Equibles

8-K

TRUSTMARK CORP (TRMK)

8-K 2024-01-23 For: 2024-01-23
View Original
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

January 23, 2024

Date of Report (Date of earliest event reported)

img234881811_0.jpg

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 January 23, 2024, Trustmark Corporation issued a press release announcing its financial results for the period ended December 31, 2023. 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 December 31, 2023
99.2 Investor slide presentation for the period ended December 31, 2023
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: January 23, 2024

EX-99.1

Exhibit 99.1

News Release

Trustmark Corporation Announces Fourth Quarter and Fiscal Year 2023 Financial Results

Performance Reflects Continued Loan and Deposit Growth,

Solid Credit Quality, and Diversified Revenue Base

JACKSON, Miss. – January 23, 2024 – Trustmark Corporation (NASDAQGS:TRMK) reported net income of $36.1 million in the fourth quarter of 2023, representing diluted earnings per share of $0.59. For the full year, Trustmark’s net income totaled $165.5 million, representing diluted earnings per share of $2.70. Trustmark’s net income in 2023 produced a return on average tangible equity of 14.04% and a return on average assets of 0.89%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable March 15, 2024, to shareholders of record on March 1, 2024.

2023 Highlights

• Loans held for investment (HFI) increased $746.5 million, or 6.1%, in 2023

• Net charge-offs represented 0.06% of average loans in 2023

• Deposits increased $1.1 billion, or 7.8%, in 2023

• Net interest income (FTE) totaled $566.3 million, up 11.7% in 2023 to produce a net interest margin of 3.32%, up 15 basis points from 2022

• Insurance revenue increased 7.2% while wealth management remained stable

• Noninterest income totaled $207.0 million and represented 27.2% of total revenue

• Total revenue increased $60.0 million, or 8.6%, to $759.8 million in 2023

• Continued technology investments to enhance efficiency and productivity

• Noninterest expense totaled $537.9 million in 2023; adjusted noninterest expense totaled $527.9 million, up 5.9% from the prior year; please refer to the Consolidated Financial Information Note 7 – Non-GAAP Financial Measures

Duane A. Dewey, President and CEO, commented, “We continued to make significant progress across the organization. Our performance reflected solid loan production and credit quality, and continued deposit growth in an increasingly competitive marketplace. We achieved double-digit growth in net interest income in 2023 while noninterest income continued to expand thanks in part to another record year in our insurance business and commendable results in our banking, mortgage banking and wealth management businesses. We have a tremendous team of associates focused on expanding customer relationships and demonstrating the value Trustmark can provide as their trusted financial partner. Looking forward, we will continue to pursue opportunities to redesign workflows and restructure the organization to further leverage investments in technology that will broaden our reach, enhance the customer experience, and improve efficiency. We remain focused on providing the financial services and advice our customers have come to expect while building long-term value for our shareholders.”

Balance Sheet Management

• Loans HFI increased $140.3 million, or 1.1%, during the quarter

• Total deposits increased $467.8 million, or 3.1%, linked-quarter

• Maintained strong capital position with CET1 ratio of 10.04% and total risk-based capital ratio of 12.29%

Loans HFI totaled $13.0 billion at December 31, 2023, reflecting an increase of $140.3 million, or 1.1%, linked-quarter and $746.5 million, or 6.1%, year-over-year. The linked-quarter growth reflected increases in commercial and industrial loans, other real estate secured loans, other loans and leases, and state and other political subdivision loans offset in part by declines in construction, land development and other land loans, and loans secured by nonfarm, nonresidential properties. Trustmark’s loan portfolio remains well-diversified by loan type and geography.

Deposits totaled $15.6 billion at December 31, 2023, up $467.8 million, or 3.1%, from the prior quarter and up $1.1 billion, or 7.8%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 83.2% of total deposits at year-end 2023. Noninterest-bearing deposits represented 20.5% of total deposits at December 31, 2023. Interest-bearing deposit costs totaled 2.67% for the fourth quarter, an increase of 28 basis points linked-quarter. The total cost of interest-bearing liabilities was 2.89% for the fourth quarter of 2023, an increase of 17 basis points from the prior quarter.

Trustmark did not repurchase any of its common shares in 2023. 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. 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 December 31, 2023, Trustmark’s tangible equity to tangible assets ratio was 6.95%, while the total risk-based capital ratio was 12.29%. Tangible book value per share was $20.87 at December 31, 2023, up 7.7% from the prior quarter and 15.2% from the prior year.

Credit Quality

• Net charge-offs totaled $2.2 million, representing 0.07% of average loans in the fourth quarter

• Provision for credit losses for loans HFI was $7.6 million in the fourth quarter

• Allowance for credit losses (ACL) represented 1.08% of loans HFI and 249.31% of nonperforming loans, excluding individually analyzed loans at year-end

Nonaccrual loans totaled $100.0 million at December 31, 2023, an increase of $9.1 million from the prior quarter and $34.0 million year-over-year. Other real estate totaled $6.9 million, reflecting increases of $1.4 million and $4.9 million from the prior quarter and prior year, respectively. Collectively, nonperforming assets totaled $106.9 million, representing 0.81% of loans HFI and held for sale (HFS) at December 31, 2023.

The provision for credit losses for loans HFI was $7.6 million in the fourth quarter and was primarily attributable to loan growth, net adjustments to the qualitative factors, and changes in the macroeconomic forecast. The provision for credit losses for off-balance sheet credit exposures was a negative $888 thousand in the fourth quarter. Collectively, the provision for credit losses totaled $6.7 million in the fourth quarter compared to $8.4 million in the prior quarter and $12.1 million in the fourth quarter of 2022.

Allocation of Trustmark’s $139.4 million ACL on loans HFI represented 0.85% of commercial loans and 1.81% of consumer and home mortgage loans, resulting in an ACL to total loans HFI of 1.08% at December 31, 2023. 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 $140.0 million in the fourth quarter, down 1.3% linked-quarter

• Net interest margin totaled 3.25% in the fourth quarter, down 4 basis points from the prior quarter

• Noninterest income totaled $49.8 million, representing 26.7% of total revenue in the fourth quarter

Revenue in the fourth quarter totaled $186.5 million, a decrease of 2.3% from the prior quarter and 2.7% from the same quarter in the prior year. The linked-quarter decrease reflects lower noninterest income and net interest income while the year-over-year decline reflects growth in noninterest income being more than offset by lower net interest income. In 2023, revenue totaled $759.8 million, an increase of 8.6% from the prior year.

Net interest income (FTE) in the fourth quarter totaled $140.0 million, resulting in a net interest margin of 3.25%, 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, which was offset in part by higher yields on the loans HFI and HFS portfolio.

Noninterest income in the fourth quarter totaled $49.8 million, a decrease of $2.4 million from the prior quarter and an increase of $4.6 million from the prior year. The linked-quarter change reflects a seasonal decline in insurance revenue, as well as lower mortgage banking and wealth management revenue. The increase in noninterest income year-over-year was well diversified across all fee-based categories.

Mortgage loan production in the fourth quarter totaled $271.9 million, a decline of 30.3% linked-quarter and 30.4% year-over-year. Mortgage banking revenue totaled $5.5 million in the fourth quarter, a decrease of $939 thousand from the prior quarter and an increase of $2.1 million year-over-year. The linked-quarter decline is attributable to an increase in net negative hedge ineffectiveness. In 2023, mortgage loan production totaled $1.5 billion, down 31.6% from the prior year. Mortgage banking revenue totaled $26.2 million in 2023, down $2.1 million from the prior year.

Insurance revenue in the fourth quarter totaled $13.2 million, a seasonal decline of $2.1 million from the prior quarter and an increase of $1.2 million from the prior year. Insurance revenue in 2023 totaled $57.6 million, up $3.8 million, or 7.2%, from the prior year. The solid performance during the year reflects an expanded producer workforce, a hardening of the insurance market, and the realization of operational efficiencies from investments in technology and improved processes.

Wealth management revenue totaled $8.7 million in the fourth quarter, down 1.3% from the prior quarter and up 7.2% from the prior year. The linked-quarter decline is principally due to reduced trust management revenue offset in part by increased brokerage revenue while the year-over-year change is attributable to increased investment services revenue. In 2023, wealth management revenue totaled $35.1 million, in line with the prior year. During 2023, Trustmark selectively expanded its salesforce in the Houston, Mobile, Jackson, and Florida Panhandle markets.

Noninterest Expense

• Total noninterest expense in the fourth quarter was $136.4 million; adjusted noninterest expense, which excludes ORE expense, amortization of intangibles, charitable contributions resulting in state tax credits, reduction in force expense, and litigation settlement expense, totaled $134.8 million, up $723 thousand from the prior quarter. Please refer to the Consolidated Financial Information Note 7 – Non-GAAP Financial Measures

• FDIC assessment expense totaled $4.8 million in the fourth quarter, up $1.1 million, or 28.7%, from the prior quarter

Salaries and employee benefits expense in the fourth quarter totaled $78.0 million, an increase of $1.3 million, or 1.7% from the prior quarter. Excluding reduction in force expense related to restructuring initiatives of $1.4 million, salaries and benefits expense totaled $76.6 million, a decline of $69 thousand from the prior quarter. Total services and fees in the fourth quarter totaled $27.9 million, unchanged from the prior quarter. Net occupancy – premises expense during the fourth quarter totaled $7.4 million, unchanged from the prior quarter. Equipment expense declined 4.4% linked-quarter to total $6.5 million. Other expense increased $943 thousand, or 6.0%, linked-quarter principally due to increased FDIC assessment expense.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, January 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, February 7, 2024, in archived format at the same web address or by calling (877) 344-7529, passcode 6776577.

