Trustmark Corporation Announces Second Quarter 2015 Financial Results

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Trustmark Corporation Announces Second Quarter 2015 Financial Results

JACKSON, Miss.--()--Trustmark Corporation (NASDAQ:TRMK) reported net income of $30.6 million in the second quarter of 2015, which represented diluted earnings per share of $0.45. Trustmark’s performance during the second quarter of 2015 produced a return on average tangible equity of 12.05% and a return on average assets of 1.01%. During the first six months of 2015, Trustmark’s net income totaled $59.8 million, which represented diluted earnings per share of $0.88. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable September 15, 2015, to shareholders of record on September 1, 2015.

Printer friendly version of earnings release with consolidated financial statements and notes: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=51150325&lang=en

Second Quarter Highlights

  • Revenue totaled $142.5 million, a 7.8% annualized increase from the prior quarter; efficiency ratio improved linked quarter to 66.00%
  • Net interest income (FTE) totaled $100.9 million; net interest margin excluding acquired loans expanded from the prior quarter to 3.49%
  • Noninterest income increased 7.5% from the prior quarter, reflecting diversified growth across Trustmark’s fee-income businesses
  • Continued solid credit performance; nonaccrual loans declined 11.1% from the prior quarter

Gerard R. Host, President and CEO, stated, “Trustmark’s financial performance reflects the value of our diversified financial services businesses. We experienced solid loan growth in our Alabama and Texas markets. Noninterest income increased 7.5% linked quarter, resulting from strong growth across our fee-income businesses. During the quarter, we expanded our mortgage-production capabilities with the addition of ten mortgage producers in Mobile and Florence, Alabama, as well as Pensacola and Destin, Florida. Noninterest expense remained well-controlled and credit quality remained strong, both of which continued to be important contributors to our financial success. Thanks to our associates, solid profitability and strong capital base, Trustmark remains well-positioned to continue to add value to the customers, clients, communities and shareholders we serve.”

Balance Sheet Management

  • Legacy loan growth in Alabama and Texas markets of $66.3 million, offset in part by reductions in Mississippi, Florida and Tennessee markets of $33.1 million
  • Average earning assets and deposits remained stable at $10.6 billion and $9.8 billion, respectively
  • Capital base provides opportunity to support additional growth

Loans held for investment totaled $6.4 billion at June 30, 2015, an increase of $33.2 million, or 0.5%, from the prior quarter and an increase of $260.1 million, or 4.2%, from one year earlier. Loans secured by nonfarm, nonresidential real estate increased by $50.1 million linked quarter as growth in Texas, Alabama and Mississippi was partially offset by declines in Florida and Tennessee. The single-family mortgage portfolio expanded by $23.9 million due principally to growth in the Mississippi and Alabama markets. Other loans, which include loans to nonprofits and real estate investment trusts, increased $7.1 million, reflecting growth in Texas, Alabama, Florida and Tennessee. Commercial and industrial loans declined $9.1 million as growth in Tennessee, Alabama and Florida was more than offset by paydowns in the Mississippi market. Loans to states and other political subdivisions decreased by $40.1 million, while construction, land development and other land loans decreased $9.2 million, reflecting in part migration of balances to loans secured by nonfarm, nonresidential real estate and other loans secured by real estate.

Acquired loans totaled $466.4 million at June 30, 2015, down $32.0 million from the prior quarter. Collectively, loans held for investment and acquired loans totaled $6.9 billion at June 30, 2015, up $1.2 million from the prior quarter.

Trustmark’s capital position remained solid, reflecting the consistent profitability of its diversified financial services businesses. At June 30, 2015, Trustmark’s tangible equity to tangible assets ratio was 8.93%, while its total risk-based capital ratio was 15.07%. Tangible book value per share was $15.58 at June 30, 2015, up 5.4% from the prior year.

Credit Quality

  • Continued improvement in classified loan balances
  • Nonperforming assets declined 4.8% linked quarter and 10.6% year-over-year
  • Annualized net charge-offs totaled seven basis points of average loans in the second quarter

Classified loans continued to reflect steady improvement. Relative to the prior quarter, Trustmark's classified loan balances declined 1.8%; when compared to the prior year, classified loan balances declined 11.0%.

Nonperforming assets declined $8.0 million, or 4.8%, from the prior quarter and $18.9 million, or 10.6%, from the comparable period one year earlier. The decline during the quarter was attributable to a reduction in nonaccrual loans, while the year-over-year decline was attributable to both a reduction in nonaccrual loans and other real estate.

Allocation of Trustmark's $71.2 million allowance for loan losses represented 1.30% of commercial loans and 0.59% of consumer and home mortgage loans, resulting in an allowance to total loans held for investment of 1.10% at June 30, 2015, representing a level management considers commensurate with the inherent risk in the loan portfolio. The allowance for loan losses represented 192.6% of nonperforming loans, excluding impaired loans at June 30, 2015.

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) remained stable compared to the prior quarter; net interest margin excluding acquired loans expanded linked quarter to 3.49%
  • Noninterest income increased 7.5% from the prior quarter; insurance commissions and service charges on deposit accounts increased 9.1% and 7.5%, respectively, from the prior quarter

Revenue in the second quarter increased 2.0%, or 7.8% annualized, from the prior quarter to $142.5 million, continuing to reflect Trustmark’s diversified business model. Net interest income (FTE) in the second quarter totaled $100.9 million, resulting in a net interest margin of 3.81%. Compared to results in the prior quarter, interest income (FTE) benefited from increased income on both the held for investment and held for sale loan portfolio as well as the securities portfolio, but was offset by lower interest and fees on acquired loans. The yield on acquired loans in the second quarter totaled 10.43% and included recoveries from settlement of debt of $3.6 million, which represented approximately 2.97% of the annualized total acquired loan yield. Excluding acquired loans, the net interest margin in the second quarter totaled 3.49%, up from 3.47% in the prior quarter.

Noninterest income totaled $45.5 million in the second quarter, an increase of 7.5% from the prior quarter and an increase of 3.2% from levels one year earlier. Service charges on deposit accounts increased 7.5% linked quarter, rebounding from a seasonal reduction in fees in the prior quarter. Bank card and other fees increased 9.7% from the prior quarter as a result of increased interchange income and fees on interest rate swaps for commercial loan customers. Other income, net improved $622 thousand linked quarter due to gains associated with bank-owned life insurance in the second quarter and a previously disclosed loss on the disposition of a branch location in the prior quarter. The improvements in other income, net were partially offset by FDIC indemnification asset write-downs due to continued improvement in credit quality of acquired covered loans and dispositions of covered other real estate.

Insurance revenue in the second quarter totaled $9.4 million, an increase of 9.1% from the prior quarter and 13.3% from levels one year earlier. The solid performance this quarter was primarily due to growth in the commercial property and casualty line of business, resulting from both a continued focus on new business and development of new production staff. Wealth management revenue totaled $7.8 million, down $232 thousand, or 2.9%, due in part to lower income from brokerage commissions and retirement plan services.

Mortgage banking revenue in the second quarter totaled $9.5 million, up 5.8% and 53.1% from levels in the prior quarter and year, respectively. The increase in mortgage revenue from the prior quarter primarily reflects favorable mortgage servicing hedge ineffectiveness and expanded secondary marketing gains. Mortgage loan production in the second quarter totaled $416.9 million, up 36.9% from the prior quarter and 29.4% from levels one year earlier.

Noninterest Expense

  • Noninterest expense totaled $100.3 million, up 1.1% from the prior quarter and down 2.4% from the prior year
  • Efficiency ratio improved linked quarter to 66.00%
  • During the first six months of the year, Trustmark closed or consolidated six banking offices and opened two new banking offices in markets with higher growth opportunities

Excluding ORE expense and intangible amortization of $2.9 million, noninterest expense totaled $97.4 million, an increase of $1.3 million, or 1.3%, from comparable expenses in the prior quarter. Salaries and benefits totaled $57.4 million in the second quarter, up 0.4% on a linked quarter basis due primarily to increased commissions from higher mortgage production; in contrast, headcount, on a full-time equivalent basis, decreased by 49 and 106 from the prior quarter and year, respectively. Services and fees increased $884 thousand from the prior quarter, reflecting additional legal and data processing expense. ORE and foreclosure expense declined $194 thousand and $2.9 million from the prior quarter and year, respectively. Other expense increased $480 thousand relative to the prior quarter due principally to higher loan expense.

Trustmark also continued the optimization of its retail delivery channels to enhance productivity and efficiency as well as promote additional revenue growth. During the second quarter, Trustmark completed the previously announced consolidation of five banking offices and announced plans to consolidate two additional offices in the third quarter of 2015. Separately, Trustmark expanded its mortgage-banking platform with the addition of a new mortgage loan-production office in Florence, Alabama, while opening new banking offices in Spanish Fort and Inverness, Alabama. In July, Trustmark opened a mortgage loan-production office in Pensacola, Florida. Trustmark is committed to investments that support profitable revenue growth as well as reengineering and efficiency opportunities to enhance shareholder value.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, July 29, 2015, 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, August 12, 2015, in archived format at the same web address or by calling (877) 344-7529, passcode 10068030.

