JACKSON, Miss.--(BUSINESS WIRE)--Trustmark Corporation (NASDAQ:TRMK) reported net income of $31.0 million in the third quarter of 2016, which represented diluted earnings per share of $0.46. This level of earnings resulted in a return on average tangible common equity of 11.16% and a return on average assets of 0.95%. Diluted earnings per share in the third quarter of 2016 increased 9.5% relative to the same period in the prior year and 15.0% from the prior quarter when a one-time charge related to a voluntary early retirement program (ERP) in that quarter is excluded. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable December 15, 2016, to shareholders of record on December 1, 2016.
Printer friendly version of earnings release with consolidated financial statements and notes: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=51445688&lang=en
Third Quarter Highlights
- Loans held for investment increased $94.0 million, or 5.2% annualized, from the prior quarter and $707.6 million, or 10.4%, year-over-year
- Credit quality remained solid, reflecting continued reductions in nonperforming assets
- Revenue excluding income on acquired loans increased 2.2% linked quarter, or 8.8% annualized, and 2.7% year-over-year to total $135.5 million in the third quarter
- Core noninterest expense remained well controlled at $96.6 million
Gerard R. Host, President and CEO, stated, “Trustmark achieved another quarter of solid financial results. We continued to maintain and expand customer relationships in our banking business by growing loans while maintaining solid credit quality. Our other lines of business continued to perform well, reflecting strength in insurance and mortgage banking. Core noninterest expense remained well controlled. Thanks to our associates, solid profitability and strong capital base, Trustmark remains well positioned to continue meeting the needs of our customers and creating long-term value for our shareholders.”
Balance Sheet Management
- Diversified legacy loan growth reflects the value of Trustmark’s five-state franchise
- Noninterest-bearing deposits increased to 32.1% of total deposits at September 30; cost of deposits remained steady at 0.13% in the third quarter
- Solid capital base continues to provide flexibility in pursuing growth opportunities
Loans held for investment totaled $7.5 billion at September 30, 2016, reflecting an increase of 5.2% annualized from the prior quarter and 10.4% year-over-year. Compared to the prior quarter, loans to state and other political subdivisions increased $70.6 million reflecting growth in Texas, Mississippi and Alabama. Construction, land development and other land loans increased $48.3 million driven by growth across Trustmark’s five-state franchise. Other loans, which include loans to nonprofits and real estate investment trusts, increased $34.9 million, reflecting growth in Mississippi and Tennessee. Loans secured by nonfarm, nonresidential real estate increased $15.4 million with growth in the Mississippi, Texas and Florida markets. Commercial and industrial loans declined $45.1 million as growth in Alabama, Tennessee and Florida was more than offset with declines in Mississippi and Texas. During the quarter, Trustmark sold the vast majority of its lower-rate, longer-term home mortgages in the secondary market rather than replacing the runoff in its single-family loan portfolio; as a result, the single-family loan portfolio decreased by $27.6 million.
Acquired loans totaled $295.7 million at September 30, 2016, down $43.3 million from the prior quarter. Collectively, loans held for investment and acquired loans totaled $7.8 billion at September 30, 2016, up $50.7 million, or 2.6% annualized, from the prior quarter.
Deposits totaled $9.7 billion at September 30, 2016, up $154.2 million, or 1.6%, from the prior quarter. Trustmark continues to maintain an attractive, low-cost deposit base with a total cost of deposits of 0.13%. The favorable mix of interest-bearing liabilities yielded a total cost of funds of 0.30% for the third quarter of 2016.
Trustmark’s capital position remained solid, reflecting the consistent profitability of its diversified financial services businesses. During the third quarter, Trustmark did not repurchase any of its common shares. The repurchase program, which is subject to market conditions and management discretion, will continue to be implemented through open market repurchases or privately negotiated transactions. At September 30, 2016, Trustmark’s tangible equity to tangible assets ratio was 8.97%, while its total risk-based capital ratio was 13.82%. Tangible book value per share was $16.95 at September 30, 2016, up 5.9% from the prior year.
Credit Quality
- Nonperforming loans and other real estate decreased 16.5% and 6.5%, respectively, from the prior quarter
- Allowance for loan losses represented 256.56% of nonperforming loans, excluding specifically reviewed impaired loans
- Allowance for held for investment and acquired loans represented 1.06% of total held for investment and acquired loans
At September 30, 2016, nonperforming loans totaled $54.4 million, down 16.5% linked quarter and 11.0% year-over-year. Other real estate totaled $65.0 million, reflecting a decline of 6.5% from the prior quarter and 22.6% from the same period one year earlier.
Net charge-offs for the quarter were $5.2 million and resulted from four impaired credits being written down to fair value or charged-off in full. None of these credits were energy related, and a significant portion of the net charge-offs had been provisioned for in previous periods.
Allocation of Trustmark's $70.9 million allowance for loan losses represented 1.02% of commercial loans and 0.68% of consumer and home mortgage loans, resulting in an allowance to total loans held for investment of 0.95% at September 30, 2016, representing a level Management considers commensurate with the inherent risk in the loan portfolio. Collectively, the allowance for both held for investment and acquired loan losses represented 1.06% of total loans, which include held for investment and acquired loans.
Unless otherwise noted, all of the above credit quality metrics exclude acquired loans and other real estate covered by FDIC loss-share agreement.
Revenue Generation
- Net interest income (FTE) excluding income on acquired loans totaled $95.4 million in the third quarter, up 2.7% from the prior quarter
- Noninterest income totaled $44.7 million in the third quarter, up 1.1% from the prior quarter
- Insurance and mortgage banking revenue demonstrated solid growth, increasing 4.5% and 9.6%, respectively, from the prior quarter
Net interest income (FTE) in the third quarter totaled $102.2 million, which resulted in a net interest margin of 3.52%. Compared to the prior quarter, net interest income (FTE) increased $1.3 million, which reflects continued growth in interest income from both the held for sale and held for investment loan portfolios, in addition to a lower level of interest and recoveries from the acquired loan portfolio. The yield on acquired loans in the third quarter totaled 8.50% and included recoveries from settlement of debt of $1.9 million; this compares to $2.9 million in recoveries from settlement of debt in the prior quarter. The net interest margin (FTE) excluding acquired loans totaled 3.38% in the third quarter, remaining unchanged from the prior quarter.
Service charges on deposit accounts totaled $11.7 million in the third quarter, an increase of $626 thousand, or 5.7%, from the prior quarter and a decline of $723 thousand, or 5.8%, year-over-year. The linked quarter change was attributable to a seasonal increase in occurrences of consumer overdrafts while the year-over-year decline reflected a decrease in consumer and business service charges as well as a reduction in occurrences of consumer overdrafts.
Bank card and other fees totaled $6.8 million in the third quarter, a decline of $680 thousand, or 9.1%, linked quarter and $208 thousand, or 3.0%, year-over-year. The linked quarter decline reflected a seasonal reduction in ATM surcharge revenue as well as reduced revenue from customer derivatives while the change year-over-year included lower ATM surcharge revenue.
Insurance revenue totaled $10.1 million in the third quarter, an increase of $436 thousand, or 4.5%, from the prior quarter and $168 thousand, or 1.7%, from the same period one year earlier. The linked quarter increase was primarily driven by the commercial property and casualty line of business while growth year-over-year reflected increases in group health insurance and other commission income, which were offset in part by reduced commercial property and casualty revenue.
Wealth management revenue totaled $7.6 million in the third quarter, a decrease of $438 thousand, or 5.5%, from the prior quarter and $219 thousand, or 2.8%, from the comparable period in 2015, reflecting in part a decline in trust management revenue.
Mortgage banking revenue in the third quarter totaled $7.4 million, an increase of $643 thousand, or 9.6%, linked quarter and a decrease of $79 thousand, or 1.1%, year-over-year. The growth from the prior quarter reflected increased secondary marketing gains and improved hedge ineffectiveness as well as expanded mortgage servicing income. When compared to levels one year earlier, increased secondary marketing gains and mortgage servicing income were more than offset by unfavorable mortgage servicing hedge ineffectiveness and a lower level of mark-to-market gains on mortgage loans held for sale. Mortgage loan production in the third quarter totaled $487.9 million, up 20.8% from the prior quarter and 16.1% from the comparable period one year earlier.
Noninterest Expense
- Core noninterest expense remained well controlled at $96.6 million
- Results of the previously announced ERP produced savings of $1.9 million during the third quarter
Trustmark’s proactive expense management programs have resulted in lower noninterest expense and improved efficiency levels. During the third quarter, noninterest expense totaled $97.9 million, down $12.3 million, or 11.1% from the prior quarter. Excluding the one-time charge of $9.3 million in second quarter related to the ERP, noninterest expense declined $3.0 million, or 2.9%, linked quarter. The efficiency ratio improved 339 basis points during the quarter to 63.8%.
Core noninterest expense, which excludes ORE expense (gain of $1.3 million), intangible amortization ($1.7 million), expense related to reducing the risk profile of the assets of the Corporation’s defined benefit plan prior to termination ($664 thousand) and additional pension expense related to the ERP ($236 thousand), totaled $96.6 million in the third quarter, a decline of $1.4 million on a comparable basis from the prior quarter.
Salaries and benefits expense totaled $57.3 million, which decreased during the quarter by $9.8 million. Excluding one-time ERP charges of $9.1 million during the second quarter, salary and benefits decreased by $706 thousand. This decrease represents ERP savings of $1.9 million during the quarter offset in part by increased pension cost of $900 thousand related to reducing the risk profile of the assets of the Corporation’s defined benefits plan as well as other non-routine pension expense related to the ERP. Other real estate expense decreased by $2.5 million during the quarter principally due to lower writedown expense of $1.2 million and an increase in the gain on sale of $1.1 million driven by the sale of two properties. Other expense totaled $11.6 million in the quarter, a decrease of $1.1 million from the prior quarter. Excluding ERP charges in the second quarter, other expense decreased by $823 thousand on a comparable basis from the prior quarter.
Additional Information
As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, October 26, 2016, at 10:00 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, which will also include a slide presentation Management will review during the conference call. A replay of the conference call will also be available through Wednesday, November 9, 2016, in archived format at the same web address or by calling (877) 344-7529, passcode 10093856.
Trustmark Corporation is a financial services company providing banking and financial solutions through 194 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,” “potential,” “continue,” “could,” “future” or the negative of those terms or other words of similar meaning. You should read statements that contain these words carefully because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements include, but are not limited to, statements relating to anticipated future operating and financial performance measures, including net interest margin, credit quality, business initiatives, growth opportunities and growth rates, among other things, and encompass any estimate, prediction, expectation, projection, opinion, anticipation, outlook or statement of belief included therein as well as the management assumptions underlying these forward-looking statements. You should be aware that the occurrence of the events described under the caption “Risk Factors” in Trustmark’s filings with the Securities and Exchange Commission could have an adverse effect on our business, results of operations and financial condition. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected.
Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, local, state and national economic and market conditions, including 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 as well as 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 relating to the European financial system and monetary and other governmental actions designed to address the level and volatility of interest rates and the volatility of securities, currency and other markets, the enactment of legislation and changes in existing regulations or enforcement practices or the adoption of new regulations, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, changes in our ability to control expenses, changes in our compensation and benefit plans, including those associated with the planned termination of our noncontributory tax-qualified defined benefit pension plan, 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, acts of war or terrorism, and other risks described in our filings with the Securities and Exchange Commission.
Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Except as required by law, we undertake no obligation to update or revise any of this information, whether as the result of new information, future events or developments or otherwise.
