Trustmark Corporation Announces First Quarter 2024 Financial Results

Trustmark Corporation (NASDAQGS:TRMK) reported net income of $41.5 million in the first quarter of 2024, representing diluted earnings per share of $0.68. Trustmark’s performance during the first quarter produced a return on average tangible equity of 12.98% and a return on average assets of 0.89%. The Board of Directors declared a quarterly cash dividend of $0.23 per share payable June 15, 2024, to shareholders of record on June 1, 2024.

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First Quarter Highlights

• Loans held for investment increased 0.8% linked-quarter and represented 85.1% of total deposits at March 31, 2024
• Credit quality remained solid
• Revenue totaled $188.2 million, up 0.9% linked-quarter
• Noninterest income increased 11.1% linked-quarter, reflecting seasonal increases and the strength of diversified business lines
• Noninterest expense decreased 3.9% linked-quarter, reflecting on-going expense management priorities

Duane A. Dewey, President and CEO, stated, “We are off to a great start in 2024. Our first quarter results reflect continued loan growth, solid credit quality, and double-digit increases in noninterest income. In addition, we experienced a meaningful decrease in noninterest expense. These accomplishments are the results of our focused efforts to expand customer relationships and diligently manage expenses. Our associates have done a tremendous job of serving customers, building relationships, and demonstrating the value Trustmark can provide as our customers’ financial partner. We are well positioned to serve and expand our customer base and create long-term value for shareholders.”

Balance Sheet Management

• Loans held for investment (HFI) increased $107.4 million, or 0.8%, during the quarter
• Total deposits decreased $231.2 million, or 1.5%, during the quarter
• Maintained strong capital position with CET1 ratio of 10.12% and total risk-based capital ratio of 12.42%

Loans HFI totaled $13.1 billion at March 31, 2024, reflecting an increase of $107.4 million, or 0.8%, linked-quarter and $560.7 million, or 4.5%, year-over-year. The linked-quarter growth reflected increases in commercial real estate and equipment finance loans offset in part by reductions in state and other political subdivision loans and consumer loans. Trustmark’s loan portfolio remains well-diversified by loan type and geography.

Deposits totaled $15.3 billion at March 31, 2024, down $231.2 million, or 1.5%, from the prior quarter and up $554.9 million, or 3.8%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 85.1% of total deposits at March 31, 2024. Migration into higher-yielding products continued to drive a change in deposit mix from noninterest-bearing deposits, which represented 19.8% of total deposits at March 31, 2024. Interest-bearing deposit costs totaled 2.74% for the first quarter, an increase of 7 basis points linked-quarter, while the total cost of deposits was 2.18%, an increase of 8 basis points linked-quarter. The total cost of interest-bearing liabilities in the first quarter was 2.92%, up 3 basis points from the prior quarter.

During the first quarter, Trustmark did not repurchase any of its outstanding common shares. As previously announced, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2024, under which $50.0 million of Trustmark’s outstanding shares may be acquired through December 31, 2024. At March 31, 2024, Trustmark’s tangible equity to tangible assets ratio was 7.20%, while the total risk-based capital ratio was 12.42%. Tangible book value per share was $21.18 at March 31, 2024, an increase of 1.5% from the prior quarter and 10.1% from the prior year.

Credit Quality

• Net charge-offs totaled $4.1 million, representing 0.12% of average loans in the first quarter
• Provision for credit losses for loans HFI was $7.7 million in the first quarter
• Allowance for credit losses (ACL) represented 1.10% of loans HFI and 235.29% of nonaccrual loans, excluding individually analyzed loans at March 31, 2024

Nonaccrual loans totaled $98.4 million at March 31, 2024, down $1.7 million from the prior quarter and an increase of $26.0 million year-over-year. Other real estate totaled $7.6 million, reflecting increases of $753 thousand and $5.9 million from the prior quarter and prior year, respectively. Collectively, nonperforming assets totaled $106.0 million, representing 0.80% of loans HFI and held for sale (HFS) at March 31, 2024.

The provision for credit losses for loans HFI was $7.7 million in the first quarter and was primarily attributable to loan growth, changes in the macroeconomic forecast, and net adjustments to the qualitative factors. The provision for credit losses for off-balance sheet credit exposures was a negative $192 thousand in the first quarter. Collectively, the provision for credit losses totaled $7.5 million in the first quarter compared to $6.7 million in the prior quarter and $1.0 million in the first quarter of 2023.

Allocation of Trustmark’s $143.0 million ACL on loans HFI represented 0.93% of commercial loans and 1.63% of consumer and home mortgage loans, resulting in an ACL to total loans HFI of 1.10% at March 31, 2024. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.

Revenue Generation

• Net interest income (FTE) totaled $136.2 million in the first quarter, down 2.8% linked-quarter
• Net interest margin totaled 3.21% in the first quarter, down 4 basis points from the prior quarter
• Noninterest income increased 11.1% linked-quarter to total $55.3 million, reflecting growth in mortgage banking, insurance, other income, and wealth management revenue

Revenue in the first quarter totaled $188.2 million, an increase of 0.9% from the prior quarter and a decrease of 0.4% from the same quarter in the prior year. The linked-quarter increase primarily reflects higher noninterest income offset in part by lower net interest income while the year-over-year decrease is attributed to lower net interest income offset in part by growth in noninterest income.

Net interest income (FTE) in the first quarter totaled $136.2 million, resulting in a net interest margin of 3.21%, down 4 basis points from the prior quarter. The decrease in the net interest margin was primarily due to increased costs of interest-bearing liabilities.

Noninterest income in the first quarter totaled $55.3 million, an increase of $5.5 million, or 11.1%, from the prior quarter and $4.0 million, or 7.7%, year-over-year. The linked-quarter increases in mortgage banking, insurance, other income, and wealth management revenue were offset in part by declines in bank card and other fees and service charges on deposit accounts. The increase in noninterest income year-over-year is broad-based, reflecting increases in mortgage banking, insurance, other income, service charges of deposit accounts and wealth management revenue which were offset in part by declines in bank card and other fees.

Mortgage loan production in the first quarter totaled $274.0 million, up 0.8% from the prior quarter and down 24.1% year-over-year. Mortgage banking revenue totaled $8.9 million in the first quarter, an increase of $3.4 million linked-quarter and $1.3 million year-over-year. The linked-quarter increase was principally attributable to increased gain on sales of mortgage loans, improvement in net negative hedge ineffectiveness, and reduced servicing asset amortization. The year-over-year increase was principally due to increased gain on sales of mortgage loans.

Insurance revenue totaled $15.5 million in the first quarter, up $2.3 million, or 17.2%, from the prior quarter and $1.2 million, or 8.1%, year-over-year. The linked-quarter and year-over-year increases primarily reflected growth in commercial property and casualty commissions. Wealth management revenue in the first quarter totaled $9.0 million, an increase of $295 thousand, or 3.4%, from the prior quarter and $172 thousand, or 2.0%, year-over-year. The linked-quarter growth reflected higher trust management revenue while the year-over-year growth reflected increased brokerage revenue.

Other income, net totaled $3.6 million in the first quarter, up $1.1 million from both the prior quarter and year-over-year. Service charges on deposit accounts totaled $11.0 million in the first quarter, reflecting a seasonal decrease of $353 thousand, or 3.1%, from the prior quarter and an increase of $622 thousand, or 6.0%, year-over-year. Bank card and other fees totaled $7.4 million in the first quarter, down $1.1 million from the prior quarter due principally to lower customer derivative revenue. Year-over-year, bank card and other fees declined $375 thousand.

