Exhibit 99.1 News Release Trustmark Corporation Announces Third Quarter 2024 Financial Results Performance Reflects Increased Earnings, Enhanced Profitability, and Strengthened Capital Flexibility JACKSON, Miss. – October 22, 2024 – Trustmark Corporation (NASDAQGS:TRMK) reported net income of $51.3 million in the third quarter of 2024, representing diluted earnings per share of $0.84. In the second quarter of 2024, Trustmark reported net income of $73.8 million, representing diluted earnings per share of $1 ...

The market expects Trustmark (TRMK) to deliver a year-over-year increase in earnings on lower revenues when it reports results for the quarter ended September 2024. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be release ...

Looking for a stock that has been consistently beating earnings estimates and might be well positioned to keep the streak alive in its next quarterly report? Trustmark (TRMK) , which belongs to the Zacks Banks - Southeast industry, could be a great candidate to consider. This holding company for Trustmark National Bank has an established record of topping earnings estimates, especially when looking at the previous two reports. The company boasts an average surprise for the past two quarters of 10.77%. For t ...

Financial Data and Key Metrics Changes - The company reported earnings of $73.8 million or $1.20 per diluted share for the second quarter, with an after-tax gain of $171.2 million from the sale of Fisher Brown Bottrell Insurance [15][35] - Net interest income increased by $8 million or 6% linked-quarter to $144 million, with the net interest margin expanding by 17 basis points to 3.38% [37][56] - The CET1 ratio increased by 80 basis points to 10.92%, and total risk-based capital expanded by 87 basis points to 13.29% [16][60] Business Line Data and Key Metrics Changes - Loans held for investment increased by $98 million linked-quarter and $541 million year-over-year, with growth driven by commercial real estate and equipment finance [36][38] - Non-interest income from adjusted continuing operations totaled $38.2 million, reflecting a $1.1 million linked-quarter decrease [45] - Non-interest expense decreased by 1.1% linked-quarter to $118.3 million, primarily due to reduced salary and benefits [47] Market Data and Key Metrics Changes - Deposits totaled $15.5 billion at June 30, a linked-quarter increase of $124 million or 0.8%, and a year-over-year increase of $549 million or 3.7% [52] - The cost of interest-bearing deposits increased by 1 basis point to 2.75% [53] - The company anticipates net interest margin to be in the range of 3.55% to 3.60% in the second half of 2024 [44] Company Strategy and Development Direction - The company is focused on organic loan growth, potential market expansion, and M&A opportunities depending on market conditions [49] - A disciplined approach to capital deployment is maintained, with a preference for organic growth and evaluating share repurchase programs as market conditions dictate [60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of 2024, indicating a busy quarter and excitement for future growth [85] - The company expects loan growth in the low-single digits for 2024, with a focus on maintaining credit quality amid rising interest rates [30][51] Other Important Information - The company completed the sale of $1.6 billion of AFS securities, generating a loss of $182.8 million, and purchased $1.4 billion of AFS securities with a higher yield of 4.85% [15] - The allowance for credit losses represents 1.18% of loans held for investment, with net charge-offs totaling $3 million, representing 9 basis points of average loans [29][41] Q&A Session Summary Question: Guidance on expenses for the second half of the year - Management confirmed expectations for expenses to grow at a low-single digit pace, estimating a run rate around $122 million to $123 million per quarter [75][76] Question: Concerns about project delays and credit quality - Management indicated that while there are no concerning trends in NPAs or NPLs, they are focused on ensuring accurate grading of credits and supporting borrowers as needed [80][84] Question: Actions taken to rationalize deposit costs - Management discussed efforts to manage deposit costs, particularly regarding maturing promotional CDs, and noted that they have pivoted strategies to maintain deposit stability [82][83]

For the quarter ended June 2024, Trustmark (TRMK) reported revenue of $185.84 million, down 5.6% over the same period last year. EPS came in at $0.66, compared to $0.74 in the year-ago quarter. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance. Here is how Trustmark performed in th ...

Trustmark, which belongs to the Zacks Banks - Southeast industry, posted revenues of $185.84 million for the quarter ended June 2024, missing the Zacks Consensus Estimate by 19.14%. This compares to year-ago revenues of $196.84 million. The company has topped consensus revenue estimates three times over the last four quarters. While Trustmark has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? It will be interesting to see how estimates fo ...

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) This section provides an overview of Trustmark's Q2 2024 performance, detailing net income, strategic transactions, and key financial highlights [Second Quarter 2024 Overview](index=1&type=section&id=Second%20Quarter%202024%20Overview) Trustmark Corporation reported net income of $73.8 million, or $1.20 diluted EPS, for Q2 2024, with net income from adjusted continuing operations at $40.5 million, or $0.66 diluted EPS. The quarter was marked by significant strategic actions including the sale of FBBI and balance sheet restructuring to enhance profitability and reduce risk Key Financial Metrics (in millions, except EPS) | Metric | Q2 2024 | | :---------------------------------- | :-------------------- | | Net Income | $73.8 | | Diluted EPS | $1.20 | | Net Income from Adjusted Continuing Operations | $40.5 | | Diluted EPS from Adjusted Continuing Operations | $0.66 | - Trustmark's CEO, Duane A. Dewey, stated that Q2 2024 was an "extremely productive quarter" due to the sale of the insurance agency and significant balance sheet restructuring, positioning the company for improved operating performance[14](index=14&type=chunk) - The core banking franchise also performed well with continued loan growth, deposit growth, solid fee income, and disciplined expense management[14](index=14&type=chunk) - The Board of Directors declared a quarterly cash dividend of **$0.23 per share** payable September 15, 2024[14](index=14&type=chunk) [Significant Non-Routine Transactions](index=1&type=section&id=Significant%20Non-Routine%20Transactions) Trustmark completed several significant non-routine transactions in Q2 2024, including the sale of Fisher Brown Bottrell Insurance, Inc. (FBBI) for a $228.3 million gain, restructuring its investment securities portfolio resulting in a $182.8 million loss, and selling a portfolio of 1-4 family mortgage loans for a $13.4 million loss. The company also exchanged Visa Class B-1 shares, generating an $8.1 million gain Impact of Non-Routine Transactions (in millions) | Transaction | Impact | | :------------------------------------ | :------------------- | | Sale of FBBI | **$228.3 gain** ($171.2 net of taxes) | | Investment Securities Portfolio Restructuring (Loss) | **$182.8 loss** ($137.1 net of taxes) | | Mortgage Loan Sale (Loss) | **$13.4 loss** ($10.1 net of taxes) | | Visa Class C Stock Exchange (Gain) | **$8.1 gain** ($6.0 net of taxes) | - The investment securities portfolio restructuring involved selling **$1.561 billion** of available-for-sale securities with an average yield of **1.36%** and purchasing **$1.378 billion** of available-for-sale securities with an average yield of **4.85%**[14](index=14&type=chunk)[29](index=29&type=chunk) - The Mortgage Loan Sale involved a portfolio of **$56.2 million** of 1-4 family mortgage loans that were three payments delinquent and/or nonaccrual, driving a **$54.1 million reduction** in nonperforming loans[14](index=14&type=chunk)[29](index=29&type=chunk) [Second Quarter Highlights](index=1&type=section&id=Second%20Quarter%20Highlights) Key highlights for Q2 2024 include a 0.7% linked-quarter increase in Loans HFI to $13.2 billion (1.2% excluding Mortgage Loan Sale), a 0.8% linked-quarter increase in deposits to $15.5 billion, and a 6.0% linked-quarter increase in Net Interest Income (FTE) to $144.3 million, with Net Interest Margin rising 17 basis points to 3.38%. Noninterest expense declined 1.1% linked-quarter, and capital ratios improved significantly Key Performance Indicators (in millions, except ratios) | Metric | Q2 2024 | Linked-Quarter Change | Year-over-Year Change | | :---------------------------------- | :-------------------- | :-------------------- | :-------------------- | | Loans HFI | **$13,200** | **+0.7%** | **+4.3%** | | Deposits | **$15,500** | **+0.8%** | **+3.7%** | | Net Interest Income (FTE) | **$144.3** | **+6.0%** | **+0.7%** | | Net Interest Margin | **3.38%** | **+17 bps** | **+5 bps** | | Noninterest Expense | **$118.3** | **-1.1%** | **-2.7%** | | Tangible Equity to Tangible Assets Ratio | **8.52%** | **+105 bps** | **+169 bps** | | Tangible Book Value Per Share | **$25.23** | **+14.5%** | **+24.7%** | [Financial Performance](index=2&type=section&id=Financial%20Performance) This section analyzes Trustmark's Q2 2024 financial performance, focusing on revenue generation, noninterest expenses, and net income per share [Revenue Generation](index=2&type=section&id=Revenue%20Generation) Revenue from adjusted continuing operations increased 4.1% linked-quarter to $179.3 million, driven by higher net interest income and growth in bank card fees and wealth management. GAAP revenue was negative $0.3 million due to significant non-routine transactions Overall Revenue (in millions) | Metric | Q2 2024 | Linked-Quarter Change | Year-over-Year Change | | :---------------------------------- | :-------------------- | :-------------------- | :-------------------- | | Revenue from Adjusted Continuing Operations | **$179.3** | **+4.1%** | **+0.9%** | | GAAP Revenue | **$(0.3)** | n/m | n/m | [Net Interest Income](index=2&type=section&id=Net%20Interest%20Income) This section examines net interest income, net interest margin, and the cost of interest-bearing and total deposits for Q2 2024 Net Interest Income Metrics (in millions, except ratios) | Metric | Q2 2024 | Linked-Quarter Change | Year-over-Year Change | | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Net Interest Income (FTE) | **$144.3** | **+6.0%** | **+0.7%** | | Net Interest Margin | **3.38%** | **+17 bps** | **+5 bps** | | Cost of Interest-Bearing Deposits | **2.75%** | **+1 bp** | **+79 bps** | | Cost of Total Deposits | **2.18%** | Unchanged | **+70 bps** | - The increase in net interest margin was primarily due to increased yields on the securities portfolio and the loans HFI and held for sale portfolio, as well as the costs of interest-bearing deposits remaining relatively flat[3](index=3&type=chunk)[50](index=50&type=chunk) [Noninterest Income](index=2&type=section&id=Noninterest%20Income) This section details the components of noninterest income, including bank card fees, service charges, and other