Equibles

10-Q

TRUSTMARK CORP (TRMK)

10-Q 2025-05-06 For: 2025-03-31
View Original
Added on April 04, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 000-03683

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Trustmark Corporation

(Exact name of registrant as specified in its charter)

Mississippi 64-0471500
(State or other jurisdiction of<br>incorporation or organization) (I.R.S. Employer<br>Identification No.)
248 East Capitol Street, Jackson, Mississippi 39201
--- ---
(Address of principal executive offices) (Zip Code)

(601) 208-5111

(Registrant’s telephone number, including area code)

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☐
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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 30, 2025, there were 60,477,582 shares outstanding of the registrant’s common stock (no par value).

Forward-Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q 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 or financial condition. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected.

Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, actions by the Board of Governors of the Federal Reserve System (FRB) that impact the level of market interest rates, local, state, national and international economic and market conditions, conditions in the housing and real estate markets in the regions in which Trustmark operates and the extent and duration of the current volatility in the credit and financial markets, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels, a slowdown in economic growth, changes in our ability to measure the fair value of assets in our portfolio, changes in the level and/or volatility of market interest rates, the impacts related to or resulting from bank failures and other economic and industry volatility, including potential increased regulatory requirements, the demand for the products and services we offer, potential unexpected adverse outcomes in pending litigation matters, our ability to attract and retain noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, cyber-attacks and other breaches which could affect our information system security, natural disasters, environmental disasters, pandemics or other health crises, acts of war or terrorism, potential market or regulatory effects of the current United States presidential administration’s policies and other risks described in our filings with the SEC.

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

Trustmark Corporation and Subsidiaries

Consolidated Statements of Income (Loss)

($ in thousands, except per share data)

(Unaudited)

Three Months Ended March 31,
2025 2024
Interest Income
Interest and fees on LHFS & LHFI $ 199,245 $ 206,092
Interest on securities:
Taxable 26,056 15,634
Tax exempt — 3
Other interest income 3,846 8,111
Total Interest Income 229,147 229,840
Interest Expense
Interest on deposits 67,718 83,716
Interest on federal funds purchased and securities sold under<br>   repurchase agreements 4,298 5,591
Other interest expense 5,076 7,703
Total Interest Expense 77,092 97,010
Net Interest Income 152,055 132,830
Provision for credit losses (PCL), LHFI 8,125 7,708
PCL, off-balance sheet credit exposures (2,831 ) (192 )
Net Interest Income After PCL 146,761 125,314
Noninterest Income (Loss)
Service charges on deposit accounts 10,636 10,958
Bank card and other fees 7,664 7,428
Mortgage banking, net 8,771 8,915
Wealth management 9,543 8,952
Other, net 5,970 3,102
Total Noninterest Income (Loss) 42,584 39,355
Noninterest Expense
Salaries and employee benefits 68,492 65,487
Services and fees 26,247 24,431
Net occupancy - premises 7,385 7,270
Equipment expense 6,308 6,325
Other expense 15,579 16,151
Total Noninterest Expense 124,011 119,664
Income (Loss) From Continuing Operations Before Income Taxes 65,334 45,005
Income taxes from continuing operations 11,701 6,832
Income (Loss) From Continuing Operations 53,633 38,173
Income from discontinued operations before income taxes — 4,512
Income taxes from discontinued operations — 1,150
Income From Discontinued Operations — 3,362
Net Income $ 53,633 $ 41,535
Earnings (Loss) Per Share (EPS)
Basic EPS from continuing operations $ 0.88 $ 0.62
Basic EPS from discontinued operations — 0.05
Basic EPS (1) 0.88 0.68
Diluted EPS from continuing operations $ 0.88 $ 0.62
Diluted EPS from discontinued operations — 0.05
Diluted EPS (1) 0.88 0.68

(1) Due to rounding, earnings (loss) per share from continuing operations and discontinued operations may not sum to earnings per share from net income.

See notes to consolidated financial statements.

Trustmark Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

($ in thousands)

(Unaudited)

Three Months Ended March 31,
2025 2024
Net income per consolidated statements of income (loss) $ 53,633 $ 41,535
Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on available for sale securities and<br>   transferred securities:
Net unrealized holding gains (losses) arising during the<br>   period 24,450 (1,914 )
Change in net unrealized holding loss on securities<br>   transferred to held to maturity 2,569 2,746
Pension and other postretirement benefit plans:
Reclassification adjustments for changes realized in net<br>   income:
Net change in prior service costs 3 21
Recognized net (gain) loss due to lump sum settlement (38 ) —
Change in net actuarial loss 54 71
Derivatives:
Change in the accumulated gain (loss) on effective cash<br>   flow hedge derivatives 5,909 (11,970 )
Reclassification adjustment for (gain) loss realized in <br>   net income 2,010 3,615
Other comprehensive income (loss), net of tax 34,957 (7,431 )
Comprehensive income (loss) $ 88,590 $ 34,104

See notes to consolidated financial statements.

Trustmark Corporation and Subsidiaries

Consolidated Statements of Changes in Shareholders' Equity

($ in thousands, except per share data)

(Unaudited)

Accumulated
Other
Comprehensive
Capital Retained Income
Amount Surplus Earnings (Loss) Total
Balance, January 1, 2025 61,008,023 $ 12,711 $ 157,899 $ 1,875,376 $ (83,659 ) $ 1,962,327
Net income per consolidated statements   of income (loss) — — — 53,633 — 53,633
Other comprehensive income (loss), net of tax — — — — 34,957 34,957
Common stock dividends paid (0.24 per share) — — — (14,732 ) — (14,732 )
Shares withheld to pay taxes, long-term   incentive plan 133,628 28 (2,443 ) — — (2,415 )
Repurchase and retirement of common stock (423,240 ) (88 ) (14,926 ) — — (15,014 )
Compensation expense, long-term   incentive plan — — 2,471 — — 2,471
Balance, March 31, 2025 60,718,411 $ 12,651 $ 143,001 $ 1,914,277 $ (48,702 ) $ 2,021,227

All values are in US Dollars.

See notes to consolidated financial statements.

Trustmark Corporation and Subsidiaries

Consolidated Statements of Changes in Shareholders' Equity (continued)

($ in thousands, except per share data)

(Unaudited)

Accumulated
Other
Comprehensive
Capital Retained Income
Amount Surplus Earnings (Loss) Total
Balance, January 1, 2024 61,071,173 $ 12,725 $ 159,688 $ 1,709,157 $ (219,723 ) $ 1,661,847
Net income per consolidated statements   of income (loss) — — — 41,535 — 41,535
Other comprehensive income (loss), net of tax — — — — (7,431 ) (7,431 )
Common stock dividends paid    (0.23 per share) — — — (14,207 ) — (14,207 )
Shares withheld to pay taxes, long-term   incentive plan 107,193 22 (1,405 ) — — (1,383 )
Compensation expense, long-term   incentive plan — — 2,238 — — 2,238
Balance, March 31, 2024 61,178,366 $ 12,747 $ 160,521 $ 1,736,485 $ (227,154 ) $ 1,682,599

All values are in US Dollars.

See notes to consolidated financial statements.

Trustmark Corporation and Subsidiaries

Consolidated Statements of Cash Flows

($ in thousands)

(Unaudited)

Three Months Ended March 31,
2025 2024
Operating Activities
Net income per consolidated statements of income (loss) $ 53,633 $ 41,535
Adjustments to reconcile net income to net cash provided by operating activities:
PCL 5,294 7,516
Depreciation and amortization 8,571 8,563
Net (accretion) amortization of securities (5,912 ) 1,373
Gains on sales of loans, net (4,252 ) (5,010 )
Compensation expense, long-term incentive plan 2,471 2,238
Deferred income tax provision (1,050 ) 28,490
Proceeds from sales of loans held for sale 260,005 263,634
Purchases and originations of loans held for sale (245,760 ) (247,476 )
Originations of mortgage servicing rights (3,068 ) (2,977 )
Earnings on bank-owned life insurance (1,865 ) (1,420 )
Net change in other assets 24,872 (21,036 )
Net change in other liabilities (12,430 ) (127,283 )
Other operating activities, net 1,909 (6,690 )
Net cash from operating activities 82,418 (58,543 )
Investing Activities
Proceeds from maturities, prepayments and calls of securities held to maturity 23,738 24,000
Proceeds from maturities, prepayments and calls of securities available for sale 52,559 56,706
Purchases of securities held to maturity — (9,136 )
Purchases of securities available for sale (58,955 ) —
Net proceeds from bank-owned life insurance 644 —
Net change in member bank stock (2,374 ) (743 )
Net change in LHFI (156,339 ) (114,096 )
Purchases of premises and equipment (1,772 ) (5,050 )
Proceeds from sales of premises and equipment 3,229 —
Proceeds from sales of other real estate 801 902
Purchases of software (2,511 ) (2,044 )
Investments in tax credit and other partnerships (2,655 ) (1,848 )
Net cash from investing activities (143,635 ) (51,309 )
Financing Activities
Net change in deposits (27,471 ) (231,206 )
Net change in federal funds purchased and securities sold under repurchase agreements 36,072 (12,530 )
Net change in short-term borrowings 105,000 —
Payments on long-term FHLB advances — (5 )
Payments under finance lease obligations (112 ) (99 )
Common stock dividends (14,732 ) (14,207 )
Repurchase and retirement of common stock (15,014 ) —
Shares withheld to pay taxes, long-term incentive plan (2,415 ) (1,383 )
Net cash from financing activities 81,328 (259,430 )
Net change in cash and cash equivalents 20,111 (369,282 )
Cash and cash equivalents at beginning of period 567,251 975,343
Cash and cash equivalents at end of period $ 587,362 $ 606,061

See notes to consolidated financial statements.

Trustmark Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

Note 1 – Business, Basis of Financial Statement Presentation and Principles of Consolidation

Trustmark Corporation (Trustmark) is a bank holding company headquartered in Jackson, Mississippi. Through its subsidiaries, Trustmark operates as a financial services organization providing banking and financial solutions to corporate institutions and individual customers through offices in Alabama, Florida, Georgia, Mississippi, Tennessee and Texas.

The consolidated financial statements include the accounts of Trustmark and all other entities in which Trustmark has a controlling financial interest. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain reclassifications have been made to prior period amounts to conform to the current period presentation.

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements, and notes thereto, included in Trustmark’s Annual Report on Form 10-K for its fiscal year ended December 31, 2024 (2024 Annual Report).

Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period. In the opinion of Management, all adjustments (consisting of normal recurring accruals) considered necessary for the fair presentation of these consolidated financial statements have been included. The preparation of financial statements in conformity with these accounting principles requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and income and expense during the reporting periods and the related disclosures. Although Management’s estimates contemplate current conditions and how they are expected to change in the future, it is reasonably possible that in 2025 actual conditions could vary from those anticipated, which could affect Trustmark’s financial condition and results of operations. Actual results could differ from those estimates.

Note 2 - Discontinued Operations

On May 31, 2024, Trustmark National Bank (TNB) completed the sale of its wholly owned subsidiary, Fisher Brown Bottrell Insurance, Inc. (FBBI), to Marsh & McLennan Agency LLC (MMA) for approximately $336.9 million in cash. The transaction resulted in a pre-tax net gain of $228.3 million. The gain, along with FBBI's historical financial results for periods prior to the sale, is reflected in Trustmark's consolidated financial statements as discontinued operations. FBBI's operating results prior to the sale have been presented as "Income From Discontinued Operations" within the accompanying consolidated statements of income (loss). Cash flows from both continuing and discontinued operations are included in the Consolidated Statements of Cash Flows.

The following table summarizes financial information related to FBBI which has been segregated from continuing operations and reported as discontinued operations for the period presented ($ in thousands):

Three Months Ended
March 31, 2024
Noninterest income:
Insurance commissions $ 15,464
Gain on sale of discontinued operations, net —
Other, net 530
Total noninterest income 15,994
Noninterest expense:
Salaries and employee benefits 9,971
Services and fees 408
Net occupancy - premises 226
Equipment expense 60
Other expense 817
Total noninterest expense 11,482
Income from discontinued operations before income taxes 4,512
Income taxes from discontinued operations 1,150
Income from discontinued operations $ 3,362

Note 3 – Securities Available for Sale and Held to Maturity

The following tables are a summary of the amortized cost and estimated fair value of securities available for sale and held to maturity at March 31, 2025 and December 31, 2024 ($ in thousands):

Securities Available for Sale Securities Held to Maturity
March 31, 2025 Amortized<br>Cost Gross<br>Unrealized<br>Gains Gross<br>Unrealized<br>Losses Estimated<br>Fair<br>Value Amortized<br>Cost Gross<br>Unrealized<br>Gains Gross<br>Unrealized<br>Losses Estimated<br>Fair<br>Value
U.S. Treasury securities $ 210,580 $ 1,883 $ — $ 212,463 $ 30,033 $ — $ (120 ) $ 29,913
U.S. Government agency<br>   obligations 50,622 106 (1,403 ) 49,325 — — — —
Mortgage-backed securities
Residential mortgage pass-<br>   through securities
Guaranteed by GNMA 30,546 8 (2,446 ) 28,108 15,726 — (609 ) 15,117
Issued by FNMA and<br>   FHLMC 1,088,798 17,147 (15,808 ) 1,090,137 411,454 166 (15,842 ) 395,778
Other residential mortgage-<br>   backed securities
Issued or guaranteed by<br>   FNMA, FHLMC or<br>   GNMA — — — — 116,969 — (6,335 ) 110,634
Commercial mortgage-backed<br>   securities
Issued or guaranteed by<br>   FNMA, FHLMC or<br>   GNMA 351,320 6,635 (526 ) 357,429 740,871 50 (32,465 ) 708,456
Total $ 1,731,866 $ 25,779 $ (20,183 ) $ 1,737,462 $ 1,315,053 $ 216 $ (55,371 ) $ 1,259,898
Securities Available for Sale Securities Held to Maturity
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
December 31, 2024 Amortized<br>Cost Gross<br>Unrealized<br>Gains Gross<br>Unrealized<br>Losses Estimated<br>Fair<br>Value Amortized<br>Cost Gross<br>Unrealized<br>Gains Gross<br>Unrealized<br>Losses Estimated<br>Fair<br>Value
U.S. Treasury Securities $ 203,524 $ 548 $ (1,403 ) $ 202,669 $ 29,842 $ 1 $ (522 ) $ 29,321
U.S. Government agency<br>   obligations 41,194 — (2,387 ) 38,807 — — — —
Mortgage-backed securities
Residential mortgage pass-<br>   through securities
Guaranteed by GNMA 31,365 3 (2,957 ) 28,411 16,218 — (844 ) 15,374
Issued by FNMA and<br>   FHLMC 1,091,122 1,610 (22,194 ) 1,070,538 423,372 94 (23,853 ) 399,613
Other residential mortgage-<br>   backed securities
Issued or guaranteed by<br>   FNMA, FHLMC or<br>   GNMA — — — — 123,685 — (8,004 ) 115,681
Commercial mortgage-backed<br>   securities
Issued or guaranteed by<br>   FNMA, FHLMC or<br>   GNMA 352,332 827 (1,050 ) 352,109 742,268 3 (43,153 ) 699,118
Total $ 1,719,537 $ 2,988 $ (29,991 ) $ 1,692,534 $ 1,335,385 $ 98 $ (76,376 ) $ 1,259,107

During 2022, Trustmark reclassified a total of $766.0 million of securities available for sale to securities held to maturity. At the date of these transfers, the net unrealized holding loss on the available for sale securities totaled approximately $91.9 million ($68.9 million, net of tax).

The securities were transferred at fair value, which became the cost basis for the securities held to maturity. 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 these transfers. At March 31, 2025, the net unamortized, unrealized loss on transferred securities included in accumulated other comprehensive income (loss) in the accompanying balance sheet totaled $44.1 million compared to $46.6 million at December 31, 2024.

ACL on Securities

Securities Available for Sale

Quarterly, Trustmark evaluates if any security has a fair value less than its amortized cost. Once these securities are identified, in order to determine whether a decline in fair value resulted from a credit loss or other factors, Trustmark performs further analysis. If Trustmark determines that a credit loss exists, the credit portion of the allowance is measured using a discounted cash flow (DCF) analysis using the effective interest rate as of the security’s purchase date. The amount of credit loss recorded by Trustmark is limited to the amount by which the amortized cost exceeds the fair value. The DCF analysis utilizes contractual maturities, as well as third-party credit ratings and cumulative default rates published annually by Moody’s Investor Service (Moody’s).

At both March 31, 2025 and December 31, 2024, the results of the analysis did not identify any securities that warranted DCF analysis, and no credit loss was recognized on any of the securities available for sale.

Accrued interest receivable is excluded from the estimate of credit losses for securities available for sale. At March 31, 2025, accrued interest receivable totaled $5.6 million for securities available for sale compared to $5.0 million December 31, 2024 and was reported in other assets on the accompanying consolidated balance sheet.

Securities Held to Maturity

At March 31, 2025 and December 31, 2024, Trustmark identified no securities held to maturity with the potential for credit loss exposure. After applying appropriate analysis, the total amount of current expected credit losses was zero at March 31, 2025 and December 31, 2024. No reserve was recorded at either March 31, 2025 or December 31, 2024.

Accrued interest receivable is excluded from the estimate of credit losses for securities held to maturity. At March 31, 2025, accrued interest receivable totaled $2.5 million for securities held to maturity compared to $2.4 million at December 31, 2024 and was reported in other assets on the accompanying consolidated balance sheet.

At both March 31, 2025 and December 31, 2024, Trustmark had no securities held to maturity that were past due 30 days or more as to principal or interest payments. Trustmark had no securities held to maturity classified as nonaccrual at March 31, 2025 and December 31, 2024.

Trustmark monitors the credit quality of securities held to maturity on a monthly basis through credit ratings. At both March 31, 2025 and December 31, 2024, Trustmark's securities held to maturity had a credit rating of Aaa, as determined by Moody’s.

The tables below include securities with gross unrealized losses for which an allowance for credit losses has not been recorded segregated by length of impairment at March 31, 2025 and December 31, 2024 ($ in thousands):

Less than 12 Months 12 Months or More Total
March 31, 2025 Estimated<br>Fair Value Gross<br>Unrealized<br>Losses Estimated<br>Fair Value Gross<br>Unrealized<br>Losses Estimated<br>Fair Value Gross<br>Unrealized<br>Losses
U.S. Treasury securities $ 29,913 $ (120 ) $ — $ — $ 29,913 $ (120 )
U.S. Government agency obligations 42,002 (1,403 ) — — 42,002 (1,403 )
Mortgage-backed securities
Residential mortgage pass-through<br>   securities
Guaranteed by GNMA 10,303 (80 ) 31,360 (2,975 ) 41,663 (3,055 )
Issued by FNMA and FHLMC 321,990 (5,135 ) 231,605 (26,515 ) 553,595 (31,650 )
Other residential mortgage-backed<br>   securities
Issued or guaranteed by FNMA,<br>   FHLMC or GNMA — — 110,634 (6,335 ) 110,634 (6,335 )
Commercial mortgage-backed securities
Issued or guaranteed by FNMA,<br>   FHLMC or GNMA 3,151 (24 ) 775,518 (32,967 ) 778,669 (32,991 )
Total $ 407,359 $ (6,762 ) $ 1,149,117 $ (68,792 ) $ 1,556,476 $ (75,554 )
December 31, 2024
U.S. Treasury Securities $ 123,277 $ (1,925 ) $ — $ — $ 123,277 $ (1,925 )
U.S. Government agency obligations 38,807 (2,387 ) — — 38,807 (2,387 )
Mortgage-backed securities
Residential mortgage pass-through<br>   securities
Guaranteed by GNMA 15,802 (293 ) 27,803 (3,508 ) 43,605 (3,801 )
Issued by FNMA and FHLMC 981,747 (13,848 ) 237,487 (32,199 ) 1,219,234 (46,047 )
Other residential mortgage-backed<br>   securities
Issued or guaranteed by FNMA,<br>   FHLMC or GNMA — — 115,681 (8,004 ) 115,681 (8,004 )
Commercial mortgage-backed securities
Issued or guaranteed by FNMA,<br>   FHLMC or GNMA 164,971 (536 ) 767,566 (43,667 ) 932,537 (44,203 )
Total $ 1,324,604 $ (18,989 ) $ 1,148,537 $ (87,378 ) $ 2,473,141 $ (106,367 )

The unrealized losses shown above are due to increases in market rates over the yields available at the time of purchase of the underlying securities and not credit quality. Trustmark does not intend to sell these securities and it is more likely than not that Trustmark will not be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.

Securities Gains and Losses

Realized gains and losses are determined using the specific identification method and are included in noninterest income (loss) as securities gains (losses), net. During the three months ended March 31, 2025 and 2024, there were no gross realized gains or losses as a result of calls and dispositions of securities.

Securities Pledged

Securities with a carrying value of $1.887 billion and $1.910 billion at March 31, 2025 and December 31, 2024, respectively, were pledged to collateralize public deposits and securities sold under repurchase agreements and for other purposes as permitted by law. At both March 31, 2025 and December 31, 2024, none of these securities were pledged under the Federal Reserve Discount Window program to provide additional contingency funding capacity.

Contractual Maturities

The amortized cost and estimated fair value of securities available for sale and held to maturity at March 31, 2025, by contractual maturity, are shown below ($ in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Securities<br>Available for Sale Securities<br>Held to Maturity
Amortized<br>Cost Estimated<br>Fair Value Amortized<br>Cost Estimated<br>Fair Value
Due in one year or less $ 32,876 $ 32,994 $ — $ —
Due after one year through five years 62,454 63,109 30,033 29,913
Due after five years through ten years 165,872 165,685 — —
261,202 261,788 30,033 29,913
Mortgage-backed securities 1,470,664 1,475,674 1,285,020 1,229,985
Total $ 1,731,866 $ 1,737,462 $ 1,315,053 $ 1,259,898

Note 4 – LHFI and ACL, LHFI

At March 31, 2025 and December 31, 2024, LHFI consisted of the following ($ in thousands):

March 31, 2025 December 31, 2024
Loans secured by real estate:
Construction, land development and other land $ 599,325 $ 587,244
Other secured by 1-4 family residential properties 665,422 650,550
Secured by nonfarm, nonresidential properties 3,532,842 3,533,282
Other real estate secured 1,876,459 1,633,830
Other loans secured by real estate:
Other construction 722,306 829,904
Secured by 1-4 family residential properties 2,308,556 2,298,993
Commercial and industrial loans 1,765,893 1,840,722
Consumer loans 157,935 156,569
State and other political subdivision loans 974,300 969,836
Other commercial loans and leases 638,431 589,012
LHFI 13,241,469 13,089,942
Less ACL 167,010 160,270
Net LHFI $ 13,074,459 $ 12,929,672

Accrued interest receivable is not included in the amortized cost basis of Trustmark’s LHFI. At March 31, 2025 and December 31, 2024, accrued interest receivable for LHFI totaled $63.2 million and $64.7 million, respectively, with no related ACL and was reported in other assets on the accompanying consolidated balance sheet.

Loan Concentrations

Trustmark does not have any loan concentrations other than those reflected in the preceding table, which exceed 10% of total LHFI. At March 31, 2025, Trustmark’s geographic loan distribution was concentrated primarily in its six key market regions: Alabama, Florida, Georgia, Mississippi, Tennessee and Texas. Accordingly, the ultimate collectability of a substantial portion of these loans is susceptible to changes in market conditions in these areas.

Nonaccrual and Past Due LHFI

No material interest income was recognized in the income statement on nonaccrual LHFI for each of the periods ended March 31, 2025 and 2024.

The following tables provide the amortized cost basis of loans on nonaccrual status and loans past due 90 days or more still accruing interest at March 31, 2025 and December 31, 2024 ($ in thousands):

March 31, 2025
Nonaccrual With No ACL Total Nonaccrual Loans Past Due 90 Days or More Still Accruing
Loans secured by real estate:
Construction, land development and other land $ — $ 433 $ —
Other secured by 1-4 family residential properties 502 7,670 586
Secured by nonfarm, nonresidential properties 426 13,185 —
Other real estate secured 268 335 —
Other loans secured by real estate:
Secured by 1-4 family residential properties 1,533 39,554 3,162
Commercial and industrial loans 36 24,190 —
Consumer loans — 360 607
Other commercial loans and leases — 893 —
Total $ 2,765 $ 86,620 $ 4,355
December 31, 2024
--- --- --- --- --- --- ---
Nonaccrual With No ACL Total Nonaccrual Loans Past Due 90 Days or More Still Accruing
Loans secured by real estate:
Construction, land development and other land $ — $ 366 $ 159
Other secured by 1-4 family residential properties 521 7,275 266
Secured by nonfarm, nonresidential properties 426 13,061 —
Other real estate secured 1,904 1,984 —
Other loans secured by real estate:
Secured by 1-4 family residential properties 1,533 31,583 3,253
Commercial and industrial loans 16 24,525 —
Consumer loans — 236 414
Other commercial loans and leases — 1,079 —
Total $ 4,400 $ 80,109 $ 4,092

The following tables provide an aging analysis of the amortized cost basis of past due LHFI (including nonaccrual LHFI) at March 31, 2025 and December 31, 2024 ($ in thousands):

March 31, 2025
Past Due
30-59 Days 60-89 Days 90 Days<br>or More Total Past Due Current<br>Loans Total LHFI
Loans secured by real estate:
Construction, land development and<br>   other land $ 2,284 $ 1,644 $ 182 $ 4,110 $ 595,215 $ 599,325
Other secured by 1-4 family residential<br>   properties 5,765 1,668 3,138 10,571 654,851 665,422
Secured by nonfarm, nonresidential<br>   properties 11,016 — 3,566 14,582 3,518,260 3,532,842
Other real estate secured 49 35 296 380 1,876,079 1,876,459
Other loans secured by real estate:
Other construction — — — — 722,306 722,306
Secured by 1-4 family residential properties 11,841 7,187 26,134 45,162 2,263,394 2,308,556
Commercial and industrial loans 1,399 394 20,572 22,365 1,743,528 1,765,893
Consumer loans 1,180 510 611 2,301 155,634 157,935
State and other political subdivision loans — — — — 974,300 974,300
Other commercial loans and leases 77 65 — 142 638,289 638,431
Total $ 33,611 $ 11,503 $ 54,499 $ 99,613 $ 13,141,856 $ 13,241,469
December 31, 2024
--- --- --- --- --- --- --- --- --- --- --- --- ---
Past Due
30-59 Days 60-89 Days 90 Days<br>or More Total Past Due Current<br>Loans Total LHFI
Loans secured by real estate:
Construction, land development and<br>   other land $ 199 $ — $ 324 $ 523 $ 586,721 $ 587,244
Other secured by 1-4 family residential<br>   properties 5,656 1,821 3,223 10,700 639,850 650,550
Secured by nonfarm, nonresidential<br>   properties 1,488 380 3,111 4,979 3,528,303 3,533,282
Other real estate secured 1,979 — 28 2,007 1,631,823 1,633,830
Other loans secured by real estate:
Other construction — — — — 829,904 829,904
Secured by 1-4 family residential properties 17,898 7,111 21,524 46,533 2,252,460 2,298,993
Commercial and industrial loans 1,114 13,300 8,835 23,249 1,817,473 1,840,722
Consumer loans 1,930 600 414 2,944 153,625 156,569
State and other political subdivision loans 24 — — 24 969,812 969,836
Other commercial loans and leases 168 67 69 304 588,708 589,012
Total $ 30,456 $ 23,279 $ 37,528 $ 91,263 $ 12,998,679 $ 13,089,942

Modified LHFI

Occasionally, Trustmark modifies loans for borrowers experiencing financial difficulties by providing payment concessions, interest-only payments for an extended period of time, maturity extensions or interest rate reductions. Other concessions may arise from court proceedings or may be imposed by law. In some cases, Trustmark provides multiple types of concessions on one loan.

The following tables present the amortized cost of LHFI of loans modified to borrowers experiencing financial difficulty disaggregated by class of loan and type of modification at the end of each of the periods presented ($ in thousands). The percentage of the amortized cost basis of LHFI that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of LHFI is also presented below:

Three Months Ended March 31, 2025
Payment Concession Term Extension Total % of Total Class of Loan
Loans secured by real estate:
Other secured by 1-4 family residential<br>   properties $ — $ 747 $ 747 0.11 %
Other loans secured by real estate:
Secured by 1-4 family residential properties — 2,190 2,190 0.09 %
Commercial and industrial loans 12,467 — 12,467 0.71 %
Total $ 12,467 $ 2,937 $ 15,404 0.12 %
Three Months Ended March 31, 2024
--- --- --- --- --- --- --- ---
Term Extension Total % of Total Class of Loan
Loans secured by real estate:
Other secured by 1-4 family residential <br>   properties $ 1,461 $ 1,461 0.23 %
Other loans secured by real estate:
Secured by 1-4 family residential properties 813 813 0.04 %
Total $ 2,274 $ 2,274 0.02 %

The following tables detail the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the periods presented:

Three Months Ended March 31, 2025
Financial Effect
Payment Concessions Term Extension
Loans secured by real estate:
Other secured by 1-4 family residential properties Modified one loan and eleven lines of credit to amortize over 24 month terms
Other loans secured by real estate:
Secured by 1-4 family residential properties Re-amortized twelve loans with term adjusted by weighted-average of 29 months
Commercial and industrial loans Eight monthly interest payments deferred
Three Months Ended March 31, 2024
--- ---
Financial Effect
Term Extension
Loans secured by real estate:
Other secured by 1-4 family residential properties Modified one loan and multiple lines of credit to amortize over 24 month terms.
Other loans secured by real estate:
Secured by 1-4 family residential properties Extended the amortization periods on six loans by a weighted-average of 2.99 years.

Trustmark's unused commitments on modified loans to borrowers experiencing financial difficulty were immaterial at March 31, 2025 compared to no unused commitments on modified loans to borrowers experiencing financial difficulty at March 31, 2024.

During the three months ended March 31, 2025, Trustmark had term extension balances of $201 thousand in the other secured by 1-4 family residential properties portfolio and payment concession balances of $18.7 million in the commercial and industrial loans portfolio that had a payment default and were modified within the twelve months prior to that default to borrowers experiencing financial difficulty. During the three months ended March 31, 2024, payment defaults of LHFI that were modified within the twelve months prior to that default to borrowers experiencing financial difficulty were immaterial.

Trustmark has utilized loans 90 days or more past due to define payment default in determining modified loans that have subsequently defaulted. If Trustmark determines that a modified loan (or a portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is charged off against the ACL, LHFI.

