trmk-8k_20200428.htm
false 0000036146 0000036146 2020-04-28 2020-04-28

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

April 28, 2020

Date of Report (Date of earliest event reported)

TRUSTMARK CORPORATION

(Exact name of registrant as specified in its charter)

 

Mississippi

 

000-03683

 

64-0471500

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

248 East Capitol Street, Jackson, Mississippi

 

39201

(Address of principal executive offices)

 

(Zip Code)

 

 

 

Registrant’s telephone number, including area code:

 

(601) 208-5111

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered Pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, no par value

TRMK

Nasdaq Global Select Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). 

 

Emerging growth company 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

 

 


 

Item 2.02.  Results of Operations and Financial Condition.

On April 28, 2020, Trustmark Corporation issued a press release announcing its financial results for the period ended March 31, 2020.  A copy of this press release and the accompanying financial statements and slide presentation are attached hereto as Exhibits 99.1 and 99.2 to this report and incorporated herein by reference.

 

 

Item 9.01.  Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit Number

 

Description of Exhibits

99.1

 

Press release announcing financial results for the period ended March 31, 2020

99.2

 

Investor slide presentation for the period ended March 31, 2020

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

TRUSTMARK CORPORATION

 

BY:

 

/s/ Louis E. Greer 

 

 

Louis E. Greer

 

 

Treasurer and Principal Financial Officer

 

 

 

DATE:

 

April 28, 2020

 

 

 

trmk-ex991_7.htm

Exhibit 99.1

News Release

Trustmark Corporation Announces First Quarter 2020 Financial Results

Position of strength and stability allows for proactive response

to COVID-19 pandemic

 

JACKSON, Miss. – April 28, 2020 – Trustmark Corporation (Nasdaq:TRMK) reported net income of $22.2 million in the first quarter of 2020, representing diluted earnings per share of $0.35.  During the first quarter, the provision and expense for credit losses totaled $27.4 million, primarily due to the impact of the COVID-19 pandemic on expected credit losses.  This increased provision and expense for credit losses reduced after-tax net income by approximately $0.32 per diluted share.  First quarter results also include a one-time, pre-tax charge of $4.4 million related to a voluntary early retirement program which reduced earnings by $0.05 per diluted share.  In addition, Trustmark reported positive net mortgage servicing hedge ineffectiveness of $9.9 million in the first quarter which increased earnings by $0.12 per diluted share.  

 

COVID-19 Response

Gerard R. Host, President and CEO, stated, “Trustmark has been proactive in responding to the COVID-19 pandemic, and we are taking comprehensive action to support customers, associates and the communities we serve.  We remain committed to serving customers as our branches continue to offer drive-thru service, our ATM and ITM network remains accessible and our robust digital and mobile banking options provide additional convenience for our customers.  Approximately 45% of Trustmark associates are working remotely, and essential employees in our offices are taking additional precautions to stay safe and healthy.  We are working with customers to provide flexibility in these uncertain circumstances, and we are serving our local economies by participating in the SBA’s Paycheck Protection Program.  SBA commitments were secured for approximately 6,000 requests totaling over $800 million with an average loan size of $137 thousand, and we continue to assist customers in completing applications for the Paycheck Protection Program.  We are committed to doing everything in our power to ensure the safety of our customers and associates and support our local economies through these challenging times.”

 

First Quarter Highlights

Maintained strong capital position with CET1 ratio of 11.35% and total risk-based capital ratio of 12.78%

Reported solid growth in fee businesses with linked quarter increases of 61.2% in mortgage banking revenue (before hedge ineffectiveness), 23.3% in insurance commissions and 10.0% in wealth management revenue

Pre-tax, pre-provision income totaled $56.6 million, a linked-quarter increase of 31.1% and year-over-year increase of 40.4%

 

Mr. Host stated, “For over 130 years, we have been committed to meeting the banking and financial needs of our customers and communities.  During the COVID-19 pandemic, we remain focused on providing support, advice and solutions to meet our customers’ unique needs.  Trustmark entered this crisis from a position of strength and stability with a solid capital base and ample liquidity.  During the first quarter, we experienced strong growth in our fee businesses and posted increases in both loan and deposit balances.  I would like to thank our dedicated associates for working diligently in these unprecedented circumstances to serve our customers.  Trustmark has weathered many storms over the years, and we remain well-positioned to continue serving customers and creating long-term value for shareholders.”

 

Balance Sheet Management

Loans held for investment (excluding loans reclassified from acquired loans) increased 1.7% linked-quarter and total deposits increased 2.9% from the prior quarter

Maintained strong capital position significantly above regulatory levels necessary to be considered “well-capitalized”

Suspended share repurchase program on March 9, 2020, to maintain flexibility through the COVID-19 pandemic

 

Loans held for investment totaled $9.6 billion at March 31, 2020, reflecting an increase of 2.5% linked-quarter and 6.4% year-over-year.  During the first quarter of 2020, Trustmark reclassified $72.6 million of acquired loans to loans held for investment with the adoption of FASB ASC Topic 326, “Financial Instruments – Credit Losses.”  Excluding this reclassification, loans held for investment increased $159.7 million, or 1.7%, from the prior quarter and $500.3 million, or 5.6%, from the comparable period one year earlier.  

 

The linked-quarter growth reflects increases in other real estate secured loans and loans secured by nonfarm, nonresidential properties, which were principally the result of the migration of construction loans as projects were completed.  Trustmark’s loan portfolio is diversified by loan type and geography.

 

Deposits totaled $11.6 billion at March 31, 2020, up $330.2 million, or 2.9%, from the prior quarter.  Trustmark maintains a strong liquidity position as loans held for investment represented 82.7% of total deposits at March 31, 2020.  Interest-bearing deposit costs totaled 0.71% for the first quarter, a decrease of 14 basis points linked-quarter.  Trustmark continues to maintain an attractive, low-cost deposit base with approximately 59% of deposit balances in checking accounts.  The total cost of interest-bearing liabilities was 0.75% for the first quarter of 2020, a decrease of 13 basis points from the prior quarter.  

 

During the first quarter, Trustmark repurchased $27.5 million, or approximately 887 thousand of its common shares in open market transactions.  On March 9, 2020, Trustmark suspended its share repurchase program to ensure ample capital to support customers during the COVID-19 pandemic.  Trustmark’s capital position remained solid, reflecting the strength and diversity of its financial services businesses.  At March 31, 2020, Trustmark’s tangible equity to tangible assets ratio was 9.27%, while the total risk-based capital ratio was 12.78%.  Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable June 15, 2020, to shareholders of record on June 1, 2020.  

 

Credit Quality

Adopted current expected credit loss (CECL) methodology for estimating credit losses effective January 1, 2020

Allowance for credit losses (ACL) represented 468.8% of nonperforming loans, excluding individually evaluated loans

Nonperforming assets declined 5.6% from the prior quarter and 12.1% year-over-year, reflecting decreases in both nonperforming loans and other real estate

 

Effective January 1, 2020, Trustmark adopted the CECL methodology for estimating credit losses, which resulted in a net $26.6 million increase for credit losses primarily due to the creation of reserves for unfunded commitments.  This one-time cumulative adjustment resulted in an after-tax decrease of $19.9 million in retained earnings.  Primarily due to economic uncertainties related to the COVID-19 pandemic, Trustmark increased its provision for credit losses by $20.6 million and its credit loss expense related to off-balance sheet credit exposures by $6.8 million, resulting in total credit loss expenses of $27.4 million in the quarter.

 

Allocation of Trustmark's $100.6 million allowance for credit losses on loans held for investment represented 0.97% of commercial loans and 1.35% of consumer and home mortgage loans, resulting in an allowance to total loans held for investment of 1.05% at March 31, 2020, representing a level management considers commensurate with the present risk in the loan portfolio.  


 

Nonperforming loans totaled $53.0 million at March 31, 2020, down $234 thousand from the prior quarter and $3.4 million year-over-year.  Other real estate totaled $24.8 million, reflecting a $4.4 million decrease from the prior quarter and down $7.3 million from the prior year.  Collectively, nonperforming assets totaled $77.8 million, reflecting a linked-quarter decrease of $4.6 million and a year-over-year decrease of $10.7 million.

 

Revenue Generation

Revenue in the first quarter totaled $169.2 million, up 10.5% from the prior quarter

Mortgage banking revenue before hedge ineffectiveness was $17.6 million in the first quarter, a linked-quarter increase of 61.2%

Insurance commissions increased 23.3% from the prior quarter, and wealth management revenue rose 10.0% over the same period

 

Revenue in the first quarter totaled $169.2 million, up 10.5% from the prior quarter and up 15.7% from the same quarter in the prior year.  The linked-quarter and year-over-year increases primarily reflect higher mortgage banking revenue as well as higher insurance commissions and wealth management revenue.  Net interest income (FTE) in the first quarter totaled $107.1 million, resulting in a net interest margin of 3.52%, down 4 basis points from the prior quarter.  Relative to the prior quarter, net interest income (FTE) decreased $1.7 million as a $4.3 million reduction in interest income more than offset a $2.6 million reduction in interest expense.  

 

Noninterest income in the first quarter totaled $65.3 million, an increase of $17.7 million from the prior quarter and an increase of $23.8 million year-over-year.  The linked-quarter change primarily reflects a $19.6 million increase in mortgage banking revenue.  Mortgage banking revenue in the first quarter included $9.9 million in positive net hedge ineffectiveness.  Mortgage loan production in the first quarter totaled $457.2 million, down 8.3% linked-quarter and up 61.3% year-over-year.  Gain on sale of loans, net totaled $14.3 million in the first quarter, up $6.4 million from the prior quarter. Mortgage banking revenue totaled $27.5 million in the first quarter.

 

Insurance revenue totaled $11.6 million in the first quarter, up 23.3%, or $2.2 million, from the fourth quarter of 2019 and 6.2%, or $679 thousand, year-over-year.  The linked-quarter and year-over-year increases primarily reflect growth in property and casualty commissions.  Wealth management revenue in the first quarter totaled $8.5 million, an increase of $774 thousand, or 10.0%, from the prior quarter.  The growth reflects both higher trust management fees and brokerage and investment services revenue.  

 

Bank card and other fees decreased $2.8 million, or 34.6%, from the prior quarter and $1.8 million, or 25.5%, year-over-year, reflecting lower customer derivative revenue.  Service charges on deposit accounts experienced a seasonal decrease of $862 thousand, or 7.9%, from the prior quarter and $233 thousand, or 2.3%, year-over-year.  

 

Noninterest Expense

Core noninterest expense totaled $110.2 million in the first quarter of 2020, an increase of 2.5% from the prior quarter

Completed voluntary early retirement program

Continued to realign delivery channels to reflect changing customer preferences

 

During the first quarter, Trustmark completed a voluntary early retirement program.  Of those eligible for the program, 107 associates, or 3.8% of the workforce, retired by March 31, 2020.  A one-time, pre-tax charge of $4.4 million related to this program was incurred during the first quarter, reflecting $4.3 million in salaries and employee benefits and $102 thousand in other expense.  The result of this program is expected to produce pre-tax savings of approximately $2.9 million for the remainder of 2020 and $4.0 million for 2021.

 

Salaries and employee benefits – excluding $4.3 million of the voluntary early retirement charge – totaled $64.9 million, an increase of 4.1% from the prior quarter.  The increase primarily reflects higher insurance commissions and a seasonal increase in payroll taxes.  Services and fees rose $430 thousand linked-quarter, and other real estate expense, net decreased $197 thousand linked-quarter.  

 

Trustmark remains focused on optimizing its delivery channels and reallocating resources to reflect changing customer preferences.  In the first quarter of 2020, Trustmark closed five branches as customers continued to migrate to mobile and digital banking channels and embraced the convenience of remote options.  Trustmark remains committed to investments that promote profitable revenue growth, reengineering processes to enhance operational efficiency, realigning delivery channels to support changing customer preferences and managing the franchise for the long-term.

 

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, April 29, 2020 at 8:30 a.m. Central Time to discuss the Corporation’s financial results.  Interested parties may listen to the conference call by dialing (877) 317-3051 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com.  A replay of the conference call will also be available through Wednesday, May 13, 2020, in archived format at the same web address or by calling (877) 344-7529, passcode 10142197.

 

Trustmark is a financial services company providing banking and financial solutions through 188 offices in Alabama, Florida, Mississippi, Tennessee and Texas.

 

Forward-Looking Statements

Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “project,” “potential,” “seek,” “continue,” “could,” “would,” “future” or the negative of those terms or other words of similar meaning. You should read statements that contain these words carefully because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements include, but are not limited to, statements relating to anticipated future operating and financial performance measures, including net interest margin, credit quality, business initiatives, growth opportunities and growth rates, among other things, and encompass any estimate, prediction, expectation, projection, opinion, anticipation, outlook or statement of belief included therein as well as the management assumptions underlying these forward-looking statements. You should be aware that the occurrence of the events described under the caption “Risk Factors” in Trustmark’s filings with the Securities and Exchange Commission could have an adverse effect on any or all of our business, results of operations financial condition and liquidity. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected. Furthermore, many of these risks and uncertainties are currently amplified by and may continue to be amplified by or may, in the future, be amplified by, the novel coronavirus (COVID-19) pandemic, and also by the effectiveness of varying governmental responses in ameliorating the impact of the pandemic on our customers and the economies where they operate.

 

Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels and slowdowns in economic growth, the effects of the COVID-19 pandemic on the domestic and global economy, as well as the effectiveness of actions of federal, state and local governments and agencies (including the Board of Governors of the Federal Reserve Board (FRB) to mitigate its spread and economic impact, local, state and national economic and market conditions, conditions in the housing and real estate markets in the regions in which Trustmark operates and the extent and duration of the current volatility in the credit and financial markets, levels of and volatility in crude oil prices, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility of market interest rates, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts, the costs and effects of litigation and of


unexpected or adverse outcomes in such litigation, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, including the potential impact of issues related to the European financial system and monetary and other governmental actions designed to address credit, securities, and/or commodity markets, the enactment of legislation and changes in existing regulations or enforcement practices or the adoption of new regulations, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, particularly with respect to the COVID-19 pandemic, changes in our ability to control expenses, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, cyber-attacks and other breaches which could affect our information system security, natural disasters, environmental disasters,  pandemics or other health crises, acts of war or terrorism, and other risks described in our filings with the Securities and Exchange Commission (SEC).

