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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 | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 29.58 | 29.60 | 31.24 | 0 | 11:48:54 |
Performance Reflects Continued Loan and Deposit Growth, Solid Credit Quality, and Diversified Revenue Base
Trustmark Corporation (NASDAQGS:TRMK) reported net income of $36.1 million in the fourth quarter of 2023, representing diluted earnings per share of $0.59. For the full year, Trustmark’s net income totaled $165.5 million, representing diluted earnings per share of $2.70. Trustmark’s net income in 2023 produced a return on average tangible equity of 14.04% and a return on average assets of 0.89%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable March 15, 2024, to shareholders of record on March 1, 2024.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20240123799186/en/
Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/53886436/en
2023 Highlights
Duane A. Dewey, President and CEO, commented, “We continued to make significant progress across the organization. Our performance reflected solid loan production and credit quality, and continued deposit growth in an increasingly competitive marketplace. We achieved double-digit growth in net interest income in 2023 while noninterest income continued to expand thanks in part to another record year in our insurance business and commendable results in our banking, mortgage banking and wealth management businesses. We have a tremendous team of associates focused on expanding customer relationships and demonstrating the value Trustmark can provide as their trusted financial partner. Looking forward, we will 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.”
Balance Sheet Management
Loans HFI totaled $13.0 billion at December 31, 2023, reflecting an increase of $140.3 million, or 1.1%, linked-quarter and $746.5 million, or 6.1%, year-over-year. The linked-quarter growth reflected increases in commercial and industrial loans, other real estate secured loans, other loans and leases, and state and other political subdivision loans offset in part by declines in construction, land development and other land loans, and loans secured by nonfarm, nonresidential properties. Trustmark’s loan portfolio remains well-diversified by loan type and geography.
Deposits totaled $15.6 billion at December 31, 2023, up $467.8 million, or 3.1%, from the prior quarter and up $1.1 billion, or 7.8%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 83.2% of total deposits at year-end 2023. Noninterest-bearing deposits represented 20.5% of total deposits at December 31, 2023. Interest-bearing deposit costs totaled 2.67% for the fourth quarter, an increase of 28 basis points linked-quarter. The total cost of interest-bearing liabilities was 2.89% for the fourth quarter of 2023, an increase of 17 basis points from the prior quarter.
Trustmark did not repurchase any of its common shares in 2023. As previously announced, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2024, under which $50.0 million of Trustmark’s outstanding shares may be acquired through December 31, 2024. 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, 2023, Trustmark’s tangible equity to tangible assets ratio was 6.95%, while the total risk-based capital ratio was 12.29%. Tangible book value per share was $20.87 at December 31, 2023, up 7.7% from the prior quarter and 15.2% from the prior year.
Credit Quality
Nonaccrual loans totaled $100.0 million at December 31, 2023, an increase of $9.1 million from the prior quarter and $34.0 million year-over-year. Other real estate totaled $6.9 million, reflecting increases of $1.4 million and $4.9 million from the prior quarter and prior year, respectively. Collectively, nonperforming assets totaled $106.9 million, representing 0.81% of loans HFI and held for sale (HFS) at December 31, 2023.
The provision for credit losses for loans HFI was $7.6 million in the fourth quarter and was primarily attributable to loan growth, net adjustments to the qualitative factors, and changes in the macroeconomic forecast. The provision for credit losses for off-balance sheet credit exposures was a negative $888 thousand in the fourth quarter. Collectively, the provision for credit losses totaled $6.7 million in the fourth quarter compared to $8.4 million in the prior quarter and $12.1 million in the fourth quarter of 2022.
Allocation of Trustmark’s $139.4 million ACL on loans HFI represented 0.85% of commercial loans and 1.81% of consumer and home mortgage loans, resulting in an ACL to total loans HFI of 1.08% at December 31, 2023. 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 $186.5 million, a decrease of 2.3% from the prior quarter and 2.7% from the same quarter in the prior year. The linked-quarter decrease reflects lower noninterest income and net interest income while the year-over-year decline reflects growth in noninterest income being more than offset by lower net interest income. In 2023, revenue totaled $759.8 million, an increase of 8.6% from the prior year.
Net interest income (FTE) in the fourth quarter totaled $140.0 million, resulting in a net interest margin of 3.25%, down 4 basis points from the prior quarter. The decrease in the net interest margin was primarily due to increased costs of interest-bearing liabilities, which was offset in part by higher yields on the loans HFI and HFS portfolio.
Noninterest income in the fourth quarter totaled $49.8 million, a decrease of $2.4 million from the prior quarter and an increase of $4.6 million from the prior year. The linked-quarter change reflects a seasonal decline in insurance revenue, as well as lower mortgage banking and wealth management revenue. The increase in noninterest income year-over-year was well diversified across all fee-based categories.
Mortgage loan production in the fourth quarter totaled $271.9 million, a decline of 30.3% linked-quarter and 30.4% year-over-year. Mortgage banking revenue totaled $5.5 million in the fourth quarter, a decrease of $939 thousand from the prior quarter and an increase of $2.1 million year-over-year. The linked-quarter decline is attributable to an increase in net negative hedge ineffectiveness. In 2023, mortgage loan production totaled $1.5 billion, down 31.6% from the prior year. Mortgage banking revenue totaled $26.2 million in 2023, down $2.1 million from the prior year.
Insurance revenue in the fourth quarter totaled $13.2 million, a seasonal decline of $2.1 million from the prior quarter and an increase of $1.2 million from the prior year. Insurance revenue in 2023 totaled $57.6 million, up $3.8 million, or 7.2%, from the prior year. The solid performance during the year reflects an expanded producer workforce, a hardening of the insurance market, and the realization of operational efficiencies from investments in technology and improved processes.
Wealth management revenue totaled $8.7 million in the fourth quarter, down 1.3% from the prior quarter and up 7.2% from the prior year. The linked-quarter decline is principally due to reduced trust management revenue offset in part by increased brokerage revenue while the year-over-year change is attributable to increased investment services revenue. In 2023, wealth management revenue totaled $35.1 million, in line with the prior year. During 2023, Trustmark selectively expanded its salesforce in the Houston, Mobile, Jackson, and Florida Panhandle markets.
Noninterest Expense
Salaries and employee benefits expense in the fourth quarter totaled $78.0 million, an increase of $1.3 million, or 1.7% from the prior quarter. Excluding reduction in force expense related to restructuring initiatives of $1.4 million, salaries and benefits expense totaled $76.6 million, a decline of $69 thousand from the prior quarter. Total services and fees in the fourth quarter totaled $27.9 million, unchanged from the prior quarter. Net occupancy – premises expense during the fourth quarter totaled $7.4 million, unchanged from the prior quarter. Equipment expense declined 4.4% linked-quarter to total $6.5 million. Other expense increased $943 thousand, or 6.0%, linked-quarter principally due to increased FDIC assessment expense.
Additional Information
As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, January 24, 2024, 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 7, 2024, in archived format at the same web address or by calling (877) 344-7529, passcode 6776577.
Trustmark is a financial services company providing banking and financial solutions through offices in Alabama, Florida, Georgia, Mississippi, Tennessee and Texas. Visit trustmark.com for more information.
Forward-Looking Statements
Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “project,” “potential,” “seek,” “continue,” “could,” “would,” “future” or the negative of those terms or other words of similar meaning. You should read statements that contain these words carefully because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements include, but are not limited to, statements relating to anticipated future operating and financial performance measures, including net interest margin, credit quality, business initiatives, growth opportunities and growth rates, among other things, and encompass any estimate, prediction, expectation, projection, opinion, anticipation, outlook or statement of belief included therein as well as the management assumptions underlying these forward-looking statements. You should be aware that the occurrence of the events described under the caption “Risk Factors” in Trustmark’s filings with the Securities and Exchange Commission (SEC) could have an adverse effect on our business, results of operations and financial condition. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected.
Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels and slowdowns in economic growth, actions by the Board of Governors of the Federal Reserve System (FRB) that impact the level of market interest rates, local, state and national economic and market conditions, conditions in the housing and real estate markets in the regions in which Trustmark operates and the extent and duration of the current volatility in the credit and financial markets, levels of and volatility in crude oil prices, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility of market interest rates, the impacts related to or resulting from recent bank failures and other economic and industry volatility, including potential increased regulatory requirements and costs and potential impacts to macroeconomic conditions, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, including the potential impact of issues related to the European financial system and monetary and other governmental actions designed to address credit, securities, and/or commodity markets, the enactment of legislation and changes in existing regulations or enforcement practices or the adoption of new regulations, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, changes in our ability to control expenses, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, cyber-attacks and other breaches which could affect our information system security, natural disasters, environmental disasters, pandemics or other health crises, acts of war or terrorism, and other risks described in our filings with the SEC.
Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Except as required by law, we undertake no obligation to update or revise any of this information, whether as the result of new information, future events or developments or otherwise.
