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Trustmark Corporation Announces Second Quarter 2021 Financial Results

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Trustmark Corporation (TRMK) reported a net income of $48.0 million for Q2 2021, equating to diluted earnings per share of $0.76. The return on average tangible equity was 13.96%, and return on average assets was 1.13%. The company declared a quarterly cash dividend of $0.23 per share, payable on September 15, 2021. Significant highlights include a 38.2% increase in pre-provision net revenue and a decline of 17.9% in nonperforming assets. The total revenue increased 7.9% quarter-over-quarter, attributed to net interest income growth of 16.3%.

Positive
  • Net income of $48.0 million, representing a 7.9% revenue increase linked-quarter.
  • Pre-provision net revenue increased by 38.2% linked-quarter.
  • Nonperforming assets declined by 17.9%, indicating improved credit quality.
  • Diluted earnings per share rose to $0.76 with a return on average tangible equity of 13.96%.
  • Dividends declared of $0.23 per share reflect strong financial positioning.
Negative
  • Noninterest income decreased by $4.2 million quarter-over-quarter and $13.1 million year-over-year.
  • Mortgage loan production dropped by 3.9% from the prior quarter and 13.7% year-over-year.
  • Noninterest expense remained high at $118.7 million despite a 2.4% decline.

Trustmark Corporation (NASDAQGS: TRMK) reported net income of $48.0 million in the second quarter of 2021, representing diluted earnings per share of $0.76. This level of earnings resulted in a return on average tangible equity of 13.96% and a return on average assets of 1.13%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable September 15, 2021, to shareholders of record on September 1, 2021.

Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/52466329/en

Second Quarter Highlights

  • Pre-provision net revenue totaled $57.2 million, a linked-quarter increase of 38.2%. Please refer to the Consolidated Financial Information, Note 8 – Non-GAAP Financial Measures.
  • Sale of $354.2 million of Paycheck Protection Program (PPP) loans originated in 2021 resulted in accelerated recognition of $18.6 million in origination fees, which is included in net interest income
  • Credit quality remained solid; nonperforming assets declined 17.9% linked-quarter
  • Continued steady growth in loans held for investment (HFI) and deposits
  • Noninterest expense declined 2.4% linked-quarter

Duane A. Dewey, President and CEO, stated, “Our associates are focused on expanding existing customer relationships as well as demonstrating the value Trustmark can provide potential customers as their trusted financial partner. The success of these efforts is reflected in solid growth in our traditional banking and mortgage businesses as well as strong performance in our insurance and wealth management businesses. Earlier this year, we introduced redesigned digital channels to enhance the customer experience and provide expanded sales capabilities, including on-line account openings. Customers have embraced these offerings and we look forward to leveraging these new tools to expand relationships and profitably generate additional revenue.

“We are pleased to have been recognized during the second quarter by Forbes as the Best-in-State Bank in Mississippi in 2021, based upon independent customer satisfaction surveys. This is affirmation that our associates are providing the financial solutions and convenience our customers’ desire,” said Dewey

Balance Sheet Management

  • Loans HFI totaled $10.2 billion, up 1.7% from the prior quarter and 5.1% year-over-year
  • Investment securities totaled $3.0 billion, up 5.3% from the prior quarter and 17.2% year-over-year
  • PPP loans totaled $166.1 million, down 75.6% from the prior quarter and 82.3% year-over-year
  • Deposits totaled $14.6 billion, up 1.7% from the prior quarter and 8.3% year-over-year
  • Maintained strong capital position with CET1 ratio of 11.76% and total risk-based capital ratio of 14.10%

Loans HFI totaled $10.2 billion at June 30, 2021, reflecting an increase of $169.2 million, or 1.7%, linked-quarter and $493.1 million, or 5.1%, year-over-year. The linked-quarter growth primarily reflects increases in municipal loans, 1-4 family mortgage loans, loans secured by nonfarm, nonresidential properties, and construction loans, which were offset in part by a decline in other real estate secured loans. Trustmark’s loan portfolio remains well-diversified by loan type and geography.

Deposits totaled $14.6 billion at June 30, 2021, up $248.6 million, or 1.7%, from the prior quarter and $1.1 billion, or 8.3%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 69.4% of total deposits at June 30, 2021. Noninterest-bearing deposits represented 30.4% of total deposits at the end of the second quarter. Interest-bearing deposit costs totaled 0.19% in the second quarter, a decrease of 3 basis points from the prior quarter. The total cost of interest-bearing liabilities was 0.25% in the second quarter of 2021, a decrease of 3 basis points from the prior quarter.

During the second quarter, Trustmark repurchased $20.8 million, or approximately 630 thousand of its common shares. During the first six months of 2021, Trustmark repurchased $25.0 million, or approximately 775 thousand of its common shares. At June 30, 2021, Trustmark had $75.0 million in remaining authority under its existing stock repurchase program, which expires on December 31, 2021. 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 June 30, 2021, Trustmark’s tangible equity-to-tangible assets ratio was 8.31% while its total risk-based capital ratio was 14.10%. Tangible book value per share was $22.13 at June 30, 2021, up 2.5% linked-quarter and 9.7% year-over-year.

Credit Quality

  • Allowance for credit losses (ACL) represented 537.35% of nonaccrual loans, excluding individually evaluated loans at June 30, 2021
  • Net charge-offs totaled $1.2 million in the second quarter
  • Loans remaining under a COVID-19 related concession represented approximately 19 basis points of loans HFI at June 30, 2021

Nonaccrual loans totaled $51.4 million at June 30, 2021, down $12.1 million from the prior quarter and up $1.5 million year-over-year. Other real estate totaled $9.4 million, reflecting a $1.2 million decrease from the prior quarter and decline of $8.8 million year-over-year. Collectively, nonperforming assets totaled $60.9 million at June 30, 2021, reflecting a linked-quarter decrease of $13.3 million and year-over-year decline of $7.4 million.

The provision for credit losses for loans HFI was a negative $4.0 million in the second quarter. Negative provisioning was primarily driven by decreases in individually analyzed reserves, qualitative reserves due to improvements in credit quality, and improving economic forecasts. The provision for credit losses for off-balance sheet credit exposures was $4.5 million in the second quarter. Off-balance sheet expense was primarily driven by an increase in off-balance sheet exposure as well as the implementation of probability of default and loss given default floors at a portfolio level to ensure appropriate risk is reflected as macroeconomic conditions improve. Collectively, the provision for credit losses totaled $537 thousand in the second quarter compared to negative $19.9 million in the prior quarter and expense of $24.4 million in the second quarter of 2020.

Allocation of Trustmark’s $104.0 million allowance for credit losses on loans HFI represented 1.04% of commercial loans and 0.98% of consumer and home mortgage loans, resulting in an allowance to total loans HFI of 1.02% at June 30, 2021. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.

Revenue Generation

  • Total revenue increased $12.9 million, or 7.9%, linked-quarter
  • Net interest income (FTE) expanded $17.2 million, or 16.3%, linked-quarter
  • Excluding PPP interest and fees, net interest income (FTE) increased $836 thousand linked-quarter
  • Noninterest income totaled $56.4 million, representing 32.1% of total revenue in the second quarter
  • Wealth Management revenue increased 6.3% linked-quarter and 18.2% year-over-year

Revenue in the second quarter totaled $175.8 million, an increase of $12.9 million, or 7.9%, from the prior quarter and $1.3 million, or 0.8%, from the same quarter in the prior year. The linked-quarter increase reflects $18.6 million of PPP loan origination fees attributable to the previously announced sale of $354.2 million in PPP loans during the second quarter.

Net interest income (FTE) in the second quarter totaled $122.4 million, resulting in a net interest margin of 3.16%, up 35 basis points from the prior quarter. The net interest margin, excluding PPP loans and Federal Reserve Bank balance, totaled 2.94% during the second quarter, a decrease of 5 basis points when compared to the prior quarter. Continued low interest rates decreased the yield on the loans HFI and held for sale portfolio as well as the securities portfolio, and were partially offset by lower costs on interest-bearing deposits.

Noninterest income in the second quarter totaled $56.4 million, a decrease of $4.2 million from the prior quarter and $13.1 million year-over-year. The linked quarter and year-over-year changes are principally attributable to lower mortgage banking revenue. Mortgage loan production in the second quarter totaled $736.8 million, down 3.9% from the prior quarter and 13.7% year-over-year. Mortgage banking revenue totaled $17.3 million in the second quarter, a decrease of $3.5 million from the prior quarter and $16.4 million year-over-year. The linked-quarter decline is principally attributable to reduced spreads which resulted in lower net gains on sales of mortgage loans in the secondary market.

Wealth management revenue totaled $8.9 million in the second quarter, an increase of $530 thousand, or 6.3%, from the prior quarter and $1.4 million, or 18.2%, year-over-year. The growth is attributable to increased trust and investment and brokerage business. Insurance revenue totaled $12.2 million in the second quarter, down 1.8%, or $228 thousand, from the prior quarter due to seasonality and up 2.9%, or $349 thousand, year-over-year. Service charges on deposit accounts increased $257 thousand, or 3.5%, from the prior quarter and $1.2 million, or 19.0%, year-over-year. Bank card and other fees decreased $1.2 million from the prior quarter and increased $584 thousand year-over-year. The linked-quarter decline reflects reduced customer derivative revenue.

Noninterest Expense

  • Noninterest expense totaled $118.7 million in the second quarter, down $2.9 million, or 2.4%, from the prior quarter
  • Adjusted noninterest expense, which excludes amortization of intangibles, ORE expenses and charitable contributions resulting in state tax credits, declined $3.9 million, or 3.3%, from the prior quarter; please refer to the Consolidated Financial Information, Note 8 – Non-GAAP Financial Measures
  • Efficiency ratio improved to 64.31% in the second quarter

Adjusted noninterest expense in the second quarter was $116.3 million, down $3.9 million, or 3.3%, from the prior quarter. Salaries and employee benefits decreased $1.0 million linked-quarter principally due to the seasonality of payroll taxes in the prior quarter. Services and fees decreased $715 thousand and total equipment expense declined $677 thousand in the second quarter compared to the prior quarter. Total other expense in the second quarter declined $1.4 million, or 9.6%, from the prior quarter. Other real estate expense, net totaled $1.5 million in the second quarter compared to $324 thousand in the prior quarter, reflecting increased valuation allowances on other real estate.

“We continued to implement strategic initiatives designed to improve efficiency, accelerate growth and provide innovation while maintaining solid risk management and our corporate culture,” said Dewey. During the first six months of 2021, Trustmark continued to realign delivery channels and closed nine offices reflecting changing customer preferences and the continued migration to mobile and digital banking channels. Additionally, Trustmark opened three new offices, one each in the Birmingham, AL MSA, Jackson, MS MSA, and Memphis, TN MSA. Each of these offices features a design that integrates myTeller® interactive teller machine (ITM) technology as well as provides enhanced areas for customer interaction.

“In addition to branch realignment initiatives, we recently announced a voluntary early retirement program for eligible associates, who have until July 31, 2021, to elect to participate in the program. Most participants are expected to retire effective August 31, 2021. Based upon participation, we plan to redesign workflows and restructure the organization to leverage investments in technology, enhance the customer experience and improve efficiency. We anticipate providing additional information regarding this program in our third quarter earnings release,” said Dewey.

“Trustmark has a program to systematically invest in and upgrade technology. In recent years, investments in state-of-the-art technology were made in Trustmark’s insurance, wealth management and mortgage banking areas as well as in human resources and accounting systems. We also made significant upgrades to our mobile banking platform, ITM network and digital marketing programs. Collectively, these investments have well-positioned Trustmark for additional growth and expansion. Over the last 36 months, we have been working toward the implementation of a new core banking system for consumer and commercial loans, deposits and customer information. This implementation, which we have named Core Optimization for Relationship Enhancement (CORE), is a multi-year project, the first phase of which will occur later this year. These investments will better position Trustmark for continued growth, enhance efficiency, and improve the customers’ experience,” said Dewey.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, July 28, 2021 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 11, 2021, in archived format at the same web address or by calling (877) 344-7529, passcode 10158119.

