Trustmark Corporation Announces Fourth Quarter and Fiscal Year 2022 Financial Results

Rhea-AI Summary

Trustmark Corporation (NASDAQGS:TRMK) reported a fourth-quarter loss of $34.1 million, or $0.56 per diluted share, attributable to a $100 million litigation settlement expense. Excluding this, fourth-quarter net income was $41.5 million, or $0.68 per diluted share. For 2022, net income totaled $71.9 million, or $1.17 per share, rising to $147.5 million, or $2.40 per share, when excluding litigation costs. Noteworthy achievements included a record $2 billion loan growth, strong credit quality, and increased net interest income of $507.1 million, up 17.9% year-over-year. A quarterly dividend of $0.23 per share was declared for March 15, 2023.

Positive

• Record loan growth of $2 billion, or 19.1%, in 2022.
• Increased net interest income of $507.1 million, up 17.9% in 2022.
• Net interest margin expanded to 3.17%, up 41 basis points from 2021.
• Insurance revenue increased by 10.7% in 2022.

Negative

• Litigation settlement expense of $100 million impacted net income.
• Loss of $34.1 million in Q4 2022 due to litigation costs.
• Mortgage loan production fell 23.1% linked-quarter and 33.9% year-over-year.

Record Loan Growth, Solid Credit Quality, Expanded Net Interest Margin

JACKSON, Miss.--(BUSINESS WIRE)-- Trustmark Corporation (NASDAQGS:TRMK) reported a loss of $34.1 million, or $0.56 per diluted share, in the fourth quarter of 2022. As previously disclosed, Trustmark agreed to a settlement that, pending court approval, will resolve all current and potential future claims relating to litigation involving the Stanford Financial Group that began in 2009. In the fourth quarter, Trustmark recognized litigation settlement expense of $100.0 million as well as an additional $750 thousand in legal fees, which are included in noninterest expense. The litigation settlement expense reduced fourth quarter net income by $75.6 million, or $1.24 per diluted share. Excluding this expense, Trustmark’s fourth quarter net income totaled $41.5 million, or $0.68 per diluted share. For the full year, Trustmark’s net income totaled $71.9 million, representing diluted earnings per share of $1.17. Excluding the litigation settlement expense, Trustmark’s net income in 2022 totaled $147.5 million, representing diluted earnings per share of $2.40. Please refer to the Consolidated Financial Information, Note 1 – Litigation Settlement and Note 7 – Non-GAAP Financial Measures. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable March 15, 2023, to shareholders of record on March 1, 2023.

Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/53289378/en

2022 Highlights

• Loans held for investment (HFI) increased $2.0 billion, or 19.1%, in 2022
• Nonperforming assets declined to 0.55% of loans HFI and held for sale (HFS)
• Net charge-offs represented 0.01% of average loans in 2022
• Net interest income FTE totaled $507.1 million, up 17.9% in 2022 to produce a net interest margin of 3.17%, up 41 basis points from 2021
• Insurance revenue increased 10.7% in 2022 while wealth management remained stable
• Noninterest income totaled $205.1 million and represented 29.3% of total revenue
• Noninterest expense, excluding litigation settlement expense, totaled $502.5 million, up 2.7% from the prior year
• Expanded market optimization efforts with a net reduction of 11 branch offices during the year
• Continued technology investments to enhance efficiency and productivity

Duane A. Dewey, President and CEO, commented, “We made significant progress across the organization during the year. Loan growth in 2022 was the highest in Trustmark’s history. Credit quality remained strong. Net interest income and the net interest margin were up significantly. Our insurance business posted another record year. We made significant investments in technology, including conversion to a state-of-the-art loan system designed to enhance efficiency and productivity. With all of these positive advancements, our financial results were overshadowed by the litigation settlement. While we expressly deny any liability or wrongdoing with respect to this matter, we believe the settlement is in the best interest of Trustmark and our shareholders as it eliminates risk, ongoing expense and uncertainty. With this matter now behind us, we will focus more intently on the future and the opportunities that are ahead. Trustmark is very well-positioned to serve and expand its customer base and create long-term value for shareholders.”

Balance Sheet Management

• Loans HFI increased $618.0 million, or 5.3%, during the quarter
• Investment securities decreased $82.9 million, or 2.3%, linked-quarter as liquidity from maturing security balances was deployed to fund loan growth
• Total deposits increased $12.5 million, or 0.1%, linked-quarter
• Maintained strong capital position with CET1 ratio of 9.74% and total risk-based capital ratio of 11.91%

Loans HFI totaled $12.2 billion at December 31, 2022, reflecting an increase of $618.0 million, or 5.3%, linked-quarter and $2.0 billion, or 19.1%, year-over-year. The linked-quarter growth was broad-based and reflected increases in virtually every category. Trustmark’s loan portfolio remains well-diversified by loan type and geography.

As previously disclosed in the third quarter of 2022, Trustmark initiated a cash flow hedging program under which interest rate swaps convert floating rate loans to fixed rate. The intent of the program is to manage the natural asset sensitivity of Trustmark’s balance sheet. As of December 31, 2022, notional balances totaled $825.0 million with a weighted average receive fixed rate of 3.10%.

Deposits totaled $14.4 billion at December 31, 2022, up $12.5 million, or 0.1%, from the prior quarter and down $649.5 million, or 4.3%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 84.5% of total deposits at year end 2022. Noninterest-bearing deposits represented 28.4% of total deposits at December 31, 2022. Interest-bearing deposit costs totaled 0.71% for the fourth quarter, an increase of 51 basis points linked-quarter. The total cost of interest-bearing liabilities was 1.03% for the fourth quarter of 2022, an increase of 72 basis points from the prior quarter.

During the fourth quarter, Trustmark did not repurchase any of its common shares. During the twelve months ended December 31, 2022, Trustmark repurchased $24.6 million, or approximately 789 thousand of its common shares. 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. 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, 2022, Trustmark’s tangible equity to tangible assets ratio was 6.27%, while the total risk-based capital ratio was 11.91%. Tangible book value per share was $18.11 at December 31, 2022, down 1.5% from the prior quarter.

Credit Quality

• Allowance for credit losses (ACL) represented 0.99% of loans HFI and 399.19% of nonperforming loans, excluding individually analyzed loans at year-end
• Net charge-offs totaled 0.06% of average loans in the fourth quarter

Nonaccrual loans totaled $66.0 million at December 31, 2022, a decrease of $2.0 million from the prior quarter and an increase of $3.3 million year-over-year. Other real estate totaled $2.0 million, reflecting a $985 thousand decrease from the prior quarter and a $2.6 million decline from the prior year. Collectively, nonperforming assets totaled $68.0 million, reflecting a linked-quarter decrease of 4.1% and year-over-year increase of 1.0%.

The provision for credit losses for loans HFI was $6.9 million in the fourth quarter primarily attributable to loan growth and the weakening in the macroeconomic forecast. The provision for credit losses for off-balance sheet credit exposures was $5.2 million in the fourth quarter, primarily driven by increases in unfunded commitments and the macroeconomic forecast. Collectively, the provision for credit losses totaled $12.1 million in the fourth quarter compared to $11.6 million in the prior quarter and a negative $1.6 million in the fourth quarter of 2021.

Allocation of Trustmark’s $120.2 million ACL on loans HFI represented 0.85% of commercial loans and 1.41% of consumer and home mortgage loans, resulting in an ACL to total loans HFI of 0.99% at December 31, 2022. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.

Revenue Generation

• Net interest income (FTE) totaled $150.0 million in the fourth quarter, up 7.9% linked-quarter
• Net interest margin expanded 16 basis points to 3.66% in the fourth quarter

Revenue in the fourth quarter totaled $191.8 million, an increase of 1.6% from the prior quarter and 28.6% from the same quarter in the prior year. The linked-quarter increase primarily reflects higher net interest income offset by lower noninterest income while the year-over-year growth is attributed to higher net interest income offset in part by reduced mortgage banking revenue. In 2022, revenue totaled $699.9 million, an increase of 9.3% from the prior year.

Net interest income (FTE) in the fourth quarter totaled $150.0 million, resulting in a net interest margin of 3.66%, up 16 basis points from the prior quarter. The expansion of the net interest margin was due to increases in the yields on the loans HFI and HFS portfolio and the securities portfolio and was partially offset by costs of interest-bearing liabilities, which resulted from the higher interest rate environment.

Noninterest income in the fourth quarter totaled $45.2 million, a decrease of $7.4 million from the prior quarter and $5.6 million from the prior year. The linked-quarter change reflects a decline in mortgage banking revenue, a seasonal decline in insurance revenue, as well as lower bank card and other fees and wealth management revenue. The decrease in noninterest income year-over-year is principally due to lower mortgage banking revenue.