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2023 ($ in thousands) (unaudited) Linked Quarter Year over Year QUARTERLY AVERAGE BALANCES 12/31/2023 9/30/2023 12/31/2022 $ Change % Change $ Change % Change Securities AFS-taxable$
1,986,825
$
2,049,006
$
2,572,675
$
(62,181
)
-3.0
%
$
(585,850
)
-22.8
%
Securities AFS-nontaxable
4,246
4,779
4,828
(533
)
-11.2
%
(582
)
-12.1
%
Securities HTM-taxable
1,430,169
1,445,895
1,268,952
(15,726
)
-1.1
%
161,217
12.7
%
Securities HTM-nontaxable
340
907
4,514
(567
)
-62.5
%
(4,174
)
-92.5
%
Total securities
3,421,580
3,500,587
3,850,969
(79,007
)
-2.3
%
(429,389
)
-11.2
%
Paycheck protection program loans (PPP)
—
—
3,235
—
n/m
(3,235
)
-100.0
%
Loans (includes loans held for sale)
13,010,028
12,926,942
12,006,661
83,086
0.6
%
1,003,367
8.4
%
Fed funds sold and reverse repurchases
121
230
6,566
(109
)
-47.4
%
(6,445
)
-98.2
%
Other earning assets
670,477
682,644
375,190
(12,167
)
-1.8
%
295,287
78.7
%
Total earning assets
17,102,206
17,110,403
16,242,621
(8,197
)
0.0
%
859,585
5.3
%
Allowance for credit losses (ACL), loans held for investment (LHFI)
(133,742
)
(127,915
)
(114,948
)
(5,827
)
-4.6
%
(18,794
)
-16.4
%
Other assets
1,749,069
1,721,310
1,630,085
27,759
1.6
%
118,984
7.3
%
Total assets$
18,717,533
$
18,703,798
$
17,757,758
$
13,735
0.1
%
$
959,775
5.4
%
Interest-bearing demand deposits$
5,053,935
$
4,875,714
$
4,719,303
$
178,221
3.7
%
$
334,632
7.1
%
Savings deposits
3,526,600
3,642,158
4,379,673
(115,558
)
-3.2
%
(853,073
)
-19.5
%
Time deposits
3,427,384
3,075,224
1,152,905
352,160
11.5
%
2,274,479
n/m
Total interest-bearing deposits
12,007,919
11,593,096
10,251,881
414,823
3.6
%
1,756,038
17.1
%
Fed funds purchased and repurchases
403,041
414,696
549,406
(11,655
)
-2.8
%
(146,365
)
-26.6
%
Other borrowings
590,765
912,151
530,993
(321,386
)
-35.2
%
59,772
11.3
%
Subordinated notes
123,446
123,391
123,226
55
0.0
%
220
0.2
%
Junior subordinated debt securities
61,856
61,856
61,856
—
0.0
%
—
0.0
%
Total interest-bearing liabilities
13,187,027
13,105,190
11,517,362
81,837
0.6
%
1,669,665
14.5
%
Noninterest-bearing deposits
3,296,351
3,429,815
4,177,113
(133,464
)
-3.9
%
(880,762
)
-21.1
%
Other liabilities
641,662
585,908
569,992
55,754
9.5
%
71,670
12.6
%
Total liabilities
17,125,040
17,120,913
16,264,467
4,127
0.0
%
860,573
5.3
%
Shareholders' equity
1,592,493
1,582,885
1,493,291
9,608
0.6
%
99,202
6.6
%
Total liabilities and equity$
18,717,533
$
18,703,798
$
17,757,758
$
13,735
0.1
%
$
959,775
5.4
%
n/m - percentage changes greater than +/- 100% are considered not meaningfulSee Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2023 ($ in thousands) (unaudited) Linked Quarter Year over Year PERIOD END BALANCES 12/31/2023 9/30/2023 12/31/2022 $ Change % Change $ Change % Change Cash and due from banks$
975,543
$
750,492
$
734,787
$
225,051
30.0
%
$
240,756
32.8
%
Fed funds sold and reverse repurchases
—
—
4,000
—
n/m
(4,000
)
-100.0
%
Securities available for sale
1,762,878
1,766,174
2,024,082
(3,296
)
-0.2
%
(261,204
)
-12.9
%
Securities held to maturity
1,426,279
1,438,287
1,494,514
(12,008
)
-0.8
%
(68,235
)
-4.6
%
PPP loans
—
—
—
—
n/m
—
n/m
Loans held for sale (LHFS)
184,812
169,244
135,226
15,568
9.2
%
49,586
36.7
%
Loans held for investment (LHFI)
12,950,524
12,810,259
12,204,039
140,265
1.1
%
746,485
6.1
%
ACL LHFI
(139,367
)
(134,031
)
(120,214
)
(5,336
)
-4.0
%
(19,153
)
-15.9
%
Net LHFI
12,811,157
12,676,228
12,083,825
134,929
1.1
%
727,332
6.0
%
Premises and equipment, net
232,537
230,718
212,365
1,819
0.8
%
20,172
9.5
%
Mortgage servicing rights
131,870
142,379
129,677
(10,509
)
-7.4
%
2,193
1.7
%
Goodwill
384,237
384,237
384,237
—
0.0
%
—
0.0
%
Identifiable intangible assets
2,965
3,093
3,640
(128
)
-4.1
%
(675
)
-18.5
%
Other real estate
6,867
5,485
1,986
1,382
25.2
%
4,881
n/m
Operating lease right-of-use assets
38,142
39,639
36,301
(1,497
)
-3.8
%
1,841
5.1
%
Other assets
764,902
784,863
770,838
(19,961
)
-2.5
%
(5,936
)
-0.8
%
Total assets$
18,722,189
$
18,390,839
$
18,015,478
$
331,350
1.8
%
$
706,711
3.9
%
Deposits: Noninterest-bearing$
3,197,620
$
3,320,124
$
4,093,771
$
(122,504
)
-3.7
%
$
(896,151
)
-21.9
%
Interest-bearing
12,372,143
11,781,799
10,343,877
590,344
5.0
%
2,028,266
19.6
%
Total deposits
15,569,763
15,101,923
14,437,648
467,840
3.1
%
1,132,115
7.8
%
Fed funds purchased and repurchases
405,745
321,799
449,331
83,946
26.1
%
(43,586
)
-9.7
%
Other borrowings
483,230
793,193
1,050,938
(309,963
)
-39.1
%
(567,708
)
-54.0
%
Subordinated notes
123,482
123,427
123,262
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
34,057
34,945
36,838
(888
)
-2.5
%
(2,781
)
-7.5
%
Operating lease liabilities
41,584
42,730
38,932
(1,146
)
-2.7
%
2,652
6.8
%
Other liabilities
340,625
340,615
324,405
10
0.0
%
16,220
5.0
%
Total liabilities
17,060,342
16,820,488
16,523,210
239,854
1.4
%
537,132
3.3
%
Common stock
12,725
12,724
12,705
1
0.0
%
20
0.2
%
Capital surplus
159,688
158,316
154,645
1,372
0.9
%
5,043
3.3
%
Retained earnings
1,709,157
1,687,199
1,600,321
21,958
1.3
%
108,836
6.8
%
Accumulated other comprehensive income (loss), net of tax
(219,723
)
(287,888
)
(275,403
)
68,165
23.7
%
55,680
20.2
%
Total shareholders' equity
1,661,847
1,570,351
1,492,268
91,496
5.8
%
169,579
11.4
%
Total liabilities and equity$
18,722,189
$
18,390,839
$
18,015,478
$
331,350
1.8
%
$
706,711
3.9
%
n/m - percentage changes greater than +/- 100% are considered not meaningfulSee Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2023 ($ in thousands except per share data) (unaudited) Quarter Ended Linked Quarter Year over Year INCOME STATEMENTS 12/31/2023 9/30/2023 12/31/2022 $ Change % Change $ Change % Change Interest and fees on LHFS & LHFI-FTE$
210,288
$
206,523
$
159,566
$
3,765
1.8
%
$
50,722
31.8
%
Interest and fees on PPP loans
—
—
101
—
n/m
(101
)
-100.0
%
Interest on securities-taxable
15,936
16,624
16,577
(688
)
-4.1
%
(641
)
-3.9
%
Interest on securities-tax exempt-FTE
44
58
93
(14
)
-24.1
%
(49
)
-52.7
%
Interest on fed funds sold and reverse repurchases
2
3
71
(1
)
-33.3
%
(69
)
-97.2
%
Other interest income
9,918
8,613
3,556
1,305
15.2
%
6,362
n/m
Total interest income-FTE
236,188
231,821
179,964
4,367
1.9
%
56,224
31.2
%
Interest on deposits
80,847
69,797
18,438
11,050
15.8
%
62,409
n/m
Interest on fed funds purchased and repurchases
5,347
5,375
4,762
(28
)
-0.5
%
585
12.3
%
Other interest expense
9,946
14,713
6,730
(4,767
)
-32.4
%
3,216
47.8
%
Total interest expense
96,140
89,885
29,930
6,255
7.0
%
66,210
n/m
Net interest income-FTE
140,048
141,936
150,034
(1,888
)
-1.3
%
(9,986
)
-6.7
%
Provision for credit losses, LHFI
7,585
8,322
6,902
(737
)
-8.9
%
683
9.9
%
Provision for credit losses, off-balance sheet credit exposures
(888
)
104
5,215
(992
)
n/m
(6,103
)
n/m
Net interest income after provision-FTE
133,351
133,510
137,917
(159
)
-0.1
%
(4,566
)
-3.3
%
Service charges on deposit accounts
11,311
11,074
11,162
237
2.1
%
149
1.3
%
Bank card and other fees
8,502
8,217
8,191
285
3.5
%
311
3.8
%
Mortgage banking, net
5,519
6,458
3,408
(939
)
-14.5
%
2,111
61.9
%
Insurance commissions
13,197
15,303
12,019
(2,106
)
-13.8
%
1,178
9.8
%
Wealth management
8,657
8,773
8,079
(116
)
-1.3
%
578
7.2
%
Other, net
2,579
2,399
2,311
180
7.5
%
268
11.6
%
Securities gains (losses), net
39
—
—
39
n/m
39
n/m
Total noninterest income
49,804
52,224
45,170
(2,420
)
-4.6
%
4,634
10.3
%
Salaries and employee benefits
78,003
76,666
73,469
1,337
1.7
%
4,534
6.2
%
Services and fees (2)
27,906
27,882
27,709
24
0.1
%
197
0.7
%
Net occupancy-premises
