Performance Reflects Continued Balance Sheet
Growth and Strong Credit Quality
Trustmark Corporation (Nasdaq:TRMK) reported net income of $52.0
million in the first quarter of 2021, representing diluted earnings
per share of $0.82. Net income in the first quarter produced a
return on average tangible equity of 15.56% and a return on average
assets of 1.26%. Trustmark’s Board of Directors declared a
quarterly cash dividend of $0.23 per share payable June 15, 2021,
to shareholders of record on June 1, 2021.
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First Quarter Highlights
- Supported local businesses by originating 4,774 loans totaling
$301.5 million (net of $16.5 million in deferred fees and costs)
from the SBA’s Paycheck Protection Program (PPP) during the
quarter
- Mortgage loan production totaled $766.6 million, down 2.8% from
the prior quarter and an increase of 67.7% from levels one year
earlier
- Provision for credit losses totaled a negative $10.5 million
due to improved credit loss expectations
Duane A. Dewey, President and CEO, stated, “Our first quarter
financial performance reflects solid loan and deposit growth, as
well as continued increases in our insurance and wealth management
businesses. Our mortgage banking revenue remained strong following
record-setting levels in the prior quarter. Improvement in the
economic outlook resulted in negative provision and expense for
credit losses, which also contributed to earnings. We continue to
focus on efficiency enhancements throughout the organization,
including investments in technology to better serve customers as
well as rationalization of the branch network. Trustmark remains
well-positioned to serve and expand our customer base and create
long-term value for our shareholders.”
Balance Sheet Management
- Loans held for investment (HFI) totaled $10.0 billion, up 1.6%
from the prior quarter and 4.3% year-over-year
- Deposits totaled $14.4 billion, an increase of 2.4%
linked-quarter and 24.3% year-over-year
- Maintained strong capital position with CET1 ratio of 11.71%
and total risk-based capital ratio of 14.07%
Loans HFI totaled $10.0 billion at March 31, 2021, reflecting an
increase of $159.2 million, or 1.6%, linked-quarter and $415.8
million, or 4.3%, year-over-year. The linked-quarter growth
reflects increases in other real estate secured loans and loans
secured by nonfarm, nonresidential properties, which were
principally the result of the migration of construction loans as
projects were completed. Trustmark’s loan portfolio is
well-diversified by loan type and geography.
Deposits totaled $14.4 billion at March 31, 2021, up $334.7
million, or 2.4%, from the prior quarter and $2.8 billion, or
24.3%, year-over-year. Trustmark maintains a strong liquidity
position as loans HFI represented 69.4% of total deposits at March
31, 2021. Noninterest-bearing deposits represented 32.7% of total
deposits at the end of the first quarter, compared to 31.0% in the
prior quarter. Interest-bearing deposit costs totaled 0.22% for the
first quarter, a decrease of 5 basis points from the prior quarter.
The total cost of interest-bearing liabilities was 0.28% for the
first quarter of 2021, a decrease of 2 basis points from the prior
quarter.
During the first quarter, Trustmark repurchased $4.2 million, or
approximately 145 thousand of its common shares in open market
transactions. At March 31, 2021, Trustmark had $95.8 million in
remaining authority under its existing stock repurchase program,
which expires December 31, 2021. 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 March 31, 2021, Trustmark’s
tangible equity to tangible assets ratio was 8.30%, while its total
risk-based capital ratio was 14.07%. Tangible book value per share
was $21.59 at March 31, 2021, up 8.4% year-over-year.
Credit Quality
- Allowance for credit losses (ACL) represented 437.08% of
nonaccrual loans, excluding individually evaluated loans, at March
31, 2021
- Recoveries exceeded charge-offs by $2.4 million in the first
quarter
- Loans remaining under a COVID-19 related concession represented
approximately 28 basis points of loans HFI at March 31, 2021
Nonaccrual loans totaled $63.5 million at March 31, 2021, up
$386 thousand from the prior quarter and $10.5 million
year-over-year. Other real estate totaled $10.7 million, reflecting
a $1.0 million decrease from the prior quarter and a decline of
$14.2 million year-over-year. Collectively, nonperforming assets
totaled $74.2 million at March 31, 2021, reflecting a
linked-quarter decrease of $614 thousand and a year-over-year
decrease of $3.7 million.
The provision for credit losses was a negative $10.5 million in
the first quarter. Negative provisioning was primarily driven by
decreases in quantitative reserves as a result of an improving
economic forecast.
Allocation of Trustmark’s $109.2 million allowance for credit
losses on loans HFI represented 1.13% of commercial loans and 0.95%
of consumer and home mortgage loans, resulting in an allowance to
total loans HFI of 1.09% at March 31, 2021. Management believes the
level of the ACL is commensurate with the present risk in the loan
portfolio.
Revenue Generation
- Mortgage banking revenue totaled $20.8 million in the first
quarter, reflecting tighter spreads and reduced gains on sale of
mortgage loans in the secondary market
- Insurance commissions increased 22.1% from the prior quarter
and wealth management revenue rose 7.4% over the same period
Revenue in the first quarter totaled $162.9 million, down 8.2%
from the prior quarter and 3.7% from the same quarter in the prior
year. The linked-quarter decrease primarily reflects lower interest
income and fees from PPP loans and loans HFI and lower net gains on
sales of mortgage loans.
Net interest income (FTE) in the first quarter totaled $105.2
million, resulting in a net interest margin of 2.81%, down 34 basis
points from the prior quarter. The net interest margin, excluding
PPP loans and Federal Reserve Bank balance, totaled 2.99% for the
first quarter, a decrease of 10 basis points when compared to the
prior quarter. 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 first quarter totaled $60.6 million, a
decrease of $5.5 million from the prior quarter and $4.7 million
year-over-year. The linked-quarter increases in insurance, wealth
management and bank card revenue were more than offset by declines
in mortgage banking revenue and service charges on deposit
accounts. Mortgage loan production in the first quarter totaled
$766.6 million, down 2.8% from the record level in the prior
quarter and an increase of 67.7% year-over-year. Mortgage banking
revenue totaled $20.8 million in the first quarter, a decrease of
$7.4 million from the prior quarter and $6.7 million
year-over-year. The linked-quarter decline is principally
attributable to reduced spreads which resulted in lower net gains
on sales of mortgage loans in the secondary market.
Insurance revenue totaled $12.4 million in the first quarter, up
22.1%, or $2.2 million, from the fourth quarter of 2020 and 7.7%,
or $895 thousand, year-over-year. The linked-quarter increase
primarily reflects growth in property and casualty commissions.
Wealth management revenue in the first quarter totaled $8.4
million, an increase of $578 thousand, or 7.4%, from the prior
quarter and relatively unchanged year-over-year. The linked-quarter
growth reflects both higher trust management fees and brokerage and
investment services revenue.
Bank card and other fees increased $365 thousand, or 4.0%, from
the prior quarter and $4.1 million, or 76.9%, year-over-year,
reflecting higher customer derivative revenue. Service charges on
deposit accounts decreased $927 thousand, or 11.2%, from the prior
quarter and $2.7 million, or 26.7%, year-over-year. The decline is
due largely to reduced NSF/OD occurrences attributable in part to
stimulus programs to address the COVID-19 pandemic.
Noninterest Expense
- Noninterest expense totaled $112.2 million in first quarter,
down 5.6% from the prior quarter
- Adjusted noninterest expense, which excludes amortization of
intangibles, ORE expenses, and credit losses for off-balance sheet
credit exposures, increased $629 thousand, or 0.5%, from the prior
quarter; please refer to the Consolidated Financial Information,
Footnote 8– Non-GAAP Financial Measures
- Continued to realign delivery channels to reflect changing
customer preferences
Adjusted noninterest expense in the first quarter was $120.2
million, up $629 thousand, or 0.5%, from the prior quarter.
Salaries and employee benefits increased $1.5 million
linked-quarter principally due to payroll taxes and increases for
performance-based commissions. Services and fees increased $157
thousand and net occupancy-premises expense grew $179 thousand
during the first quarter compared to the prior quarter.
