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Trustmark Corporation Announces Second Quarter 2023 Financial Results

Loan and Deposit Growth Continues, Credit Quality Remains Strong,

Net Interest Income and Noninterest Income Expand

Trustmark Corporation (NASDAQGS:TRMK) reported net income of $45.0 million in the second quarter of 2023, representing diluted earnings per share of $0.74. Trustmark’s performance during the second quarter produced a return on average tangible equity of 15.18% and a return on average assets of 0.96%. The Board of Directors declared a quarterly cash dividend of $0.23 per share payable September 15, 2023, to shareholders of record on September 1, 2023.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230725007677/en/

Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/53477140/en

Second Quarter Highlights

  • Loans held for investment (HFI) increased $116.8 million, or 0.9%, from the prior quarter to $12.6 billion
  • Deposits expanded $130.2 million, or 0.9%, linked-quarter to $14.9 billion
  • Total revenue increased $4.5 million, or 2.4%, linked-quarter to $193.5 million
  • Net interest income (FTE) increased $2.2 million linked-quarter to $143.3 million, resulting in a net interest margin of 3.33%
  • Noninterest income totaled $53.6 million, representing 27.7% of total revenue
  • Credit quality remained strong; net charge-offs represented 4 basis points of average loans

Duane A. Dewey, President and CEO, stated, “Trustmark continued to post solid financial results in the second quarter, reflecting continued loan and deposit growth, expanding net interest income, and growth in our fee-based businesses. During the first six months of 2023, Trustmark’s net income totaled $95.3 million, which represented diluted earnings of $1.56 per share, an increase of 51.5% from the same period in 2022. We have a tremendous team of associates throughout our system that are focused on expanding existing customer relationships as well as demonstrating the value Trustmark can provide potential customers as their trusted financial partner. We have added very talented people across the organization in numerous production and back office roles to meet our objectives. We continue to implement initiatives to improve efficiency, enhance our ability to grow and serve customers, and build long-term value for our shareholders.”

Balance Sheet Management

  • Loans HFI totaled $12.6 billion, up 0.9% from the prior quarter and 15.3% year-over-year
  • Deposits totaled $14.9 billion, up 0.9% from the previous quarter and 1.0% year-over-year
  • Maintained strong capital position with CET1 ratio of 9.87% and total risk-based capital ratio of 12.08%

Loans HFI totaled $12.6 billion at June 30, 2023, reflecting an increase of $116.8 million, or 0.9%, linked-quarter and $1.7 billion, or 15.3%, year-over-year. The linked quarter growth reflected increases in other real estate secured loans, nonfarm, nonresidential loans, and 1-4 family residential loans offset in part by declines in other loans, state and political subdivision loans, and construction, land development and other land loans. Trustmark’s loan portfolio continues to be well-diversified by loan type and geography.

Deposits totaled $14.9 billion at June 30, 2023, up $130.2 million, or 0.9%, from the prior quarter and up $143.7 million, or 1.0%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 84.6% of total deposits at June 30, 2023. Migration into higher-yielding products continued to drive a change in deposit mix from noninterest-bearing deposits, which represented 23.2% of total deposits at June 30, 2023. Interest-bearing deposit costs totaled 1.96% for the second quarter, while the total cost of deposits was 1.48%. The total cost of interest-bearing liabilities was 2.42% for the second 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 June 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 June 30, 2023.

Credit Quality

  • Nonperforming assets represented 0.60% of total loans and other real estate at June 30, 2023
  • Net charge-offs totaled $1.2 million in the second quarter, representing 0.04% of average loans
  • Allowance for credit losses (ACL) represented 1.03% of loans HFI and 301.4% of nonaccrual loans, excluding individually analyzed loans, at June 30, 2023

Nonaccrual loans totaled $75.0 million at June 30, 2023, up $2.7 million from the prior quarter and an increase of $13.0 million year-over-year. Other real estate totaled $1.1 million, reflecting a $547 thousand decrease from the prior quarter and a $1.9 million decline from the prior year.

The provision for credit losses for loans HFI was $8.2 million in the second quarter and was primarily attributable to extended maturities on mortgage loans resulting from lower prepayment speeds, weakening macroeconomic factors, and loan growth. The provision for credit losses for off-balance sheet credit exposures was $245 thousand, primarily driven by weakening macroeconomic factors. Collectively, the provision for credit losses totaled $8.5 million in the second quarter compared to $1.0 million from the prior quarter and $1.1 million in the second quarter of 2022.

Allocation of Trustmark’s $129.3 million ACL on loans HFI represented 0.84% of commercial loans and 1.60% of consumer and home mortgage loans, resulting in an ACL to total loans HFI of 1.03% at June 30, 2023. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.

Revenue Generation

  • Total revenue increased $4.5 million, or 2.4%, linked-quarter
  • Net interest income (FTE) totaled $143.3 million in the second quarter, up 1.6% linked-quarter
  • Noninterest income increased 4.2% linked-quarter to total $53.6 million, representing 27.7% of total revenue in the second quarter

Revenue in the second quarter totaled $193.5 million, an increase of $4.5 million, or 2.4%, from the prior quarter and $27.5 million, or 16.6%, from the prior year. The linked-quarter increase primarily reflects higher net interest income and solid growth in all fee income business with the exception of mortgage banking. The year-over-year growth in revenue is attributed to higher net interest income.

Net interest income (FTE) in the second quarter totaled $143.3 million, resulting in a net interest margin of 3.33%, down 6 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 second quarter totaled $53.6 million, an increase of $2.2 million, or 4.2%, from the prior quarter and a $300 thousand increase year-over-year. With the exception of mortgage banking, all categories increased linked-quarter with other, net and bank card and other fees increasing $1.2 million and $1.1 million, respectively. Year-over-year increases in insurance, other, net and service charges on deposit accounts, were offset in part by declines in bank card and other fees, mortgage banking and wealth management revenue.

Mortgage loan production in the second quarter totaled $431.3 million, an increase of 19.5% from the prior quarter and a decrease of 36.7% year-over-year. Mortgage banking revenue totaled $6.6 million in the second quarter, a decrease of $1.0 million linked-quarter and $1.5 million 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 revenue totaled $14.8 million in the second quarter, up $459 thousand, or 3.2%, from the prior quarter and $1.1 million, or 7.8%, year-over-year. The linked-quarter increase primarily reflected growth in policy fees and other commissions while the year-over-year increase primarily reflected growth in commercial property and casualty commissions. Wealth management revenue in the second quarter totaled $8.9 million, an increase of $102 thousand, or 1.2%, from the prior quarter and a decline of $220 thousand, or 2.4%, year-over-year. The linked-quarter growth reflected higher trust management revenue while the year-over-year decline reflected reduced brokerage revenue.

Noninterest Expense

  • Noninterest expense totaled $132.2 million in the second quarter, up 3.0%, from the prior quarter
  • Adjusted noninterest expense, which excludes other real estate expense, amortization of intangibles, and charitable contributions resulting in state tax credits, totaled $131.6 million in the second quarter, an increase of 3.2% from the prior quarter. Please refer to the Consolidated Financial Information, Note 7 – Non-GAAP Financial Measures

Noninterest expense in the second quarter totaled $132.2 million, an increase of $3.9 million, or 3.0%, when compared to the prior quarter. Salaries and employee benefits increased $1.9 million linked-quarter principally due to commissions and annual merit increases. Services and fees increased $2.8 million, or 11.2%, linked-quarter primarily due to increases in professional fees. Net occupancy expense declined $521 thousand, or 6.8%, while other expense declined $309 thousand, or 2.1%, linked-quarter.

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 $127 million as of June 30, 2023. Implementation of our technology plans continued during the second quarter with conversion of our credit card platform to a best-in-class product for our customers. In addition, advancements in our loan underwriting system were implemented and plans for conversion of our deposit system continued. During the quarter, 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 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, July 26, 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, August 9, 2023, in archived format at the same web address or by calling (877) 344-7529, passcode 7655682.

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 (including uncertainty regarding the federal government's debt limit or a prolonged shutdown of the federal government), 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
June 30, 2023
($ in thousands)
(unaudited)
Linked Quarter Year over Year
QUARTERLY AVERAGE BALANCES 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change
Securities AFS-taxable (1)

$

2,140,505

 

$

2,187,121

 

$

3,094,364

 

$

(46,616

)

-2.1

%

$

(953,859

)

-30.8

%

Securities AFS-nontaxable

 

4,796

 

 

4,812

 

 

5,110

 

 

(16

)

-0.3

%

 

(314

)

-6.1

%

Securities HTM-taxable (1)

 

1,463,086

 

 

1,479,283

 

 

811,599

 

 

(16,197

)

-1.1

%

 

651,487

 

80.3

%

Securities HTM-nontaxable

 

1,718

 

 

4,509

 

 

5,630

 

 

(2,791

)

-61.9

%

 

(3,912

)

-69.5

%

Total securities

 

3,610,105

 

 

3,675,725

 

 

3,916,703

 

 

(65,620

)

-1.8

%

 

(306,598

)

-7.8

%

Paycheck protection program loans (PPP)

 

 

 

 

 

17,746

 

 

 

n/m

 

 

(17,746

)

-100.0

%

Loans (includes loans held for sale)

 

12,732,057

 

 

12,530,449

 

 

10,910,178

 

 

201,608

 

1.6

%

 

1,821,879

 

16.7

%

Fed funds sold and reverse repurchases

 

3,275

 

 

2,379

 

 

110

 

 

896

 

37.7

%

 

3,165

 

n/m

 

Other earning assets

 

903,027

 

 

647,760

 

 

1,139,312

 

 

255,267

 

39.4

%

 

(236,285

)

-20.7

%

Total earning assets

 

17,248,464

 

 

16,856,313

 

 

15,984,049

 

 

392,151

 

2.3

%

 

1,264,415

 

7.9

%

Allowance for credit losses (ACL), loans held

  for investment (LHFI)

 

(121,960

)

 

(119,978

)

 

(99,106

)

 

(1,982

)

-1.7

%

 

(22,854

)

-23.1

%

Other assets

 

1,648,583

 

 

1,762,449

 

 

1,513,127

 

 

(113,866

)

-6.5

%

 

135,456

 

9.0

%

Total assets

$

18,775,087

 

$

18,498,784

 

$

17,398,070

 

$

276,303

 

1.5

%

$

1,377,017

 

