Trustmark Corporation Announces Fourth Quarter and Fiscal Year 2023 Financial Results

Trustmark Corporation (NASDAQGS:TRMK) reported net income of $36.1 million in the fourth quarter of 2023, representing diluted earnings per share of $0.59. For the full year, Trustmark’s net income totaled $165.5 million, representing diluted earnings per share of $2.70. Trustmark’s net income in 2023 produced a return on average tangible equity of 14.04% and a return on average assets of 0.89%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable March 15, 2024, to shareholders of record on March 1, 2024.

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2023 Highlights

• Loans held for investment (HFI) increased $746.5 million, or 6.1%, in 2023
• Net charge-offs represented 0.06% of average loans in 2023
• Deposits increased $1.1 billion, or 7.8%, in 2023
• Net interest income (FTE) totaled $566.3 million, up 11.7% in 2023 to produce a net interest margin of 3.32%, up 15 basis points from 2022
• Insurance revenue increased 7.2% while wealth management remained stable
• Noninterest income totaled $207.0 million and represented 27.2% of total revenue
• Total revenue increased $60.0 million, or 8.6%, to $759.8 million in 2023
• Continued technology investments to enhance efficiency and productivity
• Noninterest expense totaled $537.9 million in 2023; adjusted noninterest expense totaled $527.9 million, up 5.9% from the prior year; please refer to the Consolidated Financial Information Note 7 – Non-GAAP Financial Measures

Duane A. Dewey, President and CEO, commented, “We continued to make significant progress across the organization. Our performance reflected solid loan production and credit quality, and continued deposit growth in an increasingly competitive marketplace. We achieved double-digit growth in net interest income in 2023 while noninterest income continued to expand thanks in part to another record year in our insurance business and commendable results in our banking, mortgage banking and wealth management businesses. We have a tremendous team of associates focused on expanding customer relationships and demonstrating the value Trustmark can provide as their trusted financial partner. Looking forward, we will continue to pursue opportunities to redesign workflows and restructure the organization to further leverage investments in technology that will broaden our reach, enhance the customer experience, and improve efficiency. We remain focused on providing the financial services and advice our customers have come to expect while building long-term value for our shareholders.”

Balance Sheet Management

• Loans HFI increased $140.3 million, or 1.1%, during the quarter
• Total deposits increased $467.8 million, or 3.1%, linked-quarter
• Maintained strong capital position with CET1 ratio of 10.04% and total risk-based capital ratio of 12.29%

Loans HFI totaled $13.0 billion at December 31, 2023, reflecting an increase of $140.3 million, or 1.1%, linked-quarter and $746.5 million, or 6.1%, year-over-year. The linked-quarter growth reflected increases in commercial and industrial loans, other real estate secured loans, other loans and leases, and state and other political subdivision loans offset in part by declines in construction, land development and other land loans, and loans secured by nonfarm, nonresidential properties. Trustmark’s loan portfolio remains well-diversified by loan type and geography.

Deposits totaled $15.6 billion at December 31, 2023, up $467.8 million, or 3.1%, from the prior quarter and up $1.1 billion, or 7.8%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 83.2% of total deposits at year-end 2023. Noninterest-bearing deposits represented 20.5% of total deposits at December 31, 2023. Interest-bearing deposit costs totaled 2.67% for the fourth quarter, an increase of 28 basis points linked-quarter. The total cost of interest-bearing liabilities was 2.89% for the fourth quarter of 2023, an increase of 17 basis points from the prior quarter.

Trustmark did not repurchase any of its common shares in 2023. As previously announced, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2024, under which $50.0 million of Trustmark’s outstanding shares may be acquired through December 31, 2024. The repurchase program, which is subject to market conditions and management discretion, will continue to be implemented through open market repurchases or privately negotiated transactions. At December 31, 2023, Trustmark’s tangible equity to tangible assets ratio was 6.95%, while the total risk-based capital ratio was 12.29%. Tangible book value per share was $20.87 at December 31, 2023, up 7.7% from the prior quarter and 15.2% from the prior year.

Credit Quality

• Net charge-offs totaled $2.2 million, representing 0.07% of average loans in the fourth quarter
• Provision for credit losses for loans HFI was $7.6 million in the fourth quarter
• Allowance for credit losses (ACL) represented 1.08% of loans HFI and 249.31% of nonperforming loans, excluding individually analyzed loans at year-end

Nonaccrual loans totaled $100.0 million at December 31, 2023, an increase of $9.1 million from the prior quarter and $34.0 million year-over-year. Other real estate totaled $6.9 million, reflecting increases of $1.4 million and $4.9 million from the prior quarter and prior year, respectively. Collectively, nonperforming assets totaled $106.9 million, representing 0.81% of loans HFI and held for sale (HFS) at December 31, 2023.

The provision for credit losses for loans HFI was $7.6 million in the fourth quarter and was primarily attributable to loan growth, net adjustments to the qualitative factors, and changes in the macroeconomic forecast. The provision for credit losses for off-balance sheet credit exposures was a negative $888 thousand in the fourth quarter. Collectively, the provision for credit losses totaled $6.7 million in the fourth quarter compared to $8.4 million in the prior quarter and $12.1 million in the fourth quarter of 2022.

Allocation of Trustmark’s $139.4 million ACL on loans HFI represented 0.85% of commercial loans and 1.81% of consumer and home mortgage loans, resulting in an ACL to total loans HFI of 1.08% at December 31, 2023. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.

Revenue Generation

• Net interest income (FTE) totaled $140.0 million in the fourth quarter, down 1.3% linked-quarter
• Net interest margin totaled 3.25% in the fourth quarter, down 4 basis points from the prior quarter
• Noninterest income totaled $49.8 million, representing 26.7% of total revenue in the fourth quarter

Revenue in the fourth quarter totaled $186.5 million, a decrease of 2.3% from the prior quarter and 2.7% from the same quarter in the prior year. The linked-quarter decrease reflects lower noninterest income and net interest income while the year-over-year decline reflects growth in noninterest income being more than offset by lower net interest income. In 2023, revenue totaled $759.8 million, an increase of 8.6% from the prior year.

Net interest income (FTE) in the fourth quarter totaled $140.0 million, resulting in a net interest margin of 3.25%, down 4 basis points from the prior quarter. The decrease in the net interest margin was primarily due to increased costs of interest-bearing liabilities, which was offset in part by higher yields on the loans HFI and HFS portfolio.

Noninterest income in the fourth quarter totaled $49.8 million, a decrease of $2.4 million from the prior quarter and an increase of $4.6 million from the prior year. The linked-quarter change reflects a seasonal decline in insurance revenue, as well as lower mortgage banking and wealth management revenue. The increase in noninterest income year-over-year was well diversified across all fee-based categories.

Mortgage loan production in the fourth quarter totaled $271.9 million, a decline of 30.3% linked-quarter and 30.4% year-over-year. Mortgage banking revenue totaled $5.5 million in the fourth quarter, a decrease of $939 thousand from the prior quarter and an increase of $2.1 million year-over-year. The linked-quarter decline is attributable to an increase in net negative hedge ineffectiveness. In 2023, mortgage loan production totaled $1.5 billion, down 31.6% from the prior year. Mortgage banking revenue totaled $26.2 million in 2023, down $2.1 million from the prior year.

Insurance revenue in the fourth quarter totaled $13.2 million, a seasonal decline of $2.1 million from the prior quarter and an increase of $1.2 million from the prior year. Insurance revenue in 2023 totaled $57.6 million, up $3.8 million, or 7.2%, from the prior year. The solid performance during the year reflects an expanded producer workforce, a hardening of the insurance market, and the realization of operational efficiencies from investments in technology and improved processes.

Wealth management revenue totaled $8.7 million in the fourth quarter, down 1.3% from the prior quarter and up 7.2% from the prior year. The linked-quarter decline is principally due to reduced trust management revenue offset in part by increased brokerage revenue while the year-over-year change is attributable to increased investment services revenue. In 2023, wealth management revenue totaled $35.1 million, in line with the prior year. During 2023, Trustmark selectively expanded its salesforce in the Houston, Mobile, Jackson, and Florida Panhandle markets.

