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Trustmark Corporation Announces Third Quarter 2023 Financial Results

Performance Reflects Continued Loan and Deposit Growth, Solid Credit Quality, and Diversified Fee Income

Trustmark Corporation (NASDAQGS: TRMK) reported net income of $34.0 million in the third quarter of 2023, representing diluted earnings per share of $0.56. As previously disclosed, Trustmark recognized a litigation settlement expense of $6.5 million in the third quarter, which reduced net income by $4.9 million, or $0.08 per diluted share. Excluding this expense, Trustmark’s third quarter net income totaled $38.9 million, or $0.64 per diluted share. Please refer to the Consolidated Financial Information, Note 1 – Litigation Settlement and Note 7 – Non-GAAP Financial Measures. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable December 15, 2023, to shareholders of record on December 1, 2023.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20231024731289/en/

Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/53667141/en

Third Quarter Highlights

  • Loans held for investment (HFI) increased $196.3 million, or 1.6%, from the prior quarter to $12.8 billion
  • Deposits expanded $188.0 million, or 1.3%, linked-quarter to $15.1 billion
  • Net interest income (FTE) totaled $141.9 million, down $1.4 million linked-quarter, resulting in a net interest margin of 3.29%
  • Noninterest income totaled $52.2 million for the third quarter, representing 27.4% of total revenue
  • Noninterest expense, excluding litigation settlement expense, increased 1.7% from the prior quarter
  • Credit quality remained solid; net charge-offs totaled $3.6 million, or 0.11% of average loans, in the third quarter

Duane A. Dewey, President and CEO, stated, “Trustmark’s financial performance during the third quarter reflected continued loan and deposit growth, stable net interest income, strong performance in our insurance business, and solid credit quality. During the first nine months of 2023, Trustmark’s net income totaled $129.4 million, which represented diluted earnings per share of $2.11, an increase of 22.7% from the same period in 2022. We continue to implement significant cost savings initiatives to improve efficiency as well as technology to enhance our ability to grow and serve customers. Trustmark is well-positioned to respond to changing economic conditions and create long-term value for our shareholders.”

Balance Sheet Management

  • Loans HFI totaled $12.8 billion, up 1.6% from the prior quarter and 10.6% year-over-year
  • Deposits totaled $15.1 billion, up 1.3% from the prior quarter and 4.7% year-over-year
  • Maintained strong capital position with CET1 ratio of 9.89% and total risk-based capital ratio of 12.11%

Loans HFI totaled $12.8 billion at September 30, 2023, reflecting an increase of $196.3 million, or 1.6%, linked-quarter and $1.2 billion, or 10.6%, year-over-year. The linked quarter growth primarily reflected increases in other real estate secured loans and nonfarm, nonresidential properties offset in part by declines in construction, land development and other land loans, state and other political subdivision loans, and commercial and industrial loans. Trustmark’s loan portfolio remains well-diversified by loan type and geography.

Deposits totaled $15.1 billion at September 30, 2023, up $188.0 million, or 1.3%, from the prior quarter and $676.7 million, or 4.7%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 84.8% of total deposits at September 30, 2023. Migration into higher-yielding products continued to drive a change in deposit mix from noninterest-bearing deposits, which represented 22.0% of total deposits at September 30, 2023. Interest-bearing deposit costs totaled 2.39% in the third quarter, while the total cost of deposits was 1.84%. The total cost of interest-bearing liabilities was 2.72% in the third quarter of 2023.

As previously announced, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2023, under which $50.0 million of Trustmark’s outstanding shares may be acquired through December 31, 2023. As of September 30, 2023, Trustmark had not repurchased any of its outstanding common shares under this program. Trustmark’s regulatory capital ratios continued to exceed all levels to be considered “well-capitalized” as of September 30, 2023. Trustmark’s tangible equity-to-tangible assets ratio was 6.57% while its total risk-based capital ratio was 12.11% at September 30, 2023.

Credit Quality

  • Net charge-offs totaled $3.6 million in the third quarter, representing 0.11% of average loans
  • Provision for credit losses for loans HFI was $8.3 million for the third quarter
  • Allowance for credit losses (ACL) represented 1.05% of loans HFI and 273.60% of nonaccrual loans, excluding individually evaluated loans at September 30, 2023

Nonaccrual loans totaled $90.9 million at September 30, 2023, up $15.9 million from the prior quarter and $23.0 million year-over-year. Other real estate totaled $5.5 million, reflecting increases of $4.3 million from the prior quarter and $2.5 million year-over-year. Collectively, nonperforming assets totaled $96.4 million at September 30, 2023, reflecting a linked-quarter increase of $20.2 million and a year-over-year increase of $25.5 million.

During the third quarter, a fully-reserved nonaccrual loan transitioned to other real estate. This credit represented substantially all the net charge-offs experienced during the quarter and was also responsible for the increase in other real estate.

The provision for credit losses for loans HFI was $8.3 million in the third quarter and was primarily attributable to a single new individually evaluated nonaccrual loan for which specific reserves were established, a weakening macroeconomic forecast, loan growth, and net adjustments to the qualitative factors. The provision for credit losses for off-balance sheet credit exposures was $104 thousand in the third quarter. Collectively, the provision for credit losses totaled $8.4 million in the third quarter compared to $8.5 million in the prior quarter and $11.6 million in the third quarter of 2022.

Allocation of Trustmark’s $134.0 million ACL on loans HFI represented 0.86% of commercial loans and 1.66% of consumer and home mortgage loans, resulting in an allowance to total loans HFI of 1.05% at September 30, 2023. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.

Revenue Generation

  • Revenue totaled $190.9 million, down 1.3% linked-quarter
  • Net interest income (FTE) totaled $141.9 million in the third quarter, down 0.9% from the prior quarter
  • Noninterest income totaled $52.2 million, representing 27.4% of total revenue in the third quarter

Net interest income (FTE) in the third quarter totaled $141.9 million, resulting in a net interest margin of 3.29%, down 4 basis points from the prior quarter. The decrease in the net interest margin was due to increased costs of interest-bearing deposits which were partially offset by increased yields on the loans HFI and HFS portfolio and securities portfolio.

Noninterest income in the third quarter totaled $52.2 million, a decrease of $1.3 million from the prior quarter and $382 thousand year-over-year. The linked-quarter decline was attributable to lower other income net, bank card and other fees, mortgage banking revenue, and wealth management revenue, which were offset in part by increased insurance commissions and service charges on deposit accounts.

Mortgage loan production in the third quarter totaled $389.9 million, down 9.6% from the prior quarter and 23.3% year-over-year. Mortgage banking revenue totaled $6.5 million in the third quarter, a decrease of $142 thousand from the prior quarter and $418 thousand year-over-year. The linked-quarter decrease was principally attributable to accelerated amortization of mortgage servicing rights offset in part by reduced net negative hedge ineffectiveness.

Insurance commissions totaled $15.3 million in the third quarter, up $539 thousand, or 3.7%, linked-quarter and $1.4 million, or 10.0%, year-over-year due principally to increased property and casualty and group health commissions. Wealth management revenue totaled $8.8 million in the third quarter, a decrease of $109 thousand, or 1.2%, from the prior quarter and unchanged year-over-year. The linked-quarter change reflected growth in investment services, which was more than offset by lower trust management revenue. Service charges on deposit accounts increased $379 thousand, or 3.5%, from the prior quarter and declined $244 thousand, or 2.2%, year-over-year. Bank card and other fees decreased $700 thousand from the prior quarter and $1.1 million year-over-year. The linked-quarter change was attributable to seasonal factors while the year-over-year change was due to reduced customer derivative revenue.

Noninterest Expense

  • Total noninterest expense in the third quarter was $140.9 million; excluding litigation settlement expense of $6.5 million, noninterest expense was $134.4 million, up $2.2 million, or 1.7%, from the prior quarter. Please refer to the Consolidated Financial Information, Note 7 – Non-GAAP Financial Measures
  • FDIC assessment expense totaled $3.8 million in the third quarter, up $1.2 million, or 47.6%, from the prior quarter

Salaries and employee benefits increased $726 thousand, or 1.0%, linked-quarter due primarily to increased salary expense. Services and fees decreased $382 thousand, or 1.4%, linked-quarter due to reduced professional fees. Net occupancy-premises expense increased $275 thousand, or 3.9%, linked-quarter due in part to seasonal increases in utilities and increased rental expense. Equipment expense increased $412 thousand, or 6.4%, linked-quarter. Other expense increased $1.2 million, or 8.2%, linked-quarter, principally due to increased FDIC assessment expense.

FIT2GROW

“In 2022, we announced FIT2GROW, a comprehensive program of Focus, Innovation and Transformation designed to enhance our ability to grow and serve customers. Our Atlanta-based Equipment Finance division, established in late 2022, continues to gain traction as its portfolio has grown to $191 million as of September 30, 2023. Implementation of our technology plans for conversion of our deposit/teller/customer information system continued during the quarter. In addition, work continued on the design of our sales through service process, which will be implemented across the retail branch network in early 2024. These actions, along with cost savings initiatives, are designed to enhance Trustmark’s performance and build long-term value for our shareholders,” said Dewey.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, October 25, 2023, 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, November 8, 2023, in archived format at the same web address or by calling (877) 344-7529, passcode 4921731.

Trustmark is a financial services company providing banking and financial solutions through offices in Alabama, Florida, Georgia, 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 (SEC) 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, an increase in unemployment levels and slowdowns in economic growth, actions by the Board of Governors of the Federal Reserve System (FRB) that impact the level of market interest rates, 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 impacts related to or resulting from recent bank failures and other economic and industry volatility, including potential increased regulatory requirements and costs and potential impacts to macroeconomic conditions, 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, 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 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
September 30, 2023
($ in thousands)
(unaudited)
Linked Quarter Year over Year
QUARTERLY AVERAGE BALANCES 9/30/2023 6/30/2023 9/30/2022 $ Change % Change $ Change % Change
Securities AFS-taxable (1)

$

2,049,006

 

$

2,140,505

 

$

2,824,254

 

$

(91,499

)

-4.3

%

$

(775,248

)

-27.4

%

Securities AFS-nontaxable

 

4,779

 

 

4,796

 

 

4,928

 

 

(17

)

-0.4

%

 

(149

)

-3.0

%

Securities HTM-taxable (1)

 

1,445,895

 

 

1,463,086

 

 

1,140,685

 

 

(17,191

)

-1.2

%

 

305,210

 

26.8

%

Securities HTM-nontaxable

 

907

 

 

1,718

 

 

5,057

 

 

(811

)

-47.2

%

 

(4,150

)

-82.1

%

Total securities

 

3,500,587

 

 

3,610,105

 

 

3,974,924

 

 

(109,518

)

-3.0

%

 

(474,337

)

-11.9

%

Paycheck protection program loans (PPP)

 

 

 

 

 

9,821

 

 

 

n/m

 

 

(9,821

)

-100.0

%

Loans (includes loans held for sale)

 

12,926,942

 

 

12,732,057

 

 

11,459,551

 

 

194,885

 

1.5

%

 

1,467,391

 

12.8

%

Fed funds sold and reverse repurchases

 

230

 

 

3,275

 

 

226

 

 

(3,045

)

-93.0

%

 

4

 

1.8

%

Other earning assets

 

682,644

 

 

903,027

 

 

325,620

 

 

(220,383

)

-24.4

%

 

357,024

 

n/m

 

Total earning assets

 

17,110,403

 

 

17,248,464

 

 

15,770,142

 

 

(138,061

)

-0.8

%

 

1,340,261

 

8.5

%

Allowance for credit losses (ACL), loans held

   for investment (LHFI)

 

(127,915

)

 

(121,960

)

 

(102,951

)

 

(5,955

)

-4.9

%

 

(24,964

)

-24.2

%

Other assets

 

1,721,310

 

 

1,648,583

 

 

1,576,653

 

 

72,727

 

4.4

%

 

144,657

 

9.2

%

Total assets

$

18,703,798

 

$

18,775,087

 

$

17,243,844

 

$

(71,289

)

-0.4

%

$

1,459,954

 

8.5

%

 
Interest-bearing demand deposits

$

4,875,714

 

$

4,803,737

 

$

4,613,733

 

$

71,977

 

1.5

%

$

261,981

 

5.7

%

Savings deposits

 

