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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 | -0.14% | 29.54 | 29.01 | 30.21 | 29.94 | 29.23 | 29.85 | 298,727 | 00:01:34 |
Loan and Deposit Growth Continues, Credit Quality Remains Strong, Net Interest Income and Noninterest Income Expand
Trustmark Corporation (NASDAQGS:TRMK) reported net income of $45.0 million in the second quarter of 2023, representing diluted earnings per share of $0.74. Trustmark’s performance during the second quarter produced a return on average tangible equity of 15.18% and a return on average assets of 0.96%. The Board of Directors declared a quarterly cash dividend of $0.23 per share payable September 15, 2023, to shareholders of record on September 1, 2023.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230725007677/en/
Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/53477140/en
Second Quarter Highlights
Duane A. Dewey, President and CEO, stated, “Trustmark continued to post solid financial results in the second quarter, reflecting continued loan and deposit growth, expanding net interest income, and growth in our fee-based businesses. During the first six months of 2023, Trustmark’s net income totaled $95.3 million, which represented diluted earnings of $1.56 per share, an increase of 51.5% from the same period in 2022. We have a tremendous team of associates throughout our system that are focused on expanding existing customer relationships as well as demonstrating the value Trustmark can provide potential customers as their trusted financial partner. We have added very talented people across the organization in numerous production and back office roles to meet our objectives. We continue to implement initiatives to improve efficiency, enhance our ability to grow and serve customers, and build long-term value for our shareholders.”
Balance Sheet Management
Loans HFI totaled $12.6 billion at June 30, 2023, reflecting an increase of $116.8 million, or 0.9%, linked-quarter and $1.7 billion, or 15.3%, year-over-year. The linked quarter growth reflected increases in other real estate secured loans, nonfarm, nonresidential loans, and 1-4 family residential loans offset in part by declines in other loans, state and political subdivision loans, and construction, land development and other land loans. Trustmark’s loan portfolio continues to be well-diversified by loan type and geography.
Deposits totaled $14.9 billion at June 30, 2023, up $130.2 million, or 0.9%, from the prior quarter and up $143.7 million, or 1.0%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 84.6% of total deposits at June 30, 2023. Migration into higher-yielding products continued to drive a change in deposit mix from noninterest-bearing deposits, which represented 23.2% of total deposits at June 30, 2023. Interest-bearing deposit costs totaled 1.96% for the second quarter, while the total cost of deposits was 1.48%. The total cost of interest-bearing liabilities was 2.42% for the second quarter of 2023.
As previously announced, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2023, under which $50.0 million of Trustmark’s outstanding shares may be acquired through December 31, 2023. As of June 30, 2023, Trustmark had not repurchased any of its outstanding common shares under this program. Trustmark’s regulatory capital ratios continued to exceed all levels to be considered “well-capitalized” as of June 30, 2023.
Credit Quality
Nonaccrual loans totaled $75.0 million at June 30, 2023, up $2.7 million from the prior quarter and an increase of $13.0 million year-over-year. Other real estate totaled $1.1 million, reflecting a $547 thousand decrease from the prior quarter and a $1.9 million decline from the prior year.
The provision for credit losses for loans HFI was $8.2 million in the second quarter and was primarily attributable to extended maturities on mortgage loans resulting from lower prepayment speeds, weakening macroeconomic factors, and loan growth. The provision for credit losses for off-balance sheet credit exposures was $245 thousand, primarily driven by weakening macroeconomic factors. Collectively, the provision for credit losses totaled $8.5 million in the second quarter compared to $1.0 million from the prior quarter and $1.1 million in the second quarter of 2022.
Allocation of Trustmark’s $129.3 million ACL on loans HFI represented 0.84% of commercial loans and 1.60% of consumer and home mortgage loans, resulting in an ACL to total loans HFI of 1.03% at June 30, 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 second quarter totaled $193.5 million, an increase of $4.5 million, or 2.4%, from the prior quarter and $27.5 million, or 16.6%, from the prior year. The linked-quarter increase primarily reflects higher net interest income and solid growth in all fee income business with the exception of mortgage banking. The year-over-year growth in revenue is attributed to higher net interest income.
Net interest income (FTE) in the second quarter totaled $143.3 million, resulting in a net interest margin of 3.33%, down 6 basis points from the prior quarter. The decrease in the net interest margin was due to increased costs of interest-bearing deposits which were partially offset by increased yields on the loans HFI and HFS portfolio and securities portfolio.
Noninterest income in the second quarter totaled $53.6 million, an increase of $2.2 million, or 4.2%, from the prior quarter and a $300 thousand increase year-over-year. With the exception of mortgage banking, all categories increased linked-quarter with other, net and bank card and other fees increasing $1.2 million and $1.1 million, respectively. Year-over-year increases in insurance, other, net and service charges on deposit accounts, were offset in part by declines in bank card and other fees, mortgage banking and wealth management revenue.
Mortgage loan production in the second quarter totaled $431.3 million, an increase of 19.5% from the prior quarter and a decrease of 36.7% year-over-year. Mortgage banking revenue totaled $6.6 million in the second quarter, a decrease of $1.0 million linked-quarter and $1.5 million year-over-year. The linked-quarter decrease was principally attributable to accelerated amortization of mortgage servicing rights offset in part by reduced net negative hedge ineffectiveness.
Insurance revenue totaled $14.8 million in the second quarter, up $459 thousand, or 3.2%, from the prior quarter and $1.1 million, or 7.8%, year-over-year. The linked-quarter increase primarily reflected growth in policy fees and other commissions while the year-over-year increase primarily reflected growth in commercial property and casualty commissions. Wealth management revenue in the second quarter totaled $8.9 million, an increase of $102 thousand, or 1.2%, from the prior quarter and a decline of $220 thousand, or 2.4%, year-over-year. The linked-quarter growth reflected higher trust management revenue while the year-over-year decline reflected reduced brokerage revenue.
Noninterest Expense
Noninterest expense in the second quarter totaled $132.2 million, an increase of $3.9 million, or 3.0%, when compared to the prior quarter. Salaries and employee benefits increased $1.9 million linked-quarter principally due to commissions and annual merit increases. Services and fees increased $2.8 million, or 11.2%, linked-quarter primarily due to increases in professional fees. Net occupancy expense declined $521 thousand, or 6.8%, while other expense declined $309 thousand, or 2.1%, linked-quarter.
FIT2GROW
“In 2022, we announced FIT2GROW, a comprehensive program of Focus, Innovation and Transformation designed to enhance our ability to grow and serve customers. Our Atlanta-based Equipment Finance division, established in late 2022, continues to gain traction as its portfolio has grown to $127 million as of June 30, 2023. Implementation of our technology plans continued during the second quarter with conversion of our credit card platform to a best-in-class product for our customers. In addition, advancements in our loan underwriting system were implemented and plans for conversion of our deposit system continued. During the quarter, work continued on the design of our sales through service process, which will be implemented across the retail branch network in early 2024. These actions are designed to enhance Trustmark’s performance and build long-term value for our shareholders,” said Dewey.
Additional Information
As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, July 26, 2023, at 8:30 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (877) 317-3051 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Wednesday, August 9, 2023, in archived format at the same web address or by calling (877) 344-7529, passcode 7655682.
Trustmark is a financial services company providing banking and financial solutions through offices in Alabama, Florida, Georgia, Mississippi, Tennessee and Texas.
Forward-Looking Statements
Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “project,” “potential,” “seek,” “continue,” “could,” “would,” “future” or the negative of those terms or other words of similar meaning. You should read statements that contain these words carefully because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements include, but are not limited to, statements relating to anticipated future operating and financial performance measures, including net interest margin, credit quality, business initiatives, growth opportunities and growth rates, among other things, and encompass any estimate, prediction, expectation, projection, opinion, anticipation, outlook or statement of belief included therein as well as the management assumptions underlying these forward-looking statements. You should be aware that the occurrence of the events described under the caption “Risk Factors” in Trustmark’s filings with the Securities and Exchange Commission (SEC) could have an adverse effect on our business, results of operations and financial condition. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected.
Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels and slowdowns in economic growth, actions by the Board of Governors of the Federal Reserve System (FRB) that impact the level of market interest rates, local, state and national economic and market conditions (including uncertainty regarding the federal government's debt limit or a prolonged shutdown of the federal government), 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 June 30, 2023 ($ in thousands) (unaudited) Linked Quarter Year over Year QUARTERLY AVERAGE BALANCES 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change Securities AFS-taxable (1)$
2,140,505
$
2,187,121
$
3,094,364
$
(46,616
)
-2.1
%
$
(953,859
)
-30.8
%
Securities AFS-nontaxable
4,796
4,812
5,110
(16
)
-0.3
%
(314
)
-6.1
%
Securities HTM-taxable (1)
1,463,086
1,479,283
811,599
(16,197
)
-1.1
%
651,487
80.3
%
Securities HTM-nontaxable
1,718
4,509
5,630
(2,791
)
-61.9
%
(3,912
)
-69.5
%
Total securities
3,610,105
3,675,725
3,916,703
(65,620
)
-1.8
%
(306,598
)
-7.8
%
Paycheck protection program loans (PPP)
—
—
17,746
—
n/m
(17,746
)
-100.0
%
Loans (includes loans held for sale)
12,732,057
12,530,449
10,910,178
201,608
1.6
%
1,821,879
16.7
%
Fed funds sold and reverse repurchases
3,275
2,379
110
896
37.7
%
3,165
n/m
Other earning assets
903,027
647,760
1,139,312
255,267
39.4
%
(236,285
)
-20.7
%
Total earning assets
17,248,464
16,856,313
15,984,049
392,151
2.3
%
1,264,415
7.9
%
Allowance for credit losses (ACL), loans held for investment (LHFI)
(121,960
)
(119,978
)
(99,106
)
(1,982
)
-1.7
%
(22,854
)
-23.1
%
Other assets
1,648,583
1,762,449
1,513,127
(113,866
)
-6.5
%
135,456
9.0
%
Total assets$
18,775,087
$
18,498,784
$
17,398,070
$
276,303
1.5
%
$
1,377,017
7.9
%
Interest-bearing demand deposits$
4,803,737
$
4,751,154
$
4,578,235
$
52,583
1.1
%
$
225,502
4.9
%
Savings deposits
4,002,134
4,193,764
4,638,849
(191,630
)
-4.6
%
(636,715
)
-13.7
%
Time deposits
2,335,752
1,907,449
1,159,065
428,303
22.5
%
1,176,687
n/m
Total interest-bearing deposits
11,141,623
10,852,367
10,376,149
289,256
2.7
%
765,474
7.4
%
Fed funds purchased and repurchases
389,834
436,535
118,753
(46,701
)
-10.7
%
271,081
n/m
Other borrowings
1,330,010
1,110,843
80,283
219,167
19.7
%
1,249,727
n/m
Subordinated notes
123,337
123,281
123,116
56
0.0
%
221
0.2
%
Junior subordinated debt securities
61,856
61,856
61,856
—
0.0
%
—
0.0
%
Total interest-bearing liabilities
13,046,660
12,584,882
10,760,157
461,778
3.7
%
2,286,503
21.2
%
Noninterest-bearing deposits
3,595,927
3,813,248
4,590,338
(217,321
)
-5.7
%
(994,411
)
-21.7
%
Other liabilities
552,209
576,826
439,266
(24,617
)
-4.3
%
112,943
25.7
%
Total liabilities
17,194,796
16,974,956
15,789,761
219,840
1.3
%
1,405,035
8.9
%
Shareholders' equity
1,580,291
1,523,828
1,608,309
56,463
3.7
%
(28,018
)
-1.7
%
Total liabilities and equity$
18,775,087
$
18,498,784
$
17,398,070
$
276,303
1.5
%
$
1,377,017
7.9
%
(1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June 30, 2023 ($ in thousands) (unaudited) Linked Quarter Year over Year PERIOD END BALANCES 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change Cash and due from banks$
832,052
$
1,297,144
$
742,461
$
(465,092
)
-35.9
%
$
89,591
12.1
%
Fed funds sold and reverse repurchases
—
—
—
—
n/m
—
n/m
Securities available for sale (1)
1,871,883
1,984,162
2,644,364
(112,279
)
-5.7
%
(772,481
)
-29.2
%
Securities held to maturity (1)
1,458,665
1,474,338
1,137,754
(15,673
)
-1.1
%
320,911
28.2
%
PPP loans
—
—
12,549
—
n/m
(12,549
)
-100.0
%
Loans held for sale (LHFS)
181,094
175,926
190,186
5,168
2.9
%
(9,092
)
-4.8
%
Loans held for investment (LHFI)
12,613,967
12,497,195
10,944,840
116,772
0.9
%
1,669,127
15.3
%
ACL LHFI
(129,298
)
(122,239
)
(103,140
)
(7,059
)
-5.8
%
(26,158
)
-25.4
%
Net LHFI
12,484,669
12,374,956
10,841,700
109,713
0.9
%
1,642,969
15.2
%
Premises and equipment, net
227,630
223,975
207,914
3,655
1.6
%
19,716
9.5
%
Mortgage servicing rights
134,350
127,206
121,014
7,144
5.6
%
13,336
11.0
%
Goodwill
384,237
384,237
384,237
—
0.0
%
—
0.0
%
Identifiable intangible assets
3,222
3,352
4,264
(130
)
-3.9
%
(1,042
)
-24.4
%
Other real estate
1,137
1,684
3,034
(547
)
-32.5
%
(1,897
)
-62.5
%
Operating lease right-of-use assets
38,179
35,315
34,684
2,864
8.1
%
3,495
10.1
%
Other assets
805,508
794,883
627,349
10,625
1.3
%
178,159
28.4
%
Total assets$
18,422,626
$
18,877,178
$
16,951,510
$
(454,552
)
-2.4
%
$
1,471,116
8.7
%
Deposits: Noninterest-bearing$
3,461,073
$
3,797,055
$
4,509,472
$
(335,982
)
-8.8
%
$
(1,048,399
)
-23.2
%
Interest-bearing
11,452,827
10,986,606
10,260,696
466,221
4.2
%
1,192,131
11.6
%
Total deposits
14,913,900
14,783,661
14,770,168
130,239
0.9
%
143,732
1.0
%
Fed funds purchased and repurchases
311,179
477,980
70,157
(166,801
)
-34.9
%
241,022
n/m
Other borrowings
1,056,714
1,485,181
72,553
(428,467
)
-28.8
%
984,161
n/m
Subordinated notes
123,372
123,317
123,152
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
34,841
34,596
32,949
245
0.7
%
1,892
5.7
%
Operating lease liabilities
40,845
37,988
37,108
2,857
7.5
%
3,737
10.1
%
Other liabilities
308,726
310,500
196,871
(1,774
)
-0.6
%
111,855
56.8
%
Total liabilities
16,851,433
17,315,079
15,364,814
(463,646
)
-2.7
%
1,486,619
9.7
%
Common stock
12,724
12,720
12,752
4
0.0
%
(28
)
-0.2
%
Capital surplus
156,834
155,297
160,876
1,537
1.0
%
(4,042
)
-2.5
%
Retained earnings
1,667,339
1,636,463
1,620,210
30,876
1.9
%
47,129
2.9
%
Accumulated other comprehensive income (loss), net of tax
(265,704
)
(242,381
)
(207,142
)
(23,323
)
-9.6
%
(58,562
)
-28.3
%
Total shareholders' equity
1,571,193
1,562,099
1,586,696
9,094
0.6
%
(15,503
)
-1.0
%
Total liabilities and equity$
18,422,626
$
18,877,178
$
16,951,510
$
(454,552
)
-2.4
%
$
1,471,116
8.7
%
(1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June 30, 2023 ($ in thousands except per share data) (unaudited) Quarter Ended Linked Quarter Year over Year INCOME STATEMENTS 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change Interest and fees on LHFS & LHFI-FTE$
192,941
$
178,967
$
103,033
$
13,974
7.8
%
$
89,908
87.3
%
Interest and fees on PPP loans
—
—
184
—
n/m
(184
)
-100.0
%
Interest on securities-taxable
16,779
16,761
14,561
18
0.1
%
2,218
15.2
%
Interest on securities-tax exempt-FTE