Trustmark is a financial services company providing banking and financial solutions through 180 offices in Alabama, Florida, Mississippi, Tennessee and Texas.

Forward-Looking Statements

Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “project,” “potential,” “seek,” “continue,” “could,” “would,” “future” or the negative of those terms or other words of similar meaning. You should read statements that contain these words carefully because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements include, but are not limited to, statements relating to anticipated future operating and financial performance measures, including net interest margin, credit quality, business initiatives, growth opportunities and growth rates, among other things, and encompass any estimate, prediction, expectation, projection, opinion, anticipation, outlook or statement of belief included therein as well as the management assumptions underlying these forward-looking statements. You should be aware that the occurrence of the events described under the caption “Risk Factors” in Trustmark’s filings with the Securities and Exchange Commission (SEC) could have an adverse effect on our business, results of operations and financial condition. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected. Furthermore, many of these risks and uncertainties are currently amplified by and may continue to be amplified by or may, in the future, be amplified by, the novel coronavirus (COVID-19) pandemic, and also by the effectiveness of varying governmental responses in ameliorating the impact of the pandemic on our customers and the economies where they operate.

Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels and slowdowns in economic growth, our ability to manage the impact of the COVID-19 pandemic on our markets and our customers, as well as the effectiveness of actions of federal, state and local governments and agencies (including the Board of Governors of the Federal Reserve System (FRB)) to mitigate its spread and economic impact, local, state and national economic and market conditions, conditions in the housing and real estate markets in the regions in which Trustmark operates and the extent and duration of the current volatility in the credit and financial markets, levels of and volatility in crude oil prices, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility of market interest rates, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, including the potential impact of issues related to the European financial system and monetary and other governmental actions designed to address credit, securities, and/or commodity markets, the enactment of legislation and changes in existing regulations or enforcement practices or the adoption of new regulations, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, changes in our ability to control expenses, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, cyber-attacks and other breaches which could affect our information system security, natural disasters, environmental disasters, pandemics or other health crises, acts of war or terrorism, and other risks described in our filings with the SEC.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Except as required by law, we undertake no obligation to update or revise any of this information, whether as the result of new information, future events or developments or otherwise.

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2021
($ in thousands)
(unaudited)
 
Linked Quarter Year over Year
QUARTERLY AVERAGE BALANCES 6/30/2021 3/31/2021 6/30/2020 $ Change % Change $ Change % Change
Securities AFS-taxable

$

2,339,662

 

$

2,098,089

 

$

1,724,320

 

$

241,573

 

11.5

%

$

615,342

 

35.7

%

Securities AFS-nontaxable

 

5,174

 

 

5,190

 

 

9,827

 

 

(16

)

-0.3

%

 

(4,653

)

-47.3

%

Securities HTM-taxable

 

441,688

 

 

489,260

 

 

655,085

 

 

(47,572

)

-9.7

%

 

(213,397

)

-32.6

%

Securities HTM-nontaxable

 

10,958

 

 

24,070

 

 

25,538

 

 

(13,112

)

-54.5

%

 

(14,580

)

-57.1

%

Total securities

 

2,797,482

 

 

2,616,609

 

 

2,414,770

 

 

180,873

 

6.9

%

 

382,712

 

15.8

%

Paycheck protection program loans (PPP)

 

648,222

 

 

598,139

 

 

764,416

 

 

50,083

 

8.4

%

 

(116,194

)

-15.2

%

Loans (includes loans held for sale)

 

10,315,927

 

 

10,316,319

 

 

9,908,132

 

 

(392

)

0.0

%

 

407,795

 

4.1

%

Fed funds sold and reverse repurchases

 

55

 

 

136

 

 

113

 

 

(81

)

-59.6

%

 

(58

)

-51.3

%

Other earning assets

 

1,750,385

 

 

1,667,906

 

 

854,642

 

 

82,479

 

4.9

%

 

895,743

 

n/m

 

Total earning assets

 

15,512,071

 

 

15,199,109

 

 

13,942,073

 

 

312,962

 

2.1

%

 

1,569,998

 

11.3

%

Allowance for credit losses (ACL), loans held
  for investment (LHFI)

 

(112,346

)

 

(119,557

)

 

(103,006

)

 

7,211

 

6.0

%

 

(9,340

)

-9.1

%

Other assets

 

1,622,388

 

 

1,601,250

 

 

1,685,317

 

 

21,138

 

1.3

%

 

(62,929

)

-3.7

%

Total assets

$

17,022,113

 

$

16,680,802

 

$

15,524,384

 

$

341,311

 

2.0

%

$

1,497,729

 

9.6

%

 
Interest-bearing demand deposits

$

4,056,910

 

$

3,743,651

 

$

3,832,372

 

$

313,259

 

8.4

%

$

224,538

 

5.9

%

Savings deposits

 

4,627,180

 

 

4,659,037

 

 

4,180,540

 

 

(31,857

)

-0.7

%

 

446,640

 

10.7

%

Time deposits

 

1,301,896

 

 

1,371,830

 

 

1,578,737

 

 

(69,934

)

-5.1

%

 

(276,841

)

-17.5

%

Total interest-bearing deposits

 

9,985,986

 

 

9,774,518

 

 

9,591,649

 

 

211,468

 

2.2

%

 

394,337

 

4.1

%

Fed funds purchased and repurchases

 

174,620

 

 

166,909

 

 

105,696

 

 

7,711

 

4.6

%

 

68,924

 

65.2

%

Other borrowings

 

132,199

 

 

166,926

 

 

107,533

 

 

(34,727

)

-20.8

%

 

24,666

 

22.9

%

Subordinated notes

 

122,897

 

 

122,875

 

 

—

 

 

22

 

0.0

%

 

122,897

 

n/m

 

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

—

 

0.0

%

 

—

 

0.0

%

Total interest-bearing liabilities

 

10,477,558

 

 

10,293,084

 

 

9,866,734

 

 

184,474

 

1.8

%

 

610,824

 

6.2

%

Noninterest-bearing deposits

 

4,512,268

 

 

4,363,559

 

 

3,645,761

 

 

148,709

 

3.4

%

 

866,507

 

23.8

%

Other liabilities

 

251,582

 

 

264,808

 

 

346,173

 

 

(13,226

)

-5.0

%

 

(94,591

)

-27.3

%

Total liabilities

 

15,241,408

 

 

14,921,451

 

 

13,858,668

 

 

319,957

 

2.1

%

 

1,382,740

 

10.0

%

Shareholders' equity

 

1,780,705

 

 

1,759,351

 

 

1,665,716

 

 

21,354

 

1.2

%

 

114,989

 

6.9

%

Total liabilities and equity

$

17,022,113

 

$

16,680,802

 

$

15,524,384

 

$

341,311

 

2.0

%

$

1,497,729

 

9.6

%

 
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, 2021
($ in thousands)
(unaudited)
 
Linked Quarter Year over Year
PERIOD END BALANCES 6/30/2021 3/31/2021 6/30/2020 $ Change % Change $ Change % Change
Cash and due from banks

$

2,267,224

 

$

1,774,541

 

$

1,026,640

 

$

492,683

 

27.8

%

$

1,240,584

 

n/m

 

Fed funds sold and reverse repurchases

 

—

 

 

—

 

 

—

 

 

—

 

n/m

 

 

—

 

n/m

 

Securities available for sale

 

2,548,739

 

 

2,337,676

 

 

1,884,153

 

 

211,063

 

9.0

%

 

664,586

 

35.3

%

Securities held to maturity

 

433,012

 

 

493,738

 

 

660,048

 

 

(60,726

)

-12.3

%

 

(227,036

)

-34.4

%

PPP loans

 

166,119

 

 

679,725

 

 

939,783

 

 

(513,606

)

-75.6

%

 

(773,664

)

-82.3

%

Loans held for sale (LHFS)

 

332,132

 

 

412,999

 

 

355,089

 

 

(80,867

)

-19.6

%

 

(22,957

)

-6.5

%

Loans held for investment (LHFI)

 

10,152,869

 

 

9,983,704

 

 

9,659,806

 

 

169,165

 

1.7

%

 

493,063

 

5.1

%

ACL LHFI

 

(104,032

)

 

(109,191

)

 

(119,188

)

 

5,159

 

-4.7

%

 

15,156

 

-12.7

%

Net LHFI

 

10,048,837

 

 

9,874,513

 

 

9,540,618

 

 

174,324

 

1.8

%

 

508,219

 

5.3

%

Premises and equipment, net

 

200,970

 

 

199,098

 

 

190,567

 

 

1,872

 

0.9

%

 

10,403

 

5.5

%

Mortgage servicing rights

 

80,764

 

 

83,035

 

 

57,811

 

 

(2,271

)

-2.7

%

 

22,953

 

39.7

%

Goodwill

 

384,237

 

 

384,237

 

 

385,270

 

 

—

 

0.0

%

 

(1,033

)

-0.3

%

Identifiable intangible assets

 

6,170

 

 

6,724

 

 

8,895

 

 

(554

)

-8.2

%

 

(2,725

)

-30.6

%

Other real estate

 

9,439

 

 

10,651

 

 

18,276

 

 

(1,212

)

-11.4

%

 

(8,837

)

-48.4

%

Operating lease right-of-use assets

 

33,201

 

 

33,704

 

 

29,819

 

 

(503

)

-1.5

%

 

3,382

 

11.3

%

Other assets

 

587,288

 

 

587,672

 

 

595,110

 

 

(384

)

-0.1

%

 

(7,822

)

-1.3

%

Total assets

$

17,098,132

 

$

16,878,313

 

$

15,692,079

 

$

219,819

 

1.3

%

$

1,406,053

 

9.0

%

 
Deposits:
Noninterest-bearing

$

4,446,991

 

$

4,705,991

 

$

3,880,540

 

$

(259,000

)

-5.5

%

$

566,451

 

14.6

%

Interest-bearing

 

10,185,093

 

 

9,677,449

 

 

9,624,933

 

 

507,644

 

5.2

%

 

560,160

 

5.8

%

Total deposits

 

14,632,084

 

 

14,383,440

 

 

13,505,473

 

 

248,644

 

1.7

%

 

1,126,611

 

8.3

%

Fed funds purchased and repurchases

 

157,176

 

 

160,991

 

 

70,255

 

 

(3,815

)

-2.4

%

 

86,921

 

n/m

 

Other borrowings

 

117,223

 

 

145,994

 

 

152,860

 

 

(28,771

)

-19.7

%

 

(35,637

)

-23.3

%

Subordinated notes

 

122,932

 

 

122,877

 

 

—

 

 

55

 

0.0

%

 

122,932

 

n/m

 

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

—

 

0.0

%

 

—

 

0.0

%

ACL on off-balance sheet credit exposures

 

33,733

 

 

29,205

 

 

42,663

 

 

4,528

 

15.5

%

 

(8,930

)

-20.9

%

Operating lease liabilities

 

34,959

 

 

35,389

 

 

31,076

 

 

(430

)

-1.2

%

 

3,883

 

12.5

%

Other liabilities

 

158,860

 

 

178,856

 

 

153,952

 

 

(19,996

)

-11.2

%

 

4,908

 

3.2

%

Total liabilities

 

15,318,823

 

 

15,118,608

 

 

14,018,135

 

 

200,215

 

1.3

%

 

1,300,688

 

9.3

%

Common stock

 

13,079

 

 

13,209

 

 

13,214

 

 

(130

)

-1.0

%

 

(135

)

-1.0

%

Capital surplus

 

210,420

 

 

229,892

 

 

230,613

 

 

(19,472

)

-8.5

%

 

(20,193

)

-8.8

%

Retained earnings

 

1,566,451

 

 

1,533,110

 

 

1,419,552

 

 

33,341

 

2.2

%

 

146,899

 

10.3

%

Accum other comprehensive income (loss),
  net of tax

 

(10,641

)

 

(16,506

)

 

10,565

 

 

5,865

 

35.5

%

 

(21,206

)

n/m

 

Total shareholders' equity

 

1,779,309

 

 

1,759,705

 

 

1,673,944

 

 

19,604

 

1.1

%

 

