Trustmark Corporation Announces Third Quarter 2021 Financial Results

Rhea-AI Summary

Trustmark Corporation (TRMK) reported a net income of $21.2 million for Q3 2021, equating to a diluted earnings per share of $0.34. The results were impacted by a $4.3 million charge from a voluntary early retirement program and a $5.0 million regulatory settlement. Notably, loans held for investment grew by $22.0 million, while total deposits surged by $290.8 million. Despite these challenges, Trustmark declared a cash dividend of $0.23 per share, underscoring its commitment to returning value to shareholders.

Positive

• Net income of $21.2 million, diluted EPS of $0.34.
• Loans held for investment increased by $22.0 million.
• Deposits expanded by $290.8 million.
• Declared quarterly dividend of $0.23 per share.

Negative

• One-time charges of $4.3 million and $5.0 million impacted net income.
• Noninterest income decreased by $19.6 million year-over-year.

Performance Reflects Continued Balance Sheet Growth, Strong Credit Quality and Disciplined Expense Management

JACKSON, Miss.--(BUSINESS WIRE)-- Trustmark Corporation (NASDAQGS: TRMK) reported net income of $21.2 million in the third quarter of 2021, representing diluted earnings per share of $0.34. Third quarter results include costs of a previously announced voluntary early retirement program, which reduced net income by $4.3 million, or approximately $0.07 per diluted share. Results for the quarter also include a previously disclosed charge to resolve allegations by regulatory authorities regarding fair lending matters, which reduced net income by $5.0 million, or approximately $0.08 per diluted share. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable December 15, 2021, to shareholders of record on December 1, 2021.

Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/52515085/en

Third Quarter Highlights

• Voluntary early retirement program resulted in one-time, pre-tax charge of $5.7 million in the third quarter; expected pre-tax savings of approximately $1.3 million for the remainder of 2021 and $4.3 million in 2022
• Loans held for investment (HFI) increased $22.0 million, reflecting accelerated payoffs during the quarter while deposits expanded $290.8 million compared to the prior quarter
• Investment securities increased $470.8 million in the third quarter as excess liquidity was deployed
• Provision for credit losses, net totaled a negative $3.5 million, reflecting improved credit loss expectations
• Adjusted noninterest expense totaled $116.6 million, up 0.3% linked-quarter; please refer to the Consolidated Financial Information, Note 10 – Non-GAAP Financial Measures

Duane A. Dewey, President and CEO, stated, “We made significant progress across the organization in the third quarter as reflected by continued balance sheet growth, strong credit quality, and disciplined expense management. Our associates are focused on expanding customer relationships, which is reflected in the solid performance of our banking, insurance, and wealth management businesses.

“Our third quarter results were impacted by our previously announced settlement with regulatory authorities to resolve fair lending allegations in our Memphis, Tennessee market. We entered into these settlements to avoid the distraction of protracted litigation and because we share the common goals of breaking down barriers to home financing and exploring innovative ways to help residents of underserved areas achieve the dream of homeownership. Our quarterly results also reflect the costs associated with our voluntary early retirement program, which was accepted by 98 associates, or 3.6% of our workforce. As you may recall, we also had a voluntary early retirement program in the first quarter of 2020 in which 107 associates, or 3.8% of the workforce at that time, elected to participate. Collectively, these programs have provided additional opportunities to redesign workflows and restructure the organization to leverage investments in technology and improve efficiency.”

Balance Sheet Management

• Loans HFI totaled $10.2 billion, up 0.2% from the prior quarter and 3.3% year-over-year
• Investment securities totaled $3.5 billion, up 15.8% from the prior quarter and 36.2% year-over-year
• Noninterest-bearing deposits increased $540.9 million, or 12.2% linked-quarter
• Maintained strong capital position with CET1 ratio of 11.68% and total risk-based capital ratio of 14.01%

Loans HFI totaled $10.2 billion at September 30, 2021, reflecting an increase of $22.0 million, or 0.2%, linked-quarter and $327.2 million, or 3.3%, year-over-year. The linked-quarter growth primarily reflects increases in loans secured by nonfarm, nonresidential properties and 1-4 family mortgage loans, which were largely offset by declines in construction loans, other real estate secured loans, and municipal loans. Trustmark’s loan portfolio remains well-diversified by loan type and geography.

Deposits totaled $14.9 billion at September 30, 2021, up $290.8 million, or 2.0%, from the prior quarter and $1.7 billion, or 12.9%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 68.2% of total deposits at September 30, 2021. Noninterest-bearing deposits represented 33.4% of total deposits at the end of the third quarter. Interest-bearing deposit costs totaled 0.14% in the third quarter, a decrease of 5 basis points from the prior quarter. The total cost of interest-bearing liabilities was 0.21% in the third quarter of 2021, a decrease of 4 basis points from the prior quarter.

During the third quarter, Trustmark repurchased $9.7 million, or approximately 319 thousand of its common shares. During the nine months ended September 30, 2021, Trustmark repurchased $34.6 million, or approximately 1.1 million of its common shares. At September 30, 2021, Trustmark had $65.4 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 September 30, 2021,Trustmark’s tangible equity-to-tangible assets ratio was 8.12% while its total risk-based capital ratio was 14.01%.

Credit Quality

• Allowance for credit losses (ACL) represented 520.77% of nonaccrual loans, excluding individually evaluated loans at September 30, 2021
• Recoveries exceeded charge-offs by $2.5 million in the third quarter
• Loans remaining under a COVID-19 related concession represented approximately 20 basis points of loans HFI at September 30, 2021

Nonaccrual loans totaled $66.2 million at September 30, 2021, up $14.8 million from the prior quarter and up $12.4 million year-over-year. Other real estate totaled $6.2 million, reflecting a $3.2 million decrease from the prior quarter and a decline of $10.0 million year-over-year. Collectively, nonperforming assets totaled $72.5 million at September 30, 2021, reflecting a linked-quarter increase of $11.6 million and year-over-year increase of $2.3 million.

The provision for credit losses for loans HFI was a negative $2.5 million in the third quarter. Negative provisioning was primarily due to improvements in credit quality and the economic forecasts. The provision for credit losses for off-balance sheet credit exposures was a negative $1.0 million in the third quarter and was primarily driven by decreases in the total reserve rates applied to the unfunded portion of the loan portfolio. Collectively, the provision for credit losses totaled a negative $3.5 million in the third quarter compared to an expense of $537 thousand in the prior quarter and a negative $1.2 million in the third quarter of 2020.

Allocation of Trustmark’s $104.1 million allowance for credit losses on loans HFI represented 1.05% of commercial loans and 0.91% of consumer and home mortgage loans, resulting in an allowance to total loans HFI of 1.02% at September 30, 2021. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.

Revenue Generation

• Excluding Paycheck Protection Program (PPP) interest and fees, net interest income (FTE) increased $2.9 million, or 2.9%, linked-quarter
• Noninterest income totaled $54.1 million, representing 35.5% of total revenue in the third quarter
• Mortgage banking revenue totaled $14.0 million on production of $708.8 million in the third quarter
• Service charges on deposit accounts increased $1.3 million, or 17.0%, linked quarter

Revenue in the third quarter totaled $152.4 million, a decrease of $23.4 million, or 13.3%, from the prior quarter. During the third quarter, mortgage banking revenue declined $3.3 million while second quarter results included $18.6 million of PPP loan origination fees attributable to the sale of PPP loans.

Net interest income (FTE) in the third quarter totaled $101.2 million, resulting in a net interest margin of 2.57%. The net interest margin, excluding PPP loans and Federal Reserve Bank balance, totaled 2.90% during the third quarter, a decrease of 4 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 of interest-bearing deposits.

Noninterest income in the third quarter totaled $54.1 million, a decrease of $2.3 million from the prior quarter and $19.6 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 third quarter totaled $708.8 million, down 3.8% from the prior quarter and 20.0% year-over-year. Mortgage banking revenue totaled $14.0 million in the third quarter, a decrease of $3.3 million from the prior quarter and $22.4 million year-over-year. The linked-quarter decline is attributable to reduced spreads which resulted in lower net gains on sales of mortgage loans in the secondary market as well as reduced net hedge ineffectiveness.