net income, for Q2 2024 Noninterest Income Components (in millions) | Metric | Q2 2024 | Linked-Quarter Change | Year-over-Year Change | | :---------------------------------- | :-------------------- | :-------------------- | :-------------------- | | GAAP Noninterest Income | **$(141.3)** | n/m | n/m | | Noninterest Income from Adjusted Continuing Operations | **$38.2** | **-2.8%** | **+1.1%** | | Bank Card and Other Fees | **$9.2** | **+24.2%** | **+3.5%** | | Service Charges on Deposit Accounts | **$10.9** | Unchanged | **+2.1%** | | Other, net | **$7.5** | n/m | n/m | - The linked-quarter increase in Bank Card and Other Fees reflects expanded customer derivative revenue, interchange revenue, and miscellaneous other revenue[3](index=3&type=chunk) - The 'Other, net' category includes an **$8.1 million gain** from Visa C exchange, partially offset by a **$4.8 million noncredit-related loss** from the Mortgage Loan Sale[3](index=3&type=chunk)[52](index=52&type=chunk) [Mortgage Banking Revenue](index=2&type=section&id=Mortgage%20Banking%20Revenue) This section outlines mortgage loan production, mortgage banking revenue, and the impact of hedge ineffectiveness on Q2 2024 results Mortgage Banking Performance (in millions) | Metric | Q2 2024 | Linked-Quarter Change | Year-over-Year Change | | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Mortgage Loan Production | **$379.5** | **+38.5%** | **-12.0%** | | Mortgage Banking Revenue | **$4.2** | **-52.8%** | **-36.3%** | | Net Negative Hedge Ineffectiveness | **$(4.49)** | n/m | n/m | - The linked-quarter decrease in mortgage banking revenue was principally attributable to increased net negative hedge ineffectiveness, driven by a higher assumed discount rate on servicing cash flows[3](index=3&type=chunk)[60](index=60&type=chunk) [Wealth Management Revenue](index=2&type=section&id=Wealth%20Management%20Revenue) This section presents wealth management revenue performance, highlighting growth drivers from investment services and brokerage activities Wealth Management Revenue (in millions) | Metric | Q2 2024 | Linked-Quarter Change | Year-over-Year Change | | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Wealth Management Revenue | **$9.7** | **+8.3%** | **+9.1%** | - Linked-quarter growth reflected increased investment services and trust management revenue, while the year-over-year increase reflected expanded brokerage revenue[3](index=3&type=chunk) [Noninterest Expense](index=2&type=section&id=Noninterest%20Expense) Total noninterest expense decreased by $1.3 million, or 1.1%, linked-quarter to $118.3 million. This was mainly due to a decline in salaries and employee benefits, partially offset by increased commission expense Noninterest Expense Components (in millions) | Metric | Q2 2024 | Linked-Quarter Change | Year-over-Year Change | | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Noninterest Expense | **$118.3** | **-1.1%** | **-2.7%** | | Salaries and Employee Benefits | **$64.8** | **-1.0%** | **-2.9%** | | Other Expense | **$15.2** | **-5.6%** | **+10.7%** | - The decrease in salaries and employee benefits was principally due to reduced compensation expense and the seasonal decline in payroll taxes, partially offset by increased commission expense[3](index=3&type=chunk) [Net Income and Earnings Per Share](index=6&type=section&id=Net%20Income%20and%20Earnings%20Per%20Share) Trustmark reported net income of $73.8 million for Q2 2024, resulting in diluted EPS of $1.20. Income from continuing operations was a loss of $100.6 million, while income from discontinued operations (primarily the FBBI sale) was $174.4 million Net Income and EPS (in millions, except EPS) | Metric | Q2 2024 | | :---------------------------------- | :-------------------------------- | | Net Income | **$73.8** | | Diluted EPS - Total | **$1.20** | | Income (Loss) from Continuing Operations | **$(100.6)** | | Diluted EPS from Continuing Operations | **$(1.64)** | | Income from Discontinued Operations | **$174.4** | | Diluted EPS from Discontinued Operations | **$2.84** | [Balance Sheet & Capital Management](index=1&type=section&id=Balance%20Sheet%20%26%20Capital%20Management) This section reviews Trustmark's balance sheet and capital management, including loan and deposit trends, capital ratios, and the securities portfolio [Loans and Deposits](index=1&type=section&id=Loans%20and%20Deposits) Loans held for investment (HFI) increased 0.7% linked-quarter and 4.3% year-over-year to $13.2 billion, driven by growth in construction, nonfarm nonresidential properties, and other loans. Deposits expanded 0.8% linked-quarter and 3.7% year-over-year to $15.5 billion, with noninterest-bearing deposits representing 20.4% of total deposits Loan and Deposit Trends (in billions, except ratios) | Metric | Q2 2024 | Linked-Quarter Change | Year-over-Year Change | | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Loans HFI | **$13.2** | **+0.7%** | **+4.3%** | | Deposits | **$15.5** | **+0.8%** | **+3.7%** | | Noninterest-Bearing Deposits (% of Total) | **20.4%** | **+0.6%** | **-11.5%** | | Loans HFI to Total Deposits Ratio | **85.1%** | n/m | n/m | - Linked-quarter growth in Loans HFI reflected increases in construction, development and other land loans, loans secured by nonfarm, nonresidential properties, and other loans and leases, offset in part by declines in commercial and industrial loans, other real estate secured loans, and 1-4 family mortgage loans[14](index=14&type=chunk) [Capital Ratios and Tangible Book Value](index=1&type=section&id=Capital%20Ratios%20and%20Tangible%20Book%20Value) Trustmark enhanced its strong capital position, with the CET1 ratio at 10.92% and total risk-based capital ratio at 13.29%, both showing significant linked-quarter increases. Tangible equity to tangible assets ratio improved to 8.52%, and tangible book value per share increased 14.5% to $25.23 Capital Adequacy and Tangible Value | Metric | Q2 2024 | Linked-Quarter Change | Year-over-Year Change | | :---------------------------------- | :------ | :-------------------- | :-------------------- | | CET1 Ratio | **10.92%** | **+80 bps** | **+105 bps** | | Total Risk-Based Capital Ratio | **13.29%** | **+87 bps** | **+121 bps** | | Tangible Equity to Tangible Assets Ratio | **8.52%** | **+105 bps** | **+169 bps** | | Tangible Book Value Per Share | **$25.23** | **+14.5%** | **+24.7%** | [Securities Portfolio](index=4&type=section&id=Securities%20Portfolio) The securities portfolio was restructured in Q2 2024, involving the sale of $1.561 billion of available-for-sale securities with a 1.36% yield and the purchase of $1.378 billion of available-for-sale securities with a 4.85% yield. The portfolio is 100% invested in U.S. Treasury securities, GSE-backed obligations, and other Aaa rated securities Securities Portfolio Balances (in billions) | Metric | Q2 2024 | Linked-Quarter Change | Year-over-Year Change | | :---------------------------------- | :-------------------- | :-------------------- | :-------------------- | | Total Securities (Average) | **$3.29** | **-1.8%** | **-8.9%** | | Securities AFS (Period End) | **$1.62** | **-4.7%** | **-13.4%** | | Securities HTM (Period End) | **$1.38** | **-2.4%** | **-5.4%** | - Trustmark restructured its investment securities portfolio by selling **$1.561 billion** of available for sale securities with an average yield of **1.36%** and purchasing **$1.378 billion** of available for sale securities with an average yield of **4.85%**[14](index=14&type=chunk)[29](index=29&type=chunk) - The securities portfolio is **100% invested** in U.S. Treasury securities, GSE-backed obligations, and other Aaa rated securities, with no sub-prime collateral[47](index=47&type=chunk) [Credit Quality](index=2&type=section&id=Credit%20Quality) This section assesses Trustmark's credit quality, focusing on nonperforming assets, the Allowance for Credit Losses, and net charge-offs [Nonperforming Assets](index=2&type=section&id=Nonperforming%20Assets) Nonaccrual loans declined significantly by 55.0% linked-quarter to $44.3 million, primarily due to the Mortgage Loan Sale. Collectively, nonperforming assets decreased by 52.0% linked-quarter to $50.9 million Nonperforming Asset Trends (in millions, except ratios) | Metric | Q2 2024 | Linked-Quarter Change | Year-over-Year Change | | :---------------------------------- | :-------------------- | :-------------------- | :-------------------- | | Nonaccrual Loans | **$44.3** | **-55.0%** | **-41.0%** | | Other Real Estate | **$6.6** | **-13.6%** | n/m | | Total Nonperforming Assets | **$50.9** | **-52.0%** | **-33.2%** | | Nonaccrual LHFI / (LHFI + LHFS) | **0.33%** | **-41 bps** | **-26 bps** | - The Mortgage Loan Sale drove a **$54.1 million reduction** in nonperforming loans[14](index=14&type=chunk) - Nonaccrual LHFI in Mississippi declined **75.0%** linked-quarter to **$14.77 million**, and in Texas declined **95.6%** linked-quarter to **$0.599 million**[22](index=22&type=chunk) [Allowance for Credit Losses (ACL)](index=2&type=section&id=Allowance%20for%20Credit%20Losses%20%28ACL%29) The Allowance for Credit Losses (ACL) for loans HFI increased to $154.7 million, representing 1.18% of loans HFI and 840.20% of nonaccrual loans HFI (excluding individually analyzed loans). Management believes the ACL level is commensurate with expected credit losses Allowance for Credit Losses (in millions, except ratios) | Metric | Q2 2024 | Linked-Quarter Change | Year-over-Year Change | | :---------------------------------- | :-------------------- | :-------------------- | :-------------------- | | ACL on Loans HFI (Ending Balance) | **$154.7** | **+8.2%** | **+19.6%** | | ACL to Loans HFI Ratio | **1.18%** | **+8 bps** | **+15 bps** | | ACL to Nonaccrual Loans HFI (excl. individually analyzed loans) | **840.20%** | **+604.91%** | **+538.76%** | | ACL LHFI-Commercial / Commercial LHFI | **1.05%** | **+12 bps** | **+21 bps** | | ACL LHFI-Consumer / Consumer and Home Mortgage LHFI | **1.59%** | **-4 bps** | **-1 bp** | - Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio[3](index=3&type=chunk) [Net Charge-offs](index=2&type=section&id=Net%20Charge-offs) Net charge-offs totaled $11.6 million for Q2 2024. Excluding the Mortgage Loan Sale, net charge-offs were $3.0 million, representing 0.09% of average loans. The provision for credit losses for loans HFI was $23.3 million, or $14.7 million excluding the Mortgage Loan Sale, primarily due to credit migration Net Charge-offs and Provision for Credit Losses (in millions, except ratios) | Metric | Q2 2024 | Linked-Quarter Change | Year-over-Year Change | | :---------------------------------- | :-------------------- | :-------------------- | :-------------------- | | Net Charge-offs | **$11.6** | n/m | n/m | | Net Charge-offs (excl. Mortgage Loan Sale) / Average Loans | **0.09%** | **-3 bps** | **+5 bps** | | Total Provision for Credit Losses for Loans HFI | **$23.3** | n/m | n/m | | PCL, LHFI (excl. Mortgage Loan Sale) | **$14.7** | **+90.7%** | **+79.0%** | | PCL, Off-Balance Sheet Credit Exposures | **$(3.6)** | n/m | n/m | - The provision for credit losses for loans HFI (excluding the Mortgage Loan Sale) was primarily attributable to credit migration[3](index=3&type=chunk) - The provision for credit losses for off-balance sheet credit exposures was a **negative $3.6 