Trustmark Corporation is a financial services company providing banking and financial solutions through 201 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 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, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, 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
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2015
($ in thousands)
(unaudited)
 
                  Linked Quarter     Year over Year

QUARTERLY AVERAGE BALANCES

6/30/2015 3/31/2015

6/30/2014

$ Change

   

% Change

$ Change

 

% Change

Securities AFS-taxable $ 2,255,485 $ 2,190,344 $ 2,205,352 $ 65,141 3.0 % $ 50,133 2.3 %
Securities AFS-nontaxable 120,330 127,623 135,956 (7,293 ) -5.7 % (15,626 ) -11.5 %
Securities HTM-taxable 1,143,273 1,119,979 1,120,448 23,294 2.1 % 22,825 2.0 %
Securities HTM-nontaxable   38,173     41,405     43,551     (3,232 ) -7.8 %   (5,378 ) -12.3 %
Total securities   3,557,261     3,479,351     3,505,307     77,910   2.2 %   51,954   1.5 %
Loans (including loans held for sale) 6,554,739 6,561,430 6,160,781 (6,691 ) -0.1 % 393,958 6.4 %
Acquired loans:
Noncovered loans 462,418 502,534 664,733 (40,116 ) -8.0 % (202,315 ) -30.4 %
Covered loans 20,574 23,593 31,122 (3,019 ) -12.8 % (10,548 ) -33.9 %
Fed funds sold and rev repos 557 217 2,648 340 n/m (2,091 ) -79.0 %
Other earning assets   41,242     46,368     36,259     (5,126 ) -11.1 %   4,983   13.7 %
Total earning assets   10,636,791     10,613,493     10,400,850     23,298   0.2 %   235,941   2.3 %
Allowance for loan losses (84,331 ) (81,993 ) (77,652 ) (2,338 ) 2.9 % (6,679 ) 8.6 %
Cash and due from banks 272,292 290,251 304,441 (17,959 ) -6.2 % (32,149 ) -10.6 %
Other assets   1,288,507     1,303,552     1,343,384     (15,045 ) -1.2 %   (54,877 ) -4.1 %
Total assets $ 12,113,259   $ 12,125,303   $ 11,971,023   $ (12,044 ) -0.1 % $ 142,236   1.2 %
 
Interest-bearing demand deposits $ 1,924,447 $ 1,847,374 $ 1,826,019 $ 77,073 4.2 % $ 98,428 5.4 %
Savings deposits 3,226,380 3,252,586 3,260,634 (26,206 ) -0.8 % (34,254 ) -1.1 %
Time deposits less than $100,000 1,101,477 1,139,912 1,225,706 (38,435 ) -3.4 % (124,229 ) -10.1 %
Time deposits of $100,000 or more   751,129     785,715     911,531     (34,586 ) -4.4 %   (160,402 ) -17.6 %
Total interest-bearing deposits 7,003,433 7,025,587 7,223,890 (22,154 ) -0.3 % (220,457 ) -3.1 %
Fed funds purchased and repos 497,606 421,206 387,289 76,400 18.1 % 110,317 28.5 %
Short-term borrowings 128,761 256,714 59,465 (127,953 ) -49.8 % 69,296 n/m
Long-term FHLB advances 1,213 1,243 8,291 (30 ) -2.4 % (7,078 ) -85.4 %
Subordinated notes 49,947 49,939 49,915 8 0.0 % 32 0.1 %
Junior subordinated debt securities   61,856     61,856     61,856     -   0.0 %   -   0.0 %
Total interest-bearing liabilities 7,742,816 7,816,545 7,790,706 (73,729 ) -0.9 % (47,890 ) -0.6 %
Noninterest-bearing deposits 2,772,741 2,741,945 2,676,907 30,796 1.1 % 95,834 3.6 %
Other liabilities   143,201     129,844     111,170     13,357   10.3 %   32,031   28.8 %
Total liabilities 10,658,758 10,688,334 10,578,783 (29,576 ) -0.3 % 79,975 0.8 %
Shareholders' equity   1,454,501     1,436,969     1,392,240     17,532   1.2 %   62,261   4.5 %
Total liabilities and equity $ 12,113,259   $ 12,125,303   $ 11,971,023   $ (12,044 ) -0.1 % $ 142,236   1.2 %
 
Linked Quarter Year over Year

PERIOD END BALANCES

6/30/2015 3/31/2015 6/30/2014

$ Change

% Change

$ Change

% Change
Cash and due from banks $ 255,050 $ 335,244 $ 322,960 $ (80,194 ) -23.9 % $ (67,910 ) -21.0 %
Fed funds sold and rev repos - - 5,000 - n/m (5,000 ) -100.0 %
Securities available for sale 2,446,383 2,381,459 2,376,431 64,924 2.7 % 69,952 2.9 %
Securities held to maturity 1,190,161 1,184,554 1,156,790 5,607 0.5 % 33,371 2.9 %
Loans held for sale (LHFS) 147,539 150,365 142,103 (2,826 ) -1.9 % 5,436 3.8 %
Loans held for investment (LHFI) 6,447,073 6,413,876 6,187,000 33,197 0.5 % 260,073 4.2 %
Allowance for loan losses   (71,166 )   (71,321 )   (66,648 )   155   -0.2 %   (4,518 ) 6.8 %
Net LHFI 6,375,907 6,342,555 6,120,352 33,352 0.5 % 255,555 4.2 %
Acquired loans:
Noncovered loans 447,160 478,172 616,911 (31,012 ) -6.5 % (169,751 ) -27.5 %
Covered loans 19,239 20,271 29,628 (1,032 ) -5.1 % (10,389 ) -35.1 %
Allowance for loan losses, acquired loans   (12,629 )   (11,837 )   (11,179 )   (792 ) 6.7 %   (1,450 ) 13.0 %
Net acquired loans   453,770     486,606     635,360     (32,836 ) -6.7 %   (181,590 ) -28.6 %
Net LHFI and acquired loans 6,829,677 6,829,161 6,755,712 516 0.0 % 73,965 1.1 %
Premises and equipment, net 196,220 198,039 201,639 (1,819 ) -0.9 % (5,419 ) -2.7 %
Mortgage servicing rights 71,422 62,903 65,049 8,519 13.5 % 6,373 9.8 %
Goodwill 365,500 365,500 365,500 - 0.0 % - 0.0 %
Identifiable intangible assets 32,042 31,250 37,506 792 2.5 % (5,464 ) -14.6 %
Other real estate, excluding covered other real estate 90,748 90,175 106,970 573 0.6 % (16,222 ) -15.2 %
Covered other real estate 3,755 4,794 3,872 (1,039 ) -21.7 % (117 ) -3.0 %
FDIC indemnification asset 2,632 4,743 10,866 (2,111 ) -44.5 % (8,234 ) -75.8 %
Other assets   551,319     540,977     569,598     10,342   1.9 %   (18,279 ) -3.2 %
Total assets $ 12,182,448   $ 12,179,164   $ 12,119,996   $ 3,284   0.0 % $ 62,452   0.5 %
 
Deposits:
Noninterest-bearing $ 2,819,171 $ 2,936,875 $ 2,729,199 $ (117,704 ) -4.0 % $ 89,972 3.3 %
Interest-bearing   6,973,003     6,970,115     7,131,167     2,888   0.0 %   (158,164 ) -2.2 %
Total deposits 9,792,174 9,906,990 9,860,366 (114,816 ) -1.2 % (68,192 ) -0.7 %
Fed funds purchased and repos 477,462 523,187 559,316 (45,725 ) -8.7 % (81,854 ) -14.6 %
Short-term borrowings 201,744 50,570 61,227 151,174 n/m 140,517 n/m
Long-term FHLB advances 1,204 1,222 8,236 (18 ) -1.5 % (7,032 ) -85.4 %
Subordinated notes 49,953 49,944 49,920 9 0.0 % 33 0.1 %
Junior subordinated debt securities 61,856 61,856 61,856 - 0.0 % - 0.0 %
Other liabilities   147,646     139,311     119,184     8,335   6.0 %   28,462   23.9 %
Total liabilities   10,732,039     10,733,080     10,720,105     (1,041 ) 0.0 %   11,934   0.1 %
Common stock 14,076 14,076 14,051 - 0.0 % 25 0.2 %
Capital surplus 359,533 358,583 353,196 950 0.3 % 6,337 1.8 %
Retained earnings 1,117,993 1,103,077 1,063,201 14,916 1.4 % 54,792 5.2 %

