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)

Financial Data and Key Metrics Changes - Trustmark reported a net income increase, with net interest income totaling $136.2 million in Q1, resulting in a net interest margin of 3.21% [8][12] - Loans held for investment increased by $107.4 million or 0.8% linked quarter and $560.7 million or 4.5% year-over-year [8][9] - Deposits totaled $15.3 billion, reflecting a linked quarter decrease of $231.2 million but an increase of $554.9 million or 3.8% year-over-year [8][61] Business Line Data and Key Metrics Changes - Loan growth in Q1 was driven by commercial real estate and equipment finance, with expectations for mid-single-digit growth in 2024 [9][79] - Non-interest income for Q1 totaled $55.3 million, an increase of 11.1% linked quarter, representing 29.4% of total revenue [73][98] - Non-interest expense decreased by 3.4% linked quarter to $130.1 million, driven by lower professional fees and data processing costs [34][73] Market Data and Key Metrics Changes - The bank's commercial loan portfolio is well diversified, with no single category exceeding 14% [30] - The average cost of interest-bearing deposits increased by 7 basis points to 2.74% [76][97] - The provision for credit losses for loans held for investment was $7.7 million in Q1, maintaining solid credit quality metrics [29][60] Company Strategy and Development Direction - Trustmark signed a definitive agreement to sell its insurance agency for $345 million, which is expected to be accretive to capital and allow for balance sheet repositioning [4][71] - The company plans to focus on organic loan growth and may explore opportunities in new markets, leveraging experience gained from opening the Atlanta market [25][83] - Trustmark aims to maintain a strong capital base while prioritizing organic growth and potential M&A opportunities [80][84] Management's Comments on Operating Environment and Future Outlook - Management acknowledged significant headwinds in the marketplace but remains focused on organic growth and adding production talent [18][38] - The company expects non-interest income to grow in the mid-single digits, while non-interest expense is anticipated to increase in low-single digits for the full year [15][79] - Trustmark's capital ratios remain solid, with a common Tier 1 equity ratio of 10.12% and a total risk-based capital ratio of 12.42% [29][64] Other Important Information - The Board declared a quarterly cash dividend of $0.23 per share, payable on June 15 [29] - The company is restructuring its securities portfolio to improve cash flow stability and increase yield [72][57] Q&A Session Summary Question: What are the dynamics of the insurance sale transaction? - Management expressed excitement about the sale, highlighting its positive implications for shareholders and the bank [70][55] Question: How will the new capital be deployed? - The company plans to support organic loan growth and may explore new market opportunities, while remaining cautious about share repurchases [24][38] Question: What is the expected run rate for the insurance business post-sale? - Management confirmed that there is no ongoing fee arrangement but emphasized the positive ongoing relationship with the new partner [87] Question: What capital level would trigger share buybacks? - Management indicated that they would likely remain on the sidelines for share repurchases, focusing on organic growth and capital accretion [89][92]

Exhibit 99.1 News Release Trustmark Corporation Announces First Quarter 2024 Financial Results Loan Growth Moderates, Credit Quality Remains Stable Solid Growth in Fee Income and Disciplined Expense Management Reflected in Financial Results JACKSON, Miss. – April 23, 2024 – Trustmark Corporation (NASDAQGS:TRMK) reported net income of $41.5 million in the first quarter of 2024, representing diluted earnings per share of $0.68. Trustmark's performance during the first quarter produced a return on average tang ...

or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 000-3683 TRUSTMARK CORPORATION (Exact name of Registrant as specified in its charter) | MISSISSIPPI | 64-0471500 | | --- | --- | | (State or other jurisdiction of incorporation or | (IRS Employer Identification Number) | | organization) | | | 248 East Capitol Street, Jackson, Mississippi | 39201 | | (Address of principal executive offices) | (Zip Code) | | Registrant's telephone number, inclu ...

