Equibles

8-K

TRUSTMARK CORP (TRMK)

8-K 2022-10-25 For: 2022-10-25
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Added on April 04, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

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

October 25, 2022

Date of Report (Date of earliest event reported)

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TRUSTMARK CORPORATION

(Exact name of registrant as specified in its charter)

Mississippi 000-03683 64-0471500
(State or other jurisdiction<br><br>of incorporation) (Commission<br><br>File Number) (IRS Employer<br><br>Identification No.)
248 East Capitol Street, Jackson, Mississippi 39201
--- ---
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (601) 208-5111

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

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered Pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, no par value TRMK Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial Condition.

On October 25, 2022, Trustmark Corporation issued a press release announcing its financial results for the period ended September 30, 2022. A copy of this press release and the accompanying financial statements and slide presentation are attached hereto as Exhibits 99.1 and 99.2 to this report and incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number Description of Exhibits
99.1 Press release announcing financial results for the period ended September 30, 2022
99.2 Investor slide presentation for the period ended September 30, 2022
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

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

TRUSTMARK CORPORATION

BY: /s/ Thomas C. Owens
Thomas C. Owens
Treasurer and Principal Financial Officer
DATE: October 25, 2022

EX-99.1

Exhibit 99.1

News Release

Trustmark Corporation Announces Third Quarter 2022 Financial Results

Performance Reflects Continued Loan Growth, Strong Credit Quality,

Asset Sensitive Balance Sheet and Diversified Fee Income

JACKSON, Miss. – October 25, 2022 – Trustmark Corporation (NASDAQGS: TRMK) reported net income of $42.5 million in the third quarter of 2022, representing diluted earnings per share of $0.69. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable December 15, 2022, to shareholders of record on December 1, 2022.

Third Quarter Highlights

• Loans held for investment (HFI) increased $641.2 million, or 5.9%, from the prior quarter

• Deposits totaled $14.4 billion, with noninterest-bearing deposits representing 30.2% of total deposits

• Total revenue expanded 13.7% from the prior quarter to $188.7 million

• Net interest income (FTE) increased 20.3% from the prior quarter to $139.1 million, resulting in a 60 basis point expansion in the net interest margin to 3.50%

• Noninterest income totaled $52.6 million, representing 27.9% of total revenue

• Credit quality remained solid; net charge-offs totaled $1.0 million, or 0.03% of average loans

Duane A. Dewey, President and CEO, stated, “Trustmark’s solid financial performance during the third quarter reflected significant loan growth, net interest margin expansion, solid performance in our insurance and wealth management businesses, and strong credit quality. We continued to invest in technology enhancements, rationalize our branch network and add business lines to grow and serve customers. Trustmark is well-positioned to respond to changing economic conditions and create long-term value for our shareholders.”

Balance Sheet Management

• Loans HFI totaled $11.6 billion, up 5.9% from the prior quarter and 13.9% year-over-year

• Investment securities totaled $3.6 billion, down 4.8% from the prior quarter and up 4.3% year-over-year

• Deposits totaled $14.4 billion, down 2.3% from the prior quarter and 3.3% year-over-year

• Initiated a cash flow hedging program to manage asset sensitivity

• Maintained strong capital position with CET1 ratio of 10.63% and total risk-based capital ratio of 12.85%

Loans HFI totaled $11.6 billion at September 30, 2022, reflecting an increase of $641.2 million, or 5.9%, linked-quarter and $1.4 billion, or 13.9%, year-over-year. The linked-quarter growth was broad-based, reflecting increases in virtually every category. Trustmark’s loan portfolio remains well-diversified by loan type and geography.

Deposits totaled $14.4 billion at September 30, 2022, down $345.0 million, or 2.3%, from the prior quarter and $497.7 million, or 3.3%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 80.3% of total deposits at September 30, 2022. Noninterest-bearing deposits represented 30.2% of total deposits at the end of the third quarter. Interest-bearing deposit costs totaled 0.20% in the third quarter, an increase of 9 basis points from the prior quarter. The total cost of interest-bearing liabilities was 0.31% in the third quarter of 2022, an increase of 14 basis points from the prior quarter.

During the third quarter Trustmark initiated a cash flow hedging program under which interest rate swaps convert floating rate loans to fixed rate. The intent of the program is to manage the natural asset sensitivity of Trustmark’s balance sheet. As of September 30, 2022, notional balances totaled $675.0 million with a weighted average receive fixed rate of 2.98%.

Trustmark repurchased $8.0 million, or approximately 247 thousand of its common shares during the third quarter. During the nine months ended September 30, 2022, Trustmark repurchased $24.6 million, or approximately 789 thousand of its common shares. At September 30, 2022, Trustmark had $75.4 million in remaining authority under its existing stock repurchase program, which expires on December 31, 2022. The repurchase program, which is subject to market conditions and management discretion, will continue to be implemented through open market repurchases or privately negotiated transactions. At September 30, 2022, Trustmark’s tangible equity-to-tangible assets ratio was 6.67% while its total risk-based capital ratio was 12.85%. Tangible book value per share was $18.39 at September 30, 2022, down 6.1% from the prior quarter reflecting a decline in accumulated other comprehensive income due to mark-to-market adjustments on securities available for sale resulting from the increase in market interest rates during the third quarter.

Credit Quality

• Provision for credit losses for loans HFI was $12.9 million, largely driven by reserves related to loan growth and a less positive outlook within the macroeconomic forecasts

• Allowance for credit losses (ACL) represented 466.0% of nonaccrual loans, excluding individually evaluated loans at September 30, 2022

Nonaccrual loans totaled $67.9 million at September 30, 2022, up $5.9 million from the prior quarter and $1.7 million year-over-year. Other real estate totaled $3.0 million, reflecting a $63 thousand decrease from the prior quarter and a decline of $3.2 million year-over-year. Collectively, nonperforming assets totaled $70.9 million at September 30, 2022, reflecting a linked-quarter increase of $5.8 million and a year-over-year decrease of $1.6 million.

The provision for credit losses for loans HFI was $12.9 million in the third quarter. This provisioning was primarily driven by reserves related to loan growth, individually analyzed reserves, and a less positive outlook within the macroeconomic forecasts partially offset by adjustments to the pandemic reserve. The provision for credit losses for off-balance sheet credit exposures was a negative $1.3 million in the third quarter. Collectively, the provision for credit losses totaled $11.6 million in the third quarter compared to $1.1 million in the prior quarter and a negative $3.5 million in the third quarter of 2021.

Allocation of Trustmark’s $115.1 million allowance for credit losses on loans HFI represented 0.93% of commercial loans and 1.20% of consumer and home mortgage loans, resulting in an allowance to total loans HFI of 0.99% at September 30, 2022. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.

Revenue Generation

• Total revenue increased $22.8 million, or 13.7%, linked-quarter

• Net interest income (FTE) expanded $23.5 million, or 20.3%, linked-quarter

• Noninterest income totaled $52.6 million, representing 27.9% of total revenue in the third quarter

Revenue in the third quarter totaled $188.7 million, an increase of $22.8 million, or 13.7%, from the prior quarter and $36.3 million, or 23.8%, from the same quarter in the prior year. The linked-quarter and year-over-year increases were principally due to higher net interest income resulting from increased average earning assets and rising interest rates.

Net interest income (FTE) in the third quarter totaled $139.1 million, resulting in a net interest margin of 3.50%, up 60 basis points from the prior quarter. The expansion of the net interest margin was due to increases in the yields on the loans held for investment and held for sale portfolio and the securities portfolio and was partially offset by costs of interest-bearing deposits, which resulted from the higher interest rate environment.

Noninterest income in the third quarter totaled $52.6 million, a decrease of $647 thousand from the prior quarter and $1.5 million year-over-year. The linked-quarter decline was attributable to lower mortgage banking revenue, bank card and other fees, and wealth management revenue, which were offset by increased service charges on deposit accounts, other, net revenue and insurance commissions. Mortgage loan production in the third quarter totaled $508.3 million, down 25.4% from the prior quarter and 28.3% year-over-year. Mortgage banking revenue totaled $6.9 million in the third quarter, a decrease of $1.3 million from the prior quarter and $7.1 million year-over-year. The linked-quarter decline was principally attributable to lower gains on sales of mortgage loans in the secondary market.

