Performance Reflects Continued Loan and
Deposit Growth, Solid Credit Quality, and Diversified Revenue
Base
Trustmark Corporation (NASDAQGS:TRMK) reported net income of
$36.1 million in the fourth quarter of 2023, representing diluted
earnings per share of $0.59. For the full year, Trustmark’s net
income totaled $165.5 million, representing diluted earnings per
share of $2.70. Trustmark’s net income in 2023 produced a return on
average tangible equity of 14.04% and a return on average assets of
0.89%. Trustmark’s Board of Directors declared a quarterly cash
dividend of $0.23 per share payable March 15, 2024, to shareholders
of record on March 1, 2024.
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2023 Highlights
- Loans held for investment (HFI) increased $746.5 million, or
6.1%, in 2023
- Net charge-offs represented 0.06% of average loans in 2023
- Deposits increased $1.1 billion, or 7.8%, in 2023
- Net interest income (FTE) totaled $566.3 million, up 11.7% in
2023 to produce a net interest margin of 3.32%, up 15 basis points
from 2022
- Insurance revenue increased 7.2% while wealth management
remained stable
- Noninterest income totaled $207.0 million and represented 27.2%
of total revenue
- Total revenue increased $60.0 million, or 8.6%, to $759.8
million in 2023
- Continued technology investments to enhance efficiency and
productivity
- Noninterest expense totaled $537.9 million in 2023; adjusted
noninterest expense totaled $527.9 million, up 5.9% from the prior
year; please refer to the Consolidated Financial Information Note 7
– Non-GAAP Financial Measures
Duane A. Dewey, President and CEO, commented, “We continued to
make significant progress across the organization. Our performance
reflected solid loan production and credit quality, and continued
deposit growth in an increasingly competitive marketplace. We
achieved double-digit growth in net interest income in 2023 while
noninterest income continued to expand thanks in part to another
record year in our insurance business and commendable results in
our banking, mortgage banking and wealth management businesses. We
have a tremendous team of associates focused on expanding customer
relationships and demonstrating the value Trustmark can provide as
their trusted financial partner. Looking forward, we will continue
to pursue opportunities to redesign workflows and restructure the
organization to further leverage investments in technology that
will broaden our reach, enhance the customer experience, and
improve efficiency. We remain focused on providing the financial
services and advice our customers have come to expect while
building long-term value for our shareholders.”
Balance Sheet Management
- Loans HFI increased $140.3 million, or 1.1%, during the
quarter
- Total deposits increased $467.8 million, or 3.1%,
linked-quarter
- Maintained strong capital position with CET1 ratio of 10.04%
and total risk-based capital ratio of 12.29%
Loans HFI totaled $13.0 billion at December 31, 2023, reflecting
an increase of $140.3 million, or 1.1%, linked-quarter and $746.5
million, or 6.1%, year-over-year. The linked-quarter growth
reflected increases in commercial and industrial loans, other real
estate secured loans, other loans and leases, and state and other
political subdivision loans offset in part by declines in
construction, land development and other land loans, and loans
secured by nonfarm, nonresidential properties. Trustmark’s loan
portfolio remains well-diversified by loan type and geography.
Deposits totaled $15.6 billion at December 31, 2023, up $467.8
million, or 3.1%, from the prior quarter and up $1.1 billion, or
7.8%, year-over-year. Trustmark continues to maintain a strong
liquidity position as loans HFI represented 83.2% of total deposits
at year-end 2023. Noninterest-bearing deposits represented 20.5% of
total deposits at December 31, 2023. Interest-bearing deposit costs
totaled 2.67% for the fourth quarter, an increase of 28 basis
points linked-quarter. The total cost of interest-bearing
liabilities was 2.89% for the fourth quarter of 2023, an increase
of 17 basis points from the prior quarter.
Trustmark did not repurchase any of its common shares in 2023.
As previously announced, Trustmark’s Board of Directors authorized
a stock repurchase program effective January 1, 2024, under which
$50.0 million of Trustmark’s outstanding shares may be acquired
through December 31, 2024. 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 December 31, 2023, Trustmark’s tangible equity to
tangible assets ratio was 6.95%, while the total risk-based capital
ratio was 12.29%. Tangible book value per share was $20.87 at
December 31, 2023, up 7.7% from the prior quarter and 15.2% from
the prior year.
Credit Quality
- Net charge-offs totaled $2.2 million, representing 0.07% of
average loans in the fourth quarter
- Provision for credit losses for loans HFI was $7.6 million in
the fourth quarter
- Allowance for credit losses (ACL) represented 1.08% of loans
HFI and 249.31% of nonperforming loans, excluding individually
analyzed loans at year-end
Nonaccrual loans totaled $100.0 million at December 31, 2023, an
increase of $9.1 million from the prior quarter and $34.0 million
year-over-year. Other real estate totaled $6.9 million, reflecting
increases of $1.4 million and $4.9 million from the prior quarter
and prior year, respectively. Collectively, nonperforming assets
totaled $106.9 million, representing 0.81% of loans HFI and held
for sale (HFS) at December 31, 2023.
The provision for credit losses for loans HFI was $7.6 million
in the fourth quarter and was primarily attributable to loan
growth, net adjustments to the qualitative factors, and changes in
the macroeconomic forecast. The provision for credit losses for
off-balance sheet credit exposures was a negative $888 thousand in
the fourth quarter. Collectively, the provision for credit losses
totaled $6.7 million in the fourth quarter compared to $8.4 million
in the prior quarter and $12.1 million in the fourth quarter of
2022.
Allocation of Trustmark’s $139.4 million ACL on loans HFI
represented 0.85% of commercial loans and 1.81% of consumer and
home mortgage loans, resulting in an ACL to total loans HFI of
1.08% at December 31, 2023. Management believes the level of the
ACL is commensurate with the credit losses currently expected in
the loan portfolio.
Revenue Generation
- Net interest income (FTE) totaled $140.0 million in the fourth
quarter, down 1.3% linked-quarter
- Net interest margin totaled 3.25% in the fourth quarter, down 4
basis points from the prior quarter
- Noninterest income totaled $49.8 million, representing 26.7% of
total revenue in the fourth quarter
Revenue in the fourth quarter totaled $186.5 million, a decrease
of 2.3% from the prior quarter and 2.7% from the same quarter in
the prior year. The linked-quarter decrease reflects lower
noninterest income and net interest income while the year-over-year
decline reflects growth in noninterest income being more than
offset by lower net interest income. In 2023, revenue totaled
$759.8 million, an increase of 8.6% from the prior year.
Net interest income (FTE) in the fourth quarter totaled $140.0
million, resulting in a net interest margin of 3.25%, down 4 basis
points from the prior quarter. The decrease in the net interest
margin was primarily due to increased costs of interest-bearing
liabilities, which was offset in part by higher yields on the loans
HFI and HFS portfolio.
Noninterest income in the fourth quarter totaled $49.8 million,
a decrease of $2.4 million from the prior quarter and an increase
of $4.6 million from the prior year. The linked-quarter change
reflects a seasonal decline in insurance revenue, as well as lower
mortgage banking and wealth management revenue. The increase in
noninterest income year-over-year was well diversified across all
fee-based categories.
Mortgage loan production in the fourth quarter totaled $271.9
million, a decline of 30.3% linked-quarter and 30.4%
year-over-year. Mortgage banking revenue totaled $5.5 million in
the fourth quarter, a decrease of $939 thousand from the prior
quarter and an increase of $2.1 million year-over-year. The
linked-quarter decline is attributable to an increase in net
negative hedge ineffectiveness. In 2023, mortgage loan production
totaled $1.5 billion, down 31.6% from the prior year. Mortgage
banking revenue totaled $26.2 million in 2023, down $2.1 million
from the prior year.
Insurance revenue in the fourth quarter totaled $13.2 million, a
seasonal decline of $2.1 million from the prior quarter and an
increase of $1.2 million from the prior year. Insurance revenue in
2023 totaled $57.6 million, up $3.8 million, or 7.2%, from the
prior year. The solid performance during the year reflects an
expanded producer workforce, a hardening of the insurance market,
and the realization of operational efficiencies from investments in
technology and improved processes.
Wealth management revenue totaled $8.7 million in the fourth
quarter, down 1.3% from the prior quarter and up 7.2% from the
prior year. The linked-quarter decline is principally due to
reduced trust management revenue offset in part by increased
brokerage revenue while the year-over-year change is attributable
to increased investment services revenue. In 2023, wealth
management revenue totaled $35.1 million, in line with the prior
year. During 2023, Trustmark selectively expanded its salesforce in
the Houston, Mobile, Jackson, and Florida Panhandle markets.
