Loan and Deposit Growth Continues, Credit
Quality Remains Strong, Net Interest Income and Noninterest Income
Expand
Trustmark Corporation (NASDAQGS:TRMK) reported net income of
$45.0 million in the second quarter of 2023, representing diluted
earnings per share of $0.74. Trustmark’s performance during the
second quarter produced a return on average tangible equity of
15.18% and a return on average assets of 0.96%. The Board of
Directors declared a quarterly cash dividend of $0.23 per share
payable September 15, 2023, to shareholders of record on September
1, 2023.
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Second Quarter Highlights
- Loans held for investment (HFI) increased $116.8 million, or
0.9%, from the prior quarter to $12.6 billion
- Deposits expanded $130.2 million, or 0.9%, linked-quarter to
$14.9 billion
- Total revenue increased $4.5 million, or 2.4%, linked-quarter
to $193.5 million
- Net interest income (FTE) increased $2.2 million linked-quarter
to $143.3 million, resulting in a net interest margin of 3.33%
- Noninterest income totaled $53.6 million, representing 27.7% of
total revenue
- Credit quality remained strong; net charge-offs represented 4
basis points of average loans
Duane A. Dewey, President and CEO, stated, “Trustmark continued
to post solid financial results in the second quarter, reflecting
continued loan and deposit growth, expanding net interest income,
and growth in our fee-based businesses. During the first six months
of 2023, Trustmark’s net income totaled $95.3 million, which
represented diluted earnings of $1.56 per share, an increase of
51.5% from the same period in 2022. We have a tremendous team of
associates throughout our system that are focused on expanding
existing customer relationships as well as demonstrating the value
Trustmark can provide potential customers as their trusted
financial partner. We have added very talented people across the
organization in numerous production and back office roles to meet
our objectives. We continue to implement initiatives to improve
efficiency, enhance our ability to grow and serve customers, and
build long-term value for our shareholders.”
Balance Sheet Management
- Loans HFI totaled $12.6 billion, up 0.9% from the prior quarter
and 15.3% year-over-year
- Deposits totaled $14.9 billion, up 0.9% from the previous
quarter and 1.0% year-over-year
- Maintained strong capital position with CET1 ratio of 9.87% and
total risk-based capital ratio of 12.08%
Loans HFI totaled $12.6 billion at June 30, 2023, reflecting an
increase of $116.8 million, or 0.9%, linked-quarter and $1.7
billion, or 15.3%, year-over-year. The linked quarter growth
reflected increases in other real estate secured loans, nonfarm,
nonresidential loans, and 1-4 family residential loans offset in
part by declines in other loans, state and political subdivision
loans, and construction, land development and other land loans.
Trustmark’s loan portfolio continues to be well-diversified by loan
type and geography.
Deposits totaled $14.9 billion at June 30, 2023, up $130.2
million, or 0.9%, from the prior quarter and up $143.7 million, or
1.0%, year-over-year. Trustmark continues to maintain a strong
liquidity position as loans HFI represented 84.6% of total deposits
at June 30, 2023. Migration into higher-yielding products continued
to drive a change in deposit mix from noninterest-bearing deposits,
which represented 23.2% of total deposits at June 30, 2023.
Interest-bearing deposit costs totaled 1.96% for the second
quarter, while the total cost of deposits was 1.48%. The total cost
of interest-bearing liabilities was 2.42% for the second quarter of
2023.
As previously announced, Trustmark’s Board of Directors
authorized a stock repurchase program effective January 1, 2023,
under which $50.0 million of Trustmark’s outstanding shares may be
acquired through December 31, 2023. As of June 30, 2023, Trustmark
had not repurchased any of its outstanding common shares under this
program. Trustmark’s regulatory capital ratios continued to exceed
all levels to be considered “well-capitalized” as of June 30,
2023.
Credit Quality
- Nonperforming assets represented 0.60% of total loans and other
real estate at June 30, 2023
- Net charge-offs totaled $1.2 million in the second quarter,
representing 0.04% of average loans
- Allowance for credit losses (ACL) represented 1.03% of loans
HFI and 301.4% of nonaccrual loans, excluding individually analyzed
loans, at June 30, 2023
Nonaccrual loans totaled $75.0 million at June 30, 2023, up $2.7
million from the prior quarter and an increase of $13.0 million
year-over-year. Other real estate totaled $1.1 million, reflecting
a $547 thousand decrease from the prior quarter and a $1.9 million
decline from the prior year.
The provision for credit losses for loans HFI was $8.2 million
in the second quarter and was primarily attributable to extended
maturities on mortgage loans resulting from lower prepayment
speeds, weakening macroeconomic factors, and loan growth. The
provision for credit losses for off-balance sheet credit exposures
was $245 thousand, primarily driven by weakening macroeconomic
factors. Collectively, the provision for credit losses totaled $8.5
million in the second quarter compared to $1.0 million from the
prior quarter and $1.1 million in the second quarter of 2022.
Allocation of Trustmark’s $129.3 million ACL on loans HFI
represented 0.84% of commercial loans and 1.60% of consumer and
home mortgage loans, resulting in an ACL to total loans HFI of
1.03% at June 30, 2023. Management believes the level of the ACL is
commensurate with the credit losses currently expected in the loan
portfolio.
Revenue Generation
- Total revenue increased $4.5 million, or 2.4%,
linked-quarter
- Net interest income (FTE) totaled $143.3 million in the second
quarter, up 1.6% linked-quarter
- Noninterest income increased 4.2% linked-quarter to total $53.6
million, representing 27.7% of total revenue in the second
quarter
Revenue in the second quarter totaled $193.5 million, an
increase of $4.5 million, or 2.4%, from the prior quarter and $27.5
million, or 16.6%, from the prior year. The linked-quarter increase
primarily reflects higher net interest income and solid growth in
all fee income business with the exception of mortgage banking. The
year-over-year growth in revenue is attributed to higher net
interest income.
Net interest income (FTE) in the second quarter totaled $143.3
million, resulting in a net interest margin of 3.33%, down 6 basis
points from the prior quarter. The decrease in the net interest
margin was due to increased costs of interest-bearing deposits
which were partially offset by increased yields on the loans HFI
and HFS portfolio and securities portfolio.
Noninterest income in the second quarter totaled $53.6 million,
an increase of $2.2 million, or 4.2%, from the prior quarter and a
$300 thousand increase year-over-year. With the exception of
mortgage banking, all categories increased linked-quarter with
other, net and bank card and other fees increasing $1.2 million and
$1.1 million, respectively. Year-over-year increases in insurance,
other, net and service charges on deposit accounts, were offset in
part by declines in bank card and other fees, mortgage banking and
wealth management revenue.
Mortgage loan production in the second quarter totaled $431.3
million, an increase of 19.5% from the prior quarter and a decrease
of 36.7% year-over-year. Mortgage banking revenue totaled $6.6
million in the second quarter, a decrease of $1.0 million
linked-quarter and $1.5 million year-over-year. The linked-quarter
decrease was principally attributable to accelerated amortization
of mortgage servicing rights offset in part by reduced net negative
hedge ineffectiveness.
Insurance revenue totaled $14.8 million in the second quarter,
up $459 thousand, or 3.2%, from the prior quarter and $1.1 million,
or 7.8%, year-over-year. The linked-quarter increase primarily
reflected growth in policy fees and other commissions while the
year-over-year increase primarily reflected growth in commercial
property and casualty commissions. Wealth management revenue in the
second quarter totaled $8.9 million, an increase of $102 thousand,
or 1.2%, from the prior quarter and a decline of $220 thousand, or
2.4%, year-over-year. The linked-quarter growth reflected higher
trust management revenue while the year-over-year decline reflected
reduced brokerage revenue.
Noninterest Expense
- Noninterest expense totaled $132.2 million in the second
quarter, up 3.0%, from the prior quarter
- Adjusted noninterest expense, which excludes other real estate
expense, amortization of intangibles, and charitable contributions
resulting in state tax credits, totaled $131.6 million in the
second quarter, an increase of 3.2% from the prior quarter. Please
refer to the Consolidated Financial Information, Note 7 – Non-GAAP
Financial Measures
Noninterest expense in the second quarter totaled $132.2
million, an increase of $3.9 million, or 3.0%, when compared to the
prior quarter. Salaries and employee benefits increased $1.9
million linked-quarter principally due to commissions and annual
merit increases. Services and fees increased $2.8 million, or
11.2%, linked-quarter primarily due to increases in professional
fees. Net occupancy expense declined $521 thousand, or 6.8%, while
other expense declined $309 thousand, or 2.1%, linked-quarter.
FIT2GROW
“In 2022, we announced FIT2GROW, a comprehensive program of
Focus, Innovation and Transformation designed to enhance our
ability to grow and serve customers. Our Atlanta-based Equipment
Finance division, established in late 2022, continues to gain
traction as its portfolio has grown to $127 million as of June 30,
2023. Implementation of our technology plans continued during the
second quarter with conversion of our credit card platform to a
best-in-class product for our customers. In addition, advancements
in our loan underwriting system were implemented and plans for
conversion of our deposit system continued. During the quarter,
work continued on the design of our sales through service process,
which will be implemented across the retail branch network in early
2024. These actions are designed to enhance Trustmark’s performance
and build long-term value for our shareholders,” said Dewey.
Additional Information
As previously announced, Trustmark will conduct a conference
call with analysts on Wednesday, July 26, 2023, 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, August 9, 2023, in archived format at the same web
address or by calling (877) 344-7529, passcode 7655682.