Noninterest Expense

• Total noninterest expense in the fourth quarter was $136.4 million; adjusted noninterest expense, which excludes ORE expense, amortization of intangibles, charitable contributions resulting in state tax credits, reduction in force expense, and litigation settlement expense, totaled $134.8 million, up $723 thousand from the prior quarter. Please refer to the Consolidated Financial Information Note 7 – Non-GAAP Financial Measures
• FDIC assessment expense totaled $4.8 million in the fourth quarter, up $1.1 million, or 28.7%, from the prior quarter

Salaries and employee benefits expense in the fourth quarter totaled $78.0 million, an increase of $1.3 million, or 1.7% from the prior quarter. Excluding reduction in force expense related to restructuring initiatives of $1.4 million, salaries and benefits expense totaled $76.6 million, a decline of $69 thousand from the prior quarter. Total services and fees in the fourth quarter totaled $27.9 million, unchanged from the prior quarter. Net occupancy – premises expense during the fourth quarter totaled $7.4 million, unchanged from the prior quarter. Equipment expense declined 4.4% linked-quarter to total $6.5 million. Other expense increased $943 thousand, or 6.0%, linked-quarter principally due to increased FDIC assessment expense.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, January 24, 2024, 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 7, 2024, in archived format at the same web address or by calling [phone], passcode 6776577.

Trustmark is a financial services company providing banking and financial solutions through offices in Alabama, Florida, Georgia, Mississippi, Tennessee and Texas. Visit trustmark.com for more information.

