Trustmark Corporation Announces First Quarter 2022 Financial Results

Loan and Deposit Growth Continues, Credit Quality Remains Strong, Insurance and Wealth Management Revenue Expands

Trustmark Corporation (NASDAQGS:TRMK) reported net income of $29.2 million in the first quarter of 2022, representing diluted earnings per share of $0.47. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable June 15, 2022, to shareholders of record on June 1, 2022.

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First Quarter Highlights

• Total revenue expanded 2.9% from the prior quarter to $153.5 million
• Net interest income (FTE) grew 1.1% from the prior quarter to $102.3 million, resulting in a 5 basis point expansion in the net interest margin to 2.58%
• Noninterest income increased 6.6% from the prior quarter to $54.1 million, representing 35.3% of total revenue
• Credit quality remained strong; provision for credit losses was a negative $2.0 million in first quarter

Duane A. Dewey, President and CEO, stated, “Our first quarter financial performance reflects solid loan growth and expansion in both net interest income and noninterest income. Our balance sheet is well-positioned for additional increases in interest rates and credit quality remains a hallmark of the organization. We continue to focus on efficiency enhancements throughout the organization, including rationalization of the branch network as well as investments in technology to better serve customers. Trustmark remains well-positioned to serve and expand our customer base and create long-term value for our shareholders.”

Balance Sheet Management

• Loans held for investment (HFI) increased 1.5% from the prior quarter and 4.1% year-over-year
• Deposits grew 0.2% linked-quarter and 5.1% year-over-year
• Maintained strong capital position with CET1 ratio of 11.23% and total risk-based capital ratio of 13.53%

Loans HFI totaled $10.4 billion at March 31, 2022, reflecting an increase of $149.3 million, or 1.5%, linked-quarter and $413.4 million, or 4.1%, year-over-year. The linked-quarter growth reflects increases in 1-4 family mortgage loans, commercial and industrial loans, and loans to municipalities. Growth in these areas was partially offset by reductions in other loans, construction, land development and other land loans, and other real estate secured loans. Trustmark’s loan portfolio remains well-diversified by loan type and geography.

Deposits totaled $15.1 billion at March 31, 2022, up $26.1 million, or 0.2%, from the prior quarter and $729.9 million, or 5.1%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 68.8% of total deposits at March 31, 2022. Noninterest-bearing deposits represented 31.4% of total deposits at the end of the first quarter, compared to 31.6% in the prior quarter. Interest-bearing deposit costs totaled 0.11% for the first quarter, a decrease of 2 basis points from the prior quarter. The total cost of interest-bearing liabilities was 0.16% for the first quarter of 2022, a decrease of 3 basis points from the prior quarter.

During the first quarter, Trustmark repurchased $9.1 million, or approximately 279 thousand of its common shares, in open market transactions. At March 31, 2022, Trustmark had $90.9 million in remaining authority under its existing stock repurchase program, which expires December 31, 2022. 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 March 31, 2022, Trustmark’s tangible equity to tangible assets ratio was 7.29%, while its total risk-based capital ratio was 13.53%. Tangible book value per share was $20.22 at March 31, 2022, down 7.8% from the prior quarter reflecting a decline in other comprehensive income due to valuation adjustments on securities available for sale resulting from the increase in market interest rates during the first quarter.

Credit Quality

• Allowance for credit losses (ACL) represented 484.01% of nonaccrual loans, excluding individually evaluated loans, at March 31, 2022
• Recoveries exceeded charge-offs in the first quarter
• Other real estate totaled $3.2 million at March 31, 2022

Nonaccrual loans totaled $64.4 million at March 31, 2022, up $1.7 million from the prior quarter and $885 thousand year-over-year. Other real estate totaled $3.2 million, reflecting a $1.4 million decrease from the prior quarter and a decline of $7.5 million year-over-year. Collectively, nonperforming assets totaled $67.6 million at March 31, 2022, reflecting a linked-quarter increase of $331 thousand and a year-over-year decrease of $6.6 million.

The provision for credit losses for loans HFI was a negative $860 thousand in the first quarter while the provision for credit losses for off-balance sheet credit exposures was a negative $1.1 million. Collectively, the provision for credit losses totaled a negative $2.0 million in the first quarter and was attributable to an increase in reserves due to individually analyzed loans and loan growth which were more than offset by improvements in the macroeconomic forecast and credit quality.

Allocation of Trustmark’s $98.7 million allowance for credit losses on loans HFI represented 0.95% of commercial loans and 0.96% of consumer and home mortgage loans, resulting in an allowance to total loans HFI of 0.95% at March 31, 2022. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.

Revenue Generation

• Pre-provision net revenue totaled $31.9 million, an increase of 7.8% linked-quarter; please refer to the Consolidated Financial Information, Footnote 6 – Non-GAAP Financial Measures
• Net interest income (FTE) excluding Paycheck Protection Program (PPP) interest and fees totaled $102.2 million, up 1.3% linked-quarter
• Noninterest income increased 6.6% linked-quarter to total $54.1 million, which represented 35.3% of total revenue

Revenue in the first quarter totaled $153.5 million, up 2.9% from the prior quarter and down 5.8% from the same quarter in the prior year. The linked-quarter increase reflected higher net interest income as well as increased noninterest income. The decline in revenue year-over-year was attributable principally to a reduction in interest and fees on PPP loans as well as the decline in mortgage banking revenues from historically high levels.

Net interest income (FTE) in the first quarter totaled $102.3 million, resulting in a net interest margin of 2.58%, up 5 basis points from the prior quarter. The net interest margin, excluding PPP loans and Federal Reserve Bank balance, totaled 2.88% the first quarter, an increase of 6 basis points when compared to the prior quarter. The expansion of the net interest margin excluding PPP loans and the Federal Reserve Bank balance was due to increases in the yields on the loans held for investment and held for sale portfolio and the securities portfolio as well as lower costs of interest-bearing liabilities.

Noninterest income in the first quarter totaled $54.1 million, an increase of $3.3 million from the prior quarter and a decrease of $6.5 million year-over-year. The linked-quarter increases in insurance, wealth management and other, net revenue, which includes a gain on the sale of a former branch facility, were offset in part by a decline in mortgage banking revenue. Mortgage loan production in the first quarter totaled $544.3 million, down 7.9% from the prior quarter and 29.0% year-over-year. Mortgage banking revenue totaled $9.9 million in the first quarter, a decrease of $1.7 million from the prior quarter and $10.9 million year-over-year. The linked-quarter and year-over-year declines were principally attributable to reduced volumes and spreads, which collectively resulted in lower net gains on sales of mortgage loans in the secondary market.

Insurance revenue totaled $14.1 million in the first quarter, up 20.3%, or $2.4 million, from the fourth quarter of 2021 and 13.2%, or $1.6 million, year-over-year. The linked-quarter and year-over-year increase primarily reflected growth in commercial property and casualty commissions. Wealth management revenue in the first quarter totaled $9.1 million, an increase of $297 thousand, or 3.4%, from the prior quarter and $638 thousand, or 7.6%, year-over-year. The linked-quarter growth reflected higher trust management revenue while growth year-over-year reflects increased trust management and brokerage revenue.

