Trustmark Corporation Announces Second Quarter 2021 Financial Results

·18 min read

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

JACKSON, Miss., July 27, 2021--(BUSINESS WIRE)--Trustmark Corporation (NASDAQGS: TRMK) reported net income of $48.0 million in the second quarter of 2021, representing diluted earnings per share of $0.76. This level of earnings resulted in a return on average tangible equity of 13.96% and a return on average assets of 1.13%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable September 15, 2021, to shareholders of record on September 1, 2021.

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Second Quarter Highlights

  • Pre-provision net revenue totaled $57.2 million, a linked-quarter increase of 38.2%. Please refer to the Consolidated Financial Information, Note 8 – Non-GAAP Financial Measures.

  • Sale of $354.2 million of Paycheck Protection Program (PPP) loans originated in 2021 resulted in accelerated recognition of $18.6 million in origination fees, which is included in net interest income

  • Credit quality remained solid; nonperforming assets declined 17.9% linked-quarter

  • Continued steady growth in loans held for investment (HFI) and deposits

  • Noninterest expense declined 2.4% linked-quarter

Duane A. Dewey, President and CEO, stated, "Our associates are focused on expanding existing customer relationships as well as demonstrating the value Trustmark can provide potential customers as their trusted financial partner. The success of these efforts is reflected in solid growth in our traditional banking and mortgage businesses as well as strong performance in our insurance and wealth management businesses. Earlier this year, we introduced redesigned digital channels to enhance the customer experience and provide expanded sales capabilities, including on-line account openings. Customers have embraced these offerings and we look forward to leveraging these new tools to expand relationships and profitably generate additional revenue.

"We are pleased to have been recognized during the second quarter by Forbes as the Best-in-State Bank in Mississippi in 2021, based upon independent customer satisfaction surveys. This is affirmation that our associates are providing the financial solutions and convenience our customers’ desire," said Dewey

Balance Sheet Management

  • Loans HFI totaled $10.2 billion, up 1.7% from the prior quarter and 5.1% year-over-year

  • Investment securities totaled $3.0 billion, up 5.3% from the prior quarter and 17.2% year-over-year

  • PPP loans totaled $166.1 million, down 75.6% from the prior quarter and 82.3% year-over-year

  • Deposits totaled $14.6 billion, up 1.7% from the prior quarter and 8.3% year-over-year

  • Maintained strong capital position with CET1 ratio of 11.76% and total risk-based capital ratio of 14.10%

Loans HFI totaled $10.2 billion at June 30, 2021, reflecting an increase of $169.2 million, or 1.7%, linked-quarter and $493.1 million, or 5.1%, year-over-year. The linked-quarter growth primarily reflects increases in municipal loans, 1-4 family mortgage loans, loans secured by nonfarm, nonresidential properties, and construction loans, which were offset in part by a decline in other real estate secured loans. Trustmark’s loan portfolio remains well-diversified by loan type and geography.

Deposits totaled $14.6 billion at June 30, 2021, up $248.6 million, or 1.7%, from the prior quarter and $1.1 billion, or 8.3%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 69.4% of total deposits at June 30, 2021. Noninterest-bearing deposits represented 30.4% of total deposits at the end of the second quarter. Interest-bearing deposit costs totaled 0.19% in the second quarter, a decrease of 3 basis points from the prior quarter. The total cost of interest-bearing liabilities was 0.25% in the second quarter of 2021, a decrease of 3 basis points from the prior quarter.

During the second quarter, Trustmark repurchased $20.8 million, or approximately 630 thousand of its common shares. During the first six months of 2021, Trustmark repurchased $25.0 million, or approximately 775 thousand of its common shares. At June 30, 2021, Trustmark had $75.0 million in remaining authority under its existing stock repurchase program, which expires on December 31, 2021. The repurchase program, which is subject to market conditions and management discretion, will continue to be implemented through open market repurchases or privately negotiated transactions. At June 30, 2021, Trustmark’s tangible equity-to-tangible assets ratio was 8.31% while its total risk-based capital ratio was 14.10%. Tangible book value per share was $22.13 at June 30, 2021, up 2.5% linked-quarter and 9.7% year-over-year.