Mortgage loan production in the fourth quarter totaled $390.8 million, a decline of 23.1% linked-quarter and 33.9% year-over-year. Mortgage banking revenue totaled $3.4 million in the fourth quarter, a decrease of $3.5 million from the prior quarter and $8.2 million year-over-year. The linked-quarter decline is attributable to an increase in net negative hedge ineffectiveness as well as volume-related lower gains on sales of mortgage loans in the secondary market. In 2022, mortgage loan production totaled $2.1 billion, down 24.2% from the prior year. Mortgage banking revenue totaled $28.3 million in 2022, compared to $63.8 million in the prior year.

Insurance revenue in the fourth quarter totaled $12.0 million, a seasonal decline of $1.9 million from the prior quarter and an increase of $303 thousand from the prior year. Insurance revenue in 2022 totaled $53.7 million, up $5.2 million, or 10.7%, 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 $8.1 million in the fourth quarter, down 8.0% from the prior quarter and 7.7% from the prior year. The linked-quarter decline is principally due to reduced investment services and trust management revenue while the year-over-year change is attributable to reduced brokerage and trust management revenue. In 2022, wealth management revenue totaled $35.0 million, in line with the prior year. During 2022, Trustmark selectively expanded its salesforce in Birmingham, Jackson and the Florida Panhandle as well as expanded business development efforts in new markets.

Noninterest Expense

• Total noninterest expense in the fourth quarter was $231.2 million; excluding litigation settlement expense of $100.8 million, noninterest expense was $130.5 million, up $3.8 million, or 3.0%, from the prior quarter. Please refer to the Consolidated Financial Information, Note 7 – Non-GAAP Financial Measures.

Salaries and employee benefits expense in the fourth quarter totaled $73.5 million, up $762 thousand, or 1.0%, from the prior quarter principally due to one-time severance expense related to the FIT2GROW initiative. Total services and fees increased $964 thousand during the fourth quarter principally due to continued investments in technology and higher professional fees. Net occupancy – premises expense increased $503 thousand during the fourth quarter principally due to early lease termination expenses related to closed branch offices. Other expense increased $1.4 million during the fourth quarter reflecting in part write-downs associated with branch offices that were closed during the quarter.

FIT2GROW

“In 2022 we announced FIT2GROW, a comprehensive program of Focus, Innovation and Transformation designed to enhance Trustmark’s ability to grow and serve customers. Earlier this month, we refocused our community bank efforts on commercial, small business, and consumer lines of business to provide additional expertise for our customers and enhance profitable revenue growth. Additionally, our Atlanta loan production office is now fully functioning and is focused on Commercial Real Estate, Residential Real Estate, Corporate Banking, and Equipment Finance,” said Dewey.

“We continued efforts to optimize our branch network, reflecting changing customer preferences and the continued migration to mobile and digital channels. In 2022, we consolidated 12 branch offices, opened a full-service banking center as well as loan production offices in Birmingham, AL, and Memphis, TN. We also expanded deployment of myTeller interactive teller machine technology. These efforts are designed to efficiently serve and expand customer relationships,” said Dewey.

“Innovation is also a key component of FIT2GROW. In 2022, we successfully completed our core loan system conversion and selected the replacement for our core deposit system. Collectively, these investments are designed to provide best-in-class service to customers as well as enhance our productivity and efficiency. 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,” said Dewey.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, January 25, 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, February 8, 2023, in archived format at the same web address or by calling (877) 344-7529, passcode 3725903.

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. Furthermore, many of these risks and uncertainties are currently amplified by and may continue to be amplified by or may, in the future, be amplified by, the novel coronavirus (COVID-19) pandemic, and also by the effectiveness of varying governmental responses in ameliorating the impact of the pandemic on our customers and the economies where they operate.

Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels and slowdowns in economic growth, our ability to manage the impact of the COVID-19 pandemic on our markets, as well as the effectiveness of actions of federal, state and local governments and agencies (including the Board of Governors of the Federal Reserve System (FRB)) to mitigate its spread and economic impact, local, state and national economic and market conditions, conditions in the housing and real estate markets in the regions in which Trustmark operates and the extent and duration of the current volatility in the credit and financial markets, levels of and volatility in crude oil prices, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility of market interest rates, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, including the potential impact of recent heightened levels of inflation and the reactions of the FRB and other governmental departments and agencies in response thereto, 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, 2022
($ in thousands)
(unaudited)
													Linked Quarter							Year over Year
QUARTERLY AVERAGE BALANCES	12/31/2022				9/30/2022				12/31/2021				$ Change				% Change			$ Change				% Change
Securities AFS-taxable (1)	$	2,572,675			$	2,824,254			$	3,156,740			$	(251,579	)		-8.9	%		$	(584,065	)		-18.5	%
Securities AFS-nontaxable		4,828				4,928				5,143				(100	)		-2.0	%			(315	)		-6.1	%
Securities HTM-taxable (1)		1,268,952				1,140,685				364,038				128,267			11.2	%			904,914			n/m
Securities HTM-nontaxable		4,514				5,057				7,618				(543	)		-10.7	%			(3,104	)		-40.7	%
Total securities		3,850,969				3,974,924				3,533,539				(123,955	)		-3.1	%			317,430			9.0	%
Paycheck protection program loans (PPP)		3,235				9,821				42,749				(6,586	)		-67.1	%			(39,514	)		-92.4	%
Loans (includes loans held for sale)		12,006,661				11,459,551				10,487,679				547,110			4.8	%			1,518,982			14.5	%
Fed funds sold and reverse repurchases		6,566				226				58				6,340			n/m				6,508			n/m
Other earning assets		375,190				325,620				1,839,498				49,570			15.2	%			(1,464,308	)		-79.6	%
Total earning assets		16,242,621				15,770,142				15,903,523				472,479			3.0	%			339,098			2.1	%
Allowance for credit losses (ACL), loans held for investment (LHFI)		(114,948	)			(102,951	)			(104,148	)			(11,997	)		-11.7	%			(10,800	)		-10.4	%
Other assets		1,630,085				1,576,653				1,570,501				53,432			3.4	%			59,584			3.8	%
Total assets	$	17,757,758			$	17,243,844			$	17,369,876			$	513,914			3.0	%		$	387,882			2.2	%
Interest-bearing demand deposits	$	4,719,303			$	4,613,733			$	4,353,599			$	105,570			2.3	%		$	365,704			8.4	%
Savings deposits		4,379,673				4,514,579				4,585,624				(134,906	)		-3.0	%			(205,951	)		-4.5	%
Time deposits		1,152,905				1,111,440				1,220,083				41,465			3.7	%			(67,178	)		-5.5	%
Total interest-bearing deposits		10,251,881				10,239,752				10,159,306				12,129			0.1	%			92,575			0.9	%
Fed funds purchased and repurchases		549,406				249,809				201,856				299,597			n/m				347,550			n/m
Other borrowings		530,993				88,697				94,328				442,296			n/m				436,665			n/m
Subordinated notes		123,226				123,171				123,007				55			0.0	%			219			0.2	%
Junior subordinated debt securities		61,856				61,856				61,856				—			0.0	%			—			0.0	%
Total interest-bearing liabilities		11,517,362				10,763,285				10,640,353				754,077			7.0	%			877,009			8.2	%
Noninterest-bearing deposits		4,177,113				4,444,370				4,679,951				(267,257	)		-6.0	%			(502,838	)		-10.7	%
Other liabilities		569,992				429,720				291,449				140,272			32.6	%			278,543			95.6	%
Total liabilities		16,264,467				15,637,375				15,611,753				627,092			4.0	%			652,714			4.2	%
Shareholders' equity		1,493,291				1,606,469				1,758,123				(113,178	)		-7.0	%			(264,832	)		-15.1	%
Total liabilities and equity	$	17,757,758			$	17,243,844			$	17,369,876			$	513,914			3.0	%		$	387,882			2.2	%

