Trustmark Corporation Announces Third Quarter 2021 Financial Results

Performance Reflects Continued Balance Sheet Growth, Strong Credit Quality and Disciplined Expense Management

Trustmark Corporation (NASDAQGS: TRMK) reported net income of $21.2 million in the third quarter of 2021, representing diluted earnings per share of $0.34. Third quarter results include costs of a previously announced voluntary early retirement program, which reduced net income by $4.3 million, or approximately $0.07 per diluted share. Results for the quarter also include a previously disclosed charge to resolve allegations by regulatory authorities regarding fair lending matters, which reduced net income by $5.0 million, or approximately $0.08 per diluted share. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable December 15, 2021, to shareholders of record on December 1, 2021.

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Third Quarter Highlights

  • Voluntary early retirement program resulted in one-time, pre-tax charge of $5.7 million in the third quarter; expected pre-tax savings of approximately $1.3 million for the remainder of 2021 and $4.3 million in 2022
  • Loans held for investment (HFI) increased $22.0 million, reflecting accelerated payoffs during the quarter while deposits expanded $290.8 million compared to the prior quarter
  • Investment securities increased $470.8 million in the third quarter as excess liquidity was deployed
  • Provision for credit losses, net totaled a negative $3.5 million, reflecting improved credit loss expectations
  • Adjusted noninterest expense totaled $116.6 million, up 0.3% linked-quarter; please refer to the Consolidated Financial Information, Note 10 – Non-GAAP Financial Measures

Duane A. Dewey, President and CEO, stated, “We made significant progress across the organization in the third quarter as reflected by continued balance sheet growth, strong credit quality, and disciplined expense management. Our associates are focused on expanding customer relationships, which is reflected in the solid performance of our banking, insurance, and wealth management businesses.

“Our third quarter results were impacted by our previously announced settlement with regulatory authorities to resolve fair lending allegations in our Memphis, Tennessee market. We entered into these settlements to avoid the distraction of protracted litigation and because we share the common goals of breaking down barriers to home financing and exploring innovative ways to help residents of underserved areas achieve the dream of homeownership. Our quarterly results also reflect the costs associated with our voluntary early retirement program, which was accepted by 98 associates, or 3.6% of our workforce. As you may recall, we also had a voluntary early retirement program in the first quarter of 2020 in which 107 associates, or 3.8% of the workforce at that time, elected to participate. Collectively, these programs have provided additional opportunities to redesign workflows and restructure the organization to leverage investments in technology and improve efficiency.”

Balance Sheet Management

  • Loans HFI totaled $10.2 billion, up 0.2% from the prior quarter and 3.3% year-over-year
  • Investment securities totaled $3.5 billion, up 15.8% from the prior quarter and 36.2% year-over-year
  • Noninterest-bearing deposits increased $540.9 million, or 12.2% linked-quarter
  • Maintained strong capital position with CET1 ratio of 11.68% and total risk-based capital ratio of 14.01%

Loans HFI totaled $10.2 billion at September 30, 2021, reflecting an increase of $22.0 million, or 0.2%, linked-quarter and $327.2 million, or 3.3%, year-over-year. The linked-quarter growth primarily reflects increases in loans secured by nonfarm, nonresidential properties and 1-4 family mortgage loans, which were largely offset by declines in construction loans, other real estate secured loans, and municipal loans. Trustmark’s loan portfolio remains well-diversified by loan type and geography.

Deposits totaled $14.9 billion at September 30, 2021, up $290.8 million, or 2.0%, from the prior quarter and $1.7 billion, or 12.9%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 68.2% of total deposits at September 30, 2021. Noninterest-bearing deposits represented 33.4% of total deposits at the end of the third quarter. Interest-bearing deposit costs totaled 0.14% in the third quarter, a decrease of 5 basis points from the prior quarter. The total cost of interest-bearing liabilities was 0.21% in the third quarter of 2021, a decrease of 4 basis points from the prior quarter.

During the third quarter, Trustmark repurchased $9.7 million, or approximately 319 thousand of its common shares. During the nine months ended September 30, 2021, Trustmark repurchased $34.6 million, or approximately 1.1 million of its common shares. At September 30, 2021, Trustmark had $65.4 million in remaining authority under its existing stock repurchase program, which expires on December 31, 2021. The repurchase program, which is subject to market conditions and management discretion, will continue to be implemented through open market repurchases or privately negotiated transactions. At September 30, 2021,Trustmark’s tangible equity-to-tangible assets ratio was 8.12% while its total risk-based capital ratio was 14.01%.

Credit Quality

  • Allowance for credit losses (ACL) represented 520.77% of nonaccrual loans, excluding individually evaluated loans at September 30, 2021
  • Recoveries exceeded charge-offs by $2.5 million in the third quarter
  • Loans remaining under a COVID-19 related concession represented approximately 20 basis points of loans HFI at September 30, 2021

Nonaccrual loans totaled $66.2 million at September 30, 2021, up $14.8 million from the prior quarter and up $12.4 million year-over-year. Other real estate totaled $6.2 million, reflecting a $3.2 million decrease from the prior quarter and a decline of $10.0 million year-over-year. Collectively, nonperforming assets totaled $72.5 million at September 30, 2021, reflecting a linked-quarter increase of $11.6 million and year-over-year increase of $2.3 million.

The provision for credit losses for loans HFI was a negative $2.5 million in the third quarter. Negative provisioning was primarily due to improvements in credit quality and the economic forecasts. The provision for credit losses for off-balance sheet credit exposures was a negative $1.0 million in the third quarter and was primarily driven by decreases in the total reserve rates applied to the unfunded portion of the loan portfolio. Collectively, the provision for credit losses totaled a negative $3.5 million in the third quarter compared to an expense of $537 thousand in the prior quarter and a negative $1.2 million in the third quarter of 2020.

Allocation of Trustmark’s $104.1 million allowance for credit losses on loans HFI represented 1.05% of commercial loans and 0.91% of consumer and home mortgage loans, resulting in an allowance to total loans HFI of 1.02% at September 30, 2021. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.

Revenue Generation

  • Excluding Paycheck Protection Program (PPP) interest and fees, net interest income (FTE) increased $2.9 million, or 2.9%, linked-quarter
  • Noninterest income totaled $54.1 million, representing 35.5% of total revenue in the third quarter
  • Mortgage banking revenue totaled $14.0 million on production of $708.8 million in the third quarter
  • Service charges on deposit accounts increased $1.3 million, or 17.0%, linked quarter

Revenue in the third quarter totaled $152.4 million, a decrease of $23.4 million, or 13.3%, from the prior quarter. During the third quarter, mortgage banking revenue declined $3.3 million while second quarter results included $18.6 million of PPP loan origination fees attributable to the sale of PPP loans.

Net interest income (FTE) in the third quarter totaled $101.2 million, resulting in a net interest margin of 2.57%. The net interest margin, excluding PPP loans and Federal Reserve Bank balance, totaled 2.90% during the third quarter, a decrease of 4 basis points when compared to the prior quarter. Continued low interest rates decreased the yield on the loans HFI and held for sale portfolio as well as the securities portfolio and were partially offset by lower costs of interest-bearing deposits.

Noninterest income in the third quarter totaled $54.1 million, a decrease of $2.3 million from the prior quarter and $19.6 million year-over-year. The linked-quarter and year-over-year changes are principally attributable to lower mortgage banking revenue. Mortgage loan production in the third quarter totaled $708.8 million, down 3.8% from the prior quarter and 20.0% year-over-year. Mortgage banking revenue totaled $14.0 million in the third quarter, a decrease of $3.3 million from the prior quarter and $22.4 million year-over-year. The linked-quarter decline is attributable to reduced spreads which resulted in lower net gains on sales of mortgage loans in the secondary market as well as reduced net hedge ineffectiveness.

Wealth management revenue totaled $9.1 million in the third quarter, an increase of $125 thousand, or 1.4%, from the prior quarter and $1.4 million, or 18.1%, year-over-year. The growth is attributable to increased trust and investment and brokerage business. Insurance revenue totaled $12.1 million in the third quarter, relatively unchanged from the prior quarter and up $571 thousand, or 4.9%, year-over-year due in part to increased property and casualty commissions. Service charges on deposit accounts increased $1.3 million, or 17.0%, from the prior quarter and $1.3 million, or 17.6%, year-over-year. Bank card and other fees increased $248 thousand from the prior quarter and decreased $294 thousand year-over-year. The linked-quarter and year-over-year changes are attributable to the level of customer derivative revenue.

Noninterest Expense

  • Noninterest expense totaled $129.6 million in the third quarter and included $5.7 million in one-time expenses related to a voluntary early retirement program and $5.0 million regulatory settlement expenses
  • Adjusted noninterest expense, which excludes amortization of intangibles, ORE expenses, charitable contributions resulting in state tax credits, costs associated with the voluntary early retirement program and regulatory charges, totaled $116.6 million in the third quarter, an increase of 0.3% from the prior quarter and 1.8% year-over-year; please refer to the Consolidated Financial Information, Note 10 – Non-GAAP Financial Measures

Trustmark continued proactive measures to manage noninterest expense. During the third quarter, Trustmark completed a voluntary early retirement program. Of those eligible for the program, 98 associates, or 3.6% of the workforce, elected early retirement. A one-time, pre-tax charge of $5.7 million related to this program was incurred during the third quarter, reflecting $5.6 million in salaries and employee benefits expense and $89 thousand in other expense. The result of this program is expected to result in pre-tax savings of approximately $1.3 million in the fourth quarter of 2021 and $4.3 million in 2022.

Adjusted noninterest expense in the third quarter was $116.6 million, up $384 thousand, or 0.3%, from the prior quarter and $2.0 million, or 1.8%, year-over-year. Salaries and employee benefits expense increased $4.5 million linked-quarter; excluding the $5.6 million in charges related to the voluntary early retirement program, salary and employee benefits expense declined $1.1 million linked-quarter. Total other expense increased $5.4 million linked-quarter principally due to regulatory settlement expenses.

“Looking forward, Trustmark will continue to focus upon efficiency, growth, and innovation opportunities. We continue to redesign workflows and restructure the organization to leverage investments in technology, enhance the customer experience, and improve efficiency. We are focused on providing the services and advice our customers have come to expect while building long-term value for our shareholders,” said Dewey.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, October 27, 2021 at 8:30 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (877) 317-3051 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Wednesday, November 10, 2021, in archived format at the same web address or by calling (877) 344-7529, passcode 10160480.

Trustmark is a financial services company providing banking and financial solutions through 180 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 “Risk Factors” in Trustmark’s filings with the Securities and Exchange Commission (SEC) could have an adverse effect on our business, results of operations and financial condition. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected. Furthermore, many of these risks and uncertainties are currently amplified by and may continue to be amplified by or may, in the future, be amplified by, the novel coronavirus (COVID-19) pandemic, and also by the effectiveness of varying governmental responses in ameliorating the impact of the pandemic on our customers and the economies where they operate.

Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels and slowdowns in economic growth, our ability to manage the impact of the COVID-19 pandemic on our markets and our customers, 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 SEC.

