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Trustmark Corporation Announces First Quarter 2024 Financial Results

TRMK

Loan Growth Moderates, Credit Quality Remains Stable

Solid Growth in Fee Income and Disciplined Expense Management Reflected in Financial Results

Trustmark Corporation (NASDAQGS:TRMK) reported net income of $41.5 million in the first quarter of 2024, representing diluted earnings per share of $0.68. Trustmark’s performance during the first quarter produced a return on average tangible equity of 12.98% and a return on average assets of 0.89%. The Board of Directors declared a quarterly cash dividend of $0.23 per share payable June 15, 2024, to shareholders of record on June 1, 2024.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20240423449062/en/

Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/53946039/en

First Quarter Highlights

  • Loans held for investment increased 0.8% linked-quarter and represented 85.1% of total deposits at March 31, 2024
  • Credit quality remained solid
  • Revenue totaled $188.2 million, up 0.9% linked-quarter
  • Noninterest income increased 11.1% linked-quarter, reflecting seasonal increases and the strength of diversified business lines
  • Noninterest expense decreased 3.9% linked-quarter, reflecting on-going expense management priorities

Duane A. Dewey, President and CEO, stated, “We are off to a great start in 2024. Our first quarter results reflect continued loan growth, solid credit quality, and double-digit increases in noninterest income. In addition, we experienced a meaningful decrease in noninterest expense. These accomplishments are the results of our focused efforts to expand customer relationships and diligently manage expenses. Our associates have done a tremendous job of serving customers, building relationships, and demonstrating the value Trustmark can provide as our customers’ financial partner. We are well positioned to serve and expand our customer base and create long-term value for shareholders.”

Balance Sheet Management

  • Loans held for investment (HFI) increased $107.4 million, or 0.8%, during the quarter
  • Total deposits decreased $231.2 million, or 1.5%, during the quarter
  • Maintained strong capital position with CET1 ratio of 10.12% and total risk-based capital ratio of 12.42%

Loans HFI totaled $13.1 billion at March 31, 2024, reflecting an increase of $107.4 million, or 0.8%, linked-quarter and $560.7 million, or 4.5%, year-over-year. The linked-quarter growth reflected increases in commercial real estate and equipment finance loans offset in part by reductions in state and other political subdivision loans and consumer loans. Trustmark’s loan portfolio remains well-diversified by loan type and geography.

Deposits totaled $15.3 billion at March 31, 2024, down $231.2 million, or 1.5%, from the prior quarter and up $554.9 million, or 3.8%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 85.1% of total deposits at March 31, 2024. Migration into higher-yielding products continued to drive a change in deposit mix from noninterest-bearing deposits, which represented 19.8% of total deposits at March 31, 2024. Interest-bearing deposit costs totaled 2.74% for the first quarter, an increase of 7 basis points linked-quarter, while the total cost of deposits was 2.18%, an increase of 8 basis points linked-quarter. The total cost of interest-bearing liabilities in the first quarter was 2.92%, up 3 basis points from the prior quarter.

During the first quarter, Trustmark did not repurchase any of its outstanding common shares. As previously announced, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2024, under which $50.0 million of Trustmark’s outstanding shares may be acquired through December 31, 2024. At March 31, 2024, Trustmark’s tangible equity to tangible assets ratio was 7.20%, while the total risk-based capital ratio was 12.42%. Tangible book value per share was $21.18 at March 31, 2024, an increase of 1.5% from the prior quarter and 10.1% from the prior year.

Credit Quality

  • Net charge-offs totaled $4.1 million, representing 0.12% of average loans in the first quarter
  • Provision for credit losses for loans HFI was $7.7 million in the first quarter
  • Allowance for credit losses (ACL) represented 1.10% of loans HFI and 235.29% of nonaccrual loans, excluding individually analyzed loans at March 31, 2024

Nonaccrual loans totaled $98.4 million at March 31, 2024, down $1.7 million from the prior quarter and an increase of $26.0 million year-over-year. Other real estate totaled $7.6 million, reflecting increases of $753 thousand and $5.9 million from the prior quarter and prior year, respectively. Collectively, nonperforming assets totaled $106.0 million, representing 0.80% of loans HFI and held for sale (HFS) at March 31, 2024.

The provision for credit losses for loans HFI was $7.7 million in the first quarter and was primarily attributable to loan growth, changes in the macroeconomic forecast, and net adjustments to the qualitative factors. The provision for credit losses for off-balance sheet credit exposures was a negative $192 thousand in the first quarter. Collectively, the provision for credit losses totaled $7.5 million in the first quarter compared to $6.7 million in the prior quarter and $1.0 million in the first quarter of 2023.

Allocation of Trustmark’s $143.0 million ACL on loans HFI represented 0.93% of commercial loans and 1.63% of consumer and home mortgage loans, resulting in an ACL to total loans HFI of 1.10% at March 31, 2024. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.

Revenue Generation

  • Net interest income (FTE) totaled $136.2 million in the first quarter, down 2.8% linked-quarter
  • Net interest margin totaled 3.21% in the first quarter, down 4 basis points from the prior quarter
  • Noninterest income increased 11.1% linked-quarter to total $55.3 million, reflecting growth in mortgage banking, insurance, other income, and wealth management revenue

Revenue in the first quarter totaled $188.2 million, an increase of 0.9% from the prior quarter and a decrease of 0.4% from the same quarter in the prior year. The linked-quarter increase primarily reflects higher noninterest income offset in part by lower net interest income while the year-over-year decrease is attributed to lower net interest income offset in part by growth in noninterest income.

Net interest income (FTE) in the first quarter totaled $136.2 million, resulting in a net interest margin of 3.21%, down 4 basis points from the prior quarter. The decrease in the net interest margin was primarily due to increased costs of interest-bearing liabilities.

Noninterest income in the first quarter totaled $55.3 million, an increase of $5.5 million, or 11.1%, from the prior quarter and $4.0 million, or 7.7%, year-over-year. The linked-quarter increases in mortgage banking, insurance, other income, and wealth management revenue were offset in part by declines in bank card and other fees and service charges on deposit accounts. The increase in noninterest income year-over-year is broad-based, reflecting increases in mortgage banking, insurance, other income, service charges of deposit accounts and wealth management revenue which were offset in part by declines in bank card and other fees.

Mortgage loan production in the first quarter totaled $274.0 million, up 0.8% from the prior quarter and down 24.1% year-over-year. Mortgage banking revenue totaled $8.9 million in the first quarter, an increase of $3.4 million linked-quarter and $1.3 million year-over-year. The linked-quarter increase was principally attributable to increased gain on sales of mortgage loans, improvement in net negative hedge ineffectiveness, and reduced servicing asset amortization. The year-over-year increase was principally due to increased gain on sales of mortgage loans.

Insurance revenue totaled $15.5 million in the first quarter, up $2.3 million, or 17.2%, from the prior quarter and $1.2 million, or 8.1%, year-over-year. The linked-quarter and year-over-year increases primarily reflected growth in commercial property and casualty commissions. Wealth management revenue in the first quarter totaled $9.0 million, an increase of $295 thousand, or 3.4%, from the prior quarter and $172 thousand, or 2.0%, year-over-year. The linked-quarter growth reflected higher trust management revenue while the year-over-year growth reflected increased brokerage revenue.

