Trustmark Corporation Announces Third Quarter 2020 Financial Results

Rhea-AI Summary

Trustmark Corporation (Nasdaq: TRMK) reported a net income of $54.4 million for Q3 2020, translating to diluted earnings per share of $0.86. The company's return on average tangible equity stood at 16.82% while return on average assets was 1.37%. Noninterest income contributed 41.0% to total revenue, which reached $179.9 million, marking a 14.7% year-over-year increase. The CET1 ratio was 11.36%, and Trustmark declared a quarterly cash dividend of $0.23, payable December 15, 2020.

Positive

• Net income increased to $54.4 million, or $0.86 per share.
• Pre-tax, pre-provision income rose 1.4% quarter-over-quarter and 26.0% year-over-year.
• Loans held for investment increased by 6.8% year-over-year.
• Noninterest income grew 6.0% from the prior quarter and 52.5% year-over-year.

Negative

• Total deposits decreased by $283.1 million, or 2.1%, from the prior quarter.
• Nonperforming loans increased by $3.9 million from the prior quarter.

JACKSON, Miss.--(BUSINESS WIRE)--Trustmark Corporation (Nasdaq:TRMK) reported net income of $54.4 million in the third quarter of 2020, representing diluted earnings per share of $0.86. This level of earnings resulted in a return on average tangible equity of 16.82% and a return on average assets of 1.37%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable December 15, 2020, to shareholders of record on December 1, 2020.

Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/52314239/en

Third Quarter Highlights

• Pre-tax, pre-provision income totaled $62.9 million, a linked-quarter increase of 1.4% and year-over-year increase of 26.0%. Please refer to the Consolidated Financial Information, Footnote 9 – Non-GAAP Financial Measures.
• Noninterest income represented 41.0% of revenue in the third quarter and increased 6.0% from the prior quarter
• Maintained strong capital position with CET1 ratio of 11.36% and total risk-based capital ratio of 12.88%

Gerard R. Host, Chairman and CEO, stated, “Our third quarter results demonstrate the value of our diversified financial services businesses with strong performance in both our banking and noninterest lines of business. Loans held for investment increased 6.8% year-over-year, and mortgage loan production was up over 56% year-over-year. We experienced significant year-over-year growth in pre-tax, pre-provision income, and we maintained our solid capital base and liquidity position. Trustmark remains committed to ensuring the safety of customers and associates and supporting local economies in this challenging environment. We continue to focus on serving customers and creating long-term value for shareholders.”

Balance Sheet Management

• Loans held for investment increased $187.9 million from the prior quarter and $624.1 million year-over-year
• Gross PPP loans totaled $970.0 million at September 30, 2020
• Noninterest bearing deposits increased $83.5 million linked-quarter and represented 30.0% of total deposits at September 30, 2020

Loans held for investment totaled $9.8 billion at September 30, 2020, reflecting an increase of 1.9% linked-quarter and 6.8% year-over-year. The linked-quarter growth was driven primarily by construction and development loans and commercial real estate loans. At September 30, 2020, Trustmark’s gross Paycheck Protection Program (PPP) loans totaled $970.0 million. Net of deferred fees and costs of $25.7 million, PPP loans totaled $944.3 million. Collectively, loans held for investment and PPP loans totaled $10.8 billion at the end of the third quarter of 2020.

Deposits totaled $13.2 billion at September 30, 2020, down $283.1 million, or 2.1%, from the prior quarter. However, deposits are up $2.0 billion, or 17.5%, year-over-year primarily reflecting the impact of additional customer liquidity associated with PPP loans and government stimulus payments. Interest-bearing deposit costs totaled 0.31% for the third quarter, a decrease of 6 basis points linked-quarter. Trustmark continues to maintain an attractive, low-cost deposit base with approximately 62% of deposit balances in checking accounts. The total cost of interest-bearing liabilities was 0.33% for the third quarter of 2020, a decrease of 6 basis points from the prior quarter.

Trustmark’s capital position remained solid, reflecting the strength and diversity of its financial services businesses. At September 30, 2020, Trustmark’s tangible equity to tangible assets ratio was 8.68%, while the total risk-based capital ratio was 12.88%.

Credit Quality

• Allowance for credit losses represented 1.24% of loans held for investment and 593.72% of nonperforming loans, excluding individually evaluated loans
• Net recoveries totaled $1.1 million in the third quarter
• Other real estate declined 11.1% from the prior quarter and 49.2% year-over-year
• Approximately 2% of the loans held for investment portfolio remained under a concession at September 30, 2020

Allocation of Trustmark's $122.0 million allowance for credit losses on loans held for investment represented 1.20% of commercial loans and 1.41% of consumer and home mortgage loans, resulting in an allowance for credit losses to total loans held for investment of 1.24% at September 30, 2020, representing a level management considers commensurate with the present risk in the loan portfolio. Trustmark recorded a provision for credit losses of $1.8 million in the third quarter.

Nonperforming loans totaled $53.9 million at September 30, 2020, up $3.9 million from the prior quarter and down $5.2 million year-over-year. Other real estate totaled $16.2 million, reflecting a $2.0 million decrease from the prior quarter and down $15.7 million from the prior year. Collectively, nonperforming assets totaled $70.1 million, reflecting a linked-quarter increase of $1.8 million and a year-over-year decrease of $20.9 million.

Revenue Generation

• Revenue in the third quarter, excluding interest and fees on PPP loans, totaled $173.2 million, up 2.2% from the prior quarter and 12.1% year-over-year
• Noninterest income totaled $73.7 million in the third quarter, up 6.0% from the prior quarter and 52.5% year-over-year
• Mortgage loan production in the third quarter totaled $885.8 million, an increase of 3.8% from the prior quarter and a 56.5% increase year-over-year

Revenue in the third quarter totaled $179.9 million, up 3.1% from the prior quarter and up 14.7% from the same quarter in the prior year. Excluding $6.7 million of interest and fees on PPP loans, revenue totaled $173.2 million in the third quarter, up 2.2% from the prior quarter and up 12.1% year-over-year. The linked-quarter and year-over-year changes primarily reflect higher noninterest income. Net interest income (FTE) in the third quarter totaled $109.2 million, resulting in a net interest margin of 3.03%. Excluding PPP loans, the net interest margin totaled 3.05%, a linked-quarter decline of 9 basis points. 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. Relative to the prior quarter, net interest income (FTE) increased $1.2 million as a $327 thousand reduction in interest income was more than offset by a $1.5 million reduction in interest expense.

Noninterest income in the third quarter totaled $73.7 million, an increase of $4.2 million from the prior quarter and an increase of $25.4 million year-over-year. The linked-quarter change reflects increases in mortgage banking revenue, service charges on deposit accounts and bank card and other fees. Mortgage banking revenue before hedge ineffectiveness totaled $35.6 million in the third quarter, in line with the prior quarter. Third quarter results include $815 thousand in positive net hedge ineffectiveness. Mortgage loan production in the third quarter totaled $885.8 million, up $32.5 million from the prior quarter and $319.6 million from the same period in the prior year. Gain on sale of loans, net totaled $34.5 million in the third quarter, up $394 thousand from the prior quarter. Mortgage banking revenue totaled $36.4 million in the third quarter, up $2.7 million from the prior quarter and $28.3 million from the same period in the prior year.

Insurance revenue totaled $11.6 million in the third quarter, a seasonal decline of 2.6% from the prior quarter and an increase of 4.4% year-over-year due to higher property and casualty commissions. Wealth management revenue in the third quarter totaled $7.7 million, in line with the prior quarter and the same period in the prior year as increases in brokerage and investment services were offset by a decline in trust management fees.

Bank card and other fees increased $1.1 million, or 14.6%, from the prior quarter, reflecting higher customer derivative revenue and interchange income. Service charges on deposit accounts increased $1.2 million, or 18.4%, from the prior quarter as customers gradually returned to more normal pre-pandemic activities.

Noninterest Expense

• Total expenses were $114.0 million in the third quarter, down $4.7 million, or 4.0%, from the prior quarter
• Adjusted expenses, which excludes amortization of intangibles, ORE expense and credit losses for off-balance sheet credit exposures, increased $3.6 million, or 3.2%, from the prior quarter. Please refer to the Consolidated Financial Information, Footnote 9 – Non-GAAP Financial Measures.

Adjusted noninterest expenses totaled $114.6 million for the third quarter, representing an increase of 3.2% from the prior quarter. Salaries and employee benefits increased $1.2 million due to increases in salaries, commissions, and performance-based incentives. Services and fees increased due to continued investment in technology. Net occupancy-premises experienced a normal seasonal increase. Other adjusted noninterest expenses rose $1.5 million principally due to loan expense related to loan volumes and a non-cash charge for the realignment of branch offices.