Credit Quality

  • Allowance for credit losses (ACL) represented 537.35% of nonaccrual loans, excluding individually evaluated loans at June 30, 2021

  • Net charge-offs totaled $1.2 million in the second quarter

  • Loans remaining under a COVID-19 related concession represented approximately 19 basis points of loans HFI at June 30, 2021

Nonaccrual loans totaled $51.4 million at June 30, 2021, down $12.1 million from the prior quarter and up $1.5 million year-over-year. Other real estate totaled $9.4 million, reflecting a $1.2 million decrease from the prior quarter and decline of $8.8 million year-over-year. Collectively, nonperforming assets totaled $60.9 million at June 30, 2021, reflecting a linked-quarter decrease of $13.3 million and year-over-year decline of $7.4 million.

The provision for credit losses for loans HFI was a negative $4.0 million in the second quarter. Negative provisioning was primarily driven by decreases in individually analyzed reserves, qualitative reserves due to improvements in credit quality, and improving economic forecasts. The provision for credit losses for off-balance sheet credit exposures was $4.5 million in the second quarter. Off-balance sheet expense was primarily driven by an increase in off-balance sheet exposure as well as the implementation of probability of default and loss given default floors at a portfolio level to ensure appropriate risk is reflected as macroeconomic conditions improve. Collectively, the provision for credit losses totaled $537 thousand in the second quarter compared to negative $19.9 million in the prior quarter and expense of $24.4 million in the second quarter of 2020.

Allocation of Trustmark’s $104.0 million allowance for credit losses on loans HFI represented 1.04% of commercial loans and 0.98% of consumer and home mortgage loans, resulting in an allowance to total loans HFI of 1.02% at June 30, 2021. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.

Revenue Generation

  • Total revenue increased $12.9 million, or 7.9%, linked-quarter

  • Net interest income (FTE) expanded $17.2 million, or 16.3%, linked-quarter

  • Excluding PPP interest and fees, net interest income (FTE) increased $836 thousand linked-quarter

  • Noninterest income totaled $56.4 million, representing 32.1% of total revenue in the second quarter

  • Wealth Management revenue increased 6.3% linked-quarter and 18.2% year-over-year

Revenue in the second quarter totaled $175.8 million, an increase of $12.9 million, or 7.9%, from the prior quarter and $1.3 million, or 0.8%, from the same quarter in the prior year. The linked-quarter increase reflects $18.6 million of PPP loan origination fees attributable to the previously announced sale of $354.2 million in PPP loans during the second quarter.

Net interest income (FTE) in the second quarter totaled $122.4 million, resulting in a net interest margin of 3.16%, up 35 basis points from the prior quarter. The net interest margin, excluding PPP loans and Federal Reserve Bank balance, totaled 2.94% during the second quarter, a decrease of 5 basis points when compared to the prior quarter. Continued low interest rates decreased the yield on the loans HFI and held for sale portfolio as well as the securities portfolio, and were partially offset by lower costs on interest-bearing deposits.

Noninterest income in the second quarter totaled $56.4 million, a decrease of $4.2 million from the prior quarter and $13.1 million year-over-year. The linked quarter and year-over-year changes are principally attributable to lower mortgage banking revenue. Mortgage loan production in the second quarter totaled $736.8 million, down 3.9% from the prior quarter and 13.7% year-over-year. Mortgage banking revenue totaled $17.3 million in the second quarter, a decrease of $3.5 million from the prior quarter and $16.4 million year-over-year. The linked-quarter decline is principally attributable to reduced spreads which resulted in lower net gains on sales of mortgage loans in the secondary market.

Wealth management revenue totaled $8.9 million in the second quarter, an increase of $530 thousand, or 6.3%, from the prior quarter and $1.4 million, or 18.2%, year-over-year. The growth is attributable to increased trust and investment and brokerage business. Insurance revenue totaled $12.2 million in the second quarter, down 1.8%, or $228 thousand, from the prior quarter due to seasonality and up 2.9%, or $349 thousand, year-over-year. Service charges on deposit accounts increased $257 thousand, or 3.5%, from the prior quarter and $1.2 million, or 19.0%, year-over-year. Bank card and other fees decreased $1.2 million from the prior quarter and increased $584 thousand year-over-year. The linked-quarter decline reflects reduced customer derivative revenue.