Noninterest Expense

• Total noninterest expense declined $5.3 million, or 3.9%, linked-quarter
• Salary and employee benefit expense declined $2.5 million, or 3.3%, linked-quarter
• Total services and fees declined $3.1 million, or 11.0%, linked-quarter

Noninterest expense in the first quarter totaled $131.1 million, a decrease of $5.3 million, or 3.9%, from the prior quarter and an increase of $2.8 million, or 2.2%, year-over-year. Salary and employee benefit expense totaled $75.5 million in the first quarter, a decline of $2.5 million, or 3.3%, linked-quarter and an increase of $1.4 million, or 1.9%, year-over-year. The linked-quarter decline reflected reductions in incentives, severance, medical insurance, and salary expense, which were offset in part by a seasonal increase in payroll taxes and restricted stock compensation expense. Services and fees in the first quarter totaled $24.8 million, a decrease of $3.1 million, or 11.0%, from the prior quarter and $587 thousand, or 2.3%, year-over-year. The linked-quarter decline is attributable principally to lower professional fees and data processing software expense.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, April 24, 2024, at 8:30 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (877) 317-3051 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Wednesday, May 8, 2024, in archived format at the same web address or by calling (877) 344-7529, passcode 4820621.

Trustmark is a financial services company providing banking and financial solutions through offices in Alabama, Florida, Georgia, Mississippi, Tennessee and Texas.

Forward-Looking Statements

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

Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, actions by the Board of Governors of the Federal Reserve System (FRB) that impact the level of market interest rates, local, state, national and international economic and market conditions, conditions in the housing and real estate markets in the regions in which Trustmark operates and the extent and duration of the current volatility in the credit and financial markets, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels and slowdowns in economic growth, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility of market interest rates, the impacts related to or resulting from bank failures and other economic and industry volatility, including potential increased regulatory requirements, the demand for the products and services we offer, potential unexpected adverse outcomes in pending litigation matters, our ability to attract and retain noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, cyber-attacks and other breaches which could affect our information system security, natural disasters, environmental disasters, pandemics or other health crises, acts of war or terrorism, 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
March 31, 2024
($ in thousands)
(unaudited)
													Linked Quarter							Year over Year
QUARTERLY AVERAGE BALANCES	3/31/2024				12/31/2023				3/31/2023				$ Change				% Change			$ Change				% Change
Securities AFS-taxable	$	1,927,619			$	1,986,825			$	2,187,121			$	(59,206	)		-3.0	%		$	(259,502	)		-11.9	%
Securities AFS-nontaxable		—				4,246				4,812				(4,246	)		-100.0	%			(4,812	)		-100.0	%
Securities HTM-taxable		1,418,476				1,430,169				1,479,283				(11,693	)		-0.8	%			(60,807	)		-4.1	%
Securities HTM-nontaxable		340				340				4,509				—			0.0	%			(4,169	)		-92.5	%
Total securities		3,346,435				3,421,580				3,675,725				(75,145	)		-2.2	%			(329,290	)		-9.0	%
Loans (includes loans held for sale)		13,169,805				13,010,028				12,530,449				159,777			1.2	%			639,356			5.1	%
Fed funds sold and reverse repurchases		114				121				2,379				(7	)		-5.8	%			(2,265	)		-95.2	%
Other earning assets		571,215				670,477				647,760				(99,262	)		-14.8	%			(76,545	)		-11.8	%
Total earning assets		17,087,569				17,102,206				16,856,313				(14,637	)		-0.1	%			231,256			1.4	%
Allowance for credit losses (ACL), loans held for investment (LHFI)		(138,711	)			(133,742	)			(119,978	)			(4,969	)		-3.7	%			(18,733	)		-15.6	%
Other assets		1,730,521				1,749,069				1,762,449				(18,548	)		-1.1	%			(31,928	)		-1.8	%
Total assets	$	18,679,379			$	18,717,533			$	18,498,784			$	(38,154	)		-0.2	%		$	180,595			1.0	%
Interest-bearing demand deposits	$	5,291,779			$	5,053,935			$	4,751,154			$	237,844			4.7	%		$	540,625			11.4	%
Savings deposits		3,686,027				3,526,600				4,193,764				159,427			4.5	%			(507,737	)		-12.1	%
Time deposits		3,321,601				3,427,384				1,907,449				(105,783	)		-3.1	%			1,414,152			74.1	%
Total interest-bearing deposits		12,299,407				12,007,919				10,852,367				291,488			2.4	%			1,447,040			13.3	%
Fed funds purchased and repurchases		428,127				403,041				436,535				25,086			6.2	%			(8,408	)		-1.9	%
Other borrowings		463,459				590,765				1,110,843				(127,306	)		-21.5	%			(647,384	)		-58.3	%
Subordinated notes		123,501				123,446				123,281				55			0.0	%			220			0.2	%
Junior subordinated debt securities		61,856				61,856				61,856				—			0.0	%			—			0.0	%
Total interest-bearing liabilities		13,376,350				13,187,027				12,584,882				189,323			1.4	%			791,468			6.3	%
Noninterest-bearing deposits		3,120,566				3,296,351				3,813,248				(175,785	)		-5.3	%			(692,682	)		-18.2	%
Other liabilities		505,942				641,662				576,826				(135,720	)		-21.2	%			(70,884	)		-12.3	%
Total liabilities		17,002,858				17,125,040				16,974,956				(122,182	)		-0.7	%			27,902			0.2	%
Shareholders' equity		1,676,521				1,592,493				1,523,828				84,028			5.3	%			152,693			10.0	%
Total liabilities and equity	$	18,679,379			$	18,717,533			$	18,498,784			$	(38,154	)		-0.2	%		$	180,595			1.0	%