 

Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Except as required by law, we undertake no obligation to update or revise any of this information, whether as the result of new information, future events or developments or otherwise.

 

 

Trustmark Investor Contacts:

Trustmark Media Contact:

Louis E. Greer

Melanie A. Morgan

Treasurer and

Senior Vice President

Principal Financial Officer

601-208-2979

601-208-2310

 

 

F. Joseph Rein, Jr.

Senior Vice President

601-208-6898

 

 


 

TRUSTMARK CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED FINANCIAL INFORMATION

 

March 31, 2020

 

($ in thousands)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Linked Quarter

 

 

Year over Year

 

QUARTERLY AVERAGE BALANCES

3/31/2020

 

 

12/31/2019

 

 

3/31/2019

 

 

$ Change

 

 

% Change

 

 

$ Change

 

 

% Change

 

Securities AFS-taxable

$

1,620,422

 

 

$

1,551,358

 

 

$

1,753,268

 

 

$

69,064

 

 

 

4.5

%

 

$

(132,846

)

 

 

-7.6

%

Securities AFS-nontaxable

 

22,056

 

 

 

23,300

 

 

 

40,159

 

 

 

(1,244

)

 

 

-5.3

%

 

 

(18,103

)

 

 

-45.1

%

Securities HTM-taxable

 

694,740

 

 

 

734,474

 

 

 

866,665

 

 

 

(39,734

)

 

 

-5.4

%

 

 

(171,925

)

 

 

-19.8

%

Securities HTM-nontaxable

 

25,673

 

 

 

25,703

 

 

 

28,710

 

 

 

(30

)

 

 

-0.1

%

 

 

(3,037

)

 

 

-10.6

%

Total securities

 

2,362,891

 

 

 

2,334,835

 

 

 

2,688,802

 

 

 

28,056

 

 

 

1.2

%

 

 

(325,911

)

 

 

-12.1

%

Loans (including loans held for sale) (1)

 

9,678,174

 

 

 

9,467,437

 

 

 

9,038,204

 

 

 

210,737

 

 

 

2.2

%

 

 

639,970

 

 

 

7.1

%

Acquired loans (1)

 

 

 

 

77,797

 

 

 

104,316

 

 

 

(77,797

)

 

 

-100.0

%

 

 

(104,316

)

 

 

-100.0

%

Fed funds sold and rev repos

 

164

 

 

 

184

 

 

 

277

 

 

 

(20

)

 

 

-10.9

%

 

 

(113

)

 

 

-40.8

%

Other earning assets

 

187,327

 

 

 

227,116

 

 

 

243,493

 

 

 

(39,789

)

 

 

-17.5

%

 

 

(56,166

)

 

 

-23.1

%

Total earning assets

 

12,228,556

 

 

 

12,107,369

 

 

 

12,075,092

 

 

 

121,187

 

 

 

1.0

%

 

 

153,464

 

 

 

1.3

%

Allowance for credit losses (ACL), loans held

   for investment (LHFI) (1)

 

(85,015

)

 

 

(86,211

)

 

 

(82,227

)

 

 

1,196

 

 

 

1.4

%

 

 

(2,788

)

 

 

-3.4

%

Other assets

 

1,498,725

 

 

 

1,445,075

 

 

 

1,447,611

 

 

 

53,650

 

 

 

3.7

%

 

 

51,114

 

 

 

3.5

%

Total assets

$

13,642,266

 

 

$

13,466,233

 

 

$

13,440,476

 

 

$

176,033

 

 

 

1.3

%

 

$

201,790

 

 

 

1.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand deposits

$

3,184,134

 

 

$

3,167,256

 

 

$

2,899,467

 

 

$

16,878

 

 

 

0.5

%

 

$

284,667

 

 

 

9.8

%

Savings deposits

 

3,646,936

 

 

 

3,448,899

 

 

 

3,786,835

 

 

 

198,037

 

 

 

5.7

%

 

 

(139,899

)

 

 

-3.7

%

Time deposits

 

1,617,307

 

 

 

1,663,741

 

 

 

1,881,556

 

 

 

(46,434

)

 

 

-2.8

%

 

 

(264,249

)

 

 

-14.0

%

Total interest-bearing deposits

 

8,448,377

 

 

 

8,279,896

 

 

 

8,567,858

 

 

 

168,481

 

 

 

2.0

%

 

 

(119,481

)

 

 

-1.4

%

Fed funds purchased and repos

 

247,513

 

 

 

164,754

 

 

 

84,352

 

 

 

82,759

 

 

 

50.2

%

 

 

163,161

 

 

n/m

 

Other borrowings

 

85,279

 

 

 

79,512

 

 

 

90,804

 

 

 

5,767

 

 

 

7.3

%

 

 

(5,525

)

 

 

-6.1

%

Junior subordinated debt securities

 

61,856

 

 

 

61,856

 

 

 

61,856

 

 

 

 

 

 

0.0

%

 

 

 

 

 

0.0

%

Total interest-bearing liabilities

 

8,843,025

 

 

 

8,586,018

 

 

 

8,804,870

 

 

 

257,007

 

 

 

3.0

%

 

 

38,155

 

 

 

0.4

%

Noninterest-bearing deposits

 

2,910,951

 

 

 

3,017,824

 

 

 

2,824,220

 

 

 

(106,873

)

 

 

-3.5

%

 

 

86,731

 

 

 

3.1

%

Other liabilities

 

248,220

 

 

 

205,786

 

 

 

221,199

 

 

 

42,434

 

 

 

20.6

%

 

 

27,021

 

 

 

12.2

%

Total liabilities

 

12,002,196

 

 

 

11,809,628

 

 

 

11,850,289

 

 

 

192,568

 

 

 

1.6

%

 

 

151,907

 

 

 

1.3

%

Shareholders' equity

 

1,640,070

 

 

 

1,656,605

 

 

 

1,590,187

 

 

 

(16,535

)

 

 

-1.0

%

 

 

49,883

 

 

 

3.1

%

Total liabilities and equity

$

13,642,266

 

 

$

13,466,233

 

 

$

13,440,476

 

 

$

176,033

 

 

 

1.3

%

 

$

201,790

 

 

 

1.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See Notes to Consolidated Financials

 


 

TRUSTMARK CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED FINANCIAL INFORMATION

 

March 31, 2020

 

($ in thousands)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Linked Quarter

 

 

Year over Year

 

PERIOD END BALANCES

3/31/2020

 

 

12/31/2019

 

 

3/31/2019

 

 

$ Change

 

 

% Change

 

 

$ Change

 

 

% Change

 

Cash and due from banks

$

404,341

 

 

$

358,916

 

 

$

454,047

 

 

$

45,425

 

 

 

12.7

%

 

$

(49,706

)

 

 

-10.9

%

Fed funds sold and rev repos

 

2,000

 

 

 

 

 

 

 

 

 

2,000

 

 

n/m

 

 

 

2,000

 

 

n/m

 

Securities available for sale

 

1,833,779

 

 

 

1,602,404

 

 

 

1,723,445

 

 

 

231,375

 

 

 

14.4

%

 

 

110,334

 

 

 

6.4

%

Securities held to maturity

 

704,276

 

 

 

738,099

 

 

 

884,319

 

 

 

(33,823

)

 

 

-4.6

%

 

 

(180,043

)

 

 

-20.4

%

Loans held for sale (LHFS)

 

325,389

 

 

 

226,347

 

 

 

172,683

 

 

 

99,042

 

 

 

43.8

%

 

 

152,706

 

 

 

88.4

%

Loans held for investment (LHFI) (1)

 

9,567,920

 

 

 

9,335,628

 

 

 

8,995,014

 

 

 

232,292

 

 

 

2.5

%

 

 

572,906

 

 

 

6.4

%

ACL LHFI (1)

 

(100,564

)

 

 

(84,277

)

 

 

(79,005

)

 

 

(16,287

)

 

 

-19.3

%

 

 

(21,559

)

 

 

-27.3

%

Net LHFI

 

9,467,356

 

 

 

9,251,351

 

 

 

8,916,009

 

 

 

216,005

 

 

 

2.3

%

 

 

551,347

 

 

 

6.2

%

Acquired loans (1)

 

 

 

 

72,601

 

 

 

93,201

 

 

 

(72,601

)

 

 

-100.0

%

 

 

(93,201

)

 

 

-100.0

%

Allowance for loan losses, acquired loans (1)

 

 

 

 

(815

)

 

 

(1,297

)

 

 

815

 

 

 

100.0

%

 

 

1,297

 

 

 

100.0

%

Net acquired loans

 

 

 

 

71,786

 

 

 

91,904

 

 

 

(71,786

)

 

 

-100.0

%

 

 

(91,904

)

 

 

-100.0

%

Net LHFI and acquired loans

 

9,467,356

 

 

 

9,323,137

 

 

 

9,007,913

 

 

 

144,219

 

 

 

1.5

%

 

 

459,443

 

 

 

5.1

%

Premises and equipment, net

 

190,179

 

 

 

189,791

 

 

 

189,743

 

 

 

388

 

 

 

0.2

%

 

 

436

 

 

 

0.2

%

Mortgage servicing rights

 

56,437

 

 

 

79,394

 

 

 

86,842

 

 

 

(22,957

)

 

 

-28.9

%

 

 

(30,405

)

 

 

-35.0

%

Goodwill

 

381,717

 

 

 

379,627

 

 

 

379,627

 

 

 

2,090

 

 

 

0.6

%

 

 

2,090

 

 

 

0.6

%

Identifiable intangible assets

 

7,537

 

 

 

7,343

 

 

 

10,092

 

 

 

194

 

 

 

2.6

%

 

 

(2,555

)

 

 

-25.3

%

Other real estate

 

24,847

 

 

 

29,248

 

 

 

32,139

 

 

 

(4,401

)

 

 

-15.0

%

 

 

(7,292

)

 

 

-22.7

%

Operating lease right-of-use assets

 

30,839

 

 

 

31,182

 

 

 

33,861

 

 

 

(343

)

 

 

-1.1

%

 

 

(3,022

)

 

 

-8.9

%

Other assets

 

591,132

 

 

 

532,389

 

 

 

503,306

 

 

 

58,743

 

 

 

11.0

%

 

 

87,826

 

 

 

17.4

%

     Total assets

$

14,019,829

 

 

$

13,497,877

 

 

$

13,478,017

 

 

$

521,952

 

 

 

3.9

%

 

$

541,812

 

 

 

4.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

$

2,977,058

 

 

$

2,891,215

 

 

$

2,867,778

 

 

$

85,843

 

 

 

3.0

%

 

$

109,280

 

 

 

3.8

%

Interest-bearing

 

8,598,706

 

 

 

8,354,342

 

 

 

8,667,037

 

 

 

244,364

 

 

 

2.9

%

 

 

(68,331

)

 

 

-0.8

%

Total deposits

 

11,575,764

 

 

 

11,245,557

 

 

 

11,534,815

 

 

 

330,207

 

 

 

2.9

%

 

 

40,949

 

 

 

0.4

%

Fed funds purchased and repos

 

421,821

 

 

 

256,020

 

 

 

46,867

 

 

 

165,801

 

 

 

64.8

%

 

 

374,954

 

 

n/m

 

Other borrowings

 

84,230

 

 

 

85,396

 

 

 

83,265

 

 

 

(1,166

)

 

 

-1.4

%

 

 

965

 

 

 

1.2

%

Junior subordinated debt securities

 

61,856

 

 

 

61,856

 

 

 

61,856

 

 

 

 

 

 

0.0

%

 

 

 

 

 

0.0

%

ACL on off-balance sheet credit exposures (1)

 

36,421

 

 

 

 

 

 

 

 

 

36,421

 

 

n/m

 

 

 

36,421

 

 

n/m

 

Operating lease liabilities

 

32,055

 

 

 

32,354

 

 

 

34,921

 

 

 

(299

)

 

 

-0.9

%

 

 

(2,866

)

 

 

-8.2

%

Other liabilities

 

155,283

 

 

 

155,992

 

 

 

129,265

 

 

 

(709

)

 

 

-0.5

%

 

 

26,018

 

 

 

20.1

%

     Total liabilities

 

12,367,430

 

 

 

11,837,175

 

 

 

11,890,989

 

 

 

530,255

 

 

 

4.5

%

 

 

476,441

 

 

 

4.0

%

Common stock

 

13,209

 

 

 

13,376

 

 

 

13,499

 

 

 

(167

)

 

 

-1.2

%

 

 

(290

)

 

 

-2.1

%

Capital surplus

 

229,403

 

 

 

256,400

 

 

 

272,268

 

 

 

(26,997

)

 

 

-10.5

%

 

 

(42,865

)

 

 

-15.7

%

Retained earnings

 

1,402,089

 

 

 

1,414,526

 

 

 

1,342,176

 

 

 

(12,437

)

 

 

-0.9

%

 

 

59,913

 

 

 

4.5

%

Accum other comprehensive income (loss), net of

   tax

7,698

 

 

 

(23,600

)

 

 

(40,915

)

 

 

31,298

 

 

n/m

 

 

 

48,613

 

 

n/m

 

     Total shareholders' equity

 

1,652,399

 

 

 

1,660,702

 

 

 

1,587,028

 

 

 

(8,303

)

 

 

-0.5

%

 

 

65,371

 

 

 

4.1

%

     Total liabilities and equity

$

14,019,829

 

 

$

13,497,877

 

 

$

13,478,017

 

 

$

521,952

 

 

 

3.9

%

 

$

541,812

 

 

 

4.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

See Notes to Consolidated Financials


 

