Trustmark Corporation Announces Third Quarter 2023 Financial Results

Performance Reflects Continued Loan and Deposit Growth, Solid Credit Quality, and Diversified Fee Income

JACKSON, Miss., October 24, 2023--(BUSINESS WIRE)--Trustmark Corporation (NASDAQGS: TRMK) reported net income of $34.0 million in the third quarter of 2023, representing diluted earnings per share of $0.56. As previously disclosed, Trustmark recognized a litigation settlement expense of $6.5 million in the third quarter, which reduced net income by $4.9 million, or $0.08 per diluted share. Excluding this expense, Trustmark’s third quarter net income totaled $38.9 million, or $0.64 per diluted share. Please refer to the Consolidated Financial Information, Note 1 – Litigation Settlement and Note 7 – Non-GAAP Financial Measures. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable December 15, 2023, to shareholders of record on December 1, 2023.

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Third Quarter Highlights

• Loans held for investment (HFI) increased $196.3 million, or 1.6%, from the prior quarter to $12.8 billion

• Deposits expanded $188.0 million, or 1.3%, linked-quarter to $15.1 billion

• Net interest income (FTE) totaled $141.9 million, down $1.4 million linked-quarter, resulting in a net interest margin of 3.29%

• Noninterest income totaled $52.2 million for the third quarter, representing 27.4% of total revenue

• Noninterest expense, excluding litigation settlement expense, increased 1.7% from the prior quarter

• Credit quality remained solid; net charge-offs totaled $3.6 million, or 0.11% of average loans, in the third quarter

Duane A. Dewey, President and CEO, stated, "Trustmark’s financial performance during the third quarter reflected continued loan and deposit growth, stable net interest income, strong performance in our insurance business, and solid credit quality. During the first nine months of 2023, Trustmark’s net income totaled $129.4 million, which represented diluted earnings per share of $2.11, an increase of 22.7% from the same period in 2022. We continue to implement significant cost savings initiatives to improve efficiency as well as technology to enhance our ability to grow and serve customers. Trustmark is well-positioned to respond to changing economic conditions and create long-term value for our shareholders."

Balance Sheet Management

• Loans HFI totaled $12.8 billion, up 1.6% from the prior quarter and 10.6% year-over-year

• Deposits totaled $15.1 billion, up 1.3% from the prior quarter and 4.7% year-over-year

• Maintained strong capital position with CET1 ratio of 9.89% and total risk-based capital ratio of 12.11%

Loans HFI totaled $12.8 billion at September 30, 2023, reflecting an increase of $196.3 million, or 1.6%, linked-quarter and $1.2 billion, or 10.6%, year-over-year. The linked quarter growth primarily reflected increases in other real estate secured loans and nonfarm, nonresidential properties offset in part by declines in construction, land development and other land loans, state and other political subdivision loans, and commercial and industrial loans. Trustmark’s loan portfolio remains well-diversified by loan type and geography.

Deposits totaled $15.1 billion at September 30, 2023, up $188.0 million, or 1.3%, from the prior quarter and $676.7 million, or 4.7%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 84.8% of total deposits at September 30, 2023. Migration into higher-yielding products continued to drive a change in deposit mix from noninterest-bearing deposits, which represented 22.0% of total deposits at September 30, 2023. Interest-bearing deposit costs totaled 2.39% in the third quarter, while the total cost of deposits was 1.84%. The total cost of interest-bearing liabilities was 2.72% in the third 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 September 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 September 30, 2023. Trustmark’s tangible equity-to-tangible assets ratio was 6.57% while its total risk-based capital ratio was 12.11% at September 30, 2023.

Credit Quality

• Net charge-offs totaled $3.6 million in the third quarter, representing 0.11% of average loans

• Provision for credit losses for loans HFI was $8.3 million for the third quarter

• Allowance for credit losses (ACL) represented 1.05% of loans HFI and 273.60% of nonaccrual loans, excluding individually evaluated loans at September 30, 2023

Nonaccrual loans totaled $90.9 million at September 30, 2023, up $15.9 million from the prior quarter and $23.0 million year-over-year. Other real estate totaled $5.5 million, reflecting increases of $4.3 million from the prior quarter and $2.5 million year-over-year. Collectively, nonperforming assets totaled $96.4 million at September 30, 2023, reflecting a linked-quarter increase of $20.2 million and a year-over-year increase of $25.5 million.

During the third quarter, a fully-reserved nonaccrual loan transitioned to other real estate. This credit represented substantially all the net charge-offs experienced during the quarter and was also responsible for the increase in other real estate.

The provision for credit losses for loans HFI was $8.3 million in the third quarter and was primarily attributable to a single new individually evaluated nonaccrual loan for which specific reserves were established, a weakening macroeconomic forecast, loan growth, and net adjustments to the qualitative factors. The provision for credit losses for off-balance sheet credit exposures was $104 thousand in the third quarter. Collectively, the provision for credit losses totaled $8.4 million in the third quarter compared to $8.5 million in the prior quarter and $11.6 million in the third quarter of 2022.

Allocation of Trustmark’s $134.0 million ACL on loans HFI represented 0.86% of commercial loans and 1.66% of consumer and home mortgage loans, resulting in an allowance to total loans HFI of 1.05% at September 30, 2023. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.

Revenue Generation

• Revenue totaled $190.9 million, down 1.3% linked-quarter

• Net interest income (FTE) totaled $141.9 million in the third quarter, down 0.9% from the prior quarter

• Noninterest income totaled $52.2 million, representing 27.4% of total revenue in the third quarter

Net interest income (FTE) in the third quarter totaled $141.9 million, resulting in a net interest margin of 3.29%, down 4 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 third quarter totaled $52.2 million, a decrease of $1.3 million from the prior quarter and $382 thousand year-over-year. The linked-quarter decline was attributable to lower other income net, bank card and other fees, mortgage banking revenue, and wealth management revenue, which were offset in part by increased insurance commissions and service charges on deposit accounts.

Mortgage loan production in the third quarter totaled $389.9 million, down 9.6% from the prior quarter and 23.3% year-over-year. Mortgage banking revenue totaled $6.5 million in the third quarter, a decrease of $142 thousand from the prior quarter and $418 thousand 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 commissions totaled $15.3 million in the third quarter, up $539 thousand, or 3.7%, linked-quarter and $1.4 million, or 10.0%, year-over-year due principally to increased property and casualty and group health commissions. Wealth management revenue totaled $8.8 million in the third quarter, a decrease of $109 thousand, or 1.2%, from the prior quarter and unchanged year-over-year. The linked-quarter change reflected growth in investment services, which was more than offset by lower trust management revenue. Service charges on deposit accounts increased $379 thousand, or 3.5%, from the prior quarter and declined $244 thousand, or 2.2%, year-over-year. Bank card and other fees decreased $700 thousand from the prior quarter and $1.1 million year-over-year. The linked-quarter change was attributable to seasonal factors while the year-over-year change was due to reduced customer derivative revenue.

Noninterest Expense

• Total noninterest expense in the third quarter was $140.9 million; excluding litigation settlement expense of $6.5 million, noninterest expense was $134.4 million, up $2.2 million, or 1.7%, from the prior quarter. Please refer to the Consolidated Financial Information, Note 7 – Non-GAAP Financial Measures

• FDIC assessment expense totaled $3.8 million in the third quarter, up $1.2 million, or 47.6%, from the prior quarter

Salaries and employee benefits increased $726 thousand, or 1.0%, linked-quarter due primarily to increased salary expense. Services and fees decreased $382 thousand, or 1.4%, linked-quarter due to reduced professional fees. Net occupancy-premises expense increased $275 thousand, or 3.9%, linked-quarter due in part to seasonal increases in utilities and increased rental expense. Equipment expense increased $412 thousand, or 6.4%, linked-quarter. Other expense increased $1.2 million, or 8.2%, linked-quarter, principally due to increased FDIC assessment expense.

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 $191 million as of September 30, 2023. Implementation of our technology plans for conversion of our deposit/teller/customer information system continued during the quarter. In addition, 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, along with cost savings initiatives, 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, October 25, 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, November 8, 2023, in archived format at the same web address or by calling (877) 344-7529, passcode 4921731.

