Trustmark Corporation Announces Fourth Quarter and Fiscal Year 2020 Financial Results

Trustmark Corporation (NASDAQ:TRMK) reported net income of $51.2 million in the fourth quarter of 2020, representing diluted earnings per share of $0.81. Net income in the fourth quarter produced a return on average tangible equity of 15.47% and a return on average assets of 1.28%. For the full year, Trustmark’s net income totaled a record level of $160.0 million, representing diluted earnings per share of $2.51. Diluted earnings per share in 2020 increased 8.2% when compared to the prior year. Trustmark’s net income in 2020 produced a return on average tangible equity of 12.58% and a return on average assets of 1.05%.

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Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable March 15, 2021, to shareholders of record on March 1, 2021.

Gerard R. Host, Executive Chairman, stated, “This past year has been extremely challenging for everyone. The effects of COVID-19 have significantly impacted the ways in which we live, work and interact with one another. We extend our deepest sympathies to all who lost loved ones and all who have been impacted by this pandemic. We also extend our sincere appreciation and gratitude to healthcare professionals for their tireless and self-sacrificing work during this pandemic. Also, we want to thank our associates for their countless efforts to serve our customers and support our communities and businesses. Trustmark remains committed to providing solutions to meet customer’s unique needs during these unprecedented times.”

2020 Highlights

• Supported local communities with loan originations totaling $970 million through the SBA’s Paycheck Protection Program (PPP)
• Loans held for investment increased $488.9 million, or 5.2%
• Nonperforming assets declined 9.3%, net charge-offs represented 0.02% of average loans
• Total deposits increased $2.8 billion, or 24.9%
• Record mortgage loan production of $3.0 billion produced noninterest income of $125.8 million
• Total revenue expanded 14.3% to $701.1 million
• Noninterest income totaled $274.6 million, an increase of 46.8%
• Maintained strong capital position with CET1 ratio of 11.62% and total risk-based capital ratio of 14.12%

Duane A. Dewey, President and CEO, commented, “Our financial results demonstrate the value of Trustmark’s diversified financial services businesses. Despite a challenging environment, our banking, insurance and wealth management businesses all performed well while our mortgage banking business achieved record results. We experienced significant loan and deposit growth, and credit quality remained extremely strong as did capital ratios. Trustmark continues to be well-positioned to serve and expand its customer base and create long-term value for its shareholders.”

Balance Sheet Management

• Loans held for investment decreased $23.2 million, or 0.2%, during the quarter
• Total deposits increased $826.4 million, or 6.2%, during the quarter
• Enhanced capital base with issuance of $125 million of subordinated debt

Loans held for investment totaled $9.8 billion at December 31, 2020, reflecting an increase of 5.2% from the prior year. At December 31, 2020, Trustmark’s gross PPP loans totaled $623.0 million. Net of deferred fees and costs of $12.9 million, PPP loans totaled $610.1 million. Collectively, loans held for investment and PPP loans totaled $10.4 billion at year end 2020, an increase of $1.1 billion, or 11.8% from the prior year.

Deposits totaled $14.0 billion at December 31, 2020, up $826.4 million, or 6.2%, from the prior quarter and $2.8 billion, or 24.9%, year-over-year primarily reflecting the impact of additional customer liquidity. Noninterest bearing deposits represented 31.0% of total deposits at December 31, 2020. Interest-bearing deposit costs totaled 0.27% for the fourth quarter, a decrease of 4 basis points linked-quarter. The total cost of interest-bearing liabilities was 0.30% for the fourth quarter of 2020, a decrease of 3 basis points from the prior quarter.

Trustmark’s capital position remained solid, reflecting the strength and diversity of its financial services businesses. During the fourth quarter of 2020, Trustmark Corporation issued $125 million of 3.625% fixed-to-floating rate subordinated notes due in 2030 for general corporate purposes, further strengthening its regulatory capital position. At December 31, 2020, Trustmark’s tangible equity to tangible assets ratio was 8.34%, while the total risk-based capital ratio increased to 14.12%.

As previously announced, Trustmark’s Board of Directors authorized a stock repurchase program effective April 1, 2020, under which $100 million of Trustmark’s outstanding shares may be acquired through December 31, 2021. While Trustmark suspended its share repurchase program during the first quarter of 2020 to preserve capital given the economic uncertainty associated with the COVID-19 pandemic, Trustmark expects to resume the repurchase of its shares from time to time at prevailing market prices, through open market or private transactions, depending on market conditions, and in conjunction with its disciplined share repurchase framework. There is no guarantee as to the number of shares that may be repurchased by Trustmark, and Trustmark may discontinue purchases at any time at management’s discretion.

Credit Quality

• Allowance for credit losses represented 1.19% of loans held for investment and 572.69% of nonperforming loans, excluding individually evaluated loans at year-end
• Net charge-offs totaled $291 thousand, or 0.01% of average loans, in the fourth quarter
• Loans remaining under a COVID-19 related concession represented approximately 35 basis points of loans held for investment at December 31, 2020

Nonperforming loans totaled $63.1 million at December 31, 2020, an increase of $9.3 million from the prior quarter and $9.9 million year-over-year. Other real estate totaled $11.7 million, reflecting a $4.6 million decrease from the prior quarter and a $17.6 million decline from the prior year. Collectively, nonperforming assets totaled $74.8 million, reflecting a linked-quarter increase of 6.7% and year-over-year reduction of 9.3%.

Allocation of Trustmark’s $117.3 million allowance for credit losses on loans held for investment represented 1.20% of commercial loans and 1.16% of consumer and home mortgage loans, resulting in an allowance for credit losses to total loans held for investment of 1.19% at December 31, 2020, representing a level management considers commensurate with the present risk in the loan portfolio.

Revenue Generation

• Mortgage banking revenue totaled $28.2 million and represented 15.9% of total revenue in the fourth quarter
• Noninterest income totaled $66.1 million and represented 37.3% of total revenue in fourth quarter
• The net interest margin (FTE) totaled 3.15% in fourth quarter; excluding interest and fees on PPP loans, net interest margin (FTE) was 2.91%

Revenue in the fourth quarter totaled $177.5 million, a decrease of 1.3% from the prior quarter and an increase of 15.9% from the same quarter in the prior year. The linked-quarter decline reflects higher net interest income, which was more than offset by reduced mortgage banking revenue. In 2020, revenue totaled $701.1 million, an increase of 14.3% from the prior year. Excluding interest and fees on PPP loans, revenue totaled $674.5 million in 2020, an increase of $60.9 million, or 9.9%, from the prior year principally due to growth in mortgage banking revenue.

Net interest income (FTE) in the fourth quarter totaled $114.3 million, resulting in a net interest margin of 3.15%. Relative to the prior quarter, net interest income (FTE) increased $5.1 million reflecting an increase of $4.5 million in interest income as well as a $611 thousand reduction in interest expense. Excluding interest and fees on PPP loans, net interest income (FTE) totaled $99.4 million, resulting in a net interest margin of 2.91%, a linked-quarter decline of 14 basis points. Continued low interest rates decreased the yield on the loans held for investment and held for sale portfolio as well as the securities portfolio and were partially offset by lower costs of interest-bearing deposits.

Noninterest income in the fourth quarter totaled $66.1 million, a decrease of $7.6 million from the prior quarter and an increase of $18.5 million from the prior year. The linked-quarter change reflects increases in service charges on deposit accounts and bank card and other fees, which were more than offset by a decline in mortgage banking revenue and a seasonal decline in insurance revenue. The increase in noninterest income year-over-year is principally due to increased mortgage banking revenue.

Mortgage loan production in the fourth quarter totaled $788.4 million, a seasonal decline of 11.0% from the prior quarter and a 58.1% increase year-over-year. Mortgage banking revenue before hedge ineffectiveness totaled $29.1 million in the fourth quarter, a decline of $6.6 million from the prior quarter primarily due to lower gains on sale of loans in the secondary market. In 2020, mortgage loan production totaled a record $2.98 billion, up 69.4% from the prior year. Mortgage banking revenue totaled $125.8 million in 2020, an increase of $96.0 million from the prior year.

Insurance revenue in the fourth quarter totaled $10.2 million, a seasonal decline of $1.4 million from the prior quarter and an increase of $832 thousand from the prior year. Insurance revenue in 2020 totaled $45.2 million, up $2.8 million, or 6.6%, from the prior year. The solid performance during the year reflects an expanded producer workforce as well as the realization of operational efficiencies from investments in technology and improved processes.

Wealth management revenue totaled $7.8 million in the fourth quarter, up 2.1% from the prior quarter and 1.0% from the prior year. In 2020, wealth management revenue totaled $31.6 million, an increase of 3.1% from the prior year. During 2020, Trustmark continued to enhance its competitive positioning and efficiency of its wealth management businesses as well as expand its Private Banking capabilities in key markets.