7.9

%

 
Interest-bearing demand deposits

$

4,803,737

 

$

4,751,154

 

$

4,578,235

 

$

52,583

 

1.1

%

$

225,502

 

4.9

%

Savings deposits

 

4,002,134

 

 

4,193,764

 

 

4,638,849

 

 

(191,630

)

-4.6

%

 

(636,715

)

-13.7

%

Time deposits

 

2,335,752

 

 

1,907,449

 

 

1,159,065

 

 

428,303

 

22.5

%

 

1,176,687

 

n/m

 

Total interest-bearing deposits

 

11,141,623

 

 

10,852,367

 

 

10,376,149

 

 

289,256

 

2.7

%

 

765,474

 

7.4

%

Fed funds purchased and repurchases

 

389,834

 

 

436,535

 

 

118,753

 

 

(46,701

)

-10.7

%

 

271,081

 

n/m

 

Other borrowings

 

1,330,010

 

 

1,110,843

 

 

80,283

 

 

219,167

 

19.7

%

 

1,249,727

 

n/m

 

Subordinated notes

 

123,337

 

 

123,281

 

 

123,116

 

 

56

 

0.0

%

 

221

 

0.2

%

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

 

0.0

%

 

 

0.0

%

Total interest-bearing liabilities

 

13,046,660

 

 

12,584,882

 

 

10,760,157

 

 

461,778

 

3.7

%

 

2,286,503

 

21.2

%

Noninterest-bearing deposits

 

3,595,927

 

 

3,813,248

 

 

4,590,338

 

 

(217,321

)

-5.7

%

 

(994,411

)

-21.7

%

Other liabilities

 

552,209

 

 

576,826

 

 

439,266

 

 

(24,617

)

-4.3

%

 

112,943

 

25.7

%

Total liabilities

 

17,194,796

 

 

16,974,956

 

 

15,789,761

 

 

219,840

 

1.3

%

 

1,405,035

 

8.9

%

Shareholders' equity

 

1,580,291

 

 

1,523,828

 

 

1,608,309

 

 

56,463

 

3.7

%

 

(28,018

)

-1.7

%

Total liabilities and equity

$

18,775,087

 

$

18,498,784

 

$

17,398,070

 

$

276,303

 

1.5

%

$

1,377,017

 

7.9

%

 
(1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity.
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
June 30, 2023
($ in thousands)
(unaudited)
 
Linked Quarter Year over Year
PERIOD END BALANCES 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change
Cash and due from banks

$

832,052

 

$

1,297,144

 

$

742,461

 

$

(465,092

)

-35.9

%

$

89,591

 

12.1

%

Fed funds sold and reverse repurchases

 

 

 

 

 

 

 

 

n/m

 

 

 

n/m

 

Securities available for sale (1)

 

1,871,883

 

 

1,984,162

 

 

2,644,364

 

 

(112,279

)

-5.7

%

 

(772,481

)

-29.2

%

Securities held to maturity (1)

 

1,458,665

 

 

1,474,338

 

 

1,137,754

 

 

(15,673

)

-1.1

%

 

320,911

 

28.2

%

PPP loans

 

 

 

 

 

12,549

 

 

 

n/m

 

 

(12,549

)

-100.0

%

Loans held for sale (LHFS)

 

181,094

 

 

175,926

 

 

190,186

 

 

5,168

 

2.9

%

 

(9,092

)

-4.8

%

Loans held for investment (LHFI)

 

12,613,967

 

 

12,497,195

 

 

10,944,840

 

 

116,772

 

0.9

%

 

1,669,127

 

15.3

%

ACL LHFI

 

(129,298

)

 

(122,239

)

 

(103,140

)

 

(7,059

)

-5.8

%

 

(26,158

)

-25.4

%

Net LHFI

 

12,484,669

 

 

12,374,956

 

 

10,841,700

 

 

109,713

 

0.9

%

 

1,642,969

 

15.2

%

Premises and equipment, net

 

227,630

 

 

223,975

 

 

207,914

 

 

3,655

 

1.6

%

 

19,716

 

9.5

%

Mortgage servicing rights

 

134,350

 

 

127,206

 

 

121,014

 

 

7,144

 

5.6

%

 

13,336

 

11.0

%

Goodwill

 

384,237

 

 

384,237

 

 

384,237

 

 

 

0.0

%

 

 

0.0

%

Identifiable intangible assets

 

3,222

 

 

3,352

 

 

4,264

 

 

(130

)

-3.9

%

 

(1,042

)

-24.4

%

Other real estate

 

1,137

 

 

1,684

 

 

3,034

 

 

(547

)

-32.5

%

 

(1,897

)

-62.5

%

Operating lease right-of-use assets

 

38,179

 

 

35,315

 

 

34,684

 

 

2,864

 

8.1

%

 

3,495

 

10.1

%

Other assets

 

805,508

 

 

794,883

 

 

627,349

 

 

10,625

 

1.3

%

 

178,159

 

28.4

%

Total assets

$

18,422,626

 

$

18,877,178

 

$

16,951,510

 

$

(454,552

)

-2.4

%

$

1,471,116

 

8.7

%

 
Deposits:
Noninterest-bearing

$

3,461,073

 

$

3,797,055

 

$

4,509,472

 

$

(335,982

)

-8.8

%

$

(1,048,399

)

-23.2

%

Interest-bearing

 

11,452,827

 

 

10,986,606

 

 

10,260,696

 

 

466,221

 

4.2

%

 

1,192,131

 

11.6

%

Total deposits

 

14,913,900

 

 

14,783,661

 

 

14,770,168

 

 

130,239

 

0.9

%

 

143,732

 

1.0

%

Fed funds purchased and repurchases

 

311,179

 

 

477,980

 

 

70,157

 

 

(166,801

)

-34.9

%

 

241,022

 

n/m

 

Other borrowings

 

1,056,714

 

 

1,485,181

 

 

72,553

 

 

(428,467

)

-28.8

%

 

984,161

 

n/m

 

Subordinated notes

 

123,372

 

 

123,317

 

 

123,152

 

 

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

 

34,841

 

 

34,596

 

 

32,949

 

 

245

 

0.7

%

 

1,892

 

5.7

%

Operating lease liabilities

 

40,845

 

 

37,988

 

 

37,108

 

 

2,857

 

7.5

%

 

3,737

 

10.1

%

Other liabilities

 

308,726

 

 

310,500

 

 

196,871

 

 

(1,774

)

-0.6

%

 

111,855

 

56.8

%

Total liabilities

 

16,851,433

 

 

17,315,079

 

 

15,364,814

 

 

(463,646

)

-2.7

%

 

1,486,619

 

9.7

%

Common stock

 

12,724

 

 

12,720

 

 

12,752

 

 

4

 

0.0

%

 

(28

)

-0.2

%

Capital surplus

 

156,834

 

 

155,297

 

 

160,876

 

 

1,537

 

1.0

%

 

(4,042

)

-2.5

%

Retained earnings

 

1,667,339

 

 

1,636,463

 

 

1,620,210

 

 

30,876

 

1.9

%

 

47,129

 

2.9

%

Accumulated other comprehensive

  income (loss), net of tax

 

(265,704

)

 

(242,381

)

 

(207,142

)

 

(23,323

)

-9.6

%

 

(58,562

)

-28.3

%

Total shareholders' equity

 

1,571,193

 

 

1,562,099

 

 

1,586,696

 

 

9,094

 

0.6

%

 

(15,503

)

-1.0

%

Total liabilities and equity

$

18,422,626

 

$

18,877,178

 

$

16,951,510

 

$

(454,552

)

-2.4

%

$

1,471,116

 

8.7

%

 
(1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity.
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
June 30, 2023
($ in thousands except per share data)
(unaudited)
 
Quarter Ended Linked Quarter Year over Year
INCOME STATEMENTS 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change
Interest and fees on LHFS & LHFI-FTE

$

192,941

$

178,967

 

$

103,033

 

$

13,974

 

7.8

%

$

89,908

 

87.3

%

Interest and fees on PPP loans

 

 

 

 

184

 

 

 

n/m

 

 

(184

)

-100.0

%

Interest on securities-taxable

 

16,779

 

16,761

 

 

14,561

 

 

18

 

0.1

%

 

2,218

 

15.2

%

Interest on securities-tax exempt-FTE

 

69

 

92

 

 

107

 

 

(23

)

-25.0

%

 

(38

)

-35.5

%

Interest on fed funds sold and reverse

  repurchases

 

45

 

30

 

 

1

 

 

15

 

50.0

%

 

44

 

n/m

 

Other interest income

 

12,077

 

6,527

 

 

2,214

 

 

5,550

 

85.0

%

 

9,863

 

n/m

 

Total interest income-FTE

 

221,911

 

202,377

 

 

120,100

 

 

19,534

 

9.7

%

 

101,811

 

84.8

%

Interest on deposits

 

54,409

 

40,898

 

 

2,774

 

 

13,511

 

33.0

%

 

51,635

 

n/m

 

Interest on fed funds purchased and repurchases

 

4,865

 

4,832

 

 

70

 

 

33

 

0.7

%

 

4,795

 

n/m

 

Other interest expense

 

19,350

 

15,575

 

 

1,664

 

 

3,775

 

24.2

%

 

17,686

 

n/m

 

Total interest expense

 

78,624

 

61,305

 

 

4,508

 

 

17,319

 

28.3

%

 

74,116

 

n/m

 

Net interest income-FTE

 

143,287

 

141,072

 

 

115,592

 

 

2,215

 

1.6

%

 

27,695

 

24.0

%

Provision for credit losses, LHFI

 

8,211

 

3,244

 

 

2,716

 

 

4,967

 

n/m

 

 

5,495

 

n/m

 

Provision for credit losses, off-balance sheet

  credit exposures

 

245

 

(2,242

)

 

(1,568

)

 

2,487

 

n/m

 

 

1,813

 

n/m

 

Net interest income after provision-FTE

 

134,831

 

140,070

 

 

114,444

 

 

(5,239

)

-3.7

%

 

20,387

 

17.8

%

Service charges on deposit accounts

 

10,695

 

10,336

 

 

10,226

 

 

359

 

3.5

%

 

469

 

4.6

%

Bank card and other fees

 

8,917

 

7,803

 

 

10,167

 

 

1,114

 

14.3

%

 

(1,250

)

-12.3

%

Mortgage banking, net

 

6,600

 

7,639

 

 

8,149

 

 

