Trustmark Corporation Announces First Quarter 2020 Financial Results

Position of strength and stability allows for proactive response to COVID-19 pandemic

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Trustmark Corporation Announces First Quarter 2020 Financial Results

JACKSON, Miss.--()--Trustmark Corporation (Nasdaq:TRMK) reported net income of $22.2 million in the first quarter of 2020, representing diluted earnings per share of $0.35. During the first quarter, the provision and expense for credit losses totaled $27.4 million, primarily due to the impact of the COVID-19 pandemic on expected credit losses. This increased provision and expense for credit losses reduced after-tax net income by approximately $0.32 per diluted share. First quarter results also include a one-time, pre-tax charge of $4.4 million related to a voluntary early retirement program which reduced earnings by $0.05 per diluted share. In addition, Trustmark reported positive net mortgage servicing hedge ineffectiveness of $9.9 million in the first quarter which increased earnings by $0.12 per diluted share.

Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/52210509/en

COVID-19 Response

Gerard R. Host, President and CEO, stated, “Trustmark has been proactive in responding to the COVID-19 pandemic, and we are taking comprehensive action to support customers, associates and the communities we serve. We remain committed to serving customers as our branches continue to offer drive-thru service, our ATM and ITM network remains accessible and our robust digital and mobile banking options provide additional convenience for our customers. Approximately 45% of Trustmark associates are working remotely, and essential employees in our offices are taking additional precautions to stay safe and healthy. We are working with customers to provide flexibility in these uncertain circumstances, and we are serving our local economies by participating in the SBA’s Paycheck Protection Program. SBA commitments were secured for approximately 6,000 requests totaling over $800 million with an average loan size of $137 thousand, and we continue to assist customers in completing applications for the Paycheck Protection Program. We are committed to doing everything in our power to ensure the safety of our customers and associates and support our local economies through these challenging times.”

First Quarter Highlights

  • Maintained strong capital position with CET1 ratio of 11.35% and total risk-based capital ratio of 12.78%
  • Reported solid growth in fee businesses with linked quarter increases of 61.2% in mortgage banking revenue (before hedge ineffectiveness), 23.3% in insurance commissions and 10.0% in wealth management revenue
  • Pre-tax, pre-provision income totaled $56.6 million, a linked-quarter increase of 31.1% and year-over-year increase of 40.4%

Mr. Host stated, “For over 130 years, we have been committed to meeting the banking and financial needs of our customers and communities. During the COVID-19 pandemic, we remain focused on providing support, advice and solutions to meet our customers’ unique needs. Trustmark entered this crisis from a position of strength and stability with a solid capital base and ample liquidity. During the first quarter, we experienced strong growth in our fee businesses and posted increases in both loan and deposit balances. I would like to thank our dedicated associates for working diligently in these unprecedented circumstances to serve our customers. Trustmark has weathered many storms over the years, and we remain well-positioned to continue serving customers and creating long-term value for shareholders.”

Balance Sheet Management

  • Loans held for investment (excluding loans reclassified from acquired loans) increased 1.7% linked-quarter and total deposits increased 2.9% from the prior quarter
  • Maintained strong capital position significantly above regulatory levels necessary to be considered “well-capitalized”
  • Suspended share repurchase program on March 9, 2020, to maintain flexibility through the COVID-19 pandemic

Loans held for investment totaled $9.6 billion at March 31, 2020, reflecting an increase of 2.5% linked-quarter and 6.4% year-over-year. During the first quarter of 2020, Trustmark reclassified $72.6 million of acquired loans to loans held for investment with the adoption of FASB ASC Topic 326, “Financial Instruments – Credit Losses.” Excluding this reclassification, loans held for investment increased $159.7 million, or 1.7%, from the prior quarter and $500.3 million, or 5.6%, from the comparable period one year earlier.

The linked-quarter growth reflects increases in other real estate secured loans and loans secured by nonfarm, nonresidential properties, which were principally the result of the migration of construction loans as projects were completed. Trustmark’s loan portfolio is diversified by loan type and geography.

Deposits totaled $11.6 billion at March 31, 2020, up $330.2 million, or 2.9%, from the prior quarter. Trustmark maintains a strong liquidity position as loans held for investment represented 82.7% of total deposits at March 31, 2020. Interest-bearing deposit costs totaled 0.71% for the first quarter, a decrease of 14 basis points linked-quarter. Trustmark continues to maintain an attractive, low-cost deposit base with approximately 59% of deposit balances in checking accounts. The total cost of interest-bearing liabilities was 0.75% for the first quarter of 2020, a decrease of 13 basis points from the prior quarter.

During the first quarter, Trustmark repurchased $27.5 million, or approximately 887 thousand of its common shares in open market transactions. On March 9, 2020, Trustmark suspended its share repurchase program to ensure ample capital to support customers during the COVID-19 pandemic. Trustmark’s capital position remained solid, reflecting the strength and diversity of its financial services businesses. At March 31, 2020, Trustmark’s tangible equity to tangible assets ratio was 9.27%, while the total risk-based capital ratio was 12.78%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable June 15, 2020, to shareholders of record on June 1, 2020.

Credit Quality

  • Adopted current expected credit loss (CECL) methodology for estimating credit losses effective January 1, 2020
  • Allowance for credit losses (ACL) represented 468.8% of nonperforming loans, excluding individually evaluated loans
  • Nonperforming assets declined 5.6% from the prior quarter and 12.1% year-over-year, reflecting decreases in both nonperforming loans and other real estate

Effective January 1, 2020, Trustmark adopted the CECL methodology for estimating credit losses, which resulted in a net $26.6 million increase for credit losses primarily due to the creation of reserves for unfunded commitments. This one-time cumulative adjustment resulted in an after-tax decrease of $19.9 million in retained earnings. Primarily due to economic uncertainties related to the COVID-19 pandemic, Trustmark increased its provision for credit losses by $20.6 million and its credit loss expense related to off-balance sheet credit exposures by $6.8 million, resulting in total credit loss expenses of $27.4 million in the quarter.

Allocation of Trustmark's $100.6 million allowance for credit losses on loans held for investment represented 0.97% of commercial loans and 1.35% of consumer and home mortgage loans, resulting in an allowance to total loans held for investment of 1.05% at March 31, 2020, representing a level management considers commensurate with the present risk in the loan portfolio.

Nonperforming loans totaled $53.0 million at March 31, 2020, down $234 thousand from the prior quarter and $3.4 million year-over-year. Other real estate totaled $24.8 million, reflecting a $4.4 million decrease from the prior quarter and down $7.3 million from the prior year. Collectively, nonperforming assets totaled $77.8 million, reflecting a linked-quarter decrease of $4.6 million and a year-over-year decrease of $10.7 million.

Revenue Generation

  • Revenue in the first quarter totaled $169.2 million, up 10.5% from the prior quarter
  • Mortgage banking revenue before hedge ineffectiveness was $17.6 million in the first quarter, a linked-quarter increase of 61.2%
  • Insurance commissions increased 23.3% from the prior quarter, and wealth management revenue rose 10.0% over the same period

Revenue in the first quarter totaled $169.2 million, up 10.5% from the prior quarter and up 15.7% from the same quarter in the prior year. The linked-quarter and year-over-year increases primarily reflect higher mortgage banking revenue as well as higher insurance commissions and wealth management revenue. Net interest income (FTE) in the first quarter totaled $107.1 million, resulting in a net interest margin of 3.52%, down 4 basis points from the prior quarter. Relative to the prior quarter, net interest income (FTE) decreased $1.7 million as a $4.3 million reduction in interest income more than offset a $2.6 million reduction in interest expense.