Noninterest Expense
- Total noninterest expense in the fourth quarter was $136.4
million; adjusted noninterest expense, which excludes ORE expense,
amortization of intangibles, charitable contributions resulting in
state tax credits, reduction in force expense, and litigation
settlement expense, totaled $134.8 million, up $723 thousand from
the prior quarter. Please refer to the Consolidated Financial
Information Note 7 – Non-GAAP Financial Measures
- FDIC assessment expense totaled $4.8 million in the fourth
quarter, up $1.1 million, or 28.7%, from the prior quarter
Salaries and employee benefits expense in the fourth quarter
totaled $78.0 million, an increase of $1.3 million, or 1.7% from
the prior quarter. Excluding reduction in force expense related to
restructuring initiatives of $1.4 million, salaries and benefits
expense totaled $76.6 million, a decline of $69 thousand from the
prior quarter. Total services and fees in the fourth quarter
totaled $27.9 million, unchanged from the prior quarter. Net
occupancy – premises expense during the fourth quarter totaled $7.4
million, unchanged from the prior quarter. Equipment expense
declined 4.4% linked-quarter to total $6.5 million. Other expense
increased $943 thousand, or 6.0%, linked-quarter principally due to
increased FDIC assessment expense.
Additional Information
As previously announced, Trustmark will conduct a conference
call with analysts on Wednesday, January 24, 2024, 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, February 7, 2024, in archived format at the same web
address or by calling (877) 344-7529, passcode 6776577.
Trustmark is a financial services company providing banking and
financial solutions through offices in Alabama, Florida, Georgia,
Mississippi, Tennessee and Texas. Visit trustmark.com for more
information.
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 impacts related to or
resulting from recent bank failures and other economic and industry
volatility, including potential increased regulatory requirements
and costs and potential impacts to macroeconomic conditions, 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 December 31, 2023 ($ in
thousands) (unaudited) Linked Quarter Year
over Year QUARTERLY AVERAGE
BALANCES 12/31/2023 9/30/2023
12/31/2022 $ Change % Change $ Change
% Change Securities AFS-taxable
$
1,986,825
$
2,049,006
$
2,572,675
$
(62,181
)
-3.0
%
$
(585,850
)
-22.8
%
Securities AFS-nontaxable
4,246
4,779
4,828
(533
)
-11.2
%
(582
)
-12.1
%
Securities HTM-taxable
1,430,169
1,445,895
1,268,952
(15,726
)
-1.1
%
161,217
12.7
%
Securities HTM-nontaxable
340
907
4,514
(567
)
-62.5
%
(4,174
)
-92.5
%
Total securities
3,421,580
3,500,587
3,850,969
(79,007
)
-2.3
%
(429,389
)
-11.2
%
Paycheck protection program loans (PPP)
—
—
3,235
—
n/m
(3,235
)
-100.0
%
Loans (includes loans held for sale)
13,010,028
12,926,942
12,006,661
83,086
0.6
%
1,003,367
8.4
%
Fed funds sold and reverse repurchases
121
230
6,566
(109
)
-47.4
%
(6,445
)
-98.2
%
Other earning assets
670,477
682,644
375,190
(12,167
)
-1.8
%
295,287
78.7
%
Total earning assets
17,102,206
17,110,403
16,242,621
(8,197
)
0.0
%
859,585
5.3
%
Allowance for credit losses (ACL), loans held for investment (LHFI)
(133,742
)
(127,915
)
(114,948
)
(5,827
)
-4.6
%
(18,794
)
-16.4
%
Other assets
1,749,069
1,721,310
1,630,085
27,759
1.6
%
118,984
7.3
%
Total assets
$
18,717,533
$
18,703,798
$
17,757,758
$
13,735
0.1
%
$
959,775
5.4
%
Interest-bearing demand deposits
$
5,053,935
$
4,875,714
$
4,719,303
$
178,221
3.7
%
$
334,632
7.1
%
Savings deposits
3,526,600
3,642,158
4,379,673
(115,558
)
-3.2
%
(853,073
)
-19.5
%
Time deposits
3,427,384
3,075,224
1,152,905
352,160
11.5
%
2,274,479
n/m
Total interest-bearing deposits
12,007,919
11,593,096
10,251,881
414,823
3.6
%
1,756,038
17.1
%
Fed funds purchased and repurchases
403,041
414,696
549,406
(11,655
)
-2.8
%
(146,365
)
-26.6
%
Other borrowings
590,765
912,151
530,993
(321,386
)
-35.2
%
59,772
11.3
%
Subordinated notes
123,446
123,391
123,226
55
0.0
%
220
0.2
%
Junior subordinated debt securities
61,856
61,856
61,856
—
0.0
%
—
0.0
%
Total interest-bearing liabilities
13,187,027
13,105,190
11,517,362
81,837
0.6
%
1,669,665
14.5
%
Noninterest-bearing deposits
3,296,351
3,429,815
4,177,113
(133,464
)
-3.9
%
(880,762
)
-21.1
%
Other liabilities
641,662
585,908
569,992
55,754
9.5
%
71,670
12.6
%
Total liabilities
17,125,040
17,120,913
16,264,467
4,127
0.0
%
860,573
5.3
%
Shareholders' equity
1,592,493
1,582,885
1,493,291
9,608
0.6
%
99,202
6.6
%
Total liabilities and equity
$
18,717,533
$
18,703,798
$
17,757,758
$
13,735
0.1
%
$
959,775
5.4
%
n/m - percentage changes greater than +/- 100% are
considered not meaningful
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED
FINANCIAL INFORMATION December 31, 2023 ($ in
thousands) (unaudited) Linked Quarter
Year over Year PERIOD END
BALANCES 12/31/2023 9/30/2023
12/31/2022 $ Change % Change $ Change
% Change Cash and due from banks
$
975,543
$
750,492
$
734,787
$
225,051
30.0
%
$
240,756
32.8
%
Fed funds sold and reverse repurchases
—
—
4,000
—
n/m
(4,000
)
-100.0
%
Securities available for sale
1,762,878
1,766,174
2,024,082
(3,296
)
-0.2
%
(261,204
)
-12.9
%
Securities held to maturity
1,426,279
1,438,287
1,494,514
(12,008
)
-0.8
%
(68,235
)
-4.6
%
PPP loans
—
—
—
—
n/m
—
n/m
Loans held for sale (LHFS)
184,812
169,244
135,226
15,568
9.2
%
49,586
36.7
%
Loans held for investment (LHFI)
12,950,524
12,810,259
12,204,039
140,265
1.1
%
746,485
6.1
%
ACL LHFI
(139,367
)
(134,031
)
(120,214
)
(5,336
)
-4.0
%
(19,153
)
-15.9
%
Net LHFI
12,811,157
12,676,228
12,083,825
134,929
1.1
%
727,332
6.0
%
Premises and equipment, net
232,537
230,718
212,365
1,819
0.8
%
20,172
9.5
%
Mortgage servicing rights
131,870
142,379
129,677
(10,509
)
-7.4
%
2,193
1.7
%
Goodwill
384,237
384,237
384,237
—
0.0
%
—
0.0
%
Identifiable intangible assets
2,965
3,093
3,640
(128
)
-4.1
%
(675
)
-18.5
%
Other real estate
6,867
5,485
1,986
1,382
25.2
%
4,881
n/m
Operating lease right-of-use assets
38,142
39,639
36,301
(1,497
)
-3.8
%
1,841
5.1
%
Other assets
764,902
784,863
770,838
(19,961
)
-2.5
%
(5,936
)
-0.8
%
Total assets
$
18,722,189
$
18,390,839
$
18,015,478
$
331,350
1.8
%
$
706,711
3.9
%
Deposits: Noninterest-bearing
$
3,197,620
$
3,320,124
$
4,093,771
$
(122,504
)
-3.7
%
$
(896,151
)
-21.9
%
Interest-bearing
12,372,143
11,781,799
10,343,877
590,344
5.0
%
2,028,266
19.6
%
Total deposits
15,569,763
15,101,923
14,437,648
467,840
3.1
%
1,132,115
7.8
%
Fed funds purchased and repurchases
405,745
321,799
449,331
83,946
26.1
%
(43,586
)
-9.7
%
Other borrowings
483,230
793,193
1,050,938
(309,963
)
-39.1
%
(567,708
)
-54.0
%
Subordinated notes
123,482
123,427
123,262
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
34,057
34,945
36,838
(888
)
-2.5
%
(2,781
)
-7.5
%
Operating lease liabilities
41,584
42,730
38,932
(1,146
)
-2.7
%
2,652
6.8
%
Other liabilities
340,625
340,615
324,405
10
0.0
%
16,220
5.0
%
Total liabilities
17,060,342
