Trustmark Corporation Announces Third Quarter 2020 Financial Results

·15 min read

Performance reflects value of diversified financial services businesses

Trustmark Corporation (Nasdaq:TRMK) reported net income of $54.4 million in the third quarter of 2020, representing diluted earnings per share of $0.86. This level of earnings resulted in a return on average tangible equity of 16.82% and a return on average assets of 1.37%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable December 15, 2020, to shareholders of record on December 1, 2020.

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Third Quarter Highlights

  • Pre-tax, pre-provision income totaled $62.9 million, a linked-quarter increase of 1.4% and year-over-year increase of 26.0%. Please refer to the Consolidated Financial Information, Footnote 9 – Non-GAAP Financial Measures.

  • Noninterest income represented 41.0% of revenue in the third quarter and increased 6.0% from the prior quarter

  • Maintained strong capital position with CET1 ratio of 11.36% and total risk-based capital ratio of 12.88%

Gerard R. Host, Chairman and CEO, stated, "Our third quarter results demonstrate the value of our diversified financial services businesses with strong performance in both our banking and noninterest lines of business. Loans held for investment increased 6.8% year-over-year, and mortgage loan production was up over 56% year-over-year. We experienced significant year-over-year growth in pre-tax, pre-provision income, and we maintained our solid capital base and liquidity position. Trustmark remains committed to ensuring the safety of customers and associates and supporting local economies in this challenging environment. We continue to focus on serving customers and creating long-term value for shareholders."

Balance Sheet Management

  • Loans held for investment increased $187.9 million from the prior quarter and $624.1 million year-over-year

  • Gross PPP loans totaled $970.0 million at September 30, 2020

  • Noninterest bearing deposits increased $83.5 million linked-quarter and represented 30.0% of total deposits at September 30, 2020

Loans held for investment totaled $9.8 billion at September 30, 2020, reflecting an increase of 1.9% linked-quarter and 6.8% year-over-year. The linked-quarter growth was driven primarily by construction and development loans and commercial real estate loans. At September 30, 2020, Trustmark’s gross Paycheck Protection Program (PPP) loans totaled $970.0 million. Net of deferred fees and costs of $25.7 million, PPP loans totaled $944.3 million. Collectively, loans held for investment and PPP loans totaled $10.8 billion at the end of the third quarter of 2020.

Deposits totaled $13.2 billion at September 30, 2020, down $283.1 million, or 2.1%, from the prior quarter. However, deposits are up $2.0 billion, or 17.5%, year-over-year primarily reflecting the impact of additional customer liquidity associated with PPP loans and government stimulus payments. Interest-bearing deposit costs totaled 0.31% for the third quarter, a decrease of 6 basis points linked-quarter. Trustmark continues to maintain an attractive, low-cost deposit base with approximately 62% of deposit balances in checking accounts. The total cost of interest-bearing liabilities was 0.33% for the third quarter of 2020, a decrease of 6 basis points from the prior quarter.

Trustmark’s capital position remained solid, reflecting the strength and diversity of its financial services businesses. At September 30, 2020, Trustmark’s tangible equity to tangible assets ratio was 8.68%, while the total risk-based capital ratio was 12.88%.

Credit Quality

  • Allowance for credit losses represented 1.24% of loans held for investment and 593.72% of nonperforming loans, excluding individually evaluated loans

  • Net recoveries totaled $1.1 million in the third quarter

  • Other real estate declined 11.1% from the prior quarter and 49.2% year-over-year

  • Approximately 2% of the loans held for investment portfolio remained under a concession at September 30, 2020

Allocation of Trustmark's $122.0 million allowance for credit losses on loans held for investment represented 1.20% of commercial loans and 1.41% of consumer and home mortgage loans, resulting in an allowance for credit losses to total loans held for investment of 1.24% at September 30, 2020, representing a level management considers commensurate with the present risk in the loan portfolio. Trustmark recorded a provision for credit losses of $1.8 million in the third quarter.

Nonperforming loans totaled $53.9 million at September 30, 2020, up $3.9 million from the prior quarter and down $5.2 million year-over-year. Other real estate totaled $16.2 million, reflecting a $2.0 million decrease from the prior quarter and down $15.7 million from the prior year. Collectively, nonperforming assets totaled $70.1 million, reflecting a linked-quarter increase of $1.8 million and a year-over-year decrease of $20.9 million.