Trustmark is a financial services company providing banking and financial solutions through offices in Alabama, Florida, Georgia, Mississippi, Tennessee and Texas. Visit trustmark.com for more information.

Forward-Looking Statements

Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “project,” “potential,” “seek,” “continue,” “could,” “would,” “future” or the negative of those terms or other words of similar meaning. You should read statements that contain these words carefully because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements include, but are not limited to, statements relating to anticipated future operating and financial performance measures, including net interest margin, credit quality, business initiatives, growth opportunities and growth rates, among other things, and encompass any estimate, prediction, expectation, projection, opinion, anticipation, outlook or statement of belief included therein as well as the management assumptions underlying these forward-looking statements. You should be aware that the occurrence of the events described under the caption “Risk Factors” in Trustmark’s filings with the Securities and Exchange Commission (SEC) could have an adverse effect on our business, results of operations and financial condition. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected.

Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels and slowdowns in economic growth, actions by the Board of Governors of the Federal Reserve System (FRB) that impact the level of market interest rates, local, state and national economic and market conditions, conditions in the housing and real estate markets in the regions in which Trustmark operates and the extent and duration of the current volatility in the credit and financial markets, levels of and volatility in crude oil prices, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility of market interest rates, the impacts related to or resulting from recent bank failures and other economic and industry volatility, including potential increased regulatory requirements and costs and potential impacts to macroeconomic conditions, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts,

the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, including the potential impact of issues related to the European financial system and monetary and other governmental actions designed to address credit, securities, and/or commodity markets, the enactment of legislation and changes in existing regulations or enforcement practices or the adoption of new regulations, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, changes in our ability to control expenses, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, cyber-attacks and other breaches which could affect our information system security, natural disasters, environmental disasters, pandemics or other health crises, acts of war or terrorism, and other risks described in our filings with the SEC.

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

Trustmark 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
December 31, 2023
($ in thousands)
(unaudited)
Linked Quarter Year over Year
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
QUARTERLY AVERAGE BALANCES 12/31/2023 9/30/2023 12/31/2022 Change % Change Change % Change
Securities AFS-taxable $ 1,986,825 $ 2,049,006 $ 2,572,675 ) -3.0 % ) -22.8 %
Securities AFS-nontaxable 4,246 4,779 4,828 ) -11.2 % ) -12.1 %
Securities HTM-taxable 1,430,169 1,445,895 1,268,952 ) -1.1 % 12.7 %
Securities HTM-nontaxable 340 907 4,514 ) -62.5 % ) -92.5 %
Total securities 3,421,580 3,500,587 3,850,969 ) -2.3 % ) -11.2 %
Paycheck protection program loans (PPP) — — 3,235 n/m ) -100.0 %
Loans (includes loans held for sale) 13,010,028 12,926,942 12,006,661 0.6 % 8.4 %
Fed funds sold and reverse repurchases 121 230 6,566 ) -47.4 % ) -98.2 %
Other earning assets 670,477 682,644 375,190 ) -1.8 % 78.7 %
Total earning assets 17,102,206 17,110,403 16,242,621 ) 0.0 % 5.3 %
Allowance for credit losses (ACL), loans held <br>   for investment (LHFI) (133,742 ) (127,915 ) (114,948 ) ) -4.6 % ) -16.4 %
Other assets 1,749,069 1,721,310 1,630,085 1.6 % 7.3 %
Total assets $ 18,717,533 $ 18,703,798 $ 17,757,758 0.1 % 5.4 %
Interest-bearing demand deposits $ 5,053,935 $ 4,875,714 $ 4,719,303 3.7 % 7.1 %
Savings deposits 3,526,600 3,642,158 4,379,673 ) -3.2 % ) -19.5 %
Time deposits 3,427,384 3,075,224 1,152,905 11.5 % n/m
Total interest-bearing deposits 12,007,919 11,593,096 10,251,881 3.6 % 17.1 %
Fed funds purchased and repurchases 403,041 414,696 549,406 ) -2.8 % ) -26.6 %
Other borrowings 590,765 912,151 530,993 ) -35.2 % 11.3 %
Subordinated notes 123,446 123,391 123,226 0.0 % 0.2 %
Junior subordinated debt securities 61,856 61,856 61,856 0.0 % 0.0 %
Total interest-bearing liabilities 13,187,027 13,105,190 11,517,362 0.6 % 14.5 %
Noninterest-bearing deposits 3,296,351 3,429,815 4,177,113 ) -3.9 % ) -21.1 %
Other liabilities 641,662 585,908 569,992 9.5 % 12.6 %
Total liabilities 17,125,040 17,120,913 16,264,467 0.0 % 5.3 %
Shareholders' equity 1,592,493 1,582,885 1,493,291 0.6 % 6.6 %
Total liabilities and equity $ 18,717,533 $ 18,703,798 $ 17,757,758 0.1 % 5.4 %
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
December 31, 2023
($ in thousands)
(unaudited)
Linked Quarter Year over Year
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
PERIOD END BALANCES 12/31/2023 9/30/2023 12/31/2022 Change % Change Change % Change
Cash and due from banks $ 975,543 $ 750,492 $ 734,787 30.0 % 32.8 %
Fed funds sold and reverse repurchases — — 4,000 n/m ) -100.0 %
Securities available for sale 1,762,878 1,766,174 2,024,082 ) -0.2 % ) -12.9 %
Securities held to maturity 1,426,279 1,438,287 1,494,514 ) -0.8 % ) -4.6 %
PPP loans — — — n/m n/m
Loans held for sale (LHFS) 184,812 169,244 135,226 9.2 % 36.7 %
Loans held for investment (LHFI) 12,950,524 12,810,259 12,204,039 1.1 % 6.1 %
ACL LHFI (139,367 ) (134,031 ) (120,214 ) ) -4.0 % ) -15.9 %
Net LHFI 12,811,157 12,676,228 12,083,825 1.1 % 6.0 %
Premises and equipment, net 232,537 230,718 212,365 0.8 % 9.5 %
Mortgage servicing rights 131,870 142,379 129,677 ) -7.4 % 1.7 %
Goodwill 384,237 384,237 384,237 0.0 % 0.0 %
Identifiable intangible assets 2,965 3,093 3,640 ) -4.1 % ) -18.5 %
Other real estate 6,867 5,485 1,986 25.2 % n/m
Operating lease right-of-use assets 38,142 39,639 36,301 ) -3.8 % 5.1 %
Other assets 764,902 784,863 770,838 ) -2.5 % ) -0.8 %
Total assets $ 18,722,189 $ 18,390,839 $ 18,015,478 1.8 % 3.9 %
Deposits:
Noninterest-bearing $ 3,197,620 $ 3,320,124 $ 4,093,771 ) -3.7 % ) -21.9 %
Interest-bearing 12,372,143 11,781,799 10,343,877 5.0 % 19.6 %
Total deposits 15,569,763 15,101,923 14,437,648 3.1 % 7.8 %
Fed funds purchased and repurchases 405,745 321,799 449,331 26.1 % ) -9.7 %
Other borrowings 483,230 793,193 1,050,938 ) -39.1 % ) -54.0 %
Subordinated notes 123,482 123,427 123,262 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 34,057 34,945 36,838 ) -2.5 % ) -7.5 %
Operating lease liabilities 41,584 42,730 38,932 ) -2.7 % 6.8 %
Other liabilities 340,625 340,615 324,405 0.0 % 5.0 %
Total liabilities 17,060,342 16,820,488 16,523,210 1.4 % 3.3 %
Common stock 12,725 12,724 12,705 0.0 % 0.2 %
Capital surplus 159,688 158,316 154,645 0.9 % 3.3 %
Retained earnings 1,709,157 1,687,199 1,600,321 1.3 % 6.8 %
Accumulated other comprehensive <br>   income (loss), net of tax (219,723 ) (287,888 ) (275,403 ) 23.7 % 20.2 %
Total shareholders' equity 1,661,847 1,570,351 1,492,268 5.8 % 11.4 %
Total liabilities and equity $ 18,722,189 $ 18,390,839 $ 18,015,478 1.8 % 3.9 %
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
December 31, 2023
($ in thousands except per share data)
(unaudited)
Quarter Ended Linked Quarter Year over Year
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
INCOME STATEMENTS 12/31/2023 9/30/2023 12/31/2022 Change % Change Change % Change
Interest and fees on LHFS & LHFI-FTE $ 210,288 $ 206,523 $ 159,566 1.8 % 31.8 %
Interest and fees on PPP loans — — 101 n/m ) -100.0 %
Interest on securities-taxable 15,936 16,624 16,577 ) -4.1 % ) -3.9 %
Interest on securities-tax exempt-FTE 44 58 93 ) -24.1 % ) -52.7 %
Interest on fed funds sold and reverse<br>   repurchases 2 3 71 ) -33.3 % ) -97.2 %
Other interest income 9,918 8,613 3,556 15.2 % n/m
Total interest income-FTE 236,188 231,821 179,964 1.9 % 31.2 %
Interest on deposits 80,847 69,797 18,438 15.8 % n/m
Interest on fed funds purchased and repurchases 5,347 5,375 4,762 ) -0.5 % 12.3 %
Other interest expense 9,946 14,713 6,730 ) -32.4 % 47.8 %
Total interest expense 96,140 89,885 29,930 7.0 % n/m
Net interest income-FTE 140,048 141,936 150,034 ) -1.3 % ) -6.7 %
Provision for credit losses, LHFI 7,585 8,322 6,902 ) -8.9 % 9.9 %
Provision for credit losses, off-balance sheet <br>   credit exposures (888 ) 104 5,215 ) n/m ) n/m
Net interest income after provision-FTE 133,351 133,510 137,917 ) -0.1 % ) -3.3 %
Service charges on deposit accounts 11,311 11,074 11,162 2.1 % 1.3 %
Bank card and other fees 8,502 8,217 8,191 3.5 % 3.8 %
Mortgage banking, net 5,519 6,458 3,408 ) -14.5 % 61.9 %
Insurance commissions 13,197 15,303 12,019 ) -13.8 % 9.8 %
Wealth management 8,657 8,773 8,079 ) -1.3 % 7.2 %
Other, net 2,579 2,399 2,311 7.5 % 11.6 %
Securities gains (losses), net 39 — — n/m n/m
Total noninterest income 49,804 52,224 45,170 ) -4.6 % 10.3 %
Salaries and employee benefits 78,003 76,666 73,469 1.7 % 6.2 %
Services and fees (2) 27,906 27,882 27,709 0.1 % 0.7 %
Net occupancy-premises 7,362 7,383 7,898 ) -0.3 % ) -6.8 %
Equipment expense 6,517 6,816 6,268 ) -4.4 % 4.0 %
Litigation settlement expense (1) — 6,500 100,750 ) -100.0 % ) -100.0 %
Other expense (2) 16,641 15,698 15,135 6.0 % 10.0 %
Total noninterest expense 136,429 140,945 231,229 ) -3.2 % ) -41.0 %
Income (loss) before income taxes and tax eq adj 46,726 44,789 (48,142 ) 4.3 % n/m
Tax equivalent adjustment 3,306 3,299 3,451 0.2 % ) -4.2 %
Income (loss) before income taxes 43,420 41,490 (51,593 ) 4.7 % n/m
Income taxes 7,297 7,461 (17,530 ) ) -2.2 % n/m
Net income (loss) $ 36,123 $ 34,029 $ (34,063 ) 6.2 % n/m
Per share data
Earnings (loss) per share - basic $ 0.59 $ 0.56 $ (0.56 ) 5.4 % n/m
Earnings (loss) per share - diluted $ 0.59 $ 0.56 $ (0.56 ) 5.4 % n/m
Dividends per share $ 0.23 $ 0.23 $ 0.23 0.0 % 0.0 %
Weighted average shares outstanding
Basic 61,070,481 61,069,750 60,969,400
Diluted 61,296,840 61,263,032 61,173,249
Period end shares outstanding 61,071,173 61,070,095 60,977,686
(1) See Note 1 - Litigation Settlement in the Notes to Consolidated Financials for additional information.
(2) During the first quarter of 2023, Trustmark reclassified its debit card transaction fees from other expense to services and fees. Prior periods have been reclassified accordingly.
n/m - percentage changes greater than +/- 100% are considered not meaningful