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,
changes in the level of nonperforming assets and charge-offs, an
increase in unemployment levels and slowdowns in economic growth,
actions by the Board of Governors of the Federal Reserve System
(FRB) that impact the level of market interest rates, local, state
and national economic and market conditions (including uncertainty
regarding the federal government's debt limit or a prolonged
shutdown of the federal government), conditions in the housing and
real estate markets in the regions in which Trustmark operates and
the extent and duration of the current volatility in the credit and
financial markets, levels of and volatility in crude oil prices,
changes in our ability to measure the fair value of assets in our
portfolio, material changes in the level and/or volatility of
market interest rates, the impacts related to or resulting from
recent bank failures and other economic and industry volatility,
including potential increased regulatory requirements and costs and
potential impacts to macroeconomic conditions, the performance and
demand for the products and services we offer, including the level
and timing of withdrawals from our deposit accounts, the costs and
effects of litigation and of unexpected or adverse outcomes in such
litigation, our ability to attract noninterest-bearing deposits and
other low-cost funds, competition in loan and deposit pricing, as
well as the entry of new competitors into our markets through de
novo expansion and acquisitions, economic conditions, including the
potential impact of issues related to the European financial system
and monetary and other governmental actions designed to address
credit, securities, and/or commodity markets, the enactment of
legislation and changes in existing regulations or enforcement
practices or the adoption of new regulations, changes in accounting
standards and practices, including changes in the interpretation of
existing standards, that affect our consolidated financial
statements, changes in consumer spending, borrowings and savings
habits, technological changes, changes in the financial performance
or condition of our borrowers, changes in our ability to control
expenses, greater than expected costs or difficulties related to
the integration of acquisitions or new products and lines of
business, cyber-attacks and other breaches which could affect our
information system security, natural disasters, environmental
disasters, pandemics or other health crises, acts of war or
terrorism, and other risks described in our filings with the
SEC.
Although we believe that the expectations reflected in such
forward-looking statements are reasonable, we can give no assurance
that such expectations will prove to be correct. Except as required
by law, we undertake no obligation to update or revise any of this
information, whether as the result of new information, future
events or developments or otherwise.
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED
FINANCIAL INFORMATION June 30, 2023 ($ in
thousands) (unaudited) Linked Quarter Year
over Year QUARTERLY AVERAGE
BALANCES 6/30/2023 3/31/2023
6/30/2022 $ Change % Change $ Change
% Change Securities AFS-taxable (1)
$
2,140,505
$
2,187,121
$
3,094,364
$
(46,616
)
-2.1
%
$
(953,859
)
-30.8
%
Securities AFS-nontaxable
4,796
4,812
5,110
(16
)
-0.3
%
(314
)
-6.1
%
Securities HTM-taxable (1)
1,463,086
1,479,283
811,599
(16,197
)
-1.1
%
651,487
80.3
%
Securities HTM-nontaxable
1,718
4,509
5,630
(2,791
)
-61.9
%
(3,912
)
-69.5
%
Total securities
3,610,105
3,675,725
3,916,703
(65,620
)
-1.8
%
(306,598
)
-7.8
%
Paycheck protection program loans (PPP)
—
—
17,746
—
n/m
(17,746
)
-100.0
%
Loans (includes loans held for sale)
12,732,057
12,530,449
10,910,178
201,608
1.6
%
1,821,879
16.7
%
Fed funds sold and reverse repurchases
3,275
2,379
110
896
37.7
%
3,165
n/m
Other earning assets
903,027
647,760
1,139,312
255,267
39.4
%
(236,285
)
-20.7
%
Total earning assets
17,248,464
16,856,313
15,984,049
392,151
2.3
%
1,264,415
7.9
%
Allowance for credit losses (ACL), loans held for
investment (LHFI)
(121,960
)
(119,978
)
(99,106
)
(1,982
)
-1.7
%
(22,854
)
-23.1
%
Other assets
1,648,583
1,762,449
1,513,127
(113,866
)
-6.5
%
135,456
9.0
%
Total assets
$
18,775,087
$
18,498,784
$
17,398,070
$
276,303
1.5
%
$
1,377,017
7.9
%
Interest-bearing demand deposits
$
4,803,737
$
4,751,154
$
4,578,235
$
52,583
1.1
%
$
225,502
4.9
%
Savings deposits
4,002,134
4,193,764
4,638,849
(191,630
)
-4.6
%
(636,715
)
-13.7
%
Time deposits
2,335,752
1,907,449
1,159,065
428,303
22.5
%
1,176,687
n/m
Total interest-bearing deposits
11,141,623
10,852,367
10,376,149
289,256
2.7
%
765,474
7.4
%
Fed funds purchased and repurchases
389,834
436,535
118,753
(46,701
)
-10.7
%
271,081
n/m
Other borrowings
1,330,010
1,110,843
80,283
219,167
19.7
%
1,249,727
n/m
Subordinated notes
123,337
123,281
123,116
56
0.0
%
221
0.2
%
Junior subordinated debt securities
61,856
61,856
61,856
—
0.0
%
—
0.0
%
Total interest-bearing liabilities
13,046,660
12,584,882
10,760,157
461,778
3.7
%
2,286,503
21.2
%
Noninterest-bearing deposits
3,595,927
3,813,248
4,590,338
(217,321
)
-5.7
%
(994,411
)
-21.7
%
Other liabilities
552,209
576,826
439,266
(24,617
)
-4.3
%
112,943
25.7
%
Total liabilities
17,194,796
16,974,956
15,789,761
219,840
1.3
%
1,405,035
8.9
%
Shareholders' equity
1,580,291
1,523,828
1,608,309
56,463
3.7
%
(28,018
)
-1.7
%
Total liabilities and equity
$
18,775,087
$
18,498,784
$
17,398,070
$
276,303
1.5
%
$
1,377,017
7.9
%
(1) During the fourth quarter of 2022, Trustmark transferred
$422.9 million of securities available for sale to securities held
to maturity. See Note 2 - Securities Available for Sale and Held to
Maturity in the Notes to Consolidated Financials for additional
information. n/m - percentage changes greater than +/- 100%
are considered not meaningful
See Notes to Consolidated
Financials TRUSTMARK CORPORATION AND
SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June
30, 2023 ($ in thousands) (unaudited)
Linked Quarter Year over Year PERIOD END BALANCES 6/30/2023
3/31/2023 6/30/2022 $ Change % Change
$ Change % Change Cash and due from banks
$
832,052
$
1,297,144
$
742,461
$
(465,092
)
-35.9
%
$
89,591
12.1
%
Fed funds sold and reverse repurchases
—
—
—
—
n/m
—
n/m
Securities available for sale (1)
1,871,883
1,984,162
2,644,364
(112,279
)
-5.7
%
(772,481
)
-29.2
%
Securities held to maturity (1)
1,458,665
1,474,338
1,137,754
(15,673
)
-1.1
%
320,911
28.2
%
PPP loans
—
—
12,549
—
n/m
(12,549
)
-100.0
%
Loans held for sale (LHFS)
181,094
175,926
190,186
5,168
2.9
%
(9,092
)
-4.8
%
Loans held for investment (LHFI)
12,613,967
12,497,195
10,944,840
116,772
0.9
%
1,669,127
15.3
%
ACL LHFI
(129,298
)
(122,239
)
(103,140
)
(7,059
)
-5.8
%
(26,158
)
-25.4
%
Net LHFI
12,484,669
12,374,956
10,841,700
109,713
0.9
%
1,642,969
15.2
%
Premises and equipment, net
227,630
223,975
207,914
3,655
1.6
%
19,716
9.5
%
Mortgage servicing rights
134,350
127,206
121,014
7,144
5.6
%
13,336
11.0
%
Goodwill
384,237
384,237
384,237
—
0.0
%
—
0.0
%
Identifiable intangible assets
3,222
3,352
4,264
(130
)
-3.9
%
(1,042
)
-24.4
%
Other real estate
1,137
1,684
3,034
(547
)
-32.5
%
(1,897
)
-62.5
%
Operating lease right-of-use assets
38,179
35,315
34,684
2,864
8.1
%
3,495
10.1
%
Other assets
805,508
794,883
627,349
10,625
1.3
%
178,159
28.4
%
Total assets
$
18,422,626
$
18,877,178
$
16,951,510
$
(454,552
)
-2.4
%
$
1,471,116
8.7
%
Deposits: Noninterest-bearing
$
3,461,073
$
3,797,055
$
4,509,472
$
(335,982
)
-8.8
%
$
(1,048,399
)
-23.2
%
Interest-bearing
11,452,827
10,986,606
10,260,696
466,221
4.2
%
1,192,131
11.6
%
Total deposits
14,913,900
14,783,661
14,770,168
130,239
0.9
%
143,732
1.0
%
Fed funds purchased and repurchases
311,179
477,980
70,157
(166,801
)
-34.9
%
241,022
n/m
Other borrowings
1,056,714
1,485,181
72,553
(428,467
)
-28.8
%
984,161
n/m
Subordinated notes
123,372
123,317
123,152
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
34,841
34,596
32,949
245
0.7
%
1,892
5.7
%
Operating lease liabilities
40,845
37,988
37,108
2,857
7.5
%
3,737
10.1
%
Other liabilities
308,726
310,500
196,871
(1,774
)
-0.6
%
111,855
56.8
%
Total liabilities
16,851,433
17,315,079
15,364,814
(463,646
)
-2.7
%
1,486,619
9.7
%
Common stock
12,724
12,720
12,752
4
0.0
%
(28
)
-0.2
%
Capital surplus
156,834
155,297
160,876
1,537
1.0
%
(4,042
)
-2.5
%
Retained earnings
1,667,339
1,636,463
1,620,210
30,876
1.9
%
47,129
2.9
%
Accumulated other comprehensive income (loss), net of
tax
(265,704
)
(242,381
)
(207,142
)
(23,323
)
-9.6
%
(58,562
)
-28.3
%
Total shareholders' equity
1,571,193
1,562,099
1,586,696
9,094
0.6
%
(15,503
)
-1.0
%
Total liabilities and equity
$
18,422,626
$
18,877,178
$
16,951,510
$
(454,552
)
-2.4
%
$
1,471,116
8.7
%
(1) During the fourth quarter of 2022, Trustmark transferred
$422.9 million of securities available for sale to securities held
to maturity. See Note 2 - Securities Available for Sale and Held to
Maturity in the Notes to Consolidated Financials for additional
