Performance Reflects Continued Balance Sheet
Growth, Strong Credit Quality and Disciplined Expense
Management
Trustmark Corporation (NASDAQGS: TRMK) reported net income of
$48.0 million in the second quarter of 2021, representing diluted
earnings per share of $0.76. This level of earnings resulted in a
return on average tangible equity of 13.96% and a return on average
assets of 1.13%. Trustmark’s Board of Directors declared a
quarterly cash dividend of $0.23 per share payable September 15,
2021, to shareholders of record on September 1, 2021.
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Second Quarter Highlights
- Pre-provision net revenue totaled $57.2 million, a
linked-quarter increase of 38.2%. Please refer to the Consolidated
Financial Information, Note 8 – Non-GAAP Financial Measures.
- Sale of $354.2 million of Paycheck Protection Program (PPP)
loans originated in 2021 resulted in accelerated recognition of
$18.6 million in origination fees, which is included in net
interest income
- Credit quality remained solid; nonperforming assets declined
17.9% linked-quarter
- Continued steady growth in loans held for investment (HFI) and
deposits
- Noninterest expense declined 2.4% linked-quarter
Duane A. Dewey, President and CEO, stated, “Our associates are
focused on expanding existing customer relationships as well as
demonstrating the value Trustmark can provide potential customers
as their trusted financial partner. The success of these efforts is
reflected in solid growth in our traditional banking and mortgage
businesses as well as strong performance in our insurance and
wealth management businesses. Earlier this year, we introduced
redesigned digital channels to enhance the customer experience and
provide expanded sales capabilities, including on-line account
openings. Customers have embraced these offerings and we look
forward to leveraging these new tools to expand relationships and
profitably generate additional revenue.
“We are pleased to have been recognized during the second
quarter by Forbes as the Best-in-State Bank in Mississippi in 2021,
based upon independent customer satisfaction surveys. This is
affirmation that our associates are providing the financial
solutions and convenience our customers’ desire,” said Dewey
Balance Sheet Management
- Loans HFI totaled $10.2 billion, up 1.7% from the prior quarter
and 5.1% year-over-year
- Investment securities totaled $3.0 billion, up 5.3% from the
prior quarter and 17.2% year-over-year
- PPP loans totaled $166.1 million, down 75.6% from the prior
quarter and 82.3% year-over-year
- Deposits totaled $14.6 billion, up 1.7% from the prior quarter
and 8.3% year-over-year
- Maintained strong capital position with CET1 ratio of 11.76%
and total risk-based capital ratio of 14.10%
Loans HFI totaled $10.2 billion at June 30, 2021, reflecting an
increase of $169.2 million, or 1.7%, linked-quarter and $493.1
million, or 5.1%, year-over-year. The linked-quarter growth
primarily reflects increases in municipal loans, 1-4 family
mortgage loans, loans secured by nonfarm, nonresidential
properties, and construction loans, which were offset in part by a
decline in other real estate secured loans. Trustmark’s loan
portfolio remains well-diversified by loan type and geography.
Deposits totaled $14.6 billion at June 30, 2021, up $248.6
million, or 1.7%, from the prior quarter and $1.1 billion, or 8.3%,
year-over-year. Trustmark continues to maintain a strong liquidity
position as loans HFI represented 69.4% of total deposits at June
30, 2021. Noninterest-bearing deposits represented 30.4% of total
deposits at the end of the second quarter. Interest-bearing deposit
costs totaled 0.19% in the second quarter, a decrease of 3 basis
points from the prior quarter. The total cost of interest-bearing
liabilities was 0.25% in the second quarter of 2021, a decrease of
3 basis points from the prior quarter.
During the second quarter, Trustmark repurchased $20.8 million,
or approximately 630 thousand of its common shares. During the
first six months of 2021, Trustmark repurchased $25.0 million, or
approximately 775 thousand of its common shares. At June 30, 2021,
Trustmark had $75.0 million in remaining authority under its
existing stock repurchase program, which expires on 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
June 30, 2021, Trustmark’s tangible equity-to-tangible assets ratio
was 8.31% while its total risk-based capital ratio was 14.10%.
Tangible book value per share was $22.13 at June 30, 2021, up 2.5%
linked-quarter and 9.7% year-over-year.
Credit Quality
- Allowance for credit losses (ACL) represented 537.35% of
nonaccrual loans, excluding individually evaluated loans at June
30, 2021
- Net charge-offs totaled $1.2 million in the second quarter
- Loans remaining under a COVID-19 related concession represented
approximately 19 basis points of loans HFI at June 30, 2021
Nonaccrual loans totaled $51.4 million at June 30, 2021, down
$12.1 million from the prior quarter and up $1.5 million
year-over-year. Other real estate totaled $9.4 million, reflecting
a $1.2 million decrease from the prior quarter and decline of $8.8
million year-over-year. Collectively, nonperforming assets totaled
$60.9 million at June 30, 2021, reflecting a linked-quarter
decrease of $13.3 million and year-over-year decline of $7.4
million.
The provision for credit losses for loans HFI was a negative
$4.0 million in the second quarter. Negative provisioning was
primarily driven by decreases in individually analyzed reserves,
qualitative reserves due to improvements in credit quality, and
improving economic forecasts. The provision for credit losses for
off-balance sheet credit exposures was $4.5 million in the second
quarter. Off-balance sheet expense was primarily driven by an
increase in off-balance sheet exposure as well as the
implementation of probability of default and loss given default
floors at a portfolio level to ensure appropriate risk is reflected
as macroeconomic conditions improve. Collectively, the provision
for credit losses totaled $537 thousand in the second quarter
compared to negative $19.9 million in the prior quarter and expense
of $24.4 million in the second quarter of 2020.
Allocation of Trustmark’s $104.0 million allowance for credit
losses on loans HFI represented 1.04% of commercial loans and 0.98%
of consumer and home mortgage loans, resulting in an allowance to
total loans HFI of 1.02% at June 30, 2021. Management believes the
level of the ACL is commensurate with the credit losses currently
expected in the loan portfolio.
Revenue Generation
- Total revenue increased $12.9 million, or 7.9%,
linked-quarter
- Net interest income (FTE) expanded $17.2 million, or 16.3%,
linked-quarter
- Excluding PPP interest and fees, net interest income (FTE)
increased $836 thousand linked-quarter
- Noninterest income totaled $56.4 million, representing 32.1% of
total revenue in the second quarter
- Wealth Management revenue increased 6.3% linked-quarter and
18.2% year-over-year
Revenue in the second quarter totaled $175.8 million, an
increase of $12.9 million, or 7.9%, from the prior quarter and $1.3
million, or 0.8%, from the same quarter in the prior year. The
linked-quarter increase reflects $18.6 million of PPP loan
origination fees attributable to the previously announced sale of
$354.2 million in PPP loans during the second quarter.
Net interest income (FTE) in the second quarter totaled $122.4
million, resulting in a net interest margin of 3.16%, up 35 basis
points from the prior quarter. The net interest margin, excluding
PPP loans and Federal Reserve Bank balance, totaled 2.94% during
the second quarter, a decrease of 5 basis points when compared to
the prior quarter. Continued low interest rates decreased the yield
on the loans HFI and held for sale portfolio as well as the
securities portfolio, and were partially offset by lower costs on
interest-bearing deposits.
Noninterest income in the second quarter totaled $56.4 million,
a decrease of $4.2 million from the prior quarter and $13.1 million
year-over-year. The linked quarter and year-over-year changes are
principally attributable to lower mortgage banking revenue.
Mortgage loan production in the second quarter totaled $736.8
million, down 3.9% from the prior quarter and 13.7% year-over-year.
Mortgage banking revenue totaled $17.3 million in the second
quarter, a decrease of $3.5 million from the prior quarter and
$16.4 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.
Wealth management revenue totaled $8.9 million in the second
quarter, an increase of $530 thousand, or 6.3%, from the prior
quarter and $1.4 million, or 18.2%, year-over-year. The growth is
attributable to increased trust and investment and brokerage
business. Insurance revenue totaled $12.2 million in the second
quarter, down 1.8%, or $228 thousand, from the prior quarter due to
seasonality and up 2.9%, or $349 thousand, year-over-year. Service
charges on deposit accounts increased $257 thousand, or 3.5%, from
the prior quarter and $1.2 million, or 19.0%, year-over-year. Bank
card and other fees decreased $1.2 million from the prior quarter
and increased $584 thousand year-over-year. The linked-quarter
decline reflects reduced customer derivative revenue.
