Trustmark Corporation : Announces Second Quarter 2021 Financial Results

Performance Reflects Continued Balance Sheet Growth, Strong Credit Quality and Disciplined Expense Management

Trustmark Corporation (NASDAQGS: TRMK) reported net income of $48.0 million in the second quarter of 2021, representing diluted earnings per share of $0.76. This level of earnings resulted in a return on average tangible equity of 13.96% and a return on average assets of 1.13%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable September 15, 2021, to shareholders of record on September 1, 2021.

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Second Quarter Highlights

• Pre-provision net revenue totaled $57.2 million, a linked-quarter increase of 38.2%. Please refer to the Consolidated Financial Information, Note 8 – Non-GAAP Financial Measures.
• Sale of $354.2 million of Paycheck Protection Program (PPP) loans originated in 2021 resulted in accelerated recognition of $18.6 million in origination fees, which is included in net interest income
• Credit quality remained solid; nonperforming assets declined 17.9% linked-quarter
• Continued steady growth in loans held for investment (HFI) and deposits
• Noninterest expense declined 2.4% linked-quarter

Duane A. Dewey, President and CEO, stated, “Our associates are focused on expanding existing customer relationships as well as demonstrating the value Trustmark can provide potential customers as their trusted financial partner. The success of these efforts is reflected in solid growth in our traditional banking and mortgage businesses as well as strong performance in our insurance and wealth management businesses. Earlier this year, we introduced redesigned digital channels to enhance the customer experience and provide expanded sales capabilities, including on-line account openings. Customers have embraced these offerings and we look forward to leveraging these new tools to expand relationships and profitably generate additional revenue.

“We are pleased to have been recognized during the second quarter by Forbes as the Best-in-State Bank in Mississippi in 2021, based upon independent customer satisfaction surveys. This is affirmation that our associates are providing the financial solutions and convenience our customers’ desire,” said Dewey

Balance Sheet Management

• Loans HFI totaled $10.2 billion, up 1.7% from the prior quarter and 5.1% year-over-year
• Investment securities totaled $3.0 billion, up 5.3% from the prior quarter and 17.2% year-over-year
• PPP loans totaled $166.1 million, down 75.6% from the prior quarter and 82.3% year-over-year
• Deposits totaled $14.6 billion, up 1.7% from the prior quarter and 8.3% year-over-year
• Maintained strong capital position with CET1 ratio of 11.76% and total risk-based capital ratio of 14.10%

Loans HFI totaled $10.2 billion at June 30, 2021, reflecting an increase of $169.2 million, or 1.7%, linked-quarter and $493.1 million, or 5.1%, year-over-year. The linked-quarter growth primarily reflects increases in municipal loans, 1-4 family mortgage loans, loans secured by nonfarm, nonresidential properties, and construction loans, which were offset in part by a decline in other real estate secured loans. Trustmark’s loan portfolio remains well-diversified by loan type and geography.

Deposits totaled $14.6 billion at June 30, 2021, up $248.6 million, or 1.7%, from the prior quarter and $1.1 billion, or 8.3%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 69.4% of total deposits at June 30, 2021. Noninterest-bearing deposits represented 30.4% of total deposits at the end of the second quarter. Interest-bearing deposit costs totaled 0.19% in the second quarter, a decrease of 3 basis points from the prior quarter. The total cost of interest-bearing liabilities was 0.25% in the second quarter of 2021, a decrease of 3 basis points from the prior quarter.

During the second quarter, Trustmark repurchased $20.8 million, or approximately 630 thousand of its common shares. During the first six months of 2021, Trustmark repurchased $25.0 million, or approximately 775 thousand of its common shares. At June 30, 2021, Trustmark had $75.0 million in remaining authority under its existing stock repurchase program, which expires on December 31, 2021. 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 June 30, 2021, Trustmark’s tangible equity-to-tangible assets ratio was 8.31% while its total risk-based capital ratio was 14.10%. Tangible book value per share was $22.13 at June 30, 2021, up 2.5% linked-quarter and 9.7% year-over-year.

Credit Quality

• Allowance for credit losses (ACL) represented 537.35% of nonaccrual loans, excluding individually evaluated loans at June 30, 2021
• Net charge-offs totaled $1.2 million in the second quarter
• Loans remaining under a COVID-19 related concession represented approximately 19 basis points of loans HFI at June 30, 2021

Nonaccrual loans totaled $51.4 million at June 30, 2021, down $12.1 million from the prior quarter and up $1.5 million year-over-year. Other real estate totaled $9.4 million, reflecting a $1.2 million decrease from the prior quarter and decline of $8.8 million year-over-year. Collectively, nonperforming assets totaled $60.9 million at June 30, 2021, reflecting a linked-quarter decrease of $13.3 million and year-over-year decline of $7.4 million.

The provision for credit losses for loans HFI was a negative $4.0 million in the second quarter. Negative provisioning was primarily driven by decreases in individually analyzed reserves, qualitative reserves due to improvements in credit quality, and improving economic forecasts. The provision for credit losses for off-balance sheet credit exposures was $4.5 million in the second quarter. Off-balance sheet expense was primarily driven by an increase in off-balance sheet exposure as well as the implementation of probability of default and loss given default floors at a portfolio level to ensure appropriate risk is reflected as macroeconomic conditions improve. Collectively, the provision for credit losses totaled $537 thousand in the second quarter compared to negative $19.9 million in the prior quarter and expense of $24.4 million in the second quarter of 2020.

Allocation of Trustmark’s $104.0 million allowance for credit losses on loans HFI represented 1.04% of commercial loans and 0.98% of consumer and home mortgage loans, resulting in an allowance to total loans HFI of 1.02% at June 30, 2021. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.

Revenue Generation

• Total revenue increased $12.9 million, or 7.9%, linked-quarter
• Net interest income (FTE) expanded $17.2 million, or 16.3%, linked-quarter
• Excluding PPP interest and fees, net interest income (FTE) increased $836 thousand linked-quarter
• Noninterest income totaled $56.4 million, representing 32.1% of total revenue in the second quarter
• Wealth Management revenue increased 6.3% linked-quarter and 18.2% year-over-year

Revenue in the second quarter totaled $175.8 million, an increase of $12.9 million, or 7.9%, from the prior quarter and $1.3 million, or 0.8%, from the same quarter in the prior year. The linked-quarter increase reflects $18.6 million of PPP loan origination fees attributable to the previously announced sale of $354.2 million in PPP loans during the second quarter.

Net interest income (FTE) in the second quarter totaled $122.4 million, resulting in a net interest margin of 3.16%, up 35 basis points from the prior quarter. The net interest margin, excluding PPP loans and Federal Reserve Bank balance, totaled 2.94% during the second quarter, a decrease of 5 basis points when compared to the prior quarter. Continued low interest rates decreased the yield on the loans HFI and held for sale portfolio as well as the securities portfolio, and were partially offset by lower costs on interest-bearing deposits.

Noninterest income in the second quarter totaled $56.4 million, a decrease of $4.2 million from the prior quarter and $13.1 million year-over-year. The linked quarter and year-over-year changes are principally attributable to lower mortgage banking revenue. Mortgage loan production in the second quarter totaled $736.8 million, down 3.9% from the prior quarter and 13.7% year-over-year. Mortgage banking revenue totaled $17.3 million in the second quarter, a decrease of $3.5 million from the prior quarter and $16.4 million year-over-year. The linked-quarter decline is principally attributable to reduced spreads which resulted in lower net gains on sales of mortgage loans in the secondary market.

Wealth management revenue totaled $8.9 million in the second quarter, an increase of $530 thousand, or 6.3%, from the prior quarter and $1.4 million, or 18.2%, year-over-year. The growth is attributable to increased trust and investment and brokerage business. Insurance revenue totaled $12.2 million in the second quarter, down 1.8%, or $228 thousand, from the prior quarter due to seasonality and up 2.9%, or $349 thousand, year-over-year. Service charges on deposit accounts increased $257 thousand, or 3.5%, from the prior quarter and $1.2 million, or 19.0%, year-over-year. Bank card and other fees decreased $1.2 million from the prior quarter and increased $584 thousand year-over-year. The linked-quarter decline reflects reduced customer derivative revenue.