Other income, net totaled $3.6 million in the first quarter, up $1.1 million from both the prior quarter and year-over-year. Service charges on deposit accounts totaled $11.0 million in the first quarter, reflecting a seasonal decrease of $353 thousand, or 3.1%, from the prior quarter and an increase of $622 thousand, or 6.0%, year-over-year. Bank card and other fees totaled $7.4 million in the first quarter, down $1.1 million from the prior quarter due principally to lower customer derivative revenue. Year-over-year, bank card and other fees declined $375 thousand.

Noninterest Expense

  • Total noninterest expense declined $5.3 million, or 3.9%, linked-quarter
  • Salary and employee benefit expense declined $2.5 million, or 3.3%, linked-quarter
  • Total services and fees declined $3.1 million, or 11.0%, linked-quarter

Noninterest expense in the first quarter totaled $131.1 million, a decrease of $5.3 million, or 3.9%, from the prior quarter and an increase of $2.8 million, or 2.2%, year-over-year. Salary and employee benefit expense totaled $75.5 million in the first quarter, a decline of $2.5 million, or 3.3%, linked-quarter and an increase of $1.4 million, or 1.9%, year-over-year. The linked-quarter decline reflected reductions in incentives, severance, medical insurance, and salary expense, which were offset in part by a seasonal increase in payroll taxes and restricted stock compensation expense. Services and fees in the first quarter totaled $24.8 million, a decrease of $3.1 million, or 11.0%, from the prior quarter and $587 thousand, or 2.3%, year-over-year. The linked-quarter decline is attributable principally to lower professional fees and data processing software expense.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, April 24, 2024, at 8:30 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (877) 317-3051 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Wednesday, May 8, 2024, in archived format at the same web address or by calling (877) 344-7529, passcode 4820621.

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, actions by the Board of Governors of the Federal Reserve System (FRB) that impact the level of market interest rates, local, state, national and international economic and market conditions, conditions in the housing and real estate markets in the regions in which Trustmark operates and the extent and duration of the current volatility in the credit and financial markets, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels and slowdowns in economic growth, 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 bank failures and other economic and industry volatility, including potential increased regulatory requirements, the demand for the products and services we offer, potential unexpected adverse outcomes in pending litigation matters, our ability to attract and retain 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, 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, 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
March 31, 2024
($ in thousands)
(unaudited)
Linked Quarter Year over Year
QUARTERLY AVERAGE BALANCES 3/31/2024 12/31/2023 3/31/2023 $ Change % Change $ Change % Change
Securities AFS-taxable

$

1,927,619

$

1,986,825

$

2,187,121

$

(59,206

)

-3.0

%

$

(259,502

)

-11.9

%

Securities AFS-nontaxable

4,246

4,812

(4,246

)

-100.0

%

(4,812

)

-100.0

%

Securities HTM-taxable

1,418,476

1,430,169

1,479,283

(11,693

)

-0.8

%

(60,807

)

-4.1

%

Securities HTM-nontaxable

340

340

4,509

0.0

%

(4,169

)

-92.5

%

Total securities

3,346,435

3,421,580

3,675,725

(75,145

)

-2.2

%

(329,290

)

-9.0

%

Loans (includes loans held for sale)

13,169,805

13,010,028

12,530,449

159,777

1.2

%

639,356

5.1

%

Fed funds sold and reverse repurchases

114

121

2,379

(7

)

-5.8

%

(2,265

)

-95.2

%

Other earning assets

571,215

670,477

647,760

(99,262

)

-14.8

%

(76,545

)

-11.8

%

Total earning assets

17,087,569

17,102,206

16,856,313

(14,637

)

-0.1

%

231,256

1.4

%

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

(138,711

)

(133,742

)

(119,978

)

(4,969

)

-3.7

%

(18,733

)

-15.6

%

Other assets

1,730,521

1,749,069

1,762,449

(18,548

)

-1.1

%

(31,928

)

-1.8

%

Total assets

$

18,679,379

$

18,717,533

$

18,498,784

$

(38,154

)

-0.2

%

$

180,595

1.0

%

Interest-bearing demand deposits

$

5,291,779

$

5,053,935

$

4,751,154

$

237,844

4.7

%

$

540,625

11.4

%

Savings deposits

3,686,027

3,526,600

4,193,764

159,427

4.5

%

(507,737

)

-12.1

%

Time deposits

3,321,601

3,427,384

1,907,449

(105,783

)

-3.1

%

1,414,152

74.1

%

Total interest-bearing deposits

12,299,407

12,007,919

10,852,367

291,488

2.4

%

1,447,040

13.3

%

Fed funds purchased and repurchases

428,127

403,041

436,535

25,086

6.2

%

(8,408

)

-1.9

%

Other borrowings

463,459

590,765

1,110,843

(127,306

)

-21.5

%

(647,384

)

-58.3

%

Subordinated notes

123,501

123,446

123,281

55

0.0

%

220

0.2

%

Junior subordinated debt securities

61,856

61,856

61,856

0.0

%

0.0

%

Total interest-bearing liabilities

13,376,350

13,187,027

12,584,882

189,323

1.4

%

791,468

6.3

%

Noninterest-bearing deposits

3,120,566

3,296,351

3,813,248

(175,785

)

-5.3

%

(692,682

)

-18.2

%

Other liabilities

505,942

641,662

576,826

(135,720

)

-21.2

%

(70,884

)

-12.3

%

Total liabilities

17,002,858

17,125,040

16,974,956

(122,182

)

-0.7

%

27,902

0.2

%

Shareholders' equity

1,676,521

1,592,493

1,523,828

84,028

5.3

%

152,693

10.0

%

Total liabilities and equity

$

18,679,379

$

18,717,533

$

18,498,784

$

(38,154

)

-0.2

%

$

180,595

1.0

%

n/m - percentage changes greater than +/- 100% are considered not meaningful

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2024
($ in thousands)
(unaudited)
Linked Quarter Year over Year
PERIOD END BALANCES 3/31/2024 12/31/2023 3/31/2023 $ Change % Change $ Change % Change
Cash and due from banks

$

606,261

$

975,543

$

1,297,144

$

(369,282

)

-37.9

%

$

(690,883

)

-53.3

%

Securities available for sale

1,702,299

1,762,878

1,984,162

(60,579

)

-3.4

%

(281,863

)

-14.2

%

Securities held to maturity

1,415,025

1,426,279

1,474,338

(11,254

)

-0.8

%

(59,313

)

-4.0

%

Loans held for sale (LHFS)

172,937

184,812

175,926

(11,875

)

-6.4

%

(2,989

)

-1.7

%

Loans held for investment (LHFI)

13,057,943

12,950,524

12,497,195

107,419

0.8

%

560,748

4.5

%

ACL LHFI

(142,998

)

(139,367

)

(122,239

)

(3,631

)

-2.6

%

(20,759

)

-17.0

%

Net LHFI

12,914,945

12,811,157

12,374,956

103,788

0.8

%

539,989

4.4

%

Premises and equipment, net

232,924

232,537

223,975

387

0.2

%

8,949

4.0

%

Mortgage servicing rights

138,044

131,870

127,206

6,174

4.7

%

10,838

8.5

%

Goodwill

384,237

384,237

384,237

0.0

%

0.0

%

Identifiable intangible assets

2,845

2,965

3,352

(120

)