Accum other comprehensive loss, net of tax

  (41,193 )   (29,652 )   (30,557 )   (11,541 ) 38.9 %   (10,636 ) 34.8 %
Total shareholders' equity   1,450,409     1,446,084     1,399,891     4,325   0.3 %   50,518   3.6 %
Total liabilities and equity $ 12,182,448   $ 12,179,164   $ 12,119,996   $ 3,284   0.0 % $ 62,452   0.5 %

 

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

See Notes to Consolidated Financials

 
 
 
 
 
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2015
($ in thousands except per share data)
(unaudited)
                             
Quarter Ended Linked Quarter Year over Year

INCOME STATEMENTS

6/30/2015 3/31/2015 6/30/2014

$ Change

% Change

$ Change

% Change
Interest and fees on LHFS & LHFI-FTE $ 71,546 $ 69,658 $ 69,618 $ 1,888 2.7 % $ 1,928 2.8 %
Interest and fees on acquired loans 12,557 15,078 23,250 (2,521 ) -16.7 % (10,693 ) -46.0 %
Interest on securities-taxable 19,731 19,586 19,522 145 0.7 % 209 1.1 %
Interest on securities-tax exempt-FTE 1,688 1,789 1,912 (101 ) -5.6 % (224 ) -11.7 %
Interest on fed funds sold and rev repos 2 - 6 2 n/m (4 ) -66.7 %
Other interest income   392     393     379     (1 ) -0.3 %   13   3.4 %
Total interest income-FTE   105,916     106,504     114,687     (588 ) -0.6 %   (8,771 ) -7.6 %
Interest on deposits 3,204 3,247 3,970 (43 ) -1.3 % (766 ) -19.3 %
Interest on fed funds pch and repos 179 143 110 36 25.2 % 69 62.7 %
Other interest expense   1,614     1,649     1,375     (35 ) -2.1 %   239   17.4 %
Total interest expense   4,997     5,039     5,455     (42 ) -0.8 %   (458 ) -8.4 %
Net interest income-FTE 100,919 101,465 109,232 (546 ) -0.5 % (8,313 ) -7.6 %
Provision for loan losses, LHFI 1,033 1,785 351 (752 ) -42.1 % 682 n/m
Provision for loan losses, acquired loans   825     347     3,784     478   n/m   (2,959 ) -78.2 %
Net interest income after provision-FTE   99,061     99,333     105,097     (272 ) -0.3 %   (6,036 ) -5.7 %
Service charges on deposit accounts 11,920 11,085 11,846 835 7.5 % 74 0.6 %
Insurance commissions 9,401 8,616 8,300 785 9.1 % 1,101 13.3 %
Wealth management 7,758 7,990 7,710 (232 ) -2.9 % 48 0.6 %
Bank card and other fees 7,416 6,762 9,894 654 9.7 % (2,478 ) -25.0 %
Mortgage banking, net 9,481 8,965 6,191 516 5.8 % 3,290 53.1 %
Other, net   (433 )   (1,055 )   199     622   59.0 %   (632 ) n/m
Nonint inc-excl sec gains (losses), net 45,543 42,363 44,140 3,180 7.5 % 1,403 3.2 %
Security gains (losses), net   -     -     -     -   n/m   -   n/m
Total noninterest income   45,543     42,363     44,140     3,180   7.5 %   1,403   3.2 %
Salaries and employee benefits 57,393 57,169 56,134 224 0.4 % 1,259 2.2 %
Services and fees 15,005 14,121 14,543 884 6.3 % 462 3.2 %
Net occupancy-premises 6,243 6,191 6,413 52 0.8 % (170 ) -2.7 %
Equipment expense 5,903 5,974 6,136 (71 ) -1.2 % (233 ) -3.8 %
FDIC assessment expense 2,615 2,940 2,468 (325 ) -11.1 % 147 6.0 %
ORE/Foreclosure expense 921 1,115 3,836 (194 ) -17.4 % (2,915 ) -76.0 %
Other expense   12,186     11,706     13,231     480   4.1 %   (1,045 ) -7.9 %
Total noninterest expense   100,266     99,216     102,761     1,050   1.1 %   (2,495 ) -2.4 %
Income before income taxes and tax eq adj 44,338 42,480 46,476 1,858 4.4 % (2,138 ) -4.6 %
Tax equivalent adjustment   3,970     4,073     3,944     (103 ) -2.5 %   26   0.7 %
Income before income taxes 40,368 38,407 42,532 1,961 5.1 % (2,164 ) -5.1 %
Income taxes   9,766     9,259     9,635     507   5.5 %   131   1.4 %
Net income $ 30,602   $ 29,148   $ 32,897   $ 1,454   5.0 % $ (2,295 ) -7.0 %
 
Per share data
Earnings per share - basic $ 0.45   $ 0.43   $ 0.49   $ 0.02   4.7 % $ (0.04 ) -8.2 %
 
Earnings per share - diluted $ 0.45   $ 0.43   $ 0.49   $ 0.02   4.7 % $ (0.04 ) -8.2 %
 
Dividends per share $ 0.23   $ 0.23   $ 0.23   $ -   0.0 % $ -   0.0 %
 
Weighted average shares outstanding
Basic   67,556,825     67,525,791     67,439,659  
 
Diluted   67,685,449     67,639,326     67,582,714  
 
Period end shares outstanding   67,557,395     67,556,591     67,439,788  
 

OTHER FINANCIAL DATA

Return on equity 8.44 % 8.23 % 9.48 %
Return on average tangible equity 12.05 % 11.86 % 13.90 %
Return on assets 1.01 % 0.97 % 1.10 %
Interest margin - Yield - FTE 3.99 % 4.07 % 4.42 %
Interest margin - Cost 0.19 % 0.19 % 0.21 %
Net interest margin - FTE 3.81 % 3.88 % 4.21 %
Efficiency ratio (1) 66.00 % 66.46 % 64.31 %
Full-time equivalent employees 2,989 3,038 3,095
 

STOCK PERFORMANCE

Market value-Close $ 24.98 $ 24.28 $ 24.69
Book value $ 21.47 $ 21.41 $ 20.76
Tangible book value $ 15.58 $ 15.53 $ 14.78
 

(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.

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

See Notes to Consolidated Financials

 
 
 
 
 
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2015
($ in thousands)
(unaudited)
 
      Quarter Ended     Linked Quarter     Year over Year

NONPERFORMING ASSETS (1)

6/30/2015     3/31/2015     6/30/2014

$ Change

    % Change

$ Change

    % Change
Nonaccrual loans
Alabama $ 713 $ 902 $ 80 $ (189 ) -21.0 % $ 633 n/m
Florida 7,892 8,179 11,041 (287 ) -3.5 % (3,149 ) -28.5 %
Mississippi (2) 52,051 52,145 49,430 (94 ) -0.2 % 2,621 5.3 %
Tennessee (3) 5,468 4,197 4,244 1,271 30.3 % 1,224 28.8 %
Texas   2,314     11,585     6,323     (9,271 ) -80.0 %   (4,009 ) -63.4 %
Total nonaccrual loans 68,438 77,008 71,118 (8,570 ) -11.1 % (2,680 ) -3.8 %
Other real estate
Alabama 21,849 21,795 24,541 54 0.2 % (2,692 ) -11.0 %
Florida 31,059 34,746 43,207 (3,687 ) -10.6 % (12,148 ) -28.1 %
Mississippi (2) 14,094 15,143 18,723 (1,049 ) -6.9 % (4,629 ) -24.7 %
Tennessee (3) 9,707 10,072 12,073 (365 ) -3.6 % (2,366 ) -19.6 %
Texas   14,039     8,419     8,426     5,620   66.8 %   5,613   66.6 %
Total other real estate   90,748     90,175     106,970     573   0.6 %   (16,222 ) -15.2 %
Total nonperforming assets $ 159,186   $ 167,183   $ 178,088   $ (7,997 ) -4.8 % $ (18,902 ) -10.6 %
 

LOANS PAST DUE OVER 90 DAYS (4)

LHFI $ 1,771   $ 1,413   $ 1,936   $ 358   25.3 % $ (165 ) -8.5 %
 
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase) $ 11,987   $ 7,584   $ 21,810   $ 4,403   58.1 % $ (9,823 ) -45.0 %
 
Quarter Ended Linked Quarter Year over Year

ALLOWANCE FOR LOAN LOSSES (4)

6/30/2015 3/31/2015 6/30/2014

$ Change

% Change

$ Change

% Change
Beginning Balance $ 71,321 $ 69,616 $ 67,518 $ 1,705 2.4 % $ 3,803 5.6 %
Provision for loan losses 1,033 1,785 351 (752 ) -42.1 % 682 n/m
Charge-offs (4,278 ) (3,004 ) (3,820 ) (1,274 ) 42.4 % (458 ) 12.0 %
Recoveries   3,090     2,924     2,599     166   5.7 %   491   18.9 %
Net (charge-offs) recoveries   (1,188 )   (80 )   (1,221 )   (1,108 ) n/m   33   -2.7 %