105,365

 

6.3

%

Total liabilities and equity

$

17,098,132

 

$

16,878,313

 

$

15,692,079

 

$

219,819

 

1.3

%

$

1,406,053

 

9.0

%

 
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, 2021
($ in thousands except per share data)
(unaudited)
 
Quarter Ended Linked Quarter Year over Year
INCOME STATEMENTS 6/30/2021 3/31/2021 6/30/2020 $ Change % Change $ Change % Change
Interest and fees on LHFS & LHFI-FTE

$

93,698

$

93,394

$

99,300

$

304

0.3%

$

(5,602)

-5.6%

Interest and fees on PPP loans

 

25,555

 

9,241

 

5,044

 

16,314

n/m

 

20,511

n/m

Interest on securities-taxable

 

8,991

 

8,938

 

12,762

 

53

0.6%

 

(3,771)

-29.5%

Interest on securities-tax exempt-FTE

 

149

 

290

 

315

 

(141)

-48.6%

 

(166)

-52.7%

Interest on fed funds sold and reverse repurchases

 

—

 

—

 

—

 

—

n/m

 

—

n/m

Other interest income

 

489

 

503

 

239

 

(14)

-2.8%

 

250

n/m

Total interest income-FTE

 

128,882

 

112,366

 

117,660

 

16,516

14.7%

 

11,222

9.5%

Interest on deposits

 

4,630

 

5,223

 

8,730

 

(593)

-11.4%

 

(4,100)

-47.0%

Interest on fed funds purchased and repurchases

 

59

 

56

 

42

 

3

5.4%

 

17

40.5%

Other interest expense

 

1,813

 

1,857

 

881

 

(44)

-2.4%

 

932

n/m

Total interest expense

 

6,502

 

7,136

 

9,653

 

(634)

-8.9%

 

(3,151)

-32.6%

Net interest income-FTE

 

122,380

 

105,230

 

108,007

 

17,150

16.3%

 

14,373

13.3%

Provision for credit losses, LHFI

 

(3,991)

 

(10,501)

 

18,185

 

6,510

62.0%

 

(22,176)

n/m

Provision for credit losses, off-balance sheet
  credit exposures (1)

 

4,528

 

(9,367)

 

6,242

 

13,895

n/m

 

(1,714)

-27.5%

Net interest income after provision-FTE

 

121,843

 

125,098

 

83,580

 

(3,255)

-2.6%

 

38,263

45.8%

Service charges on deposit accounts

 

7,613

 

7,356

 

6,397

 

257

3.5%

 

1,216

19.0%

Bank card and other fees

 

8,301

 

9,472

 

7,717

 

(1,171)

-12.4%

 

584

7.6%

Mortgage banking, net

 

17,333

 

20,804

 

33,745

 

(3,471)

-16.7%

 

(16,412)

-48.6%

Insurance commissions

 

12,217

 

12,445

 

11,868

 

(228)

-1.8%

 

349

2.9%

Wealth management

 

8,946

 

8,416

 

7,571

 

530

6.3%

 

1,375

18.2%

Other, net

 

2,001

 

2,090

 

2,213

 

(89)

-4.3%

 

(212)

-9.6%

Total noninterest income

 

56,411

 

60,583

 

69,511

 

(4,172)

-6.9%

 

(13,100)

-18.8%

Salaries and employee benefits

 

70,115

 

71,162

 

66,107

 

(1,047)

-1.5%

 

4,008

6.1%

Services and fees

 

21,769

 

22,484

 

20,567

 

(715)

-3.2%

 

1,202

5.8%

Net occupancy-premises

 

6,578

 

6,795

 

6,587

 

(217)

-3.2%

 

(9)

-0.1%

Equipment expense

 

5,567

 

6,244

 

5,620

 

(677)

-10.8%

 

(53)

-0.9%

Other real estate expense, net

 

1,511

 

324

 

271

 

1,187

n/m

 

1,240

n/m

Other expense

 

13,139

 

14,539

 

13,265

 

(1,400)

-9.6%

 

(126)

-0.9%

Total noninterest expense

 

118,679

 

121,548

 

112,417

 

(2,869)

-2.4%

 

6,262

5.6%

Income before income taxes and tax eq adj

 

59,575

 

64,133

 

40,674

 

(4,558)

-7.1%

 

18,901

46.5%

Tax equivalent adjustment

 

2,957

 

2,894

 

3,007

 

63

2.2%

 

(50)

-1.7%

Income before income taxes

 

56,618

 

61,239

 

37,667

 

(4,621)

-7.5%

 

18,951

50.3%

Income taxes

 

8,637

 

9,277

 

5,517

 

(640)

-6.9%

 

3,120

56.6%

Net income

$

47,981

$

51,962

$

32,150

$

(3,981)

-7.7%

$

15,831

49.2%

 
Per share data
Earnings per share - basic

$

0.76

$

0.82

$

0.51

$

(0.06)

-7.3%

$

0.25

49.0%

 
Earnings per share - diluted

$

0.76

$

0.82

$

0.51

$

(0.06)

-7.3%

$

0.25

49.0%

 
Dividends per share

$

0.23

$

0.23

$

0.23

 

—

0.0%

 

—

0.0%

 
Weighted average shares outstanding
Basic

 

63,214,593

 

63,395,911

 

63,416,307

 
Diluted

 

63,409,683

 

63,562,503

 

63,555,065

 
Period end shares outstanding

 

62,773,226

 

63,394,522

 

63,422,439

 
(1) During the second quarter of 2021, Trustmark reclassified its credit loss expense related to off-balance sheet credit exposures from noninterest expense to provision for credit losses, off-balance sheet credit exposures. Prior periods have been reclassified accordingly.
 
n/m - percentage changes greater than +/- 100% are considered not meaningful
 
 
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2021
($ in thousands)
(unaudited)
 
Quarter Ended Linked Quarter Year over Year
NONPERFORMING ASSETS (1) 6/30/2021 3/31/2021 6/30/2020 $ Change % Change $ Change % Change
Nonaccrual LHFI
Alabama

$

8,952

 

$

9,161

 

$

4,392

 

$

(209

)

-2.3

%

$

4,560

 

n/m

 

Florida

 

467

 

 

607

 

 

687

 

 

(140

)

-23.1

%

 

(220

)

-32.0

%

Mississippi (2)

 

23,422

 

 

35,534

 

 

37,884

 

 

(12,112

)

-34.1

%

 

(14,462

)

-38.2

%

Tennessee (3)

 

10,751

 

 

12,451

 

 

6,125

 

 

(1,700

)

-13.7

%

 

4,626

 

75.5

%

Texas

 

7,856

 

 

5,761

 

 

906

 

 

2,095

 

36.4

%

 

6,950

 

n/m

 

Total nonaccrual LHFI

 

51,448

 

 

63,514

 

 

49,994

 

 

(12,066

)

-19.0

%

 

1,454

 

2.9

%

Other real estate
Alabama

 

2,830

 

 

3,085

 

 

4,766

 

 

(255

)

-8.3

%

 

(1,936

)

-40.6

%

Florida

 

—

 

 

—

 

 

3,665

 

 

—

 

n/m

 

 

(3,665

)

-100.0

%

Mississippi (2)

 

6,550

 

 

7,566

 

 

9,408

 

 

(1,016

)

-13.4

%

 

(2,858

)

-30.4

%

Tennessee (3)

 

59

 

 

—

 

 

437

 

 

59

 

n/m

 

 

(378

)

-86.5

%

Texas

 

—

 

 

—

 

 

—

 

 

—

 

n/m

 

 

—

 

n/m

 

Total other real estate

 

9,439

 

 

10,651

 

 

18,276

 

 

(1,212

)

-11.4

%

 

(8,837

)

-48.4

%

Total nonperforming assets

$

60,887

 

$

74,165

 

$

68,270

 

$

(13,278

)

-17.9

%

$

(7,383

)

-10.8

%

 
LOANS PAST DUE OVER 90 DAYS (1)
LHFI

$

423

 

$

2,593

 

$

807

 

$

(2,170

)

-83.7

%

$

(384

)

-47.6

%

 
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)

$

81,538

 

$

109,566

 

$

56,269

 

$

(28,028

)

-25.6

%

$

25,269

 

44.9

%

 
Quarter Ended Linked Quarter Year over Year
ACL LHFI (1) 6/30/2021 3/31/2021 6/30/2020 $ Change % Change $ Change % Change
Beginning Balance

$

109,191

 

$

117,306

 

$

100,564

 

$

(8,115

)

-6.9

%

$

8,627

 

8.6

%

CECL adoption adjustments:
LHFI

 

—

 

 

—

 

 

—

 

 

—

 

n/m

 

 

—

 

n/m

 

Acquired loan transfers

 

—

 

 

—

 

 

—

 

 

—

 

n/m

 

 

—

 

n/m

 

Provision for credit losses, LHFI

 

(3,991

)

 

(10,501

)

 

18,185

 

 

6,510

 

62.0

%

 

(22,176

)

n/m

 

Charge-offs

 

(4,828

)

 

(1,245

)

 

(1,870

)

 

(3,583

)

n/m

 

 

(2,958

)

n/m

 

Recoveries

 

3,660

 

 

3,631

 

 

2,309

 

 

29

 

0.8

%

 

1,351

 

58.5

%

Net (charge-offs) recoveries

 

(1,168

)

 

2,386

 

 

439

 

 

(3,554

)

n/m

 

 

(1,607

)

n/m

 

Ending Balance

$

104,032

 

$

109,191

 

$

119,188

 

$

(5,159

)

-4.7

%

$

(15,156

)

-12.7

%

 
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama

$

203

 

$

102

 

$

526

 

$

101

 

99.0

%

$

(323

)

-61.4

%

Florida

 

167

 

 

30

 

 

(127

)

 

137

 

n/m

 

 

294

 

n/m

 

Mississippi (2)

 

(3,071

)

 

2,207

 

 

(86

)

 

(5,278

)

n/m

 

 

(2,985

)

n/m

 

Tennessee (3)

 

1,031

 

 

47

 

 

66

 

 

984

 

n/m

 

 

965

 

n/m

 

Texas

 

502

 

 

—

 

 

60

 

 

502

 

n/m

 

 

442

 

n/m

 

Total net (charge-offs) recoveries

$

(1,168

)

$

2,386

 

$

439

 

$

(3,554

)

n/m

 

$

(1,607

)

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
June 30, 2021
($ in thousands)
(unaudited)
 
Quarter Ended Six Months Ended
AVERAGE BALANCES 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 6/30/2021 6/30/2020
Securities AFS-taxable

$

2,339,662

 

$

2,098,089

 

$

1,902,162

 

$

1,857,050

 

$

1,724,320

 

$

2,219,543

 

$

1,672,371

 

Securities AFS-nontaxable

 

5,174

 

 

5,190

 

 

5,206

 

 

5,973

 

 

9,827

 

 

5,182

 

 

15,942

 

Securities HTM-taxable

 

441,688

 

 

489,260

 

 

550,563

 

 

608,585

 

 

655,085

 

 

465,343

 

 

674,913

 

Securities HTM-nontaxable

 

10,958

 

 

24,070

 

 

24,752

 

 

25,508

 

 

25,538

 

 

17,478

 

 

25,606

 

Total securities

 

2,797,482

 

 

2,616,609

 

 

2,482,683

 

 

2,497,116

 

 

2,414,770

 

 

2,707,546

 

 

2,388,832

 

PPP loans

 

648,222

 

 

598,139

 

 

875,098

 

 

941,456

 

 

764,416

 

 

623,319

 

 

382,208

 

Loans (includes loans held for sale)

 

10,315,927

 

 

10,316,319

 

 

10,231,671

 

 

10,162,379

 

 

9,908,132

 

 

10,316,122

 

 

9,793,153

 

Fed funds sold and reverse repurchases

 

55

 

 

136

 

 

303

 

 

301

 

 

113

 

 

95

 

 

139

 

Other earning assets

 

1,750,385

 

 

1,667,906

 

 

860,540

 

 

722,917

 

 

854,642

 

 

1,709,373

 

 

520,985

 