3,642,158

 

 

4,002,134

 

 

4,514,579

 

 

(359,976

)

-9.0

%

 

(872,421

)

-19.3

%

Time deposits

 

3,075,224

 

 

2,335,752

 

 

1,111,440

 

 

739,472

 

31.7

%

 

1,963,784

 

n/m

 

Total interest-bearing deposits

 

11,593,096

 

 

11,141,623

 

 

10,239,752

 

 

451,473

 

4.1

%

 

1,353,344

 

13.2

%

Fed funds purchased and repurchases

 

414,696

 

 

389,834

 

 

249,809

 

 

24,862

 

6.4

%

 

164,887

 

66.0

%

Other borrowings

 

912,151

 

 

1,330,010

 

 

88,697

 

 

(417,859

)

-31.4

%

 

823,454

 

n/m

 

Subordinated notes

 

123,391

 

 

123,337

 

 

123,171

 

 

54

 

0.0

%

 

220

 

0.2

%

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

 

0.0

%

 

 

0.0

%

Total interest-bearing liabilities

 

13,105,190

 

 

13,046,660

 

 

10,763,285

 

 

58,530

 

0.4

%

 

2,341,905

 

21.8

%

Noninterest-bearing deposits

 

3,429,815

 

 

3,595,927

 

 

4,444,370

 

 

(166,112

)

-4.6

%

 

(1,014,555

)

-22.8

%

Other liabilities

 

585,908

 

 

552,209

 

 

429,720

 

 

33,699

 

6.1

%

 

156,188

 

36.3

%

Total liabilities

 

17,120,913

 

 

17,194,796

 

 

15,637,375

 

 

(73,883

)

-0.4

%

 

1,483,538

 

9.5

%

Shareholders' equity

 

1,582,885

 

 

1,580,291

 

 

1,606,469

 

 

2,594

 

0.2

%

 

(23,584

)

-1.5

%

Total liabilities and equity

$

18,703,798

 

$

18,775,087

 

$

17,243,844

 

$

(71,289

)

-0.4

%

$

1,459,954

 

8.5

%

 
(1) See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information.
 
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, 2023
($ in thousands)
(unaudited)
Linked Quarter Year over Year
PERIOD END BALANCES 9/30/2023 6/30/2023 9/30/2022 $ Change % Change $ Change % Change
Cash and due from banks

$

750,492

 

$

832,052

 

$

479,637

 

$

(81,560

)

-9.8

%

$

270,855

 

56.5

%

Fed funds sold and reverse repurchases

 

 

 

 

 

10,098

 

 

 

n/m

 

 

(10,098

)

-100.0

%

Securities available for sale (1)

 

1,766,174

 

 

1,871,883

 

 

2,444,486

 

 

(105,709

)

-5.6

%

 

(678,312

)

-27.7

%

Securities held to maturity (1)

 

1,438,287

 

 

1,458,665

 

 

1,156,985

 

 

(20,378

)

-1.4

%

 

281,302

 

24.3

%

PPP loans

 

 

 

 

 

4,798

 

 

 

n/m

 

 

(4,798

)

-100.0

%

Loans held for sale (LHFS)

 

169,244

 

 

181,094

 

 

165,213

 

 

(11,850

)

-6.5

%

 

4,031

 

2.4

%

Loans held for investment (LHFI)

 

12,810,259

 

 

12,613,967

 

 

11,586,064

 

 

196,292

 

1.6

%

 

1,224,195

 

10.6

%

ACL LHFI

 

(134,031

)

 

(129,298

)

 

(115,050

)

 

(4,733

)

-3.7

%

 

(18,981

)

-16.5

%

Net LHFI

 

12,676,228

 

 

12,484,669

 

 

11,471,014

 

 

191,559

 

1.5

%

 

1,205,214

 

10.5

%

Premises and equipment, net

 

230,718

 

 

227,630

 

 

210,761

 

 

3,088

 

1.4

%

 

19,957

 

9.5

%

Mortgage servicing rights

 

142,379

 

 

134,350

 

 

132,615

 

 

8,029

 

6.0

%

 

9,764

 

7.4

%

Goodwill

 

384,237

 

 

384,237

 

 

384,237

 

 

 

0.0

%

 

 

0.0

%

Identifiable intangible assets

 

3,093

 

 

3,222

 

 

3,952

 

 

(129

)

-4.0

%

 

(859

)

-21.7

%

Other real estate

 

5,485

 

 

1,137

 

 

2,971

 

 

4,348

 

n/m

 

 

2,514

 

84.6

%

Operating lease right-of-use assets

 

39,639

 

 

38,179

 

 

37,282

 

 

1,460

 

3.8

%

 

2,357

 

6.3

%

Other assets

 

784,863

 

 

805,508

 

 

686,585

 

 

(20,645

)

-2.6

%

 

98,278

 

14.3

%

Total assets

$

18,390,839

 

$

18,422,626

 

$

17,190,634

 

$

(31,787

)

-0.2

%

$

1,200,205

 

7.0

%

 
Deposits:
Noninterest-bearing

$

3,320,124

 

$

3,461,073

 

$

4,358,805

 

$

(140,949

)

-4.1

%

$

(1,038,681

)

-23.8

%

Interest-bearing

 

11,781,799

 

 

11,452,827

 

 

10,066,375

 

 

328,972

 

2.9

%

 

1,715,424

 

17.0

%

Total deposits

 

15,101,923

 

 

14,913,900

 

 

14,425,180

 

 

188,023

 

1.3

%

 

676,743

 

4.7

%

Fed funds purchased and repurchases

 

321,799

 

 

311,179

 

 

544,068

 

 

10,620

 

3.4

%

 

(222,269

)

-40.9

%

Other borrowings

 

793,193

 

 

1,056,714

 

 

223,172

 

 

(263,521

)

-24.9

%

 

570,021

 

n/m

 

Subordinated notes

 

123,427

 

 

123,372

 

 

123,207

 

 

55

 

0.0

%

 

220

 

0.2

%

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

 

0.0

%

 

 

0.0

%

ACL on off-balance sheet credit exposures

 

34,945

 

 

34,841

 

 

31,623

 

 

104

 

0.3

%

 

3,322

 

10.5

%

Operating lease liabilities

 

42,730

 

 

40,845

 

 

39,797

 

 

1,885

 

4.6

%

 

2,933

 

7.4

%

Other liabilities

 

340,615

 

 

308,726

 

 

232,786

 

 

31,889

 

10.3

%

 

107,829

 

46.3

%

Total liabilities

 

16,820,488

 

 

16,851,433

 

 

15,681,689

 

 

(30,945

)

-0.2

%

 

1,138,799

 

7.3

%

Common stock

 

12,724

 

 

12,724

 

 

12,700

 

 

 

0.0

%

 

24

 

0.2

%

Capital surplus

 

158,316

 

 

156,834

 

 

154,150

 

 

1,482

 

0.9

%

 

4,166

 

2.7

%

Retained earnings

 

1,687,199

 

 

1,667,339

 

 

1,648,507

 

 

19,860

 

1.2

%

 

38,692

 

2.3

%

Accumulated other comprehensive

   income (loss), net of tax

 

(287,888

)

 

(265,704

)

 

(306,412

)

 

(22,184

)

-8.3

%

 

18,524

 

6.0

%

Total shareholders' equity

 

1,570,351

 

 

1,571,193

 

 

1,508,945

 

 

(842

)

-0.1

%

 

61,406

 

4.1

%

Total liabilities and equity

$

18,390,839

 

$

18,422,626

 

$

17,190,634

 

$

(31,787

)

-0.2

%

$

1,200,205

 

7.0

%

 
(1) See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information.
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, 2023
($ in thousands except per share data)
(unaudited)
 
Quarter Ended Linked Quarter Year over Year
INCOME STATEMENTS 9/30/2023 6/30/2023 9/30/2022 $ Change % Change $ Change % Change
Interest and fees on LHFS & LHFI-FTE

$

206,523

$

192,941

$

129,395

 

$

13,582

 

7.0

%

$

77,128

 

59.6

%

Interest and fees on PPP loans

 

 

 

186

 

 

 

n/m

 

 

(186

)

-100.0

%

Interest on securities-taxable

 

16,624

 

16,779

 

16,222

 

 

(155

)

-0.9

%

 

402

 

2.5

%

Interest on securities-tax exempt-FTE

 

58

 

69

 

100

 

 

(11

)

-15.9

%

 

(42

)

-42.0

%

Interest on fed funds sold and reverse

   repurchases

 

3

 

45

 

2

 

 

(42

)

-93.3

%

 

1

 

50.0

%

Other interest income

 

8,613

 

12,077

 

1,493

 

 

(3,464

)

-28.7

%

 

7,120

 

n/m

 

Total interest income-FTE

 

231,821

 

221,911

 

147,398

 

 

9,910

 

4.5

%

 

84,423

 

57.3

%

Interest on deposits

 

69,797

 

54,409

 

5,097

 

 

15,388

 

28.3

%

 

64,700

 

n/m

 

Interest on fed funds purchased and repurchases

 

5,375

 

4,865

 

1,225

 

 

510

 

10.5

%

 

4,150

 

n/m

 

Other interest expense

 

14,713

 

19,350

 

1,996

 

 

(4,637

)

-24.0

%

 

12,717

 

n/m

 

Total interest expense

 

89,885

 

78,624

 

8,318

 

 

11,261

 

14.3

%

 

81,567

 

n/m

 

Net interest income-FTE

 

141,936

 

143,287

 

139,080

 

 

(1,351

)

-0.9

%

 

2,856

 

2.1

%

Provision for credit losses, LHFI

 

8,322

 

8,211

 

12,919

 

 

111

 

1.4

%

 

(4,597

)

-35.6

%

Provision for credit losses, off-balance sheet

   credit exposures

 

104

 

245

 

(1,326

)

 

(141

)

-57.6

%

 

1,430

 

n/m

 

Net interest income after provision-FTE

 

133,510

 

134,831

 

127,487

 

 

(1,321

)

-1.0

%

 

6,023

 

4.7

%

Service charges on deposit accounts

 

11,074

 

10,695

 

11,318

 

 

379

 

3.5

%

 

(244

)

-2.2

%

Bank card and other fees

 

8,217

 

8,917

 

9,305

 

 

(700

)

-7.9

%

 

(1,088

)

-11.7

%

Mortgage banking, net

 

6,458

 

6,600

 

6,876

 

 

(142

)

-2.2

%

 

(418

)

-6.1

%

Insurance commissions

 

15,303

 

14,764

 

13,911

 

 

539

 

3.7

%

 

1,392

 

10.0

%

Wealth management

 

8,773

 

8,882

 

8,778

 

 

(109

)

-1.2

%

 

(5

)

-0.1

%

Other, net

 

2,399

 

3,695

 

2,418

 

 

(1,296

)

-35.1

%

 

(19

)

-0.8

%

Total noninterest income

 

52,224

 

53,553

 

52,606

 

 

(1,329

)

-2.5

%

 

(382

)

-0.7

%

Salaries and employee benefits

 

76,666

 

75,940

 

72,707

 

 

726

 

1.0

%

 

3,959

 

5.4

%

Services and fees (2)

 

27,882

 

28,264

 

26,787

 

 

(382

)

-1.4

%

 

1,095

 

4.1

%

Net occupancy-premises

 

7,383

 

7,108

 

7,395

 

 

275

 

3.9

%

 

(12

)

-0.2

%

Equipment expense

 

6,816

 

6,404

 

6,072

 

 

412

 

6.4

%

 

744

 

12.3

%

Litigation settlement expense (1)

 

6,500

 

 

 

 

6,500

 

n/m

 

 

6,500

 

n/m

 

Other expense (2)

 

15,698

 

14,502

 

13,737

 

 

1,196

 

8.2

%

 

1,961

 

14.3

%

Total noninterest expense

 

140,945

 

132,218

 

126,698

 

 

8,727

 

6.6

%

 

14,247

 

11.2

%

Income (loss) before income taxes and tax eq adj

 

44,789

 

56,166

 

53,395

 

 

(11,377

)

-20.3

%

 

(8,606

)

-16.1

%

Tax equivalent adjustment

 

3,299

 

3,383

 

2,975

 

 

(84

)

-2.5

%

 

324

 

10.9

%

Income (loss) before income taxes

 

41,490

 

52,783

 

50,420

 

 

(11,293

)

-21.4

%

 

(8,930

)

-17.7

%

Income taxes

 

7,461

 

7,746

 

7,965

 

 

(285

)

-3.7

%

 

(504

)

-6.3

%

Net income (loss)

$

34,029

$

45,037

$

42,455

 

$

(11,008

)

-24.4

%

$

(8,426

)

-19.8

%

 
Per share data
Earnings (loss) per share - basic

$

0.56

$

0.74

$

0.69

 

$

(0.18

)

-24.3

%

$

(0.13

)

-18.8

%

 
Earnings (loss) per share - diluted

$

0.56

$

0.74

$

0.69

 

$

(0.18

)

-24.3

%

$

(0.13

)

-18.8

%

 
Dividends per share

$

0.23

$

0.23

$

0.23

 

 

 

0.0

%

 

 

0.0

%

 
Weighted average shares outstanding
Basic

 

61,069,750

 

61,063,277

 

61,114,804

 

 
Diluted

 

61,263,032

 

61,230,031

 

61,318,715

 

 
Period end shares outstanding

 

61,070,095

 

61,069,036

 

60,953,864

 

 
(1) See Note 1 - Litigation Settlement in the Notes to Consolidated Financials for additional information.