Ending Balance

$ 71,166   $ 71,321   $ 66,648   $ (155 ) -0.2 % $ 4,518   6.8 %
 

PROVISION FOR LOAN LOSSES (4)

Alabama $ 623 $ 761 $ 696 $ (138 ) -18.1 % $ (73 ) -10.5 %
Florida (1,168 ) 1,833 (2,014 ) (3,001 ) n/m 846 -42.0 %
Mississippi (2) 2,046 (2,729 ) 2,877 4,775 n/m (831 ) -28.9 %
Tennessee (3) (483 ) 1,432 (277 ) (1,915 ) n/m (206 ) 74.4 %
Texas   15     488     (931 )   (473 ) -96.9 %   946   n/m
Total provision for loan losses $ 1,033   $ 1,785   $ 351   $ (752 ) -42.1 % $ 682   n/m
 

NET CHARGE-OFFS (4)

Alabama $ 216 $ 144 $ 84 $ 72 50.0 % $ 132 n/m
Florida 539 (28 ) (525 ) 567 n/m 1,064 n/m
Mississippi (2) 1,028 143 1,518 885 n/m (490 ) -32.3 %
Tennessee (3) 105 (216 ) 87 321 n/m 18 20.7 %
Texas   (700 )   37     57     (737 ) n/m   (757 ) n/m
Total net charge-offs (recoveries) $ 1,188   $ 80   $ 1,221   $ 1,108   n/m $ (33 ) -2.7 %
 

CREDIT QUALITY RATIOS (1)

Net charge-offs/average loans 0.07 % 0.00 % 0.08 %
Provision for loan losses/average loans 0.06 % 0.11 % 0.02 %
Nonperforming loans/total loans (incl LHFS) 1.04 % 1.17 % 1.12 %
Nonperforming assets/total loans (incl LHFS) 2.41 % 2.55 % 2.81 %
Nonperforming assets/total loans (incl LHFS) +ORE 2.38 % 2.51 % 2.77 %
ALL/total loans (excl LHFS) 1.10 % 1.11 % 1.08 %
ALL-commercial/total commercial loans 1.30 % 1.30 % 1.20 %
ALL-consumer/total consumer and home mortgage loans 0.59 % 0.61 % 0.75 %
ALL/nonperforming loans 103.99 % 92.62 % 93.71 %
ALL/nonperforming loans -
(excl impaired loans) 192.60 % 205.52 % 159.71 %
 

CAPITAL RATIOS

Total equity/total assets 11.91 % 11.87 % 11.55 %
Tangible equity/tangible assets 8.93 % 8.91 % 8.51 %
Tangible equity/risk-weighted assets 12.34 % 12.34 % 12.19 %
Tier 1 leverage ratio 10.14 % 9.99 % 9.43 %
Tier 1 common risk-based capital ratio 13.28 % 13.14 % 12.61 %
Tier 1 risk-based capital ratio 13.97 % 13.83 % 13.34 %
Total risk-based capital ratio 15.07 % 14.92 % 14.54 %
 
(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
June 30, 2015
($ in thousands)
(unaudited)
 
      Quarter Ended     Six Months Ended

AVERAGE BALANCES

6/30/2015     3/31/2015     12/31/2014     9/30/2014     6/30/2014 6/30/2015     6/30/2014
Securities AFS-taxable $ 2,255,485 $ 2,190,344 $ 2,204,361 $ 2,202,020 $ 2,205,352 $ 2,223,094 $ 2,171,062
Securities AFS-nontaxable 120,330 127,623 129,403 131,305 135,956 123,956 142,812
Securities HTM-taxable 1,143,273 1,119,979 1,117,989 1,126,309 1,120,448 1,131,690 1,119,602
Securities HTM-nontaxable   38,173     41,405     42,040     43,114     43,551     39,780     37,330  
Total securities   3,557,261     3,479,351     3,493,793     3,502,748     3,505,307     3,518,520     3,470,806  
Loans (including loans held for sale) 6,554,739 6,561,430 6,494,369 6,387,251 6,160,781 6,558,066 6,056,331
Acquired loans:
Noncovered loans 462,418 502,534 544,260 585,675 664,733 482,365 707,988
Covered loans 20,574 23,593 27,039 28,971 31,122 22,075 32,456
Fed funds sold and rev repos 557 217 1,269 4,228 2,648 388 4,543
Other earning assets   41,242     46,368     48,224     41,871     36,259     43,791     36,538  
Total earning assets   10,636,791     10,613,493     10,608,954     10,550,744     10,400,850     10,625,205     10,308,662  
Allowance for loan losses (84,331 ) (81,993 ) (82,851 ) (78,227 ) (77,652 ) (83,168 ) (78,688 )
Cash and due from banks 272,292 290,251 284,754 272,925 304,441 281,222 355,476
Other assets   1,288,507     1,303,552     1,317,217     1,345,771     1,343,384     1,295,989     1,359,614  
Total assets $ 12,113,259   $ 12,125,303   $ 12,128,074   $ 12,091,213   $ 11,971,023   $ 12,119,248   $ 11,945,064  
 
Interest-bearing demand deposits $ 1,924,447 $ 1,847,374 $ 1,815,999 $ 1,808,710 $ 1,826,019 $ 1,886,123 $ 1,863,056
Savings deposits 3,226,380 3,252,586 2,963,771 3,050,743 3,260,634 3,239,411 3,227,053
Time deposits less than $100,000 1,101,477 1,139,912 1,152,622 1,187,794 1,225,706 1,120,588 1,252,958
Time deposits of $100,000 or more   751,129     785,715     838,309     874,333     911,531     768,326     929,421  
Total interest-bearing deposits 7,003,433 7,025,587 6,770,701 6,921,580 7,223,890 7,014,448 7,272,488
Fed funds purchased and repos 497,606 421,206 526,482 540,870 387,289 459,617 335,341
Short-term borrowings 128,761 256,714 385,841 181,114 59,465 192,384 62,222
Long-term FHLB advances 1,213 1,243 2,652 8,050 8,291 1,228 8,348
Subordinated notes 49,947 49,939 49,931 49,923 49,915 49,943 49,911
Junior subordinated debt securities   61,856     61,856     61,856     61,856     61,856     61,856     61,856  
Total interest-bearing liabilities 7,742,816 7,816,545 7,797,463 7,763,393 7,790,706 7,779,476 7,790,166
Noninterest-bearing deposits 2,772,741 2,741,945 2,762,332 2,774,745 2,676,907 2,757,428 2,653,973
Other liabilities   143,201     129,844     146,011     140,218     111,170     136,561     120,906  
Total liabilities 10,658,758 10,688,334 10,705,806 10,678,356 10,578,783 10,673,465 10,565,045
Shareholders' equity   1,454,501     1,436,969     1,422,268     1,412,857     1,392,240     1,445,783     1,380,019  
Total liabilities and equity $ 12,113,259   $ 12,125,303   $ 12,128,074   $ 12,091,213   $ 11,971,023   $ 12,119,248   $ 11,945,064  
 

PERIOD END BALANCES

  6/30/2015     3/31/2015     12/31/2014     9/30/2014     6/30/2014  
Cash and due from banks $ 255,050 $ 335,244 $ 315,973 $ 237,497 $ 322,960
Fed funds sold and rev repos - - 1,885 4,013 5,000
Securities available for sale 2,446,383 2,381,459 2,374,567 2,363,895 2,376,431
Securities held to maturity 1,190,161 1,184,554 1,170,685 1,169,640 1,156,790
Loans held for sale (LHFS) 147,539 150,365 132,196 135,562 142,103
Loans held for investment (LHFI) 6,447,073 6,413,876 6,449,469 6,333,651 6,187,000
Allowance for loan losses   (71,166 )   (71,321 )   (69,616 )   (70,134 )   (66,648 )
Net LHFI 6,375,907 6,342,555 6,379,853 6,263,517 6,120,352
Acquired loans:
Noncovered loans 447,160 478,172 525,783 564,542 616,911
Covered loans 19,239 20,271 23,626 27,607 29,628
Allowance for loan losses, acquired loans   (12,629 )   (11,837 )   (12,059 )   (11,949 )   (11,179 )
Net acquired loans   453,770     486,606     537,350     580,200     635,360  
Net LHFI and acquired loans 6,829,677 6,829,161 6,917,203 6,843,717 6,755,712
Premises and equipment, net 196,220 198,039 200,781 200,474 201,639
Mortgage servicing rights 71,422 62,903 64,358 67,090 65,049
Goodwill 365,500 365,500 365,500 365,500 365,500
Identifiable intangible assets 32,042 31,250 33,234 35,357 37,506
Other real estate, excluding covered other real estate 90,748 90,175 92,509 97,037 106,970
Covered other real estate 3,755 4,794 6,060 4,146 3,872
FDIC indemnification asset 2,632 4,743 6,997 8,154 10,866
Other assets   551,319     540,977     568,685     564,234     569,598  
Total assets $ 12,182,448   $ 12,179,164   $ 12,250,633   $ 12,096,316   $ 12,119,996  
 