Credit loss expense related to off-balance sheet credit
exposures was a negative $9.4 million in the first quarter,
reflecting the improvement of the macroeconomic factors used to
determine the necessary reserves for off-balance sheet credit
exposures. Other real estate expense, net totaled $324 thousand for
the first quarter compared to a negative $812 thousand for the
fourth quarter of 2020, reflecting lower net gains on sale of other
real estate.
Trustmark continued to invest in technology to enhance
efficiency. Digital transformation initiatives, including a
completely redesigned, state-of-the-art website to promote
engagement and enhance the customer experience, position Trustmark
for additional growth. During the first quarter, Trustmark
continued to realign delivery channels and closed seven offices,
reflecting changing customer preferences and the continued
migration to mobile and digital banking channels. Additionally, two
new offices were opened, one each in the Memphis, TN MSA and the
Jackson, MS MSA. Each of these offices features a design that
integrates myTeller® interactive teller machine technology as well
as provides enhanced areas for customer interaction.
“Looking forward, Trustmark will continue to focus upon
efficiency, growth and innovation opportunities while building upon
our solid risk management processes, corporate culture and core
values. We will continue to optimize delivery channels and
introduce technology to enhance growth and efficiency
opportunities. We will provide the 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, April 28, 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, May 12, 2021, in archived format at the same web address
or by calling (877) 344-7529, passcode 10153927.
Trustmark is a financial services company providing banking and
financial solutions through 181 offices in Alabama, Florida,
Mississippi, Tennessee and Texas.
Forward-Looking Statements
Certain statements contained in this document constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. You can identify
forward-looking statements by words such as “may,” “hope,” “will,”
“should,” “expect,” “plan,” “anticipate,” “intend,” “believe,”
“estimate,” “predict,” “project,” “potential,” “seek,” “continue,”
“could,” “would,” “future” or the negative of those terms or other
words of similar meaning. You should read statements that contain
these words carefully because they discuss our future expectations
or state other “forward-looking” information. These forward-looking
statements include, but are not limited to, statements relating to
anticipated future operating and financial performance measures,
including net interest margin, credit quality, business
initiatives, growth opportunities and growth rates, among other
things, and encompass any estimate, prediction, expectation,
projection, opinion, anticipation, outlook or statement of belief
included therein as well as the management assumptions underlying
these forward-looking statements. You should be aware that the
occurrence of the events described under the caption “Risk Factors”
in Trustmark’s filings with the Securities and Exchange Commission
could have an adverse effect on our business, results of operations
and financial condition. Should one or more of these risks
materialize, or should any such underlying assumptions prove to be
significantly different, actual results may vary significantly from
those anticipated, estimated, projected or expected.
Risks that could cause actual results to differ materially from
current expectations of Management include, but are not limited to,
changes in the level of nonperforming assets and charge-offs, 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 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 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 Securities and Exchange Commission
(SEC).
Although we believe that the expectations reflected in such
forward-looking statements are reasonable, we can give no assurance
that such expectations will prove to be correct. Except as required
by law, we undertake no obligation to update or revise any of this
information, whether as the result of new information, future
events or developments or otherwise.
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION March 31, 2021
($ in thousands) (unaudited) Linked
Quarter Year over Year QUARTERLY AVERAGE BALANCES 3/31/2021
12/31/2020 3/31/2020 $ Change % Change
$ Change % Change Securities AFS-taxable
$
2,098,089
$
1,902,162
$
1,620,422
$
195,927
10.3
%
$
477,667
29.5
%
Securities AFS-nontaxable
5,190
5,206
22,056
(16
)
-0.3
%
(16,866
)
-76.5
%
Securities HTM-taxable
489,260
550,563
694,740
(61,303
)
-11.1
%
(205,480
)
-29.6
%
Securities HTM-nontaxable
24,070
24,752
25,673
(682
)
-2.8
%
(1,603
)
-6.2
%
Total securities
2,616,609
2,482,683
2,362,891
133,926
5.4
%
253,718
10.7
%
Paycheck protection program loans (PPP)
598,139
875,098
—
(276,959
)
-31.6
%
598,139
n/m
Loans (includes loans held for sale)
10,316,319
10,231,671
9,678,174
84,648
0.8
%
638,145
6.6
%
Fed funds sold and reverse repurchases
136
303
164
(167
)
-55.1
%
(28
)
-17.1
%
Other earning assets
1,667,906
860,540
187,327
807,366
93.8
%
1,480,579
n/m
Total earning assets
15,199,109
14,450,295
12,228,556
748,814
5.2
%
2,970,553
24.3
%
Allowance for credit losses (ACL), loans held for
investment (LHFI)
(119,557
)
(124,088
)
(85,015
)
4,531
3.7
%
(34,542
)
-40.6
%
Other assets
1,601,250
1,620,694
1,498,725
(19,444
)
-1.2
%
102,525
6.8
%
Total assets
$
16,680,802
$
15,946,901
$
13,642,266
$
733,901
4.6
%
$
3,038,536
22.3
%
Interest-bearing demand deposits
$
3,743,651
$
3,649,590
$
3,184,134
$
94,061
2.6
%
$
559,517
17.6
%
Savings deposits
4,659,037
4,350,783
3,646,936
308,254
7.1
%
1,012,101
27.8
%
Time deposits
1,371,830
1,436,677
1,617,307
(64,847
)
-4.5
%
(245,477
)
-15.2
%
Total interest-bearing deposits
9,774,518
9,437,050
8,448,377
337,468
3.6
%
1,326,141
15.7
%
Fed funds purchased and repurchases
166,909
170,474
247,513
(3,565
)
-2.1
%
(80,604
)
-32.6
%
Other borrowings
166,926
173,525
85,279
(6,599
)
-3.8
%
81,647
95.7
%
