8-K
TRUSTMARK CORP (TRMK)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
April 26, 2022
Date of Report (Date of earliest event reported)
TRUSTMARK CORPORATION
(Exact name of registrant as specified in its charter)
| Mississippi | 000-03683 | 64-0471500 |
|---|---|---|
| (State or other jurisdiction<br><br><br>of incorporation) | (Commission<br><br><br>File Number) | (IRS Employer<br><br><br>Identification No.) |
| 248 East Capitol Street, Jackson, Mississippi | 39201 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) | |
| Registrant’s telephone number, including area code: | (601) 208-5111 |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered Pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, no par value | TRMK | Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On April 26, 2022, Trustmark Corporation issued a press release announcing its financial results for the period ended March 31, 2022. A copy of this press release and the accompanying financial statements and slide presentation are attached hereto as Exhibits 99.1 and 99.2 to this report and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibit Number | Description of Exhibits |
|---|---|
| 99.1 | Press release announcing financial results for the period ended March 31, 2022 |
| 99.2 | Investor slide presentation for the period ended March 31, 2022 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
TRUSTMARK CORPORATION
| BY: | /s/ Thomas C. Owens |
|---|---|
| Thomas C. Owens | |
| Treasurer and Principal Financial Officer | |
| DATE: | April 26, 2022 |
trmk-ex991_7.htm
Exhibit 99.1
| News Release |
|---|
Trustmark Corporation Announces First Quarter 2022 Financial Results
Loan and Deposit Growth Continues, Credit Quality Remains Strong,
Insurance and Wealth Management Revenue Expands
JACKSON, Miss. – April 26, 2022 – Trustmark Corporation (NASDAQGS:TRMK) reported net income of $29.2 million in the first quarter of 2022, representing diluted earnings per share of $0.47. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable June 15, 2022, to shareholders of record on June 1, 2022.
First Quarter Highlights
| • | Total revenue expanded 2.9% from the prior quarter to $153.5 million |
|---|---|
| • | Net interest income (FTE) grew 1.1% from the prior quarter to $102.3 million, resulting in a 5 basis point expansion in the net interest margin to 2.58% |
| --- | --- |
| • | Noninterest income increased 6.6% from the prior quarter to $54.1 million, representing 35.3% of total revenue |
| --- | --- |
| • | Credit quality remained strong; provision for credit losses was a negative $2.0 million in first quarter |
| --- | --- |
Duane A. Dewey, President and CEO, stated, “Our first quarter financial performance reflects solid loan growth and expansion in both net interest income and noninterest income. Our balance sheet is well-positioned for additional increases in interest rates and credit quality remains a hallmark of the organization. We continue to focus on efficiency enhancements throughout the organization, including rationalization of the branch network as well as investments in technology to better serve customers. Trustmark remains well-positioned to serve and expand our customer base and create long-term value for our shareholders.”
Balance Sheet Management
| • | Loans held for investment (HFI) increased 1.5% from the prior quarter and 4.1% year-over-year |
|---|---|
| • | Deposits grew 0.2% linked-quarter and 5.1% year-over-year |
| --- | --- |
| • | Maintained strong capital position with CET1 ratio of 11.23% and total risk-based capital ratio of 13.53% |
| --- | --- |
Loans HFI totaled $10.4 billion at March 31, 2022, reflecting an increase of $149.3 million, or 1.5%, linked-quarter and $413.4 million, or 4.1%, year-over-year. The linked-quarter growth reflects increases in 1-4 family mortgage loans, commercial and industrial loans, and loans to municipalities. Growth in these areas was partially offset by reductions in other loans, construction, land development and other land loans, and other real estate secured loans. Trustmark’s loan portfolio remains well-diversified by loan type and geography.
Deposits totaled $15.1 billion at March 31, 2022, up $26.1 million, or 0.2%, from the prior quarter and $729.9 million, or 5.1%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 68.8% of total deposits at March 31, 2022. Noninterest-bearing deposits represented 31.4% of total deposits at the end of the first quarter, compared to 31.6% in the prior quarter. Interest-bearing deposit costs totaled 0.11% for the first quarter, a decrease of 2 basis points from the prior quarter. The total cost of interest-bearing liabilities was 0.16% for the first quarter of 2022, a decrease of 3 basis points from the prior quarter.
During the first quarter, Trustmark repurchased $9.1 million, or approximately 279 thousand of its common shares, in open market transactions. At March 31, 2022, Trustmark had $90.9 million in remaining authority under its existing stock repurchase program, which expires December 31, 2022. The repurchase program, which is subject to market conditions and management discretion, will continue to be implemented through open market repurchases or privately negotiated transactions. At March 31, 2022, Trustmark’s tangible equity to tangible assets ratio was 7.29%, while its total risk-based capital ratio was 13.53%. Tangible book value per share was $20.22 at March 31, 2022, down 7.8% from the prior quarter reflecting a decline in other comprehensive income due to valuation adjustments on securities available for sale resulting from the increase in market interest rates during the first quarter.
Credit Quality
| • | Allowance for credit losses (ACL) represented 484.01% of nonaccrual loans, excluding individually evaluated loans, at March 31, 2022 |
|---|---|
| • | Recoveries exceeded charge-offs in the first quarter |
| --- | --- |
| • | Other real estate totaled $3.2 million at March 31, 2022 |
| --- | --- |
Nonaccrual loans totaled $64.4 million at March 31, 2022, up $1.7 million from the prior quarter and $885 thousand year-over-year. Other real estate totaled $3.2 million, reflecting a $1.4 million decrease from the prior quarter and a decline of $7.5 million year-over-year. Collectively, nonperforming assets totaled $67.6 million at March 31, 2022, reflecting a linked-quarter increase of $331 thousand and a year-over-year decrease of $6.6 million.
The provision for credit losses for loans HFI was a negative $860 thousand in the first quarter while the provision for credit losses for off-balance sheet credit exposures was a negative $1.1 million. Collectively, the provision for credit losses totaled a negative $2.0 million in the first quarter and was attributable to an increase in reserves due to individually analyzed loans and loan growth which were more than offset by improvements in the macroeconomic forecast and credit quality.
Allocation of Trustmark’s $98.7 million allowance for credit losses on loans HFI represented 0.95% of commercial loans and 0.96% of consumer and home mortgage loans, resulting in an allowance to total loans HFI of 0.95% at March 31, 2022. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.
Revenue Generation
| • | Pre-provision net revenue totaled $31.9 million, an increase of 7.8% linked-quarter; please refer to the Consolidated Financial Information, Footnote 6 – Non-GAAP Financial Measures |
|---|---|
| • | Net interest income (FTE) excluding Paycheck Protection Program (PPP) interest and fees totaled $102.2 million, up 1.3% linked-quarter |
| --- | --- |
| • | Noninterest income increased 6.6% linked-quarter to total $54.1 million, which represented 35.3% of total revenue |
| --- | --- |
Revenue in the first quarter totaled $153.5 million, up 2.9% from the prior quarter and down 5.8% from the same quarter in the prior year. The linked-quarter increase reflected higher net interest income as well as increased noninterest income. The decline in revenue year-over-year was attributable principally to a reduction in interest and fees on PPP loans as well as the decline in mortgage banking revenues from historically high levels.
Net interest income (FTE) in the first quarter totaled $102.3 million, resulting in a net interest margin of 2.58%, up 5 basis points from the prior quarter. The net interest margin, excluding PPP loans and Federal Reserve Bank balance, totaled 2.88% the first quarter, an increase of 6 basis points when compared to the prior quarter. The expansion of the net interest margin excluding PPP loans and the Federal Reserve Bank balance was due to increases in the yields on the loans held for investment and held for sale portfolio and the securities portfolio as well as lower costs of interest-bearing liabilities.
Noninterest income in the first quarter totaled $54.1 million, an increase of $3.3 million from the prior quarter and a decrease of $6.5 million year-over-year. The linked-quarter increases in insurance, wealth management and other, net revenue, which includes a gain on the sale of a former branch facility, were offset in part by a decline in mortgage banking revenue. Mortgage loan production in the first quarter totaled $544.3 million, down 7.9% from the prior quarter and 29.0% year-over-year. Mortgage banking revenue totaled $9.9 million in the first quarter, a decrease of $1.7 million from the prior quarter and $10.9 million year-over-year. The linked-quarter and year-over-year declines were principally attributable to reduced volumes and spreads, which collectively resulted in lower net gains on sales of mortgage loans in the secondary market.
Insurance revenue totaled $14.1 million in the first quarter, up 20.3%, or $2.4 million, from the fourth quarter of 2021 and 13.2%, or $1.6 million, year-over-year. The linked-quarter and year-over-year increase primarily reflected growth in commercial property and casualty commissions. Wealth management revenue in the first quarter totaled $9.1 million, an increase of $297 thousand, or 3.4%, from the prior quarter and $638 thousand, or 7.6%, year-over-year. The linked-quarter growth reflected higher trust management revenue while growth year-over-year reflects increased trust management and brokerage revenue.
Noninterest Expense
| • | Noninterest expense totaled $121.5 million in first quarter, up 1.7% linked-quarter and unchanged year-over year |
|---|---|
| • | Adjusted noninterest expense, which excludes ORE expense, amortization of intangibles, and charitable contributions resulting in state tax credits totaled $120.6 million in the first quarter, up 2.1% from the prior quarter and 0.3% year-over-year. Please refer to the Consolidated Financial Information, Footnote 6 – Non-GAAP Financial Measures |
| --- | --- |
Noninterest expense in the first quarter was $121.5 million, up $2.1 million, or 1.7%, from the prior quarter. Salaries and employee benefits increased $1.3 million linked-quarter principally due to payroll taxes. Services and fees increased $1.5 million linked-quarter due to continued investments in technology and higher professional fees while net occupancy-premises expense grew $263 thousand linked-quarter. Equipment expense and other expense collectively declined $1.1 million linked-quarter.
FIT2GROW
| • | Comprehensive program of Focus, Innovation and Transformation to enhance Trustmark’s growth and profitability |
|---|---|
| • | Market optimization initiatives to accelerate |
| --- | --- |
“We have accelerated our efforts to optimize our branch network, reflecting changing customer preferences and the continued migration to mobile and digital banking channels. We have identified 11 branch offices across the franchise to be closed during 2022, with estimated annualized expense savings of $2.0 million in 2023. Many of these offices are near other existing Trustmark locations. We also anticipate additional opportunities to realign our organizational structure to serve customers more effectively. These initiatives are components of FIT2GROW, a comprehensive program of Focus, Innovation and Transformation designed to enhance Trustmark’s ability to grow and serve customers and build long-term value for our shareholders. More information on these important initiatives will be provided in coming quarters,” said Dewey.
Additional Information
As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, April 27, 2022, at 8:30 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (877) 317-3051 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Wednesday, May 11, 2022, in archived format at the same web address or by calling (877) 344-7529, passcode 7381408.
Trustmark is a financial services company providing banking and financial solutions through 179 offices in Alabama, Florida, Mississippi, Tennessee and Texas.
Forward-Looking Statements
Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “project,” “potential,” “seek,” “continue,” “could,” “would,” “future” or the negative of those terms or other words of similar meaning. You should read statements that contain these words carefully because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements include, but are not limited to, statements relating to anticipated future operating and financial performance measures, including net interest margin, credit quality, business initiatives, growth opportunities and growth rates, among other things, and encompass any estimate, prediction, expectation, projection, opinion, anticipation, outlook or statement of belief included therein as well as the management assumptions underlying these forward-looking statements. You should be aware that the occurrence of the events described under the caption Item 1A. Risk Factors in this report could have an adverse effect on our business, results of operations and financial condition. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected. Furthermore, many of these risks and uncertainties are currently amplified by and may continue to be amplified by or may, in the future, be amplified by, the novel coronavirus (COVID-19) pandemic, and also by the effectiveness of varying governmental responses in ameliorating the impact of the pandemic on our customers and the economies where they operate.
Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels and slowdowns in economic growth, our ability to manage the impact of the COVID-19 pandemic on our markets, as well as the effectiveness of actions of federal, state and local governments and agencies (including the Board of Governors of the Federal Reserve System (FRB)) to mitigate its spread and economic impact, local, state and national economic and market conditions, conditions in the housing and real estate markets in the regions in which Trustmark operates and the extent and duration of the current volatility in the credit and financial markets, levels of and volatility in crude oil prices, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility of market interest rates, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, including the potential impact of issues related to the European financial system and monetary and other governmental actions designed to address credit, securities, and/or commodity markets, the enactment of legislation and changes in existing regulations or enforcement practices or the adoption of new regulations, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits,
technological changes, changes in the financial performance or condition of our borrowers, changes in our ability to control expenses, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, cyber-attacks and other breaches which could affect our information system security, natural disasters, environmental disasters, pandemics or other health crises, acts of war or terrorism, and other risks described in our filings with the Securities and Exchange Commission (SEC).
Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Except as required by law, we undertake no obligation to update or revise any of this information, whether as the result of new information, future events or developments or otherwise.
| Trustmark Investor Contacts: | Trustmark Media Contact: |
|---|---|
| Thomas C. Owens | Melanie A. Morgan |
| Treasurer and | Senior Vice President |
| Principal Financial Officer | 601-208-2979 |
| 601-208-7853 |
F. Joseph Rein, Jr.
Senior Vice President
601-208-6898
| TRUSTMARK CORPORATION AND SUBSIDIARIES | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED FINANCIAL INFORMATION | |||||||||||||||||||
| March 31, 2022 | |||||||||||||||||||
| ($ in thousands) | |||||||||||||||||||
| (unaudited) | |||||||||||||||||||
| Linked Quarter | Year over Year | ||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| QUARTERLY AVERAGE BALANCES | 3/31/2022 | 12/31/2021 | 3/31/2021 | Change | % Change | Change | % Change | ||||||||||||
| Securities AFS-taxable | $ | 3,245,502 | $ | 3,156,740 | $ | 2,098,089 | 2.8 | % | 54.7 | % | |||||||||
| Securities AFS-nontaxable | 5,127 | 5,143 | 5,190 | ) | -0.3 | % | ) | -1.2 | % | ||||||||||
| Securities HTM-taxable | 410,851 | 364,038 | 489,260 | 12.9 | % | ) | -16.0 | % | |||||||||||
| Securities HTM-nontaxable | 7,327 | 7,618 | 24,070 | ) | -3.8 | % | ) | -69.6 | % | ||||||||||
| Total securities | 3,668,807 | 3,533,539 | 2,616,609 | 3.8 | % | 40.2 | % | ||||||||||||
| Paycheck protection program loans (PPP) | 29,009 | 42,749 | 598,139 | ) | -32.1 | % | ) | -95.2 | % | ||||||||||
| Loans (includes loans held for sale) | 10,550,712 | 10,487,679 | 10,316,319 | 0.6 | % | 2.3 | % | ||||||||||||
| Fed funds sold and reverse repurchases | 56 | 58 | 136 | ) | -3.4 | % | ) | -58.8 | % | ||||||||||
| Other earning assets | 1,811,713 | 1,839,498 | 1,667,906 | ) | -1.5 | % | 8.6 | % | |||||||||||
| Total earning assets | 16,060,297 | 15,903,523 | 15,199,109 | 1.0 | % | 5.7 | % | ||||||||||||
| Allowance for credit losses (ACL), loans held<br><br><br>for investment (LHFI) | (99,390 | ) | (104,148 | ) | (119,557 | ) | 4.6 | % | 16.9 | % | |||||||||
| Other assets | 1,550,848 | 1,570,501 | 1,601,250 | ) | -1.3 | % | ) | -3.1 | % | ||||||||||
| Total assets | $ | 17,511,755 | $ | 17,369,876 | $ | 16,680,802 | 0.8 | % | 5.0 | % | |||||||||
| Interest-bearing demand deposits | $ | 4,429,056 | $ | 4,353,599 | $ | 3,743,651 | 1.7 | % | 18.3 | % | |||||||||
| Savings deposits | 4,791,104 | 4,585,624 | 4,659,037 | 4.5 | % | 2.8 | % | ||||||||||||
| Time deposits | 1,193,435 | 1,220,083 | 1,371,830 | ) | -2.2 | % | ) | -13.0 | % | ||||||||||
| Total interest-bearing deposits | 10,413,595 | 10,159,306 | 9,774,518 | 2.5 | % | 6.5 | % | ||||||||||||
| Fed funds purchased and repurchases | 212,006 | 201,856 | 166,909 | 5.0 | % | 27.0 | % | ||||||||||||
| Other borrowings | 91,090 | 94,328 | 166,926 | ) | -3.4 | % | ) | -45.4 | % | ||||||||||
| Subordinated notes | 123,061 | 123,007 | 122,875 | 0.0 | % | 0.2 | % | ||||||||||||
| Junior subordinated debt securities | 61,856 | 61,856 | 61,856 | 0.0 | % | 0.0 | % | ||||||||||||
| Total interest-bearing liabilities | 10,901,608 | 10,640,353 | 10,293,084 | 2.5 | % | 5.9 | % | ||||||||||||
| Noninterest-bearing deposits | 4,601,108 | 4,679,951 | 4,363,559 | ) | -1.7 | % | 5.4 | % | |||||||||||
| Other liabilities | 295,287 | 291,449 | 264,808 | 1.3 | % | 11.5 | % | ||||||||||||
| Total liabilities | 15,798,003 | 15,611,753 | 14,921,451 | 1.2 | % | 5.9 | % | ||||||||||||
| Shareholders' equity | 1,713,752 | 1,758,123 | 1,759,351 | ) | -2.5 | % | ) | -2.6 | % | ||||||||||
| Total liabilities and equity | $ | 17,511,755 | $ | 17,369,876 | $ | 16,680,802 | 0.8 | % | 5.0 | % | |||||||||
| n/m - percentage changes greater than +/- 100% are considered not meaningful |
All values are in US Dollars.
See Notes to Consolidated Financials
| TRUSTMARK CORPORATION AND SUBSIDIARIES | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED FINANCIAL INFORMATION | |||||||||||||||||||
| March 31, 2022 | |||||||||||||||||||
| ($ in thousands) | |||||||||||||||||||
| (unaudited) | |||||||||||||||||||
| Linked Quarter | Year over Year | ||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| PERIOD END BALANCES | 3/31/2022 | 12/31/2021 | 3/31/2021 | Change | % Change | Change | % Change | ||||||||||||
| Cash and due from banks | $ | 1,917,564 | $ | 2,266,829 | $ | 1,774,541 | ) | -15.4 | % | 8.1 | % | ||||||||
| Securities available for sale | 3,018,246 | 3,238,877 | 2,337,676 | ) | -6.8 | % | 29.1 | % | |||||||||||
| Securities held to maturity | 607,598 | 342,537 | 493,738 | 77.4 | % | 23.1 | % | ||||||||||||
| PPP loans | 18,579 | 33,336 | 679,725 | ) | -44.3 | % | ) | -97.3 | % | ||||||||||
| Loans held for sale (LHFS) | 222,538 | 275,706 | 412,999 | ) | -19.3 | % | ) | -46.1 | % | ||||||||||
| Loans held for investment (LHFI) | 10,397,129 | 10,247,829 | 9,983,704 | 1.5 | % | 4.1 | % | ||||||||||||
| ACL LHFI | (98,734 | ) | (99,457 | ) | (109,191 | ) | 0.7 | % | 9.6 | % | |||||||||
| Net LHFI | 10,298,395 | 10,148,372 | 9,874,513 | 1.5 | % | 4.3 | % | ||||||||||||
| Premises and equipment, net | 207,301 | 205,644 | 199,098 | 0.8 | % | 4.1 | % | ||||||||||||
| Mortgage servicing rights | 111,050 | 87,687 | 83,035 | 26.6 | % | 33.7 | % | ||||||||||||
| Goodwill | 384,237 | 384,237 | 384,237 | 0.0 | % | 0.0 | % | ||||||||||||
| Identifiable intangible assets | 4,591 | 5,074 | 6,724 | ) | -9.5 | % | ) | -31.7 | % | ||||||||||
| Other real estate | 3,187 | 4,557 | 10,651 | ) | -30.1 | % | ) | -70.1 | % | ||||||||||
| Operating lease right-of-use assets | 34,048 | 34,603 | 33,704 | ) | -1.6 | % | 1.0 | % | |||||||||||
| Other assets | 614,217 | 568,177 | 587,672 | 8.1 | % | 4.5 | % | ||||||||||||
| Total assets | $ | 17,441,551 | $ | 17,595,636 | $ | 16,878,313 | ) | -0.9 | % | 3.3 | % | ||||||||
| Deposits: | |||||||||||||||||||
| Noninterest-bearing | $ | 4,739,102 | $ | 4,771,065 | $ | 4,705,991 | ) | -0.7 | % | 0.7 | % | ||||||||
| Interest-bearing | 10,374,190 | 10,316,095 | 9,677,449 | 0.6 | % | 7.2 | % | ||||||||||||
| Total deposits | 15,113,292 | 15,087,160 | 14,383,440 | 0.2 | % | 5.1 | % | ||||||||||||
| Fed funds purchased and repurchases | 170,499 | 238,577 | 160,991 | ) | -28.5 | % | 5.9 | % | |||||||||||
| Other borrowings | 84,644 | 91,025 | 145,994 | ) | -7.0 | % | ) | -42.0 | % | ||||||||||
| Subordinated notes | 123,097 | 123,042 | 122,877 | 0.0 | % | 0.2 | % | ||||||||||||
| Junior subordinated debt securities | 61,856 | 61,856 | 61,856 | 0.0 | % | 0.0 | % | ||||||||||||
| ACL on off-balance sheet credit exposures | 34,517 | 35,623 | 29,205 | ) | -3.1 | % | 18.2 | % | |||||||||||
| Operating lease liabilities | 35,912 | 36,468 | 35,389 | ) | -1.5 | % | 1.5 | % | |||||||||||
| Other liabilities | 186,352 | 180,574 | 178,856 | 3.2 | % | 4.2 | % | ||||||||||||
| Total liabilities | 15,810,169 | 15,854,325 | 15,118,608 | ) | -0.3 | % | 4.6 | % | |||||||||||
| Common stock | 12,806 | 12,845 | 13,209 | ) | -0.3 | % | ) | -3.1 | % | ||||||||||
| Capital surplus | 167,094 | 175,913 | 229,892 | ) | -5.0 | % | ) | -27.3 | % | ||||||||||
| Retained earnings | 1,600,138 | 1,585,113 | 1,533,110 | 0.9 | % | 4.4 | % | ||||||||||||
| Accumulated other comprehensive income (loss),<br><br><br>net of tax | (148,656 | ) | (32,560 | ) | (16,506 | ) | ) | n/m | ) | n/m | |||||||||
| Total shareholders' equity | 1,631,382 | 1,741,311 | 1,759,705 | ) | -6.3 | % | ) | -7.3 | % | ||||||||||
| Total liabilities and equity | $ | 17,441,551 | $ | 17,595,636 | $ | 16,878,313 | ) | -0.9 | % | 3.3 | % | ||||||||
| n/m - percentage changes greater than +/- 100% are considered not meaningful |
All values are in US Dollars.