Deposits:
Noninterest-bearing $ 2,819,171 $ 2,936,875 $ 2,748,635 $ 2,723,480 $ 2,729,199
Interest-bearing   6,973,003     6,970,115     6,949,723     6,789,745     7,131,167  
Total deposits 9,792,174 9,906,990 9,698,358 9,513,225 9,860,366
Fed funds purchased and repos 477,462 523,187 443,543 607,851 559,316
Short-term borrowings 201,744 50,570 425,077 316,666 61,227
Long-term FHLB advances 1,204 1,222 1,253 8,003 8,236
Subordinated notes 49,953 49,944 49,936 49,928 49,920
Junior subordinated debt securities 61,856 61,856 61,856 61,856 61,856
Other liabilities   147,646     139,311     150,670     123,689     119,184  
Total liabilities   10,732,039     10,733,080     10,830,693     10,681,218     10,720,105  
Common stock 14,076 14,076 14,060 14,051 14,051
Capital surplus 359,533 358,583 356,244 354,251 353,196
Retained earnings 1,117,993 1,103,077 1,092,120 1,081,161 1,063,201

Accum other comprehensive loss, net of tax

  (41,193 )   (29,652 )   (42,484 )   (34,365 )   (30,557 )
Total shareholders' equity   1,450,409     1,446,084     1,419,940     1,415,098     1,399,891  
Total liabilities and equity $ 12,182,448   $ 12,179,164   $ 12,250,633   $ 12,096,316   $ 12,119,996  
 

See Notes to Consolidated Financials

 
 
 
 
 
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2015
($ in thousands except per share data)
(unaudited)
                             
Quarter Ended Six Months Ended

INCOME STATEMENTS

6/30/2015 3/31/2015 12/31/2014 9/30/2014 6/30/2014 6/30/2015 6/30/2014
Interest and fees on LHFS & LHFI-FTE $ 71,546 $ 69,658 $ 70,775 $ 70,197 $ 69,618 $ 141,204 $ 135,803
Interest and fees on acquired loans 12,557 15,078 13,500 23,200 23,250 27,635 40,036
Interest on securities-taxable 19,731 19,586 21,694 19,712 19,522 39,317 38,742
Interest on securities-tax exempt-FTE 1,688 1,789 1,814 1,845 1,912 3,477 3,832
Interest on fed funds sold and rev repos 2 - 3 9 6 2 11
Other interest income   392     393     384     386     379     785     754  
Total interest income-FTE   105,916     106,504     108,170     115,349     114,687     212,420     219,178  
Interest on deposits 3,204 3,247 3,382 3,606 3,970 6,451 8,335
Interest on fed funds pch and repos 179 143 184 180 110 322 186
Other interest expense   1,614     1,649     1,510     1,425     1,375     3,263     2,738  
Total interest expense   4,997     5,039     5,076     5,211     5,455     10,036     11,259  
Net interest income-FTE 100,919 101,465 103,094 110,138 109,232 202,384 207,919
Provision for loan losses, LHFI 1,033 1,785 (1,393 ) 3,058 351 2,818 (454 )
Provision for loan losses, acquired loans   825     347     1,179     1,145     3,784     1,172     3,847  
Net interest income after provision-FTE   99,061     99,333     103,308     105,935     105,097     198,394     204,526  
Service charges on deposit accounts 11,920 11,085 12,514 12,743 11,846 23,005 23,414
Insurance commissions 9,401 8,616 7,831 9,240 8,300 18,017 16,397
Wealth management 7,758 7,990 8,460 8,038 7,710 15,748 15,845
Bank card and other fees 7,416 6,762 6,712 7,279 9,894 14,178 18,975
Mortgage banking, net 9,481 8,965 5,918 5,842 6,191 18,446 13,020
Other, net   (433 )   (1,055 )   596     (160 )   199     (1,488 )   178  
Nonint inc-excl sec gains (losses), net 45,543 42,363 42,031 42,982 44,140 87,906 87,829
Security gains (losses), net   -     -     -     (89 )   -     -     389  
Total noninterest income   45,543     42,363     42,031     42,893     44,140     87,906     88,218  
Salaries and employee benefits 57,393 57,169 57,159 56,675 56,134 114,562 112,860
Services and fees 15,005 14,121 14,401 14,489 14,543 29,126 27,708
Net occupancy-premises 6,243 6,191 6,632 6,817 6,413 12,434 13,019
Equipment expense 5,903 5,974 5,911 5,675 6,136 11,877 12,274
FDIC assessment expense 2,615 2,940 2,669 2,644 2,468 5,555 4,884
ORE/Foreclosure expense 921 1,115 3,240 930 3,836 2,036 7,151
Other expense   12,186     11,706     14,420     12,964     13,231     23,892     26,483  
Total noninterest expense   100,266     99,216     104,432     100,194     102,761     199,482     204,379  
Income before income taxes and tax eq adj 44,338 42,480 40,907 48,634 46,476 86,818 88,365
Tax equivalent adjustment   3,970     4,073     4,179     3,909     3,944     8,043     7,727  
Income before income taxes 40,368 38,407 36,728 44,725 42,532 78,775 80,638
Income taxes   9,766     9,259     8,655     11,136     9,635     19,025     18,738  
Net income $ 30,602   $ 29,148   $ 28,073   $ 33,589   $ 32,897   $ 59,750   $ 61,900  
 
Per share data
Earnings per share - basic $ 0.45   $ 0.43   $ 0.42   $ 0.50   $ 0.49   $ 0.88   $ 0.92  
 
Earnings per share - diluted $ 0.45   $ 0.43   $ 0.42   $ 0.50   $ 0.49   $ 0.88   $ 0.92  
 
Dividends per share $ 0.23   $ 0.23   $ 0.23   $ 0.23   $ 0.23   $ 0.46   $ 0.46  
 
Weighted average shares outstanding
Basic   67,556,825     67,525,791     67,445,721     67,439,788     67,439,659     67,541,394     67,424,984  
 
Diluted   67,685,449     67,639,326     67,633,637     67,608,612     67,582,714     67,662,757     67,566,640  
 
Period end shares outstanding   67,557,395     67,556,591     67,481,992     67,439,788     67,439,788     67,557,395     67,439,788  
 
 

OTHER FINANCIAL DATA

Return on equity 8.44 % 8.23 % 7.83 % 9.43 % 9.48 % 8.33 % 9.05 %
Return on average tangible equity 12.05 % 11.86 % 11.40 % 13.70 % 13.90 % 11.96 % 13.43 %
Return on assets 1.01 % 0.97 % 0.92 % 1.10 % 1.10 % 0.99 % 1.05 %
Interest margin - Yield - FTE 3.99 % 4.07 % 4.05 % 4.34 % 4.42 % 4.03 % 4.29 %
Interest margin - Cost 0.19 % 0.19 % 0.19 % 0.20 % 0.21 % 0.19 % 0.22 %
Net interest margin - FTE 3.81 % 3.88 % 3.86 % 4.14 % 4.21 % 3.84 % 4.07 %
Efficiency ratio (1) 66.00 % 66.46 % 69.16 % 62.80 % 64.31 % 66.23 % 66.24 %
Full-time equivalent employees 2,989 3,038 3,060 3,067 3,095
 
 

STOCK PERFORMANCE

Market value-Close $ 24.98 $ 24.28 $ 24.54 $ 23.04 $ 24.69
Book value $ 21.47 $ 21.41 $ 21.04 $ 20.98 $ 20.76
Tangible book value $ 15.58 $ 15.53 $ 15.13 $ 15.04 $ 14.78
 
(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.
 

