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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 | 33.99 | 292,279 | 23:10:03 |
Solid Balance Sheet Growth, Record Results in Insurance and Wealth Management
Trustmark Corporation (NASDAQGS:TRMK) reported net income of $26.2 million in the fourth quarter of 2021, representing diluted earnings per share of $0.42. For the full year, Trustmark’s net income totaled $147.4 million, representing diluted earnings per share of $2.34. Trustmark’s net income in 2021 produced a return on average tangible equity of 10.81% and a return on average assets of 0.86%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable March 15, 2022, to shareholders of record on March 1, 2022.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20220125005343/en/
Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/52567902/en
2021 Highlights
Duane A. Dewey, President and CEO, commented, “Our banking and mortgage banking businesses performed well while our insurance and wealth management businesses achieved record results. We experienced significant loan and deposit growth, and credit quality remained strong. While we continue to navigate the challenging low interest rate environment, we remain committed to positioning the company for continued long-term success. Our balance sheet is well positioned for rising interest rates. We will continue investments in technology to improve efficiency and broaden our reach through digital marketing and product delivery. Trustmark is well-positioned to serve and expand its customer base and create long-term value for its shareholders.”
Balance Sheet Management
Loans HFI totaled $10.2 billion at December 31, 2021, reflecting an increase of $72.9 million, or 0.7%, linked-quarter and $423.3 million, or 4.3%, year-over-year. The linked-quarter growth primarily reflects increases in commercial and industrial loans, 1-4 family mortgage loans, other loans, and loans secured by nonfarm, nonresidential properties 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 $15.1 billion at December 31, 2021, up $164.3 million, or 1.1%, from the prior quarter and $1.0 billion, or 7.4%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 67.9% of total deposits at year end 2021. Noninterest bearing deposits represented 31.6% of total deposits at December 31, 2021. Interest-bearing deposit costs totaled 0.13% for the fourth quarter, a decrease of 1 basis point linked-quarter. The total cost of interest-bearing liabilities was 0.19% for the fourth quarter of 2021, a decrease of 2 basis points from the prior quarter.
During the fourth quarter, Trustmark repurchased $27.1 million, or approximately 816 thousand of its common shares. During the twelve months ended December 31, 2021, Trustmark repurchased $61.8 million, or approximately 1.9 million of its common shares. As previously announced, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2022, under which $100 million of Trustmark’s outstanding shares may be acquired through 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 December 31, 2021, Trustmark’s tangible equity to tangible assets ratio was 7.86%, while the total risk-based capital ratio was 13.55%.
Credit Quality
Nonaccrual loans totaled $62.7 million at December 31, 2021, a decrease of $3.5 million from the prior quarter and $430 thousand year-over-year. Other real estate totaled $4.6 million, reflecting a $1.7 million decrease from the prior quarter and a $7.1 million decline from the prior year. Collectively, nonperforming assets totaled $67.3 million, reflecting a linked-quarter decrease of 7.2% and year-over-year reduction of 10.1%.
The provision for credit losses for loans HFI was a negative $4.5 million in the fourth quarter. Negative provisioning was primarily due to improvements in credit quality and economic forecasts. The provision for credit losses for off-balance sheet credit exposures was $2.9 million in the fourth quarter, primarily driven by increases in unfunded amounts. Collectively, the provision for credit losses totaled a negative $1.6 million in the fourth quarter compared to a negative $3.5 million in the prior quarter and a negative $5.5 million in the fourth quarter of 2020.
Allocation of Trustmark’s $99.5 million ACL on loans HFI represented 1.00% of commercial loans and 0.87% of consumer and home mortgage loans, resulting in an ACL to total loans HFI of 0.97% at December 31, 2021. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.
Revenue Generation
Revenue in the fourth quarter totaled $149.1 million, a decrease of 2.2% from the prior quarter and 16.0% from the same quarter in the prior year. The linked-quarter decline primarily reflects lower mortgage banking revenue while the year-over-year decline is attributed to lower net interest income and reduced mortgage banking revenue. In 2021, revenue totaled $640.3 million, a decrease of 8.7% from the prior year.
Net interest income (FTE) in the fourth quarter totaled $101.2 million, resulting in a net interest margin of 2.53%. The net interest margin, excluding PPP loans and Federal Reserve Bank balance, was 2.82%, down 8 basis points from the prior quarter, significantly influenced by the growth of the investment securities portfolio. Continued low interest rates decreased the yield on the loans held for investment and held for sale portfolio as well as the securities portfolio and were partially offset by lower costs of interest-bearing deposits.
Noninterest income in the fourth quarter totaled $50.8 million, a decrease of $3.4 million from the prior quarter and $15.4 million from the prior year. The linked-quarter change reflects an increase in service charges on deposit accounts which was more than offset by a decline in mortgage banking revenue, a seasonal decline in insurance revenue, and a reduction in other income. The decrease in noninterest income year-over-year is principally due to lower mortgage banking revenue.
Mortgage loan production in the fourth quarter totaled $590.7 million, a decline of 16.7% linked-quarter and 25.1% year-over-year. Mortgage banking revenue totaled $11.6 million in the fourth quarter, a decrease of $2.4 million from the prior quarter and $16.5 million year-over-year. The linked-quarter decline is attributable to reduced spreads which resulted in lower net gains on sales of mortgage loans in the secondary market offset in part by increased net hedge ineffectiveness. In 2021, mortgage loan production totaled $2.8 billion, down 6.1% from the record level set the prior year. Mortgage banking revenue totaled $63.8 million in 2021, compared to $125.8 million in the prior year.
Insurance revenue in the fourth quarter totaled $11.7 million, a seasonal decline of $417 thousand from the prior quarter and an increase of $1.5 million from the prior year. Insurance revenue in 2021 totaled $48.5 million, up $3.3 million, or 7.4%, from the prior year. The solid performance during the year reflects an expanded producer workforce as well as the realization of operational efficiencies from investments in technology and improved processes.
Wealth management revenue totaled $8.8 million in the fourth quarter, down 3.5% from the prior quarter and up 11.7% from the prior year. In 2021, wealth management revenue totaled $35.2 million, an increase of 11.3% from the prior year. During 2021, Trustmark continued to enhance its competitive positioning and efficiency of its wealth management businesses as well as expand its Private Banking capabilities in key markets.
Noninterest Expense
Adjusted noninterest expense in the fourth quarter was $118.2 million, up $1.6 million, or 1.3%, from the prior quarter. Salaries and employee benefits expense in the fourth quarter totaled $68.3 million. Excluding the $5.6 million charge associated with the voluntary early retirement program in the third quarter, salary and employee benefits expense declined $754 thousand, or 1.1%, linked-quarter.
Total services and fees increased $598 thousand during the fourth quarter due to continued investments in technology and higher professional fees. Other real estate expense, net declined $1.0 million during the fourth quarter to $336 thousand. Other expense totaled $14.6 million in the fourth quarter. Excluding the $5.0 million regulatory settlement charge in the prior quarter, other expense increased $1.1 million linked-quarter principally due to increased operational losses.
During 2021, Trustmark consolidated 15 offices, expanded deployment of myTeller interactive teller machine technology, and opened five offices designed to efficiently serve and expand customer relationships.
“Looking forward, Trustmark will continue to focus upon efficiency, growth and innovation opportunities. We continue to pursue opportunities to redesign workflows and restructure the organization to further leverage investments in technology that will broaden our reach, enhance the customer experience, and improve efficiency. We remain focused on providing the financial services and advice our customers have come to expect while building long-term value for our shareholders,” said Dewey.
Additional Information
As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, January 26, 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, February 9, 2022, in archived format at the same web address or by calling (877) 344-7529, passcode 4362420.