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, 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
September 30, 2023
($ in thousands)
(unaudited)
													Linked Quarter							Year over Year
QUARTERLY AVERAGE BALANCES	9/30/2023				6/30/2023				9/30/2022				$ Change				% Change			$ Change				% Change
Securities AFS-taxable (1)	$	2,049,006			$	2,140,505			$	2,824,254			$	(91,499	)		-4.3	%		$	(775,248	)		-27.4	%
Securities AFS-nontaxable		4,779				4,796				4,928				(17	)		-0.4	%			(149	)		-3.0	%
Securities HTM-taxable (1)		1,445,895				1,463,086				1,140,685				(17,191	)		-1.2	%			305,210			26.8	%
Securities HTM-nontaxable		907				1,718				5,057				(811	)		-47.2	%			(4,150	)		-82.1	%
Total securities		3,500,587				3,610,105				3,974,924				(109,518	)		-3.0	%			(474,337	)		-11.9	%
Paycheck protection program loans (PPP)		—				—				9,821				—			n/m				(9,821	)		-100.0	%
Loans (includes loans held for sale)		12,926,942				12,732,057				11,459,551				194,885			1.5	%			1,467,391			12.8	%
Fed funds sold and reverse repurchases		230				3,275				226				(3,045	)		-93.0	%			4			1.8	%
Other earning assets		682,644				903,027				325,620				(220,383	)		-24.4	%			357,024			n/m
Total earning assets		17,110,403				17,248,464				15,770,142				(138,061	)		-0.8	%			1,340,261			8.5	%
Allowance for credit losses (ACL), loans held for investment (LHFI)		(127,915	)			(121,960	)			(102,951	)			(5,955	)		-4.9	%			(24,964	)		-24.2	%
Other assets		1,721,310				1,648,583				1,576,653				72,727			4.4	%			144,657			9.2	%
Total assets	$	18,703,798			$	18,775,087			$	17,243,844			$	(71,289	)		-0.4	%		$	1,459,954			8.5	%
Interest-bearing demand deposits	$	4,875,714			$	4,803,737			$	4,613,733			$	71,977			1.5	%		$	261,981			5.7	%
Savings deposits		3,642,158				4,002,134				4,514,579				(359,976	)		-9.0	%			(872,421	)		-19.3	%
Time deposits		3,075,224				2,335,752				1,111,440				739,472			31.7	%			1,963,784			n/m
Total interest-bearing deposits		11,593,096				11,141,623				10,239,752				451,473			4.1	%			1,353,344			13.2	%
Fed funds purchased and repurchases		414,696				389,834				249,809				24,862			6.4	%			164,887			66.0	%
Other borrowings		912,151				1,330,010				88,697				(417,859	)		-31.4	%			823,454			n/m
Subordinated notes		123,391				123,337				123,171				54			0.0	%			220			0.2	%
Junior subordinated debt securities		61,856				61,856				61,856				—			0.0	%			—			0.0	%
Total interest-bearing liabilities		13,105,190				13,046,660				10,763,285				58,530			0.4	%			2,341,905			21.8	%
Noninterest-bearing deposits		3,429,815				3,595,927				4,444,370				(166,112	)		-4.6	%			(1,014,555	)		-22.8	%
Other liabilities		585,908				552,209				429,720				33,699			6.1	%			156,188			36.3	%
Total liabilities		17,120,913				17,194,796				15,637,375				(73,883	)		-0.4	%			1,483,538			9.5	%
Shareholders' equity		1,582,885				1,580,291				1,606,469				2,594			0.2	%			(23,584	)		-1.5	%
Total liabilities and equity	$	18,703,798			$	18,775,087			$	17,243,844			$	(71,289	)		-0.4	%		$	1,459,954			8.5	%
(1) 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
September 30, 2023
($ in thousands)
(unaudited)
													Linked Quarter							Year over Year
PERIOD END BALANCES	9/30/2023				6/30/2023				9/30/2022				$ Change				% Change			$ Change				% Change
Cash and due from banks	$	750,492			$	832,052			$	479,637			$	(81,560	)		-9.8	%		$	270,855			56.5	%
Fed funds sold and reverse repurchases		—				—				10,098				—			n/m				(10,098	)		-100.0	%
Securities available for sale (1)		1,766,174				1,871,883				2,444,486				(105,709	)		-5.6	%			(678,312	)		-27.7	%
Securities held to maturity (1)		1,438,287				1,458,665				1,156,985				(20,378	)		-1.4	%			281,302			24.3	%
PPP loans		—				—				4,798				—			n/m				(4,798	)		-100.0	%
Loans held for sale (LHFS)		169,244				181,094				165,213				(11,850	)		-6.5	%			4,031			2.4	%
Loans held for investment (LHFI)		12,810,259				12,613,967				11,586,064				196,292			1.6	%			1,224,195			10.6	%
ACL LHFI		(134,031	)			(129,298	)			(115,050	)			(4,733	)		-3.7	%			(18,981	)		-16.5	%
Net LHFI		12,676,228				12,484,669				11,471,014				191,559			1.5	%			1,205,214			10.5	%
Premises and equipment, net		230,718				227,630				210,761				3,088			1.4	%			19,957			9.5	%
Mortgage servicing rights		142,379				134,350				132,615				8,029			6.0	%			9,764			7.4	%
Goodwill		384,237				384,237				384,237				—			0.0	%			—			0.0	%
Identifiable intangible assets		3,093				3,222				3,952				(129	)		-4.0	%			(859	)		-21.7	%
Other real estate		5,485				1,137				2,971				4,348			n/m				2,514			84.6	%
Operating lease right-of-use assets		39,639				38,179				37,282				1,460			3.8	%			2,357			6.3	%
Other assets		784,863				805,508				686,585				(20,645	)		-2.6	%			98,278			14.3	%
Total assets	$	18,390,839			$	18,422,626			$	17,190,634			$	(31,787	)		-0.2	%		$	1,200,205			7.0	%
Deposits:
Noninterest-bearing	$	3,320,124			$	3,461,073			$	4,358,805			$	(140,949	)		-4.1	%		$	(1,038,681	)		-23.8	%
Interest-bearing		11,781,799				11,452,827				10,066,375				328,972			2.9	%			1,715,424			17.0	%
Total deposits		15,101,923				14,913,900				14,425,180				188,023			1.3	%			676,743			4.7	%
Fed funds purchased and repurchases		321,799				311,179				544,068				10,620			3.4	%			(222,269	)		-40.9	%
Other borrowings		793,193				1,056,714				223,172				(263,521	)		-24.9	%			570,021			n/m
Subordinated notes		123,427				123,372				123,207				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		34,945				34,841				31,623				104			0.3	%			3,322			10.5	%
Operating lease liabilities		42,730				40,845				39,797				1,885			4.6	%			2,933			7.4	%
Other liabilities		340,615				308,726				232,786				31,889			10.3	%			107,829			46.3	%
Total liabilities		16,820,488				16,851,433				15,681,689				(30,945	)		-0.2	%			1,138,799			7.3	%
Common stock		12,724				12,724				12,700				—			0.0	%			24			0.2	%
Capital surplus		158,316				156,834				154,150				1,482		...	0.9	%			4,166			2.7	%
Retained earnings		1,687,199				1,667,339				1,648,507				19,860			1.2	%			38,692			2.3	%
Accumulated other comprehensive income (loss), net of tax		(287,888	)			(265,704	)			(306,412	)			(22,184	)		-8.3	%			18,524			6.0	%
Total shareholders' equity		1,570,351				1,571,193				1,508,945				(842	)		-0.1	%			61,406			4.1	%
Total liabilities and equity	$	18,390,839			$	18,422,626			$	17,190,634			$	(31,787	)		-0.2	%		$	1,200,205			7.0	%
(1) 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
September 30, 2023
($ in thousands except per share data)
(unaudited)
	Quarter Ended										Linked Quarter							Year over Year
INCOME STATEMENTS	9/30/2023			6/30/2023			9/30/2022				$ Change				% Change			$ Change				% Change
Interest and fees on LHFS & LHFI-FTE	$	206,523		$	192,941		$	129,395			$	13,582			7.0	%		$	77,128			59.6	%
Interest and fees on PPP loans		—			—			186				—			n/m				(186	)		-100.0	%
Interest on securities-taxable		16,624			16,779			16,222				(155	)		-0.9	%			402			2.5	%
Interest on securities-tax exempt-FTE		58			69			100				(11	)		-15.9	%			(42	)		-42.0	%
Interest on fed funds sold and reverse repurchases		3			45			2				(42	)		-93.3	%			1			50.0	%
Other interest income		8,613			12,077			1,493				(3,464	)		-28.7	%			7,120			n/m
