Trustmark Corporation Announces Second Quarter 2023 Financial Results

Trustmark Corporation (NASDAQGS:TRMK) reported net income of $45.0 million in the second quarter of 2023, representing diluted earnings per share of $0.74. Trustmark’s performance during the second quarter produced a return on average tangible equity of 15.18% and a return on average assets of 0.96%. The Board of Directors declared a quarterly cash dividend of $0.23 per share payable September 15, 2023, to shareholders of record on September 1, 2023.

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Second Quarter Highlights

• Loans held for investment (HFI) increased $116.8 million, or 0.9%, from the prior quarter to $12.6 billion
• Deposits expanded $130.2 million, or 0.9%, linked-quarter to $14.9 billion
• Total revenue increased $4.5 million, or 2.4%, linked-quarter to $193.5 million
• Net interest income (FTE) increased $2.2 million linked-quarter to $143.3 million, resulting in a net interest margin of 3.33%
• Noninterest income totaled $53.6 million, representing 27.7% of total revenue
• Credit quality remained strong; net charge-offs represented 4 basis points of average loans

Duane A. Dewey, President and CEO, stated, “Trustmark continued to post solid financial results in the second quarter, reflecting continued loan and deposit growth, expanding net interest income, and growth in our fee-based businesses. During the first six months of 2023, Trustmark’s net income totaled $95.3 million, which represented diluted earnings of $1.56 per share, an increase of 51.5% from the same period in 2022. We have a tremendous team of associates throughout our system that are focused on expanding existing customer relationships as well as demonstrating the value Trustmark can provide potential customers as their trusted financial partner. We have added very talented people across the organization in numerous production and back office roles to meet our objectives. We continue to implement initiatives to improve efficiency, enhance our ability to grow and serve customers, and build long-term value for our shareholders.”

Balance Sheet Management

• Loans HFI totaled $12.6 billion, up 0.9% from the prior quarter and 15.3% year-over-year
• Deposits totaled $14.9 billion, up 0.9% from the previous quarter and 1.0% year-over-year
• Maintained strong capital position with CET1 ratio of 9.87% and total risk-based capital ratio of 12.08%

Loans HFI totaled $12.6 billion at June 30, 2023, reflecting an increase of $116.8 million, or 0.9%, linked-quarter and $1.7 billion, or 15.3%, year-over-year. The linked quarter growth reflected increases in other real estate secured loans, nonfarm, nonresidential loans, and 1-4 family residential loans offset in part by declines in other loans, state and political subdivision loans, and construction, land development and other land loans. Trustmark’s loan portfolio continues to be well-diversified by loan type and geography.

Deposits totaled $14.9 billion at June 30, 2023, up $130.2 million, or 0.9%, from the prior quarter and up $143.7 million, or 1.0%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 84.6% of total deposits at June 30, 2023. Migration into higher-yielding products continued to drive a change in deposit mix from noninterest-bearing deposits, which represented 23.2% of total deposits at June 30, 2023. Interest-bearing deposit costs totaled 1.96% for the second quarter, while the total cost of deposits was 1.48%. The total cost of interest-bearing liabilities was 2.42% for the second quarter of 2023.

As previously announced, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2023, under which $50.0 million of Trustmark’s outstanding shares may be acquired through December 31, 2023. As of June 30, 2023, Trustmark had not repurchased any of its outstanding common shares under this program. Trustmark’s regulatory capital ratios continued to exceed all levels to be considered “well-capitalized” as of June 30, 2023.

Credit Quality

• Nonperforming assets represented 0.60% of total loans and other real estate at June 30, 2023
• Net charge-offs totaled $1.2 million in the second quarter, representing 0.04% of average loans
• Allowance for credit losses (ACL) represented 1.03% of loans HFI and 301.4% of nonaccrual loans, excluding individually analyzed loans, at June 30, 2023

Nonaccrual loans totaled $75.0 million at June 30, 2023, up $2.7 million from the prior quarter and an increase of $13.0 million year-over-year. Other real estate totaled $1.1 million, reflecting a $547 thousand decrease from the prior quarter and a $1.9 million decline from the prior year.

The provision for credit losses for loans HFI was $8.2 million in the second quarter and was primarily attributable to extended maturities on mortgage loans resulting from lower prepayment speeds, weakening macroeconomic factors, and loan growth. The provision for credit losses for off-balance sheet credit exposures was $245 thousand, primarily driven by weakening macroeconomic factors. Collectively, the provision for credit losses totaled $8.5 million in the second quarter compared to $1.0 million from the prior quarter and $1.1 million in the second quarter of 2022.

Allocation of Trustmark’s $129.3 million ACL on loans HFI represented 0.84% of commercial loans and 1.60% of consumer and home mortgage loans, resulting in an ACL to total loans HFI of 1.03% at June 30, 2023. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.

Revenue Generation

• Total revenue increased $4.5 million, or 2.4%, linked-quarter
• Net interest income (FTE) totaled $143.3 million in the second quarter, up 1.6% linked-quarter
• Noninterest income increased 4.2% linked-quarter to total $53.6 million, representing 27.7% of total revenue in the second quarter

Revenue in the second quarter totaled $193.5 million, an increase of $4.5 million, or 2.4%, from the prior quarter and $27.5 million, or 16.6%, from the prior year. The linked-quarter increase primarily reflects higher net interest income and solid growth in all fee income business with the exception of mortgage banking. The year-over-year growth in revenue is attributed to higher net interest income.

Net interest income (FTE) in the second quarter totaled $143.3 million, resulting in a net interest margin of 3.33%, down 6 basis points from the prior quarter. The decrease in the net interest margin was due to increased costs of interest-bearing deposits which were partially offset by increased yields on the loans HFI and HFS portfolio and securities portfolio.

Noninterest income in the second quarter totaled $53.6 million, an increase of $2.2 million, or 4.2%, from the prior quarter and a $300 thousand increase year-over-year. With the exception of mortgage banking, all categories increased linked-quarter with other, net and bank card and other fees increasing $1.2 million and $1.1 million, respectively. Year-over-year increases in insurance, other, net and service charges on deposit accounts, were offset in part by declines in bank card and other fees, mortgage banking and wealth management revenue.

Mortgage loan production in the second quarter totaled $431.3 million, an increase of 19.5% from the prior quarter and a decrease of 36.7% year-over-year. Mortgage banking revenue totaled $6.6 million in the second quarter, a decrease of $1.0 million linked-quarter and $1.5 million year-over-year. The linked-quarter decrease was principally attributable to accelerated amortization of mortgage servicing rights offset in part by reduced net negative hedge ineffectiveness.

Insurance revenue totaled $14.8 million in the second quarter, up $459 thousand, or 3.2%, from the prior quarter and $1.1 million, or 7.8%, year-over-year. The linked-quarter increase primarily reflected growth in policy fees and other commissions while the year-over-year increase primarily reflected growth in commercial property and casualty commissions. Wealth management revenue in the second quarter totaled $8.9 million, an increase of $102 thousand, or 1.2%, from the prior quarter and a decline of $220 thousand, or 2.4%, year-over-year. The linked-quarter growth reflected higher trust management revenue while the year-over-year decline reflected reduced brokerage revenue.

Noninterest Expense

• Noninterest expense totaled $132.2 million in the second quarter, up 3.0%, from the prior quarter
• Adjusted noninterest expense, which excludes other real estate expense, amortization of intangibles, and charitable contributions resulting in state tax credits, totaled $131.6 million in the second quarter, an increase of 3.2% from the prior quarter. Please refer to the Consolidated Financial Information, Note 7 – Non-GAAP Financial Measures

Noninterest expense in the second quarter totaled $132.2 million, an increase of $3.9 million, or 3.0%, when compared to the prior quarter. Salaries and employee benefits increased $1.9 million linked-quarter principally due to commissions and annual merit increases. Services and fees increased $2.8 million, or 11.2%, linked-quarter primarily due to increases in professional fees. Net occupancy expense declined $521 thousand, or 6.8%, while other expense declined $309 thousand, or 2.1%, linked-quarter.

FIT2GROW

“In 2022, we announced FIT2GROW, a comprehensive program of Focus, Innovation and Transformation designed to enhance our ability to grow and serve customers. Our Atlanta-based Equipment Finance division, established in late 2022, continues to gain traction as its portfolio has grown to $127 million as of June 30, 2023. Implementation of our technology plans continued during the second quarter with conversion of our credit card platform to a best-in-class product for our customers. In addition, advancements in our loan underwriting system were implemented and plans for conversion of our deposit system continued. During the quarter, work continued on the design of our sales through service process, which will be implemented across the retail branch network in early 2024. These actions are designed to enhance Trustmark’s performance and build long-term value for our shareholders,” said Dewey.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, July 26, 2023, 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 9, 2023, in archived format at the same web address or by calling [phone], passcode 7655682.

