Trustmark Corporation Announces Second Quarter 2020 Financial Results

Performance reflects value of diversified financial services businesses

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Trustmark Corporation Announces Second Quarter 2020 Financial Results

JACKSON, Miss.--()--Trustmark Corporation (Nasdaq:TRMK) reported net income of $32.2 million in the second quarter of 2020, representing diluted earnings per share of $0.51. This level of earnings resulted in a return on average tangible equity of 10.32% and a return on average assets of 0.83%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable September 15, 2020, to shareholders of record on September 1, 2020.

Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/52256607/en

Gerard R. Host, Chairman and CEO, stated, “During the second quarter, we remained focused on ensuring the safety of our customers and associates and supporting our local economies. We continued serving customers both remotely and through our branches, actively promoting digital touchpoints including our ATM and ITM network as well as digital and mobile banking applications. Trustmark participated in the SBA’s Paycheck Protection Program, providing approximately 9,700 loans totaling $970 million to local businesses. I am especially proud of our associates’ diligent efforts to assist in meeting the financial needs of our customers and work with local businesses to secure funding. We continue to follow best practices for the health and safety of our customers and associates, and we remain committed to providing solutions to meet customers’ unique needs in this challenging environment.”

Second Quarter Highlights

  • Pre-tax, pre-provision income totaled $62.1 million, a linked-quarter increase of 9.8% and year-over-year increase of 21.1%
  • Noninterest income represented 39.8% of revenue in the second quarter and increased 6.5% from the prior quarter
  • Maintained strong capital position with CET1 ratio of 11.42% and total risk-based capital ratio of 13.00%

Mr. Host stated, “Our second quarter results reflect the value of Trustmark’s diverse franchise as strong performance in our fee income businesses more than offset interest rate headwinds. Mortgage loan production increased over 85% linked-quarter and more than doubled year-over-year. In addition, we continued to invest in our insurance business with the completion of the acquisition of another Mississippi-based agency in the second quarter. We maintained disciplined expense management with minimal increases in core expenses despite increased costs related to COVID-19. Trustmark’s solid capital base and liquidity position continue to be a strength and provide stability in the face of an uncertain economic outlook. We remain well-positioned to continue serving customers and managing the franchise for the long-term.”

Balance Sheet Management

  • Provided loans under the Small Business Administration’s Paycheck Protection Program; gross PPP loans totaled $969.7 million at June 30, 2020 with an average loan size of $100 thousand
  • Loans held for investment increased $91.9 million from the prior quarter and $543.0 million year-over-year
  • Deposits increased $1.9 billion, or 16.7%, from the prior quarter driven primarily by additional customer liquidity associated with the PPP loans and government stimulus payments

During the second quarter of 2020, Trustmark participated in the Paycheck Protection Program (PPP) on behalf of its customers. At June 30, 2020, Trustmark’s gross PPP loans totaled $969.7 million. Net of deferred fees and costs of $29.9 million, PPP loans totaled $939.8 million. Loans held for investment totaled $9.7 billion at June 30, 2020, reflecting an increase of 1.0% linked-quarter and 6.0% year-over-year. The linked-quarter growth was driven primarily by construction and development loans and other real estate loans. Collectively, loans held for investment and PPP loans totaled $10.6 billion at the end of the second quarter of 2020.

Deposits totaled $13.5 billion at June 30, 2020, up $1.9 billion, or 16.7%, from the prior quarter. Deposit growth primarily reflects increases in commercial and public funds as customers deposited proceeds from PPP loans and other government stimulus programs. Interest-bearing deposit costs totaled 0.37% for the second quarter, a decrease of 34 basis points linked-quarter. Trustmark continues to maintain an attractive, low-cost deposit base with approximately 63% of deposit balances in checking accounts. The total cost of interest-bearing liabilities was 0.39% for the second quarter of 2020, a decrease of 36 basis points from the prior quarter.

As previously announced, Trustmark suspended its share repurchase program on March 9, 2020, 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 June 30, 2020, Trustmark’s tangible equity to tangible assets ratio was 8.37%, while the total risk-based capital ratio was 13.00%.

Credit Quality

  • Allowance for credit losses (ACL) represented 1.23% of loans held for investment and 561.04% of nonperforming loans, excluding individually evaluated loans
  • Other real estate declined 26.4% from the prior quarter and 41.5% year-over-year
  • Nonperforming loans decreased 5.7% and 5.5% from the prior quarter and year-over-year, respectively

Due to macroeconomic uncertainties related to the COVID-19 pandemic, Trustmark’s provision for credit losses was $18.2 million and its credit loss expense related to off-balance sheet credit exposures was $6.2 million, resulting in total credit loss expenses of $24.4 million in the second quarter.

Allocation of Trustmark's $119.2 million allowance for credit losses on loans held for investment represented 1.15% of commercial loans and 1.56% of consumer and home mortgage loans, resulting in an allowance to total loans held for investment of 1.23% at June 30, 2020, representing a level management considers commensurate with the present risk in the loan portfolio.

Nonperforming loans totaled $50.0 million at June 30, 2020, down $3.0 million from the prior quarter and $2.9 million year-over-year. Other real estate totaled $18.3 million, reflecting a $6.6 million decrease from the prior quarter and down $13.0 million from the prior year. Collectively, nonperforming assets totaled $68.3 million, reflecting a linked-quarter decrease of $9.6 million and a year-over-year decrease of $15.9 million.

Revenue Generation

  • Revenue in the second quarter, excluding interest and fees on PPP loans, totaled $169.5 million, in line with the prior quarter
  • Mortgage banking revenue before hedge ineffectiveness was $35.8 million in the second quarter, a linked-quarter increase of $18.2 million
  • Insurance commissions increased 2.8% from the prior quarter and 7.0% year-over-year

Revenue in the second quarter totaled $174.5 million, up 3.1% from the prior quarter and up 10.9% from the same quarter in the prior year. Excluding $5.0 million of interest and fees on PPP loans, revenue totaled $169.5 million in second quarter, in line with the prior quarter and up 7.7% year-over-year. The linked-quarter and year-over-year changes primarily reflect higher mortgage banking revenue partially offset by lower net interest income, excluding interest and fees on PPP loans. Net interest income (FTE) in the second quarter totaled $108.0 million, resulting in a net interest margin of 3.12%. Excluding PPP loans, the net interest margin totaled 3.14%, a linked-quarter decline of 38 basis points. Approximately 20 basis points of the decline was attributable to the impact of lower interest rates, and 18 basis points was due to an increase in average other earning asset balances driven by an increase in public fund deposit balances which is anticipated to be transitory. Relative to the prior quarter, net interest income (FTE) increased $947 thousand as a $5.8 million reduction in interest income was more than offset by a $6.8 million reduction in interest expense.

Noninterest income in the second quarter totaled $69.5 million, an increase of $4.2 million from the prior quarter and an increase of $19.9 million year-over-year. The linked-quarter change primarily reflects a $6.3 million increase in mortgage banking revenue. Mortgage loan production in the second quarter totaled $853.3 million, up $396.1 million from the prior quarter and $439.3 million from the same period in the prior year. Gain on sale of loans, net totaled $34.1 million in the second quarter, up $19.7 million from the prior quarter. Mortgage banking revenue totaled $33.7 million in the second quarter.

Insurance revenue totaled $11.9 million in the second quarter, up 2.8% from the first quarter of 2020 and 7.0% year-over-year. The linked-quarter increase primarily reflects growth in property and casualty commissions. Trustmark completed the acquisition of Boyles Moak Insurance Services in the second quarter, expanding its relationships in the Mississippi market. Wealth management revenue in the second quarter totaled $7.6 million, a decrease of $966 thousand, or 11.3%, from the prior quarter and $171 thousand, or 2.2%, year-over-year. The decline reflects lower income from fee-based accounts due to market devaluation in the second quarter.

Bank card and other fees increased $2.4 million, or 44.1%, from the prior quarter, reflecting higher customer derivative revenue. Service charges on deposit accounts decreased $3.6 million, or 36.2%, from the prior quarter, primarily due to lower NSF/OD fees. The decline reflects the impact of stimulus actions and the slowdown in economic activity related to COVID-19.

Noninterest Expense

  • Core noninterest expense totaled $111.0 million in the second quarter of 2020, an increase of 0.8% from the prior quarter
  • Efficiency ratio declined to 62.13%

Trustmark maintained disciplined expense management in the second quarter as core expenses remained stable despite increased costs related to COVID-19 safety procedures and temporary compensation adjustments. Salaries and employee benefits increased $1.2 million compared to the prior quarter, excluding charges related to the voluntary early retirement program completed in the first quarter. The increase primarily reflects higher mortgage commissions as a result of increased production.

Services and fees rose $637 thousand linked-quarter, primarily due to data processing costs and outside services and professional fees. Other real estate expense, net decreased $1.0 million linked-quarter.

Trustmark remains focused on optimizing its delivery channels and reallocating resources to reflect changing customer preferences. During the first half of the year, Trustmark consolidated five offices across the franchise. Trustmark continues to evaluate efficiency opportunities and remains committed to investments to promote profitable revenue growth.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, July 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, August 12, 2020, in archived format at the same web address or by calling (877) 344-7529, passcode 10145738.

Trustmark is a financial services company providing banking and financial solutions through 187 offices in Alabama, Florida, Mississippi, Tennessee and Texas.

Forward-Looking Statements

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

Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels and slowdowns in economic growth, 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 SEC.

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

 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2020
($ in thousands)
(unaudited)
Linked Quarter Year over Year
QUARTERLY AVERAGE BALANCES 6/30/2020 3/31/2020 6/30/2019 $ Change % Change $ Change % Change
Securities AFS-taxable

$

1,724,320

 

$

1,620,422

 

$

1,661,464

 

$

103,898

 

6.4

%

$

62,856

 

3.8

%

Securities AFS-nontaxable

 

9,827

 

 

22,056

 

 

31,474

 

 

(12,229

)

-55.4

%

 

(21,647

)

-68.8

%

Securities HTM-taxable

 

655,085

 

 

694,740

 

 

821,357

 

 

(39,655

)

-5.7

%

 

(166,272

)

-20.2

%

Securities HTM-nontaxable

 

25,538

 

 

25,673

 

 

27,035

 

 

(135

)

-0.5

%

 

(1,497

)

-5.5

%

Total securities

 

2,414,770

 

 

2,362,891

 

 

2,541,330

 

 

51,879

 

2.2

%

 

(126,560

)

-5.0

%

Paycheck protection program loans (PPP)

 

764,416

 

 

 

 

 

 

764,416

 

n/m

 

 

764,416

 

n/m

 

Loans (includes loans held for sale) (1)

 

9,908,132

 

 

9,678,174

 

 

9,260,028

 

 

229,958

 

2.4

%

 

648,104

 

7.0

%

Acquired loans (1)

 

 

 

 

 

91,217

 

 

 

n/m

 

 

(91,217

)

-100.0

%

Fed funds sold and reverse repurchases

 

113

 

 

164

 

 

34,057

 

 

(51

)

-31.1

%

 

(33,944

)

-99.7

%

Other earning assets

 

854,642

 

 

187,327

 

 

316,604

 

 

667,315

 

n/m

 

 

538,038

 

n/m

 

Total earning assets

 

13,942,073

 

 

12,228,556

 

 

12,243,236

 

 

1,713,517

 

14.0

%

 

1,698,837

 

13.9

%

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

 

(103,006

)

 

(85,015

)

 

(81,996

)

 

(17,991

)