(2) During the first quarter of 2023, Trustmark reclassified its debit card transaction fees from other expense to services and fees.

Prior periods have been reclassified accordingly.

 
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, 2023
($ in thousands)
(unaudited)
 
Quarter Ended Linked Quarter Year over Year
NONPERFORMING ASSETS (1) 9/30/2023 6/30/2023 9/30/2022 $ Change % Change $ Change % Change
Nonaccrual LHFI
Alabama (2)

$

23,530

 

$

11,058

 

$

12,710

 

$

12,472

 

n/m

 

$

10,820

 

85.1

%

Florida

 

151

 

 

334

 

 

227

 

 

(183

)

-54.8

%

 

(76

)

-33.5

%

Mississippi (3)

 

45,050

 

 

36,288

 

 

23,517

 

 

8,762

 

24.1

%

 

21,533

 

91.6

%

Tennessee (4)

 

1,841

 

 

5,088

 

 

5,120

 

 

(3,247

)

-63.8

%

 

(3,279

)

-64.0

%

Texas

 

20,327

 

 

22,259

 

 

26,353

 

 

(1,932

)

-8.7

%

 

(6,026

)

-22.9

%

Total nonaccrual LHFI

 

90,899

 

 

75,027

 

 

67,927

 

 

15,872

 

21.2

%

 

22,972

 

33.8

%

Other real estate
Alabama (2)

 

315

 

 

 

 

217

 

 

315

 

n/m

 

 

98

 

45.2

%

Mississippi (3)

 

942

 

 

1,137

 

 

2,754

 

 

(195

)

-17.2

%

 

(1,812

)

-65.8

%

Texas

 

4,228

 

 

 

 

 

 

4,228

 

n/m

 

 

4,228

 

n/m

 

Total other real estate

 

5,485

 

 

1,137

 

 

2,971

 

 

4,348

 

n/m

 

 

2,514

 

84.6

%

Total nonperforming assets

$

96,384

 

$

76,164

 

$

70,898

 

$

20,220

 

26.5

%

$

25,486

 

35.9

%

 
LOANS PAST DUE OVER 90 DAYS (1)
LHFI

$

3,804

 

$

3,911

 

$

1,842

 

$

(107

)

-2.7

%

$

1,962

 

n/m

 

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

$

42,532

 

$

35,766

 

$

48,313

 

$

6,766

 

18.9

%

$

(5,781

)

-12.0

%

 
Quarter Ended Linked Quarter Year over Year
ACL LHFI (1) 9/30/2023 6/30/2023 9/30/2022 $ Change % Change $ Change % Change
Beginning Balance

$

129,298

 

$

122,239

 

$

103,140

 

$

7,059

 

5.8

%

$

26,158

 

25.4

%

Provision for credit losses, LHFI

 

8,322

 

 

8,211

 

 

12,919

 

 

111

 

1.4

%

 

(4,597

)

-35.6

%

Charge-offs

 

(7,496

)

 

(2,773

)

 

(2,920

)

 

(4,723

)

n/m

 

 

(4,576

)

n/m

 

Recoveries

 

3,907

 

 

1,621

 

 

1,911

 

 

2,286

 

n/m

 

 

1,996

 

n/m

 

Net (charge-offs) recoveries

 

(3,589

)

 

(1,152

)

 

(1,009

)

 

(2,437

)

n/m

 

 

(2,580

)

n/m

 

Ending Balance

$

134,031

 

$

129,298

 

$

115,050

 

$

4,733

 

3.7

%

$

18,981

 

16.5

%

 
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama (2)

$

(165

)

$

(141

)

$

93

 

$

(24

)

-17.0

%

$

(258

)

n/m

 

Florida

 

21

 

 

(35

)

 

(23

)

 

56

 

n/m

 

 

44

 

n/m

 

Mississippi (3)

 

(1,867

)

 

(762

)

 

(702

)

 

(1,105

)

n/m

 

 

(1,165

)

n/m

 

Tennessee (4)

 

2,127

 

 

(166

)

 

(202

)

 

2,293

 

n/m

 

 

2,329

 

n/m

 

Texas

 

(3,705

)

 

(48

)

 

(175

)

 

(3,657

)

n/m

 

 

(3,530

)

n/m

 

Total net (charge-offs) recoveries

$

(3,589

)

$

(1,152

)

$

(1,009

)

$

(2,437

)

n/m

 

$

(2,580

)

n/m

 

 
(1) Excludes PPP loans.
(2) Alabama includes the Georgia Loan Production Office.
(3) Mississippi includes Central and Southern Mississippi Regions.
(4) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
 
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, 2023
($ in thousands)
(unaudited)
Quarter Ended Nine Months Ended
AVERAGE BALANCES 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 9/30/2023 9/30/2022
Securities AFS-taxable (1)

$

2,049,006

 

$

2,140,505

 

$

2,187,121

 

$

2,572,675

 

$

2,824,254

 

$

2,125,038

 

$

3,053,164

 

Securities AFS-nontaxable

 

4,779

 

 

4,796

 

 

4,812

 

 

4,828

 

 

4,928

 

 

4,796

 

 

5,054

 

Securities HTM-taxable (1)

 

1,445,895

 

 

1,463,086

 

 

1,479,283

 

 

1,268,952

 

 

1,140,685

 

 

1,462,632

 

 

790,385

 

Securities HTM-nontaxable

 

907

 

 

1,718

 

 

4,509

 

 

4,514

 

 

5,057

 

 

2,365

 

 

5,996

 

Total securities

 

3,500,587

 

 

3,610,105

 

 

3,675,725

 

 

3,850,969

 

 

3,974,924

 

 

3,594,831

 

 

3,854,599

 

PPP loans

 

 

 

 

 

 

 

3,235

 

 

9,821

 

 

 

 

18,788

 

Loans (includes loans held for sale)

 

12,926,942

 

 

12,732,057

 

 

12,530,449

 

 

12,006,661

 

 

11,459,551

 

 

12,731,268

 

 

10,976,809

 

Fed funds sold and reverse repurchases

 

230

 

 

3,275

 

 

2,379

 

 

6,566

 

 

226

 

 

1,953

 

 

131

 

Other earning assets

 

682,644

 

 

903,027

 

 

647,760

 

 

375,190

 

 

325,620

 

 

747,627

 

 

1,086,771

 

Total earning assets

 

17,110,403

 

 

17,248,464

 

 

16,856,313

 

 

16,242,621

 

 

15,770,142

 

 

17,075,679

 

 

15,937,098

 

ACL LHFI

 

(127,915

)

 

(121,960

)

 

(119,978

)

 

(114,948

)

 

(102,951

)

 

(123,313

)

 

(100,495

)

Other assets

 

1,721,310

 

 

1,648,583

 

 

1,762,449

 

 

1,630,085

 

 

1,576,653

 

 

1,707,608

 

 

1,546,972

 

Total assets

$

18,703,798

 

$

18,775,087

 

$

18,498,784

 

$

17,757,758

 

$

17,243,844

 

$

18,659,974

 

$

17,383,575

 

 
Interest-bearing demand deposits

$

4,875,714

 

$

4,803,737

 

$

4,751,154

 

$

4,719,303

 

$

4,613,733

 

$

4,810,658

 

$

4,541,018

 

Savings deposits

 

3,642,158

 

 

4,002,134

 

 

4,193,764

 

 

4,379,673

 

 

4,514,579

 

 

3,943,998

 

 

4,647,164

 

Time deposits

 

3,075,224

 

 

2,335,752

 

 

1,907,449

 

 

1,152,905

 

 

1,111,440

 

 

2,443,753

 

 

1,154,346

 

Total interest-bearing deposits

 

11,593,096

 

 

11,141,623

 

 

10,852,367

 

 

10,251,881

 

 

10,239,752

 

 

11,198,409

 

 

10,342,528

 

Fed funds purchased and repurchases

 

414,696

 

 

389,834

 

 

436,535

 

 

549,406

 

 

249,809

 

 

413,608

 

 

193,661

 

Other borrowings

 

912,151

 

 

1,330,010

 

 

1,110,843

 

 

530,993

 

 

88,697

 

 

1,116,940

 

 

86,681

 

Subordinated notes

 

123,391

 

 

123,337

 

 

123,281

 

 

123,226

 

 

123,171

 

 

123,337

 

 

123,116

 

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

Total interest-bearing liabilities

 

13,105,190

 

 

13,046,660

 

 

12,584,882

 

 

11,517,362

 

 

10,763,285

 

 

12,914,150

 

 

10,807,842

 

Noninterest-bearing deposits

 

3,429,815

 

 

3,595,927

 

 

3,813,248

 

 

4,177,113

 

 

4,444,370

 

 

3,611,592

 

 

4,544,698

 

Other liabilities

 

585,908

 

 

552,209

 

 

576,826

 

 

569,992

 

 

429,720

 

 

571,681

 

 

388,585

 

Total liabilities

 

17,120,913

 

 

17,194,796

 

 

16,974,956

 

 

16,264,467

 

 

15,637,375

 

 

17,097,423

 

 

15,741,125

 

Shareholders' equity

 

1,582,885

 

 

1,580,291

 

 

1,523,828

 

 

1,493,291

 

 

1,606,469

 

 

1,562,551

 

 

1,642,450

 

Total liabilities and equity

$

18,703,798

 

$

18,775,087

 

$

18,498,784

 

$

17,757,758

 

$

17,243,844

 

$

18,659,974

 

$

17,383,575

 

 
(1) See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information.
 