Noninterest income in the first quarter totaled $65.3 million, an increase of $17.7 million from the prior quarter and an increase of $23.8 million year-over-year. The linked-quarter change primarily reflects a $19.6 million increase in mortgage banking revenue. Mortgage banking revenue in the first quarter included $9.9 million in positive net hedge ineffectiveness. Mortgage loan production in the first quarter totaled $457.2 million, down 8.3% linked-quarter and up 61.3% year-over-year. Gain on sale of loans, net totaled $14.3 million in the first quarter, up $6.4 million from the prior quarter. Mortgage banking revenue totaled $27.5 million in the first quarter.

Insurance revenue totaled $11.6 million in the first quarter, up 23.3%, or $2.2 million, from the fourth quarter of 2019 and 6.2%, or $679 thousand, year-over-year. The linked-quarter and year-over-year increases primarily reflect growth in property and casualty commissions. Wealth management revenue in the first quarter totaled $8.5 million, an increase of $774 thousand, or 10.0%, from the prior quarter. The growth reflects both higher trust management fees and brokerage and investment services revenue.

Bank card and other fees decreased $2.8 million, or 34.6%, from the prior quarter and $1.8 million, or 25.5%, year-over-year, reflecting lower customer derivative revenue. Service charges on deposit accounts experienced a seasonal decrease of $862 thousand, or 7.9%, from the prior quarter and $233 thousand, or 2.3%, year-over-year.

Noninterest Expense

  • Core noninterest expense totaled $110.2 million in the first quarter of 2020, an increase of 2.5% from the prior quarter
  • Completed voluntary early retirement program
  • Continued to realign delivery channels to reflect changing customer preferences

During the first quarter, Trustmark completed a voluntary early retirement program. Of those eligible for the program, 107 associates, or 3.8% of the workforce, retired by March 31, 2020. A one-time, pre-tax charge of $4.4 million related to this program was incurred during the first quarter, reflecting $4.3 million in salaries and employee benefits and $102 thousand in other expense. The result of this program is expected to produce pre-tax savings of approximately $2.9 million for the remainder of 2020 and $4.0 million for 2021.

Salaries and employee benefits – excluding $4.3 million of the voluntary early retirement charge – totaled $64.9 million, an increase of 4.1% from the prior quarter. The increase primarily reflects higher insurance commissions and a seasonal increase in payroll taxes. Services and fees rose $430 thousand linked-quarter, and other real estate expense, net decreased $197 thousand linked-quarter.

Trustmark remains focused on optimizing its delivery channels and reallocating resources to reflect changing customer preferences. In the first quarter of 2020, Trustmark closed five branches as customers continued to migrate to mobile and digital banking channels and embraced the convenience of remote options. Trustmark remains committed to investments that promote profitable revenue growth, reengineering processes to enhance operational efficiency, realigning delivery channels to support changing customer preferences and managing the franchise for the long-term.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, April 29, 2020 at 8:30 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (877) 317-3051 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Wednesday, May 13, 2020, in archived format at the same web address or by calling (877) 344-7529, passcode 10142197.

Trustmark is a financial services company providing banking and financial solutions through 188 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 could have an adverse effect on any or all of our business, results of operations financial condition and liquidity. 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, the effects of the COVID-19 pandemic on the domestic and global economy, as well as the effectiveness of actions of federal, state and local governments and agencies (including the Board of Governors of the Federal Reserve Board (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, particularly with respect to the COVID-19 pandemic, changes in our ability to control expenses, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, cyber-attacks and other breaches which could affect our information system security, natural disasters, environmental disasters, pandemics or other health crises, acts of war or terrorism, and other risks described in our filings with the Securities and Exchange Commission (SEC).

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

 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2020
($ in thousands)
(unaudited)
Linked Quarter Year over Year
QUARTERLY AVERAGE BALANCES

3/31/2020

12/31/2019

3/31/2019

$ Change

% Change

$ Change

% Change

Securities AFS-taxable

$

1,620,422

 

$

1,551,358

 

$

1,753,268

 

$

69,064

 

4.5

%

$

(132,846

)

-7.6

%

Securities AFS-nontaxable

 

22,056

 

 

23,300

 

 

40,159

 

 

(1,244

)

-5.3

%

 

(18,103

)

-45.1

%

Securities HTM-taxable

 

694,740

 

 

734,474

 

 

866,665

 

 

(39,734

)

-5.4

%

 

(171,925

)

-19.8

%

Securities HTM-nontaxable

 

25,673

 

 

25,703

 

 

28,710

 

 

(30

)

-0.1

%

 

(3,037

)

-10.6

%

Total securities

 

2,362,891

 

 

2,334,835

 

 

2,688,802

 

 

28,056

 

1.2

%

 

(325,911

)

-12.1

%

Loans (including loans held for sale) (1)

 

9,678,174

 

 

9,467,437

 

 

9,038,204

 

 

210,737

 

2.2

%

 

639,970

 

7.1

%

Acquired loans (1)

 

77,797

 

 

104,316

 

 

(77,797

)

-100.0

%

 

(104,316

)

-100.0

%

Fed funds sold and rev repos

 

164

 

 

184

 

 

277

 

 

(20

)

-10.9

%

 

(113

)

-40.8

%

Other earning assets

 

187,327

 

 

227,116

 

 

243,493

 

 

(39,789

)

-17.5

%

 

(56,166

)

-23.1

%

Total earning assets

 

12,228,556

 

 

12,107,369

 

 

12,075,092

 

 

121,187

 

1.0

%

 

153,464

 

1.3

%

Allowance for credit losses (ACL), loans held for investment (LHFI) (1)

 

(85,015

)

 

(86,211

)

 

(82,227

)

 

1,196

 

1.4

%

 

(2,788

)

-3.4

%

Other assets

 

1,498,725

 

 

1,445,075

 

 

1,447,611

 

 

53,650

 

3.7

%

 

51,114

 

3.5

%

Total assets

$

13,642,266

 

$

13,466,233

 

$

13,440,476

 

$

176,033

 

1.3

%

$

201,790

 

1.5

%

 
Interest-bearing demand deposits

$

3,184,134

 

$

3,167,256

 

$

2,899,467

 

$

16,878

 

0.5

%

$

284,667

 

9.8

%

Savings deposits

 

3,646,936

 

 

3,448,899

 

 

3,786,835

 

 

198,037

 

5.7

%

 

(139,899

)

-3.7

%

Time deposits

 

1,617,307

 

 

1,663,741

 

 

1,881,556

 

 

(46,434

)

-2.8

%

 

(264,249

)

-14.0

%

Total interest-bearing deposits

 

8,448,377

 

 

8,279,896

 

 

8,567,858

 

 

168,481

 

2.0

%

 

(119,481

)

-1.4

%

Fed funds purchased and repos

 

247,513

 

 

164,754

 

 

84,352

 

 

82,759

 

50.2

%

 

163,161

 

n/m

 

Other borrowings

 

85,279

 

 