Trustmark closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following tables provide details of the performance of such LHFI that have been modified in the preceding twelve months for the periods presented ($ in thousands):

Three Months Ended March 31, 2025
Past Due
30-59 Days 60-89 Days 90 Days<br>or More Total Past Due Current<br>Loans Total
Loans secured by real estate:
Other secured by 1-4 family residential<br>   properties $ 339 $ 85 $ 201 $ 625 $ 2,347 $ 2,972
Other loans secured by real estate:
Secured by 1-4 family residential properties — — — — 2,316 2,316
Commercial and industrial loans — — 18,675 18,675 — 18,675
Total $ 339 $ 85 $ 18,876 $ 19,300 $ 4,663 $ 23,963
Three Months Ended March 31, 2024
--- --- --- --- --- --- --- --- --- --- --- --- ---
Past Due
30-59 Days 60-89 Days 90 Days<br>or More Total Past Due Current<br>Loans Total
Loans secured by real estate:
Other secured by 1-4 family residential<br>   properties $ — $ — $ — $ — $ 1,461 $ 1,461
Other loans secured by real estate:
Secured by 1-4 family residential properties — — — — 813 813
Total $ — $ — $ — $ — $ 2,274 $ 2,274

Collateral-Dependent Loans

The following tables present the amortized cost basis of collateral-dependent loans by class of loans and collateral type as of March 31, 2025 and December 31, 2024 ($ in thousands):

March 31, 2025
Real Estate Vehicles Miscellaneous Total
Loans secured by real estate:
Other secured by 1-4 family residential properties $ 502 $ — $ — $ 502
Secured by nonfarm, nonresidential properties 9,742 — — 9,742
Other real estate secured 268 — — 268
Other loans secured by real estate:
Secured by 1-4 family residential properties 1,533 — — 1,533
Commercial and industrial loans — 1,713 20,347 22,060
Other commercial loans and leases — — 887 887
Total $ 12,045 $ 1,713 $ 21,234 $ 34,992
December 31, 2024
--- --- --- --- --- --- --- --- ---
Real Estate Vehicles Miscellaneous Total
Loans secured by real estate:
Other secured by 1-4 family residential properties $ 521 $ — $ — $ 521
Secured by nonfarm, nonresidential properties 9,783 — — 9,783
Other real estate secured 1,904 — — 1,904
Other loans secured by real estate:
Secured by 1-4 family residential properties 1,533 — — 1,533
Commercial and industrial loans — 1,818 20,685 22,503
Other commercial loans and leases — — 896 896
Total $ 13,741 $ 1,818 $ 21,581 $ 37,140

A loan is collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided substantially through the sale of the collateral. The following provides a qualitative description by class of loan of the collateral that secures Trustmark’s collateral-dependent LHFI:

  • Loans secured by real estate – Loans within these loan classes are secured by liens on real estate properties. There have been no significant changes to the collateral that secures these financial assets during the period.
  • Other loans secured by real estate – Loans within these loan classes are secured by liens on real estate properties. There have been no significant changes to the collateral that secures these financial assets during the period.
  • Commercial and industrial loans – Loans within this loan class are primarily secured by inventory, accounts receivables, equipment and other non-real estate collateral. During the first quarter of 2025, two relationships had decreases in collateral value that secures the credit. There have been no other significant changes to the collateral that secures these financial assets during the period.
  • State and other political subdivision loans – Loans within this loan class are secured by liens on real estate properties or other non-real estate collateral. There have been no significant changes to the collateral that secures these financial assets during the period.
  • Other commercial loans and leases – Loans and leases within this loan class are secured by non-real estate collateral. There have been no significant changes to the collateral that secures these financial assets during the period.

Credit Quality Indicators

Trustmark’s LHFI portfolio credit quality indicators focus on six key quality ratios that are compared against bank tolerances. The loan indicators are total classified outstanding, total criticized outstanding, nonperforming loans, nonperforming assets, delinquencies and net loan losses. Due to the homogeneous nature of consumer loans, Trustmark does not assign a formal internal risk rating to each credit and therefore the criticized and classified measures are primarily composed of commercial loans.

In addition to monitoring portfolio credit quality indicators, Trustmark also measures how effectively the lending process is being managed and risks are being identified. As part of an ongoing monitoring process, Trustmark grades the commercial portfolio segment as it relates to credit file completion and financial statement exceptions, underwriting, collateral documentation and compliance with law as shown below:

  • Credit File Completeness and Financial Statement Exceptions – evaluates the quality and condition of credit files in terms of content and completeness and focuses on efforts to obtain and document sufficient information to determine the quality and status of credits. Also included is an evaluation of the systems/procedures used to ensure compliance with policy.

  • Underwriting – evaluates whether credits are adequately analyzed, appropriately structured and properly approved within loan policy requirements. A properly approved credit is approved by an adequate authority in a timely manner with all conditions of approval fulfilled. Total policy exceptions measure the level of underwriting and other policy exceptions within a portfolio segment.

  • Collateral Documentation – focuses on the adequacy of documentation to perfect Trustmark’s collateral position and substantiate collateral value. Collateral exceptions measure the level of documentation exceptions within a portfolio segment. Collateral exceptions occur when certain collateral documentation is either not present or not current.

  • Compliance with Law – focuses on underwriting, documentation, approval and reporting in compliance with banking laws and regulations. Primary emphasis is directed to the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), Regulation O requirements and regulations governing appraisals.

Commercial Credits

Trustmark has established a loan grading system that consists of ten individual credit risk grades (risk ratings) that encompass a range from loans where the expectation of loss is negligible to loans where loss has been established. The model is based on the risk of default for an individual credit and establishes certain criteria to delineate the level of risk across the ten unique credit risk grades. Credit risk grade definitions are as follows:

  • Risk Rate (RR) 1 through RR 6 – Grades one through six represent groups of loans that are not subject to criticism as defined in regulatory guidance. Loans in these groups exhibit characteristics that represent low to moderate risk measured by using a variety of credit risk criteria such as cash flow coverage, debt service coverage, balance sheet leverage, liquidity, management experience, industry position, prevailing economic conditions, support from secondary sources of repayment and other credit factors that may be relevant to a specific loan. In general, these loans are supported by properly margined collateral and guarantees of principal parties.
  • Other Assets Especially Mentioned (Special Mention) (RR 7) – a loan that has a potential weakness that if not corrected will lead to a more severe rating. This rating is for credits that are currently protected but potentially weak because of an adverse feature or condition that if not corrected will lead to a further downgrade.
  • Substandard (RR 8) – a loan that has at least one identified weakness that is well defined. This rating is for credits where the primary sources of repayment are not viable at the time of evaluation or where either the capital or collateral is not adequate to support the loan and the secondary means of repayment do not provide a sufficient level of support to offset the identified weakness. Loss potential exists in the aggregate amount of substandard loans but does not necessarily exist in individual loans.
  • Doubtful (RR 9) – a loan with an identified weakness that does not have a valid secondary source of repayment. Generally, these credits have an impaired primary source of repayment and secondary sources are not sufficient to prevent a loss in the credit. The exact amount of the loss has not been determined at this time.
  • Loss (RR 10) – a loan or a portion of a loan that is deemed to be uncollectible.

By definition, credit risk grades special mention (RR 7), substandard (RR 8), doubtful (RR 9) and loss (RR 10) are criticized loans while substandard (RR 8), doubtful (RR 9) and loss (RR 10) are classified loans. These definitions are standardized by all bank regulatory agencies and are generally equally applied to each individual lending institution. The remaining credit risk grades are considered pass credits and are solely defined by Trustmark.

To enhance this process, Trustmark has determined that certain loans will be individually assessed, and a formal analysis will be performed and based upon the analysis the loan will be written down to the net realizable value. Trustmark will individually assess and remove loans from the pool in the following circumstances:

  • Commercial nonaccrual loans with total exposure of $500 thousand (excluding those portions of the debt that are government guaranteed or are secured by Trustmark deposits or marketable securities) or more.
  • Any loan that is believed to not share similar risk characteristics with the rest of the pool will be individually assessed. Otherwise, the loan will be left within the pool based on the results of the assessment.
  • Commercial accruing loans deemed to be a modified loan to a borrower experiencing financial difficulty with total exposure of $500 thousand (excluding those portions of the debt that are government guaranteed or are secured by Trustmark deposits or marketable securities) or more. If the loan is believed to not share similar risk characteristics with the rest of the loan pool, the loan will be individually assessed. Otherwise, the loan will be left within the pool and monitored on an ongoing basis.

Each loan officer assesses the appropriateness of the internal risk rating assigned to their credits on an ongoing basis. Trustmark’s Asset Review area conducts independent credit quality reviews of the majority of Trustmark’s commercial loan portfolio both on the underlying credit quality of each individual loan class as well as the adherence to Trustmark’s loan policy and the loan administration process.

In addition to the ongoing internal risk rate monitoring described above, Trustmark’s Credit Quality Review Committee meets monthly and performs a review of all loans of $100 thousand or more that are either delinquent 30 days or more or on nonaccrual. This review includes recommendations regarding risk ratings, accrual status, charge-offs and appropriate servicing officer as well as evaluation of

problem credits for determination of modified status. Quarterly, the Credit Quality Review Committee reviews and modifies continuous action plans for all credits risk rated seven or worse for relationships of $250 thousand or more.

In addition, periodic reviews of significant development, construction, multi-family, nonowner-occupied and other commercial credits are performed. These reviews assess each particular project with respect to location, project valuations, progress of completion, leasing status, current financial information, rents, operating expenses, cash flow, adherence to budget and projections and other information that is pertinent to the particular type of credit as applicable. Summary results are reviewed by Senior and Regional Credit Officers in addition to the Chief Credit and Operations Officer with a determination made as to the appropriateness of existing risk ratings and accrual status.

Consumer Credits

The Retail Credit Review Committee, Management Credit Policy Committee and the Enterprise Risk Committee review the volume and percentage of consumer loan delinquencies and losses to monitor the overall quality of the consumer portfolio.

Trustmark monitors the levels and severity of past due consumer LHFI on a daily basis through its collection activities. A detailed assessment of consumer LHFI delinquencies is performed monthly at both a product and market level.

The tables below present the amortized cost basis of loans by credit quality indicator and class of loans based on analyses performed at March 31, 2025 and December 31, 2024 ($ in thousands):

Term Loans by Origination Year
2025 2024 2023 2022 2021 Prior Revolving Loans Total
As of March 31, 2025 Commercial LHFI
Loans secured by real estate:
Construction, land<br>   development and other<br>   land:
Pass - RR 1 through RR 6 $ 70,634 $ 296,047 $ 65,320 $ 29,501 $ 20,721 $ 8,762 $ 45,340 $ 536,325
Special Mention - RR 7 — — — — — — — —
Substandard - RR 8 819 1,659 884 637 88 — 174 4,261
Doubtful - RR 9 — — — — — — — —
Total 71,453 297,706 66,204 30,138 20,809 8,762 45,514 540,586
Current period gross<br>   charge-offs — — — — — — — —
Other secured by 1-4 family<br>   residential properties:
Pass - RR 1 through RR 6 $ 7,708 $ 30,796 $ 22,318 $ 21,903 $ 23,150 $ 12,404 $ 8,066 $ 126,345
Special Mention - RR 7 — 26 — — 27 — — 53
Substandard - RR 8 43 118 659 569 288 105 24 1,806
Doubtful - RR 9 — — — — — — — —
Total 7,751 30,940 22,977 22,472 23,465 12,509 8,090 128,204
Current period gross<br>   charge-offs — — — — — — — —
Secured by nonfarm,<br>   nonresidential properties:
Pass - RR 1 through RR 6 $ 245,315 $ 468,349 $ 429,995 $ 835,293 $ 416,121 $ 740,341 $ 113,080 $ 3,248,494
Special Mention - RR 7 17,343 15,575 — 67,871 — 21,230 — 122,019
Substandard - RR 8 8,364 8,442 692 43,291 37,115 64,413 — 162,317
Doubtful - RR 9 6 — — — — 6 — 12
Total 271,028 492,366 430,687 946,455 453,236 825,990 113,080 3,532,842
Current period gross<br>   charge-offs — — — — — — — —
Other real estate secured:
Pass - RR 1 through RR 6 $ 73,554 $ 86,071 $ 275,593 $ 839,363 $ 253,955 $ 150,901 $ 8,154 $ 1,687,591
Special Mention - RR 7 10,629 — 34,975 — — — 153 45,757
Substandard - RR 8 — 14,596 7,450 67,077 27,807 25,446 317 142,693
Doubtful - RR 9 — — — — — — — —
Total 84,183 100,667 318,018 906,440 281,762 176,347 8,624 1,876,041
Current period gross<br>   charge-offs — — — — — — — —
Term Loans by Origination Year
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2025 2024 2023 2022 2021 Prior Revolving Loans Total
As of March 31, 2025 Commercial LHFI
Other loans secured by real<br>   estate:
Other construction:
Pass - RR 1 through RR 6 $ 21,216 $ 166,049 $ 366,836 $ 97,996 $ — $ — $ 30,720 $ 682,817
Special Mention - RR 7 — — — — — — — —
Substandard - RR 8 — — 2,250 17,820 — 19,419 — 39,489
Doubtful - RR 9 — — — — — — — —
Total 21,216 166,049 369,086 115,816 — 19,419 30,720 722,306
Current period gross<br>   charge-offs — — — — — — — —
Commercial and industrial<br>   loans:
Pass - RR 1 through RR 6 $ 153,465 $ 417,609 $ 340,620 $ 245,002 $ 73,691 $ 45,827 $ 422,486 $ 1,698,700
Special Mention - RR 7 — — 511 11,464 22 — 12,348 24,345
Substandard - RR 8 2,280 5,284 1,008 10,075 4,204 13,132 6,341 42,324
Doubtful - RR 9 — 227 — 60 145 2 90 524
Total 155,745 423,120 342,139 266,601 78,062 58,961 441,265 1,765,893
Current period gross<br>   charge-offs — (51 ) (149 ) (140 ) (159 ) (252 ) (130 ) (881 )
State and other political<br>   subdivision loans:
Pass - RR 1 through RR 6 $ 29,446 $ 148,168 $ 79,847 $ 209,418 $ 130,610 $ 370,046 $ 6,765 $ 974,300
Special Mention - RR 7 — — — — — — — —
Substandard - RR 8 — — — — — — — —
Doubtful - RR 9 — — — — — — — —
Total 29,446 148,168 79,847 209,418 130,610 370,046 6,765 974,300
Current period gross<br>   charge-offs — — — — — — — —
Other commercial loans and<br>   leases:
Pass - RR 1 through RR 6 $ 21,284 $ 165,522 $ 135,243 $ 5,953 $ 6,808 $ 58,263 $ 238,645 $ 631,718
Special Mention - RR 7 — — — — 9 — — 9
Substandard - RR 8 21 288 1,026 157 44 46 5,122 6,704
Doubtful - RR 9 — — — — — — — —
Total 21,305 165,810 136,269 6,110 6,861 58,309 243,767 638,431
Current period gross<br>   charge-offs — (54 ) — (14 ) — — — (68 )
Total commercial<br>   LHFI $ 662,127 $ 1,824,826 $ 1,765,227 $ 2,503,450 $ 994,805 $ 1,530,343 $ 897,825 $ 10,178,603
Total commercial LHFI<br>   gross charge-offs $ — $ (105 ) $ (149 ) $ (154 ) $ (159 ) $ (252 ) $ (130 ) $ (949 )
Term Loans by Origination Year
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2025 2024 2023 2022 2021 Prior Revolving Loans Total
As of March 31, 2025 Consumer LHFI
Loans secured by real estate:
Construction, land<br>   development and other<br>   land:
Current $ 3,356 $ 30,248 $ 15,104 $ 3,964 $ 1,441 $ 2,314 $ — $ 56,427
Past due 30-89 days — — 2,132 — — 2 — 2,134
Past due 90 days or more — — — — — — — —
Nonaccrual — 42 30 20 66 20 — 178
Total 3,356 30,290 17,266 3,984 1,507 2,336 — 58,739
Current period gross<br>   charge-offs — — — — — — — —
Other secured by 1-4 family<br>   residential properties:
Current $ 8,224 $ 22,146 $ 16,402 $ 6,238 $ 5,051 $ 12,091 $ 453,943 $ 524,095
Past due 30-89 days — 699 396 25 187 151 4,203 5,661
Past due 90 days or more — — — 7 — 305 274 586
Nonaccrual — 40 12 63 42 616 6,103 6,876
Total 8,224 22,885 16,810 6,333 5,280 13,163 464,523 537,218
Current period gross<br>   charge-offs — — (97 ) (8 ) (39 ) (24 ) — (168 )
Other real estate secured:
Current $ 169 $ 159 $ — $ — $ — $ 90 $ — $ 418
Past due 30-89 days — — — — — — — —
Past due 90 days or more — — — — — — — —
Nonaccrual — — — — — — — —
Total 169 159 — — — 90 — 418
Current period gross<br>   charge-offs — — — — — — — —
Other loans secured by real<br>   estate:
Secured by 1-4 family<br>   residential properties
Current $ 32,761 $ 307,580 $ 218,570 $ 788,021 $ 449,317 $ 452,534 $ — $ 2,248,783
Past due 30-89 days — — 3,593 9,311 2,221 1,931 — 17,056
Past due 90 days or more — 168 1,138 1,500 239 118 — 3,163
Nonaccrual — 571 6,027 20,239 7,073 5,644 — 39,554
Total 32,761 308,319 229,328 819,071 458,850 460,227 — 2,308,556
Current period gross<br>   charge-offs — — (144 ) (214 ) (15 ) (7 ) — (380 )
Consumer loans:
Current $ 20,212 $ 45,089 $ 18,110 $ 12,117 $ 4,120 $ 1,024 $ 54,687 $ 155,359
Past due 30-89 days 318 264 240 40 2 — 745 1,609
Past due 90 days or more 217 41 46 4 1 — 299 608
Nonaccrual — 68 141 53 59 15 23 359
Total 20,747 45,462 18,537 12,214 4,182 1,039 55,754 157,935
Current period gross<br>   charge-offs (1,112 ) (119 ) (177 ) (67 ) (4 ) (26 ) (699 ) (2,204 )
Total consumer LHFI $ 65,257 $ 407,115 $ 281,941 $ 841,602 $ 469,819 $ 476,855 $ 520,277 $ 3,062,866
Total consumer LHFI<br>   gross charge-offs $ (1,112 ) $ (119 ) $ (418 ) $ (289 ) $ (58 ) $ (57 ) $ (699 ) $ (2,752 )
Total LHFI $ 727,384 $ 2,231,941 $ 2,047,168 $ 3,345,052 $ 1,464,624 $ 2,007,198 $ 1,418,102 $ 13,241,469
Total current period<br>   gross charge-offs $ (1,112 ) $ (224 ) $ (567 ) $ (443 ) $ (217 ) $ (309 ) $ (829 ) $ (3,701 )
Term Loans by Origination Year
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2024 2023 2022 2021 2020 Prior Revolving Loans Total
As of December 31, 2024 Commercial LHFI
Loans secured by real estate:
Construction, land<br>   development and other<br>   land:
Pass - RR 1 through RR 6 $ 324,775 $ 83,503 $ 33,580 $ 23,124 $ 8,145 $ 1,587 $ 42,469 $ 517,183
Special Mention - RR 7 2,165 — — — — — 2,002 4,167
Substandard - RR 8 17 62 226 983 — — 176 1,464
Doubtful - RR 9 — — — — — — — —
Total 326,957 83,565 33,806 24,107 8,145 1,587 44,647 522,814
Current period gross<br>   charge-offs — — — — — (24 ) — (24 )
Other secured by 1-4 family<br>   residential properties:
Pass - RR 1 through RR 6 $ 31,013 $ 24,339 $ 22,693 $ 24,090 $ 11,635 $ 2,106 $ 7,742 $ 123,618
Special Mention - RR 7 27 — — 32 — — — 59
Substandard - RR 8 125 375 555 328 — 191 27 1,601
Doubtful - RR 9 — — — — — — — —
Total 31,165 24,714 23,248 24,450 11,635 2,297 7,769 125,278
Current period gross<br>   charge-offs — — — — — (16 ) — (16 )
Secured by nonfarm,<br>   nonresidential properties:
Pass - RR 1 through RR 6 $ 542,747 $ 441,159 $ 880,511 $ 429,929 $ 464,504 $ 392,802 $ 127,812 $ 3,279,464
Special Mention - RR 7 16,266 — 52,093 — 17,978 3,335 — 89,672
Substandard - RR 8 10,007 7,321 41,686 37,915 25,601 41,598 — 164,128
Doubtful - RR 9 11 — — — — 7 — 18
Total 569,031 448,480 974,290 467,844 508,083 437,742 127,812 3,533,282
Current period gross<br>   charge-offs — — — (2,529 ) — (16 ) — (2,545 )
Other real estate secured:
Pass - RR 1 through RR 6 $ 152,314 $ 157,827 $ 726,814 $ 233,861 $ 137,786 $ 43,478 $ 7,434 $ 1,459,514
Special Mention - RR 7 — 7,450 15,481 41,019 — — 263 64,213
Substandard - RR 8 14,610 — 26,685 42,636 252 25,419 244 109,846
Doubtful - RR 9 — — — — — — — —
Total 166,924 165,277 768,980 317,516 138,038 68,897 7,941 1,633,573
Current period gross<br>   charge-offs — — (89 ) — — — — (89 )
Term Loans by Origination Year
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2024 2023 2022 2021 2020 Prior Revolving Loans Total
As of December 31, 2024 Commercial LHFI
Other loans secured by real<br>   estate:
Other construction
Pass - RR 1 through RR 6 $ 115,221 $ 410,064 $ 201,526 $ 20,647 $ — $ — $ 18,400 $ 765,858
Special Mention - RR 7 — 2,250 24,557 — — — — 26,807
Substandard - RR 8 — — 17,820 — 19,419 — — 37,239
Doubtful - RR 9 — — — — — — — —
Total 115,221 412,314 243,903 20,647 19,419 — 18,400 829,904
Current period gross<br>   charge-offs — (14 ) (2,493 ) — — — — (2,507 )
Commercial and industrial<br>   loans:
Pass - RR 1 through RR 6 $ 505,557 $ 365,724 $ 231,875 $ 98,318 $ 45,551 $ 27,456 $ 462,740 $ 1,737,221
Special Mention - RR 7 — 564 14,066 15 — — 13,836 28,481
Substandard - RR 8 7,204 1,113 39,698 5,091 891 12,905 7,598 74,500
Doubtful - RR 9 227 — 35 145 1 2 110 520
Total 512,988 367,401 285,674 103,569 46,443 40,363 484,284 1,840,722
Current period gross<br>   charge-offs (341 ) (1,211 ) (640 ) (3,251 ) (158 ) (3,132 ) (315 ) (9,048 )
State and other political<br>   subdivision loans:
Pass - RR 1 through RR 6 $ 156,130 $ 82,532 $ 212,528 $ 135,251 $ 78,543 $ 302,709 $ 2,143 $ 969,836
Special Mention - RR 7 — — — — — — — —
Substandard - RR 8 — — — — — — — —
Doubtful - RR 9 — — — — — — — —
Total 156,130 82,532 212,528 135,251 78,543 302,709 2,143 969,836
Current period gross<br>   charge-offs — — — — — — — —
Other commercial loans and<br>   leases:
Pass - RR 1 through RR 6 $ 157,619 $ 148,099 $ 7,371 $ 9,800 $ 15,606 $ 45,227 $ 203,345 $ 587,067
Special Mention - RR 7 — — 116 48 — — — 164
Substandard - RR 8 55 682 116 12 — — 901 1,766
Doubtful - RR 9 9 — 6 — — — — 15
Total 157,683 148,781 7,609 9,860 15,606 45,227 204,246 589,012
Current period gross<br>   charge-offs (25 ) — (38 ) — — (32 ) — (95 )
Total commercial<br>   LHFI $ 2,036,099 $ 1,733,064 $ 2,550,038 $ 1,103,244 $ 825,912 $ 898,822 $ 897,242 $ 10,044,421
Total commercial LHFI<br>   gross charge-offs $ (366 ) $ (1,225 ) $ (3,260 ) $ (5,780 ) $ (158 ) $ (3,220 ) $ (315 ) $ (14,324 )
Term Loans by Origination Year
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2024 2023 2022 2021 2020 Prior Revolving Loans Total
As of December 31, 2024 Consumer LHFI
Loans secured by real estate:
Construction, land<br>   development and other<br>   land:
Current $ 31,478 $ 22,752 $ 4,302 $ 2,762 $ 930 $ 1,804 $ — $ 64,028
Past due 30-89 days — 47 11 — — 106 — 164
Past due 90 days or more 91 — — 68 — — — 159
Nonaccrual — 31 21 4 — 23 — 79
Total 31,569 22,830 4,334 2,834 930 1,933 — 64,430
Current period gross<br>   charge-offs — — — — — (8 ) — (8 )
Other secured by 1-4 family<br>   residential properties:
Current $ 24,756 $ 17,202 $ 6,733 $ 5,260 $ 3,651 $ 9,563 $ 445,598 $ 512,763
Past due 30-89 days 569 38 67 66 3 579 4,524 5,846
Past due 90 days or more 21 — 8 — — 17 219 265
Nonaccrual 71 5 69 44 103 593 5,513 6,398
Total 25,417 17,245 6,877 5,370 3,757 10,752 455,854 525,272
Current period gross<br>   charge-offs (29 ) (87 ) (233 ) (40 ) (31 ) (76 ) — (496 )
Other real estate secured:
Current $ 161 $ — $ — $ — $ 68 $ 28 $ — $ 257
Past due 30-89 days — — — — — — — —
Past due 90 days or more — — — — — — — —
Nonaccrual — — — — — — — —
Total 161 — — — 68 28 — 257
Current period gross<br>   charge-offs — — — — — — — —
Other loans secured by real<br>   estate:
Secured by 1-4 family<br>   residential properties
Current $ 274,500 $ 224,266 $ 808,527 $ 459,191 $ 161,856 $ 314,906 $ — $ 2,243,246
Past due 30-89 days 169 4,405 9,883 4,082 814 1,558 — 20,911
Past due 90 days or more 4 1,263 1,098 461 170 257 — 3,253
Nonaccrual 568 3,744 17,306 5,009 1,394 3,562 — 31,583
Total 275,241 233,678 836,814 468,743 164,234 320,283 — 2,298,993
Current period gross<br>   charge-offs — (228 ) (9,910 ) (143 ) (6 ) (17 ) — (10,304 )
Consumer loans:
Current $ 55,908 $ 22,226 $ 12,922 $ 4,654 $ 1,188 $ 105 $ 56,423 $ 153,426
Past due 30-89 days 844 396 323 4 — 13 913 2,493
Past due 90 days or more 38 67 17 4 — — 288 414
Nonaccrual 25 49 63 61 19 — 19 236
Total 56,815 22,738 13,325 4,723 1,207 118 57,643 156,569
Current period gross<br>   charge-offs (5,929 ) (785 ) (470 ) (131 ) (100 ) (337 ) (2,065 ) (9,817 )
Total consumer LHFI $ 389,203 $ 296,491 $ 861,350 $ 481,670 $ 170,196 $ 333,114 $ 513,497 $ 3,045,521
Total consumer LHFI<br>   gross charge-offs $ (5,958 ) $ (1,100 ) $ (10,613 ) $ (314 ) $ (137 ) $ (438 ) $ (2,065 ) $ (20,625 )
Total LHFI $ 2,425,302 $ 2,029,555 $ 3,411,388 $ 1,584,914 $ 996,108 $ 1,231,936 $ 1,410,739 $ 13,089,942
Total current period<br>   gross charge-offs $ (6,324 ) $ (2,325 ) $ (13,873 ) $ (6,094 ) $ (295 ) $ (3,658 ) $ (2,380 ) $ (34,949 )

Past Due LHFS

LHFS past due 90 days or more totaled $71.7 million and $71.3 million at March 31, 2025 and December 31, 2024, respectively. LHFS past due 90 days or more are serviced loans eligible for repurchase, which are fully guaranteed by the Government National Mortgage Association (GNMA). GNMA optional repurchase programs allow financial institutions to buy back individual delinquent mortgage loans that meet certain criteria from the securitized loan pool for which the institution provides servicing. At the servicer’s option and without GNMA’s prior authorization, the servicer may repurchase such a delinquent loan for an amount equal to 100% of the remaining principal balance of the loan. This buy-back option is considered a conditional option until the delinquency criteria are met, at which time the option becomes unconditional. When Trustmark is deemed to have regained effective control over these loans under the unconditional buy-back option, the loans can no longer be reported as sold and must be brought back onto the balance sheet as loans held for sale, regardless of whether Trustmark intends to exercise the buy-back option. These loans are reported as held for sale with the offsetting liability being reported as short-term borrowings.

Trustmark did not exercise its buy-back option on any delinquent loans serviced for GNMA during the first three months of 2025 or 2024.

ACL on LHFI

Trustmark’s ACL methodology for LHFI is based upon guidance within the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 326-20, “Financial Instruments-Credit Losses-Measured at Amortized Cost,” as well as applicable regulatory guidance. The ACL is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Credit quality within the LHFI portfolio is continuously monitored by Management and is reflected within the ACL for LHFI. The ACL is an estimate of expected losses inherent within Trustmark’s existing LHFI portfolio. The ACL for LHFI is adjusted through the PCL, LHFI and reduced by the charge off of loan amounts, net of recoveries.

The methodology for estimating the amount of expected credit losses reported in the ACL has two basic components: a collective, or pooled, component for estimated expected credit losses for pools of loans that share similar risk characteristics, and an asset-specific component involving individual loans that do not share risk characteristics with other loans and the measurement of expected credit losses for such individual loans. In estimating the ACL for the collective component, loans are segregated into loan pools based on loan product types and similar risk characteristics.

The loans secured by real estate and other loans secured by real estate portfolio segments include loans for both commercial and residential properties. The underwriting process for these loans includes analysis of the financial position and strength of both the borrower and guarantor, experience with similar projects in the past, market demand and prospects for successful completion of the proposed project within the established budget and schedule, values of underlying collateral, availability of permanent financing, maximum loan-to-value ratios, minimum equity requirements, acceptable amortization periods and minimum debt service coverage requirements, based on property type. The borrower’s financial strength and capacity to repay their obligations remain the primary focus of underwriting. Financial strength is evaluated based upon analytical tools that consider historical and projected cash flows and performance in addition to analysis of the proposed project for income-producing properties. Additional support offered by guarantors is also considered. Ultimate repayment of these loans is sensitive to interest rate changes, general economic conditions, liquidity and availability of long-term financing.

The commercial and industrial loans portfolio segment includes loans made to many types of businesses for various purposes, such as short-term working capital loans that are usually secured by accounts receivable and inventory and term financing for equipment and fixed asset purchases that are secured by those assets. Trustmark’s credit underwriting process for commercial and industrial loans includes analysis of historical and projected cash flows and performance, evaluation of financial strength of both borrowers and guarantors as reflected in current and detailed financial information and evaluation of underlying collateral to support the credit.

The consumer loans portfolio segment is comprised of loans that are centrally underwritten based on the borrower's credit bureau score as well as an evaluation of the borrower’s repayment capacity, credit, and collateral. Property appraisals are obtained to assist in evaluating collateral. Loan-to-value and debt-to-income ratios, loan amount, and lien position are also considered in assessing whether to originate a loan. These borrowers are particularly susceptible to downturns in economic trends such as conditions that negatively affect housing prices and demand and levels of unemployment.