Noninterest Expense
- Noninterest expense totaled $118.7 million in the second
quarter, down $2.9 million, or 2.4%, from the prior quarter
- Adjusted noninterest expense, which excludes amortization of
intangibles, ORE expenses and charitable contributions resulting in
state tax credits, declined $3.9 million, or 3.3%, from the prior
quarter; please refer to the Consolidated Financial Information,
Note 8 – Non-GAAP Financial Measures
- Efficiency ratio improved to 64.31% in the second quarter
Adjusted noninterest expense in the second quarter was $116.3
million, down $3.9 million, or 3.3%, from the prior quarter.
Salaries and employee benefits decreased $1.0 million
linked-quarter principally due to the seasonality of payroll taxes
in the prior quarter. Services and fees decreased $715 thousand and
total equipment expense declined $677 thousand in the second
quarter compared to the prior quarter. Total other expense in the
second quarter declined $1.4 million, or 9.6%, from the prior
quarter. Other real estate expense, net totaled $1.5 million in the
second quarter compared to $324 thousand in the prior quarter,
reflecting increased valuation allowances on other real estate.
“We continued to implement strategic initiatives designed to
improve efficiency, accelerate growth and provide innovation while
maintaining solid risk management and our corporate culture,” said
Dewey. During the first six months of 2021, Trustmark continued to
realign delivery channels and closed nine offices reflecting
changing customer preferences and the continued migration to mobile
and digital banking channels. Additionally, Trustmark opened three
new offices, one each in the Birmingham, AL MSA, Jackson, MS MSA,
and Memphis, TN MSA. Each of these offices features a design that
integrates myTeller® interactive teller machine (ITM) technology as
well as provides enhanced areas for customer interaction.
“In addition to branch realignment initiatives, we recently
announced a voluntary early retirement program for eligible
associates, who have until July 31, 2021, to elect to participate
in the program. Most participants are expected to retire effective
August 31, 2021. Based upon participation, we plan to redesign
workflows and restructure the organization to leverage investments
in technology, enhance the customer experience and improve
efficiency. We anticipate providing additional information
regarding this program in our third quarter earnings release,” said
Dewey.
“Trustmark has a program to systematically invest in and upgrade
technology. In recent years, investments in state-of-the-art
technology were made in Trustmark’s insurance, wealth management
and mortgage banking areas as well as in human resources and
accounting systems. We also made significant upgrades to our mobile
banking platform, ITM network and digital marketing programs.
Collectively, these investments have well-positioned Trustmark for
additional growth and expansion. Over the last 36 months, we have
been working toward the implementation of a new core banking system
for consumer and commercial loans, deposits and customer
information. This implementation, which we have named Core
Optimization for Relationship Enhancement (CORE), is a multi-year
project, the first phase of which will occur later this year. These
investments will better position Trustmark for continued growth,
enhance efficiency, and improve the customers’ experience,” said
Dewey.
Additional Information
As previously announced, Trustmark will conduct a conference
call with analysts on Wednesday, July 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, August
11, 2021, in archived format at the same web address or by calling
(877) 344-7529, passcode 10158119.
Trustmark is a financial services company providing banking and
financial solutions through 180 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 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 SEC.
Although we believe that the expectations reflected in such
forward-looking statements are reasonable, we can give no assurance
that such expectations will prove to be correct. Except as required
by law, we undertake no obligation to update or revise any of this
information, whether as the result of new information, future
events or developments or otherwise.
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED
FINANCIAL INFORMATION June 30, 2021 ($ in
thousands) (unaudited) Linked Quarter
Year over Year QUARTERLY AVERAGE
BALANCES 6/30/2021 3/31/2021
6/30/2020 $ Change % Change $ Change
% Change Securities AFS-taxable
$
2,339,662
$
2,098,089
$
1,724,320
$
241,573
11.5
%
$
615,342
35.7
%
Securities AFS-nontaxable
5,174
5,190
9,827
(16
)
-0.3
%
(4,653
)
-47.3
%
Securities HTM-taxable
441,688
489,260
655,085
(47,572
)
-9.7
%
(213,397
)
-32.6
%
Securities HTM-nontaxable
10,958
24,070
25,538
(13,112
)
-54.5
%
(14,580
)
-57.1
%
Total securities
2,797,482
2,616,609
2,414,770
180,873
6.9
%
382,712
15.8
%
Paycheck protection program loans (PPP)
648,222
598,139
764,416
50,083
8.4
%
(116,194
)
-15.2
%
Loans (includes loans held for sale)
10,315,927
10,316,319
9,908,132
(392
)
0.0
%
407,795
4.1
%
Fed funds sold and reverse repurchases
55
136
113
(81
)
-59.6
%
(58
)
-51.3
%
Other earning assets
1,750,385
1,667,906
854,642
82,479
4.9
%
895,743
n/m
Total earning assets
15,512,071
15,199,109
13,942,073
312,962
2.1
%
1,569,998
11.3
%
Allowance for credit losses (ACL), loans held for
investment (LHFI)
(112,346
)
(119,557
)
(103,006
)
7,211
6.0
%
(9,340
)
-9.1
%
Other assets
1,622,388
1,601,250
1,685,317
21,138
1.3
%
(62,929
)
-3.7
%
Total assets
$
17,022,113
$
16,680,802
$
15,524,384
$
341,311
2.0
%
$
1,497,729
9.6
%
Interest-bearing demand deposits
$
4,056,910
$
3,743,651
$
3,832,372
$
313,259
8.4
%
$
224,538
5.9
%
Savings deposits
4,627,180
4,659,037
4,180,540
(31,857
)
-0.7
%
446,640
10.7
%
Time deposits
1,301,896
1,371,830
1,578,737
(69,934
)
-5.1
%
(276,841
)
-17.5
%
Total interest-bearing deposits
9,985,986
9,774,518
9,591,649
211,468
2.2
%
394,337
4.1
%
Fed funds purchased and repurchases
174,620
166,909
105,696
7,711
4.6
%
68,924
65.2
%
Other borrowings
132,199
166,926
107,533
(34,727
)
-20.8
%
24,666
22.9
%
Subordinated notes
122,897
122,875
—
22
0.0
%
122,897
n/m
Junior subordinated debt securities
61,856
61,856
61,856
—
0.0
%
—
0.0
%
Total interest-bearing liabilities
10,477,558
10,293,084
9,866,734
184,474
1.8
%
610,824
6.2
%
Noninterest-bearing deposits
4,512,268
4,363,559
3,645,761
148,709
3.4
%
866,507
23.8
%
Other liabilities
251,582
264,808
346,173
(13,226
)
-5.0
%
(94,591
)
-27.3
%
Total liabilities
15,241,408
14,921,451
13,858,668
319,957
2.1
%
1,382,740
10.0
%
Shareholders' equity
1,780,705
1,759,351
1,665,716
21,354
1.2
%
114,989
6.9
%
Total liabilities and equity
$
17,022,113
$
16,680,802
$
15,524,384
$
341,311
2.0
%
$
1,497,729
9.6
%
n/m - percentage changes greater than +/- 100% are