Noninterest Expense

• Adjusted non-interest expense, which excludes amortization of intangibles, ORE expenses, and credit losses for off-balance sheet credit exposures, increased $4.9 million, or 4.3%, from the prior quarter. Please refer to the Consolidated Financial Information, Footnote 10 – Non-GAAP Financial Measures.
• Efficiency ratio improved to 63.35% in 2020, a decline of 303 basis points from the prior year

Adjusted noninterest expense in the fourth quarter was $119.6 million, up $4.9 million, or 4.3%, from the prior quarter. Salaries and employee benefits increased $2.3 million linked-quarter principally due to increases for performance-based incentives. Total services and fees increased $1.3 million during the fourth quarter due to continued investments in technology and higher professional fees. Other expense increased $1.2 million from the prior quarter principally due to increased operational losses and other expenses.

Credit loss expense related to off-balance sheet credit exposures was a negative $1.1 million in the fourth quarter, reflecting the improvement of the macroeconomic factors used to determine the necessary reserves for off-balance sheet credit exposures. Other real estate expense was a negative $812 thousand for the fourth quarter, a decrease of approximately $2.0 million from the prior quarter, which is attributed to lower write-downs of ORE of $716 thousand and a net gain on the sale of ORE property of $1.3 million.

During 2020, Trustmark consolidated six offices and expanded deployment of interactive teller machines. In January 2021, Trustmark opened a new office featuring a design that integrates myTeller interactive teller machine technology as well as provides enhanced areas for customer engagement. With the opening of this office, two other offices were closed.

“Looking forward, Trustmark will focus upon efficiency, growth and innovation opportunities while building upon its solid risk management processes, corporate culture and core values. We will continue to optimize delivery channels to reflect changing customer preferences and introduce technology to enhance growth and efficiency opportunities. We will provide the services and advice our customers have come to expect while building term value for our shareholders,” said Dewey.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, January 27, 2021 at 8:30 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing [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, February 10, 2021, in archived format at the same web address or by calling [phone], passcode 10151113.

Trustmark is a financial services company providing banking and financial solutions through 183 offices in Alabama, Florida, Mississippi, Tennessee and Texas.