The state and other political subdivision loans and the other commercial loans and leases portfolio segments primarily consist of loans to non-depository financial institutions, such as mortgage companies, finance companies and other financial intermediaries, loans to state and political subdivisions, and loans to non-profit and charitable organizations. These loans are underwritten based on the specific nature or purpose of the loan and underlying collateral with special consideration given to the specific source of repayment for the loan. The lease segment primarily consists of commercial equipment finance leases. Trustmark’s credit underwriting process for equipment

finance leases includes analysis of historical and projected cash flows and performance, evaluation of financial strength of both borrowers and guarantors as reflected in current and detailed financial information and evaluation of underlying collateral to support the credit.

During the first quarter of 2025, as part of Trustmark's ongoing model monitoring procedures, the annual loss driver analysis was performed. The analysis resulted in changes in the loss drivers for four discounted cash-flow models. These changes were a result of incorporating data through 2024 which led to more intuitive loss drivers. All models were validated by a third party before implementation.

During the first quarter of 2024, as part of Trustmark's ongoing model monitoring procedures, the annual loss driver analysis was performed. The analysis resulted in changes in the loss drivers for all discounted cash-flow models along with changes in the loss drivers for the equipment and finance loans and leases model. These changes were a result of updating Trustmark's peer group and incorporating data through 2022 which led to more intuitive loss drivers. All models were validated by a third party before implementation.

The following table provides a description of each of Trustmark’s portfolio segments, loan classes, loan pools and the ACL methodology and loss drivers at March 31, 2025:

Portfolio Segment Loan Class Loan Pool Methodology Loss Drivers
Loans secured by real estate Construction, land<br>   development and other land 1-4 family residential<br>   construction DCF BBB 7-10 US CBI, National Unemployment
Lots and development DCF National HPI, National Unemployment
Unimproved land DCF National HPI, National Unemployment
All other consumer DCF National HPI, National Unemployment
Other secured by 1-4<br>   family residential properties Consumer 1-4 family - 1st liens DCF National HPI, Southern Unemployment
All other consumer DCF National HPI, National Unemployment
Nonresidential owner-occupied DCF Southern Unemployment, National CRE Price Index
Secured by nonfarm,<br>   nonresidential properties Nonowner-occupied -<br>   hotel/motel DCF National CRE Price Index, Southern Unemployment
Nonowner-occupied - office DCF National CRE Price Index, Southern Unemployment
Nonowner-occupied- Retail DCF National CRE Price Index, Southern Unemployment
Nonowner-occupied - senior<br>   living/nursing homes DCF National CRE Price Index, Southern Unemployment
Nonowner-occupied -<br>   all other DCF National CRE Price Index, Southern Unemployment
Nonresidential owner-occupied DCF Southern Unemployment, National CRE Price Index
Other real estate secured Nonresidential nonowner<br>   -occupied - apartments DCF National CRE Price Index, Southern Unemployment
Nonresidential owner-occupied DCF Southern Unemployment, National CRE Price Index
Nonowner-occupied -<br>   all other DCF National CRE Price Index, Southern Unemployment
Other loans secured by<br>   real estate Other construction Other construction DCF National CRE Price Index, National Unemployment, BBB 7-10 US CBI
Secured by 1-4 family<br>   residential properties Trustmark mortgage WARM Southern Unemployment
Commercial and<br>   industrial loans Commercial and<br>   industrial loans Commercial and industrial -<br>   non-working capital DCF Trustmark historical data
Commercial and industrial -<br>   working capital DCF Trustmark historical data
Equipment finance loans WARM Southern Unemployment, National GDP
Credit cards WARM Trustmark call report data
Consumer loans Consumer loans Credit cards WARM Trustmark call report data
Overdrafts Loss Rate Trustmark historical data
All other consumer DCF National HPI, National Unemployment
State and other political<br>   subdivision loans State and other political<br>   subdivision loans Obligations of state and<br>   political subdivisions DCF Moody's Bond Default Study
Other commercial loans and leases Other commercial loans and leases Other loans DCF BBB 7-10 US CBI, Southern Unemployment
Commercial and industrial -<br>   non-working capital DCF Trustmark historical data
Commercial and industrial -<br>   working capital DCF Trustmark historical data
Equipment finance leases WARM Southern Unemployment, National GDP

The following table provides a description of each of Trustmark’s portfolio segments, loan classes, loan pools and the ACL methodology and loss drivers at December 31, 2024:

Portfolio Segment Loan Class Loan Pool Methodology Loss Drivers
Loans secured by real estate Construction, land<br>   development and other land 1-4 family residential<br>   construction DCF National HPI, National Unemployment
Lots and development DCF National HPI, National Unemployment
Unimproved land DCF National HPI, National Unemployment
All other consumer DCF National HPI, National Unemployment
Other secured by 1-4<br>   family residential properties Consumer 1-4 family - 1st liens DCF National HPI, National Unemployment
All other consumer DCF National HPI, National Unemployment
Nonresidential owner-occupied DCF Southern Unemployment, National CRE Price Index
Secured by nonfarm,<br>   nonresidential properties Nonowner-occupied -<br>   hotel/motel DCF National CRE Price Index, Southern Unemployment
Nonowner-occupied - office DCF National CRE Price Index, Southern Unemployment
Nonowner-occupied- Retail DCF National CRE Price Index, Southern Unemployment
Nonowner-occupied - senior<br>   living/nursing homes DCF National CRE Price Index, Southern Unemployment
Nonowner-occupied -<br>   all other DCF National CRE Price Index, Southern Unemployment
Nonresidential owner-occupied DCF Southern Unemployment, National CRE Price Index
Other real estate secured Nonresidential nonowner<br>   -occupied - apartments DCF National CRE Price Index, Southern Unemployment
Nonresidential owner-occupied DCF Southern Unemployment, National CRE Price Index
Nonowner-occupied -<br>   all other DCF National CRE Price Index, Southern Unemployment
Other loans secured by<br>   real estate Other construction Other construction DCF National CRE Price Index, National Unemployment, BBB 7-10 US CBI
Secured by 1-4 family<br>   residential properties Trustmark mortgage WARM Southern Unemployment
Commercial and<br>   industrial loans Commercial and<br>   industrial loans Commercial and industrial -<br>   non-working capital DCF Trustmark historical data
Commercial and industrial -<br>   working capital DCF Trustmark historical data
Equipment finance loans WARM Southern Unemployment, National GDP
Credit cards WARM Trustmark call report data
Consumer loans Consumer loans Credit cards WARM Trustmark call report data
Overdrafts Loss Rate Trustmark historical data
All other consumer DCF National HPI, National Unemployment
State and other political<br>   subdivision loans State and other political<br>   subdivision loans Obligations of state and<br>   political subdivisions DCF Moody's Bond Default Study
Other commercial loans and<br>   leases Other commercial loans and leases Other loans DCF BBB 7-10 US CBI, Southern Unemployment
Commercial and industrial -<br>   non-working capital DCF Trustmark historical data
Commercial and industrial -<br>   working capital DCF Trustmark historical data
Equipment finance leases WARM Southern Unemployment, National GDP

In general, Trustmark utilizes a DCF method to estimate the quantitative portion of the ACL for loan pools. The DCF model consists of two key components, a loss driver analysis (LDA) and a cash flow analysis. For loan pools utilizing the DCF methodology, multiple assumptions are in place, depending on the loan pool. A reasonable and supportable forecast is utilized for each loan pool by developing a LDA for each loan class. The LDA uses charge off data from Federal Financial Institutions Examination Council (FFIEC) reports to construct a periodic default rate (PDR). The PDR is decomposed into a PD. Regressions are run using the data for various macroeconomic variables in order to determine which ones correlate to Trustmark’s losses. These variables are then incorporated into the application to calculate a quarterly PD using a third-party baseline forecast. In addition to the PD, a LGD is derived using a method

referred to as Frye-Jacobs. The Frye-Jacobs method is a mathematical formula that traces the relationship between LGD and PD over time and projects the LGD based on the levels of PD forecasts. This model approach is applicable to all pools within the construction, land development and other land, other secured by 1-4 family residential properties, secured by nonfarm, nonresidential properties and other real estate secured loan classes as well as consumer loans and other commercial loans.

An alternative LDA is utilized to support the PD and LGD assumptions necessary to apply a DCF methodology to the other construction pool. Fundamentally, this approach utilizes publicly reported default balances and leverages a generalized linear model (GLM) framework to estimate PD. Taken together, these differences allow for results to be scaled to be specific and directly applicable to the other construction segment. LGD is assumed to be a through-the-cycle constant based on the actual performance of Trustmark’s other construction segment. These assumptions are then input into the DCF model and used in conjunction with prepayment data to calculate the cash flows at the individual loan level. Management believes this methodology is commensurate with the level of risk in the pool.

For the commercial and industrial loans related pools, Trustmark uses its own PD and LGD data, instead of the macroeconomic variables and the Frye-Jacobs method described above, to calculate the PD and LGD as there were no defensible macroeconomic variables that correlated to Trustmark’s losses. Trustmark utilizes a third-party Bond Default Study to derive the PD and LGD for the obligations of state and political subdivisions pool. Due to the lack of losses within this pool, no defensible macroeconomic factors were identified to correlate.

The PD and LGD measures are used in conjunction with prepayment data as inputs into the DCF model to calculate the cash flows at the individual loan level. Contractual cash flows based on loan terms are adjusted for PD, LGD and prepayments to derive loss cash flows. These loss cash flows are discounted by the loan’s coupon rate to arrive at the discounted cash flow based quantitative loss. The prepayment studies are updated quarterly by a third-party for each applicable pool.

An alternate method of estimating the ACL is used for certain loan pools due to specific characteristics of these loans. For the non-DCF pools, specifically, those using the weighted average remaining maturity (WARM) method, the remaining life is incorporated into the ACL quantitative calculation.

During the second quarter of 2024, Trustmark executed a sale on a portfolio of 1-4 family mortgage loans that were at least three payments delinquent and/or nonaccrual at the time of selection. As a result of this sale, a credit mark was established for a sub-pool of the loans in the sale. Due to the lack of historical experience and the use of industry data for this sub-pool, management elected to use the credit mark for reserving purposes on a go forward basis for this sub-pool that meets the same credit criteria of being three payments delinquent and/or nonaccrual. All loans of the sub-pool that meet the above credit criteria will be removed from the 1-4 family residential properties pool and placed into a separate pool with the credit mark reserve applied to the total balance.

Trustmark determined that reasonable and supportable forecasts could be made for a twelve-month period for all of its loan pools. To the extent the lives of the loans in the LHFI portfolio extend beyond this forecast period, Trustmark uses a reversion period of four quarters and reverts to the historical mean on a straight-line basis over the remaining life of the loans. The econometric models currently in production reflect segment or pool level sensitivities of PD to changes in macroeconomic variables. By measuring the relationship between defaults and changes in the economy, the quantitative reserve incorporates reasonable and supportable forecasts of future conditions that will affect the value of Trustmark’s assets, as required by FASB ASC Topic 326. Under stable forecasts, these linear regressions will reasonably predict a pool’s PD. However, upon the occurrence of events that generate significant economic instability (such as the COVID-19 pandemic), the macroeconomic variables used for reasonable and supportable forecasting can change rapidly. At the macroeconomic levels experienced during the COVID-19 pandemic, it was not clear that the models in production at that time would produce reasonably representative results since the models at that time were originally estimated using data beginning in 2004 through 2019. During this period, a traditional, albeit severe, economic recession occurred. Thus, econometric models are sensitive to similar future levels of PD.

In order to prevent the econometric models from extrapolating beyond reasonable boundaries of their input variables, Trustmark chose to establish an upper and lower limit process when applying the periodic forecasts. In this way, Management will not rely upon unobserved and untested relationships in the setting of the quantitative reserve. This approach applies to all input variables, including: Southern Unemployment, National Unemployment, National Gross Domestic Product (GDP), National Home Price Index (HPI), National Commercial Real Estate (CRE) Price Index and the BBB 7-10 Year US Corporate Bond Index (CBI). The upper and lower limits are based on the distribution of the macroeconomic variable by selecting extreme percentiles at the upper and lower limits of the distribution, the 1stand 99th percentiles, respectively. These upper and lower limits are then used to calculate the PD for the forecast time period in which the forecasted values are outside of the upper and lower limit range. Additionally, when periods have a PD or LGD at or near zero as a result of the improving macroeconomic forecasts, Management implemented PD and LGD floors to account for the risk associated with each portfolio. The PD and LGD floors are based on Trustmark’s historical loss experience and applied at a portfolio level.

Qualitative factors used in the ACL methodology include the following:

  • Lending policies and procedures
  • Economic conditions and concentrations of credit
  • Nature and volume of the portfolio
  • Performance trends
  • External factors

While all these factors are incorporated into the overall methodology, only four are currently considered active at March 31, 2025: (i) economic conditions and concentrations of credit, (ii) nature and volume of the portfolio, (iii) performance trends and (iv) external factors.

Two of Trustmark’s largest loan classes are the loans secured by nonfarm, nonresidential properties and the loans secured by other real estate. Trustmark elected to create a qualitative factor specifically for these loan classes which addresses changes in the economic conditions of metropolitan areas and applies additional pool level reserves. This qualitative factor is based on third-party market data and forecast trends and is updated quarterly as information is available, by market and by loan pool.

Trustmark's current quantitative methodologies do not completely incorporate changes in credit quality. As a result, Trustmark utilizes the performance trends qualitative factor. This factor is based on migration analyses, that allocates additional ACL to non-pass/delinquent loans within each pool. In this way, Management believes the ACL will directly reflect changes in risk, based on the performance of the loans within a pool, whether declining or improving.

The performance trends qualitative factor is estimated by properly segmenting loan pools into risk levels by risk rating for commercial credits and delinquency status for consumer credits. A migration analysis is then performed quarterly using a third-party software and the results for each risk level are compiled to calculate the historical PD average for each loan portfolio based on risk levels. This average historical PD rate is updated annually. For the mortgage portfolio, Trustmark uses an internal report to incorporate a roll rate method for the calculation of the PD rate. In addition to the PD rate for each portfolio, Management incorporates the quantitative rate and the k value derived from the Frye-Jacobs method to calculate a loss estimate that includes both PD and LGD. The quantitative rate is used to eliminate any additional reserve that the quantitative reserve already includes. Finally, the loss estimate rate is then applied to the total balances for each risk level for each portfolio to calculate a qualitative reserve.

Management elected to activate the nature and volume of the portfolio qualitative factor for a sub-pool of the secured by 1-4 family residential properties due to its significant size as well as the underlying nature being different. The nature and volume of the portfolio qualitative factor utilizes a WARM methodology that uses industry data for the assumptions to support the qualitative adjustment. The industry data is used to compile a PD based on credit score ranges along with using the industry data to compile an LGD. The sub-pool of credits is then aggregated into the appropriate credit score bands in which a weighted average loss rate is calculated based on the PD and LGD for each credit score range. This weighted average loss rate is then applied to the expected balance for the sub-segment of credits. This total is then used as the qualitative reserve adjustment. During the first quarter of 2025, Management elected to utilize Trustmark’s historical data to develop a PD based on the credit score ranges initially established. Additionally, Management elected to use the same LGD value from the mortgage sale that occurred in the second quarter of 2024 along with the same weighted average life assumption utilized to determine the credit mark on this portfolio.

The external factors qualitative factor is Management’s best judgment on the loan or pool level impact of all factors that affect the portfolio that are not accounted for using any other part of the ACL methodology (e.g., natural disasters, changes in legislation, impacts due to technology and pandemics). During the third quarter of 2024, Trustmark activated the External Factor – Credit Quality Review qualitative factor. This qualitative factor ensures reserve adequacy for collectively evaluated commercial loans that may not have been identified and downgraded timely for various reasons. This qualitative factor population is all commercial loans risk rated 1-5. These loans are then applied to the historical average of the Watch/Special Mention rated percentage. Then the balance of these loans are applied additional reserves based on the same reserve rates utilized in the performance trends qualitative factor for Watch/Special Mention rated loans. Then the Watch/Special Mention population is applied the historical Substandard rated percentage and then subsequently applied the Substandard reserve rate utilized in the performance trends qualitative factor as well. The historical Watch/Special Mention and Substandard rated percentage averages captures the weighted average life of the commercial loan portfolio. Thus, Trustmark will allocate additional reserves to capture the proportion of potential Watch/Special Mention and Substandard rated credits that may not have been categorized as such at any given point in time through the life of the commercial loan portfolio.

The following tables disaggregate the ACL and the amortized cost basis of the loans by the measurement methodology used at March 31, 2025 and December 31, 2024 ($ in thousands):

March 31, 2025
ACL LHFI
Individually Evaluated for Credit Loss Collectively Evaluated for Credit Loss Total Individually Evaluated for Credit Loss Collectively Evaluated for Credit Loss Total
Loans secured by real estate:
Construction, land development and<br>   other land $ — $ 6,982 $ 6,982 $ — 599,325 $ 599,325
Other secured by 1-4 family residential<br>   properties — 12,476 12,476 502 664,920 665,422
Secured by nonfarm, nonresidential<br>   properties 2,166 37,807 39,973 9,742 3,523,100 3,532,842
Other real estate secured — 23,348 23,348 268 1,876,191 1,876,459
Other loans secured by real estate:
Other construction — 9,860 9,860 — 722,306 722,306
Secured by 1-4 family residential<br>   properties — 35,602 35,602 1,533 2,307,023 2,308,556
Commercial and industrial loans 10,925 14,471 25,396 22,060 1,743,833 1,765,893
Consumer loans — 5,238 5,238 — 157,935 157,935
State and other political subdivision loans — 1,605 1,605 — 974,300 974,300
Other commercial loans and leases 887 5,643 6,530 887 637,544 638,431
Total $ 13,978 $ 153,032 $ 167,010 $ 34,992 $ 13,206,477 $ 13,241,469
December 31, 2024
--- --- --- --- --- --- --- --- --- --- --- --- ---
ACL LHFI
Individually Evaluated for Credit Loss Collectively Evaluated for Credit Loss Total Individually Evaluated for Credit Loss Collectively Evaluated for Credit Loss Total
Loans secured by real estate:
Construction, land development and<br>   other land $ — $ 6,452 $ 6,452 $ — $ 587,244 $ 587,244
Other secured by 1-4 family residential<br>   properties — 11,347 11,347 521 650,029 650,550
Secured by nonfarm, nonresidential<br>   properties 2,251 35,645 37,896 9,783 3,523,499 3,533,282
Other real estate secured — 19,491 19,491 1,904 1,631,926 1,633,830
Other loans secured by real estate:
Other construction — 13,297 13,297 — 829,904 829,904
Secured by 1-4 family residential<br>   properties — 32,129 32,129 1,533 2,297,460 2,298,993
Commercial and industrial loans 10,518 16,502 27,020 22,503 1,818,219 1,840,722
Consumer loans — 5,141 5,141 — 156,569 156,569
State and other political subdivision loans — 1,250 1,250 — 969,836 969,836
Other commercial loans and leases 892 5,355 6,247 896 588,116 589,012
Total $ 13,661 $ 146,609 $ 160,270 $ 37,140 $ 13,052,802 $ 13,089,942

Changes in the ACL, LHFI were as follows for the periods presented ($ in thousands):

Three Months Ended March 31,
2025 2024
Balance at beginning of period $ 160,270 $ 139,367
Loans charged-off (3,701 ) (6,324 )
Recoveries 2,316 2,247
Net (charge-offs) recoveries (1,385 ) (4,077 )
PCL, LHFI 8,125 7,708
Balance at end of period $ 167,010 $ 142,998

The following tables detail changes in the ACL, LHFI by loan class for the periods presented ($ in thousands):

Three Months Ended March 31, 2025
Balance at Beginning of Period Charge-offs Recoveries PCL Balance at <br>End of <br>Period
Loans secured by real estate:
Construction, land development and other land $ 6,452 $ — $ 2 $ 528 $ 6,982
Other secured by 1-4 family residential properties 11,347 (168 ) 99 1,198 12,476
Secured by nonfarm, nonresidential properties 37,896 — — 2,077 39,973
Other real estate secured 19,491 — 77 3,780 23,348
Other loans secured by real estate:
Other construction 13,297 — 2 (3,439 ) 9,860
Secured by 1-4 family residential properties 32,129 (380 ) 281 3,572 35,602
Commercial and industrial loans 27,020 (881 ) 235 (978 ) 25,396
Consumer loans 5,141 (2,204 ) 1,588 713 5,238
State and other political subdivision loans 1,250 — — 355 1,605
Other commercial loans and leases 6,247 (68 ) 32 319 6,530
Total $ 160,270 $ (3,701 ) $ 2,316 $ 8,125 $ 167,010

The PCL, LHFI for the construction, land development and other land, other secured 1-4 family residential properties, secured by nonfarm, nonresidential properties, other real estate secured, secured by 1-4 family residential properties, consumer loans, state and other political subdivision loans, and other commercial loans and leases portfolios for the three months ended March 31, 2025 was primarily due to changes in the macroeconomic forecast, coupled with net adjustments to the qualitative factors due to credit migration and modeling assumption updates to utilize bank historical data and loan growth.

The negative PCL, LHFI for the other construction and the commercial and industrial loans portfolios for the three months ended March 31, 2025 was primarily due to segmentation migration and a decline in loan balances.

Three Months Ended March 31, 2024
Balance at Beginning of Period Charge-offs Recoveries PCL Balance at <br>End of <br>Period
Loans secured by real estate:
Construction, land development and other land $ 17,192 $ (24 ) $ 1 $ (11,426 ) $ 5,743
Other secured by 1-4 family residential properties 12,942 (76 ) 450 (2,762 ) 10,554
Secured by nonfarm, nonresidential properties 24,043 (2,428 ) 9 11,668 33,292
Other real estate secured 4,488 — — 4,763 9,251
Other loans secured by real estate:
Other construction 5,758 — 17 6,290 12,065
Secured by 1-4 family residential properties 34,794 (411 ) 38 (2,475 ) 31,946
Commercial and industrial loans 26,638 (584 ) 198 1,678 27,930
Consumer loans 5,794 (2,748 ) 1,505 972 5,523
State and other political subdivision loans 646 — — (8 ) 638
Other commercial loans and leases 7,072 (53 ) 29 (992 ) 6,056
Total $ 139,367 $ (6,324 ) $ 2,247 $ 7,708 $ 142,998

The PCL, LHFI for the secured by nonfarm, nonresidential properties and other real estate secured portfolios for the three months ended March 31, 2024 was primarily due to changes in the macroeconomic forecast associated with these specific loss driver models as a result of the loss driver update coupled with loan growth. The PCL, LHFI for the other construction portfolio for the three months ended March 31, 2024 was also primarily due to changes in the macroeconomic forecast associated with this specific loss driver model as a result of the loss driver update coupled with loan growth and net adjustments to the qualitative factors due to credit migration. The PCL, LHFI for the commercial and industrial portfolio for the three months ended March 31, 2024 was primarily due to net adjustments to the qualitative factors due to credit migration.

The negative PCL, LHFI for the construction, land development and other land, other secured by 1-4 family residential properties, and other commercial loans and leases portfolios for the three months ended March 31, 2024 was primarily due to changes in the macroeconomic forecast associated with these specific loss driver models as a result of the loss driver update for these loan portfolios.

The negative PCL, LHFI for the secured by 1-4 family residential properties portfolio for the three months ended March 31, 2024 was primarily due to adjustments to the Nature and Volume of Portfolio qualitative factor.

Note 5 – Mortgage Banking

MSR

The activity in the MSR is detailed in the table below for the periods presented ($ in thousands):

Three Months Ended March 31,
2025 2024
Balance at beginning of period $ 139,317 $ 131,870
Origination of servicing assets 3,068 2,977
Change in fair value:
Due to market changes (5,928 ) 5,123
Due to run-off (2,062 ) (1,926 )
Balance at end of period $ 134,395 $ 138,044

Trustmark determines the fair value of the MSR using a valuation model administered by a third party that calculates the present value of estimated future net servicing income. Trustmark considers the conditional prepayment rate (CPR), which is an estimated loan prepayment rate that uses historical prepayment rates for previous loans similar to the loans being evaluated, the float rate, which is the interest rate earned on escrow balances, and the discount rate as some of the primary assumptions used in determining the fair value of the MSR. An increase in either the CPR or discount rate assumption will result in a decrease in the fair value of the MSR, while a decrease in either assumption will result in an increase in the fair value of the MSR. An increase in the float rate will result in an increase in the fair value of the MSR, while a decrease in the float rate will result in a decrease in the fair value of the MSR. At March 31, 2025, the fair value of the MSR included an assumed average prepayment speed of 9 CPR and an average discount rate of 10.65% compared to an assumed average prepayment speed of 8 CPR and an average discount rate of 10.08% at March 31, 2024.

Mortgage Loans Serviced/Sold

During the first three months of 2025 and 2024, Trustmark sold $255.8 million and $258.3 million, respectively, of residential mortgage loans. Gains on these sales were recorded as noninterest income in mortgage banking, net and totaled $4.3 million for the first three months of 2025 compared to $5.0 million for the first three months of 2024.

The table below details the mortgage loans sold and serviced for others at March 31, 2025 and December 31, 2024 ($ in thousands):

March 31, 2025 December 31, 2024
Federal National Mortgage Association $ 4,815,228 $ 4,821,246
Government National Mortgage Association 3,733,069 3,695,419
Federal Home Loan Mortgage Corporation 241,920 213,358
Other 21,234 32,686
Total mortgage loans sold and serviced for others $ 8,811,451 $ 8,762,709

Trustmark is subject to losses in its loan servicing portfolio due to loan foreclosures. Trustmark has obligations to either repurchase the outstanding principal balance of a loan or make the purchaser whole for the economic benefits of a loan if it is determined that the loan sold was in violation of representations or warranties made by Trustmark at the time of the sale, herein referred to as mortgage loan servicing putback expenses. Such representations and warranties typically include those made regarding loans that had missing or insufficient file documentation, loans that do not meet investor guidelines, loans in which the appraisal does not support the value and/or loans obtained through fraud by the borrowers or other third parties. Generally, putback requests may be made until the loan is paid in full. However, mortgage loans delivered to Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC) on or after January 1, 2013 are subject to the Representations and Warranties Framework, which provides certain instances in which FNMA and FHLMC will not exercise their remedies, including a putback request, for breaches of certain selling representations and warranties, such as payment history and quality control review.

When a putback request is received, Trustmark evaluates the request and takes appropriate actions based on the nature of the request. Trustmark is required by FNMA and FHLMC to provide a response to putback requests within 60 days of the date of receipt. The total mortgage loan servicing putback expense is included in other expense. At both March 31, 2025 and 2024, Trustmark had a reserve for mortgage loan servicing putback expenses of $500 thousand.

There is inherent uncertainty in reasonably estimating the requirement for reserves against potential future mortgage loan servicing putback expenses. Future putback expenses are dependent on many subjective factors, including the review procedures of the purchasers and the potential refinance activity on loans sold with servicing released and the subsequent consequences under the representations and warranties. Trustmark believes that it has appropriately reserved for potential mortgage loan servicing putback requests.

Note 6 – Other Real Estate

At March 31, 2025, Trustmark’s geographic other real estate distribution was concentrated in its Alabama, Mississippi, Tennessee and Texas market regions. The ultimate recovery of a substantial portion of the carrying amount of other real estate is susceptible to changes in market conditions in these regions.

For the periods presented, changes and gains (losses), net on other real estate were as follows ($ in thousands):

Three Months Ended March 31,
2025 2024
Balance at beginning of period $ 5,917 $ 6,867
Additions 3,438 2,228
Disposals (878 ) (957 )
(Write-downs) recoveries (129 ) (518 )
Balance at end of period $ 8,348 $ 7,620
Gains (losses), net on the sale of other real estate included in<br>   other real estate expense $ (77 ) $ (55 )

At March 31, 2025 and December 31, 2024, other real estate by type of property consisted of the following ($ in thousands):

March 31, 2025 December 31, 2024
Construction, land development and other land properties $ — $ 46
1-4 family residential properties 3,290 2,260
Nonfarm, nonresidential properties 3,240 3,611
Other real estate properties 1,818 —
Total other real estate $ 8,348 $ 5,917

At March 31, 2025 and December 31, 2024, other real estate by geographic location consisted of the following ($ in thousands):

March 31, 2025 December 31, 2024
Alabama $ 271 $ 170
Mississippi (1) 4,837 2,407
Tennessee (2) 979 1,079
Texas 2,261 2,261
Total other real estate $ 8,348 $ 5,917
  • (1)
  • (2)

At March 31, 2025, the balance of other real estate included $3.3 million of foreclosed residential real estate properties recorded as a result of obtaining physical possession of the property compared to $2.3 million at December 31, 2024. At March 31, 2025 and December 31, 2024, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process was $4.5 million and $7.6 million, respectively.

Note 7 – Leases

Lessor Arrangements

Trustmark leases certain types of machinery and equipment to its customers through sales-type and direct financing leases as part of its equipment financing portfolio. These leases generally have remaining lease terms of one to eight years, some of which include renewal options and/or options for the lessee to purchase the leased property near or at the end of the lease term. Trustmark recognized interest income from its sales-type and direct financing leases of $3.6 million and $2.4 million for the three months ended March 31, 2025 and 2024, respectively. Trustmark does not have any significant operating leases in which it is the lessor.

The table below summarizes the components of Trustmark's net investment in its sales-type and direct financing leases for the periods presented ($ in thousands):

March 31, 2025 December 31, 2024
Leases receivable $ 278,406 $ 282,771
Unearned income (43,200 ) (45,585 )
Initial direct costs 2,206 2,252
Unguaranteed lease residual 8,189 7,084
Total net investment $ 245,601 $ 246,522

The table below details the minimum future lease payments for Trustmark's leases receivable at March 31, 2025 ($ in thousands):

March 31, 2025
2025 (excluding the three months ended March 31, 2025) $ 39,585
2026 51,083
2027 63,634
2028 53,230
2029 38,716
Thereafter 32,158
Lease receivable $ 278,406

Lessee Arrangements

For Trustmark's lessee arrangements, the leases of FBBI are included in discontinued operations and as a result, have been excluded from the amounts below. Prior period amounts have been reclassified. The following table details the components of net lease cost for the periods presented ($ in thousands):

Three Months Ended March 31,
2025 2024
Finance leases:
Amortization of right-of-use assets $ 113 $ 113
Interest on lease liabilities 34 38
Operating lease cost 1,341 1,180
Short-term lease cost 165 58
Variable lease cost 219 199
Sublease income (59 ) (3 )
Net lease cost $ 1,813 $ 1,585

The following table details the cash payments included in the measurement of lease liabilities during the periods presented ($ in thousands):

Three Months Ended March 31,
2025 2024
Finance leases:
Operating cash flows included in operating activities $ 34 $ 38
Financing cash flows included in payments under finance lease obligations 112 99
Operating leases:
Operating cash flows (fixed payments) included in other operating activities, net 1,315 1,099
Operating cash flows (liability reduction) included in other operating activities, net 976 771

The following table details balance sheet information, as well as weighted-average lease terms and discount rates, related to leases at March 31, 2025 and December 31, 2024 ($ in thousands):

March 31, 2025 December 31, 2024
Finance lease right-of-use assets, net of accumulated depreciation $ 3,186 $ 3,299
Finance lease liabilities 3,798 3,910
Operating lease right-of-use assets 33,861 34,668
Operating lease liabilities 37,917 38,698
Weighted-average lease term:
Finance leases 7.10 years 7.35 years
Operating leases 9.15 years 9.31 years
Weighted-average discount rate:
Finance leases 3.61 % 3.61 %
Operating leases 3.73 % 3.72 %

At March 31, 2025, future minimum rental commitments under finance and operating leases were as follows ($ in thousands):

Finance Leases Operating Leases
2025 (excluding the three months ended March 31, 2025) $ 438 $ 3,973
2026 589 5,160
2027 594 5,193
2028 599 4,824
2029 632 4,655
Thereafter 1,454 21,533
Total minimum lease payments 4,306 45,338
Less imputed interest (508 ) (7,421 )
Lease liabilities $ 3,798 $ 37,917

Note 8 – Deposits

At March 31, 2025 and December 31, 2024, deposits consisted of the following ($ in thousands):

March 31, 2025 December 31, 2024
Noninterest-bearing demand $ 3,069,929 $ 3,073,565
Interest-bearing demand (1) 7,814,905 7,861,268
Savings (1) 1,003,099 980,424
Time 3,192,771 3,192,918
Total $ 15,080,704 $ 15,108,175

(1) During the first quarter of 2025, Trustmark ceased the daily sweep from low transaction interest-bearing demand deposits to savings deposits. The prior period has been reclassified accordingly.