7,362
7,383
7,898
(21
)
-0.3
%
(536
)
-6.8
%
Equipment expense
6,517
6,816
6,268
(299
)
-4.4
%
249
4.0
%
Litigation settlement expense (1)
—
6,500
100,750
(6,500
)
-100.0
%
(100,750
)
-100.0
%
Other expense (2)
16,641
15,698
15,135
943
6.0
%
1,506
10.0
%
Total noninterest expense
136,429
140,945
231,229
(4,516
)
-3.2
%
(94,800
)
-41.0
%
Income (loss) before income taxes and tax eq adj
46,726
44,789
(48,142
)
1,937
4.3
%
94,868
n/m
Tax equivalent adjustment
3,306
3,299
3,451
7
0.2
%
(145
)
-4.2
%
Income (loss) before income taxes
43,420
41,490
(51,593
)
1,930
4.7
%
95,013
n/m
Income taxes
7,297
7,461
(17,530
)
(164
)
-2.2
%
24,827
n/m
Net income (loss)
$
36,123
$
34,029
$
(34,063
)
$
2,094
6.2
%
$
70,186
n/m
Per share data Earnings (loss) per share - basic
$
0.59
$
0.56
$
(0.56
)
$
0.03
5.4
%
$
1.15
n/m
Earnings (loss) per share - diluted
$
0.59
$
0.56
$
(0.56
)
$
0.03
5.4
%
$
1.15
n/m
Dividends per share
$
0.23
$
0.23
$
0.23
—
0.0
%
—
0.0
%
Weighted average shares outstanding Basic
61,070,481
61,069,750
60,969,400
Diluted
61,296,840
61,263,032
61,173,249
Period end shares outstanding
61,071,173
61,070,095
60,977,686
(1) See Note 1 - Litigation Settlement in the Notes to Consolidated Financials for additional information. (2) During the first quarter of 2023, Trustmark reclassified its debit card transaction fees from other expense to services and fees. Prior periods have been reclassified accordingly. n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2023 ($ in thousands) (unaudited) Quarter Ended Linked Quarter Year over Year NONPERFORMING ASSETS (1) 12/31/2023 9/30/2023 12/31/2022 $ Change % Change $ Change % Change Nonaccrual LHFI Alabama (2)$
23,271
$
23,530
$
12,300
$
(259
)
-1.1
%
$
10,971
89.2
%
Florida
170
151
227
19
12.6
%
(57
)
-25.1
%
Mississippi (3)
54,615
45,050
24,683
9,565
21.2
%
29,932
n/m
Tennessee (4)
1,802
1,841
5,566
(39
)
-2.1
%
(3,764
)
-67.6
%
Texas
20,150
20,327
23,196
(177
)
-0.9
%
(3,046
)
-13.1
%
Total nonaccrual LHFI
100,008
90,899
65,972
9,109
10.0
%
34,036
51.6
%
Other real estate Alabama (2)
1,397
315
194
1,082
n/m
1,203
n/m
Mississippi (3)
1,242
942
1,769
300
31.8
%
(527
)
-29.8
%
Tennessee (4)
—
—
23
—
n/m
(23
)
-100.0
%
Texas
4,228
4,228
—
—
0.0
%
4,228
n/m
Total other real estate
6,867
5,485
1,986
1,382
25.2
%
4,881
n/m
Total nonperforming assets
$
106,875
$
96,384
$
67,958
$
10,491
10.9
%
$
38,917
57.3
%
LOANS PAST DUE OVER 90 DAYS (1) LHFI$
5,790
$
3,804
$
3,929
$
1,986
52.2
%
$
1,861
47.4
%
LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase)$
51,243
$
42,532
$
49,320
$
8,711
20.5
%
$
1,923
3.9
%
Quarter Ended Linked Quarter Year over Year ACL LHFI (1) 12/31/2023 9/30/2023 12/31/2022 $ Change % Change $ Change % Change Beginning Balance$
134,031
$
129,298
$
115,050
$
4,733
3.7
%
$
18,981
16.5
%
Provision for credit losses, LHFI
7,585
8,322
6,902
(737
)
-8.9
%
683
9.9
%
Charge-offs
(4,250
)
(7,496
)
(3,893
)
3,246
43.3
%
(357
)
-9.2
%
Recoveries
2,001
3,907
2,155
(1,906
)
-48.8
%
(154
)
-7.1
%
Net (charge-offs) recoveries
(2,249
)
(3,589
)
(1,738
)
1,340
37.3
%
(511
)
-29.4
%
Ending Balance$
139,367
$
134,031
$
120,214
$
5,336
4.0
%
$
19,153
15.9
%
NET (CHARGE-OFFS) RECOVERIES (1) Alabama (2)$
(299
)
$
(165
)
$
98
$
(134
)
-81.2
%
$
(397
)
n/m
Florida
180
21
(60
)
159
n/m
240
n/m
Mississippi (3)
(1,943
)
(1,867
)
(1,657
)
(76
)
-4.1
%
(286
)
-17.3
%
Tennessee (4)
(193
)
2,127
(195
)
(2,320
)
n/m
2
-1.0
%
Texas
6
(3,705
)
76
3,711
n/m
(70
)
-92.1
%
Total net (charge-offs) recoveries$
(2,249
)
$
(3,589
)
$
(1,738
)
$
1,340
37.3
%
$
(511
)
-29.4
%
(1) Excludes PPP loans. (2) Alabama includes the Georgia Loan Production Office. (3) Mississippi includes Central and Southern Mississippi Regions. (4) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions. n/m - percentage changes greater than +/- 100% are considered not meaningfulSee Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2023 ($ in thousands) (unaudited) Quarter Ended Year Ended AVERAGE BALANCES 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 12/31/2023 12/31/2022 Securities AFS-taxable$
1,986,825
$
2,049,006
$
2,140,505
$
2,187,121
$
2,572,675
$
2,090,201
$
2,932,054
Securities AFS-nontaxable
4,246
4,779
4,796
4,812
4,828
4,657
4,997
Securities HTM-taxable
1,430,169
1,445,895
1,463,086
1,479,283
1,268,952
1,454,450
911,010
Securities HTM-nontaxable
340
907
1,718
4,509
4,514
1,854
5,623
Total securities
3,421,580
3,500,587
3,610,105
3,675,725
3,850,969
3,551,162
3,853,684
PPP loans
—
—
—
—
3,235
—
14,868
Loans (includes loans held for sale)
13,010,028
12,926,942
12,732,057
12,530,449
12,006,661
12,801,531
11,236,388
Fed funds sold and reverse repurchases
121
230
3,275
2,379
6,566
1,492
1,753
Other earning assets
670,477
682,644
903,027
647,760
375,190
728,181
907,414
Total earning assets
17,102,206
17,110,403
17,248,464
16,856,313
16,242,621
17,082,366
16,014,107
ACL LHFI
(133,742
)
(127,915
)
(121,960
)
(119,978
)
(114,948
)
(125,942
)
(104,138
)
Other assets
1,749,069
1,721,310
1,648,583
1,762,449
1,630,085
1,718,058
1,567,921
Total assets
$
18,717,533
$
18,703,798
$
18,775,087
$
18,498,784
$
17,757,758
$
18,674,482
$
17,477,890
Interest-bearing demand deposits
$
5,053,935
$
4,875,714
$
4,803,737
$
4,751,154
$
4,719,303
$
4,871,977
$
4,585,955
Savings deposits
3,526,600
3,642,158
4,002,134
4,193,764
4,379,673
3,838,791
4,579,742
Time deposits
3,427,384
3,075,224
2,335,752
1,907,449
1,152,905
2,691,682
1,153,983
Total interest-bearing deposits
12,007,919
11,593,096
11,141,623
10,852,367
10,251,881
11,402,450
10,319,680
Fed funds purchased and repurchases
403,041
414,696
389,834
436,535
549,406
410,945
283,328
Other borrowings
590,765
912,151
1,330,010
1,110,843
530,993
984,315
198,672
Subordinated notes
123,446
123,391
123,337
123,281
123,226
123,364
123,144
Junior subordinated debt securities
61,856
61,856
61,856
61,856
61,856
61,856
61,856
Total interest-bearing liabilities
13,187,027
13,105,190
13,046,660
12,584,882
11,517,362
12,982,930
10,986,680
Noninterest-bearing deposits
3,296,351
3,429,815
3,595,927
3,813,248
4,177,113
3,532,134
4,452,046
Other liabilities
641,662
585,908
552,209
576,826
569,992
589,320
434,310
Total liabilities
17,125,040
17,120,913
17,194,796
16,974,956
16,264,467
17,104,384
15,873,036
Shareholders' equity
1,592,493
1,582,885
1,580,291
1,523,828
1,493,291
1,570,098
1,604,854
Total liabilities and equity
$
18,717,533
$
18,703,798
$
18,775,087
$
18,498,784
$
17,757,758
$
18,674,482
$
17,477,890
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2023 ($ in thousands) (unaudited) PERIOD END BALANCES 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 Cash and due from banks$
975,543
$
750,492
$
832,052
$
1,297,144
$
734,787
Fed funds sold and reverse repurchases
—
—
—
—
4,000
Securities available for sale
1,762,878
1,766,174
1,871,883
1,984,162
2,024,082
Securities held to maturity
1,426,279
1,438,287
1,458,665
1,474,338
1,494,514
PPP loans
—
—
—
—
—
LHFS
184,812
169,244
181,094
175,926
135,226
LHFI
12,950,524
12,810,259
12,613,967
12,497,195
12,204,039
ACL LHFI
(139,367
)
(134,031
)
(129,298
)
(122,239
)
(120,214
)
Net LHFI
12,811,157
12,676,228
12,484,669
12,374,956
12,083,825
Premises and equipment, net
232,537
230,718
227,630
223,975
212,365
Mortgage servicing rights
131,870
142,379
134,350
127,206
129,677
Goodwill
384,237
384,237
384,237
384,237
384,237
Identifiable intangible assets
2,965
3,093
3,222
3,352
3,640
Other real estate
6,867
5,485
1,137
1,684
1,986
Operating lease right-of-use assets
38,142
39,639
38,179
35,315
36,301
Other assets