information. n/m - percentage changes greater than +/- 100%
are considered not meaningful
See Notes to Consolidated
Financials TRUSTMARK CORPORATION AND
SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June
30, 2023 ($ in thousands except per share data)
(unaudited) Quarter Ended Linked
Quarter Year over Year INCOME
STATEMENTS 6/30/2023 3/31/2023
6/30/2022 $ Change % Change $ Change
% Change Interest and fees on LHFS & LHFI-FTE
$
192,941
$
178,967
$
103,033
$
13,974
7.8
%
$
89,908
87.3
%
Interest and fees on PPP loans
—
—
184
—
n/m
(184
)
-100.0
%
Interest on securities-taxable
16,779
16,761
14,561
18
0.1
%
2,218
15.2
%
Interest on securities-tax exempt-FTE
69
92
107
(23
)
-25.0
%
(38
)
-35.5
%
Interest on fed funds sold and reverse repurchases
45
30
1
15
50.0
%
44
n/m
Other interest income
12,077
6,527
2,214
5,550
85.0
%
9,863
n/m
Total interest income-FTE
221,911
202,377
120,100
19,534
9.7
%
101,811
84.8
%
Interest on deposits
54,409
40,898
2,774
13,511
33.0
%
51,635
n/m
Interest on fed funds purchased and repurchases
4,865
4,832
70
33
0.7
%
4,795
n/m
Other interest expense
19,350
15,575
1,664
3,775
24.2
%
17,686
n/m
Total interest expense
78,624
61,305
4,508
17,319
28.3
%
74,116
n/m
Net interest income-FTE
143,287
141,072
115,592
2,215
1.6
%
27,695
24.0
%
Provision for credit losses, LHFI
8,211
3,244
2,716
4,967
n/m
5,495
n/m
Provision for credit losses, off-balance sheet credit
exposures
245
(2,242
)
(1,568
)
2,487
n/m
1,813
n/m
Net interest income after provision-FTE
134,831
140,070
114,444
(5,239
)
-3.7
%
20,387
17.8
%
Service charges on deposit accounts
10,695
10,336
10,226
359
3.5
%
469
4.6
%
Bank card and other fees
8,917
7,803
10,167
1,114
14.3
%
(1,250
)
-12.3
%
Mortgage banking, net
6,600
7,639
8,149
(1,039
)
-13.6
%
(1,549
)
-19.0
%
Insurance commissions
14,764
14,305
13,702
459
3.2
%
1,062
7.8
%
Wealth management
8,882
8,780
9,102
102
1.2
%
(220
)
-2.4
%
Other, net
3,695
2,514
1,907
1,181
47.0
%
1,788
93.8
%
Total noninterest income
53,553
51,377
53,253
2,176
4.2
%
300
0.6
%
Salaries and employee benefits
75,940
74,056
71,679
1,884
2.5
%
4,261
5.9
%
Services and fees (2)
28,264
25,426
25,659
2,838
11.2
%
2,605
10.2
%
Net occupancy-premises
7,108
7,629
6,892
(521
)
-6.8
%
216
3.1
%
Equipment expense
6,404
6,405
6,047
(1
)
0.0
%
357
5.9
%
Litigation settlement expense (1)
—
—
—
—
n/m
—
n/m
Other expense (2)
14,502
14,811
13,490
(309
)
-2.1
%
1,012
7.5
%
Total noninterest expense
132,218
128,327
123,767
3,891
3.0
%
8,451
6.8
%
Income (loss) before income taxes and tax eq adj
56,166
63,120
43,930
(6,954
)
-11.0
%
12,236
27.9
%
Tax equivalent adjustment
3,383
3,477
2,916
(94
)
-2.7
%
467
16.0
%
Income (loss) before income taxes
52,783
59,643
41,014
(6,860
)
-11.5
%
11,769
28.7
%
Income taxes
7,746
9,343
6,730
(1,597
)
-17.1
%
1,016
15.1
%
Net income (loss)
$
45,037
$
50,300
$
34,284
$
(5,263
)
-10.5
%
$
10,753
31.4
%
Per share data Earnings (loss) per share -
basic
$
0.74
$
0.82
$
0.56
$
(0.08
)
-9.8
%
$
0.18
32.1
%
Earnings (loss) per share - diluted
$
0.74
$
0.82
$
0.56
$
(0.08
)
-9.8
%
$
0.18
32.1
%
Dividends per share
$
0.23
$
0.23
$
0.23
—
0.0
%
—
0.0
%
Weighted average shares outstanding Basic
61,063,277
61,011,059
61,378,226
Diluted
61,230,031
61,193,275
61,546,285
Period end shares outstanding
61,069,036
61,048,516
61,201,123
(1) See Note 1 - Litigation Settlement in the Notes to
Consolidated Financials for additional information. (2) During the
first quarter of 2023, Trustmark reclassified its debit card
transaction fees from other expense to services and fees. Prior
periods have been reclassified accordingly. n/m - percentage
changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials TRUSTMARK
CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL
INFORMATION June 30, 2023 ($ in thousands)
(unaudited) Quarter Ended Linked
Quarter Year over Year NONPERFORMING ASSETS (1) 6/30/2023
3/31/2023 6/30/2022 $ Change % Change
$ Change % Change Nonaccrual LHFI Alabama (2)
$
11,058
$
10,919
$
2,698
$
139
1.3
%
$
8,360
n/m
Florida
334
256
233
78
30.5
%
101
43.3
%
Mississippi (3)
36,288
32,560
23,039
3,728
11.4
%
13,249
57.5
%
Tennessee (4)
5,088
5,416
9,500
(328
)
-6.1
%
(4,412
)
-46.4
%
Texas
22,259
23,224
26,582
(965
)
-4.2
%
(4,323
)
-16.3
%
Total nonaccrual LHFI
75,027
72,375
62,052
2,652
3.7
%
12,975
20.9
%
Other real estate Alabama (2)
—
—
84
—
n/m
(84
)
-100.0
%
Mississippi (3)
1,137
1,495
2,950
(358
)
-23.9
%
(1,813
)
-61.5
%
Tennessee (4)
—
189
—
(189
)
-100.0
%
—
n/m
Total other real estate
1,137
1,684
3,034
(547
)
-32.5
%
(1,897
)
-62.5
%
Total nonperforming assets
$
76,164
$
74,059
$
65,086
$
2,105
2.8
%
$
11,078
17.0
%
LOANS PAST DUE OVER 90 DAYS
(1) LHFI
$
3,911
$
2,255
$
1,347
$
1,656
73.4
%
$
2,564
n/m
LHFS-Guaranteed GNMA serviced loans (no obligation to
repurchase)
$
35,766
$
41,468
$
51,164
$
(5,702
)
-13.8
%
$
(15,398
)
-30.1
%
Quarter Ended Linked Quarter Year over
Year ACL LHFI (1) 6/30/2023 3/31/2023
6/30/2022 $ Change % Change $ Change
% Change Beginning Balance
$
122,239
$
120,214
$
98,734
$
2,025
1.7
%
$
23,505
23.8
%
Provision for credit losses, LHFI
8,211
3,244
2,716
4,967
n/m
5,495
n/m
Charge-offs
(2,773
)
(2,996
)
(2,277
)
223
7.4
%
(496
)
-21.8
%
Recoveries
1,621
1,777
3,967
(156
)
-8.8
%
(2,346
)
-59.1
%
Net (charge-offs) recoveries
(1,152
)
(1,219
)
1,690
67
5.5
%
(2,842
)
n/m
Ending Balance
$
129,298
$
122,239
$
103,140
$
7,059
5.8
%
$
26,158
25.4
%
NET (CHARGE-OFFS) RECOVERIES
(1) Alabama (2)
$
(141
)
$
(268
)
$
1,129
$
127
-47.4
%
$
(1,270
)
n/m
Florida
(35
)
(36
)
761
1
2.8
%
(796
)
n/m
Mississippi (3)
(762
)
(775
)
(266
)
13
1.7
%
(496
)
n/m
Tennessee (4)
(166
)
(124
)
31
(42
)
-33.9
%
(197
)
n/m
Texas
(48
)
(16
)
35
(32
)
n/m
(83
)
n/m
Total net (charge-offs) recoveries
$
(1,152
)
$
(1,219
)
$
1,690
$
67
5.5
%
$
(2,842
)
n/m
(1) Excludes PPP loans. (2) Alabama includes the Georgia
Loan Production Office. (3) Mississippi includes Central and
Southern Mississippi Regions. (4) Tennessee includes Memphis,
Tennessee and Northern Mississippi Regions. n/m - percentage
changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED
FINANCIAL INFORMATION June 30, 2023 ($ in
thousands) (unaudited) Quarter Ended Six
Months Ended AVERAGE
BALANCES 6/30/2023 3/31/2023
12/31/2022 9/30/2022 6/30/2022
6/30/2023 6/30/2022 Securities AFS-taxable (1)
$
2,140,505
$
2,187,121
$
2,572,675
$
2,824,254
$
3,094,364
$
2,163,684
$
3,169,515
Securities AFS-nontaxable
4,796
4,812
4,828
4,928
5,110
4,804
5,118
Securities HTM-taxable (1)
1,463,086
1,479,283
1,268,952
1,140,685
811,599
1,471,140
612,332
Securities HTM-nontaxable
1,718
4,509
4,514
5,057
5,630
3,106
6,474
Total securities
3,610,105
3,675,725
3,850,969
3,974,924
3,916,703
3,642,734
3,793,439
PPP loans
—
—
3,235
9,821
17,746
—
23,346
Loans (includes loans held for sale)
12,732,057
12,530,449
12,006,661
11,459,551
10,910,178
12,631,810
10,731,438
Fed funds sold and reverse repurchases
3,275
2,379
6,566
226
110
2,829
83
Other earning assets
903,027
647,760
375,190
325,620
1,139,312
780,657
1,473,655
Total earning assets
17,248,464
16,856,313
16,242,621
15,770,142
15,984,049
17,058,030
16,021,961
ACL LHFI
(121,960
)
(119,978
)
(114,948
)
(102,951
)
(99,106
)
(120,974
)
(99,247
)
Other assets
1,648,583
1,762,449
1,630,085
1,576,653
1,513,127
1,700,643
1,531,884
Total assets
$
18,775,087
$
18,498,784
$
17,757,758
$
17,243,844
$
17,398,070
$
18,637,699
$
17,454,598
Interest-bearing demand deposits
$
4,803,737
$
4,751,154
$
4,719,303
$
4,613,733
$
4,578,235
$
4,777,591
$
4,504,058
Savings deposits
4,002,134
4,193,764
4,379,673
4,514,579
4,638,849
4,097,420
4,714,556
Time deposits
2,335,752
1,907,449
1,152,905
1,111,440
1,159,065
2,122,784
1,176,155
Total interest-bearing deposits
11,141,623
10,852,367
10,251,881
10,239,752
10,376,149
10,997,795
10,394,769
Fed funds purchased and repurchases
389,834
436,535
549,406
249,809
118,753
413,055
165,122
Other borrowings
1,330,010
1,110,843
530,993
88,697
80,283
1,221,032
85,657
Subordinated notes
123,337
123,281
123,226
123,171
123,116
123,309
123,089
Junior subordinated debt securities
61,856
61,856
61,856
61,856
61,856
61,856
61,856
Total interest-bearing liabilities
13,046,660
12,584,882
11,517,362
10,763,285
10,760,157
12,817,047
10,830,493
Noninterest-bearing deposits
3,595,927
3,813,248
4,177,113
4,444,370
4,590,338
3,703,987
4,595,693
Other liabilities
552,209
576,826
569,992
429,720
439,266
564,450
367,673
Total liabilities
17,194,796
16,974,956
16,264,467
15,637,375
15,789,761
17,085,484
15,793,859
Shareholders' equity
1,580,291
1,523,828
1,493,291
1,606,469
1,608,309
1,552,215
1,660,739
Total liabilities and equity
$
18,775,087
$
18,498,784
$
17,757,758
$
17,243,844
$
17,398,070
$
18,637,699
$
17,454,598
(1) During the fourth quarter of 2022, Trustmark transferred
$422.9 million of securities available for sale to securities held
to maturity. See Note 2 - Securities Available for Sale and Held to
Maturity in the Notes to Consolidated Financials for additional
information.