Forward-Looking Statements

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

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

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

TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2020 ($ in thousands) (unaudited)
													Linked Quarter								Year over Year
QUARTERLY AVERAGE BALANCES	12/31/2020				9/30/2020				12/31/2019				$ Change				% Change				$ Change				% Change
Securities AFS-taxable	$	1,902,162			$	1,857,050			$	1,551,358			$	45,112				2.4	%		$	350,804				22.6	%
Securities AFS-nontaxable		5,206				5,973				23,300				(767	)			-12.8	%			(18,094	)			-77.7	%
Securities HTM-taxable		550,563				608,585				734,474				(58,022	)			-9.5	%			(183,911	)			-25.0	%
Securities HTM-nontaxable		24,752				25,508				25,703				(756	)			-3.0	%			(951	)			-3.7	%
Total securities		2,482,683				2,497,116				2,334,835				(14,433	)			-0.6	%			147,848				6.3	%
Paycheck protection program loans (PPP)		875,098				941,456				—				(66,358	)			-7.0	%			875,098			n/m
Loans (includes loans held for sale) (1)		10,231,671				10,162,379				9,467,437				69,292				0.7	%			764,234				8.1	%
Acquired loans (1)		—				—				77,797				—			n/m					(77,797	)			-100.0	%
Fed funds sold and reverse repurchases		303				301				184				2				0.7	%			119				64.7	%
Other earning assets		860,540				722,917				227,116				137,623				19.0	%			633,424			n/m
Total earning assets		14,450,295				14,324,169				12,107,369				126,126				0.9	%			2,342,926				19.4	%
Allowance for credit losses (ACL), loans held   for investment (LHFI) (1)		(124,088	)			(121,842	)			(86,211	)			(2,246	)			-1.8	%			(37,877	)			-43.9	%
Other assets		1,620,694				1,564,825				1,445,075				55,869				3.6	%			175,619				12.2	%
Total assets	$	15,946,901			$	15,767,152			$	13,466,233			$	179,749				1.1	%		$	2,480,668				18.4	%
Interest-bearing demand deposits	$	3,649,590			$	3,669,249			$	3,167,256			$	(19,659	)			-0.5	%		$	482,334				15.2	%
Savings deposits		4,350,783				4,416,046				3,448,899				(65,263	)			-1.5	%			901,884				26.1	%
Time deposits		1,436,677				1,507,348				1,663,741				(70,671	)			-4.7	%			(227,064	)			-13.6	%
Total interest-bearing deposits		9,437,050				9,592,643				8,279,896				(155,593	)			-1.6	%			1,157,154				14.0	%
Fed funds purchased and repurchases		170,474				84,077				164,754				86,397			n/m					5,720				3.5	%
Other borrowings		173,525				167,262				79,512				6,263				3.7	%			94,013			n/m
Subordinated notes		42,828				—				—				42,828			n/m					42,828			n/m
Junior subordinated debt securities		61,856				61,856				61,856				—				0.0	%			—				0.0	%
Total interest-bearing liabilities		9,885,733				9,905,838				8,586,018				(20,105	)			-0.2	%			1,299,715				15.1	%
Noninterest-bearing deposits		4,100,849				3,921,867				3,017,824				178,982				4.6	%			1,083,025				35.9	%
Other liabilities		235,284				244,544				205,786				(9,260	)			-3.8	%			29,498				14.3	%
Total liabilities		14,221,866				14,072,249				11,809,628				149,617				1.1	%			2,412,238				20.4	%
Shareholders' equity		1,725,035				1,694,903				1,656,605				30,132				1.8	%			68,430				4.1	%
Total liabilities and equity	$	15,946,901			$	15,767,152			$	13,466,233			$	179,749				1.1	%		$	2,480,668				18.4	%
(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2020 ($ in thousands) (unaudited)
													Linked Quarter								Year over Year
PERIOD END BALANCES	12/31/2020				9/30/2020				12/31/2019				$ Change				% Change				$ Change				% Change
Cash and due from banks	$	1,952,504			$	564,588			$	358,916			$	1,387,916			n/m				$	1,593,588			n/m
Fed funds sold and reverse repurchases		50				50				—				—				0.0	%			50			n/m
Securities available for sale		1,991,815				1,922,728				1,602,404				69,087				3.6	%			389,411				24.3	%
Securities held to maturity		538,072				611,280				738,099				(73,208	)			-12.0	%			(200,027	)			-27.1	%
PPP loans		610,134				944,270				—				(334,136	)			-35.4	%			610,134			n/m
Loans held for sale (LHFS)		446,951				485,103				226,347				(38,152	)			-7.9	%			220,604				97.5	%
Loans held for investment (LHFI) (1)		9,824,524				9,847,728				9,335,628				(23,204	)			-0.2	%			488,896				5.2	%
ACL LHFI (1)		(117,306	)			(122,010	)			(84,277	)			4,704				3.9	%			(33,029	)			-39.2	%
Net LHFI		9,707,218				9,725,718				9,251,351				(18,500	)			-0.2	%			455,867				4.9	%
Acquired loans (1)		—				—				72,601				—			n/m					(72,601	)			-100.0	%
Allowance for loan losses, acquired loans (1)		—				—				(815	)			—			n/m					815				-100.0	%
Net acquired loans		—				—				71,786				—			n/m					(71,786	)			-100.0	%
Net LHFI and acquired loans		9,707,218				9,725,718				9,323,137				(18,500	)			-0.2	%			384,081				4.1	%
Premises and equipment, net		194,278				192,722				189,791				1,556				0.8	%			4,487				2.4	%
Mortgage servicing rights		66,464				61,613				79,394				4,851				7.9	%			(12,930	)			-16.3	%
Goodwill		385,270				385,270				379,627				—				0.0	%			5,643				1.5	%
Identifiable intangible assets		7,390				8,142				7,343				(752	)			-9.2	%			47				0.6	%
Other real estate		11,651				16,248				29,248				(4,597	)			-28.3	%			(17,597	)			-60.2	%
Operating lease right-of-use assets		30,901				30,508				31,182				393				1.3	%			(281	)			-0.9	%
Other assets		609,142				609,922				532,389				(780	)			-0.1	%			76,753				14.4	%
Total assets	$	16,551,840			$	15,558,162			$	13,497,877			$	993,678				6.4	%		$	3,053,963				22.6	%
Deposits:
Noninterest-bearing	$	4,349,010			$	3,964,023			$	2,891,215			$	384,987				9.7	%		$	1,457,795				50.4	%
Interest-bearing		9,699,754				9,258,390				8,354,342				441,364				4.8	%			1,345,412				16.1	%
Total deposits		14,048,764				13,222,413				11,245,557				826,351				6.2	%			2,803,207				24.9	%
Fed funds purchased and repurchases		164,519				153,834				256,020				10,685				6.9	%			(91,501	)			-35.7	%
Other borrowings		168,252				178,599				85,396				(10,347	)			-5.8	%			82,856				97.0	%
Subordinated notes		122,921				—				—				122,921			n/m					122,921			n/m
Junior subordinated debt securities		61,856				61,856				61,856				—				0.0	%			—				0.0	%
ACL on off-balance sheet credit exposures (1)		38,572				39,659				—				(1,087	)			-2.7	%			38,572			n/m
Operating lease liabilities		32,290				31,838				32,354				452				1.4	%			(64	)			-0.2	%
Other liabilities		173,549				159,922				155,992				13,627				8.5	%			17,557				11.3	%
Total liabilities		14,810,723				13,848,121				11,837,175				962,602				7.0	%			2,973,548				25.1	%
Common stock		13,215				13,215				13,376				—				0.0	%			(161	)			-1.2	%
Capital surplus		233,120				231,836				256,400				1,284				0.6	%			(23,280	)			-9.1	%
Retained earnings		1,495,833				1,459,306				1,414,526				36,527				2.5	%			81,307				5.7	%
Accum other comprehensive income (loss),   net of tax		(1,051	)			5,684				(23,600	)			(6,735	)		n/m					22,549				95.5	%
Total shareholders' equity		1,741,117				1,710,041				1,660,702				31,076				1.8	%			80,415				4.8	%
Total liabilities and equity	$	16,551,840			$	15,558,162			$	13,497,877			$	993,678				6.4	%		$	3,053,963				22.6	%
(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2020 ($ in thousands except per share data) (unaudited)
	Quarter Ended												Linked Quarter								Year over Year
INCOME STATEMENTS	12/31/2020				9/30/2020				12/31/2019				$ Change				% Change				$ Change				% Change
Interest and fees on LHFS & LHFI-FTE	$	96,453			$	97,429			$	111,383			$	(976	)			-1.0	%		$	(14,930	)			-13.4	%
Interest and fees on PPP loans		14,870				6,729				—				8,141			n/m					14,870			n/m
Interest and fees on acquired loans (1)		—				—				2,138				—			n/m					(2,138	)			-100.0	%
Interest on securities-taxable		9,998				12,542				12,884				(2,544	)			-20.3	%			(2,886	)			-22.4	%
Interest on securities-tax exempt-FTE		293				301				484				(8	)			-2.7	%			(191	)			-39.5	%
Interest on fed funds sold and reverse repurchases		—				1				1				(1	)			-100.0	%			(1	)			-100.0	%
Other interest income		249				331				896				(82	)			-24.8	%			(647	)			-72.2	%
Total interest income-FTE		121,863				117,333				127,786				4,530				3.9	%			(5,923	)			-4.6	%
Interest on deposits		6,363				7,437				17,716				(1,074	)			-14.4	%			(11,353	)			-64.1	%
Interest on fed funds purchased and repurchases		56				32				504				24				75.0	%			(448	)			-88.9	%
Other interest expense		1,127				688				826				439				63.8	%			301				36.4	%
Total interest expense		7,546				8,157				19,046				(611	)			-7.5	%			(11,500	)			-60.4	%
Net interest income-FTE		114,317				109,176				108,740				5,141				4.7	%			5,577				5.1	%
Provision for credit losses, LHFI (1)		(4,413	)			1,760				3,661				(6,173	)		n/m					(8,074	)		n/m
Provision for loan losses, acquired loans (1)		—				—				(2	)			—			n/m					2				100.0	%
Net interest income after provision-FTE		118,730				107,416				105,081				11,314				10.5	%			13,649				13.0	%
Service charges on deposit accounts		8,283				7,577				10,894				706				9.3	%			(2,611	)			-24.0	%
Bank card and other fees		9,107				8,843				8,192				264				3.0	%			915				11.2	%
Mortgage banking, net		28,155				36,439				7,914				(8,284	)			-22.7	%			20,241			n/m
Insurance commissions		10,196				11,562				9,364				(1,366	)			-11.8	%			832				8.9	%
Wealth management		7,838				7,679				7,763				159				2.1	%			75				1.0	%
Other, net		2,538				1,601				3,451				937				58.5	%			(913	)			-26.5	%
Total noninterest income		66,117				73,701				47,578				(7,584	)			-10.3	%			18,539				39.0	%
Salaries and employee benefits		69,660				67,342				62,319				2,318				3.4	%			7,341				11.8	%
Services and fees		22,327				20,992				19,500				1,335				6.4	%			2,827				14.5	%
Net occupancy-premises		6,616				7,000				6,461				(384	)			-5.5	%			155				2.4	%
Equipment expense		6,213				5,828				5,880				385				6.6	%			333				5.7	%
Other real estate expense, net		(812	)			1,203				1,491				(2,015	)		n/m					(2,303	)		n/m
Credit loss expense related to off-balance sheet   credit exposures (1)		(1,087	)			(3,004	)			—				1,917				63.8	%			(1,087	)		n/m
Other expense		15,890				14,598				14,376				1,292				8.9	%			1,514				10.5	%