Wealth management revenue totaled $9.1 million in the third quarter, an increase of $125 thousand, or 1.4%, from the prior quarter and $1.4 million, or 18.1%, year-over-year. The growth is attributable to increased trust and investment and brokerage business. Insurance revenue totaled $12.1 million in the third quarter, relatively unchanged from the prior quarter and up $571 thousand, or 4.9%, year-over-year due in part to increased property and casualty commissions. Service charges on deposit accounts increased $1.3 million, or 17.0%, from the prior quarter and $1.3 million, or 17.6%, year-over-year. Bank card and other fees increased $248 thousand from the prior quarter and decreased $294 thousand year-over-year. The linked-quarter and year-over-year changes are attributable to the level of customer derivative revenue.

Noninterest Expense

• Noninterest expense totaled $129.6 million in the third quarter and included $5.7 million in one-time expenses related to a voluntary early retirement program and $5.0 million regulatory settlement expenses
• Adjusted noninterest expense, which excludes amortization of intangibles, ORE expenses, charitable contributions resulting in state tax credits, costs associated with the voluntary early retirement program and regulatory charges, totaled $116.6 million in the third quarter, an increase of 0.3% from the prior quarter and 1.8% year-over-year; please refer to the Consolidated Financial Information, Note 10 – Non-GAAP Financial Measures

Trustmark continued proactive measures to manage noninterest expense. During the third quarter, Trustmark completed a voluntary early retirement program. Of those eligible for the program, 98 associates, or 3.6% of the workforce, elected early retirement. A one-time, pre-tax charge of $5.7 million related to this program was incurred during the third quarter, reflecting $5.6 million in salaries and employee benefits expense and $89 thousand in other expense. The result of this program is expected to result in pre-tax savings of approximately $1.3 million in the fourth quarter of 2021 and $4.3 million in 2022.

Adjusted noninterest expense in the third quarter was $116.6 million, up $384 thousand, or 0.3%, from the prior quarter and $2.0 million, or 1.8%, year-over-year. Salaries and employee benefits expense increased $4.5 million linked-quarter; excluding the $5.6 million in charges related to the voluntary early retirement program, salary and employee benefits expense declined $1.1 million linked-quarter. Total other expense increased $5.4 million linked-quarter principally due to regulatory settlement expenses.

“Looking forward, Trustmark will continue to focus upon efficiency, growth, and innovation opportunities. We continue to redesign workflows and restructure the organization to leverage investments in technology, enhance the customer experience, and improve efficiency. We are focused on providing the services and advice our customers have come to expect while building long-term value for our shareholders,” said Dewey.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, October 27, 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, November 10, 2021, in archived format at the same web address or by calling (877) 344-7529, passcode 10160480.