Subordinated notes
122,875
42,828
—
80,047
n/m
122,875
n/m
Junior subordinated debt securities
61,856
61,856
61,856
—
0.0
%
—
0.0
%
Total interest-bearing liabilities
10,293,084
9,885,733
8,843,025
407,351
4.1
%
1,450,059
16.4
%
Noninterest-bearing deposits
4,363,559
4,100,849
2,910,951
262,710
6.4
%
1,452,608
49.9
%
Other liabilities
264,808
235,284
248,220
29,524
12.5
%
16,588
6.7
%
Total liabilities
14,921,451
14,221,866
12,002,196
699,585
4.9
%
2,919,255
24.3
%
Shareholders' equity
1,759,351
1,725,035
1,640,070
34,316
2.0
%
119,281
7.3
%
Total liabilities and equity
$
16,680,802
$
15,946,901
$
13,642,266
$
733,901
4.6
%
$
3,038,536
22.3
%
n/m - percentage changes greater than +/- 100% are
considered not meaningful
See Notes to Consolidated
Financials TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION March 31, 2021
($ in thousands) (unaudited) Linked Quarter
Year over Year PERIOD END
BALANCES 3/31/2021 12/31/2020
3/31/2020 $ Change % Change $ Change
% Change Cash and due from banks
$
1,774,541
$
1,952,504
$
404,341
$
(177,963
)
-9.1
%
$
1,370,200
n/m
Fed funds sold and reverse repurchases
—
50
2,000
(50
)
-100.0
%
(2,000
)
-100.0
%
Securities available for sale
2,337,676
1,991,815
1,833,779
345,861
17.4
%
503,897
27.5
%
Securities held to maturity
493,738
538,072
704,276
(44,334
)
-8.2
%
(210,538
)
-29.9
%
PPP loans
679,725
610,134
—
69,591
11.4
%
679,725
n/m
Loans held for sale (LHFS)
412,999
446,951
325,389
(33,952
)
-7.6
%
87,610
26.9
%
Loans held for investment (LHFI)
9,983,704
9,824,524
9,567,920
159,180
1.6
%
415,784
4.3
%
ACL LHFI
(109,191
)
(117,306
)
(100,564
)
8,115
6.9
%
(8,627
)
-8.6
%
Net LHFI
9,874,513
9,707,218
9,467,356
167,295
1.7
%
407,157
4.3
%
Premises and equipment, net
199,098
194,278
190,179
4,820
2.5
%
8,919
4.7
%
Mortgage servicing rights
83,035
66,464
56,437
16,571
24.9
%
26,598
47.1
%
Goodwill
384,237
385,270
381,717
(1,033
)
-0.3
%
2,520
0.7
%
Identifiable intangible assets
6,724
7,390
7,537
(666
)
-9.0
%
(813
)
-10.8
%
Other real estate
10,651
11,651
24,847
(1,000
)
-8.6
%
(14,196
)
-57.1
%
Operating lease right-of-use assets
33,704
30,901
30,839
2,803
9.1
%
2,865
9.3
%
Other assets
587,672
609,142
591,132
(21,470
)
-3.5
%
(3,460
)
-0.6
%
Total assets
$
16,878,313
$
16,551,840
$
14,019,829
$
326,473
2.0
%
$
2,858,484
20.4
%
Deposits: Noninterest-bearing
$
4,705,991
$
4,349,010
$
2,977,058
$
356,981
8.2
%
$
1,728,933
58.1
%
Interest-bearing
9,677,449
9,699,754
8,598,706
(22,305
)
-0.2
%
1,078,743
12.5
%
Total deposits
14,383,440
14,048,764
11,575,764
334,676
2.4
%
2,807,676
24.3
%
Fed funds purchased and repurchases
160,991
164,519
421,821
(3,528
)
-2.1
%
(260,830
)
-61.8
%
Other borrowings
145,994
168,252
84,230
(22,258
)
-13.2
%
61,764
73.3
%
Subordinated notes
122,877
122,921
—
(44
)
0.0
%
122,877
n/m
Junior subordinated debt securities
61,856
61,856
61,856
—
0.0
%
—
0.0
%
ACL on off-balance sheet credit exposures
29,205
38,572
36,421
(9,367
)
-24.3
%
(7,216
)
-19.8
%
Operating lease liabilities
35,389
32,290
32,055
3,099
9.6
%
3,334
10.4
%
Other liabilities
178,856
173,549
155,283
5,307
3.1
%
23,573
15.2
%
Total liabilities
15,118,608
14,810,723
12,367,430
307,885
2.1
%
2,751,178
22.2
%
Common stock
13,209
13,215
13,209
(6
)
0.0
%
—
0.0
%
Capital surplus
229,892
233,120
229,403
(3,228
)
-1.4
%
489
0.2
%
Retained earnings
1,533,110
1,495,833
1,402,089
37,277
2.5
%
131,021
9.3
%
Accum other comprehensive income (loss), net of tax
(16,506
)
(1,051
)
7,698
(15,455
)
n/m
(24,204
)
n/m
Total shareholders' equity
1,759,705
1,741,117
1,652,399
18,588
1.1
%
107,306
6.5
%
Total liabilities and equity
$
16,878,313
$
16,551,840
$
14,019,829
$
326,473
2.0
%
$
2,858,484
20.4
%
n/m - percentage changes greater than +/- 100% are
considered not meaningful
See Notes to Consolidated
Financials TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION March 31, 2021
($ in thousands except per share data) (unaudited)
Quarter Ended Linked Quarter Year over
Year INCOME STATEMENTS
3/31/2021 12/31/2020 3/31/2020 $ Change
% Change $ Change % Change Interest and fees
on LHFS & LHFI-FTE
$
93,394
$
96,453
$
109,357
$
(3,059
)
-3.2
%
$
(15,963
)
-14.6
%
Interest and fees on PPP loans
9,241
14,870
—
(5,629
)
-37.9
%
9,241
n/m
Interest on securities-taxable
8,938
9,998
12,948
(1,060
)
-10.6
%
(4,010
)
-31.0
%
Interest on securities-tax exempt-FTE
290
293
457
(3
)
-1.0
%
(167
)
-36.5
%
Interest on fed funds sold and reverse repurchases
—
—
—
—
n/m
—
n/m
Other interest income
503
249
740
254
n/m
(237
)
-32.0
%
Total interest income-FTE
112,366
121,863
123,502
(9,497
)
-7.8
%
(11,136
)
-9.0
%
Interest on deposits
5,223
6,363
14,957
(1,140
)
-17.9
%
(9,734
)
-65.1
%
Interest on fed funds purchased and repurchases
56
56
625
—
0.0
%
(569
)
-91.0
%
Other interest expense
1,857
1,127
860
730
64.8
%
997
n/m
Total interest expense
7,136
7,546
16,442
(410
)
-5.4
%
(9,306
)
-56.6
%
Net interest income-FTE
105,230
114,317
107,060
(9,087
)
-7.9
%
(1,830
)
-1.7
%
Provision for credit losses, LHFI
(10,501
)
(4,413
)
20,581
(6,088
)
n/m
(31,082
)
n/m
Net interest income after provision-FTE
115,731
118,730
86,479
(2,999
)
-2.5
%
29,252
33.8
%
Service charges on deposit accounts
7,356
8,283
10,032
(927
)
-11.2
%
(2,676
)
-26.7
%
Bank card and other fees
9,472
9,107
5,355
365
4.0
%
4,117
76.9
%
Mortgage banking, net
20,804
28,155
27,483
(7,351
)
-26.1
%
(6,679
)
-24.3
%
Insurance commissions
12,445
10,196
11,550
2,249
22.1
%
895
7.7
%
Wealth management
8,416
7,838
8,537
578
7.4
%
(121
)
-1.4
%
Other, net
2,090
2,538
2,307
(448
)
-17.7
%
(217
)
-9.4
%
Total noninterest income
60,583
66,117
65,264
(5,534
)
-8.4
%
(4,681
)
-7.2
%
Salaries and employee benefits
71,162
69,660
69,148
1,502
2.2
%
2,014
2.9
%
Services and fees
22,484
22,327
19,930
157
0.7
%
2,554
12.8
%
Net occupancy-premises
6,795
6,616
6,286
179
2.7
%
509
8.1
%
Equipment expense
6,244
6,213
5,616
31
0.5
%
628
11.2
%
Other real estate expense, net
324
(812
)
1,294
1,136
n/m
(970
)
-75.0
%
Credit loss expense related to off-balance sheet credit
exposures
(9,367
)
(1,087
)
6,783
(8,280
)
n/m
(16,150
)
n/m
Other expense
14,539
15,890
14,753
(1,351
)
-8.5
%
(214
)
-1.5