Noninterest Expense

• Noninterest expense totaled $118.7 million in the second quarter, down $2.9 million, or 2.4%, from the prior quarter
• Adjusted noninterest expense, which excludes amortization of intangibles, ORE expenses and charitable contributions resulting in state tax credits, declined $3.9 million, or 3.3%, from the prior quarter; please refer to the Consolidated Financial Information, Note 8 – Non-GAAP Financial Measures
• Efficiency ratio improved to 64.31% in the second quarter

Adjusted noninterest expense in the second quarter was $116.3 million, down $3.9 million, or 3.3%, from the prior quarter. Salaries and employee benefits decreased $1.0 million linked-quarter principally due to the seasonality of payroll taxes in the prior quarter. Services and fees decreased $715 thousand and total equipment expense declined $677 thousand in the second quarter compared to the prior quarter. Total other expense in the second quarter declined $1.4 million, or 9.6%, from the prior quarter. Other real estate expense, net totaled $1.5 million in the second quarter compared to $324 thousand in the prior quarter, reflecting increased valuation allowances on other real estate.

“We continued to implement strategic initiatives designed to improve efficiency, accelerate growth and provide innovation while maintaining solid risk management and our corporate culture,” said Dewey. During the first six months of 2021, Trustmark continued to realign delivery channels and closed nine offices reflecting changing customer preferences and the continued migration to mobile and digital banking channels. Additionally, Trustmark opened three new offices, one each in the Birmingham, AL MSA, Jackson, MS MSA, and Memphis, TN MSA. Each of these offices features a design that integrates myTeller^® interactive teller machine (ITM) technology as well as provides enhanced areas for customer interaction.

“In addition to branch realignment initiatives, we recently announced a voluntary early retirement program for eligible associates, who have until July 31, 2021, to elect to participate in the program. Most participants are expected to retire effective August 31, 2021. Based upon participation, we plan to redesign workflows and restructure the organization to leverage investments in technology, enhance the customer experience and improve efficiency. We anticipate providing additional information regarding this program in our third quarter earnings release,” said Dewey.

“Trustmark has a program to systematically invest in and upgrade technology. In recent years, investments in state-of-the-art technology were made in Trustmark’s insurance, wealth management and mortgage banking areas as well as in human resources and accounting systems. We also made significant upgrades to our mobile banking platform, ITM network and digital marketing programs. Collectively, these investments have well-positioned Trustmark for additional growth and expansion. Over the last 36 months, we have been working toward the implementation of a new core banking system for consumer and commercial loans, deposits and customer information. This implementation, which we have named Core Optimization for Relationship Enhancement (CORE), is a multi-year project, the first phase of which will occur later this year. These investments will better position Trustmark for continued growth, enhance efficiency, and improve the customers’ experience,” said Dewey.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, July 28, 2021 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, August 11, 2021, in archived format at the same web address or by calling [phone], passcode 10158119.

Trustmark is a financial services company providing banking and financial solutions through 180 offices in Alabama, Florida, Mississippi, Tennessee and Texas.

