Loan and Deposit Growth Continues, Credit
Quality Remains Strong, Mortgage Banking, Insurance and Wealth
Management Revenue Expands
Trustmark Corporation (NASDAQGS:TRMK) reported net income of
$50.3 million in the first quarter of 2023, representing diluted
earnings per share of $0.82. Trustmark’s performance during the
first quarter produced a return on average tangible equity of
18.03% and a return on average assets of 1.10%. The Board of
Directors declared a quarterly cash dividend of $0.23 per share
payable June 15, 2023, to shareholders of record on June 1,
2023.
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First Quarter Highlights
- Loan and deposit growth continued during the first quarter
- Credit quality remained strong
- Noninterest income increased linked-quarter, reflecting the
strength of diversified business lines
- Expense discipline continued, noninterest expense decreased
linked-quarter
Duane A. Dewey, President and CEO, stated, “Our first quarter
financial performance reflects solid loan and deposit growth,
strong performance in our mortgage, insurance and wealth management
businesses, and diligent expense management. Our overall strong
performance was impacted by increasingly competitive deposit costs
during the quarter, which compressed our net interest margin.
Trustmark has a strong, diversified and proven business model that
has stood the test of time. We remain well-positioned and committed
to meeting our customers’ needs despite the challenging financial
services environment. Our balance sheet is well-positioned for
additional increases in interest rates and credit quality remains
solid. We continue to focus on efficiency enhancements throughout
the organization as well as investments in technology to better
serve customers.”
Balance Sheet Management
- Loans held for investment (HFI) increased $293.2 million, or
2.4%, during the quarter
- Total deposits increased $346.0 million, or 2.4%, during the
quarter
- Maintained strong capital position with CET1 ratio of 9.76% and
total risk-based capital ratio of 11.95%
Loans HFI totaled $12.5 billion at March 31, 2023, reflecting an
increase of $293.2 million, or 2.4%, linked-quarter and $2.1
billion, or 20.2%, year-over-year. The linked-quarter growth was
broad-based and reflected increases in all categories with the
exception of state and political subdivisions and consumer loans.
Trustmark’s loan portfolio remains well-diversified by loan type
and geography.
Deposits totaled $14.8 billion at March 31, 2023, up $346.0
million, or 2.4%, from the prior quarter and down $329.6 million,
or 2.2%, year-over-year. Trustmark continues to maintain a strong
liquidity position as loans HFI represented 84.5% of total deposits
at March 31, 2023. Migration into higher-yielding products
continued to drive a change in deposit mix from noninterest-bearing
deposits, which represented 25.7% of total deposits at March 31,
2023. Interest-bearing deposit costs totaled 1.53% for the first
quarter, while the total cost of deposits was 1.13%. The total cost
of interest-bearing liabilities was 1.98% for the first quarter of
2023.
During the first quarter, Trustmark did not repurchase any of
its outstanding common shares. As previously announced, Trustmark’s
Board of Directors authorized a stock repurchase program effective
January 1, 2023, under which $50.0 million of Trustmark’s
outstanding shares may be acquired through December 31, 2023. At
March 31, 2023, Trustmark’s tangible equity to tangible assets
ratio was 6.35%, while the total risk-based capital ratio was
11.95%. Tangible book value per share was $19.24 at March 31, 2023,
an increase of 6.2% from the prior quarter.
Credit Quality
- Nonperforming assets represented 0.58% of loans HFI and loans
held for sale (HFS) at March 31, 2023
- Net charge-offs totaled 0.04% of average loans in the first
quarter
- Allowance for credit losses (ACL) represented 0.98% of loans
HFI and 320.80% of nonaccrual loans, excluding individually
analyzed loans at March 31, 2023
Nonaccrual loans totaled $72.4 million at March 31, 2023, up
$6.4 million from the prior quarter and an increase of $8.0 million
year-over-year. Other real estate totaled $1.7 million, reflecting
a $302 thousand decrease from the prior quarter and a $1.5 million
decline from the prior year.
The provision for credit losses for loans HFI was $3.2 million
in the first quarter and was primarily attributable to loan growth.
The provision for credit losses for off-balance sheet credit
exposures was a negative $2.2 million primarily driven by decreases
in unfunded commitments. Collectively, the provision for credit
losses totaled $1.0 million in the first quarter compared to $12.1
million in the prior quarter and a negative $2.0 million in the
first quarter of 2022.
Allocation of Trustmark’s $122.2 million ACL on loans HFI
represented 0.80% of commercial loans and 1.54% of consumer and
home mortgage loans, resulting in an ACL to total loans HFI of
0.98% at March 31, 2023. Management believes the level of the ACL
is commensurate with the credit losses currently expected in the
loan portfolio.
Revenue Generation
- Noninterest income increased 13.7% linked-quarter to total
$51.4 million, reflecting growth in mortgage banking, insurance and
wealth management revenue
- Net interest income (FTE) totaled $141.1 million in the first
quarter, down 6.0% linked-quarter
Revenue in the first quarter totaled $189.0 million, a decline
of 1.5% from the prior quarter and an increase of 23.1% from the
same quarter in the prior year. The linked-quarter decline
primarily reflects lower net interest income offset in part by
higher mortgage banking, insurance and wealth management revenue
while the year-over-year growth is attributed to higher net
interest income offset in part by reduced mortgage banking
revenue.
Net interest income (FTE) in the first quarter totaled $141.1
million, resulting in a net interest margin of 3.39%, down 27 basis
points from the prior quarter. The contraction of the net interest
margin was primarily due to the costs of interest-bearing deposits
more than offsetting the increased yields on the loans HFI and HFS
portfolio and securities portfolio. Additionally, the margin was
impacted by costs associated with the approximately $300 million
increase in average on-balance sheet liquidity added during the
quarter due to the uncertainty in the broader banking industry.
Noninterest income in the first quarter totaled $51.4 million,
an increase of $6.2 million, or 13.7%, from the prior quarter and a
decrease of $2.7 million, or 5.1%, year-over-year. The
linked-quarter increases in mortgage banking, insurance, and wealth
management revenue were offset in part by declines in service
charges on deposit accounts and bank card and other fees. The
decrease in noninterest income year-over-year is principally due to
lower mortgage banking revenue.
Mortgage loan production in the first quarter totaled $361.1
million, down 7.6% from the prior quarter and 33.7% year-over-year.
Mortgage banking revenue totaled $7.6 million in the first quarter,
an increase of $4.2 million linked-quarter and a decrease of $2.2
million year-over-year. The linked-quarter increase was principally
attributable to a decrease in net negative hedge ineffectiveness as
well as a decline in runoff of mortgage servicing rights while the
year-over-year decline was principally due to a decrease in net
hedge ineffectiveness.
Insurance revenue totaled $14.3 million in the first quarter, up
$2.3 million, or 19.0%, from the prior quarter and $216 thousand,
or 1.5%, year-over-year. The linked-quarter and year-over-year
increases primarily reflected growth in commercial property and
casualty commissions. Wealth management revenue in the first
quarter totaled $8.8 million, an increase of $701 thousand, or
8.7%, from the prior quarter and a decline of $274 thousand, or
3.0%, year-over-year. The linked-quarter growth reflected higher
trust management revenue while the year-over-year decline reflected
reduced brokerage revenue.
Noninterest Expense
- Salaries and employee benefits expense increased $587 thousand,
or 0.8%, linked-quarter
- Services and fees declined $2.3 million, or 8.2%,
linked-quarter
- Adjusted noninterest expense, which excludes ORE expense,
amortization of intangibles, charitable contributions resulting in
state tax credits, and litigation settlement expense totaled $127.5
million in the first quarter, down 1.7% from the prior quarter.
Please refer to the Consolidated Financial Information, Note 7 –
Non-GAAP Financial Measures
Noninterest expense in the first quarter totaled $128.3 million,
a decrease of $2.2 million, or 1.6%, when compared to the prior
quarter excluding the litigation settlement expense. Salaries and
employee benefits increased $587 thousand linked-quarter as
declines in salaries and commissions were more than offset by a
seasonal increase in payroll taxes. Services and fees declined $2.3
million, or 8.2%, principally due to lower professional fees.
FIT2GROW
“In 2022 we announced FIT2GROW, a comprehensive program of
Focus, Innovation and Transformation designed to enhance
Trustmark’s ability to grow and serve customers. During the first
quarter, we refocused our community bank efforts on commercial,
small business, and consumer lines of business to provide
additional expertise for our customers and enhance profitable
revenue growth. We continue to rollout new technology to enhance
the customer experience and improve efficiency and productivity.
Additionally, our Atlanta loan production office is now fully
functioning and is focused on Commercial Real Estate, Residential
Real Estate, Corporate Banking, and Equipment Finance. We look
forward to the contributions of these businesses to our financial
results going forward,” said Dewey.
Additional Information
As previously announced, Trustmark will conduct a conference
call with analysts on Wednesday, April 26, 2023, at 8:30 a.m.
