Skip to main content

Trustmark Corporation Announces First Quarter 2021 Financial Results

Trustmark Corporation (Nasdaq:TRMK) reported net income of $52.0 million in the first quarter of 2021, representing diluted earnings per share of $0.82. Net income in the first quarter produced a return on average tangible equity of 15.56% and a return on average assets of 1.26%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable June 15, 2021, to shareholders of record on June 1, 2021.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20210427006023/en/

Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/52418458/en

First Quarter Highlights

  • Supported local businesses by originating 4,774 loans totaling $301.5 million (net of $16.5 million in deferred fees and costs) from the SBA’s Paycheck Protection Program (PPP) during the quarter
  • Mortgage loan production totaled $766.6 million, down 2.8% from the prior quarter and an increase of 67.7% from levels one year earlier
  • Provision for credit losses totaled a negative $10.5 million due to improved credit loss expectations

Duane A. Dewey, President and CEO, stated, “Our first quarter financial performance reflects solid loan and deposit growth, as well as continued increases in our insurance and wealth management businesses. Our mortgage banking revenue remained strong following record-setting levels in the prior quarter. Improvement in the economic outlook resulted in negative provision and expense for credit losses, which also contributed to earnings. We continue to focus on efficiency enhancements throughout the organization, including investments in technology to better serve customers as well as rationalization of the branch network. Trustmark remains well-positioned to serve and expand our customer base and create long-term value for our shareholders.”

Balance Sheet Management

  • Loans held for investment (HFI) totaled $10.0 billion, up 1.6% from the prior quarter and 4.3% year-over-year
  • Deposits totaled $14.4 billion, an increase of 2.4% linked-quarter and 24.3% year-over-year
  • Maintained strong capital position with CET1 ratio of 11.71% and total risk-based capital ratio of 14.07%

Loans HFI totaled $10.0 billion at March 31, 2021, reflecting an increase of $159.2 million, or 1.6%, linked-quarter and $415.8 million, or 4.3%, year-over-year. The linked-quarter growth reflects increases in other real estate secured loans and loans secured by nonfarm, nonresidential properties, which were principally the result of the migration of construction loans as projects were completed. Trustmark’s loan portfolio is well-diversified by loan type and geography.

Deposits totaled $14.4 billion at March 31, 2021, up $334.7 million, or 2.4%, from the prior quarter and $2.8 billion, or 24.3%, year-over-year. Trustmark maintains a strong liquidity position as loans HFI represented 69.4% of total deposits at March 31, 2021. Noninterest-bearing deposits represented 32.7% of total deposits at the end of the first quarter, compared to 31.0% in the prior quarter. Interest-bearing deposit costs totaled 0.22% for the first quarter, a decrease of 5 basis points from the prior quarter. The total cost of interest-bearing liabilities was 0.28% for the first quarter of 2021, a decrease of 2 basis points from the prior quarter.

During the first quarter, Trustmark repurchased $4.2 million, or approximately 145 thousand of its common shares in open market transactions. At March 31, 2021, Trustmark had $95.8 million in remaining authority under its existing stock repurchase program, which expires 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 March 31, 2021, Trustmark’s tangible equity to tangible assets ratio was 8.30%, while its total risk-based capital ratio was 14.07%. Tangible book value per share was $21.59 at March 31, 2021, up 8.4% year-over-year.

Credit Quality

  • Allowance for credit losses (ACL) represented 437.08% of nonaccrual loans, excluding individually evaluated loans, at March 31, 2021
  • Recoveries exceeded charge-offs by $2.4 million in the first quarter
  • Loans remaining under a COVID-19 related concession represented approximately 28 basis points of loans HFI at March 31, 2021

Nonaccrual loans totaled $63.5 million at March 31, 2021, up $386 thousand from the prior quarter and $10.5 million year-over-year. Other real estate totaled $10.7 million, reflecting a $1.0 million decrease from the prior quarter and a decline of $14.2 million year-over-year. Collectively, nonperforming assets totaled $74.2 million at March 31, 2021, reflecting a linked-quarter decrease of $614 thousand and a year-over-year decrease of $3.7 million.

The provision for credit losses was a negative $10.5 million in the first quarter. Negative provisioning was primarily driven by decreases in quantitative reserves as a result of an improving economic forecast.

Allocation of Trustmark’s $109.2 million allowance for credit losses on loans HFI represented 1.13% of commercial loans and 0.95% of consumer and home mortgage loans, resulting in an allowance to total loans HFI of 1.09% at March 31, 2021. Management believes the level of the ACL is commensurate with the present risk in the loan portfolio.

Revenue Generation

  • Mortgage banking revenue totaled $20.8 million in the first quarter, reflecting tighter spreads and reduced gains on sale of mortgage loans in the secondary market
  • Insurance commissions increased 22.1% from the prior quarter and wealth management revenue rose 7.4% over the same period

Revenue in the first quarter totaled $162.9 million, down 8.2% from the prior quarter and 3.7% from the same quarter in the prior year. The linked-quarter decrease primarily reflects lower interest income and fees from PPP loans and loans HFI and lower net gains on sales of mortgage loans.

Net interest income (FTE) in the first quarter totaled $105.2 million, resulting in a net interest margin of 2.81%, down 34 basis points from the prior quarter. The net interest margin, excluding PPP loans and Federal Reserve Bank balance, totaled 2.99% for the first quarter, a decrease of 10 basis points when compared to the prior quarter. 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.

Noninterest income in the first quarter totaled $60.6 million, a decrease of $5.5 million from the prior quarter and $4.7 million year-over-year. The linked-quarter increases in insurance, wealth management and bank card revenue were more than offset by declines in mortgage banking revenue and service charges on deposit accounts. Mortgage loan production in the first quarter totaled $766.6 million, down 2.8% from the record level in the prior quarter and an increase of 67.7% year-over-year. Mortgage banking revenue totaled $20.8 million in the first quarter, a decrease of $7.4 million from the prior quarter and $6.7 million year-over-year. The linked-quarter decline is principally attributable to reduced spreads which resulted in lower net gains on sales of mortgage loans in the secondary market.

Insurance revenue totaled $12.4 million in the first quarter, up 22.1%, or $2.2 million, from the fourth quarter of 2020 and 7.7%, or $895 thousand, year-over-year. The linked-quarter increase primarily reflects growth in property and casualty commissions. Wealth management revenue in the first quarter totaled $8.4 million, an increase of $578 thousand, or 7.4%, from the prior quarter and relatively unchanged year-over-year. The linked-quarter growth reflects both higher trust management fees and brokerage and investment services revenue.

Bank card and other fees increased $365 thousand, or 4.0%, from the prior quarter and $4.1 million, or 76.9%, year-over-year, reflecting higher customer derivative revenue. Service charges on deposit accounts decreased $927 thousand, or 11.2%, from the prior quarter and $2.7 million, or 26.7%, year-over-year. The decline is due largely to reduced NSF/OD occurrences attributable in part to stimulus programs to address the COVID-19 pandemic.

Noninterest Expense

  • Noninterest expense totaled $112.2 million in first quarter, down 5.6% from the prior quarter
  • Adjusted noninterest expense, which excludes amortization of intangibles, ORE expenses, and credit losses for off-balance sheet credit exposures, increased $629 thousand, or 0.5%, from the prior quarter; please refer to the Consolidated Financial Information, Footnote 8– Non-GAAP Financial Measures
  • Continued to realign delivery channels to reflect changing customer preferences

Adjusted noninterest expense in the first quarter was $120.2 million, up $629 thousand, or 0.5%, from the prior quarter. Salaries and employee benefits increased $1.5 million linked-quarter principally due to payroll taxes and increases for performance-based commissions. Services and fees increased $157 thousand and net occupancy-premises expense grew $179 thousand during the first quarter compared to the prior quarter.