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 December 31, 2021 ($ in thousands) (unaudited) Linked Quarter Year over Year QUARTERLY AVERAGE BALANCES 12/31/2021 9/30/2021 12/31/2020 $ Change % Change $ Change % Change Securities AFS-taxable$
3,156,740
$
2,686,765
$
1,902,162
$
469,975
17.5
%
$
1,254,578
66.0
%
Securities AFS-nontaxable
5,143
5,159
5,206
(16
)
-0.3
%
(63
)
-1.2
%
Securities HTM-taxable
364,038
401,685
550,563
(37,647
)
-9.4
%
(186,525
)
-33.9
%
Securities HTM-nontaxable
7,618
8,641
24,752
(1,023
)
-11.8
%
(17,134
)
-69.2
%
Total securities
3,533,539
3,102,250
2,482,683
431,289
13.9
%
1,050,856
42.3
%
Paycheck protection program loans (PPP)
42,749
122,176
875,098
(79,427
)
-65.0
%
(832,349
)
-95.1
%
Loans (includes loans held for sale)
10,487,679
10,389,826
10,231,671
97,853
0.9
%
256,008
2.5
%
Fed funds sold and reverse repurchases
58
69
303
(11
)
-15.9
%
(245
)
-80.9
%
Other earning assets
1,839,498
2,038,515
860,540
(199,017
)
-9.8
%
978,958
n/m
Total earning assets
15,903,523
15,652,836
14,450,295
250,687
1.6
%
1,453,228
10.1
%
Allowance for credit losses (ACL), loans held for investment (LHFI)
(104,148
)
(104,857
)
(124,088
)
709
0.7
%
19,940
16.1
%
Other assets
1,570,501
1,602,611
1,620,694
(32,110
)
-2.0
%
(50,193
)
-3.1
%
Total assets$
17,369,876
$
17,150,590
$
15,946,901
$
219,286
1.3
%
$
1,422,975
8.9
%
Interest-bearing demand deposits$
4,353,599
$
4,224,717
$
3,649,590
$
128,882
3.1
%
$
704,009
19.3
%
Savings deposits
4,585,624
4,617,683
4,350,783
(32,059
)
-0.7
%
234,841
5.4
%
Time deposits
1,220,083
1,258,829
1,436,677
(38,746
)
-3.1
%
(216,594
)
-15.1
%
Total interest-bearing deposits
10,159,306
10,101,229
9,437,050
58,077
0.6
%
722,256
7.7
%
Fed funds purchased and repurchases
201,856
147,635
170,474
54,221
36.7
%
31,382
18.4
%
Other borrowings
94,328
109,735
173,525
(15,407
)
-14.0
%
(79,197
)
-45.6
%
Subordinated notes
123,007
122,951
42,828
56
0.0
%
80,179
n/m
Junior subordinated debt securities
61,856
61,856
61,856
—
0.0
%
—
0.0
%
Total interest-bearing liabilities
10,640,353
10,543,406
9,885,733
96,947
0.9
%
754,620
7.6
%
Noninterest-bearing deposits
4,679,951
4,566,924
4,100,849
113,027
2.5
%
579,102
14.1
%
Other liabilities
291,449
257,956
235,284
33,493
13.0
%
56,165
23.9
%
Total liabilities
15,611,753
15,368,286
14,221,866
243,467
1.6
%
1,389,887
9.8
%
Shareholders' equity
1,758,123
1,782,304
1,725,035
(24,181
)
-1.4
%
33,088
1.9
%
Total liabilities and equity$
17,369,876
$
17,150,590
$
15,946,901
$
219,286
1.3
%
$
1,422,975
8.9
%
n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2021 ($ in thousands) (unaudited) Linked Quarter Year over Year PERIOD END BALANCES 12/31/2021 9/30/2021 12/31/2020 $ Change % Change $ Change % Change Cash and due from banks$
2,266,829
$
2,175,058
$
1,952,504
$
91,771
4.2
%
$
314,325
16.1
%
Fed funds sold and reverse repurchases
—
—
50
—
n/m
(50
)
-100.0
%
Securities available for sale
3,238,877
3,057,605
1,991,815
181,272
5.9
%
1,247,062
62.6
%
Securities held to maturity
342,537
394,905
538,072
(52,368
)
-13.3
%
(195,535
)
-36.3
%
PPP loans
33,336
46,486
610,134
(13,150
)
-28.3
%
(576,798
)
-94.5
%
Loans held for sale (LHFS)
275,706
335,339
446,951
(59,633
)
-17.8
%
(171,245
)
-38.3
%
Loans held for investment (LHFI)
10,247,829
10,174,899
9,824,524
72,930
0.7
%
423,305
4.3
%
ACL LHFI
(99,457
)
(104,073
)
(117,306
)
4,616
4.4
%
17,849
15.2
%
Net LHFI
10,148,372
10,070,826
9,707,218
77,546
0.8
%
441,154
4.5
%
Premises and equipment, net
205,644
201,937
194,278
3,707
1.8
%
11,366
5.9
%
Mortgage servicing rights
87,687
84,101
66,464
3,586
4.3
%
21,223
31.9
%
Goodwill
384,237
384,237
385,270
—
0.0
%
(1,033
)
-0.3
%
Identifiable intangible assets
5,074
5,621
7,390
(547
)
-9.7
%
(2,316
)
-31.3
%
Other real estate
4,557
6,213
11,651
(1,656
)
-26.7
%
(7,094
)
-60.9
%
Operating lease right-of-use assets
34,603
34,689
30,901
(86
)
-0.2
%
3,702
12.0
%
Other assets
568,177
567,627
609,142
550
0.1
%
(40,965
)
-6.7
%
Total assets$
17,595,636
$
17,364,644
$
16,551,840
$
230,992
1.3
%
$
1,043,796
6.3
%
Deposits: Noninterest-bearing$
4,771,065
$
4,987,885
$
4,349,010
$
(216,820
)
-4.3
%
$
422,055
9.7
%
Interest-bearing
10,316,095
9,934,954
9,699,754
381,141
3.8
%
616,341
6.4
%
Total deposits
15,087,160
14,922,839
14,048,764
164,321
1.1
%
1,038,396
7.4
%
Fed funds purchased and repurchases
238,577
146,417
164,519
92,160
62.9
%
74,058
45.0
%
Other borrowings
91,025
94,889
168,252
(3,864
)
-4.1
%
(77,227
)
-45.9
%
Subordinated notes
123,042
122,987
122,921
55
0.0
%
121
0.1
%
Junior subordinated debt securities
61,856
61,856
61,856
—
0.0
%
—
0.0
%
ACL on off-balance sheet credit exposures
35,623
32,684
38,572
2,939
9.0
%
(2,949
)
-7.6
%
Operating lease liabilities
36,468
36,531
32,290
(63
)
-0.2
%
4,178
12.9
%
Other liabilities
180,574
177,494
173,549
3,080
1.7
%
7,025
4.0
%
Total liabilities
15,854,325
15,595,697
14,810,723
258,628
1.7
%
1,043,602
7.0
%
Common stock
12,845
13,014
13,215
(169
)
-1.3
%
(370
)
-2.8
%
Capital surplus
175,913
201,837
233,120
(25,924
)
-12.8
%
(57,207
)
-24.5
%
Retained earnings
1,585,113
1,573,176
1,495,833
11,937
0.8
%
89,280
6.0
%
Accumulated other comprehensive income (loss), net of tax
(32,560
)
(19,080
)
(1,051
)
(13,480
)
-70.6
%
(31,509
)
n/m
Total shareholders' equity
1,741,311
1,768,947
1,741,117
(27,636
)
-1.6
%
194
0.0
%
Total liabilities and equity$
17,595,636
$
17,364,644
$
16,551,840
$
230,992
1.3
%
$
1,043,796
6.3
%
n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2021 ($ in thousands except per share data) (unaudited) Quarter Ended Linked Quarter Year over Year INCOME STATEMENTS 12/31/2021 9/30/2021 12/31/2020 $ Change % Change $ Change % Change Interest and fees on LHFS & LHFI-FTE$
94,137
$
94,101
$
96,453
$
36
0.0
%
$
(2,316
)
-2.4
%
Interest and fees on PPP loans
397
1,533
14,870
(1,136
)
-74.1
%
(14,473
)
-97.3
%
Interest on securities-taxable
10,796
9,973
9,998
823
8.3
%
798
8.0
%
Interest on securities-tax exempt-FTE
123
132
293
(9
)
-6.8
%
(170
)
-58.0
%
Interest on fed funds sold and reverse repurchases
—
—
—
—
n/m
—
n/m
Other interest income
826
949
249