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
September 30, 2021
($ in thousands)
(unaudited)
													Linked Quarter							Year over Year
QUARTERLY AVERAGE BALANCES	9/30/2021				6/30/2021				9/30/2020				$ Change				% Change			$ Change				% Change
Securities AFS-taxable	$	2,686,765			$	2,339,662			$	1,857,050			$	347,103			14.8	%		$	829,715			44.7	%
Securities AFS-nontaxable		5,159				5,174				5,973				(15	)		-0.3	%			(814	)		-13.6	%
Securities HTM-taxable		401,685				441,688				608,585				(40,003	)		-9.1	%			(206,900	)		-34.0	%
Securities HTM-nontaxable		8,641				10,958				25,508				(2,317	)		-21.1	%			(16,867	)		-66.1	%
Total securities		3,102,250				2,797,482				2,497,116				304,768			10.9	%			605,134			24.2	%
Paycheck protection program loans (PPP)		122,176				648,222				941,456				(526,046	)		-81.2	%			(819,280	)		-87.0	%
Loans (includes loans held for sale)		10,389,826				10,315,927				10,162,379				73,899			0.7	%			227,447			2.2	%
Fed funds sold and reverse repurchases		69				55				301				14			25.5	%			(232	)		-77.1	%
Other earning assets		2,038,515				1,750,385				722,917				288,130			16.5	%			1,315,598			n/m
Total earning assets		15,652,836				15,512,071				14,324,169				140,765			0.9	%			1,328,667			9.3	%
Allowance for credit losses (ACL), loans held for investment (LHFI)		(104,857	)			(112,346	)			(121,842	)			7,489			-6.7	%			16,985			13.9	%
Other assets		1,602,611				1,622,388				1,564,825				(19,777	)		-1.2	%			37,786			2.4	%
Total assets	$	17,150,590			$	17,022,113			$	15,767,152			$	128,477			0.8	%		$	1,383,438			8.8	%
Interest-bearing demand deposits	$	4,224,717			$	4,056,910			$	3,669,249			$	167,807			4.1	%		$	555,468			15.1	%
Savings deposits		4,617,683				4,627,180				4,416,046				(9,497	)		-0.2	%			201,637			4.6	%
Time deposits		1,258,829				1,301,896				1,507,348				(43,067	)		-3.3	%			(248,519	)		-16.5	%
Total interest-bearing deposits		10,101,229				9,985,986				9,592,643				115,243			1.2	%			508,586			5.3	%
Fed funds purchased and repurchases		147,635				174,620				84,077				(26,985	)		-15.5	%			63,558			75.6	%
Other borrowings		109,735				132,199				167,262				(22,464	)		-17.0	%			(57,527	)		-34.4	%
Subordinated notes		122,951				122,897				—				54			0.0	%			122,951			n/m
Junior subordinated debt securities		61,856				61,856				61,856				—			0.0	%			—			0.0	%
Total interest-bearing liabilities		10,543,406				10,477,558				9,905,838				65,848			0.6	%			637,568			6.4	%
Noninterest-bearing deposits		4,566,924				4,512,268				3,921,867				54,656			1.2	%			645,057			16.4	%
Other liabilities		257,956				251,582				244,544				6,374			2.5	%			13,412			5.5	%
Total liabilities		15,368,286				15,241,408				14,072,249				126,878			0.8	%			1,296,037			9.2	%
Shareholders' equity		1,782,304				1,780,705				1,694,903				1,599			0.1	%			87,401			5.2	%
Total liabilities and equity	$	17,150,590			$	17,022,113			$	15,767,152			$	128,477			0.8	%		$	1,383,438			8.8	%
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, 2021
($ in thousands)
(unaudited)
													Linked Quarter							Year over Year
PERIOD END BALANCES	9/30/2021				6/30/2021				9/30/2020				$ Change				% Change			$ Change				% Change
Cash and due from banks	$	2,175,058			$	2,267,224			$	564,588			$	(92,166	)		-4.1	%		$	1,610,470			n/m
Fed funds sold and reverse repurchases		—				—				50				—			n/m				(50	)		-100.0	%
Securities available for sale		3,057,605				2,548,739				1,922,728				508,866			20.0	%			1,134,877			59.0	%
Securities held to maturity		394,905				433,012				611,280				(38,107	)		-8.8	%			(216,375	)		-35.4	%
PPP loans		46,486				166,119				944,270				(119,633	)		-72.0	%			(897,784	)		-95.1	%
Loans held for sale (LHFS)		335,339				332,132				485,103				3,207			1.0	%			(149,764	)		-30.9	%
Loans held for investment (LHFI)		10,174,899				10,152,869				9,847,728				22,030			0.2	%			327,171			3.3	%
ACL LHFI		(104,073	)			(104,032	)			(122,010	)			(41	)		0.0	%			17,937			14.7	%
Net LHFI		10,070,826				10,048,837				9,725,718				21,989			0.2	%			345,108			3.5	%
Premises and equipment, net		201,937				200,970				192,722				967			0.5	%			9,215			4.8	%
Mortgage servicing rights		84,101				80,764				61,613				3,337			4.1	%			22,488			36.5	%
Goodwill		384,237				384,237				385,270				—			0.0	%			(1,033	)		-0.3	%
Identifiable intangible assets		5,621				6,170				8,142				(549	)		-8.9	%			(2,521	)		-31.0	%
Other real estate		6,213				9,439				16,248				(3,226	)		-34.2	%			(10,035	)		-61.8	%
Operating lease right-of-use assets		34,689				33,201				30,508				1,488			4.5	%			4,181			13.7	%
Other assets		567,627				587,288				609,922				(19,661	)		-3.3	%			(42,295	)		-6.9	%
Total assets	$	17,364,644			$	17,098,132			$	15,558,162			$	266,512			1.6	%		$	1,806,482			11.6	%
Deposits:
Noninterest-bearing	$	4,987,885			$	4,446,991			$	3,964,023			$	540,894			12.2	%		$	1,023,862			25.8	%
Interest-bearing		9,934,954				10,185,093				9,258,390				(250,139	)		-2.5	%			676,564			7.3	%
Total deposits		14,922,839				14,632,084				13,222,413				290,755			2.0	%			1,700,426			12.9	%
Fed funds purchased and repurchases		146,417				157,176				153,834				(10,759	)		-6.8	%			(7,417	)		-4.8	%
Other borrowings		94,889				117,223				178,599				(22,334	)		-19.1	%			(83,710	)		-46.9	%
Subordinated notes		122,987				122,932				—				55			0.0	%			122,987			n/m
Junior subordinated debt securities		61,856				61,856				61,856				—			0.0	%			—			0.0	%
ACL on off-balance sheet credit exposures		32,684				33,733				39,659				(1,049	)		-3.1	%			(6,975	)		-17.6	%
Operating lease liabilities		36,531				34,959				31,838				1,572			4.5	%			4,693			14.7	%
Other liabilities		177,494				158,860				159,922				18,634			11.7	%			17,572			11.0	%
Total liabilities		15,595,697				15,318,823				13,848,121				276,874			1.8	%			1,747,576			12.6	%
Common stock		13,014				13,079				13,215				(65	)		-0.5	%			(201	)		-1.5	%
Capital surplus		201,837				210,420				231,836				(8,583	)		-4.1	%			(29,999	)		-12.9	%
Retained earnings		1,573,176				1,566,451				1,459,306				6,725			0.4	%			113,870			7.8	%
Accumulated other comprehensive income (loss), net of tax		(19,080	)			(10,641	)			5,684				(8,439	)		-79.3	%			(24,764	)		n/m
Total shareholders' equity		1,768,947				1,779,309				1,710,041				(10,362	)		-0.6	%			58,906			3.4	%
Total liabilities and equity	$	17,364,644			$	17,098,132			$	15,558,162			$	266,512			1.6	%		$	1,806,482			11.6	%
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, 2021
($ in thousands except per share data)
(unaudited)
	Quarter Ended												Linked Quarter							Year over Year
INCOME STATEMENTS	9/30/2021				6/30/2021				9/30/2020				$ Change				% Change			$ Change				% Change
Interest and fees on LHFS & LHFI-FTE	$	94,101			$	93,698			$	97,429			$	403			0.4	%		$	(3,328	)		-3.4	%
Interest and fees on PPP loans		1,533				25,555				6,729				(24,022	)		-94.0	%			(5,196	)		-77.2	%
Interest on securities-taxable		9,973				8,991				12,542				982			10.9	%			(2,569	)		-20.5	%
Interest on securities-tax exempt-FTE		132				149				301				(17	)		-11.4	%			(169	)		-56.1	%
Interest on fed funds sold and reverse repurchases		—				—				1				—			n/m				(1	)		-100.0	%
Other interest income		949				489				331				460			94.1	%			618			n/m
Total interest income-FTE		106,688				128,882				117,333				(22,194	)		-17.2	%			(10,645	)		-9.1	%
Interest on deposits		3,691				4,630				7,437				(939	)		-20.3	%			(3,746	)		-50.4	%
Interest on fed funds purchased and repurchases		51				59				32				(8	)		-13.6	%			19			59.4	%
Other interest expense		1,733				1,813				688				(80	)		-4.4	%			1,045			n/m
Total interest expense		5,475				6,502				8,157				(1,027	)		-15.8	%			(2,682	)		-32.9	%
Net interest income-FTE		101,213				122,380				109,176				(21,167	)		-17.3	%			(7,963	)		-7.3	%
Provision for credit losses, LHFI		(2,492	)			(3,991	)			1,760				1,499			37.6	%			(4,252	)		n/m
Provision for credit losses, off-balance sheet credit exposures (1)		(1,049	)			4,528				(3,004	)			(5,577	)		n/m				1,955			65.1	%
Net interest income after provision-FTE		104,754				121,843				110,420				(17,089	)		-14.0	%			(5,666	)		-5.1	%
Service charges on deposit accounts		8,911				7,613				7,577				1,298			17.0	%			1,334			17.6	%
Bank card and other fees		8,549				8,301				8,843				248			3.0	%			(294	)		-3.3	%
Mortgage banking, net		14,004				17,333				36,439				(3,329	)		-19.2	%			(22,435	)		-61.6	%
Insurance commissions		12,133				12,217				11,562				(84	)		-0.7	%			571			4.9	%
Wealth management		9,071				8,946				7,679				125			1.4	%			1,392			18.1	%
Other, net		1,481				2,001				1,601				(520	)		-26.0	%			(120	)		-7.5	%
Total noninterest income		54,149				56,411				73,701				(2,262	)		-4.0	%			(19,552	)		-26.5	%
Salaries and employee benefits		74,623				70,115				67,342				4,508			6.4	%			7,281			10.8	%
Services and fees		22,306				21,769				20,992				537			2.5	%			1,314			6.3	%
Net occupancy-premises		6,854				6,578				7,000				276			4.2	%			(146	)		-2.1	%
Equipment expense		5,941				5,567				5,828				374			6.7	%			113			1.9	%
Other real estate expense, net		1,357				1,511				1,203				(154	)		-10.2	%			154			12.8	%
Other expense		18,519				13,139				14,598				5,380			40.9	%			3,921			26.9	%
Total noninterest expense		129,600				118,679				116,963				10,921			9.2	%			12,637			10.8	%
Income before income taxes and tax eq adj		29,303				59,575				67,158				(30,272	)		-50.8	%			(37,855	)		-56.4	%
Tax equivalent adjustment		2,947				2,957				2,969				(10	)		-0.3	%			(22	)		-0.7	%