Trustmark is a financial services company providing banking and financial solutions through offices in Alabama, Florida, Georgia, 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.

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, actions by the Board of Governors of the Federal Reserve System (FRB) that impact the level of market interest rates, local, state and national economic and market conditions (including uncertainty regarding the federal government's debt limit or a prolonged shutdown of the federal government), 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 impacts related to or resulting from recent bank failures and other economic and industry volatility, including potential increased regulatory requirements and costs and potential impacts to macroeconomic conditions, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, including the potential impact of issues related to the European financial system and monetary and other governmental actions designed to address credit, securities, and/or commodity markets, the enactment of legislation and changes in existing regulations or enforcement practices or the adoption of new regulations, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, changes in our ability to control expenses, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, cyber-attacks and other breaches which could affect our information system security, natural disasters, environmental disasters, pandemics or other health crises, acts of war or terrorism, and other risks described in our filings with the SEC.

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

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2023
($ in thousands)
(unaudited)
													Linked Quarter							Year over Year
QUARTERLY AVERAGE BALANCES	6/30/2023				3/31/2023				6/30/2022				$ Change				% Change			$ Change				% Change
Securities AFS-taxable (1)	$	2,140,505			$	2,187,121			$	3,094,364			$	(46,616	)		-2.1	%		$	(953,859	)		-30.8	%
Securities AFS-nontaxable		4,796				4,812				5,110				(16	)		-0.3	%			(314	)		-6.1	%
Securities HTM-taxable (1)		1,463,086				1,479,283				811,599				(16,197	)		-1.1	%			651,487			80.3	%
Securities HTM-nontaxable		1,718				4,509				5,630				(2,791	)		-61.9	%			(3,912	)		-69.5	%
Total securities		3,610,105				3,675,725				3,916,703				(65,620	)		-1.8	%			(306,598	)		-7.8	%
Paycheck protection program loans (PPP)		—				—				17,746				—			n/m				(17,746	)		-100.0	%
Loans (includes loans held for sale)		12,732,057				12,530,449				10,910,178				201,608			1.6	%			1,821,879			16.7	%
Fed funds sold and reverse repurchases		3,275				2,379				110				896			37.7	%			3,165			n/m
Other earning assets		903,027				647,760				1,139,312				255,267			39.4	%			(236,285	)		-20.7	%
Total earning assets		17,248,464				16,856,313				15,984,049				392,151			2.3	%			1,264,415			7.9	%
Allowance for credit losses (ACL), loans held   for investment (LHFI)		(121,960	)			(119,978	)			(99,106	)			(1,982	)		-1.7	%			(22,854	)		-23.1	%
Other assets		1,648,583				1,762,449				1,513,127				(113,866	)		-6.5	%			135,456			9.0	%
Total assets	$	18,775,087			$	18,498,784			$	17,398,070			$	276,303			1.5	%		$	1,377,017			7.9	%
Interest-bearing demand deposits	$	4,803,737			$	4,751,154			$	4,578,235			$	52,583			1.1	%		$	225,502			4.9	%
Savings deposits		4,002,134				4,193,764				4,638,849				(191,630	)		-4.6	%			(636,715	)		-13.7	%
Time deposits		2,335,752				1,907,449				1,159,065				428,303			22.5	%			1,176,687			n/m
Total interest-bearing deposits		11,141,623				10,852,367				10,376,149				289,256			2.7	%			765,474			7.4	%
Fed funds purchased and repurchases		389,834				436,535				118,753				(46,701	)		-10.7	%			271,081			n/m
Other borrowings		1,330,010				1,110,843				80,283				219,167			19.7	%			1,249,727			n/m
Subordinated notes		123,337				123,281				123,116				56			0.0	%			221			0.2	%
Junior subordinated debt securities		61,856				61,856				61,856				—			0.0	%			—			0.0	%
Total interest-bearing liabilities		13,046,660				12,584,882				10,760,157				461,778			3.7	%			2,286,503			21.2	%
Noninterest-bearing deposits		3,595,927				3,813,248				4,590,338				(217,321	)		-5.7	%			(994,411	)		-21.7	%
Other liabilities		552,209				576,826				439,266				(24,617	)		-4.3	%			112,943			25.7	%
Total liabilities		17,194,796				16,974,956				15,789,761				219,840			1.3	%			1,405,035			8.9	%
Shareholders' equity		1,580,291				1,523,828				1,608,309				56,463			3.7	%			(28,018	)		-1.7	%
Total liabilities and equity	$	18,775,087			$	18,498,784			$	17,398,070			$	276,303			1.5	%		$	1,377,017			7.9	%
(1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity.
See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information.
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, 2023
($ in thousands)
(unaudited)
													Linked Quarter							Year over Year
PERIOD END BALANCES	6/30/2023				3/31/2023				6/30/2022				$ Change				% Change			$ Change				% Change
Cash and due from banks	$	832,052			$	1,297,144			$	742,461			$	(465,092	)		-35.9	%		$	89,591			12.1	%
Fed funds sold and reverse repurchases		—				—				—				—			n/m				—			n/m
Securities available for sale (1)		1,871,883				1,984,162				2,644,364				(112,279	)		-5.7	%			(772,481	)		-29.2	%
Securities held to maturity (1)		1,458,665				1,474,338				1,137,754				(15,673	)		-1.1	%			320,911			28.2	%
PPP loans		—				—				12,549				—			n/m				(12,549	)		-100.0	%
Loans held for sale (LHFS)		181,094				175,926				190,186				5,168			2.9	%			(9,092	)		-4.8	%
Loans held for investment (LHFI)		12,613,967				12,497,195				10,944,840				116,772			0.9	%			1,669,127			15.3	%
ACL LHFI		(129,298	)			(122,239	)			(103,140	)			(7,059	)		-5.8	%			(26,158	)		-25.4	%
Net LHFI		12,484,669				12,374,956				10,841,700				109,713			0.9	%			1,642,969			15.2	%
Premises and equipment, net		227,630				223,975				207,914				3,655			1.6	%			19,716			9.5	%
Mortgage servicing rights		134,350				127,206				121,014				7,144			5.6	%			13,336			11.0	%
Goodwill		384,237				384,237				384,237				—			0.0	%			—			0.0	%
Identifiable intangible assets		3,222				3,352				4,264				(130	)		-3.9	%			(1,042	)		-24.4	%
Other real estate		1,137				1,684				3,034				(547	)		-32.5	%			(1,897	)		-62.5	%
Operating lease right-of-use assets		38,179				35,315				34,684				2,864			8.1	%			3,495			10.1	%
Other assets		805,508				794,883				627,349				10,625			1.3	%			178,159			28.4	%
Total assets	$	18,422,626			$	18,877,178			$	16,951,510			$	(454,552	)		-2.4	%		$	1,471,116			8.7	%
Deposits:
Noninterest-bearing	$	3,461,073			$	3,797,055			$	4,509,472			$	(335,982	)		-8.8	%		$	(1,048,399	)		-23.2	%
Interest-bearing		11,452,827				10,986,606				10,260,696				466,221			4.2	%			1,192,131			11.6	%
Total deposits		14,913,900				14,783,661				14,770,168				130,239			0.9	%			143,732			1.0	%
Fed funds purchased and repurchases		311,179				477,980				70,157				(166,801	)		-34.9	%			241,022			n/m
Other borrowings		1,056,714				1,485,181				72,553				(428,467	)		-28.8	%			984,161			n/m
Subordinated notes		123,372				123,317				123,152				55			0.0	%			220			0.2	%
Junior subordinated debt securities		61,856				61,856				61,856				—			0.0	%			—			0.0	%
ACL on off-balance sheet credit exposures		34,841				34,596				32,949				245			0.7	%			1,892			5.7	%
Operating lease liabilities		40,845				37,988				37,108				2,857			7.5	%			3,737			10.1	%
Other liabilities		308,726				310,500				196,871				(1,774	)		-0.6	%			111,855			56.8	%
Total liabilities		16,851,433				17,315,079				15,364,814				(463,646	)		-2.7	%			1,486,619			9.7	%
Common stock		12,724				12,720				12,752				4			0.0	%			(28	)		-0.2	%
Capital surplus		156,834				155,297				160,876				1,537			1.0	%			(4,042	)		-2.5	%
