Trustmark Corporation Announces Fourth Quarter and Fiscal Year 2022 Financial Results

Record Loan Growth, Solid Credit Quality, Expanded Net Interest Margin

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Trustmark Corporation Announces Fourth Quarter and Fiscal Year 2022 Financial Results

JACKSON, Miss.--()--Trustmark Corporation (NASDAQGS:TRMK) reported a loss of $34.1 million, or $0.56 per diluted share, in the fourth quarter of 2022. As previously disclosed, Trustmark agreed to a settlement that, pending court approval, will resolve all current and potential future claims relating to litigation involving the Stanford Financial Group that began in 2009. In the fourth quarter, Trustmark recognized litigation settlement expense of $100.0 million as well as an additional $750 thousand in legal fees, which are included in noninterest expense. The litigation settlement expense reduced fourth quarter net income by $75.6 million, or $1.24 per diluted share. Excluding this expense, Trustmark’s fourth quarter net income totaled $41.5 million, or $0.68 per diluted share. For the full year, Trustmark’s net income totaled $71.9 million, representing diluted earnings per share of $1.17. Excluding the litigation settlement expense, Trustmark’s net income in 2022 totaled $147.5 million, representing diluted earnings per share of $2.40. Please refer to the Consolidated Financial Information, Note 1 – Litigation Settlement and Note 7 – Non-GAAP Financial Measures. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable March 15, 2023, to shareholders of record on March 1, 2023.

Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/53289378/en

2022 Highlights

  • Loans held for investment (HFI) increased $2.0 billion, or 19.1%, in 2022
  • Nonperforming assets declined to 0.55% of loans HFI and held for sale (HFS)
  • Net charge-offs represented 0.01% of average loans in 2022
  • Net interest income FTE totaled $507.1 million, up 17.9% in 2022 to produce a net interest margin of 3.17%, up 41 basis points from 2021
  • Insurance revenue increased 10.7% in 2022 while wealth management remained stable
  • Noninterest income totaled $205.1 million and represented 29.3% of total revenue
  • Noninterest expense, excluding litigation settlement expense, totaled $502.5 million, up 2.7% from the prior year
  • Expanded market optimization efforts with a net reduction of 11 branch offices during the year
  • Continued technology investments to enhance efficiency and productivity

Duane A. Dewey, President and CEO, commented, “We made significant progress across the organization during the year. Loan growth in 2022 was the highest in Trustmark’s history. Credit quality remained strong. Net interest income and the net interest margin were up significantly. Our insurance business posted another record year. We made significant investments in technology, including conversion to a state-of-the-art loan system designed to enhance efficiency and productivity. With all of these positive advancements, our financial results were overshadowed by the litigation settlement. While we expressly deny any liability or wrongdoing with respect to this matter, we believe the settlement is in the best interest of Trustmark and our shareholders as it eliminates risk, ongoing expense and uncertainty. With this matter now behind us, we will focus more intently on the future and the opportunities that are ahead. Trustmark is very well-positioned to serve and expand its customer base and create long-term value for shareholders.”

Balance Sheet Management

  • Loans HFI increased $618.0 million, or 5.3%, during the quarter
  • Investment securities decreased $82.9 million, or 2.3%, linked-quarter as liquidity from maturing security balances was deployed to fund loan growth
  • Total deposits increased $12.5 million, or 0.1%, linked-quarter
  • Maintained strong capital position with CET1 ratio of 9.74% and total risk-based capital ratio of 11.91%

Loans HFI totaled $12.2 billion at December 31, 2022, reflecting an increase of $618.0 million, or 5.3%, linked-quarter and $2.0 billion, or 19.1%, year-over-year. The linked-quarter growth was broad-based and reflected increases in virtually every category. Trustmark’s loan portfolio remains well-diversified by loan type and geography.

As previously disclosed in the third quarter of 2022, Trustmark initiated a cash flow hedging program under which interest rate swaps convert floating rate loans to fixed rate. The intent of the program is to manage the natural asset sensitivity of Trustmark’s balance sheet. As of December 31, 2022, notional balances totaled $825.0 million with a weighted average receive fixed rate of 3.10%.

Deposits totaled $14.4 billion at December 31, 2022, up $12.5 million, or 0.1%, from the prior quarter and down $649.5 million, or 4.3%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 84.5% of total deposits at year end 2022. Noninterest-bearing deposits represented 28.4% of total deposits at December 31, 2022. Interest-bearing deposit costs totaled 0.71% for the fourth quarter, an increase of 51 basis points linked-quarter. The total cost of interest-bearing liabilities was 1.03% for the fourth quarter of 2022, an increase of 72 basis points from the prior quarter.

During the fourth quarter, Trustmark did not repurchase any of its common shares. During the twelve months ended December 31, 2022, Trustmark repurchased $24.6 million, or approximately 789 thousand of its common shares. As previously announced, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2023, under which $50.0 million of Trustmark’s outstanding shares may be acquired through December 31, 2023. The repurchase program, which is subject to market conditions and management discretion, will continue to be implemented through open market repurchases or privately negotiated transactions. At December 31, 2022, Trustmark’s tangible equity to tangible assets ratio was 6.27%, while the total risk-based capital ratio was 11.91%. Tangible book value per share was $18.11 at December 31, 2022, down 1.5% from the prior quarter.

Credit Quality

  • Allowance for credit losses (ACL) represented 0.99% of loans HFI and 399.19% of nonperforming loans, excluding individually analyzed loans at year-end
  • Net charge-offs totaled 0.06% of average loans in the fourth quarter

Nonaccrual loans totaled $66.0 million at December 31, 2022, a decrease of $2.0 million from the prior quarter and an increase of $3.3 million year-over-year. Other real estate totaled $2.0 million, reflecting a $985 thousand decrease from the prior quarter and a $2.6 million decline from the prior year. Collectively, nonperforming assets totaled $68.0 million, reflecting a linked-quarter decrease of 4.1% and year-over-year increase of 1.0%.

The provision for credit losses for loans HFI was $6.9 million in the fourth quarter primarily attributable to loan growth and the weakening in the macroeconomic forecast. The provision for credit losses for off-balance sheet credit exposures was $5.2 million in the fourth quarter, primarily driven by increases in unfunded commitments and the macroeconomic forecast. Collectively, the provision for credit losses totaled $12.1 million in the fourth quarter compared to $11.6 million in the prior quarter and a negative $1.6 million in the fourth quarter of 2021.

Allocation of Trustmark’s $120.2 million ACL on loans HFI represented 0.85% of commercial loans and 1.41% of consumer and home mortgage loans, resulting in an ACL to total loans HFI of 0.99% at December 31, 2022. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.

Revenue Generation

  • Net interest income (FTE) totaled $150.0 million in the fourth quarter, up 7.9% linked-quarter
  • Net interest margin expanded 16 basis points to 3.66% in the fourth quarter

Revenue in the fourth quarter totaled $191.8 million, an increase of 1.6% from the prior quarter and 28.6% from the same quarter in the prior year. The linked-quarter increase primarily reflects higher net interest income offset by lower noninterest income while the year-over-year growth is attributed to higher net interest income offset in part by reduced mortgage banking revenue. In 2022, revenue totaled $699.9 million, an increase of 9.3% from the prior year.

Net interest income (FTE) in the fourth quarter totaled $150.0 million, resulting in a net interest margin of 3.66%, up 16 basis points from the prior quarter. The expansion of the net interest margin was due to increases in the yields on the loans HFI and HFS portfolio and the securities portfolio and was partially offset by costs of interest-bearing liabilities, which resulted from the higher interest rate environment.

Noninterest income in the fourth quarter totaled $45.2 million, a decrease of $7.4 million from the prior quarter and $5.6 million from the prior year. The linked-quarter change reflects a decline in mortgage banking revenue, a seasonal decline in insurance revenue, as well as lower bank card and other fees and wealth management revenue. The decrease in noninterest income year-over-year is principally due to lower mortgage banking revenue.