considered not meaningful
See Notes to Consolidated
Financials TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION June 30, 2021
($ in thousands) (unaudited) Linked
Quarter Year over Year PERIOD
END BALANCES 6/30/2021 3/31/2021
6/30/2020 $ Change % Change $ Change
% Change Cash and due from banks
$
2,267,224
$
1,774,541
$
1,026,640
$
492,683
27.8
%
$
1,240,584
n/m
Fed funds sold and reverse repurchases
—
—
—
—
n/m
—
n/m
Securities available for sale
2,548,739
2,337,676
1,884,153
211,063
9.0
%
664,586
35.3
%
Securities held to maturity
433,012
493,738
660,048
(60,726
)
-12.3
%
(227,036
)
-34.4
%
PPP loans
166,119
679,725
939,783
(513,606
)
-75.6
%
(773,664
)
-82.3
%
Loans held for sale (LHFS)
332,132
412,999
355,089
(80,867
)
-19.6
%
(22,957
)
-6.5
%
Loans held for investment (LHFI)
10,152,869
9,983,704
9,659,806
169,165
1.7
%
493,063
5.1
%
ACL LHFI
(104,032
)
(109,191
)
(119,188
)
5,159
-4.7
%
15,156
-12.7
%
Net LHFI
10,048,837
9,874,513
9,540,618
174,324
1.8
%
508,219
5.3
%
Premises and equipment, net
200,970
199,098
190,567
1,872
0.9
%
10,403
5.5
%
Mortgage servicing rights
80,764
83,035
57,811
(2,271
)
-2.7
%
22,953
39.7
%
Goodwill
384,237
384,237
385,270
—
0.0
%
(1,033
)
-0.3
%
Identifiable intangible assets
6,170
6,724
8,895
(554
)
-8.2
%
(2,725
)
-30.6
%
Other real estate
9,439
10,651
18,276
(1,212
)
-11.4
%
(8,837
)
-48.4
%
Operating lease right-of-use assets
33,201
33,704
29,819
(503
)
-1.5
%
3,382
11.3
%
Other assets
587,288
587,672
595,110
(384
)
-0.1
%
(7,822
)
-1.3
%
Total assets
$
17,098,132
$
16,878,313
$
15,692,079
$
219,819
1.3
%
$
1,406,053
9.0
%
Deposits: Noninterest-bearing
$
4,446,991
$
4,705,991
$
3,880,540
$
(259,000
)
-5.5
%
$
566,451
14.6
%
Interest-bearing
10,185,093
9,677,449
9,624,933
507,644
5.2
%
560,160
5.8
%
Total deposits
14,632,084
14,383,440
13,505,473
248,644
1.7
%
1,126,611
8.3
%
Fed funds purchased and repurchases
157,176
160,991
70,255
(3,815
)
-2.4
%
86,921
n/m
Other borrowings
117,223
145,994
152,860
(28,771
)
-19.7
%
(35,637
)
-23.3
%
Subordinated notes
122,932
122,877
—
55
0.0
%
122,932
n/m
Junior subordinated debt securities
61,856
61,856
61,856
—
0.0
%
—
0.0
%
ACL on off-balance sheet credit exposures
33,733
29,205
42,663
4,528
15.5
%
(8,930
)
-20.9
%
Operating lease liabilities
34,959
35,389
31,076
(430
)
-1.2
%
3,883
12.5
%
Other liabilities
158,860
178,856
153,952
(19,996
)
-11.2
%
4,908
3.2
%
Total liabilities
15,318,823
15,118,608
14,018,135
200,215
1.3
%
1,300,688
9.3
%
Common stock
13,079
13,209
13,214
(130
)
-1.0
%
(135
)
-1.0
%
Capital surplus
210,420
229,892
230,613
(19,472
)
-8.5
%
(20,193
)
-8.8
%
Retained earnings
1,566,451
1,533,110
1,419,552
33,341
2.2
%
146,899
10.3
%
Accum other comprehensive income (loss), net of tax
(10,641
)
(16,506
)
10,565
5,865
35.5
%
(21,206
)
n/m
Total shareholders' equity
1,779,309
1,759,705
1,673,944
19,604
1.1
%
105,365
6.3
%
Total liabilities and equity
$
17,098,132
$
16,878,313
$
15,692,079
$
219,819
1.3
%
$
1,406,053
9.0
%
n/m - percentage changes greater than +/- 100% are
considered not meaningful
See Notes to
Consolidated Financials TRUSTMARK CORPORATION AND
SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June
30, 2021 ($ in thousands except per share data)
(unaudited) Quarter Ended Linked
Quarter Year over Year INCOME
STATEMENTS 6/30/2021 3/31/2021
6/30/2020 $ Change % Change $ Change
% Change Interest and fees on LHFS & LHFI-FTE
$
93,698
$
93,394
$
99,300
$
304
0.3%
$
(5,602)
-5.6%
Interest and fees on PPP loans
25,555
9,241
5,044
16,314
n/m
20,511
n/m
Interest on securities-taxable
8,991
8,938
12,762
53
0.6%
(3,771)
-29.5%
Interest on securities-tax exempt-FTE
149
290
315
(141)
-48.6%
(166)
-52.7%
Interest on fed funds sold and reverse repurchases
—
—
—
—
n/m
—
n/m
Other interest income
489
503
239
(14)
-2.8%
250
n/m
Total interest income-FTE
128,882
112,366
117,660
16,516
14.7%
11,222
9.5%
Interest on deposits
4,630
5,223
8,730
(593)
-11.4%
(4,100)
-47.0%
Interest on fed funds purchased and repurchases
59
56
42
3
5.4%
17
40.5%
Other interest expense
1,813
1,857
881
(44)
-2.4%
932
n/m
Total interest expense
6,502
7,136
9,653
(634)
-8.9%
(3,151)
-32.6%
Net interest income-FTE
122,380
105,230
108,007
17,150
16.3%
14,373
13.3%
Provision for credit losses, LHFI
(3,991)
(10,501)
18,185
6,510
62.0%
(22,176)
n/m
Provision for credit losses, off-balance sheet credit
exposures (1)
4,528
(9,367)
6,242
13,895
n/m
(1,714)
-27.5%
Net interest income after provision-FTE
121,843
125,098
83,580
(3,255)
-2.6%
38,263
45.8%
Service charges on deposit accounts
7,613
7,356
6,397
257
3.5%
1,216
19.0%
Bank card and other fees
8,301
9,472
7,717
(1,171)
-12.4%
584
7.6%
Mortgage banking, net
17,333
20,804
33,745
(3,471)
-16.7%
(16,412)
-48.6%
Insurance commissions
12,217
12,445
11,868
(228)
-1.8%
349
2.9%
Wealth management
8,946
8,416
7,571
530
6.3%
1,375
18.2%
Other, net
2,001
2,090
2,213
(89)
-4.3%
(212)
-9.6%
Total noninterest income
56,411
60,583
69,511
(4,172)
-6.9%
(13,100)
-18.8%
Salaries and employee benefits
70,115
71,162
66,107
(1,047)
-1.5%
4,008
6.1%
Services and fees
21,769
22,484
20,567
(715)
-3.2%
1,202
5.8%
Net occupancy-premises
6,578
6,795
6,587
(217)
-3.2%
(9)
-0.1%
Equipment expense
5,567
6,244
5,620
(677)
-10.8%
(53)
-0.9%
Other real estate expense, net
1,511
324
271
1,187
n/m
1,240
n/m
Other expense
13,139
14,539
13,265
(1,400)
-9.6%
(126)
-0.9%
Total noninterest expense
118,679
121,548
112,417
(2,869)
-2.4%
6,262
5.6%
Income before income taxes and tax eq adj
59,575
64,133
40,674
(4,558)
-7.1%
18,901
46.5%
Tax equivalent adjustment
2,957
2,894
3,007
63
2.2%
(50)
-1.7%
Income before income taxes
56,618
61,239
37,667
(4,621)
-7.5%
18,951
50.3%
Income taxes
8,637
9,277
5,517
(640)
-6.9%
3,120
56.6%
Net income
$
47,981
$
51,962
$
32,150
$
(3,981)
-7.7%
$
15,831
49.2%
Per share data Earnings per share - basic
$
0.76
$
0.82
$
0.51
$
(0.06)
-7.3%
$
0.25
49.0%
Earnings per share - diluted
$
0.76
$
0.82
$
0.51
$
(0.06)
-7.3%
$
0.25
49.0%
Dividends per share
$
0.23
$
0.23
$
0.23
—
0.0%
—
0.0%
Weighted average shares outstanding Basic
63,214,593
63,395,911
63,416,307
Diluted
63,409,683
63,562,503
63,555,065
Period end shares outstanding
62,773,226
63,394,522
63,422,439
(1) During the second quarter of 2021, Trustmark
reclassified its credit loss expense related to off-balance sheet
credit exposures from noninterest expense to provision for credit
losses, off-balance sheet credit exposures. Prior periods have been
reclassified accordingly. n/m - percentage changes greater
than +/- 100% are considered not meaningful
See
Notes to Consolidated Financials TRUSTMARK CORPORATION AND
SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June
30, 2021 ($ in thousands) (unaudited)
Quarter Ended Linked Quarter Year over Year
NONPERFORMING ASSETS (1)
6/30/2021 3/31/2021 6/30/2020 $ Change
% Change $ Change % Change Nonaccrual LHFI
Alabama