-4.0

%

(507

)

-15.1

%

Other real estate

7,620

6,867

1,684

753

11.0

%

5,936

n/m

Operating lease right-of-use assets

36,659

38,142

35,315

(1,483

)

-3.9

%

1,344

3.8

%

Other assets

762,816

764,902

794,883

(2,086

)

-0.3

%

(32,067

)

-4.0

%

Total assets

$

18,376,612

$

18,722,189

$

18,877,178

$

(345,577

)

-1.8

%

$

(500,566

)

-2.7

%

Deposits:
Noninterest-bearing

$

3,039,652

$

3,197,620

$

3,797,055

$

(157,968

)

-4.9

%

$

(757,403

)

-19.9

%

Interest-bearing

12,298,905

12,372,143

10,986,606

(73,238

)

-0.6

%

1,312,299

11.9

%

Total deposits

15,338,557

15,569,763

14,783,661

(231,206

)

-1.5

%

554,896

3.8

%

Fed funds purchased and repurchases

393,215

405,745

477,980

(12,530

)

-3.1

%

(84,765

)

-17.7

%

Other borrowings

482,027

483,230

1,485,181

(1,203

)

-0.2

%

(1,003,154

)

-67.5

%

Subordinated notes

123,537

123,482

123,317

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

33,865

34,057

34,596

(192

)

-0.6

%

(731

)

-2.1

%

Operating lease liabilities

40,185

41,584

37,988

(1,399

)

-3.4

%

2,197

5.8

%

Other liabilities

220,771

340,625

310,500

(119,854

)

-35.2

%

(89,729

)

-28.9

%

Total liabilities

16,694,013

17,060,342

17,315,079

(366,329

)

-2.1

%

(621,066

)

-3.6

%

Common stock

12,747

12,725

12,720

22

0.2

%

27

0.2

%

Capital surplus

160,521

159,688

155,297

833

0.5

%

5,224

3.4

%

Retained earnings

1,736,485

1,709,157

1,636,463

27,328

1.6

%

100,022

6.1

%

Accumulated other comprehensive
income (loss), net of tax

(227,154

)

(219,723

)

(242,381

)

(7,431

)

-3.4

%

15,227

6.3

%

Total shareholders' equity

1,682,599

1,661,847

1,562,099

20,752

1.2

%

120,500

7.7

%

Total liabilities and equity

$

18,376,612

$

18,722,189

$

18,877,178

$

(345,577

)

-1.8

%

$

(500,566

)

-2.7

%

n/m - percentage changes greater than +/- 100% are considered not meaningful

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2024
($ in thousands except per share data)
(unaudited)
Quarter Ended Linked Quarter Year over Year
INCOME STATEMENTS 3/31/2024 12/31/2023 3/31/2023 $ Change % Change $ Change % Change
Interest and fees on LHFS & LHFI-FTE

$

209,456

$

210,288

$

178,967

$

(832

)

-0.4

%

$

30,489

17.0

%

Interest on securities-taxable

15,634

15,936

16,761

(302

)

-1.9

%

(1,127

)

-6.7

%

Interest on securities-tax exempt-FTE

4

44

92

(40

)

-90.9

%

(88

)

-95.7

%

Interest on fed funds sold and reverse repurchases

1

2

30

(1

)

-50.0

%

(29

)

-96.7

%

Other interest income

8,110

9,918

6,527

(1,808

)

-18.2

%

1,583

24.3

%

Total interest income-FTE

233,205

236,188

202,377

(2,983

)

-1.3

%

30,828

15.2

%

Interest on deposits

83,716

80,847

40,898

2,869

3.5

%

42,818

n/m

Interest on fed funds purchased and repurchases

5,591

5,347

4,832

244

4.6

%

759

15.7

%

Other interest expense

7,703

9,946

15,575

(2,243

)

-22.6

%

(7,872

)

-50.5

%

Total interest expense

97,010

96,140

61,305

870

0.9

%

35,705

58.2

%

Net interest income-FTE

136,195

140,048

141,072

(3,853

)

-2.8

%

(4,877

)

-3.5

%

Provision for credit losses, LHFI

7,708

7,585

3,244

123

1.6

%

4,464

n/m

Provision for credit losses, off-balance sheet credit exposures

(192

)

(888

)

(2,242

)

696

78.4

%

2,050

91.4

%

Net interest income after provision-FTE

128,679

133,351

140,070

(4,672

)

-3.5

%

(11,391

)

-8.1

%

Service charges on deposit accounts

10,958

11,311

10,336

(353

)

-3.1

%

622

6.0

%

Bank card and other fees

7,428

8,502

7,803

(1,074

)

-12.6

%

(375

)

-4.8

%

Mortgage banking, net

8,915

5,519

7,639

3,396

61.5

%

1,276

16.7

%

Insurance commissions

15,464

13,197

14,305

2,267

17.2

%

1,159

8.1

%

Wealth management

8,952

8,657

8,780

295

3.4

%

172

2.0

%

Other, net

3,632

2,579

2,514

1,053

40.8

%

1,118

44.5

%

Securities gains (losses), net

39

(39

)

-100.0

%

n/m

Total noninterest income

55,349

49,804

51,377

5,545

11.1

%

3,972

7.7

%

Salaries and employee benefits

75,458

78,003

74,056

(2,545

)

-3.3

%

1,402

1.9

%

Services and fees

24,839

27,906

25,426

(3,067

)

-11.0

%

(587

)

-2.3

%

Net occupancy-premises

7,496

7,362

7,629

134

1.8

%

(133

)

-1.7

%

Equipment expense

6,385

6,517

6,405

(132

)

-2.0

%

(20

)

-0.3

%

Other expense

16,968

16,641

14,811

327

2.0

%

2,157

14.6

%

Total noninterest expense

131,146

136,429

128,327

(5,283

)

-3.9

%

2,819

2.2

%

Income before income taxes and tax eq adj

52,882

46,726

63,120

6,156

13.2

%

(10,238

)

-16.2

%

Tax equivalent adjustment

3,365

3,306

3,477

59

1.8

%

(112

)

-3.2

%

Income before income taxes

49,517

43,420

59,643

6,097

14.0

%

(10,126

)

-17.0

%

Income taxes

7,982

7,297

9,343

685

9.4

%

(1,361

)

-14.6

%

Net income

$

41,535

$

36,123

$

50,300

$

5,412

15.0

%

$

(8,765

)

-17.4

%

Per share data
Earnings per share - basic

$

0.68

$

0.59

$

0.82

$

0.09

15.3

%

$

(0.14

)

-17.1

%

Earnings per share - diluted

$

0.68

$

0.59

$

0.82

$

0.09

15.3

%

$

(0.14

)

-17.1

%

Dividends per share

$

0.23

$

0.23

$

0.23

0.0

%

0.0

%

Weighted average shares outstanding
Basic

61,128,425

61,070,481

61,011,059

Diluted

61,348,364

61,296,840

61,193,275

Period end shares outstanding

61,178,366

61,071,173

61,048,516

n/m - percentage changes greater than +/- 100% are considered not meaningful

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2024
($ in thousands)
(unaudited)
Quarter Ended Linked Quarter Year over Year
NONPERFORMING ASSETS 3/31/2024 12/31/2023 3/31/2023 $ Change % Change $ Change % Change
Nonaccrual LHFI
Alabama (1)

