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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Trustmark Corporation | NASDAQ:TRMK | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.04 | 0.12% | 33.76 | 28.18 | 34.47 | 34.50 | 33.63 | 33.74 | 302,900 | 23:10:03 |
Loan and Deposit Growth Continues, Credit Quality Remains Strong, Insurance and Wealth Management Revenue Expands
Trustmark Corporation (NASDAQGS:TRMK) reported net income of $29.2 million in the first quarter of 2022, representing diluted earnings per share of $0.47. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable June 15, 2022, to shareholders of record on June 1, 2022.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20220426005303/en/
Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/52697270/en
First Quarter Highlights
Duane A. Dewey, President and CEO, stated, “Our first quarter financial performance reflects solid loan growth and expansion in both net interest income and noninterest income. Our balance sheet is well-positioned for additional increases in interest rates and credit quality remains a hallmark of the organization. We continue to focus on efficiency enhancements throughout the organization, including rationalization of the branch network as well as investments in technology to better serve customers. Trustmark remains well-positioned to serve and expand our customer base and create long-term value for our shareholders.”
Balance Sheet Management
Loans HFI totaled $10.4 billion at March 31, 2022, reflecting an increase of $149.3 million, or 1.5%, linked-quarter and $413.4 million, or 4.1%, year-over-year. The linked-quarter growth reflects increases in 1-4 family mortgage loans, commercial and industrial loans, and loans to municipalities. Growth in these areas was partially offset by reductions in other loans, construction, land development and other land loans, and other real estate secured loans. Trustmark’s loan portfolio remains well-diversified by loan type and geography.
Deposits totaled $15.1 billion at March 31, 2022, up $26.1 million, or 0.2%, from the prior quarter and $729.9 million, or 5.1%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 68.8% of total deposits at March 31, 2022. Noninterest-bearing deposits represented 31.4% of total deposits at the end of the first quarter, compared to 31.6% in the prior quarter. Interest-bearing deposit costs totaled 0.11% for the first quarter, a decrease of 2 basis points from the prior quarter. The total cost of interest-bearing liabilities was 0.16% for the first quarter of 2022, a decrease of 3 basis points from the prior quarter.
During the first quarter, Trustmark repurchased $9.1 million, or approximately 279 thousand of its common shares, in open market transactions. At March 31, 2022, Trustmark had $90.9 million in remaining authority under its existing stock repurchase program, which expires December 31, 2022. 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 March 31, 2022, Trustmark’s tangible equity to tangible assets ratio was 7.29%, while its total risk-based capital ratio was 13.53%. Tangible book value per share was $20.22 at March 31, 2022, down 7.8% from the prior quarter reflecting a decline in other comprehensive income due to valuation adjustments on securities available for sale resulting from the increase in market interest rates during the first quarter.
Credit Quality
Nonaccrual loans totaled $64.4 million at March 31, 2022, up $1.7 million from the prior quarter and $885 thousand year-over-year. Other real estate totaled $3.2 million, reflecting a $1.4 million decrease from the prior quarter and a decline of $7.5 million year-over-year. Collectively, nonperforming assets totaled $67.6 million at March 31, 2022, reflecting a linked-quarter increase of $331 thousand and a year-over-year decrease of $6.6 million.
The provision for credit losses for loans HFI was a negative $860 thousand in the first quarter while the provision for credit losses for off-balance sheet credit exposures was a negative $1.1 million. Collectively, the provision for credit losses totaled a negative $2.0 million in the first quarter and was attributable to an increase in reserves due to individually analyzed loans and loan growth which were more than offset by improvements in the macroeconomic forecast and credit quality.
Allocation of Trustmark’s $98.7 million allowance for credit losses on loans HFI represented 0.95% of commercial loans and 0.96% of consumer and home mortgage loans, resulting in an allowance to total loans HFI of 0.95% at March 31, 2022. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.
Revenue Generation
Revenue in the first quarter totaled $153.5 million, up 2.9% from the prior quarter and down 5.8% from the same quarter in the prior year. The linked-quarter increase reflected higher net interest income as well as increased noninterest income. The decline in revenue year-over-year was attributable principally to a reduction in interest and fees on PPP loans as well as the decline in mortgage banking revenues from historically high levels.
Net interest income (FTE) in the first quarter totaled $102.3 million, resulting in a net interest margin of 2.58%, up 5 basis points from the prior quarter. The net interest margin, excluding PPP loans and Federal Reserve Bank balance, totaled 2.88% the first quarter, an increase of 6 basis points when compared to the prior quarter. The expansion of the net interest margin excluding PPP loans and the Federal Reserve Bank balance was due to increases in the yields on the loans held for investment and held for sale portfolio and the securities portfolio as well as lower costs of interest-bearing liabilities.
Noninterest income in the first quarter totaled $54.1 million, an increase of $3.3 million from the prior quarter and a decrease of $6.5 million year-over-year. The linked-quarter increases in insurance, wealth management and other, net revenue, which includes a gain on the sale of a former branch facility, were offset in part by a decline in mortgage banking revenue. Mortgage loan production in the first quarter totaled $544.3 million, down 7.9% from the prior quarter and 29.0% year-over-year. Mortgage banking revenue totaled $9.9 million in the first quarter, a decrease of $1.7 million from the prior quarter and $10.9 million year-over-year. The linked-quarter and year-over-year declines were principally attributable to reduced volumes and spreads, which collectively resulted in lower net gains on sales of mortgage loans in the secondary market.
Insurance revenue totaled $14.1 million in the first quarter, up 20.3%, or $2.4 million, from the fourth quarter of 2021 and 13.2%, or $1.6 million, year-over-year. The linked-quarter and year-over-year increase primarily reflected growth in commercial property and casualty commissions. Wealth management revenue in the first quarter totaled $9.1 million, an increase of $297 thousand, or 3.4%, from the prior quarter and $638 thousand, or 7.6%, year-over-year. The linked-quarter growth reflected higher trust management revenue while growth year-over-year reflects increased trust management and brokerage revenue.
Noninterest Expense
Noninterest expense in the first quarter was $121.5 million, up $2.1 million, or 1.7%, from the prior quarter. Salaries and employee benefits increased $1.3 million linked-quarter principally due to payroll taxes. Services and fees increased $1.5 million linked-quarter due to continued investments in technology and higher professional fees while net occupancy-premises expense grew $263 thousand linked-quarter. Equipment expense and other expense collectively declined $1.1 million linked-quarter.
FIT2GROW
“We have accelerated our efforts to optimize our branch network, reflecting changing customer preferences and the continued migration to mobile and digital banking channels. We have identified 11 branch offices across the franchise to be closed during 2022, with estimated annualized expense savings of $2.0 million in 2023. Many of these offices are near other existing Trustmark locations. We also anticipate additional opportunities to realign our organizational structure to serve customers more effectively. These initiatives are components of FIT2GROW, a comprehensive program of Focus, Innovation and Transformation designed to enhance Trustmark’s ability to grow and serve customers and build long-term value for our shareholders. More information on these important initiatives will be provided in coming quarters,” said Dewey.
Additional Information
As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, April 27, 2022, at 8:30 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (877) 317-3051 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Wednesday, May 11, 2022, in archived format at the same web address or by calling (877) 344-7529, passcode 7381408.