%
Total noninterest expense
112,181
118,807
123,810
(6,626
)
-5.6
%
(11,629
)
-9.4
%
Income before income taxes and tax eq adj
64,133
66,040
27,933
(1,907
)
-2.9
%
36,200
n/m
Tax equivalent adjustment
2,894
2,939
3,108
(45
)
-1.5
%
(214
)
-6.9
%
Income before income taxes
61,239
63,101
24,825
(1,862
)
-3.0
%
36,414
n/m
Income taxes
9,277
11,884
2,607
(2,607
)
-21.9
%
6,670
n/m
Net income
$
51,962
$
51,217
$
22,218
$
745
1.5
%
$
29,744
n/m
Per share data Earnings per share - basic
$
0.82
$
0.81
$
0.35
$
0.01
1.2
%
$
0.47
n/m
Earnings per share - diluted
$
0.82
$
0.81
$
0.35
$
0.01
1.2
%
$
0.47
n/m
Dividends per share
$
0.23
$
0.23
$
0.23
—
0.0
%
—
0.0
%
Weighted average shares outstanding Basic
63,395,911
63,424,219
63,756,629
Diluted
63,562,503
63,616,767
63,913,603
Period end shares outstanding
63,394,522
63,424,526
63,396,912
n/m - percentage changes greater than +/- 100% are
considered not meaningful
See Notes to Consolidated
Financials TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION March 31, 2021
($ in thousands) (unaudited) Quarter
Ended Linked Quarter Year over Year
NONPERFORMING ASSETS (1)
3/31/2021 12/31/2020 3/31/2020 $ Change
% Change $ Change % Change Nonaccrual LHFI
Alabama
$
9,161
$
9,221
$
4,769
$
(60
)
-0.7
%
$
4,392
92.1
%
Florida
607
572
254
35
6.1
%
353
n/m
Mississippi (2)
35,534
35,015
40,815
519
1.5
%
(5,281
)
-12.9
%
Tennessee (3)
12,451
12,572
6,153
(121
)
-1.0
%
6,298
n/m
Texas
5,761
5,748
1,001
13
0.2
%
4,760
n/m
Total nonaccrual LHFI
63,514
63,128
52,992
386
0.6
%
10,522
19.9
%
Other real estate Alabama
3,085
3,271
6,229
(186
)
-5.7
%
(3,144
)
-50.5
%
Florida
—
—
4,835
—
n/m
(4,835
)
-100.0
%
Mississippi (2)
7,566
8,330
13,296
(764
)
-9.2
%
(5,730
)
-43.1
%
Tennessee (3)
—
50
487
(50
)
-100.0
%
(487
)
-100.0
%
Texas
—
—
—
—
n/m
—
n/m
Total other real estate
10,651
11,651
24,847
(1,000
)
-8.6
%
(14,196
)
-57.1
%
Total nonperforming assets
$
74,165
$
74,779
$
77,839
$
(614
)
-0.8
%
$
(3,674
)
-4.7
%
LOANS PAST DUE OVER 90 DAYS
(1) LHFI
$
2,593
$
1,576
$
708
$
1,017
64.5
%
$
1,885
n/m
LHFS-Guaranteed GNMA serviced loans (no obligation to
repurchase)
$
109,566
$
119,409
$
43,564
$
(9,843
)
-8.2
%
$
66,002
n/m
Quarter Ended Linked Quarter Year over
Year ACL LHFI (1)
3/31/2021 12/31/2020 3/31/2020 $ Change
% Change $ Change % Change Beginning Balance
$
117,306
$
122,010
$
84,277
$
(4,704
)
-3.9
%
$
33,029
39.2
%
CECL adoption adjustments: LHFI
—
—
(3,039
)
—
n/m
3,039
100.0
%
Acquired loan transfers
—
—
1,822
—
n/m
(1,822
)
-100.0
%
Provision for credit losses
(10,501
)
(4,413
)
20,581
(6,088
)
n/m
(31,082
)
n/m
Charge-offs
(1,245
)
(2,797
)
(5,545
)
1,552
55.5
%
4,300
77.5
%
Recoveries
3,631
2,506
2,468
1,125
44.9
%
1,163
47.1
%
Net (charge-offs) recoveries
2,386
(291
)
(3,077
)
2,677
n/m
5,463
n/m
Ending Balance
$
109,191
$
117,306
$
100,564
$
(8,115
)
-6.9
%
$
8,627
8.6
%
NET (CHARGE-OFFS) RECOVERIES
(1) Alabama
$
102
$
(1,011
)
$
(1,080
)
$
1,113
n/m
$
1,182
n/m
Florida
30
66
64
(36
)
-54.5
%
(34
)
-53.1
%
Mississippi (2)
2,207
332
126
1,875
n/m
2,081
n/m
Tennessee (3)
47
303
(2,186
)
(256
)
-84.5
%
2,233
n/m
Texas
—
19
(1
)
(19
)
-100.0
%
1
100.0
%
Total net (charge-offs) recoveries
$
2,386
$
(291
)
$
(3,077
)
$
2,677
n/m
$
5,463
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 March 31, 2021 ($ in thousands)
(unaudited) Quarter Ended AVERAGE BALANCES 3/31/2021
12/31/2020 9/30/2020 6/30/2020
3/31/2020 Securities AFS-taxable
$
2,098,089
$
1,902,162
$
1,857,050
$
1,724,320
$
1,620,422
Securities AFS-nontaxable
5,190
5,206
5,973
9,827
22,056
Securities HTM-taxable
489,260
550,563
608,585
655,085
694,740
Securities HTM-nontaxable
24,070
24,752
25,508
25,538
25,673
Total securities
2,616,609
2,482,683
2,497,116
2,414,770
2,362,891
PPP loans
598,139
875,098
941,456
764,416
—
Loans (includes loans held for sale)
10,316,319
10,231,671
10,162,379
9,908,132
9,678,174
Fed funds sold and reverse repurchases
136
303
301
113
164
Other earning assets
1,667,906
860,540
722,917
854,642
187,327
Total earning assets
15,199,109
14,450,295
14,324,169
13,942,073
12,228,556
ACL LHFI
(119,557
)
(124,088
)
(121,842
)
(103,006
)
(85,015
)
Other assets
1,601,250
1,620,694
1,564,825
1,685,317
1,498,725
Total assets
$
16,680,802
$
15,946,901
$
15,767,152
$
15,524,384
$
13,642,266
Interest-bearing demand deposits
$
3,743,651
$
3,649,590
$
3,669,249
$
3,832,372
$
3,184,134
Savings deposits
4,659,037
4,350,783
4,416,046
4,180,540
3,646,936
Time deposits
1,371,830
1,436,677
1,507,348
1,578,737
1,617,307
Total interest-bearing deposits
9,774,518
9,437,050
9,592,643
9,591,649
8,448,377
Fed funds purchased and repurchases
166,909
170,474
84,077
105,696
247,513
Other borrowings
166,926
173,525
167,262
107,533
85,279
Subordinated notes
122,875
42,828
—
—
—
Junior subordinated debt securities
61,856
61,856
61,856
61,856
61,856
Total interest-bearing liabilities
10,293,084
9,885,733
9,905,838
9,866,734
8,843,025
Noninterest-bearing deposits
4,363,559
4,100,849
3,921,867
3,645,761
2,910,951
Other liabilities
264,808
235,284
244,544
346,173
248,220
Total liabilities
14,921,451
14,221,866
14,072,249
13,858,668
12,002,196
Shareholders' equity
1,759,351
1,725,035
1,694,903
1,665,716
1,640,070
Total liabilities and equity
$
16,680,802
$
15,946,901
$
15,767,152
$
15,524,384
$
13,642,266
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED
FINANCIAL INFORMATION March 31, 2021 ($ in
thousands) (unaudited) PERIOD END BALANCES 3/31/2021
12/31/2020 9/30/2020 6/30/2020
3/31/2020 Cash and due from banks
$
1,774,541
$
1,952,504
$
564,588
$
1,026,640
$
404,341
Fed funds sold and reverse repurchases
—
50
50
—
2,000
Securities available for sale
2,337,676
1,991,815
1,922,728
1,884,153
1,833,779
Securities held to maturity
493,738
538,072
611,280
660,048
704,276
PPP loans
679,725
610,134
944,270
939,783
—
LHFS
412,999
446,951
485,103
355,089
325,389
LHFI
9,983,704
9,824,524
9,847,728
9,659,806
9,567,920
ACL LHFI
(109,191
)
(117,306
)
(122,010
)
(119,188
)
(100,564
)
Net LHFI
9,874,513
9,707,218
9,725,718
9,540,618
9,467,356
Premises and equipment, net
199,098
194,278
192,722
190,567
190,179
Mortgage servicing rights