Noninterest Expense

  • Noninterest expense totaled $118.7 million in the second quarter, down $2.9 million, or 2.4%, from the prior quarter

  • Adjusted noninterest expense, which excludes amortization of intangibles, ORE expenses and charitable contributions resulting in state tax credits, declined $3.9 million, or 3.3%, from the prior quarter; please refer to the Consolidated Financial Information, Note 8 – Non-GAAP Financial Measures

  • Efficiency ratio improved to 64.31% in the second quarter

Adjusted noninterest expense in the second quarter was $116.3 million, down $3.9 million, or 3.3%, from the prior quarter. Salaries and employee benefits decreased $1.0 million linked-quarter principally due to the seasonality of payroll taxes in the prior quarter. Services and fees decreased $715 thousand and total equipment expense declined $677 thousand in the second quarter compared to the prior quarter. Total other expense in the second quarter declined $1.4 million, or 9.6%, from the prior quarter. Other real estate expense, net totaled $1.5 million in the second quarter compared to $324 thousand in the prior quarter, reflecting increased valuation allowances on other real estate.

"We continued to implement strategic initiatives designed to improve efficiency, accelerate growth and provide innovation while maintaining solid risk management and our corporate culture," said Dewey. During the first six months of 2021, Trustmark continued to realign delivery channels and closed nine offices reflecting changing customer preferences and the continued migration to mobile and digital banking channels. Additionally, Trustmark opened three new offices, one each in the Birmingham, AL MSA, Jackson, MS MSA, and Memphis, TN MSA. Each of these offices features a design that integrates myTeller® interactive teller machine (ITM) technology as well as provides enhanced areas for customer interaction.

"In addition to branch realignment initiatives, we recently announced a voluntary early retirement program for eligible associates, who have until July 31, 2021, to elect to participate in the program. Most participants are expected to retire effective August 31, 2021. Based upon participation, we plan to redesign workflows and restructure the organization to leverage investments in technology, enhance the customer experience and improve efficiency. We anticipate providing additional information regarding this program in our third quarter earnings release," said Dewey.

"Trustmark has a program to systematically invest in and upgrade technology. In recent years, investments in state-of-the-art technology were made in Trustmark’s insurance, wealth management and mortgage banking areas as well as in human resources and accounting systems. We also made significant upgrades to our mobile banking platform, ITM network and digital marketing programs. Collectively, these investments have well-positioned Trustmark for additional growth and expansion. Over the last 36 months, we have been working toward the implementation of a new core banking system for consumer and commercial loans, deposits and customer information. This implementation, which we have named Core Optimization for Relationship Enhancement (CORE), is a multi-year project, the first phase of which will occur later this year. These investments will better position Trustmark for continued growth, enhance efficiency, and improve the customers’ experience," said Dewey.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, July 28, 2021 at 8:30 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (877) 317-3051 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Wednesday, August 11, 2021, in archived format at the same web address or by calling (877) 344-7529, passcode 10158119.

Trustmark is a financial services company providing banking and financial solutions through 180 offices in Alabama, Florida, Mississippi, Tennessee and Texas.

Forward-Looking Statements

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

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

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

TRUSTMARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

June 30, 2021

($ in thousands)

(unaudited)

Linked Quarter

Year over Year

QUARTERLY AVERAGE BALANCES

6/30/2021

3/31/2021

6/30/2020

$ Change

% Change

$ Change

% Change

Securities AFS-taxable

$

2,339,662

$

2,098,089

$

1,724,320

$

241,573

11.5

%

$

615,342

35.7

%

Securities AFS-nontaxable

5,174

5,190

9,827

(16

)

-0.3

%

(4,653

)

-47.3

%

Securities HTM-taxable

441,688

489,260

655,085

(47,572

)

-9.7

%

(213,397

)

-32.6

%

Securities HTM-nontaxable

10,958

24,070

25,538

(13,112

)

-54.5

%

(14,580

)

-57.1

%

Total securities

2,797,482

2,616,609

2,414,770

180,873

6.9

%

382,712

15.8

%

Paycheck protection program loans (PPP)

648,222

598,139

764,416

50,083

8.4

%

(116,194

)

-15.2

%

Loans (includes loans held for sale)

10,315,927

10,316,319

9,908,132

(392

)

0.0

%

407,795

4.1

%

Fed funds sold and reverse repurchases

55

136

113

(81

)

-59.6

%

(58

)