764,902
784,863
805,508
794,883
770,838
Total assets
$
18,722,189
$
18,390,839
$
18,422,626
$
18,877,178
$
18,015,478
Deposits: Noninterest-bearing
$
3,197,620
$
3,320,124
$
3,461,073
$
3,797,055
$
4,093,771
Interest-bearing
12,372,143
11,781,799
11,452,827
10,986,606
10,343,877
Total deposits
15,569,763
15,101,923
14,913,900
14,783,661
14,437,648
Fed funds purchased and repurchases
405,745
321,799
311,179
477,980
449,331
Other borrowings
483,230
793,193
1,056,714
1,485,181
1,050,938
Subordinated notes
123,482
123,427
123,372
123,317
123,262
Junior subordinated debt securities
61,856
61,856
61,856
61,856
61,856
ACL on off-balance sheet credit exposures
34,057
34,945
34,841
34,596
36,838
Operating lease liabilities
41,584
42,730
40,845
37,988
38,932
Other liabilities
340,625
340,615
308,726
310,500
324,405
Total liabilities
17,060,342
16,820,488
16,851,433
17,315,079
16,523,210
Common stock
12,725
12,724
12,724
12,720
12,705
Capital surplus
159,688
158,316
156,834
155,297
154,645
Retained earnings
1,709,157
1,687,199
1,667,339
1,636,463
1,600,321
Accumulated other comprehensive income (loss), net of tax
(219,723
)
(287,888
)
(265,704
)
(242,381
)
(275,403
)
Total shareholders' equity
1,661,847
1,570,351
1,571,193
1,562,099
1,492,268
Total liabilities and equity
$
18,722,189
$
18,390,839
$
18,422,626
$
18,877,178
$
18,015,478
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2023 ($ in thousands except per share data) (unaudited) Quarter Ended Year Ended INCOME STATEMENTS 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 12/31/2023 12/31/2022 Interest and fees on LHFS & LHFI-FTE$
210,288
$
206,523
$
192,941
$
178,967
$
159,566
$
788,719
$
485,246
Interest and fees on PPP loans
—
—
—
—
101
—
639
Interest on securities-taxable
15,936
16,624
16,779
16,761
16,577
66,100
59,717
Interest on securities-tax exempt-FTE
44
58
69
92
93
263
422
Interest on fed funds sold and reverse repurchases
2
3
45
30
71
80
74
Other interest income
9,918
8,613
12,077
6,527
3,556
37,135
8,080
Total interest income-FTE
236,188
231,821
221,911
202,377
179,964
892,297
554,178
Interest on deposits
80,847
69,797
54,409
40,898
18,438
245,951
29,069
Interest on fed funds purchased and repurchases
5,347
5,375
4,865
4,832
4,762
20,419
6,127
Other interest expense
9,946
14,713
19,350
15,575
6,730
59,584
11,929
Total interest expense
96,140
89,885
78,624
61,305
29,930
325,954
47,125
Net interest income-FTE
140,048
141,936
143,287
141,072
150,034
566,343
507,053
Provision for credit losses, LHFI
7,585
8,322
8,211
3,244
6,902
27,362
21,677
Provision for credit losses, off-balance sheet credit exposures
(888
)
104
245
(2,242
)
5,215
(2,781
)
1,215
Net interest income after provision-FTE
133,351
133,510
134,831
140,070
137,917
541,762
484,161
Service charges on deposit accounts
11,311
11,074
10,695
10,336
11,162
43,416
42,157
Bank card and other fees
8,502
8,217
8,917
7,803
8,191
33,439
36,105
Mortgage banking, net
5,519
6,458
6,600
7,639
3,408
26,216
28,306
Insurance commissions
13,197
15,303
14,764
14,305
12,019
57,569
53,721
Wealth management
8,657
8,773
8,882
8,780
8,079
35,092
35,013
Other, net
2,579
2,399
3,695
2,514
2,311
11,187
9,842
Securities gains (losses), net
39
—
—
—
—
39
—
Total noninterest income
49,804
52,224
53,553
51,377
45,170
206,958
205,144
Salaries and employee benefits
78,003
76,666
75,940
74,056
73,469
304,665
287,440
Services and fees (2)
27,906
27,882
28,264
25,426
27,709
109,478
105,469
Net occupancy-premises
7,362
7,383
7,108
7,629
7,898
29,482
29,264
Equipment expense
6,517
6,816
6,404
6,405
6,268
26,142
24,448
Litigation settlement expense (1)
—
6,500
—
—
100,750
6,500
100,750
Other expense (2)
16,641
15,698
14,502
14,811
15,135
61,652
55,842
Total noninterest expense
136,429
140,945
132,218
128,327
231,229
537,919
603,213
Income (loss) before income taxes and tax eq adj
46,726
44,789
56,166
63,120
(48,142
)
210,801
86,092
Tax equivalent adjustment
3,306
3,299
3,383
3,477
3,451
13,465
12,345
Income (loss) before income taxes
43,420
41,490
52,783
59,643
(51,593
)
197,336
73,747
Income taxes
7,297
7,461
7,746
9,343
(17,530
)
31,847
1,860
Net income (loss)$
36,123
$
34,029
$
45,037
$
50,300
$
(34,063
)
$
165,489
$
71,887
Per share data Earnings (loss) per share - basic$
0.59
$
0.56
$
0.74
$
0.82
$
(0.56
)
$
2.71
$
1.17
Earnings (loss) per share - diluted$
0.59
$
0.56
$
0.74
$
0.82
$
(0.56
)
$
2.70
$
1.17
Dividends per share$
0.23
$
0.23
$
0.23
$
0.23
$
0.23
$
0.92
$
0.92
Weighted average shares outstanding Basic
61,070,481
61,069,750
61,063,277
61,011,059
60,969,400
61,053,849
61,242,358
Diluted
61,296,840
61,263,032
61,230,031
61,193,275
61,173,249
61,230,621
61,431,726
Period end shares outstanding
61,071,173
61,070,095
61,069,036
61,048,516
60,977,686
61,071,173
60,977,686
(1) See Note 1 - Litigation Settlement in the Notes to Consolidated Financials for additional information. (2) During the first quarter of 2023, Trustmark reclassified its debit card transaction fees from other expense to services and fees. Prior periods have been reclassified accordingly.See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2023 ($ in thousands) (unaudited) Quarter Ended NONPERFORMING ASSETS (1) 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 Nonaccrual LHFI Alabama (2)$
23,271
$
23,530
$
11,058
$
10,919
$
12,300
Florida
170
151
334
256
227
Mississippi (3)
54,615
45,050
36,288
32,560
24,683
Tennessee (4)
1,802
1,841
5,088
5,416
5,566
Texas
20,150
20,327
22,259
23,224
23,196
Total nonaccrual LHFI
100,008
90,899
75,027
72,375
65,972
Other real estate Alabama (2)
1,397
315
—
—
194
Mississippi (3)
1,242
942
1,137
1,495
1,769
Tennessee (4)
—
—
—
189
23
Texas
4,228
4,228
—
—
—
Total other real estate
6,867
5,485
1,137
1,684
1,986
Total nonperforming assets
$
106,875
$
96,384
$
76,164
$
74,059
$
67,958
LOANS PAST DUE OVER 90 DAYS (1) LHFI
$
5,790
$
3,804
$
3,911
$
2,255
$
3,929
LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase)
$
51,243
$
42,532
$
35,766
$
41,468
$
49,320
Quarter Ended Year Ended ACL LHFI (1) 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 12/31/2023 12/31/2022 Beginning Balance
$
134,031
$
129,298
$
122,239
$
120,214
$
115,050
$
120,214
$
99,457
Provision for credit losses, LHFI
7,585
8,322
8,211
3,244
6,902
27,362
21,677
Charge-offs
(4,250
)
(7,496
)
(2,773
)
(2,996
)
(3,893
)
(17,515
)
(11,332
)
Recoveries
2,001
3,907
1,621
1,777
2,155
9,306
10,412
Net (charge-offs) recoveries
(2,249
)
(3,589
)
(1,152
)
(1,219
)
(1,738
)
(8,209
)
(920
)
Ending Balance$
139,367
$
134,031
$
129,298
$
122,239
$
120,214
$
139,367
$
120,214
NET (CHARGE-OFFS) RECOVERIES (1) Alabama (2)
$
(299
)
$
(165
)
$
(141
)
$
(268
)
$
98
$
(873
)
$
2,019
Florida
180
21
(35
)
(36
)
(60
)
130
652
Mississippi (3)
(1,943
)
(1,867
)
(762
)
(775
)
(1,657
)
(5,347
)
(2,713
)
Tennessee (4)
(193
)
2,127
(166
)
(124
)
(195
)
1,644
(790
)
Texas
6
(3,705
)
(48
)
(16
)
76
(3,763
)
(88
)
Total net (charge-offs) recoveries$
(2,249
)
$
(3,589
)
$
(1,152
)
$
(1,219
)
$
(1,738
)
$
(8,209
)
$
(920
)
(1) Excludes PPP loans. (2) Alabama includes the Georgia Loan Production Office. (3) Mississippi includes Central and Southern Mississippi Regions. (4) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2023 ($ in thousands) (unaudited) Quarter Ended Year Ended FINANCIAL RATIOS AND OTHER DATA 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 12/31/2023 12/31/2022 Return on average equity
9.00
%
8.53
%
11.43
%
13.39
%
-9.05
%
10.54
%
4.48
%
Return on average tangible equity
11.92
%
11.32
%
15.18
%
18.03
%
-12.14
%
14.04
%
6.00
%