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, 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
December 31, 2023
($ in thousands)
(unaudited)
													Linked Quarter							Year over Year
QUARTERLY AVERAGE BALANCES	12/31/2023				9/30/2023				12/31/2022				$ Change				% Change			$ Change				% Change
Securities AFS-taxable	$	1,986,825			$	2,049,006			$	2,572,675			$	(62,181	)		-3.0	%		$	(585,850	)		-22.8	%
Securities AFS-nontaxable		4,246				4,779				4,828				(533	)		-11.2	%			(582	)		-12.1	%
Securities HTM-taxable		1,430,169				1,445,895				1,268,952				(15,726	)		-1.1	%			161,217			12.7	%
Securities HTM-nontaxable		340				907				4,514				(567	)		-62.5	%			(4,174	)		-92.5	%
Total securities		3,421,580				3,500,587				3,850,969				(79,007	)		-2.3	%			(429,389	)		-11.2	%
Paycheck protection program loans (PPP)		—				—				3,235				—			n/m				(3,235	)		-100.0	%
Loans (includes loans held for sale)		13,010,028				12,926,942				12,006,661				83,086			0.6	%			1,003,367			8.4	%
Fed funds sold and reverse repurchases		121				230				6,566				(109	)		-47.4	%			(6,445	)		-98.2	%
Other earning assets		670,477				682,644				375,190				(12,167	)		-1.8	%			295,287			78.7	%
Total earning assets		17,102,206				17,110,403				16,242,621				(8,197	)		0.0	%			859,585			5.3	%
Allowance for credit losses (ACL), loans held
for investment (LHFI)		(133,742	)			(127,915	)			(114,948	)			(5,827	)		-4.6	%			(18,794	)		-16.4	%
Other assets		1,749,069				1,721,310				1,630,085				27,759			1.6	%			118,984			7.3	%
Total assets	$	18,717,533			$	18,703,798			$	17,757,758			$	13,735			0.1	%		$	959,775			5.4	%
Interest-bearing demand deposits	$	5,053,935			$	4,875,714			$	4,719,303			$	178,221			3.7	%		$	334,632			7.1	%
Savings deposits		3,526,600				3,642,158				4,379,673				(115,558	)		-3.2	%			(853,073	)		-19.5	%
Time deposits		3,427,384				3,075,224				1,152,905				352,160			11.5	%			2,274,479			n/m
Total interest-bearing deposits		12,007,919				11,593,096				10,251,881				414,823			3.6	%			1,756,038			17.1	%
Fed funds purchased and repurchases		403,041				414,696				549,406				(11,655	)		-2.8	%			(146,365	)		-26.6	%
Other borrowings		590,765				912,151				530,993				(321,386	)		-35.2	%			59,772			11.3	%
Subordinated notes		123,446				123,391				123,226				55			0.0	%			220			0.2	%
Junior subordinated debt securities		61,856				61,856				61,856				—			0.0	%			—			0.0	%
Total interest-bearing liabilities		13,187,027				13,105,190				11,517,362				81,837			0.6	%			1,669,665			14.5	%
Noninterest-bearing deposits		3,296,351				3,429,815				4,177,113				(133,464	)		-3.9	%			(880,762	)		-21.1	%
Other liabilities		641,662				585,908				569,992				55,754			9.5	%			71,670			12.6	%
Total liabilities		17,125,040				17,120,913				16,264,467				4,127			0.0	%			860,573			5.3	%
Shareholders' equity		1,592,493				1,582,885				1,493,291				9,608			0.6	%			99,202			6.6	%
Total liabilities and equity	$	18,717,533			$	18,703,798			$	17,757,758			$	13,735			0.1	%		$	959,775			5.4	%
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, 2023
($ in thousands)
(unaudited)
													Linked Quarter							Year over Year
PERIOD END BALANCES	12/31/2023				9/30/2023				12/31/2022				$ Change				% Change			$ Change				% Change
Cash and due from banks	$	975,543			$	750,492			$	734,787			$	225,051			30.0	%		$	240,756			32.8	%
Fed funds sold and reverse repurchases		—				—				4,000				—			n/m				(4,000	)		-100.0	%
Securities available for sale		1,762,878				1,766,174				2,024,082				(3,296	)		-0.2	%			(261,204	)		-12.9	%
Securities held to maturity		1,426,279				1,438,287				1,494,514				(12,008	)		-0.8	%			(68,235	)		-4.6	%
PPP loans		—				—				—				—			n/m				—			n/m
Loans held for sale (LHFS)		184,812				169,244				135,226				15,568			9.2	%			49,586			36.7	%
Loans held for investment (LHFI)		12,950,524				12,810,259				12,204,039				140,265			1.1	%			746,485			6.1	%
ACL LHFI		(139,367	)			(134,031	)			(120,214	)			(5,336	)		-4.0	%			(19,153	)		-15.9	%
Net LHFI		12,811,157				12,676,228				12,083,825				134,929			1.1	%			727,332			6.0	%
Premises and equipment, net		232,537				230,718				212,365				1,819			0.8	%			20,172			9.5	%
Mortgage servicing rights		131,870				142,379				129,677				(10,509	)		-7.4	%			2,193			1.7	%
Goodwill		384,237				384,237				384,237				—			0.0	%			—			0.0	%
Identifiable intangible assets		2,965				3,093				3,640				(128	)		-4.1	%			(675	)		-18.5	%
Other real estate		6,867				5,485				1,986				1,382			25.2	%			4,881			n/m
Operating lease right-of-use assets		38,142				39,639				36,301				(1,497	)		-3.8	%			1,841			5.1	%
Other assets		764,902				784,863				770,838				(19,961	)		-2.5	%			(5,936	)		-0.8	%
Total assets	$	18,722,189			$	18,390,839			$	18,015,478			$	331,350			1.8	%		$	706,711			3.9	%
Deposits:
Noninterest-bearing	$	3,197,620			$	3,320,124			$	4,093,771			$	(122,504	)		-3.7	%		$	(896,151	)		-21.9	%
Interest-bearing		12,372,143				11,781,799				10,343,877				590,344			5.0	%			2,028,266			19.6	%
Total deposits		15,569,763				15,101,923				14,437,648				467,840			3.1	%			1,132,115			7.8	%
Fed funds purchased and repurchases		405,745				321,799				449,331				83,946			26.1	%			(43,586	)		-9.7	%
Other borrowings		483,230				793,193				1,050,938				(309,963	)		-39.1	%			(567,708	)		-54.0	%
Subordinated notes		123,482				123,427				123,262				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		34,057				34,945				36,838				(888	)		-2.5	%			(2,781	)		-7.5	%
Operating lease liabilities		41,584				42,730				38,932				(1,146	)		-2.7	%			2,652			6.8	%
Other liabilities		340,625				340,615				324,405				10			0.0	%			16,220			5.0	%
Total liabilities		17,060,342				16,820,488				16,523,210				239,854			1.4	%			537,132			3.3	%
Common stock		12,725				12,724				12,705				1			0.0	%			20			0.2	%
Capital surplus		159,688				158,316				154,645				1,372			0.9	%			5,043			3.3	%
Retained earnings		1,709,157				1,687,199				1,600,321				21,958			1.3	%			108,836			6.8	%
Accumulated other comprehensive
income (loss), net of tax		(219,723	)			(287,888	)			(275,403	)			68,165			23.7	%			55,680			20.2	%
Total shareholders' equity		1,661,847				1,570,351				1,492,268				91,496			5.8	%			169,579			11.4	%
Total liabilities and equity	$	18,722,189			$	18,390,839			$	18,015,478			$	331,350			1.8	%		$	706,711			3.9	%
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, 2023
($ in thousands except per share data)
(unaudited)
	Quarter Ended											Linked Quarter							Year over Year
INCOME STATEMENTS	12/31/2023				9/30/2023			12/31/2022				$ Change				% Change			$ Change				% Change
Interest and fees on LHFS & LHFI-FTE	$	210,288			$	206,523		$	159,566			$	3,765			1.8	%		$	50,722			31.8	%
Interest and fees on PPP loans		—				—			101				—			n/m				(101	)		-100.0	%
Interest on securities-taxable		15,936				16,624			16,577				(688	)		-4.1	%			(641	)		-3.9	%
Interest on securities-tax exempt-FTE		44				58			93				(14	)		-24.1	%			(49	)		-52.7	%
Interest on fed funds sold and reverse
repurchases		2				3			71				(1	)		-33.3	%			(69	)		-97.2	%
Other interest income		9,918				8,613			3,556				1,305			15.2	%			6,362			n/m
Total interest income-FTE		236,188				231,821			179,964				4,367			1.9	%			56,224			31.2	%
Interest on deposits		80,847				69,797			18,438				11,050			15.8	%			62,409			n/m
Interest on fed funds purchased and repurchases		5,347				5,375			4,762				(28	)		-0.5	%			585			12.3	%
Other interest expense		9,946				14,713			6,730				(4,767	)		-32.4	%			3,216			47.8	%
Total interest expense		96,140				89,885			29,930				6,255			7.0	%			66,210			n/m
Net interest income-FTE		140,048				141,936			150,034				(1,888	)		-1.3	%			(9,986	)		-6.7	%
Provision for credit losses, LHFI		7,585				8,322			6,902				(737	)		-8.9	%			683			9.9	%
Provision for credit losses, off-balance sheet
credit exposures		(888	)			104			5,215				(992	)		n/m				(6,103	)		n/m
Net interest income after provision-FTE		133,351				133,510			137,917				(159	)		-0.1	%			(4,566	)		-3.3	%
Service charges on deposit accounts		11,311				11,074			11,162				237			2.1	%			149			1.3	%
Bank card and other fees		8,502				8,217			8,191				285			3.5	%			311			3.8	%
Mortgage banking, net		5,519				6,458			3,408				(939	)		-14.5	%			2,111			61.9	%
Insurance commissions		13,197				15,303			12,019				(2,106	)		-13.8	%			1,178			9.8	%
Wealth management		8,657				8,773			8,079				(116	)		-1.3	%			578			7.2	%
Other, net		2,579				2,399			2,311				180			7.5	%			268			11.6	%
Securities gains (losses), net		39				—			—				39			n/m				39			n/m
Total noninterest income		49,804				52,224			45,170				(2,420	)		-4.6	%			4,634			10.3	%
Salaries and employee benefits		78,003				76,666			73,469				1,337			1.7	%			4,534			6.2	%
Services and fees (2)		27,906				27,882			27,709				24			0.1	%			197			0.7	%
Net occupancy-premises		7,362				7,383			7,898				(21	)		-0.3	%			(536	)		-6.8	%
Equipment expense		6,517				6,816			6,268				(299	)		-4.4	%			249			4.0	%
Litigation settlement expense (1)		—				6,500			100,750				(6,500	)		-100.0	%			(100,750	)		-100.0	%
Other expense (2)		16,641				15,698			15,135				943			6.0	%			1,506			10.0	%
Total noninterest expense		136,429				140,945			231,229				(4,516	)		-3.2	%			(94,800	)		-41.0	%
Income (loss) before income taxes and tax eq adj		46,726				44,789			(48,142	)			1,937			4.3	%			94,868			n/m
Tax equivalent adjustment		3,306				3,299			3,451				7			0.2	%			(145	)		-4.2	%
Income (loss) before income taxes		43,420				41,490			(51,593	)			1,930			4.7	%			95,013			n/m
Income taxes		7,297				7,461			(17,530	)			(164	)		-2.2	%			24,827			n/m
Net income (loss)	$	36,123			$	34,029		$	(34,063	)		$	2,094			6.2	%		$	70,186			n/m
Per share data
Earnings (loss) per share - basic	$	0.59			$	0.56		$	(0.56	)		$	0.03			5.4	%		$	1.15			n/m
Earnings (loss) per share - diluted	$	0.59			$	0.56		$	(0.56	)		$	0.03			5.4	%		$	1.15			n/m
Dividends per share	$	0.23			$	0.23		$	0.23				—			0.0	%			—			0.0	%
Weighted average shares outstanding
Basic		61,070,481				61,069,750			60,969,400
Diluted		61,296,840				61,263,032			61,173,249
Period end shares outstanding		61,071,173				61,070,095			60,977,686
(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
December 31, 2023
($ in thousands)
(unaudited)
	Quarter Ended												Linked Quarter							Year over Year
NONPERFORMING ASSETS (1)	12/31/2023				9/30/2023				12/31/2022				$ Change				% Change			$ Change				% Change
Nonaccrual LHFI
Alabama (2)	$	23,271			$	23,530			$	12,300			$	(259	)		-1.1	%		$	10,971			89.2	%
Florida		170				151				227				19			12.6	%			(57	)		-25.1	%
Mississippi (3)		54,615				45,050				24,683				9,565			21.2	%			29,932			n/m
Tennessee (4)		1,802				1,841				5,566				(39	)		-2.1	%			(3,764	)		-67.6	%
Texas		20,150				20,327				23,196				(177	)		-0.9	%			(3,046	)		-13.1	%
Total nonaccrual LHFI		100,008				90,899				65,972				9,109			10.0	%			34,036			51.6	%
Other real estate
Alabama (2)		1,397				315				194				1,082			n/m				1,203			n/m
Mississippi (3)		1,242				942				1,769				300			31.8	%			(527	)		-29.8	%
Tennessee (4)		—				—				23				—			n/m				(23	)		-100.0	%
Texas		4,228				4,228				—				—			0.0	%			4,228			n/m
Total other real estate		6,867				5,485				1,986				1,382			25.2	%			4,881			n/m
Total nonperforming assets	$	106,875			$	96,384			$	67,958			$	10,491			10.9	%		$	38,917			57.3	%
LOANS PAST DUE OVER 90 DAYS (1)
LHFI	$	5,790			$	3,804			$	3,929			$	1,986			52.2	%		$	1,861			47.4	%
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	51,243			$	42,532			$	49,320			$	8,711			20.5	%		$	1,923			3.9	%
	Quarter Ended												Linked Quarter							Year over Year
ACL LHFI (1)	12/31/2023				9/30/2023				12/31/2022				$ Change				% Change			$ Change				% Change
Beginning Balance	$	134,031			$	129,298			$	115,050			$	4,733			3.7	%		$	18,981			16.5	%
Provision for credit losses, LHFI		7,585				8,322				6,902				(737	)		-8.9	%			683			9.9	%
Charge-offs		(4,250	)			(7,496	)			(3,893	)			3,246			43.3	%			(357	)		-9.2	%
Recoveries		2,001				3,907				2,155				(1,906	)		-48.8	%			(154	)		-7.1	%
Net (charge-offs) recoveries		(2,249	)			(3,589	)			(1,738	)			1,340			37.3	%			(511	)		-29.4	%
Ending Balance	$	139,367			$	134,031			$	120,214			$	5,336			4.0	%		$	19,153			15.9	%
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama (2)	$	(299	)		$	(165	)		$	98			$	(134	)		-81.2	%		$	(397	)		n/m
Florida		180				21				(60	)			159			n/m				240			n/m
Mississippi (3)		(1,943	)			(1,867	)			(1,657	)			(76	)		-4.1	%			(286	)		-17.3	%
Tennessee (4)		(193	)			2,127				(195	)			(2,320	)		n/m				2			-1.0	%
Texas		6				(3,705	)			76				3,711			n/m				(70	)		-92.1	%
Total net (charge-offs) recoveries	$	(2,249	)		$	(3,589	)		$	(1,738	)		$	1,340			37.3	%		$	(511	)		-29.4	%
(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
December 31, 2023
($ in thousands)
(unaudited)
		Quarter Ended																				Year Ended
AVERAGE BALANCES		12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022				12/31/2023				12/31/2022
Securities AFS-taxable		$	1,986,825			$	2,049,006			$	2,140,505			$	2,187,121			$	2,572,675			$	2,090,201			$	2,932,054
Securities AFS-nontaxable			4,246				4,779				4,796				4,812				4,828				4,657				4,997
Securities HTM-taxable			1,430,169				1,445,895				1,463,086				1,479,283				1,268,952				1,454,450				911,010
Securities HTM-nontaxable			340				907				1,718				4,509				4,514				1,854				5,623
Total securities			3,421,580				3,500,587				3,610,105				3,675,725				3,850,969				3,551,162				3,853,684
PPP loans			—				—				—				—				3,235				—				14,868
Loans (includes loans held for sale)			13,010,028				12,926,942				12,732,057				12,530,449				12,006,661				12,801,531				11,236,388
Fed funds sold and reverse repurchases			121				230				3,275				2,379				6,566				1,492				1,753
Other earning assets			670,477				682,644				903,027				647,760				375,190				728,181				907,414
Total earning assets			17,102,206				17,110,403				17,248,464				16,856,313				16,242,621				17,082,366				16,014,107
ACL LHFI			(133,742	)			(127,915	)			(121,960	)			(119,978	)			(114,948	)			(125,942	)			(104,138	)
Other assets			1,749,069				1,721,310				1,648,583				1,762,449				1,630,085				1,718,058				1,567,921
Total assets		$	18,717,533			$	18,703,798			$	18,775,087			$	18,498,784			$	17,757,758			$	18,674,482			$	17,477,890
Interest-bearing demand deposits		$	5,053,935			$	4,875,714			$	4,803,737			$	4,751,154			$	4,719,303			$	4,871,977			$	4,585,955
Savings deposits			3,526,600				3,642,158				4,002,134				4,193,764				4,379,673				3,838,791				4,579,742
Time deposits			3,427,384				3,075,224				2,335,752				1,907,449				1,152,905				2,691,682				1,153,983
Total interest-bearing deposits			12,007,919				11,593,096				11,141,623				10,852,367				10,251,881				11,402,450				10,319,680
Fed funds purchased and repurchases			403,041				414,696				389,834				436,535				549,406				410,945				283,328
Other borrowings			590,765				912,151				1,330,010				1,110,843				530,993				984,315				198,672
Subordinated notes			123,446				123,391				123,337				123,281				123,226				123,364				123,144
Junior subordinated debt securities			61,856				61,856				61,856				61,856				61,856				61,856				61,856
Total interest-bearing liabilities			13,187,027				13,105,190				13,046,660				12,584,882				11,517,362				12,982,930				10,986,680
Noninterest-bearing deposits			3,296,351				3,429,815				3,595,927				3,813,248				4,177,113				3,532,134				4,452,046
Other liabilities			641,662				585,908				552,209				576,826				569,992				589,320				434,310
Total liabilities			17,125,040				17,120,913				17,194,796				16,974,956				16,264,467				17,104,384				15,873,036
Shareholders' equity			1,592,493				1,582,885				1,580,291				1,523,828				1,493,291				1,570,098				1,604,854
Total liabilities and equity		$	18,717,533			$	18,703,798			$	18,775,087			$	18,498,784			$	17,757,758			$	18,674,482			$	17,477,890