Retained earnings		1,667,339				1,636,463				1,620,210				30,876			1.9	%			47,129			2.9	%
Accumulated other comprehensive   income (loss), net of tax		(265,704	)			(242,381	)			(207,142	)			(23,323	)		-9.6	%			(58,562	)		-28.3	%
Total shareholders' equity		1,571,193				1,562,099				1,586,696				9,094			0.6	%			(15,503	)		-1.0	%
Total liabilities and equity	$	18,422,626			$	18,877,178			$	16,951,510			$	(454,552	)		-2.4	%		$	1,471,116			8.7	%
(1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity.
See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information.
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, 2023
($ in thousands except per share data)
(unaudited)
	Quarter Ended												Linked Quarter							Year over Year
INCOME STATEMENTS	6/30/2023				3/31/2023				6/30/2022				$ Change				% Change			$ Change				% Change
Interest and fees on LHFS & LHFI-FTE	$	192,941			$	178,967			$	103,033			$	13,974			7.8	%		$	89,908			87.3	%
Interest and fees on PPP loans		—				—				184				—			n/m				(184	)		-100.0	%
Interest on securities-taxable		16,779				16,761				14,561				18			0.1	%			2,218			15.2	%
Interest on securities-tax exempt-FTE		69				92				107				(23	)		-25.0	%			(38	)		-35.5	%
Interest on fed funds sold and reverse   repurchases		45				30				1				15			50.0	%			44			n/m
Other interest income		12,077				6,527				2,214				5,550			85.0	%			9,863			n/m
Total interest income-FTE		221,911				202,377				120,100				19,534			9.7	%			101,811			84.8	%
Interest on deposits		54,409				40,898				2,774				13,511			33.0	%			51,635			n/m
Interest on fed funds purchased and repurchases		4,865				4,832				70				33			0.7	%			4,795			n/m
Other interest expense		19,350				15,575				1,664				3,775			24.2	%			17,686			n/m
Total interest expense		78,624				61,305				4,508				17,319			28.3	%			74,116			n/m
Net interest income-FTE		143,287				141,072				115,592				2,215			1.6	%			27,695			24.0	%
Provision for credit losses, LHFI		8,211				3,244				2,716				4,967			n/m				5,495			n/m
Provision for credit losses, off-balance sheet   credit exposures		245				(2,242	)			(1,568	)			2,487			n/m				1,813			n/m
Net interest income after provision-FTE		134,831				140,070				114,444				(5,239	)		-3.7	%			20,387			17.8	%
Service charges on deposit accounts		10,695				10,336				10,226				359			3.5	%			469			4.6	%
Bank card and other fees		8,917				7,803				10,167				1,114			14.3	%			(1,250	)		-12.3	%
Mortgage banking, net		6,600				7,639				8,149				(1,039	)		-13.6	%			(1,549	)		-19.0	%
Insurance commissions		14,764				14,305				13,702				459			3.2	%			1,062			7.8	%
Wealth management		8,882				8,780				9,102				102			1.2	%			(220	)		-2.4	%
Other, net		3,695				2,514				1,907				1,181			47.0	%			1,788			93.8	%
Total noninterest income		53,553				51,377				53,253				2,176			4.2	%			300			0.6	%
Salaries and employee benefits		75,940				74,056				71,679				1,884			2.5	%			4,261			5.9	%
Services and fees (2)		28,264				25,426				25,659				2,838			11.2	%			2,605			10.2	%
Net occupancy-premises		7,108				7,629				6,892				(521	)		-6.8	%			216			3.1	%
Equipment expense		6,404				6,405				6,047				(1	)		0.0	%			357			5.9	%
Litigation settlement expense (1)		—				—				—				—			n/m				—			n/m
Other expense (2)		14,502				14,811				13,490				(309	)		-2.1	%			1,012			7.5	%
Total noninterest expense		132,218				128,327				123,767				3,891			3.0	%			8,451			6.8	%
Income (loss) before income taxes and tax eq adj		56,166				63,120				43,930				(6,954	)		-11.0	%			12,236			27.9	%
Tax equivalent adjustment		3,383				3,477				2,916				(94	)		-2.7	%			467			16.0	%
Income (loss) before income taxes		52,783				59,643				41,014				(6,860	)		-11.5	%			11,769			28.7	%
Income taxes		7,746				9,343				6,730				(1,597	)		-17.1	%			1,016			15.1	%
Net income (loss)	$	45,037			$	50,300			$	34,284			$	(5,263	)		-10.5	%		$	10,753			31.4	%
Per share data
Earnings (loss) per share - basic	$	0.74			$	0.82			$	0.56			$	(0.08	)		-9.8	%		$	0.18			32.1	%
Earnings (loss) per share - diluted	$	0.74			$	0.82			$	0.56			$	(0.08	)		-9.8	%		$	0.18			32.1	%
Dividends per share	$	0.23			$	0.23			$	0.23				—			0.0	%			—			0.0	%
Weighted average shares outstanding
Basic		61,063,277				61,011,059				61,378,226
Diluted		61,230,031				61,193,275				61,546,285
Period end shares outstanding		61,069,036				61,048,516				61,201,123
(1) See Note 1 - Litigation Settlement in the Notes to Consolidated Financials for additional information.
(2) During the first quarter of 2023, Trustmark reclassified its debit card transaction fees from other expense to services and fees. Prior periods have been reclassified accordingly.
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2023
($ in thousands)
(unaudited)
	Quarter Ended												Linked Quarter							Year over Year
NONPERFORMING ASSETS (1)	6/30/2023				3/31/2023				6/30/2022				$ Change				% Change			$ Change				% Change
Nonaccrual LHFI
Alabama (2)	$	11,058			$	10,919			$	2,698			$	139			1.3	%		$	8,360			n/m
Florida		334				256				233				78			30.5	%			101			43.3	%
Mississippi (3)		36,288				32,560				23,039				3,728			11.4	%			13,249			57.5	%
Tennessee (4)		5,088				5,416				9,500				(328	)		-6.1	%			(4,412	)		-46.4	%
Texas		22,259				23,224				26,582				(965	)		-4.2	%			(4,323	)		-16.3	%
Total nonaccrual LHFI		75,027				72,375				62,052				2,652			3.7	%			12,975			20.9	%
Other real estate
Alabama (2)		—				—				84				—			n/m				(84	)		-100.0	%
Mississippi (3)		1,137				1,495				2,950				(358	)		-23.9	%			(1,813	)		-61.5	%
Tennessee (4)		—				189				—				(189	)		-100.0	%			—			n/m
Total other real estate		1,137				1,684				3,034				(547	)		-32.5	%			(1,897	)		-62.5	%
Total nonperforming assets	$	76,164			$	74,059			$	65,086			$	2,105			2.8	%		$	11,078			17.0	%
LOANS PAST DUE OVER 90 DAYS (1)
LHFI	$	3,911			$	2,255			$	1,347			$	1,656			73.4	%		$	2,564			n/m
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	35,766			$	41,468			$	51,164			$	(5,702	)		-13.8	%		$	(15,398	)		-30.1	%
	Quarter Ended												Linked Quarter							Year over Year
ACL LHFI (1)	6/30/2023				3/31/2023				6/30/2022				$ Change				% Change			$ Change				% Change
Beginning Balance	$	122,239			$	120,214			$	98,734			$	2,025			1.7	%		$	23,505			23.8	%
Provision for credit losses, LHFI		8,211				3,244				2,716				4,967			n/m				5,495			n/m
Charge-offs		(2,773	)			(2,996	)			(2,277	)			223			7.4	%			(496	)		-21.8	%
Recoveries		1,621				1,777				3,967				(156	)		-8.8	%			(2,346	)		-59.1	%
Net (charge-offs) recoveries		(1,152	)			(1,219	)			1,690				67			5.5	%			(2,842	)		n/m
Ending Balance	$	129,298			$	122,239			$	103,140			$	7,059			5.8	%		$	26,158			25.4	%
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama (2)	$	(141	)		$	(268	)		$	1,129			$	127			-47.4	%		$	(1,270	)		n/m
Florida		(35	)			(36	)			761				1			2.8	%			(796	)		n/m
Mississippi (3)		(762	)			(775	)			(266	)			13			1.7	%			(496	)		n/m
Tennessee (4)		(166	)			(124	)			31				(42	)		-33.9	%			(197	)		n/m
Texas		(48	)			(16	)			35				(32	)		n/m				(83	)		n/m
Total net (charge-offs) recoveries	$	(1,152	)		$	(1,219	)		$	1,690			$	67			5.5	%		$	(2,842	)		n/m
(1) Excludes PPP loans.
(2) Alabama includes the Georgia Loan Production Office.
(3) Mississippi includes Central and Southern Mississippi Regions.
(4) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2023
($ in thousands)
(unaudited)
		Quarter Ended																				Six Months Ended
AVERAGE BALANCES		6/30/2023				3/31/2023				12/31/2022				9/30/2022				6/30/2022				6/30/2023				6/30/2022
Securities AFS-taxable (1)		$	2,140,505			$	2,187,121			$	2,572,675			$	2,824,254			$	3,094,364			$	2,163,684			$	3,169,515
Securities AFS-nontaxable			4,796				4,812				4,828				4,928				5,110				4,804				5,118
Securities HTM-taxable (1)			1,463,086				1,479,283				1,268,952				1,140,685				811,599				1,471,140				612,332