Return on average assets
0.77
%
0.72
%
0.96
%
1.10
%
-0.76
%
0.89
%
0.41
%
Interest margin - Yield - FTE
5.48
%
5.38
%
5.16
%
4.87
%
4.40
%
5.22
%
3.46
%
Interest margin - Cost
2.23
%
2.08
%
1.83
%
1.47
%
0.73
%
1.91
%
0.29
%
Net interest margin - FTE
3.25
%
3.29
%
3.33
%
3.39
%
3.66
%
3.32
%
3.17
%
Efficiency ratio (1)
70.25
%
68.33
%
66.17
%
65.60
%
65.85
%
67.57
%
69.37
%
Full-time equivalent employees
2,757
2,756
2,761
2,758
2,738
CREDIT QUALITY RATIOS (2) Net (recoveries) charge-offs / average loans
0.07
%
0.11
%
0.04
%
0.04
%
0.06
%
0.06
%
0.01
%
Provision for credit losses, LHFI / average loans
0.23
%
0.26
%
0.26
%
0.10
%
0.23
%
0.21
%
0.19
%
Nonaccrual LHFI / (LHFI + LHFS)
0.76
%
0.70
%
0.59
%
0.57
%
0.53
%
Nonperforming assets / (LHFI + LHFS)
0.81
%
0.74
%
0.60
%
0.58
%
0.55
%
Nonperforming assets / (LHFI + LHFS + other real estate)
0.81
%
0.74
%
0.60
%
0.58
%
0.55
%
ACL LHFI / LHFI
1.08
%
1.05
%
1.03
%
0.98
%
0.99
%
ACL LHFI-commercial / commercial LHFI
0.85
%
0.86
%
0.84
%
0.80
%
0.85
%
ACL LHFI-consumer / consumer and home mortgage LHFI
1.81
%
1.66
%
1.60
%
1.54
%
1.41
%
ACL LHFI / nonaccrual LHFI
139.36
%
147.45
%
172.34
%
168.90
%
182.22
%
ACL LHFI / nonaccrual LHFI (excl individually analyzed loans)
249.31
%
273.60
%
301.44
%
320.80
%
399.19
%
CAPITAL RATIOS Total equity / total assets
8.88
%
8.54
%
8.53
%
8.28
%
8.28
%
Tangible equity / tangible assets
6.95
%
6.57
%
6.56
%
6.35
%
6.27
%
Tangible equity / risk-weighted assets
8.41
%
7.81
%
7.91
%
7.94
%
7.61
%
Tier 1 leverage ratio
8.62
%
8.49
%
8.35
%
8.29
%
8.47
%
Common equity tier 1 capital ratio
10.04
%
9.89
%
9.87
%
9.76
%
9.74
%
Tier 1 risk-based capital ratio
10.44
%
10.29
%
10.27
%
10.17
%
10.15
%
Total risk-based capital ratio
12.29
%
12.11
%
12.08
%
11.95
%
11.91
%
STOCK PERFORMANCE Market value-Close$
27.88
$
21.73
$
21.12
$
24.70
$
34.91
Book value
$
27.21
$
25.71
$
25.73
$
25.59
$
24.47
Tangible book value
$
20.87
$
19.37
$
19.38
$
19.24
$
18.11
(1) See Note 7 – Non-GAAP Financial Measures in the Notes to Consolidated Financials for Trustmark’s efficiency ratio calculation. (2) Excludes PPP loans.
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2023 ($ in thousands) (unaudited)
Note 1 - Litigation Settlement
As previously announced, on December 31, 2022, Trustmark National Bank (TNB) agreed to a settlement in principle (the Stanford Settlement) relating to litigation involving the Stanford Financial Group. On January 13, 2023, TNB entered into a Settlement Agreement (the Stanford Settlement Agreement) reflecting the terms of the Stanford Settlement. The parties to the Stanford Settlement Agreement are, on the one hand, (i) Ralph S. Janvey, solely in his capacity as the court-appointed receiver (the Stanford Receiver) for the Stanford Receivership Estate; (ii) the Official Stanford Investors Committee; (iii) each of the plaintiffs in the Rotstain and Smith Actions; and, on the other hand, (iv) TNB. Under the terms of the Stanford Settlement Agreement, the parties agreed to settle and dismiss the Rotstain Action, the Smith Action, and all current or future claims by plaintiffs in either such Action arising from or related to Stanford. In addition, the Stanford Settlement Agreement provided that the parties would request dismissal of the Jackson Action pursuant to the terms of the bar orders described below. The Court’s approval of the Stanford Settlement Agreement, including the bar orders described below, has occurred and has been upheld on appeal, as described below. As a result, pursuant to the Stanford Settlement, TNB will make a one-time cash payment of $100.0 million to the Stanford Receiver on February 2, 2024.
The Stanford Settlement Agreement included the parties’ agreement to seek the Northern District of Texas District Court’s entry of bar orders prohibiting any continued or future claims by the plaintiffs in the Actions or by any other person or entity against TNB and its related parties relating to Stanford, whether asserted to date or not. The bar orders prohibit all litigation relating to Stanford described herein, including not only the Actions and any pending matters but also any actions that may be brought in the future. Final Court approval of these bar orders was a condition of the Stanford Settlement.
The Stanford Settlement Agreement was also subject to notice to Stanford’s investor claimants (which has been provided) and final, non-appealable approval by the U.S. District Court for the Northern District of Texas (which has occurred).
The Stanford Settlement Agreement also provides that TNB denies and makes no admission of liability or wrongdoing in connection with any Stanford matter. As has been the case throughout the pendency of the Actions, TNB expressly denies any liability or wrongdoing with respect to any matter alleged in regard to the multi-billion dollar Ponzi scheme operated by Stanford for almost 20 years. TNB’s relationship with Stanford began as a result of TNB’s acquisition of a Houston-based bank in August 2006, and consisted of ordinary banking services provided to business deposit customers.
The foregoing description of the terms of the Stanford Settlement Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Stanford Settlement Agreement, a copy of which is filed as Exhibit 10.ai to the 2022 Annual Report and is incorporated herein by reference.
On January 20, 2023, the U.S. District Court for the Northern District of Texas entered an order preliminarily finding that the Stanford Settlement is fair, reasonable, and equitable; has no obvious deficiencies; and is the product of serious, informed, good faith, and arm’s-length negotiations. Following the provision of notice as required by the Stanford Settlement Agreement and by the Court’s preliminary order, the Court (Judge David C. Godbey, presiding) held a Final Approval Hearing on May 3, 2023, at which the Court approved the Stanford Settlement from the bench. On May 4, 2023, Judge Godbey signed the written orders confirming his oral ruling, including the bar order contemplated by the Stanford Settlement Agreement and the judgment and bar order with respect to the Jackson Action.
On May 10, 2023, Robert Allen Stanford, writing from prison, appealed the District Court’s approval of the Stanford Settlement to the Fifth Circuit Court of Appeals. On June 12, 2023, the Stanford Receiver moved to dismiss the appeal as frivolous. On July 25, 2023, a three-judge panel of the Fifth Circuit issued a per curiam order dismissing Stanford’s appeal as frivolous. In July and August 2023, Mr. Stanford filed, then subsequently withdrew, a motion seeking panel rehearing of the Fifth Circuit’s July 25, 2023, decision.
When Stanford’s deadline to appeal the Fifth Circuit’s ruling to the Supreme Court of the United States passed without his filing a petition for certiorari, the trial court’s ruling approving the Stanford Settlement and entering the bar orders became final and non-appealable, as defined in the Stanford Settlement Agreement (the Stanford Settlement Effective Date). On November 14, the parties to the Rotstain and Smith Actions filed agreed dismissals of those cases, which were granted on November 27, 2023 (Smith Action) and December 18, 2023 (Rotstain Action). Those dismissals were final and non-appealable as of December 27, 2023 (Smith Action) and January 17, 2024 (Rotstain Action). Accordingly, pursuant to the Stanford Settlement Agreement, TNB will make the settlement payment on February 2, 2024, concluding the Stanford Settlement.