Credit loss expense related to off-balance sheet credit exposures was a negative $9.4 million in the first quarter, reflecting the improvement of the macroeconomic factors used to determine the necessary reserves for off-balance sheet credit exposures. Other real estate expense, net totaled $324 thousand for the first quarter compared to a negative $812 thousand for the fourth quarter of 2020, reflecting lower net gains on sale of other real estate.

Trustmark continued to invest in technology to enhance efficiency. Digital transformation initiatives, including a completely redesigned, state-of-the-art website to promote engagement and enhance the customer experience, position Trustmark for additional growth. During the first quarter, Trustmark continued to realign delivery channels and closed seven offices, reflecting changing customer preferences and the continued migration to mobile and digital banking channels. Additionally, two new offices were opened, one each in the Memphis, TN MSA and the Jackson, MS MSA. Each of these offices features a design that integrates myTeller® interactive teller machine technology as well as provides enhanced areas for customer interaction.

“Looking forward, Trustmark will continue to focus upon efficiency, growth and innovation opportunities while building upon our solid risk management processes, corporate culture and core values. We will continue to optimize delivery channels and introduce technology to enhance growth and efficiency opportunities. We will provide 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, April 28, 2021 at 8:30 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (877) 317-3051 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Wednesday, May 12, 2021, in archived format at the same web address or by calling (877) 344-7529, passcode 10153927.

Trustmark is a financial services company providing banking and financial solutions through 181 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 could have an adverse effect on our business, results of operations and financial condition. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected.

Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels and slowdowns in economic growth, 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 Securities and Exchange Commission (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
March 31, 2021
($ in thousands)
(unaudited)
 
Linked QuarterYear over Year
QUARTERLY AVERAGE BALANCES3/31/202112/31/20203/31/2020$ Change% Change$ Change% Change
Securities AFS-taxable

$

2,098,089

$

1,902,162

$

1,620,422

$

195,927

10.3

%

$

477,667

29.5

%

Securities AFS-nontaxable

5,190

5,206

22,056

(16

)

-0.3

%

(16,866

)

-76.5

%

Securities HTM-taxable

489,260

550,563

694,740

(61,303

)

-11.1

%

(205,480

)

-29.6

%

Securities HTM-nontaxable

24,070

24,752

25,673

(682

)

-2.8

%

(1,603

)

-6.2

%

Total securities

2,616,609

2,482,683

2,362,891

133,926

5.4

%

253,718

10.7

%

Paycheck protection program loans (PPP)

598,139

875,098

(276,959

)

-31.6

%

598,139

n/m

Loans (includes loans held for sale)

10,316,319

10,231,671

9,678,174

84,648

0.8

%

638,145

6.6

%

Fed funds sold and reverse repurchases

136

303

164

(167

)

-55.1

%

(28

)

-17.1

%

Other earning assets

1,667,906

860,540

187,327

807,366

93.8

%

1,480,579

n/m

Total earning assets

15,199,109

14,450,295

12,228,556

748,814

5.2

%

2,970,553

24.3

%

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

(119,557

)

(124,088

)

(85,015

)

4,531

3.7

%

(34,542

)

-40.6

%

Other assets

1,601,250

1,620,694

1,498,725

(19,444

)

-1.2

%

102,525

6.8

%

Total assets

$

16,680,802

$

15,946,901

$

13,642,266

$

733,901

4.6

%

$

3,038,536

22.3

%

 
Interest-bearing demand deposits

$

3,743,651

$

3,649,590

$

3,184,134

$

94,061

2.6

%

$

559,517

17.6

%

Savings deposits

4,659,037

4,350,783

3,646,936

308,254

7.1

%

1,012,101

27.8

%

Time deposits

1,371,830

1,436,677

1,617,307

(64,847

)

-4.5

%

(245,477

)

-15.2

%

Total interest-bearing deposits

9,774,518

9,437,050

8,448,377

337,468

3.6

%

1,326,141

15.7

%

Fed funds purchased and repurchases

166,909

170,474

247,513

(3,565

)

-2.1

%

(80,604

)

-32.6

%

Other borrowings

166,926

173,525

85,279

(6,599

)

-3.8

%

81,647

95.7

%

Subordinated notes

122,875

42,828

80,047

n/m

122,875

n/m

Junior subordinated debt securities

61,856

61,856

61,856

0.0

%

0.0

%

Total interest-bearing liabilities

10,293,084

9,885,733

8,843,025

407,351

4.1

%

1,450,059

16.4

%

Noninterest-bearing deposits

4,363,559

4,100,849

2,910,951

262,710

6.4

%

1,452,608

49.9

%

Other liabilities

264,808

235,284

248,220

29,524

12.5

%

16,588

6.7

%

Total liabilities

14,921,451

14,221,866

12,002,196

699,585

4.9

%

2,919,255

24.3

%

Shareholders' equity

1,759,351

1,725,035

1,640,070

34,316

2.0

%

119,281

7.3

%

Total liabilities and equity

$

16,680,802

$

15,946,901

$

13,642,266

$

733,901

4.6

%

$

3,038,536

22.3

%

 
n/m - percentage changes greater than +/- 100% are considered not meaningful
 
See Notes to Consolidated Financials
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2021
($ in thousands)
(unaudited)
Linked QuarterYear over Year
PERIOD END BALANCES3/31/202112/31/20203/31/2020$ Change% Change$ Change% Change
Cash and due from banks

$

1,774,541

$

1,952,504

$

404,341

$

(177,963

)

-9.1

%

$

1,370,200

n/m

Fed funds sold and reverse repurchases

50

2,000

(50

)

-100.0

%

(2,000

)

-100.0

%

Securities available for sale

2,337,676

1,991,815

1,833,779

345,861

17.4

%

503,897

27.5

%

Securities held to maturity

493,738

538,072

704,276

(44,334

)

-8.2

%

(210,538

)

-29.9

%

PPP loans

679,725

610,134

69,591

11.4

%

679,725

n/m

Loans held for sale (LHFS)

412,999

446,951

325,389

(33,952

)

-7.6

%

87,610

26.9

%

Loans held for investment (LHFI)

9,983,704

9,824,524

9,567,920

159,180

1.6

%

415,784

4.3

%

ACL LHFI

(109,191

)

(117,306

)

(100,564

)

8,115

6.9

%

(8,627

)

-8.6

%

Net LHFI

9,874,513

9,707,218

9,467,356

167,295

1.7

%

407,157

4.3

%

Premises and equipment, net

199,098

194,278

190,179

4,820

2.5

%

8,919

4.7

%

Mortgage servicing rights

83,035

66,464

56,437

16,571

24.9

%

26,598

47.1

%

Goodwill

384,237

385,270

381,717

(1,033

)

-0.3

%

2,520

0.7

%

Identifiable intangible assets

6,724

7,390

7,537

(666

)

-9.0

%

(813

)

-10.8

%

Other real estate

10,651

11,651

24,847

(1,000

)

-8.6

%

(14,196

)

-57.1

%

Operating lease right-of-use assets

33,704

30,901

30,839

2,803

9.1

%

2,865

9.3

%

Other assets

587,672

609,142

591,132

(21,470

)

-3.5

%

(3,460

)