(1,039

)

-13.6

%

 

(1,549

)

-19.0

%

Insurance commissions

 

14,764

 

14,305

 

 

13,702

 

 

459

 

3.2

%

 

1,062

 

7.8

%

Wealth management

 

8,882

 

8,780

 

 

9,102

 

 

102

 

1.2

%

 

(220

)

-2.4

%

Other, net

 

3,695

 

2,514

 

 

1,907

 

 

1,181

 

47.0

%

 

1,788

 

93.8

%

Total noninterest income

 

53,553

 

51,377

 

 

53,253

 

 

2,176

 

4.2

%

 

300

 

0.6

%

Salaries and employee benefits

 

75,940

 

74,056

 

 

71,679

 

 

1,884

 

2.5

%

 

4,261

 

5.9

%

Services and fees (2)

 

28,264

 

25,426

 

 

25,659

 

 

2,838

 

11.2

%

 

2,605

 

10.2

%

Net occupancy-premises

 

7,108

 

7,629

 

 

6,892

 

 

(521

)

-6.8

%

 

216

 

3.1

%

Equipment expense

 

6,404

 

6,405

 

 

6,047

 

 

(1

)

0.0

%

 

357

 

5.9

%

Litigation settlement expense (1)

 

 

 

 

 

 

 

n/m

 

 

 

n/m

 

Other expense (2)

 

14,502

 

14,811

 

 

13,490

 

 

(309

)

-2.1

%

 

1,012

 

7.5

%

Total noninterest expense

 

132,218

 

128,327

 

 

123,767

 

 

3,891

 

3.0

%

 

8,451

 

6.8

%

Income (loss) before income taxes and tax eq adj

 

56,166

 

63,120

 

 

43,930

 

 

(6,954

)

-11.0

%

 

12,236

 

27.9

%

Tax equivalent adjustment

 

3,383

 

3,477

 

 

2,916

 

 

(94

)

-2.7

%

 

467

 

16.0

%

Income (loss) before income taxes

 

52,783

 

59,643

 

 

41,014

 

 

(6,860

)

-11.5

%

 

11,769

 

28.7

%

Income taxes

 

7,746

 

9,343

 

 

6,730

 

 

(1,597

)

-17.1

%

 

1,016

 

15.1

%

Net income (loss)

$

45,037

$

50,300

 

$

34,284

 

$

(5,263

)

-10.5

%

$

10,753

 

31.4

%

 
Per share data
Earnings (loss) per share - basic

$

0.74

$

0.82

 

$

0.56

 

$

(0.08

)

-9.8

%

$

0.18

 

32.1

%

 
Earnings (loss) per share - diluted

$

0.74

$

0.82

 

$

0.56

 

$

(0.08

)

-9.8

%

$

0.18

 

32.1

%

 
Dividends per share

$

0.23

$

0.23

 

$

0.23

 

 

 

0.0

%

 

 

0.0

%

 
Weighted average shares outstanding
Basic

 

61,063,277

 

61,011,059

 

 

61,378,226

 

 
Diluted

 

61,230,031

 

61,193,275

 

 

61,546,285

 

 
Period end shares outstanding

 

61,069,036

 

61,048,516

 

 

61,201,123

 

 
(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
June 30, 2023
($ in thousands)
(unaudited)
 
Quarter Ended Linked Quarter Year over Year
NONPERFORMING ASSETS (1) 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change
Nonaccrual LHFI
Alabama (2)

$

11,058

 

$

10,919

 

$

2,698

 

$

139

 

1.3

%

$

8,360

 

n/m

 

Florida

 

334

 

 

256

 

 

233

 

 

78

 

30.5

%

 

101

 

43.3

%

Mississippi (3)

 

36,288

 

 

32,560

 

 

23,039

 

 

3,728

 

11.4

%

 

13,249

 

57.5

%

Tennessee (4)

 

5,088

 

 

5,416

 

 

9,500

 

 

(328

)

-6.1

%

 

(4,412

)

-46.4

%

Texas

 

22,259

 

 

23,224

 

 

26,582

 

 

(965

)

-4.2

%

 

(4,323

)

-16.3

%

Total nonaccrual LHFI

 

75,027

 

 

72,375

 

 

62,052

 

 

2,652

 

3.7

%

 

12,975

 

20.9

%

Other real estate
Alabama (2)

 

 

 

 

 

84

 

 

 

n/m

 

 

(84

)

-100.0

%

Mississippi (3)

 

1,137

 

 

1,495

 

 

2,950

 

 

(358

)

-23.9

%

 

(1,813

)

-61.5

%

Tennessee (4)

 

 

 

189

 

 

 

 

(189

)

-100.0

%

 

 

n/m

 

Total other real estate

 

1,137

 

 

1,684

 

 

3,034

 

 

(547

)

-32.5

%

 

(1,897

)

-62.5

%

Total nonperforming assets

$

76,164

 

$

74,059

 

$

65,086

 

$

2,105

 

2.8

%

$

11,078

 

17.0

%

 
LOANS PAST DUE OVER 90 DAYS (1)
LHFI

$

3,911

 

$

2,255

 

$

1,347

 

$

1,656

 

73.4

%

$

2,564

 

n/m

 

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

$

35,766

 

$

41,468

 

$

51,164

 

$

(5,702

)

-13.8

%

$

(15,398

)

-30.1

%

 
Quarter Ended Linked Quarter Year over Year
ACL LHFI (1) 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change
Beginning Balance

$

122,239

 

$

120,214

 

$

98,734

 

$

2,025

 

1.7

%

$

23,505

 

23.8

%

Provision for credit losses, LHFI

 

8,211

 

 

3,244

 

 

2,716

 

 

4,967

 

n/m

 

 

5,495

 

n/m

 

Charge-offs

 

(2,773

)

 

(2,996

)

 

(2,277

)

 

223

 

7.4

%

 

(496

)

-21.8

%

Recoveries

 

1,621

 

 

1,777

 

 

3,967

 

 

(156

)

-8.8

%

 

(2,346

)

-59.1

%

Net (charge-offs) recoveries

 

(1,152

)

 

(1,219

)

 

1,690

 

 

67

 

5.5

%

 

(2,842

)

n/m

 

Ending Balance

$

129,298

 

$

122,239

 

$

103,140

 

$

7,059

 

5.8

%

$

26,158

 

25.4

%

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

$

(141

)

$

(268

)

$

1,129

 

$

127

 

-47.4

%

$

(1,270

)

n/m

 

Florida

 

(35

)

 

(36

)

 

761

 

 

1

 

2.8

%

 

(796

)

n/m

 

Mississippi (3)

 

(762

)

 

(775

)

 

(266

)

 

13

 

1.7

%

 

(496

)

n/m

 

Tennessee (4)

 

(166

)

 

(124

)

 

31

 

 

(42

)

-33.9

%

 

(197

)

n/m

 

Texas

 

(48

)

 

(16

)

 

35

 

 

(32

)

n/m

 

 

(83

)

n/m

 

Total net (charge-offs) recoveries

$

(1,152

)

$

(1,219

)

$

1,690

 

$

67

 

5.5

%

$

(2,842

)

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
June 30, 2023
($ in thousands)
(unaudited)
Quarter Ended Six Months Ended
AVERAGE BALANCES 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022
Securities AFS-taxable (1)

$

2,140,505

 

$

2,187,121

 

$

2,572,675

 

$

2,824,254

 

$

3,094,364

 

$

2,163,684

 

$

3,169,515

 

Securities AFS-nontaxable

 

4,796

 

 

4,812

 

 

4,828

 

 

4,928

 

 

5,110

 

 

4,804

 

 

5,118

 

Securities HTM-taxable (1)

 

1,463,086

 

 

1,479,283

 

 

1,268,952

 

 

1,140,685

 

 

811,599

 

 

1,471,140

 

 

612,332

 

Securities HTM-nontaxable

 

1,718

 

 

4,509

 

 

4,514

 

 

5,057

 

 

5,630

 

 

3,106

 

 

6,474

 

Total securities

 

3,610,105

 

 

3,675,725

 

 

3,850,969

 

 

3,974,924

 

 

3,916,703

 

 

3,642,734

 

 

3,793,439

 

PPP loans

 

 

 

 

 

3,235

 

 

9,821

 

 

17,746

 

 

 

 

23,346

 

Loans (includes loans held for sale)

 

12,732,057

 

 

12,530,449

 

 

12,006,661

 

 

11,459,551

 

 

10,910,178

 

 

12,631,810

 

 

10,731,438

 

Fed funds sold and reverse repurchases

 

3,275

 

 

2,379

 

 

6,566

 

 

226

 

 

110

 

 

2,829

 

 

83

 

Other earning assets

 

903,027

 

 

647,760

 

 

375,190

 

 

325,620

 

 

1,139,312

 

 

780,657

 

 

1,473,655

 

Total earning assets

 

17,248,464

 

 

16,856,313

 

 

16,242,621

 

 

15,770,142

 

 

15,984,049

 

 

17,058,030

 

 

16,021,961

 

ACL LHFI

 

(121,960

)

 

(119,978

)

 

(114,948

)

 

(102,951

)

 

(99,106

)

 

(120,974

)

 

(99,247

)

Other assets

 

1,648,583

 

 

1,762,449

 

 

1,630,085

 

 

1,576,653

 

 

1,513,127

 

 

1,700,643

 

 

1,531,884

 

Total assets

$

18,775,087

 

$

18,498,784

 

$

17,757,758

 

$

17,243,844

 

$

17,398,070

 

$

18,637,699

 

$

17,454,598

 

 
Interest-bearing demand deposits

$

4,803,737

 

$

4,751,154

 

$

4,719,303

 

$

4,613,733

 

$

4,578,235

 

$

4,777,591

 

$

4,504,058

 

Savings deposits

 

4,002,134

 

 

4,193,764

 

 

4,379,673

 

 

4,514,579

 

 

4,638,849

 

 

4,097,420

 

 

4,714,556

 

Time deposits

 

2,335,752

 

 

1,907,449

 

 

1,152,905

 

 

1,111,440

 

 

1,159,065

 

 

2,122,784

 

 

1,176,155

 

Total interest-bearing deposits

 

11,141,623

 

 

10,852,367

 

 

10,251,881

 

 

10,239,752

 

 

10,376,149

 

 

10,997,795

 

 

10,394,769

 

Fed funds purchased and repurchases

 

389,834

 

 

