Trustmark Corporation Announces Second Quarter 2020 Financial Results

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

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

Second Quarter Highlights

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

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

Balance Sheet Management

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

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

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

As previously announced, Trustmark suspended its share repurchase program on March 9, 2020, to ensure ample capital to support customers during the COVID-19 pandemic. Trustmark’s capital position remained solid, reflecting the strength and diversity of its financial services businesses. At June 30, 2020, Trustmark’s tangible equity to tangible assets ratio was 8.37%, while the total risk-based capital ratio was 13.00%.

Credit Quality

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

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

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

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

Revenue Generation

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

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

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

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

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

Noninterest Expense

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

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

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

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

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, July 29, 2020 at 8:30 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing [phone] or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Wednesday, August 12, 2020, in archived format at the same web address or by calling [phone], passcode 10145738.

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

Forward-Looking Statements

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

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

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

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2020
($ in thousands)
(unaudited)
													Linked Quarter							Year over Year
QUARTERLY AVERAGE BALANCES	6/30/2020				3/31/2020				6/30/2019				$ Change				% Change			$ Change				% Change
Securities AFS-taxable	$	1,724,320			$	1,620,422			$	1,661,464			$	103,898			6.4	%		$	62,856			3.8	%
Securities AFS-nontaxable		9,827				22,056				31,474				(12,229	)		-55.4	%			(21,647	)		-68.8	%
Securities HTM-taxable		655,085				694,740				821,357				(39,655	)		-5.7	%			(166,272	)		-20.2	%
Securities HTM-nontaxable		25,538				25,673				27,035				(135	)		-0.5	%			(1,497	)		-5.5	%
Total securities		2,414,770				2,362,891				2,541,330				51,879			2.2	%			(126,560	)		-5.0	%
Paycheck protection program loans (PPP)		764,416				—				—				764,416			n/m				764,416			n/m
Loans (includes loans held for sale) (1)		9,908,132				9,678,174				9,260,028				229,958			2.4	%			648,104			7.0	%
Acquired loans (1)		—				—				91,217				—			n/m				(91,217	)		-100.0	%
Fed funds sold and reverse repurchases		113				164				34,057				(51	)		-31.1	%			(33,944	)		-99.7	%
Other earning assets		854,642				187,327				316,604				667,315			n/m				538,038			n/m
Total earning assets		13,942,073				12,228,556				12,243,236				1,713,517			14.0	%			1,698,837			13.9	%
Allowance for credit losses (ACL), loans held   for investment (LHFI) (1)		(103,006	)			(85,015	)			(81,996	)			(17,991	)		-21.2	%			(21,010	)		-25.6	%
Other assets		1,685,317				1,498,725				1,467,462				186,592			12.5	%			217,855			14.8	%
Total assets	$	15,524,384			$	13,642,266			$	13,628,702			$	1,882,118			13.8	%		$	1,895,682			13.9	%
Interest-bearing demand deposits	$	3,832,372			$	3,184,134			$	3,048,876			$	648,238			20.4	%		$	783,496			25.7	%
Savings deposits		4,180,540				3,646,936				3,801,187				533,604			14.6	%			379,353			10.0	%
Time deposits		1,578,737				1,617,307				1,840,065				(38,570	)		-2.4	%			(261,328	)		-14.2	%
Total interest-bearing deposits		9,591,649				8,448,377				8,690,128				1,143,272			13.5	%			901,521			10.4	%
Fed funds purchased and repurchases		105,696				247,513				51,264				(141,817	)		-57.3	%			54,432			n/m
Other borrowings		107,533				85,279				81,352				22,254			26.1	%			26,181			32.2	%
Junior subordinated debt securities		61,856				61,856				61,856				—			0.0	%			—			0.0	%
Total interest-bearing liabilities		9,866,734				8,843,025				8,884,600				1,023,709			11.6	%			982,134			11.1	%
Noninterest-bearing deposits		3,645,761				2,910,951				2,898,266				734,810			25.2	%			747,495			25.8	%
Other liabilities		346,173				248,220				240,091				97,953			39.5	%			106,082			44.2	%
Total liabilities		13,858,668				12,002,196				12,022,957				1,856,472			15.5	%			1,835,711			15.3	%
Shareholders' equity		1,665,716				1,640,070				1,605,745				25,646			1.6	%			59,971			3.7	%
Total liabilities and equity	$	15,524,384			$	13,642,266			$	13,628,702			$	1,882,118			13.8	%		$	1,895,682			13.9	%
(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2020
($ in thousands)
(unaudited)
													Linked Quarter							Year over Year
PERIOD END BALANCES	6/30/2020				3/31/2020				6/30/2019				$ Change				% Change			$ Change				% Change
Cash and due from banks	$	1,026,640			$	404,341			$	404,413			$	622,299			n/m			$	622,227			n/m
Fed funds sold and reverse repurchases		—				2,000				75,499				(2,000	)		-100.0	%			(75,499	)		-100.0	%
Securities available for sale		1,884,153				1,833,779				1,643,725				50,374			2.7	%			240,428			14.6	%
Securities held to maturity		660,048				704,276				825,536				(44,228	)		-6.3	%			(165,488	)		-20.0	%
PPP loans		939,783				—				—				939,783			n/m				939,783			n/m
Loans held for sale (LHFS)		355,089				325,389				240,380				29,700			9.1	%			114,709			47.7	%
Loans held for investment (LHFI) (1)		9,659,806				9,567,920				9,116,759				91,886			1.0	%			543,047			6.0	%
ACL LHFI (1)		(119,188	)			(100,564	)			(80,399	)			(18,624	)		-18.5	%			(38,789	)		-48.2	%
Net LHFI		9,540,618				9,467,356				9,036,360				73,262			0.8	%			504,258			5.6	%