TRUSTMARK CORPORATION AND SUBSIDIARIES |
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CONSOLIDATED FINANCIAL INFORMATION |
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September 30, 2016 | |||||||||||||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||
Linked Quarter | Year over Year | ||||||||||||||||||||||||||||||||
QUARTERLY AVERAGE BALANCES |
9/30/2016 | 6/30/2016 | 9/30/2015 | $ | Change | % Change | $ | Change | % Change | ||||||||||||||||||||||||
Securities AFS-taxable | $ | 2,249,109 | $ | 2,214,040 | $ | 2,269,763 | $ | 35,069 | 1.6 | % | $ | (20,654 | ) | -0.9 | % | ||||||||||||||||||
Securities AFS-nontaxable | 95,233 | 99,296 | 116,290 | (4,063 | ) | -4.1 | % | (21,057 | ) | -18.1 | % | ||||||||||||||||||||||
Securities HTM-taxable | 1,115,053 | 1,122,463 | 1,151,673 | (7,410 | ) | -0.7 | % | (36,620 | ) | -3.2 | % | ||||||||||||||||||||||
Securities HTM-nontaxable | 34,179 | 34,785 | 36,278 | (606 | ) | -1.7 | % | (2,099 | ) | -5.8 | % | ||||||||||||||||||||||
Total securities | 3,493,574 | 3,470,584 | 3,574,004 | 22,990 | 0.7 | % | (80,430 | ) | -2.3 | % | |||||||||||||||||||||||
Loans (including loans held for sale) | 7,658,089 | 7,505,409 | 6,771,947 | 152,680 | 2.0 | % | 886,142 | 13.1 | % | ||||||||||||||||||||||||
Acquired loans: | |||||||||||||||||||||||||||||||||
Noncovered loans | 306,809 | 335,012 | 421,262 | (28,203 | ) | -8.4 | % | (114,453 | ) | -27.2 | % | ||||||||||||||||||||||
Covered loans | 10,464 | 14,728 | 18,982 | (4,264 | ) | -29.0 | % | (8,518 | ) | -44.9 | % | ||||||||||||||||||||||
Fed funds sold and rev repos | 1,352 | 1,263 | 1,167 | 89 | 7.0 | % | 185 | 15.9 | % | ||||||||||||||||||||||||
Other earning assets | 68,706 | 64,000 | 58,534 | 4,706 | 7.4 | % | 10,172 | 17.4 | % | ||||||||||||||||||||||||
Total earning assets | 11,538,994 | 11,390,996 | 10,845,896 | 147,998 | 1.3 | % | 693,098 | 6.4 | % | ||||||||||||||||||||||||
Allowance for loan losses | (82,301 | ) | (83,614 | ) | (84,482 | ) | 1,313 | -1.6 | % | 2,181 | -2.6 | % | |||||||||||||||||||||
Cash and due from banks | 299,670 | 271,135 | 266,174 | 28,535 | 10.5 | % | 33,496 | 12.6 | % | ||||||||||||||||||||||||
Other assets | 1,243,854 | 1,240,846 | 1,286,189 | 3,008 | 0.2 | % | (42,335 | ) | -3.3 | % | |||||||||||||||||||||||
Total assets | $ | 13,000,217 | $ | 12,819,363 | $ | 12,313,777 | $ | 180,854 | 1.4 | % | $ | 686,440 | 5.6 | % | |||||||||||||||||||
Interest-bearing demand deposits | $ | 1,848,084 | $ | 1,830,107 | $ | 1,915,567 | $ | 17,977 | 1.0 | % | $ | (67,483 | ) | -3.5 | % | ||||||||||||||||||
Savings deposits | 3,101,161 | 3,221,850 | 3,059,183 | (120,689 | ) | -3.7 | % | 41,978 | 1.4 | % | |||||||||||||||||||||||
Time deposits less than $100,000 | 961,641 | 978,678 | 1,072,373 | (17,037 | ) | -1.7 | % | (110,732 | ) | -10.3 | % | ||||||||||||||||||||||
Time deposits of $100,000 or more | 705,704 | 699,886 | 712,910 | 5,818 | 0.8 | % | (7,206 | ) | -1.0 | % | |||||||||||||||||||||||
Total interest-bearing deposits | 6,616,590 | 6,730,521 | 6,760,033 | (113,931 | ) | -1.7 | % | (143,443 | ) | -2.1 | % | ||||||||||||||||||||||
Fed funds purchased and repos | 481,071 | 488,512 | 528,232 | (7,441 | ) | -1.5 | % | (47,161 | ) | -8.9 | % | ||||||||||||||||||||||
Short-term borrowings | 311,473 | 319,288 | 534,931 | (7,815 | ) | -2.4 | % | (223,458 | ) | -41.8 | % | ||||||||||||||||||||||
Long-term FHLB advances | 751,095 | 597,269 | 1,195 | 153,826 | 25.8 | % | 749,900 | n/m | |||||||||||||||||||||||||
Subordinated notes | 49,988 | 49,980 | 49,955 | 8 | 0.0 | % | 33 | 0.1 | % | ||||||||||||||||||||||||
Junior subordinated debt securities | 61,856 | 61,856 | 61,856 | — | 0.0 | % | — | 0.0 | % | ||||||||||||||||||||||||
Total interest-bearing liabilities | 8,272,073 | 8,247,426 | 7,936,202 | 24,647 | 0.3 | % | 335,871 | 4.2 | % | ||||||||||||||||||||||||
Noninterest-bearing deposits | 3,060,331 | 2,927,469 | 2,771,186 | 132,862 | 4.5 | % | 289,145 | 10.4 | % | ||||||||||||||||||||||||
Other liabilities | 136,971 | 131,627 | 137,134 | 5,344 | 4.1 | % | (163 | ) | -0.1 | % | |||||||||||||||||||||||
Total liabilities | 11,469,375 | 11,306,522 | 10,844,522 | 162,853 | 1.4 | % | 624,853 | 5.8 | % | ||||||||||||||||||||||||
Shareholders' equity | 1,530,842 | 1,512,841 | 1,469,255 | 18,001 | 1.2 | % | 61,587 | 4.2 | % | ||||||||||||||||||||||||
Total liabilities and equity | $ | 13,000,217 | $ | 12,819,363 | $ | 12,313,777 | $ | 180,854 | 1.4 | % | $ | 686,440 | 5.6 | % | |||||||||||||||||||
n/m - percentage changes greater than +/- 100% are considered not meaningful | |||||||||||||||||||||||||||||||||
See Notes to Consolidated Financials |
TRUSTMARK CORPORATION AND SUBSIDIARIES |
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CONSOLIDATED FINANCIAL INFORMATION |
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September 30, 2016 |
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($ in thousands) |
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(unaudited) |
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Linked Quarter | Year over Year | ||||||||||||||||||||||||||||||||
PERIOD END BALANCES |
9/30/2016 | 6/30/2016 | 9/30/2015 | $ | Change | % Change | $ | Change | % Change | ||||||||||||||||||||||||
Cash and due from banks | $ | 383,945 | $ | 322,049 | $ | 220,052 | $ | 61,896 | 19.2 | % | $ | 163,893 | 74.5 | % | |||||||||||||||||||
Fed funds sold and rev repos | 500 | 3,198 | — | (2,698 | ) | n/m | 500 | n/m | |||||||||||||||||||||||||
Securities available for sale | 2,410,947 | 2,388,306 | 2,382,822 | 22,641 | 0.9 | % | 28,125 | 1.2 | % | ||||||||||||||||||||||||
Securities held to maturity | 1,143,234 | 1,173,204 | 1,178,440 | (29,970 | ) | -2.6 | % | (35,206 | ) | -3.0 | % | ||||||||||||||||||||||
Loans held for sale (LHFS) | 242,097 | 213,546 | 173,679 | 28,551 | 13.4 | % | 68,418 | 39.4 | % | ||||||||||||||||||||||||
Loans held for investment (LHFI) | 7,499,204 | 7,405,181 | 6,791,643 | 94,023 | 1.3 | % | 707,561 | 10.4 | % | ||||||||||||||||||||||||
Allowance for loan losses | (70,871 | ) | (71,796 | ) | (65,607 | ) | 925 | -1.3 | % | (5,264 | ) | 8.0 | % | ||||||||||||||||||||
Net LHFI | 7,428,333 | 7,333,385 | 6,726,036 | 94,948 | 1.3 | % | 702,297 | 10.4 | % | ||||||||||||||||||||||||
Acquired loans: | |||||||||||||||||||||||||||||||||
Noncovered loans | 291,825 | 325,196 | 400,528 | (33,371 | ) | -10.3 | % | (108,703 | ) | -27.1 | % | ||||||||||||||||||||||
Covered loans | 3,912 | 13,839 | 18,645 | (9,927 | ) | -71.7 | % | (14,733 | ) | -79.0 | % | ||||||||||||||||||||||
Allowance for loan losses, acquired loans | (11,380 | ) | (12,480 | ) | (12,185 | ) | 1,100 | -8.8 | % | 805 | -6.6 | % | |||||||||||||||||||||
Net acquired loans | 284,357 | 326,555 | 406,988 | (42,198 | ) | -12.9 | % | (122,631 | ) | -30.1 | % | ||||||||||||||||||||||
Net LHFI and acquired loans | 7,712,690 | 7,659,940 | 7,133,024 | 52,750 | 0.7 | % | 579,666 | 8.1 | % | ||||||||||||||||||||||||
Premises and equipment, net | 190,930 | 192,732 | 196,558 | (1,802 | ) | -0.9 | % | (5,628 | ) | -2.9 | % | ||||||||||||||||||||||
Mortgage servicing rights | 65,514 | 62,814 | 69,809 | 2,700 | 4.3 | % | (4,295 | ) | -6.2 | % | |||||||||||||||||||||||
Goodwill | 366,156 | 366,156 | 365,500 | — | 0.0 | % | 656 | 0.2 | % | ||||||||||||||||||||||||
Identifiable intangible assets | 22,366 | 24,058 | 30,129 | (1,692 | ) | -7.0 | % | (7,763 | ) | -25.8 | % | ||||||||||||||||||||||
Other real estate, excluding covered other real estate | 64,993 | 69,502 | 83,955 | (4,509 | ) | -6.5 | % | (18,962 | ) | -22.6 | % | ||||||||||||||||||||||
Covered other real estate | — | 388 | 2,865 | (388 | ) | -100.0 | % | (2,865 | ) | -100.0 | % | ||||||||||||||||||||||
FDIC indemnification asset | — | — | 1,749 | — | n/m | (1,749 | ) | -100.0 | % | ||||||||||||||||||||||||
Other assets | 558,166 | 554,456 | 551,694 | 3,710 | 0.7 | % | 6,472 | 1.2 | % | ||||||||||||||||||||||||
Total assets | $ | 13,161,538 | $ | 13,030,349 | $ | 12,390,276 | $ | 131,189 | 1.0 | % | $ | 771,262 | 6.2 | % | |||||||||||||||||||
Deposits: | |||||||||||||||||||||||||||||||||
Noninterest-bearing | $ | 3,111,603 | $ | 2,921,016 | $ | 2,787,454 | $ | 190,587 | 6.5 | % | $ | 324,149 | 11.6 | % | |||||||||||||||||||
Interest-bearing | 6,574,098 | 6,610,508 | 6,624,950 | (36,410 | ) | -0.6 | % | (50,852 | ) | -0.8 | % | ||||||||||||||||||||||
Total deposits | 9,685,701 | 9,531,524 | 9,412,404 | 154,177 | 1.6 | % | 273,297 | 2.9 | % | ||||||||||||||||||||||||
Fed funds purchased and repos | 514,918 | 606,336 | 534,204 | (91,418 | ) | -15.1 | % | (19,286 | ) | -3.6 | % | ||||||||||||||||||||||
Short-term borrowings | 412,792 | 360,434 | 709,845 | 52,358 | 14.5 | % | (297,053 | ) | -41.8 | % | |||||||||||||||||||||||
Long-term FHLB advances | 751,075 | 751,106 | 1,173 | (31 | ) | 0.0 | % | 749,902 | n/m | ||||||||||||||||||||||||
Subordinated notes | 49,993 | 49,985 | 49,961 | 8 | 0.0 | % | 32 | 0.1 | % | ||||||||||||||||||||||||
Junior subordinated debt securities | 61,856 | 61,856 | 61,856 | — | 0.0 | % | — | 0.0 | % | ||||||||||||||||||||||||
Other liabilities | 150,442 | 145,641 | 144,077 | 4,801 | 3.3 | % | 6,365 | 4.4 | % | ||||||||||||||||||||||||
Total liabilities | 11,626,777 | 11,506,882 | 10,913,520 | 119,895 | 1.0 | % | 713,257 | 6.5 | % | ||||||||||||||||||||||||
Common stock | 14,090 | 14,090 | 14,076 | - | 0.0 | % | 14 | 0.1 | % | ||||||||||||||||||||||||
Capital surplus | 365,553 | 364,516 | 360,494 | 1,037 | 0.3 | % | 5,059 | 1.4 | % | ||||||||||||||||||||||||
Retained earnings | 1,172,193 | 1,157,025 | 1,130,766 | 15,168 | 1.3 | % | 41,427 | 3.7 | % | ||||||||||||||||||||||||
Accum other comprehensive loss, net of tax | (17,075 | ) | (12,164 | ) | (28,580 | ) | (4,911 | ) | 40.4 | % | 11,505 | -40.3 | % | ||||||||||||||||||||
Total shareholders' equity | 1,534,761 | 1,523,467 | 1,476,756 | 11,294 | 0.7 | % | 58,005 | 3.9 | % | ||||||||||||||||||||||||
Total liabilities and equity | $ | 13,161,538 | $ | 13,030,349 | $ | 12,390,276 | $ | 131,189 | 1.0 | % | $ | 771,262 | 6.2 | % | |||||||||||||||||||
n/m - percentage changes greater than +/- 100% are considered not meaningful | |||||||||||||||||||||||||||||||||
See Notes to Consolidated Financials |
TRUSTMARK CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONSOLIDATED FINANCIAL INFORMATION | |||||||||||||||||||||||||||||||
September 30, 2016 |
|||||||||||||||||||||||||||||||
($ in thousands except per share data) |
|||||||||||||||||||||||||||||||
(unaudited) |
|||||||||||||||||||||||||||||||
Quarter Ended | Linked Quarter | Year over Year | |||||||||||||||||||||||||||||
INCOME STATEMENTS |
9/30/2016 | 6/30/2016 | 9/30/2015 | $ | Change | % Change | $ | Change | % Change | ||||||||||||||||||||||