See Notes to Consolidated Financials
| TRUSTMARK CORPORATION AND SUBSIDIARIES | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED FINANCIAL INFORMATION | |||||||||||||||||||
| March 31, 2022 | |||||||||||||||||||
| ($ in thousands except per share data) | |||||||||||||||||||
| (unaudited) | |||||||||||||||||||
| Quarter Ended | Linked Quarter | Year over Year | |||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| INCOME STATEMENTS | 3/31/2022 | 12/31/2021 | 3/31/2021 | Change | % Change | Change | % Change | ||||||||||||
| Interest and fees on LHFS & LHFI-FTE | $ | 93,252 | $ | 94,137 | $ | 93,394 | ) | -0.9 | % | ) | -0.2 | % | |||||||
| Interest and fees on PPP loans | 168 | 397 | 9,241 | ) | -57.7 | % | ) | -98.2 | % | ||||||||||
| Interest on securities-taxable | 12,357 | 10,796 | 8,938 | 14.5 | % | 38.3 | % | ||||||||||||
| Interest on securities-tax exempt-FTE | 122 | 123 | 290 | ) | -0.8 | % | ) | -57.9 | % | ||||||||||
| Other interest income | 817 | 826 | 503 | ) | -1.1 | % | 62.4 | % | |||||||||||
| Total interest income-FTE | 106,716 | 106,279 | 112,366 | 0.4 | % | ) | -5.0 | % | |||||||||||
| Interest on deposits | 2,760 | 3,401 | 5,223 | ) | -18.8 | % | ) | -47.2 | % | ||||||||||
| Interest on fed funds purchased and repurchases | 70 | 66 | 56 | 6.1 | % | 25.0 | % | ||||||||||||
| Other interest expense | 1,539 | 1,580 | 1,857 | ) | -2.6 | % | ) | -17.1 | % | ||||||||||
| Total interest expense | 4,369 | 5,047 | 7,136 | ) | -13.4 | % | ) | -38.8 | % | ||||||||||
| Net interest income-FTE | 102,347 | 101,232 | 105,230 | 1.1 | % | ) | -2.7 | % | |||||||||||
| Provision for credit losses, LHFI | (860 | ) | (4,515 | ) | (10,501 | ) | 81.0 | % | 91.8 | % | |||||||||
| Provision for credit losses, off-balance sheet<br><br><br>credit exposures | (1,106 | ) | 2,939 | (9,367 | ) | ) | n/m | 88.2 | % | ||||||||||
| Net interest income after provision-FTE | 104,313 | 102,808 | 125,098 | 1.5 | % | ) | -16.6 | % | |||||||||||
| Service charges on deposit accounts | 9,451 | 9,366 | 7,356 | 0.9 | % | 28.5 | % | ||||||||||||
| Bank card and other fees | 8,442 | 8,340 | 9,472 | 1.2 | % | ) | -10.9 | % | |||||||||||
| Mortgage banking, net | 9,873 | 11,609 | 20,804 | ) | -15.0 | % | ) | -52.5 | % | ||||||||||
| Insurance commissions | 14,089 | 11,716 | 12,445 | 20.3 | % | 13.2 | % | ||||||||||||
| Wealth management | 9,054 | 8,757 | 8,416 | 3.4 | % | 7.6 | % | ||||||||||||
| Other, net | 3,206 | 979 | 2,090 | n/m | 53.4 | % | |||||||||||||
| Total noninterest income | 54,115 | 50,767 | 60,583 | 6.6 | % | ) | -10.7 | % | |||||||||||
| Salaries and employee benefits | 69,585 | 68,258 | 71,162 | 1.9 | % | ) | -2.2 | % | |||||||||||
| Services and fees | 24,453 | 22,904 | 22,484 | 6.8 | % | 8.8 | % | ||||||||||||
| Net occupancy-premises | 7,079 | 6,816 | 6,795 | 3.9 | % | 4.2 | % | ||||||||||||
| Equipment expense | 6,061 | 6,585 | 6,244 | ) | -8.0 | % | ) | -2.9 | % | ||||||||||
| Other expense | 14,341 | 14,906 | 14,863 | ) | -3.8 | % | ) | -3.5 | % | ||||||||||
| Total noninterest expense | 121,519 | 119,469 | 121,548 | 1.7 | % | ) | 0.0 | % | |||||||||||
| Income before income taxes and tax eq adj | 36,909 | 34,106 | 64,133 | 8.2 | % | ) | -42.4 | % | |||||||||||
| Tax equivalent adjustment | 3,003 | 2,906 | 2,894 | 3.3 | % | 3.8 | % | ||||||||||||
| Income before income taxes | 33,906 | 31,200 | 61,239 | 8.7 | % | ) | -44.6 | % | |||||||||||
| Income taxes | 4,695 | 4,978 | 9,277 | ) | -5.7 | % | ) | -49.4 | % | ||||||||||
| Net income | $ | 29,211 | $ | 26,222 | $ | 51,962 | 11.4 | % | ) | -43.8 | % | ||||||||
| Per share data | |||||||||||||||||||
| Earnings per share - basic | $ | 0.47 | $ | 0.42 | $ | 0.82 | 11.9 | % | ) | -42.7 | % | ||||||||
| Earnings per share - diluted | $ | 0.47 | $ | 0.42 | $ | 0.82 | 11.9 | % | ) | -42.7 | % | ||||||||
| Dividends per share | $ | 0.23 | $ | 0.23 | $ | 0.23 | 0.0 | % | 0.0 | % | |||||||||
| Weighted average shares outstanding | |||||||||||||||||||
| Basic | 61,514,395 | 62,037,884 | 63,395,911 | ||||||||||||||||
| Diluted | 61,709,797 | 62,264,983 | 63,562,503 | ||||||||||||||||
| Period end shares outstanding | 61,463,392 | 61,648,679 | 63,394,522 | ||||||||||||||||
| n/m - percentage changes greater than +/- 100% are considered not meaningful |
All values are in US Dollars.
See Notes to Consolidated Financials
| TRUSTMARK CORPORATION AND SUBSIDIARIES | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED FINANCIAL INFORMATION | |||||||||||||||||||
| March 31, 2022 | |||||||||||||||||||
| ($ in thousands) | |||||||||||||||||||
| (unaudited) | |||||||||||||||||||
| Quarter Ended | Linked Quarter | Year over Year | |||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| NONPERFORMING ASSETS (1) | 3/31/2022 | 12/31/2021 | 3/31/2021 | Change | % Change | Change | % Change | ||||||||||||
| Nonaccrual LHFI | |||||||||||||||||||
| Alabama | $ | 7,506 | $ | 8,182 | $ | 9,161 | ) | -8.3 | % | ) | -18.1 | % | |||||||
| Florida | 310 | 313 | 607 | ) | -1.0 | % | ) | -48.9 | % | ||||||||||
| Mississippi (2) | 21,318 | 21,636 | 35,534 | ) | -1.5 | % | ) | -40.0 | % | ||||||||||
| Tennessee (3) | 9,266 | 10,501 | 12,451 | ) | -11.8 | % | ) | -25.6 | % | ||||||||||
| Texas | 25,999 | 22,066 | 5,761 | 17.8 | % | n/m | |||||||||||||
| Total nonaccrual LHFI | 64,399 | 62,698 | 63,514 | 2.7 | % | 1.4 | % | ||||||||||||
| Other real estate | |||||||||||||||||||
| Alabama | — | — | 3,085 | n/m | ) | -100.0 | % | ||||||||||||
| Mississippi (2) | 3,187 | 4,557 | 7,566 | ) | -30.1 | % | ) | -57.9 | % | ||||||||||
| Tennessee (3) | — | — | — | n/m | n/m | ||||||||||||||
| Total other real estate | 3,187 | 4,557 | 10,651 | ) | -30.1 | % | ) | -70.1 | % | ||||||||||
| Total nonperforming assets | $ | 67,586 | $ | 67,255 | $ | 74,165 | 0.5 | % | ) | -8.9 | % | ||||||||
| LOANS PAST DUE OVER 90 DAYS (1) | |||||||||||||||||||
| LHFI | $ | 1,503 | $ | 2,114 | $ | 2,593 | ) | -28.9 | % | ) | -42.0 | % | |||||||
| LHFS-Guaranteed GNMA serviced loans | |||||||||||||||||||
| (no obligation to repurchase) | $ | 62,078 | $ | 69,894 | $ | 109,566 | ) | -11.2 | % | ) | -43.3 | % | |||||||
| Quarter Ended | Linked Quarter | Year over Year | |||||||||||||||||
| ACL LHFI (1) | 3/31/2022 | 12/31/2021 | 3/31/2021 | Change | % Change | Change | % Change | ||||||||||||
| Beginning Balance | $ | 99,457 | $ | 104,073 | $ | 117,306 | ) | -4.4 | % | ) | -15.2 | % | |||||||
| Provision for credit losses, LHFI | (860 | ) | (4,515 | ) | (10,501 | ) | 81.0 | % | 91.8 | % | |||||||||
| Charge-offs | (2,242 | ) | (2,616 | ) | (1,245 | ) | 14.3 | % | ) | -80.1 | % | ||||||||
| Recoveries | 2,379 | 2,515 | 3,631 | ) | -5.4 | % | ) | -34.5 | % | ||||||||||
| Net (charge-offs) recoveries | 137 | (101 | ) | 2,386 | n/m | ) | -94.3 | % | |||||||||||
| Ending Balance | $ | 98,734 | $ | 99,457 | $ | 109,191 | ) | -0.7 | % | ) | -9.6 | % | |||||||
| NET (CHARGE-OFFS) RECOVERIES (1) | |||||||||||||||||||
| Alabama | $ | 699 | $ | 747 | $ | 102 | ) | -6.4 | % | n/m | |||||||||
| Florida | (26 | ) | (32 | ) | 30 | 18.8 | % | ) | n/m | ||||||||||
| Mississippi (2) | (88 | ) | (683 | ) | 2,207 | 87.1 | % | ) | n/m | ||||||||||
| Tennessee (3) | (424 | ) | (130 | ) | 47 | ) | n/m | ) | n/m | ||||||||||
| Texas | (24 | ) | (3 | ) | — | ) | n/m | ) | n/m | ||||||||||
| Total net (charge-offs) recoveries | $ | 137 | $ | (101 | ) | $ | 2,386 | n/m | ) | -94.3 | % | ||||||||
| (1) Excludes PPP loans. | |||||||||||||||||||
| (2) Mississippi includes Central and Southern Mississippi Regions. | |||||||||||||||||||
| (3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions. | |||||||||||||||||||
| n/m - percentage changes greater than +/- 100% are considered not meaningful |
All values are in US Dollars.