-0.6

%

Total assets

$

16,878,313

$

16,551,840

$

14,019,829

$

326,473

2.0

%

$

2,858,484

20.4

%

 
Deposits:
Noninterest-bearing

$

4,705,991

$

4,349,010

$

2,977,058

$

356,981

8.2

%

$

1,728,933

58.1

%

Interest-bearing

9,677,449

9,699,754

8,598,706

(22,305

)

-0.2

%

1,078,743

12.5

%

Total deposits

14,383,440

14,048,764

11,575,764

334,676

2.4

%

2,807,676

24.3

%

Fed funds purchased and repurchases

160,991

164,519

421,821

(3,528

)

-2.1

%

(260,830

)

-61.8

%

Other borrowings

145,994

168,252

84,230

(22,258

)

-13.2

%

61,764

73.3

%

Subordinated notes

122,877

122,921

(44

)

0.0

%

122,877

n/m

Junior subordinated debt securities

61,856

61,856

61,856

0.0

%

0.0

%

ACL on off-balance sheet credit exposures

29,205

38,572

36,421

(9,367

)

-24.3

%

(7,216

)

-19.8

%

Operating lease liabilities

35,389

32,290

32,055

3,099

9.6

%

3,334

10.4

%

Other liabilities

178,856

173,549

155,283

5,307

3.1

%

23,573

15.2

%

Total liabilities

15,118,608

14,810,723

12,367,430

307,885

2.1

%

2,751,178

22.2

%

Common stock

13,209

13,215

13,209

(6

)

0.0

%

0.0

%

Capital surplus

229,892

233,120

229,403

(3,228

)

-1.4

%

489

0.2

%

Retained earnings

1,533,110

1,495,833

1,402,089

37,277

2.5

%

131,021

9.3

%

Accum other comprehensive income (loss),
  net of tax

(16,506

)

(1,051

)

7,698

(15,455

)

n/m

(24,204

)

n/m

Total shareholders' equity

1,759,705

1,741,117

1,652,399

18,588

1.1

%

107,306

6.5

%

Total liabilities and equity

$

16,878,313

$

16,551,840

$

14,019,829

$

326,473

2.0

%

$

2,858,484

20.4

%

 
n/m - percentage changes greater than +/- 100% are considered not meaningful
 
See Notes to Consolidated Financials
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2021
($ in thousands except per share data)
(unaudited)
 
Quarter EndedLinked QuarterYear over Year
INCOME STATEMENTS3/31/202112/31/20203/31/2020$ Change% Change$ Change% Change
Interest and fees on LHFS & LHFI-FTE

$

93,394

$

96,453

$

109,357

$

(3,059

)

-3.2

%

$

(15,963

)

-14.6

%

Interest and fees on PPP loans

9,241

14,870

(5,629

)

-37.9

%

9,241

n/m

Interest on securities-taxable

8,938

9,998

12,948

(1,060

)

-10.6

%

(4,010

)

-31.0

%

Interest on securities-tax exempt-FTE

290

293

457

(3

)

-1.0

%

(167

)

-36.5

%

Interest on fed funds sold and reverse repurchases

n/m

n/m

Other interest income

503

249

740

254

n/m

(237

)

-32.0

%

Total interest income-FTE

112,366

121,863

123,502

(9,497

)

-7.8

%

(11,136

)

-9.0

%

Interest on deposits

5,223

6,363

14,957

(1,140

)

-17.9

%

(9,734

)

-65.1

%

Interest on fed funds purchased and repurchases

56

56

625

0.0

%

(569

)

-91.0

%

Other interest expense

1,857

1,127

860

730

64.8

%

997

n/m

Total interest expense

7,136

7,546

16,442

(410

)

-5.4

%

(9,306

)

-56.6

%

Net interest income-FTE

105,230

114,317

107,060

(9,087

)

-7.9

%

(1,830

)

-1.7

%

Provision for credit losses, LHFI

(10,501

)

(4,413

)

20,581

(6,088

)

n/m

(31,082

)

n/m

Net interest income after provision-FTE

115,731

118,730

86,479

(2,999

)

-2.5

%

29,252

33.8

%

Service charges on deposit accounts

7,356

8,283

10,032

(927

)

-11.2

%

(2,676

)

-26.7

%

Bank card and other fees

9,472

9,107

5,355

365

4.0

%

4,117

76.9

%

Mortgage banking, net

20,804

28,155

27,483

(7,351

)

-26.1

%

(6,679

)

-24.3

%

Insurance commissions

12,445

10,196

11,550

2,249

22.1

%

895

7.7

%

Wealth management

8,416

7,838

8,537

578

7.4

%

(121

)

-1.4

%

Other, net

2,090

2,538

2,307

(448

)

-17.7

%

(217

)

-9.4

%

Total noninterest income

60,583

66,117

65,264

(5,534

)

-8.4

%

(4,681

)

-7.2

%

Salaries and employee benefits

71,162

69,660

69,148

1,502

2.2

%

2,014

2.9

%

Services and fees

22,484

22,327

19,930

157

0.7

%

2,554

12.8

%

Net occupancy-premises

6,795

6,616

6,286

179

2.7

%

509

8.1

%

Equipment expense

6,244

6,213

5,616

31

0.5

%

628

11.2

%

Other real estate expense, net

324

(812

)

1,294

1,136

n/m

(970

)

-75.0

%

Credit loss expense related to off-balance sheet
  credit exposures

(9,367

)

(1,087

)

6,783

(8,280

)

n/m

(16,150

)

n/m

Other expense

14,539

15,890

14,753

(1,351

)

-8.5

%

(214

)

-1.5

%

Total noninterest expense

112,181

118,807

123,810

(6,626

)

-5.6

%

(11,629

)

-9.4

%

Income before income taxes and tax eq adj

64,133

66,040

27,933

(1,907

)

-2.9

%

36,200

n/m

Tax equivalent adjustment

2,894

2,939

3,108

(45

)

-1.5

%

(214

)

-6.9

%

Income before income taxes

61,239

63,101

24,825

(1,862

)

-3.0

%

36,414

n/m

Income taxes

9,277

11,884

2,607

(2,607

)

-21.9

%

6,670

n/m

Net income

$

51,962

$

51,217

$

22,218

$

745

1.5

%

$

29,744

n/m

 
Per share data
Earnings per share - basic

$

0.82

$

0.81

$

0.35

$

0.01

1.2

%

$

0.47

n/m

 
Earnings per share - diluted

$

0.82

$

0.81

$

0.35

$

0.01

1.2

%

$

0.47

n/m

 
Dividends per share

$

0.23

$

0.23

$

0.23

0.0

%

0.0

%

 
Weighted average shares outstanding
Basic

63,395,911

63,424,219

63,756,629

 
Diluted

63,562,503

63,616,767

63,913,603

 
Period end shares outstanding

63,394,522

63,424,526

63,396,912

 
n/m - percentage changes greater than +/- 100% are considered not meaningful
 
See Notes to Consolidated Financials
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2021
($ in thousands)
(unaudited)
 
Quarter EndedLinked QuarterYear over Year
NONPERFORMING ASSETS (1)3/31/202112/31/20203/31/2020$ Change% Change$ Change% Change
Nonaccrual LHFI
Alabama

$

9,161

$

9,221

$

4,769

$

(60

)

-0.7

%

$

4,392

92.1

%

Florida

607

572

254

35

6.1

%

353

n/m

Mississippi (2)

35,534

35,015

40,815

519

1.5

%

(5,281

)

-12.9

%

Tennessee (3)

12,451

12,572

6,153

(121

)