See Notes to Consolidated Financials

 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2023
($ in thousands)
(unaudited)
 
PERIOD END BALANCES 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022
Cash and due from banks

$

750,492

 

$

832,052

 

$

1,297,144

 

$

734,787

 

$

479,637

 

Fed funds sold and reverse repurchases

 

 

 

 

 

 

 

4,000

 

 

10,098

 

Securities available for sale (1)

 

1,766,174

 

 

1,871,883

 

 

1,984,162

 

 

2,024,082

 

 

2,444,486

 

Securities held to maturity (1)

 

1,438,287

 

 

1,458,665

 

 

1,474,338

 

 

1,494,514

 

 

1,156,985

 

PPP loans

 

 

 

 

 

 

 

 

 

4,798

 

LHFS

 

169,244

 

 

181,094

 

 

175,926

 

 

135,226

 

 

165,213

 

LHFI

 

12,810,259

 

 

12,613,967

 

 

12,497,195

 

 

12,204,039

 

 

11,586,064

 

ACL LHFI

 

(134,031

)

 

(129,298

)

 

(122,239

)

 

(120,214

)

 

(115,050

)

Net LHFI

 

12,676,228

 

 

12,484,669

 

 

12,374,956

 

 

12,083,825

 

 

11,471,014

 

Premises and equipment, net

 

230,718

 

 

227,630

 

 

223,975

 

 

212,365

 

 

210,761

 

Mortgage servicing rights

 

142,379

 

 

134,350

 

 

127,206

 

 

129,677

 

 

132,615

 

Goodwill

 

384,237

 

 

384,237

 

 

384,237

 

 

384,237

 

 

384,237

 

Identifiable intangible assets

 

3,093

 

 

3,222

 

 

3,352

 

 

3,640

 

 

3,952

 

Other real estate

 

5,485

 

 

1,137

 

 

1,684

 

 

1,986

 

 

2,971

 

Operating lease right-of-use assets

 

39,639

 

 

38,179

 

 

35,315

 

 

36,301

 

 

37,282

 

Other assets

 

784,863

 

 

805,508

 

 

794,883

 

 

770,838

 

 

686,585

 

Total assets

$

18,390,839

 

$

18,422,626

 

$

18,877,178

 

$

18,015,478

 

$

17,190,634

 

Deposits:
Noninterest-bearing

$

3,320,124

 

$

3,461,073

 

$

3,797,055

 

$

4,093,771

 

$

4,358,805

 

Interest-bearing

 

11,781,799

 

 

11,452,827

 

 

10,986,606

 

 

10,343,877

 

 

10,066,375

 

Total deposits

 

15,101,923

 

 

14,913,900

 

 

14,783,661

 

 

14,437,648

 

 

14,425,180

 

Fed funds purchased and repurchases

 

321,799

 

 

311,179

 

 

477,980

 

 

449,331

 

 

544,068

 

Other borrowings

 

793,193

 

 

1,056,714

 

 

1,485,181

 

 

1,050,938

 

 

223,172

 

Subordinated notes

 

123,427

 

 

123,372

 

 

123,317

 

 

123,262

 

 

123,207

 

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

ACL on off-balance sheet credit exposures

 

34,945

 

 

34,841

 

 

34,596

 

 

36,838

 

 

31,623

 

Operating lease liabilities

 

42,730

 

 

40,845

 

 

37,988

 

 

38,932

 

 

39,797

 

Other liabilities

 

340,615

 

 

308,726

 

 

310,500

 

 

324,405

 

 

232,786

 

Total liabilities

 

16,820,488

 

 

16,851,433

 

 

17,315,079

 

 

16,523,210

 

 

15,681,689

 

Common stock

 

12,724

 

 

12,724

 

 

12,720

 

 

12,705

 

 

12,700

 

Capital surplus

 

158,316

 

 

156,834

 

 

155,297

 

 

154,645

 

 

154,150

 

Retained earnings

 

1,687,199

 

 

1,667,339

 

 

1,636,463

 

 

1,600,321

 

 

1,648,507

 

Accumulated other comprehensive income (loss),

   net of tax

 

(287,888

)

 

(265,704

)

 

(242,381

)

 

(275,403

)

 

(306,412

)

Total shareholders' equity

 

1,570,351

 

 

1,571,193

 

 

1,562,099

 

 

1,492,268

 

 

1,508,945

 

Total liabilities and equity

$

18,390,839

 

$

18,422,626

 

$

18,877,178

 

$

18,015,478

 

$

17,190,634

 

(1) See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information.
 

See Notes to Consolidated Financials

 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2023
($ in thousands except per share data)
(unaudited)
 
Quarter Ended Nine Months Ended
INCOME STATEMENTS 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 9/30/2023 9/30/2022
Interest and fees on LHFS & LHFI-FTE

$

206,523

$

192,941

$

178,967

 

$

159,566

 

$

129,395

 

$

578,431

 

$

325,680

 

Interest and fees on PPP loans

 

 

 

 

 

101

 

 

186

 

 

 

 

538

 

Interest on securities-taxable

 

16,624

 

16,779

 

16,761

 

 

16,577

 

 

16,222

 

 

50,164

 

 

43,140

 

Interest on securities-tax exempt-FTE

 

58

 

69

 

92

 

 

93

 

 

100

 

 

219

 

 

329

 

Interest on fed funds sold and reverse repurchases

 

3

 

45

 

30

 

 

71

 

 

2

 

 

78

 

 

3

 

Other interest income

 

8,613

 

12,077

 

6,527

 

 

3,556

 

 

1,493

 

 

27,217

 

 

4,524

 

Total interest income-FTE

 

231,821

 

221,911

 

202,377

 

 

179,964

 

 

147,398

 

 

656,109

 

 

374,214

 

Interest on deposits

 

69,797

 

54,409

 

40,898

 

 

18,438

 

 

5,097

 

 

165,104

 

 

10,631

 

Interest on fed funds purchased and repurchases

 

5,375

 

4,865

 

4,832

 

 

4,762

 

 

1,225

 

 

15,072

 

 

1,365

 

Other interest expense

 

14,713

 

19,350

 

15,575

 

 

6,730

 

 

1,996

 

 

49,638

 

 

5,199

 

Total interest expense

 

89,885

 

78,624

 

61,305

 

 

29,930

 

 

8,318

 

 

229,814

 

 

17,195

 

Net interest income-FTE

 

141,936

 

143,287

 

141,072

 

 

150,034

 

 

139,080

 

 

426,295

 

 

357,019

 

Provision for credit losses, LHFI

 

8,322

 

8,211

 

3,244

 

 

6,902

 

 

12,919

 

 

19,777

 

 

14,775

 

Provision for credit losses, off-balance sheet

   credit exposures

 

104

 

245

 

(2,242

)

 

5,215

 

 

(1,326

)

 

(1,893

)

 

(4,000

)

Net interest income after provision-FTE

 

133,510

 

134,831

 

140,070

 

 

137,917

 

 

127,487

 

 

408,411

 

 

346,244

 

Service charges on deposit accounts

 

11,074

 

10,695

 

10,336

 

 

11,162

 

 

11,318

 

 

32,105

 

 

30,995

 

Bank card and other fees

 

8,217

 

8,917

 

7,803

 

 

8,191

 

 

9,305

 

 

24,937

 

 

27,914

 

Mortgage banking, net

 

6,458

 

6,600

 

7,639

 

 

3,408

 

 

6,876

 

 

20,697

 

 

24,898

 

Insurance commissions

 

15,303

 

14,764

 

14,305

 

 

12,019

 

 

13,911

 

 

44,372

 

 

41,702

 

Wealth management

 

8,773

 

8,882

 

8,780

 

 

8,079

 

 

8,778

 

 

26,435

 

 

26,934

 

Other, net

 

2,399

 

3,695

 

2,514

 

 

2,311

 

 

2,418

 

 

8,608

 

 

7,531

 

Total noninterest income

 

52,224

 

53,553

 

51,377

 

 

45,170

 

 

52,606

 

 

157,154

 

 

159,974

 

Salaries and employee benefits

 

76,666

 

75,940

 

74,056

 

 

73,469

 

 

72,707

 

 

226,662

 

 

213,971

 

Services and fees (2)

 

27,882

 

28,264

 

25,426

 

 

27,709

 

 

26,787

 

 

81,572

 

 

77,760

 

Net occupancy-premises

 

7,383

 

7,108

 

7,629

 

 

7,898

 

 

7,395

 

 

22,120

 

 

21,366

 

Equipment expense

 

6,816

 

6,404

 

6,405

 

 

6,268

 

 

6,072

 

 

19,625

 

 

18,180

 

Litigation settlement expense (1)

 

6,500

 

 

 

 

100,750

 

 

 

 

6,500

 

 

 

Other expense (2)

 

15,698

 

14,502

 

14,811

 

 

15,135

 

 

13,737

 

 

45,011

 

 

40,707

 

Total noninterest expense

 

140,945

 

132,218

 

128,327

 

 

231,229

 

 

126,698

 

 

401,490

 

 

371,984

 

Income (loss) before income taxes and tax eq adj

 

44,789

 

56,166

 

63,120

 

 

(48,142

)

 

53,395

 

 

164,075

 

 

134,234

 

Tax equivalent adjustment

 

3,299

 

3,383

 

3,477

 

 

3,451

 

 

2,975

 

 

10,159

 

 

8,894

 

Income (loss) before income taxes

 

41,490

 

52,783

 

59,643

 

 

(51,593

)

 

50,420

 

 

153,916

 

 

125,340

 

Income taxes

 

7,461

 

7,746

 

9,343

 

 

(17,530

)

 

7,965

 

 

24,550

 

 

19,390

 

Net income (loss)

$

34,029

$

45,037

$

50,300

 

$

(34,063

)

$

42,455

 

$

129,366

 

$

105,950

 

 
Per share data
Earnings (loss) per share - basic

$

0.56

$

0.74

$

0.82

 

$

(0.56

)

$

0.69

 

$

2.12

 

$

1.73

 

 
Earnings (loss) per share - diluted

$

0.56

$

0.74

$

0.82

 

$

(0.56

)

$

0.69

 

$

2.11

 

$

1.72

 

 
Dividends per share

$

0.23

$

0.23

$

0.23

 

$

0.23

 

$

0.23

 

$

0.69

 

$

0.69

 

 
Weighted average shares outstanding
Basic

 

61,069,750

 

61,063,277

 

61,011,059

 

 

60,969,400

 

 

61,114,804

 

 

61,048,244

 

 

61,334,344

 

 
Diluted

 

61,263,032

 

61,230,031

 

61,193,275

 

 

61,173,249

 

 

61,318,715

 

 

61,219,022

 

 

61,519,685

 

 
Period end shares outstanding

 

61,070,095

 

61,069,036

 

61,048,516

 

 

60,977,686

 

 

60,953,864

 

 

61,070,095

 

 

60,953,864

 

 
(1) See Note 1 - Litigation Settlement in the Notes to Consolidated Financials for additional information.
(2) During the first quarter of 2023, Trustmark reclassified its debit card transaction fees from other expense to services and fees. Prior periods have been reclassified accordingly.
 

See Notes to Consolidated Financials

 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2023
($ in thousands)
(unaudited)
 
 
Quarter Ended
NONPERFORMING ASSETS (1) 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022
Nonaccrual LHFI
Alabama (2)

$

23,530

 

$

11,058

 

$

10,919

 

$

12,300

 

$

12,710

 

Florida

 

151

 

 

334

 

 

256

 

 

227

 

 

227

 

Mississippi (3)

 

45,050

 

 

36,288

 

 

32,560

 

 

24,683

 

 

23,517

 

Tennessee (4)

 

1,841

 

 

5,088

 

 

5,416

 

 

5,566

 

 

5,120

 

Texas

 

20,327

 

 

22,259

 

 

23,224

 

 

23,196

 

 

26,353

 

Total nonaccrual LHFI

 

90,899

 

 

75,027

 

 

72,375

 

 

65,972

 

 

67,927

 

Other real estate
Alabama (2)

 

315

 

 

 

 

 

 

194

 

 

217

 

Mississippi (3)

 

942

 

 

1,137

 

 

1,495

 

 

1,769

 

 

2,754

 

Tennessee (4)

 

 

 

 

 

189

 

 

23

 

 

 

Texas

 

4,228

 

 

 

 

 

 

 

 

 

Total other real estate

 

5,485

 

 

1,137

 

 

1,684

 

 

1,986

 

 

2,971

 

Total nonperforming assets

$

96,384

 

$

76,164

 

$

74,059

 

$

67,958

 

$

70,898

 

 
LOANS PAST DUE OVER 90 DAYS (1)
LHFI

$

3,804

 

$

3,911

 

$

2,255

 

$

3,929

 

$

1,842

 

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

$

42,532

 

$

35,766

 

$

41,468

 

$

49,320

 

$

48,313

 

 
 
Quarter Ended Nine Months Ended
ACL LHFI (1) 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 9/30/2023 9/30/2022
Beginning Balance

$

129,298

 

$

122,239

 

$

120,214

 

$

115,050

 

$

103,140

 

$

120,214

 

$

99,457

 

Provision for credit losses, LHFI

 

8,322

 

 

8,211

 

 

3,244

 

 

6,902

 

 

12,919

 

 

19,777

 

 

14,775

 

Charge-offs

 

(7,496

)

 

(2,773

)

 

(2,996

)

 

(3,893

)

 

(2,920

)

 

(13,265

)

 

(7,439

)

Recoveries

 

3,907

 

 

1,621

 

 

1,777

 

 

2,155

 

 

1,911

 

 

7,305

 

 

8,257

 

Net (charge-offs) recoveries

 

(3,589

)

 

(1,152

)

 

(1,219

)

 

(1,738

)

 

(1,009

)

 

(5,960

)

 

818

 

Ending Balance

$

134,031

 

$

129,298

 