Acquired loans (1)		—				—				87,884				—			n/m				(87,884	)		-100.0	%
Allowance for loan losses, acquired loans (1)		—				—				(1,398	)			—			n/m				1,398			-100.0	%
Net acquired loans		—				—				86,486				—			n/m				(86,486	)		-100.0	%
Net LHFI and acquired loans		9,540,618				9,467,356				9,122,846				73,262			0.8	%			417,772			4.6	%
Premises and equipment, net		190,567				190,179				189,820				388			0.2	%			747			0.4	%
Mortgage servicing rights		57,811				56,437				79,283				1,374			2.4	%			(21,472	)		-27.1	%
Goodwill		385,270				381,717				379,627				3,553			0.9	%			5,643			1.5	%
Identifiable intangible assets		8,895				7,537				9,101				1,358			18.0	%			(206	)		-2.3	%
Other real estate		18,276				24,847				31,243				(6,571	)		-26.4	%			(12,967	)		-41.5	%
Operating lease right-of-use assets		29,819				30,839				32,762				(1,020	)		-3.3	%			(2,943	)		-9.0	%
Other assets		595,110				591,132				514,723				3,978			0.7	%			80,387			15.6	%
Total assets	$	15,692,079			$	14,019,829			$	13,548,958			$	1,672,250			11.9	%		$	2,143,121			15.8	%
Deposits:
Noninterest-bearing	$	3,880,540			$	2,977,058			$	2,909,141			$	903,482			30.3	%		$	971,399			33.4	%
Interest-bearing		9,624,933				8,598,706				8,657,488				1,026,227			11.9	%			967,445			11.2	%
Total deposits		13,505,473				11,575,764				11,566,629				1,929,709			16.7	%			1,938,844			16.8	%
Fed funds purchased and repurchases		70,255				421,821				51,800				(351,566	)		-83.3	%			18,455			35.6	%
Other borrowings		152,860				84,230				79,012				68,630			81.5	%			73,848			93.5	%
Junior subordinated debt securities		61,856				61,856				61,856				—			0.0	%			—			0.0	%
ACL on off-balance sheet credit exposures (1)		42,663				36,421				—				6,242			17.1	%			42,663			n/m
Operating lease liabilities		31,076				32,055				33,878				(979	)		-3.1	%			(2,802	)		-8.3	%
Other liabilities		153,952				155,283				137,233				(1,331	)		-0.9	%			16,719			12.2	%
Total liabilities		14,018,135				12,367,430				11,930,408				1,650,705			13.3	%			2,087,727			17.5	%
Common stock		13,214				13,209				13,418				5			0.0	%			(204	)		-1.5	%
Capital surplus		230,613				229,403				260,619				1,210			0.5	%			(30,006	)		-11.5	%
Retained earnings		1,419,552				1,402,089				1,369,329				17,463			1.2	%			50,223			3.7	%
Accum other comprehensive income (loss),   net of tax		10,565				7,698				(24,816	)			2,867			37.2	%			35,381			n/m
Total shareholders' equity		1,673,944				1,652,399				1,618,550				21,545			1.3	%			55,394			3.4	%
Total liabilities and equity	$	15,692,079			$	14,019,829			$	13,548,958			$	1,672,250			11.9	%		$	2,143,121			15.8	%
(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2020
($ in thousands except per share data)
(unaudited)
	Quarter Ended									Linked Quarter							Year over Year
INCOME STATEMENTS	6/30/2020			3/31/2020			6/30/2019			$ Change				% Change			$ Change				% Change
Interest and fees on LHFS & LHFI-FTE	$	99,300		$	109,357		$	114,873		$	(10,057	)		-9.2	%		$	(15,573	)		-13.6	%
Interest and fees on PPP loans		5,044			—			—			5,044			n/m				5,044			n/m
Interest and fees on acquired loans (1)		—			—			2,010			—			n/m				(2,010	)		-100.0	%
Interest on securities-taxable		12,762			12,948			13,916			(186	)		-1.4	%			(1,154	)		-8.3	%
Interest on securities-tax exempt-FTE		315			457			551			(142	)		-31.1	%			(236	)		-42.8	%
Interest on fed funds sold and reverse repurchases		—			—			214			—			n/m				(214	)		-100.0	%
Other interest income		239			740			1,820			(501	)		-67.7	%			(1,581	)		-86.9	%
Total interest income-FTE		117,660			123,502			133,384			(5,842	)		-4.7	%			(15,724	)		-11.8	%
Interest on deposits		8,730			14,957			21,500			(6,227	)		-41.6	%			(12,770	)		-59.4	%
Interest on fed funds purchased and repurchases		42			625			81			(583	)		-93.3	%			(39	)		-48.1	%
Other interest expense		881			860			831			21			2.4	%			50			6.0	%
Total interest expense		9,653			16,442			22,412			(6,789	)		-41.3	%			(12,759	)		-56.9	%
Net interest income-FTE		108,007			107,060			110,972			947			0.9	%			(2,965	)		-2.7	%
Provision for credit losses, LHFI (1)		18,185			20,581			2,486			(2,396	)		-11.6	%			15,699			n/m
Provision for loan losses, acquired loans (1)		—			—			106			—			n/m				(106	)		-100.0	%
Net interest income after provision-FTE		89,822			86,479			108,380			3,343			3.9	%			(18,558	)		-17.1	%
Service charges on deposit accounts		6,397			10,032			10,379			(3,635	)		-36.2	%			(3,982	)		-38.4	%
Bank card and other fees		7,717			5,355			8,004			2,362			44.1	%			(287	)		-3.6	%
Mortgage banking, net		33,745			27,483			10,295			6,262			22.8	%			23,450			n/m
Insurance commissions		11,868			11,550			11,089			318			2.8	%			779			7.0	%
Wealth management		7,571			8,537			7,742			(966	)		-11.3	%			(171	)		-2.2	%
Other, net		2,213			2,307			2,130			(94	)		-4.1	%			83			3.9	%
Total noninterest income		69,511			65,264			49,639			4,247			6.5	%			19,872			40.0	%
Salaries and employee benefits		66,107			69,148			61,949			(3,041	)		-4.4	%			4,158			6.7	%
Services and fees		20,567			19,930			18,009			637			3.2	%			2,558			14.2	%
Net occupancy-premises		6,587			6,286			6,403			301			4.8	%			184			2.9	%
Equipment expense		5,620			5,616			5,958			4			0.1	%			(338	)		-5.7	%
Other real estate expense, net		271			1,294			132			(1,023	)		-79.1	%			139			n/m
Credit loss expense related to off-balance sheet   credit exposures (1)		6,242			6,783			—			(541	)		-8.0	%			6,242			n/m
Other expense		13,265			14,753			13,650			(1,488	)		-10.1	%			(385	)		-2.8	%
Total noninterest expense		118,659			123,810			106,101			(5,151	)		-4.2	%			12,558			11.8	%
Income before income taxes and tax eq adj		40,674			27,933			51,918			12,741			45.6	%			(11,244	)		-21.7	%
Tax equivalent adjustment		3,007			3,108			3,248			(101	)		-3.2	%			(241	)		-7.4	%
Income before income taxes		37,667			24,825			48,670			12,842			51.7	%			(11,003	)		-22.6	%
Income taxes		5,517			2,607			6,530			2,910			n/m				(1,013	)		-15.5	%
Net income	$	32,150		$	22,218		$	42,140		$	9,932			44.7	%		$	(9,990	)		-23.7	%
Per share data
Earnings per share - basic	$	0.51		$	0.35		$	0.65		$	0.16			45.7	%		$	(0.14	)		-21.5	%
Earnings per share - diluted	$	0.51		$	0.35		$	0.65		$	0.16			45.7	%		$	(0.14	)		-21.5	%
Dividends per share	$	0.23		$	0.23		$	0.23			—			0.0	%			—			0.0	%
Weighted average shares outstanding
Basic		63,416,307			63,756,629			64,677,889