All values are in US Dollars.

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2023
($ in thousands)
(unaudited)
Quarter Ended Linked Quarter Year over Year
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
NONPERFORMING ASSETS (1) 12/31/2023 9/30/2023 12/31/2022 Change % Change Change % Change
Nonaccrual LHFI
Alabama (2) $ 23,271 $ 23,530 $ 12,300 ) -1.1 % 89.2 %
Florida 170 151 227 12.6 % ) -25.1 %
Mississippi (3) 54,615 45,050 24,683 21.2 % n/m
Tennessee (4) 1,802 1,841 5,566 ) -2.1 % ) -67.6 %
Texas 20,150 20,327 23,196 ) -0.9 % ) -13.1 %
Total nonaccrual LHFI 100,008 90,899 65,972 10.0 % 51.6 %
Other real estate
Alabama (2) 1,397 315 194 n/m n/m
Mississippi (3) 1,242 942 1,769 31.8 % ) -29.8 %
Tennessee (4) — — 23 n/m ) -100.0 %
Texas 4,228 4,228 — 0.0 % n/m
Total other real estate 6,867 5,485 1,986 25.2 % n/m
Total nonperforming assets $ 106,875 $ 96,384 $ 67,958 10.9 % 57.3 %
LOANS PAST DUE OVER 90 DAYS (1)
LHFI $ 5,790 $ 3,804 $ 3,929 52.2 % 47.4 %
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase) $ 51,243 $ 42,532 $ 49,320 20.5 % 3.9 %
Quarter Ended Linked Quarter Year over Year
ACL LHFI (1) 12/31/2023 9/30/2023 12/31/2022 Change % Change Change % Change
Beginning Balance $ 134,031 $ 129,298 $ 115,050 3.7 % 16.5 %
Provision for credit losses, LHFI 7,585 8,322 6,902 ) -8.9 % 9.9 %
Charge-offs (4,250 ) (7,496 ) (3,893 ) 43.3 % ) -9.2 %
Recoveries 2,001 3,907 2,155 ) -48.8 % ) -7.1 %
Net (charge-offs) recoveries (2,249 ) (3,589 ) (1,738 ) 37.3 % ) -29.4 %
Ending Balance $ 139,367 $ 134,031 $ 120,214 4.0 % 15.9 %
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama (2) $ (299 ) $ (165 ) $ 98 ) -81.2 % ) n/m
Florida 180 21 (60 ) n/m n/m
Mississippi (3) (1,943 ) (1,867 ) (1,657 ) ) -4.1 % ) -17.3 %
Tennessee (4) (193 ) 2,127 (195 ) ) n/m -1.0 %
Texas 6 (3,705 ) 76 n/m ) -92.1 %
Total net (charge-offs) recoveries $ (2,249 ) $ (3,589 ) $ (1,738 ) 37.3 % ) -29.4 %
(1) Excludes PPP loans.
(2) Alabama includes the Georgia Loan Production Office.
(3) Mississippi includes Central and Southern Mississippi Regions.
(4) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
n/m - percentage changes greater than +/- 100% are considered not meaningful

All values are in US Dollars.

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2023
($ in thousands)
(unaudited)
Quarter Ended Year Ended
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
AVERAGE BALANCES 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 12/31/2023 12/31/2022
Securities AFS-taxable $ 1,986,825 $ 2,049,006 $ 2,140,505 $ 2,187,121 $ 2,572,675 $ 2,090,201 $ 2,932,054
Securities AFS-nontaxable 4,246 4,779 4,796 4,812 4,828 4,657 4,997
Securities HTM-taxable 1,430,169 1,445,895 1,463,086 1,479,283 1,268,952 1,454,450 911,010
Securities HTM-nontaxable 340 907 1,718 4,509 4,514 1,854 5,623
Total securities 3,421,580 3,500,587 3,610,105 3,675,725 3,850,969 3,551,162 3,853,684
PPP loans — — — — 3,235 — 14,868
Loans (includes loans held for sale) 13,010,028 12,926,942 12,732,057 12,530,449 12,006,661 12,801,531 11,236,388
Fed funds sold and reverse repurchases 121 230 3,275 2,379 6,566 1,492 1,753
Other earning assets 670,477 682,644 903,027 647,760 375,190 728,181 907,414
Total earning assets 17,102,206 17,110,403 17,248,464 16,856,313 16,242,621 17,082,366 16,014,107
ACL LHFI (133,742 ) (127,915 ) (121,960 ) (119,978 ) (114,948 ) (125,942 ) (104,138 )
Other assets 1,749,069 1,721,310 1,648,583 1,762,449 1,630,085 1,718,058 1,567,921
Total assets $ 18,717,533 $ 18,703,798 $ 18,775,087 $ 18,498,784 $ 17,757,758 $ 18,674,482 $ 17,477,890
Interest-bearing demand deposits $ 5,053,935 $ 4,875,714 $ 4,803,737 $ 4,751,154 $ 4,719,303 $ 4,871,977 $ 4,585,955
Savings deposits 3,526,600 3,642,158 4,002,134 4,193,764 4,379,673 3,838,791 4,579,742
Time deposits 3,427,384 3,075,224 2,335,752 1,907,449 1,152,905 2,691,682 1,153,983
Total interest-bearing deposits 12,007,919 11,593,096 11,141,623 10,852,367 10,251,881 11,402,450 10,319,680
Fed funds purchased and repurchases 403,041 414,696 389,834 436,535 549,406 410,945 283,328
Other borrowings 590,765 912,151 1,330,010 1,110,843 530,993 984,315 198,672
Subordinated notes 123,446 123,391 123,337 123,281 123,226 123,364 123,144
Junior subordinated debt securities 61,856 61,856 61,856 61,856 61,856 61,856 61,856
Total interest-bearing liabilities 13,187,027 13,105,190 13,046,660 12,584,882 11,517,362 12,982,930 10,986,680
Noninterest-bearing deposits 3,296,351 3,429,815 3,595,927 3,813,248 4,177,113 3,532,134 4,452,046
Other liabilities 641,662 585,908 552,209 576,826 569,992 589,320 434,310
Total liabilities 17,125,040 17,120,913 17,194,796 16,974,956 16,264,467 17,104,384 15,873,036
Shareholders' equity 1,592,493 1,582,885 1,580,291 1,523,828 1,493,291 1,570,098 1,604,854
Total liabilities and equity $ 18,717,533 $ 18,703,798 $ 18,775,087 $ 18,498,784 $ 17,757,758 $ 18,674,482 $ 17,477,890