See Notes to Consolidated Financials

 
 
 
 
 
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2015
($ in thousands)
(unaudited)
                             
Quarter Ended

NONPERFORMING ASSETS (1)

6/30/2015 3/31/2015 12/31/2014 9/30/2014 6/30/2014
Nonaccrual loans
Alabama $ 713 $ 902 $ 852 $ 852 $ 80
Florida 7,892 8,179 11,091 10,986 11,041
Mississippi (2) 52,051 52,145 57,129 65,751 49,430
Tennessee (3) 5,468 4,197 5,819 5,901 4,244
Texas   2,314     11,585     4,452     4,824     6,323  
Total nonaccrual loans 68,438 77,008 79,343 88,314 71,118
Other real estate
Alabama 21,849 21,795 21,196 24,256 24,541
Florida 31,059 34,746 35,324 36,608 43,207
Mississippi (2) 14,094 15,143 17,397 16,419 18,723
Tennessee (3) 9,707 10,072 10,292 11,347 12,073
Texas   14,039     8,419     8,300     8,407     8,426  
Total other real estate   90,748     90,175     92,509     97,037     106,970  
Total nonperforming assets $ 159,186   $ 167,183   $ 171,852   $ 185,351   $ 178,088  
 

LOANS PAST DUE OVER 90 DAYS (4)

LHFI $ 1,771   $ 1,413   $ 2,764   $ 3,839   $ 1,936  
 
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase) $ 11,987   $ 7,584   $ 25,943   $ 24,979   $ 21,810  
 
 
Quarter Ended Six Months Ended

ALLOWANCE FOR LOAN LOSSES (4)

6/30/2015 3/31/2015 12/31/2014 9/30/2014 6/30/2014 6/30/2015 6/30/2014
Beginning Balance $ 71,321 $ 69,616 $ 70,134 $ 66,648 $ 67,518 $ 69,616 $ 66,448
Provision for loan losses 1,033 1,785 (1,393 ) 3,058 351 2,818 (454 )
Charge-offs (4,278 ) (3,004 ) (3,174 ) (3,216 ) (3,820 ) (7,282 ) (6,836 )
Recoveries   3,090     2,924     4,049     3,644     2,599     6,014     7,490  
Net (charge-offs) recoveries   (1,188 )   (80 )   875     428     (1,221 )   (1,268 )   654  
Ending Balance $ 71,166   $ 71,321   $ 69,616   $ 70,134   $ 66,648   $ 71,166   $ 66,648  
 

PROVISION FOR LOAN LOSSES (4)

Alabama $ 623 $ 761 $ 283 $ 1,093 $ 696 $ 1,384 $ 1,168
Florida (1,168 ) 1,833 (66 ) (147 ) (2,014 ) 665 (5,513 )
Mississippi (2) 2,046 (2,729 ) (3,065 ) 4,679 2,877 (683 ) 4,860
Tennessee (3) (483 ) 1,432 1,993 244 (277 ) 949 (1,192 )
Texas   15     488     (538 )   (2,811 )   (931 )   503     223  
Total provision for loan losses $ 1,033   $ 1,785   $ (1,393 ) $ 3,058   $ 351   $ 2,818   $ (454 )
 

NET CHARGE-OFFS (4)

Alabama $ 216 $ 144 $ 92 $ 172 $ 84 $ 360 $ 139
Florida 539 (28 ) (226 ) (89 ) (525 ) 511 (3,049 )
Mississippi (2) 1,028 143 (880 ) 462 1,518 1,171 2,194
Tennessee (3) 105 (216 ) 325 48 87 (111 ) 86
Texas   (700 )   37     (186 )   (1,021 )   57     (663 )   (24 )
Total net charge-offs (recoveries) $ 1,188   $ 80   $ (875 ) $ (428 ) $ 1,221   $ 1,268   $ (654 )
 

CREDIT QUALITY RATIOS (1)

Net charge-offs/average loans 0.07 % 0.00 % -0.05 % -0.03 % 0.08 % 0.04 % -0.02 %
Provision for loan losses/average loans 0.06 % 0.11 % -0.09 % 0.19 % 0.02 % 0.09 % -0.02 %
Nonperforming loans/total loans (incl LHFS) 1.04 % 1.17 % 1.21 % 1.37 % 1.12 %
Nonperforming assets/total loans (incl LHFS) 2.41 % 2.55 % 2.61 % 2.87 % 2.81 %
Nonperforming assets/total loans (incl LHFS) +ORE 2.38 % 2.51 % 2.57 % 2.82 % 2.77 %
ALL/total loans (excl LHFS) 1.10 % 1.11 % 1.08 % 1.11 % 1.08 %
ALL-commercial/total commercial loans 1.30 % 1.30 % 1.23 % 1.26 % 1.20 %
ALL-consumer/total consumer and home mortgage loans 0.59 % 0.61 % 0.67 % 0.69 % 0.75 %
ALL/nonperforming loans 103.99 % 92.62 % 87.74 % 79.41 % 93.71 %
ALL/nonperforming loans -
(excl impaired loans) 192.60 % 205.52 % 180.95 % 178.81 % 159.71 %
 

CAPITAL RATIOS

Total equity/total assets 11.91 % 11.87 % 11.59 % 11.70 % 11.55 %
Tangible equity/tangible assets 8.93 % 8.91 % 8.62 % 8.67 % 8.51 %
Tangible equity/risk-weighted assets 12.34 % 12.34 % 12.17 % 12.24 % 12.19 %
Tier 1 leverage ratio 10.14 % 9.99 % 9.63 % 9.54 % 9.43 %
Tier 1 common risk-based capital ratio 13.28 % 13.14 % 12.75 % 12.74 % 12.61 %
Tier 1 risk-based capital ratio 13.97 % 13.83 % 13.47 % 13.47 % 13.34 %
Total risk-based capital ratio 15.07 % 14.92 % 14.56 % 14.70 % 14.54 %
 
 
(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
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2015
($ in thousands)
(unaudited)

 

Note 1 - Securities Available for Sale and Held to Maturity

 

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

 
    6/30/2015     3/31/2015     12/31/2014     9/30/2014     6/30/2014

SECURITIES AVAILABLE FOR SALE

U.S. Treasury securities $ - $ - $ 100 $ 100 $ 100
U.S. Government agency obligations
Issued by U.S. Government agencies 74,409 78,115 79,656 83,011 117,489
Issued by U.S. Government sponsored agencies 33,009 33,076 32,818 30,779 40,848
Obligations of states and political subdivisions 151,322 160,154 162,258 165,463 171,229
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA 20,651 12,010 12,427 12,828 13,492
Issued by FNMA and FHLMC 185,651 195,470 204,441 213,420 225,229
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 1,662,476 1,646,710 1,661,833 1,603,138 1,543,619
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 290,398 225,826 189,334 221,641 229,283
Asset-backed securities and structured financial products   28,467   30,098   31,700   33,515   35,142
Total securities available for sale $ 2,446,383 $ 2,381,459 $ 2,374,567 $ 2,363,895 $ 2,376,431
 

SECURITIES HELD TO MATURITY

U.S. Government agency obligations
Issued by U.S. Government sponsored agencies $ 101,374 $ 101,171 $ 100,971 $ 100,767 $ 100,563
Obligations of states and political subdivisions 56,978 62,928 63,505 64,538 65,193
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA 18,265 18,861 19,115 13,368 13,959
Issued by FNMA and FHLMC 10,965 11,341 11,437 11,816 12,165
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 838,989 842,827 834,176 836,966 822,444
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA   163,590   147,426   141,481   142,185   142,466
Total securities held to maturity $ 1,190,161 $ 1,184,554 $ 1,170,685 $ 1,169,640 $ 1,156,790
 

During the fourth quarter of 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 June 30, 2015, the net unamortized, unrealized loss on the transferred securities included in accumulated other comprehensive (loss) income in the accompanying balance sheet totaled approximately $37.3 million ($23.0 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 94% 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
June 30, 2015
($ in thousands)
(unaudited)

 

Note 2 – Loan Composition

 
 

LHFI BY TYPE (excluding acquired loans)

    6/30/2015     3/31/2015     12/31/2014     9/30/2014     6/30/2014
Loans secured by real estate:
Construction, land development and other land loans $ 682,444 $ 691,657 $ 619,877 $ 580,794 $ 531,651
Secured by 1-4 family residential properties 1,637,933 1,613,993 1,634,397 1,625,480 1,581,859
Secured by nonfarm, nonresidential properties 1,567,035 1,516,895 1,553,193 1,560,901 1,544,516
Other real estate secured 240,056 233,322 253,787 239,819 250,383
Commercial and industrial loans 1,219,684 1,228,788 1,270,350 1,246,753 1,250,146
Consumer loans 165,215 161,535 167,964 168,813 165,372
State and other political subdivision loans 574,265 614,330 602,727 585,382 562,415
Other loans   360,441     353,356     347,174     325,709     300,658  
LHFI 6,447,073 6,413,876 6,449,469 6,333,651 6,187,000
Allowance for loan losses   (71,166 )   (71,321 )   (69,616 )   (70,134 )   (66,648 )
Net LHFI $ 6,375,907   $ 6,342,555   $ 6,379,853   $ 6,263,517   $ 6,120,352  
 

ACQUIRED NONCOVERED LOANS BY TYPE

    6/30/2015     3/31/2015     12/31/2014     9/30/2014     6/30/2014
Loans secured by real estate:
Construction, land development and other land loans $     50,867 $     51,363 $     58,309 $     64,808 $    