Noninterest Expense

• Noninterest expense totaled $121.5 million in first quarter, up 1.7% linked-quarter and unchanged year-over year
• Adjusted noninterest expense, which excludes ORE expense, amortization of intangibles, and charitable contributions resulting in state tax credits totaled $120.6 million in the first quarter, up 2.1% from the prior quarter and 0.3% year-over-year. Please refer to the Consolidated Financial Information, Footnote 6 – Non-GAAP Financial Measures

Noninterest expense in the first quarter was $121.5 million, up $2.1 million, or 1.7%, from the prior quarter. Salaries and employee benefits increased $1.3 million linked-quarter principally due to payroll taxes. Services and fees increased $1.5 million linked-quarter due to continued investments in technology and higher professional fees while net occupancy-premises expense grew $263 thousand linked-quarter. Equipment expense and other expense collectively declined $1.1 million linked-quarter.

FIT2GROW

• Comprehensive program of Focus, Innovation and Transformation to enhance Trustmark’s growth and profitability
• Market optimization initiatives to accelerate

“We have accelerated our efforts to optimize our branch network, reflecting changing customer preferences and the continued migration to mobile and digital banking channels. We have identified 11 branch offices across the franchise to be closed during 2022, with estimated annualized expense savings of $2.0 million in 2023. Many of these offices are near other existing Trustmark locations. We also anticipate additional opportunities to realign our organizational structure to serve customers more effectively. These initiatives are components of FIT2GROW, a comprehensive program of Focus, Innovation and Transformation designed to enhance Trustmark’s ability to grow and serve customers and build long-term value for our shareholders. More information on these important initiatives will be provided in coming quarters,” said Dewey.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, April 27, 2022, at 8:30 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing [phone] or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Wednesday, May 11, 2022, in archived format at the same web address or by calling [phone], passcode 7381408.

Trustmark is a financial services company providing banking and financial solutions through 179 offices in Alabama, Florida, Mississippi, Tennessee and Texas.

Forward-Looking Statements

Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “project,” “potential,” “seek,” “continue,” “could,” “would,” “future” or the negative of those terms or other words of similar meaning. You should read statements that contain these words carefully because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements include, but are not limited to, statements relating to anticipated future operating and financial performance measures, including net interest margin, credit quality, business initiatives, growth opportunities and growth rates, among other things, and encompass any estimate, prediction, expectation, projection, opinion, anticipation, outlook or statement of belief included therein as well as the management assumptions underlying these forward-looking statements. You should be aware that the occurrence of the events described under the caption Item 1A. Risk Factors in this report 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. Furthermore, many of these risks and uncertainties are currently amplified by and may continue to be amplified by or may, in the future, be amplified by, the novel coronavirus (COVID-19) pandemic, and also by the effectiveness of varying governmental responses in ameliorating the impact of the pandemic on our customers and the economies where they operate.

Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels and slowdowns in economic growth, our ability to manage the impact of the COVID-19 pandemic on our markets, as well as the effectiveness of actions of federal, state and local governments and agencies (including the Board of Governors of the Federal Reserve System (FRB)) to mitigate its spread and economic impact, local, state and national economic and market conditions, conditions in the housing and real estate markets in the regions in which Trustmark operates and the extent and duration of the current volatility in the credit and financial markets, levels of and volatility in crude oil prices, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility of market interest rates, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, including the potential impact of issues related to the European financial system and monetary and other governmental actions designed to address credit, securities, and/or commodity markets, the enactment of legislation and changes in existing regulations or enforcement practices or the adoption of new regulations, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, changes in our ability to control expenses, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, cyber-attacks and other breaches which could affect our information system security, natural disasters, environmental disasters, pandemics or other health crises, acts of war or terrorism, and other risks described in our filings with the Securities and Exchange Commission (SEC).