-51.3

%

Other earning assets

1,750,385

1,667,906

854,642

82,479

4.9

%

895,743

n/m

Total earning assets

15,512,071

15,199,109

13,942,073

312,962

2.1

%

1,569,998

11.3

%

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

(112,346

)

(119,557

)

(103,006

)

7,211

6.0

%

(9,340

)

-9.1

%

Other assets

1,622,388

1,601,250

1,685,317

21,138

1.3

%

(62,929

)

-3.7

%

Total assets

$

17,022,113

$

16,680,802

$

15,524,384

$

341,311

2.0

%

$

1,497,729

9.6

%

Interest-bearing demand deposits

$

4,056,910

$

3,743,651

$

3,832,372

$

313,259

8.4

%

$

224,538

5.9

%

Savings deposits

4,627,180

4,659,037

4,180,540

(31,857

)

-0.7

%

446,640

10.7

%

Time deposits

1,301,896

1,371,830

1,578,737

(69,934

)

-5.1

%

(276,841

)

-17.5

%

Total interest-bearing deposits

9,985,986

9,774,518

9,591,649

211,468

2.2

%

394,337

4.1

%

Fed funds purchased and repurchases

174,620

166,909

105,696

7,711

4.6

%

68,924

65.2

%

Other borrowings

132,199

166,926

107,533

(34,727

)

-20.8

%

24,666

22.9

%

Subordinated notes

122,897

122,875

22

0.0

%

122,897

n/m

Junior subordinated debt securities

61,856

61,856

61,856

0.0

%

0.0

%

Total interest-bearing liabilities

10,477,558

10,293,084

9,866,734

184,474

1.8

%

610,824

6.2

%

Noninterest-bearing deposits

4,512,268

4,363,559

3,645,761

148,709

3.4

%

866,507

23.8

%

Other liabilities

251,582

264,808

346,173

(13,226

)

-5.0

%

(94,591

)

-27.3

%

Total liabilities

15,241,408

14,921,451

13,858,668

319,957

2.1

%

1,382,740

10.0

%

Shareholders' equity

1,780,705

1,759,351

1,665,716

21,354

1.2

%

114,989

6.9

Total liabilities and equity

$

17,022,113

$

16,680,802

$

15,524,384

$

341,311

2.0

%

$

1,497,729

9.6

%

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

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

June 30, 2021

($ in thousands)

(unaudited)

Linked Quarter

Year over Year

PERIOD END BALANCES

6/30/2021

3/31/2021

6/30/2020

$ Change

% Change

$ Change

% Change

Cash and due from banks

$

2,267,224

$

1,774,541

$

1,026,640

$

492,683

27.8

%

$

1,240,584

n/m

Fed funds sold and reverse repurchases

n/m

n/m

Securities available for sale

2,548,739

2,337,676

1,884,153

211,063

9.0

%

664,586

35.3

%

Securities held to maturity

433,012

493,738

660,048

(60,726

)

-12.3

%

(227,036

)

-34.4

%

PPP loans

166,119

679,725

939,783

(513,606

)

-75.6

%

(773,664

)

-82.3

%

Loans held for sale (LHFS)

332,132

412,999

355,089

(80,867

)

-19.6

%

(22,957

)

-6.5

%

Loans held for investment (LHFI)

10,152,869

9,983,704

9,659,806

169,165

1.7

%

493,063

5.1

%

ACL LHFI

(104,032

)

(109,191

)

(119,188

)

5,159

-4.7

%

15,156

-12.7

%

Net LHFI

10,048,837

9,874,513

9,540,618

174,324

1.8

%

508,219

5.3

%

Premises and equipment, net

200,970

199,098

190,567

1,872

0.9

%

10,403

5.5

%

Mortgage servicing rights

80,764

83,035

57,811

(2,271

)

-2.7

%

22,953

39.7

%

Goodwill

384,237

384,237

385,270

0.0

%

(1,033

)

-0.3

%

Identifiable intangible assets

6,170

6,724

8,895

(554

)

-8.2

%

(2,725

)

-30.6

%

Other real estate

9,439

10,651

18,276

(1,212

)

-11.4

%

(8,837

)

-48.4

%

Operating lease right-of-use assets

33,201

33,704

29,819

(503

)

-1.5

%

3,382

11.3

%

Other assets

587,288

587,672

595,110

(384

)

-0.1

%

(7,822

)