75,353

Secured by 1-4 family residential properties 101,027 111,830 116,920 120,366

133,191

Secured by nonfarm, nonresidential properties 168,698 177,210 202,323 214,806

226,967

Other real estate secured 25,666 26,819 27,813 28,036

30,918

Commercial and industrial loans 73,732 81,261 88,256 103,185

114,212

Consumer loans 7,273 8,494 9,772 11,236

14,733

Other loans       19,897         21,195         22,390         22,105        

21,537

 
Noncovered loans 447,160 478,172 525,783 564,542

616,911

Allowance for loan losses       (11,927 )       (11,106 )       (10,541 )       (11,136 )      

(9,770

)

Net noncovered loans $     435,233   $     467,066   $     515,242   $     553,406   $    

607,141

 
ACQUIRED COVERED LOANS BY TYPE       6/30/2015     3/31/2015     12/31/2014     9/30/2014     6/30/2014
Loans secured by real estate:
Construction, land development and other land loans $       904 $       1,447 $       1,197 $       1,721 $       2,130
Secured by 1-4 family residential properties 11,080 11,200 13,180 14,114 14,565
Secured by nonfarm, nonresidential properties 5,206 5,844 7,672 8,270 8,831
Other real estate secured 1,622 1,469 1,096 2,949 2,376
Commercial and industrial loans 371 255 277 327 336
Consumer loans - - - - -
Other loans         56           56           204           226           1,390  
Covered loans 19,239 20,271 23,626 27,607 29,628
Allowance for loan losses         (702 )         (731 )         (1,518 )         (813 )         (1,409 )
Net covered loans $       18,537   $       19,540   $       22,108   $       26,794   $       28,219  
 
 
 
 
 
 

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2015
($ in thousands)
(unaudited)

 
Note 2 – Loan Composition (continued)
 
    June 30, 2015

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 $ 682,444 $ 90,143 $ 59,123 $ 250,180 $ 55,907 $ 227,091
Secured by 1-4 family residential properties 1,637,933 51,114 50,074 1,400,973 118,877 16,895
Secured by nonfarm, nonresidential properties 1,567,035 127,686 163,491 771,774 147,094 356,990
Other real estate secured 240,056 16,920 5,630 143,176 17,932 56,398
Commercial and industrial loans 1,219,684 87,282 12,290 750,577 115,896 253,639
Consumer loans 165,215 17,228 2,594 125,937 16,886 2,570
State and other political subdivision loans 574,265 45,427 26,826 408,388 20,732 72,892
Other loans   360,441   22,861   19,707   237,846   38,742   41,285
Loans $ 6,447,073 $ 458,661 $ 339,735 $ 4,088,851 $ 532,066 $ 1,027,760
 
 
 

CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION (1)

Lots $ 46,755 $ 5,766 $ 21,435 $ 13,767 $ 2,297 $ 3,490
Development 52,087 7,610 5,471 29,861 796 8,349
Unimproved land 113,535 8,061 21,608 46,250 21,915 15,701
1-4 family construction 144,864 24,526 10,127 69,343 1,941 38,927
Other construction   325,203   44,180   482   90,959   28,958   160,624
Construction, land development and other land loans $ 682,444 $ 90,143 $ 59,123 $ 250,180 $ 55,907 $ 227,091
 
 
 
 

LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION (1)

Income producing:
Retail $ 212,385 $ 36,496 $ 35,661 $ 71,404 $ 21,084 $ 47,740
Office 205,966 15,924 38,868 77,619 6,225 67,330
Nursing homes/assisted living 76,658 - - 70,847 5,811 -
Hotel/motel 110,620 11,372 18,477 37,192 33,472 10,107
Industrial 43,212 5,325 5,795 11,316 1,091 19,685
Health care 25,319 2,174 - 23,126 19 -
Convenience stores 13,471 239 - 7,356 1,180 4,696
Other   154,628   6,257   19,021   69,527   3,089   56,734
Total income producing loans 842,259 77,787 117,822 368,387 71,971 206,292
 
Owner-occupied:
Office 114,409 7,234 17,756 57,401 7,887 24,131
Churches 94,059 3,967 2,791 47,170 30,108 10,023
Industrial warehouses 129,256 3,776 2,659 68,110 11,419 43,292
Health care 110,329 13,310 8,182 59,034 10,044 19,759
Convenience stores 66,751 463 1,492 49,544 2,914 12,338
Retail 36,774 2,305 5,396 22,629 3,369 3,075
Restaurants 33,161 1,946 1,908 23,960 3,928 1,419
Auto dealerships 13,473 7,629 80 4,439 1,313 12
Other   126,564   9,269   5,405   71,100   4,141   36,649
Total owner-occupied loans   724,776   49,899   45,669   403,387   75,123   150,698
Loans secured by nonfarm, nonresidential properties $ 1,567,035 $ 127,686 $ 163,491 $ 771,774 $ 147,094 $ 356,990
 
(1) Excludes acquired loans.
 
 
 
 
 
 

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2015
($ 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     Six Months Ended
6/30/2015     3/31/2015     12/31/2014     9/30/2014     6/30/2014 6/30/2015     6/30/2014
Securities – taxable 2.33 % 2.40 % 2.59 % 2.35 % 2.35 % 2.36 % 2.37 %
Securities – nontaxable 4.27 % 4.29 % 4.20 % 4.20 % 4.27 % 4.28 % 4.29 %
Securities – total 2.42 % 2.49 % 2.67 % 2.44 % 2.45 % 2.45 % 2.47 %
Loans - LHFI & LHFS 4.38 % 4.31 % 4.32 % 4.36 % 4.53 % 4.34 % 4.52 %
Acquired loans 10.43 % 11.62 % 9.38 % 14.98 % 13.40 % 11.05 % 10.90 %
Loans - total 4.79 % 4.85 % 4.73 % 5.29 % 5.43 % 4.82 % 5.22 %
FF sold & rev repo 1.44 % 0.00 % 0.94 % 0.84 % 0.91 % 1.04 % 0.49 %
Other earning assets 3.81 % 3.44 % 3.16 % 3.66 % 4.19 % 3.61 % 4.16 %
Total earning assets 3.99 % 4.07 % 4.05 % 4.34 % 4.42 % 4.03 % 4.29 %
 
Interest-bearing deposits 0.18 % 0.19 % 0.20 % 0.21 % 0.22 % 0.19 % 0.23 %
FF pch & repo 0.14 % 0.14 % 0.14 % 0.13 % 0.11 % 0.14 % 0.11 %
Other borrowings 2.68 % 1.81 % 1.20 % 1.88 % 3.07 % 2.15 % 3.03 %
Total interest-bearing liabilities 0.26 % 0.26 % 0.26 % 0.27 % 0.28 % 0.26 % 0.29 %
 
Net interest margin 3.81 % 3.88 % 3.86 % 4.14 % 4.21 % 3.84 % 4.07 %
Net interest margin excluding acquired loans 3.49 % 3.47 % 3.54 % 3.47 % 3.55 % 3.48 % 3.54 %
 

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 7 basis points during the second quarter of 2015. The decline in the net interest margin was primarily due to a $2.2 million decrease in accretion and recoveries on acquired loans during the second quarter of 2015.

The net interest margin, excluding acquired loans, increased 2 basis points to 3.49% during the second quarter of 2015 from a total of 3.47% during the first quarter of 2015. During the fourth quarter of 2014, the net interest margin, excluding acquired loans as well as $2.2 million of yield maintenance payments on prepaid securities, totaled 3.46%.

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 positive ineffectiveness of $2.1 million and $546 thousand for the quarters ended June 30, 2015 and 2014, respectively.

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

    Quarter Ended     Six Months Ended
6/30/2015     3/31/2015     12/31/2014     9/30/2014     6/30/2014 6/30/2015     6/30/2014
Mortgage servicing income, net $ 4,696 $ 4,897 $ 4,814 $ 4,674 $ 4,592 $ 9,593 $ 9,131
Change in fair value-MSR from runoff (2,587 ) (2,213 ) (1,999 ) (2,364 ) (2,391 ) (4,800 ) (4,203 )
Gain on sales of loans, net 5,114 3,716 2,910 3,272 2,749 8,830 4,588
Other, net   206     1,245     132     (323 )   695     1,451     1,095  
Mortgage banking income before hedge ineffectiveness   7,429     7,645     5,857     5,259     5,645     15,074     10,611  
Change in fair value-MSR from market changes 6,076 (2,368 ) (4,142 ) 700 (3,038 ) 3,708 (3,761 )
Change in fair value of derivatives   (4,024 )   3,688     4,203     (117 )   3,584     (336 )   6,170  
Net positive hedge ineffectiveness   2,052     1,320     61     583     546     3,372     2,409  
Mortgage banking, net $ 9,481   $ 8,965   $ 5,918   $ 5,842   $ 6,191   $ 18,446   $ 13,020  
 

During the first quarter of 2015, Trustmark exercised its option to repurchase delinquent loans serviced for GNMA. These loans were subsequently sold to a third party under different repurchase provisions. Trustmark retained the servicing for these loans, which are fully guaranteed by FHA/VA. As a result of this repurchase and sale, the loans are no longer carried as "LHFS-Guaranteed GNMA serviced loans" (see pages 3 and 6). The transaction resulted in a gain of $304 thousand, which was recorded during the first quarter of 2015 and is included in the table above as "Gain on sales of loans, net.”