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2023
($ in thousands)
(unaudited)
PERIOD END BALANCES		12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Cash and due from banks		$	975,543			$	750,492			$	832,052			$	1,297,144			$	734,787
Fed funds sold and reverse repurchases			—				—				—				—				4,000
Securities available for sale			1,762,878				1,766,174				1,871,883				1,984,162				2,024,082
Securities held to maturity			1,426,279				1,438,287				1,458,665				1,474,338				1,494,514
PPP loans			—				—				—				—				—
LHFS			184,812				169,244				181,094				175,926				135,226
LHFI			12,950,524				12,810,259				12,613,967				12,497,195				12,204,039
ACL LHFI			(139,367	)			(134,031	)			(129,298	)			(122,239	)			(120,214	)
Net LHFI			12,811,157				12,676,228				12,484,669				12,374,956				12,083,825
Premises and equipment, net			232,537				230,718				227,630				223,975				212,365
Mortgage servicing rights			131,870				142,379				134,350				127,206				129,677
Goodwill			384,237				384,237				384,237				384,237				384,237
Identifiable intangible assets			2,965				3,093				3,222				3,352				3,640
Other real estate			6,867				5,485				1,137				1,684				1,986
Operating lease right-of-use assets			38,142				39,639				38,179				35,315				36,301
Other assets			764,902				784,863				805,508				794,883				770,838
Total assets		$	18,722,189			$	18,390,839			$	18,422,626			$	18,877,178			$	18,015,478
Deposits:
Noninterest-bearing		$	3,197,620			$	3,320,124			$	3,461,073			$	3,797,055			$	4,093,771
Interest-bearing			12,372,143				11,781,799				11,452,827				10,986,606				10,343,877
Total deposits			15,569,763				15,101,923				14,913,900				14,783,661				14,437,648
Fed funds purchased and repurchases			405,745				321,799				311,179				477,980				449,331
Other borrowings			483,230				793,193				1,056,714				1,485,181				1,050,938
Subordinated notes			123,482				123,427				123,372				123,317				123,262
Junior subordinated debt securities			61,856				61,856				61,856				61,856				61,856
ACL on off-balance sheet credit exposures			34,057				34,945				34,841				34,596				36,838
Operating lease liabilities			41,584				42,730				40,845				37,988				38,932
Other liabilities			340,625				340,615				308,726				310,500				324,405
Total liabilities			17,060,342				16,820,488				16,851,433				17,315,079				16,523,210
Common stock			12,725				12,724				12,724				12,720				12,705
Capital surplus			159,688				158,316				156,834				155,297				154,645
Retained earnings			1,709,157				1,687,199				1,667,339				1,636,463				1,600,321
Accumulated other comprehensive income (loss),
net of tax			(219,723	)			(287,888	)			(265,704	)			(242,381	)			(275,403	)
Total shareholders' equity			1,661,847				1,570,351				1,571,193				1,562,099				1,492,268
Total liabilities and equity		$	18,722,189			$	18,390,839			$	18,422,626			$	18,877,178			$	18,015,478