(123
)
-13.0
%
577
n/m
Total interest income-FTE
106,279
106,688
121,863
(409
)
-0.4
%
(15,584
)
-12.8
%
Interest on deposits
3,401
3,691
6,363
(290
)
-7.9
%
(2,962
)
-46.6
%
Interest on fed funds purchased and repurchases
66
51
56
15
29.4
%
10
17.9
%
Other interest expense
1,580
1,733
1,127
(153
)
-8.8
%
453
40.2
%
Total interest expense
5,047
5,475
7,546
(428
)
-7.8
%
(2,499
)
-33.1
%
Net interest income-FTE
101,232
101,213
114,317
19
0.0
%
(13,085
)
-11.4
%
Provision for credit losses, LHFI
(4,515
)
(2,492
)
(4,413
)
(2,023
)
81.2
%
(102
)
-2.3
%
Provision for credit losses, off-balance sheet credit exposures (1)
2,939
(1,049
)
(1,087
)
3,988
n/m
4,026
n/m
Net interest income after provision-FTE
102,808
104,754
119,817
(1,946
)
-1.9
%
(17,009
)
-14.2
%
Service charges on deposit accounts
9,366
8,911
8,283
455
5.1
%
1,083
13.1
%
Bank card and other fees
8,340
8,549
9,107
(209
)
-2.4
%
(767
)
-8.4
%
Mortgage banking, net
11,609
14,004
28,155
(2,395
)
-17.1
%
(16,546
)
-58.8
%
Insurance commissions
11,716
12,133
10,196
(417
)
-3.4
%
1,520
14.9
%
Wealth management
8,757
9,071
7,838
(314
)
-3.5
%
919
11.7
%
Other, net
979
1,481
2,538
(502
)
-33.9
%
(1,559
)
-61.4
%
Total noninterest income
50,767
54,149
66,117
(3,382
)
-6.2
%
(15,350
)
-23.2
%
Salaries and employee benefits
68,258
74,623
69,660
(6,365
)
-8.5
%
(1,402
)
-2.0
%
Services and fees
22,904
22,306
22,327
598
2.7
%
577
2.6
%
Net occupancy-premises
6,816
6,854
6,616
(38
)
-0.6
%
200
3.0
%
Equipment expense
6,585
5,941
6,213
644
10.8
%
372
6.0
%
Other real estate expense, net
336
1,357
(812
)
(1,021
)
-75.2
%
1,148
n/m
Other expense
14,570
18,519
15,890
(3,949
)
-21.3
%
(1,320
)
-8.3
%
Total noninterest expense
119,469
129,600
119,894
(10,131
)
-7.8
%
(425
)
-0.4
%
Income before income taxes and tax eq adj
34,106
29,303
66,040
4,803
16.4
%
(31,934
)
-48.4
%
Tax equivalent adjustment
2,906
2,947
2,939
(41
)
-1.4
%
(33
)
-1.1
%
Income before income taxes
31,200
26,356
63,101
4,844
18.4
%
(31,901
)
-50.6
%
Income taxes
4,978
5,156
11,884
(178
)
-3.5
%
(6,906
)
-58.1
%
Net income$
26,222
$
21,200
$
51,217
$
5,022
23.7
%
$
(24,995
)
-48.8
%
Per share data Earnings per share - basic$
0.42
$
0.34
$
0.81
$
0.08
23.5
%
$
(0.39
)
-48.1
%
Earnings per share - diluted$
0.42
$
0.34
$
0.81
$
0.08
23.5
%
$
(0.39
)
-48.1
%
Dividends per share$
0.23
$
0.23
$
0.23
—
0.0
%
—
0.0
%
Weighted average shares outstanding Basic
62,037,884
62,521,684
63,424,219
Diluted
62,264,983
62,730,157
63,616,767
Period end shares outstanding
61,648,679
62,461,832
63,424,526
(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 December 31, 2021 ($ in thousands) (unaudited) Quarter Ended Linked Quarter Year over Year NONPERFORMING ASSETS (1) 12/31/2021 9/30/2021 12/31/2020 $ Change % Change $ Change % Change Nonaccrual LHFI Alabama
$
8,182
$
9,223
$
9,221
$
(1,041
)
-11.3
%
$
(1,039
)
-11.3
%
Florida
313
381
572
(68
)
-17.8
%
(259
)
-45.3
%
Mississippi (2)
21,636
22,898
35,015
(1,262
)
-5.5
%
(13,379
)
-38.2
%
Tennessee (3)
10,501
10,356
12,572
145
1.4
%
(2,071
)
-16.5
%
Texas
22,066
23,382
5,748
(1,316
)
-5.6
%
16,318
n/m
Total nonaccrual LHFI
62,698
66,240
63,128
(3,542
)
-5.3
%
(430
)
-0.7
%
Other real estate Alabama
—
613
3,271
(613
)
-100.0
%
(3,271
)
-100.0
%
Florida
—
—
—
—
n/m
—
n/m
Mississippi (2)
4,557
5,600
8,330
(1,043
)
-18.6
%
(3,773
)
-45.3
%
Tennessee (3)
—
—
50
—
n/m
(50
)
-100.0
%
Texas
—
—
—
—
n/m
—
n/m
Total other real estate
4,557
6,213
11,651
(1,656
)
-26.7
%
(7,094
)
-60.9
%
Total nonperforming assets$
67,255
$
72,453
$
74,779
$
(5,198
)
-7.2
%
$
(7,524
)
-10.1
%
LOANS PAST DUE OVER 90 DAYS (1) LHFI$
2,114
$
625
$
1,576
$
1,489
n/m
$
538
34.1
%
LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase)$
69,894
$
75,091
$
119,409
$
(5,197
)
-6.9
%
$
(49,515
)
-41.5
%
Quarter Ended Linked Quarter Year over Year ACL LHFI (1) 12/31/2021 9/30/2021 12/31/2020 $ Change % Change $ Change % Change Beginning Balance$
104,073
$
104,032
$
122,010
$
41
0.0
%
$
(17,937
)
-14.7
%
CECL adoption adjustments: LHFI
—
—
—
—
n/m
—
n/m
Acquired loan transfers
—
—
—
—
n/m
—
n/m
Provision for credit losses, LHFI
(4,515
)
(2,492
)
(4,413
)
(2,023
)
-81.2
%
(102
)
-2.3
%
Charge-offs
(2,616
)
(1,586
)
(2,797
)
(1,030
)
-64.9
%
181
6.5
%
Recoveries
2,515
4,119
2,506
(1,604
)
-38.9
%
9
0.4
%
Net (charge-offs) recoveries
(101
)
2,533
(291
)
(2,634
)
n/m
190
-65.3
%
Ending Balance$
99,457
$
104,073
$
117,306
$
(4,616
)
-4.4
%
$
(17,849
)
-15.2
%
NET (CHARGE-OFFS) RECOVERIES (1) Alabama$
747
$
247
$
(1,011
)
$
500
n/m
$
1,758
n/m
Florida
(32
)
356
66
(388
)
n/m
(98
)
n/m
Mississippi (2)
(683
)
1,436
332
(2,119
)
n/m
(1,015
)
n/m
Tennessee (3)
(130
)
(8
)
303
(122
)
n/m
(433
)
n/m
Texas
(3
)
502
19
(505
)
n/m
(22
)
n/m
Total net (charge-offs) recoveries
$
(101
)
$
2,533
$
(291
)
$
(2,634
)
n/m
$
190
65.3
%
(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 December 31, 2021 ($ in thousands) (unaudited) Quarter Ended Year Ended AVERAGE BALANCES 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020 12/31/2021 12/31/2020 Securities AFS-taxable$
3,156,740
$
2,686,765
$
2,339,662
$
2,098,089
$
1,902,162
$
2,573,533
$
1,776,555
Securities AFS-nontaxable
5,143
5,159
5,174
5,190
5,206
5,166
10,737
Securities HTM-taxable
364,038
401,685
441,688
489,260
550,563
423,763
626,983
Securities HTM-nontaxable
7,618
8,641
10,958
24,070
24,752
12,765
25,366
Total securities
3,533,539
3,102,250
2,797,482
2,616,609
2,482,683
3,015,227
2,439,641
PPP loans
42,749
122,176
648,222
598,139
875,098
350,668
646,680
Loans (includes loans held for sale)
10,487,679
10,389,826
10,315,927
10,316,319
10,231,671
10,377,941
9,996,192
Fed funds sold and reverse repurchases
58
69
55
136
303
79
221
Other earning assets
1,839,498
2,038,515
1,750,385
1,667,906
860,540
1,825,134
657,096
Total earning assets
15,903,523
15,652,836
15,512,071
15,199,109
14,450,295
15,569,049
13,739,830
ACL LHFI
(104,148
)
(104,857
)
(112,346
)
(119,557
)
(124,088
)
(110,170
)
(108,567
)
Other assets
1,570,501
1,602,611
1,622,388
1,601,250
1,620,694
1,599,114
1,592,393
Total assets
$
17,369,876
$
17,150,590
$
17,022,113