-1.0

%

6,298

n/m

Texas

5,761

5,748

1,001

13

0.2

%

4,760

n/m

Total nonaccrual LHFI

63,514

63,128

52,992

386

0.6

%

10,522

19.9

%

Other real estate
Alabama

3,085

3,271

6,229

(186

)

-5.7

%

(3,144

)

-50.5

%

Florida

4,835

n/m

(4,835

)

-100.0

%

Mississippi (2)

7,566

8,330

13,296

(764

)

-9.2

%

(5,730

)

-43.1

%

Tennessee (3)

50

487

(50

)

-100.0

%

(487

)

-100.0

%

Texas

n/m

n/m

Total other real estate

10,651

11,651

24,847

(1,000

)

-8.6

%

(14,196

)

-57.1

%

Total nonperforming assets

$

74,165

$

74,779

$

77,839

$

(614

)

-0.8

%

$

(3,674

)

-4.7

%

 
LOANS PAST DUE OVER 90 DAYS (1)
LHFI

$

2,593

$

1,576

$

708

$

1,017

64.5

%

$

1,885

n/m

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

$

109,566

$

119,409

$

43,564

$

(9,843

)

-8.2

%

$

66,002

n/m

 
Quarter EndedLinked QuarterYear over Year
ACL LHFI (1)3/31/202112/31/20203/31/2020$ Change% Change$ Change% Change
Beginning Balance

$

117,306

$

122,010

$

84,277

$

(4,704

)

-3.9

%

$

33,029

39.2

%

CECL adoption adjustments:
LHFI

(3,039

)

n/m

3,039

100.0

%

Acquired loan transfers

1,822

n/m

(1,822

)

-100.0

%

Provision for credit losses

(10,501

)

(4,413

)

20,581

(6,088

)

n/m

(31,082

)

n/m

Charge-offs

(1,245

)

(2,797

)

(5,545

)

1,552

55.5

%

4,300

77.5

%

Recoveries

3,631

2,506

2,468

1,125

44.9

%

1,163

47.1

%

Net (charge-offs) recoveries

2,386

(291

)

(3,077

)

2,677

n/m

5,463

n/m

Ending Balance

$

109,191

$

117,306

$

100,564

$

(8,115

)

-6.9

%

$

8,627

8.6

%

 
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama

$

102

$

(1,011

)

$

(1,080

)

$

1,113

n/m

$

1,182

n/m

Florida

30

66

64

(36

)

-54.5

%

(34

)

-53.1

%

Mississippi (2)

2,207

332

126

1,875

n/m

2,081

n/m

Tennessee (3)

47

303

(2,186

)

(256

)

-84.5

%

2,233

n/m

Texas

19

(1

)

(19

)

-100.0

%

1

100.0

%

Total net (charge-offs) recoveries

$

2,386

$

(291

)

$

(3,077

)

$

2,677

n/m

$

5,463

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
March 31, 2021
($ in thousands)
(unaudited)
 
Quarter Ended
AVERAGE BALANCES3/31/202112/31/20209/30/20206/30/20203/31/2020
Securities AFS-taxable

$

2,098,089

$

1,902,162

$

1,857,050

$

1,724,320

$

1,620,422

Securities AFS-nontaxable

5,190

5,206

5,973

9,827

22,056

Securities HTM-taxable

489,260

550,563

608,585

655,085

694,740

Securities HTM-nontaxable

24,070

24,752

25,508

25,538

25,673

Total securities

2,616,609

2,482,683

2,497,116

2,414,770

2,362,891

PPP loans

598,139

875,098

941,456

764,416

Loans (includes loans held for sale)

10,316,319

10,231,671

10,162,379

9,908,132

9,678,174

Fed funds sold and reverse repurchases

136

303

301

113

164

Other earning assets

1,667,906

860,540

722,917

854,642

187,327

Total earning assets

15,199,109

14,450,295

14,324,169

13,942,073

12,228,556

ACL LHFI

(119,557

)

(124,088

)

(121,842

)

(103,006

)

(85,015

)

Other assets

1,601,250

1,620,694

1,564,825

1,685,317

1,498,725

Total assets

$

16,680,802

$

15,946,901

$

15,767,152

$

15,524,384

$

13,642,266

 
Interest-bearing demand deposits

$

3,743,651

$

3,649,590

$

3,669,249

$

3,832,372

$

3,184,134

Savings deposits

4,659,037

4,350,783

4,416,046

4,180,540

3,646,936

Time deposits

1,371,830

1,436,677

1,507,348

1,578,737

1,617,307

Total interest-bearing deposits

9,774,518

9,437,050

9,592,643

9,591,649

8,448,377

Fed funds purchased and repurchases

166,909

170,474

84,077

105,696

247,513

Other borrowings

166,926

173,525

167,262

107,533

85,279

Subordinated notes

122,875

42,828

Junior subordinated debt securities

61,856

61,856

61,856

61,856

61,856

Total interest-bearing liabilities

10,293,084

9,885,733

9,905,838

9,866,734

8,843,025

Noninterest-bearing deposits

4,363,559

4,100,849

3,921,867

3,645,761

2,910,951

Other liabilities

264,808

235,284

244,544

346,173

248,220

Total liabilities

14,921,451

14,221,866

14,072,249

13,858,668

12,002,196

Shareholders' equity

1,759,351

1,725,035

1,694,903

1,665,716

1,640,070

Total liabilities and equity

$

16,680,802

$

15,946,901

$

15,767,152

$

15,524,384

$

13,642,266

 
See Notes to Consolidated Financials
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2021
($ in thousands)
(unaudited)
 
PERIOD END BALANCES3/31/202112/31/20209/30/20206/30/20203/31/2020
Cash and due from banks

$

1,774,541

$

1,952,504

$

564,588

$

1,026,640

$

404,341

Fed funds sold and reverse repurchases

50

50

2,000

Securities available for sale

2,337,676

1,991,815

1,922,728

1,884,153

1,833,779

Securities held to maturity

493,738

538,072

611,280

660,048

704,276

PPP loans

679,725

610,134

944,270

939,783

LHFS

412,999

446,951

485,103

355,089

325,389

LHFI

9,983,704

9,824,524

9,847,728

9,659,806

9,567,920

ACL LHFI

(109,191

)

(117,306

)

(122,010

)

(119,188

)

(100,564

)

Net LHFI

9,874,513

9,707,218

9,725,718

9,540,618

9,467,356

Premises and equipment, net

199,098

194,278

192,722

190,567

190,179

Mortgage servicing rights

83,035

66,464

61,613

57,811

56,437

Goodwill

384,237

385,270

385,270

385,270

381,717

Identifiable intangible assets

6,724

7,390

8,142

8,895

7,537

Other real estate

10,651

11,651

16,248

18,276

24,847

Operating lease right-of-use assets

33,704

30,901

30,508

29,819

30,839

Other assets

587,672

609,142

609,922

595,110

591,132

Total assets

$

16,878,313

$

16,551,840

$

15,558,162

$

15,692,079

$

14,019,829

 
Deposits:
Noninterest-bearing

$

4,705,991

$

4,349,010

$

3,964,023

$

3,880,540

$

2,977,058

Interest-bearing

9,677,449

9,699,754

9,258,390

9,624,933

8,598,706

Total deposits

14,383,440

14,048,764

13,222,413

13,505,473

11,575,764

Fed funds purchased and repurchases

160,991

164,519

153,834

70,255

421,821

Other borrowings

145,994

168,252

178,599

152,860

84,230

Subordinated notes

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

29,205

38,572

39,659

42,663

36,421

Operating lease liabilities

35,389

32,290

31,838

31,076

32,055

Other liabilities

178,856

173,549

159,922

153,952

155,283

Total liabilities

15,118,608

14,810,723

13,848,121

14,018,135

12,367,430

Common stock

13,209

13,215

13,215

13,214

13,209

Capital surplus

229,892

233,120

231,836

230,613

229,403

Retained earnings

1,533,110

1,495,833

1,459,306

1,419,552

1,402,089

Accum other comprehensive income (loss), net of tax

(16,506

)