Forward-Looking Statements

Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “project,” “potential,” “seek,” “continue,” “could,” “would,” “future” or the negative of those terms or other words of similar meaning. You should read statements that contain these words carefully because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements include, but are not limited to, statements relating to anticipated future operating and financial performance measures, including net interest margin, credit quality, business initiatives, growth opportunities and growth rates, among other things, and encompass any estimate, prediction, expectation, projection, opinion, anticipation, outlook or statement of belief included therein as well as the management assumptions underlying these forward-looking statements. You should be aware that the occurrence of the events described under the caption “Risk Factors” in Trustmark’s filings with the Securities and Exchange Commission (SEC) could have an adverse effect on our business, results of operations and financial condition. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected. 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 and our customers, 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 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
June 30, 2021
($ in thousands)
(unaudited)
													Linked Quarter							Year over Year
QUARTERLY AVERAGE BALANCES	6/30/2021				3/31/2021				6/30/2020				$ Change				% Change			$ Change				% Change
Securities AFS-taxable	$	2,339,662			$	2,098,089			$	1,724,320			$	241,573			11.5	%		$	615,342			35.7	%
Securities AFS-nontaxable		5,174				5,190				9,827				(16	)		-0.3	%			(4,653	)		-47.3	%
Securities HTM-taxable		441,688				489,260				655,085				(47,572	)		-9.7	%			(213,397	)		-32.6	%
Securities HTM-nontaxable		10,958				24,070				25,538				(13,112	)		-54.5	%			(14,580	)		-57.1	%
Total securities		2,797,482				2,616,609				2,414,770				180,873			6.9	%			382,712			15.8	%
Paycheck protection program loans (PPP)		648,222				598,139				764,416				50,083			8.4	%			(116,194	)		-15.2	%
Loans (includes loans held for sale)		10,315,927				10,316,319				9,908,132				(392	)		0.0	%			407,795			4.1	%
Fed funds sold and reverse repurchases		55				136				113				(81	)		-59.6	%			(58	)		-51.3	%
Other earning assets		1,750,385				1,667,906				854,642				82,479			4.9	%			895,743			n/m
Total earning assets		15,512,071				15,199,109				13,942,073				312,962			2.1	%			1,569,998			11.3	%
Allowance for credit losses (ACL), loans held   for investment (LHFI)		(112,346	)			(119,557	)			(103,006	)			7,211			6.0	%			(9,340	)		-9.1	%
Other assets		1,622,388				1,601,250				1,685,317				21,138			1.3	%			(62,929	)		-3.7	%
Total assets	$	17,022,113			$	16,680,802			$	15,524,384			$	341,311			2.0	%		$	1,497,729			9.6	%
Interest-bearing demand deposits	$	4,056,910			$	3,743,651			$	3,832,372			$	313,259			8.4	%		$	224,538			5.9	%
Savings deposits		4,627,180				4,659,037				4,180,540				(31,857	)		-0.7	%			446,640			10.7	%
Time deposits		1,301,896				1,371,830				1,578,737				(69,934	)		-5.1	%			(276,841	)		-17.5	%
Total interest-bearing deposits		9,985,986				9,774,518				9,591,649				211,468			2.2	%			394,337			4.1	%
Fed funds purchased and repurchases		174,620				166,909				105,696				7,711			4.6	%			68,924			65.2	%
Other borrowings		132,199				166,926				107,533				(34,727	)		-20.8	%			24,666			22.9	%
Subordinated notes		122,897				122,875				—				22			0.0	%			122,897			n/m
Junior subordinated debt securities		61,856				61,856				61,856				—			0.0	%			—			0.0	%
Total interest-bearing liabilities		10,477,558				10,293,084				9,866,734				184,474			1.8	%			610,824			6.2	%
Noninterest-bearing deposits		4,512,268				4,363,559				3,645,761				148,709			3.4	%			866,507			23.8	%
Other liabilities		251,582				264,808				346,173				(13,226	)		-5.0	%			(94,591	)		-27.3	%
Total liabilities		15,241,408				14,921,451				13,858,668				319,957			2.1	%			1,382,740			10.0	%
Shareholders' equity		1,780,705				1,759,351				1,665,716				21,354			1.2	%			114,989			6.9	%
Total liabilities and equity	$	17,022,113			$	16,680,802			$	15,524,384			$	341,311			2.0	%		$	1,497,729			9.6	%
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, 2021
($ in thousands)
(unaudited)
													Linked Quarter							Year over Year
PERIOD END BALANCES	6/30/2021				3/31/2021				6/30/2020				$ Change				% Change			$ Change				% Change
Cash and due from banks	$	2,267,224			$	1,774,541			$	1,026,640			$	492,683			27.8	%		$	1,240,584			n/m
Fed funds sold and reverse repurchases		—				—				—				—			n/m				—			n/m
Securities available for sale		2,548,739				2,337,676				1,884,153				211,063			9.0	%			664,586			35.3	%
Securities held to maturity		433,012				493,738				660,048				(60,726	)		-12.3	%			(227,036	)		-34.4	%
PPP loans		166,119				679,725				939,783				(513,606	)		-75.6	%			(773,664	)		-82.3	%
Loans held for sale (LHFS)		332,132				412,999				355,089				(80,867	)		-19.6	%			(22,957	)		-6.5	%
Loans held for investment (LHFI)		10,152,869				9,983,704				9,659,806				169,165			1.7	%			493,063			5.1	%
ACL LHFI		(104,032	)			(109,191	)			(119,188	)			5,159			-4.7	%			15,156			-12.7	%
Net LHFI		10,048,837				9,874,513				9,540,618				174,324			1.8	%			508,219			5.3	%
Premises and equipment, net		200,970				199,098				190,567				1,872			0.9	%			10,403			5.5	%
Mortgage servicing rights		80,764				83,035				57,811				(2,271	)		-2.7	%			22,953			39.7	%
Goodwill		384,237				384,237				385,270				—			0.0	%			(1,033	)		-0.3	%
Identifiable intangible assets		6,170				6,724				8,895				(554	)		-8.2	%			(2,725	)		-30.6	%
Other real estate		9,439				10,651				18,276				(1,212	)		-11.4	%			(8,837	)		-48.4	%
Operating lease right-of-use assets		33,201				33,704				29,819				(503	)		-1.5	%			3,382			11.3	%
Other assets		587,288				587,672				595,110				(384	)		-0.1	%			(7,822	)		-1.3	%
Total assets	$	17,098,132			$	16,878,313			$	15,692,079			$	219,819			1.3	%		$	1,406,053			9.0	%
Deposits:
Noninterest-bearing	$	4,446,991			$	4,705,991			$	3,880,540			$	(259,000	)		-5.5	%		$	566,451			14.6	%
Interest-bearing		10,185,093				9,677,449				9,624,933				507,644			5.2	%			560,160			5.8	%
Total deposits		14,632,084				14,383,440				13,505,473				248,644			1.7	%			1,126,611			8.3	%
Fed funds purchased and repurchases		157,176				160,991				70,255				(3,815	)		-2.4	%			86,921			n/m
Other borrowings		117,223				145,994				152,860				(28,771	)		-19.7	%			(35,637	)		-23.3	%
Subordinated notes		122,932				122,877				—				55			0.0	%			122,932			n/m
Junior subordinated debt securities		61,856				61,856				61,856				—			0.0	%			—			0.0	%
ACL on off-balance sheet credit exposures		33,733				29,205				42,663				4,528			15.5	%			(8,930	)		-20.9	%
Operating lease liabilities		34,959				35,389				31,076				(430	)		-1.2	%			3,883			12.5	%
Other liabilities		158,860				178,856				153,952				(19,996	)		-11.2	%			4,908			3.2	%
Total liabilities		15,318,823				15,118,608				14,018,135				200,215			1.3	%			1,300,688			9.3	%
Common stock		13,079				13,209				13,214				(130	)		-1.0	%			(135	)		-1.0	%
Capital surplus		210,420				229,892				230,613				(19,472	)		-8.5	%			(20,193	)		-8.8	%
Retained earnings		1,566,451				1,533,110				1,419,552				33,341			2.2	%			146,899			10.3	%
Accum other comprehensive income (loss),   net of tax		(10,641	)			(16,506	)			10,565				5,865			35.5	%			(21,206	)		n/m
Total shareholders' equity		1,779,309				1,759,705				1,673,944				19,604			1.1	%			105,365			6.3	%
Total liabilities and equity	$	17,098,132			$	16,878,313			$	15,692,079			$	219,819			1.3	%		$	1,406,053			9.0	%
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, 2021
($ in thousands except per share data)
(unaudited)
	Quarter Ended									Linked Quarter					Year over Year
INCOME STATEMENTS	6/30/2021			3/31/2021			6/30/2020			$ Change			% Change		$ Change			% Change
Interest and fees on LHFS & LHFI-FTE	$	93,698		$	93,394		$	99,300		$	304		0.3%		$	(5,602)		-5.6%
Interest and fees on PPP loans		25,555			9,241			5,044			16,314		n/m			20,511		n/m
Interest on securities-taxable		8,991			8,938			12,762			53		0.6%			(3,771)		-29.5%
Interest on securities-tax exempt-FTE		149			290			315			(141)		-48.6%			(166)		-52.7%
Interest on fed funds sold and reverse repurchases		—			—			—			—		n/m			—		n/m
Other interest income		489			503			239			(14)		-2.8%			250		n/m
Total interest income-FTE		128,882			112,366			117,660			16,516		14.7%			11,222		9.5%
Interest on deposits		4,630			5,223			8,730			(593)		-11.4%			(4,100)		-47.0%
Interest on fed funds purchased and repurchases		59			56			42			3		5.4%			17		40.5%
Other interest expense		1,813			1,857			881			(44)		-2.4%			932		n/m
Total interest expense		6,502			7,136			9,653			(634)		-8.9%			(3,151)		-32.6%
Net interest income-FTE		122,380			105,230			108,007			17,150		16.3%			14,373		13.3%
Provision for credit losses, LHFI		(3,991)			(10,501)			18,185			6,510		62.0%			(22,176)		n/m
Provision for credit losses, off-balance sheet   credit exposures (1)		4,528			(9,367)			6,242			13,895		n/m			(1,714)		-27.5%
Net interest income after provision-FTE		121,843			125,098			83,580			(3,255)		-2.6%			38,263		45.8%
Service charges on deposit accounts		7,613			7,356			6,397			257		3.5%			1,216		19.0%
Bank card and other fees		8,301			9,472			7,717			(1,171)		-12.4%			584		7.6%
Mortgage banking, net		17,333			20,804			33,745			(3,471)		-16.7%			(16,412)		-48.6%
Insurance commissions		12,217			12,445			11,868			(228)		-1.8%			349		2.9%
Wealth management		8,946			8,416			7,571			530		6.3%			1,375		18.2%
Other, net		2,001			2,090			2,213			(89)		-4.3%			(212)		-9.6%
Total noninterest income		56,411			60,583			69,511			(4,172)		-6.9%			(13,100)		-18.8%
Salaries and employee benefits		70,115			71,162			66,107			(1,047)		-1.5%			4,008		6.1%
Services and fees		21,769			22,484			20,567			(715)		-3.2%			1,202		5.8%
