Record earnings in 2020 reflect value of
diversified financial services businesses Solid balance
sheet, credit quality and capital base provide strength and
stability
Trustmark Corporation (NASDAQ:TRMK) reported net income of $51.2
million in the fourth quarter of 2020, representing diluted
earnings per share of $0.81. Net income in the fourth quarter
produced a return on average tangible equity of 15.47% and a return
on average assets of 1.28%. For the full year, Trustmark’s net
income totaled a record level of $160.0 million, representing
diluted earnings per share of $2.51. Diluted earnings per share in
2020 increased 8.2% when compared to the prior year. Trustmark’s
net income in 2020 produced a return on average tangible equity of
12.58% and a return on average assets of 1.05%.
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Trustmark’s Board of Directors declared a quarterly cash
dividend of $0.23 per share payable March 15, 2021, to shareholders
of record on March 1, 2021.
Gerard R. Host, Executive Chairman, stated, “This past year has
been extremely challenging for everyone. The effects of COVID-19
have significantly impacted the ways in which we live, work and
interact with one another. We extend our deepest sympathies to all
who lost loved ones and all who have been impacted by this
pandemic. We also extend our sincere appreciation and gratitude to
healthcare professionals for their tireless and self-sacrificing
work during this pandemic. Also, we want to thank our associates
for their countless efforts to serve our customers and support our
communities and businesses. Trustmark remains committed to
providing solutions to meet customer’s unique needs during these
unprecedented times.”
2020 Highlights
- Supported local communities with loan originations totaling
$970 million through the SBA’s Paycheck Protection Program
(PPP)
- Loans held for investment increased $488.9 million, or
5.2%
- Nonperforming assets declined 9.3%, net charge-offs represented
0.02% of average loans
- Total deposits increased $2.8 billion, or 24.9%
- Record mortgage loan production of $3.0 billion produced
noninterest income of $125.8 million
- Total revenue expanded 14.3% to $701.1 million
- Noninterest income totaled $274.6 million, an increase of
46.8%
- Maintained strong capital position with CET1 ratio of 11.62%
and total risk-based capital ratio of 14.12%
Duane A. Dewey, President and CEO, commented, “Our financial
results demonstrate the value of Trustmark’s diversified financial
services businesses. Despite a challenging environment, our
banking, insurance and wealth management businesses all performed
well while our mortgage banking business achieved record results.
We experienced significant loan and deposit growth, and credit
quality remained extremely strong as did capital ratios. Trustmark
continues to be well-positioned to serve and expand its customer
base and create long-term value for its shareholders.”
Balance Sheet Management
- Loans held for investment decreased $23.2 million, or 0.2%,
during the quarter
- Total deposits increased $826.4 million, or 6.2%, during the
quarter
- Enhanced capital base with issuance of $125 million of
subordinated debt
Loans held for investment totaled $9.8 billion at December 31,
2020, reflecting an increase of 5.2% from the prior year. At
December 31, 2020, Trustmark’s gross PPP loans totaled $623.0
million. Net of deferred fees and costs of $12.9 million, PPP loans
totaled $610.1 million. Collectively, loans held for investment and
PPP loans totaled $10.4 billion at year end 2020, an increase of
$1.1 billion, or 11.8% from the prior year.
Deposits totaled $14.0 billion at December 31, 2020, up $826.4
million, or 6.2%, from the prior quarter and $2.8 billion, or
24.9%, year-over-year primarily reflecting the impact of additional
customer liquidity. Noninterest bearing deposits represented 31.0%
of total deposits at December 31, 2020. Interest-bearing deposit
costs totaled 0.27% for the fourth quarter, a decrease of 4 basis
points linked-quarter. The total cost of interest-bearing
liabilities was 0.30% for the fourth quarter of 2020, a decrease of
3 basis points from the prior quarter.
Trustmark’s capital position remained solid, reflecting the
strength and diversity of its financial services businesses. During
the fourth quarter of 2020, Trustmark Corporation issued $125
million of 3.625% fixed-to-floating rate subordinated notes due in
2030 for general corporate purposes, further strengthening its
regulatory capital position. At December 31, 2020, Trustmark’s
tangible equity to tangible assets ratio was 8.34%, while the total
risk-based capital ratio increased to 14.12%.
As previously announced, Trustmark’s Board of Directors
authorized a stock repurchase program effective April 1, 2020,
under which $100 million of Trustmark’s outstanding shares may be
acquired through December 31, 2021. While Trustmark suspended its
share repurchase program during the first quarter of 2020 to
preserve capital given the economic uncertainty associated with the
COVID-19 pandemic, Trustmark expects to resume the repurchase of
its shares from time to time at prevailing market prices, through
open market or private transactions, depending on market
conditions, and in conjunction with its disciplined share
repurchase framework. There is no guarantee as to the number of
shares that may be repurchased by Trustmark, and Trustmark may
discontinue purchases at any time at management’s discretion.
Credit Quality
- Allowance for credit losses represented 1.19% of loans held for
investment and 572.69% of nonperforming loans, excluding
individually evaluated loans at year-end
- Net charge-offs totaled $291 thousand, or 0.01% of average
loans, in the fourth quarter
- Loans remaining under a COVID-19 related concession represented
approximately 35 basis points of loans held for investment at
December 31, 2020
Nonperforming loans totaled $63.1 million at December 31, 2020,
an increase of $9.3 million from the prior quarter and $9.9 million
year-over-year. Other real estate totaled $11.7 million, reflecting
a $4.6 million decrease from the prior quarter and a $17.6 million
decline from the prior year. Collectively, nonperforming assets
totaled $74.8 million, reflecting a linked-quarter increase of 6.7%
and year-over-year reduction of 9.3%.
Allocation of Trustmark’s $117.3 million allowance for credit
losses on loans held for investment represented 1.20% of commercial
loans and 1.16% of consumer and home mortgage loans, resulting in
an allowance for credit losses to total loans held for investment
of 1.19% at December 31, 2020, representing a level management
considers commensurate with the present risk in the loan
portfolio.
Revenue Generation
- Mortgage banking revenue totaled $28.2 million and represented
15.9% of total revenue in the fourth quarter
- Noninterest income totaled $66.1 million and represented 37.3%
of total revenue in fourth quarter
- The net interest margin (FTE) totaled 3.15% in fourth quarter;
excluding interest and fees on PPP loans, net interest margin (FTE)
was 2.91%
Revenue in the fourth quarter totaled $177.5 million, a decrease
of 1.3% from the prior quarter and an increase of 15.9% from the
same quarter in the prior year. The linked-quarter decline reflects
higher net interest income, which was more than offset by reduced
mortgage banking revenue. In 2020, revenue totaled $701.1 million,
an increase of 14.3% from the prior year. Excluding interest and
fees on PPP loans, revenue totaled $674.5 million in 2020, an
increase of $60.9 million, or 9.9%, from the prior year principally
due to growth in mortgage banking revenue.
Net interest income (FTE) in the fourth quarter totaled $114.3
million, resulting in a net interest margin of 3.15%. Relative to
the prior quarter, net interest income (FTE) increased $5.1 million
reflecting an increase of $4.5 million in interest income as well
as a $611 thousand reduction in interest expense. Excluding
interest and fees on PPP loans, net interest income (FTE) totaled
$99.4 million, resulting in a net interest margin of 2.91%, a
linked-quarter decline of 14 basis points. Continued low interest
rates decreased the yield on the loans held for investment and held
for sale portfolio as well as the securities portfolio and were
partially offset by lower costs of interest-bearing deposits.
Noninterest income in the fourth quarter totaled $66.1 million,
a decrease of $7.6 million from the prior quarter and an increase
of $18.5 million from the prior year. The linked-quarter change
reflects increases in service charges on deposit accounts and bank
card and other fees, which were more than offset by a decline in
mortgage banking revenue and a seasonal decline in insurance
revenue. The increase in noninterest income year-over-year is
principally due to increased mortgage banking revenue.
Mortgage loan production in the fourth quarter totaled $788.4
million, a seasonal decline of 11.0% from the prior quarter and a
58.1% increase year-over-year. Mortgage banking revenue before
hedge ineffectiveness totaled $29.1 million in the fourth quarter,
a decline of $6.6 million from the prior quarter primarily due to
lower gains on sale of loans in the secondary market. In 2020,
mortgage loan production totaled a record $2.98 billion, up 69.4%
from the prior year. Mortgage banking revenue totaled $125.8
million in 2020, an increase of $96.0 million from the prior
year.
Insurance revenue in the fourth quarter totaled $10.2 million, a
seasonal decline of $1.4 million from the prior quarter and an
increase of $832 thousand from the prior year. Insurance revenue in
2020 totaled $45.2 million, up $2.8 million, or 6.6%, from the
prior year. The solid performance during the year reflects an
expanded producer workforce as well as the realization of
operational efficiencies from investments in technology and
improved processes.
Wealth management revenue totaled $7.8 million in the fourth
quarter, up 2.1% from the prior quarter and 1.0% from the prior
year. In 2020, wealth management revenue totaled $31.6 million, an
increase of 3.1% from the prior year. During 2020, Trustmark
continued to enhance its competitive positioning and efficiency of
its wealth management businesses as well as expand its Private
Banking capabilities in key markets.