Insurance revenue totaled $13.9 million in the third quarter, up $209 thousand, or 1.5%, linked-quarter and up $1.8 million, or 14.7%, year-over-year due in part to increased property and casualty commissions. Wealth management revenue totaled $8.8 million in the third quarter, a decrease of $324 thousand, or 3.6%, from the prior quarter and $293 thousand, or 3.2%, year-over-year as growth in investment management services was more than offset by lower trust management and brokerage revenue. Service charges on deposit accounts increased $1.1 million, or 10.7%, from the prior quarter and $2.4 million, or 27.0%, year-over-year. Bank card and other fees decreased $862 thousand from the prior quarter and increased $756 thousand year-over-year.

Noninterest Expense

• Noninterest expense totaled $126.7 million in the third quarter, up $2.9 million, or 2.4%, from the prior quarter

• Investments in new Atlanta loan production office (LPO) and establishment of Equipment Finance line of business reflected in increased salary and benefit expense

• Efficiency ratio improves to 64.96%

Noninterest expense in the third quarter was $126.7 million, up $2.9 million, or 2.4%, from the prior quarter. Salaries and employee benefits increased $1.0 million, or 1.4%, linked-quarter due primarily to expansion initiatives including the opening of a LPO in Atlanta as well as the establishment of the Equipment Finance line of business. Total services and fees increased $1.3 million, or 5.1%, linked-quarter due to increased professional fees associated with technology and risk management initiatives. Office occupancy expense increased $503 thousand, or 7.3%, linked-quarter due in part to seasonal increases in utilities and increased rental expense.

FIT2GROW

“Earlier this year, we announced FIT2GROW, a comprehensive program of Focus, Innovation and Transformation designed to enhance Trustmark’s ability to grow and serve customers. As part of this program, we are focusing our community bank efforts on commercial, small business, and consumer lines of business to provide additional expertise for our customers and enhance profitable revenue growth. We have also expanded geographically with the opening of a loan production office in Atlanta, which is focused on Commercial Real Estate, Residential Real Estate, Corporate Banking, and Equipment Finance,” said Dewey.

“Innovation is also a key component of FIT2GROW. In recent years, investments in state-of-the-art technology were made in Trustmark’s insurance, wealth management and mortgage banking areas as well as in human resources and accounting systems. We also made significant upgrades to our mobile banking platform, ITM network and digital marketing programs. Collectively, these investments have positioned Trustmark for growth and efficiency. During the third quarter, we successfully converted to a new core loan system and will be implementing a state-of-the-art loan origination platform during the fourth quarter. Collectively, these investments are designed to provide best-in-class service to customers as well as enhance our productivity and efficiency,” said Dewey.

“We have accelerated efforts to optimize our branch network, reflecting changing customer preferences and the continued migration to mobile and digital channels as announced in the first quarter. To date, eight offices have been closed in 2022, and four additional offices are scheduled to close in the fourth quarter. We will continue to pursue opportunities to redesign workflows and restructure the organization,” said Dewey.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, October 26, 2022, at 8:30 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (877) 317-3051 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Wednesday, November 9, 2022, in archived format at the same web address or by calling (877) 344-7529, passcode 8003135.

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. Furthermore, many of these risks and uncertainties are currently amplified by and may continue to be amplified by or may, in the future, be amplified by, the novel coronavirus (COVID-19) pandemic, and also by the effectiveness of varying governmental responses in ameliorating the impact of the pandemic on our customers and the economies where they operate.

Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels and slowdowns in economic growth, our ability to manage the impact of the COVID-19 pandemic on our markets, as well as the effectiveness of actions of federal, state and local governments and agencies (including the Board of Governors of the Federal Reserve System (FRB)) to mitigate its spread and economic impact, local, state and national economic and market conditions, conditions in the housing and real estate markets in the regions in which Trustmark operates and the extent and duration of the current volatility in the credit and financial markets, levels of and volatility in crude oil prices, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility of market interest rates, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, including the potential impact of recent heightened levels of inflation and the reactions of the FRB and other governmental departments and agencies in response thereto, 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 Investor Contacts: Trustmark Media Contact:
Thomas C. Owens Melanie A. Morgan
Treasurer and Senior Vice President
Principal Financial Officer 601-208-2979
601-208-7853

F. Joseph Rein, Jr.

Senior Vice President

601-208-6898

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2022
($ in thousands)
(unaudited)
Linked Quarter Year over Year
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
QUARTERLY AVERAGE BALANCES 6/30/2022 9/30/2021 Change % Change Change % Change
Securities AFS-taxable (1) 2,824,254 $ 3,094,364 $ 2,686,765 ) -8.7 % 5.1 %
Securities AFS-nontaxable 4,928 5,110 5,159 ) -3.6 % ) -4.5 %
Securities HTM-taxable (1) 1,140,685 811,599 401,685 40.5 % n/m
Securities HTM-nontaxable 5,057 5,630 8,641 ) -10.2 % ) -41.5 %
Total securities 3,974,924 3,916,703 3,102,250 1.5 % 28.1 %
Paycheck protection program loans (PPP) 9,821 17,746 122,176 ) -44.7 % ) -92.0 %
Loans (includes loans held for sale) 11,459,551 10,910,178 10,389,826 5.0 % 10.3 %
Fed funds sold and reverse repurchases 226 110 69 n/m n/m
Other earning assets 325,620 1,139,312 2,038,515 ) -71.4 % ) -84.0 %
Total earning assets 15,770,142 15,984,049 15,652,836 ) -1.3 % 0.7 %
Allowance for credit losses (ACL), loans held    for investment (LHFI) (102,951 ) (99,106 ) (104,857 ) ) -3.9 % 1.8 %
Other assets 1,576,653 1,513,127 1,602,611 4.2 % ) -1.6 %
Total assets 17,243,844 $ 17,398,070 $ 17,150,590 ) -0.9 % 0.5 %
Interest-bearing demand deposits 4,613,733 $ 4,578,235 $ 4,224,717 0.8 % 9.2 %
Savings deposits 4,514,579 4,638,849 4,617,683 ) -2.7 % ) -2.2 %
Time deposits 1,111,440 1,159,065 1,258,829 ) -4.1 % ) -11.7 %
Total interest-bearing deposits 10,239,752 10,376,149 10,101,229 ) -1.3 % 1.4 %
Fed funds purchased and repurchases 249,809 118,753 147,635 n/m 69.2 %
Other borrowings 88,697 80,283 109,735 10.5 % ) -19.2 %
Subordinated notes 123,171 123,116 122,951 0.0 % 0.2 %
Junior subordinated debt securities 61,856 61,856 61,856 0.0 % 0.0 %
Total interest-bearing liabilities 10,763,285 10,760,157 10,543,406 0.0 % 2.1 %
Noninterest-bearing deposits 4,444,370 4,590,338 4,566,924 ) -3.2 % ) -2.7 %
Other liabilities 429,720 439,266 257,956 ) -2.2 % 66.6 %
Total liabilities 15,637,375 15,789,761 15,368,286 ) -1.0 % 1.8 %
Shareholders' equity 1,606,469 1,608,309 1,782,304 ) -0.1 % ) -9.9 %
Total liabilities and equity 17,243,844 $ 17,398,070 $ 17,150,590 ) -0.9 % 0.5 %
(1) During the second quarter of 2022, Trustmark transferred 343.1 million of securities available for sale to securities held to maturity.
See Note 1 - 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

All values are in US Dollars.