In the third quarter, the credit loss expense related to off-balance sheet exposures was a negative $3.0 million, a decline of $9.2 million from the prior quarter. The decline primarily reflects improvement of the macroeconomic factors used to determine the necessary reserves for off-balance sheet exposures. Other real estate expense, net increased $932 thousand primarily due to write-downs. Total expenses for the third quarter declined $4.7 million, or 4.0%, from the prior quarter, as the decline in credit loss expense was partially offset by an increase in adjusted noninterest expense.

Trustmark continues to focus on identifying efficiency opportunities in operations and delivery channels as well as utilizing technology solutions to streamline processes and improve the customer experience. Year-to-date, Trustmark has consolidated six offices across the franchise. In addition, Trustmark is in the process of converting select drive-thru only branches to interactive teller machines which will provide extended hours for additional customer convenience while reducing servicing costs. Trustmark remains committed to investments to promote profitable revenue growth and reallocating resources to reflect changing customer preferences.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, October 28, 2020 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, November 11, 2020, in archived format at the same web address or by calling (877) 344-7529, passcode 10148374.

Trustmark is a financial services company providing banking and financial solutions through 187 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, the effects of the COVID-19 pandemic on the domestic and global economy, as well as the effectiveness of actions of federal, state and local governments and agencies (including the Board of Governors of the Federal Reserve Board (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, particularly with respect to the COVID-19 pandemic, 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
September 30, 2020
($ in thousands)
(unaudited)
													Linked Quarter							Year over Year
QUARTERLY AVERAGE BALANCES	9/30/2020				6/30/2020				9/30/2019				$ Change				% Change			$ Change				% Change
Securities AFS-taxable	$	1,857,050			$	1,724,320			$	1,570,803			$	132,730			7.7	%		$	286,247			18.2	%
Securities AFS-nontaxable		5,973				9,827				25,096				(3,854	)		-39.2	%			(19,123	)		-76.2	%
Securities HTM-taxable		608,585				655,085				778,098				(46,500	)		-7.1	%			(169,513	)		-21.8	%
Securities HTM-nontaxable		25,508				25,538				26,088				(30	)		-0.1	%			(580	)		-2.2	%
Total securities		2,497,116				2,414,770				2,400,085				82,346			3.4	%			97,031			4.0	%
Paycheck protection program loans (PPP)		941,456				764,416				—				177,040			23.2	%			941,456			n/m
Loans (includes loans held for sale) (1)		10,162,379				9,908,132				9,436,287				254,247			2.6	%			726,092			7.7	%
Acquired loans (1)		—				—				82,641				—			n/m				(82,641	)		-100.0	%
Fed funds sold and reverse repurchases		301				113				3,662				188			n/m				(3,361	)		-91.8	%
Other earning assets		722,917				854,642				176,163				(131,725	)		-15.4	%			546,754			n/m
Total earning assets		14,324,169				13,942,073				12,098,838				382,096			2.7	%			2,225,331			18.4	%
Allowance for credit losses (ACL), loans held for investment (LHFI) (1)		(121,842	)			(103,006	)			(83,756	)			(18,836	)		-18.3	%			(38,086	)		-45.5	%
Other assets		1,564,825				1,685,317				1,447,977				(120,492	)		-7.1	%			116,848			8.1	%
Total assets	$	15,767,152			$	15,524,384			$	13,463,059			$	242,768			1.6	%		$	2,304,093			17.1	%
Interest-bearing demand deposits	$	3,669,249			$	3,832,372			$	3,085,758			$	(163,123	)		-4.3	%		$	583,491			18.9	%
Savings deposits		4,416,046				4,180,540				3,568,403				235,506			5.6	%			847,643			23.8	%
Time deposits		1,507,348				1,578,737				1,753,083				(71,389	)		-4.5	%			(245,735	)		-14.0	%
Total interest-bearing deposits		9,592,643				9,591,649				8,407,244				994			0.0	%			1,185,399			14.1	%
Fed funds purchased and repurchases		84,077				105,696				142,064				(21,619	)		-20.5	%			(57,987	)		-40.8	%
Other borrowings		167,262				107,533				78,404				59,729			55.5	%			88,858			n/m
Junior subordinated debt securities		61,856				61,856				61,856				—			0.0	%			—			0.0	%
Total interest-bearing liabilities		9,905,838				9,866,734				8,689,568				39,104			0.4	%			1,216,270			14.0	%
Noninterest-bearing deposits		3,921,867				3,645,761				2,932,754				276,106			7.6	%			989,113			33.7	%
Other liabilities		244,544				346,173				206,091				(101,629	)		-29.4	%			38,453			18.7	%
Total liabilities		14,072,249				13,858,668				11,828,413				213,581			1.5	%			2,243,836			19.0	%
Shareholders' equity		1,694,903				1,665,716				1,634,646				29,187			1.8	%			60,257			3.7	%
Total liabilities and equity	$	15,767,152			$	15,524,384			$	13,463,059			$	242,768			1.6	%		$	2,304,093			17.1	%

(1)

See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.

n/m - percentage changes greater than +/- 100% are considered not meaningful

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2020
($ in thousands)
(unaudited)
													Linked Quarter							Year over Year
PERIOD END BALANCES	9/30/2020				6/30/2020				9/30/2019				$ Change				% Change			$ Change				% Change
Cash and due from banks	$	564,588			$	1,026,640			$	486,263			$	(462,052	)		-45.0	%		$	78,325			16.1	%
Fed funds sold and reverse repurchases		50				—				—				50			n/m				50			n/m
Securities available for sale		1,922,728				1,884,153				1,553,705				38,575			2.0	%			369,023			23.8	%
Securities held to maturity		611,280				660,048				785,422				(48,768	)		-7.4	%			(174,142	)		-22.2	%
PPP loans		944,270				939,783				—				4,487			0.5	%			944,270			n/m
Loans held for sale (LHFS)		485,103				355,089				292,800				130,014			36.6	%			192,303			65.7	%
Loans held for investment (LHFI) (1)		9,847,728				9,659,806				9,223,668				187,922			1.9	%			624,060			6.8	%
ACL LHFI (1)		(122,010	)			(119,188	)			(83,226	)			(2,822	)		-2.4	%			(38,784	)		-46.6	%
Net LHFI		9,725,718				9,540,618				9,140,442				185,100			1.9	%			585,276			6.4	%
Acquired loans (1)		—				—				81,004				—			n/m				(81,004	)		-100.0	%
Allowance for loan losses, acquired loans (1)		—				—				(1,249	)			—			n/m				1,249			-100.0	%
Net acquired loans		—				—				79,755				—			n/m				(79,755	)		-100.0	%
Net LHFI and acquired loans		9,725,718				9,540,618				9,220,197				185,100			1.9	%			505,521			5.5	%
Premises and equipment, net		192,722				190,567				188,423				2,155			1.1	%			4,299			2.3	%
Mortgage servicing rights		61,613				57,811				73,016				3,802			6.6	%			(11,403	)		-15.6	%
Goodwill		385,270				385,270				379,627				—			0.0	%			5,643			1.5	%
Identifiable intangible assets		8,142				8,895				8,345				(753	)		-8.5	%			(203	)		-2.4	%
Other real estate		16,248				18,276				31,974				(2,028	)		-11.1	%			(15,726	)		-49.2	%
Operating lease right-of-use assets		30,508				29,819				33,180				689			2.3	%			(2,672	)		-8.1	%
Other assets		609,922				595,110				531,834				14,812			2.5	%			78,088			14.7	%
Total assets	$	15,558,162			$	15,692,079			$	13,584,786			$	(133,917	)		-0.9	%		$	1,973,376			14.5	%
Deposits:
Noninterest-bearing	$	3,964,023			$	3,880,540			$	3,064,127			$	83,483			2.2	%		$	899,896			29.4	%
Interest-bearing		9,258,390				9,624,933				8,190,056				(366,543	)		-3.8	%			1,068,334			13.0	%
Total deposits		13,222,413				13,505,473				11,254,183				(283,060	)		-2.1	%			1,968,230			17.5	%
Fed funds purchased and repurchases		153,834				70,255				376,712				83,579			n/m				(222,878	)		-59.2	%
Other borrowings		178,599				152,860				76,685				25,739			16.8	%			101,914			n/m
Junior subordinated debt securities		61,856				61,856				61,856				—			0.0	%			—			0.0	%
ACL on off-balance sheet credit exposures (1)		39,659				42,663				—				(3,004	)		-7.0	%			39,659			n/m
Operating lease liabilities		31,838				31,076				34,319				762			2.5	%			(2,481	)		-7.2	%
Other liabilities		159,922				153,952				135,669				5,970			3.9	%			24,253			17.9	%
Total liabilities		13,848,121				14,018,135				11,939,424				(170,014	)		-1.2	%			1,908,697			16.0	%
Common stock		13,215				13,214				13,390				1			0.0	%			(175	)		-1.3	%
Capital surplus		231,836				230,613				257,370				1,223			0.5	%			(25,534	)		-9.9	%
Retained earnings		1,459,306				1,419,552				1,395,460				39,754			2.8	%			63,846			4.6	%
Accum other comprehensive income (loss), net of tax		5,684				10,565				(20,858	)			(4,881	)		-46.2	%			26,542			n/m
Total shareholders' equity		1,710,041				1,673,944				1,645,362				36,097			2.2	%			64,679			3.9	%
Total liabilities and equity	$	15,558,162			$	15,692,079			$	13,584,786			$	(133,917	)		-0.9	%		$	1,973,376			14.5	%