Mortgage loan production in the fourth quarter totaled $390.8 million, a decline of 23.1% linked-quarter and 33.9% year-over-year. Mortgage banking revenue totaled $3.4 million in the fourth quarter, a decrease of $3.5 million from the prior quarter and $8.2 million year-over-year. The linked-quarter decline is attributable to an increase in net negative hedge ineffectiveness as well as volume-related lower gains on sales of mortgage loans in the secondary market. In 2022, mortgage loan production totaled $2.1 billion, down 24.2% from the prior year. Mortgage banking revenue totaled $28.3 million in 2022, compared to $63.8 million in the prior year.

Insurance revenue in the fourth quarter totaled $12.0 million, a seasonal decline of $1.9 million from the prior quarter and an increase of $303 thousand from the prior year. Insurance revenue in 2022 totaled $53.7 million, up $5.2 million, or 10.7%, from the prior year. The solid performance during the year reflects an expanded producer workforce, a hardening of the insurance market, and the realization of operational efficiencies from investments in technology and improved processes.

Wealth management revenue totaled $8.1 million in the fourth quarter, down 8.0% from the prior quarter and 7.7% from the prior year. The linked-quarter decline is principally due to reduced investment services and trust management revenue while the year-over-year change is attributable to reduced brokerage and trust management revenue. In 2022, wealth management revenue totaled $35.0 million, in line with the prior year. During 2022, Trustmark selectively expanded its salesforce in Birmingham, Jackson and the Florida Panhandle as well as expanded business development efforts in new markets.

Noninterest Expense

  • Total noninterest expense in the fourth quarter was $231.2 million; excluding litigation settlement expense of $100.8 million, noninterest expense was $130.5 million, up $3.8 million, or 3.0%, from the prior quarter. Please refer to the Consolidated Financial Information, Note 7 – Non-GAAP Financial Measures.

Salaries and employee benefits expense in the fourth quarter totaled $73.5 million, up $762 thousand, or 1.0%, from the prior quarter principally due to one-time severance expense related to the FIT2GROW initiative. Total services and fees increased $964 thousand during the fourth quarter principally due to continued investments in technology and higher professional fees. Net occupancy – premises expense increased $503 thousand during the fourth quarter principally due to early lease termination expenses related to closed branch offices. Other expense increased $1.4 million during the fourth quarter reflecting in part write-downs associated with branch offices that were closed during the quarter.

FIT2GROW

In 2022 we announced FIT2GROW, a comprehensive program of Focus, Innovation and Transformation designed to enhance Trustmark’s ability to grow and serve customers. Earlier this month, we refocused our community bank efforts on commercial, small business, and consumer lines of business to provide additional expertise for our customers and enhance profitable revenue growth. Additionally, our Atlanta loan production office is now fully functioning and is focused on Commercial Real Estate, Residential Real Estate, Corporate Banking, and Equipment Finance,” said Dewey.

We continued efforts to optimize our branch network, reflecting changing customer preferences and the continued migration to mobile and digital channels. In 2022, we consolidated 12 branch offices, opened a full-service banking center as well as loan production offices in Birmingham, AL, and Memphis, TN. We also expanded deployment of myTeller interactive teller machine technology. These efforts are designed to efficiently serve and expand customer relationships,” said Dewey.

Innovation is also a key component of FIT2GROW. In 2022, we successfully completed our core loan system conversion and selected the replacement for our core deposit system. Collectively, these investments are designed to provide best-in-class service to customers as well as enhance our productivity and efficiency. Looking forward, we will continue to pursue opportunities to redesign workflows and restructure the organization to further leverage investments in technology that will broaden our reach, enhance the customer experience, and improve efficiency. We remain focused on providing the financial services and advice our customers have come to expect while building long-term value for our shareholders,” said Dewey.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, January 25, 2023, 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, February 8, 2023, in archived format at the same web address or by calling (877) 344-7529, passcode 3725903.

Trustmark is a financial services company providing banking and financial solutions through offices in Alabama, Florida, Georgia, Mississippi, Tennessee and Texas. Visit trustmark.com for more information.

Forward-Looking Statements

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

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

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

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2022
($ in thousands)
(unaudited)
 
 
Linked Quarter Year over Year
QUARTERLY AVERAGE BALANCES 12/31/2022 9/30/2022 12/31/2021 $ Change % Change $ Change % Change
Securities AFS-taxable (1)

$

2,572,675

 

$

2,824,254

 

$

3,156,740

 

$

(251,579

)

-8.9

%

$

(584,065

)

-18.5

%

Securities AFS-nontaxable

 

4,828

 

 

4,928

 

 

5,143

 

 

(100

)

-2.0

%

 

(315

)

-6.1

%

Securities HTM-taxable (1)

 

1,268,952

 

 

1,140,685

 

 

364,038

 

 

128,267

 

11.2

%

 

904,914

 

n/m

 

Securities HTM-nontaxable

 

4,514

 

 

5,057

 

 

7,618

 

 

(543

)

-10.7

%

 

(3,104

)

-40.7

%

Total securities

 

3,850,969

 

 

3,974,924

 

 

3,533,539

 

 

(123,955

)

-3.1

%

 

317,430

 

9.0

%

Paycheck protection program loans (PPP)

 

3,235

 

 

9,821

 

 

42,749

 

 

(6,586

)

-67.1

%

 

(39,514

)

-92.4

%

Loans (includes loans held for sale)

 

12,006,661

 

 

11,459,551

 

 

10,487,679

 

 

547,110

 

4.8

%

 

1,518,982

 

14.5

%

Fed funds sold and reverse repurchases

 

6,566

 

 

226

 

 

58

 

 

6,340

 

n/m

 

 

6,508

 

n/m

 

Other earning assets

 

375,190

 

 

325,620

 

 

1,839,498

 

 

49,570

 

15.2

%

 

(1,464,308

)

-79.6

%

Total earning assets

 

16,242,621

 

 

15,770,142

 

 

15,903,523

 

 

472,479

 

3.0

%

 

339,098

 

2.1

%

Allowance for credit losses (ACL), loans held
for investment (LHFI)
(114,948 ) (102,951 ) (104,148 ) (11,997 ) -11.7 % (10,800 ) -10.4 %
Other assets

 

1,630,085

 

 

1,576,653

 

 

1,570,501

 

 

53,432

 

3.4

%

 

59,584

 

3.8

%

Total assets

$

17,757,758

 

$

17,243,844

 

$

17,369,876

 

$

513,914

 

3.0

%

$

387,882

 

2.2

%

 
Interest-bearing demand deposits

$

4,719,303

 

$

4,613,733

 

$

4,353,599

 

$

105,570

 

2.3

%

$

365,704

 

8.4

%

Savings deposits

 

4,379,673

 

 

4,514,579

 

 

4,585,624

 

 

(134,906

)

-3.0

%

 

(205,951

)

-4.5

%

Time deposits

 

1,152,905

 

 

1,111,440

 

 

1,220,083

 

 

41,465

 

3.7

%

 

(67,178

)

-5.5

%

Total interest-bearing deposits

 

10,251,881

 

 

10,239,752

 

 

10,159,306

 

 

12,129

 

0.1

%

 

92,575

 

0.9

%

Fed funds purchased and repurchases

 

549,406

 

 

249,809

 

 

201,856

 

 

299,597

 

n/m

 

 

347,550

 

n/m

 

Other borrowings

 

530,993

 

 

88,697

 

 

94,328

 

 

442,296

 

n/m

 

 

436,665

 

n/m

 

Subordinated notes

 

123,226

 

 

123,171

 

 

123,007

 

 

55

 

0.0

%

 

219

 

0.2

%

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

 

0.0

%

 

 

0.0

%

Total interest-bearing liabilities

 

11,517,362

 

 

10,763,285

 

 

10,640,353

 

 

754,077

 

7.0

%

 

877,009

 

8.2

%

Noninterest-bearing deposits

 

4,177,113

 

 

4,444,370

 

 

4,679,951

 

 

(267,257

)

-6.0

%

 

(502,838

)

-10.7

%

Other liabilities

 

569,992

 