Central Time to discuss the Corporation’s financial results.
Interested parties may listen to the conference call by dialing
(877) 317-3051 or by clicking on the link provided under the
Investor Relations section of our website at www.trustmark.com. A
replay of the conference call will also be available through
Wednesday, May 10, 2023, in archived format at the same web address
or by calling (877) 344-7529, passcode 2946740.
Trustmark is a financial services company providing banking and
financial solutions through offices in Alabama, Florida, Georgia,
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.
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,
actions by the Board of Governors of the Federal Reserve System
(FRB) that impact the level of market interest rates, 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 March 31, 2023 ($ in
thousands) (unaudited) Linked Quarter Year
over Year QUARTERLY AVERAGE
BALANCES 3/31/2023 12/31/2022
3/31/2022 $ Change % Change $ Change
% Change Securities AFS-taxable (1)
$
2,187,121
$
2,572,675
$
3,245,502
$
(385,554
)
-15.0
%
$
(1,058,381
)
-32.6
%
Securities AFS-nontaxable
4,812
4,828
5,127
(16
)
-0.3
%
(315
)
-6.1
%
Securities HTM-taxable (1)
1,479,283
1,268,952
410,851
210,331
16.6
%
1,068,432
n/m
Securities HTM-nontaxable
4,509
4,514
7,327
(5
)
-0.1
%
(2,818
)
-38.5
%
Total securities
3,675,725
3,850,969
3,668,807
(175,244
)
-4.6
%
6,918
0.2
%
Paycheck protection program loans (PPP)
—
3,235
29,009
(3,235
)
-100.0
%
(29,009
)
-100.0
%
Loans (includes loans held for sale)
12,530,449
12,006,661
10,550,712
523,788
4.4
%
1,979,737
18.8
%
Fed funds sold and reverse repurchases
2,379
6,566
56
(4,187
)
-63.8
%
2,323
n/m
Other earning assets
647,760
375,190
1,811,713
272,570
72.6
%
(1,163,953
)
-64.2
%
Total earning assets
16,856,313
16,242,621
16,060,297
613,692
3.8
%
796,016
5.0
%
Allowance for credit losses (ACL), loans heldfor investment (LHFI)
(119,978
)
(114,948
)
(99,390
)
(5,030
)
-4.4
%
(20,588
)
-20.7
%
Other assets
1,762,449
1,630,085
1,550,848
132,364
8.1
%
211,601
13.6
%
Total assets
$
18,498,784
$
17,757,758
$
17,511,755
$
741,026
4.2
%
$
987,029
5.6
%
Interest-bearing demand deposits
$
4,751,154
$
4,719,303
$
4,429,056
$
31,851
0.7
%
$
322,098
7.3
%
Savings deposits
4,193,764
4,379,673
4,791,104
(185,909
)
-4.2
%
(597,340
)
-12.5
%
Time deposits
1,907,449
1,152,905
1,193,435
754,544
65.4
%
714,014
59.8
%
Total interest-bearing deposits
10,852,367
10,251,881
10,413,595
600,486
5.9
%
438,772
4.2
%
Fed funds purchased and repurchases
436,535
549,406
212,006
(112,871
)
-20.5
%
224,529
n/m
Other borrowings
1,110,843
530,993
91,090
579,850
n/m
1,019,753
n/m
Subordinated notes
123,281
123,226
123,061
55
0.0
%
220
0.2
%
Junior subordinated debt securities
61,856
61,856
61,856
—
0.0
%
—
0.0
%
Total interest-bearing liabilities
12,584,882
11,517,362
10,901,608
1,067,520
9.3
%
1,683,274
15.4
%
Noninterest-bearing deposits
3,813,248
4,177,113
4,601,108
(363,865
)
-8.7
%
(787,860
)
-17.1
%
Other liabilities
576,826
569,992
295,287
6,834
1.2
%
281,539
95.3
%
Total liabilities
16,974,956
16,264,467
15,798,003
710,489
4.4
%
1,176,953
7.5
%
Shareholders' equity
1,523,828
1,493,291
1,713,752
30,537
2.0
%
(189,924
)
-11.1
%
Total liabilities and equity
$
18,498,784
$
17,757,758
$
17,511,755
$
741,026
4.2
%
$
987,029
5.6
%
(1) During the fourth quarter of 2022, Trustmark transferred
$422.9 million of securities available for sale to securities held
to maturity. See Note 2 - Securities Available for Sale and Held to
Maturity in the Notes to Consolidated Financials for additional
information. n/m - percentage changes greater than +/- 100%
are considered not meaningful
See Notes to Consolidated
Financials TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION March 31, 2023
($ in thousands) (unaudited) Linked
Quarter Year over Year PERIOD
END BALANCES 3/31/2023 12/31/2022
3/31/2022 $ Change % Change $ Change
% Change Cash and due from banks
$
1,297,144
$
734,787
$
1,917,564
$
562,357
76.5
%
$
(620,420
)
-32.4
%
Fed funds sold and reverse repurchases
—
4,000
—
(4,000
)
-100.0
%
—
n/m
Securities available for sale (1)
1,984,162
2,024,082
3,018,246
(39,920
)
-2.0
%
(1,034,084
)
-34.3
%
Securities held to maturity (1)
1,474,338
1,494,514
607,598
(20,176
)
-1.4
%
866,740
n/m
PPP loans
—
—
18,579
—
n/m
(18,579
)
-100.0
%
Loans held for sale (LHFS)
175,926
135,226
222,538
40,700
30.1
%
(46,612
)
-20.9
%
Loans held for investment (LHFI)
12,497,195
12,204,039
10,397,129
293,156
2.4
%
2,100,066
20.2
%
ACL LHFI
(122,239
)
(120,214
)
(98,734
)
(2,025
)
-1.7
%
(23,505
)
-23.8
%
Net LHFI
12,374,956
12,083,825
10,298,395
291,131
2.4
%
2,076,561
20.2
%
Premises and equipment, net
223,975
212,365
207,301
11,610
5.5
%
16,674
8.0
%
Mortgage servicing rights
127,206
129,677
111,050
(2,471
)
-1.9
%
16,156
14.5
%
Goodwill
384,237
384,237
384,237
—
0.0
%
—
0.0
%
Identifiable intangible assets
3,352
3,640
4,591
(288
)
-7.9
%
(1,239
)
-27.0
%
Other real estate
1,684
1,986
3,187
(302
)
-15.2
%
(1,503
)
-47.2
%
Operating lease right-of-use assets
35,315
36,301
34,048
(986
)
-2.7
%
1,267
3.7
%
Other assets
794,883
770,838
614,217
24,045
3.1
%
180,666
29.4
%
Total assets
$
18,877,178
$
18,015,478
$
17,441,551
$
861,700
4.8
%
$
1,435,627
8.2
%
Deposits: Noninterest-bearing
$
3,797,055
$
4,093,771
$
4,739,102
$
(296,716
)
-7.2
%
$
(942,047
)
-19.9
%
Interest-bearing
10,986,606
10,343,877
10,374,190
642,729
6.2
%
612,416
5.9
%
Total deposits
14,783,661
14,437,648
15,113,292
346,013
2.4
%
(329,631
)
-2.2
%
Fed funds purchased and repurchases
477,980
449,331
170,499
28,649
6.4
%
307,481
n/m
Other borrowings
1,485,181
1,050,938
84,644
434,243
41.3
%
1,400,537
n/m
Subordinated notes
123,317
123,262
123,097
55
0.0
%
220
0.2
%
Junior subordinated debt securities
61,856
61,856
61,856
—
0.0
%
—
0.0
%
ACL on off-balance sheet credit exposures
34,596
36,838
34,517
(2,242
)
-6.1
%
79
0.2
%
Operating lease liabilities
37,988
38,932
35,912
(944
)
-2.4
%
2,076
5.8
%
Other liabilities
310,500
324,405
186,352
(13,905
)
-4.3
%
124,148
66.6
%
Total liabilities
17,315,079
16,523,210
15,810,169
791,869
4.8
%
1,504,910
9.5
%
Common stock
12,720
12,705
12,806
15
0.1
%
(86
)
-0.7
%
Capital surplus
155,297
154,645
167,094
652
0.4
%
(11,797
)
-7.1
%
Retained earnings
1,636,463
1,600,321
1,600,138
36,142
2.3
%
36,325
2.3
%
Accumulated other comprehensiveincome (loss), net of tax
(242,381
)
(275,403
)
(148,656
)
33,022
12.0
%
(93,725
)
-63.0
%
Total shareholders' equity
1,562,099
1,492,268
1,631,382
69,831
4.7
%
(69,283
)
-4.2
%
Total liabilities and equity
$
18,877,178
$
18,015,478
$
17,441,551
$
861,700
4.8
%
$
1,435,627
8.2
%
(1) During the fourth quarter of 2022, Trustmark transferred
$422.9 million of securities available for sale to securities held
to maturity. See Note 2 - Securities Available for Sale and Held to
Maturity in the Notes to Consolidated Financials for additional
information. n/m - percentage changes greater than +/- 100%
are considered not meaningful
See Notes to Consolidated
Financials TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION March 31, 2023
($ in thousands except per share data) (unaudited)
Quarter Ended Linked Quarter Year over
Year INCOME STATEMENTS
3/31/2023 12/31/2022 3/31/2022 $ Change
% Change $ Change % Change Interest and fees
on LHFS & LHFI-FTE
$
178,967
$
159,566
$
93,252
$
19,401
12.2
%
$
85,715
91.9
%
Interest and fees on PPP loans
—
101
168
(101
)
-100.0
%
(168
)
-100.0