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

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2024
($ in thousands)
(unaudited)
													Linked Quarter							Year over Year
PERIOD END BALANCES	3/31/2024				12/31/2023				3/31/2023				$ Change				% Change			$ Change				% Change
Cash and due from banks	$	606,261			$	975,543			$	1,297,144			$	(369,282	)		-37.9	%		$	(690,883	)		-53.3	%
Securities available for sale		1,702,299				1,762,878				1,984,162				(60,579	)		-3.4	%			(281,863	)		-14.2	%
Securities held to maturity		1,415,025				1,426,279				1,474,338				(11,254	)		-0.8	%			(59,313	)		-4.0	%
Loans held for sale (LHFS)		172,937				184,812				175,926				(11,875	)		-6.4	%			(2,989	)		-1.7	%
Loans held for investment (LHFI)		13,057,943				12,950,524				12,497,195				107,419			0.8	%			560,748			4.5	%
ACL LHFI		(142,998	)			(139,367	)			(122,239	)			(3,631	)		-2.6	%			(20,759	)		-17.0	%
Net LHFI		12,914,945				12,811,157				12,374,956				103,788			0.8	%			539,989			4.4	%
Premises and equipment, net		232,924				232,537				223,975				387			0.2	%			8,949			4.0	%
Mortgage servicing rights		138,044				131,870				127,206				6,174			4.7	%			10,838			8.5	%
Goodwill		384,237				384,237				384,237				—			0.0	%			—			0.0	%
Identifiable intangible assets		2,845				2,965				3,352				(120	)		-4.0	%			(507	)		-15.1	%
Other real estate		7,620				6,867				1,684				753			11.0	%			5,936			n/m
Operating lease right-of-use assets		36,659				38,142				35,315				(1,483	)		-3.9	%			1,344			3.8	%
Other assets		762,816				764,902				794,883				(2,086	)		-0.3	%			(32,067	)		-4.0	%
Total assets	$	18,376,612			$	18,722,189			$	18,877,178			$	(345,577	)		-1.8	%		$	(500,566	)		-2.7	%
Deposits:
Noninterest-bearing	$	3,039,652			$	3,197,620			$	3,797,055			$	(157,968	)		-4.9	%		$	(757,403	)		-19.9	%
Interest-bearing		12,298,905				12,372,143				10,986,606				(73,238	)		-0.6	%			1,312,299			11.9	%
Total deposits		15,338,557				15,569,763				14,783,661				(231,206	)		-1.5	%			554,896			3.8	%
Fed funds purchased and repurchases		393,215				405,745				477,980				(12,530	)		-3.1	%			(84,765	)		-17.7	%
Other borrowings		482,027				483,230				1,485,181				(1,203	)		-0.2	%			(1,003,154	)		-67.5	%
Subordinated notes		123,537				123,482				123,317				55			0.0	%			220			0.2	%
Junior subordinated debt securities		61,856				61,856				61,856				—			0.0	%			—			0.0	%
ACL on off-balance sheet credit exposures		33,865				34,057				34,596				(192	)		-0.6	%			(731	)		-2.1	%
Operating lease liabilities		40,185				41,584				37,988				(1,399	)		-3.4	%			2,197			5.8	%
Other liabilities		220,771				340,625				310,500				(119,854	)		-35.2	%			(89,729	)		-28.9	%
Total liabilities		16,694,013				17,060,342				17,315,079				(366,329	)		-2.1	%			(621,066	)		-3.6	%
Common stock		12,747				12,725				12,720				22			0.2	%			27			0.2	%
Capital surplus		160,521				159,688				155,297				833			0.5	%			5,224			3.4	%
Retained earnings		1,736,485				1,709,157				1,636,463				27,328			1.6	%			100,022			6.1	%
Accumulated other comprehensive
income (loss), net of tax		(227,154	)			(219,723	)			(242,381	)			(7,431	)		-3.4	%			15,227			6.3	%
Total shareholders' equity		1,682,599				1,661,847				1,562,099				20,752			1.2	%			120,500			7.7	%
Total liabilities and equity	$	18,376,612			$	18,722,189			$	18,877,178			$	(345,577	)		-1.8	%		$	(500,566	)		-2.7	%

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

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2024
($ in thousands except per share data)
(unaudited)
	Quarter Ended												Linked Quarter							Year over Year
INCOME STATEMENTS	3/31/2024				12/31/2023				3/31/2023				$ Change				% Change			$ Change				% Change
Interest and fees on LHFS & LHFI-FTE	$	209,456			$	210,288			$	178,967			$	(832	)		-0.4	%		$	30,489			17.0	%
Interest on securities-taxable		15,634				15,936				16,761				(302	)		-1.9	%			(1,127	)		-6.7	%
Interest on securities-tax exempt-FTE		4				44				92				(40	)		-90.9	%			(88	)		-95.7	%
Interest on fed funds sold and reverse repurchases		1				2				30				(1	)		-50.0	%			(29	)		-96.7	%
Other interest income		8,110				9,918				6,527				(1,808	)		-18.2	%			1,583			24.3	%
Total interest income-FTE		233,205				236,188				202,377				(2,983	)		-1.3	%			30,828			15.2	%
Interest on deposits		83,716				80,847				40,898				2,869			3.5	%			42,818			n/m
Interest on fed funds purchased and repurchases		5,591				5,347				4,832				244			4.6	%			759			15.7	%
Other interest expense		7,703				9,946				15,575				(2,243	)		-22.6	%			(7,872	)		-50.5	%
Total interest expense		97,010				96,140				61,305				870			0.9	%			35,705			58.2	%
Net interest income-FTE		136,195				140,048				141,072				(3,853	)		-2.8	%			(4,877	)		-3.5	%
Provision for credit losses, LHFI		7,708				7,585				3,244				123			1.6	%			4,464			n/m
Provision for credit losses, off-balance sheet credit exposures		(192	)			(888	)			(2,242	)			696			78.4	%			2,050			91.4	%
Net interest income after provision-FTE		128,679				133,351				140,070				(4,672	)		-3.5	%			(11,391	)		-8.1	%
Service charges on deposit accounts		10,958				11,311				10,336				(353	)		-3.1	%			622			6.0	%
Bank card and other fees		7,428				8,502				7,803				(1,074	)		-12.6	%			(375	)		-4.8	%
Mortgage banking, net		8,915				5,519				7,639				3,396			61.5	%			1,276			16.7	%
Insurance commissions		15,464				13,197				14,305				2,267			17.2	%			1,159			8.1	%
Wealth management		8,952				8,657				8,780				295			3.4	%			172			2.0	%
Other, net		3,632				2,579				2,514				1,053			40.8	%			1,118			44.5	%
Securities gains (losses), net		—				39				—				(39	)		-100.0	%			—			n/m
Total noninterest income		55,349				49,804				51,377				5,545			11.1	%			3,972			7.7	%
Salaries and employee benefits		75,458				78,003				74,056				(2,545	)		-3.3	%			1,402			1.9	%
Services and fees		24,839				27,906				25,426				(3,067	)		-11.0	%			(587	)		-2.3	%
Net occupancy-premises		7,496				7,362				7,629				134			1.8	%			(133	)		-1.7	%
Equipment expense		6,385				6,517				6,405				(132	)		-2.0	%			(20	)		-0.3	%
Other expense		16,968				16,641				14,811				327			2.0	%			2,157			14.6	%
Total noninterest expense		131,146				136,429				128,327				(5,283	)		-3.9	%			2,819			2.2	%
Income before income taxes and tax eq adj		52,882				46,726				63,120				6,156			13.2	%			(10,238	)		-16.2	%
Tax equivalent adjustment		3,365				3,306				3,477				59			1.8	%			(112	)		-3.2	%
Income before income taxes		49,517				43,420				59,643				6,097			14.0	%			(10,126	)		-17.0	%
Income taxes		7,982				7,297				9,343				685			9.4	%			(1,361	)		-14.6	%
Net income	$	41,535			$	36,123			$	50,300			$	5,412			15.0	%		$	(8,765	)		-17.4	%
Per share data
Earnings per share - basic	$	0.68			$	0.59			$	0.82			$	0.09			15.3	%		$	(0.14	)		-17.1	%
Earnings per share - diluted	$	0.68			$	0.59			$	0.82			$	0.09			15.3	%		$	(0.14	)		-17.1	%
Dividends per share	$	0.23			$	0.23			$	0.23				—			0.0	%			—			0.0	%
Weighted average shares outstanding
Basic		61,128,425				61,070,481				61,011,059
Diluted		61,348,364				61,296,840				61,193,275
Period end shares outstanding		61,178,366				61,071,173				61,048,516