Total interest income-FTE		231,821			221,911			147,398				9,910			4.5	%			84,423			57.3	%
Interest on deposits		69,797			54,409			5,097				15,388			28.3	%			64,700			n/m
Interest on fed funds purchased and repurchases		5,375			4,865			1,225				510			10.5	%			4,150			n/m
Other interest expense		14,713			19,350			1,996				(4,637	)		-24.0	%			12,717			n/m
Total interest expense		89,885			78,624			8,318				11,261			14.3	%			81,567			n/m
Net interest income-FTE		141,936			143,287			139,080				(1,351	)		-0.9	%			2,856			2.1	%
Provision for credit losses, LHFI		8,322			8,211			12,919				111			1.4	%			(4,597	)		-35.6	%
Provision for credit losses, off-balance sheet credit exposures		104			245			(1,326	)			(141	)		-57.6	%			1,430			n/m
Net interest income after provision-FTE		133,510			134,831			127,487				(1,321	)		-1.0	%			6,023			4.7	%
Service charges on deposit accounts		11,074			10,695			11,318				379			3.5	%			(244	)		-2.2	%
Bank card and other fees		8,217			8,917			9,305				(700	)		-7.9	%			(1,088	)		-11.7	%
Mortgage banking, net		6,458			6,600			6,876				(142	)		-2.2	%			(418	)		-6.1	%
Insurance commissions		15,303			14,764			13,911				539			3.7	%			1,392			10.0	%
Wealth management		8,773			8,882			8,778				(109	)		-1.2	%			(5	)		-0.1	%
Other, net		2,399			3,695			2,418				(1,296	)		-35.1	%			(19	)		-0.8	%
Total noninterest income		52,224			53,553			52,606				(1,329	)		-2.5	%			(382	)		-0.7	%
Salaries and employee benefits		76,666			75,940			72,707				726			1.0	%			3,959			5.4	%
Services and fees (2)		27,882			28,264			26,787				(382	)		-1.4	%			1,095			4.1	%
Net occupancy-premises		7,383			7,108			7,395				275			3.9	%			(12	)		-0.2	%
Equipment expense		6,816			6,404			6,072				412			6.4	%			744			12.3	%
Litigation settlement expense (1)		6,500			—			—				6,500			n/m				6,500			n/m
Other expense (2)		15,698			14,502			13,737				1,196			8.2	%			1,961			14.3	%
Total noninterest expense		140,945			132,218			126,698				8,727			6.6	%			14,247			11.2	%
Income (loss) before income taxes and tax eq adj		44,789			56,166			53,395				(11,377	)		-20.3	%			(8,606	)		-16.1	%
Tax equivalent adjustment		3,299			3,383			2,975				(84	)		-2.5	%			324			10.9	%
Income (loss) before income taxes		41,490			52,783			50,420				(11,293	)		-21.4	%			(8,930	)		-17.7	%
Income taxes		7,461			7,746			7,965				(285	)		-3.7	%			(504	)		-6.3	%
Net income (loss)	$	34,029		$	45,037		$	42,455			$	(11,008	)		-24.4	%		$	(8,426	)		-19.8	%
Per share data
Earnings (loss) per share - basic	$	0.56		$	0.74		$	0.69			$	(0.18	)		-24.3	%		$	(0.13	)		-18.8	%
Earnings (loss) per share - diluted	$	0.56		$	0.74		$	0.69			$	(0.18	)		-24.3	%		$	(0.13	)		-18.8	%
Dividends per share	$	0.23		$	0.23		$	0.23				—			0.0	%			—			0.0	%
Weighted average shares outstanding
Basic		61,069,750			61,063,277			61,114,804
Diluted		61,263,032			61,230,031			61,318,715
Period end shares outstanding		61,070,095			61,069,036			60,953,864
(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
September 30, 2023
($ in thousands)
(unaudited)
	Quarter Ended												Linked Quarter							Year over Year
NONPERFORMING ASSETS (1)	9/30/2023				6/30/2023				9/30/2022				$ Change				% Change			$ Change				% Change
Nonaccrual LHFI
Alabama (2)	$	23,530			$	11,058			$	12,710			$	12,472			n/m			$	10,820			85.1	%
Florida		151				334				227				(183	)		-54.8	%			(76	)		-33.5	%
Mississippi (3)		45,050				36,288				23,517				8,762			24.1	%			21,533			91.6	%
Tennessee (4)		1,841				5,088				5,120				(3,247	)		-63.8	%			(3,279	)		-64.0	%
Texas		20,327				22,259				26,353				(1,932	)		-8.7	%			(6,026	)		-22.9	%
Total nonaccrual LHFI		90,899				75,027				67,927				15,872			21.2	%			22,972			33.8	%
Other real estate
Alabama (2)		315				—				217				315			n/m				98			45.2	%
Mississippi (3)		942				1,137				2,754				(195	)		-17.2	%			(1,812	)		-65.8	%
Texas		4,228				—				—				4,228			n/m				4,228			n/m
Total other real estate		5,485				1,137				2,971				4,348			n/m				2,514			84.6	%
Total nonperforming assets	$	96,384			$	76,164			$	70,898			$	20,220			26.5	%		$	25,486			35.9	%
LOANS PAST DUE OVER 90 DAYS (1)
LHFI	$	3,804			$	3,911			$	1,842			$	(107	)		-2.7	%		$	1,962			n/m
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	42,532			$	35,766			$	48,313			$	6,766			18.9	%		$	(5,781	)		-12.0	%
	Quarter Ended												Linked Quarter							Year over Year
ACL LHFI (1)	9/30/2023				6/30/2023				9/30/2022				$ Change				% Change			$ Change				% Change
Beginning Balance	$	129,298			$	122,239			$	103,140			$	7,059			5.8	%		$	26,158			25.4	%
Provision for credit losses, LHFI		8,322				8,211				12,919				111			1.4	%			(4,597	)		-35.6	%
Charge-offs		(7,496	)			(2,773	)			(2,920	)			(4,723	)		n/m				(4,576	)		n/m
Recoveries		3,907				1,621				1,911				2,286			n/m				1,996			n/m
Net (charge-offs) recoveries		(3,589	)			(1,152	)			(1,009	)			(2,437	)		n/m				(2,580	)		n/m
Ending Balance	$	134,031			$	129,298			$	115,050			$	4,733			3.7	%		$	18,981			16.5	%
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama (2)	$	(165	)		$	(141	)		$	93			$	(24	)		-17.0	%		$	(258	)		n/m
Florida		21				(35	)			(23	)			56			n/m				44			n/m
Mississippi (3)		(1,867	)			(762	)			(702	)			(1,105	)		n/m				(1,165	)		n/m
Tennessee (4)		2,127				(166	)			(202	)			2,293			n/m				2,329			n/m
Texas		(3,705	)			(48	)			(175	)			(3,657	)		n/m				(3,530	)		n/m
Total net (charge-offs) recoveries	$	(3,589	)		$	(1,152	)		$	(1,009	)		$	(2,437	)		n/m			$	(2,580	)		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
September 30, 2023
($ in thousands)
(unaudited)
		Quarter Ended																				Nine Months Ended
AVERAGE BALANCES		9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022				9/30/2023				9/30/2022
Securities AFS-taxable (1)		$	2,049,006			$	2,140,505			$	2,187,121			$	2,572,675			$	2,824,254			$	2,125,038			$	3,053,164
Securities AFS-nontaxable			4,779				4,796				4,812				4,828				4,928				4,796				5,054
Securities HTM-taxable (1)			1,445,895				1,463,086				1,479,283				1,268,952				1,140,685				1,462,632				790,385
Securities HTM-nontaxable			907				1,718				4,509				4,514				5,057				2,365				5,996
Total securities			3,500,587				3,610,105				3,675,725				3,850,969				3,974,924				3,594,831				3,854,599
PPP loans			—				—				—				3,235				9,821				—				18,788
Loans (includes loans held for sale)			12,926,942				12,732,057				12,530,449				12,006,661				11,459,551				12,731,268				10,976,809
Fed funds sold and reverse repurchases			230				3,275				2,379				6,566				226				1,953				131
Other earning assets			682,644				903,027				647,760				375,190				325,620				747,627				1,086,771
Total earning assets			17,110,403				17,248,464				16,856,313				16,242,621				15,770,142				17,075,679				15,937,098
ACL LHFI			(127,915	)			(121,960	)			(119,978	)			(114,948	)			(102,951	)			(123,313	)			(100,495	)
Other assets			1,721,310				1,648,583				1,762,449				1,630,085				1,576,653				1,707,608				1,546,972
Total assets		$	18,703,798			$	18,775,087			$	18,498,784			$	17,757,758			$	17,243,844			$	18,659,974			$	17,383,575
Interest-bearing demand deposits		$	4,875,714			$	4,803,737			$	4,751,154			$	4,719,303			$	4,613,733			$	4,810,658			$	4,541,018