Noninterest Expense
- Adjusted non-interest expense, which excludes amortization of
intangibles, ORE expenses, and credit losses for off-balance sheet
credit exposures, increased $4.9 million, or 4.3%, from the prior
quarter. Please refer to the Consolidated Financial Information,
Footnote 10 – Non-GAAP Financial Measures.
- Efficiency ratio improved to 63.35% in 2020, a decline of 303
basis points from the prior year
Adjusted noninterest expense in the fourth quarter was $119.6
million, up $4.9 million, or 4.3%, from the prior quarter. Salaries
and employee benefits increased $2.3 million linked-quarter
principally due to increases for performance-based incentives.
Total services and fees increased $1.3 million during the fourth
quarter due to continued investments in technology and higher
professional fees. Other expense increased $1.2 million from the
prior quarter principally due to increased operational losses and
other expenses.
Credit loss expense related to off-balance sheet credit
exposures was a negative $1.1 million in the fourth quarter,
reflecting the improvement of the macroeconomic factors used to
determine the necessary reserves for off-balance sheet credit
exposures. Other real estate expense was a negative $812 thousand
for the fourth quarter, a decrease of approximately $2.0 million
from the prior quarter, which is attributed to lower write-downs of
ORE of $716 thousand and a net gain on the sale of ORE property of
$1.3 million.
During 2020, Trustmark consolidated six offices and expanded
deployment of interactive teller machines. In January 2021,
Trustmark opened a new office featuring a design that integrates
myTeller interactive teller machine technology as well as provides
enhanced areas for customer engagement. With the opening of this
office, two other offices were closed.
“Looking forward, Trustmark will focus upon efficiency, growth
and innovation opportunities while building upon its solid risk
management processes, corporate culture and core values. We will
continue to optimize delivery channels to reflect changing customer
preferences and introduce technology to enhance growth and
efficiency opportunities. We will provide the services and advice
our customers have come to expect while building term value for our
shareholders,” said Dewey.
Additional Information
As previously announced, Trustmark will conduct a conference
call with analysts on Wednesday, January 27, 2021 at 8:30 a.m.
Central Time to discuss the Corporation’s financial results.
Interested parties may listen to the conference call by dialing
(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 10, 2021, in archived format at the same web
address or by calling (877) 344-7529, passcode 10151113.
Trustmark is a financial services company providing banking and
financial solutions through 183 offices in Alabama, Florida,
Mississippi, Tennessee and Texas.
Forward-Looking Statements
Certain statements contained in this document constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. You can identify
forward-looking statements by words such as “may,” “hope,” “will,”
“should,” “expect,” “plan,” “anticipate,” “intend,” “believe,”
“estimate,” “predict,” “project,” “potential,” “seek,” “continue,”
“could,” “would,” “future” or the negative of those terms or other
words of similar meaning. You should read statements that contain
these words carefully because they discuss our future expectations
or state other “forward-looking” information. These forward-looking
statements include, but are not limited to, statements relating to
anticipated future operating and financial performance measures,
including net interest margin, credit quality, business
initiatives, growth opportunities and growth rates, among other
things, and encompass any estimate, prediction, expectation,
projection, opinion, anticipation, outlook or statement of belief
included therein as well as the management assumptions underlying
these forward-looking statements. You should be aware that the
occurrence of the events described under the caption “Risk Factors”
in Trustmark’s filings with the Securities and Exchange Commission
(SEC) could have an adverse effect on our business, results of
operations and financial condition. Should one or more of these
risks materialize, or should any such underlying assumptions prove
to be significantly different, actual results may vary
significantly from those anticipated, estimated, projected or
expected. Furthermore, many of these risks and uncertainties are
currently amplified by and may continue to be amplified by or may,
in the future, be amplified by, the novel coronavirus (COVID-19)
pandemic, and also by the effectiveness of varying governmental
responses in ameliorating the impact of the pandemic on our
customers and the economies where they operate.
Risks that could cause actual results to differ materially from
current expectations of Management include, but are not limited to,
changes in the level of nonperforming assets and charge-offs, an
increase in unemployment levels and slowdowns in economic growth,
our ability to manage the impact of the COVID-19 pandemic on our
markets and our customers, as well as the effectiveness of actions
of federal, state and local governments and agencies (including the
Board of Governors of the Federal Reserve 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,
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, 2020
($ in thousands)
(unaudited)
Linked Quarter
Year over Year
QUARTERLY AVERAGE
BALANCES
12/31/2020
9/30/2020
12/31/2019
$ Change
% Change
$ Change
% Change
Securities AFS-taxable
$
1,902,162
$
1,857,050
$
1,551,358
$
45,112
2.4
%
$
350,804
22.6
%
Securities AFS-nontaxable
5,206
5,973
23,300
(767
)
-12.8
%
(18,094
)
-77.7
%
Securities HTM-taxable
550,563
608,585
734,474
(58,022
)
-9.5
%
(183,911
)
-25.0
%
Securities HTM-nontaxable
24,752
25,508
25,703
(756
)
-3.0
%
(951
)
-3.7
%
Total securities
2,482,683
2,497,116
2,334,835
(14,433
)
-0.6
%
147,848
6.3
%
Paycheck protection program loans
(PPP)
875,098
941,456
—
(66,358
)
-7.0
%
875,098
n/m
Loans (includes loans held for sale)
(1)
10,231,671
10,162,379
9,467,437
69,292
0.7
%
764,234
8.1
%
Acquired loans (1)
—
—
77,797
—
n/m
(77,797
)
-100.0
%
Fed funds sold and reverse repurchases
303
301
184
2
0.7
%
119
64.7
%
Other earning assets
860,540
722,917
227,116
137,623
19.0
%
633,424
n/m
Total earning assets
14,450,295
14,324,169
12,107,369
126,126
0.9
%
2,342,926
19.4
%
Allowance for credit losses (ACL), loans
held
for investment (LHFI) (1)
(124,088
)
(121,842
)
(86,211
)
(2,246
)
-1.8
%
(37,877
)
-43.9
%
Other assets
1,620,694
1,564,825
1,445,075
55,869
3.6
%
175,619
12.2
%
Total assets
$
15,946,901
$
15,767,152
$
13,466,233
$
179,749
1.1
%
$
2,480,668
18.4
%
Interest-bearing demand deposits