$

122,239

 

$

120,214

 

$

115,050

 

$

134,031

 

$

115,050

 

 
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama (2)

$

(165

)

$

(141

)

$

(268

)

$

98

 

$

93

 

$

(574

)

$

1,921

 

Florida

 

21

 

 

(35

)

 

(36

)

 

(60

)

 

(23

)

 

(50

)

 

712

 

Mississippi (3)

 

(1,867

)

 

(762

)

 

(775

)

 

(1,657

)

 

(702

)

 

(3,404

)

 

(1,056

)

Tennessee (4)

 

2,127

 

 

(166

)

 

(124

)

 

(195

)

 

(202

)

 

1,837

 

 

(595

)

Texas

 

(3,705

)

 

(48

)

 

(16

)

 

76

 

 

(175

)

 

(3,769

)

 

(164

)

Total net (charge-offs) recoveries

$

(3,589

)

$

(1,152

)

$

(1,219

)

$

(1,738

)

$

(1,009

)

$

(5,960

)

$

818

 

 
(1) Excludes PPP loans.
(2) Alabama includes the Georgia Loan Production Office.
(3) Mississippi includes Central and Southern Mississippi Regions.
(4) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
 

See Notes to Consolidated Financials

 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2023
(unaudited)
Quarter Ended Nine Months Ended
FINANCIAL RATIOS AND OTHER DATA 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 9/30/2023 9/30/2022
Return on average equity

 

8.53

%

 

11.43

%

 

13.39

%

 

-9.05

%

 

10.48

%

11.07

%

8.62

%

Return on average tangible equity

 

11.32

%

 

15.18

%

 

18.03

%

 

-12.14

%

 

13.90

%

14.77

%

11.39

%

Return on average assets

 

0.72

%

 

0.96

%

 

1.10

%

 

-0.76

%

 

0.98

%

0.93

%

0.81

%

Interest margin - Yield - FTE

 

5.38

%

 

5.16

%

 

4.87

%

 

4.40

%

 

3.71

%

5.14

%

3.14

%

Interest margin - Cost

 

2.08

%

 

1.83

%

 

1.47

%

 

0.73

%

 

0.21

%

1.80

%

0.14

%

Net interest margin - FTE

 

3.29

%

 

3.33

%

 

3.39

%

 

3.66

%

 

3.50

%

3.34

%

3.00

%

Efficiency ratio (1)

 

68.33

%

 

66.17

%

 

65.60

%

 

65.85

%

 

64.96

%

66.70

%

70.70

%

Full-time equivalent employees

 

2,756

 

 

2,761

 

 

2,758

 

 

2,738

 

 

2,717

 

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

 

0.11

%

 

0.04

%

 

0.04

%

 

0.06

%

 

0.03

%

0.06

%

-0.01

%

Provision for credit losses, LHFI / average loans

 

0.26

%

 

0.26

%

 

0.10

%

 

0.23

%

 

0.45

%

0.21

%

0.18

%

Nonaccrual LHFI / (LHFI + LHFS)

 

0.70

%

 

0.59

%

 

0.57

%

 

0.53

%

 

0.58

%

Nonperforming assets / (LHFI + LHFS)

 

0.74

%

 

0.60

%

 

0.58

%

 

0.55

%

 

0.60

%

Nonperforming assets / (LHFI + LHFS

   + other real estate)

 

0.74

%

 

0.60

%

 

0.58

%

 

0.55

%

 

0.60

%

ACL LHFI / LHFI

 

1.05

%

 

1.03

%

 

0.98

%

 

0.99

%

 

0.99

%

ACL LHFI-commercial / commercial LHFI

 

0.86

%

 

0.84

%

 

0.80

%

 

0.85

%

 

0.93

%

ACL LHFI-consumer / consumer and

   home mortgage LHFI

 

1.66

%

 

1.60

%

 

1.54

%

 

1.41

%

 

1.20

%

ACL LHFI / nonaccrual LHFI

 

147.45

%

 

172.34

%

 

168.90

%

 

182.22

%

 

169.37

%

ACL LHFI / nonaccrual LHFI

   (excl individually analyzed loans)

 

273.60

%

 

301.44

%

 

320.80

%

 

399.19

%

 

466.03

%

 
CAPITAL RATIOS
Total equity / total assets

 

8.54

%

 

8.53

%

 

8.28

%

 

8.28

%

 

8.78

%

Tangible equity / tangible assets

 

6.57

%

 

6.56

%

 

6.35

%

 

6.27

%

 

6.67

%

Tangible equity / risk-weighted assets

 

7.81

%

 

7.91

%

 

7.94

%

 

7.61

%

 

8.15

%

Tier 1 leverage ratio

 

8.49

%

 

8.35

%

 

8.29

%

 

8.47

%

 

9.01

%

Common equity tier 1 capital ratio

 

9.89

%

 

9.87

%

 

9.76

%

 

9.74

%

 

10.63

%

Tier 1 risk-based capital ratio

 

10.29

%

 

10.27

%

 

10.17

%

 

10.15

%

 

11.06

%

Total risk-based capital ratio

 

12.11

%

 

12.08

%

 

11.95

%

 

11.91

%

 

12.85

%

 
STOCK PERFORMANCE
Market value-Close

$

21.73

 

$

21.12

 

$

24.70

 

$

34.91

 

$

30.63

 

Book value

$

25.71

 

$

25.73

 

$

25.59

 

$

24.47

 

$

24.76

 

Tangible book value

$

19.37

 

$

19.38

 

$

19.24

 

$

18.11

 

$

18.39

 

 
(1) See Note 7 – Non-GAAP Financial Measures in the Notes to Consolidated Financials for Trustmark’s efficiency ratio calculation.
(2) Excludes PPP loans.
 

See Notes to Consolidated Financials

 

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2023

($ in thousands)

(unaudited)

Note 1 - Litigation Settlement

As previously announced, on December 31, 2022, Trustmark National Bank (TNB) agreed to a settlement in principle (the Stanford Settlement) relating to litigation involving the Stanford Financial Group. On January 13, 2023, TNB entered into a Settlement Agreement (the Stanford Settlement Agreement) reflecting the terms of the Stanford Settlement. The parties to the Stanford Settlement Agreement are, on the one hand, (i) Ralph S. Janvey, solely in his capacity as the court-appointed receiver (the Stanford Receiver) for the Stanford Receivership Estate; (ii) the Official Stanford Investors Committee; (iii) each of the plaintiffs in the Rotstain and Smith Actions; and, on the other hand, (iv) TNB. Under the terms of the Stanford Settlement Agreement, the parties agreed to settle and dismiss the Rotstain Action, the Smith Action, and all current or future claims by plaintiffs in either such Action arising from or related to Stanford. In addition, the Stanford Settlement Agreement provided that the parties would request dismissal of the Jackson Action pursuant to the terms of the bar orders described below. If the Court’s approval (as described below) of the Stanford Settlement Agreement, including the bar orders described below, is upheld on appeal, TNB will make a one-time cash payment of $100.0 million to the Stanford Receiver.

The Stanford Settlement Agreement included the parties’ agreement to seek the Northern District of Texas District Court’s entry of bar orders prohibiting any continued or future claims by the plaintiffs in the Actions or by any other person or entity against TNB and its related parties relating to Stanford, whether asserted to date or not. The bar orders therefore would prohibit all litigation relating to Stanford described herein, including not only the Actions and any pending matters but also any actions that may be brought in the future. Final Court approval of these bar orders is a condition of the Stanford Settlement.

The Stanford Settlement Agreement is also subject to notice to Stanford’s investor claimants (which has been provided) and final, non-appealable approval by the U.S. District Court for the Northern District of Texas. While TNB believes that the Stanford Settlement Agreement is consistent with the terms of prior Stanford-related settlements that have been approved by the Court and were not successfully appealed, it is possible that the Court’s approval of the Stanford Settlement Agreement (which has occurred, as described further below) may not be upheld on appeal.

The Stanford Settlement Agreement also provides that TNB denies and makes no admission of liability or wrongdoing in connection with any Stanford matter. As has been the case throughout the pendency of the Actions, TNB expressly denies any liability or wrongdoing with respect to any matter alleged in regard to the multi-billion-dollar Ponzi scheme operated by Stanford for almost 20 years. TNB’s relationship with Stanford began as a result of TNB’s acquisition of a Houston-based bank in August 2006, and consisted of ordinary banking services provided to business deposit customers.

The foregoing description of the terms of the Stanford Settlement Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Stanford Settlement Agreement, a copy of which is filed as Exhibit 10.ai to the 2022 Annual Report and is incorporated herein by reference.

On January 20, 2023, the U.S. District Court for the Northern District of Texas entered an order preliminarily finding that the Stanford Settlement is fair, reasonable, and equitable; has no obvious deficiencies; and is the product of serious, informed, good faith, and arm’s-length negotiations. Following the provision of notice as required by the Stanford Settlement Agreement and by the Court’s preliminary order, the Court (Judge David C. Godbey, presiding) held a Final Approval Hearing on May 3, 2023, at which the Court approved the Stanford Settlement from the bench. On May 4, 2023, Judge Godbey signed the written orders confirming his oral ruling, including the bar order contemplated by the Stanford Settlement Agreement and the judgment and bar order with respect to the Jackson Action.

On May 10, 2023, Robert Allen Stanford, writing from prison, appealed the District Court’s approval of the Stanford Settlement to the Fifth Circuit Court of Appeals. On June 12, 2023, the Stanford Receiver moved to dismiss the appeal as frivolous. On July 25, 2023, a three-judge panel of the Fifth Circuit issued a per curiam order dismissing Stanford’s appeal as frivolous. On August 8, 2023, Mr. Stanford filed a motion for stay of mandate pending petition for certiorari. On August 22, 2023, the Fifth Circuit denied the motion for stay of mandate. On August 30, 2023, the Fifth Circuit issued the mandate.

The Stanford Settlement will become effective when the trial court’s ruling approving the Stanford Settlement and entering the bar order becomes final and non-appealable, as defined in the Stanford Settlement Agreement (the Stanford Settlement Effective Date). Within five days of the Stanford Settlement Effective Date, the parties to the Rotstain and Smith Actions will file agreed dismissals of those cases. Absent any further appeal in either of the Rotstain or Smith Actions, those dismissals will become final 30 days after entered and signed by the respective judges. TNB will be required to make the Stanford Settlement payment within 30 days after those dismissals become final. Any further appeal of any of the orders described above would delay the making of the Stanford Settlement payment.

On August 11, 2023, the Stanford Receiver filed a Motion to Enforce Settlement Agreement in the Northern District of Texas District Court, asking Judge Godbey to rule that the Stanford Settlement Effective Date has occurred. The Stanford Receiver took the position that Mr. Stanford’s appeals are frivolous and do not prevent the trial court’s ruling from becoming final and non-appealable, as defined in the Stanford Settlement Agreement. TNB filed a response in opposition to the Stanford Receiver’s Motion to Enforce. The trial court has not yet ruled on the Motion to Enforce. On September 22, 2023, the Stanford Receiver filed a Motion to Enjoin, requesting that the trial court enjoin Mr. Stanford from making court filings in any Stanford-related case, including notices of appeal, without obtaining leave of the court. The court has not yet ruled on the Motion to Enjoin.

Pending the resolution of the Stanford Settlement approval process, the Rotstain, Smith and Jackson Actions are stayed.

TNB and Trustmark Corporation determined that it was in the best interest of TNB, Trustmark Corporation and the shareholders of Trustmark Corporation to enter into the Stanford Settlement and the Stanford Settlement Agreement to eliminate the risk, ongoing expense, uncertainty as to ultimate outcome, and imposition on management and the business of TNB of further litigation of the Actions and related Stanford claims.