TRUSTMARK CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED FINANCIAL INFORMATION

 

March 31, 2020

 

($ in thousands except per share data)

 

(unaudited)

 

 

Quarter Ended

 

 

Linked Quarter

 

 

Year over Year

 

INCOME STATEMENTS

3/31/2020

 

 

12/31/2019

 

 

3/31/2019

 

 

$ Change

 

 

% Change

 

 

$ Change

 

 

% Change

 

Interest and fees on LHFS & LHFI-FTE

$

109,357

 

 

$

111,383

 

 

$

109,890

 

 

$

(2,026

)

 

 

-1.8

%

 

$

(533

)

 

 

-0.5

%

Interest and fees on acquired loans (1)

 

 

 

 

2,138

 

 

 

1,916

 

 

 

(2,138

)

 

 

-100.0

%

 

 

(1,916

)

 

 

-100.0

%

Interest on securities-taxable

 

12,948

 

 

 

12,884

 

 

 

14,665

 

 

 

64

 

 

 

0.5

%

 

 

(1,717

)

 

 

-11.7

%

Interest on securities-tax exempt-FTE

 

457

 

 

 

484

 

 

 

646

 

 

 

(27

)

 

 

-5.6

%

 

 

(189

)

 

 

-29.3

%

Interest on fed funds sold and rev repos

 

 

 

 

1

 

 

 

2

 

 

 

(1

)

 

 

-100.0

%

 

 

(2

)

 

 

-100.0

%

Other interest income

 

740

 

 

 

896

 

 

 

1,603

 

 

 

(156

)

 

 

-17.4

%

 

 

(863

)

 

 

-53.8

%

     Total interest income-FTE

 

123,502

 

 

 

127,786

 

 

 

128,722

 

 

 

(4,284

)

 

 

-3.4

%

 

 

(5,220

)

 

 

-4.1

%

Interest on deposits

 

14,957

 

 

 

17,716

 

 

 

19,570

 

 

 

(2,759

)

 

 

-15.6

%

 

 

(4,613

)

 

 

-23.6

%

Interest on fed funds pch and repos

 

625

 

 

 

504

 

 

 

288

 

 

 

121

 

 

 

24.0

%

 

 

337

 

 

n/m

 

Other interest expense

 

860

 

 

 

826

 

 

 

825

 

 

 

34

 

 

 

4.1

%

 

 

35

 

 

 

4.2

%

     Total interest expense

 

16,442

 

 

 

19,046

 

 

 

20,683

 

 

 

(2,604

)

 

 

-13.7

%

 

 

(4,241

)

 

 

-20.5

%

     Net interest income-FTE

 

107,060

 

 

 

108,740

 

 

 

108,039

 

 

 

(1,680

)

 

 

-1.5

%

 

 

(979

)

 

 

-0.9

%

Provision for credit losses, LHFI (1)

 

20,581

 

 

 

3,661

 

 

 

1,611

 

 

 

16,920

 

 

n/m

 

 

 

18,970

 

 

n/m

 

Provision for loan losses, acquired loans (1)

 

 

 

 

(2

)

 

 

78

 

 

 

2

 

 

 

100.0

%

 

 

(78

)

 

 

-100.0

%

     Net interest income after provision-FTE

 

86,479

 

 

 

105,081

 

 

 

106,350

 

 

 

(18,602

)

 

 

-17.7

%

 

 

(19,871

)

 

 

-18.7

%

Service charges on deposit accounts

 

10,032

 

 

 

10,894

 

 

 

10,265

 

 

 

(862

)

 

 

-7.9

%

 

 

(233

)

 

 

-2.3

%

Bank card and other fees

 

5,355

 

 

 

8,192

 

 

 

7,191

 

 

 

(2,837

)

 

 

-34.6

%

 

 

(1,836

)

 

 

-25.5

%

Mortgage banking, net

 

27,483

 

 

 

7,914

 

 

 

3,442

 

 

 

19,569

 

 

n/m

 

 

 

24,041

 

 

n/m

 

Insurance commissions

 

11,550

 

 

 

9,364

 

 

 

10,871

 

 

 

2,186

 

 

 

23.3

%

 

 

679

 

 

 

6.2

%

Wealth management

 

8,537

 

 

 

7,763

 

 

 

7,483

 

 

 

774

 

 

 

10.0

%

 

 

1,054

 

 

 

14.1

%

Other, net

 

2,307

 

 

 

3,451

 

 

 

2,239

 

 

 

(1,144

)

 

 

-33.1

%

 

 

68

 

 

 

3.0

%

     Nonint inc-excl sec gains (losses), net

 

65,264

 

 

 

47,578

 

 

 

41,491

 

 

 

17,686

 

 

 

37.2

%

 

 

23,773

 

 

 

57.3

%

Security gains (losses), net

 

 

 

 

 

 

 

 

 

 

 

 

n/m

 

 

 

 

 

n/m

 

     Total noninterest income

 

65,264

 

 

 

47,578

 

 

 

41,491

 

 

 

17,686

 

 

 

37.2

%

 

 

23,773

 

 

 

57.3

%

Salaries and employee benefits

 

69,148

 

 

 

62,319

 

 

 

60,954

 

 

 

6,829

 

 

 

11.0

%

 

 

8,194

 

 

 

13.4

%

Services and fees

 

19,930

 

 

 

19,500

 

 

 

16,968

 

 

 

430

 

 

 

2.2

%

 

 

2,962

 

 

 

17.5

%

Net occupancy-premises

 

6,286

 

 

 

6,461

 

 

 

6,454

 

 

 

(175

)

 

 

-2.7

%

 

 

(168

)

 

 

-2.6

%

Equipment expense

 

5,616

 

 

 

5,880

 

 

 

5,924

 

 

 

(264

)

 

 

-4.5

%

 

 

(308

)

 

 

-5.2

%

Other real estate expense, net

 

1,294

 

 

 

1,491

 

 

 

1,752

 

 

 

(197

)

 

 

-13.2

%

 

 

(458

)

 

 

-26.1

%

Credit loss expense related to off-balance sheet

   credit exposures (1)

 

6,783

 

 

 

 

 

 

 

 

 

6,783

 

 

n/m

 

 

 

6,783

 

 

n/m

 

Other expense

 

14,753

 

 

 

14,376

 

 

 

13,969

 

 

 

377

 

 

 

2.6

%

 

 

784

 

 

 

5.6

%

     Total noninterest expense

 

123,810

 

 

 

110,027

 

 

 

106,021

 

 

 

13,783

 

 

 

12.5

%

 

 

17,789

 

 

 

16.8

%

Income before income taxes and tax eq adj

 

27,933

 

 

 

42,632

 

 

 

41,820

 

 

 

(14,699

)

 

 

-34.5

%

 

 

(13,887

)

 

 

-33.2

%

Tax equivalent adjustment

 

3,108

 

 

 

3,149

 

 

 

3,231

 

 

 

(41

)

 

 

-1.3

%

 

 

(123

)

 

 

-3.8

%

Income before income taxes

 

24,825

 

 

 

39,483

 

 

 

38,589

 

 

 

(14,658

)

 

 

-37.1

%

 

 

(13,764

)

 

 

-35.7

%

Income taxes

 

2,607

 

 

 

5,537

 

 

 

5,250

 

 

 

(2,930

)

 

 

-52.9

%

 

 

(2,643

)

 

 

-50.3

%

Net income

$

22,218

 

 

$

33,946

 

 

$

33,339

 

 

$

(11,728

)

 

 

-34.5

%

 

$

(11,121

)

 

 

-33.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per share data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Earnings per share - basic

$

0.35

 

 

$

0.53

 

 

$

0.51

 

 

$

(0.18

)

 

 

-34.0

%

 

$

(0.16

)

 

 

-31.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Earnings per share - diluted

$

0.35

 

 

$

0.53

 

 

$

0.51

 

 

$

(0.18

)

 

 

-34.0

%

 

$

(0.16

)

 

 

-31.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Dividends per share

$

0.23

 

 

$

0.23

 

 

$

0.23

 

 

 

 

 

 

0.0

%

 

 

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Basic

 

63,756,629

 

 

 

64,255,716

 

 

 

65,239,470

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Diluted

 

63,913,603

 

 

 

64,435,276

 

 

 

65,378,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period end shares outstanding

 

63,396,912

 

 

 

64,200,111

 

 

 

64,789,943

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

See Notes to Consolidated Financials

 


 

TRUSTMARK CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED FINANCIAL INFORMATION

 

March 31, 2020

 

($ in thousands)

 

(unaudited)

 

 

 

Quarter Ended

 

 

Linked Quarter

 

 

Year over Year

 

NONPERFORMING ASSETS (1)

3/31/2020

 

 

12/31/2019

 

 

3/31/2019

 

 

$ Change

 

 

% Change

 

 

$ Change

 

 

% Change

 

Nonaccrual loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Alabama

$

4,769

 

 

$

1,870

 

 

$

2,971

 

 

$

2,899

 

 

n/m

 

 

$

1,798

 

 

 

60.5

%

  Florida

 

254

 

 

 

267

 

 

 

408

 

 

 

(13

)

 

 

-4.9

%

 

 

(154

)

 

 

-37.7

%

  Mississippi (2)

 

40,815

 

 

 

41,493

 

 

 

41,145

 

 

 

(678

)

 

 

-1.6

%

 

 

(330

)

 

 

-0.8

%

  Tennessee (3)

 

6,153

 

 

 

8,980

 

 

 

8,806

 

 

 

(2,827

)

 

 

-31.5

%

 

 

(2,653

)

 

 

-30.1

%

  Texas

 

1,001

 

 

 

616

 

 

 

3,093

 

 

 

385

 

 

 

62.5

%

 

 

(2,092

)

 

 

-67.6

%

     Total nonaccrual loans

 

52,992

 

 

 

53,226

 

 

 

56,423

 

 

 

(234

)

 

 

-0.4

%

 

 

(3,431

)

 

 

-6.1

%

Other real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Alabama

 

6,229

 

 

 

8,133

 

 

 

6,878

 

 

 

(1,904

)

 

 

-23.4

%

 

 

(649

)

 

 

-9.4

%

  Florida

 

4,835

 

 

 

5,877

 

 

 

8,120

 

 

 

(1,042

)

 

 

-17.7

%

 

 

(3,285

)

 

 

-40.5

%

  Mississippi (2)

 

13,296

 

 

 

14,919

 

 

 

15,421

 

 

 

(1,623

)

 

 

-10.9

%

 

 

(2,125

)

 

 

-13.8

%

  Tennessee (3)

 

487

 

 

 

319

 

 

 

994

 

 

 

168

 

 

 

52.7

%

 

 

(507

)

 

 

-51.0

%

  Texas

 

 

 

 

 

 

 

726

 

 

 

 

 

n/m

 

 

 

(726

)

 

 

-100.0

%

     Total other real estate

 

24,847

 

 

 

29,248

 

 

 

32,139

 

 

 

(4,401

)

 

 

-15.0

%

 

 

(7,292

)

 

 

-22.7

%

        Total nonperforming assets

$

77,839

 

 

$

82,474

 

 

$

88,562

 

 

$

(4,635

)

 

 

-5.6

%

 

$

(10,723

)

 

 

-12.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOANS PAST DUE OVER 90 DAYS (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LHFI

$

708

 

 

$

642

 

 

$

670

 

 

$

66

 

 

 

10.3

%

 

$

38

 

 

 

5.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LHFS-Guaranteed GNMA serviced loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(no obligation to repurchase)

$

43,564

 

 

$

41,648

 

 

$

40,793

 

 

$

1,916

 

 

 

4.6

%

 

$

2,771

 

 

 

6.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

 

Linked Quarter

 

 

Year over Year

 

ACL LHFI (1)(4)

3/31/2020

 

 

12/31/2019

 

 

3/31/2019

 

 

$ Change

 

 

% Change

 

 

$ Change

 

 

% Change

 

Beginning Balance

$

84,277

 

 

$

83,226

 

 

$

79,290

 

 

$

1,051

 

 

 

1.3

%

 

$

4,987

 

 

 

6.3

%

CECL adoption adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LHFI

 

(3,039

)

 

 

 

 

 

 

 

 

(3,039

)

 

n/m

 

 

 

(3,039

)

 

n/m

 

Acquired loan transfers

 

1,822

 

 

 

 

 

 

 

 

 

1,822

 

 

n/m

 

 

 

1,822

 

 

n/m

 

Provision for credit losses

 

20,581

 

 

 

3,661

 

 

 

1,611

 

 

 

16,920

 

 

n/m

 

 

 

18,970

 

 

n/m

 

Charge-offs

 

(5,545

)

 

 

(4,619

)

 

 

(4,033

)

 

 

(926

)

 

 

-20.0

%

 

 

(1,512

)

 

 

-37.5

%

Recoveries

 

2,468

 

 

 

2,009

 

 

 

2,137

 

 

 

459

 

 

 

22.8

%

 

 

331

 

 

 

15.5

%

Net (charge-offs) recoveries

 

(3,077

)

 

 

(2,610

)

 

 

(1,896

)

 

 

(467

)

 

 

-17.9

%

 

 

(1,181

)

 

 

-62.3

%

Ending Balance

$

100,564

 

 

$

84,277

 

 

$

79,005

 

 

$

16,287

 

 

 

19.3

%

 

$

21,559

 

 

 

27.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET (CHARGE-OFFS) RECOVERIES (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alabama

$

(1,080

)

 

$

(132

)

 

$

(15

)

 

$

(948

)

 

n/m

 

 

$

(1,065

)

 

n/m

 

Florida

 

64

 

 

 

357

 

 

 

227

 

 

 

(293

)

 

 

-82.1

%

 

 

(163

)

 

 

-71.8

%

Mississippi (2)

 

126

 

 

 

(1,792

)

 

 

(2,130

)

 

 

1,918

 

 

n/m

 

 

 

2,256

 

 

n/m

 

Tennessee (3)

 

(2,186

)

 

 

(131

)

 

 

(50

)

 

 

(2,055

)

 

n/m

 

 

 

(2,136

)

 

n/m

 

Texas

 

(1

)

 

 

(912

)

 

 

72

 

 

 

911

 

 

 

99.9

%

 

 

(73

)

 

n/m

 

     Total net (charge-offs) recoveries

$

(3,077

)

 

$

(2,610

)

 

$

(1,896

)

 

$

(467

)

 

 

-17.9

%

 

$

(1,181

)

 

 

-62.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)  Excludes acquired loans.