$
3,649,590
$
3,669,249
$
3,167,256
$
(19,659
)
-0.5
%
$
482,334
15.2
%
Savings deposits
4,350,783
4,416,046
3,448,899
(65,263
)
-1.5
%
901,884
26.1
%
Time deposits
1,436,677
1,507,348
1,663,741
(70,671
)
-4.7
%
(227,064
)
-13.6
%
Total interest-bearing deposits
9,437,050
9,592,643
8,279,896
(155,593
)
-1.6
%
1,157,154
14.0
%
Fed funds purchased and repurchases
170,474
84,077
164,754
86,397
n/m
5,720
3.5
%
Other borrowings
173,525
167,262
79,512
6,263
3.7
%
94,013
n/m
Subordinated notes
42,828
—
—
42,828
n/m
42,828
n/m
Junior subordinated debt securities
61,856
61,856
61,856
—
0.0
%
—
0.0
%
Total interest-bearing
liabilities
9,885,733
9,905,838
8,586,018
(20,105
)
-0.2
%
1,299,715
15.1
%
Noninterest-bearing deposits
4,100,849
3,921,867
3,017,824
178,982
4.6
%
1,083,025
35.9
%
Other liabilities
235,284
244,544
205,786
(9,260
)
-3.8
%
29,498
14.3
%
Total liabilities
14,221,866
14,072,249
11,809,628
149,617
1.1
%
2,412,238
20.4
%
Shareholders' equity
1,725,035
1,694,903
1,656,605
30,132
1.8
%
68,430
4.1
%
Total liabilities and equity
$
15,946,901
$
15,767,152
$
13,466,233
$
179,749
1.1
%
$
2,480,668
18.4
%
(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
December 31, 2020
($ in thousands)
(unaudited)
Linked Quarter
Year over Year
PERIOD END
BALANCES
12/31/2020
9/30/2020
12/31/2019
$ Change
% Change
$ Change
% Change
Cash and due from banks
$
1,952,504
$
564,588
$
358,916
$
1,387,916
n/m
$
1,593,588
n/m
Fed funds sold and reverse repurchases
50
50
—
—
0.0
%
50
n/m
Securities available for sale
1,991,815
1,922,728
1,602,404
69,087
3.6
%
389,411
24.3
%
Securities held to maturity
538,072
611,280
738,099
(73,208
)
-12.0
%
(200,027
)
-27.1
%
PPP loans
610,134
944,270
—
(334,136
)
-35.4
%
610,134
n/m
Loans held for sale (LHFS)
446,951
485,103
226,347
(38,152
)
-7.9
%
220,604
97.5
%
Loans held for investment (LHFI) (1)
9,824,524
9,847,728
9,335,628
(23,204
)
-0.2
%
488,896
5.2
%
ACL LHFI (1)
(117,306
)
(122,010
)
(84,277
)
4,704
3.9
%
(33,029
)
-39.2
%
Net LHFI
9,707,218
9,725,718
9,251,351
(18,500
)
-0.2
%
455,867
4.9
%
Acquired loans (1)
—
—
72,601
—
n/m
(72,601
)
-100.0
%
Allowance for loan losses, acquired loans
(1)
—
—
(815
)
—
n/m
815
-100.0
%
Net acquired loans
—
—
71,786
—
n/m
(71,786
)
-100.0
%
Net LHFI and acquired loans
9,707,218
9,725,718
9,323,137
(18,500
)
-0.2
%
384,081
4.1
%
Premises and equipment, net
194,278
192,722
189,791
1,556
0.8
%
4,487
2.4
%
Mortgage servicing rights
66,464
61,613
79,394
4,851
7.9
%
(12,930
)
-16.3
%
Goodwill
385,270
385,270
379,627
—
0.0
%
5,643
1.5
%
Identifiable intangible assets
7,390
8,142
7,343
(752
)
-9.2
%
47
0.6
%
Other real estate
11,651
16,248
29,248
(4,597
)
-28.3
%
(17,597
)
-60.2
%
Operating lease right-of-use assets
30,901
30,508
31,182
393
1.3
%
(281
)
-0.9
%
Other assets
609,142
609,922
532,389
(780
)
-0.1
%
76,753
14.4
%
Total assets
$
16,551,840
$
15,558,162
$
13,497,877
$
993,678
6.4
%
$
3,053,963
22.6
%
Deposits:
Noninterest-bearing
$
4,349,010
$
3,964,023
$
2,891,215
$
384,987
9.7
%
$
1,457,795
50.4
%
Interest-bearing
9,699,754
9,258,390
8,354,342
441,364
4.8
%
1,345,412
16.1
%
Total deposits
14,048,764
13,222,413
11,245,557
826,351
6.2
%
2,803,207
24.9
%
Fed funds purchased and repurchases
164,519
153,834
256,020
10,685
6.9
%
(91,501
)
-35.7
%
Other borrowings
168,252
178,599
85,396
(10,347
)
-5.8
%
82,856
97.0
%
Subordinated notes
122,921
—
—
122,921
n/m
122,921
n/m
Junior subordinated debt securities
61,856
61,856
61,856
—
0.0
%
—
0.0
%
ACL on off-balance sheet credit exposures
(1)
38,572
39,659
—
(1,087
)
-2.7
%
38,572
n/m
Operating lease liabilities
32,290
31,838
32,354
452
1.4
%
(64
)
-0.2
%
Other liabilities
173,549
159,922
155,992
13,627
8.5
%
17,557
11.3
%
Total liabilities
14,810,723
13,848,121
11,837,175
962,602
7.0
%
2,973,548
25.1
%
Common stock
13,215
13,215
13,376
—
0.0
%
(161
)
-1.2
%
Capital surplus
233,120
231,836
256,400
1,284
0.6
%
(23,280
)
-9.1
%
Retained earnings
1,495,833
1,459,306
1,414,526
36,527
2.5
%
81,307
5.7
%
Accum other comprehensive income
(loss),
net of tax
(1,051
)
5,684
(23,600
)
(6,735
)
n/m
22,549
95.5
%
Total shareholders' equity
1,741,117
1,710,041
1,660,702
31,076
1.8
%
80,415
4.8
%
Total liabilities and equity
$
16,551,840
$
15,558,162
$
13,497,877
$
993,678
6.4
%
$
3,053,963
22.6
%
(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
December 31, 2020
($ in thousands except per share
data)
(unaudited)
Quarter Ended
Linked Quarter
Year over Year
INCOME
STATEMENTS
12/31/2020
9/30/2020
12/31/2019
$ Change
% Change
$ Change
% Change
Interest and fees on LHFS &
LHFI-FTE
$
96,453
$
97,429
$
111,383
$
(976
)
-1.0
%
$
(14,930
)
-13.4
%
Interest and fees on PPP loans
14,870
6,729
—
8,141
n/m
14,870
n/m
Interest and fees on acquired loans
(1)
—
—
2,138
—
n/m
(2,138
)
-100.0
%
Interest on securities-taxable
9,998
12,542
12,884
(2,544
)
-20.3
%
(2,886
)
-22.4
%
Interest on securities-tax exempt-FTE
293
301
484
(8
)
-2.7
%
(191
)
-39.5
%
Interest on fed funds sold and reverse
repurchases
—
1
1
(1
)
-100.0
%
(1
)
-100.0
%
Other interest income
249
331
896
(82
)
-24.8
%
(647
)
-72.2
%
Total interest income-FTE
121,863
117,333
127,786
4,530
3.9
%
(5,923
)
-4.6
%
Interest on deposits
6,363
7,437
17,716
(1,074
)
-14.4
%
(11,353
)
-64.1
%
Interest on fed funds purchased and
repurchases
56
32
504
24
75.0
%
(448
)
-88.9
%
Other interest expense
1,127
688
826
439
63.8
%
301
36.4
%
Total interest expense
7,546
8,157
19,046
(611
)
-7.5
%
(11,500
)
-60.4
%
Net interest income-FTE
114,317
109,176
108,740
5,141
4.7
%
5,577
5.1
%
Provision for credit losses, LHFI (1)
(4,413
)
1,760
3,661
(6,173
)
n/m
(8,074
)
n/m
Provision for loan losses, acquired loans
(1)
—
—
(2
)
—
n/m
2
100.0
%
Net interest income after
provision-FTE
118,730
107,416
105,081
11,314
10.5
%
13,649
13.0
%
Service charges on deposit accounts
8,283
7,577
10,894
706
9.3
%
(2,611
)
-24.0
%
Bank card and other fees
9,107
8,843
8,192
264
3.0
%
915
11.2
%
Mortgage banking, net
28,155
36,439
7,914
(8,284
)
-22.7
%
20,241
n/m
Insurance commissions
10,196
11,562
9,364
(1,366
)
-11.8
%
832
8.9
%
Wealth management
7,838
7,679
7,763
159
2.1
%
75
1.0
%
Other, net
2,538
1,601
3,451
937
58.5
%
(913
)
-26.5
%
Total noninterest income
66,117
73,701
47,578
(7,584
)
-10.3
%
18,539
39.0
%
Salaries and employee benefits
69,660
67,342
62,319
2,318
3.4
%
7,341
11.8
%
Services and fees
22,327
20,992
19,500
1,335
6.4
%
2,827
14.5
%
Net occupancy-premises
6,616
7,000
6,461
(384
)
-5.5
%
155
2.4
%
Equipment expense
6,213
5,828
5,880
385
6.6
%
333
5.7
%
Other real estate expense, net
(812
)
1,203
1,491
(2,015
)
n/m
(2,303
)
n/m
Credit loss expense related to off-balance
sheet
credit exposures (1)
(1,087
)
(3,004
)
—
1,917
63.8
%
(1,087
)
n/m
Other expense
15,890
14,598
14,376
1,292
8.9
%
1,514
10.5
%
Total noninterest expense
118,807
113,959