As previously announced, on August 30, 2023, TNB agreed to a settlement in principle (the Adams/Madison Timber Settlement) relating to litigation and claims involving Arthur Lamar Adams and Madison Timber Properties, LLC (collectively, Adams/Madison Timber). On October 9, 2023, TNB entered into a Settlement Agreement (the Adams/Madison Timber Settlement Agreement) reflecting the terms of the Adams/Madison Timber Settlement. The parties to the Adams/Madison Timber Settlement are, on the one hand, Alysson Mills in her capacity as Court-appointed Receiver (the Adams/Madison Timber Receiver); and, on the other hand, TNB. Under the terms of the Adams/Madison Timber Settlement Agreement, the parties agreed to settle and dismiss the Adams/Madison Timber Action, and the Adams/Madison Timber Receiver will fully release all claims against TNB and any of its employees, agents and representatives. The Adams/Madison Timber Settlement includes the parties’ agreement to seek the Court’s entry of bar orders prohibiting any continued or future claims by anyone against TNB and its related parties relating to Adams/Madison Timber, whether asserted to date or not. The bar orders therefore would prohibit all litigation relating to Adams/Madison Timber described herein. Final Court approval of a bar order is a condition of the Adams/Madison Timber Settlement.

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2023

($ in thousands)

(unaudited)

Note 1 - Litigation Settlement (continued)

The Adams/Madison Timber Settlement is also subject to notice to Adams/Madison Timber investors, and final, non-appealable approval by the Court and entry of a judgment dismissing the Lawsuit against TNB. The timing of any final decision by the Court is subject to the discretion of the Court and any appeal. If the Adams/Madison Timber Settlement, including the bar order described above, is approved by the Court and is not subject to further appeal, TNB will make a one-time cash payment of $6.5 million to the Adams/Madison Timber Receiver.

While TNB believes that the Adams/Madison Timber Settlement is consistent with the terms of settlements in similar cases that have been approved and were not successfully appealed, it is possible that the Court may decide not to approve the Adams/Madison Timber Settlement Agreement or that the Court of Appeals could reject the Adams/Madison Timber Settlement Agreement on an appeal, either of which could render the Adams/Madison Timber Settlement a nullity.

At the time of the entry into the Stanford Settlement as described above, Trustmark Corporation recognized $100.0 million of litigation settlement expense, as well as an additional $750 thousand in legal fees, which were included in noninterest expense related to the Stanford litigation during the fourth quarter of 2022. As a result of the entry into the Adams/Madison Timber Settlement as described above, Trustmark Corporation recognized $6.5 million of litigation settlement expense which was included in noninterest expense related to the Adams/Madison Timber litigation during the third quarter of 2023. Trustmark Corporation expects that both the Stanford Settlement and Adams/Madison Timber Settlement will be tax deductible. Trustmark Corporation and TNB remain substantially above levels considered to be well-capitalized under all relevant standards.

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2023

($ in thousands)

(unaudited)

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:

 

 

9/30/2023

 

 

6/30/2023

 

 

3/31/2023

 

 

12/31/2022

 

 

9/30/2022

 

SECURITIES AVAILABLE FOR SALE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

$

363,476

 

 

$

362,966

 

 

$

386,903

 

 

$

391,513

 

 

$

416,278

 

U.S. Government agency obligations

 

 

6,780

 

 

 

6,999

 

 

 

7,254

 

 

 

7,766

 

 

 

9,116

 

Obligations of states and political subdivisions

 

 

4,642

 

 

 

4,813

 

 

 

4,907

 

 

 

4,862

 

 

 

4,763

 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage pass-through securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guaranteed by GNMA

 

 

22,881

 

 

 

25,336

 

 

 

26,851

 

 

 

27,097

 

 

 

28,164

 

Issued by FNMA and FHLMC

 

 

1,171,521

 

 

 

1,250,435

 

 

 

1,317,848

 

 

 

1,345,463

 

 

 

1,718,057

 

Other residential mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

90,402

 

 

 

98,388

 

 

 

108,192

 

 

 

115,140

 

 

 

126,138

 

Commercial mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

106,472

 

 

 

122,946

 

 

 

132,207

 

 

 

132,241

 

 

 

141,970

 

Total securities available for sale

 

$

1,766,174

 

 

$

1,871,883

 

 

$

1,984,162

 

 

$

2,024,082

 

 

$

2,444,486

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SECURITIES HELD TO MATURITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

$

28,872

 

 

$

28,679

 

 

$

28,486

 

 

$

28,295

 

 

$

 

Obligations of states and political subdivisions

 

 

341

 

 

 

1,180

 

 

 

4,507

 

 

 

4,510

 

 

 

4,512

 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage pass-through securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guaranteed by GNMA

 

 

13,090

 

 

 

13,235

 

 

 

4,336

 

 

 

4,442

 

 

 

4,527

 

Issued by FNMA and FHLMC

 

 

474,003

 

 

 

484,679

 

 

 

497,854

 

 

 

509,311

 

 

 

179,375

 

Other residential mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

162,031

 

 

 

171,002

 

 

 

179,334

 

 

 

188,201

 

 

 

197,923

 

Commercial mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

759,950

 

 

 

759,890

 

 

 

759,821

 

 

 

759,755

 

 

 

770,648

 

Total securities held to maturity

 

$

1,438,287

 

 

$

1,458,665

 

 

$

1,474,338

 

 

$

1,494,514

 

 

$

1,156,985

 

During the fourth quarter of 2022, Trustmark reclassified $422.9 million 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 $57.1 million ($42.8 million, net of tax). The net unrealized holding loss will be 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.

During the second quarter of 2022, Trustmark reclassified $343.1 million 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 $34.8 million ($26.1 million, net of tax). The net unrealized holding loss will be 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, 2023, the net unamortized, unrealized loss included in accumulated other comprehensive income (loss) in the accompanying balance sheet for securities held to maturity transferred from securities available for sale totaled $60.4 million.

Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 99.9% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE.

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2023

($ in thousands)

(unaudited)

Note 3 – Loan Composition

LHFI consisted of the following during the periods presented:

LHFI BY TYPE

 

9/30/2023

 

 

6/30/2023

 

 

3/31/2023

 

 

12/31/2022

 

 

9/30/2022

 

Loans secured by real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction, land development and other land loans

 

$

1,609,326

 

 

$

1,722,657

 

 

$

1,723,772

 

 

$

1,719,542

 

 

$

1,647,395

 

Secured by 1-4 family residential properties

 

 

2,893,606

 

 

 

2,854,182

 

 

 

2,822,048

 

 

 

2,775,847

 

 

 

2,597,112

 

Secured by nonfarm, nonresidential properties

 

 

3,569,671

 

 

 

3,471,728

 

 

 

3,375,579

 

 

 

3,278,830

 

 

 

3,206,946

 

Other real estate secured

 

 

1,218,499

 

 

 

954,410

 

 

 

847,527

 

 

 

742,538

 

 

 

593,119

 

Commercial and industrial loans

 

 

1,828,924

 

 

 

1,883,480

 

 

 

1,882,360

 

 

 

1,821,259

 

 

 

1,689,532

 

Consumer loans

 

 

161,940

 

 

 

163,788

 

 

 

162,911

 

 

 

166,425

 

 

 

163,412

 

State and other political subdivision loans

 

 

1,056,569

 

 

 

1,111,710

 

 

 

1,193,727

 

 

 

1,223,863

 

 

 

1,188,703

 

Other loans

 

 

471,724

 

 

 

452,012

 

 

 

489,271

 

 

 

475,735

 

 

 

499,845

 

LHFI

 

 

12,810,259

 

 

 

12,613,967

 

 

 

12,497,195

 

 

 

12,204,039

 

 

 

11,586,064

 

ACL LHFI

 

 

(134,031

)

 

 

(129,298

)

 

 

(122,239

)

 

 

(120,214

)

 

 

(115,050

)

Net LHFI

 

$

12,676,228

 

 

$

12,484,669

 

 

$

12,374,956

 

 

$

12,083,825

 

 

$

11,471,014

 

The following table presents the LHFI composition by region and reflects each region’s diversified mix of loans:

 

September 30, 2023

 

LHFI - COMPOSITION BY REGION

Total

 

 

Alabama (1)

 

 

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

$

1,609,326

 

 

$

663,662

 

 

$

48,627

 

 

$

420,356

 

 

$

36,803

 

 

$

439,878

 

Secured by 1-4 family residential properties

 

2,893,606

 

 

 

143,673

 

 

 

53,575

 

 

 

2,582,837

 

 

 

83,462

 

 

 

30,059

 

Secured by nonfarm, nonresidential properties

 

3,569,671

 

 

 

1,034,874

 

 

 

225,415

 

 

 

1,472,990

 

 

 

158,448

 

 

 

677,944

 

Other real estate secured

 

1,218,499

 

 

 

574,432

 

 

 

1,786

 

 

 

339,070

 

 

 

7,234

 

 

 

295,977

 

Commercial and industrial loans

 

1,828,924

 

 

 

596,259

 

 

 

24,918

 

 

 

748,944

 

 

 

210,930

 

 

 

247,873

 

Consumer loans

 

161,940

 

 

 

22,496

 

 

 

7,870

 

 

 

100,908

 

 

 

20,332

 

 

 

10,334

 

State and other political subdivision loans

 

1,056,569

 

 

 

75,952

 

 

 

61,154

 

 

 

794,052

 

 

 

25,302

 

 

 

100,109

 

Other loans

 

471,724

 

 

 

159,267

 

 

 

8,615

 

 

 

198,567

 

 

 

32,950

 

 

 

72,325

 

Loans

$

12,810,259

 

 

$

3,270,615

 

 

$

431,960

 

 

$

6,657,724

 

 

$

575,461

 

 

$

1,874,499

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION

 

 

 

 

 

 

 

Lots

$

70,356

 

 

$

28,476

 

 

$

9,633

 

 

$

17,847

 

 

$

3,786

 

 

$

10,614

 

Development

 

141,561

 

 

 

66,958

 

 

 

1,264

 

 

 

37,430

 

 

 

9,547

 

 

 

26,362

 

Unimproved land

 

104,733

 

 

 

21,528

 

 

 

12,079

 

 

 

33,736

 

 

 

8,399

 

 

 

28,991

 

1-4 family construction

 

338,731

 

 

 

175,267

 

 

 

17,871

 

 

 

91,549

 

 

 

15,071

 

 

 

38,973

 

Other construction

 

953,945

 

 

 

371,433

 

 

 

7,780

 

 

 

239,794

 

 

 

 

 

 

334,938

 

Construction, land development and other land loans

$

1,609,326

 

 

$

663,662

 

 

$

48,627

 

 

$

420,356

 

 

$

36,803

 

 

$

439,878

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes Georgia Loan Production Office.

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2023

($ in thousands)

(unaudited)

Note 3 – Loan Composition (continued)

 

 

September 30, 2023

 

 

 

Total

 

 

Alabama (1)

 

 

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

 

$

347,583

 

 

$

113,885

 

 

$

26,299

 

 

$

117,698

 

 

$

20,497

 

 

$

69,204

 

Office

 

 

279,701

 

 

 

102,062

 

 

 

17,527

 

 

 

90,600

 

 

 

1,679

 

 

 

67,833

 

Hotel/motel

 

 

302,738

 

 

 

172,577

 

 

 

50,221

 

 

 

53,467

 

 

 

26,473

 

 

 

 

Mini-storage

 

 

158,429

 

 

 

32,591

 

 

 

1,952

 

 

 

103,801

 

 

 

765

 

 

 

19,320

 

Industrial

 

 

401,023

 

 

 

90,512

 

 

 

20,175

 

 

 

134,431

 

 

 

9,839

 

 

 

146,066

 

Health care

 

 

96,798

 

 

 

68,699

 

 

 

 

 

 

25,316

 

 

 

335

 

 

 

2,448

 

Convenience stores

 

 

30,278

 

 

 

7,105

 

 

 

432

 

 

 

13,618

 

 

 

561

 

 

 

8,562

 

Nursing homes/senior living

 

 

500,572

 

 

 

224,541

 

 

 

 

 

 

158,619

 

 

 

5,076

 

 

 

112,336

 

Other

 

 

128,293

 

 

 

46,672

 

 

 

9,382

 

 

 

53,862

 

 

 

8,558

 

 

 

9,819

 

Total non-owner occupied loans

 

 

2,245,415

 

 

 

858,644

 

 

 

125,988

 

 

 

751,412

 

 

 

73,783

 

 

 

435,588

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Owner-occupied:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office

 

 

156,016

 

 

 

43,789

 

 

 

35,448

 

 

 

46,191

 

 

 

11,153

 

 

 

19,435

 

Churches

 

 

62,835

 

 

 

16,432

 

 

 

4,261

 

 

 

36,020

 

 

 

3,594

 

 

 

2,528

 

Industrial warehouses

 

 

164,150

 

 

 

15,231

 

 

 

3,957

 

 

 

40,616

 

 

 

17,002

 

 

 

87,344

 

Health care

 

 

126,980

 

 

 

11,400

 

 

 

6,017

 

 

 

88,912

 

 

 

2,287

 

 

 

18,364

 

Convenience stores

 

 

143,188

 

 

 

11,801

 

 

 

29,443

 

 

 

67,261

 

 

 

196

 

 

 

34,487

 

Retail

 

 

90,471

 

 

 

10,370

 

 

 

13,880

 

 

 

39,378

 

 

 

17,836

 

 

 

9,007

 

Restaurants

 

 

57,112

 

 

 

4,095

 

 

 

3,467

 

 

 

31,116

 

 

 

15,181

 

 

 

3,253

 

Auto dealerships

 

 

44,669

 

 

 

5,780

 

 

 

206

 

 

 

21,859

 

 

 

16,824

 

 

 

 

Nursing homes/senior living

 

 

346,129

 

 

 

43,995

 

 

 

 

 

 

275,934

 

 

 

 

 

 

26,200

 

Other

 

 

132,706

 

 

 

13,337

 

 

 

2,748

 

 

 

74,291

 

 

 

592

 

 

 

41,738

 

Total owner-occupied loans

 

 

1,324,256

 

 

 

176,230

 

 

 

99,427

 

 

 

721,578

 

 

 

84,665

 

 

 

242,356

 

Loans secured by nonfarm, nonresidential properties

 

$

3,569,671

 

 

$

1,034,874

 

 

$

225,415

 

 

$

1,472,990

 

 

$

158,448

 

 

$

677,944

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes Georgia Loan Production Office.

