[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents Trustmark Corporation's unaudited condensed consolidated financial statements for Q1 2025, including balance sheets, income statements, cash flows, and notes - The financial statements adhere to U.S. GAAP for interim reporting, omitting some annual disclosures[30](index=30&type=chunk) - Trustmark completed the sale of Fisher Brown Bottrell Insurance, Inc. on May 31, 2024, with its historical results reported as discontinued operations[32](index=32&type=chunk) [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$18.30 billion** as of March 31, 2025, driven by loan growth, with shareholders' equity rising to **$2.02 billion** Consolidated Balance Sheet Highlights ($ in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$18,296,203** | **$18,152,422** | | Net Loans Held for Investment (LHFI) | $13,074,459 | $12,929,672 | | Total Securities (AFS & HTM) | $3,052,515 | $3,027,919 | | Total Deposits | $15,080,704 | $15,108,175 | | **Total Liabilities** | **$16,274,976** | **$16,190,095** | | **Total Shareholders' Equity** | **$2,021,227** | **$1,962,327** | [Consolidated Statements of Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Income%20(Loss)) Net income for Q1 2025 increased to **$53.6 million**, driven by a 14.5% rise in net interest income and 8.2% growth in noninterest income Q1 2025 vs Q1 2024 Income Statement Highlights ($ in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Interest Income | $152,055 | $132,830 | | Provision for Credit Losses (PCL), LHFI | $8,125 | $7,708 | | Total Noninterest Income | $42,584 | $39,355 | | Total Noninterest Expense | $124,011 | $119,664 | | **Net Income** | **$53,633** | **$41,535** | | **Diluted EPS** | **$0.88** | **$0.68** | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities was **$82.4 million** in Q1 2025, a turnaround from a prior year outflow, while investing activities used **$143.6 million** Cash Flow Summary ($ in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $82,418 | $(58,543) | | Net cash from investing activities | $(143,635) | $(51,309) | | Net cash from financing activities | $81,328 | $(259,430) | | **Net change in cash and cash equivalents** | **$20,111** | **$(369,282)** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed disclosures for financial statements, covering discontinued operations, portfolio composition, credit losses, and regulatory capital [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=73&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's analysis of Trustmark's Q1 2025 financial condition and operating results, including capital, liquidity, and asset quality [Executive Overview](index=75&type=section&id=Executive%20Overview) Q1 2025 results show continued loan growth, stable credit quality, and a solid capital position, with net income rising to **$53.6 million** - Q1 2025 financial results featured continued **LHFI growth**, stable credit quality, and a **solid capital position**[216](index=216&type=chunk) Q1 2025 Financial Highlights | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $53.6 million | $41.5 million | | Diluted EPS | $0.88 | $0.68 | | Return on Average Tangible Equity | 13.13% | 12.98% | | Return on Average Assets | 1.19% | 0.89% | - The Board declared a quarterly cash dividend of **$0.24 per share**, payable June 15, 2025[216](index=216&type=chunk) [Results of Operations](index=84&type=section&id=Results%20of%20Operations) Total revenue increased 13.0% to **$194.6 million** in Q1 2025, driven by a 14.5% rise in net interest income and an 8.2% increase in noninterest income Net Interest Income and Margin (FTE) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Interest Income (FTE) | $154,739 thousand | $136,195 thousand | | Net Interest Margin (FTE) | 3.75% | 3.21% | - Noninterest income increased by **$3.2 million (8.2%)** year-over-year, primarily due to a **$2.4 million gain** on a bank property sale[227](index=227&type=chunk)[259](index=259&type=chunk) - Noninterest expense rose by **$4.3 million (3.6%)** year-over-year, mainly from higher salaries and benefits and increased services and fees[228](index=228&type=chunk) [Financial Condition](index=94&type=section&id=Financial%20Condition) Total assets reached **$18.3 billion** as of March 31, 2025, with LHFI growing by **$151.5 million** to **$13.24 billion**, while deposits slightly decreased - LHFI increased by **$151.5 million (1.2%)** from year-end 2024, driven by growth in real estate secured and other commercial loans[283](index=283&type=chunk) LHFI Composition ($ in thousands) | Loan Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Loans secured by real estate | $6,674,082 | $6,404,906 | | Other loans secured by real estate | $3,030,862 | $3,128,897 | | Commercial and industrial loans | $1,765,893 | $1,840,722 | | **Total LHFI** | **$13,241,469** | **$13,089,942** | - Total deposits decreased slightly by **$27.5 million (0.2%)** to **$15.081 billion** compared to December 31, 2024[317](index=317&type=chunk) - The securities portfolio is **100% invested** in U.S. Treasury, government agency, GSE-backed, and Aaa-rated securities[277](index=277&type=chunk) [Allowance for Credit Losses and Asset Quality](index=99&type=section&id=Allowance%20for%20Credit%20Losses%20and%20Asset%20Quality) ACL on LHFI increased to **$167.0 million** (1.26% of LHFI) at March 31, 2025, while nonperforming assets rose to **$95.0 million** Allowance for Credit Losses (ACL) on LHFI ($ in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | ACL, LHFI | $167,010 | $160,270 | | ACL / LHFI | 1.26% | 1.22% | - The Provision for Credit Losses (PCL) on LHFI was **$8.1 million** for Q1 2025, up from **$7.7 million** in Q1 2024[253](index=253&type=chunk) Nonperforming Assets ($ in thousands) | Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Nonaccrual LHFI | $86,620 | $80,109 | | Other real estate | $8,348 | $5,917 | | **Total nonperforming assets** | **$94,968** | **$86,026** | [Capital Resources and Liquidity](index=108&type=section&id=Capital%20Resources%20and%20Liquidity) Trustmark maintains a strong capital position with all ratios exceeding well-capitalized standards, and robust liquidity supported by diverse funding sources Regulatory Capital Ratios | Ratio | March 31, 2025 | Minimum Requirement | | :--- | :--- | :--- | | Common Equity Tier 1 | 11.63% | 7.00% | | Tier 1 Capital | 12.03% | 8.50% | | Total Capital | 14.10% | 10.50% | | Tier 1 Leverage | 10.11% | 4.00% | - A new **$100.0 million** stock repurchase program was authorized, with **$15.0 million** in shares repurchased during Q1 2025[166](index=166&type=chunk)[335](index=335&type=chunk) - Liquidity sources include a strong deposit base, **$1.717 billion** in FHLB borrowing capacity, **$1.157 billion** in unencumbered securities, and **$1.183 billion** in Federal Reserve collateral capacity[342](index=342&type=chunk)[343](index=343&type=chunk)[344](index=344&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=120&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Information on market risk is referenced within the 'Market/Interest Rate Risk Management' discussion of the Management's Discussion and Analysis - Required market risk information is provided in the Market/Interest Rate Risk Management discussion within the MD&A[377](index=377&type=chunk) [Controls and Procedures](index=120&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - The CEO and Principal Financial Officer concluded that Trustmark's disclosure controls and procedures were **effective** as of the reporting period end[378](index=378&type=chunk) - No material changes to internal control over financial reporting occurred during the last fiscal quarter[379](index=379&type=chunk) [PART II. OTHER INFORMATION](index=120&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=120&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Trustmark is involved in ordinary course legal proceedings, with management believing no probable material losses or adverse financial effects - Trustmark accrues litigation liabilities when a loss is both **probable and reasonably estimable**[381](index=381&type=chunk) - Management currently believes no pending legal proceeding will result in a probable or estimable loss, nor a material adverse financial effect[381](index=381&type=chunk)[382](index=382&type=chunk) [Risk Factors](index=122&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes to risk factors have been reported since Trustmark's 2024 Annual Report on Form 10-K - No material changes to risk factors were reported since the 2024 Annual Report[383](index=383&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=122&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) Trustmark's Board authorized a **$100.0 million** stock repurchase program, with **423,240 shares** repurchased in Q1 2025 Common Stock Repurchases (Q1 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Jan 2025 | 243,717 | $34.90 | | Feb 2025 | 98,112 | $37.48 | | Mar 2025 | 81,411 | $34.79 | | **Total** | **423,240** | **N/A** | - As of March 31, 2025, approximately **$85.0 million** remained available