Revenue Generation

  • Revenue in the third quarter, excluding interest and fees on PPP loans, totaled $173.2 million, up 2.2% from the prior quarter and 12.1% year-over-year

  • Noninterest income totaled $73.7 million in the third quarter, up 6.0% from the prior quarter and 52.5% year-over-year

  • Mortgage loan production in the third quarter totaled $885.8 million, an increase of 3.8% from the prior quarter and a 56.5% increase year-over-year

Revenue in the third quarter totaled $179.9 million, up 3.1% from the prior quarter and up 14.7% from the same quarter in the prior year. Excluding $6.7 million of interest and fees on PPP loans, revenue totaled $173.2 million in the third quarter, up 2.2% from the prior quarter and up 12.1% year-over-year. The linked-quarter and year-over-year changes primarily reflect higher noninterest income. Net interest income (FTE) in the third quarter totaled $109.2 million, resulting in a net interest margin of 3.03%. Excluding PPP loans, the net interest margin totaled 3.05%, a linked-quarter decline of 9 basis points. Continued low interest rates decreased the yield on the loans held for investment and held for sale portfolio as well as the securities portfolio and were partially offset by lower costs of interest-bearing deposits. Relative to the prior quarter, net interest income (FTE) increased $1.2 million as a $327 thousand reduction in interest income was more than offset by a $1.5 million reduction in interest expense.

Noninterest income in the third quarter totaled $73.7 million, an increase of $4.2 million from the prior quarter and an increase of $25.4 million year-over-year. The linked-quarter change reflects increases in mortgage banking revenue, service charges on deposit accounts and bank card and other fees. Mortgage banking revenue before hedge ineffectiveness totaled $35.6 million in the third quarter, in line with the prior quarter. Third quarter results include $815 thousand in positive net hedge ineffectiveness. Mortgage loan production in the third quarter totaled $885.8 million, up $32.5 million from the prior quarter and $319.6 million from the same period in the prior year. Gain on sale of loans, net totaled $34.5 million in the third quarter, up $394 thousand from the prior quarter. Mortgage banking revenue totaled $36.4 million in the third quarter, up $2.7 million from the prior quarter and $28.3 million from the same period in the prior year.

Insurance revenue totaled $11.6 million in the third quarter, a seasonal decline of 2.6% from the prior quarter and an increase of 4.4% year-over-year due to higher property and casualty commissions. Wealth management revenue in the third quarter totaled $7.7 million, in line with the prior quarter and the same period in the prior year as increases in brokerage and investment services were offset by a decline in trust management fees.

Bank card and other fees increased $1.1 million, or 14.6%, from the prior quarter, reflecting higher customer derivative revenue and interchange income. Service charges on deposit accounts increased $1.2 million, or 18.4%, from the prior quarter as customers gradually returned to more normal pre-pandemic activities.

Noninterest Expense

  • Total expenses were $114.0 million in the third quarter, down $4.7 million, or 4.0%, from the prior quarter

  • Adjusted expenses, which excludes amortization of intangibles, ORE expense and credit losses for off-balance sheet credit exposures, increased $3.6 million, or 3.2%, from the prior quarter. Please refer to the Consolidated Financial Information, Footnote 9 – Non-GAAP Financial Measures.

Adjusted noninterest expenses totaled $114.6 million for the third quarter, representing an increase of 3.2% from the prior quarter. Salaries and employee benefits increased $1.2 million due to increases in salaries, commissions, and performance-based incentives. Services and fees increased due to continued investment in technology. Net occupancy-premises experienced a normal seasonal increase. Other adjusted noninterest expenses rose $1.5 million principally due to loan expense related to loan volumes and a non-cash charge for the realignment of branch offices.

In the third quarter, the credit loss expense related to off-balance sheet exposures was a negative $3.0 million, a decline of $9.2 million from the prior quarter. The decline primarily reflects improvement of the macroeconomic factors used to determine the necessary reserves for off-balance sheet exposures. Other real estate expense, net increased $932 thousand primarily due to write-downs. Total expenses for the third quarter declined $4.7 million, or 4.0%, from the prior quarter, as the decline in credit loss expense was partially offset by an increase in adjusted noninterest expense.