436,535

 

 

549,406

 

 

249,809

 

 

118,753

 

 

413,055

 

 

165,122

 

Other borrowings

 

1,330,010

 

 

1,110,843

 

 

530,993

 

 

88,697

 

 

80,283

 

 

1,221,032

 

 

85,657

 

Subordinated notes

 

123,337

 

 

123,281

 

 

123,226

 

 

123,171

 

 

123,116

 

 

123,309

 

 

123,089

 

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

Total interest-bearing liabilities

 

13,046,660

 

 

12,584,882

 

 

11,517,362

 

 

10,763,285

 

 

10,760,157

 

 

12,817,047

 

 

10,830,493

 

Noninterest-bearing deposits

 

3,595,927

 

 

3,813,248

 

 

4,177,113

 

 

4,444,370

 

 

4,590,338

 

 

3,703,987

 

 

4,595,693

 

Other liabilities

 

552,209

 

 

576,826

 

 

569,992

 

 

429,720

 

 

439,266

 

 

564,450

 

 

367,673

 

Total liabilities

 

17,194,796

 

 

16,974,956

 

 

16,264,467

 

 

15,637,375

 

 

15,789,761

 

 

17,085,484

 

 

15,793,859

 

Shareholders' equity

 

1,580,291

 

 

1,523,828

 

 

1,493,291

 

 

1,606,469

 

 

1,608,309

 

 

1,552,215

 

 

1,660,739

 

Total liabilities and equity

$

18,775,087

 

$

18,498,784

 

$

17,757,758

 

$

17,243,844

 

$

17,398,070

 

$

18,637,699

 

$

17,454,598

 

 
(1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity.
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
June 30, 2023
($ in thousands)
(unaudited)
 
 
PERIOD END BALANCES 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022
Cash and due from banks

$

832,052

 

$

1,297,144

 

$

734,787

 

$

479,637

 

$

742,461

 

Fed funds sold and reverse repurchases

 

 

 

 

 

4,000

 

 

10,098

 

 

 

Securities available for sale (1)

 

1,871,883

 

 

1,984,162

 

 

2,024,082

 

 

2,444,486

 

 

2,644,364

 

Securities held to maturity (1)

 

1,458,665

 

 

1,474,338

 

 

1,494,514

 

 

1,156,985

 

 

1,137,754

 

PPP loans

 

 

 

 

 

 

 

4,798

 

 

12,549

 

LHFS

 

181,094

 

 

175,926

 

 

135,226

 

 

165,213

 

 

190,186

 

LHFI

 

12,613,967

 

 

12,497,195

 

 

12,204,039

 

 

11,586,064

 

 

10,944,840

 

ACL LHFI

 

(129,298

)

 

(122,239

)

 

(120,214

)

 

(115,050

)

 

(103,140

)

Net LHFI

 

12,484,669

 

 

12,374,956

 

 

12,083,825

 

 

11,471,014

 

 

10,841,700

 

Premises and equipment, net

 

227,630

 

 

223,975

 

 

212,365

 

 

210,761

 

 

207,914

 

Mortgage servicing rights

 

134,350

 

 

127,206

 

 

129,677

 

 

132,615

 

 

121,014

 

Goodwill

 

384,237

 

 

384,237

 

 

384,237

 

 

384,237

 

 

384,237

 

Identifiable intangible assets

 

3,222

 

 

3,352

 

 

3,640

 

 

3,952

 

 

4,264

 

Other real estate

 

1,137

 

 

1,684

 

 

1,986

 

 

2,971

 

 

3,034

 

Operating lease right-of-use assets

 

38,179

 

 

35,315

 

 

36,301

 

 

37,282

 

 

34,684

 

Other assets

 

805,508

 

 

794,883

 

 

770,838

 

 

686,585

 

 

627,349

 

Total assets

$

18,422,626

 

$

18,877,178

 

$

18,015,478

 

$

17,190,634

 

$

16,951,510

 

 
Deposits:
Noninterest-bearing

$

3,461,073

 

$

3,797,055

 

$

4,093,771

 

$

4,358,805

 

$

4,509,472

 

Interest-bearing

 

11,452,827

 

 

10,986,606

 

 

10,343,877

 

 

10,066,375

 

 

10,260,696

 

Total deposits

 

14,913,900

 

 

14,783,661

 

 

14,437,648

 

 

14,425,180

 

 

14,770,168

 

Fed funds purchased and repurchases

 

311,179

 

 

477,980

 

 

449,331

 

 

544,068

 

 

70,157

 

Other borrowings

 

1,056,714

 

 

1,485,181

 

 

1,050,938

 

 

223,172

 

 

72,553

 

Subordinated notes

 

123,372

 

 

123,317

 

 

123,262

 

 

123,207

 

 

123,152

 

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

ACL on off-balance sheet credit exposures

 

34,841

 

 

34,596

 

 

36,838

 

 

31,623

 

 

32,949

 

Operating lease liabilities

 

40,845

 

 

37,988

 

 

38,932

 

 

39,797

 

 

37,108

 

Other liabilities

 

308,726

 

 

310,500

 

 

324,405

 

 

232,786

 

 

196,871

 

Total liabilities

 

16,851,433

 

 

17,315,079

 

 

16,523,210

 

 

15,681,689

 

 

15,364,814

 

Common stock

 

12,724

 

 

12,720

 

 

12,705

 

 

12,700

 

 

12,752

 

Capital surplus

 

156,834

 

 

155,297

 

 

154,645

 

 

154,150

 

 

160,876

 

Retained earnings

 

1,667,339

 

 

1,636,463

 

 

1,600,321

 

 

1,648,507

 

 

1,620,210

 

Accumulated other comprehensive income (loss),

  net of tax

 

(265,704

)

 

(242,381

)

 

(275,403

)

 

(306,412

)

 

(207,142

)

Total shareholders' equity

 

1,571,193

 

 

1,562,099

 

 

1,492,268

 

 

1,508,945

 

 

1,586,696

 

Total liabilities and equity

$

18,422,626

 

$

18,877,178

 

$

18,015,478

 

$

17,190,634

 

$

16,951,510

 

 
(1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity.
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
June 30, 2023
($ in thousands except per share data)
(unaudited)
 
Quarter Ended Six Months Ended
INCOME STATEMENTS 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022
Interest and fees on LHFS & LHFI-FTE

$

192,941

$

178,967

 

$

159,566

 

$

129,395

 

$

103,033

 

$

371,908

 

$

196,285

 

Interest and fees on PPP loans

 

 

 

 

101

 

 

186

 

 

184

 

 

 

 

352

 

Interest on securities-taxable

 

16,779

 

16,761

 

 

16,577

 

 

16,222

 

 

14,561

 

 

33,540

 

 

26,918

 

Interest on securities-tax exempt-FTE

 

69

 

92

 

 

93

 

 

100

 

 

107

 

 

161

 

 

229

 

Interest on fed funds sold and reverse repurchases

 

45

 

30

 

 

71

 

 

2

 

 

1

 

 

75

 

 

1

 

Other interest income

 

12,077

 

6,527

 

 

3,556

 

 

1,493

 

 

2,214

 

 

18,604

 

 

3,031

 

Total interest income-FTE

 

221,911

 

202,377

 

 

179,964

 

 

147,398

 

 

120,100

 

 

424,288

 

 

226,816

 

Interest on deposits

 

54,409

 

40,898

 

 

18,438

 

 

5,097

 

 

2,774

 

 

95,307

 

 

5,534

 

Interest on fed funds purchased and repurchases

 

4,865

 

4,832

 

 

4,762

 

 

1,225

 

 

70

 

 

9,697

 

 

140

 

Other interest expense

 

19,350

 

15,575

 

 

6,730

 

 

1,996

 

 

1,664

 

 

34,925

 

 

3,203

 

Total interest expense

 

78,624

 

61,305

 

 

29,930

 

 

8,318

 

 

4,508

 

 

139,929

 

 

8,877

 

Net interest income-FTE

 

143,287

 

141,072

 

 

150,034

 

 

139,080

 

 

115,592

 

 

284,359

 

 

217,939

 

Provision for credit losses, LHFI

 

8,211

 

3,244

 

 

6,902

 

 

12,919

 

 

2,716

 

 

11,455

 

 

1,856

 

Provision for credit losses, off-balance sheet

  credit exposures

 

245

 

(2,242

)

 

5,215

 

 

(1,326

)

 

(1,568

)

 

(1,997

)

 

(2,674

)

Net interest income after provision-FTE

 

134,831

 

140,070

 

 

137,917

 

 

127,487

 

 

114,444

 

 

274,901

 

 

218,757

 

Service charges on deposit accounts

 

10,695

 

10,336

 

 

11,162

 

 

11,318

 

 

10,226

 

 

21,031

 

 

19,677

 

Bank card and other fees

 

8,917

 

7,803

 

 

8,191

 

 

9,305

 

 

10,167

 

 

16,720

 

 

18,609

 

Mortgage banking, net

 

6,600

 

7,639

 

 

3,408

 

 

6,876

 

 

8,149

 

 

14,239

 

 

18,022

 

Insurance commissions

 

14,764

 

14,305

 

 

12,019

 

 

13,911

 

 

13,702

 

 

29,069

 

 

27,791

 

Wealth management

 

8,882

 

8,780

 

 

8,079

 

 

8,778

 

 

9,102

 

 

17,662

 

 

18,156

 

Other, net

 

3,695

 

2,514

 

 

2,311

 

 

2,418

 

 

1,907

 

 

6,209

 

 

5,113

 

Total noninterest income

 

53,553

 

51,377

 

 

45,170

 

 

52,606

 

 

53,253

 

 

104,930

 

 

107,368

 

Salaries and employee benefits

 

75,940

 

74,056

 

 

73,469

 

 

72,707

 

 

71,679

 

 

149,996

 

 

141,264

 

Services and fees (2)

 

28,264

 

25,426

 

 

27,709

 

 

26,787

 

 

25,659

 

 

53,690

 

 

50,973

 

Net occupancy-premises

 

7,108

 

7,629

 

 

7,898

 

 

7,395

 

 

6,892

 

 

14,737

 

 

13,971

 

Equipment expense

 

6,404

 

6,405

 

 

6,268

 

 

6,072

 

 

6,047

 

 

12,809

 

 

12,108

 

Litigation settlement expense (1)

 

 

 

 

100,750

 

 

 

 

 

 

 

 