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2023
($ in thousands)
(unaudited)
PERIOD END BALANCES 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Cash and due from banks $ 975,543 $ 750,492 $ 832,052 $ 1,297,144 $ 734,787
Fed funds sold and reverse repurchases — — — — 4,000
Securities available for sale 1,762,878 1,766,174 1,871,883 1,984,162 2,024,082
Securities held to maturity 1,426,279 1,438,287 1,458,665 1,474,338 1,494,514
PPP loans — — — — —
LHFS 184,812 169,244 181,094 175,926 135,226
LHFI 12,950,524 12,810,259 12,613,967 12,497,195 12,204,039
ACL LHFI (139,367 ) (134,031 ) (129,298 ) (122,239 ) (120,214 )
Net LHFI 12,811,157 12,676,228 12,484,669 12,374,956 12,083,825
Premises and equipment, net 232,537 230,718 227,630 223,975 212,365
Mortgage servicing rights 131,870 142,379 134,350 127,206 129,677
Goodwill 384,237 384,237 384,237 384,237 384,237
Identifiable intangible assets 2,965 3,093 3,222 3,352 3,640
Other real estate 6,867 5,485 1,137 1,684 1,986
Operating lease right-of-use assets 38,142 39,639 38,179 35,315 36,301
Other assets 764,902 784,863 805,508 794,883 770,838
Total assets $ 18,722,189 $ 18,390,839 $ 18,422,626 $ 18,877,178 $ 18,015,478
Deposits:
Noninterest-bearing $ 3,197,620 $ 3,320,124 $ 3,461,073 $ 3,797,055 $ 4,093,771
Interest-bearing 12,372,143 11,781,799 11,452,827 10,986,606 10,343,877
Total deposits 15,569,763 15,101,923 14,913,900 14,783,661 14,437,648
Fed funds purchased and repurchases 405,745 321,799 311,179 477,980 449,331
Other borrowings 483,230 793,193 1,056,714 1,485,181 1,050,938
Subordinated notes 123,482 123,427 123,372 123,317 123,262
Junior subordinated debt securities 61,856 61,856 61,856 61,856 61,856
ACL on off-balance sheet credit exposures 34,057 34,945 34,841 34,596 36,838
Operating lease liabilities 41,584 42,730 40,845 37,988 38,932
Other liabilities 340,625 340,615 308,726 310,500 324,405
Total liabilities 17,060,342 16,820,488 16,851,433 17,315,079 16,523,210
Common stock 12,725 12,724 12,724 12,720 12,705
Capital surplus 159,688 158,316 156,834 155,297 154,645
Retained earnings 1,709,157 1,687,199 1,667,339 1,636,463 1,600,321
Accumulated other comprehensive income (loss), <br>   net of tax (219,723 ) (287,888 ) (265,704 ) (242,381 ) (275,403 )
Total shareholders' equity 1,661,847 1,570,351 1,571,193 1,562,099 1,492,268
Total liabilities and equity $ 18,722,189 $ 18,390,839 $ 18,422,626 $ 18,877,178 $ 18,015,478

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2023
($ in thousands except per share data)
(unaudited)
Quarter Ended Year Ended
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
INCOME STATEMENTS 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 12/31/2023 12/31/2022
Interest and fees on LHFS & LHFI-FTE $ 210,288 $ 206,523 $ 192,941 $ 178,967 $ 159,566 $ 788,719 $ 485,246
Interest and fees on PPP loans — — — — 101 — 639
Interest on securities-taxable 15,936 16,624 16,779 16,761 16,577 66,100 59,717
Interest on securities-tax exempt-FTE 44 58 69 92 93 263 422
Interest on fed funds sold and reverse repurchases 2 3 45 30 71 80 74
Other interest income 9,918 8,613 12,077 6,527 3,556 37,135 8,080
Total interest income-FTE 236,188 231,821 221,911 202,377 179,964 892,297 554,178
Interest on deposits 80,847 69,797 54,409 40,898 18,438 245,951 29,069
Interest on fed funds purchased and repurchases 5,347 5,375 4,865 4,832 4,762 20,419 6,127
Other interest expense 9,946 14,713 19,350 15,575 6,730 59,584 11,929
Total interest expense 96,140 89,885 78,624 61,305 29,930 325,954 47,125
Net interest income-FTE 140,048 141,936 143,287 141,072 150,034 566,343 507,053
Provision for credit losses, LHFI 7,585 8,322 8,211 3,244 6,902 27,362 21,677
Provision for credit losses, off-balance sheet <br>   credit exposures (888 ) 104 245 (2,242 ) 5,215 (2,781 ) 1,215
Net interest income after provision-FTE 133,351 133,510 134,831 140,070 137,917 541,762 484,161
Service charges on deposit accounts 11,311 11,074 10,695 10,336 11,162 43,416 42,157
Bank card and other fees 8,502 8,217 8,917 7,803 8,191 33,439 36,105
Mortgage banking, net 5,519 6,458 6,600 7,639 3,408 26,216 28,306
Insurance commissions 13,197 15,303 14,764 14,305 12,019 57,569 53,721
Wealth management 8,657 8,773 8,882 8,780 8,079 35,092 35,013
Other, net 2,579 2,399 3,695 2,514 2,311 11,187 9,842
Securities gains (losses), net 39 — — — — 39 —
Total noninterest income 49,804 52,224 53,553 51,377 45,170 206,958 205,144
Salaries and employee benefits 78,003 76,666 75,940 74,056 73,469 304,665 287,440
Services and fees (2) 27,906 27,882 28,264 25,426 27,709 109,478 105,469
Net occupancy-premises 7,362 7,383 7,108 7,629 7,898 29,482 29,264
Equipment expense 6,517 6,816 6,404 6,405 6,268 26,142 24,448
Litigation settlement expense (1) — 6,500 — — 100,750 6,500 100,750
Other expense (2) 16,641 15,698 14,502 14,811 15,135 61,652 55,842
Total noninterest expense 136,429 140,945 132,218 128,327 231,229 537,919 603,213
Income (loss) before income taxes and tax eq adj 46,726 44,789 56,166 63,120 (48,142 ) 210,801 86,092
Tax equivalent adjustment 3,306 3,299 3,383 3,477 3,451 13,465 12,345
Income (loss) before income taxes 43,420 41,490 52,783 59,643 (51,593 ) 197,336 73,747
Income taxes 7,297 7,461 7,746 9,343 (17,530 ) 31,847 1,860
Net income (loss) $ 36,123 $ 34,029 $ 45,037 $ 50,300 $ (34,063 ) $ 165,489 $ 71,887
Per share data
Earnings (loss) per share - basic $ 0.59 $ 0.56 $ 0.74 $ 0.82 $ (0.56 ) $ 2.71 $ 1.17
Earnings (loss) per share - diluted $ 0.59 $ 0.56 $ 0.74 $ 0.82 $ (0.56 ) $ 2.70 $ 1.17
Dividends per share $ 0.23 $ 0.23 $ 0.23 $ 0.23 $ 0.23 $ 0.92 $ 0.92
Weighted average shares outstanding
Basic 61,070,481 61,069,750 61,063,277 61,011,059 60,969,400 61,053,849 61,242,358
Diluted 61,296,840 61,263,032 61,230,031 61,193,275 61,173,249 61,230,621 61,431,726
Period end shares outstanding 61,071,173 61,070,095 61,069,036 61,048,516 60,977,686 61,071,173 60,977,686
(1) See Note 1 - Litigation Settlement in the Notes to Consolidated Financials for additional information.
(2) During the first quarter of 2023, Trustmark reclassified its debit card transaction fees from other expense to services and fees. Prior periods have been reclassified accordingly.