(1,051

)

5,684

10,565

7,698

Total shareholders' equity

1,759,705

1,741,117

1,710,041

1,673,944

1,652,399

Total liabilities and equity

$

16,878,313

$

16,551,840

$

15,558,162

$

15,692,079

$

14,019,829

 
See Notes to Consolidated Financials
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2021
($ in thousands except per share data)
(unaudited)
 
Quarter Ended
INCOME STATEMENTS3/31/202112/31/20209/30/20206/30/20203/31/2020
Interest and fees on LHFS & LHFI-FTE

$

93,394

$

96,453

$

97,429

$

99,300

$

109,357

Interest and fees on PPP loans

9,241

14,870

6,729

5,044

Interest on securities-taxable

8,938

9,998

12,542

12,762

12,948

Interest on securities-tax exempt-FTE

290

293

301

315

457

Interest on fed funds sold and reverse repurchases

1

Other interest income

503

249

331

239

740

Total interest income-FTE

112,366

121,863

117,333

117,660

123,502

Interest on deposits

5,223

6,363

7,437

8,730

14,957

Interest on fed funds purchased and repurchases

56

56

32

42

625

Other interest expense

1,857

1,127

688

881

860

Total interest expense

7,136

7,546

8,157

9,653

16,442

Net interest income-FTE

105,230

114,317

109,176

108,007

107,060

Provision for credit losses, LHFI

(10,501

)

(4,413

)

1,760

18,185

20,581

Net interest income after provision-FTE

115,731

118,730

107,416

89,822

86,479

Service charges on deposit accounts

7,356

8,283

7,577

6,397

10,032

Bank card and other fees

9,472

9,107

8,843

7,717

5,355

Mortgage banking, net

20,804

28,155

36,439

33,745

27,483

Insurance commissions

12,445

10,196

11,562

11,868

11,550

Wealth management

8,416

7,838

7,679

7,571

8,537

Other, net

2,090

2,538

1,601

2,213

2,307

Total noninterest income

60,583

66,117

73,701

69,511

65,264

Salaries and employee benefits

71,162

69,660

67,342

66,107

69,148

Services and fees

22,484

22,327

20,992

20,567

19,930

Net occupancy-premises

6,795

6,616

7,000

6,587

6,286

Equipment expense

6,244

6,213

5,828

5,620

5,616

Other real estate expense, net

324

(812

)

1,203

271

1,294

Credit loss expense related to off-balance sheet credit exposures

(9,367

)

(1,087

)

(3,004

)

6,242

6,783

Other expense

14,539

15,890

14,598

13,265

14,753

Total noninterest expense

112,181

118,807

113,959

118,659

123,810

Income before income taxes and tax eq adj

64,133

66,040

67,158

40,674

27,933

Tax equivalent adjustment

2,894

2,939

2,969

3,007

3,108

Income before income taxes

61,239

63,101

64,189

37,667

24,825

Income taxes

9,277

11,884

9,749

5,517

2,607

Net income

$

51,962

$

51,217

$

54,440

$

32,150

$

22,218

 
Per share data
Earnings per share - basic

$

0.82

$

0.81

$

0.86

$

0.51

$

0.35

 
Earnings per share - diluted

$

0.82

$

0.81

$

0.86

$

0.51

$

0.35

 
Dividends per share

$

0.23

$

0.23

$

0.23

$

0.23

$

0.23

 
Weighted average shares outstanding
Basic

63,395,911

63,424,219

63,422,692

63,416,307

63,756,629

 
Diluted

63,562,503

63,616,767

63,581,964

63,555,065

63,913,603

 
Period end shares outstanding

63,394,522

63,424,526

63,423,820

63,422,439

63,396,912

 
See Notes to Consolidated Financials
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2021
($ in thousands)
(unaudited)
 
Quarter Ended
NONPERFORMING ASSETS (1)3/31/202112/31/20209/30/20206/30/20203/31/2020
Nonaccrual LHFI
Alabama

$

9,161

$

9,221

$

3,860

$

4,392

$

4,769

Florida

607

572

617

687

254

Mississippi (2)

35,534

35,015

35,617

37,884

40,815

Tennessee (3)

12,451

12,572

13,041

6,125

6,153

Texas

5,761

5,748

721

906

1,001

Total nonaccrual LHFI

63,514

63,128

53,856

49,994

52,992

Other real estate
Alabama

3,085

3,271

3,725

4,766

6,229

Florida

3,665

3,665

4,835

Mississippi (2)

7,566

8,330

8,718

9,408

13,296

Tennessee (3)

50

140

437

487

Texas

Total other real estate

10,651

11,651

16,248

18,276

24,847

Total nonperforming assets

$

74,165

$

74,779

$

70,104

$

68,270

$

77,839

 
LOANS PAST DUE OVER 90 DAYS (1)
LHFI

$

2,593

$

1,576

$

782

$

807

$

708

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

$

109,566

$

119,409

$

121,281

$

56,269

$

43,564

 
 
Quarter Ended
ACL LHFI (1)3/31/202112/31/20209/30/20206/30/20203/31/2020
Beginning Balance

$

117,306

$

122,010

$

119,188

$

100,564

$

84,277

CECL adoption adjustments:
LHFI

(3,039

)

Acquired loan transfers

1,822

Provision for credit losses

(10,501

)

(4,413

)

1,760

18,185

20,581

Charge-offs

(1,245

)

(2,797

)

(1,263

)

(1,870

)

(5,545

)

Recoveries

3,631

2,506

2,325

2,309

2,468

Net (charge-offs) recoveries

2,386

(291

)

1,062

439

(3,077

)

Ending Balance

$

109,191

$

117,306

$

122,010

$

119,188

$

100,564

 
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama

$

102

$

(1,011

)

$

117

$

526

$

(1,080

)

Florida

30

66

387

(127

)

64

Mississippi (2)

2,207

332

442

(86

)

126

Tennessee (3)

47

303

42

66

(2,186

)

Texas

19

74

60

(1

)

Total net (charge-offs) recoveries

$

2,386

$

(291

)

$

1,062

$

439

$

(3,077

)

 
(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
March 31, 2021
(unaudited)
Quarter Ended
FINANCIAL RATIOS AND OTHER DATA3/31/202112/31/20209/30/20206/30/20203/31/2020
Return on average equity

11.98

%

11.81

%

12.78

%

7.76

%

5.45

%

Return on average tangible equity

15.56

%

15.47

%

16.82

%

10.32

%

7.34

%

Return on average assets

1.26

%

1.28

%

1.37

%

0.83

%

0.66

%

Interest margin - Yield - FTE

3.00

%

3.35

%

3.26

%

3.39

%

4.06

%

Interest margin - Cost

0.19

%

0.21

%

0.23

%

0.28

%

0.54

%

Net interest margin - FTE

2.81

%

3.15

%

3.03

%

3.12

%

3.52

%

Efficiency ratio (1)

71.84

%

65.59

%

62.19

%

62.13

%

63.50

%

Full-time equivalent employees

2,793

2,797

2,807

2,798

2,761

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

-0.09

%

0.01

%

-0.04

%

-0.02

%

0.13

%

Provision for credit losses / average loans

-0.41

%

-0.17

%

0.07

%

0.74

%

0.86

%

Nonaccrual LHFI / (LHFI + LHFS)