 

Other expense (2)

 

14,502

 

14,811

 

 

15,135

 

 

13,737

 

 

13,490

 

 

29,313

 

 

26,970

 

Total noninterest expense

 

132,218

 

128,327

 

 

231,229

 

 

126,698

 

 

123,767

 

 

260,545

 

 

245,286

 

Income (loss) before income taxes and tax eq adj

 

56,166

 

63,120

 

 

(48,142

)

 

53,395

 

 

43,930

 

 

119,286

 

 

80,839

 

Tax equivalent adjustment

 

3,383

 

3,477

 

 

3,451

 

 

2,975

 

 

2,916

 

 

6,860

 

 

5,919

 

Income (loss) before income taxes

 

52,783

 

59,643

 

 

(51,593

)

 

50,420

 

 

41,014

 

 

112,426

 

 

74,920

 

Income taxes

 

7,746

 

9,343

 

 

(17,530

)

 

7,965

 

 

6,730

 

 

17,089

 

 

11,425

 

Net income (loss)

$

45,037

$

50,300

 

$

(34,063

)

$

42,455

 

$

34,284

 

$

95,337

 

$

63,495

 

 
Per share data
Earnings (loss) per share - basic

$

0.74

$

0.82

 

$

(0.56

)

$

0.69

 

$

0.56

 

$

1.56

 

$

1.03

 

 
Earnings (loss) per share - diluted

$

0.74

$

0.82

 

$

(0.56

)

$

0.69

 

$

0.56

 

$

1.56

 

$

1.03

 

 
Dividends per share

$

0.23

$

0.23

 

$

0.23

 

$

0.23

 

$

0.23

 

$

0.46

 

$

0.46

 

 
Weighted average shares outstanding
Basic

 

61,063,277

 

61,011,059

 

 

60,969,400

 

 

61,114,804

 

 

61,378,226

 

 

61,037,312

 

 

61,445,934

 

 
Diluted

 

61,230,031

 

61,193,275

 

 

61,173,249

 

 

61,318,715

 

 

61,546,285

 

 

61,206,799

 

 

61,624,569

 

 
Period end shares outstanding

 

61,069,036

 

61,048,516

 

 

60,977,686

 

 

60,953,864

 

 

61,201,123

 

 

61,069,036

 

 

61,201,123

 

 
(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
June 30, 2023
($ in thousands)
(unaudited)
 
 
Quarter Ended
NONPERFORMING ASSETS (1) 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022
Nonaccrual LHFI
Alabama (2)

$

11,058

 

$

10,919

 

$

12,300

 

$

12,710

 

$

2,698

 

Florida

 

334

 

 

256

 

 

227

 

 

227

 

 

233

 

Mississippi (3)

 

36,288

 

 

32,560

 

 

24,683

 

 

23,517

 

 

23,039

 

Tennessee (4)

 

5,088

 

 

5,416

 

 

5,566

 

 

5,120

 

 

9,500

 

Texas

 

22,259

 

 

23,224

 

 

23,196

 

 

26,353

 

 

26,582

 

Total nonaccrual LHFI

 

75,027

 

 

72,375

 

 

65,972

 

 

67,927

 

 

62,052

 

Other real estate
Alabama (2)

 

 

 

 

 

194

 

 

217

 

 

84

 

Mississippi (3)

 

1,137

 

 

1,495

 

 

1,769

 

 

2,754

 

 

2,950

 

Tennessee (4)

 

 

 

189

 

 

23

 

 

 

 

 

Total other real estate

 

1,137

 

 

1,684

 

 

1,986

 

 

2,971

 

 

3,034

 

Total nonperforming assets

$

76,164

 

$

74,059

 

$

67,958

 

$

70,898

 

$

65,086

 

 
LOANS PAST DUE OVER 90 DAYS (1)
LHFI

$

3,911

 

$

2,255

 

$

3,929

 

$

1,842

 

$

1,347

 

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

$

35,766

 

$

41,468

 

$

49,320

 

$

48,313

 

$

51,164

 

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

$

122,239

 

$

120,214

 

$

115,050

 

$

103,140

 

$

98,734

 

$

120,214

 

$

99,457

 

Provision for credit losses, LHFI

 

8,211

 

 

3,244

 

 

6,902

 

 

12,919

 

 

2,716

 

 

11,455

 

 

1,856

 

Charge-offs

 

(2,773

)

 

(2,996

)

 

(3,893

)

 

(2,920

)

 

(2,277

)

 

(5,769

)

 

(4,519

)

Recoveries

 

1,621

 

 

1,777

 

 

2,155

 

 

1,911

 

 

3,967

 

 

3,398

 

 

6,346

 

Net (charge-offs) recoveries

 

(1,152

)

 

(1,219

)

 

(1,738

)

 

(1,009

)

 

1,690

 

 

(2,371

)

 

1,827

 

Ending Balance

$

129,298

 

$

122,239

 

$

120,214

 

$

115,050

 

$

103,140

 

$

129,298

 

$

103,140

 

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

$

(141

)

$

(268

)

$

98

 

$

93

 

$

1,129

 

$

(409

)

$

1,828

 

Florida

 

(35

)

 

(36

)

 

(60

)

 

(23

)

 

761

 

 

(71

)

 

735

 

Mississippi (3)

 

(762

)

 

(775

)

 

(1,657

)

 

(702

)

 

(266

)

 

(1,537

)

 

(354

)

Tennessee (4)

 

(166

)

 

(124

)

 

(195

)

 

(202

)

 

31

 

 

(290

)

 

(393

)

Texas

 

(48

)

 

(16

)

 

76

 

 

(175

)

 

35

 

 

(64

)

 

11

 

Total net (charge-offs) recoveries

$

(1,152

)

$

(1,219

)

$

(1,738

)

$

(1,009

)

$

1,690

 

$

(2,371

)

$

1,827

 

 
(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
June 30, 2023
($ in thousands)
(unaudited)
 
Quarter Ended Six Months Ended
FINANCIAL RATIOS AND OTHER DATA 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022
Return on average equity

 

11.43

%

 

13.39

%

 

-9.05

%

 

10.48

%

 

8.55

%

12.39

%

7.71

%

Return on average tangible equity

 

15.18

%

 

18.03

%

 

-12.14

%

 

13.90

%

 

11.36

%

16.56

%

10.16

%

Return on average assets

 

0.96

%

 

1.10

%

 

-0.76

%

 

0.98

%

 

0.79

%

1.03

%

0.73

%

Interest margin - Yield - FTE

 

5.16

%

 

4.87

%

 

4.40

%

 

3.71

%

 

3.01

%

5.02

%

2.85

%

Interest margin - Cost

 

1.83

%

 

1.47

%

 

0.73

%

 

0.21

%

 

0.11

%

1.65

%

0.11

%

Net interest margin - FTE

 

3.33

%

 

3.39

%

 

3.66

%

 

3.50

%

 

2.90

%

3.36

%

2.74

%

Efficiency ratio (1)

 

66.17

%

 

65.60

%

 

65.85

%

 

64.96

%

 

71.89

%

65.89

%

74.08

%

Full-time equivalent employees

 

2,761

 

 

2,758

 

 

2,738

 

 

2,717

 

 

2,727

 

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

 

0.04

%

 

0.04

%

 

0.06

%

 

0.03

%

 

-0.06

%

0.04

%

-0.03

%

Provision for credit losses, LHFI / average loans

 

0.26

%

 

0.10

%

 

0.23

%

 

0.45

%

 

0.10

%

0.18

%

0.03

%

Nonaccrual LHFI / (LHFI + LHFS)

 

0.59

%

 

0.57

%

 

0.53

%

 

0.58

%

 

0.56

%

Nonperforming assets / (LHFI + LHFS)

 

0.60

%

 

0.58

%

 

0.55

%

 

0.60

%

 

0.58

%

Nonperforming assets / (LHFI + LHFS

  + other real estate)

 

0.60

%

 

0.58

%

 

0.55

%

 

0.60

%

 

0.58

%

ACL LHFI / LHFI

 

1.03

%

 

0.98

%

 

0.99

%

 

0.99

%

 

0.94

%

ACL LHFI-commercial / commercial LHFI

 

0.84

%

 

0.80

%

 

0.85

%

 

0.93

%

 

0.88

%

ACL LHFI-consumer / consumer and

  home mortgage LHFI

 

1.60

%

 

1.54

%

 

1.41

%

 

1.20

%

 

1.14

%

ACL LHFI / nonaccrual LHFI

 

172.34

%

 

168.90

%

 

182.22

%

 

169.37

%

 

166.22

%

ACL LHFI / nonaccrual LHFI

  (excl individually analyzed loans)

 

301.44

%

 

320.80

%

 

399.19

%

 

466.03

%

 

475.27

%

 
CAPITAL RATIOS
Total equity / total assets

 

8.53

%

 

8.28

%

 

8.28

%

 

8.78

%

 

9.36

%

Tangible equity / tangible assets

 

6.56

%

 

6.35

%

 

6.27

%

 

6.67

%

 

7.23

%

Tangible equity / risk-weighted assets

 

7.91

%

 

7.94

%

 

7.61

%

 

8.15

%

 

9.16

%

Tier 1 leverage ratio

 

8.35

%

 

8.29

%

 

8.47

%

 

9.01

%

 

8.80

%

Common equity tier 1 capital ratio

 

9.87

%

 

9.76

%

 

9.74

%

 

10.63

%

 

11.01

%

Tier 1 risk-based capital ratio

 

10.27

%

 

10.17

%

 

10.15

%

 

11.06

%

 

11.47

%

Total risk-based capital ratio

 

12.08

%

 

11.95

%

 

11.91

%

 

12.85

%

 

13.26

%

 
STOCK PERFORMANCE
Market value-Close

$

21.12

 

$

24.70

 

$

34.91

 

$

30.63

 

$

29.19

 

Book value

$

25.73

 

$

25.59

 

$

24.47

 

$

24.76

 

$

25.93

 

Tangible book value

$

19.38

 

$

19.24

 

$

18.11

 

$

18.39

 

$

19.58

 

 
(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

June 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 Settlement) relating to litigation involving the Stanford Financial Group. On January 13, 2023, TNB entered into a Settlement Agreement (the Settlement Agreement) reflecting the terms of the Settlement. The parties to the Settlement Agreement are, on the one hand, (i) Ralph S. Janvey, solely in his capacity as the court-appointed receiver (the 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 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 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 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 Receiver.