Diluted		63,555,065			63,913,603			64,815,029
Period end shares outstanding		63,422,439			63,396,912			64,398,846
(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2020
($ in thousands)
(unaudited)
	Quarter Ended												Linked Quarter							Year over Year
NONPERFORMING ASSETS (1)	6/30/2020				3/31/2020				6/30/2019				$ Change				% Change			$ Change				% Change
Nonaccrual LHFI
Alabama	$	4,392			$	4,769			$	2,327			$	(377	)		-7.9	%		$	2,065			88.7	%
Florida		687				254				330				433			n/m				357			n/m
Mississippi (2)		37,884				40,815				39,373				(2,931	)		-7.2	%			(1,489	)		-3.8	%
Tennessee (3)		6,125				6,153				8,455				(28	)		-0.5	%			(2,330	)		-27.6	%
Texas		906				1,001				2,403				(95	)		-9.5	%			(1,497	)		-62.3	%
Total nonaccrual LHFI		49,994				52,992				52,888				(2,998	)		-5.7	%			(2,894	)		-5.5	%
Other real estate
Alabama		4,766				6,229				6,451				(1,463	)		-23.5	%			(1,685	)		-26.1	%
Florida		3,665				4,835				7,826				(1,170	)		-24.2	%			(4,161	)		-53.2	%
Mississippi (2)		9,408				13,296				15,511				(3,888	)		-29.2	%			(6,103	)		-39.3	%
Tennessee (3)		437				487				815				(50	)		-10.3	%			(378	)		-46.4	%
Texas		—				—				640				—			n/m				(640	)		-100.0	%
Total other real estate		18,276				24,847				31,243				(6,571	)		-26.4	%			(12,967	)		-41.5	%
Total nonperforming assets	$	68,270			$	77,839			$	84,131			$	(9,569	)		-12.3	%		$	(15,861	)		-18.9	%
LOANS PAST DUE OVER 90 DAYS (1)
LHFI	$	807			$	708			$	1,245			$	99			14.0	%		$	(438	)		-35.2	%
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	56,269			$	43,564			$	38,355			$	12,705			29.2	%		$	17,914			46.7	%
	Quarter Ended												Linked Quarter							Year over Year
ACL LHFI (1)(4)	6/30/2020				3/31/2020				6/30/2019				$ Change				% Change			$ Change				% Change
Beginning Balance	$	100,564			$	84,277			$	79,005			$	16,287			19.3	%		$	21,559			27.3	%
CECL adoption adjustments:
LHFI		—				(3,039	)			—				3,039			n/m				—			n/m
Acquired loan transfers		—				1,822				—				(1,822	)		n/m				—			n/m
Provision for credit losses		18,185				20,581				2,486				(2,396	)		-11.6	%			15,699			n/m
Charge-offs		(1,870	)			(5,545	)			(2,937	)			3,675			66.3	%			1,067			36.3	%
Recoveries		2,309				2,468				1,845				(159	)		-6.4	%			464			25.1	%
Net (charge-offs) recoveries		439				(3,077	)			(1,092	)			3,516			n/m				1,531			n/m
Ending Balance	$	119,188			$	100,564			$	80,399			$	18,624			18.5	%		$	38,789			48.2	%
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama	$	526			$	(1,080	)		$	(278	)		$	1,606			n/m			$	804			n/m
Florida		(127	)			64				130				(191	)		n/m				(257	)		n/m
Mississippi (2)		(86	)			126				(907	)			(212	)		n/m				821			90.5	%
Tennessee (3)		66				(2,186	)			(44	)			2,252			n/m				110			n/m
Texas		60				(1	)			7				61			n/m				53			n/m
Total net (charge-offs) recoveries	$	439			$	(3,077	)		$	(1,092	)		$	3,516			n/m			$	1,531			n/m
(1) Excludes PPP and acquired loans.
(2) Mississippi includes Central and Southern Mississippi Regions.
(3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
(4) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2020
($ in thousands)
(unaudited)
		Quarter Ended																				Six Months Ended
AVERAGE BALANCES		6/30/2020				3/31/2020				12/31/2019				9/30/2019				6/30/2019				6/30/2020				6/30/2019
Securities AFS-taxable		$	1,724,320			$	1,620,422			$	1,551,358			$	1,570,803			$	1,661,464			$	1,672,371			$	1,707,112
Securities AFS-nontaxable			9,827				22,056				23,300				25,096				31,474				15,942				35,793
Securities HTM-taxable			655,085				694,740				734,474				778,098				821,357				674,913				843,886
Securities HTM-nontaxable			25,538				25,673				25,703				26,088				27,035				25,606				27,868
Total securities			2,414,770				2,362,891				2,334,835				2,400,085				2,541,330				2,388,832				2,614,659
PPP loans			764,416				—				—				—				—				382,208				—
Loans (includes loans held for sale) (1)			9,908,132				9,678,174				9,467,437				9,436,287				9,260,028				9,793,153				9,149,729
Acquired loans (1)			—				—				77,797				82,641				91,217				—				97,730
Fed funds sold and reverse repurchases			113				164				184				3,662				34,057				139				17,260
Other earning assets			854,642				187,327				227,116				176,163				316,604				520,985				280,250
Total earning assets			13,942,073				12,228,556				12,107,369				12,098,838				12,243,236				13,085,317				12,159,628
ACL LHFI (1)			(103,006	)			(85,015	)			(86,211	)			(83,756	)			(81,996	)			(94,011	)			(82,111	)
Other assets			1,685,317				1,498,725				1,445,075				1,447,977				1,467,462				1,592,019				1,457,592
Total assets		$	15,524,384			$	13,642,266			$	13,466,233			$	13,463,059			$	13,628,702			$	14,583,325			$	13,535,109
Interest-bearing demand deposits		$	3,832,372			$	3,184,134			$	3,167,256			$	3,085,758			$	3,048,876			$	3,508,253			$	2,974,584
Savings deposits			4,180,540				3,646,936				3,448,899				3,568,403				3,801,187				3,913,738				3,794,051
Time deposits			1,578,737				1,617,307				1,663,741				1,753,083				1,840,065				1,598,022				1,860,696
Total interest-bearing deposits			9,591,649				8,448,377				8,279,896				8,407,244				8,690,128				9,020,013				8,629,331
Fed funds purchased and repurchases			105,696				247,513				164,754				142,064				51,264				176,605				67,717
Other borrowings			107,533				85,279				79,512				78,404				81,352				96,406				86,052
Junior subordinated debt securities			61,856				61,856				61,856				61,856				61,856				61,856				61,856
Total interest-bearing liabilities			9,866,734				8,843,025				8,586,018				8,689,568				8,884,600				9,354,880				8,844,956
Noninterest-bearing deposits			3,645,761				2,910,951				3,017,824				2,932,754				2,898,266				3,278,356				2,861,448
Other liabilities			346,173				248,220				205,786				206,091				240,091				297,196				230,696
Total liabilities			13,858,668				12,002,196				11,809,628				11,828,413				12,022,957				12,930,432				11,937,100
Shareholders' equity			1,665,716				1,640,070				1,656,605				1,634,646				1,605,745				1,652,893				1,598,009
Total liabilities and equity		$	15,524,384			$	13,642,266			$	13,466,233			$	13,463,059			$	13,628,702			$	14,583,325			$	13,535,109
(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2020
($ in thousands)
(unaudited)
PERIOD END BALANCES		6/30/2020				3/31/2020				12/31/2019				9/30/2019				6/30/2019
