Trustmark Corporation Announces First Quarter 2011 Financial Results and Declares $0.23 Quarterly Cash Dividend

JACKSON, Miss.--(BUSINESS WIRE)--Trustmark Corporation (NASDAQ:TRMK) reported net income available to common shareholders of $24.0 million in the first quarter of 2011, which represented basic and diluted earnings per common share of $0.38 and $0.37, respectively. Trustmark’s performance during the quarter produced a return on average tangible common equity of 11.65% and a return on average assets of 1.02%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per common share. The dividend is payable June 15, 2011, to shareholders of record on June 1, 2011.

Printer friendly version of earnings release with consolidated financial statements and notes: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=6696360&lang=en

Gerard R. Host, President and CEO, stated, “Our first quarter results continued to reflect the strength and diversity of the Trustmark franchise. Growth in earning assets in Trustmark’s traditional banking business, coupled with lower funding costs, produced stable net interest income and a 4.30% net interest margin. Our fee-based wealth management and mortgage banking businesses also continued to perform well. Most significant, however, was the improvement in credit quality, which was reflected by reductions in nonperforming loans and net charge-offs.

“Our solid earnings, strong capital base, and dedicated associates have well-positioned Trustmark to meet the needs of our customers and take advantage of opportunities in the marketplace to build shareholder value. On April 15, we announced the acquisition of Heritage Banking Group, a 90-year old financial institution headquartered in Carthage, Mississippi, from the Federal Deposit Insurance Corporation. At year-end 2010, Heritage had approximately $224 million in assets and $196 million in deposits. The acquisition is expected to generate an estimated one-time $4 million to $6 million after-tax gain in the second quarter of 2011 and will be immediately accretive to Trustmark’s earnings per share and tangible book value per share. The determination of the actual gain will be completed in 60 to 90 days as we finalize the fair value of the acquired assets. We are pleased to welcome our new customers to Trustmark and look forward to additional opportunities to strengthen the value of our franchise.”

Credit Quality

• Nonperforming loans declined 11.3% while nonperforming assets fell 5.9%
• Net charge-offs declined 40.0% to represent 0.51% of average loans
• Allowance for loan losses represented 215.4% of nonperforming loans, excluding impaired loans

During the first quarter, nonperforming loans decreased $16.1 million, or 11.3%, relative to the prior quarter to total $126.8 million, or 2.09% of total loans, marking four consecutive quarters of improvement. Foreclosed real estate increased $2.5 million from the prior quarter to total $89.2 million. Collectively, nonperforming assets decreased $13.6 million, or 5.9%, to total $216.0 million at March 31, 2011.

Net charge-offs during the first quarter totaled $7.6 million, a decline of 40.0% relative to the prior quarter, to represent 0.51% of average loans. The provision for loan losses totaled $7.5 million, a decrease of 36.1% from the prior quarter. During the first quarter, Trustmark experienced a steady and continued reduction in criticized loans, including a $12.8 million decline in its Florida market, relative to the prior quarter.

Allocation of Trustmark’s $93.4 million allowance for loan losses represented 1.98% of commercial loans and 0.76% of consumer and home mortgage loans, resulting in an allowance to total loans of 1.57% as of March 31, 2011. The allowance for loan losses represented 215.4% of nonperforming loans, excluding impaired loans.

Trustmark continued to make significant progress in the resolution of its construction and land development portfolio in Florida. During the last 12 months, this portfolio was reduced by 33.3% to total $122.4 million. At March 31, 2011, the associated reserve for loan losses on this portfolio totaled $14.5 million, or 11.88%. Trustmark remains focused on managing credit risks resulting from current economic and real estate market conditions.

Capital Strength

• Tangible common equity to tangible assets expanded to 9.27%
• Total risk-based capital increased to 16.25%

Trustmark’s consistent profitability and sound balance sheet management continued to be reflected in its solid capital position. Tangible common equity totaled $853.6 million and represented 9.27% of tangible assets at March 31, 2011. Total risk-based capital increased to 16.25%, significantly exceeding the 10% regulatory requirement to be classified as “well-capitalized.” Trustmark’s strong capital base provides strategic flexibility to support organic growth as well as acquisition opportunities that strengthen the value of the franchise.

Balance Sheet Management

• Average earning assets increased $118.9 million, or 1.4% from prior quarter
• Net interest income (FTE) totaled $90.0 million, resulting in a 4.30% net interest margin
• Cost of interest bearing deposits improves to 0.70%

Trustmark’s efforts to reduce exposure to construction and land development lending as well as the decision to discontinue indirect auto financing continued to be reflected in loan totals. At March 31, 2011, total loans held for investment were $6.0 billion, a decline of $96.2 million from the prior quarter. During this period, construction and land development loans declined $30.4 million while the indirect auto portfolio fell $37.8 million. While economic conditions continued to constrain demand for credit, Trustmark experienced modest growth in its commercial and industrial loan and single family mortgage portfolios.

Average earning assets during the first quarter totaled $8.5 billion, an increase of $118.9 million from the prior quarter. Growth in average investment securities more than offset a decline in average loans during the first quarter. Average deposits during the first quarter increased $203.0 million to $7.2 billion.

Noninterest Income

• Noninterest income totaled $36.4 million and represented 28.8% of total revenue
• Wealth Management income represented the best quarterly performance in two years

Service charges on deposit accounts during the first quarter totaled $11.9 million, a decline of $1.6 million from the prior quarter principally due to seasonality. When compared to figures one year earlier, services charges were down $1.1 million, with approximately $942 thousand of the decline attributable to a reduction in NSF fees resulting from the impact of regulatory changes. Bank cards and other fees totaled $6.5 million during the first quarter, in line with the prior quarter and up $595 thousand from figures one year earlier as a result of increased debit card usage.

Trustmark continued to achieve solid financial performance from its diverse financial services businesses. Wealth management income totaled $6.0 million during the first quarter of 2011, the best quarterly performance in more than two years. Results reflected improved market conditions as well as growth in retirement planning services and brokerage activities. In addition, insurance revenue totaled $6.5 million, reflecting a seasonal increase relative to the prior quarter. Mortgage banking income totaled $4.7 million during the first quarter, reflecting stable mortgage servicing income, solid secondary marketing gains and successful hedging initiatives.

Noninterest Expense

• Noninterest expense remained well-controlled
• Foreclosure expense declined to $3.2 million

During the first quarter of 2011, noninterest expense totaled $80.0 million, a decrease of $419 thousand from the prior quarter. Salary and employee benefits expense totaled $44.0 million during the first quarter, a reduction of $376 thousand from the prior quarter. Other expense declined $654 thousand during the quarter principally due to reductions in operational losses and other expenses. Equipment expense increased $915 thousand during the quarter due in part to enhanced disaster recovery capabilities as well as nonrecurring implementation costs related to enhancements to Trustmark’s data communications network.

ADDITIONAL INFORMATION

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, April 27, 2011 at 10:00 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing [phone], passcode 446676, 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 Thursday, May 5, 2011, in archived format at the same web address or by calling [phone], passcode 446676.

Trustmark is a financial services company providing banking and financial solutions through over 150 offices in Florida, Mississippi, Tennessee and Texas.