69
92
107
(23
)
-25.0
%
(38
)
-35.5
%
Interest on fed funds sold and reverse repurchases
45
30
1
15
50.0
%
44
n/m
Other interest income
12,077
6,527
2,214
5,550
85.0
%
9,863
n/m
Total interest income-FTE
221,911
202,377
120,100
19,534
9.7
%
101,811
84.8
%
Interest on deposits
54,409
40,898
2,774
13,511
33.0
%
51,635
n/m
Interest on fed funds purchased and repurchases
4,865
4,832
70
33
0.7
%
4,795
n/m
Other interest expense
19,350
15,575
1,664
3,775
24.2
%
17,686
n/m
Total interest expense
78,624
61,305
4,508
17,319
28.3
%
74,116
n/m
Net interest income-FTE
143,287
141,072
115,592
2,215
1.6
%
27,695
24.0
%
Provision for credit losses, LHFI
8,211
3,244
2,716
4,967
n/m
5,495
n/m
Provision for credit losses, off-balance sheet credit exposures
245
(2,242
)
(1,568
)
2,487
n/m
1,813
n/m
Net interest income after provision-FTE
134,831
140,070
114,444
(5,239
)
-3.7
%
20,387
17.8
%
Service charges on deposit accounts
10,695
10,336
10,226
359
3.5
%
469
4.6
%
Bank card and other fees
8,917
7,803
10,167
1,114
14.3
%
(1,250
)
-12.3
%
Mortgage banking, net
6,600
7,639
8,149
(1,039
)
-13.6
%
(1,549
)
-19.0
%
Insurance commissions
14,764
14,305
13,702
459
3.2
%
1,062
7.8
%
Wealth management
8,882
8,780
9,102
102
1.2
%
(220
)
-2.4
%
Other, net
3,695
2,514
1,907
1,181
47.0
%
1,788
93.8
%
Total noninterest income
53,553
51,377
53,253
2,176
4.2
%
300
0.6
%
Salaries and employee benefits
75,940
74,056
71,679
1,884
2.5
%
4,261
5.9
%
Services and fees (2)
28,264
25,426
25,659
2,838
11.2
%
2,605
10.2
%
Net occupancy-premises
7,108
7,629
6,892
(521
)
-6.8
%
216
3.1
%
Equipment expense
6,404
6,405
6,047
(1
)
0.0
%
357
5.9
%
Litigation settlement expense (1)
—
—
—
—
n/m
—
n/m
Other expense (2)
14,502
14,811
13,490
(309
)
-2.1
%
1,012
7.5
%
Total noninterest expense
132,218
128,327
123,767
3,891
3.0
%
8,451
6.8
%
Income (loss) before income taxes and tax eq adj
56,166
63,120
43,930
(6,954
)
-11.0
%
12,236
27.9
%
Tax equivalent adjustment
3,383
3,477
2,916
(94
)
-2.7
%
467
16.0
%
Income (loss) before income taxes
52,783
59,643
41,014
(6,860
)
-11.5
%
11,769
28.7
%
Income taxes
7,746
9,343
6,730
(1,597
)
-17.1
%
1,016
15.1
%
Net income (loss)$
45,037
$
50,300
$
34,284
$
(5,263
)
-10.5
%
$
10,753
31.4
%
Per share data Earnings (loss) per share - basic$
0.74
$
0.82
$
0.56
$
(0.08
)
-9.8
%
$
0.18
32.1
%
Earnings (loss) per share - diluted$
0.74
$
0.82
$
0.56
$
(0.08
)
-9.8
%
$
0.18
32.1
%
Dividends per share$
0.23
$
0.23
$
0.23
—
0.0
%
—
0.0
%
Weighted average shares outstanding Basic
61,063,277
61,011,059
61,378,226
Diluted
61,230,031
61,193,275
61,546,285
Period end shares outstanding
61,069,036
61,048,516
61,201,123
(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 June 30, 2023 ($ in thousands) (unaudited) Quarter Ended Linked Quarter Year over Year NONPERFORMING ASSETS (1) 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change Nonaccrual LHFI Alabama (2)
$
11,058
$
10,919
$
2,698
$
139
1.3
%
$
8,360
n/m
Florida
334
256
233
78
30.5
%
101
43.3
%
Mississippi (3)
36,288
32,560
23,039
3,728
11.4
%
13,249
57.5
%
Tennessee (4)
5,088
5,416
9,500
(328
)
-6.1
%
(4,412
)
-46.4
%
Texas
22,259
23,224
26,582
(965
)
-4.2
%
(4,323
)
-16.3
%
Total nonaccrual LHFI
75,027
72,375
62,052
2,652
3.7
%
12,975
20.9
%
Other real estate Alabama (2)
—
—
84
—
n/m
(84
)
-100.0
%
Mississippi (3)
1,137
1,495
2,950
(358
)
-23.9
%
(1,813
)
-61.5
%
Tennessee (4)
—
189
—
(189
)
-100.0
%
—
n/m
Total other real estate
1,137
1,684
3,034
(547
)
-32.5
%
(1,897
)
-62.5
%
Total nonperforming assets$
76,164
$
74,059
$
65,086
$
2,105
2.8
%
$
11,078
17.0
%
LOANS PAST DUE OVER 90 DAYS (1) LHFI$
3,911
$
2,255
$
1,347
$
1,656
73.4
%
$
2,564
n/m
LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase)
$
35,766
$
41,468
$
51,164
$
(5,702
)
-13.8
%
$
(15,398
)
-30.1
%
Quarter Ended Linked Quarter Year over Year ACL LHFI (1) 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change Beginning Balance$
122,239
$
120,214
$
98,734
$
2,025
1.7
%
$
23,505
23.8
%
Provision for credit losses, LHFI
8,211
3,244
2,716
4,967
n/m
5,495
n/m
Charge-offs
(2,773
)
(2,996
)
(2,277
)
223
7.4
%
(496
)
-21.8
%
Recoveries
1,621
1,777
3,967
(156
)
-8.8
%
(2,346
)
-59.1
%
Net (charge-offs) recoveries
(1,152
)
(1,219
)
1,690
67
5.5
%
(2,842
)
n/m
Ending Balance
$
129,298
$
122,239
$
103,140
$
7,059
5.8
%
$
26,158
25.4
%
NET (CHARGE-OFFS) RECOVERIES (1) Alabama (2)$
(141
)
$
(268
)
$
1,129
$
127
-47.4
%
$
(1,270
)
n/m
Florida
(35
)
(36
)
761
1
2.8
%
(796
)
n/m
Mississippi (3)
(762
)
(775
)
(266
)
13
1.7
%
(496
)
n/m
Tennessee (4)
(166
)
(124
)
31
(42
)
-33.9
%
(197
)
n/m
Texas
(48
)
(16
)
35
(32
)
n/m
(83
)
n/m
Total net (charge-offs) recoveries
$
(1,152
)
$
(1,219
)
$
1,690
$
67
5.5
%
$
(2,842
)
n/m
(1) Excludes PPP loans. (2) Alabama includes the Georgia Loan Production Office. (3) Mississippi includes Central and Southern Mississippi Regions. (4) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June 30, 2023 ($ in thousands) (unaudited) Quarter Ended Six Months Ended AVERAGE BALANCES 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Securities AFS-taxable (1)
$
2,140,505
$
2,187,121
$
2,572,675
$
2,824,254
$
3,094,364
$
2,163,684
$
3,169,515
Securities AFS-nontaxable
4,796
4,812
4,828
4,928
5,110
4,804
5,118
Securities HTM-taxable (1)
1,463,086
1,479,283
1,268,952
1,140,685
811,599
1,471,140
612,332
Securities HTM-nontaxable
1,718
4,509
4,514
5,057
5,630
3,106
6,474
Total securities
3,610,105
3,675,725
3,850,969
3,974,924
3,916,703
3,642,734
3,793,439
PPP loans
—
—
3,235
9,821
17,746
—
23,346
Loans (includes loans held for sale)
12,732,057
12,530,449
12,006,661
11,459,551
10,910,178
12,631,810
10,731,438
Fed funds sold and reverse repurchases
3,275
2,379
6,566
226
110
2,829
83
Other earning assets
903,027
647,760
375,190
325,620
1,139,312
780,657
1,473,655
Total earning assets
17,248,464
16,856,313
16,242,621
15,770,142
15,984,049
17,058,030
16,021,961
ACL LHFI
(121,960
)
(119,978
)
(114,948
)
(102,951
)
(99,106
)
(120,974
)
(99,247
)
Other assets
1,648,583
1,762,449
1,630,085
1,576,653
1,513,127
1,700,643
1,531,884
Total assets
$
18,775,087
$
18,498,784
$
17,757,758
$
17,243,844
$
17,398,070
$
18,637,699
$
17,454,598
Interest-bearing demand deposits
$
4,803,737
$
4,751,154
$
4,719,303
$