Savings deposits			3,642,158				4,002,134				4,193,764				4,379,673				4,514,579				3,943,998				4,647,164
Time deposits			3,075,224				2,335,752				1,907,449				1,152,905				1,111,440				2,443,753				1,154,346
Total interest-bearing deposits			11,593,096				11,141,623				10,852,367				10,251,881				10,239,752				11,198,409				10,342,528
Fed funds purchased and repurchases			414,696				389,834				436,535				549,406				249,809				413,608				193,661
Other borrowings			912,151				1,330,010				1,110,843				530,993				88,697				1,116,940				86,681
Subordinated notes			123,391				123,337				123,281				123,226				123,171				123,337				123,116
Junior subordinated debt securities			61,856				61,856				61,856				61,856				61,856				61,856				61,856
Total interest-bearing liabilities			13,105,190				13,046,660				12,584,882				11,517,362				10,763,285				12,914,150				10,807,842
Noninterest-bearing deposits			3,429,815				3,595,927				3,813,248				4,177,113				4,444,370				3,611,592				4,544,698
Other liabilities			585,908				552,209				576,826				569,992				429,720				571,681				388,585
Total liabilities			17,120,913				17,194,796				16,974,956				16,264,467				15,637,375				17,097,423				15,741,125
Shareholders' equity			1,582,885				1,580,291				1,523,828				1,493,291				1,606,469				1,562,551				1,642,450
Total liabilities and equity		$	18,703,798			$	18,775,087			$	18,498,784			$	17,757,758			$	17,243,844			$	18,659,974			$	17,383,575
(1) 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
September 30, 2023
($ in thousands)
(unaudited)
PERIOD END BALANCES		9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022
Cash and due from banks		$	750,492			$	832,052			$	1,297,144			$	734,787			$	479,637
Fed funds sold and reverse repurchases			—				—				—				4,000				10,098
Securities available for sale (1)			1,766,174				1,871,883				1,984,162				2,024,082				2,444,486
Securities held to maturity (1)			1,438,287				1,458,665				1,474,338				1,494,514				1,156,985
PPP loans			—				—				—				—				4,798
LHFS			169,244				181,094				175,926				135,226				165,213
LHFI			12,810,259				12,613,967				12,497,195				12,204,039				11,586,064
ACL LHFI			(134,031	)			(129,298	)			(122,239	)			(120,214	)			(115,050	)
Net LHFI			12,676,228				12,484,669				12,374,956				12,083,825				11,471,014
Premises and equipment, net			230,718				227,630				223,975				212,365				210,761
Mortgage servicing rights			142,379				134,350				127,206				129,677				132,615
Goodwill			384,237				384,237				384,237				384,237				384,237
Identifiable intangible assets			3,093				3,222				3,352				3,640				3,952
Other real estate			5,485				1,137				1,684				1,986				2,971
Operating lease right-of-use assets			39,639				38,179				35,315				36,301				37,282
Other assets			784,863				805,508				794,883				770,838				686,585
Total assets		$	18,390,839			$	18,422,626			$	18,877,178			$	18,015,478			$	17,190,634
Deposits:
Noninterest-bearing		$	3,320,124			$	3,461,073			$	3,797,055			$	4,093,771			$	4,358,805
Interest-bearing			11,781,799				11,452,827				10,986,606				10,343,877				10,066,375
Total deposits			15,101,923				14,913,900				14,783,661				14,437,648				14,425,180
Fed funds purchased and repurchases			321,799				311,179				477,980				449,331				544,068
Other borrowings			793,193				1,056,714				1,485,181				1,050,938				223,172
Subordinated notes			123,427				123,372				123,317				123,262				123,207
Junior subordinated debt securities			61,856				61,856				61,856				61,856				61,856
ACL on off-balance sheet credit exposures			34,945				34,841				34,596				36,838				31,623
Operating lease liabilities			42,730				40,845				37,988				38,932				39,797
Other liabilities			340,615				308,726				310,500				324,405				232,786
Total liabilities			16,820,488				16,851,433				17,315,079				16,523,210				15,681,689
Common stock			12,724				12,724				12,720				12,705				12,700
Capital surplus			158,316				156,834				155,297				154,645				154,150
Retained earnings			1,687,199				1,667,339				1,636,463				1,600,321				1,648,507
Accumulated other comprehensive income (loss), net of tax			(287,888	)			(265,704	)			(242,381	)			(275,403	)			(306,412	)
Total shareholders' equity			1,570,351				1,571,193				1,562,099				1,492,268				1,508,945
Total liabilities and equity		$	18,390,839			$	18,422,626			$	18,877,178			$	18,015,478			$	17,190,634
(1) 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
September 30, 2023
($ in thousands except per share data)
(unaudited)
		Quarter Ended																		Nine Months Ended
INCOME STATEMENTS		9/30/2023			6/30/2023			3/31/2023				12/31/2022				9/30/2022				9/30/2023				9/30/2022
Interest and fees on LHFS & LHFI-FTE		$	206,523		$	192,941		$	178,967			$	159,566			$	129,395			$	578,431			$	325,680
Interest and fees on PPP loans			—			—			—				101				186				—				538
Interest on securities-taxable			16,624			16,779			16,761				16,577				16,222				50,164				43,140
Interest on securities-tax exempt-FTE			58			69			92				93				100				219				329
Interest on fed funds sold and reverse repurchases			3			45			30				71				2				78				3
Other interest income			8,613			12,077			6,527				3,556				1,493				27,217				4,524
Total interest income-FTE			231,821			221,911			202,377				179,964				147,398				656,109				374,214
Interest on deposits			69,797			54,409			40,898				18,438				5,097				165,104				10,631
Interest on fed funds purchased and repurchases			5,375			4,865			4,832				4,762				1,225				15,072				1,365
Other interest expense			14,713			19,350			15,575				6,730				1,996				49,638				5,199
Total interest expense			89,885			78,624			61,305				29,930				8,318				229,814				17,195
Net interest income-FTE			141,936			143,287			141,072				150,034				139,080				426,295				357,019
Provision for credit losses, LHFI			8,322			8,211			3,244				6,902				12,919				19,777				14,775
Provision for credit losses, off-balance sheet credit exposures			104			245			(2,242	)			5,215				(1,326	)			(1,893	)			(4,000	)
Net interest income after provision-FTE			133,510			134,831			140,070				137,917				127,487				408,411				346,244
Service charges on deposit accounts			11,074			10,695			10,336				11,162				11,318				32,105				30,995
Bank card and other fees			8,217			8,917			7,803				8,191				9,305				24,937				27,914
Mortgage banking, net			6,458			6,600			7,639				3,408				6,876				20,697				24,898
Insurance commissions			15,303			14,764			14,305				12,019				13,911				44,372				41,702
Wealth management			8,773			8,882			8,780				8,079				8,778				26,435				26,934
Other, net			2,399			3,695			2,514				2,311				2,418				8,608				7,531
Total noninterest income			52,224			53,553			51,377				45,170				52,606				157,154				159,974
Salaries and employee benefits			76,666			75,940			74,056				73,469				72,707				226,662				213,971
Services and fees (2)			27,882			28,264			25,426				27,709				26,787				81,572				77,760
Net occupancy-premises			7,383			7,108			7,629				7,898				7,395				22,120				21,366
Equipment expense			6,816			6,404			6,405				6,268				6,072				19,625				18,180
Litigation settlement expense (1)			6,500			—			—				100,750				—				6,500				—