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2023
($ in thousands)
(unaudited)
Quarter Ended
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
NONPERFORMING ASSETS (1) 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022
Nonaccrual LHFI
Alabama (2) $ 23,271 $ 23,530 $ 11,058 $ 10,919 $ 12,300
Florida 170 151 334 256 227
Mississippi (3) 54,615 45,050 36,288 32,560 24,683
Tennessee (4) 1,802 1,841 5,088 5,416 5,566
Texas 20,150 20,327 22,259 23,224 23,196
Total nonaccrual LHFI 100,008 90,899 75,027 72,375 65,972
Other real estate
Alabama (2) 1,397 315 — — 194
Mississippi (3) 1,242 942 1,137 1,495 1,769
Tennessee (4) — — — 189 23
Texas 4,228 4,228 — — —
Total other real estate 6,867 5,485 1,137 1,684 1,986
Total nonperforming assets $ 106,875 $ 96,384 $ 76,164 $ 74,059 $ 67,958
LOANS PAST DUE OVER 90 DAYS (1)
LHFI $ 5,790 $ 3,804 $ 3,911 $ 2,255 $ 3,929
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase) $ 51,243 $ 42,532 $ 35,766 $ 41,468 $ 49,320
Quarter Ended Year Ended
ACL LHFI (1) 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 12/31/2023 12/31/2022
Beginning Balance $ 134,031 $ 129,298 $ 122,239 $ 120,214 $ 115,050 $ 120,214 $ 99,457
Provision for credit losses, LHFI 7,585 8,322 8,211 3,244 6,902 27,362 21,677
Charge-offs (4,250 ) (7,496 ) (2,773 ) (2,996 ) (3,893 ) (17,515 ) (11,332 )
Recoveries 2,001 3,907 1,621 1,777 2,155 9,306 10,412
Net (charge-offs) recoveries (2,249 ) (3,589 ) (1,152 ) (1,219 ) (1,738 ) (8,209 ) (920 )
Ending Balance $ 139,367 $ 134,031 $ 129,298 $ 122,239 $ 120,214 $ 139,367 $ 120,214
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama (2) $ (299 ) $ (165 ) $ (141 ) $ (268 ) $ 98 $ (873 ) $ 2,019
Florida 180 21 (35 ) (36 ) (60 ) 130 652
Mississippi (3) (1,943 ) (1,867 ) (762 ) (775 ) (1,657 ) (5,347 ) (2,713 )
Tennessee (4) (193 ) 2,127 (166 ) (124 ) (195 ) 1,644 (790 )
Texas 6 (3,705 ) (48 ) (16 ) 76 (3,763 ) (88 )
Total net (charge-offs) recoveries $ (2,249 ) $ (3,589 ) $ (1,152 ) $ (1,219 ) $ (1,738 ) $ (8,209 ) $ (920 )
(1) Excludes PPP loans.
(2) Alabama includes the Georgia Loan Production Office.
(3) Mississippi includes Central and Southern Mississippi Regions.
(4) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2023
(unaudited)
Quarter Ended Year Ended
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
FINANCIAL RATIOS AND OTHER DATA 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 12/31/2023 12/31/2022
Return on average equity 9.00 % 8.53 % 11.43 % 13.39 % -9.05 % 10.54 % 4.48 %
Return on average tangible equity 11.92 % 11.32 % 15.18 % 18.03 % -12.14 % 14.04 % 6.00 %
Return on average assets 0.77 % 0.72 % 0.96 % 1.10 % -0.76 % 0.89 % 0.41 %
Interest margin - Yield - FTE 5.48 % 5.38 % 5.16 % 4.87 % 4.40 % 5.22 % 3.46 %
Interest margin - Cost 2.23 % 2.08 % 1.83 % 1.47 % 0.73 % 1.91 % 0.29 %
Net interest margin - FTE 3.25 % 3.29 % 3.33 % 3.39 % 3.66 % 3.32 % 3.17 %
Efficiency ratio (1) 70.25 % 68.33 % 66.17 % 65.60 % 65.85 % 67.57 % 69.37 %
Full-time equivalent employees 2,757 2,756 2,761 2,758 2,738
CREDIT QUALITY RATIOS (2)
Net (recoveries) charge-offs / average loans 0.07 % 0.11 % 0.04 % 0.04 % 0.06 % 0.06 % 0.01 %
Provision for credit losses, LHFI / average loans 0.23 % 0.26 % 0.26 % 0.10 % 0.23 % 0.21 % 0.19 %
Nonaccrual LHFI / (LHFI + LHFS) 0.76 % 0.70 % 0.59 % 0.57 % 0.53 %
Nonperforming assets / (LHFI + LHFS) 0.81 % 0.74 % 0.60 % 0.58 % 0.55 %
Nonperforming assets / (LHFI + LHFS <br>   + other real estate) 0.81 % 0.74 % 0.60 % 0.58 % 0.55 %
ACL LHFI / LHFI 1.08 % 1.05 % 1.03 % 0.98 % 0.99 %
ACL LHFI-commercial / commercial LHFI 0.85 % 0.86 % 0.84 % 0.80 % 0.85 %
ACL LHFI-consumer / consumer and <br>   home mortgage LHFI 1.81 % 1.66 % 1.60 % 1.54 % 1.41 %
ACL LHFI / nonaccrual LHFI 139.36 % 147.45 % 172.34 % 168.90 % 182.22 %
ACL LHFI / nonaccrual LHFI <br>   (excl individually analyzed loans) 249.31 % 273.60 % 301.44 % 320.80 % 399.19 %
CAPITAL RATIOS
Total equity / total assets 8.88 % 8.54 % 8.53 % 8.28 % 8.28 %
Tangible equity / tangible assets 6.95 % 6.57 % 6.56 % 6.35 % 6.27 %
Tangible equity / risk-weighted assets 8.41 % 7.81 % 7.91 % 7.94 % 7.61 %
Tier 1 leverage ratio 8.62 % 8.49 % 8.35 % 8.29 % 8.47 %
Common equity tier 1 capital ratio 10.04 % 9.89 % 9.87 % 9.76 % 9.74 %
Tier 1 risk-based capital ratio 10.44 % 10.29 % 10.27 % 10.17 % 10.15 %
Total risk-based capital ratio 12.29 % 12.11 % 12.08 % 11.95 % 11.91 %
STOCK PERFORMANCE
Market value-Close $ 27.88 $ 21.73 $ 21.12 $ 24.70 $ 34.91
Book value $ 27.21 $ 25.71 $ 25.73 $ 25.59 $ 24.47
Tangible book value $ 20.87 $ 19.37 $ 19.38 $ 19.24 $ 18.11
(1) See Note 7 – Non-GAAP Financial Measures in the Notes to Consolidated Financials for Trustmark’s efficiency ratio calculation.
(2) Excludes PPP loans.

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2023
($ in thousands)
(unaudited)

Note 1 - Litigation Settlement

As previously announced, on December 31, 2022, Trustmark National Bank (TNB) agreed to a settlement in principle (the Stanford Settlement) relating to litigation involving the Stanford Financial Group. On January 13, 2023, TNB entered into a Settlement Agreement (the Stanford Settlement Agreement) reflecting the terms of the Stanford Settlement. The parties to the Stanford Settlement Agreement are, on the one hand, (i) Ralph S. Janvey, solely in his capacity as the court-appointed receiver (the Stanford Receiver) for the Stanford Receivership Estate; (ii) the Official Stanford Investors Committee; (iii) each of the plaintiffs in the Rotstain and Smith Actions; and, on the other hand, (iv) TNB. Under the terms of the Stanford Settlement Agreement, the parties agreed to settle and dismiss the Rotstain Action, the Smith Action, and all current or future claims by plaintiffs in either such Action arising from or related to Stanford. In addition, the Stanford Settlement Agreement provided that the parties would request dismissal of the Jackson Action pursuant to the terms of the bar orders described below. The Court’s approval of the Stanford Settlement Agreement, including the bar orders described below, has occurred and has been upheld on appeal, as described below. As a result, pursuant to the Stanford Settlement, TNB will make a one-time cash payment of $100.0 million to the Stanford Receiver on February 2, 2024.

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

The Stanford Settlement Agreement was also subject to notice to Stanford’s investor claimants (which has been provided) and final, non-appealable approval by the U.S. District Court for the Northern District of Texas (which has occurred).

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

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

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

On May 10, 2023, Robert Allen Stanford, writing from prison, appealed the District Court’s approval of the Stanford Settlement to the Fifth Circuit Court of Appeals. On June 12, 2023, the Stanford Receiver moved to dismiss the appeal as frivolous. On July 25, 2023, a three-judge panel of the Fifth Circuit issued a per curiam order dismissing Stanford’s appeal as frivolous. In July and August 2023, Mr. Stanford filed, then subsequently withdrew, a motion seeking panel rehearing of the Fifth Circuit’s July 25, 2023, decision.