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

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2021
($ in thousands)
(unaudited)
Linked Quarter Year over Year
QUARTERLY AVERAGE BALANCES 9/30/2021 6/30/2021 9/30/2020 $ Change % Change $ Change % Change
Securities AFS-taxable

$

2,686,765

 

$

2,339,662

 

$

1,857,050

 

$

347,103

 

14.8

%

$

829,715

 

44.7

%

Securities AFS-nontaxable

 

5,159

 

 

5,174

 

 

5,973

 

 

(15

)

-0.3

%

 

(814

)

-13.6

%

Securities HTM-taxable

 

401,685

 

 

441,688

 

 

608,585

 

 

(40,003

)

-9.1

%

 

(206,900

)

-34.0

%

Securities HTM-nontaxable

 

8,641

 

 

10,958

 

 

25,508

 

 

(2,317

)

-21.1

%

 

(16,867

)

-66.1

%

Total securities

 

3,102,250

 

 

2,797,482

 

 

2,497,116

 

 

304,768

 

10.9

%

 

605,134

 

24.2

%

Paycheck protection program loans (PPP)

 

122,176

 

 

648,222

 

 

941,456

 

 

(526,046

)

-81.2

%

 

(819,280

)

-87.0

%

Loans (includes loans held for sale)

 

10,389,826

 

 

10,315,927

 

 

10,162,379

 

 

73,899

 

0.7

%

 

227,447

 

2.2

%

Fed funds sold and reverse repurchases

 

69

 

 

55

 

 

301

 

 

14

 

25.5

%

 

(232

)

-77.1

%

Other earning assets

 

2,038,515

 

 

1,750,385

 

 

722,917

 

 

288,130

 

16.5

%

 

1,315,598

 

n/m

 

Total earning assets

 

15,652,836

 

 

15,512,071

 

 

14,324,169

 

 

140,765

 

0.9

%

 

1,328,667

 

9.3

%

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

 

(104,857

)

 

(112,346

)

 

(121,842

)

 

7,489

 

-6.7

%

 

16,985

 

13.9

%

Other assets

 

1,602,611

 

 

1,622,388

 

 

1,564,825

 

 

(19,777

)

-1.2

%

 

37,786

 

2.4

%

Total assets

$

17,150,590

 

$

17,022,113

 

$

15,767,152

 

$

128,477

 

0.8

%

$

1,383,438

 

8.8

%

 
Interest-bearing demand deposits

$

4,224,717

 

$

4,056,910

 

$

3,669,249

 

$

167,807

 

4.1

%

$

555,468

 

15.1

%

Savings deposits

 

4,617,683

 

 

4,627,180

 

 

4,416,046

 

 

(9,497

)

-0.2

%

 

201,637

 

4.6

%

Time deposits

 

1,258,829

 

 

1,301,896

 

 

1,507,348

 

 

(43,067

)

-3.3

%

 

(248,519

)

-16.5

%

Total interest-bearing deposits

 

10,101,229

 

 

9,985,986

 

 

9,592,643

 

 

115,243

 

1.2

%

 

508,586

 

5.3

%

Fed funds purchased and repurchases

 

147,635

 

 

174,620

 

 

84,077

 

 

(26,985

)

-15.5

%

 

63,558

 

75.6

%

Other borrowings

 

109,735

 

 

132,199

 

 

167,262

 

 

(22,464

)

-17.0

%

 

(57,527

)

-34.4

%

Subordinated notes

 

122,951

 

 

122,897

 

 

 

 

54

 

0.0

%

 

122,951

 

n/m

 

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

 

0.0

%

 

 

0.0

%

Total interest-bearing liabilities

 

10,543,406

 

 

10,477,558

 

 

9,905,838

 

 

65,848

 

0.6

%

 

637,568

 

6.4

%

Noninterest-bearing deposits

 

4,566,924

 

 

4,512,268

 

 

3,921,867

 

 

54,656

 

1.2

%

 

645,057

 

16.4

%

Other liabilities

 

257,956

 

 

251,582

 

 

244,544

 

 

6,374

 

2.5

%

 

13,412

 

5.5

%

Total liabilities

 

15,368,286

 

 

15,241,408

 

 

14,072,249

 

 

126,878

 

0.8

%

 

1,296,037

 

9.2

%

Shareholders' equity

 

1,782,304

 

 

1,780,705

 

 

1,694,903

 

 

1,599

 

0.1

%

 

87,401

 

5.2

%

Total liabilities and equity

$

17,150,590

 

$

17,022,113

 

$

15,767,152

 

$

128,477

 

0.8

%

$

1,383,438

 

8.8

%

 
n/m - percentage changes greater than +/- 100% are considered not meaningful
 
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2021
($ in thousands)
(unaudited)
Linked Quarter Year over Year
PERIOD END BALANCES 9/30/2021 6/30/2021 9/30/2020 $ Change % Change $ Change % Change
Cash and due from banks

$

2,175,058

 

$

2,267,224

 

$

564,588

 

$

(92,166

)

-4.1

%

$

1,610,470

 

n/m

 

Fed funds sold and reverse repurchases

 

 

 

 

 

50

 

 

 

n/m

 

 

(50

)

-100.0

%

Securities available for sale

 

3,057,605

 

 

2,548,739

 

 

1,922,728

 

 

508,866

 

20.0

%

 

1,134,877

 

59.0

%

Securities held to maturity

 

394,905

 

 

433,012

 

 

611,280

 

 

(38,107

)

-8.8

%

 

(216,375

)

-35.4

%

PPP loans

 

46,486

 

 

166,119

 

 

944,270

 

 

(119,633

)

-72.0

%

 

(897,784

)

-95.1

%

Loans held for sale (LHFS)

 

335,339

 

 

332,132

 

 

485,103

 

 

3,207

 

1.0

%

 

(149,764

)

-30.9

%

Loans held for investment (LHFI)

 

10,174,899

 

 

10,152,869

 

 

9,847,728

 

 

22,030

 

0.2

%

 

327,171

 

3.3

%

ACL LHFI

 

(104,073

)

 

(104,032

)

 

(122,010

)

 

(41

)

0.0

%

 

17,937

 

14.7

%

Net LHFI

 

10,070,826

 

 

10,048,837

 

 

9,725,718

 

 

21,989

 

0.2

%

 

345,108

 

3.5

%

Premises and equipment, net

 

201,937

 

 

200,970

 

 

192,722

 

 

967

 

0.5

%

 

9,215

 

4.8

%

Mortgage servicing rights

 

84,101

 

 

80,764

 

 

61,613

 

 

3,337

 

4.1

%

 

22,488

 

36.5

%

Goodwill

 

384,237

 

 

384,237

 

 

385,270

 

 

 

0.0

%

 

(1,033

)

-0.3

%

Identifiable intangible assets

 

5,621

 

 

6,170

 

 

8,142

 

 

(549

)

-8.9

%

 

(2,521

)

-31.0

%

Other real estate

 

6,213

 

 

9,439

 

 

16,248

 

 

(3,226

)

-34.2

%

 

(10,035

)

-61.8

%

Operating lease right-of-use assets

 

34,689

 

 

33,201

 

 

30,508

 

 

1,488

 

4.5

%

 

4,181

 

13.7

%

Other assets

 

567,627

 

 

587,288

 

 

609,922

 

 

(19,661

)

-3.3

%

 

(42,295

)

-6.9

%

Total assets

$

17,364,644

 

$

17,098,132

 

$

15,558,162

 

$

266,512

 

1.6

%

$

1,806,482

 

11.6

%

 
Deposits:
Noninterest-bearing

$

4,987,885

 

$

4,446,991

 

$

3,964,023

 

$

540,894

 

12.2

%

$

1,023,862

 

25.8

%

Interest-bearing

 

9,934,954

 

 

10,185,093

 

 

9,258,390

 

 

(250,139

)

-2.5

%

 

676,564

 

7.3

%

Total deposits

 

14,922,839

 

 

14,632,084

 

 

13,222,413

 

 

290,755

 

2.0

%

 

1,700,426

 

12.9

%

Fed funds purchased and repurchases

 

146,417

 

 

157,176

 

 

153,834

 

 

(10,759

)

-6.8

%

 

(7,417

)

-4.8

%

Other borrowings

 

94,889

 

 

117,223

 

 

178,599

 

 

(22,334

)

-19.1

%

 

(83,710

)

-46.9

%

Subordinated notes

 

122,987

 

 

122,932

 

 

 

 

55

 

0.0

%

 

122,987

 

n/m

 

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

 

0.0

%

 

 

0.0

%

ACL on off-balance sheet credit exposures

 

32,684

 

 

33,733

 

 

39,659

 

 

(1,049

)

-3.1

%

 

(6,975

)

-17.6

%

Operating lease liabilities

 

36,531

 

 

34,959

 

 

31,838

 

 

1,572

 

4.5

%

 

4,693

 

14.7

%

Other liabilities

 

177,494

 

 

158,860

 

 

159,922

 

 

18,634

 

11.7

%

 

17,572

 

11.0

%

Total liabilities

 

15,595,697

 

 

15,318,823

 

 

13,848,121

 

 

276,874

 

1.8

%

 

1,747,576

 

12.6

%

Common stock

 

13,014

 

 

13,079

 

 

13,215

 

 

(65

)

-0.5

%

 

(201

)

-1.5

%

Capital surplus

 

201,837

 

 

210,420

 

 

231,836

 

 

(8,583

)

-4.1

%

 

(29,999

)

-12.9

%

Retained earnings

 

1,573,176

 

 

1,566,451

 

 

1,459,306

 

 

6,725

 

0.4

%

 

113,870

 

7.8

%

Accumulated other comprehensive income (loss), net of tax

 

(19,080

)

 

(10,641

)

 

5,684

 

 

(8,439

)

-79.3

%

 

(24,764

)

n/m

 

Total shareholders' equity

 

1,768,947

 

 

1,779,309

 

 

1,710,041

 

 

(10,362

)

-0.6

%

 

58,906

 

3.4

%

Total liabilities and equity

$

17,364,644

 

$

17,098,132

 

$

15,558,162

 

$

266,512

 

1.6

%

$

1,806,482

 

11.6

%

 
n/m - percentage changes greater than +/- 100% are considered not meaningful
 
See Notes to Consolidated Financials  
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2021
($ in thousands except per share data)
(unaudited)
 
Quarter Ended Linked Quarter Year over Year
INCOME STATEMENTS 9/30/2021 6/30/2021 9/30/2020 $ Change % Change $ Change % Change
Interest and fees on LHFS & LHFI-FTE

$

94,101

 

$

93,698

 

$

97,429

 

$

403

 

0.4

%

$

(3,328

)

-3.4

%

Interest and fees on PPP loans

 

1,533

 

 

25,555

 

 

6,729

 

 

(24,022

)

-94.0

%

 

(5,196

)

-77.2

%

Interest on securities-taxable

 

9,973

 

 

8,991

 

 

12,542

 

 

982

 

10.9

%

 

(2,569

)

-20.5

%

Interest on securities-tax exempt-FTE

 

132

 

 

149

 

 

301

 

 

(17

)

-11.4

%

 

(169

)

-56.1

%

Interest on fed funds sold and reverse repurchases

 

 

 

 

 

1

 

 

 

n/m

 

 

(1

)

-100.0

%

Other interest income

 

949

 

 

489

 

 

331

 

 

460

 

94.1

%

 

618

 

n/m

 

Total interest income-FTE

 

106,688

 

 

128,882

 

 

117,333

 

 

(22,194

)

-17.2

%

 

(10,645

)

-9.1

%

Interest on deposits

 

3,691

 

 

4,630

 

 

7,437

 

 

(939

)

-20.3

%

 

(3,746

)

-50.4

%

Interest on fed funds purchased and repurchases

 

51

 

 

59

 

 

32

 

 

(8

)

-13.6

%

 

19

 

59.4

%

Other interest expense

 

1,733

 

 

1,813

 

 

688

 

 

(80

)

-4.4

%

 

1,045

 

n/m

 

Total interest expense

 

5,475

 

 

6,502

 

 

8,157

 

 

(1,027

)

-15.8

%

 

(2,682

)

-32.9

%

Net interest income-FTE

 

101,213

 

 

122,380

 

 

109,176

 

 

(21,167

)

-17.3

%

 

(7,963

)

-7.3

%

Provision for credit losses, LHFI

 

(2,492

)

 

(3,991

)

 

1,760

 

 

1,499

 

37.6

%

 

(4,252

)

n/m

 

Provision for credit losses, off-balance sheet credit exposures (1)

 

(1,049

)

 

4,528

 

 

(3,004

)

 

(5,577

)

n/m

 

 

1,955

 

65.1

%

Net interest income after provision-FTE

 

104,754

 

 

121,843

 

 

110,420

 

 

(17,089

)

-14.0

%

 

(5,666

)

-5.1

%

Service charges on deposit accounts

 