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

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2024
($ in thousands)
(unaudited)
	Quarter Ended												Linked Quarter							Year over Year
NONPERFORMING ASSETS	3/31/2024				12/31/2023				3/31/2023				$ Change				% Change			$ Change				% Change
Nonaccrual LHFI
Alabama (1)	$	23,261			$	23,271			$	10,919			$	(10	)		0.0	%		$	12,342			n/m
Florida		585				170				256				415			n/m				329			n/m
Mississippi (2)		59,059				54,615				32,560				4,444			8.1	%			26,499			81.4	%
Tennessee (3)		1,800				1,802				5,416				(2	)		-0.1	%			(3,616	)		-66.8	%
Texas		13,646				20,150				23,224				(6,504	)		-32.3	%			(9,578	)		-41.2	%
Total nonaccrual LHFI		98,351				100,008				72,375				(1,657	)		-1.7	%			25,976			35.9	%
Other real estate
Alabama (1)		1,050				1,397				—				(347	)		-24.8	%			1,050			n/m
Florida		71				—				—				71			n/m				71			n/m
Mississippi (2)		2,870				1,242				1,495				1,628			n/m				1,375			92.0	%
Tennessee (3)		86				—				189				86			n/m				(103	)		-54.5	%
Texas		3,543				4,228				—				(685	)		-16.2	%			3,543			n/m
Total other real estate		7,620				6,867				1,684				753			11.0	%			5,936			n/m
Total nonperforming assets	$	105,971			$	106,875			$	74,059			$	(904	)		-0.8	%		$	31,912			43.1	%
LOANS PAST DUE OVER 90 DAYS
LHFI	$	5,243			$	5,790			$	2,255			$	(547	)		-9.4	%		$	2,988			n/m
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	56,530			$	51,243			$	41,468			$	5,287			10.3	%		$	15,062			36.3	%
	Quarter Ended												Linked Quarter							Year over Year
ACL LHFI	3/31/2024				12/31/2023				3/31/2023				$ Change				% Change			$ Change				% Change
Beginning Balance	$	139,367			$	134,031			$	120,214			$	5,336			4.0	%		$	19,153			15.9	%
Provision for credit losses, LHFI		7,708				7,585				3,244				123			1.6	%			4,464			n/m
Charge-offs		(6,324	)			(4,250	)			(2,996	)			(2,074	)		-48.8	%			(3,328	)		n/m
Recoveries		2,247				2,001				1,777				246			12.3	%			470			26.4	%
Net (charge-offs) recoveries		(4,077	)			(2,249	)			(1,219	)			(1,828	)		-81.3	%			(2,858	)		n/m
Ending Balance	$	142,998			$	139,367			$	122,239			$	3,631			2.6	%		$	20,759			17.0	%
NET (CHARGE-OFFS) RECOVERIES
Alabama (1)	$	(341	)		$	(299	)		$	(268	)		$	(42	)		-14.0	%		$	(73	)		-27.2	%
Florida		277				180				(36	)			97			53.9	%			313			n/m
Mississippi (2)		(1,489	)			(1,943	)			(775	)			454			23.4	%			(714	)		-92.1	%
Tennessee (3)		(179	)			(193	)			(124	)			14			7.3	%			(55	)		-44.4	%
Texas		(2,345	)			6				(16	)			(2,351	)		n/m				(2,329	)		n/m
Total net (charge-offs) recoveries	$	(4,077	)		$	(2,249	)		$	(1,219	)		$	(1,828	)		-81.3	%		$	(2,858	)		n/m

(1) Alabama includes the Georgia Loan Production Office.

(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
March 31, 2024
($ in thousands)
(unaudited)
		Quarter Ended
AVERAGE BALANCES		3/31/2024				12/31/2023				9/30/2023				6/30/2023				3/31/2023
Securities AFS-taxable		$	1,927,619			$	1,986,825			$	2,049,006			$	2,140,505			$	2,187,121
Securities AFS-nontaxable			—				4,246				4,779				4,796				4,812
Securities HTM-taxable			1,418,476				1,430,169				1,445,895				1,463,086				1,479,283
Securities HTM-nontaxable			340				340				907				1,718				4,509
Total securities			3,346,435				3,421,580				3,500,587				3,610,105				3,675,725
Loans (includes loans held for sale)			13,169,805				13,010,028				12,926,942				12,732,057				12,530,449
Fed funds sold and reverse repurchases			114				121				230				3,275				2,379
Other earning assets			571,215				670,477				682,644				903,027				647,760
Total earning assets			17,087,569				17,102,206				17,110,403				17,248,464				16,856,313
ACL LHFI			(138,711	)			(133,742	)			(127,915	)			(121,960	)			(119,978	)
Other assets			1,730,521				1,749,069				1,721,310				1,648,583				1,762,449
Total assets		$	18,679,379			$	18,717,533			$	18,703,798			$	18,775,087			$	18,498,784
Interest-bearing demand deposits		$	5,291,779			$	5,053,935			$	4,875,714			$	4,803,737			$	4,751,154
Savings deposits			3,686,027				3,526,600				3,642,158				4,002,134				4,193,764
Time deposits			3,321,601				3,427,384				3,075,224				2,335,752				1,907,449
Total interest-bearing deposits			12,299,407				12,007,919				11,593,096				11,141,623				10,852,367
Fed funds purchased and repurchases			428,127				403,041				414,696				389,834				436,535
Other borrowings			463,459				590,765				912,151				1,330,010				1,110,843
Subordinated notes			123,501				123,446				123,391				123,337				123,281
Junior subordinated debt securities			61,856				61,856				61,856				61,856				61,856
Total interest-bearing liabilities			13,376,350				13,187,027				13,105,190				13,046,660				12,584,882
Noninterest-bearing deposits			3,120,566				3,296,351				3,429,815				3,595,927				3,813,248
Other liabilities			505,942				641,662				585,908				552,209				576,826
Total liabilities			17,002,858				17,125,040				17,120,913				17,194,796				16,974,956
Shareholders' equity			1,676,521				1,592,493				1,582,885				1,580,291				1,523,828
Total liabilities and equity		$	18,679,379			$	18,717,533			$	18,703,798			$	18,775,087			$	18,498,784