$
8,952
$
9,161
$
4,392
$
(209
)
-2.3
%
$
4,560
n/m
Florida
467
607
687
(140
)
-23.1
%
(220
)
-32.0
%
Mississippi (2)
23,422
35,534
37,884
(12,112
)
-34.1
%
(14,462
)
-38.2
%
Tennessee (3)
10,751
12,451
6,125
(1,700
)
-13.7
%
4,626
75.5
%
Texas
7,856
5,761
906
2,095
36.4
%
6,950
n/m
Total nonaccrual LHFI
51,448
63,514
49,994
(12,066
)
-19.0
%
1,454
2.9
%
Other real estate Alabama
2,830
3,085
4,766
(255
)
-8.3
%
(1,936
)
-40.6
%
Florida
—
—
3,665
—
n/m
(3,665
)
-100.0
%
Mississippi (2)
6,550
7,566
9,408
(1,016
)
-13.4
%
(2,858
)
-30.4
%
Tennessee (3)
59
—
437
59
n/m
(378
)
-86.5
%
Texas
—
—
—
—
n/m
—
n/m
Total other real estate
9,439
10,651
18,276
(1,212
)
-11.4
%
(8,837
)
-48.4
%
Total nonperforming assets
$
60,887
$
74,165
$
68,270
$
(13,278
)
-17.9
%
$
(7,383
)
-10.8
%
LOANS PAST DUE OVER 90 DAYS
(1) LHFI
$
423
$
2,593
$
807
$
(2,170
)
-83.7
%
$
(384
)
-47.6
%
LHFS-Guaranteed GNMA serviced loans (no obligation to
repurchase)
$
81,538
$
109,566
$
56,269
$
(28,028
)
-25.6
%
$
25,269
44.9
%
Quarter Ended Linked Quarter Year over
Year ACL LHFI (1)
6/30/2021 3/31/2021 6/30/2020 $ Change
% Change $ Change % Change Beginning Balance
$
109,191
$
117,306
$
100,564
$
(8,115
)
-6.9
%
$
8,627
8.6
%
CECL adoption adjustments: LHFI
—
—
—
—
n/m
—
n/m
Acquired loan transfers
—
—
—
—
n/m
—
n/m
Provision for credit losses, LHFI
(3,991
)
(10,501
)
18,185
6,510
62.0
%
(22,176
)
n/m
Charge-offs
(4,828
)
(1,245
)
(1,870
)
(3,583
)
n/m
(2,958
)
n/m
Recoveries
3,660
3,631
2,309
29
0.8
%
1,351
58.5
%
Net (charge-offs) recoveries
(1,168
)
2,386
439
(3,554
)
n/m
(1,607
)
n/m
Ending Balance
$
104,032
$
109,191
$
119,188
$
(5,159
)
-4.7
%
$
(15,156
)
-12.7
%
NET (CHARGE-OFFS) RECOVERIES
(1) Alabama
$
203
$
102
$
526
$
101
99.0
%
$
(323
)
-61.4
%
Florida
167
30
(127
)
137
n/m
294
n/m
Mississippi (2)
(3,071
)
2,207
(86
)
(5,278
)
n/m
(2,985
)
n/m
Tennessee (3)
1,031
47
66
984
n/m
965
n/m
Texas
502
—
60
502
n/m
442
n/m
Total net (charge-offs) recoveries
$
(1,168
)
$
2,386
$
439
$
(3,554
)
n/m
$
(1,607
)
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 June 30, 2021 ($ in thousands)
(unaudited) Quarter Ended Six Months
Ended AVERAGE BALANCES
6/30/2021 3/31/2021 12/31/2020
9/30/2020 6/30/2020 6/30/2021 6/30/2020
Securities AFS-taxable
$
2,339,662
$
2,098,089
$
1,902,162
$
1,857,050
$
1,724,320
$
2,219,543
$
1,672,371
Securities AFS-nontaxable
5,174
5,190
5,206
5,973
9,827
5,182
15,942
Securities HTM-taxable
441,688
489,260
550,563
608,585
655,085
465,343
674,913
Securities HTM-nontaxable
10,958
24,070
24,752
25,508
25,538
17,478
25,606
Total securities
2,797,482
2,616,609
2,482,683
2,497,116
2,414,770
2,707,546
2,388,832
PPP loans
648,222
598,139
875,098
941,456
764,416
623,319
382,208
Loans (includes loans held for sale)
10,315,927
10,316,319
10,231,671
10,162,379
9,908,132
10,316,122
9,793,153
Fed funds sold and reverse repurchases
55
136
303
301
113
95
139
Other earning assets
1,750,385
1,667,906
860,540
722,917
854,642
1,709,373
520,985
Total earning assets
15,512,071
15,199,109
14,450,295
14,324,169
13,942,073
15,356,455
13,085,317
ACL LHFI
(112,346
)
(119,557
)
(124,088
)
(121,842
)
(103,006
)
(115,932
)
(94,011
)
Other assets
1,622,388
1,601,250
1,620,694
1,564,825
1,685,317
1,611,877
1,592,019
Total assets
$
17,022,113
$
16,680,802
$
15,946,901
$
15,767,152
$
15,524,384
$
16,852,400
$
14,583,325
Interest-bearing demand deposits
$
4,056,910
$
3,743,651
$
3,649,590
$
3,669,249
$
3,832,372
$
3,901,146
$
3,508,253
Savings deposits
4,627,180
4,659,037
4,350,783
4,416,046
4,180,540
4,643,020
3,913,738
Time deposits
1,301,896
1,371,830
1,436,677
1,507,348
1,578,737
1,336,670
1,598,022
Total interest-bearing deposits
9,985,986
9,774,518
9,437,050
9,592,643
9,591,649
9,880,836
9,020,013
Fed funds purchased and repurchases
174,620
166,909
170,474
84,077
105,696
170,786
176,605
Other borrowings
132,199
166,926
173,525
167,262
107,533
149,467
96,406
Subordinated notes
122,897
122,875
42,828
—
—
122,886
—
Junior subordinated debt securities
61,856
61,856
61,856
61,856
61,856
61,856
61,856
Total interest-bearing liabilities
10,477,558
10,293,084
9,885,733
9,905,838
9,866,734
10,385,831
9,354,880
Noninterest-bearing deposits
4,512,268
4,363,559
4,100,849
3,921,867
3,645,761
4,438,324
3,278,356
Other liabilities
251,582
264,808
235,284
244,544
346,173
258,158
297,196
Total liabilities
15,241,408
14,921,451
14,221,866
14,072,249
13,858,668
15,082,313
12,930,432
Shareholders' equity
1,780,705
1,759,351
1,725,035
1,694,903
1,665,716
1,770,087
1,652,893
Total liabilities and equity
$
17,022,113
$
16,680,802
$
15,946,901
$
15,767,152
$
15,524,384
$
16,852,400
$
14,583,325
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED
FINANCIAL INFORMATION June 30, 2021 ($ in
thousands) (unaudited) PERIOD END BALANCES 6/30/2021
3/31/2021 12/31/2020 9/30/2020
6/30/2020 Cash and due from banks
$
2,267,224
$
1,774,541
$
1,952,504
$
564,588
$
1,026,640
Fed funds sold and reverse repurchases
—
—
50
50
—
Securities available for sale
2,548,739
2,337,676
1,991,815
1,922,728
1,884,153
Securities held to maturity
433,012
493,738
538,072
611,280
660,048
PPP loans
166,119
679,725
610,134
944,270
939,783
LHFS
332,132
412,999
446,951
485,103
355,089
LHFI
10,152,869
9,983,704
9,824,524
9,847,728
9,659,806
ACL LHFI
(104,032
)
(109,191
)
(117,306
)
(122,010
)
(119,188
)
Net LHFI
10,048,837
9,874,513
9,707,218
9,725,718
9,540,618
Premises and equipment, net
200,970
199,098
194,278
192,722
190,567
Mortgage servicing rights
80,764
83,035
66,464
61,613
57,811
Goodwill
384,237
384,237
385,270
385,270
385,270
Identifiable intangible assets
6,170
6,724
7,390
8,142
8,895
Other real estate
9,439
10,651
11,651
16,248
18,276
Operating lease right-of-use assets
33,201
33,704
30,901
30,508
29,819
Other assets
587,288
587,672
609,142
609,922
595,110
Total assets
$
17,098,132
$
16,878,313
$
16,551,840
$
15,558,162
$
15,692,079
Deposits: Noninterest-bearing
$
4,446,991
$
4,705,991
$
4,349,010
$
3,964,023
$
3,880,540
Interest-bearing
10,185,093
9,677,449
9,699,754
9,258,390
9,624,933
Total deposits
14,632,084
14,383,440
14,048,764
13,222,413
13,505,473
Fed funds purchased and repurchases
157,176
160,991
164,519
153,834
70,255
Other borrowings
117,223
145,994
168,252
178,599
152,860
Subordinated notes
122,932
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
33,733
29,205
38,572
39,659
42,663
Operating lease liabilities
34,959
35,389
32,290
31,838
31,076
Other liabilities
158,860
178,856
173,549
159,922
153,952
Total liabilities
15,318,823
15,118,608
14,810,723
13,848,121
14,018,135
Common stock
13,079
13,209
13,215
13,215
13,214
Capital surplus
210,420
229,892
233,120
231,836
230,613
Retained earnings
1,566,451
1,533,110
1,495,833
1,459,306
1,419,552
Accum other comprehensive income (loss), net of tax
(10,641
)
(16,506
)
(1,051
)
5,684
10,565
Total shareholders' equity
1,779,309
1,759,705
1,741,117
1,710,041
1,673,944