 

 

 

 

 

(2)  Mississippi includes Central and Southern Mississippi Regions.

 

 

 

 

 

(3)  Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

See Notes to Consolidated Financials


 

TRUSTMARK CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED FINANCIAL INFORMATION

 

March 31, 2020

 

($ in thousands)

 

(unaudited)

 

 

 

Quarter Ended

 

AVERAGE BALANCES

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

3/31/2019

 

Securities AFS-taxable

 

$

1,620,422

 

 

$

1,551,358

 

 

$

1,570,803

 

 

$

1,661,464

 

 

$

1,753,268

 

Securities AFS-nontaxable

 

 

22,056

 

 

 

23,300

 

 

 

25,096

 

 

 

31,474

 

 

 

40,159

 

Securities HTM-taxable

 

 

694,740

 

 

 

734,474

 

 

 

778,098

 

 

 

821,357

 

 

 

866,665

 

Securities HTM-nontaxable

 

 

25,673

 

 

 

25,703

 

 

 

26,088

 

 

 

27,035

 

 

 

28,710

 

Total securities

 

 

2,362,891

 

 

 

2,334,835

 

 

 

2,400,085

 

 

 

2,541,330

 

 

 

2,688,802

 

Loans (including loans held for sale) (1)

 

 

9,678,174

 

 

 

9,467,437

 

 

 

9,436,287

 

 

 

9,260,028

 

 

 

9,038,204

 

Acquired loans (1)

 

 

 

 

 

77,797

 

 

 

82,641

 

 

 

91,217

 

 

 

104,316

 

Fed funds sold and rev repos

 

 

164

 

 

 

184

 

 

 

3,662

 

 

 

34,057

 

 

 

277

 

Other earning assets

 

 

187,327

 

 

 

227,116

 

 

 

176,163

 

 

 

316,604

 

 

 

243,493

 

Total earning assets

 

 

12,228,556

 

 

 

12,107,369

 

 

 

12,098,838

 

 

 

12,243,236

 

 

 

12,075,092

 

ACL LHFI (1)

 

 

(85,015

)

 

 

(86,211

)

 

 

(83,756

)

 

 

(81,996

)

 

 

(82,227

)

Other assets

 

 

1,498,725

 

 

 

1,445,075

 

 

 

1,447,977

 

 

 

1,467,462

 

 

 

1,447,611

 

Total assets

 

$

13,642,266

 

 

$

13,466,233

 

 

$

13,463,059

 

 

$

13,628,702

 

 

$

13,440,476

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand deposits

 

$

3,184,134

 

 

$

3,167,256

 

 

$

3,085,758

 

 

$

3,048,876

 

 

$

2,899,467

 

Savings deposits

 

 

3,646,936

 

 

 

3,448,899

 

 

 

3,568,403

 

 

 

3,801,187

 

 

 

3,786,835

 

Time deposits

 

 

1,617,307

 

 

 

1,663,741

 

 

 

1,753,083

 

 

 

1,840,065

 

 

 

1,881,556

 

Total interest-bearing deposits

 

 

8,448,377

 

 

 

8,279,896

 

 

 

8,407,244

 

 

 

8,690,128

 

 

 

8,567,858

 

Fed funds purchased and repos

 

 

247,513

 

 

 

164,754

 

 

 

142,064

 

 

 

51,264

 

 

 

84,352

 

Other borrowings

 

 

85,279

 

 

 

79,512

 

 

 

78,404

 

 

 

81,352

 

 

 

90,804

 

Junior subordinated debt securities

 

 

61,856

 

 

 

61,856

 

 

 

61,856

 

 

 

61,856

 

 

 

61,856

 

Total interest-bearing liabilities

 

 

8,843,025

 

 

 

8,586,018

 

 

 

8,689,568

 

 

 

8,884,600

 

 

 

8,804,870

 

Noninterest-bearing deposits

 

 

2,910,951

 

 

 

3,017,824

 

 

 

2,932,754

 

 

 

2,898,266

 

 

 

2,824,220

 

Other liabilities

 

 

248,220

 

 

 

205,786

 

 

 

206,091

 

 

 

240,091

 

 

 

221,199

 

Total liabilities

 

 

12,002,196

 

 

 

11,809,628

 

 

 

11,828,413

 

 

 

12,022,957

 

 

 

11,850,289

 

Shareholders' equity

 

 

1,640,070

 

 

 

1,656,605

 

 

 

1,634,646

 

 

 

1,605,745

 

 

 

1,590,187

 

Total liabilities and equity

 

$

13,642,266

 

 

$

13,466,233

 

 

$

13,463,059

 

 

$

13,628,702

 

 

$

13,440,476

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See Notes to Consolidated Financials


 

TRUSTMARK CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED FINANCIAL INFORMATION

 

March 31, 2020

 

($ in thousands)

 

(unaudited)

 

PERIOD END BALANCES

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

3/31/2019

 

Cash and due from banks

 

$

404,341

 

 

$

358,916

 

 

$

486,263

 

 

$

404,413

 

 

$

454,047

 

Fed funds sold and rev repos

 

 

2,000

 

 

 

 

 

 

 

 

 

75,499

 

 

 

 

Securities available for sale

 

 

1,833,779

 

 

 

1,602,404

 

 

 

1,553,705

 

 

 

1,643,725

 

 

 

1,723,445

 

Securities held to maturity

 

 

704,276

 

 

 

738,099

 

 

 

785,422

 

 

 

825,536

 

 

 

884,319

 

Loans held for sale (LHFS)

 

 

325,389

 

 

 

226,347

 

 

 

292,800

 

 

 

240,380

 

 

 

172,683

 

Loans held for investment (LHFI) (1)

 

 

9,567,920

 

 

 

9,335,628

 

 

 

9,223,668

 

 

 

9,116,759

 

 

 

8,995,014

 

ACL LHFI (1)

 

 

(100,564

)

 

 

(84,277

)

 

 

(83,226

)

 

 

(80,399

)

 

 

(79,005

)

Net LHFI

 

 

9,467,356

 

 

 

9,251,351

 

 

 

9,140,442

 

 

 

9,036,360

 

 

 

8,916,009

 

Acquired loans (1)

 

 

 

 

 

72,601

 

 

 

81,004

 

 

 

87,884

 

 

 

93,201

 

Allowance for loan losses, acquired loans (1)

 

 

 

 

 

(815

)

 

 

(1,249

)

 

 

(1,398

)

 

 

(1,297

)

Net acquired loans

 

 

 

 

 

71,786

 

 

 

79,755

 

 

 

86,486

 

 

 

91,904

 

Net LHFI and acquired loans

 

 

9,467,356

 

 

 

9,323,137

 

 

 

9,220,197

 

 

 

9,122,846

 

 

 

9,007,913

 

Premises and equipment, net

 

 

190,179

 

 

 

189,791

 

 

 

188,423

 

 

 

189,820

 

 

 

189,743

 

Mortgage servicing rights

 

 

56,437

 

 

 

79,394

 

 

 

73,016

 

 

 

79,283

 

 

 

86,842

 

Goodwill

 

 

381,717

 

 

 

379,627

 

 

 

379,627

 

 

 

379,627

 

 

 

379,627

 

Identifiable intangible assets

 

 

7,537

 

 

 

7,343

 

 

 

8,345

 

 

 

9,101

 

 

 

10,092

 

Other real estate

 

 

24,847

 

 

 

29,248

 

 

 

31,974

 

 

 

31,243

 

 

 

32,139

 

Operating lease right-of-use assets

 

 

30,839

 

 

 

31,182

 

 

 

33,180

 

 

 

32,762

 

 

 

33,861

 

Other assets

 

 

591,132

 

 

 

532,389

 

 

 

531,834

 

 

 

514,723

 

 

 

503,306

 

Total assets

 

$

14,019,829

 

 

$

13,497,877

 

 

$

13,584,786

 

 

$

13,548,958

 

 

$

13,478,017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

2,977,058

 

 

$

2,891,215

 

 

$

3,064,127

 

 

$

2,909,141

 

 

$

2,867,778

 

Interest-bearing

 

 

8,598,706

 

 

 

8,354,342

 

 

 

8,190,056

 

 

 

8,657,488

 

 

 

8,667,037

 

Total deposits

 

 

11,575,764

 

 

 

11,245,557

 

 

 

11,254,183

 

 

 

11,566,629

 

 

 

11,534,815

 

Fed funds purchased and repos

 

 

421,821

 

 

 

256,020

 

 

 

376,712

 

 

 

51,800

 

 

 

46,867

 

Other borrowings

 

 

84,230

 

 

 

85,396

 

 

 

76,685

 

 

 

79,012

 

 

 

83,265

 

Junior subordinated debt securities

 

 

61,856

 

 

 

61,856

 

 

 

61,856

 

 

 

61,856

 

 

 

61,856

 

ACL on off-balance sheet credit exposures (1)

 

 

36,421

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating lease liabilities

 

 

32,055

 

 

 

32,354

 

 

 

34,319

 

 

 

33,878

 

 

 

34,921

 

Other liabilities

 

 

155,283

 

 

 

155,992

 

 

 

135,669

 

 

 

137,233

 

 

 

129,265

 

Total liabilities

 

 

12,367,430

 

 

 

11,837,175

 

 

 

11,939,424

 

 

 

11,930,408

 

 

 

11,890,989

 

Common stock

 

 

13,209

 

 

 

13,376

 

 

 

13,390

 

 

 

13,418

 

 

 

13,499

 

Capital surplus

 

 

229,403

 

 

 

256,400

 

 

 

257,370

 

 

 

260,619

 

 

 

272,268

 

Retained earnings

 

 

1,402,089

 

 

 

1,414,526

 

 

 

1,395,460

 

 

 

1,369,329

 

 

 

1,342,176

 

Accum other comprehensive income (loss), net of tax

 

 

7,698

 

 

 

(23,600

)

 

 

(20,858

)

 

 

(24,816

)

 

 

(40,915

)

Total shareholders' equity

 

 

1,652,399

 

 

 

1,660,702

 

 

 

1,645,362

 

 

 

1,618,550

 

 

 

1,587,028

 

Total liabilities and equity

 

$

14,019,829

 

 

$

13,497,877

 

 

$

13,584,786

 

 

$

13,548,958

 

 

$

13,478,017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

See Notes to Consolidated Financials


 

TRUSTMARK CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED FINANCIAL INFORMATION

 

March 31, 2020

 

($ in thousands except per share data)

 

(unaudited)

 

 

 

 

Quarter Ended

 

INCOME STATEMENTS

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

3/31/2019

 

Interest and fees on LHFS & LHFI-FTE

 

$

109,357

 

 

$

111,383

 

 

$

116,432

 

 

$

114,873

 

 

$

109,890

 

Interest and fees on acquired loans (1)

 

 

 

 

 

2,138

 

 

 

2,309

 

 

 

2,010

 

 

 

1,916

 

Interest on securities-taxable

 

 

12,948

 

 

 

12,884

 

 

 

13,184

 

 

 

13,916

 

 

 

14,665

 

Interest on securities-tax exempt-FTE

 

 

457

 

 

 

484

 

 

 

485

 

 

 

551

 

 

 

646

 

Interest on fed funds sold and rev repos

 

 

 

 

 

1

 

 

 

23

 

 

 

214

 

 

 

2

 

Other interest income

 

 

740

 

 

 

896

 

 

 

1,044

 

 

 

1,820

 

 

 

1,603

 

Total interest income-FTE

 

 

123,502

 

 

 

127,786

 

 

 

133,477

 

 

 

133,384

 

 

 

128,722

 

Interest on deposits

 

 

14,957

 

 

 

17,716

 

 

 

20,385

 

 

 

21,500

 

 

 

19,570

 

Interest on fed funds pch and repos

 

 

625

 

 

 

504

 

 

 

547

 

 

 

81

 

 

 

288

 

Other interest expense

 

 

860

 

 

 

826

 

 

 

830

 

 

 

831

 

 

 

825

 

Total interest expense

 

 

16,442

 

 

 

19,046

 

 

 

21,762

 

 

 

22,412

 

 

 

20,683

 

Net interest income-FTE

 

 

107,060

 

 

 

108,740

 

 

 

111,715

 

 

 

110,972

 

 

 

108,039

 

Provision for credit losses, LHFI (1)

 

 

20,581

 

 

 

3,661

 

 

 

3,039

 

 

 

2,486

 

 

 

1,611

 

Provision for loan losses, acquired loans (1)

 

 

 

 

 

(2

)

 

 

(140

)

 

 

106

 

 

 

78

 

Net interest income after provision-FTE

 

 

86,479

 

 

 

105,081

 

 

 

108,816

 

 

 

108,380

 

 

 

106,350

 

Service charges on deposit accounts

 

 

10,032

 

 

 

10,894

 

 

 

11,065

 

 

 

10,379

 

 

 

10,265

 

Bank card and other fees

 

 

5,355

 

 

 

8,192

 

 

 

8,349

 

 

 

8,004

 

 

 

7,191

 

Mortgage banking, net

 

 

27,483

 

 

 

7,914

 

 

 

8,171

 

 

 

10,295

 

 

 

3,442

 

Insurance commissions

 

 

11,550

 

 

 

9,364

 

 

 

11,072

 

 

 

11,089

 

 

 

10,871

 

Wealth management

 

 

8,537

 

 

 

7,763

 

 

 

7,691

 

 

 

7,742

 

 

 