Trustmark Corporation (NASDAQ:TRMK) Q4 2024 Results Conference Call January 24, 2024 9:30 AM ET Company Participants Joey Rein - Director of Corporate Strategy Duane Dewey - President and CEO Barry Harvey - Chief Credit and Operations Officer Tom Owens - Chief Financial Officer Tom Chambers - Chief Accounting Officer Conference Call Participants Graham Dick - Piper Sandler Gary Tenner - D.A. Davidson Catherine Mealor - KBW Operator Good morning, ladies and gentlemen, and welcome to Trustmark Corporation's F ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section details Trustmark Corporation's unaudited financial statements, management's analysis, market risk, and internal controls [Financial Statements](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents Trustmark Corporation's unaudited condensed consolidated financial statements and detailed notes for the period ended September 30, 2023 [Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) Trustmark's total assets grew to **$18.39 billion** as of September 30, 2023, from **$18.02 billion** at year-end 2022, driven by a **5.0%** increase in net loans held for investment, while total deposits increased by **4.6%** to **$15.10 billion** Consolidated Balance Sheet Highlights ($ in thousands) | Account | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Assets | $18,390,839 | $18,015,478 | | Net Loans Held for Investment (LHFI) | $12,676,228 | $12,083,825 | | Total Deposits | $15,101,923 | $14,437,648 | | Total Liabilities | $16,820,488 | $16,523,210 | | Total Shareholders' Equity | $1,570,351 | $1,492,268 | Consolidated Income Statement Highlights ($ in thousands) | Account | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net Interest Income | $416,136 | $348,125 | | Provision for Credit Losses, LHFI | $19,777 | $14,775 | | Noninterest Income | $157,154 | $159,974 | | Noninterest Expense | $401,490 | $371,984 | | Net Income | $129,366 | $105,950 | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on Trustmark's accounting policies and financial components, including securities, loans, ACL methodology, legal contingencies, derivatives, and segment performance - The financial statements are prepared in conformity with U.S. GAAP for interim information and should be read with the 2022 Annual Report on Form 10-K[29](index=29&type=chunk) - Management makes estimates and assumptions that affect reported amounts; actual results could differ[30](index=30&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=61&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses Trustmark's financial performance, covering loan and deposit growth, net interest income, credit quality, and a **$6.5 million** litigation settlement - Q3 2023 results reflected solid growth in loans held for investment (LHFI) and deposits, stable net interest income, and continued credit quality strength[223](index=223&type=chunk) - A **$6.5 million** litigation settlement expense related to Adams/Madison Timber was recognized in Q3 2023[223](index=223&type=chunk) - The Board of Directors declared a quarterly cash dividend of **$0.23 per share**, payable December 15, 2023[224](index=224&type=chunk) [Results of Operations](index=70&type=section&id=MD%26A_Results_of_Operations) For the nine months ended September 30, 2023, total revenue increased **12.8%** to **$573.3 million**, driven by a **19.5%** rise in net interest income to **$416.1 million**, while noninterest income decreased slightly by **1.8%** to **$157.2 million**, and noninterest expense rose **7.9%** to **$401.5 million** due to a **$6.5 million** litigation settlement Key Performance Metrics (Nine Months Ended Sep 30, $ in Millions) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net Interest Income-FTE | $426.3M | $357.0M | | Net Interest Margin-FTE | 3.34% | 3.00% | | Noninterest Income | $157.2M | $160.0M | | Noninterest Expense | $401.5M | $372.0M | | Net Income | $129.4M | $106.0M | - The provision for credit losses on LHFI for the nine months of 2023 was **$19.8 million**, an increase from **$14.8 million** in the prior year, reflecting loan growth and a weakening macroeconomic forecast[276](index=276&type=chunk) - Noninterest expense for the nine months of 2023 included a **$6.5 million** litigation settlement expense; excluding this, noninterest expense increased **6.2%** YoY[239](index=239&type=chunk) [Financial Condition](index=79&type=section&id=MD%26A_Financial_Condition) As of September 30, 2023, total assets were **$18.39 billion**, with loans held for investment (LHFI) growing **5.0%** to **$12.81 billion**, while nonperforming assets increased to **$96.4 million**, and deposits grew **4.6%** to **$15.10 billion** with a shift towards interest-bearing accounts - LHFI increased by **$606.2 million (5.0%)** since Dec 31, 2022, primarily from net growth in loans secured by real estate[315](index=315&type=chunk) - Nonperforming assets rose to **$96.4 million** at Q3 2023 from **$68.0 million** at year-end 2022, mainly due to an increase in nonaccrual LHFI[242](index=242&type=chunk)[339](index=339&type=chunk) - Deposits increased by **$664.3 million (4.6%)** since year-end 2022, with a shift from noninterest-bearing deposits (**-$773.6 million**) to interest-bearing deposits (**+$1.44 billion**), including **$727.3 million** in new brokered CDs[346](index=346&type=chunk) - The allowance for credit losses (ACL) on LHFI stood at **$134.0 million**, or **1.05%** of total LHFI, up from **0.99%** at year-end 