Trustmark Corporation Announces Fourth Quarter and Fiscal Year 2021 Financial Results

Solid Balance Sheet Growth, Record Results in Insurance and Wealth Management

Trustmark Corporation (NASDAQGS:TRMK) reported net income of $26.2 million in the fourth quarter of 2021, representing diluted earnings per share of $0.42. For the full year, Trustmark’s net income totaled $147.4 million, representing diluted earnings per share of $2.34. Trustmark’s net income in 2021 produced a return on average tangible equity of 10.81% and a return on average assets of 0.86%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable March 15, 2022, to shareholders of record on March 1, 2022.

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2021 Highlights

• Loans held for investment (HFI) increased $423.3 million, or 4.3%
• Nonperforming assets declined 10.1% to represent 0.64% of loans HFI and held for sale (HFS)
• Recoveries exceeded charge-offs by $3.7 million
• Total deposits increased $1.0 billion, or 7.4%
• Repurchased $61.8 million, or approximately 1.9 million shares of common stock
• Insurance and Wealth Management businesses had a record year with revenue up 7.4% and 11.3%, respectively
• Mortgage Banking revenue totaled $63.8 million with loan production exceeding $2.8 billion
• Noninterest income totaled $221.9 million and represented 34.7% of total revenue
• Completed voluntary early retirement program that reduced workforce by 3.6%
• Expanded market optimization efforts with a net reduction of 10 offices during the year
• Continued technology investments to enhance efficiency and productivity

Duane A. Dewey, President and CEO, commented, “Our banking and mortgage banking businesses performed well while our insurance and wealth management businesses achieved record results. We experienced significant loan and deposit growth, and credit quality remained strong. While we continue to navigate the challenging low interest rate environment, we remain committed to positioning the company for continued long-term success. Our balance sheet is well positioned for rising interest rates. We will continue investments in technology to improve efficiency and broaden our reach through digital marketing and product delivery. Trustmark is well-positioned to serve and expand its customer base and create long-term value for its shareholders.”

Balance Sheet Management

• Loans HFI increased $72.9 million, or 0.7%, during the quarter
• Investment securities increased $128.9 million, or 3.7%, as excess liquidity was deployed linked-quarter
• Total deposits increased $164.3 million, or 1.1%, linked-quarter
• Maintained strong capital position with CET1 ratio of 11.29% and total risk-based capital ratio of 13.55%

Loans HFI totaled $10.2 billion at December 31, 2021, reflecting an increase of $72.9 million, or 0.7%, linked-quarter and $423.3 million, or 4.3%, year-over-year. The linked-quarter growth primarily reflects increases in commercial and industrial loans, 1-4 family mortgage loans, other loans, and loans secured by nonfarm, nonresidential properties which were offset in part by a decline in other real estate secured loans. Trustmark’s loan portfolio remains well-diversified by loan type and geography.

Deposits totaled $15.1 billion at December 31, 2021, up $164.3 million, or 1.1%, from the prior quarter and $1.0 billion, or 7.4%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 67.9% of total deposits at year end 2021. Noninterest bearing deposits represented 31.6% of total deposits at December 31, 2021. Interest-bearing deposit costs totaled 0.13% for the fourth quarter, a decrease of 1 basis point linked-quarter. The total cost of interest-bearing liabilities was 0.19% for the fourth quarter of 2021, a decrease of 2 basis points from the prior quarter.

During the fourth quarter, Trustmark repurchased $27.1 million, or approximately 816 thousand of its common shares. During the twelve months ended December 31, 2021, Trustmark repurchased $61.8 million, or approximately 1.9 million of its common shares. As previously announced, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2022, under which $100 million of Trustmark’s outstanding shares may be acquired through December 31, 2022. 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, 2021, Trustmark’s tangible equity to tangible assets ratio was 7.86%, while the total risk-based capital ratio was 13.55%.

Credit Quality

• Allowance for credit losses (ACL) represented 0.97% of loans HFI and 500.85% of nonperforming loans, excluding individually evaluated loans at year-end
• Net charge-offs totaled $101 thousand in the fourth quarter
• Loans remaining under a COVID-19 related concession represented approximately 1 basis point of loans HFI at December 31, 2021

Nonaccrual loans totaled $62.7 million at December 31, 2021, a decrease of $3.5 million from the prior quarter and $430 thousand year-over-year. Other real estate totaled $4.6 million, reflecting a $1.7 million decrease from the prior quarter and a $7.1 million decline from the prior year. Collectively, nonperforming assets totaled $67.3 million, reflecting a linked-quarter decrease of 7.2% and year-over-year reduction of 10.1%.

The provision for credit losses for loans HFI was a negative $4.5 million in the fourth quarter. Negative provisioning was primarily due to improvements in credit quality and economic forecasts. The provision for credit losses for off-balance sheet credit exposures was $2.9 million in the fourth quarter, primarily driven by increases in unfunded amounts. Collectively, the provision for credit losses totaled a negative $1.6 million in the fourth quarter compared to a negative $3.5 million in the prior quarter and a negative $5.5 million in the fourth quarter of 2020.

Allocation of Trustmark’s $99.5 million ACL on loans HFI represented 1.00% of commercial loans and 0.87% of consumer and home mortgage loans, resulting in an ACL to total loans HFI of 0.97% at December 31, 2021. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.

Revenue Generation

• Excluding Paycheck Protection Program (PPP) interest and fees, net interest income (FTE) increased $1.2 million, or 1.2%, linked-quarter
• The net interest margin (FTE) totaled 2.53% in fourth quarter; excluding interest and fees on PPP loans and Federal Reserve Bank balance, net interest margin (FTE) was 2.82%
• Noninterest income totaled $50.8 million and represented 34.1% of total revenue in fourth quarter

Revenue in the fourth quarter totaled $149.1 million, a decrease of 2.2% from the prior quarter and 16.0% from the same quarter in the prior year. The linked-quarter decline primarily reflects lower mortgage banking revenue while the year-over-year decline is attributed to lower net interest income and reduced mortgage banking revenue. In 2021, revenue totaled $640.3 million, a decrease of 8.7% from the prior year.

Net interest income (FTE) in the fourth quarter totaled $101.2 million, resulting in a net interest margin of 2.53%. The net interest margin, excluding PPP loans and Federal Reserve Bank balance, was 2.82%, down 8 basis points from the prior quarter, significantly influenced by the growth of the investment securities portfolio. Continued low interest rates decreased the yield on the loans held for investment and held for sale portfolio as well as the securities portfolio and were partially offset by lower costs of interest-bearing deposits.

Noninterest income in the fourth quarter totaled $50.8 million, a decrease of $3.4 million from the prior quarter and $15.4 million from the prior year. The linked-quarter change reflects an increase in service charges on deposit accounts which was more than offset by a decline in mortgage banking revenue, a seasonal decline in insurance revenue, and a reduction in other income. The decrease in noninterest income year-over-year is principally due to lower mortgage banking revenue.

Mortgage loan production in the fourth quarter totaled $590.7 million, a decline of 16.7% linked-quarter and 25.1% year-over-year. Mortgage banking revenue totaled $11.6 million in the fourth quarter, a decrease of $2.4 million from the prior quarter and $16.5 million year-over-year. The linked-quarter decline is attributable to reduced spreads which resulted in lower net gains on sales of mortgage loans in the secondary market offset in part by increased net hedge ineffectiveness. In 2021, mortgage loan production totaled $2.8 billion, down 6.1% from the record level set the prior year. Mortgage banking revenue totaled $63.8 million in 2021, compared to $125.8 million in the prior year.

Insurance revenue in the fourth quarter totaled $11.7 million, a seasonal decline of $417 thousand from the prior quarter and an increase of $1.5 million from the prior year. Insurance revenue in 2021 totaled $48.5 million, up $3.3 million, or 7.4%, from the prior year. The solid performance during the year reflects an expanded producer workforce as well as the realization of operational efficiencies from investments in technology and improved processes.

Wealth management revenue totaled $8.8 million in the fourth quarter, down 3.5% from the prior quarter and up 11.7% from the prior year. In 2021, wealth management revenue totaled $35.2 million, an increase of 11.3% from the prior year. During 2021, Trustmark continued to enhance its competitive positioning and efficiency of its wealth management businesses as well as expand its Private Banking capabilities in key markets.

Noninterest Expense

• Adjusted noninterest expense, which excludes ORE expense, amortization of intangibles, charitable contributions resulting in state tax credits, costs associated with the voluntary early retirement program and regulatory charges increased $1.6 million, or 1.3%, from the prior quarter. Please refer to the Consolidated Financial Information, Footnote 10 – Non-GAAP Financial Measures.

Adjusted noninterest expense in the fourth quarter was $118.2 million, up $1.6 million, or 1.3%, from the prior quarter. Salaries and employee benefits expense in the fourth quarter totaled $68.3 million. Excluding the $5.6 million charge associated with the voluntary early retirement program in the third quarter, salary and employee benefits expense declined $754 thousand, or 1.1%, linked-quarter.