Trustmark continues to focus on identifying efficiency opportunities in operations and delivery channels as well as utilizing technology solutions to streamline processes and improve the customer experience. Year-to-date, Trustmark has consolidated six offices across the franchise. In addition, Trustmark is in the process of converting select drive-thru only branches to interactive teller machines which will provide extended hours for additional customer convenience while reducing servicing costs. Trustmark remains committed to investments to promote profitable revenue growth and reallocating resources to reflect changing customer preferences.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, October 28, 2020 at 8:30 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (877) 317-3051 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Wednesday, November 11, 2020, in archived format at the same web address or by calling (877) 344-7529, passcode 10148374.

Trustmark is a financial services company providing banking and financial solutions through 187 offices in Alabama, Florida, Mississippi, Tennessee and Texas.

Forward-Looking Statements

Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as "may," "hope," "will," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "project," "potential," "seek," "continue," "could," "would," "future" or the negative of those terms or other words of similar meaning. You should read statements that contain these words carefully because they discuss our future expectations or state other "forward-looking" information. These forward-looking statements include, but are not limited to, statements relating to anticipated future operating and financial performance measures, including net interest margin, credit quality, business initiatives, growth opportunities and growth rates, among other things, and encompass any estimate, prediction, expectation, projection, opinion, anticipation, outlook or statement of belief included therein as well as the management assumptions underlying these forward-looking statements. You should be aware that the occurrence of the events described under the caption "Risk Factors" in Trustmark’s filings with the Securities and Exchange Commission (SEC) could have an adverse effect on our business, results of operations and financial condition. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected. Furthermore, many of these risks and uncertainties are currently amplified by and may continue to be amplified by or may, in the future, be amplified by, the novel coronavirus (COVID-19) pandemic, and also by the effectiveness of varying governmental responses in ameliorating the impact of the pandemic on our customers and the economies where they operate.

Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels and slowdowns in economic growth, the effects of the COVID-19 pandemic on the domestic and global economy, as well as the effectiveness of actions of federal, state and local governments and agencies (including the Board of Governors of the Federal Reserve Board (FRB)) to mitigate its spread and economic impact, local, state and national economic and market conditions, conditions in the housing and real estate markets in the regions in which Trustmark operates and the extent and duration of the current volatility in the credit and financial markets, levels of and volatility in crude oil prices, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility of market interest rates, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, including the potential impact of issues related to the European financial system and monetary and other governmental actions designed to address credit, securities, and/or commodity markets, the enactment of legislation and changes in existing regulations or enforcement practices or the adoption of new regulations, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, particularly with respect to the COVID-19 pandemic, changes in our ability to control expenses, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, cyber-attacks and other breaches which could affect our information system security, natural disasters, environmental disasters, pandemics or other health crises, acts of war or terrorism, and other risks described in our filings with the SEC.

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

TRUSTMARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

September 30, 2020

($ in thousands)

(unaudited)

Linked Quarter

Year over Year

QUARTERLY AVERAGE BALANCES

9/30/2020

6/30/2020

9/30/2019

$ Change

% Change

$ Change

% Change

Securities AFS-taxable

$

1,857,050

$

1,724,320

$

1,570,803

$

132,730

7.7

%

$

286,247

18.2

%

Securities AFS-nontaxable

5,973

9,827

25,096

(3,854

)

-39.2

%

(19,123

)

-76.2

%

Securities HTM-taxable

608,585

655,085

778,098

(46,500

)

-7.1

%

(169,513

)

-21.8

%

Securities HTM-nontaxable

25,508

25,538

26,088

(30

)

-0.1

%

(580

)

-2.2

%

Total securities

2,497,116

2,414,770

2,400,085

82,346

3.4

%

97,031

4.0

%

Paycheck protection program loans (PPP)

941,456

764,416

177,040

23.2

%

941,456

n/m

Loans (includes loans held for sale) (1)