-21.2

%

 

(21,010

)

-25.6

%

Other assets

 

1,685,317

 

 

1,498,725

 

 

1,467,462

 

 

186,592

 

12.5

%

 

217,855

 

14.8

%

Total assets

$

15,524,384

 

$

13,642,266

 

$

13,628,702

 

$

1,882,118

 

13.8

%

$

1,895,682

 

13.9

%

 
Interest-bearing demand deposits

$

3,832,372

 

$

3,184,134

 

$

3,048,876

 

$

648,238

 

20.4

%

$

783,496

 

25.7

%

Savings deposits

 

4,180,540

 

 

3,646,936

 

 

3,801,187

 

 

533,604

 

14.6

%

 

379,353

 

10.0

%

Time deposits

 

1,578,737

 

 

1,617,307

 

 

1,840,065

 

 

(38,570

)

-2.4

%

 

(261,328

)

-14.2

%

Total interest-bearing deposits

 

9,591,649

 

 

8,448,377

 

 

8,690,128

 

 

1,143,272

 

13.5

%

 

901,521

 

10.4

%

Fed funds purchased and repurchases

 

105,696

 

 

247,513

 

 

51,264

 

 

(141,817

)

-57.3

%

 

54,432

 

n/m

 

Other borrowings

 

107,533

 

 

85,279

 

 

81,352

 

 

22,254

 

26.1

%

 

26,181

 

32.2

%

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

 

0.0

%

 

 

0.0

%

Total interest-bearing liabilities

 

9,866,734

 

 

8,843,025

 

 

8,884,600

 

 

1,023,709

 

11.6

%

 

982,134

 

11.1

%

Noninterest-bearing deposits

 

3,645,761

 

 

2,910,951

 

 

2,898,266

 

 

734,810

 

25.2

%

 

747,495

 

25.8

%

Other liabilities

 

346,173

 

 

248,220

 

 

240,091

 

 

97,953

 

39.5

%

 

106,082

 

44.2

%

Total liabilities

 

13,858,668

 

 

12,002,196

 

 

12,022,957

 

 

1,856,472

 

15.5

%

 

1,835,711

 

15.3

%

Shareholders' equity

 

1,665,716

 

 

1,640,070

 

 

1,605,745

 

 

25,646

 

1.6

%

 

59,971

 

3.7

%

Total liabilities and equity

$

15,524,384

 

$

13,642,266

 

$

13,628,702

 

$

1,882,118

 

13.8

%

$

1,895,682

 

13.9

%

 
(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
June 30, 2020
($ in thousands)
(unaudited)
 
Linked Quarter Year over Year
PERIOD END BALANCES 6/30/2020 3/31/2020 6/30/2019 $ Change % Change $ Change % Change
Cash and due from banks

$

1,026,640

 

$

404,341

 

$

404,413

 

$

622,299

 

n/m

 

$

622,227

 

n/m

 

Fed funds sold and reverse repurchases

 

 

 

2,000

 

 

75,499

 

 

(2,000

)

-100.0

%

 

(75,499

)

-100.0

%

Securities available for sale

 

1,884,153

 

 

1,833,779

 

 

1,643,725

 

 

50,374

 

2.7

%

 

240,428

 

14.6

%

Securities held to maturity

 

660,048

 

 

704,276

 

 

825,536

 

 

(44,228

)

-6.3

%

 

(165,488

)

-20.0

%

PPP loans

 

939,783

 

 

 

 

 

 

939,783

 

n/m

 

 

939,783

 

n/m

 

Loans held for sale (LHFS)

 

355,089

 

 

325,389

 

 

240,380

 

 

29,700

 

9.1

%

 

114,709

 

47.7

%

Loans held for investment (LHFI) (1)

 

9,659,806

 

 

9,567,920

 

 

9,116,759

 

 

91,886

 

1.0

%

 

543,047

 

6.0

%

ACL LHFI (1)

 

(119,188

)

 

(100,564

)

 

(80,399

)

 

(18,624

)

-18.5

%

 

(38,789

)

-48.2

%

Net LHFI

 

9,540,618

 

 

9,467,356

 

 

9,036,360

 

 

73,262

 

0.8

%

 

504,258

 

5.6

%

Acquired loans (1)

 

 

 

 

 

87,884

 

 

 

n/m

 

 

(87,884

)

-100.0

%

Allowance for loan losses, acquired loans (1)

 

 

 

 

 

(1,398

)

 

 

n/m

 

 

1,398

 

-100.0

%

Net acquired loans

 

 

 

 

 

86,486

 

 

 

n/m

 

 

(86,486

)

-100.0

%

Net LHFI and acquired loans

 

9,540,618

 

 

9,467,356

 

 

9,122,846

 

 

73,262

 

0.8

%

 

417,772

 

4.6

%

Premises and equipment, net

 

190,567

 

 

190,179

 

 

189,820

 

 

388

 

0.2

%

 

747

 

0.4

%

Mortgage servicing rights

 

57,811

 

 

56,437

 

 

79,283

 

 

1,374

 

2.4

%

 

(21,472

)

-27.1

%

Goodwill

 

385,270

 

 

381,717

 

 

379,627

 

 

3,553

 

0.9

%

 

5,643

 

1.5

%

Identifiable intangible assets

 

8,895

 

 

7,537

 

 

9,101

 

 

1,358

 

18.0

%

 

(206

)

-2.3

%

Other real estate

 

18,276

 

 

24,847

 

 

31,243

 

 

(6,571

)

-26.4

%

 

(12,967

)

-41.5

%

Operating lease right-of-use assets

 

29,819

 

 

30,839

 

 

32,762

 

 

(1,020

)

-3.3

%

 

(2,943

)

-9.0

%

Other assets

 

595,110

 

 

591,132

 

 

514,723

 

 

3,978

 

0.7

%

 

80,387

 

15.6

%

Total assets

$

15,692,079

 

$

14,019,829

 

$

13,548,958

 

$

1,672,250

 

11.9

%

$

2,143,121

 

15.8

%

 
Deposits:
Noninterest-bearing

$

3,880,540

 

$

2,977,058

 

$

2,909,141

 

$

903,482

 

30.3

%

$

971,399

 

33.4

%

Interest-bearing

 

9,624,933

 

 

8,598,706

 

 

8,657,488

 

 

1,026,227

 

11.9

%

 

967,445

 

11.2

%

Total deposits

 

13,505,473

 

 

11,575,764

 

 

11,566,629

 

 

1,929,709

 

16.7

%

 

1,938,844

 

16.8

%

Fed funds purchased and repurchases

 

70,255

 

 

421,821

 

 

51,800

 

 

(351,566

)

-83.3

%

 

18,455

 

35.6

%

Other borrowings

 

152,860

 

 

84,230

 

 

79,012

 

 

68,630

 

81.5

%

 

73,848

 

93.5

%

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

 

0.0

%

 

 

0.0

%

ACL on off-balance sheet credit exposures (1)

 

42,663

 

 

36,421

 

 

 

 

6,242

 

17.1

%

 

42,663

 

n/m

 

Operating lease liabilities

 

31,076

 

 

32,055

 

 

33,878

 

 

(979

)

-3.1

%

 

(2,802

)

-8.3

%

Other liabilities

 

153,952

 

 

155,283

 

 

137,233

 

 

(1,331

)

-0.9

%

 

16,719

 

12.2

%

Total liabilities

 

14,018,135

 

 

12,367,430

 

 

11,930,408

 

 

1,650,705

 

13.3

%

 

2,087,727

 

17.5

%

Common stock

 

13,214

 

 

13,209

 

 

13,418

 

 

5

 

0.0

%

 

(204

)

-1.5

%

Capital surplus

 

230,613

 

 

229,403

 

 

260,619

 

 

1,210

 

0.5

%

 

(30,006

)

-11.5

%

Retained earnings

 

1,419,552

 

 

1,402,089

 

 

1,369,329

 

 

17,463

 

1.2

%

 

50,223

 

3.7

%

Accum other comprehensive income (loss),
  net of tax

 

10,565

 

 

7,698

 

 

(24,816

)

 

2,867

 

37.2

%

 

35,381

 

n/m

 

Total shareholders' equity

 

1,673,944

 

 

1,652,399

 

 

1,618,550

 

 

21,545

 

1.3

%

 

55,394

 

3.4

%

Total liabilities and equity

$

15,692,079

 

$

14,019,829

 

$

13,548,958

 

$

1,672,250

 

11.9

%

$

2,143,121

 

15.8

%

 
(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
June 30, 2020
($ in thousands except per share data)
(unaudited)
 
Quarter Ended Linked Quarter Year over Year
INCOME STATEMENTS 6/30/2020 3/31/2020 6/30/2019 $ Change % Change $ Change % Change
Interest and fees on LHFS & LHFI-FTE

$

99,300

$

109,357

$

114,873

$

(10,057

)

-9.2

%

$

(15,573

)

-13.6

%

Interest and fees on PPP loans

 

5,044

 

 

 

5,044

 

n/m

 

 

5,044

 

n/m

 

Interest and fees on acquired loans (1)

 

 

 

2,010

 

 

n/m

 

 

(2,010

)

-100.0

%

Interest on securities-taxable

 

12,762

 

12,948

 

13,916

 

(186

)

-1.4

%

 

(1,154

)

-8.3

%

Interest on securities-tax exempt-FTE

 

315

 

457

 

551

 

(142

)

-31.1

%

 

(236

)

-42.8

%

Interest on fed funds sold and reverse repurchases

 

 

 

214

 

 

n/m

 

 

(214

)

-100.0

%

Other interest income

 

239

 

740

 

1,820

 

(501

)

-67.7

%

 

(1,581

)

-86.9

%

Total interest income-FTE

 

117,660

 

123,502

 

133,384

 

(5,842

)

-4.7

%

 

(15,724

)

-11.8

%

Interest on deposits

 

8,730

 

14,957

 

21,500

 

(6,227

)

-41.6

%

 

(12,770

)

-59.4

%

Interest on fed funds purchased and repurchases

 

42

 

625

 

81

 

(583

)

-93.3

%

 

(39

)

-48.1

%

Other interest expense

 

881

 

860

 

831

 

21

 

2.4

%

 

50

 

6.0

%

Total interest expense

 

9,653

 

16,442

 

22,412

 

(6,789

)

-41.3

%

 

(12,759

)

-56.9

%

Net interest income-FTE

 

108,007

 

107,060

 

110,972

 

947

 

0.9

%

 

(2,965

)

-2.7

%

Provision for credit losses, LHFI (1)

 

18,185

 

20,581

 

2,486

 

(2,396

)

-11.6

%

 

15,699

 

n/m

 

Provision for loan losses, acquired loans (1)

 

 

 

106

 

 

n/m

 

 

(106

)

-100.0

%

Net interest income after provision-FTE

 

89,822

 

86,479

 

108,380

 

3,343

 

3.9

%

 

(18,558

)

-17.1

%

Service charges on deposit accounts

 

6,397

 

10,032

 

10,379

 

(3,635

)

-36.2

%

 

(3,982

)

-38.4

%

Bank card and other fees

 

7,717

 

5,355

 

8,004

 

2,362

 

44.1

%

 

(287

)

-3.6

%

Mortgage banking, net

 

33,745

 

27,483

 

10,295

 

6,262

 

22.8

%

 

23,450

 

n/m

 

Insurance commissions

 

11,868

 

11,550

 

11,089

 

318

 

2.8

%

 

779

 

7.0

%

Wealth management

 

7,571

 

8,537

 