Other expense (2)			15,698			14,502			14,811				15,135				13,737				45,011				40,707
Total noninterest expense			140,945			132,218			128,327				231,229				126,698				401,490				371,984
Income (loss) before income taxes and tax eq adj			44,789			56,166			63,120				(48,142	)			53,395				164,075				134,234
Tax equivalent adjustment			3,299			3,383			3,477				3,451				2,975				10,159				8,894
Income (loss) before income taxes			41,490			52,783			59,643				(51,593	)			50,420				153,916				125,340
Income taxes			7,461			7,746			9,343				(17,530	)			7,965				24,550				19,390
Net income (loss)		$	34,029		$	45,037		$	50,300			$	(34,063	)		$	42,455			$	129,366			$	105,950
Per share data
Earnings (loss) per share - basic		$	0.56		$	0.74		$	0.82			$	(0.56	)		$	0.69			$	2.12			$	1.73
Earnings (loss) per share - diluted		$	0.56		$	0.74		$	0.82			$	(0.56	)		$	0.69			$	2.11			$	1.72
Dividends per share		$	0.23		$	0.23		$	0.23			$	0.23			$	0.23			$	0.69			$	0.69
Weighted average shares outstanding
Basic			61,069,750			61,063,277			61,011,059				60,969,400				61,114,804				61,048,244				61,334,344
Diluted			61,263,032			61,230,031			61,193,275				61,173,249				61,318,715				61,219,022				61,519,685
Period end shares outstanding			61,070,095			61,069,036			61,048,516				60,977,686				60,953,864				61,070,095				60,953,864
(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
September 30, 2023
($ in thousands)
(unaudited)
		Quarter Ended
NONPERFORMING ASSETS (1)		9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022
Nonaccrual LHFI
Alabama (2)		$	23,530			$	11,058			$	10,919			$	12,300			$	12,710
Florida			151				334				256				227				227
Mississippi (3)			45,050				36,288				32,560				24,683				23,517
Tennessee (4)			1,841				5,088				5,416				5,566				5,120
Texas			20,327				22,259				23,224				23,196				26,353
Total nonaccrual LHFI			90,899				75,027				72,375				65,972				67,927
Other real estate
Alabama (2)			315				—				—				194				217
Mississippi (3)			942				1,137				1,495				1,769				2,754
Tennessee (4)			—				—				189				23				—
Texas			4,228				—				—				—				—
Total other real estate			5,485				1,137				1,684				1,986				2,971
Total nonperforming assets		$	96,384			$	76,164			$	74,059			$	67,958			$	70,898
LOANS PAST DUE OVER 90 DAYS (1)
LHFI		$	3,804			$	3,911			$	2,255			$	3,929			$	1,842
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)		$	42,532			$	35,766			$	41,468			$	49,320			$	48,313
		Quarter Ended																				Nine Months Ended
ACL LHFI (1)		9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022				9/30/2023				9/30/2022
Beginning Balance		$	129,298			$	122,239			$	120,214			$	115,050			$	103,140			$	120,214			$	99,457
Provision for credit losses, LHFI			8,322				8,211				3,244				6,902				12,919				19,777				14,775
Charge-offs			(7,496	)			(2,773	)			(2,996	)			(3,893	)			(2,920	)			(13,265	)			(7,439	)
Recoveries			3,907				1,621				1,777				2,155				1,911				7,305				8,257
Net (charge-offs) recoveries			(3,589	)			(1,152	)			(1,219	)			(1,738	)			(1,009	)			(5,960	)			818
Ending Balance		$	134,031			$	129,298			$	122,239			$	120,214			$	115,050			$	134,031			$	115,050
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama (2)		$	(165	)		$	(141	)		$	(268	)		$	98			$	93			$	(574	)		$	1,921
Florida			21				(35	)			(36	)			(60	)			(23	)			(50	)			712
Mississippi (3)			(1,867	)			(762	)			(775	)			(1,657	)			(702	)			(3,404	)			(1,056	)
Tennessee (4)			2,127				(166	)			(124	)			(195	)			(202	)			1,837				(595	)
Texas			(3,705	)			(48	)			(16	)			76				(175	)			(3,769	)			(164	)
Total net (charge-offs) recoveries		$	(3,589	)		$	(1,152	)		$	(1,219	)		$	(1,738	)		$	(1,009	)		$	(5,960	)		$	818
(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
September 30, 2023
(unaudited)
		Quarter Ended																				Nine Months Ended
FINANCIAL RATIOS AND OTHER DATA		9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022				9/30/2023			9/30/2022
Return on average equity			8.53	%			11.43	%			13.39	%			-9.05	%			10.48	%		11.07	%		8.62	%
Return on average tangible equity			11.32	%			15.18	%			18.03	%			-12.14	%			13.90	%		14.77	%		11.39	%
Return on average assets			0.72	%			0.96	%			1.10	%			-0.76	%			0.98	%		0.93	%		0.81	%
Interest margin - Yield - FTE			5.38	%			5.16	%			4.87	%			4.40	%			3.71	%		5.14	%		3.14	%
Interest margin - Cost			2.08	%			1.83	%			1.47	%			0.73	%			0.21	%		1.80	%		0.14	%
Net interest margin - FTE			3.29	%			3.33	%			3.39	%			3.66	%			3.50	%		3.34	%		3.00	%
Efficiency ratio (1)			68.33	%			66.17	%			65.60	%			65.85	%			64.96	%		66.70	%		70.70	%
Full-time equivalent employees			2,756				2,761				2,758				2,738				2,717
CREDIT QUALITY RATIOS (2)
Net (recoveries) charge-offs / average loans			0.11	%			0.04	%			0.04	%			0.06	%			0.03	%		0.06	%		-0.01	%
Provision for credit losses, LHFI / average loans			0.26	%			0.26	%			0.10	%			0.23	%			0.45	%		0.21	%		0.18	%
Nonaccrual LHFI / (LHFI + LHFS)			0.70	%			0.59	%			0.57	%			0.53	%			0.58	%
Nonperforming assets / (LHFI + LHFS)			0.74	%			0.60	%			0.58	%			0.55	%			0.60	%
Nonperforming assets / (LHFI + LHFS + other real estate)			0.74	%			0.60	%			0.58	%			0.55	%			0.60	%
ACL LHFI / LHFI			1.05	%			1.03	%			0.98	%			0.99	%			0.99	%
ACL LHFI-commercial / commercial LHFI			0.86	%			0.84	%			0.80	%			0.85	%			0.93	%
ACL LHFI-consumer / consumer and home mortgage LHFI			1.66	%			1.60	%			1.54	%			1.41	%			1.20	%
ACL LHFI / nonaccrual LHFI			147.45	%			172.34	%			168.90	%			182.22	%			169.37	%
ACL LHFI / nonaccrual LHFI (excl individually analyzed loans)			273.60	%			301.44	%			320.80	%			399.19	%			466.03	%
CAPITAL RATIOS
Total equity / total assets			8.54	%			8.53	%			8.28	%			8.28	%			8.78	%
Tangible equity / tangible assets			6.57	%			6.56	%			6.35	%			6.27	%			6.67	%
Tangible equity / risk-weighted assets			7.81	%			7.91	%			7.94	%			7.61	%			8.15	%
Tier 1 leverage ratio			8.49	%			8.35	%			8.29	%			8.47	%			9.01	%
Common equity tier 1 capital ratio			9.89	%			9.87	%			9.76	%			9.74	%			10.63	%
Tier 1 risk-based capital ratio			10.29	%			10.27	%			10.17	%			10.15	%			11.06	%
Total risk-based capital ratio			12.11	%			12.08	%			11.95	%			11.91	%			12.85	%
STOCK PERFORMANCE
Market value-Close		$	21.73			$	21.12			$	24.70			$	34.91			$	30.63
Book value		$	25.71			$	25.73			$	25.59			$	24.47			$	24.76
Tangible book value		$	19.37			$	19.38			$	19.24			$	18.11			$	18.39
(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
September 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 Stanford Settlement) relating to litigation involving the Stanford Financial Group. On January 13, 2023, TNB entered into a Settlement Agreement (the Stanford Settlement Agreement) reflecting the terms of the Stanford Settlement. The parties to the Stanford Settlement Agreement are, on the one hand, (i) Ralph S. Janvey, solely in his capacity as the court-appointed receiver (the Stanford 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 Stanford 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 Stanford 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 Stanford 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 Stanford Receiver.