Trustmark is a financial services company providing banking and financial solutions through 179 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 Item 1A. Risk Factors in this report 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, 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 Securities and Exchange Commission (SEC).
Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Except as required by law, we undertake no obligation to update or revise any of this information, whether as the result of new information, future events or developments or otherwise.
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2022 ($ in thousands) (unaudited) Linked Quarter Year over Year QUARTERLY AVERAGE BALANCES 3/31/2022 12/31/2021 3/31/2021 $ Change % Change $ Change % Change Securities AFS-taxable$
3,245,502
$
3,156,740
$
2,098,089
$
88,762
2.8
%
$
1,147,413
54.7
%
Securities AFS-nontaxable
5,127
5,143
5,190
(16
)
-0.3
%
(63
)
-1.2
%
Securities HTM-taxable
410,851
364,038
489,260
46,813
12.9
%
(78,409
)
-16.0
%
Securities HTM-nontaxable
7,327
7,618
24,070
(291
)
-3.8
%
(16,743
)
-69.6
%
Total securities
3,668,807
3,533,539
2,616,609
135,268
3.8
%
1,052,198
40.2
%
Paycheck protection program loans (PPP)
29,009
42,749
598,139
(13,740
)
-32.1
%
(569,130
)
-95.2
%
Loans (includes loans held for sale)
10,550,712
10,487,679
10,316,319
63,033
0.6
%
234,393
2.3
%
Fed funds sold and reverse repurchases
56
58
136
(2
)
-3.4
%
(80
)
-58.8
%
Other earning assets
1,811,713
1,839,498
1,667,906
(27,785
)
-1.5
%
143,807
8.6
%
Total earning assets
16,060,297
15,903,523
15,199,109
156,774
1.0
%
861,188
5.7
%
Allowance for credit losses (ACL), loans held for investment (LHFI)
(99,390
)
(104,148
)
(119,557
)
4,758
4.6
%
20,167
16.9
%
Other assets
1,550,848
1,570,501
1,601,250
(19,653
)
-1.3
%
(50,402
)
-3.1
%
Total assets$
17,511,755
$
17,369,876
$
16,680,802
$
141,879
0.8
%
$
830,953
5.0
%
Interest-bearing demand deposits$
4,429,056
$
4,353,599
$
3,743,651
$
75,457
1.7
%
$
685,405
18.3
%
Savings deposits
4,791,104
4,585,624
4,659,037
205,480
4.5
%
132,067
2.8
%
Time deposits
1,193,435
1,220,083
1,371,830
(26,648
)
-2.2
%
(178,395
)
-13.0
%
Total interest-bearing deposits
10,413,595
10,159,306
9,774,518
254,289
2.5
%
639,077
6.5
%
Fed funds purchased and repurchases
212,006
201,856
166,909
10,150
5.0
%
45,097
27.0
%
Other borrowings
91,090
94,328
166,926
(3,238
)
-3.4
%
(75,836
)
-45.4
%
Subordinated notes
123,061
123,007
122,875
54
0.0
%
186
0.2
%
Junior subordinated debt securities
61,856
61,856
61,856
—
0.0
%
—
0.0
%
Total interest-bearing liabilities
10,901,608
10,640,353
10,293,084
261,255
2.5
%
608,524
5.9
%
Noninterest-bearing deposits
4,601,108
4,679,951
4,363,559
(78,843
)
-1.7
%
237,549
5.4
%
Other liabilities
295,287
291,449
264,808
3,838
1.3
%
30,479
11.5
%
Total liabilities
15,798,003
15,611,753
14,921,451
186,250
1.2
%
876,552
5.9
%
Shareholders' equity
1,713,752
1,758,123
1,759,351
(44,371
)
-2.5
%
(45,599
)
-2.6
%
Total liabilities and equity$
17,511,755
$
17,369,876
$
16,680,802
$
141,879
0.8
%
$
830,953
5.0
%
n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2022 ($ in thousands) (unaudited) Linked Quarter Year over Year PERIOD END BALANCES 3/31/2022 12/31/2021 3/31/2021 $ Change % Change $ Change % Change Cash and due from banks$
1,917,564
$
2,266,829
$
1,774,541
$
(349,265
)
-15.4
%
$
143,023
8.1
%
Securities available for sale
3,018,246
3,238,877
2,337,676
(220,631
)
-6.8
%
680,570
29.1
%
Securities held to maturity
607,598
342,537
493,738
265,061
77.4
%
113,860
23.1
%
PPP loans
18,579
33,336
679,725
(14,757
)
-44.3
%
(661,146
)
-97.3
%
Loans held for sale (LHFS)
222,538
275,706
412,999
(53,168
)
-19.3
%
(190,461
)
-46.1
%
Loans held for investment (LHFI)
10,397,129
10,247,829
9,983,704
149,300
1.5
%
413,425
4.1
%
ACL LHFI
(98,734
)
(99,457
)
(109,191
)
723
0.7
%
10,457
9.6
%
Net LHFI
10,298,395
10,148,372
9,874,513
150,023
1.5
%
423,882
4.3
%
Premises and equipment, net
207,301
205,644
199,098
1,657
0.8
%
8,203
4.1
%
Mortgage servicing rights
111,050
87,687
83,035
23,363
26.6
%
28,015
33.7
%
Goodwill
384,237
384,237
384,237
—
0.0
%
—
0.0
%
Identifiable intangible assets
4,591
5,074
6,724
(483
)
-9.5
%
(2,133
)
-31.7
%
Other real estate
3,187
4,557
10,651
(1,370
)
-30.1
%
(7,464
)
-70.1
%
Operating lease right-of-use assets
34,048
34,603
33,704
(555
)
-1.6
%
344
1.0
%
Other assets
614,217
568,177
587,672
46,040
8.1
%
26,545
4.5
%
Total assets$
17,441,551
$
17,595,636
$
16,878,313
$
(154,085
)
-0.9
%
$
563,238
3.3
%
Deposits: Noninterest-bearing$
4,739,102
$
4,771,065
$
4,705,991
$
(31,963
)
-0.7
%
$
33,111
0.7
%
Interest-bearing
10,374,190
10,316,095
9,677,449
58,095
0.6
%
696,741
7.2
%
Total deposits
15,113,292
15,087,160
14,383,440
26,132
0.2
%
729,852
5.1
%
Fed funds purchased and repurchases
170,499
238,577
160,991
(68,078
)
-28.5
%
9,508
5.9
%
Other borrowings
84,644
91,025
145,994
(6,381
)
-7.0
%
(61,350
)
-42.0
%
Subordinated notes
123,097
123,042
122,877
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
34,517
35,623
29,205
(1,106
)
-3.1
%
5,312
18.2
%
Operating lease liabilities
35,912
36,468
35,389
(556
)
-1.5
%
523
1.5
%
Other liabilities
186,352
180,574
178,856
5,778
3.2
%
7,496
4.2
%
Total liabilities
15,810,169
15,854,325
15,118,608
(44,156
)
-0.3
%
691,561
4.6
%
Common stock
12,806
12,845
13,209
(39
)
-0.3
%
(403
)
-3.1
%
Capital surplus
167,094
175,913
229,892
(8,819
)
-5.0
%
(62,798
)
-27.3
%
Retained earnings
1,600,138
1,585,113
1,533,110
15,025
0.9
%
67,028
4.4
%
Accumulated other comprehensive income (loss), net of tax
(148,656
)
(32,560
)
(16,506
)
(116,096
)
n/m
(132,150
)
n/m
Total shareholders' equity
1,631,382
1,741,311
1,759,705
(109,929
)
-6.3
%
(128,323
)
-7.3
%
Total liabilities and equity$
17,441,551
$
17,595,636
$
16,878,313
$
(154,085
)
-0.9
%
$
563,238
3.3