(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
December 31, 2022
($ in thousands)
(unaudited)
													Linked Quarter							Year over Year
PERIOD END BALANCES	12/31/2022				9/30/2022				12/31/2021				$ Change				% Change			$ Change				% Change
Cash and due from banks	$	734,787			$	479,637			$	2,266,829			$	255,150			53.2	%		$	(1,532,042	)		-67.6	%
Fed funds sold and reverse repurchases		4,000				10,098				—				(6,098	)		-60.4	%			4,000			n/m
Securities available for sale (1)		2,024,082				2,444,486				3,238,877				(420,404	)		-17.2	%			(1,214,795	)		-37.5	%
Securities held to maturity (1)		1,494,514				1,156,985				342,537				337,529			29.2	%			1,151,977			n/m
PPP loans		—				4,798				33,336				(4,798	)		-100.0	%			(33,336	)		-100.0	%
Loans held for sale (LHFS)		135,226				165,213				275,706				(29,987	)		-18.2	%			(140,480	)		-51.0	%
Loans held for investment (LHFI)		12,204,039				11,586,064				10,247,829				617,975			5.3	%			1,956,210			19.1	%
ACL LHFI		(120,214	)			(115,050	)			(99,457	)			(5,164	)		-4.5	%			(20,757	)		-20.9	%
Net LHFI		12,083,825				11,471,014				10,148,372				612,811			5.3	%			1,935,453			19.1	%
Premises and equipment, net		212,365				210,761				205,644				1,604			0.8	%			6,721			3.3	%
Mortgage servicing rights		129,677				132,615				87,687				(2,938	)		-2.2	%			41,990			47.9	%
Goodwill		384,237				384,237				384,237				—			0.0	%			—			0.0	%
Identifiable intangible assets		3,640				3,952				5,074				(312	)		-7.9	%			(1,434	)		-28.3	%
Other real estate		1,986				2,971				4,557				(985	)		-33.2	%			(2,571	)		-56.4	%
Operating lease right-of-use assets		36,301				37,282				34,603				(981	)		-2.6	%			1,698			4.9	%
Other assets		770,838				686,585				568,177				84,253			12.3	%			202,661			35.7	%
Total assets	$	18,015,478			$	17,190,634			$	17,595,636			$	824,844			4.8	%		$	419,842			2.4	%
Deposits:
Noninterest-bearing	$	4,093,771			$	4,358,805			$	4,771,065			$	(265,034	)		-6.1	%		$	(677,294	)		-14.2	%
Interest-bearing		10,343,877				10,066,375				10,316,095				277,502			2.8	%			27,782			0.3	%
Total deposits		14,437,648				14,425,180				15,087,160				12,468			0.1	%			(649,512	)		-4.3	%
Fed funds purchased and repurchases		449,331				544,068				238,577				(94,737	)		-17.4	%			210,754			88.3	%
Other borrowings		1,050,938				223,172				91,025				827,766			n/m				959,913			n/m
Subordinated notes		123,262				123,207				123,042				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		36,838				31,623				35,623				5,215			16.5	%			1,215			3.4	%
Operating lease liabilities		38,932				39,797				36,468				(865	)		-2.2	%			2,464			6.8	%
Other liabilities		324,405				232,786				180,574				91,619			39.4	%			143,831			79.7	%
Total liabilities		16,523,210				15,681,689				15,854,325				841,521			5.4	%			668,885			4.2	%
Common stock		12,705				12,700				12,845				5			0.0	%			(140	)		-1.1	%
Capital surplus		154,645				154,150				175,913				495			0.3	%			(21,268	)		-12.1	%
Retained earnings		1,600,321				1,648,507				1,585,113				(48,186	)		-2.9	%			15,208			1.0	%
Accumulated other comprehensive income (loss), net of tax		(275,403	)			(306,412	)			(32,560	)			31,009			10.1	%			(242,843	)		n/m
Total shareholders' equity		1,492,268				1,508,945				1,741,311				(16,677	)		-1.1	%			(249,043	)		-14.3	%
Total liabilities and equity	$	18,015,478			$	17,190,634			$	17,595,636			$	824,844			4.8	%		$	419,842			2.4	%

(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
December 31, 2022
($ in thousands except per share data)
(unaudited)
	Quarter Ended												Linked Quarter							Year over Year
INCOME STATEMENTS	12/31/2022				9/30/2022				12/31/2021				$ Change				% Change			$ Change				% Change
Interest and fees on LHFS & LHFI-FTE	$	159,566			$	129,395			$	94,137			$	30,171			23.3	%		$	65,429			69.5	%
Interest and fees on PPP loans		101				186				397				(85	)		-45.7	%			(296	)		-74.6	%
Interest on securities-taxable		16,577				16,222				10,796				355			2.2	%			5,781			53.5	%
Interest on securities-tax exempt-FTE		93				100				123				(7	)		-7.0	%			(30	)		-24.4	%
Interest on fed funds sold and reverse repurchases		71				2				—				69			n/m				71			n/m
Other interest income		3,556				1,493				826				2,063			n/m				2,730			n/m
Total interest income-FTE		179,964				147,398				106,279				32,566			22.1	%			73,685			69.3	%
Interest on deposits		18,438				5,097				3,401				13,341			n/m				15,037			n/m
Interest on fed funds purchased and repurchases		4,762				1,225				66				3,537			n/m				4,696			n/m
Other interest expense		6,730				1,996				1,580				4,734			n/m				5,150			n/m
Total interest expense		29,930				8,318				5,047				21,612			n/m				24,883			n/m
Net interest income-FTE		150,034				139,080				101,232				10,954			7.9	%			48,802			48.2	%
Provision for credit losses, LHFI		6,902				12,919				(4,515	)			(6,017	)		-46.6	%			11,417			n/m
Provision for credit losses, off-balance sheet credit exposures		5,215				(1,326	)			2,939				6,541			n/m				2,276			77.4	%
Net interest income after provision-FTE		137,917				127,487				102,808				10,430			8.2	%			35,109			34.2	%
Service charges on deposit accounts		11,162				11,318				9,366				(156	)		-1.4	%			1,796			19.2	%
Bank card and other fees		8,191				9,305				8,340				(1,114	)		-12.0	%			(149	)		-1.8	%
Mortgage banking, net		3,408				6,876				11,609				(3,468	)		-50.4	%			(8,201	)		-70.6	%
Insurance commissions		12,019				13,911				11,716				(1,892	)		-13.6	%			303			2.6	%
Wealth management		8,079				8,778				8,757				(699	)		-8.0	%			(678	)		-7.7	%
Other, net		2,311				2,418				979				(107	)		-4.4	%			1,332			n/m
Total noninterest income		45,170				52,606				50,767				(7,436	)		-14.1	%			(5,597	)		-11.0	%
Salaries and employee benefits		73,469				72,707				68,258				762			1.0	%			5,211			7.6	%
Services and fees		26,759				25,795				22,904				964			3.7	%			3,855			16.8	%
Net occupancy-premises		7,898				7,395				6,816				503			6.8	%			1,082			15.9	%
Equipment expense		6,268				6,072				6,585				196			3.2	%			(317	)		-4.8	%
Litigation settlement expense (1)		100,750				—				—				100,750			n/m				100,750			n/m
Other expense		16,085				14,729				14,906				1,356			9.2	%			1,179			7.9	%
Total noninterest expense		231,229				126,698				119,469				104,531			82.5	%			111,760			93.5	%
Income (loss) before income taxes and tax eq adj		(48,142	)			53,395				34,106				(101,537	)		n/m				(82,248	)		n/m
Tax equivalent adjustment		3,451				2,975				2,906				476			16.0	%			545			18.8	%
Income (loss) before income taxes		(51,593	)			50,420				31,200				(102,013	)		n/m				(82,793	)		n/m
Income taxes		(17,530	)			7,965				4,978				(25,495	)		n/m				(22,508	)		n/m
Net income (loss)	$	(34,063	)		$	42,455			$	26,222			$	(76,518	)		n/m			$	(60,285	)		n/m
Per share data
Earnings (loss) per share - basic	$	(0.56	)		$	0.69			$	0.42			$	(1.25	)		n/m			$	(0.98	)		n/m
Earnings (loss) per share - diluted	$	(0.56	)		$	0.69			$	0.42			$	(1.25	)		n/m			$	(0.98	)		n/m
Dividends per share	$	0.23			$	0.23			$	0.23				—			0.0	%			—			0.0	%
Weighted average shares outstanding
Basic		60,969,400				61,114,804				62,037,884
Diluted		61,173,249				61,318,715				62,264,983
Period end shares outstanding		60,977,686				60,953,864				61,648,679