79,512

 

 

90,804

 

 

5,767

 

7.3

%

 

(5,525

)

-6.1

%

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

0.0

%

0.0

%

Total interest-bearing liabilities

 

8,843,025

 

 

8,586,018

 

 

8,804,870

 

 

257,007

 

3.0

%

 

38,155

 

0.4

%

Noninterest-bearing deposits

 

2,910,951

 

 

3,017,824

 

 

2,824,220

 

 

(106,873

)

-3.5

%

 

86,731

 

3.1

%

Other liabilities

 

248,220

 

 

205,786

 

 

221,199

 

 

42,434

 

20.6

%

 

27,021

 

12.2

%

Total liabilities

 

12,002,196

 

 

11,809,628

 

 

11,850,289

 

 

192,568

 

1.6

%

 

151,907

 

1.3

%

Shareholders' equity

 

1,640,070

 

 

1,656,605

 

 

1,590,187

 

 

(16,535

)

-1.0

%

 

49,883

 

3.1

%

Total liabilities and equity

$

13,642,266

 

$

13,466,233

 

$

13,440,476

 

$

176,033

 

1.3

%

$

201,790

 

1.5

%

(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
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, 2020
($ in thousands)
(unaudited)
Linked Quarter Year over Year
PERIOD END BALANCES

3/31/2020

12/31/2019

3/31/2019

$ Change

% Change

$ Change

% Change

Cash and due from banks

$

404,341

 

$

358,916

 

$

454,047

 

$

45,425

 

12.7

%

$

(49,706

)

-10.9

%

Fed funds sold and rev repos

 

2,000

 

 

2,000

 

n/m

 

 

2,000

 

n/m

 

Securities available for sale

 

1,833,779

 

 

1,602,404

 

 

1,723,445

 

 

231,375

 

14.4

%

 

110,334

 

6.4

%

Securities held to maturity

 

704,276

 

 

738,099

 

 

884,319

 

 

(33,823

)

-4.6

%

 

(180,043

)

-20.4

%

Loans held for sale (LHFS)

 

325,389

 

 

226,347

 

 

172,683

 

 

99,042

 

43.8

%

 

152,706

 

88.4

%

Loans held for investment (LHFI) (1)

 

9,567,920

 

 

9,335,628

 

 

8,995,014

 

 

232,292

 

2.5

%

 

572,906

 

6.4

%

ACL LHFI (1)

 

(100,564

)

 

(84,277

)

 

(79,005

)

 

(16,287

)

-19.3

%

 

(21,559

)

-27.3

%

Net LHFI

 

9,467,356

 

 

9,251,351

 

 

8,916,009

 

 

216,005

 

2.3

%

 

551,347

 

6.2

%

Acquired loans (1)

 

72,601

 

 

93,201

 

 

(72,601

)

-100.0

%

 

(93,201

)

-100.0

%

Allowance for loan losses, acquired loans (1)

 

(815

)

 

(1,297

)

 

815

 

100.0

%

 

1,297

 

100.0

%

Net acquired loans

 

71,786

 

 

91,904

 

 

(71,786

)

-100.0

%

 

(91,904

)

-100.0

%

Net LHFI and acquired loans

 

9,467,356

 

 

9,323,137

 

 

9,007,913

 

 

144,219

 

1.5

%

 

459,443

 

5.1

%

Premises and equipment, net

 

190,179

 

 

189,791

 

 

189,743

 

 

388

 

0.2

%

 

436

 

0.2

%

Mortgage servicing rights

 

56,437

 

 

79,394

 

 

86,842

 

 

(22,957

)

-28.9

%

 

(30,405

)

-35.0

%

Goodwill

 

381,717

 

 

379,627

 

 

379,627

 

 

2,090

 

0.6

%

 

2,090

 

0.6

%

Identifiable intangible assets

 

7,537

 

 

7,343

 

 

10,092

 

 

194

 

2.6

%

 

(2,555

)

-25.3

%

Other real estate

 

24,847

 

 

29,248

 

 

32,139

 

 

(4,401

)

-15.0

%

 

(7,292

)

-22.7

%

Operating lease right-of-use assets

 

30,839

 

 

31,182

 

 

33,861

 

 

(343

)

-1.1

%

 

(3,022

)

-8.9

%

Other assets

 

591,132

 

 

532,389

 

 

503,306

 

 

58,743

 

11.0

%

 

87,826

 

17.4

%

Total assets

$

14,019,829

 

$

13,497,877

 

$

13,478,017

 

$

521,952

 

3.9

%

$

541,812

 

4.0

%

 
Deposits:
Noninterest-bearing

$

2,977,058

 

$

2,891,215

 

$

2,867,778

 

$

85,843

 

3.0

%

$

109,280

 

3.8

%

Interest-bearing

 

8,598,706

 

 

8,354,342

 

 

8,667,037

 

 

244,364

 

2.9

%

 

(68,331

)

-0.8

%

Total deposits

 

11,575,764

 

 

11,245,557

 

 

11,534,815

 

 

330,207

 

2.9

%

 

40,949

 

0.4

%

Fed funds purchased and repos

 

421,821

 

 

256,020

 

 

46,867

 

 

165,801

 

64.8

%

 

374,954

 

n/m

 

Other borrowings

 

84,230

 

 

85,396

 

 

83,265

 

 

(1,166

)

-1.4

%

 

965

 

1.2

%

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

0.0

%

0.0

%

ACL on off-balance sheet credit exposures (1)

 

36,421

 

 

36,421

 

n/m

 

 

36,421

 

n/m

 

Operating lease liabilities

 

32,055

 

 

32,354

 

 

34,921

 

 

(299

)

-0.9

%

 

(2,866

)

-8.2

%

Other liabilities

 

155,283

 

 

155,992

 

 

129,265

 

 

(709

)

-0.5

%

 

26,018

 

20.1

%

Total liabilities

 

12,367,430

 

 

11,837,175

 

 

11,890,989

 

 

530,255

 

4.5

%

 

476,441

 

4.0

%

Common stock

 

13,209

 

 

13,376

 

 

13,499

 

 

(167

)

-1.2

%

 

(290

)

-2.1

%

Capital surplus

 

229,403

 

 

256,400

 

 

272,268

 

 

(26,997

)

-10.5

%

 

(42,865

)

-15.7

%

Retained earnings

 

1,402,089

 

 

1,414,526

 

 

1,342,176

 

 

(12,437

)

-0.9

%

 

59,913

 

4.5

%

Accum other comprehensive income (loss), net of tax

 

7,698

 

 

(23,600

)

 

(40,915

)

 

31,298

 

n/m

 

 

48,613

 

n/m

 

Total shareholders' equity

 

1,652,399

 

 

1,660,702

 

 

1,587,028

 

 

(8,303

)

-0.5

%

 

65,371

 

4.1

%

Total liabilities and equity

$

14,019,829

 

$

13,497,877

 

$

13,478,017

 

$

521,952

 

3.9

%

$

541,812

 

4.0

%

(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
 
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, 2020
($ in thousands except per share data)
(unaudited)
 
Quarter Ended Linked Quarter Year over Year
INCOME STATEMENTS 3/31/2020 12/31/2019 3/31/2019 $ Change % Change $ Change % Change
Interest and fees on LHFS & LHFI-FTE

$

109,357

$

111,383

 