The Stanford 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 Stanford Settlement.

The Stanford 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 Stanford 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 Stanford Settlement Agreement (which has occurred, as described further below) may not be upheld on appeal.

The Stanford 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 Stanford Settlement Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Stanford 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 Stanford 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 Stanford 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 Stanford 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 Stanford Settlement Agreement and the judgment and bar order with respect to the Jackson Action.

On May 10, 2023, Robert Allen Stanford, writing from prison, appealed the District Court’s approval of the Stanford Settlement to the Fifth Circuit Court of Appeals. On June 12, 2023, the Stanford Receiver moved to dismiss the appeal as frivolous. On July 25, 2023, a three-judge panel of the Fifth Circuit issued a per curiam order dismissing Stanford’s appeal as frivolous. On August 8, 2023, Mr. Stanford filed a motion for stay of mandate pending petition for certiorari. On August 22, 2023, the Fifth Circuit denied the motion for stay of mandate. On August 30, 2023, the Fifth Circuit issued the mandate.

The Stanford Settlement will become effective when the trial court’s ruling approving the Stanford Settlement and entering the bar order becomes final and non-appealable, as defined in the Stanford Settlement Agreement (the Stanford Settlement Effective Date). Within five days of the Stanford 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 Stanford 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 Stanford Settlement payment.

On August 11, 2023, the Stanford Receiver filed a Motion to Enforce Settlement Agreement in the Northern District of Texas District Court, asking Judge Godbey to rule that the Stanford Settlement Effective Date has occurred. The Stanford Receiver took the position that Mr. Stanford’s appeals are frivolous and do not prevent the trial court’s ruling from becoming final and non-appealable, as defined in the Stanford Settlement Agreement. TNB filed a response in opposition to the Stanford Receiver’s Motion to Enforce. The trial court has not yet ruled on the Motion to Enforce. On September 22, 2023, the Stanford Receiver filed a Motion to Enjoin, requesting that the trial court enjoin Mr. Stanford from making court filings in any Stanford-related case, including notices of appeal, without obtaining leave of the court. The court has not yet ruled on the Motion to Enjoin.

Pending the resolution of the Stanford 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 Stanford Settlement and the Stanford 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.

As previously announced, on August 30, 2023, TNB agreed to a settlement in principle (the Adams/Madison Timber Settlement) relating to litigation and claims involving Arthur Lamar Adams and Madison Timber Properties, LLC (collectively, Adams/Madison Timber). On October 9, 2023, TNB entered into a Settlement Agreement (the Adams/Madison Timber Settlement Agreement) reflecting the terms of the Adams/Madison Timber Settlement. The parties to the Adams/Madison Timber Settlement are, on the one hand, Alysson Mills in her capacity as Court-appointed Receiver (the Adams/Madison Timber Receiver); and, on the other hand, TNB. Under the terms of the Adams/Madison Timber Settlement Agreement, the parties agreed to settle and dismiss the Adams/Madison Timber Action, and the Adams/Madison Timber Receiver will fully release all claims against TNB and any of its employees, agents and representatives. The Adams/Madison Timber Settlement includes the parties’ agreement to seek the Court’s entry of bar orders prohibiting any continued or future claims by anyone against TNB and its related parties relating to Adams/Madison Timber, whether asserted to date or not. The bar orders therefore would prohibit all litigation relating to Adams/Madison Timber described herein. Final Court approval of a bar order is a condition of the Adams/Madison Timber Settlement.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
September 30, 2023
($ in thousands)
(unaudited)

Note 1 - Litigation Settlement (continued)

The Adams/Madison Timber Settlement is also subject to notice to Adams/Madison Timber investors, and final, non-appealable approval by the Court and entry of a judgment dismissing the Lawsuit against TNB. The timing of any final decision by the Court is subject to the discretion of the Court and any appeal. If the Adams/Madison Timber Settlement, including the bar order described above, is approved by the Court and is not subject to further appeal, TNB will make a one-time cash payment of $6.5 million to the Adams/Madison Timber Receiver.

While TNB believes that the Adams/Madison Timber Settlement is consistent with the terms of settlements in similar cases that have been approved and were not successfully appealed, it is possible that the Court may decide not to approve the Adams/Madison Timber Settlement Agreement or that the Court of Appeals could reject the Adams/Madison Timber Settlement Agreement on an appeal, either of which could render the Adams/Madison Timber Settlement a nullity.

At the time of the entry into the Stanford Settlement as described above, 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. As a result of the entry into the Adams/Madison Timber Settlement as described above, Trustmark Corporation recognized $6.5 million of litigation settlement expense which was included in noninterest expense related to the Adams/Madison Timber litigation during the third quarter of 2023. Trustmark Corporation expects that both the Stanford Settlement and Adams/Madison Timber 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
September 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:

		9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities		$	363,476			$	362,966			$	386,903			$	391,513			$	416,278
U.S. Government agency obligations			6,780				6,999				7,254				7,766				9,116
Obligations of states and political subdivisions			4,642				4,813				4,907				4,862				4,763
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			22,881				25,336				26,851				27,097				28,164
Issued by FNMA and FHLMC			1,171,521				1,250,435				1,317,848				1,345,463				1,718,057
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			90,402				98,388				108,192				115,140				126,138
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			106,472				122,946				132,207				132,241				141,970
Total securities available for sale		$	1,766,174			$	1,871,883			$	1,984,162			$	2,024,082			$	2,444,486
SECURITIES HELD TO MATURITY
U.S. Treasury securities		$	28,872			$	28,679			$	28,486			$	28,295			$	—
Obligations of states and political subdivisions			341				1,180				4,507				4,510				4,512
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			13,090				13,235				4,336				4,442				4,527
Issued by FNMA and FHLMC			474,003				484,679				497,854				509,311				179,375
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			162,031				171,002				179,334				188,201				197,923
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			759,950				759,890				759,821				759,755				770,648
Total securities held to maturity		$	1,438,287			$	1,458,665			$	1,474,338			$	1,494,514			$	1,156,985

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 September 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 $60.4 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 99.9% 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
September 30, 2023
($ in thousands)
(unaudited)

Note 3 – Loan Composition

LHFI consisted of the following during the periods presented:

LHFI BY TYPE		9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022
Loans secured by real estate:
Construction, land development and other land loans		$	1,609,326			$	1,722,657			$	1,723,772			$	1,719,542			$	1,647,395
Secured by 1-4 family residential properties			2,893,606				2,854,182				2,822,048				2,775,847				2,597,112
Secured by nonfarm, nonresidential properties			3,569,671				3,471,728				3,375,579				3,278,830				3,206,946
Other real estate secured			1,218,499				954,410				847,527				742,538				593,119
Commercial and industrial loans			1,828,924				1,883,480				1,882,360				1,821,259				1,689,532
Consumer loans			161,940				163,788				162,911				166,425				163,412
State and other political subdivision loans			1,056,569				1,111,710				1,193,727				1,223,863				1,188,703
Other loans			471,724				452,012				489,271				475,735				499,845
LHFI			12,810,259				12,613,967				12,497,195				12,204,039				11,586,064
ACL LHFI			(134,031	)			(129,298	)			(122,239	)			(120,214	)			(115,050	)
Net LHFI		$	12,676,228			$	12,484,669			$	12,374,956			$	12,083,825			$	11,471,014

The following table presents the LHFI composition by region and reflects each region’s diversified mix of loans:

	September 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	$	1,609,326			$	663,662			$	48,627			$	420,356			$	36,803			$	439,878
Secured by 1-4 family residential properties		2,893,606				143,673				53,575				2,582,837				83,462				30,059
Secured by nonfarm, nonresidential properties		3,569,671				1,034,874				225,415				1,472,990				158,448				677,944
Other real estate secured		1,218,499				574,432				1,786				339,070				7,234				295,977
Commercial and industrial loans		1,828,924				596,259				24,918				748,944				210,930				247,873
Consumer loans		161,940				22,496				7,870				100,908				20,332				10,334
State and other political subdivision loans		1,056,569				75,952				61,154				794,052				25,302				100,109
Other loans		471,724				159,267				8,615				198,567				32,950				72,325
Loans	$	12,810,259			$	3,270,615			$	431,960			$	6,657,724			$	575,461			$	1,874,499
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots	$	70,356			$	28,476			$	9,633			$	17,847			$	3,786			$	10,614
Development		141,561				66,958				1,264				37,430				9,547				26,362
Unimproved land		104,733				21,528				12,079				33,736				8,399				28,991
1-4 family construction		338,731				175,267				17,871				91,549				15,071				38,973
Other construction		953,945				371,433				7,780				239,794				—				334,938
Construction, land development and other land loans	$	1,609,326			$	663,662			$	48,627			$	420,356			$	36,803			$	439,878
(1) Includes Georgia Loan Production Office.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
September 30, 2023
($ in thousands)
(unaudited)

Note 3 – Loan Composition (continued)

		September 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		$	347,583			$	113,885			$	26,299			$	117,698			$	20,497			$	69,204
Office			279,701				102,062				17,527				90,600				1,679				67,833
Hotel/motel			302,738				172,577				50,221				53,467				26,473				—
Mini-storage			158,429				32,591				1,952				103,801				765				19,320
Industrial			401,023				90,512				20,175				134,431				9,839				146,066
Health care			96,798				68,699				—				25,316				335				2,448
Convenience stores			30,278				7,105				432				13,618				561				8,562
Nursing homes/senior living			500,572				224,541				—				158,619				5,076				112,336
Other			128,293				46,672				9,382				53,862				8,558				9,819
Total non-owner occupied loans			2,245,415				858,644				125,988				751,412				73,783				435,588
Owner-occupied:
Office			156,016				43,789				35,448				46,191				11,153				19,435
Churches			62,835				16,432				4,261				36,020				3,594				2,528
Industrial warehouses			164,150				15,231				3,957				40,616				17,002				87,344
Health care			126,980				11,400				6,017				88,912				2,287				18,364
Convenience stores			143,188				11,801				29,443				67,261				196				34,487
Retail			90,471				10,370				13,880				39,378				17,836				9,007
Restaurants			57,112				4,095				3,467				31,116				15,181				3,253
Auto dealerships			44,669				5,780				206				21,859				16,824				—
Nursing homes/senior living			346,129				43,995				—				275,934				—				26,200
Other			132,706				13,337				2,748				74,291				592				41,738
Total owner-occupied loans			1,324,256				176,230				99,427				721,578				84,665				242,356
Loans secured by nonfarm, nonresidential properties		$	3,569,671			$	1,034,874			$	225,415			$	1,472,990			$	158,448			$	677,944
(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																				Nine Months Ended
		9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022				9/30/2023				9/30/2022
Securities – taxable			1.89	%			1.87	%			1.85	%			1.71	%			1.62	%			1.87	%			1.50	%
Securities – nontaxable			4.05	%			4.25	%			4.00	%			3.95	%			3.97	%			4.09	%			3.98	%
Securities – total			1.89	%			1.87	%			1.86	%			1.72	%			1.63	%			1.87	%			1.51	%
PPP loans			—				—				—				12.39	%			7.51	%			—				3.83	%
Loans - LHFI & LHFS			6.34	%			6.08	%			5.79	%			5.27	%			4.48	%			6.07	%			3.97	%
Loans - total			6.34	%			6.08	%			5.79	%			5.27	%			4.48	%			6.07	%			3.97	%
Fed funds sold & reverse repurchases			5.17	%			5.51	%			5.11	%			4.29	%			3.51	%			5.34	%			3.06	%
Other earning assets			5.01	%			5.36	%			4.09	%			3.76	%			1.82	%			4.87	%			0.56	%
Total earning assets			5.38	%			5.16	%			4.87	%			4.40	%			3.71	%			5.14	%			3.14	%
Interest-bearing deposits			2.39	%			1.96	%			1.53	%			0.71	%			0.20	%			1.97	%			0.14	%
Fed funds purchased & repurchases			5.14	%			5.01	%			4.49	%			3.44	%			1.95	%			4.87	%			0.94	%
Other borrowings			5.32	%			5.12	%			4.87	%			3.73	%			2.89	%			5.10	%			2.56	%
Total interest-bearing liabilities			2.72	%			2.42	%			1.98	%			1.03	%			0.31	%			2.38	%			0.21	%
Total Deposits			1.84	%			1.48	%			1.13	%			0.51	%			0.14	%			1.49	%			0.10	%
Net interest margin			3.29	%			3.33	%			3.39	%			3.66	%			3.50	%			3.34	%			3.00	%
Net interest margin excluding PPP loans and the FRB balance			3.24	%			3.23	%			3.36	%			3.66	%			3.53	%			3.27	%			3.17	%

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
September 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 third quarter of 2023, the average FRB balance totaled $566.3 million compared to $777.0 million for the second 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 remained relatively flat when compared to the second quarter of 2023, totaling 3.24% for the third quarter of 2023, as increased yields on the loans held for investment and held for sale portfolio was mostly offset by increased costs of interest-bearing deposits.

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 $1.0 million during the third quarter of 2023.

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

		Quarter Ended																				Nine Months Ended
		9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022				9/30/2023				9/30/2022
Mortgage servicing income, net		$	6,916			$	6,764			$	6,785			$	6,636			$	6,669			$	20,465			$	19,655
Change in fair value-MSR from runoff			(3,203	)			(2,710	)			(1,145	)			(2,981	)			(3,462	)			(7,058	)			(11,053	)
Gain on sales of loans, net			3,748				3,887				3,797				3,328				4,597				11,432				16,850
Mortgage banking income before hedge ineffectiveness			7,461				7,941				9,437				6,983				7,804				24,839				25,452
Change in fair value-MSR from market changes			6,809				5,898				(3,972	)			(3,348	)			10,770				8,735				41,529
Change in fair value of derivatives			(7,812	)			(7,239	)			2,174				(227	)			(11,698	)			(12,877	)			(42,083	)
Net positive (negative) hedge ineffectiveness			(1,003	)			(1,341	)			(1,798	)			(3,575	)			(928	)			(4,142	)			(554	)
Mortgage banking, net		$	6,458			$	6,600			$	7,639			$	3,408			$	6,876			$	20,697			$	24,898

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
September 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																				Nine Months Ended
		9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022				9/30/2023				9/30/2022
Partnership amortization for tax credit purposes		$	(1,995	)		$	(2,019	)		$	(1,961	)		$	(1,869	)		$	(1,531	)		$	(5,975	)		$	(4,342	)
Increase in life insurance cash surrender value			1,784				1,716				1,693				1,687				1,676				5,193				4,986
Other miscellaneous income			2,610				3,998				2,782				2,493				2,273				9,390				6,887
Total other, net		$	2,399			$	3,695			$	2,514			$	2,311			$	2,418			$	8,608			$	7,531

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

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

		Quarter Ended																				Nine Months Ended
		9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022				9/30/2023				9/30/2022
Loan expense (1)		$	3,130			$	3,066			$	2,538			$	2,908			$	2,866			$	8,734			$	9,341
Amortization of intangibles			129				130				288				312				312				547				1,122
FDIC assessment expense			3,765				2,550				2,370				2,130				1,945				8,685				5,255
Other real estate expense, net			(40	)			171				172				18				497				303				1,155
Other miscellaneous expense			8,714				8,585				9,443				9,767				8,117				26,742				23,834
Total other expense (1)		$	15,698			$	14,502			$	14,811			$	15,135			$	13,737			$	45,011			$	40,707
(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
September 30, 2023
($ in thousands)
(unaudited)

Note 7 – Non-GAAP Financial Measures (continued)