million**, primarily driven by decreases in unfunded commitments[3](index=3&type=chunk) [Consolidated Financial Information (Detailed Tables)](index=4&type=section&id=Consolidated%20Financial%20Information%20%28Detailed%20Tables%29) This section provides detailed consolidated financial tables, including average and period-end balances, income statements, nonperforming assets, and key financial ratios [Quarterly Average Balances](index=4&type=section&id=Quarterly%20Average%20Balances) This section provides a detailed breakdown of quarterly average balances for assets, liabilities, and shareholders' equity, showing trends linked-quarter and year-over-year Quarterly Average Balances (in thousands) | Metric | Q2 2024 | Linked-Quarter Change | Year-over-Year Change | | :---------------------------------- | :--------------------- | :-------------------- | :-------------------- | | Total Earning Assets | **$17,189,447** | **+0.6%** | **-0.3%** | | Total Assets | **$18,786,509** | **+0.6%** | **+0.1%** | | Total Interest-Bearing Deposits | **$12,222,381** | **-0.6%** | **+9.7%** | | Total Liabilities | **$17,059,020** | **+0.3%** | **-0.8%** | | Shareholders' Equity | **$1,727,489** | **+3.0%** | **+9.3%** | [Period End Balances](index=5&type=section&id=Period%20End%20Balances) This section presents period-end balances for assets, liabilities, and shareholders' equity, highlighting changes from the prior quarter and prior year Period End Balances (in thousands) | Metric | Q2 2024 | Linked-Quarter Change | Year-over-Year Change | | :---------------------------------- | :--------------------- | :-------------------- | :-------------------- | | Total Assets | **$18,452,487** | **+0.4%** | **+0.2%** | | Total Deposits | **$15,462,888** | **+0.8%** | **+3.7%** | | Total Liabilities | **$16,573,346** | **-0.7%** | **-1.7%** | | Total Shareholders' Equity | **$1,879,141** | **+11.7%** | **+19.6%** | | Assets of Discontinued Operations | **$0** | **-100.0%** | **-100.0%** | [Income Statements](index=6&type=section&id=Income%20Statements) The income statement shows a net income of $73.8 million for Q2 2024. Key figures include total interest income (FTE) of $242.5 million, total interest expense of $98.1 million, and a significant securities loss of $182.8 million Income Statement Highlights (in thousands) | Metric | Q2 2024 | Linked-Quarter Change | Year-over-Year Change | | :---------------------------------- | :--------------------- | :-------------------- | :-------------------- | | Total Interest Income (FTE) | **$242,455** | **+4.0%** | **+9.3%** | | Total Interest Expense | **$98,122** | **+1.1%** | **+24.8%** | | Net Interest Income (FTE) | **$144,333** | **+6.0%** | **+0.7%** | | Securities Gains (Losses), net | **$(182,792)** | n/m | n/m | | Income (Loss) from Continuing Operations | **$(100,605)** | n/m | n/m | | Income from Discontinued Operations | **$174,437** | n/m | n/m | | Net Income | **$73,832** | **+77.8%** | **+63.9%** | [Nonperforming Assets (Detailed)](index=8&type=section&id=Nonperforming%20Assets%20%28Detailed%29) This section provides a detailed breakdown of nonperforming assets by region, showing significant declines in nonaccrual loans in Mississippi and Texas linked-quarter Nonperforming Assets by Region (in thousands) | Metric | Q2 2024 | Linked-Quarter Change | Year-over-Year Change | | :---------------------------------- | :--------------------- | :-------------------- | :-------------------- | | Total Nonaccrual LHFI | **$44,292** | **-55.0%** | **-41.0%** | | Mississippi Nonaccrual LHFI | **$14,773** | **-75.0%** | **-59.3%** | | Texas Nonaccrual LHFI | **$599** | **-95.6%** | **-97.3%** | | Total Other Real Estate | **$6,586** | **-13.6%** | n/m | | Loans Past Due Over 90 Days (LHFI) | **$5,413** | **+3.2%** | **+38.4%** | [Financial Ratios and Other Data](index=15&type=section&id=Financial%20Ratios%20and%20Other%20Data) This section presents key financial, credit quality, and capital ratios, including GAAP and Non-GAAP adjusted figures, demonstrating improvements in capital adequacy and efficiency Key Financial Ratios | Metric | Q2 2024 | Linked-Quarter Change | Year-over-Year Change | | :---------------------------------- | :------ | :-------------------- | :-------------------- | | Return on Average Equity - Total | **17.19%** | **+7.23%** | **+5.76%** | | Efficiency Ratio | **63.81%** | **-3.09%** | **-2.31%** | | Net Interest Margin - FTE | **3.38%** | **+17 bps** | **+5 bps** | | Nonperforming Assets / (LHFI + LHFS) | **0.38%** | **-42 bps** | **-22 bps** | | Total Equity / Total Assets | **10.18%** | **+102 bps** | **+165 bps** | [Notes to Consolidated Financials](index=17&type=section&id=Notes%20to%20Consolidated%20Financials) This section provides detailed notes to the consolidated financials, explaining significant transactions, portfolio compositions, yields, and non-GAAP measures [Significant Non-Routine Transactions (Note 1)](index=17&type=section&id=Significant%20Non-Routine%20Transactions%20%28Note%201%29) This note details the four significant non-routine transactions completed in Q2 2024: the sale of FBBI, the restructuring of the investment securities portfolio, the sale of 1-4 family mortgage loans, and the exchange of Visa Class B-1 shares Impact of Non-Routine Transactions (in millions) | Transaction | Impact | | :------------------------------------ | :------------------- | | Sale of FBBI | **$228.3 gain** ($171.2 net of taxes) | | Investment Securities Portfolio Restructuring (Loss) | **$182.8 loss** ($137.1 net of taxes) | | Mortgage Loan Sale (Loss) | **$13.4 loss** ($10.1 net of taxes) | | Visa Class C Stock Exchange (Gain) | **$8.1 gain** ($6.0 net of taxes) | - The credit-related portion of the Mortgage Loan Sale loss totaled **$8.6 million**, recorded as adjustments to charge-offs and the provision for credit losses[29](index=29&type=chunk) - The noncredit-related portion was **$4.8 million**, recorded in noninterest income in other, net[29](index=29&type=chunk) [Securities Available for Sale and Held to Maturity (Note 2)](index=17&type=section&id=Securities%20Available%20for%20Sale%20and%20Held%20to%20Maturity%20%28Note%202%29) This note provides a summary of the estimated fair value of securities available for sale and the amortized cost of securities held to maturity. The portfolio is entirely invested in high-quality, Aaa-rated securities Securities Portfolio Balances (in thousands) | Metric | Q2 2024 | | :---------------------------------- | :--------------------- | | Total Securities Available for Sale | **$1,621,659** | | Total Securities Held to Maturity | **$1,380,487** | | Net Unamortized, Unrealized Loss (HTM from AFS) | **$52,100** | - The securities portfolio is **100% invested** in U.S. Treasury securities, GSE-backed obligations, and other Aaa rated securities, as determined by Moody's[47](index=47&type=chunk) - None of the securities are collateralized by sub-prime assets[47](index=47&type=chunk) [Loan Composition (Note 3)](index=18&type=section&id=Loan%20Composition%20%28Note%203%29) This note details the composition of loans held for investment (LHFI) by type and region. Real estate secured loans constitute a significant portion, with nonfarm, nonresidential properties being the largest category Loans Held for Investment by Type (in thousands) | Loan Type | Q2 2024 | | :------------------------------------------ | :--------------------- | | Construction, land development and other land loans | **$1,638,972** | | Secured by 1-4 family residential properties | **$2,878,295** | | Secured by nonfarm, nonresidential properties | **$3,598,647** | | Other real estate secured | **$1,344,968** | | Commercial and industrial loans | **$1,880,607** | | Consumer loans | **$153,316** | | State and other political subdivision loans | **$1,053,015** | | Other loans and leases | **$607,598** | | **Total LHFI** | **$13,155,418** | Loans Held for Investment by Region (in thousands) | Region | LHFI | | :----------- | :------------------ | | Mississippi | **$6,691,222** | | Alabama | **$3,655,149** | | Texas | **$1,896,437** | | Florida | **$412,832** | | Tennessee | **$499,778** | [Yields on Earning Assets and Interest-Bearing Liabilities (Note 4)](index=19&type=section&id=Yields%20on%20Earning%20Assets%20and%20Interest-Bearing%20Liabilities%20%28Note%204%29) This note provides a detailed breakdown of yields on earning assets and rates paid on interest-bearing liabilities on a tax-equivalent basis, showing the net interest margin increase Yields and Rates | Metric | Q2 2024 | Q1 2024 | Q2 2023 | | :---------------------------------- | :------ | :------ | :------ | | Yield on Total Earning Assets | **5.67%** | **5.49%** | **5.16%** | | Rate on Interest-Bearing Deposits | **2.75%** | **2.74%** | **1.96%** | | Net Interest Margin | **3.38%** | **3.21%** | **3.33%** | - The net interest margin increased **17 basis points** linked-quarter, primarily due to increased yields on the securities portfolio and the loans held for investment and held for sale portfolio, as well as the costs of interest-bearing deposits remaining relatively flat[50](index=50&type=chunk) [Mortgage Banking (Note 5)](index=21&type=section&id=Mortgage%20Banking%20%28Note%205%29) This note details the components of mortgage banking revenue, including mortgage servicing income, gain on sales of loans, and the impact of hedge ineffectiveness Mortgage Banking Components (in thousands) | Metric | Q2 2024 | | :---------------------------------- | :--------------------- | | Mortgage Servicing Income, net | **$6,993** | | Gain on sales of loans, net | **$5,151** | | Mortgage banking income before hedge ineffectiveness | **$8,697** | | Net positive (negative) hedge ineffectiveness | **$(4,493)** | | Mortgage banking, net | **$4,204** | - The net negative hedge ineffectiveness of **$4.5 million** during Q2 2024 resulted from comparing the change in value of hedge instruments to the change in the fair value of mortgage servicing rights (MSR) attributable to interest rates and other market-driven changes[60](index=60&type=chunk) [Other Noninterest Income and Expense (Note 6)](index=22&type=section&id=Other%20Noninterest%20Income%20and%20Expense%20%28Note%206%29) This note breaks down other noninterest income and expense components, including the Visa C shares fair value adjustment and the loss on the sale of 1-4 family mortgage loans Other Noninterest Income Components (in thousands) | Other Noninterest Income Component | Q2 2024 | | :------------------------------------------ | :--------------------- | | Partnership amortization for tax credit purposes | **$(1,824)** | | Increase in life insurance cash surrender value | **$1,860** | | Loss on sale of 1-4 family mortgage loans | **$(4,798)** | | Visa C shares fair value adjustment | **$8,056** | | Other miscellaneous income | **$4,167** | | **Total other, net** | **$7,461** | Other Noninterest Expense Components (in thousands) | Other Noninterest Expense Component | Q2 2024 | | :------------------------------------------ | :--------------------- | | Loan expense | **$2,880** | | Amortization of intangibles | **$27** | | FDIC assessment expense | **$4,816** | | Other real estate expense, net | **$327** | | Other miscellaneous expense | **$7,189** | | **Total other expense** | **$15,239** | [Non-GAAP Financial Measures (Note 