83,035
66,464
61,613
57,811
56,437
Goodwill
384,237
385,270
385,270
385,270
381,717
Identifiable intangible assets
6,724
7,390
8,142
8,895
7,537
Other real estate
10,651
11,651
16,248
18,276
24,847
Operating lease right-of-use assets
33,704
30,901
30,508
29,819
30,839
Other assets
587,672
609,142
609,922
595,110
591,132
Total assets
$
16,878,313
$
16,551,840
$
15,558,162
$
15,692,079
$
14,019,829
Deposits: Noninterest-bearing
$
4,705,991
$
4,349,010
$
3,964,023
$
3,880,540
$
2,977,058
Interest-bearing
9,677,449
9,699,754
9,258,390
9,624,933
8,598,706
Total deposits
14,383,440
14,048,764
13,222,413
13,505,473
11,575,764
Fed funds purchased and repurchases
160,991
164,519
153,834
70,255
421,821
Other borrowings
145,994
168,252
178,599
152,860
84,230
Subordinated notes
122,877
122,921
—
—
—
Junior subordinated debt securities
61,856
61,856
61,856
61,856
61,856
ACL on off-balance sheet credit exposures
29,205
38,572
39,659
42,663
36,421
Operating lease liabilities
35,389
32,290
31,838
31,076
32,055
Other liabilities
178,856
173,549
159,922
153,952
155,283
Total liabilities
15,118,608
14,810,723
13,848,121
14,018,135
12,367,430
Common stock
13,209
13,215
13,215
13,214
13,209
Capital surplus
229,892
233,120
231,836
230,613
229,403
Retained earnings
1,533,110
1,495,833
1,459,306
1,419,552
1,402,089
Accum other comprehensive income (loss), net of tax
(16,506
)
(1,051
)
5,684
10,565
7,698
Total shareholders' equity
1,759,705
1,741,117
1,710,041
1,673,944
1,652,399
Total liabilities and equity
$
16,878,313
$
16,551,840
$
15,558,162
$
15,692,079
$
14,019,829
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED
FINANCIAL INFORMATION March 31, 2021 ($ in thousands
except per share data) (unaudited) Quarter
Ended INCOME STATEMENTS
3/31/2021 12/31/2020 9/30/2020
6/30/2020 3/31/2020 Interest and fees on LHFS &
LHFI-FTE
$
93,394
$
96,453
$
97,429
$
99,300
$
109,357
Interest and fees on PPP loans
9,241
14,870
6,729
5,044
—
Interest on securities-taxable
8,938
9,998
12,542
12,762
12,948
Interest on securities-tax exempt-FTE
290
293
301
315
457
Interest on fed funds sold and reverse repurchases
—
—
1
—
—
Other interest income
503
249
331
239
740
Total interest income-FTE
112,366
121,863
117,333
117,660
123,502
Interest on deposits
5,223
6,363
7,437
8,730
14,957
Interest on fed funds purchased and repurchases
56
56
32
42
625
Other interest expense
1,857
1,127
688
881
860
Total interest expense
7,136
7,546
8,157
9,653
16,442
Net interest income-FTE
105,230
114,317
109,176
108,007
107,060
Provision for credit losses, LHFI
(10,501
)
(4,413
)
1,760
18,185
20,581
Net interest income after provision-FTE
115,731
118,730
107,416
89,822
86,479
Service charges on deposit accounts
7,356
8,283
7,577
6,397
10,032
Bank card and other fees
9,472
9,107
8,843
7,717
5,355
Mortgage banking, net
20,804
28,155
36,439
33,745
27,483
Insurance commissions
12,445
10,196
11,562
11,868
11,550
Wealth management
8,416
7,838
7,679
7,571
8,537
Other, net
2,090
2,538
1,601
2,213
2,307
Total noninterest income
60,583
66,117
73,701
69,511
65,264
Salaries and employee benefits
71,162
69,660
67,342
66,107
69,148
Services and fees
22,484
22,327
20,992
20,567
19,930
Net occupancy-premises
6,795
6,616
7,000
6,587
6,286
Equipment expense
6,244
6,213
5,828
5,620
5,616
Other real estate expense, net
324
(812
)
1,203
271
1,294
Credit loss expense related to off-balance sheet credit exposures
(9,367
)
(1,087
)
(3,004
)
6,242
6,783
Other expense
14,539
15,890
14,598
13,265
14,753
Total noninterest expense
112,181
118,807
113,959
118,659
123,810
Income before income taxes and tax eq adj
64,133
66,040
67,158
40,674
27,933
Tax equivalent adjustment
2,894
2,939
2,969
3,007
3,108
Income before income taxes
61,239
63,101
64,189
37,667
24,825
Income taxes
9,277
11,884
9,749
5,517
2,607
Net income
$
51,962
$
51,217
$
54,440
$
32,150
$
22,218
Per share data Earnings per share - basic
$
0.82
$
0.81
$
0.86
$
0.51
$
0.35
Earnings per share - diluted
$
0.82
$
0.81
$
0.86
$
0.51
$
0.35
Dividends per share
$
0.23
$
0.23
$
0.23
$
0.23
$
0.23
Weighted average shares outstanding Basic
63,395,911
63,424,219
63,422,692
63,416,307
63,756,629
Diluted
63,562,503
63,616,767
63,581,964
63,555,065
63,913,603
Period end shares outstanding
63,394,522
63,424,526
63,423,820
63,422,439
63,396,912
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED
FINANCIAL INFORMATION March 31, 2021 ($ in
thousands) (unaudited) Quarter Ended
NONPERFORMING ASSETS (1)
3/31/2021 12/31/2020 9/30/2020
6/30/2020 3/31/2020 Nonaccrual LHFI Alabama
$
9,161
$
9,221
$
3,860
$
4,392
$
4,769
Florida
607
572
617
687
254
Mississippi (2)
35,534
35,015
35,617
37,884
40,815
Tennessee (3)
12,451
12,572
13,041
6,125
6,153
Texas
5,761
5,748
721
906
1,001
Total nonaccrual LHFI
63,514
63,128
53,856
49,994
52,992
Other real estate Alabama
3,085
3,271
3,725
4,766
6,229
Florida
—
—
3,665
3,665
4,835
Mississippi (2)
7,566
8,330
8,718
9,408
13,296
Tennessee (3)
—
50
140
437
487
Texas
—
—
—
—
—
Total other real estate
10,651
11,651
16,248
18,276
24,847
Total nonperforming assets
$
74,165
$
74,779
$
70,104
$
68,270
$
77,839
LOANS PAST DUE OVER 90 DAYS
(1) LHFI
$
2,593
$
1,576
$
782
$
807
$
708
LHFS-Guaranteed GNMA serviced loans (no obligation to
repurchase)
$
109,566
$
119,409
$
121,281
$
56,269
$
43,564
Quarter Ended ACL
LHFI (1) 3/31/2021 12/31/2020
9/30/2020 6/30/2020 3/31/2020 Beginning
Balance
$
117,306
$
122,010
$
119,188
$
100,564
$
84,277
CECL adoption adjustments: LHFI
—
—
—
—
(3,039
)
Acquired loan transfers
—
—
—
—
1,822
Provision for credit losses
(10,501
)
(4,413
)
1,760
18,185
20,581
Charge-offs
(1,245
)
(2,797
)
(1,263
)
(1,870
)
(5,545
)
Recoveries
3,631
2,506
2,325
2,309
2,468
Net (charge-offs) recoveries
2,386
(291
)
1,062
439
(3,077
)
Ending Balance
$
109,191
$
117,306
$
122,010
$
119,188
$
100,564
NET (CHARGE-OFFS) RECOVERIES
(1) Alabama
$
102
$
(1,011
)
$
117
$
526
$
(1,080
)
Florida
30
66
387
(127
)
64
Mississippi (2)
2,207
332
442
(86
)
126
Tennessee (3)
47
303
42
66
(2,186
)
Texas
—
19
74
60
(1
)
Total net (charge-offs) recoveries
$
2,386
$
(291
)
$
1,062
$
439
$
(3,077
)
(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 March