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2024
($ in thousands)
(unaudited)
PERIOD END BALANCES		3/31/2024				12/31/2023				9/30/2023				6/30/2023				3/31/2023
Cash and due from banks		$	606,261			$	975,543			$	750,492			$	832,052			$	1,297,144
Securities available for sale			1,702,299				1,762,878				1,766,174				1,871,883				1,984,162
Securities held to maturity			1,415,025				1,426,279				1,438,287				1,458,665				1,474,338
LHFS			172,937				184,812				169,244				181,094				175,926
LHFI			13,057,943				12,950,524				12,810,259				12,613,967				12,497,195
ACL LHFI			(142,998	)			(139,367	)			(134,031	)			(129,298	)			(122,239	)
Net LHFI			12,914,945				12,811,157				12,676,228				12,484,669				12,374,956
Premises and equipment, net			232,924				232,537				230,718				227,630				223,975
Mortgage servicing rights			138,044				131,870				142,379				134,350				127,206
Goodwill			384,237				384,237				384,237				384,237				384,237
Identifiable intangible assets			2,845				2,965				3,093				3,222				3,352
Other real estate			7,620				6,867				5,485				1,137				1,684
Operating lease right-of-use assets			36,659				38,142				39,639				38,179				35,315
Other assets			762,816				764,902				784,863				805,508				794,883
Total assets		$	18,376,612			$	18,722,189			$	18,390,839			$	18,422,626			$	18,877,178
Deposits:
Noninterest-bearing		$	3,039,652			$	3,197,620			$	3,320,124			$	3,461,073			$	3,797,055
Interest-bearing			12,298,905				12,372,143				11,781,799				11,452,827				10,986,606
Total deposits			15,338,557				15,569,763				15,101,923				14,913,900				14,783,661
Fed funds purchased and repurchases			393,215				405,745				321,799				311,179				477,980
Other borrowings			482,027				483,230				793,193				1,056,714				1,485,181
Subordinated notes			123,537				123,482				123,427				123,372				123,317
Junior subordinated debt securities			61,856				61,856				61,856				61,856				61,856
ACL on off-balance sheet credit exposures			33,865				34,057				34,945				34,841				34,596
Operating lease liabilities			40,185				41,584				42,730				40,845				37,988
Other liabilities			220,771				340,625				340,615				308,726				310,500
Total liabilities			16,694,013				17,060,342				16,820,488				16,851,433				17,315,079
Common stock			12,747				12,725				12,724				12,724				12,720
Capital surplus			160,521				159,688				158,316				156,834				155,297
Retained earnings			1,736,485				1,709,157				1,687,199				1,667,339				1,636,463
Accumulated other comprehensive income (loss),
net of tax			(227,154	)			(219,723	)			(287,888	)			(265,704	)			(242,381	)
Total shareholders' equity			1,682,599				1,661,847				1,570,351				1,571,193				1,562,099
Total liabilities and equity		$	18,376,612			$	18,722,189			$	18,390,839			$	18,422,626			$	18,877,178

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2024
($ in thousands except per share data)
(unaudited)
		Quarter Ended
INCOME STATEMENTS		3/31/2024				12/31/2023				9/30/2023			6/30/2023			3/31/2023
Interest and fees on LHFS & LHFI-FTE		$	209,456			$	210,288			$	206,523		$	192,941		$	178,967
Interest on securities-taxable			15,634				15,936				16,624			16,779			16,761
Interest on securities-tax exempt-FTE			4				44				58			69			92
Interest on fed funds sold and reverse repurchases			1				2				3			45			30
Other interest income			8,110				9,918				8,613			12,077			6,527
Total interest income-FTE			233,205				236,188				231,821			221,911			202,377
Interest on deposits			83,716				80,847				69,797			54,409			40,898
Interest on fed funds purchased and repurchases			5,591				5,347				5,375			4,865			4,832
Other interest expense			7,703				9,946				14,713			19,350			15,575
Total interest expense			97,010				96,140				89,885			78,624			61,305
Net interest income-FTE			136,195				140,048				141,936			143,287			141,072
Provision for credit losses, LHFI			7,708				7,585				8,322			8,211			3,244
Provision for credit losses, off-balance sheet credit exposures			(192	)			(888	)			104			245			(2,242	)
Net interest income after provision-FTE			128,679				133,351				133,510			134,831			140,070
Service charges on deposit accounts			10,958				11,311				11,074			10,695			10,336
Bank card and other fees			7,428				8,502				8,217			8,917			7,803
Mortgage banking, net			8,915				5,519				6,458			6,600			7,639
Insurance commissions			15,464				13,197				15,303			14,764			14,305
Wealth management			8,952				8,657				8,773			8,882			8,780
Other, net			3,632				2,579				2,399			3,695			2,514
Securities gains (losses), net			—				39				—			—			—
Total noninterest income			55,349				49,804				52,224			53,553			51,377
Salaries and employee benefits			75,458				78,003				76,666			75,940			74,056
Services and fees			24,839				27,906				27,882			28,264			25,426
Net occupancy-premises			7,496				7,362				7,383			7,108			7,629
Equipment expense			6,385				6,517				6,816			6,404			6,405
Litigation settlement expense			—				—				6,500			—			—
Other expense			16,968				16,641				15,698			14,502			14,811
Total noninterest expense			131,146				136,429				140,945			132,218			128,327
Income before income taxes and tax eq adj			52,882				46,726				44,789			56,166			63,120
Tax equivalent adjustment			3,365				3,306				3,299			3,383			3,477
Income before income taxes			49,517				43,420				41,490			52,783			59,643
Income taxes			7,982				7,297				7,461			7,746			9,343
Net income		$	41,535			$	36,123			$	34,029		$	45,037		$	50,300
Per share data
Earnings per share - basic		$	0.68			$	0.59			$	0.56		$	0.74		$	0.82
Earnings per share - diluted		$	0.68			$	0.59			$	0.56		$	0.74		$	0.82
Dividends per share		$	0.23			$	0.23			$	0.23		$	0.23		$	0.23
Weighted average shares outstanding
Basic			61,128,425				61,070,481				61,069,750			61,063,277			61,011,059
Diluted			61,348,364				61,296,840				61,263,032			61,230,031			61,193,275
Period end shares outstanding			61,178,366				61,071,173				61,070,095			61,069,036			61,048,516

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2024
($ in thousands)
(unaudited)
		Quarter Ended
NONPERFORMING ASSETS		3/31/2024				12/31/2023				9/30/2023				6/30/2023				3/31/2023
Nonaccrual LHFI
Alabama (1)		$	23,261			$	23,271			$	23,530			$	11,058			$	10,919
Florida			585				170				151				334				256
Mississippi (2)			59,059				54,615				45,050				36,288				32,560
Tennessee (3)			1,800				1,802				1,841				5,088				5,416
Texas			13,646				20,150				20,327				22,259				23,224
Total nonaccrual LHFI			98,351				100,008				90,899				75,027				72,375
Other real estate
Alabama (1)			1,050				1,397				315				—				—
Florida			71				—				—				—				—
Mississippi (2)			2,870				1,242				942				1,137				1,495
Tennessee (3)			86				—				—				—				189
Texas			3,543				4,228				4,228				—				—
Total other real estate			7,620				6,867				5,485				1,137				1,684
Total nonperforming assets		$	105,971			$	106,875			$	96,384			$	76,164			$	74,059
LOANS PAST DUE OVER 90 DAYS
LHFI		$	5,243			$	5,790			$	3,804			$	3,911			$	2,255
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)		$	56,530			$	51,243			$	42,532			$	35,766			$	41,468
		Quarter Ended
ACL LHFI		3/31/2024				12/31/2023				9/30/2023				6/30/2023				3/31/2023
Beginning Balance		$	139,367			$	134,031			$	129,298			$	122,239			$	120,214
Provision for credit losses, LHFI			7,708				7,585				8,322				8,211				3,244
Charge-offs			(6,324	)			(4,250	)			(7,496	)			(2,773	)			(2,996	)
Recoveries			2,247				2,001				3,907				1,621				1,777
Net (charge-offs) recoveries			(4,077	)			(2,249	)			(3,589	)			(1,152	)			(1,219	)
Ending Balance		$	142,998			$	139,367			$	134,031			$	129,298			$	122,239
NET (CHARGE-OFFS) RECOVERIES
Alabama (1)		$	(341	)		$	(299	)		$	(165	)		$	(141	)		$	(268	)
Florida			277				180				21				(35	)			(36	)
Mississippi (2)			(1,489	)			(1,943	)			(1,867	)			(762	)			(775	)
Tennessee (3)			(179	)			(193	)			2,127				(166	)			(124	)
Texas			(2,345	)			6				(3,705	)			(48	)			(16	)
Total net (charge-offs) recoveries		$	(4,077	)		$	(2,249	)		$	(3,589	)		$	(1,152	)		$	(1,219	)

(1) Alabama includes the Georgia Loan Production Office.