See Notes to Consolidated Financials TRUSTMARK
CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL
INFORMATION June 30, 2023 ($ in thousands)
(unaudited) PERIOD
END BALANCES 6/30/2023 3/31/2023
12/31/2022 9/30/2022 6/30/2022 Cash and due
from banks
$
832,052
$
1,297,144
$
734,787
$
479,637
$
742,461
Fed funds sold and reverse repurchases
—
—
4,000
10,098
—
Securities available for sale (1)
1,871,883
1,984,162
2,024,082
2,444,486
2,644,364
Securities held to maturity (1)
1,458,665
1,474,338
1,494,514
1,156,985
1,137,754
PPP loans
—
—
—
4,798
12,549
LHFS
181,094
175,926
135,226
165,213
190,186
LHFI
12,613,967
12,497,195
12,204,039
11,586,064
10,944,840
ACL LHFI
(129,298
)
(122,239
)
(120,214
)
(115,050
)
(103,140
)
Net LHFI
12,484,669
12,374,956
12,083,825
11,471,014
10,841,700
Premises and equipment, net
227,630
223,975
212,365
210,761
207,914
Mortgage servicing rights
134,350
127,206
129,677
132,615
121,014
Goodwill
384,237
384,237
384,237
384,237
384,237
Identifiable intangible assets
3,222
3,352
3,640
3,952
4,264
Other real estate
1,137
1,684
1,986
2,971
3,034
Operating lease right-of-use assets
38,179
35,315
36,301
37,282
34,684
Other assets
805,508
794,883
770,838
686,585
627,349
Total assets
$
18,422,626
$
18,877,178
$
18,015,478
$
17,190,634
$
16,951,510
Deposits: Noninterest-bearing
$
3,461,073
$
3,797,055
$
4,093,771
$
4,358,805
$
4,509,472
Interest-bearing
11,452,827
10,986,606
10,343,877
10,066,375
10,260,696
Total deposits
14,913,900
14,783,661
14,437,648
14,425,180
14,770,168
Fed funds purchased and repurchases
311,179
477,980
449,331
544,068
70,157
Other borrowings
1,056,714
1,485,181
1,050,938
223,172
72,553
Subordinated notes
123,372
123,317
123,262
123,207
123,152
Junior subordinated debt securities
61,856
61,856
61,856
61,856
61,856
ACL on off-balance sheet credit exposures
34,841
34,596
36,838
31,623
32,949
Operating lease liabilities
40,845
37,988
38,932
39,797
37,108
Other liabilities
308,726
310,500
324,405
232,786
196,871
Total liabilities
16,851,433
17,315,079
16,523,210
15,681,689
15,364,814
Common stock
12,724
12,720
12,705
12,700
12,752
Capital surplus
156,834
155,297
154,645
154,150
160,876
Retained earnings
1,667,339
1,636,463
1,600,321
1,648,507
1,620,210
Accumulated other comprehensive income (loss), net of
tax
(265,704
)
(242,381
)
(275,403
)
(306,412
)
(207,142
)
Total shareholders' equity
1,571,193
1,562,099
1,492,268
1,508,945
1,586,696
Total liabilities and equity
$
18,422,626
$
18,877,178
$
18,015,478
$
17,190,634
$
16,951,510
(1) During the fourth quarter of 2022, Trustmark transferred
$422.9 million of securities available for sale to securities held
to maturity. See Note 2 - Securities Available for Sale and Held to
Maturity in the Notes to Consolidated Financials for additional
information.
See Notes to Consolidated Financials TRUSTMARK
CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL
INFORMATION June 30, 2023 ($ in thousands except per
share data) (unaudited) Quarter Ended
Six Months Ended INCOME
STATEMENTS 6/30/2023 3/31/2023
12/31/2022 9/30/2022 6/30/2022
6/30/2023 6/30/2022 Interest and fees on LHFS &
LHFI-FTE
$
192,941
$
178,967
$
159,566
$
129,395
$
103,033
$
371,908
$
196,285
Interest and fees on PPP loans
—
—
101
186
184
—
352
Interest on securities-taxable
16,779
16,761
16,577
16,222
14,561
33,540
26,918
Interest on securities-tax exempt-FTE
69
92
93
100
107
161
229
Interest on fed funds sold and reverse repurchases
45
30
71
2
1
75
1
Other interest income
12,077
6,527
3,556
1,493
2,214
18,604
3,031
Total interest income-FTE
221,911
202,377
179,964
147,398
120,100
424,288
226,816
Interest on deposits
54,409
40,898
18,438
5,097
2,774
95,307
5,534
Interest on fed funds purchased and repurchases
4,865
4,832
4,762
1,225
70
9,697
140
Other interest expense
19,350
15,575
6,730
1,996
1,664
34,925
3,203
Total interest expense
78,624
61,305
29,930
8,318
4,508
139,929
8,877
Net interest income-FTE
143,287
141,072
150,034
139,080
115,592
284,359
217,939
Provision for credit losses, LHFI
8,211
3,244
6,902
12,919
2,716
11,455
1,856
Provision for credit losses, off-balance sheet credit
exposures
245
(2,242
)
5,215
(1,326
)
(1,568
)
(1,997
)
(2,674
)
Net interest income after provision-FTE
134,831
140,070
137,917
127,487
114,444
274,901
218,757
Service charges on deposit accounts
10,695
10,336
11,162
11,318
10,226
21,031
19,677
Bank card and other fees
8,917
7,803
8,191
9,305
10,167
16,720
18,609
Mortgage banking, net
6,600
7,639
3,408
6,876
8,149
14,239
18,022
Insurance commissions
14,764
14,305
12,019
13,911
13,702
29,069
27,791
Wealth management
8,882
8,780
8,079
8,778
9,102
17,662
18,156
Other, net
3,695
2,514
2,311
2,418
1,907
6,209
5,113
Total noninterest income
53,553
51,377
45,170
52,606
53,253
104,930
107,368
Salaries and employee benefits
75,940
74,056
73,469
72,707
71,679
149,996
141,264
Services and fees (2)
28,264
25,426
27,709
26,787
25,659
53,690
50,973
Net occupancy-premises
7,108
7,629
7,898
7,395
6,892
14,737
13,971
Equipment expense
6,404
6,405
6,268
6,072
6,047
12,809
12,108
Litigation settlement expense (1)
—
—
100,750
—
—
—
—
Other expense (2)
14,502
14,811
15,135
13,737
13,490
29,313
26,970
Total noninterest expense
132,218
128,327
231,229
126,698
123,767
260,545
245,286
Income (loss) before income taxes and tax eq adj
56,166
63,120
(48,142
)
53,395
43,930
119,286
80,839
Tax equivalent adjustment
3,383
3,477
3,451
2,975
2,916
6,860
5,919
Income (loss) before income taxes
52,783
59,643
(51,593
)
50,420
41,014
112,426
74,920
Income taxes
7,746
9,343
(17,530
)
7,965
6,730
17,089
11,425
Net income (loss)
$
45,037
$
50,300
$
(34,063
)
$
42,455
$
34,284
$
95,337
$
63,495
Per share data Earnings (loss) per share -
basic
$
0.74
$
0.82
$
(0.56
)
$
0.69
$
0.56
$
1.56
$
1.03
Earnings (loss) per share - diluted
$
0.74
$
0.82
$
(0.56
)
$
0.69
$
0.56
$
1.56
$
1.03
Dividends per share
$
0.23
$
0.23
$
0.23
$
0.23
$
0.23
$
0.46
$
0.46
Weighted average shares outstanding Basic
61,063,277
61,011,059
60,969,400
61,114,804
61,378,226
61,037,312
61,445,934
Diluted
61,230,031
61,193,275
61,173,249
61,318,715
61,546,285
61,206,799
61,624,569
Period end shares outstanding
61,069,036
61,048,516
60,977,686
60,953,864
61,201,123
61,069,036
61,201,123
(1) See Note 1 - Litigation Settlement in the Notes to
Consolidated Financials for additional information. (2) During the
first quarter of 2023, Trustmark reclassified its debit card
transaction fees from other expense to services and fees. Prior
periods have been reclassified accordingly.