7)](index=22&type=section&id=Non-GAAP%20Financial%20Measures%20%28Note%207%29) This note explains Trustmark's use of non-GAAP financial measures, such as tangible common equity and adjusted continuing operations, for business planning and performance comparison. It provides reconciliations for these measures - Trustmark uses non-GAAP financial measures for business planning, managing against internal projected results, and measuring performance by excluding non-operational and unusual or non-recurring items[54](index=54&type=chunk)[66](index=66&type=chunk) - Tangible common equity is defined as common equity less goodwill and identifiable intangible assets[54](index=54&type=chunk) - These measures are intended to complement GAAP and regulatory capital ratios[54](index=54&type=chunk) Non-GAAP Adjusted Metrics (in thousands, except EPS) | Non-GAAP Metric | Q2 2024 | | :------------------------------------------ | :--------------------------------- | | Noninterest income from adjusted continuing operations | **$38,248** | | Noninterest expense from adjusted continuing operations | **$118,326** | | PPNR (Pre-Provision Net Revenue) | **$60,951** | | Net income adjusted for significant non-routine transactions | **$40,520** | | Diluted EPS from adjusted continuing operations | **$0.66** | [Forward-Looking Statements & Risk Factors](index=3&type=section&id=Forward-Looking%20Statements%20%26%20Risk%20Factors) This section outlines cautionary statements regarding forward-looking information and details various risk factors that could impact future results [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section contains cautionary statements regarding forward-looking information, emphasizing that actual results may differ materially due to various risks. Trustmark undertakes no obligation to update or revise this information, except as required by law - Forward-looking statements are identified by words such as "may," "hope," "will," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "project," "potential," "seek," "continue," "could," "would," "future" or their negatives[16](index=16&type=chunk) - Readers are warned that the occurrence of events described under "Risk Factors" could have an adverse effect on the business, results of operations, and financial condition, and actual results may vary significantly from expectations[16](index=16&type=chunk) [Risk Factors](index=3&type=section&id=Risk%20Factors) This section outlines various risks that could cause actual results to differ from expectations, including market interest rate changes, economic conditions, credit quality, regulatory changes, competition, technological changes, and natural disasters - Key risks include actions by the Federal Reserve Board impacting market interest rates, local, state, national, and international economic and market conditions, and conditions in the housing and real estate markets[16](index=16&type=chunk) - Other risks involve changes in nonperforming assets and charge-offs, an increase in unemployment levels, impacts related to bank failures and industry volatility, demand for products and services, and potential unexpected adverse outcomes in litigation[16](index=16&type=chunk) - Further risks include competition, changes in accounting standards, consumer habits, technological changes, cyber-attacks, natural disasters, pandemics, acts of war or terrorism, and difficulties related to acquisitions or new lines of business[16](index=16&type=chunk)

Core Viewpoint - Trustmark is expected to report a year-over-year decline in earnings despite higher revenues, with the consensus EPS estimate at $0.61, reflecting a -17.6% change from the previous year [9][11]. Revenue and Earnings Estimates - Revenues for the upcoming quarter are projected to be $229.83 million, representing a 16.8% increase from the same quarter last year [2]. - The consensus EPS estimate has been revised 5.34% higher in the last 30 days, indicating a positive reassessment by analysts [2]. Earnings Surprise Prediction - The Zacks Earnings ESP indicates a positive reading of +7.76% for Trustmark, suggesting that analysts have recently become more optimistic about the company's earnings prospects [14]. - A positive Earnings ESP is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) [4]. Historical Performance - Trustmark has beaten consensus EPS estimates three out of the last four quarters, indicating a history of positive surprises [17]. - In the last reported quarter, Trustmark had an earnings surprise of +13.33%, with actual earnings of $0.68 compared to an expected $0.60 [6]. Analyst Sentiment and Market Reaction - Despite the positive Earnings ESP, Trustmark currently holds a Zacks Rank of 4 (Sell), which complicates the prediction of an earnings beat [5][15]. - The stock's immediate price movement will largely depend on management's commentary during the earnings call and other market factors [10][18].

A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years. Therefore, the Zacks rating upgrade for Trustmark basically reflects positivity about its earnings outlook that could translate into buying pressure and an increase in its stock price. The change in a company's future earnings potential, as reflected in earnings ...

Form 10-Q Filing Information [Registrant Information](index=1&type=section&id=Registrant%20Information) This section details Trustmark Corporation's Form 10-Q filing information, including its SEC file number, trading symbol (TRMK), and common shares outstanding | Detail | Value | | :--- | :--- | | Filing Type | Quarterly Report on Form 10-Q | | Period Ended | March 31, 2024 | | Commission File Number | 000-03683 | | Registrant Name | Trustmark Corporation | | Trading Symbol | TRMK | | Exchange | Nasdaq Global Select Market | | Filer Status | Large accelerated filer | | Common Stock Outstanding (as of April 30, 2024) | 61,201,825 shares | [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section clarifies that forward-looking statements involve risks and uncertainties, advising readers to consult the 'Risk Factors' section - Forward-looking statements discuss future expectations, operating and financial performance, and are subject to risks outlined in SEC filings. **Actual results may vary significantly from expectations**[6](index=6&type=chunk)[8](index=8&type=chunk) [Risk Factors](index=3&type=section&id=Risk%20Factors) This section details various risks, including Federal Reserve actions, economic conditions, credit quality, and regulatory changes, that could impact actual results - Key risks include **Federal Reserve actions impacting interest rates**, local/national **economic conditions**, **housing/real estate market volatility**, changes in **nonperforming assets**, unemployment, fair value measurement, bank failures, **regulatory changes**, **competition**, accounting standard changes, consumer habits, **technological changes**, **cyber-attacks**, and **natural disasters**[7](index=7&type=chunk) PART I. FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents Trustmark Corporation's unaudited consolidated financial statements for Q1 2024, including balance sheets, income, comprehensive income, equity, and cash flow statements [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) | Metric (in thousands) | March 31, 2024 | December 31, 2023 | | :-------------------- | :------------- | :---------------- | | **Assets** | | | | Cash and due from banks | $606,261 | $975,543 | | Securities available for sale | $1,702,299 | $1,762,878 | | Securities held to maturity | $1,415,025 | $1,426,279 | | Loans held for investment (net) | $12,914,945 | $12,811,157 | | Total Assets | $18,376,612 | $18,722,189 | | **Liabilities** | | | | Total deposits | $15,338,557 | $15,569,763 | | Total Liabilities | $16,694,013 | $17,060,342 | | **Shareholders' Equity** | | | | Total Shareholders' Equity | $1,682,599 | $1,661,847 | | Total Liabilities and Shareholders' Equity | $18,376,612 | $18,722,189 | - Total Assets **decreased by $345.577 million (1.84%)** from December 31, 2023, to March 31, 2024, primarily driven by a decrease in Cash and due from banks and Total deposits[11](index=11&type=chunk) - Shareholders' Equity **increased by $20.752 million (1.25%)** from December 31, 2023, to March 31, 2024[11](index=11&type=chunk) [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) | Metric (in thousands, except per share) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Total Interest Income | $229,840 | $198,900 | | Total Interest Expense | $97,010 | $61,305 | | Net Interest Income | $132,830 | $137,595 | | Provision for credit losses (PCL), LHFI | $7,708 | $3,244 | | Total Noninterest Income | $55,349 | $51,377 | | Total Noninterest Expense | $131,146 | $128,327 | | Net Income | $41,535 | $50,300 | | Basic EPS | $0.68 | $0.82 | | Diluted EPS | $0.68 | $0.82 | - Net Income **decreased by $8.765 million (17.43%)** year-over-year, primarily due to a significant increase in **Total Interest Expense (+58.2%)** and **Provision for credit losses (+137.6%)**, partially offset by increases in **Total Interest Income (+15.6%)** and **Total Noninterest Income (+7.7%)**[13](index=13&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) | Metric (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net income | $41,535 | $50,300 | | Other comprehensive income (loss), net of tax | $(7,431) | $33,022 | | Comprehensive income (loss) | $34,104 | $83,322 | - Comprehensive income (loss) significantly **decreased by $49.218 million (59.07%)** year-over-year, primarily driven by a shift from net unrealized gains to losses on available-for-sale securities and a substantial negative change in accumulated gain/loss on effective cash flow hedge derivatives in 2024[15](index=15&type=chunk) [Consolidated Statements of Changes in Shareholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) | Metric (in thousands) | Balance, January 1, 2024 | Balance, March 31, 2024 | | :-------------------- | :----------------------- | :---------------------- | | Common Stock Amount | $12,725 | $12,747 | | Capital Surplus | $159,688 | $160,521 | | Retained Earnings | $1,709,157 | $1,736,485 | | Accumulated Other Comprehensive Income (Loss) | $(219,723) | $(227,154) | | Total Shareholders' Equity | $1,661,847 | $1,682,599 | - Total Shareholders' Equity **increased by $20.752 million** from January 1, 2024, to March 31, 2024, primarily due to **net income of $41.535 million**, partially offset by **common stock dividends paid of $14.207 million** and **other comprehensive loss of $7.431 million**[18](index=18&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) | Metric (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net cash from operating activities | $(58,543) | $2,559 | | Net cash from investing activities | $(51,309) | $(249,310) | | Net cash from financing activities | $(259,430) | $809,108 | | Net change in cash and cash equivalents | $(369,282) | $562,357 | | Cash and cash equivalents at end of period | $606,261 | $1,297,144 | - Net cash from operating activities shifted from a **positive inflow of $2.559 million** in Q1 2023 to a **negative outflow of $58.543 million** in Q1 2024[24](index=24&type=chunk) - Net cash from financing activities saw a significant reversal, moving from an **inflow of $809.108 million** in Q1 