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

 

 

 

9/30/2023

 

 

6/30/2023

 

 

3/31/2023

 

 

12/31/2022

 

 

9/30/2022

 

 

9/30/2023

 

 

9/30/2022

 

Securities – taxable

 

 

1.89

%

 

 

1.87

%

 

 

1.85

%

 

 

1.71

%

 

 

1.62

%

 

 

1.87

%

 

 

1.50

%

Securities – nontaxable

 

 

4.05

%

 

 

4.25

%

 

 

4.00

%

 

 

3.95

%

 

 

3.97

%

 

 

4.09

%

 

 

3.98

%

Securities – total

 

 

1.89

%

 

 

1.87

%

 

 

1.86

%

 

 

1.72

%

 

 

1.63

%

 

 

1.87

%

 

 

1.51

%

PPP loans

 

 

 

 

 

 

 

 

 

 

 

12.39

%

 

 

7.51

%

 

 

 

 

 

3.83

%

Loans - LHFI & LHFS

 

 

6.34

%

 

 

6.08

%

 

 

5.79

%

 

 

5.27

%

 

 

4.48

%

 

 

6.07

%

 

 

3.97

%

Loans - total

 

 

6.34

%

 

 

6.08

%

 

 

5.79

%

 

 

5.27

%

 

 

4.48

%

 

 

6.07

%

 

 

3.97

%

Fed funds sold & reverse repurchases

 

 

5.17

%

 

 

5.51

%

 

 

5.11

%

 

 

4.29

%

 

 

3.51

%

 

 

5.34

%

 

 

3.06

%

Other earning assets

 

 

5.01

%

 

 

5.36

%

 

 

4.09

%

 

 

3.76

%

 

 

1.82

%

 

 

4.87

%

 

 

0.56

%

Total earning assets

 

 

5.38

%

 

 

5.16

%

 

 

4.87

%

 

 

4.40

%

 

 

3.71

%

 

 

5.14

%

 

 

3.14

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

 

2.39

%

 

 

1.96

%

 

 

1.53

%

 

 

0.71

%

 

 

0.20

%

 

 

1.97

%

 

 

0.14

%

Fed funds purchased & repurchases

 

 

5.14

%

 

 

5.01

%

 

 

4.49

%

 

 

3.44

%

 

 

1.95

%

 

 

4.87

%

 

 

0.94

%

Other borrowings

 

 

5.32

%

 

 

5.12

%

 

 

4.87

%

 

 

3.73

%

 

 

2.89

%

 

 

5.10

%

 

 

2.56

%

Total interest-bearing liabilities

 

 

2.72

%

 

 

2.42

%

 

 

1.98

%

 

 

1.03

%

 

 

0.31

%

 

 

2.38

%

 

 

0.21

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Deposits

 

 

1.84

%

 

 

1.48

%

 

 

1.13

%

 

 

0.51

%

 

 

0.14

%

 

 

1.49

%

 

 

0.10

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

 

3.29

%

 

 

3.33

%

 

 

3.39

%

 

 

3.66

%

 

 

3.50

%

 

 

3.34

%

 

 

3.00

%

Net interest margin excluding PPP loans

   and the FRB balance

 

 

3.24

%

 

 

3.23

%

 

 

3.36

%

 

 

3.66

%

 

 

3.53

%

 

 

3.27

%

 

 

3.17

%

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2023

($ in thousands)

(unaudited)

Note 4 – Yields on Earning Assets and Interest-Bearing Liabilities (continued)

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 PPP loans and the balance held at the Federal Reserve Bank of Atlanta (FRB), which equals reported net interest income-FTE excluding interest income on PPP loans and the FRB balance, annualized, as a percent of average earning assets excluding average PPP loans and the FRB balance.

For the third quarter of 2023, the average FRB balance totaled $566.3 million compared to $777.0 million for the second quarter of 2023 and is included in other earning assets in the accompanying average consolidated balance sheets.

The net interest margin excluding PPP loans and the FRB balance remained relatively flat when compared to the second quarter of 2023, totaling 3.24% for the third quarter of 2023, as increased yields on the loans held for investment and held for sale portfolio was mostly offset by increased 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 negative hedge ineffectiveness of $1.0 million during the third quarter of 2023.

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

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

9/30/2023

 

 

6/30/2023

 

 

3/31/2023

 

 

12/31/2022

 

 

9/30/2022

 

 

9/30/2023

 

 

9/30/2022

 

Mortgage servicing income, net

 

$

6,916

 

 

$

6,764

 

 

$

6,785

 

 

$

6,636

 

 

$

6,669

 

 

$

20,465

 

 

$

19,655

 

Change in fair value-MSR from runoff

 

 

(3,203

)

 

 

(2,710

)

 

 

(1,145

)

 

 

(2,981

)

 

 

(3,462

)

 

 

(7,058

)

 

 

(11,053

)

Gain on sales of loans, net

 

 

3,748

 

 

 

3,887

 

 

 

3,797

 

 

 

3,328

 

 

 

4,597

 

 

 

11,432

 

 

 

16,850

 

Mortgage banking income before hedge

   ineffectiveness

 

 

7,461

 

 

 

7,941

 

 

 

9,437

 

 

 

6,983

 

 

 

7,804

 

 

 

24,839

 

 

 

25,452

 

Change in fair value-MSR from market changes

 

 

6,809

 

 

 

5,898

 

 

 

(3,972

)

 

 

(3,348

)

 

 

10,770

 

 

 

8,735

 

 

 

41,529

 

Change in fair value of derivatives

 

 

(7,812

)

 

 

(7,239

)

 

 

2,174

 

 

 

(227

)

 

 

(11,698

)

 

 

(12,877

)

 

 

(42,083

)

Net positive (negative) hedge ineffectiveness

 

 

(1,003

)

 

 

(1,341

)

 

 

(1,798

)

 

 

(3,575

)

 

 

(928

)

 

 

(4,142

)

 

 

(554

)

Mortgage banking, net

 

$

6,458

 

 

$

6,600

 

 

$

7,639

 

 

$

3,408

 

 

$

6,876

 

 

$

20,697

 

 

$

24,898

 

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2023

($ in thousands)

(unaudited)

Note 6 – Other Noninterest Income and Expense

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

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

9/30/2023

 

 

6/30/2023

 

 

3/31/2023

 

 

12/31/2022

 

 

9/30/2022

 

 

9/30/2023

 

 

9/30/2022

 

Partnership amortization for tax credit purposes

 

$

(1,995

)

 

$

(2,019

)

 

$

(1,961

)

 

$

(1,869

)

 

$

(1,531

)

 

$

(5,975

)

 

$

(4,342

)

Increase in life insurance cash surrender value

 

 

1,784

 

 

 

1,716

 

 

 

1,693

 

 

 

1,687

 

 

 

1,676

 

 

 

5,193

 

 

 

4,986

 

Other miscellaneous income

 

 

2,610

 

 

 

3,998

 

 

 

2,782

 

 

 

2,493

 

 

 

2,273

 

 

 

9,390

 

 

 

6,887

 

Total other, net

 

$

2,399

 

 

$

3,695

 

 

$

2,514

 

 

$

2,311

 

 

$

2,418

 

 

$

8,608

 

 

$

7,531

 

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

 

 

Nine Months Ended

 

 

 

9/30/2023

 

 

6/30/2023

 

 

3/31/2023

 

 

12/31/2022

 

 

9/30/2022

 

 

9/30/2023

 

 

9/30/2022

 

Loan expense (1)

 

$

3,130

 

 

$

3,066

 

 

$

2,538

 

 

$

2,908

 

 

$

2,866

 

 

$

8,734

 

 

$

9,341

 

Amortization of intangibles

 

 

129

 

 

 

130

 

 

 

288

 

 

 

312

 

 

 

312

 

 

 

547

 

 

 

1,122

 

FDIC assessment expense

 

 

3,765

 

 

 

2,550

 

 

 

2,370

 

 

 

2,130

 

 

 

1,945

 

 

 

8,685

 

 

 

5,255

 

Other real estate expense, net

 

 

(40

)

 

 

171

 

 

 

172

 

 

 

18

 

 

 

497

 

 

 

303

 

 

 

1,155

 

Other miscellaneous expense

 

 

8,714

 

 

 

8,585

 

 

 

9,443

 

 

 

9,767

 

 

 

8,117

 

 

 

26,742

 

 

 

23,834

 

Total other expense (1)

 

$

15,698

 

 

$

14,502

 

 

$

14,811

 

 

$

15,135

 

 

$

13,737

 

 

$

45,011

 

 

$

40,707

 

 

(1) During the first quarter of 2023, Trustmark reclassified its debit card transaction fees from other expense to services and fees. Prior periods have been reclassified accordingly.

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’s Common Equity Tier 1 capital includes common stock, capital surplus and retained earnings, and is reduced by goodwill and other intangible assets, net of associated net deferred tax liabilities as well as disallowed deferred tax assets and threshold deductions as applicable.

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 intangible 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 audited consolidated financial statements and the notes related thereto in their entirety and not to rely on any single financial measure.