16,820,488
16,523,210
239,854
1.4
%
537,132
3.3
%
Common stock
12,725
12,724
12,705
1
0.0
%
20
0.2
%
Capital surplus
159,688
158,316
154,645
1,372
0.9
%
5,043
3.3
%
Retained earnings
1,709,157
1,687,199
1,600,321
21,958
1.3
%
108,836
6.8
%
Accumulated other comprehensive income (loss), net of tax
(219,723
)
(287,888
)
(275,403
)
68,165
23.7
%
55,680
20.2
%
Total shareholders' equity
1,661,847
1,570,351
1,492,268
91,496
5.8
%
169,579
11.4
%
Total liabilities and equity
$
18,722,189
$
18,390,839
$
18,015,478
$
331,350
1.8
%
$
706,711
3.9
%
n/m - percentage changes greater than +/- 100% are
considered not meaningful
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED
FINANCIAL INFORMATION December 31, 2023 ($ in
thousands except per share data) (unaudited)
Quarter Ended Linked Quarter Year over Year
INCOME STATEMENTS
12/31/2023 9/30/2023 12/31/2022 $
Change % Change $ Change % Change Interest
and fees on LHFS & LHFI-FTE
$
210,288
$
206,523
$
159,566
$
3,765
1.8
%
$
50,722
31.8
%
Interest and fees on PPP loans
—
—
101
—
n/m
(101
)
-100.0
%
Interest on securities-taxable
15,936
16,624
16,577
(688
)
-4.1
%
(641
)
-3.9
%
Interest on securities-tax exempt-FTE
44
58
93
(14
)
-24.1
%
(49
)
-52.7
%
Interest on fed funds sold and reverse repurchases
2
3
71
(1
)
-33.3
%
(69
)
-97.2
%
Other interest income
9,918
8,613
3,556
1,305
15.2
%
6,362
n/m
Total interest income-FTE
236,188
231,821
179,964
4,367
1.9
%
56,224
31.2
%
Interest on deposits
80,847
69,797
18,438
11,050
15.8
%
62,409
n/m
Interest on fed funds purchased and repurchases
5,347
5,375
4,762
(28
)
-0.5
%
585
12.3
%
Other interest expense
9,946
14,713
6,730
(4,767
)
-32.4
%
3,216
47.8
%
Total interest expense
96,140
89,885
29,930
6,255
7.0
%
66,210
n/m
Net interest income-FTE
140,048
141,936
150,034
(1,888
)
-1.3
%
(9,986
)
-6.7
%
Provision for credit losses, LHFI
7,585
8,322
6,902
(737
)
-8.9
%
683
9.9
%
Provision for credit losses, off-balance sheet credit exposures
(888
)
104
5,215
(992
)
n/m
(6,103
)
n/m
Net interest income after provision-FTE
133,351
133,510
137,917
(159
)
-0.1
%
(4,566
)
-3.3
%
Service charges on deposit accounts
11,311
11,074
11,162
237
2.1
%
149
1.3
%
Bank card and other fees
8,502
8,217
8,191
285
3.5
%
311
3.8
%
Mortgage banking, net
5,519
6,458
3,408
(939
)
-14.5
%
2,111
61.9
%
Insurance commissions
13,197
15,303
12,019
(2,106
)
-13.8
%
1,178
9.8
%
Wealth management
8,657
8,773
8,079
(116
)
-1.3
%
578
7.2
%
Other, net
2,579
2,399
2,311
180
7.5
%
268
11.6
%
Securities gains (losses), net
39
—
—
39
n/m
39
n/m
Total noninterest income
49,804
52,224
45,170
(2,420
)
-4.6
%
4,634
10.3
%
Salaries and employee benefits
78,003
76,666
73,469
1,337
1.7
%
4,534
6.2
%
Services and fees (2)
27,906
27,882
27,709
24
0.1
%
197
0.7
%
Net occupancy-premises
7,362
7,383
7,898
(21
)
-0.3
%
(536
)
-6.8
%
Equipment expense
6,517
6,816
6,268
(299
)
-4.4
%
249
4.0
%
Litigation settlement expense (1)
—
6,500
100,750
(6,500
)
-100.0
%
(100,750
)
-100.0
%
Other expense (2)
16,641
15,698
15,135
943
6.0
%
1,506
10.0
%
Total noninterest expense
136,429
140,945
231,229
(4,516
)
-3.2
%
(94,800
)
-41.0
%
Income (loss) before income taxes and tax eq adj
46,726
44,789
(48,142
)
1,937
4.3
%
94,868
n/m
Tax equivalent adjustment
3,306
3,299
3,451
7
0.2
%
(145
)
-4.2
%
Income (loss) before income taxes
43,420
41,490
(51,593
)
1,930
4.7
%
95,013
n/m
Income taxes
7,297
7,461
(17,530
)
(164
)
-2.2
%
24,827
n/m
Net income (loss)
$
36,123
$
34,029
$
(34,063
)
$
2,094
6.2
%
$
70,186
n/m
Per share data Earnings (loss) per share -
basic
$
0.59
$
0.56
$
(0.56
)
$
0.03
5.4
%
$
1.15
n/m
Earnings (loss) per share - diluted
$
0.59
$
0.56
$
(0.56
)
$
0.03
5.4
%
$
1.15
n/m
Dividends per share
$
0.23
$
0.23
$
0.23
—
0.0
%
—
0.0
%
Weighted average shares outstanding Basic
61,070,481
61,069,750
60,969,400
Diluted
61,296,840
61,263,032
61,173,249
Period end shares outstanding
61,071,173
61,070,095
60,977,686
(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 December 31, 2023 ($ in
thousands) (unaudited) Quarter Ended Linked
Quarter Year over Year NONPERFORMING ASSETS (1) 12/31/2023
9/30/2023 12/31/2022 $ Change % Change
$ Change % Change Nonaccrual LHFI Alabama (2)
$
23,271
$
23,530
$
12,300
$
(259
)
-1.1
%
$
10,971
89.2
%
Florida
170
151
227
19
12.6
%
(57
)
-25.1
%
Mississippi (3)
54,615
45,050
24,683
9,565
21.2
%
29,932
n/m
Tennessee (4)
1,802
1,841
5,566
(39
)
-2.1
%
(3,764
)
-67.6
%
Texas
20,150
20,327
23,196
(177
)
-0.9
%
(3,046
)
-13.1
%
Total nonaccrual LHFI
100,008
90,899
65,972
9,109
10.0
%
34,036
51.6
%
Other real estate Alabama (2)
1,397
315
194
1,082
n/m
1,203
n/m
Mississippi (3)
1,242
942
1,769
300
31.8
%
(527
)
-29.8
%
Tennessee (4)
—
—
23
—
n/m
(23
)
-100.0
%
Texas
4,228
4,228
—
—
0.0
%
4,228
n/m
Total other real estate
6,867
5,485
1,986
1,382
25.2
%
4,881
n/m
Total nonperforming assets
$
106,875
$
96,384
$
67,958
$
10,491
10.9
%
$
38,917
57.3
%
LOANS PAST DUE OVER 90 DAYS
(1) LHFI
$
5,790
$
3,804
$
3,929
$
1,986
52.2
%
$
1,861
47.4
%
LHFS-Guaranteed GNMA serviced loans (no obligation to
repurchase)
$
51,243
$
42,532
$
49,320
$
8,711
20.5
%
$
1,923
3.9
%
Quarter Ended Linked Quarter Year over
Year ACL LHFI (1) 12/31/2023 9/30/2023
12/31/2022 $ Change % Change $ Change
% Change Beginning Balance
$
134,031
$
129,298
$
115,050
$
4,733
3.7
%
$
18,981
16.5
%
Provision for credit losses, LHFI
7,585
8,322
6,902
(737
)
-8.9
%
683
9.9
%
Charge-offs
(4,250
)
(7,496
)
(3,893
)
3,246
43.3
%
(357
)
-9.2
%
Recoveries
2,001
3,907
2,155
(1,906
)
-48.8
%
(154
)
-7.1
%
Net (charge-offs) recoveries
(2,249
)
(3,589
)
(1,738
)
1,340
37.3
%
(511
)
-29.4
%
Ending Balance
$
139,367
$
134,031
$
120,214
$
5,336
4.0
%
$
19,153
15.9
%
NET (CHARGE-OFFS) RECOVERIES
(1) Alabama (2)
$
(299
)
$
(165
)
$
98
$
(134
)
-81.2
%
$
(397
)
n/m
Florida
180
21
(60
)
159
n/m
240
n/m
Mississippi (3)
(1,943
)
(1,867
)
(1,657
)
(76
)
-4.1
%
(286
)
-17.3
%
Tennessee (4)
(193
)
2,127
(195
)
(2,320
)
n/m
2
-1.0
%
Texas
6
(3,705
)
76
3,711
n/m
(70
)
-92.1
%
Total net (charge-offs) recoveries
$
(2,249
)
$
(3,589
)
$
(1,738
)
$
1,340
37.3
%
$
(511
)
-29.4
%
(1) Excludes PPP loans. (2) Alabama includes the Georgia
Loan Production Office. (3) Mississippi includes Central and
Southern Mississippi Regions. (4) 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 December 31, 2023 ($ in
thousands) (unaudited) Quarter Ended Year
Ended AVERAGE BALANCES
12/31/2023 9/30/2023 6/30/2023
3/31/2023 12/31/2022 12/31/2023
12/31/2022 Securities AFS-taxable
$
1,986,825
$
2,049,006
$
2,140,505
$
2,187,121
$
2,572,675
$
2,090,201
$
2,932,054
Securities AFS-nontaxable
4,246
4,779
4,796
4,812
4,828
4,657
4,997
Securities HTM-taxable
1,430,169
1,445,895
1,463,086
1,479,283
1,268,952
1,454,450
911,010
Securities HTM-nontaxable
340
907
1,718
4,509
4,514
1,854
5,623
Total securities
3,421,580
3,500,587
3,610,105
3,675,725
3,850,969
3,551,162
3,853,684
PPP loans
—
—
—
—
3,235
—
14,868
Loans (includes loans held for sale)
13,010,028
12,926,942
12,732,057
12,530,449