Note 9 – Securities Sold Under Repurchase Agreements

Trustmark utilizes securities sold under repurchase agreements as a source of borrowing in connection with overnight repurchase agreements offered to commercial deposit customers by using its unencumbered investment securities as collateral. Trustmark accounts for its securities sold under repurchase agreements as secured borrowings in accordance with FASB ASC Subtopic 860-30, “Transfers and Servicing – Secured Borrowing and Collateral.” Securities sold under repurchase agreements are stated at the amount of cash received in connection with the transaction. Trustmark monitors collateral levels on a continual basis and may be required to provide additional collateral based on the fair value of the underlying securities. Securities sold under repurchase agreements were secured by securities with a carrying amount of $27.9 million and $40.3 million at March 31, 2025 and December 31, 2024, respectively. Trustmark’s repurchase agreements are transacted under master repurchase agreements that give Trustmark, in the event of default by the counterparty, the right of offset with the same counterparty. At both March 31, 2025 and December 31, 2024, all repurchase agreements were short-term and consisted primarily of sweep repurchase arrangements, under which excess deposits are “swept” into

overnight repurchase agreements with Trustmark. The following table presents the securities sold under repurchase agreements by collateral pledged at March 31, 2025 and December 31, 2024 ($ in thousands):

March 31, 2025 December 31, 2024
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA $ 1,639 $ —
Issued by FNMA and FHLMC 7,813 11,685
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC or GNMA 3,392 7,487
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC or GNMA 11,140 10,169
Total securities sold under repurchase agreements $ 23,984 $ 29,341

Note 10 – Revenue from Contracts with Customers

Trustmark accounts for revenue from contracts with customers in accordance with FASB ASC Topic 606, “Revenue from Contracts with Customers,” which provides that revenue be recognized in a manner that depicts the transfer of goods or services to a customer in an amount that reflects the consideration Trustmark expects to be entitled to in exchange for those goods or services. Revenue from contracts with customers is recognized either over time in a manner that depicts Trustmark’s performance, or at a point in time when control of the goods or services are transferred to the customer. Trustmark’s noninterest income (loss), excluding all of mortgage banking, net and securities gains (losses), net and portions of bank card and other fees and other, net, are considered within the scope of FASB ASC Topic 606. Gains or losses on the sale of other real estate, which are included in Trustmark’s noninterest expense as other expense, are also within the scope of FASB ASC Topic 606.

Trustmark records a gain or loss from the sale of other real estate when control of the property transfers to the buyer. Trustmark records the gain or loss from the sale of other real estate in noninterest expense as other expense. Other real estate sales for the three months ended March 31, 2025 resulted in a net loss of $77 thousand, compared to a net loss of $55 thousand for the three months ended March 31, 2024.

The Insurance Segment is included in discontinued operations for the three months ended March 31, 2024. See Note 2 - Discontinued Operations for additional information about discontinued operations.

The following table presents noninterest income (loss) disaggregated by reportable operating segment and revenue stream for the periods presented ($ in thousands):

Three Months Ended March 31, 2025 Three Months Ended March 31, 2024
Topic 606 Not Topic <br>606 (1) Total Topic 606 Not Topic <br>606 (1) Total
General Banking Segment
Service charges on deposit accounts $ 10,615 $ — $ 10,615 $ 10,936 $ — $ 10,936
Bank card and other fees 7,380 245 7,625 7,192 200 7,392
Mortgage banking, net — 8,771 8,771 — 8,915 8,915
Wealth management 181 — 181 189 — 189
Other, net 5,413 409 5,822 3,348 (382 ) 2,966
Total noninterest income (loss) $ 23,589 $ 9,425 $ 33,014 $ 21,665 $ 8,733 $ 30,398
Wealth Management Segment
Service charges on deposit accounts $ 21 $ — $ 21 $ 22 $ — $ 22
Bank card and other fees 39 — 39 36 — 36
Wealth management 9,362 — 9,362 8,763 — 8,763
Other, net 52 96 148 42 94 136
Total noninterest income $ 9,474 $ 96 $ 9,570 $ 8,863 $ 94 $ 8,957
Consolidated
Service charges on deposit accounts $ 10,636 $ — $ 10,636 $ 10,958 $ — $ 10,958
Bank card and other fees 7,419 245 7,664 7,228 200 7,428
Mortgage banking, net — 8,771 8,771 — 8,915 8,915
Wealth management 9,543 — 9,543 8,952 — 8,952
Other, net 5,465 505 5,970 3,390 (288 ) 3,102
Total noninterest income (loss) $ 33,063 $ 9,521 $ 42,584 $ 30,528 $ 8,827 $ 39,355
  • (1)

Note 11 – Defined Benefit and Other Postretirement Benefits

Qualified Pension Plan

Trustmark maintains a noncontributory tax-qualified defined benefit pension plan titled the Trustmark Corporation Pension Plan for Certain Employees of Acquired Financial Institutions (the Continuing Plan) to satisfy commitments made by Trustmark to associates covered through plans obtained in acquisitions.

The following table presents information regarding the net periodic benefit cost for the Continuing Plan for the periods presented ($ in thousands):

Three Months Ended March 31,
2025 2024
Service cost $ 9 $ 10
Interest cost 69 62
Expected return on plan assets (32 ) (24 )
Recognized net (gain) loss due to lump sum settlements (50 ) —
Recognized net actuarial (gain) loss (2 ) —
Net periodic benefit cost $ (6 ) $ 48

For the plan year ending December 31, 2025, Trustmark’s minimum required contribution to the Continuing Plan is $109 thousand; however, Management and the Board of Directors of Trustmark will monitor the Continuing Plan throughout 2025 to determine any additional funding requirements by the plan’s measurement date, which is December 31.

Supplemental Retirement Plans

Trustmark maintains a nonqualified supplemental retirement plan covering key executive officers and senior officers as well as directors who have elected to defer fees. The plan provides for retirement and/or death benefits based on a participant’s covered salary or deferred fees. Although plan benefits may be paid from Trustmark’s general assets, Trustmark has purchased life insurance contracts on the participants covered under the plan, which may be used to fund future benefit payments under the plan. The annual measurement date for the plan is December 31. As a result of mergers prior to 2014, Trustmark became the administrator of nonqualified supplemental retirement plans, for which the plan benefits were frozen prior to the merger date.

The following table presents information regarding the net periodic benefit cost for Trustmark’s nonqualified supplemental retirement plans for the periods presented ($ in thousands):

Three Months Ended March 31,
2025 2024
Service cost $ 4 $ 11
Interest cost 495 477
Amortization of prior service cost 4 28
Recognized net actuarial loss 73 95
Net periodic benefit cost $ 576 $ 611

Note 12 – Stock and Incentive Compensation

Trustmark has granted restricted stock units subject to the provisions of the Stock and Incentive Compensation Plan (the Stock Plan). Current outstanding and future grants of restricted stock units are subject to the provisions of the Stock Plan, which is designed to provide flexibility to Trustmark regarding its ability to motivate, attract and retain the services of key associates and directors. The Stock Plan also allows Trustmark to grant nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units and performance units to key associates and directors.

Restricted Stock Grants

Performance Units

Trustmark’s performance units vest over three years and are granted to Trustmark’s executive and senior management teams. Performance units granted vest based on performance goals of return on average tangible equity and total shareholder return. Performance units are valued utilizing a Monte Carlo simulation model to estimate fair value of the units at the grant date. The Monte Carlo simulation was performed by an independent valuation consultant and requires the use of subjective modeling assumptions. These units are recognized using the straight-line method over the requisite service period. These units are granted at 100% of target, yet provide for achievement units if performance measures exceed 100%. The restricted stock agreement for these units provides for dividend privileges, but no voting rights.

Time-Based Units

Trustmark’s time-based units granted to Trustmark’s executive and senior management teams vest over three years. Trustmark’s time-based units granted to members of Trustmark’s Board of Directors vest over one year. Time-based units are valued utilizing the fair value of Trustmark’s stock at the grant date. These units are recognized on the straight-line method over the requisite service period. The restricted stock agreement for these units provides for dividend privileges, but no voting rights.

The following table summarizes the Stock Plan activity for the period presented:

Three Months Ended March 31, 2025
Performance<br>Units Time-Vested<br>Units
Nonvested units, beginning of period 208,045 372,276
Granted 63,392 104,794
Adjustment for performance factor 47,415 —
Released from restriction (105,951 ) (91,051 )
Forfeited (416 ) (2,462 )
Nonvested units, end of period 212,485 383,557

The following table presents information regarding compensation expense for units under the Stock Plan for the periods presented ($ in thousands):

Three Months Ended March 31,
2025 2024
Performance units $ 493 $ 462
Time-vested units 1,978 1,776
Total compensation expense $ 2,471 $ 2,238

Note 13 – Contingencies

Lending Related

Trustmark makes commitments to extend credit and issues standby and commercial letters of credit (letters of credit) in the normal course of business in order to fulfill the financing needs of its customers. The carrying amount of commitments to extend credit and letters of credit approximates the fair value of such financial instruments.

Commitments to extend credit are agreements to lend money to customers pursuant to certain specified conditions. Commitments generally have fixed expiration dates or other termination clauses. Because many of these commitments are expected to expire without being fully drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The exposure to credit loss in the event of nonperformance by the other party to the commitments to extend credit is represented by the contract amount of those instruments. Trustmark applies the same credit policies and standards as it does in the lending process when making these commitments. The collateral obtained is based upon the nature of the transaction and the assessed creditworthiness of the borrower. At March 31, 2025 and 2024, Trustmark had unused commitments to extend credit of $4.387 billion and $4.792 billion, respectively.

Letters of credit are conditional commitments issued by Trustmark to insure the performance of a customer to a third-party. A financial standby letter of credit irrevocably obligates Trustmark to pay a third-party beneficiary when a customer fails to repay an outstanding loan or debt instrument. A performance standby letter of credit irrevocably obligates Trustmark to pay a third-party beneficiary when a customer fails to perform some contractual, nonfinancial obligation. When issuing letters of credit, Trustmark uses the same policies regarding credit risk and collateral, which are followed in the lending process. At March 31, 2025 and 2024, Trustmark’s maximum exposure to credit loss in the event of nonperformance by the customer for letters of credit was $117.9 million and $139.5 million, respectively. These amounts consist primarily of commitments with maturities of less than three years, which have an immaterial carrying value. Trustmark holds collateral to support standby letters of credit when deemed necessary. As of March 31, 2025 and 2024, the fair value of collateral held was $25.7 million and $33.1 million, respectively.

ACL on Off-Balance Sheet Credit Exposures

Trustmark maintains a separate ACL on off-balance sheet credit exposures, including unfunded loan commitments and letters of credit, which is included on the accompanying consolidated balance sheets as of March 31, 2025 and December 31, 2024.

During the first quarter of 2024, Management decided to implement a performance trends qualitative factor for unfunded commitments. The same assumptions are applied in this calculation that the funded balances utilize with the addition of using the funding rates on the unfunded commitments. The performance trends qualitative factor reserve is then added to the other calculated reserve to get a total reserve for off-balance sheet credit exposures.

During the third quarter of 2024, Management implemented the External Factor – Credit Quality Review qualitative factor for unfunded commitments. The same assumptions are applied in this calculation that the funded balances utilize with the addition of using the funding rates on the unfunded commitments. The Credit Quality Review qualitative factor reserve is then added to the other calculated reserve to get a total reserve for off-balance sheet credit exposures.

Changes in the ACL on off-balance sheet credit exposures were as follows for the periods presented ($ in thousands):

Three Months Ended March 31,
2025 2024
Balance at beginning of period $ 29,392 $ 34,057
PCL, off-balance sheet credit exposures (2,831 ) (192 )
Balance at end of period $ 26,561 $ 33,865

Adjustments to the ACL on off-balance sheet credit exposures are recorded to PCL, off-balance sheet credit exposures. The decrease in the ACL on off-balance sheet credit exposures for the three months ended March 31, 2025 was primarily due to the decrease in required reserves as a result of a decrease in unfunded commitments coupled with the decrease in the quantitative reserve rate primarily related to commercial construction.

The decrease in the ACL on off-balance sheet credit exposures for the three months ended March 31, 2024 was primarily due to decrease in required reserves as a result of a decrease in unfunded commitments largely offset by an increase in required reserves as a result of implementing the performance trend qualitative reserve factor.

No credit loss estimate is reported for off-balance sheet credit exposures that are unconditionally cancellable by Trustmark or for undrawn amounts under such arrangements that may be drawn prior to the cancellation of the arrangement.

Legal Proceedings

Trustmark and its subsidiaries are parties to lawsuits and other claims that arise in the ordinary course of business. Some of the lawsuits assert claims related to the lending, collection, servicing, investment, trust and other business activities, and some of the lawsuits allege substantial claims for damages.

In accordance with FASB ASC Subtopic 450-20, “Loss Contingencies,” Trustmark will establish an accrued liability for any litigation matter if and when such matter presents loss contingencies that are both probable and reasonably estimable. At the present time, Trustmark believes, based on its evaluation and the advice of legal counsel, that a loss in any currently pending legal proceeding is not probable and a reasonable estimate cannot reasonably be made.

Note 14 – Earnings Per Share (EPS)

The following table reflects weighted-average shares used to calculate basic and diluted EPS for the periods presented (in thousands):

Three Months Ended March 31,
2025 2024
Basic shares 60,800 61,128
Dilutive shares 249 220
Diluted shares 61,049 61,348

Weighted-average antidilutive stock awards are excluded in determining diluted EPS. The following table reflects weighted-average antidilutive stock awards for the periods presented (in thousands):

Three Months Ended March 31,
2025 2024
Weighted-average antidilutive stock awards 35 —

Note 15 – Statements of Cash Flows

The following table reflects specific transaction amounts for the periods presented ($ in thousands):

Three Months Ended March 31,
2025 2024
Interest expense paid on deposits and borrowings $ 78,198 $ 98,327
Noncash transfers from loans to other real estate 3,438 2,228
Operating right-of-use assets resulting from lease liabilities 195 —

Note 16 – Shareholders’ Equity

Regulatory Capital

Trustmark and TNB are subject to minimum risk-based capital and leverage capital requirements, as described in the section captioned “Capital Adequacy” included in Part I. Item 1. – Business of Trustmark’s 2024 Annual Report, which are administered by the federal

bank regulatory agencies. These capital requirements, as defined by federal regulations, involve quantitative and qualitative measures of assets, liabilities and certain off-balance sheet instruments. Trustmark’s and TNB’s minimum risk-based capital requirements include a capital conservation buffer of 2.50%. Accumulated other comprehensive income (loss), net of tax, is not included in computing regulatory capital. Trustmark elected the five-year phase-in transition period (through December 31, 2024) related to adopting FASB ASU 2016-13 for regulatory capital purposes. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements of Trustmark and TNB and limit Trustmark’s and TNB’s ability to pay dividends. As of March 31, 2025, Trustmark and TNB exceeded all applicable minimum capital standards. In addition, Trustmark and TNB met applicable regulatory guidelines to be considered well-capitalized at March 31, 2025. To be categorized in this manner, Trustmark and TNB maintained, as applicable, minimum common equity Tier 1 risk-based capital, Tier 1 risk-based capital, total risk-based capital and Tier 1 leverage ratios as set forth in the accompanying table, and were not subject to any written agreement, order or capital directive, or prompt corrective action directive issued by their primary federal regulators to meet and maintain a specific capital level for any capital measures. There are no significant conditions or events that have occurred since March 31, 2025, which Management believes have affected Trustmark’s or TNB’s present classification.

The following table provides Trustmark’s and TNB’s actual regulatory capital amounts and ratios under regulatory capital standards in effect at March 31, 2025 and December 31, 2024 ($ in thousands):

Actual
Regulatory Capital Minimum To Be Well
Amount Ratio Requirement Capitalized
At March 31, 2025:
Common Equity Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation $ 1,746,998 11.63 % 7.00 % n/a
Trustmark National Bank 1,838,631 12.24 % 7.00 % 6.50 %
Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation $ 1,806,998 12.03 % 8.50 % n/a
Trustmark National Bank 1,838,631 12.24 % 8.50 % 8.00 %
Total Capital (to Risk Weighted Assets)
Trustmark Corporation $ 2,118,632 14.10 % 10.50 % n/a
Trustmark National Bank 2,026,479 13.49 % 10.50 % 10.00 %
Tier 1 Leverage (to Average Assets)
Trustmark Corporation $ 1,806,998 10.11 % 4.00 % n/a
Trustmark National Bank 1,838,631 10.29 % 4.00 % 5.00 %
At December 31, 2024:
Common Equity Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation $ 1,729,672 11.54 % 7.00 % n/a
Trustmark National Bank 1,828,044 12.20 % 7.00 % 6.50 %
Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation $ 1,789,672 11.94 % 8.50 % n/a
Trustmark National Bank 1,828,044 12.20 % 8.50 % 8.00 %
Total Capital (to Risk Weighted Assets)
Trustmark Corporation $ 2,094,874 13.97 % 10.50 % n/a
Trustmark National Bank 2,009,544 13.41 % 10.50 % 10.00 %
Tier 1 Leverage (to Average Assets)
Trustmark Corporation $ 1,789,672 9.99 % 4.00 % n/a
Trustmark National Bank 1,828,044 10.21 % 4.00 % 5.00 %

Stock Repurchase Program

On December 5, 2023, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2024, under which $50.0 million of Trustmark’s outstanding shares could be acquired through December 31, 2024. Under this authority, Trustmark repurchased 203 thousand shares of its common stock valued at $7.5 million during the twelve months ended December 31, 2024.

On December 3, 2024, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2025, under which $100.0 million of Trustmark’s outstanding shares may be acquired through December 31, 2025. The repurchase program, which is subject to market conditions and management discretion, will be implemented through open market repurchases or privately negotiated transactions. Under this authority, Trustmark repurchased 423 thousand shares of its common stock valued at $15.0 million during the three months ended March 31, 2025.

Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss)

The following table presents the net change in the components of accumulated other comprehensive income (loss) and the related tax effects allocated to each component for the periods presented ($ in thousands). The amortization of prior service cost, recognized net loss due to lump sum settlements and change in net actuarial loss are included in the computation of net periodic benefit cost (see Note 11 – Defined Benefit and Other Postretirement Benefits for additional details). Reclassification adjustments related to pension and other postretirement benefit plans are included in salaries and employee benefits and other expense in the accompanying consolidated statements of income (loss). Reclassification adjustments related to the cash flow hedge derivatives are included in interest and fees on LHFS and LHFI in the accompanying consolidated statements of income (loss).

Three Months Ended March 31, 2025 Three Months Ended March 31, 2024
Before Tax<br>Amount Tax (Expense)<br>Benefit Net of Tax<br>Amount Before Tax<br>Amount Tax (Expense)<br>Benefit Net of Tax<br>Amount
Securities available for sale and transferred<br>   securities:
Net unrealized holding gains (losses) arising <br>   during the period $ 32,599 $ (8,149 ) $ 24,450 $ (2,552 ) $ 638 $ (1,914 )
Change in net unrealized holding loss on <br>   securities transferred to held to maturity 3,425 (856 ) 2,569 3,661 (915 ) 2,746
Total securities available for sale <br>   and transferred securities 36,024 (9,005 ) 27,019 1,109 (277 ) 832
Pension and other postretirement benefit plans:
Reclassification adjustments for changes<br>   realized in net income:
Net change in prior service costs 4 (1 ) 3 28 (7 ) 21
Recognized net loss due to lump sum<br>   settlements (50 ) 12 (38 ) — — —
Change in net actuarial loss 71 (17 ) 54 95 (24 ) 71
Total pension and other postretirement<br>   benefit plans 25 (6 ) 19 123 (31 ) 92
Cash flow hedge derivatives:
Change in accumulated gain (loss) on effective<br>   cash flow hedge derivatives 7,879 (1,970 ) 5,909 (15,960 ) 3,990 (11,970 )
Reclassification adjustment for (gain) loss<br>   realized in net income 2,680 (670 ) 2,010 4,820 (1,205 ) 3,615
Total cash flow hedge derivatives 10,559 (2,640 ) 7,919 (11,140 ) 2,785 (8,355 )
Total other comprehensive income (loss) $ 46,608 $ (11,651 ) $ 34,957 $ (9,908 ) $ 2,477 $ (7,431 )

The following table presents the changes in the balances of each component of accumulated other comprehensive income (loss) for the periods presented ($ in thousands). All amounts are presented net of tax.

Securities <br>Available for Sale <br>and Transferred <br>Securities Defined<br>Benefit <br>Pension Items Cash Flow <br>Hedge <br>Derivatives Total
Balance at January 1, 2025 $ (66,885 ) $ (4,721 ) $ (12,053 ) $ (83,659 )
Other comprehensive income (loss) before<br>   reclassification 27,019 — 5,909 32,928
Amounts reclassified from accumulated other <br>   comprehensive income (loss) — 19 2,010 2,029
Net other comprehensive income (loss) 27,019 19 7,919 34,957
Balance at March 31, 2025 $ (39,866 ) $ (4,702 ) $ (4,134 ) $ (48,702 )
Balance at January 1, 2024 $ (204,670 ) $ (6,075 ) $ (8,978 ) $ (219,723 )
Other comprehensive income (loss) before<br>   reclassification 832 — (11,970 ) (11,138 )
Amounts reclassified from accumulated other <br>   comprehensive income (loss) — 92 3,615 3,707
Net other comprehensive income (loss) 832 92 (8,355 ) (7,431 )
Balance at March 31, 2024 $ (203,838 ) $ (5,983 ) $ (17,333 ) $ (227,154 )

Note 17 – Fair Value

Financial Instruments Measured at Fair Value

The methodologies Trustmark uses in determining the fair values are based primarily on the use of independent, market-based data to reflect a value that would be reasonably expected upon exchange of the position in an orderly transaction between market participants at the measurement date. The predominant portion of assets that are stated at fair value are of a nature that can be valued using prices or inputs that are readily observable through a variety of independent data providers. The providers selected by Trustmark for fair valuation data are widely recognized and accepted vendors whose evaluations support the pricing functions of financial institutions, investment and mutual funds, and portfolio managers. Trustmark has documented and evaluated the pricing methodologies used by the vendors and maintains internal processes that regularly test valuations for anomalies.

Trustmark utilizes an independent pricing service to advise it on the carrying value of the securities available for sale portfolio. As part of Trustmark’s procedures, the price provided from the service is evaluated for reasonableness given market changes. When a questionable price exists, Trustmark investigates further to determine if the price is valid. If needed, other market participants may be utilized to determine the correct fair value. Trustmark has also reviewed and confirmed its determinations in thorough discussions with the pricing source regarding their methods of price discovery.

Mortgage loan commitments are valued based on the securities prices of similar collateral, term, rate and delivery for which the loan is eligible to deliver in place of the particular security. Trustmark acquires a broad array of mortgage security prices that are supplied by a market data vendor, which in turn accumulates prices from a broad list of securities dealers. Prices are processed through a mortgage pipeline management system that accumulates and segregates all loan commitment and forward-sale transactions according to the similarity of various characteristics (maturity, term, rate, and collateral). Prices are matched to those positions that are deemed to be an eligible substitute or offset (i.e., “deliverable”) for a corresponding security observed in the marketplace.

Trustmark estimates the fair value of the MSR through the use of prevailing market participant assumptions and market participant valuation processes. This valuation is periodically tested and validated against other third-party firm valuations.

Trustmark obtains the fair value of interest rate swaps from a third-party pricing service that uses an industry standard discounted cash flow methodology. In addition, credit valuation adjustments are incorporated in the fair values to account for potential nonperformance risk. In adjusting the fair value of its interest rate swap contracts for the effect of nonperformance risk, Trustmark has considered any applicable credit enhancements such as collateral postings, thresholds, mutual puts, and guarantees. In conjunction with the FASB’s fair value measurement guidance, Trustmark made an accounting policy election to measure the credit risk of these derivative financial instruments, which are subject to master netting agreements, on a net basis by counterparty portfolio.

Trustmark has determined that the majority of the inputs used to value its interest rate swaps offered to qualified commercial borrowers fall within Level 2 of the fair value hierarchy, while the credit valuation adjustments associated with these derivatives utilize Level 3 inputs, such as estimates of current credit spreads. Trustmark has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its interest rate swaps and has determined that the credit valuation adjustment is not significant to the overall valuation of these derivatives. As a result, Trustmark classifies its interest rate swap valuations in Level 2 of the fair value hierarchy.

Trustmark also utilizes 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 the MSR attributable to interest rates. Fair values of these derivative instruments are determined from quoted prices in active markets for identical assets therefore allowing them to be classified within Level 1 of the fair value hierarchy. In addition, Trustmark utilizes derivative instruments such as interest rate lock commitments in its mortgage banking area which lack observable inputs for valuation purposes resulting in their inclusion in Level 3 of the fair value hierarchy.

At this time, Trustmark presents no fair values that are derived through internal modeling. Should positions requiring fair valuation arise that are not relevant to existing methodologies, Trustmark will make every reasonable effort to obtain market participant assumptions, or independent evaluation.

Financial Assets and Liabilities

The following tables summarize financial assets and financial liabilities measured at fair value on a recurring basis at March 31, 2025 and December 31, 2024, segregated by the level of valuation inputs within the fair value hierarchy utilized to measure fair value ($ in thousands). There were no transfers between fair value levels for the three months ended March 31, 2025 and the year ended December 31, 2024.

March 31, 2025
Total Level 1 Level 2 Level 3
U.S. Treasury securities $ 212,463 $ 212,463 $ — $ —
U.S. Government agency obligations 49,325 — 49,325 —
Mortgage-backed securities 1,475,674 — 1,475,674 —
Securities available for sale 1,737,462 212,463 1,524,999 —
LHFS 188,689 — 188,689 —
MSR 134,395 — — 134,395
Other assets - derivatives 17,469 1,137 15,544 788
Other liabilities - derivatives 28,768 39 28,729 —
December 31, 2024
--- --- --- --- --- --- --- --- ---
Total Level 1 Level 2 Level 3
U.S. Treasury securities $ 202,669 $ 202,669 $ — $ —
U.S. Government agency obligations 38,807 — 38,807 —
Mortgage-backed securities 1,451,058 — 1,451,058 —
Securities available for sale 1,692,534 202,669 1,489,865 —
LHFS 200,307 — 200,307 —
MSR 139,317 — — 139,317
Other assets - derivatives 15,397 18 15,150 229
Other liabilities - derivatives 41,355 2,183 39,172 —

The changes in Level 3 assets measured at fair value on a recurring basis for the three months ended March 31, 2025 and 2024 are summarized as follows ($ in thousands):

MSR Other Assets -<br>Derivatives
Balance, January 1, 2025 $ 139,317 $ 229
Total net (loss) gain included in Mortgage banking, net (1) (7,990 ) 748
Additions 3,068 —
Sales — (189 )
Balance, March 31, 2025 $ 134,395 $ 788
The amount of total gains (losses) for the period included in earnings<br>   that are attributable to the change in unrealized gains or <br>   losses still held at March 31, 2025 $ (5,928 ) $ 345
Balance, January 1, 2024 $ 131,870 $ 845
Total net (loss) gain included in Mortgage banking, net (1) 3,197 1,047
Additions 2,977 —
Sales — (735 )
Balance, March 31, 2024 $ 138,044 $ 1,157
The amount of total gains (losses) for the period included in<br>   earnings that are attributable to the change in unrealized<br>   gains or losses still held at March 31, 2024 $ 5,123 $ 927
  • (1)

Trustmark may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP. Assets at March 31, 2025, which have been measured at fair value on a nonrecurring basis, include collateral-dependent LHFI. A loan is collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided substantially through the sale of the collateral. The expected credit loss for collateral-dependent loans is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral, adjusted for the estimated cost to sell. Fair value estimates for collateral-dependent loans are derived from appraised values based on the current market value or as is value of the collateral, normally from recently received and reviewed appraisals. Current appraisals are ordered on an annual basis based on the inspection date or more often if market conditions necessitate. Appraisals are obtained from state-certified appraisers and are based on certain assumptions, which may include construction or development status and the highest and best use of the property. These appraisals are reviewed by Trustmark’s Appraisal Review Department to ensure they are acceptable, and values are adjusted down for costs associated with asset disposal. At March 31, 2025, Trustmark had outstanding balances of $35.0 million with a related ACL of $14.0 million in collateral-dependent LHFI, compared to outstanding balances of $37.1 million with a related ACL of $13.7 million in collateral-dependent LHFI at December 31, 2024. The collateral-dependent LHFI are classified as Level 3 in the fair value hierarchy.

Nonfinancial Assets and Liabilities

Certain nonfinancial assets measured at fair value on a nonrecurring basis include foreclosed assets (upon initial recognition or subsequent impairment), nonfinancial assets and nonfinancial liabilities measured at fair value in the second step of a goodwill impairment test, and intangible assets and other nonfinancial long-lived assets measured at fair value for impairment assessment.

Other real estate includes assets that have been acquired in satisfaction of debt through foreclosure and is recorded at the fair value less cost to sell (estimated fair value) at the time of foreclosure. Fair value is based on independent appraisals and other relevant factors. In the determination of fair value subsequent to foreclosure, Management also considers other factors or recent developments, such as changes in market conditions from the time of valuation and anticipated sales values considering plans for disposition, which could result in an adjustment to lower the collateral value estimates indicated in the appraisals. Periodic revaluations are classified as Level 3 in the fair value hierarchy since assumptions are used that may not be observable in the market.

Foreclosed assets of $533 thousand were remeasured during the first three months of 2025, requiring write-downs of $111 thousand to reach their current fair values compared to $194 thousand of foreclosed assets that were remeasured during the first three months of 2024, requiring write-downs of $34 thousand.

Fair Value of Financial Instruments

FASB ASC Topic 825, “Financial Instruments,” requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis.