Net occupancy-premises		6,578			6,795			6,587			(217)		-3.2%			(9)		-0.1%
Equipment expense		5,567			6,244			5,620			(677)		-10.8%			(53)		-0.9%
Other real estate expense, net		1,511			324			271			1,187		n/m			1,240		n/m
Other expense		13,139			14,539			13,265			(1,400)		-9.6%			(126)		-0.9%
Total noninterest expense		118,679			121,548			112,417			(2,869)		-2.4%			6,262		5.6%
Income before income taxes and tax eq adj		59,575			64,133			40,674			(4,558)		-7.1%			18,901		46.5%
Tax equivalent adjustment		2,957			2,894			3,007			63		2.2%			(50)		-1.7%
Income before income taxes		56,618			61,239			37,667			(4,621)		-7.5%			18,951		50.3%
Income taxes		8,637			9,277			5,517			(640)		-6.9%			3,120		56.6%
Net income	$	47,981		$	51,962		$	32,150		$	(3,981)		-7.7%		$	15,831		49.2%
Per share data
Earnings per share - basic	$	0.76		$	0.82		$	0.51		$	(0.06)		-7.3%		$	0.25		49.0%
Earnings per share - diluted	$	0.76		$	0.82		$	0.51		$	(0.06)		-7.3%		$	0.25		49.0%
Dividends per share	$	0.23		$	0.23		$	0.23			—		0.0%			—		0.0%
Weighted average shares outstanding
Basic		63,214,593			63,395,911			63,416,307
Diluted		63,409,683			63,562,503			63,555,065
Period end shares outstanding		62,773,226			63,394,522			63,422,439
(1) During the second quarter of 2021, Trustmark reclassified its credit loss expense related to off-balance sheet credit exposures from noninterest expense to provision for credit losses, off-balance sheet credit exposures. Prior periods have been reclassified accordingly.
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2021
($ in thousands)
(unaudited)
	Quarter Ended												Linked Quarter							Year over Year
NONPERFORMING ASSETS (1)	6/30/2021				3/31/2021				6/30/2020				$ Change				% Change			$ Change				% Change
Nonaccrual LHFI
Alabama	$	8,952			$	9,161			$	4,392			$	(209	)		-2.3	%		$	4,560			n/m
Florida		467				607				687				(140	)		-23.1	%			(220	)		-32.0	%
Mississippi (2)		23,422				35,534				37,884				(12,112	)		-34.1	%			(14,462	)		-38.2	%
Tennessee (3)		10,751				12,451				6,125				(1,700	)		-13.7	%			4,626			75.5	%
Texas		7,856				5,761				906				2,095			36.4	%			6,950			n/m
Total nonaccrual LHFI		51,448				63,514				49,994				(12,066	)		-19.0	%			1,454			2.9	%
Other real estate
Alabama		2,830				3,085				4,766				(255	)		-8.3	%			(1,936	)		-40.6	%
Florida		—				—				3,665				—			n/m				(3,665	)		-100.0	%
Mississippi (2)		6,550				7,566				9,408				(1,016	)		-13.4	%			(2,858	)		-30.4	%
Tennessee (3)		59				—				437				59			n/m				(378	)		-86.5	%
Texas		—				—				—				—			n/m				—			n/m
Total other real estate		9,439				10,651				18,276				(1,212	)		-11.4	%			(8,837	)		-48.4	%
Total nonperforming assets	$	60,887			$	74,165			$	68,270			$	(13,278	)		-17.9	%		$	(7,383	)		-10.8	%
LOANS PAST DUE OVER 90 DAYS (1)
LHFI	$	423			$	2,593			$	807			$	(2,170	)		-83.7	%		$	(384	)		-47.6	%
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	81,538			$	109,566			$	56,269			$	(28,028	)		-25.6	%		$	25,269			44.9	%
	Quarter Ended												Linked Quarter							Year over Year
ACL LHFI (1)	6/30/2021				3/31/2021				6/30/2020				$ Change				% Change			$ Change				% Change
Beginning Balance	$	109,191			$	117,306			$	100,564			$	(8,115	)		-6.9	%		$	8,627			8.6	%
CECL adoption adjustments:
LHFI		—				—				—				—			n/m				—			n/m
Acquired loan transfers		—				—				—				—			n/m				—			n/m
Provision for credit losses, LHFI		(3,991	)			(10,501	)			18,185				6,510			62.0	%			(22,176	)		n/m
Charge-offs		(4,828	)			(1,245	)			(1,870	)			(3,583	)		n/m				(2,958	)		n/m
Recoveries		3,660				3,631				2,309				29			0.8	%			1,351			58.5	%
Net (charge-offs) recoveries		(1,168	)			2,386				439				(3,554	)		n/m				(1,607	)		n/m
Ending Balance	$	104,032			$	109,191			$	119,188			$	(5,159	)		-4.7	%		$	(15,156	)		-12.7	%
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama	$	203			$	102			$	526			$	101			99.0	%		$	(323	)		-61.4	%
Florida		167				30				(127	)			137			n/m				294			n/m
Mississippi (2)		(3,071	)			2,207				(86	)			(5,278	)		n/m				(2,985	)		n/m
Tennessee (3)		1,031				47				66				984			n/m				965			n/m
Texas		502				—				60				502			n/m				442			n/m
Total net (charge-offs) recoveries	$	(1,168	)		$	2,386			$	439			$	(3,554	)		n/m			$	(1,607	)		n/m
(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
June 30, 2021
($ in thousands)
(unaudited)
		Quarter Ended																				Six Months Ended
AVERAGE BALANCES		6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020				6/30/2021				6/30/2020
Securities AFS-taxable		$	2,339,662			$	2,098,089			$	1,902,162			$	1,857,050			$	1,724,320			$	2,219,543			$	1,672,371
Securities AFS-nontaxable			5,174				5,190				5,206				5,973				9,827				5,182				15,942
Securities HTM-taxable			441,688				489,260				550,563				608,585				655,085				465,343				674,913
Securities HTM-nontaxable			10,958				24,070				24,752				25,508				25,538				17,478				25,606
Total securities			2,797,482				2,616,609				2,482,683				2,497,116				2,414,770				2,707,546				2,388,832
PPP loans			648,222				598,139				875,098				941,456				764,416				623,319				382,208
Loans (includes loans held for sale)			10,315,927				10,316,319				10,231,671				10,162,379				9,908,132				10,316,122				9,793,153
Fed funds sold and reverse repurchases			55				136				303				301				113				95				139
Other earning assets			1,750,385				1,667,906				860,540				722,917				854,642				1,709,373				520,985
Total earning assets			15,512,071				15,199,109				14,450,295				14,324,169				13,942,073				15,356,455				13,085,317
ACL LHFI			(112,346	)			(119,557	)			(124,088	)			(121,842	)			(103,006	)			(115,932	)			(94,011	)
Other assets			1,622,388				1,601,250				1,620,694				1,564,825				1,685,317				1,611,877				1,592,019
Total assets		$	17,022,113			$	16,680,802			$	15,946,901			$	15,767,152			$	15,524,384			$	16,852,400			$	14,583,325
Interest-bearing demand deposits		$	4,056,910			$	3,743,651			$	3,649,590			$	3,669,249			$	3,832,372			$	3,901,146			$	3,508,253
Savings deposits			4,627,180				4,659,037				4,350,783				4,416,046				4,180,540				4,643,020				3,913,738
Time deposits			1,301,896				1,371,830				1,436,677				1,507,348				1,578,737				1,336,670				1,598,022
Total interest-bearing deposits			9,985,986				9,774,518				9,437,050				9,592,643				9,591,649				9,880,836				9,020,013
Fed funds purchased and repurchases			174,620				166,909				170,474				84,077				105,696				170,786				176,605
Other borrowings			132,199				166,926				173,525				167,262				107,533				149,467				96,406
Subordinated notes			122,897				122,875				42,828				—				—				122,886				—
Junior subordinated debt securities			61,856				61,856				61,856				61,856				61,856				61,856				61,856
Total interest-bearing liabilities			10,477,558				10,293,084				9,885,733				9,905,838				9,866,734				10,385,831				9,354,880
Noninterest-bearing deposits			4,512,268				4,363,559				4,100,849				3,921,867				3,645,761				4,438,324				3,278,356
Other liabilities			251,582				264,808				235,284				244,544				346,173				258,158				297,196
Total liabilities			15,241,408				14,921,451				14,221,866				14,072,249				13,858,668				15,082,313				12,930,432
Shareholders' equity			1,780,705				1,759,351				1,725,035				1,694,903				1,665,716				1,770,087				1,652,893
Total liabilities and equity		$	17,022,113			$	16,680,802			$	15,946,901			$	15,767,152			$	15,524,384			$	16,852,400			$	14,583,325
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2021
($ in thousands)
(unaudited)
PERIOD END BALANCES		6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020
Cash and due from banks		$	2,267,224			$	1,774,541			$	1,952,504			$	564,588			$	1,026,640
Fed funds sold and reverse repurchases			—				—				50				50				—
Securities available for sale			2,548,739				2,337,676				1,991,815				1,922,728				1,884,153
Securities held to maturity			433,012				493,738				538,072				611,280				660,048
PPP loans			166,119				679,725				610,134				944,270				939,783
LHFS			332,132				412,999				446,951				485,103				355,089
LHFI			10,152,869				9,983,704				9,824,524				9,847,728				9,659,806
ACL LHFI			(104,032	)			(109,191	)			(117,306	)			(122,010	)			(119,188	)
Net LHFI			10,048,837				9,874,513				9,707,218				9,725,718				9,540,618
Premises and equipment, net			200,970				199,098				194,278				192,722				190,567
Mortgage servicing rights			80,764				83,035				66,464				61,613				57,811
Goodwill			384,237				384,237				385,270				385,270				385,270
Identifiable intangible assets			6,170				6,724				7,390				8,142				8,895
Other real estate			9,439				10,651				11,651				16,248				18,276
Operating lease right-of-use assets			33,201				33,704				30,901				30,508				29,819
Other assets			587,288				587,672				609,142				609,922				595,110
Total assets		$	17,098,132			$	16,878,313			$	16,551,840			$	15,558,162			$	15,692,079
Deposits:
Noninterest-bearing		$	4,446,991			$	4,705,991			$	4,349,010			$	3,964,023			$	3,880,540
Interest-bearing			10,185,093				9,677,449				9,699,754				9,258,390				9,624,933
Total deposits			14,632,084				14,383,440				14,048,764				13,222,413				13,505,473
Fed funds purchased and repurchases			157,176				160,991				164,519				153,834				70,255
Other borrowings			117,223				145,994				168,252				178,599				152,860
Subordinated notes			122,932				122,877				122,921				—				—
Junior subordinated debt securities			61,856				61,856				61,856				61,856				61,856
ACL on off-balance sheet credit exposures			33,733				29,205				38,572				39,659				42,663
Operating lease liabilities			34,959				35,389				32,290				31,838				31,076
Other liabilities			158,860				178,856				173,549				159,922				153,952
Total liabilities			15,318,823				15,118,608				14,810,723				13,848,121				14,018,135
Common stock			13,079				13,209				13,215				13,215				13,214
Capital surplus			210,420				229,892				233,120				231,836				230,613
Retained earnings			1,566,451				1,533,110				1,495,833				1,459,306				1,419,552