Securities HTM-nontaxable			1,718				4,509				4,514				5,057				5,630				3,106				6,474
Total securities			3,610,105				3,675,725				3,850,969				3,974,924				3,916,703				3,642,734				3,793,439
PPP loans			—				—				3,235				9,821				17,746				—				23,346
Loans (includes loans held for sale)			12,732,057				12,530,449				12,006,661				11,459,551				10,910,178				12,631,810				10,731,438
Fed funds sold and reverse repurchases			3,275				2,379				6,566				226				110				2,829				83
Other earning assets			903,027				647,760				375,190				325,620				1,139,312				780,657				1,473,655
Total earning assets			17,248,464				16,856,313				16,242,621				15,770,142				15,984,049				17,058,030				16,021,961
ACL LHFI			(121,960	)			(119,978	)			(114,948	)			(102,951	)			(99,106	)			(120,974	)			(99,247	)
Other assets			1,648,583				1,762,449				1,630,085				1,576,653				1,513,127				1,700,643				1,531,884
Total assets		$	18,775,087			$	18,498,784			$	17,757,758			$	17,243,844			$	17,398,070			$	18,637,699			$	17,454,598
Interest-bearing demand deposits		$	4,803,737			$	4,751,154			$	4,719,303			$	4,613,733			$	4,578,235			$	4,777,591			$	4,504,058
Savings deposits			4,002,134				4,193,764				4,379,673				4,514,579				4,638,849				4,097,420				4,714,556
Time deposits			2,335,752				1,907,449				1,152,905				1,111,440				1,159,065				2,122,784				1,176,155
Total interest-bearing deposits			11,141,623				10,852,367				10,251,881				10,239,752				10,376,149				10,997,795				10,394,769
Fed funds purchased and repurchases			389,834				436,535				549,406				249,809				118,753				413,055				165,122
Other borrowings			1,330,010				1,110,843				530,993				88,697				80,283				1,221,032				85,657
Subordinated notes			123,337				123,281				123,226				123,171				123,116				123,309				123,089
Junior subordinated debt securities			61,856				61,856				61,856				61,856				61,856				61,856				61,856
Total interest-bearing liabilities			13,046,660				12,584,882				11,517,362				10,763,285				10,760,157				12,817,047				10,830,493
Noninterest-bearing deposits			3,595,927				3,813,248				4,177,113				4,444,370				4,590,338				3,703,987				4,595,693
Other liabilities			552,209				576,826				569,992				429,720				439,266				564,450				367,673
Total liabilities			17,194,796				16,974,956				16,264,467				15,637,375				15,789,761				17,085,484				15,793,859
Shareholders' equity			1,580,291				1,523,828				1,493,291				1,606,469				1,608,309				1,552,215				1,660,739
Total liabilities and equity		$	18,775,087			$	18,498,784			$	17,757,758			$	17,243,844			$	17,398,070			$	18,637,699			$	17,454,598
(1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity.
See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2023
($ in thousands)
(unaudited)
PERIOD END BALANCES		6/30/2023				3/31/2023				12/31/2022				9/30/2022				6/30/2022
Cash and due from banks		$	832,052			$	1,297,144			$	734,787			$	479,637			$	742,461
Fed funds sold and reverse repurchases			—				—				4,000				10,098				—
Securities available for sale (1)			1,871,883				1,984,162				2,024,082				2,444,486				2,644,364
Securities held to maturity (1)			1,458,665				1,474,338				1,494,514				1,156,985				1,137,754
PPP loans			—				—				—				4,798				12,549
LHFS			181,094				175,926				135,226				165,213				190,186
LHFI			12,613,967				12,497,195				12,204,039				11,586,064				10,944,840
ACL LHFI			(129,298	)			(122,239	)			(120,214	)			(115,050	)			(103,140	)
Net LHFI			12,484,669				12,374,956				12,083,825				11,471,014				10,841,700
Premises and equipment, net			227,630				223,975				212,365				210,761				207,914
Mortgage servicing rights			134,350				127,206				129,677				132,615				121,014
Goodwill			384,237				384,237				384,237				384,237				384,237
Identifiable intangible assets			3,222				3,352				3,640				3,952				4,264
Other real estate			1,137				1,684				1,986				2,971				3,034
Operating lease right-of-use assets			38,179				35,315				36,301				37,282				34,684
Other assets			805,508				794,883				770,838				686,585				627,349
Total assets		$	18,422,626			$	18,877,178			$	18,015,478			$	17,190,634			$	16,951,510
Deposits:
Noninterest-bearing		$	3,461,073			$	3,797,055			$	4,093,771			$	4,358,805			$	4,509,472
Interest-bearing			11,452,827				10,986,606				10,343,877				10,066,375				10,260,696
Total deposits			14,913,900				14,783,661				14,437,648				14,425,180				14,770,168
Fed funds purchased and repurchases			311,179				477,980				449,331				544,068				70,157
Other borrowings			1,056,714				1,485,181				1,050,938				223,172				72,553
Subordinated notes			123,372				123,317				123,262				123,207				123,152
Junior subordinated debt securities			61,856				61,856				61,856				61,856				61,856
ACL on off-balance sheet credit exposures			34,841				34,596				36,838				31,623				32,949
Operating lease liabilities			40,845				37,988				38,932				39,797				37,108
Other liabilities			308,726				310,500				324,405				232,786				196,871
Total liabilities			16,851,433				17,315,079				16,523,210				15,681,689				15,364,814
Common stock			12,724				12,720				12,705				12,700				12,752
Capital surplus			156,834				155,297				154,645				154,150				160,876
Retained earnings			1,667,339				1,636,463				1,600,321				1,648,507				1,620,210
Accumulated other comprehensive income (loss),   net of tax			(265,704	)			(242,381	)			(275,403	)			(306,412	)			(207,142	)
Total shareholders' equity			1,571,193				1,562,099				1,492,268				1,508,945				1,586,696
Total liabilities and equity		$	18,422,626			$	18,877,178			$	18,015,478			$	17,190,634			$	16,951,510
(1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity.
See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2023
($ in thousands except per share data)
(unaudited)
		Quarter Ended																				Six Months Ended
INCOME STATEMENTS		6/30/2023				3/31/2023				12/31/2022				9/30/2022				6/30/2022				6/30/2023				6/30/2022
Interest and fees on LHFS & LHFI-FTE		$	192,941			$	178,967			$	159,566			$	129,395			$	103,033			$	371,908			$	196,285
Interest and fees on PPP loans			—				—				101				186				184				—				352
Interest on securities-taxable			16,779				16,761				16,577				16,222				14,561				33,540				26,918
Interest on securities-tax exempt-FTE			69				92				93				100				107				161				229
Interest on fed funds sold and reverse repurchases			45				30				71				2				1				75				1
Other interest income			12,077				6,527				3,556				1,493				2,214				18,604				3,031
Total interest income-FTE			221,911				202,377				179,964				147,398				120,100				424,288				226,816
Interest on deposits			54,409				40,898				18,438				5,097				2,774				95,307				5,534
Interest on fed funds purchased and repurchases			4,865				4,832				4,762				1,225				70				9,697				140
Other interest expense			19,350				15,575				6,730				1,996				1,664				34,925				3,203
Total interest expense			78,624				61,305				29,930				8,318				4,508				139,929				8,877
Net interest income-FTE			143,287				141,072				150,034				139,080				115,592				284,359				217,939
Provision for credit losses, LHFI			8,211				3,244				6,902				12,919				2,716				11,455				1,856
Provision for credit losses, off-balance sheet   credit exposures			245				(2,242	)			5,215				(1,326	)			(1,568	)			(1,997	)			(2,674	)
Net interest income after provision-FTE			134,831				140,070				137,917				127,487				114,444				274,901				218,757
Service charges on deposit accounts			10,695				10,336				11,162				11,318				10,226				21,031				19,677
Bank card and other fees			8,917				7,803				8,191				9,305				10,167				16,720				18,609
Mortgage banking, net			6,600				7,639				3,408				6,876				8,149				14,239				18,022