(1)

See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.

n/m - percentage changes greater than +/- 100% are considered not meaningful

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2020
($ in thousands except per share data)
(unaudited)
	Quarter Ended											Linked Quarter							Year over Year
INCOME STATEMENTS	9/30/2020				6/30/2020			9/30/2019				$ Change				% Change			$ Change				% Change
Interest and fees on LHFS & LHFI-FTE	$	97,429			$	99,300		$	116,432			$	(1,871	)		-1.9	%		$	(19,003	)		-16.3	%
Interest and fees on PPP loans		6,729				5,044			—				1,685			33.4	%			6,729			n/m
Interest and fees on acquired loans (1)		—				—			2,309				—			n/m				(2,309	)		-100.0	%
Interest on securities-taxable		12,542				12,762			13,184				(220	)		-1.7	%			(642	)		-4.9	%
Interest on securities-tax exempt-FTE		301				315			485				(14	)		-4.4	%			(184	)		-37.9	%
Interest on fed funds sold and reverse repurchases		1				—			23				1			n/m				(22	)		-95.7	%
Other interest income		331				239			1,044				92			38.5	%			(713	)		-68.3	%
Total interest income-FTE		117,333				117,660			133,477				(327	)		-0.3	%			(16,144	)		-12.1	%
Interest on deposits		7,437				8,730			20,385				(1,293	)		-14.8	%			(12,948	)		-63.5	%
Interest on fed funds purchased and repurchases		32				42			547				(10	)		-23.8	%			(515	)		-94.1	%
Other interest expense		688				881			830				(193	)		-21.9	%			(142	)		-17.1	%
Total interest expense		8,157				9,653			21,762				(1,496	)		-15.5	%			(13,605	)		-62.5	%
Net interest income-FTE		109,176				108,007			111,715				1,169			1.1	%			(2,539	)		-2.3	%
Provision for credit losses, LHFI (1)		1,760				18,185			3,039				(16,425	)		-90.3	%			(1,279	)		-42.1	%
Provision for loan losses, acquired loans (1)		—				—			(140	)			—			n/m				140			100.0	%
Net interest income after provision-FTE		107,416				89,822			108,816				17,594			19.6	%			(1,400	)		-1.3	%
Service charges on deposit accounts		7,577				6,397			11,065				1,180			18.4	%			(3,488	)		-31.5	%
Bank card and other fees		8,843				7,717			8,349				1,126			14.6	%			494			5.9	%
Mortgage banking, net		36,439				33,745			8,171				2,694			8.0	%			28,268			n/m
Insurance commissions		11,562				11,868			11,072				(306	)		-2.6	%			490			4.4	%
Wealth management		7,679				7,571			7,691				108			1.4	%			(12	)		-0.2	%
Other, net		1,601				2,213			1,989				(612	)		-27.7	%			(388	)		-19.5	%
Total noninterest income		73,701				69,511			48,337				4,190			6.0	%			25,364			52.5	%
Salaries and employee benefits		67,342				66,107			62,495				1,235			1.9	%			4,847			7.8	%
Services and fees		20,992				20,567			18,838				425			2.1	%			2,154			11.4	%
Net occupancy-premises		7,000				6,587			6,831				413			6.3	%			169			2.5	%
Equipment expense		5,828				5,620			5,971				208			3.7	%			(143	)		-2.4	%
Other real estate expense, net		1,203				271			531				932			n/m				672			n/m
Credit loss expense related to off-balance sheet credit exposures (1)		(3,004	)			6,242			—				(9,246	)		n/m				(3,004	)		n/m
Other expense		14,598				13,265			12,187				1,333			10.0	%			2,411			19.8	%
Total noninterest expense		113,959				118,659			106,853				(4,700	)		-4.0	%			7,106			6.7	%
Income before income taxes and tax eq adj		67,158				40,674			50,300				26,484			65.1	%			16,858			33.5	%
Tax equivalent adjustment		2,969				3,007			3,249				(38	)		-1.3	%			(280	)		-8.6	%
Income before income taxes		64,189				37,667			47,051				26,522			70.4	%			17,138			36.4	%
Income taxes		9,749				5,517			6,016				4,232			76.7	%			3,733			62.1	%
Net income	$	54,440			$	32,150		$	41,035			$	22,290			69.3	%		$	13,405			32.7	%
Per share data
Earnings per share - basic	$	0.86			$	0.51		$	0.64			$	0.35			68.6	%		$	0.22			34.4	%
Earnings per share - diluted	$	0.86			$	0.51		$	0.64			$	0.35			68.6	%		$	0.22			34.4	%
Dividends per share	$	0.23			$	0.23		$	0.23				—			0.0	%			—			0.0	%
Weighted average shares outstanding
Basic		63,422,692				63,416,307			64,358,540
Diluted		63,581,964				63,555,065			64,514,605
Period end shares outstanding		63,423,820				63,422,439			64,262,779

(1)

See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.

n/m - percentage changes greater than +/- 100% are considered not meaningful

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2020
($ in thousands)
(unaudited)
	Quarter Ended												Linked Quarter							Year over Year
NONPERFORMING ASSETS (1)	9/30/2020				6/30/2020				9/30/2019				$ Change				% Change			$ Change				% Change
Nonaccrual LHFI
Alabama	$	3,860			$	4,392			$	2,936			$	(532	)		-12.1	%		$	924			31.5	%
Florida		617				687				311				(70	)		-10.2	%			306			98.4	%
Mississippi (2)		35,617				37,884				43,895				(2,267	)		-6.0	%			(8,278	)		-18.9	%
Tennessee (3)		13,041				6,125				10,193				6,916			n/m				2,848			27.9	%
Texas		721				906				1,695				(185	)		-20.4	%			(974	)		-57.5	%
Total nonaccrual LHFI		53,856				49,994				59,030				3,862			7.7	%			(5,174	)		-8.8	%
Other real estate
Alabama		3,725				4,766				6,501				(1,041	)		-21.8	%			(2,776	)		-42.7	%
Florida		3,665				3,665				6,983				—			0.0	%			(3,318	)		-47.5	%
Mississippi (2)		8,718				9,408				17,646				(690	)		-7.3	%			(8,928	)		-50.6	%
Tennessee (3)		140				437				844				(297	)		-68.0	%			(704	)		-83.4	%
Texas		—				—				—				—			n/m				—			n/m
Total other real estate		16,248				18,276				31,974				(2,028	)		-11.1	%			(15,726	)		-49.2	%
Total nonperforming assets	$	70,104			$	68,270			$	91,004			$	1,834			2.7	%		$	(20,900	)		-23.0	%
LOANS PAST DUE OVER 90 DAYS (1)
LHFI	$	782			$	807			$	878			$	(25	)		-3.1	%		$	(96	)		-10.9	%
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	121,281			$	56,269			$	36,445			$	65,012			n/m			$	84,836			n/m
	Quarter Ended												Linked Quarter							Year over Year
ACL LHFI (1)(4)	9/30/2020				6/30/2020				9/30/2019				$ Change				% Change			$ Change				% Change
Beginning Balance	$	119,188			$	100,564			$	80,399			$	18,624			18.5	%		$	38,789			48.2	%
CECL adoption adjustments:
LHFI		—				—				—				—			n/m				—			n/m
Acquired loan transfers		—				—				—				—			n/m				—			n/m
Provision for credit losses		1,760				18,185				3,039				(16,425	)		-90.3	%			(1,279	)		-42.1	%
Charge-offs		(1,263	)			(1,870	)			(2,892	)			607			32.5	%			1,629			56.3	%
Recoveries		2,325				2,309				2,680				16			0.7	%			(355	)		-13.2	%
Net (charge-offs) recoveries		1,062				439				(212	)			623			n/m				1,274			n/m
Ending Balance	$	122,010			$	119,188			$	83,226			$	2,822			2.4	%		$	38,784			46.6	%
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama	$	117			$	526			$	(329	)		$	(409	)		-77.8	%		$	446			n/m
Florida		387				(127	)			136				514			n/m				251			n/m
Mississippi (2)		442				(86	)			391				528			n/m				51			13.0	%
Tennessee (3)		42				66				(483	)			(24	)		-36.4	%			525			n/m
Texas		74				60				73				14			23.3	%			1			1.4	%
Total net (charge-offs) recoveries	$	1,062			$	439			$	(212	)		$	623			n/m			$	1,274			n/m