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2023
($ in thousands except per share data)
(unaudited)
		Quarter Ended																		Year Ended
INCOME STATEMENTS		12/31/2023				9/30/2023			6/30/2023			3/31/2023				12/31/2022				12/31/2023				12/31/2022
Interest and fees on LHFS & LHFI-FTE		$	210,288			$	206,523		$	192,941		$	178,967			$	159,566			$	788,719			$	485,246
Interest and fees on PPP loans			—				—			—			—				101				—				639
Interest on securities-taxable			15,936				16,624			16,779			16,761				16,577				66,100				59,717
Interest on securities-tax exempt-FTE			44				58			69			92				93				263				422
Interest on fed funds sold and reverse repurchases			2				3			45			30				71				80				74
Other interest income			9,918				8,613			12,077			6,527				3,556				37,135				8,080
Total interest income-FTE			236,188				231,821			221,911			202,377				179,964				892,297				554,178
Interest on deposits			80,847				69,797			54,409			40,898				18,438				245,951				29,069
Interest on fed funds purchased and repurchases			5,347				5,375			4,865			4,832				4,762				20,419				6,127
Other interest expense			9,946				14,713			19,350			15,575				6,730				59,584				11,929
Total interest expense			96,140				89,885			78,624			61,305				29,930				325,954				47,125
Net interest income-FTE			140,048				141,936			143,287			141,072				150,034				566,343				507,053
Provision for credit losses, LHFI			7,585				8,322			8,211			3,244				6,902				27,362				21,677
Provision for credit losses, off-balance sheet
credit exposures			(888	)			104			245			(2,242	)			5,215				(2,781	)			1,215
Net interest income after provision-FTE			133,351				133,510			134,831			140,070				137,917				541,762				484,161
Service charges on deposit accounts			11,311				11,074			10,695			10,336				11,162				43,416				42,157
Bank card and other fees			8,502				8,217			8,917			7,803				8,191				33,439				36,105
Mortgage banking, net			5,519				6,458			6,600			7,639				3,408				26,216				28,306
Insurance commissions			13,197				15,303			14,764			14,305				12,019				57,569				53,721
Wealth management			8,657				8,773			8,882			8,780				8,079				35,092				35,013
Other, net			2,579				2,399			3,695			2,514				2,311				11,187				9,842
Securities gains (losses), net			39				—			—			—				—				39				—
Total noninterest income			49,804				52,224			53,553			51,377				45,170				206,958				205,144
Salaries and employee benefits			78,003				76,666			75,940			74,056				73,469				304,665				287,440
Services and fees (2)			27,906				27,882			28,264			25,426				27,709				109,478				105,469
Net occupancy-premises			7,362				7,383			7,108			7,629				7,898				29,482				29,264
Equipment expense			6,517				6,816			6,404			6,405				6,268				26,142				24,448
Litigation settlement expense (1)			—				6,500			—			—				100,750				6,500				100,750
Other expense (2)			16,641				15,698			14,502			14,811				15,135				61,652				55,842
Total noninterest expense			136,429				140,945			132,218			128,327				231,229				537,919				603,213
Income (loss) before income taxes and tax eq adj			46,726				44,789			56,166			63,120				(48,142	)			210,801				86,092
Tax equivalent adjustment			3,306				3,299			3,383			3,477				3,451				13,465				12,345
Income (loss) before income taxes			43,420				41,490			52,783			59,643				(51,593	)			197,336				73,747
Income taxes			7,297				7,461			7,746			9,343				(17,530	)			31,847				1,860
Net income (loss)		$	36,123			$	34,029		$	45,037		$	50,300			$	(34,063	)		$	165,489			$	71,887
Per share data
Earnings (loss) per share - basic		$	0.59			$	0.56		$	0.74		$	0.82			$	(0.56	)		$	2.71			$	1.17
Earnings (loss) per share - diluted		$	0.59			$	0.56		$	0.74		$	0.82			$	(0.56	)		$	2.70			$	1.17
Dividends per share		$	0.23			$	0.23		$	0.23		$	0.23			$	0.23			$	0.92			$	0.92
Weighted average shares outstanding
Basic			61,070,481				61,069,750			61,063,277			61,011,059				60,969,400				61,053,849				61,242,358
Diluted			61,296,840				61,263,032			61,230,031			61,193,275				61,173,249				61,230,621				61,431,726
Period end shares outstanding			61,071,173				61,070,095			61,069,036			61,048,516				60,977,686				61,071,173				60,977,686
(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
December 31, 2023
($ in thousands)
(unaudited)
		Quarter Ended
NONPERFORMING ASSETS (1)		12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Nonaccrual LHFI
Alabama (2)		$	23,271			$	23,530			$	11,058			$	10,919			$	12,300
Florida			170				151				334				256				227
Mississippi (3)			54,615				45,050				36,288				32,560				24,683
Tennessee (4)			1,802				1,841				5,088				5,416				5,566
Texas			20,150				20,327				22,259				23,224				23,196
Total nonaccrual LHFI			100,008				90,899				75,027				72,375				65,972
Other real estate
Alabama (2)			1,397				315				—				—				194
Mississippi (3)			1,242				942				1,137				1,495				1,769
Tennessee (4)			—				—				—				189				23
Texas			4,228				4,228				—				—				—
Total other real estate			6,867				5,485				1,137				1,684				1,986
Total nonperforming assets		$	106,875			$	96,384			$	76,164			$	74,059			$	67,958
LOANS PAST DUE OVER 90 DAYS (1)
LHFI		$	5,790			$	3,804			$	3,911			$	2,255			$	3,929
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)		$	51,243			$	42,532			$	35,766			$	41,468			$	49,320
		Quarter Ended																				Year Ended
ACL LHFI (1)		12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022				12/31/2023				12/31/2022
Beginning Balance		$	134,031			$	129,298			$	122,239			$	120,214			$	115,050			$	120,214			$	99,457
Provision for credit losses, LHFI			7,585				8,322				8,211				3,244				6,902				27,362				21,677
Charge-offs			(4,250	)			(7,496	)			(2,773	)			(2,996	)			(3,893	)			(17,515	)			(11,332	)
Recoveries			2,001				3,907				1,621				1,777				2,155				9,306				10,412
Net (charge-offs) recoveries			(2,249	)			(3,589	)			(1,152	)			(1,219	)			(1,738	)			(8,209	)			(920	)
Ending Balance		$	139,367			$	134,031			$	129,298			$	122,239			$	120,214			$	139,367			$	120,214
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama (2)		$	(299	)		$	(165	)		$	(141	)		$	(268	)		$	98			$	(873	)		$	2,019
Florida			180				21				(35	)			(36	)			(60	)			130				652
Mississippi (3)			(1,943	)			(1,867	)			(762	)			(775	)			(1,657	)			(5,347	)			(2,713	)
Tennessee (4)			(193	)			2,127				(166	)			(124	)			(195	)			1,644				(790	)
Texas			6				(3,705	)			(48	)			(16	)			76				(3,763	)			(88	)
Total net (charge-offs) recoveries		$	(2,249	)		$	(3,589	)		$	(1,152	)		$	(1,219	)		$	(1,738	)		$	(8,209	)		$	(920	)
(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
December 31, 2023
($ in thousands)
(unaudited)
		Quarter Ended																				Year Ended
FINANCIAL RATIOS AND OTHER DATA		12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022				12/31/2023			12/31/2022
Return on average equity			9.00	%			8.53	%			11.43	%			13.39	%			-9.05	%		10.54	%		4.48	%
Return on average tangible equity			11.92	%			11.32	%			15.18	%			18.03	%			-12.14	%		14.04	%		6.00	%
Return on average assets			0.77	%			0.72	%			0.96	%			1.10	%			-0.76	%		0.89	%		0.41	%
Interest margin - Yield - FTE			5.48	%			5.38	%			5.16	%			4.87	%			4.40	%		5.22	%		3.46	%
Interest margin - Cost			2.23	%			2.08	%			1.83	%			1.47	%			0.73	%		1.91	%		0.29	%
Net interest margin - FTE			3.25	%			3.29	%			3.33	%			3.39	%			3.66	%		3.32	%		3.17	%
Efficiency ratio (1)			70.25	%			68.33	%			66.17	%			65.60	%			65.85	%		67.57	%		69.37	%
Full-time equivalent employees			2,757				2,756				2,761				2,758				2,738
CREDIT QUALITY RATIOS (2)
Net (recoveries) charge-offs / average loans			0.07	%			0.11	%			0.04	%			0.04	%			0.06	%		0.06	%		0.01	%
Provision for credit losses, LHFI / average loans			0.23	%			0.26	%			0.26	%			0.10	%			0.23	%		0.21	%		0.19	%
Nonaccrual LHFI / (LHFI + LHFS)			0.76	%			0.70	%			0.59	%			0.57	%			0.53	%
Nonperforming assets / (LHFI + LHFS)			0.81	%			0.74	%			0.60	%			0.58	%			0.55	%
Nonperforming assets / (LHFI + LHFS
+ other real estate)			0.81	%			0.74	%			0.60	%			0.58	%			0.55	%
ACL LHFI / LHFI			1.08	%			1.05	%			1.03	%			0.98	%			0.99	%
ACL LHFI-commercial / commercial LHFI			0.85	%			0.86	%			0.84	%			0.80	%			0.85	%
ACL LHFI-consumer / consumer and
home mortgage LHFI			1.81	%			1.66	%			1.60	%			1.54	%			1.41	%
ACL LHFI / nonaccrual LHFI			139.36	%			147.45	%			172.34	%			168.90	%			182.22	%
ACL LHFI / nonaccrual LHFI
(excl individually analyzed loans)			249.31	%			273.60	%			301.44	%			320.80	%			399.19	%
CAPITAL RATIOS
Total equity / total assets			8.88	%			8.54	%			8.53	%			8.28	%			8.28	%
Tangible equity / tangible assets			6.95	%			6.57	%			6.56	%			6.35	%			6.27	%
Tangible equity / risk-weighted assets			8.41	%			7.81	%			7.91	%			7.94	%			7.61	%
Tier 1 leverage ratio			8.62	%			8.49	%			8.35	%			8.29	%			8.47	%
Common equity tier 1 capital ratio			10.04	%			9.89	%			9.87	%			9.76	%			9.74	%
Tier 1 risk-based capital ratio			10.44	%			10.29	%			10.27	%			10.17	%			10.15	%
Total risk-based capital ratio			12.29	%			12.11	%			12.08	%			11.95	%			11.91	%
STOCK PERFORMANCE
Market value-Close		$	27.88			$	21.73			$	21.12			$	24.70			$	34.91
Book value		$	27.21			$	25.71			$	25.73			$	25.59			$	24.47
Tangible book value		$	20.87			$	19.37			$	19.38			$	19.24			$	18.11
(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
December 31, 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 Stanford Settlement) relating to litigation involving the Stanford Financial Group. On January 13, 2023, TNB entered into a Settlement Agreement (the Stanford Settlement Agreement) reflecting the terms of the Stanford Settlement. The parties to the Stanford Settlement Agreement are, on the one hand, (i) Ralph S. Janvey, solely in his capacity as the court-appointed receiver (the Stanford 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 Stanford 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 Stanford Settlement Agreement provided that the parties would request dismissal of the Jackson Action pursuant to the terms of the bar orders described below. The Court’s approval of the Stanford Settlement Agreement, including the bar orders described below, has occurred and has been upheld on appeal, as described below. As a result, pursuant to the Stanford Settlement, TNB will make a one-time cash payment of $100.0 million to the Stanford Receiver on February 2, 2024.