Cash and due from banks		$	1,026,640			$	404,341			$	358,916			$	486,263			$	404,413
Fed funds sold and reverse repurchases			—				2,000				—				—				75,499
Securities available for sale			1,884,153				1,833,779				1,602,404				1,553,705				1,643,725
Securities held to maturity			660,048				704,276				738,099				785,422				825,536
PPP loans			939,783				—				—				—				—
Loans held for sale (LHFS)			355,089				325,389				226,347				292,800				240,380
Loans held for investment (LHFI) (1)			9,659,806				9,567,920				9,335,628				9,223,668				9,116,759
ACL LHFI (1)			(119,188	)			(100,564	)			(84,277	)			(83,226	)			(80,399	)
Net LHFI			9,540,618				9,467,356				9,251,351				9,140,442				9,036,360
Acquired loans (1)			—				—				72,601				81,004				87,884
Allowance for loan losses, acquired loans (1)			—				—				(815	)			(1,249	)			(1,398	)
Net acquired loans			—				—				71,786				79,755				86,486
Net LHFI and acquired loans			9,540,618				9,467,356				9,323,137				9,220,197				9,122,846
Premises and equipment, net			190,567				190,179				189,791				188,423				189,820
Mortgage servicing rights			57,811				56,437				79,394				73,016				79,283
Goodwill			385,270				381,717				379,627				379,627				379,627
Identifiable intangible assets			8,895				7,537				7,343				8,345				9,101
Other real estate			18,276				24,847				29,248				31,974				31,243
Operating lease right-of-use assets			29,819				30,839				31,182				33,180				32,762
Other assets			595,110				591,132				532,389				531,834				514,723
Total assets		$	15,692,079			$	14,019,829			$	13,497,877			$	13,584,786			$	13,548,958
Deposits:
Noninterest-bearing		$	3,880,540			$	2,977,058			$	2,891,215			$	3,064,127			$	2,909,141
Interest-bearing			9,624,933				8,598,706				8,354,342				8,190,056				8,657,488
Total deposits			13,505,473				11,575,764				11,245,557				11,254,183				11,566,629
Fed funds purchased and repurchases			70,255				421,821				256,020				376,712				51,800
Other borrowings			152,860				84,230				85,396				76,685				79,012
Junior subordinated debt securities			61,856				61,856				61,856				61,856				61,856
ACL on off-balance sheet credit exposures (1)			42,663				36,421				—				—				—
Operating lease liabilities			31,076				32,055				32,354				34,319				33,878
Other liabilities			153,952				155,283				155,992				135,669				137,233
Total liabilities			14,018,135				12,367,430				11,837,175				11,939,424				11,930,408
Common stock			13,214				13,209				13,376				13,390				13,418
Capital surplus			230,613				229,403				256,400				257,370				260,619
Retained earnings			1,419,552				1,402,089				1,414,526				1,395,460				1,369,329
Accum other comprehensive income (loss), net of tax			10,565				7,698				(23,600	)			(20,858	)			(24,816	)
Total shareholders' equity			1,673,944				1,652,399				1,660,702				1,645,362				1,618,550
Total liabilities and equity		$	15,692,079			$	14,019,829			$	13,497,877			$	13,584,786			$	13,548,958
(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2020
($ in thousands except per share data)
(unaudited)
		Quarter Ended																	Six Months Ended
INCOME STATEMENTS		6/30/2020			3/31/2020			12/31/2019				9/30/2019				6/30/2019			6/30/2020			6/30/2019
Interest and fees on LHFS & LHFI-FTE		$	99,300		$	109,357		$	111,383			$	116,432			$	114,873		$	208,657		$	224,763
Interest and fees on PPP loans			5,044			—			—				—				—			5,044			—
Interest and fees on acquired loans (1)			—			—			2,138				2,309				2,010			—			3,926
Interest on securities-taxable			12,762			12,948			12,884				13,184				13,916			25,710			28,581
Interest on securities-tax exempt-FTE			315			457			484				485				551			772			1,197
Interest on fed funds sold and reverse repurchases			—			—			1				23				214			—			216
Other interest income			239			740			896				1,044				1,820			979			3,423
Total interest income-FTE			117,660			123,502			127,786				133,477				133,384			241,162			262,106
Interest on deposits			8,730			14,957			17,716				20,385				21,500			23,687			41,070
Interest on fed funds purchased and repurchases			42			625			504				547				81			667			369
Other interest expense			881			860			826				830				831			1,741			1,656
Total interest expense			9,653			16,442			19,046				21,762				22,412			26,095			43,095
Net interest income-FTE			108,007			107,060			108,740				111,715				110,972			215,067			219,011
Provision for credit losses, LHFI (1)			18,185			20,581			3,661				3,039				2,486			38,766			4,097
Provision for loan losses, acquired loans (1)			—			—			(2	)			(140	)			106			—			184
Net interest income after provision-FTE			89,822			86,479			105,081				108,816				108,380			176,301			214,730
Service charges on deposit accounts			6,397			10,032			10,894				11,065				10,379			16,429			20,644
Bank card and other fees			7,717			5,355			8,192				8,349				8,004			13,072			15,195
Mortgage banking, net			33,745			27,483			7,914				8,171				10,295			61,228			13,737
Insurance commissions			11,868			11,550			9,364				11,072				11,089			23,418			21,960
Wealth management			7,571			8,537			7,763				7,691				7,742			16,108			15,225
Other, net			2,213			2,307			3,451				1,989				2,130			4,520			4,369
Total noninterest income			69,511			65,264			47,578				48,337				49,639			134,775			91,130
Salaries and employee benefits			66,107			69,148			62,319				62,495				61,949			135,255			122,903
Services and fees			20,567			19,930			19,500				18,838				18,009			40,497			34,977
Net occupancy-premises			6,587			6,286			6,461				6,831				6,403			12,873			12,857
Equipment expense			5,620			5,616			5,880				5,971				5,958			11,236			11,882
Other real estate expense, net			271			1,294			1,491				531				132			1,565			1,884
Credit loss expense related to off-balance sheet   credit exposures (1)			6,242			6,783			—				—				—			13,025			—
Other expense			13,265			14,753			14,376				12,187				13,650			28,018			27,619
Total noninterest expense			118,659			123,810			110,027				106,853				106,101			242,469			212,122
Income before income taxes and tax eq adj			40,674			27,933			42,632				50,300				51,918			68,607			93,738
Tax equivalent adjustment			3,007			3,108			3,149				3,249				3,248			6,115			6,479
Income before income taxes			37,667			24,825			39,483				47,051				48,670			62,492			87,259
Income taxes			5,517			2,607			5,537				6,016				6,530			8,124			11,780