31, 2021 (unaudited) Quarter Ended
FINANCIAL RATIOS AND OTHER DATA
3/31/2021 12/31/2020 9/30/2020
6/30/2020 3/31/2020 Return on average equity
11.98
%
11.81
%
12.78
%
7.76
%
5.45
%
Return on average tangible equity
15.56
%
15.47
%
16.82
%
10.32
%
7.34
%
Return on average assets
1.26
%
1.28
%
1.37
%
0.83
%
0.66
%
Interest margin - Yield - FTE
3.00
%
3.35
%
3.26
%
3.39
%
4.06
%
Interest margin - Cost
0.19
%
0.21
%
0.23
%
0.28
%
0.54
%
Net interest margin - FTE
2.81
%
3.15
%
3.03
%
3.12
%
3.52
%
Efficiency ratio (1)
71.84
%
65.59
%
62.19
%
62.13
%
63.50
%
Full-time equivalent employees
2,793
2,797
2,807
2,798
2,761
CREDIT QUALITY RATIOS
(2) Net (recoveries) charge-offs / average loans
-0.09
%
0.01
%
-0.04
%
-0.02
%
0.13
%
Provision for credit losses / average loans
-0.41
%
-0.17
%
0.07
%
0.74
%
0.86
%
Nonaccrual LHFI / (LHFI + LHFS)
0.61
%
0.61
%
0.52
%
0.50
%
0.54
%
Nonperforming assets / (LHFI + LHFS)
0.71
%
0.73
%
0.68
%
0.68
%
0.79
%
Nonperforming assets / (LHFI + LHFS + other real estate)
0.71
%
0.73
%
0.68
%
0.68
%
0.78
%
ACL LHFI / LHFI
1.09
%
1.19
%
1.24
%
1.23
%
1.05
%
ACL LHFI-commercial / commercial LHFI
1.13
%
1.20
%
1.20
%
1.15
%
0.97
%
ACL LHFI-consumer / consumer and home mortgage LHFI
0.95
%
1.16
%
1.41
%
1.56
%
1.35
%
ACL LHFI / nonaccrual LHFI
171.92
%
185.82
%
226.55
%
238.40
%
189.77
%
ACL LHFI / nonaccrual LHFI (excl individually evaluated loans)
437.08
%
572.69
%
593.72
%
561.04
%
468.84
%
CAPITAL RATIOS Total
equity / total assets
10.43
%
10.52
%
10.99
%
10.67
%
11.79
%
Tangible equity / tangible assets
8.30
%
8.34
%
8.68
%
8.37
%
9.27
%
Tangible equity / risk-weighted assets
11.23
%
11.22
%
11.01
%
11.09
%
11.05
%
Tier 1 leverage ratio
9.11
%
9.33
%
9.20
%
9.08
%
10.21
%
Common equity tier 1 capital ratio
11.71
%
11.62
%
11.36
%
11.42
%
11.35
%
Tier 1 risk-based capital ratio
12.20
%
12.11
%
11.86
%
11.94
%
11.88
%
Total risk-based capital ratio
14.07
%
14.12
%
12.88
%
13.00
%
12.78
%
STOCK PERFORMANCE Market
value-Close
$
33.66
$
27.31
$
21.41
$
24.52
$
23.30
Book value
$
27.76
$
27.45
$
26.96
$
26.39
$
26.06
Tangible book value
$
21.59
$
21.26
$
20.76
$
20.18
$
19.92
(1) See Note 8 – 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 March 31, 2021 ($ in
thousands) (unaudited)
Note 1 - Paycheck Protection Program
In January 2021, Trustmark began submitting applications to the
SBA on behalf of and originating loans to qualified small
businesses under the Coronavirus Aid, Relief, and Economic Security
Act (the CARES Act), as amended by the Consolidated Appropriations
Act, 2021. During the first quarter of 2021, Trustmark originated
4,774 PPP loans totaling $301.5 million (net of $16.5 million of
deferred fees and costs). At March 31, 2021, Trustmark had 7,456
PPP loans outstanding that totaled $679.7 million (net of $22.1
million of deferred fees and costs) under the CARES Act.
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 2 - Securities Available for Sale and Held to
Maturity
The following table is a summary of the estimated fair value of
securities available for sale and the amortized cost of securities
held to maturity:
3/31/2021
12/31/2020
9/30/2020
6/30/2020
3/31/2020
SECURITIES
AVAILABLE FOR SALE
U.S. Government agency obligations
$
17,349
$
18,041
$
19,011
$
19,898
$
21,190
Obligations of states and political
subdivisions
5,798
5,835
8,315
11,176
23,572
Mortgage-backed securities
Residential mortgage pass-through
securities
Guaranteed by GNMA
52,406
56,862
62,156
69,637
71,971
Issued by FNMA and FHLMC
1,749,144
1,441,321
1,279,919
1,121,604
967,329
Other residential mortgage-backed
securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
345,869
419,437
500,858
574,940
634,075
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
167,110
50,319
52,469
86,898
115,642
Total securities available for sale
$
2,337,676
$
1,991,815
$
1,922,728
$
1,884,153
$
1,833,779
SECURITIES HELD
TO MATURITY
Obligations of states and political
subdivisions
$
26,554
$
26,584
$
31,605
$
31,629
$
31,758
Mortgage-backed securities
Residential mortgage pass-through
securities
Guaranteed by GNMA
7,268
7,598
8,244
10,306
10,492
Issued by FNMA and FHLMC
61,855
67,944
78,213
86,346
91,971
Other residential mortgage-backed
securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
324,360
360,361
399,400
435,333
463,175
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
73,701
75,585
93,818
96,434
106,880
Total securities held to maturity
$
493,738
$
538,072
$
611,280
$
660,048
$
704,276
At March 31, 2021, 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 $8.2 million ($6.2 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 98.0% 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 3 – Loan Composition
LHFI consisted of the following during the periods
presented:
LHFI BY
TYPE
3/31/2021
12/31/2020
9/30/2020
6/30/2020
3/31/2020
Loans secured by real estate:
Construction, land development and other
land loans
$
1,342,088
$
1,309,039
$
1,385,947
$
1,277,277
$
1,136,389
Secured by 1-4 family residential
properties
1,742,782
1,741,132
1,775,400
1,813,525
1,852,065
Secured by nonfarm, nonresidential
properties
2,799,195
2,709,026
2,707,627
2,610,392
2,575,422
Other real estate secured
1,135,005
1,065,964
887,792
884,815
838,573
Commercial and industrial loans
1,323,277
1,309,078
1,398,468
1,413,255
1,476,777
Consumer loans
153,267
161,174
160,960
161,620
170,678
State and other political subdivision
loans
1,036,694
1,000,776
935,349
931,536
938,637
Other loans
451,396
528,335
596,185
567,386
579,379
LHFI
9,983,704
9,824,524
9,847,728
9,659,806
9,567,920
ACL LHFI
(109,191
)
(117,306
)
(122,010
)
(119,188
)
(100,564
)
Net LHFI
$
9,874,513
$
9,707,218
$
9,725,718
$
9,540,618
$
9,467,356
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIALS March 31, 2021 ($ in
thousands) (unaudited)
Note 3 – Loan Composition (continued)
The following table presents the LHFI composition by region at
March 31, 2021 and reflects each region’s diversified mix of
loans:
March 31, 2021
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
$
1,342,088
$
497,839
$
65,032
$
315,127
$
40,117
$
423,973