Total noninterest expense		118,807				113,959				110,027				4,848				4.3	%			8,780				8.0	%
Income before income taxes and tax eq adj		66,040				67,158				42,632				(1,118	)			-1.7	%			23,408				54.9	%
Tax equivalent adjustment		2,939				2,969				3,149				(30	)			-1.0	%			(210	)			-6.7	%
Income before income taxes		63,101				64,189				39,483				(1,088	)			-1.7	%			23,618				59.8	%
Income taxes		11,884				9,749				5,537				2,135				21.9	%			6,347			n/m
Net income	$	51,217			$	54,440			$	33,946			$	(3,223	)			-5.9	%		$	17,271				50.9	%
Per share data
Earnings per share - basic	$	0.81			$	0.86			$	0.53			$	(0.05	)			-5.8	%		$	0.28				52.8	%
Earnings per share - diluted	$	0.81			$	0.86			$	0.53			$	(0.05	)			-5.8	%		$	0.28				52.8	%
Dividends per share	$	0.23			$	0.23			$	0.23				—				0.0	%			—				0.0	%
Weighted average shares outstanding
Basic		63,424,219				63,422,692				64,255,716
Diluted		63,616,767				63,581,964				64,435,276
Period end shares outstanding		63,424,526				63,423,820				64,200,111
(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2020 ($ in thousands) (unaudited)
	Quarter Ended												Linked Quarter								Year over Year
NONPERFORMING ASSETS (1)	12/31/2020				9/30/2020				12/31/2019				$ Change				% Change				$ Change				% Change
Nonaccrual LHFI
Alabama	$	9,221			$	3,860			$	1,870			$	5,361			n/m				$	7,351			n/m
Florida		572				617				267				(45	)			-7.3	%			305			n/m
Mississippi (2)		35,015				35,617				41,493				(602	)			-1.7	%			(6,478	)			-15.6	%
Tennessee (3)		12,572				13,041				8,980				(469	)			-3.6	%			3,592				40.0	%
Texas		5,748				721				616				5,027			n/m					5,132			n/m
Total nonaccrual LHFI		63,128				53,856				53,226				9,272				17.2	%			9,902				18.6	%
Other real estate
Alabama		3,271				3,725				8,133				(454	)			-12.2	%			(4,862	)			-59.8	%
Florida		—				3,665				5,877				(3,665	)			-100.0	%			(5,877	)			-100.0	%
Mississippi (2)		8,330				8,718				14,919				(388	)			-4.5	%			(6,589	)			-44.2	%
Tennessee (3)		50				140				319				(90	)			-64.3	%			(269	)			-84.3	%
Texas		—				—				—				—			n/m					—			n/m
Total other real estate		11,651				16,248				29,248				(4,597	)			-28.3	%			(17,597	)			-60.2	%
Total nonperforming assets	$	74,779			$	70,104			$	82,474			$	4,675				6.7	%		$	(7,695	)			-9.3	%
LOANS PAST DUE OVER 90 DAYS (1)
LHFI	$	1,576			$	782			$	642			$	794			n/m				$	934			n/m
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	119,409			$	121,281			$	41,648			$	(1,872	)			-1.5	%		$	77,761			n/m
	Quarter Ended												Linked Quarter								Year over Year
ACL LHFI (1)(4)	12/31/2020				9/30/2020				12/31/2019				$ Change				% Change				$ Change				% Change
Beginning Balance	$	122,010			$	119,188			$	83,226			$	2,822				2.4	%		$	38,784				46.6	%
CECL adoption adjustments:
LHFI		—				—				—				—			n/m					—			n/m
Acquired loan transfers		—				—				—				—			n/m					—			n/m
Provision for credit losses		(4,413	)			1,760				3,661				(6,173	)		n/m					(8,074	)		n/m
Charge-offs		(2,797	)			(1,263	)			(4,619	)			(1,534	)		n/m					1,822				39.4	%
Recoveries		2,506				2,325				2,009				181				7.8	%			497				24.7	%
Net (charge-offs) recoveries		(291	)			1,062				(2,610	)			(1,353	)		n/m					2,319				88.9	%
Ending Balance	$	117,306			$	122,010			$	84,277			$	(4,704	)			-3.9	%		$	33,029				39.2	%
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama	$	(1,011	)		$	117			$	(132	)		$	(1,128	)		n/m				$	(879	)		n/m
Florida		66				387				357				(321	)			-82.9	%			(291	)			-81.5	%
Mississippi (2)		332				442				(1,792	)			(110	)			-24.9	%			2,124			n/m
Tennessee (3)		303				42				(131	)			261			n/m					434			n/m
Texas		19				74				(912	)			(55	)			-74.3	%			931			n/m
Total net (charge-offs) recoveries	$	(291	)		$	1,062			$	(2,610	)		$	(1,353	)		n/m				$	2,319				-88.9	%
(1) Excludes PPP and acquired loans.
(2) Mississippi includes Central and Southern Mississippi Regions.
(3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
(4) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2020 ($ in thousands) (unaudited)
		Quarter Ended																				Year Ended
AVERAGE BALANCES		12/31/2020				9/30/2020				6/30/2020				3/31/2020				12/31/2019				12/31/2020				12/31/2019
Securities AFS-taxable		$	1,902,162			$	1,857,050			$	1,724,320			$	1,620,422			$	1,551,358			$	1,776,555			$	1,633,496
Securities AFS-nontaxable			5,206				5,973				9,827				22,056				23,300				10,737				29,948
Securities HTM-taxable			550,563				608,585				655,085				694,740				734,474				626,983				799,726
Securities HTM-nontaxable			24,752				25,508				25,538				25,673				25,703				25,366				26,874
Total securities			2,482,683				2,497,116				2,414,770				2,362,891				2,334,835				2,439,641				2,490,044
PPP loans			875,098				941,456				764,416				—				—				646,680				—
Loans (includes loans held for sale) (1)			10,231,671				10,162,379				9,908,132				9,678,174				9,467,437				9,996,192				9,302,037
Acquired loans (1)			—				—				—				—				77,797				—				88,903
Fed funds sold and reverse repurchases			303				301				113				164				184				221				9,529
Other earning assets			860,540				722,917				854,642				187,327				227,116				657,096				240,622
Total earning assets			14,450,295				14,324,169				13,942,073				12,228,556				12,107,369				13,739,830				12,131,135
ACL LHFI (1)			(124,088	)			(121,842	)			(103,006	)			(85,015	)			(86,211	)			(108,567	)			(83,559	)
Other assets			1,620,694				1,564,825				1,685,317				1,498,725				1,445,075				1,592,393				1,452,012
Total assets		$	15,946,901			$	15,767,152			$	15,524,384			$	13,642,266			$	13,466,233			$	15,223,656			$	13,499,588
Interest-bearing demand deposits		$	3,649,590			$	3,669,249			$	3,832,372			$	3,184,134			$	3,167,256			$	3,584,249			$	3,051,170
Savings deposits			4,350,783				4,416,046				4,180,540				3,646,936				3,448,899				4,149,860				3,650,178
Time deposits			1,436,677				1,507,348				1,578,737				1,617,307				1,663,741				1,534,673				1,783,928
Total interest-bearing deposits			9,437,050				9,592,643				9,591,649				8,448,377				8,279,896				9,268,782				8,485,276
Fed funds purchased and repurchases			170,474				84,077				105,696				247,513				164,754				151,805				110,915
Other borrowings			173,525				167,262				107,533				85,279				79,512				133,602				82,476
Subordinated notes			42,828				—				—				—				—				10,766				—
Junior subordinated debt securities			61,856				61,856				61,856				61,856				61,856				61,856				61,856
Total interest-bearing liabilities			9,885,733				9,905,838				9,866,734				8,843,025				8,586,018				9,626,811				8,740,523
Noninterest-bearing deposits			4,100,849				3,921,867				3,645,761				2,910,951				3,017,824				3,646,860				2,918,836
Other liabilities			235,284				244,544				346,173				248,220				205,786				268,398				218,216
Total liabilities			14,221,866				14,072,249				13,858,668				12,002,196				11,809,628				13,542,069				11,877,575
Shareholders' equity			1,725,035				1,694,903				1,665,716				1,640,070				1,656,605				1,681,587				1,622,013
Total liabilities and equity		$	15,946,901			$	15,767,152			$	15,524,384			$	13,642,266			$	13,466,233			$	15,223,656			$	13,499,588
(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2020 ($ in thousands) (unaudited)
PERIOD END BALANCES		12/31/2020				9/30/2020				6/30/2020				3/31/2020				12/31/2019
Cash and due from banks		$	1,952,504			$	564,588			$	1,026,640			$	404,341			$	358,916
Fed funds sold and reverse repurchases			50				50				—				2,000				—
Securities available for sale			1,991,815				1,922,728				1,884,153				1,833,779				1,602,404
Securities held to maturity			538,072				611,280				660,048				704,276				738,099
PPP loans			610,134				944,270				939,783				—				—
Loans held for sale (LHFS)			446,951				485,103				355,089				325,389				226,347
Loans held for investment (LHFI) (1)			9,824,524				9,847,728				9,659,806				9,567,920				9,335,628
ACL LHFI (1)			(117,306	)			(122,010	)			(119,188	)			(100,564	)			(84,277	)
Net LHFI			9,707,218				9,725,718				9,540,618				9,467,356				9,251,351
Acquired loans (1)			—				—				—				—				72,601
Allowance for loan losses, acquired loans (1)			—				—				—				—				(815	)
Net acquired loans			—				—				—				—				71,786
Net LHFI and acquired loans			9,707,218				9,725,718				9,540,618				9,467,356				9,323,137
Premises and equipment, net			194,278				192,722				190,567				190,179				189,791
Mortgage servicing rights			66,464				61,613				57,811				56,437				79,394
Goodwill			385,270				385,270				385,270				381,717				379,627
Identifiable intangible assets			7,390				8,142				8,895				7,537				7,343
Other real estate			11,651				16,248				18,276				24,847				29,248
Operating lease right-of-use assets			30,901				30,508				29,819				30,839				31,182
Other assets			609,142				609,922				595,110				591,132				532,389
Total assets		$	16,551,840			$	15,558,162			$	15,692,079			$	14,019,829			$	13,497,877
Deposits:
Noninterest-bearing		$	4,349,010			$	3,964,023			$	3,880,540			$	2,977,058			$	2,891,215
Interest-bearing			9,699,754				9,258,390				9,624,933				8,598,706				8,354,342
Total deposits			14,048,764				13,222,413				13,505,473				11,575,764				11,245,557
Fed funds purchased and repurchases			164,519				153,834				70,255				421,821				256,020
Other borrowings			168,252				178,599				152,860				84,230				85,396
Subordinated notes			122,921				—				—				—				—
Junior subordinated debt securities			61,856				61,856				61,856				61,856				61,856
ACL on off-balance sheet credit exposures (1)			38,572				39,659				42,663				36,421				—
Operating lease liabilities			32,290				31,838				31,076				32,055				32,354
Other liabilities			173,549				159,922				153,952				155,283				155,992
Total liabilities			14,810,723				13,848,121				14,018,135				12,367,430				11,837,175
Common stock			13,215				13,215				13,214				13,209				13,376
Capital surplus			233,120				231,836				230,613				229,403				256,400
Retained earnings			1,495,833				1,459,306				1,419,552				1,402,089				1,414,526
Accum other comprehensive income (loss), net of tax			(1,051	)			5,684				10,565				7,698				(23,600	)