4,613,733
$
4,578,235
$
4,777,591
$
4,504,058
Savings deposits
4,002,134
4,193,764
4,379,673
4,514,579
4,638,849
4,097,420
4,714,556
Time deposits
2,335,752
1,907,449
1,152,905
1,111,440
1,159,065
2,122,784
1,176,155
Total interest-bearing deposits
11,141,623
10,852,367
10,251,881
10,239,752
10,376,149
10,997,795
10,394,769
Fed funds purchased and repurchases
389,834
436,535
549,406
249,809
118,753
413,055
165,122
Other borrowings
1,330,010
1,110,843
530,993
88,697
80,283
1,221,032
85,657
Subordinated notes
123,337
123,281
123,226
123,171
123,116
123,309
123,089
Junior subordinated debt securities
61,856
61,856
61,856
61,856
61,856
61,856
61,856
Total interest-bearing liabilities
13,046,660
12,584,882
11,517,362
10,763,285
10,760,157
12,817,047
10,830,493
Noninterest-bearing deposits
3,595,927
3,813,248
4,177,113
4,444,370
4,590,338
3,703,987
4,595,693
Other liabilities
552,209
576,826
569,992
429,720
439,266
564,450
367,673
Total liabilities
17,194,796
16,974,956
16,264,467
15,637,375
15,789,761
17,085,484
15,793,859
Shareholders' equity
1,580,291
1,523,828
1,493,291
1,606,469
1,608,309
1,552,215
1,660,739
Total liabilities and equity
$
18,775,087
$
18,498,784
$
17,757,758
$
17,243,844
$
17,398,070
$
18,637,699
$
17,454,598
(1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information.
See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June 30, 2023 ($ in thousands) (unaudited) PERIOD END BALANCES 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Cash and due from banks
$
832,052
$
1,297,144
$
734,787
$
479,637
$
742,461
Fed funds sold and reverse repurchases
—
—
4,000
10,098
—
Securities available for sale (1)
1,871,883
1,984,162
2,024,082
2,444,486
2,644,364
Securities held to maturity (1)
1,458,665
1,474,338
1,494,514
1,156,985
1,137,754
PPP loans
—
—
—
4,798
12,549
LHFS
181,094
175,926
135,226
165,213
190,186
LHFI
12,613,967
12,497,195
12,204,039
11,586,064
10,944,840
ACL LHFI
(129,298
)
(122,239
)
(120,214
)
(115,050
)
(103,140
)
Net LHFI
12,484,669
12,374,956
12,083,825
11,471,014
10,841,700
Premises and equipment, net
227,630
223,975
212,365
210,761
207,914
Mortgage servicing rights
134,350
127,206
129,677
132,615
121,014
Goodwill
384,237
384,237
384,237
384,237
384,237
Identifiable intangible assets
3,222
3,352
3,640
3,952
4,264
Other real estate
1,137
1,684
1,986
2,971
3,034
Operating lease right-of-use assets
38,179
35,315
36,301
37,282
34,684
Other assets
805,508
794,883
770,838
686,585
627,349
Total assets
$
18,422,626
$
18,877,178
$
18,015,478
$
17,190,634
$
16,951,510
Deposits: Noninterest-bearing
$
3,461,073
$
3,797,055
$
4,093,771
$
4,358,805
$
4,509,472
Interest-bearing
11,452,827
10,986,606
10,343,877
10,066,375
10,260,696
Total deposits
14,913,900
14,783,661
14,437,648
14,425,180
14,770,168
Fed funds purchased and repurchases
311,179
477,980
449,331
544,068
70,157
Other borrowings
1,056,714
1,485,181
1,050,938
223,172
72,553
Subordinated notes
123,372
123,317
123,262
123,207
123,152
Junior subordinated debt securities
61,856
61,856
61,856
61,856
61,856
ACL on off-balance sheet credit exposures
34,841
34,596
36,838
31,623
32,949
Operating lease liabilities
40,845
37,988
38,932
39,797
37,108
Other liabilities
308,726
310,500
324,405
232,786
196,871
Total liabilities
16,851,433
17,315,079
16,523,210
15,681,689
15,364,814
Common stock
12,724
12,720
12,705
12,700
12,752
Capital surplus
156,834
155,297
154,645
154,150
160,876
Retained earnings
1,667,339
1,636,463
1,600,321
1,648,507
1,620,210
Accumulated other comprehensive income (loss), net of tax
(265,704
)
(242,381
)
(275,403
)
(306,412
)
(207,142
)
Total shareholders' equity
1,571,193
1,562,099
1,492,268
1,508,945
1,586,696
Total liabilities and equity
$
18,422,626
$
18,877,178
$
18,015,478
$
17,190,634
$
16,951,510
(1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information.
See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June 30, 2023 ($ in thousands except per share data) (unaudited) Quarter Ended Six Months Ended INCOME STATEMENTS 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Interest and fees on LHFS & LHFI-FTE
$
192,941
$
178,967
$
159,566
$
129,395
$
103,033
$
371,908
$
196,285
Interest and fees on PPP loans
—
—
101
186
184
—
352
Interest on securities-taxable
16,779
16,761
16,577
16,222
14,561
33,540
26,918
Interest on securities-tax exempt-FTE
69
92
93
100
107
161
229
Interest on fed funds sold and reverse repurchases
45
30
71
2
1
75
1
Other interest income
12,077
6,527
3,556
1,493
2,214
18,604
3,031
Total interest income-FTE
221,911
202,377
179,964
147,398
120,100
424,288
226,816
Interest on deposits
54,409
40,898
18,438
5,097
2,774
95,307
5,534
Interest on fed funds purchased and repurchases
4,865
4,832
4,762
1,225
70
9,697
140
Other interest expense
19,350
15,575
6,730
1,996
1,664
34,925
3,203
Total interest expense
78,624
61,305
29,930
8,318
4,508
139,929
8,877
Net interest income-FTE
143,287
141,072
150,034
139,080
115,592
284,359
217,939
Provision for credit losses, LHFI
8,211
3,244
6,902
12,919
2,716
11,455
1,856
Provision for credit losses, off-balance sheet credit exposures
245
(2,242
)
5,215
(1,326
)
(1,568
)
(1,997
)
(2,674
)
Net interest income after provision-FTE
134,831
140,070
137,917
127,487
114,444
274,901
218,757
Service charges on deposit accounts
10,695
10,336
11,162
11,318
10,226
21,031
19,677
Bank card and other fees
8,917
7,803
8,191
9,305
10,167
16,720
18,609
Mortgage banking, net
6,600
7,639
3,408
6,876
8,149
14,239
18,022
Insurance commissions
14,764
14,305
12,019
13,911
13,702
29,069
27,791
Wealth management
8,882
8,780
8,079
8,778
9,102
17,662
18,156
Other, net
3,695
2,514
2,311
2,418
1,907
6,209
5,113
Total noninterest income
53,553
51,377
45,170
52,606
53,253
104,930
107,368
Salaries and employee benefits
75,940
74,056
73,469
72,707
71,679
149,996
141,264
Services and fees (2)
28,264
25,426
27,709
26,787
25,659
53,690
50,973
Net occupancy-premises
7,108
7,629
7,898
7,395
6,892
14,737
13,971
Equipment expense
6,404
6,405
6,268
6,072
6,047
12,809
12,108
Litigation settlement expense (1)
—
—
100,750
—
—
—
—
Other expense (2)
14,502
14,811
15,135
13,737
13,490
29,313
26,970
Total noninterest expense
132,218
128,327
231,229
126,698
123,767
260,545
245,286
Income (loss) before income taxes and tax eq adj