(1)	See Note 1 - Litigation Settlement 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
December 31, 2022
($ in thousands)
(unaudited)
	Quarter Ended												Linked Quarter							Year over Year
NONPERFORMING ASSETS (1)	12/31/2022				9/30/2022				12/31/2021				$ Change				% Change			$ Change				% Change
Nonaccrual LHFI
Alabama	$	12,300			$	12,710			$	8,182			$	(410	)		-3.2	%		$	4,118			50.3	%
Florida		227				227				313				—			0.0	%			(86	)		-27.5	%
Mississippi (2)		24,683				23,517				21,636				1,166			5.0	%			3,047			14.1	%
Tennessee (3)		5,566				5,120				10,501				446			8.7	%			(4,935	)		-47.0	%
Texas		23,196				26,353				22,066				(3,157	)		-12.0	%			1,130			5.1	%
Total nonaccrual LHFI		65,972				67,927				62,698				(1,955	)		-2.9	%			3,274			5.2	%
Other real estate
Alabama		194				217				—				(23	)		-10.6	%			194			n/m
Mississippi (2)		1,769				2,754				4,557				(985	)		-35.8	%			(2,788	)		-61.2	%
Tennessee (3)		23				—				—				23			n/m				23			n/m
Total other real estate		1,986				2,971				4,557				(985	)		-33.2	%			(2,571	)		-56.4	%
Total nonperforming assets	$	67,958			$	70,898			$	67,255			$	(2,940	)		-4.1	%		$	703			1.0	%
LOANS PAST DUE OVER 90 DAYS (1)
LHFI	$	3,929			$	1,842			$	2,114			$	2,087			n/m			$	1,815			85.9	%
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	49,320			$	48,313			$	69,894			$	1,007			2.1	%		$	(20,574	)		-29.4	%
	Quarter Ended												Linked Quarter							Year over Year
ACL LHFI (1)	12/31/2022				9/30/2022				12/31/2021				$ Change				% Change			$ Change				% Change
Beginning Balance	$	115,050			$	103,140			$	104,073			$	11,910			11.5	%		$	10,977			10.5	%
Provision for credit losses, LHFI		6,902				12,919				(4,515	)			(6,017	)		-46.6	%			11,417			n/m
Charge-offs		(3,893	)			(2,920	)			(2,616	)			(973	)		-33.3	%			(1,277	)		-48.8	%
Recoveries		2,155				1,911				2,515				244			12.8	%			(360	)		-14.3	%
Net (charge-offs) recoveries		(1,738	)			(1,009	)			(101	)			(729	)		72.2	%			(1,637	)		n/m
Ending Balance	$	120,214			$	115,050			$	99,457			$	5,164			4.5	%		$	20,757			20.9	%
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama	$	98			$	93			$	747			$	5			5.4	%		$	(649	)		-86.9	%
Florida		(60	)			(23	)			(32	)			(37	)		n/m				(28	)		-87.5	%
Mississippi (2)		(1,657	)			(702	)			(683	)			(955	)		n/m				(974	)		n/m
Tennessee (3)		(195	)			(202	)			(130	)			7			3.5	%			(65	)		-50.0	%
Texas		76				(175	)			(3	)			251			n/m				79			n/m
Total net (charge-offs) recoveries	$	(1,738	)		$	(1,009	)		$	(101	)		$	(729	)		-72.2	%		$	(1,637	)		n/m

(1)	Excludes PPP loans.
(2)	Mississippi includes Central and Southern Mississippi Regions.
(3)	Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2022
($ in thousands)
(unaudited)
		Quarter Ended																				Year Ended
AVERAGE BALANCES		12/31/2022				9/30/2022				6/30/2022				3/31/2022				12/31/2021				12/31/2022				12/31/2021
Securities AFS-taxable (1)		$	2,572,675			$	2,824,254			$	3,094,364			$	3,245,502			$	3,156,740			$	2,932,054			$	2,573,533
Securities AFS-nontaxable			4,828				4,928				5,110				5,127				5,143				4,997				5,166
Securities HTM-taxable (1)			1,268,952				1,140,685				811,599				410,851				364,038				911,010				423,763
Securities HTM-nontaxable			4,514				5,057				5,630				7,327				7,618				5,623				12,765
Total securities			3,850,969				3,974,924				3,916,703				3,668,807				3,533,539				3,853,684				3,015,227
PPP loans			3,235				9,821				17,746				29,009				42,749				14,868				350,668
Loans (includes loans held for sale)			12,006,661				11,459,551				10,910,178				10,550,712				10,487,679				11,236,388				10,377,941
Fed funds sold and reverse repurchases			6,566				226				110				56				58				1,753				79
Other earning assets			375,190				325,620				1,139,312				1,811,713				1,839,498				907,414				1,825,134
Total earning assets			16,242,621				15,770,142				15,984,049				16,060,297				15,903,523				16,014,107				15,569,049
ACL LHFI			(114,948	)			(102,951	)			(99,106	)			(99,390	)			(104,148	)			(104,138	)			(110,170	)
Other assets			1,630,085				1,576,653				1,513,127				1,550,848				1,570,501				1,567,921				1,599,114
Total assets		$	17,757,758			$	17,243,844			$	17,398,070			$	17,511,755			$	17,369,876			$	17,477,890			$	17,057,993
Interest-bearing demand deposits		$	4,719,303			$	4,613,733			$	4,578,235			$	4,429,056			$	4,353,599			$	4,585,955			$	4,096,746
Savings deposits			4,379,673				4,514,579				4,638,849				4,791,104				4,585,624				4,579,742				4,622,167
Time deposits			1,152,905				1,111,440				1,159,065				1,193,435				1,220,083				1,153,983				1,287,663
Total interest-bearing deposits			10,251,881				10,239,752				10,376,149				10,413,595				10,159,306				10,319,680				10,006,576
Fed funds purchased and repurchases			549,406				249,809				118,753				212,006				201,856				283,328				172,782
Other borrowings			530,993				88,697				80,283				91,090				94,328				198,672				125,554
Subordinated notes			123,226				123,171				123,116				123,061				123,007				123,144				122,933
Junior subordinated debt securities			61,856				61,856				61,856				61,856				61,856				61,856				61,856
Total interest-bearing liabilities			11,517,362				10,763,285				10,760,157				10,901,608				10,640,353				10,986,680				10,489,701
Noninterest-bearing deposits			4,177,113				4,444,370				4,590,338				4,601,108				4,679,951				4,452,046				4,531,642
Other liabilities			569,992				429,720				439,266				295,287				291,449				434,310				266,499
Total liabilities			16,264,467				15,637,375				15,789,761				15,798,003				15,611,753				15,873,036				15,287,842
Shareholders' equity			1,493,291				1,606,469				1,608,309				1,713,752				1,758,123				1,604,854				1,770,151
Total liabilities and equity		$	17,757,758			$	17,243,844			$	17,398,070			$	17,511,755			$	17,369,876			$	17,477,890			$	17,057,993

(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
December 31, 2022
($ in thousands)
(unaudited)
PERIOD END BALANCES		12/31/2022				9/30/2022				6/30/2022				3/31/2022				12/31/2021
Cash and due from banks		$	734,787			$	479,637			$	742,461			$	1,917,564			$	2,266,829
Fed funds sold and reverse repurchases			4,000				10,098				—				—				—
Securities available for sale (1)			2,024,082				2,444,486				2,644,364				3,018,246				3,238,877
Securities held to maturity (1)			1,494,514				1,156,985				1,137,754				607,598				342,537
PPP loans			—				4,798				12,549				18,579				33,336
LHFS			135,226				165,213				190,186				222,538				275,706
LHFI			12,204,039				11,586,064				10,944,840				10,397,129				10,247,829
ACL LHFI			(120,214	)			(115,050	)			(103,140	)			(98,734	)			(99,457	)
Net LHFI			12,083,825				11,471,014				10,841,700				10,298,395				10,148,372
Premises and equipment, net			212,365				210,761				207,914				207,301				205,644
Mortgage servicing rights			129,677				132,615				121,014				111,050				87,687
Goodwill			384,237				384,237				384,237				384,237				384,237
Identifiable intangible assets			3,640				3,952				4,264				4,591				5,074
Other real estate			1,986				2,971				3,034				3,187				4,557
Operating lease right-of-use assets			36,301				37,282				34,684				34,048				34,603
Other assets			770,838				686,585				627,349				614,217				568,177
Total assets		$	18,015,478			$	17,190,634			$	16,951,510			$	17,441,551			$	17,595,636
Deposits:
Noninterest-bearing		$	4,093,771			$	4,358,805			$	4,509,472			$	4,739,102			$	4,771,065
Interest-bearing			10,343,877				10,066,375				10,260,696				10,374,190				10,316,095
Total deposits			14,437,648				14,425,180				14,770,168				15,113,292				15,087,160
Fed funds purchased and repurchases			449,331				544,068				70,157				170,499				238,577
Other borrowings			1,050,938				223,172				72,553				84,644				91,025
Subordinated notes			123,262				123,207				123,152				123,097				123,042
Junior subordinated debt securities			61,856				61,856				61,856				61,856				61,856
ACL on off-balance sheet credit exposures			36,838				31,623				32,949				34,517				35,623
Operating lease liabilities			38,932				39,797				37,108				35,912				36,468
Other liabilities			324,405				232,786				196,871				186,352				180,574
Total liabilities			16,523,210				15,681,689				15,364,814				15,810,169				15,854,325
Common stock			12,705				12,700				12,752				12,806				12,845
Capital surplus			154,645				154,150				160,876				167,094				175,913
Retained earnings			1,600,321				1,648,507				1,620,210				1,600,138				1,585,113
Accumulated other comprehensive income (loss), net of tax			(275,403	)			(306,412	)			(207,142	)			(148,656	)			(32,560	)
Total shareholders' equity			1,492,268				1,508,945				1,586,696				1,631,382				1,741,311
Total liabilities and equity		$	18,015,478			$	17,190,634			$	16,951,510			$	17,441,551			$	17,595,636