2022[333](index=333&type=chunk) [Capital Resources and Liquidity](index=91&type=section&id=MD%26A_Capital%20Resources%20and%20Liquidity) Trustmark maintained a strong capital position with all regulatory capital ratios exceeding 'well-capitalized' standards, including a Common Equity Tier 1 (CET1) ratio of **9.89%**, and robust liquidity supported by a strong deposit base and **$3.60 billion** in additional FHLB borrowing capacity Regulatory Capital Ratios (Trustmark Corporation) | Ratio | Sep 30, 2023 | Minimum Requirement | | :--- | :--- | :--- | | Common Equity Tier 1 | 9.89% | 7.00% | | Tier 1 Capital | 10.29% | 8.50% | | Total Capital | 12.11% | 10.50% | | Tier 1 Leverage | 8.49% | 4.00% | - Trustmark had access to **$3.60 billion** in additional FHLB advances and **$1.38 billion** in Discount Window capacity as of September 30, 2023[371](index=371&type=chunk)[374](index=374&type=chunk) - No shares were repurchased during the first nine months of 2023 under the **$50.0 million** stock repurchase program authorized for 2023[363](index=363&type=chunk) [Asset/Liability Management](index=94&type=section&id=MD%26A_Asset%2FLiability%20Management) Trustmark actively manages interest rate risk using financial simulation models and derivatives, including a **$1.0 billion** notional cash flow hedging program, with Mortgage Servicing Rights (MSR) valued at **$142.4 million** Estimated Change in Net Interest Income (1-Year Horizon) | Rate Change | Estimated % Change | | :--- | :--- | | +200 bps | 2.0% | | +100 bps | 1.0% | | -100 bps | -1.2% | | -200 bps | -2.8% | - Trustmark initiated a cash flow hedging program with an aggregate notional value of **$1.0 billion** as of September 30, 2023, to manage exposure to interest rate movements[386](index=386&type=chunk) - The fair value of Mortgage Servicing Rights (MSR) was **$142.4 million**; a **10%** adverse change in prepayment speed would decrease fair value by approximately **$5.0 million**[403](index=403&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=98&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section refers to the 'Market/Interest Rate Risk Management' discussion within the Management's Discussion and Analysis (MD&A) for information on the company's market risk exposures - Information required by this item is included in the discussion of Market/Interest Rate Risk Management found in the MD&A section[407](index=407&type=chunk) [Controls and Procedures](index=98&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and Principal Financial Officer, evaluated the company's disclosure controls and procedures and concluded they were effective as of September 30, 2023, with no material changes to internal control over financial reporting during the third quarter - Based on an evaluation as of the end of the reporting period, the CEO and Principal Financial Officer concluded that Trustmark's disclosure controls and procedures were effective[408](index=408&type=chunk) - No changes in internal control over financial reporting occurred during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, these controls[409](index=409&type=chunk) [PART II. OTHER INFORMATION](index=98&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information on Trustmark's legal proceedings, risk factors, equity security sales, and other relevant disclosures [Legal Proceedings](index=98&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Trustmark's subsidiary, TNB, has reached settlement agreements in two major litigations: a **$100.0 million** settlement for the Stanford Financial Group litigation and a **$6.5 million** settlement for the Adams/Madison Timber litigation, both pending final court approval - Trustmark recognized a **$100.0 million** litigation settlement expense in Q4 2022 related to the Stanford Financial Group litigation[173](index=173&type=chunk) - Trustmark recognized a **$6.5 million** litigation settlement expense in Q3 2023 related to the Adams/Madison Timber litigation[173](index=173&type=chunk) - For other pending legal proceedings, Trustmark believes a loss is not probable and a reasonable estimate cannot be made at this time[173](index=173&type=chunk)[411](index=411&type=chunk) [Risk Factors](index=98&type=section&id=ITEM%201A.%20RISK%20FACTORS) There have been no material changes to the risk factors previously disclosed in Trustmark's 2022 Annual Report on Form 10-K - There has been no material change in the risk factors previously disclosed in Trustmark's 2022 Annual Report[412](index=412&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=98&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) Trustmark has a stock repurchase program authorizing the acquisition of up to **$50.0 million** of its common stock through December 31, 2023, with no shares repurchased during the third quarter of 2023 - A stock repurchase program for up to **$50.0 million** is effective through December 31, 2023[413](index=413&type=chunk) - No shares of common stock were repurchased by the company during the three months ended September 30, 2023[414](index=414&type=chunk) [Other Information](index=99&type=section&id=ITEM%205.%20OTHER%20INFORMATION) During the third quarter of 2023, none of Trustmark's directors or executive officers adopted or terminated a Rule 10b5-1 trading plan or any non-Rule 10b5-1 trading arrangement - During Q3 2023, no directors or executive officers adopted or terminated any Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements[417](index=417&type=chunk)