Insurance commissions			14,764				14,305				12,019				13,911				13,702				29,069				27,791
Wealth management			8,882				8,780				8,079				8,778				9,102				17,662				18,156
Other, net			3,695				2,514				2,311				2,418				1,907				6,209				5,113
Total noninterest income			53,553				51,377				45,170				52,606				53,253				104,930				107,368
Salaries and employee benefits			75,940				74,056				73,469				72,707				71,679				149,996				141,264
Services and fees (2)			28,264				25,426				27,709				26,787				25,659				53,690				50,973
Net occupancy-premises			7,108				7,629				7,898				7,395				6,892				14,737				13,971
Equipment expense			6,404				6,405				6,268				6,072				6,047				12,809				12,108
Litigation settlement expense (1)			—				—				100,750				—				—				—				—
Other expense (2)			14,502				14,811				15,135				13,737				13,490				29,313				26,970
Total noninterest expense			132,218				128,327				231,229				126,698				123,767				260,545				245,286
Income (loss) before income taxes and tax eq adj			56,166				63,120				(48,142	)			53,395				43,930				119,286				80,839
Tax equivalent adjustment			3,383				3,477				3,451				2,975				2,916				6,860				5,919
Income (loss) before income taxes			52,783				59,643				(51,593	)			50,420				41,014				112,426				74,920
Income taxes			7,746				9,343				(17,530	)			7,965				6,730				17,089				11,425
Net income (loss)		$	45,037			$	50,300			$	(34,063	)		$	42,455			$	34,284			$	95,337			$	63,495
Per share data
Earnings (loss) per share - basic		$	0.74			$	0.82			$	(0.56	)		$	0.69			$	0.56			$	1.56			$	1.03
Earnings (loss) per share - diluted		$	0.74			$	0.82			$	(0.56	)		$	0.69			$	0.56			$	1.56			$	1.03
Dividends per share		$	0.23			$	0.23			$	0.23			$	0.23			$	0.23			$	0.46			$	0.46
Weighted average shares outstanding
Basic			61,063,277				61,011,059				60,969,400				61,114,804				61,378,226				61,037,312				61,445,934
Diluted			61,230,031				61,193,275				61,173,249				61,318,715				61,546,285				61,206,799				61,624,569
Period end shares outstanding			61,069,036				61,048,516				60,977,686				60,953,864				61,201,123				61,069,036				61,201,123
(1) See Note 1 - Litigation Settlement in the Notes to Consolidated Financials for additional information.
(2) During the first quarter of 2023, Trustmark reclassified its debit card transaction fees from other expense to services and fees. Prior periods have been reclassified accordingly.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2023
($ in thousands)
(unaudited)
		Quarter Ended
NONPERFORMING ASSETS (1)		6/30/2023				3/31/2023				12/31/2022				9/30/2022				6/30/2022
Nonaccrual LHFI
Alabama (2)		$	11,058			$	10,919			$	12,300			$	12,710			$	2,698
Florida			334				256				227				227				233
Mississippi (3)			36,288				32,560				24,683				23,517				23,039
Tennessee (4)			5,088				5,416				5,566				5,120				9,500
Texas			22,259				23,224				23,196				26,353				26,582
Total nonaccrual LHFI			75,027				72,375				65,972				67,927				62,052
Other real estate
Alabama (2)			—				—				194				217				84
Mississippi (3)			1,137				1,495				1,769				2,754				2,950
Tennessee (4)			—				189				23				—				—
Total other real estate			1,137				1,684				1,986				2,971				3,034
Total nonperforming assets		$	76,164			$	74,059			$	67,958			$	70,898			$	65,086
LOANS PAST DUE OVER 90 DAYS (1)
LHFI		$	3,911			$	2,255			$	3,929			$	1,842			$	1,347
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)		$	35,766			$	41,468			$	49,320			$	48,313			$	51,164
		Quarter Ended																				Six Months Ended
ACL LHFI (1)		6/30/2023				3/31/2023				12/31/2022				9/30/2022				6/30/2022				6/30/2023				6/30/2022
Beginning Balance		$	122,239			$	120,214			$	115,050			$	103,140			$	98,734			$	120,214			$	99,457
Provision for credit losses, LHFI			8,211				3,244				6,902				12,919				2,716				11,455				1,856
Charge-offs			(2,773	)			(2,996	)			(3,893	)			(2,920	)			(2,277	)			(5,769	)			(4,519	)
Recoveries			1,621				1,777				2,155				1,911				3,967				3,398				6,346
Net (charge-offs) recoveries			(1,152	)			(1,219	)			(1,738	)			(1,009	)			1,690				(2,371	)			1,827
Ending Balance		$	129,298			$	122,239			$	120,214			$	115,050			$	103,140			$	129,298			$	103,140
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama (2)		$	(141	)		$	(268	)		$	98			$	93			$	1,129			$	(409	)		$	1,828
Florida			(35	)			(36	)			(60	)			(23	)			761				(71	)			735
Mississippi (3)			(762	)			(775	)			(1,657	)			(702	)			(266	)			(1,537	)			(354	)
Tennessee (4)			(166	)			(124	)			(195	)			(202	)			31				(290	)			(393	)
Texas			(48	)			(16	)			76				(175	)			35				(64	)			11
Total net (charge-offs) recoveries		$	(1,152	)		$	(1,219	)		$	(1,738	)		$	(1,009	)		$	1,690			$	(2,371	)		$	1,827
(1) Excludes PPP loans.
(2) Alabama includes the Georgia Loan Production Office.
(3) Mississippi includes Central and Southern Mississippi Regions.
(4) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2023
($ in thousands)
(unaudited)
		Quarter Ended																				Six Months Ended
FINANCIAL RATIOS AND OTHER DATA		6/30/2023				3/31/2023				12/31/2022				9/30/2022				6/30/2022				6/30/2023			6/30/2022
Return on average equity			11.43	%			13.39	%			-9.05	%			10.48	%			8.55	%		12.39	%		7.71	%
Return on average tangible equity			15.18	%			18.03	%			-12.14	%			13.90	%			11.36	%		16.56	%		10.16	%
Return on average assets			0.96	%			1.10	%			-0.76	%			0.98	%			0.79	%		1.03	%		0.73	%
Interest margin - Yield - FTE			5.16	%			4.87	%			4.40	%			3.71	%			3.01	%		5.02	%		2.85	%
Interest margin - Cost			1.83	%			1.47	%			0.73	%			0.21	%			0.11	%		1.65	%		0.11	%
Net interest margin - FTE			3.33	%			3.39	%			3.66	%			3.50	%			2.90	%		3.36	%		2.74	%
Efficiency ratio (1)			66.17	%			65.60	%			65.85	%			64.96	%			71.89	%		65.89	%		74.08	%
Full-time equivalent employees			2,761				2,758				2,738				2,717				2,727
CREDIT QUALITY RATIOS (2)
Net (recoveries) charge-offs / average loans			0.04	%			0.04	%			0.06	%			0.03	%			-0.06	%		0.04	%		-0.03	%
Provision for credit losses, LHFI / average loans			0.26	%			0.10	%			0.23	%			0.45	%			0.10	%		0.18	%		0.03	%
Nonaccrual LHFI / (LHFI + LHFS)			0.59	%			0.57	%			0.53	%			0.58	%			0.56	%
Nonperforming assets / (LHFI + LHFS)			0.60	%			0.58	%			0.55	%			0.60	%			0.58	%
Nonperforming assets / (LHFI + LHFS   + other real estate)			0.60	%			0.58	%			0.55	%			0.60	%			0.58	%
ACL LHFI / LHFI			1.03	%			0.98	%			0.99	%			0.99	%			0.94	%
ACL LHFI-commercial / commercial LHFI			0.84	%			0.80	%			0.85	%			0.93	%			0.88	%
ACL LHFI-consumer / consumer and   home mortgage LHFI			1.60	%			1.54	%			1.41	%			1.20	%			1.14	%
ACL LHFI / nonaccrual LHFI			172.34	%			168.90	%			182.22	%			169.37	%			166.22	%
ACL LHFI / nonaccrual LHFI   (excl individually analyzed loans)			301.44	%			320.80	%			399.19	%			466.03	%			475.27	%
CAPITAL RATIOS
Total equity / total assets			8.53	%			8.28	%			8.28	%			8.78	%			9.36	%
Tangible equity / tangible assets			6.56	%			6.35	%			6.27	%			6.67	%			7.23	%
Tangible equity / risk-weighted assets			7.91	%			7.94	%			7.61	%			8.15	%			9.16	%
Tier 1 leverage ratio			8.35	%			8.29	%			8.47	%			9.01	%			8.80	%
Common equity tier 1 capital ratio			9.87	%			9.76	%			9.74	%			10.63	%			11.01	%
Tier 1 risk-based capital ratio			10.27	%			10.17	%			10.15	%			11.06	%			11.47	%
Total risk-based capital ratio			12.08	%			11.95	%			11.91	%			12.85	%			13.26	%
STOCK PERFORMANCE
Market value-Close		$	21.12			$	24.70			$	34.91			$	30.63			$	29.19
Book value		$	25.73			$	25.59			$	24.47			$	24.76			$	25.93
Tangible book value		$	19.38			$	19.24			$	18.11			$	18.39			$	19.58
(1) See Note 7 – Non-GAAP Financial Measures in the Notes to Consolidated Financials for Trustmark’s efficiency ratio calculation.
(2) Excludes PPP loans.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