56,166
63,120
(48,142
)
53,395
43,930
119,286
80,839
Tax equivalent adjustment
3,383
3,477
3,451
2,975
2,916
6,860
5,919
Income (loss) before income taxes
52,783
59,643
(51,593
)
50,420
41,014
112,426
74,920
Income taxes
7,746
9,343
(17,530
)
7,965
6,730
17,089
11,425
Net income (loss)
$
45,037
$
50,300
$
(34,063
)
$
42,455
$
34,284
$
95,337
$
63,495
Per share data Earnings (loss) per share - basic
$
0.74
$
0.82
$
(0.56
)
$
0.69
$
0.56
$
1.56
$
1.03
Earnings (loss) per share - diluted
$
0.74
$
0.82
$
(0.56
)
$
0.69
$
0.56
$
1.56
$
1.03
Dividends per share
$
0.23
$
0.23
$
0.23
$
0.23
$
0.23
$
0.46
$
0.46
Weighted average shares outstanding Basic
61,063,277
61,011,059
60,969,400
61,114,804
61,378,226
61,037,312
61,445,934
Diluted
61,230,031
61,193,275
61,173,249
61,318,715
61,546,285
61,206,799
61,624,569
Period end shares outstanding
61,069,036
61,048,516
60,977,686
60,953,864
61,201,123
61,069,036
61,201,123
(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 June 30, 2023 ($ in thousands) (unaudited) Quarter Ended NONPERFORMING ASSETS (1) 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Nonaccrual LHFI Alabama (2)
$
11,058
$
10,919
$
12,300
$
12,710
$
2,698
Florida
334
256
227
227
233
Mississippi (3)
36,288
32,560
24,683
23,517
23,039
Tennessee (4)
5,088
5,416
5,566
5,120
9,500
Texas
22,259
23,224
23,196
26,353
26,582
Total nonaccrual LHFI
75,027
72,375
65,972
67,927
62,052
Other real estate Alabama (2)
—
—
194
217
84
Mississippi (3)
1,137
1,495
1,769
2,754
2,950
Tennessee (4)
—
189
23
—
—
Total other real estate
1,137
1,684
1,986
2,971
3,034
Total nonperforming assets
$
76,164
$
74,059
$
67,958
$
70,898
$
65,086
LOANS PAST DUE OVER 90 DAYS (1) LHFI
$
3,911
$
2,255
$
3,929
$
1,842
$
1,347
LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase)
$
35,766
$
41,468
$
49,320
$
48,313
$
51,164
Quarter Ended Six Months Ended ACL LHFI (1) 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Beginning Balance
$
122,239
$
120,214
$
115,050
$
103,140
$
98,734
$
120,214
$
99,457
Provision for credit losses, LHFI
8,211
3,244
6,902
12,919
2,716
11,455
1,856
Charge-offs
(2,773
)
(2,996
)
(3,893
)
(2,920
)
(2,277
)
(5,769
)
(4,519
)
Recoveries
1,621
1,777
2,155
1,911
3,967
3,398
6,346
Net (charge-offs) recoveries
(1,152
)
(1,219
)
(1,738
)
(1,009
)
1,690
(2,371
)
1,827
Ending Balance
$
129,298
$
122,239
$
120,214
$
115,050
$
103,140
$
129,298
$
103,140
NET (CHARGE-OFFS) RECOVERIES (1) Alabama (2)
$
(141
)
$
(268
)
$
98
$
93
$
1,129
$
(409
)
$
1,828
Florida
(35
)
(36
)
(60
)
(23
)
761
(71
)
735
Mississippi (3)
(762
)
(775
)
(1,657
)
(702
)
(266
)
(1,537
)
(354
)
Tennessee (4)
(166
)
(124
)
(195
)
(202
)
31
(290
)
(393
)
Texas
(48
)
(16
)
76
(175
)
35
(64
)
11
Total net (charge-offs) recoveries
$
(1,152
)
$
(1,219
)
$
(1,738
)
$
(1,009
)
$
1,690
$
(2,371
)
$
1,827
(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 June 30, 2023 ($ in thousands) (unaudited) Quarter Ended Six Months Ended FINANCIAL RATIOS AND OTHER DATA 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Return on average equity
11.43
%
13.39
%
-9.05
%
10.48
%
8.55
%
12.39
%
7.71
%
Return on average tangible equity
15.18
%
18.03
%
-12.14
%
13.90
%
11.36
%
16.56
%
10.16
%
Return on average assets
0.96
%
1.10
%
-0.76
%
0.98
%
0.79
%
1.03
%
0.73
%
Interest margin - Yield - FTE
5.16
%
4.87
%
4.40
%
3.71
%
3.01
%
5.02
%
2.85
%
Interest margin - Cost
1.83
%
1.47
%
0.73
%
0.21
%
0.11
%
1.65
%
0.11
%
Net interest margin - FTE
3.33
%
3.39
%
3.66
%
3.50
%
2.90
%
3.36
%
2.74
%
Efficiency ratio (1)
66.17
%
65.60
%
65.85
%
64.96
%
71.89
%
65.89
%
74.08
%
Full-time equivalent employees
2,761
2,758
2,738
2,717
2,727
CREDIT QUALITY RATIOS (2) Net (recoveries) charge-offs / average loans
0.04
%
0.04
%
0.06
%
0.03
%
-0.06
%
0.04
%
-0.03
%
Provision for credit losses, LHFI / average loans
0.26
%
0.10
%
0.23
%
0.45
%
0.10
%
0.18
%
0.03
%
Nonaccrual LHFI / (LHFI + LHFS)
0.59
%
0.57
%
0.53
%
0.58
%
0.56
%
Nonperforming assets / (LHFI + LHFS)
0.60
%
0.58
%
0.55
%
0.60
%
0.58
%
Nonperforming assets / (LHFI + LHFS + other real estate)
0.60
%
0.58
%
0.55
%
0.60
%
0.58
%
ACL LHFI / LHFI
1.03
%
0.98
%
0.99
%
0.99
%
0.94
%
ACL LHFI-commercial / commercial LHFI
0.84
%
0.80
%
0.85
%
0.93
%
0.88
%
ACL LHFI-consumer / consumer and home mortgage LHFI
1.60
%
1.54
%
1.41
%
1.20
%
1.14
%
ACL LHFI / nonaccrual LHFI
172.34
%
168.90
%
182.22
%
169.37
%
166.22
%
ACL LHFI / nonaccrual LHFI (excl individually analyzed loans)
301.44
%
320.80
%
399.19
%
466.03
%
475.27
%
CAPITAL RATIOS Total equity / total assets
8.53
%
8.28
%
8.28
%
8.78
%
9.36
%
Tangible equity / tangible assets
6.56
%
6.35
%
6.27
%
6.67
%
7.23
%
Tangible equity / risk-weighted assets
7.91
%
7.94
%
7.61
%
8.15
%
9.16
%
Tier 1 leverage ratio
8.35
%
8.29
%
8.47
%
9.01
%
8.80
%
Common equity tier 1 capital ratio
9.87
%
9.76
%
9.74
%
10.63
%
11.01
%
Tier 1 risk-based capital ratio
10.27
%
10.17
%
10.15
%
11.06
%
11.47
%
Total risk-based capital ratio
12.08
%
11.95
%
11.91
%
12.85
%
13.26
%
STOCK PERFORMANCE Market value-Close$
21.12
$
24.70
$
34.91
$
30.63
$
29.19
Book value
$
25.73
$
25.59
$
24.47
$
24.76
$
25.93
Tangible book value
$
19.38
$
19.24
$
18.11
$
18.39
$
19.58
(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
June 30, 2023
($ in thousands)
(unaudited)
Note 1 - Litigation Settlement
As previously announced, on December 31, 2022, Trustmark National Bank (TNB) agreed to a settlement in principle (the Settlement) relating to litigation involving the Stanford Financial Group. On January 13, 2023, TNB entered into a Settlement Agreement (the Settlement Agreement) reflecting the terms of the Settlement. The parties to the Settlement Agreement are, on the one hand, (i) Ralph S. Janvey, solely in his capacity as the court-appointed receiver (the 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 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 Settlement Agreement provided that the parties would request dismissal of the Jackson Action pursuant to the terms of the bar orders described below. If the Court’s approval (as described below) of the Settlement Agreement, including the bar orders described below, is upheld on appeal, TNB will make a one-time cash payment of $100.0 million to the Receiver.