TNB and Trustmark Corporation determined that it was in the best interest of TNB, Trustmark Corporation and the shareholders of Trustmark Corporation to enter into the Stanford Settlement and the Stanford Settlement Agreement to eliminate the risk, ongoing expense, uncertainty as to ultimate outcome, and imposition on management and the business of TNB of further litigation of the Actions and related Stanford claims.
As previously announced, on August 30, 2023, TNB agreed to a settlement in principle (the Adams/Madison Timber Settlement) relating to litigation and claims involving Arthur Lamar Adams and Madison Timber Properties, LLC (collectively, Adams/Madison Timber). On October 9, 2023, TNB entered into a Settlement Agreement (the Adams/Madison Timber Settlement Agreement) reflecting the terms of the Adams/Madison Timber Settlement. The parties to the Adams/Madison Timber Settlement are, on the one hand, Alysson Mills in her capacity as Court-appointed Receiver (the Adams/Madison Timber Receiver); and, on the other hand, TNB. Under the terms of the Adams/Madison Timber Settlement Agreement, the parties agreed to settle and dismiss the Adams/Madison Timber Action, and the Adams/Madison Timber Receiver agreed to fully release all claims against TNB and any of its employees, agents and representatives. The Adams/Madison Timber Settlement included the parties’ agreement to seek the Court’s entry of bar orders prohibiting any continued or future claims by anyone against TNB and its related parties relating to Adams/Madison Timber, whether asserted to date or not. Final Court approval of a bar order was a condition of the Adams/Madison Timber Settlement. On November 14, 2023, the Court entered a Partial Final Judgment and Final Bar Order approving the settlement. The bar order therefore is expected to prohibit all litigation relating to Adams/Madison Timber described herein.
The Adams/Madison Timber Settlement was subject to notice to Adams/Madison Timber investors, and final, non-appealable approval by the Court and entry of a judgment dismissing the Lawsuit against TNB. No investor or other interested parties appealed the bar order before the appeal deadline passed. Accordingly, TNB made the settlement payment to the Adams/Madison Timber Receiver on January 22, 2024, concluding the Adams/Madison Timber Settlement.
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2023 ($ in thousands) (unaudited)
Note 1 - Litigation Settlement (continued)
At the time of the entry into the Stanford Settlement as described above, Trustmark Corporation recognized $100.0 million of litigation settlement expense, as well as an additional $750 thousand in legal fees, which were included in noninterest expense related to the Stanford litigation during the fourth quarter of 2022. As a result of the entry into the Adams/Madison Timber Settlement as described above, Trustmark Corporation recognized $6.5 million of litigation settlement expense which was included in noninterest expense related to the Adams/Madison Timber litigation during the third quarter of 2023. Trustmark Corporation expects that both the Stanford Settlement and Adams/Madison Timber Settlement will be tax deductible. Trustmark Corporation and TNB remain substantially above levels considered to be well-capitalized under all relevant standards.
Note 2 - Securities Available for Sale and Held to Maturity
The following table is a summary of the estimated fair value of securities available for sale and the amortized cost of securities held to maturity:
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities
$
372,368
$
363,476
$
362,966
$
386,903
$
391,513
U.S. Government agency obligations
5,792
6,780
6,999
7,254
7,766
Obligations of states and political subdivisions
—
4,642
4,813
4,907
4,862
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA
23,135
22,881
25,336
26,851
27,097
Issued by FNMA and FHLMC
1,176,798
1,171,521
1,250,435
1,317,848
1,345,463
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA
86,074
90,402
98,388
108,192
115,140
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA
98,711
106,472
122,946
132,207
132,241
Total securities available for sale
$
1,762,878
$
1,766,174
$
1,871,883
$
1,984,162
$
2,024,082
SECURITIES HELD TO MATURITY
U.S. Treasury securities
$
29,068
$
28,872
$
28,679
$
28,486
$
28,295
Obligations of states and political subdivisions
340
341
1,180
4,507
4,510
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA
13,005
13,090
13,235
4,336
4,442
Issued by FNMA and FHLMC
469,593
474,003
484,679
497,854
509,311
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA
154,466
162,031
171,002
179,334
188,201
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA
759,807
759,950
759,890
759,821
759,755
Total securities held to maturity
$
1,426,279
$
1,438,287
$
1,458,665
$
1,474,338
$
1,494,514
At December 31, 2023, the net unamortized, unrealized loss included in accumulated other comprehensive income (loss) in the accompanying balance sheet for securities held to maturity transferred from securities available for sale totaled $57.6 million.
Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 99.99% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE.
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2023 ($ in thousands) (unaudited)
Note 3 – Loan Composition
LHFI consisted of the following during the periods presented:
LHFI BY TYPE
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
Loans secured by real estate:
Construction, land development and other land loans
$
1,510,679
$
1,609,326
$
1,722,657
$
1,723,772
$
1,719,542
Secured by 1-4 family residential properties
2,904,715
2,893,606
2,854,182
2,822,048
2,775,847
Secured by nonfarm, nonresidential properties
3,489,434
3,569,671
3,471,728
3,375,579
3,278,830
Other real estate secured
1,312,551
1,218,499
954,410
847,527
742,538
Commercial and industrial loans
1,922,910
1,828,924
1,883,480
1,882,360
1,821,259
Consumer loans
161,725
161,940
163,788
162,911
166,425
State and other political subdivision loans
1,088,466
1,056,569
1,111,710
1,193,727
1,223,863
Other loans and leases
560,044
471,724
452,012
489,271
475,735
LHFI
12,950,524
12,810,259
12,613,967
12,497,195
12,204,039
ACL LHFI
(139,367
)
(134,031
)
(129,298
)
(122,239
)
(120,214
)
Net LHFI
$
12,811,157
$
12,676,228
$
12,484,669
$
12,374,956
$
12,083,825
The following table presents the LHFI composition based upon the region where the loan was originated and reflects each region’s diversified mix of loans:
December 31, 2023
LHFI - COMPOSITION BY REGION
Total
Alabama (1)
Florida
Mississippi (Central and Southern Regions)
Tennessee (Memphis, TN and Northern MS Regions)
Texas
Loans secured by real estate:
Construction, land development and other land loans
$
1,510,679
$
688,438
$
37,626
$
435,406
$
37,194
$
312,015
Secured by 1-4 family residential properties
2,904,715
151,446
54,998
2,582,329
84,031
31,911
Secured by nonfarm, nonresidential properties
3,489,434
960,656
233,908
1,431,968
153,226
709,676
Other real estate secured
1,312,551
583,165
1,761
396,715
7,587
323,323
Commercial and industrial loans
1,922,910
658,573
25,406
780,949
217,729
240,253
Consumer loans
161,725
22,609
7,509
101,389
20,433
9,785
State and other political subdivision loans
1,088,466
71,882
52,759
813,291
25,999
124,535
Other loans and leases
560,044
209,874
8,476
223,583
46,519
71,592
Loans
$
12,950,524
$
3,346,643
$
422,443
$
6,765,630
$
592,718
$
1,823,090
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots
$
71,875
$
30,186
$
8,353
$
17,257
$
4,714
$
11,365
Development
146,655
74,015
1,262
36,690
12,649
22,039
Unimproved land
101,941
17,432
12,853
36,573
8,094
26,989
1-4 family construction
322,415
164,712
13,099
95,297
11,737
37,570
Other construction
867,793
402,093
2,059
249,589
—
214,052
Construction, land development and other land loans
$
1,510,679
$
688,438
$
37,626
$
435,406
$
37,194
$
312,015
(1) Includes Georgia Loan Production Office.
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2023 ($ in thousands) (unaudited)
Note 3 – Loan Composition (continued)
December 31, 2023
Total
Alabama (1)
Florida
Mississippi (Central and Southern Regions)
Tennessee (Memphis, TN and Northern MS Regions)
Texas
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION
Non-owner occupied:
Retail
$
346,844
$
128,743
$
25,732
$
91,057
$
17,721
$
83,591
Office
286,511
104,114
19,857
94,294
1,649
66,597
Hotel/motel
270,740
144,403
47,111
53,227
25,999
—
Mini-storage
157,938
32,452
1,917
103,500
756
19,313
Industrial
382,737
57,386
19,762
123,306
9,730
172,553
Health care
97,783
69,352
688
25,021
333
2,389
Convenience stores
26,254
3,315
425
13,777
249
8,488
Nursing homes/senior living
508,665
229,352
—
160,359
4,901
114,053
Other
110,828
31,370
9,232
52,521
8,321
9,384
Total non-owner occupied loans
2,188,300
800,487
124,724
717,062
69,659
476,368
Owner-occupied:
Office
152,053
44,028
38,401
39,790
11,459
18,375
Churches
62,217
17,098
4,178
34,899
3,541
2,501
Industrial warehouses
159,227
11,619
4,618
40,837
16,330
85,823
Health care
125,304
11,031
6,274
87,507
2,269
18,223
Convenience stores
142,537
12,593
29,299
65,031
14
35,600
Retail
89,174
9,606
15,644
37,340
17,694
8,890
Restaurants
48,172
4,010
3,503
22,316
15,095
3,248
Auto dealerships
43,556
5,533
201
21,383
16,439
—
Nursing homes/senior living
345,108
31,644
—
287,264
—
26,200
Other
133,786
13,007
7,066
78,539
726
34,448
Total owner-occupied loans
1,301,134
160,169
109,184
714,906
83,567
233,308
Loans secured by nonfarm, nonresidential properties
$
3,489,434
$
960,656
$
233,908
$
1,431,968
$
153,226
$
709,676
(1) Includes Georgia Loan Production Office.