Net income		$	32,150		$	22,218		$	33,946			$	41,035			$	42,140		$	54,368		$	75,479
Per share data
Earnings per share - basic		$	0.51		$	0.35		$	0.53			$	0.64			$	0.65		$	0.86		$	1.16
Earnings per share - diluted		$	0.51		$	0.35		$	0.53			$	0.64			$	0.65		$	0.85		$	1.16
Dividends per share		$	0.23		$	0.23		$	0.23			$	0.23			$	0.23		$	0.46		$	0.46
Weighted average shares outstanding
Basic			63,416,307			63,756,629			64,255,716				64,358,540				64,677,889			63,586,468			64,957,128
Diluted			63,555,065			63,913,603			64,435,276				64,514,605				64,815,029			63,721,728			65,088,908
Period end shares outstanding			63,422,439			63,396,912			64,200,111				64,262,779				64,398,846			63,422,439			64,398,846
(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2020
($ in thousands)
(unaudited)
		Quarter Ended
NONPERFORMING ASSETS (1)		6/30/2020				3/31/2020				12/31/2019				9/30/2019				6/30/2019
Nonaccrual LHFI
Alabama		$	4,392			$	4,769			$	1,870			$	2,936			$	2,327
Florida			687				254				267				311				330
Mississippi (2)			37,884				40,815				41,493				43,895				39,373
Tennessee (3)			6,125				6,153				8,980				10,193				8,455
Texas			906				1,001				616				1,695				2,403
Total nonaccrual LHFI			49,994				52,992				53,226				59,030				52,888
Other real estate
Alabama			4,766				6,229				8,133				6,501				6,451
Florida			3,665				4,835				5,877				6,983				7,826
Mississippi (2)			9,408				13,296				14,919				17,646				15,511
Tennessee (3)			437				487				319				844				815
Texas			—				—				—				—				640
Total other real estate			18,276				24,847				29,248				31,974				31,243
Total nonperforming assets		$	68,270			$	77,839			$	82,474			$	91,004			$	84,131
LOANS PAST DUE OVER 90 DAYS (1)
LHFI		$	807			$	708			$	642			$	878			$	1,245
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)		$	56,269			$	43,564			$	41,648			$	36,445			$	38,355
		Quarter Ended																				Six Months Ended
ACL LHFI (1)(4)		6/30/2020				3/31/2020				12/31/2019				9/30/2019				6/30/2019				6/30/2020				6/30/2019
Beginning Balance		$	100,564			$	84,277			$	83,226			$	80,399			$	79,005			$	84,277			$	79,290
CECL adoption adjustments:
LHFI			—				(3,039	)			—				—				—				(3,039	)			—
Acquired loan transfers			—				1,822				—				—				—				1,822				—
Provision for credit losses			18,185				20,581				3,661				3,039				2,486				38,766				4,097
Charge-offs			(1,870	)			(5,545	)			(4,619	)			(2,892	)			(2,937	)			(7,415	)			(6,970	)
Recoveries			2,309				2,468				2,009				2,680				1,845				4,777				3,982
Net (charge-offs) recoveries			439				(3,077	)			(2,610	)			(212	)			(1,092	)			(2,638	)			(2,988	)
Ending Balance		$	119,188			$	100,564			$	84,277			$	83,226			$	80,399			$	119,188			$	80,399
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama		$	526			$	(1,080	)		$	(132	)		$	(329	)		$	(278	)		$	(554	)		$	(293	)
Florida			(127	)			64				357				136				130				(63	)			357
Mississippi (2)			(86	)			126				(1,792	)			391				(907	)			40				(3,037	)
Tennessee (3)			66				(2,186	)			(131	)			(483	)			(44	)			(2,120	)			(94	)
Texas			60				(1	)			(912	)			73				7				59				79
Total net (charge-offs) recoveries		$	439			$	(3,077	)		$	(2,610	)		$	(212	)		$	(1,092	)		$	(2,638	)		$	(2,988	)
(1) Excludes PPP and acquired loans.
(2) Mississippi includes Central and Southern Mississippi Regions.
(3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
(4) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2020
(unaudited)
		Quarter Ended																				Six Months Ended
FINANCIAL RATIOS AND OTHER DATA		6/30/2020				3/31/2020				12/31/2019				9/30/2019				6/30/2019				6/30/2020			6/30/2019
Return on average equity			7.76	%			5.45	%			8.13	%			9.96	%			10.53	%		6.61	%		9.52	%
Return on average tangible equity			10.32	%			7.34	%			10.85	%			13.31	%			14.14	%		8.84	%		12.86	%
Return on average assets			0.83	%			0.66	%			1.00	%			1.21	%			1.24	%		0.75	%		1.12	%
Interest margin - Yield - FTE			3.39	%			4.06	%			4.19	%			4.38	%			4.37	%		3.71	%		4.35	%
Interest margin - Cost			0.28	%			0.54	%			0.62	%			0.71	%			0.73	%		0.40	%		0.71	%
Net interest margin - FTE			3.12	%			3.52	%			3.56	%			3.66	%			3.64	%		3.31	%		3.63	%
Efficiency ratio (1)			62.13	%			63.50	%			68.08	%			64.98	%			64.55	%		62.81	%		66.25	%
Full-time equivalent employees			2,798				2,761				2,844				2,835				2,819
CREDIT QUALITY RATIOS (2)
Net (recoveries) charge-offs / average loans			-0.02	%			0.13	%			0.11	%			0.01	%			0.05	%		0.05	%		0.07	%
Provision for credit losses / average loans (3)			0.74	%			0.86	%			0.15	%			0.13	%			0.11	%		0.80	%		0.09	%
Nonaccrual LHFI / (LHFI + LHFS)			0.50	%			0.54	%			0.56	%			0.62	%			0.57	%
Nonperforming assets / (LHFI + LHFS)			0.68	%			0.79	%			0.86	%			0.96	%			0.90	%
Nonperforming assets / (LHFI + LHFS + other real estate)			0.68	%			0.78	%			0.86	%			0.95	%			0.90	%
ACL LHFI / LHFI (3)			1.23	%			1.05	%			0.90	%			0.90	%			0.88	%
ACL LHFI-commercial / commercial LHFI (3)			1.15	%			0.97	%			0.98	%			0.98	%			0.96	%
ACL LHFI-consumer / consumer and home mortgage LHFI (3)			1.56	%			1.35	%			0.61	%			0.61	%			0.60	%
ACL LHFI / nonaccrual LHFI (3)			238.40	%			189.77	%			158.34	%			140.99	%			152.02	%
ACL LHFI / nonaccrual LHFI (excl individually evaluated loans) (3)			561.04	%			468.84	%			410.52	%			357.15	%			383.19	%
CAPITAL RATIOS (3)
Total equity / total assets			10.67	%			11.79	%			12.30	%			12.11	%			11.95	%
Tangible equity / tangible assets			8.37	%			9.27	%			9.72	%			9.53	%			9.34	%
Tangible equity / risk-weighted assets			11.09	%			11.05	%			11.58	%			11.50	%			11.39	%
Tier 1 leverage ratio			9.08	%			10.21	%			10.48	%			10.34	%			10.03	%
Common equity tier 1 capital ratio			11.42	%			11.35	%			11.93	%			11.83	%			11.76	%
Tier 1 risk-based capital ratio			11.94	%			11.88	%			12.48	%			12.38	%			12.31	%
Total risk-based capital ratio			13.00	%			12.78	%			13.25	%			13.15	%			13.07	%
STOCK PERFORMANCE
Market value-Close		$	24.52			$	23.30			$	34.51			$	34.11			$	33.25
Book value		$	26.39			$	26.06			$	25.87			$	25.60			$	25.13
Tangible book value		$	20.18			$	19.92			$	19.84			$	19.57			$	19.10
(1) See Note 9 – Non-GAAP Financial Measures in the Notes to Consolidated Financials for Trustmark’s efficiency ratio calculation.
(2) Excludes PPP and acquired loans.
(3) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
See Notes to Consolidated Financials