7,483

 

Other, net

 

 

2,307

 

 

 

3,451

 

 

 

1,989

 

 

 

2,130

 

 

 

2,239

 

Nonint inc-excl sec gains (losses), net

 

 

65,264

 

 

 

47,578

 

 

 

48,337

 

 

 

49,639

 

 

 

41,491

 

Security gains (losses), net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total noninterest income

 

 

65,264

 

 

 

47,578

 

 

 

48,337

 

 

 

49,639

 

 

 

41,491

 

Salaries and employee benefits

 

 

69,148

 

 

 

62,319

 

 

 

62,495

 

 

 

61,949

 

 

 

60,954

 

Services and fees

 

 

19,930

 

 

 

19,500

 

 

 

18,838

 

 

 

18,009

 

 

 

16,968

 

Net occupancy-premises

 

 

6,286

 

 

 

6,461

 

 

 

6,831

 

 

 

6,403

 

 

 

6,454

 

Equipment expense

 

 

5,616

 

 

 

5,880

 

 

 

5,971

 

 

 

5,958

 

 

 

5,924

 

Other real estate expense, net

 

 

1,294

 

 

 

1,491

 

 

 

531

 

 

 

132

 

 

 

1,752

 

Credit loss expense related to off-balance sheet credit exposures (1)

 

 

6,783

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expense

 

 

14,753

 

 

 

14,376

 

 

 

12,187

 

 

 

13,650

 

 

 

13,969

 

Total noninterest expense

 

 

123,810

 

 

 

110,027

 

 

 

106,853

 

 

 

106,101

 

 

 

106,021

 

Income before income taxes and tax eq adj

 

 

27,933

 

 

 

42,632

 

 

 

50,300

 

 

 

51,918

 

 

 

41,820

 

Tax equivalent adjustment

 

 

3,108

 

 

 

3,149

 

 

 

3,249

 

 

 

3,248

 

 

 

3,231

 

Income before income taxes

 

 

24,825

 

 

 

39,483

 

 

 

47,051

 

 

 

48,670

 

 

 

38,589

 

Income taxes

 

 

2,607

 

 

 

5,537

 

 

 

6,016

 

 

 

6,530

 

 

 

5,250

 

Net income

 

$

22,218

 

 

$

33,946

 

 

$

41,035

 

 

$

42,140

 

 

$

33,339

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per share data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - basic

 

$

0.35

 

 

$

0.53

 

 

$

0.64

 

 

$

0.65

 

 

$

0.51

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - diluted

 

$

0.35

 

 

$

0.53

 

 

$

0.64

 

 

$

0.65

 

 

$

0.51

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends per share

 

$

0.23

 

 

$

0.23

 

 

$

0.23

 

 

$

0.23

 

 

$

0.23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

63,756,629

 

 

 

64,255,716

 

 

 

64,358,540

 

 

 

64,677,889

 

 

 

65,239,470

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

63,913,603

 

 

 

64,435,276

 

 

 

64,514,605

 

 

 

64,815,029

 

 

 

65,378,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period end shares outstanding

 

 

63,396,912

 

 

 

64,200,111

 

 

 

64,262,779

 

 

 

64,398,846

 

 

 

64,789,943

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

See Notes to Consolidated Financials

 


 

TRUSTMARK CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED FINANCIAL  INFORMATION

 

March 31, 2020

 

($ in thousands)

 

(unaudited)

 

 

 

 

Quarter Ended

 

NONPERFORMING ASSETS (1)

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

3/31/2019

 

Nonaccrual loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alabama

 

$

4,769

 

 

$

1,870

 

 

$

2,936

 

 

$

2,327

 

 

$

2,971

 

Florida

 

 

254

 

 

 

267

 

 

 

311

 

 

 

330

 

 

 

408

 

Mississippi (2)

 

 

40,815

 

 

 

41,493

 

 

 

43,895

 

 

 

39,373

 

 

 

41,145

 

Tennessee (3)

 

 

6,153

 

 

 

8,980

 

 

 

10,193

 

 

 

8,455

 

 

 

8,806

 

Texas

 

 

1,001

 

 

 

616

 

 

 

1,695

 

 

 

2,403

 

 

 

3,093

 

Total nonaccrual loans

 

 

52,992

 

 

 

53,226

 

 

 

59,030

 

 

 

52,888

 

 

 

56,423

 

Other real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alabama

 

 

6,229

 

 

 

8,133

 

 

 

6,501

 

 

 

6,451

 

 

 

6,878

 

Florida

 

 

4,835

 

 

 

5,877

 

 

 

6,983

 

 

 

7,826

 

 

 

8,120

 

Mississippi (2)

 

 

13,296

 

 

 

14,919

 

 

 

17,646

 

 

 

15,511

 

 

 

15,421

 

Tennessee (3)

 

 

487

 

 

 

319

 

 

 

844

 

 

 

815

 

 

 

994

 

Texas

 

 

 

 

 

 

 

 

 

 

 

640

 

 

 

726

 

Total other real estate

 

 

24,847

 

 

 

29,248

 

 

 

31,974

 

 

 

31,243

 

 

 

32,139

 

Total nonperforming assets

 

$

77,839

 

 

$

82,474

 

 

$

91,004

 

 

$

84,131

 

 

$

88,562

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOANS PAST DUE OVER 90 DAYS (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LHFI

 

$

708

 

 

$

642

 

 

$

878

 

 

$

1,245

 

 

$

670

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LHFS-Guaranteed GNMA serviced loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(no obligation to repurchase)

 

$

43,564

 

 

$

41,648

 

 

$

36,445

 

 

$

38,355

 

 

$

40,793

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

ACL LHFI (1)(4)

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

3/31/2019

 

Beginning Balance

 

$

84,277

 

 

$

83,226

 

 

$

80,399

 

 

$

79,005

 

 

$

79,290

 

CECL adoption adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LHFI

 

 

(3,039

)

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loan transfers

 

 

1,822

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

 

20,581

 

 

 

3,661

 

 

 

3,039

 

 

 

2,486

 

 

 

1,611

 

Charge-offs

 

 

(5,545

)

 

 

(4,619

)

 

 

(2,892

)

 

 

(2,937

)

 

 

(4,033

)

Recoveries

 

 

2,468

 

 

 

2,009

 

 

 

2,680

 

 

 

1,845

 

 

 

2,137

 

Net (charge-offs) recoveries

 

 

(3,077

)

 

 

(2,610

)

 

 

(212

)

 

 

(1,092

)

 

 

(1,896

)

Ending Balance

 

$

100,564

 

 

$

84,277

 

 

$

83,226

 

 

$

80,399

 

 

$

79,005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET (CHARGE-OFFS) RECOVERIES (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alabama

 

$

(1,080

)

 

$

(132

)

 

$

(329

)

 

$

(278

)

 

$

(15

)

Florida

 

 

64

 

 

 

357

 

 

 

136

 

 

 

130

 

 

 

227

 

Mississippi (2)

 

 

126

 

 

 

(1,792

)

 

 

391

 

 

 

(907

)

 

 

(2,130

)

Tennessee (3)

 

 

(2,186

)

 

 

(131

)

 

 

(483

)

 

 

(44

)

 

 

(50

)

Texas

 

 

(1

)

 

 

(912

)

 

 

73

 

 

 

7

 

 

 

72

 

Total net (charge-offs) recoveries

 

$

(3,077

)

 

$

(2,610

)

 

$

(212

)

 

$

(1,092

)

 

$

(1,896

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)  Excludes acquired loans.

 

 

 

 

 

(2)  Mississippi includes Central and Southern Mississippi Regions.

 

 

 

 

 

(3)  Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.

 

 

 

 

 

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

 

 

See Notes to Consolidated Financials


 

TRUSTMARK CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED FINANCIAL  INFORMATION

 

March 31, 2020

 

(unaudited)

 

 

 

 

 

Quarter Ended

 

FINANCIAL RATIOS AND OTHER DATA

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

3/31/2019

 

Return on equity

 

 

5.45

%

 

 

8.13

%

 

 

9.96

%

 

 

10.53

%

 

 

8.50

%

Return on average tangible equity

 

 

7.34

%

 

 

10.85

%

 

 

13.31

%

 

 

14.14

%

 

 

11.55

%

Return on assets

 

 

0.66

%

 

 

1.00

%

 

 

1.21

%

 

 

1.24

%

 

 

1.01

%

Interest margin - Yield - FTE

 

 

4.06

%

 

 

4.19

%

 

 

4.38

%

 

 

4.37

%

 

 

4.32

%

Interest margin - Cost

 

 

0.54

%

 

 

0.62

%

 

 

0.71

%

 

 

0.73

%

 

 

0.69

%

Net interest margin - FTE

 

 

3.52

%

 

 

3.56

%

 

 

3.66

%

 

 

3.64

%

 

 

3.63

%

Efficiency ratio (1)

 

 

63.50

%

 

 

68.08

%

 

 

64.98

%

 

 

64.55

%

 

 

68.08

%

Full-time equivalent employees

 

 

2,761

 

 

 

2,844

 

 

 

2,835

 

 

 

2,819

 

 

 

2,839

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CREDIT QUALITY RATIOS (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs/average loans

 

 

0.13

%

 

 

0.11

%

 

 

0.01

%

 

 

0.05

%

 

 

0.09

%

Provision for credit losses/average loans (3)

 

 

0.86

%

 

 

0.15

%

 

 

0.13

%

 

 

0.11

%

 

 

0.07

%

Nonperforming loans/total loans (incl LHFS)

 

 

0.54

%

 

 

0.56

%

 

 

0.62

%

 

 

0.57

%

 

 

0.62

%

Nonperforming assets/total loans (incl LHFS)

 

 

0.79

%

 

 

0.86

%

 

 

0.96

%

 

 

0.90

%

 

 

0.97

%

Nonperforming assets/total loans (incl LHFS) +ORE

 

 

0.78

%

 

 

0.86

%

 

 

0.95

%

 

 

0.90

%

 

 

0.96

%

ACL LHFI/total loans (excl LHFS) (3)

 

 

1.05

%

 

 

0.90

%

 

 

0.90

%

 

 

0.88

%

 

 

0.88

%

ACL LHFI-commercial/total commercial loans (3)

 

 

0.97

%

 

 

0.98

%

 

 

0.98

%

 

 

0.96

%

 

 

0.96

%

ACL LHFI-consumer/total consumer and home mortgage loans (3)

 

 

1.35

%

 

 

0.61

%

 

 

0.61

%

 

 

0.60

%

 

 

0.57

%

ACL LHFI/nonperforming loans (3)

 

 

189.77

%

 

 

158.34

%

 

 

140.99

%

 

 

152.02

%

 

 

140.02

%

ACL LHFI/nonperforming loans (excl individually evaluated loans) (3)

468.84

%

 

 

410.52

%

 

 

357.15

%

 

 

383.19

%

 

 

342.97

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CAPITAL RATIOS (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total equity/total assets

 

 

11.79

%

 

 

12.30

%

 

 

12.11

%

 

 

11.95

%

 

 

11.77

%

Tangible equity/tangible assets

 

 

9.27

%

 

 

9.72

%

 

 

9.53

%

 

 

9.34

%

 

 

9.15

%

Tangible equity/risk-weighted assets

 

 

11.05

%

 

 

11.58

%

 

 

11.50

%

 

 

11.39

%

 

 

11.35

%

Tier 1 leverage ratio

 

 

10.21

%

 

 

10.48

%

 

 

10.34

%

 

 

10.03

%

 

 

10.05

%

Common equity tier 1 capital ratio

 

 

11.35

%

 

 

11.93

%

 

 

11.83

%

 

 

11.76

%

 

 

11.88

%

Tier 1 risk-based capital ratio

 

 

11.88

%

 

 

12.48

%

 

 

12.38

%

 

 

12.31

%

 

 

12.45

%

Total risk-based capital ratio

 

 

12.78

%

 

 

13.25

%

 

 

13.15

%

 

 

13.07

%

 

 

13.21

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCK PERFORMANCE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Market value-Close

 

$

23.30

 

 

$

34.51

 

 

$

34.11

 

 

$

33.25

 

 

$

33.63

 

Book value

 

$

26.06

 

 

$

25.87

 

 

$

25.60

 

 

$

25.13

 

 

$

24.49

 

Tangible book value

 

$

19.92

 

 

$

19.84

 

 

$

19.57

 

 

$

19.10

 

 

$

18.48

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

(2)  Excludes acquired loans.

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

See Notes to Consolidated Financials


 

TRUSTMARK CORPORATION AND SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIALS

 

March 31, 2020

 

($ in thousands)

 

(unaudited)

 

Note 1 – Recently Effective Accounting Pronouncements

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

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

During the first quarter of 2020, based upon the factors discussed above, Trustmark recorded a provision for credit losses of $20.6 million and a credit loss expense related to off-balance sheet credit exposures of $6.8 million.