110,027
4,848
4.3
%
8,780
8.0
%
Income before income taxes and tax eq
adj
66,040
67,158
42,632
(1,118
)
-1.7
%
23,408
54.9
%
Tax equivalent adjustment
2,939
2,969
3,149
(30
)
-1.0
%
(210
)
-6.7
%
Income before income taxes
63,101
64,189
39,483
(1,088
)
-1.7
%
23,618
59.8
%
Income taxes
11,884
9,749
5,537
2,135
21.9
%
6,347
n/m
Net income
$
51,217
$
54,440
$
33,946
$
(3,223
)
-5.9
%
$
17,271
50.9
%
Per share data
Earnings per share - basic
$
0.81
$
0.86
$
0.53
$
(0.05
)
-5.8
%
$
0.28
52.8
%
Earnings per share - diluted
$
0.81
$
0.86
$
0.53
$
(0.05
)
-5.8
%
$
0.28
52.8
%
Dividends per share
$
0.23
$
0.23
$
0.23
—
0.0
%
—
0.0
%
Weighted average shares
outstanding
Basic
63,424,219
63,422,692
64,255,716
Diluted
63,616,767
63,581,964
64,435,276
Period end shares outstanding
63,424,526
63,423,820
64,200,111
(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
December 31, 2020
($ in thousands)
(unaudited)
Quarter Ended
Linked Quarter
Year over Year
NONPERFORMING
ASSETS (1)
12/31/2020
9/30/2020
12/31/2019
$ Change
% Change
$ Change
% Change
Nonaccrual LHFI
Alabama
$
9,221
$
3,860
$
1,870
$
5,361
n/m
$
7,351
n/m
Florida
572
617
267
(45
)
-7.3
%
305
n/m
Mississippi (2)
35,015
35,617
41,493
(602
)
-1.7
%
(6,478
)
-15.6
%
Tennessee (3)
12,572
13,041
8,980
(469
)
-3.6
%
3,592
40.0
%
Texas
5,748
721
616
5,027
n/m
5,132
n/m
Total nonaccrual LHFI
63,128
53,856
53,226
9,272
17.2
%
9,902
18.6
%
Other real estate
Alabama
3,271
3,725
8,133
(454
)
-12.2
%
(4,862
)
-59.8
%
Florida
—
3,665
5,877
(3,665
)
-100.0
%
(5,877
)
-100.0
%
Mississippi (2)
8,330
8,718
14,919
(388
)
-4.5
%
(6,589
)
-44.2
%
Tennessee (3)
50
140
319
(90
)
-64.3
%
(269
)
-84.3
%
Texas
—
—
—
—
n/m
—
n/m
Total other real estate
11,651
16,248
29,248
(4,597
)
-28.3
%
(17,597
)
-60.2
%
Total nonperforming assets
$
74,779
$
70,104
$
82,474
$
4,675
6.7
%
$
(7,695
)
-9.3
%
LOANS PAST DUE
OVER 90 DAYS (1)
LHFI
$
1,576
$
782
$
642
$
794
n/m
$
934
n/m
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)
$
119,409
$
121,281
$
41,648
$
(1,872
)
-1.5
%
$
77,761
n/m
Quarter Ended
Linked Quarter
Year over Year
ACL
LHFI (1)(4)
12/31/2020
9/30/2020
12/31/2019
$ Change
% Change
$ Change
% Change
Beginning Balance
$
122,010
$
119,188
$
83,226
$
2,822
2.4
%
$
38,784
46.6
%
CECL adoption adjustments:
LHFI
—
—
—
—
n/m
—
n/m
Acquired loan transfers
—
—
—
—
n/m
—
n/m
Provision for credit losses
(4,413
)
1,760
3,661
(6,173
)
n/m
(8,074
)
n/m
Charge-offs
(2,797
)
(1,263
)
(4,619
)
(1,534
)
n/m
1,822
39.4
%
Recoveries
2,506
2,325
2,009
181
7.8
%
497
24.7
%
Net (charge-offs) recoveries
(291
)
1,062
(2,610
)
(1,353
)
n/m
2,319
88.9
%
Ending Balance
$
117,306
$
122,010
$
84,277
$
(4,704
)
-3.9
%
$
33,029
39.2
%
NET (CHARGE-OFFS)
RECOVERIES (1)
Alabama
$
(1,011
)
$
117
$
(132
)
$
(1,128
)
n/m
$
(879
)
n/m
Florida
66
387
357
(321
)
-82.9
%
(291
)
-81.5
%
Mississippi (2)
332
442
(1,792
)
(110
)
-24.9
%
2,124
n/m
Tennessee (3)
303
42
(131
)
261
n/m
434
n/m
Texas
19
74
(912
)
(55
)
-74.3
%
931
n/m
Total net (charge-offs)
recoveries
$
(291
)
$
1,062
$
(2,610
)
$
(1,353
)
n/m
$
2,319
-88.9
%
(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
December 31, 2020
($ in thousands)
(unaudited)
Quarter Ended
Year Ended
AVERAGE
BALANCES
12/31/2020
9/30/2020
6/30/2020
3/31/2020
12/31/2019
12/31/2020
12/31/2019
Securities AFS-taxable
$
1,902,162
$
1,857,050
$
1,724,320
$
1,620,422
$
1,551,358
$
1,776,555
$
1,633,496
Securities AFS-nontaxable
5,206
5,973
9,827
22,056
23,300
10,737
29,948
Securities HTM-taxable
550,563
608,585
655,085
694,740
734,474
626,983
799,726
Securities HTM-nontaxable
24,752
25,508
25,538
25,673
25,703
25,366
26,874
Total securities
2,482,683
2,497,116
2,414,770
2,362,891
2,334,835
2,439,641
2,490,044
PPP loans
875,098
941,456
764,416
—
—
646,680
—
Loans (includes loans held for sale)
(1)
10,231,671
10,162,379
9,908,132
9,678,174
9,467,437
9,996,192
9,302,037
Acquired loans (1)
—
—
—
—
77,797
—
88,903
Fed funds sold and reverse repurchases
303
301
113
164
184
221
9,529
Other earning assets
860,540
722,917
854,642
187,327
227,116
657,096
240,622
Total earning assets
14,450,295
14,324,169
13,942,073
12,228,556
12,107,369
13,739,830
12,131,135
ACL LHFI (1)
(124,088
)
(121,842
)
(103,006
)
(85,015
)
(86,211
)
(108,567
)
(83,559
)
Other assets
1,620,694
1,564,825
1,685,317
1,498,725
1,445,075
1,592,393
1,452,012
Total assets
$
15,946,901
$
15,767,152
$
15,524,384
$
13,642,266
$
13,466,233
$
15,223,656
$
13,499,588
Interest-bearing demand deposits
$
3,649,590
$
3,669,249
$
3,832,372
$
3,184,134
$
3,167,256
$
3,584,249
$
3,051,170
Savings deposits
4,350,783
4,416,046
4,180,540
3,646,936
3,448,899
4,149,860
3,650,178
Time deposits
1,436,677
1,507,348
1,578,737
1,617,307
1,663,741
1,534,673
1,783,928
Total interest-bearing deposits
9,437,050
9,592,643
9,591,649
8,448,377
8,279,896
9,268,782
8,485,276
Fed funds purchased and repurchases
170,474
84,077
105,696
247,513
164,754
151,805
110,915
Other borrowings
173,525
167,262
107,533
85,279
79,512
133,602
82,476
Subordinated notes
42,828
—
—
—
—
10,766
—
Junior subordinated debt securities
61,856
61,856
61,856
61,856
61,856
61,856
61,856
Total interest-bearing
liabilities
9,885,733
9,905,838
9,866,734
8,843,025
8,586,018
9,626,811
8,740,523
Noninterest-bearing deposits
4,100,849
3,921,867
3,645,761
2,910,951
3,017,824
3,646,860
2,918,836
Other liabilities
235,284
244,544
346,173
248,220
205,786
268,398
218,216
Total liabilities
14,221,866
14,072,249
13,858,668
12,002,196
11,809,628
13,542,069
11,877,575
Shareholders' equity
1,725,035
1,694,903
1,665,716
1,640,070
1,656,605
1,681,587
1,622,013
Total liabilities and equity
$
15,946,901
$
15,767,152
$
15,524,384
$
13,642,266
$
13,466,233
$
15,223,656
$
13,499,588
(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
December 31, 2020
($ in thousands)
(unaudited)
PERIOD END
BALANCES
12/31/2020
9/30/2020
6/30/2020
3/31/2020
12/31/2019
Cash and due from banks
$
1,952,504
$
564,588
$
1,026,640
$
404,341
$
358,916
Fed funds sold and reverse repurchases
50
50
—
2,000
—
Securities available for sale
1,991,815
1,922,728
1,884,153
1,833,779
1,602,404
Securities held to maturity
538,072
611,280
660,048
704,276
738,099
PPP loans
610,134
944,270
939,783
—
—
Loans held for sale (LHFS)
446,951
485,103
355,089
325,389
226,347
Loans held for investment (LHFI) (1)
9,824,524
9,847,728
9,659,806
9,567,920
9,335,628
ACL LHFI (1)
(117,306
)
(122,010
)
(119,188
)
(100,564
)
(84,277
)
Net LHFI
9,707,218
9,725,718
9,540,618
9,467,356
9,251,351
Acquired loans (1)
—
—
—
—
72,601
Allowance for loan losses, acquired loans
(1)
—
—
—
—
(815
)
Net acquired loans
—
—
—
—
71,786
Net LHFI and acquired loans
9,707,218
9,725,718
9,540,618
9,467,356
9,323,137
Premises and equipment, net
194,278
192,722
190,567
190,179
189,791
Mortgage servicing rights
66,464
61,613
57,811
56,437
79,394