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

Note 1 – Recently Effective Accounting Pronouncements

ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” was adopted by Trustmark on January 1, 2020. At the date of adoption, Trustmark recorded a decrease to its ACL, LHFI of $3.0 million and an increase to its ACL on off-balance sheet credit exposures of $29.6 million resulting in a one-time cumulative effect adjustment of $26.6 million ($19.9 million, net of tax) through retained earnings.

In accordance with the amendments of ASU 2016-13, Trustmark estimates the ACL using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts including the COVID-19 pandemic effects. Trustmark uses a third-party software application to calculate the quantitative portion of the ACL using a methodology and assumptions specific to each loan pool. The qualitative portion of the ACL is based on general economic conditions and other internal and external factors affecting Trustmark as a whole as well as specific LHFI. The total quantitative and qualitative portions of the ACL reflect Management’s expectations of future conditions based on reasonable and supportable forecasts.

Based upon the factors discussed above, during the second quarter of 2020, Trustmark recorded a provision for credit losses of $18.2 million and a credit loss expense related to off-balance sheet credit exposures of $6.2 million compared to a provision for credit losses of $20.6 million and a credit loss expense related to off-balance sheet credit exposures of $6.8 million recorded during the first quarter of 2020.

Upon adoption of FASB ASC Topic 326, Trustmark elected to account for its existing acquired loans as purchased credit deteriorated loans included within the LHFI portfolio. As a result, acquired loans of $72.6 million, as well as the necessary calculated allowance of $1.8 million, were transferred during the first quarter of 2020. The acquired loans and related allowance transferred were acquired in the BancTrust Financial Group, Inc. merger on February 13, 2013. LHFI presented in prior periods exclude acquired loans and thus may not be comparable to the current period presentation.

In accordance with FASB ASC Subtopic 326-20, “Financial Instruments – Credit Losses – Measured at Amortized Cost,” Trustmark has developed an allowance for credit losses methodology effective January 1, 2020, which replaces its previous allowance for loan losses methodology. The ACL for LHFI is adjusted through the provision for credit losses and reduced by the charge off of loan amounts, net of recoveries. Prior periods present the allowance for loan losses and provision for loan losses methodology under the incurred loss model and thus may not be comparable to the current period presentation.

Trustmark’s estimated allowance for credit losses on securities available for sale and held to maturity under ASU 2016-13 was deemed immaterial due to the composition of these portfolios. Both portfolios consist primarily of U.S. government agency guaranteed mortgage-backed securities for which the risk of loss is minimal. Therefore, Trustmark did not recognize a cumulative effect adjustment through retained earnings related to the available for sale or held to maturity securities.

Trustmark has elected the five-year phase-in transition period related to adopting the CECL methodology for its regulatory capital.

Note 2 - Paycheck Protection Program

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

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

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

Note 3 - Securities Available for Sale and Held to Maturity

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

		6/30/2020				3/31/2020				12/31/2019				9/30/2019				6/30/2019
SECURITIES AVAILABLE FOR SALE
U.S. Government agency obligations		$	19,898			$	21,190			$	22,327			$	24,697			$	26,646
Obligations of states and political subdivisions			11,176				23,572				25,465				35,001				38,698
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			69,637				71,971				69,252				63,391				65,716
Issued by FNMA and FHLMC			1,121,604				967,329				713,356				589,962				624,364
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			574,940				634,075				658,226				705,601				751,371
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			86,898				115,642				113,778				135,053				136,930
Total securities available for sale		$	1,884,153			$	1,833,779			$	1,602,404			$	1,553,705			$	1,643,725
SECURITIES HELD TO MATURITY
U.S. Government agency obligations		$	—			$	—			$	3,781			$	3,770			$	3,758
Obligations of states and political subdivisions			31,629				31,758				31,781				31,806				32,860
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			10,306				10,492				10,820				10,994				11,184
Issued by FNMA and FHLMC			86,346				91,971				96,631				102,048				106,755
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			435,333				463,175				485,324				510,770				536,166
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			96,434				106,880				109,762				126,034				134,813
Total securities held to maturity		$	660,048			$	704,276			$	738,099			$	785,422			$	825,536

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

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

Note 4 – Loan Composition

LHFI consisted of the following during the periods presented:

LHFI BY TYPE (1)		6/30/2020				3/31/2020				12/31/2019				9/30/2019				6/30/2019
Loans secured by real estate:
Construction, land development and other land loans		$	1,277,277			$	1,136,389			$	1,162,791			$	1,135,999			$	1,111,297
Secured by 1-4 family residential properties			1,813,525				1,852,065				1,855,913				1,820,455				1,818,126
Secured by nonfarm, nonresidential properties			2,610,392				2,575,422				2,475,245				2,442,308				2,326,312
Other real estate secured			884,815				838,573				724,480				668,667				635,839
Commercial and industrial loans			1,413,255				1,476,777				1,477,896				1,491,367				1,533,318
Consumer loans			161,620				170,678				175,738				176,894				176,133
State and other political subdivision loans			931,536				938,637				967,944				978,456				982,187
Other loans			567,386				579,379				495,621				509,522				533,547
LHFI			9,659,806				9,567,920				9,335,628				9,223,668				9,116,759
ACL LHFI			(119,188	)			(100,564	)			(84,277	)			(83,226	)			(80,399	)
Net LHFI		$	9,540,618			$	9,467,356			$	9,251,351			$	9,140,442			$	9,036,360
(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.

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

Note 4 – Loan Composition (continued)

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

		June 30, 2020
LHFI - COMPOSITION BY REGION		Total				Alabama				Florida				Mississippi (Central and Southern Regions)				Tennessee (Memphis, TN and Northern MS Regions)				Texas
Loans secured by real estate:
Construction, land development and other land loans		$	1,277,277			$	391,698			$	100,052			$	348,029			$	25,641			$	411,857
Secured by 1-4 family residential properties			1,813,525				127,961				40,303				1,553,730				79,745				11,786
Secured by nonfarm, nonresidential properties			2,610,392				670,633				278,285				936,469				188,264				536,741
Other real estate secured			884,815				256,797				26,201				348,224				7,898				245,695
Commercial and industrial loans			1,413,255				195,494				22,629				674,592				305,918				214,622
Consumer loans			161,620				24,182				5,593				110,988				18,489				2,368
State and other political subdivision loans			931,536				90,539				37,549				603,171				29,236				171,041
Other loans			567,386				70,185				14,778				375,440				82,255				24,728
Loans		$	9,659,806			$	1,827,489			$	525,390			$	4,950,643			$	737,446			$	1,618,838
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots		$	79,174			$	17,812			$	24,342			$	30,072			$	1,932			$	5,016
Development			66,900				16,233				5,018				31,184				5,284				9,181
Unimproved land			101,285				24,335				18,401				26,874				11,359				20,316
1-4 family construction			234,950				98,621				21,346				80,468				6,710				27,805
Other construction			794,968				234,697				30,945				179,431				356				349,539
Construction, land development and other land loans		$	1,277,277			$	391,698			$	100,052			$	348,029			$	25,641			$	411,857
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION
Non-owner occupied:
Retail		$	410,176			$	147,990			$	39,904			$	120,699			$	27,437			$	74,146
Office			233,980				67,549				27,499				65,692				12,335				60,905
Hotel/motel			348,958				135,970				102,544				59,237				40,207				11,000
Mini-storage			114,380				16,312				3,928				49,075				412				44,653
Industrial			193,415				62,803				10,991				36,216				2,166				81,239
Health care			45,871				13,166				11,739				18,738				—				2,228
Convenience stores			22,416				3,425				—				6,477				401				12,113
Nursing homes/senior living			48,453				18,627				—				4,012				7,243				18,571
Other			70,999				4,595				6,280				15,121				6,629				38,374
Total non-owner occupied loans			1,488,648				470,437				202,885				375,267				96,830				343,229
Owner-occupied:
Office			159,624				39,672				35,831				49,691				9,609				24,821
Churches			104,498				24,138				7,731				47,965				10,785				13,879
Industrial warehouses			159,246				10,878				2,588				48,310				17,150				80,320
Health care			140,073				16,535				5,953				102,405				2,493				12,687
Convenience stores			110,245				14,870				7,641				66,720				609				20,405
Retail			74,453				15,863				7,125				28,915				6,771				15,779
Restaurants			57,884				4,127				2,401				34,467				15,424				1,465
Auto dealerships			47,720				7,982				290				12,615				26,833				—
Nursing homes/senior living			184,563				61,645				5,840				117,078				—				—
Other			83,438				4,486				—				53,036				1,760				24,156
Total owner-occupied loans			1,121,744				200,196				75,400				561,202				91,434				193,512
Loans secured by nonfarm, nonresidential properties		$	2,610,392			$	670,633			$	278,285			$	936,469			$	188,264			$	536,741