Note 4 – Yields on Earning Assets and Interest-Bearing Liabilities
The following table illustrates the yields on earning assets by category as well as the rates paid on interest-bearing liabilities on a tax equivalent basis:
Quarter Ended
Year Ended
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
12/31/2023
12/31/2022
Securities – taxable
1.85
%
1.89
%
1.87
%
1.85
%
1.71
%
1.86
%
1.55
%
Securities – nontaxable
3.81
%
4.05
%
4.25
%
4.00
%
3.95
%
4.04
%
3.97
%
Securities – total
1.85
%
1.89
%
1.87
%
1.86
%
1.72
%
1.87
%
1.56
%
PPP loans
—
—
—
—
12.39
%
—
4.30
%
Loans - LHFI & LHFS
6.41
%
6.34
%
6.08
%
5.79
%
5.27
%
6.16
%
4.32
%
Loans - total
6.41
%
6.34
%
6.08
%
5.79
%
5.27
%
6.16
%
4.32
%
Fed funds sold & reverse repurchases
6.56
%
5.17
%
5.51
%
5.11
%
4.29
%
5.36
%
4.22
%
Other earning assets
5.87
%
5.01
%
5.36
%
4.09
%
3.76
%
5.10
%
0.89
%
Total earning assets
5.48
%
5.38
%
5.16
%
4.87
%
4.40
%
5.22
%
3.46
%
Interest-bearing deposits
2.67
%
2.39
%
1.96
%
1.53
%
0.71
%
2.16
%
0.28
%
Fed funds purchased & repurchases
5.26
%
5.14
%
5.01
%
4.49
%
3.44
%
4.97
%
2.16
%
Other borrowings
5.08
%
5.32
%
5.12
%
4.87
%
3.73
%
5.09
%
3.11
%
Total interest-bearing liabilities
2.89
%
2.72
%
2.42
%
1.98
%
1.03
%
2.51
%
0.43
%
Total Deposits
2.10
%
1.84
%
1.48
%
1.13
%
0.51
%
1.65
%
0.20
%
Net interest margin
3.25
%
3.29
%
3.33
%
3.39
%
3.66
%
3.32
%
3.17
%
Net interest margin excluding PPP loans
and the FRB balance
3.16
%
3.24
%
3.23
%
3.36
%
3.66
%
3.25
%
3.30
%
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2023 ($ in thousands) (unaudited)
Note 4 – Yields on Earning Assets and Interest-Bearing Liabilities (continued)
Reflected in the table above are yields on earning assets and liabilities, along with the net interest margin which equals reported net interest income-FTE, annualized, as a percent of average earning assets. In addition, the table includes net interest margin excluding PPP loans and the balance held at the Federal Reserve Bank of Atlanta (FRB), which equals reported net interest income-FTE excluding interest income on PPP loans and the FRB balance, annualized, as a percent of average earning assets excluding average PPP loans and the FRB balance.
For the fourth quarter of 2023, the average FRB balance totaled $572.0 million compared to $566.3 million for the third quarter of 2023 and is included in other earning assets in the accompanying average consolidated balance sheets.
The net interest margin excluding PPP loans and the FRB balance decreased 8 basis points when compared to the third quarter of 2023, totaling 3.16% for the fourth quarter of 2023, primarily due to increased costs of interest-bearing liabilities which resulted from the higher interest-rate environment and was partially offset by an increase in the yield on the loans held for investment and held for sale portfolio.
Note 5 – Mortgage Banking
Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that offsets the changes in fair value of mortgage servicing rights (MSR) attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under generally accepted accounting principles (GAAP). Changes in the fair value of these exchange-traded derivative instruments, including administrative costs, are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of the MSR. The MSR fair value represents the present value of future cash flows, which among other things includes decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the change in value of hedge instruments to the change in the fair value of the MSR asset attributable to changes in interest rates and other market driven changes in valuation inputs and assumptions. The impact of this strategy resulted in a net negative hedge ineffectiveness of $2.2 million during the fourth quarter of 2023.
The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements:
Quarter Ended
Year Ended
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
12/31/2023
12/31/2022
Mortgage servicing income, net
$
6,731
$
6,916
$
6,764
$
6,785
$
6,636
$
27,196
$
26,291
Change in fair value-MSR from runoff
(2,972
)
(3,203
)
(2,710
)
(1,145
)
(2,981
)
(10,030
)
(14,034
)
Gain on sales of loans, net
3,913
3,748
3,887
3,797
3,328
15,345
20,178
Mortgage banking income before hedge
ineffectiveness
7,672
7,461
7,941
9,437
6,983
32,511
32,435
Change in fair value-MSR from market changes
(10,224
)
6,809
5,898
(3,972
)
(3,348
)
(1,489
)
38,181
Change in fair value of derivatives
8,071
(7,812
)
(7,239
)
2,174
(227
)
(4,806
)
(42,310
)
Net positive (negative) hedge ineffectiveness
(2,153
)
(1,003
)
(1,341
)
(1,798
)
(3,575
)
(6,295
)
(4,129
)
Mortgage banking, net
$
5,519
$
6,458
$
6,600
$
7,639
$
3,408
$
26,216
$
28,306
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2023 ($ in thousands) (unaudited)
Note 6 – Other Noninterest Income and Expense
Other noninterest income consisted of the following for the periods presented:
Quarter Ended
Year Ended
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
12/31/2023
12/31/2022
Partnership amortization for tax credit purposes
$
(2,013
)
$
(1,995
)
$
(2,019
)
$
(1,961
)
$
(1,869
)
$
(7,988
)
$
(6,211
)
Increase in life insurance cash surrender value
1,825
1,784
1,716
1,693
1,687
7,018
6,673
Other miscellaneous income
2,767
2,610
3,998
2,782
2,493
12,157
9,380
Total other, net
$
2,579
$
2,399
$
3,695
$
2,514
$
2,311
$
11,187
$
9,842
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
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
12/31/2023
12/31/2022
Loan expense (1)
$
2,380
$
3,130
$
3,066
$
2,538
$
2,908
$
11,114
$
12,249
Amortization of intangibles
128
129
130
288
312
675
1,434
FDIC assessment expense
4,844
3,765
2,550
2,370
2,130
13,529
7,385
Other real estate expense, net
(184
)
(40
)
171
172
18
119
1,173
Other miscellaneous expense
9,473
8,714
8,585
9,443
9,767
36,215
33,601
Total other expense (1)
$
16,641
$
15,698
$
14,502
$
14,811
$
15,135
$
61,652
$
55,842
(1) During the first quarter of 2023, Trustmark reclassified its debit card transaction fees from other expense to services and fees. Prior periods have been reclassified accordingly.
Note 7 – Non-GAAP Financial Measures
In addition to capital ratios defined by GAAP and banking regulators, Trustmark utilizes various tangible common equity measures when evaluating capital utilization and adequacy. Tangible common equity, as defined by Trustmark, represents common equity less goodwill and identifiable intangible assets. Trustmark’s Common Equity Tier 1 capital includes common stock, capital surplus and retained earnings, and is reduced by goodwill and other intangible assets, net of associated net deferred tax liabilities as well as disallowed deferred tax assets and threshold deductions as applicable.
Trustmark believes these measures are important because they reflect the level of capital available to withstand unexpected market conditions. Additionally, presentation of these measures allows readers to compare certain aspects of Trustmark’s capitalization to other organizations. These ratios differ from capital measures defined by banking regulators principally in that the numerator excludes shareholders’ equity associated with preferred securities, the nature and extent of which varies across organizations. In Management’s experience, many stock analysts use tangible common equity measures in conjunction with more traditional bank capital ratios to compare capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, typically stemming from the use of the purchase accounting method in accounting for mergers and acquisitions.
These calculations are intended to complement the capital ratios defined by GAAP and banking regulators. Because GAAP does not include these capital ratio measures, Trustmark believes there are no comparable GAAP financial measures to these tangible common equity ratios. Despite the importance of these measures to Trustmark, there are no standardized definitions for them and, as a result, Trustmark’s calculations may not be comparable with other organizations. Also, there may be limits in the usefulness of these measures to investors. As a result, Trustmark encourages readers to consider its audited consolidated financial statements and the notes related thereto in their entirety and not to rely on any single financial measure.