Total services and fees increased $598 thousand during the fourth quarter due to continued investments in technology and higher professional fees. Other real estate expense, net declined $1.0 million during the fourth quarter to $336 thousand. Other expense totaled $14.6 million in the fourth quarter. Excluding the $5.0 million regulatory settlement charge in the prior quarter, other expense increased $1.1 million linked-quarter principally due to increased operational losses.

During 2021, Trustmark consolidated 15 offices, expanded deployment of myTeller interactive teller machine technology, and opened five offices designed to efficiently serve and expand customer relationships.

“Looking forward, Trustmark will continue to focus upon efficiency, growth and innovation opportunities. We 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,” said Dewey.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, January 26, 2022, 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 9, 2022, in archived format at the same web address or by calling [phone], passcode 4362420.

Trustmark is a financial services company providing banking and financial solutions through 180 offices in Alabama, Florida, Mississippi, Tennessee and Texas.

Forward-Looking Statements

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

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

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

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2021
($ in thousands)
(unaudited)
													Linked Quarter							Year over Year
QUARTERLY AVERAGE BALANCES	12/31/2021				9/30/2021				12/31/2020				$ Change				% Change			$ Change				% Change
Securities AFS-taxable	$	3,156,740			$	2,686,765			$	1,902,162			$	469,975			17.5	%		$	1,254,578			66.0	%
Securities AFS-nontaxable		5,143				5,159				5,206				(16	)		-0.3	%			(63	)		-1.2	%
Securities HTM-taxable		364,038				401,685				550,563				(37,647	)		-9.4	%			(186,525	)		-33.9	%
Securities HTM-nontaxable		7,618				8,641				24,752				(1,023	)		-11.8	%			(17,134	)		-69.2	%
Total securities		3,533,539				3,102,250				2,482,683				431,289			13.9	%			1,050,856			42.3	%
Paycheck protection program loans (PPP)		42,749				122,176				875,098				(79,427	)		-65.0	%			(832,349	)		-95.1	%
Loans (includes loans held for sale)		10,487,679				10,389,826				10,231,671				97,853			0.9	%			256,008			2.5	%
Fed funds sold and reverse repurchases		58				69				303				(11	)		-15.9	%			(245	)		-80.9	%
Other earning assets		1,839,498				2,038,515				860,540				(199,017	)		-9.8	%			978,958			n/m
Total earning assets		15,903,523				15,652,836				14,450,295				250,687			1.6	%			1,453,228			10.1	%
Allowance for credit losses (ACL), loans held for investment (LHFI)		(104,148	)			(104,857	)			(124,088	)			709			0.7	%			19,940			16.1	%
Other assets		1,570,501				1,602,611				1,620,694				(32,110	)		-2.0	%			(50,193	)		-3.1	%
Total assets	$	17,369,876			$	17,150,590			$	15,946,901			$	219,286			1.3	%		$	1,422,975			8.9	%
Interest-bearing demand deposits	$	4,353,599			$	4,224,717			$	3,649,590			$	128,882			3.1	%		$	704,009			19.3	%
Savings deposits		4,585,624				4,617,683				4,350,783				(32,059	)		-0.7	%			234,841			5.4	%
Time deposits		1,220,083				1,258,829				1,436,677				(38,746	)		-3.1	%			(216,594	)		-15.1	%
Total interest-bearing deposits		10,159,306				10,101,229				9,437,050				58,077			0.6	%			722,256			7.7	%
Fed funds purchased and repurchases		201,856				147,635				170,474				54,221			36.7	%			31,382			18.4	%
Other borrowings		94,328				109,735				173,525				(15,407	)		-14.0	%			(79,197	)		-45.6	%
Subordinated notes		123,007				122,951				42,828				56			0.0	%			80,179			n/m
Junior subordinated debt securities		61,856				61,856				61,856				—			0.0	%			—			0.0	%
Total interest-bearing liabilities		10,640,353				10,543,406				9,885,733				96,947			0.9	%			754,620			7.6	%
Noninterest-bearing deposits		4,679,951				4,566,924				4,100,849				113,027			2.5	%			579,102			14.1	%
Other liabilities		291,449				257,956				235,284				33,493			13.0	%			56,165			23.9	%
Total liabilities		15,611,753				15,368,286				14,221,866				243,467			1.6	%			1,389,887			9.8	%
Shareholders' equity		1,758,123				1,782,304				1,725,035				(24,181	)		-1.4	%			33,088			1.9	%
Total liabilities and equity	$	17,369,876			$	17,150,590			$	15,946,901			$	219,286			1.3	%		$	1,422,975			8.9	%
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, 2021
($ in thousands)
(unaudited)
													Linked Quarter							Year over Year
PERIOD END BALANCES	12/31/2021				9/30/2021				12/31/2020				$ Change				% Change			$ Change				% Change
Cash and due from banks	$	2,266,829			$	2,175,058			$	1,952,504			$	91,771			4.2	%		$	314,325			16.1	%
Fed funds sold and reverse repurchases		—				—				50				—			n/m				(50	)		-100.0	%
Securities available for sale		3,238,877				3,057,605				1,991,815				181,272			5.9	%			1,247,062			62.6	%
Securities held to maturity		342,537				394,905				538,072				(52,368	)		-13.3	%			(195,535	)		-36.3	%
PPP loans		33,336				46,486				610,134				(13,150	)		-28.3	%			(576,798	)		-94.5	%
Loans held for sale (LHFS)		275,706				335,339				446,951				(59,633	)		-17.8	%			(171,245	)		-38.3	%
Loans held for investment (LHFI)		10,247,829				10,174,899				9,824,524				72,930			0.7	%			423,305			4.3	%
ACL LHFI		(99,457	)			(104,073	)			(117,306	)			4,616			4.4	%			17,849			15.2	%
Net LHFI		10,148,372				10,070,826				9,707,218				77,546			0.8	%			441,154			4.5	%
Premises and equipment, net		205,644				201,937				194,278				3,707			1.8	%			11,366			5.9	%
Mortgage servicing rights		87,687				84,101				66,464				3,586			4.3	%			21,223			31.9	%
Goodwill		384,237				384,237				385,270				—			0.0	%			(1,033	)		-0.3	%
Identifiable intangible assets		5,074				5,621				7,390				(547	)		-9.7	%			(2,316	)		-31.3	%
Other real estate		4,557				6,213				11,651				(1,656	)		-26.7	%			(7,094	)		-60.9	%
Operating lease right-of-use assets		34,603				34,689				30,901				(86	)		-0.2	%			3,702			12.0	%
Other assets		568,177				567,627				609,142				550			0.1	%			(40,965	)		-6.7	%
Total assets	$	17,595,636			$	17,364,644			$	16,551,840			$	230,992			1.3	%		$	1,043,796			6.3	%
Deposits:
Noninterest-bearing	$	4,771,065			$	4,987,885			$	4,349,010			$	(216,820	)		-4.3	%		$	422,055			9.7	%
Interest-bearing		10,316,095				9,934,954				9,699,754				381,141			3.8	%			616,341			6.4	%
Total deposits		15,087,160				14,922,839				14,048,764				164,321			1.1	%			1,038,396			7.4	%
Fed funds purchased and repurchases		238,577				146,417				164,519				92,160			62.9	%			74,058			45.0	%
Other borrowings		91,025				94,889				168,252				(3,864	)		-4.1	%			(77,227	)		-45.9	%
Subordinated notes		123,042				122,987				122,921				55			0.0	%			121			0.1	%
Junior subordinated debt securities		61,856				61,856				61,856				—			0.0	%			—			0.0	%
ACL on off-balance sheet credit exposures		35,623				32,684				38,572				2,939			9.0	%			(2,949	)		-7.6	%
Operating lease liabilities		36,468				36,531				32,290				(63	)		-0.2	%			4,178			12.9	%
Other liabilities		180,574				177,494				173,549				3,080			1.7	%			7,025			4.0	%
Total liabilities		15,854,325				15,595,697				14,810,723				258,628			1.7	%			1,043,602			7.0	%
Common stock		12,845				13,014				13,215				(169	)		-1.3	%			(370	)		-2.8	%
Capital surplus		175,913				201,837				233,120				(25,924	)		-12.8	%			(57,207	)		-24.5	%
Retained earnings		1,585,113				1,573,176				1,495,833				11,937			0.8	%			89,280			6.0	%
Accumulated other comprehensive income (loss), net of tax		(32,560	)			(19,080	)			(1,051	)			(13,480	)		-70.6	%			(31,509	)		n/m