FORWARD-LOOKING STATEMENTS

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

Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, local, state and national economic and market conditions, including the extent and duration of the current volatility in the credit and financial markets, 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 and monetary and other governmental actions designed to address the level and volatility of interest rates and the volatility of securities, currency and other markets, the enactment of legislation and changes in existing regulations, or enforcement practices, or the adoption of new regulations, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, changes in our ability to control expenses, changes in our compensation and benefit plans, greater than expected costs or difficulties related to the integration of new products and lines of business, natural disasters, environmental disasters, acts of war or terrorism and other risks described in our filings with the Securities and Exchange Commission.

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

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2011
($ in thousands)
(unaudited)
										Linked Quarter					Year over Year
QUARTERLY AVERAGE BALANCES		3/31/2011			12/31/2010			3/31/2010		$	Change		% Change		$	Change		% Change
Securities AFS-taxable	$	2,050,502		$	1,817,996		$	1,514,029		$	232,506		12.8	%	$	536,473		35.4	%
Securities AFS-nontaxable		144,921			140,139			105,067			4,782		3.4	%		39,854		37.9	%
Securities HTM-taxable		97,710			121,278			179,076			(23,568	)	-19.4	%		(81,366	)	-45.4	%
Securities HTM-nontaxable		27,099			33,138			46,852			(6,039	)	-18.2	%		(19,753	)	-42.2	%
Total securities		2,320,232			2,112,551			1,845,024			207,681		9.8	%		475,208		25.8	%
Loans (including loans held for sale)		6,107,025			6,199,875			6,412,671			(92,850	)	-1.5	%		(305,646	)	-4.8	%
Fed funds sold and rev repos		8,359			10,766			10,438			(2,407	)	-22.4	%		(2,079	)	-19.9	%
Other earning assets		47,851			41,359			46,199			6,492		15.7	%		1,652		3.6	%
Total earning assets		8,483,467			8,364,551			8,314,332			118,916		1.4	%		169,135		2.0	%
Allowance for loan losses		(96,065	)		(96,559	)		(106,200	)		494		-0.5	%		10,135		-9.5	%
Cash and due from banks		222,380			207,874			216,305			14,506		7.0	%		6,075		2.8	%
Other assets		899,524			888,666			910,401			10,858		1.2	%		(10,877	)	-1.2	%
Total assets	$	9,509,306		$	9,364,532		$	9,334,838		$	144,774		1.5	%	$	174,468		1.9	%
Interest-bearing demand deposits	$	1,465,390		$	1,347,252		$	1,270,827		$	118,138		8.8	%	$	194,563		15.3	%
Savings deposits		2,045,874			1,794,352			1,953,711			251,522		14.0	%		92,163		4.7	%
Time deposits less than $100,000		1,210,219			1,235,529			1,356,469			(25,310	)	-2.0	%		(146,250	)	-10.8	%
Time deposits of $100,000 or more		876,975			932,744			1,014,027			(55,769	)	-6.0	%		(137,052	)	-13.5	%
Total interest-bearing deposits		5,598,458			5,309,877			5,595,034			288,581		5.4	%		3,424		0.1	%
Fed funds purchased and repos		647,881			701,978			600,826			(54,097	)	-7.7	%		47,055		7.8	%
Short-term borrowings		254,451			254,442			199,550			9		0.0	%		54,901		27.5	%
Long-term FHLB advances		-			-			75,000			-		n/m			(75,000	)	-100.0	%
Subordinated notes		49,809			49,801			49,777			8		0.0	%		32		0.1	%
Junior subordinated debt securities		61,856			64,546			70,104			(2,690	)	-4.2	%		(8,248	)	-11.8	%
Total interest-bearing liabilities		6,612,455			6,380,644			6,590,291			231,811		3.6	%		22,164		0.3	%
Noninterest-bearing deposits		1,620,554			1,706,089			1,535,209			(85,535	)	-5.0	%		85,345		5.6	%
Other liabilities		116,399			117,741			85,982			(1,342	)	-1.1	%		30,417		35.4	%
Total liabilities		8,349,408			8,204,474			8,211,482			144,934		1.8	%		137,926		1.7	%
Shareholders' equity		1,159,898			1,160,058			1,123,356			(160	)	0.0	%		36,542		3.3	%
Total liabilities and equity	$	9,509,306		$	9,364,532		$	9,334,838		$	144,774		1.5	%	$	174,468		1.9	%
										Linked Quarter					Year over Year
PERIOD END BALANCES		3/31/2011			12/31/2010			3/31/2010		$	Change		% Change		$	Change		% Change
Cash and due from banks	$	193,087		$	161,544		$	191,973		$	31,543		19.5	%	$	1,114		0.6	%
Fed funds sold and rev repos		1,726			11,773			11,599			(10,047	)	-85.3	%		(9,873	)	-85.1	%
Securities available for sale		2,309,704			2,177,249			1,706,565			132,455		6.1	%		603,139		35.3	%
Securities held to maturity		110,054			140,847			215,888			(30,793	)	-21.9	%		(105,834	)	-49.0	%
Loans held for sale		112,981			153,044			176,682			(40,063	)	-26.2	%		(63,701	)	-36.1	%
Loans		5,964,089			6,060,242			6,170,878			(96,153	)	-1.6	%		(206,789	)	-3.4	%
Allowance for loan losses		(93,398	)		(93,510	)		(101,643	)		112		-0.1	%		8,245		-8.1	%
Net Loans		5,870,691			5,966,732			6,069,235			(96,041	)	-1.6	%		(198,544	)	-3.3	%
Premises and equipment, net		141,524			142,289			145,113			(765	)	-0.5	%		(3,589	)	-2.5	%
Mortgage servicing rights		53,598			51,151			50,037			2,447		4.8	%		3,561		7.1	%
Goodwill		291,104			291,104			291,104			-		0.0	%		-		0.0	%
Identifiable intangible assets		15,532			16,306			18,944			(774	)	-4.7	%		(3,412	)	-18.0	%
Other real estate		89,198			86,704			91,176			2,494		2.9	%		(1,978	)	-2.2	%
Other assets		325,263			355,159			324,899			(29,896	)	-8.4	%		364		0.1	%
Total assets	$	9,514,462		$	9,553,902		$	9,293,215		$	(39,440	)	-0.4	%	$	221,247		2.4	%
Deposits:
Noninterest-bearing	$	1,668,104		$	1,636,625		$	1,511,080		$	31,479		1.9	%	$	157,024		10.4	%
Interest-bearing		5,758,170			5,407,942			5,635,973			350,228		6.5	%		122,197		2.2	%
Total deposits		7,426,274			7,044,567			7,147,053			381,707		5.4	%		279,221		3.9	%
Fed funds purchased and repos		550,919			700,138			571,711			(149,219	)	-21.3	%		(20,792	)	-3.6	%
Short-term borrowings		154,585			425,343			132,784			(270,758	)	-63.7	%		21,801		16.4	%
Long-term FHLB advances		-			-			75,000			-		n/m			(75,000	)	n/m
Subordinated notes		49,814			49,806			49,782			8		0.0	%		32		0.1	%
Junior subordinated debt securities		61,856			61,856			70,104			-		0.0	%		(8,248	)	-11.8	%
Other liabilities		110,785			122,708			118,252			(11,923	)	-9.7	%		(7,467	)	-6.3	%
Total liabilities		8,354,233			8,404,418			8,164,686			(50,185	)	-0.6	%		189,547		2.3	%
Common stock		13,333			13,318			13,302			15		0.1	%		31		0.2	%
Capital surplus		260,297			256,675			250,365			3,622		1.4	%		9,932		4.0	%
Retained earnings		898,222			890,917			860,398			7,305		0.8	%		37,824		4.4	%
Accum other comprehensive
(loss) income, net of tax		(11,623	)		(11,426	)		4,464			(197	)	1.7	%		(16,087	)	n/m
Total shareholders' equity		1,160,229			1,149,484			1,128,529			10,745		0.9	%		31,700		2.8	%
Total liabilities and equity	$	9,514,462		$	9,553,902		$	9,293,215		$	(39,440	)	-0.4	%	$	221,247		2.4	%
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, 2011
($ in thousands except per share data)
(unaudited)
	Quarter Ended									Linked Quarter					Year over Year
INCOME STATEMENTS		3/31/2011			12/31/2010			3/31/2010		$	Change		% Change		$	Change		% Change
Interest and fees on loans-FTE	$	79,116		$	82,664		$	84,127		$	(3,548	)	-4.3	%	$	(5,011	)	-6.0	%
Interest on securities-taxable		19,992			19,076			19,735			916		4.8	%		257		1.3	%
Interest on securities-tax exempt-FTE		2,128			2,169			2,180			(41	)	-1.9	%		(52	)	-2.4	%