See Notes to Consolidated Financials
| TRUSTMARK CORPORATION AND SUBSIDIARIES | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED FINANCIAL INFORMATION | |||||||||||||||
| March 31, 2022 | |||||||||||||||
| ($ in thousands) | |||||||||||||||
| (unaudited) | |||||||||||||||
| Quarter Ended | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| AVERAGE BALANCES | 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | ||||||||||
| Securities AFS-taxable | $ | 3,245,502 | $ | 3,156,740 | $ | 2,686,765 | $ | 2,339,662 | $ | 2,098,089 | |||||
| Securities AFS-nontaxable | 5,127 | 5,143 | 5,159 | 5,174 | 5,190 | ||||||||||
| Securities HTM-taxable | 410,851 | 364,038 | 401,685 | 441,688 | 489,260 | ||||||||||
| Securities HTM-nontaxable | 7,327 | 7,618 | 8,641 | 10,958 | 24,070 | ||||||||||
| Total securities | 3,668,807 | 3,533,539 | 3,102,250 | 2,797,482 | 2,616,609 | ||||||||||
| PPP loans | 29,009 | 42,749 | 122,176 | 648,222 | 598,139 | ||||||||||
| Loans (includes loans held for sale) | 10,550,712 | 10,487,679 | 10,389,826 | 10,315,927 | 10,316,319 | ||||||||||
| Fed funds sold and reverse repurchases | 56 | 58 | 69 | 55 | 136 | ||||||||||
| Other earning assets | 1,811,713 | 1,839,498 | 2,038,515 | 1,750,385 | 1,667,906 | ||||||||||
| Total earning assets | 16,060,297 | 15,903,523 | 15,652,836 | 15,512,071 | 15,199,109 | ||||||||||
| ACL LHFI | (99,390 | ) | (104,148 | ) | (104,857 | ) | (112,346 | ) | (119,557 | ) | |||||
| Other assets | 1,550,848 | 1,570,501 | 1,602,611 | 1,622,388 | 1,601,250 | ||||||||||
| Total assets | $ | 17,511,755 | $ | 17,369,876 | $ | 17,150,590 | $ | 17,022,113 | $ | 16,680,802 | |||||
| Interest-bearing demand deposits | $ | 4,429,056 | $ | 4,353,599 | $ | 4,224,717 | $ | 4,056,910 | $ | 3,743,651 | |||||
| Savings deposits | 4,791,104 | 4,585,624 | 4,617,683 | 4,627,180 | 4,659,037 | ||||||||||
| Time deposits | 1,193,435 | 1,220,083 | 1,258,829 | 1,301,896 | 1,371,830 | ||||||||||
| Total interest-bearing deposits | 10,413,595 | 10,159,306 | 10,101,229 | 9,985,986 | 9,774,518 | ||||||||||
| Fed funds purchased and repurchases | 212,006 | 201,856 | 147,635 | 174,620 | 166,909 | ||||||||||
| Other borrowings | 91,090 | 94,328 | 109,735 | 132,199 | 166,926 | ||||||||||
| Subordinated notes | 123,061 | 123,007 | 122,951 | 122,897 | 122,875 | ||||||||||
| Junior subordinated debt securities | 61,856 | 61,856 | 61,856 | 61,856 | 61,856 | ||||||||||
| Total interest-bearing liabilities | 10,901,608 | 10,640,353 | 10,543,406 | 10,477,558 | 10,293,084 | ||||||||||
| Noninterest-bearing deposits | 4,601,108 | 4,679,951 | 4,566,924 | 4,512,268 | 4,363,559 | ||||||||||
| Other liabilities | 295,287 | 291,449 | 257,956 | 251,582 | 264,808 | ||||||||||
| Total liabilities | 15,798,003 | 15,611,753 | 15,368,286 | 15,241,408 | 14,921,451 | ||||||||||
| Shareholders' equity | 1,713,752 | 1,758,123 | 1,782,304 | 1,780,705 | 1,759,351 | ||||||||||
| Total liabilities and equity | $ | 17,511,755 | $ | 17,369,876 | $ | 17,150,590 | $ | 17,022,113 | $ | 16,680,802 |
See Notes to Consolidated Financials
| TRUSTMARK CORPORATION AND SUBSIDIARIES | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED FINANCIAL INFORMATION | |||||||||||||||
| March 31, 2022 | |||||||||||||||
| ($ in thousands) | |||||||||||||||
| (unaudited) | |||||||||||||||
| PERIOD END BALANCES | 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Cash and due from banks | $ | 1,917,564 | $ | 2,266,829 | $ | 2,175,058 | $ | 2,267,224 | $ | 1,774,541 | |||||
| Securities available for sale | 3,018,246 | 3,238,877 | 3,057,605 | 2,548,739 | 2,337,676 | ||||||||||
| Securities held to maturity | 607,598 | 342,537 | 394,905 | 433,012 | 493,738 | ||||||||||
| PPP loans | 18,579 | 33,336 | 46,486 | 166,119 | 679,725 | ||||||||||
| LHFS | 222,538 | 275,706 | 335,339 | 332,132 | 412,999 | ||||||||||
| LHFI | 10,397,129 | 10,247,829 | 10,174,899 | 10,152,869 | 9,983,704 | ||||||||||
| ACL LHFI | (98,734 | ) | (99,457 | ) | (104,073 | ) | (104,032 | ) | (109,191 | ) | |||||
| Net LHFI | 10,298,395 | 10,148,372 | 10,070,826 | 10,048,837 | 9,874,513 | ||||||||||
| Premises and equipment, net | 207,301 | 205,644 | 201,937 | 200,970 | 199,098 | ||||||||||
| Mortgage servicing rights | 111,050 | 87,687 | 84,101 | 80,764 | 83,035 | ||||||||||
| Goodwill | 384,237 | 384,237 | 384,237 | 384,237 | 384,237 | ||||||||||
| Identifiable intangible assets | 4,591 | 5,074 | 5,621 | 6,170 | 6,724 | ||||||||||
| Other real estate | 3,187 | 4,557 | 6,213 | 9,439 | 10,651 | ||||||||||
| Operating lease right-of-use assets | 34,048 | 34,603 | 34,689 | 33,201 | 33,704 | ||||||||||
| Other assets | 614,217 | 568,177 | 567,627 | 587,288 | 587,672 | ||||||||||
| Total assets | $ | 17,441,551 | $ | 17,595,636 | $ | 17,364,644 | $ | 17,098,132 | $ | 16,878,313 | |||||
| Deposits: | |||||||||||||||
| Noninterest-bearing | $ | 4,739,102 | $ | 4,771,065 | $ | 4,987,885 | $ | 4,446,991 | $ | 4,705,991 | |||||
| Interest-bearing | 10,374,190 | 10,316,095 | 9,934,954 | 10,185,093 | 9,677,449 | ||||||||||
| Total deposits | 15,113,292 | 15,087,160 | 14,922,839 | 14,632,084 | 14,383,440 | ||||||||||
| Fed funds purchased and repurchases | 170,499 | 238,577 | 146,417 | 157,176 | 160,991 | ||||||||||
| Other borrowings | 84,644 | 91,025 | 94,889 | 117,223 | 145,994 | ||||||||||
| Subordinated notes | 123,097 | 123,042 | 122,987 | 122,932 | 122,877 | ||||||||||
| Junior subordinated debt securities | 61,856 | 61,856 | 61,856 | 61,856 | 61,856 | ||||||||||
| ACL on off-balance sheet credit exposures | 34,517 | 35,623 | 32,684 | 33,733 | 29,205 | ||||||||||
| Operating lease liabilities | 35,912 | 36,468 | 36,531 | 34,959 | 35,389 | ||||||||||
| Other liabilities | 186,352 | 180,574 | 177,494 | 158,860 | 178,856 | ||||||||||
| Total liabilities | 15,810,169 | 15,854,325 | 15,595,697 | 15,318,823 | 15,118,608 | ||||||||||
| Common stock | 12,806 | 12,845 | 13,014 | 13,079 | 13,209 | ||||||||||
| Capital surplus | 167,094 | 175,913 | 201,837 | 210,420 | 229,892 | ||||||||||
| Retained earnings | 1,600,138 | 1,585,113 | 1,573,176 | 1,566,451 | 1,533,110 | ||||||||||
| Accumulated other comprehensive income (loss), net of tax | (148,656 | ) | (32,560 | ) | (19,080 | ) | (10,641 | ) | (16,506 | ) | |||||
| Total shareholders' equity | 1,631,382 | 1,741,311 | 1,768,947 | 1,779,309 | 1,759,705 | ||||||||||
| Total liabilities and equity | $ | 17,441,551 | $ | 17,595,636 | $ | 17,364,644 | $ | 17,098,132 | $ | 16,878,313 |
See Notes to Consolidated Financials
| TRUSTMARK CORPORATION AND SUBSIDIARIES | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED FINANCIAL INFORMATION | |||||||||||||||
| March 31, 2022 | |||||||||||||||
| ($ in thousands except per share data) | |||||||||||||||
| (unaudited) | |||||||||||||||
| Quarter Ended | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| INCOME STATEMENTS | 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | ||||||||||
| Interest and fees on LHFS & LHFI-FTE | $ | 93,252 | $ | 94,137 | $ | 94,101 | $ | 93,698 | $ | 93,394 | |||||
| Interest and fees on PPP loans | 168 | 397 | 1,533 | 25,555 | 9,241 | ||||||||||
| Interest on securities-taxable | 12,357 | 10,796 | 9,973 | 8,991 | 8,938 | ||||||||||
| Interest on securities-tax exempt-FTE | 122 | 123 | 132 | 149 | 290 | ||||||||||
| Other interest income | 817 | 826 | 949 | 489 | 503 | ||||||||||
| Total interest income-FTE | 106,716 | 106,279 | 106,688 | 128,882 | 112,366 | ||||||||||
| Interest on deposits | 2,760 | 3,401 | 3,691 | 4,630 | 5,223 | ||||||||||
| Interest on fed funds purchased and repurchases | 70 | 66 | 51 | 59 | 56 | ||||||||||
| Other interest expense | 1,539 | 1,580 | 1,733 | 1,813 | 1,857 | ||||||||||
| Total interest expense | 4,369 | 5,047 | 5,475 | 6,502 | 7,136 | ||||||||||
| Net interest income-FTE | 102,347 | 101,232 | 101,213 | 122,380 | 105,230 | ||||||||||
| Provision for credit losses, LHFI | (860 | ) | (4,515 | ) | (2,492 | ) | (3,991 | ) | (10,501 | ) | |||||
| Provision for credit losses, off-balance sheet credit exposures | (1,106 | ) | 2,939 | (1,049 | ) | 4,528 | (9,367 | ) | |||||||
| Net interest income after provision-FTE | 104,313 | 102,808 | 104,754 | 121,843 | 125,098 | ||||||||||
| Service charges on deposit accounts | 9,451 | 9,366 | 8,911 | 7,613 | 7,356 | ||||||||||
| Bank card and other fees | 8,442 | 8,340 | 8,549 | 8,301 | 9,472 | ||||||||||
| Mortgage banking, net | 9,873 | 11,609 | 14,004 | 17,333 | 20,804 | ||||||||||
| Insurance commissions | 14,089 | 11,716 | 12,133 | 12,217 | 12,445 | ||||||||||
| Wealth management | 9,054 | 8,757 | 9,071 | 8,946 | 8,416 | ||||||||||
| Other, net | 3,206 | 979 | 1,481 | 2,001 | 2,090 | ||||||||||
| Total noninterest income | 54,115 | 50,767 | 54,149 | 56,411 | 60,583 | ||||||||||
| Salaries and employee benefits | 69,585 | 68,258 | 74,623 | 70,115 | 71,162 | ||||||||||
| Services and fees | 24,453 | 22,904 | 22,306 | 21,769 | 22,484 | ||||||||||
| Net occupancy-premises | 7,079 | 6,816 | 6,854 | 6,578 | 6,795 | ||||||||||
| Equipment expense | 6,061 | 6,585 | 5,941 | 5,567 | 6,244 | ||||||||||
| Other expense | 14,341 | 14,906 | 19,876 | 14,650 | 14,863 | ||||||||||
| Total noninterest expense | 121,519 | 119,469 | 129,600 | 118,679 | 121,548 | ||||||||||
| Income before income taxes and tax eq adj | 36,909 | 34,106 | 29,303 | 59,575 | 64,133 | ||||||||||
| Tax equivalent adjustment | 3,003 | 2,906 | 2,947 | 2,957 | 2,894 | ||||||||||
| Income before income taxes | 33,906 | 31,200 | 26,356 | 56,618 | 61,239 | ||||||||||
| Income taxes | 4,695 | 4,978 | 5,156 | 8,637 | 9,277 | ||||||||||
| Net income | $ | 29,211 | $ | 26,222 | $ | 21,200 | $ | 47,981 | $ | 51,962 | |||||
| Per share data | |||||||||||||||