$
16,680,802
$
15,946,901
$
17,057,993
$
15,223,656
Interest-bearing demand deposits
$
4,353,599
$
4,224,717
$
4,056,910
$
3,743,651
$
3,649,590
$
4,096,746
$
3,584,249
Savings deposits
4,585,624
4,617,683
4,627,180
4,659,037
4,350,783
4,622,167
4,149,860
Time deposits
1,220,083
1,258,829
1,301,896
1,371,830
1,436,677
1,287,663
1,534,673
Total interest-bearing deposits
10,159,306
10,101,229
9,985,986
9,774,518
9,437,050
10,006,576
9,268,782
Fed funds purchased and repurchases
201,856
147,635
174,620
166,909
170,474
172,782
151,805
Other borrowings
94,328
109,735
132,199
166,926
173,525
125,554
133,602
Subordinated notes
123,007
122,951
122,897
122,875
42,828
122,933
10,766
Junior subordinated debt securities
61,856
61,856
61,856
61,856
61,856
61,856
61,856
Total interest-bearing liabilities
10,640,353
10,543,406
10,477,558
10,293,084
9,885,733
10,489,701
9,626,811
Noninterest-bearing deposits
4,679,951
4,566,924
4,512,268
4,363,559
4,100,849
4,531,642
3,646,860
Other liabilities
291,449
257,956
251,582
264,808
235,284
266,499
268,398
Total liabilities
15,611,753
15,368,286
15,241,408
14,921,451
14,221,866
15,287,842
13,542,069
Shareholders' equity
1,758,123
1,782,304
1,780,705
1,759,351
1,725,035
1,770,151
1,681,587
Total liabilities and equity
$
17,369,876
$
17,150,590
$
17,022,113
$
16,680,802
$
15,946,901
$
17,057,993
$
15,223,656
See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2021 ($ in thousands) (unaudited) PERIOD END BALANCES 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020 Cash and due from banks
$
2,266,829
$
2,175,058
$
2,267,224
$
1,774,541
$
1,952,504
Fed funds sold and reverse repurchases
—
—
—
—
50
Securities available for sale
3,238,877
3,057,605
2,548,739
2,337,676
1,991,815
Securities held to maturity
342,537
394,905
433,012
493,738
538,072
PPP loans
33,336
46,486
166,119
679,725
610,134
LHFS
275,706
335,339
332,132
412,999
446,951
LHFI
10,247,829
10,174,899
10,152,869
9,983,704
9,824,524
ACL LHFI
(99,457
)
(104,073
)
(104,032
)
(109,191
)
(117,306
)
Net LHFI
10,148,372
10,070,826
10,048,837
9,874,513
9,707,218
Premises and equipment, net
205,644
201,937
200,970
199,098
194,278
Mortgage servicing rights
87,687
84,101
80,764
83,035
66,464
Goodwill
384,237
384,237
384,237
384,237
385,270
Identifiable intangible assets
5,074
5,621
6,170
6,724
7,390
Other real estate
4,557
6,213
9,439
10,651
11,651
Operating lease right-of-use assets
34,603
34,689
33,201
33,704
30,901
Other assets
568,177
567,627
587,288
587,672
609,142
Total assets
$
17,595,636
$
17,364,644
$
17,098,132
$
16,878,313
$
16,551,840
Deposits: Noninterest-bearing
$
4,771,065
$
4,987,885
$
4,446,991
$
4,705,991
$
4,349,010
Interest-bearing
10,316,095
9,934,954
10,185,093
9,677,449
9,699,754
Total deposits
15,087,160
14,922,839
14,632,084
14,383,440
14,048,764
Fed funds purchased and repurchases
238,577
146,417
157,176
160,991
164,519
Other borrowings
91,025
94,889
117,223
145,994
168,252
Subordinated notes
123,042
122,987
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
35,623
32,684
33,733
29,205
38,572
Operating lease liabilities
36,468
36,531
34,959
35,389
32,290
Other liabilities
180,574
177,494
158,860
178,856
173,549
Total liabilities
15,854,325
15,595,697
15,318,823
15,118,608
14,810,723
Common stock
12,845
13,014
13,079
13,209
13,215
Capital surplus
175,913
201,837
210,420
229,892
233,120
Retained earnings
1,585,113
1,573,176
1,566,451
1,533,110
1,495,833
Accumulated other comprehensive income (loss), net of tax
(32,560
)
(19,080
)
(10,641
)
(16,506
)
(1,051
)
Total shareholders' equity
1,741,311
1,768,947
1,779,309
1,759,705
1,741,117
Total liabilities and equity
$
17,595,636
$
17,364,644
$
17,098,132
$
16,878,313
$
16,551,840
See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2021 ($ in thousands except per share data) (unaudited) Quarter Ended Year Ended INCOME STATEMENTS 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020 12/31/2021 12/31/2020 Interest and fees on LHFS & LHFI-FTE
$
94,137
$
94,101
$
93,698
$
93,394
$
96,453
$
375,330
$
402,539
Interest and fees on PPP loans
397
1,533
25,555
9,241
14,870
36,726
26,643
Interest on securities-taxable
10,796
9,973
8,991
8,938
9,998
38,698
48,250
Interest on securities-tax exempt-FTE
123
132
149
290
293
694
1,366
Interest on fed funds sold and reverse repurchases
—
—
—
—
—
—
1
Other interest income
826
949
489
503
249
2,767
1,559
Total interest income-FTE
106,279
106,688
128,882
112,366
121,863
454,215
480,358
Interest on deposits
3,401
3,691
4,630
5,223
6,363
16,945
37,487
Interest on fed funds purchased and repurchases
66
51
59
56
56
232
755
Other interest expense
1,580
1,733
1,813
1,857
1,127
6,983
3,556
Total interest expense
5,047
5,475
6,502
7,136
7,546
24,160
41,798
Net interest income-FTE
101,232
101,213
122,380
105,230
114,317
430,055
438,560
Provision for credit losses, LHFI
(4,515
)
(2,492
)
(3,991
)
(10,501
)
(4,413
)
(21,499
)
36,113
Provision for credit losses, off-balance sheet credit exposures (1)
2,939
(1,049
)
4,528
(9,367
)
(1,087
)
(2,949
)
8,934
Net interest income after provision-FTE
102,808
104,754
121,843
125,098
119,817
454,503
393,513
Service charges on deposit accounts
9,366
8,911
7,613
7,356
8,283
33,246
32,289
Bank card and other fees
8,340
8,549
8,301
9,472
9,107
34,662
31,022
Mortgage banking, net
11,609
14,004
17,333
20,804
28,155
63,750
125,822
Insurance commissions
11,716
12,133
12,217
12,445
10,196
48,511
45,176
Wealth management
8,757
9,071
8,946
8,416
7,838
35,190
31,625
Other, net
979
1,481
2,001
2,090
2,538
6,551
8,659
Total noninterest income
50,767
54,149
56,411
60,583
66,117
221,910
274,593
Salaries and employee benefits
68,258
74,623
70,115
71,162
69,660
284,158
272,257
Services and fees
22,904
22,306
21,769
22,484
22,327
89,463
83,816
Net occupancy-premises
6,816
6,854
6,578
6,795
6,616
27,043
26,489
Equipment expense
6,585
5,941
5,567
6,244
6,213
24,337
23,277
Other real estate expense, net
336
1,357
1,511
324
(812
)
3,528
1,956
Other expense
14,570
18,519
13,139
14,539
15,890
60,767
58,506
Total noninterest expense
119,469
129,600
118,679
121,548
119,894
489,296