$

109,890

$

(2,026

)

-1.8

%

$

(533

)

-0.5

%

Interest and fees on acquired loans (1)

 

2,138

 

 

1,916

 

(2,138

)

-100.0

%

 

(1,916

)

-100.0

%

Interest on securities-taxable

 

12,948

 

12,884

 

 

14,665

 

64

 

0.5

%

 

(1,717

)

-11.7

%

Interest on securities-tax exempt-FTE

 

457

 

484

 

 

646

 

(27

)

-5.6

%

 

(189

)

-29.3

%

Interest on fed funds sold and rev repos

 

1

 

 

2

 

(1

)

-100.0

%

 

(2

)

-100.0

%

Other interest income

 

740

 

896

 

 

1,603

 

(156

)

-17.4

%

 

(863

)

-53.8

%

Total interest income-FTE

 

123,502

 

127,786

 

 

128,722

 

(4,284

)

-3.4

%

 

(5,220

)

-4.1

%

Interest on deposits

 

14,957

 

17,716

 

 

19,570

 

(2,759

)

-15.6

%

 

(4,613

)

-23.6

%

Interest on fed funds pch and repos

 

625

 

504

 

 

288

 

121

 

24.0

%

 

337

 

n/m

 

Other interest expense

 

860

 

826

 

 

825

 

34

 

4.1

%

 

35

 

4.2

%

Total interest expense

 

16,442

 

19,046

 

 

20,683

 

(2,604

)

-13.7

%

 

(4,241

)

-20.5

%

Net interest income-FTE

 

107,060

 

108,740

 

 

108,039

 

(1,680

)

-1.5

%

 

(979

)

-0.9

%

Provision for credit losses, LHFI (1)

 

20,581

 

3,661

 

 

1,611

 

16,920

 

n/m

 

 

18,970

 

n/m

 

Provision for loan losses, acquired loans (1)

 

(2

)

 

78

 

2

 

100.0

%

 

(78

)

-100.0

%

Net interest income after provision-FTE

 

86,479

 

105,081

 

 

106,350

 

(18,602

)

-17.7

%

 

(19,871

)

-18.7

%

Service charges on deposit accounts

 

10,032

 

10,894

 

 

10,265

 

(862

)

-7.9

%

 

(233

)

-2.3

%

Bank card and other fees

 

5,355

 

8,192

 

 

7,191

 

(2,837

)

-34.6

%

 

(1,836

)

-25.5

%

Mortgage banking, net

 

27,483

 

7,914

 

 

3,442

 

19,569

 

n/m

 

 

24,041

 

n/m

 

Insurance commissions

 

11,550

 

9,364

 

 

10,871

 

2,186

 

23.3

%

 

679

 

6.2

%

Wealth management

 

8,537

 

7,763

 

 

7,483

 

774

 

10.0

%

 

1,054

 

14.1

%

Other, net

 

2,307

 

3,451

 

 

2,239

 

(1,144

)

-33.1

%

 

68

 

3.0

%

Nonint inc-excl sec gains (losses), net

 

65,264

 

47,578

 

 

41,491

 

17,686

 

37.2

%

 

23,773

 

57.3

%

Security gains (losses), net

n/m

 

n/m

 

Total noninterest income

 

65,264

 

47,578

 

 

41,491

 

17,686

 

37.2

%

 

23,773

 

57.3

%

Salaries and employee benefits

 

69,148

 

62,319

 

 

60,954

 

6,829

 

11.0

%

 

8,194

 

13.4

%

Services and fees

 

19,930

 

19,500

 

 

16,968

 

430

 

2.2

%

 

2,962

 

17.5

%

Net occupancy-premises

 

6,286

 

6,461

 

 

6,454

 

(175

)

-2.7

%

 

(168

)

-2.6

%

Equipment expense

 

5,616

 

5,880

 

 

5,924

 

(264

)

-4.5

%

 

(308

)

-5.2

%

Other real estate expense, net

 

1,294

 

1,491

 

 

1,752

 

(197

)

-13.2

%

 

(458

)

-26.1

%

Credit loss expense related to off-balance sheet credit exposures (1)

 

6,783

 

6,783

 

n/m

 

 

6,783

 

n/m

 

Other expense

 

14,753

 

14,376

 

 

13,969

 

377

 

2.6

%

 

784

 

5.6

%

Total noninterest expense

 

123,810

 

110,027

 

 

106,021

 

13,783

 

12.5

%

 

17,789

 

16.8

%

Income before income taxes and tax eq adj

 

27,933

 

42,632

 

 

41,820

 

(14,699

)

-34.5

%

 

(13,887

)

-33.2

%

Tax equivalent adjustment

 

3,108

 

3,149

 

 

3,231

 

(41

)

-1.3

%

 

(123

)

-3.8

%

Income before income taxes

 

24,825

 

39,483

 

 

38,589

 

(14,658

)

-37.1

%

 

(13,764

)

-35.7

%

Income taxes

 

2,607

 

5,537

 

 

5,250

 

(2,930

)

-52.9

%

 

(2,643

)

-50.3

%

Net income

$

22,218

$

33,946

 

$

33,339

$

(11,728

)

-34.5

%

$

(11,121

)

-33.4

%

 
Per share data
Earnings per share - basic

$

0.35

$

0.53

 

$

0.51

$

(0.18

)

-34.0

%

$

(0.16

)

-31.4

%

 
Earnings per share - diluted

$

0.35

$

0.53

 

$

0.51

$

(0.18

)

-34.0

%

$

(0.16

)

-31.4

%

 
Dividends per share

$

0.23

$

0.23

 

$

0.23

0.0

%

0.0

%

 
Weighted average shares outstanding
Basic

 

63,756,629

 

64,255,716

 

 

65,239,470

 
Diluted

 

63,913,603

 

64,435,276

 

 

65,378,500

 
Period end shares outstanding

 

63,396,912

 

64,200,111

 

 

64,789,943

(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
 
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, 2020
($ in thousands)
(unaudited)
 
 
Quarter Ended Linked Quarter Year over Year
NONPERFORMING ASSETS (1) 3/31/2020 12/31/2019 3/31/2019 $ Change % Change $ Change % Change
Nonaccrual loans
Alabama

$

4,769

 

$

1,870

 

$

2,971

 

$

2,899

 

n/m

 

$

1,798

 

60.5

%

Florida

 

254

 

 

267

 

 

408

 

 

(13

)

-4.9

%

 

(154

)

-37.7

%

Mississippi (2)

 

40,815

 

 

41,493

 

 

41,145

 

 

(678

)

-1.6

%

 

(330

)

-0.8

%

Tennessee (3)

 

6,153

 

 

8,980

 

 

8,806

 

 

(2,827

)

-31.5

%

 

(2,653

)

-30.1

%

Texas

 

1,001

 

 

616

 

 

3,093

 

 

385

 

62.5

%

 

(2,092

)

-67.6

%

Total nonaccrual loans

 

52,992

 

 

53,226

 

 

56,423

 

 

(234

)

-0.4

%

 

(3,431

)

-6.1

%

Other real estate
Alabama

 

6,229

 

 

8,133

 

 

6,878

 

 

(1,904

)

-23.4

%

 

(649

)

-9.4

%

Florida

 

4,835

 

 

5,877

 

 