Goodwill
385,270
385,270
385,270
381,717
379,627
Identifiable intangible assets
7,390
8,142
8,895
7,537
7,343
Other real estate
11,651
16,248
18,276
24,847
29,248
Operating lease right-of-use assets
30,901
30,508
29,819
30,839
31,182
Other assets
609,142
609,922
595,110
591,132
532,389
Total assets
$
16,551,840
$
15,558,162
$
15,692,079
$
14,019,829
$
13,497,877
Deposits:
Noninterest-bearing
$
4,349,010
$
3,964,023
$
3,880,540
$
2,977,058
$
2,891,215
Interest-bearing
9,699,754
9,258,390
9,624,933
8,598,706
8,354,342
Total deposits
14,048,764
13,222,413
13,505,473
11,575,764
11,245,557
Fed funds purchased and repurchases
164,519
153,834
70,255
421,821
256,020
Other borrowings
168,252
178,599
152,860
84,230
85,396
Subordinated notes
122,921
—
—
—
—
Junior subordinated debt securities
61,856
61,856
61,856
61,856
61,856
ACL on off-balance sheet credit exposures
(1)
38,572
39,659
42,663
36,421
—
Operating lease liabilities
32,290
31,838
31,076
32,055
32,354
Other liabilities
173,549
159,922
153,952
155,283
155,992
Total liabilities
14,810,723
13,848,121
14,018,135
12,367,430
11,837,175
Common stock
13,215
13,215
13,214
13,209
13,376
Capital surplus
233,120
231,836
230,613
229,403
256,400
Retained earnings
1,495,833
1,459,306
1,419,552
1,402,089
1,414,526
Accum other comprehensive income (loss),
net of tax
(1,051
)
5,684
10,565
7,698
(23,600
)
Total shareholders' equity
1,741,117
1,710,041
1,673,944
1,652,399
1,660,702
Total liabilities and equity
$
16,551,840
$
15,558,162
$
15,692,079
$
14,019,829
$
13,497,877
(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
December 31, 2020
($ in thousands except per share
data)
(unaudited)
Quarter Ended
Year Ended
INCOME
STATEMENTS
12/31/2020
9/30/2020
6/30/2020
3/31/2020
12/31/2019
12/31/2020
12/31/2019
Interest and fees on LHFS &
LHFI-FTE
$
96,453
$
97,429
$
99,300
$
109,357
$
111,383
$
402,539
$
452,578
Interest and fees on PPP loans
14,870
6,729
5,044
—
—
26,643
—
Interest and fees on acquired loans
(1)
—
—
—
—
2,138
—
8,373
Interest on securities-taxable
9,998
12,542
12,762
12,948
12,884
48,250
54,649
Interest on securities-tax exempt-FTE
293
301
315
457
484
1,366
2,166
Interest on fed funds sold and reverse
repurchases
—
1
—
—
1
1
240
Other interest income
249
331
239
740
896
1,559
5,363
Total interest income-FTE
121,863
117,333
117,660
123,502
127,786
480,358
523,369
Interest on deposits
6,363
7,437
8,730
14,957
17,716
37,487
79,171
Interest on fed funds purchased and
repurchases
56
32
42
625
504
755
1,420
Other interest expense
1,127
688
881
860
826
3,556
3,312
Total interest expense
7,546
8,157
9,653
16,442
19,046
41,798
83,903
Net interest income-FTE
114,317
109,176
108,007
107,060
108,740
438,560
439,466
Provision for credit losses, LHFI (1)
(4,413
)
1,760
18,185
20,581
3,661
36,113
10,797
Provision for loan losses, acquired loans
(1)
—
—
—
—
(2
)
—
42
Net interest income after
provision-FTE
118,730
107,416
89,822
86,479
105,081
402,447
428,627
Service charges on deposit accounts
8,283
7,577
6,397
10,032
10,894
32,289
42,603
Bank card and other fees
9,107
8,843
7,717
5,355
8,192
31,022
31,736
Mortgage banking, net
28,155
36,439
33,745
27,483
7,914
125,822
29,822
Insurance commissions
10,196
11,562
11,868
11,550
9,364
45,176
42,396
Wealth management
7,838
7,679
7,571
8,537
7,763
31,625
30,679
Other, net
2,538
1,601
2,213
2,307
3,451
8,659
9,809
Total noninterest income
66,117
73,701
69,511
65,264
47,578
274,593
187,045
Salaries and employee benefits
69,660
67,342
66,107
69,148
62,319
272,257
247,717
Services and fees
22,327
20,992
20,567
19,930
19,500
83,816
73,315
Net occupancy-premises
6,616
7,000
6,587
6,286
6,461
26,489
26,149
Equipment expense
6,213
5,828
5,620
5,616
5,880
23,277
23,733
Other real estate expense, net
(812
)
1,203
271
1,294
1,491
1,956
3,906
Credit loss expense related to off-balance
sheet credit
exposures (1)
(1,087
)
(3,004
)
6,242
6,783
—
8,934
—
Other expense
15,890
14,598
13,265
14,753
14,376
58,506
54,182
Total noninterest expense
118,807
113,959
118,659
123,810
110,027
475,235
429,002
Income before income taxes and tax eq
adj
66,040
67,158
40,674
27,933
42,632
201,805
186,670
Tax equivalent adjustment
2,939
2,969
3,007
3,108
3,149
12,023
12,877
Income before income taxes
63,101
64,189
37,667
24,825
39,483
189,782
173,793
Income taxes
11,884
9,749
5,517
2,607
5,537
29,757
23,333
Net income
$
51,217
$
54,440
$
32,150
$
22,218
$
33,946
$
160,025
$
150,460
Per share data
Earnings per share - basic
$
0.81
$
0.86
$
0.51
$
0.35
$
0.53
$
2.52
$
2.33
Earnings per share - diluted
$
0.81
$
0.86
$
0.51
$
0.35
$
0.53
$
2.51
$
2.32
Dividends per share
$
0.23
$
0.23
$
0.23
$
0.23
$
0.23
$
0.92
$
0.92
Weighted average shares
outstanding
Basic
63,424,219
63,422,692
63,416,307
63,756,629
64,255,716
63,504,516
64,629,457
Diluted
63,616,767
63,581,964
63,555,065
63,913,603
64,435,276
63,645,599
64,771,770
Period end shares outstanding
63,424,526
63,423,820
63,422,439
63,396,912
64,200,111
63,424,526
64,200,111
(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
December 31, 2020
($ in thousands)
(unaudited)
Quarter Ended
NONPERFORMING
ASSETS (1)
12/31/2020
9/30/2020
6/30/2020
3/31/2020
12/31/2019
Nonaccrual LHFI
Alabama
$
9,221
$
3,860
$
4,392
$
4,769
$
1,870
Florida
572
617
687
254
267
Mississippi (2)
35,015
35,617
37,884
40,815
41,493
Tennessee (3)
12,572
13,041
6,125
6,153
8,980
Texas
5,748
721
906
1,001
616
Total nonaccrual LHFI
63,128
53,856
49,994
52,992
53,226
Other real estate
Alabama
3,271
3,725
4,766
6,229
8,133
Florida
—
3,665
3,665
4,835
5,877
Mississippi (2)
8,330
8,718
9,408
13,296
14,919
Tennessee (3)
50
140
437
487
319
Texas
—
—
—
—
—
Total other real estate
11,651
16,248
18,276
24,847
29,248
Total nonperforming assets
$
74,779
$
70,104
$
68,270
$
77,839
$
82,474
LOANS PAST DUE
OVER 90 DAYS (1)
LHFI
$
1,576
$
782
$
807
$
708
$
642
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)
$
119,409
$
121,281
$
56,269
$
43,564
$
41,648
Quarter Ended
Year Ended
ACL
LHFI (1)(4)
12/31/2020
9/30/2020
6/30/2020
3/31/2020
12/31/2019
12/31/2020
12/31/2019
Beginning Balance
$
122,010
$
119,188
$
100,564
$
84,277
$
83,226
$
84,277
$
79,290
CECL adoption adjustments:
LHFI
—
—
—
(3,039
)
—
(3,039
)
—
Acquired loan transfers
—
—
—
1,822
—
1,822
—
Provision for credit losses
(4,413
)
1,760
18,185
20,581
3,661
36,113
10,797
Charge-offs
(2,797
)
(1,263
)
(1,870
)
(5,545
)
(4,619
)
(11,475
)
(14,481
)
Recoveries
2,506
2,325
2,309
2,468
2,009
9,608
8,671
Net (charge-offs) recoveries
(291
)
1,062
439
(3,077
)
(2,610
)
(1,867
)
(5,810
)
Ending Balance
$
117,306
$
122,010
$
119,188
$
100,564
$
84,277
$
117,306
$
84,277
NET (CHARGE-OFFS)
RECOVERIES (1)
Alabama
$
(1,011
)
$
117
$
526
$
(1,080
)
$
(132
)
$
(1,448
)
$
(754
)
Florida
66
387
(127
)
64
357
390
850
Mississippi (2)
332
442
(86
)
126
(1,792
)
814
(4,438
)
Tennessee (3)