Interest on fed funds sold and rev repos		8			12			8			(4	)	-33.3	%		-		0.0	%
Other interest income		332			328			383			4		1.2	%		(51	)	-13.3	%
Total interest income-FTE		101,576			104,249			106,433			(2,673	)	-2.6	%		(4,857	)	-4.6	%
Interest on deposits		9,719			10,359			13,904			(640	)	-6.2	%		(4,185	)	-30.1	%
Interest on fed funds pch and repos		338			403			226			(65	)	-16.1	%		112		49.6	%
Other interest expense		1,553			1,535			1,592			18		1.2	%		(39	)	-2.4	%
Total interest expense		11,610			12,297			15,722			(687	)	-5.6	%		(4,112	)	-26.2	%
Net interest income-FTE		89,966			91,952			90,711			(1,986	)	-2.2	%		(745	)	-0.8	%
Provision for loan losses		7,537			11,794			15,095			(4,257	)	-36.1	%		(7,558	)	-50.1	%
Net interest income after provision-FTE		82,429			80,158			75,616			2,271		2.8	%		6,813		9.0	%
Service charges on deposit accounts		11,907			13,493			12,977			(1,586	)	-11.8	%		(1,070	)	-8.2	%
Insurance commissions		6,512			6,224			6,837			288		4.6	%		(325	)	-4.8	%
Wealth management		5,986			5,760			5,355			226		3.9	%		631		11.8	%
Bank card and other fees		6,475			6,482			5,880			(7	)	-0.1	%		595		10.1	%
Mortgage banking, net		4,722			4,502			6,072			220		4.9	%		(1,350	)	-22.2	%
Other, net		762			2,070			879			(1,308	)	-63.2	%		(117	)	-13.3	%
Nonint inc-excl sec gains, net		36,364			38,531			38,000			(2,167	)	-5.6	%		(1,636	)	-4.3	%
Security gains, net		7			101			369			(94	)	-93.1	%		(362	)	-98.1	%
Total noninterest income		36,371			38,632			38,369			(2,261	)	-5.9	%		(1,998	)	-5.2	%
Salaries and employee benefits		44,036			44,412			42,854			(376	)	-0.8	%		1,182		2.8	%
Services and fees		10,270			10,462			10,255			(192	)	-1.8	%		15		0.1	%
Net occupancy-premises		5,073			4,896			5,034			177		3.6	%		39		0.8	%
Equipment expense		5,144			4,229			4,303			915		21.6	%		841		19.5	%
FDIC assessment expense		2,750			2,942			3,147			(192	)	-6.5	%		(397	)	-12.6	%
ORE/Foreclosure expense		3,213			3,310			3,061			(97	)	-2.9	%		152		5.0	%
Other expense		9,532			10,186			7,707			(654	)	-6.4	%		1,825		23.7	%
Total noninterest expense		80,018			80,437			76,361			(419	)	-0.5	%		3,657		4.8	%
Income before income taxes and tax eq adj		38,782			38,353			37,624			429		1.1	%		1,158		3.1	%
Tax equivalent adjustment		3,591			3,400			3,293			191		5.6	%		298		9.0	%
Income before income taxes		35,191			34,953			34,331			238		0.7	%		860		2.5	%
Income taxes		11,178			9,793			10,876			1,385		14.1	%		302		2.8	%
Net income available to common shareholders	$	24,013		$	25,160		$	23,455		$	(1,147	)	-4.6	%	$	558		2.4	%
Per common share data
Earnings per share - basic	$	0.38		$	0.39		$	0.37		$	(0.01	)	-2.6	%	$	0.01		2.7	%
Earnings per share - diluted	$	0.37		$	0.39		$	0.37		$	(0.02	)	-5.1	%	$	-		0.0	%
Dividends per share	$	0.23		$	0.23		$	0.23		$	-		0.0	%	$	-		0.0	%
Weighted average common shares outstanding
Basic		63,950,461			63,892,362			63,743,302
Diluted		64,181,752			64,105,064			63,933,333
Period end common shares outstanding		63,987,064			63,917,591			63,844,500
OTHER FINANCIAL DATA
Return on common equity		8.40	%		8.60	%		8.47	%
Return on average tangible common equity		11.65	%		11.96	%		11.98	%
Return on equity		8.40	%		8.60	%		8.47	%
Return on assets		1.02	%		1.07	%		1.02	%
Interest margin - Yield - FTE		4.86	%		4.94	%		5.19	%
Interest margin - Cost		0.56	%		0.58	%		0.77	%
Net interest margin - FTE		4.30	%		4.36	%		4.42	%
Efficiency ratio		63.34	%		61.65	%		59.33	%
Full-time equivalent employees		2,489			2,490			2,506
COMMON STOCK PERFORMANCE
Market value-Close	$	23.42		$	24.84		$	24.43
Common book value	$	18.13		$	17.98		$	17.68
Tangible common book value	$	13.34		$	13.17		$	12.82
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, 2011
($ in thousands)
(unaudited)
	Quarter Ended									Linked Quarter					Year over Year
NONPERFORMING ASSETS		3/31/2011			12/31/2010			3/31/2010		$	Change		% Change		$	Change			% Change
Nonaccrual loans
Florida	$	44,548		$	53,773		$	79,687		$	(9,225	)	-17.2	%	$	(35,139	)		-44.1	%
Mississippi (1)		40,226			39,803			41,795			423		1.1	%		(1,569	)		-3.8	%
Tennessee (2)		13,886			14,703			12,673			(817	)	-5.6	%		1,213			9.6	%
Texas		28,130			34,644			31,354			(6,514	)	-18.8	%		(3,224	)		-10.3	%
Total nonaccrual loans		126,790			142,923			165,509			(16,133	)	-11.3	%		(38,719	)		-23.4	%
Other real estate
Florida		31,339			32,370			40,145			(1,031	)	-3.2	%		(8,806	)		-21.9	%
Mississippi (1)		22,084			24,181			23,082			(2,097	)	-8.7	%		(998	)		-4.3	%
Tennessee (2)		16,920			16,407			9,769			513		3.1	%		7,151			73.2	%
Texas		18,855			13,746			18,180			5,109		37.2	%		675			3.7	%
Total other real estate		89,198			86,704			91,176			2,494		2.9	%		(1,978	)		-2.2	%
Total nonperforming assets	$	215,988		$	229,627		$	256,685		$	(13,639	)	-5.9	%	$	(40,697	)		-15.9	%
LOANS PAST DUE OVER 90 DAYS
Loans held for investment	$	5,010		$	3,608		$	8,411		$	1,402		38.9	%	$	(3,401	)		-40.4	%
Loans HFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	19,808		$	15,777		$	48,571		$	4,031		25.5	%	$	(28,763	)		-59.2	%
	Quarter Ended									Linked Quarter					Year over Year
ALLOWANCE FOR LOAN LOSSES		3/31/2011			12/31/2010			3/31/2010		$	Change		% Change		$	Change			% Change
Beginning Balance	$	93,510		$	94,458		$	103,662		$	(948	)	-1.0	%	$	(10,152	)		-9.8	%
Provision for loan losses		7,537			11,794			15,095			(4,257	)	-36.1	%		(7,558	)		-50.1	%
Charge-offs		(11,132	)		(15,883	)		(19,775	)		4,751		-29.9	%		8,643			-43.7	%
Recoveries		3,483			3,141			2,661			342		10.9	%		822			30.9	%
Net charge-offs		(7,649	)		(12,742	)		(17,114	)		5,093		-40.0	%		9,465			-55.3	%
Ending Balance	$	93,398		$	93,510		$	101,643		$	(112	)	-0.1	%	$	(8,245	)		-8.1	%
PROVISION FOR LOAN LOSSES																		`
Florida	$	3,024		$	7,473		$	5,501		$	(4,449	)	-59.5	%	$	(2,477	)		-45.0	%
Mississippi (1)		1,071			2,673			3,748			(1,602	)	-59.9	%		(2,677	)		-71.4	%
Tennessee (2)		1,619			910			1,314			709		77.9	%		305			23.2	%
Texas		1,823			738			4,532			1,085		n/m			(2,709	)		-59.8	%
Total provision for loan losses	$	7,537		$	11,794		$	15,095		$	(4,257	)	-36.1	%	$	(7,558	)		-50.1	%
NET CHARGE-OFFS
Florida	$	5,478		$	4,830		$	8,989		$	648		13.4	%	$	(3,511	)		-39.1	%
Mississippi (1)		410			4,422			6,777			(4,012	)	-90.7	%		(6,367	)		-94.0	%
Tennessee (2)		979			1,646			426			(667	)	-40.5	%		553			n/m
Texas		782			1,844			922			(1,062	)	-57.6	%		(140	)		-15.2	%
Total net charge-offs	$	7,649		$	12,742		$	17,114		$	(5,093	)	-40.0	%	$	(9,465	)		-55.3	%
CREDIT QUALITY RATIOS
Net charge offs/average loans		0.51	%		0.82	%		1.08	%
Provision for loan losses/average loans		0.50	%		0.75	%		0.95	%
Nonperforming loans/total loans (incl LHFS)		2.09	%		2.30	%		2.61	%
Nonperforming assets/total loans (incl LHFS)		3.55	%		3.70	%		4.04	%
Nonperforming assets/total loans (incl LHFS) +ORE		3.50	%		3.64	%		3.99	%
ALL/total loans (excl LHFS)		1.57	%		1.54	%		1.65	%
ALL-commercial/total commercial loans		1.98	%		1.94	%		2.10	%
ALL-consumer/total consumer and home mortgage loans		0.76	%		0.78	%		0.80	%
ALL/nonperforming loans		73.66	%		65.43	%		61.41	%
ALL/nonperforming loans -
(excl impaired loans with no specific reserves)		215.40	%		188.11	%		131.36	%
CAPITAL RATIOS
Total equity/total assets		12.19	%		12.03	%		12.14	%
Common equity/total assets		12.19	%		12.03	%		12.14	%
Tangible common equity/tangible assets		9.27	%		9.11	%		9.11	%
Tangible common equity/risk-weighted assets		13.06	%		12.62	%		12.15	%