8,911

 

 

7,613

 

 

7,577

 

 

1,298

 

17.0

%

 

1,334

 

17.6

%

Bank card and other fees

 

8,549

 

 

8,301

 

 

8,843

 

 

248

 

3.0

%

 

(294

)

-3.3

%

Mortgage banking, net

 

14,004

 

 

17,333

 

 

36,439

 

 

(3,329

)

-19.2

%

 

(22,435

)

-61.6

%

Insurance commissions

 

12,133

 

 

12,217

 

 

11,562

 

 

(84

)

-0.7

%

 

571

 

4.9

%

Wealth management

 

9,071

 

 

8,946

 

 

7,679

 

 

125

 

1.4

%

 

1,392

 

18.1

%

Other, net

 

1,481

 

 

2,001

 

 

1,601

 

 

(520

)

-26.0

%

 

(120

)

-7.5

%

Total noninterest income

 

54,149

 

 

56,411

 

 

73,701

 

 

(2,262

)

-4.0

%

 

(19,552

)

-26.5

%

Salaries and employee benefits

 

74,623

 

 

70,115

 

 

67,342

 

 

4,508

 

6.4

%

 

7,281

 

10.8

%

Services and fees

 

22,306

 

 

21,769

 

 

20,992

 

 

537

 

2.5

%

 

1,314

 

6.3

%

Net occupancy-premises

 

6,854

 

 

6,578

 

 

7,000

 

 

276

 

4.2

%

 

(146

)

-2.1

%

Equipment expense

 

5,941

 

 

5,567

 

 

5,828

 

 

374

 

6.7

%

 

113

 

1.9

%

Other real estate expense, net

 

1,357

 

 

1,511

 

 

1,203

 

 

(154

)

-10.2

%

 

154

 

12.8

%

Other expense

 

18,519

 

 

13,139

 

 

14,598

 

 

5,380

 

40.9

%

 

3,921

 

26.9

%

Total noninterest expense

 

129,600

 

 

118,679

 

 

116,963

 

 

10,921

 

9.2

%

 

12,637

 

10.8

%

Income before income taxes and tax eq adj

 

29,303

 

 

59,575

 

 

67,158

 

 

(30,272

)

-50.8

%

 

(37,855

)

-56.4

%

Tax equivalent adjustment

 

2,947

 

 

2,957

 

 

2,969

 

 

(10

)

-0.3

%

 

(22

)

-0.7

%

Income before income taxes

 

26,356

 

 

56,618

 

 

64,189

 

 

(30,262

)

-53.4

%

 

(37,833

)

-58.9

%

Income taxes

 

5,156

 

 

8,637

 

 

9,749

 

 

(3,481

)

-40.3

%

 

(4,593

)

-47.1

%

Net income

$

21,200

 

$

47,981

 

$

54,440

 

$

(26,781

)

-55.8

%

$

(33,240

)

-61.1

%

 
Per share data
Earnings per share - basic

$

0.34

 

$

0.76

 

$

0.86

 

$

(0.42

)

-55.3

%

$

(0.52

)

-60.5

%

 
Earnings per share - diluted

$

0.34

 

$

0.76

 

$

0.86

 

$

(0.42

)

-55.3

%

$

(0.52

)

-60.5

%

 
Dividends per share

$

0.23

 

$

0.23

 

$

0.23

 

 

 

0.0

%

 

 

0.0

%

 
Weighted average shares outstanding
Basic

 

62,521,684

 

 

63,214,593

 

 

63,422,692

 

 
Diluted

 

62,730,157

 

 

63,409,683

 

 

63,581,964

 

 
Period end shares outstanding

 

62,461,832

 

 

62,773,226

 

 

63,423,820

 

 
(1) During the second quarter of 2021, Trustmark reclassified its credit loss expense related to off-balance sheet credit exposures from noninterest expense to provision for credit losses, off-balance sheet credit exposures. Prior periods have been reclassified accordingly.
 
 
n/m - percentage changes greater than +/- 100% are considered not meaningful
 
 See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2021
($ in thousands)
(unaudited)
Quarter Ended Linked Quarter Year over Year
NONPERFORMING ASSETS (1) 9/30/2021 6/30/2021 9/30/2020 $ Change % Change $ Change % Change
Nonaccrual LHFI
Alabama

$

9,223

 

$

8,952

 

$

3,860

 

$

271

 

3.0

%

$

5,363

 

n/m

 

Florida

 

381

 

 

467

 

 

617

 

 

(86

)

-18.4

%

 

(236

)

-38.2

%

Mississippi (2)

 

22,898

 

 

23,422

 

 

35,617

 

 

(524

)

-2.2

%

 

(12,719

)

-35.7

%

Tennessee (3)

 

10,356

 

 

10,751

 

 

13,041

 

 

(395

)

-3.7

%

 

(2,685

)

-20.6

%

Texas

 

23,382

 

 

7,856

 

 

721

 

 

15,526

 

n/m

 

 

22,661

 

n/m

 

Total nonaccrual LHFI

 

66,240

 

 

51,448

 

 

53,856

 

 

14,792

 

28.8

%

 

12,384

 

23.0

%

Other real estate
Alabama

 

613

 

 

2,830

 

 

3,725

 

 

(2,217

)

-78.3

%

 

(3,112

)

-83.5

%

Florida

 

 

 

 

 

3,665

 

 

 

n/m

 

 

(3,665

)

-100.0

%

Mississippi (2)

 

5,600

 

 

6,550

 

 

8,718

 

 

(950

)

-14.5

%

 

(3,118

)

-35.8

%

Tennessee (3)

 

 

 

59

 

 

140

 

 

(59

)

-100.0

%

 

(140

)

-100.0

%

Texas

 

 

 

 

 

 

 

 

n/m

 

 

 

n/m

 

Total other real estate

 

6,213

 

 

9,439

 

 

16,248

 

 

(3,226

)

-34.2

%

 

(10,035

)

-61.8

%

Total nonperforming assets

$

72,453

 

$

60,887

 

$

70,104

 

$

11,566

 

19.0

%

$

2,349

 

3.4

%

 
LOANS PAST DUE OVER 90 DAYS (1)
LHFI

$

625

 

$

423

 

$

782

 

$

202

 

47.8

%

$

(157

)

-20.1

%

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

$

75,091

 

$

81,538

 

$

121,281

 

$

(6,447

)

-7.9

%

$

(46,190

)

-38.1

%

 
Quarter Ended Linked Quarter Year over Year
ACL LHFI (1) 9/30/2021 6/30/2021 9/30/2020 $ Change % Change $ Change % Change
Beginning Balance

$

104,032

 

$

109,191

 

$

119,188

 

$

(5,159

)

-4.7

%

$

(15,156

)

-12.7

%

CECL adoption adjustments:
LHFI

 

 

 

 

 

 

 

 

n/m

 

 

 

n/m

 

Acquired loan transfers

 

 

 

 

 

 

 

 

n/m

 

 

 

n/m

 

Provision for credit losses, LHFI

 

(2,492

)

 

(3,991

)

 

1,760

 

 

1,499

 

37.6

%

 

(4,252

)

n/m

 

Charge-offs

 

(1,586

)

 

(4,828

)

 

(1,263

)

 

3,242

 

67.1

%

 

(323

)

-25.6

%

Recoveries

 

4,119

 

 

3,660

 

 

2,325

 

 

459

 

12.5

%

 

1,794

 

77.2

%

Net (charge-offs) recoveries

 

2,533

 

 

(1,168

)

 

1,062

 

 

3,701

 

n/m

 

 

1,471

 

n/m

 

Ending Balance

$

104,073

 

$

104,032

 

$

122,010

 

$

41

 

0.0

%

$

(17,937

)

-14.7

%

 
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama

$

247

 

$

203

 

$

117

 

$

44

 

21.7

%

$

130

 

n/m

 

Florida

 

356

 

 

167

 

 

387

 

 

189

 

n/m

 

 

(31

)

-8.0

%

Mississippi (2)

 

1,436

 

 

(3,071

)

 

442

 

 

4,507

 

n/m

 

 

994

 

n/m

 

Tennessee (3)

 

(8

)

 

1,031

 

 

42

 

 

(1,039

)

n/m

 

 

(50

)

n/m

 

Texas

 

502

 

 

502

 

 

74

 

 

 

0.0

%

 

428

 

n/m

 

Total net (charge-offs) recoveries

$

2,533

 

$

(1,168

)

$

1,062

 

$

3,701

 

n/m

 

$

1,471

 

n/m

 

 
(1) Excludes PPP loans.
(2) Mississippi includes Central and Southern Mississippi Regions.
(3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
 
n/m - percentage changes greater than +/- 100% are considered not meaningful
 
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2021
($ in thousands)
(unaudited)
Quarter Ended Nine Months Ended
AVERAGE BALANCES 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020 9/30/2021 9/30/2020
Securities AFS-taxable

$

2,686,765

 

$

2,339,662

 

$

2,098,089

 

$

1,902,162

 

$

1,857,050

 

$

2,376,995

 

$

1,734,380

 

Securities AFS-nontaxable

 

5,159

 

 

5,174

 

 

5,190

 

 

5,206

 

 

5,973

 

 

5,174

 

 

12,594

 

Securities HTM-taxable

 

401,685

 

 

441,688

 

 

489,260

 

 

550,563

 

 

608,585

 

 

443,890

 

 

652,642

 

Securities HTM-nontaxable

 

8,641

 

 

10,958

 

 

24,070

 

 

24,752

 

 

25,508

 

 

14,500

 

 

25,573

 

Total securities

 

3,102,250

 

 

2,797,482

 

 

2,616,609

 

 

2,482,683

 

 

2,497,116

 

 

2,840,559

 

 

2,425,189

 

PPP loans

 

122,176

 

 

648,222

 

 

598,139

 

 

875,098

 

 

941,456

 

 

454,436

 

 

569,985

 

Loans (includes loans held for sale)

 

10,389,826

 

 

10,315,927

 

 

10,316,319

 

 

10,231,671

 

 

10,162,379

 

 

10,340,960

 

 

9,917,127

 

Fed funds sold and reverse repurchases

 

69

 

 

55

 

 

136

 

 

303

 

 

301

 

 

86

 

 

193

 

Other earning assets

 

2,038,515

 

 

1,750,385

 

 

1,667,906

 

 

860,540

 

 

722,917

 

 

1,820,293

 

 

588,787

 

Total earning assets

 

15,652,836

 

 

15,512,071

 

 

15,199,109

 

 

14,450,295

 

 

14,324,169

 

 

15,456,334

 

 

13,501,281

 

ACL LHFI

 

(104,857

)

 

(112,346

)

 

(119,557

)

 

(124,088

)

 

(121,842

)

 

(112,199

)

 

(103,355

)

Other assets

 

1,602,611

 

 

1,622,388

 

 

1,601,250

 

 

1,620,694

 

 

1,564,825

 

 

1,608,754

 

 

1,582,888

 

Total assets

$

17,150,590

 

$

17,022,113

 

$

16,680,802

 

$

15,946,901

 

$

15,767,152

 

$

16,952,889

 

$

14,980,814

 

 
Interest-bearing demand deposits

$

4,224,717

 

$

4,056,910

 

$

3,743,651

 

$

3,649,590

 

$

3,669,249

 

$

4,010,188

 

$

3,562,310

 

Savings deposits

 

4,617,683

 

 

4,627,180

 

 

4,659,037

 

 

4,350,783

 

 

4,416,046

 

 

4,634,482

 

 

4,082,396

 

Time deposits

 

1,258,829

 

 

1,301,896

 

 

1,371,830

 

 

1,436,677

 

 

1,507,348

 

 

1,310,438

 

 

1,567,577

 

Total interest-bearing deposits

 

10,101,229

 

 

9,985,986

 

 

9,774,518

 

 

9,437,050

 

 

9,592,643

 

 

9,955,108

 

 

9,212,283

 

Fed funds purchased and repurchases

 

147,635

 