Total shareholders' equity		1,741,311				1,768,947				1,741,117				(27,636	)		-1.6	%			194			0.0	%
Total liabilities and equity	$	17,595,636			$	17,364,644			$	16,551,840			$	230,992			1.3	%		$	1,043,796			6.3	%
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, 2021
($ in thousands except per share data)
(unaudited)
	Quarter Ended												Linked Quarter							Year over Year
INCOME STATEMENTS	12/31/2021				9/30/2021				12/31/2020				$ Change				% Change			$ Change				% Change
Interest and fees on LHFS & LHFI-FTE	$	94,137			$	94,101			$	96,453			$	36			0.0	%		$	(2,316	)		-2.4	%
Interest and fees on PPP loans		397				1,533				14,870				(1,136	)		-74.1	%			(14,473	)		-97.3	%
Interest on securities-taxable		10,796				9,973				9,998				823			8.3	%			798			8.0	%
Interest on securities-tax exempt-FTE		123				132				293				(9	)		-6.8	%			(170	)		-58.0	%
Interest on fed funds sold and reverse repurchases		—				—				—				—			n/m				—			n/m
Other interest income		826				949				249				(123	)		-13.0	%			577			n/m
Total interest income-FTE		106,279				106,688				121,863				(409	)		-0.4	%			(15,584	)		-12.8	%
Interest on deposits		3,401				3,691				6,363				(290	)		-7.9	%			(2,962	)		-46.6	%
Interest on fed funds purchased and repurchases		66				51				56				15			29.4	%			10			17.9	%
Other interest expense		1,580				1,733				1,127				(153	)		-8.8	%			453			40.2	%
Total interest expense		5,047				5,475				7,546				(428	)		-7.8	%			(2,499	)		-33.1	%
Net interest income-FTE		101,232				101,213				114,317				19			0.0	%			(13,085	)		-11.4	%
Provision for credit losses, LHFI		(4,515	)			(2,492	)			(4,413	)			(2,023	)		81.2	%			(102	)		-2.3	%
Provision for credit losses, off-balance sheet credit exposures (1)		2,939				(1,049	)			(1,087	)			3,988			n/m				4,026			n/m
Net interest income after provision-FTE		102,808				104,754				119,817				(1,946	)		-1.9	%			(17,009	)		-14.2	%
Service charges on deposit accounts		9,366				8,911				8,283				455			5.1	%			1,083			13.1	%
Bank card and other fees		8,340				8,549				9,107				(209	)		-2.4	%			(767	)		-8.4	%
Mortgage banking, net		11,609				14,004				28,155				(2,395	)		-17.1	%			(16,546	)		-58.8	%
Insurance commissions		11,716				12,133				10,196				(417	)		-3.4	%			1,520			14.9	%
Wealth management		8,757				9,071				7,838				(314	)		-3.5	%			919			11.7	%
Other, net		979				1,481				2,538				(502	)		-33.9	%			(1,559	)		-61.4	%
Total noninterest income		50,767				54,149				66,117				(3,382	)		-6.2	%			(15,350	)		-23.2	%
Salaries and employee benefits		68,258				74,623				69,660				(6,365	)		-8.5	%			(1,402	)		-2.0	%
Services and fees		22,904				22,306				22,327				598			2.7	%			577			2.6	%
Net occupancy-premises		6,816				6,854				6,616				(38	)		-0.6	%			200			3.0	%
Equipment expense		6,585				5,941				6,213				644			10.8	%			372			6.0	%
Other real estate expense, net		336				1,357				(812	)			(1,021	)		-75.2	%			1,148			n/m
Other expense		14,570				18,519				15,890				(3,949	)		-21.3	%			(1,320	)		-8.3	%
Total noninterest expense		119,469				129,600				119,894				(10,131	)		-7.8	%			(425	)		-0.4	%
Income before income taxes and tax eq adj		34,106				29,303				66,040				4,803			16.4	%			(31,934	)		-48.4	%
Tax equivalent adjustment		2,906				2,947				2,939				(41	)		-1.4	%			(33	)		-1.1	%
Income before income taxes		31,200				26,356				63,101				4,844			18.4	%			(31,901	)		-50.6	%
Income taxes		4,978				5,156				11,884				(178	)		-3.5	%			(6,906	)		-58.1	%
Net income	$	26,222			$	21,200			$	51,217			$	5,022			23.7	%		$	(24,995	)		-48.8	%
Per share data
Earnings per share - basic	$	0.42			$	0.34			$	0.81			$	0.08			23.5	%		$	(0.39	)		-48.1	%
Earnings per share - diluted	$	0.42			$	0.34			$	0.81			$	0.08			23.5	%		$	(0.39	)		-48.1	%
Dividends per share	$	0.23			$	0.23			$	0.23				—			0.0	%			—			0.0	%
Weighted average shares outstanding
Basic		62,037,884				62,521,684				63,424,219
Diluted		62,264,983				62,730,157				63,616,767
Period end shares outstanding		61,648,679				62,461,832				63,424,526
(1) During the second quarter of 2021, Trustmark reclassified its credit loss expense related to off-balance sheet credit exposures from noninterest expense to provision for credit losses, off-balance sheet credit exposures. Prior periods have been reclassified accordingly.
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2021
($ in thousands)
(unaudited)
	Quarter Ended												Linked Quarter							Year over Year
NONPERFORMING ASSETS (1)	12/31/2021				9/30/2021				12/31/2020				$ Change				% Change			$ Change				% Change
Nonaccrual LHFI
Alabama	$	8,182			$	9,223			$	9,221			$	(1,041	)		-11.3	%		$	(1,039	)		-11.3	%
Florida		313				381				572				(68	)		-17.8	%			(259	)		-45.3	%
Mississippi (2)		21,636				22,898				35,015				(1,262	)		-5.5	%			(13,379	)		-38.2	%
Tennessee (3)		10,501				10,356				12,572				145			1.4	%			(2,071	)		-16.5	%
Texas		22,066				23,382				5,748				(1,316	)		-5.6	%			16,318			n/m
Total nonaccrual LHFI		62,698				66,240				63,128				(3,542	)		-5.3	%			(430	)		-0.7	%
Other real estate
Alabama		—				613				3,271				(613	)		-100.0	%			(3,271	)		-100.0	%
Florida		—				—				—				—			n/m				—			n/m
Mississippi (2)		4,557				5,600				8,330				(1,043	)		-18.6	%			(3,773	)		-45.3	%
Tennessee (3)		—				—				50				—			n/m				(50	)		-100.0	%
Texas		—				—				—				—			n/m				—			n/m
Total other real estate		4,557				6,213				11,651				(1,656	)		-26.7	%			(7,094	)		-60.9	%
Total nonperforming assets	$	67,255			$	72,453			$	74,779			$	(5,198	)		-7.2	%		$	(7,524	)		-10.1	%
LOANS PAST DUE OVER 90 DAYS (1)
LHFI	$	2,114			$	625			$	1,576			$	1,489			n/m			$	538			34.1	%
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	69,894			$	75,091			$	119,409			$	(5,197	)		-6.9	%		$	(49,515	)		-41.5	%
	Quarter Ended												Linked Quarter							Year over Year
ACL LHFI (1)	12/31/2021				9/30/2021				12/31/2020				$ Change				% Change			$ Change				% Change
Beginning Balance	$	104,073			$	104,032			$	122,010			$	41			0.0	%		$	(17,937	)		-14.7	%
CECL adoption adjustments:
LHFI		—				—				—				—			n/m				—			n/m
Acquired loan transfers		—				—				—				—			n/m				—			n/m
Provision for credit losses, LHFI		(4,515	)			(2,492	)			(4,413	)			(2,023	)		-81.2	%			(102	)		-2.3	%
Charge-offs		(2,616	)			(1,586	)			(2,797	)			(1,030	)		-64.9	%			181			6.5	%
Recoveries		2,515				4,119				2,506				(1,604	)		-38.9	%			9			0.4	%
Net (charge-offs) recoveries		(101	)			2,533				(291	)			(2,634	)		n/m				190			-65.3	%
Ending Balance	$	99,457			$	104,073			$	117,306			$	(4,616	)		-4.4	%		$	(17,849	)		-15.2	%
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama	$	747			$	247			$	(1,011	)		$	500			n/m			$	1,758			n/m
Florida		(32	)			356				66				(388	)		n/m				(98	)		n/m
Mississippi (2)		(683	)			1,436				332				(2,119	)		n/m				(1,015	)		n/m
Tennessee (3)		(130	)			(8	)			303				(122	)		n/m				(433	)		n/m
Texas		(3	)			502				19				(505	)		n/m				(22	)		n/m
Total net (charge-offs) recoveries	$	(101	)		$	2,533			$	(291	)		$	(2,634	)		n/m			$	190			65.3	%
(1) Excludes PPP loans.
(2) Mississippi includes Central and Southern Mississippi Regions.
(3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2021
($ in thousands)
(unaudited)
		Quarter Ended																				Year Ended
AVERAGE BALANCES		12/31/2021				9/30/2021				6/30/2021				3/31/2021				12/31/2020				12/31/2021				12/31/2020
Securities AFS-taxable		$	3,156,740			$	2,686,765			$	2,339,662			$	2,098,089			$	1,902,162			$	2,573,533			$	1,776,555
Securities AFS-nontaxable			5,143				5,159				5,174				5,190				5,206				5,166				10,737
Securities HTM-taxable			364,038				401,685				441,688				489,260				550,563				423,763				626,983