When Stanford’s deadline to appeal the Fifth Circuit’s ruling to the Supreme Court of the United States passed without his filing a petition for certiorari, the trial court’s ruling approving the Stanford Settlement and entering the bar orders became final and non-appealable, as defined in the Stanford Settlement Agreement (the Stanford Settlement Effective Date). On November 14, the parties to the Rotstain and Smith Actions filed agreed dismissals of those cases, which were granted on November 27, 2023 (Smith Action) and December 18, 2023 (Rotstain Action). Those dismissals were final and non-appealable as of December 27, 2023 (Smith Action) and January 17, 2024 (Rotstain Action). Accordingly, pursuant to the Stanford Settlement Agreement, TNB will make the settlement payment on February 2, 2024, concluding the Stanford Settlement.

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

As previously announced, on August 30, 2023, TNB agreed to a settlement in principle (the Adams/Madison Timber Settlement) relating to litigation and claims involving Arthur Lamar Adams and Madison Timber Properties, LLC (collectively, Adams/Madison Timber). On October 9, 2023, TNB entered into a Settlement Agreement (the Adams/Madison Timber Settlement Agreement) reflecting the terms of the Adams/Madison Timber Settlement. The parties to the Adams/Madison Timber Settlement are, on the one hand, Alysson Mills in her capacity as Court-appointed Receiver (the Adams/Madison Timber Receiver); and, on the other hand, TNB. Under the terms of the Adams/Madison Timber Settlement Agreement, the parties agreed to settle and dismiss the Adams/Madison Timber Action, and the Adams/Madison Timber Receiver agreed to fully release all claims against TNB and any of its employees, agents and representatives. The Adams/Madison Timber Settlement included the parties’ agreement to seek the Court’s entry of bar orders prohibiting any continued or future claims by anyone against TNB and its related parties relating to Adams/Madison Timber, whether asserted to date or not. Final Court approval of a bar order was a condition of the Adams/Madison Timber Settlement. On November 14, 2023, the Court entered a Partial Final Judgment and Final Bar Order approving the settlement. The bar order therefore is expected to prohibit all litigation relating to Adams/Madison Timber described herein.

The Adams/Madison Timber Settlement was subject to notice to Adams/Madison Timber investors, and final, non-appealable approval by the Court and entry of a judgment dismissing the Lawsuit against TNB. No investor or other interested parties appealed the bar order before the appeal deadline passed. Accordingly, TNB made the settlement payment to the Adams/Madison Timber Receiver on January 22, 2024, concluding the Adams/Madison Timber Settlement.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2023
($ in thousands)
(unaudited)

Note 1 - Litigation Settlement (continued)

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

Note 2 - Securities Available for Sale and Held to Maturity

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

12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities $ 372,368 $ 363,476 $ 362,966 $ 386,903 $ 391,513
U.S. Government agency obligations 5,792 6,780 6,999 7,254 7,766
Obligations of states and political subdivisions — 4,642 4,813 4,907 4,862
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA 23,135 22,881 25,336 26,851 27,097
Issued by FNMA and FHLMC 1,176,798 1,171,521 1,250,435 1,317,848 1,345,463
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 86,074 90,402 98,388 108,192 115,140
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 98,711 106,472 122,946 132,207 132,241
Total securities available for sale $ 1,762,878 $ 1,766,174 $ 1,871,883 $ 1,984,162 $ 2,024,082
SECURITIES HELD TO MATURITY
U.S. Treasury securities $ 29,068 $ 28,872 $ 28,679 $ 28,486 $ 28,295
Obligations of states and political subdivisions 340 341 1,180 4,507 4,510
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA 13,005 13,090 13,235 4,336 4,442
Issued by FNMA and FHLMC 469,593 474,003 484,679 497,854 509,311
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 154,466 162,031 171,002 179,334 188,201
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 759,807 759,950 759,890 759,821 759,755
Total securities held to maturity $ 1,426,279 $ 1,438,287 $ 1,458,665 $ 1,474,338 $ 1,494,514

At December 31, 2023, the net unamortized, unrealized loss included in accumulated other comprehensive income (loss) in the accompanying balance sheet for securities held to maturity transferred from securities available for sale totaled $57.6 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
December 31, 2023
($ in thousands)
(unaudited)

Note 3 – Loan Composition

LHFI consisted of the following during the periods presented:

LHFI BY TYPE 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022
Loans secured by real estate:
Construction, land development and other land loans $ 1,510,679 $ 1,609,326 $ 1,722,657 $ 1,723,772 $ 1,719,542
Secured by 1-4 family residential properties 2,904,715 2,893,606 2,854,182 2,822,048 2,775,847
Secured by nonfarm, nonresidential properties 3,489,434 3,569,671 3,471,728 3,375,579 3,278,830
Other real estate secured 1,312,551 1,218,499 954,410 847,527 742,538
Commercial and industrial loans 1,922,910 1,828,924 1,883,480 1,882,360 1,821,259
Consumer loans 161,725 161,940 163,788 162,911 166,425
State and other political subdivision loans 1,088,466 1,056,569 1,111,710 1,193,727 1,223,863
Other loans and leases 560,044 471,724 452,012 489,271 475,735
LHFI 12,950,524 12,810,259 12,613,967 12,497,195 12,204,039
ACL LHFI (139,367 ) (134,031 ) (129,298 ) (122,239 ) (120,214 )
Net LHFI $ 12,811,157 $ 12,676,228 $ 12,484,669 $ 12,374,956 $ 12,083,825

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:

December 31, 2023
LHFI - COMPOSITION BY REGION Total Alabama (1) 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 $ 1,510,679 $ 688,438 $ 37,626 $ 435,406 $ 37,194 $ 312,015
Secured by 1-4 family residential properties 2,904,715 151,446 54,998 2,582,329 84,031 31,911
Secured by nonfarm, nonresidential properties 3,489,434 960,656 233,908 1,431,968 153,226 709,676
Other real estate secured 1,312,551 583,165 1,761 396,715 7,587 323,323
Commercial and industrial loans 1,922,910 658,573 25,406 780,949 217,729 240,253
Consumer loans 161,725 22,609 7,509 101,389 20,433 9,785
State and other political subdivision loans 1,088,466 71,882 52,759 813,291 25,999 124,535
Other loans and leases 560,044 209,874 8,476 223,583 46,519 71,592
Loans $ 12,950,524 $ 3,346,643 $ 422,443 $ 6,765,630 $ 592,718 $ 1,823,090
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots $ 71,875 $ 30,186 $ 8,353 $ 17,257 $ 4,714 $ 11,365
Development 146,655 74,015 1,262 36,690 12,649 22,039
Unimproved land 101,941 17,432 12,853 36,573 8,094 26,989
1-4 family construction 322,415 164,712 13,099 95,297 11,737 37,570
Other construction 867,793 402,093 2,059 249,589 — 214,052
Construction, land development and other land loans $ 1,510,679 $ 688,438 $ 37,626 $ 435,406 $ 37,194 $ 312,015
(1) Includes Georgia Loan Production Office.
TRUSTMARK CORPORATION AND SUBSIDIARIES
---
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2023
($ in thousands)
(unaudited)

Note 3 – Loan Composition (continued)

December 31, 2023
Total Alabama (1) Florida Mississippi <br>(Central and <br>Southern <br>Regions) Tennessee <br>(Memphis, TN and <br>Northern MS<br>Regions) Texas
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION
Non-owner occupied:
Retail $ 346,844 $ 128,743 $ 25,732 $ 91,057 $ 17,721 $ 83,591
Office 286,511 104,114 19,857 94,294 1,649 66,597
Hotel/motel 270,740 144,403 47,111 53,227 25,999 —
Mini-storage 157,938 32,452 1,917 103,500 756 19,313
Industrial 382,737 57,386 19,762 123,306 9,730 172,553
Health care 97,783 69,352 688 25,021 333 2,389
Convenience stores 26,254 3,315 425 13,777 249 8,488
Nursing homes/senior living 508,665 229,352 — 160,359 4,901 114,053
Other 110,828 31,370 9,232 52,521 8,321 9,384
Total non-owner occupied loans 2,188,300 800,487 124,724 717,062 69,659 476,368
Owner-occupied:
Office 152,053 44,028 38,401 39,790 11,459 18,375
Churches 62,217 17,098 4,178 34,899 3,541 2,501
Industrial warehouses 159,227 11,619 4,618 40,837 16,330 85,823
Health care 125,304 11,031 6,274 87,507 2,269 18,223
Convenience stores 142,537 12,593 29,299 65,031 14 35,600
Retail 89,174 9,606 15,644 37,340 17,694 8,890
Restaurants 48,172 4,010 3,503 22,316 15,095 3,248
Auto dealerships 43,556 5,533 201 21,383 16,439 —
Nursing homes/senior living 345,108 31,644 — 287,264 — 26,200
Other 133,786 13,007 7,066 78,539 726 34,448
Total owner-occupied loans 1,301,134 160,169 109,184 714,906 83,567 233,308
Loans secured by nonfarm, nonresidential properties $ 3,489,434 $ 960,656 $ 233,908 $ 1,431,968 $ 153,226 $ 709,676
(1) Includes Georgia Loan Production Office.