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

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2022
($ in thousands)
(unaudited)
													Linked Quarter							Year over Year
QUARTERLY AVERAGE BALANCES	3/31/2022				12/31/2021				3/31/2021				$ Change				% Change			$ Change				% Change
Securities AFS-taxable	$	3,245,502			$	3,156,740			$	2,098,089			$	88,762			2.8	%		$	1,147,413			54.7	%
Securities AFS-nontaxable		5,127				5,143				5,190				(16	)		-0.3	%			(63	)		-1.2	%
Securities HTM-taxable		410,851				364,038				489,260				46,813			12.9	%			(78,409	)		-16.0	%
Securities HTM-nontaxable		7,327				7,618				24,070				(291	)		-3.8	%			(16,743	)		-69.6	%
Total securities		3,668,807				3,533,539				2,616,609				135,268			3.8	%			1,052,198			40.2	%
Paycheck protection program loans (PPP)		29,009				42,749				598,139				(13,740	)		-32.1	%			(569,130	)		-95.2	%
Loans (includes loans held for sale)		10,550,712				10,487,679				10,316,319				63,033			0.6	%			234,393			2.3	%
Fed funds sold and reverse repurchases		56				58				136				(2	)		-3.4	%			(80	)		-58.8	%
Other earning assets		1,811,713				1,839,498				1,667,906				(27,785	)		-1.5	%			143,807			8.6	%
Total earning assets		16,060,297				15,903,523				15,199,109				156,774			1.0	%			861,188			5.7	%
Allowance for credit losses (ACL), loans held for investment (LHFI)		(99,390	)			(104,148	)			(119,557	)			4,758			4.6	%			20,167			16.9	%
Other assets		1,550,848				1,570,501				1,601,250				(19,653	)		-1.3	%			(50,402	)		-3.1	%
Total assets	$	17,511,755			$	17,369,876			$	16,680,802			$	141,879			0.8	%		$	830,953			5.0	%
Interest-bearing demand deposits	$	4,429,056			$	4,353,599			$	3,743,651			$	75,457			1.7	%		$	685,405			18.3	%
Savings deposits		4,791,104				4,585,624				4,659,037				205,480			4.5	%			132,067			2.8	%
Time deposits		1,193,435				1,220,083				1,371,830				(26,648	)		-2.2	%			(178,395	)		-13.0	%
Total interest-bearing deposits		10,413,595				10,159,306				9,774,518				254,289			2.5	%			639,077			6.5	%
Fed funds purchased and repurchases		212,006				201,856				166,909				10,150			5.0	%			45,097			27.0	%
Other borrowings		91,090				94,328				166,926				(3,238	)		-3.4	%			(75,836	)		-45.4	%
Subordinated notes		123,061				123,007				122,875				54			0.0	%			186			0.2	%
Junior subordinated debt securities		61,856				61,856				61,856				—			0.0	%			—			0.0	%
Total interest-bearing liabilities		10,901,608				10,640,353				10,293,084				261,255			2.5	%			608,524			5.9	%
Noninterest-bearing deposits		4,601,108				4,679,951				4,363,559				(78,843	)		-1.7	%			237,549			5.4	%
Other liabilities		295,287				291,449				264,808				3,838			1.3	%			30,479			11.5	%
Total liabilities		15,798,003				15,611,753				14,921,451				186,250			1.2	%			876,552			5.9	%
Shareholders' equity		1,713,752				1,758,123				1,759,351				(44,371	)		-2.5	%			(45,599	)		-2.6	%
Total liabilities and equity	$	17,511,755			$	17,369,876			$	16,680,802			$	141,879			0.8	%		$	830,953			5.0	%
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2022
($ in thousands)
(unaudited)
													Linked Quarter							Year over Year
PERIOD END BALANCES	3/31/2022				12/31/2021				3/31/2021				$ Change				% Change			$ Change				% Change
Cash and due from banks	$	1,917,564			$	2,266,829			$	1,774,541			$	(349,265	)		-15.4	%		$	143,023			8.1	%
Securities available for sale		3,018,246				3,238,877				2,337,676				(220,631	)		-6.8	%			680,570			29.1	%
Securities held to maturity		607,598				342,537				493,738				265,061			77.4	%			113,860			23.1	%
PPP loans		18,579				33,336				679,725				(14,757	)		-44.3	%			(661,146	)		-97.3	%
Loans held for sale (LHFS)		222,538				275,706				412,999				(53,168	)		-19.3	%			(190,461	)		-46.1	%
Loans held for investment (LHFI)		10,397,129				10,247,829				9,983,704				149,300			1.5	%			413,425			4.1	%
ACL LHFI		(98,734	)			(99,457	)			(109,191	)			723			0.7	%			10,457			9.6	%
Net LHFI		10,298,395				10,148,372				9,874,513				150,023			1.5	%			423,882			4.3	%
Premises and equipment, net		207,301				205,644				199,098				1,657			0.8	%			8,203			4.1	%
Mortgage servicing rights		111,050				87,687				83,035				23,363			26.6	%			28,015			33.7	%
Goodwill		384,237				384,237				384,237				—			0.0	%			—			0.0	%
Identifiable intangible assets		4,591				5,074				6,724				(483	)		-9.5	%			(2,133	)		-31.7	%
Other real estate		3,187				4,557				10,651				(1,370	)		-30.1	%			(7,464	)		-70.1	%
Operating lease right-of-use assets		34,048				34,603				33,704				(555	)		-1.6	%			344			1.0	%
Other assets		614,217				568,177				587,672				46,040			8.1	%			26,545			4.5	%
Total assets	$	17,441,551			$	17,595,636			$	16,878,313			$	(154,085	)		-0.9	%		$	563,238			3.3	%
Deposits:
Noninterest-bearing	$	4,739,102			$	4,771,065			$	4,705,991			$	(31,963	)		-0.7	%		$	33,111			0.7	%
Interest-bearing		10,374,190				10,316,095				9,677,449				58,095			0.6	%			696,741			7.2	%
Total deposits		15,113,292				15,087,160				14,383,440				26,132			0.2	%			729,852			5.1	%
Fed funds purchased and repurchases		170,499				238,577				160,991				(68,078	)		-28.5	%			9,508			5.9	%
Other borrowings		84,644				91,025				145,994				(6,381	)		-7.0	%			(61,350	)		-42.0	%
Subordinated notes		123,097				123,042				122,877				55			0.0	%			220			0.2	%
Junior subordinated debt securities		61,856				61,856				61,856				—			0.0	%			—			0.0	%
ACL on off-balance sheet credit exposures		34,517				35,623				29,205				(1,106	)		-3.1	%			5,312			18.2	%
Operating lease liabilities		35,912				36,468				35,389				(556	)		-1.5	%			523			1.5	%
Other liabilities		186,352				180,574				178,856				5,778			3.2	%			7,496			4.2	%
Total liabilities		15,810,169				15,854,325				15,118,608				(44,156	)		-0.3	%			691,561			4.6	%
Common stock		12,806				12,845				13,209				(39	)		-0.3	%			(403	)		-3.1	%
Capital surplus		167,094				175,913				229,892				(8,819	)		-5.0	%			(62,798	)		-27.3	%
Retained earnings		1,600,138				1,585,113				1,533,110				15,025			0.9	%			67,028			4.4	%
Accumulated other comprehensive income (loss), net of tax		(148,656	)			(32,560	)			(16,506	)			(116,096	)		n/m				(132,150	)		n/m
Total shareholders' equity		1,631,382				1,741,311				1,759,705				(109,929	)		-6.3	%			(128,323	)		-7.3	%
Total liabilities and equity	$	17,441,551			$	17,595,636			$	16,878,313			$	(154,085	)		-0.9	%		$	563,238			3.3	%
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2022
($ in thousands except per share data)
(unaudited)
	Quarter Ended												Linked Quarter							Year over Year
INCOME STATEMENTS	3/31/2022				12/31/2021				3/31/2021				$ Change				% Change			$ Change				% Change
Interest and fees on LHFS & LHFI-FTE	$	93,252			$	94,137			$	93,394			$	(885	)		-0.9	%		$	(142	)		-0.2	%
Interest and fees on PPP loans		168				397				9,241				(229	)		-57.7	%			(9,073	)		-98.2	%
Interest on securities-taxable		12,357				10,796				8,938				1,561			14.5	%			3,419			38.3	%
Interest on securities-tax exempt-FTE		122				123				290				(1	)		-0.8	%			(168	)		-57.9	%
Other interest income		817				826				503				(9	)		-1.1	%			314			62.4	%
Total interest income-FTE		106,716				106,279				112,366				437			0.4	%			(5,650	)		-5.0	%
Interest on deposits		2,760				3,401				5,223				(641	)		-18.8	%			(2,463	)		-47.2	%
Interest on fed funds purchased and repurchases		70				66				56				4			6.1	%			14			25.0	%
Other interest expense		1,539				1,580				1,857				(41	)		-2.6	%			(318	)		-17.1	%
Total interest expense		4,369				5,047				7,136				(678	)		-13.4	%			(2,767	)		-38.8	%
Net interest income-FTE		102,347				101,232				105,230				1,115			1.1	%			(2,883	)		-2.7	%
Provision for credit losses, LHFI		(860	)			(4,515	)			(10,501	)			3,655			81.0	%			9,641			91.8	%
Provision for credit losses, off-balance sheet credit exposures		(1,106	)			2,939				(9,367	)			(4,045	)		n/m				8,261			88.2	%
Net interest income after provision-FTE		104,313				102,808				125,098				1,505			1.5	%			(20,785	)		-16.6	%
Service charges on deposit accounts		9,451				9,366				7,356				85			0.9	%			2,095			28.5	%
Bank card and other fees		8,442				8,340				9,472				102			1.2	%			(1,030	)		-10.9	%
Mortgage banking, net		9,873				11,609				20,804				(1,736	)		-15.0	%			(10,931	)		-52.5	%
Insurance commissions		14,089				11,716				12,445				2,373			20.3	%			1,644			13.2	%
Wealth management		9,054				8,757				8,416				297			3.4	%			638			7.6	%
Other, net		3,206				979				2,090				2,227			n/m				1,116			53.4	%
Total noninterest income		54,115				50,767				60,583				3,348			6.6	%			(6,468	)		-10.7	%