Accum other comprehensive income (loss), net of tax			(10,641	)			(16,506	)			(1,051	)			5,684				10,565
Total shareholders' equity			1,779,309				1,759,705				1,741,117				1,710,041				1,673,944
Total liabilities and equity		$	17,098,132			$	16,878,313			$	16,551,840			$	15,558,162			$	15,692,079
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2021
($ in thousands except per share data)
(unaudited)
		Quarter Ended																			Six Months Ended
INCOME STATEMENTS		6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020			6/30/2021				6/30/2020
Interest and fees on LHFS & LHFI-FTE		$	93,698			$	93,394			$	96,453			$	97,429			$	99,300		$	187,092			$	208,657
Interest and fees on PPP loans			25,555				9,241				14,870				6,729				5,044			34,796				5,044
Interest on securities-taxable			8,991				8,938				9,998				12,542				12,762			17,929				25,710
Interest on securities-tax exempt-FTE			149				290				293				301				315			439				772
Interest on fed funds sold and reverse repurchases			—				—				—				1				—			—				—
Other interest income			489				503				249				331				239			992				979
Total interest income-FTE			128,882				112,366				121,863				117,333				117,660			241,248				241,162
Interest on deposits			4,630				5,223				6,363				7,437				8,730			9,853				23,687
Interest on fed funds purchased and repurchases			59				56				56				32				42			115				667
Other interest expense			1,813				1,857				1,127				688				881			3,670				1,741
Total interest expense			6,502				7,136				7,546				8,157				9,653			13,638				26,095
Net interest income-FTE			122,380				105,230				114,317				109,176				108,007			227,610				215,067
Provision for credit losses, LHFI			(3,991	)			(10,501	)			(4,413	)			1,760				18,185			(14,492	)			38,766
Provision for credit losses, off-balance sheet   credit exposures (1)			4,528				(9,367	)			(1,087	)			(3,004	)			6,242			(4,839	)			13,025
Net interest income after provision-FTE			121,843				125,098				119,817				110,420				83,580			246,941				163,276
Service charges on deposit accounts			7,613				7,356				8,283				7,577				6,397			14,969				16,429
Bank card and other fees			8,301				9,472				9,107				8,843				7,717			17,773				13,072
Mortgage banking, net			17,333				20,804				28,155				36,439				33,745			38,137				61,228
Insurance commissions			12,217				12,445				10,196				11,562				11,868			24,662				23,418
Wealth management			8,946				8,416				7,838				7,679				7,571			17,362				16,108
Other, net			2,001				2,090				2,538				1,601				2,213			4,091				4,520
Total noninterest income			56,411				60,583				66,117				73,701				69,511			116,994				134,775
Salaries and employee benefits			70,115				71,162				69,660				67,342				66,107			141,277				135,255
Services and fees			21,769				22,484				22,327				20,992				20,567			44,253				40,497
Net occupancy-premises			6,578				6,795				6,616				7,000				6,587			13,373				12,873
Equipment expense			5,567				6,244				6,213				5,828				5,620			11,811				11,236
Other real estate expense, net			1,511				324				(812	)			1,203				271			1,835				1,565
Other expense			13,139				14,539				15,890				14,598				13,265			27,678				28,018
Total noninterest expense			118,679				121,548				119,894				116,963				112,417			240,227				229,444
Income before income taxes and tax eq adj			59,575				64,133				66,040				67,158				40,674			123,708				68,607
Tax equivalent adjustment			2,957				2,894				2,939				2,969				3,007			5,851				6,115
Income before income taxes			56,618				61,239				63,101				64,189				37,667			117,857				62,492
Income taxes			8,637				9,277				11,884				9,749				5,517			17,914				8,124
Net income		$	47,981			$	51,962			$	51,217			$	54,440			$	32,150		$	99,943			$	54,368
Per share data
Earnings per share - basic		$	0.76			$	0.82			$	0.81			$	0.86			$	0.51		$	1.58			$	0.86
Earnings per share - diluted		$	0.76			$	0.82			$	0.81			$	0.86			$	0.51		$	1.57			$	0.85
Dividends per share		$	0.23			$	0.23			$	0.23			$	0.23			$	0.23		$	0.46			$	0.46
Weighted average shares outstanding
Basic			63,214,593				63,395,911				63,424,219				63,422,692				63,416,307			63,304,751				63,586,468
Diluted			63,409,683				63,562,503				63,616,767				63,581,964				63,555,065			63,465,515				63,721,728
Period end shares outstanding			62,773,226				63,394,522				63,424,526				63,423,820				63,422,439			62,773,226				63,422,439
(1) During the second quarter of 2021, Trustmark reclassified its credit loss expense related to off-balance sheet credit exposures from noninterest expense to provision for credit losses, off-balance sheet credit exposures. Prior periods have been reclassified accordingly.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2021
($ in thousands)
(unaudited)
		Quarter Ended
NONPERFORMING ASSETS (1)		6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020
Nonaccrual LHFI
Alabama		$	8,952			$	9,161			$	9,221			$	3,860			$	4,392
Florida			467				607				572				617				687
Mississippi (2)			23,422				35,534				35,015				35,617				37,884
Tennessee (3)			10,751				12,451				12,572				13,041				6,125
Texas			7,856				5,761				5,748				721				906
Total nonaccrual LHFI			51,448				63,514				63,128				53,856				49,994
Other real estate
Alabama			2,830				3,085				3,271				3,725				4,766
Florida			—				—				—				3,665				3,665
Mississippi (2)			6,550				7,566				8,330				8,718				9,408
Tennessee (3)			59				—				50				140				437
Texas			—				—				—				—				—
Total other real estate			9,439				10,651				11,651				16,248				18,276
Total nonperforming assets		$	60,887			$	74,165			$	74,779			$	70,104			$	68,270
LOANS PAST DUE OVER 90 DAYS (1)
LHFI		$	423			$	2,593			$	1,576			$	782			$	807
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)		$	81,538			$	109,566			$	119,409			$	121,281			$	56,269
		Quarter Ended																				Six Months Ended
ACL LHFI (1)		6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020				6/30/2021				6/30/2020
Beginning Balance		$	109,191			$	117,306			$	122,010			$	119,188			$	100,564			$	117,306			$	84,277
CECL adoption adjustments:
LHFI			—				—				—				—				—				—				(3,039	)
Acquired loan transfers			—				—				—				—				—				—				1,822
Provision for credit losses, LHFI			(3,991	)			(10,501	)			(4,413	)			1,760				18,185				(14,492	)			38,766
Charge-offs			(4,828	)			(1,245	)			(2,797	)			(1,263	)			(1,870	)			(6,073	)			(7,415	)
Recoveries			3,660				3,631				2,506				2,325				2,309				7,291				4,777
Net (charge-offs) recoveries			(1,168	)			2,386				(291	)			1,062				439				1,218				(2,638	)
Ending Balance		$	104,032			$	109,191			$	117,306			$	122,010			$	119,188			$	104,032			$	119,188
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama		$	203			$	102			$	(1,011	)		$	117			$	526			$	305			$	(554	)
Florida			167				30				66				387				(127	)			197				(63	)
Mississippi (2)			(3,071	)			2,207				332				442				(86	)			(864	)			40
Tennessee (3)			1,031				47				303				42				66				1,078				(2,120	)
Texas			502				—				19				74				60				502				59
Total net (charge-offs) recoveries		$	(1,168	)		$	2,386			$	(291	)		$	1,062			$	439			$	1,218			$	(2,638	)
(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
June 30, 2021
(unaudited)
		Quarter Ended																				Six Months Ended
FINANCIAL RATIOS AND OTHER DATA		6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020				6/30/2021			6/30/2020
Return on average equity			10.81	%			11.98	%			11.81	%			12.78	%			7.76	%		11.39	%		6.61	%
Return on average tangible equity			13.96	%			15.56	%			15.47	%			16.82	%			10.32	%		14.75	%		8.84	%
Return on average assets			1.13	%			1.26	%			1.28	%			1.37	%			0.83	%		1.20	%		0.75	%
Interest margin - Yield - FTE			3.33	%			3.00	%			3.35	%			3.26	%			3.39	%		3.17	%		3.71	%
Interest margin - Cost			0.17	%			0.19	%			0.21	%			0.23	%			0.28	%		0.18	%		0.40	%
Net interest margin - FTE			3.16	%			2.81	%			3.15	%			3.03	%			3.12	%		2.99	%		3.31	%
Efficiency ratio (1)			64.31	%			71.84	%			65.59	%			62.19	%			62.13	%		67.93	%		62.81	%
Full-time equivalent employees			2,772				2,793				2,797				2,807				2,798
CREDIT QUALITY RATIOS (2)
Net (recoveries) charge-offs / average loans			0.05	%			-0.09	%			0.01	%			-0.04	%			-0.02	%		-0.02	%		0.05	%
Provision for credit losses, LHFI / average loans			-0.16	%			-0.41	%			-0.17	%			0.07	%			0.74	%		-0.28	%		0.80	%
Nonaccrual LHFI / (LHFI + LHFS)			0.49	%			0.61	%			0.61	%			0.52	%			0.50	%
Nonperforming assets / (LHFI + LHFS)			0.58	%			0.71	%			0.73	%			0.68	%			0.68	%
Nonperforming assets / (LHFI + LHFS + other real estate)			0.58	%			0.71	%			0.73	%			0.68	%			0.68	%
ACL LHFI / LHFI			1.02	%			1.09	%			1.19	%			1.24	%			1.23	%
ACL LHFI-commercial / commercial LHFI			1.04	%			1.13	%			1.20	%			1.20	%			1.15	%
ACL LHFI-consumer / consumer and home mortgage LHFI			0.98	%			0.95	%			1.16	%			1.41	%			1.56	%
ACL LHFI / nonaccrual LHFI			202.21	%			171.92	%			185.82	%			226.55	%			238.40	%
ACL LHFI / nonaccrual LHFI (excl individually evaluated loans)			537.35	%			437.08	%			572.69	%			593.72	%			561.04	%
CAPITAL RATIOS
Total equity / total assets			10.41	%			10.43	%			10.52	%			10.99	%			10.67	%
Tangible equity / tangible assets			8.31	%			8.30	%			8.34	%			8.68	%			8.37	%
Tangible equity / risk-weighted assets			11.33	%			11.23	%			11.22	%			11.01	%			11.09	%
Tier 1 leverage ratio			9.00	%			9.11	%			9.33	%			9.20	%			9.08	%
Common equity tier 1 capital ratio			11.76	%			11.71	%			11.62	%			11.36	%			11.42	%
Tier 1 risk-based capital ratio			12.25	%			12.20	%			12.11	%			11.86	%			11.94	%
Total risk-based capital ratio			14.10	%			14.07	%			14.12	%			12.88	%			13.00	%
STOCK PERFORMANCE
Market value-Close		$	30.80			$	33.66			$	27.31			$	21.41			$	24.52
Book value		$	28.35			$	27.76			$	27.45			$	26.96			$	26.39
Tangible book value		$	22.13			$	21.59			$	21.26			$	20.76			$	20.18
(1) See Note 8 – 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
June 30, 2021
($ in thousands)
(unaudited)