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2022
($ in thousands)
(unaudited)
Linked Quarter Year over Year
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
PERIOD END BALANCES 6/30/2022 9/30/2021 Change % Change Change % Change
Cash and due from banks 479,637 $ 742,461 $ 2,175,058 ) -35.4 % ) -77.9 %
Fed funds sold and reverse repurchases 10,098 — — n/m n/m
Securities available for sale (1) 2,444,486 2,644,364 3,057,605 ) -7.6 % ) -20.1 %
Securities held to maturity (1) 1,156,985 1,137,754 394,905 1.7 % n/m
PPP loans 4,798 12,549 46,486 ) -61.8 % ) -89.7 %
Loans held for sale (LHFS) 165,213 190,186 335,339 ) -13.1 % ) -50.7 %
Loans held for investment (LHFI) 11,586,064 10,944,840 10,174,899 5.9 % 13.9 %
ACL LHFI (115,050 ) (103,140 ) (104,073 ) ) -11.5 % ) -10.5 %
Net LHFI 11,471,014 10,841,700 10,070,826 5.8 % 13.9 %
Premises and equipment, net 210,761 207,914 201,937 1.4 % 4.4 %
Mortgage servicing rights 132,615 121,014 84,101 9.6 % 57.7 %
Goodwill 384,237 384,237 384,237 0.0 % 0.0 %
Identifiable intangible assets 3,952 4,264 5,621 ) -7.3 % ) -29.7 %
Other real estate 2,971 3,034 6,213 ) -2.1 % ) -52.2 %
Operating lease right-of-use assets 37,282 34,684 34,689 7.5 % 7.5 %
Other assets 686,585 627,349 567,627 9.4 % 21.0 %
Total assets 17,190,634 $ 16,951,510 $ 17,364,644 1.4 % ) -1.0 %
Deposits:
Noninterest-bearing 4,358,805 $ 4,509,472 $ 4,987,885 ) -3.3 % ) -12.6 %
Interest-bearing 10,066,375 10,260,696 9,934,954 ) -1.9 % 1.3 %
Total deposits 14,425,180 14,770,168 14,922,839 ) -2.3 % ) -3.3 %
Fed funds purchased and repurchases 544,068 70,157 146,417 n/m n/m
Other borrowings 223,172 72,553 94,889 n/m n/m
Subordinated notes 123,207 123,152 122,987 0.0 % 0.2 %
Junior subordinated debt securities 61,856 61,856 61,856 0.0 % 0.0 %
ACL on off-balance sheet credit exposures 31,623 32,949 32,684 ) -4.0 % ) -3.2 %
Operating lease liabilities 39,797 37,108 36,531 7.2 % 8.9 %
Other liabilities 232,786 196,871 177,494 18.2 % 31.2 %
Total liabilities 15,681,689 15,364,814 15,595,697 2.1 % 0.6 %
Common stock 12,700 12,752 13,014 ) -0.4 % ) -2.4 %
Capital surplus 154,150 160,876 201,837 ) -4.2 % ) -23.6 %
Retained earnings 1,648,507 1,620,210 1,573,176 1.7 % 4.8 %
Accumulated other comprehensive    income (loss), net of tax (306,412 ) (207,142 ) (19,080 ) ) 47.9 % ) n/m
Total shareholders' equity 1,508,945 1,586,696 1,768,947 ) -4.9 % ) -14.7 %
Total liabilities and equity 17,190,634 $ 16,951,510 $ 17,364,644 1.4 % ) -1.0 %
(1) During the second quarter of 2022, Trustmark transferred 343.1 million of securities available for sale to securities held to maturity.
See Note 1 - 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

All values are in US Dollars.

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2022
($ in thousands except per share data)
(unaudited)
Quarter Ended Linked Quarter Year over Year
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
INCOME STATEMENTS 9/30/2022 6/30/2022 9/30/2021 Change % Change Change % Change
Interest and fees on LHFS & LHFI-FTE $ 129,395 $ 103,033 $ 94,101 25.6 % 37.5 %
Interest and fees on PPP loans 186 184 1,533 1.1 % ) -87.9 %
Interest on securities-taxable 16,222 14,561 9,973 11.4 % 62.7 %
Interest on securities-tax exempt-FTE 100 107 132 ) -6.5 % ) -24.2 %
Interest on fed funds sold and reverse<br>   repurchases 2 1 — 100.0 % n/m
Other interest income 1,493 2,214 949 ) -32.6 % 57.3 %
Total interest income-FTE 147,398 120,100 106,688 22.7 % 38.2 %
Interest on deposits 5,097 2,774 3,691 83.7 % 38.1 %
Interest on fed funds purchased and repurchases 1,225 70 51 n/m n/m
Other interest expense 1,996 1,664 1,733 20.0 % 15.2 %
Total interest expense 8,318 4,508 5,475 84.5 % 51.9 %
Net interest income-FTE 139,080 115,592 101,213 20.3 % 37.4 %
Provision for credit losses, LHFI 12,919 2,716 (2,492 ) n/m n/m
Provision for credit losses, off-balance sheet <br>   credit exposures (1,326 ) (1,568 ) (1,049 ) 15.4 % ) -26.4 %
Net interest income after provision-FTE 127,487 114,444 104,754 11.4 % 21.7 %
Service charges on deposit accounts 11,318 10,226 8,911 10.7 % 27.0 %
Bank card and other fees 9,305 10,167 8,549 ) -8.5 % 8.8 %
Mortgage banking, net 6,876 8,149 14,004 ) -15.6 % ) -50.9 %
Insurance commissions 13,911 13,702 12,133 1.5 % 14.7 %
Wealth management 8,778 9,102 9,071 ) -3.6 % ) -3.2 %
Other, net 2,418 1,907 1,481 26.8 % 63.3 %
Total noninterest income 52,606 53,253 54,149 ) -1.2 % ) -2.8 %
Salaries and employee benefits 72,707 71,679 74,623 1.4 % ) -2.6 %
Services and fees 25,795 24,538 22,306 5.1 % 15.6 %
Net occupancy-premises 7,395 6,892 6,854 7.3 % 7.9 %
Equipment expense 6,072 6,047 5,941 0.4 % 2.2 %
Other expense 14,729 14,611 19,876 0.8 % ) -25.9 %
Total noninterest expense 126,698 123,767 129,600 2.4 % ) -2.2 %
Income before income taxes and tax eq adj 53,395 43,930 29,303 21.5 % 82.2 %
Tax equivalent adjustment 2,975 2,916 2,947 2.0 % 1.0 %
Income before income taxes 50,420 41,014 26,356 22.9 % 91.3 %
Income taxes 7,965 6,730 5,156 18.4 % 54.5 %
Net income $ 42,455 $ 34,284 $ 21,200 23.8 % n/m
Per share data
Earnings per share - basic $ 0.69 $ 0.56 $ 0.34 23.2 % n/m
Earnings per share - diluted $ 0.69 $ 0.56 $ 0.34 23.2 % n/m
Dividends per share $ 0.23 $ 0.23 $ 0.23 0.0 % 0.0 %
Weighted average shares outstanding
Basic 61,114,804 61,378,226 62,521,684
Diluted 61,318,715 61,546,285 62,730,157
Period end shares outstanding 60,953,864 61,201,123 62,461,832
n/m - percentage changes greater than +/- 100% are considered not meaningful

All values are in US Dollars.