%
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2022 ($ in thousands except per share data) (unaudited) Quarter Ended Linked Quarter Year over Year INCOME STATEMENTS 3/31/2022 12/31/2021 3/31/2021 $ Change % Change $ Change % Change Interest and fees on LHFS & LHFI-FTE
$
93,252
$
94,137
$
93,394
$
(885
)
-0.9
%
$
(142
)
-0.2
%
Interest and fees on PPP loans
168
397
9,241
(229
)
-57.7
%
(9,073
)
-98.2
%
Interest on securities-taxable
12,357
10,796
8,938
1,561
14.5
%
3,419
38.3
%
Interest on securities-tax exempt-FTE
122
123
290
(1
)
-0.8
%
(168
)
-57.9
%
Other interest income
817
826
503
(9
)
-1.1
%
314
62.4
%
Total interest income-FTE
106,716
106,279
112,366
437
0.4
%
(5,650
)
-5.0
%
Interest on deposits
2,760
3,401
5,223
(641
)
-18.8
%
(2,463
)
-47.2
%
Interest on fed funds purchased and repurchases
70
66
56
4
6.1
%
14
25.0
%
Other interest expense
1,539
1,580
1,857
(41
)
-2.6
%
(318
)
-17.1
%
Total interest expense
4,369
5,047
7,136
(678
)
-13.4
%
(2,767
)
-38.8
%
Net interest income-FTE
102,347
101,232
105,230
1,115
1.1
%
(2,883
)
-2.7
%
Provision for credit losses, LHFI
(860
)
(4,515
)
(10,501
)
3,655
81.0
%
9,641
91.8
%
Provision for credit losses, off-balance sheet credit exposures
(1,106
)
2,939
(9,367
)
(4,045
)
n/m
8,261
88.2
%
Net interest income after provision-FTE
104,313
102,808
125,098
1,505
1.5
%
(20,785
)
-16.6
%
Service charges on deposit accounts
9,451
9,366
7,356
85
0.9
%
2,095
28.5
%
Bank card and other fees
8,442
8,340
9,472
102
1.2
%
(1,030
)
-10.9
%
Mortgage banking, net
9,873
11,609
20,804
(1,736
)
-15.0
%
(10,931
)
-52.5
%
Insurance commissions
14,089
11,716
12,445
2,373
20.3
%
1,644
13.2
%
Wealth management
9,054
8,757
8,416
297
3.4
%
638
7.6
%
Other, net
3,206
979
2,090
2,227
n/m
1,116
53.4
%
Total noninterest income
54,115
50,767
60,583
3,348
6.6
%
(6,468
)
-10.7
%
Salaries and employee benefits
69,585
68,258
71,162
1,327
1.9
%
(1,577
)
-2.2
%
Services and fees
24,453
22,904
22,484
1,549
6.8
%
1,969
8.8
%
Net occupancy-premises
7,079
6,816
6,795
263
3.9
%
284
4.2
%
Equipment expense
6,061
6,585
6,244
(524
)
-8.0
%
(183
)
-2.9
%
Other expense
14,341
14,906
14,863
(565
)
-3.8
%
(522
)
-3.5
%
Total noninterest expense
121,519
119,469
121,548
2,050
1.7
%
(29
)
0.0
%
Income before income taxes and tax eq adj
36,909
34,106
64,133
2,803
8.2
%
(27,224
)
-42.4
%
Tax equivalent adjustment
3,003
2,906
2,894
97
3.3
%
109
3.8
%
Income before income taxes
33,906
31,200
61,239
2,706
8.7
%
(27,333
)
-44.6
%
Income taxes
4,695
4,978
9,277
(283
)
-5.7
%
(4,582
)
-49.4
%
Net income$
29,211
$
26,222
$
51,962
$
2,989
11.4
%
$
(22,751
)
-43.8
%
Per share data Earnings per share - basic$
0.47
$
0.42
$
0.82
$
0.05
11.9
%
$
(0.35
)
-42.7
%
Earnings per share - diluted$
0.47
$
0.42
$
0.82
$
0.05
11.9
%
$
(0.35
)
-42.7
%
Dividends per share$
0.23
$
0.23
$
0.23
—
0.0
%
—
0.0
%
Weighted average shares outstanding Basic
61,514,395
62,037,884
63,395,911
Diluted
61,709,797
62,264,983
63,562,503
Period end shares outstanding
61,463,392
61,648,679
63,394,522
n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2022 ($ in thousands) (unaudited) Quarter Ended Linked Quarter Year over Year NONPERFORMING ASSETS (1) 3/31/2022 12/31/2021 3/31/2021 $ Change % Change $ Change % Change Nonaccrual LHFI Alabama
$
7,506
$
8,182
$
9,161
$
(676
)
-8.3
%
$
(1,655
)
-18.1
%
Florida
310
313
607
(3
)
-1.0
%
(297
)
-48.9
%
Mississippi (2)
21,318
21,636
35,534
(318
)
-1.5
%
(14,216
)
-40.0
%
Tennessee (3)
9,266
10,501
12,451
(1,235
)
-11.8
%
(3,185
)
-25.6
%
Texas
25,999
22,066
5,761
3,933
17.8
%
20,238
n/m
Total nonaccrual LHFI
64,399
62,698
63,514
1,701
2.7
%
885
1.4
%
Other real estate Alabama
—
—
3,085
—
n/m
(3,085
)
-100.0
%
Mississippi (2)
3,187
4,557
7,566
(1,370
)
-30.1
%
(4,379
)
-57.9
%
Tennessee (3)
—
—
—
—
n/m
—
n/m
Total other real estate
3,187
4,557
10,651
(1,370
)
-30.1
%
(7,464
)
-70.1
%
Total nonperforming assets$
67,586
$
67,255
$
74,165
$
331
0.5
%
$
(6,579
)
-8.9
%
LOANS PAST DUE OVER 90 DAYS (1) LHFI$
1,503
$
2,114
$
2,593
$
(611
)
-28.9
%
$
(1,090
)
-42.0
%
LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase)$
62,078
$
69,894
$
109,566
$
(7,816
)
-11.2
%
$
(47,488
)
-43.3
%
Quarter Ended Linked Quarter Year over Year ACL LHFI (1) 3/31/2022 12/31/2021 3/31/2021 $ Change % Change $ Change % Change Beginning Balance$
99,457
$
104,073
$
117,306
$
(4,616
)
-4.4
%
$
(17,849
)
-15.2
%
Provision for credit losses, LHFI
(860
)
(4,515
)
(10,501
)
3,655
81.0
%
9,641
91.8
%
Charge-offs
(2,242
)
(2,616
)
(1,245
)
374
14.3
%
(997
)
-80.1
%
Recoveries
2,379
2,515
3,631
(136
)
-5.4
%
(1,252
)
-34.5
%
Net (charge-offs) recoveries
137
(101
)
2,386
238
n/m
(2,249
)
-94.3
%
Ending Balance$
98,734
$
99,457
$
109,191
$
(723
)
-0.7
%
$
(10,457
)
-9.6
%
NET (CHARGE-OFFS) RECOVERIES (1) Alabama$
699
$
747
$
102
$
(48
)
-6.4
%
$
597
n/m
Florida
(26
)
(32
)
30
6
18.8
%
(56
)
n/m
Mississippi (2)
(88
)
(683
)
2,207
595
87.1
%
(2,295
)
n/m
Tennessee (3)
(424
)
(130
)
47
(294
)
n/m
(471
)
n/m
Texas
(24
)
(3
)
—
(21
)
n/m
(24
)
n/m
Total net (charge-offs) recoveries
$
137
$
(101
)
$
2,386
$
238
n/m
$
(2,249
)
-94.3
%
(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 March 31, 2022 ($ in thousands) (unaudited) Quarter Ended AVERAGE BALANCES 3/31/2022 12/31/2021 9/30/2021 6/30/2021 3/31/2021 Securities AFS-taxable$
3,245,502
$
3,156,740
$
2,686,765
$
2,339,662
$
2,098,089
Securities AFS-nontaxable
5,127
5,143
5,159
5,174
5,190
Securities HTM-taxable
410,851
364,038
401,685
441,688
489,260
Securities HTM-nontaxable
7,327
7,618
8,641
10,958
24,070
Total securities
3,668,807
3,533,539
3,102,250
2,797,482
2,616,609
PPP loans
29,009
42,749
122,176
648,222
598,139
Loans (includes loans held for sale)
10,550,712
10,487,679
10,389,826
10,315,927
10,316,319
Fed funds sold and reverse repurchases
56
58
69
55
136
Other earning assets