(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 December 31, 2022
($ in thousands except per share data)
(unaudited)
		Quarter Ended																				Year Ended
INCOME STATEMENTS		12/31/2022				9/30/2022				6/30/2022				3/31/2022				12/31/2021				12/31/2022			12/31/2021
Interest and fees on LHFS & LHFI-FTE		$	159,566			$	129,395			$	103,033			$	93,252			$	94,137			$	485,246		$	375,330
Interest and fees on PPP loans			101				186				184				168				397				639			36,726
Interest on securities-taxable			16,577				16,222				14,561				12,357				10,796				59,717			38,698
Interest on securities-tax exempt-FTE			93				100				107				122				123				422			694
Interest on fed funds sold and reverse repurchases			71				2				1				—				—				74			—
Other interest income			3,556				1,493				2,214				817				826				8,080			2,767
Total interest income-FTE			179,964				147,398				120,100				106,716				106,279				554,178			454,215
Interest on deposits			18,438				5,097				2,774				2,760				3,401				29,069			16,945
Interest on fed funds purchased and repurchases			4,762				1,225				70				70				66				6,127			232
Other interest expense			6,730				1,996				1,664				1,539				1,580				11,929			6,983
Total interest expense			29,930				8,318				4,508				4,369				5,047				47,125			24,160
Net interest income-FTE			150,034				139,080				115,592				102,347				101,232				507,053			430,055
Provision for credit losses, LHFI			6,902				12,919				2,716				(860	)			(4,515	)			21,677			(21,499	)
Provision for credit losses, off-balance sheet credit exposures			5,215				(1,326	)			(1,568	)			(1,106	)			2,939				1,215			(2,949	)
Net interest income after provision-FTE			137,917				127,487				114,444				104,313				102,808				484,161			454,503
Service charges on deposit accounts			11,162				11,318				10,226				9,451				9,366				42,157			33,246
Bank card and other fees			8,191				9,305				10,167				8,442				8,340				36,105			34,662
Mortgage banking, net			3,408				6,876				8,149				9,873				11,609				28,306			63,750
Insurance commissions			12,019				13,911				13,702				14,089				11,716				53,721			48,511
Wealth management			8,079				8,778				9,102				9,054				8,757				35,013			35,190
Other, net			2,311				2,418				1,907				3,206				979				9,842			6,551
Total noninterest income			45,170				52,606				53,253				54,115				50,767				205,144			221,910
Salaries and employee benefits			73,469				72,707				71,679				69,585				68,258				287,440			284,158
Services and fees			26,759				25,795				24,538				24,453				22,904				101,545			89,463
Net occupancy-premises			7,898				7,395				6,892				7,079				6,816				29,264			27,043
Equipment expense			6,268				6,072				6,047				6,061				6,585				24,448			24,337
Litigation settlement expense (1)			100,750				—				—				—				—				100,750			—
Other expense			16,085				14,729				14,611				14,341				14,906				59,766			64,295
Total noninterest expense			231,229				126,698				123,767				121,519				119,469				603,213			489,296
Income (loss) before income taxes and tax eq adj			(48,142	)			53,395				43,930				36,909				34,106				86,092			187,117
Tax equivalent adjustment			3,451				2,975				2,916				3,003				2,906				12,345			11,704
Income (loss) before income taxes			(51,593	)			50,420				41,014				33,906				31,200				73,747			175,413
Income taxes			(17,530	)			7,965				6,730				4,695				4,978				1,860			28,048
Net income (loss)		$	(34,063	)		$	42,455			$	34,284			$	29,211			$	26,222			$	71,887		$	147,365
Per share data
Earnings (loss) per share - basic		$	(0.56	)		$	0.69			$	0.56			$	0.47			$	0.42			$	1.17		$	2.35
Earnings (loss) per share - diluted		$	(0.56	)		$	0.69			$	0.56			$	0.47			$	0.42			$	1.17		$	2.34
Dividends per share		$	0.23			$	0.23			$	0.23			$	0.23			$	0.23			$	0.92		$	0.92
Weighted average shares outstanding
Basic			60,969,400				61,114,804				61,378,226				61,514,395				62,037,884				61,242,358			62,788,055
Diluted			61,173,249				61,318,715				61,546,285				61,709,797				62,264,983				61,431,726			62,973,464
Period end shares outstanding			60,977,686				60,953,864				61,201,123				61,463,392				61,648,679				60,977,686			61,648,679

(1)	See Note 1 - Litigation Settlement in the Notes to Consolidated Financials for additional information.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2022
($ in thousands)
(unaudited)
		Quarter Ended
NONPERFORMING ASSETS (1)		12/31/2022				9/30/2022				6/30/2022				3/31/2022				12/31/2021
Nonaccrual LHFI
Alabama		$	12,300			$	12,710			$	2,698			$	7,506			$	8,182
Florida			227				227				233				310				313
Mississippi (2)			24,683				23,517				23,039				21,318				21,636
Tennessee (3)			5,566				5,120				9,500				9,266				10,501
Texas			23,196				26,353				26,582				25,999				22,066
Total nonaccrual LHFI			65,972				67,927				62,052				64,399				62,698
Other real estate
Alabama			194				217				84				—				—
Mississippi (2)			1,769				2,754				2,950				3,187				4,557
Tennessee (3)			23				—				—				—				—
Total other real estate			1,986				2,971				3,034				3,187				4,557
Total nonperforming assets		$	67,958			$	70,898			$	65,086			$	67,586			$	67,255
LOANS PAST DUE OVER 90 DAYS (1)
LHFI		$	3,929			$	1,842			$	1,347			$	1,503			$	2,114
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)		$	49,320			$	48,313			$	51,164			$	62,078			$	69,894
		Quarter Ended																				Year Ended
ACL LHFI (1)		12/31/2022				9/30/2022				6/30/2022				3/31/2022				12/31/2021				12/31/2022				12/31/2021
Beginning Balance		$	115,050			$	103,140			$	98,734			$	99,457			$	104,073			$	99,457			$	117,306
Provision for credit losses, LHFI			6,902				12,919				2,716				(860	)			(4,515	)			21,677				(21,499	)
Charge-offs			(3,893	)			(2,920	)			(2,277	)			(2,242	)			(2,616	)			(11,332	)			(10,275	)
Recoveries			2,155				1,911				3,967				2,379				2,515				10,412				13,925
Net (charge-offs) recoveries			(1,738	)			(1,009	)			1,690				137				(101	)			(920	)			3,650
Ending Balance		$	120,214			$	115,050			$	103,140			$	98,734			$	99,457			$	120,214			$	99,457
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama		$	98			$	93			$	1,129			$	699			$	747			$	2,019			$	1,299
Florida			(60	)			(23	)			761				(26	)			(32	)			652				521
Mississippi (2)			(1,657	)			(702	)			(266	)			(88	)			(683	)			(2,713	)			(111	)
Tennessee (3)			(195	)			(202	)			31				(424	)			(130	)			(790	)			940
Texas			76				(175	)			35				(24	)			(3	)			(88	)			1,001
Total net (charge-offs) recoveries		$	(1,738	)		$	(1,009	)		$	1,690			$	137			$	(101	)		$	(920	)		$	3,650

(1)	Excludes PPP loans.
(2)	Mississippi includes Central and Southern Mississippi Regions.
(3)	Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2022
(unaudited)
		Quarter Ended
FINANCIAL RATIOS AND OTHER DATA		12/31/2022				9/30/2022				6/30/2022				3/31/2022				12/31/2021
Return on average equity			-9.05	%			10.48	%			8.55	%			6.91	%			5.92	%
Return on average tangible equity			-12.14	%			13.90	%			11.36	%			9.05	%			7.72	%
Return on average assets			-0.76	%			0.98	%			0.79	%			0.68	%			0.60	%
Interest margin - Yield - FTE			4.40	%			3.71	%			3.01	%			2.69	%			2.65	%
Interest margin - Cost			0.73	%			0.21	%			0.11	%			0.11	%			0.13	%
Net interest margin - FTE			3.66	%			3.50	%			2.90	%			2.58	%			2.53	%
Efficiency ratio (1)			65.85	%			64.96	%			71.89	%			76.44	%			76.52	%
Full-time equivalent employees			2,738				2,717				2,727				2,725				2,692
CREDIT QUALITY RATIOS (2)
Net (recoveries) charge-offs / average loans			0.06	%			0.03	%			-0.06	%			-0.01	%			0.00	%
Provision for credit losses, LHFI / average loans			0.23	%			0.45	%			0.10	%			-0.03	%			-0.17	%
Nonaccrual LHFI / (LHFI + LHFS)			0.53	%			0.58	%			0.56	%			0.61	%			0.60	%
Nonperforming assets / (LHFI + LHFS)			0.55	%			0.60	%			0.58	%			0.64	%			0.64	%
Nonperforming assets / (LHFI + LHFS + other real estate)			0.55	%			0.60	%			0.58	%			0.64	%			0.64	%
ACL LHFI / LHFI			0.99	%			0.99	%			0.94	%			0.95	%			0.97	%
ACL LHFI-commercial / commercial LHFI			0.85	%			0.93	%			0.88	%			0.95	%			1.00	%
ACL LHFI-consumer / consumer and home mortgage LHFI			1.41	%			1.20	%			1.14	%			0.96	%			0.87	%
ACL LHFI / nonaccrual LHFI			182.22	%			169.37	%			166.22	%			153.32	%			158.63	%
ACL LHFI / nonaccrual LHFI (excl individually analyzed loans)			399.19	%			466.03	%			475.27	%			484.01	%			500.85	%
CAPITAL RATIOS
Total equity / total assets			8.28	%			8.78	%			9.36	%			9.35	%			9.90	%
Tangible equity / tangible assets			6.27	%			6.67	%			7.23	%			7.29	%			7.86	%
Tangible equity / risk-weighted assets			7.61	%			8.15	%			9.16	%			9.79	%			10.71	%
Tier 1 leverage ratio			8.47	%			9.01	%			8.80	%			8.66	%			8.73	%
Common equity tier 1 capital ratio			9.74	%			10.63	%			11.01	%			11.23	%			11.29	%
Tier 1 risk-based capital ratio			10.15	%			11.06	%			11.47	%			11.70	%			11.77	%
Total risk-based capital ratio			11.91	%			12.85	%			13.26	%			13.53	%			13.55	%
STOCK PERFORMANCE
Market value-Close		$	34.91			$	30.63			$	29.19			$	30.39			$	32.46
Book value		$	24.47			$	24.76			$	25.93			$	26.54			$	28.25
Tangible book value		$	18.11			$	18.39			$	19.58			$	20.22			$	21.93