Income before income taxes		26,356				56,618				64,189				(30,262	)		-53.4	%			(37,833	)		-58.9	%
Income taxes		5,156				8,637				9,749				(3,481	)		-40.3	%			(4,593	)		-47.1	%
Net income	$	21,200			$	47,981			$	54,440			$	(26,781	)		-55.8	%		$	(33,240	)		-61.1	%
Per share data
Earnings per share - basic	$	0.34			$	0.76			$	0.86			$	(0.42	)		-55.3	%		$	(0.52	)		-60.5	%
Earnings per share - diluted	$	0.34			$	0.76			$	0.86			$	(0.42	)		-55.3	%		$	(0.52	)		-60.5	%
Dividends per share	$	0.23			$	0.23			$	0.23				—			0.0	%			—			0.0	%
Weighted average shares outstanding
Basic		62,521,684				63,214,593				63,422,692
Diluted		62,730,157				63,409,683				63,581,964
Period end shares outstanding		62,461,832				62,773,226				63,423,820
(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
September 30, 2021
($ in thousands)
(unaudited)
	Quarter Ended												Linked Quarter							Year over Year
NONPERFORMING ASSETS (1)	9/30/2021				6/30/2021				9/30/2020				$ Change				% Change			$ Change				% Change
Nonaccrual LHFI
Alabama	$	9,223			$	8,952			$	3,860			$	271			3.0	%		$	5,363			n/m
Florida		381				467				617				(86	)		-18.4	%			(236	)		-38.2	%
Mississippi (2)		22,898				23,422				35,617				(524	)		-2.2	%			(12,719	)		-35.7	%
Tennessee (3)		10,356				10,751				13,041				(395	)		-3.7	%			(2,685	)		-20.6	%
Texas		23,382				7,856				721				15,526			n/m				22,661			n/m
Total nonaccrual LHFI		66,240				51,448				53,856				14,792			28.8	%			12,384			23.0	%
Other real estate
Alabama		613				2,830				3,725				(2,217	)		-78.3	%			(3,112	)		-83.5	%
Florida		—				—				3,665				—			n/m				(3,665	)		-100.0	%
Mississippi (2)		5,600				6,550				8,718				(950	)		-14.5	%			(3,118	)		-35.8	%
Tennessee (3)		—				59				140				(59	)		-100.0	%			(140	)		-100.0	%
Texas		—				—				—				—			n/m				—			n/m
Total other real estate		6,213				9,439				16,248				(3,226	)		-34.2	%			(10,035	)		-61.8	%
Total nonperforming assets	$	72,453			$	60,887			$	70,104			$	11,566			19.0	%		$	2,349			3.4	%
LOANS PAST DUE OVER 90 DAYS (1)
LHFI	$	625			$	423			$	782			$	202			47.8	%		$	(157	)		-20.1	%
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	75,091			$	81,538			$	121,281			$	(6,447	)		-7.9	%		$	(46,190	)		-38.1	%
	Quarter Ended												Linked Quarter							Year over Year
ACL LHFI (1)	9/30/2021				6/30/2021				9/30/2020				$ Change				% Change			$ Change				% Change
Beginning Balance	$	104,032			$	109,191			$	119,188			$	(5,159	)		-4.7	%		$	(15,156	)		-12.7	%
CECL adoption adjustments:
LHFI		—				—				—				—			n/m				—			n/m
Acquired loan transfers		—				—				—				—			n/m				—			n/m
Provision for credit losses, LHFI		(2,492	)			(3,991	)			1,760				1,499			37.6	%			(4,252	)		n/m
Charge-offs		(1,586	)			(4,828	)			(1,263	)			3,242			67.1	%			(323	)		-25.6	%
Recoveries		4,119				3,660				2,325				459			12.5	%			1,794			77.2	%
Net (charge-offs) recoveries		2,533				(1,168	)			1,062				3,701			n/m				1,471			n/m
Ending Balance	$	104,073			$	104,032			$	122,010			$	41			0.0	%		$	(17,937	)		-14.7	%
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama	$	247			$	203			$	117			$	44			21.7	%		$	130			n/m
Florida		356				167				387				189			n/m				(31	)		-8.0	%
Mississippi (2)		1,436				(3,071	)			442				4,507			n/m				994			n/m
Tennessee (3)		(8	)			1,031				42				(1,039	)		n/m				(50	)		n/m
Texas		502				502				74				—			0.0	%			428			n/m
Total net (charge-offs) recoveries	$	2,533			$	(1,168	)		$	1,062			$	3,701			n/m			$	1,471			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
September 30, 2021
($ in thousands)
(unaudited)
		Quarter Ended																				Nine Months Ended
AVERAGE BALANCES		9/30/2021				6/30/2021				3/31/2021				12/31/2020				9/30/2020				9/30/2021				9/30/2020
Securities AFS-taxable		$	2,686,765			$	2,339,662			$	2,098,089			$	1,902,162			$	1,857,050			$	2,376,995			$	1,734,380
Securities AFS-nontaxable			5,159				5,174				5,190				5,206				5,973				5,174				12,594
Securities HTM-taxable			401,685				441,688				489,260				550,563				608,585				443,890				652,642
Securities HTM-nontaxable			8,641				10,958				24,070				24,752				25,508				14,500				25,573
Total securities			3,102,250				2,797,482				2,616,609				2,482,683				2,497,116				2,840,559				2,425,189
PPP loans			122,176				648,222				598,139				875,098				941,456				454,436				569,985
Loans (includes loans held for sale)			10,389,826				10,315,927				10,316,319				10,231,671				10,162,379				10,340,960				9,917,127
Fed funds sold and reverse repurchases			69				55				136				303				301				86				193
Other earning assets			2,038,515				1,750,385				1,667,906				860,540				722,917				1,820,293				588,787
Total earning assets			15,652,836				15,512,071				15,199,109				14,450,295				14,324,169				15,456,334				13,501,281
ACL LHFI			(104,857	)			(112,346	)			(119,557	)			(124,088	)			(121,842	)			(112,199	)			(103,355	)
Other assets			1,602,611				1,622,388				1,601,250				1,620,694				1,564,825				1,608,754				1,582,888
Total assets		$	17,150,590			$	17,022,113			$	16,680,802			$	15,946,901			$	15,767,152			$	16,952,889			$	14,980,814
Interest-bearing demand deposits		$	4,224,717			$	4,056,910			$	3,743,651			$	3,649,590			$	3,669,249			$	4,010,188			$	3,562,310
Savings deposits			4,617,683				4,627,180				4,659,037				4,350,783				4,416,046				4,634,482				4,082,396
Time deposits			1,258,829				1,301,896				1,371,830				1,436,677				1,507,348				1,310,438				1,567,577
Total interest-bearing deposits			10,101,229				9,985,986				9,774,518				9,437,050				9,592,643				9,955,108				9,212,283
Fed funds purchased and repurchases			147,635				174,620				166,909				170,474				84,077				162,984				145,537
Other borrowings			109,735				132,199				166,926				173,525				167,262				136,077				120,197
Subordinated notes			122,951				122,897				122,875				42,828				—				122,908				—
Junior subordinated debt securities			61,856				61,856				61,856				61,856				61,856				61,856				61,856
Total interest-bearing liabilities			10,543,406				10,477,558				10,293,084				9,885,733				9,905,838				10,438,933				9,539,873
Noninterest-bearing deposits			4,566,924				4,512,268				4,363,559				4,100,849				3,921,867				4,481,662				3,494,425
Other liabilities			257,956				251,582				264,808				235,284				244,544				258,090				279,517
Total liabilities			15,368,286				15,241,408				14,921,451				14,221,866				14,072,249				15,178,685				13,313,815
Shareholders' equity			1,782,304				1,780,705				1,759,351				1,725,035				1,694,903				1,774,204				1,666,999
Total liabilities and equity		$	17,150,590			$	17,022,113			$	16,680,802			$	15,946,901			$	15,767,152			$	16,952,889			$	14,980,814
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2021
($ in thousands)
(unaudited)
PERIOD END BALANCES		9/30/2021				6/30/2021				3/31/2021				12/31/2020				9/30/2020
Cash and due from banks		$	2,175,058			$	2,267,224			$	1,774,541			$	1,952,504			$	564,588
Fed funds sold and reverse repurchases			—				—				—				50				50
Securities available for sale			3,057,605				2,548,739				2,337,676				1,991,815				1,922,728
Securities held to maturity			394,905				433,012				493,738				538,072				611,280
PPP loans			46,486				166,119				679,725				610,134				944,270
LHFS			335,339				332,132				412,999				446,951				485,103
LHFI			10,174,899				10,152,869				9,983,704				9,824,524				9,847,728
ACL LHFI			(104,073	)			(104,032	)			(109,191	)			(117,306	)			(122,010	)
Net LHFI			10,070,826				10,048,837				9,874,513				9,707,218				9,725,718
Premises and equipment, net			201,937				200,970				199,098				194,278				192,722
Mortgage servicing rights			84,101				80,764				83,035				66,464				61,613
Goodwill			384,237				384,237				384,237				385,270				385,270
Identifiable intangible assets			5,621				6,170				6,724				7,390				8,142
Other real estate			6,213				9,439				10,651				11,651				16,248
Operating lease right-of-use assets			34,689				33,201				33,704				30,901				30,508
Other assets			567,627				587,288				587,672				609,142				609,922
Total assets		$	17,364,644			$	17,098,132			$	16,878,313			$	16,551,840			$	15,558,162
Deposits:
Noninterest-bearing		$	4,987,885			$	4,446,991			$	4,705,991			$	4,349,010			$	3,964,023
Interest-bearing			9,934,954				10,185,093				9,677,449				9,699,754				9,258,390
Total deposits			14,922,839				14,632,084				14,383,440				14,048,764				13,222,413
Fed funds purchased and repurchases			146,417				157,176				160,991				164,519				153,834
Other borrowings			94,889				117,223				145,994				168,252				178,599
Subordinated notes			122,987				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			32,684				33,733				29,205				38,572				39,659
Operating lease liabilities			36,531				34,959				35,389				32,290				31,838
Other liabilities			177,494				158,860				178,856				173,549				159,922
Total liabilities			15,595,697				15,318,823				15,118,608				14,810,723				13,848,121
Common stock			13,014				13,079				13,209				13,215				13,215
Capital surplus			201,837				210,420				229,892				233,120				231,836
Retained earnings			1,573,176				1,566,451				1,533,110				1,495,833				1,459,306
Accumulated other comprehensive income (loss), net of tax			(19,080	)			(10,641	)			(16,506	)			(1,051	)			5,684
Total shareholders' equity			1,768,947				1,779,309				1,759,705				1,741,117				1,710,041
Total liabilities and equity		$	17,364,644			$	17,098,132			$	16,878,313			$	16,551,840			$	15,558,162