1,811,713
1,839,498
2,038,515
1,750,385
1,667,906
Total earning assets
16,060,297
15,903,523
15,652,836
15,512,071
15,199,109
ACL LHFI
(99,390
)
(104,148
)
(104,857
)
(112,346
)
(119,557
)
Other assets
1,550,848
1,570,501
1,602,611
1,622,388
1,601,250
Total assets
$
17,511,755
$
17,369,876
$
17,150,590
$
17,022,113
$
16,680,802
Interest-bearing demand deposits
$
4,429,056
$
4,353,599
$
4,224,717
$
4,056,910
$
3,743,651
Savings deposits
4,791,104
4,585,624
4,617,683
4,627,180
4,659,037
Time deposits
1,193,435
1,220,083
1,258,829
1,301,896
1,371,830
Total interest-bearing deposits
10,413,595
10,159,306
10,101,229
9,985,986
9,774,518
Fed funds purchased and repurchases
212,006
201,856
147,635
174,620
166,909
Other borrowings
91,090
94,328
109,735
132,199
166,926
Subordinated notes
123,061
123,007
122,951
122,897
122,875
Junior subordinated debt securities
61,856
61,856
61,856
61,856
61,856
Total interest-bearing liabilities
10,901,608
10,640,353
10,543,406
10,477,558
10,293,084
Noninterest-bearing deposits
4,601,108
4,679,951
4,566,924
4,512,268
4,363,559
Other liabilities
295,287
291,449
257,956
251,582
264,808
Total liabilities
15,798,003
15,611,753
15,368,286
15,241,408
14,921,451
Shareholders' equity
1,713,752
1,758,123
1,782,304
1,780,705
1,759,351
Total liabilities and equity
$
17,511,755
$
17,369,876
$
17,150,590
$
17,022,113
$
16,680,802
See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2022 ($ in thousands) (unaudited) PERIOD END BALANCES 3/31/2022 12/31/2021 9/30/2021 6/30/2021 3/31/2021 Cash and due from banks
$
1,917,564
$
2,266,829
$
2,175,058
$
2,267,224
$
1,774,541
Securities available for sale
3,018,246
3,238,877
3,057,605
2,548,739
2,337,676
Securities held to maturity
607,598
342,537
394,905
433,012
493,738
PPP loans
18,579
33,336
46,486
166,119
679,725
LHFS
222,538
275,706
335,339
332,132
412,999
LHFI
10,397,129
10,247,829
10,174,899
10,152,869
9,983,704
ACL LHFI
(98,734
)
(99,457
)
(104,073
)
(104,032
)
(109,191
)
Net LHFI
10,298,395
10,148,372
10,070,826
10,048,837
9,874,513
Premises and equipment, net
207,301
205,644
201,937
200,970
199,098
Mortgage servicing rights
111,050
87,687
84,101
80,764
83,035
Goodwill
384,237
384,237
384,237
384,237
384,237
Identifiable intangible assets
4,591
5,074
5,621
6,170
6,724
Other real estate
3,187
4,557
6,213
9,439
10,651
Operating lease right-of-use assets
34,048
34,603
34,689
33,201
33,704
Other assets
614,217
568,177
567,627
587,288
587,672
Total assets
$
17,441,551
$
17,595,636
$
17,364,644
$
17,098,132
$
16,878,313
Deposits: Noninterest-bearing
$
4,739,102
$
4,771,065
$
4,987,885
$
4,446,991
$
4,705,991
Interest-bearing
10,374,190
10,316,095
9,934,954
10,185,093
9,677,449
Total deposits
15,113,292
15,087,160
14,922,839
14,632,084
14,383,440
Fed funds purchased and repurchases
170,499
238,577
146,417
157,176
160,991
Other borrowings
84,644
91,025
94,889
117,223
145,994
Subordinated notes
123,097
123,042
122,987
122,932
122,877
Junior subordinated debt securities
61,856
61,856
61,856
61,856
61,856
ACL on off-balance sheet credit exposures
34,517
35,623
32,684
33,733
29,205
Operating lease liabilities
35,912
36,468
36,531
34,959
35,389
Other liabilities
186,352
180,574
177,494
158,860
178,856
Total liabilities
15,810,169
15,854,325
15,595,697
15,318,823
15,118,608
Common stock
12,806
12,845
13,014
13,079
13,209
Capital surplus
167,094
175,913
201,837
210,420
229,892
Retained earnings
1,600,138
1,585,113
1,573,176
1,566,451
1,533,110
Accumulated other comprehensive income (loss), net of tax
(148,656
)
(32,560
)
(19,080
)
(10,641
)
(16,506
)
Total shareholders' equity
1,631,382
1,741,311
1,768,947
1,779,309
1,759,705
Total liabilities and equity
$
17,441,551
$
17,595,636
$
17,364,644
$
17,098,132
$
16,878,313
See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2022 ($ in thousands except per share data) (unaudited) Quarter Ended INCOME STATEMENTS 3/31/2022 12/31/2021 9/30/2021 6/30/2021 3/31/2021 Interest and fees on LHFS & LHFI-FTE
$
93,252
$
94,137
$
94,101
$
93,698
$
93,394
Interest and fees on PPP loans
168
397
1,533
25,555
9,241
Interest on securities-taxable
12,357
10,796
9,973
8,991
8,938
Interest on securities-tax exempt-FTE
122
123
132
149
290
Other interest income
817
826
949
489
503
Total interest income-FTE
106,716
106,279
106,688
128,882
112,366
Interest on deposits
2,760
3,401
3,691
4,630
5,223
Interest on fed funds purchased and repurchases
70
66
51
59
56
Other interest expense
1,539
1,580
1,733
1,813
1,857
Total interest expense
4,369
5,047
5,475
6,502
7,136
Net interest income-FTE
102,347
101,232
101,213
122,380
105,230
Provision for credit losses, LHFI
(860
)
(4,515
)
(2,492
)
(3,991
)
(10,501
)
Provision for credit losses, off-balance sheet credit exposures
(1,106
)
2,939
(1,049
)
4,528
(9,367
)
Net interest income after provision-FTE
104,313
102,808
104,754
121,843
125,098
Service charges on deposit accounts
9,451
9,366
8,911
7,613
7,356
Bank card and other fees
8,442
8,340
8,549
8,301
9,472
Mortgage banking, net
9,873
11,609
14,004
17,333
20,804
Insurance commissions
14,089
11,716
12,133
12,217
12,445
Wealth management
9,054
8,757
9,071
8,946
8,416
Other, net
3,206
979
1,481
2,001
2,090
Total noninterest income
54,115
50,767
54,149
56,411
60,583
Salaries and employee benefits
69,585
68,258
74,623
70,115
71,162
Services and fees
24,453
22,904
22,306
21,769
22,484
Net occupancy-premises
7,079
6,816
6,854
6,578
6,795
Equipment expense
6,061
6,585
5,941
5,567
6,244
Other expense
14,341
14,906
19,876
14,650
14,863
Total noninterest expense
121,519
119,469
129,600
118,679
121,548
Income before income taxes and tax eq adj
36,909
34,106
29,303
59,575
64,133
Tax equivalent adjustment
3,003
2,906
2,947
2,957
2,894
Income before income taxes
33,906
31,200
26,356
56,618
61,239
Income taxes
4,695
4,978
5,156
8,637