7,742

 

(966

)

-11.3

%

 

(171

)

-2.2

%

Other, net

 

2,213

 

2,307

 

2,130

 

(94

)

-4.1

%

 

83

 

3.9

%

Total noninterest income

 

69,511

 

65,264

 

49,639

 

4,247

 

6.5

%

 

19,872

 

40.0

%

Salaries and employee benefits

 

66,107

 

69,148

 

61,949

 

(3,041

)

-4.4

%

 

4,158

 

6.7

%

Services and fees

 

20,567

 

19,930

 

18,009

 

637

 

3.2

%

 

2,558

 

14.2

%

Net occupancy-premises

 

6,587

 

6,286

 

6,403

 

301

 

4.8

%

 

184

 

2.9

%

Equipment expense

 

5,620

 

5,616

 

5,958

 

4

 

0.1

%

 

(338

)

-5.7

%

Other real estate expense, net

 

271

 

1,294

 

132

 

(1,023

)

-79.1

%

 

139

 

n/m

 

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

 

6,242

 

6,783

 

 

(541

)

-8.0

%

 

6,242

 

n/m

 

Other expense

 

13,265

 

14,753

 

13,650

 

(1,488

)

-10.1

%

 

(385

)

-2.8

%

Total noninterest expense

 

118,659

 

123,810

 

106,101

 

(5,151

)

-4.2

%

 

12,558

 

11.8

%

Income before income taxes and tax eq adj

 

40,674

 

27,933

 

51,918

 

12,741

 

45.6

%

 

(11,244

)

-21.7

%

Tax equivalent adjustment

 

3,007

 

3,108

 

3,248

 

(101

)

-3.2

%

 

(241

)

-7.4

%

Income before income taxes

 

37,667

 

24,825

 

48,670

 

12,842

 

51.7

%

 

(11,003

)

-22.6

%

Income taxes

 

5,517

 

2,607

 

6,530

 

2,910

 

n/m

 

 

(1,013

)

-15.5

%

Net income

$

32,150

$

22,218

$

42,140

$

9,932

 

44.7

%

$

(9,990

)

-23.7

%

 
Per share data
Earnings per share - basic

$

0.51

$

0.35

$

0.65

$

0.16

 

45.7

%

$

(0.14

)

-21.5

%

 
Earnings per share - diluted

$

0.51

$

0.35

$

0.65

$

0.16

 

45.7

%

$

(0.14

)

-21.5

%

 
Dividends per share

$

0.23

$

0.23

$

0.23

 

 

0.0

%

 

 

0.0

%

 
Weighted average shares outstanding
Basic

 

63,416,307

 

63,756,629

 

64,677,889

 
Diluted

 

63,555,065

 

63,913,603

 

64,815,029

 
Period end shares outstanding

 

63,422,439

 

63,396,912

 

64,398,846

 
(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
June 30, 2020
($ in thousands)
(unaudited)
Quarter Ended Linked Quarter Year over Year
NONPERFORMING ASSETS (1) 6/30/2020 3/31/2020 6/30/2019 $ Change % Change $ Change % Change
Nonaccrual LHFI
Alabama

$

4,392

 

$

4,769

 

$

2,327

 

$

(377

)

-7.9

%

$

2,065

 

88.7

%

Florida

 

687

 

 

254

 

 

330

 

 

433

 

n/m

 

 

357

 

n/m

 

Mississippi (2)

 

37,884

 

 

40,815

 

 

39,373

 

 

(2,931

)

-7.2

%

 

(1,489

)

-3.8

%

Tennessee (3)

 

6,125

 

 

6,153

 

 

8,455

 

 

(28

)

-0.5

%

 

(2,330

)

-27.6

%

Texas

 

906

 

 

1,001

 

 

2,403

 

 

(95

)

-9.5

%

 

(1,497

)

-62.3

%

Total nonaccrual LHFI

 

49,994

 

 

52,992

 

 

52,888

 

 

(2,998

)

-5.7

%

 

(2,894

)

-5.5

%

Other real estate
Alabama

 

4,766

 

 

6,229

 

 

6,451

 

 

(1,463

)

-23.5

%

 

(1,685

)

-26.1

%

Florida

 

3,665

 

 

4,835

 

 

7,826

 

 

(1,170

)

-24.2

%

 

(4,161

)

-53.2

%

Mississippi (2)

 

9,408

 

 

13,296

 

 

15,511

 

 

(3,888

)

-29.2

%

 

(6,103

)

-39.3

%

Tennessee (3)

 

437

 

 

487

 

 

815

 

 

(50

)

-10.3

%

 

(378

)

-46.4

%

Texas

 

 

 

 

 

640

 

 

 

n/m

 

 

(640

)

-100.0

%

Total other real estate

 

18,276

 

 

24,847

 

 

31,243

 

 

(6,571

)

-26.4

%

 

(12,967

)

-41.5

%

Total nonperforming assets

$

68,270

 

$

77,839

 

$

84,131

 

$

(9,569

)

-12.3

%

$

(15,861

)

-18.9

%

 
LOANS PAST DUE OVER 90 DAYS (1)
LHFI

$

807

 

$

708

 

$

1,245

 

$

99

 

14.0

%

$

(438

)

-35.2

%

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

$

56,269

 

$

43,564

 

$

38,355

 

$

12,705

 

29.2

%

$

17,914

 

46.7

%

 
Quarter Ended Linked Quarter Year over Year
ACL LHFI (1)(4) 6/30/2020 3/31/2020 6/30/2019 $ Change % Change $ Change % Change
Beginning Balance

$

100,564

 

$

84,277

 

$

79,005

 

$

16,287

 

19.3

%

$

21,559

 

27.3

%

CECL adoption adjustments:
LHFI

 

 

 

(3,039

)

 

 

 

3,039

 

n/m

 

 

 

n/m

 

Acquired loan transfers

 

 

 

1,822

 

 

 

 

(1,822

)

n/m

 

 

 

n/m

 

Provision for credit losses

 

18,185

 

 

20,581

 

 

2,486

 

 

(2,396

)

-11.6

%

 

15,699

 

n/m

 

Charge-offs

 

(1,870

)

 

(5,545

)

 

(2,937

)

 

3,675

 

66.3

%

 

1,067

 

36.3

%

Recoveries

 

2,309

 

 

2,468

 

 

1,845

 

 

(159

)

-6.4

%

 

464

 

25.1

%

Net (charge-offs) recoveries

 

439

 

 

(3,077

)

 

(1,092

)

 

3,516

 

n/m

 

 

1,531

 

n/m

 

Ending Balance

$

119,188

 

$

100,564

 

$

80,399

 

$

18,624

 

18.5

%

$

38,789

 

48.2

%

 
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama

$

526

 

$

(1,080

)

$

(278

)

$

1,606

 

n/m

 

$

804

 

n/m

 

Florida

 

(127

)

 

64

 

 

130

 

 

(191

)

n/m

 

 

(257

)

n/m

 

Mississippi (2)

 

(86

)

 

126

 

 

(907

)

 

(212

)

n/m

 

 

821

 

90.5

%

Tennessee (3)

 

66

 

 

(2,186

)

 

(44

)

 

2,252

 

n/m

 

 

110

 

n/m

 

Texas

 

60

 

 

(1

)

 

7

 

 

61

 

n/m

 

 

53

 

n/m

 

Total net (charge-offs) recoveries

$

439

 

$

(3,077

)

$

(1,092

)

$

3,516

 

n/m

 

$

1,531

 

n/m

 

 
(1) Excludes PPP and 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
June 30, 2020
($ in thousands)
(unaudited)
Quarter Ended Six Months Ended
AVERAGE BALANCES 6/30/2020 3/31/2020 12/31/2019 9/30/2019 6/30/2019 6/30/2020 6/30/2019
Securities AFS-taxable

$

1,724,320

 

$

1,620,422

 

$

1,551,358

 

$

1,570,803

 

$

1,661,464

 

$

1,672,371

 

$

1,707,112

 

Securities AFS-nontaxable

 

9,827

 

 

22,056

 

 

23,300

 

 

25,096

 

 

31,474

 

 

15,942

 

 

35,793

 

Securities HTM-taxable

 

655,085

 

 

694,740

 

 

734,474

 

 

778,098

 

 

821,357

 

 

674,913

 

 

843,886

 

Securities HTM-nontaxable

 

25,538

 

 

25,673

 

 

25,703

 

 

26,088

 

 

27,035

 

 

25,606

 

 

27,868

 

Total securities

 

2,414,770

 

 

2,362,891

 

 

2,334,835

 

 

2,400,085

 

 

2,541,330

 

 

2,388,832

 

 

2,614,659

 

PPP loans

 

764,416

 

 

 

 

 

 

 

 

 

 

382,208

 

 

 

Loans (includes loans held for sale) (1)

 

9,908,132

 

 

9,678,174

 

 

9,467,437

 

 

9,436,287

 

 

9,260,028

 

 

9,793,153

 

 

9,149,729

 

Acquired loans (1)

 

 

 

 

 

77,797

 

 

82,641

 

 

91,217

 

 

 

 

97,730

 

Fed funds sold and reverse repurchases

 

113

 

 

164

 

 

184

 

 

3,662

 

 

34,057

 

 

139

 

 

17,260

 

Other earning assets

 

854,642

 

 

187,327

 

 

227,116

 

 

176,163

 

 

316,604

 

 

520,985

 

 

280,250

 

Total earning assets

 

13,942,073

 

 

12,228,556

 

 

12,107,369

 

 

12,098,838

 

 

12,243,236

 

 

13,085,317

 

 

12,159,628

 

ACL LHFI (1)

 

(103,006

)

 

(85,015

)

 

(86,211

)

 

(83,756

)

 

(81,996

)

 

(94,011

)

 

(82,111

)

Other assets

 

1,685,317

 

 

1,498,725

 

 

1,445,075

 

 

1,447,977

 

 

1,467,462

 

 

1,592,019

 

 

1,457,592

 

Total assets

$

15,524,384

 

$

13,642,266

 

$

13,466,233

 

$

13,463,059

 

$

13,628,702

 

$

14,583,325

 

$

13,535,109

 

 
Interest-bearing demand deposits

$

3,832,372

 

$

3,184,134

 

$

3,167,256

 

$

3,085,758

 

$

3,048,876

 

$

3,508,253

 

$

2,974,584

 

Savings deposits

 

4,180,540

 

 

3,646,936

 

 

3,448,899

 

 

3,568,403

 

 

3,801,187

 

 

3,913,738

 

 

3,794,051

 

Time deposits

 

1,578,737

 

 

1,617,307

 

 

1,663,741

 

 

1,753,083

 

 

1,840,065

 

 

1,598,022

 

 

1,860,696

 

Total interest-bearing deposits

 

9,591,649

 

 

8,448,377

 

 

8,279,896

 

 

8,407,244

 

 

8,690,128

 

 

9,020,013

 

 

8,629,331

 

Fed funds purchased and repurchases

 

105,696

 

 

247,513

 

 

164,754

 

 

142,064

 

 

51,264

 

 

176,605

 

 

67,717

 

Other borrowings

 

107,533

 

 

85,279

 

 

79,512

 

 

78,404

 

 

81,352

 

 

96,406

 

 

86,052

 

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

Total interest-bearing liabilities

 

9,866,734

 

 

8,843,025

 

 

8,586,018

 

 

8,689,568

 

 

8,884,600

 

 

9,354,880

 

 

8,844,956

 

Noninterest-bearing deposits

 

3,645,761

 