Interest and fees on LHFS & LHFI-FTE | $ | 80,649 | $ | 77,777 | $ | 72,951 | $ | 2,872 | 3.7 | % | $ | 7,698 | 10.6 | % | |||||||||||||||||
Interest and fees on acquired loans | 6,781 | 8,051 | 11,607 | (1,270 | ) | -15.8 | % | (4,826 | ) | -41.6 | % | ||||||||||||||||||||
Interest on securities-taxable | 19,351 | 19,402 | 20,264 | (51 | ) | -0.3 | % | (913 | ) | -4.5 | % | ||||||||||||||||||||
Interest on securities-tax exempt-FTE | 1,388 | 1,429 | 1,609 | (41 | ) | -2.9 | % | (221 | ) | -13.7 | % | ||||||||||||||||||||
Interest on fed funds sold and rev repos | 5 | 4 | 2 | 1 | 25.0 | % | 3 | n/m | |||||||||||||||||||||||
Other interest income | 223 | 200 | 392 | 23 | 11.5 | % | (169 | ) | -43.1 | % | |||||||||||||||||||||
Total interest income-FTE | 108,397 | 106,863 | 106,825 | 1,534 | 1.4 | % | 1,572 | 1.5 | % | ||||||||||||||||||||||
Interest on deposits | 3,208 | 3,122 | 3,147 | 86 | 2.8 | % | 61 | 1.9 | % | ||||||||||||||||||||||
Interest on fed funds pch and repos | 411 | 404 | 205 | 7 | 1.7 | % | 206 | n/m | |||||||||||||||||||||||
Other interest expense | 2,603 | 2,428 | 1,811 | 175 | 7.2 | % | 792 | 43.7 | % | ||||||||||||||||||||||
Total interest expense | 6,222 | 5,954 | 5,163 | 268 | 4.5 | % | 1,059 | 20.5 | % | ||||||||||||||||||||||
Net interest income-FTE | 102,175 | 100,909 | 101,662 | 1,266 | 1.3 | % | 513 | 0.5 | % | ||||||||||||||||||||||
Provision for loan losses, LHFI | 4,284 | 2,596 | 2,514 | 1,688 | 65.0 | % | 1,770 | 70.4 | % | ||||||||||||||||||||||
Provision for loan losses, acquired loans | 691 | 607 | 1,256 | 84 | 13.8 | % | (565 | ) | -45.0 | % | |||||||||||||||||||||
Net interest income after provision-FTE | 97,200 | 97,706 | 97,892 | (506 | ) | -0.5 | % | (692 | ) | -0.7 | % | ||||||||||||||||||||
Service charges on deposit accounts | 11,677 | 11,051 | 12,400 | 626 | 5.7 | % | (723 | ) | -5.8 | % | |||||||||||||||||||||
Insurance commissions | 10,074 | 9,638 | 9,906 | 436 | 4.5 | % | 168 | 1.7 | % | ||||||||||||||||||||||
Wealth management | 7,571 | 8,009 | 7,790 | (438 | ) | -5.5 | % | (219 | ) | -2.8 | % | ||||||||||||||||||||
Bank card and other fees | 6,756 | 7,436 | 6,964 | (680 | ) | -9.1 | % | (208 | ) | -3.0 | % | ||||||||||||||||||||
Mortgage banking, net | 7,364 | 6,721 | 7,443 | 643 | 9.6 | % | (79 | ) | -1.1 | % | |||||||||||||||||||||
Other, net | 1,274 | 1,372 | 1,470 | (98 | ) | -7.1 | % | (196 | ) | -13.3 | % | ||||||||||||||||||||
Nonint inc-excl sec gains (losses), net | 44,716 | 44,227 | 45,973 | 489 | 1.1 | % | (1,257 | ) | -2.7 | % | |||||||||||||||||||||
Security gains (losses), net | — | — | — | — | n/m | - | n/m | ||||||||||||||||||||||||
Total noninterest income | 44,716 | 44,227 | 45,973 | 489 | 1.1 | % | (1,257 | ) | -2.7 | % | |||||||||||||||||||||
Salaries and employee benefits | 57,250 | 67,018 | 58,270 | (9,768 | ) | -14.6 | % | (1,020 | ) | -1.8 | % | ||||||||||||||||||||
Services and fees | 14,947 | 14,522 | 14,691 | 425 | 2.9 | % | 256 | 1.7 | % | ||||||||||||||||||||||
Net occupancy-premises | 6,440 | 5,928 | 6,580 | 512 | 8.6 | % | (140 | ) | -2.1 | % | |||||||||||||||||||||
Equipment expense | 6,063 | 5,896 | 5,877 | 167 | 2.8 | % | 186 | 3.2 | % | ||||||||||||||||||||||
FDIC assessment expense | 2,911 | 2,959 | 2,559 | (48 | ) | -1.6 | % | 352 | 13.8 | % | |||||||||||||||||||||
Other real estate expense | (1,313 | ) | 1,193 | 3,385 | (2,506 | ) | n/m | (4,698 | ) | n/m | |||||||||||||||||||||
Other expense | 11,610 | 12,663 | 12,198 | (1,053 | ) | -8.3 | % | (588 | ) | -4.8 | % | ||||||||||||||||||||
Total noninterest expense | 97,908 | 110,179 | 103,560 | (12,271 | ) | -11.1 | % | (5,652 | ) | -5.5 | % | ||||||||||||||||||||
Income before income taxes and tax eq adj | 44,008 | 31,754 | 40,305 | 12,254 | 38.6 | % | 3,703 | 9.2 | % | ||||||||||||||||||||||
Tax equivalent adjustment | 4,611 | 4,532 | 4,056 | 79 | 1.7 | % | 555 | 13.7 | % | ||||||||||||||||||||||
Income before income taxes | 39,397 | 27,222 | 36,249 | 12,175 | 44.7 | % | 3,148 | 8.7 | % | ||||||||||||||||||||||
Income taxes | 8,415 | 5,719 | 7,819 | 2,696 | 47.1 | % | 596 | 7.6 | % | ||||||||||||||||||||||
Net income | $ | 30,982 | $ | 21,503 | $ | 28,430 | $ | 9,479 | 44.1 | % | $ | 2,552 | 9.0 | % | |||||||||||||||||
Per share data | |||||||||||||||||||||||||||||||
Earnings per share - basic | $ | 0.46 | $ | 0.32 | $ | 0.42 | $ | 0.14 | 43.8 | % | $ | 0.04 | 9.5 | % | |||||||||||||||||
Earnings per share - diluted | $ | 0.46 | $ | 0.32 | $ | 0.42 | $ | 0.14 | 43.8 | % | $ | 0.04 | 9.5 | % | |||||||||||||||||
Dividends per share | $ | 0.23 | $ | 0.23 | $ | 0.23 | — | 0.0 | % | — | 0.0 | % | |||||||||||||||||||
Weighted average shares outstanding | |||||||||||||||||||||||||||||||
Basic | 67,625,085 | 67,619,571 | 67,557,395 | ||||||||||||||||||||||||||||
Diluted | 67,793,203 | 67,770,174 | 67,707,456 | ||||||||||||||||||||||||||||
Period end shares outstanding | 67,626,939 | 67,623,601 | 67,557,395 | ||||||||||||||||||||||||||||
n/m - percentage changes greater than +/- 100% are considered not meaningful | |||||||||||||||||||||||||||||||
See Notes to Consolidated Financials |
|||||||||||||||||||||||||||||||
TRUSTMARK CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||
CONSOLIDATED FINANCIAL INFORMATION | ||||||||||||||||||||||||||||||||
September 30, 2016 |
||||||||||||||||||||||||||||||||
($ in thousands) |
||||||||||||||||||||||||||||||||
(unaudited) |
||||||||||||||||||||||||||||||||
Quarter Ended | Linked Quarter | Year over Year | ||||||||||||||||||||||||||||||
NONPERFORMING ASSETS (1) |
9/30/2016 | 6/30/2016 | 9/30/2015 | $ | Change | % Change | $ | Change | % Change | |||||||||||||||||||||||
Nonaccrual loans | ||||||||||||||||||||||||||||||||
Alabama | $ | 1,403 | $ | 1,379 | $ | 1,306 | $ | 24 | 1.7 | % | $ | 97 | 7.4 | % | ||||||||||||||||||
Florida | 3,719 | 1,806 | 7,444 | 1,913 | n/m | (3,725 | ) | -50.0 | % | |||||||||||||||||||||||
Mississippi (2) | 41,968 | 54,543 | 44,955 | (12,575 | ) | -23.1 | % | (2,987 | ) | -6.6 | % | |||||||||||||||||||||
Tennessee (3) | 6,620 | 5,345 | 4,911 | 1,275 | 23.9 | % | 1,709 | 34.8 | % | |||||||||||||||||||||||
Texas | 700 | 2,055 | 2,515 | (1,355 | ) | -65.9 | % | (1,815 | ) | -72.2 | % | |||||||||||||||||||||
Total nonaccrual loans | 54,410 | 65,128 | 61,131 | (10,718 | ) | -16.5 | % | (6,721 | ) | -11.0 | % | |||||||||||||||||||||
Other real estate | ||||||||||||||||||||||||||||||||
Alabama | 15,574 | 18,031 | 23,822 | (2,457 | ) | -13.6 | % | (8,248 | ) | -34.6 | % | |||||||||||||||||||||
Florida | 25,147 | 28,052 | 30,374 | (2,905 | ) | -10.4 | % | (5,227 | ) | -17.2 | % | |||||||||||||||||||||
Mississippi (2) | 16,659 | 14,435 | 13,180 | 2,224 | 15.4 | % | 3,479 | 26.4 | % | |||||||||||||||||||||||
Tennessee (3) | 6,061 | 7,432 | 9,840 | (1,371 | ) | -18.4 | % | (3,779 | ) | -38.4 | % | |||||||||||||||||||||
Texas | 1,552 | 1,552 | 6,739 | - | 0.0 | % | (5,187 | ) | -77.0 | % | ||||||||||||||||||||||
Total other real estate | 64,993 | 69,502 | 83,955 | (4,509 | ) | -6.5 | % | (18,962 | ) | -22.6 | % | |||||||||||||||||||||
Total nonperforming assets | $ | 119,403 | $ | 134,630 | $ | 145,086 | $ | (15,227 | ) | -11.3 | % | $ | (25,683 | ) | -17.7 | % | ||||||||||||||||
LOANS PAST DUE OVER 90 DAYS (4) |
||||||||||||||||||||||||||||||||
LHFI | $ | 953 | $ | 3,382 | $ | 9,224 | $ | (2,429 | ) | -71.8 | % | $ | (8,271 | ) | -89.7 | % | ||||||||||||||||
LHFS-Guaranteed GNMA serviced loans | ||||||||||||||||||||||||||||||||
(no obligation to repurchase) | $ | 25,570 | $ | 23,473 | $ | 15,165 | $ | 2,097 | 8.9 | % | $ | 10,405 | 68.6 | % | ||||||||||||||||||
Quarter Ended | Linked Quarter | Year over Year | ||||||||||||||||||||||||||||||
ALLOWANCE FOR LOAN LOSSES (4) |
9/30/2016 | 6/30/2016 | 9/30/2015 | $ | Change | % Change | $ | Change | % Change | |||||||||||||||||||||||
Beginning Balance | $ | 71,796 | $ | 69,668 | $ | 71,166 | $ | 2,128 | 3.1 | % | $ | 630 | 0.9 | % | ||||||||||||||||||
Provision for loan losses | 4,284 | 2,596 | 2,514 | 1,688 | 65.0 | % | 1,770 | 70.4 | % | |||||||||||||||||||||||
Charge-offs | (8,279 | ) | (3,251 | ) | (11,406 | ) | (5,028 | ) | n/m | 3,127 | -27.4 | % | ||||||||||||||||||||
Recoveries | 3,070 | 2,783 | 3,333 | 287 | 10.3 | % | (263 | ) | -7.9 | % | ||||||||||||||||||||||
Net charge-offs | (5,209 | ) | (468 | ) | (8,073 | ) | (4,741 | ) | n/m | 2,864 | -35.5 | % | ||||||||||||||||||||
Ending Balance | $ | 70,871 | $ | 71,796 | $ | 65,607 | $ | (925 | ) | -1.3 | % | $ | 5,264 | 8.0 | % | |||||||||||||||||
PROVISION FOR LOAN LOSSES (4) |
||||||||||||||||||||||||||||||||
Alabama | $ | 132 | $ | 1,189 | $ | (70 | ) | $ | (1,057 | ) | -88.9 | % | $ | 202 | n/m | |||||||||||||||||
Florida | 31 | (364 | ) | (1,430 | ) | 395 | n/m | 1,461 | n/m | |||||||||||||||||||||||
Mississippi (2) | 703 | (833 | ) | 4,221 | 1,536 | n/m | (3,518 | ) | -83.3 | % | ||||||||||||||||||||||
Tennessee (3) | 151 | 726 | (1,050 | ) | (575 | ) | -79.2 | % | 1,201 | n/m | ||||||||||||||||||||||
Texas | 3,267 | 1,878 | 843 | 1,389 | 74.0 | % | 2,424 | n/m | ||||||||||||||||||||||||
Total provision for loan losses | $ | 4,284 | $ | 2,596 | $ | 2,514 | $ | 1,688 | 65.0 | % | $ | 1,770 | 70.4 | % | ||||||||||||||||||
NET CHARGE-OFFS (4) |
||||||||||||||||||||||||||||||||
Alabama | $ | 38 | $ | 436 | $ | 163 | $ | (398 | ) | -91.3 | % | $ | (125 | ) | -76.7 | % | ||||||||||||||||
Florida | (169 | ) | (595 | ) | (1,090 | ) | 426 | -71.6 | % | 921 | -84.5 | % | ||||||||||||||||||||
Mississippi (2) | 2,484 | (237 | ) | 7,391 | 2,721 | n/m | (4,907 | ) | -66.4 | % | ||||||||||||||||||||||
Tennessee (3) | 74 | 252 | 448 | (178 | ) | -70.6 | % | (374 | ) | -83.5 | % | |||||||||||||||||||||
Texas | 2,782 | 612 | 1,161 | 2,170 | n/m | 1,621 | n/m | |||||||||||||||||||||||||
Total net charge-offs | $ | 5,209 | $ | 468 | $ | 8,073 | $ | 4,741 | n/m | $ | (2,864 | ) | -35.5 | % | ||||||||||||||||||
(1) - Excludes acquired loans and covered other real estate | ||||||||||||||||||||||||||||||||
(2) - Mississippi includes Central and Southern Mississippi Regions | ||||||||||||||||||||||||||||||||
(3) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions | ||||||||||||||||||||||||||||||||
(4) - Excludes acquired loans | ||||||||||||||||||||||||||||||||
n/m - percentage changes greater than +/- 100% are considered not meaningful | ||||||||||||||||||||||||||||||||
See Notes to Consolidated Financials |
TRUSTMARK CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||
CONSOLIDATED FINANCIAL INFORMATION | |||||||||||||||||||||||||||||||||||
September 30, 2016 | |||||||||||||||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||
Quarter Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
AVERAGE BALANCES |