Securities HTM-nontaxable			7,618				8,641				10,958				24,070				24,752				12,765				25,366
Total securities			3,533,539				3,102,250				2,797,482				2,616,609				2,482,683				3,015,227				2,439,641
PPP loans			42,749				122,176				648,222				598,139				875,098				350,668				646,680
Loans (includes loans held for sale)			10,487,679				10,389,826				10,315,927				10,316,319				10,231,671				10,377,941				9,996,192
Fed funds sold and reverse repurchases			58				69				55				136				303				79				221
Other earning assets			1,839,498				2,038,515				1,750,385				1,667,906				860,540				1,825,134				657,096
Total earning assets			15,903,523				15,652,836				15,512,071				15,199,109				14,450,295				15,569,049				13,739,830
ACL LHFI			(104,148	)			(104,857	)			(112,346	)			(119,557	)			(124,088	)			(110,170	)			(108,567	)
Other assets			1,570,501				1,602,611				1,622,388				1,601,250				1,620,694				1,599,114				1,592,393
Total assets		$	17,369,876			$	17,150,590			$	17,022,113			$	16,680,802			$	15,946,901			$	17,057,993			$	15,223,656
Interest-bearing demand deposits		$	4,353,599			$	4,224,717			$	4,056,910			$	3,743,651			$	3,649,590			$	4,096,746			$	3,584,249
Savings deposits			4,585,624				4,617,683				4,627,180				4,659,037				4,350,783				4,622,167				4,149,860
Time deposits			1,220,083				1,258,829				1,301,896				1,371,830				1,436,677				1,287,663				1,534,673
Total interest-bearing deposits			10,159,306				10,101,229				9,985,986				9,774,518				9,437,050				10,006,576				9,268,782
Fed funds purchased and repurchases			201,856				147,635				174,620				166,909				170,474				172,782				151,805
Other borrowings			94,328				109,735				132,199				166,926				173,525				125,554				133,602
Subordinated notes			123,007				122,951				122,897				122,875				42,828				122,933				10,766
Junior subordinated debt securities			61,856				61,856				61,856				61,856				61,856				61,856				61,856
Total interest-bearing liabilities			10,640,353				10,543,406				10,477,558				10,293,084				9,885,733				10,489,701				9,626,811
Noninterest-bearing deposits			4,679,951				4,566,924				4,512,268				4,363,559				4,100,849				4,531,642				3,646,860
Other liabilities			291,449				257,956				251,582				264,808				235,284				266,499				268,398
Total liabilities			15,611,753				15,368,286				15,241,408				14,921,451				14,221,866				15,287,842				13,542,069
Shareholders' equity			1,758,123				1,782,304				1,780,705				1,759,351				1,725,035				1,770,151				1,681,587
Total liabilities and equity		$	17,369,876			$	17,150,590			$	17,022,113			$	16,680,802			$	15,946,901			$	17,057,993			$	15,223,656
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2021
($ in thousands)
(unaudited)
PERIOD END BALANCES		12/31/2021				9/30/2021				6/30/2021				3/31/2021				12/31/2020
Cash and due from banks		$	2,266,829			$	2,175,058			$	2,267,224			$	1,774,541			$	1,952,504
Fed funds sold and reverse repurchases			—				—				—				—				50
Securities available for sale			3,238,877				3,057,605				2,548,739				2,337,676				1,991,815
Securities held to maturity			342,537				394,905				433,012				493,738				538,072
PPP loans			33,336				46,486				166,119				679,725				610,134
LHFS			275,706				335,339				332,132				412,999				446,951
LHFI			10,247,829				10,174,899				10,152,869				9,983,704				9,824,524
ACL LHFI			(99,457	)			(104,073	)			(104,032	)			(109,191	)			(117,306	)
Net LHFI			10,148,372				10,070,826				10,048,837				9,874,513				9,707,218
Premises and equipment, net			205,644				201,937				200,970				199,098				194,278
Mortgage servicing rights			87,687				84,101				80,764				83,035				66,464
Goodwill			384,237				384,237				384,237				384,237				385,270
Identifiable intangible assets			5,074				5,621				6,170				6,724				7,390
Other real estate			4,557				6,213				9,439				10,651				11,651
Operating lease right-of-use assets			34,603				34,689				33,201				33,704				30,901
Other assets			568,177				567,627				587,288				587,672				609,142
Total assets		$	17,595,636			$	17,364,644			$	17,098,132			$	16,878,313			$	16,551,840
Deposits:
Noninterest-bearing		$	4,771,065			$	4,987,885			$	4,446,991			$	4,705,991			$	4,349,010
Interest-bearing			10,316,095				9,934,954				10,185,093				9,677,449				9,699,754
Total deposits			15,087,160				14,922,839				14,632,084				14,383,440				14,048,764
Fed funds purchased and repurchases			238,577				146,417				157,176				160,991				164,519
Other borrowings			91,025				94,889				117,223				145,994				168,252
Subordinated notes			123,042				122,987				122,932				122,877				122,921
Junior subordinated debt securities			61,856				61,856				61,856				61,856				61,856
ACL on off-balance sheet credit exposures			35,623				32,684				33,733				29,205				38,572
Operating lease liabilities			36,468				36,531				34,959				35,389				32,290
Other liabilities			180,574				177,494				158,860				178,856				173,549
Total liabilities			15,854,325				15,595,697				15,318,823				15,118,608				14,810,723
Common stock			12,845				13,014				13,079				13,209				13,215
Capital surplus			175,913				201,837				210,420				229,892				233,120
Retained earnings			1,585,113				1,573,176				1,566,451				1,533,110				1,495,833
Accumulated other comprehensive income (loss), net of tax			(32,560	)			(19,080	)			(10,641	)			(16,506	)			(1,051	)
Total shareholders' equity			1,741,311				1,768,947				1,779,309				1,759,705				1,741,117
Total liabilities and equity		$	17,595,636			$	17,364,644			$	17,098,132			$	16,878,313			$	16,551,840
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2021
($ in thousands except per share data)
(unaudited)
		Quarter Ended																				Year Ended
INCOME STATEMENTS		12/31/2021				9/30/2021				6/30/2021				3/31/2021				12/31/2020				12/31/2021				12/31/2020
Interest and fees on LHFS & LHFI-FTE		$	94,137			$	94,101			$	93,698			$	93,394			$	96,453			$	375,330			$	402,539
Interest and fees on PPP loans			397				1,533				25,555				9,241				14,870				36,726				26,643
Interest on securities-taxable			10,796				9,973				8,991				8,938				9,998				38,698				48,250
Interest on securities-tax exempt-FTE			123				132				149				290				293				694				1,366
Interest on fed funds sold and reverse repurchases			—				—				—				—				—				—				1
Other interest income			826				949				489				503				249				2,767				1,559
Total interest income-FTE			106,279				106,688				128,882				112,366				121,863				454,215				480,358
Interest on deposits			3,401				3,691				4,630				5,223				6,363				16,945				37,487
Interest on fed funds purchased and repurchases			66				51				59				56				56				232				755
Other interest expense			1,580				1,733				1,813				1,857				1,127				6,983				3,556
Total interest expense			5,047				5,475				6,502				7,136				7,546				24,160				41,798
Net interest income-FTE			101,232				101,213				122,380				105,230				114,317				430,055				438,560
Provision for credit losses, LHFI			(4,515	)			(2,492	)			(3,991	)			(10,501	)			(4,413	)			(21,499	)			36,113
Provision for credit losses, off-balance sheet credit exposures (1)			2,939				(1,049	)			4,528				(9,367	)			(1,087	)			(2,949	)			8,934
Net interest income after provision-FTE			102,808				104,754				121,843				125,098				119,817				454,503				393,513
Service charges on deposit accounts			9,366				8,911				7,613				7,356				8,283				33,246				32,289
Bank card and other fees			8,340				8,549				8,301				9,472				9,107				34,662				31,022
Mortgage banking, net			11,609				14,004				17,333				20,804				28,155				63,750				125,822
Insurance commissions			11,716				12,133				12,217				12,445				10,196				48,511				45,176