 

429,720

 

 

291,449

 

 

140,272

 

32.6

%

 

278,543

 

95.6

%

Total liabilities

 

16,264,467

 

 

15,637,375

 

 

15,611,753

 

 

627,092

 

4.0

%

 

652,714

 

4.2

%

Shareholders' equity

 

1,493,291

 

 

1,606,469

 

 

1,758,123

 

 

(113,178

)

-7.0

%

 

(264,832

)

-15.1

%

Total liabilities and equity

$

17,757,758

 

$

17,243,844

 

$

17,369,876

 

$

513,914

 

3.0

%

$

387,882

 

2.2

%

(1)

During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity.
See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information.
 
n/m - percentage changes greater than +/- 100% are considered not meaningful
 

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2022
($ in thousands)
(unaudited)
 
 
Linked Quarter Year over Year
PERIOD END BALANCES 12/31/2022 9/30/2022 12/31/2021 $ Change % Change $ Change % Change
Cash and due from banks

$

734,787

 

$

479,637

 

$

2,266,829

 

$

255,150

 

53.2

%

$

(1,532,042

)

-67.6

%

Fed funds sold and reverse repurchases

 

4,000

 

 

10,098

 

 

 

 

(6,098

)

-60.4

%

 

4,000

 

n/m

 

Securities available for sale (1)

 

2,024,082

 

 

2,444,486

 

 

3,238,877

 

 

(420,404

)

-17.2

%

 

(1,214,795

)

-37.5

%

Securities held to maturity (1)

 

1,494,514

 

 

1,156,985

 

 

342,537

 

 

337,529

 

29.2

%

 

1,151,977

 

n/m

 

PPP loans

 

 

 

4,798

 

 

33,336

 

 

(4,798

)

-100.0

%

 

(33,336

)

-100.0

%

Loans held for sale (LHFS)

 

135,226

 

 

165,213

 

 

275,706

 

 

(29,987

)

-18.2

%

 

(140,480

)

-51.0

%

Loans held for investment (LHFI)

 

12,204,039

 

 

11,586,064

 

 

10,247,829

 

 

617,975

 

5.3

%

 

1,956,210

 

19.1

%

ACL LHFI

 

(120,214

)

 

(115,050

)

 

(99,457

)

 

(5,164

)

-4.5

%

 

(20,757

)

-20.9

%

Net LHFI

 

12,083,825

 

 

11,471,014

 

 

10,148,372

 

 

612,811

 

5.3

%

 

1,935,453

 

19.1

%

Premises and equipment, net

 

212,365

 

 

210,761

 

 

205,644

 

 

1,604

 

0.8

%

 

6,721

 

3.3

%

Mortgage servicing rights

 

129,677

 

 

132,615

 

 

87,687

 

 

(2,938

)

-2.2

%

 

41,990

 

47.9

%

Goodwill

 

384,237

 

 

384,237

 

 

384,237

 

 

 

0.0

%

 

 

0.0

%

Identifiable intangible assets

 

3,640

 

 

3,952

 

 

5,074

 

 

(312

)

-7.9

%

 

(1,434

)

-28.3

%

Other real estate

 

1,986

 

 

2,971

 

 

4,557

 

 

(985

)

-33.2

%

 

(2,571

)

-56.4

%

Operating lease right-of-use assets

 

36,301

 

 

37,282

 

 

34,603

 

 

(981

)

-2.6

%

 

1,698

 

4.9

%

Other assets

 

770,838

 

 

686,585

 

 

568,177

 

 

84,253

 

12.3

%

 

202,661

 

35.7

%

Total assets

$

18,015,478

 

$

17,190,634

 

$

17,595,636

 

$

824,844

 

4.8

%

$

419,842

 

2.4

%

 
Deposits:
Noninterest-bearing

$

4,093,771

 

$

4,358,805

 

$

4,771,065

 

$

(265,034

)

-6.1

%

$

(677,294

)

-14.2

%

Interest-bearing

 

10,343,877

 

 

10,066,375

 

 

10,316,095

 

 

277,502

 

2.8

%

 

27,782

 

0.3

%

Total deposits

 

14,437,648

 

 

14,425,180

 

 

15,087,160

 

 

12,468

 

0.1

%

 

(649,512

)

-4.3

%

Fed funds purchased and repurchases

 

449,331

 

 

544,068

 

 

238,577

 

 

(94,737

)

-17.4

%

 

210,754

 

88.3

%

Other borrowings

 

1,050,938

 

 

223,172

 

 

91,025

 

 

827,766

 

n/m

 

 

959,913

 

n/m

 

Subordinated notes

 

123,262

 

 

123,207

 

 

123,042

 

 

55

 

0.0

%

 

220

 

0.2

%

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

 

0.0

%

 

 

0.0

%

ACL on off-balance sheet credit exposures

 

36,838

 

 

31,623

 

 

35,623

 

 

5,215

 

16.5

%

 

1,215

 

3.4

%

Operating lease liabilities

 

38,932

 

 

39,797

 

 

36,468

 

 

(865

)

-2.2

%

 

2,464

 

6.8

%

Other liabilities

 

324,405

 

 

232,786

 

 

180,574

 

 

91,619

 

39.4

%

 

143,831

 

79.7

%

Total liabilities

 

16,523,210

 

 

15,681,689

 

 

15,854,325

 

 

841,521

 

5.4

%

 

668,885

 

4.2

%

Common stock

 

12,705

 

 

12,700

 

 

12,845

 

 

5

 

0.0

%

 

(140

)

-1.1

%

Capital surplus

 

154,645

 

 

154,150

 

 

175,913

 

 

495

 

0.3

%

 

(21,268

)

-12.1

%

Retained earnings

 

1,600,321

 

 

1,648,507

 

 

1,585,113

 

 

(48,186

)

-2.9

%

 

15,208

 

1.0

%

Accumulated other comprehensive
income (loss), net of tax

 

(275,403

)

 

 

(306,412

)

 

 

(32,560

)

 

 

31,009

 

 

10.1

%

 

 

(242,843

)

 

n/m

 

Total shareholders' equity

 

1,492,268

 

 

1,508,945

 

 

1,741,311

 

 

(16,677

)

-1.1

%

 

(249,043

)

-14.3

%

Total liabilities and equity

$

18,015,478

 

$

17,190,634

 

$

17,595,636

 

$

824,844

 

4.8

%

$

419,842

 

2.4

%

(1)

During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity.
See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information.
 
n/m - percentage changes greater than +/- 100% are considered not meaningful
 

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2022
($ in thousands except per share data)
(unaudited)
 
Quarter Ended Linked Quarter Year over Year
INCOME STATEMENTS 12/31/2022 9/30/2022 12/31/2021 $ Change % Change $ Change % Change
Interest and fees on LHFS & LHFI-FTE

$

159,566

 

$

129,395

 

$

94,137

 

$

30,171

 

23.3

%

$

65,429

 

69.5

%

Interest and fees on PPP loans

 

101

 

 

186

 

 

397

 

 

(85

)

-45.7

%

 

(296

)

-74.6

%

Interest on securities-taxable

 

16,577

 

 

16,222

 

 

10,796

 

 

355

 

2.2

%

 

5,781

 

53.5

%

Interest on securities-tax exempt-FTE

 

93

 

 

100

 

 

123

 

 

(7

)

-7.0

%

 

(30

)

-24.4

%

Interest on fed funds sold and reverse
repurchases

 

71

 

 

2

 

 

 

 

69

 

n/m

 

 

71

 

n/m

 

Other interest income

 

3,556

 

 

1,493

 

 

826

 

 

2,063

 

n/m

 

 

2,730

 

n/m

 

Total interest income-FTE

 

179,964

 

 

147,398

 

 

106,279

 

 

32,566

 

22.1

%

 

73,685

 

69.3

%

Interest on deposits

 

18,438

 

 

5,097

 

 

3,401

 

 

13,341

 

n/m

 

 

15,037

 

n/m

 

Interest on fed funds purchased and repurchases

 

4,762

 

 