(1)		Excludes PPP and acquired loans.
(2)		Mississippi includes Central and Southern Mississippi Regions.
(3)		Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
(4)		See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2020
($ in thousands)
(unaudited)
		Quarter Ended																				Nine Months Ended
AVERAGE BALANCES		9/30/2020				6/30/2020				3/31/2020				12/31/2019				9/30/2019				9/30/2020				9/30/2019
Securities AFS-taxable		$	1,857,050			$	1,724,320			$	1,620,422			$	1,551,358			$	1,570,803			$	1,734,380			$	1,661,177
Securities AFS-nontaxable			5,973				9,827				22,056				23,300				25,096				12,594				32,188
Securities HTM-taxable			608,585				655,085				694,740				734,474				778,098				652,642				821,716
Securities HTM-nontaxable			25,508				25,538				25,673				25,703				26,088				25,573				27,268
Total securities			2,497,116				2,414,770				2,362,891				2,334,835				2,400,085				2,425,189				2,542,349
PPP loans			941,456				764,416				—				—				—				569,985				—
Loans (includes loans held for sale) (1)			10,162,379				9,908,132				9,678,174				9,467,437				9,436,287				9,917,127				9,246,298
Acquired loans (1)			—				—				—				77,797				82,641				—				92,645
Fed funds sold and reverse repurchases			301				113				164				184				3,662				193				12,678
Other earning assets			722,917				854,642				187,327				227,116				176,163				588,787				245,173
Total earning assets			14,324,169				13,942,073				12,228,556				12,107,369				12,098,838				13,501,281				12,139,143
ACL LHFI (1)			(121,842	)			(103,006	)			(85,015	)			(86,211	)			(83,756	)			(103,355	)			(82,665	)
Other assets			1,564,825				1,685,317				1,498,725				1,445,075				1,447,977				1,582,888				1,454,350
Total assets		$	15,767,152			$	15,524,384			$	13,642,266			$	13,466,233			$	13,463,059			$	14,980,814			$	13,510,828
Interest-bearing demand deposits		$	3,669,249			$	3,832,372			$	3,184,134			$	3,167,256			$	3,085,758			$	3,562,310			$	3,012,049
Savings deposits			4,416,046				4,180,540				3,646,936				3,448,899				3,568,403				4,082,396				3,718,008
Time deposits			1,507,348				1,578,737				1,617,307				1,663,741				1,753,083				1,567,577				1,824,431
Total interest-bearing deposits			9,592,643				9,591,649				8,448,377				8,279,896				8,407,244				9,212,283				8,554,488
Fed funds purchased and repurchases			84,077				105,696				247,513				164,754				142,064				145,537				92,771
Other borrowings			167,262				107,533				85,279				79,512				78,404				120,197				83,475
Junior subordinated debt securities			61,856				61,856				61,856				61,856				61,856				61,856				61,856
Total interest-bearing liabilities			9,905,838				9,866,734				8,843,025				8,586,018				8,689,568				9,539,873				8,792,590
Noninterest-bearing deposits			3,921,867				3,645,761				2,910,951				3,017,824				2,932,754				3,494,425				2,885,478
Other liabilities			244,544				346,173				248,220				205,786				206,091				279,517				222,404
Total liabilities			14,072,249				13,858,668				12,002,196				11,809,628				11,828,413				13,313,815				11,900,472
Shareholders' equity			1,694,903				1,665,716				1,640,070				1,656,605				1,634,646				1,666,999				1,610,356
Total liabilities and equity		$	15,767,152			$	15,524,384			$	13,642,266			$	13,466,233			$	13,463,059			$	14,980,814			$	13,510,828

(1)		See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2020
($ in thousands)
(unaudited)
PERIOD END BALANCES		9/30/2020				6/30/2020				3/31/2020				12/31/2019				9/30/2019
Cash and due from banks		$	564,588			$	1,026,640			$	404,341			$	358,916			$	486,263
Fed funds sold and reverse repurchases			50				—				2,000				—				—
Securities available for sale			1,922,728				1,884,153				1,833,779				1,602,404				1,553,705
Securities held to maturity			611,280				660,048				704,276				738,099				785,422
PPP loans			944,270				939,783				—				—				—
Loans held for sale (LHFS)			485,103				355,089				325,389				226,347				292,800
Loans held for investment (LHFI) (1)			9,847,728				9,659,806				9,567,920				9,335,628				9,223,668
ACL LHFI (1)			(122,010	)			(119,188	)			(100,564	)			(84,277	)			(83,226	)
Net LHFI			9,725,718				9,540,618				9,467,356				9,251,351				9,140,442
Acquired loans (1)			—				—				—				72,601				81,004
Allowance for loan losses, acquired loans (1)			—				—				—				(815	)			(1,249	)
Net acquired loans			—				—				—				71,786				79,755
Net LHFI and acquired loans			9,725,718				9,540,618				9,467,356				9,323,137				9,220,197
Premises and equipment, net			192,722				190,567				190,179				189,791				188,423
Mortgage servicing rights			61,613				57,811				56,437				79,394				73,016
Goodwill			385,270				385,270				381,717				379,627				379,627
Identifiable intangible assets			8,142				8,895				7,537				7,343				8,345
Other real estate			16,248				18,276				24,847				29,248				31,974
Operating lease right-of-use assets			30,508				29,819				30,839				31,182				33,180
Other assets			609,922				595,110				591,132				532,389				531,834
Total assets		$	15,558,162			$	15,692,079			$	14,019,829			$	13,497,877			$	13,584,786
Deposits:
Noninterest-bearing		$	3,964,023			$	3,880,540			$	2,977,058			$	2,891,215			$	3,064,127
Interest-bearing			9,258,390				9,624,933				8,598,706				8,354,342				8,190,056
Total deposits			13,222,413				13,505,473				11,575,764				11,245,557				11,254,183
Fed funds purchased and repurchases			153,834				70,255				421,821				256,020				376,712
Other borrowings			178,599				152,860				84,230				85,396				76,685
Junior subordinated debt securities			61,856				61,856				61,856				61,856				61,856
ACL on off-balance sheet credit exposures (1)			39,659				42,663				36,421				—				—
Operating lease liabilities			31,838				31,076				32,055				32,354				34,319
Other liabilities			159,922				153,952				155,283				155,992				135,669
Total liabilities			13,848,121				14,018,135				12,367,430				11,837,175				11,939,424
Common stock			13,215				13,214				13,209				13,376				13,390
Capital surplus			231,836				230,613				229,403				256,400				257,370
Retained earnings			1,459,306				1,419,552				1,402,089				1,414,526				1,395,460
Accum other comprehensive income (loss), net of tax			5,684				10,565				7,698				(23,600	)			(20,858	)
Total shareholders' equity			1,710,041				1,673,944				1,652,399				1,660,702				1,645,362
Total liabilities and equity		$	15,558,162			$	15,692,079			$	14,019,829			$	13,497,877			$	13,584,786