9/30/2016 | 6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/2015 | 9/30/2016 | 9/30/2015 | ||||||||||||||||||||||||||||
Securities AFS-taxable | $ | 2,249,109 | $ | 2,214,040 | $ | 2,211,479 | $ | 2,209,801 | $ | 2,269,763 | $ | 2,224,964 | $ | 2,238,822 | |||||||||||||||||||||
Securities AFS-nontaxable | 95,233 | 99,296 | 105,844 | 110,290 | 116,290 | 100,106 | 121,373 | ||||||||||||||||||||||||||||
Securities HTM-taxable | 1,115,053 | 1,122,463 | 1,142,434 | 1,145,397 | 1,151,673 | 1,126,608 | 1,138,424 | ||||||||||||||||||||||||||||
Securities HTM-nontaxable | 34,179 | 34,785 | 35,841 | 35,755 | 36,278 | 34,932 | 38,600 | ||||||||||||||||||||||||||||
Total securities | 3,493,574 | 3,470,584 | 3,495,598 | 3,501,243 | 3,574,004 | 3,486,610 | 3,537,219 | ||||||||||||||||||||||||||||
Loans (including loans held for sale) | 7,658,089 | 7,505,409 | 7,346,333 | 7,089,672 | 6,771,947 | 7,503,842 | 6,630,143 | ||||||||||||||||||||||||||||
Acquired loans: | |||||||||||||||||||||||||||||||||||
Noncovered loans | 306,809 | 335,012 | 361,772 | 384,306 | 421,262 | 334,430 | 461,774 | ||||||||||||||||||||||||||||
Covered loans | 10,464 | 14,728 | 16,663 | 18,341 | 18,982 | 13,939 | 21,033 | ||||||||||||||||||||||||||||
Fed funds sold and rev repos | 1,352 | 1,263 | 382 | 1,384 | 1,167 | 1,000 | 650 | ||||||||||||||||||||||||||||
Other earning assets | 68,706 | 64,000 | 66,702 | 68,016 | 58,534 | 66,477 | 48,759 | ||||||||||||||||||||||||||||
Total earning assets | 11,538,994 | 11,390,996 | 11,287,450 | 11,062,962 | 10,845,896 | 11,406,298 | 10,699,578 | ||||||||||||||||||||||||||||
Allowance for loan losses | (82,301 | ) | (83,614 | ) | (81,138 | ) | (78,652 | ) | (84,482 | ) | (82,351 | ) | (83,611 | ) | |||||||||||||||||||||
Cash and due from banks | 299,670 | 271,135 | 281,912 | 272,562 | 266,174 | 284,295 | 276,151 | ||||||||||||||||||||||||||||
Other assets | 1,243,854 | 1,240,846 | 1,253,282 | 1,266,712 | 1,286,189 | 1,245,988 | 1,292,685 | ||||||||||||||||||||||||||||
Total assets | $ | 13,000,217 | $ | 12,819,363 | $ | 12,741,506 | $ | 12,523,584 | $ | 12,313,777 | $ | 12,854,230 | $ | 12,184,803 | |||||||||||||||||||||
Interest-bearing demand deposits | $ | 1,848,084 | $ | 1,830,107 | $ | 1,866,043 | $ | 1,917,598 | $ | 1,915,567 | $ | 1,848,078 | $ | 1,896,046 | |||||||||||||||||||||
Savings deposits | 3,101,161 | 3,221,850 | 3,188,916 | 2,963,318 | 3,059,183 | 3,170,389 | 3,178,675 | ||||||||||||||||||||||||||||
Time deposits less than $100,000 | 961,641 | 978,678 | 994,406 | 1,033,233 | 1,072,373 | 978,181 | 1,104,339 | ||||||||||||||||||||||||||||
Time deposits of $100,000 or more | 705,704 | 699,886 | 683,170 | 687,635 | 712,910 | 696,288 | 749,651 | ||||||||||||||||||||||||||||
Total interest-bearing deposits | 6,616,590 | 6,730,521 | 6,732,535 | 6,601,784 | 6,760,033 | 6,692,936 | 6,928,711 | ||||||||||||||||||||||||||||
Fed funds purchased and repos | 481,071 | 488,512 | 517,180 | 563,424 | 528,232 | 495,535 | 482,740 | ||||||||||||||||||||||||||||
Short-term borrowings | 311,473 | 319,288 | 413,616 | 733,365 | 534,931 | 347,992 | 307,821 | ||||||||||||||||||||||||||||
Long-term FHLB advances | 751,095 | 597,269 | 501,144 | 50,078 | 1,195 | 616,994 | 1,217 | ||||||||||||||||||||||||||||
Subordinated notes | 49,988 | 49,980 | 49,972 | 49,964 | 49,955 | 49,980 | 49,947 | ||||||||||||||||||||||||||||
Junior subordinated debt securities | 61,856 | 61,856 | 61,856 | 61,856 | 61,856 | 61,856 | 61,856 | ||||||||||||||||||||||||||||
Total interest-bearing liabilities | 8,272,073 | 8,247,426 | 8,276,303 | 8,060,471 | 7,936,202 | 8,265,293 | 7,832,292 | ||||||||||||||||||||||||||||
Noninterest-bearing deposits | 3,060,331 | 2,927,469 | 2,836,283 | 2,839,894 | 2,771,186 | 2,941,795 | 2,762,064 | ||||||||||||||||||||||||||||
Other liabilities | 136,971 | 131,627 | 134,236 | 141,925 | 137,134 | 134,287 | 136,754 | ||||||||||||||||||||||||||||
Total liabilities | 11,469,375 | 11,306,522 | 11,246,822 | 11,042,290 | 10,844,522 | 11,341,375 | 10,731,110 | ||||||||||||||||||||||||||||
Shareholders' equity | 1,530,842 | 1,512,841 | 1,494,684 | 1,481,294 | 1,469,255 | 1,512,855 | 1,453,693 | ||||||||||||||||||||||||||||
Total liabilities and equity | $ | 13,000,217 | $ | 12,819,363 | $ | 12,741,506 | $ | 12,523,584 | $ | 12,313,777 | $ | 12,854,230 | $ | 12,184,803 | |||||||||||||||||||||
See Notes to Consolidated Financials |
TRUSTMARK CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||||
CONSOLIDATED FINANCIAL INFORMATION | |||||||||||||||||||||||||
September 30, 2016 |
|||||||||||||||||||||||||
($ in thousands) |
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(unaudited) |
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|
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PERIOD END BALANCES |
9/30/2016 | 6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/2015 | ||||||||||||||||||||
Cash and due from banks | $ | 383,945 | $ | 322,049 | $ | 228,498 | $ | 277,751 | $ | 220,052 | |||||||||||||||
Fed funds sold and rev repos | 500 | 3,198 | — | 250 | — | ||||||||||||||||||||
Securities available for sale | 2,410,947 | 2,388,306 | 2,368,120 | 2,345,422 | 2,382,822 | ||||||||||||||||||||
Securities held to maturity | 1,143,234 | 1,173,204 | 1,168,203 | 1,187,818 | 1,178,440 | ||||||||||||||||||||
Loans held for sale (LHFS) | 242,097 | 213,546 | 191,028 | 160,189 | 173,679 | ||||||||||||||||||||
Loans held for investment (LHFI) | 7,499,204 | 7,405,181 | 7,268,022 | 7,091,385 | 6,791,643 | ||||||||||||||||||||
Allowance for loan losses | (70,871 | ) | (71,796 | ) | (69,668 | ) | (67,619 | ) | (65,607 | ) | |||||||||||||||
Net LHFI | 7,428,333 | 7,333,385 | 7,198,354 | 7,023,766 | 6,726,036 | ||||||||||||||||||||
Acquired loans: | |||||||||||||||||||||||||
Noncovered loans | 291,825 | 325,196 | 349,781 | 372,711 | 400,528 | ||||||||||||||||||||
Covered loans | 3,912 | 13,839 | 14,974 | 17,700 | 18,645 | ||||||||||||||||||||
Allowance for loan losses, acquired loans | (11,380 | ) | (12,480 | ) | (13,535 | ) | (11,992 | ) | (12,185 | ) | |||||||||||||||
Net acquired loans | 284,357 | 326,555 | 351,220 | 378,419 | 406,988 | ||||||||||||||||||||
Net LHFI and acquired loans | 7,712,690 | 7,659,940 | 7,549,574 | 7,402,185 | 7,133,024 | ||||||||||||||||||||
Premises and equipment, net | 190,930 | 192,732 | 194,453 | 195,656 | 196,558 | ||||||||||||||||||||
Mortgage servicing rights | 65,514 | 62,814 | 68,208 | 74,007 | 69,809 | ||||||||||||||||||||
Goodwill | 366,156 | 366,156 | 366,156 | 366,156 | 365,500 | ||||||||||||||||||||
Identifiable intangible assets | 22,366 | 24,058 | 25,751 | 27,546 | 30,129 | ||||||||||||||||||||
Other real estate, excluding covered other real estate | 64,993 | 69,502 | 71,806 | 77,177 | 83,955 | ||||||||||||||||||||
Covered other real estate | — | 388 | 496 | 1,651 | 2,865 | ||||||||||||||||||||
FDIC indemnification asset | — | — | 506 | 738 | 1,749 | ||||||||||||||||||||
Other assets | 558,166 | 554,456 | 542,397 | 562,350 | 551,694 | ||||||||||||||||||||
Total assets | $ | 13,161,538 | $ | 13,030,349 | $ | 12,775,196 | $ | 12,678,896 | $ | 12,390,276 | |||||||||||||||
Deposits: | |||||||||||||||||||||||||
Noninterest-bearing | $ | 3,111,603 | $ | 2,921,016 | $ | 2,874,306 | $ | 2,998,694 | $ | 2,787,454 | |||||||||||||||
Interest-bearing | 6,574,098 | 6,610,508 | 6,759,337 | 6,589,536 | 6,624,950 | ||||||||||||||||||||
Total deposits | 9,685,701 | 9,531,524 | 9,633,643 | 9,588,230 | 9,412,404 | ||||||||||||||||||||
Fed funds purchased and repos | 514,918 | 606,336 | 466,436 | 441,042 | 534,204 | ||||||||||||||||||||
Short-term borrowings | 412,792 | 360,434 | 411,385 | 412,617 | 709,845 | ||||||||||||||||||||
Long-term FHLB advances | 751,075 | 751,106 | 501,124 | 501,155 | 1,173 | ||||||||||||||||||||
Subordinated notes | 49,993 | 49,985 | 49,977 | 49,969 | 49,961 | ||||||||||||||||||||
Junior subordinated debt securities | 61,856 | 61,856 | 61,856 | 61,856 | 61,856 | ||||||||||||||||||||
Other liabilities | 150,442 | 145,641 | 142,519 | 150,970 | 144,077 | ||||||||||||||||||||
Total liabilities | 11,626,777 | 11,506,882 | 11,266,940 | 11,205,839 | 10,913,520 | ||||||||||||||||||||
Common stock | 14,090 | 14,090 | 14,093 | 14,076 | 14,076 | ||||||||||||||||||||
Capital surplus | 365,553 | 364,516 | 363,979 | 361,467 | 360,494 | ||||||||||||||||||||
Retained earnings | 1,172,193 | 1,157,025 | 1,151,757 | 1,142,908 | 1,130,766 | ||||||||||||||||||||
Accum other comprehensive loss, net of tax | (17,075 | ) | (12,164 | ) | (21,573 | ) | (45,394 | ) | (28,580 | ) | |||||||||||||||
Total shareholders' equity | 1,534,761 | 1,523,467 | 1,508,256 | 1,473,057 | 1,476,756 | ||||||||||||||||||||
Total liabilities and equity | $ | 13,161,538 | $ | 13,030,349 | $ | 12,775,196 | $ | 12,678,896 | $ | 12,390,276 | |||||||||||||||
See Notes to Consolidated Financials |
TRUSTMARK CORPORATION AND SUBSIDIARIES |
|||||||||||||||||||||||||||||||||
CONSOLIDATED FINANCIAL INFORMATION |
|||||||||||||||||||||||||||||||||
September 30, 2016 | |||||||||||||||||||||||||||||||||
($ in thousands except per share data) | |||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||
Quarter Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||
INCOME STATEMENTS |
9/30/2016 | 6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/2015 | 9/30/2016 | 9/30/2015 | ||||||||||||||||||||||||||
Interest and fees on LHFS & LHFI-FTE | $ | 80,649 | $ | 77,777 | $ | 76,235 | $ | 74,383 | $ | 72,951 | $ | 234,661 | $ | 214,155 | |||||||||||||||||||
Interest and fees on acquired loans | 6,781 | 8,051 | 7,022 | 11,910 | 11,607 | 21,854 | 39,242 | ||||||||||||||||||||||||||
Interest on securities-taxable | 19,351 | 19,402 | 20,086 | 21,149 | 20,264 | 58,839 | 59,581 | ||||||||||||||||||||||||||
Interest on securities-tax exempt-FTE | 1,388 | 1,429 | 1,497 | 1,565 | 1,609 | 4,314 | 5,086 | ||||||||||||||||||||||||||
Interest on fed funds sold and rev repos | 5 | 4 | 1 | 4 | 2 | 10 | 4 | ||||||||||||||||||||||||||
Other interest income | 223 | 200 | 230 | 402 | 392 | 653 | 1,177 | ||||||||||||||||||||||||||
Total interest income-FTE | 108,397 | 106,863 | 105,071 | 109,413 | 106,825 | 320,331 | 319,245 | ||||||||||||||||||||||||||
Interest on deposits | 3,208 | 3,122 | 3,038 | 3,000 | 3,147 | 9,368 | 9,598 | ||||||||||||||||||||||||||
Interest on fed funds pch and repos | 411 | 404 | 431 | 274 | 205 | 1,246 | 527 | ||||||||||||||||||||||||||
Other interest expense | 2,603 | 2,428 | 2,389 | 1,987 | 1,811 | 7,420 | 5,074 | ||||||||||||||||||||||||||
Total interest expense | 6,222 | 5,954 | 5,858 | 5,261 | 5,163 | 18,034 | 15,199 | ||||||||||||||||||||||||||
Net interest income-FTE | 102,175 | 100,909 | 99,213 | 104,152 | 101,662 | 302,297 | 304,046 | ||||||||||||||||||||||||||