(2) Mississippi includes Central and Southern Mississippi Regions.

(3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2024
(unaudited)
		Quarter Ended
FINANCIAL RATIOS AND OTHER DATA		3/31/2024				12/31/2023				9/30/2023				6/30/2023				3/31/2023
Return on average equity			9.96	%			9.00	%			8.53	%			11.43	%			13.39	%
Return on average tangible equity			12.98	%			11.92	%			11.32	%			15.18	%			18.03	%
Return on average assets			0.89	%			0.77	%			0.72	%			0.96	%			1.10	%
Interest margin - Yield - FTE			5.49	%			5.48	%			5.38	%			5.16	%			4.87	%
Interest margin - Cost			2.28	%			2.23	%			2.08	%			1.83	%			1.47	%
Net interest margin - FTE			3.21	%			3.25	%			3.29	%			3.33	%			3.39	%
Efficiency ratio (1)			67.25	%			70.25	%			68.33	%			66.17	%			65.60	%
Full-time equivalent employees			2,712				2,757				2,756				2,761				2,758
CREDIT QUALITY RATIOS
Net (recoveries) charge-offs / average loans			0.12	%			0.07	%			0.11	%			0.04	%			0.04	%
Provision for credit losses, LHFI / average loans			0.24	%			0.23	%			0.26	%			0.26	%			0.10	%
Nonaccrual LHFI / (LHFI + LHFS)			0.74	%			0.76	%			0.70	%			0.59	%			0.57	%
Nonperforming assets / (LHFI + LHFS)			0.80	%			0.81	%			0.74	%			0.60	%			0.58	%
Nonperforming assets / (LHFI + LHFS
+ other real estate)			0.80	%			0.81	%			0.74	%			0.60	%			0.58	%
ACL LHFI / LHFI			1.10	%			1.08	%			1.05	%			1.03	%			0.98	%
ACL LHFI-commercial / commercial LHFI			0.93	%			0.85	%			0.86	%			0.84	%			0.80	%
ACL LHFI-consumer / consumer and
home mortgage LHFI			1.63	%			1.81	%			1.66	%			1.60	%			1.54	%
ACL LHFI / nonaccrual LHFI			145.39	%			139.36	%			147.45	%			172.34	%			168.90	%
ACL LHFI / nonaccrual LHFI
(excl individually analyzed loans)			235.29	%			249.31	%			273.60	%			301.44	%			320.80	%
CAPITAL RATIOS
Total equity / total assets			9.16	%			8.88	%			8.54	%			8.53	%			8.28	%
Tangible equity / tangible assets			7.20	%			6.95	%			6.57	%			6.56	%			6.35	%
Tangible equity / risk-weighted assets			8.49	%			8.41	%			7.81	%			7.91	%			7.94	%
Tier 1 leverage ratio			8.76	%			8.62	%			8.49	%			8.35	%			8.29	%
Common equity tier 1 capital ratio			10.12	%			10.04	%			9.89	%			9.87	%			9.76	%
Tier 1 risk-based capital ratio			10.51	%			10.44	%			10.29	%			10.27	%			10.17	%
Total risk-based capital ratio			12.42	%			12.29	%			12.11	%			12.08	%			11.95	%
STOCK PERFORMANCE
Market value-Close		$	28.11			$	27.88			$	21.73			$	21.12			$	24.70
Book value		$	27.50			$	27.21			$	25.71			$	25.73			$	25.59
Tangible book value		$	21.18			$	20.87			$	19.37			$	19.38			$	19.24

(1) See Note 6 – Non-GAAP Financial Measures in the Notes to Consolidated Financials for Trustmark’s efficiency ratio calculation.

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

March 31, 2024

($ in thousands)

(unaudited)

Note 1 - Securities Available for Sale and Held to Maturity

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

		3/31/2024			12/31/2023			9/30/2023			6/30/2023			3/31/2023
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities		$	372,424		$	372,368		$	363,476		$	362,966		$	386,903
U.S. Government agency obligations			5,594			5,792			6,780			6,999			7,254
Obligations of states and political subdivisions			—			—			4,642			4,813			4,907
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			22,232			23,135			22,881			25,336			26,851
Issued by FNMA and FHLMC			1,129,521			1,176,798			1,171,521			1,250,435			1,317,848
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			79,099			86,074			90,402			98,388			108,192
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			93,429			98,711			106,472			122,946			132,207
Total securities available for sale		$	1,702,299		$	1,762,878		$	1,766,174		$	1,871,883		$	1,984,162
SECURITIES HELD TO MATURITY
U.S. Treasury securities		$	29,261		$	29,068		$	28,872		$	28,679		$	28,486
Obligations of states and political subdivisions			340			340			341			1,180			4,507
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			18,387			13,005			13,090			13,235			4,336
Issued by FNMA and FHLMC			461,457			469,593			474,003			484,679			497,854
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			146,447			154,466			162,031			171,002			179,334
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			759,133			759,807			759,950			759,890			759,821
Total securities held to maturity		$	1,415,025		$	1,426,279		$	1,438,287		$	1,458,665		$	1,474,338

At March 31, 2024, the net unamortized, unrealized loss included in accumulated other comprehensive income (loss) in the accompanying balance sheet for securities held to maturity transferred from securities available for sale totaled $54.8 million.

Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 99.99% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE.

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

March 31, 2024

($ in thousands)

(unaudited)

Note 2 – Loan Composition

LHFI consisted of the following during the periods presented:

LHFI BY TYPE		3/31/2024				12/31/2023				9/30/2023				6/30/2023				3/31/2023
Loans secured by real estate:
Construction, land development and other land loans		$	1,539,461			$	1,510,679			$	1,609,326			$	1,722,657			$	1,723,772
Secured by 1-4 family residential properties			2,891,481				2,904,715				2,893,606				2,854,182				2,822,048
Secured by nonfarm, nonresidential properties			3,543,235				3,489,434				3,569,671				3,471,728				3,375,579
Other real estate secured			1,384,610				1,312,551				1,218,499				954,410				847,527
Commercial and industrial loans			1,922,711				1,922,910				1,828,924				1,883,480				1,882,360
Consumer loans			156,430				161,725				161,940				163,788				162,911
State and other political subdivision loans			1,052,844				1,088,466				1,056,569				1,111,710				1,193,727
Other loans and leases			567,171				560,044				471,724				452,012				489,271
LHFI			13,057,943				12,950,524				12,810,259				12,613,967				12,497,195
ACL LHFI			(142,998	)			(139,367	)			(134,031	)			(129,298	)			(122,239	)
Net LHFI		$	12,914,945			$	12,811,157			$	12,676,228			$	12,484,669			$	12,374,956

The following table presents the LHFI composition based upon the region where the loan was originated and reflects each region’s diversified mix of loans:

	March 31, 2024
LHFI - COMPOSITION BY REGION	Total			Alabama (1)			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	$	1,539,461		$	753,918		$	38,790		$	391,843		$	40,988		$	313,922
Secured by 1-4 family residential properties		2,891,481			154,303			54,099			2,565,424			83,292			34,363
Secured by nonfarm, nonresidential properties		3,543,235			981,921			233,109			1,485,304			150,017			692,884
Other real estate secured		1,384,610			561,115			1,728			417,757			6,965			397,045
Commercial and industrial loans		1,922,711			657,294			23,941			841,797			150,313			249,366
Consumer loans		156,430			21,302			7,399			95,951			18,178			13,600
State and other political subdivision loans		1,052,844			70,161			52,069			782,985			23,700			123,929
Other loans and leases		567,171			236,775			8,202			200,957			57,098			64,139
Loans	$	13,057,943		$	3,436,789		$	419,337		$	6,782,018		$	530,551		$	1,889,248
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots	$	70,445		$	28,830		$	8,196		$	17,829		$	4,587		$	11,003
Development		122,788			56,825			1,260			28,668			12,576			23,459
Unimproved land		110,272			20,907			13,404			29,759			8,006			38,196
1-4 family construction		313,503			162,760			13,501			91,453			15,693			30,096
Other construction		922,453			484,596			2,429			224,134			126			211,168
Construction, land development and other land loans	$	1,539,461		$	753,918		$	38,790		$	391,843		$	40,988		$	313,922

(1)	Includes Georgia Loan Production Office.

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

March 31, 2024

($ in thousands)

(unaudited)

Note 2 – Loan Composition (continued)

		March 31, 2024
		Total			Alabama (1)			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		$	367,575		$	139,444		$	24,147		$	106,123		$	17,381		$	80,480
Office			261,984			101,364			19,605			73,689			1,617			65,709
Hotel/motel			255,925			128,356			48,992			53,054			25,523			—
Mini-storage			165,962			40,724			1,864			103,323			745			19,306
Industrial			438,626			83,304			19,377			147,199			8,143			180,603
Health care			97,837			69,786			684			24,707			331			2,329
Convenience stores			25,572			3,214			419			13,599			239			8,101
Nursing homes/senior living			513,854			227,254			—			186,507			4,724			95,369
Other			109,838			31,790			9,067			51,626			8,211			9,144
Total non-owner occupied loans			2,237,173			825,236			124,155			759,827			66,914			461,041
Owner-occupied:
Office			150,283			41,047			37,629			41,658			11,555			18,394
Churches			56,697			14,208			4,094			32,706			3,215			2,474
Industrial warehouses			156,148			11,553			4,537			39,874			15,766			84,418
Health care			124,330			11,337			8,163			85,172			2,251			17,407
Convenience stores			148,158			12,172			29,156			72,715			—			34,115
Retail			88,445			9,457			15,287			35,730			17,087			10,884
Restaurants			48,491			4,008			2,930			21,360			16,367			3,826
Auto dealerships			42,394			5,138			194			21,007			16,055			—
Nursing homes/senior living			353,641			35,216			—			292,264			—			26,161
Other			137,475			12,549			6,964			82,991			807			34,164
Total owner-occupied loans			1,306,062			156,685			108,954			725,477			83,103			231,843
Loans secured by nonfarm, nonresidential properties		$	3,543,235		$	981,921		$	233,109		$	1,485,304		$	150,017		$	692,884

(1)	Includes Georgia Loan Production Office.

Note 3 – Yields on Earning Assets and Interest-Bearing Liabilities

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

		Quarter Ended
		3/31/2024				12/31/2023				9/30/2023				6/30/2023				3/31/2023
Securities – taxable			1.88	%			1.85	%			1.89	%			1.87	%			1.85	%
Securities – nontaxable			4.73	%			3.81	%			4.05	%			4.25	%			4.00	%
Securities – total			1.88	%			1.85	%			1.89	%			1.87	%			1.86	%
LHFI & LHFS			6.40	%			6.41	%			6.34	%			6.08	%			5.79	%
Fed funds sold & reverse repurchases			3.53	%			6.56	%			5.17	%			5.51	%			5.11	%
Other earning assets			5.71	%			5.87	%			5.01	%			5.36	%			4.09	%
Total earning assets			5.49	%			5.48	%			5.38	%			5.16	%			4.87	%
Interest-bearing deposits			2.74	%			2.67	%			2.39	%			1.96	%			1.53	%
Fed funds purchased & repurchases			5.25	%			5.26	%			5.14	%			5.01	%			4.49	%
Other borrowings			4.78	%			5.08	%			5.32	%			5.12	%			4.87	%
Total interest-bearing liabilities			2.92	%			2.89	%			2.72	%			2.42	%			1.98	%
Total Deposits			2.18	%			2.10	%			1.84	%			1.48	%			1.13	%
Net interest margin			3.21	%			3.25	%			3.29	%			3.33	%			3.39	%

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

March 31, 2024

($ in thousands)

(unaudited)

Note 3 – Yields on Earning Assets and Interest-Bearing Liabilities (continued)

Reflected in the table above are yields on earning assets and liabilities, along with the net interest margin which equals reported net interest income-FTE, annualized, as a percent of average earning assets.

The net interest margin decreased four basis points when compared to the fourth quarter of 2023, totaling 3.21% for the first quarter of 2024, primarily due to increased costs of interest-bearing deposits which resulted from the higher interest rate environment.

Note 4 – Mortgage Banking

Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that offsets the changes in fair value of mortgage servicing rights (MSR) attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under generally accepted accounting principles (GAAP). Changes in the fair value of these exchange-traded derivative instruments, including administrative costs, are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of the MSR. The MSR fair value represents the present value of future cash flows, which among other things includes decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the change in value of hedge instruments to the change in the fair value of the MSR asset attributable to changes in interest rates and other market driven changes in valuation inputs and assumptions. The impact of this strategy resulted in a net negative hedge ineffectiveness of $1.1 million during the first quarter of 2024.

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

		Quarter Ended
		3/31/2024				12/31/2023				9/30/2023				6/30/2023				3/31/2023
Mortgage servicing income, net		$	6,934			$	6,731			$	6,916			$	6,764			$	6,785
Change in fair value-MSR from runoff			(1,926	)			(2,972	)			(3,203	)			(2,710	)			(1,145	)
Gain on sales of loans, net.			5,009				3,913				3,748				3,887				3,797
Mortgage banking income before hedge ineffectiveness			10,017				7,672				7,461				7,941				9,437
Change in fair value-MSR from market changes			5,123				(10,224	)			6,809				5,898				(3,972	)
Change in fair value of derivatives			(6,225	)			8,071				(7,812	)			(7,239	)			2,174
Net positive (negative) hedge ineffectiveness			(1,102	)			(2,153	)			(1,003	)			(1,341	)			(1,798	)
Mortgage banking, net		$	8,915			$	5,519			$	6,458			$	6,600			$	7,639

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

March 31, 2024

($ in thousands)

(unaudited)

Note 5 – Other Noninterest Income and Expense

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

		Quarter Ended
		3/31/2024				12/31/2023				9/30/2023				6/30/2023				3/31/2023
Partnership amortization for tax credit purposes		$	(1,834	)		$	(2,013	)		$	(1,995	)		$	(2,019	)		$	(1,961	)
Increase in life insurance cash surrender value			1,844				1,825				1,784				1,716				1,693
Other miscellaneous income			3,622				2,767				2,610				3,998				2,782
Total other, net		$	3,632			$	2,579			$	2,399			$	3,695			$	2,514