(1)		See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2020
($ in thousands except per share data)
(unaudited)
		Quarter Ended																		Nine Months Ended
INCOME STATEMENTS		9/30/2020				6/30/2020			3/31/2020			12/31/2019				9/30/2019				9/30/2020			9/30/2019
Interest and fees on LHFS & LHFI-FTE		$	97,429			$	99,300		$	109,357		$	111,383			$	116,432			$	306,086		$	341,195
Interest and fees on PPP loans			6,729				5,044			—			—				—				11,773			—
Interest and fees on acquired loans (1)			—				—			—			2,138				2,309				—			6,235
Interest on securities-taxable			12,542				12,762			12,948			12,884				13,184				38,252			41,765
Interest on securities-tax exempt-FTE			301				315			457			484				485				1,073			1,682
Interest on fed funds sold and reverse repurchases			1				—			—			1				23				1			239
Other interest income			331				239			740			896				1,044				1,310			4,467
Total interest income-FTE			117,333				117,660			123,502			127,786				133,477				358,495			395,583
Interest on deposits			7,437				8,730			14,957			17,716				20,385				31,124			61,455
Interest on fed funds purchased and repurchases			32				42			625			504				547				699			916
Other interest expense			688				881			860			826				830				2,429			2,486
Total interest expense			8,157				9,653			16,442			19,046				21,762				34,252			64,857
Net interest income-FTE			109,176				108,007			107,060			108,740				111,715				324,243			330,726
Provision for credit losses, LHFI (1)			1,760				18,185			20,581			3,661				3,039				40,526			7,136
Provision for loan losses, acquired loans (1)			—				—			—			(2	)			(140	)			—			44
Net interest income after provision-FTE			107,416				89,822			86,479			105,081				108,816				283,717			323,546
Service charges on deposit accounts			7,577				6,397			10,032			10,894				11,065				24,006			31,709
Bank card and other fees			8,843				7,717			5,355			8,192				8,349				21,915			23,544
Mortgage banking, net			36,439				33,745			27,483			7,914				8,171				97,667			21,908
Insurance commissions			11,562				11,868			11,550			9,364				11,072				34,980			33,032
Wealth management			7,679				7,571			8,537			7,763				7,691				23,787			22,916
Other, net			1,601				2,213			2,307			3,451				1,989				6,121			6,358
Total noninterest income			73,701				69,511			65,264			47,578				48,337				208,476			139,467
Salaries and employee benefits			67,342				66,107			69,148			62,319				62,495				202,597			185,398
Services and fees			20,992				20,567			19,930			19,500				18,838				61,489			53,815
Net occupancy-premises			7,000				6,587			6,286			6,461				6,831				19,873			19,688
Equipment expense			5,828				5,620			5,616			5,880				5,971				17,064			17,853
Other real estate expense, net			1,203				271			1,294			1,491				531				2,768			2,415
Credit loss expense related to off-balance sheet credit exposures (1)			(3,004	)			6,242			6,783			—				—				10,021			—
Other expense			14,598				13,265			14,753			14,376				12,187				42,616			39,806
Total noninterest expense			113,959				118,659			123,810			110,027				106,853				356,428			318,975
Income before income taxes and tax eq adj			67,158				40,674			27,933			42,632				50,300				135,765			144,038
Tax equivalent adjustment			2,969				3,007			3,108			3,149				3,249				9,084			9,728
Income before income taxes			64,189				37,667			24,825			39,483				47,051				126,681			134,310
Income taxes			9,749				5,517			2,607			5,537				6,016				17,873			17,796
Net income		$	54,440			$	32,150		$	22,218		$	33,946			$	41,035			$	108,808		$	116,514
Per share data
Earnings per share - basic		$	0.86			$	0.51		$	0.35		$	0.53			$	0.64			$	1.71		$	1.80
Earnings per share - diluted		$	0.86			$	0.51		$	0.35		$	0.53			$	0.64			$	1.71		$	1.80
Dividends per share		$	0.23			$	0.23		$	0.23		$	0.23			$	0.23			$	0.69		$	0.69
Weighted average shares outstanding
Basic			63,422,692				63,416,307			63,756,629			64,255,716				64,358,540				63,531,478			64,755,406
Diluted			63,581,964				63,555,065			63,913,603			64,435,276				64,514,605				63,665,127			64,889,916
Period end shares outstanding			63,423,820				63,422,439			63,396,912			64,200,111				64,262,779				63,423,820			64,262,779

(1)

See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2020
($ in thousands)
(unaudited)
		Quarter Ended
NONPERFORMING ASSETS (1)		9/30/2020				6/30/2020				3/31/2020				12/31/2019				9/30/2019
Nonaccrual LHFI
Alabama		$	3,860			$	4,392			$	4,769			$	1,870			$	2,936
Florida			617				687				254				267				311
Mississippi (2)			35,617				37,884				40,815				41,493				43,895
Tennessee (3)			13,041				6,125				6,153				8,980				10,193
Texas			721				906				1,001				616				1,695
Total nonaccrual LHFI			53,856				49,994				52,992				53,226				59,030
Other real estate
Alabama			3,725				4,766				6,229				8,133				6,501
Florida			3,665				3,665				4,835				5,877				6,983
Mississippi (2)			8,718				9,408				13,296				14,919				17,646
Tennessee (3)			140				437				487				319				844
Texas			—				—				—				—				—
Total other real estate			16,248				18,276				24,847				29,248				31,974
Total nonperforming assets		$	70,104			$	68,270			$	77,839			$	82,474			$	91,004
LOANS PAST DUE OVER 90 DAYS (1)
LHFI		$	782			$	807			$	708			$	642			$	878
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)		$	121,281			$	56,269			$	43,564			$	41,648			$	36,445
		Quarter Ended																				Nine Months Ended
ACL LHFI (1)(4)		9/30/2020				6/30/2020				3/31/2020				12/31/2019				9/30/2019				9/30/2020				9/30/2019
Beginning Balance		$	119,188			$	100,564			$	84,277			$	83,226			$	80,399			$	84,277			$	79,290
CECL adoption adjustments:
LHFI			—				—				(3,039	)			—				—				(3,039	)			—
Acquired loan transfers			—				—				1,822				—				—				1,822				—
Provision for credit losses			1,760				18,185				20,581				3,661				3,039				40,526				7,136
Charge-offs			(1,263	)			(1,870	)			(5,545	)			(4,619	)			(2,892	)			(8,678	)			(9,862	)
Recoveries			2,325				2,309				2,468				2,009				2,680				7,102				6,662
Net (charge-offs) recoveries			1,062				439				(3,077	)			(2,610	)			(212	)			(1,576	)			(3,200	)
Ending Balance		$	122,010			$	119,188			$	100,564			$	84,277			$	83,226			$	122,010			$	83,226
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama		$	117			$	526			$	(1,080	)		$	(132	)		$	(329	)		$	(437	)		$	(622	)
Florida			387				(127	)			64				357				136				324				493
Mississippi (2)			442				(86	)			126				(1,792	)			391				482				(2,646	)
Tennessee (3)			42				66				(2,186	)			(131	)			(483	)			(2,078	)			(577	)
Texas			74				60				(1	)			(912	)			73				133				152
Total net (charge-offs) recoveries		$	1,062			$	439			$	(3,077	)		$	(2,610	)		$	(212	)		$	(1,576	)		$	(3,200	)

(1)		Excludes PPP and acquired loans.
(2)		Mississippi includes Central and Southern Mississippi Regions.
(3)		Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
(4)		See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2020
(unaudited)
		Quarter Ended																				Nine Months Ended
FINANCIAL RATIOS AND OTHER DATA		9/30/2020				6/30/2020				3/31/2020				12/31/2019				9/30/2019				9/30/2020			9/30/2019
Return on average equity			12.78	%			7.76	%			5.45	%			8.13	%			9.96	%		8.72	%		9.67	%
Return on average tangible equity			16.82	%			10.32	%			7.34	%			10.85	%			13.31	%		11.57	%		13.01	%
Return on average assets			1.37	%			0.83	%			0.66	%			1.00	%			1.21	%		0.97	%		1.15	%
Interest margin - Yield - FTE			3.26	%			3.39	%			4.06	%			4.19	%			4.38	%		3.55	%		4.36	%
Interest margin - Cost			0.23	%			0.28	%			0.54	%			0.62	%			0.71	%		0.34	%		0.71	%
Net interest margin - FTE			3.03	%			3.12	%			3.52	%			3.56	%			3.66	%		3.21	%		3.64	%
Efficiency ratio (1)			62.19	%			62.13	%			63.50	%			68.08	%			64.98	%		62.59	%		65.82	%
Full-time equivalent employees			2,807				2,798				2,761				2,844				2,835
CREDIT QUALITY RATIOS (2)
Net (recoveries) charge-offs / average loans			-0.04	%			-0.02	%			0.13	%			0.11	%			0.01	%		0.02	%		0.05	%
Provision for credit losses / average loans (3)			0.07	%			0.74	%			0.86	%			0.15	%			0.13	%		0.55	%		0.10	%
Nonaccrual LHFI / (LHFI + LHFS)			0.52	%			0.50	%			0.54	%			0.56	%			0.62	%
Nonperforming assets / (LHFI + LHFS)			0.68	%			0.68	%			0.79	%			0.86	%			0.96	%
Nonperforming assets / (LHFI + LHFS + other real estate)			0.68	%			0.68	%			0.78	%			0.86	%			0.95	%
ACL LHFI / LHFI (3)			1.24	%			1.23	%			1.05	%			0.90	%			0.90	%
ACL LHFI-commercial / commercial LHFI (3)			1.20	%			1.15	%			0.97	%			0.98	%			0.98	%
ACL LHFI-consumer / consumer and home mortgage LHFI (3)			1.41	%			1.56	%			1.35	%			0.61	%			0.61	%
ACL LHFI / nonaccrual LHFI (3)			226.55	%			238.40	%			189.77	%			158.34	%			140.99	%
ACL LHFI / nonaccrual LHFI (excl individually evaluated loans) (3)			593.72	%			561.04	%			468.84	%			410.52	%			357.15	%
CAPITAL RATIOS (3)
Total equity / total assets			10.99	%			10.67	%			11.79	%			12.30	%			12.11	%
Tangible equity / tangible assets			8.68	%			8.37	%			9.27	%			9.72	%			9.53	%
Tangible equity / risk-weighted assets			11.01	%			11.09	%			11.05	%			11.58	%			11.50	%
Tier 1 leverage ratio			9.20	%			9.08	%			10.21	%			10.48	%			10.34	%
Common equity tier 1 capital ratio			11.36	%			11.42	%			11.35	%			11.93	%			11.83	%
Tier 1 risk-based capital ratio			11.86	%			11.94	%			11.88	%			12.48	%			12.38	%
Total risk-based capital ratio			12.88	%			13.00	%			12.78	%			13.25	%			13.15	%
STOCK PERFORMANCE
Market value-Close		$	21.41			$	24.52			$	23.30			$	34.51			$	34.11
Book value		$	26.96			$	26.39			$	26.06			$	25.87			$	25.60
Tangible book value		$	20.76			$	20.18			$	19.92			$	19.84			$	19.57