2023 to an **outflow of $259.430 million** in Q1 2024, primarily due to a decrease in deposits and federal funds purchased[24](index=24&type=chunk) [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed disclosures for consolidated financial statements, covering accounting policies, asset/liability categories, revenue, benefits, equity, fair value, and segment information [Note 1 – Business, Basis of Financial Statement Presentation and Principles of Consolidation](index=11&type=section&id=Note%201%20%E2%80%93%20Business,%20Basis%20of%20Financial%20Statement%20Presentation%20and%20Principles%20of%20Consolidation) - Trustmark Corporation is a **bank holding company** providing **financial services** through subsidiaries in Alabama, Florida, Mississippi, Tennessee, and Texas[26](index=26&type=chunk) - The **unaudited condensed consolidated financial statements** conform to **U.S. GAAP** for interim information and **SEC regulations**, and should be read with the 2023 Annual Report[28](index=28&type=chunk) - Trustmark National Bank (TNB) announced an agreement to **sell its wholly owned subsidiary, Fisher Brown Bottrell Insurance, Inc. (FBBI), for $345.0 million in cash**, expected to close by Q2 2024. The **estimated after-tax proceeds of $228.0 million** will be used to reposition Trustmark's balance sheet[30](index=30&type=chunk) [Note 2 – Securities Available for Sale and Held to Maturity](index=12&type=section&id=Note%202%20%E2%80%93%20Securities%20Available%20for%20Sale%20and%20Held%20to%20Maturity) | Securities Type (in thousands) | March 31, 2024 Amortized Cost | March 31, 2024 Estimated Fair Value | December 31, 2023 Amortized Cost | December 31, 2023 Estimated Fair Value | | :----------------------------- | :----------------------------- | :-------------------------------- | :----------------------------- | :-------------------------------- | | **Available for Sale** | | | | | | U.S. Treasury securities | $396,289 | $372,424 | $396,179 | $372,368 | | Mortgage-backed securities | $1,498,674 | $1,324,281 | $1,556,621 | $1,384,718 | | Total Available for Sale | $1,900,980 | $1,702,299 | $1,959,007 | $1,762,878 | | **Held to Maturity** | | | | | | U.S. Treasury securities | $29,261 | $28,746 | $29,068 | $29,042 | | Mortgage-backed securities | $1,385,424 | $1,303,928 | $1,396,866 | $1,333,734 | | Total Held to Maturity | $1,415,025 | $1,333,014 | $1,426,279 | $1,355,504 | - At March 31, 2024, total **gross unrealized losses on securities available for sale were $198.709 million**, and for **securities held to maturity were $82.070 million**, primarily due to increases in market interest rates[32](index=32&type=chunk)[43](index=43&type=chunk) - **No credit loss was recognized** on available for sale securities at March 31, 2024, or December 31, 2023. For held to maturity securities, **potential credit loss exposure was deemed immaterial**, with no reserve recorded[37](index=37&type=chunk)[39](index=39&type=chunk) [Note 3 – LHFI and ACL, LHFI](index=17&type=section&id=Note%203%20%E2%80%93%20LHFI%20and%20ACL,%20LHFI) | Loan Category (in thousands) | March 31, 2024 | December 31, 2023 | | :--------------------------- | :------------- | :---------------- | | Loans secured by real estate | $6,170,230 | $6,467,268 | | Other loans secured by real estate | $3,188,547 | $3,150,111 | | Commercial and industrial loans | $1,922,711 | $1,922,910 | | Consumer loans | $159,340 | $165,734 | | State and other political subdivision loans | $1,052,844 | $1,088,466 | | Other commercial loans and leases | $564,261 | $556,035 | | Total LHFI | $13,057,943 | $12,950,524 | | Less ACL, LHFI | $142,998 | $139,367 | | Net LHFI | $12,914,945 | $12,811,157 | - LHFI **increased by $107.419 million (0.83%)** from December 31, 2023, to March 31, 2024, primarily due to net growth in real estate secured LHFI, partially offset by a decline in state and other political subdivision LHFI[49](index=49&type=chunk)[284](index=284&type=chunk) | ACL, LHFI (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :----------------------- | :-------------------------------- | :-------------------------------- | | Balance at beginning of period | $139,367 | $120,214 | | Net (charge-offs) recoveries | $(4,077) | $(1,219) | | PCL, LHFI | $7,708 | $3,244 | | Balance at end of period | $142,998 | $122,239 | - The ACL on LHFI **increased by $3.631 million (2.61%)** from December 31, 2023, to March 31, 2024, primarily due to changes in macroeconomic forecasts from the annual loss driver analysis, partially offset by updates to qualitative reserve factors[117](index=117&type=chunk)[118](index=118&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk) [Note 4 – Mortgage Banking](index=50&type=section&id=Note%204%20%E2%80%93%20Mortgage%20Banking) | MSR Activity (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Balance at beginning of period | $131,870 | $129,677 | | Origination of servicing assets | $2,977 | $2,646 | | Change in fair value: Due to market changes | $5,123 | $(3,972) | | Change in fair value: Due to run-off | $(1,926) | $(1,145) | | Balance at end of period | $138,044 | $127,206 | - Mortgage Servicing Rights (MSR) fair value **increased by $6.174 million (4.85%)** from March 31, 2023, to March 31, 2024, primarily due to positive market changes in 2024 compared to negative changes in 2023[123](index=123&type=chunk) - Trustmark **sold $258.3 million of residential mortgage loans** in Q1 2024, **generating $5.0 million in net gains**, an increase from $213.8 million sold and $3.8 million in gains in Q1 2023[124](index=124&type=chunk) [Note 5 – Other Real Estate](index=52&type=section&id=Note%205%20%E2%80%93%20Other%20Real%20Estate) | Other Real Estate (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------- | :-------------------------------- | :-------------------------------- | | Balance at beginning of period | $6,867 | $1,986 | | Additions | $2,228 | $300 | | Disposals | $(957) | $(542) | | (Write-downs) recoveries | $(518) | $(60) | | Balance at end of period | $7,620 | $1,684 | | Gains (losses), net on sale | $(55) | $(77) | - Other real estate, net **increased by $753 thousand (11.0%)** from December 31, 2023, to March 31, 2024, primarily due to properties foreclosed in the Mississippi market region, partially offset by sales and write-downs[128](index=128&type=chunk)[129](index=129&type=chunk)[131](index=131&type=chunk) [Note 6 – Leases](index=54&type=section&id=Note%206%20%E2%80%93%20Leases) | Lease Type (in thousands) | March 31, 2024 | December 31, 2023 | | :------------------------ | :------------- | :---------------- | | Leases receivable | $202,112 | $161,319 | | Total net investment (Lessor) | $173,963 | $137,735 | | Finance lease right-of-use assets, net | $3,638 | $3,751 | | Operating lease right-of-use assets | $36,659 | $38,142 | | Finance lease liabilities | $4,234 | $4,334 | | Operating lease liabilities | $40,185 | $41,584 | - Trustmark's net investment in sales-type and direct financing leases (Lessor) **increased by $36.228 million (26.3%)** from December 31, 2023, to March 31, 2024[133](index=133&type=chunk) - Net lease cost for the three months ended March 31, 2024, was **$1.678 million**, a **decrease of $0.347 million (17.1%)** from the same period in 2023[134](index=134&type=chunk) [Note 7 – Deposits](index=58&type=section&id=Note%207%20%E2%80%93%20Deposits) | Deposit Type (in thousands) | March 31, 2024 | December 31, 2023 | | :-------------------------- | :------------- | :---------------- | | Noninterest-bearing demand | $3,039,652 | $3,197,620 | | Interest-bearing demand | $5,226,089 | $4,947,626 | | Savings | $3,750,392 | $4,047,853 | | Time | $3,322,424 | $3,376,664 | | Total | $15,338,557 | $15,569,763 | - Total deposits **decreased by $231.206 million (1.49%)** from December 31, 2023, to March 31, 2024. **Noninterest-bearing deposits decreased by $157.968 million (4.94%)**, while **interest-bearing deposits decreased by $73.238 million (0.59%)**[135](index=135&type=chunk) [Note 8 – Securities Sold Under Repurchase Agreements](index=58&type=section&id=Note%208%20%E2%80%93%20Securities%20Sold%20Under%20Repurchase%20Agreements) | Collateral Pledged (in thousands) | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------- | :---------------- | | Mortgage-backed securities | $39,722 | $29,126 | | Total securities sold under repurchase agreements | $39,722 | $29,126 | - Securities sold under repurchase agreements **increased by $10.596 million (36.38%)** from December 31, 2023, to March 31, 2024, primarily collateralized by mortgage-backed securities[136](index=136&type=chunk) [Note 9 – Revenue from Contracts with Customers](index=58&type=section&id=Note%209%20%E2%80%93%20Revenue%20from%20Contracts%20with%20Customers) | Noninterest Income (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Service charges on deposit accounts | $10,958 | $10,336 | | Bank card and other fees | $7,428 | $7,803 | | Mortgage banking, net | $8,915 | $7,639 | | Insurance commissions | $15,464 | $14,305 | | Wealth management | $8,952 | $8,780 | | Other, net | $3,632 | $2,514 | | Total noninterest income | $55,349 | $51,377 | - Total noninterest income **increased by $3.972 million (7.73%)** year-over-year, with significant increases in **Mortgage banking, net (+16.7%)**, **Insurance commissions (+8.1%)**, and **Other, net (+44.5%)**[139](index=139&type=chunk) [Note 10 – Defined Benefit and Other Postretirement Benefits](index=59&type=section&id=Note%2010%20%E2%80%93%20Defined%20Benefit%20and%20Other%20Postretirement%20Benefits) | Net Periodic Benefit Cost (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | Qualified Pension Plan | $48 | $85 | | Nonqualified Supplemental Retirement Plans | $611 | $642 | | Total Net Periodic Benefit Cost | $659 | $727 | - Net periodic benefit cost for the Qualified Pension Plan **decreased by $37 thousand (43.5%)** year-over-year, while for nonqualified supplemental retirement plans, it **decreased by $31 thousand (4.8%)**[141](index=141&type=chunk)[145](index=145&type=chunk) [Note 11 – Stock and Incentive Compensation](index=61&type=section&id=Note%2011%20%E2%80%93%20Stock%20and%20Incentive%20Compensation) | Compensation Expense (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Performance units | $462 | $278 | | Time-vested units | $1,776 | $1,437 | | Total compensation expense | $2,238 | $1,715 | - Total compensation expense for units under the Stock Plan **increased by $523 thousand (30.5%)** year-over-year, driven by increases in both performance units and time-vested units[150](index=150&type=chunk) - Performance units and time-based units are granted to executive and senior management, **vesting over three years**, with time-based units for directors **vesting over one year**. Both provide **dividend privileges but no voting rights**[147](index=147&type=chunk)[148](index=148&type=chunk) [Note 12 – Contingencies](index=63&type=section&id=Note%2012%20%E2%80%93%20Contingencies) | Contingency (in thousands) | March 31, 2024 | March 31, 2023 | | :------------------------- | :------------- | :------------- | | Unused commitments to extend credit | $4,792,000 | $5,424,000 | | Maximum exposure for letters of credit | $139,500 | $137,300 | | ACL on off-balance sheet credit exposures | $33,865 | $34,596 | - Unused commitments to extend credit **decreased