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2022
($ in thousands)
(unaudited)
Quarter Ended Linked Quarter Year over Year
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
NONPERFORMING ASSETS (1) 9/30/2022 6/30/2022 9/30/2021 Change % Change Change % Change
Nonaccrual LHFI
Alabama $ 12,710 $ 2,698 $ 9,223 n/m 37.8 %
Florida 227 233 381 ) -2.6 % ) -40.4 %
Mississippi (2) 23,517 23,039 22,898 2.1 % 2.7 %
Tennessee (3) 5,120 9,500 10,356 ) -46.1 % ) -50.6 %
Texas 26,353 26,582 23,382 ) -0.9 % 12.7 %
Total nonaccrual LHFI 67,927 62,052 66,240 9.5 % 2.5 %
Other real estate
Alabama 217 84 613 n/m ) -64.6 %
Mississippi (2) 2,754 2,950 5,600 ) -6.6 % ) -50.8 %
Total other real estate 2,971 3,034 6,213 ) -2.1 % ) -52.2 %
Total nonperforming assets $ 70,898 $ 65,086 $ 72,453 8.9 % ) -2.1 %
LOANS PAST DUE OVER 90 DAYS (1)
LHFI $ 1,842 $ 1,347 $ 625 36.7 % n/m
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase) $ 48,313 $ 51,164 $ 75,091 ) -5.6 % ) -35.7 %
Quarter Ended Linked Quarter Year over Year
ACL LHFI (1) 9/30/2022 6/30/2022 9/30/2021 Change % Change Change % Change
Beginning Balance $ 103,140 $ 98,734 $ 104,032 4.5 % ) -0.9 %
Provision for credit losses, LHFI 12,919 2,716 (2,492 ) n/m n/m
Charge-offs (2,920 ) (2,277 ) (1,586 ) ) -28.2 % ) -84.1 %
Recoveries 1,911 3,967 4,119 ) -51.8 % ) -53.6 %
Net (charge-offs) recoveries (1,009 ) 1,690 2,533 ) n/m ) n/m
Ending Balance $ 115,050 $ 103,140 $ 104,073 11.5 % 10.5 %
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama $ 93 $ 1,129 $ 247 ) -91.8 % ) -62.3 %
Florida (23 ) 761 356 ) n/m ) n/m
Mississippi (2) (702 ) (266 ) 1,436 ) n/m ) n/m
Tennessee (3) (202 ) 31 (8 ) ) n/m ) n/m
Texas (175 ) 35 502 ) n/m ) n/m
Total net (charge-offs) recoveries $ (1,009 ) $ 1,690 $ 2,533 ) n/m ) n/m
(1) Excludes PPP loans.
(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

All values are in US Dollars.

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2022
($ in thousands)
(unaudited)
Nine Months Ended
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
AVERAGE BALANCES 6/30/2022 3/31/2022 12/31/2021 9/30/2021 9/30/2022 9/30/2021
Securities AFS-taxable (1) 2,824,254 $ 3,094,364 $ 3,245,502 $ 3,156,740 $ 2,686,765 $ 3,053,164 $ 2,376,995
Securities AFS-nontaxable 4,928 5,110 5,127 5,143 5,159 5,054 5,174
Securities HTM-taxable (1) 1,140,685 811,599 410,851 364,038 401,685 790,385 443,890
Securities HTM-nontaxable 5,057 5,630 7,327 7,618 8,641 5,996 14,500
Total securities 3,974,924 3,916,703 3,668,807 3,533,539 3,102,250 3,854,599 2,840,559
PPP loans 9,821 17,746 29,009 42,749 122,176 18,788 454,436
Loans (includes loans held for sale) 11,459,551 10,910,178 10,550,712 10,487,679 10,389,826 10,976,809 10,340,960
Fed funds sold and reverse repurchases 226 110 56 58 69 131 86
Other earning assets 325,620 1,139,312 1,811,713 1,839,498 2,038,515 1,086,771 1,820,293
Total earning assets 15,770,142 15,984,049 16,060,297 15,903,523 15,652,836 15,937,098 15,456,334
ACL LHFI (102,951 ) (99,106 ) (99,390 ) (104,148 ) (104,857 ) (100,495 ) (112,199 )
Other assets 1,576,653 1,513,127 1,550,848 1,570,501 1,602,611 1,546,972 1,608,754
Total assets 17,243,844 $ 17,398,070 $ 17,511,755 $ 17,369,876 $ 17,150,590 $ 17,383,575 $ 16,952,889
Interest-bearing demand deposits 4,613,733 $ 4,578,235 $ 4,429,056 $ 4,353,599 $ 4,224,717 $ 4,541,018 $ 4,010,188
Savings deposits 4,514,579 4,638,849 4,791,104 4,585,624 4,617,683 4,647,164 4,634,482
Time deposits 1,111,440 1,159,065 1,193,435 1,220,083 1,258,829 1,154,346 1,310,438
Total interest-bearing deposits 10,239,752 10,376,149 10,413,595 10,159,306 10,101,229 10,342,528 9,955,108
Fed funds purchased and repurchases 249,809 118,753 212,006 201,856 147,635 193,661 162,984
Other borrowings 88,697 80,283 91,090 94,328 109,735 86,681 136,077
Subordinated notes 123,171 123,116 123,061 123,007 122,951 123,116 122,908
Junior subordinated debt securities 61,856 61,856 61,856 61,856 61,856 61,856 61,856
Total interest-bearing liabilities 10,763,285 10,760,157 10,901,608 10,640,353 10,543,406 10,807,842 10,438,933
Noninterest-bearing deposits 4,444,370 4,590,338 4,601,108 4,679,951 4,566,924 4,544,698 4,481,662
Other liabilities 429,720 439,266 295,287 291,449 257,956 388,585 258,090
Total liabilities 15,637,375 15,789,761 15,798,003 15,611,753 15,368,286 15,741,125 15,178,685
Shareholders' equity 1,606,469 1,608,309 1,713,752 1,758,123 1,782,304 1,642,450 1,774,204
Total liabilities and equity 17,243,844 $ 17,398,070 $ 17,511,755 $ 17,369,876 $ 17,150,590 $ 17,383,575 $ 16,952,889
(1) During the second quarter of 2022, Trustmark transferred 343.1 million of securities available for sale to securities held to maturity.
See Note 1 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information.

All values are in US Dollars.

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2022
($ in thousands)
(unaudited)
PERIOD END BALANCES 6/30/2022 3/31/2022 12/31/2021 9/30/2021
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Cash and due from banks 479,637 $ 742,461 $ 1,917,564 $ 2,266,829 $ 2,175,058
Fed funds sold and reverse repurchases 10,098 — — — —
Securities available for sale (1) 2,444,486 2,644,364 3,018,246 3,238,877 3,057,605
Securities held to maturity (1) 1,156,985 1,137,754 607,598 342,537 394,905
PPP loans 4,798 12,549 18,579 33,336 46,486
LHFS 165,213 190,186 222,538 275,706 335,339
LHFI 11,586,064 10,944,840 10,397,129 10,247,829 10,174,899
ACL LHFI (115,050 ) (103,140 ) (98,734 ) (99,457 ) (104,073 )
Net LHFI 11,471,014 10,841,700 10,298,395 10,148,372 10,070,826
Premises and equipment, net 210,761 207,914 207,301 205,644 201,937
Mortgage servicing rights 132,615 121,014 111,050 87,687 84,101
Goodwill 384,237 384,237 384,237 384,237 384,237
Identifiable intangible assets 3,952 4,264 4,591 5,074 5,621
Other real estate 2,971 3,034 3,187 4,557 6,213
Operating lease right-of-use assets 37,282 34,684 34,048 34,603 34,689
Other assets 686,585 627,349 614,217 568,177 567,627
Total assets 17,190,634 $ 16,951,510 $ 17,441,551 $ 17,595,636 $ 17,364,644
Deposits:
Noninterest-bearing 4,358,805 $ 4,509,472 $ 4,739,102 $ 4,771,065 $ 4,987,885
Interest-bearing 10,066,375 10,260,696 10,374,190 10,316,095 9,934,954
Total deposits 14,425,180 14,770,168 15,113,292 15,087,160 14,922,839
Fed funds purchased and repurchases 544,068 70,157 170,499 238,577 146,417
Other borrowings 223,172 72,553 84,644 91,025 94,889
Subordinated notes 123,207 123,152 123,097 123,042 122,987
Junior subordinated debt securities 61,856 61,856 61,856 61,856 61,856
ACL on off-balance sheet credit exposures 31,623 32,949 34,517 35,623 32,684
Operating lease liabilities 39,797 37,108 35,912 36,468 36,531
Other liabilities 232,786 196,871 186,352 180,574 177,494
Total liabilities 15,681,689 15,364,814 15,810,169 15,854,325 15,595,697
Common stock 12,700 12,752 12,806 12,845 13,014
Capital surplus 154,150 160,876 167,094 175,913 201,837
Retained earnings 1,648,507 1,620,210 1,600,138 1,585,113 1,573,176
Accumulated other comprehensive income (loss),    net of tax (306,412 ) (207,142 ) (148,656 ) (32,560 ) (19,080 )
Total shareholders' equity 1,508,945 1,586,696 1,631,382 1,741,311 1,768,947
Total liabilities and equity 17,190,634 $ 16,951,510 $ 17,441,551 $ 17,595,636 $ 17,364,644
(1) During the second quarter of 2022, Trustmark transferred 343.1 million of securities available for sale to securities held to maturity.
See Note 1 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information.