Secured by 1-4 family residential
properties
1,742,782
112,699
37,777
1,509,503
69,371
13,432
Secured by nonfarm, nonresidential
properties
2,799,195
765,496
263,877
976,949
181,688
611,185
Other real estate secured
1,135,005
325,951
6,139
418,988
19,910
364,017
Commercial and industrial loans
1,323,277
203,778
22,980
621,592
290,619
184,308
Consumer loans
153,267
22,501
7,755
100,323
19,232
3,456
State and other political subdivision
loans
1,036,694
95,707
35,179
684,640
45,335
175,833
Other loans
451,396
79,979
13,016
279,520
64,796
14,085
Loans
$
9,983,704
$
2,103,950
$
451,755
$
4,906,642
$
731,068
$
1,790,289
CONSTRUCTION,
LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots
$
67,471
$
21,575
$
11,036
$
26,266
$
1,373
$
7,221
Development
110,837
42,509
610
42,838
13,709
11,171
Unimproved land
108,607
33,232
14,333
31,363
11,568
18,111
1-4 family construction
255,987
117,406
22,312
71,072
12,495
32,702
Other construction
799,186
283,117
16,741
143,588
972
354,768
Construction, land development and other
land loans
$
1,342,088
$
497,839
$
65,032
$
315,127
$
40,117
$
423,973
LOANS SECURED BY
NONFARM, NONRESIDENTIAL PROPERTIES BY REGION
Non-owner occupied:
Retail
$
400,595
$
162,007
$
31,393
$
106,249
$
25,339
$
75,607
Office
236,662
68,374
26,516
64,074
12,449
65,249
Hotel/motel
352,191
150,807
90,266
51,443
36,164
23,511
Mini-storage
135,538
23,176
2,392
62,461
390
47,119
Industrial
201,182
47,521
18,356
47,369
419
87,517
Health care
41,973
21,803
1,194
16,417
383
2,176
Convenience stores
16,773
3,289
200
3,134
373
9,777
Nursing homes/senior living
158,489
71,123
—
42,050
6,760
38,556
Other
78,407
10,075
7,261
25,585
8,846
26,640
Total non-owner occupied loans
1,621,810
558,175
177,578
418,782
91,123
376,152
Owner-occupied:
Office
163,874
40,240
44,295
37,566
8,662
33,111
Churches
102,001
21,454
6,586
50,270
10,030
13,661
Industrial warehouses
177,666
12,410
3,169
49,610
17,122
95,355
Health care
141,491
26,787
7,525
94,096
2,327
10,756
Convenience stores
136,175
17,369
9,348
65,479
531
43,448
Retail
69,585
14,050
6,670
23,696
10,512
14,657
Restaurants
56,319
4,267
4,394
32,341
15,025
292
Auto dealerships
56,449
7,033
274
23,599
25,543
—
Nursing homes/senior living
176,746
58,770
—
117,976
—
—
Other
97,079
4,941
4,038
63,534
813
23,753
Total owner-occupied loans
1,177,385
207,321
86,299
558,167
90,565
235,033
Loans secured by nonfarm, nonresidential
properties
$
2,799,195
$
765,496
$
263,877
$
976,949
$
181,688
$
611,185
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIALS March 31, 2021 ($ in
thousands) (unaudited)
Note 4 – Subordinated Notes
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. At March 31, 2021, the carrying amount of the Notes was
$122.9 million. The Notes are unsecured obligations and are
subordinated in right of payment to all of Trustmark’s 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 TNB. 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.
Note 5 – Yields on Earning Assets and Interest-Bearing
Liabilities
The following table illustrates the yields on earning assets by
category as well as the rates paid on interest-bearing liabilities
on a tax equivalent basis:
Quarter Ended
3/31/2021
12/31/2020
9/30/2020
6/30/2020
3/31/2020
Securities – taxable
1.40
%
1.62
%
2.02
%
2.16
%
2.25
%
Securities – nontaxable
4.02
%
3.89
%
3.80
%
3.58
%
3.85
%
Securities – total
1.43
%
1.65
%
2.05
%
2.18
%
2.28
%
PPP loans
6.27
%
6.76
%
2.84
%
2.65
%
—
Loans - LHFI & LHFS
3.67
%
3.75
%
3.81
%
4.03
%
4.54
%
Loans - total
3.81
%
3.99
%
3.73
%
3.93
%
4.54
%
Fed funds sold & reverse
repurchases
—
—
1.32
%
—
—
Other earning assets
0.12
%
0.12
%
0.18
%
0.11
%
1.59
%
Total earning assets
3.00
%
3.35
%
3.26
%
3.39
%
4.06
%
Interest-bearing deposits
0.22
%
0.27
%
0.31
%
0.37
%
0.71
%
Fed funds purchased & repurchases
0.14
%
0.13
%
0.15
%
0.16
%
1.02
%
Other borrowings
2.14
%
1.61
%
1.19
%
2.09
%
2.35
%
Total interest-bearing liabilities
0.28
%
0.30
%
0.33
%
0.39
%
0.75
%
Net interest margin
2.81
%
3.15
%
3.03
%
3.12
%
3.52
%
Net interest margin excluding PPP loans
and the FRB balance
2.99
%
3.09
%
3.20
%
3.35
%
3.55
%
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 loans and the balance held at the
Federal Reserve Bank of Atlanta (FRB), which equals reported net
interest income-FTE excluding interest income on PPP loans and the
FRB balance, annualized, as a percent of average earning assets
excluding average PPP loans and the FRB balance.
At March 31, 2021 and December 31, 2020, the average FRB balance
totaled $1.618 billion and $814.2 million, respectively, and is
included in other earning assets in the accompanying average
consolidated balance sheets.
The net interest margin excluding PPP loans and the FRB balance
totaled 2.99% for the first quarter of 2021, a decrease of 10 basis
points when compared to the fourth 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 6 – Mortgage Banking
Trustmark utilizes a portfolio of exchange-traded derivative
instruments, such as Treasury note futures contracts and option
contracts, to achieve a fair value return that offsets the changes
in fair value of mortgage servicing rights (MSR) attributable to
interest rates. These transactions are considered freestanding
derivatives that do not otherwise qualify for hedge accounting
under generally accepted accounting principles (GAAP). Changes in
the fair value of these exchange-traded derivative instruments,
including administrative costs, are recorded in noninterest income
in mortgage banking, net and are offset by the changes in the fair
value of the MSR. The MSR fair value represents the present value
of future cash flows, which among other things includes decay and
the effect of changes in interest rates. Ineffectiveness of hedging
the MSR fair value is measured by comparing the change in value of
hedge instruments to the change in the fair value of the MSR asset
attributable to changes in interest rates and other market driven
changes in valuation inputs and assumptions. The impact of this
strategy resulted in a net positive ineffectiveness of $270
thousand during the first quarter of 2021.