The carrying amounts and estimated fair values of financial instruments at March 31, 2025 and December 31, 2024, are as follows ($ in thousands):

March 31, 2025 December 31, 2024
Carrying<br>Value Estimated<br>Fair Value Carrying<br>Value Estimated<br>Fair Value
Financial Assets:
Level 2 Inputs:
Cash and short-term investments $ 587,362 $ 587,362 $ 567,251 $ 567,251
Securities held to maturity 1,315,053 1,259,898 1,335,385 1,259,107
Level 3 Inputs:
Net LHFI 13,074,459 13,040,321 12,929,672 12,886,168
Financial Liabilities:
Level 2 Inputs:
Deposits 15,080,704 15,070,082 15,108,175 15,098,854
Federal funds purchased and securities sold under<br>   repurchase agreements 360,080 360,080 324,008 324,008
Other borrowings 404,815 404,815 301,541 301,541
Subordinated notes 123,757 122,188 123,702 120,625
Junior subordinated debt securities 61,856 50,103 61,856 49,794

Fair Value Option

Trustmark has elected to account for its LHFS under the fair value option, with interest income on these LHFS reported in interest and fees on LHFS and LHFI. The fair value of the LHFS is determined using quoted prices for a similar asset, adjusted for specific attributes of that loan. The LHFS are actively managed and monitored and certain market risks of the loans may be mitigated through the use of derivatives. These derivative instruments are carried at fair value with changes in fair value recorded as noninterest income (loss) in mortgage banking, net. The changes in the fair value of LHFS are largely offset by changes in the fair value of the derivative instruments. For the three months ended March 31, 2025, a net gain of $643 thousand was recorded as noninterest income (loss) in mortgage banking, net for changes in the fair value of LHFS accounted for under the fair value option, compared to net loss of $1.5 million for the three months ended March 31, 2024. Interest and fees on LHFS and LHFI for the three months ended March 31, 2025 included $1.9 million of interest earned on LHFS accounted for under the fair value option, compared to $1.7 million for the three months ended March 31, 2024. Election of the fair value option allows Trustmark to reduce the accounting volatility that would otherwise result from the asymmetry created by accounting for the financial instruments at the lower of cost or fair value and the derivatives at fair value. The fair value option election does not apply to GNMA optional repurchase loans which do not meet the requirements under FASB ASC Topic 825 to be accounted for under the fair value option. GNMA optional repurchase loans totaled $96.0 million and $97.6 million at March 31, 2025 and December 31, 2024, respectively, and are included in LHFS on the accompanying consolidated balance sheets. For additional information regarding GNMA optional repurchase loans, please see the section captioned “Past Due LHFS” included in Note 3 – LHFI and ACL, LHFI.

The following table provides information about the fair value and the contractual principal outstanding of the LHFS accounted for under the fair value option at March 31, 2025 and December 31, 2024 ($ in thousands):

March 31, 2025 December 31, 2024
Fair value of LHFS $ 92,672 $ 102,676
LHFS contractual principal outstanding 90,961 105,322
Fair value less unpaid principal $ 1,711 $ (2,646 )

Note 18 – Derivative Financial Instruments

Derivatives Designated as Hedging Instruments

Trustmark engages in a cash flow hedging program to add stability to interest income and to manage its exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of fixed-rate amounts from a counterparty in exchange for Trustmark making variable-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate floor spreads designated as cash flow hedges involve the receipt of variable-rate amounts if interest rates fall below the purchased floor strike rate on the contract and payments of variable-rate amounts if interest rates fall below the sold floor strike rate on the contract. Trustmark uses such derivatives to hedge the variable cash flows associated with existing and anticipated variable-rate loan assets. At March 31, 2025, the aggregate notional value of Trustmark's interest rate swaps and floor spreads designated as cash flow hedges totaled $1.495 billion compared to $1.500 billion at December 31, 2024.

Trustmark records any gains or losses on these cash flow hedges in accumulated other comprehensive income (loss). Gains and losses on derivatives representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with Trustmark’s accounting policy election. The earnings recognition of excluded components included in interest and fees on LHFS and LHFI totaled $130 thousand of amortization expense for the three months ended March 31, 2025, compared to $85 thousand of amortization expense for the three months ended March 31, 2024. As interest payments are received on Trustmark's variable-rate assets, amounts reported in accumulated other comprehensive income (loss) are reclassified into interest and fees on LHFS and LHFI in the accompanying consolidated statements of income (loss) during the same period. During the next twelve months, Trustmark estimates that $6.2 million will be reclassified as a reduction to interest and fees on LHFS and LHFI. This amount could differ due to changes in interest rates, hedge de-designations or the addition of other hedges.

Derivatives not Designated as Hedging Instruments

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 economically hedges changes in the fair value of the MSR attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting. The total notional amount of these derivative instruments was $324.0 million at March 31, 2025 compared to $311.5 million at December 31, 2024. Changes in the fair value of these exchange-traded derivative instruments are recorded as noninterest income (loss) in mortgage banking, net and are offset by changes in the fair value of the MSR. The impact of this strategy resulted in a net negative ineffectiveness of $581 thousand and $1.1 million for the three months ended March 31, 2025 and 2024, respectively.

As part of Trustmark’s risk management strategy in the mortgage banking area, derivative instruments such as forward sales contracts are utilized. Trustmark’s obligations under forward sales contracts consist of commitments to deliver mortgage loans, originated and/or purchased, in the secondary market at a future date. Changes in the fair value of these derivative instruments are recorded as noninterest income (loss) in mortgage banking, net and are offset by changes in the fair value of LHFS. Trustmark’s off-balance sheet obligations under these derivative instruments totaled $117.5 million at March 31, 2025, with a negative valuation adjustment of $513 thousand, compared to $110.0 million, with a positive valuation adjustment of $679 thousand, at December 31, 2024.

Trustmark also utilizes derivative instruments such as interest rate lock commitments in its mortgage banking area. Interest rate lock commitments are residential mortgage loan commitments with customers, which guarantee a specified interest rate for a specified time period. Changes in the fair value of these derivative instruments are recorded as noninterest income (loss) in mortgage banking, net and are offset by the changes in the fair value of forward sales contracts. Trustmark’s off-balance sheet obligations under these derivative instruments totaled $84.0 million at March 31, 2025, with a positive valuation adjustment of $788 thousand, compared to $52.1 million, with a positive valuation adjustment of $229 thousand, at December 31, 2024.

Trustmark offers certain derivatives products directly to qualified commercial lending clients seeking to manage their interest rate risk. Trustmark economically hedges interest rate swap transactions executed with commercial lending clients by entering into offsetting interest rate swap transactions with institutional derivatives market participants. Derivatives transactions executed as part of this program are not designated as qualifying hedging relationships and are, therefore, carried at fair value with the change in fair value recorded as noninterest income (loss) in bank card and other fees. Because these derivatives have mirror-image contractual terms, in addition to collateral provisions which mitigate the impact of non-performance risk, the changes in fair value are expected to substantially offset. The offsetting interest rate swap transactions are either cleared through the Chicago Mercantile Exchange for clearable transactions or booked directly with institutional derivatives market participants for non-clearable transactions. The Chicago Mercantile Exchange rules legally characterize variation margin collateral payments made or received for centrally cleared interest rate swaps as settlements rather than collateral. As a result, centrally cleared interest rate swaps included in other assets and other liabilities are presented on a net basis in the accompanying consolidated balance sheets. At March 31, 2025, Trustmark had interest rate swaps with an aggregate notional amount of $1.874 billion related to this program, compared to $1.819 billion at December 31, 2024.

Credit-risk-related Contingent Features

Trustmark has agreements with its financial institution counterparties that contain provisions where if Trustmark defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then Trustmark could also be declared in default on its derivatives obligations.

At March 31, 2025, there was no termination value of interest rate swaps in a liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements compared to $568 thousand at December 31, 2024. At March 31, 2025 and December 31, 2024, Trustmark had posted collateral of $2.1 million and $1.5 million, respectively, against its obligations because of negotiated thresholds and minimum transfer amounts under these agreements. If Trustmark had breached any of these triggering provisions at March 31, 2025, it could have been required to settle its obligations under the agreements at the termination value.

Credit risk participation agreements arise when Trustmark contracts with other financial institutions, as a guarantor or beneficiary, to share credit risk associated with certain interest rate swaps. These agreements provide for reimbursement of losses resulting from a third-party default on the underlying swap. At March 31, 2025, Trustmark had entered into eleven risk participation agreements as a beneficiary with aggregate notional amounts of $96.2 million compared to eleven risk participation agreements as a beneficiary with an aggregate notional amount of $83.9 million at December 31, 2024. At March 31, 2025, Trustmark had entered into twenty-nine risk participation agreements as a guarantor with aggregate notional amounts of $238.0 million compared to twenty-eight risk participation agreements as a guarantor with aggregate notional amounts of $229.1 million at December 31, 2024. The aggregate fair values of these risk participation agreements were immaterial at both March 31, 2025 and December 31, 2024.

Tabular Disclosures

The following tables disclose the fair value of derivative instruments in Trustmark’s consolidated balance sheets at March 31, 2025 and December 31, 2024 as well as the effect of these derivative instruments on Trustmark’s results of operations for the periods presented ($ in thousands):

March 31, 2025 December 31, 2024
Derivatives in hedging relationships:
Interest rate contracts:
Interest rate swaps included in other assets (1) $ 1,677 $ 74
Interest rate floors included in other assets 2,043 1,582
Interest rate swaps included in other liabilities (1) 1,781 5,958
Derivatives not designated as hedging instruments:
Interest rate contracts:
Exchange traded purchased options included in other assets $ 78 $ 18
OTC written options (rate locks) included in other assets 788 229
Futures contracts included in other assets 1,059 —
Interest rate swaps included in other assets (1) 11,796 13,478
Credit risk participation agreements included in other assets 28 16
Futures contracts included in other liabilities — 1,972
Forward contracts included in other liabilities (513 ) (679 )
Exchange traded written options included in other liabilities 39 211
Interest rate swaps included in other liabilities (1) 27,355 33,817
Credit risk participation agreements included in other liabilities 106 76
  • (1)
Three Months Ended March 31,
2025 2024
Derivatives in hedging relationships:
Amount of gain (loss) reclassified from accumulated other <br> comprehensive income (loss) and recognized in <br> interest and fees on LHFS and LHFI $ (2,680 ) $ (4,820 )
Derivatives not designated as hedging instruments:
Amount of gain (loss) recognized in mortgage banking, net $ 4,715 $ (5,126 )
Amount of gain (loss) recognized in bank card and other fees (88 ) (56 )

The following table discloses the amount included in other comprehensive income (loss), net of tax, for derivative instruments designated as cash flow hedges for the periods presented ($ in thousands):

Three Months Ended March 31,
2025 2024
Derivatives in cash flow hedging relationship
Amount of gain (loss) recognized in other comprehensive <br>   income (loss), net of tax $ 5,909 $ (11,970 )

Trustmark’s interest rate swap derivative instruments are subject to master netting agreements, and therefore, eligible for offsetting in the consolidated balance sheets. Trustmark has elected to not offset any derivative instruments in its consolidated balance sheets. Information about financial instruments that are eligible for offset in the consolidated balance sheets as of March 31, 2025 and December 31, 2024 is presented in the following tables ($ in thousands):

Offsetting of Derivative Assets
As of March 31, 2025
Gross Amounts Not Offset in the<br>Statement of Financial Position
Gross <br>Amounts of <br>Recognized <br>Assets Gross Amounts<br>Offset in the<br>Statement of<br>Financial Position Net Amounts of<br>Assets presented in<br>the Statement of<br>Financial Position Financial <br>Instruments Cash Collateral <br>Received Net Amount
Derivatives $ 15,516 $ — $ 15,516 $ (7,160 ) $ (1,000 ) $ 7,356
Offsetting of Derivative Liabilities
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
As of March 31, 2025
Gross Amounts Not Offset in the <br>Statement of Financial Position
Gross <br>Amounts of <br>Recognized<br>Liabilities Gross Amounts<br>Offset in the<br>Statement of<br>Financial Position Net Amounts of <br>Liabilities presented <br>in the Statement of <br>Financial Position Financial<br>Instruments Cash Collateral<br>Posted Net Amount
Derivatives $ 29,136 $ — $ 29,136 $ (7,160 ) $ (2,110 ) $ 19,866
Offsetting of Derivative Assets
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
As of December 31, 2024
Gross Amounts Not Offset in the <br>Statement of Financial Position
Gross <br>Amounts of <br>Recognized <br>Assets Gross Amounts<br>Offset in the<br>Statement of<br>Financial Position Net Amounts of<br>Assets presented in<br>the Statement of<br>Financial Position Financial <br>Instruments Cash Collateral<br>Received Net Amount
Derivatives $ 15,134 $ — $ 15,134 $ (7,956 ) $ (2,000 ) $ 5,178
Offsetting of Derivative Liabilities
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
As of December 31, 2024
Gross Amounts Not Offset in the <br>Statement of Financial Position
Gross <br>Amounts of <br>Recognized<br>Liabilities Gross Amounts <br>Offset in the <br>Statement of <br>Financial Position Net Amounts of<br>Liabilities presented<br>in the Statement of<br>Financial Position Financial <br>Instruments Cash Collateral<br>Posted Net Amount
Derivatives $ 39,775 $ — $ 39,775 $ (7,956 ) $ (1,460 ) $ 30,359

Note 19 – Segment Information

Trustmark’s management reporting structure includes two segments: General Banking and Wealth Management. For a complete overview of Trustmark’s operating segments, see Note 21 – Segment Information included in Part II. Item 8. – Financial Statements and Supplementary Data, of Trustmark’s 2024 Annual Report.

Trustmark's reportable segments are determined by the Chief Executive Officer (CEO), who is the designated chief operating decision maker (CODM), based upon information provided about Trustmark's products and services offered. The reportable segments are also distinguished by the level of information provided to the CEO, who uses such information to review performance of various lines of business, which are then aggregated if operating performance, products and services and customers are similar. The CEO evaluates the financial performance of Trustmark's lines of business, such as evaluating revenue streams, significant expenses and budget to actual results, in assessing the performance of Trustmark's reportable segments and in the determination of allocating resources.

The Insurance Segment is included in discontinued operations for the three months ended March 31, 2024 in the accompanying consolidated balance sheets and the consolidated statements of income (loss). See Note 2 - Discontinued Operations for additional information about discontinued operations.

The accounting policies of each reportable segment are the same as those of Trustmark except for its internal allocations. Noninterest expenses for back-office operations support are allocated to segments based on estimated uses of those services. Trustmark measures the net interest income of its business segments with a process that assigns cost of funds or earnings credit on a matched-term basis. This process, called “funds transfer pricing”, charges an appropriate cost of funds to assets held by a business unit, or credits the business unit for potential earnings for carrying liabilities. The net of these charges and credits flows through to the General Banking Segment, which contains the management team responsible for determining TNB’s funding and interest rate risk strategies.

The following tables disclose financial information by reportable segment for the periods presented ($ in thousands):

Three Months Ended March 31, 2025 General Banking Wealth Management Consolidated
Interest income $ 226,158 $ 2,989 $ 229,147
Interest expense 76,297 795 77,092
Funds transfer pricing, net 460 (460 ) —
Net interest income 150,321 1,734 152,055
PCL 5,297 (3 ) 5,294
Net interest income after PCL 145,024 1,737 146,761
Service charges on deposit accounts 10,615 21 10,636
Bank card and other fees 7,625 39 7,664
Mortgage banking, net 8,771 — 8,771
Wealth management 181 9,362 9,543
Other, net 5,918 52 5,970
Internal allocations (96 ) 96 —
Noninterest income (loss) 33,014 9,570 42,584
Salaries and employee benefits 62,871 5,621 68,492
Services and fees 25,599 648 26,247
Other segment expenses (1) 28,847 425 29,272
Internal allocations (1,482 ) 1,482 —
Noninterest expense 115,835 8,176 124,011
Income from continuing operations before income taxes 62,203 3,131 65,334
Income taxes from continuing operations 10,922 779 11,701
Consolidated income from continuing operations $ 51,281 $ 2,352 $ 53,633
Selected Financial Information
Total assets from continuing operations $ 18,098,364 $ 197,839 $ 18,296,203
Depreciation and amortization from continuing operations $ 8,509 $ 62 $ 8,571

(1)

Other segment expenses for the General Banking Segment include net occupancy-premises, equipment expense, FDIC assessment expense, other real estate expense, net, loan expense and other miscellaneous expense. Other segment expenses for the Wealth Management Segment include net occupancy-premises, equipment expense, FDIC assessment expense, loan expense and other miscellaneous expense.

Three Months Ended March 31, 2024 General Banking Wealth Management Consolidated
Interest income $ 227,571 $ 2,269 $ 229,840
Interest expense 96,502 508 97,010
Funds transfer pricing, net 445 (445 ) —
Net interest income 131,514 1,316 132,830
PCL 7,348 168 7,516
Net interest income after PCL 124,166 1,148 125,314
Service charges on deposit accounts 10,936 22 10,958
Bank card and other fees 7,392 36 7,428
Mortgage banking, net 8,915 — 8,915
Wealth management 189 8,763 8,952
Other, net 3,060 42 3,102
Internal allocations (94 ) 94 —
Noninterest income (loss) 30,398 8,957 39,355
Salaries and employee benefits 60,103 5,384 65,487
Services and fees 23,739 692 24,431
Other segment expenses (1) 29,287 459 29,746
Internal allocations (1,456 ) 1,456 —
Noninterest expense 111,673 7,991 119,664
Income from continuing operations before income taxes 42,891 2,114 45,005
Income taxes from continuing operations 6,309 523 6,832
Consolidated income from continuing operations $ 36,582 $ 1,591 $ 38,173
Selected Financial Information
Total assets from continuing operations $ 18,125,354 $ 178,165 $ 18,303,519
Depreciation and amortization from continuing operations $ 8,367 $ 62 $ 8,429

(1)

Other segment expenses for the General Banking Segment include net occupancy-premises, equipment expense, FDIC assessment expense, other real estate expense, net, loan expense and other miscellaneous expense. Other segment expenses for the Wealth Management Segment include net occupancy-premises, equipment expense, FDIC assessment expense, loan expense and other miscellaneous expense.

Note 20 – Accounting Policies Recently Adopted and Pending Accounting Pronouncements

Accounting Policies Recently Adopted

Except for the changes detailed below, Trustmark has consistently applied its accounting policies to all periods presented in the accompanying consolidated financial statements.

ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” Issued in November 2023, ASU 2023-07 is intended to improve disclosures about a public entity’s reportable segments and address requests from investors and other allocators of capital for additional, more detailed information about a reportable segment’s expenses. The amendments of ASU 2023-07 require a public entity to disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss, and an amount for other segment items by reportable segment and a description of its composition. The other segment items category is the difference between segment revenue less the significant expenses disclosed and each reported measure of segment profit or loss. ASU 2023-07 also requires a public entity to provide all annual disclosures about a reportable segment’s profit or loss and assets currently required under FASB ASC Topic 280 in interim periods. The amendments of ASU 2023-07 clarify that if the CODM uses more than one measure of a segment's profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit. However, at least one of the reported segment profit or loss measures (or the single reported measure if only one is disclosed) should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity's consolidated financial statements. ASU 2023-07 requires a public entity to disclose the title and position of the CODM, together with an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. In addition, ASU 2023-07 requires that a public entity with a single reportable segment provide all the disclosures required by the amendments of ASU 2023-07 and all existing segment disclosures in FASB ASC Topic 280. The amendments of ASU 2023-07 were effective for fiscal years beginning after December 15,

2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments in ASU 2023-07 should be applied retrospectively to all periods presented on the financial statements. Upon implementation, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. Trustmark adopted the amendments of ASU 2023-07 related to annual disclosure requirements effective January 1, 2024, and the newly required annual disclosures were included in Note 21 – Segment Information of the 2024 Annual Report. Trustmark adopted the amendments of ASU 2023-07 related to interim disclosure requirements effective January 1, 2025, and the newly required interim disclosures are included in Note 19 - Segment Information of this report. Adoption of ASU 2023-07 did not have a material impact to Trustmark’s consolidated financial statements or results of operations.

ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” Issued in December 2023, ASU 2023-09 is intended to improve the disclosures for income taxes to address requests from investors, lenders, creditors and other allocators of capital (collectively, "investors") that use the financial statements to make capital allocation decisions. During the FASB's 2021 agenda consultation process and other stakeholder outreach, investors highlighted that the current system of income tax disclosures does not provide enough information to understand the tax provision for an entity that operates in multiple jurisdictions. Investors currently rely on the rate reconciliation table and other disclosures, including total income taxes paid in the statement of cash flows, to evaluate income tax risks and opportunities. The amendments in ASU 2023-09 will require consistent categories and greater disaggregation of information in the rate reconciliation disclosure as well as disclosure of income taxes paid disaggregated by jurisdiction. The amendments of ASU 2023-09 are effective for annual periods beginning after December 15, 2024, and early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. Trustmark adopted the amendments of ASU 2023-09 effective January 1, 2025, and will include the required disclosures in its Annual Report on Form 10-K for the year ending December 31, 2025. Trustmark is currently evaluating the changes to disclosures required by ASU 2023-09; however, adoption of ASU 2023-09 is not expected to have a material impact to Trustmark’s consolidated financial statements or results of operations.

Pending Accounting Pronouncements

ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” Issued in November 2024, ASU 2024-03 with the objective of providing investors with more decision-useful information regarding a public business entity's expenses by enhancing disclosures on income statement expenses. Investor feedback indicated a strong preference for the disclosure of disaggregated financial reporting information as a top priority for the FASB. Detailed knowledge of an entity's expenses is crucial for understanding its prospects for future cash flows and for making performance comparisons over time and with other entities. Investors emphasized that information regarding cost of sales, selling, general, and administrative expenses, employee compensation costs, depreciation and amortization, and research and development expenditure would enhance their comprehension of an entity's cost structure and ability to forecast future cash flows. The ASU applies exclusively to public business entities and mandates additional disclosures about specific expense categories on both annual and interim bases in the notes to financial statements that are not currently required. The amendments do not alter or eliminate existing expense disclosure requirements nor change requirements for presenting expenses on the face of the income statement. However, they do specify that certain existing disclosures must now appear in the same tabular format as the new disaggregation requirements. The FASB issued ASU 2025-01 in January 2025, clarifying that the amendments in ASU 2024-03 are effective for public business entities for annual reporting periods beginning after December 15, 2026, and for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. Trustmark intends to adopt the amendments of ASU 2024-03 effective January 1, 2027, and will include the required annual disclosures in its Annual Report on Form 10-K for the year ending December 31, 2027, and required interim disclosures in its Quarterly Report on Form 10-Q for the period ending March 31, 2028. Trustmark is currently evaluating the changes to disclosures required by ASU 2024-03; however, adoption of ASU 2024-03 is not expected to have a material impact to Trustmark’s consolidated financial statements or results of operations.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following provides a narrative discussion and analysis of Trustmark Corporation’s (Trustmark) financial condition and results of operations. This discussion should be read in conjunction with the unaudited consolidated financial statements and the supplemental financial data included in Part I. Item 1. – Financial Statements of this report.

Description of Business

Trustmark, a Mississippi business corporation incorporated in 1968, is a bank holding company headquartered in Jackson, Mississippi. Trustmark’s principal subsidiary is Trustmark National Bank (TNB), initially chartered by the State of Mississippi in 1889. At March 31, 2025, TNB had total assets of $18.294 billion, which represented approximately 99.99% of the consolidated assets of Trustmark.

Through TNB and its other subsidiaries, Trustmark operates as a financial services organization providing banking and other financial solutions through offices and 2,506 full-time equivalent associates (measured at March 31, 2025) located in the states of Alabama, Florida (primarily in the northwest or “Panhandle” region of that state, which is referred to herein as Trustmark’s Florida market), Georgia (primarily in Atlanta, which is referred to herein as Trustmark's Georgia market), Mississippi, Tennessee (in the Memphis and Northern Mississippi regions, which are collectively referred to herein as Trustmark’s Tennessee market), and Texas (primarily in Houston, which is referred to herein as Trustmark’s Texas market). Trustmark’s operations are managed along two operating segments: General Banking Segment and Wealth Management Segment. For a complete overview of Trustmark’s business, see the section captioned “The Corporation” included in Part I. Item 1. – Business of Trustmark’s Annual Report on Form 10-K for its fiscal year ended December 31, 2024 (2024 Annual Report).

Executive Overview

Trustmark's financial results for the first three months of 2025 reflected continued growth in loans held for investment (LHFI), stable credit quality and an attractive deposit base. Trustmark's capital position remained solid, reflecting the consistent profitability of its diversified financial services businesses. Trustmark continues efforts to expand customer relationships and diligently manage expenses. With robust capital, liquidity and profitability, Trustmark is well-positioned to compete in changing economic conditions and create long-term value for its shareholders. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.24 per share. The dividend is payable June 15, 2025, to shareholders of record on June 1, 2025.

Recent Economic and Industry Developments

Economic activity improved slightly during the first three months of 2025; however, economic concerns remain as a result of the cumulative weight of uncertainty regarding the potential economic impact of geopolitical developments, such as the conflicts in Ukraine and the Middle East, inflation, other economic and industry volatility, the current United States presidential administration's policies, higher energy prices and broader price pressures. Doubts surrounding the near-term direction of global markets and the potential impact on the United States economy are expected to persist for the near term. While Trustmark's customer base is wholly domestic, international economic conditions affect domestic economic conditions, and thus may have an impact upon Trustmark's financial condition or results of operations.

Market interest rates remained elevated during most of 2024. In September 2024, the FRB began lowering the target federal funds rate making multiple decreases during the fourth quarter of 2024 to a range of 4.25% to 4.50% as of December 2024, based on its confidence that inflation was moving substantially toward 2.00% and that the risks to achieving the FRB's employment and inflation goals were roughly balanced. In addition, in September 2024, the FRB made the first of multiple reductions in the rate it pays on reserves, lowering the rate to 4.40% as of December 2024. At the January and March 2025 meetings of the FRB's Federal Open Market Committee, the FRB determined to leave the target federal funds rate unchanged at a range of 4.25% to 4.50% and to maintain the rate it pays on reserves at 4.40%. Prior period rate increases increased the competitive pressures on the deposit cost of funds. While rate cuts potentially reduced those competitive pressures, they increased pressure on Trustmark's net interest margin, a key component to its financial results. It is not possible to predict the direction, pace or magnitude of further changes, if any, in interest rates, or the impact any such rate changes will have on Trustmark's results of operations.

In the February 2025 and April 2025 “Summary of Commentary on Current Economic Conditions by Federal Reserve District,” the twelve Federal Reserve Districts’ reports suggested that during the reporting periods (covering the periods from January 6, 2025 through February 24, 2025 and February 25, 2025 through April 14, 2025) economic activity rose slightly, but uncertainty around international trade policy was pervasive. Reports by the twelve Federal Reserve Districts (Districts) noted the following during the reporting periods:

  • Consumer spending was lower on balance, with reports of solid demand for essential goods mixed with increased price sensitivity for discretionary items, particularly among lower-income shoppers. Most Districts saw moderate to robust sales of vehicles and of some nondurables, generally attributed to a rush to purchase ahead of tariff-related price increases. Both leisure and business travel were down on balance, with several Districts noting a decline in international visitors. Manufacturing activity was mixed, with a majority of Districts reporting slight to modest increases in the February 2025 report and two-thirds of Districts reporting manufacturing activity was little changed or had declined in the April 2025 report. Contacts in manufacturing expressed concerns over the potential impact of looming trade policy changes.

  • Residential real estate markets were mixed with reports pointing to ongoing inventory constraints. Construction activity declined modestly for both residential and nonresidential units. Some contacts in the sector also expressed nervousness around the impact of potential tariffs on the price of lumber and other materials. Commercial real estate activity expanded slightly as multifamily propped up the industrial and office sectors.

  • Banking activity was slightly higher on balance among reporting Districts. The energy sector experienced modest growth. Agricultural conditions among reporting Districts were stable to slightly deteriorated. Cuts to federal grants and subsidies

  • along with declines in philanthropic donations caused gaps in services provided by many community organizations. Expectations for economic activity over the coming months in several Districts worsened considerably as economic uncertainty, particularly surrounding tariffs, rose.

  • Employment was slightly higher on balance. Multiple Districts cited job growth in healthcare and finance, while employment declines were reported in manufacturing and information technology. Hiring was generally slower for consumer-facing firms than for business-to-business firms. The most notable declines in headcount were in government roles or roles at organizations receiving government funding. Several Districts reported that firms were taking a wait-and-see approach to employment, pausing or slowing hiring until there is more clarity on economic conditions. Labor availability improved for many sectors and Districts, although there were some reports of constraints on labor supply resulting from shifting immigration policies in certain sectors and regions. Wages grew at a modest-to-moderate pace, with several Districts noting that wage pressures were easing.

  • Prices increased at a modest-to-moderate pace in most Districts, with several Districts reporting an uptick in the pace of increase relative to previous reports. Input price pressures were generally greater than sales price pressures, particularly in manufacturing and construction. Most Districts noted that firms expected elevated input cost growth resulting from tariffs, with many firms already receiving notices from suppliers that costs would be increasing. Firms reported adding tariff surcharges or shortening pricing horizons to account for uncertain trade policy. Many Districts noted that higher prices for eggs and other food ingredients were impacting food processors and restaurants. Reports of substantial increases in insurance and freight transportation costs were also widespread. Most businesses expected to pass through additional costs to customers; however, there were reports about margin compression amid increased costs, as demand remained tepid in some sectors, especially for consumer-facing firms.

Reports by the Federal Reserve’s Sixth District, Atlanta (which includes Trustmark’s Alabama, Florida, Georgia and Mississippi market regions), Eighth District, St. Louis (which includes Trustmark’s Tennessee market region), and Eleventh District, Dallas (which includes Trustmark’s Texas market region), noted similar findings for the reporting period as those discussed above. The Federal Reserve’s Sixth District also noted a slight decline in housing demand as mortgage rates ticked up and affordability declined. The Federal Reserve's Sixth District reported moderate loan growth across most major lending categories, with multifamily lending outpacing other categories, asset quality remained stable overall with low levels of nonperforming loans as a percentage of total loans, customer creditworthiness remained solid, and both deposit balances and borrowings by banks increased modestly, though loan growth outpaced growth of deposits increasing loan-to-deposit ratios. The Federal Reserve’s Eighth District reported that banking activity remained steady, with some increased optimism across contacts due to expected regulatory changes and net interest margin improvement. The Federal Reserve’s Eighth District also reported that loan demand remained flat, consumer past-due accounts continued to rise, though the exposure was staying at 60 days or less and a slight increase in small business bankruptcies and past dues; however, despite a few pockets of concern, bankers reported credit portfolios were strong. The Federal Reserve’s Eleventh District reported that loan volume and loan demand continued increasing at a rapid pace during the February 2025 reporting period but decelerated sharply in March 2025, credit tightening continued, while loan pricing declined, and loan nonperformance rose across all loan types, while growth in general business activity slowed. The Federal Reserve’s Eleventh District also noted that bankers' outlooks were cautiously optimistic with expectations of improvements in loan demand and business activity tempered by expectations of a continued increase in loan nonperformance, and citing net interest margin, liquidity and cybersecurity as top outlook concerns.