Total liabilities and equity
$
17,098,132
$
16,878,313
$
16,551,840
$
15,558,162
$
15,692,079
See Notes to Consolidated Financials TRUSTMARK
CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL
INFORMATION June 30, 2021 ($ in thousands except per
share data) (unaudited) Quarter Ended
Six Months Ended INCOME
STATEMENTS 6/30/2021 3/31/2021
12/31/2020 9/30/2020 6/30/2020
6/30/2021 6/30/2020 Interest and fees on LHFS &
LHFI-FTE
$
93,698
$
93,394
$
96,453
$
97,429
$
99,300
$
187,092
$
208,657
Interest and fees on PPP loans
25,555
9,241
14,870
6,729
5,044
34,796
5,044
Interest on securities-taxable
8,991
8,938
9,998
12,542
12,762
17,929
25,710
Interest on securities-tax exempt-FTE
149
290
293
301
315
439
772
Interest on fed funds sold and reverse repurchases
—
—
—
1
—
—
—
Other interest income
489
503
249
331
239
992
979
Total interest income-FTE
128,882
112,366
121,863
117,333
117,660
241,248
241,162
Interest on deposits
4,630
5,223
6,363
7,437
8,730
9,853
23,687
Interest on fed funds purchased and repurchases
59
56
56
32
42
115
667
Other interest expense
1,813
1,857
1,127
688
881
3,670
1,741
Total interest expense
6,502
7,136
7,546
8,157
9,653
13,638
26,095
Net interest income-FTE
122,380
105,230
114,317
109,176
108,007
227,610
215,067
Provision for credit losses, LHFI
(3,991
)
(10,501
)
(4,413
)
1,760
18,185
(14,492
)
38,766
Provision for credit losses, off-balance sheet credit
exposures (1)
4,528
(9,367
)
(1,087
)
(3,004
)
6,242
(4,839
)
13,025
Net interest income after provision-FTE
121,843
125,098
119,817
110,420
83,580
246,941
163,276
Service charges on deposit accounts
7,613
7,356
8,283
7,577
6,397
14,969
16,429
Bank card and other fees
8,301
9,472
9,107
8,843
7,717
17,773
13,072
Mortgage banking, net
17,333
20,804
28,155
36,439
33,745
38,137
61,228
Insurance commissions
12,217
12,445
10,196
11,562
11,868
24,662
23,418
Wealth management
8,946
8,416
7,838
7,679
7,571
17,362
16,108
Other, net
2,001
2,090
2,538
1,601
2,213
4,091
4,520
Total noninterest income
56,411
60,583
66,117
73,701
69,511
116,994
134,775
Salaries and employee benefits
70,115
71,162
69,660
67,342
66,107
141,277
135,255
Services and fees
21,769
22,484
22,327
20,992
20,567
44,253
40,497
Net occupancy-premises
6,578
6,795
6,616
7,000
6,587
13,373
12,873
Equipment expense
5,567
6,244
6,213
5,828
5,620
11,811
11,236
Other real estate expense, net
1,511
324
(812
)
1,203
271
1,835
1,565
Other expense
13,139
14,539
15,890
14,598
13,265
27,678
28,018
Total noninterest expense
118,679
121,548
119,894
116,963
112,417
240,227
229,444
Income before income taxes and tax eq adj
59,575
64,133
66,040
67,158
40,674
123,708
68,607
Tax equivalent adjustment
2,957
2,894
2,939
2,969
3,007
5,851
6,115
Income before income taxes
56,618
61,239
63,101
64,189
37,667
117,857
62,492
Income taxes
8,637
9,277
11,884
9,749
5,517
17,914
8,124
Net income
$
47,981
$
51,962
$
51,217
$
54,440
$
32,150
$
99,943
$
54,368
Per share data Earnings per share - basic
$
0.76
$
0.82
$
0.81
$
0.86
$
0.51
$
1.58
$
0.86
Earnings per share - diluted
$
0.76
$
0.82
$
0.81
$
0.86
$
0.51
$
1.57
$
0.85
Dividends per share
$
0.23
$
0.23
$
0.23
$
0.23
$
0.23
$
0.46
$
0.46
Weighted average shares outstanding Basic
63,214,593
63,395,911
63,424,219
63,422,692
63,416,307
63,304,751
63,586,468
Diluted
63,409,683
63,562,503
63,616,767
63,581,964
63,555,065
63,465,515
63,721,728
Period end shares outstanding
62,773,226
63,394,522
63,424,526
63,423,820
63,422,439
62,773,226
63,422,439
(1) During the second quarter of 2021, Trustmark
reclassified its credit loss expense related to off-balance sheet
credit exposures from noninterest expense to provision for credit
losses, off-balance sheet credit exposures. Prior periods have been
reclassified accordingly.
See Notes to
Consolidated Financials TRUSTMARK CORPORATION AND
SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June
30, 2021 ($ in thousands) (unaudited)
Quarter Ended NONPERFORMING
ASSETS (1) 6/30/2021 3/31/2021
12/31/2020 9/30/2020 6/30/2020 Nonaccrual LHFI
Alabama
$
8,952
$
9,161
$
9,221
$
3,860
$
4,392
Florida
467
607
572
617
687
Mississippi (2)
23,422
35,534
35,015
35,617
37,884
Tennessee (3)
10,751
12,451
12,572
13,041
6,125
Texas
7,856
5,761
5,748
721
906
Total nonaccrual LHFI
51,448
63,514
63,128
53,856
49,994
Other real estate Alabama
2,830
3,085
3,271
3,725
4,766
Florida
—
—
—
3,665
3,665
Mississippi (2)
6,550
7,566
8,330
8,718
9,408
Tennessee (3)
59
—
50
140
437
Texas
—
—
—
—
—
Total other real estate
9,439
10,651
11,651
16,248
18,276
Total nonperforming assets
$
60,887
$
74,165
$
74,779
$
70,104
$
68,270
LOANS PAST DUE OVER 90 DAYS
(1) LHFI
$
423
$
2,593
$
1,576
$
782
$
807
LHFS-Guaranteed GNMA serviced loans (no obligation to
repurchase)
$
81,538
$
109,566
$
119,409
$
121,281
$
56,269
Quarter Ended
Six Months Ended
ACL LHFI (1) 6/30/2021
3/31/2021 12/31/2020 9/30/2020
6/30/2020 6/30/2021 6/30/2020 Beginning
Balance
$
109,191
$
117,306
$
122,010
$
119,188
$
100,564
$
117,306
$
84,277
CECL adoption adjustments: LHFI
—
—
—
—
—
—
(3,039
)
Acquired loan transfers
—
—
—
—
—
—
1,822
Provision for credit losses, LHFI
(3,991
)
(10,501
)
(4,413
)
1,760
18,185
(14,492
)
38,766
Charge-offs
(4,828
)
(1,245
)
(2,797
)
(1,263
)
(1,870
)
(6,073
)
(7,415
)
Recoveries
3,660
3,631
2,506
2,325
2,309
7,291
4,777
Net (charge-offs) recoveries
(1,168
)
2,386
(291
)
1,062
439
1,218
(2,638
)
Ending Balance
$
104,032
$
109,191
$
117,306
$
122,010
$
119,188
$
104,032
$
119,188
NET (CHARGE-OFFS) RECOVERIES
(1) Alabama
$
203
$
102
$
(1,011
)
$
117
$
526
$
305
$
(554
)
Florida
167
30
66
387
(127
)
197
(63
)
Mississippi (2)
(3,071
)
2,207
332
442
(86
)
(864
)
40
Tennessee (3)
1,031
47
303
42
66
1,078
(2,120
)
Texas
502
—
19
74
60
502
59
Total net (charge-offs) recoveries
$
(1,168
)
$
2,386
$
(291
)
$
1,062
$
439
$
1,218
$
(2,638
)
(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 June
30, 2021 (unaudited) Quarter Ended Six
Months Ended FINANCIAL RATIOS AND
OTHER DATA 6/30/2021 3/31/2021
12/31/2020 9/30/2020 6/30/2020
6/30/2021 6/30/2020 Return on average equity
10.81
%
11.98
%
11.81
%
12.78
%
7.76
%
11.39
%
6.61
%
Return on average tangible equity
13.96
%
15.56
%
15.47
%
16.82
%
10.32
%
14.75
%
8.84
%
Return on average assets
1.13
%
1.26
%
1.28
%
1.37
%
0.83
%
1.20
%
0.75
%
Interest margin - Yield - FTE
3.33
%
3.00
%
3.35
%
3.26
%
3.39
%
3.17
%
3.71
%
Interest margin - Cost
0.17
%
0.19
%
0.21
%
0.23
%
0.28
%
0.18
%
0.40
%
Net interest margin - FTE
3.16
%
2.81
%
3.15
%
3.03
%
3.12
%
2.99
%
3.31
%
Efficiency ratio (1)
64.31
%
71.84
%
65.59
%
62.19
%
62.13
%
67.93
%
62.81
%
Full-time equivalent employees
2,772
2,793
2,797
2,807
2,798
CREDIT QUALITY RATIOS
(2) Net (recoveries) charge-offs / average loans
0.05
%
-0.09
%
0.01
%
-0.04
%
-0.02
%
-0.02
%
0.05
%
Provision for credit losses, LHFI / average loans
-0.16
%
-0.41
%
-0.17
%
0.07
%
0.74
%
-0.28
%
0.80
%
Nonaccrual LHFI / (LHFI + LHFS)
0.49