 

174,620

 

 

166,909

 

 

170,474

 

 

84,077

 

 

162,984

 

 

145,537

 

Other borrowings

 

109,735

 

 

132,199

 

 

166,926

 

 

173,525

 

 

167,262

 

 

136,077

 

 

120,197

 

Subordinated notes

 

122,951

 

 

122,897

 

 

122,875

 

 

42,828

 

 

 

 

122,908

 

 

 

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

Total interest-bearing liabilities

 

10,543,406

 

 

10,477,558

 

 

10,293,084

 

 

9,885,733

 

 

9,905,838

 

 

10,438,933

 

 

9,539,873

 

Noninterest-bearing deposits

 

4,566,924

 

 

4,512,268

 

 

4,363,559

 

 

4,100,849

 

 

3,921,867

 

 

4,481,662

 

 

3,494,425

 

Other liabilities

 

257,956

 

 

251,582

 

 

264,808

 

 

235,284

 

 

244,544

 

 

258,090

 

 

279,517

 

Total liabilities

 

15,368,286

 

 

15,241,408

 

 

14,921,451

 

 

14,221,866

 

 

14,072,249

 

 

15,178,685

 

 

13,313,815

 

Shareholders' equity

 

1,782,304

 

 

1,780,705

 

 

1,759,351

 

 

1,725,035

 

 

1,694,903

 

 

1,774,204

 

 

1,666,999

 

Total liabilities and equity

$

17,150,590

 

$

17,022,113

 

$

16,680,802

 

$

15,946,901

 

$

15,767,152

 

$

16,952,889

 

$

14,980,814

 

 
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2021
($ in thousands)
(unaudited)
 
PERIOD END BALANCES 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020
Cash and due from banks

$

2,175,058

 

$

2,267,224

 

$

1,774,541

 

$

1,952,504

 

$

564,588

 

Fed funds sold and reverse repurchases

 

 

 

 

 

 

 

50

 

 

50

 

Securities available for sale

 

3,057,605

 

 

2,548,739

 

 

2,337,676

 

 

1,991,815

 

 

1,922,728

 

Securities held to maturity

 

394,905

 

 

433,012

 

 

493,738

 

 

538,072

 

 

611,280

 

PPP loans

 

46,486

 

 

166,119

 

 

679,725

 

 

610,134

 

 

944,270

 

LHFS

 

335,339

 

 

332,132

 

 

412,999

 

 

446,951

 

 

485,103

 

LHFI

 

10,174,899

 

 

10,152,869

 

 

9,983,704

 

 

9,824,524

 

 

9,847,728

 

ACL LHFI

 

(104,073

)

 

(104,032

)

 

(109,191

)

 

(117,306

)

 

(122,010

)

Net LHFI

 

10,070,826

 

 

10,048,837

 

 

9,874,513

 

 

9,707,218

 

 

9,725,718

 

Premises and equipment, net

 

201,937

 

 

200,970

 

 

199,098

 

 

194,278

 

 

192,722

 

Mortgage servicing rights

 

84,101

 

 

80,764

 

 

83,035

 

 

66,464

 

 

61,613

 

Goodwill

 

384,237

 

 

384,237

 

 

384,237

 

 

385,270

 

 

385,270

 

Identifiable intangible assets

 

5,621

 

 

6,170

 

 

6,724

 

 

7,390

 

 

8,142

 

Other real estate

 

6,213

 

 

9,439

 

 

10,651

 

 

11,651

 

 

16,248

 

Operating lease right-of-use assets

 

34,689

 

 

33,201

 

 

33,704

 

 

30,901

 

 

30,508

 

Other assets

 

567,627

 

 

587,288

 

 

587,672

 

 

609,142

 

 

609,922

 

Total assets

$

17,364,644

 

$

17,098,132

 

$

16,878,313

 

$

16,551,840

 

$

15,558,162

 

 
Deposits:
Noninterest-bearing

$

4,987,885

 

$

4,446,991

 

$

4,705,991

 

$

4,349,010

 

$

3,964,023

 

Interest-bearing

 

9,934,954

 

 

10,185,093

 

 

9,677,449

 

 

9,699,754

 

 

9,258,390

 

Total deposits

 

14,922,839

 

 

14,632,084

 

 

14,383,440

 

 

14,048,764

 

 

13,222,413

 

Fed funds purchased and repurchases

 

146,417

 

 

157,176

 

 

160,991

 

 

164,519

 

 

153,834

 

Other borrowings

 

94,889

 

 

117,223

 

 

145,994

 

 

168,252

 

 

178,599

 

Subordinated notes

 

122,987

 

 

122,932

 

 

122,877

 

 

122,921

 

 

 

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

ACL on off-balance sheet credit exposures

 

32,684

 

 

33,733

 

 

29,205

 

 

38,572

 

 

39,659

 

Operating lease liabilities

 

36,531

 

 

34,959

 

 

35,389

 

 

32,290

 

 

31,838

 

Other liabilities

 

177,494

 

 

158,860

 

 

178,856

 

 

173,549

 

 

159,922

 

Total liabilities

 

15,595,697

 

 

15,318,823

 

 

15,118,608

 

 

14,810,723

 

 

13,848,121

 

Common stock

 

13,014

 

 

13,079

 

 

13,209

 

 

13,215

 

 

13,215

 

Capital surplus

 

201,837

 

 

210,420

 

 

229,892

 

 

233,120

 

 

231,836

 

Retained earnings

 

1,573,176

 

 

1,566,451

 

 

1,533,110

 

 

1,495,833

 

 

1,459,306

 

Accumulated other comprehensive income (loss), net of tax

 

(19,080

)

 

(10,641

)

 

(16,506

)

 

(1,051

)

 

5,684

 

Total shareholders' equity

 

1,768,947

 

 

1,779,309

 

 

1,759,705

 

 

1,741,117

 

 

1,710,041

 

Total liabilities and equity

$

17,364,644

 

$

17,098,132

 

$

16,878,313

 

$

16,551,840

 

$

15,558,162

 

 
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2021
($ in thousands except per share data)
(unaudited)
 
 
 
Quarter Ended Nine Months Ended
INCOME STATEMENTS 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020 9/30/2021 9/30/2020
Interest and fees on LHFS & LHFI-FTE

$

94,101

 

$

93,698

 

$

93,394

 

$

96,453

 

$

97,429

 

$

281,193

 

$

306,086

Interest and fees on PPP loans

 

1,533

 

 

25,555

 

 

9,241

 

 

14,870

 

 

6,729

 

 

36,329

 

 

11,773

Interest on securities-taxable

 

9,973

 

 

8,991

 

 

8,938

 

 

9,998

 

 

12,542

 

 

27,902

 

 

38,252

Interest on securities-tax exempt-FTE

 

132

 

 

149

 

 

290

 

 

293

 

 

301

 

 

571

 

 

1,073

Interest on fed funds sold and reverse repurchases

 

 

 

 

 

 

 

 

 

1

 

 

 

 

1

Other interest income

 

949

 

 

489

 

 

503

 

 

249

 

 

331

 

 

1,941

 

 

1,310

Total interest income-FTE

 

106,688

 

 

128,882

 

 

112,366

 

 

121,863

 

 

117,333

 

 

347,936

 

 

358,495

Interest on deposits

 

3,691

 

 

4,630

 

 

5,223

 

 

6,363

 

 

7,437

 

 

13,544

 

 

31,124

Interest on fed funds purchased and repurchases

 

51

 

 

59

 

 

56

 

 

56

 

 

32

 

 

166

 

 

699

Other interest expense

 

1,733

 

 

1,813

 

 

1,857

 

 

1,127

 

 

688

 

 

5,403

 

 

2,429

Total interest expense

 

5,475

 

 

6,502

 

 

7,136

 

 

7,546

 

 

8,157

 

 

19,113

 

 

34,252

Net interest income-FTE

 

101,213

 

 

122,380

 

 

105,230

 

 

114,317

 

 

109,176

 

 

328,823

 

 

324,243

Provision for credit losses, LHFI

 

(2,492

)

 

(3,991

)

 

(10,501

)

 

(4,413

)

 

1,760

 

 

(16,984

)

 

40,526

Provision for credit losses, off-balance sheet credit exposures (1)

 

(1,049

)

 

4,528

 

 

(9,367

)

 

(1,087

)

 

(3,004

)

 

(5,888

)

 

10,021

Net interest income after provision-FTE

 

104,754

 

 

121,843

 

 

125,098

 

 

119,817

 

 

110,420

 

 

351,695

 

 

273,696

Service charges on deposit accounts

 

8,911

 

 

7,613

 

 

7,356

 

 

8,283

 

 

7,577

 

 

23,880

 

 

24,006

Bank card and other fees

 

8,549

 

 

8,301

 

 

9,472

 

 

9,107

 

 

8,843

 

 

26,322

 

 

21,915

Mortgage banking, net

 

14,004

 

 

17,333

 

 

20,804

 

 

28,155

 

 

36,439

 

 

52,141

 

 

97,667

Insurance commissions

 

12,133

 

 

12,217

 

 

12,445

 

 

10,196

 

 

11,562

 

 

36,795

 

 

34,980

Wealth management

 

9,071

 

 

8,946

 

 

8,416

 

 

7,838

 

 

7,679

 

 

26,433

 

 

23,787

Other, net

 

1,481

 

 

2,001

 

 

2,090

 

 

2,538

 

 

1,601

 

 

5,572

 

 

6,121

Total noninterest income

 

54,149

 

 

56,411

 

 

60,583

 

 

66,117

 

 

73,701

 

 

171,143

 

 

208,476

Salaries and employee benefits

 

74,623

 

 

70,115

 

 

71,162

 

 

69,660

 

 

67,342

 

 

215,900

 

 

202,597

Services and fees

 

22,306

 

 

21,769

 

 

22,484

 

 

22,327

 

 

20,992

 

 

66,559

 

 

61,489

Net occupancy-premises

 

6,854

 

 

6,578

 

 

6,795

 

 

6,616

 

 

7,000

 

 

20,227

 

 

19,873

Equipment expense

 

5,941

 

 

5,567

 

 

6,244

 

 

6,213

 

 

5,828

 

 

17,752

 

 

17,064

Other real estate expense, net

 

1,357

 

 

1,511

 

 

324

 

 

(812

)

 

1,203

 

 

3,192

 

 

2,768

Other expense

 

18,519

 

 

13,139

 

 

14,539

 

 

15,890

 

 

14,598

 

 

46,197

 

 

42,616

Total noninterest expense

 

129,600

 

 

118,679

 

 

121,548

 

 

119,894

 

 

116,963

 

 

369,827

 

 

346,407

Income before income taxes and tax eq adj

 

29,303

 

 

59,575

 

 

64,133

 

 

66,040

 

 

67,158

 

 

153,011

 

 

135,765

Tax equivalent adjustment

 

2,947

 

 

2,957

 

 

2,894

 

 

2,939

 

 

2,969

 

 

8,798

 

 

9,084

Income before income taxes

 

26,356

 

 

56,618

 

 

61,239

 

 

63,101

 

 

64,189

 

 

144,213

 

 

126,681

Income taxes

 

5,156

 

 

8,637

 

 

9,277

 

 

11,884

 

 

9,749

 

 

23,070

 

 

17,873

Net income

$

21,200

 

$

47,981

 

$

51,962

 

$

51,217

 

$

54,440

 

$

121,143

 

$

108,808

 
Per share data
Earnings per share - basic

$

0.34

 

$

0.76

 

$

0.82

 

$

0.81

 

$

0.86

 

$

1.92

 

$

1.71

 
Earnings per share - diluted

$

0.34

 

$

0.76

 

$

0.82

 

$

0.81

 

$

0.86

 

$

1.92

 

$

1.71

 
Dividends per share

$

0.23

 

$

0.23

 

$

0.23

 

$

0.23

 

$

0.23

 

$

0.69

 

$

0.69

 
Weighted average shares outstanding
Basic

 

62,521,684

 

 

63,214,593

 

 

63,395,911

 

 

63,424,219

 

 

63,422,692

 

 

63,040,860

 

 

63,531,478

 
Diluted

 

62,730,157

 

 

63,409,683

 

 

63,562,503

 

 

63,616,767

 

 

63,581,964

 

 

63,219,987

 

 

63,665,127

 
Period end shares outstanding

 

62,461,832

 

 

62,773,226

 

 

63,394,522

 

 

63,424,526

 

 

63,423,820

 

 

62,461,832

 

 

63,423,820

 
(1) During the second quarter of 2021, Trustmark reclassified its credit loss expense related to off-balance sheet credit exposures from noninterest expense to provision for credit losses, off-balance sheet credit exposures. Prior periods have been reclassified accordingly.
 