-1.3

%

Total assets

$

17,098,132

$

16,878,313

$

15,692,079

$

219,819

1.3

%

$

1,406,053

9.0

%

Deposits:

Noninterest-bearing

$

4,446,991

$

4,705,991

$

3,880,540

$

(259,000

)

-5.5

%

$

566,451

14.6

%

Interest-bearing

10,185,093

9,677,449

9,624,933

507,644

5.2

%

560,160

5.8

%

Total deposits

14,632,084

14,383,440

13,505,473

248,644

1.7

%

1,126,611

8.3

%

Fed funds purchased and repurchases

157,176

160,991

70,255

(3,815

)

-2.4

%

86,921

n/m

Other borrowings

117,223

145,994

152,860

(28,771

)

-19.7

%

(35,637

)

-23.3

%

Subordinated notes

122,932

122,877

55

0.0

%

122,932

n/m

Junior subordinated debt securities

61,856

61,856

61,856

0.0

%

0.0

%

ACL on off-balance sheet credit exposures

33,733

29,205

42,663

4,528

15.5

%

(8,930

)

-20.9

%

Operating lease liabilities

34,959

35,389

31,076

(430

)

-1.2

%

3,883

12.5

%

Other liabilities

158,860

178,856

153,952

(19,996

)

-11.2

%

4,908

3.2

%

Total liabilities

15,318,823

15,118,608

14,018,135

200,215

1.3

%

1,300,688

9.3

%

Common stock

13,079

13,209

13,214

(130

)

-1.0

%

(135

)

-1.0

%

Capital surplus

210,420

229,892

230,613

(19,472

)

-8.5

%

(20,193

)

-8.8

%

Retained earnings

1,566,451

1,533,110

1,419,552

33,341

2.2

%

146,899

10.3

%

Accum other comprehensive income (loss),
net of tax

(10,641

)

(16,506

)

10,565

5,865

35.5

%

(21,206

)

n/m

Total shareholders' equity

1,779,309

1,759,705

1,673,944

19,604

1.1

%

105,365

6.3

%

Total liabilities and equity

$

17,098,132

$

16,878,313

$

15,692,079

$

219,819

1.3

%

$

1,406,053

9.0

%

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

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

June 30, 2021

($ in thousands except per share data)

(unaudited)

Quarter Ended

Linked Quarter

Year over Year

INCOME STATEMENTS

6/30/2021

3/31/2021

6/30/2020

$ Change

% Change

$ Change

% Change

Interest and fees on LHFS & LHFI-FTE

$

93,698

$

93,394

$

99,300

$

304

0.3%

$

(5,602)

-5.6%

Interest and fees on PPP loans

25,555

9,241

5,044

16,314

n/m

20,511

n/m

Interest on securities-taxable

8,991

8,938

12,762

53

0.6%

(3,771)

-29.5%

Interest on securities-tax exempt-FTE

149

290

315

(141)

-48.6%

(166)

-52.7%

Interest on fed funds sold and reverse repurchases

n/m

n/m

Other interest income

489

503

239

(14)

-2.8%

250

n/m

Total interest income-FTE

128,882

112,366

117,660

16,516

14.7%

11,222

9.5%

Interest on deposits

4,630

5,223

8,730

(593)

-11.4%

(4,100)

-47.0%

Interest on fed funds purchased and repurchases

59

56

42

3

5.4%

17

40.5%

Other interest expense

1,813

1,857

881

(44)

-2.4%

932

n/m

Total interest expense

6,502

7,136

9,653

(634)

-8.9%

(3,151)

-32.6%

Net interest income-FTE

122,380

105,230

108,007

17,150

16.3%

14,373

13.3%

Provision for credit losses, LHFI

(3,991)

(10,501)

18,185

6,510

62.0%

(22,176)

n/m

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

4,528

(9,367)

6,242

13,895

n/m

(1,714)

-27.5%

Net interest income after provision-FTE

121,843

125,098

83,580

(3,255)

-2.6%

38,263

45.8%

Service charges on deposit accounts

7,613

7,356

6,397

257

3.5%

1,216

19.0%

Bank card and other fees

8,301

9,472

7,717

(1,171)

-12.4%

584

7.6%

Mortgage banking, net

17,333

20,804

33,745

(3,471)

-16.7%

(16,412)

-48.6%

Insurance commissions

12,217

12,445

11,868

(228)