 
 
 
 
 
 

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2015
($ in thousands)
(unaudited)

 

Note 5 – Other Noninterest Income and Expense

 

Other noninterest income consisted of the following for the periods presented ($ in thousands):

 
    Quarter Ended     Six Months Ended
6/30/2015     3/31/2015     12/31/2014     9/30/2014     6/30/2014 6/30/2015     6/30/2014
Partnership amortization for tax credit purposes $ (2,480 ) $ (2,472 ) $ (2,806 ) $ (3,006 ) $ (3,006 ) $ (4,952 ) $ (6,012 )
Decrease in FDIC indemnification asset (1,798 ) (970 ) (735 ) (452 ) (999 ) (2,768 ) (1,687 )
Increase in life insurance cash surrender value 1,673 1,675 1,693 1,702 1,857 3,348 3,945
Other miscellaneous income   2,172     712     2,444     1,596     2,347     2,884     3,932  
Total other, net $ (433 ) $ (1,055 ) $ 596   $ (160 ) $ 199   $ (1,488 ) $ 178  
 

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 or historical tax credits). These investments are recorded based on the equity method of accounting, which requires the equity in partnership losses to be recognized when incurred and are recorded as a reduction in other income. 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.

During the second quarter of 2015, other noninterest income included a write-down of the FDIC indemnification asset of $1.8 million on acquired covered loans and covered other real estate obtained from the Heritage Banking Group as a result of loan pay-offs, real estate sales, improved cash flow projections and valuation of covered other real estate.

Other noninterest expense consisted of the following for the periods presented ($ in thousands):

    Quarter Ended     Six Months Ended
6/30/2015     3/31/2015     12/31/2014     9/30/2014     6/30/2014 6/30/2015     6/30/2014
Loan expense $ 3,342 $ 2,721 $ 3,312 $ 3,070 $ 3,107 $ 6,063 $ 6,571
Amortization of intangibles 1,959 1,991 2,123 2,150 2,190 3,950 4,483
Other miscellaneous expense   6,885   6,994   8,985   7,744   7,934   13,879   15,429
Total other expense $ 12,186 $ 11,706 $ 14,420 $ 12,964 $ 13,231 $ 23,892 $ 26,483
 

Note 6 – Non-GAAP Financial Measures

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

Trustmark 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.

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
June 30, 2015
($ in thousands)
(unaudited)

 
Note 6 - Non-GAAP Financial Measures (continued)                          
  Quarter Ended Six Months Ended
6/30/2015 3/31/2015 12/31/2014 9/30/2014 6/30/2014 6/30/2015 6/30/2014

TANGIBLE EQUITY

AVERAGE BALANCES
Total shareholders' equity $ 1,454,501 $ 1,436,969 $ 1,422,268 $ 1,412,857 $ 1,392,240 $ 1,445,783 $ 1,380,019
Less: Goodwill (365,500 ) (365,500 ) (365,500 ) (365,500 ) (365,500 ) (365,500 ) (369,090 )
Identifiable intangible assets   (30,385 )   (32,398 )   (34,411 )   (36,553 )   (38,711 )   (31,386 )   (39,857 )
Total average tangible equity $ 1,058,616   $ 1,039,071   $ 1,022,357   $ 1,010,804   $ 988,029   $ 1,048,897   $ 971,072  
 
PERIOD END BALANCES
Total shareholders' equity $ 1,450,409 $ 1,446,084 $ 1,419,940 $ 1,415,098 $ 1,399,891
Less: Goodwill (365,500 ) (365,500 ) (365,500 ) (365,500 ) (365,500 )
Identifiable intangible assets   (32,042 )   (31,250 )   (33,234 )   (35,357 )   (37,506 )
Total tangible equity (a) $ 1,052,867   $ 1,049,334   $ 1,021,206   $ 1,014,241   $ 996,885  
 

TANGIBLE ASSETS

Total assets $ 12,182,448 $ 12,179,164 $ 12,250,633 $ 12,096,316 $ 12,119,996
Less: Goodwill (365,500 ) (365,500 ) (365,500 ) (365,500 ) (365,500 )
Identifiable intangible assets   (32,042 )   (31,250 )   (33,234 )   (35,357 )   (37,506 )
Total tangible assets (b) $ 11,784,906   $ 11,782,414   $ 11,851,899   $ 11,695,459   $ 11,716,990  
 
Risk-weighted assets (c) $ 8,530,144   $ 8,503,102   $ 8,387,799   $ 8,287,608   $ 8,175,622  
 

NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION

Net income $ 30,602 $ 29,148 $ 28,073 $ 33,589 $ 32,897 $ 59,750 $ 61,900
Plus: Intangible amortization net of tax   1,210     1,229     1,312     1,328     1,353     2,439     2,770  
Net income adjusted for intangible amortization $ 31,812   $ 30,377   $ 29,385   $ 34,917   $ 34,250   $ 62,189   $ 64,670  
 
Period end common shares outstanding (d)   67,557,395     67,556,591     67,481,992     67,439,788     67,439,788  
 

TANGIBLE COMMON EQUITY MEASUREMENTS

Return on average tangible equity (1) 12.05 % 11.86 % 11.40 % 13.70 % 13.90 % 11.96 % 13.43 %
Tangible equity/tangible assets (a)/(b) 8.93 % 8.91 % 8.62 % 8.67 % 8.51 %
Tangible equity/risk-weighted assets (a)/(c) 12.34 % 12.34 % 12.17 % 12.24 % 12.19 %
Tangible book value (a)/(d)*1,000 $ 15.58 $ 15.53 $ 15.13 $ 15.04 $ 14.78
 

TIER 1 COMMON RISK-BASED CAPITAL - BASEL I

Total shareholders' equity $ 1,419,940 $ 1,415,098 $ 1,399,891
Eliminate qualifying AOCI 42,484 34,365 30,557
Qualifying tier 1 capital 60,000 60,000 60,000
Disallowed goodwill (365,500 ) (365,500 ) (365,500 )
Adj to goodwill allowed for deferred taxes 15,855 15,503 15,150
Other disallowed intangibles (33,234 ) (35,357 ) (37,506 )
Disallowed servicing intangible (6,436 ) (6,709 ) (6,505 )
Disallowed deferred taxes   (3,479 )   (1,234 )   (5,134 )
Total tier 1 capital 1,129,630 1,116,166 1,090,953
Less: Qualifying tier 1 capital   (60,000 )   (60,000 )   (60,000 )
Total tier 1 common capital (e) $ 1,069,630   $ 1,056,166   $ 1,030,953  
 
Tier 1 common risk-based capital ratio (e)/(c) 12.75 % 12.74 % 12.61 %
 

COMMON EQUITY TIER 1 CAPITAL (CET1) - BASEL III

Total shareholders' equity $ 1,450,409 $ 1,446,084
AOCI-related adjustments 41,193 29,652
CET1 adjustments and deductions:
Goodwill net of associated deferred tax liabilities (DTLs) (348,940 ) (349,292 )
Other adjustments and deductions for CET1 (2)   (9,568 )   (9,104 )
CET1 capital (f) 1,133,094 1,117,340
Additional tier 1 capital instruments plus related surplus 60,000 60,000
Less: additional tier 1 capital deductions   (1,571 )   (1,762 )
Additional tier 1 capital   58,429     58,238  
Tier 1 capital $ 1,191,523   $ 1,175,578  
 
Tier 1 common risk-based capital ratio (f)/(c) 13.28 % 13.14 %
 
(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.
 
 
 
 
 
 
 

Contacts

Trustmark Corporation
Investor Contacts:
Louis E. Greer, 601-208-2310
Treasurer and Principal Financial Officer
or
F. Joseph Rein, Jr., 601-208-6898
Senior Vice President
or
Media Contact:
Melanie A. Morgan, 601-208-2979
Senior Vice President

Release Summary

Trustmark Corporation Announces Second Quarter 2015 Financial Results

Contacts

Trustmark Corporation
Investor Contacts:
Louis E. Greer, 601-208-2310
Treasurer and Principal Financial Officer
or
F. Joseph Rein, Jr., 601-208-6898
Senior Vice President
or
Media Contact:
Melanie A. Morgan, 601-208-2979
Senior Vice President