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2023

($ in thousands)

(unaudited)

Note 7 – Non-GAAP Financial Measures (continued)

 

 

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

 

 

9/30/2023

 

 

6/30/2023

 

 

3/31/2023

 

 

12/31/2022

 

 

9/30/2022

 

 

9/30/2023

 

 

9/30/2022

 

TANGIBLE EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE BALANCES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders' equity

 

 

 

$

1,582,885

 

 

$

1,580,291

 

 

$

1,523,828

 

 

$

1,493,291

 

 

$

1,606,469

 

 

$

1,562,551

 

 

$

1,642,450

 

Less: Goodwill

 

 

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

Identifiable intangible assets

 

 

 

 

(3,174

)

 

 

(3,301

)

 

 

(3,523

)

 

 

(3,816

)

 

 

(4,131

)

 

 

(3,331

)

 

 

(4,479

)

Total average tangible equity

 

 

 

$

1,195,474

 

 

$

1,192,753

 

 

$

1,136,068

 

 

$

1,105,238

 

 

$

1,218,101

 

 

$

1,174,983

 

 

$

1,253,734

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PERIOD END BALANCES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders' equity

 

 

 

$

1,570,351

 

 

$

1,571,193

 

 

$

1,562,099

 

 

$

1,492,268

 

 

$

1,508,945

 

 

 

 

 

 

 

Less: Goodwill

 

 

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

 

 

 

 

 

 

Identifiable intangible assets

 

 

 

 

(3,093

)

 

 

(3,222

)

 

 

(3,352

)

 

 

(3,640

)

 

 

(3,952

)

 

 

 

 

 

 

Total tangible equity

 

(a)

 

$

1,183,021

 

 

$

1,183,734

 

 

$

1,174,510

 

 

$

1,104,391

 

 

$

1,120,756

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TANGIBLE ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

 

$

18,390,839

 

 

$

18,422,626

 

 

$

18,877,178

 

 

$

18,015,478

 

 

$

17,190,634

 

 

 

 

 

 

 

Less: Goodwill

 

 

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

 

 

 

 

 

 

Identifiable intangible assets

 

 

 

 

(3,093

)

 

 

(3,222

)

 

 

(3,352

)

 

 

(3,640

)

 

 

(3,952

)

 

 

 

 

 

 

Total tangible assets

 

(b)

 

$

18,003,509

 

 

$

18,035,167

 

 

$

18,489,589

 

 

$

17,627,601

 

 

$

16,802,445

 

 

 

 

 

 

 

Risk-weighted assets

 

(c)

 

$

15,143,531

 

 

$

14,966,614

 

 

$

14,793,893

 

 

$

14,521,078

 

 

$

13,748,819

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) ADJUSTED FOR INTANGIBLE AMORTIZATION

 

 

 

 

 

 

 

Net income (loss)

 

 

 

$

34,029

 

 

$

45,037

 

 

$

50,300

 

 

$

(34,063

)

 

$

42,455

 

 

$

129,366

 

 

$

105,950

 

Plus: Intangible amortization net of tax

 

 

 

 

96

 

 

 

97

 

 

 

216

 

 

 

234

 

 

 

234

 

 

 

409

 

 

 

842

 

Net income (loss) adjusted for intangible amortization

 

$

34,125

 

 

$

45,134

 

 

$

50,516

 

 

$

(33,829

)

 

$

42,689

 

 

$

129,775

 

 

$

106,792

 

Period end common shares outstanding

 

(d)

 

 

61,070,095

 

 

 

61,069,036

 

 

 

61,048,516

 

 

 

60,977,686

 

 

 

60,953,864

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TANGIBLE COMMON EQUITY MEASUREMENTS

 

 

 

 

 

 

 

Return on average tangible equity (1)

 

 

 

 

11.32

%

 

 

15.18

%

 

 

18.03

%

 

 

-12.14

%

 

 

13.90

%

 

 

14.77

%

 

 

11.39

%

Tangible equity/tangible assets

 

(a)/(b)

 

 

6.57

%

 

 

6.56

%

 

 

6.35

%

 

 

6.27

%

 

 

6.67

%

 

 

 

 

 

 

Tangible equity/risk-weighted assets

 

(a)/(c)

 

 

7.81

%

 

 

7.91

%

 

 

7.94

%

 

 

7.61

%

 

 

8.15

%

 

 

 

 

 

 

Tangible book value

 

(a)/(d)*1,000

 

$

19.37

 

 

$

19.38

 

 

$

19.24

 

 

$

18.11

 

 

$

18.39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMMON EQUITY TIER 1 CAPITAL (CET1)

 

 

 

 

 

 

 

Total shareholders' equity

 

 

 

$

1,570,351

 

 

$

1,571,193

 

 

$

1,562,099

 

 

$

1,492,268

 

 

$

1,508,945

 

 

 

 

 

 

 

CECL transition adjustment

 

 

 

 

13,000

 

 

 

13,000

 

 

 

13,000

 

 

 

19,500

 

 

 

19,500

 

 

 

 

 

 

 

AOCI-related adjustments

 

 

 

 

287,888

 

 

 

265,704

 

 

 

242,381

 

 

 

275,403

 

 

 

306,412

 

 

 

 

 

 

 

CET1 adjustments and deductions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill net of associated deferred

   tax liabilities (DTLs)

 

 

(370,219

)

 

 

(370,227

)

 

 

(370,234

)

 

 

(370,241

)

 

 

(370,217

)

 

 

 

 

 

 

Other adjustments and deductions

   for CET1 (2)

 

 

(2,803

)

 

 

(2,915

)

 

 

(3,275

)

 

 

(3,258

)

 

 

(3,506

)

 

 

 

 

 

 

CET1 capital

 

(e)

 

 

1,498,217

 

 

 

1,476,755

 

 

 

1,443,971

 

 

 

1,413,672

 

 

 

1,461,134

 

 

 

 

 

 

 

Additional tier 1 capital instruments

   plus related surplus

 

 

60,000

 

 

 

60,000

 

 

 

60,000

 

 

 

60,000

 

 

 

60,000

 

 

 

 

 

 

 

Tier 1 capital

 

 

 

$

1,558,217

 

 

$

1,536,755

 

 

$

1,503,971

 

 

$

1,473,672

 

 

$

1,521,134

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity tier 1 capital ratio

 

(e)/(c)

 

 

9.89

%

 

 

9.87

%

 

 

9.76

%

 

 

9.74

%

 

 

10.63

%

 

 

 

 

 

 

 

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

(2) Includes other intangible assets, net of DTLs, disallowed deferred tax assets (DTAs), threshold deductions and transition adjustments, as applicable.

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2023

($ in thousands)

(unaudited)

Note 7 – 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-provision net revenue (PPNR) during the periods presented:

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

9/30/2023

 

 

6/30/2023

 

 

3/31/2023

 

 

12/31/2022

 

 

9/30/2022

 

 

9/30/2023

 

 

9/30/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (GAAP)

 

$

138,637

 

 

$

139,904

 

 

$

137,595

 

 

$

146,583

 

 

$

136,105

 

 

$

416,136

 

 

$

348,125

 

Noninterest income (GAAP)

 

 

52,224

 

 

 

53,553

 

 

 

51,377

 

 

 

45,170

 

 

 

52,606

 

 

 

157,154

 

 

 

159,974

 

Pre-provision revenue

(a)

$

190,861

 

 

$

193,457

 

 

$

188,972

 

 

$

191,753

 

 

$

188,711

 

 

$

573,290

 

 

$

508,099

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense (GAAP)

 

$

140,945

 

 

$

132,218

 

 

$

128,327

 

 

$

231,229

 

 

$

126,698

 

 

$

401,490

 

 

$

371,984

 

Less: Litigation settlement expense

 

 

(6,500

)

 

 

 

 

 

 

 

 

(100,750

)

 

 

 

 

 

(6,500

)

 

 

 

Adjusted noninterest expense - PPNR (Non-GAAP)

(b)

$

134,445

 

 

$

132,218

 

 

$

128,327

 

 

$

130,479

 

 

$

126,698

 

 

$

394,990

 

 

$

371,984

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PPNR (Non-GAAP)

(a)-(b)

$

56,416

 

 

$

61,239

 

 

$

60,645

 

 

$

61,274

 

 

$

62,013

 

 

$

178,300

 

 

$

136,115

 

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

 

Quarter Ended

 

 

 

Nine Months Ended

 

 

9/30/2023

 

 

 

9/30/2022

 

 

 

9/30/2023

 

 

 

9/30/2022

 

 

Amount

 

 

Diluted

EPS

 

 

 

Amount

 

 

Diluted

EPS

 

 

 

Amount

 

 

Diluted

EPS

 

 

 

Amount

 

 

Diluted

EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) (GAAP)

$

34,029

 

 

$

0.56

 

 

 

$

42,455

 

 

$

0.69

 

 

 

$

129,366

 

 

$

2.11

 

 

 

$

105,950

 

 

$

1.72

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Significant non-routine transactions (net of taxes):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Litigation settlement expense

 

4,875

 

 

 

0.08

 

 

 

 

 

 

 

 

 

 

 

4,875

 

 

 

0.08

 

 

 

 

 

 

 

 

Net income adjusted for significant non-routine

   transactions (Non-GAAP)

$

38,904

 

 

$

0.64

 

 

 

$

42,455

 

 

$

0.69

 

 

 

$

134,241

 

 

$

2.19

 

 

 

$

105,950

 

 

$

1.72

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported

(GAAP)

 

 

Adjusted

(Non-

GAAP)

 

 

 

Reported

(GAAP)

 

 

Adjusted

(Non-

GAAP)

 

 

 

Reported

(GAAP)

 

 

Adjusted

(Non-

GAAP)

 

 

 

Reported

(GAAP)

 

 

Adjusted

(Non-

GAAP)

 

Return on average equity

 

8.53

%

 

 

9.74

%

 

 

 

10.48

%

 

n/a

 

 

 

 

11.07

%

 

 

11.48

%

 

 

 

8.62

%

 

n/a

 

Return on average tangible equity

 

11.32

%

 

 

12.92

%

 

 

 

13.90

%

 

n/a

 

 

 

 

14.77

%

 

 

15.31

%

 

 

 

11.39

%

 

n/a

 

Return on average assets

 

0.72

%

 

 

0.83

%

 

 

 

0.98

%

 

n/a

 

 

 

 

0.93

%

 

 

0.96

%

 

 

 

0.81

%

 

n/a

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

n/a - not applicable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2023

($ in thousands)

(unaudited)

Note 7 – Non-GAAP Financial Measures (continued)

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

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

9/30/2023

 

 

6/30/2023

 

 

3/31/2023

 

 

12/31/2022

 

 

9/30/2022

 

 

9/30/2023

 

 

9/30/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total noninterest expense (GAAP)

 

$

140,945

 

 

$

132,218

 

 

$

128,327

 

 

$

231,229

 

 

$

126,698

 

 

$

401,490

 

 

$

371,984

 

Less: Other real estate expense, net

 

 

40

 

 

 

(171

)

 

 

(172

)

 

 

(18

)

 

 

(497

)

 

 

(303

)

 

 

(1,155

)

Amortization of intangibles

 

 

(129

)

 

 

(130

)

 

 

(288

)

 

 

(312

)

 

 

(312

)

 

 

(547

)

 

 

(1,122

)

Charitable contributions resulting in

   state tax credits

 

 

(325

)

 

 

(325

)

 

 

(325

)

 

 

(375

)

 

 

(375

)

 

 

(975

)

 

 

(1,125

)

Litigation settlement expense

 

 

(6,500

)

 

 

 

 

 

 

 

 

(100,750

)

 

 

 

 

 

(6,500

)

 

 

 

Adjusted noninterest expense (Non-GAAP)

(c)

$

134,031

 

 

$

131,592

 

 

$

127,542

 

 

$

129,774

 

 

$

125,514

 

 

$

393,165

 

 

$

368,582

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (GAAP)

 

$

138,637

 

 

$

139,904

 

 

$

137,595

 

 

$

146,583

 

 

$

136,105

 

 

$

416,136

 

 

$

348,125

 

Add: Tax equivalent adjustment

 

 

3,299

 

 

 

3,383

 

 

 

3,477

 

 

 

3,451

 

 

 

2,975

 

 

 

10,159

 

 

 

8,894

 

Net interest income-FTE (Non-GAAP)

(a)

$

141,936

 

 

$

143,287

 

 

$

141,072

 

 

$

150,034

 

 

$

139,080

 

 

$

426,295

 

 

$

357,019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income (GAAP)

 

$

52,224

 

 

$

53,553

 

 

$

51,377

 

 

$

45,170

 

 

$

52,606

 

 

$

157,154

 

 

$

159,974

 

Add: Partnership amortization for tax credit purposes

 

1,995

 

 

 

2,019

 

 

 

1,961

 

 

 

1,869

 

 

 

1,531

 

 

 

5,975

 

 

 

4,342

 

Adjusted noninterest income (Non-GAAP)

(b)

$

54,219

 

 

$

55,572

 

 

$

53,338

 

 

$

47,039

 

 

$

54,137

 

 

$

163,129

 

 

$

164,316

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted revenue (Non-GAAP)

(a)+(b)

$

196,155

 

 

$

198,859

 

 

$

194,410

 

 

$

197,073

 

 

$

193,217

 

 

$

589,424

 

 

$

521,335

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio (Non-GAAP)

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

 

68.33

%

 

 

66.17

%

 

 

65.60

%

 

 

65.85

%

 

 

64.96

%

 

 

66.70

%

 

 

70.70

%

 

Contacts

Trustmark Investor Contacts:

Thomas C. Owens

Treasurer and Principal Financial Officer

601-208-7853

F. Joseph Rein, Jr.

Senior Vice President

601-208-6898

Trustmark Media Contact:

Melanie A. Morgan

Senior Vice President

601-208-2979

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