Provision for loan losses, LHFI | 4,284 | 2,596 | 2,243 | 3,043 | 2,514 | 9,123 | 5,332 | ||||||||||||||||||||||||||
Provision for loan losses, acquired loans | 691 | 607 | 1,309 | 997 | 1,256 | 2,607 | 2,428 | ||||||||||||||||||||||||||
Net interest income after provision-FTE | 97,200 | 97,706 | 95,661 | 100,112 | 97,892 | 290,567 | 296,286 | ||||||||||||||||||||||||||
Service charges on deposit accounts | 11,677 | 11,051 | 11,081 | 11,961 | 12,400 | 33,809 | 35,405 | ||||||||||||||||||||||||||
Insurance commissions | 10,074 | 9,638 | 8,593 | 8,501 | 9,906 | 28,305 | 27,923 | ||||||||||||||||||||||||||
Wealth management | 7,571 | 8,009 | 7,407 | 7,831 | 7,790 | 22,987 | 23,538 | ||||||||||||||||||||||||||
Bank card and other fees | 6,756 | 7,436 | 6,918 | 7,156 | 6,964 | 21,110 | 21,142 | ||||||||||||||||||||||||||
Mortgage banking, net | 7,364 | 6,721 | 8,699 | 4,287 | 7,443 | 22,784 | 25,889 | ||||||||||||||||||||||||||
Other, net | 1,274 | 1,372 | 888 | (466 | ) | 1,470 | 3,534 | (18 | ) | ||||||||||||||||||||||||
Nonint inc-excl sec gains (losses), net | 44,716 | 44,227 | 43,586 | 39,270 | 45,973 | 132,529 | 133,879 | ||||||||||||||||||||||||||
Security gains (losses), net | — | — | (310 | ) | — | — | (310 | ) | — | ||||||||||||||||||||||||
Total noninterest income | 44,716 | 44,227 | 43,276 | 39,270 | 45,973 | 132,219 | 133,879 | ||||||||||||||||||||||||||
Salaries and employee benefits | 57,250 | 67,018 | 57,201 | 57,366 | 58,270 | 181,469 | 172,832 | ||||||||||||||||||||||||||
Services and fees | 14,947 | 14,522 | 14,475 | 13,717 | 14,691 | 43,944 | 43,817 | ||||||||||||||||||||||||||
Net occupancy-premises | 6,440 | 5,928 | 6,188 | 6,304 | 6,580 | 18,556 | 19,014 | ||||||||||||||||||||||||||
Equipment expense | 6,063 | 5,896 | 6,094 | 6,105 | 5,877 | 18,053 | 17,754 | ||||||||||||||||||||||||||
FDIC assessment expense | 2,911 | 2,959 | 2,811 | 2,614 | 2,559 | 8,681 | 8,114 | ||||||||||||||||||||||||||
Other real estate expense | (1,313 | ) | 1,193 | 181 | (518 | ) | 3,385 | 61 | 5,421 | ||||||||||||||||||||||||
Other expense | 11,610 | 12,663 | 11,994 | 13,032 | 12,198 | 36,267 | 36,090 | ||||||||||||||||||||||||||
Total noninterest expense | 97,908 | 110,179 | 98,944 | 98,620 | 103,560 | 307,031 | 303,042 | ||||||||||||||||||||||||||
Income before income taxes and tax eq adj | 44,008 | 31,754 | 39,993 | 40,762 | 40,305 | 115,755 | 127,123 | ||||||||||||||||||||||||||
Tax equivalent adjustment | 4,611 | 4,532 | 4,473 | 4,334 | 4,056 | 13,616 | 12,099 | ||||||||||||||||||||||||||
Income before income taxes | 39,397 | 27,222 | 35,520 | 36,428 | 36,249 | 102,139 | 115,024 | ||||||||||||||||||||||||||
Income taxes | 8,415 | 5,719 | 8,517 | 8,570 | 7,819 | 22,651 | 26,844 | ||||||||||||||||||||||||||
Net income | $ | 30,982 | $ | 21,503 | $ | 27,003 | $ | 27,858 | $ | 28,430 | $ | 79,488 | $ | 88,180 | |||||||||||||||||||
Per share data | |||||||||||||||||||||||||||||||||
Earnings per share - basic | $ | 0.46 | $ | 0.32 | $ | 0.40 | $ | 0.41 | $ | 0.42 | $ | 1.18 | $ | 1.31 | |||||||||||||||||||
Earnings per share - diluted | $ | 0.46 | $ | 0.32 | $ | 0.40 | $ | 0.41 | $ | 0.42 | $ | 1.17 | $ | 1.30 | |||||||||||||||||||
Dividends per share | $ | 0.23 | $ | 0.23 | $ | 0.23 | $ | 0.23 | $ | 0.23 | $ | 0.69 | $ | 0.69 | |||||||||||||||||||
Weighted average shares outstanding | |||||||||||||||||||||||||||||||||
Basic | 67,625,085 | 67,619,571 | 67,609,662 | 67,557,991 | 67,557,395 | 67,618,131 | 67,546,786 | ||||||||||||||||||||||||||
Diluted | 67,793,203 | 67,770,174 | 67,746,592 | 67,734,109 | 67,707,456 | 67,771,125 | 67,677,206 | ||||||||||||||||||||||||||
Period end shares outstanding | 67,626,939 | 67,623,601 | 67,639,832 | 67,559,128 | 67,557,395 | 67,626,939 | 67,557,395 | ||||||||||||||||||||||||||
See Notes to Consolidated Financials |
TRUSTMARK CORPORATION AND SUBSIDIARIES |
|||||||||||||||||||||||||||||||||||
CONSOLIDATED FINANCIAL INFORMATION |
|||||||||||||||||||||||||||||||||||
September 30, 2016 | |||||||||||||||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||
Quarter Ended | |||||||||||||||||||||||||||||||||||
NONPERFORMING ASSETS (1) |
9/30/2016 | 6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/2015 | ||||||||||||||||||||||||||||||
Nonaccrual loans | |||||||||||||||||||||||||||||||||||
Alabama | $ | 1,403 | $ | 1,379 | $ | 1,788 | $ | 1,776 | $ | 1,306 | |||||||||||||||||||||||||
Florida | 3,719 | 1,806 | 4,952 | 5,180 | 7,444 | ||||||||||||||||||||||||||||||
Mississippi (2) | 41,968 | 54,543 | 56,590 | 40,754 | 44,955 | ||||||||||||||||||||||||||||||
Tennessee (3) | 6,620 | 5,345 | 5,849 | 5,106 | 4,911 | ||||||||||||||||||||||||||||||
Texas | 700 | 2,055 | 1,515 | 2,496 | 2,515 | ||||||||||||||||||||||||||||||
Total nonaccrual loans | 54,410 | 65,128 | 70,694 | 55,312 | 61,131 | ||||||||||||||||||||||||||||||
Other real estate | |||||||||||||||||||||||||||||||||||
Alabama | 15,574 | 18,031 | 19,137 | 21,578 | 23,822 | ||||||||||||||||||||||||||||||
Florida | 25,147 | 28,052 | 27,907 | 29,579 | 30,374 | ||||||||||||||||||||||||||||||
Mississippi (2) | 16,659 | 14,435 | 14,511 | 14,312 | 13,180 | ||||||||||||||||||||||||||||||
Tennessee (3) | 6,061 | 7,432 | 8,699 | 9,974 | 9,840 | ||||||||||||||||||||||||||||||
Texas | 1,552 | 1,552 | 1,552 | 1,734 | 6,739 | ||||||||||||||||||||||||||||||
Total other real estate | 64,993 | 69,502 | 71,806 | 77,177 | 83,955 | ||||||||||||||||||||||||||||||
Total nonperforming assets | $ | 119,403 | $ | 134,630 | $ | 142,500 | $ | 132,489 | $ | 145,086 | |||||||||||||||||||||||||
LOANS PAST DUE OVER 90 DAYS (4) |
|||||||||||||||||||||||||||||||||||
LHFI | $ | 953 | $ | 3,382 | $ | 611 | $ | 2,300 | $ | 9,224 | |||||||||||||||||||||||||
LHFS-Guaranteed GNMA serviced loans |
|||||||||||||||||||||||||||||||||||
(no obligation to repurchase) | $ | 25,570 | $ | 23,473 | $ | 24,110 | $ | 21,812 | $ | 15,165 | |||||||||||||||||||||||||
Quarter Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
ALLOWANCE FOR LOAN LOSSES (4) |
9/30/2016 | 6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/2015 | 9/30/2016 | 9/30/2015 | ||||||||||||||||||||||||||||
Beginning Balance | $ | 71,796 | $ | 69,668 | $ | 67,619 | $ | 65,607 | $ | 71,166 | $ | 67,619 | $ | 69,616 | |||||||||||||||||||||
Provision for loan losses | 4,284 | 2,596 | 2,243 | 3,043 | 2,514 | 9,123 | 5,332 | ||||||||||||||||||||||||||||
Charge-offs | (8,279 | ) | (3,251 | ) | (3,363 | ) | (3,781 | ) | (11,406 | ) | (14,893 | ) | (18,688 | ) | |||||||||||||||||||||
Recoveries | 3,070 | 2,783 | 3,169 | 2,750 | 3,333 | 9,022 | 9,347 | ||||||||||||||||||||||||||||
Net charge-offs | (5,209 | ) | (468 | ) | (194 | ) | (1,031 | ) | (8,073 | ) | (5,871 | ) | (9,341 | ) | |||||||||||||||||||||
Ending Balance | $ | 70,871 | $ | 71,796 | $ | 69,668 | $ | 67,619 | $ | 65,607 | $ | 70,871 | $ | 65,607 | |||||||||||||||||||||
PROVISION FOR LOAN LOSSES (4) |
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Alabama | $ | 132 | $ | 1,189 | $ | 540 | $ | 1,453 | $ | (70 | ) | $ | 1,861 | $ | 1,314 | ||||||||||||||||||||
Florida | 31 | (364 | ) | (818 | ) | (1,357 | ) | (1,430 | ) | (1,151 | ) | (765 | ) | ||||||||||||||||||||||
Mississippi (2) | 703 | (833 | ) | 1,848 | 1,842 | 4,221 | 1,718 | 3,538 | |||||||||||||||||||||||||||
Tennessee (3) | 151 | 726 | 138 | 182 | (1,050 | ) | 1,015 | (101 | ) | ||||||||||||||||||||||||||
Texas | 3,267 | 1,878 | 535 | 923 | 843 | 5,680 | 1,346 | ||||||||||||||||||||||||||||
Total provision for loan losses | $ | 4,284 | $ | 2,596 | $ | 2,243 | $ | 3,043 | $ | 2,514 | $ | 9,123 | $ | 5,332 | |||||||||||||||||||||
NET CHARGE-OFFS (4) |
|||||||||||||||||||||||||||||||||||
Alabama | $ | 38 | $ | 436 | $ | 63 | $ | 422 | $ | 163 | $ | 537 | $ | 523 | |||||||||||||||||||||
Florida | (169 | ) | (595 | ) | (674 | ) | (389 | ) | (1,090 | ) | (1,438 | ) | (579 | ) | |||||||||||||||||||||
Mississippi (2) | 2,484 | (237 | ) | (74 | ) | 925 | 7,391 | 2,173 | 8,562 | ||||||||||||||||||||||||||
Tennessee (3) | 74 | 252 | 8 | 188 | 448 | 334 | 337 | ||||||||||||||||||||||||||||
Texas | 2,782 | 612 | 871 | (115 | ) | 1,161 | 4,265 | 498 | |||||||||||||||||||||||||||
Total net charge-offs | $ | 5,209 | $ | 468 | $ | 194 | $ | 1,031 | $ | 8,073 | $ | 5,871 | $ | 9,341 | |||||||||||||||||||||
(1) - Excludes acquired loans and covered other real estate | |||||||||||||||||||||||||||||||||||
(2) - Mississippi includes Central and Southern Mississippi Regions | |||||||||||||||||||||||||||||||||||
(3) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions | |||||||||||||||||||||||||||||||||||
(4) - Excludes acquired loans | |||||||||||||||||||||||||||||||||||
See Notes to Consolidated Financials |
TRUSTMARK CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||
CONSOLIDATED FINANCIAL INFORMATION | |||||||||||||||||||||||||||||||||
September 30, 2016 |
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(unaudited) |
|||||||||||||||||||||||||||||||||
Quarter Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||
FINANCIAL RATIOS AND OTHER DATA |
9/30/2016 | 6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/2015 | 9/30/2016 | 9/30/2015 | ||||||||||||||||||||||||||
Return on equity | 8.05 | % | 5.72 | % | 7.27 | % | 7.46 | % | 7.68 | % | 7.02 | % | 8.11 | % | |||||||||||||||||||
Return on average tangible equity | 11.16 | % | 8.08 | % | 10.26 | % | 10.61 | % | 10.96 | % | 9.85 | % | 11.62 | % | |||||||||||||||||||
Return on assets | 0.95 | % | 0.67 | % | 0.85 | % | 0.88 | % | 0.92 | % | 0.83 | % | 0.97 | % | |||||||||||||||||||
Interest margin - Yield - FTE | 3.74 | % | 3.77 | % | 3.74 | % | 3.92 | % | 3.91 | % | 3.75 | % | 3.99 | % | |||||||||||||||||||
Interest margin - Cost | 0.21 | % | 0.21 | % | 0.21 | % | 0.19 | % | 0.19 | % | 0.21 | % | 0.19 | % | |||||||||||||||||||
Net interest margin - FTE | 3.52 | % | 3.56 | % | 3.54 | % | 3.74 | % | 3.72 | % | 3.54 | % | 3.80 | % | |||||||||||||||||||
Efficiency ratio (1) | 63.81 | % | 67.20 | % | 66.87 | % | 66.03 | % | 67.87 | % | 65.95 | % | 66.78 | % | |||||||||||||||||||
Full-time equivalent employees | 2,787 | 2,818 | 2,946 | 2,941 | 2,963 | ||||||||||||||||||||||||||||
CREDIT QUALITY RATIOS (2) |
|||||||||||||||||||||||||||||||||
Net charge-offs/average loans | 0.27 | % | 0.03 | % | 0.01 | % | 0.06 | % | 0.47 | % | 0.10 | % | 0.19 | % | |||||||||||||||||||
Provision for loan losses/average loans | 0.22 | % | 0.14 | % | 0.12 | % | 0.17 | % | 0.15 | % | 0.16 | % | 0.11 | % | |||||||||||||||||||
Nonperforming loans/total loans (incl LHFS) | 0.70 | % | 0.85 | % | 0.95 | % | 0.76 | % | 0.88 | % | |||||||||||||||||||||||
Nonperforming assets/total loans (incl LHFS) | 1.54 | % | 1.77 | % | 1.91 | % | 1.83 | % | 2.08 | % | |||||||||||||||||||||||