All values are in US Dollars.

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2022
($ in thousands except per share data)
(unaudited)
Quarter Ended Nine Months Ended
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
INCOME STATEMENTS 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 9/30/2022 9/30/2021
Interest and fees on LHFS & LHFI-FTE $ 129,395 $ 103,033 $ 93,252 $ 94,137 $ 94,101 $ 325,680 $ 281,193
Interest and fees on PPP loans 186 184 168 397 1,533 538 36,329
Interest on securities-taxable 16,222 14,561 12,357 10,796 9,973 43,140 27,902
Interest on securities-tax exempt-FTE 100 107 122 123 132 329 571
Interest on fed funds sold and reverse repurchases 2 1 — — — 3 —
Other interest income 1,493 2,214 817 826 949 4,524 1,941
Total interest income-FTE 147,398 120,100 106,716 106,279 106,688 374,214 347,936
Interest on deposits 5,097 2,774 2,760 3,401 3,691 10,631 13,544
Interest on fed funds purchased and repurchases 1,225 70 70 66 51 1,365 166
Other interest expense 1,996 1,664 1,539 1,580 1,733 5,199 5,403
Total interest expense 8,318 4,508 4,369 5,047 5,475 17,195 19,113
Net interest income-FTE 139,080 115,592 102,347 101,232 101,213 357,019 328,823
Provision for credit losses, LHFI 12,919 2,716 (860 ) (4,515 ) (2,492 ) 14,775 (16,984 )
Provision for credit losses, off-balance sheet <br>   credit exposures (1,326 ) (1,568 ) (1,106 ) 2,939 (1,049 ) (4,000 ) (5,888 )
Net interest income after provision-FTE 127,487 114,444 104,313 102,808 104,754 346,244 351,695
Service charges on deposit accounts 11,318 10,226 9,451 9,366 8,911 30,995 23,880
Bank card and other fees 9,305 10,167 8,442 8,340 8,549 27,914 26,322
Mortgage banking, net 6,876 8,149 9,873 11,609 14,004 24,898 52,141
Insurance commissions 13,911 13,702 14,089 11,716 12,133 41,702 36,795
Wealth management 8,778 9,102 9,054 8,757 9,071 26,934 26,433
Other, net 2,418 1,907 3,206 979 1,481 7,531 5,572
Total noninterest income 52,606 53,253 54,115 50,767 54,149 159,974 171,143
Salaries and employee benefits 72,707 71,679 69,585 68,258 74,623 213,971 215,900
Services and fees 25,795 24,538 24,453 22,904 22,306 74,786 66,559
Net occupancy-premises 7,395 6,892 7,079 6,816 6,854 21,366 20,227
Equipment expense 6,072 6,047 6,061 6,585 5,941 18,180 17,752
Other expense 14,729 14,611 14,341 14,906 19,876 43,681 49,389
Total noninterest expense 126,698 123,767 121,519 119,469 129,600 371,984 369,827
Income before income taxes and tax eq adj 53,395 43,930 36,909 34,106 29,303 134,234 153,011
Tax equivalent adjustment 2,975 2,916 3,003 2,906 2,947 8,894 8,798
Income before income taxes 50,420 41,014 33,906 31,200 26,356 125,340 144,213
Income taxes 7,965 6,730 4,695 4,978 5,156 19,390 23,070
Net income $ 42,455 $ 34,284 $ 29,211 $ 26,222 $ 21,200 $ 105,950 $ 121,143
Per share data
Earnings per share - basic $ 0.69 $ 0.56 $ 0.47 $ 0.42 $ 0.34 $ 1.73 $ 1.92
Earnings per share - diluted $ 0.69 $ 0.56 $ 0.47 $ 0.42 $ 0.34 $ 1.72 $ 1.92
Dividends per share $ 0.23 $ 0.23 $ 0.23 $ 0.23 $ 0.23 $ 0.69 $ 0.69
Weighted average shares outstanding
Basic 61,114,804 61,378,226 61,514,395 62,037,884 62,521,684 61,334,344 63,040,860
Diluted 61,318,715 61,546,285 61,709,797 62,264,983 62,730,157 61,519,685 63,219,987
Period end shares outstanding 60,953,864 61,201,123 61,463,392 61,648,679 62,461,832 60,953,864 62,461,832

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2022
($ in thousands)
(unaudited)
Quarter Ended
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
NONPERFORMING ASSETS (1) 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021
Nonaccrual LHFI
Alabama $ 12,710 $ 2,698 $ 7,506 $ 8,182 $ 9,223
Florida 227 233 310 313 381
Mississippi (2) 23,517 23,039 21,318 21,636 22,898
Tennessee (3) 5,120 9,500 9,266 10,501 10,356
Texas 26,353 26,582 25,999 22,066 23,382
Total nonaccrual LHFI 67,927 62,052 64,399 62,698 66,240
Other real estate
Alabama 217 84 — — 613
Mississippi (2) 2,754 2,950 3,187 4,557 5,600
Total other real estate 2,971 3,034 3,187 4,557 6,213
Total nonperforming assets $ 70,898 $ 65,086 $ 67,586 $ 67,255 $ 72,453
LOANS PAST DUE OVER 90 DAYS (1)
LHFI $ 1,842 $ 1,347 $ 1,503 $ 2,114 $ 625
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase) $ 48,313 $ 51,164 $ 62,078 $ 69,894 $ 75,091
Quarter Ended Nine Months Ended
ACL LHFI (1) 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 9/30/2022 9/30/2021
Beginning Balance $ 103,140 $ 98,734 $ 99,457 $ 104,073 $ 104,032 $ 99,457 $ 117,306
Provision for credit losses, LHFI 12,919 2,716 (860 ) (4,515 ) (2,492 ) 14,775 (16,984 )
Charge-offs (2,920 ) (2,277 ) (2,242 ) (2,616 ) (1,586 ) (7,439 ) (7,659 )
Recoveries 1,911 3,967 2,379 2,515 4,119 8,257 11,410
Net (charge-offs) recoveries (1,009 ) 1,690 137 (101 ) 2,533 818 3,751
Ending Balance $ 115,050 $ 103,140 $ 98,734 $ 99,457 $ 104,073 $ 115,050 $ 104,073
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama $ 93 $ 1,129 $ 699 $ 747 $ 247 $ 1,921 $ 552
Florida (23 ) 761 (26 ) (32 ) 356 712 553
Mississippi (2) (702 ) (266 ) (88 ) (683 ) 1,436 (1,056 ) 572
Tennessee (3) (202 ) 31 (424 ) (130 ) (8 ) (595 ) 1,070
Texas (175 ) 35 (24 ) (3 ) 502 (164 ) 1,004
Total net (charge-offs) recoveries $ (1,009 ) $ 1,690 $ 137 $ (101 ) $ 2,533 $ 818 $ 3,751
(1) Excludes PPP loans.
(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
September 30, 2022
(unaudited)
Quarter Ended Nine Months Ended
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
FINANCIAL RATIOS AND OTHER DATA 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 9/30/2022 9/30/2021
Return on average equity 10.48 % 8.55 % 6.91 % 5.92 % 4.72 % 8.62 % 9.13 %
Return on average tangible equity 13.90 % 11.36 % 9.05 % 7.72 % 6.16 % 11.39 % 11.84 %
Return on average assets 0.98 % 0.79 % 0.68 % 0.60 % 0.49 % 0.81 % 0.96 %
Interest margin - Yield - FTE 3.71 % 3.01 % 2.69 % 2.65 % 2.70 % 3.14 % 3.01 %
Interest margin - Cost 0.21 % 0.11 % 0.11 % 0.13 % 0.14 % 0.14 % 0.17 %
Net interest margin - FTE 3.50 % 2.90 % 2.58 % 2.53 % 2.57 % 3.00 % 2.84 %
Efficiency ratio (1) 64.96 % 71.89 % 76.44 % 76.52 % 74.10 % 70.70 % 69.85 %
Full-time equivalent employees 2,717 2,727 2,725 2,692 2,680
CREDIT QUALITY RATIOS (2)
Net (recoveries) charge-offs / average loans 0.03 % -0.06 % -0.01 % 0.00 % -0.10 % -0.01 % -0.05 %
Provision for credit losses, LHFI / average loans 0.45 % 0.10 % -0.03 % -0.17 % -0.10 % 0.18 % -0.22 %
Nonaccrual LHFI / (LHFI + LHFS) 0.58 % 0.56 % 0.61 % 0.60 % 0.63 %
Nonperforming assets / (LHFI + LHFS) 0.60 % 0.58 % 0.64 % 0.64 % 0.69 %
Nonperforming assets / (LHFI + LHFS <br>   + other real estate) 0.60 % 0.58 % 0.64 % 0.64 % 0.69 %
ACL LHFI / LHFI 0.99 % 0.94 % 0.95 % 0.97 % 1.02 %
ACL LHFI-commercial / commercial LHFI 0.93 % 0.88 % 0.95 % 1.00 % 1.05 %
ACL LHFI-consumer / consumer and <br>   home mortgage LHFI 1.20 % 1.14 % 0.96 % 0.87 % 0.91 %
ACL LHFI / nonaccrual LHFI 169.37 % 166.22 % 153.32 % 158.63 % 157.11 %
ACL LHFI / nonaccrual LHFI <br>   (excl individually evaluated loans) 466.03 % 475.27 % 484.01 % 500.85 % 520.77 %
CAPITAL RATIOS
Total equity / total assets 8.78 % 9.36 % 9.35 % 9.90 % 10.19 %
Tangible equity / tangible assets 6.67 % 7.23 % 7.29 % 7.86 % 8.12 %
Tangible equity / risk-weighted assets 8.15 % 9.16 % 9.79 % 10.71 % 11.19 %
Tier 1 leverage ratio 9.01 % 8.80 % 8.66 % 8.73 % 8.92 %
Common equity tier 1 capital ratio 10.63 % 11.01 % 11.23 % 11.29 % 11.68 %
Tier 1 risk-based capital ratio 11.06 % 11.47 % 11.70 % 11.77 % 12.17 %
Total risk-based capital ratio 12.85 % 13.26 % 13.53 % 13.55 % 14.01 %
STOCK PERFORMANCE
Market value-Close $ 30.63 $ 29.19 $ 30.39 $ 32.46 $ 32.22
Book value $ 24.76 $ 25.93 $ 26.54 $ 28.25 $ 28.32
Tangible book value $ 18.39 $ 19.58 $ 20.22 $ 21.93 $ 22.08
(1) See Note 6 – Non-GAAP Financial Measures in the Notes to Consolidated Financials for Trustmark’s efficiency ratio calculation.
(2) Excludes PPP loans.