466,301
Income before income taxes and tax eq adj
34,106
29,303
59,575
64,133
66,040
187,117
201,805
Tax equivalent adjustment
2,906
2,947
2,957
2,894
2,939
11,704
12,023
Income before income taxes
31,200
26,356
56,618
61,239
63,101
175,413
189,782
Income taxes
4,978
5,156
8,637
9,277
11,884
28,048
29,757
Net income$
26,222
$
21,200
$
47,981
$
51,962
$
51,217
$
147,365
$
160,025
Per share data Earnings per share - basic$
0.42
$
0.34
$
0.76
$
0.82
$
0.81
$
2.35
$
2.52
Earnings per share - diluted$
0.42
$
0.34
$
0.76
$
0.82
$
0.81
$
2.34
$
2.51
Dividends per share$
0.23
$
0.23
$
0.23
$
0.23
$
0.23
$
0.92
$
0.92
Weighted average shares outstanding Basic
62,037,884
62,521,684
63,214,593
63,395,911
63,424,219
62,788,055
63,504,516
Diluted
62,264,983
62,730,157
63,409,683
63,562,503
63,616,767
62,973,464
63,645,599
Period end shares outstanding
61,648,679
62,461,832
62,773,226
63,394,522
63,424,526
61,648,679
63,424,526
(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. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2021 ($ in thousands) (unaudited) Quarter Ended NONPERFORMING ASSETS (1) 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020 Nonaccrual LHFI Alabama$
8,182
$
9,223
$
8,952
$
9,161
$
9,221
Florida
313
381
467
607
572
Mississippi (2)
21,636
22,898
23,422
35,534
35,015
Tennessee (3)
10,501
10,356
10,751
12,451
12,572
Texas
22,066
23,382
7,856
5,761
5,748
Total nonaccrual LHFI
62,698
66,240
51,448
63,514
63,128
Other real estate Alabama
—
613
2,830
3,085
3,271
Florida
—
—
—
—
—
Mississippi (2)
4,557
5,600
6,550
7,566
8,330
Tennessee (3)
—
—
59
—
50
Texas
—
—
—
—
—
Total other real estate
4,557
6,213
9,439
10,651
11,651
Total nonperforming assets
$
67,255
$
72,453
$
60,887
$
74,165
$
74,779
LOANS PAST DUE OVER 90 DAYS (1) LHFI
$
2,114
$
625
$
423
$
2,593
$
1,576
LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase)
$
69,894
$
75,091
$
81,538
$
109,566
$
119,409
Quarter Ended Year Ended ACL LHFI (1) 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020 12/31/2021 12/31/2020 Beginning Balance
$
104,073
$
104,032
$
109,191
$
117,306
$
122,010
$
117,306
$
84,277
CECL adoption adjustments: LHFI
—
—
—
—
—
—
(3,039
)
Acquired loan transfers
—
—
—
—
—
—
1,822
Provision for credit losses, LHFI
(4,515
)
(2,492
)
(3,991
)
(10,501
)
(4,413
)
(21,499
)
36,113
Charge-offs
(2,616
)
(1,586
)
(4,828
)
(1,245
)
(2,797
)
(10,275
)
(11,475
)
Recoveries
2,515
4,119
3,660
3,631
2,506
13,925
9,608
Net (charge-offs) recoveries
(101
)
2,533
(1,168
)
2,386
(291
)
3,650
(1,867
)
Ending Balance$
99,457
$
104,073
$
104,032
$
109,191
$
117,306
$
99,457
$
117,306
NET (CHARGE-OFFS) RECOVERIES (1) Alabama
$
747
$
247
$
203
$
102
$
(1,011
)
$
1,299
$
(1,448
)
Florida
(32
)
356
167
30
66
521
390
Mississippi (2)
(683
)
1,436
(3,071
)
2,207
332
(111
)
814
Tennessee (3)
(130
)
(8
)
1,031
47
303
940
(1,775
)
Texas
(3
)
502
502
—
19
1,001
152
Total net (charge-offs) recoveries
$
(101
)
$
2,533
$
(1,168
)
$
2,386
$
(291
)
$
3,650
$
(1,867
)
(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 December 31, 2021 (unaudited) Quarter Ended Year Ended FINANCIAL RATIOS AND OTHER DATA 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020 12/31/2021 12/31/2020 Return on average equity
5.92
%
4.72
%
10.81
%
11.98
%
11.81
%
8.32
%
9.52
%
Return on average tangible equity
7.72
%
6.16
%
13.96
%
15.56
%
15.47
%
10.81
%
12.58
%
Return on average assets
0.60
%
0.49
%
1.13
%
1.26
%
1.28
%
0.86
%
1.05
%
Interest margin - Yield - FTE
2.65
%
2.70
%
3.33
%
3.00
%
3.35
%
2.92
%
3.50
%
Interest margin - Cost
0.13
%
0.14
%
0.17
%
0.19
%
0.21
%
0.16
%
0.30
%
Net interest margin - FTE
2.53
%
2.57
%
3.16
%
2.81
%
3.15
%
2.76
%
3.19
%
Efficiency ratio (1)
76.52
%
74.10
%
64.31
%
71.84
%
65.59
%
71.41
%
63.35
%
Full-time equivalent employees
2,692
2,680
2,772
2,793
2,797
CREDIT QUALITY RATIOS (2) Net (recoveries) charge-offs / average loans
0.00
%
-0.10
%
0.05
%
-0.09
%
0.01
%
-0.04
%
0.02
%
Provision for credit losses, LHFI / average loans
-0.17
%
-0.10
%
-0.16
%
-0.41
%
-0.17
%
-0.21
%
0.36
%
Nonaccrual LHFI / (LHFI + LHFS)
0.60
%
0.63
%
0.49
%
0.61
%
0.61
%
Nonperforming assets / (LHFI + LHFS)
0.64
%
0.69
%
0.58
%
0.71
%
0.73
%
Nonperforming assets / (LHFI + LHFS + other real estate)
0.64
%
0.69
%
0.58
%
0.71
%
0.73
%
ACL LHFI / LHFI
0.97
%
1.02
%
1.02
%
1.09
%
1.19
%
ACL LHFI-commercial / commercial LHFI
1.00
%
1.05
%
1.04
%
1.13
%
1.20
%
ACL LHFI-consumer / consumer and home mortgage LHFI
0.87
%
0.91
%
0.98
%
0.95
%
1.16
%
ACL LHFI / nonaccrual LHFI
158.63
%
157.11
%
202.21
%
171.92
%
185.82
%
ACL LHFI / nonaccrual LHFI (excl individually evaluated loans)
500.85
%
520.77
%
537.35
%
437.08
%
572.69
%
CAPITAL RATIOS Total equity / total assets
9.90
%
10.19
%
10.41
%
10.43
%
10.52
%
Tangible equity / tangible assets
7.86
%
8.12
%
8.31
%
8.30
%
8.34
%
Tangible equity / risk-weighted assets
10.71
%
11.19
%
11.33
%
11.23
%
11.22
%
Tier 1 leverage ratio
8.73
%
8.92
%
9.00
%
9.11
%
9.33
%
Common equity tier 1 capital ratio
11.29
%
11.68
%
11.76
%
11.71
%
11.62
%
Tier 1 risk-based capital ratio
11.77
%
12.17
%
12.25
%
12.20
%
12.11
%
Total risk-based capital ratio
13.55
%
14.01
%
14.10
%
14.07
%
14.12
%
STOCK PERFORMANCE Market value-Close$
32.46
$
32.22
$
30.80
$
33.66
$
27.31
Book value
$
28.25
$
28.32
$
28.35
$
27.76
$
27.45
Tangible book value
$
21.93
$
22.08
$
22.13
$
21.59
$
21.26
(1) See Note 10 – 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 December 31, 2021 ($ in thousands) (unaudited)
Note 1 – Regulatory Matters
On October 22, 2021, Trustmark Corporation’s subsidiary, Trustmark National Bank (“TNB”), issued a press release announcing that it entered into a consent order with the Office of the Comptroller of the Currency (“OCC”) and a separate consent order jointly with the U.S. Department of Justice (“DOJ”) and the Consumer Financial Protection Bureau (“CFPB”), to resolve allegations that TNB previously violated the Fair Housing Act (the “FHA”), the Equal Credit Opportunity Act (the “ECOA”) and the Consumer Financial Protection Act within the Memphis metropolitan statistical area (the “Memphis MSA”).