| Earnings per share - basic | $ | 0.47 | $ | 0.42 | $ | 0.34 | $ | 0.76 | $ | 0.82 | |||||
| Earnings per share - diluted | $ | 0.47 | $ | 0.42 | $ | 0.34 | $ | 0.76 | $ | 0.82 | |||||
| Dividends per share | $ | 0.23 | $ | 0.23 | $ | 0.23 | $ | 0.23 | $ | 0.23 | |||||
| Weighted average shares outstanding | |||||||||||||||
| Basic | 61,514,395 | 62,037,884 | 62,521,684 | 63,214,593 | 63,395,911 | ||||||||||
| Diluted | 61,709,797 | 62,264,983 | 62,730,157 | 63,409,683 | 63,562,503 | ||||||||||
| Period end shares outstanding | 61,463,392 | 61,648,679 | 62,461,832 | 62,773,226 | 63,394,522 |
See Notes to Consolidated Financials
| TRUSTMARK CORPORATION AND SUBSIDIARIES | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED FINANCIAL INFORMATION | |||||||||||||||
| March 31, 2022 | |||||||||||||||
| ($ in thousands) | |||||||||||||||
| (unaudited) | |||||||||||||||
| Quarter Ended | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| NONPERFORMING ASSETS (1) | 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | ||||||||||
| Nonaccrual LHFI | |||||||||||||||
| Alabama | $ | 7,506 | $ | 8,182 | $ | 9,223 | $ | 8,952 | $ | 9,161 | |||||
| Florida | 310 | 313 | 381 | 467 | 607 | ||||||||||
| Mississippi (2) | 21,318 | 21,636 | 22,898 | 23,422 | 35,534 | ||||||||||
| Tennessee (3) | 9,266 | 10,501 | 10,356 | 10,751 | 12,451 | ||||||||||
| Texas | 25,999 | 22,066 | 23,382 | 7,856 | 5,761 | ||||||||||
| Total nonaccrual LHFI | 64,399 | 62,698 | 66,240 | 51,448 | 63,514 | ||||||||||
| Other real estate | |||||||||||||||
| Alabama | — | — | 613 | 2,830 | 3,085 | ||||||||||
| Mississippi (2) | 3,187 | 4,557 | 5,600 | 6,550 | 7,566 | ||||||||||
| Tennessee (3) | — | — | — | 59 | — | ||||||||||
| Total other real estate | 3,187 | 4,557 | 6,213 | 9,439 | 10,651 | ||||||||||
| Total nonperforming assets | $ | 67,586 | $ | 67,255 | $ | 72,453 | $ | 60,887 | $ | 74,165 | |||||
| LOANS PAST DUE OVER 90 DAYS (1) | |||||||||||||||
| LHFI | $ | 1,503 | $ | 2,114 | $ | 625 | $ | 423 | $ | 2,593 | |||||
| LHFS-Guaranteed GNMA serviced loans | |||||||||||||||
| (no obligation to repurchase) | $ | 62,078 | $ | 69,894 | $ | 75,091 | $ | 81,538 | $ | 109,566 | |||||
| Quarter Ended | |||||||||||||||
| ACL LHFI (1) | 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | ||||||||||
| Beginning Balance | $ | 99,457 | $ | 104,073 | $ | 104,032 | $ | 109,191 | $ | 117,306 | |||||
| Provision for credit losses, LHFI | (860 | ) | (4,515 | ) | (2,492 | ) | (3,991 | ) | (10,501 | ) | |||||
| Charge-offs | (2,242 | ) | (2,616 | ) | (1,586 | ) | (4,828 | ) | (1,245 | ) | |||||
| Recoveries | 2,379 | 2,515 | 4,119 | 3,660 | 3,631 | ||||||||||
| Net (charge-offs) recoveries | 137 | (101 | ) | 2,533 | (1,168 | ) | 2,386 | ||||||||
| Ending Balance | $ | 98,734 | $ | 99,457 | $ | 104,073 | $ | 104,032 | $ | 109,191 | |||||
| NET (CHARGE-OFFS) RECOVERIES (1) | |||||||||||||||
| Alabama | $ | 699 | $ | 747 | $ | 247 | $ | 203 | $ | 102 | |||||
| Florida | (26 | ) | (32 | ) | 356 | 167 | 30 | ||||||||
| Mississippi (2) | (88 | ) | (683 | ) | 1,436 | (3,071 | ) | 2,207 | |||||||
| Tennessee (3) | (424 | ) | (130 | ) | (8 | ) | 1,031 | 47 | |||||||
| Texas | (24 | ) | (3 | ) | 502 | 502 | — | ||||||||
| Total net (charge-offs) recoveries | $ | 137 | $ | (101 | ) | $ | 2,533 | $ | (1,168 | ) | $ | 2,386 | |||
| (1) Excludes PPP loans. | |||||||||||||||
| (2) Mississippi includes Central and Southern Mississippi Regions. | |||||||||||||||
| (3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions. |
See Notes to Consolidated Financials
| TRUSTMARK CORPORATION AND SUBSIDIARIES | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED FINANCIAL INFORMATION | |||||||||||||||
| March 31, 2022 | |||||||||||||||
| (unaudited) | |||||||||||||||
| Quarter Ended | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| FINANCIAL RATIOS AND OTHER DATA | 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | ||||||||||
| Return on average equity | 6.91 | % | 5.92 | % | 4.72 | % | 10.81 | % | 11.98 | % | |||||
| Return on average tangible equity | 9.05 | % | 7.72 | % | 6.16 | % | 13.96 | % | 15.56 | % | |||||
| Return on average assets | 0.68 | % | 0.60 | % | 0.49 | % | 1.13 | % | 1.26 | % | |||||
| Interest margin - Yield - FTE | 2.69 | % | 2.65 | % | 2.70 | % | 3.33 | % | 3.00 | % | |||||
| Interest margin - Cost | 0.11 | % | 0.13 | % | 0.14 | % | 0.17 | % | 0.19 | % | |||||
| Net interest margin - FTE | 2.58 | % | 2.53 | % | 2.57 | % | 3.16 | % | 2.81 | % | |||||
| Efficiency ratio (1) | 76.44 | % | 76.52 | % | 74.10 | % | 64.31 | % | 71.84 | % | |||||
| Full-time equivalent employees | 2,725 | 2,692 | 2,680 | 2,772 | 2,793 | ||||||||||
| CREDIT QUALITY RATIOS (2) | |||||||||||||||
| Net (recoveries) charge-offs / average loans | -0.01 | % | 0.00 | % | -0.10 | % | 0.05 | % | -0.09 | % | |||||
| Provision for credit losses, LHFI / average loans | -0.03 | % | -0.17 | % | -0.10 | % | -0.16 | % | -0.41 | % | |||||
| Nonaccrual LHFI / (LHFI + LHFS) | 0.61 | % | 0.60 | % | 0.63 | % | 0.49 | % | 0.61 | % | |||||
| Nonperforming assets / (LHFI + LHFS) | 0.64 | % | 0.64 | % | 0.69 | % | 0.58 | % | 0.71 | % | |||||
| Nonperforming assets / (LHFI + LHFS + other real estate) | 0.64 | % | 0.64 | % | 0.69 | % | 0.58 | % | 0.71 | % | |||||
| ACL LHFI / LHFI | 0.95 | % | 0.97 | % | 1.02 | % | 1.02 | % | 1.09 | % | |||||
| ACL LHFI-commercial / commercial LHFI | 0.95 | % | 1.00 | % | 1.05 | % | 1.04 | % | 1.13 | % | |||||
| ACL LHFI-consumer / consumer and home mortgage LHFI | 0.96 | % | 0.87 | % | 0.91 | % | 0.98 | % | 0.95 | % | |||||
| ACL LHFI / nonaccrual LHFI | 153.32 | % | 158.63 | % | 157.11 | % | 202.21 | % | 171.92 | % | |||||
| ACL LHFI / nonaccrual LHFI (excl individually evaluated loans) | 484.01 | % | 500.85 | % | 520.77 | % | 537.35 | % | 437.08 | % | |||||
| CAPITAL RATIOS | |||||||||||||||
| Total equity / total assets | 9.35 | % | 9.90 | % | 10.19 | % | 10.41 | % | 10.43 | % | |||||
| Tangible equity / tangible assets | 7.29 | % | 7.86 | % | 8.12 | % | 8.31 | % | 8.30 | % | |||||
| Tangible equity / risk-weighted assets | 9.79 | % | 10.71 | % | 11.19 | % | 11.33 | % | 11.23 | % | |||||
| Tier 1 leverage ratio | 8.66 | % | 8.73 | % | 8.92 | % | 9.00 | % | 9.11 | % | |||||
| Common equity tier 1 capital ratio | 11.23 | % | 11.29 | % | 11.68 | % | 11.76 | % | 11.71 | % | |||||
| Tier 1 risk-based capital ratio | 11.70 | % | 11.77 | % | 12.17 | % | 12.25 | % | 12.20 | % | |||||
| Total risk-based capital ratio | 13.53 | % | 13.55 | % | 14.01 | % | 14.10 | % | 14.07 | % | |||||
| STOCK PERFORMANCE | |||||||||||||||
| Market value-Close | $ | 30.39 | $ | 32.46 | $ | 32.22 | $ | 30.80 | $ | 33.66 | |||||
| Book value | $ | 26.54 | $ | 28.25 | $ | 28.32 | $ | 28.35 | $ | 27.76 | |||||
| Tangible book value | $ | 20.22 | $ | 21.93 | $ | 22.08 | $ | 22.13 | $ | 21.59 | |||||
| (1) See Note 6 – Non-GAAP Financial Measures in the Notes to Consolidated Financials for Trustmark’s efficiency ratio calculation. | |||||||||||||||
| (2) Excludes PPP loans. |
See Notes to Consolidated Financials
| TRUSTMARK CORPORATION AND SUBSIDIARIES |
|---|
| NOTES TO CONSOLIDATED FINANCIALS |
| March 31, 2022 |
| ($ in thousands) |
| (unaudited) |
Note 1 - Securities Available for Sale and Held to Maturity
The following table is a summary of the estimated fair value of securities available for sale and the amortized cost of securities held to maturity:
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| SECURITIES AVAILABLE FOR SALE | ||||||||||
| U.S. Treasury securities | $ | 361,822 | $ | 344,640 | $ | 278,615 | $ | 30,025 | $ | — |
| U.S. Government agency obligations | 12,623 | 13,727 | 14,979 | 16,023 | 17,349 | |||||
| Obligations of states and political subdivisions | 5,359 | 5,714 | 5,734 | 5,807 | 5,798 | |||||
| Mortgage-backed securities | ||||||||||
| Residential mortgage pass-through securities | ||||||||||
| Guaranteed by GNMA | 35,117 | 39,573 | 43,860 | 48,445 | 52,406 | |||||
| Issued by FNMA and FHLMC | 2,038,331 | 2,218,429 | 2,187,412 | 1,983,783 | 1,749,144 | |||||
| Other residential mortgage-backed securities | ||||||||||
| Issued or guaranteed by FNMA, FHLMC, or GNMA | 164,506 | 196,690 | 236,885 | 283,988 | 345,869 | |||||
| Commercial mortgage-backed securities | ||||||||||
| Issued or guaranteed by FNMA, FHLMC, or GNMA | 400,488 | 420,104 | 290,120 | 180,668 | 167,110 | |||||
| Total securities available for sale | $ | 3,018,246 | $ | 3,238,877 | $ | 3,057,605 | $ | 2,548,739 | $ | 2,337,676 |
| SECURITIES HELD TO MATURITY | ||||||||||
| Obligations of states and political subdivisions | $ | 7,324 | $ | 7,328 | $ | 10,683 | $ | 12,994 | $ | 26,554 |
| Mortgage-backed securities | ||||||||||
| Residential mortgage pass-through securities | ||||||||||
| Guaranteed by GNMA | 4,831 | 5,005 | 5,912 | 6,249 | 7,268 | |||||
| Issued by FNMA and FHLMC | 192,373 | 43,444 | 48,554 | 53,406 | 61,855 | |||||
| Other residential mortgage-backed securities | ||||||||||
| Issued or guaranteed by FNMA, FHLMC, or GNMA | 224,012 | 241,934 | 264,638 | 291,477 | 324,360 | |||||
| Commercial mortgage-backed securities | ||||||||||
| Issued or guaranteed by FNMA, FHLMC, or GNMA | 179,058 | 44,826 | 65,118 | 68,886 | 73,701 | |||||
| Total securities held to maturity | $ | 607,598 | $ | 342,537 | $ | 394,905 | $ | 433,012 | $ | 493,738 |
At March 31, 2022, the net unamortized, unrealized loss included in accumulated other comprehensive income (loss) in the accompanying balance sheet for securities held to maturity previously transferred from securities available for sale totaled approximately $5.8 million ($4.3 million, net of tax).
Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 99.7% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE.