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
September 30, 2022
($ 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:

9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities $ 416,278 $ 419,696 $ 361,822 $ 344,640 $ 278,615
U.S. Government agency obligations 9,116 11,947 12,623 13,727 14,979
Obligations of states and political subdivisions 4,763 5,179 5,359 5,714 5,734
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA 28,164 32,240 35,117 39,573 43,860
Issued by FNMA and FHLMC 1,718,057 1,888,546 2,038,331 2,218,429 2,187,412
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 126,138 144,158 164,506 196,690 236,885
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 141,970 142,598 400,488 420,104 290,120
Total securities available for sale $ 2,444,486 $ 2,644,364 $ 3,018,246 $ 3,238,877 $ 3,057,605
SECURITIES HELD TO MATURITY
Obligations of states and political subdivisions $ 4,512 $ 5,320 $ 7,324 $ 7,328 $ 10,683
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA 4,527 4,624 4,831 5,005 5,912
Issued by FNMA and FHLMC 179,375 185,554 192,373 43,444 48,554
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 197,923 210,479 224,012 241,934 264,638
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 770,648 731,777 179,058 44,826 65,118
Total securities held to maturity $ 1,156,985 $ 1,137,754 $ 607,598 $ 342,537 $ 394,905

During the second quarter of 2022, Trustmark reclassified $343.1 million of securities available for sale to securities held to maturity. The securities were transferred at fair value, which became the cost basis for the securities held to maturity. At the date of transfer, the net unrealized holding loss on the available for sale securities totaled approximately $34.8 million ($26.1 million, net of tax). The net unrealized holding loss will be amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. There were no gains or losses recognized as a result of the transfer.

At September 30, 2022, 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 approximately $37.7 million ($28.3 million, net of tax).

Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 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.

Note 2 – Loan Composition

LHFI consisted of the following during the periods presented:

LHFI BY TYPE 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021
Loans secured by real estate:
Construction, land development and other land loans $ 1,647,395 $ 1,440,058 $ 1,273,959 $ 1,308,781 $ 1,286,613
Secured by 1-4 family residential properties 2,597,112 2,424,962 2,106,998 1,977,993 1,891,292
Secured by nonfarm, nonresidential properties 3,206,946 3,178,079 2,975,039 2,977,084 2,924,953
Other real estate secured 593,119 555,311 715,939 726,043 986,163
Commercial and industrial loans 1,689,532 1,551,001 1,495,060 1,414,279 1,327,211
Consumer loans 163,412 160,716 154,215 159,472 157,963
State and other political subdivision loans 1,188,703 1,110,795 1,215,023 1,146,251 1,125,186
Other loans 499,845 523,918 460,896 537,926 475,518
LHFI 11,586,064 10,944,840 10,397,129 10,247,829 10,174,899
ACL LHFI (115,050 ) (103,140 ) (98,734 ) (99,457 ) (104,073 )
Net LHFI $ 11,471,014 $ 10,841,700 $ 10,298,395 $ 10,148,372 $ 10,070,826
TRUSTMARK CORPORATION AND SUBSIDIARIES
---
NOTES TO CONSOLIDATED FINANCIALS
September 30, 2022
($ in thousands)
(unaudited)

Note 2 – Loan Composition (continued)