Trustmark Corporation (NASDAQ:TRMK) Q3 2023 Earnings Conference Call October 25, 2023 9:30 AM ET Company Participants Joey Rein - Director of Corporate Strategy Duane Dewey - President and Chief Executive Officer Barry Harvey - Chief Credit and Operations Officer Tom Owens - Chief Financial Officer Tom Chambers - Chief Accounting Officer Conference Call Participants Graham Dick - Piper Sandler Kevin Fitzsimmons - D.A. Davidson Will Jones - KBW Operator Good morning, ladies and gentlemen, and welcome to Trus ...

Financial Performance - Net interest income (FTE) totaled $141.9 million[21], resulting in a net interest margin of 3.29%[21, 104], down 4 bps from the prior quarter[21] - Noninterest income totaled $52.2 million[35], representing 27.4% of total revenue in the third quarter[35] - Adjusted noninterest expense totaled $134.0 million[116], an increase of $2.4 million, or 1.9%, from the prior quarter[98] - Net charge-offs totaled $3.6 million in the third quarter, representing 0.11% of average loans[21, 46] - Insurance revenue totaled $15.3 million, up $539 thousand from the prior quarter and $1.4 million year-over-year[4] Loan and Deposit Growth - Loans Held for Investment (HFI) increased $196.3 million, or 1.6%, linked-quarter, and $1.2 billion, or 10.6%, year-over-year[35] - Deposits expanded $188.0 million, or 1.3%, linked-quarter and $676.7 million, or 4.7%, year-over-year[35, 59] - Brokered deposits totaled $740.2 million, up $125.5 million from the prior quarter, to represent 4.9% of total deposits at September 30, 2023[9] Capital Position - Capital position remained strong with a CET1 ratio of 9.89% and a total risk-based capital ratio of 12.11% at September 30, 2023[7, 35]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 000-03683 Trustmark Corporation (Exact name of registrant as specified in its charter) Mississippi 64-0471500 (State or other jurisdiction of in ...

Trustmark Corporation (NASDAQ:TRMK) Q2 2023 Earnings Conference Call July 26, 2023 9:30 AM ET Company Participants Joey Rein - Director, Corporate Strategy Duane Dewey - President & Chief Executive Officer Barry Harvey - Chief Credit & Operations Officer Tom Owens - Chief Financial Officer Tom Chambers - Chief Accounting Officer Conference Call Participants Catherine Mealor - KBW Kevin Fitzsimmons - D.A. Davidson Joe Yanchunis - Raymond James Graham Dick - Piper Sandler Operator Good morning, ladies and gen ...