Total shareholders' equity			1,741,117				1,710,041				1,673,944				1,652,399				1,660,702
Total liabilities and equity		$	16,551,840			$	15,558,162			$	15,692,079			$	14,019,829			$	13,497,877
(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2020 ($ in thousands except per share data) (unaudited)
		Quarter Ended																				Year Ended
INCOME STATEMENTS		12/31/2020				9/30/2020				6/30/2020				3/31/2020				12/31/2019				12/31/2020				12/31/2019
Interest and fees on LHFS & LHFI-FTE		$	96,453			$	97,429			$	99,300			$	109,357			$	111,383			$	402,539			$	452,578
Interest and fees on PPP loans			14,870				6,729				5,044				—				—				26,643				—
Interest and fees on acquired loans (1)			—				—				—				—				2,138				—				8,373
Interest on securities-taxable			9,998				12,542				12,762				12,948				12,884				48,250				54,649
Interest on securities-tax exempt-FTE			293				301				315				457				484				1,366				2,166
Interest on fed funds sold and reverse repurchases			—				1				—				—				1				1				240
Other interest income			249				331				239				740				896				1,559				5,363
Total interest income-FTE			121,863				117,333				117,660				123,502				127,786				480,358				523,369
Interest on deposits			6,363				7,437				8,730				14,957				17,716				37,487				79,171
Interest on fed funds purchased and repurchases			56				32				42				625				504				755				1,420
Other interest expense			1,127				688				881				860				826				3,556				3,312
Total interest expense			7,546				8,157				9,653				16,442				19,046				41,798				83,903
Net interest income-FTE			114,317				109,176				108,007				107,060				108,740				438,560				439,466
Provision for credit losses, LHFI (1)			(4,413	)			1,760				18,185				20,581				3,661				36,113				10,797
Provision for loan losses, acquired loans (1)			—				—				—				—				(2	)			—				42
Net interest income after provision-FTE			118,730				107,416				89,822				86,479				105,081				402,447				428,627
Service charges on deposit accounts			8,283				7,577				6,397				10,032				10,894				32,289				42,603
Bank card and other fees			9,107				8,843				7,717				5,355				8,192				31,022				31,736
Mortgage banking, net			28,155				36,439				33,745				27,483				7,914				125,822				29,822
Insurance commissions			10,196				11,562				11,868				11,550				9,364				45,176				42,396
Wealth management			7,838				7,679				7,571				8,537				7,763				31,625				30,679
Other, net			2,538				1,601				2,213				2,307				3,451				8,659				9,809
Total noninterest income			66,117				73,701				69,511				65,264				47,578				274,593				187,045
Salaries and employee benefits			69,660				67,342				66,107				69,148				62,319				272,257				247,717
Services and fees			22,327				20,992				20,567				19,930				19,500				83,816				73,315
Net occupancy-premises			6,616				7,000				6,587				6,286				6,461				26,489				26,149
Equipment expense			6,213				5,828				5,620				5,616				5,880				23,277				23,733
Other real estate expense, net			(812	)			1,203				271				1,294				1,491				1,956				3,906
Credit loss expense related to off-balance sheet credit   exposures (1)			(1,087	)			(3,004	)			6,242				6,783				—				8,934				—
Other expense			15,890				14,598				13,265				14,753				14,376				58,506				54,182
Total noninterest expense			118,807				113,959				118,659				123,810				110,027				475,235				429,002
Income before income taxes and tax eq adj			66,040				67,158				40,674				27,933				42,632				201,805				186,670
Tax equivalent adjustment			2,939				2,969				3,007				3,108				3,149				12,023				12,877
Income before income taxes			63,101				64,189				37,667				24,825				39,483				189,782				173,793
Income taxes			11,884				9,749				5,517				2,607				5,537				29,757				23,333
Net income		$	51,217			$	54,440			$	32,150			$	22,218			$	33,946			$	160,025			$	150,460
Per share data
Earnings per share - basic		$	0.81			$	0.86			$	0.51			$	0.35			$	0.53			$	2.52			$	2.33
Earnings per share - diluted		$	0.81			$	0.86			$	0.51			$	0.35			$	0.53			$	2.51			$	2.32
Dividends per share		$	0.23			$	0.23			$	0.23			$	0.23			$	0.23			$	0.92			$	0.92
Weighted average shares outstanding
Basic			63,424,219				63,422,692				63,416,307				63,756,629				64,255,716				63,504,516				64,629,457
Diluted			63,616,767				63,581,964				63,555,065				63,913,603				64,435,276				63,645,599				64,771,770
Period end shares outstanding			63,424,526				63,423,820				63,422,439				63,396,912				64,200,111				63,424,526				64,200,111
(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2020 ($ in thousands) (unaudited)
		Quarter Ended
NONPERFORMING ASSETS (1)		12/31/2020				9/30/2020				6/30/2020				3/31/2020				12/31/2019
Nonaccrual LHFI
Alabama		$	9,221			$	3,860			$	4,392			$	4,769			$	1,870
Florida			572				617				687				254				267
Mississippi (2)			35,015				35,617				37,884				40,815				41,493
Tennessee (3)			12,572				13,041				6,125				6,153				8,980
Texas			5,748				721				906				1,001				616
Total nonaccrual LHFI			63,128				53,856				49,994				52,992				53,226
Other real estate
Alabama			3,271				3,725				4,766				6,229				8,133
Florida			—				3,665				3,665				4,835				5,877
Mississippi (2)			8,330				8,718				9,408				13,296				14,919
Tennessee (3)			50				140				437				487				319
Texas			—				—				—				—				—
Total other real estate			11,651				16,248				18,276				24,847				29,248
Total nonperforming assets		$	74,779			$	70,104			$	68,270			$	77,839			$	82,474
LOANS PAST DUE OVER 90 DAYS (1)
LHFI		$	1,576			$	782			$	807			$	708			$	642
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)		$	119,409			$	121,281			$	56,269			$	43,564			$	41,648
		Quarter Ended																				Year Ended
ACL LHFI (1)(4)		12/31/2020				9/30/2020				6/30/2020				3/31/2020				12/31/2019				12/31/2020				12/31/2019
Beginning Balance		$	122,010			$	119,188			$	100,564			$	84,277			$	83,226			$	84,277			$	79,290
CECL adoption adjustments:
LHFI			—				—				—				(3,039	)			—				(3,039	)			—
Acquired loan transfers			—				—				—				1,822				—				1,822				—
Provision for credit losses			(4,413	)			1,760				18,185				20,581				3,661				36,113				10,797
Charge-offs			(2,797	)			(1,263	)			(1,870	)			(5,545	)			(4,619	)			(11,475	)			(14,481	)
Recoveries			2,506				2,325				2,309				2,468				2,009				9,608				8,671
Net (charge-offs) recoveries			(291	)			1,062				439				(3,077	)			(2,610	)			(1,867	)			(5,810	)
Ending Balance		$	117,306			$	122,010			$	119,188			$	100,564			$	84,277			$	117,306			$	84,277
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama		$	(1,011	)		$	117			$	526			$	(1,080	)		$	(132	)		$	(1,448	)		$	(754	)
Florida			66				387				(127	)			64				357				390				850
Mississippi (2)			332				442				(86	)			126				(1,792	)			814				(4,438	)
Tennessee (3)			303				42				66				(2,186	)			(131	)			(1,775	)			(708	)
Texas			19				74				60				(1	)			(912	)			152				(760	)
Total net (charge-offs) recoveries		$	(291	)		$	1,062			$	439			$	(3,077	)		$	(2,610	)		$	(1,867	)		$	(5,810	)
(1) Excludes PPP and acquired loans.
(2) Mississippi includes Central and Southern Mississippi Regions.
(3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
(4) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2020 (unaudited)
		Quarter Ended																				Year Ended
FINANCIAL RATIOS AND OTHER DATA		12/31/2020				9/30/2020				6/30/2020				3/31/2020				12/31/2019				12/31/2020				12/31/2019
Return on average equity			11.81	%			12.78	%			7.76	%			5.45	%			8.13	%			9.52	%			9.28	%
Return on average tangible equity			15.47	%			16.82	%			10.32	%			7.34	%			10.85	%			12.58	%			12.45	%
Return on average assets			1.28	%			1.37	%			0.83	%			0.66	%			1.00	%			1.05	%			1.11	%
Interest margin - Yield - FTE			3.35	%			3.26	%			3.39	%			4.06	%			4.19	%			3.50	%			4.31	%
Interest margin - Cost			0.21	%			0.23	%			0.28	%			0.54	%			0.62	%			0.30	%			0.69	%
Net interest margin - FTE			3.15	%			3.03	%			3.12	%			3.52	%			3.56	%			3.19	%			3.62	%
Efficiency ratio (1)			65.59	%			62.19	%			62.13	%			63.50	%			68.08	%			63.35	%			66.38	%
Full-time equivalent employees			2,797				2,807				2,798				2,761				2,844
CREDIT QUALITY RATIOS (2)
Net (recoveries) charge-offs / average loans			0.01	%			-0.04	%			-0.02	%			0.13	%			0.11	%			0.02	%			0.06	%
Provision for credit losses / average loans (3)			-0.17	%			0.07	%			0.74	%			0.86	%			0.15	%			0.36	%			0.12	%
Nonaccrual LHFI / (LHFI + LHFS)			0.61	%			0.52	%			0.50	%			0.54	%			0.56	%
Nonperforming assets / (LHFI + LHFS)			0.73	%			0.68	%			0.68	%			0.79	%			0.86	%
Nonperforming assets / (LHFI + LHFS + other real estate)			0.73	%			0.68	%			0.68	%			0.78	%			0.86	%
ACL LHFI / LHFI (3)			1.19	%			1.24	%			1.23	%			1.05	%			0.90	%
ACL LHFI-commercial / commercial LHFI (3)			1.20	%			1.20	%			1.15	%			0.97	%			0.98	%
ACL LHFI-consumer / consumer and home mortgage LHFI (3)			1.16	%			1.41	%			1.56	%			1.35	%			0.61	%
ACL LHFI / nonaccrual LHFI (3)			185.82	%			226.55	%			238.40	%			189.77	%			158.34	%
ACL LHFI / nonaccrual LHFI (excl individually evaluated loans) (3)			572.69	%			593.72	%			561.04	%			468.84	%			410.52	%
CAPITAL RATIOS (3)
Total equity / total assets			10.52	%			10.99	%			10.67	%			11.79	%			12.30	%
Tangible equity / tangible assets			8.34	%			8.68	%			8.37	%			9.27	%			9.72	%
Tangible equity / risk-weighted assets			11.22	%			11.01	%			11.09	%			11.05	%			11.58	%
Tier 1 leverage ratio			9.33	%			9.20	%			9.08	%			10.21	%			10.48	%
Common equity tier 1 capital ratio			11.62	%			11.36	%			11.42	%			11.35	%			11.93	%
Tier 1 risk-based capital ratio			12.11	%			11.86	%			11.94	%			11.88	%			12.48	%
Total risk-based capital ratio			14.12	%			12.88	%			13.00	%			12.78	%			13.25	%
STOCK PERFORMANCE
Market value-Close		$	27.31			$	21.41			$	24.52			$	23.30			$	34.51
Book value		$	27.45			$	26.96			$	26.39			$	26.06			$	25.87
Tangible book value		$	21.26			$	20.76			$	20.18			$	19.92			$	19.84
(1) See Note 10 – Non-GAAP Financial Measures in the Notes to Consolidated Financials for Trustmark’s efficiency ratio calculation.
(2) Excludes PPP and acquired loans.
(3) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2020
($ in thousands)
(unaudited)