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2021
($ in thousands)
(unaudited)
 
 
Quarter Ended
NONPERFORMING ASSETS (1) 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020
Nonaccrual LHFI
Alabama

$

9,223

 

$

8,952

 

$

9,161

 

$

9,221

 

$

3,860

 

Florida

 

381

 

 

467

 

 

607

 

 

572

 

 

617

 

Mississippi (2)

 

22,898

 

 

23,422

 

 

35,534

 

 

35,015

 

 

35,617

 

Tennessee (3)

 

10,356

 

 

10,751

 

 

12,451

 

 

12,572

 

 

13,041

 

Texas

 

23,382

 

 

7,856

 

 

5,761

 

 

5,748

 

 

721

 

Total nonaccrual LHFI

 

66,240

 

 

51,448

 

 

63,514

 

 

63,128

 

 

53,856

 

Other real estate
Alabama

 

613

 

 

2,830

 

 

3,085

 

 

3,271

 

 

3,725

 

Florida

 

 

 

 

 

 

 

 

 

3,665

 

Mississippi (2)

 

5,600

 

 

6,550

 

 

7,566

 

 

8,330

 

 

8,718

 

Tennessee (3)

 

 

 

59

 

 

 

 

50

 

 

140

 

Texas

 

 

 

 

 

 

 

 

 

 

Total other real estate

 

6,213

 

 

9,439

 

 

10,651

 

 

11,651

 

 

16,248

 

Total nonperforming assets

$

72,453

 

$

60,887

 

$

74,165

 

$

74,779

 

$

70,104

 

 
LOANS PAST DUE OVER 90 DAYS (1)
LHFI

$

625

 

$

423

 

$

2,593

 

$

1,576

 

$

782

 

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

$

75,091

 

$

81,538

 

$

109,566

 

$

119,409

 

$

121,281

 

 
 
Quarter Ended Nine Months Ended
ACL LHFI (1) 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020 9/30/2021 9/30/2020
Beginning Balance

$

104,032

 

$

109,191

 

$

117,306

 

$

122,010

 

$

119,188

 

$

117,306

 

$

84,277

 

CECL adoption adjustments:
LHFI

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,039

)

Acquired loan transfers

 

 

 

 

 

 

 

 

 

 

 

 

 

1,822

 

Provision for credit losses, LHFI

 

(2,492

)

 

(3,991

)

 

(10,501

)

 

(4,413

)

 

1,760

 

 

(16,984

)

 

40,526

 

Charge-offs

 

(1,586

)

 

(4,828

)

 

(1,245

)

 

(2,797

)

 

(1,263

)

 

(7,659

)

 

(8,678

)

Recoveries

 

4,119

 

 

3,660

 

 

3,631

 

 

2,506

 

 

2,325

 

 

11,410

 

 

7,102

 

Net (charge-offs) recoveries

 

2,533

 

 

(1,168

)

 

2,386

 

 

(291

)

 

1,062

 

 

3,751

 

 

(1,576

)

Ending Balance

$

104,073

 

$

104,032

 

$

109,191

 

$

117,306

 

$

122,010

 

$

104,073

 

$

122,010

 

 
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama

$

247

 

$

203

 

$

102

 

$

(1,011

)

$

117

 

$

552

 

$

(437

)

Florida

 

356

 

 

167

 

 

30

 

 

66

 

 

387

 

 

553

 

 

324

 

Mississippi (2)

 

1,436

 

 

(3,071

)

 

2,207

 

 

332

 

 

442

 

 

572

 

 

482

 

Tennessee (3)

 

(8

)

 

1,031

 

 

47

 

 

303

 

 

42

 

 

1,070

 

 

(2,078

)

Texas

 

502

 

 

502

 

 

 

 

19

 

 

74

 

 

1,004

 

 

133

 

Total net (charge-offs) recoveries

$

2,533

 

$

(1,168

)

$

2,386

 

$

(291

)

$

1,062

 

$

3,751

 

$

(1,576

)

 
(1) Excludes PPP loans.
(2) Mississippi includes Central and Southern Mississippi Regions.
(3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
 

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2021
(unaudited)
 
 
Quarter Ended Nine Months Ended
FINANCIAL RATIOS AND OTHER DATA 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020 9/30/2021 9/30/2020
Return on average equity

 

4.72

%

 

10.81

%

 

11.98

%

 

11.81

%

 

12.78

%

9.13

%

8.72

%

Return on average tangible equity

 

6.16

%

 

13.96

%

 

15.56

%

 

15.47

%

 

16.82

%

11.84

%

11.57

%

Return on average assets

 

0.49

%

 

1.13

%

 

1.26

%

 

1.28

%

 

1.37

%

0.96

%

0.97

%

Interest margin - Yield - FTE

 

2.70

%

 

3.33

%

 

3.00

%

 

3.35

%

 

3.26

%

3.01

%

3.55

%

Interest margin - Cost

 

0.14

%

 

0.17

%

 

0.19

%

 

0.21

%

 

0.23

%

0.17

%

0.34

%

Net interest margin - FTE

 

2.57

%

 

3.16

%

 

2.81

%

 

3.15

%

 

3.03

%

2.84

%

3.21

%

Efficiency ratio (1)

 

74.10

%

 

64.31

%

 

71.84

%

 

65.59

%

 

62.19

%

69.85

%

62.59

%

Full-time equivalent employees

 

2,680

 

 

2,772

 

 

2,793

 

 

2,797

 

 

2,807

 

 
CREDIT QUALITY RATIOS (2)
Net (recoveries) charge-offs / average loans

 

-0.10

%

 

0.05

%

 

-0.09

%

 

0.01

%

 

-0.04

%

-0.05

%

0.02

%

Provision for credit losses, LHFI / average loans

 

-0.10

%

 

-0.16

%

 

-0.41

%

 

-0.17

%

 

0.07

%

-0.22

%

0.55

%

Nonaccrual LHFI / (LHFI + LHFS)

 

0.63

%

 

0.49

%

 

0.61

%

 

0.61

%

 

0.52

%

Nonperforming assets / (LHFI + LHFS)

 

0.69

%

 

0.58

%

 

0.71

%

 

0.73

%

 

0.68

%

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

 

0.69

%

 

0.58

%

 

0.71

%

 

0.73

%

 

0.68

%

ACL LHFI / LHFI

 

1.02

%

 

1.02

%

 

1.09

%

 

1.19

%

 

1.24

%

ACL LHFI-commercial / commercial LHFI

 

1.05

%

 

1.04

%

 

1.13

%

 

1.20

%

 

1.20

%

ACL LHFI-consumer / consumer and home mortgage LHFI

 

0.91

%

 

0.98

%

 

0.95

%

 

1.16

%

 

1.41

%

ACL LHFI / nonaccrual LHFI

 

157.11

%

 

202.21

%

 

171.92

%

 

185.82

%

 

226.55

%

ACL LHFI / nonaccrual LHFI (excl individually evaluated loans)

 

520.77

%

 

537.35

%

 

437.08

%

 

572.69

%

 

593.72

%

 
CAPITAL RATIOS
Total equity / total assets

 

10.19

%

 

10.41

%

 

10.43

%

 

10.52

%

 

10.99

%

Tangible equity / tangible assets

 

8.12

%

 

8.31

%

 

8.30

%

 

8.34

%

 

8.68

%

Tangible equity / risk-weighted assets

 

11.19

%

 

11.33

%

 

11.23

%

 

11.22

%

 

11.01

%

Tier 1 leverage ratio

 

8.92

%

 

9.00

%

 

9.11

%

 

9.33

%

 

9.20

%

Common equity tier 1 capital ratio

 

11.68

%

 

11.76

%

 

11.71

%

 

11.62

%

 

11.36

%

Tier 1 risk-based capital ratio

 

12.17

%

 

12.25

%

 

12.20

%

 

12.11

%

 

11.86

%

Total risk-based capital ratio

 

14.01

%

 

14.10

%

 

14.07

%

 

14.12

%

 

12.88

%

 
STOCK PERFORMANCE
Market value-Close

$

32.22

 

$

30.80

 

$

33.66

 

$

27.31

 

$

21.41

 

Book value

$

28.32

 

$

28.35

 

$

27.76

 

$

27.45

 

$

26.96

 

Tangible book value

$

22.08

 

$

22.13

 

$

21.59

 

$

21.26

 

$

20.76

 

 
(1) See Note 10 – Non-GAAP Financial Measures in the Notes to Consolidated Financials for Trustmark’s efficiency ratio calculation.
(2) Excludes PPP loans.
 

See Notes to Consolidated Financials

 

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2021

($ in thousands)

(unaudited)

Note 1 – Regulatory Matters

On October 22, 2021, Trustmark Corporation’s subsidiary, Trustmark National Bank (“TNB”), issued a press release announcing that it entered into a consent order with the Office of the Comptroller of the Currency (“OCC”) and a separate consent order jointly with the U.S. Department of Justice (“DOJ”) and the Consumer Financial Protection Bureau (“CFPB”), to resolve allegations that TNB previously violated the Fair Housing Act (the “FHA”), the Equal Credit Opportunity Act (the “ECOA”) and the Consumer Financial Protection Act within the Memphis metropolitan statistical area (the “Memphis MSA”).

Under the DOJ and CFPB’s joint consent order, TNB will pay a civil money penalty totaling $5.0 million, of which $4.0 million will satisfy the OCC’s civil money penalty as set forth in the OCC’s consent order; the remaining $1.0 million will be paid to the CFPB. The joint consent order also requires TNB, among other things, to implement a mutually agreed-upon Fair Lending Plan, invest $3.85 million over five years in a loan subsidy fund to increase credit opportunities to residents of majority-Black and Hispanic neighborhoods, and devote a minimum of $400 thousand over five years toward community development partnership contributions and $200 thousand per year over five years toward advertising, community outreach, and credit repair and education in TNB’s Memphis lending area (defined in the consent order as consisting of Shelby County and Fayette County in Tennessee and DeSoto County in Mississippi). TNB will also open one new mortgage loan production office to serve the credit needs of residents in a majority-Black and Hispanic neighborhood in TNB’s Memphis lending area. In addition, TNB will continue to maintain its full-time Community Lending Manager position and its full-time Community Development Manager position, which are both focused on the Memphis MSA.

The joint consent order must be approved by the United States District Court for the Western District of Tennessee.

Note 2 - Paycheck Protection Program

On June 30, 2021, Trustmark announced the sale of substantially all PPP loans originated in 2021 by its wholly owned subsidiary, TNB, to The Loan Source, Inc. (Loan Source), a firm with significant expertise in PPP loans. As a result of this transaction, Loan Source will assume responsibility for the servicing and forgiveness process for the loans it has acquired from Trustmark. This transaction will allow Trustmark to focus on more traditional lending efforts and increase its ability to provide customers with financial services in an improving economic environment.

Trustmark accelerated the recognition of unamortized PPP loan origination fees, net of cost, of approximately $18.6 million, in the second quarter of 2021 due to the sale of approximately $354.2 million in PPP loans. This revenue is substantially the same as Trustmark would expect to recognize upon the maturity or forgiveness of the PPP loans being sold in this transaction, and thus this transaction serves to accelerate revenue anticipated in future periods into the second quarter.