Total earning assets

 

15,512,071

 

 

15,199,109

 

 

14,450,295

 

 

14,324,169

 

 

13,942,073

 

 

15,356,455

 

 

13,085,317

 

ACL LHFI

 

(112,346

)

 

(119,557

)

 

(124,088

)

 

(121,842

)

 

(103,006

)

 

(115,932

)

 

(94,011

)

Other assets

 

1,622,388

 

 

1,601,250

 

 

1,620,694

 

 

1,564,825

 

 

1,685,317

 

 

1,611,877

 

 

1,592,019

 

Total assets

$

17,022,113

 

$

16,680,802

 

$

15,946,901

 

$

15,767,152

 

$

15,524,384

 

$

16,852,400

 

$

14,583,325

 

 
Interest-bearing demand deposits

$

4,056,910

 

$

3,743,651

 

$

3,649,590

 

$

3,669,249

 

$

3,832,372

 

$

3,901,146

 

$

3,508,253

 

Savings deposits

 

4,627,180

 

 

4,659,037

 

 

4,350,783

 

 

4,416,046

 

 

4,180,540

 

 

4,643,020

 

 

3,913,738

 

Time deposits

 

1,301,896

 

 

1,371,830

 

 

1,436,677

 

 

1,507,348

 

 

1,578,737

 

 

1,336,670

 

 

1,598,022

 

Total interest-bearing deposits

 

9,985,986

 

 

9,774,518

 

 

9,437,050

 

 

9,592,643

 

 

9,591,649

 

 

9,880,836

 

 

9,020,013

 

Fed funds purchased and repurchases

 

174,620

 

 

166,909

 

 

170,474

 

 

84,077

 

 

105,696

 

 

170,786

 

 

176,605

 

Other borrowings

 

132,199

 

 

166,926

 

 

173,525

 

 

167,262

 

 

107,533

 

 

149,467

 

 

96,406

 

Subordinated notes

 

122,897

 

 

122,875

 

 

42,828

 

 

—

 

 

—

 

 

122,886

 

 

—

 

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

Total interest-bearing liabilities

 

10,477,558

 

 

10,293,084

 

 

9,885,733

 

 

9,905,838

 

 

9,866,734

 

 

10,385,831

 

 

9,354,880

 

Noninterest-bearing deposits

 

4,512,268

 

 

4,363,559

 

 

4,100,849

 

 

3,921,867

 

 

3,645,761

 

 

4,438,324

 

 

3,278,356

 

Other liabilities

 

251,582

 

 

264,808

 

 

235,284

 

 

244,544

 

 

346,173

 

 

258,158

 

 

297,196

 

Total liabilities

 

15,241,408

 

 

14,921,451

 

 

14,221,866

 

 

14,072,249

 

 

13,858,668

 

 

15,082,313

 

 

12,930,432

 

Shareholders' equity

 

1,780,705

 

 

1,759,351

 

 

1,725,035

 

 

1,694,903

 

 

1,665,716

 

 

1,770,087

 

 

1,652,893

 

Total liabilities and equity

$

17,022,113

 

$

16,680,802

 

$

15,946,901

 

$

15,767,152

 

$

15,524,384

 

$

16,852,400

 

$

14,583,325

 

 
 
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2021
($ in thousands)
(unaudited)
 
PERIOD END BALANCES 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020
Cash and due from banks

$

2,267,224

 

$

1,774,541

 

$

1,952,504

 

$

564,588

 

$

1,026,640

 

Fed funds sold and reverse repurchases

 

—

 

 

—

 

 

50

 

 

50

 

 

—

 

Securities available for sale

 

2,548,739

 

 

2,337,676

 

 

1,991,815

 

 

1,922,728

 

 

1,884,153

 

Securities held to maturity

 

433,012

 

 

493,738

 

 

538,072

 

 

611,280

 

 

660,048

 

PPP loans

 

166,119

 

 

679,725

 

 

610,134

 

 

944,270

 

 

939,783

 

LHFS

 

332,132

 

 

412,999

 

 

446,951

 

 

485,103

 

 

355,089

 

LHFI

 

10,152,869

 

 

9,983,704

 

 

9,824,524

 

 

9,847,728

 

 

9,659,806

 

ACL LHFI

 

(104,032

)

 

(109,191

)

 

(117,306

)

 

(122,010

)

 

(119,188

)

Net LHFI

 

10,048,837

 

 

9,874,513

 

 

9,707,218

 

 

9,725,718

 

 

9,540,618

 

Premises and equipment, net

 

200,970

 

 

199,098

 

 

194,278

 

 

192,722

 

 

190,567

 

Mortgage servicing rights

 

80,764

 

 

83,035

 

 

66,464

 

 

61,613

 

 

57,811

 

Goodwill

 

384,237

 

 

384,237

 

 

385,270

 

 

385,270

 

 

385,270

 

Identifiable intangible assets

 

6,170

 

 

6,724

 

 

7,390

 

 

8,142

 

 

8,895

 

Other real estate

 

9,439

 

 

10,651

 

 

11,651

 

 

16,248

 

 

18,276

 

Operating lease right-of-use assets

 

33,201

 

 

33,704

 

 

30,901

 

 

30,508

 

 

29,819

 

Other assets

 

587,288

 

 

587,672

 

 

609,142

 

 

609,922

 

 

595,110

 

Total assets

$

17,098,132

 

$

16,878,313

 

$

16,551,840

 

$

15,558,162

 

$

15,692,079

 

 
Deposits:
Noninterest-bearing

$

4,446,991

 

$

4,705,991

 

$

4,349,010

 

$

3,964,023

 

$

3,880,540

 

Interest-bearing

 

10,185,093

 

 

9,677,449

 

 

9,699,754

 

 

9,258,390

 

 

9,624,933

 

Total deposits

 

14,632,084

 

 

14,383,440

 

 

14,048,764

 

 

13,222,413

 

 

13,505,473

 

Fed funds purchased and repurchases

 

157,176

 

 

160,991

 

 

164,519

 

 

153,834

 

 

70,255

 

Other borrowings

 

117,223

 

 

145,994

 

 

168,252

 

 

178,599

 

 

152,860

 

Subordinated notes

 

122,932

 

 

122,877

 

 

122,921

 

 

—

 

 

—

 

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

ACL on off-balance sheet credit exposures

 

33,733

 

 

29,205

 

 

38,572

 

 

39,659

 

 

42,663

 

Operating lease liabilities

 

34,959

 

 

35,389

 

 

32,290

 

 

31,838

 

 

31,076

 

Other liabilities

 

158,860

 

 

178,856

 

 

173,549

 

 

159,922

 

 

153,952

 

Total liabilities

 

15,318,823

 

 

15,118,608

 

 

14,810,723

 

 

13,848,121

 

 

14,018,135

 

Common stock

 

13,079

 

 

13,209

 

 

13,215

 

 

13,215

 

 

13,214

 

Capital surplus

 

210,420

 

 

229,892

 

 

233,120

 

 

231,836

 

 

230,613

 

Retained earnings

 

1,566,451

 

 

1,533,110

 

 

1,495,833

 

 

1,459,306

 

 

1,419,552

 

Accum other comprehensive income (loss), net of tax

 

(10,641

)

 

(16,506

)

 

(1,051

)

 

5,684

 

 

10,565

 

Total shareholders' equity

 

1,779,309

 

 

1,759,705

 

 

1,741,117

 

 

1,710,041

 

 

1,673,944

 

Total liabilities and equity

$

17,098,132

 

$

16,878,313

 

$

16,551,840

 

$

15,558,162

 

$

15,692,079

 

 
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2021
($ in thousands except per share data)
(unaudited)
 
Quarter Ended Six Months Ended
INCOME STATEMENTS 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 6/30/2021 6/30/2020
Interest and fees on LHFS & LHFI-FTE

$

93,698

 

$

93,394

 

$

96,453

 

$

97,429

 

$

99,300

$

187,092

 

$

208,657

Interest and fees on PPP loans

 

25,555

 

 

9,241

 

 

14,870

 

 

6,729

 

 

5,044

 

34,796

 

 

5,044

Interest on securities-taxable

 

8,991

 

 

8,938

 

 

9,998

 

 

12,542

 

 

12,762

 

17,929

 

 

25,710

Interest on securities-tax exempt-FTE

 

149

 

 

290

 

 

293

 

 

301

 

 

315

 

439

 

 

772

Interest on fed funds sold and reverse repurchases

 

—

 

 

—

 

 

—

 

 

1

 

 

—

 

—

 

 

—

Other interest income

 

489

 

 

503

 

 

249

 

 

331

 

 

239

 

992

 

 

979

Total interest income-FTE

 

128,882

 

 

112,366

 

 

121,863

 

 

117,333

 

 

117,660

 

241,248

 

 

241,162

Interest on deposits

 

4,630

 

 

5,223

 

 

6,363

 

 

7,437

 

 

8,730

 

9,853

 

 

23,687

Interest on fed funds purchased and repurchases

 

59

 

 

56

 

 

56

 

 

32

 

 

42

 

115

 

 

667

Other interest expense

 

1,813

 

 

1,857

 

 

1,127

 

 

688

 

 

881

 

3,670

 

 

1,741

Total interest expense

 

6,502

 

 

7,136

 

 

7,546

 

 

8,157

 

 

9,653

 

13,638

 

 

26,095

Net interest income-FTE

 

122,380

 

 

105,230

 

 

114,317

 

 

109,176

 

 

108,007

 

227,610

 

 

215,067

Provision for credit losses, LHFI

 

(3,991

)

 

(10,501

)

 

(4,413

)

 

1,760

 

 

18,185

 

(14,492

)

 

38,766

Provision for credit losses, off-balance sheet
  credit exposures (1)

 

4,528

 

 

(9,367

)

 

(1,087

)

 

(3,004

)

 

6,242

 

(4,839

)

 

13,025

Net interest income after provision-FTE

 

121,843

 

 

125,098

 

 

119,817

 

 

110,420

 

 

83,580

 

246,941

 

 

163,276

Service charges on deposit accounts

 

7,613

 

 

7,356

 

 

8,283

 

 

7,577

 

 

6,397

 

14,969

 

 

16,429

Bank card and other fees

 

8,301

 

 

9,472

 

 

9,107

 

 

8,843

 

 

7,717

 

17,773

 

 

13,072

Mortgage banking, net

 

17,333

 

 

20,804

 

 

28,155

 

 

36,439

 

 

33,745

 

38,137

 

 

61,228

Insurance commissions

 

12,217

 

 

12,445

 

 

10,196

 

 

11,562

 

 

11,868

 

24,662

 

 

23,418

Wealth management

 

8,946

 

 

8,416

 

 

7,838

 

 

7,679

 

 

7,571

 

17,362

 

 

16,108

Other, net

 

2,001

 

 

2,090

 

 

2,538

 

 

1,601

 

 

2,213

 

4,091

 

 

4,520

Total noninterest income

 

56,411

 

 

60,583

 

 

66,117

 

 

73,701

 

 

69,511

 

116,994

 

 

134,775

Salaries and employee benefits

 

70,115

 

 

71,162

 

 

69,660

 

 

67,342

 

 

66,107

 

141,277

 

 

135,255

Services and fees

 

21,769

 

 

22,484

 

 

22,327

 

 

20,992

 

 

20,567

 

44,253

 

 

40,497

Net occupancy-premises

 

6,578

 

 

6,795

 

 

6,616

 

 

7,000

 

 

6,587

 

13,373

 

 

12,873

Equipment expense

 

5,567

 

 

6,244

 

 

6,213

 

 

5,828

 

 

5,620

 

11,811

 

 

11,236

Other real estate expense, net

 

1,511

 

 

324

 

 

(812

)

 

1,203

 

 

271

 

1,835

 

 

1,565

Other expense

 

13,139

 

 

14,539

 

 

15,890

 

 

14,598

 

 

13,265

 

27,678

 

 

28,018

Total noninterest expense

 

118,679

 

 

121,548

 

 

119,894

 

 

116,963

 

 

112,417

 

240,227

 

 

229,444

Income before income taxes and tax eq adj

 

59,575

 