8,120

 

 

(1,042

)

-17.7

%

 

(3,285

)

-40.5

%

Mississippi (2)

 

13,296

 

 

14,919

 

 

15,421

 

 

(1,623

)

-10.9

%

 

(2,125

)

-13.8

%

Tennessee (3)

 

487

 

 

319

 

 

994

 

 

168

 

52.7

%

 

(507

)

-51.0

%

Texas

 

726

 

n/m

 

 

(726

)

-100.0

%

Total other real estate

 

24,847

 

 

29,248

 

 

32,139

 

 

(4,401

)

-15.0

%

 

(7,292

)

-22.7

%

Total nonperforming assets

$

77,839

 

$

82,474

 

$

88,562

 

$

(4,635

)

-5.6

%

$

(10,723

)

-12.1

%

 
LOANS PAST DUE OVER 90 DAYS (1)
LHFI

$

708

 

$

642

 

$

670

 

$

66

 

10.3

%

$

38

 

5.7

%

 
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)

$

43,564

 

$

41,648

 

$

40,793

 

$

1,916

 

4.6

%

$

2,771

 

6.8

%

 
Quarter Ended Linked Quarter Year over Year
ACL LHFI (1)(4) 3/31/2020 12/31/2019 3/31/2019 $ Change % Change $ Change % Change
Beginning Balance

$

84,277

 

$

83,226

 

$

79,290

 

$

1,051

 

1.3

%

$

4,987

 

6.3

%

CECL adoption adjustments:
LHFI

 

(3,039

)

 

(3,039

)

n/m

 

 

(3,039

)

n/m

 

Acquired loan transfers

 

1,822

 

 

1,822

 

n/m

 

 

1,822

 

n/m

 

Provision for credit losses

 

20,581

 

 

3,661

 

 

1,611

 

 

16,920

 

n/m

 

 

18,970

 

n/m

 

Charge-offs

 

(5,545

)

 

(4,619

)

 

(4,033

)

 

(926

)

-20.0

%

 

(1,512

)

-37.5

%

Recoveries

 

2,468

 

 

2,009

 

 

2,137

 

 

459

 

22.8

%

 

331

 

15.5

%

Net (charge-offs) recoveries

 

(3,077

)

 

(2,610

)

 

(1,896

)

 

(467

)

-17.9

%

 

(1,181

)

-62.3

%

Ending Balance

$

100,564

 

$

84,277

 

$

79,005

 

$

16,287

 

19.3

%

$

21,559

 

27.3

%

 
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama

$

(1,080

)

$

(132

)

$

(15

)

$

(948

)

n/m

 

$

(1,065

)

n/m

 

Florida

 

64

 

 

357

 

 

227

 

 

(293

)

-82.1

%

 

(163

)

-71.8

%

Mississippi (2)

 

126

 

 

(1,792

)

 

(2,130

)

 

1,918

 

n/m

 

 

2,256

 

n/m

 

Tennessee (3)

 

(2,186

)

 

(131

)

 

(50

)

 

(2,055

)

n/m

 

 

(2,136

)

n/m

 

Texas

 

(1

)

 

(912

)

 

72

 

 

911

 

99.9

%

 

(73

)

n/m

 

Total net (charge-offs) recoveries

$

(3,077

)

$

(2,610

)

$

(1,896

)

$

(467

)

-17.9

%

$

(1,181

)

-62.3

%

(1) Excludes acquired loans.
(2) Mississippi includes Central and Southern Mississippi Regions.
(3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
(4) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
 
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, 2020
($ in thousands)
(unaudited)
Quarter Ended
AVERAGE BALANCES 3/31/2020 12/31/2019 9/30/2019 6/30/2019 3/31/2019
Securities AFS-taxable

$

1,620,422

 

$

1,551,358

 

$

1,570,803

 

$

1,661,464

 

$

1,753,268

 

Securities AFS-nontaxable

 

22,056

 

 

23,300

 

 

25,096

 

 

31,474

 

 

40,159

 

Securities HTM-taxable

 

694,740

 

 

734,474

 

 

778,098

 

 

821,357

 

 

866,665

 

Securities HTM-nontaxable

 

25,673

 

 

25,703

 

 

26,088

 

 

27,035

 

 

28,710

 

Total securities

 

2,362,891

 

 

2,334,835

 

 

2,400,085

 

 

2,541,330

 

 

2,688,802

 

Loans (including loans held for sale) (1)

 

9,678,174

 

 

9,467,437

 

 

9,436,287

 

 

9,260,028

 

 

9,038,204

 

Acquired loans (1)

 

77,797

 

 

82,641

 

 

91,217

 

 

104,316

 

Fed funds sold and rev repos

 

164

 

 

184

 

 

3,662

 

 

34,057

 

 

277

 

Other earning assets

 

187,327

 

 

227,116

 

 

176,163

 

 

316,604

 

 

243,493

 

Total earning assets

 

12,228,556

 

 

12,107,369

 

 

12,098,838

 

 

12,243,236

 

 

12,075,092

 

ACL LHFI (1)

 

(85,015

)

 

(86,211

)

 

(83,756

)

 

(81,996

)

 

(82,227

)

Other assets

 

1,498,725

 

 

1,445,075

 

 

1,447,977

 

 

1,467,462

 

 

1,447,611

 

Total assets

$

13,642,266

 

$

13,466,233

 

$

13,463,059

 

$

13,628,702

 

$

13,440,476

 

 
Interest-bearing demand deposits

$

3,184,134

 

$

3,167,256

 

$

3,085,758

 

$

3,048,876

 

$

2,899,467

 

Savings deposits

 

3,646,936

 

 

3,448,899

 

 

3,568,403

 

 

3,801,187

 

 

3,786,835

 

Time deposits

 

1,617,307

 

 

1,663,741

 

 

1,753,083

 

 

1,840,065

 

 

1,881,556

 

Total interest-bearing deposits

 

8,448,377

 

 

8,279,896

 

 

8,407,244

 

 

8,690,128

 

 

8,567,858

 

Fed funds purchased and repos

 

247,513

 

 

164,754

 

 

142,064

 

 

51,264

 

 

84,352

 

Other borrowings

 

85,279

 

 

79,512

 

 

78,404

 

 

81,352

 

 

90,804

 

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

Total interest-bearing liabilities

 

8,843,025

 

 

8,586,018

 

 

8,689,568

 

 

8,884,600

 

 

8,804,870

 

Noninterest-bearing deposits

 

2,910,951

 

 

3,017,824

 

 

2,932,754

 

 

2,898,266

 

 

2,824,220

 

Other liabilities

 

248,220

 

 

205,786

 

 

206,091

 

 

240,091

 

 

221,199

 

Total liabilities

 

12,002,196

 

 

11,809,628

 

 

11,828,413

 

 

12,022,957

 

 

11,850,289

 

Shareholders' equity

 

1,640,070

 

 

1,656,605

 

 

1,634,646

 

 

1,605,745

 

 

1,590,187

 

Total liabilities and equity

$

13,642,266

 

$

13,466,233

 

$

13,463,059

 

$

13,628,702

 

$

13,440,476

 

(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
 
See Notes to Consolidated Financials
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2020
($ in thousands)
(unaudited)
 
 
PERIOD END BALANCES 3/31/2020 12/31/2019 9/30/2019 6/30/2019 3/31/2019
Cash and due from banks