 

2,910,951

 

 

3,017,824

 

 

2,932,754

 

 

2,898,266

 

 

3,278,356

 

 

2,861,448

 

Other liabilities

 

346,173

 

 

248,220

 

 

205,786

 

 

206,091

 

 

240,091

 

 

297,196

 

 

230,696

 

Total liabilities

 

13,858,668

 

 

12,002,196

 

 

11,809,628

 

 

11,828,413

 

 

12,022,957

 

 

12,930,432

 

 

11,937,100

 

Shareholders' equity

 

1,665,716

 

 

1,640,070

 

 

1,656,605

 

 

1,634,646

 

 

1,605,745

 

 

1,652,893

 

 

1,598,009

 

Total liabilities and equity

$

15,524,384

 

$

13,642,266

 

$

13,466,233

 

$

13,463,059

 

$

13,628,702

 

$

14,583,325

 

$

13,535,109

 

 
(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
June 30, 2020
($ in thousands)
(unaudited)
 
PERIOD END BALANCES 6/30/2020 3/31/2020 12/31/2019 9/30/2019 6/30/2019
Cash and due from banks

$

1,026,640

 

$

404,341

 

$

358,916

 

$

486,263

 

$

404,413

 

Fed funds sold and reverse repurchases

 

 

 

2,000

 

 

 

 

 

 

75,499

 

Securities available for sale

 

1,884,153

 

 

1,833,779

 

 

1,602,404

 

 

1,553,705

 

 

1,643,725

 

Securities held to maturity

 

660,048

 

 

704,276

 

 

738,099

 

 

785,422

 

 

825,536

 

PPP loans

 

939,783

 

 

 

 

 

 

 

 

 

Loans held for sale (LHFS)

 

355,089

 

 

325,389

 

 

226,347

 

 

292,800

 

 

240,380

 

Loans held for investment (LHFI) (1)

 

9,659,806

 

 

9,567,920

 

 

9,335,628

 

 

9,223,668

 

 

9,116,759

 

ACL LHFI (1)

 

(119,188

)

 

(100,564

)

 

(84,277

)

 

(83,226

)

 

(80,399

)

Net LHFI

 

9,540,618

 

 

9,467,356

 

 

9,251,351

 

 

9,140,442

 

 

9,036,360

 

Acquired loans (1)

 

 

 

 

 

72,601

 

 

81,004

 

 

87,884

 

Allowance for loan losses, acquired loans (1)

 

 

 

 

 

(815

)

 

(1,249

)

 

(1,398

)

Net acquired loans

 

 

 

 

 

71,786

 

 

79,755

 

 

86,486

 

Net LHFI and acquired loans

 

9,540,618

 

 

9,467,356

 

 

9,323,137

 

 

9,220,197

 

 

9,122,846

 

Premises and equipment, net

 

190,567

 

 

190,179

 

 

189,791

 

 

188,423

 

 

189,820

 

Mortgage servicing rights

 

57,811

 

 

56,437

 

 

79,394

 

 

73,016

 

 

79,283

 

Goodwill

 

385,270

 

 

381,717

 

 

379,627

 

 

379,627

 

 

379,627

 

Identifiable intangible assets

 

8,895

 

 

7,537

 

 

7,343

 

 

8,345

 

 

9,101

 

Other real estate

 

18,276

 

 

24,847

 

 

29,248

 

 

31,974

 

 

31,243

 

Operating lease right-of-use assets

 

29,819

 

 

30,839

 

 

31,182

 

 

33,180

 

 

32,762

 

Other assets

 

595,110

 

 

591,132

 

 

532,389

 

 

531,834

 

 

514,723

 

Total assets

$

15,692,079

 

$

14,019,829

 

$

13,497,877

 

$

13,584,786

 

$

13,548,958

 

 
Deposits:
Noninterest-bearing

$

3,880,540

 

$

2,977,058

 

$

2,891,215

 

$

3,064,127

 

$

2,909,141

 

Interest-bearing

 

9,624,933

 

 

8,598,706

 

 

8,354,342

 

 

8,190,056

 

 

8,657,488

 

Total deposits

 

13,505,473

 

 

11,575,764

 

 

11,245,557

 

 

11,254,183

 

 

11,566,629

 

Fed funds purchased and repurchases

 

70,255

 

 

421,821

 

 

256,020

 

 

376,712

 

 

51,800

 

Other borrowings

 

152,860

 

 

84,230

 

 

85,396

 

 

76,685

 

 

79,012

 

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

ACL on off-balance sheet credit exposures (1)

 

42,663

 

 

36,421

 

 

 

 

 

 

 

Operating lease liabilities

 

31,076

 

 

32,055

 

 

32,354

 

 

34,319

 

 

33,878

 

Other liabilities

 

153,952

 

 

155,283

 

 

155,992

 

 

135,669

 

 

137,233

 

Total liabilities

 

14,018,135

 

 

12,367,430

 

 

11,837,175

 

 

11,939,424

 

 

11,930,408

 

Common stock

 

13,214

 

 

13,209

 

 

13,376

 

 

13,390

 

 

13,418

 

Capital surplus

 

230,613

 

 

229,403

 

 

256,400

 

 

257,370

 

 

260,619

 

Retained earnings

 

1,419,552

 

 

1,402,089

 

 

1,414,526

 

 

1,395,460

 

 

1,369,329

 

Accum other comprehensive income (loss), net of tax

 

10,565

 

 

7,698

 

 

(23,600

)

 

(20,858

)

 

(24,816

)

Total shareholders' equity

 

1,673,944

 

 

1,652,399

 

 

1,660,702

 

 

1,645,362

 

 

1,618,550

 

Total liabilities and equity

$

15,692,079

 

$

14,019,829

 

$

13,497,877

 

$

13,584,786

 

$

13,548,958

 

 
(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
June 30, 2020
($ in thousands except per share data)
(unaudited)
 
Quarter Ended Six Months Ended
INCOME STATEMENTS 6/30/2020 3/31/2020 12/31/2019 9/30/2019 6/30/2019 6/30/2020 6/30/2019
Interest and fees on LHFS & LHFI-FTE

$

99,300

$

109,357

$

111,383

 

$

116,432

 

$

114,873

$

208,657

$

224,763

Interest and fees on PPP loans

 

5,044

 

 

 

 

 

 

 

5,044

 

Interest and fees on acquired loans (1)

 

 

 

2,138

 

 

2,309

 

 

2,010

 

 

3,926

Interest on securities-taxable

 

12,762

 

12,948

 

12,884

 

 

13,184

 

 

13,916

 

25,710

 

28,581

Interest on securities-tax exempt-FTE

 

315

 

457

 

484

 

 

485

 

 

551

 

772

 

1,197

Interest on fed funds sold and reverse repurchases

 

 

 

1

 

 

23

 

 

214

 

 

216

Other interest income

 

239

 

740

 

896

 

 

1,044

 

 

1,820

 

979

 

3,423

Total interest income-FTE

 

117,660

 

123,502

 

127,786

 

 

133,477

 

 

133,384

 

241,162

 

262,106

Interest on deposits

 

8,730

 

14,957

 

17,716

 

 

20,385

 

 

21,500

 

23,687

 

41,070

Interest on fed funds purchased and repurchases

 

42

 

625

 

504

 

 

547

 

 

81

 

667

 

369

Other interest expense

 

881

 

860

 

826

 

 

830

 

 

831

 

1,741

 

1,656

Total interest expense

 

9,653

 

16,442

 

19,046

 

 

21,762

 

 

22,412

 

26,095

 

43,095

Net interest income-FTE

 

108,007

 

107,060

 

108,740

 

 

111,715

 

 

110,972

 

215,067

 

219,011

Provision for credit losses, LHFI (1)

 

18,185

 

20,581

 

3,661

 

 

3,039

 

 

2,486

 

38,766

 

4,097

Provision for loan losses, acquired loans (1)

 

 

 

(2

)

 

(140

)

 

106

 

 

184

Net interest income after provision-FTE

 

89,822

 

86,479

 

105,081

 

 

108,816

 

 

108,380

 

176,301

 

214,730

Service charges on deposit accounts

 

6,397

 

10,032

 

10,894

 

 

11,065

 

 

10,379

 

16,429

 

20,644

Bank card and other fees

 

7,717

 

5,355

 

8,192

 

 

8,349

 

 

8,004

 

13,072

 

15,195

Mortgage banking, net

 

33,745

 

27,483

 

7,914

 

 

8,171

 

 

10,295

 

61,228

 

13,737

Insurance commissions

 

11,868

 

11,550

 

9,364

 

 

11,072

 

 

11,089

 

23,418

 

21,960

Wealth management

 

7,571

 

8,537

 

7,763

 

 

7,691

 

 

7,742

 

16,108

 

15,225

Other, net

 

2,213

 

2,307

 

3,451

 

 

1,989

 

 

2,130

 

4,520

 

4,369

Total noninterest income

 

69,511

 

65,264

 

47,578

 

 

48,337

 

 

49,639

 

134,775

 

91,130

Salaries and employee benefits

 

66,107

 

69,148

 

62,319

 

 

62,495

 

 

61,949

 

135,255

 

122,903

Services and fees

 

20,567

 

19,930

 

19,500

 

 

18,838

 

 

18,009

 

40,497

 

34,977

Net occupancy-premises

 

6,587

 

6,286

 

6,461

 

 

6,831

 

 

6,403

 

12,873

 

12,857

Equipment expense

 

5,620

 

5,616

 

5,880

 

 

5,971

 

 

5,958

 

11,236

 

11,882

Other real estate expense, net

 

271

 

1,294

 

1,491

 

 

531

 

 

132

 

1,565

 

1,884

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

 

6,242

 

6,783

 

 

 

 

 

 

13,025

 

Other expense

 

13,265

 

14,753

 

14,376

 

 

12,187

 

 

13,650

 

28,018

 

27,619

Total noninterest expense

 

118,659

 

123,810

 

110,027

 

 

106,853

 

 

106,101

 

242,469

 

212,122

Income before income taxes and tax eq adj

 

40,674

 

27,933

 

42,632

 

 

50,300

 

 

51,918

 

68,607

 

93,738

Tax equivalent adjustment

 

3,007

 

3,108

 

3,149

 

 

3,249

 

 

3,248

 

6,115

 

6,479

Income before income taxes

 

37,667

 

24,825

 

39,483

 

 

47,051

 

 

48,670

 

62,492

 

87,259

Income taxes

 

5,517

 

2,607

 

5,537

 

 

6,016

 

 

6,530

 

8,124

 

11,780

Net income

$

32,150

$

22,218

$

33,946

 

$

41,035

 

$

42,140

$

54,368

$

75,479

 
Per share data
Earnings per share - basic

$

0.51

$

0.35

$

0.53

 

$

0.64

 

$

0.65

$

0.86

$

1.16

 
Earnings per share - diluted

$

0.51

$

0.35

$

0.53

 

$

0.64

 

$

0.65

$

0.85

$

1.16

 
Dividends per share

$

0.23

$

0.23

$

0.23

 

$

0.23

 

$

0.23

$

0.46

$

0.46

 
Weighted average shares outstanding
Basic

 

63,416,307

 

63,756,629

 

64,255,716

 

 

64,358,540

 

 

64,677,889

 

63,586,468

 

64,957,128

 
Diluted

 

63,555,065

 

63,913,603

 

64,435,276

 

 

64,514,605

 

 

64,815,029

 

63,721,728

 

65,088,908

 
Period end shares outstanding

 