(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, 2022

($ in thousands)

(unaudited)

Note 1 - Litigation Settlement

As previously announced, on December 31, 2022, Trustmark National Bank (“Trustmark”) agreed to a settlement in principle (the “Settlement”) relating to litigation involving the Stanford Financial Group that includes a lawsuit initially filed in the District Court of Harris County, Texas on August 23, 2009 and also includes other subsequently-filed Stanford-related lawsuits. Trustmark Corporation, the parent company of Trustmark, has provided disclosure relating to these matters in its periodic reports on Forms 10-K and 10-Q throughout the pendency of these actions.

The parties to the Settlement 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 (as defined below); and, on the other hand, (iv) Trustmark.

Under the terms of the Settlement, the parties have agreed to settle and dismiss Rotstain et al. v. Trustmark National Bank, et al., CA No. 4-22-CV-00800 (S.D. Tex.) (the “Rotstain Action”), Smith et al. v. Independent Bank, et al., CA No. 4-20-CV-00675 (S.D. Tex.) (the “Smith Action”), and all current or future claims arising from or related to Stanford. In addition, the Settlement provides that the parties will request dismissal of Jackson, et al., v. Cox, et al., CA No. 3:10-CV-0328 (N.D. Tex.) (the “Jackson Action” and, collectively with the Rotstain Action and the Smith Action, the “Actions”) pursuant to the terms of the bar orders described below. If the Settlement, including the bar orders described below, is approved by the Court and is not subject to further appeal, Trustmark will make a one-time cash payment of $100.0 million to the Receiver. Trustmark expects to be relieved of pre-trial deadlines and the February 27, 2023 trial setting in the Rotstain Action pending final Court approval of a Settlement Agreement reflecting the terms of the Settlement and pending entry of the bar orders. The Smith and Jackson Actions are currently stayed.

The Settlement includes the parties’ agreement to seek the Northern District of Texas District Court’s entry of bar orders prohibiting any continued or future claims against Trustmark 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 in Trustmark Corporation’s SEC periodic reports, 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 is also subject to the execution and delivery of a definitive Settlement Agreement reflecting the terms of the Settlement, notice to Stanford’s investor claimants and final, non-appealable approval by the U.S. District Court for the Northern District of Texas. The timing of any final decision by the Court is subject to the discretion of the Court and any appeal. While Trustmark believes that the Settlement 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 may decide not to approve the Settlement Agreement or that the Fifth Circuit Court of Appeals could decide to accept an appeal thereof.

The Settlement Agreement will provide that Trustmark makes no admission of liability or wrongdoing in connection with any Stanford matter. As has been the case throughout the pendency of the Actions, Trustmark expressly denies any liability or wrongdoing with respect to any matter alleged in regard of the multi-billion-dollar Ponzi scheme operated by Stanford for almost 20 years. Trustmark’s relationship with Stanford consisted of ordinary banking services provided to business deposit customers.

Trustmark and Trustmark Corporation have determined that it is in the best interest of Trustmark, Trustmark Corporation and the shareholders of Trustmark Corporation to enter into the Settlement to eliminate the risk, ongoing expense, uncertainty as to ultimate outcome and imposition on management and the business of Trustmark of further litigation of the Actions and related Stanford claims.

As a result 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, that 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 will remain substantially above levels considered to be well-capitalized under all relevant standards.

The foregoing description 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 will be filed as an exhibit to a future periodic or current report of Trustmark Corporation.

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

December 31, 2022

($ 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:

		12/31/2022				9/30/2022				6/30/2022				3/31/2022				12/31/2021
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities		$	391,513			$	416,278			$	419,696			$	361,822			$	344,640
U.S. Government agency obligations			7,766				9,116				11,947				12,623				13,727
Obligations of states and political subdivisions			4,862				4,763				5,179				5,359				5,714
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			27,097				28,164				32,240				35,117				39,573
Issued by FNMA and FHLMC			1,345,463				1,718,057				1,888,546				2,038,331				2,218,429
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			115,140				126,138				144,158				164,506				196,690
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			132,241				141,970				142,598				400,488				420,104
Total securities available for sale		$	2,024,082			$	2,444,486			$	2,644,364			$	3,018,246			$	3,238,877
SECURITIES HELD TO MATURITY
U.S. Treasury securities		$	28,295			$	—			$	—			$	—			$	—
Obligations of states and political subdivisions			4,510				4,512				5,320				7,324				7,328
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			4,442				4,527				4,624				4,831				5,005
Issued by FNMA and FHLMC			509,311				179,375				185,554				192,373				43,444
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			188,201				197,923				210,479				224,012				241,934
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			759,755				770,648				731,777				179,058				44,826
Total securities held to maturity		$	1,494,514			$	1,156,985			$	1,137,754			$	607,598			$	342,537

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 December 31, 2022, 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 approximately $92.3 million ($69.2 million, net of tax).

Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 99.8% 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

December 31, 2022

($ in thousands)

(unaudited)

Note 3 – Loan Composition

LHFI consisted of the following during the periods presented:

LHFI BY TYPE		12/31/2022				9/30/2022				6/30/2022				3/31/2022				12/31/2021
Loans secured by real estate:
Construction, land development and other land loans		$	1,719,542			$	1,647,395			$	1,440,058			$	1,273,959			$	1,308,781
Secured by 1-4 family residential properties			2,775,847				2,597,112				2,424,962				2,106,998				1,977,993
Secured by nonfarm, nonresidential properties			3,278,830				3,206,946				3,178,079				2,975,039				2,977,084
Other real estate secured			742,538				593,119				555,311				715,939				726,043
Commercial and industrial loans			1,821,259				1,689,532				1,551,001				1,495,060				1,414,279
Consumer loans			166,425				163,412				160,716				154,215				159,472
State and other political subdivision loans			1,223,863				1,188,703				1,110,795				1,215,023				1,146,251
Other loans			475,735				499,845				523,918				460,896				537,926
LHFI			12,204,039				11,586,064				10,944,840				10,397,129				10,247,829
ACL LHFI			(120,214	)			(115,050	)			(103,140	)			(98,734	)			(99,457	)
Net LHFI		$	12,083,825			$	11,471,014			$	10,841,700			$	10,298,395			$	10,148,372

The following table presents the LHFI composition by region and reflects each region’s diversified mix of loans:

	December 31, 2022
LHFI - COMPOSITION BY REGION	Total				Alabama				Florida				Mississippi (Central and Southern Regions)				Tennessee (Memphis, TN and Northern MS Regions)				Texas
Loans secured by real estate:
Construction, land development and other land loans	$	1,719,542			$	841,298			$	65,920			$	421,210			$	33,205			$	357,909
Secured by 1-4 family residential properties		2,775,847				133,596				50,672				2,483,094				79,782				28,703
Secured by nonfarm, nonresidential properties		3,278,830				895,306				212,185				1,394,562				172,432				604,345
Other real estate secured		742,538				202,453				2,013				339,592				6,822				191,658
Commercial and industrial loans		1,821,259				502,492				26,496				773,135				285,706				233,430
Consumer loans		166,425				24,172				8,528				103,107				18,442				12,176
State and other political subdivision loans		1,223,863				77,017				62,962				859,117				27,881				196,886
Other loans		475,735				74,478				9,245				268,903				58,052				65,057
Loans	$	12,204,039			$	2,750,812			$	438,021			$	6,642,720			$	682,322			$	1,690,164
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots	$	71,964			$	37,553			$	9,802			$	16,654			$	1,923			$	6,032
Development		140,114				56,653				1,392				46,940				6,798				28,331
Unimproved land		108,972				22,548				14,348				35,177				5,039				31,860
1-4 family construction		369,566				197,352				24,903				97,370				17,436				32,505
Other construction		1,028,926				527,192				15,475				225,069				2,009				259,181
Construction, land development and other land loans	$	1,719,542			$	841,298			$	65,920			$	421,210			$	33,205			$	357,909