$

23,261

$

23,271

$

10,919

$

(10

)

0.0

%

$

12,342

n/m

Florida

585

170

256

415

n/m

329

n/m

Mississippi (2)

59,059

54,615

32,560

4,444

8.1

%

26,499

81.4

%

Tennessee (3)

1,800

1,802

5,416

(2

)

-0.1

%

(3,616

)

-66.8

%

Texas

13,646

20,150

23,224

(6,504

)

-32.3

%

(9,578

)

-41.2

%

Total nonaccrual LHFI

98,351

100,008

72,375

(1,657

)

-1.7

%

25,976

35.9

%

Other real estate
Alabama (1)

1,050

1,397

(347

)

-24.8

%

1,050

n/m

Florida

71

71

n/m

71

n/m

Mississippi (2)

2,870

1,242

1,495

1,628

n/m

1,375

92.0

%

Tennessee (3)

86

189

86

n/m

(103

)

-54.5

%

Texas

3,543

4,228

(685

)

-16.2

%

3,543

n/m

Total other real estate

7,620

6,867

1,684

753

11.0

%

5,936

n/m

Total nonperforming assets

$

105,971

$

106,875

$

74,059

$

(904

)

-0.8

%

$

31,912

43.1

%

LOANS PAST DUE OVER 90 DAYS
LHFI

$

5,243

$

5,790

$

2,255

$

(547

)

-9.4

%

$

2,988

n/m

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

$

56,530

$

51,243

$

41,468

$

5,287

10.3

%

$

15,062

36.3

%

Quarter Ended Linked Quarter Year over Year
ACL LHFI 3/31/2024 12/31/2023 3/31/2023 $ Change % Change $ Change % Change
Beginning Balance

$

139,367

$

134,031

$

120,214

$

5,336

4.0

%

$

19,153

15.9

%

Provision for credit losses, LHFI

7,708

7,585

3,244

123

1.6

%

4,464

n/m

Charge-offs

(6,324

)

(4,250

)

(2,996

)

(2,074

)

-48.8

%

(3,328

)

n/m

Recoveries

2,247

2,001

1,777

246

12.3

%

470

26.4

%

Net (charge-offs) recoveries

(4,077

)

(2,249

)

(1,219

)

(1,828

)

-81.3

%

(2,858

)

n/m

Ending Balance

$

142,998

$

139,367

$

122,239

$

3,631

2.6

%

$

20,759

17.0

%

NET (CHARGE-OFFS) RECOVERIES
Alabama (1)

$

(341

)

$

(299

)

$

(268

)

$

(42

)

-14.0

%

$

(73

)

-27.2

%

Florida

277

180

(36

)

97

53.9

%

313

n/m

Mississippi (2)

(1,489

)

(1,943

)

(775

)

454

23.4

%

(714

)

-92.1

%

Tennessee (3)

(179

)

(193

)

(124

)

14

7.3

%

(55

)

-44.4

%

Texas

(2,345

)

6

(16

)

(2,351

)

n/m

(2,329

)

n/m

Total net (charge-offs) recoveries

$

(4,077

)

$

(2,249

)

$

(1,219

)

$

(1,828

)

-81.3

%

$

(2,858

)

n/m

(1) Alabama includes the Georgia Loan Production Office.
(2) Mississippi includes Central and Southern Mississippi Regions.
(3) 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
March 31, 2024
($ in thousands)
(unaudited)
Quarter Ended
AVERAGE BALANCES 3/31/2024 12/31/2023 9/30/2023 6/30/2023 3/31/2023
Securities AFS-taxable

$

1,927,619

$

1,986,825

$

2,049,006

$

2,140,505

$

2,187,121

Securities AFS-nontaxable

4,246

4,779

4,796

4,812

Securities HTM-taxable

1,418,476

1,430,169

1,445,895

1,463,086

1,479,283

Securities HTM-nontaxable

340

340

907

1,718

4,509

Total securities

3,346,435

3,421,580

3,500,587

3,610,105

3,675,725

Loans (includes loans held for sale)

13,169,805

13,010,028

12,926,942

12,732,057

12,530,449

Fed funds sold and reverse repurchases

114

121

230

3,275

2,379

Other earning assets

571,215

670,477

682,644

903,027

647,760

Total earning assets

17,087,569

17,102,206

17,110,403

17,248,464

16,856,313

ACL LHFI

(138,711

)

(133,742

)

(127,915

)

(121,960

)

(119,978

)

Other assets

1,730,521

1,749,069

1,721,310

1,648,583

1,762,449

Total assets

$

18,679,379

$

18,717,533

$

18,703,798

$

18,775,087

$

18,498,784

Interest-bearing demand deposits

$

5,291,779

$

5,053,935

$

4,875,714

$

4,803,737

$

4,751,154

Savings deposits

3,686,027

3,526,600

3,642,158

4,002,134

4,193,764

Time deposits

3,321,601

3,427,384

3,075,224

2,335,752

1,907,449

Total interest-bearing deposits

12,299,407

12,007,919

11,593,096

11,141,623

10,852,367

Fed funds purchased and repurchases

428,127

403,041

414,696

389,834

436,535

Other borrowings

463,459

590,765

912,151

1,330,010

1,110,843

Subordinated notes

123,501

123,446

123,391

123,337

123,281

Junior subordinated debt securities

61,856

61,856

61,856

61,856

61,856

Total interest-bearing liabilities

13,376,350

13,187,027

13,105,190

13,046,660

12,584,882

Noninterest-bearing deposits

3,120,566

3,296,351

3,429,815

3,595,927

3,813,248

Other liabilities

505,942

641,662

585,908

552,209

576,826

Total liabilities

17,002,858

17,125,040

17,120,913

17,194,796

16,974,956

Shareholders' equity

1,676,521

1,592,493

1,582,885

1,580,291

1,523,828

Total liabilities and equity

$

18,679,379

$

18,717,533

$

18,703,798

$

18,775,087

$

18,498,784

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2024
($ in thousands)
(unaudited)
PERIOD END BALANCES 3/31/2024 12/31/2023 9/30/2023 6/30/2023 3/31/2023
Cash and due from banks

$

606,261

$

975,543

$

750,492

$

832,052

$

1,297,144

Securities available for sale

1,702,299

1,762,878

1,766,174

1,871,883

1,984,162

Securities held to maturity

1,415,025

1,426,279

1,438,287

1,458,665

1,474,338

LHFS

172,937

184,812

169,244

181,094

175,926

LHFI

13,057,943

12,950,524

12,810,259

12,613,967

12,497,195

ACL LHFI

(142,998

)

(139,367

)

(134,031

)

(129,298

)

(122,239

)