Note 1 – Recently Effective Accounting Pronouncements

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

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

Based upon the factors discussed above, during the fourth quarter of 2020, Trustmark recorded a negative provision for credit losses of $4.4 million and a negative credit loss expense related to off-balance sheet credit exposures of $1.1 million compared to a provision for credit losses of $1.8 million and a negative credit loss expense related to off-balance sheet credit exposures of $3.0 million recorded during the third quarter of 2020.

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

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

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

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

Note 2 - Paycheck Protection Program

At December 31, 2020, Trustmark had outstanding 7,398 PPP loans totaling $610.1 million (net of $12.9 million of deferred fees and costs) under the Coronavirus Aid, Relief, and Economic Security Act, which was signed into law on March 27, 2020. Due to amount and nature of the PPP loans, these loans were not included in the LHFI portfolio and are presented separately in the accompanying consolidated balance sheets. The PPP loans are fully guaranteed by the SBA; therefore, no ACL was estimated for these loans.

Note 3 - Securities Available for Sale and Held to Maturity

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

		12/31/2020				9/30/2020				6/30/2020				3/31/2020				12/31/2019
SECURITIES AVAILABLE FOR SALE
U.S. Government agency obligations		$	18,041			$	19,011			$	19,898			$	21,190			$	22,327
Obligations of states and political subdivisions			5,835				8,315				11,176				23,572				25,465
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			56,862				62,156				69,637				71,971				69,252
Issued by FNMA and FHLMC			1,441,321				1,279,919				1,121,604				967,329				713,356
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			419,437				500,858				574,940				634,075				658,226
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			50,319				52,469				86,898				115,642				113,778
Total securities available for sale		$	1,991,815			$	1,922,728			$	1,884,153			$	1,833,779			$	1,602,404
SECURITIES HELD TO MATURITY
U.S. Government agency obligations		$	—			$	—			$	—			$	—			$	3,781
Obligations of states and political subdivisions			26,584				31,605				31,629				31,758				31,781
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			7,598				8,244				10,306				10,492				10,820
Issued by FNMA and FHLMC			67,944				78,213				86,346				91,971				96,631
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			360,361				399,400				435,333				463,175				485,324
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			75,585				93,818				96,434				106,880				109,762
Total securities held to maturity		$	538,072			$	611,280			$	660,048			$	704,276			$	738,099

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2020
($ in thousands)
(unaudited)

Note 3 - Securities Available for Sale and Held to Maturity (continued)

At December 31, 2020, the net unamortized, unrealized loss included in accumulated other comprehensive income (loss) in the accompanying balance sheet for securities held to maturity previously transferred from securities available for sale totaled approximately $8.9 million ($6.7 million, net of tax).

Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 98.7% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE.

Note 4 – Loan Composition

LHFI consisted of the following during the periods presented:

LHFI BY TYPE (1)		12/31/2020				9/30/2020				6/30/2020				3/31/2020				12/31/2019
Loans secured by real estate:
Construction, land development and other land loans		$	1,309,039			$	1,385,947			$	1,277,277			$	1,136,389			$	1,162,791
Secured by 1-4 family residential properties			1,741,132				1,775,400				1,813,525				1,852,065				1,855,913
Secured by nonfarm, nonresidential properties			2,709,026				2,707,627				2,610,392				2,575,422				2,475,245
Other real estate secured			1,065,964				887,792				884,815				838,573				724,480
Commercial and industrial loans			1,309,078				1,398,468				1,413,255				1,476,777				1,477,896
Consumer loans			161,174				160,960				161,620				170,678				175,738
State and other political subdivision loans			1,000,776				935,349				931,536				938,637				967,944
Other loans			528,335				596,185				567,386				579,379				495,621
LHFI			9,824,524				9,847,728				9,659,806				9,567,920				9,335,628
ACL LHFI			(117,306	)			(122,010	)			(119,188	)			(100,564	)			(84,277	)
Net LHFI		$	9,707,218			$	9,725,718			$	9,540,618			$	9,467,356			$	9,251,351
(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.

The following table presents the LHFI composition by region at December 31, 2020 and reflects each region’s diversified mix of loans:

		December 31, 2020
LHFI - COMPOSITION BY REGION		Total				Alabama				Florida				Mississippi (Central and Southern Regions)				Tennessee (Memphis, TN and Northern MS Regions)				Texas
Loans secured by real estate:
Construction, land development and other land loans		$	1,309,039			$	494,486			$	62,963			$	315,555			$	30,618			$	405,417
Secured by 1-4 family residential properties			1,741,132				118,205				37,062				1,501,505				73,039				11,321
Secured by nonfarm, nonresidential properties			2,709,026				710,266				262,697				984,508				186,405				565,150
Other real estate secured			1,065,964				312,295				6,332				392,986				6,621				347,730
Commercial and industrial loans			1,309,078				199,301				22,774				611,743				271,940				203,320
Consumer loans			161,174				23,402				6,641				107,133				20,062				3,936
State and other political subdivision loans			1,000,776				87,468				35,179				670,883				41,698				165,548
Other loans			528,335				81,631				14,247				349,217				61,709				21,531
Loans		$	9,824,524			$	2,027,054			$	447,895			$	4,933,530			$	692,092			$	1,723,953
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots		$	74,177			$	24,842			$	12,945			$	28,546			$	1,231			$	6,613
Development			94,443				37,537				315				33,059				12,505				11,027
Unimproved land			99,857				30,260				15,863				24,742				10,746				18,246
1-4 family construction			245,579				112,709				23,641				71,815				5,061				32,353
Other construction			794,983				289,138				10,199				157,393				1,075				337,178
Construction, land development and other land loans		$	1,309,039			$	494,486			$	62,963			$	315,555			$	30,618			$	405,417

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2020
($ in thousands)
(unaudited)

Note 4 – Loan Composition (continued)

		December 31, 2020
		Total				Alabama				Florida				Mississippi (Central and Southern Regions)				Tennessee (Memphis, TN and Northern MS Regions)				Texas
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION
Non-owner occupied:
Retail		$	389,905			$	149,401			$	31,965			$	108,724			$	26,257			$	73,558
Office			228,094				64,625				26,697				68,056				12,122				56,594
Hotel/motel			341,972				146,542				91,819				52,883				39,728				11,000
Mini-storage			130,995				23,499				2,344				61,359				397				43,396
Industrial			183,795				47,135				15,805				40,308				1,087				79,460
Health care			46,597				23,088				2,462				18,462				389				2,196
Convenience stores			16,148				3,304				—				3,351				383				9,110
Nursing homes/senior living			112,256				35,941				—				31,456				6,923				37,936
Other			71,670				4,505				6,715				24,133				8,450				27,867
Total non-owner occupied loans			1,521,432				498,040				177,807				408,732				95,736				341,117
Owner-occupied:
Office			188,960				42,679				45,651				49,120				8,814				42,696
Churches			105,832				22,604				6,768				51,499				10,231				14,730
Industrial warehouses			161,050				13,732				3,097				50,969				16,362				76,890
Health care			136,246				24,485				4,466				94,695				2,341				10,259
Convenience stores			122,155				18,744				9,516				65,919				556				27,420
Retail			73,832				15,308				6,574				26,447				10,653				14,850
Restaurants			59,856				4,255				4,446				34,681				15,097				1,377
Auto dealerships			54,805				7,542				279				21,009				25,975				—
Nursing homes/senior living			175,442				57,846				—				117,596				—				—
Other			109,416				5,031				4,093				63,841				640				35,811
Total owner-occupied loans			1,187,594				212,226				84,890				575,776				90,669				224,033
Loans secured by nonfarm, nonresidential properties		$	2,709,026			$	710,266			$	262,697			$	984,508			$	186,405			$	565,150

