Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Trustmark Corporation Announces First Quarter 2023 Financial Results By: Trustmark Corporation via Business Wire April 25, 2023 at 16:30 PM EDT Loan and Deposit Growth Continues, Credit Quality Remains Strong, Mortgage Banking, Insurance and Wealth Management Revenue Expands Trustmark Corporation (NASDAQGS:TRMK) reported net income of $50.3 million in the first quarter of 2023, representing diluted earnings per share of $0.82. Trustmark’s performance during the first quarter produced a return on average tangible equity of 18.03% and a return on average assets of 1.10%. The Board of Directors declared a quarterly cash dividend of $0.23 per share payable June 15, 2023, to shareholders of record on June 1, 2023. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230425005438/en/ Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/53386997/en First Quarter Highlights Loan and deposit growth continued during the first quarter Credit quality remained strong Noninterest income increased linked-quarter, reflecting the strength of diversified business lines Expense discipline continued, noninterest expense decreased linked-quarter Duane A. Dewey, President and CEO, stated, “Our first quarter financial performance reflects solid loan and deposit growth, strong performance in our mortgage, insurance and wealth management businesses, and diligent expense management. Our overall strong performance was impacted by increasingly competitive deposit costs during the quarter, which compressed our net interest margin. Trustmark has a strong, diversified and proven business model that has stood the test of time. We remain well-positioned and committed to meeting our customers’ needs despite the challenging financial services environment. Our balance sheet is well-positioned for additional increases in interest rates and credit quality remains solid. We continue to focus on efficiency enhancements throughout the organization as well as investments in technology to better serve customers.” Balance Sheet Management Loans held for investment (HFI) increased $293.2 million, or 2.4%, during the quarter Total deposits increased $346.0 million, or 2.4%, during the quarter Maintained strong capital position with CET1 ratio of 9.76% and total risk-based capital ratio of 11.95% Loans HFI totaled $12.5 billion at March 31, 2023, reflecting an increase of $293.2 million, or 2.4%, linked-quarter and $2.1 billion, or 20.2%, year-over-year. The linked-quarter growth was broad-based and reflected increases in all categories with the exception of state and political subdivisions and consumer loans. Trustmark’s loan portfolio remains well-diversified by loan type and geography. Deposits totaled $14.8 billion at March 31, 2023, up $346.0 million, or 2.4%, from the prior quarter and down $329.6 million, or 2.2%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 84.5% of total deposits at March 31, 2023. Migration into higher-yielding products continued to drive a change in deposit mix from noninterest-bearing deposits, which represented 25.7% of total deposits at March 31, 2023. Interest-bearing deposit costs totaled 1.53% for the first quarter, while the total cost of deposits was 1.13%. The total cost of interest-bearing liabilities was 1.98% for the first quarter of 2023. During the first quarter, Trustmark did not repurchase any of its outstanding common shares. As previously announced, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2023, under which $50.0 million of Trustmark’s outstanding shares may be acquired through December 31, 2023. At March 31, 2023, Trustmark’s tangible equity to tangible assets ratio was 6.35%, while the total risk-based capital ratio was 11.95%. Tangible book value per share was $19.24 at March 31, 2023, an increase of 6.2% from the prior quarter. Credit Quality Nonperforming assets represented 0.58% of loans HFI and loans held for sale (HFS) at March 31, 2023 Net charge-offs totaled 0.04% of average loans in the first quarter Allowance for credit losses (ACL) represented 0.98% of loans HFI and 320.80% of nonaccrual loans, excluding individually analyzed loans at March 31, 2023 Nonaccrual loans totaled $72.4 million at March 31, 2023, up $6.4 million from the prior quarter and an increase