 

64,133

 

 

66,040

 

 

67,158

 

 

40,674

 

123,708

 

 

68,607

Tax equivalent adjustment

 

2,957

 

 

2,894

 

 

2,939

 

 

2,969

 

 

3,007

 

5,851

 

 

6,115

Income before income taxes

 

56,618

 

 

61,239

 

 

63,101

 

 

64,189

 

 

37,667

 

117,857

 

 

62,492

Income taxes

 

8,637

 

 

9,277

 

 

11,884

 

 

9,749

 

 

5,517

 

17,914

 

 

8,124

Net income

$

47,981

 

$

51,962

 

$

51,217

 

$

54,440

 

$

32,150

$

99,943

 

$

54,368

 
Per share data
Earnings per share - basic

$

0.76

 

$

0.82

 

$

0.81

 

$

0.86

 

$

0.51

$

1.58

 

$

0.86

 
Earnings per share - diluted

$

0.76

 

$

0.82

 

$

0.81

 

$

0.86

 

$

0.51

$

1.57

 

$

0.85

 
Dividends per share

$

0.23

 

$

0.23

 

$

0.23

 

$

0.23

 

$

0.23

$

0.46

 

$

0.46

 
Weighted average shares outstanding
Basic

 

63,214,593

 

 

63,395,911

 

 

63,424,219

 

 

63,422,692

 

 

63,416,307

 

63,304,751

 

 

63,586,468

 
Diluted

 

63,409,683

 

 

63,562,503

 

 

63,616,767

 

 

63,581,964

 

 

63,555,065

 

63,465,515

 

 

63,721,728

 
Period end shares outstanding

 

62,773,226

 

 

63,394,522

 

 

63,424,526

 

 

63,423,820

 

 

63,422,439

 

62,773,226

 

 

63,422,439

 
(1) During the second quarter of 2021, Trustmark reclassified its credit loss expense related to off-balance sheet credit exposures from noninterest expense to provision for credit losses, off-balance sheet credit exposures. Prior periods have been reclassified accordingly.
 
 
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2021
($ in thousands)
(unaudited)
 
Quarter Ended
NONPERFORMING ASSETS (1) 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020
Nonaccrual LHFI
Alabama

$

8,952

 

$

9,161

 

$

9,221

 

$

3,860

 

$

4,392

 

Florida

 

467

 

 

607

 

 

572

 

 

617

 

 

687

 

Mississippi (2)

 

23,422

 

 

35,534

 

 

35,015

 

 

35,617

 

 

37,884

 

Tennessee (3)

 

10,751

 

 

12,451

 

 

12,572

 

 

13,041

 

 

6,125

 

Texas

 

7,856

 

 

5,761

 

 

5,748

 

 

721

 

 

906

 

Total nonaccrual LHFI

 

51,448

 

 

63,514

 

 

63,128

 

 

53,856

 

 

49,994

 

Other real estate
Alabama

 

2,830

 

 

3,085

 

 

3,271

 

 

3,725

 

 

4,766

 

Florida

 

—

 

 

—

 

 

—

 

 

3,665

 

 

3,665

 

Mississippi (2)

 

6,550

 

 

7,566

 

 

8,330

 

 

8,718

 

 

9,408

 

Tennessee (3)

 

59

 

 

—

 

 

50

 

 

140

 

 

437

 

Texas

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

Total other real estate

 

9,439

 

 

10,651

 

 

11,651

 

 

16,248

 

 

18,276

 

Total nonperforming assets

$

60,887

 

$

74,165

 

$

74,779

 

$

70,104

 

$

68,270

 

 
LOANS PAST DUE OVER 90 DAYS (1)
LHFI

$

423

 

$

2,593

 

$

1,576

 

$

782

 

$

807

 

 
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)

$

81,538

 

$

109,566

 

$

119,409

 

$

121,281

 

$

56,269

 

 
 

Quarter Ended

Six Months Ended

ACL LHFI (1) 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 6/30/2021 6/30/2020
Beginning Balance

$

109,191

 

$

117,306

 

$

122,010

 

$

119,188

 

$

100,564

 

$

117,306

 

$

84,277

 

CECL adoption adjustments:
LHFI

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

(3,039

)

Acquired loan transfers

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

1,822

 

Provision for credit losses, LHFI

 

(3,991

)

 

(10,501

)

 

(4,413

)

 

1,760

 

 

18,185

 

 

(14,492

)

 

38,766

 

Charge-offs

 

(4,828

)

 

(1,245

)

 

(2,797

)

 

(1,263

)

 

(1,870

)

 

(6,073

)

 

(7,415

)

Recoveries

 

3,660

 

 

3,631

 

 

2,506

 

 

2,325

 

 

2,309

 

 

7,291

 

 

4,777

 

Net (charge-offs) recoveries

 

(1,168

)

 

2,386

 

 

(291

)

 

1,062

 

 

439

 

 

1,218

 

 

(2,638

)

Ending Balance

$

104,032

 

$

109,191

 

$

117,306

 

$

122,010

 

$

119,188

 

$

104,032

 

$

119,188

 

 
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama

$

203

 

$

102

 

$

(1,011

)

$

117

 

$

526

 

$

305

 

$

(554

)

Florida

 

167

 

 

30

 

 

66

 

 

387

 

 

(127

)

 

197

 

 

(63

)

Mississippi (2)

 

(3,071

)

 

2,207

 

 

332

 

 

442

 

 

(86

)

 

(864

)

 

40

 

Tennessee (3)

 

1,031

 

 

47

 

 

303

 

 

42

 

 

66

 

 

1,078

 

 

(2,120

)

Texas

 

502

 

 

—

 

 

19

 

 

74

 

 

60

 

 

502

 

 

59

 

Total net (charge-offs) recoveries

$

(1,168

)

$

2,386

 

$

(291

)

$

1,062

 

$

439

 

$

1,218

 

$

(2,638

)

 
(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
June 30, 2021
(unaudited)
 
Quarter Ended Six Months Ended
FINANCIAL RATIOS AND OTHER DATA 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 6/30/2021 6/30/2020
Return on average equity

 

10.81

%

 

11.98

%

 

11.81

%

 

12.78

%

 

7.76

%

11.39

%

6.61

%

Return on average tangible equity

 

13.96

%

 

15.56

%

 

15.47

%

 

16.82

%

 

10.32

%

14.75

%

8.84

%

Return on average assets

 

1.13

%

 

1.26

%

 

1.28

%

 

1.37

%

 

0.83

%

1.20

%

0.75

%

Interest margin - Yield - FTE

 

3.33

%

 

3.00

%

 

3.35

%

 

3.26

%

 

3.39

%

3.17

%

3.71

%

Interest margin - Cost

 

0.17

%

 

0.19

%

 

0.21

%

 

0.23

%

 

0.28

%

0.18

%

0.40

%

Net interest margin - FTE

 

3.16

%

 

2.81

%

 

3.15

%

 

3.03

%

 

3.12

%

2.99

%

3.31

%

Efficiency ratio (1)

 

64.31

%

 

71.84

%

 

65.59

%

 

62.19

%

 

62.13

%

67.93

%

62.81

%

Full-time equivalent employees

 

2,772

 

 

2,793

 

 

2,797

 

 

2,807

 

 

2,798

 

 
CREDIT QUALITY RATIOS (2)
Net (recoveries) charge-offs / average loans

 

0.05

%

 

-0.09

%

 

0.01

%

 

-0.04

%

 

-0.02

%

-0.02

%

0.05

%

Provision for credit losses, LHFI / average loans

 

-0.16

%

 

-0.41

%

 

-0.17

%

 

0.07

%

 

0.74

%

-0.28

%

0.80

%

Nonaccrual LHFI / (LHFI + LHFS)

 

0.49

%

 

0.61

%

 

0.61

%

 

0.52

%

 

0.50

%

Nonperforming assets / (LHFI + LHFS)

 

0.58

%

 

0.71

%

 

0.73

%

 

0.68

%

 

0.68

%

Nonperforming assets / (LHFI + LHFS + other real estate)

 

0.58

%

 

0.71

%

 

0.73

%

 

0.68

%

 

0.68

%

ACL LHFI / LHFI

 

1.02

%

 

1.09

%

 

1.19

%

 

1.24

%

 

1.23

%

ACL LHFI-commercial / commercial LHFI

 

1.04

%

 

1.13

%

 

1.20

%

 

1.20

%

 

1.15

%

ACL LHFI-consumer / consumer and home mortgage LHFI

 

0.98

%

 

0.95

%

 

1.16

%

 

1.41

%

 

1.56

%

ACL LHFI / nonaccrual LHFI

 

202.21

%

 

171.92

%

 

185.82

%

 

226.55

%

 

238.40

%

ACL LHFI / nonaccrual LHFI (excl individually evaluated loans)

 

537.35

%

 

437.08

%

 

572.69

%

 

593.72

%

 

561.04

%

 
CAPITAL RATIOS
Total equity / total assets

 

10.41

%

 

10.43

%

 

10.52

%

 

10.99

%

 

10.67

%

Tangible equity / tangible assets

 

8.31

%

 

8.30

%

 

8.34

%

 

8.68

%

 

8.37

%

Tangible equity / risk-weighted assets

 

11.33

%

 

11.23

%

 

11.22

%

 

11.01

%

 

11.09

%

Tier 1 leverage ratio

 

9.00

%

 

9.11

%

 

9.33

%

 

9.20

%

 

9.08

%

Common equity tier 1 capital ratio

 

11.76

%

 

11.71

%

 

11.62

%

 

11.36

%

 

11.42

%

Tier 1 risk-based capital ratio

 

12.25

%

 

12.20

%

 

12.11

%

 

11.86

%

 

11.94

%

Total risk-based capital ratio

 

14.10

%

 

14.07

%

 

14.12

%

 

12.88

%

 

13.00

%

 
STOCK PERFORMANCE
Market value-Close

$

30.80

 

$

33.66

 

$

27.31

 

$

21.41

 

$

24.52

 

Book value

$

28.35

 

$

27.76

 

$

27.45

 

$

26.96

 

$

26.39

 

Tangible book value

$

22.13

 

$

21.59

 

$

21.26

 

$

20.76

 

$

20.18

 

 
(1) See Note 8 – 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, 2021
($ in thousands)
(unaudited)

Note 1 - Paycheck Protection Program

On June 30, 2021, Trustmark announced the sale of substantially all PPP loans originated in 2021 by its wholly owned subsidiary, Trustmark National Bank (TNB), to The Loan Source, Inc. (Loan Source), a firm with significant expertise in PPP loans. As a result of this transaction, Loan Source will assume responsibility for the servicing and forgiveness process for the loans it has acquired from Trustmark. This transaction will allow Trustmark to focus on more traditional lending efforts and increase its ability to provide customers with financial services in an improving economic environment.

On a pre-tax basis, Trustmark accelerated the recognition of unamortized PPP loan origination fees, net of cost, of approximately $18.6 million, in the second quarter of 2021 due to the sale of approximately $354.2 million in PPP loans. This revenue is substantially the same as Trustmark would expect to recognize upon the maturity or forgiveness of the PPP loans being sold in this transaction, and thus this transaction serves to accelerate revenue anticipated in future periods into the second quarter.

At June 30, 2021, Trustmark had 843 PPP loans outstanding that totaled $166.1 million (net of $2.1 million of deferred fees and costs) under the CARES Act. Due to amount and nature of the PPP loans, these loans were not included in the LHFI portfolio and are presented separately in the accompanying consolidated balance sheets. The PPP loans are fully guaranteed by the Small Business Administration; therefore, no ACL was estimated for these loans.