1,225

 

 

66

 

 

3,537

 

n/m

 

 

4,696

 

n/m

 

Other interest expense

 

6,730

 

 

1,996

 

 

1,580

 

 

4,734

 

n/m

 

 

5,150

 

n/m

 

Total interest expense

 

29,930

 

 

8,318

 

 

5,047

 

 

21,612

 

n/m

 

 

24,883

 

n/m

 

Net interest income-FTE

 

150,034

 

 

139,080

 

 

101,232

 

 

10,954

 

7.9

%

 

48,802

 

48.2

%

Provision for credit losses, LHFI

 

6,902

 

 

12,919

 

 

(4,515

)

 

(6,017

)

-46.6

%

 

11,417

 

n/m

 

Provision for credit losses, off-balance sheet
credit exposures

 

5,215

 

 

(1,326

)

 

2,939

 

 

6,541

 

n/m

 

 

2,276

 

77.4

%

Net interest income after provision-FTE

 

137,917

 

 

127,487

 

 

102,808

 

 

10,430

 

8.2

%

 

35,109

 

34.2

%

Service charges on deposit accounts

 

11,162

 

 

11,318

 

 

9,366

 

 

(156

)

-1.4

%

 

1,796

 

19.2

%

Bank card and other fees

 

8,191

 

 

9,305

 

 

8,340

 

 

(1,114

)

-12.0

%

 

(149

)

-1.8

%

Mortgage banking, net

 

3,408

 

 

6,876

 

 

11,609

 

 

(3,468

)

-50.4

%

 

(8,201

)

-70.6

%

Insurance commissions

 

12,019

 

 

13,911

 

 

11,716

 

 

(1,892

)

-13.6

%

 

303

 

2.6

%

Wealth management

 

8,079

 

 

8,778

 

 

8,757

 

 

(699

)

-8.0

%

 

(678

)

-7.7

%

Other, net

 

2,311

 

 

2,418

 

 

979

 

 

(107

)

-4.4

%

 

1,332

 

n/m

 

Total noninterest income

 

45,170

 

 

52,606

 

 

50,767

 

 

(7,436

)

-14.1

%

 

(5,597

)

-11.0

%

Salaries and employee benefits

 

73,469

 

 

72,707

 

 

68,258

 

 

762

 

1.0

%

 

5,211

 

7.6

%

Services and fees

 

26,759

 

 

25,795

 

 

22,904

 

 

964

 

3.7

%

 

3,855

 

16.8

%

Net occupancy-premises

 

7,898

 

 

7,395

 

 

6,816

 

 

503

 

6.8

%

 

1,082

 

15.9

%

Equipment expense

 

6,268

 

 

6,072

 

 

6,585

 

 

196

 

3.2

%

 

(317

)

-4.8

%

Litigation settlement expense (1)

 

100,750

 

 

 

 

 

 

100,750

 

n/m

 

 

100,750

 

n/m

 

Other expense

 

16,085

 

 

14,729

 

 

14,906

 

 

1,356

 

9.2

%

 

1,179

 

7.9

%

Total noninterest expense

 

231,229

 

 

126,698

 

 

119,469

 

 

104,531

 

82.5

%

 

111,760

 

93.5

%

Income (loss) before income taxes and tax eq adj

 

(48,142

)

 

53,395

 

 

34,106

 

 

(101,537

)

n/m

 

 

(82,248

)

n/m

 

Tax equivalent adjustment

 

3,451

 

 

2,975

 

 

2,906

 

 

476

 

16.0

%

 

545

 

18.8

%

Income (loss) before income taxes

 

(51,593

)

 

50,420

 

 

31,200

 

 

(102,013

)

n/m

 

 

(82,793

)

n/m

 

Income taxes

 

(17,530

)

 

7,965

 

 

4,978

 

 

(25,495

)

n/m

 

 

(22,508

)

n/m

 

Net income (loss)

$

(34,063

)

$

42,455

 

$

26,222

 

$

(76,518

)

n/m

 

$

(60,285

)

n/m

 

 
Per share data
Earnings (loss) per share - basic

$

(0.56

)

$

0.69

 

$

0.42

 

$

(1.25

)

n/m

 

$

(0.98

)

n/m

 

 
Earnings (loss) per share - diluted

$

(0.56

)

$

0.69

 

$

0.42

 

$

(1.25

)

n/m

 

$

(0.98

)

n/m

 

 
Dividends per share

$

0.23

 

$

0.23

 

$

0.23

 

 

 

0.0

%

 

 

0.0

%

 
Weighted average shares outstanding
Basic

 

60,969,400

 

 

61,114,804

 

 

62,037,884

 

 
Diluted

 

61,173,249

 

 

61,318,715

 

 

62,264,983

 

 
Period end shares outstanding

 

60,977,686

 

 

60,953,864

 

 

61,648,679

 

(1)

See Note 1 - Litigation Settlement in the Notes to Consolidated Financials for additional information.
 
n/m - percentage changes greater than +/- 100% are considered not meaningful
 
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2022
($ in thousands)
(unaudited)
 
 
Quarter Ended Linked Quarter Year over Year
NONPERFORMING ASSETS (1) 12/31/2022 9/30/2022 12/31/2021 $ Change % Change $ Change % Change
Nonaccrual LHFI
Alabama

$

12,300

 

$

12,710

 

$

8,182

 

$

(410

)

-3.2

%

$

4,118

 

50.3

%

Florida

 

227

 

 

227

 

 

313

 

 

 

0.0

%

 

(86

)

-27.5

%

Mississippi (2)

 

24,683

 

 

23,517

 

 

21,636

 

 

1,166

 

5.0

%

 

3,047

 

14.1

%

Tennessee (3)

 

5,566

 

 

5,120

 

 

10,501

 

 

446

 

8.7

%

 

(4,935

)

-47.0

%

Texas

 

23,196

 

 

26,353

 

 

22,066

 

 

(3,157

)

-12.0

%

 

1,130

 

5.1

%

Total nonaccrual LHFI

 

65,972

 

 

67,927

 

 

62,698

 

 

(1,955

)

-2.9

%

 

3,274

 

5.2

%

Other real estate
Alabama

 

194

 

 

217

 

 

 

 

(23

)

-10.6

%

 

194

 

n/m

 

Mississippi (2)

 

1,769

 

 

2,754

 

 

4,557

 

 

(985

)

-35.8

%

 

(2,788

)

-61.2

%

Tennessee (3)

 

23

 

 

 

 

 

 

23

 

n/m

 

 

23

 

n/m

 

Total other real estate

 

1,986

 

 

2,971

 

 

4,557

 

 

(985

)

-33.2

%

 

(2,571

)

-56.4

%

Total nonperforming assets

$

67,958

 

$

70,898

 

$

67,255

 

$

(2,940

)

-4.1

%

$

703

 

1.0

%

 
LOANS PAST DUE OVER 90 DAYS (1)
LHFI

$

3,929

 

$

1,842

 

$

2,114

 

$

2,087

 

n/m

 

$

1,815

 

85.9

%

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

$

49,320

 

$

48,313

 

$

69,894

 

$

1,007

 

2.1

%

$

(20,574

)

-29.4

%

 
Quarter Ended Linked Quarter Year over Year
ACL LHFI (1) 12/31/2022 9/30/2022 12/31/2021 $ Change % Change $ Change % Change
Beginning Balance

$

115,050

 

$

103,140

 

$

104,073

 

$

11,910

 

11.5

%

$

10,977

 

10.5

%

Provision for credit losses, LHFI

 

6,902

 

 

12,919

 

 

(4,515

)

 

(6,017

)

-46.6

%

 

11,417

 

n/m

 

Charge-offs

 

(3,893

)

 

(2,920

)

 

(2,616

)

 

(973

)

-33.3

%

 

(1,277

)

-48.8

%

Recoveries

 

2,155

 

 

1,911

 

 

2,515

 

 

244

 

12.8

%

 

(360

)

-14.3

%

Net (charge-offs) recoveries

 

(1,738

)

 

(1,009

)

 

(101

)

 

(729

)

72.2

%

 

(1,637

)

n/m

 

Ending Balance

$

120,214

 

$

115,050

 

$

99,457

 

$

5,164

 

4.5

%

$

20,757

 

20.9

%

 
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama

$

98

 

$

93

 

$

747

 

$

5

 

5.4

%

$

(649

)

-86.9

%

Florida

 

(60

)

 

(23

)

 

(32

)

 

(37

)

n/m

 

 

(28

)

-87.5

%

Mississippi (2)

 

(1,657

)

 

(702

)

 

(683

)

 

(955

)

n/m

 

 

(974

)

n/m

 

Tennessee (3)

 

(195

)

 

(202

)

 

(130

)

 

7

 

3.5

%

 

(65

)

-50.0

%

Texas

 

76

 

 

(175

)

 

(3

)

 

251

 

n/m

 

 

79

 

n/m

 

Total net (charge-offs) recoveries

$

(1,738

)

$

(1,009

)

$

(101

)

$

(729

)

-72.2

%

$

(1,637

)

n/m

 

(1)

Excludes PPP loans.