%
Interest on securities-taxable
16,761
16,577
12,357
184
1.1
%
4,404
35.6
%
Interest on securities-tax exempt-FTE
92
93
122
(1
)
-1.1
%
(30
)
-24.6
%
Interest on fed funds sold and reverserepurchases
30
71
—
(41
)
-57.7
%
30
n/m
Other interest income
6,527
3,556
817
2,971
83.5
%
5,710
n/m
Total interest income-FTE
202,377
179,964
106,716
22,413
12.5
%
95,661
89.6
%
Interest on deposits
40,898
18,438
2,760
22,460
n/m
38,138
n/m
Interest on fed funds purchased and repurchases
4,832
4,762
70
70
1.5
%
4,762
n/m
Other interest expense
15,575
6,730
1,539
8,845
n/m
14,036
n/m
Total interest expense
61,305
29,930
4,369
31,375
n/m
56,936
n/m
Net interest income-FTE
141,072
150,034
102,347
(8,962
)
-6.0
%
38,725
37.8
%
Provision for credit losses, LHFI
3,244
6,902
(860
)
(3,658
)
-53.0
%
4,104
n/m
Provision for credit losses, off-balance sheetcredit exposures
(2,242
)
5,215
(1,106
)
(7,457
)
n/m
(1,136
)
n/m
Net interest income after provision-FTE
140,070
137,917
104,313
2,153
1.6
%
35,757
34.3
%
Service charges on deposit accounts
10,336
11,162
9,451
(826
)
-7.4
%
885
9.4
%
Bank card and other fees
7,803
8,191
8,442
(388
)
-4.7
%
(639
)
-7.6
%
Mortgage banking, net
7,639
3,408
9,873
4,231
n/m
(2,234
)
-22.6
%
Insurance commissions
14,305
12,019
14,089
2,286
19.0
%
216
1.5
%
Wealth management
8,780
8,079
9,054
701
8.7
%
(274
)
-3.0
%
Other, net
2,514
2,311
3,206
203
8.8
%
(692
)
-21.6
%
Total noninterest income
51,377
45,170
54,115
6,207
13.7
%
(2,738
)
-5.1
%
Salaries and employee benefits
74,056
73,469
69,585
587
0.8
%
4,471
6.4
%
Services and fees (2)
25,426
27,709
25,314
(2,283
)
-8.2
%
112
0.4
%
Net occupancy-premises
7,629
7,898
7,079
(269
)
-3.4
%
550
7.8
%
Equipment expense
6,405
6,268
6,061
137
2.2
%
344
5.7
%
Litigation settlement expense (1)
—
100,750
—
(100,750
)
-100.0
%
—
n/m
Other expense (2)
14,811
15,135
13,480
(324
)
-2.1
%
1,331
9.9
%
Total noninterest expense
128,327
231,229
121,519
(102,902
)
-44.5
%
6,808
5.6
%
Income (loss) before income taxes and tax eq adj
63,120
(48,142
)
36,909
111,262
n/m
26,211
71.0
%
Tax equivalent adjustment
3,477
3,451
3,003
26
0.8
%
474
15.8
%
Income (loss) before income taxes
59,643
(51,593
)
33,906
111,236
n/m
25,737
75.9
%
Income taxes
9,343
(17,530
)
4,695
26,873
n/m
4,648
99.0
%
Net income (loss)
$
50,300
$
(34,063
)
$
29,211
$
84,363
n/m
$
21,089
72.2
%
Per share data Earnings (loss) per share -
basic
$
0.82
$
(0.56
)
$
0.47
$
1.38
n/m
$
0.35
74.5
%
Earnings (loss) per share - diluted
$
0.82
$
(0.56
)
$
0.47
$
1.38
n/m
$
0.35
74.5
%
Dividends per share
$
0.23
$
0.23
$
0.23
—
0.0
%
—
0.0
%
Weighted average shares outstanding Basic
61,011,059
60,969,400
61,514,395
Diluted
61,193,275
61,173,249
61,709,797
Period end shares outstanding
61,048,516
60,977,686
61,463,392
(1) See Note 1 - Litigation Settlement in the Notes to
Consolidated Financials for additional information. (2) During the
first quarter of 2023, Trustmark reclassified its debit card
transaction fees from other expense to services and fees. 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 March 31, 2023 ($ in thousands)
(unaudited) Quarter Ended Linked
Quarter Year over Year NONPERFORMING ASSETS (1) 3/31/2023
12/31/2022 3/31/2022 $ Change % Change
$ Change % Change Nonaccrual LHFI Alabama
$
10,919
$
12,300
$
7,506
$
(1,381
)
-11.2
%
$
3,413
45.5
%
Florida
256
227
310
29
12.8
%
(54
)
-17.4
%
Mississippi (2)
32,560
24,683
21,318
7,877
31.9
%
11,242
52.7
%
Tennessee (3)
5,416
5,566
9,266
(150
)
-2.7
%
(3,850
)
-41.5
%
Texas
23,224
23,196
25,999
28
0.1
%
(2,775
)
-10.7
%
Total nonaccrual LHFI
72,375
65,972
64,399
6,403
9.7
%
7,976
12.4
%
Other real estate Alabama
—
194
—
(194
)
-100.0
%
—
n/m
Mississippi (2)
1,495
1,769
3,187
(274
)
-15.5
%
(1,692
)
-53.1
%
Tennessee (3)
189
23
—
166
n/m
189
n/m
Total other real estate
1,684
1,986
3,187
(302
)
-15.2
%
(1,503
)
-47.2
%
Total nonperforming assets
$
74,059
$
67,958
$
67,586
$
6,101
9.0
%
$
6,473
9.6
%
LOANS PAST DUE OVER 90 DAYS
(1) LHFI
$
2,255
$
3,929
$
1,503
$
(1,674
)
-42.6
%
$
752
50.0
%
LHFS-Guaranteed GNMA serviced loans (no obligation to
repurchase)
$
41,468
$
49,320
$
62,078
$
(7,852
)
-15.9
%
$
(20,610
)
-33.2
%
Quarter Ended Linked Quarter Year over
Year ACL LHFI (1)
3/31/2023 12/31/2022 3/31/2022 $ Change
% Change $ Change % Change Beginning Balance
$
120,214
$
115,050
$
99,457
$
5,164
4.5
%
$
20,757
20.9
%
Provision for credit losses, LHFI
3,244
6,902
(860
)
(3,658
)
-53.0
%
4,104
n/m
Charge-offs
(2,996
)
(3,893
)
(2,242
)
897
23.0
%
(754
)
-33.6
%
Recoveries
1,777
2,155
2,379
(378
)
-17.5
%
(602
)
-25.3
%
Net (charge-offs) recoveries
(1,219
)
(1,738
)
137
519
29.9
%
(1,356
)
n/m
Ending Balance
$
122,239
$
120,214
$
98,734
$
2,025
1.7
%
$
23,505
23.8
%
NET (CHARGE-OFFS) RECOVERIES
(1) Alabama
$
(268
)
$
98
$
699
$
(366
)
n/m
$
(967
)
n/m
Florida
(36
)
(60
)
(26
)
24
40.0
%
(10
)
-38.5
%
Mississippi (2)
(775
)
(1,657
)
(88
)
882
53.2
%
(687
)
n/m
Tennessee (3)
(124
)
(195
)
(424
)
71
36.4
%
300
70.8
%
Texas
(16
)
76
(24
)
(92
)
n/m
8
33.3
%
Total net (charge-offs) recoveries
$
(1,219
)
$
(1,738
)
$
137
$
519
29.9
%
$
(1,356
)
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, 2023 ($ in thousands)
(unaudited) Quarter Ended AVERAGE BALANCES 3/31/2023
12/31/2022 9/30/2022 6/30/2022
3/31/2022 Securities AFS-taxable (1)
$
2,187,121
$
2,572,675
$
2,824,254
$
3,094,364
$
3,245,502
Securities AFS-nontaxable
4,812
4,828
4,928
5,110
5,127
Securities HTM-taxable (1)
1,479,283
1,268,952
1,140,685
811,599
410,851
Securities HTM-nontaxable
4,509
4,514
5,057
5,630
7,327
Total securities
3,675,725
3,850,969
3,974,924
3,916,703
3,668,807
PPP loans
—
3,235
9,821
17,746
29,009
Loans (includes loans held for sale)
12,530,449
12,006,661
11,459,551
10,910,178
10,550,712
Fed funds sold and reverse repurchases
2,379
6,566
226
110
56
Other earning assets
647,760
375,190
325,620
1,139,312
1,811,713
Total earning assets
16,856,313
16,242,621
15,770,142
15,984,049
16,060,297
ACL LHFI
(119,978
)
(114,948
)
(102,951
)
(99,106
)
(99,390
)
Other assets
1,762,449
1,630,085
1,576,653
1,513,127
1,550,848
Total assets
$
18,498,784
$
17,757,758
$
17,243,844
$
17,398,070
$
17,511,755
Interest-bearing demand deposits
$
4,751,154
$
4,719,303
$
4,613,733
$
4,578,235
$
4,429,056
Savings deposits
4,193,764
4,379,673
4,514,579
4,638,849
4,791,104
Time deposits
1,907,449
1,152,905
1,111,440
1,159,065
1,193,435
Total interest-bearing deposits
10,852,367
10,251,881
10,239,752
10,376,149
10,413,595
Fed funds purchased and repurchases
436,535
549,406
249,809
118,753
212,006
Other borrowings
1,110,843
530,993
88,697
80,283
91,090
Subordinated notes
123,281
123,226
123,171
123,116
123,061
Junior subordinated debt securities
61,856
61,856
61,856
61,856
61,856
Total interest-bearing liabilities
12,584,882
11,517,362
10,763,285
10,760,157
10,901,608
Noninterest-bearing deposits
3,813,248
4,177,113
4,444,370
4,590,338
4,601,108
Other liabilities
576,826
569,992
429,720
439,266
295,287
Total liabilities
16,974,956
16,264,467
15,637,375
15,789,761
15,798,003
Shareholders' equity
1,523,828
1,493,291
1,606,469
1,608,309
1,713,752
Total liabilities and equity
$
18,498,784
$
17,757,758
$
17,243,844
$
17,398,070
$
17,511,755
(1) During the fourth quarter of 2022, Trustmark transferred
$422.9 million of securities available for sale to securities held
to maturity. See Note 2 - Securities Available for Sale and Held to
Maturity in the Notes to Consolidated Financials for additional
information.