Note 1 - Paycheck Protection Program

On June 30, 2021, Trustmark announced the sale of substantially all PPP loans originated in 2021 by its wholly owned subsidiary, Trustmark National Bank (TNB), to The Loan Source, Inc. (Loan Source), a firm with significant expertise in PPP loans. As a result of this transaction, Loan Source will assume responsibility for the servicing and forgiveness process for the loans it has acquired from Trustmark. This transaction will allow Trustmark to focus on more traditional lending efforts and increase its ability to provide customers with financial services in an improving economic environment.

On a pre-tax basis, Trustmark accelerated the recognition of unamortized PPP loan origination fees, net of cost, of approximately $18.6 million, in the second quarter of 2021 due to the sale of approximately $354.2 million in PPP loans. This revenue is substantially the same as Trustmark would expect to recognize upon the maturity or forgiveness of the PPP loans being sold in this transaction, and thus this transaction serves to accelerate revenue anticipated in future periods into the second quarter.

At June 30, 2021, Trustmark had 843 PPP loans outstanding that totaled $166.1 million (net of $2.1 million of deferred fees and costs) under the CARES Act. Due to amount and nature of the PPP loans, these loans were not included in the LHFI portfolio and are presented separately in the accompanying consolidated balance sheets. The PPP loans are fully guaranteed by the Small Business Administration; therefore, no ACL was estimated for these loans.

Note 2 - Securities Available for Sale and Held to Maturity

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

		6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities		$	30,025			$	—			$	—			$	—			$	—
U.S. Government agency obligations			16,023				17,349				18,041				19,011				19,898
Obligations of states and political subdivisions			5,807				5,798				5,835				8,315				11,176
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			48,445				52,406				56,862				62,156				69,637
Issued by FNMA and FHLMC			1,983,783				1,749,144				1,441,321				1,279,919				1,121,604
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			283,988				345,869				419,437				500,858				574,940
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			180,668				167,110				50,319				52,469				86,898
Total securities available for sale		$	2,548,739			$	2,337,676			$	1,991,815			$	1,922,728			$	1,884,153
SECURITIES HELD TO MATURITY
Obligations of states and political subdivisions		$	12,994			$	26,554			$	26,584			$	31,605			$	31,629
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			6,249				7,268				7,598				8,244				10,306
Issued by FNMA and FHLMC			53,406				61,855				67,944				78,213				86,346
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			291,477				324,360				360,361				399,400				435,333
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			68,886				73,701				75,585				93,818				96,434
Total securities held to maturity		$	433,012			$	493,738			$	538,072			$	611,280			$	660,048

At June 30, 2021, 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 $7.5 million ($5.6 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 99.4% 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, 2021
($ in thousands)
(unaudited)

Note 3 – Loan Composition

LHFI consisted of the following during the periods presented:

LHFI BY TYPE		6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020
Loans secured by real estate:
Construction, land development and other land loans		$	1,360,302			$	1,342,088			$	1,309,039			$	1,385,947			$	1,277,277
Secured by 1-4 family residential properties			1,810,396				1,742,782				1,741,132				1,775,400				1,813,525
Secured by nonfarm, nonresidential properties			2,819,662				2,799,195				2,709,026				2,707,627				2,610,392
Other real estate secured			1,078,622				1,135,005				1,065,964				887,792				884,815
Commercial and industrial loans			1,326,605				1,323,277				1,309,078				1,398,468				1,413,255
Consumer loans			153,519				153,267				161,174				160,960				161,620
State and other political subdivision loans			1,136,764				1,036,694				1,000,776				935,349				931,536
Other loans			466,999				451,396				528,335				596,185				567,386
LHFI			10,152,869				9,983,704				9,824,524				9,847,728				9,659,806
ACL LHFI			(104,032	)			(109,191	)			(117,306	)			(122,010	)			(119,188	)
Net LHFI		$	10,048,837			$	9,874,513			$	9,707,218			$	9,725,718			$	9,540,618

The following table presents the LHFI composition by region at June 30, 2021 and reflects each region’s diversified mix of loans:

		June 30, 2021
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		$	1,360,302			$	512,156			$	57,415			$	358,091			$	36,934			$	395,706
Secured by 1-4 family residential properties			1,810,396				113,712				38,443				1,576,135				68,876				13,230
Secured by nonfarm, nonresidential properties			2,819,662				783,796				248,269				1,006,513				175,586				605,498
Other real estate secured			1,078,622				287,039				5,734				356,092				19,676				410,081
Commercial and industrial loans			1,326,605				212,425				21,180				585,821				298,249				208,930
Consumer loans			153,519				22,792				7,660				99,067				19,496				4,504
State and other political subdivision loans			1,136,764				106,447				53,425				722,702				37,777				216,413
Other loans			466,999				77,295				12,964				290,024				65,816				20,900
Loans		$	10,152,869			$	2,115,662			$	445,090			$	4,994,445			$	722,410			$	1,875,262
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots		$	59,839			$	22,570			$	9,368			$	20,283			$	1,181			$	6,437
Development			106,548				41,903				554				37,599				13,211				13,281
Unimproved land			102,023				27,747				12,709				32,564				11,375				17,628
1-4 family construction			264,227				135,418				19,606				63,863				10,088				35,252
Other construction			827,665				284,518				15,178				203,782				1,079				323,108
Construction, land development and other land loans		$	1,360,302			$	512,156			$	57,415			$	358,091			$	36,934			$	395,706