12,006,661
12,801,531
11,236,388
Fed funds sold and reverse repurchases
121
230
3,275
2,379
6,566
1,492
1,753
Other earning assets
670,477
682,644
903,027
647,760
375,190
728,181
907,414
Total earning assets
17,102,206
17,110,403
17,248,464
16,856,313
16,242,621
17,082,366
16,014,107
ACL LHFI
(133,742
)
(127,915
)
(121,960
)
(119,978
)
(114,948
)
(125,942
)
(104,138
)
Other assets
1,749,069
1,721,310
1,648,583
1,762,449
1,630,085
1,718,058
1,567,921
Total assets
$
18,717,533
$
18,703,798
$
18,775,087
$
18,498,784
$
17,757,758
$
18,674,482
$
17,477,890
Interest-bearing demand deposits
$
5,053,935
$
4,875,714
$
4,803,737
$
4,751,154
$
4,719,303
$
4,871,977
$
4,585,955
Savings deposits
3,526,600
3,642,158
4,002,134
4,193,764
4,379,673
3,838,791
4,579,742
Time deposits
3,427,384
3,075,224
2,335,752
1,907,449
1,152,905
2,691,682
1,153,983
Total interest-bearing deposits
12,007,919
11,593,096
11,141,623
10,852,367
10,251,881
11,402,450
10,319,680
Fed funds purchased and repurchases
403,041
414,696
389,834
436,535
549,406
410,945
283,328
Other borrowings
590,765
912,151
1,330,010
1,110,843
530,993
984,315
198,672
Subordinated notes
123,446
123,391
123,337
123,281
123,226
123,364
123,144
Junior subordinated debt securities
61,856
61,856
61,856
61,856
61,856
61,856
61,856
Total interest-bearing liabilities
13,187,027
13,105,190
13,046,660
12,584,882
11,517,362
12,982,930
10,986,680
Noninterest-bearing deposits
3,296,351
3,429,815
3,595,927
3,813,248
4,177,113
3,532,134
4,452,046
Other liabilities
641,662
585,908
552,209
576,826
569,992
589,320
434,310
Total liabilities
17,125,040
17,120,913
17,194,796
16,974,956
16,264,467
17,104,384
15,873,036
Shareholders' equity
1,592,493
1,582,885
1,580,291
1,523,828
1,493,291
1,570,098
1,604,854
Total liabilities and equity
$
18,717,533
$
18,703,798
$
18,775,087
$
18,498,784
$
17,757,758
$
18,674,482
$
17,477,890
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED
FINANCIAL INFORMATION December 31, 2023 ($ in
thousands) (unaudited) PERIOD END BALANCES 12/31/2023
9/30/2023 6/30/2023 3/31/2023
12/31/2022 Cash and due from banks
$
975,543
$
750,492
$
832,052
$
1,297,144
$
734,787
Fed funds sold and reverse repurchases
—
—
—
—
4,000
Securities available for sale
1,762,878
1,766,174
1,871,883
1,984,162
2,024,082
Securities held to maturity
1,426,279
1,438,287
1,458,665
1,474,338
1,494,514
PPP loans
—
—
—
—
—
LHFS
184,812
169,244
181,094
175,926
135,226
LHFI
12,950,524
12,810,259
12,613,967
12,497,195
12,204,039
ACL LHFI
(139,367
)
(134,031
)
(129,298
)
(122,239
)
(120,214
)
Net LHFI
12,811,157
12,676,228
12,484,669
12,374,956
12,083,825
Premises and equipment, net
232,537
230,718
227,630
223,975
212,365
Mortgage servicing rights
131,870
142,379
134,350
127,206
129,677
Goodwill
384,237
384,237
384,237
384,237
384,237
Identifiable intangible assets
2,965
3,093
3,222
3,352
3,640
Other real estate
6,867
5,485
1,137
1,684
1,986
Operating lease right-of-use assets
38,142
39,639
38,179
35,315
36,301
Other assets
764,902
784,863
805,508
794,883
770,838
Total assets
$
18,722,189
$
18,390,839
$
18,422,626
$
18,877,178
$
18,015,478
Deposits: Noninterest-bearing
$
3,197,620
$
3,320,124
$
3,461,073
$
3,797,055
$
4,093,771
Interest-bearing
12,372,143
11,781,799
11,452,827
10,986,606
10,343,877
Total deposits
15,569,763
15,101,923
14,913,900
14,783,661
14,437,648
Fed funds purchased and repurchases
405,745
321,799
311,179
477,980
449,331
Other borrowings
483,230
793,193
1,056,714
1,485,181
1,050,938
Subordinated notes
123,482
123,427
123,372
123,317
123,262
Junior subordinated debt securities
61,856
61,856
61,856
61,856
61,856
ACL on off-balance sheet credit exposures
34,057
34,945
34,841
34,596
36,838
Operating lease liabilities
41,584
42,730
40,845
37,988
38,932
Other liabilities
340,625
340,615
308,726
310,500
324,405
Total liabilities
17,060,342
16,820,488
16,851,433
17,315,079
16,523,210
Common stock
12,725
12,724
12,724
12,720
12,705
Capital surplus
159,688
158,316
156,834
155,297
154,645
Retained earnings
1,709,157
1,687,199
1,667,339
1,636,463
1,600,321
Accumulated other comprehensive income (loss), net of tax
(219,723
)
(287,888
)
(265,704
)
(242,381
)
(275,403
)
Total shareholders' equity
1,661,847
1,570,351
1,571,193
1,562,099
1,492,268
Total liabilities and equity
$
18,722,189
$
18,390,839
$
18,422,626
$
18,877,178
$
18,015,478
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED
FINANCIAL INFORMATION December 31, 2023 ($ in
thousands except per share data) (unaudited)
Quarter Ended Year Ended INCOME STATEMENTS 12/31/2023
9/30/2023 6/30/2023 3/31/2023
12/31/2022 12/31/2023 12/31/2022 Interest and
fees on LHFS & LHFI-FTE
$
210,288
$
206,523
$
192,941
$
178,967
$
159,566
$
788,719
$
485,246
Interest and fees on PPP loans
—
—
—
—
101
—
639
Interest on securities-taxable
15,936
16,624
16,779
16,761
16,577
66,100
59,717
Interest on securities-tax exempt-FTE
44
58
69
92
93
263
422
Interest on fed funds sold and reverse repurchases
2
3
45
30
71
80
74
Other interest income
9,918
8,613
12,077
6,527
3,556
37,135
8,080
Total interest income-FTE
236,188
231,821
221,911
202,377
179,964
892,297
554,178
Interest on deposits
80,847
69,797
54,409
40,898
18,438
245,951
29,069
Interest on fed funds purchased and repurchases
5,347
5,375
4,865
4,832
4,762
20,419
6,127
Other interest expense
9,946
14,713
19,350
15,575
6,730
59,584
11,929
Total interest expense
96,140
89,885
78,624
61,305
29,930
325,954
47,125
Net interest income-FTE
140,048
141,936
143,287
141,072
150,034
566,343
507,053
Provision for credit losses, LHFI
7,585
8,322
8,211
3,244
6,902
27,362
21,677
Provision for credit losses, off-balance sheet credit exposures
(888
)
104
245
(2,242
)
5,215
(2,781
)
1,215
Net interest income after provision-FTE
133,351
133,510
134,831
140,070
137,917
541,762
484,161
Service charges on deposit accounts
11,311
11,074
10,695
10,336
11,162
43,416
42,157
Bank card and other fees
8,502
8,217
8,917
7,803
8,191
33,439
36,105
Mortgage banking, net
5,519
6,458
6,600
7,639
3,408
26,216
28,306
Insurance commissions
13,197
15,303
14,764
14,305
12,019
57,569
53,721
Wealth management
8,657
8,773
8,882
8,780
8,079
35,092
35,013
Other, net
2,579
2,399
3,695
2,514
2,311
11,187
9,842
Securities gains (losses), net
39
—
—
—
—
39
—
Total noninterest income
49,804
52,224
53,553
51,377
45,170
206,958
205,144
Salaries and employee benefits
78,003
76,666
75,940
74,056
73,469
304,665
287,440
Services and fees (2)
27,906
27,882
28,264
25,426
27,709
109,478
105,469
Net occupancy-premises
7,362
7,383
7,108
7,629
7,898
29,482
29,264
Equipment expense
6,517
6,816
6,404
6,405
6,268
26,142
24,448
Litigation settlement expense (1)
—
6,500
—
—
100,750
6,500
100,750
Other expense (2)
16,641
15,698
14,502
14,811
15,135
61,652
55,842
Total noninterest expense
136,429
140,945
132,218
128,327
231,229
537,919
603,213
Income (loss) before income taxes and tax eq adj
46,726
44,789
56,166
63,120
(48,142
)
210,801
86,092
Tax equivalent adjustment
3,306
3,299
3,383
3,477