(2)

Mississippi includes Central and Southern Mississippi Regions.

(3)

Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
 
n/m - percentage changes greater than +/- 100% are considered not meaningful
 
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2022
($ in thousands)
(unaudited)
 
 
Quarter Ended Year Ended
AVERAGE BALANCES 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 12/31/2022 12/31/2021
Securities AFS-taxable (1)

$

2,572,675

 

$

2,824,254

 

$

3,094,364

 

$

3,245,502

 

$

3,156,740

 

$

2,932,054

 

$

2,573,533

 

Securities AFS-nontaxable

 

4,828

 

 

4,928

 

 

5,110

 

 

5,127

 

 

5,143

 

 

4,997

 

 

5,166

 

Securities HTM-taxable (1)

 

1,268,952

 

 

1,140,685

 

 

811,599

 

 

410,851

 

 

364,038

 

 

911,010

 

 

423,763

 

Securities HTM-nontaxable

 

4,514

 

 

5,057

 

 

5,630

 

 

7,327

 

 

7,618

 

 

5,623

 

 

12,765

 

Total securities

 

3,850,969

 

 

3,974,924

 

 

3,916,703

 

 

3,668,807

 

 

3,533,539

 

 

3,853,684

 

 

3,015,227

 

PPP loans

 

3,235

 

 

9,821

 

 

17,746

 

 

29,009

 

 

42,749

 

 

14,868

 

 

350,668

 

Loans (includes loans held for sale)

 

12,006,661

 

 

11,459,551

 

 

10,910,178

 

 

10,550,712

 

 

10,487,679

 

 

11,236,388

 

 

10,377,941

 

Fed funds sold and reverse repurchases

 

6,566

 

 

226

 

 

110

 

 

56

 

 

58

 

 

1,753

 

 

79

 

Other earning assets

 

375,190

 

 

325,620

 

 

1,139,312

 

 

1,811,713

 

 

1,839,498

 

 

907,414

 

 

1,825,134

 

Total earning assets

 

16,242,621

 

 

15,770,142

 

 

15,984,049

 

 

16,060,297

 

 

15,903,523

 

 

16,014,107

 

 

15,569,049

 

ACL LHFI

 

(114,948

)

 

(102,951

)

 

(99,106

)

 

(99,390

)

 

(104,148

)

 

(104,138

)

 

(110,170

)

Other assets

 

1,630,085

 

 

1,576,653

 

 

1,513,127

 

 

1,550,848

 

 

1,570,501

 

 

1,567,921

 

 

1,599,114

 

Total assets

$

17,757,758

 

$

17,243,844

 

$

17,398,070

 

$

17,511,755

 

$

17,369,876

 

$

17,477,890

 

$

17,057,993

 

 
Interest-bearing demand deposits

$

4,719,303

 

$

4,613,733

 

$

4,578,235

 

$

4,429,056

 

$

4,353,599

 

$

4,585,955

 

$

4,096,746

 

Savings deposits

 

4,379,673

 

 

4,514,579

 

 

4,638,849

 

 

4,791,104

 

 

4,585,624

 

 

4,579,742

 

 

4,622,167

 

Time deposits

 

1,152,905

 

 

1,111,440

 

 

1,159,065

 

 

1,193,435

 

 

1,220,083

 

 

1,153,983

 

 

1,287,663

 

Total interest-bearing deposits

 

10,251,881

 

 

10,239,752

 

 

10,376,149

 

 

10,413,595

 

 

10,159,306

 

 

10,319,680

 

 

10,006,576

 

Fed funds purchased and repurchases

 

549,406

 

 

249,809

 

 

118,753

 

 

212,006

 

 

201,856

 

 

283,328

 

 

172,782

 

Other borrowings

 

530,993

 

 

88,697

 

 

80,283

 

 

91,090

 

 

94,328

 

 

198,672

 

 

125,554

 

Subordinated notes

 

123,226

 

 

123,171

 

 

123,116

 

 

123,061

 

 

123,007

 

 

123,144

 

 

122,933

 

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

Total interest-bearing liabilities

 

11,517,362

 

 

10,763,285

 

 

10,760,157

 

 

10,901,608

 

 

10,640,353

 

 

10,986,680

 

 

10,489,701

 

Noninterest-bearing deposits

 

4,177,113

 

 

4,444,370

 

 

4,590,338

 

 

4,601,108

 

 

4,679,951

 

 

4,452,046

 

 

4,531,642

 

Other liabilities

 

569,992

 

 

429,720

 

 

439,266

 

 

295,287

 

 

291,449

 

 

434,310

 

 

266,499

 

Total liabilities

 

16,264,467

 

 

15,637,375

 

 

15,789,761

 

 

15,798,003

 

 

15,611,753

 

 

15,873,036

 

 

15,287,842

 

Shareholders' equity

 

1,493,291

 

 

1,606,469

 

 

1,608,309

 

 

1,713,752

 

 

1,758,123

 

 

1,604,854

 

 

1,770,151

 

Total liabilities and equity

$

17,757,758

 

$

17,243,844

 

$

17,398,070

 

$

17,511,755

 

$

17,369,876

 

$

17,477,890

 

$

17,057,993

 

(1)

During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity.
See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information.
 
 
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2022
($ in thousands)
(unaudited)
 
 
PERIOD END BALANCES 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021
Cash and due from banks

$

734,787

 

$

479,637

 

$

742,461

 

$

1,917,564

 

$

2,266,829

 

Fed funds sold and reverse repurchases

 

4,000

 

 

10,098

 

 

 

 

 

 

 

Securities available for sale (1)

 

2,024,082

 

 

2,444,486

 

 

2,644,364

 

 

3,018,246

 

 

3,238,877

 

Securities held to maturity (1)

 

1,494,514

 

 

1,156,985

 

 

1,137,754

 

 

607,598

 

 

342,537

 

PPP loans

 

 

 

4,798

 

 

12,549

 

 

18,579

 

 

33,336

 

LHFS

 

135,226

 

 

165,213

 

 

190,186

 

 

222,538

 

 

275,706

 

LHFI

 

12,204,039

 

 

11,586,064

 

 

10,944,840

 

 

10,397,129

 

 

10,247,829

 

ACL LHFI

 

(120,214

)

 

(115,050

)

 

(103,140

)

 

(98,734

)

 

(99,457

)

Net LHFI

 

12,083,825

 

 

11,471,014

 

 

10,841,700

 

 

10,298,395

 

 

10,148,372

 

Premises and equipment, net

 

212,365

 

 

210,761

 

 

207,914

 

 

207,301

 

 

205,644

 

Mortgage servicing rights

 

129,677

 

 

132,615

 

 

121,014

 

 

111,050

 

 

87,687

 

Goodwill

 

384,237

 

 

384,237

 

 

384,237

 

 

384,237

 

 

384,237

 

Identifiable intangible assets

 

3,640

 

 

3,952

 

 

4,264

 

 

4,591

 

 

5,074

 