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

December 31, 2022

($ in thousands)

(unaudited)

Note 3 – Loan Composition (continued)

		December 31, 2022
		Total				Alabama				Florida				Mississippi (Central and Southern Regions)				Tennessee (Memphis, TN and Northern MS Regions)				Texas
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION
Non-owner occupied:
Retail		$	343,073			$	133,173			$	33,675			$	91,921			$	21,695			$	62,609
Office			271,112				122,818				17,394				70,836				10,435				49,629
Hotel/motel			298,159				170,048				40,031				60,191				27,889				—
Mini-storage			155,037				28,072				2,104				105,229				482				19,150
Industrial			333,650				68,863				17,523				121,055				2,799				123,410
Health care			49,363				17,633				989				26,836				343				3,562
Convenience stores			33,721				7,416				641				14,959				593				10,112
Nursing homes/senior living			390,739				136,986				—				184,730				5,595				63,428
Other			136,120				35,040				9,793				61,086				16,397				13,804
Total non-owner occupied loans			2,010,974				720,049				122,150				736,843				86,228				345,704
Owner-occupied:
Office			165,403				43,628				36,375				48,325				8,827				28,248
Churches			72,472				16,167				5,255				41,036				7,165				2,849
Industrial warehouses			175,272				19,344				4,996				47,413				16,872				86,647
Health care			130,604				12,216				6,384				95,437				2,341				14,226
Convenience stores			136,785				12,558				21,581				65,069				376				37,201
Retail			101,087				11,360				8,118				44,578				19,187				17,844
Restaurants			55,944				3,999				4,169				32,275				12,229				3,272
Auto dealerships			49,304				6,794				228				24,282				18,000				—
Nursing homes/senior living			237,082				36,132				—				174,750				—				26,200
Other			143,903				13,059				2,929				84,554				1,207				42,154
Total owner-occupied loans			1,267,856				175,257				90,035				657,719				86,204				258,641
Loans secured by nonfarm, nonresidential properties		$	3,278,830			$	895,306			$	212,185			$	1,394,562			$	172,432			$	604,345

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
		12/31/2022				9/30/2022				6/30/2022				3/31/2022				12/31/2021				12/31/2022				12/31/2021
Securities – taxable			1.71	%			1.62	%			1.50	%			1.37	%			1.22	%			1.55	%			1.29	%
Securities – nontaxable			3.95	%			3.97	%			4.00	%			3.97	%			3.82	%			3.97	%			3.87	%
Securities – total			1.72	%			1.63	%			1.50	%			1.38	%			1.23	%			1.56	%			1.31	%
PPP loans			12.39	%			7.51	%			4.16	%			2.35	%			3.68	%			4.30	%			10.47	%
Loans - LHFI & LHFS			5.27	%			4.48	%			3.79	%			3.58	%			3.56	%			4.32	%			3.62	%
Loans - total			5.27	%			4.48	%			3.79	%			3.58	%			3.56	%			4.32	%			3.84	%
Fed funds sold & reverse repurchases			4.29	%			3.51	%			3.65	%			—				—				4.22	%			—
Other earning assets			3.76	%			1.82	%			0.78	%			0.18	%			0.18	%			0.89	%			0.15	%
Total earning assets			4.40	%			3.71	%			3.01	%			2.69	%			2.65	%			3.46	%			2.92	%
Interest-bearing deposits			0.71	%			0.20	%			0.11	%			0.11	%			0.13	%			0.28	%			0.17	%
Fed funds purchased & repurchases			3.44	%			1.95	%			0.24	%			0.13	%			0.13	%			2.16	%			0.13	%
Other borrowings			3.73	%			2.89	%			2.52	%			2.26	%			2.25	%			3.11	%			2.25	%
Total interest-bearing liabilities			1.03	%			0.31	%			0.17	%			0.16	%			0.19	%			0.43	%			0.23	%
Net interest margin			3.66	%			3.50	%			2.90	%			2.58	%			2.53	%			3.17	%			2.76	%
Net interest margin excluding PPP loans and the FRB balance			3.66	%			3.53	%			3.06	%			2.88	%			2.82	%			3.30	%			2.91	%

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

December 31, 2022

($ 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.

At December 31, 2022 and September 30, 2022, the average FRB balance totaled $299.2 million and $275.4 million, respectively, and is included in other earning assets in the accompanying average consolidated balance sheets.

The net interest margin excluding PPP loans and the FRB balance increased 13 basis points when compared to the third quarter of 2022, totaling 3.66% for the fourth quarter of 2022. The expansion of the net interest margin excluding PPP loans and the FRB balance was due to increases in the yields on the loans held for investment and held for sale portfolio and the securities portfolio and was partially offset by increased costs of interest-bearing liabilities, which resulted from the higher interest-rate environment.

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 ineffectiveness of $3.6 million during the fourth quarter of 2022.

The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements:

		Quarter Ended																				Year Ended
		12/31/2022				9/30/2022				6/30/2022				3/31/2022				12/31/2021				12/31/2022				12/31/2021
Mortgage servicing income, net		$	6,636			$	6,669			$	6,557			$	6,429			$	6,571			$	26,291			$	25,476
Change in fair value-MSR from runoff			(2,981	)			(3,462	)			(3,806	)			(3,785	)			(4,745	)			(14,034	)			(20,160	)
Gain on sales of loans, net			3,328				4,597				6,030				6,223				9,005				20,178				55,976
Mortgage banking income before hedge ineffectiveness			6,983				7,804				8,781				8,867				10,831				32,435				61,292
Change in fair value-MSR from market changes			(3,348	)			10,770				8,739				22,020				2,221				38,181				13,258
Change in fair value of derivatives			(227	)			(11,698	)			(9,371	)			(21,014	)			(1,443	)			(42,310	)			(10,800	)
Net positive (negative) hedge ineffectiveness			(3,575	)			(928	)			(632	)			1,006				778				(4,129	)			2,458
Mortgage banking, net		$	3,408			$	6,876			$	8,149			$	9,873			$	11,609			$	28,306			$	63,750

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

December 31, 2022

($ 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
		12/31/2022				9/30/2022				6/30/2022				3/31/2022				12/31/2021				12/31/2022				12/31/2021
Partnership amortization for tax credit purposes		$	(1,869	)		$	(1,531	)		$	(1,475	)		$	(1,336	)		$	(2,455	)		$	(6,211	)		$	(8,011	)
Increase in life insurance cash surrender value			1,687				1,676				1,683				1,627				1,675				6,673				6,630
Other miscellaneous income			2,493				2,273				1,699				2,915				1,759				9,380				7,932
Total other, net		$	2,311			$	2,418			$	1,907			$	3,206			$	979			$	9,842			$	6,551

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
		12/31/2022				9/30/2022				6/30/2022				3/31/2022				12/31/2021				12/31/2022				12/31/2021
Loan expense		$	3,858			$	3,858			$	4,068			$	4,389			$	3,221			$	16,173			$	15,148
Amortization of intangibles			312				312				328				482				548				1,434				2,316
FDIC assessment expense			2,130				1,945				1,810				1,500				1,475				7,385				5,515
Regulatory settlement charge			—				—				—				—				—				—				5,000
Other real estate expense, net			18				497				623				35				336				1,173				3,528
Other miscellaneous expense			9,767				8,117				7,782				7,935				9,326				33,601				32,788
Total other expense		$	16,085			$	14,729			$	14,611			$	14,341			$	14,906			$	59,766			$	64,295

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, 2022

($ in thousands except per share data)

(unaudited)

Note 7 – Non-GAAP Financial Measures (continued)