 

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

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

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

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

Note 2 - 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:

 

 

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

3/31/2019

 

SECURITIES AVAILABLE FOR SALE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agency obligations

 

$

21,190

 

 

$

22,327

 

 

$

24,697

 

 

$

26,646

 

 

$

28,008

 

Obligations of states and political subdivisions

 

 

23,572

 

 

 

25,465

 

 

 

35,001

 

 

 

38,698

 

 

 

50,954

 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage pass-through securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guaranteed by GNMA

 

 

71,971

 

 

 

69,252

 

 

 

63,391

 

 

 

65,716

 

 

 

66,176

 

Issued by FNMA and FHLMC

 

 

967,329

 

 

 

713,356

 

 

 

589,962

 

 

 

624,364

 

 

 

645,958

 

Other residential mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

634,075

 

 

 

658,226

 

 

 

705,601

 

 

 

751,371

 

 

 

784,566

 

Commercial mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

115,642

 

 

 

113,778

 

 

 

135,053

 

 

 

136,930

 

 

 

147,783

 

Total securities available for sale

 

$

1,833,779

 

 

$

1,602,404

 

 

$

1,553,705

 

 

$

1,643,725

 

 

$

1,723,445

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SECURITIES HELD TO MATURITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agency obligations

 

$

 

 

$

3,781

 

 

$

3,770

 

 

$

3,758

 

 

$

3,747

 

Obligations of states and political subdivisions

 

 

31,758

 

 

 

31,781

 

 

 

31,806

 

 

 

32,860

 

 

 

35,352

 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage pass-through securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guaranteed by GNMA

 

 

10,492

 

 

 

10,820

 

 

 

10,994

 

 

 

11,184

 

 

 

11,710

 

Issued by FNMA and FHLMC

 

 

91,971

 

 

 

96,631

 

 

 

102,048

 

 

 

106,755

 

 

 

111,962

 

Other residential mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

463,175

 

 

 

485,324

 

 

 

510,770

 

 

 

536,166

 

 

 

559,690

 

Commercial mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

106,880

 

 

 

109,762

 

 

 

126,034

 

 

 

134,813

 

 

 

161,858

 

Total securities held to maturity

 

$

704,276

 

 

$

738,099

 

 

$

785,422

 

 

$

825,536

 

 

$

884,319

 

At March 31, 2020, the net unamortized, unrealized loss included in accumulated other comprehensive income (loss) in the accompanying balance sheet for securities held to maturity previously transferred from securities available for sale totaled approximately $11.2 million ($8.4 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 97.7% 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, 2020

 

($ in thousands)

 

(unaudited)

 

Note 3 – Loan Composition

LHFI consisted of the following during the periods presented:

 

LHFI BY TYPE (1)

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

3/31/2019

 

Loans secured by real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction, land development and other land loans

 

$

1,136,389

 

 

$

1,162,791

 

 

$

1,135,999

 

 

$

1,111,297

 

 

$

1,209,761

 

Secured by 1-4 family residential properties

 

 

1,852,065

 

 

 

1,855,913

 

 

 

1,820,455

 

 

 

1,818,126

 

 

 

1,810,872

 

Secured by nonfarm, nonresidential properties

 

 

2,575,422

 

 

 

2,475,245

 

 

 

2,442,308

 

 

 

2,326,312

 

 

 

2,241,072

 

Other real estate secured

 

 

838,573

 

 

 

724,480

 

 

 

668,667

 

 

 

635,839

 

 

 

528,032

 

Commercial and industrial loans

 

 

1,476,777

 

 

 

1,477,896

 

 

 

1,491,367

 

 

 

1,533,318

 

 

 

1,558,057

 

Consumer loans

 

 

170,678

 

 

 

175,738

 

 

 

176,894

 

 

 

176,133

 

 

 

176,619

 

State and other political subdivision loans

 

 

938,637

 

 

 

967,944

 

 

 

978,456

 

 

 

982,187

 

 

 

982,626

 

Other loans

 

 

579,379

 

 

 

495,621

 

 

 

509,522

 

 

 

533,547

 

 

 

487,975

 

LHFI

 

 

9,567,920

 

 

 

9,335,628

 

 

 

9,223,668

 

 

 

9,116,759

 

 

 

8,995,014

 

ACL LHFI

 

 

(100,564

)

 

 

(84,277

)

 

 

(83,226

)

 

 

(80,399

)

 

 

(79,005

)

Net LHFI

 

$

9,467,356

 

 

$

9,251,351

 

 

$

9,140,442

 

 

$

9,036,360

 

 

$

8,916,009

 

(1)

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

 

The following table presents the LHFI composition by region at March 31, 2020 and reflects each region’s diversified mix of loans:

 

 

 

March 31, 2020

 

LHFI - COMPOSITION BY REGION

 

Total

 

 

Alabama

 

 

Florida

 

 

Mississippi

(Central and

Southern

Regions)

 

 

Tennessee

(Memphis, TN and

Northern MS

Regions)

 

 

Texas

 

Loans secured by real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction, land development and other land loans

 

$

1,136,389

 

 

$

358,297

 

 

$

89,884

 

 

$

308,049

 

 

$

23,554

 

 

$

356,605

 

Secured by 1-4 family residential properties

 

 

1,852,065

 

 

 

131,161

 

 

 

40,346

 

 

 

1,584,995

 

 

 

82,329

 

 

 

13,234

 

Secured by nonfarm, nonresidential properties

 

 

2,575,422

 

 

 

658,690

 

 

 

280,670

 

 

 

961,998

 

 

 

167,424

 

 

 

506,640

 

Other real estate secured

 

 

838,573

 

 

 

251,741

 

 

 

25,144

 

 

 

341,864

 

 

 

9,276

 

 

 

210,548

 

Commercial and industrial loans

 

 

1,476,777

 

 

 

214,041

 

 

 

20,612

 

 

 

699,930

 

 

 

315,542

 

 

 

226,652

 

Consumer loans

 

 

170,678

 

 

 

23,787

 

 

 

6,393

 

 

 

118,257

 

 

 

19,954

 

 

 

2,287

 

State and other political subdivision loans

 

 

938,637

 

 

 

109,422

 

 

 

38,763

 

 

 

582,098

 

 

 

26,717

 

 

 

181,637

 

Other loans

 

 

579,379

 

 

 

81,214

 

 

 

15,561

 

 

 

368,269

 

 

 

84,000

 

 

 

30,335

 

Loans

 

$

9,567,920

 

 

$

1,828,353

 

 

$

517,373

 

 

$

4,965,460

 

 

$

728,796

 

 

$

1,527,938

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION

 

 

 

 

 

 

 

 

 

Lots

 

$

74,865

 

 

$

18,309

 

 

$

23,768

 

 

$

25,757

 

 

$

1,647

 

 

$

5,384

 

Development

 

 

63,640

 

 

 

14,326

 

 

 

7,505

 

 

 

29,130

 

 

 

4,938

 

 

 

7,741

 

Unimproved land

 

 

106,812

 

 

 

28,543

 

 

 

16,678

 

 

 

29,752

 

 

 

11,323

 

 

 

20,516

 

1-4 family construction

 

 

240,948

 

 

 

98,982

 

 

 

20,878

 

 

 

85,674

 

 

 

4,335

 

 

 

31,079

 

Other construction

 

 

650,124

 

 

 

198,137

 

 

 

21,055

 

 

 

137,736

 

 

 

1,311

 

 

 

291,885

 

Construction, land development and other land loans

 

$

1,136,389

 

 

$

358,297

 

 

$

89,884

 

 

$

308,049

 

 

$

23,554

 

 

$

356,605

 

 

 

 


 

TRUSTMARK CORPORATION AND SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIALS

 

March 31, 2020

 

($ in thousands)

 

(unaudited)

 

 

Note 3 – Loan Composition (continued)

 

 

 

 

March 31, 2020

 

 

 

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

 

$

443,057

 

 

$

162,375

 

 

$

41,536

 

 

$

137,615

 

 

$

27,531

 

 

$

74,000

 

Office

 

 

210,317

 

 

 

45,026

 

 

 

34,397

 

 

 

59,339

 

 

 

12,686

 

 

 

58,869

 

Hotel/motel

 

 

353,666

 

 

 

136,120

 

 

 

100,735

 

 

 

65,604

 

 

 

40,207

 

 

 

11,000

 

Mini-storage

 

 

109,009

 

 

 

12,112

 

 

 

3,520

 

 

 

49,479

 

 

 

420

 

 

 

43,478

 

Industrial

 

 

188,403

 

 

 

63,245

 

 

 

13,418

 

 

 

38,613

 

 

 

2,243

 

 

 

70,884

 

Health care

 

 

42,520

 

 

 

15,414

 

 

 

4,535

 

 

 

18,815

 

 

 

 

 

 

3,756

 

Convenience stores

 

 

27,116

 

 

 

3,496

 

 

 

 

 

 

11,243

 

 

 

410

 

 

 

11,967

 

Nursing homes/senior living

 

 

57,123

 

 

 

18,696

 

 

 

 

 

 

19,856

 

 

 

 

 

 

18,571

 

Other

 

 

66,085

 

 

 

5,238

 

 

 

6,892

 

 

 

11,120

 

 

 

5,959

 

 

 

36,876

 

Total non-owner occupied loans

 

 

1,497,296

 

 

 

461,722

 

 

 

205,033

 

 

 

411,684

 

 

 

89,456

 

 

 

329,401

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Owner-occupied:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office

 

 

166,804

 

 

 

38,751

 

 

 

38,062

 

 

 

53,284

 

 

 

10,763

 

 

 

25,944

 

Churches

 

 

103,009

 

 

 

24,506

 

 

 

6,250

 

 

 

46,790

 

 

 

11,201

 

 

 

14,262

 

Industrial warehouses

 

 

152,128

 

 

 

12,425

 

 

 

3,517

 

 

 

49,776

 

 

 

16,829

 

 

 

69,581

 

Health care

 

 

129,995

 

 

 

15,391

 

 

 

6,006

 

 

 

93,260

 

 

 

2,515

 

 

 

12,823

 

Convenience stores

 

 

104,925

 

 

 

13,026

 

 

 

8,071

 

 

 

62,871

 

 

 

640

 

 

 

20,317

 

Retail

 

 

68,057

 

 

 

17,945

 

 

 

6,636

 

 

 

24,610

 

 

 

2,707

 

 

 

16,159

 

Restaurants

 

 

59,617

 

 

 

4,200

 

 

 

1,833

 

 

 

36,612

 

 

 

15,497

 

 

 

1,475

 

Auto dealerships

 

 

31,366

 

 

 

7,947

 

 

 

295

 

 

 

12,883

 

 

 

10,241

 

 

 

 

Nursing homes/senior living

 

 

179,065

 

 

 

58,271

 

 

 

 

 

 

115,015

 

 

 

5,779

 

 

 

 

Other

 

 

83,160

 

 

 

4,506

 

 

 

4,967

 

 

 

55,213

 

 

 

1,796

 

 

 

16,678

 

Total owner-occupied loans

 

 

1,078,126

 

 

 

196,968

 

 

 

75,637

 

 

 

550,314

 

 

 

77,968

 

 

 

177,239

 

Loans secured by nonfarm, nonresidential properties

 

$

2,575,422

 

 

$

658,690

 

 

$

280,670

 

 

$

961,998

 

 

$

167,424

 

 

$

506,640

 

 

 


 


 

TRUSTMARK CORPORATION AND SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIALS

 

March 31, 2020

 

($ in thousands)

 

(unaudited)

 

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

 

 

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

3/31/2019

 

Securities – taxable

 

 

2.25

%

 

 

2.24

%

 

 

2.23

%

 

 

2.25

%

 

 

2.27

%

Securities – nontaxable

 

 

3.85

%

 

 

3.92

%

 

 

3.76

%

 

 

3.78

%

 

 

3.80

%

Securities – total

 

 

2.28

%

 

 

2.27

%

 

 

2.26

%

 

 

2.28

%

 

 

2.31

%

Loans - LHFI & LHFS

 

 

4.54

%

 

 

4.67

%

 

 

4.90

%

 

 

4.98

%

 

 

4.93

%

Acquired loans

 

 

 

 

 

10.90

%

 

 

11.08

%

 

 

8.84

%

 

 

7.45

%

Loans - total

 

 

4.54

%

 

 

4.72

%

 

 

4.95

%

 

 

5.01

%

 

 

4.96

%

FF sold & rev repo

 

 

 

 

 

2.16

%

 

 

2.49

%

 

 

2.52

%

 

 

2.93

%

Other earning assets

 

 

1.59

%

 

 

1.57

%

 

 

2.35

%

 

 

2.31

%

 

 

2.67

%

Total earning assets

 

 

4.06

%

 

 

4.19

%

 

 

4.38

%

 

 

4.37

%

 

 

4.32

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

 

0.71

%

 

 

0.85

%

 

 

0.96

%

 

 

0.99

%

 

 

0.93

%

FF pch & repo

 

 

1.02

%

 

 

1.21

%

 

 

1.53

%

 

 

0.63

%

 

 

1.38

%

Other borrowings

 

 

2.35

%

 

 

2.32

%

 

 

2.35

%

 

 

2.33

%

 

 

2.19

%

Total interest-bearing liabilities

 

 

0.75

%

 

 

0.88

%

 

 

0.99

%

 

 

1.01

%

 

 

0.95

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

 

3.52

%

 

 

3.56

%

 

 

3.66

%

 

 

3.64

%

 

 

3.63

%

Net interest margin excluding acquired loans

 

 

3.52

%

 

 

3.52

%

 

 

3.61

%

 

 

3.60

%

 

 

3.60

%

Reflected in the table above are yields on earning assets and liabilities, along with the net interest margin which equals reported net interest income-FTE, annualized, as a percent of average earning assets. In addition, the table includes net interest margin excluding acquired loans, which equals reported net interest income-FTE excluding interest income on acquired loans, annualized, as a percent of average earning assets excluding average acquired loans.  

The net interest margin excluding acquired loans remained flat at 3.52% for the first quarter of 2020 when compared to the fourth quarter of 2019, as the decline in the yield on the loans held for investment and held for sale portfolio was offset by lower costs of interest-bearing deposits.

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 positive ineffectiveness of $9.9 million primarily due to widening spreads between mortgage and ten-year Treasury rates during the first quarter of 2020.  