-1.8%

349

2.9%

Wealth management

8,946

8,416

7,571

530

6.3%

1,375

18.2%

Other, net

2,001

2,090

2,213

(89)

-4.3%

(212)

-9.6%

Total noninterest income

56,411

60,583

69,511

(4,172)

-6.9%

(13,100)

-18.8%

Salaries and employee benefits

70,115

71,162

66,107

(1,047)

-1.5%

4,008

6.1%

Services and fees

21,769

22,484

20,567

(715)

-3.2%

1,202

5.8%

Net occupancy-premises

6,578

6,795

6,587

(217)

-3.2%

(9)

-0.1%

Equipment expense

5,567

6,244

5,620

(677)

-10.8%

(53)

-0.9%

Other real estate expense, net

1,511

324

271

1,187

n/m

1,240

n/m

Other expense

13,139

14,539

13,265

(1,400)

-9.6%

(126)

-0.9%

Total noninterest expense

118,679

121,548

112,417

(2,869)

-2.4%

6,262

5.6%

Income before income taxes and tax eq adj

59,575

64,133

40,674

(4,558)

-7.1%

18,901

46.5%

Tax equivalent adjustment

2,957

2,894

3,007

63

2.2%

(50)

-1.7%

Income before income taxes

56,618

61,239

37,667

(4,621)

-7.5%

18,951

50.3%

Income taxes

8,637

9,277

5,517

(640)

-6.9%

3,120

56.6%

Net income

$

47,981

$

51,962

$

32,150

$

(3,981)

-7.7%

$

15,831

49.2%

Per share data

Earnings per share - basic

$

0.76

$

0.82

$

0.51

$

(0.06)

-7.3%

$

0.25

49.0%

Earnings per share - diluted

$

0.76

$

0.82

$

0.51

$

(0.06)

-7.3%

$

0.25

49.0%

Dividends per share

$

0.23

$

0.23

$

0.23

0.0%

0.0%

Weighted average shares outstanding

Basic

63,214,593

63,395,911

63,416,307

Diluted

63,409,683

63,562,503

63,555,065

Period end shares outstanding

62,773,226

63,394,522

63,422,439

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

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

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

June 30, 2021

($ in thousands)

(unaudited)

Quarter Ended

Linked Quarter

Year over Year

NONPERFORMING ASSETS (1)

6/30/2021

3/31/2021

6/30/2020

$ Change

% Change

$ Change

% Change

Nonaccrual LHFI

Alabama

$

8,952

$

9,161

$

4,392

$

(209

)

-2.3

%

$

4,560

n/m

Florida

467

607

687

(140

)

-23.1

%

(220

)

-32.0

%

Mississippi (2)

23,422

35,534

37,884

(12,112

)

-34.1

%

(14,462

)

-38.2

%

Tennessee (3)

10,751

12,451

6,125

(1,700

)

-13.7

%

4,626

75.5

%

Texas

7,856

5,761

906

2,095

36.4

%

6,950

n/m

Total nonaccrual LHFI

51,448

63,514

49,994

(12,066

)

-19.0

%

1,454

2.9

%

Other real estate

Alabama

2,830

3,085

4,766

(255

)

-8.3

%

(1,936

)

-40.6

%

Florida

3,665

n/m

(3,665

)

-100.0

%

Mississippi (2)

6,550

7,566

9,408

(1,016

)

-13.4

%

(2,858

)

-30.4

%

Tennessee (3)

59

437

59

n/m

(378

)

-86.5

%

Texas

n/m

n/m

Total other real estate

9,439

10,651

18,276

(1,212

)

-11.4

%

(8,837

)

-48.4

%

Total nonperforming assets

$

60,887

$

74,165

$

68,270

$

(13,278

)

-17.9

%

$

(7,383

)

-10.8

%

LOANS PAST DUE OVER 90 DAYS (1)

LHFI

$

423

$

2,593

$

807

$

(2,170

)

-83.7

%

$

(384

)

-47.6

%

LHFS-Guaranteed GNMA serviced loans

(no obligation to repurchase)

$

81,538

$

109,566

$

56,269

$

(28,028

)

-25.6

%

$

25,269

44.9

%

Quarter Ended

Linked Quarter

Year over Year

ACL LHFI (1)