10,162,379

9,908,132

9,436,287

254,247

2.6

%

726,092

7.7

%

Acquired loans (1)

82,641

n/m

(82,641

)

-100.0

%

Fed funds sold and reverse repurchases

301

113

3,662

188

n/m

(3,361

)

-91.8

%

Other earning assets

722,917

854,642

176,163

(131,725

)

-15.4

%

546,754

n/m

Total earning assets

14,324,169

13,942,073

12,098,838

382,096

2.7

%

2,225,331

18.4

%

Allowance for credit losses (ACL), loans held for investment (LHFI) (1)

(121,842

)

(103,006

)

(83,756

)

(18,836

)

-18.3

%

(38,086

)

-45.5

%

Other assets

1,564,825

1,685,317

1,447,977

(120,492

)

-7.1

%

116,848

8.1

%

Total assets

$

15,767,152

$

15,524,384

$

13,463,059

$

242,768

1.6

%

$

2,304,093

17.1

%

Interest-bearing demand deposits

$

3,669,249

$

3,832,372

$

3,085,758

$

(163,123

)

-4.3

%

$

583,491

18.9

%

Savings deposits

4,416,046

4,180,540

3,568,403

235,506

5.6

%

847,643

23.8

%

Time deposits

1,507,348

1,578,737

1,753,083

(71,389

)

-4.5

%

(245,735

)

-14.0

%

Total interest-bearing deposits

9,592,643

9,591,649

8,407,244

994

0.0

%

1,185,399

14.1

%

Fed funds purchased and repurchases

84,077

105,696

142,064

(21,619

)

-20.5

%

(57,987

)

-40.8

%

Other borrowings

167,262

107,533

78,404

59,729

55.5

%

88,858

n/m

Junior subordinated debt securities

61,856

61,856

61,856

0.0

%

0.0

%

Total interest-bearing liabilities

9,905,838

9,866,734

8,689,568

39,104

0.4

%

1,216,270

14.0

%

Noninterest-bearing deposits

3,921,867

3,645,761

2,932,754

276,106

7.6

%

989,113

33.7

%

Other liabilities

244,544

346,173

206,091

(101,629

)

-29.4

%

38,453

18.7

%

Total liabilities

14,072,249

13,858,668

11,828,413

213,581

1.5

%

2,243,836

19.0

%

Shareholders' equity

1,694,903

...

1,665,716

1,634,646

29,187

1.8

%

60,257

3.7

%

Total liabilities and equity

$

15,767,152

$

15,524,384

$

13,463,059

$

242,768

1.6

%

$

2,304,093

17.1

%

(1)

See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.

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

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

September 30, 2020

($ in thousands)

(unaudited)

Linked Quarter

Year over Year

PERIOD END BALANCES

9/30/2020

6/30/2020

9/30/2019

$ Change

% Change

$ Change

% Change

Cash and due from banks

$

564,588

$

1,026,640

$

486,263

$

(462,052

)

-45.0

%

$

78,325

16.1

%

Fed funds sold and reverse repurchases

50

50

n/m

50

n/m

Securities available for sale

1,922,728

1,884,153

1,553,705

38,575

2.0

%

369,023

23.8

%

Securities held to maturity

611,280

660,048

785,422

(48,768

)

-7.4

%

(174,142

)

-22.2

%

PPP loans

944,270

939,783

4,487

0.5

%

944,270

n/m

Loans held for sale (LHFS)

485,103

355,089

292,800

130,014

36.6

%

192,303

65.7

%

Loans held for investment (LHFI) (1)

9,847,728

9,659,806

9,223,668

187,922

1.9

%

624,060

6.8

%

ACL LHFI (1)

(122,010

)

(119,188

)

(83,226

)

(2,822

)

-2.4

%

(38,784

)

-46.6

%

Net LHFI

9,725,718

9,540,618

9,140,442

185,100

1.9

%

585,276

6.4

%

Acquired loans (1)

81,004

n/m

(81,004

)

-100.0

%

Allowance for loan losses, acquired loans (1)

(1,249

)

n/m

1,249

-100.0

%

Net acquired loans

79,755

n/m

(79,755

)