Nonperforming assets/total loans (incl LHFS) +ORE | 1.53 | % | 1.75 | % | 1.89 | % | 1.81 | % | 2.06 | % | |||||||||||||||||||||||
ALL/total loans (excl LHFS) | 0.95 | % | 0.97 | % | 0.96 | % | 0.95 | % | 0.97 | % | |||||||||||||||||||||||
ALL-commercial/total commercial loans | 1.02 | % | 1.05 | % | 1.06 | % | 1.05 | % | 1.07 | % | |||||||||||||||||||||||
ALL-consumer/total consumer and home mortgage loans | 0.68 | % | 0.70 | % | 0.65 | % | 0.66 | % | 0.67 | % | |||||||||||||||||||||||
ALL/nonperforming loans | 130.25 | % | 110.24 | % | 98.55 | % | 122.25 | % | 107.32 | % | |||||||||||||||||||||||
ALL/nonperforming loans (excl specifically reviewed impaired loans) | 256.56 | % | 231.13 | % | 203.24 | % | 210.32 | % | 206.72 | % | |||||||||||||||||||||||
CAPITAL RATIOS |
|||||||||||||||||||||||||||||||||
Total equity/total assets | 11.66 | % | 11.69 | % | 11.81 | % | 11.62 | % | 11.92 | % | |||||||||||||||||||||||
Tangible equity/tangible assets | 8.97 | % | 8.97 | % | 9.01 | % | 8.79 | % | 9.01 | % | |||||||||||||||||||||||
Tangible equity/risk-weighted assets | 11.85 | % | 11.85 | % | 11.84 | % | 11.68 | % | 12.24 | % | |||||||||||||||||||||||
Tier 1 leverage ratio | 9.92 | % | 9.93 | % | 9.93 | % | 10.03 | % | 10.09 | % | |||||||||||||||||||||||
Common equity tier 1 capital ratio | 12.35 | % | 12.32 | % | 12.41 | % | 12.57 | % | 13.00 | % | |||||||||||||||||||||||
Tier 1 risk-based capital ratio | 12.97 | % | 12.94 | % | 13.04 | % | 13.21 | % | 13.66 | % | |||||||||||||||||||||||
Total risk-based capital ratio | 13.82 | % | 13.82 | % | 13.92 | % | 14.07 | % | 14.66 | % | |||||||||||||||||||||||
STOCK PERFORMANCE |
|||||||||||||||||||||||||||||||||
Market value-Close | $ | 27.56 | $ | 24.85 | $ | 23.03 | $ | 23.04 | $ | 23.17 | |||||||||||||||||||||||
Book value | $ | 22.69 | $ | 22.53 | $ | 22.30 | $ | 21.80 | $ | 21.86 | |||||||||||||||||||||||
Tangible book value | $ | 16.95 | $ | 16.76 | $ | 16.50 | $ | 15.98 | $ | 16.00 | |||||||||||||||||||||||
(1) - The efficiency ratio is noninterest expense to total net interest income (FTE) and noninterest income, excluding security gains (losses), amortization of partnership tax credits, amortization of purchased intangibles, and nonroutine income and expense items. |
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(2) - Excludes acquired loans and covered other real estate | |||||||||||||||||||||||||||||||||
See Notes to Consolidated Financials |
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS September 30, 2016 ($ in thousands) (unaudited) |
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Note 1 - Securities Available for Sale and Held to Maturity |
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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 ($ in thousands): |
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9/30/2016 | 6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/2015 | ||||||||||||||||||||
SECURITIES AVAILABLE FOR SALE |
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U.S. Government agency obligations | ||||||||||||||||||||||||
Issued by U.S. Government agencies | $ | 58,234 | $ | 61,359 | $ | 63,814 | $ | 68,135 | $ | 71,282 | ||||||||||||||
Issued by U.S. Government sponsored agencies | 283 | 286 | 286 | 281 | 23,016 | |||||||||||||||||||
Obligations of states and political subdivisions | 124,641 | 129,285 | 135,655 | 138,609 | 147,794 | |||||||||||||||||||
Mortgage-backed securities | ||||||||||||||||||||||||
Residential mortgage pass-through securities | ||||||||||||||||||||||||
Guaranteed by GNMA | 36,788 | 29,282 | 25,081 | 25,812 | 26,651 | |||||||||||||||||||
Issued by FNMA and FHLMC | 561,989 | 428,542 | 330,558 | 225,542 | 177,411 | |||||||||||||||||||
Other residential mortgage-backed securities | ||||||||||||||||||||||||
Issued or guaranteed by FNMA, FHLMC, or GNMA | 1,374,399 | 1,474,357 | 1,540,541 | 1,582,860 | 1,630,402 | |||||||||||||||||||
Commercial mortgage-backed securities | ||||||||||||||||||||||||
Issued or guaranteed by FNMA, FHLMC, or GNMA | 254,613 | 265,195 | 272,185 | 279,226 | 279,609 | |||||||||||||||||||
Asset-backed securities and structured financial products | — | — | — | 24,957 | 26,657 | |||||||||||||||||||
Total securities available for sale | $ | 2,410,947 | $ | 2,388,306 | $ | 2,368,120 | $ | 2,345,422 | $ | 2,382,822 | ||||||||||||||
SECURITIES HELD TO MATURITY |
||||||||||||||||||||||||
U.S. Government agency obligations | ||||||||||||||||||||||||
Issued by U.S. Government sponsored agencies | $ | 3,636 | $ | 31,142 | $ | 63,085 | $ | 101,782 | $ | 101,578 | ||||||||||||||
Obligations of states and political subdivisions | 52,937 | 53,473 | 54,278 | 55,892 | 56,661 | |||||||||||||||||||
Mortgage-backed securities | ||||||||||||||||||||||||
Residential mortgage pass-through securities | ||||||||||||||||||||||||
Guaranteed by GNMA | 16,183 | 16,415 | 16,590 | 17,363 | 17,783 | |||||||||||||||||||
Issued by FNMA and FHLMC | 39,989 | 42,267 | 9,871 | 10,368 | 10,669 | |||||||||||||||||||
Other residential mortgage-backed securities | ||||||||||||||||||||||||
Issued or guaranteed by FNMA, FHLMC, or GNMA | 831,662 | 824,175 | 818,201 | 820,012 | 808,763 | |||||||||||||||||||
Commercial mortgage-backed securities | ||||||||||||||||||||||||
Issued or guaranteed by FNMA, FHLMC, or GNMA | 198,827 | 205,732 | 206,178 | 182,401 | 182,986 | |||||||||||||||||||
Total securities held to maturity | $ | 1,143,234 | $ | 1,173,204 | $ | 1,168,203 | $ | 1,187,818 | $ | 1,178,440 | ||||||||||||||
During 2013, Trustmark reclassified approximately $1.099 billion of securities available for sale to securities held to maturity. The securities were transferred at fair value, which became the cost basis for the securities held to maturity. At the date of transfer, the net unrealized holding loss on the available for sale securities totaled approximately $46.6 million ($28.8 million, net of tax). The net unrealized holding loss is amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. There were no gains or losses recognized as a result of the transfer. At September 30, 2016, the net unamortized, unrealized loss on the transferred securities included in accumulated other comprehensive loss in the accompanying balance sheet totaled approximately $25.7 million ($15.8 million, net of tax).
Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of approximately 95% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE.
TRUSTMARK CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||
NOTES TO CONSOLIDATED FINANCIALS | |||||||||||||||||||||
September 30, 2016 |
|||||||||||||||||||||
($ in thousands) |
|||||||||||||||||||||
(unaudited) |
|||||||||||||||||||||
Note 2 – Loan Composition |
|||||||||||||||||||||
LHFI BY TYPE (excluding acquired loans) |
9/30/2016 | 6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/2015 | ||||||||||||||||
Loans secured by real estate: | |||||||||||||||||||||
Construction, land development and other land loans | $ | 766,685 | $ | 718,438 | $ | 697,500 | $ | 824,723 | $ | 785,472 | |||||||||||
Secured by 1-4 family residential properties | 1,592,453 | 1,620,013 | 1,640,015 | 1,649,501 | 1,638,639 | ||||||||||||||||
Secured by nonfarm, nonresidential properties | 1,916,153 | 1,900,784 | 1,893,240 | 1,736,476 | 1,604,453 | ||||||||||||||||
Other real estate secured | 317,680 | 323,734 | 273,752 | 211,228 | 225,523 | ||||||||||||||||
Commercial and industrial loans | 1,421,382 | 1,466,511 | 1,368,464 | 1,343,211 | 1,270,277 | ||||||||||||||||
Consumer loans | 170,073 | 166,436 | 164,544 | 169,135 | 169,509 | ||||||||||||||||
State and other political subdivision loans | 875,973 | 805,401 | 787,049 | 734,615 | 677,539 | ||||||||||||||||
Other loans | 438,805 | 403,864 | 443,458 | 422,496 | 420,231 | ||||||||||||||||
LHFI | 7,499,204 | 7,405,181 | 7,268,022 | 7,091,385 | 6,791,643 | ||||||||||||||||
Allowance for loan losses | (70,871 | ) | (71,796 | ) | (69,668 | ) | (67,619 | ) | (65,607 | ) | |||||||||||
Net LHFI | $ | 7,428,333 | $ | 7,333,385 | $ | 7,198,354 | $ | 7,023,766 | $ | 6,726,036 |
ACQUIRED NONCOVERED LOANS BY TYPE |
9/30/2016 | 6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/2015 | ||||||||||||||||
Loans secured by real estate: | |||||||||||||||||||||
Construction, land development and other land loans | $ | 25,040 | $ | 37,682 | $ | 41,097 | $ | 41,623 | $ | 45,299 | |||||||||||
Secured by 1-4 family residential properties | 72,689 | 73,313 | 81,314 | 86,950 | 96,870 | ||||||||||||||||
Secured by nonfarm, nonresidential properties | 110,606 | 115,989 | 126,177 | 135,626 | 146,614 | ||||||||||||||||
Other real estate secured | 20,903 | 24,015 | 24,374 | 23,860 | 23,816 | ||||||||||||||||
Commercial and industrial loans | 39,519 | 49,639 | 51,663 | 55,075 | 57,748 | ||||||||||||||||
Consumer loans | 3,878 | 4,295 | 5,027 | 5,641 | 6,295 | ||||||||||||||||
Other loans | 19,190 | 20,263 | 20,129 | 23,936 | 23,886 | ||||||||||||||||
Noncovered loans | 291,825 | 325,196 | 349,781 | 372,711 | 400,528 | ||||||||||||||||
Allowance for loan losses | (11,330 | ) | (12,218 | ) | (13,212 | ) | (11,259 | ) | (11,417 | ) | |||||||||||
Net noncovered loans | $ | 280,495 | $ | 312,978 | $ | 336,569 | $ | 361,452 | $ | 389,111 |
|
|||||||||||||||||||||
ACQUIRED COVERED LOANS BY TYPE (1) |
9/30/2016 | 6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/2015 | ||||||||||||||||
Loans secured by real estate: | |||||||||||||||||||||
Construction, land development and other land loans | $ | — | $ | 334 | $ | 387 | $ | 1,021 | $ | 966 | |||||||||||
Secured by 1-4 family residential properties | 3,912 | 8,363 | 8,564 | 10,058 | 10,546 | ||||||||||||||||
Secured by nonfarm, nonresidential properties | — | 3,709 | 3,679 | 4,638 | 5,363 | ||||||||||||||||
Other real estate secured | — | 1,257 | 1,132 | 1,286 | 1,511 | ||||||||||||||||
Commercial and industrial loans | — | 121 | 1,143 | 624 | 205 | ||||||||||||||||
Consumer loans | — | — | — | — | — | ||||||||||||||||
Other loans | — | 55 | 69 | 73 | 54 | ||||||||||||||||
Covered loans | 3,912 | 13,839 | 14,974 | 17,700 | 18,645 | ||||||||||||||||
Allowance for loan losses | (50 | ) | (262 | ) | (323 | ) | (733 | ) | (768 | ) | |||||||||||
Net covered loans | $ | 3,862 | $ | 13,577 | $ | 14,651 | $ | 16,967 | $ | 17,877 |
(1) Trustmark’s loss share agreement with the FDIC covering the acquired covered loans other than loans secured by 1-4 family residential properties expired on June 30, 2016. Trustmark’s loss share agreement with the FDIC covering the acquired covered loans secured by 1-4 family residential properties will expire in 2021. Effective July 1, 2016, all acquired covered loans excluding the acquired covered loans secured by 1-4 family residential properties were reclassified to acquired noncovered loans.