The Stanford 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 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 was a condition of the Stanford Settlement.

The Stanford Settlement Agreement was 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 (which has occurred).

The Stanford 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 Stanford Settlement Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Stanford 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 Stanford 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 Stanford 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 Stanford 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 Stanford Settlement Agreement and the judgment and bar order with respect to the Jackson Action.

On May 10, 2023, Robert Allen Stanford, writing from prison, appealed the District Court’s approval of the Stanford Settlement to the Fifth Circuit Court of Appeals. On June 12, 2023, the Stanford Receiver moved to dismiss the appeal as frivolous. On July 25, 2023, a three-judge panel of the Fifth Circuit issued a per curiam order dismissing Stanford’s appeal as frivolous. In July and August 2023, Mr. Stanford filed, then subsequently withdrew, a motion seeking panel rehearing of the Fifth Circuit’s July 25, 2023, decision.

When Stanford’s deadline to appeal the Fifth Circuit’s ruling to the Supreme Court of the United States passed without his filing a petition for certiorari, the trial court’s ruling approving the Stanford Settlement and entering the bar orders became final and non-appealable, as defined in the Stanford Settlement Agreement (the Stanford Settlement Effective Date). On November 14, the parties to the Rotstain and Smith Actions filed agreed dismissals of those cases, which were granted on November 27, 2023 (Smith Action) and December 18, 2023 (Rotstain Action). Those dismissals were final and non-appealable as of December 27, 2023 (Smith Action) and January 17, 2024 (Rotstain Action). Accordingly, pursuant to the Stanford Settlement Agreement, TNB will make the settlement payment on February 2, 2024, concluding the Stanford Settlement.

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 Stanford Settlement and the Stanford 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.

As previously announced, on August 30, 2023, TNB agreed to a settlement in principle (the Adams/Madison Timber Settlement) relating to litigation and claims involving Arthur Lamar Adams and Madison Timber Properties, LLC (collectively, Adams/Madison Timber). On October 9, 2023, TNB entered into a Settlement Agreement (the Adams/Madison Timber Settlement Agreement) reflecting the terms of the Adams/Madison Timber Settlement. The parties to the Adams/Madison Timber Settlement are, on the one hand, Alysson Mills in her capacity as Court-appointed Receiver (the Adams/Madison Timber Receiver); and, on the other hand, TNB. Under the terms of the Adams/Madison Timber Settlement Agreement, the parties agreed to settle and dismiss the Adams/Madison Timber Action, and the Adams/Madison Timber Receiver agreed to fully release all claims against TNB and any of its employees, agents and representatives. The Adams/Madison Timber Settlement included the parties’ agreement to seek the Court’s entry of bar orders prohibiting any continued or future claims by anyone against TNB and its related parties relating to Adams/Madison Timber, whether asserted to date or not. Final Court approval of a bar order was a condition of the Adams/Madison Timber Settlement. On November 14, 2023, the Court entered a Partial Final Judgment and Final Bar Order approving the settlement. The bar order therefore is expected to prohibit all litigation relating to Adams/Madison Timber described herein.

The Adams/Madison Timber Settlement was subject to notice to Adams/Madison Timber investors, and final, non-appealable approval by the Court and entry of a judgment dismissing the Lawsuit against TNB. No investor or other interested parties appealed the bar order before the appeal deadline passed. Accordingly, TNB made the settlement payment to the Adams/Madison Timber Receiver on January 22, 2024, concluding the Adams/Madison Timber Settlement.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2023
($ in thousands)
(unaudited)

Note 1 - Litigation Settlement (continued)

At the time of the entry into the Stanford Settlement as described above, 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. As a result of the entry into the Adams/Madison Timber Settlement as described above, Trustmark Corporation recognized $6.5 million of litigation settlement expense which was included in noninterest expense related to the Adams/Madison Timber litigation during the third quarter of 2023. Trustmark Corporation expects that both the Stanford Settlement and Adams/Madison Timber Settlement will be tax deductible. Trustmark Corporation and TNB remain substantially above levels considered to be well-capitalized under all relevant standards.

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:

		12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities		$	372,368			$	363,476			$	362,966			$	386,903			$	391,513
U.S. Government agency obligations			5,792				6,780				6,999				7,254				7,766
Obligations of states and political subdivisions			—				4,642				4,813				4,907				4,862
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			23,135				22,881				25,336				26,851				27,097
Issued by FNMA and FHLMC			1,176,798				1,171,521				1,250,435				1,317,848				1,345,463
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			86,074				90,402				98,388				108,192				115,140
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			98,711				106,472				122,946				132,207				132,241
Total securities available for sale		$	1,762,878			$	1,766,174			$	1,871,883			$	1,984,162			$	2,024,082
SECURITIES HELD TO MATURITY
U.S. Treasury securities		$	29,068			$	28,872			$	28,679			$	28,486			$	28,295
Obligations of states and political subdivisions			340				341				1,180				4,507				4,510
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			13,005				13,090				13,235				4,336				4,442
Issued by FNMA and FHLMC			469,593				474,003				484,679				497,854				509,311
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			154,466				162,031				171,002				179,334				188,201
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			759,807				759,950				759,890				759,821				759,755
Total securities held to maturity		$	1,426,279			$	1,438,287			$	1,458,665			$	1,474,338			$	1,494,514

At December 31, 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 $57.6 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 99.99% 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
December 31, 2023
($ in thousands)
(unaudited)

Note 3 – Loan Composition

LHFI consisted of the following during the periods presented:

LHFI BY TYPE		12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Loans secured by real estate:
Construction, land development and other land loans		$	1,510,679			$	1,609,326			$	1,722,657			$	1,723,772			$	1,719,542
Secured by 1-4 family residential properties			2,904,715				2,893,606				2,854,182				2,822,048				2,775,847
Secured by nonfarm, nonresidential properties			3,489,434				3,569,671				3,471,728				3,375,579				3,278,830
Other real estate secured			1,312,551				1,218,499				954,410				847,527				742,538
Commercial and industrial loans			1,922,910				1,828,924				1,883,480				1,882,360				1,821,259
Consumer loans			161,725				161,940				163,788				162,911				166,425
State and other political subdivision loans			1,088,466				1,056,569				1,111,710				1,193,727				1,223,863
Other loans and leases			560,044				471,724				452,012				489,271				475,735
LHFI			12,950,524				12,810,259				12,613,967				12,497,195				12,204,039
ACL LHFI			(139,367	)			(134,031	)			(129,298	)			(122,239	)			(120,214	)
Net LHFI		$	12,811,157			$	12,676,228			$	12,484,669			$	12,374,956			$	12,083,825

The following table presents the LHFI composition based upon the region where the loan was originated and reflects each region’s diversified mix of loans:

	December 31, 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	$	1,510,679			$	688,438			$	37,626			$	435,406			$	37,194			$	312,015
Secured by 1-4 family residential properties		2,904,715				151,446				54,998				2,582,329				84,031				31,911
Secured by nonfarm, nonresidential properties		3,489,434				960,656				233,908				1,431,968				153,226				709,676
Other real estate secured		1,312,551				583,165				1,761				396,715				7,587				323,323
Commercial and industrial loans		1,922,910				658,573				25,406				780,949				217,729				240,253
Consumer loans		161,725				22,609				7,509				101,389				20,433				9,785
State and other political subdivision loans		1,088,466				71,882				52,759				813,291				25,999				124,535
Other loans and leases		560,044				209,874				8,476				223,583				46,519				71,592
Loans	$	12,950,524			$	3,346,643			$	422,443			$	6,765,630			$	592,718			$	1,823,090
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots	$	71,875			$	30,186			$	8,353			$	17,257			$	4,714			$	11,365
Development		146,655				74,015				1,262				36,690				12,649				22,039
Unimproved land		101,941				17,432				12,853				36,573				8,094				26,989
1-4 family construction		322,415				164,712				13,099				95,297				11,737				37,570
Other construction		867,793				402,093				2,059				249,589				—				214,052
Construction, land development and other land loans	$	1,510,679			$	688,438			$	37,626			$	435,406			$	37,194			$	312,015
(1) Includes Georgia Loan Production Office.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2023
($ in thousands)
(unaudited)

Note 3 – Loan Composition (continued)

		December 31, 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		$	346,844			$	128,743			$	25,732			$	91,057			$	17,721			$	83,591
Office			286,511				104,114				19,857				94,294				1,649				66,597
Hotel/motel			270,740				144,403				47,111				53,227				25,999				—
Mini-storage			157,938				32,452				1,917				103,500				756				19,313
Industrial			382,737				57,386				19,762				123,306				9,730				172,553
Health care			97,783				69,352				688				25,021				333				2,389
Convenience stores			26,254				3,315				425				13,777				249				8,488
Nursing homes/senior living			508,665				229,352				—				160,359				4,901				114,053
Other			110,828				31,370				9,232				52,521				8,321				9,384
Total non-owner occupied loans			2,188,300				800,487				124,724				717,062				69,659				476,368
Owner-occupied:
Office			152,053				44,028				38,401				39,790				11,459				18,375
Churches			62,217				17,098				4,178				34,899				3,541				2,501
Industrial warehouses			159,227				11,619				4,618				40,837				16,330				85,823
Health care			125,304				11,031				6,274				87,507				2,269				18,223
Convenience stores			142,537				12,593				29,299				65,031				14				35,600
Retail			89,174				9,606				15,644				37,340				17,694				8,890
Restaurants			48,172				4,010				3,503				22,316				15,095				3,248
Auto dealerships			43,556				5,533				201				21,383				16,439				—
Nursing homes/senior living			345,108				31,644				—				287,264				—				26,200
Other			133,786				13,007				7,066				78,539				726				34,448
Total owner-occupied loans			1,301,134				160,169				109,184				714,906				83,567				233,308
Loans secured by nonfarm, nonresidential properties		$	3,489,434			$	960,656			$	233,908			$	1,431,968			$	153,226			$	709,676
(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																				Year Ended
		12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022				12/31/2023				12/31/2022
Securities – taxable			1.85	%			1.89	%			1.87	%			1.85	%			1.71	%			1.86	%			1.55	%
Securities – nontaxable			3.81	%			4.05	%			4.25	%			4.00	%			3.95	%			4.04	%			3.97	%
Securities – total			1.85	%			1.89	%			1.87	%			1.86	%			1.72	%			1.87	%			1.56	%
PPP loans			—				—				—				—				12.39	%			—				4.30	%
Loans - LHFI & LHFS			6.41	%			6.34	%			6.08	%			5.79	%			5.27	%			6.16	%			4.32	%
Loans - total			6.41	%			6.34	%			6.08	%			5.79	%			5.27	%			6.16	%			4.32	%
Fed funds sold & reverse repurchases			6.56	%			5.17	%			5.51	%			5.11	%			4.29	%			5.36	%			4.22	%
Other earning assets			5.87	%			5.01	%			5.36	%			4.09	%			3.76	%			5.10	%			0.89	%
Total earning assets			5.48	%			5.38	%			5.16	%			4.87	%			4.40	%			5.22	%			3.46	%
Interest-bearing deposits			2.67	%			2.39	%			1.96	%			1.53	%			0.71	%			2.16	%			0.28	%
Fed funds purchased & repurchases			5.26	%			5.14	%			5.01	%			4.49	%			3.44	%			4.97	%			2.16	%
Other borrowings			5.08	%			5.32	%			5.12	%			4.87	%			3.73	%			5.09	%			3.11	%
Total interest-bearing liabilities			2.89	%			2.72	%			2.42	%			1.98	%			1.03	%			2.51	%			0.43	%
Total Deposits			2.10	%			1.84	%			1.48	%			1.13	%			0.51	%			1.65	%			0.20	%
Net interest margin			3.25	%			3.29	%			3.33	%			3.39	%			3.66	%			3.32	%			3.17	%
Net interest margin excluding PPP loans
and the FRB balance			3.16	%			3.24	%			3.23	%			3.36	%			3.66	%			3.25	%			3.30	%

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 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 fourth quarter of 2023, the average FRB balance totaled $572.0 million compared to $566.3 million for the third 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 8 basis points when compared to the third quarter of 2023, totaling 3.16% for the fourth quarter of 2023, primarily due to increased costs of interest-bearing liabilities which resulted from the higher interest-rate environment and was partially offset by an increase in the yield on the loans held for investment and held for sale 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 $2.2 million during the fourth quarter of 2023.

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

		Quarter Ended																				Year Ended
		12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022				12/31/2023				12/31/2022
Mortgage servicing income, net		$	6,731			$	6,916			$	6,764			$	6,785			$	6,636			$	27,196			$	26,291
Change in fair value-MSR from runoff			(2,972	)			(3,203	)			(2,710	)			(1,145	)			(2,981	)			(10,030	)			(14,034	)
Gain on sales of loans, net			3,913				3,748				3,887				3,797				3,328				15,345				20,178
Mortgage banking income before hedge
ineffectiveness			7,672				7,461				7,941				9,437				6,983				32,511				32,435
Change in fair value-MSR from market changes			(10,224	)			6,809				5,898				(3,972	)			(3,348	)			(1,489	)			38,181
Change in fair value of derivatives			8,071				(7,812	)			(7,239	)			2,174				(227	)			(4,806	)			(42,310	)
Net positive (negative) hedge ineffectiveness			(2,153	)			(1,003	)			(1,341	)			(1,798	)			(3,575	)			(6,295	)			(4,129	)
Mortgage banking, net		$	5,519			$	6,458			$	6,600			$	7,639			$	3,408			$	26,216			$	28,306

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2023
($ in thousands)
(unaudited)

Note 6 – Other Noninterest Income and Expense

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

		Quarter Ended																				Year Ended
		12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022				12/31/2023				12/31/2022
Partnership amortization for tax credit purposes		$	(2,013	)		$	(1,995	)		$	(2,019	)		$	(1,961	)		$	(1,869	)		$	(7,988	)		$	(6,211	)
Increase in life insurance cash surrender value			1,825				1,784				1,716				1,693				1,687				7,018				6,673
Other miscellaneous income			2,767				2,610				3,998				2,782				2,493				12,157				9,380
Total other, net		$	2,579			$	2,399			$	3,695			$	2,514			$	2,311			$	11,187			$	9,842

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
		12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022				12/31/2023				12/31/2022
Loan expense (1)		$	2,380			$	3,130			$	3,066			$	2,538			$	2,908			$	11,114			$	12,249
Amortization of intangibles			128				129				130				288				312				675				1,434
FDIC assessment expense			4,844				3,765				2,550				2,370				2,130				13,529				7,385
Other real estate expense, net			(184	)			(40	)			171				172				18				119				1,173
Other miscellaneous expense			9,473				8,714				8,585				9,443				9,767				36,215				33,601
Total other expense (1)		$	16,641			$	15,698			$	14,502			$	14,811			$	15,135			$	61,652			$	55,842
(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
December 31, 2023
($ in thousands)
(unaudited)

Note 7 – Non-GAAP Financial Measures (continued)