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

September 30, 2022
LHFI - COMPOSITION BY REGION Total Alabama Florida Mississippi <br>(Central and <br>Southern <br>Regions) Tennessee <br>(Memphis, TN and <br>Northern MS<br>Regions) Texas
Loans secured by real estate:
Construction, land development and other land loans $ 1,647,395 $ 768,582 $ 57,901 $ 419,470 $ 38,356 $ 363,086
Secured by 1-4 family residential properties 2,597,112 126,847 48,428 2,320,799 71,330 29,708
Secured by nonfarm, nonresidential properties 3,206,946 911,567 249,549 1,292,254 173,434 580,142
Other real estate secured 593,119 101,680 1,758 337,458 7,036 145,187
Commercial and industrial loans 1,689,532 420,001 25,879 743,116 260,939 239,597
Consumer loans 163,412 23,660 7,595 101,340 19,355 11,462
State and other political subdivision loans 1,188,703 77,853 70,293 831,431 28,879 180,247
Other loans 499,845 69,925 10,096 305,372 54,077 60,375
Loans $ 11,586,064 $ 2,500,115 $ 471,499 $ 6,351,240 $ 653,406 $ 1,609,804
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots $ 72,411 $ 40,195 $ 8,822 $ 16,441 $ 1,937 $ 5,016
Development 144,989 51,404 1,690 54,266 6,604 31,025
Unimproved land 99,197 21,327 13,174 32,514 4,707 27,475
1-4 family construction 377,144 201,230 25,079 89,429 25,099 36,307
Other construction 953,654 454,426 9,136 226,820 9 263,263
Construction, land development and other land loans $ 1,647,395 $ 768,582 $ 57,901 $ 419,470 $ 38,356 $ 363,086
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION
Non-owner occupied:
Retail $ 324,948 $ 122,602 $ 34,912 $ 85,101 $ 22,155 $ 60,178
Office 269,068 102,266 18,027 86,812 10,604 51,359
Hotel/motel 298,266 171,299 73,974 24,721 28,272 —
Mini-storage 159,898 27,253 2,150 110,838 500 19,157
Industrial 344,013 116,897 18,636 106,635 247 101,598
Health care 50,239 17,864 1,017 27,427 347 3,584
Convenience stores 29,170 8,706 668 15,019 604 4,173
Nursing homes/senior living 346,795 139,263 — 139,029 5,765 62,738
Other 122,999 17,496 9,979 60,027 16,596 18,901
Total non-owner occupied loans 1,945,396 723,646 159,363 655,609 85,090 321,688
Owner-occupied:
Office 152,004 42,342 37,200 45,750 9,316 17,396
Churches 75,039 16,676 5,348 42,353 7,577 3,085
Industrial warehouses 167,154 18,112 2,920 38,509 17,408 90,205
Health care 126,382 11,077 6,491 91,939 2,360 14,515
Convenience stores 153,282 12,891 21,626 68,967 398 49,400
Retail 95,058 11,993 8,780 43,985 19,373 10,927
Restaurants 53,409 3,098 4,732 29,428 12,293 3,858
Auto dealerships 50,838 7,290 235 24,924 18,389 —
Nursing homes/senior living 252,203 50,363 — 175,640 — 26,200
Other 136,181 14,079 2,854 75,150 1,230 42,868
Total owner-occupied loans 1,261,550 187,921 90,186 636,645 88,344 258,454
Loans secured by nonfarm, nonresidential properties $ 3,206,946 $ 911,567 $ 249,549 $ 1,292,254 $ 173,434 $ 580,142
TRUSTMARK CORPORATION AND SUBSIDIARIES
---
NOTES TO CONSOLIDATED FINANCIALS
September 30, 2022
($ in thousands)
(unaudited)

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 Nine Months Ended
9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 9/30/2022 9/30/2021
Securities – taxable 1.62 % 1.50 % 1.37 % 1.22 % 1.28 % 1.50 % 1.32 %
Securities – nontaxable 3.97 % 4.00 % 3.97 % 3.82 % 3.79 % 3.98 % 3.88 %
Securities – total 1.63 % 1.50 % 1.38 % 1.23 % 1.29 % 1.51 % 1.34 %
PPP loans 7.51 % 4.16 % 2.35 % 3.68 % 4.98 % 3.83 % 10.69 %
Loans - LHFI & LHFS 4.48 % 3.79 % 3.58 % 3.56 % 3.59 % 3.97 % 3.64 %
Loans - total 4.48 % 3.79 % 3.58 % 3.56 % 3.61 % 3.97 % 3.93 %
Fed funds sold & reverse repurchases 3.51 % 3.65 % — — — 3.06 % —
Other earning assets 1.82 % 0.78 % 0.18 % 0.18 % 0.18 % 0.56 % 0.14 %
Total earning assets 3.71 % 3.01 % 2.69 % 2.65 % 2.70 % 3.14 % 3.01 %
Interest-bearing deposits 0.20 % 0.11 % 0.11 % 0.13 % 0.14 % 0.14 % 0.18 %
Fed funds purchased & repurchases 1.95 % 0.24 % 0.13 % 0.13 % 0.14 % 0.94 % 0.14 %
Other borrowings 2.89 % 2.52 % 2.26 % 2.25 % 2.33 % 2.56 % 2.25 %
Total interest-bearing liabilities 0.31 % 0.17 % 0.16 % 0.19 % 0.21 % 0.21 % 0.24 %
Net interest margin 3.50 % 2.90 % 2.58 % 2.53 % 2.57 % 3.00 % 2.84 %
Net interest margin excluding PPP loans <br>   and the FRB balance 3.53 % 3.06 % 2.88 % 2.82 % 2.90 % 3.17 % 2.94 %

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.

At September 30, 2022 and June 30, 2022, the average FRB balance totaled $275.4 million and $1.077 billion, respectively, 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 totaled 3.53% for the third quarter of 2022, an increase of 47 basis points when compared to the second quarter of 2022. The expansion of the net interest margin excluding PPP loans and the FRB balance was due to increases in the yields on the loans held for investment and held for sale portfolio and the securities portfolio and was partially offset by 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 ineffectiveness of $928 thousand during the third quarter of 2022.

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

Quarter Ended Nine Months Ended
9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 9/30/2022 9/30/2021
Mortgage servicing income, net $ 6,669 $ 6,557 $ 6,429 $ 6,571 $ 6,406 $ 19,655 $ 18,905
Change in fair value-MSR from runoff (3,462 ) (3,806 ) (3,785 ) (4,745 ) (5,283 ) (11,053 ) (15,415 )
Gain on sales of loans, net 4,597 6,030 6,223 9,005 12,737 16,850 46,971
Mortgage banking income before hedge <br>   ineffectiveness 7,804 8,781 8,867 10,831 13,860 25,452 50,461
Change in fair value-MSR from market changes 10,770 8,739 22,020 2,221 1,806 41,529 11,037
Change in fair value of derivatives (11,698 ) (9,371 ) (21,014 ) (1,443 ) (1,662 ) (42,083 ) (9,357 )
Net positive (negative) hedge ineffectiveness (928 ) (632 ) 1,006 778 144 (554 ) 1,680
Mortgage banking, net $ 6,876 $ 8,149 $ 9,873 $ 11,609 $ 14,004 $ 24,898 $ 52,141
TRUSTMARK CORPORATION AND SUBSIDIARIES
---
NOTES TO CONSOLIDATED FINANCIALS
September 30, 2022
($ in thousands)
(unaudited)

Note 5 – Other Noninterest Income and Expense

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

Quarter Ended Nine Months Ended
9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 9/30/2022 9/30/2021
Partnership amortization for tax credit purposes $ (1,531 ) $ (1,475 ) $ (1,336 ) $ (2,455 ) $ (2,045 ) $ (4,342 ) $ (5,556 )
Increase in life insurance cash surrender value 1,676 1,683 1,627 1,675 1,663 4,986 4,955
Other miscellaneous income 2,273 1,699 2,915 1,759 1,863 6,887 6,173
Total other, net $ 2,418 $ 1,907 $ 3,206 $ 979 $ 1,481 $ 7,531 $ 5,572

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

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

Quarter Ended Nine Months Ended
9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 9/30/2022 9/30/2021
Loan expense $ 3,858 $ 4,068 $ 4,389 $ 3,221 $ 4,022 $ 12,315 $ 11,927
Amortization of intangibles 312 328 482 548 549 1,122 1,768
FDIC assessment expense 1,945 1,810 1,500 1,475 1,275 5,255 4,040
Regulatory settlement charge — — — — 5,000 — 5,000
Other real estate expense, net 497 623 35 336 1,357 1,155 3,192
Other miscellaneous expense 8,117 7,782 7,935 9,326 7,673 23,834 23,462
Total other expense $ 14,729 $ 14,611 $ 14,341 $ 14,906 $ 19,876 $ 43,681 $ 49,389

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
September 30, 2022
($ in thousands except per share data)
(unaudited)

Note 6 – Non-GAAP Financial Measures (continued)