Wealth management			8,757				9,071				8,946				8,416				7,838				35,190				31,625
Other, net			979				1,481				2,001				2,090				2,538				6,551				8,659
Total noninterest income			50,767				54,149				56,411				60,583				66,117				221,910				274,593
Salaries and employee benefits			68,258				74,623				70,115				71,162				69,660				284,158				272,257
Services and fees			22,904				22,306				21,769				22,484				22,327				89,463				83,816
Net occupancy-premises			6,816				6,854				6,578				6,795				6,616				27,043				26,489
Equipment expense			6,585				5,941				5,567				6,244				6,213				24,337				23,277
Other real estate expense, net			336				1,357				1,511				324				(812	)			3,528				1,956
Other expense			14,570				18,519				13,139				14,539				15,890				60,767				58,506
Total noninterest expense			119,469				129,600				118,679				121,548				119,894				489,296				466,301
Income before income taxes and tax eq adj			34,106				29,303				59,575				64,133				66,040				187,117				201,805
Tax equivalent adjustment			2,906				2,947				2,957				2,894				2,939				11,704				12,023
Income before income taxes			31,200				26,356				56,618				61,239				63,101				175,413				189,782
Income taxes			4,978				5,156				8,637				9,277				11,884				28,048				29,757
Net income		$	26,222			$	21,200			$	47,981			$	51,962			$	51,217			$	147,365			$	160,025
Per share data
Earnings per share - basic		$	0.42			$	0.34			$	0.76			$	0.82			$	0.81			$	2.35			$	2.52
Earnings per share - diluted		$	0.42			$	0.34			$	0.76			$	0.82			$	0.81			$	2.34			$	2.51
Dividends per share		$	0.23			$	0.23			$	0.23			$	0.23			$	0.23			$	0.92			$	0.92
Weighted average shares outstanding
Basic			62,037,884				62,521,684				63,214,593				63,395,911				63,424,219				62,788,055				63,504,516
Diluted			62,264,983				62,730,157				63,409,683				63,562,503				63,616,767				62,973,464				63,645,599
Period end shares outstanding			61,648,679				62,461,832				62,773,226				63,394,522				63,424,526				61,648,679				63,424,526
(1) During the second quarter of 2021, Trustmark reclassified its credit loss expense related to off-balance sheet credit exposures from noninterest expense to provision for credit losses, off-balance sheet credit exposures. Prior periods have been reclassified accordingly.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2021
($ in thousands)
(unaudited)
		Quarter Ended
NONPERFORMING ASSETS (1)		12/31/2021				9/30/2021				6/30/2021				3/31/2021				12/31/2020
Nonaccrual LHFI
Alabama		$	8,182			$	9,223			$	8,952			$	9,161			$	9,221
Florida			313				381				467				607				572
Mississippi (2)			21,636				22,898				23,422				35,534				35,015
Tennessee (3)			10,501				10,356				10,751				12,451				12,572
Texas			22,066				23,382				7,856				5,761				5,748
Total nonaccrual LHFI			62,698				66,240				51,448				63,514				63,128
Other real estate
Alabama			—				613				2,830				3,085				3,271
Florida			—				—				—				—				—
Mississippi (2)			4,557				5,600				6,550				7,566				8,330
Tennessee (3)			—				—				59				—				50
Texas			—				—				—				—				—
Total other real estate			4,557				6,213				9,439				10,651				11,651
Total nonperforming assets		$	67,255			$	72,453			$	60,887			$	74,165			$	74,779
LOANS PAST DUE OVER 90 DAYS (1)
LHFI		$	2,114			$	625			$	423			$	2,593			$	1,576
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)		$	69,894			$	75,091			$	81,538			$	109,566			$	119,409
		Quarter Ended																				Year Ended
ACL LHFI (1)		12/31/2021				9/30/2021				6/30/2021				3/31/2021				12/31/2020				12/31/2021				12/31/2020
Beginning Balance		$	104,073			$	104,032			$	109,191			$	117,306			$	122,010			$	117,306			$	84,277
CECL adoption adjustments:
LHFI			—				—				—				—				—				—				(3,039	)
Acquired loan transfers			—				—				—				—				—				—				1,822
Provision for credit losses, LHFI			(4,515	)			(2,492	)			(3,991	)			(10,501	)			(4,413	)			(21,499	)			36,113
Charge-offs			(2,616	)			(1,586	)			(4,828	)			(1,245	)			(2,797	)			(10,275	)			(11,475	)
Recoveries			2,515				4,119				3,660				3,631				2,506				13,925				9,608
Net (charge-offs) recoveries			(101	)			2,533				(1,168	)			2,386				(291	)			3,650				(1,867	)
Ending Balance		$	99,457			$	104,073			$	104,032			$	109,191			$	117,306			$	99,457			$	117,306
NET (CHARGE-OFFS) RECOVERIES (1)
Alabama		$	747			$	247			$	203			$	102			$	(1,011	)		$	1,299			$	(1,448	)
Florida			(32	)			356				167				30				66				521				390
Mississippi (2)			(683	)			1,436				(3,071	)			2,207				332				(111	)			814
Tennessee (3)			(130	)			(8	)			1,031				47				303				940				(1,775	)
Texas			(3	)			502				502				—				19				1,001				152
Total net (charge-offs) recoveries		$	(101	)		$	2,533			$	(1,168	)		$	2,386			$	(291	)		$	3,650			$	(1,867	)
(1) Excludes PPP loans.
(2) Mississippi includes Central and Southern Mississippi Regions.
(3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2021
(unaudited)
		Quarter Ended																				Year Ended
FINANCIAL RATIOS AND OTHER DATA		12/31/2021				9/30/2021				6/30/2021				3/31/2021				12/31/2020				12/31/2021			12/31/2020
Return on average equity			5.92	%			4.72	%			10.81	%			11.98	%			11.81	%		8.32	%		9.52	%
Return on average tangible equity			7.72	%			6.16	%			13.96	%			15.56	%			15.47	%		10.81	%		12.58	%
Return on average assets			0.60	%			0.49	%			1.13	%			1.26	%			1.28	%		0.86	%		1.05	%
Interest margin - Yield - FTE			2.65	%			2.70	%			3.33	%			3.00	%			3.35	%		2.92	%		3.50	%
Interest margin - Cost			0.13	%			0.14	%			0.17	%			0.19	%			0.21	%		0.16	%		0.30	%
Net interest margin - FTE			2.53	%			2.57	%			3.16	%			2.81	%			3.15	%		2.76	%		3.19	%
Efficiency ratio (1)			76.52	%			74.10	%			64.31	%			71.84	%			65.59	%		71.41	%		63.35	%
Full-time equivalent employees			2,692				2,680				2,772				2,793				2,797
CREDIT QUALITY RATIOS (2)
Net (recoveries) charge-offs / average loans			0.00	%			-0.10	%			0.05	%			-0.09	%			0.01	%		-0.04	%		0.02	%
Provision for credit losses, LHFI / average loans			-0.17	%			-0.10	%			-0.16	%			-0.41	%			-0.17	%		-0.21	%		0.36	%
Nonaccrual LHFI / (LHFI + LHFS)			0.60	%			0.63	%			0.49	%			0.61	%			0.61	%
Nonperforming assets / (LHFI + LHFS)			0.64	%			0.69	%			0.58	%			0.71	%			0.73	%
Nonperforming assets / (LHFI + LHFS + other real estate)			0.64	%			0.69	%			0.58	%			0.71	%			0.73	%
ACL LHFI / LHFI			0.97	%			1.02	%			1.02	%			1.09	%			1.19	%
ACL LHFI-commercial / commercial LHFI			1.00	%			1.05	%			1.04	%			1.13	%			1.20	%
ACL LHFI-consumer / consumer and home mortgage LHFI			0.87	%			0.91	%			0.98	%			0.95	%			1.16	%
ACL LHFI / nonaccrual LHFI			158.63	%			157.11	%			202.21	%			171.92	%			185.82	%
ACL LHFI / nonaccrual LHFI (excl individually evaluated loans)			500.85	%			520.77	%			537.35	%			437.08	%			572.69	%
CAPITAL RATIOS
Total equity / total assets			9.90	%			10.19	%			10.41	%			10.43	%			10.52	%
Tangible equity / tangible assets			7.86	%			8.12	%			8.31	%			8.30	%			8.34	%
Tangible equity / risk-weighted assets			10.71	%			11.19	%			11.33	%			11.23	%			11.22	%
Tier 1 leverage ratio			8.73	%			8.92	%			9.00	%			9.11	%			9.33	%
Common equity tier 1 capital ratio			11.29	%			11.68	%			11.76	%			11.71	%			11.62	%
Tier 1 risk-based capital ratio			11.77	%			12.17	%			12.25	%			12.20	%			12.11	%
Total risk-based capital ratio			13.55	%			14.01	%			14.10	%			14.07	%			14.12	%
STOCK PERFORMANCE
Market value-Close		$	32.46			$	32.22			$	30.80			$	33.66			$	27.31
Book value		$	28.25			$	28.32			$	28.35			$	27.76			$	27.45
Tangible book value		$	21.93			$	22.08			$	22.13			$	21.59			$	21.26
(1) See Note 10 – 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, 2021
($ in thousands)
(unaudited)