Salaries and employee benefits		69,585				68,258				71,162				1,327			1.9	%			(1,577	)		-2.2	%
Services and fees		24,453				22,904				22,484				1,549			6.8	%			1,969			8.8	%
Net occupancy-premises		7,079				6,816				6,795				263			3.9	%			284			4.2	%
Equipment expense		6,061				6,585				6,244				(524	)		-8.0	%			(183	)		-2.9	%
Other expense		14,341				14,906				14,863				(565	)		-3.8	%			(522	)		-3.5	%
Total noninterest expense		121,519				119,469				121,548				2,050			1.7	%			(29	)		0.0	%
Income before income taxes and tax eq adj		36,909				34,106				64,133				2,803			8.2	%			(27,224	)		-42.4	%
Tax equivalent adjustment		3,003				2,906				2,894				97			3.3	%			109			3.8	%
Income before income taxes		33,906				31,200				61,239				2,706			8.7	%			(27,333	)		-44.6	%
Income taxes		4,695				4,978				9,277				(283	)		-5.7	%			(4,582	)		-49.4	%
Net income	$	29,211			$	26,222			$	51,962			$	2,989			11.4	%		$	(22,751	)		-43.8	%
Per share data
Earnings per share - basic	$	0.47			$	0.42			$	0.82			$	0.05			11.9	%		$	(0.35	)		-42.7	%
Earnings per share - diluted	$	0.47			$	0.42			$	0.82			$	0.05			11.9	%		$	(0.35	)		-42.7	%
Dividends per share	$	0.23			$	0.23			$	0.23				—			0.0	%			—			0.0	%
Weighted average shares outstanding
Basic		61,514,395				62,037,884				63,395,911
Diluted		61,709,797				62,264,983				63,562,503
Period end shares outstanding		61,463,392				61,648,679				63,394,522
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2022
($ in thousands)
(unaudited)
	Quarter Ended												Linked Quarter							Year over Year
NONPERFORMING ASSETS (1)	3/31/2022				12/31/2021				3/31/2021				$ Change				% Change			$ Change				% Change
Nonaccrual LHFI
Alabama	$	7,506			$	8,182			$	9,161			$	(676	)		-8.3	%		$	(1,655	)		-18.1	%
Florida		310				313				607				(3	)		-1.0	%			(297	)		-48.9	%
Mississippi (2)		21,318				21,636				35,534				(318	)		-1.5	%			(14,216	)		-40.0	%
Tennessee (3)		9,266				10,501				12,451				(1,235	)		-11.8	%			(3,185	)		-25.6	%
Texas		25,999				22,066				5,761				3,933			17.8	%			20,238			n/m
Total nonaccrual LHFI		64,399				62,698				63,514				1,701			2.7	%			885			1.4	%
Other real estate
Alabama		—				—				3,085				—			n/m				(3,085	)		-100.0	%
Mississippi (2)		3,187				4,557				7,566				(1,370	)		-30.1	%			(4,379	)		-57.9	%
Tennessee (3)		—				—				—				—			n/m				—			n/m
Total other real estate		3,187				4,557				10,651				(1,370	)		-30.1	%			(7,464	)		-70.1	%
Total nonperforming assets	$	67,586			$	67,255			$	74,165			$	331			0.5	%		$	(6,579	)		-8.9	%
LOANS PAST DUE OVER 90 DAYS (1)
LHFI	$	1,503			$	2,114			$	2,593			$	(611	)		-28.9	%		$	(1,090	)		-42.0	%
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	62,078			$	69,894			$	109,566			$	(7,816	)		-11.2	%		$	(47,488	)		-43.3	%
	Quarter Ended												Linked Quarter							Year over Year
ACL LHFI (1)	3/31/2022				12/31/2021				3/31/2021				$ Change				% Change			$ Change				% Change
Beginning Balance	$	99,457			$	104,073			$	117,306			$	(4,616	)		-4.4	%		$	(17,849	)		-15.2	%
Provision for credit losses, LHFI		(860	)			(4,515	)			(10,501	)			3,655			81.0	%			9,641			91.8	%
Charge-offs		(2,242	)			(2,616	)			(1,245	)			374			14.3	%			(997	)		-80.1	%
Recoveries		2,379				2,515				3,631				(136	)		-5.4	%			(1,252	)		-34.5	%
Net (charge-offs) recoveries		137				(101	)			2,386				238			n/m				(2,249	)		-94.3	%
Ending Balance	$	98,734			$	99,457			$	109,191			$	(723	)		-0.7	%		$	(10,457	)		-9.6	%
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama	$	699			$	747			$	102			$	(48	)		-6.4	%		$	597			n/m
Florida		(26	)			(32	)			30				6			18.8	%			(56	)		n/m
Mississippi (2)		(88	)			(683	)			2,207				595			87.1	%			(2,295	)		n/m
Tennessee (3)		(424	)			(130	)			47				(294	)		n/m				(471	)		n/m
Texas		(24	)			(3	)			—				(21	)		n/m				(24	)		n/m
Total net (charge-offs) recoveries	$	137			$	(101	)		$	2,386			$	238			n/m			$	(2,249	)		-94.3	%
(1) Excludes PPP loans.
(2) Mississippi includes Central and Southern Mississippi Regions.
(3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2022
($ in thousands)
(unaudited)
		Quarter Ended
AVERAGE BALANCES		3/31/2022				12/31/2021				9/30/2021				6/30/2021				3/31/2021
Securities AFS-taxable		$	3,245,502			$	3,156,740			$	2,686,765			$	2,339,662			$	2,098,089
Securities AFS-nontaxable			5,127				5,143				5,159				5,174				5,190
Securities HTM-taxable			410,851				364,038				401,685				441,688				489,260
Securities HTM-nontaxable			7,327				7,618				8,641				10,958				24,070
Total securities			3,668,807				3,533,539				3,102,250				2,797,482				2,616,609
PPP loans			29,009				42,749				122,176				648,222				598,139
Loans (includes loans held for sale)			10,550,712				10,487,679				10,389,826				10,315,927				10,316,319
Fed funds sold and reverse repurchases			56				58				69				55				136
Other earning assets			1,811,713				1,839,498				2,038,515				1,750,385				1,667,906
Total earning assets			16,060,297				15,903,523				15,652,836				15,512,071				15,199,109
ACL LHFI			(99,390	)			(104,148	)			(104,857	)			(112,346	)			(119,557	)
Other assets			1,550,848				1,570,501				1,602,611				1,622,388				1,601,250
Total assets		$	17,511,755			$	17,369,876			$	17,150,590			$	17,022,113			$	16,680,802
Interest-bearing demand deposits		$	4,429,056			$	4,353,599			$	4,224,717			$	4,056,910			$	3,743,651
Savings deposits			4,791,104				4,585,624				4,617,683				4,627,180				4,659,037
Time deposits			1,193,435				1,220,083				1,258,829				1,301,896				1,371,830
Total interest-bearing deposits			10,413,595				10,159,306				10,101,229				9,985,986				9,774,518
Fed funds purchased and repurchases			212,006				201,856				147,635				174,620				166,909
Other borrowings			91,090				94,328				109,735				132,199				166,926
Subordinated notes			123,061				123,007				122,951				122,897				122,875
Junior subordinated debt securities			61,856				61,856				61,856				61,856				61,856
Total interest-bearing liabilities			10,901,608				10,640,353				10,543,406				10,477,558				10,293,084
Noninterest-bearing deposits			4,601,108				4,679,951				4,566,924				4,512,268				4,363,559
Other liabilities			295,287				291,449				257,956				251,582				264,808
Total liabilities			15,798,003				15,611,753				15,368,286				15,241,408				14,921,451
Shareholders' equity			1,713,752				1,758,123				1,782,304				1,780,705				1,759,351
Total liabilities and equity		$	17,511,755			$	17,369,876			$	17,150,590			$	17,022,113			$	16,680,802
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2022
($ in thousands)
(unaudited)
PERIOD END BALANCES		3/31/2022				12/31/2021				9/30/2021				6/30/2021				3/31/2021
Cash and due from banks		$	1,917,564			$	2,266,829			$	2,175,058			$	2,267,224			$	1,774,541
Securities available for sale			3,018,246				3,238,877				3,057,605				2,548,739				2,337,676
Securities held to maturity			607,598				342,537				394,905				433,012				493,738
PPP loans			18,579				33,336				46,486				166,119				679,725
LHFS			222,538				275,706				335,339				332,132				412,999
LHFI			10,397,129				10,247,829				10,174,899				10,152,869				9,983,704
ACL LHFI			(98,734	)			(99,457	)			(104,073	)			(104,032	)			(109,191	)
Net LHFI			10,298,395				10,148,372				10,070,826				10,048,837				9,874,513
Premises and equipment, net			207,301				205,644				201,937				200,970				199,098
Mortgage servicing rights			111,050				87,687				84,101				80,764				83,035
Goodwill			384,237				384,237				384,237				384,237				384,237
Identifiable intangible assets			4,591				5,074				5,621				6,170				6,724
Other real estate			3,187				4,557				6,213				9,439				10,651
Operating lease right-of-use assets			34,048				34,603				34,689				33,201				33,704
Other assets			614,217				568,177				567,627				587,288				587,672
Total assets		$	17,441,551			$	17,595,636			$	17,364,644			$	17,098,132			$	16,878,313
Deposits:
Noninterest-bearing		$	4,739,102			$	4,771,065			$	4,987,885			$	4,446,991			$	4,705,991
Interest-bearing			10,374,190				10,316,095				9,934,954				10,185,093				9,677,449
Total deposits			15,113,292				15,087,160				14,922,839				14,632,084				14,383,440
Fed funds purchased and repurchases			170,499				238,577				146,417				157,176				160,991
Other borrowings			84,644				91,025				94,889				117,223				145,994
Subordinated notes			123,097				123,042				122,987				122,932				122,877
Junior subordinated debt securities			61,856				61,856				61,856				61,856				61,856
ACL on off-balance sheet credit exposures			34,517				35,623				32,684				33,733				29,205
Operating lease liabilities			35,912				36,468				36,531				34,959				35,389