-100.0

%

Net LHFI and acquired loans

9,725,718

9,540,618

9,220,197

185,100

1.9

%

505,521

5.5

%

Premises and equipment, net

192,722

190,567

188,423

2,155

1.1

%

4,299

2.3

%

Mortgage servicing rights

61,613

57,811

73,016

3,802

6.6

%

(11,403

)

-15.6

%

Goodwill

385,270

385,270

379,627

0.0

%

5,643

1.5

%

Identifiable intangible assets

8,142

8,895

8,345

(753

)

-8.5

%

(203

)

-2.4

%

Other real estate

16,248

18,276

31,974

(2,028

)

-11.1

%

(15,726

)

-49.2

%

Operating lease right-of-use assets

30,508

29,819

33,180

689

2.3

%

(2,672

)

-8.1

%

Other assets

609,922

595,110

531,834

14,812

2.5

%

78,088

14.7

%

Total assets

$

15,558,162

$

15,692,079

$

13,584,786

$

(133,917

)

-0.9

%

$

1,973,376

14.5

%

Deposits:

Noninterest-bearing

$

3,964,023

$

3,880,540

$

3,064,127

$

83,483

2.2

%

$

899,896

29.4

%

Interest-bearing

9,258,390

9,624,933

8,190,056

(366,543

)

-3.8

%

1,068,334

13.0

%

Total deposits

13,222,413

13,505,473

11,254,183

(283,060

)

-2.1

%

1,968,230

17.5

%

Fed funds purchased and repurchases

153,834

70,255

376,712

83,579

n/m

(222,878

)

-59.2

%

Other borrowings

178,599

152,860

76,685

25,739

16.8

%

101,914

n/m

Junior subordinated debt securities

61,856

61,856

61,856

0.0

%

0.0

%

ACL on off-balance sheet credit exposures (1)

39,659

42,663

(3,004

)

-7.0

%

39,659

n/m

Operating lease liabilities

31,838

31,076

34,319

762

2.5

%

(2,481

)

-7.2

%

Other liabilities

159,922

153,952

135,669

5,970

3.9

%

24,253

17.9

%

Total liabilities

13,848,121

14,018,135

11,939,424

(170,014

)

-1.2

%

1,908,697

16.0

%

Common stock

13,215

13,214

13,390

1

0.0

%

(175

)

-1.3

%

Capital surplus

231,836

230,613

257,370

1,223

0.5

%

(25,534

)

-9.9

%

Retained earnings

1,459,306

1,419,552

1,395,460

39,754

2.8

%

63,846

4.6

%

Accum other comprehensive income (loss), net of tax

5,684

10,565

(20,858

)

(4,881

)

-46.2

%

26,542

n/m

Total shareholders' equity

1,710,041

1,673,944

1,645,362

36,097

2.2

%

64,679

3.9

%

Total liabilities and equity

$

15,558,162

$

15,692,079

$

13,584,786

$

(133,917

)

-0.9

%

$

1,973,376

14.5

%

(1)

See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.

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


See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

September 30, 2020

($ in thousands except per share data)

(unaudited)

Quarter Ended

Linked Quarter

Year over Year

INCOME STATEMENTS

9/30/2020

6/30/2020

9/30/2019

$ Change

% Change

$ Change

% Change

Interest and fees on LHFS & LHFI-FTE

$

97,429

$

99,300

$

116,432

$

(1,871

)

-1.9

%

$

(19,003

)

-16.3

%

Interest and fees on PPP loans

6,729

5,044

1,685

33.4

%

6,729

n/m

Interest and fees on acquired loans (1)

2,309

n/m

(2,309

)

-100.0

%

Interest on securities-taxable

12,542

12,762

13,184

(220

)

-1.7

%

(642

)

-4.9

%

Interest on securities-tax exempt-FTE

301

315

485

(14

)

-4.4

%

(184

)

-37.9

%

Interest on fed funds sold and reverse repurchases

1

23

1

n/m

(22

)

-95.7

%

Other interest income

331

239

1,044

92

38.5

%

(713

)

-68.3

%

Total interest income-FTE

117,333

117,660

133,477

(327

)

-0.3

%

(16,144

)

-12.1

%

Interest on deposits

7,437

8,730

20,385

(1,293

)