Note 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:

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

 

 

9/30/2020

 

 

6/30/2020

 

SECURITIES AVAILABLE FOR SALE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

$

30,025

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

U.S. Government agency obligations

 

 

16,023

 

 

 

17,349

 

 

 

18,041

 

 

 

19,011

 

 

 

19,898

 

Obligations of states and political subdivisions

 

 

5,807

 

 

 

5,798

 

 

 

5,835

 

 

 

8,315

 

 

 

11,176

 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage pass-through securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guaranteed by GNMA

 

 

48,445

 

 

 

52,406

 

 

 

56,862

 

 

 

62,156

 

 

 

69,637

 

Issued by FNMA and FHLMC

 

 

1,983,783

 

 

 

1,749,144

 

 

 

1,441,321

 

 

 

1,279,919

 

 

 

1,121,604

 

Other residential mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

283,988

 

 

 

345,869

 

 

 

419,437

 

 

 

500,858

 

 

 

574,940

 

Commercial mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

180,668

 

 

 

167,110

 

 

 

50,319

 

 

 

52,469

 

 

 

86,898

 

Total securities available for sale

 

$

2,548,739

 

 

$

2,337,676

 

 

$

1,991,815

 

 

$

1,922,728

 

 

$

1,884,153

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SECURITIES HELD TO MATURITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Obligations of states and political subdivisions

 

$

12,994

 

 

$

26,554

 

 

$

26,584

 

 

$

31,605

 

 

$

31,629

 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage pass-through securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guaranteed by GNMA

 

 

6,249

 

 

 

7,268

 

 

 

7,598

 

 

 

8,244

 

 

 

10,306

 

Issued by FNMA and FHLMC

 

 

53,406

 

 

 

61,855

 

 

 

67,944

 

 

 

78,213

 

 

 

86,346

 

Other residential mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

291,477

 

 

 

324,360

 

 

 

360,361

 

 

 

399,400

 

 

 

435,333

 

Commercial mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

68,886

 

 

 

73,701

 

 

 

75,585

 

 

 

93,818

 

 

 

96,434

 

Total securities held to maturity

 

$

433,012

 

 

$

493,738

 

 

$

538,072

 

 

$

611,280

 

 

$

660,048

 

At June 30, 2021, the net unamortized, unrealized loss included in accumulated other comprehensive income (loss) in the accompanying balance sheet for securities held to maturity previously transferred from securities available for sale totaled approximately $7.5 million ($5.6 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 99.4% 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, 2021
($ in thousands)
(unaudited)

Note 3 – Loan Composition

LHFI consisted of the following during the periods presented:

LHFI BY TYPE

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

 

 

9/30/2020

 

 

6/30/2020

 

Loans secured by real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction, land development and other land loans

 

$

1,360,302

 

 

$

1,342,088

 

 

$

1,309,039

 

 

$

1,385,947

 

 

$

1,277,277

 

Secured by 1-4 family residential properties

 

 

1,810,396

 

 

 

1,742,782

 

 

 

1,741,132

 

 

 

1,775,400

 

 

 

1,813,525

 

Secured by nonfarm, nonresidential properties

 

 

2,819,662

 

 

 

2,799,195

 

 

 

2,709,026

 

 

 

2,707,627

 

 

 

2,610,392

 

Other real estate secured

 

 

1,078,622

 

 

 

1,135,005

 

 

 

1,065,964

 

 

 

887,792

 

 

 

884,815

 

Commercial and industrial loans

 

 

1,326,605

 

 

 

1,323,277

 

 

 

1,309,078

 

 

 

1,398,468

 

 

 

1,413,255

 

Consumer loans

 

 

153,519

 

 

 

153,267

 

 

 

161,174

 

 

 

160,960

 

 

 

161,620

 

State and other political subdivision loans

 

 

1,136,764

 

 

 

1,036,694

 

 

 

1,000,776

 

 

 

935,349

 

 

 

931,536

 

Other loans

 

 

466,999

 

 

 

451,396

 

 

 

528,335

 

 

 

596,185

 

 

 

567,386

 

LHFI

 

 

10,152,869

 

 

 

9,983,704

 

 

 

9,824,524

 

 

 

9,847,728

 

 

 

9,659,806

 

ACL LHFI

 

 

(104,032

)

 

 

(109,191

)

 

 

(117,306

)

 

 

(122,010

)

 

 

(119,188

)

Net LHFI

 

$

10,048,837

 

 

$

9,874,513

 

 

$

9,707,218

 

 

$

9,725,718

 

 

$

9,540,618

 

The following table presents the LHFI composition by region at June 30, 2021 and reflects each region’s diversified mix of loans:

 

 

June 30, 2021

 

LHFI - COMPOSITION BY REGION

 

Total

 

 

Alabama

 

 

Florida

 

 

Mississippi
(Central and
Southern
Regions)

 

 

Tennessee
(Memphis,
TN and
Northern MS
Regions)

 

 

Texas

 

Loans secured by real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction, land development and other land loans

 

$

1,360,302

 

 

$

512,156

 

 

$

57,415

 

 

$

358,091

 

 

$

36,934

 

 

$

395,706

 

Secured by 1-4 family residential properties

 

 

1,810,396

 

 

 

113,712

 

 

 

38,443

 

 

 

1,576,135

 

 

 

68,876

 

 

 

13,230

 

Secured by nonfarm, nonresidential properties

 

 

2,819,662

 

 

 

783,796

 

 

 

248,269

 

 

 

1,006,513

 

 

 

175,586

 

 

 

605,498

 

Other real estate secured

 

 

1,078,622

 

 

 

287,039

 

 

 

5,734

 

 

 

356,092

 

 

 

19,676

 

 

 

410,081

 

Commercial and industrial loans

 

 

1,326,605

 

 

 

212,425

 

 

 

21,180

 

 

 

585,821

 

 

 

298,249

 

 

 

208,930

 

Consumer loans

 

 

153,519

 

 

 

22,792

 

 

 

7,660

 

 

 

99,067

 

 

 

19,496

 

 

 

4,504

 

State and other political subdivision loans

 

 

1,136,764

 

 

 

106,447

 

 

 

53,425

 

 

 

722,702

 

 

 

37,777

 

 

 

216,413

 

Other loans

 

 

466,999

 

 

 

77,295

 

 

 

12,964

 

 

 

290,024

 

 

 

65,816

 

 

 

20,900

 

Loans

 

$

10,152,869

 

 

$

2,115,662

 

 

$

445,090

 

 

$

4,994,445

 

 

$

722,410

 

 

$

1,875,262

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION

Lots

 

$

59,839

 

 

$

22,570

 

 

$

9,368

 

 

$

20,283

 

 

$

1,181

 

 

$

6,437

 

Development

 

 

106,548

 

 

 

41,903

 

 

 

554

 

 

 

37,599

 

 

 

13,211

 

 

 

13,281

 

Unimproved land

 

 

102,023

 

 

 

27,747

 

 

 

12,709

 

 

 

32,564

 

 

 

11,375

 

 

 

17,628

 

1-4 family construction

 

 

264,227

 

 

 

135,418

 

 

 

19,606

 

 

 

63,863

 

 

 

10,088

 

 

 

35,252

 

Other construction

 

 

827,665

 

 

 

284,518

 

 

 

15,178

 

 

 

203,782

 

 

 

1,079

 

 

 

323,108

 

Construction, land development and other land loans

 

$

1,360,302

 

 

$

512,156

 

 

$

57,415

 

 

$

358,091

 

 

$

36,934

 

 

$

395,706

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2021
($ in thousands)
(unaudited)

Note 3 – Loan Composition (continued)

 

 

June 30, 2021

 

 

 

Total

 

 

Alabama

 

 

Florida

 

 

Mississippi
(Central and
Southern
Regions)

 

 

Tennessee
(Memphis,
TN and
Northern MS
Regions)

 

 

Texas

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION

Non-owner occupied:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

$

401,811

 

 

$

158,862

 

 

$

36,208

 

 

$

108,021

 

 

$

22,347

 

 

$

76,373

 

Office

 

 

203,704

 

 

 

48,483

 

 

 

25,523

 

 

 

62,711

 

 

 

12,352

 

 

 

54,635

 

Hotel/motel

 

 

340,867

 

 

 

167,536

 

 

 

65,163

 

 

 

47,535

 

 

 

35,708

 

 

 

24,925

 

Mini-storage

 

 

138,841

 

 

 

22,969

 

 

 

2,151

 

 

 

66,392

 

 

 

382

 

 

 

46,947

 

Industrial

 

 

211,872

 

 

 

43,197

 

 

 

19,008

 

 

 

46,733

 

 

 

139

 

 

 

102,795

 

Health care

 

 

41,722

 

 

 

21,555

 

 

 

1,167

 

 

 

16,468

 

 

 

376

 

 

 

2,156

 

Convenience stores

 

 

22,052

 

 

 

6,742

 

 

 

200

 

 

 

3,737

 

 

 

564

 

 

 

10,809

 

Nursing homes/senior living

 

 

154,351

 

 

 

84,686

 

 

 

—

 

 

 

43,067

 

 

 

6,598

 

 

 

20,000

 

Other

 

 

85,841

 

 

 

12,990

 

 

 

8,293

 

 

 

27,345

 

 

 

8,962

 

 

 

28,251

 

Total non-owner occupied loans

 

 

1,601,061

 

 

 

567,020

 

 

 

157,713

 

 

 

422,009

 

 

 

87,428

 

 

 

366,891

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Owner-occupied:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office

 

 

174,051

 

 

 

40,219

 

 

 

41,695

 

 

 

54,589

 

 

 

8,149

 

 

 

29,399

 

Churches

 

 

100,575

 

 

 

20,331

 

 

 

6,439

 

 

 

50,387

 

 

 

10,056

 

 

 

13,362

 

Industrial warehouses

 

 

177,645

 

 

 

12,820

 

 

 

3,582

 

 

 

49,855

 

 

 

16,729

 

 

 

94,659

 

Health care

 

 

139,456

 

 

 

25,317

 

 

 

7,019

 

 

 

94,162

 

 

 

2,313

 

 

 

10,645

 

Convenience stores

 

 

139,508

 

 

 

16,425

 

 

 

13,211

 

 

 

64,621

 

 

 

511

 

 

 

44,740

 

Retail

 

 

68,652

 

 

 

13,448

 

 

 

9,815

 

 

 

20,565

 

 

 

10,382

 

 

 

14,442

 

Restaurants

 

 

54,470

 

 

 

3,838

 

 

 

4,609

 

 

 

31,637

 

 

 

14,101

 

 

 

285

 

Auto dealerships

 

 

55,141

 

 

 

6,664

 

 

 

267

 

 

 

23,099

 

 

 

25,111

 

 

 

—

 

Nursing homes/senior living

 

 

202,579

 

 

 

71,916

 

 

 

—

 

 

 

130,663

 

 

 

—

 

 

 

—

 

Other

 

 

106,524

 

 

 

5,798

 

 

 

3,919

 

 

 

64,926

 

 

 

806

 

 

 

31,075

 

Total owner-occupied loans

 

 

1,218,601

 

 

 

216,776

 

 

 

90,556

 

 

 

584,504

 

 

 

88,158

 

 

 

238,607

 

Loans secured by nonfarm, nonresidential properties

 

$

2,819,662

 

 

$

783,796

 

 

$

248,269

 

 

$

1,006,513

 

 

$

175,586

 

 

$

605,498

 

Note 4 – Subordinated Notes

During the fourth quarter of 2020, Trustmark agreed to issue and sell $125.0 million aggregate principal amount of its 3.625% Fixed-to-Floating Rate Subordinated Notes (the Notes) due December 1, 2030. At June 30, 2021, the carrying amount of the Notes was $122.9 million. The Notes are unsecured obligations and are subordinated in right of payment to all of Trustmark’s existing and future senior indebtedness, whether secured or unsecured. The Notes are obligations of Trustmark only and are not obligations of, and are not guaranteed by, any of its subsidiaries, including TNB. From the date of issuance until November 30, 2025, the Notes bear interest at a fixed rate of 3.625% per year, payable semi-annually in arrears on June 1 and December 1 of each year. Beginning December 1, 2025, the Notes will bear interest at a floating rate per year equal to the Benchmark rate, which is the Three-Month Term Secured Overnight Financing Rate (SOFR), plus 338.7 basis points, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year. The Notes qualify as Tier 2 capital for Trustmark. The Notes may be redeemed at Trustmark’s option under certain circumstances. Trustmark intends to use the net proceeds for general corporate purposes.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2021
($ in thousands)
(unaudited)