At September 30, 2021, Trustmark had PPP loans outstanding that totaled $46.5 million (net of $798 thousand of deferred fees and costs) under the CARES Act. Due to the amount and nature of the PPP loans, these loans were not included in the LHFI portfolio and are presented separately in the accompanying consolidated balance sheets. The PPP loans are fully guaranteed by the Small Business Administration; therefore, no ACL was estimated for these loans.

Note 3 - Securities Available for Sale and Held to Maturity

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

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

 

 

9/30/2020

 

SECURITIES AVAILABLE FOR SALE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

$

278,615

 

 

$

30,025

 

 

$

 

 

$

 

 

$

 

U.S. Government agency obligations

 

 

14,979

 

 

 

16,023

 

 

 

17,349

 

 

 

18,041

 

 

 

19,011

 

Obligations of states and political subdivisions

 

 

5,734

 

 

 

5,807

 

 

 

5,798

 

 

 

5,835

 

 

 

8,315

 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage pass-through securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guaranteed by GNMA

 

 

43,860

 

 

 

48,445

 

 

 

52,406

 

 

 

56,862

 

 

 

62,156

 

Issued by FNMA and FHLMC

 

 

2,187,412

 

 

 

1,983,783

 

 

 

1,749,144

 

 

 

1,441,321

 

 

 

1,279,919

 

Other residential mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

236,885

 

 

 

283,988

 

 

 

345,869

 

 

 

419,437

 

 

 

500,858

 

Commercial mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

290,120

 

 

 

180,668

 

 

 

167,110

 

 

 

50,319

 

 

 

52,469

 

Total securities available for sale

 

$

3,057,605

 

 

$

2,548,739

 

 

$

2,337,676

 

 

$

1,991,815

 

 

$

1,922,728

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SECURITIES HELD TO MATURITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Obligations of states and political subdivisions

 

$

10,683

 

 

$

12,994

 

 

$

26,554

 

 

$

26,584

 

 

$

31,605

 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage pass-through securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guaranteed by GNMA

 

 

5,912

 

 

 

6,249

 

 

 

7,268

 

 

 

7,598

 

 

 

8,244

 

Issued by FNMA and FHLMC

 

 

48,554

 

 

 

53,406

 

 

 

61,855

 

 

 

67,944

 

 

 

78,213

 

Other residential mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

264,638

 

 

 

291,477

 

 

 

324,360

 

 

 

360,361

 

 

 

399,400

 

Commercial mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

65,118

 

 

 

68,886

 

 

 

73,701

 

 

 

75,585

 

 

 

93,818

 

Total securities held to maturity

 

$

394,905

 

 

$

433,012

 

 

$

493,738

 

 

$

538,072

 

 

$

611,280

 

At September 30, 2021, 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 $6.8 million ($5.1 million, net of tax).

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2021

($ in thousands)

(unaudited)

Note 3 - Securities Available for Sale and Held to Maturity (continued)

Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 98.5% 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 4 – Loan Composition

LHFI consisted of the following during the periods presented:

LHFI BY TYPE

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

 

 

9/30/2020

 

Loans secured by real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction, land development and other land loans

 

$

1,286,613

 

 

$

1,360,302

 

 

$

1,342,088

 

 

$

1,309,039

 

 

$

1,385,947

 

Secured by 1-4 family residential properties

 

 

1,891,292

 

 

 

1,810,396

 

 

 

1,742,782

 

 

 

1,741,132

 

 

 

1,775,400

 

Secured by nonfarm, nonresidential properties

 

 

2,924,953

 

 

 

2,819,662

 

 

 

2,799,195

 

 

 

2,709,026

 

 

 

2,707,627

 

Other real estate secured

 

 

986,163

 

 

 

1,078,622

 

 

 

1,135,005

 

 

 

1,065,964

 

 

 

887,792

 

Commercial and industrial loans

 

 

1,327,211

 

 

 

1,326,605

 

 

 

1,323,277

 

 

 

1,309,078

 

 

 

1,398,468

 

Consumer loans

 

 

157,963

 

 

 

153,519

 

 

 

153,267

 

 

 

161,174

 

 

 

160,960

 

State and other political subdivision loans

 

 

1,125,186

 

 

 

1,136,764

 

 

 

1,036,694

 

 

 

1,000,776

 

 

 

935,349

 

Other loans

 

 

475,518

 

 

 

466,999

 

 

 

451,396

 

 

 

528,335

 

 

 

596,185

 

LHFI

 

 

10,174,899

 

 

 

10,152,869

 

 

 

9,983,704

 

 

 

9,824,524

 

 

 

9,847,728

 

ACL LHFI

 

 

(104,073

)

 

 

(104,032

)

 

 

(109,191

)

 

 

(117,306

)

 

 

(122,010

)

Net LHFI

 

$

10,070,826

 

 

$

10,048,837

 

 

$

9,874,513

 

 

$

9,707,218

 

 

$

9,725,718

 

The following table presents the LHFI composition by region at September 30, 2021 and reflects each region’s diversified mix of loans:

 

 

September 30, 2021

 

LHFI - COMPOSITION BY REGION

 

Total

 

 

Alabama

 

 

Florida

 

 

Mississippi

(Central and

Southern

Regions)

 

 

Tennessee

(Memphis,

TN and

Northern
MS

Regions)

 

 

Texas

 

Loans secured by real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction, land development and other land loans

 

$

1,286,613

 

 

$

554,207

 

 

$

45,335

 

 

$

374,064

 

 

$

38,583

 

 

$

274,424

 

Secured by 1-4 family residential properties

 

 

1,891,292

 

 

 

109,986

 

 

 

39,699

 

 

 

1,659,289

 

 

 

68,123

 

 

 

14,195

 

Secured by nonfarm, nonresidential properties

 

 

2,924,953

 

 

 

834,328

 

 

 

259,997

 

 

 

1,089,333

 

 

 

174,338

 

 

 

566,957

 

Other real estate secured

 

 

986,163

 

 

 

221,832

 

 

 

6,154

 

 

 

303,760

 

 

 

19,850

 

 

 

434,567

 

Commercial and industrial loans

 

 

1,327,211

 

 

 

230,698

 

 

 

23,678

 

 

 

597,197

 

 

 

276,876

 

 

 

198,762

 

Consumer loans

 

 

157,963

 

 

 

22,125

 

 

 

8,403

 

 

 

101,034

 

 

 

19,398

 

 

 

7,003

 

State and other political subdivision loans

 

 

1,125,186

 

 

 

101,679

 

 

 

54,619

 

 

 

734,853

 

 

 

37,408

 

 

 

196,627

 

Other loans

 

 

475,518

 

 

 

74,703

 

 

 

11,903

 

 

 

289,739

 

 

 

69,725

 

 

 

29,448

 

Loans

 

$

10,174,899

 

 

$

2,149,558

 

 

$

449,788

 

 

$

5,149,269

 

 

$

704,301

 

 

$

1,721,983

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION

 

 

 

 

 

 

 

 

 

Lots

 

$

60,804

 

 

$

27,014

 

 

$

8,676

 

 

$

17,782

 

 

$

905

 

 

$

6,427

 

Development

 

 

124,213

 

 

 

48,692

 

 

 

612

 

 

 

46,452

 

 

 

13,016

 

 

 

15,441

 

Unimproved land

 

 

93,283

 

 

 

28,095

 

 

 

12,146

 

 

 

28,601

 

 

 

11,187

 

 

 

13,254

 

1-4 family construction

 

 

281,504

 

 

 

147,073

 

 

 

19,485

 

 

 

70,508

 

 

 

12,528

 

 

 

31,910

 

Other construction

 

 

726,809

 

 

 

303,333

 

 

 

4,416

 

 

 

210,721

 

 

 

947

 

 

 

207,392

 

Construction, land development and other land loans

 

$

1,286,613

 

 

$

554,207

 

 

$

45,335

 

 

$

374,064

 

 

$

38,583

 

 

$

274,424

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2021

($ in thousands)

(unaudited)

Note 4 – Loan Composition (continued)

 

 

September 30, 2021

 

 

 

Total

 

 

Alabama

 

 

Florida

 

 

Mississippi

(Central and

Southern

Regions)

 

 

Tennessee

(Memphis,

TN and

Northern
MS

Regions)

 

 

Texas

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION

 

 

 

 

 

 

 

 

 

Non-owner occupied:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

$

384,940

 

 

$

155,375

 

 

$

32,778

 

 

$

105,444

 

 

$

18,285

 

 

$

73,058

 

Office

 

 

215,297

 

 

 

52,628

 

 

 

23,835

 

 

 

67,094

 

 

 

11,714

 

 

 

60,026

 

Hotel/motel

 

 

347,023

 

 

 

176,352

 

 

 

76,664

 

 

 

47,229

 

 

 

32,638

 

 

 

14,140

 

Mini-storage

 

 

130,853

 

 

 

22,757

 

 

 

2,227

 

 

 

76,790

 

 

 

632

 

 

 

28,447

 

Industrial

 

 

246,576

 

 

 

57,901

 

 

 

20,755

 

 

 

62,071

 

 

 

137

 

 

 

105,712

 

Health care

 

 

59,676

 

 

 

39,225

 

 

 

1,140

 

 

 

16,755

 

 

 

370

 

 

 

2,186

 

Convenience stores

 

 

23,047

 

 

 

8,010

 

 

 

683

 

 

 

3,627

 

 

 

1,194

 

 

 

9,533

 

Nursing homes/senior living

 

 

204,678

 

 

 

106,572

 

 

 

 

 

 

71,672

 

 

 

6,434

 

 

 

20,000

 

Other

 

 

76,742

 

 

 

16,021

 

 

 

7,388

 

 

 

31,370

 

 

 

10,939

 

 

 

11,024

 

Total non-owner occupied loans

 

 

1,688,832

 

 

 

634,841

 

 

 

165,470

 

 

 

482,052

 

 

 

82,343

 

 

 

324,126

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Owner-occupied:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office

 

 

167,713

 

 

 

37,485

 

 

 

42,334

 

 

 

49,810

 

 

 

9,794

 

 

 

28,290

 

Churches

 

 

96,810

 

 

 

19,892

 

 

 

6,089

 

 

 

48,537

 

 

 

9,352

 

 

 

12,940

 

Industrial warehouses

 

 

178,394

 

 

 

11,807

 

 

 

2,989

 

 

 

50,594

 

 

 

18,686

 

 

 

94,318

 

Health care

 

 

143,180

 

 

 

12,033

 

 

 

6,915

 

 

 

107,190

 

 

 

2,296

 

 

 

14,746

 

Convenience stores

 

 

141,490

 

 

 

16,155

 

 

 

13,945

 

 

 

68,325

 

 

 

489

 

 

 

42,576

 

Retail

 

 

75,640

 

 

 

13,214

 

 

 

13,577

 

 

 

20,040

 

 

 

12,035

 

 

 

16,774

 

Restaurants

 

 

56,892

 

 

 

3,750

 

 

 

4,545

 

 

 

31,612

 

 

 

13,585

 

 

 

3,400

 

Auto dealerships

 

 

56,403

 

 

 

6,358

 

 

 

261

 

 

 

25,240

 

 

 

24,544

 

 

 

 

Nursing homes/senior living

 

 

211,190

 

 

 

73,078

 

 

 

 

 

 

138,112

 

 

 

 

 

 

 

Other

 

 

108,409

 

 

 

5,715

 

 

 

3,872

 

 

 

67,821

 

 

 

1,214

 

 

 

29,787

 

Total owner-occupied loans

 

 

1,236,121

 

 

 

199,487

 

 

 

94,527

 

 

 

607,281

 

 

 

91,995

 

 

 

242,831

 

Loans secured by nonfarm, nonresidential properties

 

$

2,924,953

 

 

$

834,328

 

 

$

259,997

 

 

$

1,089,333

 

 

$

174,338

 

 

$

566,957

 

Note 5 – Subordinated Notes

During the fourth quarter of 2020, Trustmark agreed to issue and sell $125.0 million aggregate principal amount of its 3.625% Fixed-to-Floating Rate Subordinated Notes (the Notes) due December 1, 2030. At September 30, 2021, the carrying amount of the Notes was $123.0 million. The Notes are unsecured obligations and are subordinated in right of payment to all of Trustmark’s existing and future senior indebtedness, whether secured or unsecured. The Notes are obligations of Trustmark only and are not obligations of, and are not guaranteed by, any of its subsidiaries, including TNB. From the date of issuance until November 30, 2025, the Notes bear interest at a fixed rate of 3.625% per year, payable semi-annually in arrears on June 1 and December 1 of each year. Beginning December 1, 2025, the Notes will bear interest at a floating rate per year equal to the Benchmark rate, which is the Three-Month Term Secured Overnight Financing Rate (SOFR), plus 338.7 basis points, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year. The Notes qualify as Tier 2 capital for Trustmark. The Notes may be redeemed at Trustmark’s option under certain circumstances. Trustmark intends to use the net proceeds for general corporate purposes.