under the current repurchase plan[385](index=385&type=chunk) [Other Information](index=122&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No directors or executive officers adopted or terminated Rule 10b5-1 trading plans or similar arrangements during Q1 2025 - No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans or similar arrangements during Q1 2025[388](index=388&type=chunk) [Exhibits](index=123&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and Inline XBRL Interactive Data files - Exhibits include CEO and Principal Financial Officer certifications under Sarbanes-Oxley Act Sections 302 and 906[393](index=393&type=chunk) - The filing incorporates Inline XBRL Interactive Data as required[393](index=393&type=chunk)

Financial Data and Key Metrics Changes - Trustmark reported net income of $53.6 million, representing fully diluted EPS of $0.88 per share, with a return on average assets of 1.19% and a return on average tangible equity of 13.13% [7][9] - Loans held for investment increased by $151 million or 1.2% linked quarter, with a stable deposit base and a cost of total deposits rising by 15 basis points to 1.83% [6][10] - Non-interest income totaled approximately $43 million, up 4% linked quarter, while non-interest expense declined by $419,000 linked quarter [7][8] Business Line Data and Key Metrics Changes - The growth in loans was diversified, reflecting increases in commercial real estate (CRE), other commercial loans, and one to four family mortgage loans [6][10] - Non-interest expense management efforts were highlighted, with declines in salaries, employee benefits, and service fees contributing to the overall reduction [8][41] Market Data and Key Metrics Changes - The company anticipates low single-digit growth in loans held for investments and deposits for the full year 2025, while securities balances are expected to remain stable [10][11] - The net interest margin is projected to be in the range of 3.75% to 3.85% for the full year, with net interest income expected to increase mid to high single digits [11] Company Strategy and Development Direction - Trustmark is focused on organic loan growth, potential market expansion, and M&A opportunities depending on market conditions [11][45] - The company is monitoring the impact of tariffs and administrative policies on its customer base, indicating a cautious but optimistic outlook for growth [10][11] Management's Comments on Operating Environment and Future Outlook - Management noted stable credit quality with net charge-offs totaling $1.4 million, representing four basis points of average loans [8] - The company is experiencing a solid pipeline across various business units, although some uncertainty in the market may lead to a slowdown in new origination volume [25][26] Other Important Information - The tangible book value per share increased to $27.78, up 4.1% during the quarter and 26.1% year over year [10] - The Board declared a quarterly cash dividend of $0.24 per share payable on June 15 to shareholders of record on June 1 [10] Q&A Session Summary Question: Loan growth trends and client behavior regarding tariffs - Management discussed expectations for meaningful maturing CRE loans in 2025 and noted that many clients are considering extension options due to uncertainty in interest rates [19][20] Question: Impact of net interest margin and potential rate cuts - Management explained that a linked quarter decline in net interest margin was primarily due to seasonal declines in loan fees, and they expect low single-digit increases moving forward [27][30] Question: Credit quality and reserve build - Management confirmed that the increase in the allowance for credit losses was expected, driven by loan growth and qualitative adjustments [38][39] Question: Expense management and future investments - Management highlighted a focus on controlling expenses, with plans for a core system conversion in 2026 and a disciplined approach to managing costs [41][42] Question: Share repurchase program and capital deployment - Management indicated that the pace of share repurchases will be dictated by market conditions and loan growth, with a focus on strategic growth initiatives in key markets [44][45]

Over the last four quarters, the company has surpassed consensus EPS estimates four times. Trustmark, which belongs to the Zacks Banks - Southeast industry, posted revenues of $197.32 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.52%. This compares to year-ago revenues of $191.54 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released ...