TRUSTMARK CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||||||
NOTES TO CONSOLIDATED FINANCIALS | ||||||||||||||||||||||||
September 30, 2016 |
||||||||||||||||||||||||
($ in thousands) |
||||||||||||||||||||||||
(unaudited) |
||||||||||||||||||||||||
Note 2 – Loan Composition (continued) |
||||||||||||||||||||||||
September 30, 2016 | ||||||||||||||||||||||||
LHFI - COMPOSITION BY REGION (1) |
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 | $ | 766,685 | $ | 138,256 | $ | 64,664 | $ | 269,498 | $ | 55,915 | $ | 238,352 | ||||||||||||
Secured by 1-4 family residential properties | 1,592,453 | 73,672 | 47,011 | 1,350,883 | 103,739 | 17,148 | ||||||||||||||||||
Secured by nonfarm, nonresidential properties | 1,916,153 | 264,483 | 164,480 | 890,783 | 135,327 | 461,080 | ||||||||||||||||||
Other real estate secured | 317,680 | 22,415 | 3,934 | 144,864 | 17,762 | 128,705 | ||||||||||||||||||
Commercial and industrial loans | 1,421,382 | 150,892 | 18,288 | 683,042 | 288,595 | 280,565 | ||||||||||||||||||
Consumer loans | 170,073 | 20,109 | 3,688 | 126,228 | 17,917 | 2,131 | ||||||||||||||||||
State and other political subdivision loans | 875,973 | 76,432 | 29,602 | 554,403 | 32,607 | 182,929 | ||||||||||||||||||
Other loans | 438,805 | 37,715 | 18,716 | 300,260 | 61,811 | 20,303 | ||||||||||||||||||
Loans | $ | 7,499,204 | $ | 783,974 | $ | 350,383 | $ | 4,319,961 | $ | 713,673 | $ | 1,331,213 | ||||||||||||
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION (1) |
||||||||||||||||||||||||
Lots | $ | 58,673 | $ | 14,008 | $ | 19,480 | $ | 20,700 | $ | 1,831 | $ | 2,654 | ||||||||||||
Development | 49,186 | 6,315 | 7,246 | 20,929 | 619 | 14,077 | ||||||||||||||||||
Unimproved land | 110,549 | 15,868 | 16,764 | 43,079 | 17,028 | 17,810 | ||||||||||||||||||
1-4 family construction | 169,657 | 43,729 | 9,821 | 70,614 | 2,877 | 42,616 | ||||||||||||||||||
Other construction | 378,620 | 58,336 | 11,353 | 114,176 | 33,560 | 161,195 | ||||||||||||||||||
Construction, land development and other land loans | $ | 766,685 | $ | 138,256 | $ | 64,664 | $ | 269,498 | $ | 55,915 | $ | 238,352 | ||||||||||||
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION (1) |
||||||||||||||||||||||||
Income producing: | ||||||||||||||||||||||||
Retail | $ | 290,139 | $ | 67,751 | $ | 36,384 | $ | 111,629 | $ | 21,601 | $ | 52,774 | ||||||||||||
Office | 232,940 | 32,747 | 31,247 | 78,121 | 6,212 | 84,613 | ||||||||||||||||||
Nursing homes/assisted living | 97,159 | — | — | 90,351 | 6,808 | — | ||||||||||||||||||
Hotel/motel | 192,610 | 46,418 | 21,482 | 50,589 | 25,916 | 48,205 | ||||||||||||||||||
Mini-storage | 111,854 | 9,070 | 5,445 | 53,399 | 183 | 43,757 | ||||||||||||||||||
Industrial | 88,693 | 9,498 | 9,236 | 24,944 | 5,254 | 39,761 | ||||||||||||||||||
Health care | 25,162 | 2,587 | 837 | 21,738 | — | — | ||||||||||||||||||
Convenience stores | 18,980 | 1,564 | — | 10,130 | 1,030 | 6,256 | ||||||||||||||||||
Other | 70,253 | 5,814 | 10,879 | 22,849 | 2,841 | 27,870 | ||||||||||||||||||
Total income producing loans | 1,127,790 | 175,449 | 115,510 | 463,750 | 69,845 | 303,236 | ||||||||||||||||||
Owner-occupied: | ||||||||||||||||||||||||
Office | 144,046 | 15,775 | 23,995 | 77,336 | 6,971 | 19,969 | ||||||||||||||||||
Churches | 86,329 | 8,785 | 2,125 | 44,829 | 23,370 | 7,220 | ||||||||||||||||||
Industrial warehouses | 126,365 | 6,409 | 3,788 | 60,487 | 10,553 | 45,128 | ||||||||||||||||||
Health care | 123,856 | 20,153 | 6,963 | 69,296 | 7,983 | 19,461 | ||||||||||||||||||
Convenience stores | 87,992 | 7,466 | 2,375 | 53,596 | 1,204 | 23,351 | ||||||||||||||||||
Retail | 35,657 | 3,983 | 5,127 | 20,749 | 2,048 | 3,750 | ||||||||||||||||||
Restaurants | 32,028 | 3,593 | 1,149 | 21,656 | 3,529 | 2,101 | ||||||||||||||||||
Auto dealerships | 14,542 | 8,944 | 42 | 4,393 | 1,163 | — | ||||||||||||||||||
Other | 137,548 | 13,926 | 3,406 | 74,691 | 8,661 | 36,864 | ||||||||||||||||||
Total owner-occupied loans | 788,363 | 89,034 | 48,970 | 427,033 | 65,482 | 157,844 | ||||||||||||||||||
Loans secured by nonfarm, nonresidential properties | $ | 1,916,153 | $ | 264,483 | $ | 164,480 | $ | 890,783 | $ | 135,327 | $ | 461,080 | ||||||||||||
(1) Excludes acquired loans. |
||||||||||||||||||||||||
TRUSTMARK CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||||||||
NOTES TO CONSOLIDATED FINANCIALS | |||||||||||||||||||||||||||||
September 30, 2016 |
|||||||||||||||||||||||||||||
($ in thousands) |
|||||||||||||||||||||||||||||
(unaudited) |
|||||||||||||||||||||||||||||
Note 3 – Yields on Earning Assets and Interest-Bearing Liabilities | |||||||||||||||||||||||||||||
The following table illustrates the yields on earning assets by category as well as the rates paid on interest-bearing liabilities on a tax equivalent basis: |
|||||||||||||||||||||||||||||
Quarter Ended | Nine Months Ended | ||||||||||||||||||||||||||||
9/30/2016 | 6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/2015 | 9/30/2016 | 9/30/2015 | |||||||||||||||||||||||
Securities – taxable | 2.29 | % | 2.34 | % | 2.41 | % | 2.50 | % | 2.35 | % | 2.35 | % | 2.36 | % | |||||||||||||||
Securities – nontaxable | 4.27 | % | 4.29 | % | 4.25 | % | 4.25 | % | 4.18 | % | 4.27 | % | 4.25 | % | |||||||||||||||
Securities – total | 2.36 | % | 2.41 | % | 2.48 | % | 2.57 | % | 2.43 | % | 2.42 | % | 2.44 | % | |||||||||||||||
Loans - LHFI & LHFS | 4.19 | % | 4.17 | % | 4.17 | % | 4.16 | % | 4.27 | % | 4.18 | % | 4.32 | % | |||||||||||||||
Acquired loans | 8.50 | % | 9.26 | % | 7.46 | % | 11.74 | % | 10.46 | % | 8.38 | % | 10.87 | % | |||||||||||||||
Loans - total | 4.36 | % | 4.39 | % | 4.33 | % | 4.57 | % | 4.65 | % | 4.36 | % | 4.76 | % | |||||||||||||||
FF sold & rev repo | 1.47 | % | 1.27 | % | 1.05 | % | 1.15 | % | 0.68 | % | 1.34 | % | 0.82 | % | |||||||||||||||
Other earning assets | 1.29 | % | 1.26 | % | 1.39 | % | 2.34 | % | 2.66 | % | 1.31 | % | 3.23 | % | |||||||||||||||
Total earning assets | 3.74 | % | 3.77 | % | 3.74 | % | 3.92 | % | 3.91 | % | 3.75 | % | 3.99 | % | |||||||||||||||
Interest-bearing deposits | 0.19 | % | 0.19 | % | 0.18 | % | 0.18 | % | 0.18 | % | 0.19 | % | 0.19 | % | |||||||||||||||
FF pch & repo | 0.34 | % | 0.33 | % | 0.34 | % | 0.19 | % | 0.15 | % | 0.34 | % | 0.15 | % | |||||||||||||||
Other borrowings | 0.88 | % | 0.95 | % | 0.94 | % | 0.88 | % | 1.11 | % | 0.92 | % | 1.61 | % | |||||||||||||||
Total interest-bearing liabilities | 0.30 | % | 0.29 | % | 0.28 | % | 0.26 | % | 0.26 | % | 0.29 | % | 0.26 | % | |||||||||||||||
Net interest margin | 3.52 | % | 3.56 | % | 3.54 | % | 3.74 | % | 3.72 | % | 3.54 | % | 3.80 | % | |||||||||||||||
Net interest margin excluding acquired loans | 3.38 | % | 3.38 | % | 3.40 | % | 3.43 | % | 3.43 | % | 3.39 | % | 3.47 | % | |||||||||||||||
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 decreased 4 basis points during the third quarter of 2016. The decline was primarily due to a $1.4 million reduction in accretion income and recoveries on settlement of debt for acquired loans during the third quarter of 2016 compared to the second quarter of 2016.
Note 4 – Mortgage Banking
Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that offsets the changes in fair value of mortgage servicing rights (MSR) attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under generally accepted accounting principles (GAAP). Changes in the fair value of these exchange-traded derivative instruments, including administrative costs, are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of the MSR. The MSR fair value represents the present value of future cash flows, which among other things includes decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the change in value of hedge instruments to the change in the fair value of the MSR asset attributable to changes in interest rates and other market driven changes in valuation inputs and assumptions. The impact of this strategy resulted in a net negative ineffectiveness of $1.2 million for the quarter ended September 30, 2016 compared to a net positive ineffectiveness of $479 thousand for the quarter ended September 30, 2015.
The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements:
Quarter Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
9/30/2016 | 6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/2015 | 9/30/2016 | 9/30/2015 | |||||||||||||||||||||||||||||
Mortgage servicing income, net | $ | 5,271 | $ | 5,177 | $ | 5,058 | $ | 5,126 | $ | 4,906 | $ | 15,506 | $ | 14,499 | |||||||||||||||||||||
Change in fair value-MSR from runoff | (2,862 | ) | (2,500 | ) | (2,005 | ) | (2,091 | ) | (2,636 | ) | (7,367 | ) | (7,436 | ) | |||||||||||||||||||||
Gain on sales of loans, net | 6,410 | 5,480 | 2,591 | 4,656 | 4,479 | 14,481 | 13,309 | ||||||||||||||||||||||||||||
Other, net | (299 | ) | 498 | 2,642 | (1,433 | ) | 215 | 2,841 | 1,666 | ||||||||||||||||||||||||||
Mortgage banking income before hedge ineffectiveness | 8,520 | 8,655 | 8,286 | 6,258 | 6,964 | 25,461 | 22,038 | ||||||||||||||||||||||||||||
Change in fair value-MSR from market changes | 381 | (7,033 | ) | (6,866 | ) | 2,010 | (4,141 | ) | (13,518 | ) | (433 | ) | |||||||||||||||||||||||
Change in fair value of derivatives | (1,537 | ) | 5,099 | 7,279 | (3,981 | ) | 4,620 | 10,841 | 4,284 | ||||||||||||||||||||||||||
Net (negative) positive hedge ineffectiveness | (1,156 | ) | (1,934 | ) | 413 | (1,971 | ) | 479 | (2,677 | ) | 3,851 | ||||||||||||||||||||||||
Mortgage banking, net | $ | 7,364 | $ | 6,721 | $ | 8,699 | $ | 4,287 | $ | 7,443 | $ | 22,784 | $ | 25,889 | |||||||||||||||||||||
TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIALS
September 30, 2016
($
in thousands)
(unaudited)
Note 5 – Salaries and Employee Benefit Plans
Early Retirement Program
In April 2016, Trustmark announced
a voluntary early retirement program (ERP) for associates age 60 and
above with five or more years of service. The cost of this program is
reflected in a one-time, pre-tax charge of approximately $9.3 million
(salaries and employee benefits expense of $9.1 million and other
miscellaneous expense of $230 thousand), or $0.085 per basic share net
of tax, in Trustmark’s second quarter 2016 earnings.
As a result of the ERP, during the third quarter of 2016 Trustmark realized savings of $1.9 million in salaries and employee benefits expense and incurred additional pension expense of $236 thousand, which resulted from additional settlements from pension lump sum elections.
Defined Benefit Pension Plan
Trustmark maintains a
noncontributory tax-qualified defined benefit pension plan (Trustmark
Capital Accumulation Plan, the “Plan”), in which substantially all
associates who began employment prior to 2007 participate. The Plan
provides retirement benefits that are based on the length of credited
service and final average compensation, as defined in the Plan, and vest
upon three years of service. Benefit accruals under the plan have been
frozen since 2009, with the exception of certain associates covered
through plans obtained in acquisitions that were subsequently merged
into the Plan. Other than the associates covered through these acquired
plans that were merged into the Plan, associates have not earned
additional benefits, except for interest as required by law, since the
Plan was frozen. Current and former associates who participate in the
Plan retain their right to receive benefits that accrued before the Plan
was frozen.
On July 26, 2016, the Board of Directors of Trustmark authorized the termination of the Plan, effective as of December 31, 2016. To satisfy commitments made by Trustmark to associates (collectively, the “Continuing Associates”) covered through acquired plans that were merged into the Plan, the Board also approved the spin-off of the portion of the Plan associated with the accrued benefits of the Continuing Associates into a new plan titled the Trustmark Corporation Pension Plan for Certain Employees of Acquired Financial Institutions (the “Spin-Off Plan”), effective as of December 31, 2016, immediately prior to the termination of the Plan.
In order to terminate the Plan, in accordance with Internal Revenue Service and Pension Benefit Guaranty Corporation requirements, Trustmark is required to fully fund the Plan on a termination basis and will contribute the additional assets necessary to do so. The final distributions will be made from current plan assets and a one-time pension settlement expense will be recognized when paid by Trustmark during the second quarter of 2017. Further, as a result of Trustmark’s de-risking investment strategy for the Plan as of June 30, 2016, the expected rate of return on plan assets during the second half of 2016 will decrease from 6.0% to 2.5%. Accordingly, Trustmark's increased periodic benefit costs for the Plan during the third quarter of 2016 was $664 thousand. Participants in the Plan will have a choice of receiving a lump sum cash payment or annuity payments under a group annuity contract purchased from an insurance carrier, subject to certain exceptions. As a result of the termination of the Plan, each participant will become fully vested in his or her accrued benefits under the Plan.