Note 2 – Loan Composition
LHFI consisted of the following during the periods presented:
| LHFI BY TYPE | 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Loans secured by real estate: | |||||||||||||||
| Construction, land development and other land loans | $ | 1,273,959 | $ | 1,308,781 | $ | 1,286,613 | $ | 1,360,302 | $ | 1,342,088 | |||||
| Secured by 1-4 family residential properties | 2,106,998 | 1,977,993 | 1,891,292 | 1,810,396 | 1,742,782 | ||||||||||
| Secured by nonfarm, nonresidential properties | 2,975,039 | 2,977,084 | 2,924,953 | 2,819,662 | 2,799,195 | ||||||||||
| Other real estate secured | 715,939 | 726,043 | 986,163 | 1,078,622 | 1,135,005 | ||||||||||
| Commercial and industrial loans | 1,495,060 | 1,414,279 | 1,327,211 | 1,326,605 | 1,323,277 | ||||||||||
| Consumer loans | 154,215 | 159,472 | 157,963 | 153,519 | 153,267 | ||||||||||
| State and other political subdivision loans | 1,215,023 | 1,146,251 | 1,125,186 | 1,136,764 | 1,036,694 | ||||||||||
| Other loans | 460,896 | 537,926 | 475,518 | 466,999 | 451,396 | ||||||||||
| LHFI | 10,397,129 | 10,247,829 | 10,174,899 | 10,152,869 | 9,983,704 | ||||||||||
| ACL LHFI | (98,734 | ) | (99,457 | ) | (104,073 | ) | (104,032 | ) | (109,191 | ) | |||||
| Net LHFI | $ | 10,298,395 | $ | 10,148,372 | $ | 10,070,826 | $ | 10,048,837 | $ | 9,874,513 | |||||
| TRUSTMARK CORPORATION AND SUBSIDIARIES | |||||||||||||||
| --- | |||||||||||||||
| NOTES TO CONSOLIDATED FINANCIALS | |||||||||||||||
| March 31, 2022 | |||||||||||||||
| ($ in thousands) | |||||||||||||||
| (unaudited) |
Note 2 – Loan Composition (continued)
The following table presents the LHFI composition by region and reflects each region’s diversified mix of loans:
| March 31, 2022 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| LHFI - COMPOSITION BY REGION | Total | Alabama | Florida | Mississippi<br><br><br>(Central and<br><br><br>Southern<br><br><br>Regions) | Tennessee<br><br><br>(Memphis, TN and<br><br><br>Northern MS<br><br><br>Regions) | Texas | ||||||
| Loans secured by real estate: | ||||||||||||
| Construction, land development and other land loans | $ | 1,273,959 | $ | 529,999 | $ | 48,309 | $ | 352,191 | $ | 53,661 | $ | 289,799 |
| Secured by 1-4 family residential properties | 2,106,998 | 111,960 | 41,219 | 1,870,529 | 66,423 | 16,867 | ||||||
| Secured by nonfarm, nonresidential properties | 2,975,039 | 859,687 | 255,757 | 1,125,568 | 180,042 | 553,985 | ||||||
| Other real estate secured | 715,939 | 171,769 | 6,691 | 267,558 | 20,747 | 249,174 | ||||||
| Commercial and industrial loans | 1,495,060 | 323,940 | 24,462 | 637,245 | 280,006 | 229,407 | ||||||
| Consumer loans | 154,215 | 22,749 | 8,203 | 97,681 | 18,128 | 7,454 | ||||||
| State and other political subdivision loans | 1,215,023 | 89,009 | 73,548 | 758,807 | 33,627 | 260,032 | ||||||
| Other loans | 460,896 | 75,916 | 11,219 | 290,692 | 35,503 | 47,566 | ||||||
| Loans | $ | 10,397,129 | $ | 2,185,029 | $ | 469,408 | $ | 5,400,271 | $ | 688,137 | $ | 1,654,284 |
| CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION | ||||||||||||
| Lots | $ | 66,342 | $ | 30,229 | $ | 10,368 | $ | 16,696 | $ | 3,179 | $ | 5,870 |
| Development | 120,992 | 52,238 | 555 | 30,884 | 12,141 | 25,174 | ||||||
| Unimproved land | 102,184 | 24,360 | 11,889 | 33,738 | 11,020 | 21,177 | ||||||
| 1-4 family construction | 338,813 | 157,819 | 20,402 | 93,811 | 26,304 | 40,477 | ||||||
| Other construction | 645,628 | 265,353 | 5,095 | 177,062 | 1,017 | 197,101 | ||||||
| Construction, land development and other land loans | $ | 1,273,959 | $ | 529,999 | $ | 48,309 | $ | 352,191 | $ | 53,661 | $ | 289,799 |
| LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION | ||||||||||||
| Non-owner occupied: | ||||||||||||
| Retail | $ | 354,974 | $ | 132,872 | $ | 35,777 | $ | 100,409 | $ | 22,650 | $ | 63,266 |
| Office | 200,790 | 68,636 | 22,721 | 65,783 | 11,708 | 31,942 | ||||||
| Hotel/motel | 340,296 | 185,774 | 77,052 | 31,274 | 31,782 | 14,414 | ||||||
| Mini-storage | 157,182 | 22,984 | 2,100 | 103,191 | 432 | 28,475 | ||||||
| Industrial | 281,324 | 91,265 | 19,647 | 100,512 | 133 | 69,767 | ||||||
| Health care | 60,365 | 20,933 | 1,073 | 35,057 | 357 | 2,945 | ||||||
| Convenience stores | 20,328 | 8,270 | 668 | 5,971 | 1,144 | 4,275 | ||||||
| Nursing homes/senior living | 247,036 | 97,362 | — | 86,447 | 6,101 | 57,126 | ||||||
| Other | 80,353 | 18,638 | 7,089 | 27,329 | 11,458 | 15,839 | ||||||
| Total non-owner occupied loans | 1,742,648 | 646,734 | 166,127 | 555,973 | 85,765 | 288,049 | ||||||
| Owner-occupied: | ||||||||||||
| Office | 174,447 | 38,250 | 37,682 | 58,774 | 12,933 | 26,808 | ||||||
| Churches | 81,601 | 18,512 | 5,630 | 45,644 | 8,296 | 3,519 | ||||||
| Industrial warehouses | 179,800 | 17,012 | 2,683 | 51,383 | 18,796 | 89,926 | ||||||
| Health care | 117,428 | 11,815 | 6,709 | 81,711 | 2,257 | 14,936 | ||||||
| Convenience stores | 141,493 | 13,915 | 18,399 | 67,249 | 444 | 41,486 | ||||||
| Retail | 71,684 | 10,740 | 10,473 | 19,559 | 18,668 | 12,244 | ||||||
| Restaurants | 55,403 | 4,616 | 4,867 | 29,491 | 12,460 | 3,969 | ||||||
| Auto dealerships | 51,150 | 5,798 | 249 | 25,856 | 19,247 | — | ||||||
| Nursing homes/senior living | 236,661 | 85,536 | — | 124,925 | — | 26,200 | ||||||
| Other | 122,724 | 6,759 | 2,938 | 65,003 | 1,176 | 46,848 | ||||||
| Total owner-occupied loans | 1,232,391 | 212,953 | 89,630 | 569,595 | 94,277 | 265,936 | ||||||
| Loans secured by nonfarm, nonresidential properties | $ | 2,975,039 | $ | 859,687 | $ | 255,757 | $ | 1,125,568 | $ | 180,042 | $ | 553,985 |
| TRUSTMARK CORPORATION AND SUBSIDIARIES | ||||||||||||
| --- | ||||||||||||
| NOTES TO CONSOLIDATED FINANCIALS | ||||||||||||
| March 31, 2022 | ||||||||||||
| ($ in thousands) | ||||||||||||
| (unaudited) |
Note 3 – Yields on Earning Assets and Interest-Bearing Liabilities
The following table illustrates the yields on earning assets by category as well as the rates paid on interest-bearing liabilities on a tax equivalent basis:
| Quarter Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||||
| Securities – taxable | 1.37 | % | 1.22 | % | 1.28 | % | 1.30 | % | 1.40 | % | |||||
| Securities – nontaxable | 3.97 | % | 3.82 | % | 3.79 | % | 3.70 | % | 4.02 | % | |||||
| Securities – total | 1.38 | % | 1.23 | % | 1.29 | % | 1.31 | % | 1.43 | % | |||||
| PPP loans | 2.35 | % | 3.68 | % | 4.98 | % | 15.81 | % | 6.27 | % | |||||
| Loans - LHFI & LHFS | 3.58 | % | 3.56 | % | 3.59 | % | 3.64 | % | 3.67 | % | |||||
| Loans - total | 3.58 | % | 3.56 | % | 3.61 | % | 4.36 | % | 3.81 | % | |||||
| Other earning assets | 0.18 | % | 0.18 | % | 0.18 | % | 0.11 | % | 0.12 | % | |||||
| Total earning assets | 2.69 | % | 2.65 | % | 2.70 | % | 3.33 | % | 3.00 | % | |||||
| Interest-bearing deposits | 0.11 | % | 0.13 | % | 0.14 | % | 0.19 | % | 0.22 | % | |||||
| Fed funds purchased & repurchases | 0.13 | % | 0.13 | % | 0.14 | % | 0.14 | % | 0.14 | % | |||||
| Other borrowings | 2.26 | % | 2.25 | % | 2.33 | % | 2.29 | % | 2.14 | % | |||||
| Total interest-bearing liabilities | 0.16 | % | 0.19 | % | 0.21 | % | 0.25 | % | 0.28 | % | |||||
| Net interest margin | 2.58 | % | 2.53 | % | 2.57 | % | 3.16 | % | 2.81 | % | |||||
| Net interest margin excluding PPP loans and the FRB balance | 2.88 | % | 2.82 | % | 2.90 | % | 2.94 | % | 2.99 | % |
Reflected in the table above are yields on earning assets and liabilities, along with the net interest margin which equals reported net interest income-FTE, annualized, as a percent of average earning assets. In addition, the table includes net interest margin excluding PPP loans and the balance held at the Federal Reserve Bank of Atlanta (FRB), which equals reported net interest income-FTE excluding interest income on PPP loans and the FRB balance, annualized, as a percent of average earning assets excluding average PPP loans and the FRB balance.
At March 31, 2022 and December 31, 2021, the average FRB balance totaled $1.758 billion and $1.787 billion, respectively, and is included in other earning assets in the accompanying average consolidated balance sheets.
The net interest margin excluding PPP loans and the FRB balance totaled 2.88% for the first quarter of 2022, an increase of 6 basis points when compared to the fourth quarter of 2021. The expansion of the net interest margin excluding PPP loans and the FRB balance was due to increases in the yields on the loans held for investment and held for sale portfolio and the securities portfolio which resulted from the higher interest-rate environment as well as lower costs of interest-bearing liabilities.
Note 4 – Mortgage Banking
Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that offsets the changes in fair value of mortgage servicing rights (MSR) attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under generally accepted accounting principles (GAAP). Changes in the fair value of these exchange-traded derivative instruments, including administrative costs, are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of the MSR. The MSR fair value represents the present value of future cash flows, which among other things includes decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the change in value of hedge instruments to the change in the fair value of the MSR asset attributable to changes in interest rates and other market driven changes in valuation inputs and assumptions. The impact of this strategy resulted in a net positive ineffectiveness of $1.0 million during the first quarter of 2022.
The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements:
| Quarter Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||||
| Mortgage servicing income, net | $ | 6,429 | $ | 6,571 | $ | 6,406 | $ | 6,318 | $ | 6,181 | |||||
| Change in fair value-MSR from runoff | (3,785 | ) | (4,745 | ) | (5,283 | ) | (5,029 | ) | (5,103 | ) | |||||
| Gain on sales of loans, net | 6,223 | 9,005 | 12,737 | 14,778 | 19,456 | ||||||||||
| Mortgage banking income before hedge ineffectiveness | 8,867 | 10,831 | 13,860 | 16,067 | 20,534 | ||||||||||
| Change in fair value-MSR from market changes | 22,020 | 2,221 | 1,806 | (4,465 | ) | 13,696 | |||||||||
| Change in fair value of derivatives | (21,014 | ) | (1,443 | ) | (1,662 | ) | 5,731 | (13,426 | ) | ||||||
| Net positive (negative) hedge ineffectiveness | 1,006 | 778 | 144 | 1,266 | 270 | ||||||||||
| Mortgage banking, net | $ | 9,873 | $ | 11,609 | $ | 14,004 | $ | 17,333 | $ | 20,804 | |||||
| TRUSTMARK CORPORATION AND SUBSIDIARIES | |||||||||||||||
| --- | |||||||||||||||
| NOTES TO CONSOLIDATED FINANCIALS | |||||||||||||||
| March 31, 2022 | |||||||||||||||
| ($ in thousands) | |||||||||||||||
| (unaudited) |
Note 5 – Other Noninterest Income and Expense
Other noninterest income consisted of the following for the periods presented:
| Quarter Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||||
| Partnership amortization for tax credit purposes | $ | (1,336 | ) | $ | (2,455 | ) | $ | (2,045 | ) | $ | (1,989 | ) | $ | (1,522 | ) |
| Increase in life insurance cash surrender value | 1,627 | 1,675 | 1,663 | 1,653 | 1,639 | ||||||||||
| Other miscellaneous income | 2,915 | 1,759 | 1,863 | 2,337 | 1,973 | ||||||||||
| Total other, net | $ | 3,206 | $ | 979 | $ | 1,481 | $ | 2,001 | $ | 2,090 |
Trustmark invests in partnerships that provide income tax credits on a Federal and/or State basis (i.e., new market tax credits, low-income housing tax credits and historical tax credits). The income tax credits related to these partnerships are utilized as specifically allowed by income tax law and are recorded as a reduction in income tax expense.