$

404,341

 

$

358,916

 

$

486,263

 

$

404,413

 

$

454,047

 

Fed funds sold and rev repos

 

2,000

 

 

75,499

 

Securities available for sale

 

1,833,779

 

 

1,602,404

 

 

1,553,705

 

 

1,643,725

 

 

1,723,445

 

Securities held to maturity

 

704,276

 

 

738,099

 

 

785,422

 

 

825,536

 

 

884,319

 

Loans held for sale (LHFS)

 

325,389

 

 

226,347

 

 

292,800

 

 

240,380

 

 

172,683

 

Loans held for investment (LHFI) (1)

 

9,567,920

 

 

9,335,628

 

 

9,223,668

 

 

9,116,759

 

 

8,995,014

 

ACL LHFI (1)

 

(100,564

)

 

(84,277

)

 

(83,226

)

 

(80,399

)

 

(79,005

)

Net LHFI

 

9,467,356

 

 

9,251,351

 

 

9,140,442

 

 

9,036,360

 

 

8,916,009

 

Acquired loans (1)

 

72,601

 

 

81,004

 

 

87,884

 

 

93,201

 

Allowance for loan losses, acquired loans (1)

 

(815

)

 

(1,249

)

 

(1,398

)

 

(1,297

)

Net acquired loans

 

71,786

 

 

79,755

 

 

86,486

 

 

91,904

 

Net LHFI and acquired loans

 

9,467,356

 

 

9,323,137

 

 

9,220,197

 

 

9,122,846

 

 

9,007,913

 

Premises and equipment, net

 

190,179

 

 

189,791

 

 

188,423

 

 

189,820

 

 

189,743

 

Mortgage servicing rights

 

56,437

 

 

79,394

 

 

73,016

 

 

79,283

 

 

86,842

 

Goodwill

 

381,717

 

 

379,627

 

 

379,627

 

 

379,627

 

 

379,627

 

Identifiable intangible assets

 

7,537

 

 

7,343

 

 

8,345

 

 

9,101

 

 

10,092

 

Other real estate

 

24,847

 

 

29,248

 

 

31,974

 

 

31,243

 

 

32,139

 

Operating lease right-of-use assets

 

30,839

 

 

31,182

 

 

33,180

 

 

32,762

 

 

33,861

 

Other assets

 

591,132

 

 

532,389

 

 

531,834

 

 

514,723

 

 

503,306

 

Total assets

$

14,019,829

 

$

13,497,877

 

$

13,584,786

 

$

13,548,958

 

$

13,478,017

 

 
Deposits:
Noninterest-bearing

$

2,977,058

 

$

2,891,215

 

$

3,064,127

 

$

2,909,141

 

$

2,867,778

 

Interest-bearing

 

8,598,706

 

 

8,354,342

 

 

8,190,056

 

 

8,657,488

 

 

8,667,037

 

Total deposits

 

11,575,764

 

 

11,245,557

 

 

11,254,183

 

 

11,566,629

 

 

11,534,815

 

Fed funds purchased and repos

 

421,821

 

 

256,020

 

 

376,712

 

 

51,800

 

 

46,867

 

Other borrowings

 

84,230

 

 

85,396

 

 

76,685

 

 

79,012

 

 

83,265

 

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

ACL on off-balance sheet credit exposures (1)

 

36,421

 

Operating lease liabilities

 

32,055

 

 

32,354

 

 

34,319

 

 

33,878

 

 

34,921

 

Other liabilities

 

155,283

 

 

155,992

 

 

135,669

 

 

137,233

 

 

129,265

 

Total liabilities

 

12,367,430

 

 

11,837,175

 

 

11,939,424

 

 

11,930,408

 

 

11,890,989

 

Common stock

 

13,209

 

 

13,376

 

 

13,390

 

 

13,418

 

 

13,499

 

Capital surplus

 

229,403

 

 

256,400

 

 

257,370

 

 

260,619

 

 

272,268

 

Retained earnings

 

1,402,089

 

 

1,414,526

 

 

1,395,460

 

 

1,369,329

 

 

1,342,176

 

Accum other comprehensive income (loss), net of tax

 

7,698

 

 

(23,600

)

 

(20,858

)

 

(24,816

)

 

(40,915

)

Total shareholders' equity

 

1,652,399

 

 

1,660,702

 

 

1,645,362

 

 

1,618,550

 

 

1,587,028

 

Total liabilities and equity

$

14,019,829

 

$

13,497,877

 

$

13,584,786

 

$

13,548,958

 

$

13,478,017

 

(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
 
See Notes to Consolidated Financials
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2020
($ in thousands except per share data)
(unaudited)
 
Quarter Ended
INCOME STATEMENTS 3/31/2020 12/31/2019 9/30/2019 6/30/2019 3/31/2019
Interest and fees on LHFS & LHFI-FTE

$

109,357

$

111,383

 

$

116,432

 

$

114,873

$

109,890

Interest and fees on acquired loans (1)

 

2,138

 

 

2,309

 

 

2,010

 

1,916

Interest on securities-taxable

 

12,948

 

12,884

 

 

13,184

 

 

13,916

 

14,665

Interest on securities-tax exempt-FTE

 

457

 

484

 

 

485

 

 

551

 

646

Interest on fed funds sold and rev repos

 

1

 

 

23

 

 

214

 

2

Other interest income

 

740

 

896

 

 

1,044

 

 

1,820

 

1,603

Total interest income-FTE

 

123,502

 

127,786

 

 

133,477

 

 

133,384

 

128,722

Interest on deposits

 

14,957

 

17,716

 

 

20,385

 

 

21,500

 

19,570

Interest on fed funds pch and repos

 

625

 

504

 

 

547

 

 

81

 

288

Other interest expense

 

860

 

826

 

 

830

 

 

831

 

825

Total interest expense

 

16,442

 

19,046

 

 

21,762

 

 

22,412

 

20,683

Net interest income-FTE

 

107,060

 

108,740

 

 

111,715

 

 

110,972

 

108,039

Provision for credit losses, LHFI (1)

 

20,581

 

3,661

 

 

3,039

 

 

2,486

 

1,611

Provision for loan losses, acquired loans (1)

 

(2

)

 

(140

)

 

106

 

78

Net interest income after provision-FTE

 

86,479

 

105,081

 

 

108,816

 

 

108,380

 

106,350

Service charges on deposit accounts

 

10,032

 

10,894

 

 

11,065

 

 

10,379

 

10,265

Bank card and other fees

 

5,355

 

8,192

 

 

8,349

 

 

8,004

 

7,191

Mortgage banking, net

 

27,483

 

7,914

 

 

8,171

 

 

10,295

 

3,442

Insurance commissions

 

11,550

 

9,364

 

 

11,072

 

 

11,089

 

10,871

Wealth management

 

8,537

 

7,763

 

 

7,691

 

 

7,742

 

7,483

Other, net

 

2,307

 

3,451

 

 

1,989

 

 

2,130

 

2,239

Nonint inc-excl sec gains (losses), net

 

65,264

 

47,578

 

 

48,337

 

 

49,639

 

41,491

Security gains (losses), net

Total noninterest income

 

65,264

 

47,578

 

 

48,337

 

 

49,639

 

41,491

Salaries and employee benefits

 