Other liabilities			186,352				180,574				177,494				158,860				178,856
Total liabilities			15,810,169				15,854,325				15,595,697				15,318,823				15,118,608
Common stock			12,806				12,845				13,014				13,079				13,209
Capital surplus			167,094				175,913				201,837				210,420				229,892
Retained earnings			1,600,138				1,585,113				1,573,176				1,566,451				1,533,110
Accumulated other comprehensive income (loss), net of tax			(148,656	)			(32,560	)			(19,080	)			(10,641	)			(16,506	)
Total shareholders' equity			1,631,382				1,741,311				1,768,947				1,779,309				1,759,705
Total liabilities and equity		$	17,441,551			$	17,595,636			$	17,364,644			$	17,098,132			$	16,878,313
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2022
($ in thousands except per share data)
(unaudited)
		Quarter Ended
INCOME STATEMENTS		3/31/2022				12/31/2021				9/30/2021				6/30/2021				3/31/2021
Interest and fees on LHFS & LHFI-FTE		$	93,252			$	94,137			$	94,101			$	93,698			$	93,394
Interest and fees on PPP loans			168				397				1,533				25,555				9,241
Interest on securities-taxable			12,357				10,796				9,973				8,991				8,938
Interest on securities-tax exempt-FTE			122				123				132				149				290
Other interest income			817				826				949				489				503
Total interest income-FTE			106,716				106,279				106,688				128,882				112,366
Interest on deposits			2,760				3,401				3,691				4,630				5,223
Interest on fed funds purchased and repurchases			70				66				51				59				56
Other interest expense			1,539				1,580				1,733				1,813				1,857
Total interest expense			4,369				5,047				5,475				6,502				7,136
Net interest income-FTE			102,347				101,232				101,213				122,380				105,230
Provision for credit losses, LHFI			(860	)			(4,515	)			(2,492	)			(3,991	)			(10,501	)
Provision for credit losses, off-balance sheet credit exposures			(1,106	)			2,939				(1,049	)			4,528				(9,367	)
Net interest income after provision-FTE			104,313				102,808				104,754				121,843				125,098
Service charges on deposit accounts			9,451				9,366				8,911				7,613				7,356
Bank card and other fees			8,442				8,340				8,549				8,301				9,472
Mortgage banking, net			9,873				11,609				14,004				17,333				20,804
Insurance commissions			14,089				11,716				12,133				12,217				12,445
Wealth management			9,054				8,757				9,071				8,946				8,416
Other, net			3,206				979				1,481				2,001				2,090
Total noninterest income			54,115				50,767				54,149				56,411				60,583
Salaries and employee benefits			69,585				68,258				74,623				70,115				71,162
Services and fees			24,453				22,904				22,306				21,769				22,484
Net occupancy-premises			7,079				6,816				6,854				6,578				6,795
Equipment expense			6,061				6,585				5,941				5,567				6,244
Other expense			14,341				14,906				19,876				14,650				14,863
Total noninterest expense			121,519				119,469				129,600				118,679				121,548
Income before income taxes and tax eq adj			36,909				34,106				29,303				59,575				64,133
Tax equivalent adjustment			3,003				2,906				2,947				2,957				2,894
Income before income taxes			33,906				31,200				26,356				56,618				61,239
Income taxes			4,695				4,978				5,156				8,637				9,277
Net income		$	29,211			$	26,222			$	21,200			$	47,981			$	51,962
Per share data
Earnings per share - basic		$	0.47			$	0.42			$	0.34			$	0.76			$	0.82
Earnings per share - diluted		$	0.47			$	0.42			$	0.34			$	0.76			$	0.82
Dividends per share		$	0.23			$	0.23			$	0.23			$	0.23			$	0.23
Weighted average shares outstanding
Basic			61,514,395				62,037,884				62,521,684				63,214,593				63,395,911
Diluted			61,709,797				62,264,983				62,730,157				63,409,683				63,562,503
Period end shares outstanding			61,463,392				61,648,679				62,461,832				62,773,226				63,394,522
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2022
($ in thousands)
(unaudited)
		Quarter Ended
NONPERFORMING ASSETS (1)		3/31/2022				12/31/2021				9/30/2021				6/30/2021				3/31/2021
Nonaccrual LHFI
Alabama		$	7,506			$	8,182			$	9,223			$	8,952			$	9,161
Florida			310				313				381				467				607
Mississippi (2)			21,318				21,636				22,898				23,422				35,534
Tennessee (3)			9,266				10,501				10,356				10,751				12,451
Texas			25,999				22,066				23,382				7,856				5,761
Total nonaccrual LHFI			64,399				62,698				66,240				51,448				63,514
Other real estate
Alabama			—				—				613				2,830				3,085
Mississippi (2)			3,187				4,557				5,600				6,550				7,566
Tennessee (3)			—				—				—				59				—
Total other real estate			3,187				4,557				6,213				9,439				10,651
Total nonperforming assets		$	67,586			$	67,255			$	72,453			$	60,887			$	74,165
LOANS PAST DUE OVER 90 DAYS (1)
LHFI		$	1,503			$	2,114			$	625			$	423			$	2,593
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)		$	62,078			$	69,894			$	75,091			$	81,538			$	109,566
		Quarter Ended
ACL LHFI (1)		3/31/2022				12/31/2021				9/30/2021				6/30/2021				3/31/2021
Beginning Balance		$	99,457			$	104,073			$	104,032			$	109,191			$	117,306
Provision for credit losses, LHFI			(860	)			(4,515	)			(2,492	)			(3,991	)			(10,501	)
Charge-offs			(2,242	)			(2,616	)			(1,586	)			(4,828	)			(1,245	)
Recoveries			2,379				2,515				4,119				3,660				3,631
Net (charge-offs) recoveries			137				(101	)			2,533				(1,168	)			2,386
Ending Balance		$	98,734			$	99,457			$	104,073			$	104,032			$	109,191
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama		$	699			$	747			$	247			$	203			$	102
Florida			(26	)			(32	)			356				167				30
Mississippi (2)			(88	)			(683	)			1,436				(3,071	)			2,207
Tennessee (3)			(424	)			(130	)			(8	)			1,031				47
Texas			(24	)			(3	)			502				502				—
Total net (charge-offs) recoveries		$	137			$	(101	)		$	2,533			$	(1,168	)		$	2,386
(1) Excludes PPP loans.
(2) Mississippi includes Central and Southern Mississippi Regions.
(3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2022
(unaudited)
		Quarter Ended
FINANCIAL RATIOS AND OTHER DATA		3/31/2022				12/31/2021				9/30/2021				6/30/2021				3/31/2021
Return on average equity			6.91	%			5.92	%			4.72	%			10.81	%			11.98	%
Return on average tangible equity			9.05	%			7.72	%			6.16	%			13.96	%			15.56	%
Return on average assets			0.68	%			0.60	%			0.49	%			1.13	%			1.26	%
Interest margin - Yield - FTE			2.69	%			2.65	%			2.70	%			3.33	%			3.00	%
Interest margin - Cost			0.11	%			0.13	%			0.14	%			0.17	%			0.19	%
Net interest margin - FTE			2.58	%			2.53	%			2.57	%			3.16	%			2.81	%
Efficiency ratio (1)			76.44	%			76.52	%			74.10	%			64.31	%			71.84	%
Full-time equivalent employees			2,725				2,692				2,680				2,772				2,793
CREDIT QUALITY RATIOS (2)
Net (recoveries) charge-offs / average loans			-0.01	%			0.00	%			-0.10	%			0.05	%			-0.09	%
Provision for credit losses, LHFI / average loans			-0.03	%			-0.17	%			-0.10	%			-0.16	%			-0.41	%
Nonaccrual LHFI / (LHFI + LHFS)			0.61	%			0.60	%			0.63	%			0.49	%			0.61	%
Nonperforming assets / (LHFI + LHFS)			0.64	%			0.64	%			0.69	%			0.58	%			0.71	%
Nonperforming assets / (LHFI + LHFS + other real estate)			0.64	%			0.64	%			0.69	%			0.58	%			0.71	%
ACL LHFI / LHFI			0.95	%			0.97	%			1.02	%			1.02	%			1.09	%
ACL LHFI-commercial / commercial LHFI			0.95	%			1.00	%			1.05	%			1.04	%			1.13	%
ACL LHFI-consumer / consumer and home mortgage LHFI			0.96	%			0.87	%			0.91	%			0.98	%			0.95	%
ACL LHFI / nonaccrual LHFI			153.32	%			158.63	%			157.11	%			202.21	%			171.92	%
ACL LHFI / nonaccrual LHFI (excl individually evaluated loans)			484.01	%			500.85	%			520.77	%			537.35	%			437.08	%
CAPITAL RATIOS
Total equity / total assets			9.35	%			9.90	%			10.19	%			10.41	%			10.43	%
Tangible equity / tangible assets			7.29	%			7.86	%			8.12	%			8.31	%			8.30	%
Tangible equity / risk-weighted assets			9.79	%			10.71	%			11.19	%			11.33	%			11.23	%
Tier 1 leverage ratio			8.66	%			8.73	%			8.92	%			9.00	%			9.11	%
Common equity tier 1 capital ratio			11.23	%			11.29	%			11.68	%			11.76	%			11.71	%
Tier 1 risk-based capital ratio			11.70	%			11.77	%			12.17	%			12.25	%			12.20	%
Total risk-based capital ratio			13.53	%			13.55	%			14.01	%			14.10	%			14.07	%
STOCK PERFORMANCE
Market value-Close		$	30.39			$	32.46			$	32.22			$	30.80			$	33.66
Book value		$	26.54			$	28.25			$	28.32			$	28.35			$	27.76
Tangible book value		$	20.22			$	21.93			$	22.08			$	22.13			$	21.59
(1) See Note 6 – Non-GAAP Financial Measures in the Notes to Consolidated Financials for Trustmark’s efficiency ratio calculation.
(2) Excludes PPP loans.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