of $8.0 million year-over-year. Other real estate totaled $1.7 million, reflecting a $302 thousand decrease from the prior quarter and a $1.5 million decline from the prior year. The provision for credit losses for loans HFI was $3.2 million in the first quarter and was primarily attributable to loan growth. The provision for credit losses for off-balance sheet credit exposures was a negative $2.2 million primarily driven by decreases in unfunded commitments. Collectively, the provision for credit losses totaled $1.0 million in the first quarter compared to $12.1 million in the prior quarter and a negative $2.0 million in the first quarter of 2022. Allocation of Trustmark’s $122.2 million ACL on loans HFI represented 0.80% of commercial loans and 1.54% of consumer and home mortgage loans, resulting in an ACL to total loans HFI of 0.98% at March 31, 2023. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio. Revenue Generation Noninterest income increased 13.7% linked-quarter to total $51.4 million, reflecting growth in mortgage banking, insurance and wealth management revenue Net interest income (FTE) totaled $141.1 million in the first quarter, down 6.0% linked-quarter Revenue in the first quarter totaled $189.0 million, a decline of 1.5% from the prior quarter and an increase of 23.1% from the same quarter in the prior year. The linked-quarter decline primarily reflects lower net interest income offset in part by higher mortgage banking, insurance and wealth management revenue while the year-over-year growth is attributed to higher net interest income offset in part by reduced mortgage banking revenue. Net interest income (FTE) in the first quarter totaled $141.1 million, resulting in a net interest margin of 3.39%, down 27 basis points from the prior quarter. The contraction of the net interest margin was primarily due to the costs of interest-bearing deposits more than offsetting the increased yields on the loans HFI and HFS portfolio and securities portfolio. Additionally, the margin was impacted by costs associated with the approximately $300 million increase in average on-balance sheet liquidity added during the quarter due to the uncertainty in the broader banking industry. Noninterest income in the first quarter totaled $51.4 million, an increase of $6.2 million, or 13.7%, from the prior quarter and a decrease of $2.7 million, or 5.1%, year-over-year. The linked-quarter increases in mortgage banking, insurance, and wealth management revenue were offset in part by declines in service charges on deposit accounts and bank card and other fees. The decrease in noninterest income year-over-year is principally due to lower mortgage banking revenue. Mortgage loan production in the first quarter totaled $361.1 million, down 7.6% from the prior quarter and 33.7% year-over-year. Mortgage banking revenue totaled $7.6 million in the first quarter, an increase of $4.2 million linked-quarter and a decrease of $2.2 million year-over-year. The linked-quarter increase was principally attributable to a decrease in net negative hedge ineffectiveness as well as a decline in runoff of mortgage servicing rights while the year-over-year decline was principally due to a decrease in net hedge ineffectiveness. Insurance revenue totaled $14.3 million in the first quarter, up $2.3 million, or 19.0%, from the prior quarter and $216 thousand, or 1.5%, year-over-year. The linked-quarter and year-over-year increases primarily reflected growth in commercial property and casualty commissions. Wealth management revenue in the first quarter totaled $8.8 million, an increase of $701 thousand, or 8.7%, from the prior quarter and a decline of $274 thousand, or 3.0%, year-over-year. The linked-quarter growth reflected higher trust management revenue while the year-over-year decline reflected reduced brokerage revenue. Noninterest Expense Salaries and employee benefits expense increased $587 thousand, or 0.8%, linked-quarter Services and fees declined $2.3 million, or 8.2%, linked-quarter Adjusted noninterest expense, which excludes ORE expense, amortization of intangibles, charitable contributions resulting in state tax credits, and litigation settlement expense totaled $127.5 million in the first quarter, down 1.7% from the prior quarter. Please refer to the Consolidated