-14.8

%

(12,948

)

-63.5

%

Interest on fed funds purchased and repurchases

32

42

547

(10

)

-23.8

%

(515

)

-94.1

%

Other interest expense

688

881

830

(193

)

-21.9

%

(142

)

-17.1

%

Total interest expense

8,157

9,653

21,762

(1,496

)

-15.5

%

(13,605

)

-62.5

%

Net interest income-FTE

109,176

108,007

111,715

1,169

1.1

%

(2,539

)

-2.3

%

Provision for credit losses, LHFI (1)

1,760

18,185

3,039

(16,425

)

-90.3

%

(1,279

)

-42.1

%

Provision for loan losses, acquired loans (1)

(140

)

n/m

140

100.0

%

Net interest income after provision-FTE

107,416

89,822

108,816

17,594

19.6

%

(1,400

)

-1.3

%

Service charges on deposit accounts

7,577

6,397

11,065

1,180

18.4

%

(3,488

)

-31.5

%

Bank card and other fees

8,843

7,717

8,349

1,126

14.6

%

494

5.9

%

Mortgage banking, net

36,439

33,745

8,171

2,694

8.0

%

28,268

n/m

Insurance commissions

11,562

11,868

11,072

(306

)

-2.6

%

490

4.4

%

Wealth management

7,679

7,571

7,691

108

1.4

%

(12

)

-0.2

%

Other, net

1,601

2,213

1,989

(612

)

-27.7

%

(388

)

-19.5

%

Total noninterest income

73,701

69,511

48,337

4,190

6.0

%

25,364

52.5

%

Salaries and employee benefits

67,342

66,107

62,495

1,235

1.9

%

4,847

7.8

%

Services and fees

20,992

20,567

18,838

425

2.1

%

2,154

11.4

%

Net occupancy-premises

7,000

6,587

6,831

413

6.3

%

169

2.5

%

Equipment expense

5,828

5,620

5,971

208

3.7

%

(143

)

-2.4

%

Other real estate expense, net

1,203

271

531

932

n/m

672

n/m

Credit loss expense related to off-balance sheet credit exposures (1)

(3,004

)

6,242

(9,246

)

n/m

(3,004

)

n/m

Other expense

14,598

13,265

12,187

1,333

10.0

%

2,411

19.8

%

Total noninterest expense

113,959

118,659

106,853

(4,700

)

-4.0

%

7,106

6.7

%

Income before income taxes and tax eq adj

67,158

40,674

50,300

26,484

65.1

%

16,858

33.5

%

Tax equivalent adjustment

2,969

3,007

3,249

(38

)

-1.3

%

(280

)

-8.6

%

Income before income taxes

64,189

37,667

47,051

26,522

70.4

%

17,138

36.4

%

Income taxes

9,749

5,517

6,016

4,232

76.7

%

3,733

62.1

%

Net income

$

54,440

$

32,150

$

41,035

$

22,290

69.3

%

$

13,405

32.7

%

Per share data

Earnings per share - basic

$

0.86

$

0.51

$

0.64

$

0.35

68.6

%

$

0.22

34.4

%

Earnings per share - diluted

$

0.86

$

0.51

$

0.64

$

0.35

68.6

%

$

0.22

34.4

%

Dividends per share

$

0.23

$

0.23

$

0.23

0.0

%

0.0

%

Weighted average shares outstanding

Basic

63,422,692

63,416,307

64,358,540

Diluted

63,581,964

63,555,065

64,514,605

Period end shares outstanding

63,423,820

63,422,439

64,262,779

(1)

See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.