3,451
13,465
12,345
Income (loss) before income taxes
43,420
41,490
52,783
59,643
(51,593
)
197,336
73,747
Income taxes
7,297
7,461
7,746
9,343
(17,530
)
31,847
1,860
Net income (loss)
$
36,123
$
34,029
$
45,037
$
50,300
$
(34,063
)
$
165,489
$
71,887
Per share data Earnings (loss) per share -
basic
$
0.59
$
0.56
$
0.74
$
0.82
$
(0.56
)
$
2.71
$
1.17
Earnings (loss) per share - diluted
$
0.59
$
0.56
$
0.74
$
0.82
$
(0.56
)
$
2.70
$
1.17
Dividends per share
$
0.23
$
0.23
$
0.23
$
0.23
$
0.23
$
0.92
$
0.92
Weighted average shares outstanding Basic
61,070,481
61,069,750
61,063,277
61,011,059
60,969,400
61,053,849
61,242,358
Diluted
61,296,840
61,263,032
61,230,031
61,193,275
61,173,249
61,230,621
61,431,726
Period end shares outstanding
61,071,173
61,070,095
61,069,036
61,048,516
60,977,686
61,071,173
60,977,686
(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 December 31, 2023 ($ in
thousands) (unaudited) Quarter
Ended NONPERFORMING ASSETS
(1) 12/31/2023 9/30/2023 6/30/2023
3/31/2023 12/31/2022 Nonaccrual LHFI Alabama (2)
$
23,271
$
23,530
$
11,058
$
10,919
$
12,300
Florida
170
151
334
256
227
Mississippi (3)
54,615
45,050
36,288
32,560
24,683
Tennessee (4)
1,802
1,841
5,088
5,416
5,566
Texas
20,150
20,327
22,259
23,224
23,196
Total nonaccrual LHFI
100,008
90,899
75,027
72,375
65,972
Other real estate Alabama (2)
1,397
315
—
—
194
Mississippi (3)
1,242
942
1,137
1,495
1,769
Tennessee (4)
—
—
—
189
23
Texas
4,228
4,228
—
—
—
Total other real estate
6,867
5,485
1,137
1,684
1,986
Total nonperforming assets
$
106,875
$
96,384
$
76,164
$
74,059
$
67,958
LOANS PAST DUE OVER 90 DAYS
(1) LHFI
$
5,790
$
3,804
$
3,911
$
2,255
$
3,929
LHFS-Guaranteed GNMA serviced loans (no obligation to
repurchase)
$
51,243
$
42,532
$
35,766
$
41,468
$
49,320
Quarter Ended Year Ended
ACL LHFI (1) 12/31/2023 9/30/2023
6/30/2023 3/31/2023 12/31/2022
12/31/2023 12/31/2022 Beginning Balance
$
134,031
$
129,298
$
122,239
$
120,214
$
115,050
$
120,214
$
99,457
Provision for credit losses, LHFI
7,585
8,322
8,211
3,244
6,902
27,362
21,677
Charge-offs
(4,250
)
(7,496
)
(2,773
)
(2,996
)
(3,893
)
(17,515
)
(11,332
)
Recoveries
2,001
3,907
1,621
1,777
2,155
9,306
10,412
Net (charge-offs) recoveries
(2,249
)
(3,589
)
(1,152
)
(1,219
)
(1,738
)
(8,209
)
(920
)
Ending Balance
$
139,367
$
134,031
$
129,298
$
122,239
$
120,214
$
139,367
$
120,214
NET (CHARGE-OFFS) RECOVERIES
(1) Alabama (2)
$
(299
)
$
(165
)
$
(141
)
$
(268
)
$
98
$
(873
)
$
2,019
Florida
180
21
(35
)
(36
)
(60
)
130
652
Mississippi (3)
(1,943
)
(1,867
)
(762
)
(775
)
(1,657
)
(5,347
)
(2,713
)
Tennessee (4)
(193
)
2,127
(166
)
(124
)
(195
)
1,644
(790
)
Texas
6
(3,705
)
(48
)
(16
)
76
(3,763
)
(88
)
Total net (charge-offs) recoveries
$
(2,249
)
$
(3,589
)
$
(1,152
)
$
(1,219
)
$
(1,738
)
$
(8,209
)
$
(920
)
(1) Excludes PPP loans. (2) Alabama includes the Georgia
Loan Production Office. (3) Mississippi includes Central and
Southern Mississippi Regions. (4) Tennessee includes Memphis,
Tennessee and Northern Mississippi Regions.
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED
FINANCIAL INFORMATION December 31, 2023 ($ in
thousands) (unaudited) Quarter Ended
Year Ended FINANCIAL RATIOS AND
OTHER DATA 12/31/2023 9/30/2023
6/30/2023 3/31/2023 12/31/2022
12/31/2023 12/31/2022 Return on average equity
9.00
%
8.53
%
11.43
%
13.39
%
-9.05
%
10.54
%
4.48
%
Return on average tangible equity
11.92
%
11.32
%
15.18
%
18.03
%
-12.14
%
14.04
%
6.00
%
Return on average assets
0.77
%
0.72
%
0.96
%
1.10
%
-0.76
%
0.89
%
0.41
%
Interest margin - Yield - FTE
5.48
%
5.38
%
5.16
%
4.87
%
4.40
%
5.22
%
3.46
%
Interest margin - Cost
2.23
%
2.08
%
1.83
%
1.47
%
0.73
%
1.91
%
0.29
%
Net interest margin - FTE
3.25
%
3.29
%
3.33
%
3.39
%
3.66
%
3.32
%
3.17
%
Efficiency ratio (1)
70.25
%
68.33
%
66.17
%
65.60
%
65.85
%
67.57
%
69.37
%
Full-time equivalent employees
2,757
2,756
2,761
2,758
2,738
CREDIT QUALITY RATIOS
(2) Net (recoveries) charge-offs / average loans
0.07
%
0.11
%
0.04
%
0.04
%
0.06
%
0.06
%
0.01
%
Provision for credit losses, LHFI / average loans
0.23
%
0.26
%
0.26
%
0.10
%
0.23
%
0.21
%
0.19
%
Nonaccrual LHFI / (LHFI + LHFS)
0.76
%
0.70
%
0.59
%
0.57
%
0.53
%
Nonperforming assets / (LHFI + LHFS)
0.81
%
0.74
%
0.60
%
0.58
%
0.55
%
Nonperforming assets / (LHFI + LHFS + other real estate)
0.81
%
0.74
%
0.60
%
0.58
%
0.55
%
ACL LHFI / LHFI
1.08
%
1.05
%
1.03
%
0.98
%
0.99
%
ACL LHFI-commercial / commercial LHFI
0.85
%
0.86
%
0.84
%
0.80
%
0.85
%
ACL LHFI-consumer / consumer and home mortgage LHFI
1.81
%
1.66
%
1.60
%
1.54
%
1.41
%
ACL LHFI / nonaccrual LHFI
139.36
%
147.45
%
172.34
%
168.90
%
182.22
%
ACL LHFI / nonaccrual LHFI (excl individually analyzed loans)
249.31
%
273.60
%
301.44
%
320.80
%
399.19
%
CAPITAL RATIOS Total
equity / total assets
8.88
%
8.54
%
8.53
%
8.28
%
8.28
%
Tangible equity / tangible assets
6.95
%
6.57
%
6.56
%
6.35
%
6.27
%
Tangible equity / risk-weighted assets
8.41
%
7.81
%
7.91
%
7.94
%
7.61
%
Tier 1 leverage ratio
8.62
%
8.49
%
8.35
%
8.29
%
8.47
%
Common equity tier 1 capital ratio
10.04
%
9.89
%
9.87
%
9.76
%
9.74
%
Tier 1 risk-based capital ratio
10.44
%
10.29
%
10.27
%
10.17
%
10.15
%
Total risk-based capital ratio
12.29
%
12.11
%
12.08
%
11.95
%
11.91
%
STOCK PERFORMANCE Market
value-Close
$
27.88
$
21.73
$
21.12
$
24.70
$
34.91
Book value
$
27.21
$
25.71
$
25.73
$
25.59
$
24.47
Tangible book value
$
20.87
$
19.37
$
19.38
$
19.24
$
18.11
(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 December 31, 2023 ($ in
thousands) (unaudited)
Note 1 - Litigation Settlement
As previously announced, on December 31, 2022, Trustmark
National Bank (TNB) agreed to a settlement in principle (the
Stanford Settlement) relating to litigation involving the Stanford
Financial Group. On January 13, 2023, TNB entered into a Settlement
Agreement (the Stanford Settlement Agreement) reflecting the terms
of the Stanford Settlement. The parties to the Stanford Settlement
Agreement are, on the one hand, (i) Ralph S. Janvey, solely in his
capacity as the court-appointed receiver (the Stanford Receiver)
for the Stanford Receivership Estate; (ii) the Official Stanford
Investors Committee; (iii) each of the plaintiffs in the Rotstain
and Smith Actions; and, on the other hand, (iv) TNB. Under the
terms of the Stanford Settlement Agreement, the parties agreed to
settle and dismiss the Rotstain Action, the Smith Action, and all
current or future claims by plaintiffs in either such Action
arising from or related to Stanford. In addition, the Stanford
Settlement Agreement provided that the parties would request
dismissal of the Jackson Action pursuant to the terms of the bar
orders described below. The Court’s approval of the Stanford
Settlement Agreement, including the bar orders described below, has
occurred and has been upheld on appeal, as described below. As a
result, pursuant to the Stanford Settlement, TNB will make a
one-time cash payment of $100.0 million to the Stanford Receiver on
February 2, 2024.