Note 1 – Regulatory Matters

On October 22, 2021, Trustmark Corporation’s subsidiary, Trustmark National Bank (“TNB”), issued a press release announcing that it entered into a consent order with the Office of the Comptroller of the Currency (“OCC”) and a separate consent order jointly with the U.S. Department of Justice (“DOJ”) and the Consumer Financial Protection Bureau (“CFPB”), to resolve allegations that TNB previously violated the Fair Housing Act (the “FHA”), the Equal Credit Opportunity Act (the “ECOA”) and the Consumer Financial Protection Act within the Memphis metropolitan statistical area (the “Memphis MSA”).

Under the DOJ and CFPB’s joint consent order, TNB paid a civil money penalty totaling $5.0 million, of which $4.0 million satisfied the OCC’s civil money penalty as set forth in the OCC’s consent order; the remaining $1.0 million was paid to the CFPB. The joint consent order also requires TNB, among other things, to implement a mutually agreed-upon Fair Lending Plan, invest $3.85 million over five years in a loan subsidy fund to increase credit opportunities to residents of majority-Black and Hispanic neighborhoods, and devote a minimum of $400 thousand over five years toward community development partnership contributions and $200 thousand per year over five years toward advertising, community outreach, and credit repair and education in TNB’s Memphis lending area (defined in the consent order as consisting of Shelby County and Fayette County in Tennessee and DeSoto County in Mississippi). TNB will also open one new mortgage loan production office to serve the credit needs of residents in a majority-Black and Hispanic neighborhood in TNB’s Memphis lending area. In addition, TNB will continue to maintain its full-time Community Lending Manager position and its full-time Community Development Manager position, which are both focused on the Memphis MSA.

The joint consent order has been approved by the United States District Court for the Western District of Tennessee.

Note 2 - Paycheck Protection Program

On June 30, 2021, Trustmark announced the sale of substantially all PPP loans originated in 2021 by its wholly owned subsidiary, TNB, to The Loan Source, Inc. (Loan Source), a firm with significant expertise in PPP loans. As a result of this transaction, Loan Source will assume responsibility for the servicing and forgiveness process for the loans it has acquired from Trustmark. This transaction will allow Trustmark to focus on more traditional lending efforts and increase its ability to provide customers with financial services in an improving economic environment.

Trustmark accelerated the recognition of unamortized PPP loan origination fees, net of cost, of approximately $18.6 million, in the second quarter of 2021 due to the sale of approximately $354.2 million in PPP loans. This revenue is substantially the same as Trustmark would expect to recognize upon the maturity or forgiveness of the PPP loans being sold in this transaction, and thus this transaction serves to accelerate revenue anticipated in future periods into the second quarter.

At December 31, 2021, Trustmark had PPP loans outstanding that totaled $33.3 million (net of $500 thousand of deferred fees and costs) under the CARES Act. Due to the amount and nature of the PPP loans, these loans were not included in the LHFI portfolio and are presented separately in the accompanying consolidated balance sheets. The PPP loans are fully guaranteed by the Small Business Administration; therefore, no ACL was estimated for these loans.

Note 3 - Securities Available for Sale and Held to Maturity

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

		12/31/2021				9/30/2021				6/30/2021				3/31/2021				12/31/2020
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities		$	344,640			$	278,615			$	30,025			$	—			$	—
U.S. Government agency obligations			13,727				14,979				16,023				17,349				18,041
Obligations of states and political subdivisions			5,714				5,734				5,807				5,798				5,835
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			39,573				43,860				48,445				52,406				56,862
Issued by FNMA and FHLMC			2,218,429				2,187,412				1,983,783				1,749,144				1,441,321
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			196,690				236,885				283,988				345,869				419,437
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			420,104				290,120				180,668				167,110				50,319
Total securities available for sale		$	3,238,877			$	3,057,605			$	2,548,739			$	2,337,676			$	1,991,815
SECURITIES HELD TO MATURITY
Obligations of states and political subdivisions		$	7,328			$	10,683			$	12,994			$	26,554			$	26,584
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA			5,005				5,912				6,249				7,268				7,598
Issued by FNMA and FHLMC			43,444				48,554				53,406				61,855				67,944
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			241,934				264,638				291,477				324,360				360,361
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA			44,826				65,118				68,886				73,701				75,585
Total securities held to maturity		$	342,537			$	394,905			$	433,012			$	493,738			$	538,072

At December 31, 2021, the net unamortized, unrealized loss included in accumulated other comprehensive income (loss) in the accompanying balance sheet for securities held to maturity previously transferred from securities available for sale totaled approximately $6.3 million ($4.7 million, net of tax).

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2021
($ in thousands)
(unaudited)

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

Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 99.7% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE.

Note 4 – Loan Composition

LHFI consisted of the following during the periods presented:

LHFI BY TYPE		12/31/2021				9/30/2021				6/30/2021				3/31/2021				12/31/2020
Loans secured by real estate:
Construction, land development and other land loans		$	1,308,781			$	1,286,613			$	1,360,302			$	1,342,088			$	1,309,039
Secured by 1-4 family residential properties			1,977,993				1,891,292				1,810,396				1,742,782				1,741,132
Secured by nonfarm, nonresidential properties			2,977,084				2,924,953				2,819,662				2,799,195				2,709,026
Other real estate secured			726,043				986,163				1,078,622				1,135,005				1,065,964
Commercial and industrial loans			1,414,279				1,327,211				1,326,605				1,323,277				1,309,078
Consumer loans			159,472				157,963				153,519				153,267				161,174
State and other political subdivision loans			1,146,251				1,125,186				1,136,764				1,036,694				1,000,776
Other loans			537,926				475,518				466,999				451,396				528,335
LHFI			10,247,829				10,174,899				10,152,869				9,983,704				9,824,524
ACL LHFI			(99,457	)			(104,073	)			(104,032	)			(109,191	)			(117,306	)
Net LHFI		$	10,148,372			$	10,070,826			$	10,048,837			$	9,874,513			$	9,707,218

The following table presents the LHFI composition by region at December 31, 2021 and reflects each region’s diversified mix of loans:

		December 31, 2021
LHFI - COMPOSITION BY REGION		Total				Alabama				Florida				Mississippi (Central and Southern Regions)				Tennessee (Memphis, TN and Northern MS Regions)				Texas
Loans secured by real estate:
Construction, land development and other land loans		$	1,308,781			$	522,231			$	49,383			$	411,607			$	48,328			$	277,232
Secured by 1-4 family residential properties			1,977,993				114,068				41,473				1,738,583				67,601				16,268
Secured by nonfarm, nonresidential properties			2,977,084				890,055				252,656				1,137,039				170,318				527,016
Other real estate secured			726,043				147,430				6,765				280,122				19,887				271,839
Commercial and industrial loans			1,414,279				279,151				24,099				516,122				349,385				245,522
Consumer loans			159,472				23,850				8,176				101,701				18,129				7,616
State and other political subdivision loans			1,146,251				98,215				72,146				728,509				34,542				212,839
Other loans			537,926				76,612				11,697				355,863				43,004				50,750
Loans		$	10,247,829			$	2,151,612			$	466,395			$	5,269,546			$	751,194			$	1,609,082
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots		$	62,841			$	25,827			$	8,399			$	17,845			$	3,210			$	7,560
Development			139,708				59,615				584				44,593				11,862				23,054
Unimproved land			101,591				26,016				12,495				31,167				10,976				20,937
1-4 family construction			292,828				140,905				20,388				78,164				21,123				32,248
Other construction			711,813				269,868				7,517				239,838				1,157				193,433
Construction, land development and other land loans		$	1,308,781			$	522,231			$	49,383			$	411,607			$	48,328			$	277,232

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2021
($ in thousands)
(unaudited)

Note 4 – Loan Composition (continued)

		December 31, 2021
		Total				Alabama				Florida				Mississippi (Central and Southern Regions)				Tennessee (Memphis, TN and Northern MS Regions)				Texas
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION
Non-owner occupied:
Retail		$	351,822			$	140,054			$	29,586			$	97,103			$	18,777			$	66,302
Office			208,835				68,067				22,626				66,799				12,786				38,557
Hotel/motel			348,090				176,327				78,408				46,886				32,204				14,265
Mini-storage			153,938				22,414				2,144				100,029				697				28,654
Industrial			346,096				134,279				20,581				86,613				135				104,488
Health care			63,746				32,230				1,101				27,766				364				2,285
Convenience stores			22,634				8,114				677				3,748				1,167				8,928
Nursing homes/senior living			197,677				86,868				—				84,540				6,269				20,000
Other			78,940				17,509				7,239				32,015				11,729				10,448
Total non-owner occupied loans			1,771,778				685,862				162,362				545,499				84,128				293,927
Owner-occupied:
Office			170,438				37,572				42,913				48,923				13,091				27,939
Churches			83,375				18,657				5,937				47,019				9,172				2,590
Industrial warehouses			182,126				21,647				2,678				48,118				18,562				91,121
Health care			141,427				11,854				6,809				105,842				2,276				14,646
Convenience stores			130,948				15,255				13,244				68,673				466				33,310
Retail			65,269				12,420				10,992				20,476				8,818				12,563
Restaurants			54,978				2,877				4,484				30,894				12,735				3,988
Auto dealerships			53,710				6,090				256				27,489				19,875				—
Nursing homes/senior living			197,232				71,639				—				125,593				—				—
Other			125,803				6,182				2,981				68,513				1,195				46,932
Total owner-occupied loans			1,205,306				204,193				90,294				591,540				86,190				233,089
Loans secured by nonfarm, nonresidential properties		$	2,977,084			$	890,055			$	252,656			$	1,137,039			$	170,318			$	527,016