June 30, 2023

($ in thousands)

(unaudited)

Note 1 - Litigation Settlement

As previously announced, on December 31, 2022, Trustmark National Bank (TNB) agreed to a settlement in principle (the Settlement) relating to litigation involving the Stanford Financial Group. On January 13, 2023, TNB entered into a Settlement Agreement (the Settlement Agreement) reflecting the terms of the Settlement. The parties to the Settlement Agreement are, on the one hand, (i) Ralph S. Janvey, solely in his capacity as the court-appointed receiver (the Receiver) for the Stanford Receivership Estate; (ii) the Official Stanford Investors Committee; (iii) each of the plaintiffs in the Rotstain and Smith Actions; and, on the other hand, (iv) TNB. Under the terms of the Settlement Agreement, the parties agreed to settle and dismiss the Rotstain Action, the Smith Action, and all current or future claims by plaintiffs in either such Action arising from or related to Stanford. In addition, the Settlement Agreement provided that the parties would request dismissal of the Jackson Action pursuant to the terms of the bar orders described below. If the Court’s approval (as described below) of the Settlement Agreement, including the bar orders described below, is upheld on appeal, TNB will make a one-time cash payment of $100.0 million to the Receiver.

The Settlement Agreement included the parties’ agreement to seek the Northern District of Texas District Court’s entry of bar orders prohibiting any continued or future claims by the plaintiffs in the Actions or by any other person or entity against TNB and its related parties relating to Stanford, whether asserted to date or not. The bar orders therefore would prohibit all litigation relating to Stanford described herein, including not only the Actions and any pending matters but also any actions that may be brought in the future. Final Court approval of these bar orders is a condition of the Settlement.

The Settlement Agreement is also subject to notice to Stanford’s investor claimants (which has been provided) and final, non-appealable approval by the U.S. District Court for the Northern District of Texas. While TNB believes that the Settlement Agreement is consistent with the terms of prior Stanford-related settlements that have been approved by the Court and were not successfully appealed, it is possible that the Court’s approval of the Settlement Agreement (which has occurred, as described further below) may not be upheld on appeal.

The Settlement Agreement also provides that TNB denies and makes no admission of liability or wrongdoing in connection with any Stanford matter. As has been the case throughout the pendency of the Actions, TNB expressly denies any liability or wrongdoing with respect to any matter alleged in regard to the multi-billion-dollar Ponzi scheme operated by Stanford for almost 20 years. TNB’s relationship with Stanford began as a result of TNB’s acquisition of a Houston-based bank in August 2006, and consisted of ordinary banking services provided to business deposit customers.

The foregoing description of the terms of the Settlement Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Settlement Agreement, a copy of which is filed as Exhibit 10.ai to the 2022 Annual Report and is incorporated herein by reference.

On January 20, 2023, the U.S. District Court for the Northern District of Texas entered an order preliminarily finding that the Settlement is fair, reasonable, and equitable; has no obvious deficiencies; and is the product of serious, informed, good faith, and arm’s-length negotiations. Following the provision of notice as required by the Settlement Agreement and by the Court’s preliminary order, the Court (Judge David C. Godbey, presiding) held a Final Approval Hearing on May 3, 2023, at which the Court approved the Settlement from the bench. On May 4, 2023, Judge Godbey signed the written orders confirming his oral ruling, including the bar order contemplated by the Settlement Agreement and the judgment and bar order with respect to the Jackson Action.

On May 11, 2023, Robert Allen Stanford, writing from prison, appealed the District Court’s approval of the Settlement to the Fifth Circuit Court of Appeals. On June 12, 2023, the Receiver moved to dismiss the appeal as frivolous. That motion is now fully briefed and awaiting the Fifth Circuit’s decision.

The Settlement will become effective when the Fifth Circuit’s ruling in favor of the approval of the Settlement becomes final and non-appealable (the Settlement Effective Date). Within five days of the Settlement Effective Date, the parties to the Rotstain and Smith Actions will file agreed dismissals of those cases. Absent any further appeal in either of the Rotstain or Smith Actions, those dismissals will become final 30 days after entered and signed by the respective judges. TNB will be required to make the Settlement payment within 30 days after those dismissals become final. Any further appeal of any of the orders described above would delay the making of the Settlement payment.

Pending the resolution of the settlement approval process, the Rotstain, Smith and Jackson Actions are stayed.

TNB and Trustmark Corporation determined that it was in the best interest of TNB, Trustmark Corporation and the shareholders of Trustmark Corporation to enter into the Settlement and the Settlement Agreement to eliminate the risk, ongoing expense, uncertainty as to ultimate outcome, and imposition on management and the business of TNB of further litigation of the Actions and related Stanford claims.

At the time of the entry into the Settlement, Trustmark Corporation recognized $100.0 million of litigation settlement expense, as well as an additional $750 thousand in legal fees, which were included in noninterest expense related to the Stanford litigation during the fourth quarter of 2022. Trustmark Corporation expects that the Settlement will be tax deductible. Trustmark Corporation and TNB remain substantially above levels considered to be well-capitalized under all relevant standards.

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

June 30, 2023

($ in thousands)

(unaudited)

Note 2 - Securities Available for Sale and Held to Maturity

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

		6/30/2023				3/31/2023				12/31/2022				9/30/2022				6/30/2022
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities		$	362,966			$	386,903			$	391,513			$	416,278			$	419,696
U.S. Government agency obligations			6,999				7,254				7,766				9,116				11,947
Obligations of states and political subdivisions			4,813				4,907				4,862				4,763				5,179
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			25,336				26,851				27,097				28,164				32,240
Issued by FNMA and FHLMC			1,250,435				1,317,848				1,345,463				1,718,057				1,888,546
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			98,388				108,192				115,140				126,138				144,158
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			122,946				132,207				132,241				141,970				142,598
Total securities available for sale		$	1,871,883			$	1,984,162			$	2,024,082			$	2,444,486			$	2,644,364
SECURITIES HELD TO MATURITY
U.S. Treasury securities		$	28,679			$	28,486			$	28,295			$	—			$	—
Obligations of states and political subdivisions			1,180				4,507				4,510				4,512				5,320
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			13,235				4,336				4,442				4,527				4,624
Issued by FNMA and FHLMC			484,679				497,854				509,311				179,375				185,554
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			171,002				179,334				188,201				197,923				210,479
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			759,890				759,821				759,755				770,648				731,777
Total securities held to maturity		$	1,458,665			$	1,474,338			$	1,494,514			$	1,156,985			$	1,137,754

During the fourth quarter of 2022, Trustmark reclassified $422.9 million of securities available for sale to securities held to maturity. The securities were transferred at fair value, which became the cost basis for the securities held to maturity. At the date of transfer, the net unrealized holding loss on the available for sale securities totaled approximately $57.1 million ($42.8 million, net of tax). The net unrealized holding loss will be amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. There were no gains or losses recognized as a result of the transfer.

During the second quarter of 2022, Trustmark reclassified $343.1 million of securities available for sale to securities held to maturity. The securities were transferred at fair value, which became the cost basis for the securities held to maturity. At the date of transfer, the net unrealized holding loss on the available for sale securities totaled approximately $34.8 million ($26.1 million, net of tax). The net unrealized holding loss will be amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. There were no gains or losses recognized as a result of the transfer.

At June 30, 2023, the net unamortized, unrealized loss included in accumulated other comprehensive income (loss) in the accompanying balance sheet for securities held to maturity transferred from securities available for sale totaled $63.4 million.

Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 99.8% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE.

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

June 30, 2023

($ in thousands)

(unaudited)

Note 3 – Loan Composition

LHFI consisted of the following during the periods presented:

LHFI BY TYPE		6/30/2023				3/31/2023				12/31/2022				9/30/2022				6/30/2022
Loans secured by real estate:
Construction, land development and other land loans		$	1,722,657			$	1,723,772			$	1,719,542			$	1,647,395			$	1,440,058
Secured by 1-4 family residential properties			2,854,182				2,822,048				2,775,847				2,597,112				2,424,962
Secured by nonfarm, nonresidential properties			3,471,728				3,375,579				3,278,830				3,206,946				3,178,079
Other real estate secured			954,410				847,527				742,538				593,119				555,311
Commercial and industrial loans			1,883,480				1,882,360				1,821,259				1,689,532				1,551,001
Consumer loans			163,788				162,911				166,425				163,412				160,716
State and other political subdivision loans			1,111,710				1,193,727				1,223,863				1,188,703				1,110,795
Other loans			452,012				489,271				475,735				499,845				523,918
LHFI			12,613,967				12,497,195				12,204,039				11,586,064				10,944,840
ACL LHFI			(129,298	)			(122,239	)			(120,214	)			(115,050	)			(103,140	)
Net LHFI		$	12,484,669			$	12,374,956			$	12,083,825			$	11,471,014			$	10,841,700

The following table presents the LHFI composition by region and reflects each region’s diversified mix of loans:

	June 30, 2023
LHFI - COMPOSITION BY REGION	Total				Alabama (1)				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	$	1,722,657			$	817,793			$	54,845			$	395,489			$	30,387			$	424,143
Secured by 1-4 family residential properties		2,854,182				136,612				51,817				2,555,191				83,409				27,153
Secured by nonfarm, nonresidential properties		3,471,728				954,604				225,437				1,471,341				159,402				660,944
Other real estate secured		954,410				379,984				1,805				294,497				7,376				270,748
Commercial and industrial loans		1,883,480				576,345				25,686				750,161				257,002				274,286
Consumer loans		163,788				23,925				8,354				101,026				19,411				11,072
State and other political subdivision loans		1,111,710				77,931				61,148				805,342				25,596				141,693
Other loans		452,012				110,395				9,963				219,075				48,806				63,773
Loans	$	12,613,967			$	3,077,589			$	439,055			$	6,592,122			$	631,389			$	1,873,812
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots	$	69,120			$	29,517			$	10,179			$	14,955			$	4,362			$	10,107
Development		130,166				55,946				1,366				36,602				7,465				28,787
Unimproved land		96,994				20,854				13,859				29,651				4,564				28,066
1-4 family construction		353,056				191,964				17,325				94,139				13,996				35,632
Other construction		1,073,321				519,512				12,116				220,142				—				321,551
Construction, land development and other land loans	$	1,722,657			$	817,793			$	54,845			$	395,489			$	30,387			$	424,143
(1) Includes Georgia Loan Production Office.

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

June 30, 2023

($ in thousands)

(unaudited)

Note 3 – Loan Composition (continued)

		June 30, 2023
		Total				Alabama (1)				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		$	363,101			$	125,094			$	26,313			$	123,940			$	20,570			$	67,184
Office			275,841				102,162				16,822				86,818				2,152				67,887
Hotel/motel			298,632				167,641				50,344				53,705				26,942				—
Mini-storage			144,253				23,282				2,002				99,182				464				19,323
Industrial			375,366				89,226				18,416				103,343				9,976				154,405
Health care			70,788				41,098				—				26,846				338				2,506
Convenience stores			32,385				7,207				438				14,279				572				9,889
Nursing homes/senior living			471,414				174,609				—				201,391				5,249				90,165
Other			132,613				44,071				9,381				60,170				8,655				10,336
Total non-owner occupied loans			2,164,393				774,390				123,716				769,674				74,918				421,695
Owner-occupied:
Office			153,392				45,525				36,517				43,905				9,906				17,539
Churches			67,325				16,766				4,394				37,537				6,069				2,559
Industrial warehouses			164,540				16,056				4,571				41,402				17,487				85,024
Health care			146,007				10,420				6,141				108,638				2,305				18,503
Convenience stores			149,551				11,834				33,888				68,713				215				34,901
Retail			88,837				11,270				9,271				40,320				18,849				9,127
Restaurants			54,460				4,191				3,925				31,241				11,844				3,259
Auto dealerships			45,878				6,151				213				22,307				17,207				—
Nursing homes/senior living			301,226				44,709				—				230,317				—				26,200
Other			136,119				13,292				2,801				77,287				602				42,137
Total owner-occupied loans			1,307,335				180,214				101,721				701,667				84,484				239,249
Loans secured by nonfarm, nonresidential properties		$	3,471,728			$	954,604			$	225,437			$	1,471,341			$	159,402			$	660,944
(1) Includes Georgia Loan Production Office.

Note 4 – 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
		6/30/2023				3/31/2023				12/31/2022				9/30/2022				6/30/2022				6/30/2023				6/30/2022
Securities – taxable			1.87	%			1.85	%			1.71	%			1.62	%			1.50	%			1.86	%			1.44	%
Securities – nontaxable			4.25	%			4.00	%			3.95	%			3.97	%			4.00	%			4.10	%			3.98	%
Securities – total			1.87	%			1.86	%			1.72	%			1.63	%			1.50	%			1.87	%			1.44	%
PPP loans			—				—				12.39	%			7.51	%			4.16	%			—				3.04	%
Loans - LHFI & LHFS			6.08	%			5.79	%			5.27	%			4.48	%			3.79	%			5.94	%			3.69	%
Loans - total			6.08	%			5.79	%			5.27	%			4.48	%			3.79	%			5.94	%			3.69	%
Fed funds sold & reverse repurchases			5.51	%			5.11	%			4.29	%			3.51	%			3.65	%			5.35	%			2.43	%
Other earning assets			5.36	%			4.09	%			3.76	%			1.82	%			0.78	%			4.81	%			0.41	%
Total earning assets			5.16	%			4.87	%			4.40	%			3.71	%			3.01	%			5.02	%			2.85	%
Interest-bearing deposits			1.96	%			1.53	%			0.71	%			0.20	%			0.11	%			1.75	%			0.11	%
Fed funds purchased & repurchases			5.01	%			4.49	%			3.44	%			1.95	%			0.24	%			4.73	%			0.17	%
Other borrowings			5.12	%			4.87	%			3.73	%			2.89	%			2.52	%			5.01	%			2.39	%
Total interest-bearing liabilities			2.42	%			1.98	%			1.03	%			0.31	%			0.17	%			2.20	%			0.17	%
Total Deposits			1.48	%			1.13	%			0.51	%			0.14	%			0.07	%			1.31	%			0.07	%
Net interest margin			3.33	%			3.39	%			3.66	%			3.50	%			2.90	%			3.36	%			2.74	%
Net interest margin excluding PPP loans   and the FRB balance			3.23	%			3.36	%			3.66	%			3.53	%			3.06	%			3.30	%			2.97	%

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

June 30, 2023

($ in thousands)

(unaudited)

Note 4 – Yields on Earning Assets and Interest-Bearing Liabilities (continued)

Reflected in the table above are yields on earning assets and liabilities, along with the net interest margin which equals reported net interest income-FTE, annualized, as a percent of average earning assets. In addition, the table includes net interest margin excluding PPP loans and the balance held at the Federal Reserve Bank of Atlanta (FRB), which equals reported net interest income-FTE excluding interest income on PPP loans and the FRB balance, annualized, as a percent of average earning assets excluding average PPP loans and the FRB balance.

For the second quarter of 2023, the average FRB balance totaled $777.0 million compared to $555.5 million for the first quarter of 2023 and is included in other earning assets in the accompanying average consolidated balance sheets.

The net interest margin excluding PPP loans and the FRB balance decreased 13 basis points when compared to the first quarter of 2023, totaling 3.23% for the second quarter of 2023. The decrease in the net interest margin excluding PPP loans and the FRB balance was due to increased costs of interest-bearing deposits, which was partially offset by increases in the yields on the loans held for investment and held for sale portfolio and the securities portfolio.

Note 5 – 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 hedge ineffectiveness of $1.3 million during the second quarter of 2023.

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

		Quarter Ended																				Six Months Ended
		6/30/2023				3/31/2023				12/31/2022				9/30/2022				6/30/2022				6/30/2023				6/30/2022
Mortgage servicing income, net		$	6,764			$	6,785			$	6,636			$	6,669			$	6,557			$	13,549			$	12,986
Change in fair value-MSR from runoff			(2,710	)			(1,145	)			(2,981	)			(3,462	)			(3,806	)			(3,855	)			(7,591	)
Gain on sales of loans, net			3,887				3,797				3,328				4,597				6,030				7,684				12,253
Mortgage banking income before hedge   ineffectiveness			7,941				9,437				6,983				7,804				8,781				17,378				17,648
Change in fair value-MSR from market changes			5,898				(3,972	)			(3,348	)			10,770				8,739				1,926				30,759
Change in fair value of derivatives			(7,239	)			2,174				(227	)			(11,698	)			(9,371	)			(5,065	)			(30,385	)
Net positive (negative) hedge ineffectiveness			(1,341	)			(1,798	)			(3,575	)			(928	)			(632	)			(3,139	)			374
Mortgage banking, net		$	6,600			$	7,639			$	3,408			$	6,876			$	8,149			$	14,239			$	18,022

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

June 30, 2023

($ in thousands)

(unaudited)

Note 6 – Other Noninterest Income and Expense

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

		Quarter Ended																				Six Months Ended
		6/30/2023				3/31/2023				12/31/2022				9/30/2022				6/30/2022				6/30/2023				6/30/2022
Partnership amortization for tax credit purposes		$	(2,019	)		$	(1,961	)		$	(1,869	)		$	(1,531	)		$	(1,475	)		$	(3,980	)		$	(2,811	)
Increase in life insurance cash surrender value			1,716				1,693				1,687				1,676				1,683				3,409				3,310
Other miscellaneous income			3,998				2,782				2,493				2,273				1,699				6,780				4,614
Total other, net		$	3,695			$	2,514			$	2,311			$	2,418			$	1,907			$	6,209			$	5,113

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
		6/30/2023				3/31/2023				12/31/2022				9/30/2022				6/30/2022				6/30/2023				6/30/2022
Loan expense (1)		$	3,066			$	2,538			$	2,908			$	2,866			$	2,947			$	5,604			$	6,475
Amortization of intangibles			130				288				312				312				328				418				810
FDIC assessment expense			2,550				2,370				2,130				1,945				1,810				4,920				3,310
Other real estate expense, net			171				172				18				497				623				343				658
Other miscellaneous expense			8,585				9,443				9,767				8,117				7,782				18,028				15,717
Total other expense (1)		$	14,502			$	14,811			$	15,135			$	13,737			$	13,490			$	29,313			$	26,970
(1) During the first quarter of 2023, Trustmark reclassified its debit card transaction fees from other expense to services and fees. Prior periods have been reclassified accordingly.