63,422,439

 

63,396,912

 

64,200,111

 

 

64,262,779

 

 

64,398,846

 

63,422,439

 

64,398,846

 
(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
June 30, 2020
($ in thousands)
(unaudited)
 
Quarter Ended
NONPERFORMING ASSETS (1) 6/30/2020 3/31/2020 12/31/2019 9/30/2019 6/30/2019
Nonaccrual LHFI
Alabama

$

4,392

 

$

4,769

 

$

1,870

 

$

2,936

 

$

2,327

 

Florida

 

687

 

 

254

 

 

267

 

 

311

 

 

330

 

Mississippi (2)

 

37,884

 

 

40,815

 

 

41,493

 

 

43,895

 

 

39,373

 

Tennessee (3)

 

6,125

 

 

6,153

 

 

8,980

 

 

10,193

 

 

8,455

 

Texas

 

906

 

 

1,001

 

 

616

 

 

1,695

 

 

2,403

 

Total nonaccrual LHFI

 

49,994

 

 

52,992

 

 

53,226

 

 

59,030

 

 

52,888

 

Other real estate
Alabama

 

4,766

 

 

6,229

 

 

8,133

 

 

6,501

 

 

6,451

 

Florida

 

3,665

 

 

4,835

 

 

5,877

 

 

6,983

 

 

7,826

 

Mississippi (2)

 

9,408

 

 

13,296

 

 

14,919

 

 

17,646

 

 

15,511

 

Tennessee (3)

 

437

 

 

487

 

 

319

 

 

844

 

 

815

 

Texas

 

 

 

 

 

 

 

 

 

640

 

Total other real estate

 

18,276

 

 

24,847

 

 

29,248

 

 

31,974

 

 

31,243

 

Total nonperforming assets

$

68,270

 

$

77,839

 

$

82,474

 

$

91,004

 

$

84,131

 

 
LOANS PAST DUE OVER 90 DAYS (1)
LHFI

$

807

 

$

708

 

$

642

 

$

878

 

$

1,245

 

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

$

56,269

 

$

43,564

 

$

41,648

 

$

36,445

 

$

38,355

 

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

$

100,564

 

$

84,277

 

$

83,226

 

$

80,399

 

$

79,005

 

$

84,277

 

79,290

 

CECL adoption adjustments:
LHFI

 

 

 

(3,039

)

 

 

 

 

 

 

 

(3,039

)

 

 

Acquired loan transfers

 

 

 

1,822

 

 

 

 

 

 

 

 

1,822

 

 

 

Provision for credit losses

 

18,185

 

 

20,581

 

 

3,661

 

 

3,039

 

 

2,486

 

 

38,766

 

 

4,097

 

Charge-offs

 

(1,870

)

 

(5,545

)

 

(4,619

)

 

(2,892

)

 

(2,937

)

 

(7,415

)

 

(6,970

)

Recoveries

 

2,309

 

 

2,468

 

 

2,009

 

 

2,680

 

 

1,845

 

 

4,777

 

 

3,982

 

Net (charge-offs) recoveries

 

439

 

 

(3,077

)

 

(2,610

)

 

(212

)

 

(1,092

)

 

(2,638

)

 

(2,988

)

Ending Balance

$

119,188

 

$

100,564

 

$

84,277

 

$

83,226

 

$

80,399

 

$

119,188

 

80,399

 

 
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama

$

526

 

$

(1,080

)

$

(132

)

$

(329

)

$

(278

)

$

(554

)

(293

)

Florida

 

(127

)

 

64

 

 

357

 

 

136

 

 

130

 

 

(63

)

 

357

 

Mississippi (2)

 

(86

)

 

126

 

 

(1,792

)

 

391

 

 

(907

)

 

40

 

 

(3,037

)

Tennessee (3)

 

66

 

 

(2,186

)

 

(131

)

 

(483

)

 

(44

)

 

(2,120

)

 

(94

)

Texas

 

60

 

 

(1

)

 

(912

)

 

73

 

 

7

 

 

59

 

 

79

 

Total net (charge-offs) recoveries

$

439

 

$

(3,077

)

$

(2,610

)

$

(212

)

$

(1,092

)

$

(2,638

)

(2,988

)

 
(1) Excludes PPP and 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
June 30, 2020
(unaudited)
Quarter Ended Six Months Ended
FINANCIAL RATIOS AND OTHER DATA 6/30/2020 3/31/2020 12/31/2019 9/30/2019 6/30/2019 6/30/2020 6/30/2019
Return on average equity

 

7.76

%

 

5.45

%

 

8.13

%

 

9.96

%

 

10.53

%

6.61

%

9.52

%

Return on average tangible equity

 

10.32

%

 

7.34

%

 

10.85

%

 

13.31

%

 

14.14

%

8.84

%

12.86

%

Return on average assets

 

0.83

%

 

0.66

%

 

1.00

%

 

1.21

%

 

1.24

%

0.75

%

1.12

%

Interest margin - Yield - FTE

 

3.39

%

 

4.06

%

 

4.19

%

 

4.38

%

 

4.37

%

3.71

%

4.35

%

Interest margin - Cost

 

0.28

%

 

0.54

%

 

0.62

%

 

0.71

%

 

0.73

%

0.40

%

0.71

%

Net interest margin - FTE

 

3.12

%

 

3.52

%

 

3.56

%

 

3.66

%

 

3.64

%

3.31

%

3.63

%

Efficiency ratio (1)

 

62.13

%

 

63.50

%

 

68.08

%

 

64.98

%

 

64.55

%

62.81

%

66.25

%

Full-time equivalent employees

 

2,798

 

 

2,761

 

 

2,844

 

 

2,835

 

 

2,819

 

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

 

-0.02

%

 

0.13

%

 

0.11

%

 

0.01

%

 

0.05

%

0.05

%

0.07

%

Provision for credit losses / average loans (3)

 

0.74

%

 

0.86

%

 

0.15

%

 

0.13

%

 

0.11

%

0.80

%

0.09

%

Nonaccrual LHFI / (LHFI + LHFS)

 

0.50

%

 

0.54

%

 

0.56

%

 

0.62

%

 

0.57

%

Nonperforming assets / (LHFI + LHFS)

 

0.68

%

 

0.79

%

 

0.86

%

 

0.96

%

 

0.90

%

Nonperforming assets / (LHFI + LHFS + other real estate)

 

0.68

%

 

0.78

%

 

0.86

%

 

0.95

%

 

0.90

%

ACL LHFI / LHFI (3)

 

1.23

%

 

1.05

%

 

0.90

%

 

0.90

%

 

0.88

%

ACL LHFI-commercial / commercial LHFI (3)

 

1.15

%

 

0.97

%

 

0.98

%

 

0.98

%

 

0.96

%

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

 

1.56

%

 

1.35

%

 

0.61

%

 

0.61

%

 

0.60

%

ACL LHFI / nonaccrual LHFI (3)

 

238.40

%

 

189.77

%

 

158.34

%

 

140.99

%

 

152.02

%

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

 

561.04

%

 

468.84

%

 

410.52

%

 

357.15

%

 

383.19

%

 
CAPITAL RATIOS (3)
Total equity / total assets

 

10.67

%

 

11.79

%

 

12.30

%

 

12.11

%

 

11.95

%

Tangible equity / tangible assets

 

8.37

%

 

9.27

%

 

9.72

%

 

9.53

%

 

9.34

%

Tangible equity / risk-weighted assets

 

11.09

%

 

11.05

%

 

11.58

%

 

11.50

%

 

11.39

%

Tier 1 leverage ratio

 

9.08

%

 

10.21

%

 

10.48

%

 

10.34

%

 

10.03

%

Common equity tier 1 capital ratio

 

11.42

%

 

11.35

%

 

11.93

%

 

11.83

%

 

11.76

%

Tier 1 risk-based capital ratio

 

11.94

%

 

11.88

%

 

12.48

%

 

12.38

%

 

12.31

%

Total risk-based capital ratio

 

13.00

%

 

12.78

%

 

13.25

%

 

13.15

%

 

13.07

%

 
STOCK PERFORMANCE
Market value-Close

$

24.52

 

$

23.30

 

$

34.51

 

$

34.11

 

$

33.25

 

Book value

$

26.39

 

$

26.06

 

$

25.87

 

$

25.60

 

$

25.13

 

Tangible book value

$

20.18

 

$

19.92

 

$

19.84

 

$

19.57

 

$

19.10

 

 
(1) See Note 9 – Non-GAAP Financial Measures in the Notes to Consolidated Financials for Trustmark’s efficiency ratio calculation.
(2) Excludes PPP and 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
June 30, 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.

Based upon the factors discussed above, during the second quarter of 2020, Trustmark recorded a provision for credit losses of $18.2 million and a credit loss expense related to off-balance sheet credit exposures of $6.2 million compared to 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 recorded during the first quarter of 2020.

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 - Paycheck Protection Program

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), a $2 trillion stimulus package intended to provide relief to businesses and consumers in the United States struggling as a result of the pandemic, was signed into law. A provision in the CARES Act included a $349 billion fund for the creation of the Paycheck Protection Program (PPP) through the Small Business Administration (SBA) and Treasury Department. The PPP is intended to provide loans to small businesses to pay their employees, rent, mortgage interest and utilities. PPP loans are forgivable, in whole or in part, if the proceeds are used for payroll and other permitted purposes in accordance with the requirements of the PPP. These loans carry a fixed rate of 1.00% per annum and a term of two years, if not forgiven, in whole or in part. Payments are deferred for the first six months of the loan. The loans are 100% guaranteed by the SBA. The SBA pays the originating bank a processing fee ranging from 1.0% to 5.0%, based on the size of the loan.

During the second quarter of 2020, Trustmark participated in the PPP on behalf of its customers. At June 30, 2020, Trustmark’s gross PPP loans totaled $969.7 million with an average loan size of $100 thousand. Net of deferred fees and costs of $29.9 million, PPP loans totaled $939.8 million at June 30, 2020.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2020
($ in thousands)
(unaudited)

Note 3 - Securities Available for Sale and Held to Maturity

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

 

 

6/30/2020

 

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

SECURITIES AVAILABLE FOR SALE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agency obligations

 

$

19,898

 

 

$

21,190

 

 

$

22,327

 

 

$

24,697

 

 

$

26,646

 

Obligations of states and political subdivisions

 

 

11,176

 

 

 

23,572

 

 

 

25,465

 

 

 

35,001

 

 

 

38,698

 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage pass-through securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guaranteed by GNMA

 

 

69,637

 

 

 

71,971

 

 

 

69,252

 

 

 

63,391

 

 

 

65,716

 

Issued by FNMA and FHLMC

 

 

1,121,604

 

 

 

967,329

 

 

 

713,356

 

 

 

589,962

 

 

 

624,364

 

Other residential mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

574,940

 

 

 

634,075

 

 

 

658,226

 

 

 

705,601

 

 

 

751,371

 

Commercial mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

86,898

 

 

 

115,642

 

 

 

113,778

 

 

 

135,053

 

 

 

136,930

 

Total securities available for sale

 

$

1,884,153

 

 

$

1,833,779

 

 

$

1,602,404

 

 

$

1,553,705

 

 

$

1,643,725

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SECURITIES HELD TO MATURITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agency obligations

 

$

 

 

$

 

 

$

3,781

 

 

$

3,770

 

 

$

3,758

 

Obligations of states and political subdivisions

 

 

31,629

 

 

 

31,758

 

 

 

31,781

 

 

 

31,806

 

 

 

32,860

 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage pass-through securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guaranteed by GNMA

 

 

10,306

 

 

 

10,492

 

 

 

10,820

 

 

 

10,994

 

 

 

11,184

 

Issued by FNMA and FHLMC

 

 

86,346

 

 

 

91,971

 

 

 

96,631

 

 

 

102,048

 

 

 

106,755

 

Other residential mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

435,333

 

 

 

463,175

 

 

 

485,324

 

 

 

510,770

 

 

 

536,166

 

Commercial mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

96,434

 

 

 

106,880

 

 

 

109,762

 

 

 

126,034

 

 

 

134,813

 

Total securities held to maturity

 

$

660,048

 

 

$

704,276

 

 

$

738,099

 

 

$

785,422

 

 

$

825,536

 

 

At June 30, 2020, the net unamortized, unrealized loss included in accumulated other comprehensive income (loss) in the accompanying balance sheet for securities held to maturity previously transferred from securities available for sale totaled approximately $10.5 million ($7.9 million, net of tax).

Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 98.3% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE.

Note 4 – Loan Composition

LHFI consisted of the following during the periods presented:

LHFI BY TYPE (1)

 

6/30/2020

 

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

Loans secured by real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction, land development and other land loans

 

$

1,277,277

 

 

$

1,136,389

 

 

$

1,162,791

 

 

$

1,135,999

 

 

$

1,111,297

 

Secured by 1-4 family residential properties

 

 

1,813,525

 

 

 

1,852,065

 

 

 

1,855,913

 

 

 

1,820,455

 

 

 

1,818,126

 

Secured by nonfarm, nonresidential properties

 

 

2,610,392

 

 

 

2,575,422

 

 

 

2,475,245

 

 

 

2,442,308

 

 

 

2,326,312

 

Other real estate secured

 

 

884,815

 

 

 

838,573

 

 

 

724,480

 

 

 

668,667

 

 

 

635,839

 

Commercial and industrial loans

 

 

1,413,255

 

 

 

1,476,777

 

 

 

1,477,896

 

 

 

1,491,367

 

 

 

1,533,318

 

Consumer loans

 

 

161,620

 

 

 

170,678

 

 

 

175,738

 

 

 

176,894

 

 

 

176,133

 

State and other political subdivision loans

 

 

931,536

 

 

 

938,637

 

 

 

967,944

 

 

 

978,456

 

 

 

982,187

 

Other loans

 

 

567,386

 

 

 

579,379

 

 

 

495,621

 

 

 

509,522

 

 

 

533,547

 

LHFI

 

 

9,659,806

 

 

 

9,567,920

 

 

 

9,335,628

 

 

 

9,223,668

 

 

 

9,116,759

 

ACL LHFI

 

 

(119,188

)

 

 

(100,564

)

 

 

(84,277

)

 

 

(83,226

)

 

 

(80,399

)

Net LHFI

 

$

9,540,618

 

 

$

9,467,356

 

 

$

9,251,351

 

 

$

9,140,442

 

 

$

9,036,360

 

(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.

 

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2020
($ in thousands)
(unaudited)

Note 4 – Loan Composition (continued)

The following table presents the LHFI composition by region at June 30, 2020 and reflects each region’s diversified mix of loans:

 

 

June 30, 2020

 

LHFI - COMPOSITION BY REGION

 

Total

 

 

Alabama

 

 

Florida

 

 

Mississippi
(Central and
Southern
Regions)

 

 

Tennessee
(Memphis,
TN and
Northern MS
Regions)

 

 

Texas

 

Loans secured by real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction, land development and other land loans

 

$

1,277,277

 

 

$

391,698

 

 

$

100,052

 

 

$

348,029

 

 

$

25,641

 

 

$

411,857

 

Secured by 1-4 family residential properties

 

 

1,813,525

 

 

 

127,961

 

 

 

40,303

 

 

 

1,553,730

 

 

 

79,745

 

 

 

11,786

 

Secured by nonfarm, nonresidential properties

 

 

2,610,392

 

 

 

670,633

 

 

 

278,285

 

 

 

936,469

 

 

 

188,264

 

 

 

536,741

 

Other real estate secured

 

 

884,815

 

 

 

256,797

 

 

 

26,201

 

 

 

348,224

 

 

 

7,898

 

 

 

245,695

 

Commercial and industrial loans

 

 

1,413,255

 

 

 

195,494

 

 

 

22,629

 

 

 

674,592

 

 

 

305,918

 

 

 

214,622

 

Consumer loans

 

 

161,620

 

 

 

24,182

 

 

 

5,593

 

 

 

110,988

 

 

 

18,489

 

 

 

2,368

 

State and other political subdivision loans

 

 

931,536

 

 

 

90,539

 

 

 

37,549

 

 

 

603,171

 

 

 

29,236

 

 

 

171,041

 

Other loans

 

 

567,386

 

 

 

70,185

 

 

 

14,778

 

 

 

375,440

 

 

 

82,255

 

 

 

24,728

 

Loans

 

$

9,659,806

 

 

$

1,827,489

 

 

$

525,390

 

 

$

4,950,643

 

 

$

737,446

 

 

$

1,618,838

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION

 

 

 

 

 

 

 

 

 

Lots

 

$

79,174

 

 

$

17,812

 

 

$

24,342

 

 

$

30,072

 

 

$

1,932

 

 

$

5,016

 

Development

 

 

66,900

 

 

 

16,233

 

 

 

5,018

 

 

 

31,184

 

 

 

5,284

 

 

 

9,181

 

Unimproved land

 

 

101,285

 

 

 

24,335

 

 

 

18,401

 

 

 

26,874

 

 

 

11,359

 

 

 

20,316

 

1-4 family construction

 

 

234,950

 

 

 

98,621

 

 

 

21,346

 

 

 

80,468

 

 

 

6,710

 

 

 

27,805

 

Other construction

 

 

794,968

 

 

 

234,697

 

 

 

30,945

 

 

 

179,431

 

 

 

356

 

 

 

349,539

 

Construction, land development and other land loans

 

$

1,277,277

 

 

$

391,698

 

 

$

100,052

 

 

$

348,029

 

 

$

25,641

 

 

$

411,857

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION

 

 

 

 

 

 

 

 

 

Non-owner occupied:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

$

410,176

 

 

$

147,990

 

 

$

39,904

 

 

$

120,699

 

 

$

27,437

 

 

$

74,146

 

Office

 

 

233,980

 

 

 

67,549

 

 

 

27,499

 

 

 

65,692

 

 

 

12,335

 

 

 

60,905

 

Hotel/motel

 

 

348,958

 

 

 

135,970

 

 

 

102,544

 

 

 

59,237

 

 

 

40,207

 

 

 

11,000

 

Mini-storage

 

 

114,380

 

 

 

16,312

 

 

 

3,928

 

 

 

49,075

 

 

 

412

 

 

 

44,653

 

Industrial

 

 

193,415

 

 

 

62,803

 

 

 

10,991

 

 

 

36,216

 

 

 

2,166

 

 

 

81,239

 

Health care

 

 

45,871

 

 

 

13,166

 

 

 

11,739

 

 

 

18,738

 

 

 

 

 

 

2,228

 

Convenience stores

 

 

22,416

 

 

 

3,425

 

 

 

 

 

 

6,477

 

 

 

401

 

 

 

12,113

 

Nursing homes/senior living

 

 

48,453

 

 

 

18,627

 

 

 

 

 

 

4,012

 

 

 

7,243

 

 

 

18,571

 

Other

 

 

70,999

 

 

 

4,595

 

 

 

6,280

 

 

 

15,121

 

 

 

6,629

 

 

 

38,374

 

Total non-owner occupied loans

 

 

1,488,648

 

 

 

470,437

 

 

 

202,885

 

 

 

375,267

 

 

 

96,830

 

 

 

343,229

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Owner-occupied:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office

 

 

159,624

 

 

 

39,672

 

 

 

35,831

 

 

 

49,691

 

 

 

9,609

 

 

 

24,821

 

Churches

 

 

104,498

 

 

 

24,138

 

 

 

7,731

 

 

 

47,965

 

 

 

10,785

 

 

 

13,879

 

Industrial warehouses

 

 

159,246

 

 

 

10,878

 

 

 

2,588

 

 

 

48,310

 

 

 

17,150

 

 

 

80,320

 

Health care

 

 

140,073

 

 

 

16,535

 

 

 

5,953

 

 

 

102,405

 

 

 

2,493

 

 

 

12,687

 

Convenience stores

 

 

110,245

 

 

 

14,870

 

 

 

7,641

 

 

 

66,720

 

 

 

609

 

 

 

20,405

 

Retail

 

 

74,453

 

 

 

15,863

 

 

 

7,125

 

 

 

28,915

 

 

 

6,771

 

 

 

15,779

 

Restaurants

 

 

57,884

 

 

 

4,127

 

 

 

2,401

 

 

 

34,467

 

 

 

15,424

 

 

 

1,465

 

Auto dealerships

 

 

47,720

 

 

 

7,982

 

 

 

290

 

 

 

12,615

 

 

 

26,833

 

 

 

 

Nursing homes/senior living

 

 

184,563

 

 

 

61,645

 

 

 

5,840

 

 

 

117,078

 

 

 

 

 

 

 

Other

 

 

83,438

 

 

 

4,486

 

 

 

 

 

 

53,036

 

 

 

1,760

 

 

 

24,156

 

Total owner-occupied loans

 

 

1,121,744

 

 

 

200,196

 

 

 

75,400

 

 

 

561,202

 

 

 

91,434

 

 

 

193,512

 

Loans secured by nonfarm, nonresidential properties

 

$

2,610,392

 

 

$

670,633

 

 

$

278,285

 

 

$

936,469

 

 

$

188,264

 

 

$

536,741

 

 

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2020
($ in thousands)
(unaudited)

Note 5 – Yields on Earning Assets and Interest-Bearing Liabilities

The following table illustrates the yields on earning assets by category as well as the rates paid on interest-bearing liabilities on a tax equivalent basis:

 

 

Quarter Ended

 

 

Six Months Ended

 

 

 

6/30/2020

 

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

6/30/2020

 

 

6/30/2019

 

Securities – taxable

 

 

2.16

%

 

 

2.25

%

 

 

2.24

%

 

 

2.23

%

 

 

2.25

%

 

 

2.20

%

 

 

2.26

%

Securities – nontaxable

 

 

3.58

%

 

 

3.85

%

 

 

3.92

%

 

 

3.76

%

 

 

3.78

%

 

 

3.74

%

 

 

3.79

%

Securities – total

 

 

2.18

%

 

 

2.28

%

 

 

2.27

%

 

 

2.26

%

 

 

2.28

%

 

 

2.23

%

 

 

2.30

%

PPP loans

 

 

2.65

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.65

%

 

 

 

Loans - LHFI & LHFS

 

 

4.03

%

 

 

4.54

%

 

 

4.67

%

 

 

4.90

%

 

 

4.98

%

 

 

4.28

%

 

 

4.95

%

Acquired loans

 

 

 

 

 

 

 

 

10.90

%

 

 

11.08

%

 

 

8.84

%

 

 

 

 

 

8.10

%

Loans - total

 

 

3.93

%

 

 

4.54

%

 

 

4.72

%

 

 

4.95

%

 

 

5.01

%

 

 

4.22

%

 

 

4.99

%

Fed funds sold & reverse repurchases

 

 

 

 

 

 

 

 

2.16

%

 

 

2.49

%

 

 