Trustmark is intently monitoring the impact of tariffs and other administrative policies on its customer base, interest rates and credit-related issues. Although there has been no immediate impact to Trustmark’s financial condition or results of operations, economic uncertainty or disruptions in the marketplace, as a result of such policies, could reduce loan demand or increase loan nonperformance. It is not possible to predict the timing or magnitude of changes to policies by the current United States presidential administration, if any, or the impact any such policy changes could have on Trustmark's customer base, credit quality or results of operations.

Financial Highlights

Trustmark reported net income of $53.6 million, or basic and diluted earnings per share (EPS) of $0.88, in the first quarter of 2025, compared to $41.5 million, or basic and diluted EPS of $0.68, in the first quarter of 2024. Trustmark’s reported performance during the quarter ended March 31, 2025 produced a return on average tangible equity of 13.13%, a return on average assets of 1.19%, an average equity to average assets ratio of 10.94% and a dividend payout ratio of 27.27%, compared to a return on average tangible equity of 12.98%, a return on average assets of 0.89%, an average equity to average assets ratio of 8.98% and a dividend payout ratio of 33.82% during the quarter ended March 31, 2024.

Trustmark completed the sale of FBBI during the second quarter of 2024. As such, financial results for the three months ended March 31, 2024 consist of both continuing and discontinued operations. The discontinued operations include the financial results of FBBI prior to the sale. Trustmark reported income from continuing operations of $38.2 million for the three months ended March 31, 2024. Trustmark's reported performance from continuing operations for the three months ended March 31, 2024 produced a return on average tangible equity of 11.45% and a return on average assets of 0.83%.

Total revenue, which is defined as net interest income plus noninterest income (loss), for the three months ended March 31, 2025 was $194.6 million, an increase of $22.5 million, or 13.0%, when compared to the same time period in 2024, principally due to an increase in net interest income. Net interest income for the three months ended March 31, 2025 totaled $152.1 million, an increase of $19.2 million, or 14.5%, when compared to the same time period in 2024, principally attributable to an increase in interest on securities as well as declines in all categories of interest expense, partially offset by declines in interest and fees on loans held for sale (LHFS) and LHFI and other interest income. Interest income totaled $229.1 million for the three months ended March 31, 2025, a decrease of $693 thousand, or 0.3%, when compared to the same time period in 2024, reflecting decreases in interest and fees on LHFS and LHFI, primarily as a result of a decline in yields on the LHFS and LHFI portfolios, and other interest income, primarily due to a decline in interest earned on balances held at the Federal Reserve Bank of Atlanta (FRBA), largely offset by an increase in interest on securities, primarily as a result of restructuring the securities portfolio during the second quarter of 2024. Interest expense totaled $77.1 million for the three months ended March 31, 2025, a decrease of $19.9 million, or 20.5%, when compared to the same time period in 2024 reflecting declines in all categories of interest expense.

Noninterest income (loss) for the three months ended March 31, 2025 totaled $42.6 million, an increase of $3.2 million, or 8.2%, when compared to the same time period in 2024 principally due to an increase in other, net. Other, net totaled $6.0 million for the three months ended March 31, 2025, an increase of $2.9 million, or 92.5%, when compared to the same time period in 2024, principally due to a $2.4 million gain on the sale of a bank property during the first quarter of 2025 as well as a gain in income from other partnership investments.

Noninterest expense for the three months ended March 31, 2025 totaled $124.0 million, an increase of $4.3 million, or 3.6%, when compared to the same time period in 2024, principally due to increases in salaries and employee benefits and services and fees. Salaries and employee benefits totaled $68.5 million for the three months ended March 31, 2025, an increase of $3.0 million, or 4.6%, when compared to the same time period in 2024, primarily due to increases in medical insurance expense, salaries expense principally due to general merit increases, commissions related to mortgage originations and annual incentive compensation. Services and fees totaled $26.2 million for the three months ended March 31, 2025, an increase of $1.8 million, or 7.4%, when compared to the same time period in 2024, principally due to increases in data processing expenses related to software, advertising expense, legal expense, and business process operations outsourcing expense.

Trustmark’s total PCL on LHFI for the three months ended March 31, 2025 totaled $8.1 million, an increase of $417 thousand, or 5.4%, when compared to the same time period in 2024. The PCL, LHFI for the three months ended March 31, 2025 primarily reflected increases in required reserves as a result of updates to qualitative reserve factors, credit migration, changes in macroeconomic forecasts and loan growth. The PCL on off-balance sheet credit exposures totaled a negative $2.8 million for the three months ended March 31, 2025, compared to a negative $192 thousand for the same time period in 2024. The release in PCL, off-balance sheet credit exposures for the three months ended March 31, 2025, primarily reflected a decrease in required reserves as a result of a decrease in the unfunded commitments and changes in the total reserve rate primarily related to commercial construction. Please see the section captioned “Provision for Credit Losses” for additional information regarding the PCL on LHFI and off-balance sheet credit exposures.

At March 31, 2025, nonperforming assets totaled $95.0 million, an increase of $8.9 million, or 10.4%, compared to December 31, 2024, reflecting increases in both nonaccrual LHFI and other real estate. Nonaccrual LHFI totaled $86.6 million at March 31, 2025, an increase of $6.5 million, or 8.1%, relative to December 31, 2024, primarily as a result of 1-4 family mortgage loans placed on nonaccrual status partially offset by nonaccrual loans foreclosed during the first three months of 2025 in the Mississippi market region. Other real estate, net totaled $8.3 million at March 31, 2025, an increase of $2.4 million, or 41.1%, when compared to December 31, 2024, principally due to properties foreclosed partially offset by properties sold in the Mississippi market region.

LHFI totaled $13.241 billion at March 31, 2025, an increase of $151.5 million, or 1.2%, compared to December 31, 2024. The increase in LHFI during the first three months of 2025 was primarily due to net growth in LHFI secured by real estate and other commercial loans and leases partially offset by net declines in commercial and industrial LHFI. For additional information regarding changes in LHFI and comparative balances by loan category, see the section captioned “LHFI.”

Management has continued its practice of maintaining excess funding capacity to provide Trustmark with adequate liquidity for its ongoing operations. In this regard, Trustmark benefits from its strong deposit base, its investment portfolio and its access to funding from a variety of external funding sources such as upstream federal funds lines, FHLB advances and brokered deposits. See the section captioned “Capital Resources and Liquidity” for further discussion of the components of Trustmark’s excess funding capacity.

Total deposits were $15.081 billion at March 31, 2025, a decrease of $27.5 million, or 0.2%, compared to December 31, 2024. During the first three months of 2025, noninterest-bearing deposits decreased $3.6 million, or 0.1%, principally due to a decline in public noninterest-bearing demand deposit accounts largely offset by increases in consumer and commercial noninterest-bearing demand deposit accounts. Interest-bearing deposits decreased $23.8 million, or 0.2%, during the first three months of 2025, primarily due to declines in consumer and commercial interest checking accounts and consumer certificates of deposits (CDs), partially offset by growth in public interest checking accounts, commercial money market deposit accounts (MMDA), consumer savings accounts and brokered CDs.

Federal funds purchased and securities sold under repurchase agreements totaled $360.1 million at March 31, 2025, an increase of $36.1 million, or 11.1%, compared to December 31, 2024, principally due to an increase in upstream federal funds purchased. Other borrowings totaled $404.8 million at March 31, 2025, an increase of $103.3 million, or 34.2%, compared to December 31, 2024, principally due to an increase in outstanding short-term FHLB advances with the FHLB of Dallas.

Recent Legislative and Regulatory Developments

On October 24, 2023, the federal banking agencies released a final rule significantly revising the framework that the agencies use to evaluate banks’ records of meeting the credit needs of their entire communities under the Community Reinvestment Act (CRA). On March 28, 2025, the agencies announced their intent to issue a proposal to rescind the October 2023 final rule, and to reinstate the CRA framework that existed prior to the October 2023 final rule. TNB received a rating of “Outstanding” in its most recent CRA performance evaluation, which was conducted using the CRA framework that existed prior to the October 2023 final rule.

On July 30, 2024, the FDIC issued a proposed rule that would revise the FDIC’s regulations governing the classification and treatment of brokered deposits. On March 3, 2025, the FDIC withdrew the proposed rule.

For additional information regarding legislation and regulation applicable to Trustmark, see the section captioned “Supervision and Regulation” included in Part I. Item 1. – Business of Trustmark’s 2024 Annual Report.

Selected Financial Data

The following tables present financial data derived from Trustmark’s consolidated financial statements as of and for the periods presented ($ in thousands, except per share data):

Three Months Ended March 31,
2025 2024
Consolidated Statements of Income (Loss)
Total interest income $ 229,147 $ 229,840
Total interest expense 77,092 97,010
Net interest income 152,055 132,830
PCL, LHFI 8,125 7,708
PCL, off-balance sheet credit exposures (2,831 ) (192 )
Noninterest income (loss) 42,584 39,355
Noninterest expense 124,011 119,664
Income (loss) from continuing operations before income taxes 65,334 45,005
Income taxes from continuing operations 11,701 6,832
Income (loss) from continuing operations 53,633 38,173
Income from discontinued operations before income taxes — 4,512
Income taxes from discontinued operations — 1,150
Income from discontinued operations — 3,362
Net income $ 53,633 $ 41,535
Total Revenue (1) $ 194,639 $ 172,185
Per Share Data (2)
Basic earnings (loss) per share (EPS) from continuing operations $ 0.88 $ 0.62
Basic EPS from discontinued operations $ — $ 0.05
Basic EPS - total $ 0.88 $ 0.68
Diluted EPS from continuing operations $ 0.88 $ 0.62
Diluted EPS from discontinued operations $ — $ 0.05
Diluted EPS - total $ 0.88 $ 0.68
Cash dividends per share $ 0.24 $ 0.23
Performance Ratios
Return on average equity 10.92 % 9.96 %
Return on average equity from continuing operations 10.92 % 9.16 %
Return on average tangible equity 13.13 % 12.98 %
Return on average tangible equity from continuing operations 13.13 % 11.45 %
Return on average assets 1.19 % 0.89 %
Return on average assets from continuing operations 1.19 % 0.83 %
Average equity / average assets 10.94 % 8.98 %
Net interest margin (fully taxable equivalent) 3.75 % 3.21 %
Dividend payout ratio 27.27 % 33.82 %
Dividend payout ratio from continuing operations 27.27 % 37.10 %
Credit Quality Ratios
Net charge-offs (recoveries) / average loans 0.04 % 0.12 %
PCL, LHFI / average loans 0.25 % 0.24 %
Nonaccrual LHFI / (LHFI + LHFS) 0.64 % 0.74 %
Nonperforming assets / (LHFI + LHFS) plus other real estate 0.71 % 0.80 %
ACL, LHFI / LHFI 1.26 % 1.10 %
  • (1)
  • (2)
March 31,
2025 2024
Consolidated Balance Sheets
Total assets $ 18,296,203 $ 18,376,612
Securities 3,052,515 3,117,324
Total loans (LHFI + LHFS) 13,430,158 13,230,880
Deposits 15,080,704 15,338,557
Total shareholders' equity 2,021,227 1,682,599
Stock Performance
Market value - close $ 34.49 $ 28.11
Book value 33.29 27.50
Tangible book value 27.78 22.03
Capital Ratios
Total equity / total assets 11.05 % 9.16 %
Tangible equity / tangible assets 9.39 % 7.47 %
Tangible equity / risk-weighted assets 11.23 % 8.83 %
Tier 1 leverage ratio 10.11 % 8.76 %
Common equity Tier 1 risk-based capital ratio 11.63 % 10.12 %
Tier 1 risk-based capital ratio 12.03 % 10.51 %
Total risk-based capital ratio 14.10 % 12.42 %

Non-GAAP Financial Measures

In addition to capital ratios defined by U.S. generally accepted accounting principles (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 calculation methods may not be comparable with those of other organizations. Also, there may be limits in the usefulness of these measures to investors. As a result, 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 reconciles Trustmark’s calculation of these measures to amounts reported under GAAP for the periods presented ($ in thousands, except per share data):

Three Months Ended March 31,
2025 2024
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity $ 1,991,554 $ 1,676,521
Less: Goodwill (334,605 ) (334,605 )
Identifiable intangible assets (113 ) (224 )
Total average tangible equity $ 1,656,836 $ 1,341,692
PERIOD END BALANCES
Total shareholders' equity $ 2,021,227 $ 1,682,599
Less: Goodwill (334,605 ) (334,605 )
Identifiable intangible assets (95 ) (208 )
Total tangible equity (a) $ 1,686,527 $ 1,347,786
TANGIBLE ASSETS
Total assets $ 18,296,203 $ 18,376,612
Less: Goodwill (334,605 ) (334,605 )
Identifiable intangible assets (95 ) (208 )
Total tangible assets (b) $ 17,961,503 $ 18,041,799
Risk-weighted assets (c) $ 15,024,476 $ 15,257,385
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income (loss) from continuing operations $ 53,633 $ 38,173
Plus: Intangible amortization net of tax from<br>   continuing operations 24 20
Net income (loss) from continuing operations adjusted for<br>   intangible amortization $ 53,657 $ 38,193
Period end shares outstanding (d) 60,718,411 61,178,366
TANGIBLE EQUITY MEASUREMENTS
Return on average tangible equity from<br>   continuing operations (1) 13.13 % 11.45 %
Tangible equity/tangible assets (a)/(b) 9.39 % 7.47 %
Tangible equity/risk-weighted assets (a)/(c) 11.23 % 8.83 %
Tangible book value (a)/(d)*1,000 $ 27.78 $ 22.03
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity $ 2,021,227 $ 1,682,599
CECL transitional adjustment — 6,500
AOCI-related adjustments 48,702 227,154
CET1 adjustments and deductions:
Goodwill net of associated deferred tax liabilities (DTLs) (320,756 ) (370,205 )
Other adjustments and deductions for CET1 (2) (2,175 ) (2,588 )
CET1 capital (e) 1,746,998 1,543,460
Additional Tier 1 capital instruments plus related surplus 60,000 60,000
Tier 1 capital $ 1,806,998 $ 1,603,460
Common equity tier 1 risk-based capital ratio (e)/(c) 11.63 % 10.12 %
  • (1)
  • (2)

Results of Operations

Net Interest Income

Net interest income is the principal component of Trustmark’s income stream and represents the difference, or spread, between interest and fee income generated from earning assets and the interest expense paid on deposits and borrowed funds. Fluctuations in interest rates, as well as volume and mix changes in earning assets and interest-bearing liabilities, can materially impact net interest income. The net interest margin is computed by dividing fully taxable equivalent (FTE) net interest income by average interest-earning assets and measures how effectively Trustmark utilizes its interest-earning assets in relationship to the interest cost of funding them. The

accompanying yield/rate analysis table shows the average balances for all assets and liabilities of Trustmark and the interest income or expense associated with earning assets and interest-bearing liabilities. The yields and rates have been computed based upon interest income and expense adjusted to a FTE basis using the federal statutory corporate tax rate in effect for each of the periods shown. Loans on nonaccrual have been included in the average loan balances, and interest collected prior to these loans having been placed on nonaccrual has been included in interest income. Loan fees included in interest associated with the average LHFS and LHFI balances were immaterial.

Net interest income-FTE for the three months ended March 31, 2025 increased $18.5 million, or 13.6%, when compared with the same time period in 2024 reflecting declines in all categories of interest expense as well as an increase in interest on securities, partially offset by declines in interest and fees on LHFS and LHFI-FTE and other interest income. The net interest margin-FTE for the three months ended March 31, 2025 increased 54 basis points to 3.75% when compared to the same time period in 2024, principally due to an increase in the yield on the securities portfolio, primarily due to the restructuring of the available for sale securities portfolio during the second quarter of 2024, as well as decreases in the cost of interest-bearing liabilities.

Average interest-earning assets for the three months ended March 31, 2025 totaled $16.737 billion compared to $17.088 billion for the same time period in 2024, a decrease of $350.3 million, or 2.1%, principally due to decreases in average total securities and average other earning assets partially offset by an increase in average loans (LHFS and LHFI). Average total securities declined $295.0 million, or 8.8%, when the three months ended March 31, 2025 is compared to the same time period in 2024, principally due to available for sale securities sold net of available for sale securities purchased as part of the restructuring of the available for sale securities portfolio during the second quarter of 2024 as well as calls, maturities and pay-downs of the loans underlying GSE guaranteed securities. Average other earning assets decreased $205.8 million, or 36.0%, when the three months ended March 31, 2025 is compared to the same time period in 2024, primarily due to a decrease in reserves held at the FRBA. Average loans (LHFS and LHFI) increased $150.5 million, or 1.1%, when the three months ended March 31, 2025 is compared to the same time period in 2024, principally due to an increase in the average balance of the LHFI portfolio of $142.6 million, or 1.1%. The increase in the LHFI portfolio when the balances at March 31, 2025 are compared to March 31, 2024 was principally due to net growth in LHFI secured by real estate and other commercial loans and leases partially offset by declines in commercial and industrial loans and state and other political subdivision loans.

Interest income-FTE for the three months ended March 31, 2025 totaled $231.8 million, a slight decrease of $1.4 million, or 0.6%, while the yield on total earning assets increased to 5.62% compared to 5.49% for the same time period in 2024. The slight decrease in interest income-FTE for the three months ended March 31 2025 was primarily due to decreases in interest and fees on LHFS and LHFI-FTE and other interest income largely offset by an increase in interest on securities-taxable. During the three months ended March 31, 2025, interest and fees on LHFS and LHFI-FTE decreased $7.5 million, or 3.6%, while the yield on LHFS and LHFI decreased 25 basis points to 6.15% when compared to the same time period in 2024, primarily due to a decline in interest rates. During the three months ended March 31, 2025, other interest income declined $4.3 million, or 52.6%, while the yield on other earning assets decreased 144 basis points to 4.27% when compared to the same time period in 2024, principally due to a decline in interest earned on reserves held at the FRBA reflecting both a decline in reserves held at the FRBA and a decline in the rate paid by the FRB on reserve balances. Interest on securities-taxable increased $10.4 million, or 66.7%, when the three months ended March 31, 2025 is compared to the same time period in 2024, while the yield on securities-taxable increased to 3.46% compared to 1.88%, principally due to the restructuring of the available for sale securities portfolio during the second quarter of 2024.

Average interest-bearing liabilities for the three months ended March 31, 2025 totaled $12.877 billion compared to $13.376 billion for the same time period in 2024, a decrease of $498.9 million, or 3.7%, reflecting declines in all categories of average interest-bearing liabilities. Average interest-bearing deposits for the three months ended March 31, 2025 decreased $356.8 million, or 2.9%, when compared to the same time period in 2024, reflecting declines in all categories of average interest-bearing deposits. Average other borrowings for the three months ended March 31, 2025 decreased $119.2 million, or 18.4%, when compared to the same time period in 2024, principally due to the decrease in average short-term FHLB advances outstanding with the FHLB of Dallas as a result of changes in funding needs. Average federal funds purchased and securities sold under repurchase agreements for the three months ended March 31, 2025 decreased $22.9 million, or 5.4%, when compared to the same time period in 2024, reflecting declines in both upstream federal funds purchased and securities sold under repurchase agreements.

Interest expense for the three months ended March 31, 2025 totaled $77.1 million, a decrease of $19.9 million, or 20.5%, when compared with the same time period in 2024, while the rate on total interest-bearing liabilities decreased 49 basis points to 2.43%, reflecting declines in all categories of interest expense. Interest on deposits for the three months ended March 31, 2025 decreased $16.0 million, or 19.1%, while the rate on interest-bearing deposits decreased 44 basis points to 2.30% when compared to the same time period in 2024, primarily due to declines in public interest checking and brokered deposits as well as a decline in rates on interest-bearing deposits. Other interest expense for the three months ended March 31, 2025 decreased $2.6 million, or 34.1%, while the rate on other borrowings decreased 89 basis points to 3.89% when compared to the same time period in 2024, primarily due to the decrease in average outstanding short-term FHLB advances with the FHLB of Dallas. Interest expense on federal funds purchased and securities sold under repurchase agreements for the three months ended March 31, 2025 totaled $4.3 million, a decrease of $1.3 million, or 23.1%, while the rate on

federal funds purchased and securities sold under repurchase agreements decreased 95 basis points to 4.30% when compared to the same time period in 2024, reflecting a decrease in the target rate on federal funds purchased by the FRB.

The following table provides the tax equivalent basis yield or rate for each component of the tax equivalent net interest margin for the periods presented ($ in thousands):

Three Months Ended March 31,
2025 2024
Average<br>Balance Interest Yield/<br>Rate Average<br>Balance Interest Yield/<br>Rate
Assets
Interest-earning assets:
Securities - taxable $ 3,051,476 $ 26,056 3.46 % $ 3,346,095 $ 15,634 1.88 %
Securities - nontaxable — — — 340 4 4.73 %
Loans (LHFS and LHFI) 13,320,276 201,929 6.15 % 13,169,805 209,456 6.40 %
Other earning assets 365,505 3,846 4.27 % 571,329 8,111 5.71 %
Total interest-earning assets 16,737,257 231,831 5.62 % 17,087,569 233,205 5.49 %
Other assets 1,624,581 1,730,521
ACL, LHFI (159,893 ) (138,711 )
Total assets $ 18,201,945 $ 18,679,379
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits $ 11,942,605 67,718 2.30 % $ 12,299,407 83,716 2.74 %
Federal funds purchased and<br>   securities sold under repurchase<br>   agreements 405,189 4,298 4.30 % 428,127 5,591 5.25 %
Other borrowings 529,617 5,076 3.89 % 648,816 7,703 4.78 %
Total interest-bearing liabilities 12,877,411 77,092 2.43 % 13,376,350 97,010 2.92 %
Noninterest-bearing demand deposits 3,055,333 3,120,566
Other liabilities 277,647 505,942
Shareholders' equity 1,991,554 1,676,521
Total liabilities and<br>   shareholders' equity $ 18,201,945 $ 18,679,379
Net interest margin 154,739 3.75 % 136,195 3.21 %
Less tax equivalent adjustment 2,684 3,365
Net interest margin per<br>   consolidated statements<br>   of income (loss) $ 152,055 $ 132,830

Provision for Credit Losses

The PCL, LHFI is the amount necessary to maintain the ACL for LHFI at the amount of expected credit losses inherent within the LHFI portfolio. The amount of PCL and the related ACL for LHFI are based on Trustmark’s ACL methodology. The PCL, LHFI, totaled $8.1 million for the three months ended March 31, 2025, compared to $7.7 million for the same time period in 2024. The PCL, LHFI for the three months ended March 31, 2025 primarily reflected increases in required reserves as a result of updates to qualitative reserve factors, credit migration, changes in macroeconomic forecasts and loan growth.

FASB ASC Topic 326 requires Trustmark to estimate expected credit losses for off-balance sheet credit exposures which are not unconditionally cancellable by Trustmark. Trustmark maintains a separate ACL for off-balance sheet credit exposures, including unfunded commitments and letters of credit. Adjustments to the ACL on off-balance sheet credit exposures are recorded to the PCL, off-balance sheet credit exposures. The PCL, off-balance sheet credit exposures totaled a negative $2.8 million for the three months ended March 31, 2025, compared to a negative $192 thousand for the same time period in 2024. The release in PCL, off-balance sheet credit exposures for the three months ended March 31, 2025, primarily reflected a decrease in required reserves as a result of a decrease in the unfunded commitments and changes in the total reserve rate primarily related to commercial construction.

See the section captioned “Allowance for Credit Losses” for information regarding Trustmark’s ACL methodology as well as further analysis of the PCL.

Noninterest Income (Loss)

The following table provides the comparative components of noninterest income (loss) for the periods presented ($ in thousands):

Three Months Ended March 31,
2025 2024 Change % Change
Service charges on deposit accounts $ 10,636 $ 10,958 ) -2.9 %
Bank card and other fees 7,664 7,428 3.2 %
Mortgage banking, net 8,771 8,915 ) -1.6 %
Wealth management 9,543 8,952 6.6 %
Other, net 5,970 3,102 92.5 %
Total noninterest income (loss) $ 42,584 $ 39,355 8.2 %

All values are in US Dollars.

Changes in various components of noninterest income (loss) are discussed in further detail below. For analysis of Trustmark’s wealth management income, please see the section captioned “Results of Segment Operations.”

Mortgage Banking, Net

The following table illustrates the components of mortgage banking, net included in noninterest income (loss) for the periods presented ($ in thousands):

Three Months Ended March 31,
2025 2024 Change % Change
Mortgage servicing income, net $ 7,161 $ 6,934 3.3 %
Change in fair value-MSR from runoff (2,062 ) (1,926 ) ) -7.1 %
Gain on sales of loans, net 4,253 5,009 ) -15.1 %
Mortgage banking income before<br>   net hedge ineffectiveness 9,352 10,017 ) -6.6 %
Change in fair value-MSR from market changes (5,928 ) 5,123 ) n/m
Change in fair value of derivatives 5,347 (6,225 ) n/m
Net hedge ineffectiveness (581 ) (1,102 ) 47.3 %
Mortgage banking, net $ 8,771 $ 8,915 ) -1.6 %

All values are in US Dollars.

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

The decrease in mortgage banking, net for the three months ended March 31, 2025 when compared to the same time period in 2024 was principally due to a decrease in the gain on sales of loans, net and an increase in the amortization of the MSR, largely offset by a decrease in the net negative hedge ineffectiveness. Mortgage loan production for the three months ended March 31, 2025 was $318.8 million, an increase of $44.8 million, or 16.4%, when compared to the same time period in 2024. Loans serviced for others totaled $8.811 billion at March 31, 2025, compared with $8.553 billion at March 31, 2024, an increase of $258.2 million, or 3.0%.

Representing a significant component of mortgage banking income is the gain on sales of loans, net. The decrease in the gain on sales of loans, net when the three months ended March 31, 2025 is compared to the same time period in 2024, was primarily the result of lower profit margins in secondary marketing activities partially offset by an increase in the mortgage valuation adjustment. Loan sales totaled $255.8 million for the three months ended March 31, 2025, a decrease of $2.5 million, or 1.0%, when compared with the same time period in 2024.

Other, Net

The following table illustrates the components of other, net included in noninterest income (loss) for the periods presented ($ in thousands):

Three Months Ended March 31,
2025 2024 Change % Change
Partnership amortization for tax credit purposes $ (2,124 ) $ (1,834 ) ) -15.8 %
Increase in life insurance cash surrender value 1,867 1,844 1.2 %
Other miscellaneous income 6,227 3,092 n/m
Total other, net $ 5,970 $ 3,102 92.5 %

All values are in US Dollars.

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

The increase in other, net when the three months ended March 31, 2025 is compared to the same time period in 2024, principally due to a $2.4 million gain on the sale of a bank property during the first quarter of 2025 as well as a gain in income from other partnership investments.

Noninterest Expense

The following table illustrates the comparative components of noninterest expense for the periods presented ($ in thousands):

Three Months Ended March 31,
2025 2024 Change % Change
Salaries and employee benefits $ 68,492 $ 65,487 4.6 %
Services and fees 26,247 24,431 7.4 %
Net occupancy-premises 7,385 7,270 1.6 %
Equipment expense 6,308 6,325 ) -0.3 %
Other expense 15,579 16,151 ) -3.5 %
Total noninterest expense $ 124,011 $ 119,664 3.6 %

All values are in US Dollars.

Changes in the various components of noninterest expense are discussed in further detail below. Management considers disciplined expense management a key area of focus in the support of improving shareholder value.

Salaries and Employee Benefits

The increase in salaries and employee benefits when the three months ended March 31, 2025 is compared to the same time period in 2024 was primarily due to increases in medical insurance expense, salaries expense principally due to general merit increases, commissions related to mortgage originations and annual incentive compensation.

Services and Fees

The increases in services and fees when the three months ended March 31, 2025 is compared to the same time period in 2024 were principally due to increases in data processing expenses related to software, advertising expense, legal expense, and business process operations outsourcing expense.

Other Expense

The following table illustrates the comparative components of other noninterest expense for the periods presented ($ in thousands):

Three Months Ended March 31,
2025 2024 Change % Change
Loan expense $ 2,792 $ 2,955 ) -5.5 %
Amortization of intangibles 31 28 10.7 %
FDIC assessment expense 4,160 4,509 ) -7.7 %
Other real estate expense, net 452 671 ) -32.6 %
Other miscellaneous expense 8,144 7,988 2.0 %
Total other expense $ 15,579 $ 16,151 ) -3.5 %

All values are in US Dollars.

Results of Segment Operations

For a description of the methodologies used to measure financial performance and financial information by reportable segment, please see Note 19 – Segment Information included in Part I. Item 1. – Financial Statements of this report. The Insurance Segment is included in discontinued operations for the three months ended March 31, 2024. For additional information about discontinued operations, please see Note 2 - Discontinued Operations included in Part I. Item 1. – Financial Statements of this report. The following discusses changes in the results of operations of each reportable segment for the three months ended March 31, 2025 and 2024.

General Banking

Net interest income for the General Banking Segment increased $18.8 million, or 14.3%, when the three months ended March 31, 2025 is compared with the same time period in 2024. The increase in net interest income was principally due to an increase in interest on securities as well as declines in all categories of interest expense, partially offset by declines in interest and fees from LHFS and LHFI and other interest income. The net PCL (LHFI and off-balance sheet credit exposures) for the General Banking Segment for the three months ended March 31, 2025 totaled $5.3 million compared to a net PCL of $7.3 million for the same time period in 2024, a decrease of $2.1 million, or 27.9%. For more information on these net interest income and PCL items, please see the sections captioned “Financial Highlights” and “Results of Operations.”

Noninterest income (loss) for the General Banking Segment increased $2.6 million, or 8.6%, when the first three months of 2025 is compared to the same time period in 2024, primarily due to an increase in other, net, principally resulting from a $2.4 million gain on the sale of a bank property during the first quarter of 2025 as well as a gain in income from other partnership investments. Noninterest income (loss) for the General Banking Segment includes service charges on deposit accounts; wealth management; bank card and other fees; mortgage banking, net; other, net and securities gains (losses), net. For more information on these noninterest income items, please see the analysis included in the section captioned “Noninterest Income (Loss).”

Noninterest expense for the General Banking Segment increased $4.2 million, or 3.7%, when the first three months of 2025 is compared with the same time period in 2024, principally due to increases in salaries and employee benefits and data processing charges related to software. For more information on these noninterest expense items, please see the analysis included in the section captioned “Noninterest Expense.”

Wealth Management

Net income for the Wealth Management Segment for the first three months of 2025 increased $761 thousand, or 47.8%, when compared to the same time period in 2024, primarily due to increases in net interest income and noninterest income. Net interest income for the Wealth Management Segment for the three months ended March 31, 2025 increased $418 thousand, or 31.8%, when compared to the same time period in 2024, principally due to an increase in interest and fees on loans. The net PCL for the three months ended March 31, 2025 totaled a negative $3 thousand compared to a net PCL of $168 thousand for the same period in 2024, a decrease of $171 thousand. Noninterest income for the Wealth Management Segment, which primarily includes income related to investment management, trust and brokerage services, increased $613 thousand, or 6.8%, when the first three months of 2025 is compared to the same time period in 2024, primarily due to an increase in income from trust management services. Noninterest expense for the Wealth Management Segment increased $185 thousand, or 2.3%, when the first three months of 2025 is compared to the same time period in 2024, principally due to an increase in salaries and employee benefits expense, primarily related to trust and portfolio manager annual incentives and medical insurance expense.