Other real estate

 

1,986

 

 

2,971

 

 

3,034

 

 

3,187

 

 

4,557

 

Operating lease right-of-use assets

 

36,301

 

 

37,282

 

 

34,684

 

 

34,048

 

 

34,603

 

Other assets

 

770,838

 

 

686,585

 

 

627,349

 

 

614,217

 

 

568,177

 

Total assets

$

18,015,478

 

$

17,190,634

 

$

16,951,510

 

$

17,441,551

 

$

17,595,636

 

 
Deposits:
Noninterest-bearing

$

4,093,771

 

$

4,358,805

 

$

4,509,472

 

$

4,739,102

 

$

4,771,065

 

Interest-bearing

 

10,343,877

 

 

10,066,375

 

 

10,260,696

 

 

10,374,190

 

 

10,316,095

 

Total deposits

 

14,437,648

 

 

14,425,180

 

 

14,770,168

 

 

15,113,292

 

 

15,087,160

 

Fed funds purchased and repurchases

 

449,331

 

 

544,068

 

 

70,157

 

 

170,499

 

 

238,577

 

Other borrowings

 

1,050,938

 

 

223,172

 

 

72,553

 

 

84,644

 

 

91,025

 

Subordinated notes

 

123,262

 

 

123,207

 

 

123,152

 

 

123,097

 

 

123,042

 

Junior subordinated debt securities

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

 

61,856

 

ACL on off-balance sheet credit exposures

 

36,838

 

 

31,623

 

 

32,949

 

 

34,517

 

 

35,623

 

Operating lease liabilities

 

38,932

 

 

39,797

 

 

37,108

 

 

35,912

 

 

36,468

 

Other liabilities

 

324,405

 

 

232,786

 

 

196,871

 

 

186,352

 

 

180,574

 

Total liabilities

 

16,523,210

 

 

15,681,689

 

 

15,364,814

 

 

15,810,169

 

 

15,854,325

 

Common stock

 

12,705

 

 

12,700

 

 

12,752

 

 

12,806

 

 

12,845

 

Capital surplus

 

154,645

 

 

154,150

 

 

160,876

 

 

167,094

 

 

175,913

 

Retained earnings

 

1,600,321

 

 

1,648,507

 

 

1,620,210

 

 

1,600,138

 

 

1,585,113

 

Accumulated other comprehensive income (loss),
net of tax

 

(275,403

)

 

(306,412

)

 

(207,142

)

 

(148,656

)

 

(32,560

)

Total shareholders' equity

 

1,492,268

 

 

1,508,945

 

 

1,586,696

 

 

1,631,382

 

 

1,741,311

 

Total liabilities and equity

$

18,015,478

 

$

17,190,634

 

$

16,951,510

 

$

17,441,551

 

$

17,595,636

 

(1)

During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity.
See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information.
 
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION December 31, 2022
($ in thousands except per share data)
(unaudited)
 
Quarter Ended Year Ended
INCOME STATEMENTS 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 12/31/2022 12/31/2021
Interest and fees on LHFS & LHFI-FTE

$

159,566

 

$

129,395

 

$

103,033

 

$

93,252

 

$

94,137

 

$

485,246

$

375,330

 

Interest and fees on PPP loans

 

101

 

 

186

 

 

184

 

 

168

 

 

397

 

 

639

 

36,726

 

Interest on securities-taxable

 

16,577

 

 

16,222

 

 

14,561

 

 

12,357

 

 

10,796

 

 

59,717

 

38,698

 

Interest on securities-tax exempt-FTE

 

93

 

 

100

 

 

107

 

 

122

 

 

123

 

 

422

 

694

 

Interest on fed funds sold and reverse repurchases

 

71

 

 

2

 

 

1

 

 

 

 

 

 

74

 

 

Other interest income

 

3,556

 

 

1,493

 

 

2,214

 

 

817

 

 

826

 

 

8,080

 

2,767

 

Total interest income-FTE

 

179,964

 

 

147,398

 

 

120,100

 

 

106,716

 

 

106,279

 

 

554,178

 

454,215

 

Interest on deposits

 

18,438

 

 

5,097

 

 

2,774

 

 

2,760

 

 

3,401

 

 

29,069

 

16,945

 

Interest on fed funds purchased and repurchases

 

4,762

 

 

1,225

 

 

70

 

 

70

 

 

66

 

 

6,127

 

232

 

Other interest expense

 

6,730

 

 

1,996

 

 

1,664

 

 

1,539

 

 

1,580

 

 

11,929

 

6,983

 

Total interest expense

 

29,930

 

 

8,318

 

 

4,508

 

 

4,369

 

 

5,047

 

 

47,125

 

24,160

 

Net interest income-FTE

 

150,034

 

 

139,080

 

 

115,592

 

 

102,347

 

 

101,232

 

 

507,053

 

430,055

 

Provision for credit losses, LHFI

 

6,902

 

 

12,919

 

 

2,716

 

 

(860

)

 

(4,515

)

 

21,677

 

(21,499

)

Provision for credit losses, off-balance sheet
credit exposures

 

5,215

 

 

(1,326

)

 

(1,568

)

 

(1,106

)

 

2,939

 

 

1,215

 

(2,949

)

Net interest income after provision-FTE

 

137,917

 

 

127,487

 

 

114,444

 

 

104,313

 

 

102,808

 

 

484,161

 

454,503

 

Service charges on deposit accounts

 

11,162

 

 

11,318

 

 

10,226

 

 

9,451

 

 

9,366

 

 

42,157

 

33,246

 

Bank card and other fees

 

8,191

 

 

9,305

 

 

10,167

 

 

8,442

 

 

8,340

 

 

36,105

 

34,662

 

Mortgage banking, net

 

3,408

 

 

6,876

 

 

8,149

 

 

9,873

 

 

11,609

 

 

28,306

 

63,750

 

Insurance commissions

 

12,019

 

 

13,911

 

 

13,702

 

 

14,089

 

 

11,716

 

 

53,721

 

48,511

 

Wealth management

 

8,079

 

 

8,778

 

 

9,102

 

 

9,054

 

 

8,757

 

 

35,013

 

35,190

 

Other, net

 

2,311

 

 

2,418

 

 

1,907

 

 

3,206

 

 

979

 

 

9,842

 

6,551

 

Total noninterest income

 

45,170

 

 

52,606

 

 

53,253

 

 

54,115

 

 

50,767

 

 

205,144

 

221,910

 

Salaries and employee benefits

 

73,469

 

 

72,707

 

 

71,679

 

 

69,585

 

 

68,258

 

 

287,440

 

284,158

 

Services and fees

 

26,759

 

 

25,795

 

 

24,538

 

 

24,453

 

 

22,904

 

 

101,545

 

89,463

 

Net occupancy-premises

 

7,898

 

 

7,395

 

 

6,892

 

 

7,079

 

 

6,816

 

 

29,264

 

27,043

 

Equipment expense

 

6,268

 

 

6,072

 

 

6,047

 

 

6,061

 

 

6,585

 

 

24,448

 

24,337

 

Litigation settlement expense (1)

 

100,750

 

 

 

 

 

 

 

 

 

 

100,750

 

 

Other expense

 

16,085

 

 

14,729

 

 

14,611

 

 

14,341

 

 

14,906

 

 

59,766

 

64,295

 

Total noninterest expense

 

231,229

 

 

126,698

 

 

123,767

 

 

121,519

 

 

119,469

 

 

603,213

 

489,296

 

Income (loss) before income taxes and tax eq adj

 

(48,142

)

 

53,395

 

 

43,930

 

 

36,909

 

 

34,106

 

 

86,092

 

187,117

 

Tax equivalent adjustment

 

3,451

 

 

2,975

 

 

2,916

 

 

3,003

 

 

2,906

 

 

12,345

 

11,704

 

Income (loss) before income taxes

 

(51,593

)

 

50,420

 

 

41,014

 

 

33,906

 

 

31,200

 

 

73,747

 

175,413

 

Income taxes

 

(17,530

)

 