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2021

($ in thousands)

(unaudited)

Note 6 – Yields on Earning Assets and Interest-Bearing Liabilities

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

 

Quarter Ended

 

 

Nine Months Ended

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

 

 

9/30/2020

 

 

9/30/2021

 

 

9/30/2020

 

Securities – taxable

 

1.28

%

 

 

1.30

%

 

 

1.40

%

 

 

1.62

%

 

 

2.02

%

 

 

1.32

%

 

 

2.14

%

Securities – nontaxable

 

3.79

%

 

 

3.70

%

 

 

4.02

%

 

 

3.89

%

 

 

3.80

%

 

 

3.88

%

 

 

3.76

%

Securities – total

 

1.29

%

 

 

1.31

%

 

 

1.43

%

 

 

1.65

%

 

 

2.05

%

 

 

1.34

%

 

 

2.17

%

PPP loans

 

4.98

%

 

 

15.81

%

 

 

6.27

%

 

 

6.76

%

 

 

2.84

%

 

 

10.69

%

 

 

2.76

%

Loans - LHFI & LHFS

 

3.59

%

 

 

3.64

%

 

 

3.67

%

 

 

3.75

%

 

 

3.81

%

 

 

3.64

%

 

 

4.12

%

Loans - total

 

3.61

%

 

 

4.36

%

 

 

3.81

%

 

 

3.99

%

 

 

3.73

%

 

 

3.93

%

 

 

4.05

%

Fed funds sold & reverse repurchases

 

 

 

 

 

 

 

 

 

 

 

 

 

1.32

%

 

 

 

 

 

0.69

%

Other earning assets

 

0.18

%

 

 

0.11

%

 

 

0.12

%

 

 

0.12

%

 

 

0.18

%

 

 

0.14

%

 

 

0.30

%

Total earning assets

 

2.70

%

 

 

3.33

%

 

 

3.00

%

 

 

3.35

%

 

 

3.26

%

 

 

3.01

%

 

 

3.55

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

0.14

%

 

 

0.19

%

 

 

0.22

%

 

 

0.27

%

 

 

0.31

%

 

 

0.18

%

 

 

0.45

%

Fed funds purchased & repurchases

 

0.14

%

 

 

0.14

%

 

 

0.14

%

 

 

0.13

%

 

 

0.15

%

 

 

0.14

%

 

 

0.64

%

Other borrowings

 

2.33

%

 

 

2.29

%

 

 

2.14

%

 

 

1.61

%

 

 

1.19

%

 

 

2.25

%

 

 

1.78

%

Total interest-bearing liabilities

 

0.21

%

 

 

0.25

%

 

 

0.28

%

 

 

0.30

%

 

 

0.33

%

 

 

0.24

%

 

 

0.48

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

2.57

%

 

 

3.16

%

 

 

2.81

%

 

 

3.15

%

 

 

3.03

%

 

 

2.84

%

 

 

3.21

%

Net interest margin excluding PPP loans and the FRB balance

2.90

%

 

 

2.94

%

 

 

2.99

%

 

 

3.09

%

 

 

3.20

%

 

 

2.94

%

 

 

3.36

%

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

At September 30, 2021 and June 30, 2021, the average FRB balance totaled $1.996 billion and $1.700 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 2.90% for the third quarter of 2021, a decrease of 4 basis points when compared to the second quarter of 2021. Continued low interest rates decreased the yield on the loans held for investment and held for sale portfolio as well as the securities portfolio and were partially offset by lower costs of interest-bearing deposits.

Note 7 – 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 $144 thousand during the third quarter of 2021.

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2021

($ in thousands)

(unaudited)

Note 7 – Mortgage Banking (continued)

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

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

 

 

9/30/2020

 

 

9/30/2021

 

 

9/30/2020

 

Mortgage servicing income, net

 

$

6,406

 

 

$

6,318

 

 

$

6,181

 

 

$

6,227

 

 

$

5,742

 

 

$

18,905

 

 

$

17,454

 

Change in fair value-MSR from runoff

 

 

(5,283

)

 

 

(5,029

)

 

 

(5,103

)

 

 

(5,177

)

 

 

(4,590

)

 

 

(15,415

)

 

 

(11,411

)

Gain on sales of loans, net

 

 

12,737

 

 

 

14,778

 

 

 

19,456

 

 

 

28,014

 

 

 

34,472

 

 

 

46,971

 

 

 

82,889

 

Mortgage banking income before hedge ineffectiveness

 

 

13,860

 

 

 

16,067

 

 

 

20,534

 

 

 

29,064

 

 

 

35,624

 

 

 

50,461

 

 

 

88,932

 

Change in fair value-MSR from market changes

 

 

1,806

 

 

 

(4,465

)

 

 

13,696

 

 

 

951

 

 

 

60

 

 

 

11,037

 

 

 

(27,098

)

Change in fair value of derivatives

 

 

(1,662

)

 

 

5,731

 

 

 

(13,426

)

 

 

(1,860

)

 

 

755

 

 

 

(9,357

)

 

 

35,833

 

Net positive (negative) hedge ineffectiveness

 

 

144

 

 

 

1,266

 

 

 

270

 

 

 

(909

)

 

 

815

 

 

 

1,680

 

 

 

8,735

 

Mortgage banking, net

 

$

14,004

 

 

$

17,333

 

 

$

20,804

 

 

$

28,155

 

 

$

36,439

 

 

$

52,141

 

 

$

97,667

 

Note 8 – Salaries and Employee Benefit Plans

Early Retirement Program

In June 2021, Trustmark announced a voluntary early retirement program. In general, associates who were eligible to participate had to be at least 60 years of age with five or more years of continuous service. The cost of this program is reflected in a one-time charge of approximately $5.7 million (salaries and benefits of $5.6 million and other miscellaneous expense of $89 thousand; or $0.07 per diluted share net of tax) in Trustmark’s third quarter of 2021 earnings. The salary and employee benefits expense savings resulting from the implementation of the early retirement program are expected to total approximately $1.3 million ($0.02 per diluted share net of tax) and $4.3 million ($0.05 per diluted share net of tax) for the remainder of 2021 and for the year ended 2022, respectively.

Note 9 – Other Noninterest Income and Expense

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

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

 

 

9/30/2020

 

 

9/30/2021

 

 

9/30/2020

 

Partnership amortization for tax credit purposes

 

$

(2,045

)

 

$

(1,989

)

 

$

(1,522

)

 

$

(1,877

)

 

$

(1,457

)

 

$

(5,556

)

 

$

(3,823

)

Increase in life insurance cash surrender value

 

 

1,663

 

 

 

1,653

 

 

 

1,639

 

 

 

1,708

 

 

 

1,755

 

 

 

4,955

 

 

 

5,173

 

Other miscellaneous income

 

 

1,863

 

 

 

2,337

 

 

 

1,973

 

 

 

2,707

 

 

 

1,303

 

 

 

6,173

 

 

 

4,771

 

Total other, net

 

$

1,481

 

 

$

2,001

 

 

$

2,090

 

 

$

2,538

 

 

$

1,601

 

 

$

5,572

 

 

$

6,121

 

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

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

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

 

 

9/30/2020

 

 

9/30/2021

 

 

9/30/2020

 

Loan expense

 

$

4,022

 

 

$

3,738

 

 

$

4,167

 

 

$

4,243

 

 

$

4,184

 

 

$

11,927

 

 

$

10,934

 

Amortization of intangibles

 

 

549

 

 

 

553

 

 

 

666

 

 

 

752

 

 

 

752

 

 

 

1,768

 

 

 

2,300

 

FDIC assessment expense

 

 

1,275

 

 

 

1,225

 

 

 

1,540

 

 

 

1,500

 

 

 

1,410

 

 

 

4,040

 

 

 

4,590

 

Regulatory settlement charge

 

 

5,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,000

 

 

 

 

Other miscellaneous expense

 

 

7,673

 

 

 

7,623

 

 

 

8,166

 

 

 

9,395

 

 

 

8,252

 

 

 

23,462

 

 

 

24,792

 

Total other expense

 

$

18,519

 

 

$

13,139

 

 

$

14,539

 

 

$

15,890

 

 

$

14,598

 

 

$

46,197

 

 

$

42,616

 

During the third quarter of 2021, other expense included a charge of $5.0 million to resolve allegations by regulatory authorities regarding fair lending matters. See Note 1 – Regulatory Matters for further details.

Note 10 – Non-GAAP Financial Measures

In addition to capital ratios defined by U.S. generally accepted accounting principles (GAAP) and banking regulators, Trustmark utilizes various tangible common equity measures when evaluating capital utilization and adequacy. Tangible common equity, as defined by Trustmark, represents common equity less goodwill and identifiable intangible assets.

Trustmark 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 tangible 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 consolidated financial statements in their entirety and not to rely on any single financial measure. The following table reconciles Trustmark’s calculation of these measures to amounts reported under GAAP.

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2021

($ in thousands except per share data)

(unaudited)

Note 10 – Non-GAAP Financial Measures (continued)

 

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

 

 

9/30/2020

 

 

9/30/2021

 

 

9/30/2020

 

TANGIBLE EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE BALANCES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders' equity

 

 

$

1,782,304

 

 

$

1,780,705

 

 

$

1,759,351

 

 

$

1,725,035

 

 

$

1,694,903

 

 

$

1,774,204

 

 

$

1,666,999

 

Less: Goodwill

 

 

 

(384,237

)

 

 

(384,237

)

 

 

(385,155

)

 

 

(385,270

)

 

 

(385,270

)

 

 

(384,540

)

 

 

(383,016

)

Identifiable intangible assets

 

 

 

(5,899

)

 

 

(6,442

)

 

 

(7,118

)

 

 

(7,803

)

 

 

(8,550

)

 

 

(6,482

)

 

 

(8,146

)

Total average tangible equity

 

 

$

1,392,168

 

 

$

1,390,026

 

 

$

1,367,078

 

 

$

1,331,962

 

 

$

1,301,083

 

 

$

1,383,182

 

 

$

1,275,837

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PERIOD END BALANCES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders' equity

 

 

$

1,768,947

 

 

$

1,779,309

 

 

$

1,759,705

 

 

$

1,741,117

 

 

$

1,710,041

 

 

 

 

 

 

 

 

 

Less: Goodwill

 

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

 

 

(385,270

)

 

 

(385,270

)

 

 

 

 

 

 

 

 

Identifiable intangible assets

 

 

 

(5,621

)

 

 

(6,170

)

 

 

(6,724

)

 

 

(7,390

)

 

 

(8,142

)

 

 

 

 

 

 

 

 

Total tangible equity

(a)

 

$

1,379,089

 

 

$

1,388,902

 

 

$

1,368,744

 

 

$

1,348,457

 

 

$

1,316,629

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TANGIBLE ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

$

17,364,644

 

 

$

17,098,132

 

 

$

16,878,313

 

 

$

16,551,840

 

 

$

15,558,162

 

 

 

 

 

 

 

 