303
42
66
(2,186
)
(131
)
(1,775
)
(708
)
Texas
19
74
60
(1
)
(912
)
152
(760
)
Total net (charge-offs)
recoveries
$
(291
)
$
1,062
$
439
$
(3,077
)
$
(2,610
)
$
(1,867
)
$
(5,810
)
(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
December 31, 2020
(unaudited)
Quarter Ended
Year Ended
FINANCIAL RATIOS
AND OTHER DATA
12/31/2020
9/30/2020
6/30/2020
3/31/2020
12/31/2019
12/31/2020
12/31/2019
Return on average equity
11.81
%
12.78
%
7.76
%
5.45
%
8.13
%
9.52
%
9.28
%
Return on average tangible equity
15.47
%
16.82
%
10.32
%
7.34
%
10.85
%
12.58
%
12.45
%
Return on average assets
1.28
%
1.37
%
0.83
%
0.66
%
1.00
%
1.05
%
1.11
%
Interest margin - Yield - FTE
3.35
%
3.26
%
3.39
%
4.06
%
4.19
%
3.50
%
4.31
%
Interest margin - Cost
0.21
%
0.23
%
0.28
%
0.54
%
0.62
%
0.30
%
0.69
%
Net interest margin - FTE
3.15
%
3.03
%
3.12
%
3.52
%
3.56
%
3.19
%
3.62
%
Efficiency ratio (1)
65.59
%
62.19
%
62.13
%
63.50
%
68.08
%
63.35
%
66.38
%
Full-time equivalent employees
2,797
2,807
2,798
2,761
2,844
CREDIT QUALITY
RATIOS (2)
Net (recoveries) charge-offs / average
loans
0.01
%
-0.04
%
-0.02
%
0.13
%
0.11
%
0.02
%
0.06
%
Provision for credit losses / average
loans (3)
-0.17
%
0.07
%
0.74
%
0.86
%
0.15
%
0.36
%
0.12
%
Nonaccrual LHFI / (LHFI + LHFS)
0.61
%
0.52
%
0.50
%
0.54
%
0.56
%
Nonperforming assets / (LHFI + LHFS)
0.73
%
0.68
%
0.68
%
0.79
%
0.86
%
Nonperforming assets / (LHFI + LHFS +
other real estate)
0.73
%
0.68
%
0.68
%
0.78
%
0.86
%
ACL LHFI / LHFI (3)
1.19
%
1.24
%
1.23
%
1.05
%
0.90
%
ACL LHFI-commercial / commercial LHFI
(3)
1.20
%
1.20
%
1.15
%
0.97
%
0.98
%
ACL LHFI-consumer / consumer and home
mortgage LHFI (3)
1.16
%
1.41
%
1.56
%
1.35
%
0.61
%
ACL LHFI / nonaccrual LHFI (3)
185.82
%
226.55
%
238.40
%
189.77
%
158.34
%
ACL LHFI / nonaccrual LHFI (excl
individually evaluated loans) (3)
572.69
%
593.72
%
561.04
%
468.84
%
410.52
%
CAPITAL
RATIOS (3)
Total equity / total assets
10.52
%
10.99
%
10.67
%
11.79
%
12.30
%
Tangible equity / tangible assets
8.34
%
8.68
%
8.37
%
9.27
%
9.72
%
Tangible equity / risk-weighted assets
11.22
%
11.01
%
11.09
%
11.05
%
11.58
%
Tier 1 leverage ratio
9.33
%
9.20
%
9.08
%
10.21
%
10.48
%
Common equity tier 1 capital ratio
11.62
%
11.36
%
11.42
%
11.35
%
11.93
%
Tier 1 risk-based capital ratio
12.11
%
11.86
%
11.94
%
11.88
%
12.48
%
Total risk-based capital ratio
14.12
%
12.88
%
13.00
%
12.78
%
13.25
%
STOCK
PERFORMANCE
Market value-Close
$
27.31
$
21.41
$
24.52
$
23.30
$
34.51
Book value
$
27.45
$
26.96
$
26.39
$
26.06
$
25.87
Tangible book value
$
21.26
$
20.76
$
20.18
$
19.92
$
19.84
(1) See Note 10 – 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 December 31, 2020 ($ in thousands) (unaudited)
Note 1 – Recently Effective Accounting Pronouncements
ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326):
Measurement of Credit Losses on Financial Instruments” was adopted
by Trustmark Corporation (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 fourth
quarter of 2020, Trustmark recorded a negative provision for credit
losses of $4.4 million and a negative credit loss expense related
to off-balance sheet credit exposures of $1.1 million compared to a
provision for credit losses of $1.8 million and a negative credit
loss expense related to off-balance sheet credit exposures of $3.0
million recorded during the third 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
At December 31, 2020, Trustmark had outstanding 7,398 PPP loans
totaling $610.1 million (net of $12.9 million of deferred fees and
costs) under the Coronavirus Aid, Relief, and Economic Security
Act, which was signed into law on March 27, 2020. Due to amount and
nature of the PPP loans, these loans were not included in the LHFI
portfolio and are presented separately in the accompanying
consolidated balance sheets. The PPP loans are fully guaranteed by
the SBA; therefore, no ACL was estimated for these loans.
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:
12/31/2020
9/30/2020
6/30/2020
3/31/2020
12/31/2019
SECURITIES
AVAILABLE FOR SALE
U.S. Government agency obligations
$
18,041
$
19,011
$
19,898
$
21,190
$
22,327
Obligations of states and political
subdivisions
5,835
8,315
11,176
23,572
25,465
Mortgage-backed securities
Residential mortgage pass-through
securities
Guaranteed by GNMA
56,862
62,156
69,637
71,971
69,252
Issued by FNMA and FHLMC
1,441,321
1,279,919
1,121,604
967,329
713,356
Other residential mortgage-backed
securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
419,437
500,858
574,940
634,075
658,226
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
50,319
52,469
86,898
115,642
113,778
Total securities available for sale
$
1,991,815
$
1,922,728
$
1,884,153
$
1,833,779
$
1,602,404
SECURITIES HELD
TO MATURITY
U.S. Government agency obligations
$
—
$
—
$
—
$
—
$
3,781
Obligations of states and political
subdivisions
26,584
31,605
31,629
31,758
31,781
Mortgage-backed securities
Residential mortgage pass-through
securities
Guaranteed by GNMA
7,598
8,244
10,306
10,492
10,820
Issued by FNMA and FHLMC
67,944
78,213
86,346
91,971
96,631
Other residential mortgage-backed
securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
360,361
399,400
435,333
463,175
485,324
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
75,585
93,818
96,434
106,880
109,762
Total securities held to maturity
$
538,072
$
611,280
$
660,048
$
704,276
$
738,099
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED
FINANCIALS December 31, 2020 ($ in thousands) (unaudited)
Note 3 - Securities Available for Sale and Held to Maturity
(continued)
At December 31, 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 $8.9 million ($6.7 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 98.7% 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)
12/31/2020
9/30/2020
6/30/2020
3/31/2020
12/31/2019
Loans secured by real estate:
Construction, land development and other
land loans
$
1,309,039
$
1,385,947
$
1,277,277
$
1,136,389
$
1,162,791
Secured by 1-4 family residential
properties
1,741,132
1,775,400
1,813,525
1,852,065
1,855,913
Secured by nonfarm, nonresidential
properties
2,709,026
2,707,627
2,610,392
2,575,422
2,475,245
Other real estate secured
1,065,964
887,792
884,815
838,573
724,480
Commercial and industrial loans
1,309,078
1,398,468
1,413,255
1,476,777
1,477,896
Consumer loans
161,174
160,960
161,620
170,678
175,738
State and other political subdivision
loans
1,000,776
935,349
931,536
938,637
967,944
Other loans
528,335
596,185
567,386
579,379
495,621
LHFI
9,824,524
9,847,728
9,659,806
9,567,920
9,335,628
ACL LHFI
(117,306
)
(122,010
)
(119,188
)
(100,564
)
(84,277
)
Net LHFI
$
9,707,218
$
9,725,718
$
9,540,618
$
9,467,356
$
9,251,351
(1) See Note 1 – Recently Effective Accounting Pronouncements in
the Notes to Consolidated Financials for additional details.