Tier 1 leverage ratio		10.10	%		10.14	%		9.81	%
Tier 1 common risk-based capital ratio		13.32	%		12.87	%		12.14	%
Tier 1 risk-based capital ratio		14.24	%		13.77	%		13.15	%
Total risk-based capital ratio		16.25	%		15.77	%		15.15	%
(1) - Mississippi includes Central and Southern Mississippi Regions
(2) - 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, 2011
($ in thousands)
(unaudited)
		Quarter Ended
	AVERAGE BALANCES		3/31/2011			12/31/2010			9/30/2010			6/30/2010			3/31/2010
	Securities AFS-taxable	$	2,050,502		$	1,817,996		$	1,654,335		$	1,586,165		$	1,514,029
	Securities AFS-nontaxable		144,921			140,139			111,959			110,969			105,067
	Securities HTM-taxable		97,710			121,278			143,124			162,691			179,076
	Securities HTM-nontaxable		27,099			33,138			37,703			41,628			46,852
	Total securities		2,320,232			2,112,551			1,947,121			1,901,453			1,845,024
	Loans (including loans held for sale)		6,107,025			6,199,875			6,230,961			6,301,201			6,412,671
	Fed funds sold and rev repos		8,359			10,766			8,418			7,478			10,438
	Other earning assets		47,851			41,359			33,615			38,764			46,199
	Total earning assets		8,483,467			8,364,551			8,220,115			8,248,896			8,314,332
	Allowance for loan losses		(96,065	)		(96,559	)		(102,528	)		(104,814	)		(106,200	)
	Cash and due from banks		222,380			207,874			214,736			207,670			216,305
	Other assets		899,524			888,666			885,600			898,749			910,401
	Total assets	$	9,509,306		$	9,364,532		$	9,217,923		$	9,250,501		$	9,334,838
	Interest-bearing demand deposits	$	1,465,390		$	1,347,252		$	1,363,377		$	1,306,783		$	1,270,827
	Savings deposits		2,045,874			1,794,352			1,888,121			2,066,612			1,953,711
	Time deposits less than $100,000		1,210,219			1,235,529			1,276,088			1,307,611			1,356,469
	Time deposits of $100,000 or more		876,975			932,744			957,148			989,397			1,014,027
	Total interest-bearing deposits		5,598,458			5,309,877			5,484,734			5,670,403			5,595,034
	Fed funds purchased and repos		647,881			701,978			522,523			495,904			600,826
	Short-term borrowings		254,451			254,442			202,017			181,669			199,550
	Long-term FHLB advances		-			-			-			15,833			75,000
	Subordinated notes		49,809			49,801			49,793			49,785			49,777
	Junior subordinated debt securities		61,856			64,546			70,104			70,104			70,104
	Total interest-bearing liabilities		6,612,455			6,380,644			6,329,171			6,483,698			6,590,291
	Noninterest-bearing deposits		1,620,554			1,706,089			1,629,122			1,536,153			1,535,209
	Other liabilities		116,399			117,741			104,576			91,715			85,982
	Total liabilities		8,349,408			8,204,474			8,062,869			8,111,566			8,211,482
	Shareholders' equity		1,159,898			1,160,058			1,155,054			1,138,935			1,123,356
	Total liabilities and equity	$	9,509,306		$	9,364,532		$	9,217,923		$	9,250,501		$	9,334,838
	PERIOD END BALANCES		3/31/2011			12/31/2010			9/30/2010			6/30/2010			3/31/2010
	Cash and due from banks	$	193,087		$	161,544		$	196,136		$	186,365		$	191,973
	Fed funds sold and rev repos		1,726			11,773			6,655			5,713			11,599
	Securities available for sale		2,309,704			2,177,249			1,968,624			1,786,710			1,706,565
	Securities held to maturity		110,054			140,847			168,849			192,860			215,888
	Loans held for sale		112,981			153,044			268,137			218,369			176,682
	Loans		5,964,089			6,060,242			5,998,704			6,054,995			6,170,878
	Allowance for loan losses		(93,398	)		(93,510	)		(94,458	)		(100,656	)		(101,643	)
	Net Loans		5,870,691			5,966,732			5,904,246			5,954,339			6,069,235
	Premises and equipment, net		141,524			142,289			143,393			143,536			145,113
	Mortgage servicing rights		53,598			51,151			41,972			43,044			50,037
	Goodwill		291,104			291,104			291,104			291,104			291,104
	Identifiable intangible assets		15,532			16,306			17,181			18,062			18,944
	Other real estate		89,198			86,704			84,722			91,400			91,176
	Other assets		325,263			355,159			325,886			313,043			324,899
	Total assets	$	9,514,462		$	9,553,902		$	9,416,905		$	9,244,545		$	9,293,215
	Deposits:
	Noninterest-bearing	$	1,668,104		$	1,636,625		$	1,709,311		$	1,539,598		$	1,511,080
	Interest-bearing		5,758,170			5,407,942			5,316,025			5,599,796			5,635,973
	Total deposits		7,426,274			7,044,567			7,025,336			7,139,394			7,147,053
	Fed funds purchased and repos		550,919			700,138			633,065			492,367			571,711
	Short-term borrowings		154,585			425,343			318,457			208,136			132,784
	Long-term FHLB advances		-			-			-			-			75,000
	Subordinated notes		49,814			49,806			49,798			49,790			49,782
	Junior subordinated debt securities		61,856			61,856			70,104			70,104			70,104
	Other liabilities		110,785			122,708			161,353			142,374			118,252
	Total liabilities		8,354,233			8,404,418			8,258,113			8,102,165			8,164,686
	Common stock		13,333			13,318			13,311			13,311			13,302
	Capital surplus		260,297			256,675			254,288			253,133			250,365
	Retained earnings		898,222			890,917			881,545			870,532			860,398
	Accum other comprehensive
	(loss) income, net of tax		(11,623	)		(11,426	)		9,648			5,404			4,464
	Total shareholders' equity		1,160,229			1,149,484			1,158,792			1,142,380			1,128,529
	Total liabilities and equity	$	9,514,462		$	9,553,902		$	9,416,905		$	9,244,545		$	9,293,215
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2011
($ in thousands except per share data)
(unaudited)
		Quarter Ended
	INCOME STATEMENTS		3/31/2011			12/31/2010			9/30/2010			6/30/2010			3/31/2010
	Interest and fees on loans-FTE	$	79,116		$	82,664		$	83,374		$	84,362		$	84,127
	Interest on securities-taxable		19,992			19,076			18,641			19,626			19,735
	Interest on securities-tax exempt-FTE		2,128			2,169			2,080			2,151			2,180
	Interest on fed funds sold and rev repos		8			12			9			7			8
	Other interest income		332			328			332			366			383
	Total interest income-FTE		101,576			104,249			104,436			106,512			106,433
	Interest on deposits		9,719			10,359			11,609			12,785			13,904
	Interest on fed funds pch and repos		338			403			294			260			226
	Other interest expense		1,553			1,535			1,631			1,597			1,592
	Total interest expense		11,610			12,297			13,534			14,642			15,722
	Net interest income-FTE		89,966			91,952			90,902			91,870			90,711
	Provision for loan losses		7,537			11,794			12,259			10,398			15,095
	Net interest income after provision-FTE		82,429			80,158			78,643			81,472			75,616
	Service charges on deposit accounts		11,907			13,493			14,493			14,220			12,977
	Insurance commissions		6,512			6,224			7,746			6,884			6,837
	Wealth management		5,986			5,760			5,199			5,558			5,355
	Bank card and other fees		6,475			6,482			6,235			6,417			5,880
	Mortgage banking, net		4,722			4,502			9,861			8,910			6,072
	Other, net		762			2,070			441			1,103			879
	Nonint inc-excl sec gains, net		36,364			38,531			43,975			43,092			38,000
	Security gains, net		7			101			4			1,855			369
	Total noninterest income		36,371			38,632			43,979			44,947			38,369
	Salaries and employee benefits		44,036			44,412			44,034			43,282			42,854
	Services and fees		10,270			10,462			10,709			10,523			10,255
	Net occupancy-premises		5,073			4,896			4,961			4,917			5,034
	Equipment expense		5,144			4,229			4,356			4,247			4,303
	FDIC assessment expense		2,750			2,942			3,037			3,035			3,147
	ORE/Foreclosure expense		3,213			3,310			8,728			9,278			3,061