%
0.61
%
0.61
%
0.52
%
0.50
%
Nonperforming assets / (LHFI + LHFS)
0.58
%
0.71
%
0.73
%
0.68
%
0.68
%
Nonperforming assets / (LHFI + LHFS + other real estate)
0.58
%
0.71
%
0.73
%
0.68
%
0.68
%
ACL LHFI / LHFI
1.02
%
1.09
%
1.19
%
1.24
%
1.23
%
ACL LHFI-commercial / commercial LHFI
1.04
%
1.13
%
1.20
%
1.20
%
1.15
%
ACL LHFI-consumer / consumer and home mortgage LHFI
0.98
%
0.95
%
1.16
%
1.41
%
1.56
%
ACL LHFI / nonaccrual LHFI
202.21
%
171.92
%
185.82
%
226.55
%
238.40
%
ACL LHFI / nonaccrual LHFI (excl individually evaluated loans)
537.35
%
437.08
%
572.69
%
593.72
%
561.04
%
CAPITAL RATIOS Total
equity / total assets
10.41
%
10.43
%
10.52
%
10.99
%
10.67
%
Tangible equity / tangible assets
8.31
%
8.30
%
8.34
%
8.68
%
8.37
%
Tangible equity / risk-weighted assets
11.33
%
11.23
%
11.22
%
11.01
%
11.09
%
Tier 1 leverage ratio
9.00
%
9.11
%
9.33
%
9.20
%
9.08
%
Common equity tier 1 capital ratio
11.76
%
11.71
%
11.62
%
11.36
%
11.42
%
Tier 1 risk-based capital ratio
12.25
%
12.20
%
12.11
%
11.86
%
11.94
%
Total risk-based capital ratio
14.10
%
14.07
%
14.12
%
12.88
%
13.00
%
STOCK PERFORMANCE Market
value-Close
$
30.80
$
33.66
$
27.31
$
21.41
$
24.52
Book value
$
28.35
$
27.76
$
27.45
$
26.96
$
26.39
Tangible book value
$
22.13
$
21.59
$
21.26
$
20.76
$
20.18
(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 June 30, 2021 ($ in
thousands) (unaudited)
Note 1 - Paycheck Protection Program
On June 30, 2021, Trustmark announced the sale of substantially
all PPP loans originated in 2021 by its wholly owned subsidiary,
Trustmark National Bank (TNB), to The Loan Source, Inc. (Loan
Source), a firm with significant expertise in PPP loans. As a
result of this transaction, Loan Source will assume responsibility
for the servicing and forgiveness process for the loans it has
acquired from Trustmark. This transaction will allow Trustmark to
focus on more traditional lending efforts and increase its ability
to provide customers with financial services in an improving
economic environment.
On a pre-tax basis, Trustmark accelerated the recognition of
unamortized PPP loan origination fees, net of cost, of
approximately $18.6 million, in the second quarter of 2021 due to
the sale of approximately $354.2 million in PPP loans. This revenue
is substantially the same as Trustmark would expect to recognize
upon the maturity or forgiveness of the PPP loans being sold in
this transaction, and thus this transaction serves to accelerate
revenue anticipated in future periods into the second quarter.
At June 30, 2021, Trustmark had 843 PPP loans outstanding that
totaled $166.1 million (net of $2.1 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 Small Business
Administration; 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:
6/30/2021
3/31/2021
12/31/2020
9/30/2020
6/30/2020
SECURITIES
AVAILABLE FOR SALE
U.S. Treasury securities
$
30,025
$
—
$
—
$
—
$
—
U.S. Government agency obligations
16,023
17,349
18,041
19,011
19,898
Obligations of states and political
subdivisions
5,807
5,798
5,835
8,315
11,176
Mortgage-backed securities
Residential mortgage pass-through
securities
Guaranteed by GNMA
48,445
52,406
56,862
62,156
69,637
Issued by FNMA and FHLMC
1,983,783
1,749,144
1,441,321
1,279,919
1,121,604
Other residential mortgage-backed
securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
283,988
345,869
419,437
500,858
574,940
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
180,668
167,110
50,319
52,469
86,898
Total securities available for sale
$
2,548,739
$
2,337,676
$
1,991,815
$
1,922,728
$
1,884,153
SECURITIES HELD
TO MATURITY
Obligations of states and political
subdivisions
$
12,994
$
26,554
$
26,584
$
31,605
$
31,629
Mortgage-backed securities
Residential mortgage pass-through
securities
Guaranteed by GNMA
6,249
7,268
7,598
8,244
10,306
Issued by FNMA and FHLMC
53,406
61,855
67,944
78,213
86,346
Other residential mortgage-backed
securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
291,477
324,360
360,361
399,400
435,333
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or
GNMA
68,886
73,701
75,585
93,818
96,434
Total securities held to maturity
$
433,012
$
493,738
$
538,072
$
611,280
$
660,048
At June 30, 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 $7.5 million ($5.6 million, net of tax).
Management continues to focus on asset quality as one of the
strategic goals of the securities portfolio, which is evidenced by
the investment of 99.4% of the portfolio in GSE-backed obligations
and other Aaa rated securities as determined by Moody’s. None of
the securities owned by Trustmark are collateralized by assets
which are considered sub-prime. Furthermore, outside of stock
ownership in the Federal Home Loan Bank of Dallas, Federal Home
Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not
hold any other equity investment in a GSE.
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIALS June 30, 2021 ($ in
thousands) (unaudited)
Note 3 – Loan Composition
LHFI consisted of the following during the periods
presented:
LHFI BY
TYPE
6/30/2021
3/31/2021
12/31/2020
9/30/2020
6/30/2020
Loans secured by real estate:
Construction, land development and other
land loans
$
1,360,302
$
1,342,088
$
1,309,039
$
1,385,947
$
1,277,277
Secured by 1-4 family residential
properties
1,810,396
1,742,782
1,741,132
1,775,400
1,813,525
Secured by nonfarm, nonresidential
properties
2,819,662
2,799,195
2,709,026
2,707,627
2,610,392
Other real estate secured
1,078,622
1,135,005
1,065,964
887,792
884,815
Commercial and industrial loans
1,326,605
1,323,277
1,309,078
1,398,468
1,413,255
Consumer loans
153,519
153,267
161,174
160,960
161,620
State and other political subdivision
loans
1,136,764
1,036,694
1,000,776
935,349
931,536
Other loans
466,999
451,396
528,335
596,185
567,386
LHFI
10,152,869
9,983,704
9,824,524
9,847,728
9,659,806
ACL LHFI
(104,032
)
(109,191
)
(117,306
)
(122,010
)
(119,188
)
Net LHFI
$
10,048,837
$
9,874,513
$
9,707,218
$
9,725,718
$
9,540,618
The following table presents the LHFI composition by region at
June 30, 2021 and reflects each region’s diversified mix of
loans:
June 30, 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
$
1,360,302
$
512,156
$
57,415
$
358,091
$
36,934
$
395,706
Secured by 1-4 family residential
properties
1,810,396
113,712
38,443
1,576,135
68,876
13,230
Secured by nonfarm, nonresidential
properties
2,819,662
783,796
248,269
1,006,513
175,586
605,498
Other real estate secured
1,078,622
287,039
5,734
356,092
19,676
410,081
Commercial and industrial loans
1,326,605
212,425
21,180
585,821
298,249
208,930
Consumer loans
153,519
22,792
7,660
99,067
19,496
4,504
State and other political subdivision
loans
1,136,764
106,447
53,425
722,702
37,777
216,413
Other loans
466,999
77,295
12,964
290,024
65,816
20,900
Loans
$
10,152,869
$
2,115,662
$
445,090
$
4,994,445
$
722,410
$
1,875,262
CONSTRUCTION,
LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots
$
59,839
$
22,570
$
9,368
$
20,283
$
1,181
$
6,437
Development
106,548
41,903
554
37,599
13,211
13,281
Unimproved land
102,023
27,747
12,709
32,564
11,375
17,628
1-4 family construction
264,227
135,418
19,606
63,863
10,088
35,252
Other construction
827,665
284,518
15,178
203,782
1,079
323,108
Construction, land development and other
land loans
$
1,360,302
$
512,156
$
57,415
$
358,091
$
36,934
$
395,706
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIALS June 30, 2021 ($ in
thousands) (unaudited)
Note 3 – Loan Composition (continued)
June 30, 2021
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
$
401,811
$
158,862
$
36,208
$
108,021
$
22,347
$
76,373
Office
203,704
48,483
25,523
62,711
12,352
54,635
Hotel/motel
340,867
167,536
65,163
47,535
35,708
24,925
Mini-storage
138,841
22,969
2,151
66,392
382
46,947
Industrial
211,872
43,197
19,008
46,733
139
102,795
Health care
41,722
21,555
1,167
16,468
376
2,156
Convenience stores
22,052
6,742
200
3,737
564
10,809
Nursing homes/senior living
154,351
84,686
—
43,067
6,598
20,000
Other
85,841
12,990
8,293
27,345
8,962
28,251
Total non-owner occupied loans
1,601,061
567,020
157,713
422,009
87,428
366,891
Owner-occupied:
Office
174,051
40,219
41,695
54,589
8,149
29,399
Churches
100,575
20,331
6,439
50,387
10,056
13,362
Industrial warehouses
177,645
12,820
3,582
49,855
16,729
94,659
Health care
139,456
25,317
7,019
94,162
2,313
10,645
Convenience stores
139,508
16,425
13,211
64,621
511
44,740
Retail
68,652
13,448
9,815
20,565
10,382
14,442
Restaurants
54,470
3,838
4,609
31,637
14,101
285
Auto dealerships
55,141
6,664
267
23,099
25,111
—
Nursing homes/senior living
202,579
71,916
—
130,663
—
—
Other
106,524
5,798
3,919
64,926
806
31,075
Total owner-occupied loans
1,218,601
216,776
90,556
584,504
88,158
238,607
Loans secured by nonfarm, nonresidential
properties
$
2,819,662
$
783,796
$
248,269
$
1,006,513
$
175,586
$
605,498
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 June 30, 2021, the carrying amount of the Notes was
$122.9 million. The Notes are unsecured obligations and are
subordinated in right of payment to all of Trustmark’s existing and
future senior indebtedness, whether secured or unsecured. The Notes
are obligations of Trustmark only and are not obligations of, and
are not guaranteed by, any of its subsidiaries, including TNB. From
the date of issuance until November 30, 2025, the Notes bear
interest at a fixed rate of 3.625% per year, payable semi-annually
in arrears on June 1 and December 1 of each year. Beginning
December 1, 2025, the Notes will bear interest at a floating rate
per year equal to the Benchmark rate, which is the Three-Month Term
Secured Overnight Financing Rate (SOFR), plus 338.7 basis points,
payable quarterly in arrears on March 1, June 1, September 1 and
December 1 of each year. The Notes qualify as Tier 2 capital for
Trustmark. The Notes may be redeemed at Trustmark’s option under
certain circumstances. Trustmark intends to use the net proceeds
for general corporate purposes.
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIALS June 30, 2021 ($ in
thousands) (unaudited)
Note 5 – Yields on Earning Assets and Interest-Bearing
Liabilities
The following table illustrates the yields on earning assets by
category as well as the rates paid on interest-bearing liabilities
on a tax equivalent basis:
Quarter Ended
Six Months Ended
6/30/2021
3/31/2021
12/31/2020
9/30/2020
6/30/2020
6/30/2021
6/30/2020
Securities – taxable
1.30
%
1.40
%
1.62
%
2.02
%
2.16
%
1.35
%
2.20
%
Securities – nontaxable
3.70
%
4.02
%
3.89
%
3.80
%
3.58
%
3.91
%
3.74
%
Securities – total
1.31
%
1.43
%
1.65
%
2.05
%
2.18
%
1.37
%
2.23
%
PPP loans
15.81
%
6.27
%
6.76
%
2.84
%
2.65
%
11.26
%
2.65
%
Loans - LHFI & LHFS
3.64
%
3.67
%
3.75
%
3.81
%
4.03
%
3.66
%
4.28
%
Loans - total
4.36
%
3.81
%
3.99
%
3.73
%
3.93
%
4.09
%
4.22
%
Fed funds sold & reverse
repurchases
—
—
—
1.32
%
—
—
—
Other earning assets
0.11
%
0.12
%
0.12
%
0.18
%
0.11
%
0.12
%
0.38
%
Total earning assets
3.33
%
3.00
%
3.35
%
3.26
%
3.39
%
3.17
%
3.71
%
Interest-bearing deposits
0.19
%
0.22
%
0.27
%
0.31
%
0.37
%
0.20
%
0.53
%
Fed funds purchased & repurchases
0.14
%
0.14
%
0.13
%
0.15
%
0.16
%
0.14
%
0.76
%
Other borrowings
2.29
%
2.14
%
1.61
%
1.19
%
2.09
%
2.21
%
2.21
%
Total interest-bearing liabilities
0.25
%
0.28
%
0.30
%
0.33
%
0.39
%
0.26
%
0.56
%
Net interest margin
3.16
%
2.81
%
3.15
%
3.03
%
3.12
%
2.99
%
3.31
%
Net interest margin excluding PPP loans
and the FRB balance
2.94
%
2.99
%
3.09
%
3.20
%
3.35
%
2.96
%
3.44
%
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 June 30, 2021 and March 31, 2021, the average FRB balance
totaled $1.700 billion and $1.618 billion, 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 2.94% for the second quarter of 2021, a decrease of 5 basis
points when compared to the first quarter of 2021. 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 $1.3 million
during the second quarter of 2021.
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIALS June 30, 2021 ($ 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
Six Months Ended
6/30/2021
3/31/2021
12/31/2020
9/30/2020
6/30/2020
6/30/2021
6/30/2020
Mortgage servicing income, net
$
6,318
$
6,181
$
6,227
$
5,742
$
5,893
$
12,499
$
11,712
Change in fair value-MSR from runoff
(5,029
)
(5,103
)
(5,177
)
(4,590
)
(4,214
)
(10,132
)
(6,821
)
Gain on sales of loans, net
14,778
19,456
28,014
34,472
34,078
34,234
48,417
Mortgage banking income before hedge
ineffectiveness
16,067
20,534
29,064
35,624
35,757
36,601
53,308
Change in fair value-MSR from market
changes
(4,465
)
13,696
951
60
(3,159
)
9,231
(27,158
)
Change in fair value of derivatives
5,731
(13,426
)
(1,860
)
755
1,147
(7,695
)
35,078
Net positive (negative) hedge
ineffectiveness
1,266
270
(909
)
815
(2,012
)
1,536
7,920
Mortgage banking, net
$
17,333
$
20,804
$
28,155
$
36,439
$
33,745
$
38,137
$
61,228
Note 7 – Other Noninterest Income and Expense
Other noninterest income consisted of the following for the
periods presented:
Quarter Ended
Six Months Ended
6/30/2021
3/31/2021
12/31/2020
9/30/2020
6/30/2020
6/30/2021
6/30/2020
Partnership amortization for tax credit
purposes
$
(1,989
)
$
(1,522
)
$
(1,877
)
$
(1,457
)
$
(1,205
)
$
(3,511
)
$
(2,366
)
Increase in life insurance cash surrender
value
1,653
1,639
1,708
1,755
1,696
3,292
3,418
Other miscellaneous income
2,337
1,973
2,707
1,303
1,722
4,310
3,468
Total other, net
$
2,001
$
2,090
$
2,538
$
1,601
$
2,213
$
4,091
$
4,520
Trustmark invests in partnerships that provide income tax
credits on a Federal and/or State basis (i.e., new market tax
credits, low income housing tax credits and historical tax
credits). The income tax credits related to these partnerships are
utilized as specifically allowed by income tax law and are recorded
as a reduction in income tax expense.