 

Less: Goodwill

 

 

 

(384,237

)

 

 

(384,237

)

 

 

(384,237

)

 

 

(385,270

)

 

 

(385,270

)

 

 

 

 

 

 

 

 

Identifiable intangible assets

 

 

 

(5,621

)

 

 

(6,170

)

 

 

(6,724

)

 

 

(7,390

)

 

 

(8,142

)

 

 

 

 

 

 

 

 

Total tangible assets

(b)

 

$

16,974,786

 

 

$

16,707,725

 

 

$

16,487,352

 

 

$

16,159,180

 

 

$

15,164,750

 

 

 

 

 

 

 

 

 

Risk-weighted assets

(c)

 

$

12,324,254

 

 

$

12,256,492

 

 

$

12,188,988

 

 

$

12,017,378

 

 

$

11,963,269

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION

 

 

 

 

 

 

 

 

 

Net income

 

 

$

21,200

 

 

$

47,981

 

 

$

51,962

 

 

$

51,217

 

 

$

54,440

 

 

$

121,143

 

 

$

108,808

 

Plus: Intangible amortization net of tax

 

 

 

412

 

 

 

415

 

 

 

500

 

 

 

564

 

 

 

564

 

 

 

1,327

 

 

 

1,725

 

Net income adjusted for intangible amortization

 

$

21,612

 

 

$

48,396

 

 

$

52,462

 

 

$

51,781

 

 

$

55,004

 

 

$

122,470

 

 

$

110,533

 

Period end common shares outstanding

(d)

 

 

62,461,832

 

 

 

62,773,226

 

 

 

63,394,522

 

 

 

63,424,526

 

 

 

63,423,820

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TANGIBLE COMMON EQUITY MEASUREMENTS

 

 

 

 

 

 

 

 

 

Return on average tangible equity (1)

 

 

 

6.16

%

 

 

13.96

%

 

 

15.56

%

 

 

15.47

%

 

 

16.82

%

 

 

11.84

%

 

 

11.57

%

Tangible equity/tangible assets

(a)/(b)

 

 

8.12

%

 

 

8.31

%

 

 

8.30

%

 

 

8.34

%

 

 

8.68

%

 

 

 

 

 

 

 

 

Tangible equity/risk-weighted assets

(a)/(c)

 

 

11.19

%

 

 

11.33

%

 

 

11.23

%

 

 

11.22

%

 

 

11.01

%

 

 

 

 

 

 

 

 

Tangible book value

(a)/(d)*1,000

 

$

22.08

 

 

$

22.13

 

 

$

21.59

 

 

$

21.26

 

 

$

20.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMMON EQUITY TIER 1 CAPITAL (CET1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders' equity

 

 

$

1,768,947

 

 

$

1,779,309

 

 

$

1,759,705

 

 

$

1,741,117

 

 

$

1,710,041

 

 

 

 

 

 

 

 

 

CECL transition adjustment

 

 

 

26,419

 

 

 

26,671

 

 

 

26,829

 

 

 

31,199

 

 

 

32,647

 

 

 

 

 

 

 

 

 

AOCI-related adjustments

 

 

 

19,080

 

 

 

10,641

 

 

 

16,506

 

 

 

1,051

 

 

 

(5,684

)

 

 

 

 

 

 

 

 

CET1 adjustments and deductions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill net of associated deferred tax liabilities (DTLs)

 

 

(370,264

)

 

 

(370,276

)

 

 

(370,288

)

 

 

(371,333

)

 

 

(371,345

)

 

 

 

 

 

 

 

 

Other adjustments and deductions for CET1 (2)

 

 

(4,817

)

 

 

(5,243

)

 

 

(5,675

)

 

 

(6,190

)

 

 

(6,770

)

 

 

 

 

 

 

 

 

CET1 capital

(e)

 

 

1,439,365

 

 

 

1,441,102

 

 

 

1,427,077

 

 

 

1,395,844

 

 

 

1,358,889

 

 

 

 

 

 

 

 

 

Additional tier 1 capital instruments plus related surplus

 

 

60,000

 

 

 

60,000

 

 

 

60,000

 

 

 

60,000

 

 

 

60,000

 

 

 

 

 

 

 

 

 

Tier 1 capital

 

 

$

1,499,365

 

 

$

1,501,102

 

 

$

1,487,077

 

 

$

1,455,844

 

 

$

1,418,889

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity tier 1 capital ratio

(e)/(c)

 

 

11.68

%

 

 

11.76

%

 

 

11.71

%

 

 

11.62

%

 

 

11.36

%

 

 

 

 

 

 

 

 

(1)

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

(2)

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

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2021

($ in thousands except per share data)

unaudited)

Note 10 – Non-GAAP Financial Measures (continued)

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

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

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

 

 

9/30/2020

 

 

9/30/2021

 

 

9/30/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (GAAP)

 

$

98,266

 

 

$

119,423

 

 

$

102,336

 

 

$

111,378

 

 

$

106,207

 

 

$

320,025

 

 

$

315,159

 

Noninterest income (GAAP)

 

 

54,149

 

 

 

56,411

 

 

 

60,583

 

 

 

66,117

 

 

 

73,701

 

 

 

171,143

 

 

 

208,476

 

Pre-provision revenue

(a)

$

152,415

 

 

$

175,834

 

 

$

162,919

 

 

$

177,495

 

 

$

179,908

 

 

$

491,168

 

 

$

523,635

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense (GAAP)

 

$

129,600

 

 

$

118,679

 

 

$

121,548

 

 

$

119,894

 

 

$

116,963

 

 

$

369,827

 

 

$

346,407

 

Less: Voluntary early retirement program

 

 

(5,700

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,700

)

 

 

(4,375

)

Regulatory settlement charge

 

 

(5,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,000

)

 

 

 

Adjusted noninterest expense - PPNR (Non-GAAP)

(b)

$

118,900

 

 

$

118,679

 

 

$

121,548

 

 

$

119,894

 

 

$

116,963

 

 

$

359,127

 

 

$

342,032

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PPNR (Non-GAAP)

(a)-(b)

$

33,515

 

 

$

57,155

 

 

$

41,371

 

 

$

57,601

 

 

$

62,945

 

 

$

132,041

 

 

$

181,603

 

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

 

 

Quarter Ended

 

 

 

Nine Months Ended

 

 

 

9/30/2021

 

 

 

9/30/2020

 

 

 

9/30/2021

 

 

 

9/30/2020

 

 

 

Amount

 

 

Diluted

EPS

 

 

 

Amount

 

 

Diluted

EPS

 

 

 

Amount

 

 

Diluted

EPS

 

 

 

Amount

 

 

Diluted

EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (GAAP)

$

21,200

 

 

$

0.34

 

 

 

$

54,440

 

 

$

0.86

 

 

 

$

121,143

 

 

$

1.92

 

 

 

$

108,808

 

 

$

1.71

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Significant non-routine transactions (net of taxes):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voluntary early retirement program

 

 

4,275

 

 

 

0.07

 

 

 

 

 

 

 

 

 

 

 

4,275

 

 

 

0.07

 

 

 

 

3,281

 

 

 

0.05

 

Regulatory settlement charge (not tax deductible)

 

 

5,000

 

 

 

0.08

 

 

 

 

 

 

 

 

 

 

 

5,000

 

 

 

0.08

 

 

 

 

 

 

 

 

Net income adjusted for significant non-routine

 

transactions (Non-GAAP)

$

30,475

 

 

$

0.49

 

 

 

$

54,440

 

 

$

0.86

 

 

 

$

130,418

 

 

$

2.07

 

 

 

$

112,089

 

 

$

1.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported

(GAAP)

 

 

Adjusted

(Non

GAAP)

 

 

 

Reported

(GAAP)

 

 

Adjusted

(Non

GAAP)

 

 

 

Reported

(GAAP)

 

 

Adjusted

(Non

GAAP)

 

 

 

Reported

(GAAP)

 

 

Adjusted

(Non

GAAP)

 

Return on average equity

 

 

4.72

%

 

 

6.77

%

 

 

 

12.78

%

 

n/a

 

 

 

 

9.13

%

 

 

9.82

%

 

 

 

8.72

%

 

 

8.97

%

Return on average tangible equity

 

 

6.16

%

 

 

8.77

%

 

 

 

16.82

%

 

n/a

 

 

 

 

11.84

%

 

 

12.72

%

 

 

 

11.57

%

 

 

11.89

%

Return on average assets

 

 

0.49

%

 

 

0.71

%

 

 

 

1.37

%

 

n/a

 

 

 

 

0.96

%

 

 

1.03

%

 

 

 

0.97

%

 

 

1.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

n/a - not applicable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2021

($ in thousands except per share data)

unaudited)

Note 10 – Non-GAAP Financial Measures (continued)

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

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

 

 

9/30/2020

 

 

9/30/2021

 

 

9/30/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total noninterest expense (GAAP)

 

$

129,600

 

 

$

118,679

 

 

$

121,548

 

 

$

119,894

 

 

$

116,963

 

 

 

369,827

 

 

$

346,407

 

Less: Other real estate expense, net

 

(1,357

)

 

 

(1,511

)

 

 

(324

)

 

 

812

 

 

 

(1,203

)

 

 

(3,192

)

 

 

(2,768

)

Amortization of intangibles

 

(549

)

 

 

(553

)

 

 

(666

)

 

 

(752

)

 

 

(752

)

 

 

(1,768

)

 

 

(2,300

)

Charitable contributions resulting in state tax credits

 

(350

)

 

 

(355

)

 

 

(350

)

 

 

(375

)

 

 

(375

)

 

 

(1,055

)

 

 

(1,125

)

Voluntary early retirement program

 

(5,700

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,700

)

 

 

(4,375

)

Regulatory settlement charge

 

 

(5,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,000

)

 

 

 

Adjusted noninterest expense (Non-GAAP)

(c)

$

116,644

 

 

$

116,260

 

 

$

120,208

 

 

$

119,579

 

 

$

114,633

 

 

$

353,112

 

 

$

335,839

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (GAAP)

 

$

98,266

 

 

$

119,423

 

 

$

102,336

 

 

$

111,378

 

 

$

106,207

 

 

$

320,025

 

 

$

315,159

 

Add: Tax equivalent adjustment

 

 

2,947

 

 

 

2,957

 

 

 

2,894

 

 

 

2,939

 

 

 

2,969

 

 

 

8,798

 

 

 

9,084

 

Net interest income-FTE (Non-GAAP)

(a)

$

101,213

 

 

$

122,380

 

 

$

105,230

 

 

$

114,317

 

 

$

109,176

 

 

$

328,823

 

 

$

324,243

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income (GAAP)

 

$

54,149

 

 

$

56,411

 

 

$

60,583

 

 

$

66,117

 

 

$

73,701

 

 

$

171,143

 

 

$

208,476

 

Add: Partnership amortization for tax credit purposes

 

2,045

 

 

 

1,989

 

 

 

1,522

 

 

 

1,877

 

 

 

1,457

 

 

 

5,556

 

 

 

3,823

 

Adjusted noninterest income (Non-GAAP)

(b)

$

56,194

 

 

$

58,400

 

 

$

62,105

 

 

$

67,994

 

 

$

75,158

 

 

$

176,699

 

 

$

212,299

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted revenue (Non-GAAP)

(a)+(b)

$

157,407

 

 

$

180,780

 

 

$

167,335

 

 

$

182,311

 

 

$

184,334

 

 

$

505,522

 

 

$

536,542

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio (Non-GAAP)

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

 

74.10

%

 

 

64.31

%

 

 

71.84

%

 

 

65.59

%

 

 

62.19

%

 

 

69.85

%

 

 

62.59

%

 

Contacts

Trustmark Investor Contacts:

Thomas C. Owens

Treasurer and Principal Financial Officer

601-208-7853

F. Joseph Rein, Jr.

Senior Vice President

601-208-6898

Trustmark Media Contact:

Melanie A. Morgan

Senior Vice President

601-208-2979

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