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


See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

September 30, 2020

($ in thousands)

(unaudited)

Quarter Ended

Linked Quarter

Year over Year

NONPERFORMING ASSETS (1)

9/30/2020

6/30/2020

9/30/2019

$ Change

% Change

$ Change

% Change

Nonaccrual LHFI

Alabama

$

3,860

$

4,392

$

2,936

$

(532

)

-12.1

%

$

924

31.5

%

Florida

617

687

311

(70

)

-10.2

%

306

98.4

%

Mississippi (2)

35,617

37,884

43,895

(2,267

)

-6.0

%

(8,278

)

-18.9

%

Tennessee (3)

13,041

6,125

10,193

6,916

n/m

2,848

27.9

%

Texas

721

906

1,695

(185

)

-20.4

%

(974

)

-57.5

%

Total nonaccrual LHFI

53,856

49,994

59,030

3,862

7.7

%

(5,174

)

-8.8

%

Other real estate

Alabama

3,725

4,766

6,501

(1,041

)

-21.8

%

(2,776

)

-42.7

%

Florida

3,665

3,665

6,983

0.0

%

(3,318

)

-47.5

%

Mississippi (2)

8,718

9,408

17,646

(690

)

-7.3

%

(8,928

)

-50.6

%

Tennessee (3)

140

437

844

(297

)

-68.0

%

(704

)

-83.4

%

Texas

n/m

n/m

Total other real estate

16,248

18,276

31,974

(2,028

)

-11.1

%

(15,726

)

-49.2

%

Total nonperforming assets

$

70,104

$

68,270

$

91,004

$

1,834

2.7

%

$

(20,900

)

-23.0

%

LOANS PAST DUE OVER 90 DAYS (1)

LHFI

$

782

$

807

$

878

$

(25

)

-3.1

%

$

(96

)

-10.9

%

LHFS-Guaranteed GNMA serviced loans

(no obligation to repurchase)

$

121,281

$

56,269

$

36,445

$

65,012

n/m

$

84,836

n/m

Quarter Ended

Linked Quarter

Year over Year

ACL LHFI (1)(4)

9/30/2020

6/30/2020

9/30/2019

$ Change

% Change

$ Change

% Change

Beginning Balance

$

119,188

$

100,564

$

80,399

$

18,624

18.5

%

$

38,789

48.2

%

CECL adoption adjustments:

LHFI

n/m

n/m

Acquired loan transfers

n/m

n/m

Provision for credit losses

1,760

18,185

3,039

(16,425

)

-90.3

%

(1,279

)

-42.1

%

Charge-offs

(1,263

)

(1,870

)

(2,892

)

607

32.5

%

1,629

56.3

%

Recoveries

2,325

2,309

2,680

16

0.7

%

(355

)

-13.2

%

Net (charge-offs) recoveries

1,062

439

(212

)

623

n/m

1,274

n/m

Ending Balance

$

122,010

$

119,188

$

83,226

$

2,822

2.4

%

$

38,784

46.6

%

NET (CHARGE-OFFS) RECOVERIES (1)

Alabama

$

117

$

526

$

(329

)

$

(409

)

-77.8

%

$

446

n/m

Florida

387

(127

)

136

514

n/m

251

n/m

Mississippi (2)

442

(86

)

391

528

n/m

51

13.0

%

Tennessee (3)

42

66

(483

)

(24

)

-36.4

%

525

n/m

Texas

74

60

73

14

23.3

%

1

1.4

%

Total net (charge-offs) recoveries

$

1,062

$

439

$

(212

)

$

623

n/m

$

1,274

n/m

(1)

Excludes PPP and acquired loans.

(2)

Mississippi includes Central and Southern Mississippi Regions.

(3)

Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.

(4)

See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.

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


See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

September 30, 2020

($ in thousands)

(unaudited)

Quarter Ended

Nine Months Ended

AVERAGE BALANCES

9/30/2020

6/30/2020

3/31/2020

12/31/2019

9/30/2019

9/30/2020

9/30/2019

Securities AFS-taxable

$

1,857,050

$

1,724,320

$

1,620,422

$

1,551,358

$

1,570,803

$

1,734,380

$

1,661,177

Securities AFS-nontaxable

5,973

9,827

22,056

23,300

25,096

12,594

32,188

Securities HTM-taxable

608,585

655,085

694,740

734,474

778,098

652,642

821,716

Securities HTM-nontaxable

25,508

25,538

25,673

25,703

26,088

25,573

27,268

Total securities

2,497,116

2,414,770

2,362,891

2,334,835

2,400,085

2,425,189

2,542,349

PPP loans

941,456

764,416

569,985

Loans (includes loans held for sale) (1)

10,162,379

9,908,132

9,678,174

9,467,437

9,436,287

9,917,127

9,246,298

Acquired loans (1)