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED
FINANCIAL INFORMATION March 31, 2023 ($ in
thousands) (unaudited) PERIOD END BALANCES 3/31/2023
12/31/2022 9/30/2022 6/30/2022
3/31/2022 Cash and due from banks
$
1,297,144
$
734,787
$
479,637
$
742,461
$
1,917,564
Fed funds sold and reverse repurchases
—
4,000
10,098
—
—
Securities available for sale (1)
1,984,162
2,024,082
2,444,486
2,644,364
3,018,246
Securities held to maturity (1)
1,474,338
1,494,514
1,156,985
1,137,754
607,598
PPP loans
—
—
4,798
12,549
18,579
LHFS
175,926
135,226
165,213
190,186
222,538
LHFI
12,497,195
12,204,039
11,586,064
10,944,840
10,397,129
ACL LHFI
(122,239
)
(120,214
)
(115,050
)
(103,140
)
(98,734
)
Net LHFI
12,374,956
12,083,825
11,471,014
10,841,700
10,298,395
Premises and equipment, net
223,975
212,365
210,761
207,914
207,301
Mortgage servicing rights
127,206
129,677
132,615
121,014
111,050
Goodwill
384,237
384,237
384,237
384,237
384,237
Identifiable intangible assets
3,352
3,640
3,952
4,264
4,591
Other real estate
1,684
1,986
2,971
3,034
3,187
Operating lease right-of-use assets
35,315
36,301
37,282
34,684
34,048
Other assets
794,883
770,838
686,585
627,349
614,217
Total assets
$
18,877,178
$
18,015,478
$
17,190,634
$
16,951,510
$
17,441,551
Deposits: Noninterest-bearing
$
3,797,055
$
4,093,771
$
4,358,805
$
4,509,472
$
4,739,102
Interest-bearing
10,986,606
10,343,877
10,066,375
10,260,696
10,374,190
Total deposits
14,783,661
14,437,648
14,425,180
14,770,168
15,113,292
Fed funds purchased and repurchases
477,980
449,331
544,068
70,157
170,499
Other borrowings
1,485,181
1,050,938
223,172
72,553
84,644
Subordinated notes
123,317
123,262
123,207
123,152
123,097
Junior subordinated debt securities
61,856
61,856
61,856
61,856
61,856
ACL on off-balance sheet credit exposures
34,596
36,838
31,623
32,949
34,517
Operating lease liabilities
37,988
38,932
39,797
37,108
35,912
Other liabilities
310,500
324,405
232,786
196,871
186,352
Total liabilities
17,315,079
16,523,210
15,681,689
15,364,814
15,810,169
Common stock
12,720
12,705
12,700
12,752
12,806
Capital surplus
155,297
154,645
154,150
160,876
167,094
Retained earnings
1,636,463
1,600,321
1,648,507
1,620,210
1,600,138
Accumulated other comprehensive income (loss),net of tax
(242,381
)
(275,403
)
(306,412
)
(207,142
)
(148,656
)
Total shareholders' equity
1,562,099
1,492,268
1,508,945
1,586,696
1,631,382
Total liabilities and equity
$
18,877,178
$
18,015,478
$
17,190,634
$
16,951,510
$
17,441,551
(1) During the fourth quarter of 2022, Trustmark transferred
$422.9 million of securities available for sale to securities held
to maturity. See Note 2 - Securities Available for Sale and Held to
Maturity in the Notes to Consolidated Financials for additional
information.
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION March 31, 2023
($ in thousands except per share data) (unaudited)
Quarter Ended INCOME
STATEMENTS 3/31/2023 12/31/2022
9/30/2022 6/30/2022 3/31/2022 Interest and
fees on LHFS & LHFI-FTE
$
178,967
$
159,566
$
129,395
$
103,033
$
93,252
Interest and fees on PPP loans
—
101
186
184
168
Interest on securities-taxable
16,761
16,577
16,222
14,561
12,357
Interest on securities-tax exempt-FTE
92
93
100
107
122
Interest on fed funds sold and reverse repurchases
30
71
2
1
—
Other interest income
6,527
3,556
1,493
2,214
817
Total interest income-FTE
202,377
179,964
147,398
120,100
106,716
Interest on deposits
40,898
18,438
5,097
2,774
2,760
Interest on fed funds purchased and repurchases
4,832
4,762
1,225
70
70
Other interest expense
15,575
6,730
1,996
1,664
1,539
Total interest expense
61,305
29,930
8,318
4,508
4,369
Net interest income-FTE
141,072
150,034
139,080
115,592
102,347
Provision for credit losses, LHFI
3,244
6,902
12,919
2,716
(860
)
Provision for credit losses, off-balance sheetcredit exposures
(2,242
)
5,215
(1,326
)
(1,568
)
(1,106
)
Net interest income after provision-FTE
140,070
137,917
127,487
114,444
104,313
Service charges on deposit accounts
10,336
11,162
11,318
10,226
9,451
Bank card and other fees
7,803
8,191
9,305
10,167
8,442
Mortgage banking, net
7,639
3,408
6,876
8,149
9,873
Insurance commissions
14,305
12,019
13,911
13,702
14,089
Wealth management
8,780
8,079
8,778
9,102
9,054
Other, net
2,514
2,311
2,418
1,907
3,206
Total noninterest income
51,377
45,170
52,606
53,253
54,115
Salaries and employee benefits
74,056
73,469
72,707
71,679
69,585
Services and fees (2)
25,426
27,709
26,787
25,659
25,314
Net occupancy-premises
7,629
7,898
7,395
6,892
7,079
Equipment expense
6,405
6,268
6,072
6,047
6,061
Litigation settlement expense (1)
—
100,750
—
—
—
Other expense (2)
14,811
15,135
13,737
13,490
13,480
Total noninterest expense
128,327
231,229
126,698
123,767
121,519
Income (loss) before income taxes and tax eq adj
63,120
(48,142
)
53,395
43,930
36,909
Tax equivalent adjustment
3,477
3,451
2,975
2,916
3,003
Income (loss) before income taxes
59,643
(51,593
)
50,420
41,014
33,906
Income taxes
9,343
(17,530
)
7,965
6,730
4,695
Net income (loss)
$
50,300
$
(34,063
)
$
42,455
$
34,284
$
29,211
Per share data Earnings (loss) per share -
basic
$
0.82
$
(0.56
)
$
0.69
$
0.56
$
0.47
Earnings (loss) per share - diluted
$
0.82
$
(0.56
)
$
0.69
$
0.56
$
0.47
Dividends per share
$
0.23
$
0.23
$
0.23
$
0.23
$
0.23
Weighted average shares outstanding Basic
61,011,059
60,969,400
61,114,804
61,378,226
61,514,395
Diluted
61,193,275
61,173,249
61,318,715
61,546,285
61,709,797
Period end shares outstanding
61,048,516
60,977,686
60,953,864
61,201,123
61,463,392
(1) See Note 1 - Litigation Settlement in the Notes to
Consolidated Financials for additional information. (2) During the
first quarter of 2023, Trustmark reclassified its debit card
transaction fees from other expense to services and fees. Prior
periods have been reclassified accordingly.