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

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

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

		Quarter Ended																				Six Months Ended
		6/30/2020				3/31/2020				12/31/2019				9/30/2019				6/30/2019				6/30/2020				6/30/2019
Securities – taxable			2.16	%			2.25	%			2.24	%			2.23	%			2.25	%			2.20	%			2.26	%
Securities – nontaxable			3.58	%			3.85	%			3.92	%			3.76	%			3.78	%			3.74	%			3.79	%
Securities – total			2.18	%			2.28	%			2.27	%			2.26	%			2.28	%			2.23	%			2.30	%
PPP loans			2.65	%			—				—				—				—				2.65	%			—
Loans - LHFI & LHFS			4.03	%			4.54	%			4.67	%			4.90	%			4.98	%			4.28	%			4.95	%
Acquired loans			—				—				10.90	%			11.08	%			8.84	%			—				8.10	%
Loans - total			3.93	%			4.54	%			4.72	%			4.95	%			5.01	%			4.22	%			4.99	%
Fed funds sold & reverse repurchases			—				—				2.16	%			2.49	%			2.52	%			—				2.52	%
Other earning assets			0.11	%			1.59	%			1.57	%			2.35	%			2.31	%			0.38	%			2.46	%
Total earning assets			3.39	%			4.06	%			4.19	%			4.38	%			4.37	%			3.71	%			4.35	%
Interest-bearing deposits			0.37	%			0.71	%			0.85	%			0.96	%			0.99	%			0.53	%			0.96	%
Fed funds purchased & repurchases			0.16	%			1.02	%			1.21	%			1.53	%			0.63	%			0.76	%			1.10	%
Other borrowings			2.09	%			2.35	%			2.32	%			2.35	%			2.33	%			2.21	%			2.26	%
Total interest-bearing liabilities			0.39	%			0.75	%			0.88	%			0.99	%			1.01	%			0.56	%			0.98	%
Net interest margin			3.12	%			3.52	%			3.56	%			3.66	%			3.64	%			3.31	%			3.63	%
Net interest margin excluding PPP and acquired loans			3.14	%			3.52	%			3.52	%			3.61	%			3.60	%			3.32	%			3.60	%

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

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

Note 6 – Mortgage Banking

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

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

		Quarter Ended																				Six Months Ended
		6/30/2020				3/31/2020				12/31/2019				9/30/2019				6/30/2019				6/30/2020				6/30/2019
Mortgage servicing income, net		$	5,893			$	5,819			$	5,854			$	5,688			$	5,734			$	11,712			$	11,341
Change in fair value-MSR from runoff			(4,214	)			(2,607	)			(2,950	)			(3,569	)			(2,918	)			(6,821	)			(5,316	)
Gain on sales of loans, net			34,078				14,339				7,984				9,799				7,532				48,417				12,513
Mortgage banking income before hedge ineffectiveness			35,757				17,551				10,888				11,918				10,348				53,308				18,538
Change in fair value-MSR from market changes			(3,159	)			(23,999	)			4,048				(8,054	)			(8,209	)			(27,158	)			(17,072	)
Change in fair value of derivatives			1,147				33,931				(7,022	)			4,307				8,156				35,078				12,271
Net positive (negative) hedge ineffectiveness			(2,012	)			9,932				(2,974	)			(3,747	)			(53	)			7,920				(4,801	)
Mortgage banking, net		$	33,745			$	27,483			$	7,914			$	8,171			$	10,295			$	61,228			$	13,737

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

Note 7 – Salaries and Employee Benefit Plans

Early Retirement Program

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

Note 8 – Other Noninterest Income and Expense

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

		Quarter Ended																				Six Months Ended
		6/30/2020				3/31/2020				12/31/2019				9/30/2019				6/30/2019				6/30/2020				6/30/2019
Partnership amortization for tax credit purposes		$	(1,205	)		$	(1,161	)		$	(1,630	)		$	(1,994	)		$	(2,010	)		$	(2,366	)		$	(4,020	)
Increase in life insurance cash surrender value			1,696				1,722				1,802				1,814				1,803				3,418				3,586
Other miscellaneous income			1,722				1,746				3,279				2,169				2,337				3,468				4,803
Total other, net		$	2,213			$	2,307			$	3,451			$	1,989			$	2,130			$	4,520			$	4,369

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

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

		Quarter Ended																				Six Months Ended
		6/30/2020				3/31/2020				12/31/2019				9/30/2019				6/30/2019				6/30/2020				6/30/2019
Loan expense		$	2,954			$	2,799			$	2,968			$	2,886			$	3,003			$	5,753			$	5,700
Amortization of intangibles			736				812				1,002				1,021				992				1,548				2,093
FDIC assessment expense			1,590				1,590				1,450				1,400				1,836				3,180				3,594
Other miscellaneous expense			7,985				9,552				8,956				6,880				7,819				17,537				16,232
Total other expense		$	13,265			$	14,753			$	14,376			$	12,187			$	13,650			$	28,018			$	27,619

Note 9 – Non-GAAP Financial Measures

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

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

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

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

Note 9 – Non-GAAP Financial Measures (continued)