	Other expense		9,532			10,186			8,598			9,146			7,707
	Total noninterest expense		80,018			80,437			84,423			84,428			76,361
	Income before income taxes and tax eq adj		38,782			38,353			38,199			41,991			37,624
	Tax equivalent adjustment		3,591			3,400			3,335			3,384			3,293
	Income before income taxes		35,191			34,953			34,864			38,607			34,331
	Income taxes		11,178			9,793			9,004			12,446			10,876
	Net income available to common shareholders	$	24,013		$	25,160		$	25,860		$	26,161		$	23,455
	Per common share data
	Earnings per share - basic	$	0.38		$	0.39		$	0.40		$	0.41		$	0.37
	Earnings per share - diluted	$	0.37		$	0.39		$	0.40		$	0.41		$	0.37
	Dividends per share	$	0.23		$	0.23		$	0.23		$	0.23		$	0.23
	Weighted average common shares outstanding
	Basic		63,950,461			63,892,362			63,885,647			63,872,879			63,743,302
	Diluted		64,181,752			64,105,064			64,066,798			64,054,171			63,933,333
	Period end common shares outstanding		63,987,064			63,917,591			63,885,959			63,885,403			63,844,500
	OTHER FINANCIAL DATA
	Return on common equity		8.40	%		8.60	%		8.88	%		9.21	%		8.47	%
	Return on average tangible common equity		11.65	%		11.96	%		12.38	%		12.92	%		11.98	%
	Return on equity		8.40	%		8.60	%		8.88	%		9.21	%		8.47	%
	Return on assets		1.02	%		1.07	%		1.11	%		1.13	%		1.02	%
	Interest margin - Yield - FTE		4.86	%		4.94	%		5.04	%		5.18	%		5.19	%
	Interest margin - Cost		0.56	%		0.58	%		0.65	%		0.71	%		0.77	%
	Net interest margin - FTE		4.30	%		4.36	%		4.39	%		4.47	%		4.42	%
	Efficiency ratio		63.34	%		61.65	%		62.59	%		62.56	%		59.33	%
	Full-time equivalent employees		2,489			2,490			2,501			2,527			2,506
	COMMON STOCK PERFORMANCE
	Market value-Close	$	23.42		$	24.84		$	21.74		$	20.82		$	24.43
	Common book value	$	18.13		$	17.98		$	18.14		$	17.88		$	17.68
	Tangible common book value	$	13.34		$	13.17		$	13.31		$	13.04		$	12.82
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2011
($ in thousands)
(unaudited)
		Quarter Ended
	NONPERFORMING ASSETS		3/31/2011			12/31/2010			9/30/2010			6/30/2010			3/31/2010
	Nonaccrual loans
	Florida	$	44,548		$	53,773		$	65,759		$	74,954		$	79,687
	Mississippi (1)		40,226			39,803			48,962			39,924			41,795
	Tennessee (2)		13,886			14,703			9,207			9,778			12,673
	Texas		28,130			34,644			35,388			35,222			31,354
	Total nonaccrual loans		126,790			142,923			159,316			159,878			165,509
	Other real estate
	Florida		31,339			32,370			31,665			31,814			40,145
	Mississippi (1)		22,084			24,181			24,548			28,020			23,082
	Tennessee (2)		16,920			16,407			16,456			12,493			9,769
	Texas		18,855			13,746			12,053			19,073			18,180
	Total other real estate		89,198			86,704			84,722			91,400			91,176
	Total nonperforming assets	$	215,988		$	229,627		$	244,038		$	251,278		$	256,685
	LOANS PAST DUE OVER 90 DAYS
	Loans held for investment	$	5,010		$	3,608		$	5,795		$	6,057		$	8,411
	Loans HFS-Guaranteed GNMA serviced loans
	(no obligation to repurchase)	$	19,808		$	15,777		$	50,246		$	49,712		$	48,571
		Quarter Ended
	ALLOWANCE FOR LOAN LOSSES		3/31/2011			12/31/2010			9/30/2010			6/30/2010			3/31/2010
	Beginning Balance	$	93,510		$	94,458		$	100,656		$	101,643		$	103,662
	Provision for loan losses		7,537			11,794			12,259			10,398			15,095
	Charge-offs		(11,132	)		(15,883	)		(21,942	)		(14,297	)		(19,775	)
	Recoveries		3,483			3,141			3,485			2,912			2,661
	Net charge-offs		(7,649	)		(12,742	)		(18,457	)		(11,385	)		(17,114	)
	Ending Balance	$	93,398		$	93,510		$	94,458		$	100,656		$	101,643
	PROVISION FOR LOAN LOSSES
	Florida	$	3,024		$	7,473		$	4,520		$	2,432		$	5,501
	Mississippi (1)		1,071			2,673			4,398			3,430			3,748
	Tennessee (2)		1,619			910			(172	)		3,560			1,314
	Texas		1,823			738			3,513			976			4,532
	Total provision for loan losses	$	7,537		$	11,794		$	12,259		$	10,398		$	15,095
	NET CHARGE-OFFS
	Florida	$	5,478		$	4,830		$	8,951		$	5,880		$	8,989
	Mississippi (1)		410			4,422			3,879			3,885			6,777
	Tennessee (2)		979			1,646			3,475			1,031			426
	Texas		782			1,844			2,152			589			922
	Total net charge-offs	$	7,649		$	12,742		$	18,457		$	11,385		$	17,114
	CREDIT QUALITY RATIOS
	Net charge offs/average loans		0.51	%		0.82	%		1.18	%		0.72	%		1.08	%
	Provision for loan losses/average loans		0.50	%		0.75	%		0.78	%		0.66	%		0.95	%
	Nonperforming loans/total loans (incl LHFS)		2.09	%		2.30	%		2.54	%		2.55	%		2.61	%
	Nonperforming assets/total loans (incl LHFS)		3.55	%		3.70	%		3.89	%		4.01	%		4.04	%
	Nonperforming assets/total loans (incl LHFS) +ORE		3.50	%		3.64	%		3.84	%		3.95	%		3.99	%
	ALL/total loans (excl LHFS)		1.57	%		1.54	%		1.57	%		1.66	%		1.65	%
	ALL-commercial/total commercial loans		1.98	%		1.94	%		1.97	%		2.10	%		2.10	%
	ALL-consumer/total consumer and home mortgage loans		0.76	%		0.78	%		0.81	%		0.82	%		0.80	%
	ALL/nonperforming loans		73.66	%		65.43	%		59.29	%		62.96	%		61.41	%
	ALL/nonperforming loans -
	(excl impaired loans with no specific reserves)		215.40	%		188.11	%		140.94	%		148.86	%		131.36	%
	CAPITAL RATIOS
	Total equity/total assets		12.19	%		12.03	%		12.31	%		12.36	%		12.14	%
	Common equity/total assets		12.19	%		12.03	%		12.31	%		12.36	%		12.14	%
	Tangible common equity/tangible assets		9.27	%		9.11	%		9.34	%		9.32	%		9.11	%
	Tangible common equity/risk-weighted assets		13.06	%		12.62	%		12.78	%		12.51	%		12.15	%
	Tier 1 leverage ratio		10.10	%		10.14	%		10.26	%		10.07	%		9.81	%
	Tier 1 common risk-based capital ratio		13.32	%		12.87	%		12.72	%		12.51	%		12.14	%
	Tier 1 risk-based capital ratio		14.24	%		13.77	%		13.75	%		13.53	%		13.15	%
	Total risk-based capital ratio		16.25	%		15.77	%		15.75	%		15.53	%		15.15	%
(1) - Mississippi includes Central and Southern Mississippi Regions
(2) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2011
($ in thousands)
(unaudited)
Note 1 - Securities Available for Sale and Held to Maturity
The following table is a summary of the estimated fair value of securities available for sale and the amortized cost of securities held to maturity ($ in thousands):
		3/31/2011		12/31/2010		9/30/2010		6/30/2010		3/31/2010
SECURITIES AVAILABLE FOR SALE
U.S. Government agency obligations
Issued by U.S. Government agencies	$	10	$	12	$	14	$	16	$	18
Issued by U.S. Government sponsored agencies		136,168		122,023		149,588		124,566		68,574
Obligations of states and political subdivisions		161,909		159,637		148,772		125,234		123,292
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		12,079		12,442		13,273		13,390		11,986
Issued by FNMA and FHLMC		417,022		426,504		243,220		142,900		51,292
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		1,486,872		1,400,816		1,366,373		1,333,725		1,387,752
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		95,644		55,815		41,359		40,789		57,485
Corporate debt securities		-		-		6,025		6,090		6,166
Total securities available for sale	$	2,309,704	$	2,177,249	$	1,968,624	$	1,786,710	$	1,706,565
SECURITIES HELD TO MATURITY
Obligations of states and political subdivisions	$	49,129	$	53,246	$	61,139	$	64,517	$	69,975
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		5,650		6,058		6,462		6,591		6,801
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		52,272		78,526		98,217		118,708		136,054
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		3,003		3,017		3,031		3,044		3,058
Total securities held to maturity	$	110,054	$	140,847	$	168,849	$	192,860	$	215,888

Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of approximately 91% of the portfolio in U.S. Government agency-backed obligations and other AAA rated securities. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of membership in the Federal Home Loan Bank of Dallas, Federal Reserve Bank and Depository Trust and Clearing Corporation, Trustmark does not hold any equity investment in government sponsored entities.

Note 2 – Loan Composition
LOANS BY TYPE		3/31/2011			12/31/2010			9/30/2010			6/30/2010			3/31/2010
Loans secured by real estate:
Construction, land development and other land loans	$	552,956		$	583,316		$	615,554		$	737,015		$	803,942
Secured by 1-4 family residential properties		1,737,018			1,732,056			1,672,199			1,630,353			1,637,121
Secured by nonfarm, nonresidential properties		1,488,711			1,498,108			1,531,953			1,463,657			1,466,296
Other real estate secured		216,986			231,963			203,931			189,118			194,641
Commercial and industrial loans		1,082,258			1,068,369			1,016,292			1,040,152			1,041,580
Consumer loans		357,870			402,165			444,927			492,262			542,488
Other loans		528,290			544,265			513,848			502,438			484,810
Loans		5,964,089			6,060,242			5,998,704			6,054,995			6,170,878
Allowance for loan losses		(93,398	)		(93,510	)		(94,458	)		(100,656	)		(101,643	)
Net Loans	$	5,870,691		$	5,966,732		$	5,904,246		$	5,954,339		$	6,069,235