9,277
Net income
$
29,211
$
26,222
$
21,200
$
47,981
$
51,962
Per share data Earnings per share - basic
$
0.47
$
0.42
$
0.34
$
0.76
$
0.82
Earnings per share - diluted
$
0.47
$
0.42
$
0.34
$
0.76
$
0.82
Dividends per share
$
0.23
$
0.23
$
0.23
$
0.23
$
0.23
Weighted average shares outstanding Basic
61,514,395
62,037,884
62,521,684
63,214,593
63,395,911
Diluted
61,709,797
62,264,983
62,730,157
63,409,683
63,562,503
Period end shares outstanding
61,463,392
61,648,679
62,461,832
62,773,226
63,394,522
See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2022 ($ in thousands) (unaudited) Quarter Ended NONPERFORMING ASSETS (1) 3/31/2022 12/31/2021 9/30/2021 6/30/2021 3/31/2021 Nonaccrual LHFI Alabama
$
7,506
$
8,182
$
9,223
$
8,952
$
9,161
Florida
310
313
381
467
607
Mississippi (2)
21,318
21,636
22,898
23,422
35,534
Tennessee (3)
9,266
10,501
10,356
10,751
12,451
Texas
25,999
22,066
23,382
7,856
5,761
Total nonaccrual LHFI
64,399
62,698
66,240
51,448
63,514
Other real estate Alabama
—
—
613
2,830
3,085
Mississippi (2)
3,187
4,557
5,600
6,550
7,566
Tennessee (3)
—
—
—
59
—
Total other real estate
3,187
4,557
6,213
9,439
10,651
Total nonperforming assets
$
67,586
$
67,255
$
72,453
$
60,887
$
74,165
LOANS PAST DUE OVER 90 DAYS (1) LHFI
$
1,503
$
2,114
$
625
$
423
$
2,593
LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase)
$
62,078
$
69,894
$
75,091
$
81,538
$
109,566
Quarter Ended ACL LHFI (1) 3/31/2022 12/31/2021 9/30/2021 6/30/2021 3/31/2021 Beginning Balance
$
99,457
$
104,073
$
104,032
$
109,191
$
117,306
Provision for credit losses, LHFI
(860
)
(4,515
)
(2,492
)
(3,991
)
(10,501
)
Charge-offs
(2,242
)
(2,616
)
(1,586
)
(4,828
)
(1,245
)
Recoveries
2,379
2,515
4,119
3,660
3,631
Net (charge-offs) recoveries
137
(101
)
2,533
(1,168
)
2,386
Ending Balance
$
98,734
$
99,457
$
104,073
$
104,032
$
109,191
NET (CHARGE-OFFS) RECOVERIES (1) Alabama
$
699
$
747
$
247
$
203
$
102
Florida
(26
)
(32
)
356
167
30
Mississippi (2)
(88
)
(683
)
1,436
(3,071
)
2,207
Tennessee (3)
(424
)
(130
)
(8
)
1,031
47
Texas
(24
)
(3
)
502
502
—
Total net (charge-offs) recoveries
$
137
$
(101
)
$
2,533
$
(1,168
)
$
2,386
(1) Excludes PPP loans. (2) Mississippi includes Central and Southern Mississippi Regions. (3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2022 (unaudited) Quarter Ended FINANCIAL RATIOS AND OTHER DATA 3/31/2022 12/31/2021 9/30/2021 6/30/2021 3/31/2021 Return on average equity
6.91
%
5.92
%
4.72
%
10.81
%
11.98
%
Return on average tangible equity
9.05
%
7.72
%
6.16
%
13.96
%
15.56
%
Return on average assets
0.68
%
0.60
%
0.49
%
1.13
%
1.26
%
Interest margin - Yield - FTE
2.69
%
2.65
%
2.70
%
3.33
%
3.00
%
Interest margin - Cost
0.11
%
0.13
%
0.14
%
0.17
%
0.19
%
Net interest margin - FTE
2.58
%
2.53
%
2.57
%
3.16
%
2.81
%
Efficiency ratio (1)
76.44
%
76.52
%
74.10
%
64.31
%
71.84
%
Full-time equivalent employees
2,725
2,692
2,680
2,772
2,793
CREDIT QUALITY RATIOS (2) Net (recoveries) charge-offs / average loans
-0.01
%
0.00
%
-0.10
%
0.05
%
-0.09
%
Provision for credit losses, LHFI / average loans
-0.03
%
-0.17
%
-0.10
%
-0.16
%
-0.41
%
Nonaccrual LHFI / (LHFI + LHFS)
0.61
%
0.60
%
0.63
%
0.49
%
0.61
%
Nonperforming assets / (LHFI + LHFS)
0.64
%
0.64
%
0.69
%
0.58
%
0.71
%
Nonperforming assets / (LHFI + LHFS + other real estate)
0.64
%
0.64
%
0.69
%
0.58
%
0.71
%
ACL LHFI / LHFI
0.95
%
0.97
%
1.02
%
1.02
%
1.09
%
ACL LHFI-commercial / commercial LHFI
0.95
%
1.00
%
1.05
%
1.04
%
1.13
%
ACL LHFI-consumer / consumer and home mortgage LHFI
0.96
%
0.87
%
0.91
%
0.98
%
0.95
%
ACL LHFI / nonaccrual LHFI
153.32
%
158.63
%
157.11
%
202.21
%
171.92
%
ACL LHFI / nonaccrual LHFI (excl individually evaluated loans)
484.01
%
500.85
%
520.77
%
537.35
%
437.08
%
CAPITAL RATIOS Total equity / total assets
9.35
%
9.90
%
10.19
%
10.41
%
10.43
%
Tangible equity / tangible assets
7.29
%
7.86
%
8.12
%
8.31
%
8.30
%
Tangible equity / risk-weighted assets
9.79
%
10.71
%
11.19
%
11.33
%
11.23
%
Tier 1 leverage ratio
8.66
%
8.73
%
8.92
%
9.00
%
9.11
%
Common equity tier 1 capital ratio
11.23
%
11.29
%
11.68
%
11.76
%
11.71
%
Tier 1 risk-based capital ratio
11.70
%
11.77
%
12.17
%
12.25
%
12.20
%
Total risk-based capital ratio
13.53
%
13.55
%
14.01
%
14.10
%
14.07
%
STOCK PERFORMANCE Market value-Close$
30.39
$
32.46
$
32.22
$
30.80
$
33.66
Book value
$
26.54
$
28.25
$
28.32
$
28.35
$
27.76
Tangible book value
$
20.22
$
21.93
$
22.08
$
22.13
$
21.59
(1) See Note 6 – 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
March 31, 2022
($ in thousands)
(unaudited)
Note 1 - Securities Available for Sale and Held to Maturity
The following table is a summary of the estimated fair value of securities available for sale and the amortized cost of securities held to maturity:
3/31/2022
12/31/2021
9/30/2021
6/30/2021
3/31/2021
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities
$
361,822
$
344,640
$
278,615
$
30,025
$
—
U.S. Government agency obligations
12,623
13,727
14,979
16,023
17,349
Obligations of states and political subdivisions
5,359
5,714
5,734
5,807
5,798
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA
35,117
39,573
43,860
48,445
52,406
Issued by FNMA and FHLMC
2,038,331
2,218,429
2,187,412
1,983,783
1,749,144
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA
164,506
196,690
236,885
283,988
345,869
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA
400,488
420,104
290,120
180,668
167,110
Total securities available for sale
$
3,018,246
$
3,238,877
$
3,057,605
$
2,548,739
$
2,337,676
SECURITIES HELD TO MATURITY
Obligations of states and political subdivisions
$
7,324
$
7,328
$
10,683
$
12,994
$
26,554
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA
4,831
5,005
5,912
6,249
7,268
Issued by FNMA and FHLMC
192,373
43,444
48,554
53,406
61,855
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA
224,012