See Notes to Consolidated Financials TRUSTMARK
CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL
INFORMATION June 30, 2023 ($ in thousands)
(unaudited) Quarter Ended
NONPERFORMING ASSETS (1)
6/30/2023 3/31/2023 12/31/2022
9/30/2022 6/30/2022 Nonaccrual LHFI Alabama (2)
$
11,058
$
10,919
$
12,300
$
12,710
$
2,698
Florida
334
256
227
227
233
Mississippi (3)
36,288
32,560
24,683
23,517
23,039
Tennessee (4)
5,088
5,416
5,566
5,120
9,500
Texas
22,259
23,224
23,196
26,353
26,582
Total nonaccrual LHFI
75,027
72,375
65,972
67,927
62,052
Other real estate Alabama (2)
—
—
194
217
84
Mississippi (3)
1,137
1,495
1,769
2,754
2,950
Tennessee (4)
—
189
23
—
—
Total other real estate
1,137
1,684
1,986
2,971
3,034
Total nonperforming assets
$
76,164
$
74,059
$
67,958
$
70,898
$
65,086
LOANS PAST DUE OVER 90 DAYS
(1) LHFI
$
3,911
$
2,255
$
3,929
$
1,842
$
1,347
LHFS-Guaranteed GNMA serviced loans (no obligation to
repurchase)
$
35,766
$
41,468
$
49,320
$
48,313
$
51,164
Quarter Ended Six Months Ended
ACL LHFI (1) 6/30/2023 3/31/2023
12/31/2022 9/30/2022 6/30/2022
6/30/2023 6/30/2022 Beginning Balance
$
122,239
$
120,214
$
115,050
$
103,140
$
98,734
$
120,214
$
99,457
Provision for credit losses, LHFI
8,211
3,244
6,902
12,919
2,716
11,455
1,856
Charge-offs
(2,773
)
(2,996
)
(3,893
)
(2,920
)
(2,277
)
(5,769
)
(4,519
)
Recoveries
1,621
1,777
2,155
1,911
3,967
3,398
6,346
Net (charge-offs) recoveries
(1,152
)
(1,219
)
(1,738
)
(1,009
)
1,690
(2,371
)
1,827
Ending Balance
$
129,298
$
122,239
$
120,214
$
115,050
$
103,140
$
129,298
$
103,140
NET (CHARGE-OFFS) RECOVERIES
(1) Alabama (2)
$
(141
)
$
(268
)
$
98
$
93
$
1,129
$
(409
)
$
1,828
Florida
(35
)
(36
)
(60
)
(23
)
761
(71
)
735
Mississippi (3)
(762
)
(775
)
(1,657
)
(702
)
(266
)
(1,537
)
(354
)
Tennessee (4)
(166
)
(124
)
(195
)
(202
)
31
(290
)
(393
)
Texas
(48
)
(16
)
76
(175
)
35
(64
)
11
Total net (charge-offs) recoveries
$
(1,152
)
$
(1,219
)
$
(1,738
)
$
(1,009
)
$
1,690
$
(2,371
)
$
1,827
(1) Excludes PPP loans. (2) Alabama includes the Georgia
Loan Production Office. (3) Mississippi includes Central and
Southern Mississippi Regions. (4) Tennessee includes Memphis,
Tennessee and Northern Mississippi Regions.
See Notes to
Consolidated Financials TRUSTMARK CORPORATION
AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION
June 30, 2023 ($ in thousands) (unaudited)
Quarter Ended Six Months Ended FINANCIAL RATIOS AND OTHER DATA
6/30/2023 3/31/2023 12/31/2022
9/30/2022 6/30/2022 6/30/2023 6/30/2022
Return on average equity
11.43
%
13.39
%
-9.05
%
10.48
%
8.55
%
12.39
%
7.71
%
Return on average tangible equity
15.18
%
18.03
%
-12.14
%
13.90
%
11.36
%
16.56
%
10.16
%
Return on average assets
0.96
%
1.10
%
-0.76
%
0.98
%
0.79
%
1.03
%
0.73
%
Interest margin - Yield - FTE
5.16
%
4.87
%
4.40
%
3.71
%
3.01
%
5.02
%
2.85
%
Interest margin - Cost
1.83
%
1.47
%
0.73
%
0.21
%
0.11
%
1.65
%
0.11
%
Net interest margin - FTE
3.33
%
3.39
%
3.66
%
3.50
%
2.90
%
3.36
%
2.74
%
Efficiency ratio (1)
66.17
%
65.60
%
65.85
%
64.96
%
71.89
%
65.89
%
74.08
%
Full-time equivalent employees
2,761
2,758
2,738
2,717
2,727
CREDIT QUALITY RATIOS
(2) Net (recoveries) charge-offs / average loans
0.04
%
0.04
%
0.06
%
0.03
%
-0.06
%
0.04
%
-0.03
%
Provision for credit losses, LHFI / average loans
0.26
%
0.10
%
0.23
%
0.45
%
0.10
%
0.18
%
0.03
%
Nonaccrual LHFI / (LHFI + LHFS)
0.59
%
0.57
%
0.53
%
0.58
%
0.56
%
Nonperforming assets / (LHFI + LHFS)
0.60
%
0.58
%
0.55
%
0.60
%
0.58
%
Nonperforming assets / (LHFI + LHFS + other real estate)
0.60
%
0.58
%
0.55
%
0.60
%
0.58
%
ACL LHFI / LHFI
1.03
%
0.98
%
0.99
%
0.99
%
0.94
%
ACL LHFI-commercial / commercial LHFI
0.84
%
0.80
%
0.85
%
0.93
%
0.88
%
ACL LHFI-consumer / consumer and home mortgage LHFI
1.60
%
1.54
%
1.41
%
1.20
%
1.14
%
ACL LHFI / nonaccrual LHFI
172.34
%
168.90
%
182.22
%
169.37
%
166.22
%
ACL LHFI / nonaccrual LHFI (excl individually analyzed
loans)
301.44
%
320.80
%
399.19
%
466.03
%
475.27
%
CAPITAL RATIOS Total
equity / total assets
8.53
%
8.28
%
8.28
%
8.78
%
9.36
%
Tangible equity / tangible assets
6.56
%
6.35
%
6.27
%
6.67
%
7.23
%
Tangible equity / risk-weighted assets
7.91
%
7.94
%
7.61
%
8.15
%
9.16
%
Tier 1 leverage ratio
8.35
%
8.29
%
8.47
%
9.01
%
8.80
%
Common equity tier 1 capital ratio
9.87
%
9.76
%
9.74
%
10.63
%
11.01
%
Tier 1 risk-based capital ratio
10.27
%
10.17
%
10.15
%
11.06
%
11.47
%
Total risk-based capital ratio
12.08
%
11.95
%
11.91
%
12.85
%
13.26
%
STOCK PERFORMANCE Market
value-Close
$
21.12
$
24.70
$
34.91
$
30.63
$
29.19
Book value
$
25.73
$
25.59
$
24.47
$
24.76
$
25.93
Tangible book value
$
19.38
$
19.24
$
18.11
$
18.39
$
19.58
(1) See Note 7 – Non-GAAP Financial Measures in the Notes to
Consolidated Financials for Trustmark’s efficiency ratio
calculation. (2) Excludes PPP loans.
See Notes to
Consolidated Financials
TRUSTMARK CORPORATION AND
SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIALS
June 30, 2023
($ in thousands)
(unaudited)
Note 1 - Litigation Settlement
As previously announced, on December 31, 2022, Trustmark
National Bank (TNB) agreed to a settlement in principle (the
Settlement) relating to litigation involving the Stanford Financial
Group. On January 13, 2023, TNB entered into a Settlement Agreement
(the Settlement Agreement) reflecting the terms of the Settlement.
The parties to the Settlement Agreement are, on the one hand, (i)
Ralph S. Janvey, solely in his capacity as the court-appointed
receiver (the Receiver) for the Stanford Receivership Estate; (ii)
the Official Stanford Investors Committee; (iii) each of the
plaintiffs in the Rotstain and Smith Actions; and, on the other
hand, (iv) TNB. Under the terms of the Settlement Agreement, the
parties agreed to settle and dismiss the Rotstain Action, the Smith
Action, and all current or future claims by plaintiffs in either
such Action arising from or related to Stanford. In addition, the
Settlement Agreement provided that the parties would request
dismissal of the Jackson Action pursuant to the terms of the bar
orders described below. If the Court’s approval (as described
below) of the Settlement Agreement, including the bar orders
described below, is upheld on appeal, TNB will make a one-time cash
payment of $100.0 million to the Receiver.
The Settlement Agreement included the parties’ agreement to seek
the Northern District of Texas District Court’s entry of bar orders
prohibiting any continued or future claims by the plaintiffs in the
Actions or by any other person or entity against TNB and its
related parties relating to Stanford, whether asserted to date or
not. The bar orders therefore would prohibit all litigation
relating to Stanford described herein, including not only the
Actions and any pending matters but also any actions that may be
brought in the future. Final Court approval of these bar orders is
a condition of the Settlement.