The Settlement Agreement included the parties’ agreement to seek the Northern District of Texas District Court’s entry of bar orders prohibiting any continued or future claims by the plaintiffs in the Actions or by any other person or entity against TNB and its related parties relating to Stanford, whether asserted to date or not. The bar orders therefore would prohibit all litigation relating to Stanford described herein, including not only the Actions and any pending matters but also any actions that may be brought in the future. Final Court approval of these bar orders is a condition of the Settlement.
The Settlement Agreement is also subject to notice to Stanford’s investor claimants (which has been provided) and final, non-appealable approval by the U.S. District Court for the Northern District of Texas. While TNB believes that the Settlement Agreement is consistent with the terms of prior Stanford-related settlements that have been approved by the Court and were not successfully appealed, it is possible that the Court’s approval of the Settlement Agreement (which has occurred, as described further below) may not be upheld on appeal.
The 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 Settlement Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the 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 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 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 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 Settlement Agreement and the judgment and bar order with respect to the Jackson Action.
On May 11, 2023, Robert Allen Stanford, writing from prison, appealed the District Court’s approval of the Settlement to the Fifth Circuit Court of Appeals. On June 12, 2023, the Receiver moved to dismiss the appeal as frivolous. That motion is now fully briefed and awaiting the Fifth Circuit’s decision.
The Settlement will become effective when the Fifth Circuit’s ruling in favor of the approval of the Settlement becomes final and non-appealable (the Settlement Effective Date). Within five days of the Settlement Effective Date, the parties to the Rotstain and Smith Actions will file agreed dismissals of those cases. Absent any further appeal in either of the Rotstain or Smith Actions, those dismissals will become final 30 days after entered and signed by the respective judges. TNB will be required to make the Settlement payment within 30 days after those dismissals become final. Any further appeal of any of the orders described above would delay the making of the Settlement payment.
Pending the resolution of the settlement approval process, the Rotstain, Smith and Jackson Actions are stayed.
TNB and Trustmark Corporation determined that it was in the best interest of TNB, Trustmark Corporation and the shareholders of Trustmark Corporation to enter into the Settlement and the 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.
At the time of the entry into the Settlement, Trustmark Corporation recognized $100.0 million of litigation settlement expense, as well as an additional $750 thousand in legal fees, which were included in noninterest expense related to the Stanford litigation during the fourth quarter of 2022. Trustmark Corporation expects that the Settlement will be tax deductible. Trustmark Corporation and TNB remain substantially above levels considered to be well-capitalized under all relevant standards.
TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2023
($ in thousands)
(unaudited)
Note 2 - Securities Available for Sale and Held to Maturity
The following table is a summary of the estimated fair value of securities available for sale and the amortized cost of securities held to maturity:
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities
$
362,966
$
386,903
$
391,513
$
416,278
$
419,696
U.S. Government agency obligations
6,999
7,254
7,766
9,116
11,947
Obligations of states and political subdivisions
4,813
4,907
4,862
4,763
5,179
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA
25,336
26,851
27,097
28,164
32,240
Issued by FNMA and FHLMC
1,250,435
1,317,848
1,345,463
1,718,057
1,888,546
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA
98,388
108,192
115,140
126,138
144,158
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA
122,946
132,207
132,241
141,970
142,598
Total securities available for sale
$
1,871,883
$
1,984,162
$
2,024,082
$
2,444,486
$
2,644,364
SECURITIES HELD TO MATURITY
U.S. Treasury securities
$
28,679
$
28,486
$
28,295
$
—
$
—
Obligations of states and political subdivisions
1,180
4,507
4,510
4,512
5,320
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA
13,235
4,336
4,442
4,527
4,624
Issued by FNMA and FHLMC
484,679
497,854
509,311
179,375
185,554
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA
171,002
179,334
188,201
197,923
210,479
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA
759,890
759,821
759,755
770,648
731,777
Total securities held to maturity
$
1,458,665
$
1,474,338
$
1,494,514
$
1,156,985
$
1,137,754
During the fourth quarter of 2022, Trustmark reclassified $422.9 million of securities available for sale to securities held to maturity. The securities were transferred at fair value, which became the cost basis for the securities held to maturity. At the date of transfer, the net unrealized holding loss on the available for sale securities totaled approximately $57.1 million ($42.8 million, net of tax). The net unrealized holding loss will be amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. There were no gains or losses recognized as a result of the transfer.
During the second quarter of 2022, Trustmark reclassified $343.1 million of securities available for sale to securities held to maturity. The securities were transferred at fair value, which became the cost basis for the securities held to maturity. At the date of transfer, the net unrealized holding loss on the available for sale securities totaled approximately $34.8 million ($26.1 million, net of tax). The net unrealized holding loss will be amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. There were no gains or losses recognized as a result of the transfer.
At June 30, 2023, the net unamortized, unrealized loss included in accumulated other comprehensive income (loss) in the accompanying balance sheet for securities held to maturity transferred from securities available for sale totaled $63.4 million.
Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 99.8% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE.
TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2023
($ in thousands)
(unaudited)
Note 3 – Loan Composition
LHFI consisted of the following during the periods presented:
LHFI BY TYPE
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
Loans secured by real estate:
Construction, land development and other land loans
$
1,722,657
$
1,723,772
$
1,719,542
$
1,647,395
$
1,440,058
Secured by 1-4 family residential properties
2,854,182
2,822,048
2,775,847
2,597,112
2,424,962
Secured by nonfarm, nonresidential properties
3,471,728
3,375,579
3,278,830
3,206,946
3,178,079
Other real estate secured
954,410
847,527
742,538
593,119
555,311
Commercial and industrial loans
1,883,480
1,882,360
1,821,259
1,689,532
1,551,001
Consumer loans
163,788
162,911
166,425
163,412
160,716
State and other political subdivision loans
1,111,710
1,193,727
1,223,863
1,188,703
1,110,795
Other loans
452,012
489,271
475,735
499,845
523,918
LHFI
12,613,967
12,497,195
12,204,039
11,586,064
10,944,840
ACL LHFI
(129,298
)
(122,239
)
(120,214
)
(115,050
)
(103,140
)
Net LHFI
$
12,484,669
$
12,374,956
$
12,083,825
$
11,471,014
$
10,841,700
The following table presents the LHFI composition by region and reflects each region’s diversified mix of loans:
June 30, 2023
LHFI - COMPOSITION BY REGION
Total
Alabama (1)
Florida
Mississippi (Central and Southern Regions)
Tennessee (Memphis, TN and Northern MS Regions)
Texas
Loans secured by real estate:
Construction, land development and other land loans
$
1,722,657
$
817,793
$
54,845
$
395,489
$
30,387
$
424,143
Secured by 1-4 family residential properties
2,854,182
136,612
51,817
2,555,191
83,409
27,153
Secured by nonfarm, nonresidential properties
3,471,728
954,604
225,437
1,471,341
159,402
660,944
Other real estate secured
954,410
379,984
1,805
294,497
7,376
270,748
Commercial and industrial loans
1,883,480
576,345
25,686
750,161
257,002
274,286
Consumer loans
163,788
23,925
8,354
101,026
19,411
11,072
State and other political subdivision loans
1,111,710
77,931
61,148
805,342
25,596
141,693
Other loans
452,012
110,395
9,963
219,075
48,806
63,773
Loans
$
12,613,967
$
3,077,589
$
439,055
$
6,592,122
$
631,389
$
1,873,812
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots
$
69,120
$
29,517
$
10,179
$
14,955
$
4,362
$
10,107
Development
130,166
55,946
1,366
36,602
7,465
28,787
Unimproved land
96,994
20,854
13,859
29,651
4,564
28,066
1-4 family construction
353,056
191,964
17,325
94,139
13,996
35,632
Other construction
1,073,321
519,512
12,116
220,142
—
321,551
Construction, land development and other land loans
$
1,722,657
$
817,793
$
54,845
$
395,489
$
30,387
$
424,143
(1) Includes Georgia Loan Production Office.
TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2023
($ in thousands)
(unaudited)
Note 3 – Loan Composition (continued)
June 30, 2023
Total
Alabama (1)
Florida
Mississippi (Central and Southern Regions)
Tennessee (Memphis, TN and Northern MS Regions)
Texas
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION
Non-owner occupied:
Retail
$
363,101
$
125,094
$
26,313
$
123,940
$
20,570
$
67,184
Office
275,841
102,162
16,822
86,818
2,152
67,887
Hotel/motel
298,632
167,641
50,344
53,705
26,942
—
Mini-storage
144,253
23,282
2,002
99,182
464
19,323
Industrial
375,366
89,226
18,416
103,343
9,976
154,405
Health care
70,788
41,098
—
26,846
338
2,506
Convenience stores
32,385
7,207
438
14,279
572
9,889
Nursing homes/senior living
471,414
174,609
—
201,391
5,249
90,165
Other
132,613
44,071
9,381
60,170
8,655
10,336
Total non-owner occupied loans
2,164,393
774,390
123,716
769,674
74,918
421,695
Owner-occupied:
Office
153,392
45,525
36,517
43,905
9,906
17,539
Churches
67,325
16,766
4,394
37,537
6,069
2,559
Industrial warehouses
164,540
16,056
4,571
41,402
17,487
85,024
Health care
146,007
10,420
6,141
108,638
2,305
18,503
Convenience stores
149,551
11,834
33,888
68,713
215
34,901
Retail
88,837
11,270
9,271
40,320
18,849
9,127
Restaurants
54,460
4,191
3,925
31,241
11,844
3,259
Auto dealerships
45,878
6,151
213
22,307
17,207
—
Nursing homes/senior living
301,226
44,709
—
230,317
—
26,200
Other
136,119
13,292
2,801
77,287
602
42,137
Total owner-occupied loans
1,307,335
180,214
101,721
701,667
84,484
239,249
Loans secured by nonfarm, nonresidential properties
$
3,471,728
$
954,604
$
225,437
$
1,471,341
$
159,402
$
660,944
(1) Includes Georgia Loan Production Office.
Note 4 – Yields on Earning Assets and Interest-Bearing Liabilities
The following table illustrates the yields on earning assets by category as well as the rates paid on interest-bearing liabilities on a tax equivalent basis:
Quarter Ended
Six Months Ended
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
6/30/2023
6/30/2022
Securities – taxable
1.87
%
1.85
%
1.71
%
1.62
%
1.50
%
1.86
%
1.44
%
Securities – nontaxable
4.25
%
4.00
%
3.95
%
3.97
%
4.00
%
4.10
%
3.98
%
Securities – total
1.87
%
1.86
%
1.72
%
1.63
%
1.50
%
1.87
%
1.44
%
PPP loans
—
—
12.39
%
7.51
%
4.16
%
—
3.04
%
Loans - LHFI & LHFS
6.08
%
5.79
%
5.27
%
4.48
%
3.79
%
5.94
%
3.69
%
Loans - total
6.08
%
5.79
%
5.27
%
4.48
%
3.79
%
5.94
%
3.69
%
Fed funds sold & reverse repurchases
5.51
%
5.11
%
4.29
%
3.51
%
3.65
%
5.35
%
2.43
%
Other earning assets
5.36
%
4.09
%
3.76
%
1.82
%
0.78
%
4.81
%
0.41
%
Total earning assets
5.16
%
4.87
%
4.40
%
3.71
%
3.01
%
5.02
%
2.85
%
Interest-bearing deposits
1.96
%
1.53
%
0.71
%
0.20
%
0.11
%
1.75
%
0.11
%
Fed funds purchased & repurchases
5.01
%
4.49
%
3.44
%
1.95
%
0.24
%
4.73
%
0.17
%
Other borrowings
5.12
%
4.87
%
3.73
%
2.89
%
2.52
%
5.01
%
2.39
%
Total interest-bearing liabilities
2.42
%
1.98
%
1.03
%
0.31
%
0.17
%
2.20
%
0.17
%
Total Deposits
1.48
%
1.13
%
0.51
%
0.14
%
0.07
%
1.31
%
0.07
%
Net interest margin
3.33
%
3.39
%
3.66
%
3.50
%
2.90
%
3.36
%
2.74
%
Net interest margin excluding PPP loans and the FRB balance
3.23
%
3.36
%
3.66
%
3.53
%
3.06
%
3.30
%
2.97
%
TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2023
($ in thousands)
(unaudited)
Note 4 – Yields on Earning Assets and Interest-Bearing Liabilities (continued)
Reflected in the table above are yields on earning assets and liabilities, along with the net interest margin which equals reported net interest income-FTE, annualized, as a percent of average earning assets. In addition, the table includes net interest margin excluding PPP loans and the balance held at the Federal Reserve Bank of Atlanta (FRB), which equals reported net interest income-FTE excluding interest income on PPP loans and the FRB balance, annualized, as a percent of average earning assets excluding average PPP loans and the FRB balance.
For the second quarter of 2023, the average FRB balance totaled $777.0 million compared to $555.5 million for the first 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 13 basis points when compared to the first quarter of 2023, totaling 3.23% for the second quarter of 2023. The decrease in the net interest margin excluding PPP loans and the FRB balance was due to increased costs of interest-bearing deposits, which was partially offset by increases in the yields on the loans held for investment and held for sale portfolio and the securities 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 $1.3 million during the second quarter of 2023.