6/30/2021

3/31/2021

6/30/2020

$ Change

% Change

$ Change

% Change

Beginning Balance

$

109,191

$

117,306

$

100,564

$

(8,115

)

-6.9

%

$

8,627

8.6

%

CECL adoption adjustments:

LHFI

n/m

n/m

Acquired loan transfers

n/m

n/m

Provision for credit losses, LHFI

(3,991

)

(10,501

)

18,185

6,510

62.0

%

(22,176

)

n/m

Charge-offs

(4,828

)

(1,245

)

(1,870

)

(3,583

)

n/m

(2,958

)

n/m

Recoveries

3,660

3,631

2,309

29

0.8

%

1,351

58.5

%

Net (charge-offs) recoveries

(1,168

)

2,386

439

(3,554

)

n/m

(1,607

)

n/m

Ending Balance

$

104,032

$

109,191

$

119,188

$

(5,159

)

-4.7

%

$

(15,156

)

-12.7

%

NET (CHARGE-OFFS) RECOVERIES (1)

Alabama

$

203

$

102

$

526

$

101

99.0

%

$

(323

)

-61.4

%

Florida

167

30

(127

)

137

n/m

294

n/m

Mississippi (2)

(3,071

)

2,207

(86

)

(5,278

)

n/m

(2,985

)

n/m

Tennessee (3)

1,031

47

66

984

n/m

965

n/m

Texas

502

60

502

n/m

442

n/m

Total net (charge-offs) recoveries

$

(1,168

)

$

2,386

$

439

$

(3,554

)

n/m

$

(1,607

)

n/m

(1) Excludes PPP loans.

(2) Mississippi includes Central and Southern Mississippi Regions.

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

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

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

June 30, 2021

($ in thousands)

(unaudited)

Quarter Ended

Six Months Ended

AVERAGE BALANCES

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

6/30/2021

6/30/2020

Securities AFS-taxable

$

2,339,662

$

2,098,089

$

1,902,162

$

1,857,050

$

1,724,320

$

2,219,543

$

1,672,371

Securities AFS-nontaxable

5,174

5,190

5,206

5,973

9,827

5,182

15,942

Securities HTM-taxable

441,688

489,260

550,563

608,585

655,085

465,343

674,913

Securities HTM-nontaxable

10,958

24,070

24,752

25,508

25,538

17,478

25,606

Total securities

2,797,482

2,616,609

2,482,683

2,497,116

2,414,770

2,707,546

2,388,832

PPP loans

648,222

598,139

875,098

941,456

764,416

623,319

382,208

Loans (includes loans held for sale)

10,315,927

10,316,319

10,231,671

10,162,379

9,908,132

10,316,122

9,793,153

Fed funds sold and reverse repurchases

55

136

303

301

113

95

139

Other earning assets

1,750,385

1,667,906

860,540

722,917

854,642

1,709,373

520,985

Total earning assets

15,512,071

15,199,109

14,450,295

14,324,169

13,942,073

15,356,455

13,085,317

ACL LHFI

(112,346

)

(119,557

)

(124,088

)

(121,842

)

(103,006

)

(115,932

)

(94,011

)