Other noninterest expense consisted of the following for the periods presented:
| Quarter Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | ||||||
| Loan expense | $ | 4,389 | $ | 3,221 | $ | 4,022 | $ | 3,738 | $ | 4,167 |
| Amortization of intangibles | 482 | 548 | 549 | 553 | 666 | |||||
| FDIC assessment expense | 1,500 | 1,475 | 1,275 | 1,225 | 1,540 | |||||
| Regulatory settlement charge | — | — | 5,000 | — | — | |||||
| Other real estate expense, net | 35 | 336 | 1,357 | 1,511 | 324 | |||||
| Other miscellaneous expense | 7,935 | 9,326 | 7,673 | 7,623 | 8,166 | |||||
| Total other expense | $ | 14,341 | $ | 14,906 | $ | 19,876 | $ | 14,650 | $ | 14,863 |
Note 6 – Non-GAAP Financial Measures
In addition to capital ratios defined by GAAP and banking regulators, Trustmark utilizes various tangible common equity measures when evaluating capital utilization and adequacy. Tangible common equity, as defined by Trustmark, represents common equity less goodwill and identifiable intangible assets. Trustmark’s Common Equity Tier 1 capital includes common stock, capital surplus and retained earnings, and is reduced by goodwill and other intangible assets, net of associated net deferred tax liabilities as well as disallowed deferred tax assets and threshold deductions as applicable.
Trustmark believes these measures are important because they reflect the level of capital available to withstand unexpected market conditions. Additionally, presentation of these measures allows readers to compare certain aspects of Trustmark’s capitalization to other organizations. These ratios differ from capital measures defined by banking regulators principally in that the numerator excludes shareholders’ equity associated with preferred securities, the nature and extent of which varies across organizations. In Management’s experience, many stock analysts use tangible common equity measures in conjunction with more traditional bank capital ratios to compare capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, typically stemming from the use of the purchase accounting method in accounting for mergers and acquisitions.
These calculations are intended to complement the capital ratios defined by GAAP and banking regulators. Because GAAP does not include these capital ratio measures, Trustmark believes there are no comparable GAAP financial measures to these tangible common equity ratios. Despite the importance of these measures to Trustmark, there are no standardized definitions for them and, as a result, Trustmark’s calculations may not be comparable with other organizations. Also, there may be limits in the usefulness of these measures to investors. As a result, Trustmark encourages readers to consider its audited consolidated financial statements and the notes related thereto in their entirety and not to rely on any single financial measure.
| TRUSTMARK CORPORATION AND SUBSIDIARIES |
|---|
| NOTES TO CONSOLIDATED FINANCIALS |
| March 31, 2022 |
| ($ in thousands) |
| (unaudited) |
Note 6 – Non-GAAP Financial Measures (continued)
| Quarter Ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | ||||||||||||
| TANGIBLE EQUITY | ||||||||||||||||
| AVERAGE BALANCES | ||||||||||||||||
| Total shareholders' equity | $ | 1,713,752 | $ | 1,758,123 | $ | 1,782,304 | $ | 1,780,705 | $ | 1,759,351 | ||||||
| Less: Goodwill | (384,237 | ) | (384,237 | ) | (384,237 | ) | (384,237 | ) | (385,155 | ) | ||||||
| Identifiable intangible assets | (4,879 | ) | (5,382 | ) | (5,899 | ) | (6,442 | ) | (7,118 | ) | ||||||
| Total average tangible equity | $ | 1,324,636 | $ | 1,368,504 | $ | 1,392,168 | $ | 1,390,026 | $ | 1,367,078 | ||||||
| PERIOD END BALANCES | ||||||||||||||||
| Total shareholders' equity | $ | 1,631,382 | $ | 1,741,311 | $ | 1,768,947 | $ | 1,779,309 | $ | 1,759,705 | ||||||
| Less: Goodwill | (384,237 | ) | (384,237 | ) | (384,237 | ) | (384,237 | ) | (384,237 | ) | ||||||
| Identifiable intangible assets | (4,591 | ) | (5,074 | ) | (5,621 | ) | (6,170 | ) | (6,724 | ) | ||||||
| Total tangible equity | (a) | $ | 1,242,554 | $ | 1,352,000 | $ | 1,379,089 | $ | 1,388,902 | $ | 1,368,744 | |||||
| TANGIBLE ASSETS | ||||||||||||||||
| Total assets | $ | 17,441,551 | $ | 17,595,636 | $ | 17,364,644 | $ | 17,098,132 | $ | 16,878,313 | ||||||
| Less: Goodwill | (384,237 | ) | (384,237 | ) | (384,237 | ) | (384,237 | ) | (384,237 | ) | ||||||
| Identifiable intangible assets | (4,591 | ) | (5,074 | ) | (5,621 | ) | (6,170 | ) | (6,724 | ) | ||||||
| Total tangible assets | (b) | $ | 17,052,723 | $ | 17,206,325 | $ | 16,974,786 | $ | 16,707,725 | $ | 16,487,352 | |||||
| Risk-weighted assets | (c) | $ | 12,691,545 | $ | 12,623,630 | $ | 12,324,254 | $ | 12,256,492 | $ | 12,188,988 | |||||
| NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION | ||||||||||||||||
| Net income | $ | 29,211 | $ | 26,222 | $ | 21,200 | $ | 47,981 | $ | 51,962 | ||||||
| Plus: Intangible amortization net of tax | 362 | 411 | 412 | 415 | 500 | |||||||||||
| Net income adjusted for intangible amortization | $ | 29,573 | $ | 26,633 | $ | 21,612 | $ | 48,396 | $ | 52,462 | ||||||
| Period end common shares outstanding | (d) | 61,463,392 | 61,648,679 | 62,461,832 | 62,773,226 | 63,394,522 | ||||||||||
| TANGIBLE COMMON EQUITY MEASUREMENTS | ||||||||||||||||
| Return on average tangible equity (1) | 9.05 | % | 7.72 | % | 6.16 | % | 13.96 | % | 15.56 | % | ||||||
| Tangible equity/tangible assets | (a)/(b) | 7.29 | % | 7.86 | % | 8.12 | % | 8.31 | % | 8.30 | % | |||||
| Tangible equity/risk-weighted assets | (a)/(c) | 9.79 | % | 10.71 | % | 11.19 | % | 11.33 | % | 11.23 | % | |||||
| Tangible book value | (a)/(d)*1,000 | $ | 20.22 | $ | 21.93 | $ | 22.08 | $ | 22.13 | $ | 21.59 | |||||
| COMMON EQUITY TIER 1 CAPITAL (CET1) | ||||||||||||||||
| Total shareholders' equity | $ | 1,631,382 | $ | 1,741,311 | $ | 1,768,947 | $ | 1,779,309 | $ | 1,759,705 | ||||||
| CECL transition adjustment | 19,500 | 26,000 | 26,419 | 26,671 | 26,829 | |||||||||||
| AOCI-related adjustments | 148,656 | 32,560 | 19,080 | 10,641 | 16,506 | |||||||||||
| CET1 adjustments and deductions: | ||||||||||||||||
| Goodwill net of associated deferred tax liabilities (DTLs) | (370,240 | ) | (370,252 | ) | (370,264 | ) | (370,276 | ) | (370,288 | ) | ||||||
| Other adjustments and deductions for CET1 (2) | (4,015 | ) | (4,392 | ) | (4,817 | ) | (5,243 | ) | (5,675 | ) | ||||||
| CET1 capital | (e) | 1,425,283 | 1,425,227 | 1,439,365 | 1,441,102 | 1,427,077 | ||||||||||
| Additional tier 1 capital instruments plus related surplus | 60,000 | 60,000 | 60,000 | 60,000 | 60,000 | |||||||||||
| Tier 1 capital | $ | 1,485,283 | $ | 1,485,227 | $ | 1,499,365 | $ | 1,501,102 | $ | 1,487,077 | ||||||
| Common equity tier 1 capital ratio | (e)/(c) | 11.23 | % | 11.29 | % | 11.68 | % | 11.76 | % | 11.71 | % | |||||
| (1) | Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity. | |||||||||||||||
| --- | --- | |||||||||||||||
| (2) | Includes other intangible assets, net of DTLs, disallowed deferred tax assets (DTAs), threshold deductions and transition adjustments, as applicable. | |||||||||||||||
| --- | --- | |||||||||||||||
| TRUSTMARK CORPORATION AND SUBSIDIARIES | ||||||||||||||||
| --- | ||||||||||||||||
| NOTES TO CONSOLIDATED FINANCIALS | ||||||||||||||||
| March 31, 2022 | ||||||||||||||||
| ($ in thousands) | ||||||||||||||||
| (unaudited) |
Note 6 – Non-GAAP Financial Measures (continued)
Trustmark discloses certain non-GAAP financial measures because Management uses these measures for business planning purposes, including to manage Trustmark’s business against internal projected results of operations and to measure Trustmark’s performance. Trustmark views these as measures of our core operating business, which exclude the impact of the items detailed below, as these items are generally not operational in nature. These non-GAAP financial measures also provide another basis for comparing period-to-period results as presented in the accompanying selected financial data table and the audited consolidated financial statements by excluding potential differences caused by non-operational and unusual or non-recurring items. Readers are cautioned that these adjustments are not permitted under GAAP. Trustmark encourages readers to consider its consolidated financial statements and the notes related thereto in their entirety, and not to rely on any single financial measure.