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

 

 

 

Quarter Ended

 

 

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

3/31/2019

 

Mortgage servicing income, net

 

$

5,819

 

 

$

5,854

 

 

$

5,688

 

 

$

5,734

 

 

$

5,607

 

Change in fair value-MSR from runoff

 

 

(2,607

)

 

 

(2,950

)

 

 

(3,569

)

 

 

(2,918

)

 

 

(2,398

)

Gain on sales of loans, net

 

 

14,339

 

 

 

7,984

 

 

 

9,799

 

 

 

7,532

 

 

 

4,981

 

Mortgage banking income before hedge ineffectiveness

 

 

17,551

 

 

 

10,888

 

 

 

11,918

 

 

 

10,348

 

 

 

8,190

 

Change in fair value-MSR from market changes

 

 

(23,999

)

 

 

4,048

 

 

 

(8,054

)

 

 

(8,209

)

 

 

(8,863

)

Change in fair value of derivatives

 

 

33,931

 

 

 

(7,022

)

 

 

4,307

 

 

 

8,156

 

 

 

4,115

 

Net positive (negative) hedge ineffectiveness

 

 

9,932

 

 

 

(2,974

)

 

 

(3,747

)

 

 

(53

)

 

 

(4,748

)

Mortgage banking, net

 

$

27,483

 

 

$

7,914

 

 

$

8,171

 

 

$

10,295

 

 

$

3,442

 

 

 

 

 

 

 


 


 

TRUSTMARK CORPORATION AND SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIALS

 

March 31, 2020

 

($ in thousands)

 

(unaudited)

 

Note 6 – Salaries and Employee Benefit Plans

Early Retirement Program

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

 

Note 7 – Other Noninterest Income and Expense

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

 

  

 

Quarter Ended

 

 

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

3/31/2019

 

Partnership amortization for tax credit purposes

 

$

(1,161

)

 

$

(1,630

)

 

$

(1,994

)

 

$

(2,010

)

 

$

(2,010

)

Increase in life insurance cash surrender value

 

 

1,722

 

 

 

1,802

 

 

 

1,814

 

 

 

1,803

 

 

 

1,783

 

Other miscellaneous income

 

 

1,746

 

 

 

3,279

 

 

 

2,169

 

 

 

2,337

 

 

 

2,466

 

Total other, net

 

$

2,307

 

 

$

3,451

 

 

$

1,989

 

 

$

2,130

 

 

$

2,239

 

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

 

 

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

3/31/2019

 

Loan expense

 

$

2,799

 

 

$

2,968

 

 

$

2,886

 

 

$

3,003

 

 

$

2,697

 

Amortization of intangibles

 

 

812

 

 

 

1,002

 

 

 

1,021

 

 

 

992

 

 

 

1,101

 

FDIC assessment expense

 

 

1,590

 

 

 

1,450

 

 

 

1,400

 

 

 

1,836

 

 

 

1,758

 

Other miscellaneous expense

 

 

9,552

 

 

 

8,956

 

 

 

6,880

 

 

 

7,819

 

 

 

8,413

 

Total other expense

 

$

14,753

 

 

$

14,376

 

 

$

12,187

 

 

$

13,650

 

 

$

13,969

 

 

Note 8 – Non-GAAP Financial Measures

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

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

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

 


 

TRUSTMARK CORPORATION AND SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIALS

 

March 31, 2020

 

($ in thousands except per share data)

 

(unaudited)

 

Note 8 – Non-GAAP Financial Measures (continued)

 

 

 

 

 

 

Quarter Ended

 

 

 

 

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

3/31/2019

 

TANGIBLE EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE BALANCES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders' equity

 

 

 

$

1,640,070

 

 

$

1,656,605

 

 

$

1,634,646

 

 

$

1,605,745

 

 

$

1,590,187

 

Less:  Goodwill

 

 

 

 

(380,671

)

 

 

(379,627

)

 

 

(379,627

)

 

 

(379,627

)

 

 

(379,627

)

           Identifiable intangible assets

 

 

 

 

(8,049

)

 

 

(7,882

)

 

 

(8,706

)

 

 

(9,631

)

 

 

(10,666

)

Total average tangible equity

 

 

 

$

1,251,350

 

 

$

1,269,096

 

 

$

1,246,313

 

 

$

1,216,487

 

 

$

1,199,894

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PERIOD END BALANCES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders' equity

 

 

 

$

1,652,399

 

 

$

1,660,702

 

 

$

1,645,362

 

 

$

1,618,550

 

 

$

1,587,028

 

Less:  Goodwill

 

 

 

 

(381,717

)

 

 

(379,627

)

 

 

(379,627

)

 

 

(379,627

)

 

 

(379,627

)

           Identifiable intangible assets

 

 

 

 

(7,537

)

 

 

(7,343

)

 

 

(8,345

)

 

 

(9,101

)

 

 

(10,092

)

Total tangible equity

 

(a)

 

$

1,263,145

 

 

$

1,273,732

 

 

$

1,257,390

 

 

$

1,229,822

 

 

$

1,197,309

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TANGIBLE ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

 

$

14,019,829

 

 

$

13,497,877

 

 

$

13,584,786

 

 

$

13,548,958

 

 

$

13,478,017

 

Less:  Goodwill

 

 

 

 

(381,717

)

 

 

(379,627

)

 

 

(379,627

)

 

 

(379,627

)

 

 

(379,627

)

           Identifiable intangible assets

 

 

 

 

(7,537

)

 

 

(7,343

)

 

 

(8,345

)

 

 

(9,101

)

 

 

(10,092

)

Total tangible assets

 

(b)

 

$

13,630,575

 

 

$

13,110,907

 

 

$

13,196,814

 

 

$

13,160,230

 

 

$

13,088,298

 

Risk-weighted assets

 

(c)

 

$

11,427,297

 

 

$

11,002,877

 

 

$

10,935,018

 

 

$

10,796,903

 

 

$

10,548,472

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

$

22,218

 

 

$

33,946

 

 

$

41,035

 

 

$

42,140

 

 

$

33,339

 

Plus: Intangible amortization net of tax

 

 

 

 

609

 

 

 

752

 

 

 

766

 

 

 

744

 

 

 

826

 

  Net income adjusted for intangible amortization

 

 

 

$

22,827

 

 

$

34,698

 

 

$

41,801

 

 

$

42,884

 

 

$

34,165

 

Period end common shares outstanding

 

(d)

 

 

63,396,912

 

 

 

64,200,111

 

 

 

64,262,779

 

 

 

64,398,846

 

 

 

64,789,943

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TANGIBLE COMMON EQUITY MEASUREMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average tangible equity (1)

 

 

 

 

7.34

%

 

 

10.85

%

 

 

13.31

%

 

 

14.14

%

 

 

11.55

%

Tangible equity/tangible assets

 

(a)/(b)

 

 

9.27

%

 

 

9.72

%

 

 

9.53

%

 

 

9.34

%

 

 

9.15

%

Tangible equity/risk-weighted assets

 

(a)/(c)

 

 

11.05

%

 

 

11.58

%

 

 

11.50

%

 

 

11.39

%

 

 

11.35

%

Tangible book value

 

(a)/(d)*1,000

 

$

19.92

 

 

$

19.84

 

 

$

19.57

 

 

$

19.10

 

 

$

18.48

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMMON EQUITY TIER 1 CAPITAL (CET1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders' equity

 

 

 

$

1,652,399

 

 

$

1,660,702

 

 

$

1,645,362

 

 

$

1,618,550

 

 

$

1,587,028

 

CECL transition adjustment (3)

 

 

 

 

26,476

 

 

 

 

 

 

 

 

 

 

 

 

 

AOCI-related adjustments

 

 

 

 

(7,698

)

 

 

23,600

 

 

 

20,858

 

 

 

24,816

 

 

 

40,915

 

CET1 adjustments and deductions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Goodwill net of associated deferred tax liabilities (DTLs)

 

 

 

 

(367,825

)

 

 

(365,738

)

 

 

(365,741

)

 

 

(365,745

)

 

 

(365,748

)

     Other adjustments and deductions for CET1 (2)

 

 

 

 

(6,269

)

 

 

(5,896

)

 

 

(6,671

)

 

 

(8,268

)

 

 

(9,099

)

        CET1 capital

 

(e)

 

 

1,297,083

 

 

 

1,312,668

 

 

 

1,293,808

 

 

 

1,269,353

 

 

 

1,253,096

 

     Additional tier 1 capital instruments plus related surplus

 

 

 

 

60,000

 

 

 

60,000

 

 

 

60,000

 

 

 

60,000

 

 

 

60,000

 

        Tier 1 capital

 

 

 

$

1,357,083

 

 

$

1,372,668

 

 

$

1,353,808

 

 

$

1,329,353

 

 

$

1,313,096

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity tier 1 capital ratio

 

(e)/(c)

 

 

11.35

%

 

 

11.93

%

 

 

11.83

%

 

 

11.76

%

 

 

11.88

%

 

(1)

Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity.

(2)

Includes other intangible assets, net of DTLs, disallowed deferred tax assets (DTAs), threshold deductions and transition adjustments, as applicable.  

(3)

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

 

 

 

 

 

 

 

 

 

 


 

TRUSTMARK CORPORATION AND SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIALS

 

March 31, 2020

 

($ in thousands except per share data)

 

(unaudited)

 

 

Note 8 – Non-GAAP Financial Measures (continued)

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

The following table presents pre-tax pre-provision income during the periods presented:

 

 

 

 

 

Quarter Ended

 

 

 

 

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

3/31/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (GAAP)

 

$

103,952

 

 

$

105,591

 

 

$

108,466

 

 

$

107,724

 

 

$

104,808

 

Noninterest income (GAAP)

 

 

65,264

 

 

 

47,578

 

 

 

48,337

 

 

 

49,639

 

 

 

41,491

 

Pre-tax pre-provision revenue

(a)

$

169,216

 

 

$

153,169

 

 

$

156,803

 

 

$

157,363

 

 

$

146,299

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense (GAAP)

 

$

123,810

 

 

$

110,027

 

 

$

106,853

 

 

$

106,101

 

 

$

106,021

 

  Less:

Voluntary early retirement program

 

 

(4,375

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit loss expense related to off-balance sheet credit exposures

 

(6,783

)

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted noninterest expense (Non-GAAP)

(b)

$

112,652

 

 

$

110,027

 

 

$

106,853

 

 

$

106,101

 

 

$

106,021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax pre-provision income (Non-GAAP)

(a)-(b)

$

56,564

 

 

$

43,142

 

 

$

49,950

 

 

$

51,262

 

 

$

40,278

 

 

The following table presents adjustments to net income and select financial ratios as reported in accordance with GAAP resulting from significant non-routine items occurring during the periods presented:

 

 

Quarter Ended

 

 

 

3/31/2020

 

 

 

3/31/2019

 

 

 

Amount

 

 

Diluted EPS

 

 

 

Amount

 

 

Diluted EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (GAAP)

$

22,218

 

 

$

0.35

 

 

 

$

33,339

 

 

$

0.51

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Significant non-routine transactions (net of taxes):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Voluntary early retirement program

 

 

3,281

 

 

 

0.05

 

 

 

 

 

 

 

 

Net Income adjusted for significant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

non-routine transactions (Non-GAAP)

$

25,499

 

 

$

0.40

 

 

 

$

33,339

 

 

$

0.51

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported

 

 

Adjusted

 

 

 

Reported

 

 

Adjusted

 

 

 

(GAAP)

 

 

(Non-GAAP)

 

 

 

(GAAP)

 

 

(Non-GAAP)

 

Return on equity

 

 

5.45

%

 

 

6.25

%

 

 

 

8.50

%

 

n/a

 

Return on average tangible equity

 

 

7.34

%

 

 

8.39

%

 

 

 

11.55

%

 

n/a

 

Return on assets

 

 

0.66

%

 

 

0.75

%

 

 

 

1.01

%

 

n/a

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

n/a - not applicable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

TRUSTMARK CORPORATION AND SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIALS

 

March 31, 2020

 

($ in thousands)

 

(unaudited)

 

Note 8 – Non-GAAP Financial Measures (continued)

 

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

 

 

 

 

 

Quarter Ended

 

 

 

 

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

3/31/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total noninterest expense (GAAP)

 

$

123,810

 

 

$

110,027

 

 

$

106,853

 

 

$

106,101

 

 

$

106,021

 

  Less:

Other real estate expense, net

 

(1,294

)

 

 

(1,491

)

 

 

(531

)

 

 

(132

)

 

 

(1,752

)

 

Amortization of intangibles

 

(812

)

 

 

(1,002

)

 

 

(1,021

)

 

 

(992

)

 

 

(1,101

)

 

Voluntary early retirement program

 

(4,375

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit loss expense related to off-balance sheet exposures

 

(6,783

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Charitable contributions resulting in state tax credits

 

(375

)

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted noninterest expense (Non-GAAP)

(c)

$

110,171

 

 

$

107,534

 

 

$

105,301

 

 

$

104,977

 

 

$

103,168

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (GAAP)

 

$

103,952

 

 

$

105,591

 

 

$

108,466

 

 

$

107,724

 

 

$

104,808

 

  Add:

Tax equivalent adjustment

 

 

3,108

 

 

 

3,149

 

 

 

3,249

 

 

 

3,248

 

 

 

3,231

 

Net interest income-FTE (Non-GAAP)

(a)

$

107,060

 

 

$

108,740

 

 

$

111,715

 

 

$

110,972

 

 

$

108,039

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income (GAAP)

 

$

65,264

 

 

$

47,578

 

 

$

48,337

 

 

$

49,639

 

 

$

41,491

 

  Add:

Partnership amortization for tax credit purposes

 

1,161

 

 

 

1,630

 

 

 

1,994

 

 

 

2,010

 

 

 

2,010

 

Adjusted noninterest income (Non-GAAP)

(b)

$

66,425

 

 

$

49,208

 

 

$

50,331

 

 

$

51,649

 

 

$

43,501

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted revenue (Non-GAAP)

(a)+(b)

$

173,485

 

 

$

157,948

 

 

$

162,046

 

 

$

162,621

 

 

$

151,540

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio (Non-GAAP)

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

 

63.50

%

 

 

68.08

%

 

 

64.98

%

 

 

64.55

%

 

 

68.08

%

 