(1)		See Note 9 – Non-GAAP Financial Measures in the Notes to Consolidated Financials for Trustmark’s efficiency ratio calculation.
(2)		Excludes PPP and acquired loans.
(3)		See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2020

($ in thousands)

(unaudited)

Note 1 – Recently Effective Accounting Pronouncements

ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” was adopted by Trustmark on January 1, 2020. At the date of adoption, Trustmark recorded a decrease to its ACL, LHFI of $3.0 million and an increase to its ACL on off-balance sheet credit exposures of $29.6 million resulting in a one-time cumulative effect adjustment of $26.6 million ($19.9 million, net of tax) through retained earnings.

In accordance with the amendments of ASU 2016-13, Trustmark estimates the ACL using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts including the COVID-19 pandemic effects. Trustmark uses a third-party software application to calculate the quantitative portion of the ACL using a methodology and assumptions specific to each loan pool. The qualitative portion of the ACL is based on general economic conditions and other internal and external factors affecting Trustmark as a whole as well as specific LHFI. The total quantitative and qualitative portions of the ACL reflect Management’s expectations of future conditions based on reasonable and supportable forecasts.

Based upon the factors discussed above, during the third quarter of 2020, Trustmark recorded a provision for credit losses of $1.8 million and a negative credit loss expense related to off-balance sheet credit exposures of $3.0 million compared to a provision for credit losses of $18.2 million and a credit loss expense related to off-balance sheet credit exposures of $6.2 million recorded during the second quarter of 2020.

Upon adoption of FASB ASC Topic 326, Trustmark elected to account for its existing acquired loans as purchased credit deteriorated loans included within the LHFI portfolio. As a result, acquired loans of $72.6 million, as well as the necessary calculated allowance of $1.8 million, were transferred during the first quarter of 2020. The acquired loans and related allowance transferred were acquired in the BancTrust Financial Group, Inc. merger on February 13, 2013. LHFI presented in prior periods exclude acquired loans and thus may not be comparable to the current period presentation.

In accordance with FASB ASC Subtopic 326-20, “Financial Instruments – Credit Losses – Measured at Amortized Cost,” Trustmark has developed an allowance for credit losses methodology effective January 1, 2020, which replaces its previous allowance for loan losses methodology. The ACL for LHFI is adjusted through the provision for credit losses and reduced by the charge off of loan amounts, net of recoveries. Prior periods present the allowance for loan losses and provision for loan losses methodology under the incurred loss model and thus may not be comparable to the current period presentation.

Trustmark’s estimated allowance for credit losses on securities available for sale and held to maturity under ASU 2016-13 was deemed immaterial due to the composition of these portfolios. Both portfolios consist primarily of U.S. government agency guaranteed mortgage-backed securities for which the risk of loss is minimal. Therefore, Trustmark did not recognize a cumulative effect adjustment through retained earnings related to the available for sale or held to maturity securities.

Trustmark has elected the five-year phase-in transition period related to adopting the CECL methodology for its regulatory capital.

Note 2 - Paycheck Protection Program

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), a stimulus package intended to provide relief to businesses and consumers in the United States struggling as a result of the pandemic, was signed into law. A provision in the CARES Act included a $349 billion fund for the creation of the Paycheck Protection Program (PPP) through the Small Business Administration (SBA) and Treasury Department. The PPP is intended to provide loans to small businesses to pay their employees, rent, mortgage interest and utilities. PPP loans are forgivable, in whole or in part, if the proceeds are used for payroll and other permitted purposes in accordance with the requirements of the PPP. If not forgiven, in whole or in part, these loans carry a fixed rate of 1.00% per annum with payments deferred for the first six months of the loan. Originally, the loans carried a term of two years under SBA rules implemented by the CARES Act, but a June 5, 2020 amendment to the CARES Act provided for a five-year minimum loan term for loans made beginning as of such date, and permitted lenders and borrowers to mutually agree to amend existing two-year loans to have terms of five to ten years. The loans are 100% guaranteed by the SBA. The SBA pays the originating bank a processing fee ranging from 1.0% to 5.0%, based on the size of the loan.

At September 30, 2020, Trustmark had outstanding 9,691 PPP loans totaling $944.3 million (net of $25.7 million of deferred fees and costs) with an average loan size of $100 thousand. 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 SBA; therefore, no ACL was estimated for these loans.

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2020

($ in thousands)

(unaudited)

Note 3 - Securities Available for Sale and Held to Maturity

The following table is a summary of the estimated fair value of securities available for sale and the amortized cost of securities held to maturity:

		9/30/2020			6/30/2020			3/31/2020			12/31/2019			9/30/2019
SECURITIES AVAILABLE FOR SALE
U.S. Government agency obligations		$	19,011		$	19,898		$	21,190		$	22,327		$	24,697
Obligations of states and political subdivisions			8,315			11,176			23,572			25,465			35,001
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			62,156			69,637			71,971			69,252			63,391
Issued by FNMA and FHLMC			1,279,919			1,121,604			967,329			713,356			589,962
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			500,858			574,940			634,075			658,226			705,601
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			52,469			86,898			115,642			113,778			135,053
Total securities available for sale		$	1,922,728		$	1,884,153		$	1,833,779		$	1,602,404		$	1,553,705
SECURITIES HELD TO MATURITY
U.S. Government agency obligations		$	—		$	—		$	—		$	3,781		$	3,770
Obligations of states and political subdivisions			31,605			31,629			31,758			31,781			31,806
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			8,244			10,306			10,492			10,820			10,994
Issued by FNMA and FHLMC			78,213			86,346			91,971			96,631			102,048
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			399,400			435,333			463,175			485,324			510,770
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			93,818			96,434			106,880			109,762			126,034
Total securities held to maturity		$	611,280		$	660,048		$	704,276		$	738,099		$	785,422

At September 30, 2020, 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 $9.7 million ($7.3 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 98.4% 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.

Note 4 – Loan Composition

LHFI consisted of the following during the periods presented:

LHFI BY TYPE (1)		9/30/2020				6/30/2020				3/31/2020				12/31/2019				9/30/2019
Loans secured by real estate:
Construction, land development and other land loans		$	1,385,947			$	1,277,277			$	1,136,389			$	1,162,791			$	1,135,999
Secured by 1-4 family residential properties			1,775,400				1,813,525				1,852,065				1,855,913				1,820,455
Secured by nonfarm, nonresidential properties			2,707,627				2,610,392				2,575,422				2,475,245				2,442,308
Other real estate secured			887,792				884,815				838,573				724,480				668,667
Commercial and industrial loans			1,398,468				1,413,255				1,476,777				1,477,896				1,491,367
Consumer loans			160,960				161,620				170,678				175,738				176,894
State and other political subdivision loans			935,349				931,536				938,637				967,944				978,456
Other loans			596,185				567,386				579,379				495,621				509,522
LHFI			9,847,728				9,659,806				9,567,920				9,335,628				9,223,668
ACL LHFI			(122,010	)			(119,188	)			(100,564	)			(84,277	)			(83,226	)
Net LHFI		$	9,725,718			$	9,540,618			$	9,467,356			$	9,251,351			$	9,140,442

(1)

See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2020

($ in thousands)

(unaudited)

Note 4 – Loan Composition (continued)

The following table presents the LHFI composition by region at September 30, 2020 and reflects each region’s diversified mix of loans:

		September 30, 2020
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		$	1,385,947			$	417,037			$	106,909			$	323,508			$	25,941			$	512,552
Secured by 1-4 family residential properties			1,775,400				124,666				38,269				1,524,234				77,201				11,030
Secured by nonfarm, nonresidential properties			2,707,627				679,817				283,629				998,294				183,620				562,267
Other real estate secured			887,792				253,180				6,133				409,377				6,095				213,007
Commercial and industrial loans			1,398,468				183,024				23,617				717,164				302,111				172,552
Consumer loans			160,960				24,262				6,481				108,193				18,789				3,235
State and other political subdivision loans			935,349				86,610				37,106				623,607				37,366				150,660
Other loans			596,185				83,526				14,878				389,907				80,180				27,694
Loans		$	9,847,728			$	1,852,122			$	517,022			$	5,094,284			$	731,303			$	1,652,997
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots		$	77,787			$	17,880			$	23,659			$	29,991			$	1,246			$	5,011
Development			72,903				24,010				6,155				30,424				5,264				7,050
Unimproved land			102,092				25,890				20,007				25,866				11,084				19,245
1-4 family construction			241,737				111,104				21,856				70,073				7,560				31,144
Other construction			891,428				238,153				35,232				167,154				787				450,102
Construction, land development and other land loans		$	1,385,947			$	417,037			$	106,909			$	323,508			$	25,941			$	512,552
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION
Non-owner occupied:
Retail		$	415,168			$	142,452			$	38,484			$	133,673			$	26,868			$	73,691
Office			257,143				66,829				27,215				83,379				12,230				67,490
Hotel/motel			343,854				137,960				101,206				53,507				40,181				11,000
Mini-storage			120,173				20,676				3,572				56,772				405				38,748
Industrial			216,231				57,102				12,327				41,895				1,124				103,783
Health care			45,835				12,865				11,729				18,634				395				2,212
Convenience stores			16,214				3,366				—				3,223				392				9,233
Nursing homes/senior living			65,903				28,197				—				12,051				7,084				18,571
Other			61,932				4,608				7,167				17,054				6,120				26,983
Total non-owner occupied loans			1,542,453				474,055				201,700				420,188				94,799				351,711
Owner-occupied:
Office			180,968				43,521				41,440				52,219				9,359				34,429
Churches			106,979				22,981				7,213				52,590				10,501				13,694
Industrial warehouses			165,356				13,234				2,869				50,088				16,784				82,381
Health care			127,692				17,162				4,975				101,319				2,462				1,774
Convenience stores			120,909				15,874				7,899				70,654				580				25,902
Retail			69,764				15,119				6,655				26,636				6,275				15,079
Restaurants			59,955				4,088				4,492				34,295				15,658				1,422
Auto dealerships			46,629				7,664				284				12,278				26,403				—
Nursing homes/senior living			181,803				61,368				—				120,435				—				—
Other			105,119				4,751				6,102				57,592				799				35,875
Total owner-occupied loans			1,165,174				205,762				81,929				578,106				88,821				210,556
Loans secured by nonfarm, nonresidential properties		$	2,707,627			$	679,817			$	283,629			$	998,294			$	183,620			$	562,267

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2020

($ 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															Nine Months Ended
		9/30/2020			6/30/2020			3/31/2020			12/31/2019			9/30/2019			9/30/2020			9/30/2019
Securities – taxable		2.02	%		2.16	%		2.25	%		2.24	%		2.23	%		2.14	%		2.25	%
Securities – nontaxable		3.80	%		3.58	%		3.85	%		3.92	%		3.76	%		3.76	%		3.78	%
Securities – total		2.05	%		2.18	%		2.28	%		2.27	%		2.26	%		2.17	%		2.28	%
PPP loans		2.84	%		2.65	%		—			—			—			2.76	%		—
Loans - LHFI & LHFS		3.81	%		4.03	%		4.54	%		4.67	%		4.90	%		4.12	%		4.93	%
Acquired loans		—			—			—			10.90	%		11.08	%		—			9.00	%
Loans - total		3.73	%		3.93	%		4.54	%		4.72	%		4.95	%		4.05	%		4.97	%
Fed funds sold & reverse repurchases		1.32	%		—			—			2.16	%		2.49	%		0.69	%		2.52	%
Other earning assets		0.18	%		0.11	%		1.59	%		1.57	%		2.35	%		0.30	%		2.44	%
Total earning assets		3.26	%		3.39	%		4.06	%		4.19	%		4.38	%		3.55	%		4.36	%
Interest-bearing deposits		0.31	%		0.37	%		0.71	%		0.85	%		0.96	%		0.45	%		0.96	%
Fed funds purchased & repurchases		0.15	%		0.16	%		1.02	%		1.21	%		1.53	%		0.64	%		1.32	%
Other borrowings		1.19	%		2.09	%		2.35	%		2.32	%		2.35	%		1.78	%		2.29	%
Total interest-bearing liabilities		0.33	%		0.39	%		0.75	%		0.88	%		0.99	%		0.48	%		0.99	%
Net interest margin		3.03	%		3.12	%		3.52	%		3.56	%		3.66	%		3.21	%		3.64	%
Net interest margin excluding PPP and acquired loans		3.05	%		3.14	%		3.52	%		3.52	%		3.61	%		3.23	%		3.60	%

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 and acquired loans, which equals reported net interest income-FTE excluding interest income on PPP and acquired loans, annualized, as a percent of average earning assets excluding average PPP and acquired loans.

The net interest margin excluding PPP and acquired loans totaled 3.05% for the third quarter of 2020, a decrease of 9 basis points when compared to the second quarter of 2020. 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 $815 thousand during the third quarter of 2020.

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

		Quarter Ended																				Nine Months Ended
		9/30/2020				6/30/2020				3/31/2020				12/31/2019				9/30/2019				9/30/2020				9/30/2019
Mortgage servicing income, net		$	5,742			$	5,893			$	5,819			$	5,854			$	5,688			$	17,454			$	17,029
Change in fair value-MSR from runoff			(4,590	)			(4,214	)			(2,607	)			(2,950	)			(3,569	)			(11,411	)			(8,885	)
Gain on sales of loans, net			34,472				34,078				14,339				7,984				9,799				82,889				22,312
Mortgage banking income before hedge ineffectiveness			35,624				35,757				17,551				10,888				11,918				88,932				30,456
Change in fair value-MSR from market changes			60				(3,159	)			(23,999	)			4,048				(8,054	)			(27,098	)			(25,126	)
Change in fair value of derivatives			755				1,147				33,931				(7,022	)			4,307				35,833				16,578
Net positive (negative) hedge ineffectiveness			815				(2,012	)			9,932				(2,974	)			(3,747	)			8,735				(8,548	)
Mortgage banking, net		$	36,439			$	33,745			$	27,483			$	7,914			$	8,171			$	97,667			$	21,908

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2020

($ in thousands)

(unaudited)

Note 7 – Salaries and Employee Benefit Plans

Early Retirement Program

In January 2020, Trustmark announced a voluntary early retirement program for associates age 60 and above with five or more years of continuous service. The cost of this program is reflected in a one-time, pre-tax charge of approximately $4.4 million (salaries and benefits of $4.3 million and other miscellaneous expense of $102 thousand; or $0.05 per basic share net of tax) in Trustmark’s first quarter 2020 earnings. The pre-tax salary and employee benefits expense savings resulting from the implementation of the early retirement program are expected to total approximately $2.9 million ($0.03 per basic share net of tax) and $4.0 million ($0.05 per basic share net of tax) for the remainder of 2020 and for the year ended 2021, respectively.

Note 8 – Other Noninterest Income and Expense

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

		Quarter Ended																				Nine Months Ended
		9/30/2020				6/30/2020				3/31/2020				12/31/2019				9/30/2019				9/30/2020				9/30/2019
Partnership amortization for tax credit purposes		$	(1,457	)		$	(1,205	)		$	(1,161	)		$	(1,630	)		$	(1,994	)		$	(3,823	)		$	(6,014	)
Increase in life insurance cash surrender value			1,755				1,696				1,722				1,802				1,814				5,173				5,400
Other miscellaneous income			1,303				1,722				1,746				3,279				2,169				4,771				6,972
Total other, net		$	1,601			$	2,213			$	2,307			$	3,451			$	1,989			$	6,121			$	6,358

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															Nine Months Ended
		9/30/2020			6/30/2020			3/31/2020			12/31/2019			9/30/2019			9/30/2020			9/30/2019
Loan expense		$	3,485		$	2,954		$	2,799		$	2,968		$	2,886		$	9,238		$	8,586
Amortization of intangibles			752			736			812			1,002			1,021			2,300			3,114
FDIC assessment expense			1,410			1,590			1,590			1,450			1,400			4,590			4,994
Other miscellaneous expense			8,951			7,985			9,552			8,956			6,880			26,488			23,112
Total other expense		$	14,598		$	13,265		$	14,753		$	14,376		$	12,187		$	42,616		$	39,806

Note 9 – 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

September 30, 2020

($ in thousands except per share data)

(unaudited)

Note 9 – Non-GAAP Financial Measures (continued)