The following table presents pre-provision net revenue (PPNR) during the periods presented:
| Quarter Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||
| Net interest income (GAAP) | $ | 99,344 | $ | 98,326 | $ | 98,266 | $ | 119,423 | $ | 102,336 | |||
| Noninterest income (GAAP) | 54,115 | 50,767 | 54,149 | 56,411 | 60,583 | ||||||||
| Pre-provision revenue | (a) | $ | 153,459 | $ | 149,093 | $ | 152,415 | $ | 175,834 | $ | 162,919 | ||
| Noninterest expense (GAAP) | $ | 121,519 | $ | 119,469 | $ | 129,600 | $ | 118,679 | $ | 121,548 | |||
| Less: | Voluntary early retirement program | — | — | (5,700 | ) | — | — | ||||||
| Regulatory settlement charge | — | — | (5,000 | ) | — | — | |||||||
| Adjusted noninterest expense - PPNR (Non-GAAP) | (b) | $ | 121,519 | $ | 119,469 | $ | 118,900 | $ | 118,679 | $ | 121,548 | ||
| PPNR (Non-GAAP) | (a)-(b) | $ | 31,940 | $ | 29,624 | $ | 33,515 | $ | 57,155 | $ | 41,371 |
The following table presents Trustmark’s calculation of its efficiency ratio for the periods presented:
| Quarter Ended | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||||||
| Total noninterest expense (GAAP) | $ | 121,519 | $ | 119,469 | $ | 129,600 | $ | 118,679 | $ | 121,548 | |||||||
| Less: | Other real estate expense, net | (35 | ) | (336 | ) | (1,357 | ) | (1,511 | ) | (324 | ) | ||||||
| Amortization of intangibles | (482 | ) | (548 | ) | (549 | ) | (553 | ) | (666 | ) | |||||||
| Charitable contributions resulting in state tax credits | (375 | ) | (391 | ) | (350 | ) | (355 | ) | (350 | ) | |||||||
| Voluntary early retirement program | — | — | (5,700 | ) | — | — | |||||||||||
| Regulatory settlement charge | — | — | (5,000 | ) | — | — | |||||||||||
| Adjusted noninterest expense (Non-GAAP) | (c) | $ | 120,627 | $ | 118,194 | $ | 116,644 | $ | 116,260 | $ | 120,208 | ||||||
| Net interest income (GAAP) | $ | 99,344 | $ | 98,326 | $ | 98,266 | $ | 119,423 | $ | 102,336 | |||||||
| Add: | Tax equivalent adjustment | 3,003 | 2,906 | 2,947 | 2,957 | 2,894 | |||||||||||
| Net interest income-FTE (Non-GAAP) | (a) | $ | 102,347 | $ | 101,232 | $ | 101,213 | $ | 122,380 | $ | 105,230 | ||||||
| Noninterest income (GAAP) | $ | 54,115 | $ | 50,767 | $ | 54,149 | $ | 56,411 | $ | 60,583 | |||||||
| Add: | Partnership amortization for tax credit purposes | 1,336 | 2,455 | 2,045 | 1,989 | 1,522 | |||||||||||
| Adjusted noninterest income (Non-GAAP) | (b) | $ | 55,451 | $ | 53,222 | $ | 56,194 | $ | 58,400 | $ | 62,105 | ||||||
| Adjusted revenue (Non-GAAP) | (a)+(b) | $ | 157,798 | $ | 154,454 | $ | 157,407 | $ | 180,780 | $ | 167,335 | ||||||
| Efficiency ratio (Non-GAAP) | (c)/((a)+(b)) | 76.44 | % | 76.52 | % | 74.10 | % | 64.31 | % | 71.84 | % |
First Quarter 2022 Financial Results April 26, 2022 Exhibit 99.2
Forward–Looking Statements 2 Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “project,” “potential,” “seek,” “continue,” “could,” “would,” “future” or the negative of those terms or other words of similar meaning. You should read statements that contain these words carefully because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements include, but are not limited to, statements relating to anticipated future operating and financial performance measures, including net interest margin, credit quality, business initiatives, growth opportunities and growth rates, among other things, and encompass any estimate, prediction, expectation, projection, opinion, anticipation, outlook or statement of belief included therein as well as the management assumptions underlying these forward looking statements. You should be aware that the occurrence of the events described under the caption Item 1A. Risk Factors in this report could have an adverse effect on our business, results of operations and financial condition. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected. Furthermore, many of these risks and uncertainties are currently amplified by and may continue to be amplified by or may, in the future, be amplified by, the novel coronavirus (COVID-19) pandemic, and also by the effectiveness of varying governmental responses in ameliorating the impact of the pandemic on our customers and the economies where they operate.
Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels and slowdowns in economic growth, our ability to manage the impact of the COVID-19 pandemic on our markets, as well as the effectiveness of actions of federal, state and local governments and agencies (including the Board of Governors of the Federal Reserve System (FRB)) to mitigate its spread and economic impact, local, state and national economic and market conditions, conditions in the housing and real estate markets in the regions in which Trustmark operates and the extent and duration of the current volatility in the credit and financial markets, levels of and volatility in crude oil prices, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility of market interest rates, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, including the potential impact of issues related to the European financial system and monetary and other governmental actions designed to address credit, securities, and/or commodity markets, the enactment of legislation and changes in existing regulations or enforcement practices or the adoption of new regulations, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, changes in our ability to control expenses, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, cyber attacks and other breaches which could affect our information system security, natural disasters, environmental disasters, pandemics or other health crises, acts of war or terrorism, and other risks described in our filings with the Securities and Exchange Commission (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
Expense Management Financial Highlights Loan and deposit growth continues, credit quality remains strong, insurance and wealth management revenue expands Source: Company reports 3 Loans Held for Investment (HFI) increased $149.3 million, or 1.5%, linked-quarter and $413.4 million, or 4.1%, year-over-year Deposits increased $26.1 million, or 0.2%, linked-quarter and $729.9 million, or 5.1%, year-over-year Solid performance in fee-based businesses
Earnings Drivers Revenue totaled $153.5 million, up $4.4 million, or 2.9%, from the prior quarter Net interest income (FTE) totaled $102.3 million, an increase $1.1 million, or 1.1%, linked-quarter Noninterest income totaled $54.1 million, representing 35.3% of total revenue Insurance revenue experienced a 20.3% increase linked-quarter and 13.2% increase year-over-year Profitable Revenue Generation Noninterest expense totaled $121.5 million in the first quarter, up $2.1 million, or 1.7%, from the prior quarter Salaries and employee benefits expense increased $1.3 million principally due to payroll taxes Equipment expense and other expense collectively declined $1.1 million linked-quarter Credit quality remained solid; nonperforming assets declined 8.9% year-over-year Recoveries exceeded charge-offs by $137 thousand in the first quarter Provision for credit losses totaled a negative $2.0 million for the quarter Credit Quality Maintained strong capital levels with CET1 ratio of 11.23% and total risk-based capital ratio of 13.53% Repurchased $9.1 million, or approximately 279 thousand shares of common stock in the first quarter; at March 31, 2022, had $90.9 million remaining authority under the repurchase program, which expires on December 31, 2022 Board of Directors declared quarterly cash dividend of $0.23 per share Capital Management
Loans Held for Investment (LHFI) Portfolio Focus on profitable, credit-disciplined loan growth continued Source: Company reports (1) Percentages may not sum to 100% due to rounding. Dollar Change: $22 $149 $73 $169 4 Portfolio exhibits diversity by product type, geography, and industry
Solid growth in the quarter while maintaining strong asset quality
Virtually no exposure to regulatory defined higher risk commercial and industrial outstandings and REITs
1-4 Residential portfolio is primarily comprised of 15 year or less mortgages and Hybrid ARMs
Real Estate Secured Loan Portfolio Detail 5 Source: Company reports (1) Multi-Family is included in Other Real Estate Secured Loans in Financials Focus on vertical construction with limited exposure to unimproved land and development
Well-diversified product and geographical mix
Balanced between non-owner and owner-occupied portfolios
Virtually no REIT outstanding ($4.4 million)
Commercial Loan Portfolio Detail 6 Source: Company reports Well-diversified portfolio with no single category exceeding 12%
Small energy book and has never been an area of focused growth
Virtually no regulatory defined higher risk commercial and industrial outstanding ($16.0 million)
Portfolio includes commercial, financial intermediaries, agriculture production and non-profits
Allowance for Credit Losses Source: Company reports Does not include allowance for off balance sheet credit exposures Totals may not foot due to rounding 7 ($ in millions) Net impact of quantitative changes including improvement of the macroeconomic forecast, loan growth, and individually analyzed reserves Net impact of qualitative changes including the COVID-19 pandemic reserve and potential impact of the rising rate environment Net impact of all other changes including prepayment studies etc. ACL 12/31/21 ACL 3/31/22
Credit Risk Management Solid asset quality metrics Allowance for credit losses represented 0.95% of loans held for investment and 484.01% of nonaccrual loans, excluding individually evaluated loans Recoveries exceeded charge-offs by $137 thousand in the first quarter Nonperforming assets remained relatively unchanged from the prior quarter and declined $6.6 million, or 8.9%, year-over-year Source: Company reports Note: Unless noted otherwise, credit metrics exclude PPP loans (1) Totals may not foot due to rounding (2) NPLs excludes individually evaluated loans 8
Attractive, Low-Cost Deposit Base Deposits totaled $15.1 billion at March 31, 2022, up $26.1 million, or 0.2%, linked-quarter, and up $729.9 million, or 5.1%, year-over-year
Cost of interest-bearing deposits in the first quarter totaled 0.11%, down 2 basis points from the prior quarter Source: Company reports (1) Numbers and/or percentages may not foot due to rounding. (2) Above does not include the daily sweep between low transaction interest checking to savings for regulatory purposes. 9 $14,668
Income Statement Highlights – Net Interest Income Net interest income (FTE) totaled $102.3 million, resulting in a net interest margin of 2.58% in the first quarter
The net interest margin, excluding PPP loans and Federal Reserve Bank balance, totaled 2.88% in the first quarter, a 6 basis point increase from the prior quarter
Source: Company reports (1) Totals may not foot due to rounding (2) Loan Yield includes LHFI & LHFS 10 Asset Rate/Volume Liability Rate/Volume # of Days in Quarter PPP Net Interest Margin
Earning Asset Composition & Interest Rate Sensitivity As of 03/31/22 11 Substantial NII asset sensitivity is driven by, Loan portfolio mix with 47% variable rate (Excludes Hybrid ARMS >1 year to next reset) Securities portfolio duration of 4.1 years Cash & due balance of $1.9 billion
Agency MBS is backed primarily by 15-year collateral Book Balance: $3.8B Yield: 1.38% Book Balance: $10.6B Yield2: 3.58% (1) Loans include LHFI & LHFS (2) Loan Yield includes LHFI & LHFS
Income Statement Highlights – Noninterest Income Source: Company reports (1) Totals may not foot due to rounding
Noninterest income totaled $54.1 million in the first quarter, an increase of $3.3 million linked-quarter and a $6.5 million decrease year-over-year. The linked-quarter increases in insurance, wealth management and other, net revenue, which includes a gain on the sale of a former branch facility, were offset in part by a decline in mortgage banking revenue.
Insurance revenue totaled $14.1 million, a $2.4 million increase from the prior quarter and a $1.6 million increase from the previous year due primarily to increased property and casualty commissions.
12 (1)
Income Statement Highlights – Mortgage Banking Source: Company reports (1) Totals may not foot due to rounding (2) Production includes Loans Available for Sale (AFS) and Portfolio (3) Gain on Sale Margin excludes FAS 133 (Pipeline valuation adjustment)
Mortgage banking revenue totaled $9.9 million in the first quarter of 2022, a $1.7 million decrease linked-quarter and $10.9 million decrease year-over year.
Mortgage loan production in the first quarter totaled $544.3 million, a decrease of 7.9% from the prior quarter and 29.0% from the prior year.
Retail production represented 80% of volume, or $434.2 million, in the first quarter.
13 Gain on sale margin (3) Purchase 52% 71% 69% 71% 73% Refinance 48% 29% 31% 29% 27%
Adjusted Noninterest Expense(2) – totaled $120.6 million in the first quarter, a 2.1% increase from the prior quarter Salaries and employee benefits increased $1.3 million linked-quarter principally due to payroll taxes.
Services & fees increased $1.5 million from the prior quarter due to continued investments in technology and higher professional fees while net occupancy-premises expense grew $263 thousand
Equipment expense and other expense collectively declined $1.1 million linked-quarter
Income Statement Highlights – Noninterest Expense Source: Company reports (1) Totals may not foot due to rounding (2) For Non-GAAP measures, please refer to the Earnings Release dated April 26, 2022 and the Consolidated Financial Information, Note 6 – Non-GAAP Financial Measures 14
Capital Management Solid capital position reflects consistent profitability of diversified financial services businesses Capital position remained strong with a CET1 ratio of 11.23% and a total risk-based capital ratio of 13.53% at March 31, 2022 Repurchased $9.1 million, or approximately 279 thousand shares of common stock in the first quarter. At March 31, 2022, Trustmark had $90.9 million in remaining authority under its existing stock repurchase program, which expires December 31, 2022. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable June 15, 2022, to shareholders of record on June 1, 2022 Source: Company reports (1) Trustmark has elected the five-year phase-in transition period related to adopting the CECL methodology for its regulatory capital. 15
Outlook Commentary(1) Source: Company reports (1) See Forward Looking Statement Disclosure on page 2 of this presentation for a discussion of factors that could affect management’s expectations and results in future periods. 16
Trustmark Corporation Diversified financial services company headquartered in Jackson, MS, offering banking, wealth management, and risk management solutions in 179 locations throughout the Southeast U.S. Our vision is to be a premier financial services provider in our marketplace. Our mission is to achieve outstanding customer satisfaction by providing banking, wealth management, and risk management solutions through superior sales and service, utilizing excellent people, teamwork, and diversity, while meeting our corporate financial goals.
17 Who We Are Strategic Priorities to Enhance Shareholder Value Our Footprint