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2021
($ in thousands)
(unaudited)

Note 3 – Loan Composition (continued)

		June 30, 2021
		Total				Alabama				Florida				Mississippi (Central and Southern Regions)				Tennessee (Memphis, TN and Northern MS Regions)				Texas
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION
Non-owner occupied:
Retail		$	401,811			$	158,862			$	36,208			$	108,021			$	22,347			$	76,373
Office			203,704				48,483				25,523				62,711				12,352				54,635
Hotel/motel			340,867				167,536				65,163				47,535				35,708				24,925
Mini-storage			138,841				22,969				2,151				66,392				382				46,947
Industrial			211,872				43,197				19,008				46,733				139				102,795
Health care			41,722				21,555				1,167				16,468				376				2,156
Convenience stores			22,052				6,742				200				3,737				564				10,809
Nursing homes/senior living			154,351				84,686				—				43,067				6,598				20,000
Other			85,841				12,990				8,293				27,345				8,962				28,251
Total non-owner occupied loans			1,601,061				567,020				157,713				422,009				87,428				366,891
Owner-occupied:
Office			174,051				40,219				41,695				54,589				8,149				29,399
Churches			100,575				20,331				6,439				50,387				10,056				13,362
Industrial warehouses			177,645				12,820				3,582				49,855				16,729				94,659
Health care			139,456				25,317				7,019				94,162				2,313				10,645
Convenience stores			139,508				16,425				13,211				64,621				511				44,740
Retail			68,652				13,448				9,815				20,565				10,382				14,442
Restaurants			54,470				3,838				4,609				31,637				14,101				285
Auto dealerships			55,141				6,664				267				23,099				25,111				—
Nursing homes/senior living			202,579				71,916				—				130,663				—				—
Other			106,524				5,798				3,919				64,926				806				31,075
Total owner-occupied loans			1,218,601				216,776				90,556				584,504				88,158				238,607
Loans secured by nonfarm, nonresidential properties		$	2,819,662			$	783,796			$	248,269			$	1,006,513			$	175,586			$	605,498

Note 4 – Subordinated Notes

During the fourth quarter of 2020, Trustmark agreed to issue and sell $125.0 million aggregate principal amount of its 3.625% Fixed-to-Floating Rate Subordinated Notes (the Notes) due December 1, 2030. At June 30, 2021, the carrying amount of the Notes was $122.9 million. The Notes are unsecured obligations and are subordinated in right of payment to all of Trustmark’s existing and future senior indebtedness, whether secured or unsecured. The Notes are obligations of Trustmark only and are not obligations of, and are not guaranteed by, any of its subsidiaries, including TNB. From the date of issuance until November 30, 2025, the Notes bear interest at a fixed rate of 3.625% per year, payable semi-annually in arrears on June 1 and December 1 of each year. Beginning December 1, 2025, the Notes will bear interest at a floating rate per year equal to the Benchmark rate, which is the Three-Month Term Secured Overnight Financing Rate (SOFR), plus 338.7 basis points, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year. The Notes qualify as Tier 2 capital for Trustmark. The Notes may be redeemed at Trustmark’s option under certain circumstances. Trustmark intends to use the net proceeds for general corporate purposes.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2021
($ in thousands)
(unaudited)

Note 5 – 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
		6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020				6/30/2021				6/30/2020
Securities – taxable			1.30	%			1.40	%			1.62	%			2.02	%			2.16	%			1.35	%			2.20	%
Securities – nontaxable			3.70	%			4.02	%			3.89	%			3.80	%			3.58	%			3.91	%			3.74	%
Securities – total			1.31	%			1.43	%			1.65	%			2.05	%			2.18	%			1.37	%			2.23	%
PPP loans			15.81	%			6.27	%			6.76	%			2.84	%			2.65	%			11.26	%			2.65	%
Loans - LHFI & LHFS			3.64	%			3.67	%			3.75	%			3.81	%			4.03	%			3.66	%			4.28	%
Loans - total			4.36	%			3.81	%			3.99	%			3.73	%			3.93	%			4.09	%			4.22	%
Fed funds sold & reverse repurchases			—				—				—				1.32	%			—				—				—
Other earning assets			0.11	%			0.12	%			0.12	%			0.18	%			0.11	%			0.12	%			0.38	%
Total earning assets			3.33	%			3.00	%			3.35	%			3.26	%			3.39	%			3.17	%			3.71	%
Interest-bearing deposits			0.19	%			0.22	%			0.27	%			0.31	%			0.37	%			0.20	%			0.53	%
Fed funds purchased & repurchases			0.14	%			0.14	%			0.13	%			0.15	%			0.16	%			0.14	%			0.76	%
Other borrowings			2.29	%			2.14	%			1.61	%			1.19	%			2.09	%			2.21	%			2.21	%
Total interest-bearing liabilities			0.25	%			0.28	%			0.30	%			0.33	%			0.39	%			0.26	%			0.56	%
Net interest margin			3.16	%			2.81	%			3.15	%			3.03	%			3.12	%			2.99	%			3.31	%
Net interest margin excluding PPP loans and the FRB balance			2.94	%			2.99	%			3.09	%			3.20	%			3.35	%			2.96	%			3.44	%

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 June 30, 2021 and March 31, 2021, the average FRB balance totaled $1.700 billion and $1.618 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 2.94% for the second quarter of 2021, a decrease of 5 basis points when compared to the first quarter of 2021. Continued low interest rates decreased the yield on the loans held for investment and held for sale portfolio as well as the securities portfolio and were partially offset by lower costs of interest-bearing deposits.

Note 6 – 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 $1.3 million during the second quarter of 2021.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2021
($ in thousands)
(unaudited)

Note 6 – Mortgage Banking (continued)

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

		Quarter Ended																				Six Months Ended
		6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020				6/30/2021				6/30/2020
Mortgage servicing income, net		$	6,318			$	6,181			$	6,227			$	5,742			$	5,893			$	12,499			$	11,712
Change in fair value-MSR from runoff			(5,029	)			(5,103	)			(5,177	)			(4,590	)			(4,214	)			(10,132	)			(6,821	)
Gain on sales of loans, net			14,778				19,456				28,014				34,472				34,078				34,234				48,417
Mortgage banking income before hedge ineffectiveness			16,067				20,534				29,064				35,624				35,757				36,601				53,308
Change in fair value-MSR from market changes			(4,465	)			13,696				951				60				(3,159	)			9,231				(27,158	)
Change in fair value of derivatives			5,731				(13,426	)			(1,860	)			755				1,147				(7,695	)			35,078
Net positive (negative) hedge ineffectiveness			1,266				270				(909	)			815				(2,012	)			1,536				7,920
Mortgage banking, net		$	17,333			$	20,804			$	28,155			$	36,439			$	33,745			$	38,137			$	61,228

Note 7 – Other Noninterest Income and Expense

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

		Quarter Ended																				Six Months Ended
		6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020				6/30/2021				6/30/2020
Partnership amortization for tax credit purposes		$	(1,989	)		$	(1,522	)		$	(1,877	)		$	(1,457	)		$	(1,205	)		$	(3,511	)		$	(2,366	)
Increase in life insurance cash surrender value			1,653				1,639				1,708				1,755				1,696				3,292				3,418
Other miscellaneous income			2,337				1,973				2,707				1,303				1,722				4,310				3,468
Total other, net		$	2,001			$	2,090			$	2,538			$	1,601			$	2,213			$	4,091			$	4,520

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																				Six Months Ended
		6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020				6/30/2021				6/30/2020
Loan expense		$	3,738			$	4,167			$	4,243			$	4,184			$	3,619			$	7,905			$	6,751
Amortization of intangibles			553				666				752				752				736				1,219				1,548
FDIC assessment expense			1,225				1,540				1,500				1,410				1,590				2,765				3,180
Other miscellaneous expense			7,623				8,166				9,395				8,252				7,320				15,789				16,539
Total other expense		$	13,139			$	14,539			$	15,890			$	14,598			$	13,265			$	27,678			$	28,018

Note 8 – Non-GAAP Financial Measures

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

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

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

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2021
($ in thousands except per share data)
(unaudited)

Note 8 – Non-GAAP Financial Measures (continued)