by $632 million (11.65%)** year-over-year, while maximum exposure for letters of credit **increased by $2.2 million (1.6%)**[152](index=152&type=chunk)[153](index=153&type=chunk) - The ACL on off-balance sheet credit exposures **decreased by $731 thousand (2.11%)** year-over-year, primarily due to a decrease in unfunded commitments, partially offset by the implementation of a performance trends qualitative factor[156](index=156&type=chunk) [Note 13 – Earnings Per Share (EPS)](index=65&type=section&id=Note%2013%20%E2%80%93%20Earnings%20Per%20Share%20(EPS)) | EPS (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :----------------- | :-------------------------------- | :-------------------------------- | | Basic shares | 61,128 | 61,011 | | Dilutive shares | 220 | 182 | | Diluted shares | 61,348 | 61,193 | | Basic EPS | $0.68 | $0.82 | | Diluted EPS | $0.68 | $0.82 | - Basic and Diluted EPS remained at **$0.68** for Q1 2024, a **decrease from $0.82** in Q1 2023, reflecting lower net income[161](index=161&type=chunk) [Note 14 – Statements of Cash Flows](index=65&type=section&id=Note%2014%20%E2%80%93%20Statements%20of%20Cash%20Flows) | Transaction (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------- | :-------------------------------- | :-------------------------------- | | Interest expense paid on deposits and borrowings | $98,327 | $54,823 | | Noncash transfers from loans to other real estate | $2,228 | $300 | - Interest expense paid on deposits and borrowings **increased significantly by $43.504 million (79.35%)** year-over-year[162](index=162&type=chunk) [Note 15 – Shareholders' Equity](index=65&type=section&id=Note%2015%20%E2%80%93%20Shareholders'%20Equity) | Capital Ratio | Trustmark Corporation (March 31, 2024) | Trustmark National Bank (March 31, 2024) | | :------------------------------------ | :------------------------------------- | :------------------------------------ | | Common Equity Tier 1 Capital (to RWA) | 10.12% | 10.62% | | Tier 1 Capital (to RWA) | 10.51% | 10.62% | | Total Capital (to RWA) | 12.42% | 11.73% | | Tier 1 Leverage (to Average Assets) | 8.76% | 8.87% | - Trustmark Corporation and Trustmark National Bank **exceeded all minimum regulatory capital standards** and were considered **well-capitalized** at March 31, 2024[163](index=163&type=chunk) - A new **stock repurchase program for $50.0 million** was authorized effective January 1, 2024, through December 31, 2024; **no shares have been repurchased** under this program as of March 31, 2024[166](index=166&type=chunk) [Note 16 – Fair Value](index=70&type=section&id=Note%2016%20%E2%80%93%20Fair%20Value) | Financial Instrument (in thousands) | March 31, 2024 Fair Value | December 31, 2023 Fair Value | | :-------------------------------- | :------------------------ | :------------------------- | | Securities available for sale | $1,702,299 | $1,762,878 | | Loans held for sale (LHFS) | $172,937 | $184,812 | | Mortgage servicing rights (MSR) | $138,044 | $131,870 | | Other assets - derivatives | $16,953 | $23,316 | | Other liabilities - derivatives | $40,803 | $35,600 | - Trustmark uses **independent pricing services** and **market-based data** to determine fair values, with most inputs classified as **Level 2**. MSR and certain derivatives utilize **Level 3 inputs**[171](index=171&type=chunk)[174](index=174&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk) - Collateral-dependent LHFI, measured at fair value on a nonrecurring basis, totaled **$42.9 million** with a related **ACL of $12.6 million** at March 31, 2024, classified as **Level 3**[181](index=181&type=chunk) [Note 17 – Derivative Financial Instruments](index=75&type=section&id=Note%2017%20%E2%80%93%20Derivative%20Financial%20Instruments) | Derivative Type (in thousands) | March 31, 2024 Notional Value | December 31, 2023 Notional Value | | :----------------------------- | :---------------------------- | :----------------------------- | | Cash flow hedges (interest rate swaps/floors) | $1,225,000 | $1,125,000 | | Exchange-traded derivatives (MSR hedge) | $301,000 | $285,000 | | Commercial client interest rate swaps | $1,470,000 | $1,500,000 | - Trustmark's cash flow hedging program **increased its aggregate notional value by $100 million (8.9%)** year-over-year, aiming to stabilize interest income and manage interest rate exposure[190](index=190&type=chunk) - For Q1 2024, a **net loss of $3.6 million** (net of tax) from cash flow hedges was reclassified into interest and fees on LHFS and LHFI, compared to a **$2.2 million loss** in Q1 2023[191](index=191&type=chunk) [Note 18 – Segment Information](index=80&type=section&id=Note%2018%20%E2%80%93%20Segment%20Information) | Segment (in thousands) | Net Income (Q1 2024) | Net Income (Q1 2023) | Total Assets (March 31, 2024) | Total Assets (March 31, 2023) | | :--------------------- | :------------------- | :------------------- | :---------------------------- | :---------------------------- | | General Banking | $36,550 | $46,070 | $18,093,454 | $18,578,910 | | Wealth Management | $1,591 | $1,543 | $178,165 | $207,414 | | Insurance | $3,394 | $2,687 | $104,993 | $90,854 | | Consolidated | $41,535 | $50,300 | $18,376,612 | $18,877,178 | - General Banking net income **decreased by $9.520 million (20.66%)** year-over-year, primarily due to increased provision for credit losses and higher interest expense[206](index=206&type=chunk) - Insurance segment net income **increased by $707 thousand (26.31%)** year-over-year, driven by new business commission volume in commercial property and casualty[206](index=206&type=chunk) [Note 19 – Accounting Policies Recently Adopted and Pending Accounting Pronouncements](index=83&type=section&id=Note%2019%20%E2%80%93%20Accounting%20Policies%20Recently%20Adopted%20and%20Pending%20Accounting%20Pronouncements) - Trustmark adopted **ASU 2023-07, 'Segment Reporting,'** for annual disclosures effective January 1, 2024, and plans to adopt interim disclosure requirements effective January 1, 2025. This is **not expected to materially impact financial statements**[208](index=208&type=chunk) - Trustmark intends to adopt **ASU 2023-09, 'Income Taxes,'** effective January 1, 2025, which will require more disaggregated income tax disclosures. This is **not expected to materially impact financial statements**[209](index=209&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=83&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides a comprehensive analysis of Trustmark's Q1 2024 financial condition and results, covering operations, economic developments, and capital and liquidity management [Description of Business](index=85&type=section&id=Description%20of%20Business) - Trustmark Corporation, headquartered in Jackson, Mississippi, is a **bank holding company** operating through Trustmark National Bank (TNB) and other subsidiaries[211](index=211&type=chunk) - Trustmark provides **financial services** across Alabama, Florida, Mississippi, Tennessee, and Texas, managed through **General Banking, Wealth Management, and Insurance segments**[212](index=212&type=chunk) [Executive Overview](index=85&type=section&id=Executive%20Overview) - Trustmark reported Q1 2024 financial results reflecting **continued growth in loans held for investment (LHFI)**, **solid credit quality**, and **increased noninterest income**, maintaining a **solid capital position**[213](index=213&type=chunk) - TNB agreed to **sell its insurance subsidiary, Fisher Brown Bottrell Insurance, Inc. (FBBI), for $345.0 million in cash**, with **estimated after-tax proceeds of $228.0 million** to be used for balance sheet repositioning, expected to close by Q2 2024[214](index=214&type=chunk) - TNB tendered its **38.7 thousand Visa Class B-1 common shares** in an exchange offer, which is expected to result in a **realized gain** upon acceptance in Q2 2024[215](index=215&type=chunk) [Recent Economic and Industry Developments](index=85&type=section&id=Recent%20Economic%20and%20Industry%20Developments) - Economic activity **slightly improved** in Q1 2024, but concerns persist due to **geopolitical developments, inflation, higher energy prices, and the 2024 election cycle**[216](index=216&type=chunk) - The Federal Reserve maintained the **target federal funds rate at 5.25% to 5.50%** and the **interest rate on reserves at 5.40%** since July 2023, leading to **increased competitive pressures on deposit costs**[217](index=217&type=chunk) - **Bank lending was roughly flat**, residential construction increased slightly, and **home sales strengthened**, while nonresidential construction was flat and commercial real estate leasing fell slightly[218](index=218&type=chunk) [Financial Highlights](index=87&type=section&id=Financial%20Highlights) | Metric | Q1 2024 | Q1 2023 | | :------------------------------------ | :------ | :------ | | Net Income (in millions) | $41.5 | $50.3 | | Basic and Diluted EPS | $0.68 | $0.82 | | Return on average tangible equity | 12.98% | 18.03% | | Return on average assets | 0.89% | 1.10% | | Total Revenue (in millions) | $188.2 | $189.0 | | Net Interest Income (in millions) | $132.8 | $137.6 | | Noninterest Income (in millions) | $55.3 | $51.4 | | Noninterest Expense (in millions) | $131.1 | $128.3 | | PCL, LHFI (in millions) | $7.7 | $3.2 | | Nonperforming assets (in millions) | $106.0 | $106.9 (Dec 31, 2023) | | LHFI (in billions) | $13.058 | $12.950 (Dec 31, 2023) | | Total Deposits (in billions) | $15.339 | $15.570 (Dec 31, 2023) | - Net income **decreased by 17.4%** year-over-year, with **EPS falling from $0.82 to $0.68**. Total revenue **slightly decreased by 0.4%**[219](index=219&type=chunk)[220](index=220&type=chunk) - Net interest income **decreased by 3.5%** due to higher interest on deposits, while noninterest income **increased by 7.7%** driven by mortgage banking, insurance commissions, and other fees[221](index=221&type=chunk)[222](index=222&type=chunk) - Nonperforming assets **decreased by 0.8%** from December 31, 2023, to March 31, 2024, primarily due to a decrease in nonaccrual LHFI[225](index=225&type=chunk) [Selected Financial Data](index=92&type=section&id=Selected%20Financial%20Data) | Metric | March 31, 2024 | March 31, 2023 | | :------------------------------------ | :------------- | :------------- | | Total Assets (in thousands) | $18,376,612 | $18,877,178 | | Total Loans (LHFI + LHFS) (in thousands) | $13,230,880 | $12,673,121 | | Deposits (in thousands) | $15,338,557 | $14,783,661 | | Total Shareholders' Equity (in thousands) | $1,682,599 | $1,562,099 | | Return on average equity | 9.96% | 13.39% | | Net interest margin (FTE) | 3.21% | 3.39% | | Nonperforming assets / (LHFI + LHFS) plus other real estate | 0.80% | 0.58% | | ACL, LHFI / LHFI | 1.10% | 0.98% | | Common equity Tier 1 risk-based capital ratio | 10.12% | 9.76% | - Total assets **decreased by $500.566 million (2.65%)** year-over-year, while total loans **increased by $557.759 million (4.40%)**[235](index=235&type=chunk) - The net interest margin (FTE) **decreased by 18 basis points** year-over-year, **from 3.39% to 3.21%**[233](index=233&type=chunk) [Non-GAAP Financial Measures](index=93&type=section&id=Non-GAAP%20Financial%20Measures) - Trustmark uses **non-GAAP tangible common equity measures** to **evaluate capital utilization and adequacy**, reflecting capital available to withstand unexpected