At March 31, 2025 and 2024, Trustmark held assets under management and administration of $9.547 billion and $8.799 billion, respectively, and brokerage assets of $2.603 billion and $2.712 billion, respectively.

Income Taxes

For the three months ended March 31, 2025, Trustmark’s combined effective tax rate from continuing operations was 17.9% compared to 15.2% for the same time period in 2024. Trustmark’s effective tax rate continues to be less than the statutory rate primarily due to various tax-exempt income items and its utilization of income tax credit programs. 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 or 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.

Financial Condition

Earning assets serve as the primary revenue streams for Trustmark and are comprised of securities, loans and other earning assets. Average earning assets totaled $16.737 billion, or 92.0% of total average assets, for the three months ended March 31, 2025, compared to $17.088 billion, or 91.5% of total average assets, for the three months ended March 31, 2024, a decrease of $350.3 million, or 2.1%.

Securities

The securities portfolio is utilized by Management to manage interest rate risk, generate interest income, provide liquidity and use as collateral for public deposits and wholesale funding. Risk and return can be adjusted by altering duration, composition and/or balance of the portfolio. The weighted-average life of the portfolio was 4.7 years at March 31, 2025 compared to 4.8 years at December 31, 2024.

When compared to December 31, 2024, total investment securities increased by $24.6 million, or 0.8%, during the first three months of 2025. This increase resulted primarily from purchases of available for sale securities and an increase in the fair market value of the available for sale securities, partially offset by calls, maturities and pay-downs of the loans underlying GSE guaranteed securities. Trustmark sold no securities during the first three months of 2025 and 2024.

During 2022, Trustmark reclassified approximately $766.0 million of securities available for sale to securities held to maturity to mitigate the potential adverse impact of a rising interest rate environment on the fair value of the available for sale securities and the related impact on tangible common equity. At the date of these transfers, the net unrealized holding loss on the available for sale securities totaled approximately $91.9 million ($68.9 million net of tax). The resulting net unrealized holding losses are being 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.

At March 31, 2025, the net unamortized, unrealized loss on all transferred securities included in accumulated other comprehensive income (loss) (AOCI) in the accompanying consolidated balance sheets totaled $44.1 million compared to $46.6 million at December 31, 2024.

Available for sale securities are carried at their estimated fair value with unrealized gains or losses recognized, net of taxes, in AOCI, a separate component of shareholders’ equity. At March 31, 2025, available for sale securities totaled $1.737 billion, which represented 56.9% of the securities portfolio, compared to $1.693 billion, or 55.9% of total securities, at December 31, 2024. At March 31, 2025, unrealized gains, net on available for sale securities totaled $5.6 million compared to unrealized losses, net of $27.0 million at December 31, 2024. At March 31, 2025, available for sale securities consisted of U.S. Treasury securities, direct obligations of government agencies and GSE guaranteed mortgage-related securities.

Held to maturity securities are carried at amortized cost and represent those securities that Trustmark both intends and has the ability to hold to maturity. At March 31, 2025, held to maturity securities totaled $1.315 billion, which represented 43.1% of the total securities portfolio, compared to $1.335 billion, or 44.1% of total securities, at December 31, 2024.

Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 100.0% of the portfolio in U.S. Treasury securities, direct obligations of government agencies, GSE-backed obligations and other Aaa-rated securities as determined by Moody’s Investors Services (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 FHLB of Dallas and FRBA, Trustmark does not hold any other equity investment in a GSE or other governmental entity.

As of March 31, 2025, Trustmark did not hold securities of any one issuer with a carrying value exceeding 10% of total shareholders’ equity, other than certain GSEs which are exempt from inclusion. Management continues to closely monitor the credit quality as well as the ratings of the debt and mortgage-backed securities issued by the GSEs and held in Trustmark’s securities portfolio.

The following tables present Trustmark’s securities portfolio by amortized cost and estimated fair value and by credit rating, as determined by Moody’s, at March 31, 2025 and December 31, 2024 ($ in thousands):

March 31, 2025
Amortized Cost Estimated Fair Value
Amount % Amount %
Securities Available for Sale
Aaa $ 1,731,866 100.0 % $ 1,737,462 100.0 %
Securities Held to Maturity
Aaa $ 1,315,053 100.0 % $ 1,259,898 100.0 %
December 31, 2024
--- --- --- --- --- --- --- --- --- --- ---
Amortized Cost Estimated Fair Value
Amount % Amount %
Securities Available for Sale
Aaa $ 1,719,537 100.0 % $ 1,692,534 100.0 %
Securities Held to Maturity
Aaa $ 1,335,385 100.0 % $ 1,259,107 100.0 %

The table above presenting the credit rating of Trustmark’s securities is formatted to show the securities according to the credit rating category, and not by category of the underlying security.

LHFS

At March 31, 2025, LHFS totaled $188.7 million, consisting of $92.7 million of residential real estate mortgage loans in the process of being sold to third parties and $96.0 million of GNMA optional repurchase loans. At December 31, 2024, LHFS totaled $200.3 million, consisting of $102.7 million of residential real estate mortgage loans in the process of being sold to third parties and $97.6 million of GNMA optional repurchase loans. Please refer to the nonperforming assets table that follows for information on GNMA loans eligible for repurchase which are past due 90 days or more.

Trustmark did not exercise its buy-back option on any delinquent loans serviced for GNMA during the first three months of 2025 or 2024.

For additional information regarding the GNMA optional repurchase loans, please see the section captioned “Past Due LHFS” included in Note 4 – LHFI and Allowance for Credit Losses, LHFI of Part I. Item 1. – Financial Statements of this report.

LHFI

At March 31, 2025 and December 31, 2024, LHFI consisted of the following ($ in thousands):

March 31, 2025 December 31, 2024
Amount % Amount %
Loans secured by real estate:
Construction, land development and other land $ 599,325 4.5 % $ 587,244 4.5 %
Other secured by 1-4 family residential properties 665,422 5.0 % 650,550 5.0 %
Secured by nonfarm, nonresidential properties 3,532,842 26.7 % 3,533,282 27.0 %
Other real estate secured 1,876,459 14.2 % 1,633,830 12.5 %
Other loans secured by real estate:
Other construction 722,306 5.5 % 829,904 6.3 %
Secured by 1-4 family residential properties 2,308,556 17.4 % 2,298,993 17.6 %
Commercial and industrial loans 1,765,893 13.3 % 1,840,722 14.0 %
Consumer loans 157,935 1.2 % 156,569 1.2 %
State and other political subdivision loans 974,300 7.4 % 969,836 7.4 %
Other commercial loans and leases 638,431 4.8 % 589,012 4.5 %
LHFI $ 13,241,469 100.0 % $ 13,089,942 100.0 %

LHFI increased $151.5 million, or 1.2%, compared to December 31, 2024. The increase in LHFI during the first three months of 2025 was primarily due to net growth in LHFI secured by real estate and other commercial loans and leases partially offset by net declines in commercial and industrial LHFI.

LHFI secured by real estate increased $171.1 million, or 1.8%, during the first three months of 2025, reflecting net growth in other real estate secured LHFI, other LHFI secured by 1-4 family residential properties and construction, land development and other land LHFI, partially offset by a net decline in other construction LHFI. Other real estate secured LHFI increased $242.6 million, or 14.9%, during the first three months of 2025, primarily due to other construction loans that moved to LHFI secured by multi-family residential properties in the Alabama, Mississippi and Texas market regions. Excluding other construction loan reclassifications, other real estate secured LHFI decreased $84.1 million, or 5.1%, during the first three months of 2025 principally due to declines in LHFI secured by multi-family residential properties in the Alabama and Texas market regions. Other LHFI secured by 1-4 family residential properties increased $14.9 million, or 2.3%, during the first three months of 2025, principally due to growth in the Mississippi, Alabama, Florida, Tennessee and Texas market regions. LHFI secured by construction, land development and other land increased $12.1 million, or 2.1%, during the first three months of 2025 primarily due to growth in 1-4 family construction loans in the Alabama, Tennessee and Georgia market regions, unimproved land loans in the Texas market region and land development loans in the Alabama and Mississippi market regions, partially offset by declines in 1-4 family construction loans in the Mississippi and Texas market regions, land development loans in the Texas market region and unimproved land loans in the Florida market region. Other construction loans decreased $107.6 million, or 13.0%, during the first three months of 2025 primarily due to other construction loans moved to other loan categories upon the completion of the related construction project in the Alabama, Mississippi, Texas, Georgia and Florida market regions partially offset by new construction loans in all six market regions. During the first three months of 2025, $348.5 million loans were moved from other construction to other loan categories, including $326.7 million to multi-family residential loans and $21.7 million to nonowner-occupied loans. Excluding all reclassifications between loan categories, growth in other construction loans across all six market regions totaled $240.6 million, or 29.0%, during the first three months of 2025.

Other commercial loans and leases increased $49.4 million, or 8.4%, during the first three months of 2025, principally due to increases in other commercial loans in the Mississippi, Georgia and Texas market regions partially offset by declines in other commercial loans in the Tennessee and Alabama market regions. Commercial and industrial LHFI declined $74.8 million, or 4.1%, during the first three months of 2025 reflecting declines in the Alabama, Texas, Mississippi, Tennessee and Florida market regions, partially offset by growth in the Georgia market region.

The following table provides information regarding Trustmark’s home equity loans and home equity lines of credit which are included in the LHFI secured by 1-4 family residential properties for the periods presented ($ in thousands):

March 31, 2025 December 31, 2024
Home equity loans $ 73,717 $ 72,183
Home equity lines of credit 468,222 458,327
Percentage of loans and lines for which Trustmark holds first lien 46.2 % 46.7 %
Percentage of loans and lines for which Trustmark does not hold first lien 53.8 % 53.3 %

Due to the increased risk associated with second liens, loan terms and underwriting guidelines differ from those used for products secured by first liens. Loan amounts and loan-to-value ratios are limited and are lower for second liens than first liens. Also, interest rates and maximum amortization periods are adjusted accordingly. In addition, regardless of lien position, the passing credit score for approval of all home equity lines of credit is generally higher than that of term loans. The ACL on LHFI is also reflective of the increased risk related to second liens through application of a greater loss factor to this portion of the portfolio.

Trustmark’s variable rate LHFI are based primarily on various prime and SOFR interest rate bases. The following tables provide information regarding the interest rate terms of Trustmark’s LHFI as of March 31, 2025 and December 31, 2024 ($ in thousands):

March 31, 2025
Fixed Variable Total
Loans secured by real estate:
Construction, land development and other land $ 136,277 $ 463,048 $ 599,325
Other secured by 1- 4 family residential properties 192,816 472,606 665,422
Secured by nonfarm, nonresidential properties 1,301,091 2,231,751 3,532,842
Other real estate secured 137,225 1,739,234 1,876,459
Other loans secured by real estate:
Other construction 17,920 704,386 722,306
Secured by 1- 4 family residential properties 1,215,686 1,092,870 2,308,556
Commercial and industrial loans 769,903 995,990 1,765,893
Consumer loans 131,452 26,483 157,935
State and other political subdivision loans 910,898 63,402 974,300
Other commercial loans and leases 385,068 253,363 638,431
LHFI $ 5,198,336 $ 8,043,133 $ 13,241,469
December 31, 2024
--- --- --- --- --- --- ---
Fixed Variable Total
Loans secured by real estate:
Construction, land development and other land $ 139,526 $ 447,718 $ 587,244
Other secured by 1- 4 family residential properties 187,912 462,638 650,550
Secured by nonfarm, nonresidential properties 1,381,111 2,152,171 3,533,282
Other real estate secured 159,839 1,473,991 1,633,830
Other loans secured by real estate:
Other construction 31,466 798,438 829,904
Secured by 1- 4 family residential properties 1,256,835 1,042,158 2,298,993
Commercial and industrial loans 762,649 1,078,073 1,840,722
Consumer loans 130,905 25,664 156,569
State and other political subdivision loans 906,250 63,586 969,836
Other commercial loans and leases 376,705 212,307 589,012
LHFI $ 5,333,198 $ 7,756,744 $ 13,089,942

In the following tables, LHFI reported by region (along with related nonperforming assets and net charge-offs) are associated with location of origination except for loans secured by 1-4 family residential properties (representing traditional mortgages), credit cards and equipment finance loans and leases. Loans secured by 1-4 family residential properties and credit cards are included in the Mississippi Region because they are centrally analyzed and approved as part of a specific line of business located at Trustmark’s headquarters in Jackson, Mississippi. The equipment finance loans and leases are primarily reported in the Georgia market region because they centrally analyzed and approved as part of the Equipment Finance line of business which is located in Atlanta, Georgia.

The following table presents the LHFI composition by region at March 31, 2025 and reflects each region’s diversified mix of loans ($ in thousands):

March 31, 2025
LHFI Composition by Region Total Alabama Florida Georgia Mississippi Tennessee Texas
Loans secured by real estate:
Construction, land development and<br>   other land $ 599,325 $ 265,649 $ 24,718 $ 17,289 $ 140,924 $ 45,924 $ 104,821
Other secured by 1-4 family residential<br>   properties 665,422 156,707 62,267 — 321,929 84,073 40,446
Secured by nonfarm, nonresidential<br>   properties 3,532,842 968,991 188,318 86,682 1,518,669 127,092 643,090
Other real estate secured 1,876,459 896,353 1,472 — 477,674 930 500,030
Other loans secured by real estate:
Other construction 722,306 247,718 9,871 138,647 135,590 933 189,547
Secured by 1-4 family residential<br>   properties 2,308,556 — — — 2,305,838 2,718 —
Commercial and industrial loans 1,765,893 468,732 19,112 252,863 683,689 118,541 222,956
Consumer loans 157,935 23,648 7,867 — 94,664 14,115 17,641
State and other political subdivision loans 974,300 57,295 67,563 12,416 724,817 26,184 86,025
Other commercial loans and leases 638,431 28,108 3,543 259,390 248,264 50,918 48,208
LHFI $ 13,241,469 $ 3,113,201 $ 384,731 $ 767,287 $ 6,652,058 $ 471,428 $ 1,852,764
Construction, Land Development and Other Land Loans by Region
Lots $ 61,516 $ 26,578 $ 5,792 $ — $ 17,386 $ 1,903 $ 9,857
Development 107,402 58,256 — — 19,108 13,232 16,806
Unimproved land 106,221 18,116 10,662 — 26,205 8,947 42,291
1-4 family construction 324,186 162,699 8,264 17,289 78,225 21,842 35,867
Construction, land development and<br>   other land loans $ 599,325 $ 265,649 $ 24,718 $ 17,289 $ 140,924 $ 45,924 $ 104,821
Loans Secured by Nonfarm, Nonresidential Properties by Region
Nonowner-occupied:
Retail $ 283,918 $ 75,230 $ 19,803 $ — $ 100,542 $ 20,276 $ 68,067
Office 248,180 93,220 18,489 — 95,251 2,759 38,461
Hotel/motel 276,954 141,324 43,628 — 68,461 23,541 —
Mini-storage 158,111 40,410 1,561 12,882 91,013 604 11,641
Industrial 531,020 99,376 17,422 73,800 178,257 2,504 159,661
Health care 149,348 122,172 670 — 24,059 320 2,127
Convenience stores 22,040 2,590 393 — 12,677 195 6,185
Nursing homes/senior living 373,326 129,587 — — 145,090 4,002 94,647
Other 108,694 27,792 8,632 — 56,598 7,529 8,143
Total nonowner-occupied loans 2,151,591 731,701 110,598 86,682 771,948 61,730 388,932
Owner-occupied:
Office 139,762 48,209 33,853 — 32,536 8,549 16,615
Churches 48,141 11,055 3,657 — 28,149 2,931 2,349
Industrial warehouses 202,660 15,596 8,047 — 52,688 12,980 113,349
Health care 123,162 10,390 7,868 — 84,980 2,175 17,749
Convenience stores 104,929 10,439 2,084 — 56,730 — 35,676
Retail 79,018 8,257 12,253 — 43,637 7,085 7,786
Restaurants 54,385 3,127 2,682 — 28,033 16,297 4,246
Auto dealerships 39,289 3,792 167 — 20,676 14,654 —
Nursing homes/senior living 461,136 109,542 — — 325,649 — 25,945
Other 128,769 16,883 7,109 — 73,643 691 30,443
Total owner-occupied loans 1,381,251 237,290 77,720 — 746,721 65,362 254,158
Loans secured by nonfarm,<br>   nonresidential properties $ 3,532,842 $ 968,991 $ 188,318 $ 86,682 $ 1,518,669 $ 127,092 $ 643,090

Allowance for Credit Losses

LHFI

Trustmark’s ACL methodology for LHFI is based upon guidance within FASB ASC Subtopic 326-20, “Financial Instruments – Credit Losses – Measured at Amortized Cost,” as well as applicable regulatory guidance from its primary regulator. The ACL is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Credit quality within the LHFI portfolio is continuously monitored by Management and is reflected within the ACL for loans. The ACL is an

estimate of expected losses inherent within Trustmark’s existing LHFI portfolio. The ACL on LHFI is adjusted through the PCL, LHFI and reduced by the charge off of loan amounts, net of recoveries.

The loan loss estimation process involves procedures to appropriately consider the unique characteristics of Trustmark’s LHFI portfolio segments. These segments are further disaggregated into loan classes, the level at which credit risk is estimated. When computing allowance levels, credit loss assumptions are estimated using a model that categorizes loan pools based on loss history, delinquency status and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Evaluations of the portfolio and individual credits are inherently subjective, as they require estimates, assumptions and judgments as to the facts and circumstances of particular situations.

During the second quarter of 2024, Trustmark executed a sale on a portfolio of 1-4 family mortgage loans that were at least three payments delinquent and/or nonaccrual at the time of selection. As a result of this sale, a credit mark was established for a sub-pool of the loans in the sale. Due to the lack of historical experience and the use of industry data for this sub-pool, management elected to use the credit mark for reserving purposes on a go forward basis for this sub-pool that meet the same credit criteria of being three payments delinquent and/or nonaccrual. All loans of the sub-pool that meet the above credit criteria will be removed from the 1-4 family residential properties pool and placed into a separate pool with the credit mark reserve applied to the total balance.

The econometric models currently in production reflect segment or pool level sensitivities of probability of default (PD) to changes in macroeconomic variables. By measuring the relationship between defaults and changes in the economy, the quantitative reserve incorporates reasonable and supportable forecasts of future conditions that will affect the value of Trustmark's assets, as required by FASB ASC Topic 326. Under stable forecasts, these linear regressions will reasonably predict a pool’s PD. However, upon the occurrence of events that generate significant economic instability (such as the COVID-19 pandemic), the macroeconomic variables used for reasonable and supportable forecasting changed rapidly. At the macroeconomic levels experienced during the COVID-19 pandemic, it was not clear that the models in production would produce reasonably representative results since the models were originally estimated using data beginning in 2004 through 2019. During this period, a traditional, albeit severe, economic recession occurred. Thus, econometric models are sensitive to similar future levels of PD.

In order to prevent the econometric models from extrapolating beyond reasonable boundaries of their input variables, Trustmark chose to establish an upper and lower limit process when applying the periodic forecasts. In this way, Management will not rely upon unobserved and untested relationships in the setting of the quantitative reserve. This approach applies to all input variables, including: Southern Unemployment, National Unemployment, National Gross Domestic Product (GDP), National Home Price Index (HPI), National Commercial Real Estate (CRE) Price Index and the BBB 7-10 Year US Corporate Bond Index. The upper and lower limits are based on the distribution of the macroeconomic variable by selecting extreme percentiles at the upper and lower limits of the distribution, the 1st and 99th percentiles, respectively. These upper and lower limits are then used to calculate the PD for the forecast time period in which the forecasted values are outside of the upper and lower limit range. Additionally, for periods having a PD or loss given default (LGD) at or near zero as a result of the improving macroeconomic forecasts, Management implemented PD and LGD floors to account for the risk associated with each portfolio. The PD and LGD floors are based on Trustmark's historical loss experience and applied at a portfolio level.

The external factors qualitative factor is Management’s best judgment on the loan or pool level impact of all factors that affect the portfolio that are not accounted for using any other part of the ACL methodology (e.g., natural disasters, changes in legislation, impacts due to technology and pandemics). During the third quarter of 2024, Trustmark activated the External Factor – Credit Quality Review qualitative factor. This qualitative factor ensures reserve adequacy for collectively evaluated commercial loans that may not have been identified and downgraded timely for various reasons. This qualitative factor population is all commercial loans risk rated 1-5. These loans are then applied to the historical average of the Watch/Special Mention rated percentage. Then the balance of these loans are applied additional reserves based on the same reserve rates utilized in the performance trends qualitative factor for Watch/Special Mention rated loans. Then the Watch/Special Mention population is applied the historical Substandard rated percentage and then subsequently applied the Substandard reserve rate utilized in the performance trends qualitative factor as well. The historical Watch/Special Mention and Substandard rated percentage averages capture the weighted-average life of the commercial loan portfolio. Thus, Trustmark will allocate additional reserves to capture the proportion of potential Watch/Special Mention and Substandard rated credits that may not have been categorized as such at any given point in time through the life of the commercial loan portfolio.

Management elected to activate the nature and volume of the portfolio qualitative factor for a sub-pool of the secured by 1-4 family residential properties due to its significant size as well as the underlying nature being different. The nature and volume of the portfolio qualitative factor utilizes a WARM methodology that uses industry data for the assumptions to support the qualitative adjustment. The industry data is used to compile a PD based on credit score ranges along with using the industry data to compile an LGD. The sub-pools of credits are then aggregated into the appropriate credit score bands in which a weighted-average loss rate is calculated based on the PD and LGD for each credit score range. This weighted-average loss rate is then applied to the expected balance for the sub-segment of credits. This total is then used as the qualitative reserve adjustment. During the first quarter of 2025, Management elected to utilize

Trustmark’s historical data to develop a PD based on the credit score ranges initially set up. Additionally, Management elected to use the same LGD value from the mortgage sale that occurred in the second quarter of 2024 along with the same weighted average life assumption utilized to determine the credit mark on this portfolio.

Trustmark's current quantitative methodologies do not completely incorporate changes in credit quality. As a result, Trustmark utilizes the performance trends qualitative factor. This factor is based on migration analyses, that allocates additional ACL to non-pass/delinquent loans within each pool. In this way, Management believes the ACL will directly reflect changes in risk, based on the performance of the loans within a pool, whether declining or improving.

The performance trends qualitative factor is estimated by properly segmenting loan pools into risk levels by risk rating for commercial credits and delinquency status for consumer credits. A migration analysis is then performed quarterly using a third-party software and the results for each risk level are compiled to calculate the historical PD average for each loan portfolio based on risk levels. This average historical PD rate is updated annually. For the mortgage portfolio, Trustmark uses an internal report to incorporate a roll rate method for the calculation of the PD rate. In addition to the PD rate for each portfolio, Management incorporates the quantitative rate and the k value derived from the Frye-Jacobs method to calculate a loss estimate that includes both PD and LGD. The quantitative rate is used to eliminate any additional reserve that the quantitative reserve already includes. Finally, the loss estimate rate is then applied to the total balances for each risk level for each portfolio to calculate a qualitative reserve.

Determining the appropriateness of the allowance is complex and requires judgment by Management about the effect of matters that are inherently uncertain. In future periods, evaluations of the overall LHFI portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the allowance and credit loss expense.

For a complete description of Trustmark’s ACL methodology and the quantitative and qualitative factors included in the calculation, please see Note 4 – LHFI and Allowance for Credit Losses, LHFI included in Part I. Item 1. – Financial Statements of this report.

At March 31, 2025, the ACL on LHFI was $167.0 million, an increase of $6.7 million, or 4.2%, when compared with December 31, 2024. The increase in the ACL during the first three months of 2025 was principally due to increases in required reserves as a result of updates to qualitative reserve factors, credit migration, changes in macroeconomic forecasts and loan growth. Allocation of Trustmark’s $167.0 million ACL on LHFI, represented 1.11% of commercial LHFI and 1.76% of consumer and home mortgage LHFI, resulting in an ACL to total LHFI of 1.26% as of March 31, 2025. This compares with an ACL to total LHFI of 1.22% at December 31, 2024, which was allocated to commercial LHFI at 1.10% and to consumer and mortgage LHFI at 1.62%.

The following table presents changes in the ACL on LHFI for the periods presented ($ in thousands):

Three Months Ended March 31,
2025 2024
Balance at beginning of period $ 160,270 $ 139,367
PCL, LHFI 8,125 7,708
Charge-offs (3,701 ) (6,324 )
Recoveries 2,316 2,247
Net (charge-offs) recoveries (1,385 ) (4,077 )
Balance at end of period $ 167,010 $ 142,998

The decrease in net charge-offs when the three months ended March 31, 2025 is compared to the same time period in 2024 was principally due to a commercial credit in the Texas market region that was charged off during the first quarter of 2024.

The following table presents the net (charge-offs) recoveries by geographic market region for the periods presented ($ in thousands):

Three Months Ended March 31,
2025 2024
Alabama $ (207 ) $ (341 )
Florida (17 ) 277
Mississippi (755 ) (1,489 )
Tennessee (301 ) (179 )
Texas (105 ) (2,345 )
Total net (charge-offs) recoveries $ (1,385 ) $ (4,077 )

The PCL, LHFI for the three months ended March 31, 2025 totaled 0.25% of average loans (LHFS and LHFI) compared to 0.24% of average loans (LHFS and LHFI) for the same time period in 2024. The PCL, LHFI for the three months ended March 31, 2025 primarily reflected increases in required reserves as a result of updates to qualitative reserve factors, credit migration, changes in macroeconomic forecasts and loan growth.

Off-Balance Sheet Credit Exposures

Trustmark maintains a separate ACL on off-balance sheet credit exposures, including unfunded loan commitments and letters of credit, which is included on the accompanying consolidated balance sheets. Expected credit losses for off-balance sheet credit exposures are estimated by calculating a commitment usage factor over the contractual period for exposures that are not unconditionally cancellable by Trustmark. Trustmark calculates a loan pool level unfunded amount for the period. Trustmark calculates an expected funding rate each period which is applied to each pool’s unfunded commitment balances to ensure that reserves will be applied to each pool based upon balances expected to be funded based upon historical levels. Additionally, a reserve rate is applied to the unfunded commitment balance, which includes both quantitative and a majority of the qualitative aspects of the current period’s expected credit loss rate. During 2024, Management implemented a performance trends qualitative factor and an External Factor – Credit Quality Review qualitative factor for unfunded commitments. For both qualitative factors, the same assumptions are applied in the unfunded commitment calculation that are used in the funded balance calculation with the only difference being the unfunded commitment calculation includes the funding rates for the unfunded commitments. The reserves for these two qualitative factors are added to the other calculated reserve to get a total reserve for off-balance sheet credit exposures. See the section captioned “ACL on Off-Balance Sheet Credit Exposures” in Note 13 – Contingencies included in Part I. Item 1. – Financial Statements of this report for complete description of Trustmark’s ACL methodology on off-balance sheet credit exposures.

Adjustments to the ACL on off-balance sheet credit exposures are recorded to the PCL, off-balance sheet credit exposures. At March 31, 2025, the ACL on off-balance sheet credit exposures totaled $26.6 million compared to $29.4 million at December 31, 2024, a decrease of $2.8 million, or 9.6%. The PCL, off-balance sheet credit exposures totaled a negative $2.8 million for the three months ended March 31, 2025, compared to a negative $192 thousand for the same time period in 2024. The release in PCL, off-balance sheet credit exposures for the three months ended March 31, 2025, primarily reflected a decrease in required reserves as a result of a decrease in the unfunded commitments and changes in the total reserve rate primarily related to commercial construction.

Nonperforming Assets

The table below provides the components of nonperforming assets by geographic market region at March 31, 2025 and December 31, 2024 ($ in thousands):

March 31, 2025 December 31, 2024
Nonaccrual LHFI
Alabama $ 18,633 $ 18,601
Florida 391 305
Mississippi 49,107 42,203
Tennessee 2,339 2,431
Texas 16,150 16,569
Total nonaccrual LHFI 86,620 80,109
Other real estate
Alabama 271 170
Mississippi 4,837 2,407
Tennessee 979 1,079
Texas 2,261 2,261
Total other real estate 8,348 5,917
Total nonperforming assets $ 94,968 $ 86,026
Nonperforming assets/total loans (LHFS and LHFI) and ORE 0.71 % 0.65 %
Loans past due 90 days or more
LHFI $ 4,355 $ 4,092
LHFS - Guaranteed GNMA serviced loans (1) $ 71,720 $ 71,255
  • (1)

See the previous discussion of LHFS for more information on Trustmark’s serviced GNMA loans eligible for repurchase and the impact of Trustmark’s repurchases of delinquent mortgage loans under the GNMA optional repurchase program.

Nonaccrual LHFI

At March 31, 2025, nonaccrual LHFI totaled $86.6 million, or 0.64% of total LHFS and LHFI, reflecting an increase of $6.5 million, or 8.1%, relative to December 31, 2024. The increase in nonaccrual LHFI during the first three months of 2025 was primarily a result of 1-4 family mortgage loans placed on nonaccrual status partially offset by nonaccrual loans foreclosed during the first three months of 2025 in the Mississippi market region. Trustmark's mortgage loans are primarily included in the Mississippi market region because these loans are centrally analyzed and approved as part of the mortgage line of business which is located in Jackson, Mississippi.

For additional information regarding nonaccrual LHFI, see the section captioned “Nonaccrual and Past Due LHFI” included in Note 4 – LHFI and Allowance for Credit Losses, LHFI in Part I. Item 1. – Financial Statements of this report.

Other Real Estate

Other real estate at March 31, 2025 increased $2.4 million, or 41.1%, when compared with December 31, 2024. The increase in other real estate was principally due to properties foreclosed partially offset by properties sold in the Mississippi market region.

The following tables illustrate changes in other real estate by geographic market region for the periods presented ($ in thousands):

Three Months Ended March 31, 2025
Total Alabama Florida Mississippi Tennessee Texas
Balance at beginning of period $ 5,917 $ 170 $ — $ 2,407 $ 1,079 $ 2,261
Additions 3,438 43 — 3,336 59 —
Disposals (878 ) — — (819 ) (59 ) —
Net (write-downs) recoveries (129 ) 58 — (87 ) (100 ) —
Balance at end of period $ 8,348 $ 271 $ — $ 4,837 $ 979 $ 2,261
Three Months Ended March 31, 2024
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Total Alabama Florida Mississippi Tennessee Texas
Balance at beginning of period $ 6,867 $ 1,397 $ — $ 1,242 $ — $ 4,228
Additions 2,228 92 — 2,102 34 —
Disposals (957 ) (522 ) — (435 ) — —
Net (write-downs) recoveries (518 ) 83 — 32 52 (685 )
Adjustments — — 71 (71 ) — —
Balance at end of period $ 7,620 $ 1,050 $ 71 $ 2,870 $ 86 $ 3,543

Other real estate is revalued on an annual basis or more often if market conditions necessitate. Subsequent to foreclosure, losses on the periodic revaluation of the property are charged against the reserve for other real estate write-downs or net income in other real estate expense, if a reserve does not exist. Write-downs of other real estate decreased $389 thousand, or 75.1%, when the first three months of 2025 is compared to the same time period in 2024, principally due to a decrease in the provision for other real estate write-down recorded in the respective periods, primarily related to a reserve for other real estate write-down recorded during the first quarter of 2024 for a foreclosed property in the Texas market region.