0.61

%

0.61

%

0.52

%

0.50

%

0.54

%

Nonperforming assets / (LHFI + LHFS)

0.71

%

0.73

%

0.68

%

0.68

%

0.79

%

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

0.71

%

0.73

%

0.68

%

0.68

%

0.78

%

ACL LHFI / LHFI

1.09

%

1.19

%

1.24

%

1.23

%

1.05

%

ACL LHFI-commercial / commercial LHFI

1.13

%

1.20

%

1.20

%

1.15

%

0.97

%

ACL LHFI-consumer / consumer and home mortgage LHFI

0.95

%

1.16

%

1.41

%

1.56

%

1.35

%

ACL LHFI / nonaccrual LHFI

171.92

%

185.82

%

226.55

%

238.40

%

189.77

%

ACL LHFI / nonaccrual LHFI (excl individually evaluated loans)

437.08

%

572.69

%

593.72

%

561.04

%

468.84

%

 
CAPITAL RATIOS
Total equity / total assets

10.43

%

10.52

%

10.99

%

10.67

%

11.79

%

Tangible equity / tangible assets

8.30

%

8.34

%

8.68

%

8.37

%

9.27

%

Tangible equity / risk-weighted assets

11.23

%

11.22

%

11.01

%

11.09

%

11.05

%

Tier 1 leverage ratio

9.11

%

9.33

%

9.20

%

9.08

%

10.21

%

Common equity tier 1 capital ratio

11.71

%

11.62

%

11.36

%

11.42

%

11.35

%

Tier 1 risk-based capital ratio

12.20

%

12.11

%

11.86

%

11.94

%

11.88

%

Total risk-based capital ratio

14.07

%

14.12

%

12.88

%

13.00

%

12.78

%

 
STOCK PERFORMANCE
Market value-Close

$

33.66

$

27.31

$

21.41

$

24.52

$

23.30

Book value

$

27.76

$

27.45

$

26.96

$

26.39

$

26.06

Tangible book value

$

21.59

$

21.26

$

20.76

$

20.18

$

19.92

 
(1) See Note 8 – Non-GAAP Financial Measures in the Notes to Consolidated Financials for Trustmark’s efficiency ratio calculation.
(2) Excludes PPP loans.
 
See Notes to Consolidated Financials
 

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2021
($ in thousands)
(unaudited)

Note 1 - Paycheck Protection Program

In January 2021, Trustmark began submitting applications to the SBA on behalf of and originating loans to qualified small businesses under the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), as amended by the Consolidated Appropriations Act, 2021. During the first quarter of 2021, Trustmark originated 4,774 PPP loans totaling $301.5 million (net of $16.5 million of deferred fees and costs). At March 31, 2021, Trustmark had 7,456 PPP loans outstanding that totaled $679.7 million (net of $22.1 million of deferred fees and costs) under the CARES Act.

Due to amount and nature of the PPP loans, these loans were not included in the LHFI portfolio and are presented separately in the accompanying consolidated balance sheets. The PPP loans are fully guaranteed by the SBA; therefore, no ACL was estimated for these loans.

Note 2 - Securities Available for Sale and Held to Maturity

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

 

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

SECURITIES AVAILABLE FOR SALE

U.S. Government agency obligations

$

17,349

$

18,041

$

19,011

$

19,898

$

21,190

Obligations of states and political subdivisions

5,798

5,835

8,315

11,176

23,572

Mortgage-backed securities

Residential mortgage pass-through securities

Guaranteed by GNMA

52,406

56,862

62,156

69,637

71,971

Issued by FNMA and FHLMC

1,749,144

1,441,321

1,279,919

1,121,604

967,329

Other residential mortgage-backed securities

Issued or guaranteed by FNMA, FHLMC, or GNMA

345,869

419,437

500,858

574,940

634,075

Commercial mortgage-backed securities

Issued or guaranteed by FNMA, FHLMC, or GNMA

167,110

50,319

52,469

86,898

115,642

Total securities available for sale

$

2,337,676

$

1,991,815

$

1,922,728

$

1,884,153

$

1,833,779

SECURITIES HELD TO MATURITY

Obligations of states and political subdivisions

$

26,554

$

26,584

$

31,605

$

31,629

$

31,758

Mortgage-backed securities

Residential mortgage pass-through securities

Guaranteed by GNMA

7,268

7,598

8,244

10,306

10,492

Issued by FNMA and FHLMC

61,855

67,944

78,213

86,346

91,971

Other residential mortgage-backed securities

Issued or guaranteed by FNMA, FHLMC, or GNMA

324,360

360,361

399,400

435,333

463,175

Commercial mortgage-backed securities

Issued or guaranteed by FNMA, FHLMC, or GNMA

73,701

75,585

93,818

96,434

106,880

Total securities held to maturity

$

493,738

$

538,072

$

611,280

$

660,048

$

704,276

 

At March 31, 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 $8.2 million ($6.2 million, net of tax).

Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 98.0% 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 3 – Loan Composition

LHFI consisted of the following during the periods presented:

 

LHFI BY TYPE

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

Loans secured by real estate:

Construction, land development and other land loans

$

1,342,088

$

1,309,039

$

1,385,947

$

1,277,277

$

1,136,389

Secured by 1-4 family residential properties

1,742,782

1,741,132

1,775,400

1,813,525

1,852,065

Secured by nonfarm, nonresidential properties

2,799,195

2,709,026

2,707,627

2,610,392

2,575,422

Other real estate secured

1,135,005

1,065,964

887,792

884,815

838,573

Commercial and industrial loans

1,323,277

1,309,078

1,398,468

1,413,255

1,476,777

Consumer loans

153,267

161,174

160,960

161,620

170,678

State and other political subdivision loans

1,036,694

1,000,776

935,349

931,536

938,637

Other loans

451,396

528,335

596,185

567,386

579,379

LHFI

9,983,704

9,824,524

9,847,728

9,659,806

9,567,920

ACL LHFI

(109,191

)

(117,306

)

(122,010

)

(119,188

)

(100,564

)

Net LHFI

$

9,874,513

$

9,707,218

$

9,725,718

$

9,540,618

$

9,467,356

 

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2021
($ in thousands)
(unaudited)

Note 3 – Loan Composition (continued)

The following table presents the LHFI composition by region at March 31, 2021 and reflects each region’s diversified mix of loans:

 

March 31, 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

$

1,342,088

$

497,839

$

65,032

$

315,127

$

40,117

$

423,973

Secured by 1-4 family residential properties

1,742,782

112,699

37,777

1,509,503

69,371

13,432

Secured by nonfarm, nonresidential properties

2,799,195

765,496

263,877

976,949

181,688

611,185

Other real estate secured

1,135,005

325,951

6,139

418,988

19,910

364,017

Commercial and industrial loans

1,323,277

203,778

22,980

621,592

290,619

184,308

Consumer loans

153,267

22,501

7,755

100,323

19,232

3,456

State and other political subdivision loans

1,036,694

95,707

35,179

684,640

45,335

175,833

Other loans

451,396

79,979

13,016

279,520

64,796

14,085

Loans

$

9,983,704

$

2,103,950

$

451,755

$

4,906,642

$

731,068

$

1,790,289

CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION

Lots

$

67,471

$

21,575

$

11,036

$

26,266

$

1,373

$

7,221

Development

110,837

42,509

610

42,838

13,709

11,171

Unimproved land

108,607

33,232

14,333

31,363

11,568

18,111

1-4 family construction

255,987

117,406

22,312

71,072

12,495

32,702

Other construction

799,186

283,117

16,741

143,588

972

354,768

Construction, land development and other land loans

$

1,342,088

$

497,839

$

65,032

$

315,127

$

40,117

$

423,973

LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION

Non-owner occupied:

Retail

$

400,595

$

162,007

$

31,393

$

106,249

$

25,339

$

75,607

Office

236,662

68,374

26,516

64,074

12,449

65,249

Hotel/motel

352,191

150,807

90,266

51,443

36,164

23,511

Mini-storage

135,538

23,176

2,392

62,461

390

47,119

Industrial

201,182

47,521

18,356

47,369

419

87,517

Health care

41,973

21,803

1,194

16,417

383

2,176

Convenience stores

16,773

3,289

200

3,134

373

9,777

Nursing homes/senior living

158,489

71,123

42,050

6,760

38,556

Other

78,407

10,075

7,261

25,585

8,846

26,640

Total non-owner occupied loans

1,621,810

558,175

177,578

418,782

91,123

376,152

Owner-occupied:

Office

163,874

40,240

44,295

37,566

8,662

33,111

Churches

102,001

21,454

6,586

50,270

10,030

13,661

Industrial warehouses

177,666

12,410

3,169

49,610

17,122

95,355

Health care

141,491

26,787

7,525

94,096

2,327

10,756

Convenience stores

136,175

17,369

9,348

65,479

531

43,448

Retail

69,585

14,050

6,670

23,696

10,512

14,657

Restaurants

56,319

4,267

4,394

32,341

15,025

292

Auto dealerships

56,449

7,033

274

23,599

25,543

Nursing homes/senior living

176,746

58,770

117,976

Other

97,079

4,941

4,038

63,534

813

23,753

Total owner-occupied loans

1,177,385

207,321

86,299

558,167

90,565

235,033

Loans secured by nonfarm, nonresidential properties

$

2,799,195

$

765,496

$

263,877

$

976,949

$

181,688

$

611,185

 

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2021
($ in thousands)
(unaudited)

Note 4 – Subordinated Notes

During the fourth quarter of 2020, Trustmark agreed to issue and sell $125.0 million aggregate principal amount of its 3.625% Fixed-to-Floating Rate Subordinated Notes (the Notes) due December 1, 2030. At March 31, 2021, the carrying amount of the Notes was $122.9 million. The Notes are unsecured obligations and are subordinated in right of payment to all of Trustmark’s existing and future senior indebtedness, whether secured or unsecured. The Notes are obligations of Trustmark only and are not obligations of, and are not guaranteed by, any of its subsidiaries, including TNB. From the date of issuance until November 30, 2025, the Notes bear interest at a fixed rate of 3.625% per year, payable semi-annually in arrears on June 1 and December 1 of each year. Beginning December 1, 2025, the Notes will bear interest at a floating rate per year equal to the Benchmark rate, which is the Three-Month Term Secured Overnight Financing Rate (SOFR), plus 338.7 basis points, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year. The Notes qualify as Tier 2 capital for Trustmark. The Notes may be redeemed at Trustmark’s option under certain circumstances. Trustmark intends to use the net proceeds for general corporate purposes.

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

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

Securities – taxable

1.40

%

1.62

%

2.02

%

2.16

%

2.25

%

Securities – nontaxable

4.02

%

3.89

%

3.80

%

3.58

%

3.85

%

Securities – total

1.43

%

1.65

%

2.05

%

2.18

%

2.28

%

PPP loans

6.27

%

6.76

%

2.84

%

2.65

%

Loans - LHFI & LHFS

3.67

%

3.75

%

3.81

%

4.03

%

4.54

%

Loans - total

3.81

%

3.99

%

3.73

%

3.93

%

4.54

%

Fed funds sold & reverse repurchases

1.32

%

Other earning assets

0.12

%

0.12

%

0.18

%

0.11

%

1.59

%

Total earning assets

3.00

%

3.35

%

3.26

%

3.39

%

4.06

%

Interest-bearing deposits

0.22

%

0.27

%

0.31

%

0.37

%

0.71

%

Fed funds purchased & repurchases

0.14

%

0.13

%

0.15

%

0.16

%

1.02

%

Other borrowings

2.14

%

1.61

%

1.19

%

2.09

%

2.35

%

Total interest-bearing liabilities

0.28

%

0.30

%

0.33

%

0.39

%

0.75

%

Net interest margin

2.81

%

3.15

%

3.03

%

3.12

%

3.52

%

Net interest margin excluding PPP loans and the FRB balance

2.99

%

3.09

%

3.20

%

3.35

%

3.55

%

 

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 March 31, 2021 and December 31, 2020, the average FRB balance totaled $1.618 billion and $814.2 million, respectively, and is included in other earning assets in the accompanying average consolidated balance sheets.

The net interest margin excluding PPP loans and the FRB balance totaled 2.99% for the first quarter of 2021, a decrease of 10 basis points when compared to the fourth 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 $270 thousand during the first quarter of 2021.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2021
($ in thousands)
(unaudited)

Note 6 – Mortgage Banking (continued)

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

 

Quarter Ended

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

Mortgage servicing income, net

$

6,181

$

6,227

$

5,742

$

5,893

$

5,819

Change in fair value-MSR from runoff

(5,103

)

(5,177

)

(4,590

)

(4,214

)

(2,607

)

Gain on sales of loans, net

19,456

28,014

34,472

34,078

14,339

Mortgage banking income before hedge ineffectiveness

20,534

29,064

35,624

35,757

17,551

Change in fair value-MSR from market changes

13,696

951

60

(3,159

)

(23,999

)

Change in fair value of derivatives

(13,426

)

(1,860

)

755

1,147

33,931

Net positive (negative) hedge ineffectiveness

270

(909

)

815

(2,012

)

9,932

Mortgage banking, net

$

20,804

$

28,155

$

36,439

$

33,745

$

27,483

 

Note 7 – Other Noninterest Income and Expense

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

 

Quarter Ended

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

Partnership amortization for tax credit purposes

$

(1,522

)

$

(1,877

)

$

(1,457

)

$

(1,205

)

$

(1,161

)

Increase in life insurance cash surrender value

1,639

1,708

1,755

1,696

1,722

Other miscellaneous income

1,973

2,707

1,303

1,722

1,746

Total other, net

$

2,090

$

2,538

$

1,601

$

2,213

$

2,307

 

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

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

Loan expense

$

3,411

$

3,696

$

3,485

$

2,954

$

2,799

Amortization of intangibles

666

752

752

736

812

FDIC assessment expense

1,540

1,500

1,410

1,590

1,590

Other miscellaneous expense

8,922

9,942

8,951

7,985

9,552

Total other expense

$

14,539

$

15,890

$

14,598

$

13,265

$

14,753

 

Note 8 – Non-GAAP Financial Measures

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

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

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

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2021
($ in thousands except per share data)
(unaudited)

Note 8 – Non-GAAP Financial Measures (continued)

 

Quarter Ended

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

TANGIBLE EQUITY

AVERAGE BALANCES

Total shareholders' equity

$

1,759,351

$

1,725,035

$

1,694,903

$

1,665,716

$

1,640,070

Less: Goodwill

(385,155

)

(385,270

)

(385,270

)

(383,081

)

(380,671

)

Identifiable intangible assets

(7,118

)

(7,803

)

(8,550

)

(7,834

)

(8,049

)