The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements:
Quarter Ended
Six Months Ended
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
6/30/2023
6/30/2022
Mortgage servicing income, net
$
6,764
$
6,785
$
6,636
$
6,669
$
6,557
$
13,549
$
12,986
Change in fair value-MSR from runoff
(2,710
)
(1,145
)
(2,981
)
(3,462
)
(3,806
)
(3,855
)
(7,591
)
Gain on sales of loans, net
3,887
3,797
3,328
4,597
6,030
7,684
12,253
Mortgage banking income before hedge ineffectiveness
7,941
9,437
6,983
7,804
8,781
17,378
17,648
Change in fair value-MSR from market changes
5,898
(3,972
)
(3,348
)
10,770
8,739
1,926
30,759
Change in fair value of derivatives
(7,239
)
2,174
(227
)
(11,698
)
(9,371
)
(5,065
)
(30,385
)
Net positive (negative) hedge ineffectiveness
(1,341
)
(1,798
)
(3,575
)
(928
)
(632
)
(3,139
)
374
Mortgage banking, net
$
6,600
$
7,639
$
3,408
$
6,876
$
8,149
$
14,239
$
18,022
TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2023
($ in thousands)
(unaudited)
Note 6 – Other Noninterest Income and Expense
Other noninterest income consisted of the following for the periods presented:
Quarter Ended
Six Months Ended
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
6/30/2023
6/30/2022
Partnership amortization for tax credit purposes
$
(2,019
)
$
(1,961
)
$
(1,869
)
$
(1,531
)
$
(1,475
)
$
(3,980
)
$
(2,811
)
Increase in life insurance cash surrender value
1,716
1,693
1,687
1,676
1,683
3,409
3,310
Other miscellaneous income
3,998
2,782
2,493
2,273
1,699
6,780
4,614
Total other, net
$
3,695
$
2,514
$
2,311
$
2,418
$
1,907
$
6,209
$
5,113
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
Six Months Ended
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
6/30/2023
6/30/2022
Loan expense (1)
$
3,066
$
2,538
$
2,908
$
2,866
$
2,947
$
5,604
$
6,475
Amortization of intangibles
130
288
312
312
328
418
810
FDIC assessment expense
2,550
2,370
2,130
1,945
1,810
4,920
3,310
Other real estate expense, net
171
172
18
497
623
343
658
Other miscellaneous expense
8,585
9,443
9,767
8,117
7,782
18,028
15,717
Total other expense (1)
$
14,502
$
14,811
$
15,135
$
13,737
$
13,490
$
29,313
$
26,970
(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
June 30, 2023
($ in thousands except per share data)
(unaudited)
Note 7 – Non-GAAP Financial Measures (continued)
Quarter Ended
Six Months Ended
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
6/30/2023
6/30/2022
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity
$
1,580,291
$
1,523,828
$
1,493,291
$
1,606,469
$
1,608,309
$
1,552,215
$
1,660,739
Less: Goodwill
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
Identifiable intangible assets
(3,301
)
(3,523
)
(3,816
)
(4,131
)
(4,436
)
(3,411
)
(4,656
)
Total average tangible equity
$
1,192,753
$
1,136,068
$
1,105,238
$
1,218,101
$
1,219,636
$
1,164,567
$
1,271,846
PERIOD END BALANCES
Total shareholders' equity
$
1,571,193
$
1,562,099
$
1,492,268
$
1,508,945
$
1,586,696
Less: Goodwill
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
Identifiable intangible assets
(3,222
)
(3,352
)
(3,640
)
(3,952
)
(4,264
)
Total tangible equity
(a)
$
1,183,734
$
1,174,510
$
1,104,391
$
1,120,756
$
1,198,195
TANGIBLE ASSETS
Total assets
$
18,422,626
$
18,877,178
$
18,015,478
$
17,190,634
$
16,951,510
Less: Goodwill
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
Identifiable intangible assets
(3,222
)
(3,352
)
(3,640
)
(3,952
)
(4,264
)
Total tangible assets
(b)
$
18,035,167
$
18,489,589
$
17,627,601
$
16,802,445
$
16,563,009
Risk-weighted assets
(c)
$
14,966,614
$
14,793,893
$
14,521,078
$
13,748,819
$
13,076,981
NET INCOME (LOSS) ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income (loss)
$
45,037
$
50,300
$
(34,063
)
$
42,455
$
34,284
$
95,337
$
63,495
Plus: Intangible amortization net of tax
97
216
234
234
246
313
608
Net income (loss) adjusted for intangible amortization
$
45,134
$
50,516
$
(33,829
)
$
42,689
$
34,530
$
95,650
$
64,103
Period end common shares outstanding
(d)
61,069,036
61,048,516
60,977,686
60,953,864
61,201,123
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity (1)
15.18
%
18.03
%
-12.14
%
13.90
%
11.36
%
16.56
%
10.16
%
Tangible equity/tangible assets
(a)/(b)
6.56
%
6.35
%
6.27
%
6.67
%
7.23
%
Tangible equity/risk-weighted assets
(a)/(c)
7.91
%
7.94
%
7.61
%
8.15
%
9.16
%
Tangible book value
(a)/(d)*1,000
$
19.38
$
19.24
$
18.11
$
18.39
$
19.58
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity
$
1,571,193
$
1,562,099
$
1,492,268
$
1,508,945
$
1,586,696
CECL transition adjustment
13,000
13,000
19,500
19,500
19,500
AOCI-related adjustments
265,704
242,381
275,403
306,412
207,142
CET1 adjustments and deductions:
Goodwill net of associated deferred tax liabilities (DTLs)
(370,227
)
(370,234
)
(370,241
)
(370,217
)
(370,229
)
Other adjustments and deductions for CET1 (2)
(2,915
)
(3,275
)
(3,258
)
(3,506
)
(3,757
)
CET1 capital
(e)
1,476,755
1,443,971
1,413,672
1,461,134
1,439,352
Additional tier 1 capital instruments plus related surplus
60,000
60,000
60,000
60,000
60,000
Tier 1 capital
$
1,536,755
$
1,503,971
$
1,473,672
$
1,521,134
$
1,499,352
Common equity tier 1 capital ratio
(e)/(c)
9.87
%
9.76
%
9.74
%
10.63
%
11.01
%
(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
June 30, 2023
($ in thousands)
(unaudited)
Note 7 – Non-GAAP Financial Measures (continued)
Trustmark discloses certain non-GAAP financial measures because Management uses these measures for business planning purposes, including to manage Trustmark’s business against internal projected results of operations and to measure Trustmark’s performance. Trustmark views these as measures of our core operating business, which exclude the impact of the items detailed below, as these items are generally not operational in nature. These non-GAAP financial measures also provide another basis for comparing period-to-period results as presented in the accompanying selected financial data table and the audited consolidated financial statements by excluding potential differences caused by non-operational and unusual or non-recurring items. Readers are cautioned that these adjustments are not permitted under GAAP. Trustmark encourages readers to consider its consolidated financial statements and the notes related thereto in their entirety, and not to rely on any single financial measure.
The following table presents pre-provision net revenue (PPNR) during the periods presented:
Quarter Ended
Six Months Ended
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
6/30/2023
6/30/2022
Net interest income (GAAP)
$
139,904
$
137,595
$
146,583
$
136,105
$
112,676
$
277,499
$
212,020
Noninterest income (GAAP)
53,553
51,377
45,170
52,606
53,253
104,930
107,368
Pre-provision revenue
(a)
$
193,457
$
188,972
$
191,753
$
188,711
$
165,929
$
382,429
$
319,388
Noninterest expense (GAAP)
$
132,218
$
128,327
$
231,229
$
126,698
$
123,767
$
260,545
$
245,286
Less: Litigation settlement expense
—
—
(100,750
)
—
—
—
—
Adjusted noninterest expense - PPNR (Non-GAAP)
(b)
$
132,218
$
128,327
$
130,479
$
126,698
$
123,767
$
260,545
$
245,286
PPNR (Non-GAAP)
(a)-(b)
$
61,239
$
60,645
$
61,274
$
62,013
$
42,162
$
121,884
$
74,102
The following table presents Trustmark’s calculation of its efficiency ratio for the periods presented:
Quarter Ended
Six Months Ended
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
6/30/2023
6/30/2022
Total noninterest expense (GAAP)
$
132,218
$
128,327
$
231,229
$
126,698
$
123,767
$
260,545
$
245,286
Less: Other real estate expense, net
(171
)
(172
)
(18
)
(497
)
(623
)
(343
)
(658
)
Amortization of intangibles
(130
)
(288
)
(312
)
(312
)
(328
)
(418
)
(810
)
Charitable contributions resulting in state tax credits
(325
)
(325
)
(375
)
(375
)
(375
)
(650
)
(750
)
Litigation settlement expense
—
—
(100,750
)
—
—
—
—
Adjusted noninterest expense (Non-GAAP)
(c)
$
131,592
$
127,542
$
129,774
$
125,514
$
122,441
$
259,134
$
243,068
Net interest income (GAAP)
$
139,904
$
137,595
$
146,583
$
136,105
$
112,676
$
277,499
$
212,020
Add: Tax equivalent adjustment
3,383
3,477
3,451
2,975
2,916
6,860
5,919
Net interest income-FTE (Non-GAAP)
(a)
$
143,287
$
141,072
$
150,034
$
139,080
$
115,592
$
284,359
$
217,939
Noninterest income (GAAP)
$
53,553
$
51,377
$
45,170
$
52,606
$
53,253
$
104,930
$
107,368
Add: Partnership amortization for tax credit purposes
2,019
1,961
1,869
1,531
1,475
3,980
2,811
Adjusted noninterest income (Non-GAAP)
(b)
$
55,572
$
53,338
$
47,039
$
54,137
$
54,728
$
108,910
$
110,179
Adjusted revenue (Non-GAAP)
(a)+(b)
$
198,859
$
194,410
$
197,073
$
193,217
$
170,320
$
393,269
$
328,118
Efficiency ratio (Non-GAAP)
(c)/((a)+(b))
66.17
%
65.60
%
65.85
%
64.96
%
71.89
%
65.89
%
74.08
%
View source version on businesswire.com: https://www.businesswire.com/news/home/20230725007677/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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