Note 2 – Loan Composition (continued)
	March 31, 2011
LOAN COMPOSITION BY REGION	Total		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	$	552,956	$	122,445	$	239,164	$	42,381	$	148,966
Secured by 1-4 family residential properties		1,737,018		69,552		1,485,170		150,327		31,969
Secured by nonfarm, nonresidential properties		1,488,711		177,943		793,863		195,171		321,734
Other real estate secured		216,986		13,472		158,578		8,422		36,514
Commercial and industrial loans		1,082,258		14,774		782,451		80,253		204,780
Consumer loans		357,870		1,476		326,795		23,794		5,805
Other loans		528,290		27,694		446,732		20,089		33,775
Loans	$	5,964,089	$	427,356	$	4,232,753	$	520,437	$	783,543
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots	$	80,875	$	44,742	$	23,017	$	1,885	$	11,231
Development		145,358		20,524		57,436		6,115		61,283
Unimproved land		195,198		52,177		84,370		23,866		34,785
1-4 family construction		89,096		1,078		64,309		4,216		19,493
Other construction		42,429		3,924		10,032		6,299		22,174
Construction, land development and other land loans	$	552,956	$	122,445	$	239,164	$	42,381	$	148,966
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION
Income producing:
Retail	$	171,922	$	48,259	$	69,487	$	24,467	$	29,709
Office		157,427		47,233		78,719		13,140		18,335
Nursing homes/assisted living		121,284		-		111,424		4,485		5,375
Hotel/motel		65,575		11,104		29,405		11,008		14,058
Industrial		32,658		9,220		4,914		1,228		17,296
Health care		13,559		-		12,441		56		1,062
Convenience stores		11,407		438		6,092		2,433		2,444
Other		170,327		13,081		66,098		12,756		78,392
Total income producing loans		744,159		129,335		378,580		69,573		166,671
Owner-occupied:
Office		122,926		17,687		64,174		17,780		23,285
Churches		115,235		2,157		53,242		54,662		5,174
Industrial warehouses		95,026		2,418		54,855		521		37,232
Health care		79,964		10,956		54,607		6,950		7,451
Convenience stores		65,870		1,266		38,990		2,824		22,790
Retail		36,348		5,574		21,774		2,295		6,705
Restaurants		29,238		778		22,885		3,942		1,633
Auto dealerships		19,982		596		15,190		1,488		2,708
Other		179,963		7,176		89,566		35,136		48,085
Total owner-occupied loans		744,552		48,608		415,283		125,598		155,063
Loans secured by nonfarm, nonresidential properties	$	1,488,711	$	177,943	$	793,863	$	195,171	$	321,734

Note 2 – Loan Composition (continued)
	March 31, 2011
								Classified (3)
FLORIDA CREDIT QUALITY	Total Loans		Criticized Loans (1)		Special Mention (2)			Accruing		Nonimpaired Nonaccrual		Impaired Nonaccrual (4)
Construction, land development and other land loans:
Lots	$	44,742	$	14,620	$	664		$	9,947	$	1,946	$	2,063
Development		20,524		10,760		-			3,553		83		7,124
Unimproved land		52,177		31,518		21,233			2,148		817		7,320
1-4 family construction		1,078		-		-			-		-		-
Other construction		3,924		299		-			299		-		-
Construction, land development and other land loans		122,445		57,197		21,897			15,947		2,846		16,507
Commercial, commercial real estate and consumer		304,911		69,547		12,509			31,843		5,402		19,793
Total Florida loans	$	427,356	$	126,744	$	34,406		$	47,790	$	8,248	$	36,300
FLORIDA LOAN LOSS RESERVES BY LOAN TYPE	Total Loans		Loan Loss Reserves		Loan Loss Reserve % of Total Loans
Construction, land development and other land loans:
Lots	$	44,742	$	4,212		9.41	%
Development		20,524		4,047		19.72	%
Unimproved land		52,177		5,976		11.45	%
1-4 family construction		1,078		34		3.15	%
Other construction		3,924		277		7.06	%
Construction, land development and other land loans		122,445		14,546		11.88	%
Commercial, commercial real estate and consumer		304,911		6,660		2.18	%
Total Florida loans	$	427,356	$	21,206		4.96	%
(1) Criticized loans equal all special mention and classified loans.
(2) Special mention loans exhibit potential credit weaknesses that, if not resolved, may ultimately result in a more severe classification.
(3) Classified loans include those loans identified by management as exhibiting well-defined credit weaknesses that may jeopardize repayment in full of the debt.
(4) All nonaccrual loans over $500 thousand are individually assessed for impairment. Impaired loans have been determined to be collateral dependent and assessed using a fair value approach. Fair value estimates begin with appraised values, normally from recently received and reviewed appraisals. Appraised values are adjusted down for costs associated with asset disposal. At the time a loan is deemed to be impaired, the full difference between book value and the most likely estimate of the asset’s net realizable value is charged off. However, as subsequent events dictate and estimated net realizable values decline, required reserves are established.

LOAN COMPOSITION -FLORIDA		3/31/2011		12/31/2010		9/30/2010		6/30/2010		3/31/2010
Loans secured by real estate:
Construction, land development and other land loans	$	122,445	$	132,021	$	145,907	$	173,932	$	183,670
Secured by 1-4 family residential properties		69,552		72,114		73,738		77,680		81,297
Secured by nonfarm, nonresidential properties		177,943		183,250		184,992		178,297		179,637
Other real estate secured		13,472		14,038		12,223		8,062		5,195
Commercial and industrial loans		14,774		16,053		17,512		25,254		22,100
Consumer loans		1,476		1,487		1,636		1,756		2,077
Other loans		27,694		25,488		28,194		29,354		29,480
Loans	$	427,356	$	444,451	$	464,202	$	494,335	$	503,456
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS - FLORIDA
Lots	$	44,742	$	46,907	$	48,700	$	54,406	$	57,436
Development		20,524		21,144		24,060		24,632		27,381
Unimproved land		52,177		57,811		61,676		69,003		71,271
1-4 family construction		1,078		2,277		7,864		9,148		10,247
Other construction		3,924		3,882		3,607		16,743		17,335
Construction, land development and other land loans	$	122,445	$	132,021	$	145,907	$	173,932	$	183,670