7,965

 

 

6,730

 

 

4,695

 

 

4,978

 

 

1,860

 

28,048

 

Net income (loss)

$

(34,063

)

$

42,455

 

$

34,284

 

$

29,211

 

$

26,222

 

$

71,887

$

147,365

 

 
Per share data
Earnings (loss) per share - basic

$

(0.56

)

$

0.69

 

$

0.56

 

$

0.47

 

$

0.42

 

$

1.17

$

2.35

 

 
Earnings (loss) per share - diluted

$

(0.56

)

$

0.69

 

$

0.56

 

$

0.47

 

$

0.42

 

$

1.17

$

2.34

 

 
Dividends per share

$

0.23

 

$

0.23

 

$

0.23

 

$

0.23

 

$

0.23

 

$

0.92

$

0.92

 

 
Weighted average shares outstanding
Basic

 

60,969,400

 

 

61,114,804

 

 

61,378,226

 

 

61,514,395

 

 

62,037,884

 

 

61,242,358

 

62,788,055

 

 
Diluted

 

61,173,249

 

 

61,318,715

 

 

61,546,285

 

 

61,709,797

 

 

62,264,983

 

 

61,431,726

 

62,973,464

 

 
Period end shares outstanding

 

60,977,686

 

 

60,953,864

 

 

61,201,123

 

 

61,463,392

 

 

61,648,679

 

 

60,977,686

 

61,648,679

(1)

See Note 1 - Litigation Settlement in the Notes to Consolidated Financials for additional information.
 
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2022
($ in thousands)
(unaudited)
 
 
Quarter Ended
NONPERFORMING ASSETS (1) 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021
Nonaccrual LHFI
Alabama

$

12,300

 

$

12,710

 

$

2,698

 

$

7,506

 

$

8,182

 

Florida

 

227

 

 

227

 

 

233

 

 

310

 

 

313

 

Mississippi (2)

 

24,683

 

 

23,517

 

 

23,039

 

 

21,318

 

 

21,636

 

Tennessee (3)

 

5,566

 

 

5,120

 

 

9,500

 

 

9,266

 

 

10,501

 

Texas

 

23,196

 

 

26,353

 

 

26,582

 

 

25,999

 

 

22,066

 

Total nonaccrual LHFI

 

65,972

 

 

67,927

 

 

62,052

 

 

64,399

 

 

62,698

 

Other real estate
Alabama

 

194

 

 

217

 

 

84

 

 

 

 

 

Mississippi (2)

 

1,769

 

 

2,754

 

 

2,950

 

 

3,187

 

 

4,557

 

Tennessee (3)

 

23

 

 

 

 

 

 

 

 

 

Total other real estate

 

1,986

 

 

2,971

 

 

3,034

 

 

3,187

 

 

4,557

 

Total nonperforming assets

$

67,958

 

$

70,898

 

$

65,086

 

$

67,586

 

$

67,255

 

 
LOANS PAST DUE OVER 90 DAYS (1)
LHFI

$

3,929

 

$

1,842

 

$

1,347

 

$

1,503

 

$

2,114

 

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

$

49,320

 

$

48,313

 

$

51,164

 

$

62,078

 

$

69,894

 

 
 
Quarter Ended Year Ended
ACL LHFI (1) 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 12/31/2022 12/31/2021
Beginning Balance

$

115,050

 

$

103,140

 

$

98,734

 

$

99,457

 

$

104,073

 

$

99,457

 

$

117,306

 

Provision for credit losses, LHFI

 

6,902

 

 

12,919

 

 

2,716

 

 

(860

)

 

(4,515

)

 

21,677

 

 

(21,499

)

Charge-offs

 

(3,893

)

 

(2,920

)

 

(2,277

)

 

(2,242

)

 

(2,616

)

 

(11,332

)

 

(10,275

)

Recoveries

 

2,155

 

 

1,911

 

 

3,967

 

 

2,379

 

 

2,515

 

 

10,412

 

 

13,925

 

Net (charge-offs) recoveries

 

(1,738

)

 

(1,009

)

 

1,690

 

 

137

 

 

(101

)

 

(920

)

 

3,650

 

Ending Balance

$

120,214

 

$

115,050

 

$

103,140

 

$

98,734

 

$

99,457

 

$

120,214

 

$

99,457

 

 
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama

$

98

 

$

93

 

$

1,129

 

$

699

 

$

747

 

$

2,019

 

$

1,299

 

Florida

 

(60

)

 

(23

)

 

761

 

 

(26

)

 

(32

)

 

652

 

 

521

 

Mississippi (2)

 

(1,657

)

 

(702

)

 

(266

)

 

(88

)

 

(683

)

 

(2,713

)

 

(111

)

Tennessee (3)

 

(195

)

 

(202

)

 

31

 

 

(424

)

 

(130

)

 

(790

)

 

940

 

Texas

 

76

 

 

(175

)

 

35

 

 

(24

)

 

(3

)

 

(88

)

 

1,001

 

Total net (charge-offs) recoveries

$

(1,738

)

$

(1,009

)

$

1,690

 

$

137

 

$

(101

)

$

(920

)

$

3,650

 

(1)

Excludes PPP loans.

(2)

Mississippi includes Central and Southern Mississippi Regions.

(3)

Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
 
 
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2022
(unaudited)
 
 
Quarter Ended
FINANCIAL RATIOS AND OTHER DATA 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021
Return on average equity

 

-9.05

%

 

10.48

%

 

8.55

%

 

6.91

%

 

5.92

%

Return on average tangible equity

 

-12.14

%

 

13.90

%

 

11.36

%

 

9.05

%

 

7.72

%

Return on average assets

 

-0.76

%

 

0.98

%

 

0.79

%

 

0.68

%

 

0.60

%

Interest margin - Yield - FTE

 

4.40

%

 

3.71

%

 

3.01

%

 

2.69

%

 

2.65

%

Interest margin - Cost

 

0.73

%

 

0.21

%

 

0.11

%

 

0.11

%

 

0.13

%

Net interest margin - FTE

 

3.66

%

 

3.50

%

 

2.90

%

 

2.58

%

 

2.53

%

Efficiency ratio (1)

 

65.85

%

 

64.96

%

 

71.89

%

 

76.44

%

 

76.52

%

Full-time equivalent employees

 

2,738

 

 

2,717

 

 

2,727

 

 

2,725

 

 

2,692

 

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

 

0.06

%

 

0.03

%

 

-0.06

%

 

-0.01

%

 

0.00

%

Provision for credit losses, LHFI / average loans

 

0.23

%

 

0.45

%

 

0.10

%

 

-0.03

%

 

-0.17

%

Nonaccrual LHFI / (LHFI + LHFS)

 

0.53

%

 

0.58

%

 

0.56

%

 

0.61

%

 

0.60

%

Nonperforming assets / (LHFI + LHFS)

 

0.55

%

 

0.60

%

 

0.58

%

 

0.64

%

 

0.64

%

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

 

0.55

%

 

0.60

%

 

0.58

%

 

0.64

%

 

0.64

%

ACL LHFI / LHFI

 

0.99

%

 

0.99

%

 

0.94

%

 

0.95

%

 

0.97

%

ACL LHFI-commercial / commercial LHFI

 

0.85

%

 

0.93

%

 

0.88

%

 

0.95

%

 

1.00

%

ACL LHFI-consumer / consumer and
home mortgage LHFI

 

1.41

%

 

1.20

%

 

1.14

%

 

0.96

%

 

0.87

%

ACL LHFI / nonaccrual LHFI

 

182.22

%

 

169.37

%

 

166.22

%

 

153.32

%

 

158.63

%

ACL LHFI / nonaccrual LHFI
(excl individually analyzed loans)

 

399.19

%

 

466.03

%

 

475.27

%

 

484.01

%

 

500.85

%

 
CAPITAL RATIOS
Total equity / total assets

 

8.28

%

 

8.78

%

 

9.36

%

 

9.35

%

 

9.90

%

Tangible equity / tangible assets

 

6.27

%

 

6.67

%

 