The Stanford Settlement Agreement included the parties’
agreement to seek the Northern District of Texas District Court’s
entry of bar orders prohibiting any continued or future claims by
the plaintiffs in the Actions or by any other person or entity
against TNB and its related parties relating to Stanford, whether
asserted to date or not. The bar orders prohibit all litigation
relating to Stanford described herein, including not only the
Actions and any pending matters but also any actions that may be
brought in the future. Final Court approval of these bar orders was
a condition of the Stanford Settlement.
The Stanford Settlement Agreement was also subject to notice to
Stanford’s investor claimants (which has been provided) and final,
non-appealable approval by the U.S. District Court for the Northern
District of Texas (which has occurred).
The Stanford Settlement Agreement also provides that TNB denies
and makes no admission of liability or wrongdoing in connection
with any Stanford matter. As has been the case throughout the
pendency of the Actions, TNB expressly denies any liability or
wrongdoing with respect to any matter alleged in regard to the
multi-billion dollar Ponzi scheme operated by Stanford for almost
20 years. TNB’s relationship with Stanford began as a result of
TNB’s acquisition of a Houston-based bank in August 2006, and
consisted of ordinary banking services provided to business deposit
customers.
The foregoing description of the terms of the Stanford
Settlement Agreement does not purport to be complete and is
qualified in its entirety by reference to the full text of the
Stanford Settlement Agreement, a copy of which is filed as Exhibit
10.ai to the 2022 Annual Report and is incorporated herein by
reference.
On January 20, 2023, the U.S. District Court for the Northern
District of Texas entered an order preliminarily finding that the
Stanford Settlement is fair, reasonable, and equitable; has no
obvious deficiencies; and is the product of serious, informed, good
faith, and arm’s-length negotiations. Following the provision of
notice as required by the Stanford Settlement Agreement and by the
Court’s preliminary order, the Court (Judge David C. Godbey,
presiding) held a Final Approval Hearing on May 3, 2023, at which
the Court approved the Stanford Settlement from the bench. On May
4, 2023, Judge Godbey signed the written orders confirming his oral
ruling, including the bar order contemplated by the Stanford
Settlement Agreement and the judgment and bar order with respect to
the Jackson Action.
On May 10, 2023, Robert Allen Stanford, writing from prison,
appealed the District Court’s approval of the Stanford Settlement
to the Fifth Circuit Court of Appeals. On June 12, 2023, the
Stanford Receiver moved to dismiss the appeal as frivolous. On July
25, 2023, a three-judge panel of the Fifth Circuit issued a per
curiam order dismissing Stanford’s appeal as frivolous. In July and
August 2023, Mr. Stanford filed, then subsequently withdrew, a
motion seeking panel rehearing of the Fifth Circuit’s July 25,
2023, decision.
When Stanford’s deadline to appeal the Fifth Circuit’s ruling to
the Supreme Court of the United States passed without his filing a
petition for certiorari, the trial court’s ruling approving the
Stanford Settlement and entering the bar orders became final and
non-appealable, as defined in the Stanford Settlement Agreement
(the Stanford Settlement Effective Date). On November 14, the
parties to the Rotstain and Smith Actions filed agreed dismissals
of those cases, which were granted on November 27, 2023 (Smith
Action) and December 18, 2023 (Rotstain Action). Those dismissals
were final and non-appealable as of December 27, 2023 (Smith
Action) and January 17, 2024 (Rotstain Action). Accordingly,
pursuant to the Stanford Settlement Agreement, TNB will make the
settlement payment on February 2, 2024, concluding the Stanford
Settlement.
TNB and Trustmark Corporation determined that it was in the best
interest of TNB, Trustmark Corporation and the shareholders of
Trustmark Corporation to enter into the Stanford Settlement and the
Stanford Settlement Agreement to eliminate the risk, ongoing
expense, uncertainty as to ultimate outcome, and imposition on
management and the business of TNB of further litigation of the
Actions and related Stanford claims.
As previously announced, on August 30, 2023, TNB agreed to a
settlement in principle (the Adams/Madison Timber Settlement)
relating to litigation and claims involving Arthur Lamar Adams and
Madison Timber Properties, LLC (collectively, Adams/Madison
Timber). On October 9, 2023, TNB entered into a Settlement
Agreement (the Adams/Madison Timber Settlement Agreement)
reflecting the terms of the Adams/Madison Timber Settlement. The
parties to the Adams/Madison Timber Settlement are, on the one
hand, Alysson Mills in her capacity as Court-appointed Receiver
(the Adams/Madison Timber Receiver); and, on the other hand, TNB.
Under the terms of the Adams/Madison Timber Settlement Agreement,
the parties agreed to settle and dismiss the Adams/Madison Timber
Action, and the Adams/Madison Timber Receiver agreed to fully
release all claims against TNB and any of its employees, agents and
representatives. The Adams/Madison Timber Settlement included the
parties’ agreement to seek the Court’s entry of bar orders
prohibiting any continued or future claims by anyone against TNB
and its related parties relating to Adams/Madison Timber, whether
asserted to date or not. Final Court approval of a bar order was a
condition of the Adams/Madison Timber Settlement. On November 14,
2023, the Court entered a Partial Final Judgment and Final Bar
Order approving the settlement. The bar order therefore is expected
to prohibit all litigation relating to Adams/Madison Timber
described herein.
The Adams/Madison Timber Settlement was subject to notice to
Adams/Madison Timber investors, and final, non-appealable approval
by the Court and entry of a judgment dismissing the Lawsuit against
TNB. No investor or other interested parties appealed the bar order
before the appeal deadline passed. Accordingly, TNB made the
settlement payment to the Adams/Madison Timber Receiver on January
22, 2024, concluding the Adams/Madison Timber Settlement.
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIALS December 31, 2023 ($ in
thousands) (unaudited)
Note 1 - Litigation Settlement (continued)
At the time of the entry into the Stanford Settlement as
described above, 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. As a result of the entry into the Adams/Madison Timber
Settlement as described above, Trustmark Corporation recognized
$6.5 million of litigation settlement expense which was included in
noninterest expense related to the Adams/Madison Timber litigation
during the third quarter of 2023. Trustmark Corporation expects
that both the Stanford Settlement and Adams/Madison Timber
Settlement will be tax deductible. Trustmark Corporation and TNB
remain substantially above levels considered to be well-capitalized
under all relevant standards.
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:
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
SECURITIES
AVAILABLE FOR SALE
U.S. Treasury securities
$
372,368
$
363,476
$
362,966
$
386,903
$
391,513
U.S. Government agency obligations
5,792
6,780
6,999
7,254
7,766
Obligations of states and political
subdivisions
—
4,642
4,813
4,907
4,862
Mortgage-backed securities
Residential mortgage pass-through
securities
Guaranteed by GNMA
23,135
22,881
25,336
26,851
27,097
Issued by FNMA and FHLMC
1,176,798
1,171,521
1,250,435
1,317,848
1,345,463
Other residential mortgage-backed
securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
86,074
90,402
98,388
108,192
115,140
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
98,711
106,472
122,946
132,207
132,241
Total securities available for sale
$
1,762,878
$
1,766,174
$
1,871,883
$
1,984,162
$
2,024,082
SECURITIES HELD
TO MATURITY
U.S. Treasury securities
$
29,068
$
28,872
$
28,679
$
28,486
$
28,295
Obligations of states and political
subdivisions
340
341
1,180
4,507
4,510
Mortgage-backed securities
Residential mortgage pass-through
securities
Guaranteed by GNMA
13,005
13,090
13,235
4,336
4,442
Issued by FNMA and FHLMC
469,593
474,003
484,679
497,854
509,311
Other residential mortgage-backed
securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
154,466
162,031
171,002
179,334
188,201
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
759,807
759,950
759,890
759,821
759,755
Total securities held to maturity
$
1,426,279
$
1,438,287
$
1,458,665
$
1,474,338
$
1,494,514
At December 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 $57.6
million.
Management continues to focus on asset quality as one of the
strategic goals of the securities portfolio, which is evidenced by
the investment of 99.99% of the portfolio in GSE-backed obligations
and other Aaa rated securities as determined by Moody’s. None of
the securities owned by Trustmark are collateralized by assets
which are considered sub-prime. Furthermore, outside of stock
ownership in the Federal Home Loan Bank of Dallas, Federal Home
Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not
hold any other equity investment in a GSE.