market conditions and for comparison with other organizations[236](index=236&type=chunk)[237](index=237&type=chunk) | Metric | March 31, 2024 | March 31, 2023 | | :------------------------------------ | :------------- | :------------- | | Total average tangible equity (in thousands) | $1,289,364 | $1,136,068 | | Total tangible equity (in thousands) | $1,295,517 | $1,174,510 | | Total tangible assets (in thousands) | $17,989,530 | $18,489,589 | | Return on average tangible equity | 12.98% | 18.03% | | Tangible equity/tangible assets | 7.20% | 6.35% | | Tangible book value | $21.18 | $19.24 | - Tangible book value per share **increased from $19.24 in Q1 2023 to $21.18 in Q1 2024**[240](index=240&type=chunk) [Results of Operations](index=94&type=section&id=Results%20of%20Operations) [Net Interest Income](index=94&type=section&id=Net%20Interest%20Income) | Metric (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net interest income-FTE | $136,195 | $141,072 | | Net interest margin-FTE | 3.21% | 3.39% | | Average interest-earning assets | $17,087,569 | $16,856,313 | | Yield on total earning assets | 5.49% | 4.87% | | Average interest-bearing liabilities | $13,376,350 | $12,584,882 | | Rate on total interest-bearing liabilities | 2.92% | 1.98% | - Net interest income (FTE) **decreased by $4.9 million (3.5%)** year-over-year, and the net interest margin (FTE) **decreased by 18 basis points to 3.21%**[243](index=243&type=chunk) - The decrease in net interest income was primarily due to a **58.2% increase in interest on deposits**, partially offset by a **17.0% increase in interest and fees on LHFS and LHFI**[243](index=243&type=chunk)[245](index=245&type=chunk)[247](index=247&type=chunk) [Provision for Credit Losses](index=97&type=section&id=Provision%20for%20Credit%20Losses) | PCL (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :----------------- | :-------------------------------- | :-------------------------------- | | PCL, LHFI | $7,708 | $3,244 | | PCL, off-balance sheet credit exposures | $(192) | $(2,242) | - PCL on LHFI **increased by $4.464 million (137.6%)** year-over-year, primarily reflecting increased required reserves due to changes in macroeconomic forecasts from the annual loss driver analysis[250](index=250&type=chunk) - PCL on off-balance sheet credit exposures was a **negative $192 thousand** in Q1 2024, a **decrease in negative provision of $2.050 million (91.4%)** year-over-year, mainly due to decreased unfunded commitments partially offset by a new qualitative reserve factor[251](index=251&type=chunk) [Noninterest Income](index=99&type=section&id=Noninterest%20Income) | Noninterest Income (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | $ Change | % Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :------- | :------- | | Service charges on deposit accounts | $10,958 | $10,336 | $622 | 6.0% | | Bank card and other fees | $7,428 | $7,803 | $(375) | -4.8% | | Mortgage banking, net | $8,915 | $7,639 | $1,276 | 16.7% | | Insurance commissions | $15,464 | $14,305 | $1,159 | 8.1% | | Wealth management | $8,952 | $8,780 | $172 | 2.0% | | Other, net | $3,632 | $2,514 | $1,118 | 44.5% | | Total noninterest income | $55,349 | $51,377 | $3,972 | 7.7% | - Total noninterest income **increased by $3.972 million (7.7%)** year-over-year, primarily driven by increases in **mortgage banking, net (+16.7%)**, **insurance commissions (+8.1%)**, and **other, net (+44.5%)**[254](index=254&type=chunk) - Mortgage banking, net **increased by $1.276 million**, mainly due to higher gains on sales of loans, net, despite a **24.1% decrease in mortgage loan production**[255](index=255&type=chunk)[256](index=256&type=chunk) [Noninterest Expense](index=100&type=section&id=Noninterest%20Expense) | Noninterest Expense (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | $ Change | % Change | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :------- | :------- | | Salaries and employee benefits | $75,458 | $74,056 | $1,402 | 1.9% | | Services and fees | $24,839 | $25,426 | $(587) | -2.3% | | Net occupancy - premises | $7,496 | $7,629 | $(133) | -1.7% | | Equipment expense | $6,385 | $6,405 | $(20) | -0.3% | | Other expense | $16,968 | $14,811 | $2,157 | 14.6% | | Total noninterest expense | $131,146 | $128,327 | $2,819 | 2.2% | - Total noninterest expense **increased by $2.819 million (2.2%)** year-over-year, primarily due to increases in **other expense (+14.6%)** and **salaries and employee benefits (+1.9%)**[258](index=258&type=chunk) - Other expense increased mainly due to a **90.3% rise in FDIC assessment expense**, driven by an increased assessment rate[260](index=260&type=chunk) [Results of Segment Operations](index=100&type=section&id=Results%20of%20Segment%20Operations) | Segment (in thousands) | Net Income (Q1 2024) | Net Income (Q1 2023) | | :--------------------- | :------------------- | :------------------- | | General Banking | $36,550 | $46,070 | | Wealth Management | $1,591 | $1,543 | | Insurance | $3,394 | $2,687 | - General Banking net income **decreased by $9.520 million (20.7%)** year-over-year, primarily due to higher PCL and increased interest on deposits[263](index=263&type=chunk) - Insurance segment net income **increased by $707 thousand (26.3%)** year-over-year, driven by new business commission volume in commercial property and casualty[266](index=266&type=chunk) [Income Taxes](index=102&type=section&id=Income%20Taxes) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :----- | :-------------------------------- | :-------------------------------- | | Income taxes (in thousands) | $7,982 | $9,343 | | Combined effective tax rate | 16.1% | 15.7% | - The combined effective tax rate **increased slightly from 15.7% in Q1 2023 to 16.1% in Q1 2024**, remaining below the statutory rate due to tax-exempt income and tax credit programs[268](index=268&type=chunk) [Financial Condition](index=104&type=section&id=Financial%20Condition) [Securities](index=104&type=section&id=Securities) - Total investment securities **decreased by $71.8 million (2.3%)** during Q1 2024, primarily due to calls, maturities, and pay-downs of GSE guaranteed securities[272](index=272&type=chunk) | Securities (in thousands) | March 31, 2024 | December 31, 2023 | | :------------------------ | :------------- | :---------------- | | Available for sale | $1,702,299 | $1,762,878 | | Held to maturity | $1,415,025 | $1,426,279 | | Total Investment Securities | $3,117,324 | $3,189,157 | | Unrealized losses, net (AFS) | $198,700 | $196,100 | - The entire securities portfolio (**100%**) is invested in **GSE-backed obligations and other Aaa-rated securities**, reflecting a focus on **asset quality**[277](index=277&type=chunk) [LHFS](index=105&type=section&id=LHFS) | LHFS (in thousands) | March 31, 2024 | December 31, 2023 | | :------------------ | :------------- | :---------------- | | Residential mortgage loans | $95,200 | $106,000 | | GNMA optional repurchase loans | $77,700 | $78,800 | | Total LHFS | $172,900 | $184,800 | - LHFS **decreased by $11.9 million (6.4%)** from December 31, 2023, to March 31, 2024, with declines in both residential mortgage loans and GNMA optional repurchase loans[281](index=281&type=chunk) - Trustmark **did not exercise its buy-back option** on any delinquent loans serviced for GNMA during Q1 2024 or Q1 2023[282](index=282&type=chunk) [LHFI](index=106&type=section&id=LHFI) | LHFI Category (in thousands) | March 31, 2024 Amount | March 31, 2024 % of Total | December 31, 2023 Amount | December 31, 2023 % of Total | | :--------------------------- | :-------------------- | :------------------------ | :----------------------- | :------------------------- | | Loans secured by real estate | $6,170,230 | 47.2% | $6,467,268 | 50.0% | | Other loans secured by real estate | $3,188,547 | 24.4% | $3,150,111 | 24.3% | | Commercial and industrial loans | $1,922,711 | 14.7% | $1,922,910 | 14.9% | | State and other political subdivision loans | $1,052,844 | 8.1% | $1,088,466 | 8.4% | | Total LHFI | $13,057,943 | 100.0% | $12,950,524 | 100.0% | - LHFI **increased by $107.4 million (0.8%)** from December 31, 2023, to March 31, 2024, driven by net growth in real estate secured LHFI, partially offset by a decline in state and other political subdivision LHFI[284](index=284&type=chunk) - LHFI secured by real estate **increased by $141.4 million (1.5%)** in Q1 2024, primarily due to growth in other real estate secured LHFI and other construction LHFI[285](index=285&type=chunk) [Allowance for Credit Losses](index=110&type=section&id=Allowance%20for%20Credit%20Losses) | ACL on LHFI (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------- | :-------------------------------- | :-------------------------------- | | Balance at beginning of period | $139,367 | $120,214 | | Provision for credit losses, LHFI | $7,708 | $3,244 | | Net (charge-offs) recoveries | $(4,077) | $(1,219) | | Balance at end of period | $142,998 | $122,239 | | ACL to total LHFI | 1.10% | 0.98% | - The ACL on LHFI **increased by $3.6 million (2.6%)** in Q1 2024, primarily due to changes in macroeconomic forecasts from the annual loss driver analysis, partially offset by updates to qualitative reserve factors[304](index=304&type=chunk) - Net charge-offs **increased significantly from $(1.219) million in Q1 2023 to $(4.077) million in Q1 2024**, driven by higher gross charge-offs across all market regions[305](index=305&type=chunk) [Off-Balance Sheet Credit Exposures](index=115&type=section&id=Off-Balance%20Sheet%20Credit%20Exposures) | ACL on Off-Balance Sheet (in thousands) | March 31, 2024 | December 31, 2023 | | :------------------------------------ | :------------- | :---------------- | | Balance at end of period | $33,865 | $34,057 | | PCL, off-balance sheet credit exposures (Q1 2024) | $(192) | $(2,242) (Q1 2023) | - The ACL on off-balance sheet credit exposures **decreased by $192 thousand (0.6%)** in Q1 2024, primarily due to a decrease in unfunded commitments, partially offset by the implementation of a performance trends qualitative factor[308](index=308&type=chunk) [Nonperforming Assets](index=116&type=section&id=Nonperforming%20Assets) | Nonperforming Assets (in thousands) | March 31, 2024 | December 31, 2023 | | :---------------------------------- | :------------- | :---------------- | | Nonaccrual LHFI | $98,351 | $100,008 | | Other real estate | $7,620 | $6,867 | | Total nonperforming assets | $105,971 | $106,875 | | Nonperforming assets/total loans and ORE | 0.80% | 0.81% | | LHFS - Guaranteed GNMA serviced loans past due 90+ days | $56,530 | $51,243 | - Total nonperforming assets **decreased by $904 thousand (0.8%)** from December 31, 2023, to March 31, 2024, primarily due to a decrease in nonaccrual LHFI[225](index=225&type=chunk)[309](index=309&type=chunk) - Nonaccrual LHFI **decreased by $1.7 million (1.7%)** in Q1 2024, mainly due to the resolution of a large commercial credit in Texas, partially offset by new nonaccruals and increased mortgage nonaccruals[311](index=311&type=chunk) [Deposits](index=118&type=section&id=Deposits) | Deposit Type (in thousands) | March 31, 2024 | December 31, 2023 | | :-------------------------- | :------------- | :---------------- | | Noninterest-bearing deposits | $3,039,652 | $3,197,620 | | Interest-bearing deposits | $12,298,905 | $12,372,143 | | Total