March 31, 2022

($ 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:

		3/31/2022				12/31/2021				9/30/2021				6/30/2021				3/31/2021
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities		$	361,822			$	344,640			$	278,615			$	30,025			$	—
U.S. Government agency obligations			12,623				13,727				14,979				16,023				17,349
Obligations of states and political subdivisions			5,359				5,714				5,734				5,807				5,798
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			35,117				39,573				43,860				48,445				52,406
Issued by FNMA and FHLMC			2,038,331				2,218,429				2,187,412				1,983,783				1,749,144
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			164,506				196,690				236,885				283,988				345,869
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			400,488				420,104				290,120				180,668				167,110
Total securities available for sale		$	3,018,246			$	3,238,877			$	3,057,605			$	2,548,739			$	2,337,676
SECURITIES HELD TO MATURITY
Obligations of states and political subdivisions		$	7,324			$	7,328			$	10,683			$	12,994			$	26,554
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			4,831				5,005				5,912				6,249				7,268
Issued by FNMA and FHLMC			192,373				43,444				48,554				53,406				61,855
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			224,012				241,934				264,638				291,477				324,360
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			179,058				44,826				65,118				68,886				73,701
Total securities held to maturity		$	607,598			$	342,537			$	394,905			$	433,012			$	493,738

At March 31, 2022, the net unamortized, unrealized loss included in accumulated other comprehensive income (loss) in the accompanying balance sheet for securities held to maturity previously transferred from securities available for sale totaled approximately $5.8 million ($4.3 million, net of tax).

Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 99.7% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE.

Note 2 – Loan Composition

LHFI consisted of the following during the periods presented:

LHFI BY TYPE		3/31/2022				12/31/2021				9/30/2021				6/30/2021				3/31/2021
Loans secured by real estate:
Construction, land development and other land loans		$	1,273,959			$	1,308,781			$	1,286,613			$	1,360,302			$	1,342,088
Secured by 1-4 family residential properties			2,106,998				1,977,993				1,891,292				1,810,396				1,742,782
Secured by nonfarm, nonresidential properties			2,975,039				2,977,084				2,924,953				2,819,662				2,799,195
Other real estate secured			715,939				726,043				986,163				1,078,622				1,135,005
Commercial and industrial loans			1,495,060				1,414,279				1,327,211				1,326,605				1,323,277
Consumer loans			154,215				159,472				157,963				153,519				153,267
State and other political subdivision loans			1,215,023				1,146,251				1,125,186				1,136,764				1,036,694
Other loans			460,896				537,926				475,518				466,999				451,396
LHFI			10,397,129				10,247,829				10,174,899				10,152,869				9,983,704
ACL LHFI			(98,734	)			(99,457	)			(104,073	)			(104,032	)			(109,191	)
Net LHFI		$	10,298,395			$	10,148,372			$	10,070,826			$	10,048,837			$	9,874,513

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

March 31, 2022

($ in thousands)

(unaudited)

Note 2 – Loan Composition (continued)

The following table presents the LHFI composition by region and reflects each region’s diversified mix of loans:

		March 31, 2022
LHFI - COMPOSITION BY REGION		Total				Alabama				Florida				Mississippi (Central and Southern Regions)				Tennessee (Memphis, TN and Northern MS Regions)				Texas
Loans secured by real estate:
Construction, land development and other land loans		$	1,273,959			$	529,999			$	48,309			$	352,191			$	53,661			$	289,799
Secured by 1-4 family residential properties			2,106,998				111,960				41,219				1,870,529				66,423				16,867
Secured by nonfarm, nonresidential properties			2,975,039				859,687				255,757				1,125,568				180,042				553,985
Other real estate secured			715,939				171,769				6,691				267,558				20,747				249,174
Commercial and industrial loans			1,495,060				323,940				24,462				637,245				280,006				229,407
Consumer loans			154,215				22,749				8,203				97,681				18,128				7,454
State and other political subdivision loans			1,215,023				89,009				73,548				758,807				33,627				260,032
Other loans			460,896				75,916				11,219				290,692				35,503				47,566
Loans		$	10,397,129			$	2,185,029			$	469,408			$	5,400,271			$	688,137			$	1,654,284
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots		$	66,342			$	30,229			$	10,368			$	16,696			$	3,179			$	5,870
Development			120,992				52,238				555				30,884				12,141				25,174
Unimproved land			102,184				24,360				11,889				33,738				11,020				21,177
1-4 family construction			338,813				157,819				20,402				93,811				26,304				40,477
Other construction			645,628				265,353				5,095				177,062				1,017				197,101
Construction, land development and other land loans		$	1,273,959			$	529,999			$	48,309			$	352,191			$	53,661			$	289,799
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION
Non-owner occupied:
Retail		$	354,974			$	132,872			$	35,777			$	100,409			$	22,650			$	63,266
Office			200,790				68,636				22,721				65,783				11,708				31,942
Hotel/motel			340,296				185,774				77,052				31,274				31,782				14,414
Mini-storage			157,182				22,984				2,100				103,191				432				28,475
Industrial			281,324				91,265				19,647				100,512				133				69,767
Health care			60,365				20,933				1,073				35,057				357				2,945
Convenience stores			20,328				8,270				668				5,971				1,144				4,275
Nursing homes/senior living			247,036				97,362				—				86,447				6,101				57,126
Other			80,353				18,638				7,089				27,329				11,458				15,839
Total non-owner occupied loans			1,742,648				646,734				166,127				555,973				85,765				288,049
Owner-occupied:
Office			174,447				38,250				37,682				58,774				12,933				26,808
Churches			81,601				18,512				5,630				45,644				8,296				3,519
Industrial warehouses			179,800				17,012				2,683				51,383				18,796				89,926
Health care			117,428				11,815				6,709				81,711				2,257				14,936
Convenience stores			141,493				13,915				18,399				67,249				444				41,486
Retail			71,684				10,740				10,473				19,559				18,668				12,244
Restaurants			55,403				4,616				4,867				29,491				12,460				3,969
Auto dealerships			51,150				5,798				249				25,856				19,247				—
Nursing homes/senior living			236,661				85,536				—				124,925				—				26,200
Other			122,724				6,759				2,938				65,003				1,176				46,848
Total owner-occupied loans			1,232,391				212,953				89,630				569,595				94,277				265,936
Loans secured by nonfarm, nonresidential properties		$	2,975,039			$	859,687			$	255,757			$	1,125,568			$	180,042			$	553,985

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

March 31, 2022

($ 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
		3/31/2022				12/31/2021				9/30/2021				6/30/2021				3/31/2021
Securities – taxable			1.37	%			1.22	%			1.28	%			1.30	%			1.40	%
Securities – nontaxable			3.97	%			3.82	%			3.79	%			3.70	%			4.02	%
Securities – total			1.38	%			1.23	%			1.29	%			1.31	%			1.43	%
PPP loans			2.35	%			3.68	%			4.98	%			15.81	%			6.27	%
Loans - LHFI & LHFS			3.58	%			3.56	%			3.59	%			3.64	%			3.67	%
Loans - total			3.58	%			3.56	%			3.61	%			4.36	%			3.81	%
Other earning assets			0.18	%			0.18	%			0.18	%			0.11	%			0.12	%
Total earning assets			2.69	%			2.65	%			2.70	%			3.33	%			3.00	%
Interest-bearing deposits			0.11	%			0.13	%			0.14	%			0.19	%			0.22	%
Fed funds purchased & repurchases			0.13	%			0.13	%			0.14	%			0.14	%			0.14	%
Other borrowings			2.26	%			2.25	%			2.33	%			2.29	%			2.14	%
Total interest-bearing liabilities			0.16	%			0.19	%			0.21	%			0.25	%			0.28	%
Net interest margin			2.58	%			2.53	%			2.57	%			3.16	%			2.81	%
Net interest margin excluding PPP loans and the FRB balance			2.88	%			2.82	%			2.90	%			2.94	%			2.99	%

Reflected in the table above are yields on earning assets and liabilities, along with the net interest margin which equals reported net interest income-FTE, annualized, as a percent of average earning assets. In addition, the table includes net interest margin excluding PPP loans and the balance held at the Federal Reserve Bank of Atlanta (FRB), which equals reported net interest income-FTE excluding interest income on PPP loans and the FRB balance, annualized, as a percent of average earning assets excluding average PPP loans and the FRB balance.

At March 31, 2022 and December 31, 2021, the average FRB balance totaled $1.758 billion and $1.787 billion, respectively, and is included in other earning assets in the accompanying average consolidated balance sheets.

The net interest margin excluding PPP loans and the FRB balance totaled 2.88% for the first quarter of 2022, an increase of 6 basis points when compared to the fourth quarter of 2021. The expansion of the net interest margin excluding PPP loans and the FRB balance was due to increases in the yields on the loans held for investment and held for sale portfolio and the securities portfolio which resulted from the higher interest-rate environment as well as lower costs of interest-bearing liabilities.

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 $1.0 million during the first quarter of 2022.

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

		Quarter Ended
		3/31/2022				12/31/2021				9/30/2021				6/30/2021				3/31/2021
Mortgage servicing income, net		$	6,429			$	6,571			$	6,406			$	6,318			$	6,181
Change in fair value-MSR from runoff			(3,785	)			(4,745	)			(5,283	)			(5,029	)			(5,103	)
Gain on sales of loans, net			6,223				9,005				12,737				14,778				19,456
Mortgage banking income before hedge ineffectiveness			8,867				10,831				13,860				16,067				20,534
Change in fair value-MSR from market changes			22,020				2,221				1,806				(4,465	)			13,696
Change in fair value of derivatives			(21,014	)			(1,443	)			(1,662	)			5,731				(13,426	)
Net positive (negative) hedge ineffectiveness			1,006				778				144				1,266				270
Mortgage banking, net		$	9,873			$	11,609			$	14,004			$	17,333			$	20,804

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

March 31, 2022

($ in thousands)

(unaudited)

Note 5 – Other Noninterest Income and Expense

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

		Quarter Ended
		3/31/2022				12/31/2021				9/30/2021				6/30/2021				3/31/2021
Partnership amortization for tax credit purposes		$	(1,336	)		$	(2,455	)		$	(2,045	)		$	(1,989	)		$	(1,522	)
Increase in life insurance cash surrender value			1,627				1,675				1,663				1,653				1,639
Other miscellaneous income			2,915				1,759				1,863				2,337				1,973
Total other, net		$	3,206			$	979			$	1,481			$	2,001			$	2,090

Trustmark invests in partnerships that provide income tax credits on a Federal and/or State basis (i.e., new market tax credits, low-income housing tax credits and historical tax credits). The income tax credits related to these partnerships are utilized as specifically allowed by income tax law and are recorded as a reduction in income tax expense.