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

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

		Quarter Ended
		3/31/2024			12/31/2023				9/30/2023				6/30/2023			3/31/2023
Loan expense		$	2,955		$	2,380			$	3,130			$	3,066		$	2,538
Amortization of intangibles			120			128				129				130			288
FDIC assessment expense			4,509			4,844				3,765				2,550			2,370
Other real estate expense, net			671			(184	)			(40	)			171			172
Other miscellaneous expense			8,713			9,473				8,714				8,585			9,443
Total other expense		$	16,968		$	16,641			$	15,698			$	14,502		$	14,811

Note 6 – Non-GAAP Financial Measures

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

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

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

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

March 31, 2024

($ in thousands except per share data)

(unaudited)

Note 6 – Non-GAAP Financial Measures (continued)

				Quarter Ended
				3/31/2024				12/31/2023				9/30/2023				6/30/2023				3/31/2023
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity				$	1,676,521			$	1,592,493			$	1,582,885			$	1,580,291			$	1,523,828
Less: Goodwill					(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)
Identifiable intangible assets					(2,920	)			(3,044	)			(3,174	)			(3,301	)			(3,523	)
Total average tangible equity				$	1,289,364			$	1,205,212			$	1,195,474			$	1,192,753			$	1,136,068
PERIOD END BALANCES
Total shareholders' equity				$	1,682,599			$	1,661,847			$	1,570,351			$	1,571,193			$	1,562,099
Less: Goodwill					(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)
Identifiable intangible assets					(2,845	)			(2,965	)			(3,093	)			(3,222	)			(3,352	)
Total tangible equity		(a)		$	1,295,517			$	1,274,645			$	1,183,021			$	1,183,734			$	1,174,510
TANGIBLE ASSETS
Total assets				$	18,376,612			$	18,722,189			$	18,390,839			$	18,422,626			$	18,877,178
Less: Goodwill					(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)
Identifiable intangible assets					(2,845	)			(2,965	)			(3,093	)			(3,222	)			(3,352	)
Total tangible assets		(b)		$	17,989,530			$	18,334,987			$	18,003,509			$	18,035,167			$	18,489,589
Risk-weighted assets		(c)		$	15,257,385			$	15,153,263			$	15,143,531			$	14,966,614			$	14,793,893
NET INCOME (LOSS) ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income (loss)				$	41,535			$	36,123			$	34,029			$	45,037			$	50,300
Plus: Intangible amortization net of tax					90				96				96				97				216
Net income (loss) adjusted for intangible amortization				$	41,625			$	36,219			$	34,125			$	45,134			$	50,516
Period end common shares outstanding		(d)			61,178,366				61,071,173				61,070,095				61,069,036				61,048,516
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity (1)					12.98	%			11.92	%			11.32	%			15.18	%			18.03	%
Tangible equity/tangible assets		(a)/(b)			7.20	%			6.95	%			6.57	%			6.56	%			6.35	%
Tangible equity/risk-weighted assets		(a)/(c)			8.49	%			8.41	%			7.81	%			7.91	%			7.94	%
Tangible book value		(a)/(d)*1,000		$	21.18			$	20.87			$	19.37			$	19.38			$	19.24
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity				$	1,682,599			$	1,661,847			$	1,570,351			$	1,571,193			$	1,562,099
CECL transition adjustment					6,500				13,000				13,000				13,000				13,000
AOCI-related adjustments					227,154				219,723				287,888				265,704				242,381
CET1 adjustments and deductions:
Goodwill net of associated deferred tax liabilities (DTLs)					(370,205	)			(370,212	)			(370,219	)			(370,227	)			(370,234	)
Other adjustments and deductions for CET1 (2)					(2,588	)			(2,693	)			(2,803	)			(2,915	)			(3,275	)
CET1 capital		(e)			1,543,460				1,521,665				1,498,217				1,476,755				1,443,971
Additional tier 1 capital instruments plus related surplus					60,000				60,000				60,000				60,000				60,000
Tier 1 capital				$	1,603,460			$	1,581,665			$	1,558,217			$	1,536,755			$	1,503,971
Common equity tier 1 capital ratio		(e)/(c)			10.12	%			10.04	%			9.89	%			9.87	%			9.76	%

(1)	Calculation = ((net income (loss) adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity.
(2)	Includes other intangible assets, net of DTLs, disallowed deferred tax assets (DTAs), threshold deductions and transition adjustments, as applicable.

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

March 31, 2024

($ in thousands except per share data)

(unaudited)

Note 6 – Non-GAAP Financial Measures (continued)

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

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

			Quarter Ended
			3/31/2024			12/31/2023				9/30/2023				6/30/2023			3/31/2023
Net interest income (GAAP)			$	132,830		$	136,742			$	138,637			$	139,904		$	137,595
Noninterest income (GAAP)				55,349			49,804				52,224				53,553			51,377
Pre-provision revenue		(a)	$	188,179		$	186,546			$	190,861			$	193,457		$	188,972
Noninterest expense (GAAP)			$	131,146		$	136,429			$	140,945			$	132,218		$	128,327
Less:	Reduction in force expense			—			(1,406	)			—				—			—
	Litigation settlement expense			—			—				(6,500	)			—			—
Adjusted noninterest expense - PPNR (Non-GAAP)		(b)	$	131,146		$	135,023			$	134,445			$	132,218		$	128,327
PPNR (Non-GAAP)		(a)-(b)	$	57,033		$	51,523			$	56,416			$	61,239		$	60,645

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

			Quarter Ended
			3/31/2024				12/31/2023				9/30/2023				6/30/2023				3/31/2023
Total noninterest expense (GAAP)			$	131,146			$	136,429			$	140,945			$	132,218			$	128,327
Less:	Other real estate expense, net			(671	)			184				40				(171	)			(172	)
	Amortization of intangibles			(120	)			(128	)			(129	)			(130	)			(288	)
	Charitable contributions resulting in state tax credits			(300	)			(325	)			(325	)			(325	)			(325	)
	Reduction in force expense			—				(1,406	)			—				—				—
	Litigation settlement expense			—				—				(6,500	)			—				—
Adjusted noninterest expense (Non-GAAP)		(c)	$	130,055			$	134,754			$	134,031			$	131,592			$	127,542
Net interest income (GAAP)			$	132,830			$	136,742			$	138,637			$	139,904			$	137,595
Add:	Tax equivalent adjustment			3,365				3,306				3,299				3,383				3,477
Net interest income-FTE (Non-GAAP)		(a)	$	136,195			$	140,048			$	141,936			$	143,287			$	141,072
Noninterest income (GAAP)			$	55,349			$	49,804			$	52,224			$	53,553			$	51,377
Add:	Partnership amortization for tax credit purposes			1,834				2,013				1,995				2,019				1,961
Less:	Securities (gains) losses, net			—				(39	)			—				—				—
Adjusted noninterest income (Non-GAAP)		(b)	$	57,183			$	51,778			$	54,219			$	55,572			$	53,338
Adjusted revenue (Non-GAAP)		(a)+(b)	$	193,378			$	191,826			$	196,155			$	198,859			$	194,410
Efficiency ratio (Non-GAAP)		(c)/((a)+(b))		67.25	%			70.25	%			68.33	%			66.17	%			65.60	%

 

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