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIALS March 31, 2021 ($ in
thousands) (unaudited)
Note 6 – Mortgage Banking (continued)
The following table illustrates the components of mortgage
banking revenues included in noninterest income in the accompanying
income statements:
Quarter Ended
3/31/2021
12/31/2020
9/30/2020
6/30/2020
3/31/2020
Mortgage servicing income, net
$
6,181
$
6,227
$
5,742
$
5,893
$
5,819
Change in fair value-MSR from runoff
(5,103
)
(5,177
)
(4,590
)
(4,214
)
(2,607
)
Gain on sales of loans, net
19,456
28,014
34,472
34,078
14,339
Mortgage banking income before hedge
ineffectiveness
20,534
29,064
35,624
35,757
17,551
Change in fair value-MSR from market
changes
13,696
951
60
(3,159
)
(23,999
)
Change in fair value of derivatives
(13,426
)
(1,860
)
755
1,147
33,931
Net positive (negative) hedge
ineffectiveness
270
(909
)
815
(2,012
)
9,932
Mortgage banking, net
$
20,804
$
28,155
$
36,439
$
33,745
$
27,483
Note 7 – Other Noninterest Income and Expense
Other noninterest income consisted of the following for the
periods presented:
Quarter Ended
3/31/2021
12/31/2020
9/30/2020
6/30/2020
3/31/2020
Partnership amortization for tax credit
purposes
$
(1,522
)
$
(1,877
)
$
(1,457
)
$
(1,205
)
$
(1,161
)
Increase in life insurance cash surrender
value
1,639
1,708
1,755
1,696
1,722
Other miscellaneous income
1,973
2,707
1,303
1,722
1,746
Total other, net
$
2,090
$
2,538
$
1,601
$
2,213
$
2,307
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
3/31/2021
12/31/2020
9/30/2020
6/30/2020
3/31/2020
Loan expense
$
3,411
$
3,696
$
3,485
$
2,954
$
2,799
Amortization of intangibles
666
752
752
736
812
FDIC assessment expense
1,540
1,500
1,410
1,590
1,590
Other miscellaneous expense
8,922
9,942
8,951
7,985
9,552
Total other expense
$
14,539
$
15,890
$
14,598
$
13,265
$
14,753
Note 8 – 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 March 31, 2021 ($ in
thousands except per share data) (unaudited)
Note 8 – Non-GAAP Financial Measures (continued)
Quarter Ended
3/31/2021
12/31/2020
9/30/2020
6/30/2020
3/31/2020
TANGIBLE
EQUITY
AVERAGE BALANCES
Total shareholders' equity
$
1,759,351
$
1,725,035
$
1,694,903
$
1,665,716
$
1,640,070
Less: Goodwill
(385,155
)
(385,270
)
(385,270
)
(383,081
)
(380,671
)
Identifiable intangible assets
(7,118
)
(7,803
)
(8,550
)
(7,834
)
(8,049
)
Total average tangible equity
$
1,367,078
$
1,331,962
$
1,301,083
$
1,274,801
$
1,251,350
PERIOD END BALANCES
Total shareholders' equity
$
1,759,705
$
1,741,117
$
1,710,041
$
1,673,944
$
1,652,399
Less: Goodwill
(384,237
)
(385,270
)
(385,270
)
(385,270
)
(381,717
)
Identifiable intangible assets
(6,724
)
(7,390
)
(8,142
)
(8,895
)
(7,537
)
Total tangible equity
(a)
$
1,368,744
$
1,348,457
$
1,316,629
$
1,279,779
$
1,263,145
TANGIBLE
ASSETS
Total assets
$
16,878,313
$
16,551,840
$
15,558,162
$
15,692,079
$
14,019,829
Less: Goodwill
(384,237
)
(385,270
)
(385,270
)
(385,270
)
(381,717
)
Identifiable intangible assets
(6,724
)
(7,390
)
(8,142
)
(8,895
)
(7,537
)
Total tangible assets
(b)
$
16,487,352
$
16,159,180
$
15,164,750
$
15,297,914
$
13,630,575
Risk-weighted assets
(c)
$
12,188,988
$
12,017,378
$
11,963,269
$
11,539,157
$
11,427,297
NET INCOME
ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income
$
51,962
$
51,217
$
54,440
$
32,150
$
22,218
Plus: Intangible amortization net of
tax
500
564
564
552
609
Net income adjusted for intangible
amortization
$
52,462
$
51,781
$
55,004
$
32,702
$
22,827
Period end common shares outstanding
(d)
63,394,522
63,424,526
63,423,820
63,422,439
63,396,912
TANGIBLE COMMON
EQUITY MEASUREMENTS
Return on average tangible equity (1)
15.56
%
15.47
%
16.82
%
10.32
%
7.34
%
Tangible equity/tangible assets
(a)/(b)
8.30
%
8.34
%
8.68
%
8.37
%
9.27
%
Tangible equity/risk-weighted assets
(a)/(c)
11.23
%
11.22
%
11.01
%
11.09
%
11.05
%
Tangible book value
(a)/(d)*1,000
$
21.59
$
21.26
$
20.76
$
20.18
$
19.92
COMMON EQUITY
TIER 1 CAPITAL (CET1)
Total shareholders' equity
$
1,759,705
$
1,741,117
$
1,710,041
$
1,673,944
$
1,652,399
CECL transition adjustment
26,829
31,199
32,647
32,693
26,476
AOCI-related adjustments
16,506
1,051
(5,684
)
(10,565
)
(7,698
)
CET1 adjustments and deductions:
Goodwill net of associated deferred tax
liabilities (DTLs)
(370,288
)
(371,333
)
(371,345
)
(371,342
)
(367,825
)
Other adjustments and deductions for CET1
(2)
(5,675
)
(6,190
)
(6,770
)
(7,352
)
(6,269
)
CET1 capital
(e)
1,427,077
1,395,844
1,358,889
1,317,378
1,297,083
Additional tier 1 capital instruments plus
related surplus
60,000
60,000
60,000
60,000
60,000
Tier 1 capital
$
1,487,077
$
1,455,844
$
1,418,889
$
1,377,378
$
1,357,083
Common equity tier 1 capital ratio
(e)/(c)
11.71
%
11.62
%
11.36
%
11.42
%
11.35
%
(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.
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIALS March 31, 2021 ($ in
thousands except per share data) (unaudited)
Note 8 – 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
3/31/2021
12/31/2020
9/30/2020
6/30/2020
3/31/2020
Net interest income (GAAP)
$
102,336
$
111,378
$
106,207
$
105,000
$
103,952
Noninterest income (GAAP)
60,583
66,117
73,701
69,511
65,264
Pre-provision revenue
(a)
$
162,919
$
177,495
$
179,908
$
174,511
$
169,216
Noninterest expense (GAAP)
$
112,181
$
118,807
$
113,959
$
118,659
$
123,810
Less: Voluntary
early retirement program
—
—
—
—
(4,375
)
Credit loss expense related to off-balance
sheet credit exposures
9,367
1,087
3,004
(6,242
)
(6,783
)
Adjusted noninterest expense - PPNR
(Non-GAAP)
(b)
$
121,548
$
119,894
$
116,963
$
112,417
$
112,652
PPNR (Non-GAAP)
(a)-(b)
$
41,371
$
57,601
$
62,945
$
62,094
$
56,564
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
3/31/2021
3/31/2020
Amount
Diluted EPS
Amount
Diluted EPS
Net Income (GAAP)
$
51,962
$
0.82
$
22,218
$
0.35
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)
$
51,962
$
0.82
$
25,499
$
0.40
Reported
Adjusted
Reported
Adjusted
(GAAP)
(Non-GAAP)
(GAAP)
(Non-GAAP)
Return on average equity
11.98
%
n/a
5.45
%
6.25
%
Return on average tangible equity
15.56
%
n/a
7.34
%
8.39
%
Return on average assets
1.26
%
n/a
0.66
%
0.75
%
n/a - not applicable
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIALS March 31, 2021 ($ in
thousands) (unaudited)
Note 8 – Non-GAAP Financial Measures (continued)
The following table presents Trustmark’s calculation of its
efficiency ratio for the periods presented:
Quarter Ended
3/31/2021
12/31/2020
9/30/2020
6/30/2020
3/31/2020
Total noninterest expense (GAAP)
$
112,181
$
118,807
$
113,959
$
118,659
$
123,810
Less:
Other real estate expense, net
(324
)
812
(1,203
)
(271
)
(1,294
)
Amortization of intangibles
(666
)
(752
)
(752
)
(736
)
(812
)
Voluntary early retirement program
—
—
—
—
(4,375
)
Credit loss expense related to off-balance
sheet exposures
9,367
1,087
3,004
(6,242
)
(6,783
)
Charitable contributions resulting in
state tax credits
(350
)
(375
)
(375
)
(375
)
(375
)
Adjusted noninterest expense
(Non-GAAP)
(c)
$
120,208
$
119,579
$
114,633
$
111,035
$
110,171
Net interest income (GAAP)
$
102,336
$
111,378
$
106,207
$
105,000
$
103,952
Add:
Tax equivalent adjustment
2,894
2,939
2,969
3,007
3,108
Net interest income-FTE (Non-GAAP)
(a)
$
105,230
$
114,317
$
109,176
$
108,007
$
107,060
Noninterest income (GAAP)
$
60,583
$
66,117
$
73,701
$
69,511
$
65,264
Add:
Partnership amortization for tax credit
purposes
1,522
1,877
1,457
1,205
1,161
Adjusted noninterest income (Non-GAAP)
(b)
$
62,105
$
67,994
$
75,158
$
70,716
$
66,425
Adjusted revenue (Non-GAAP)
(a)+(b)
$
167,335
$
182,311
$
184,334
$
178,723
$
173,485
Efficiency ratio (Non-GAAP)
(c)/((a)+(b))
71.84
%
65.59
%
62.19
%
62.13
%
63.50
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210427006023/en/
Trustmark Investor Contacts: Thomas C. Owens Treasurer
and Principal Financial Officer 601-208-7853
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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