241,934
264,638
291,477
324,360
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA
179,058
44,826
65,118
68,886
73,701
Total securities held to maturity
$
607,598
$
342,537
$
394,905
$
433,012
$
493,738
At March 31, 2022, the net unamortized, unrealized loss included in accumulated other comprehensive income (loss) in the accompanying balance sheet for securities held to maturity previously transferred from securities available for sale totaled approximately $5.8 million ($4.3 million, net of tax).
Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 99.7% 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.
Note 2 – Loan Composition
LHFI consisted of the following during the periods presented:
LHFI BY TYPE
3/31/2022
12/31/2021
9/30/2021
6/30/2021
3/31/2021
Loans secured by real estate:
Construction, land development and other land loans
$
1,273,959
$
1,308,781
$
1,286,613
$
1,360,302
$
1,342,088
Secured by 1-4 family residential properties
2,106,998
1,977,993
1,891,292
1,810,396
1,742,782
Secured by nonfarm, nonresidential properties
2,975,039
2,977,084
2,924,953
2,819,662
2,799,195
Other real estate secured
715,939
726,043
986,163
1,078,622
1,135,005
Commercial and industrial loans
1,495,060
1,414,279
1,327,211
1,326,605
1,323,277
Consumer loans
154,215
159,472
157,963
153,519
153,267
State and other political subdivision loans
1,215,023
1,146,251
1,125,186
1,136,764
1,036,694
Other loans
460,896
537,926
475,518
466,999
451,396
LHFI
10,397,129
10,247,829
10,174,899
10,152,869
9,983,704
ACL LHFI
(98,734
)
(99,457
)
(104,073
)
(104,032
)
(109,191
)
Net LHFI
$
10,298,395
$
10,148,372
$
10,070,826
$
10,048,837
$
9,874,513
TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2022
($ in thousands)
(unaudited)
Note 2 – Loan Composition (continued)
The following table presents the LHFI composition by region and reflects each region’s diversified mix of loans:
March 31, 2022
LHFI - COMPOSITION BY REGION
Total
Alabama
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
$
1,273,959
$
529,999
$
48,309
$
352,191
$
53,661
$
289,799
Secured by 1-4 family residential properties
2,106,998
111,960
41,219
1,870,529
66,423
16,867
Secured by nonfarm, nonresidential properties
2,975,039
859,687
255,757
1,125,568
180,042
553,985
Other real estate secured
715,939
171,769
6,691
267,558
20,747
249,174
Commercial and industrial loans
1,495,060
323,940
24,462
637,245
280,006
229,407
Consumer loans
154,215
22,749
8,203
97,681
18,128
7,454
State and other political subdivision loans
1,215,023
89,009
73,548
758,807
33,627
260,032
Other loans
460,896
75,916
11,219
290,692
35,503
47,566
Loans
$
10,397,129
$
2,185,029
$
469,408
$
5,400,271
$
688,137
$
1,654,284
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots
$
66,342
$
30,229
$
10,368
$
16,696
$
3,179
$
5,870
Development
120,992
52,238
555
30,884
12,141
25,174
Unimproved land
102,184
24,360
11,889
33,738
11,020
21,177
1-4 family construction
338,813
157,819
20,402
93,811
26,304
40,477
Other construction
645,628
265,353
5,095
177,062
1,017
197,101
Construction, land development and other land loans
$
1,273,959
$
529,999
$
48,309
$
352,191
$
53,661
$
289,799
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION
Non-owner occupied:
Retail
$
354,974
$
132,872
$
35,777
$
100,409
$
22,650
$
63,266
Office
200,790
68,636
22,721
65,783
11,708
31,942
Hotel/motel
340,296
185,774
77,052
31,274
31,782
14,414
Mini-storage
157,182
22,984
2,100
103,191
432
28,475
Industrial
281,324
91,265
19,647
100,512
133
69,767
Health care
60,365
20,933
1,073
35,057
357
2,945
Convenience stores
20,328
8,270
668
5,971
1,144
4,275
Nursing homes/senior living
247,036
97,362
—
86,447
6,101
57,126
Other
80,353
18,638
7,089
27,329
11,458
15,839
Total non-owner occupied loans
1,742,648
646,734
166,127
555,973
85,765
288,049
Owner-occupied:
Office
174,447
38,250
37,682
58,774
12,933
26,808
Churches
81,601
18,512
5,630
45,644
8,296
3,519
Industrial warehouses
179,800
17,012
2,683
51,383
18,796
89,926
Health care
117,428
11,815
6,709
81,711
2,257
14,936
Convenience stores
141,493
13,915
18,399
67,249
444
41,486
Retail
71,684
10,740
10,473
19,559
18,668
12,244
Restaurants
55,403
4,616
4,867
29,491
12,460
3,969
Auto dealerships
51,150
5,798
249
25,856
19,247
—
Nursing homes/senior living
236,661
85,536
—
124,925
—
26,200
Other
122,724
6,759
2,938
65,003
1,176
46,848
Total owner-occupied loans
1,232,391
212,953
89,630
569,595
94,277
265,936
Loans secured by nonfarm, nonresidential properties
$
2,975,039
$
859,687
$
255,757
$
1,125,568
$
180,042
$
553,985
TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2022
($ in thousands)
(unaudited)
Note 3 – Yields on Earning Assets and Interest-Bearing Liabilities
The following table illustrates the yields on earning assets by category as well as the rates paid on interest-bearing liabilities on a tax equivalent basis:
Quarter Ended
3/31/2022
12/31/2021
9/30/2021
6/30/2021
3/31/2021
Securities – taxable
1.37
%
1.22
%
1.28
%
1.30
%
1.40
%
Securities – nontaxable
3.97
%
3.82
%
3.79
%
3.70
%
4.02
%
Securities – total
1.38
%
1.23
%
1.29
%
1.31
%
1.43
%
PPP loans
2.35
%
3.68
%
4.98
%
15.81
%
6.27
%
Loans - LHFI & LHFS
3.58
%
3.56
%
3.59
%
3.64
%
3.67
%
Loans - total
3.58
%
3.56
%
3.61
%
4.36
%
3.81
%
Other earning assets
0.18
%
0.18
%
0.18
%
0.11
%
0.12
%
Total earning assets
2.69
%
2.65
%
2.70
%
3.33
%
3.00
%
Interest-bearing deposits
0.11
%
0.13
%
0.14
%
0.19
%
0.22
%
Fed funds purchased & repurchases
0.13
%
0.13
%
0.14
%
0.14
%
0.14
%
Other borrowings
2.26
%
2.25
%
2.33
%
2.29
%
2.14
%
Total interest-bearing liabilities
0.16
%
0.19
%
0.21
%
0.25
%
0.28
%
Net interest margin
2.58
%
2.53
%
2.57
%
3.16
%
2.81
%
Net interest margin excluding PPP loans and the FRB balance
2.88
%
2.82
%
2.90
%
2.94
%
2.99
%
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.