69,148

 

62,319

 

 

62,495

 

 

61,949

 

60,954

Services and fees

 

19,930

 

19,500

 

 

18,838

 

 

18,009

 

16,968

Net occupancy-premises

 

6,286

 

6,461

 

 

6,831

 

 

6,403

 

6,454

Equipment expense

 

5,616

 

5,880

 

 

5,971

 

 

5,958

 

5,924

Other real estate expense, net

 

1,294

 

1,491

 

 

531

 

 

132

 

1,752

Credit loss expense related to off-balance sheet credit exposures (1)

 

6,783

Other expense

 

14,753

 

14,376

 

 

12,187

 

 

13,650

 

13,969

Total noninterest expense

 

123,810

 

110,027

 

 

106,853

 

 

106,101

 

106,021

Income before income taxes and tax eq adj

 

27,933

 

42,632

 

 

50,300

 

 

51,918

 

41,820

Tax equivalent adjustment

 

3,108

 

3,149

 

 

3,249

 

 

3,248

 

3,231

Income before income taxes

 

24,825

 

39,483

 

 

47,051

 

 

48,670

 

38,589

Income taxes

 

2,607

 

5,537

 

 

6,016

 

 

6,530

 

5,250

Net income

$

22,218

$

33,946

 

$

41,035

 

$

42,140

$

33,339

 
Per share data
Earnings per share - basic

$

0.35

$

0.53

 

$

0.64

 

$

0.65

$

0.51

 
Earnings per share - diluted

$

0.35

$

0.53

 

$

0.64

 

$

0.65

$

0.51

 
Dividends per share

$

0.23

$

0.23

 

$

0.23

 

$

0.23

$

0.23

 
Weighted average shares outstanding
Basic

 

63,756,629

 

64,255,716

 

 

64,358,540

 

 

64,677,889

 

65,239,470

 
Diluted

 

63,913,603

 

64,435,276

 

 

64,514,605

 

 

64,815,029

 

65,378,500

 
Period end shares outstanding

 

63,396,912

 

64,200,111

 

 

64,262,779

 

 

64,398,846

 

64,789,943

(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
 
See Notes to Consolidated Financials
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2020
($ in thousands)
(unaudited)
 
Quarter Ended
NONPERFORMING ASSETS (1) 3/31/2020 12/31/2019 9/30/2019 6/30/2019 3/31/2019
Nonaccrual loans
Alabama

$

4,769

 

$

1,870

 

$

2,936

 

$

2,327

 

$

2,971

 

Florida

 

254

 

 

267

 

 

311

 

 

330

 

 

408

 

Mississippi (2)

 

40,815

 

 

41,493

 

 

43,895

 

 

39,373

 

 

41,145

 

Tennessee (3)

 

6,153

 

 

8,980

 

 

10,193

 

 

8,455

 

 

8,806

 

Texas

 

1,001

 

 

616

 

 

1,695

 

 

2,403

 

 

3,093

 

Total nonaccrual loans

 

52,992

 

 

53,226

 

 

59,030

 

 

52,888

 

 

56,423

 

Other real estate
Alabama

 

6,229

 

 

8,133

 

 

6,501

 

 

6,451

 

 

6,878

 

Florida

 

4,835

 

 

5,877

 

 

6,983

 

 

7,826

 

 

8,120

 

Mississippi (2)

 

13,296

 

 

14,919

 

 

17,646

 

 

15,511

 

 

15,421

 

Tennessee (3)

 

487

 

 

319

 

 

844

 

 

815

 

 

994

 

Texas

 

640

 

 

726

 

Total other real estate

 

24,847

 

 

29,248

 

 

31,974

 

 

31,243

 

 

32,139

 

Total nonperforming assets

$

77,839

 

$

82,474

 

$

91,004

 

$

84,131

 

$

88,562

 

 
LOANS PAST DUE OVER 90 DAYS (1)
LHFI

$

708

 

$

642

 

$

878

 

$

1,245

 

$

670

 

 
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)

$

43,564

 

$

41,648

 

$

36,445

 

$

38,355

 

$

40,793

 

 
 
Quarter Ended
ACL LHFI (1)(4) 3/31/2020 12/31/2019 9/30/2019 6/30/2019 3/31/2019
Beginning Balance

$

84,277

 

$

83,226

 

$

80,399

 

$

79,005

 

$

79,290

 

CECL adoption adjustments:
LHFI

 

(3,039

)

Acquired loan transfers

 

1,822

 

Provision for credit losses

 

20,581

 

 

3,661

 

 

3,039

 

 

2,486

 

 

1,611

 

Charge-offs

 

(5,545

)

 

(4,619

)

 

(2,892

)

 

(2,937

)

 

(4,033

)

Recoveries

 

2,468

 

 

2,009

 

 

2,680

 

 

1,845

 

 

2,137

 

Net (charge-offs) recoveries

 

(3,077

)

 

(2,610

)

 

(212

)

 

(1,092

)

 

(1,896

)

Ending Balance

$

100,564

 

$

84,277

 

$

83,226

 

$

80,399

 

$

79,005

 

 
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama

$

(1,080

)

$

(132

)

$

(329

)

$

(278

)

$

(15

)

Florida

 

64

 

 

357

 

 

136

 

 

130

 

 

227

 

Mississippi (2)

 

126

 

 

(1,792

)

 

391

 

 

(907

)

 

(2,130

)

Tennessee (3)

 

(2,186

)

 

(131

)

 

(483

)

 

(44

)

 

(50

)

Texas

 

(1

)

 

(912

)

 

73

 

 

7

 

 

72

 

Total net (charge-offs) recoveries

$

(3,077

)

$

(2,610

)

$

(212

)

$

(1,092

)

$

(1,896

)

(1) Excludes acquired loans.
(2) Mississippi includes Central and Southern Mississippi Regions.
(3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
(4) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
 
See Notes to Consolidated Financials
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2020
(unaudited)
Quarter Ended
FINANCIAL RATIOS AND OTHER DATA 3/31/2020 12/31/2019 9/30/2019 6/30/2019 3/31/2019
Return on equity

 

5.45

%

 

8.13

%

 

9.96

%

 

10.53

%

 

8.50

%

Return on average tangible equity

 

7.34

%

 

10.85

%

 

13.31

%

 

14.14

%

 

11.55

%

Return on assets

 

0.66

%

 

1.00

%

 

1.21

%

 

1.24

%

 

1.01

%

Interest margin - Yield - FTE

 

4.06

%

 

4.19

%

 

4.38

%

 

4.37

%

 

4.32

%

Interest margin - Cost

 

0.54

%

 

0.62

%

 

0.71

%

 

0.73

%

 

0.69

%

Net interest margin - FTE

 

3.52

%

 

3.56

%

 

3.66

%

 

3.64

%

 

3.63

%

Efficiency ratio (1)

 

63.50

%

 

68.08

%

 

64.98

%

 

64.55

%

 

68.08

%

Full-time equivalent employees

 

2,761

 

 

2,844

 

 

2,835

 

 

2,819

 

 

2,839

 

 
CREDIT QUALITY RATIOS (2)
Net charge-offs/average loans

 

0.13

%

 

0.11

%

 

0.01

%

 

0.05

%

 

0.09

%

Provision for credit losses/average loans (3)

 