The 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 Settlement.

The 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 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 Settlement Agreement (which has occurred, as described further below) may not be upheld on appeal.

The 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 Settlement Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the 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 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 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 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 Settlement Agreement and the judgment and bar order with respect to the Jackson Action.

On May 11, 2023, Robert Allen Stanford, writing from prison, appealed the District Court’s approval of the Settlement to the Fifth Circuit Court of Appeals. On June 12, 2023, the Receiver moved to dismiss the appeal as frivolous. That motion is now fully briefed and awaiting the Fifth Circuit’s decision.

The Settlement will become effective when the Fifth Circuit’s ruling in favor of the approval of the Settlement becomes final and non-appealable (the Settlement Effective Date). Within five days of the 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 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 Settlement payment.

Pending the resolution of the 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 Settlement and the 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.

At the time of the entry into the Settlement, 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. Trustmark Corporation expects that the 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

June 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:

 

 

6/30/2023

 

 

3/31/2023

 

 

12/31/2022

 

 

9/30/2022

 

 

6/30/2022

 

SECURITIES AVAILABLE FOR SALE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

$

362,966

 

 

$

386,903

 

 

$

391,513

 

 

$

416,278

 

 

$

419,696

 

U.S. Government agency obligations

 

 

6,999

 

 

 

7,254

 

 

 

7,766

 

 

 

9,116

 

 

 

11,947

 

Obligations of states and political subdivisions

 

 

4,813

 

 

 

4,907

 

 

 

4,862

 

 

 

4,763

 

 

 

5,179

 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage pass-through securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guaranteed by GNMA

 

 

25,336

 

 

 

26,851

 

 

 

27,097

 

 

 

28,164

 

 

 

32,240

 

Issued by FNMA and FHLMC

 

 

1,250,435

 

 

 

1,317,848

 

 

 

1,345,463

 

 

 

1,718,057

 

 

 

1,888,546

 

Other residential mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

98,388

 

 

 

108,192

 

 

 

115,140

 

 

 

126,138

 

 

 

144,158

 

Commercial mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

122,946

 

 

 

132,207

 

 

 

132,241

 

 

 

141,970

 

 

 

142,598

 

Total securities available for sale

 

$

1,871,883

 

 

$

1,984,162

 

 

$

2,024,082

 

 

$

2,444,486

 

 

$

2,644,364

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SECURITIES HELD TO MATURITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

$

28,679

 

 

$

28,486

 

 

$

28,295

 

 

$

 

 

$

 

Obligations of states and political subdivisions

 

 

1,180

 

 

 

4,507

 

 

 

4,510

 

 

 

4,512

 

 

 

5,320

 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage pass-through securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guaranteed by GNMA

 

 

13,235

 

 

 

4,336

 

 

 

4,442

 

 

 

4,527

 

 

 

4,624

 

Issued by FNMA and FHLMC

 

 

484,679

 

 

 

497,854

 

 

 

509,311

 

 

 

179,375

 

 

 

185,554

 

Other residential mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

171,002

 

 

 

179,334

 

 

 

188,201

 

 

 

197,923

 

 

 

210,479

 

Commercial mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

759,890

 

 

 

759,821

 

 

 

759,755

 

 

 

770,648

 

 

 

731,777

 

Total securities held to maturity

 

$

1,458,665

 

 

$

1,474,338

 

 

$

1,494,514

 

 

$

1,156,985

 

 

$

1,137,754

 

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 June 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 $63.4 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 99.8% 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

June 30, 2023

($ in thousands)

(unaudited)

Note 3 – Loan Composition

LHFI consisted of the following during the periods presented:

LHFI BY TYPE

 

6/30/2023

 

 

3/31/2023

 

 

12/31/2022

 

 

9/30/2022

 

 

6/30/2022

 

Loans secured by real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction, land development and other land loans

 

$

1,722,657

 

 

$

1,723,772

 

 

$

1,719,542

 

 

$

1,647,395

 

 

$

1,440,058

 

Secured by 1-4 family residential properties

 

 

2,854,182

 

 

 

2,822,048

 

 

 

2,775,847

 

 

 

2,597,112

 

 

 

2,424,962

 

Secured by nonfarm, nonresidential properties

 

 

3,471,728

 

 

 

3,375,579

 

 

 

3,278,830

 

 

 

3,206,946

 

 

 

3,178,079

 

Other real estate secured

 

 

954,410

 

 

 

847,527

 

 

 

742,538

 

 

 

593,119

 

 

 

555,311

 

Commercial and industrial loans

 

 

1,883,480

 

 

 

1,882,360

 

 

 

1,821,259

 

 

 

1,689,532

 

 

 

1,551,001

 

Consumer loans

 

 

163,788

 

 

 

162,911

 

 

 

166,425

 

 

 

163,412

 

 

 

160,716

 

State and other political subdivision loans

 

 

1,111,710

 

 

 

1,193,727

 

 

 

1,223,863

 

 

 

1,188,703

 

 

 

1,110,795

 

Other loans

 

 

452,012

 

 

 

489,271

 

 

 

475,735

 

 

 

499,845

 

 

 

523,918

 

LHFI

 

 

12,613,967

 

 

 

12,497,195

 

 

 

12,204,039

 

 

 

11,586,064

 

 

 

10,944,840

 

ACL LHFI

 

 

(129,298

)

 

 

(122,239

)

 

 

(120,214

)

 

 

(115,050

)

 

 

(103,140

)

Net LHFI

 

$

12,484,669

 

 

$

12,374,956

 

 

$

12,083,825

 

 

$

11,471,014

 

 

$

10,841,700

 

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

 

June 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

$

1,722,657

 

 

$

817,793

 

 

$

54,845

 

 

$

395,489

 

 

$

30,387

 

 

$

424,143

 

Secured by 1-4 family residential properties

 

2,854,182

 

 

 

136,612

 

 

 

51,817

 

 

 

2,555,191

 

 

 

83,409

 

 

 

27,153

 

Secured by nonfarm, nonresidential properties

 

3,471,728

 

 

 

954,604

 

 

 

225,437

 

 

 

1,471,341

 

 

 

159,402

 

 

 

660,944

 

Other real estate secured

 

954,410

 

 

 

379,984

 

 

 

1,805

 

 

 

294,497

 

 

 

7,376

 

 

 

270,748

 

Commercial and industrial loans

 

1,883,480

 

 

 

576,345

 

 

 

25,686

 

 

 

750,161

 

 

 

257,002

 

 

 

274,286

 

Consumer loans

 

163,788

 

 

 

23,925

 

 

 

8,354

 

 

 

101,026

 

 

 

19,411

 

 

 

11,072

 

State and other political subdivision loans

 

1,111,710

 

 

 

77,931

 

 

 

61,148

 

 

 

805,342

 

 

 

25,596

 

 

 

141,693

 

Other loans

 

452,012

 

 

 

110,395

 

 

 

9,963

 

 

 

219,075

 

 

 

48,806

 

 

 

63,773

 

Loans

$

12,613,967

 

 

$

3,077,589

 

 

$

439,055

 

 

$

6,592,122

 

 

$

631,389

 

 

$

1,873,812

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION

 

 

 

 

 

 

 

Lots

$

69,120

 

 

$

29,517

 

 

$

10,179

 

 

$

14,955

 

 

$

4,362

 

 

$

10,107

 

Development

 

130,166

 

 

 

55,946

 

 

 

1,366

 

 

 

36,602

 

 

 

7,465

 

 

 

28,787

 

Unimproved land

 

96,994

 

 

 

20,854

 

 

 

13,859

 

 

 

29,651

 

 

 

4,564

 

 

 

28,066

 

1-4 family construction

 

353,056

 

 

 

191,964

 

 

 

17,325

 

 

 

94,139

 

 

 

13,996

 

 

 

35,632

 

Other construction

 

1,073,321

 

 

 

519,512

 

 

 

12,116

 

 

 

220,142

 

 

 

 

 

 

321,551

 

Construction, land development and other land loans

$

1,722,657

 

 

$

817,793

 

 

$

54,845

 

 

$

395,489

 

 

$

30,387

 

 

$

424,143

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes Georgia Loan Production Office.

 

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

June 30, 2023

($ in thousands)

(unaudited)

Note 3 – Loan Composition (continued)

 

 

June 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

 

$

363,101

 

 

$

125,094

 

 

$

26,313

 

 

$

123,940

 

 

$

20,570

 

 

$

67,184

 

Office

 

 

275,841

 

 

 

102,162

 

 

 

16,822

 

 

 

86,818

 

 

 

2,152

 

 

 

67,887

 

Hotel/motel

 

 

298,632

 

 

 

167,641

 

 

 

50,344

 

 

 

53,705

 

 

 

26,942

 

 

 

 

Mini-storage

 

 

144,253

 

 

 

23,282

 

 

 

2,002

 

 

 

99,182

 

 

 

464

 

 

 

19,323

 

Industrial

 

 

375,366

 

 

 

89,226

 

 

 

18,416

 

 

 

103,343

 

 

 

9,976

 

 

 

154,405

 

Health care

 

 

70,788

 

 

 

41,098

 

 

 

 

 

 

26,846

 

 

 

338

 

 

 

2,506

 

Convenience stores

 

 

32,385

 

 

 

7,207

 

 

 

438

 

 

 

14,279

 

 

 

572

 

 

 

9,889

 

Nursing homes/senior living

 

 

471,414

 

 

 

174,609

 

 

 

 

 

 

201,391

 

 

 

5,249

 

 

 

90,165

 

Other

 

 

132,613

 

 

 

44,071

 

 

 

9,381

 

 

 

60,170

 

 

 

8,655

 

 

 

10,336

 

Total non-owner occupied loans

 

 

2,164,393

 

 

 

774,390

 

 

 

123,716

 

 

 

769,674

 

 

 

74,918

 

 

 

421,695

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Owner-occupied:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office

 

 

153,392

 

 

 

45,525

 

 

 

36,517

 

 

 

43,905

 

 

 

9,906

 

 

 

17,539

 

Churches

 

 

67,325

 

 

 

16,766

 

 

 

4,394

 

 

 

37,537

 

 

 

6,069

 

 

 

2,559

 

Industrial warehouses

 

 

164,540

 

 

 

16,056

 

 

 

4,571

 

 

 

41,402

 

 

 

17,487

 

 

 

85,024

 

Health care

 