The Board reserved the right to defer or revoke the termination of the Plan if circumstances change such that deferral or revocation would be warranted, but has no intent to do so at this time.
Note 6 – Other Noninterest Income and Expense | |||||||||||||||||||||||||||||
Other noninterest income consisted of the following for the periods presented ($ in thousands): |
|||||||||||||||||||||||||||||
Quarter Ended | Nine Months Ended | ||||||||||||||||||||||||||||
9/30/2016 | 6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/2015 | 9/30/2016 | 9/30/2015 | |||||||||||||||||||||||
Partnership amortization for tax credit purposes | $ | (2,479 | ) | $ | (2,479 | ) | $ | (2,479 | ) | $ | (3,015 | ) | $ | (2,083 | ) | $ | (7,437 | ) | $ | (7,035 | ) | ||||||||
(Decrease) increase in FDIC indemnification asset | (72 | ) | (118 | ) | (99 | ) | (827 | ) | 82 | (289 | ) | (2,686 | ) | ||||||||||||||||
Increase in life insurance cash surrender value | 1,746 | 1,702 | 1,692 | 1,667 | 1,687 | 5,140 | 5,035 | ||||||||||||||||||||||
Other miscellaneous income | 2,079 | 2,267 | 1,774 | 1,709 | 1,784 | 6,120 | 4,668 | ||||||||||||||||||||||
Total other, net | $ | 1,274 | $ | 1,372 | $ | 888 | $ | (466 | ) | $ | 1,470 | $ | 3,534 | $ | (18 | ) | |||||||||||||
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 ($ in thousands):
Quarter Ended | Nine Months Ended | ||||||||||||||||||||||||||
9/30/2016 | 6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/2015 | 9/30/2016 | 9/30/2015 | |||||||||||||||||||||
Loan expense | $ | 3,336 | $ | 3,024 | $ | 3,043 | $ | 3,356 | $ | 3,416 | $ | 9,403 | $ | 9,479 | |||||||||||||
Amortization of intangibles | 1,692 | 1,692 | 1,796 | 1,927 | 1,942 | 5,180 | 5,892 | ||||||||||||||||||||
Other miscellaneous expense | 6,582 | 7,947 | 7,155 | 7,749 | 6,840 | 21,684 | 20,719 | ||||||||||||||||||||
Total other expense | $ | 11,610 | $ | 12,663 | $ | 11,994 | $ | 13,032 | $ | 12,198 | $ | 36,267 | $ | 36,090 | |||||||||||||
TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIALS
September 30, 2016
($
in thousands)
(unaudited)
Note 7 – Non-GAAP Financial Measures
In addition to capital ratios defined by U.S. generally accepted accounting principles (GAAP) and banking regulators, Trustmark utilizes various tangible common equity measures when evaluating capital utilization and adequacy. Tangible common equity, as defined by Trustmark, represents common equity less goodwill and identifiable intangible assets.
Trustmark believes these measures are important because they reflect the level of capital available to withstand unexpected market conditions. Additionally, presentation of these measures allows readers to compare certain aspects of Trustmark’s capitalization to other organizations. These ratios differ from capital measures defined by banking regulators principally in that the numerator excludes shareholders’ equity associated with preferred securities, the nature and extent of which varies across organizations. In Management’s experience, many stock analysts use tangible common equity measures in conjunction with more traditional bank capital ratios to compare capital adequacy of banking organizations with significant amounts of goodwill or other tangible assets, typically stemming from the use of the purchase accounting method in accounting for mergers and acquisitions.
These calculations are intended to complement the capital ratios defined by GAAP and banking regulators. Because GAAP does not include these capital ratio measures, Trustmark believes there are no comparable GAAP financial measures to these tangible common equity ratios. Despite the importance of these measures to Trustmark, there are no standardized definitions for them and, as a result, Trustmark’s calculations may not be comparable with other organizations. Also there may be limits in the usefulness of these measures to investors. As a result, Trustmark encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure. The following table reconciles Trustmark’s calculation of these measures to amounts reported under GAAP.
TRUSTMARK CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
NOTES TO CONSOLIDATED FINANCIALS | |||||||||||||||||||||||||||||||
September 30, 2016 |
|||||||||||||||||||||||||||||||
($ in thousands) |
|||||||||||||||||||||||||||||||
(unaudited) |
|||||||||||||||||||||||||||||||
Note 7 – Non-GAAP Financial Measures (continued) | |||||||||||||||||||||||||||||||
Quarter Ended | Nine Months Ended | ||||||||||||||||||||||||||||||
9/30/2016 | 6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/2015 | 9/30/2016 | 9/30/2016 | |||||||||||||||||||||||||
TANGIBLE EQUITY |
|||||||||||||||||||||||||||||||
AVERAGE BALANCES | |||||||||||||||||||||||||||||||
Total shareholders' equity | $ | 1,530,842 | $ | 1,512,841 | $ | 1,494,684 | $ | 1,481,294 | $ | 1,469,255 | $ | 1,512,855 | $ | 1,453,693 | |||||||||||||||||
Less: Goodwill | (366,156 | ) | (366,156 | ) | (366,156 | ) | (365,945 | ) | (365,500 | ) | (366,156 | ) | (365,500 | ) | |||||||||||||||||
Identifiable intangible assets | (23,311 | ) | (24,961 | ) | (26,709 | ) | (28,851 | ) | (31,144 | ) | (24,988 | ) | (31,304 | ) | |||||||||||||||||
Total average tangible equity | $ | 1,141,375 | $ | 1,121,724 | $ | 1,101,819 | $ | 1,086,498 | $ | 1,072,611 | $ | 1,121,711 | $ | 1,056,889 | |||||||||||||||||
PERIOD END BALANCES | |||||||||||||||||||||||||||||||
Total shareholders' equity | $ | 1,534,761 | $ | 1,523,467 | $ | 1,508,256 | $ | 1,473,057 | $ | 1,476,756 | |||||||||||||||||||||
Less: Goodwill | (366,156 | ) | (366,156 | ) | (366,156 | ) | (366,156 | ) | (365,500 | ) | |||||||||||||||||||||
Identifiable intangible assets | (22,366 | ) | (24,058 | ) | (25,751 | ) | (27,546 | ) | (30,129 | ) | |||||||||||||||||||||
Total tangible equity | (a) | $ | 1,146,239 | $ | 1,133,253 | $ | 1,116,349 | $ | 1,079,355 | $ | 1,081,127 | ||||||||||||||||||||
TANGIBLE ASSETS |
|||||||||||||||||||||||||||||||
Total assets | $ | 13,161,538 | $ | 13,030,349 | $ | 12,775,196 | $ | 12,678,896 | $ | 12,390,276 | |||||||||||||||||||||
Less: Goodwill | (366,156 | ) | (366,156 | ) | (366,156 | ) | (366,156 | ) | (365,500 | ) | |||||||||||||||||||||
Identifiable intangible assets | (22,366 | ) | (24,058 | ) | (25,751 | ) | (27,546 | ) | (30,129 | ) | |||||||||||||||||||||
Total tangible assets | (b) | $ | 12,773,016 | $ | 12,640,135 | $ | 12,383,289 | $ | 12,285,194 | $ | 11,994,647 | ||||||||||||||||||||
Risk-weighted assets | (c) | $ | 9,670,302 | $ | 9,559,816 | $ | 9,431,021 | $ | 9,242,902 | $ | 8,831,355 | ||||||||||||||||||||
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION |
|||||||||||||||||||||||||||||||
Net income | $ | 30,982 | $ | 21,503 | $ | 27,003 | $ | 27,858 | $ | 28,430 | $ | 79,488 | $ | 88,180 | |||||||||||||||||
Plus: Intangible amortization net of tax | 1,045 | 1,045 | 1,109 | 1,191 | 1,199 | 3,199 | 3,638 | ||||||||||||||||||||||||
Net income adjusted for intangible amortization | $ | 32,027 | $ | 22,548 | $ | 28,112 | $ | 29,049 | $ | 29,629 | $ | 82,687 | $ | 91,818 | |||||||||||||||||
Period end common shares outstanding | (d) | 67,626,939 | 67,623,601 | 67,639,832 | 67,559,128 | 67,557,395 | |||||||||||||||||||||||||
TANGIBLE COMMON EQUITY MEASUREMENTS |
|||||||||||||||||||||||||||||||
Return on average tangible equity (1) | 11.16 | % | 8.08 | % | 10.26 | % | 10.61 | % | 10.96 | % | 9.85 | % | 11.62 | % | |||||||||||||||||
Tangible equity/tangible assets | (a)/(b) | 8.97 | % | 8.97 | % | 9.01 | % | 8.79 | % | 9.01 | % | ||||||||||||||||||||
Tangible equity/risk-weighted assets | (a)/(c) | 11.85 | % | 11.85 | % | 11.84 | % | 11.68 | % | 12.24 | % | ||||||||||||||||||||
Tangible book value | (a)/(d)*1,000 | $ | 16.95 | $ | 16.76 | $ | 16.50 | $ | 15.98 | $ | 16.00 | ||||||||||||||||||||
COMMON EQUITY TIER 1 CAPITAL (CET1) |
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Total shareholders' equity | $ | 1,534,761 | $ | 1,523,467 | $ | 1,508,256 | $ | 1,473,057 | $ | 1,476,756 | |||||||||||||||||||||
AOCI-related adjustments | 17,075 | 12,164 | 21,573 | 45,394 | 28,580 | ||||||||||||||||||||||||||
CET1 adjustments and deductions: | |||||||||||||||||||||||||||||||
Goodwill net of associated deferred tax liabilities (DTLs) | (347,800 | ) | (348,158 | ) | (348,515 | ) | (348,873 | ) | (348,587 | ) | |||||||||||||||||||||
Other adjustments and deductions for CET1 (2) | (9,307 | ) | (10,042 | ) | (10,861 | ) | (7,980 | ) | (8,888 | ) | |||||||||||||||||||||
CET1 capital | (e) | 1,194,729 | 1,177,431 | 1,170,453 | 1,161,598 | 1,147,861 | |||||||||||||||||||||||||
Additional tier 1 capital instruments plus related surplus | 60,000 | 60,000 | 60,000 | 60,000 | 60,000 | ||||||||||||||||||||||||||
Less: additional tier 1 capital deductions | (276 | ) | (328 | ) | (434 | ) | (1,063 | ) | (1,287 | ) | |||||||||||||||||||||
Additional tier 1 capital | 59,724 | 59,672 | 59,566 | 58,937 | 58,713 | ||||||||||||||||||||||||||
Tier 1 capital | $ | 1,254,453 | $ | 1,237,103 | $ | 1,230,019 | $ | 1,220,535 | $ | 1,206,574 | |||||||||||||||||||||
Common equity tier 1 capital ratio | (e)/(c) | 12.35 | % | 12.32 | % | 12.41 | % | 12.57 | % | 13.00 | % | ||||||||||||||||||||
(1) Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity | |||||||||||||||||||||||||||||||
(2) Includes other intangible assets, net of DTLs, disallowed deferred tax assets (DTAS), threshold deductions and transition adjustments, as applicable. | |||||||||||||||||||||||||||||||
TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIALS
September 30, 2016
($
in thousands)
(unaudited)
Note 7 – Non-GAAP Financial Measures (continued)
Trustmark discloses certain non-GAAP financial measures, including net income adjusted for significant non-routine transactions, 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 net income adjusted for significant non-routine transactions as a measure of our core operating business, which excludes the impact of the items detailed below, as these items are generally not operational in nature. This non-GAAP measure also provides 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 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 ($ in thousands, except per share data):
Quarter Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
9/30/2016 | 9/30/2015 | 9/30/2016 | 9/30/2015 | |||||||||||||||||||||||||||||
Amount | Diluted EPS | Amount | Diluted EPS | Amount | Diluted EPS | Amount | Diluted EPS | |||||||||||||||||||||||||
Net Income (GAAP) | $ | 30,982 | $ | 0.457 | $ | 28,430 | $ | 0.420 | $ | 79,488 | $ | 1.173 | $ | 88,180 | $ | 1.303 | ||||||||||||||||
Significant non-routine transactions (net of taxes): | ||||||||||||||||||||||||||||||||
Non-routine early retirement program expense |
146 | 0.002 | — | — | 5,884 | 0.087 | — | — | ||||||||||||||||||||||||
Non-routine pension expense due to de-risking strategy in Plan assets portfolio |
410 | 0.006 | — | — | 410 | 0.006 | — | — | ||||||||||||||||||||||||
Net Income adjusted for significant | ||||||||||||||||||||||||||||||||
non-routine transactions (Non-GAAP) | $ | 31,538 | $ | 0.465 | $ | 28,430 | $ | 0.420 | $ | 85,782 | $ | 1.266 | $ | 88,180 | $ | 1.303 | ||||||||||||||||
Reported | Adjusted | Reported | Adjusted | Reported | Adjusted | Reported | Adjusted | |||||||||||||||||||||||||
(GAAP) | (Non-GAAP) | (GAAP) | (Non-GAAP) | (GAAP) | (Non-GAAP) | (GAAP) | (Non-GAAP) | |||||||||||||||||||||||||
Return on equity | 8.05 | % | 8.20 | % | 7.68 | % | n/a | 7.02 | % | 7.57 | % | 8.11 | % | n/a | ||||||||||||||||||
Return on average tangible equity | 11.16 | % | 11.36 | % | 10.96 | % | n/a | 9.85 | % | 10.60 | % | 11.62 | % | n/a | ||||||||||||||||||
Return on assets | 0.95 | % | 0.97 | % | 0.92 | % | n/a | 0.83 | % | 0.89 | % | 0.97 | % | n/a | ||||||||||||||||||
n/a - not applicable |