Net LHFI

12,914,945

12,811,157

12,676,228

12,484,669

12,374,956

Premises and equipment, net

232,924

232,537

230,718

227,630

223,975

Mortgage servicing rights

138,044

131,870

142,379

134,350

127,206

Goodwill

384,237

384,237

384,237

384,237

384,237

Identifiable intangible assets

2,845

2,965

3,093

3,222

3,352

Other real estate

7,620

6,867

5,485

1,137

1,684

Operating lease right-of-use assets

36,659

38,142

39,639

38,179

35,315

Other assets

762,816

764,902

784,863

805,508

794,883

Total assets

$

18,376,612

$

18,722,189

$

18,390,839

$

18,422,626

$

18,877,178

Deposits:
Noninterest-bearing

$

3,039,652

$

3,197,620

$

3,320,124

$

3,461,073

$

3,797,055

Interest-bearing

12,298,905

12,372,143

11,781,799

11,452,827

10,986,606

Total deposits

15,338,557

15,569,763

15,101,923

14,913,900

14,783,661

Fed funds purchased and repurchases

393,215

405,745

321,799

311,179

477,980

Other borrowings

482,027

483,230

793,193

1,056,714

1,485,181

Subordinated notes

123,537

123,482

123,427

123,372

123,317

Junior subordinated debt securities

61,856

61,856

61,856

61,856

61,856

ACL on off-balance sheet credit exposures

33,865

34,057

34,945

34,841

34,596

Operating lease liabilities

40,185

41,584

42,730

40,845

37,988

Other liabilities

220,771

340,625

340,615

308,726

310,500

Total liabilities

16,694,013

17,060,342

16,820,488

16,851,433

17,315,079

Common stock

12,747

12,725

12,724

12,724

12,720

Capital surplus

160,521

159,688

158,316

156,834

155,297

Retained earnings

1,736,485

1,709,157

1,687,199

1,667,339

1,636,463

Accumulated other comprehensive income (loss),
net of tax

(227,154

)

(219,723

)

(287,888

)

(265,704

)

(242,381

)

Total shareholders' equity

1,682,599

1,661,847

1,570,351

1,571,193

1,562,099

Total liabilities and equity

$

18,376,612

$

18,722,189

$

18,390,839

$

18,422,626

$

18,877,178

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2024
($ in thousands except per share data)
(unaudited)
Quarter Ended
INCOME STATEMENTS 3/31/2024 12/31/2023 9/30/2023 6/30/2023 3/31/2023
Interest and fees on LHFS & LHFI-FTE

$

209,456

$

210,288

$

206,523

$

192,941

$

178,967

Interest on securities-taxable

15,634

15,936

16,624

16,779

16,761

Interest on securities-tax exempt-FTE

4

44

58

69

92

Interest on fed funds sold and reverse repurchases

1

2

3

45

30

Other interest income

8,110

9,918

8,613

12,077

6,527

Total interest income-FTE

233,205

236,188

231,821

221,911

202,377

Interest on deposits

83,716

80,847

69,797

54,409

40,898

Interest on fed funds purchased and repurchases

5,591

5,347

5,375

4,865

4,832

Other interest expense

7,703

9,946

14,713

19,350

15,575

Total interest expense

97,010

96,140

89,885

78,624

61,305

Net interest income-FTE

136,195

140,048

141,936

143,287

141,072

Provision for credit losses, LHFI

7,708

7,585

8,322

8,211

3,244

Provision for credit losses, off-balance sheet credit exposures

(192

)

(888

)

104

245

(2,242

)

Net interest income after provision-FTE

128,679

133,351

133,510

134,831

140,070

Service charges on deposit accounts

10,958

11,311

11,074

10,695

10,336

Bank card and other fees

7,428

8,502

8,217

8,917

7,803

Mortgage banking, net

8,915

5,519

6,458

6,600

7,639

Insurance commissions

15,464

13,197

15,303

14,764

14,305

Wealth management

8,952

8,657

8,773

8,882

8,780

Other, net

3,632

2,579

2,399

3,695

2,514

Securities gains (losses), net

39

Total noninterest income

55,349

49,804

52,224

53,553

51,377

Salaries and employee benefits

75,458

78,003

76,666

75,940

74,056

Services and fees

24,839

27,906

27,882

28,264

25,426

Net occupancy-premises

7,496

7,362

7,383

7,108

7,629

Equipment expense

6,385

6,517

6,816

6,404

6,405

Litigation settlement expense

6,500

Other expense

16,968

16,641

15,698

14,502

14,811

Total noninterest expense

131,146

136,429

140,945

132,218

128,327

Income before income taxes and tax eq adj

52,882

46,726

44,789

56,166

63,120

Tax equivalent adjustment

3,365

3,306

3,299

3,383

3,477

Income before income taxes

49,517

43,420

41,490

52,783

59,643

Income taxes

7,982

7,297

7,461

7,746

9,343

Net income

$

41,535

$

36,123

$

34,029

$

45,037

$

50,300

Per share data
Earnings per share - basic

$

0.68

$

0.59

$

0.56

$

0.74

$

0.82

Earnings per share - diluted

$

0.68

$

0.59

$

0.56

$

0.74

$

0.82

Dividends per share

$

0.23

$

0.23

$

0.23

$

0.23

$

0.23

Weighted average shares outstanding
Basic

61,128,425

61,070,481

61,069,750

61,063,277

61,011,059

Diluted

61,348,364

61,296,840

61,263,032

61,230,031

61,193,275

Period end shares outstanding

61,178,366

61,071,173

61,070,095

61,069,036

61,048,516

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2024
($ in thousands)
(unaudited)
Quarter Ended
NONPERFORMING ASSETS 3/31/2024 12/31/2023 9/30/2023 6/30/2023 3/31/2023
Nonaccrual LHFI
Alabama (1)

$

23,261

$

23,271

$

23,530

$

11,058

$

10,919

Florida

585

170

151

334

256

Mississippi (2)

59,059

54,615

45,050

36,288

32,560

Tennessee (3)

1,800

1,802

1,841

5,088

5,416

Texas

13,646

20,150

20,327

22,259

23,224

Total nonaccrual LHFI

98,351

100,008

90,899

75,027

72,375

Other real estate
Alabama (1)

1,050

1,397

315

Florida

71

Mississippi (2)

2,870

1,242

942

1,137

1,495

Tennessee (3)

86

189

Texas

3,543

4,228

4,228

Total other real estate

7,620

6,867

5,485

1,137

1,684

Total nonperforming assets

$

105,971

$

106,875

$

96,384

$

76,164

$

74,059

LOANS PAST DUE OVER 90 DAYS
LHFI

$

5,243

$

5,790

$

3,804

$

3,911

$

2,255

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

$

56,530

$

51,243

$

42,532

$

35,766

$

41,468

Quarter Ended
ACL LHFI 3/31/2024 12/31/2023 9/30/2023 6/30/2023 3/31/2023
Beginning Balance

$

139,367

$

134,031

$

129,298

$

122,239

$

120,214

Provision for credit losses, LHFI

7,708

7,585

8,322

8,211

3,244

Charge-offs

(6,324

)

(4,250

)

(7,496

)

(2,773

)

(2,996

)

Recoveries

2,247

2,001

3,907

1,621

1,777

Net (charge-offs) recoveries

(4,077

)

(2,249

)

(3,589

)

(1,152

)

(1,219

)

Ending Balance

$

142,998

$

139,367

$

134,031

$

129,298

$

122,239

NET (CHARGE-OFFS) RECOVERIES
Alabama (1)

$

(341

)

$

(299

)

$

(165

)

$

(141

)

$

(268

)

Florida

277

180

21

(35

)

(36

)

Mississippi (2)

(1,489

)

(1,943

)

(1,867

)

(762

)

(775

)

Tennessee (3)

(179

)

(193

)

2,127

(166

)

(124

)

Texas

(2,345

)

6

(3,705

)

(48

)

(16

)