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

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

Quarter Ended Year Ended
12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 12/31/2023 12/31/2022
Securities – taxable 1.85 % 1.89 % 1.87 % 1.85 % 1.71 % 1.86 % 1.55 %
Securities – nontaxable 3.81 % 4.05 % 4.25 % 4.00 % 3.95 % 4.04 % 3.97 %
Securities – total 1.85 % 1.89 % 1.87 % 1.86 % 1.72 % 1.87 % 1.56 %
PPP loans — — — — 12.39 % — 4.30 %
Loans - LHFI & LHFS 6.41 % 6.34 % 6.08 % 5.79 % 5.27 % 6.16 % 4.32 %
Loans - total 6.41 % 6.34 % 6.08 % 5.79 % 5.27 % 6.16 % 4.32 %
Fed funds sold & reverse repurchases 6.56 % 5.17 % 5.51 % 5.11 % 4.29 % 5.36 % 4.22 %
Other earning assets 5.87 % 5.01 % 5.36 % 4.09 % 3.76 % 5.10 % 0.89 %
Total earning assets 5.48 % 5.38 % 5.16 % 4.87 % 4.40 % 5.22 % 3.46 %
Interest-bearing deposits 2.67 % 2.39 % 1.96 % 1.53 % 0.71 % 2.16 % 0.28 %
Fed funds purchased & repurchases 5.26 % 5.14 % 5.01 % 4.49 % 3.44 % 4.97 % 2.16 %
Other borrowings 5.08 % 5.32 % 5.12 % 4.87 % 3.73 % 5.09 % 3.11 %
Total interest-bearing liabilities 2.89 % 2.72 % 2.42 % 1.98 % 1.03 % 2.51 % 0.43 %
Total Deposits 2.10 % 1.84 % 1.48 % 1.13 % 0.51 % 1.65 % 0.20 %
Net interest margin 3.25 % 3.29 % 3.33 % 3.39 % 3.66 % 3.32 % 3.17 %
Net interest margin excluding PPP loans <br>   and the FRB balance 3.16 % 3.24 % 3.23 % 3.36 % 3.66 % 3.25 % 3.30 %
TRUSTMARK CORPORATION AND SUBSIDIARIES
---
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2023
($ in thousands)
(unaudited)

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

Reflected in the table above are yields on earning assets and liabilities, along with the net interest margin which equals reported net interest income-FTE, annualized, as a percent of average earning assets. In addition, the table includes net interest margin excluding PPP loans and the balance held at the Federal Reserve Bank of Atlanta (FRB), which equals reported net interest income-FTE excluding interest income on PPP loans and the FRB balance, annualized, as a percent of average earning assets excluding average PPP loans and the FRB balance.

For the fourth quarter of 2023, the average FRB balance totaled $572.0 million compared to $566.3 million for the third quarter of 2023 and is included in other earning assets in the accompanying average consolidated balance sheets.

The net interest margin excluding PPP loans and the FRB balance decreased 8 basis points when compared to the third quarter of 2023, totaling 3.16% for the fourth quarter of 2023, primarily due to increased costs of interest-bearing liabilities which resulted from the higher interest-rate environment and was partially offset by an increase in the yield on the loans held for investment and held for sale portfolio.

Note 5 – Mortgage Banking

Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that offsets the changes in fair value of mortgage servicing rights (MSR) attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under generally accepted accounting principles (GAAP). Changes in the fair value of these exchange-traded derivative instruments, including administrative costs, are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of the MSR. The MSR fair value represents the present value of future cash flows, which among other things includes decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the change in value of hedge instruments to the change in the fair value of the MSR asset attributable to changes in interest rates and other market driven changes in valuation inputs and assumptions. The impact of this strategy resulted in a net negative hedge ineffectiveness of $2.2 million during the fourth quarter of 2023.

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

Quarter Ended Year Ended
12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 12/31/2023 12/31/2022
Mortgage servicing income, net $ 6,731 $ 6,916 $ 6,764 $ 6,785 $ 6,636 $ 27,196 $ 26,291
Change in fair value-MSR from runoff (2,972 ) (3,203 ) (2,710 ) (1,145 ) (2,981 ) (10,030 ) (14,034 )
Gain on sales of loans, net 3,913 3,748 3,887 3,797 3,328 15,345 20,178
Mortgage banking income before hedge <br>   ineffectiveness 7,672 7,461 7,941 9,437 6,983 32,511 32,435
Change in fair value-MSR from market changes (10,224 ) 6,809 5,898 (3,972 ) (3,348 ) (1,489 ) 38,181
Change in fair value of derivatives 8,071 (7,812 ) (7,239 ) 2,174 (227 ) (4,806 ) (42,310 )
Net positive (negative) hedge ineffectiveness (2,153 ) (1,003 ) (1,341 ) (1,798 ) (3,575 ) (6,295 ) (4,129 )
Mortgage banking, net $ 5,519 $ 6,458 $ 6,600 $ 7,639 $ 3,408 $ 26,216 $ 28,306
TRUSTMARK CORPORATION AND SUBSIDIARIES
---
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2023
($ in thousands)
(unaudited)

Note 6 – Other Noninterest Income and Expense

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

Quarter Ended Year Ended
12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 12/31/2023 12/31/2022
Partnership amortization for tax credit purposes $ (2,013 ) $ (1,995 ) $ (2,019 ) $ (1,961 ) $ (1,869 ) $ (7,988 ) $ (6,211 )
Increase in life insurance cash surrender value 1,825 1,784 1,716 1,693 1,687 7,018 6,673
Other miscellaneous income 2,767 2,610 3,998 2,782 2,493 12,157 9,380
Total other, net $ 2,579 $ 2,399 $ 3,695 $ 2,514 $ 2,311 $ 11,187 $ 9,842

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 Year Ended
12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 12/31/2023 12/31/2022
Loan expense (1) $ 2,380 $ 3,130 $ 3,066 $ 2,538 $ 2,908 $ 11,114 $ 12,249
Amortization of intangibles 128 129 130 288 312 675 1,434
FDIC assessment expense 4,844 3,765 2,550 2,370 2,130 13,529 7,385
Other real estate expense, net (184 ) (40 ) 171 172 18 119 1,173
Other miscellaneous expense 9,473 8,714 8,585 9,443 9,767 36,215 33,601
Total other expense (1) $ 16,641 $ 15,698 $ 14,502 $ 14,811 $ 15,135 $ 61,652 $ 55,842

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

Note 7 – Non-GAAP Financial Measures

In addition to capital ratios defined by GAAP and banking regulators, Trustmark utilizes various tangible common equity measures when evaluating capital utilization and adequacy. Tangible common equity, as defined by Trustmark, represents common equity less goodwill and identifiable intangible assets. Trustmark’s Common Equity Tier 1 capital includes common stock, capital surplus and retained earnings, and is reduced by goodwill and other intangible assets, net of associated net deferred tax liabilities as well as disallowed deferred tax assets and threshold deductions as applicable.

Trustmark believes these measures are important because they reflect the level of capital available to withstand unexpected market conditions. Additionally, presentation of these measures allows readers to compare certain aspects of Trustmark’s capitalization to other organizations. These ratios differ from capital measures defined by banking regulators principally in that the numerator excludes shareholders’ equity associated with preferred securities, the nature and extent of which varies across organizations. In Management’s experience, many stock analysts use tangible common equity measures in conjunction with more traditional bank capital ratios to compare capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, typically stemming from the use of the purchase accounting method in accounting for mergers and acquisitions.

These calculations are intended to complement the capital ratios defined by GAAP and banking regulators. Because GAAP does not include these capital ratio measures, Trustmark believes there are no comparable GAAP financial measures to these tangible common equity ratios. Despite the importance of these measures to Trustmark, there are no standardized definitions for them and, as a result, Trustmark’s calculations may not be comparable with other organizations. Also, there may be limits in the usefulness of these measures to investors. As a result, Trustmark encourages readers to consider its audited consolidated financial statements and the notes related thereto in their entirety and not to rely on any single financial measure.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2023
($ in thousands except per share data)
(unaudited)

Note 7 – Non-GAAP Financial Measures (continued)