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

		Quarter Ended
		3/31/2022				12/31/2021				9/30/2021				6/30/2021				3/31/2021
Loan expense		$	4,389			$	3,221			$	4,022			$	3,738			$	4,167
Amortization of intangibles			482				548				549				553				666
FDIC assessment expense			1,500				1,475				1,275				1,225				1,540
Regulatory settlement charge			—				—				5,000				—				—
Other real estate expense, net			35				336				1,357				1,511				324
Other miscellaneous expense			7,935				9,326				7,673				7,623				8,166
Total other expense		$	14,341			$	14,906			$	19,876			$	14,650			$	14,863

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’s Common Equity Tier 1 capital includes common stock, capital surplus and retained earnings, and is reduced by goodwill and other intangible assets, net of associated net deferred tax liabilities as well as disallowed deferred tax assets and threshold deductions as applicable.

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

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

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

March 31, 2022

($ in thousands)

(unaudited)

Note 6 – Non-GAAP Financial Measures (continued)

				Quarter Ended
				3/31/2022				12/31/2021				9/30/2021				6/30/2021				3/31/2021
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity				$	1,713,752			$	1,758,123			$	1,782,304			$	1,780,705			$	1,759,351
Less: Goodwill					(384,237	)			(384,237	)			(384,237	)			(384,237	)			(385,155	)
Identifiable intangible assets					(4,879	)			(5,382	)			(5,899	)			(6,442	)			(7,118	)
Total average tangible equity				$	1,324,636			$	1,368,504			$	1,392,168			$	1,390,026			$	1,367,078
PERIOD END BALANCES
Total shareholders' equity				$	1,631,382			$	1,741,311			$	1,768,947			$	1,779,309			$	1,759,705
Less: Goodwill					(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)
Identifiable intangible assets					(4,591	)			(5,074	)			(5,621	)			(6,170	)			(6,724	)
Total tangible equity		(a)		$	1,242,554			$	1,352,000			$	1,379,089			$	1,388,902			$	1,368,744
TANGIBLE ASSETS
Total assets				$	17,441,551			$	17,595,636			$	17,364,644			$	17,098,132			$	16,878,313
Less: Goodwill					(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)
Identifiable intangible assets					(4,591	)			(5,074	)			(5,621	)			(6,170	)			(6,724	)
Total tangible assets		(b)		$	17,052,723			$	17,206,325			$	16,974,786			$	16,707,725			$	16,487,352
Risk-weighted assets		(c)		$	12,691,545			$	12,623,630			$	12,324,254			$	12,256,492			$	12,188,988
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income				$	29,211			$	26,222			$	21,200			$	47,981			$	51,962
Plus: Intangible amortization net of tax					362				411				412				415				500
Net income adjusted for intangible amortization				$	29,573			$	26,633			$	21,612			$	48,396			$	52,462
Period end common shares outstanding		(d)			61,463,392				61,648,679				62,461,832				62,773,226				63,394,522
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity (1)					9.05	%			7.72	%			6.16	%			13.96	%			15.56	%
Tangible equity/tangible assets		(a)/(b)			7.29	%			7.86	%			8.12	%			8.31	%			8.30	%
Tangible equity/risk-weighted assets		(a)/(c)			9.79	%			10.71	%			11.19	%			11.33	%			11.23	%
Tangible book value		(a)/(d)*1,000		$	20.22			$	21.93			$	22.08			$	22.13			$	21.59
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity				$	1,631,382			$	1,741,311			$	1,768,947			$	1,779,309			$	1,759,705
CECL transition adjustment					19,500				26,000				26,419				26,671				26,829
AOCI-related adjustments					148,656				32,560				19,080				10,641				16,506
CET1 adjustments and deductions:
Goodwill net of associated deferred tax liabilities (DTLs)					(370,240	)			(370,252	)			(370,264	)			(370,276	)			(370,288	)
Other adjustments and deductions for CET1 (2)					(4,015	)			(4,392	)			(4,817	)			(5,243	)			(5,675	)
CET1 capital		(e)			1,425,283				1,425,227				1,439,365				1,441,102				1,427,077
Additional tier 1 capital instruments plus related surplus					60,000				60,000				60,000				60,000				60,000
Tier 1 capital				$	1,485,283			$	1,485,227			$	1,499,365			$	1,501,102			$	1,487,077
Common equity tier 1 capital ratio		(e)/(c)			11.23	%			11.29	%			11.68	%			11.76	%			11.71	%

(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

March 31, 2022

($ in thousands)

(unaudited)

Note 6 – Non-GAAP Financial Measures (continued)

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

The following table presents pre-provision net revenue (PPNR) during the periods presented:

			Quarter Ended
			3/31/2022				12/31/2021				9/30/2021				6/30/2021				3/31/2021
Net interest income (GAAP)			$	99,344			$	98,326			$	98,266			$	119,423			$	102,336
Noninterest income (GAAP)				54,115				50,767				54,149				56,411				60,583
Pre-provision revenue		(a)	$	153,459			$	149,093			$	152,415			$	175,834			$	162,919
Noninterest expense (GAAP)			$	121,519			$	119,469			$	129,600			$	118,679			$	121,548
Less:	Voluntary early retirement program			—				—				(5,700	)			—				—
	Regulatory settlement charge			—				—				(5,000	)			—				—
Adjusted noninterest expense - PPNR (Non-GAAP)		(b)	$	121,519			$	119,469			$	118,900			$	118,679			$	121,548
PPNR (Non-GAAP)		(a)-(b)	$	31,940			$	29,624			$	33,515			$	57,155			$	41,371

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

			Quarter Ended
			3/31/2022				12/31/2021				9/30/2021				6/30/2021				3/31/2021
Total noninterest expense (GAAP)			$	121,519			$	119,469			$	129,600			$	118,679			$	121,548
Less:	Other real estate expense, net			(35	)			(336	)			(1,357	)			(1,511	)			(324	)
	Amortization of intangibles			(482	)			(548	)			(549	)			(553	)			(666	)
	Charitable contributions resulting in state tax credits			(375	)			(391	)			(350	)			(355	)			(350	)
	Voluntary early retirement program			—				—				(5,700	)			—				—
	Regulatory settlement charge			—				—				(5,000	)			—				—
Adjusted noninterest expense (Non-GAAP)		(c)	$	120,627			$	118,194			$	116,644			$	116,260			$	120,208
Net interest income (GAAP)			$	99,344			$	98,326			$	98,266			$	119,423			$	102,336
Add:	Tax equivalent adjustment			3,003				2,906				2,947				2,957				2,894
Net interest income-FTE (Non-GAAP)		(a)	$	102,347			$	101,232			$	101,213			$	122,380			$	105,230
Noninterest income (GAAP)			$	54,115			$	50,767			$	54,149			$	56,411			$	60,583
Add:	Partnership amortization for tax credit purposes			1,336				2,455				2,045				1,989				1,522
Adjusted noninterest income (Non-GAAP)		(b)	$	55,451			$	53,222			$	56,194			$	58,400			$	62,105
Adjusted revenue (Non-GAAP)		(a)+(b)	$	157,798			$	154,454			$	157,407			$	180,780			$	167,335
Efficiency ratio (Non-GAAP)		(c)/((a)+(b))		76.44	%			76.52	%			74.10	%			64.31	%			71.84	%

 

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