Note 7 – Non-GAAP Financial Measures

In addition to capital ratios defined by 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’s Common Equity Tier 1 capital includes common stock, capital surplus and retained earnings, and is reduced by goodwill and other intangible assets, net of associated net deferred tax liabilities as well as disallowed deferred tax assets and threshold deductions as applicable.

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 intangible 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 audited consolidated financial statements and the notes related thereto in their entirety and not to rely on any single financial measure.

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

June 30, 2023

($ in thousands except per share data)

(unaudited)

Note 7 – Non-GAAP Financial Measures (continued)

				Quarter Ended																				Six Months Ended
				6/30/2023				3/31/2023				12/31/2022				9/30/2022				6/30/2022				6/30/2023				6/30/2022
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity				$	1,580,291			$	1,523,828			$	1,493,291			$	1,606,469			$	1,608,309			$	1,552,215			$	1,660,739
Less: Goodwill					(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)
Identifiable intangible assets					(3,301	)			(3,523	)			(3,816	)			(4,131	)			(4,436	)			(3,411	)			(4,656	)
Total average tangible equity				$	1,192,753			$	1,136,068			$	1,105,238			$	1,218,101			$	1,219,636			$	1,164,567			$	1,271,846
PERIOD END BALANCES
Total shareholders' equity				$	1,571,193			$	1,562,099			$	1,492,268			$	1,508,945			$	1,586,696
Less: Goodwill					(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)
Identifiable intangible assets					(3,222	)			(3,352	)			(3,640	)			(3,952	)			(4,264	)
Total tangible equity		(a)		$	1,183,734			$	1,174,510			$	1,104,391			$	1,120,756			$	1,198,195
TANGIBLE ASSETS
Total assets				$	18,422,626			$	18,877,178			$	18,015,478			$	17,190,634			$	16,951,510
Less: Goodwill					(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)
Identifiable intangible assets					(3,222	)			(3,352	)			(3,640	)			(3,952	)			(4,264	)
Total tangible assets		(b)		$	18,035,167			$	18,489,589			$	17,627,601			$	16,802,445			$	16,563,009
Risk-weighted assets		(c)		$	14,966,614			$	14,793,893			$	14,521,078			$	13,748,819			$	13,076,981
NET INCOME (LOSS) ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income (loss)				$	45,037			$	50,300			$	(34,063	)		$	42,455			$	34,284			$	95,337			$	63,495
Plus: Intangible amortization net of tax					97				216				234				234				246				313				608
Net income (loss) adjusted for intangible amortization				$	45,134			$	50,516			$	(33,829	)		$	42,689			$	34,530			$	95,650			$	64,103
Period end common shares outstanding		(d)			61,069,036				61,048,516				60,977,686				60,953,864				61,201,123
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity (1)					15.18	%			18.03	%			-12.14	%			13.90	%			11.36	%			16.56	%			10.16	%
Tangible equity/tangible assets		(a)/(b)			6.56	%			6.35	%			6.27	%			6.67	%			7.23	%
Tangible equity/risk-weighted assets		(a)/(c)			7.91	%			7.94	%			7.61	%			8.15	%			9.16	%
Tangible book value		(a)/(d)*1,000		$	19.38			$	19.24			$	18.11			$	18.39			$	19.58
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity				$	1,571,193			$	1,562,099			$	1,492,268			$	1,508,945			$	1,586,696
CECL transition adjustment					13,000				13,000				19,500				19,500				19,500
AOCI-related adjustments					265,704				242,381				275,403				306,412				207,142
CET1 adjustments and deductions:
Goodwill net of associated deferred   tax liabilities (DTLs)					(370,227	)			(370,234	)			(370,241	)			(370,217	)			(370,229	)
Other adjustments and deductions   for CET1 (2)					(2,915	)			(3,275	)			(3,258	)			(3,506	)			(3,757	)
CET1 capital		(e)			1,476,755				1,443,971				1,413,672				1,461,134				1,439,352
Additional tier 1 capital instruments   plus related surplus					60,000				60,000				60,000				60,000				60,000
Tier 1 capital				$	1,536,755			$	1,503,971			$	1,473,672			$	1,521,134			$	1,499,352
Common equity tier 1 capital ratio		(e)/(c)			9.87	%			9.76	%			9.74	%			10.63	%			11.01	%
(1) Calculation = ((net income (loss) adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity.
(2) Includes other intangible assets, net of DTLs, disallowed deferred tax assets (DTAs), threshold deductions and transition adjustments, as applicable.

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

June 30, 2023

($ in thousands)

(unaudited)

Note 7 – Non-GAAP Financial Measures (continued)

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

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

		Quarter Ended																				Six Months Ended
		6/30/2023				3/31/2023				12/31/2022				9/30/2022				6/30/2022				6/30/2023				6/30/2022
Net interest income (GAAP)		$	139,904			$	137,595			$	146,583			$	136,105			$	112,676			$	277,499			$	212,020
Noninterest income (GAAP)			53,553				51,377				45,170				52,606				53,253				104,930				107,368
Pre-provision revenue	(a)	$	193,457			$	188,972			$	191,753			$	188,711			$	165,929			$	382,429			$	319,388
Noninterest expense (GAAP)		$	132,218			$	128,327			$	231,229			$	126,698			$	123,767			$	260,545			$	245,286
Less: Litigation settlement expense			—				—				(100,750	)			—				—				—				—
Adjusted noninterest expense - PPNR (Non-GAAP)	(b)	$	132,218			$	128,327			$	130,479			$	126,698			$	123,767			$	260,545			$	245,286
PPNR (Non-GAAP)	(a)-(b)	$	61,239			$	60,645			$	61,274			$	62,013			$	42,162			$	121,884			$	74,102

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

		Quarter Ended																				Six Months Ended
		6/30/2023				3/31/2023				12/31/2022				9/30/2022				6/30/2022				6/30/2023				6/30/2022
Total noninterest expense (GAAP)		$	132,218			$	128,327			$	231,229			$	126,698			$	123,767			$	260,545			$	245,286
Less: Other real estate expense, net			(171	)			(172	)			(18	)			(497	)			(623	)			(343	)			(658	)
Amortization of intangibles			(130	)			(288	)			(312	)			(312	)			(328	)			(418	)			(810	)
Charitable contributions resulting in   state tax credits			(325	)			(325	)			(375	)			(375	)			(375	)			(650	)			(750	)
Litigation settlement expense			—				—				(100,750	)			—				—				—				—
Adjusted noninterest expense (Non-GAAP)	(c)	$	131,592			$	127,542			$	129,774			$	125,514			$	122,441			$	259,134			$	243,068
Net interest income (GAAP)		$	139,904			$	137,595			$	146,583			$	136,105			$	112,676			$	277,499			$	212,020
Add: Tax equivalent adjustment			3,383				3,477				3,451				2,975				2,916				6,860				5,919
Net interest income-FTE (Non-GAAP)	(a)	$	143,287			$	141,072			$	150,034			$	139,080			$	115,592			$	284,359			$	217,939
Noninterest income (GAAP)		$	53,553			$	51,377			$	45,170			$	52,606			$	53,253			$	104,930			$	107,368
Add: Partnership amortization for tax credit purposes			2,019				1,961				1,869				1,531				1,475				3,980				2,811
Adjusted noninterest income (Non-GAAP)	(b)	$	55,572			$	53,338			$	47,039			$	54,137			$	54,728			$	108,910			$	110,179
Adjusted revenue (Non-GAAP)	(a)+(b)	$	198,859			$	194,410			$	197,073			$	193,217			$	170,320			$	393,269			$	328,118
Efficiency ratio (Non-GAAP)	(c)/((a)+(b))		66.17	%			65.60	%			65.85	%			64.96	%			71.89	%			65.89	%			74.08	%

 

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The Trustmark Stock at the time of publication of the news with a fall of -1,38 % to 21,40USD on Lang & Schwarz stock exchange (25. Juli 2023, 22:33 Uhr).