See Notes to
Consolidated Financials TRUSTMARK CORPORATION AND
SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March
31, 2023 ($ in thousands) (unaudited)
Quarter Ended NONPERFORMING
ASSETS (1) 3/31/2023 12/31/2022
9/30/2022 6/30/2022 3/31/2022 Nonaccrual LHFI
Alabama
$
10,919
$
12,300
$
12,710
$
2,698
$
7,506
Florida
256
227
227
233
310
Mississippi (2)
32,560
24,683
23,517
23,039
21,318
Tennessee (3)
5,416
5,566
5,120
9,500
9,266
Texas
23,224
23,196
26,353
26,582
25,999
Total nonaccrual LHFI
72,375
65,972
67,927
62,052
64,399
Other real estate Alabama
—
194
217
84
—
Mississippi (2)
1,495
1,769
2,754
2,950
3,187
Tennessee (3)
189
23
—
—
—
Total other real estate
1,684
1,986
2,971
3,034
3,187
Total nonperforming assets
$
74,059
$
67,958
$
70,898
$
65,086
$
67,586
LOANS PAST DUE OVER 90 DAYS
(1) LHFI
$
2,255
$
3,929
$
1,842
$
1,347
$
1,503
LHFS-Guaranteed GNMA serviced loans (no obligation to
repurchase)
$
41,468
$
49,320
$
48,313
$
51,164
$
62,078
Quarter Ended ACL
LHFI (1) 3/31/2023 12/31/2022
9/30/2022 6/30/2022 3/31/2022 Beginning
Balance
$
120,214
$
115,050
$
103,140
$
98,734
$
99,457
Provision for credit losses, LHFI
3,244
6,902
12,919
2,716
(860
)
Charge-offs
(2,996
)
(3,893
)
(2,920
)
(2,277
)
(2,242
)
Recoveries
1,777
2,155
1,911
3,967
2,379
Net (charge-offs) recoveries
(1,219
)
(1,738
)
(1,009
)
1,690
137
Ending Balance
$
122,239
$
120,214
$
115,050
$
103,140
$
98,734
NET (CHARGE-OFFS) RECOVERIES
(1) Alabama
$
(268
)
$
98
$
93
$
1,129
$
699
Florida
(36
)
(60
)
(23
)
761
(26
)
Mississippi (2)
(775
)
(1,657
)
(702
)
(266
)
(88
)
Tennessee (3)
(124
)
(195
)
(202
)
31
(424
)
Texas
(16
)
76
(175
)
35
(24
)
Total net (charge-offs) recoveries
$
(1,219
)
$
(1,738
)
$
(1,009
)
$
1,690
$
137
(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, 2023 ($ in thousands) (unaudited) Quarter
Ended FINANCIAL RATIOS AND OTHER
DATA 3/31/2023 12/31/2022 9/30/2022
6/30/2022 3/31/2022 Return on average equity
13.39
%
-9.05
%
10.48
%
8.55
%
6.91
%
Return on average tangible equity
18.03
%
-12.14
%
13.90
%
11.36
%
9.05
%
Return on average assets
1.10
%
-0.76
%
0.98
%
0.79
%
0.68
%
Interest margin - Yield - FTE
4.87
%
4.40
%
3.71
%
3.01
%
2.69
%
Interest margin - Cost
1.47
%
0.73
%
0.21
%
0.11
%
0.11
%
Net interest margin - FTE
3.39
%
3.66
%
3.50
%
2.90
%
2.58
%
Efficiency ratio (1)
65.60
%
65.85
%
64.96
%
71.89
%
76.44
%
Full-time equivalent employees
2,758
2,738
2,717
2,727
2,725
CREDIT QUALITY RATIOS
(2) Net (recoveries) charge-offs / average loans
0.04
%
0.06
%
0.03
%
-0.06
%
-0.01
%
Provision for credit losses, LHFI / average loans
0.10
%
0.23
%
0.45
%
0.10
%
-0.03
%
Nonaccrual LHFI / (LHFI + LHFS)
0.57
%
0.53
%
0.58
%
0.56
%
0.61
%
Nonperforming assets / (LHFI + LHFS)
0.58
%
0.55
%
0.60
%
0.58
%
0.64
%
Nonperforming assets / (LHFI + LHFS+ other real estate)
0.58
%
0.55
%
0.60
%
0.58
%
0.64
%
ACL LHFI / LHFI
0.98
%
0.99
%
0.99
%
0.94
%
0.95
%
ACL LHFI-commercial / commercial LHFI
0.80
%
0.85
%
0.93
%
0.88
%
0.95
%
ACL LHFI-consumer / consumer andhome mortgage LHFI
1.54
%
1.41
%
1.20
%
1.14
%
0.96
%
ACL LHFI / nonaccrual LHFI
168.90
%
182.22
%
169.37
%
166.22
%
153.32
%
ACL LHFI / nonaccrual LHFI(excl individually analyzed loans)
320.80
%
399.19
%
466.03
%
475.27
%
484.01
%
CAPITAL RATIOS Total
equity / total assets
8.28
%
8.28
%
8.78
%
9.36
%
9.35
%
Tangible equity / tangible assets
6.35
%
6.27
%
6.67
%
7.23
%
7.29
%
Tangible equity / risk-weighted assets
7.94
%
7.61
%
8.15
%
9.16
%
9.79
%
Tier 1 leverage ratio
8.29
%
8.47
%
9.01
%
8.80
%
8.66
%
Common equity tier 1 capital ratio
9.76
%
9.74
%
10.63
%
11.01
%
11.23
%
Tier 1 risk-based capital ratio
10.17
%
10.15
%
11.06
%
11.47
%
11.70
%
Total risk-based capital ratio
11.95
%
11.91
%
12.85
%
13.26
%
13.53
%
STOCK PERFORMANCE Market
value-Close
$
24.70
$
34.91
$
30.63
$
29.19
$
30.39
Book value
$
25.59
$
24.47
$
24.76
$
25.93
$
26.54
Tangible book value
$
19.24
$
18.11
$
18.39
$
19.58
$
20.22
(1) See Note 7 – Non-GAAP Financial Measures in the Notes to
Consolidated Financials for Trustmark’s efficiency ratio
calculation. (2) Excludes PPP loans.
See Notes to
Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands)
(unaudited)
Note 1 - Litigation Settlement
As previously announced, on December 31, 2022, Trustmark
National Bank (“Trustmark”) agreed to a settlement in principle
(the “Settlement”) relating to litigation involving the Stanford
Financial Group that includes a lawsuit initially filed in the
District Court of Harris County, Texas on August 23, 2009 and also
includes other subsequently-filed Stanford-related lawsuits.
Trustmark Corporation, the parent company of Trustmark, has
provided disclosure relating to these matters in its current report
on Form 8-K filed on January 3, 2023, and in its periodic reports
on Forms 10-K and 10-Q throughout the pendency of these
actions.
The parties to the Settlement are, on the one hand, (i) Ralph S.
Janvey, solely in his capacity as the court-appointed receiver (the
“Receiver”) for the Stanford Receivership Estate; (ii) the Official
Stanford Investors Committee; (iii) each of the plaintiffs in the
Rotstain and Smith Actions (as defined below); and, on the other
hand, (iv) Trustmark.
Under the terms of the Settlement, the parties agreed to settle
and dismiss Rotstain, et al. v. Trustmark National Bank, et al., CA
No. 4-22-CV-00800 (S.D. Tex.) (the “Rotstain Action”), Smith et al.
v. Independent Bank, et al., CA No. 4-20-CV-00675 (S.D. Tex.) (the
“Smith Action”), and all current or future claims arising from or
related to Stanford. In addition, the Settlement provides that the
parties will request dismissal of Jackson, et al., v. Cox, et al.,
CA No. 3:10-CV-0328 (N.D. Tex.) (the “Jackson Action” and,
collectively with the Rotstain Action and the Smith Action, the
“Actions”) pursuant to the terms of the bar orders described below.
If the Settlement, including the bar orders described below, is
approved by the Court and is not subject to further appeal,
Trustmark will make a one-time cash payment of $100.0 million to
the Receiver. Trustmark was relieved of pre-trial deadlines and the
February 27, 2023 trial setting in the Rotstain Action pending
final Court approval of a Settlement Agreement reflecting the terms
of the Settlement and pending entry of the bar orders. The Smith
and Jackson Actions are currently stayed.