Under the DOJ and CFPB’s joint consent order, TNB paid a civil money penalty totaling $5.0 million, of which $4.0 million satisfied the OCC’s civil money penalty as set forth in the OCC’s consent order; the remaining $1.0 million was paid to the CFPB. The joint consent order also requires TNB, among other things, to implement a mutually agreed-upon Fair Lending Plan, invest $3.85 million over five years in a loan subsidy fund to increase credit opportunities to residents of majority-Black and Hispanic neighborhoods, and devote a minimum of $400 thousand over five years toward community development partnership contributions and $200 thousand per year over five years toward advertising, community outreach, and credit repair and education in TNB’s Memphis lending area (defined in the consent order as consisting of Shelby County and Fayette County in Tennessee and DeSoto County in Mississippi). TNB will also open one new mortgage loan production office to serve the credit needs of residents in a majority-Black and Hispanic neighborhood in TNB’s Memphis lending area. In addition, TNB will continue to maintain its full-time Community Lending Manager position and its full-time Community Development Manager position, which are both focused on the Memphis MSA.
The joint consent order has been approved by the United States District Court for the Western District of Tennessee.
Note 2 - Paycheck Protection Program
On June 30, 2021, Trustmark announced the sale of substantially all PPP loans originated in 2021 by its wholly owned subsidiary, TNB, to The Loan Source, Inc. (Loan Source), a firm with significant expertise in PPP loans. As a result of this transaction, Loan Source will assume responsibility for the servicing and forgiveness process for the loans it has acquired from Trustmark. This transaction will allow Trustmark to focus on more traditional lending efforts and increase its ability to provide customers with financial services in an improving economic environment.
Trustmark accelerated the recognition of unamortized PPP loan origination fees, net of cost, of approximately $18.6 million, in the second quarter of 2021 due to the sale of approximately $354.2 million in PPP loans. This revenue is substantially the same as Trustmark would expect to recognize upon the maturity or forgiveness of the PPP loans being sold in this transaction, and thus this transaction serves to accelerate revenue anticipated in future periods into the second quarter.
At December 31, 2021, Trustmark had PPP loans outstanding that totaled $33.3 million (net of $500 thousand of deferred fees and costs) under the CARES Act. Due to the amount and nature of the PPP loans, these loans were not included in the LHFI portfolio and are presented separately in the accompanying consolidated balance sheets. The PPP loans are fully guaranteed by the Small Business Administration; therefore, no ACL was estimated for these loans.
Note 3 - 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:
12/31/2021
9/30/2021
6/30/2021
3/31/2021
12/31/2020
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities
$
344,640
$
278,615
$
30,025
$
—
$
—
U.S. Government agency obligations
13,727
14,979
16,023
17,349
18,041
Obligations of states and political subdivisions
5,714
5,734
5,807
5,798
5,835
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA
39,573
43,860
48,445
52,406
56,862
Issued by FNMA and FHLMC
2,218,429
2,187,412
1,983,783
1,749,144
1,441,321
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA
196,690
236,885
283,988
345,869
419,437
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA
420,104
290,120
180,668
167,110
50,319
Total securities available for sale
$
3,238,877
$
3,057,605
$
2,548,739
$
2,337,676
$
1,991,815
SECURITIES HELD TO MATURITY
Obligations of states and political subdivisions
$
7,328
$
10,683
$
12,994
$
26,554
$
26,584
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA
5,005
5,912
6,249
7,268
7,598
Issued by FNMA and FHLMC
43,444
48,554
53,406
61,855
67,944
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA
241,934
264,638
291,477
324,360
360,361
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA
44,826
65,118
68,886
73,701
75,585
Total securities held to maturity
$
342,537
$
394,905
$
433,012
$
493,738
$
538,072
At December 31, 2021, 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 $6.3 million ($4.7 million, net of tax).
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2021 ($ in thousands) (unaudited)
Note 3 - Securities Available for Sale and Held to Maturity (continued)
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 4 – Loan Composition
LHFI consisted of the following during the periods presented:
LHFI BY TYPE
12/31/2021
9/30/2021
6/30/2021
3/31/2021
12/31/2020
Loans secured by real estate:
Construction, land development and other land loans
$
1,308,781
$
1,286,613
$
1,360,302
$
1,342,088
$
1,309,039
Secured by 1-4 family residential properties
1,977,993
1,891,292
1,810,396
1,742,782
1,741,132
Secured by nonfarm, nonresidential properties
2,977,084
2,924,953
2,819,662
2,799,195
2,709,026
Other real estate secured
726,043
986,163
1,078,622
1,135,005
1,065,964
Commercial and industrial loans
1,414,279
1,327,211
1,326,605
1,323,277
1,309,078
Consumer loans
159,472
157,963
153,519
153,267
161,174
State and other political subdivision loans
1,146,251
1,125,186
1,136,764
1,036,694
1,000,776
Other loans
537,926
475,518
466,999
451,396
528,335
LHFI
10,247,829
10,174,899
10,152,869
9,983,704
9,824,524
ACL LHFI
(99,457
)
(104,073
)
(104,032
)
(109,191
)
(117,306
)
Net LHFI
$
10,148,372
$
10,070,826
$
10,048,837
$
9,874,513
$
9,707,218
The following table presents the LHFI composition by region at December 31, 2021 and reflects each region’s diversified mix of loans:
December 31, 2021
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
$
1,308,781
$
522,231
$
49,383
$
411,607
$
48,328
$
277,232
Secured by 1-4 family residential properties
1,977,993
114,068
41,473
1,738,583
67,601
16,268
Secured by nonfarm, nonresidential properties
2,977,084
890,055
252,656
1,137,039
170,318
527,016
Other real estate secured
726,043
147,430
6,765
280,122
19,887
271,839
Commercial and industrial loans
1,414,279
279,151
24,099
516,122
349,385
245,522
Consumer loans
159,472
23,850
8,176
101,701
18,129
7,616
State and other political subdivision loans
1,146,251
98,215
72,146
728,509
34,542
212,839
Other loans
537,926
76,612
11,697
355,863
43,004
50,750
Loans
$
10,247,829
$
2,151,612
$
466,395
$
5,269,546
$
751,194
$
1,609,082
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots
$
62,841
$
25,827
$
8,399
$
17,845
$
3,210
$
7,560
Development
139,708
59,615
584
44,593
11,862
23,054
Unimproved land
101,591
26,016
12,495
31,167
10,976
20,937
1-4 family construction
292,828
140,905
20,388
78,164
21,123
32,248
Other construction
711,813
269,868
7,517
239,838
1,157
193,433
Construction, land development and other land loans
$
1,308,781
$
522,231
$
49,383
$
411,607
$
48,328
$
277,232
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2021 ($ in thousands) (unaudited)
Note 4 – Loan Composition (continued)
December 31, 2021
Total
Alabama
Florida
Mississippi (Central and Southern Regions)
Tennessee (Memphis, TN and Northern MS Regions)
Texas
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION
Non-owner occupied:
Retail
$
351,822
$
140,054
$
29,586
$
97,103
$
18,777
$
66,302
Office
208,835
68,067
22,626
66,799
12,786
38,557
Hotel/motel
348,090
176,327
78,408
46,886
32,204
14,265
Mini-storage
153,938
22,414
2,144
100,029
697
28,654
Industrial
346,096
134,279
20,581
86,613
135
104,488
Health care
63,746
32,230
1,101
27,766
364
2,285
Convenience stores
22,634
8,114
677
3,748
1,167
8,928
Nursing homes/senior living
197,677
86,868
—
84,540
6,269
20,000
Other
78,940
17,509
7,239
32,015
11,729
10,448
Total non-owner occupied loans
1,771,778
685,862
162,362
545,499
84,128
293,927
Owner-occupied:
Office
170,438
37,572
42,913
48,923
13,091
27,939
Churches
83,375
18,657
5,937
47,019
9,172
2,590
Industrial warehouses
182,126
21,647
2,678
48,118
18,562
91,121
Health care
141,427
11,854
6,809
105,842
2,276
14,646
Convenience stores
130,948
15,255
13,244
68,673
466
33,310
Retail
65,269
12,420
10,992
20,476
8,818
12,563
Restaurants
54,978
2,877
4,484
30,894
12,735
3,988
Auto dealerships
53,710
6,090
256
27,489
19,875
—
Nursing homes/senior living
197,232
71,639
—
125,593
—
—
Other
125,803
6,182
2,981
68,513
1,195
46,932
Total owner-occupied loans
1,205,306
204,193
90,294
591,540
86,190
233,089
Loans secured by nonfarm, nonresidential properties
$
2,977,084
$
890,055
$
252,656
$
1,137,039
$
170,318
$
527,016
Note 5 – Subordinated Notes
During the fourth quarter of 2020, Trustmark agreed to issue and sell $125.0 million aggregate principal amount of its 3.625% Fixed-to-Floating Rate Subordinated Notes (the Notes) due December 1, 2030. At December 31, 2021, the carrying amount of the Notes was $123.0 million. The Notes are unsecured obligations and are subordinated in right of payment to all of Trustmark’s existing and future senior indebtedness, whether secured or unsecured. The Notes are obligations of Trustmark only and are not obligations of, and are not guaranteed by, any of its subsidiaries, including TNB. From the date of issuance until November 30, 2025, the Notes bear interest at a fixed rate of 3.625% per year, payable semi-annually in arrears on June 1 and December 1 of each year. Beginning December 1, 2025, the Notes will bear interest at a floating rate per year equal to the Benchmark rate, which is the Three-Month Term Secured Overnight Financing Rate (SOFR), plus 338.7 basis points, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year. The Notes qualify as Tier 2 capital for Trustmark. The Notes may be redeemed at Trustmark’s option under certain circumstances. Trustmark intends to use the net proceeds for general corporate purposes.