Note 5 - Subordinated Notes Payable

During the fourth quarter of 2020, Trustmark agreed to issue and sell $125.0 million aggregate principal amount of its 3.625% Fixed-to-Floating Rate Subordinated Notes (the Notes) due December 1, 2030. The Notes were sold at an underwriting discount of 1.2%, resulting in net proceeds to Trustmark of $123.5 million before deducting offering expenses of $600 thousand. At December 31, 2020, the carrying amount of the Notes was $122.9 million. The Notes are unsecured obligations and are subordinated in right of payment to all our existing and future senior indebtedness, whether secured or unsecured. The Notes are obligations of Trustmark only and are not obligations of, and are not guaranteed by, any of its subsidiaries, including Trustmark National Bank. From the date of issuance until November 30, 2025, the Notes bear interest at a fixed rate of 3.625% per year, payable semi-annually in arrears on June 1 and December 1 of each year. Beginning December 1, 2025, the Notes will bear interest at a floating rate per year equal to the Benchmark rate, which is the Three-Month Term Secured Overnight Financing Rate (SOFR), plus 338.7 basis points, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year. The Notes qualify as Tier 2 capital for Trustmark. The Notes may be redeemed at Trustmark’s option under certain circumstances. Trustmark intends to use the net proceeds for general corporate purposes.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2020
($ in thousands)
(unaudited)

Note 6 – Yields on Earning Assets and Interest-Bearing Liabilities

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

		Quarter Ended																				Year Ended
		12/31/2020				9/30/2020				6/30/2020				3/31/2020				12/31/2019				12/31/2020				12/31/2019
Securities – taxable			1.62	%			2.02	%			2.16	%			2.25	%			2.24	%			2.01	%			2.25	%
Securities – nontaxable			3.89	%			3.80	%			3.58	%			3.85	%			3.92	%			3.78	%			3.81	%
Securities – total			1.65	%			2.05	%			2.18	%			2.28	%			2.27	%			2.03	%			2.28	%
PPP loans			6.76	%			2.84	%			2.65	%			—				—				4.12	%			—
Loans - LHFI & LHFS			3.75	%			3.81	%			4.03	%			4.54	%			4.67	%			4.03	%			4.87	%
Acquired loans			—				—				—				—				10.90	%			—				9.42	%
Loans - total			3.99	%			3.73	%			3.93	%			4.54	%			4.72	%			4.03	%			4.91	%
Fed funds sold & reverse repurchases			—				1.32	%			—				—				2.16	%			0.45	%			2.52	%
Other earning assets			0.12	%			0.18	%			0.11	%			1.59	%			1.57	%			0.24	%			2.23	%
Total earning assets			3.35	%			3.26	%			3.39	%			4.06	%			4.19	%			3.50	%			4.31	%
Interest-bearing deposits			0.27	%			0.31	%			0.37	%			0.71	%			0.85	%			0.40	%			0.93	%
Fed funds purchased & repurchases			0.13	%			0.15	%			0.16	%			1.02	%			1.21	%			0.50	%			1.28	%
Other borrowings			1.61	%			1.19	%			2.09	%			2.35	%			2.32	%			1.72	%			2.29	%
Total interest-bearing liabilities			0.30	%			0.33	%			0.39	%			0.75	%			0.88	%			0.43	%			0.96	%
Net interest margin			3.15	%			3.03	%			3.12	%			3.52	%			3.56	%			3.19	%			3.62	%
Net interest margin excluding PPP and acquired loans			2.91	%			3.05	%			3.14	%			3.52	%			3.52	%			3.15	%			3.58	%

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

The net interest margin excluding PPP and acquired loans totaled 2.91% for the fourth quarter of 2020, a decrease of 14 basis points when compared to the third quarter of 2020. Continued low interest rates decreased the yield on the loans held for investment and held for sale portfolio as well as the securities portfolio and were partially offset by lower costs of interest-bearing deposits.

Note 7 – Mortgage Banking

Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that offsets the changes in fair value of mortgage servicing rights (MSR) attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under generally accepted accounting principles (GAAP). Changes in the fair value of these exchange-traded derivative instruments, including administrative costs, are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of the MSR. The MSR fair value represents the present value of future cash flows, which among other things includes decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the change in value of hedge instruments to the change in the fair value of the MSR asset attributable to changes in interest rates and other market driven changes in valuation inputs and assumptions. The impact of this strategy resulted in a net negative ineffectiveness of $909 thousand during the fourth quarter of 2020.

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

		Quarter Ended																				Year Ended
		12/31/2020				9/30/2020				6/30/2020				3/31/2020				12/31/2019				12/31/2020				12/31/2019
Mortgage servicing income, net		$	6,227			$	5,742			$	5,893			$	5,819			$	5,854			$	23,681			$	22,883
Change in fair value-MSR from runoff			(5,177	)			(4,590	)			(4,214	)			(2,607	)			(2,950	)			(16,588	)			(11,835	)
Gain on sales of loans, net			28,014				34,472				34,078				14,339				7,984				110,903				30,296
Mortgage banking income before hedge ineffectiveness			29,064				35,624				35,757				17,551				10,888				117,996				41,344
Change in fair value-MSR from market changes			951				60				(3,159	)			(23,999	)			4,048				(26,147	)			(21,078	)
Change in fair value of derivatives			(1,860	)			755				1,147				33,931				(7,022	)			33,973				9,556
Net positive (negative) hedge ineffectiveness			(909	)			815				(2,012	)			9,932				(2,974	)			7,826				(11,522	)
Mortgage banking, net		$	28,155			$	36,439			$	33,745			$	27,483			$	7,914			$	125,822			$	29,822

Note 8 – Salaries and Employee Benefit Plans

Early Retirement Program

In January 2020, Trustmark announced a voluntary early retirement program for associates age 60 and above with five or more years of continuous service. The cost of this program is reflected in a one-time, pre-tax charge of approximately $4.4 million (salaries and benefits of $4.3 million and other miscellaneous expense of $102 thousand; or $0.05 per basic share net of tax) in Trustmark’s first quarter 2020 earnings.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2020
($ in thousands)
(unaudited)

Note 9 – Other Noninterest Income and Expense

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

		Quarter Ended																				Year Ended
		12/31/2020				9/30/2020				6/30/2020				3/31/2020				12/31/2019				12/31/2020				12/31/2019
Partnership amortization for tax credit purposes		$	(1,877	)		$	(1,457	)		$	(1,205	)		$	(1,161	)		$	(1,630	)		$	(5,700	)		$	(7,644	)
Increase in life insurance cash surrender value			1,708				1,755				1,696				1,722				1,802				6,881				7,202
Other miscellaneous income			2,707				1,303				1,722				1,746				3,279				7,478				10,251
Total other, net		$	2,538			$	1,601			$	2,213			$	2,307			$	3,451			$	8,659			$	9,809

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

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

		Quarter Ended																				Year Ended
		12/31/2020				9/30/2020				6/30/2020				3/31/2020				12/31/2019				12/31/2020				12/31/2019
Loan expense		$	3,696			$	3,485			$	2,954			$	2,799			$	2,968			$	12,934			$	11,554
Amortization of intangibles			752				752				736				812				1,002				3,052				4,116
FDIC assessment expense			1,500				1,410				1,590				1,590				1,450				6,090				6,444
Other miscellaneous expense			9,942				8,951				7,985				9,552				8,956				36,430				32,068
Total other expense		$	15,890			$	14,598			$	13,265			$	14,753			$	14,376			$	58,506			$	54,182

Note 10 – Non-GAAP Financial Measures

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

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

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

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2020
($ in thousands except per share data)
(unaudited)

Note 10 – Non-GAAP Financial Measures (continued)