The Settlement included the parties’ agreement to seek the
Northern District of Texas District Court’s entry of bar orders
prohibiting any continued or future claims against Trustmark and
its related parties relating to Stanford, whether asserted to date
or not. The bar orders therefore would prohibit all litigation
relating to Stanford described in Trustmark Corporation’s SEC
periodic reports, including the Actions and any pending matters, as
well as any actions relating to Stanford that may be brought in the
future. Final Court approval of these bar orders is a condition of
the Settlement.
The Settlement was also subject to the execution and delivery of
a definitive Settlement Agreement reflecting the terms of the
Settlement, which was fully executed by the parties on January 13,
2023, and notice to Stanford’s investor claimants, which the
Receiver has effectuated. The Settlement is also subject to final,
non-appealable approval by the U.S. District Court for the Northern
District of Texas. That Court has scheduled a hearing to approve
the Settlement for May 3, 2023, but the timing of any final
decision by the Court is subject to the discretion of the Court and
any appeal. Robert Allen Stanford (founder of the Stanford
Financial Group) is the only person or entity who filed an
objection to the Settlement. The Court has previously overruled
objections filed by Mr. Stanford in connection with prior
Stanford-related settlements. While Trustmark believes that the
Settlement is consistent with the terms of prior Stanford-related
settlements that have been approved by the Court and were not
successfully appealed, it is possible that the Court may decide not
to approve the Settlement Agreement or that the Fifth Circuit Court
of Appeals could decide to accept an appeal thereof.
The Settlement Agreement provides that Trustmark makes no
admission of liability or wrongdoing in connection with any
Stanford matter. As has been the case throughout the pendency of
the Actions, Trustmark expressly denies any liability or wrongdoing
with respect to any matter alleged in regard of the
multi-billion-dollar Ponzi scheme operated by Stanford for almost
20 years. Trustmark’s relationship with Stanford consisted of
ordinary banking services provided to business deposit
customers.
Trustmark and Trustmark Corporation determined that it was in
the best interest of Trustmark, Trustmark Corporation and the
shareholders of Trustmark Corporation to enter into the Settlement
and the Settlement Agreement to eliminate the risk, ongoing
expense, uncertainty as to ultimate outcome, and imposition on
management and the business of Trustmark of further litigation of
the Actions and related Stanford claims.
As the time of the entry into the Settlement, Trustmark
Corporation recognized $100.0 million of litigation settlement
expense, as well as an additional $750 thousand in legal fees,
which were included in noninterest expense related to the Stanford
litigation during the fourth quarter of 2022. Trustmark Corporation
expects that the Settlement will be tax deductible. Trustmark
remains substantially above levels considered to be
well-capitalized under all relevant standards.
The foregoing description of the Settlement Agreement does not
purport to be complete and is qualified in its entirety by
reference to the full text of the Settlement Agreement, a copy of
which was filed as an exhibit to Trustmark Corporation’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2022,
which was filed on February 16, 2023.
TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands)
(unaudited)
Note 2 - Securities Available for Sale and Held to
Maturity
The following table is a summary of the estimated fair value of
securities available for sale and the amortized cost of securities
held to maturity:
3/31/2023
12/31/2022
9/30/2022
6/30/2022
3/31/2022
SECURITIES
AVAILABLE FOR SALE
U.S. Treasury securities
$
386,903
$
391,513
$
416,278
$
419,696
$
361,822
U.S. Government agency obligations
7,254
7,766
9,116
11,947
12,623
Obligations of states and political
subdivisions
4,907
4,862
4,763
5,179
5,359
Mortgage-backed securities
Residential mortgage pass-through
securities
Guaranteed by GNMA
26,851
27,097
28,164
32,240
35,117
Issued by FNMA and FHLMC
1,317,848
1,345,463
1,718,057
1,888,546
2,038,331
Other residential mortgage-backed
securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
108,192
115,140
126,138
144,158
164,506
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
132,207
132,241
141,970
142,598
400,488
Total securities available for sale
$
1,984,162
$
2,024,082
$
2,444,486
$
2,644,364
$
3,018,246
SECURITIES HELD
TO MATURITY
U.S. Treasury securities
$
28,486
$
28,295
$
—
$
—
$
—
Obligations of states and political
subdivisions
4,507
4,510
4,512
5,320
7,324
Mortgage-backed securities
Residential mortgage pass-through
securities
Guaranteed by GNMA
4,336
4,442
4,527
4,624
4,831
Issued by FNMA and FHLMC
497,854
509,311
179,375
185,554
192,373
Other residential mortgage-backed
securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
179,334
188,201
197,923
210,479
224,012
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
759,821
759,755
770,648
731,777
179,058
Total securities held to maturity
$
1,474,338
$
1,494,514
$
1,156,985
$
1,137,754
$
607,598
During the fourth quarter of 2022, Trustmark reclassified $422.9
million of securities available for sale to securities held to
maturity. The securities were transferred at fair value, which
became the cost basis for the securities held to maturity. At the
date of transfer, the net unrealized holding loss on the available
for sale securities totaled approximately $57.1 million ($42.8
million, net of tax). The net unrealized holding loss will be
amortized over the remaining life of the securities as a yield
adjustment in a manner consistent with the amortization or
accretion of the original purchase premium or discount on the
associated security. There were no gains or losses recognized as a
result of the transfer.
During the second quarter of 2022, Trustmark reclassified $343.1
million of securities available for sale to securities held to
maturity. The securities were transferred at fair value, which
became the cost basis for the securities held to maturity. At the
date of transfer, the net unrealized holding loss on the available
for sale securities totaled approximately $34.8 million ($26.1
million, net of tax). The net unrealized holding loss will be
amortized over the remaining life of the securities as a yield
adjustment in a manner consistent with the amortization or
accretion of the original purchase premium or discount on the
associated security. There were no gains or losses recognized as a
result of the transfer.
At March 31, 2023, the net unamortized, unrealized loss included
in accumulated other comprehensive income (loss) in the
accompanying balance sheet for securities held to maturity
transferred from securities available for sale totaled
approximately $88.5 million ($66.3 million, net of tax).
Management continues to focus on asset quality as one of the
strategic goals of the securities portfolio, which is evidenced by
the investment of 99.8% of the portfolio in GSE-backed obligations
and other Aaa rated securities as determined by Moody’s. None of
the securities owned by Trustmark are collateralized by assets
which are considered sub-prime. Furthermore, outside of stock
ownership in the Federal Home Loan Bank of Dallas, Federal Home
Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not
hold any other equity investment in a GSE.
TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands)
(unaudited)
Note 3 – Loan Composition
LHFI consisted of the following during the periods
presented:
LHFI BY
TYPE
3/31/2023
12/31/2022
9/30/2022
6/30/2022
3/31/2022
Loans secured by real estate:
Construction, land development and other
land loans
$
1,723,772
$
1,719,542
$
1,647,395
$
1,440,058
$
1,273,959
Secured by 1-4 family residential
properties
2,822,048
2,775,847
2,597,112
2,424,962
2,106,998
Secured by nonfarm, nonresidential
properties
3,375,579
3,278,830
3,206,946
3,178,079
2,975,039
Other real estate secured
847,527
742,538
593,119
555,311
715,939
Commercial and industrial loans
1,882,360
1,821,259
1,689,532
1,551,001
1,495,060
Consumer loans
162,911
166,425
163,412
160,716
154,215
State and other political subdivision
loans
1,193,727
1,223,863
1,188,703
1,110,795
1,215,023
Other loans
489,271
475,735
499,845
523,918
460,896
LHFI
12,497,195
12,204,039
11,586,064
10,944,840
10,397,129
ACL LHFI
(122,239
)
(120,214
)
(115,050
)
(103,140
)
(98,734
)
Net LHFI
$
12,374,956
$
12,083,825
$
11,471,014
$
10,841,700
$
10,298,395
The following table presents the LHFI composition by region and
reflects each region’s diversified mix of loans:
March 31, 2023
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
$
1,723,772
$
909,783
$
74,625
$
333,986
$
25,741
$
379,637
Secured by 1-4 family residential
properties
2,822,048
135,830
52,395
2,522,951
81,540
29,332
Secured by nonfarm, nonresidential
properties
3,375,579
901,613
204,533
1,462,426
161,899
645,108
Other real estate secured
847,527
264,170
1,985
334,758
7,018
239,596
Commercial and industrial loans
1,882,360
557,088
28,068
768,940
272,153
256,111
Consumer loans
162,911
23,109
9,401
99,817
19,172
11,412
State and other political subdivision
loans
1,193,727
74,925
62,353
845,902
27,380
183,167
Other loans
489,271
101,083
9,165
262,889
53,156
62,978
Loans
$
12,497,195
$
2,967,601
$
442,525
$
6,631,669
$
648,059
$
1,807,341
CONSTRUCTION,
LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots
$
66,925
$
31,642
$
10,281
$
15,010
$
2,220
$
7,772
Development
142,477
74,820
1,379
30,507
6,773
28,998
Unimproved land
103,649
22,480
14,148
31,056
4,754
31,211
1-4 family construction
369,163
212,970
19,447
91,177
11,994
33,575
Other construction
1,041,558
567,871
29,370
166,236
—
278,081
Construction, land development and other
land loans
$
1,723,772
$
909,783
$
74,625
$
333,986
$
25,741
$
379,637
TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands)
(unaudited)
Note 3 – Loan Composition (continued)
March 31, 2023
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
$
347,775
$
124,551
$
26,625
$
113,299
$
21,143
$
62,157
Office
292,032
102,166
16,905
105,561
10,255
57,145
Hotel/motel
290,681
168,832
40,506
53,942
27,401
—
Mini-storage
154,053
28,261
2,058
104,063
481
19,190
Industrial
333,132
69,107
17,524
105,769
2,774
137,958
Health care
70,317
40,435
—
27,002
340
2,540
Convenience stores
33,226
7,318
592
14,709
582
10,025
Nursing homes/senior living
449,014
152,155
—
202,163
5,423
89,273
Other
125,798
40,814
9,840
53,248
8,696
13,200
Total non-owner occupied loans
2,096,028
733,639
114,050
779,756
77,095
391,488
Owner-occupied:
Office
167,317
43,797
36,759
49,046
10,104
27,611
Churches
68,028
15,531
4,592
38,625
6,697
2,583
Industrial warehouses
168,429
17,468
4,644
43,359
16,083
86,875
Health care
144,201
11,397
6,272
105,568
2,323
18,641
Convenience stores
133,875
12,194
21,451
63,187
235
36,808
Retail
94,435
11,194
9,588
44,745
18,987
9,921
Restaurants
55,190
4,247
4,105
31,642
11,931
3,265
Auto dealerships
47,930
6,470
222
23,688
17,550
—
Nursing homes/senior living
257,998
32,615
—
199,183
—
26,200
Other
142,148
13,061
2,850
83,627
894
41,716
Total owner-occupied loans
1,279,551
167,974
90,483
682,670
84,804
253,620
Loans secured by nonfarm, nonresidential
properties
$
3,375,579
$
901,613
$
204,533
$
1,462,426
$
161,899
$
645,108
Note 4 – Yields on Earning Assets and Interest-Bearing
Liabilities
The following table illustrates the yields on earning assets by
category as well as the rates paid on interest-bearing liabilities
on a tax equivalent basis:
Quarter Ended
3/31/2023
12/31/2022
9/30/2022
6/30/2022
3/31/2022
Securities – taxable
1.85
%
1.71
%
1.62
%
1.50
%
1.37
%
Securities – nontaxable
4.00
%
3.95
%
3.97
%
4.00
%
3.97
%
Securities – total
1.86
%
1.72
%
1.63
%
1.50
%
1.38
%
PPP loans
—
12.39
%
7.51
%
4.16
%
2.35
%
Loans - LHFI & LHFS
5.79
%
5.27
%
4.48
%
3.79
%
3.58
%
Loans - total
5.79
%
5.27
%
4.48
%
3.79
%
3.58
%
Fed funds sold & reverse
repurchases
5.11
%
4.29
%
3.51
%
3.65
%
—
Other earning assets
4.09
%
3.76
%
1.82
%
0.78
%
0.18
%
Total earning assets
4.87
%
4.40
%
3.71
%
3.01
%
2.69
%
Interest-bearing deposits
1.53
%
0.71
%
0.20
%
0.11
%
0.11
%
Fed funds purchased & repurchases
4.49
%
3.44
%
1.95
%
0.24
%
0.13
%
Other borrowings
4.87
%
3.73
%
2.89
%
2.52
%
2.26
%
Total interest-bearing liabilities
1.98
%
1.03
%
0.31
%
0.17
%
0.16
%
Total Deposits
1.13
%
0.51
%
0.14
%
0.07
%
0.07
%
Net interest margin
3.39
%
3.66
%
3.50
%
2.90
%
2.58
%
Net interest margin excluding PPP loans
and the FRB balance
3.36
%
3.66
%
3.53
%
3.06
%
2.88
%
TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands)
(unaudited)
Note 4 – Yields on Earning Assets and Interest-Bearing
Liabilities (continued)
Reflected in the table above are yields on earning assets and
liabilities, along with the net interest margin which equals
reported net interest income-FTE, annualized, as a percent of
average earning assets. In addition, the table includes net
interest margin excluding PPP loans and the balance held at the
Federal Reserve Bank of Atlanta (FRB), which equals reported net
interest income-FTE excluding interest income on PPP loans and the
FRB balance, annualized, as a percent of average earning assets
excluding average PPP loans and the FRB balance.
At March 31, 2023 and December 31, 2022, the average FRB balance
totaled $555.5 million and $299.2 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
decreased 30 basis points when compared to the fourth quarter of
2022, totaling 3.36% for the first quarter of 2023. The decrease in
the net interest margin excluding PPP loans and the FRB balance was
due to increased costs of interest-bearing deposits, which was
partially offset by increases in the yields on the loans held for
investment and held for sale portfolio and the securities
portfolio.
Note 5 – Mortgage Banking
Trustmark utilizes a portfolio of exchange-traded derivative
instruments, such as Treasury note futures contracts and option
contracts, to achieve a fair value return that offsets the changes
in fair value of mortgage servicing rights (MSR) attributable to
interest rates. These transactions are considered freestanding
derivatives that do not otherwise qualify for hedge accounting
under generally accepted accounting principles (GAAP). Changes in
the fair value of these exchange-traded derivative instruments,
including administrative costs, are recorded in noninterest income
in mortgage banking, net and are offset by the changes in the fair
value of the MSR. The MSR fair value represents the present value
of future cash flows, which among other things includes decay and
the effect of changes in interest rates. Ineffectiveness of hedging
the MSR fair value is measured by comparing the change in value of
hedge instruments to the change in the fair value of the MSR asset
attributable to changes in interest rates and other market driven
changes in valuation inputs and assumptions. The impact of this
strategy resulted in a net negative ineffectiveness of $1.8 million
during the first quarter of 2023.
The following table illustrates the components of mortgage
banking revenues included in noninterest income in the accompanying
income statements:
Quarter Ended
3/31/2023
12/31/2022
9/30/2022
6/30/2022
3/31/2022
Mortgage servicing income, net
$
6,785
$
6,636
$
6,669
$
6,557
$
6,429
Change in fair value-MSR from runoff
(1,145
)
(2,981
)
(3,462
)
(3,806
)
(3,785
)
Gain on sales of loans, net
3,797
3,328
4,597
6,030
6,223
Mortgage banking income before hedge
ineffectiveness
9,437
6,983
7,804
8,781
8,867
Change in fair value-MSR from market
changes
(3,972
)
(3,348
)
10,770
8,739
22,020
Change in fair value of derivatives
2,174
(227
)
(11,698
)
(9,371
)
(21,014
)
Net positive (negative) hedge
ineffectiveness
(1,798
)
(3,575
)
(928
)
(632
)
1,006
Mortgage banking, net
$
7,639
$
3,408
$
6,876
$
8,149
$
9,873
TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands)
(unaudited)
Note 6 – Other Noninterest Income and Expense
Other noninterest income consisted of the following for the
periods presented:
Quarter Ended
3/31/2023
12/31/2022
9/30/2022
6/30/2022
3/31/2022
Partnership amortization for tax credit
purposes
$
(1,961
)
$
(1,869
)
$
(1,531
)
$
(1,475
)
$
(1,336
)
Increase in life insurance cash surrender
value
1,693
1,687
1,676
1,683
1,627
Other miscellaneous income
2,782
2,493
2,273
1,699
2,915
Total other, net
$
2,514
$
2,311
$
2,418
$
1,907
$
3,206
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
3/31/2023
12/31/2022
9/30/2022
6/30/2022
3/31/2022
Loan expense (1)
$
2,538
$
2,908
$
2,866
$
2,947
$
3,528
Amortization of intangibles
288
312
312
328
482
FDIC assessment expense
2,370
2,130
1,945
1,810
1,500
Other real estate expense, net
172
18
497
623
35
Other miscellaneous expense
9,443
9,767
8,117
7,782
7,935
Total other expense (1)
$
14,811
$
15,135
$
13,737
$
13,490
$
13,480
(1) During the first quarter of 2023,
Trustmark reclassified its debit card transaction fees from other
expense to services and fees. Prior periods have been reclassified
accordingly.
Note 7 – Non-GAAP Financial Measures
In addition to capital ratios defined by GAAP and banking
regulators, Trustmark utilizes various tangible common equity
measures when evaluating capital utilization and adequacy. Tangible
common equity, as defined by Trustmark, represents common equity
less goodwill and identifiable intangible assets. Trustmark’s
Common Equity Tier 1 capital includes common stock, capital surplus
and retained earnings, and is reduced by goodwill and other
intangible assets, net of associated net deferred tax liabilities
as well as disallowed deferred tax assets and threshold deductions
as applicable.