Total average tangible equity

$

1,367,078

$

1,331,962

$

1,301,083

$

1,274,801

$

1,251,350

PERIOD END BALANCES

Total shareholders' equity

$

1,759,705

$

1,741,117

$

1,710,041

$

1,673,944

$

1,652,399

Less: Goodwill

(384,237

)

(385,270

)

(385,270

)

(385,270

)

(381,717

)

Identifiable intangible assets

(6,724

)

(7,390

)

(8,142

)

(8,895

)

(7,537

)

Total tangible equity

(a)

$

1,368,744

$

1,348,457

$

1,316,629

$

1,279,779

$

1,263,145

TANGIBLE ASSETS

Total assets

$

16,878,313

$

16,551,840

$

15,558,162

$

15,692,079

$

14,019,829

Less: Goodwill

(384,237

)

(385,270

)

(385,270

)

(385,270

)

(381,717

)

Identifiable intangible assets

(6,724

)

(7,390

)

(8,142

)

(8,895

)

(7,537

)

Total tangible assets

(b)

$

16,487,352

$

16,159,180

$

15,164,750

$

15,297,914

$

13,630,575

Risk-weighted assets

(c)

$

12,188,988

$

12,017,378

$

11,963,269

$

11,539,157

$

11,427,297

NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION

Net income

$

51,962

$

51,217

$

54,440

$

32,150

$

22,218

Plus: Intangible amortization net of tax

500

564

564

552

609

Net income adjusted for intangible amortization

$

52,462

$

51,781

$

55,004

$

32,702

$

22,827

Period end common shares outstanding

(d)

63,394,522

63,424,526

63,423,820

63,422,439

63,396,912

TANGIBLE COMMON EQUITY MEASUREMENTS

Return on average tangible equity (1)

15.56

%

15.47

%

16.82

%

10.32

%

7.34

%

Tangible equity/tangible assets

(a)/(b)

8.30

%

8.34

%

8.68

%

8.37

%

9.27

%

Tangible equity/risk-weighted assets

(a)/(c)

11.23

%

11.22

%

11.01

%

11.09

%

11.05

%

Tangible book value

(a)/(d)*1,000

$

21.59

$

21.26

$

20.76

$

20.18

$

19.92

COMMON EQUITY TIER 1 CAPITAL (CET1)

Total shareholders' equity

$

1,759,705

$

1,741,117

$

1,710,041

$

1,673,944

$

1,652,399

CECL transition adjustment

26,829

31,199

32,647

32,693

26,476

AOCI-related adjustments

16,506

1,051

(5,684

)

(10,565

)

(7,698

)

CET1 adjustments and deductions:

Goodwill net of associated deferred tax liabilities (DTLs)

(370,288

)

(371,333

)

(371,345

)

(371,342

)

(367,825

)

Other adjustments and deductions for CET1 (2)

(5,675

)

(6,190

)

(6,770

)

(7,352

)

(6,269

)

CET1 capital

(e)

1,427,077

1,395,844

1,358,889

1,317,378

1,297,083

Additional tier 1 capital instruments plus related surplus

60,000

60,000

60,000

60,000

60,000

Tier 1 capital

$

1,487,077

$

1,455,844

$

1,418,889

$

1,377,378

$

1,357,083

Common equity tier 1 capital ratio

(e)/(c)

11.71

%

11.62

%

11.36

%

11.42

%

11.35

%

(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
March 31, 2021
($ in thousands except per share data)
(unaudited)

Note 8 – Non-GAAP Financial Measures (continued)

Trustmark discloses certain non-GAAP financial measures because Management uses these measures for business planning purposes, including to manage Trustmark’s business against internal projected results of operations and to measure Trustmark’s performance. Trustmark views these as measures of our core operating business, which exclude the impact of the items detailed below, as these items are generally not operational in nature. These non-GAAP financial measures also provide another basis for comparing period-to-period results as presented in the accompanying selected financial data table and the audited consolidated financial statements by excluding potential differences caused by non-operational and unusual or non-recurring items. Readers are cautioned that these adjustments are not permitted under GAAP. Trustmark encourages readers to consider its consolidated financial statements and the notes related thereto in their entirety, and not to rely on any single financial measure.

The following table presents pre-provision net revenue (PPNR) during the periods presented:

 

Quarter Ended

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

Net interest income (GAAP)

$

102,336

$

111,378

$

106,207

$

105,000

$

103,952

Noninterest income (GAAP)

60,583

66,117

73,701

69,511

65,264

Pre-provision revenue

(a)

$

162,919

$

177,495

$

179,908

$

174,511

$

169,216

Noninterest expense (GAAP)

$

112,181

$

118,807

$

113,959

$

118,659

$

123,810

Less:    Voluntary early retirement program

(4,375

)

Credit loss expense related to off-balance sheet credit exposures

9,367

1,087

3,004

(6,242

)

(6,783

)

Adjusted noninterest expense - PPNR (Non-GAAP)

(b)

$

121,548

$

119,894

$

116,963

$

112,417

$

112,652

PPNR (Non-GAAP)

(a)-(b)

$

41,371

$

57,601

$

62,945

$

62,094

$

56,564

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

3/31/2021

3/31/2020

Amount

Diluted EPS

Amount

Diluted EPS

Net Income (GAAP)

$

51,962

$

0.82

$

22,218

$

0.35

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)

$

51,962

$

0.82

$

25,499

$

0.40

Reported

Adjusted

Reported

Adjusted

(GAAP)

(Non-GAAP)

(GAAP)

(Non-GAAP)

Return on average equity

11.98

%

n/a

5.45

%

6.25

%

Return on average tangible equity

15.56

%

n/a

7.34

%

8.39

%

Return on average assets

1.26

%

n/a

0.66

%

0.75

%

n/a - not applicable

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2021
($ in thousands)
(unaudited)

Note 8 – Non-GAAP Financial Measures (continued)

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

 

Quarter Ended

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

Total noninterest expense (GAAP)

$

112,181

$

118,807

$

113,959

$

118,659

$

123,810

Less:

Other real estate expense, net

(324

)

812

(1,203

)

(271

)

(1,294

)

Amortization of intangibles

(666

)

(752

)

(752

)

(736

)

(812

)

Voluntary early retirement program

(4,375

)

Credit loss expense related to off-balance sheet exposures

9,367

1,087

3,004

(6,242

)

(6,783

)

Charitable contributions resulting in state tax credits

(350

)

(375

)

(375

)

(375

)

(375

)

Adjusted noninterest expense (Non-GAAP)

(c)

$

120,208

$

119,579

$

114,633

$

111,035

$

110,171

Net interest income (GAAP)

$

102,336

$

111,378

$

106,207

$

105,000

$

103,952

Add:

Tax equivalent adjustment

2,894

2,939

2,969

3,007

3,108

Net interest income-FTE (Non-GAAP)

(a)

$

105,230

$

114,317

$

109,176

$

108,007

$

107,060

Noninterest income (GAAP)

$

60,583

$

66,117

$

73,701

$

69,511

$

65,264

Add:

Partnership amortization for tax credit purposes

1,522

1,877

1,457

1,205

1,161

Adjusted noninterest income (Non-GAAP)

(b)

$

62,105

$

67,994

$

75,158

$

70,716

$

66,425

Adjusted revenue (Non-GAAP)

(a)+(b)

$

167,335

$

182,311

$

184,334

$

178,723

$

173,485

Efficiency ratio (Non-GAAP)

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

71.84

%

65.59

%

62.19

%

62.13

%

63.50

%

Contacts:

Trustmark Investor Contacts:
Thomas C. Owens
Treasurer and Principal Financial Officer
601-208-7853

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.