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2021
($ in thousands except per share data)
(unaudited)
		Quarter Ended																				Nine Months Ended
INCOME STATEMENTS		9/30/2021				6/30/2021				3/31/2021				12/31/2020				9/30/2020				9/30/2021				9/30/2020
Interest and fees on LHFS & LHFI-FTE		$	94,101			$	93,698			$	93,394			$	96,453			$	97,429			$	281,193			$	306,086
Interest and fees on PPP loans			1,533				25,555				9,241				14,870				6,729				36,329				11,773
Interest on securities-taxable			9,973				8,991				8,938				9,998				12,542				27,902				38,252
Interest on securities-tax exempt-FTE			132				149				290				293				301				571				1,073
Interest on fed funds sold and reverse repurchases			—				—				—				—				1				—				1
Other interest income			949				489				503				249				331				1,941				1,310
Total interest income-FTE			106,688				128,882				112,366				121,863				117,333				347,936				358,495
Interest on deposits			3,691				4,630				5,223				6,363				7,437				13,544				31,124
Interest on fed funds purchased and repurchases			51				59				56				56				32				166				699
Other interest expense			1,733				1,813				1,857				1,127				688				5,403				2,429
Total interest expense			5,475				6,502				7,136				7,546				8,157				19,113				34,252
Net interest income-FTE			101,213				122,380				105,230				114,317				109,176				328,823				324,243
Provision for credit losses, LHFI			(2,492	)			(3,991	)			(10,501	)			(4,413	)			1,760				(16,984	)			40,526
Provision for credit losses, off-balance sheet credit exposures (1)			(1,049	)			4,528				(9,367	)			(1,087	)			(3,004	)			(5,888	)			10,021
Net interest income after provision-FTE			104,754				121,843				125,098				119,817				110,420				351,695				273,696
Service charges on deposit accounts			8,911				7,613				7,356				8,283				7,577				23,880				24,006
Bank card and other fees			8,549				8,301				9,472				9,107				8,843				26,322				21,915
Mortgage banking, net			14,004				17,333				20,804				28,155				36,439				52,141				97,667
Insurance commissions			12,133				12,217				12,445				10,196				11,562				36,795				34,980
Wealth management			9,071				8,946				8,416				7,838				7,679				26,433				23,787
Other, net			1,481				2,001				2,090				2,538				1,601				5,572				6,121
Total noninterest income			54,149				56,411				60,583				66,117				73,701				171,143				208,476
Salaries and employee benefits			74,623				70,115				71,162				69,660				67,342				215,900				202,597
Services and fees			22,306				21,769				22,484				22,327				20,992				66,559				61,489
Net occupancy-premises			6,854				6,578				6,795				6,616				7,000				20,227				19,873
Equipment expense			5,941				5,567				6,244				6,213				5,828				17,752				17,064
Other real estate expense, net			1,357				1,511				324				(812	)			1,203				3,192				2,768
Other expense			18,519				13,139				14,539				15,890				14,598				46,197				42,616
Total noninterest expense			129,600				118,679				121,548				119,894				116,963				369,827				346,407
Income before income taxes and tax eq adj			29,303				59,575				64,133				66,040				67,158				153,011				135,765
Tax equivalent adjustment			2,947				2,957				2,894				2,939				2,969				8,798				9,084
Income before income taxes			26,356				56,618				61,239				63,101				64,189				144,213				126,681
Income taxes			5,156				8,637				9,277				11,884				9,749				23,070				17,873
Net income		$	21,200			$	47,981			$	51,962			$	51,217			$	54,440			$	121,143			$	108,808
Per share data
Earnings per share - basic		$	0.34			$	0.76			$	0.82			$	0.81			$	0.86			$	1.92			$	1.71
Earnings per share - diluted		$	0.34			$	0.76			$	0.82			$	0.81			$	0.86			$	1.92			$	1.71
Dividends per share		$	0.23			$	0.23			$	0.23			$	0.23			$	0.23			$	0.69			$	0.69
Weighted average shares outstanding
Basic			62,521,684				63,214,593				63,395,911				63,424,219				63,422,692				63,040,860				63,531,478
Diluted			62,730,157				63,409,683				63,562,503				63,616,767				63,581,964				63,219,987				63,665,127
Period end shares outstanding			62,461,832				62,773,226				63,394,522				63,424,526				63,423,820				62,461,832				63,423,820
(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
September 30, 2021
($ in thousands)
(unaudited)
		Quarter Ended
NONPERFORMING ASSETS (1)		9/30/2021				6/30/2021				3/31/2021				12/31/2020				9/30/2020
Nonaccrual LHFI
Alabama		$	9,223			$	8,952			$	9,161			$	9,221			$	3,860
Florida			381				467				607				572				617
Mississippi (2)			22,898				23,422				35,534				35,015				35,617
Tennessee (3)			10,356				10,751				12,451				12,572				13,041
Texas			23,382				7,856				5,761				5,748				721
Total nonaccrual LHFI			66,240				51,448				63,514				63,128				53,856
Other real estate
Alabama			613				2,830				3,085				3,271				3,725
Florida			—				—				—				—				3,665
Mississippi (2)			5,600				6,550				7,566				8,330				8,718
Tennessee (3)			—				59				—				50				140
Texas			—				—				—				—				—
Total other real estate			6,213				9,439				10,651				11,651				16,248
Total nonperforming assets		$	72,453			$	60,887			$	74,165			$	74,779			$	70,104
LOANS PAST DUE OVER 90 DAYS (1)
LHFI		$	625			$	423			$	2,593			$	1,576			$	782
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)		$	75,091			$	81,538			$	109,566			$	119,409			$	121,281
		Quarter Ended																				Nine Months Ended
ACL LHFI (1)		9/30/2021				6/30/2021				3/31/2021				12/31/2020				9/30/2020				9/30/2021				9/30/2020
Beginning Balance		$	104,032			$	109,191			$	117,306			$	122,010			$	119,188			$	117,306			$	84,277
CECL adoption adjustments:
LHFI			—				—				—				—				—				—				(3,039	)
Acquired loan transfers			—				—				—				—				—				—				1,822
Provision for credit losses, LHFI			(2,492	)			(3,991	)			(10,501	)			(4,413	)			1,760				(16,984	)			40,526
Charge-offs			(1,586	)			(4,828	)			(1,245	)			(2,797	)			(1,263	)			(7,659	)			(8,678	)
Recoveries			4,119				3,660				3,631				2,506				2,325				11,410				7,102
Net (charge-offs) recoveries			2,533				(1,168	)			2,386				(291	)			1,062				3,751				(1,576	)
Ending Balance		$	104,073			$	104,032			$	109,191			$	117,306			$	122,010			$	104,073			$	122,010
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama		$	247			$	203			$	102			$	(1,011	)		$	117			$	552			$	(437	)
Florida			356				167				30				66				387				553				324
Mississippi (2)			1,436				(3,071	)			2,207				332				442				572				482
Tennessee (3)			(8	)			1,031				47				303				42				1,070				(2,078	)
Texas			502				502				—				19				74				1,004				133
Total net (charge-offs) recoveries		$	2,533			$	(1,168	)		$	2,386			$	(291	)		$	1,062			$	3,751			$	(1,576	)
(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
September 30, 2021
(unaudited)
		Quarter Ended																				Nine Months Ended
FINANCIAL RATIOS AND OTHER DATA		9/30/2021				6/30/2021				3/31/2021				12/31/2020				9/30/2020				9/30/2021			9/30/2020
Return on average equity			4.72	%			10.81	%			11.98	%			11.81	%			12.78	%		9.13	%		8.72	%
Return on average tangible equity			6.16	%			13.96	%			15.56	%			15.47	%			16.82	%		11.84	%		11.57	%
Return on average assets			0.49	%			1.13	%			1.26	%			1.28	%			1.37	%		0.96	%		0.97	%
Interest margin - Yield - FTE			2.70	%			3.33	%			3.00	%			3.35	%			3.26	%		3.01	%		3.55	%
Interest margin - Cost			0.14	%			0.17	%			0.19	%			0.21	%			0.23	%		0.17	%		0.34	%
Net interest margin - FTE			2.57	%			3.16	%			2.81	%			3.15	%			3.03	%		2.84	%		3.21	%
Efficiency ratio (1)			74.10	%			64.31	%			71.84	%			65.59	%			62.19	%		69.85	%		62.59	%
Full-time equivalent employees			2,680				2,772				2,793				2,797				2,807
CREDIT QUALITY RATIOS (2)
Net (recoveries) charge-offs / average loans			-0.10	%			0.05	%			-0.09	%			0.01	%			-0.04	%		-0.05	%		0.02	%
Provision for credit losses, LHFI / average loans			-0.10	%			-0.16	%			-0.41	%			-0.17	%			0.07	%		-0.22	%		0.55	%
Nonaccrual LHFI / (LHFI + LHFS)			0.63	%			0.49	%			0.61	%			0.61	%			0.52	%
Nonperforming assets / (LHFI + LHFS)			0.69	%			0.58	%			0.71	%			0.73	%			0.68	%
Nonperforming assets / (LHFI + LHFS + other real estate)			0.69	%			0.58	%			0.71	%			0.73	%			0.68	%
ACL LHFI / LHFI			1.02	%			1.02	%			1.09	%			1.19	%			1.24	%
ACL LHFI-commercial / commercial LHFI			1.05	%			1.04	%			1.13	%			1.20	%			1.20	%
ACL LHFI-consumer / consumer and home mortgage LHFI			0.91	%			0.98	%			0.95	%			1.16	%			1.41	%
ACL LHFI / nonaccrual LHFI			157.11	%			202.21	%			171.92	%			185.82	%			226.55	%
ACL LHFI / nonaccrual LHFI (excl individually evaluated loans)			520.77	%			537.35	%			437.08	%			572.69	%			593.72	%
CAPITAL RATIOS
Total equity / total assets			10.19	%			10.41	%			10.43	%			10.52	%			10.99	%
Tangible equity / tangible assets			8.12	%			8.31	%			8.30	%			8.34	%			8.68	%
Tangible equity / risk-weighted assets			11.19	%			11.33	%			11.23	%			11.22	%			11.01	%
Tier 1 leverage ratio			8.92	%			9.00	%			9.11	%			9.33	%			9.20	%
Common equity tier 1 capital ratio			11.68	%			11.76	%			11.71	%			11.62	%			11.36	%
Tier 1 risk-based capital ratio			12.17	%			12.25	%			12.20	%			12.11	%			11.86	%
Total risk-based capital ratio			14.01	%			14.10	%			14.07	%			14.12	%			12.88	%
STOCK PERFORMANCE
Market value-Close		$	32.22			$	30.80			$	33.66			$	27.31			$	21.41
Book value		$	28.32			$	28.35			$	27.76			$	27.45			$	26.96
Tangible book value		$	22.08			$	22.13			$	21.59			$	21.26			$	20.76
(1) See Note 10 – 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
September 30, 2021
($ in thousands)
(unaudited)