				Quarter Ended																				Year Ended
				12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022				12/31/2023				12/31/2022
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity				$	1,592,493			$	1,582,885			$	1,580,291			$	1,523,828			$	1,493,291			$	1,570,098			$	1,604,854
Less: Goodwill					(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)
Identifiable intangible assets					(3,044	)			(3,174	)			(3,301	)			(3,523	)			(3,816	)			(3,259	)			(4,312	)
Total average tangible equity				$	1,205,212			$	1,195,474			$	1,192,753			$	1,136,068			$	1,105,238			$	1,182,602			$	1,216,305
PERIOD END BALANCES
Total shareholders' equity				$	1,661,847			$	1,570,351			$	1,571,193			$	1,562,099			$	1,492,268
Less: Goodwill					(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)
Identifiable intangible assets					(2,965	)			(3,093	)			(3,222	)			(3,352	)			(3,640	)
Total tangible equity		(a)		$	1,274,645			$	1,183,021			$	1,183,734			$	1,174,510			$	1,104,391
TANGIBLE ASSETS
Total assets				$	18,722,189			$	18,390,839			$	18,422,626			$	18,877,178			$	18,015,478
Less: Goodwill					(384,237	)			(384,237	)			(384,237	)			(384,237	)			(384,237	)
Identifiable intangible assets					(2,965	)			(3,093	)			(3,222	)			(3,352	)			(3,640	)
Total tangible assets		(b)		$	18,334,987			$	18,003,509			$	18,035,167			$	18,489,589			$	17,627,601
Risk-weighted assets		(c)		$	15,153,263			$	15,143,531			$	14,966,614			$	14,793,893			$	14,521,078
NET INCOME (LOSS) ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income (loss)				$	36,123			$	34,029			$	45,037			$	50,300			$	(34,063	)		$	165,489			$	71,887
Plus: Intangible amortization net of tax					96				96				97				216				234				505				1,076
Net income (loss) adjusted for intangible amortization				$	36,219			$	34,125			$	45,134			$	50,516			$	(33,829	)		$	165,994			$	72,963
Period end common shares outstanding		(d)			61,071,173				61,070,095				61,069,036				61,048,516				60,977,686
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity (1)					11.92	%			11.32	%			15.18	%			18.03	%			-12.14	%			14.04	%			6.00	%
Tangible equity/tangible assets		(a)/(b)			6.95	%			6.57	%			6.56	%			6.35	%			6.27	%
Tangible equity/risk-weighted assets		(a)/(c)			8.41	%			7.81	%			7.91	%			7.94	%			7.61	%
Tangible book value		(a)/(d)*1,000		$	20.87			$	19.37			$	19.38			$	19.24			$	18.11
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity				$	1,661,847			$	1,570,351			$	1,571,193			$	1,562,099			$	1,492,268
CECL transition adjustment					13,000				13,000				13,000				13,000				19,500
AOCI-related adjustments					219,723				287,888				265,704				242,381				275,403
CET1 adjustments and deductions:
Goodwill net of associated deferred
tax liabilities (DTLs)					(370,212	)			(370,219	)			(370,227	)			(370,234	)			(370,241	)
Other adjustments and deductions
for CET1 (2)					(2,693	)			(2,803	)			(2,915	)			(3,275	)			(3,258	)
CET1 capital		(e)			1,521,665				1,498,217				1,476,755				1,443,971				1,413,672
Additional tier 1 capital instruments
plus related surplus					60,000				60,000				60,000				60,000				60,000
Tier 1 capital				$	1,581,665			$	1,558,217			$	1,536,755			$	1,503,971			$	1,473,672
Common equity tier 1 capital ratio		(e)/(c)			10.04	%			9.89	%			9.87	%			9.76	%			9.74	%
(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
December 31, 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																				Year Ended
			12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022				12/31/2023				12/31/2022
Net interest income (GAAP)			$	136,742			$	138,637			$	139,904			$	137,595			$	146,583			$	552,878			$	494,708
Noninterest income (GAAP)				49,804				52,224				53,553				51,377				45,170				206,958				205,144
Pre-provision revenue		(a)	$	186,546			$	190,861			$	193,457			$	188,972			$	191,753			$	759,836			$	699,852
Noninterest expense (GAAP)			$	136,429			$	140,945			$	132,218			$	128,327			$	231,229			$	537,919			$	603,213
Less:	Reduction in force expense			(1,406	)			—				—				—				—				(1,406	)			—
	Litigation settlement expense			—				(6,500	)			—				—				(100,750	)			(6,500	)			(100,750	)
Adjusted noninterest expense - PPNR (Non-GAAP)		(b)	$	135,023			$	134,445			$	132,218			$	128,327			$	130,479			$	530,013			$	502,463
PPNR (Non-GAAP)		(a)-(b)	$	51,523			$	56,416			$	61,239			$	60,645			$	61,274			$	229,823			$	197,389

The following table presents adjustments to net income (loss) 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
	12/31/2023									12/31/2022									12/31/2023									12/31/2022
	Amount				Diluted EPS					Amount				Diluted EPS					Amount				Diluted EPS					Amount				Diluted EPS
Net income (loss) (GAAP)	$	36,123			$	0.59				$	(34,063	)		$	(0.56	)			$	165,489			$	2.70				$	71,887			$	1.17
Significant non-routine transactions (net of taxes):
Reduction in force expense		1,055				0.02					—				—					1,055				0.02					—				—
Litigation settlement expense		—				—					75,563				1.24					4,875				0.08					75,563				1.23
Net income adjusted for significant non-routine
transactions (Non-GAAP)	$	37,178			$	0.61				$	41,500			$	0.68				$	171,419			$	2.80				$	147,450			$	2.40
	Reported (GAAP)				Adjusted (Non- GAAP)					Reported (GAAP)				Adjusted (Non- GAAP)					Reported (GAAP)				Adjusted (Non- GAAP)					Reported (GAAP)				Adjusted (Non- GAAP)
Return on average equity		9.00	%			9.23	%				-9.05	%			10.75	%				10.54	%			10.90	%				4.48	%			9.13	%
Return on average tangible equity		11.92	%			12.22	%				-12.14	%			14.49	%				14.04	%			14.51	%				6.00	%			12.12	%
Return on average assets		0.77	%			0.79	%				-0.76	%			0.93	%				0.89	%			0.92	%				0.41	%			0.84	%

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2023
($ in thousands)
(unaudited)

Note 7 – Non-GAAP Financial Measures (continued)

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

			Quarter Ended																				Year Ended
			12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022				12/31/2023				12/31/2022
Total noninterest expense (GAAP)			$	136,429			$	140,945			$	132,218			$	128,327			$	231,229			$	537,919			$	603,213
Less:	Other real estate expense, net			184				40				(171	)			(172	)			(18	)			(119	)			(1,173	)
	Amortization of intangibles			(128	)			(129	)			(130	)			(288	)			(312	)			(675	)			(1,434	)
	Charitable contributions resulting in
	state tax credits			(325	)			(325	)			(325	)			(325	)			(375	)			(1,300	)			(1,500	)
	Reduction in force expense			(1,406	)			—				—				—				—				(1,406	)			—
	Litigation settlement expense			—				(6,500	)			—				—				(100,750	)			(6,500	)			(100,750	)
Adjusted noninterest expense (Non-GAAP)		(c)	$	134,754			$	134,031			$	131,592			$	127,542			$	129,774			$	527,919			$	498,356
Net interest income (GAAP)			$	136,742			$	138,637			$	139,904			$	137,595			$	146,583			$	552,878			$	494,708
Add:	Tax equivalent adjustment			3,306				3,299				3,383				3,477				3,451				13,465				12,345
Net interest income-FTE (Non-GAAP)		(a)	$	140,048			$	141,936			$	143,287			$	141,072			$	150,034			$	566,343			$	507,053
Noninterest income (GAAP)			$	49,804			$	52,224			$	53,553			$	51,377			$	45,170			$	206,958			$	205,144
Add:	Partnership amortization for tax credit purposes			2,013				1,995				2,019				1,961				1,869				7,988				6,211
Less:	Securities (gains) losses, net			(39	)			—				—				—				—				(39	)			—
Adjusted noninterest income (Non-GAAP)		(b)	$	51,778			$	54,219			$	55,572			$	53,338			$	47,039			$	214,907			$	211,355
Adjusted revenue (Non-GAAP)		(a)+(b)	$	191,826			$	196,155			$	198,859			$	194,410			$	197,073			$	781,250			$	718,408
Efficiency ratio (Non-GAAP)		(c)/((a)+(b))		70.25	%			68.33	%			66.17	%			65.60	%			65.85	%			67.57	%			69.37	%

 

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The Trustmark Stock at the time of publication of the news with a raise of +0,39 % to 25,80EUR on Lang & Schwarz stock exchange (23. Januar 2024, 22:33 Uhr).