Other noninterest expense consisted of the following for the
periods presented:
Quarter Ended
Six Months Ended
6/30/2021
3/31/2021
12/31/2020
9/30/2020
6/30/2020
6/30/2021
6/30/2020
Loan expense
$
3,738
$
4,167
$
4,243
$
4,184
$
3,619
$
7,905
$
6,751
Amortization of intangibles
553
666
752
752
736
1,219
1,548
FDIC assessment expense
1,225
1,540
1,500
1,410
1,590
2,765
3,180
Other miscellaneous expense
7,623
8,166
9,395
8,252
7,320
15,789
16,539
Total other expense
$
13,139
$
14,539
$
15,890
$
14,598
$
13,265
$
27,678
$
28,018
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 June 30, 2021 ($ in thousands
except per share data) (unaudited)
Note 8 – Non-GAAP Financial Measures (continued)
Quarter Ended
Six Months Ended
6/30/2021
3/31/2021
12/31/2020
9/30/2020
6/30/2020
6/30/2021
6/30/2020
TANGIBLE
EQUITY
AVERAGE BALANCES
Total shareholders' equity
$
1,780,705
$
1,759,351
$
1,725,035
$
1,694,903
$
1,665,716
$
1,770,087
$
1,652,893
Less: Goodwill
(384,237
)
(385,155
)
(385,270
)
(385,270
)
(383,081
)
(384,694
)
(381,876
)
Identifiable intangible assets
(6,442
)
(7,118
)
(7,803
)
(8,550
)
(7,834
)
(6,778
)
(7,942
)
Total average tangible equity
$
1,390,026
$
1,367,078
$
1,331,962
$
1,301,083
$
1,274,801
$
1,378,615
$
1,263,075
PERIOD END BALANCES
Total shareholders' equity
$
1,779,309
$
1,759,705
$
1,741,117
$
1,710,041
$
1,673,944
Less: Goodwill
(384,237
)
(384,237
)
(385,270
)
(385,270
)
(385,270
)
Identifiable intangible assets
(6,170
)
(6,724
)
(7,390
)
(8,142
)
(8,895
)
Total tangible equity
(a)
$
1,388,902
$
1,368,744
$
1,348,457
$
1,316,629
$
1,279,779
TANGIBLE
ASSETS
Total assets
$
17,098,132
$
16,878,313
$
16,551,840
$
15,558,162
$
15,692,079
Less: Goodwill
(384,237
)
(384,237
)
(385,270
)
(385,270
)
(385,270
)
Identifiable intangible assets
(6,170
)
(6,724
)
(7,390
)
(8,142
)
(8,895
)
Total tangible assets
(b)
$
16,707,725
$
16,487,352
$
16,159,180
$
15,164,750
$
15,297,914
Risk-weighted assets
(c)
$
12,256,492
$
12,188,988
$
12,017,378
$
11,963,269
$
11,539,157
NET INCOME
ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income
$
47,981
$
51,962
$
51,217
$
54,440
$
32,150
$
99,943
$
54,368
Plus: Intangible amortization net of
tax
415
500
564
564
552
915
1,161
Net income adjusted for intangible
amortization
$
48,396
$
52,462
$
51,781
$
55,004
$
32,702
$
100,858
$
55,529
Period end common shares outstanding
(d)
62,773,226
63,394,522
63,424,526
63,423,820
63,422,439
TANGIBLE COMMON
EQUITY MEASUREMENTS
Return on average tangible equity (1)
13.96
%
15.56
%
15.47
%
16.82
%
10.32
%
14.75
%
8.84
%
Tangible equity/tangible assets
(a)/(b)
8.31
%
8.30
%
8.34
%
8.68
%
8.37
%
Tangible equity/risk-weighted assets
(a)/(c)
11.33
%
11.23
%
11.22
%
11.01
%
11.09
%
Tangible book value
(a)/(d)*1,000
$
22.13
$
21.59
$
21.26
$
20.76
$
20.18
COMMON EQUITY
TIER 1 CAPITAL (CET1)
Total shareholders' equity
$
1,779,309
$
1,759,705
$
1,741,117
$
1,710,041
$
1,673,944
CECL transition adjustment
26,671
26,829
31,199
32,647
32,693
AOCI-related adjustments
10,641
16,506
1,051
(5,684
)
(10,565
)
CET1 adjustments and deductions:
Goodwill net of associated deferred tax
liabilities (DTLs)
(370,276
)
(370,288
)
(371,333
)
(371,345
)
(371,342
)
Other adjustments and deductions for CET1
(2)
(5,243
)
(5,675
)
(6,190
)
(6,770
)
(7,352
)
CET1 capital
(e)
1,441,102
1,427,077
1,395,844
1,358,889
1,317,378
Additional tier 1 capital instruments plus
related surplus
60,000
60,000
60,000
60,000
60,000
Tier 1 capital
$
1,501,102
$
1,487,077
$
1,455,844
$
1,418,889
$
1,377,378
Common equity tier 1 capital ratio
(e)/(c)
11.76
%
11.71
%
11.62
%
11.36
%
11.42
%
(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 June 30, 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
Six Months Ended
6/30/2021
3/31/2021
12/31/2020
9/30/2020
6/30/2020
6/30/2021
6/30/2020
Net interest income (GAAP)
$
119,423
$
102,336
$
111,378
$
106,207
$
105,000
$
221,759
$
208,952
Noninterest income (GAAP)
56,411
60,583
66,117
73,701
69,511
116,994
134,775
Pre-provision revenue
(a)
$
175,834
$
162,919
$
177,495
$
179,908
$
174,511
$
338,753
$
343,727
Noninterest expense (GAAP)
$
118,679
$
121,548
$
119,894
$
116,963
$
112,417
$
240,227
$
229,444
Less: Voluntary early retirement
program
—
—
—
—
—
—
(4,375
)
Adjusted noninterest expense - PPNR
(Non-GAAP)
(b)
$
118,679
$
121,548
$
119,894
$
116,963
$
112,417
$
240,227
$
225,069
PPNR (Non-GAAP)
(a)-(b)
$
57,155
$
41,371
$
57,601
$
62,945
$
62,094
$
98,526
$
118,658
The following table presents adjustments to net income and
select financial ratios as reported in accordance with GAAP
resulting from significant non-routine items occurring during the
periods presented:
Quarter Ended
Six Months Ended
6/30/2021
6/30/2020
6/30/2021
6/30/2020
Amount
Diluted EPS
Amount
Diluted EPS
Amount
Diluted EPS
Amount
Diluted EPS
Net Income (GAAP)
$
47,981
$
0.76
$
32,150
$
0.51
$
99,943
$
1.57
$
54,368
$
0.85
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)
$
47,981
$
0.76
$
32,150
$
0.51
$
99,943
$
1.57
$
57,649
$
0.90
Reported (GAAP)
Adjusted
Reported (GAAP)
Adjusted
Reported (GAAP)
Adjusted
Reported (GAAP)
Adjusted
(Non- GAAP)
(Non- GAAP)
(Non- GAAP)
(Non- GAAP)
Return on average equity
10.81
%
n/a
7.76
%
n/a
11.39
%
n/a
6.61
%
7.00
%
Return on average tangible equity
13.96
%
n/a
10.32
%
n/a
14.75
%
n/a
8.84
%
9.35
%
Return on average assets
1.13
%
n/a
0.83
%
n/a
1.20
%
n/a
0.75
%
0.79
%
n/a - not applicable
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIALS June 30, 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
Six Months Ended
6/30/2021
3/31/2021
12/31/2020
9/30/2020
6/30/2020
6/30/2021
6/30/2020
Total noninterest expense (GAAP)
$
118,679
$
121,548
$
119,894
$
116,963
$
112,417
240,227
$
229,444
Less: Other real estate expense, net
(1,511
)
(324
)
812
(1,203
)
(271
)
(1,835
)
(1,565
)
Amortization of intangibles
(553
)
(666
)
(752
)
(752
)
(736
)
(1,219
)
(1,548
)
Voluntary early retirement program
—
—
—
—
—
—
(4,375
)
Charitable contributions resulting in
state tax credits
(355
)
(350
)
(375
)
(375
)
(375
)
(705
)
(750
)
Adjusted noninterest expense
(Non-GAAP)
(c)
$
116,260
$
120,208
$
119,579
$
114,633
$
111,035
$
236,468
$
221,206
Net interest income (GAAP)
$
119,423
$
102,336
$
111,378
$
106,207
$
105,000
$
221,759
$
208,952
Add: Tax equivalent adjustment
2,957
2,894
2,939
2,969
3,007
5,851
6,115
Net interest income-FTE (Non-GAAP)
(a)
$
122,380
$
105,230
$
114,317
$
109,176
$
108,007
$
227,610
$
215,067
Noninterest income (GAAP)
$
56,411
$
60,583
$
66,117
$
73,701
$
69,511
$
116,994
$
134,775
Add: Partnership amortization for tax
credit purposes
1,989
1,522
1,877
1,457
1,205
3,511
2,366
Adjusted noninterest income (Non-GAAP)
(b)
$
58,400
$
62,105
$
67,994
$
75,158
$
70,716
$
120,505
$
137,141
Adjusted revenue (Non-GAAP)
(a)+(b)
$
180,780
$
167,335
$
182,311
$
184,334
$
178,723
$
348,115
$
352,208
Efficiency ratio (Non-GAAP)
(c)/((a)+(b))
64.31
%
71.84
%
65.59
%
62.19
%
62.13
%
67.93
%
62.81
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210727006020/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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