 

146,007

 

 

 

10,420

 

 

 

6,141

 

 

 

108,638

 

 

 

2,305

 

 

 

18,503

 

Convenience stores

 

 

149,551

 

 

 

11,834

 

 

 

33,888

 

 

 

68,713

 

 

 

215

 

 

 

34,901

 

Retail

 

 

88,837

 

 

 

11,270

 

 

 

9,271

 

 

 

40,320

 

 

 

18,849

 

 

 

9,127

 

Restaurants

 

 

54,460

 

 

 

4,191

 

 

 

3,925

 

 

 

31,241

 

 

 

11,844

 

 

 

3,259

 

Auto dealerships

 

 

45,878

 

 

 

6,151

 

 

 

213

 

 

 

22,307

 

 

 

17,207

 

 

 

 

Nursing homes/senior living

 

 

301,226

 

 

 

44,709

 

 

 

 

 

 

230,317

 

 

 

 

 

 

26,200

 

Other

 

 

136,119

 

 

 

13,292

 

 

 

2,801

 

 

 

77,287

 

 

 

602

 

 

 

42,137

 

Total owner-occupied loans

 

 

1,307,335

 

 

 

180,214

 

 

 

101,721

 

 

 

701,667

 

 

 

84,484

 

 

 

239,249

 

Loans secured by nonfarm, nonresidential properties

 

$

3,471,728

 

 

$

954,604

 

 

$

225,437

 

 

$

1,471,341

 

 

$

159,402

 

 

$

660,944

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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

 

 

Six Months Ended

 

 

 

6/30/2023

 

 

3/31/2023

 

 

12/31/2022

 

 

9/30/2022

 

 

6/30/2022

 

 

6/30/2023

 

 

6/30/2022

 

Securities – taxable

 

 

1.87

%

 

 

1.85

%

 

 

1.71

%

 

 

1.62

%

 

 

1.50

%

 

 

1.86

%

 

 

1.44

%

Securities – nontaxable

 

 

4.25

%

 

 

4.00

%

 

 

3.95

%

 

 

3.97

%

 

 

4.00

%

 

 

4.10

%

 

 

3.98

%

Securities – total

 

 

1.87

%

 

 

1.86

%

 

 

1.72

%

 

 

1.63

%

 

 

1.50

%

 

 

1.87

%

 

 

1.44

%

PPP loans

 

 

 

 

 

 

 

 

12.39

%

 

 

7.51

%

 

 

4.16

%

 

 

 

 

 

3.04

%

Loans - LHFI & LHFS

 

 

6.08

%

 

 

5.79

%

 

 

5.27

%

 

 

4.48

%

 

 

3.79

%

 

 

5.94

%

 

 

3.69

%

Loans - total

 

 

6.08

%

 

 

5.79

%

 

 

5.27

%

 

 

4.48

%

 

 

3.79

%

 

 

5.94

%

 

 

3.69

%

Fed funds sold & reverse repurchases

 

 

5.51

%

 

 

5.11

%

 

 

4.29

%

 

 

3.51

%

 

 

3.65

%

 

 

5.35

%

 

 

2.43

%

Other earning assets

 

 

5.36

%

 

 

4.09

%

 

 

3.76

%

 

 

1.82

%

 

 

0.78

%

 

 

4.81

%

 

 

0.41

%

Total earning assets

 

 

5.16

%

 

 

4.87

%

 

 

4.40

%

 

 

3.71

%

 

 

3.01

%

 

 

5.02

%

 

 

2.85

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

 

1.96

%

 

 

1.53

%

 

 

0.71

%

 

 

0.20

%

 

 

0.11

%

 

 

1.75

%

 

 

0.11

%

Fed funds purchased & repurchases

 

 

5.01

%

 

 

4.49

%

 

 

3.44

%

 

 

1.95

%

 

 

0.24

%

 

 

4.73

%

 

 

0.17

%

Other borrowings

 

 

5.12

%

 

 

4.87

%

 

 

3.73

%

 

 

2.89

%

 

 

2.52

%

 

 

5.01

%

 

 

2.39

%

Total interest-bearing liabilities

 

 

2.42

%

 

 

1.98

%

 

 

1.03

%

 

 

0.31

%

 

 

0.17

%

 

 

2.20

%

 

 

0.17

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Deposits

 

 

1.48

%

 

 

1.13

%

 

 

0.51

%

 

 

0.14

%

 

 

0.07

%

 

 

1.31

%

 

 

0.07

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

 

3.33

%

 

 

3.39

%

 

 

3.66

%

 

 

3.50

%

 

 

2.90

%

 

 

3.36

%

 

 

2.74

%

Net interest margin excluding PPP loans

  and the FRB balance

 

 

3.23

%

 

 

3.36

%

 

 

3.66

%

 

 

3.53

%

 

 

3.06

%

 

 

3.30

%

 

 

2.97

%

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

June 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 second quarter of 2023, the average FRB balance totaled $777.0 million compared to $555.5 million for the first 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 decreased 13 basis points when compared to the first quarter of 2023, totaling 3.23% for the second quarter of 2023. The decrease in the net interest margin excluding PPP loans and the FRB balance was due to increased costs of interest-bearing deposits, which was partially offset by increases in the yields on the loans held for investment and held for sale portfolio and the securities portfolio.

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 $1.3 million during the second quarter of 2023.

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

 

 

Quarter Ended

 

 

Six Months Ended

 

 

 

6/30/2023

 

 

3/31/2023

 

 

12/31/2022

 

 

9/30/2022

 

 

6/30/2022

 

 

6/30/2023

 

 

6/30/2022

 

Mortgage servicing income, net

 

$

6,764

 

 

$

6,785

 

 

$

6,636

 

 

$

6,669

 

 

$

6,557

 

 

$

13,549

 

 

$

12,986

 

Change in fair value-MSR from runoff

 

 

(2,710

)

 

 

(1,145

)

 

 

(2,981

)

 

 

(3,462

)

 

 

(3,806

)

 

 

(3,855

)

 

 

(7,591

)

Gain on sales of loans, net

 

 

3,887

 

 

 

3,797

 

 

 

3,328

 

 

 

4,597

 

 

 

6,030

 

 

 

7,684

 

 

 

12,253

 

Mortgage banking income before hedge

  ineffectiveness

 

 

7,941

 

 

 

9,437

 

 

 

6,983

 

 

 

7,804

 

 

 

8,781

 

 

 

17,378

 

 

 

17,648

 

Change in fair value-MSR from market changes

 

 

5,898

 

 

 

(3,972

)

 

 

(3,348

)

 

 

10,770

 

 

 

8,739

 

 

 

1,926

 

 

 

30,759

 

Change in fair value of derivatives

 

 

(7,239

)

 

 

2,174

 

 

 

(227

)

 

 

(11,698

)

 

 

(9,371

)

 

 

(5,065

)

 

 

(30,385

)

Net positive (negative) hedge ineffectiveness

 

 

(1,341

)

 

 

(1,798

)

 

 

(3,575

)

 

 

(928

)

 

 

(632

)

 

 

(3,139

)

 

 

374

 

Mortgage banking, net

 

$

6,600

 

 

$

7,639

 

 

$

3,408

 

 

$

6,876

 

 

$

8,149

 

 

$

14,239

 

 

$

18,022

 

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

June 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

 

 

Six Months Ended

 

 

 

6/30/2023

 

 

3/31/2023

 

 

12/31/2022

 

 

9/30/2022

 

 

6/30/2022

 

 

6/30/2023

 

 

6/30/2022

 

Partnership amortization for tax credit purposes

 

$

(2,019

)

 

$

(1,961

)

 

$

(1,869

)

 

$

(1,531

)

 

$

(1,475

)

 

$

(3,980

)

 

$

(2,811

)

Increase in life insurance cash surrender value

 

 

1,716

 

 

 

1,693

 

 

 

1,687

 

 

 

1,676

 

 

 

1,683

 

 

 

3,409

 

 

 

3,310

 

Other miscellaneous income

 

 

3,998

 

 

 

2,782

 

 

 

2,493

 

 

 

2,273

 

 

 

1,699

 

 

 

6,780

 

 

 

4,614

 

Total other, net

 

$

3,695

 

 

$

2,514

 

 

$

2,311

 

 

$

2,418

 

 

$

1,907

 

 

$

6,209

 

 

$

5,113

 

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

 

 

Six Months Ended

 

 

 

6/30/2023

 

 

3/31/2023

 

 

12/31/2022

 

 

9/30/2022

 

 

6/30/2022

 

 

6/30/2023

 

 

6/30/2022

 

Loan expense (1)

 

$

3,066

 

 

$

2,538

 

 

$

2,908

 

 

$

2,866

 

 

$

2,947

 

 

$

5,604

 

 

$

6,475

 

Amortization of intangibles

 

 

130

 

 

 

288

 

 

 

312

 

 

 

312

 

 

 

328

 

 

 

418

 

 

 

810

 

FDIC assessment expense

 

 

2,550

 

 

 

2,370

 

 

 

2,130

 

 

 

1,945

 

 

 

1,810

 

 

 

4,920

 

 

 

3,310

 

Other real estate expense, net

 

 

171

 

 

 

172

 

 

 

18

 

 

 

497

 

 

 

623

 

 

 

343

 

 

 

658

 

Other miscellaneous expense

 

 

8,585

 

 

 

9,443

 

 

 

9,767

 

 

 

8,117

 

 

 

7,782

 

 

 

18,028

 

 

 

15,717

 

Total other expense (1)

 

$

14,502

 

 

$

14,811

 

 

$

15,135

 

 

$

13,737

 

 

$

13,490

 

 

$

29,313

 

 

$

26,970

 

 

(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

June 30, 2023

($ in thousands except per share data)

(unaudited)

Note 7 – Non-GAAP Financial Measures (continued)

 

 

 

 

Quarter Ended

 

 

Six Months Ended

 

 

 

 

 

6/30/2023

 

 

3/31/2023

 

 

12/31/2022

 

 

9/30/2022

 

 

6/30/2022

 

 

6/30/2023

 

 

6/30/2022

 

TANGIBLE EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE BALANCES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders' equity

 

 

 

$

1,580,291

 

 

$

1,523,828

 

 

$

1,493,291

 

 

$

1,606,469

 

 

$

1,608,309

 

 

$

1,552,215

 

 

$

1,660,739

 

Less: Goodwill

 

 