Note 5 – Subordinated Notes

During the fourth quarter of 2020, Trustmark agreed to issue and sell $125.0 million aggregate principal amount of its 3.625% Fixed-to-Floating Rate Subordinated Notes (the Notes) due December 1, 2030. At December 31, 2021, the carrying amount of the Notes was $123.0 million. The Notes are unsecured obligations and are subordinated in right of payment to all of Trustmark’s existing and future senior indebtedness, whether secured or unsecured. The Notes are obligations of Trustmark only and are not obligations of, and are not guaranteed by, any of its subsidiaries, including TNB. From the date of issuance until November 30, 2025, the Notes bear interest at a fixed rate of 3.625% per year, payable semi-annually in arrears on June 1 and December 1 of each year. Beginning December 1, 2025, the Notes will bear interest at a floating rate per year equal to the Benchmark rate, which is the Three-Month Term Secured Overnight Financing Rate (SOFR), plus 338.7 basis points, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year. The Notes qualify as Tier 2 capital for Trustmark. The Notes may be redeemed at Trustmark’s option under certain circumstances. Trustmark intends to use the net proceeds for general corporate purposes.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2021
($ in thousands)
(unaudited)

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

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

	Quarter Ended																				Year Ended
	12/31/2021				9/30/2021				6/30/2021				3/31/2021				12/31/2020				12/31/2021				12/31/2020
Securities – taxable		1.22	%			1.28	%			1.30	%			1.40	%			1.62	%			1.29	%			2.01	%
Securities – nontaxable		3.82	%			3.79	%			3.70	%			4.02	%			3.89	%			3.87	%			3.78	%
Securities – total		1.23	%			1.29	%			1.31	%			1.43	%			1.65	%			1.31	%			2.03	%
PPP loans		3.68	%			4.98	%			15.81	%			6.27	%			6.76	%			10.47	%			4.12	%
Loans - LHFI & LHFS		3.56	%			3.59	%			3.64	%			3.67	%			3.75	%			3.62	%			4.03	%
Loans - total		3.56	%			3.61	%			4.36	%			3.81	%			3.99	%			3.84	%			4.03	%
Fed funds sold & reverse repurchases		—				—				—				—				—				—				0.45	%
Other earning assets		0.18	%			0.18	%			0.11	%			0.12	%			0.12	%			0.15	%			0.24	%
Total earning assets		2.65	%			2.70	%			3.33	%			3.00	%			3.35	%			2.92	%			3.50	%
Interest-bearing deposits		0.13	%			0.14	%			0.19	%			0.22	%			0.27	%			0.17	%			0.40	%
Fed funds purchased & repurchases		0.13	%			0.14	%			0.14	%			0.14	%			0.13	%			0.13	%			0.50	%
Other borrowings		2.25	%			2.33	%			2.29	%			2.14	%			1.61	%			2.25	%			1.72	%
Total interest-bearing liabilities		0.19	%			0.21	%			0.25	%			0.28	%			0.30	%			0.23	%			0.43	%
Net interest margin		2.53	%			2.57	%			3.16	%			2.81	%			3.15	%			2.76	%			3.19	%
Net interest margin excluding PPP loans and the FRB balance		2.82	%			2.90	%			2.94	%			2.99	%			3.09	%			2.91	%			3.29	%

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

At December 31, 2021 and September 30, 2021, the average FRB balance totaled $1.787 billion and $1.996 billion, respectively, and is included in other earning assets in the accompanying average consolidated balance sheets.

The net interest margin excluding PPP loans and the FRB balance totaled 2.82% for the fourth quarter of 2021, a decrease of 8 basis points when compared to the third quarter of 2021. Continued low interest rates decreased the yield on the loans held for investment and held for sale portfolio as well as the securities portfolio and were partially offset by lower costs of interest-bearing deposits.

Note 7 – Mortgage Banking

Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that offsets the changes in fair value of mortgage servicing rights (MSR) attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under generally accepted accounting principles (GAAP). Changes in the fair value of these exchange-traded derivative instruments, including administrative costs, are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of the MSR. The MSR fair value represents the present value of future cash flows, which among other things includes decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the change in value of hedge instruments to the change in the fair value of the MSR asset attributable to changes in interest rates and other market driven changes in valuation inputs and assumptions. The impact of this strategy resulted in a net positive ineffectiveness of $778 thousand during the fourth quarter of 2021.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2021
($ in thousands)
(unaudited)

Note 7 – Mortgage Banking (continued)

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

		Quarter Ended																				Year Ended
		12/31/2021				9/30/2021				6/30/2021				3/31/2021				12/31/2020				12/31/2021				12/31/2020
Mortgage servicing income, net		$	6,571			$	6,406			$	6,318			$	6,181			$	6,227			$	25,476			$	23,681
Change in fair value-MSR from runoff			(4,745	)			(5,283	)			(5,029	)			(5,103	)			(5,177	)			(20,160	)			(16,588	)
Gain on sales of loans, net			9,005				12,737				14,778				19,456				28,014				55,976				110,903
Mortgage banking income before hedge ineffectiveness			10,831				13,860				16,067				20,534				29,064				61,292				117,996
Change in fair value-MSR from market changes			2,221				1,806				(4,465	)			13,696				951				13,258				(26,147	)
Change in fair value of derivatives			(1,443	)			(1,662	)			5,731				(13,426	)			(1,860	)			(10,800	)			33,973
Net positive (negative) hedge ineffectiveness			778				144				1,266				270				(909	)			2,458				7,826
Mortgage banking, net		$	11,609			$	14,004			$	17,333			$	20,804			$	28,155			$	63,750			$	125,822

Note 8 – Salaries and Employee Benefit Plans

Early Retirement Program

In June 2021, Trustmark announced a voluntary early retirement program. In general, associates who were eligible to participate had to be at least 60 years of age with five or more years of continuous service. The cost of this program is reflected in a one-time charge of approximately $5.7 million (salaries and benefits of $5.6 million and other miscellaneous expense of $89 thousand; or $0.07 per diluted share net of tax) in Trustmark’s third quarter of 2021 earnings. The salary and employee benefits expense savings that resulted from the implementation of the early retirement program was approximately $1.3 million ($0.02 per diluted share net of tax) for 2021 and expected to be $4.3 million ($0.05 per diluted share net of tax) for the year ended 2022.

Note 9 – Other Noninterest Income and Expense

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

		Quarter Ended																				Year Ended
		12/31/2021				9/30/2021				6/30/2021				3/31/2021				12/31/2020				12/31/2021				12/31/2020
Partnership amortization for tax credit purposes		$	(2,455	)		$	(2,045	)		$	(1,989	)		$	(1,522	)		$	(1,877	)		$	(8,011	)		$	(5,700	)
Increase in life insurance cash surrender value			1,675				1,663				1,653				1,639				1,708				6,630				6,881
Other miscellaneous income			1,759				1,863				2,337				1,973				2,707				7,932				7,478
Total other, net		$	979			$	1,481			$	2,001			$	2,090			$	2,538			$	6,551			$	8,659

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
		12/31/2021				9/30/2021				6/30/2021				3/31/2021				12/31/2020				12/31/2021				12/31/2020
Loan expense		$	3,221			$	4,022			$	3,738			$	4,167			$	4,243			$	15,148			$	15,177
Amortization of intangibles			548				549				553				666				752				2,316				3,052
FDIC assessment expense			1,475				1,275				1,225				1,540				1,500				5,515				6,090
Regulatory settlement charge			—				5,000				—				—				—				5,000				—
Other miscellaneous expense			9,326				7,673				7,623				8,166				9,395				32,788				34,187
Total other expense		$	14,570			$	18,519			$	13,139			$	14,539			$	15,890			$	60,767			$	58,506

During the third quarter of 2021, other expense included a charge of $5.0 million to resolve allegations by regulatory authorities regarding fair lending matters. See Note 1 – Regulatory Matters for further details.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2021
($ in thousands)
(unaudited)

Note 10 – Non-GAAP Financial Measures

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

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

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

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2021
($ in thousands)
(unaudited)

Note 10 – Non-GAAP Financial Measures (continued)