77,797

82,641

92,645

Fed funds sold and reverse repurchases

301

113

164

184

3,662

193

12,678

Other earning assets

722,917

854,642

187,327

227,116

176,163

588,787

245,173

Total earning assets

14,324,169

13,942,073

12,228,556

12,107,369

12,098,838

13,501,281

12,139,143

ACL LHFI (1)

(121,842

)

(103,006

)

(85,015

)

(86,211

)

(83,756

)

(103,355

)

(82,665

)

Other assets

1,564,825

1,685,317

1,498,725

1,445,075

1,447,977

1,582,888

1,454,350

Total assets

$

15,767,152

$

15,524,384

$

13,642,266

$

13,466,233

$

13,463,059

$

14,980,814

$

13,510,828

Interest-bearing demand deposits

$

3,669,249

$

3,832,372

$

3,184,134

$

3,167,256

$

3,085,758

$

3,562,310

$

3,012,049

Savings deposits

4,416,046

4,180,540

3,646,936

3,448,899

3,568,403

4,082,396

3,718,008

Time deposits

1,507,348

1,578,737

1,617,307

1,663,741

1,753,083

1,567,577

1,824,431

Total interest-bearing deposits

9,592,643

9,591,649

8,448,377

8,279,896

8,407,244

9,212,283

8,554,488

Fed funds purchased and repurchases

84,077

105,696

247,513

164,754

142,064

145,537

92,771

Other borrowings

167,262

107,533

85,279

79,512

78,404

120,197

83,475

Junior subordinated debt securities

61,856

61,856

61,856

61,856

61,856

61,856

61,856

Total interest-bearing liabilities

9,905,838

9,866,734

8,843,025

8,586,018

8,689,568

9,539,873

8,792,590

Noninterest-bearing deposits

3,921,867

3,645,761

2,910,951

3,017,824

2,932,754

3,494,425

2,885,478

Other liabilities

244,544

346,173

248,220

205,786

206,091

279,517

222,404

Total liabilities

14,072,249

13,858,668

12,002,196

11,809,628

11,828,413

13,313,815

11,900,472

Shareholders' equity

1,694,903

1,665,716

1,640,070

1,656,605

1,634,646

1,666,999

1,610,356

Total liabilities and equity

$

15,767,152

$

15,524,384

$

13,642,266

$

13,466,233

$

13,463,059

$

14,980,814

$

13,510,828

(1)

See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

September 30, 2020

($ in thousands)

(unaudited)

PERIOD END BALANCES

9/30/2020

6/30/2020

3/31/2020

12/31/2019

9/30/2019

Cash and due from banks

$

564,588

$

1,026,640

$

404,341

$

358,916

$

486,263

Fed funds sold and reverse repurchases

50

2,000

Securities available for sale

1,922,728

1,884,153

1,833,779

1,602,404

1,553,705

Securities held to maturity

611,280

660,048

704,276

738,099

785,422

PPP loans

944,270

939,783

Loans held for sale (LHFS)

485,103

355,089

325,389

226,347

292,800

Loans held for investment (LHFI) (1)

9,847,728

9,659,806

9,567,920

9,335,628

9,223,668

ACL LHFI (1)

(122,010

)

(119,188

)

(100,564

)

(84,277

)

(83,226

)

Net LHFI

9,725,718

9,540,618

9,467,356

9,251,351

9,140,442

Acquired loans (1)

72,601

81,004

Allowance for loan losses, acquired loans (1)

(815

)

(1,249

)

Net acquired loans

71,786

79,755

Net LHFI and acquired loans

9,725,718

9,540,618

9,467,356

9,323,137

9,220,197

Premises and equipment, net

192,722

190,567

190,179

189,791

188,423

Mortgage servicing rights

61,613

57,811

56,437

79,394

73,016

Goodwill

385,270

385,270

381,717

379,627

379,627

Identifiable intangible assets

8,142

8,895

7,537

7,343

8,345

Other real estate

16,248

18,276

24,847

29,248

31,974

Operating lease right-of-use assets

30,508

29,819

30,839

31,182

33,180

Other assets

609,922

595,110

591,132

532,389