The Settlement Agreement is also subject to notice to Stanford’s
investor claimants (which has been provided) and final,
non-appealable approval by the U.S. District Court for the Northern
District of Texas. While TNB believes that the Settlement Agreement
is consistent with the terms of prior Stanford-related settlements
that have been approved by the Court and were not successfully
appealed, it is possible that the Court’s approval of the
Settlement Agreement (which has occurred, as described further
below) may not be upheld on appeal.
The Settlement Agreement also provides that TNB denies and makes
no admission of liability or wrongdoing in connection with any
Stanford matter. As has been the case throughout the pendency of
the Actions, TNB expressly denies any liability or wrongdoing with
respect to any matter alleged in regard to the multi-billion-dollar
Ponzi scheme operated by Stanford for almost 20 years. TNB’s
relationship with Stanford began as a result of TNB’s acquisition
of a Houston-based bank in August 2006, and consisted of ordinary
banking services provided to business deposit customers.
The foregoing description of the terms of the Settlement
Agreement does not purport to be complete and is qualified in its
entirety by reference to the full text of the Settlement Agreement,
a copy of which is filed as Exhibit 10.ai to the 2022 Annual Report
and is incorporated herein by reference.
On January 20, 2023, the U.S. District Court for the Northern
District of Texas entered an order preliminarily finding that the
Settlement is fair, reasonable, and equitable; has no obvious
deficiencies; and is the product of serious, informed, good faith,
and arm’s-length negotiations. Following the provision of notice as
required by the Settlement Agreement and by the Court’s preliminary
order, the Court (Judge David C. Godbey, presiding) held a Final
Approval Hearing on May 3, 2023, at which the Court approved the
Settlement from the bench. On May 4, 2023, Judge Godbey signed the
written orders confirming his oral ruling, including the bar order
contemplated by the Settlement Agreement and the judgment and bar
order with respect to the Jackson Action.
On May 11, 2023, Robert Allen Stanford, writing from prison,
appealed the District Court’s approval of the Settlement to the
Fifth Circuit Court of Appeals. On June 12, 2023, the Receiver
moved to dismiss the appeal as frivolous. That motion is now fully
briefed and awaiting the Fifth Circuit’s decision.
The Settlement will become effective when the Fifth Circuit’s
ruling in favor of the approval of the Settlement becomes final and
non-appealable (the Settlement Effective Date). Within five days of
the Settlement Effective Date, the parties to the Rotstain and
Smith Actions will file agreed dismissals of those cases. Absent
any further appeal in either of the Rotstain or Smith Actions,
those dismissals will become final 30 days after entered and signed
by the respective judges. TNB will be required to make the
Settlement payment within 30 days after those dismissals become
final. Any further appeal of any of the orders described above
would delay the making of the Settlement payment.
Pending the resolution of the settlement approval process, the
Rotstain, Smith and Jackson Actions are stayed.
TNB and Trustmark Corporation determined that it was in the best
interest of TNB, Trustmark Corporation and the shareholders of
Trustmark Corporation to enter into the Settlement and the
Settlement Agreement to eliminate the risk, ongoing expense,
uncertainty as to ultimate outcome, and imposition on management
and the business of TNB of further litigation of the Actions and
related Stanford claims.
At the time of the entry into the Settlement, Trustmark
Corporation recognized $100.0 million of litigation settlement
expense, as well as an additional $750 thousand in legal fees,
which were included in noninterest expense related to the Stanford
litigation during the fourth quarter of 2022. Trustmark Corporation
expects that the Settlement will be tax deductible. Trustmark
Corporation and TNB remain substantially above levels considered to
be well-capitalized under all relevant standards.
TRUSTMARK CORPORATION AND
SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIALS
June 30, 2023
($ in thousands)
(unaudited)
Note 2 - Securities Available for Sale and Held to
Maturity
The following table is a summary of the estimated fair value of
securities available for sale and the amortized cost of securities
held to maturity:
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
SECURITIES
AVAILABLE FOR SALE
U.S. Treasury securities
$
362,966
$
386,903
$
391,513
$
416,278
$
419,696
U.S. Government agency obligations
6,999
7,254
7,766
9,116
11,947
Obligations of states and political
subdivisions
4,813
4,907
4,862
4,763
5,179
Mortgage-backed securities
Residential mortgage pass-through
securities
Guaranteed by GNMA
25,336
26,851
27,097
28,164
32,240
Issued by FNMA and FHLMC
1,250,435
1,317,848
1,345,463
1,718,057
1,888,546
Other residential mortgage-backed
securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
98,388
108,192
115,140
126,138
144,158
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
122,946
132,207
132,241
141,970
142,598
Total securities available for sale
$
1,871,883
$
1,984,162
$
2,024,082
$
2,444,486
$
2,644,364
SECURITIES HELD
TO MATURITY
U.S. Treasury securities
$
28,679
$
28,486
$
28,295
$
—
$
—
Obligations of states and political
subdivisions
1,180
4,507
4,510
4,512
5,320
Mortgage-backed securities
Residential mortgage pass-through
securities
Guaranteed by GNMA
13,235
4,336
4,442
4,527
4,624
Issued by FNMA and FHLMC
484,679
497,854
509,311
179,375
185,554
Other residential mortgage-backed
securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
171,002
179,334
188,201
197,923
210,479
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
759,890
759,821
759,755
770,648
731,777
Total securities held to maturity
$
1,458,665
$
1,474,338
$
1,494,514
$
1,156,985
$
1,137,754
During the fourth quarter of 2022, Trustmark reclassified $422.9
million of securities available for sale to securities held to
maturity. The securities were transferred at fair value, which
became the cost basis for the securities held to maturity. At the
date of transfer, the net unrealized holding loss on the available
for sale securities totaled approximately $57.1 million ($42.8
million, net of tax). The net unrealized holding loss will be
amortized over the remaining life of the securities as a yield
adjustment in a manner consistent with the amortization or
accretion of the original purchase premium or discount on the
associated security. There were no gains or losses recognized as a
result of the transfer.
During the second quarter of 2022, Trustmark reclassified $343.1
million of securities available for sale to securities held to
maturity. The securities were transferred at fair value, which
became the cost basis for the securities held to maturity. At the
date of transfer, the net unrealized holding loss on the available
for sale securities totaled approximately $34.8 million ($26.1
million, net of tax). The net unrealized holding loss will be
amortized over the remaining life of the securities as a yield
adjustment in a manner consistent with the amortization or
accretion of the original purchase premium or discount on the
associated security. There were no gains or losses recognized as a
result of the transfer.
At June 30, 2023, the net unamortized, unrealized loss included
in accumulated other comprehensive income (loss) in the
accompanying balance sheet for securities held to maturity
transferred from securities available for sale totaled $63.4
million.
Management continues to focus on asset quality as one of the
strategic goals of the securities portfolio, which is evidenced by
the investment of 99.8% of the portfolio in GSE-backed obligations
and other Aaa rated securities as determined by Moody’s. None of
the securities owned by Trustmark are collateralized by assets
which are considered sub-prime. Furthermore, outside of stock
ownership in the Federal Home Loan Bank of Dallas, Federal Home
Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not
hold any other equity investment in a GSE.
TRUSTMARK CORPORATION AND
SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIALS
June 30, 2023
($ in thousands)
(unaudited)
Note 3 – Loan Composition
LHFI consisted of the following during the periods
presented:
LHFI BY
TYPE
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
Loans secured by real estate:
Construction, land development and other
land loans
$
1,722,657
$
1,723,772
$
1,719,542
$
1,647,395
$
1,440,058
Secured by 1-4 family residential
properties
2,854,182
2,822,048
2,775,847
2,597,112
2,424,962
Secured by nonfarm, nonresidential
properties
3,471,728
3,375,579
3,278,830
3,206,946
3,178,079
Other real estate secured
954,410
847,527
742,538
593,119
555,311
Commercial and industrial loans
1,883,480
1,882,360
1,821,259
1,689,532
1,551,001
Consumer loans
163,788
162,911
166,425
163,412
160,716
State and other political subdivision
loans
1,111,710
1,193,727
1,223,863
1,188,703
1,110,795
Other loans
452,012
489,271
475,735
499,845
523,918
LHFI
12,613,967
12,497,195
12,204,039
11,586,064
10,944,840
ACL LHFI
(129,298
)
(122,239
)
(120,214
)
(115,050
)
(103,140
)
Net LHFI
$
12,484,669
$
12,374,956
$
12,083,825
$
11,471,014
$
10,841,700
The following table presents the LHFI composition by region and
reflects each region’s diversified mix of loans:
June 30, 2023
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
$
1,722,657
$
817,793
$
54,845
$
395,489
$
30,387
$
424,143
Secured by 1-4 family residential
properties
2,854,182
136,612
51,817
2,555,191
83,409
27,153
Secured by nonfarm, nonresidential
properties
3,471,728
954,604
225,437
1,471,341
159,402
660,944
Other real estate secured
954,410
379,984
1,805
294,497
7,376
270,748
Commercial and industrial loans
1,883,480
576,345
25,686
750,161
257,002
274,286
Consumer loans
163,788
23,925
8,354
101,026
19,411
11,072
State and other political subdivision
loans
1,111,710
77,931
61,148
805,342
25,596
141,693
Other loans
452,012
110,395
9,963
219,075
48,806
63,773
Loans
$
12,613,967
$
3,077,589
$
439,055
$
6,592,122
$
631,389
$
1,873,812
CONSTRUCTION,
LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots
$
69,120
$
29,517
$
10,179
$
14,955
$
4,362
$
10,107
Development
130,166
55,946
1,366
36,602
7,465
28,787
Unimproved land
96,994
20,854
13,859
29,651
4,564
28,066
1-4 family construction
353,056
191,964
17,325
94,139
13,996
35,632
Other construction
1,073,321
519,512
12,116
220,142
—
321,551
Construction, land development and other
land loans
$
1,722,657
$
817,793
$
54,845
$
395,489
$
30,387
$
424,143
(1) Includes Georgia Loan Production
Office.