Quarter Ended Nine Months Ended
9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 9/30/2022 9/30/2021
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity $ 1,606,469 $ 1,608,309 $ 1,713,752 $ 1,758,123 $ 1,782,304 $ 1,642,450 $ 1,774,204
Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,540 )
Identifiable intangible assets (4,131 ) (4,436 ) (4,879 ) (5,382 ) (5,899 ) (4,479 ) (6,482 )
Total average tangible equity $ 1,218,101 $ 1,219,636 $ 1,324,636 $ 1,368,504 $ 1,392,168 $ 1,253,734 $ 1,383,182
PERIOD END BALANCES
Total shareholders' equity $ 1,508,945 $ 1,586,696 $ 1,631,382 $ 1,741,311 $ 1,768,947
Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 )
Identifiable intangible assets (3,952 ) (4,264 ) (4,591 ) (5,074 ) (5,621 )
Total tangible equity (a) $ 1,120,756 $ 1,198,195 $ 1,242,554 $ 1,352,000 $ 1,379,089
TANGIBLE ASSETS
Total assets $ 17,190,634 $ 16,951,510 $ 17,441,551 $ 17,595,636 $ 17,364,644
Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 )
Identifiable intangible assets (3,952 ) (4,264 ) (4,591 ) (5,074 ) (5,621 )
Total tangible assets (b) $ 16,802,445 $ 16,563,009 $ 17,052,723 $ 17,206,325 $ 16,974,786
Risk-weighted assets (c) $ 13,748,819 $ 13,076,981 $ 12,691,545 $ 12,623,630 $ 12,324,254
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income $ 42,455 $ 34,284 $ 29,211 $ 26,222 $ 21,200 $ 105,950 $ 121,143
Plus: Intangible amortization net of tax 234 246 362 411 412 842 1,327
Net income adjusted for intangible amortization $ 42,689 $ 34,530 $ 29,573 $ 26,633 $ 21,612 $ 106,792 $ 122,470
Period end common shares outstanding (d) 60,953,864 61,201,123 61,463,392 61,648,679 62,461,832
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity (1) 13.90 % 11.36 % 9.05 % 7.72 % 6.16 % 11.39 % 11.84 %
Tangible equity/tangible assets (a)/(b) 6.67 % 7.23 % 7.29 % 7.86 % 8.12 %
Tangible equity/risk-weighted assets (a)/(c) 8.15 % 9.16 % 9.79 % 10.71 % 11.19 %
Tangible book value (a)/(d)*1,000 $ 18.39 $ 19.58 $ 20.22 $ 21.93 $ 22.08
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity $ 1,508,945 $ 1,586,696 $ 1,631,382 $ 1,741,311 $ 1,768,947
CECL transition adjustment 19,500 19,500 19,500 26,000 26,419
AOCI-related adjustments 306,412 207,142 148,656 32,560 19,080
CET1 adjustments and deductions:
Goodwill net of associated deferred <br>   tax liabilities (DTLs) (370,217 ) (370,229 ) (370,240 ) (370,252 ) (370,264 )
Other adjustments and deductions <br>   for CET1 (2) (3,506 ) (3,757 ) (4,015 ) (4,392 ) (4,817 )
CET1 capital (e) 1,461,134 1,439,352 1,425,283 1,425,227 1,439,365
Additional tier 1 capital instruments <br>   plus related surplus 60,000 60,000 60,000 60,000 60,000
Tier 1 capital $ 1,521,134 $ 1,499,352 $ 1,485,283 $ 1,485,227 $ 1,499,365
Common equity tier 1 capital ratio (e)/(c) 10.63 % 11.01 % 11.23 % 11.29 % 11.68 %

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

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

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
September 30, 2022
($ in thousands)
(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 Nine Months Ended
9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 9/30/2022 9/30/2021
Net interest income (GAAP) $ 136,105 $ 112,676 $ 99,344 $ 98,326 $ 98,266 $ 348,125 $ 320,025
Noninterest income (GAAP) 52,606 53,253 54,115 50,767 54,149 159,974 171,143
Pre-provision revenue (a) $ 188,711 $ 165,929 $ 153,459 $ 149,093 $ 152,415 $ 508,099 $ 491,168
Noninterest expense (GAAP) $ 126,698 $ 123,767 $ 121,519 $ 119,469 $ 129,600 $ 371,984 $ 369,827
Less: Voluntary early retirement program — — — — (5,700 ) — (5,700 )
Regulatory settlement charge — — — — (5,000 ) — (5,000 )
Adjusted noninterest expense - PPNR (Non-GAAP) (b) $ 126,698 $ 123,767 $ 121,519 $ 119,469 $ 118,900 $ 371,984 $ 359,127
PPNR (Non-GAAP) (a)-(b) $ 62,013 $ 42,162 $ 31,940 $ 29,624 $ 33,515 $ 136,115 $ 132,041

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

Quarter Ended Nine Months Ended
9/30/2022 9/30/2021 9/30/2022 9/30/2021
Amount Diluted EPS Amount Diluted EPS Amount Diluted EPS Amount Diluted EPS
Net income (GAAP) $ 42,455 $ 0.69 $ 21,200 $ 0.34 $ 105,950 $ 1.72 $ 121,143 $ 1.92
Significant non-routine transactions (net of taxes):
Voluntary early retirement program — — 4,275 0.07 — — 4,275 0.07
Regulatory settlement charge <br>     (not tax deductible) — — 5,000 0.08 — — 5,000 0.08
Net income adjusted for significant non-routine <br>   transactions (Non-GAAP) $ 42,455 $ 0.69 $ 30,475 $ 0.49 $ 105,950 $ 1.72 $ 130,418 $ 2.07
Reported (GAAP) Adjusted (Non-GAAP) Reported (GAAP) Adjusted (Non-GAAP) Reported (GAAP) Adjusted (Non-GAAP) Reported (GAAP) Adjusted (Non-GAAP)
Return on average equity 10.48 % n/a 4.72 % 6.77 % 8.62 % n/a 9.13 % 9.82 %
Return on average tangible equity 13.90 % n/a 6.16 % 8.77 % 11.39 % n/a 11.84 % 12.72 %
Return on average assets 0.98 % n/a 0.49 % 0.71 % 0.81 % n/a 0.96 % 1.03 %
n/a - not applicable
TRUSTMARK CORPORATION AND SUBSIDIARIES
---
NOTES TO CONSOLIDATED FINANCIALS
September 30, 2022
($ in thousands)
(unaudited)

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

Quarter Ended Nine Months Ended
9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 9/30/2022 9/30/2021
Total noninterest expense (GAAP) $ 126,698 $ 123,767 $ 121,519 $ 119,469 $ 129,600 $ 371,984 $ 369,827
Less: Other real estate expense, net (497 ) (623 ) (35 ) (336 ) (1,357 ) (1,155 ) (3,192 )
Amortization of intangibles (312 ) (328 ) (482 ) (548 ) (549 ) (1,122 ) (1,768 )
Charitable contributions resulting in <br>   state tax credits (375 ) (375 ) (375 ) (391 ) (350 ) (1,125 ) (1,055 )
Voluntary early retirement program — — — — (5,700 ) — (5,700 )
Regulatory settlement charge — — — — (5,000 ) — (5,000 )
Adjusted noninterest expense (Non-GAAP) (c) $ 125,514 $ 122,441 $ 120,627 $ 118,194 $ 116,644 $ 368,582 $ 353,112
Net interest income (GAAP) $ 136,105 $ 112,676 $ 99,344 $ 98,326 $ 98,266 $ 348,125 $ 320,025
Add: Tax equivalent adjustment 2,975 2,916 3,003 2,906 2,947 8,894 8,798
Net interest income-FTE (Non-GAAP) (a) $ 139,080 $ 115,592 $ 102,347 $ 101,232 $ 101,213 $ 357,019 $ 328,823
Noninterest income (GAAP) $ 52,606 $ 53,253 $ 54,115 $ 50,767 $ 54,149 $ 159,974 $ 171,143
Add: Partnership amortization for tax credit purposes 1,531 1,475 1,336 2,455 2,045 4,342 5,556
Adjusted noninterest income (Non-GAAP) (b) $ 54,137 $ 54,728 $ 55,451 $ 53,222 $ 56,194 $ 164,316 $ 176,699
Adjusted revenue (Non-GAAP) (a)+(b) $ 193,217 $ 170,320 $ 157,798 $ 154,454 $ 157,407 $ 521,335 $ 505,522
Efficiency ratio (Non-GAAP) (c)/((a)+(b)) 64.96 % 71.89 % 76.44 % 76.52 % 74.10 % 70.70 % 69.85 %

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Third Quarter 2022 Financial Results October 25, 2022 Exhibit 99.2

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