				Quarter Ended																				Nine Months Ended
				9/30/2020				6/30/2020				3/31/2020				12/31/2019				9/30/2019				9/30/2020				9/30/2019
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity				$	1,694,903			$	1,665,716			$	1,640,070			$	1,656,605			$	1,634,646			$	1,666,999			$	1,610,356
Less: Goodwill					(385,270	)			(383,081	)			(380,671	)			(379,627	)			(379,627	)			(383,016	)			(379,627	)
Identifiable intangible assets					(8,550	)			(7,834	)			(8,049	)			(7,882	)			(8,706	)			(8,146	)			(9,660	)
Total average tangible equity				$	1,301,083			$	1,274,801			$	1,251,350			$	1,269,096			$	1,246,313			$	1,275,837			$	1,221,069
PERIOD END BALANCES
Total shareholders' equity				$	1,710,041			$	1,673,944			$	1,652,399			$	1,660,702			$	1,645,362
Less: Goodwill					(385,270	)			(385,270	)			(381,717	)			(379,627	)			(379,627	)
Identifiable intangible assets					(8,142	)			(8,895	)			(7,537	)			(7,343	)			(8,345	)
Total tangible equity		(a)		$	1,316,629			$	1,279,779			$	1,263,145			$	1,273,732			$	1,257,390
TANGIBLE ASSETS
Total assets				$	15,558,162			$	15,692,079			$	14,019,829			$	13,497,877			$	13,584,786
Less: Goodwill					(385,270	)			(385,270	)			(381,717	)			(379,627	)			(379,627	)
Identifiable intangible assets					(8,142	)			(8,895	)			(7,537	)			(7,343	)			(8,345	)
Total tangible assets		(b)		$	15,164,750			$	15,297,914			$	13,630,575			$	13,110,907			$	13,196,814
Risk-weighted assets		(c)		$	11,963,269			$	11,539,157			$	11,427,297			$	11,002,877			$	10,935,018
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income				$	54,440			$	32,150			$	22,218			$	33,946			$	41,035			$	108,808			$	116,514
Plus: Intangible amortization net of tax					564				552				609				752				766				1,725				2,336
Net income adjusted for intangible amortization				$	55,004			$	32,702			$	22,827			$	34,698			$	41,801			$	110,533			$	118,850
Period end common shares outstanding		(d)			63,423,820				63,422,439				63,396,912				64,200,111				64,262,779
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity (1)					16.82	%			10.32	%			7.34	%			10.85	%			13.31	%			11.57	%			13.01	%
Tangible equity/tangible assets		(a)/(b)			8.68	%			8.37	%			9.27	%			9.72	%			9.53	%
Tangible equity/risk-weighted assets		(a)/(c)			11.01	%			11.09	%			11.05	%			11.58	%			11.50	%
Tangible book value		(a)/(d)*1,000		$	20.76			$	20.18			$	19.92			$	19.84			$	19.57
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity				$	1,710,041			$	1,673,944			$	1,652,399			$	1,660,702			$	1,645,362
CECL transition adjustment (3)					32,647				32,693				26,476				—				—
AOCI-related adjustments					(5,684	)			(10,565	)			(7,698	)			23,600				20,858
CET1 adjustments and deductions:
Goodwill net of associated deferred tax liabilities (DTLs)					(371,345	)			(371,342	)			(367,825	)			(365,738	)			(365,741	)
Other adjustments and deductions for CET1 (2)					(6,770	)			(7,352	)			(6,269	)			(5,896	)			(6,671	)
CET1 capital		(e)			1,358,889				1,317,378				1,297,083				1,312,668				1,293,808
Additional tier 1 capital instruments plus related surplus					60,000				60,000				60,000				60,000				60,000
Tier 1 capital				$	1,418,889			$	1,377,378			$	1,357,083			$	1,372,668			$	1,353,808
Common equity tier 1 capital ratio		(e)/(c)			11.36	%			11.42	%			11.35	%			11.93	%			11.83	%

(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.
(3)		See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2020

($ in thousands except per share data)

(unaudited)

Note 9 – 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-tax pre-provision income during the periods presented:

				Quarter Ended																	Nine Months Ended
				9/30/2020			6/30/2020				3/31/2020				12/31/2019			9/30/2019			9/30/2020				9/30/2019
Net interest income (GAAP)				$	106,207		$	105,000			$	103,952			$	105,591		$	108,466		$	315,159			$	320,998
Noninterest income (GAAP)					73,701			69,511				65,264				47,578			48,337			208,476				139,467
Pre-tax pre-provision revenue			(a)	$	179,908		$	174,511			$	169,216			$	153,169		$	156,803		$	523,635			$	460,465
Noninterest expense (GAAP)				$	113,959		$	118,659			$	123,810			$	110,027		$	106,853		$	356,428			$	318,975
Less:	Voluntary early retirement program				—			—				(4,375	)			—			—			(4,375	)			—
	Credit loss expense related to off-balance sheet credit exposures				3,004			(6,242	)			(6,783	)			—			—			(10,021	)			—
Adjusted noninterest expense (Non-GAAP)			(b)	$	116,963		$	112,417			$	112,652			$	110,027		$	106,853		$	342,032			$	318,975
Pre-tax pre-provision income (Non-GAAP)			(a)-(b)	$	62,945		$	62,094			$	56,564			$	43,142		$	49,950		$	181,603			$	141,490

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										Nine Months Ended
		9/30/2020					9/30/2019					9/30/2020					9/30/2019
		Amount		Diluted EPS			Amount		Diluted EPS			Amount		Diluted EPS			Amount		Diluted EPS
Net Income (GAAP)		$ 54,440		$ 0.86			$ 41,035		$ 0.64			$ 108,808		$ 1.71			$ 116,514		$ 1.80
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)		$ 54,440		$ 0.86			$ 41,035		$ 0.64			$ 112,089		$ 1.76			$ 116,514		$ 1.80
		Reported		Adjusted			Reported		Adjusted			Reported		Adjusted			Reported		Adjusted
		(GAAP)		(Non-GAAP)			(GAAP)		(Non-GAAP)			(GAAP)		(Non-GAAP)			(GAAP)		(Non-GAAP)
Return on average equity		12.78%		n/a			9.96%		n/a			8.72%		8.97%			9.67%		n/a
Return on average tangible equity		16.82%		n/a			13.31%		n/a			11.57%		11.89%			13.01%		n/a
Return on average assets		1.37%		n/a			1.21%		n/a			0.97%		1.00%			1.15%		n/a
n/a - not applicable

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2020

($ in thousands)

(unaudited)

Note 9 – Non-GAAP Financial Measures (continued)

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

				Quarter Ended																				Nine Months Ended
				9/30/2020				6/30/2020				3/31/2020				12/31/2019				9/30/2019				9/30/2020				9/30/2019
Total noninterest expense (GAAP)				$	113,959			$	118,659			$	123,810			$	110,027			$	106,853			$	356,428			$	318,975
Less:	Other real estate expense, net				(1,203	)			(271	)			(1,294	)			(1,491	)			(531	)			(2,768	)			(2,415	)
	Amortization of intangibles				(752	)			(736	)			(812	)			(1,002	)			(1,021	)			(2,300	)			(3,114	)
	Voluntary early retirement program				—				—				(4,375	)			—				—				(4,375	)			—
	Credit loss expense related to off-balance sheet exposures				3,004				(6,242	)			(6,783	)			—				—				(10,021	)			—
	Charitable contributions resulting in state tax credits				(375	)			(375	)			(375	)			—				—				(1,125	)			—
Adjusted noninterest expense (Non-GAAP)			(c)	$	114,633			$	111,035			$	110,171			$	107,534			$	105,301			$	335,839			$	313,446
Net interest income (GAAP)				$	106,207			$	105,000			$	103,952			$	105,591			$	108,466			$	315,159			$	320,998
Add:	Tax equivalent adjustment				2,969				3,007				3,108				3,149				3,249				9,084				9,728
Net interest income-FTE (Non-GAAP)			(a)	$	109,176			$	108,007			$	107,060			$	108,740			$	111,715			$	324,243			$	330,726
Noninterest income (GAAP)				$	73,701			$	69,511			$	65,264			$	47,578			$	48,337			$	208,476			$	139,467
Add:	Partnership amortization for tax credit purposes				1,457				1,205				1,161				1,630				1,994				3,823				6,014
Adjusted noninterest income (Non-GAAP)			(b)	$	75,158			$	70,716			$	66,425			$	49,208			$	50,331			$	212,299			$	145,481
Adjusted revenue (Non-GAAP)			(a)+(b)	$	184,334			$	178,723			$	173,485			$	157,948			$	162,046			$	536,542			$	476,207
Efficiency ratio (Non-GAAP)			(c)/((a)+(b))		62.19	%			62.13	%			63.50	%			68.08	%			64.98	%			62.59	%			65.82	%