				Quarter Ended																				Year Ended
				12/31/2020				9/30/2020				6/30/2020				3/31/2020				12/31/2019				12/31/2020				12/31/2019
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity				$	1,725,035			$	1,694,903			$	1,665,716			$	1,640,070			$	1,656,605			$	1,681,587			$	1,622,013
Less: Goodwill					(385,270	)			(385,270	)			(383,081	)			(380,671	)			(379,627	)			(383,582	)			(379,627	)
Identifiable intangible assets					(7,803	)			(8,550	)			(7,834	)			(8,049	)			(7,882	)			(8,060	)			(9,212	)
Total average tangible equity				$	1,331,962			$	1,301,083			$	1,274,801			$	1,251,350			$	1,269,096			$	1,289,945			$	1,233,174
PERIOD END BALANCES
Total shareholders' equity				$	1,741,117			$	1,710,041			$	1,673,944			$	1,652,399			$	1,660,702
Less: Goodwill					(385,270	)			(385,270	)			(385,270	)			(381,717	)			(379,627	)
Identifiable intangible assets					(7,390	)			(8,142	)			(8,895	)			(7,537	)			(7,343	)
Total tangible equity		(a)		$	1,348,457			$	1,316,629			$	1,279,779			$	1,263,145			$	1,273,732
TANGIBLE ASSETS
Total assets				$	16,551,840			$	15,558,162			$	15,692,079			$	14,019,829			$	13,497,877
Less: Goodwill					(385,270	)			(385,270	)			(385,270	)			(381,717	)			(379,627	)
Identifiable intangible assets					(7,390	)			(8,142	)			(8,895	)			(7,537	)			(7,343	)
Total tangible assets		(b)		$	16,159,180			$	15,164,750			$	15,297,914			$	13,630,575			$	13,110,907
Risk-weighted assets		(c)		$	12,017,378			$	11,963,269			$	11,539,157			$	11,427,297			$	11,002,877
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income				$	51,217			$	54,440			$	32,150			$	22,218			$	33,946			$	160,025			$	150,460
Plus: Intangible amortization net of tax					564				564				552				609				752				2,289				3,088
Net income adjusted for intangible amortization				$	51,781			$	55,004			$	32,702			$	22,827			$	34,698			$	162,314			$	153,548
Period end common shares outstanding		(d)			63,424,526				63,423,820				63,422,439				63,396,912				64,200,111
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity (1)					15.47	%			16.82	%			10.32	%			7.34	%			10.85	%			12.58	%			12.45	%
Tangible equity/tangible assets		(a)/(b)			8.34	%			8.68	%			8.37	%			9.27	%			9.72	%
Tangible equity/risk-weighted assets		(a)/(c)			11.22	%			11.01	%			11.09	%			11.05	%			11.58	%
Tangible book value		(a)/(d)*1,000		$	21.26			$	20.76			$	20.18			$	19.92			$	19.84
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity				$	1,741,117			$	1,710,041			$	1,673,944			$	1,652,399			$	1,660,702
CECL transition adjustment (3)					31,199				32,647				32,693				26,476				—
AOCI-related adjustments					1,051				(5,684	)			(10,565	)			(7,698	)			23,600
CET1 adjustments and deductions:
Goodwill net of associated deferred tax liabilities (DTLs)					(371,333	)			(371,345	)			(371,342	)			(367,825	)			(365,738	)
Other adjustments and deductions for CET1 (2)					(6,190	)			(6,770	)			(7,352	)			(6,269	)			(5,896	)
CET1 capital		(e)			1,395,844				1,358,889				1,317,378				1,297,083				1,312,668
Additional tier 1 capital instruments plus related surplus					60,000				60,000				60,000				60,000				60,000
Tier 1 capital				$	1,455,844			$	1,418,889			$	1,377,378			$	1,357,083			$	1,372,668
Common equity tier 1 capital ratio		(e)/(c)			11.62	%			11.36	%			11.42	%			11.35	%			11.93	%
(1) Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity.
(2) Includes other intangible assets, net of DTLs, disallowed deferred tax assets (DTAs), threshold deductions and transition adjustments, as applicable.
(3) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2020
($ in thousands except per share data)
(unaudited)

Note 10 – Non-GAAP Financial Measures (continued)

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

The following table presents pre-provision net revenue (PPNR) during the periods presented:

			Quarter Ended																				Year Ended
			12/31/2020				9/30/2020				6/30/2020				3/31/2020				12/31/2019				12/31/2020				12/31/2019
Net interest income (GAAP)			$	111,378			$	106,207			$	105,000			$	103,952			$	105,591			$	426,537			$	426,589
Noninterest income (GAAP)				66,117				73,701				69,511				65,264				47,578				274,593				187,045
Pre-provision revenue		(a)	$	177,495			$	179,908			$	174,511			$	169,216			$	153,169			$	701,130			$	613,634
Noninterest expense (GAAP)			$	118,807			$	113,959			$	118,659			$	123,810			$	110,027			$	475,235			$	429,002
Less:	Voluntary early retirement program			—				—				—				(4,375	)			—				(4,375	)			—
	Credit loss expense related to off-balance sheet credit   exposures			1,087				3,004				(6,242	)			(6,783	)			—				(8,934	)			—
Adjusted noninterest expense - PPNR (Non-GAAP)		(b)	$	119,894			$	116,963			$	112,417			$	112,652			$	110,027			$	461,926			$	429,002
PPNR (Non-GAAP)		(a)-(b)	$	57,601			$	62,945			$	62,094			$	56,564			$	43,142			$	239,204			$	184,632

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

		Quarter Ended																		Year Ended
		12/31/2020									12/31/2019									12/31/2020									12/31/2019
		Amount				Diluted EPS					Amount				Diluted EPS					Amount				Diluted EPS					Amount				Diluted EPS
Net Income (GAAP)		$	51,217			$	0.81				$	33,946			$	0.53				$	160,025			$	2.51				$	150,460			$	2.32
Significant non-routine transactions (net of taxes):
Voluntary early retirement program			—				—					—				—					3,281				0.05					—				—
Net Income adjusted for significant
non-routine transactions (Non-GAAP)		$	51,217			$	0.81				$	33,946			$	0.53				$	163,306			$	2.56				$	150,460			$	2.32
		Reported (GAAP)				Adjusted					Reported (GAAP)				Adjusted					Reported (GAAP)				Adjusted					Reported (GAAP)				Adjusted
						(Non-GAAP)									(Non-GAAP)									(Non-GAAP)									(Non-GAAP)
Return on average equity			11.81	%		n/a						8.13	%		n/a						9.52	%			9.69	%				9.28	%		n/a
Return on average tangible equity			15.47	%		n/a						10.85	%		n/a						12.58	%			12.81	%				12.45	%		n/a
Return on average assets			1.28	%		n/a						1.00	%		n/a						1.05	%			1.07	%				1.11	%		n/a
n/a - not applicable

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2020
($ in thousands)
(unaudited)

Note 10 – Non-GAAP Financial Measures (continued)

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

				Quarter Ended																				Year Ended
				12/31/2020				9/30/2020				6/30/2020				3/31/2020				12/31/2019				12/31/2020				12/31/2019
Total noninterest expense (GAAP)				$	118,807			$	113,959			$	118,659			$	123,810			$	110,027			$	475,235			$	429,002
Less:	Other real estate expense, net				812				(1,203	)			(271	)			(1,294	)			(1,491	)			(1,956	)			(3,906	)
	Amortization of intangibles				(752	)			(752	)			(736	)			(812	)			(1,002	)			(3,052	)			(4,116	)
	Voluntary early retirement program				—				—				—				(4,375	)			—				(4,375	)			—
	Credit loss expense related to off-balance sheet exposures				1,087				3,004				(6,242	)			(6,783	)			—				(8,934	)			—
	Charitable contributions resulting in state tax credits				(375	)			(375	)			(375	)			(375	)			—				(1,500	)			—
Adjusted noninterest expense (Non-GAAP)			(c)	$	119,579			$	114,633			$	111,035			$	110,171			$	107,534			$	455,418			$	420,980
Net interest income (GAAP)				$	111,378			$	106,207			$	105,000			$	103,952			$	105,591			$	426,537			$	426,589
Add:	Tax equivalent adjustment				2,939				2,969				3,007				3,108				3,149				12,023				12,877
Net interest income-FTE (Non-GAAP)			(a)	$	114,317			$	109,176			$	108,007			$	107,060			$	108,740			$	438,560			$	439,466
Noninterest income (GAAP)				$	66,117			$	73,701			$	69,511			$	65,264			$	47,578			$	274,593			$	187,045
Add:	Partnership amortization for tax credit purposes				1,877				1,457				1,205				1,161				1,630				5,700				7,644
Adjusted noninterest income (Non-GAAP)			(b)	$	67,994			$	75,158			$	70,716			$	66,425			$	49,208			$	280,293			$	194,689
Adjusted revenue (Non-GAAP)			(a)+(b)	$	182,311			$	184,334			$	178,723			$	173,485			$	157,948			$	718,853			$	634,155
Efficiency ratio (Non-GAAP)			(c)/((a)+(b))		65.59	%			62.19	%			62.13	%			63.50	%			68.08	%			63.35	%			66.38	%

 

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