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2021 ($ in thousands) (unaudited)
Note 6 – 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
Year Ended
12/31/2021
9/30/2021
6/30/2021
3/31/2021
12/31/2020
12/31/2021
12/31/2020
Securities – taxable
1.22
%
1.28
%
1.30
%
1.40
%
1.62
%
1.29
%
2.01
%
Securities – nontaxable
3.82
%
3.79
%
3.70
%
4.02
%
3.89
%
3.87
%
3.78
%
Securities – total
1.23
%
1.29
%
1.31
%
1.43
%
1.65
%
1.31
%
2.03
%
PPP loans
3.68
%
4.98
%
15.81
%
6.27
%
6.76
%
10.47
%
4.12
%
Loans - LHFI & LHFS
3.56
%
3.59
%
3.64
%
3.67
%
3.75
%
3.62
%
4.03
%
Loans - total
3.56
%
3.61
%
4.36
%
3.81
%
3.99
%
3.84
%
4.03
%
Fed funds sold & reverse repurchases
—
—
—
—
—
—
0.45
%
Other earning assets
0.18
%
0.18
%
0.11
%
0.12
%
0.12
%
0.15
%
0.24
%
Total earning assets
2.65
%
2.70
%
3.33
%
3.00
%
3.35
%
2.92
%
3.50
%
Interest-bearing deposits
0.13
%
0.14
%
0.19
%
0.22
%
0.27
%
0.17
%
0.40
%
Fed funds purchased & repurchases
0.13
%
0.14
%
0.14
%
0.14
%
0.13
%
0.13
%
0.50
%
Other borrowings
2.25
%
2.33
%
2.29
%
2.14
%
1.61
%
2.25
%
1.72
%
Total interest-bearing liabilities
0.19
%
0.21
%
0.25
%
0.28
%
0.30
%
0.23
%
0.43
%
Net interest margin
2.53
%
2.57
%
3.16
%
2.81
%
3.15
%
2.76
%
3.19
%
Net interest margin excluding PPP loans and the FRB balance
2.82
%
2.90
%
2.94
%
2.99
%
3.09
%
2.91
%
3.29
%
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 December 31, 2021 and September 30, 2021, the average FRB balance totaled $1.787 billion and $1.996 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 2.82% for the fourth quarter of 2021, a decrease of 8 basis points when compared to the third quarter of 2021. Continued low interest rates decreased the yield on the loans held for investment and held for sale portfolio as well as the securities portfolio and were partially offset by lower costs of interest-bearing deposits.
Note 7 – 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 $778 thousand during the fourth quarter of 2021.
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2021 ($ in thousands) (unaudited)
Note 7 – Mortgage Banking (continued)
The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements:
Quarter Ended
Year Ended
12/31/2021
9/30/2021
6/30/2021
3/31/2021
12/31/2020
12/31/2021
12/31/2020
Mortgage servicing income, net
$
6,571
$
6,406
$
6,318
$
6,181
$
6,227
$
25,476
$
23,681
Change in fair value-MSR from runoff
(4,745
)
(5,283
)
(5,029
)
(5,103
)
(5,177
)
(20,160
)
(16,588
)
Gain on sales of loans, net
9,005
12,737
14,778
19,456
28,014
55,976
110,903
Mortgage banking income before hedge ineffectiveness
10,831
13,860
16,067
20,534
29,064
61,292
117,996
Change in fair value-MSR from market changes
2,221
1,806
(4,465
)
13,696
951
13,258
(26,147
)
Change in fair value of derivatives
(1,443
)
(1,662
)
5,731
(13,426
)
(1,860
)
(10,800
)
33,973
Net positive (negative) hedge ineffectiveness
778
144
1,266
270
(909
)
2,458
7,826
Mortgage banking, net
$
11,609
$
14,004
$
17,333
$
20,804
$
28,155
$
63,750
$
125,822
Note 8 – Salaries and Employee Benefit Plans
Early Retirement Program
In June 2021, Trustmark announced a voluntary early retirement program. In general, associates who were eligible to participate had to be at least 60 years of age with five or more years of continuous service. The cost of this program is reflected in a one-time charge of approximately $5.7 million (salaries and benefits of $5.6 million and other miscellaneous expense of $89 thousand; or $0.07 per diluted share net of tax) in Trustmark’s third quarter of 2021 earnings. The salary and employee benefits expense savings that resulted from the implementation of the early retirement program was approximately $1.3 million ($0.02 per diluted share net of tax) for 2021 and expected to be $4.3 million ($0.05 per diluted share net of tax) for the year ended 2022.
Note 9 – Other Noninterest Income and Expense
Other noninterest income consisted of the following for the periods presented:
Quarter Ended
Year Ended
12/31/2021
9/30/2021
6/30/2021
3/31/2021
12/31/2020
12/31/2021
12/31/2020
Partnership amortization for tax credit purposes
$
(2,455
)
$
(2,045
)
$
(1,989
)
$
(1,522
)
$
(1,877
)
$
(8,011
)
$
(5,700
)
Increase in life insurance cash surrender value
1,675
1,663
1,653
1,639
1,708
6,630
6,881
Other miscellaneous income
1,759
1,863
2,337
1,973
2,707
7,932
7,478
Total other, net
$
979
$
1,481
$
2,001
$
2,090
$
2,538
$
6,551
$
8,659
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
Year Ended
12/31/2021
9/30/2021
6/30/2021
3/31/2021
12/31/2020
12/31/2021
12/31/2020
Loan expense
$
3,221
$
4,022
$
3,738
$
4,167
$
4,243
$
15,148
$
15,177
Amortization of intangibles
548
549
553
666
752
2,316
3,052
FDIC assessment expense
1,475
1,275
1,225
1,540
1,500
5,515
6,090
Regulatory settlement charge
—
5,000
—
—
—
5,000
—
Other miscellaneous expense
9,326
7,673
7,623
8,166
9,395
32,788
34,187
Total other expense
$
14,570
$
18,519
$
13,139
$
14,539
$
15,890
$
60,767
$
58,506
During the third quarter of 2021, other expense included a charge of $5.0 million to resolve allegations by regulatory authorities regarding fair lending matters. See Note 1 – Regulatory Matters for further details.
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2021 ($ in thousands) (unaudited)
Note 10 – Non-GAAP Financial Measures
In addition to capital ratios defined by U.S. generally accepted accounting principles (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 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 tangible 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 consolidated financial statements in their entirety and not to rely on any single financial measure. The following table reconciles Trustmark’s calculation of these measures to amounts reported under GAAP.