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIALS December 31, 2023 ($ in
thousands) (unaudited)
Note 3 – Loan Composition
LHFI consisted of the following during the periods
presented:
LHFI BY
TYPE
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
Loans secured by real estate:
Construction, land development and other
land loans
$
1,510,679
$
1,609,326
$
1,722,657
$
1,723,772
$
1,719,542
Secured by 1-4 family residential
properties
2,904,715
2,893,606
2,854,182
2,822,048
2,775,847
Secured by nonfarm, nonresidential
properties
3,489,434
3,569,671
3,471,728
3,375,579
3,278,830
Other real estate secured
1,312,551
1,218,499
954,410
847,527
742,538
Commercial and industrial loans
1,922,910
1,828,924
1,883,480
1,882,360
1,821,259
Consumer loans
161,725
161,940
163,788
162,911
166,425
State and other political subdivision
loans
1,088,466
1,056,569
1,111,710
1,193,727
1,223,863
Other loans and leases
560,044
471,724
452,012
489,271
475,735
LHFI
12,950,524
12,810,259
12,613,967
12,497,195
12,204,039
ACL LHFI
(139,367
)
(134,031
)
(129,298
)
(122,239
)
(120,214
)
Net LHFI
$
12,811,157
$
12,676,228
$
12,484,669
$
12,374,956
$
12,083,825
The following table presents the LHFI composition based upon the
region where the loan was originated and reflects each region’s
diversified mix of loans:
December 31, 2023
LHFI -
COMPOSITION BY REGION
Total
Alabama (1)
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
$
1,510,679
$
688,438
$
37,626
$
435,406
$
37,194
$
312,015
Secured by 1-4 family residential
properties
2,904,715
151,446
54,998
2,582,329
84,031
31,911
Secured by nonfarm, nonresidential
properties
3,489,434
960,656
233,908
1,431,968
153,226
709,676
Other real estate secured
1,312,551
583,165
1,761
396,715
7,587
323,323
Commercial and industrial loans
1,922,910
658,573
25,406
780,949
217,729
240,253
Consumer loans
161,725
22,609
7,509
101,389
20,433
9,785
State and other political subdivision
loans
1,088,466
71,882
52,759
813,291
25,999
124,535
Other loans and leases
560,044
209,874
8,476
223,583
46,519
71,592
Loans
$
12,950,524
$
3,346,643
$
422,443
$
6,765,630
$
592,718
$
1,823,090
CONSTRUCTION,
LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots
$
71,875
$
30,186
$
8,353
$
17,257
$
4,714
$
11,365
Development
146,655
74,015
1,262
36,690
12,649
22,039
Unimproved land
101,941
17,432
12,853
36,573
8,094
26,989
1-4 family construction
322,415
164,712
13,099
95,297
11,737
37,570
Other construction
867,793
402,093
2,059
249,589
—
214,052
Construction, land development and other
land loans
$
1,510,679
$
688,438
$
37,626
$
435,406
$
37,194
$
312,015
(1) Includes Georgia Loan Production
Office.
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIALS December 31, 2023 ($ in
thousands) (unaudited)
Note 3 – Loan Composition (continued)
December 31, 2023
Total
Alabama (1)
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
$
346,844
$
128,743
$
25,732
$
91,057
$
17,721
$
83,591
Office
286,511
104,114
19,857
94,294
1,649
66,597
Hotel/motel
270,740
144,403
47,111
53,227
25,999
—
Mini-storage
157,938
32,452
1,917
103,500
756
19,313
Industrial
382,737
57,386
19,762
123,306
9,730
172,553
Health care
97,783
69,352
688
25,021
333
2,389
Convenience stores
26,254
3,315
425
13,777
249
8,488
Nursing homes/senior living
508,665
229,352
—
160,359
4,901
114,053
Other
110,828
31,370
9,232
52,521
8,321
9,384
Total non-owner occupied loans
2,188,300
800,487
124,724
717,062
69,659
476,368
Owner-occupied:
Office
152,053
44,028
38,401
39,790
11,459
18,375
Churches
62,217
17,098
4,178
34,899
3,541
2,501
Industrial warehouses
159,227
11,619
4,618
40,837
16,330
85,823
Health care
125,304
11,031
6,274
87,507
2,269
18,223
Convenience stores
142,537
12,593
29,299
65,031
14
35,600
Retail
89,174
9,606
15,644
37,340
17,694
8,890
Restaurants
48,172
4,010
3,503
22,316
15,095
3,248
Auto dealerships
43,556
5,533
201
21,383
16,439
—
Nursing homes/senior living
345,108
31,644
—
287,264
—
26,200
Other
133,786
13,007
7,066
78,539
726
34,448
Total owner-occupied loans
1,301,134
160,169
109,184
714,906
83,567
233,308
Loans secured by nonfarm, nonresidential
properties
$
3,489,434
$
960,656
$
233,908
$
1,431,968
$
153,226
$
709,676
(1) Includes Georgia Loan Production
Office.
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
Year Ended
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
12/31/2023
12/31/2022
Securities – taxable
1.85
%
1.89
%
1.87
%
1.85
%
1.71
%
1.86
%
1.55
%
Securities – nontaxable
3.81
%
4.05
%
4.25
%
4.00
%
3.95
%
4.04
%
3.97
%
Securities – total
1.85
%
1.89
%
1.87
%
1.86
%
1.72
%
1.87
%
1.56
%
PPP loans
—
—
—
—
12.39
%
—
4.30
%
Loans - LHFI & LHFS
6.41
%
6.34
%
6.08
%
5.79
%
5.27
%
6.16
%
4.32
%
Loans - total
6.41
%
6.34
%
6.08
%
5.79
%
5.27
%
6.16
%
4.32
%
Fed funds sold & reverse
repurchases
6.56
%
5.17
%
5.51
%
5.11
%
4.29
%
5.36
%
4.22
%
Other earning assets
5.87
%
5.01
%
5.36
%
4.09
%
3.76
%
5.10
%
0.89
%
Total earning assets
5.48
%
5.38
%
5.16
%
4.87
%
4.40
%
5.22
%
3.46
%
Interest-bearing deposits
2.67
%
2.39
%
1.96
%
1.53
%
0.71
%
2.16
%
0.28
%
Fed funds purchased & repurchases
5.26
%
5.14
%
5.01
%
4.49
%
3.44
%
4.97
%
2.16
%
Other borrowings
5.08
%
5.32
%
5.12
%
4.87
%
3.73
%
5.09
%
3.11
%
Total interest-bearing liabilities
2.89
%
2.72
%
2.42
%
1.98
%
1.03
%
2.51
%
0.43
%
Total Deposits
2.10
%
1.84
%
1.48
%
1.13
%
0.51
%
1.65
%
0.20
%
Net interest margin
3.25
%
3.29
%
3.33
%
3.39
%
3.66
%
3.32
%
3.17
%
Net interest margin excluding PPP
loans
and the FRB balance
3.16
%
3.24
%
3.23
%
3.36
%
3.66
%
3.25
%
3.30
%
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIALS December 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.
For the fourth quarter of 2023, the average FRB balance totaled
$572.0 million compared to $566.3 million for the third quarter of
2023 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 8 basis points when compared to the third quarter of
2023, totaling 3.16% for the fourth quarter of 2023, primarily due
to increased costs of interest-bearing liabilities which resulted
from the higher interest-rate environment and was partially offset
by an increase in the yield on the loans held for investment and
held for sale 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 hedge ineffectiveness of $2.2
million during the fourth quarter of 2023.