At March 31, 2022 and December 31, 2021, the average FRB balance totaled $1.758 billion and $1.787 billion, respectively, 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 totaled 2.88% for the first quarter of 2022, an increase of 6 basis points when compared to the fourth quarter of 2021. The expansion of the net interest margin excluding PPP loans and the FRB balance was due to increases in the yields on the loans held for investment and held for sale portfolio and the securities portfolio which resulted from the higher interest-rate environment as well as lower costs of interest-bearing liabilities.
Note 4 – Mortgage Banking
Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that offsets the changes in fair value of mortgage servicing rights (MSR) attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under generally accepted accounting principles (GAAP). Changes in the fair value of these exchange-traded derivative instruments, including administrative costs, are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of the MSR. The MSR fair value represents the present value of future cash flows, which among other things includes decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the change in value of hedge instruments to the change in the fair value of the MSR asset attributable to changes in interest rates and other market driven changes in valuation inputs and assumptions. The impact of this strategy resulted in a net positive ineffectiveness of $1.0 million during the first quarter of 2022.
The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements:
Quarter Ended
3/31/2022
12/31/2021
9/30/2021
6/30/2021
3/31/2021
Mortgage servicing income, net
$
6,429
$
6,571
$
6,406
$
6,318
$
6,181
Change in fair value-MSR from runoff
(3,785
)
(4,745
)
(5,283
)
(5,029
)
(5,103
)
Gain on sales of loans, net
6,223
9,005
12,737
14,778
19,456
Mortgage banking income before hedge ineffectiveness
8,867
10,831
13,860
16,067
20,534
Change in fair value-MSR from market changes
22,020
2,221
1,806
(4,465
)
13,696
Change in fair value of derivatives
(21,014
)
(1,443
)
(1,662
)
5,731
(13,426
)
Net positive (negative) hedge ineffectiveness
1,006
778
144
1,266
270
Mortgage banking, net
$
9,873
$
11,609
$
14,004
$
17,333
$
20,804
TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2022
($ in thousands)
(unaudited)
Note 5 – Other Noninterest Income and Expense
Other noninterest income consisted of the following for the periods presented:
Quarter Ended
3/31/2022
12/31/2021
9/30/2021
6/30/2021
3/31/2021
Partnership amortization for tax credit purposes
$
(1,336
)
$
(2,455
)
$
(2,045
)
$
(1,989
)
$
(1,522
)
Increase in life insurance cash surrender value
1,627
1,675
1,663
1,653
1,639
Other miscellaneous income
2,915
1,759
1,863
2,337
1,973
Total other, net
$
3,206
$
979
$
1,481
$
2,001
$
2,090
Trustmark invests in partnerships that provide income tax credits on a Federal and/or State basis (i.e., new market tax credits, low-income housing tax credits and historical tax credits). The income tax credits related to these partnerships are utilized as specifically allowed by income tax law and are recorded as a reduction in income tax expense.
Other noninterest expense consisted of the following for the periods presented:
Quarter Ended
3/31/2022
12/31/2021
9/30/2021
6/30/2021
3/31/2021
Loan expense
$
4,389
$
3,221
$
4,022
$
3,738
$
4,167
Amortization of intangibles
482
548
549
553
666
FDIC assessment expense
1,500
1,475
1,275
1,225
1,540
Regulatory settlement charge
—
—
5,000
—
—
Other real estate expense, net
35
336
1,357
1,511
324
Other miscellaneous expense
7,935
9,326
7,673
7,623
8,166
Total other expense
$
14,341
$
14,906
$
19,876
$
14,650
$
14,863
Note 6 – Non-GAAP Financial Measures
In addition to capital ratios defined by GAAP and banking regulators, Trustmark utilizes various tangible common equity measures when evaluating capital utilization and adequacy. Tangible common equity, as defined by Trustmark, represents common equity less goodwill and identifiable intangible assets. Trustmark’s Common Equity Tier 1 capital includes common stock, capital surplus and retained earnings, and is reduced by goodwill and other intangible assets, net of associated net deferred tax liabilities as well as disallowed deferred tax assets and threshold deductions as applicable.
Trustmark believes these measures are important because they reflect the level of capital available to withstand unexpected market conditions. Additionally, presentation of these measures allows readers to compare certain aspects of Trustmark’s capitalization to other organizations. These ratios differ from capital measures defined by banking regulators principally in that the numerator excludes shareholders’ equity associated with preferred securities, the nature and extent of which varies across organizations. In Management’s experience, many stock analysts use tangible common equity measures in conjunction with more traditional bank capital ratios to compare capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, typically stemming from the use of the purchase accounting method in accounting for mergers and acquisitions.
These calculations are intended to complement the capital ratios defined by GAAP and banking regulators. Because GAAP does not include these capital ratio measures, Trustmark believes there are no comparable GAAP financial measures to these tangible common equity ratios. Despite the importance of these measures to Trustmark, there are no standardized definitions for them and, as a result, Trustmark’s calculations may not be comparable with other organizations. Also, there may be limits in the usefulness of these measures to investors. As a result, Trustmark encourages readers to consider its audited consolidated financial statements and the notes related thereto in their entirety and not to rely on any single financial measure.
TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2022
($ in thousands)
(unaudited)
Note 6 – Non-GAAP Financial Measures (continued)
Quarter Ended
3/31/2022
12/31/2021
9/30/2021
6/30/2021
3/31/2021
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity
$
1,713,752
$
1,758,123
$
1,782,304
$
1,780,705
$
1,759,351
Less: Goodwill
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(385,155
)
Identifiable intangible assets
(4,879
)
(5,382
)
(5,899
)
(6,442
)
(7,118
)
Total average tangible equity
$
1,324,636
$
1,368,504
$
1,392,168
$
1,390,026
$
1,367,078
PERIOD END BALANCES
Total shareholders' equity
$
1,631,382
$
1,741,311
$
1,768,947
$
1,779,309
$
1,759,705
Less: Goodwill
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
Identifiable intangible assets
(4,591
)
(5,074
)
(5,621
)
(6,170
)
(6,724
)
Total tangible equity
(a)
$
1,242,554
$
1,352,000
$
1,379,089
$
1,388,902
$
1,368,744
TANGIBLE ASSETS
Total assets
$
17,441,551
$
17,595,636
$
17,364,644
$
17,098,132
$
16,878,313
Less: Goodwill
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
Identifiable intangible assets
(4,591
)
(5,074
)
(5,621
)
(6,170
)
(6,724
)
Total tangible assets
(b)
$
17,052,723
$
17,206,325
$
16,974,786
$
16,707,725
$
16,487,352
Risk-weighted assets
(c)
$
12,691,545
$
12,623,630
$
12,324,254
$
12,256,492
$
12,188,988
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income
$
29,211
$
26,222
$
21,200
$
47,981
$
51,962
Plus: Intangible amortization net of tax
362
411
412
415
500
Net income adjusted for intangible amortization
$
29,573
$
26,633
$
21,612
$
48,396
$
52,462
Period end common shares outstanding
(d)
61,463,392
61,648,679
62,461,832
62,773,226
63,394,522
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity (1)
9.05
%
7.72
%
6.16
%
13.96
%
15.56
%
Tangible equity/tangible assets
(a)/(b)
7.29
%
7.86
%
8.12
%
8.31
%
8.30
%
Tangible equity/risk-weighted assets
(a)/(c)
9.79
%
10.71
%
11.19
%
11.33
%
11.23
%
Tangible book value
(a)/(d)*1,000
$
20.22
$
21.93
$
22.08
$
22.13
$
21.59
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity
$
1,631,382
$
1,741,311
$
1,768,947
$
1,779,309
$
1,759,705
CECL transition adjustment
19,500
26,000
26,419
26,671
26,829
AOCI-related adjustments
148,656
32,560
19,080
10,641
16,506
CET1 adjustments and deductions:
Goodwill net of associated deferred tax liabilities (DTLs)
(370,240
)
(370,252
)
(370,264
)
(370,276
)
(370,288
)
Other adjustments and deductions for CET1 (2)
(4,015
)
(4,392
)
(4,817
)
(5,243
)
(5,675
)
CET1 capital
(e)
1,425,283
1,425,227
1,439,365
1,441,102
1,427,077
Additional tier 1 capital instruments plus related surplus
60,000
60,000
60,000
60,000
60,000
Tier 1 capital
$
1,485,283
$
1,485,227
$
1,499,365
$
1,501,102
$
1,487,077
Common equity tier 1 capital ratio
(e)/(c)
11.23
%
11.29
%
11.68
%
11.76
%
11.71
%
(1)
Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity.
(2)
Includes other intangible assets, net of DTLs, disallowed deferred tax assets (DTAs), threshold deductions and transition adjustments, as applicable.
TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2022
($ in thousands)
(unaudited)
Note 6 – Non-GAAP Financial Measures (continued)
Trustmark discloses certain non-GAAP financial measures because Management uses these measures for business planning purposes, including to manage Trustmark’s business against internal projected results of operations and to measure Trustmark’s performance. Trustmark views these as measures of our core operating business, which exclude the impact of the items detailed below, as these items are generally not operational in nature. These non-GAAP financial measures also provide another basis for comparing period-to-period results as presented in the accompanying selected financial data table and the audited consolidated financial statements by excluding potential differences caused by non-operational and unusual or non-recurring items. Readers are cautioned that these adjustments are not permitted under GAAP. Trustmark encourages readers to consider its consolidated financial statements and the notes related thereto in their entirety, and not to rely on any single financial measure.
The following table presents pre-provision net revenue (PPNR) during the periods presented:
Quarter Ended
3/31/2022
12/31/2021
9/30/2021
6/30/2021
3/31/2021
Net interest income (GAAP)
$
99,344
$
98,326
$
98,266
$
119,423
$
102,336
Noninterest income (GAAP)
54,115
50,767
54,149
56,411
60,583
Pre-provision revenue
(a)
$
153,459
$
149,093
$
152,415
$
175,834
$
162,919
Noninterest expense (GAAP)
$
121,519
$
119,469
$
129,600
$
118,679
$
121,548
Less:
Voluntary early retirement program
—
—
(5,700
)
—
—
Regulatory settlement charge
—
—
(5,000
)
—
—
Adjusted noninterest expense - PPNR (Non-GAAP)
(b)
$
121,519
$
119,469
$
118,900
$
118,679
$
121,548
PPNR (Non-GAAP)
(a)-(b)
$
31,940
$
29,624
$
33,515
$
57,155
$
41,371
The following table presents Trustmark’s calculation of its efficiency ratio for the periods presented:
Quarter Ended
3/31/2022
12/31/2021
9/30/2021
6/30/2021
3/31/2021
Total noninterest expense (GAAP)
$
121,519
$
119,469
$
129,600
$
118,679
$
121,548
Less:
Other real estate expense, net
(35
)
(336
)
(1,357
)
(1,511
)
(324
)
Amortization of intangibles
(482
)
(548
)
(549
)
(553
)
(666
)
Charitable contributions resulting in state tax credits
(375
)
(391
)
(350
)
(355
)
(350
)
Voluntary early retirement program
—
—
(5,700
)
—
—
Regulatory settlement charge
—
—
(5,000
)
—
—
Adjusted noninterest expense (Non-GAAP)
(c)
$
120,627
$
118,194
$
116,644
$
116,260
$
120,208
Net interest income (GAAP)
$
99,344
$
98,326
$
98,266
$
119,423
$
102,336
Add:
Tax equivalent adjustment
3,003
2,906
2,947
2,957
2,894
Net interest income-FTE (Non-GAAP)
(a)
$
102,347
$
101,232
$
101,213
$
122,380
$
105,230
Noninterest income (GAAP)
$
54,115
$
50,767
$
54,149
$
56,411
$
60,583
Add:
Partnership amortization for tax credit purposes
1,336
2,455
2,045
1,989
1,522
Adjusted noninterest income (Non-GAAP)
(b)
$
55,451
$
53,222
$
56,194
$
58,400
$
62,105
Adjusted revenue (Non-GAAP)
(a)+(b)
$
157,798
$
154,454
$
157,407
$
180,780
$
167,335
Efficiency ratio (Non-GAAP)
(c)/((a)+(b))
76.44
%
76.52
%
74.10
%
64.31
%
71.84
%
View source version on businesswire.com: https://www.businesswire.com/news/home/20220426005303/en/
Trustmark Investor Contacts: Thomas C. Owens Treasurer and Principal Financial Officer 601-208-7853
F. Joseph Rein, Jr. Senior Vice President 601-208-6898
Trustmark Media Contact: Melanie A. Morgan Senior Vice President 601-208-2979
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