Note 5 – 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

 

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

 

 

9/30/2020

 

 

6/30/2020

 

 

6/30/2021

 

 

6/30/2020

 

Securities – taxable

 

 

1.30

%

 

 

1.40

%

 

 

1.62

%

 

 

2.02

%

 

 

2.16

%

 

 

1.35

%

 

 

2.20

%

Securities – nontaxable

 

 

3.70

%

 

 

4.02

%

 

 

3.89

%

 

 

3.80

%

 

 

3.58

%

 

 

3.91

%

 

 

3.74

%

Securities – total

 

 

1.31

%

 

 

1.43

%

 

 

1.65

%

 

 

2.05

%

 

 

2.18

%

 

 

1.37

%

 

 

2.23

%

PPP loans

 

 

15.81

%

 

 

6.27

%

 

 

6.76

%

 

 

2.84

%

 

 

2.65

%

 

 

11.26

%

 

 

2.65

%

Loans - LHFI & LHFS

 

 

3.64

%

 

 

3.67

%

 

 

3.75

%

 

 

3.81

%

 

 

4.03

%

 

 

3.66

%

 

 

4.28

%

Loans - total

 

 

4.36

%

 

 

3.81

%

 

 

3.99

%

 

 

3.73

%

 

 

3.93

%

 

 

4.09

%

 

 

4.22

%

Fed funds sold & reverse repurchases

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1.32

%

 

 

—

 

 

 

—

 

 

 

—

 

Other earning assets

 

 

0.11

%

 

 

0.12

%

 

 

0.12

%

 

 

0.18

%

 

 

0.11

%

 

 

0.12

%

 

 

0.38

%

Total earning assets

 

 

3.33

%

 

 

3.00

%

 

 

3.35

%

 

 

3.26

%

 

 

3.39

%

 

 

3.17

%

 

 

3.71

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

 

0.19

%

 

 

0.22

%

 

 

0.27

%

 

 

0.31

%

 

 

0.37

%

 

 

0.20

%

 

 

0.53

%

Fed funds purchased & repurchases

 

 

0.14

%

 

 

0.14

%

 

 

0.13

%

 

 

0.15

%

 

 

0.16

%

 

 

0.14

%

 

 

0.76

%

Other borrowings

 

 

2.29

%

 

 

2.14

%

 

 

1.61

%

 

 

1.19

%

 

 

2.09

%

 

 

2.21

%

 

 

2.21

%

Total interest-bearing liabilities

 

 

0.25

%

 

 

0.28

%

 

 

0.30

%

 

 

0.33

%

 

 

0.39

%

 

 

0.26

%

 

 

0.56

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

 

3.16

%

 

 

2.81

%

 

 

3.15

%

 

 

3.03

%

 

 

3.12

%

 

 

2.99

%

 

 

3.31

%

Net interest margin excluding PPP loans and the FRB balance

 

 

2.94

%

 

 

2.99

%

 

 

3.09

%

 

 

3.20

%

 

 

3.35

%

 

 

2.96

%

 

 

3.44

%

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 June 30, 2021 and March 31, 2021, the average FRB balance totaled $1.700 billion and $1.618 billion, respectively, and is included in other earning assets in the accompanying average consolidated balance sheets.

The net interest margin excluding PPP loans and the FRB balance totaled 2.94% for the second quarter of 2021, a decrease of 5 basis points when compared to the first quarter of 2021. Continued low interest rates decreased the yield on the loans held for investment and held for sale portfolio as well as the securities portfolio and were partially offset by lower costs of interest-bearing deposits.

Note 6 – Mortgage Banking

Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that offsets the changes in fair value of mortgage servicing rights (MSR) attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under generally accepted accounting principles (GAAP). Changes in the fair value of these exchange-traded derivative instruments, including administrative costs, are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of the MSR. The MSR fair value represents the present value of future cash flows, which among other things includes decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the change in value of hedge instruments to the change in the fair value of the MSR asset attributable to changes in interest rates and other market driven changes in valuation inputs and assumptions. The impact of this strategy resulted in a net positive ineffectiveness of $1.3 million during the second quarter of 2021.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2021
($ in thousands)
(unaudited)

Note 6 – Mortgage Banking (continued)

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

 

 

Quarter Ended

 

 

Six Months Ended

 

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

 

 

9/30/2020

 

 

6/30/2020

 

 

6/30/2021

 

 

6/30/2020

 

Mortgage servicing income, net

 

$

6,318

 

 

$

6,181

 

 

$

6,227

 

 

$

5,742

 

 

$

5,893

 

 

$

12,499

 

 

$

11,712

 

Change in fair value-MSR from runoff

 

 

(5,029

)

 

 

(5,103

)

 

 

(5,177

)

 

 

(4,590

)

 

 

(4,214

)

 

 

(10,132

)

 

 

(6,821

)

Gain on sales of loans, net

 

 

14,778

 

 

 

19,456

 

 

 

28,014

 

 

 

34,472

 

 

 

34,078

 

 

 

34,234

 

 

 

48,417

 

Mortgage banking income before hedge ineffectiveness

 

 

16,067

 

 

 

20,534

 

 

 

29,064

 

 

 

35,624

 

 

 

35,757

 

 

 

36,601

 

 

 

53,308

 

Change in fair value-MSR from market changes

 

 

(4,465

)

 

 

13,696

 

 

 

951

 

 

 

60

 

 

 

(3,159

)

 

 

9,231

 

 

 

(27,158

)

Change in fair value of derivatives

 

 

5,731

 

 

 

(13,426

)

 

 

(1,860

)

 

 

755

 

 

 

1,147

 

 

 

(7,695

)

 

 

35,078

 

Net positive (negative) hedge ineffectiveness

 

 

1,266

 

 

 

270

 

 

 

(909

)

 

 

815

 

 

 

(2,012

)

 

 

1,536

 

 

 

7,920

 

Mortgage banking, net

 

$

17,333

 

 

$

20,804

 

 

$

28,155

 

 

$

36,439

 

 

$

33,745

 

 

$

38,137

 

 

$

61,228

 

Note 7 – Other Noninterest Income and Expense

Other noninterest income consisted of the following for the periods presented:

 

 

Quarter Ended

 

 

Six Months Ended

 

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

 

 

9/30/2020

 

 

6/30/2020

 

 

6/30/2021

 

 

6/30/2020

 

Partnership amortization for tax credit purposes

 

$

(1,989

)

 

$

(1,522

)

 

$

(1,877

)

 

$

(1,457

)

 

$

(1,205

)

 

$

(3,511

)

 

$

(2,366

)

Increase in life insurance cash surrender value

 

 

1,653

 

 

 

1,639

 

 

 

1,708

 

 

 

1,755

 

 

 

1,696

 

 

 

3,292

 

 

 

3,418

 

Other miscellaneous income

 

 

2,337

 

 

 

1,973

 

 

 

2,707

 

 

 

1,303

 

 

 

1,722

 

 

 

4,310

 

 

 

3,468

 

Total other, net

 

$

2,001

 

 

$

2,090

 

 

$

2,538

 

 

$

1,601

 

 

$

2,213

 

 

$

4,091

 

 

$

4,520

 

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

 

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

 

 

9/30/2020

 

 

6/30/2020

 

 

6/30/2021

 

 

6/30/2020

 

Loan expense

 

$

3,738

 

 

$

4,167

 

 

$

4,243

 

 

$

4,184

 

 

$

3,619

 

 

$

7,905

 

 

$

6,751

 

Amortization of intangibles

 

 

553

 

 

 

666

 

 

 

752

 

 

 

752

 

 

 

736

 

 

 

1,219

 

 

 

1,548

 

FDIC assessment expense

 

 

1,225

 

 

 

1,540

 

 

 

1,500

 

 

 

1,410

 

 

 

1,590

 

 

 

2,765

 

 

 

3,180

 

Other miscellaneous expense

 

 

7,623

 

 

 

8,166

 

 

 

9,395

 

 

 

8,252

 

 

 

7,320

 

 

 

15,789

 

 

 

16,539

 

Total other expense

 

$

13,139

 

 

$

14,539

 

 

$

15,890

 

 

$

14,598

 

 

$

13,265

 

 

$

27,678

 

 

$

28,018

 

Note 8 – Non-GAAP Financial Measures

In addition to capital ratios defined by U.S. generally accepted accounting principles (GAAP) and banking regulators, Trustmark utilizes various tangible common equity measures when evaluating capital utilization and adequacy. Tangible common equity, as defined by Trustmark, represents common equity less goodwill and identifiable intangible assets.

Trustmark believes these measures are important because they reflect the level of capital available to withstand unexpected market conditions. Additionally, presentation of these measures allows readers to compare certain aspects of Trustmark’s capitalization to other organizations. These ratios differ from capital measures defined by banking regulators principally in that the numerator excludes shareholders’ equity associated with preferred securities, the nature and extent of which varies across organizations. In Management’s experience, many stock analysts use tangible common equity measures in conjunction with more traditional bank capital ratios to compare capital adequacy of banking organizations with significant amounts of goodwill or other tangible assets, typically stemming from the use of the purchase accounting method in accounting for mergers and acquisitions.

These calculations are intended to complement the capital ratios defined by GAAP and banking regulators. Because GAAP does not include these capital ratio measures, Trustmark believes there are no comparable GAAP financial measures to these tangible common equity ratios. Despite the importance of these measures to Trustmark, there are no standardized definitions for them and, as a result, Trustmark’s calculations may not be comparable with other organizations. Also, there may be limits in the usefulness of these measures to investors. As a result, Trustmark encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure. The following table reconciles Trustmark’s calculation of these measures to amounts reported under GAAP.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2021
($ in thousands except per share data)
(unaudited)

Note 8 – Non-GAAP Financial Measures (continued)

 

 

 

 

Quarter Ended

 

 

Six Months Ended

 

 

 

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

 

 

9/30/2020

 

 

6/30/2020

 

 

6/30/2021

 

 

6/30/2020

 

TANGIBLE EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE BALANCES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders' equity

 

 

 

$

1,780,705

 

 

$

1,759,351

 

 

$

1,725,035

 

 

$

1,694,903

 

 

$

1,665,716

 

 

$

1,770,087

 

 

$

1,652,893

 

Less: Goodwill

 

 

 

 

(384,237

)

 

 

(385,155

)

 

 

(385,270

)

 

 

(385,270

)

 

 

(383,081

)

 

 

(384,694

)

 

 

(381,876

)

Identifiable intangible assets

 

 

 

 

(6,442

)

 

 

(7,118

)

 

 

(7,803

)

 

 

(8,550

)

 

 

(7,834

)

 

 

(6,778

)

 

 

(7,942

)

Total average tangible equity

 

 

 

$

1,390,026

 

 

$

1,367,078

 

 

$

1,331,962

 

 

$

1,301,083

 

 

$

1,274,801

 

 

$

1,378,615

 

 

$

1,263,075

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PERIOD END BALANCES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders' equity

 

 

 

$

1,779,309

 

 

$

1,759,705

 

 

$

1,741,117

 

 

$

1,710,041

 

 

$

1,673,944

 

 

 

 

 

 

 

 

 

Less: Goodwill

 

 

 

 

(384,237

)

 

 

(384,237

)

 

 

(385,270

)

 

 

(385,270

)

 

 

(385,270

)

 

 

 

 

 

 

 

 

Identifiable intangible assets

 

 

 

 

(6,170

)

 

 

(6,724

)

 

 

(7,390

)

 

 

(8,142

)

 

 

(8,895

)

 

 

 

 

 

 

 

 

Total tangible equity

 

(a)

 

$

1,388,902

 

 

$

1,368,744

 

 

$

1,348,457

 

 

$

1,316,629

 

 

$

1,279,779

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TANGIBLE ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

 

$

17,098,132

 

 

$

16,878,313

 

 

$

16,551,840

 

 

$

15,558,162

 

 

$

15,692,079

 

 

 

 

 

 

 

 

 

Less: Goodwill

 

 

 

 

(384,237

)

 

 

(384,237

)

 

 

(385,270

)

 

 

(385,270

)

 

 