Note 1 – Regulatory Matters

On October 22, 2021, Trustmark Corporation’s subsidiary, Trustmark National Bank (“TNB”), issued a press release announcing that it entered into a consent order with the Office of the Comptroller of the Currency (“OCC”) and a separate consent order jointly with the U.S. Department of Justice (“DOJ”) and the Consumer Financial Protection Bureau (“CFPB”), to resolve allegations that TNB previously violated the Fair Housing Act (the “FHA”), the Equal Credit Opportunity Act (the “ECOA”) and the Consumer Financial Protection Act within the Memphis metropolitan statistical area (the “Memphis MSA”).

Under the DOJ and CFPB’s joint consent order, TNB will pay a civil money penalty totaling $5.0 million, of which $4.0 million will satisfy the OCC’s civil money penalty as set forth in the OCC’s consent order; the remaining $1.0 million will be paid to the CFPB. The joint consent order also requires TNB, among other things, to implement a mutually agreed-upon Fair Lending Plan, invest $3.85 million over five years in a loan subsidy fund to increase credit opportunities to residents of majority-Black and Hispanic neighborhoods, and devote a minimum of $400 thousand over five years toward community development partnership contributions and $200 thousand per year over five years toward advertising, community outreach, and credit repair and education in TNB’s Memphis lending area (defined in the consent order as consisting of Shelby County and Fayette County in Tennessee and DeSoto County in Mississippi). TNB will also open one new mortgage loan production office to serve the credit needs of residents in a majority-Black and Hispanic neighborhood in TNB’s Memphis lending area. In addition, TNB will continue to maintain its full-time Community Lending Manager position and its full-time Community Development Manager position, which are both focused on the Memphis MSA.

The joint consent order must be approved by the United States District Court for the Western District of Tennessee.

Note 2 - Paycheck Protection Program

On June 30, 2021, Trustmark announced the sale of substantially all PPP loans originated in 2021 by its wholly owned subsidiary, 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.

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 September 30, 2021, Trustmark had PPP loans outstanding that totaled $46.5 million (net of $798 thousand of deferred fees and costs) under the CARES Act. Due to the 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 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:

		9/30/2021				6/30/2021				3/31/2021				12/31/2020				9/30/2020
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities		$	278,615			$	30,025			$	—			$	—			$	—
U.S. Government agency obligations			14,979				16,023				17,349				18,041				19,011
Obligations of states and political subdivisions			5,734				5,807				5,798				5,835				8,315
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			43,860				48,445				52,406				56,862				62,156
Issued by FNMA and FHLMC			2,187,412				1,983,783				1,749,144				1,441,321				1,279,919
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			236,885				283,988				345,869				419,437				500,858
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			290,120				180,668				167,110				50,319				52,469
Total securities available for sale		$	3,057,605			$	2,548,739			$	2,337,676			$	1,991,815			$	1,922,728
SECURITIES HELD TO MATURITY
Obligations of states and political subdivisions		$	10,683			$	12,994			$	26,554			$	26,584			$	31,605
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			5,912				6,249				7,268				7,598				8,244
Issued by FNMA and FHLMC			48,554				53,406				61,855				67,944				78,213
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			264,638				291,477				324,360				360,361				399,400
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			65,118				68,886				73,701				75,585				93,818
Total securities held to maturity		$	394,905			$	433,012			$	493,738			$	538,072			$	611,280

At September 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 $6.8 million ($5.1 million, net of tax).

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

Note 3 - Securities Available for Sale and Held to Maturity (continued)

Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 98.5% 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		9/30/2021				6/30/2021				3/31/2021				12/31/2020				9/30/2020
Loans secured by real estate:
Construction, land development and other land loans		$	1,286,613			$	1,360,302			$	1,342,088			$	1,309,039			$	1,385,947
Secured by 1-4 family residential properties			1,891,292				1,810,396				1,742,782				1,741,132				1,775,400
Secured by nonfarm, nonresidential properties			2,924,953				2,819,662				2,799,195				2,709,026				2,707,627
Other real estate secured			986,163				1,078,622				1,135,005				1,065,964				887,792
Commercial and industrial loans			1,327,211				1,326,605				1,323,277				1,309,078				1,398,468
Consumer loans			157,963				153,519				153,267				161,174				160,960
State and other political subdivision loans			1,125,186				1,136,764				1,036,694				1,000,776				935,349
Other loans			475,518				466,999				451,396				528,335				596,185
LHFI			10,174,899				10,152,869				9,983,704				9,824,524				9,847,728
ACL LHFI			(104,073	)			(104,032	)			(109,191	)			(117,306	)			(122,010	)
Net LHFI		$	10,070,826			$	10,048,837			$	9,874,513			$	9,707,218			$	9,725,718

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

		September 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		$	1,286,613			$	554,207			$	45,335			$	374,064			$	38,583			$	274,424
Secured by 1-4 family residential properties			1,891,292				109,986				39,699				1,659,289				68,123				14,195
Secured by nonfarm, nonresidential properties			2,924,953				834,328				259,997				1,089,333				174,338				566,957
Other real estate secured			986,163				221,832				6,154				303,760				19,850				434,567
Commercial and industrial loans			1,327,211				230,698				23,678				597,197				276,876				198,762
Consumer loans			157,963				22,125				8,403				101,034				19,398				7,003
State and other political subdivision loans			1,125,186				101,679				54,619				734,853				37,408				196,627
Other loans			475,518				74,703				11,903				289,739				69,725				29,448
Loans		$	10,174,899			$	2,149,558			$	449,788			$	5,149,269			$	704,301			$	1,721,983
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots		$	60,804			$	27,014			$	8,676			$	17,782			$	905			$	6,427
Development			124,213				48,692				612				46,452				13,016				15,441
Unimproved land			93,283				28,095				12,146				28,601				11,187				13,254
1-4 family construction			281,504				147,073				19,485				70,508				12,528				31,910
Other construction			726,809				303,333				4,416				210,721				947				207,392
Construction, land development and other land loans		$	1,286,613			$	554,207			$	45,335			$	374,064			$	38,583			$	274,424

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

Note 4 – Loan Composition (continued)