				Quarter Ended																				Six Months Ended
				6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020				6/30/2021				6/30/2020
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity				$	1,780,705			$	1,759,351			$	1,725,035			$	1,694,903			$	1,665,716			$	1,770,087			$	1,652,893
Less: Goodwill					(384,237	)			(385,155	)			(385,270	)			(385,270	)			(383,081	)			(384,694	)			(381,876	)
Identifiable intangible assets					(6,442	)			(7,118	)			(7,803	)			(8,550	)			(7,834	)			(6,778	)			(7,942	)
Total average tangible equity				$	1,390,026			$	1,367,078			$	1,331,962			$	1,301,083			$	1,274,801			$	1,378,615			$	1,263,075
PERIOD END BALANCES
Total shareholders' equity				$	1,779,309			$	1,759,705			$	1,741,117			$	1,710,041			$	1,673,944
Less: Goodwill					(384,237	)			(384,237	)			(385,270	)			(385,270	)			(385,270	)
Identifiable intangible assets					(6,170	)			(6,724	)			(7,390	)			(8,142	)			(8,895	)
Total tangible equity		(a)		$	1,388,902			$	1,368,744			$	1,348,457			$	1,316,629			$	1,279,779
TANGIBLE ASSETS
Total assets				$	17,098,132			$	16,878,313			$	16,551,840			$	15,558,162			$	15,692,079
Less: Goodwill					(384,237	)			(384,237	)			(385,270	)			(385,270	)			(385,270	)
Identifiable intangible assets					(6,170	)			(6,724	)			(7,390	)			(8,142	)			(8,895	)
Total tangible assets		(b)		$	16,707,725			$	16,487,352			$	16,159,180			$	15,164,750			$	15,297,914
Risk-weighted assets		(c)		$	12,256,492			$	12,188,988			$	12,017,378			$	11,963,269			$	11,539,157
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income				$	47,981			$	51,962			$	51,217			$	54,440			$	32,150			$	99,943			$	54,368
Plus: Intangible amortization net of tax					415				500				564				564				552				915				1,161
Net income adjusted for intangible amortization				$	48,396			$	52,462			$	51,781			$	55,004			$	32,702			$	100,858			$	55,529
Period end common shares outstanding		(d)			62,773,226				63,394,522				63,424,526				63,423,820				63,422,439
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity (1)					13.96	%			15.56	%			15.47	%			16.82	%			10.32	%			14.75	%			8.84	%
Tangible equity/tangible assets		(a)/(b)			8.31	%			8.30	%			8.34	%			8.68	%			8.37	%
Tangible equity/risk-weighted assets		(a)/(c)			11.33	%			11.23	%			11.22	%			11.01	%			11.09	%
Tangible book value		(a)/(d)*1,000		$	22.13			$	21.59			$	21.26			$	20.76			$	20.18
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity				$	1,779,309			$	1,759,705			$	1,741,117			$	1,710,041			$	1,673,944
CECL transition adjustment					26,671				26,829				31,199				32,647				32,693
AOCI-related adjustments					10,641				16,506				1,051				(5,684	)			(10,565	)
CET1 adjustments and deductions:
Goodwill net of associated deferred tax liabilities (DTLs)					(370,276	)			(370,288	)			(371,333	)			(371,345	)			(371,342	)
Other adjustments and deductions for CET1 (2)					(5,243	)			(5,675	)			(6,190	)			(6,770	)			(7,352	)
CET1 capital		(e)			1,441,102				1,427,077				1,395,844				1,358,889				1,317,378
Additional tier 1 capital instruments plus related surplus					60,000				60,000				60,000				60,000				60,000
Tier 1 capital				$	1,501,102			$	1,487,077			$	1,455,844			$	1,418,889			$	1,377,378
Common equity tier 1 capital ratio		(e)/(c)			11.76	%			11.71	%			11.62	%			11.36	%			11.42	%
(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
June 30, 2021
($ in thousands except per share data)
(unaudited)

Note 8 – Non-GAAP Financial Measures (continued)

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

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

			Quarter Ended																				Six Months Ended
			6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020				6/30/2021				6/30/2020
Net interest income (GAAP)			$	119,423			$	102,336			$	111,378			$	106,207			$	105,000			$	221,759			$	208,952
Noninterest income (GAAP)				56,411				60,583				66,117				73,701				69,511				116,994				134,775
Pre-provision revenue		(a)	$	175,834			$	162,919			$	177,495			$	179,908			$	174,511			$	338,753			$	343,727
Noninterest expense (GAAP)			$	118,679			$	121,548			$	119,894			$	116,963			$	112,417			$	240,227			$	229,444
Less: Voluntary early retirement program				—				—				—				—				—				—				(4,375	)
Adjusted noninterest expense - PPNR (Non-GAAP)		(b)	$	118,679			$	121,548			$	119,894			$	116,963			$	112,417			$	240,227			$	225,069
PPNR (Non-GAAP)		(a)-(b)	$	57,155			$	41,371			$	57,601			$	62,945			$	62,094			$	98,526			$	118,658

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

	Quarter Ended																		Six Months Ended
	6/30/2021									6/30/2020									6/30/2021									6/30/2020
	Amount				Diluted EPS					Amount				Diluted EPS					Amount				Diluted EPS					Amount				Diluted EPS
Net Income (GAAP)	$	47,981			$	0.76				$	32,150			$	0.51				$	99,943			$	1.57				$	54,368			$	0.85
Significant non-routine transactions (net of taxes):
Voluntary early retirement program		—				—					—				—					—				—					3,281				0.05
Net Income adjusted for significant
non-routine transactions (Non-GAAP)	$	47,981			$	0.76				$	32,150			$	0.51				$	99,943			$	1.57				$	57,649			$	0.90
	Reported (GAAP)				Adjusted					Reported (GAAP)				Adjusted					Reported (GAAP)				Adjusted					Reported (GAAP)				Adjusted
					(Non- GAAP)									(Non- GAAP)									(Non- GAAP)									(Non- GAAP)
Return on average equity		10.81	%		n/a						7.76	%		n/a						11.39	%		n/a						6.61	%			7.00	%
Return on average tangible equity		13.96	%		n/a						10.32	%		n/a						14.75	%		n/a						8.84	%			9.35	%
Return on average assets		1.13	%		n/a						0.83	%		n/a						1.20	%		n/a						0.75	%			0.79	%
n/a - not applicable

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2021
($ in thousands)
(unaudited)

Note 8 – Non-GAAP Financial Measures (continued)

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

		Quarter Ended																				Six Months Ended
		6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020				6/30/2021				6/30/2020
Total noninterest expense (GAAP)		$	118,679			$	121,548			$	119,894			$	116,963			$	112,417				240,227			$	229,444
Less: Other real estate expense, net			(1,511	)			(324	)			812				(1,203	)			(271	)			(1,835	)			(1,565	)
Amortization of intangibles			(553	)			(666	)			(752	)			(752	)			(736	)			(1,219	)			(1,548	)
Voluntary early retirement program			—				—				—				—				—				—				(4,375	)
Charitable contributions resulting in state tax credits			(355	)			(350	)			(375	)			(375	)			(375	)			(705	)			(750	)
Adjusted noninterest expense (Non-GAAP)	(c)	$	116,260			$	120,208			$	119,579			$	114,633			$	111,035			$	236,468			$	221,206
Net interest income (GAAP)		$	119,423			$	102,336			$	111,378			$	106,207			$	105,000			$	221,759			$	208,952
Add: Tax equivalent adjustment			2,957				2,894				2,939				2,969				3,007				5,851				6,115
Net interest income-FTE (Non-GAAP)	(a)	$	122,380			$	105,230			$	114,317			$	109,176			$	108,007			$	227,610			$	215,067
Noninterest income (GAAP)		$	56,411			$	60,583			$	66,117			$	73,701			$	69,511			$	116,994			$	134,775
Add: Partnership amortization for tax credit purposes			1,989				1,522				1,877				1,457				1,205				3,511				2,366
Adjusted noninterest income (Non-GAAP)	(b)	$	58,400			$	62,105			$	67,994			$	75,158			$	70,716			$	120,505			$	137,141
Adjusted revenue (Non-GAAP)	(a)+(b)	$	180,780			$	167,335			$	182,311			$	184,334			$	178,723			$	348,115			$	352,208
Efficiency ratio (Non-GAAP)	(c)/((a)+(b))		64.31	%			71.84	%			65.59	%			62.19	%			62.13	%			67.93	%			62.81	%

 

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