(385,270

)

 

 

 

 

 

 

 

 

Identifiable intangible assets

 

 

 

 

(6,170

)

 

 

(6,724

)

 

 

(7,390

)

 

 

(8,142

)

 

 

(8,895

)

 

 

 

 

 

 

 

 

Total tangible assets

 

(b)

 

$

16,707,725

 

 

$

16,487,352

 

 

$

16,159,180

 

 

$

15,164,750

 

 

$

15,297,914

 

 

 

 

 

 

 

 

 

Risk-weighted assets

 

(c)

 

$

12,256,492

 

 

$

12,188,988

 

 

$

12,017,378

 

 

$

11,963,269

 

 

$

11,539,157

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

$

47,981

 

 

$

51,962

 

 

$

51,217

 

 

$

54,440

 

 

$

32,150

 

 

$

99,943

 

 

$

54,368

 

Plus: Intangible amortization net of tax

 

 

 

 

415

 

 

 

500

 

 

 

564

 

 

 

564

 

 

 

552

 

 

 

915

 

 

 

1,161

 

Net income adjusted for intangible amortization

 

$

48,396

 

 

$

52,462

 

 

$

51,781

 

 

$

55,004

 

 

$

32,702

 

 

$

100,858

 

 

$

55,529

 

Period end common shares outstanding

 

(d)

 

 

62,773,226

 

 

 

63,394,522

 

 

 

63,424,526

 

 

 

63,423,820

 

 

 

63,422,439

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TANGIBLE COMMON EQUITY MEASUREMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average tangible equity (1)

 

 

 

 

13.96

%

 

 

15.56

%

 

 

15.47

%

 

 

16.82

%

 

 

10.32

%

 

 

14.75

%

 

 

8.84

%

Tangible equity/tangible assets

 

(a)/(b)

 

 

8.31

%

 

 

8.30

%

 

 

8.34

%

 

 

8.68

%

 

 

8.37

%

 

 

 

 

 

 

 

 

Tangible equity/risk-weighted assets

 

(a)/(c)

 

 

11.33

%

 

 

11.23

%

 

 

11.22

%

 

 

11.01

%

 

 

11.09

%

 

 

 

 

 

 

 

 

Tangible book value

 

(a)/(d)*1,000

 

$

22.13

 

 

$

21.59

 

 

$

21.26

 

 

$

20.76

 

 

$

20.18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMMON EQUITY TIER 1 CAPITAL (CET1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders' equity

 

 

 

$

1,779,309

 

 

$

1,759,705

 

 

$

1,741,117

 

 

$

1,710,041

 

 

$

1,673,944

 

 

 

 

 

 

 

 

 

CECL transition adjustment

 

 

 

 

26,671

 

 

 

26,829

 

 

 

31,199

 

 

 

32,647

 

 

 

32,693

 

 

 

 

 

 

 

 

 

AOCI-related adjustments

 

 

 

 

10,641

 

 

 

16,506

 

 

 

1,051

 

 

 

(5,684

)

 

 

(10,565

)

 

 

 

 

 

 

 

 

CET1 adjustments and deductions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill net of associated deferred tax liabilities (DTLs)

 

 

(370,276

)

 

 

(370,288

)

 

 

(371,333

)

 

 

(371,345

)

 

 

(371,342

)

 

 

 

 

 

 

 

 

Other adjustments and deductions for CET1 (2)

 

 

(5,243

)

 

 

(5,675

)

 

 

(6,190

)

 

 

(6,770

)

 

 

(7,352

)

 

 

 

 

 

 

 

 

CET1 capital

 

(e)

 

 

1,441,102

 

 

 

1,427,077

 

 

 

1,395,844

 

 

 

1,358,889

 

 

 

1,317,378

 

 

 

 

 

 

 

 

 

Additional tier 1 capital instruments plus related surplus

 

 

60,000

 

 

 

60,000

 

 

 

60,000

 

 

 

60,000

 

 

 

60,000

 

 

 

 

 

 

 

 

 

Tier 1 capital

 

 

 

$

1,501,102

 

 

$

1,487,077

 

 

$

1,455,844

 

 

$

1,418,889

 

 

$

1,377,378

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity tier 1 capital ratio

 

(e)/(c)

 

 

11.76

%

 

 

11.71

%

 

 

11.62

%

 

 

11.36

%

 

 

11.42

%

 

 

 

 

 

 

 

 

 

(1) Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity.

(2) Includes other intangible assets, net of DTLs, disallowed deferred tax assets (DTAs), threshold deductions and transition adjustments, as applicable.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2021
($ in thousands except per share data)
(unaudited)

Note 8 – 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

 

 

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

 

 

9/30/2020

 

 

6/30/2020

 

 

6/30/2021

 

 

6/30/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (GAAP)

 

$

119,423

 

 

$

102,336

 

 

$

111,378

 

 

$

106,207

 

 

$

105,000

 

 

$

221,759

 

 

$

208,952

 

Noninterest income (GAAP)

 

 

56,411

 

 

 

60,583

 

 

 

66,117

 

 

 

73,701

 

 

 

69,511

 

 

 

116,994

 

 

 

134,775

 

Pre-provision revenue

(a)

$

175,834

 

 

$

162,919

 

 

$

177,495

 

 

$

179,908

 

 

$

174,511

 

 

$

338,753

 

 

$

343,727

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense (GAAP)

 

$

118,679

 

 

$

121,548

 

 

$

119,894

 

 

$

116,963

 

 

$

112,417

 

 

$

240,227

 

 

$

229,444

 

Less: Voluntary early retirement program

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(4,375

)

Adjusted noninterest expense - PPNR (Non-GAAP)

(b)

$

118,679

 

 

$

121,548

 

 

$

119,894

 

 

$

116,963

 

 

$

112,417

 

 

$

240,227

 

 

$

225,069

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PPNR (Non-GAAP)

(a)-(b)

$

57,155

 

 

$

41,371

 

 

$

57,601

 

 

$

62,945

 

 

$

62,094

 

 

$

98,526

 

 

$

118,658

 

The following table presents adjustments to net income and select financial ratios as reported in accordance with GAAP resulting from significant non-routine items occurring during the periods presented:

 

Quarter Ended

 

 

 

Six Months Ended

 

 

6/30/2021

 

 

 

6/30/2020

 

 

 

6/30/2021

 

 

 

6/30/2020

 

 

Amount

 

 

Diluted
EPS

 

 

 

Amount

 

 

Diluted
EPS

 

 

 

Amount

 

 

Diluted
EPS

 

 

 

Amount

 

 

Diluted
EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (GAAP)

$

47,981

 

 

$

0.76

 

 

 

$

32,150

 

 

$

0.51

 

 

 

$

99,943

 

 

$

1.57

 

 

 

$

54,368

 

 

$

0.85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Significant non-routine transactions (net of taxes):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voluntary early retirement program

 

—

 

 

 

—

 

 

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

—

 

 

 

 

3,281

 

 

 

0.05

 

Net Income adjusted for significant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  non-routine transactions (Non-GAAP)

$

47,981

 

 

$

0.76

 

 

 

$

32,150

 

 

$

0.51

 

 

 

$

99,943

 

 

$

1.57

 

 

 

$

57,649

 

 

$

0.90

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported
(GAAP)

 

 

Adjusted

 

 

 

Reported
(GAAP)

 

 

Adjusted

 

 

 

Reported
(GAAP)

 

 

Adjusted

 

 

 

Reported
(GAAP)

 

 

Adjusted

 

 

 

 

(Non-
GAAP)

 

 

 

 

 

(Non-
GAAP)

 

 

 

 

 

(Non-
GAAP)

 

 

 

 

 

(Non-
GAAP)

 

Return on average equity

 

10.81

%

 

n/a

 

 

 

 

7.76

%

 

n/a

 

 

 

 

11.39

%

 

n/a

 

 

 

 

6.61

%

 

 

7.00

%

Return on average tangible equity

 

13.96

%

 

n/a

 

 

 

 

10.32

%

 

n/a

 

 

 

 

14.75

%

 

n/a

 

 

 

 

8.84

%

 

 

9.35

%

Return on average assets

 

1.13

%

 

n/a

 

 

 

 

0.83

%

 

n/a

 

 

 

 

1.20

%

 

n/a

 

 

 

 

0.75

%

 

 

0.79

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

n/a - not applicable

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2021
($ in thousands)
(unaudited)

Note 8 – Non-GAAP Financial Measures (continued)

The following table presents Trustmark’s calculation of its efficiency ratio for the periods presented:

 

 

Quarter Ended

 

 

Six Months Ended

 

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

 

 

9/30/2020

 

 

6/30/2020

 

 

6/30/2021

 

 

6/30/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total noninterest expense (GAAP)

 

$

118,679

 

 

$

121,548

 

 

$

119,894

 

 

$

116,963

 

 

$

112,417

 

 

 

240,227

 

 

$

229,444

 

Less: Other real estate expense, net

 

 

(1,511

)

 

 

(324

)

 

 

812

 

 

 

(1,203

)

 

 

(271

)

 

 

(1,835

)

 

 

(1,565

)

Amortization of intangibles

 

 

(553

)

 

 

(666

)

 

 

(752

)

 

 

(752

)

 

 

(736

)

 

 

(1,219

)

 

 

(1,548

)

Voluntary early retirement program

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(4,375

)

Charitable contributions resulting in state tax credits

 

 

(355

)

 

 

(350

)

 

 

(375

)

 

 

(375

)

 

 

(375

)

 

 

(705

)

 

 

(750

)

Adjusted noninterest expense (Non-GAAP)

(c)

$

116,260

 

 

$

120,208

 

 

$

119,579

 

 

$

114,633

 

 

$

111,035

 

 

$

236,468

 

 

$

221,206

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (GAAP)

 

$

119,423

 

 

$

102,336

 

 

$

111,378

 

 

$

106,207

 

 

$

105,000

 

 

$

221,759

 

 

$

208,952

 

Add: Tax equivalent adjustment

 

 

2,957

 

 

 

2,894

 

 

 

2,939

 

 

 

2,969

 

 

 

3,007

 

 

 

5,851

 

 

 

6,115

 

Net interest income-FTE (Non-GAAP)

(a)

$

122,380

 

 

$

105,230

 

 

$

114,317

 

 

$

109,176

 

 

$

108,007

 

 

$

227,610

 

 

$

215,067

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income (GAAP)

 

$

56,411

 

 

$

60,583

 

 

$

66,117

 

 

$

73,701

 

 

$

69,511

 

 

$

116,994

 

 

$

134,775

 

Add: Partnership amortization for tax credit purposes

 

 

1,989

 

 

 

1,522

 

 

 

1,877

 

 

 

1,457

 

 

 

1,205

 

 

 

3,511

 

 

 

2,366

 

Adjusted noninterest income (Non-GAAP)

(b)

$

58,400

 

 

$

62,105

 

 

$

67,994

 

 

$

75,158

 

 

$

70,716

 

 

$

120,505

 

 

$

137,141

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted revenue (Non-GAAP)

(a)+(b)

$

180,780

 

 

$

167,335

 

 

$

182,311

 

 

$

184,334

 

 

$

178,723

 

 

$

348,115

 

 

$

352,208

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio (Non-GAAP)

(c)/((a)+(b))

 

64.31

%

 

 

71.84

%

 

 

65.59

%

 

 

62.19

%

 

 

62.13

%

 

 

67.93

%

 

 

62.81

%

 

FAQ

What were Trustmark's earnings in Q2 2021?

Trustmark reported net income of $48.0 million in Q2 2021.

What is the dividend declared by Trustmark for September 2021?

The Board declared a quarterly cash dividend of $0.23 per share payable on September 15, 2021.

How did Trustmark's nonperforming assets change in Q2 2021?

Nonperforming assets declined by 17.9% linked-quarter, indicating improved credit quality.

What was Trustmark's return on average tangible equity in Q2 2021?

Trustmark's return on average tangible equity was 13.96% for Q2 2021.

How much did Trustmark's total revenue increase in Q2 2021?

Total revenue increased by 7.9% linked-quarter, totaling $175.8 million.

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