		September 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		$	384,940			$	155,375			$	32,778			$	105,444			$	18,285			$	73,058
Office			215,297				52,628				23,835				67,094				11,714				60,026
Hotel/motel			347,023				176,352				76,664				47,229				32,638				14,140
Mini-storage			130,853				22,757				2,227				76,790				632				28,447
Industrial			246,576				57,901				20,755				62,071				137				105,712
Health care			59,676				39,225				1,140				16,755				370				2,186
Convenience stores			23,047				8,010				683				3,627				1,194				9,533
Nursing homes/senior living			204,678				106,572				—				71,672				6,434				20,000
Other			76,742				16,021				7,388				31,370				10,939				11,024
Total non-owner occupied loans			1,688,832				634,841				165,470				482,052				82,343				324,126
Owner-occupied:
Office			167,713				37,485				42,334				49,810				9,794				28,290
Churches			96,810				19,892				6,089				48,537				9,352				12,940
Industrial warehouses			178,394				11,807				2,989				50,594				18,686				94,318
Health care			143,180				12,033				6,915				107,190				2,296				14,746
Convenience stores			141,490				16,155				13,945				68,325				489				42,576
Retail			75,640				13,214				13,577				20,040				12,035				16,774
Restaurants			56,892				3,750				4,545				31,612				13,585				3,400
Auto dealerships			56,403				6,358				261				25,240				24,544				—
Nursing homes/senior living			211,190				73,078				—				138,112				—				—
Other			108,409				5,715				3,872				67,821				1,214				29,787
Total owner-occupied loans			1,236,121				199,487				94,527				607,281				91,995				242,831
Loans secured by nonfarm, nonresidential properties		$	2,924,953			$	834,328			$	259,997			$	1,089,333			$	174,338			$	566,957

Note 5 – 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 September 30, 2021, the carrying amount of the Notes was $123.0 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
September 30, 2021
($ in thousands)
(unaudited)

Note 6 – 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
	9/30/2021				6/30/2021				3/31/2021				12/31/2020				9/30/2020				9/30/2021				9/30/2020
Securities – taxable		1.28	%			1.30	%			1.40	%			1.62	%			2.02	%			1.32	%			2.14	%
Securities – nontaxable		3.79	%			3.70	%			4.02	%			3.89	%			3.80	%			3.88	%			3.76	%
Securities – total		1.29	%			1.31	%			1.43	%			1.65	%			2.05	%			1.34	%			2.17	%
PPP loans		4.98	%			15.81	%			6.27	%			6.76	%			2.84	%			10.69	%			2.76	%
Loans - LHFI & LHFS		3.59	%			3.64	%			3.67	%			3.75	%			3.81	%			3.64	%			4.12	%
Loans - total		3.61	%			4.36	%			3.81	%			3.99	%			3.73	%			3.93	%			4.05	%
Fed funds sold & reverse repurchases		—				—				—				—				1.32	%			—				0.69	%
Other earning assets		0.18	%			0.11	%			0.12	%			0.12	%			0.18	%			0.14	%			0.30	%
Total earning assets		2.70	%			3.33	%			3.00	%			3.35	%			3.26	%			3.01	%			3.55	%
Interest-bearing deposits		0.14	%			0.19	%			0.22	%			0.27	%			0.31	%			0.18	%			0.45	%
Fed funds purchased & repurchases		0.14	%			0.14	%			0.14	%			0.13	%			0.15	%			0.14	%			0.64	%
Other borrowings		2.33	%			2.29	%			2.14	%			1.61	%			1.19	%			2.25	%			1.78	%
Total interest-bearing liabilities		0.21	%			0.25	%			0.28	%			0.30	%			0.33	%			0.24	%			0.48	%
Net interest margin		2.57	%			3.16	%			2.81	%			3.15	%			3.03	%			2.84	%			3.21	%
Net interest margin excluding PPP loans and the FRB balance		2.90	%			2.94	%			2.99	%			3.09	%			3.20	%			2.94	%			3.36	%

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 September 30, 2021 and June 30, 2021, the average FRB balance totaled $1.996 billion and $1.700 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 2.90% for the third quarter of 2021, a decrease of 4 basis points when compared to the second 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 7 – 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 $144 thousand during the third quarter of 2021.

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

Note 7 – Mortgage Banking (continued)

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

		Quarter Ended																				Nine Months Ended
		9/30/2021				6/30/2021				3/31/2021				12/31/2020				9/30/2020				9/30/2021				9/30/2020
Mortgage servicing income, net		$	6,406			$	6,318			$	6,181			$	6,227			$	5,742			$	18,905			$	17,454
Change in fair value-MSR from runoff			(5,283	)			(5,029	)			(5,103	)			(5,177	)			(4,590	)			(15,415	)			(11,411	)
Gain on sales of loans, net			12,737				14,778				19,456				28,014				34,472				46,971				82,889
Mortgage banking income before hedge ineffectiveness			13,860				16,067				20,534				29,064				35,624				50,461				88,932
Change in fair value-MSR from market changes			1,806				(4,465	)			13,696				951				60				11,037				(27,098	)
Change in fair value of derivatives			(1,662	)			5,731				(13,426	)			(1,860	)			755				(9,357	)			35,833
Net positive (negative) hedge ineffectiveness			144				1,266				270				(909	)			815				1,680				8,735
Mortgage banking, net		$	14,004			$	17,333			$	20,804			$	28,155			$	36,439			$	52,141			$	97,667

Note 8 – Salaries and Employee Benefit Plans

Early Retirement Program

In June 2021, Trustmark announced a voluntary early retirement program. In general, associates who were eligible to participate had to be at least 60 years of age with five or more years of continuous service. The cost of this program is reflected in a one-time charge of approximately $5.7 million (salaries and benefits of $5.6 million and other miscellaneous expense of $89 thousand; or $0.07 per diluted share net of tax) in Trustmark’s third quarter of 2021 earnings. The salary and employee benefits expense savings resulting from the implementation of the early retirement program are expected to total approximately $1.3 million ($0.02 per diluted share net of tax) and $4.3 million ($0.05 per diluted share net of tax) for the remainder of 2021 and for the year ended 2022, respectively.

Note 9 – Other Noninterest Income and Expense

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

		Quarter Ended																				Nine Months Ended
		9/30/2021				6/30/2021				3/31/2021				12/31/2020				9/30/2020				9/30/2021				9/30/2020
Partnership amortization for tax credit purposes		$	(2,045	)		$	(1,989	)		$	(1,522	)		$	(1,877	)		$	(1,457	)		$	(5,556	)		$	(3,823	)
Increase in life insurance cash surrender value			1,663				1,653				1,639				1,708				1,755				4,955				5,173
Other miscellaneous income			1,863				2,337				1,973				2,707				1,303				6,173				4,771
Total other, net		$	1,481			$	2,001			$	2,090			$	2,538			$	1,601			$	5,572			$	6,121

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
		9/30/2021				6/30/2021				3/31/2021				12/31/2020				9/30/2020				9/30/2021				9/30/2020
Loan expense		$	4,022			$	3,738			$	4,167			$	4,243			$	4,184			$	11,927			$	10,934
Amortization of intangibles			549				553				666				752				752				1,768				2,300
FDIC assessment expense			1,275				1,225				1,540				1,500				1,410				4,040				4,590
Regulatory settlement charge			5,000				—				—				—				—				5,000				—
Other miscellaneous expense			7,673				7,623				8,166				9,395				8,252				23,462				24,792
Total other expense		$	18,519			$	13,139			$	14,539			$	15,890			$	14,598			$	46,197			$	42,616

During the third quarter of 2021, other expense included a charge of $5.0 million to resolve allegations by regulatory authorities regarding fair lending matters. See Note 1 – Regulatory Matters for further details.

Note 10 – 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, 2021
($ in thousands except per share data)
(unaudited)

Note 10 – Non-GAAP Financial Measures (continued)