Trustmark believes these measures are important because they
reflect the level of capital available to withstand unexpected
market conditions. Additionally, presentation of these measures
allows readers to compare certain aspects of Trustmark’s
capitalization to other organizations. These ratios differ from
capital measures defined by banking regulators principally in that
the numerator excludes shareholders’ equity associated with
preferred securities, the nature and extent of which varies across
organizations. In Management’s experience, many stock analysts use
tangible common equity measures in conjunction with more
traditional bank capital ratios to compare capital adequacy of
banking organizations with significant amounts of goodwill or other
intangible assets, typically stemming from the use of the purchase
accounting method in accounting for mergers and acquisitions.
These calculations are intended to complement the capital ratios
defined by GAAP and banking regulators. Because GAAP does not
include these capital ratio measures, Trustmark believes there are
no comparable GAAP financial measures to these tangible common
equity ratios. Despite the importance of these measures to
Trustmark, there are no standardized definitions for them and, as a
result, Trustmark’s calculations may not be comparable with other
organizations. Also, there may be limits in the usefulness of these
measures to investors. As a result, Trustmark encourages readers to
consider its audited consolidated financial statements and the
notes related thereto in their entirety and not to rely on any
single financial measure.
TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands
except per share data) (unaudited)
Note 7 – Non-GAAP Financial Measures (continued)
Quarter Ended
3/31/2023
12/31/2022
9/30/2022
6/30/2022
3/31/2022
TANGIBLE
EQUITY
AVERAGE BALANCES
Total shareholders' equity
$
1,523,828
$
1,493,291
$
1,606,469
$
1,608,309
$
1,713,752
Less: Goodwill
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
Identifiable intangible assets
(3,523
)
(3,816
)
(4,131
)
(4,436
)
(4,879
)
Total average tangible equity
$
1,136,068
$
1,105,238
$
1,218,101
$
1,219,636
$
1,324,636
PERIOD END BALANCES
Total shareholders' equity
$
1,562,099
$
1,492,268
$
1,508,945
$
1,586,696
$
1,631,382
Less: Goodwill
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
Identifiable intangible assets
(3,352
)
(3,640
)
(3,952
)
(4,264
)
(4,591
)
Total tangible equity
(a)
$
1,174,510
$
1,104,391
$
1,120,756
$
1,198,195
$
1,242,554
TANGIBLE
ASSETS
Total assets
$
18,877,178
$
18,015,478
$
17,190,634
$
16,951,510
$
17,441,551
Less: Goodwill
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
Identifiable intangible assets
(3,352
)
(3,640
)
(3,952
)
(4,264
)
(4,591
)
Total tangible assets
(b)
$
18,489,589
$
17,627,601
$
16,802,445
$
16,563,009
$
17,052,723
Risk-weighted assets
(c)
$
14,793,893
$
14,521,078
$
13,748,819
$
13,076,981
$
12,691,545
NET INCOME (LOSS)
ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income (loss)
$
50,300
$
(34,063
)
$
42,455
$
34,284
$
29,211
Plus: Intangible amortization net of
tax
216
234
234
246
362
Net income (loss) adjusted for intangible
amortization
$
50,516
$
(33,829
)
$
42,689
$
34,530
$
29,573
Period end common shares outstanding
(d)
61,048,516
60,977,686
60,953,864
61,201,123
61,463,392
TANGIBLE COMMON
EQUITY MEASUREMENTS
Return on average tangible equity (1)
18.03
%
-12.14
%
13.90
%
11.36
%
9.05
%
Tangible equity/tangible assets
(a)/(b)
6.35
%
6.27
%
6.67
%
7.23
%
7.29
%
Tangible equity/risk-weighted assets
(a)/(c)
7.94
%
7.61
%
8.15
%
9.16
%
9.79
%
Tangible book value
(a)/(d)*1,000
$
19.24
$
18.11
$
18.39
$
19.58
$
20.22
COMMON EQUITY
TIER 1 CAPITAL (CET1)
Total shareholders' equity
$
1,562,099
$
1,492,268
$
1,508,945
$
1,586,696
$
1,631,382
CECL transition adjustment
13,000
19,500
19,500
19,500
19,500
AOCI-related adjustments
242,381
275,403
306,412
207,142
148,656
CET1 adjustments and deductions:
Goodwill net of associated deferred tax
liabilities (DTLs)
(370,234
)
(370,241
)
(370,217
)
(370,229
)
(370,240
)
Other adjustments and deductions for CET1
(2)
(3,275
)
(3,258
)
(3,506
)
(3,757
)
(4,015
)
CET1 capital
(e)
1,443,971
1,413,672
1,461,134
1,439,352
1,425,283
Additional tier 1 capital instruments plus
related surplus
60,000
60,000
60,000
60,000
60,000
Tier 1 capital
$
1,503,971
$
1,473,672
$
1,521,134
$
1,499,352
$
1,485,283
Common equity tier 1 capital ratio
(e)/(c)
9.76
%
9.74
%
10.63
%
11.01
%
11.23
%
(1)
Calculation = ((net income (loss) adjusted
for intangible amortization/number of days in period)*number of
days in year)/total average tangible equity.
(2)
Includes other intangible assets, net of
DTLs, disallowed deferred tax assets (DTAs), threshold deductions
and transition adjustments, as applicable.
TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands)
(unaudited)
Note 7 – Non-GAAP Financial Measures (continued)
Trustmark discloses certain non-GAAP financial measures because
Management uses these measures for business planning purposes,
including to manage Trustmark’s business against internal projected
results of operations and to measure Trustmark’s performance.
Trustmark views these as measures of our core operating business,
which exclude the impact of the items detailed below, as these
items are generally not operational in nature. These non-GAAP
financial measures also provide another basis for comparing
period-to-period results as presented in the accompanying selected
financial data table and the audited consolidated financial
statements by excluding potential differences caused by
non-operational and unusual or non-recurring items. Readers are
cautioned that these adjustments are not permitted under GAAP.
Trustmark encourages readers to consider its consolidated financial
statements and the notes related thereto in their entirety, and not
to rely on any single financial measure.
The following table presents pre-provision net revenue (PPNR)
during the periods presented:
Quarter Ended
3/31/2023
12/31/2022
9/30/2022
6/30/2022
3/31/2022
Net interest income (GAAP)
$
137,595
$
146,583
$
136,105
$
112,676
$
99,344
Noninterest income (GAAP)
51,377
45,170
52,606
53,253
54,115
Pre-provision revenue
(a)
$
188,972
$
191,753
$
188,711
$
165,929
$
153,459
Noninterest expense (GAAP)
$
128,327
$
231,229
$
126,698
$
123,767
$
121,519
Less: Litigation settlement expense
—
(100,750
)
—
—
—
Adjusted noninterest expense - PPNR
(Non-GAAP)
(b)
$
128,327
$
130,479
$
126,698
$
123,767
$
121,519
PPNR (Non-GAAP)
(a)-(b)
$
60,645
$
61,274
$
62,013
$
42,162
$
31,940
The following table presents Trustmark’s calculation of its
efficiency ratio for the periods presented:
Quarter Ended
3/31/2023
12/31/2022
9/30/2022
6/30/2022
3/31/2022
Total noninterest expense (GAAP)
$
128,327
$
231,229
$
126,698
$
123,767
$
121,519
Less: Other real estate expense, net
(172
)
(18
)
(497
)
(623
)
(35
)
Amortization of intangibles
(288
)
(312
)
(312
)
(328
)
(482
)
Charitable contributions resulting in
state tax credits
(325
)
(375
)
(375
)
(375
)
(375
)
Litigation settlement expense
—
(100,750
)
—
—
—
Adjusted noninterest expense
(Non-GAAP)
(c)
$
127,542
$
129,774
$
125,514
$
122,441
$
120,627
Net interest income (GAAP)
$
137,595
$
146,583
$
136,105
$
112,676
$
99,344
Add: Tax equivalent adjustment
3,477
3,451
2,975
2,916
3,003
Net interest income-FTE (Non-GAAP)
(a)
$
141,072
$
150,034
$
139,080
$
115,592
$
102,347
Noninterest income (GAAP)
$
51,377
$
45,170
$
52,606
$
53,253
$
54,115
Add: Partnership amortization for tax
credit purposes
1,961
1,869
1,531
1,475
1,336
Adjusted noninterest income (Non-GAAP)
(b)
$
53,338
$
47,039
$
54,137
$
54,728
$
55,451
Adjusted revenue (Non-GAAP)
(a)+(b)
$
194,410
$
197,073
$
193,217
$
170,320
$
157,798
Efficiency ratio (Non-GAAP)
(c)/((a)+(b))
65.60
%
65.85
%
64.96
%
71.89
%
76.44
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230425005438/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
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