0.86

%

 

0.15

%

 

0.13

%

 

0.11

%

 

0.07

%

Nonperforming loans/total loans (incl LHFS)

 

0.54

%

 

0.56

%

 

0.62

%

 

0.57

%

 

0.62

%

Nonperforming assets/total loans (incl LHFS)

 

0.79

%

 

0.86

%

 

0.96

%

 

0.90

%

 

0.97

%

Nonperforming assets/total loans (incl LHFS) +ORE

 

0.78

%

 

0.86

%

 

0.95

%

 

0.90

%

 

0.96

%

ACL LHFI/total loans (excl LHFS) (3)

 

1.05

%

 

0.90

%

 

0.90

%

 

0.88

%

 

0.88

%

ACL LHFI-commercial/total commercial loans (3)

 

0.97

%

 

0.98

%

 

0.98

%

 

0.96

%

 

0.96

%

ACL LHFI-consumer/total consumer and home mortgage loans (3)

 

1.35

%

 

0.61

%

 

0.61

%

 

0.60

%

 

0.57

%

ACL LHFI/nonperforming loans (3)

 

189.77

%

 

158.34

%

 

140.99

%

 

152.02

%

 

140.02

%

ACL LHFI/nonperforming loans (excl individually evaluated loans) (3)

 

468.84

%

 

410.52

%

 

357.15

%

 

383.19

%

 

342.97

%

 
CAPITAL RATIOS (3)
Total equity/total assets

 

11.79

%

 

12.30

%

 

12.11

%

 

11.95

%

 

11.77

%

Tangible equity/tangible assets

 

9.27

%

 

9.72

%

 

9.53

%

 

9.34

%

 

9.15

%

Tangible equity/risk-weighted assets

 

11.05

%

 

11.58

%

 

11.50

%

 

11.39

%

 

11.35

%

Tier 1 leverage ratio

 

10.21

%

 

10.48

%

 

10.34

%

 

10.03

%

 

10.05

%

Common equity tier 1 capital ratio

 

11.35

%

 

11.93

%

 

11.83

%

 

11.76

%

 

11.88

%

Tier 1 risk-based capital ratio

 

11.88

%

 

12.48

%

 

12.38

%

 

12.31

%

 

12.45

%

Total risk-based capital ratio

 

12.78

%

 

13.25

%

 

13.15

%

 

13.07

%

 

13.21

%

 
STOCK PERFORMANCE
Market value-Close

$

23.30

 

$

34.51

 

$

34.11

 

$

33.25

 

$

33.63

 

Book value

$

26.06

 

$

25.87

 

$

25.60

 

$

25.13

 

$

24.49

 

Tangible book value

$

19.92

 

$

19.84

 

$

19.57

 

$

19.10

 

$

18.48

 

(1) See Note 8 – Non-GAAP Financial Measures in the Notes to Consolidated Financials for Trustmark’s efficiency ratio calculation.
(2) Excludes acquired loans.
(3) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
 
See Notes to Consolidated Financials
 

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2020
($ in thousands)
(unaudited)

Note 1 – Recently Effective Accounting Pronouncements

ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” was adopted by Trustmark on January 1, 2020. At the date of adoption, Trustmark recorded a decrease to its ACL, LHFI of $3.0 million and an increase to its ACL on off-balance sheet credit exposures of $29.6 million resulting in a one-time cumulative effect adjustment of $26.6 million ($19.9 million, net of tax) through retained earnings.

In accordance with the amendments of ASU 2016-13, Trustmark estimates the ACL using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts including the COVID-19 pandemic effects. Trustmark uses a third-party software application to calculate the quantitative portion of the ACL using a methodology and assumptions specific to each loan pool. The qualitative portion of the ACL is based on general economic conditions and other internal and external factors affecting Trustmark as a whole as well as specific LHFI. The total quantitative and qualitative portions of the ACL reflect Management’s expectations of future conditions based on reasonable and supportable forecasts.

During the first quarter of 2020, based upon the factors discussed above, Trustmark recorded a provision for credit losses of $20.6 million and a credit loss expense related to off-balance sheet credit exposures of $6.8 million.

Upon adoption of FASB ASC Topic 326, Trustmark elected to account for its existing acquired loans as purchased credit deteriorated loans included within the LHFI portfolio. As a result, acquired loans of $72.6 million, as well as the necessary calculated allowance of $1.8 million, were transferred during the first quarter of 2020. The acquired loans and related allowance transferred were acquired in the BancTrust Financial Group, Inc. merger on February 13, 2013. LHFI presented in prior periods exclude acquired loans and thus may not be comparable to the current period presentation.

In accordance with FASB ASC Subtopic 326-20, “Financial Instruments – Credit Losses – Measured at Amortized Cost,” Trustmark has developed an allowance for credit losses methodology effective January 1, 2020, which replaces its previous allowance for loan losses methodology. The ACL for LHFI is adjusted through the provision for credit losses and reduced by the charge off of loan amounts, net of recoveries. Prior periods present the allowance for loan losses and provision for loan losses methodology under the incurred loss model and thus may not be comparable to the current period presentation.

Trustmark’s estimated allowance for credit losses on securities available for sale and held to maturity under ASU 2016-13 was deemed immaterial due to the composition of these portfolios. Both portfolios consist primarily of U.S. government agency guaranteed mortgage-backed securities for which the risk of loss is minimal. Therefore, Trustmark did not recognize a cumulative effect adjustment through retained earnings related to the available for sale or held to maturity securities.

Trustmark has elected the five-year phase-in transition period related to adopting the CECL methodology for its regulatory capital.

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:

 

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

3/31/2019

 

SECURITIES AVAILABLE FOR SALE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agency obligations

 

$

21,190

 

 

$

22,327

 

 

$

24,697

 

 

$

26,646

 

 

$

28,008

 

Obligations of states and political subdivisions

 

 

23,572

 

 

 

25,465

 

 

 

35,001

 

 

 

38,698

 

 

 

50,954

 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage pass-through securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guaranteed by GNMA

 

 

71,971

 

 

 

69,252

 

 

 

63,391

 

 

 

65,716

 

 

 

66,176

 

Issued by FNMA and FHLMC

 

 

967,329

 

 

 

713,356

 

 

 

589,962

 

 

 

624,364

 

 

 

645,958

 

Other residential mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

634,075

 

 

 

658,226

 

 

 

705,601

 

 

 

751,371

 

 

 

784,566

 

Commercial mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

115,642

 

 

 

113,778

 

 

 

135,053

 

 

 

136,930

 

 

 

147,783

 

Total securities available for sale

 

$

1,833,779

 

 

$

1,602,404

 

 

$

1,553,705

 

 

$

1,643,725

 

 

$

1,723,445

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SECURITIES HELD TO MATURITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agency obligations

 

$

 

 

$

3,781

 

 

$

3,770

 

 

$

3,758

 

 

$

3,747

 

Obligations of states and political subdivisions

 

 

31,758

 

 

 

31,781

 

 

 

31,806

 

 

 

32,860

 

 

 

35,352

 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage pass-through securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guaranteed by GNMA

 

 

10,492

 

 

 

10,820

 

 

 

10,994

 

 

 

11,184

 

 

 

11,710

 

Issued by FNMA and FHLMC

 

 

91,971

 

 

 

96,631