TRUSTMARK CORPORATION AND
SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIALS
June 30, 2023
($ in thousands)
(unaudited)
Note 3 – Loan Composition (continued)
June 30, 2023
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
$
363,101
$
125,094
$
26,313
$
123,940
$
20,570
$
67,184
Office
275,841
102,162
16,822
86,818
2,152
67,887
Hotel/motel
298,632
167,641
50,344
53,705
26,942
—
Mini-storage
144,253
23,282
2,002
99,182
464
19,323
Industrial
375,366
89,226
18,416
103,343
9,976
154,405
Health care
70,788
41,098
—
26,846
338
2,506
Convenience stores
32,385
7,207
438
14,279
572
9,889
Nursing homes/senior living
471,414
174,609
—
201,391
5,249
90,165
Other
132,613
44,071
9,381
60,170
8,655
10,336
Total non-owner occupied loans
2,164,393
774,390
123,716
769,674
74,918
421,695
Owner-occupied:
Office
153,392
45,525
36,517
43,905
9,906
17,539
Churches
67,325
16,766
4,394
37,537
6,069
2,559
Industrial warehouses
164,540
16,056
4,571
41,402
17,487
85,024
Health care
146,007
10,420
6,141
108,638
2,305
18,503
Convenience stores
149,551
11,834
33,888
68,713
215
34,901
Retail
88,837
11,270
9,271
40,320
18,849
9,127
Restaurants
54,460
4,191
3,925
31,241
11,844
3,259
Auto dealerships
45,878
6,151
213
22,307
17,207
—
Nursing homes/senior living
301,226
44,709
—
230,317
—
26,200
Other
136,119
13,292
2,801
77,287
602
42,137
Total owner-occupied loans
1,307,335
180,214
101,721
701,667
84,484
239,249
Loans secured by nonfarm, nonresidential
properties
$
3,471,728
$
954,604
$
225,437
$
1,471,341
$
159,402
$
660,944
(1) Includes Georgia Loan Production
Office.
Note 4 – Yields on Earning Assets and Interest-Bearing
Liabilities
The following table illustrates the yields on earning assets by
category as well as the rates paid on interest-bearing liabilities
on a tax equivalent basis:
Quarter Ended
Six Months Ended
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
6/30/2023
6/30/2022
Securities – taxable
1.87
%
1.85
%
1.71
%
1.62
%
1.50
%
1.86
%
1.44
%
Securities – nontaxable
4.25
%
4.00
%
3.95
%
3.97
%
4.00
%
4.10
%
3.98
%
Securities – total
1.87
%
1.86
%
1.72
%
1.63
%
1.50
%
1.87
%
1.44
%
PPP loans
—
—
12.39
%
7.51
%
4.16
%
—
3.04
%
Loans - LHFI & LHFS
6.08
%
5.79
%
5.27
%
4.48
%
3.79
%
5.94
%
3.69
%
Loans - total
6.08
%
5.79
%
5.27
%
4.48
%
3.79
%
5.94
%
3.69
%
Fed funds sold & reverse
repurchases
5.51
%
5.11
%
4.29
%
3.51
%
3.65
%
5.35
%
2.43
%
Other earning assets
5.36
%
4.09
%
3.76
%
1.82
%
0.78
%
4.81
%
0.41
%
Total earning assets
5.16
%
4.87
%
4.40
%
3.71
%
3.01
%
5.02
%
2.85
%
Interest-bearing deposits
1.96
%
1.53
%
0.71
%
0.20
%
0.11
%
1.75
%
0.11
%
Fed funds purchased & repurchases
5.01
%
4.49
%
3.44
%
1.95
%
0.24
%
4.73
%
0.17
%
Other borrowings
5.12
%
4.87
%
3.73
%
2.89
%
2.52
%
5.01
%
2.39
%
Total interest-bearing liabilities
2.42
%
1.98
%
1.03
%
0.31
%
0.17
%
2.20
%
0.17
%
Total Deposits
1.48
%
1.13
%
0.51
%
0.14
%
0.07
%
1.31
%
0.07
%
Net interest margin
3.33
%
3.39
%
3.66
%
3.50
%
2.90
%
3.36
%
2.74
%
Net interest margin excluding PPP loans
and the FRB balance
3.23
%
3.36
%
3.66
%
3.53
%
3.06
%
3.30
%
2.97
%
TRUSTMARK CORPORATION AND
SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIALS
June 30, 2023
($ in thousands)
(unaudited)
Note 4 – Yields on Earning Assets and Interest-Bearing
Liabilities (continued)
Reflected in the table above are yields on earning assets and
liabilities, along with the net interest margin which equals
reported net interest income-FTE, annualized, as a percent of
average earning assets. In addition, the table includes net
interest margin excluding PPP loans and the balance held at the
Federal Reserve Bank of Atlanta (FRB), which equals reported net
interest income-FTE excluding interest income on PPP loans and the
FRB balance, annualized, as a percent of average earning assets
excluding average PPP loans and the FRB balance.
For the second quarter of 2023, the average FRB balance totaled
$777.0 million compared to $555.5 million for the first quarter of
2023 and is included in other earning assets in the accompanying
average consolidated balance sheets.
The net interest margin excluding PPP loans and the FRB balance
decreased 13 basis points when compared to the first quarter of
2023, totaling 3.23% for the second quarter of 2023. The decrease
in the net interest margin excluding PPP loans and the FRB balance
was due to increased costs of interest-bearing deposits, which was
partially offset by increases in the yields on the loans held for
investment and held for sale portfolio and the securities
portfolio.
Note 5 – Mortgage Banking
Trustmark utilizes a portfolio of exchange-traded derivative
instruments, such as Treasury note futures contracts and option
contracts, to achieve a fair value return that offsets the changes
in fair value of mortgage servicing rights (MSR) attributable to
interest rates. These transactions are considered freestanding
derivatives that do not otherwise qualify for hedge accounting
under generally accepted accounting principles (GAAP). Changes in
the fair value of these exchange-traded derivative instruments,
including administrative costs, are recorded in noninterest income
in mortgage banking, net and are offset by the changes in the fair
value of the MSR. The MSR fair value represents the present value
of future cash flows, which among other things includes decay and
the effect of changes in interest rates. Ineffectiveness of hedging
the MSR fair value is measured by comparing the change in value of
hedge instruments to the change in the fair value of the MSR asset
attributable to changes in interest rates and other market driven
changes in valuation inputs and assumptions. The impact of this
strategy resulted in a net negative hedge ineffectiveness of $1.3
million during the second quarter of 2023.
The following table illustrates the components of mortgage
banking revenues included in noninterest income in the accompanying
income statements:
Quarter Ended
Six Months Ended
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
6/30/2023
6/30/2022
Mortgage servicing income, net
$
6,764
$
6,785
$
6,636
$
6,669
$
6,557
$
13,549
$
12,986
Change in fair value-MSR from runoff
(2,710
)
(1,145
)
(2,981
)
(3,462
)
(3,806
)
(3,855
)
(7,591
)
Gain on sales of loans, net
3,887
3,797
3,328
4,597
6,030
7,684
12,253
Mortgage banking income before hedge
ineffectiveness
7,941
9,437
6,983
7,804
8,781
17,378
17,648
Change in fair value-MSR from market
changes
5,898
(3,972
)
(3,348
)
10,770
8,739
1,926
30,759
Change in fair value of derivatives
(7,239
)
2,174
(227
)
(11,698
)
(9,371
)
(5,065
)
(30,385
)
Net positive (negative) hedge
ineffectiveness
(1,341
)
(1,798
)
(3,575
)
(928
)
(632
)
(3,139
)
374
Mortgage banking, net
$
6,600
$
7,639
$
3,408
$
6,876
$
8,149
$
14,239
$
18,022
TRUSTMARK CORPORATION AND
SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIALS
June 30, 2023
($ in thousands)
(unaudited)
Note 6 – Other Noninterest Income and Expense
Other noninterest income consisted of the following for the
periods presented:
Quarter Ended
Six Months Ended
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
6/30/2023
6/30/2022
Partnership amortization for tax credit
purposes
$
(2,019
)
$
(1,961
)
$
(1,869
)
$
(1,531
)
$
(1,475
)
$
(3,980
)
$
(2,811
)
Increase in life insurance cash surrender
value
1,716
1,693
1,687
1,676
1,683
3,409
3,310
Other miscellaneous income
3,998
2,782
2,493
2,273
1,699
6,780
4,614
Total other, net
$
3,695
$
2,514
$
2,311
$
2,418
$
1,907
$
6,209
$
5,113
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
Six Months Ended
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
6/30/2023
6/30/2022
Loan expense (1)
$
3,066
$
2,538
$
2,908
$
2,866
$
2,947
$
5,604
$
6,475
Amortization of intangibles
130
288
312
312
328
418
810
FDIC assessment expense
2,550
2,370
2,130
1,945
1,810
4,920
3,310
Other real estate expense, net
171
172
18
497
623
343
658
Other miscellaneous expense
8,585
9,443
9,767
8,117
7,782
18,028
15,717
Total other expense (1)
$
14,502
$
14,811
$
15,135
$
13,737
$
13,490
$
29,313
$
26,970
(1) During the first quarter of 2023,
Trustmark reclassified its debit card transaction fees from other
expense to services and fees. Prior periods have been reclassified
accordingly.