deposits | $15,338,557 | $15,569,763 | | Total uninsured deposits | $5,531,000 | $5,601,000 | - Total deposits **decreased by $231.2 million (1.5%)** in Q1 2024. **Noninterest-bearing deposits declined by $158.0 million (4.9%)** as customers migrated to higher-yielding products[318](index=318&type=chunk) - Total uninsured deposits were **$5.531 billion (36.1% of total deposits)** at March 31, 2024, a **slight decrease from $5.601 billion (36.0%)** at December 31, 2023[319](index=319&type=chunk) [Borrowings](index=118&type=section&id=Borrowings) | Borrowing Type (in thousands) | March 31, 2024 | December 31, 2023 | | :---------------------------- | :------------- | :---------------- | | Federal funds purchased and securities sold under repurchase agreements | $393,215 | $405,745 | | Other borrowings | $482,027 | $483,230 | | Upstream federal funds purchased | $345,000 | $370,000 | - Federal funds purchased and securities sold under repurchase agreements **decreased by $12.5 million (3.1%)** in Q1 2024, primarily due to a decrease in upstream federal funds purchased[321](index=321&type=chunk) - Other borrowings **decreased by $1.2 million (0.2%)** in Q1 2024, mainly due to a decline in GNMA loans eligible for repurchase[322](index=322&type=chunk) [Legal Environment](index=118&type=section&id=Legal%20Environment) - Trustmark is involved in lawsuits arising in the ordinary course of business, but currently believes that a loss in any pending legal proceeding is **not probable or reasonably estimable**[323](index=323&type=chunk) [Off-Balance Sheet Arrangements](index=118&type=section&id=Off-Balance%20Sheet%20Arrangements) - Information on off-balance sheet arrangements is detailed under 'Lending Related' in **Note 12 – Contingencies**[324](index=324&type=chunk) [Capital Resources and Liquidity](index=119&type=section&id=Capital%20Resources%20and%20Liquidity) [Regulatory Capital](index=119&type=section&id=Regulatory%20Capital) - Trustmark and TNB **exceeded all minimum risk-based capital and leverage capital requirements** at March 31, 2024, and were considered **well-capitalized**[327](index=327&type=chunk) - **Subordinated notes ($123.5 million) qualify as Tier 2 capital**, and **trust preferred securities ($60.0 million) qualify as Tier 1 capital**, contributing to Trustmark's strong capital structure[328](index=328&type=chunk)[329](index=329&type=chunk) [Dividends on Common Stock](index=119&type=section&id=Dividends%20on%20Common%20Stock) - Dividends per common share remained **$0.23** for Q1 2024 and Q1 2023, with an indicated **annual dividend of $0.92 per share** for 2024, consistent with 2023[331](index=331&type=chunk) [Stock Repurchase Program](index=120&type=section&id=Stock%20Repurchase%20Program) - A new **$50.0 million stock repurchase program** was authorized for 2024, but **no shares were repurchased** under this or the prior 2023 program as of March 31, 2024[333](index=333&type=chunk)[334](index=334&type=chunk) [Liquidity](index=120&type=section&id=Liquidity) - Trustmark maintains **strong liquidity** through its **deposit base, investment portfolio, and access to external funding sources** like federal funds lines, FHLB advances, and brokered deposits[335](index=335&type=chunk)[336](index=336&type=chunk) - At March 31, 2024, Trustmark had **$4.065 billion in available FHLB borrowing capacity**, **$799.0 million in unencumbered U.S. Treasury and agency securities**, and **$1.412 billion in collateral capacity at the Federal Reserve Discount Window**[341](index=341&type=chunk)[343](index=343&type=chunk)[344](index=344&type=chunk) - Average deposits were **$15.420 billion** for Q1 2024, representing **82.6% of average liabilities and shareholders' equity**[338](index=338&type=chunk) [Asset/Liability Management](index=122&type=section&id=Asset/Liability%20Management) [Overview](index=122&type=section&id=Overview) - Trustmark's primary market risk is **interest rate risk**, managed through policies to **monitor and limit exposure to changes in market interest rates**, affecting net interest income variability[350](index=350&type=chunk) - **All LIBOR exposure was remediated** or in the process of remediation as of March 31, 2024, following the LIBOR cessation date of June 30, 2023[351](index=351&type=chunk) [Derivatives](index=124&type=section&id=Derivatives) - Trustmark uses **financial derivatives** (e.g., interest rate swaps, futures, options) to **manage interest rate risk and hedge variable cash flows** from loan assets, with an **aggregate notional value of $1.225 billion** for cash flow hedges at March 31, 2024[355](index=355&type=chunk)[356](index=356&type=chunk) - Derivatives not designated as hedging instruments, such as **interest rate lock commitments and forward sales contracts**, are used in mortgage banking to manage risk, with a **gross notional amount of $217.0 million** at March 31, 2024[358](index=358&type=chunk) - Trustmark also offers **interest rate derivatives to commercial lending clients**, economically hedging these transactions with offsetting swaps, with an **aggregate notional amount of $1.470 billion** at March 31, 2024[362](index=362&type=chunk) [Market/Interest Rate Risk Management](index=126&type=section&id=Market/Interest%20Rate%20Risk%20Management) | Change in Interest Rates | Estimated % Change in Net Interest Income (2024) | Estimated % Change in Net Interest Income (2023) | | :----------------------- | :--------------------------------------------- | :--------------------------------------------- | | +200 basis points | 1.4% | 3.5% | | +100 basis points | 0.7% | 1.7% | | -100 basis points | -0.8% | -1.8% | | -200 basis points | -2.3% | -4.8% | - Trustmark uses financial simulation models to measure interest rate exposure, showing that a **+200 basis point shift** in interest rates would **increase net interest income by 1.4%** in 2024, while a **-200 basis point shift** would **decrease it by 2.3%**[368](index=368&type=chunk)[370](index=370&type=chunk) | Change in Interest Rates | Estimated % Change in Net Portfolio Value (2024) | Estimated % Change in Net Portfolio Value (2023) | | :----------------------- | :--------------------------------------------- | :--------------------------------------------- | | +200 basis points | -1.9% | -1.7% | | +100 basis points | -0.7% | -0.6% | - The MSR fair value was $138.0 million at March 31, 2024. A **10% adverse change in prepayment speed** or a **100 basis point increase in discount rate** would result in an approximate **$5.0 million and $5.7 million decline in fair value**, respectively[375](index=375&type=chunk) [Critical Accounting Policies](index=129&type=section&id=Critical%20Accounting%20Policies) - There have been **no significant changes** in Trustmark's critical accounting policies during the first three months of 2024[376](index=376&type=chunk) [Accounting Policies Recently Adopted and Pending Accounting Pronouncements](index=129&type=section&id=Accounting%20Policies%20Recently%20Adopted%20and%20Pending%20Accounting%20Pronouncements) - Trustmark adopted **ASU 2023-07** on segment reporting for annual disclosures effective January 1, 2024, and plans to adopt interim disclosures effective January 1, 2025. It also plans to adopt **ASU 2023-09** on income tax disclosures effective January 1, 2025. Neither is expected to have a **material impact on financial statements**[378](index=378&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=129&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section refers to the 'Market/Interest Rate Risk Management' discussion for market risk disclosures - Quantitative and qualitative disclosures about market risk are included in the **'Market/Interest Rate Risk Management' section** of Management's Discussion and Analysis[379](index=379&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=129&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes in internal control over financial reporting - Trustmark's disclosure controls and procedures were deemed **effective** as of March 31, 2024, by management, including the CEO and Principal Financial Officer[380](index=380&type=chunk) - **No material changes** in internal control over financial reporting occurred during the last fiscal quarter[381](index=381&type=chunk) PART II. OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=129&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Trustmark is involved in ordinary course lawsuits, but management believes a loss is not probable or reasonably estimable, with no material adverse effect expected - Trustmark is party to lawsuits in the ordinary course of business, but management believes a loss in any pending legal proceeding is **not probable or reasonably estimable**[382](index=382&type=chunk)[383](index=383&type=chunk) - Legal proceedings are **not expected to have a material adverse effect** on Trustmark's consolidated financial condition[383](index=383&type=chunk) [ITEM 1A. RISK FACTORS](index=130&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section confirms no material changes to risk factors previously disclosed in Trustmark's 2023 Annual Report - **No material change** in risk factors previously disclosed in Trustmark's 2023 Annual Report[384](index=384&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=130&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) A **$50.0 million** stock repurchase program was authorized for 2024, but **no shares were repurchased** as of March 31, 2024 - A **$50.0 million** stock repurchase program was authorized for 2024, but **no shares were purchased** during Q1 2024[385](index=385&type=chunk)[386](index=386&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=130&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This section confirms **no defaults upon senior securities** occurred during the reporting period - **No defaults upon senior securities** occurred[387](index=387&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=130&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This section clarifies that **mine safety disclosures are not applicable** to Trustmark Corporation - **Mine safety disclosures are not applicable**[388](index=388&type=chunk) [ITEM 5. OTHER INFORMATION](index=130&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section reports **no Rule 10b5-1 trading plans** or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or executive officers in Q1 2024 - **No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans** or non-Rule 10b5-1 trading arrangements during Q1 2024[389](index=389&type=chunk) [ITEM 6. EXHIBITS](index=131&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with the Form 10-Q, including compensation plans, employment agreements, and Sarbanes-Oxley Act certifications - Exhibits include **stock and incentive compensation plan agreements**, an **employment agreement amendment**, and **Sarbanes-Oxley Act certifications**[394](index=394&type=chunk) [SIGNATURES](index=132&type=section&id=SIGNATURES) This section contains the official signatures of Trustmark Corporation's President and CEO, and Treasurer and Principal Financial Officer, certifying the report filing - The report is duly signed by **Duane A. Dewey (President and CEO)** and **Thomas C. Owens (Treasurer and Principal Financial Officer)** on May 7, 2024[398](index=398&type=chunk)