The following table illustrates the components of mortgage
banking revenues included in noninterest income in the accompanying
income statements:
Quarter Ended
Year Ended
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
12/31/2023
12/31/2022
Mortgage servicing income, net
$
6,731
$
6,916
$
6,764
$
6,785
$
6,636
$
27,196
$
26,291
Change in fair value-MSR from runoff
(2,972
)
(3,203
)
(2,710
)
(1,145
)
(2,981
)
(10,030
)
(14,034
)
Gain on sales of loans, net
3,913
3,748
3,887
3,797
3,328
15,345
20,178
Mortgage banking income before hedge
ineffectiveness
7,672
7,461
7,941
9,437
6,983
32,511
32,435
Change in fair value-MSR from market
changes
(10,224
)
6,809
5,898
(3,972
)
(3,348
)
(1,489
)
38,181
Change in fair value of derivatives
8,071
(7,812
)
(7,239
)
2,174
(227
)
(4,806
)
(42,310
)
Net positive (negative) hedge
ineffectiveness
(2,153
)
(1,003
)
(1,341
)
(1,798
)
(3,575
)
(6,295
)
(4,129
)
Mortgage banking, net
$
5,519
$
6,458
$
6,600
$
7,639
$
3,408
$
26,216
$
28,306
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIALS December 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
Year Ended
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
12/31/2023
12/31/2022
Partnership amortization for tax credit
purposes
$
(2,013
)
$
(1,995
)
$
(2,019
)
$
(1,961
)
$
(1,869
)
$
(7,988
)
$
(6,211
)
Increase in life insurance cash surrender
value
1,825
1,784
1,716
1,693
1,687
7,018
6,673
Other miscellaneous income
2,767
2,610
3,998
2,782
2,493
12,157
9,380
Total other, net
$
2,579
$
2,399
$
3,695
$
2,514
$
2,311
$
11,187
$
9,842
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
Year Ended
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
12/31/2023
12/31/2022
Loan expense (1)
$
2,380
$
3,130
$
3,066
$
2,538
$
2,908
$
11,114
$
12,249
Amortization of intangibles
128
129
130
288
312
675
1,434
FDIC assessment expense
4,844
3,765
2,550
2,370
2,130
13,529
7,385
Other real estate expense, net
(184
)
(40
)
171
172
18
119
1,173
Other miscellaneous expense
9,473
8,714
8,585
9,443
9,767
36,215
33,601
Total other expense (1)
$
16,641
$
15,698
$
14,502
$
14,811
$
15,135
$
61,652
$
55,842
(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 December 31, 2023 ($ in
thousands) (unaudited)
Note 7 – Non-GAAP Financial Measures (continued)
Quarter Ended
Year Ended
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
12/31/2023
12/31/2022
TANGIBLE
EQUITY
AVERAGE BALANCES
Total shareholders' equity
$
1,592,493
$
1,582,885
$
1,580,291
$
1,523,828
$
1,493,291
$
1,570,098
$
1,604,854
Less: Goodwill
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
Identifiable intangible assets
(3,044
)
(3,174
)
(3,301
)
(3,523
)
(3,816
)
(3,259
)
(4,312
)
Total average tangible equity
$
1,205,212
$
1,195,474
$
1,192,753
$
1,136,068
$
1,105,238
$
1,182,602
$
1,216,305
PERIOD END BALANCES
Total shareholders' equity
$
1,661,847
$
1,570,351
$
1,571,193
$
1,562,099
$
1,492,268
Less: Goodwill
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
Identifiable intangible assets
(2,965
)
(3,093
)
(3,222
)
(3,352
)
(3,640
)
Total tangible equity
(a)
$
1,274,645
$
1,183,021
$
1,183,734
$
1,174,510
$
1,104,391
TANGIBLE
ASSETS
Total assets
$
18,722,189
$
18,390,839
$
18,422,626
$
18,877,178
$
18,015,478
Less: Goodwill
(384,237
)
(384,237
)
(384,237
)
(384,237
)
(384,237
)
Identifiable intangible assets
(2,965
)
(3,093
)
(3,222
)
(3,352
)
(3,640
)
Total tangible assets
(b)
$
18,334,987
$
18,003,509
$
18,035,167
$
18,489,589
$
17,627,601
Risk-weighted assets
(c)
$
15,153,263
$
15,143,531
$
14,966,614
$
14,793,893
$
14,521,078
NET INCOME (LOSS)
ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income (loss)
$
36,123
$
34,029
$
45,037
$
50,300
$
(34,063
)
$
165,489
$
71,887
Plus: Intangible amortization net of
tax
96
96
97
216
234
505
1,076
Net income (loss) adjusted for intangible
amortization
$
36,219
$
34,125
$
45,134
$
50,516
$
(33,829
)
$
165,994
$
72,963
Period end common shares outstanding
(d)
61,071,173
61,070,095
61,069,036
61,048,516
60,977,686
TANGIBLE COMMON
EQUITY MEASUREMENTS
Return on average tangible equity (1)
11.92
%
11.32
%
15.18
%
18.03
%
-12.14
%
14.04
%
6.00
%
Tangible equity/tangible assets
(a)/(b)
6.95
%
6.57
%
6.56
%
6.35
%
6.27
%
Tangible equity/risk-weighted assets
(a)/(c)
8.41
%
7.81
%
7.91
%
7.94
%
7.61
%
Tangible book value
(a)/(d)*1,000
$
20.87
$
19.37
$
19.38
$
19.24
$
18.11
COMMON EQUITY
TIER 1 CAPITAL (CET1)
Total shareholders' equity
$
1,661,847
$
1,570,351
$
1,571,193
$
1,562,099
$
1,492,268
CECL transition adjustment
13,000
13,000
13,000
13,000
19,500
AOCI-related adjustments
219,723
287,888
265,704
242,381
275,403
CET1 adjustments and deductions:
Goodwill net of associated deferred
tax liabilities (DTLs)
(370,212
)
(370,219
)
(370,227
)
(370,234
)
(370,241
)
Other adjustments and deductions
for CET1 (2)
(2,693
)
(2,803
)
(2,915
)
(3,275
)
(3,258
)
CET1 capital
(e)
1,521,665
1,498,217
1,476,755
1,443,971
1,413,672
Additional tier 1 capital instruments
plus related surplus
60,000
60,000
60,000
60,000
60,000
Tier 1 capital
$
1,581,665
$
1,558,217
$
1,536,755
$
1,503,971
$
1,473,672
Common equity tier 1 capital ratio
(e)/(c)
10.04
%
9.89
%
9.87
%
9.76
%
9.74
%
(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 December 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
Year Ended
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
12/31/2023
12/31/2022
Net interest income (GAAP)
$
136,742
$
138,637
$
139,904
$
137,595
$
146,583
$
552,878
$
494,708
Noninterest income (GAAP)
49,804
52,224
53,553
51,377
45,170
206,958
205,144
Pre-provision revenue
(a)
$
186,546
$
190,861
$
193,457
$
188,972
$
191,753
$
759,836
$
699,852
Noninterest expense (GAAP)
$
136,429
$
140,945
$
132,218
$
128,327
$
231,229
$
537,919
$
603,213
Less:
Reduction in force expense
(1,406
)
—
—
—
—
(1,406
)
—
Litigation settlement expense
—
(6,500
)
—
—
(100,750
)
(6,500
)
(100,750
)
Adjusted noninterest expense - PPNR
(Non-GAAP)
(b)
$
135,023
$
134,445
$
132,218
$
128,327
$
130,479
$
530,013
$
502,463
PPNR (Non-GAAP)
(a)-(b)
$
51,523
$
56,416
$
61,239
$
60,645
$
61,274
$
229,823
$
197,389
The following table presents adjustments to net income (loss)
and select financial ratios as reported in accordance with GAAP
resulting from significant non-routine items occurring during the
periods presented:
Quarter Ended
Year Ended
12/31/2023
12/31/2022
12/31/2023
12/31/2022
Amount
Diluted EPS
Amount
Diluted EPS
Amount
Diluted EPS
Amount
Diluted EPS
Net income (loss) (GAAP)
$
36,123
$
0.59
$
(34,063
)
$
(0.56
)
$
165,489
$
2.70
$
71,887
$
1.17
Significant non-routine transactions (net
of taxes):
Reduction in force expense
1,055
0.02
—
—
1,055
0.02
—
—
Litigation settlement expense
—
—
75,563
1.24
4,875
0.08
75,563
1.23
Net income adjusted for significant
non-routine
transactions (Non-GAAP)
$
37,178
$
0.61
$
41,500
$
0.68
$
171,419
$
2.80
$
147,450
$
2.40
Reported (GAAP)
Adjusted (Non-
GAAP)
Reported (GAAP)
Adjusted (Non- GAAP)
Reported (GAAP)
Adjusted (Non- GAAP)
Reported (GAAP)
Adjusted (Non- GAAP)
Return on average equity
9.00
%
9.23
%
-9.05
%
10.75
%
10.54
%
10.90
%
4.48
%
9.13
%
Return on average tangible equity
11.92
%
12.22
%
-12.14
%
14.49
%
14.04
%
14.51
%
6.00
%
12.12
%
Return on average assets
0.77
%
0.79
%
-0.76
%
0.93
%
0.89
%
0.92
%
0.41
%
0.84
%
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIALS December 31, 2023 ($ in
thousands) (unaudited)
Note 7 – Non-GAAP Financial Measures (continued)
The following table presents Trustmark’s calculation of its
efficiency ratio for the periods presented:
Quarter Ended
Year Ended
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
12/31/2023
12/31/2022
Total noninterest expense (GAAP)
$
136,429
$
140,945
$
132,218
$
128,327
$
231,229
$
537,919
$
603,213
Less:
Other real estate expense, net
184
40
(171
)
(172
)
(18
)
(119
)
(1,173
)
Amortization of intangibles
(128
)
(129
)
(130
)
(288
)
(312
)
(675
)
(1,434
)
Charitable contributions resulting in
state tax credits
(325
)
(325
)
(325
)
(325
)
(375
)
(1,300
)
(1,500
)
Reduction in force expense
(1,406
)
—
—
—
—
(1,406
)
—
Litigation settlement expense
—
(6,500
)
—
—
(100,750
)
(6,500
)
(100,750
)
Adjusted noninterest expense
(Non-GAAP)
(c)
$
134,754
$
134,031
$
131,592
$
127,542
$
129,774
$
527,919
$
498,356
Net interest income (GAAP)
$
136,742
$
138,637
$
139,904
$
137,595
$
146,583
$
552,878
$
494,708
Add:
Tax equivalent adjustment
3,306
3,299
3,383
3,477
3,451
13,465
12,345
Net interest income-FTE (Non-GAAP)
(a)
$
140,048
$
141,936
$
143,287
$
141,072
$
150,034
$
566,343
$
507,053
Noninterest income (GAAP)
$
49,804
$
52,224
$
53,553
$
51,377
$
45,170
$
206,958
$
205,144
Add:
Partnership amortization for tax credit
purposes
2,013
1,995
2,019
1,961
1,869
7,988
6,211
Less:
Securities (gains) losses, net
(39
)
—
—
—
—
(39
)
—
Adjusted noninterest income (Non-GAAP)
(b)
$
51,778
$
54,219
$
55,572
$
53,338
$
47,039
$
214,907
$
211,355
Adjusted revenue (Non-GAAP)
(a)+(b)
$
191,826
$
196,155
$
198,859
$
194,410
$
197,073
$
781,250
$
718,408
Efficiency ratio (Non-GAAP)
(c)/((a)+(b))
70.25
%
68.33
%
66.17
%
65.60
%
65.85
%
67.57
%
69.37
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240123799186/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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