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

Identifiable intangible assets

 

 

 

 

(3,301

)

 

 

(3,523

)

 

 

(3,816

)

 

 

(4,131

)

 

 

(4,436

)

 

 

(3,411

)

 

 

(4,656

)

Total average tangible equity

 

 

 

$

1,192,753

 

 

$

1,136,068

 

 

$

1,105,238

 

 

$

1,218,101

 

 

$

1,219,636

 

 

$

1,164,567

 

 

$

1,271,846

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PERIOD END BALANCES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders' equity

 

 

 

$

1,571,193

 

 

$

1,562,099

 

 

$

1,492,268

 

 

$

1,508,945

 

 

$

1,586,696

 

 

 

 

 

 

 

Less: Goodwill

 

 

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

 

 

 

 

 

 

Identifiable intangible assets

 

 

 

 

(3,222

)

 

 

(3,352

)

 

 

(3,640

)

 

 

(3,952

)

 

 

(4,264

)

 

 

 

 

 

 

Total tangible equity

 

(a)

 

$

1,183,734

 

 

$

1,174,510

 

 

$

1,104,391

 

 

$

1,120,756

 

 

$

1,198,195

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TANGIBLE ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

 

$

18,422,626

 

 

$

18,877,178

 

 

$

18,015,478

 

 

$

17,190,634

 

 

$

16,951,510

 

 

 

 

 

 

 

Less: Goodwill

 

 

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

 

 

 

 

 

 

Identifiable intangible assets

 

 

 

 

(3,222

)

 

 

(3,352

)

 

 

(3,640

)

 

 

(3,952

)

 

 

(4,264

)

 

 

 

 

 

 

Total tangible assets

 

(b)

 

$

18,035,167

 

 

$

18,489,589

 

 

$

17,627,601

 

 

$

16,802,445

 

 

$

16,563,009

 

 

 

 

 

 

 

Risk-weighted assets

 

(c)

 

$

14,966,614

 

 

$

14,793,893

 

 

$

14,521,078

 

 

$

13,748,819

 

 

$

13,076,981

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) ADJUSTED FOR INTANGIBLE AMORTIZATION

 

 

 

 

 

 

 

Net income (loss)

 

 

 

$

45,037

 

 

$

50,300

 

 

$

(34,063

)

 

$

42,455

 

 

$

34,284

 

 

$

95,337

 

 

$

63,495

 

Plus: Intangible amortization net of tax

 

 

 

 

97

 

 

 

216

 

 

 

234

 

 

 

234

 

 

 

246

 

 

 

313

 

 

 

608

 

Net income (loss) adjusted for intangible amortization

 

$

45,134

 

 

$

50,516

 

 

$

(33,829

)

 

$

42,689

 

 

$

34,530

 

 

$

95,650

 

 

$

64,103

 

Period end common shares outstanding

 

(d)

 

 

61,069,036

 

 

 

61,048,516

 

 

 

60,977,686

 

 

 

60,953,864

 

 

 

61,201,123

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TANGIBLE COMMON EQUITY MEASUREMENTS

 

 

 

 

 

 

 

Return on average tangible equity (1)

 

 

 

 

15.18

%

 

 

18.03

%

 

 

-12.14

%

 

 

13.90

%

 

 

11.36

%

 

 

16.56

%

 

 

10.16

%

Tangible equity/tangible assets

 

(a)/(b)

 

 

6.56

%

 

 

6.35

%

 

 

6.27

%

 

 

6.67

%

 

 

7.23

%

 

 

 

 

 

 

Tangible equity/risk-weighted assets

 

(a)/(c)

 

 

7.91

%

 

 

7.94

%

 

 

7.61

%

 

 

8.15

%

 

 

9.16

%

 

 

 

 

 

 

Tangible book value

 

(a)/(d)*1,000

 

$

19.38

 

 

$

19.24

 

 

$

18.11

 

 

$

18.39

 

 

$

19.58

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMMON EQUITY TIER 1 CAPITAL (CET1)

 

 

 

 

 

 

 

Total shareholders' equity

 

 

 

$

1,571,193

 

 

$

1,562,099

 

 

$

1,492,268

 

 

$

1,508,945

 

 

$

1,586,696

 

 

 

 

 

 

 

CECL transition adjustment

 

 

 

 

13,000

 

 

 

13,000

 

 

 

19,500

 

 

 

19,500

 

 

 

19,500

 

 

 

 

 

 

 

AOCI-related adjustments

 

 

 

 

265,704

 

 

 

242,381

 

 

 

275,403

 

 

 

306,412

 

 

 

207,142

 

 

 

 

 

 

 

CET1 adjustments and deductions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill net of associated deferred

  tax liabilities (DTLs)

 

 

(370,227

)

 

 

(370,234

)

 

 

(370,241

)

 

 

(370,217

)

 

 

(370,229

)

 

 

 

 

 

 

Other adjustments and deductions

  for CET1 (2)

 

 

(2,915

)

 

 

(3,275

)

 

 

(3,258

)

 

 

(3,506

)

 

 

(3,757

)

 

 

 

 

 

 

CET1 capital

 

(e)

 

 

1,476,755

 

 

 

1,443,971

 

 

 

1,413,672

 

 

 

1,461,134

 

 

 

1,439,352

 

 

 

 

 

 

 

Additional tier 1 capital instruments

  plus related surplus

 

 

60,000

 

 

 

60,000

 

 

 

60,000

 

 

 

60,000

 

 

 

60,000

 

 

 

 

 

 

 

Tier 1 capital

 

 

 

$

1,536,755

 

 

$

1,503,971

 

 

$

1,473,672

 

 

$

1,521,134

 

 

$

1,499,352

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity tier 1 capital ratio

 

(e)/(c)

 

 

9.87

%

 

 

9.76

%

 

 

9.74

%

 

 

10.63

%

 

 

11.01

%

 

 

 

 

 

 

 

(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

June 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

 

 

Six Months Ended

 

 

 

6/30/2023

 

 

3/31/2023

 

 

12/31/2022

 

 

9/30/2022

 

 

6/30/2022

 

 

6/30/2023

 

 

6/30/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (GAAP)

 

$

139,904

 

 

$

137,595

 

 

$

146,583

 

 

$

136,105

 

 

$

112,676

 

 

$

277,499

 

 

$

212,020

 

Noninterest income (GAAP)

 

 

53,553

 

 

 

51,377

 

 

 

45,170

 

 

 

52,606

 

 

 

53,253

 

 

 

104,930

 

 

 

107,368

 

Pre-provision revenue

(a)

$

193,457

 

 

$

188,972

 

 

$

191,753

 

 

$

188,711

 

 

$

165,929

 

 

$

382,429

 

 

$

319,388

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense (GAAP)

 

$

132,218

 

 

$

128,327

 

 

$

231,229

 

 

$

126,698

 

 

$

123,767

 

 

$

260,545

 

 

$

245,286

 

Less: Litigation settlement expense

 

 

 

 

 

 

 

 

(100,750

)

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted noninterest expense - PPNR (Non-GAAP)

(b)

$

132,218

 

 

$

128,327

 

 

$

130,479

 

 

$

126,698

 

 

$

123,767

 

 

$

260,545

 

 

$

245,286

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PPNR (Non-GAAP)

(a)-(b)

$

61,239

 

 

$

60,645

 

 

$

61,274

 

 

$

62,013

 

 

$

42,162

 

 

$

121,884

 

 

$

74,102

 

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

 

 

Quarter Ended

 

 

Six Months Ended

 

 

 

6/30/2023

 

 

3/31/2023

 

 

12/31/2022

 

 

9/30/2022

 

 

6/30/2022

 

 

6/30/2023

 

 

6/30/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total noninterest expense (GAAP)

 

$

132,218

 

 

$

128,327

 

 

$

231,229

 

 

$

126,698

 

 

$

123,767

 

 

$

260,545

 

 

$

245,286

 

Less: Other real estate expense, net

 

(171

)

 

 

(172

)

 

 

(18

)

 

 

(497

)

 

 

(623

)

 

 

(343

)

 

 

(658

)

Amortization of intangibles

 

(130

)

 

 

(288

)

 

 

(312

)

 

 

(312

)

 

 

(328

)

 

 

(418

)

 

 

(810

)

Charitable contributions resulting in

  state tax credits

 

(325

)

 

 

(325

)

 

 

(375

)

 

 

(375

)

 

 

(375

)

 

 

(650

)

 

 

(750

)

Litigation settlement expense

 

 

 

 

 

 

 

 

(100,750

)

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted noninterest expense (Non-GAAP)

(c)

$

131,592

 

 

$

127,542

 

 

$

129,774

 

 

$

125,514

 

 

$

122,441

 

 

$

259,134

 

 

$

243,068

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (GAAP)

 

$

139,904

 

 

$

137,595

 

 

$

146,583

 

 

$

136,105

 

 

$

112,676

 

 

$

277,499

 

 

$

212,020

 

Add: Tax equivalent adjustment

 

 

3,383

 

 

 

3,477

 

 

 

3,451

 

 

 

2,975

 

 

 

2,916

 

 

 

6,860

 

 

 

5,919

 

Net interest income-FTE (Non-GAAP)

(a)

$

143,287

 

 

$

141,072

 

 

$

150,034

 

 

$

139,080

 

 

$

115,592

 

 

$

284,359

 

 

$

217,939

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income (GAAP)

 

$

53,553

 

 

$

51,377

 

 

$

45,170

 

 

$

52,606

 

 

$

53,253

 

 

$

104,930

 

 

$

107,368

 

Add: Partnership amortization for tax credit purposes

 

2,019

 

 

 

1,961

 

 

 

1,869

 

 

 

1,531

 

 

 

1,475

 

 

 

3,980

 

 

 

2,811

 

Adjusted noninterest income (Non-GAAP)

(b)

$

55,572

 

 

$

53,338

 

 

$

47,039

 

 

$

54,137

 

 

$

54,728

 

 

$

108,910

 

 

$

110,179

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted revenue (Non-GAAP)

(a)+(b)

$

198,859

 

 

$

194,410

 

 

$

197,073

 

 

$

193,217

 

 

$

170,320

 

 

$

393,269

 

 

$

328,118

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio (Non-GAAP)

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

 

66.17

%

 

 

65.60

%

 

 

65.85

%

 

 

64.96

%

 

 

71.89

%

 

 

65.89

%

 

 

74.08

%

 

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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