Total net (charge-offs) recoveries

$

(4,077

)

$

(2,249

)

$

(3,589

)

$

(1,152

)

$

(1,219

)

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

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2024
(unaudited)
Quarter Ended
FINANCIAL RATIOS AND OTHER DATA 3/31/2024 12/31/2023 9/30/2023 6/30/2023 3/31/2023
Return on average equity

9.96

%

9.00

%

8.53

%

11.43

%

13.39

%

Return on average tangible equity

12.98

%

11.92

%

11.32

%

15.18

%

18.03

%

Return on average assets

0.89

%

0.77

%

0.72

%

0.96

%

1.10

%

Interest margin - Yield - FTE

5.49

%

5.48

%

5.38

%

5.16

%

4.87

%

Interest margin - Cost

2.28

%

2.23

%

2.08

%

1.83

%

1.47

%

Net interest margin - FTE

3.21

%

3.25

%

3.29

%

3.33

%

3.39

%

Efficiency ratio (1)

67.25

%

70.25

%

68.33

%

66.17

%

65.60

%

Full-time equivalent employees

2,712

2,757

2,756

2,761

2,758

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

0.12

%

0.07

%

0.11

%

0.04

%

0.04

%

Provision for credit losses, LHFI / average loans

0.24

%

0.23

%

0.26

%

0.26

%

0.10

%

Nonaccrual LHFI / (LHFI + LHFS)

0.74

%

0.76

%

0.70

%

0.59

%

0.57

%

Nonperforming assets / (LHFI + LHFS)

0.80

%

0.81

%

0.74

%

0.60

%

0.58

%

Nonperforming assets / (LHFI + LHFS
+ other real estate)

0.80

%

0.81

%

0.74

%

0.60

%

0.58

%

ACL LHFI / LHFI

1.10

%

1.08

%

1.05

%

1.03

%

0.98

%

ACL LHFI-commercial / commercial LHFI

0.93

%

0.85

%

0.86

%

0.84

%

0.80

%

ACL LHFI-consumer / consumer and
home mortgage LHFI

1.63

%

1.81

%

1.66

%

1.60

%

1.54

%

ACL LHFI / nonaccrual LHFI

145.39

%

139.36

%

147.45

%

172.34

%

168.90

%

ACL LHFI / nonaccrual LHFI
(excl individually analyzed loans)

235.29

%

249.31

%

273.60

%

301.44

%

320.80

%

CAPITAL RATIOS
Total equity / total assets

9.16

%

8.88

%

8.54

%

8.53

%

8.28

%

Tangible equity / tangible assets

7.20

%

6.95

%

6.57

%

6.56

%

6.35

%

Tangible equity / risk-weighted assets

8.49

%

8.41

%

7.81

%

7.91

%

7.94

%

Tier 1 leverage ratio

8.76

%

8.62

%

8.49

%

8.35

%

8.29

%

Common equity tier 1 capital ratio

10.12

%

10.04

%

9.89

%

9.87

%

9.76

%

Tier 1 risk-based capital ratio

10.51

%

10.44

%

10.29

%

10.27

%

10.17

%

Total risk-based capital ratio

12.42

%

12.29

%

12.11

%

12.08

%

11.95

%

STOCK PERFORMANCE
Market value-Close

$

28.11

$

27.88

$

21.73

$

21.12

$

24.70

Book value

$

27.50

$

27.21

$

25.71

$

25.73

$

25.59

Tangible book value

$

21.18

$

20.87

$

19.37

$

19.38

$

19.24

(1) See Note 6 – Non-GAAP Financial Measures in the Notes to Consolidated Financials for Trustmark’s efficiency ratio calculation.

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2024
($ in thousands)
(unaudited)

Note 1 - Securities Available for Sale and Held to Maturity

The following table is a summary of the estimated fair value of securities available for sale and the amortized cost of securities held to maturity:

3/31/2024

12/31/2023

9/30/2023

6/30/2023

3/31/2023

SECURITIES AVAILABLE FOR SALE

U.S. Treasury securities

$

372,424

$

372,368

$

363,476

$

362,966

$

386,903

U.S. Government agency obligations

5,594

5,792

6,780

6,999

7,254

Obligations of states and political subdivisions

4,642

4,813

4,907

Mortgage-backed securities

Residential mortgage pass-through securities

Guaranteed by GNMA

22,232

23,135

22,881

25,336

26,851

Issued by FNMA and FHLMC

1,129,521

1,176,798

1,171,521

1,250,435

1,317,848

Other residential mortgage-backed securities

Issued or guaranteed by FNMA, FHLMC, or GNMA

79,099

86,074

90,402

98,388

108,192

Commercial mortgage-backed securities

Issued or guaranteed by FNMA, FHLMC, or GNMA

93,429

98,711

106,472

122,946

132,207

Total securities available for sale

$

1,702,299

$

1,762,878

$

1,766,174

$

1,871,883

$

1,984,162

SECURITIES HELD TO MATURITY

U.S. Treasury securities

$

29,261

$

29,068

$

28,872

$

28,679

$

28,486

Obligations of states and political subdivisions

340

340

341

1,180

4,507

Mortgage-backed securities

Residential mortgage pass-through securities

Guaranteed by GNMA

18,387

13,005

13,090

13,235

4,336

Issued by FNMA and FHLMC

461,457

469,593

474,003

484,679

497,854

Other residential mortgage-backed securities

Issued or guaranteed by FNMA, FHLMC, or GNMA

146,447

154,466

162,031

171,002

179,334

Commercial mortgage-backed securities

Issued or guaranteed by FNMA, FHLMC, or GNMA

759,133

759,807

759,950

759,890

759,821

Total securities held to maturity

$

1,415,025

$

1,426,279

$

1,438,287

$

1,458,665

$

1,474,338

At March 31, 2024, 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 $54.8 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 99.99% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2024
($ in thousands)
(unaudited)

Note 2 – Loan Composition

LHFI consisted of the following during the periods presented:

LHFI BY TYPE

3/31/2024

12/31/2023

9/30/2023

6/30/2023

3/31/2023

Loans secured by real estate:

Construction, land development and other land loans

$

1,539,461

$

1,510,679

$

1,609,326

$

1,722,657

$

1,723,772

Secured by 1-4 family residential properties

2,891,481

2,904,715

2,893,606

2,854,182

2,822,048

Secured by nonfarm, nonresidential properties

3,543,235

3,489,434

3,569,671

3,471,728

3,375,579

Other real estate secured

1,384,610

1,312,551

1,218,499

954,410

847,527

Commercial and industrial loans

1,922,711

1,922,910

1,828,924

1,883,480

1,882,360

Consumer loans

156,430

161,725

161,940

163,788

162,911

State and other political subdivision loans

1,052,844

1,088,466

1,056,569

1,111,710

1,193,727

Other loans and leases

567,171

560,044

471,724

452,012

489,271

LHFI

13,057,943

12,950,524

12,810,259

12,613,967

12,497,195

ACL LHFI

(142,998

)

(139,367

)

(134,031

)

(129,298

)

(122,239

)

Net LHFI

$

12,914,945

$

12,811,157

$

12,676,228

$

12,484,669

$

12,374,956

The following table presents the LHFI composition based upon the region where the loan was originated and reflects each region’s diversified mix of loans:

March 31, 2024

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

$

1,539,461

$

753,918

$

38,790

$

391,843

$

40,988

$

313,922

Secured by 1-4 family residential properties

2,891,481

154,303

54,099

2,565,424

83,292

34,363

Secured by nonfarm, nonresidential properties

3,543,235

981,921

233,109

1,485,304

150,017

692,884

Other real estate secured

1,384,610

561,115

1,728

417,757

6,965

397,045

Commercial and industrial loans

1,922,711

657,294

23,941

841,797

150,313

249,366

Consumer loans

156,430

21,302

7,399

95,951

18,178

13,600

State and other political subdivision loans

1,052,844

70,161

52,069

782,985

23,700

123,929

Other loans and leases

567,171

236,775

8,202

200,957

57,098

64,139

Loans

$

13,057,943

$

3,436,789

$

419,337

$

6,782,018

$

530,551

$

1,889,248

CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION

Lots

$

70,445

$

28,830

$

8,196

$

17,829

$

4,587

$

11,003

Development

122,788

56,825

1,260

28,668

12,576

23,459

Unimproved land

110,272

20,907

13,404

29,759

8,006

38,196

1-4 family construction

313,503

162,760

13,501

91,453

15,693

30,096

Other construction

922,453

484,596

2,429

224,134

126

211,168

Construction, land development and other land loans

$

1,539,461

$

753,918

$

38,790

$

391,843

$

40,988

$

313,922

(1)

Includes Georgia Loan Production Office.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2024
($ in thousands)
(unaudited)

Note 2 – Loan Composition (continued)

March 31, 2024

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

$

367,575

$

139,444

$

24,147

$

106,123

$

17,381

$

80,480

Office

261,984

101,364

19,605

73,689

1,617

65,709

Hotel/motel

255,925

128,356

48,992

53,054

25,523

Mini-storage

165,962

40,724

1,864

103,323

745

19,306

Industrial

438,626

83,304

19,377

147,199

8,143

180,603

Health care

97,837

69,786

684

24,707

331

2,329

Convenience stores

25,572

3,214

419

13,599

239

8,101

Nursing homes/senior living

513,854

227,254

186,507

4,724

95,369

Other

109,838

31,790

9,067

51,626

8,211

9,144

Total non-owner occupied loans

2,237,173

825,236

124,155

759,827

66,914

461,041

Owner-occupied:

Office

150,283

41,047

37,629

41,658

11,555

18,394

Churches

56,697

14,208

4,094

32,706

3,215

2,474

Industrial warehouses

156,148

11,553

4,537

39,874

15,766

84,418

Health care

124,330

11,337

8,163

85,172

2,251

17,407

Convenience stores

148,158

12,172

29,156

72,715

34,115

Retail

88,445

9,457

15,287

35,730

17,087

10,884

Restaurants

48,491

4,008

2,930

21,360

16,367

3,826

Auto dealerships

42,394

5,138

194

21,007

16,055

Nursing homes/senior living

353,641

35,216

292,264

26,161

Other

137,475

12,549

6,964

82,991

807

34,164

Total owner-occupied loans

1,306,062

156,685

108,954

725,477

83,103

231,843

Loans secured by nonfarm, nonresidential properties

$

3,543,235

$

981,921

$

233,109

$

1,485,304

$

150,017

$

692,884

(1)

Includes Georgia Loan Production Office.

Note 3 – Yields on Earning Assets and Interest-Bearing Liabilities

The following table illustrates the yields on earning assets by category as well as the rates paid on interest-bearing liabilities on a tax equivalent basis:

Quarter Ended

3/31/2024

12/31/2023

9/30/2023

6/30/2023

3/31/2023

Securities – taxable

1.88

%

1.85

%

1.89

%

1.87

%

1.85

%

Securities – nontaxable

4.73

%

3.81

%

4.05

%

4.25

%

4.00

%

Securities – total

1.88

%

1.85

%

1.89

%

1.87

%

1.86

%

LHFI & LHFS

6.40

%

6.41

%

6.34

%

6.08

%

5.79

%

Fed funds sold & reverse repurchases

3.53

%

6.56

%

5.17

%

5.51

%

5.11

%

Other earning assets

5.71

%

5.87

%

5.01

%

5.36

%

4.09

%

Total earning assets

5.49

%

5.48

%

5.38

%

5.16

%

4.87

%

Interest-bearing deposits

2.74

%

2.67

%

2.39

%

1.96

%

1.53

%

Fed funds purchased & repurchases

5.25

%

5.26

%

5.14

%

5.01

%

4.49

%

Other borrowings

4.78

%

5.08

%

5.32

%

5.12

%

4.87

%

Total interest-bearing liabilities

2.92

%

2.89

%

2.72

%

2.42

%

1.98

%

Total Deposits

2.18

%

2.10

%

1.84

%

1.48

%

1.13

%

Net interest margin

3.21

%

3.25

%

3.29

%

3.33

%

3.39

%

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2024
($ in thousands)
(unaudited)

Note 3 – 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.

The net interest margin decreased four basis points when compared to the fourth quarter of 2023, totaling 3.21% for the first quarter of 2024, primarily due to increased costs of interest-bearing deposits which resulted from the higher interest rate environment.

Note 4 – Mortgage Banking

Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that offsets the changes in fair value of mortgage servicing rights (MSR) attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under generally accepted accounting principles (GAAP). Changes in the fair value of these exchange-traded derivative instruments, including administrative costs, are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of the MSR. The MSR fair value represents the present value of future cash flows, which among other things includes decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the change in value of hedge instruments to the change in the fair value of the MSR asset attributable to changes in interest rates and other market driven changes in valuation inputs and assumptions. The impact of this strategy resulted in a net negative hedge ineffectiveness of $1.1 million during the first quarter of 2024.

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

Quarter Ended

3/31/2024

12/31/2023

9/30/2023

6/30/2023

3/31/2023

Mortgage servicing income, net

$

6,934

$

6,731

$

6,916

$

6,764

$

6,785

Change in fair value-MSR from runoff

(1,926

)

(2,972

)

(3,203

)

(2,710

)

(1,145

)

Gain on sales of loans, net.

5,009

3,913

3,748

3,887

3,797

Mortgage banking income before hedge ineffectiveness

10,017

7,672

7,461

7,941

9,437

Change in fair value-MSR from market changes

5,123

(10,224

)

6,809

5,898

(3,972

)

Change in fair value of derivatives

(6,225

)

8,071

(7,812

)

(7,239

)

2,174

Net positive (negative) hedge ineffectiveness

(1,102

)

(2,153

)

(1,003

)

(1,341

)

(1,798

)

Mortgage banking, net

$

8,915

$

5,519

$

6,458

$

6,600

$

7,639

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2024
($ in thousands)
(unaudited)

Note 5 – Other Noninterest Income and Expense

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

Quarter Ended

3/31/2024

12/31/2023

9/30/2023

6/30/2023

3/31/2023

Partnership amortization for tax credit purposes

$

(1,834

)

$

(2,013

)

$

(1,995

)

$

(2,019

)

$

(1,961

)