2.52

%

 

 

 

 

 

2.52

%

Other earning assets

 

 

0.11

%

 

 

1.59

%

 

 

1.57

%

 

 

2.35

%

 

 

2.31

%

 

 

0.38

%

 

 

2.46

%

Total earning assets

 

 

3.39

%

 

 

4.06

%

 

 

4.19

%

 

 

4.38

%

 

 

4.37

%

 

 

3.71

%

 

 

4.35

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

 

0.37

%

 

 

0.71

%

 

 

0.85

%

 

 

0.96

%

 

 

0.99

%

 

 

0.53

%

 

 

0.96

%

Fed funds purchased & repurchases

 

 

0.16

%

 

 

1.02

%

 

 

1.21

%

 

 

1.53

%

 

 

0.63

%

 

 

0.76

%

 

 

1.10

%

Other borrowings

 

 

2.09

%

 

 

2.35

%

 

 

2.32

%

 

 

2.35

%

 

 

2.33

%

 

 

2.21

%

 

 

2.26

%

Total interest-bearing liabilities

 

 

0.39

%

 

 

0.75

%

 

 

0.88

%

 

 

0.99

%

 

 

1.01

%

 

 

0.56

%

 

 

0.98

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

 

3.12

%

 

 

3.52

%

 

 

3.56

%

 

 

3.66

%

 

 

3.64

%

 

 

3.31

%

 

 

3.63

%

Net interest margin excluding PPP and acquired loans

 

 

3.14

%

 

 

3.52

%

 

 

3.52

%

 

 

3.61

%

 

 

3.60

%

 

 

3.32

%

 

 

3.60

%

 

Reflected in the table above are yields on earning assets and liabilities, along with the net interest margin which equals reported net interest income-FTE, annualized, as a percent of average earning assets. In addition, the table includes net interest margin excluding PPP and acquired loans, which equals reported net interest income-FTE excluding interest income on PPP and acquired loans, annualized, as a percent of average earning assets excluding average PPP and acquired loans.

The net interest margin excluding PPP and acquired loans totaled 3.14% for the second quarter of 2020, a decrease of 38 basis points when compared to the first quarter of 2020. Approximately 20 basis points of this decline was due to lower interest rates, which decreased the yield on the loans held for investment and held for sale portfolio and was partially offset by lower costs of interest-bearing deposits, and 18 basis points was due to an increase in other earning asset balances driven by an increase in public fund deposit balances which is anticipated to be transitory.

Note 6 – Mortgage Banking

Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that offsets the changes in fair value of mortgage servicing rights (MSR) attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under generally accepted accounting principles (GAAP). Changes in the fair value of these exchange-traded derivative instruments, including administrative costs, are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of the MSR. The MSR fair value represents the present value of future cash flows, which among other things includes decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the change in value of hedge instruments to the change in the fair value of the MSR asset attributable to changes in interest rates and other market driven changes in valuation inputs and assumptions. The impact of this strategy resulted in a net negative ineffectiveness of $2.0 million primarily due to tightening spreads between mortgage and ten-year Treasury rates during the second quarter of 2020.

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

 

 

Quarter Ended

 

 

Six Months Ended

 

 

 

6/30/2020

 

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

6/30/2020

 

 

6/30/2019

 

Mortgage servicing income, net

 

$

5,893

 

 

$

5,819

 

 

$

5,854

 

 

$

5,688

 

 

$

5,734

 

 

$

11,712

 

 

$

11,341

 

Change in fair value-MSR from runoff

 

 

(4,214

)

 

 

(2,607

)

 

 

(2,950

)

 

 

(3,569

)

 

 

(2,918

)

 

 

(6,821

)

 

 

(5,316

)

Gain on sales of loans, net

 

 

34,078

 

 

 

14,339

 

 

 

7,984

 

 

 

9,799

 

 

 

7,532

 

 

 

48,417

 

 

 

12,513

 

Mortgage banking income before hedge ineffectiveness

 

 

35,757

 

 

 

17,551

 

 

 

10,888

 

 

 

11,918

 

 

 

10,348

 

 

 

53,308

 

 

 

18,538

 

Change in fair value-MSR from market changes

 

 

(3,159

)

 

 

(23,999

)

 

 

4,048

 

 

 

(8,054

)

 

 

(8,209

)

 

 

(27,158

)

 

 

(17,072

)

Change in fair value of derivatives

 

 

1,147

 

 

 

33,931

 

 

 

(7,022

)

 

 

4,307

 

 

 

8,156

 

 

 

35,078

 

 

 

12,271

 

Net positive (negative) hedge ineffectiveness

 

 

(2,012

)

 

 

9,932

 

 

 

(2,974

)

 

 

(3,747

)

 

 

(53

)

 

 

7,920

 

 

 

(4,801

)

Mortgage banking, net

 

$

33,745

 

 

$

27,483

 

 

$

7,914

 

 

$

8,171

 

 

$

10,295

 

 

$

61,228

 

 

$

13,737

 

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2020
($ in thousands)
(unaudited)

Note 7 – Salaries and Employee Benefit Plans

Early Retirement Program

In January 2020, Trustmark announced a voluntary early retirement program for associates age 60 and above with five or more years of continuous service. The cost of this program is reflected in a one-time, pre-tax charge of approximately $4.4 million (salaries and benefits of $4.3 million and other miscellaneous expense of $102 thousand; or $0.05 per basic share net of tax) in Trustmark’s first quarter 2020 earnings. The pre-tax salary and employee benefits expense savings resulting from the implementation of the early retirement program are expected to total approximately $2.9 million ($0.03 per basic share net of tax) and $4.0 million ($0.05 per basic share net of tax) for the remainder of 2020 and for the year ended 2021, respectively.

Note 8 – Other Noninterest Income and Expense

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

 

 

Quarter Ended

 

 

Six Months Ended

 

 

 

6/30/2020

 

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

6/30/2020

 

 

6/30/2019

 

Partnership amortization for tax credit purposes

 

$

(1,205

)

 

$

(1,161

)

 

$

(1,630

)

 

$

(1,994

)

 

$

(2,010

)

 

$

(2,366

)

 

$

(4,020

)

Increase in life insurance cash surrender value

 

 

1,696

 

 

 

1,722

 

 

 

1,802

 

 

 

1,814

 

 

 

1,803

 

 

 

3,418

 

 

 

3,586

 

Other miscellaneous income

 

 

1,722

 

 

 

1,746

 

 

 

3,279

 

 

 

2,169

 

 

 

2,337

 

 

 

3,468

 

 

 

4,803

 

Total other, net

 

$

2,213

 

 

$

2,307

 

 

$

3,451

 

 

$

1,989

 

 

$

2,130

 

 

$

4,520

 

 

$

4,369

 

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

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

 

 

Quarter Ended

 

 

Six Months Ended

 

 

 

6/30/2020

 

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

6/30/2020

 

 

6/30/2019

 

Loan expense

 

$

2,954

 

 

$

2,799

 

 

$

2,968

 

 

$

2,886

 

 

$

3,003

 

 

$

5,753

 

 

$

5,700

 

Amortization of intangibles

 

 

736

 

 

 

812

 

 

 

1,002

 

 

 

1,021

 

 

 

992

 

 

 

1,548

 

 

 

2,093

 

FDIC assessment expense

 

 

1,590

 

 

 

1,590

 

 

 

1,450

 

 

 

1,400

 

 

 

1,836

 

 

 

3,180

 

 

 

3,594

 

Other miscellaneous expense

 

 

7,985

 

 

 

9,552

 

 

 

8,956

 

 

 

6,880

 

 

 

7,819

 

 

 

17,537

 

 

 

16,232

 

Total other expense

 

$

13,265

 

 

$

14,753

 

 

$

14,376

 

 

$

12,187

 

 

$

13,650

 

 

$

28,018

 

 

$

27,619

 

Note 9 – Non-GAAP Financial Measures

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

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

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

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2020
($ in thousands except per share data)
(unaudited)

Note 9 – Non-GAAP Financial Measures (continued)

 

 

 

 

Quarter Ended

 

 

Six Months Ended

 

 

 

 

 

6/30/2020

 

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

6/30/2020

 

 

6/30/2019

 

TANGIBLE EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE BALANCES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders' equity

 

 

 

$

1,665,716

 

 

$

1,640,070

 

 

$

1,656,605

 

 

$

1,634,646

 

 

$

1,605,745

 

 

$

1,652,893

 

 

$

1,598,009

 

Less:  Goodwill

 

 

 

 

(383,081

)

 

 

(380,671

)

 

 

(379,627

)

 

 

(379,627

)

 

 

(379,627

)

 

 

(381,876

)

 

 

(379,627

)

Identifiable intangible assets

 

 

 

 

(7,834

)

 

 

(8,049

)

 

 

(7,882

)

 

 

(8,706

)

 

 

(9,631

)

 

 

(7,942

)

 

 

(10,146

)

Total average tangible equity

 

 

 

$

1,274,801

 

 

$

1,251,350

 

 

$

1,269,096

 

 

$

1,246,313

 

 

$

1,216,487

 

 

$

1,263,075

 

 

$

1,208,236

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PERIOD END BALANCES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders' equity

 

 

 

$

1,673,944

 

 

$

1,652,399

 

 

$

1,660,702

 

 

$

1,645,362

 

 

$

1,618,550

 

 

 

 

 

 

 

 

 

Less:  Goodwill

 

 

 

 

(385,270

)

 

 

(381,717

)

 

 

(379,627

)

 

 

(379,627

)

 

 

(379,627

)

 

 

 

 

 

 

 

 

Identifiable intangible assets

 

 

 

 

(8,895

)

 

 

(7,537

)

 

 

(7,343

)

 

 

(8,345

)

 

 

(9,101

)

 

 

 

 

 

 

 

 

Total tangible equity

 

(a)

 

$

1,279,779

 

 

$

1,263,145

 

 

$

1,273,732

 

 

$

1,257,390

 

 

$

1,229,822

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TANGIBLE ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

 

$

15,692,079

 

 

$

14,019,829

 

 

$

13,497,877

 

 

$

13,584,786

 

 

$

13,548,958

 

 

 

 

 

 

 

 

 

Less:  Goodwill

 

 

 

 

(385,270

)

 

 

(381,717

)

 

 

(379,627

)

 

 

(379,627

)

 

 

(379,627

)

 

 

 

 

 

 

 

 

Identifiable intangible assets

 

 

 

 

(8,895

)

 

 

(7,537

)

 

 

(7,343

)

 

 

(8,345

)

 

 

(9,101

)

 

 

 

 

 

 

 

 

Total tangible assets

 

(b)

 

$

15,297,914

 

 

$

13,630,575

 

 

$

13,110,907

 

 

$

13,196,814

 

 

$

13,160,230

 

 

 

 

 

 

 

 

 

Risk-weighted assets

 

(c)

 

$

11,539,157

 

 

$

11,427,297

 

 

$

11,002,877

 

 

$

10,935,018

 

 

$

10,796,903

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION

 

 

 

 

 

 

 

 

 

Net income

 

 

 

$

32,150

 

 

$

22,218

 

 

$

33,946

 

 

$

41,035

 

 

$

42,140

 

 

$

54,368

 

 

$

75,479

 

Plus: Intangible amortization net of tax

 

 

 

 

552

 

 

 

609

 

 

 

752

 

 

 

766

 

 

 

744

 

 

 

1,161

 

 

 

1,570

 

Net income adjusted for intangible amortization

 

$

32,702

 

 

$

22,827

 