				Quarter Ended																				Nine Months Ended
				9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022				9/30/2023				9/30/2022
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity				$	1,582,885			$	1,580,291			$	1,523,828			$	1,493,291			$	1,606,469			$	1,562,551			$	1,642,450
Less: Goodwill					(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)
Identifiable intangible assets					(3,174	)			(3,301	)			(3,523	)			(3,816	)			(4,131	)			(3,331	)			(4,479	)
Total average tangible equity				$	1,195,474			$	1,192,753			$	1,136,068			$	1,105,238			$	1,218,101			$	1,174,983			$	1,253,734
PERIOD END BALANCES
Total shareholders' equity				$	1,570,351			$	1,571,193			$	1,562,099			$	1,492,268			$	1,508,945
Less: Goodwill					(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)
Identifiable intangible assets					(3,093	)			(3,222	)			(3,352	)			(3,640	)			(3,952	)
Total tangible equity		(a)		$	1,183,021			$	1,183,734			$	1,174,510			$	1,104,391			$	1,120,756
TANGIBLE ASSETS
Total assets				$	18,390,839			$	18,422,626			$	18,877,178			$	18,015,478			$	17,190,634
Less: Goodwill					(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)
Identifiable intangible assets					(3,093	)			(3,222	)			(3,352	)			(3,640	)			(3,952	)
Total tangible assets		(b)		$	18,003,509			$	18,035,167			$	18,489,589			$	17,627,601			$	16,802,445
Risk-weighted assets		(c)		$	15,143,531			$	14,966,614			$	14,793,893			$	14,521,078			$	13,748,819
NET INCOME (LOSS) ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income (loss)				$	34,029			$	45,037			$	50,300			$	(34,063	)		$	42,455			$	129,366			$	105,950
Plus: Intangible amortization net of tax					96				97				216				234				234				409				842
Net income (loss) adjusted for intangible amortization				$	34,125			$	45,134			$	50,516			$	(33,829	)		$	42,689			$	129,775			$	106,792
Period end common shares outstanding		(d)			61,070,095				61,069,036				61,048,516				60,977,686				60,953,864
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity (1)					11.32	%			15.18	%			18.03	%			-12.14	%			13.90	%			14.77	%			11.39	%
Tangible equity/tangible assets		(a)/(b)			6.57	%			6.56	%			6.35	%			6.27	%			6.67	%
Tangible equity/risk-weighted assets		(a)/(c)			7.81	%			7.91	%			7.94	%			7.61	%			8.15	%
Tangible book value		(a)/(d)*1,000		$	19.37			$	19.38			$	19.24			$	18.11			$	18.39
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity				$	1,570,351			$	1,571,193			$	1,562,099			$	1,492,268			$	1,508,945
CECL transition adjustment					13,000				13,000				13,000				19,500				19,500
AOCI-related adjustments					287,888				265,704				242,381				275,403				306,412
CET1 adjustments and deductions:
Goodwill net of associated deferred tax liabilities (DTLs)					(370,219	)			(370,227	)			(370,234	)			(370,241	)			(370,217	)
Other adjustments and deductions for CET1 (2)					(2,803	)			(2,915	)			(3,275	)			(3,258	)			(3,506	)
CET1 capital		(e)			1,498,217				1,476,755				1,443,971				1,413,672				1,461,134
Additional tier 1 capital instruments plus related surplus					60,000				60,000				60,000				60,000				60,000
Tier 1 capital				$	1,558,217			$	1,536,755			$	1,503,971			$	1,473,672			$	1,521,134
Common equity tier 1 capital ratio		(e)/(c)			9.89	%			9.87	%			9.76	%			9.74	%			10.63	%
(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
September 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																				Nine Months Ended
		9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022				9/30/2023				9/30/2022
Net interest income (GAAP)		$	138,637			$	139,904			$	137,595			$	146,583			$	136,105			$	416,136			$	348,125
Noninterest income (GAAP)			52,224				53,553				51,377				45,170				52,606				157,154				159,974
Pre-provision revenue	(a)	$	190,861			$	193,457			$	188,972			$	191,753			$	188,711			$	573,290			$	508,099
Noninterest expense (GAAP)		$	140,945			$	132,218			$	128,327			$	231,229			$	126,698			$	401,490			$	371,984
Less: Litigation settlement expense			(6,500	)			—				—				(100,750	)			—				(6,500	)			—
Adjusted noninterest expense - PPNR (Non-GAAP)	(b)	$	134,445			$	132,218			$	128,327			$	130,479			$	126,698			$	394,990			$	371,984
PPNR (Non-GAAP)	(a)-(b)	$	56,416			$	61,239			$	60,645			$	61,274			$	62,013			$	178,300			$	136,115

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

	Quarter Ended																		Nine Months Ended
	9/30/2023									9/30/2022									9/30/2023									9/30/2022
	Amount				Diluted EPS					Amount				Diluted EPS					Amount				Diluted EPS					Amount				Diluted EPS
Net income (loss) (GAAP)	$	34,029			$	0.56				$	42,455			$	0.69				$	129,366			$	2.11				$	105,950			$	1.72
Significant non-routine transactions (net of taxes):
Litigation settlement expense		4,875				0.08					—				—					4,875				0.08					—				—
Net income adjusted for significant non-routine transactions (Non-GAAP)	$	38,904			$	0.64				$	42,455			$	0.69				$	134,241			$	2.19				$	105,950			$	1.72
	Reported (GAAP)				Adjusted (Non- GAAP)					Reported (GAAP)				Adjusted (Non- GAAP)					Reported (GAAP)				Adjusted (Non- GAAP)					Reported (GAAP)				Adjusted (Non- GAAP)
Return on average equity		8.53	%			9.74	%				10.48	%		n/a						11.07	%			11.48	%				8.62	%		n/a
Return on average tangible equity		11.32	%			12.92	%				13.90	%		n/a						14.77	%			15.31	%				11.39	%		n/a
Return on average assets		0.72	%			0.83	%				0.98	%		n/a						0.93	%			0.96	%				0.81	%		n/a
n/a - not applicable

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
September 30, 2023
($ in thousands)
(unaudited)

Note 7 – Non-GAAP Financial Measures (continued)

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

		Quarter Ended																				Nine Months Ended
		9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022				9/30/2023				9/30/2022
Total noninterest expense (GAAP)		$	140,945			$	132,218			$	128,327			$	231,229			$	126,698			$	401,490			$	371,984
Less: Other real estate expense, net			40				(171	)			(172	)			(18	)			(497	)			(303	)			(1,155	)
Amortization of intangibles			(129	)			(130	)			(288	)			(312	)			(312	)			(547	)			(1,122	)
Charitable contributions resulting in state tax credits			(325	)			(325	)			(325	)			(375	)			(375	)			(975	)			(1,125	)
Litigation settlement expense			(6,500	)			—				—				(100,750	)			—				(6,500	)			—
Adjusted noninterest expense (Non-GAAP)	(c)	$	134,031			$	131,592			$	127,542			$	129,774			$	125,514			$	393,165			$	368,582
Net interest income (GAAP)		$	138,637			$	139,904			$	137,595			$	146,583			$	136,105			$	416,136			$	348,125
Add: Tax equivalent adjustment			3,299				3,383				3,477				3,451				2,975				10,159				8,894
Net interest income-FTE (Non-GAAP)	(a)	$	141,936			$	143,287			$	141,072			$	150,034			$	139,080			$	426,295			$	357,019
Noninterest income (GAAP)		$	52,224			$	53,553			$	51,377			$	45,170			$	52,606			$	157,154			$	159,974
Add: Partnership amortization for tax credit purposes			1,995				2,019				1,961				1,869				1,531				5,975				4,342
Adjusted noninterest income (Non-GAAP)	(b)	$	54,219			$	55,572			$	53,338			$	47,039			$	54,137			$	163,129			$	164,316
Adjusted revenue (Non-GAAP)	(a)+(b)	$	196,155			$	198,859			$	194,410			$	197,073			$	193,217			$	589,424			$	521,335
Efficiency ratio (Non-GAAP)	(c)/((a)+(b))		68.33	%			66.17	%			65.60	%			65.85	%			64.96	%			66.70	%			70.70	%

View source version on businesswire.com: https://www.businesswire.com/news/home/20231024731289/en/

Contacts

Trustmark Investor Contacts:
Thomas C. Owens
Treasurer and Principal Financial Officer
601-208-7853

F. Joseph Rein, Jr.
Senior Vice President
601-208-6898

Trustmark Media Contact:
Melanie A. Morgan
Senior Vice President
601-208-2979