The following table presents the LHFI composition by region at
December 31, 2020 and reflects each region’s diversified mix of
loans:
December 31, 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
$
1,309,039
$
494,486
$
62,963
$
315,555
$
30,618
$
405,417
Secured by 1-4 family residential
properties
1,741,132
118,205
37,062
1,501,505
73,039
11,321
Secured by nonfarm, nonresidential
properties
2,709,026
710,266
262,697
984,508
186,405
565,150
Other real estate secured
1,065,964
312,295
6,332
392,986
6,621
347,730
Commercial and industrial loans
1,309,078
199,301
22,774
611,743
271,940
203,320
Consumer loans
161,174
23,402
6,641
107,133
20,062
3,936
State and other political subdivision
loans
1,000,776
87,468
35,179
670,883
41,698
165,548
Other loans
528,335
81,631
14,247
349,217
61,709
21,531
Loans
$
9,824,524
$
2,027,054
$
447,895
$
4,933,530
$
692,092
$
1,723,953
CONSTRUCTION,
LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots
$
74,177
$
24,842
$
12,945
$
28,546
$
1,231
$
6,613
Development
94,443
37,537
315
33,059
12,505
11,027
Unimproved land
99,857
30,260
15,863
24,742
10,746
18,246
1-4 family construction
245,579
112,709
23,641
71,815
5,061
32,353
Other construction
794,983
289,138
10,199
157,393
1,075
337,178
Construction, land development and other
land loans
$
1,309,039
$
494,486
$
62,963
$
315,555
$
30,618
$
405,417
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED
FINANCIALS December 31, 2020 ($ in thousands) (unaudited)
Note 4 – Loan Composition (continued)
December 31, 2020
Total
Alabama
Florida
Mississippi (Central and
Southern Regions)
Tennessee (Memphis, TN and
Northern MS Regions)
Texas
LOANS SECURED BY
NONFARM, NONRESIDENTIAL PROPERTIES BY REGION
Non-owner occupied:
Retail
$
389,905
$
149,401
$
31,965
$
108,724
$
26,257
$
73,558
Office
228,094
64,625
26,697
68,056
12,122
56,594
Hotel/motel
341,972
146,542
91,819
52,883
39,728
11,000
Mini-storage
130,995
23,499
2,344
61,359
397
43,396
Industrial
183,795
47,135
15,805
40,308
1,087
79,460
Health care
46,597
23,088
2,462
18,462
389
2,196
Convenience stores
16,148
3,304
—
3,351
383
9,110
Nursing homes/senior living
112,256
35,941
—
31,456
6,923
37,936
Other
71,670
4,505
6,715
24,133
8,450
27,867
Total non-owner occupied loans
1,521,432
498,040
177,807
408,732
95,736
341,117
Owner-occupied:
Office
188,960
42,679
45,651
49,120
8,814
42,696
Churches
105,832
22,604
6,768
51,499
10,231
14,730
Industrial warehouses
161,050
13,732
3,097
50,969
16,362
76,890
Health care
136,246
24,485
4,466
94,695
2,341
10,259
Convenience stores
122,155
18,744
9,516
65,919
556
27,420
Retail
73,832
15,308
6,574
26,447
10,653
14,850
Restaurants
59,856
4,255
4,446
34,681
15,097
1,377
Auto dealerships
54,805
7,542
279
21,009
25,975
—
Nursing homes/senior living
175,442
57,846
—
117,596
—
—
Other
109,416
5,031
4,093
63,841
640
35,811
Total owner-occupied loans
1,187,594
212,226
84,890
575,776
90,669
224,033
Loans secured by nonfarm, nonresidential
properties
$
2,709,026
$
710,266
$
262,697
$
984,508
$
186,405
$
565,150
Note 5 - Subordinated Notes Payable
During the fourth quarter of 2020, Trustmark agreed to issue and
sell $125.0 million aggregate principal amount of its 3.625%
Fixed-to-Floating Rate Subordinated Notes (the Notes) due December
1, 2030. The Notes were sold at an underwriting discount of 1.2%,
resulting in net proceeds to Trustmark of $123.5 million before
deducting offering expenses of $600 thousand. At December 31, 2020,
the carrying amount of the Notes was $122.9 million. The Notes are
unsecured obligations and are subordinated in right of payment to
all our existing and future senior indebtedness, whether secured or
unsecured. The Notes are obligations of Trustmark only and are not
obligations of, and are not guaranteed by, any of its subsidiaries,
including Trustmark National Bank. From the date of issuance until
November 30, 2025, the Notes bear interest at a fixed rate of
3.625% per year, payable semi-annually in arrears on June 1 and
December 1 of each year. Beginning December 1, 2025, the Notes will
bear interest at a floating rate per year equal to the Benchmark
rate, which is the Three-Month Term Secured Overnight Financing
Rate (SOFR), plus 338.7 basis points, payable quarterly in arrears
on March 1, June 1, September 1 and December 1 of each year. The
Notes qualify as Tier 2 capital for Trustmark. The Notes may be
redeemed at Trustmark’s option under certain circumstances.
Trustmark intends to use the net proceeds for general corporate
purposes.
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED
FINANCIALS December 31, 2020 ($ in thousands) (unaudited)
Note 6 – 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
Year Ended
12/31/2020
9/30/2020
6/30/2020
3/31/2020
12/31/2019
12/31/2020
12/31/2019
Securities – taxable
1.62
%
2.02
%
2.16
%
2.25
%
2.24
%
2.01
%
2.25
%
Securities – nontaxable
3.89
%
3.80
%
3.58
%
3.85
%
3.92
%
3.78
%
3.81
%
Securities – total
1.65
%
2.05
%
2.18
%
2.28
%
2.27
%
2.03
%
2.28
%
PPP loans
6.76
%
2.84
%
2.65
%
—
—
4.12
%
—
Loans - LHFI & LHFS
3.75
%
3.81
%
4.03
%
4.54
%
4.67
%
4.03
%
4.87
%
Acquired loans
—
—
—
—
10.90
%
—
9.42
%
Loans - total
3.99
%
3.73
%
3.93
%
4.54
%
4.72
%
4.03
%
4.91
%
Fed funds sold & reverse
repurchases
—
1.32
%
—
—
2.16
%
0.45
%
2.52
%
Other earning assets
0.12
%
0.18
%
0.11
%
1.59
%
1.57
%
0.24
%
2.23
%
Total earning assets
3.35
%
3.26
%
3.39
%
4.06
%
4.19
%
3.50
%
4.31
%
Interest-bearing deposits
0.27
%
0.31
%
0.37
%
0.71
%
0.85
%
0.40
%
0.93
%
Fed funds purchased & repurchases
0.13
%
0.15
%
0.16
%
1.02
%
1.21
%
0.50
%
1.28
%
Other borrowings
1.61
%
1.19
%
2.09
%
2.35
%
2.32
%
1.72
%
2.29
%
Total interest-bearing liabilities
0.30
%
0.33
%
0.39
%
0.75
%
0.88
%
0.43
%
0.96
%
Net interest margin
3.15
%
3.03
%
3.12
%
3.52
%
3.56
%
3.19
%
3.62
%
Net interest margin excluding PPP and
acquired loans
2.91
%
3.05
%
3.14
%
3.52
%
3.52
%
3.15
%
3.58
%
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
2.91% for the fourth quarter of 2020, a decrease of 14 basis points
when compared to the third quarter of 2020. Continued low interest
rates decreased the yield on the loans held for investment and held
for sale portfolio as well as the securities portfolio and were
partially offset by lower costs of interest-bearing deposits.
Note 7 – 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 $909
thousand during the fourth quarter of 2020.
The following table illustrates the components of mortgage
banking revenues included in noninterest income in the accompanying
income statements:
Quarter Ended
Year Ended
12/31/2020
9/30/2020
6/30/2020
3/31/2020
12/31/2019
12/31/2020
12/31/2019
Mortgage servicing income, net
$
6,227
$
5,742
$
5,893
$
5,819
$
5,854
$
23,681
$
22,883
Change in fair value-MSR from runoff
(5,177
)
(4,590
)
(4,214
)
(2,607
)
(2,950
)
(16,588
)
(11,835
)
Gain on sales of loans, net
28,014
34,472
34,078
14,339
7,984
110,903
30,296
Mortgage banking income before hedge
ineffectiveness
29,064
35,624
35,757
17,551
10,888
117,996
41,344
Change in fair value-MSR from market
changes
951
60
(3,159
)
(23,999
)
4,048
(26,147
)
(21,078
)
Change in fair value of derivatives
(1,860
)
755
1,147
33,931
(7,022
)
33,973
9,556
Net positive (negative) hedge
ineffectiveness
(909
)
815
(2,012
)
9,932
(2,974
)
7,826
(11,522
)
Mortgage banking, net
$
28,155
$
36,439
$
33,745
$
27,483
$
7,914
$
125,822
$
29,822
Note 8 – 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 $0.05 per basic share
net of tax) in Trustmark’s first quarter 2020 earnings.