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2021 ($ in thousands) (unaudited)
Note 10 – Non-GAAP Financial Measures (continued)
Quarter Ended
Year Ended
12/31/2021
9/30/2021
6/30/2021
3/31/2021
12/31/2020
12/31/2021
12/31/2020
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity
$
1,758,123
$
1,782,304
$
1,780,705
$
1,759,351
$
1,725,035
$
1,770,151
$
1,681,587
Less: Goodwill
(384,237
)
(384,237
)
(384,237
)
(385,155
)
(385,270
)
(384,463
)
(383,582
)
Identifiable intangible assets
(5,382
)
(5,899
)
(6,442
)
(7,118
)
(7,803
)
(6,205
)
(8,060
)
Total average tangible equity
$
1,368,504
$
1,392,168
$
1,390,026
$
1,367,078
$
1,331,962
$
1,379,483
$
1,289,945
PERIOD END BALANCES
Total shareholders' equity
$
1,741,311
$
1,768,947
$
1,779,309
$
1,759,705
$
1,741,117
Less: Goodwill
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(385,270
)
Identifiable intangible assets
(5,074
)
(5,621
)
(6,170
)
(6,724
)
(7,390
)
Total tangible equity
(a)
$
1,352,000
$
1,379,089
$
1,388,902
$
1,368,744
$
1,348,457
TANGIBLE ASSETS
Total assets
$
17,595,636
$
17,364,644
$
17,098,132
$
16,878,313
$
16,551,840
Less: Goodwill
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(385,270
)
Identifiable intangible assets
(5,074
)
(5,621
)
(6,170
)
(6,724
)
(7,390
)
Total tangible assets
(b)
$
17,206,325
$
16,974,786
$
16,707,725
$
16,487,352
$
16,159,180
Risk-weighted assets
(c)
$
12,623,630
$
12,324,254
$
12,256,492
$
12,188,988
$
12,017,378
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income
$
26,222
$
21,200
$
47,981
$
51,962
$
51,217
$
147,365
$
160,025
Plus: Intangible amortization net of tax
411
412
415
500
564
1,738
2,289
Net income adjusted for intangible amortization
$
26,633
$
21,612
$
48,396
$
52,462
$
51,781
$
149,103
$
162,314
Period end common shares outstanding
(d)
61,648,679
62,461,832
62,773,226
63,394,522
63,424,526
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity (1)
7.72
%
6.16
%
13.96
%
15.56
%
15.47
%
10.81
%
12.58
%
Tangible equity/tangible assets
(a)/(b)
7.86
%
8.12
%
8.31
%
8.30
%
8.34
%
Tangible equity/risk-weighted assets
(a)/(c)
10.71
%
11.19
%
11.33
%
11.23
%
11.22
%
Tangible book value
(a)/(d)*1,000
$
21.93
$
22.08
$
22.13
$
21.59
$
21.26
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity
$
1,741,311
$
1,768,947
$
1,779,309
$
1,759,705
$
1,741,117
CECL transition adjustment
26,000
26,419
26,671
26,829
31,199
AOCI-related adjustments
32,560
19,080
10,641
16,506
1,051
CET1 adjustments and deductions:
Goodwill net of associated deferred tax liabilities (DTLs)
(370,252
)
(370,264
)
(370,276
)
(370,288
)
(371,333
)
Other adjustments and deductions for CET1 (2)
(4,392
)
(4,817
)
(5,243
)
(5,675
)
(6,190
)
CET1 capital
(e)
1,425,227
1,439,365
1,441,102
1,427,077
1,395,844
Additional tier 1 capital instruments plus related surplus
60,000
60,000
60,000
60,000
60,000
Tier 1 capital
$
1,485,227
$
1,499,365
$
1,501,102
$
1,487,077
$
1,455,844
Common equity tier 1 capital ratio
(e)/(c)
11.29
%
11.68
%
11.76
%
11.71
%
11.62
%
(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 December 31, 2021 ($ in thousands) (unaudited)
Note 10 – 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
Year Ended
12/31/2021
9/30/2021
6/30/2021
3/31/2021
12/31/2020
12/31/2021
12/31/2020
Net interest income (GAAP)
$
98,326
$
98,266
$
119,423
$
102,336
$
111,378
$
418,351
$
426,537
Noninterest income (GAAP)
50,767
54,149
56,411
60,583
66,117
221,910
274,593
Pre-provision revenue
(a)
$
149,093
$
152,415
$
175,834
$
162,919
$
177,495
$
640,261
$
701,130
Noninterest expense (GAAP)
$
119,469
$
129,600
$
118,679
$
121,548
$
119,894
$
489,296
$
466,301
Less: Voluntary early retirement program
—
(5,700
)
—
—
—
(5,700
)
(4,375
)
Regulatory settlement charge
—
(5,000
)
—
—
—
(5,000
)
—
Adjusted noninterest expense - PPNR (Non-GAAP)
(b)
$
119,469
$
118,900
$
118,679
$
121,548
$
119,894
$
478,596
$
461,926
PPNR (Non-GAAP)
(a)-(b)
$
29,624
$
33,515
$
57,155
$
41,371
$
57,601
$
161,665
$
239,204
The following table presents adjustments to net income and select financial ratios as reported in accordance with GAAP resulting from significant non-routine items occurring during the periods presented:
Quarter Ended
Year Ended
12/31/2021
12/31/2020
12/31/2021
12/31/2020
Amount
Diluted EPS
Amount
Diluted EPS
Amount
Diluted EPS
Amount
Diluted EPS
Net income (GAAP)
$
26,222
$
0.42
$
51,217
$
0.81
$
147,365
$
2.34
$
160,025
$
2.51
Significant non-routine transactions (net of taxes):
Voluntary early retirement program
—
—
—
—
4,275
0.07
3,281
0.05
Regulatory settlement charge (not tax deductible)
—
—
—
—
5,000
0.08
—
—
Net income adjusted for significant non-routine transactions (Non-GAAP)
$
26,222
$
0.42
$
51,217
$
0.81
$
156,640
$
2.49
$
163,306
$
2.56
Reported (GAAP)
Adjusted (Non- GAAP)
Reported (GAAP)
Adjusted (Non- GAAP)
Reported (GAAP)
Adjusted (Non- GAAP)
Reported (GAAP)
Adjusted (Non- GAAP)
Return on average equity
5.92
%
n/a
11.81
%
n/a
8.32
%
8.83
%
9.52
%
9.69
%
Return on average tangible equity
7.72
%
n/a
15.47
%
n/a
10.81
%
11.45
%
12.58
%
12.81
%
Return on average assets
0.60
%
n/a
1.28
%
n/a
0.86
%
0.92
%
1.05
%
1.07
%
n/a - not applicable
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2021 ($ in thousands) (unaudited)
Note 10 – Non-GAAP Financial Measures (continued)
The following table presents Trustmark’s calculation of its efficiency ratio for the periods presented:
Quarter Ended
Year Ended
12/31/2021
9/30/2021
6/30/2021
3/31/2021
12/31/2020
12/31/2021
12/31/2020
Total noninterest expense (GAAP)
$
119,469
$
129,600
$
118,679
$
121,548
$
119,894
489,296
$
466,301
Less: Other real estate expense, net
(336
)
(1,357
)
(1,511
)
(324
)
812
(3,528
)
(1,956
)
Amortization of intangibles
(548
)
(549
)
(553
)
(666
)
(752
)
(2,316
)
(3,052
)
Charitable contributions resulting in state tax credits
(391
)
(350
)
(355
)
(350
)
(375
)
(1,446
)
(1,500
)
Voluntary early retirement program
—
(5,700
)
—
—
—
(5,700
)
(4,375
)
Regulatory settlement charge
—
(5,000
)
—
—
—
(5,000
)
—
Adjusted noninterest expense (Non-GAAP)
(c)
$
118,194
$
116,644
$
116,260
$
120,208
$
119,579
$
471,306
$
455,418
Net interest income (GAAP)
$
98,326
$
98,266
$
119,423
$
102,336
$
111,378
$
418,351
$
426,537
Add: Tax equivalent adjustment
2,906
2,947
2,957
2,894
2,939
11,704
12,023
Net interest income-FTE (Non-GAAP)
(a)
$
101,232
$
101,213
$
122,380
$
105,230
$
114,317
$
430,055
$
438,560
Noninterest income (GAAP)
$
50,767
$
54,149
$
56,411
$
60,583
$
66,117
$
221,910
$
274,593
Add: Partnership amortization for tax credit purposes
2,455
2,045
1,989
1,522
1,877
8,011
5,700
Adjusted noninterest income (Non-GAAP)
(b)
$
53,222
$
56,194
$
58,400
$
62,105
$
67,994
$
229,921
$
280,293
Adjusted revenue (Non-GAAP)
(a)+(b)
$
154,454
$
157,407
$
180,780
$
167,335
$
182,311
$
659,976
$
718,853
Efficiency ratio (Non-GAAP)
(c)/((a)+(b))
76.52
%
74.10
%
64.31
%
71.84
%
65.59
%
71.41
%
63.35
%
View source version on businesswire.com: https://www.businesswire.com/news/home/20220125005343/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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