Note 7 – Non-GAAP Financial Measures
In addition to capital ratios defined by GAAP and banking
regulators, Trustmark utilizes various tangible common equity
measures when evaluating capital utilization and adequacy. Tangible
common equity, as defined by Trustmark, represents common equity
less goodwill and identifiable intangible assets. Trustmark’s
Common Equity Tier 1 capital includes common stock, capital surplus
and retained earnings, and is reduced by goodwill and other
intangible assets, net of associated net deferred tax liabilities
as well as disallowed deferred tax assets and threshold deductions
as applicable.
Trustmark believes these measures are important because they
reflect the level of capital available to withstand unexpected
market conditions. Additionally, presentation of these measures
allows readers to compare certain aspects of Trustmark’s
capitalization to other organizations. These ratios differ from
capital measures defined by banking regulators principally in that
the numerator excludes shareholders’ equity associated with
preferred securities, the nature and extent of which varies across
organizations. In Management’s experience, many stock analysts use
tangible common equity measures in conjunction with more
traditional bank capital ratios to compare capital adequacy of
banking organizations with significant amounts of goodwill or other
intangible assets, typically stemming from the use of the purchase
accounting method in accounting for mergers and acquisitions.
These calculations are intended to complement the capital ratios
defined by GAAP and banking regulators. Because GAAP does not
include these capital ratio measures, Trustmark believes there are
no comparable GAAP financial measures to these tangible common
equity ratios. Despite the importance of these measures to
Trustmark, there are no standardized definitions for them and, as a
result, Trustmark’s calculations may not be comparable with other
organizations. Also, there may be limits in the usefulness of these
measures to investors. As a result, Trustmark encourages readers to
consider its audited consolidated financial statements and the
notes related thereto in their entirety and not to rely on any
single financial measure.
TRUSTMARK CORPORATION AND
SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIALS
June 30, 2023
($ in thousands except per share
data)
(unaudited)
Note 7 – Non-GAAP Financial Measures (continued)
Quarter Ended
Six Months Ended
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
6/30/2023
6/30/2022
TANGIBLE
EQUITY
AVERAGE BALANCES
Total shareholders' equity
$
1,580,291
$
1,523,828
$
1,493,291
$
1,606,469
$
1,608,309
$
1,552,215
$
1,660,739
Less: Goodwill
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
Identifiable intangible assets
(3,301
)
(3,523
)
(3,816
)
(4,131
)
(4,436
)
(3,411
)
(4,656
)
Total average tangible equity
$
1,192,753
$
1,136,068
$
1,105,238
$
1,218,101
$
1,219,636
$
1,164,567
$
1,271,846
PERIOD END BALANCES
Total shareholders' equity
$
1,571,193
$
1,562,099
$
1,492,268
$
1,508,945
$
1,586,696
Less: Goodwill
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
Identifiable intangible assets
(3,222
)
(3,352
)
(3,640
)
(3,952
)
(4,264
)
Total tangible equity
(a)
$
1,183,734
$
1,174,510
$
1,104,391
$
1,120,756
$
1,198,195
TANGIBLE
ASSETS
Total assets
$
18,422,626
$
18,877,178
$
18,015,478
$
17,190,634
$
16,951,510
Less: Goodwill
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
Identifiable intangible assets
(3,222
)
(3,352
)
(3,640
)
(3,952
)
(4,264
)
Total tangible assets
(b)
$
18,035,167
$
18,489,589
$
17,627,601
$
16,802,445
$
16,563,009
Risk-weighted assets
(c)
$
14,966,614
$
14,793,893
$
14,521,078
$
13,748,819
$
13,076,981
NET INCOME (LOSS)
ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income (loss)
$
45,037
$
50,300
$
(34,063
)
$
42,455
$
34,284
$
95,337
$
63,495
Plus: Intangible amortization net of
tax
97
216
234
234
246
313
608
Net income (loss) adjusted for intangible
amortization
$
45,134
$
50,516
$
(33,829
)
$
42,689
$
34,530
$
95,650
$
64,103
Period end common shares outstanding
(d)
61,069,036
61,048,516
60,977,686
60,953,864
61,201,123
TANGIBLE COMMON
EQUITY MEASUREMENTS
Return on average tangible equity (1)
15.18
%
18.03
%
-12.14
%
13.90
%
11.36
%
16.56
%
10.16
%
Tangible equity/tangible assets
(a)/(b)
6.56
%
6.35
%
6.27
%
6.67
%
7.23
%
Tangible equity/risk-weighted assets
(a)/(c)
7.91
%
7.94
%
7.61
%
8.15
%
9.16
%
Tangible book value
(a)/(d)*1,000
$
19.38
$
19.24
$
18.11
$
18.39
$
19.58
COMMON EQUITY
TIER 1 CAPITAL (CET1)
Total shareholders' equity
$
1,571,193
$
1,562,099
$
1,492,268
$
1,508,945
$
1,586,696
CECL transition adjustment
13,000
13,000
19,500
19,500
19,500
AOCI-related adjustments
265,704
242,381
275,403
306,412
207,142
CET1 adjustments and deductions:
Goodwill net of associated deferred
tax liabilities (DTLs)
(370,227
)
(370,234
)
(370,241
)
(370,217
)
(370,229
)
Other adjustments and deductions
for CET1 (2)
(2,915
)
(3,275
)
(3,258
)
(3,506
)
(3,757
)
CET1 capital
(e)
1,476,755
1,443,971
1,413,672
1,461,134
1,439,352
Additional tier 1 capital instruments
plus related surplus
60,000
60,000
60,000
60,000
60,000
Tier 1 capital
$
1,536,755
$
1,503,971
$
1,473,672
$
1,521,134
$
1,499,352
Common equity tier 1 capital ratio
(e)/(c)
9.87
%
9.76
%
9.74
%
10.63
%
11.01
%
(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
June 30, 2023
($ in thousands)
(unaudited)
Note 7 – Non-GAAP Financial Measures (continued)
Trustmark discloses certain non-GAAP financial measures because
Management uses these measures for business planning purposes,
including to manage Trustmark’s business against internal projected
results of operations and to measure Trustmark’s performance.
Trustmark views these as measures of our core operating business,
which exclude the impact of the items detailed below, as these
items are generally not operational in nature. These non-GAAP
financial measures also provide another basis for comparing
period-to-period results as presented in the accompanying selected
financial data table and the audited consolidated financial
statements by excluding potential differences caused by
non-operational and unusual or non-recurring items. Readers are
cautioned that these adjustments are not permitted under GAAP.
Trustmark encourages readers to consider its consolidated financial
statements and the notes related thereto in their entirety, and not
to rely on any single financial measure.
The following table presents pre-provision net revenue (PPNR)
during the periods presented:
Quarter Ended
Six Months Ended
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
6/30/2023
6/30/2022
Net interest income (GAAP)
$
139,904
$
137,595
$
146,583
$
136,105
$
112,676
$
277,499
$
212,020
Noninterest income (GAAP)
53,553
51,377
45,170
52,606
53,253
104,930
107,368
Pre-provision revenue
(a)
$
193,457
$
188,972
$
191,753
$
188,711
$
165,929
$
382,429
$
319,388
Noninterest expense (GAAP)
$
132,218
$
128,327
$
231,229
$
126,698
$
123,767
$
260,545
$
245,286
Less: Litigation settlement expense
—
—
(100,750
)
—
—
—
—
Adjusted noninterest expense - PPNR
(Non-GAAP)
(b)
$
132,218
$
128,327
$
130,479
$
126,698
$
123,767
$
260,545
$
245,286
PPNR (Non-GAAP)
(a)-(b)
$
61,239
$
60,645
$
61,274
$
62,013
$
42,162
$
121,884
$
74,102
The following table presents Trustmark’s calculation of its
efficiency ratio for the periods presented:
Quarter Ended
Six Months Ended
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
6/30/2023
6/30/2022
Total noninterest expense (GAAP)
$
132,218
$
128,327
$
231,229
$
126,698
$
123,767
$
260,545
$
245,286
Less: Other real estate expense, net
(171
)
(172
)
(18
)
(497
)
(623
)
(343
)
(658
)
Amortization of intangibles
(130
)
(288
)
(312
)
(312
)
(328
)
(418
)
(810
)
Charitable contributions resulting in
state tax credits
(325
)
(325
)
(375
)
(375
)
(375
)
(650
)
(750
)
Litigation settlement expense
—
—
(100,750
)
—
—
—
—
Adjusted noninterest expense
(Non-GAAP)
(c)
$
131,592
$
127,542
$
129,774
$
125,514
$
122,441
$
259,134
$
243,068
Net interest income (GAAP)
$
139,904
$
137,595
$
146,583
$
136,105
$
112,676
$
277,499
$
212,020
Add: Tax equivalent adjustment
3,383
3,477
3,451
2,975
2,916
6,860
5,919
Net interest income-FTE (Non-GAAP)
(a)
$
143,287
$
141,072
$
150,034
$
139,080
$
115,592
$
284,359
$
217,939
Noninterest income (GAAP)
$
53,553
$
51,377
$
45,170
$
52,606
$
53,253
$
104,930
$
107,368
Add: Partnership amortization for tax
credit purposes
2,019
1,961
1,869
1,531
1,475
3,980
2,811
Adjusted noninterest income (Non-GAAP)
(b)
$
55,572
$
53,338
$
47,039
$
54,137
$
54,728
$
108,910
$
110,179
Adjusted revenue (Non-GAAP)
(a)+(b)
$
198,859
$
194,410
$
197,073
$
193,217
$
170,320
$
393,269
$
328,118
Efficiency ratio (Non-GAAP)
(c)/((a)+(b))
66.17
%
65.60
%
65.85
%
64.96
%
71.89
%
65.89
%
74.08
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230725007677/en/
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
Grafico Azioni Trustmark (NASDAQ:TRMK)
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Da Feb 2025 a Mar 2025
Grafico Azioni Trustmark (NASDAQ:TRMK)
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Da Mar 2024 a Mar 2025