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED
FINANCIALS December 31, 2020 ($ in thousands) (unaudited)
Note 9 – Other Noninterest Income and Expense
Other noninterest income consisted of the following for the
periods presented:
Quarter Ended
Year Ended
12/31/2020
9/30/2020
6/30/2020
3/31/2020
12/31/2019
12/31/2020
12/31/2019
Partnership amortization for tax credit
purposes
$
(1,877
)
$
(1,457
)
$
(1,205
)
$
(1,161
)
$
(1,630
)
$
(5,700
)
$
(7,644
)
Increase in life insurance cash surrender
value
1,708
1,755
1,696
1,722
1,802
6,881
7,202
Other miscellaneous income
2,707
1,303
1,722
1,746
3,279
7,478
10,251
Total other, net
$
2,538
$
1,601
$
2,213
$
2,307
$
3,451
$
8,659
$
9,809
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
Year Ended
12/31/2020
9/30/2020
6/30/2020
3/31/2020
12/31/2019
12/31/2020
12/31/2019
Loan expense
$
3,696
$
3,485
$
2,954
$
2,799
$
2,968
$
12,934
$
11,554
Amortization of intangibles
752
752
736
812
1,002
3,052
4,116
FDIC assessment expense
1,500
1,410
1,590
1,590
1,450
6,090
6,444
Other miscellaneous expense
9,942
8,951
7,985
9,552
8,956
36,430
32,068
Total other expense
$
15,890
$
14,598
$
13,265
$
14,753
$
14,376
$
58,506
$
54,182
Note 10 – 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 December 31, 2020 ($ in thousands except per share data)
(unaudited)
Note 10 – Non-GAAP Financial Measures (continued)
Quarter Ended
Year Ended
12/31/2020
9/30/2020
6/30/2020
3/31/2020
12/31/2019
12/31/2020
12/31/2019
TANGIBLE
EQUITY
AVERAGE BALANCES
Total shareholders' equity
$
1,725,035
$
1,694,903
$
1,665,716
$
1,640,070
$
1,656,605
$
1,681,587
$
1,622,013
Less: Goodwill
(385,270
)
(385,270
)
(383,081
)
(380,671
)
(379,627
)
(383,582
)
(379,627
)
Identifiable intangible assets
(7,803
)
(8,550
)
(7,834
)
(8,049
)
(7,882
)
(8,060
)
(9,212
)
Total average tangible equity
$
1,331,962
$
1,301,083
$
1,274,801
$
1,251,350
$
1,269,096
$
1,289,945
$
1,233,174
PERIOD END BALANCES
Total shareholders' equity
$
1,741,117
$
1,710,041
$
1,673,944
$
1,652,399
$
1,660,702
Less: Goodwill
(385,270
)
(385,270
)
(385,270
)
(381,717
)
(379,627
)
Identifiable intangible assets
(7,390
)
(8,142
)
(8,895
)
(7,537
)
(7,343
)
Total tangible equity
(a)
$
1,348,457
$
1,316,629
$
1,279,779
$
1,263,145
$
1,273,732
TANGIBLE
ASSETS
Total assets
$
16,551,840
$
15,558,162
$
15,692,079
$
14,019,829
$
13,497,877
Less: Goodwill
(385,270
)
(385,270
)
(385,270
)
(381,717
)
(379,627
)
Identifiable intangible assets
(7,390
)
(8,142
)
(8,895
)
(7,537
)
(7,343
)
Total tangible assets
(b)
$
16,159,180
$
15,164,750
$
15,297,914
$
13,630,575
$
13,110,907
Risk-weighted assets
(c)
$
12,017,378
$
11,963,269
$
11,539,157
$
11,427,297
$
11,002,877
NET INCOME
ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income
$
51,217
$
54,440
$
32,150
$
22,218
$
33,946
$
160,025
$
150,460
Plus: Intangible amortization net of
tax
564
564
552
609
752
2,289
3,088
Net income adjusted for intangible
amortization
$
51,781
$
55,004
$
32,702
$
22,827
$
34,698
$
162,314
$
153,548
Period end common shares outstanding
(d)
63,424,526
63,423,820
63,422,439
63,396,912
64,200,111
TANGIBLE COMMON
EQUITY MEASUREMENTS
Return on average tangible equity (1)
15.47
%
16.82
%
10.32
%
7.34
%
10.85
%
12.58
%
12.45
%
Tangible equity/tangible assets
(a)/(b)
8.34
%
8.68
%
8.37
%
9.27
%
9.72
%
Tangible equity/risk-weighted assets
(a)/(c)
11.22
%
11.01
%
11.09
%
11.05
%
11.58
%
Tangible book value
(a)/(d)*1,000
$
21.26
$
20.76
$
20.18
$
19.92
$
19.84
COMMON EQUITY
TIER 1 CAPITAL (CET1)
Total shareholders' equity
$
1,741,117
$
1,710,041
$
1,673,944
$
1,652,399
$
1,660,702
CECL transition adjustment (3)
31,199
32,647
32,693
26,476
—
AOCI-related adjustments
1,051
(5,684
)
(10,565
)
(7,698
)
23,600
CET1 adjustments and deductions:
Goodwill net of associated deferred tax
liabilities (DTLs)
(371,333
)
(371,345
)
(371,342
)
(367,825
)
(365,738
)
Other adjustments and deductions for CET1
(2)
(6,190
)
(6,770
)
(7,352
)
(6,269
)
(5,896
)
CET1 capital
(e)
1,395,844
1,358,889
1,317,378
1,297,083
1,312,668
Additional tier 1 capital instruments plus
related surplus
60,000
60,000
60,000
60,000
60,000
Tier 1 capital
$
1,455,844
$
1,418,889
$
1,377,378
$
1,357,083
$
1,372,668
Common equity tier 1 capital ratio
(e)/(c)
11.62
%
11.36
%
11.42
%
11.35
%
11.93
%
(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 December 31, 2020 ($ in thousands except per share data)
(unaudited)
Note 10 – Non-GAAP Financial Measures (continued)
Trustmark discloses certain non-GAAP financial measures because
Management uses these measures for business planning purposes,
including to manage Trustmark’s business against internal projected
results of operations and to measure Trustmark’s performance.
Trustmark views these as measures of our core operating business,
which exclude the impact of the items detailed below, as these
items are generally not operational in nature. These non-GAAP
financial measures also provide another basis for comparing
period-to-period results as presented in the accompanying selected
financial data table and the audited consolidated financial
statements by excluding potential differences caused by
non-operational and unusual or non-recurring items. Readers are
cautioned that these adjustments are not permitted under GAAP.
Trustmark encourages readers to consider its consolidated financial
statements and the notes related thereto in their entirety, and not
to rely on any single financial measure.
The following table presents pre-provision net revenue (PPNR)
during the periods presented:
Quarter Ended
Year Ended
12/31/2020
9/30/2020
6/30/2020
3/31/2020
12/31/2019
12/31/2020
12/31/2019
Net interest income (GAAP)
$
111,378
$
106,207
$
105,000
$
103,952
$
105,591
$
426,537
$
426,589
Noninterest income (GAAP)
66,117
73,701
69,511
65,264
47,578
274,593
187,045
Pre-provision revenue
(a)
$
177,495
$
179,908
$
174,511
$
169,216
$
153,169
$
701,130
$
613,634
Noninterest expense (GAAP)
$
118,807
$
113,959
$
118,659
$
123,810
$
110,027
$
475,235
$
429,002
Less: Voluntary early retirement program
—
—
—
(4,375
)
—
(4,375
)
—
Credit loss expense related to off-balance sheet
credit exposures
1,087
3,004
(6,242
)
(6,783
)
—
(8,934
)
—
Adjusted noninterest expense - PPNR
(Non-GAAP)
(b)
$
119,894
$
116,963
$
112,417
$
112,652
$
110,027
$
461,926
$
429,002
PPNR (Non-GAAP)
(a)-(b)
$
57,601
$
62,945
$
62,094
$
56,564
$
43,142
$
239,204
$
184,632
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
Year Ended
12/31/2020
12/31/2019
12/31/2020
12/31/2019
Amount
Diluted EPS
Amount
Diluted EPS
Amount
Diluted EPS
Amount
Diluted EPS
Net Income (GAAP)
$
51,217
$
0.81
$
33,946
$
0.53
$
160,025
$
2.51
$
150,460
$
2.32
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)
$
51,217
$
0.81
$
33,946
$
0.53
$
163,306
$
2.56
$
150,460
$
2.32
Reported
(GAAP)
Adjusted
Reported
(GAAP)
Adjusted
Reported
(GAAP)
Adjusted
Reported
(GAAP)
Adjusted
(Non-GAAP)
(Non-GAAP)
(Non-GAAP)
(Non-GAAP)
Return on average equity
11.81
%
n/a
8.13
%
n/a
9.52
%
9.69
%
9.28
%
n/a
Return on average tangible equity
15.47
%
n/a
10.85
%
n/a
12.58
%
12.81
%
12.45
%
n/a
Return on average assets
1.28
%
n/a
1.00
%
n/a
1.05
%
1.07
%
1.11
%
n/a
n/a - not applicable
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED
FINANCIALS December 31, 2020 ($ in thousands) (unaudited)
Note 10 – Non-GAAP Financial Measures (continued)
The following table presents Trustmark’s calculation of its
efficiency ratio for the periods presented:
Quarter Ended
Year Ended
12/31/2020
9/30/2020
6/30/2020
3/31/2020
12/31/2019
12/31/2020
12/31/2019
Total noninterest expense (GAAP)
$
118,807
$
113,959
$
118,659
$
123,810
$
110,027
$
475,235
$
429,002
Less:
Other real estate expense, net
812
(1,203
)
(271
)
(1,294
)
(1,491
)
(1,956
)
(3,906
)
Amortization of intangibles
(752
)
(752
)
(736
)
(812
)
(1,002
)
(3,052
)
(4,116
)
Voluntary early retirement program
—
—
—
(4,375
)
—
(4,375
)
—
Credit loss expense related to off-balance
sheet exposures
1,087
3,004
(6,242
)
(6,783
)
—
(8,934
)
—
Charitable contributions resulting in
state tax credits
(375
)
(375
)
(375
)
(375
)
—
(1,500
)
—
Adjusted noninterest expense
(Non-GAAP)
(c)
$
119,579
$
114,633
$
111,035
$
110,171
$
107,534
$
455,418
$
420,980
Net interest income (GAAP)
$
111,378
$
106,207
$
105,000
$
103,952
$
105,591
$
426,537
$
426,589
Add:
Tax equivalent adjustment
2,939
2,969
3,007
3,108
3,149
12,023
12,877
Net interest income-FTE (Non-GAAP)
(a)
$
114,317
$
109,176
$
108,007
$
107,060
$
108,740
$
438,560
$
439,466
Noninterest income (GAAP)
$
66,117
$
73,701
$
69,511
$
65,264
$
47,578
$
274,593
$
187,045
Add:
Partnership amortization for tax credit
purposes
1,877
1,457
1,205
1,161
1,630
5,700
7,644
Adjusted noninterest income (Non-GAAP)
(b)
$
67,994
$
75,158
$
70,716
$
66,425
$
49,208
$
280,293
$
194,689
Adjusted revenue (Non-GAAP)
(a)+(b)
$
182,311
$
184,334
$
178,723
$
173,485
$
157,948
$
718,853
$
634,155
Efficiency ratio (Non-GAAP)
(c)/((a)+(b))
65.59
%
62.19
%
62.13
%
63.50
%
68.08
%
63.35
%
66.38
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210126006001/en/
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
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