				Quarter Ended																				Year Ended
				12/31/2021				9/30/2021				6/30/2021				3/31/2021				12/31/2020				12/31/2021				12/31/2020
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity				$	1,758,123			$	1,782,304			$	1,780,705			$	1,759,351			$	1,725,035			$	1,770,151			$	1,681,587
Less: Goodwill					(384,237	)			(384,237	)			(384,237	)			(385,155	)			(385,270	)			(384,463	)			(383,582	)
Identifiable intangible assets					(5,382	)			(5,899	)			(6,442	)			(7,118	)			(7,803	)			(6,205	)			(8,060	)
Total average tangible equity				$	1,368,504			$	1,392,168			$	1,390,026			$	1,367,078			$	1,331,962			$	1,379,483			$	1,289,945
PERIOD END BALANCES
Total shareholders' equity				$	1,741,311			$	1,768,947			$	1,779,309			$	1,759,705			$	1,741,117
Less: Goodwill					(384,237	)			(384,237	)			(384,237	)			(384,237	)			(385,270	)
Identifiable intangible assets					(5,074	)			(5,621	)			(6,170	)			(6,724	)			(7,390	)
Total tangible equity		(a)		$	1,352,000			$	1,379,089			$	1,388,902			$	1,368,744			$	1,348,457
TANGIBLE ASSETS
Total assets				$	17,595,636			$	17,364,644			$	17,098,132			$	16,878,313			$	16,551,840
Less: Goodwill					(384,237	)			(384,237	)			(384,237	)			(384,237	)			(385,270	)
Identifiable intangible assets					(5,074	)			(5,621	)			(6,170	)			(6,724	)			(7,390	)
Total tangible assets		(b)		$	17,206,325			$	16,974,786			$	16,707,725			$	16,487,352			$	16,159,180
Risk-weighted assets		(c)		$	12,623,630			$	12,324,254			$	12,256,492			$	12,188,988			$	12,017,378
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income				$	26,222			$	21,200			$	47,981			$	51,962			$	51,217			$	147,365			$	160,025
Plus: Intangible amortization net of tax					411				412				415				500				564				1,738				2,289
Net income adjusted for intangible amortization				$	26,633			$	21,612			$	48,396			$	52,462			$	51,781			$	149,103			$	162,314
Period end common shares outstanding		(d)			61,648,679				62,461,832				62,773,226				63,394,522				63,424,526
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity (1)					7.72	%			6.16	%			13.96	%			15.56	%			15.47	%			10.81	%			12.58	%
Tangible equity/tangible assets		(a)/(b)			7.86	%			8.12	%			8.31	%			8.30	%			8.34	%
Tangible equity/risk-weighted assets		(a)/(c)			10.71	%			11.19	%			11.33	%			11.23	%			11.22	%
Tangible book value		(a)/(d)*1,000		$	21.93			$	22.08			$	22.13			$	21.59			$	21.26
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity				$	1,741,311			$	1,768,947			$	1,779,309			$	1,759,705			$	1,741,117
CECL transition adjustment					26,000				26,419				26,671				26,829				31,199
AOCI-related adjustments					32,560				19,080				10,641				16,506				1,051
CET1 adjustments and deductions:
Goodwill net of associated deferred tax liabilities (DTLs)					(370,252	)			(370,264	)			(370,276	)			(370,288	)			(371,333	)
Other adjustments and deductions for CET1 (2)					(4,392	)			(4,817	)			(5,243	)			(5,675	)			(6,190	)
CET1 capital		(e)			1,425,227				1,439,365				1,441,102				1,427,077				1,395,844
Additional tier 1 capital instruments plus related surplus					60,000				60,000				60,000				60,000				60,000
Tier 1 capital				$	1,485,227			$	1,499,365			$	1,501,102			$	1,487,077			$	1,455,844
Common equity tier 1 capital ratio		(e)/(c)			11.29	%			11.68	%			11.76	%			11.71	%			11.62	%

(1)	Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity.
(2)	Includes other intangible assets, net of DTLs, disallowed deferred tax assets (DTAs), threshold deductions and transition adjustments, as applicable.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2021
($ in thousands)
(unaudited)

Note 10 – Non-GAAP Financial Measures (continued)

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

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

		Quarter Ended																				Year Ended
		12/31/2021				9/30/2021				6/30/2021				3/31/2021				12/31/2020				12/31/2021				12/31/2020
Net interest income (GAAP)		$	98,326			$	98,266			$	119,423			$	102,336			$	111,378			$	418,351			$	426,537
Noninterest income (GAAP)			50,767				54,149				56,411				60,583				66,117				221,910				274,593
Pre-provision revenue	(a)	$	149,093			$	152,415			$	175,834			$	162,919			$	177,495			$	640,261			$	701,130
Noninterest expense (GAAP)		$	119,469			$	129,600			$	118,679			$	121,548			$	119,894			$	489,296			$	466,301
Less: Voluntary early retirement program			—				(5,700	)			—				—				—				(5,700	)			(4,375	)
Regulatory settlement charge			—				(5,000	)			—				—				—				(5,000	)			—
Adjusted noninterest expense - PPNR (Non-GAAP)	(b)	$	119,469			$	118,900			$	118,679			$	121,548			$	119,894			$	478,596			$	461,926
PPNR (Non-GAAP)	(a)-(b)	$	29,624			$	33,515			$	57,155			$	41,371			$	57,601			$	161,665			$	239,204

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

		Quarter Ended																		Year Ended
		12/31/2021									12/31/2020									12/31/2021									12/31/2020
		Amount				Diluted EPS					Amount				Diluted EPS					Amount				Diluted EPS					Amount				Diluted EPS
Net income (GAAP)		$	26,222			$	0.42				$	51,217			$	0.81				$	147,365			$	2.34				$	160,025			$	2.51
Significant non-routine transactions (net of taxes):
Voluntary early retirement program			—				—					—				—					4,275				0.07					3,281				0.05
Regulatory settlement charge (not tax deductible)			—				—					—				—					5,000				0.08					—				—
Net income adjusted for significant non-routine transactions (Non-GAAP)		$	26,222			$	0.42				$	51,217			$	0.81				$	156,640			$	2.49				$	163,306			$	2.56
		Reported (GAAP)				Adjusted (Non- GAAP)					Reported (GAAP)				Adjusted (Non- GAAP)					Reported (GAAP)				Adjusted (Non- GAAP)					Reported (GAAP)				Adjusted (Non- GAAP)
Return on average equity			5.92	%		n/a						11.81	%		n/a						8.32	%			8.83	%				9.52	%			9.69	%
Return on average tangible equity			7.72	%		n/a						15.47	%		n/a						10.81	%			11.45	%				12.58	%			12.81	%
Return on average assets			0.60	%		n/a						1.28	%		n/a						0.86	%			0.92	%				1.05	%			1.07	%
n/a - not applicable

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2021
($ in thousands)
(unaudited)

Note 10 – Non-GAAP Financial Measures (continued)

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

		Quarter Ended																				Year Ended
		12/31/2021				9/30/2021				6/30/2021				3/31/2021				12/31/2020				12/31/2021				12/31/2020
Total noninterest expense (GAAP)		$	119,469			$	129,600			$	118,679			$	121,548			$	119,894				489,296			$	466,301
Less: Other real estate expense, net			(336	)			(1,357	)			(1,511	)			(324	)			812				(3,528	)			(1,956	)
Amortization of intangibles			(548	)			(549	)			(553	)			(666	)			(752	)			(2,316	)			(3,052	)
Charitable contributions resulting in state tax credits			(391	)			(350	)			(355	)			(350	)			(375	)			(1,446	)			(1,500	)
Voluntary early retirement program			—				(5,700	)			—				—				—				(5,700	)			(4,375	)
Regulatory settlement charge			—				(5,000	)			—				—				—				(5,000	)			—
Adjusted noninterest expense (Non-GAAP)	(c)	$	118,194			$	116,644			$	116,260			$	120,208			$	119,579			$	471,306			$	455,418
Net interest income (GAAP)		$	98,326			$	98,266			$	119,423			$	102,336			$	111,378			$	418,351			$	426,537
Add: Tax equivalent adjustment			2,906				2,947				2,957				2,894				2,939				11,704				12,023
Net interest income-FTE (Non-GAAP)	(a)	$	101,232			$	101,213			$	122,380			$	105,230			$	114,317			$	430,055			$	438,560
Noninterest income (GAAP)		$	50,767			$	54,149			$	56,411			$	60,583			$	66,117			$	221,910			$	274,593
Add: Partnership amortization for tax credit purposes			2,455				2,045				1,989				1,522				1,877				8,011				5,700
Adjusted noninterest income (Non-GAAP)	(b)	$	53,222			$	56,194			$	58,400			$	62,105			$	67,994			$	229,921			$	280,293
Adjusted revenue (Non-GAAP)	(a)+(b)	$	154,454			$	157,407			$	180,780			$	167,335			$	182,311			$	659,976			$	718,853
Efficiency ratio (Non-GAAP)	(c)/((a)+(b))		76.52	%			74.10	%			64.31	%			71.84	%			65.59	%			71.41	%			63.35	%

 

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