			Quarter Ended																				Nine Months Ended
			9/30/2021				6/30/2021				3/31/2021				12/31/2020				9/30/2020				9/30/2021				9/30/2020
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity			$	1,782,304			$	1,780,705			$	1,759,351			$	1,725,035			$	1,694,903			$	1,774,204			$	1,666,999
Less: Goodwill				(384,237	)			(384,237	)			(385,155	)			(385,270	)			(385,270	)			(384,540	)			(383,016	)
Identifiable intangible assets				(5,899	)			(6,442	)			(7,118	)			(7,803	)			(8,550	)			(6,482	)			(8,146	)
Total average tangible equity			$	1,392,168			$	1,390,026			$	1,367,078			$	1,331,962			$	1,301,083			$	1,383,182			$	1,275,837
PERIOD END BALANCES
Total shareholders' equity			$	1,768,947			$	1,779,309			$	1,759,705			$	1,741,117			$	1,710,041
Less: Goodwill				(384,237	)			(384,237	)			(384,237	)			(385,270	)			(385,270	)
Identifiable intangible assets				(5,621	)			(6,170	)			(6,724	)			(7,390	)			(8,142	)
Total tangible equity	(a)		$	1,379,089			$	1,388,902			$	1,368,744			$	1,348,457			$	1,316,629
TANGIBLE ASSETS
Total assets			$	17,364,644			$	17,098,132			$	16,878,313			$	16,551,840			$	15,558,162
Less: Goodwill				(384,237	)			(384,237	)			(384,237	)			(385,270	)			(385,270	)
Identifiable intangible assets				(5,621	)			(6,170	)			(6,724	)			(7,390	)			(8,142	)
Total tangible assets	(b)		$	16,974,786			$	16,707,725			$	16,487,352			$	16,159,180			$	15,164,750
Risk-weighted assets	(c)		$	12,324,254			$	12,256,492			$	12,188,988			$	12,017,378			$	11,963,269
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income			$	21,200			$	47,981			$	51,962			$	51,217			$	54,440			$	121,143			$	108,808
Plus: Intangible amortization net of tax				412				415				500				564				564				1,327				1,725
Net income adjusted for intangible amortization			$	21,612			$	48,396			$	52,462			$	51,781			$	55,004			$	122,470			$	110,533
Period end common shares outstanding	(d)			62,461,832				62,773,226				63,394,522				63,424,526				63,423,820
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity (1)				6.16	%			13.96	%			15.56	%			15.47	%			16.82	%			11.84	%			11.57	%
Tangible equity/tangible assets	(a)/(b)			8.12	%			8.31	%			8.30	%			8.34	%			8.68	%
Tangible equity/risk-weighted assets	(a)/(c)			11.19	%			11.33	%			11.23	%			11.22	%			11.01	%
Tangible book value	(a)/(d)*1,000		$	22.08			$	22.13			$	21.59			$	21.26			$	20.76
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity			$	1,768,947			$	1,779,309			$	1,759,705			$	1,741,117			$	1,710,041
CECL transition adjustment				26,419				26,671				26,829				31,199				32,647
AOCI-related adjustments				19,080				10,641				16,506				1,051				(5,684	)
CET1 adjustments and deductions:
Goodwill net of associated deferred tax liabilities (DTLs)				(370,264	)			(370,276	)			(370,288	)			(371,333	)			(371,345	)
Other adjustments and deductions for CET1 (2)				(4,817	)			(5,243	)			(5,675	)			(6,190	)			(6,770	)
CET1 capital	(e)			1,439,365				1,441,102				1,427,077				1,395,844				1,358,889
Additional tier 1 capital instruments plus related surplus				60,000				60,000				60,000				60,000				60,000
Tier 1 capital			$	1,499,365			$	1,501,102			$	1,487,077			$	1,455,844			$	1,418,889
Common equity tier 1 capital ratio	(e)/(c)			11.68	%			11.76	%			11.71	%			11.62	%			11.36	%

(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
September 30, 2021
($ in thousands except per share data)
unaudited)

Note 10 – 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																				Nine Months Ended
		9/30/2021				6/30/2021				3/31/2021				12/31/2020				9/30/2020				9/30/2021				9/30/2020
Net interest income (GAAP)		$	98,266			$	119,423			$	102,336			$	111,378			$	106,207			$	320,025			$	315,159
Noninterest income (GAAP)			54,149				56,411				60,583				66,117				73,701				171,143				208,476
Pre-provision revenue	(a)	$	152,415			$	175,834			$	162,919			$	177,495			$	179,908			$	491,168			$	523,635
Noninterest expense (GAAP)		$	129,600			$	118,679			$	121,548			$	119,894			$	116,963			$	369,827			$	346,407
Less: Voluntary early retirement program			(5,700	)			—				—				—				—				(5,700	)			(4,375	)
Regulatory settlement charge			(5,000	)			—				—				—				—				(5,000	)			—
Adjusted noninterest expense - PPNR (Non-GAAP)	(b)	$	118,900			$	118,679			$	121,548			$	119,894			$	116,963			$	359,127			$	342,032
PPNR (Non-GAAP)	(a)-(b)	$	33,515			$	57,155			$	41,371			$	57,601			$	62,945			$	132,041			$	181,603

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
		9/30/2021									9/30/2020									9/30/2021									9/30/2020
		Amount				Diluted EPS					Amount				Diluted EPS					Amount				Diluted EPS					Amount				Diluted EPS
Net income (GAAP)		$	21,200			$	0.34				$	54,440			$	0.86				$	121,143			$	1.92				$	108,808			$	1.71
Significant non-routine transactions (net of taxes):
Voluntary early retirement program			4,275				0.07					—				—					4,275				0.07					3,281				0.05
Regulatory settlement charge (not tax deductible)			5,000				0.08					—				—					5,000				0.08					—				—
Net income adjusted for significant non-routine
transactions (Non-GAAP)		$	30,475			$	0.49				$	54,440			$	0.86				$	130,418			$	2.07				$	112,089			$	1.76
		Reported (GAAP)				Adjusted (Non GAAP)					Reported (GAAP)				Adjusted (Non GAAP)					Reported (GAAP)				Adjusted (Non GAAP)					Reported (GAAP)				Adjusted (Non GAAP)
Return on average equity			4.72	%			6.77	%				12.78	%		n/a						9.13	%			9.82	%				8.72	%			8.97	%
Return on average tangible equity			6.16	%			8.77	%				16.82	%		n/a						11.84	%			12.72	%				11.57	%			11.89	%
Return on average assets			0.49	%			0.71	%				1.37	%		n/a						0.96	%			1.03	%				0.97	%			1.00	%
n/a - not applicable

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

Note 10 – 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
		9/30/2021				6/30/2021				3/31/2021				12/31/2020				9/30/2020				9/30/2021				9/30/2020
Total noninterest expense (GAAP)		$	129,600			$	118,679			$	121,548			$	119,894			$	116,963				369,827			$	346,407
Less: Other real estate expense, net			(1,357	)			(1,511	)			(324	)			812				(1,203	)			(3,192	)			(2,768	)
Amortization of intangibles			(549	)			(553	)			(666	)			(752	)			(752	)			(1,768	)			(2,300	)
Charitable contributions resulting in state tax credits			(350	)			(355	)			(350	)			(375	)			(375	)			(1,055	)			(1,125	)
Voluntary early retirement program			(5,700	)			—				—				—				—				(5,700	)			(4,375	)
Regulatory settlement charge			(5,000	)			—				—				—				—				(5,000	)			—
Adjusted noninterest expense (Non-GAAP)	(c)	$	116,644			$	116,260			$	120,208			$	119,579			$	114,633			$	353,112			$	335,839
Net interest income (GAAP)		$	98,266			$	119,423			$	102,336			$	111,378			$	106,207			$	320,025			$	315,159
Add: Tax equivalent adjustment			2,947				2,957				2,894				2,939				2,969				8,798				9,084
Net interest income-FTE (Non-GAAP)	(a)	$	101,213			$	122,380			$	105,230			$	114,317			$	109,176			$	328,823			$	324,243
Noninterest income (GAAP)		$	54,149			$	56,411			$	60,583			$	66,117			$	73,701			$	171,143			$	208,476
Add: Partnership amortization for tax credit purposes			2,045				1,989				1,522				1,877				1,457				5,556				3,823
Adjusted noninterest income (Non-GAAP)	(b)	$	56,194			$	58,400			$	62,105			$	67,994			$	75,158			$	176,699			$	212,299
Adjusted revenue (Non-GAAP)	(a)+(b)	$	157,407			$	180,780			$	167,335			$	182,311			$	184,334			$	505,522			$	536,542
Efficiency ratio (Non-GAAP)	(c)/((a)+(b))		74.10	%			64.31	%			71.84	%			65.59	%			62.19	%			69.85	%			62.59	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211026006141/en/

Trustmark Investor Contacts:

Thomas C. Owens

Treasurer and Principal Financial Officer

601-208-7853

F. Joseph Rein, Jr.

Senior Vice President

601-208-6898

Trustmark Media Contact:

Melanie A. Morgan

Senior Vice President

601-208-2979

Source: Trustmark Corporation

FAQ

What were Trustmark Corporation's earnings results for Q3 2021?

Trustmark reported a net income of $21.2 million, or $0.34 per diluted share, for Q3 2021.

How did the voluntary early retirement program affect Trustmark's financials?

The program resulted in a one-time net income reduction of $4.3 million.

What is the current dividend for Trustmark Corporation's shareholders?

Trustmark declared a quarterly cash dividend of $0.23 per share, payable on December 15, 2021.

How much did Trustmark’s deposits grow in the third quarter?

Trustmark's deposits increased by $290.8 million compared to the prior quarter.

What was the impact of regulatory charges on Trustmark's earnings in Q3 2021?

Regulatory charges related to fair lending allegations reduced net income by $5.0 million.