TRUSTMARK CORPORATIO

TRMK
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Trustmark Third Quarter 2021 Financial Results Presentation

10/26/2021 | 04:48pm

Third Quarter 2021 Financial Results

October 26, 2021

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.

2

Financial Highlights

Performance reflects continued balance sheet growth, strong credit quality and disciplined expense management

Earnings

Voluntary early retirement program reduced net income by $4.3 million, or

approximately $0.07 per diluted share; anticipate pre-tax savings of

Drivers

approximately $1.3 million for the remainder of 2021 and $4.3 million in 2022

Charge to resolve allegations by regulatory authorities regarding fair lending

matters reduced net income by $5.0 million, or approximately $0.08 per diluted

share

Collectively, these items reduced net income by $9.3 million, or approximately

$0.15 per diluted share

Profitable

Loans Held for Investment (HFI) increased $22.0 million, or 0.2%, linked-

quarter and $327.2 million, or 3.3%, year-over-year

Revenue

Deposits increased $290.8 million, or 2.0%, linked-quarter and $1.7 billion, or

Generation

12.9%, year-over-year

Investment securities increased $470.8 million linked-quarter as excess

liquidity was deployed

Net interest income (FTE), excluding interest and fees on PPP loans, increased

$2.9 million, or 2.9%, linked-quarter

Noninterest income totaled $54.1 million, representing 35.5% of total revenue

Expense

Adjusted noninterest expense(1) totaled $116.6 million in the third quarter, a 0.3%

Management

increase from the prior quarter

Credit

Recoveries exceeded charge-offs by $2.5 million in the third quarter

Provision for credit losses, net totaled a negative $3.5 million for the quarter

Quality

Loans remaining under a COVID-19 related concession represented

approximately 20 basis points of loans HFI at September 30, 2021

Capital

Maintained strong capital levels with CET1 ratio of 11.68% and total risk-based

capital ratio of 14.01%

Management

Repurchased $9.7 million, or approximately 319 thousand shares of common

stock in the third quarter; at September 30, 2021, had $65.4 million remaining authority under the repurchase program, which expires on December 31, 2021

At September 30, 2021

Total Assets

$17.4 billion

Loans (HFI)

$10.2 billion

PPP Loans

$46.5 million

Total Deposits

$14.9 billion

Banking Centers

180

Q3-21

Q2-21

Q3-20

Net Income

$21.2

$48.0

$54.4

($ in millions)

EPS -

$0.34

$0.76

$0.86

Diluted

ROAA

0.49%

1.13%

1.37%

ROATCE

6.16%

13.96%

16.82%

Dividends /

$0.23

$0.23

$0.23

Share

TE/TA

8.12%

8.31%

8.68%

Source: Company reports Board of Directors declared quarterly cash dividend of $0.23 per share

(1) For Non-GAAP measures, please refer to the Earnings Release dated October 26, 2021 and the Consolidated Financial Information, Note 10 - Non-GAAP Financial Measures

3

Loans Held for Investment (LHFI) Portfolio

Focus on profitable, credit-disciplined loan growth continued

LHFI

Change

($ in millions)

09/30/21

LQ

Y-o-Y

Loans secured by real estate:

Const., land dev. and other land loans

$

1,287

$

(74)

$

(99)

Secured by 1-4 family residential prop.

1,891

81

116

Secured by nonfarm, nonresidential prop.

2,925

105

217

Other real estate secured

986

(92)

98

Commercial and industrial loans

1,327

1

(71)

Consumer loans

158

4

(3)

State and other political subdivision loans

1,125

(12)

190

Other loans

476

9

(121)

Total LHFI

$

10,175

$

22

$

327

LHFI by Quarter

$10,153

$10,175

$9,984

$9,848

$9,825

Dollar Change:

$(23)

$159

$169

$22

Q3-20

Q4-20

Q1-21

Q2-21

Q3-21

Source: Company reports

(1) Percentages may not sum to 100% due to rounding.

Loan Portfolio Composition 09/30/21(1)

Other RE,

10%

C&I, 13%

Nonfarm-Nonres,

29%

Consumer, 2%

State & Other

Political Sub. , 11%

Other, 5%

1-4 Residential,

19%

Construction,

Land Dev, 13%

  • Trustmark has no loan exposure in which the source of repayment or the underlying security of such exposure is tied to the realization of value from energy reserves
    • Total energy-related sector exposure of $316 million with outstanding balances of $101 million - representing 0.99% of total LHFI - at September 30, 2021
    • At September 30, 2021, nonaccrual energy- related loans represented 1.34% of outstanding energy-related loans and 1 basis point of outstanding LHFI

4

Real Estate Secured Loan Portfolio Detail

CRE Portfolio

% of CRE

($ in millions)

Portfolio

09/30/21

Lots, Development and Unimproved Land

$ 278

7%

1-4 Family Construction

282

7%

Other Construction

727

19%

Total Construction, Land Development and

$ 1,287

33%

Other Land Loans

Retail

385

10%

Offices

215

6%

Hotels/Motels

347

9%

Industrial

247

6%

Other (including REITs)

500

13%

Total Non-owner Occupied & REITs

$ 1,694

44%

Multi-Family(1)

911

23%

Total CRE

$ 3,892

100%

Source: Company reports

(1) Multi-Family is included in Other Real Estate Secured Loans in Financials

Owner-Occupied NonFarm,

% of Owner-

NonResidential

Occupied

($ in millions)

Portfolio

09/30/21

Offices

$ 168

14%

Churches

97

8%

Industrial Warehouses

178

14%

Health Care

143

12%

Convenience Stores

141

11%

Nursing Homes/Senior Living

211

17%

Other

298

24%

Total Owner-Occupied

$ 1,236

100%

  • Focus on vertical construction with limited exposure to unimproved land and development
  • Well-diversifiedproduct and geographical mix
  • Balanced between non-owner and owner-occupied portfolios
  • Virtually no REIT outstandings ($4.9 million)

5

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Trustmark Corporation published this content on 26 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 October 2021 20:47:25 UTC.

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