7.23

%

 

7.29

%

 

7.86

%

Tangible equity / risk-weighted assets

 

7.61

%

 

8.15

%

 

9.16

%

 

9.79

%

 

10.71

%

Tier 1 leverage ratio

 

8.47

%

 

9.01

%

 

8.80

%

 

8.66

%

 

8.73

%

Common equity tier 1 capital ratio

 

9.74

%

 

10.63

%

 

11.01

%

 

11.23

%

 

11.29

%

Tier 1 risk-based capital ratio

 

10.15

%

 

11.06

%

 

11.47

%

 

11.70

%

 

11.77

%

Total risk-based capital ratio

 

11.91

%

 

12.85

%

 

13.26

%

 

13.53

%

 

13.55

%

 
STOCK PERFORMANCE
Market value-Close

$

34.91

 

$

30.63

 

$

29.19

 

$

30.39

 

$

32.46

 

Book value

$

24.47

 

$

24.76

 

$

25.93

 

$

26.54

 

$

28.25

 

Tangible book value

$

18.11

 

$

18.39

 

$

19.58

 

$

20.22

 

$

21.93

 

(1)

See Note 7 – Non-GAAP Financial Measures in the Notes to Consolidated Financials for Trustmark’s efficiency ratio calculation.

(2)

Excludes PPP loans.
 
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2022
($ in thousands)
(unaudited)

Note 1 - Litigation Settlement

As previously announced, on December 31, 2022, Trustmark National Bank (“Trustmark”) agreed to a settlement in principle (the “Settlement”) relating to litigation involving the Stanford Financial Group that includes a lawsuit initially filed in the District Court of Harris County, Texas on August 23, 2009 and also includes other subsequently-filed Stanford-related lawsuits. Trustmark Corporation, the parent company of Trustmark, has provided disclosure relating to these matters in its periodic reports on Forms 10-K and 10-Q throughout the pendency of these actions.

The parties to the Settlement are, on the one hand, (i) Ralph S. Janvey, solely in his capacity as the court-appointed receiver (the “Receiver”) for the Stanford Receivership Estate; (ii) the Official Stanford Investors Committee; (iii) each of the plaintiffs in the Rotstain and Smith Actions (as defined below); and, on the other hand, (iv) Trustmark.

Under the terms of the Settlement, the parties have agreed to settle and dismiss Rotstain et al. v. Trustmark National Bank, et al., CA No. 4-22-CV-00800 (S.D. Tex.) (the “Rotstain Action”), Smith et al. v. Independent Bank, et al., CA No. 4-20-CV-00675 (S.D. Tex.) (the “Smith Action”), and all current or future claims arising from or related to Stanford. In addition, the Settlement provides that the parties will request dismissal of Jackson, et al., v. Cox, et al., CA No. 3:10-CV-0328 (N.D. Tex.) (the “Jackson Action” and, collectively with the Rotstain Action and the Smith Action, the “Actions”) pursuant to the terms of the bar orders described below. If the Settlement, including the bar orders described below, is approved by the Court and is not subject to further appeal, Trustmark will make a one-time cash payment of $100.0 million to the Receiver. Trustmark expects to be relieved of pre-trial deadlines and the February 27, 2023 trial setting in the Rotstain Action pending final Court approval of a Settlement Agreement reflecting the terms of the Settlement and pending entry of the bar orders. The Smith and Jackson Actions are currently stayed.

The Settlement includes the parties’ agreement to seek the Northern District of Texas District Court’s entry of bar orders prohibiting any continued or future claims against Trustmark and its related parties relating to Stanford, whether asserted to date or not. The bar orders therefore would prohibit all litigation relating to Stanford described in Trustmark Corporation’s SEC periodic reports, including not only the Actions and any pending matters but also any actions that may be brought in the future. Final Court approval of these bar orders is a condition of the Settlement.

The Settlement is also subject to the execution and delivery of a definitive Settlement Agreement reflecting the terms of the Settlement, notice to Stanford’s investor claimants and final, non-appealable approval by the U.S. District Court for the Northern District of Texas. The timing of any final decision by the Court is subject to the discretion of the Court and any appeal. While Trustmark believes that the Settlement is consistent with the terms of prior Stanford-related settlements that have been approved by the Court and were not successfully appealed, it is possible that the Court may decide not to approve the Settlement Agreement or that the Fifth Circuit Court of Appeals could decide to accept an appeal thereof.

The Settlement Agreement will provide that Trustmark makes no admission of liability or wrongdoing in connection with any Stanford matter. As has been the case throughout the pendency of the Actions, Trustmark expressly denies any liability or wrongdoing with respect to any matter alleged in regard of the multi-billion-dollar Ponzi scheme operated by Stanford for almost 20 years. Trustmark’s relationship with Stanford consisted of ordinary banking services provided to business deposit customers.

Trustmark and Trustmark Corporation have determined that it is in the best interest of Trustmark, Trustmark Corporation and the shareholders of Trustmark Corporation to enter into the Settlement to eliminate the risk, ongoing expense, uncertainty as to ultimate outcome and imposition on management and the business of Trustmark of further litigation of the Actions and related Stanford claims.

As a result of the entry into the Settlement, Trustmark Corporation recognized $100.0 million of litigation settlement expense, as well as an additional $750 thousand in legal fees, that were included in noninterest expense related to the Stanford litigation during the fourth quarter of 2022. Trustmark Corporation expects that the Settlement will be tax deductible. Trustmark will remain substantially above levels considered to be well-capitalized under all relevant standards.

The foregoing description of the Settlement Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Settlement Agreement, a copy of which will be filed as an exhibit to a future periodic or current report of Trustmark Corporation.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2022
($ in thousands)
(unaudited)

Note 2 - Securities Available for Sale and Held to Maturity

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

 

 

12/31/2022

 

 

9/30/2022

 

 

6/30/2022

 

 

3/31/2022

 

 

12/31/2021

 

SECURITIES AVAILABLE FOR SALE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

$

391,513

 

 

$

416,278

 

 

$

419,696

 

 

$

361,822

 

 

$

344,640

 

U.S. Government agency obligations

 

 

7,766

 

 

 

9,116

 

 

 

11,947

 

 

 

12,623

 

 

 

13,727

 

Obligations of states and political subdivisions

 

 

4,862

 

 

 

4,763

 

 

 

5,179

 

 

 

5,359

 

 

 

5,714

 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage pass-through securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guaranteed by GNMA

 

 

27,097

 

 

 

28,164

 

 

 

32,240

 

 

 

35,117

 

 

 

39,573

 

Issued by FNMA and FHLMC

 

 

1,345,463

 

 

 

1,718,057

 

 

 

1,888,546

 

 

 

2,038,331

 

 

 

2,218,429

 

Other residential mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

115,140

 

 

 

126,138

 

 

 

144,158

 

 

 

164,506

 

 

 

196,690

 

Commercial mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

132,241

 

 

 

141,970

 

 

 

142,598

 

 

 

400,488

 

 

 

420,104

 

Total securities available for sale

 

$

2,024,082

 

 

$

2,444,486

 

 

$

2,644,364

 

 

$

3,018,246

 

 

$

3,238,877

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SECURITIES HELD TO MATURITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

$

28,295

 

 

$

 

 

$

 

 

$

 

 

$

 

Obligations of states and political subdivisions

 

 

4,510

 

 

 

4,512

 

 

 

5,320

 

 

 

7,324

 

 

 

7,328

 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage pass-through securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guaranteed by GNMA

 

 

4,442

 

 

 

4,527

 

 

 

4,624

 

 

 

4,831

 

 

 

5,005

 

Issued by FNMA and FHLMC

 

 

509,311

 

 

 

179,375

 

 

 

185,554

 

 

 

192,373

 

 

 

43,444

 

Other residential mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

188,201

 

 

 

197,923

 

 

 

210,479

 

 

 

224,012

 

 

 

241,934

 

Commercial mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued or guaranteed by FNMA, FHLMC, or GNMA

 

 

759,755

 

 

 

770,648