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2023 ($ in thousands) (unaudited)
Note 7 – Non-GAAP Financial Measures (continued)
Quarter Ended
Year Ended
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
12/31/2023
12/31/2022
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity
$
1,592,493
$
1,582,885
$
1,580,291
$
1,523,828
$
1,493,291
$
1,570,098
$
1,604,854
Less: Goodwill
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
Identifiable intangible assets
(3,044
)
(3,174
)
(3,301
)
(3,523
)
(3,816
)
(3,259
)
(4,312
)
Total average tangible equity
$
1,205,212
$
1,195,474
$
1,192,753
$
1,136,068
$
1,105,238
$
1,182,602
$
1,216,305
PERIOD END BALANCES
Total shareholders' equity
$
1,661,847
$
1,570,351
$
1,571,193
$
1,562,099
$
1,492,268
Less: Goodwill
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
Identifiable intangible assets
(2,965
)
(3,093
)
(3,222
)
(3,352
)
(3,640
)
Total tangible equity
(a)
$
1,274,645
$
1,183,021
$
1,183,734
$
1,174,510
$
1,104,391
TANGIBLE ASSETS
Total assets
$
18,722,189
$
18,390,839
$
18,422,626
$
18,877,178
$
18,015,478
Less: Goodwill
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
Identifiable intangible assets
(2,965
)
(3,093
)
(3,222
)
(3,352
)
(3,640
)
Total tangible assets
(b)
$
18,334,987
$
18,003,509
$
18,035,167
$
18,489,589
$
17,627,601
Risk-weighted assets
(c)
$
15,153,263
$
15,143,531
$
14,966,614
$
14,793,893
$
14,521,078
NET INCOME (LOSS) ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income (loss)
$
36,123
$
34,029
$
45,037
$
50,300
$
(34,063
)
$
165,489
$
71,887
Plus: Intangible amortization net of tax
96
96
97
216
234
505
1,076
Net income (loss) adjusted for intangible amortization
$
36,219
$
34,125
$
45,134
$
50,516
$
(33,829
)
$
165,994
$
72,963
Period end common shares outstanding
(d)
61,071,173
61,070,095
61,069,036
61,048,516
60,977,686
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity (1)
11.92
%
11.32
%
15.18
%
18.03
%
-12.14
%
14.04
%
6.00
%
Tangible equity/tangible assets
(a)/(b)
6.95
%
6.57
%
6.56
%
6.35
%
6.27
%
Tangible equity/risk-weighted assets
(a)/(c)
8.41
%
7.81
%
7.91
%
7.94
%
7.61
%
Tangible book value
(a)/(d)*1,000
$
20.87
$
19.37
$
19.38
$
19.24
$
18.11
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity
$
1,661,847
$
1,570,351
$
1,571,193
$
1,562,099
$
1,492,268
CECL transition adjustment
13,000
13,000
13,000
13,000
19,500
AOCI-related adjustments
219,723
287,888
265,704
242,381
275,403
CET1 adjustments and deductions:
Goodwill net of associated deferred
tax liabilities (DTLs)
(370,212
)
(370,219
)
(370,227
)
(370,234
)
(370,241
)
Other adjustments and deductions
for CET1 (2)
(2,693
)
(2,803
)
(2,915
)
(3,275
)
(3,258
)
CET1 capital
(e)
1,521,665
1,498,217
1,476,755
1,443,971
1,413,672
Additional tier 1 capital instruments
plus related surplus
60,000
60,000
60,000
60,000
60,000
Tier 1 capital
$
1,581,665
$
1,558,217
$
1,536,755
$
1,503,971
$
1,473,672
Common equity tier 1 capital ratio
(e)/(c)
10.04
%
9.89
%
9.87
%
9.76
%
9.74
%
(1) Calculation = ((net income (loss) adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity.
(2) Includes other intangible assets, net of DTLs, disallowed deferred tax assets (DTAs), threshold deductions and transition adjustments, as applicable.
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2023 ($ in thousands) (unaudited)
Note 7 – Non-GAAP Financial Measures (continued)
Trustmark discloses certain non-GAAP financial measures because Management uses these measures for business planning purposes, including to manage Trustmark’s business against internal projected results of operations and to measure Trustmark’s performance. Trustmark views these as measures of our core operating business, which exclude the impact of the items detailed below, as these items are generally not operational in nature. These non-GAAP financial measures also provide another basis for comparing period-to-period results as presented in the accompanying selected financial data table and the audited consolidated financial statements by excluding potential differences caused by non-operational and unusual or non-recurring items. Readers are cautioned that these adjustments are not permitted under GAAP. Trustmark encourages readers to consider its consolidated financial statements and the notes related thereto in their entirety, and not to rely on any single financial measure.
The following table presents pre-provision net revenue (PPNR) during the periods presented:
Quarter Ended
Year Ended
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
12/31/2023
12/31/2022
Net interest income (GAAP)
$
136,742
$
138,637
$
139,904
$
137,595
$
146,583
$
552,878
$
494,708
Noninterest income (GAAP)
49,804
52,224
53,553
51,377
45,170
206,958
205,144
Pre-provision revenue
(a)
$
186,546
$
190,861
$
193,457
$
188,972
$
191,753
$
759,836
$
699,852
Noninterest expense (GAAP)
$
136,429
$
140,945
$
132,218
$
128,327
$
231,229
$
537,919
$
603,213
Less:
Reduction in force expense
(1,406
)
—
—
—
—
(1,406
)
—
Litigation settlement expense
—
(6,500
)
—
—
(100,750
)
(6,500
)
(100,750
)
Adjusted noninterest expense - PPNR (Non-GAAP)
(b)
$
135,023
$
134,445
$
132,218
$
128,327
$
130,479
$
530,013
$
502,463
PPNR (Non-GAAP)
(a)-(b)
$
51,523
$
56,416
$
61,239
$
60,645
$
61,274
$
229,823
$
197,389
The following table presents adjustments to net income (loss) and select financial ratios as reported in accordance with GAAP resulting from significant non-routine items occurring during the periods presented:
Quarter Ended
Year Ended
12/31/2023
12/31/2022
12/31/2023
12/31/2022
Amount
Diluted EPS
Amount
Diluted EPS
Amount
Diluted EPS
Amount
Diluted EPS
Net income (loss) (GAAP)
$
36,123
$
0.59
$
(34,063
)
$
(0.56
)
$
165,489
$
2.70
$
71,887
$
1.17
Significant non-routine transactions (net of taxes):
Reduction in force expense
1,055
0.02
—
—
1,055
0.02
—
—
Litigation settlement expense
—
—
75,563
1.24
4,875
0.08
75,563
1.23
Net income adjusted for significant non-routine
transactions (Non-GAAP)
$
37,178
$
0.61
$
41,500
$
0.68
$
171,419
$
2.80
$
147,450
$
2.40
Reported (GAAP)
Adjusted (Non- GAAP)
Reported (GAAP)
Adjusted (Non- GAAP)
Reported (GAAP)
Adjusted (Non- GAAP)
Reported (GAAP)
Adjusted (Non- GAAP)
Return on average equity
9.00
%
9.23
%
-9.05
%
10.75
%
10.54
%
10.90
%
4.48
%
9.13
%
Return on average tangible equity
11.92
%
12.22
%
-12.14
%
14.49
%
14.04
%
14.51
%
6.00
%
12.12
%
Return on average assets
0.77
%
0.79
%
-0.76
%
0.93
%
0.89
%
0.92
%
0.41
%
0.84
%
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2023 ($ in thousands) (unaudited)
Note 7 – Non-GAAP Financial Measures (continued)
The following table presents Trustmark’s calculation of its efficiency ratio for the periods presented:
Quarter Ended
Year Ended
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
12/31/2023
12/31/2022
Total noninterest expense (GAAP)
$
136,429
$
140,945
$
132,218
$
128,327
$
231,229
$
537,919
$
603,213
Less:
Other real estate expense, net
184
40
(171
)
(172
)
(18
)
(119
)
(1,173
)
Amortization of intangibles
(128
)
(129
)
(130
)
(288
)
(312
)
(675
)
(1,434
)
Charitable contributions resulting in
state tax credits
(325
)
(325
)
(325
)
(325
)
(375
)
(1,300
)
(1,500
)
Reduction in force expense
(1,406
)
—
—
—
—
(1,406
)
—
Litigation settlement expense
—
(6,500
)
—
—
(100,750
)
(6,500
)
(100,750
)
Adjusted noninterest expense (Non-GAAP)
(c)
$
134,754
$
134,031
$
131,592
$
127,542
$
129,774
$
527,919
$
498,356
Net interest income (GAAP)
$
136,742
$
138,637
$
139,904
$
137,595
$
146,583
$
552,878
$
494,708
Add:
Tax equivalent adjustment
3,306
3,299
3,383
3,477
3,451
13,465
12,345
Net interest income-FTE (Non-GAAP)
(a)
$
140,048
$
141,936
$
143,287
$
141,072
$
150,034
$
566,343
$
507,053
Noninterest income (GAAP)
$
49,804
$
52,224
$
53,553
$
51,377
$
45,170
$
206,958
$
205,144
Add:
Partnership amortization for tax credit purposes
2,013
1,995
2,019
1,961
1,869
7,988
6,211
Less:
Securities (gains) losses, net
(39
)
—
—
—
—
(39
)
—
Adjusted noninterest income (Non-GAAP)
(b)
$
51,778
$
54,219
$
55,572
$
53,338
$
47,039
$
214,907
$
211,355
Adjusted revenue (Non-GAAP)
(a)+(b)
$
191,826
$
196,155
$
198,859
$
194,410
$
197,073
$
781,250
$
718,408
Efficiency ratio (Non-GAAP)
(c)/((a)+(b))
70.25
%
68.33
%
66.17
%
65.60
%
65.85
%
67.57
%
69.37
%
View source version on businesswire.com: https://www.businesswire.com/news/home/20240123799186/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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