Other assets

1,622,388

1,601,250

1,620,694

1,564,825

1,685,317

1,611,877

1,592,019

Total assets

$

17,022,113

$

16,680,802

$

15,946,901

$

15,767,152

$

15,524,384

$

16,852,400

$

14,583,325

Interest-bearing demand deposits

$

4,056,910

$

3,743,651

$

3,649,590

$

3,669,249

$

3,832,372

$

3,901,146

$

3,508,253

Savings deposits

4,627,180

4,659,037

4,350,783

4,416,046

4,180,540

4,643,020

3,913,738

Time deposits

1,301,896

1,371,830

1,436,677

1,507,348

1,578,737

1,336,670

1,598,022

Total interest-bearing deposits

9,985,986

9,774,518

9,437,050

9,592,643

9,591,649

9,880,836

9,020,013

Fed funds purchased and repurchases

174,620

166,909

170,474

84,077

105,696

170,786

176,605

Other borrowings

132,199

166,926

173,525

167,262

107,533

149,467

96,406

Subordinated notes

122,897

122,875

42,828

122,886

Junior subordinated debt securities

61,856

61,856

61,856

61,856

61,856

61,856

61,856

Total interest-bearing liabilities

10,477,558

10,293,084

9,885,733

9,905,838

9,866,734

10,385,831

9,354,880

Noninterest-bearing deposits

4,512,268

4,363,559

4,100,849

3,921,867

3,645,761

4,438,324

3,278,356

Other liabilities

251,582

264,808

235,284

244,544

346,173

258,158

297,196

Total liabilities

15,241,408

14,921,451

14,221,866

14,072,249

13,858,668

15,082,313

12,930,432

Shareholders' equity

1,780,705

1,759,351

1,725,035

1,694,903

1,665,716

1,770,087

1,652,893

Total liabilities and equity

$

17,022,113

$

16,680,802

$

15,946,901

$

15,767,152

$

15,524,384

$

16,852,400

$

14,583,325

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

June 30, 2021

($ in thousands)

(unaudited)

PERIOD END BALANCES

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

Cash and due from banks

$

2,267,224

$

1,774,541

$

1,952,504

$

564,588

$

1,026,640

Fed funds sold and reverse repurchases

50

50

Securities available for sale

2,548,739

2,337,676

1,991,815

1,922,728

1,884,153

Securities held to maturity

433,012

493,738

538,072

611,280

660,048

PPP loans

166,119

679,725

610,134

944,270

939,783

LHFS

332,132

412,999

446,951

485,103

355,089

LHFI

10,152,869

9,983,704

9,824,524

9,847,728

9,659,806

ACL LHFI

(104,032

)

(109,191

)

(117,306

)

(122,010

)

(119,188

)

Net LHFI

10,048,837

9,874,513

9,707,218

9,725,718

9,540,618

Premises and equipment, net

200,970

199,098

194,278

192,722

190,567

Mortgage servicing rights

80,764

83,035

66,464

61,613

57,811

Goodwill

384,237

384,237

385,270

385,270

385,270

Identifiable intangible assets

6,170

6,724

7,390

8,142

8,895

Other real estate

9,439

10,651

11,651

16,248

18,276

Operating lease right-of-use assets

33,201

33,704

30,901

30,508

29,819

Other assets

587,288

587,672

609,142

609,922

595,110

Total assets

$

17,098,132

$

16,878,313

$

16,551,840

$

15,558,162

$

15,692,079

Deposits:

Noninterest-bearing

$

4,446,991

$

4,705,991

$

4,349,010

$

3,964,023

$

3,880,540

Interest-bearing

10,185,093

9,677,449

9,699,754

9,258,390

9,624,933

Total deposits

14,632,084

14,383,440

14,048,764

13,222,413

13,505,473

Fed funds purchased and repurchases

157,176

160,991

164,519

153,834

70,255

Other borrowings

117,223

145,994

168,252

178,599

152,860

Subordinated notes

122,932

122,877

122,921

Junior subordinated debt securities

61,856

61,856

61,856

61,856

61,856

ACL on off-balance sheet credit exposures

33,733

29,205

38,572

39,659

42,663

Operating lease liabilities

34,959

35,389

32,290

31,838

31,076

Other liabilities

158,860

178,856

173,549

159,922

153,952

Total liabilities

15,318,823

15,118,608

14,810,723

13,848,121

14,018,135

Common stock

13,079

13,209

13,215

13,215

13,214

Capital surplus

210,420

229,892

233,120

231,836

230,613

Retained earnings

1,566,451

1,533,110

1,495,833

1,459,306

1,419,552

Accum other comprehensive income (loss), net of tax

(10,641

)

(16,506

)

(1,051

)

5,684

10,565

Total shareholders' equity

1,779,309

1,759,705

1,741,117

1,710,041

1,673,944

Total liabilities and equity

$

17,098,132

$

16,878,313

$

16,551,840

$

15,558,162

$

15,692,079

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

June 30, 2021

($ in thousands except per share data)

(unaudited)

Quarter Ended

Six Months Ended

INCOME STATEMENTS

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

6/30/2021

6/30/2020

Interest and fees on LHFS & LHFI-FTE

$

93,698

$

93,394

$

96,453

$

97,429

$

99,300

$

187,092

$

208,657

Interest and fees on PPP loans

25,555

9,241

14,870

6,729

5,044

34,796

5,044

Interest on securities-taxable

8,991

8,938

9,998

12,542

12,762

17,929

25,710

Interest on securities-tax exempt-FTE

149

290

293

301