 

trmk-ex992_567.pptx.htm

Slide 1

First Quarter 2020 Financial Results Exhibit 99.2

Slide 2

Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “project,” “potential,” “seek,” “continue,” “could,” “would,” “future” or the negative of those terms or other words of similar meaning. You should read statements that contain these words carefully because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements include, but are not limited to, statements relating to anticipated future operating and financial performance measures, including net interest margin, credit quality, business initiatives, growth opportunities and growth rates, among other things, and encompass any estimate, prediction, expectation, projection, opinion, anticipation, outlook or statement of belief included therein as well as the management assumptions underlying these forward-looking statements. You should be aware that the occurrence of the events described under the caption “Risk Factors” in Trustmark’s filings with the Securities and Exchange Commission could have an adverse effect on any or all of our business, results of operations financial condition and liquidity. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected. Furthermore, many of these risks and uncertainties are currently amplified by and may continue to be amplified by or may, in the future, be amplified by, the novel coronavirus (COVID-19) pandemic, and also by the effectiveness of varying governmental responses in ameliorating the impact of the pandemic on our customers and the economies where they operate.   Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels and slowdowns in economic growth, the effects of the COVID-19 pandemic on the domestic and global economy, as well as the effectiveness of actions of federal, state and local governments and agencies (including the Board of Governors of the Federal Reserve Board (FRB) to mitigate its spread and economic impact, local, state and national economic and market conditions, conditions in the housing and real estate markets in the regions in which Trustmark operates and the extent and duration of the current volatility in the credit and financial markets, levels of and volatility in crude oil prices, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility of market interest rates, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, including the potential impact of issues related to the European financial system and monetary and other governmental actions designed to address credit, securities, and/or commodity markets, the enactment of legislation and changes in existing regulations or enforcement practices or the adoption of new regulations, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, particularly with respect to the COVID-19 pandemic, changes in our ability to control expenses, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, cyber-attacks and other breaches which could affect our information system security, natural disasters, environmental disasters, pandemics or other health crises, acts of war or terrorism, and other risks described in our filings with the Securities and Exchange Commission (SEC).   Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Except as required by law, we undertake no obligation to update or revise any of this information, whether as the result of new information, future events or developments or otherwise. Forward–Looking Statements

Slide 3

Trustmark has been proactive in its response to the COVID-19 pandemic and is taking comprehensive action to support customers, associates and communities COVID-19 Response Customers Branches remaining open with drive-thru service, and lobby access by appointment ATM and ITM network remain accessible, as well as robust digital and mobile banking options Proactive outreach with customers to discuss challenges and solutions Providing waivers of certain fees and charges, including penalties on early CD withdrawals Granting extensions, deferrals and forbearance as appropriate Paused all foreclosures and repossessions No negative credit bureau reporting for previously up-to-date customers Providing support to small business owners through SBA’s Paycheck Protection Program; Approximately 6,000 applications approved with proceeds in excess of $800 million as of April 23, 2020 Implemented social distancing, heightened focus on hygiene, additional cleaning and protection measures implemented in compliance with CDC guidelines Approximately 45% of associates working remotely; other departments working on rotating schedules Encouraged at-risk associates to work remotely or self-quarantine Provided temporary compensation adjustments and one-time payment to front line associates Provided all associates with additional paid sick leave Special contributions to area food banks and others supporting at-risk individuals and families Provide meals to Healthcare Heroes and school lunch programs Hosted blood drives Supported distribution of hand sanitizer Expanded outreach efforts to promote overview of available stimulus opportunities Associates Communities

Slide 4

Q1-20 Financial Highlights Maintained position of strength and stability LHFI (excl. acquired loan reclassification) increased $159.7 million, or 1.7%, from the prior quarter and $500.3 million, or 5.6%, Y-o-Y Pre-tax, pre-provision (PTPP) income totaled $56.6 million, up 31.1% LQ and 40.4% Y-o-Y Core noninterest expense totaled $110.2 million in the first quarter of 2020, an increase of 2.5% from the prior quarter Voluntary early retirement program expected to produce pre-tax savings of approximately $2.9 million for the remainder of 2020 and $4.0 million in 2021 Adopted current expected credit losses (CECL) methodology for estimating allowance for credit losses Nonperforming assets declined 5.6% from the prior quarter and 12.1% year-over-year Credit Quality Capital Management Maintained strong capital levels with CET1 ratio of 11.35% and total risk-based capital ratio of 12.78% Suspended share repurchase program on March 9, 2020 Source: Company reports At March 31, 2020 Total Assets $14.0 billion Loans Held for Investment $9.6 billion Total Deposits $11.6 billion Banking Centers 188 Q1-20 Q4-19 Q1-19 Net Income $22.2 million $33.9 million $33.3 million EPS – Diluted $0.35 $0.53 $0.51 PTPP Income $56.6 million $43.1 million $40.3 million ROAA 0.66% 1.00% 1.01% ROATCE 7.34% 10.85% 11.55% Dividends / Share $0.23 $0.23 $0.23 TCE/TA 9.27% 9.72% 9.15% Provision and expense for credit losses totaled $27.4 million, primarily due to the impact of the COVID-19 pandemic on expected credit losses; reduced after-tax net income by $0.32 per diluted share First quarter results include a pre-tax charge of $4.4 million related to a voluntary early retirement program which reduced earnings by $0.05 per diluted share Positive net mortgage servicing hedge ineffectiveness of $9.9 million in the first quarter increased earnings by $0.12 per diluted share Expense Management Profitable Revenue Generation Earnings Drivers

Slide 5

Loans Held for Investment (LHFI) Portfolio Focus on profitable, credit-disciplined loan growth continued Source: Company reports (1) During the first quarter of 2020, Trustmark reclassified $72.6 million of acquired loans to loans held for investment with the adoption of FASB ASC Topic 326. Reflects change excluding acquired loan reclass. Trustmark has no loan exposure in which the source of repayment or the underlying security of such exposure is tied to the realization of value from energy reserves Total energy-related sector exposure of $359.6 million with outstanding balances of $131.7 million – representing 1.4% of total LHFI – at March 31, 2020 At March 31, 2020, nonaccrual energy-related loans represented 8.4% of outstanding energy-related loans and 12 basis points of outstanding LHFI Dollar Change: $122 $107 $112 $160(1)

Slide 6

Loan Portfolio Detail Source: Company reports (1) Multi-Family is included in Other Real Estate Secured Loans in Financials Focus on vertical construction with limited exposure to unimproved land and development Well diversified product and geographical mix Balanced between non-owner and owner occupied portfolios Virtually no REIT outstandings ($40 million)

Slide 7

Loan Portfolio Detail Source: Company reports Portfolio includes commercial, financial intermediaries, agriculture production and non-profits Well diversified portfolio with no single category exceeding 12% Small energy book and has never been an area of focused growth Virtually no regulatory defined higher risk commercial and industrial outstandings ($3 million)

Slide 8

Loan Portfolio Detail COVID-19 Impacted Industries at March 31, 2020 Restaurants $116 million Outstanding 1.21% of Portfolio Outstandings Hotels $366 million Outstanding 3.83% of Portfolio Outstandings Retail (CRE) $505 million Outstanding 5.28% of Portfolio Outstandings Energy $132 million Outstanding 1.38% of Portfolio Outstandings 23% of book- stand-alone buildings with strong essential services tenants Limited-Service Restaurants – 24% Carryout Restaurants – 19% Other – 2% No loans where repayment or underlying security tied to realization of value from energy reserves 344 Loans 95 Loans 359 Loans 134 Loans 91% operate under a flag 81% operate under Marriott, Hilton, IHG & Hyatt Flags 74% Real Estate Secured Full-Service Restaurants - 55% Additional 3% of book- national grocery store anchored Additional 14% of book-investment grade anchored centers Higher Risk C&I $3 million Outstanding 1 Borrower Pre COVID-19 loan to value was 54% Pre COVID-19 debt service coverage was 1.8x Mall exposure in only one borrower-$5 million outstanding Experienced operators & carries secondary guarantor support $124 million Exposure $451 million Exposure $635 million Exposure $360 million Exposure $14 million Exposure 99% Real Estate Secured

Slide 9

Loan Customer Assistance Programs Loan Concessions Provided As a Result of COVID-19 April 23, 2020 (1) Commercial concessions are primarily either interest only for 90 days or full payment deferrals for 90 days. (2) Consumer concessions are 90-day full payment deferrals. Paycheck Protection Program Results Through April 23, 2020 Trustmark is actively participating in the Paycheck Protection Program administered by the Small Business Administration. The bank began taking customer applications on Saturday, April 4 and began funding loans on Monday, April 13. Small Business Administration commitments were secured for approximately 6,000 requests totaling more than $800 million with an average size of $137 thousand. ($ in Thousands) Categories Number of Loans Balances CRE (1) 287 $ 612,691 Commercial (1) 768 276,632 1-4 Family (2) 498 82,056 Consumer (non 1-4 Family) (2) 425 4,836 Total Concessions 1,978 $ 976,215

Slide 10

Credit Risk Management Solid asset quality metrics Adopted current expected credit loss (CECL) methodology for estimating credit losses effective January 1, 2020 Nonperforming loans decreased 0.4% and 6.1% from the prior quarter and year-over-year, respectively Other real estate declined 15.0% from the prior quarter and 22.7% year-over-year Allowance for credit losses represented 468.8% of nonperforming loans, excluding individually evaluated loans Source: Company reports Note: Unless noted otherwise, credit metrics exclude acquired loans and other real estate covered by FDIC loss-share agreement (1) NPLs excludes individually evaluated loans

Slide 11

Drivers of Change Under CECL Allowance for Credit Losses- Loans and Leases and Off-Balance Sheet Credit Exposures ALLL 12/31/19 Day 1 Adjustment Portfolio Changes Economic Factors ACL 03/31/20(1) CECL Day 1 transition adjustment Includes ACL for loans and leases and off-balance sheet credit exposures Net loan growth Changes in credit quality Charge-offs and recoveries Changes to macro-economic variables Source: Company reports (1) Includes allowance for credit losses for LHFI and off-balance sheet credit exposures ($ in millions)

Slide 12

Attractive, Low-Cost Deposit Base Deposits totaled $11.6 billion at March 31, 2020, up $330.2 million, or 2.9%, from the prior quarter and up $40.9 million, or 0.4%, year-over-year Cost of interest bearing deposits in the first quarter totaled 0.71%, down 14 basis points from the prior quarter Source: Company reports (1) Percentages may not sum to 100% due to rounding

Slide 13

Income Statement Highlights – Net Interest Income Net interest income (FTE) totaled $107.1 million in the first quarter, resulting in a net interest margin of 3.52%. Net interest income (FTE) decreased $1.7 million relative to the prior quarter, as a $4.3 million reduction in interest income more than offset a $2.6 million reduction in interest expense Source: Company reports (1) Totals may not foot due to rounding (2) Loan Yield and NIM exclude acquired loans

Slide 14

Income Statement Highlights – Noninterest Income Source: Company reports Noninterest income totaled $65.3 million, up 37.2% linked-quarter and up 57.3% year-over-year Mortgage loan production in the first quarter totaled $457.2 million, a decline of 8.3% from the prior quarter and a 61.3% increase year-over-year. Mortgage banking revenue totaled $27.5 million in the first quarter, including $9.9 million of positive net mortgage servicing hedge ineffectiveness Gain on sales of loans, net totaled $14.3 million in the first quarter, up $6.4 million from the prior quarter Insurance revenue increased 23.3% linked-quarter, and wealth management revenue increased 10.0% from the prior quarter NII = 38.6% of Quarterly Revenue

Slide 15

Income Statement Highlights – Noninterest Expense Source: Company reports (1) Totals may not foot due to rounding Core Expenses – increased modestly in the first quarter, up 2.5% from the prior quarter Salaries and employee benefits – excluding a one-time charge related to the early retirement program – totaled $64.9 million, an increase of 4.1% linked-quarter due to a seasonal increase in payroll taxes and higher insurance commissions Services and fees increased $430 thousand due to increased professional fees Non-Core Expenses – increased significantly due to the adoption of CECL methodology related to the increase in the allowance for credit losses for off-balance sheet credit exposures and the one-time charge for early retirement

Slide 16

Capital Management Solid capital position reflects consistent profitability of diversified financial services businesses During the first quarter, Trustmark repurchased approximately $27.5 million, or 887 thousand shares of its outstanding common stock. Trustmark suspended its share repurchase program on March 9, 2020, to ensure ample capital to support customers during the COVID-19 pandemic. Source: Company reports (1) Trustmark has elected the five-year phase-in transition period related to adopting the CECL methodology for its regulatory capital.

Slide 17

Trustmark Corporation Who We Are Diversified financial services company headquartered in Jackson, MS, offering banking, wealth management, and risk management solutions throughout the Southeast U.S. Our vision is to be a premier financial services provider in our marketplace. Our mission is to achieve outstanding customer satisfaction by providing banking, wealth management, and risk management solutions through superior sales and service, utilizing excellent people, teamwork, and diversity, while meeting our corporate financial goals. Our Footprint Strategic Priorities to Enhance Shareholder Value Profitable Revenue Generation Organic growth across banking, mortgage, insurance and wealth management businesses Expansion into growth markets across the Southeast via mergers and acquisitions Leverage Technology Investments Enhance the customers’ experience Continuously improve productivity and efficiency Credit Quality Maintain disciplined underwriting and pricing Effective Risk Management and Compliance Enhance understanding and management of risk across the enterprise Ensure regulatory compliance

v3.20.1
Document and Entity Information
Apr. 28, 2020
Cover [Abstract]  
Document Type 8-K
Amendment Flag false
Document Period End Date Apr. 28, 2020
Entity Registrant Name TRUSTMARK CORP
Entity Central Index Key 0000036146
Entity Emerging Growth Company false
Entity File Number 000-03683
Entity Incorporation, State or Country Code MS
Entity Tax Identification Number 64-0471500
Entity Address, Address Line One 248 East Capitol Street
Entity Address, City or Town Jackson
Entity Address, State or Province MS
Entity Address, Postal Zip Code 39201
City Area Code 601
Local Phone Number 208-5111
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of each class Common Stock, no par value
Trading Symbol TRMK
Name of each exchange on which registered NASDAQ