Quarter Ended Year Ended
12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 12/31/2023 12/31/2022
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity $ 1,592,493 $ 1,582,885 $ 1,580,291 $ 1,523,828 $ 1,493,291 $ 1,570,098 $ 1,604,854
Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 )
Identifiable intangible assets (3,044 ) (3,174 ) (3,301 ) (3,523 ) (3,816 ) (3,259 ) (4,312 )
Total average tangible equity $ 1,205,212 $ 1,195,474 $ 1,192,753 $ 1,136,068 $ 1,105,238 $ 1,182,602 $ 1,216,305
PERIOD END BALANCES
Total shareholders' equity $ 1,661,847 $ 1,570,351 $ 1,571,193 $ 1,562,099 $ 1,492,268
Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 )
Identifiable intangible assets (2,965 ) (3,093 ) (3,222 ) (3,352 ) (3,640 )
Total tangible equity (a) $ 1,274,645 $ 1,183,021 $ 1,183,734 $ 1,174,510 $ 1,104,391
TANGIBLE ASSETS
Total assets $ 18,722,189 $ 18,390,839 $ 18,422,626 $ 18,877,178 $ 18,015,478
Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 )
Identifiable intangible assets (2,965 ) (3,093 ) (3,222 ) (3,352 ) (3,640 )
Total tangible assets (b) $ 18,334,987 $ 18,003,509 $ 18,035,167 $ 18,489,589 $ 17,627,601
Risk-weighted assets (c) $ 15,153,263 $ 15,143,531 $ 14,966,614 $ 14,793,893 $ 14,521,078
NET INCOME (LOSS) ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income (loss) $ 36,123 $ 34,029 $ 45,037 $ 50,300 $ (34,063 ) $ 165,489 $ 71,887
Plus: Intangible amortization net of tax 96 96 97 216 234 505 1,076
Net income (loss) adjusted for intangible amortization $ 36,219 $ 34,125 $ 45,134 $ 50,516 $ (33,829 ) $ 165,994 $ 72,963
Period end common shares outstanding (d) 61,071,173 61,070,095 61,069,036 61,048,516 60,977,686
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity (1) 11.92 % 11.32 % 15.18 % 18.03 % -12.14 % 14.04 % 6.00 %
Tangible equity/tangible assets (a)/(b) 6.95 % 6.57 % 6.56 % 6.35 % 6.27 %
Tangible equity/risk-weighted assets (a)/(c) 8.41 % 7.81 % 7.91 % 7.94 % 7.61 %
Tangible book value (a)/(d)*1,000 $ 20.87 $ 19.37 $ 19.38 $ 19.24 $ 18.11
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity $ 1,661,847 $ 1,570,351 $ 1,571,193 $ 1,562,099 $ 1,492,268
CECL transition adjustment 13,000 13,000 13,000 13,000 19,500
AOCI-related adjustments 219,723 287,888 265,704 242,381 275,403
CET1 adjustments and deductions:
Goodwill net of associated deferred <br>   tax liabilities (DTLs) (370,212 ) (370,219 ) (370,227 ) (370,234 ) (370,241 )
Other adjustments and deductions <br>   for CET1 (2) (2,693 ) (2,803 ) (2,915 ) (3,275 ) (3,258 )
CET1 capital (e) 1,521,665 1,498,217 1,476,755 1,443,971 1,413,672
Additional tier 1 capital instruments <br>   plus related surplus 60,000 60,000 60,000 60,000 60,000
Tier 1 capital $ 1,581,665 $ 1,558,217 $ 1,536,755 $ 1,503,971 $ 1,473,672
Common equity tier 1 capital ratio (e)/(c) 10.04 % 9.89 % 9.87 % 9.76 % 9.74 %

(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
December 31, 2023
($ in thousands except per share data)
(unaudited)

Note 7 – Non-GAAP Financial Measures (continued)

Trustmark discloses certain non-GAAP financial measures because Management uses these measures for business planning purposes, including to manage Trustmark’s business against internal projected results of operations and to measure Trustmark’s performance. Trustmark views these as measures of our core operating business, which exclude the impact of the items detailed below, as these items are generally not operational in nature. These non-GAAP financial measures also provide another basis for comparing period-to-period results as presented in the accompanying selected financial data table and the audited consolidated financial statements by excluding potential differences caused by non-operational and unusual or non-recurring items. Readers are cautioned that these adjustments are not permitted under GAAP. Trustmark encourages readers to consider its consolidated financial statements and the notes related thereto in their entirety, and not to rely on any single financial measure.

The following table presents pre-provision net revenue (PPNR) during the periods presented:

Quarter Ended Year Ended
12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 12/31/2023 12/31/2022
Net interest income (GAAP) $ 136,742 $ 138,637 $ 139,904 $ 137,595 $ 146,583 $ 552,878 $ 494,708
Noninterest income (GAAP) 49,804 52,224 53,553 51,377 45,170 206,958 205,144
Pre-provision revenue (a) $ 186,546 $ 190,861 $ 193,457 $ 188,972 $ 191,753 $ 759,836 $ 699,852
Noninterest expense (GAAP) $ 136,429 $ 140,945 $ 132,218 $ 128,327 $ 231,229 $ 537,919 $ 603,213
Less: Reduction in force expense (1,406 ) — — — — (1,406 ) —
Litigation settlement expense — (6,500 ) — — (100,750 ) (6,500 ) (100,750 )
Adjusted noninterest expense - PPNR (Non-GAAP) (b) $ 135,023 $ 134,445 $ 132,218 $ 128,327 $ 130,479 $ 530,013 $ 502,463
PPNR (Non-GAAP) (a)-(b) $ 51,523 $ 56,416 $ 61,239 $ 60,645 $ 61,274 $ 229,823 $ 197,389

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

occurring during the periods presented:

Quarter Ended Year Ended
12/31/2023 12/31/2022 12/31/2023 12/31/2022
Amount Diluted EPS Amount Diluted EPS Amount Diluted EPS Amount Diluted EPS
Net income (loss) (GAAP) $ 36,123 $ 0.59 $ (34,063 ) $ (0.56 ) $ 165,489 $ 2.70 $ 71,887 $ 1.17
Significant non-routine transactions (net of taxes):
Reduction in force expense 1,055 0.02 — — 1,055 0.02 — —
Litigation settlement expense — — 75,563 1.24 4,875 0.08 75,563 1.23
Net income adjusted for significant non-routine <br>   transactions (Non-GAAP) $ 37,178 $ 0.61 $ 41,500 $ 0.68 $ 171,419 $ 2.80 $ 147,450 $ 2.40
Reported (GAAP) Adjusted (Non-GAAP) Reported (GAAP) Adjusted (Non-GAAP) Reported (GAAP) Adjusted (Non-GAAP) Reported (GAAP) Adjusted (Non-GAAP)
Return on average equity 9.00 % 9.23 % -9.05 % 10.75 % 10.54 % 10.90 % 4.48 % 9.13 %
Return on average tangible equity 11.92 % 12.22 % -12.14 % 14.49 % 14.04 % 14.51 % 6.00 % 12.12 %
Return on average assets 0.77 % 0.79 % -0.76 % 0.93 % 0.89 % 0.92 % 0.41 % 0.84 %
TRUSTMARK CORPORATION AND SUBSIDIARIES
---
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2023
($ in thousands)
(unaudited)

Note 7 – Non-GAAP Financial Measures (continued)

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

Quarter Ended Year Ended
12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 12/31/2023 12/31/2022
Total noninterest expense (GAAP) $ 136,429 $ 140,945 $ 132,218 $ 128,327 $ 231,229 $ 537,919 $ 603,213
Less: Other real estate expense, net 184 40 (171 ) (172 ) (18 ) (119 ) (1,173 )
Amortization of intangibles (128 ) (129 ) (130 ) (288 ) (312 ) (675 ) (1,434 )
Charitable contributions resulting in <br>   state tax credits (325 ) (325 ) (325 ) (325 ) (375 ) (1,300 ) (1,500 )
Reduction in force expense (1,406 ) — — — — (1,406 ) —
Litigation settlement expense — (6,500 ) — — (100,750 ) (6,500 ) (100,750 )
Adjusted noninterest expense (Non-GAAP) (c) $ 134,754 $ 134,031 $ 131,592 $ 127,542 $ 129,774 $ 527,919 $ 498,356
Net interest income (GAAP) $ 136,742 $ 138,637 $ 139,904 $ 137,595 $ 146,583 $ 552,878 $ 494,708
Add: Tax equivalent adjustment 3,306 3,299 3,383 3,477 3,451 13,465 12,345
Net interest income-FTE (Non-GAAP) (a) $ 140,048 $ 141,936 $ 143,287 $ 141,072 $ 150,034 $ 566,343 $ 507,053
Noninterest income (GAAP) $ 49,804 $ 52,224 $ 53,553 $ 51,377 $ 45,170 $ 206,958 $ 205,144
Add: Partnership amortization for tax credit purposes 2,013 1,995 2,019 1,961 1,869 7,988 6,211
Less: Securities (gains) losses, net (39 ) — — — — (39 ) —
Adjusted noninterest income (Non-GAAP) (b) $ 51,778 $ 54,219 $ 55,572 $ 53,338 $ 47,039 $ 214,907 $ 211,355
Adjusted revenue (Non-GAAP) (a)+(b) $ 191,826 $ 196,155 $ 198,859 $ 194,410 $ 197,073 $ 781,250 $ 718,408
Efficiency ratio (Non-GAAP) (c)/((a)+(b)) 70.25 % 68.33 % 66.17 % 65.60 % 65.85 % 67.57 % 69.37 %

Slide 1

Slide 2

Slide 3

Slide 4

(1)

Slide 5

Slide 6

Slide 7

Slide 8

Slide 9

Slide 10

Slide 11

Slide 12

Slide 13

(1)

Slide 14

Slide 15

Slide 16

Slide 17

Slide 18

Report a Problem

Category
Description
Email (optional, for follow-up)