				Quarter Ended																				Year Ended
				12/31/2022				9/30/2022				6/30/2022				3/31/2022				12/31/2021				12/31/2022				12/31/2021
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity				$	1,493,291			$	1,606,469			$	1,608,309			$	1,713,752			$	1,758,123			$	1,604,854			$	1,770,151
Less: Goodwill					(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,463	)
Identifiable intangible assets					(3,816	)			(4,131	)			(4,436	)			(4,879	)			(5,382	)			(4,312	)			(6,205	)
Total average tangible equity				$	1,105,238			$	1,218,101			$	1,219,636			$	1,324,636			$	1,368,504			$	1,216,305			$	1,379,483
PERIOD END BALANCES
Total shareholders' equity				$	1,492,268			$	1,508,945			$	1,586,696			$	1,631,382			$	1,741,311
Less: Goodwill					(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)
Identifiable intangible assets					(3,640	)			(3,952	)			(4,264	)			(4,591	)			(5,074	)
Total tangible equity		(a)		$	1,104,391			$	1,120,756			$	1,198,195			$	1,242,554			$	1,352,000
TANGIBLE ASSETS
Total assets				$	18,015,478			$	17,190,634			$	16,951,510			$	17,441,551			$	17,595,636
Less: Goodwill					(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)
Identifiable intangible assets					(3,640	)			(3,952	)			(4,264	)			(4,591	)			(5,074	)
Total tangible assets		(b)		$	17,627,601			$	16,802,445			$	16,563,009			$	17,052,723			$	17,206,325
Risk-weighted assets		(c)		$	14,521,078			$	13,748,819			$	13,076,981			$	12,691,545			$	12,623,630
NET INCOME (LOSS) ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income (loss)				$	(34,063	)		$	42,455			$	34,284			$	29,211			$	26,222			$	71,887			$	147,365
Plus: Intangible amortization net of tax					234				234				246				362				411				1,076				1,738
Net income (loss) adjusted for intangible amortization				$	(33,829	)		$	42,689			$	34,530			$	29,573			$	26,633			$	72,963			$	149,103
Period end common shares outstanding		(d)			60,977,686				60,953,864				61,201,123				61,463,392				61,648,679
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity (1)					-12.14	%			13.90	%			11.36	%			9.05	%			7.72	%			6.00	%			10.81	%
Tangible equity/tangible assets		(a)/(b)			6.27	%			6.67	%			7.23	%			7.29	%			7.86	%
Tangible equity/risk-weighted assets		(a)/(c)			7.61	%			8.15	%			9.16	%			9.79	%			10.71	%
Tangible book value		(a)/(d)*1,000		$	18.11			$	18.39			$	19.58			$	20.22			$	21.93
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity				$	1,492,268			$	1,508,945			$	1,586,696			$	1,631,382			$	1,741,311
CECL transition adjustment					19,500				19,500				19,500				19,500				26,000
AOCI-related adjustments					275,403				306,412				207,142				148,656				32,560
CET1 adjustments and deductions:
Goodwill net of associated deferred tax liabilities (DTLs)					(370,241	)			(370,217	)			(370,229	)			(370,240	)			(370,252	)
Other adjustments and deductions for CET1 (2)					(3,258	)			(3,506	)			(3,757	)			(4,015	)			(4,392	)
CET1 capital		(e)			1,413,672				1,461,134				1,439,352				1,425,283				1,425,227
Additional tier 1 capital instruments plus related surplus					60,000				60,000				60,000				60,000				60,000
Tier 1 capital				$	1,473,672			$	1,521,134			$	1,499,352			$	1,485,283			$	1,485,227
Common equity tier 1 capital ratio		(e)/(c)			9.74	%			10.63	%			11.01	%			11.23	%			11.29	%

(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, 2022

($ 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
		12/31/2022				9/30/2022				6/30/2022				3/31/2022				12/31/2021				12/31/2022				12/31/2021
Net interest income (GAAP)		$	146,583			$	136,105			$	112,676			$	99,344			$	98,326			$	494,708			$	418,351
Noninterest income (GAAP)			45,170				52,606				53,253				54,115				50,767				205,144				221,910
Pre-provision revenue	(a)	$	191,753			$	188,711			$	165,929			$	153,459			$	149,093			$	699,852			$	640,261
Noninterest expense (GAAP)		$	231,229			$	126,698			$	123,767			$	121,519			$	119,469			$	603,213			$	489,296
Less: Litigation settlement expense			(100,750	)			—				—				—				—				(100,750	)			—
Voluntary early retirement program			—				—				—				—				—				—				(5,700	)
Regulatory settlement charge			—				—				—				—				—				—				(5,000	)
Adjusted noninterest expense - PPNR (Non-GAAP)	(b)	$	130,479			$	126,698			$	123,767			$	121,519			$	119,469			$	502,463			$	478,596
PPNR (Non-GAAP)	(a)-(b)	$	61,274			$	62,013			$	42,162			$	31,940			$	29,624			$	197,389			$	161,665

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
	12/31/2022									12/31/2021									12/31/2022									12/31/2021
	Amount				Diluted EPS					Amount				Diluted EPS					Amount				Diluted EPS					Amount				Diluted EPS
Net income (loss) (GAAP)	$	(34,063	)		$	(0.56	)			$	26,222			$	0.42				$	71,887			$	1.17				$	147,365			$	2.34
Significant non-routine transactions (net of taxes):
Litigation settlement expense		75,563				1.24					—				—					75,563				1.23					—				—
Voluntary early retirement program		—				—					—				—					—				—					4,275				0.07
Regulatory settlement charge (not tax deductible)		—				—					—				—					—				—					5,000				0.08
Net income adjusted for significant non-routine transactions (Non-GAAP)	$	41,500			$	0.68				$	26,222			$	0.42				$	147,450			$	2.40				$	156,640			$	2.49
	Reported (GAAP)				Adjusted (Non-GAAP)					Reported (GAAP)				Adjusted (Non-GAAP)					Reported (GAAP)				Adjusted (Non-GAAP)					Reported (GAAP)				Adjusted (Non-GAAP)
Return on average equity		-9.05	%			10.75	%				5.92	%		n/a						4.48	%			9.13	%				8.32	%			8.83	%
Return on average tangible equity		-12.14	%			14.49	%				7.72	%		n/a						6.00	%			12.12	%				10.81	%			11.45	%
Return on average assets		-0.76	%			0.93	%				0.60	%		n/a						0.41	%			0.84	%				0.86	%			0.92	%
n/a - not applicable

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

December 31, 2022

($ 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
			12/31/2022				9/30/2022				6/30/2022				3/31/2022				12/31/2021				12/31/2022				12/31/2021
Total noninterest expense (GAAP)			$	231,229			$	126,698			$	123,767			$	121,519			$	119,469			$	603,213			$	489,296
Less: Other real estate expense, net				(18	)			(497	)			(623	)			(35	)			(336	)			(1,173	)			(3,528	)
Amortization of intangibles				(312	)			(312	)			(328	)			(482	)			(548	)			(1,434	)			(2,316	)
Charitable contributions resulting in state tax credits				(375	)			(375	)			(375	)			(375	)			(391	)			(1,500	)			(1,446	)
Litigation settlement expense				(100,750	)			—				—				—				—				(100,750	)			—
Voluntary early retirement program				—				—				—				—				—				—				(5,700	)
Regulatory settlement charge				—				—				—				—				—				—				(5,000	)
Adjusted noninterest expense (Non-GAAP)		(c)	$	129,774			$	125,514			$	122,441			$	120,627			$	118,194			$	498,356			$	471,306
Net interest income (GAAP)			$	146,583			$	136,105			$	112,676			$	99,344			$	98,326			$	494,708			$	418,351
Add: Tax equivalent adjustment				3,451				2,975				2,916				3,003				2,906				12,345				11,704
Net interest income-FTE (Non-GAAP)		(a)	$	150,034			$	139,080			$	115,592			$	102,347			$	101,232			$	507,053			$	430,055
Noninterest income (GAAP)			$	45,170			$	52,606			$	53,253			$	54,115			$	50,767			$	205,144			$	221,910
Add: Partnership amortization for tax credit purposes				1,869				1,531				1,475				1,336				2,455				6,211				8,011
Adjusted noninterest income (Non-GAAP)		(b)	$	47,039			$	54,137			$	54,728			$	55,451			$	53,222			$	211,355			$	229,921
Adjusted revenue (Non-GAAP)		(a)+(b)	$	197,073			$	193,217			$	170,320			$	157,798			$	154,454			$	718,408			$	659,976
Efficiency ratio (Non-GAAP)		(c)/((a)+(b))		65.85	%			64.96	%			71.89	%			76.44	%			76.52	%			69.37	%			71.41	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230124005266/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

Source: Trustmark Corporation

FAQ

What was Trustmark's fourth-quarter earnings report for 2022?

Trustmark reported a loss of $34.1 million, or $0.56 per diluted share, in Q4 2022, primarily due to a litigation settlement.

How did Trustmark perform financially in 2022?

In 2022, Trustmark had a net income of $71.9 million, or $1.17 per share, increasing to $147.5 million, or $2.40 per share, when excluding litigation costs.

What were the key highlights from Trustmark's 2022 performance?

Key highlights included record loan growth of $2 billion, a 17.9% increase in net interest income, and a net interest margin of 3.17%.

What is the status of Trustmark's dividend?

Trustmark's Board declared a quarterly cash dividend of $0.23 per share, payable on March 15, 2023.