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
	3/31/2011		12/31/2010		9/30/2010		6/30/2010		3/31/2010
Securities – Taxable	3.77	%	3.90	%	4.11	%	4.50	%	4.73	%
Securities – Nontaxable	5.02	%	4.97	%	5.51	%	5.65	%	5.82	%
Securities – Total	3.87	%	3.99	%	4.22	%	4.59	%	4.82	%
Loans	5.25	%	5.29	%	5.31	%	5.37	%	5.32	%
FF Sold & Rev Repo	0.39	%	0.44	%	0.42	%	0.38	%	0.31	%
Other Earning Assets	2.81	%	3.15	%	3.92	%	3.79	%	3.36	%
Total Earning Assets	4.86	%	4.94	%	5.04	%	5.18	%	5.19	%
Interest-bearing Deposits	0.70	%	0.77	%	0.84	%	0.90	%	1.01	%
FF Pch & Repo	0.21	%	0.23	%	0.22	%	0.21	%	0.15	%
Other Borrowings	1.72	%	1.65	%	2.01	%	2.02	%	1.64	%
Total Interest-bearing Liabilities	0.71	%	0.76	%	0.85	%	0.91	%	0.97	%
Net interest margin	4.30	%	4.36	%	4.39	%	4.47	%	4.42	%

During the first quarter of 2011, the net interest margin decreased 6 basis points to 4.30%, from 4.36% for the fourth quarter of 2010. The decrease is primarily a result of the downward repricing of fixed-rate assets, mostly within Trustmark's investment securities portfolio, which was partially offset by declines in interest-bearing deposit costs.

Note 4 – Mortgage Banking

Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and exchange-traded option contracts, to achieve a fair value return that offsets the changes in fair value of MSR attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting. Changes in the fair value of these exchange-traded derivative instruments are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of MSR. The MSR fair value represents the effect of present value decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the total hedge cost to the changes in the fair value of the MSR asset attributable to interest rate changes. The impact of this strategy resulted in a net positive ineffectiveness of $263 thousand and $1.0 million for the quarters ended March 31, 2011 and 2010, respectively.

The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements:
	Quarter Ended
		3/31/2011			12/31/2010			9/30/2010			6/30/2010			3/31/2010
Mortgage servicing income, net	$	3,614		$	3,577		$	3,406		$	3,495		$	3,449
Change in fair value-MSR from runoff		(1,291	)		(2,506	)		(2,255	)		(1,374	)		(1,170	)
Gain on sales of loans, net		3,101			5,754			3,911			1,897			3,755
Other, net		(965	)		(2,016	)		1,919			1,193			(1,002	)
Mortgage banking income before hedge ineffectiveness		4,459			4,809			6,981			5,211			5,032
Change in fair value-MSR from market changes		257			5,870			(3,115	)		(8,631	)		(3,067	)
Change in fair value of derivatives		6			(6,177	)		5,995			12,330			4,107
Net positive (negative) hedge ineffectiveness		263			(307	)		2,880			3,699			1,040
Mortgage banking, net	$	4,722		$	4,502		$	9,861		$	8,910		$	6,072

During the first quarter of 2010, Trustmark completed the final settlement of the sale of approximately $920.9 million in mortgages serviced for others, which reduced Trustmark’s MSR by approximately $8.5 million. In addition, during December of 2010, Trustmark purchased approximately $53.9 million of GNMA serviced loans, which were subsequently sold to a third party. Trustmark will retain the servicing for these loans, which are fully guaranteed by FHA/VA. The effect of these transactions did not have a material impact on Trustmark's results of operations.

Note 5 – Non-GAAP Financial Measures

In addition to capital ratios defined by 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.

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.

Note 5 - Non-GAAP Financial Measures (continued)
			Quarter Ended
				3/31/2011			12/31/2010			9/30/2010			6/30/2010			3/31/2010
TANGIBLE COMMON EQUITY
AVERAGE BALANCES
Total shareholders' common equity			$	1,159,898		$	1,160,058		$	1,155,054		$	1,138,935		$	1,123,356
Less:	Goodwill			(291,104	)		(291,104	)		(291,104	)		(291,104	)		(291,104	)
	Identifiable intangible assets			(16,003	)		(16,835	)		(17,716	)		(18,596	)		(19,484	)
Total average tangible common equity			$	852,791		$	852,119		$	846,234		$	829,235		$	812,768
PERIOD END BALANCES
Total shareholders' common equity			$	1,160,229		$	1,149,484		$	1,158,792		$	1,142,380		$	1,128,529
Less:	Goodwill			(291,104	)		(291,104	)		(291,104	)		(291,104	)		(291,104	)
	Identifiable intangible assets			(15,532	)		(16,306	)		(17,181	)		(18,062	)		(18,944	)
Total tangible common equity		(a)	$	853,593		$	842,074		$	850,507		$	833,214		$	818,481
TANGIBLE ASSETS
Total assets			$	9,514,462		$	9,553,902		$	9,416,905		$	9,244,545		$	9,293,215
Less:	Goodwill			(291,104	)		(291,104	)		(291,104	)		(291,104	)		(291,104	)
	Identifiable intangible assets			(15,532	)		(16,306	)		(17,181	)		(18,062	)		(18,944	)
Total tangible assets		(b)	$	9,207,826		$	9,246,492		$	9,108,620		$	8,935,379		$	8,983,167
Risk-weighted assets		(c)	$	6,536,056		$	6,672,174		$	6,653,479		$	6,658,897		$	6,737,084
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income available to common shareholders			$	24,013		$	25,160		$	25,860		$	26,161		$	23,455
Plus:	Intangible amortization net of tax			480			538			545			545			545
Net income adjusted for intangible amortization			$	24,493		$	25,698		$	26,405		$	26,706		$	24,000
Period end common shares outstanding		(d)		63,987,064			63,917,591			63,885,959			63,885,403			63,844,500
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible common equity ^1				11.65	%		11.96	%		12.38	%		12.92	%		11.98	%
Tangible common equity/tangible assets		(a)/(b)		9.27	%		9.11	%		9.34	%		9.32	%		9.11	%
Tangible common equity/risk-weighted assets		(a)/(c)		13.06	%		12.62	%		12.78	%		12.51	%		12.15	%
Tangible common book value		(a)/(d)*1,000	$	13.34		$	13.17		$	13.31		$	13.04		$	12.82
TIER 1 COMMON RISK-BASED CAPITAL
Total shareholders' equity			$	1,160,229		$	1,149,484		$	1,158,792		$	1,142,380		$	1,128,529
Eliminate qualifying AOCI				11,623			11,426			(9,648	)		(5,404	)		(4,464	)
Qualifying tier 1 capital				60,000			60,000			68,000			68,000			68,000
Disallowed goodwill				(291,104	)		(291,104	)		(291,104	)		(291,104	)		(291,104	)
Adj to goodwill allowed for deferred taxes				10,568			10,215			9,863			9,510			9,158
Other disallowed intangibles				(15,532	)		(16,306	)		(17,181	)		(18,062	)		(18,944	)
Disallowed servicing intangible				(5,360	)		(5,115	)		(4,197	)		(4,304	)		(5,004	)
Total tier 1 capital			$	930,424		$	918,600		$	914,525		$	901,016		$	886,171
Less:	Qualifying tier 1 capital			(60,000	)		(60,000	)		(68,000	)		(68,000	)		(68,000	)
Total tier 1 common capital		(e)	$	870,424		$	858,600		$	846,525		$	833,016		$	818,171
Tier 1 common risk-based capital ratio		(e)/(c)		13.32	%		12.87	%		12.72	%		12.51	%		12.14	%
^1 Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible common equity

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