For additional information regarding other real estate, please see Note 6 – Other Real Estate included in Part I. Item 1. – Financial Statements of this report.

Deposits

Trustmark’s deposits are its primary source of funding and primarily consist of core deposits from the communities Trustmark serves. Deposits include interest-bearing and noninterest-bearing demand accounts, savings, MMDA, CDs and individual retirement accounts. Total deposits were $15.081 billion at March 31, 2025 compared to $15.108 billion at December 31, 2024, a decrease of $27.5 million, or 0.2%. During the first three months of 2025, noninterest-bearing deposits decreased $3.6 million, or 0.1%, principally due to a decline in public noninterest-bearing demand deposit accounts largely offset by increases in consumer and commercial noninterest-bearing demand deposit accounts. Interest-bearing deposits decreased $23.8 million, or 0.2%, during the first three months of 2025, primarily due to declines in consumer and commercial interest checking accounts and consumer CDs, partially offset by growth in public interest checking accounts, commercial MMDA, consumer savings accounts and brokered CDs.

At March 31, 2025, Trustmark's total uninsured deposits were $5.437 billion, or 36.0% of total deposits, compared to $5.359 billion, or 35.5% of total deposits, at December 31, 2024.

Borrowings

Trustmark uses short-term borrowings, such as federal funds purchased, securities sold under repurchase agreements and short-term FHLB advances, to fund growth of earning assets in excess of deposit growth. See the section captioned “Liquidity” for further discussion of the components of Trustmark’s excess funding capacity.

Federal funds purchased and securities sold under repurchase agreements totaled $360.1 million at March 31, 2025 compared to $324.0 million at December 31, 2024, an increase of $36.1 million, or 11.1%, principally due to an increase in upstream federal funds purchased. At March 31, 2025 and December 31, 2024, $35.1 million and $39.0 million, respectively, represented customer related transactions, such as commercial sweep repurchase balances. Trustmark had $325.0 million of upstream federal funds purchased at March 31, 2025 compared to $285.0 million at December 31, 2024.

Other borrowings totaled $404.8 million at March 31, 2025, an increase of $103.3 million, or 34.2%, when compared with $301.5 million at December 31, 2024, principally due to an increase in outstanding short-term FHLB advances with the FHLB of Dallas.

Legal Environment

Information required in this section is set forth under the heading “Legal Proceedings” of Note 13 – Contingencies included in Part I. Item 1. – Financial Statements of this report.

Off-Balance Sheet Arrangements

Information required in this section is set forth under the heading “Lending Related” of Note 13 – Contingencies included in Part I. Item 1. – Financial Statements of this report.

Capital Resources and Liquidity

Trustmark places a significant emphasis on the maintenance of a strong capital position, which promotes investor confidence, provides access to funding sources under favorable terms and enhances Trustmark’s ability to capitalize on business growth and acquisition opportunities. Higher levels of liquidity, however, bear corresponding costs, measured in terms of lower yields on short-term, more liquid earning assets and higher expenses for extended liability maturities. Trustmark manages capital based upon risks and growth opportunities as well as regulatory requirements. Trustmark utilizes a capital model in order to provide Management with a monthly tool for analyzing changes in its strategic capital ratios. This allows Management to hold sufficient capital to provide for growth opportunities and protect the balance sheet against sudden adverse market conditions, while maintaining an attractive return on equity to shareholders.

At March 31, 2025, Trustmark’s total shareholders’ equity was $2.021 billion, an increase of $58.9 million, or 3.0%, when compared to December 31, 2024. During the first three months of 2025, shareholders’ equity increased primarily as a result of net income of $53.6 million and a $24.5 million positive net change in the fair market value of securities available for sale, partially offset by common stock repurchases of $15.0 million and common stock dividends of $14.7 million.

Regulatory Capital

Trustmark and TNB are subject to minimum risk-based capital and leverage capital requirements, as described in the section captioned “Capital Adequacy” included in Part I. Item 1. – Business of Trustmark’s 2024 Annual Report, which are administered by the federal bank regulatory agencies. These capital requirements, as defined by federal regulations, involve quantitative and qualitative measures of assets, liabilities and certain off-balance sheet instruments. Trustmark’s and TNB’s minimum risk-based capital requirements include a capital conservation buffer of 2.5%. AOCI is not included in computing regulatory capital. Trustmark elected the five-year phase-in transition period (through December 31, 2024) related to adopting FASB ASU 2016-13 for regulatory capital purposes. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements of Trustmark and TNB and limit Trustmark’s and TNB’s ability to pay dividends. At March 31, 2025, Trustmark and TNB exceeded all applicable minimum capital standards. In addition, Trustmark and TNB met applicable regulatory guidelines to be considered well-capitalized at March 31, 2025. To be categorized in this manner, Trustmark and TNB maintained minimum common equity Tier 1 risk-based capital, Tier 1 risk-based capital, total risk-based capital and Tier 1 leverage ratios, and were not subject to any written agreement, order or capital directive, or prompt corrective action directive issued by their primary federal regulators to meet and maintain a specific capital level for any capital measures. There

are no significant conditions or events that have occurred since March 31, 2025 which Management believes have affected Trustmark’s or TNB’s present classification.

In 2020, Trustmark enhanced its capital structure with the issuance of $125.0 million of subordinated notes. At March 31, 2025, the carrying amount of the subordinated notes was $123.8 million compared to $123.7 million at December 31, 2024. The subordinated notes mature December 1, 2030 and are redeemable at Trustmark’s option under certain circumstances. For regulatory capital purposes, the subordinated notes qualified as Tier 2 capital for Trustmark at March 31, 2025 and December 31, 2024. Trustmark may utilize the full carrying value of the subordinated notes as Tier 2 capital until December 1, 2025 (five years prior to maturity). Beginning December 1, 2025, the subordinated notes will phase out of Tier 2 capital 20.0% each year until maturity.

In 2006, Trustmark enhanced its capital structure with the issuance of trust preferred securities. For regulatory capital purposes, the trust preferred securities qualified as Tier 1 capital at March 31, 2025 and December 31, 2024. Trustmark intends to continue to utilize $60.0 million in trust preferred securities issued by Trustmark Preferred Capital Trust I (the Trust) as Tier 1 capital up to the regulatory limit, as permitted by the grandfather provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III Final Rule.

Refer to the section captioned “Regulatory Capital” included in Note 16 – Shareholders’ Equity in Part I. Item 1. – Financial Statements of this report for an illustration of Trustmark’s and TNB’s actual regulatory capital amounts and ratios under regulatory capital standards in effect at March 31, 2025 and December 31, 2024.

Dividends on Common Stock

Dividends per common share for the three months ended March 31, 2025 and 2024 were $0.24 and $0.23, respectively. Trustmark’s indicated dividend for 2025 is $0.96 per common share, an increase of $0.04 per common share when compared to $0.92 per common share in 2024.

Stock Repurchase Program

From time to time, Trustmark's Board of Directors has authorized stock repurchase plans. In general, stock repurchase plans allow Trustmark to proactively manage its capital position and return excess capital to shareholders. Shares purchased also provide Trustmark with shares of common stock necessary to satisfy obligations related to stock compensation awards.

On December 5, 2023, the Board of Directors of Trustmark authorized a stock repurchase program, effective January 1, 2024, under which $50.0 million of Trustmark's outstanding common stock could be acquired through December 31, 2024. Under this authority, Trustmark repurchased 203 thousand shares of its common stock valued at $7.5 million during the year ended December 31, 2024.

On December 3, 2024, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2025, under which $100.0 million of Trustmark’s outstanding shares may be acquired through December 31, 2025. The repurchase program, which is subject to market conditions and management discretion, will be implemented through open market repurchases or privately negotiated transactions. Under this authority, Trustmark repurchased 423 thousand shares of its common stock valued at $15.0 million during the first three months of 2025.

Liquidity

Liquidity is the ability to ensure that sufficient cash flow and liquid assets are available to satisfy current and future financial obligations, including demand for loans and deposit withdrawals, funding operating costs and other corporate purposes. Consistent cash flows from operations and adequate capital provide internally generated liquidity. Furthermore, Management maintains funding capacity from a variety of external sources to meet daily funding needs, such as those required to meet deposit withdrawals, loan disbursements and security settlements. Liquidity strategy also includes the use of wholesale funding sources to provide for the seasonal fluctuations of deposit and loan demand and the cyclical fluctuations of the economy that impact the availability of funds. Management keeps excess funding capacity available to meet potential demands associated with adverse circumstances.

The asset side of the balance sheet provides liquidity primarily through maturities and cash flows from loans and securities as well as the ability to pledge or sell certain loans and securities. The liability portion of the balance sheet provides liquidity primarily through noninterest and interest-bearing deposits. Trustmark utilizes federal funds purchased, FHLB advances, securities sold under repurchase agreements, the Federal Reserve Discount Window (Discount Window) and brokered deposits to provide additional liquidity. Access to these additional sources represents Trustmark’s incremental borrowing capacity.

Trustmark's liquidity position is continuously monitored and adjustments are made to manage the balance as deemed appropriate. Liquidity risk management is an important element to Trustmark's asset/liability management process. Trustmark regularly models liquidity stress scenarios to assess potential liquidity outflows or funding problems resulting from economic disruptions or other significant occurrences as deemed appropriate by Management. These scenarios are incorporated into Trustmark's contingency funding plan, which provides the basis for the identification of its liquidity needs.

Deposit accounts represent Trustmark’s largest funding source. Average deposits totaled $14.998 billion for the first three months of 2025 and represented approximately 82.4% of average liabilities and shareholders’ equity, compared to average deposits of $15.420 billion, which represented 82.6% of average liabilities and shareholders’ equity for the first three months of 2024. For more information on average interest-bearing deposits, please see the analysis included in the section captioned “Net Interest Income.”

Trustmark had $313.3 million held in an interest-bearing account at the FRBA at March 31, 2025, compared to $297.3 million held at December 31, 2024.

Trustmark utilizes brokered deposits to supplement other wholesale funding sources. At March 31, 2025 and December 31, 2024, brokered sweep MMDA deposits totaled $9.3 million and $10.6 million, respectively. In addition, Trustmark had $278.6 million of brokered CDs at March 31, 2025 compared to $250.0 million at December 31, 2024.

At March 31, 2025, Trustmark had $325.0 million of upstream federal funds purchased compared to $285.0 million of upstream federal funds purchased at December 31, 2024. Trustmark maintains adequate federal funds lines to provide sufficient short-term liquidity.

Trustmark maintains a relationship with the FHLB of Dallas, which provided $305.0 million of outstanding short-term and no long-term advances at March 31, 2025, compared to $200.0 million of outstanding short-term and no long-term advances at December 31, 2024. Under the existing borrowing agreement, Trustmark had sufficient qualifying collateral to increase FHLB advances or letters of credit with the FHLB of Dallas by $1.717 billion at March 31, 2025.

Additionally, Trustmark has the ability to leverage its unencumbered investment securities as collateral. At March 31, 2025, Trustmark had approximately $1.157 billion available in unencumbered Treasury and agency securities compared to $1.107 billion in unencumbered Treasury and agency securities at December 31, 2024.

Another borrowing source is the Discount Window. At March 31, 2025, Trustmark had approximately $1.183 billion available in collateral capacity at the Discount Window primarily from pledges of commercial and industrial LHFI, compared with $1.187 billion at December 31, 2024.

During 2020, Trustmark issued $125.0 million aggregate principal amount of its 3.625% fixed-to-floating rate subordinated notes. At March 31, 2025, the carrying amount of the subordinated notes was $123.8 million compared to $123.7 million at December 31, 2024. The subordinated notes mature December 1, 2030 and are redeemable at Trustmark’s option under certain circumstances. The subordinated notes are unsecured obligations and are subordinated in right of payment to all of Trustmark’s existing and future senior indebtedness, whether secured or unsecured. The subordinated notes are obligations of Trustmark only and are not obligations of, and are not guaranteed by, any of its subsidiaries, including TNB.

During 2006, Trustmark completed a private placement of $60.0 million of trust preferred securities through a newly formed Delaware trust affiliate, the Trust. The trust preferred securities mature September 30, 2036 and are redeemable at Trustmark’s option. The proceeds from the sale of the trust preferred securities were used by the Trust to purchase $61.9 million in aggregate principal amount of Trustmark’s junior subordinated debentures.

The Board of Directors of Trustmark currently has the authority to issue up to 20.0 million preferred shares with no par value. The ability to issue preferred shares in the future will provide Trustmark with additional financial and management flexibility for general corporate and acquisition purposes. At March 31, 2025, Trustmark had no shares of preferred stock issued and outstanding.

Management believes that Trustmark has sufficient liquidity and capital resources to meet presently known cash flow requirements arising from ongoing business transactions. As of March 31, 2025, Management is not aware of any events that are reasonably likely to have a material adverse effect on Trustmark's liquidity, capital resources or operations. In addition, Management is not aware of any regulatory recommendations regarding liquidity that would have a material adverse effect on Trustmark.

In the ordinary course of business, Trustmark has entered into contractual obligations and has made other commitments to make future payments. Please refer to the accompanying notes to the consolidated financial statements included in Part I. Item 1. – Financial Statements of this report and Trustmark's 2024 Annual Report for the expected timing of such payments as of March 31, 2025 and December 31, 2024. There have been no material changes in Trustmark's contractual obligations since year-end.

Asset/Liability Management

Overview

Market risk reflects the potential risk of loss arising from adverse changes in interest rates and market prices. Trustmark has risk management policies to monitor and limit exposure to market risk. Trustmark’s primary market risk is interest rate risk created by core banking activities. Interest rate risk is the potential variability of the income generated by Trustmark’s financial products or services, which results from changes in various market interest rates. Market rate changes may take the form of absolute shifts, variances in the relationships between different rates and changes in the shape or slope of the interest rate term structure.

Management continually develops and applies cost-effective strategies to manage these risks. Management’s Asset/Liability Committee sets the day-to-day operating guidelines, approves strategies affecting net interest income and coordinates activities within policy limits established by the Board of Directors of Trustmark. A key objective of the asset/liability management program is to quantify, monitor and manage interest rate risk and to assist Management in maintaining stability in the net interest margin under varying interest rate environments.

Derivatives

Trustmark uses financial derivatives for management of interest rate risk. Management’s Asset/Liability Committee, in its oversight role for the management of interest rate risk, approves the use of derivatives in balance sheet hedging strategies. The most common derivatives employed by Trustmark are interest rate lock commitments, forward contracts (both futures contracts and options on futures contracts), interest rate swaps, interest rate caps and interest rate floors. As a general matter, the values of these instruments are designed to be inversely related to the values of the assets that they hedge (i.e., if the value of the hedged asset falls, the value of the related hedge rises). In addition, Trustmark has entered into derivatives contracts as counterparty to one or more customers in connection with loans extended to those customers. These transactions are designed to hedge interest rate exposure of the customers and are not entered into by Trustmark for speculative purposes. Increased federal regulation of the derivatives markets may increase the cost to Trustmark to administer derivatives programs.

Derivatives Designated as Hedging Instruments

Trustmark engages in a cash flow hedging program to add stability to interest income and to manage its exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of fixed-rate amounts from a counterparty in exchange for Trustmark making variable-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate floor spreads designated as cash flow hedges involve the receipt of variable-rate amounts if interest rates fall below the purchased floor strike rate on the contract and payments of variable rate amounts if interest rates fall below the sold floor strike rate on the contract. Trustmark uses such derivatives to hedge the variable cash flows associated with existing and anticipated variable-rate loan assets. At March 31, 2025, the aggregate notional value of Trustmark's interest rate swaps and floor spreads designated as cash flow hedges totaled $1.495 billion compared to $1.500 billion at December 31, 2024.

Trustmark records any gains or losses on these cash flow hedges in AOCI. Gains and losses on derivatives representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with Trustmark’s accounting policy election. The earnings recognition of excluded components included in interest and fees on LHFS and LHFI totaled $130 thousand of amortization expense for the three months ended March 31, 2025, compared to $85 thousand of amortization expense for the three months ended March 31, 2024. As interest payments are received on Trustmark's variable-rate assets, amounts reported in AOCI are reclassified into interest and fees on LHFS and LHFI in the accompanying consolidated statements of income during the same period. For the three months ended March 31, 2025, Trustmark reclassified a loss, net of tax, of $2.0 million into interest and fees on LHFS and LHFI, compared to a loss, net of tax, of $3.6 million for the same time period in 2024. During the next twelve months, Trustmark estimates that $6.2 million will be reclassified as a reduction to interest and fees on LHFS and LHFI. This amount could differ due to changes in interest rates, hedge de-designations or the addition of other hedges.

Derivatives Not Designated as Hedging Instruments

As part of Trustmark’s risk management strategy in the mortgage banking business, various derivative instruments such as interest rate lock commitments and forward sales contracts are utilized. Rate lock commitments are residential mortgage loan commitments with customers, which guarantee a specified interest rate for a specified period of time. The gross notional amount of Trustmark’s off-balance sheet obligations under these derivative instruments totaled $84.0 million at March 31, 2025, with a positive valuation adjustment of $788 thousand, compared to $52.1 million, with a positive valuation adjustment of $229 thousand at December 31, 2024. Trustmark’s obligations under forward contracts consist of commitments to deliver mortgage loans, originated and/or purchased, in the secondary market at a future date. The gross notional amount of Trustmark’s off-balance sheet obligations under these derivative instruments

totaled $117.5 million at March 31, 2025, with a negative valuation adjustment of $513 thousand, compared to $110.0 million, with a positive valuation adjustment of $679 thousand at December 31, 2024.

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 economically hedges changes in fair value of the MSR attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under GAAP. The total notional amount of these derivative instruments was $324.0 million at March 31, 2025 compared to $311.5 million at December 31, 2024. These exchange-traded derivative instruments are accounted for at fair value with changes in the fair value recorded as noninterest income (loss) 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 $581 thousand and $1.1 million for the three months ended March 31, 2025 and 2024, respectively.

Trustmark offers certain interest rate derivatives products directly to qualified commercial lending clients seeking to manage their interest rate risk under loans they have entered into with TNB. Trustmark economically hedges interest rate swap transactions executed with commercial lending clients by entering into offsetting interest rate swap transactions with institutional derivatives market participants. Derivatives transactions executed as part of this program are not designated as qualifying hedging relationships under GAAP and are, therefore, carried on Trustmark’s financial statements at fair value with the change in fair value recorded as noninterest income in bank card and other fees. Because these derivatives have mirror-image contractual terms, in addition to collateral provisions which mitigate the impact of non-performance risk, the changes in fair value are expected to substantially offset. The Chicago Mercantile Exchange rules legally characterize variation margin collateral payments made or received for centrally cleared interest rate swaps as settlements rather than collateral. As a result, centrally cleared interest rate swaps included in other assets and other liabilities are presented on a net basis in the accompanying consolidated balance sheets. As of March 31, 2025, Trustmark had interest rate swaps with an aggregate notional amount of $1.874 billion related to this program, compared to $1.819 billion as of December 31, 2024.

Credit-Risk-Related Contingent Features

Trustmark has agreements with its financial institution counterparties that contain provisions where if Trustmark defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then Trustmark could also be deemed to be in default on its derivatives obligations.

At March 31, 2025, there was no termination value of interest rate swaps in a liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements compared to $568 thousand at December 31, 2024. At March 31, 2025 and December 31, 2024, Trustmark had posted collateral of $2.1 million and $1.5 million, respectively, against its obligations because of negotiated thresholds and minimum transfer amounts under these agreements. If Trustmark had breached any of these triggering provisions at March 31, 2025, it could have been required to settle its obligations under the agreements at the termination value (which is expected to approximate fair market value).

Credit risk participation agreements arise when Trustmark contracts with other financial institutions, as a guarantor or beneficiary, to share credit risk associated with certain interest rate swaps. These agreements provide for reimbursement of losses resulting from a third-party default on the underlying swap. At March 31, 2025, Trustmark had entered into eleven risk participation agreements as a beneficiary with an aggregate notional amount of $96.2 million compared to eleven risk participation agreements as a beneficiary with an aggregate notional amount of $83.9 million at December 31, 2024. At March 31, 2025, Trustmark had entered into twenty-nine risk participation agreements as a guarantor with an aggregate notional amount of $238.0 million compared to twenty-eight risk participation agreements as a guarantor with an aggregate notional amount of $229.1 million at December 31, 2024. The aggregate fair values of these risk participation agreements were immaterial at both March 31, 2025 and December 31, 2024.

Trustmark’s participation in the derivatives markets is subject to increased federal regulation of these markets. Trustmark believes that it may continue to use financial derivatives to manage interest rate risk and also to offer derivatives products to certain qualified commercial lending clients in compliance with the Volcker Rule. However, the increased federal regulation of the derivatives markets has increased the cost to Trustmark of administering its derivatives programs. Some of these costs (particularly compliance costs related to the Volcker Rule and other federal regulations) are expected to recur in the future.

Market/Interest Rate Risk Management

The primary purpose in managing interest rate risk is to invest capital effectively and preserve the value created by the core banking business. This is accomplished through the development and implementation of lending, funding, pricing and hedging strategies

designed to maximize net interest income performance under varying interest rate environments subject to specific liquidity and interest rate risk guidelines.

Financial simulation models are the primary tools used by Management’s Asset/Liability Committee to measure interest rate exposure. The significant increase in short-term market interest rates and the overall interest rate environment is likely to affect the balance sheet composition and rates. The simulation incorporates assumptions regarding the effects of such changes based on a combination of historical analysis and expected behavior. Using a wide range of scenarios, Management is provided with extensive information on the potential impact on net interest income caused by changes in interest rates. Models are structured to simulate cash flows and accrual characteristics of Trustmark’s balance sheet. Assumptions are made about the direction and volatility of interest rates, the slope of the yield curve and the changing composition of Trustmark’s balance sheet, resulting from both strategic plans and customer behavior. In addition, the model incorporates Management’s assumptions and expectations regarding such factors as loan and deposit growth, pricing, prepayment speeds and spreads between interest rates.

Based on the results of the simulation models using static balances, the table below summarizes the effect various one-year interest rate shift scenarios would have on net interest income compared to a base case, flat scenario at March 31, 2025 and 2024.

Estimated % Change<br>in Net Interest Income
March 31,
Change in Interest Rates 2025 2024
+200 basis points 2.4 % 1.4 %
+100 basis points 1.2 % 0.7 %
-100 basis points -1.7 % -0.8 %
-200 basis points -4.1 % -2.3 %

Management cannot provide any assurance about the actual effect of changes in interest rates on net interest income. The estimates provided do not include the effects of possible strategic changes in the balances of various assets and liabilities throughout 2025 or additional actions Trustmark could undertake in response to changes in interest rates. Management will continue to prudently manage the balance sheet in an effort to control interest rate risk and maintain profitability over the long term.

Another component of interest rate risk management is measuring the economic value-at-risk for a given change in market interest rates. The economic value-at-risk may indicate risks associated with longer-term balance sheet items that may not affect net interest income at risk over shorter time periods. Trustmark uses computer-modeling techniques to determine the present value of all asset and liability cash flows (both on- and off-balance sheet), adjusted for prepayment expectations, using a market discount rate. The economic value of equity (EVE), also known as net portfolio value, is defined as the difference between the present value of asset cash flows and the present value of liability cash flows. The resulting change in EVE in different market rate environments, from the base case scenario, is the amount of EVE at risk from those rate environments.

The following table summarizes the effect that various interest rate shifts would have on net portfolio value at March 31, 2025 and 2024.

Estimated % Change<br>in Net Portfolio Value
March 31,
Change in Interest Rates 2025 2024
+200 basis points -1.0 % -1.9 %
+100 basis points -0.2 % -0.7 %

Trustmark determines the fair value of the MSR using a valuation model administered by a third party that calculates the present value of estimated future net servicing income. The model incorporates assumptions that market participants use in estimating future net servicing income, including estimates of prepayment speeds, discount rate, default rates, cost to service (including delinquency and foreclosure costs), escrow account earnings, contractual servicing fee income and other ancillary income such as late fees. Management reviews all significant assumptions quarterly. Mortgage loan prepayment speeds, a key assumption in the model, is the annual rate at which borrowers are forecasted to repay their mortgage loan principal. The discount rate used to determine the present value of estimated future net servicing income, another key assumption in the model, is an estimate of the required rate of return investors in the market would require for an asset with similar risk. Both assumptions can, and generally will, change as market conditions and interest rates change.

By way of example, an increase in either the prepayment speed or discount rate assumption will result in a decrease in the fair value of the MSR, while a decrease in either assumption will result in an increase in the fair value of the MSR. In recent years, there have been

significant market-driven fluctuations in loan prepayment speeds and discount rates. These fluctuations can be rapid and may continue to be significant. Therefore, estimating prepayment speed and/or discount rates within ranges that market participants would use in determining the fair value of the MSR requires significant management judgment.

At March 31, 2025, the MSR fair value was $134.4 million, compared to $138.0 million at March 31, 2024. The impact on the MSR fair value of a 10% adverse change in prepayment speed or a 100 basis point increase in discount rate at March 31, 2025, would be a decline in fair value of approximately $4.9 million and $5.3 million, respectively, compared to a decline in fair value of approximately $5.0 million and $5.7 million, respectively, at March 31, 2024. Changes of equal magnitude in the opposite direction would produce similar increases in fair value in the respective amounts.

Critical Accounting Policies

For an overview of Trustmark’s critical accounting policies, see the section captioned “Critical Accounting Policies” included in Part II. Item 7. – Management’s Discussion and Analysis of Financial Condition and Results of Operations, of Trustmark’s 2024 Annual Report. There have been no significant changes in Trustmark’s critical accounting policies during the first three months of 2025.

For additional information regarding Trustmark’s basis of presentation and accounting policies, see Note 1 – Business, Basis of Financial Statement Presentation and Principles of Consolidation included in Part I. Item 1. – Financial Statements of this report.

Accounting Policies Recently Adopted and Pending Accounting Pronouncements

For a complete list of recently adopted and pending accounting policies and the impact on Trustmark, see Note 20 – Accounting Policies Recently Adopted and Pending Accounting Pronouncements included in Part I. Item 1. – Financial Statements of this report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by this item is included in the discussion of Market/Interest Rate Risk Management found in Management’s Discussion and Analysis.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out by Trustmark’s Management, with the participation of its Chief Executive Officer and Treasurer and Principal Financial Officer (Principal Financial Officer), of the effectiveness of Trustmark’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, the Chief Executive Officer and the Principal Financial Officer concluded that Trustmark’s disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

There has been no change in Trustmark’s internal control over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, Trustmark’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information required in this section is set forth under the heading “Legal Proceedings” of Note 13 – Contingencies in Part I. Item 1 – Financial Statements of this report.

In accordance with FASB Accounting Standards Codification (ASC) Topic 450-20, “Loss Contingencies,” Trustmark will establish an accrued liability for litigation matters when those matters present loss contingencies that are both probable and reasonably estimable. At the present time, Trustmark believes, based on its evaluation and the advice of legal counsel, that a loss in any such proceeding is not probable and reasonably estimable. All matters will continue to be monitored for further developments that would make such loss contingency both probable and reasonably estimable. In view of the inherent difficulty of predicting the outcome of legal proceedings, Trustmark cannot predict the eventual outcomes of the currently pending matters or the timing of their ultimate resolution. Trustmark currently believes, however, based upon the advice of legal counsel and Management’s evaluation and after taking into account its

current insurance coverage, that the legal proceedings currently pending should not have a material adverse effect on Trustmark’s consolidated financial condition.

ITEM 1A. RISK FACTORS

There has been no material change in the risk factors previously disclosed in Trustmark’s 2024 Annual Report.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On December 3, 2024, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2025, under which $100.0 million of Trustmark’s outstanding shares may be acquired through December 31, 2025. The repurchase program, which is subject to market conditions and management discretion, will be implemented through open market repurchases or privately negotiated transactions.

The following table provides information with respect to purchases by Trustmark or made on behalf of Trustmark of its common stock during the three months ended March 31, 2025 ($ in thousands, except per share amounts):

Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plan Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan at the End of the Period
January 1, 2025 to January 31, 2025 243,717 $ 34.90 243,717 $ 91,495
February 1, 2025 to February 28, 2025 98,112 37.48 98,112 87,818
March 1, 2025 to March 31, 2025 81,411 34.79 81,411 84,986
Total 423,240 423,240

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Securities Trading Plans of Directors and Executive Officers

During the three months ended March 31, 2025, none of Trustmark’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Trustmark’s securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” (as defined in Item 408(c) of Regulation S-K).

ITEM 6. EXHIBITS

The exhibits listed in the Exhibit Index are filed herewith or are incorporated herein by reference.

EXHIBIT INDEX

31-a Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31-b Certification by Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32-a Certification by Chief Executive Officer pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32-b Certification by Principal Financial Officer pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101 Inline XBRL Interactive Data.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).

* - Denotes management contract.

All other exhibits are omitted, as they are inapplicable or not required by the related instructions.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TRUSTMARK CORPORATION

BY: /s/ Duane A. Dewey BY: /s/ Thomas C. Owens
Duane A. Dewey Thomas C. Owens
President and Chief Executive Officer Treasurer and Principal Financial Officer
DATE: May 6, 2025 DATE: May 6, 2025

EX-31.a

Exhibit 31-a

TRUSTMARK CORPORATION

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Duane A. Dewey, certify that:

1) I have reviewed this Quarterly Report on Form 10-Q of Trustmark Corporation;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

BY: /s/ Duane A. Dewey
Duane A. Dewey
President and Chief Executive Officer
DATE: May 6, 2025

EX-31.b

Exhibit 31-b

TRUSTMARK CORPORATION

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas C. Owens, certify that:

1) I have reviewed this Quarterly Report on Form 10-Q of Trustmark Corporation;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

BY: /s/ Thomas C. Owens
Thomas C. Owens
Treasurer and Principal Financial Officer
DATE: May 6, 2025

EX-32.a

Exhibit 32-a

TRUSTMARK CORPORATION

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Trustmark Corporation (Trustmark) on Form 10-Q for the quarter ended March 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Duane A. Dewey, President and Chief Executive Officer of Trustmark, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Trustmark.

BY: /s/ Duane A. Dewey
Duane A. Dewey
President and Chief Executive Officer
DATE: May 6, 2025

EX-32.b

Exhibit 32-b

TRUSTMARK CORPORATION

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Trustmark Corporation (Trustmark) on Form 10-Q for the quarter ended March 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Thomas C. Owens, Treasurer and Principal Financial Officer of Trustmark, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Trustmark.

BY: /s/ Thomas C. Owens
Thomas C. Owens
Treasurer and Principal Financial Officer
DATE: May 6, 2025

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