 

$

34,698

 

 

$

41,801

 

 

$

42,884

 

 

$

55,529

 

 

$

77,049

 

Period end common shares outstanding

 

(d)

 

 

63,422,439

 

 

 

63,396,912

 

 

 

64,200,111

 

 

 

64,262,779

 

 

 

64,398,846

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TANGIBLE COMMON EQUITY MEASUREMENTS

 

 

 

 

 

 

 

 

Return on average tangible equity (1)

 

 

 

 

10.32

%

 

 

7.34

%

 

 

10.85

%

 

 

13.31

%

 

 

14.14

%

 

 

8.84

%

 

 

12.86

%

Tangible equity/tangible assets

 

(a)/(b)

 

 

8.37

%

 

 

9.27

%

 

 

9.72

%

 

 

9.53

%

 

 

9.34

%

 

 

 

 

 

 

 

 

Tangible equity/risk-weighted assets

 

(a)/(c)

 

 

11.09

%

 

 

11.05

%

 

 

11.58

%

 

 

11.50

%

 

 

11.39

%

 

 

 

 

 

 

 

 

Tangible book value

 

(a)/(d)*1,000

 

$

20.18

 

 

$

19.92

 

 

$

19.84

 

 

$

19.57

 

 

$

19.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMMON EQUITY TIER 1 CAPITAL (CET1)

 

 

 

 

 

 

 

 

 

Total shareholders' equity

 

 

 

$

1,673,944

 

 

$

1,652,399

 

 

$

1,660,702

 

 

$

1,645,362

 

 

$

1,618,550

 

 

 

 

 

 

 

 

 

CECL transition adjustment (3)

 

 

 

 

32,693

 

 

 

26,476

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AOCI-related adjustments

 

 

 

 

(10,565

)

 

 

(7,698

)

 

 

23,600

 

 

 

20,858

 

 

 

24,816

 

 

 

 

 

 

 

 

 

CET1 adjustments and deductions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill net of associated deferred tax liabilities (DTLs)

 

 

(371,342

)

 

 

(367,825

)

 

 

(365,738

)

 

 

(365,741

)

 

 

(365,745

)

 

 

 

 

 

 

 

 

Other adjustments and deductions for CET1 (2)

 

 

(7,352

)

 

 

(6,269

)

 

 

(5,896

)

 

 

(6,671

)

 

 

(8,268

)

 

 

 

 

 

 

 

 

CET1 capital

 

(e)

 

 

1,317,378

 

 

 

1,297,083

 

 

 

1,312,668

 

 

 

1,293,808

 

 

 

1,269,353

 

 

 

 

 

 

 

 

 

Additional tier 1 capital instruments plus related surplus

 

 

60,000

 

 

 

60,000

 

 

 

60,000

 

 

 

60,000

 

 

 

60,000

 

 

 

 

 

 

 

 

 

Tier 1 capital

 

 

 

$

1,377,378

 

 

$

1,357,083

 

 

$

1,372,668

 

 

$

1,353,808

 

 

$

1,329,353

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity tier 1 capital ratio

 

(e)/(c)

 

 

11.42

%

 

 

11.35

%

 

 

11.93

%

 

 

11.83

%

 

 

11.76

%

 

 

 

 

 

 

 

 

(1)

Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity.

(2)

Includes other intangible assets, net of DTLs, disallowed deferred tax assets (DTAs), threshold deductions and transition adjustments, as applicable.

(3)

See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details. 

 

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2020
($ in thousands except per share data)
(unaudited)

Note 9 – Non-GAAP Financial Measures (continued)

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

The following table presents pre-tax pre-provision income during the periods presented:

 

 

 

Quarter Ended

 

 

Six Months Ended

 

 

 

 

6/30/2020

 

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

6/30/2020

 

 

6/30/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (GAAP)

 

$

105,000

 

 

$

103,952

 

 

$

105,591

 

 

$

108,466

 

 

$

107,724

 

 

$

208,952

 

 

$

212,532

 

Noninterest income (GAAP)

 

 

69,511

 

 

 

65,264

 

 

 

47,578

 

 

 

48,337

 

 

 

49,639

 

 

 

134,775

 

 

 

91,130

 

Pre-tax pre-provision revenue

(a)

$

174,511

 

 

$

169,216

 

 

$

153,169

 

 

$

156,803

 

 

$

157,363

 

 

$

343,727

 

 

$

303,662

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense (GAAP)

 

$

118,659

 

 

$

123,810

 

 

$

110,027

 

 

$

106,853

 

 

$

106,101

 

 

$

242,469

 

 

$

212,122

 

Less: Voluntary early retirement program

 

 

 

 

 

(4,375

)

 

 

 

 

 

 

 

 

 

 

 

(4,375

)

 

 

 

Credit loss expense related to off-balance sheet credit
  exposures

 

(6,242

)

 

 

(6,783

)

 

 

 

 

 

 

 

 

 

 

 

(13,025

)

 

 

 

Adjusted noninterest expense (Non-GAAP)

(b)

$

112,417

 

 

$

112,652

 

 

$

110,027

 

 

$

106,853

 

 

$

106,101

 

 

$

225,069

 

 

$

212,122

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax pre-provision income (Non-GAAP)

(a)-(b)

$

62,094

 

 

$

56,564

 

 

$

43,142

 

 

$

49,950

 

 

$

51,262

 

 

$

118,658

 

 

$

91,540

 

 

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

 

 

Quarter Ended

 

 

 

Six Months Ended

 

 

 

6/30/2020

 

 

 

6/30/2019

 

 

 

6/30/2020

 

 

 

6/30/2019

 

 

 

Amount

 

 

Diluted
EPS

 

 

 

Amount

 

 

Diluted
EPS

 

 

 

Amount

 

 

Diluted
EPS

 

 

 

Amount

 

 

Diluted
EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (GAAP)

$

32,150

 

 

$

0.51

 

 

 

$

42,140

 

 

$

0.65

 

 

 

$

54,368

 

 

$

0.85

 

 

 

$

75,479

 

 

$

1.16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Significant non-routine transactions (net of taxes):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voluntary early retirement program

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,281

 

 

 

0.05

 

 

 

 

 

 

 

 

Net Income adjusted for significant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

non-routine transactions (Non-GAAP)

$

32,150

 

 

$

0.51

 

 

 

$

42,140

 

 

$

0.65

 

 

 

$

57,649

 

 

$

0.90

 

 

 

$

75,479

 

 

$

1.16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported
(GAAP)

 

 

Adjusted

 

 

 

Reported
(GAAP)

 

 

Adjusted

 

 

 

Reported
(GAAP)

 

 

Adjusted

 

 

 

Reported
(GAAP)

 

 

Adjusted

 

 

 

 

 

(Non-
GAAP)

 

 

 

 

 

(Non-
GAAP)

 

 

 

 

 

(Non-
GAAP)

 

 

 

 

 

(Non-
GAAP)

 

Return on average equity

 

 

7.76

%

 

n/a

 

 

 

 

10.53

%

 

n/a

 

 

 

 

6.61

%

 

 

7.00

%

 

 

 

9.52

%

 

n/a

 

Return on average tangible equity

 

 

10.32

%

 

n/a

 

 

 

 

14.14

%

 

n/a

 

 

 

 

8.84

%

 

 

9.35

%

 

 

 

12.86

%

 

n/a

 

Return on average assets

 

 

0.83

%

 

n/a

 

 

 

 

1.24

%

 

n/a

 

 

 

 

0.75

%

 

 

0.79

%

 

 

 

1.12

%

 

n/a

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

n/a - not applicable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2020
($ in thousands)
(unaudited)

Note 9 – Non-GAAP Financial Measures (continued)

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

 

 

 

Quarter Ended

 

 

Six Months Ended

 

 

 

 

6/30/2020

 

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

6/30/2020

 

 

6/30/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total noninterest expense (GAAP)

 

$

118,659

 

 

$

123,810

 

 

$

110,027

 

 

$

106,853

 

 

$

106,101

 

 

$

242,469

 

 

$

212,122

 

Less: Other real estate expense, net

 

(271

)

 

 

(1,294

)

 

 

(1,491

)

 

 

(531

)

 

 

(132

)

 

 

(1,565

)

 

 

(1,884

)

Amortization of intangibles

 

(736

)

 

 

(812

)

 

 

(1,002

)

 

 

(1,021

)

 

 

(992

)

 

 

(1,548

)

 

 

(2,093

)

Voluntary early retirement program

 

 

 

 

(4,375

)

 

 

 

 

 

 

 

 

 

 

 

(4,375

)

 

 

 

Credit loss expense related to off-balance sheet exposures

 

(6,242

)

 

 

(6,783

)

 

 

 

 

 

 

 

 

 

 

 

(13,025

)

 

 

 

Charitable contributions resulting in state tax credits

 

(375

)

 

 

(375

)

 

 

 

 

 

 

 

 

 

 

 

(750

)

 

 

 

Adjusted noninterest expense (Non-GAAP)

(c)

$

111,035

 

 

$

110,171

 

 

$

107,534

 

 

$

105,301

 

 

$

104,977

 

 

$

221,206

 

 

$

208,145

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (GAAP)

 

$

105,000

 

 

$

103,952

 

 

$

105,591

 

 

$

108,466

 

 

$

107,724

 

 

$

208,952

 

 

$

212,532

 

Add: Tax equivalent adjustment

 

 

3,007

 

 

 

3,108

 

 

 

3,149

 

 

 

3,249

 

 

 

3,248

 

 

 

6,115

 

 

 

6,479

 

Net interest income-FTE (Non-GAAP)

(a)

$

108,007

 

 

$

107,060

 

 

$

108,740

 

 

$

111,715

 

 

$

110,972

 

 

$

215,067

 

 

$

219,011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income (GAAP)

 

$

69,511

 

 

$

65,264

 

 

$

47,578

 

 

$

48,337

 

 

$

49,639

 

 

$

134,775

 

 

$

91,130

 

Add: Partnership amortization for tax credit purposes

 

1,205

 

 

 

1,161

 

 

 

1,630

 

 

 

1,994

 

 

 

2,010

 

 

 

2,366

 

 

 

4,020

 

Adjusted noninterest income (Non-GAAP)

(b)

$

70,716

 

 

$

66,425

 

 

$

49,208

 

 

$

50,331

 

 

$

51,649

 

 

$

137,141

 

 

$

95,150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted revenue (Non-GAAP)

(a)+(b)

$

178,723

 

 

$

173,485

 

 

$

157,948

 

 

$

162,046

 

 

$

162,621

 

 

$

352,208

 

 

$

314,161

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio (Non-GAAP)

(c)/((a)+(b))

 

62.13

%

 

 

63.50

%

 

 

68.08

%

 

 

64.98

%

 

 

64.55

%

 

 

62.81

%

 

 

66.25

%

 

Contacts

Trustmark Investor Contacts:
Louis E. Greer
Treasurer and Principal Financial Officer
601-208-2310

F. Joseph Rein, Jr.
Senior Vice President
601-208-6898

Trustmark Media Contact:
Melanie A. Morgan
Senior Vice President
601-208-2979

Release Summary

Trustmark Corporation Announces Second Quarter 2020 Financial Results

Contacts

Trustmark Investor Contacts:
Louis E. Greer
Treasurer and Principal Financial Officer
601-208-2310

F. Joseph Rein, Jr.
Senior Vice President
601-208-6898

Trustmark Media Contact:
Melanie A. Morgan
Senior Vice President
601-208-2979