Financial Information, Note 7 – Non-GAAP Financial Measures Noninterest expense in the first quarter totaled $128.3 million, a decrease of $2.2 million, or 1.6%, when compared to the prior quarter excluding the litigation settlement expense. Salaries and employee benefits increased $587 thousand linked-quarter as declines in salaries and commissions were more than offset by a seasonal increase in payroll taxes. Services and fees declined $2.3 million, or 8.2%, principally due to lower professional fees. FIT2GROW “In 2022 we announced FIT2GROW, a comprehensive program of Focus, Innovation and Transformation designed to enhance Trustmark’s ability to grow and serve customers. During the first quarter, we refocused our community bank efforts on commercial, small business, and consumer lines of business to provide additional expertise for our customers and enhance profitable revenue growth. We continue to rollout new technology to enhance the customer experience and improve efficiency and productivity. Additionally, our Atlanta loan production office is now fully functioning and is focused on Commercial Real Estate, Residential Real Estate, Corporate Banking, and Equipment Finance. We look forward to the contributions of these businesses to our financial results going forward,” said Dewey. Additional Information As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, April 26, 2023, at 8:30 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (877) 317-3051 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Wednesday, May 10, 2023, in archived format at the same web address or by calling (877) 344-7529, passcode 2946740. Trustmark is a financial services company providing banking and financial solutions through offices in Alabama, Florida, Georgia, Mississippi, Tennessee and Texas. Forward-Looking Statements Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “project,” “potential,” “seek,” “continue,” “could,” “would,” “future” or the negative of those terms or other words of similar meaning. You should read statements that contain these words carefully because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements include, but are not limited to, statements relating to anticipated future operating and financial performance measures, including net interest margin, credit quality, business initiatives, growth opportunities and growth rates, among other things, and encompass any estimate, prediction, expectation, projection, opinion, anticipation, outlook or statement of belief included therein as well as the management assumptions underlying these forward-looking statements. You should be aware that the occurrence of the events described under the caption “Risk Factors” in Trustmark’s filings with the Securities and Exchange Commission (SEC) could have an adverse effect on our business, results of operations and financial condition. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected. Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels and slowdowns in economic growth, actions by the Board of Governors of the Federal Reserve System (FRB) that impact the level of market interest rates, local, state and national economic and market conditions, conditions in the housing and real estate markets in the regions in which Trustmark operates and the extent and duration of the current volatility in the credit and financial markets, levels of and volatility in crude oil prices, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility of market interest rates, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, including the potential impact of issues related to the European financial system and monetary and other governmental actions designed to address credit, securities, and/or commodity markets, the enactment of legislation and changes in existing regulations or enforcement practices or the adoption of new regulations, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, changes in our ability to control expenses, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, cyber-attacks and other breaches which could affect our information system security, natural disasters, environmental disasters, pandemics or other health crises, acts of war or terrorism, and other risks described in our filings with the SEC. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Except as required by law, we undertake no obligation to update or revise any of this information, whether as the result of new information, future events or developments or otherwise. TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands) (unaudited) Linked Quarter Year over Year QUARTERLY AVERAGE BALANCES 3/31/2023 12/31/2022 3/31/2022 $ Change % Change $ Change % Change Securities AFS-taxable (1) $ 2,187,121 $ 2,572,675 $ 3,245,502 $ (385,554 ) -15.0 % $ (1,058,381 ) -32.6 % Securities AFS-nontaxable 4,812 4,828 5,127 (16 ) -0.3 % (315 ) -6.1 % Securities HTM-taxable (1) 1,479,283 1,268,952 410,851 210,331 16.6 % 1,068,432 n/m Securities HTM-nontaxable 4,509 4,514 7,327 (5 ) -0.1 % (2,818 ) -38.5 % Total securities 3,675,725 3,850,969 3,668,807 (175,244 ) -4.6 % 6,918 0.2 % Paycheck protection program loans (PPP) — 3,235 29,009 (3,235 ) -100.0 % (29,009 ) -100.0 % Loans (includes loans held for sale) 12,530,449 12,006,661 10,550,712 523,788 4.4 % 1,979,737 18.8 % Fed funds sold and reverse repurchases 2,379 6,566 56 (4,187 ) -63.8 % 2,323 n/m Other earning assets 647,760 375,190 1,811,713 272,570 72.6 % (1,163,953 ) -64.2 % Total earning assets 16,856,313 16,242,621 16,060,297 613,692 3.8 % 796,016 5.0 % Allowance for credit losses (ACL), loans heldfor investment (LHFI) (119,978 ) (114,948 ) (99,390 ) (5,030 ) -4.4 % (20,588 ) -20.7 % Other assets 1,762,449 1,630,085 1,550,848 132,364 8.1 % 211,601 13.6 % Total assets $ 18,498,784 $ 17,757,758 $ 17,511,755 $ 741,026 4.2 % $ 987,029 5.6 % Interest-bearing demand deposits $ 4,751,154 $ 4,719,303 $ 4,429,056 $ 31,851 0.7 % $ 322,098 7.3 % Savings deposits 4,193,764 4,379,673 4,791,104 (185,909 ) -4.2 % (597,340 ) -12.5 % Time deposits 1,907,449 1,152,905 1,193,435 754,544 65.4 % 714,014 59.8 % Total interest-bearing deposits 10,852,367 10,251,881 10,413,595 600,486 5.9 % 438,772 4.2 % Fed funds purchased and repurchases 436,535 549,406 212,006 (112,871 ) -20.5 % 224,529 n/m Other borrowings 1,110,843 530,993 91,090 579,850 n/m 1,019,753 n/m Subordinated notes 123,281 123,226 123,061 55 0.0 % 220 0.2 % Junior subordinated debt securities 61,856 61,856 61,856 — 0.0 % — 0.0 % Total interest-bearing liabilities 12,584,882 11,517,362 10,901,608 1,067,520 9.3 % 1,683,274 15.4 % Noninterest-bearing deposits 3,813,248 4,177,113 4,601,108 (363,865 ) -8.7 % (787,860 ) -17.1 % Other liabilities 576,826 569,992 295,287 6,834 1.2 % 281,539 95.3 % Total liabilities 16,974,956 16,264,467 15,798,003 710,489 4.4 % 1,176,953 7.5 % Shareholders' equity 1,523,828 1,493,291 1,713,752 30,537 2.0 % (189,924 ) -11.1 % Total liabilities and equity $ 18,498,784 $ 17,757,758 $ 17,511,755 $ 741,026 4.2 % $ 987,029 5.6 % (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands) (unaudited) Linked Quarter Year over Year PERIOD END BALANCES 3/31/2023 12/31/2022 3/31/2022 $ Change % Change $ Change % Change Cash and due from banks $ 1,297,144 $ 734,787 $ 1,917,564 $ 562,357 76.5 % $ (620,420 ) -32.4 % Fed funds sold and reverse repurchases — 4,000 — (4,000 ) -100.0 % — n/m Securities available for sale (1) 1,984,162 2,024,082 3,018,246 (39,920 ) -2.0 % (1,034,084 ) -34.3 % Securities held to maturity (1) 1,474,338 1,494,514 607,598 (20,176 ) -1.4 % 866,740 n/m PPP loans — — 18,579 — n/m (18,579 ) -100.0 % Loans held for sale (LHFS) 175,926 135,226 222,538 40,700 30.1 % (46,612 ) -20.9 % Loans held for investment (LHFI) 12,497,195 12,204,039 10,397,129 293,156 2.4 % 2,100,066 20.2 % ACL LHFI (122,239 ) (120,214 ) (98,734 ) (2,025 ) -1.7 % (23,505 ) -23.8 % Net LHFI 12,374,956 12,083,825 10,298,395 291,131 2.4 % 2,076,561 20.2 % Premises and equipment, net 223,975 212,365 207,301 11,610 5.5 % 16,674 8.0 % Mortgage servicing rights 127,206 129,677 111,050 (2,471 ) -1.9 % 16,156 14.5 % Goodwill 384,237 384,237 384,237 — 0.0 % — 0.0 % Identifiable intangible assets 3,352 3,640 4,591 (288 ) -7.9 % (1,239 ) -27.0 % Other real estate 1,684 1,986 3,187 (302 ) -15.2 % (1,503 ) -47.2 % Operating lease right-of-use assets 35,315 36,301 34,048 (986 ) -2.7 % 1,267 3.7 % Other assets 794,883 770,838 614,217 24,045 3.1 % 180,666 29.4 % Total assets $ 18,877,178 $ 18,015,478 $ 17,441,551 $ 861,700 4.8 % $ 1,435,627 8.2 % Deposits: Noninterest-bearing $ 3,797,055 $ 4,093,771 $ 4,739,102 $ (296,716 ) -7.2 % $ (942,047 ) -19.9 % Interest-bearing 10,986,606 10,343,877 10,374,190 642,729 6.2 % 612,416 5.9 % Total deposits 14,783,661 14,437,648 15,113,292 346,013 2.4 % (329,631 ) -2.2 % Fed funds purchased and repurchases 477,980 449,331 170,499 28,649 6.4 % 307,481 n/m Other borrowings 1,485,181 1,050,938 84,644 434,243 41.3 % 1,400,537 n/m Subordinated notes 123,317 123,262 123,097 55 0.0 % 220 0.2 % Junior subordinated debt securities 61,856 61,856 61,856 — 0.0 % — 0.0 % ACL on off-balance sheet credit exposures 34,596 36,838 34,517 (2,242 ) -6.1 % 79 0.2 % Operating lease liabilities 37,988 38,932 35,912 (944 ) -2.4 % 2,076 5.8 % Other liabilities 310,500 324,405 186,352 (13,905 ) -4.3 % 124,148 66.6 % Total liabilities 17,315,079 16,523,210 15,810,169 791,869 4.8 % 1,504,910 9.5 % Common stock 12,720 12,705 12,806 15 0.1 % (86 ) -0.7 % Capital surplus 155,297 154,645 167,094 652 0.4 % (11,797 ) -7.1 % Retained earnings 1,636,463 1,600,321 1,600,138 36,142 2.3 % 36,325 2.3 % Accumulated other comprehensiveincome (loss), net of tax (242,381 ) (275,403 ) (148,656 ) 33,022 12.0 % (93,725 ) -63.0 % Total shareholders' equity 1,562,099 1,492,268 1,631,382 69,831 4.7 % (69,283 ) -4.2 % Total liabilities and equity $ 18,877,178 $ 18,015,478 $ 17,441,551 $ 861,700 4.8 % $ 1,435,627 8.2 % (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands except per share data) (unaudited) Quarter Ended Linked Quarter Year over Year INCOME STATEMENTS 3/31/2023 12/31/2022 3/31/2022 $ Change % Change $ Change % Change Interest and fees on LHFS & LHFI-FTE $ 178,967 $ 159,566 $ 93,252 $ 19,401 12.2 % $ 85,715 91.9 % Interest and fees on PPP loans — 101 168 (101 ) -100.0 % (168 ) -100.0 % Interest on securities-taxable 16,761 16,577 12,357 184 1.1 % 4,404 35.6 % Interest on securities-tax exempt-FTE 92 93 122 (1 ) -1.1 % (30 ) -24.6 % Interest on fed funds sold and reverserepurchases 30 71 — (41 ) -57.7 % 30 n/m Other interest income 6,527 3,556 817 2,971 83.5 % 5,710 n/m Total interest income-FTE 202,377 179,964 106,716 22,413 12.5 % 95,661 89.6 % Interest on deposits 40,898 18,438 2,760 22,460 n/m 38,138 n/m Interest on fed funds purchased and repurchases 4,832 4,762 70 70 1.5 % 4,762 n/m Other interest expense 15,575 6,730 1,539 8,845 n/m 14,036 n/m Total interest expense 61,305 29,930 4,369 31,375 n/m 56,936 n/m Net interest income-FTE 141,072 150,034 102,347 (8,962 ) -6.0 % 38,725 37.8 % Provision for credit losses, LHFI 3,244 6,902 (860 ) (3,658 ) -53.0 % 4,104 n/m Provision for credit losses, off-balance sheetcredit exposures (2,242 ) 5,215 (1,106 ) (7,457 ) n/m (1,136 ) n/m Net interest income after provision-FTE 140,070 137,917 104,313 2,153 1.6 % 35,757 34.3 % Service charges on deposit accounts 10,336 11,162 9,451 (826 ) -7.4 % 885 9.4 % Bank card and other fees 7,803 8,191 8,442 (388 ) -4.7 % (639 ) -7.6 % Mortgage banking, net 7,639 3,408 9,873 4,231 n/m (2,234 ) -22.6 % Insurance commissions 14,305 12,019 14,089 2,286 19.0 % 216 1.5 % Wealth management 8,780 8,079 9,054 701 8.7 % (274 ) -3.0 % Other, net 2,514 2,311 3,206 203 8.8 % (692 ) -21.6 % Total noninterest income 51,377 45,170 54,115 6,207 13.7 % (2,738 ) -5.1 % Salaries and employee benefits 74,056 73,469 69,585 587 0.8 % 4,471 6.4 % Services and fees (2) 25,426 27,709 25,314 (2,283 ) -8.2 % 112 0.4 % Net occupancy-premises 7,629 7,898 7,079 (269 ) -3.4 % 550 7.8 % Equipment expense 6,405 6,268 6,061 137 2.2 % 344 5.7 % Litigation settlement expense (1) — 100,750 — (100,750 ) -100.0 % — n/m Other expense (2) 14,811 15,135 13,480 (324 ) -2.1 % 1,331 9.9 % Total noninterest expense 128,327 231,229 121,519 (102,902 ) -44.5 % 6,808 5.6 % Income (loss) before income taxes and tax eq adj 63,120 (48,142 ) 36,909 111,262 n/m 26,211 71.0 % Tax equivalent adjustment 3,477 3,451 3,003 26 0.8 % 474 15.8 % Income (loss) before income taxes 59,643 (51,593 ) 33,906 111,236 n/m 25,737 75.9 % Income taxes 9,343 (17,530 ) 4,695 26,873 n/m 4,648 99.0 % Net income (loss) $ 50,300 $ (34,063 ) $ 29,211 $ 84,363 n/m $ 21,089 72.2 % Per share data Earnings (loss) per share - basic $ 0.82 $ (0.56 ) $ 0.47 $ 1.38 n/m $ 0.35 74.5 % Earnings (loss) per share - diluted $ 0.82 $ (0.56 ) $ 0.47 $ 1.38 n/m $ 0.35 74.5 % Dividends per share $ 0.23 $ 0.23 $ 0.23 — 0.0 % — 0.0 % Weighted average shares outstanding Basic 61,011,059 60,969,400 61,514,395 Diluted 61,193,275 61,173,249 61,709,797 Period end shares outstanding 61,048,516 60,977,686 61,463,392 (1) See Note 1 - Litigation Settlement in the Notes to Consolidated Financials for additional information. (2) During the first quarter of 2023, Trustmark reclassified its debit card transaction fees from other expense to services and fees. Prior periods have been reclassified accordingly. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands) (unaudited) Quarter Ended Linked Quarter Year over Year NONPERFORMING ASSETS (1) 3/31/2023 12/31/2022 3/31/2022 $ Change % Change $ Change % Change Nonaccrual LHFI Alabama $ 10,919 $ 12,300 $ 7,506 $ (1,381 ) -11.2 % $ 3,413 45.5 % Florida 256 227 310 29 12.8 % (54 ) -17.4 % Mississippi (2) 32,560 24,683 21,318 7,877 31.9 % 11,242 52.7 % Tennessee (3) 5,416 5,566 9,266 (150 ) -2.7 % (3,850 ) -41.5 % Texas 23,224 23,196 25,999 28 0.1 % (2,775 ) -10.7 % Total nonaccrual LHFI 72,375 65,972 64,399 6,403 9.7 % 7,976 12.4 % Other real estate Alabama — 194 — (194 ) -100.0 % — n/m Mississippi (2) 1,495 1,769 3,187 (274 ) -15.5 % (1,692 ) -53.1 % Tennessee (3) 189 23 — 166 n/m 189 n/m Total other real estate 1,684 1,986 3,187 (302 ) -15.2 % (1,503 ) -47.2 % Total nonperforming assets $ 74,059 $ 67,958 $ 67,586 $ 6,101 9.0 % $ 6,473 9.6 % LOANS PAST DUE OVER 90 DAYS (1) LHFI $ 2,255 $ 3,929 $ 1,503 $ (1,674 ) -42.6 % $ 752 50.0 % LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase) $ 41,468 $ 49,320 $ 62,078 $ (7,852 ) -15.9 % $ (20,610 ) -33.2 % Quarter Ended Linked Quarter Year over Year ACL LHFI (1) 3/31/2023 12/31/2022 3/31/2022 $ Change % Change $ Change % Change Beginning Balance $ 120,214 $ 115,050 $ 99,457 $ 5,164 4.5 % $ 20,757 20.9 % Provision for credit losses, LHFI 3,244 6,902 (860 ) (3,658 ) -53.0 % 4,104 n/m Charge-offs (2,996 ) (3,893 ) (2,242 ) 897 23.0 % (754 ) -33.6 % Recoveries 1,777 2,155 2,379 (378 ) -17.5 % (602 ) -25.3 % Net (charge-offs) recoveries (1,219 ) (1,738 ) 137 519 29.9 % (1,356 ) n/m Ending Balance $ 122,239 $ 120,214 $ 98,734 $ 2,025 1.7 % $ 23,505 23.8 % NET (CHARGE-OFFS) RECOVERIES (1) Alabama $ (268 ) $ 98 $ 699 $ (366 ) n/m $ (967 ) n/m Florida (36 ) (60 ) (26 ) 24 40.0 % (10 ) -38.5 % Mississippi (2) (775 ) (1,657 ) (88 ) 882 53.2 % (687 ) n/m Tennessee (3) (124 ) (195 ) (424 ) 71 36.4 % 300 70.8 % Texas (16 ) 76 (24 ) (92 ) n/m 8 33.3 % Total net (charge-offs) recoveries $ (1,219 ) $ (1,738 ) $ 137 $ 519 29.9 % $ (1,356 ) n/m (1) Excludes PPP loans. (2) Mississippi includes Central and Southern Mississippi Regions. (3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands) (unaudited) Quarter Ended AVERAGE BALANCES 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Securities AFS-taxable (1) $ 2,187,121 $ 2,572,675 $ 2,824,254 $ 3,094,364 $ 3,245,502 Securities AFS-nontaxable 4,812 4,828 4,928 5,110 5,127 Securities HTM-taxable (1) 1,479,283 1,268,952 1,140,685 811,599 410,851 Securities HTM-nontaxable 4,509 4,514 5,057 5,630 7,327 Total securities 3,675,725 3,850,969 3,974,924 3,916,703 3,668,807 PPP loans — 3,235 9,821 17,746 29,009 Loans (includes loans held for sale) 12,530,449 12,006,661 11,459,551 10,910,178 10,550,712 Fed funds sold and reverse repurchases 2,379 6,566 226 110 56 Other earning assets 647,760 375,190 325,620 1,139,312 1,811,713 Total earning assets 16,856,313 16,242,621 15,770,142 15,984,049 16,060,297 ACL LHFI (119,978 ) (114,948 ) (102,951 ) (99,106 ) (99,390 ) Other assets 1,762,449 1,630,085 1,576,653 1,513,127 1,550,848 Total assets $ 18,498,784 $ 17,757,758 $ 17,243,844 $ 17,398,070 $ 17,511,755 Interest-bearing demand deposits $ 4,751,154 $ 4,719,303 $ 4,613,733 $ 4,578,235 $ 4,429,056 Savings deposits 4,193,764 4,379,673 4,514,579 4,638,849 4,791,104 Time deposits 1,907,449 1,152,905 1,111,440 1,159,065 1,193,435 Total interest-bearing deposits 10,852,367 10,251,881 10,239,752 10,376,149 10,413,595 Fed funds purchased and repurchases 436,535 549,406 249,809 118,753 212,006 Other borrowings 1,110,843 530,993 88,697 80,283 91,090 Subordinated notes 123,281 123,226 123,171 123,116 123,061 Junior subordinated debt securities 61,856 61,856 61,856 61,856 61,856 Total interest-bearing liabilities 12,584,882 11,517,362 10,763,285 10,760,157 10,901,608 Noninterest-bearing deposits 3,813,248 4,177,113 