				Quarter Ended																				Six Months Ended
				6/30/2020				3/31/2020				12/31/2019				9/30/2019				6/30/2019				6/30/2020				6/30/2019
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity				$	1,665,716			$	1,640,070			$	1,656,605			$	1,634,646			$	1,605,745			$	1,652,893			$	1,598,009
Less:  Goodwill					(383,081	)			(380,671	)			(379,627	)			(379,627	)			(379,627	)			(381,876	)			(379,627	)
Identifiable intangible assets					(7,834	)			(8,049	)			(7,882	)			(8,706	)			(9,631	)			(7,942	)			(10,146	)
Total average tangible equity				$	1,274,801			$	1,251,350			$	1,269,096			$	1,246,313			$	1,216,487			$	1,263,075			$	1,208,236
PERIOD END BALANCES
Total shareholders' equity				$	1,673,944			$	1,652,399			$	1,660,702			$	1,645,362			$	1,618,550
Less:  Goodwill					(385,270	)			(381,717	)			(379,627	)			(379,627	)			(379,627	)
Identifiable intangible assets					(8,895	)			(7,537	)			(7,343	)			(8,345	)			(9,101	)
Total tangible equity		(a)		$	1,279,779			$	1,263,145			$	1,273,732			$	1,257,390			$	1,229,822
TANGIBLE ASSETS
Total assets				$	15,692,079			$	14,019,829			$	13,497,877			$	13,584,786			$	13,548,958
Less:  Goodwill					(385,270	)			(381,717	)			(379,627	)			(379,627	)			(379,627	)
Identifiable intangible assets					(8,895	)			(7,537	)			(7,343	)			(8,345	)			(9,101	)
Total tangible assets		(b)		$	15,297,914			$	13,630,575			$	13,110,907			$	13,196,814			$	13,160,230
Risk-weighted assets		(c)		$	11,539,157			$	11,427,297			$	11,002,877			$	10,935,018			$	10,796,903
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income				$	32,150			$	22,218			$	33,946			$	41,035			$	42,140			$	54,368			$	75,479
Plus: Intangible amortization net of tax					552				609				752				766				744				1,161				1,570
Net income adjusted for intangible amortization				$	32,702			$	22,827			$	34,698			$	41,801			$	42,884			$	55,529			$	77,049
Period end common shares outstanding		(d)			63,422,439				63,396,912				64,200,111				64,262,779				64,398,846
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity (1)					10.32	%			7.34	%			10.85	%			13.31	%			14.14	%			8.84	%			12.86	%
Tangible equity/tangible assets		(a)/(b)			8.37	%			9.27	%			9.72	%			9.53	%			9.34	%
Tangible equity/risk-weighted assets		(a)/(c)			11.09	%			11.05	%			11.58	%			11.50	%			11.39	%
Tangible book value		(a)/(d)*1,000		$	20.18			$	19.92			$	19.84			$	19.57			$	19.10
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity				$	1,673,944			$	1,652,399			$	1,660,702			$	1,645,362			$	1,618,550
CECL transition adjustment (3)					32,693				26,476				—				—				—
AOCI-related adjustments					(10,565	)			(7,698	)			23,600				20,858				24,816
CET1 adjustments and deductions:
Goodwill net of associated deferred tax liabilities (DTLs)					(371,342	)			(367,825	)			(365,738	)			(365,741	)			(365,745	)
Other adjustments and deductions for CET1 (2)					(7,352	)			(6,269	)			(5,896	)			(6,671	)			(8,268	)
CET1 capital		(e)			1,317,378				1,297,083				1,312,668				1,293,808				1,269,353
Additional tier 1 capital instruments plus related surplus					60,000				60,000				60,000				60,000				60,000
Tier 1 capital				$	1,377,378			$	1,357,083			$	1,372,668			$	1,353,808			$	1,329,353
Common equity tier 1 capital ratio		(e)/(c)			11.42	%			11.35	%			11.93	%			11.83	%			11.76	%

(1)	Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity.
(2)	Includes other intangible assets, net of DTLs, disallowed deferred tax assets (DTAs), threshold deductions and transition adjustments, as applicable.
(3)	See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.

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

Note 9 – Non-GAAP Financial Measures (continued)

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

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

			Quarter Ended																				Six Months Ended
			6/30/2020				3/31/2020				12/31/2019				9/30/2019				6/30/2019				6/30/2020				6/30/2019
Net interest income (GAAP)			$	105,000			$	103,952			$	105,591			$	108,466			$	107,724			$	208,952			$	212,532
Noninterest income (GAAP)				69,511				65,264				47,578				48,337				49,639				134,775				91,130
Pre-tax pre-provision revenue		(a)	$	174,511			$	169,216			$	153,169			$	156,803			$	157,363			$	343,727			$	303,662
Noninterest expense (GAAP)			$	118,659			$	123,810			$	110,027			$	106,853			$	106,101			$	242,469			$	212,122
Less: Voluntary early retirement program				—				(4,375	)			—				—				—				(4,375	)			—
Credit loss expense related to off-balance sheet credit   exposures				(6,242	)			(6,783	)			—				—				—				(13,025	)			—
Adjusted noninterest expense (Non-GAAP)		(b)	$	112,417			$	112,652			$	110,027			$	106,853			$	106,101			$	225,069			$	212,122
Pre-tax pre-provision income (Non-GAAP)		(a)-(b)	$	62,094			$	56,564			$	43,142			$	49,950			$	51,262			$	118,658			$	91,540

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

		Quarter Ended																		Six Months Ended
		6/30/2020									6/30/2019									6/30/2020									6/30/2019
		Amount				Diluted EPS					Amount				Diluted EPS					Amount				Diluted EPS					Amount				Diluted EPS
Net Income (GAAP)		$	32,150			$	0.51				$	42,140			$	0.65				$	54,368			$	0.85				$	75,479			$	1.16
Significant non-routine transactions (net of taxes):
Voluntary early retirement program			—				—					—				—					3,281				0.05					—				—
Net Income adjusted for significant
non-routine transactions (Non-GAAP)		$	32,150			$	0.51				$	42,140			$	0.65				$	57,649			$	0.90				$	75,479			$	1.16
		Reported (GAAP)				Adjusted					Reported (GAAP)				Adjusted					Reported (GAAP)				Adjusted					Reported (GAAP)				Adjusted
						(Non- GAAP)									(Non- GAAP)									(Non- GAAP)									(Non- GAAP)
Return on average equity			7.76	%		n/a						10.53	%		n/a						6.61	%			7.00	%				9.52	%		n/a
Return on average tangible equity			10.32	%		n/a						14.14	%		n/a						8.84	%			9.35	%				12.86	%		n/a
Return on average assets			0.83	%		n/a						1.24	%		n/a						0.75	%			0.79	%				1.12	%		n/a
n/a - not applicable

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

Note 9 – Non-GAAP Financial Measures (continued)

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

			Quarter Ended																				Six Months Ended
			6/30/2020				3/31/2020				12/31/2019				9/30/2019				6/30/2019				6/30/2020				6/30/2019
Total noninterest expense (GAAP)			$	118,659			$	123,810			$	110,027			$	106,853			$	106,101			$	242,469			$	212,122
Less: Other real estate expense, net				(271	)			(1,294	)			(1,491	)			(531	)			(132	)			(1,565	)			(1,884	)
Amortization of intangibles				(736	)			(812	)			(1,002	)			(1,021	)			(992	)			(1,548	)			(2,093	)
Voluntary early retirement program				—				(4,375	)			—				—				—				(4,375	)			—
Credit loss expense related to off-balance sheet exposures				(6,242	)			(6,783	)			—				—				—				(13,025	)			—
Charitable contributions resulting in state tax credits				(375	)			(375	)			—				—				—				(750	)			—
Adjusted noninterest expense (Non-GAAP)		(c)	$	111,035			$	110,171			$	107,534			$	105,301			$	104,977			$	221,206			$	208,145
Net interest income (GAAP)			$	105,000			$	103,952			$	105,591			$	108,466			$	107,724			$	208,952			$	212,532
Add: Tax equivalent adjustment				3,007				3,108				3,149				3,249				3,248				6,115				6,479
Net interest income-FTE (Non-GAAP)		(a)	$	108,007			$	107,060			$	108,740			$	111,715			$	110,972			$	215,067			$	219,011
Noninterest income (GAAP)			$	69,511			$	65,264			$	47,578			$	48,337			$	49,639			$	134,775			$	91,130
Add: Partnership amortization for tax credit purposes				1,205				1,161				1,630				1,994				2,010				2,366				4,020
Adjusted noninterest income (Non-GAAP)		(b)	$	70,716			$	66,425			$	49,208			$	50,331			$	51,649			$	137,141			$	95,150
Adjusted revenue (Non-GAAP)		(a)+(b)	$	178,723			$	173,485			$	157,948			$	162,046			$	162,621			$	352,208			$	314,161
Efficiency ratio (Non-GAAP)		(c)/((a)+(b))		62.13	%			63.50	%			68.08	%			64.98	%			64.55	%			62.81	%			66.25	%

 

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