Increase in life insurance cash surrender value

1,844

1,825

1,784

1,716

1,693

Other miscellaneous income

3,622

2,767

2,610

3,998

2,782

Total other, net

$

3,632

$

2,579

$

2,399

$

3,695

$

2,514

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

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

Quarter Ended

3/31/2024

12/31/2023

9/30/2023

6/30/2023

3/31/2023

Loan expense

$

2,955

$

2,380

$

3,130

$

3,066

$

2,538

Amortization of intangibles

120

128

129

130

288

FDIC assessment expense

4,509

4,844

3,765

2,550

2,370

Other real estate expense, net

671

(184

)

(40

)

171

172

Other miscellaneous expense

8,713

9,473

8,714

8,585

9,443

Total other expense

$

16,968

$

16,641

$

15,698

$

14,502

$

14,811

Note 6 – 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
March 31, 2024
($ in thousands except per share data)
(unaudited)

Note 6 – Non-GAAP Financial Measures (continued)

Quarter Ended

3/31/2024

12/31/2023

9/30/2023

6/30/2023

3/31/2023

TANGIBLE EQUITY

AVERAGE BALANCES

Total shareholders' equity

$

1,676,521

$

1,592,493

$

1,582,885

$

1,580,291

$

1,523,828

Less: Goodwill

(384,237

)

(384,237

)

(384,237

)

(384,237

)

(384,237

)

Identifiable intangible assets

(2,920

)

(3,044

)

(3,174

)

(3,301

)

(3,523

)

Total average tangible equity

$

1,289,364

$

1,205,212

$

1,195,474

$

1,192,753

$

1,136,068

PERIOD END BALANCES

Total shareholders' equity

$

1,682,599

$

1,661,847

$

1,570,351

$

1,571,193

$

1,562,099

Less: Goodwill

(384,237

)

(384,237

)

(384,237

)

(384,237

)

(384,237

)

Identifiable intangible assets

(2,845

)

(2,965

)

(3,093

)

(3,222

)

(3,352

)

Total tangible equity

(a)

$

1,295,517

$

1,274,645

$

1,183,021

$

1,183,734

$

1,174,510

TANGIBLE ASSETS

Total assets

$

18,376,612

$

18,722,189

$

18,390,839

$

18,422,626

$

18,877,178

Less: Goodwill

(384,237

)

(384,237

)

(384,237

)

(384,237

)

(384,237

)

Identifiable intangible assets

(2,845

)

(2,965

)

(3,093

)

(3,222

)

(3,352

)

Total tangible assets

(b)

$

17,989,530

$

18,334,987

$

18,003,509

$

18,035,167

$

18,489,589

Risk-weighted assets

(c)

$

15,257,385

$

15,153,263

$

15,143,531

$

14,966,614

$

14,793,893

NET INCOME (LOSS) ADJUSTED FOR INTANGIBLE AMORTIZATION

Net income (loss)

$

41,535

$

36,123

$

34,029

$

45,037

$

50,300

Plus: Intangible amortization net of tax

90

96

96

97

216

Net income (loss) adjusted for intangible amortization

$

41,625

$

36,219

$

34,125

$

45,134

$

50,516

Period end common shares outstanding

(d)

61,178,366

61,071,173

61,070,095

61,069,036

61,048,516

TANGIBLE COMMON EQUITY MEASUREMENTS

Return on average tangible equity (1)

12.98

%

11.92

%

11.32

%

15.18

%

18.03

%

Tangible equity/tangible assets

(a)/(b)

7.20

%

6.95

%

6.57

%

6.56

%

6.35

%

Tangible equity/risk-weighted assets

(a)/(c)

8.49

%

8.41

%

7.81

%

7.91

%

7.94

%

Tangible book value

(a)/(d)*1,000

$

21.18

$

20.87

$

19.37

$

19.38

$

19.24

COMMON EQUITY TIER 1 CAPITAL (CET1)

Total shareholders' equity

$

1,682,599

$

1,661,847

$

1,570,351

$

1,571,193

$

1,562,099

CECL transition adjustment

6,500

13,000

13,000

13,000

13,000

AOCI-related adjustments

227,154

219,723

287,888

265,704

242,381

CET1 adjustments and deductions:

Goodwill net of associated deferred tax liabilities (DTLs)

(370,205

)

(370,212

)

(370,219

)

(370,227

)

(370,234

)

Other adjustments and deductions for CET1 (2)

(2,588

)

(2,693

)

(2,803

)

(2,915

)

(3,275

)

CET1 capital

(e)

1,543,460

1,521,665

1,498,217

1,476,755

1,443,971

Additional tier 1 capital instruments plus related surplus

60,000

60,000

60,000

60,000

60,000

Tier 1 capital

$

1,603,460

$

1,581,665

$

1,558,217

$

1,536,755

$

1,503,971

Common equity tier 1 capital ratio

(e)/(c)

10.12

%

10.04

%

9.89

%

9.87

%

9.76

%

(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
March 31, 2024
($ in thousands except per share data)
(unaudited)

Note 6 – 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

3/31/2024

12/31/2023

9/30/2023

6/30/2023

3/31/2023

Net interest income (GAAP)

$

132,830

$

136,742

$

138,637

$

139,904

$

137,595

Noninterest income (GAAP)

55,349

49,804

52,224

53,553

51,377

Pre-provision revenue

(a)

$

188,179

$

186,546

$

190,861

$

193,457

$

188,972

Noninterest expense (GAAP)

$

131,146

$

136,429

$

140,945

$

132,218

$

128,327

Less:

Reduction in force expense

(1,406

)

Litigation settlement expense

(6,500

)

Adjusted noninterest expense - PPNR (Non-GAAP)

(b)

$

131,146

$

135,023

$

134,445

$

132,218

$

128,327

PPNR (Non-GAAP)

(a)-(b)

$

57,033

$

51,523

$

56,416

$

61,239

$

60,645

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

Quarter Ended

3/31/2024

12/31/2023

9/30/2023

6/30/2023

3/31/2023

Total noninterest expense (GAAP)

$

131,146

$

136,429

$

140,945

$

132,218

$

128,327

Less:

Other real estate expense, net

(671

)

184

40

(171

)

(172

)

Amortization of intangibles

(120

)

(128

)

(129

)

(130

)

(288

)

Charitable contributions resulting in state tax credits

(300

)

(325

)

(325

)

(325

)

(325

)

Reduction in force expense

(1,406

)

Litigation settlement expense

(6,500

)

Adjusted noninterest expense (Non-GAAP)

(c)

$

130,055

$

134,754

$

134,031

$

131,592

$

127,542

Net interest income (GAAP)

$

132,830

$

136,742

$

138,637

$

139,904

$

137,595

Add:

Tax equivalent adjustment

3,365

3,306

3,299

3,383

3,477

Net interest income-FTE (Non-GAAP)

(a)

$

136,195

$

140,048

$

141,936

$

143,287

$

141,072

Noninterest income (GAAP)

$

55,349

$

49,804

$

52,224

$

53,553

$

51,377

Add:

Partnership amortization for tax credit purposes

1,834

2,013

1,995

2,019

1,961

Less:

Securities (gains) losses, net

(39

)

Adjusted noninterest income (Non-GAAP)

(b)

$

57,183

$

51,778

$

54,219

$

55,572

$

53,338

Adjusted revenue (Non-GAAP)

(a)+(b)

$

193,378

$

191,826

$

196,155

$

198,859

$

194,410

Efficiency ratio (Non-GAAP)

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

67.25

%

70.25

%

68.33

%

66.17

%

65.60

%



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