4,444,370 4,590,338 4,601,108 Other liabilities 576,826 569,992 429,720 439,266 295,287 Total liabilities 16,974,956 16,264,467 15,637,375 15,789,761 15,798,003 Shareholders' equity 1,523,828 1,493,291 1,606,469 1,608,309 1,713,752 Total liabilities and equity $ 18,498,784 $ 17,757,758 $ 17,243,844 $ 17,398,070 $ 17,511,755 (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands) (unaudited) PERIOD END BALANCES 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Cash and due from banks $ 1,297,144 $ 734,787 $ 479,637 $ 742,461 $ 1,917,564 Fed funds sold and reverse repurchases — 4,000 10,098 — — Securities available for sale (1) 1,984,162 2,024,082 2,444,486 2,644,364 3,018,246 Securities held to maturity (1) 1,474,338 1,494,514 1,156,985 1,137,754 607,598 PPP loans — — 4,798 12,549 18,579 LHFS 175,926 135,226 165,213 190,186 222,538 LHFI 12,497,195 12,204,039 11,586,064 10,944,840 10,397,129 ACL LHFI (122,239 ) (120,214 ) (115,050 ) (103,140 ) (98,734 ) Net LHFI 12,374,956 12,083,825 11,471,014 10,841,700 10,298,395 Premises and equipment, net 223,975 212,365 210,761 207,914 207,301 Mortgage servicing rights 127,206 129,677 132,615 121,014 111,050 Goodwill 384,237 384,237 384,237 384,237 384,237 Identifiable intangible assets 3,352 3,640 3,952 4,264 4,591 Other real estate 1,684 1,986 2,971 3,034 3,187 Operating lease right-of-use assets 35,315 36,301 37,282 34,684 34,048 Other assets 794,883 770,838 686,585 627,349 614,217 Total assets $ 18,877,178 $ 18,015,478 $ 17,190,634 $ 16,951,510 $ 17,441,551 Deposits: Noninterest-bearing $ 3,797,055 $ 4,093,771 $ 4,358,805 $ 4,509,472 $ 4,739,102 Interest-bearing 10,986,606 10,343,877 10,066,375 10,260,696 10,374,190 Total deposits 14,783,661 14,437,648 14,425,180 14,770,168 15,113,292 Fed funds purchased and repurchases 477,980 449,331 544,068 70,157 170,499 Other borrowings 1,485,181 1,050,938 223,172 72,553 84,644 Subordinated notes 123,317 123,262 123,207 123,152 123,097 Junior subordinated debt securities 61,856 61,856 61,856 61,856 61,856 ACL on off-balance sheet credit exposures 34,596 36,838 31,623 32,949 34,517 Operating lease liabilities 37,988 38,932 39,797 37,108 35,912 Other liabilities 310,500 324,405 232,786 196,871 186,352 Total liabilities 17,315,079 16,523,210 15,681,689 15,364,814 15,810,169 Common stock 12,720 12,705 12,700 12,752 12,806 Capital surplus 155,297 154,645 154,150 160,876 167,094 Retained earnings 1,636,463 1,600,321 1,648,507 1,620,210 1,600,138 Accumulated other comprehensive income (loss),net of tax (242,381 ) (275,403 ) (306,412 ) (207,142 ) (148,656 ) Total shareholders' equity 1,562,099 1,492,268 1,508,945 1,586,696 1,631,382 Total liabilities and equity $ 18,877,178 $ 18,015,478 $ 17,190,634 $ 16,951,510 $ 17,441,551 (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands except per share data) (unaudited) Quarter Ended INCOME STATEMENTS 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Interest and fees on LHFS & LHFI-FTE $ 178,967 $ 159,566 $ 129,395 $ 103,033 $ 93,252 Interest and fees on PPP loans — 101 186 184 168 Interest on securities-taxable 16,761 16,577 16,222 14,561 12,357 Interest on securities-tax exempt-FTE 92 93 100 107 122 Interest on fed funds sold and reverse repurchases 30 71 2 1 — Other interest income 6,527 3,556 1,493 2,214 817 Total interest income-FTE 202,377 179,964 147,398 120,100 106,716 Interest on deposits 40,898 18,438 5,097 2,774 2,760 Interest on fed funds purchased and repurchases 4,832 4,762 1,225 70 70 Other interest expense 15,575 6,730 1,996 1,664 1,539 Total interest expense 61,305 29,930 8,318 4,508 4,369 Net interest income-FTE 141,072 150,034 139,080 115,592 102,347 Provision for credit losses, LHFI 3,244 6,902 12,919 2,716 (860 ) Provision for credit losses, off-balance sheetcredit exposures (2,242 ) 5,215 (1,326 ) (1,568 ) (1,106 ) Net interest income after provision-FTE 140,070 137,917 127,487 114,444 104,313 Service charges on deposit accounts 10,336 11,162 11,318 10,226 9,451 Bank card and other fees 7,803 8,191 9,305 10,167 8,442 Mortgage banking, net 7,639 3,408 6,876 8,149 9,873 Insurance commissions 14,305 12,019 13,911 13,702 14,089 Wealth management 8,780 8,079 8,778 9,102 9,054 Other, net 2,514 2,311 2,418 1,907 3,206 Total noninterest income 51,377 45,170 52,606 53,253 54,115 Salaries and employee benefits 74,056 73,469 72,707 71,679 69,585 Services and fees (2) 25,426 27,709 26,787 25,659 25,314 Net occupancy-premises 7,629 7,898 7,395 6,892 7,079 Equipment expense 6,405 6,268 6,072 6,047 6,061 Litigation settlement expense (1) — 100,750 — — — Other expense (2) 14,811 15,135 13,737 13,490 13,480 Total noninterest expense 128,327 231,229 126,698 123,767 121,519 Income (loss) before income taxes and tax eq adj 63,120 (48,142 ) 53,395 43,930 36,909 Tax equivalent adjustment 3,477 3,451 2,975 2,916 3,003 Income (loss) before income taxes 59,643 (51,593 ) 50,420 41,014 33,906 Income taxes 9,343 (17,530 ) 7,965 6,730 4,695 Net income (loss) $ 50,300 $ (34,063 ) $ 42,455 $ 34,284 $ 29,211 Per share data Earnings (loss) per share - basic $ 0.82 $ (0.56 ) $ 0.69 $ 0.56 $ 0.47 Earnings (loss) per share - diluted $ 0.82 $ (0.56 ) $ 0.69 $ 0.56 $ 0.47 Dividends per share $ 0.23 $ 0.23 $ 0.23 $ 0.23 $ 0.23 Weighted average shares outstanding Basic 61,011,059 60,969,400 61,114,804 61,378,226 61,514,395 Diluted 61,193,275 61,173,249 61,318,715 61,546,285 61,709,797 Period end shares outstanding 61,048,516 60,977,686 60,953,864 61,201,123 61,463,392 (1) See Note 1 - Litigation Settlement in the Notes to Consolidated Financials for additional information. (2) During the first quarter of 2023, Trustmark reclassified its debit card transaction fees from other expense to services and fees. Prior periods have been reclassified accordingly. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands) (unaudited) Quarter Ended NONPERFORMING ASSETS (1) 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Nonaccrual LHFI Alabama $ 10,919 $ 12,300 $ 12,710 $ 2,698 $ 7,506 Florida 256 227 227 233 310 Mississippi (2) 32,560 24,683 23,517 23,039 21,318 Tennessee (3) 5,416 5,566 5,120 9,500 9,266 Texas 23,224 23,196 26,353 26,582 25,999 Total nonaccrual LHFI 72,375 65,972 67,927 62,052 64,399 Other real estate Alabama — 194 217 84 — Mississippi (2) 1,495 1,769 2,754 2,950 3,187 Tennessee (3) 189 23 — — — Total other real estate 1,684 1,986 2,971 3,034 3,187 Total nonperforming assets $ 74,059 $ 67,958 $ 70,898 $ 65,086 $ 67,586 LOANS PAST DUE OVER 90 DAYS (1) LHFI $ 2,255 $ 3,929 $ 1,842 $ 1,347 $ 1,503 LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase) $ 41,468 $ 49,320 $ 48,313 $ 51,164 $ 62,078 Quarter Ended ACL LHFI (1) 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Beginning Balance $ 120,214 $ 115,050 $ 103,140 $ 98,734 $ 99,457 Provision for credit losses, LHFI 3,244 6,902 12,919 2,716 (860 ) Charge-offs (2,996 ) (3,893 ) (2,920 ) (2,277 ) (2,242 ) Recoveries 1,777 2,155 1,911 3,967 2,379 Net (charge-offs) recoveries (1,219 ) (1,738 ) (1,009 ) 1,690 137 Ending Balance $ 122,239 $ 120,214 $ 115,050 $ 103,140 $ 98,734 NET (CHARGE-OFFS) RECOVERIES (1) Alabama $ (268 ) $ 98 $ 93 $ 1,129 $ 699 Florida (36 ) (60 ) (23 ) 761 (26 ) Mississippi (2) (775 ) (1,657 ) (702 ) (266 ) (88 ) Tennessee (3) (124 ) (195 ) (202 ) 31 (424 ) Texas (16 ) 76 (175 ) 35 (24 ) Total net (charge-offs) recoveries $ (1,219 ) $ (1,738 ) $ (1,009 ) $ 1,690 $ 137 (1) Excludes PPP loans. (2) Mississippi includes Central and Southern Mississippi Regions. (3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands) (unaudited) Quarter Ended FINANCIAL RATIOS AND OTHER DATA 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Return on average equity 13.39 % -9.05 % 10.48 % 8.55 % 6.91 % Return on average tangible equity 18.03 % -12.14 % 13.90 % 11.36 % 9.05 % Return on average assets 1.10 % -0.76 % 0.98 % 0.79 % 0.68 % Interest margin - Yield - FTE 4.87 % 4.40 % 3.71 % 3.01 % 2.69 % Interest margin - Cost 1.47 % 0.73 % 0.21 % 0.11 % 0.11 % Net interest margin - FTE 3.39 % 3.66 % 3.50 % 2.90 % 2.58 % Efficiency ratio (1) 65.60 % 65.85 % 64.96 % 71.89 % 76.44 % Full-time equivalent employees 2,758 2,738 2,717 2,727 2,725 CREDIT QUALITY RATIOS (2) Net (recoveries) charge-offs / average loans 0.04 % 0.06 % 0.03 % -0.06 % -0.01 % Provision for credit losses, LHFI / average loans 0.10 % 0.23 % 0.45 % 0.10 % -0.03 % Nonaccrual LHFI / (LHFI + LHFS) 0.57 % 0.53 % 0.58 % 0.56 % 0.61 % Nonperforming assets / (LHFI + LHFS) 0.58 % 0.55 % 0.60 % 0.58 % 0.64 % Nonperforming assets / (LHFI + LHFS+ other real estate) 0.58 % 0.55 % 0.60 % 0.58 % 0.64 % ACL LHFI / LHFI 0.98 % 0.99 % 0.99 % 0.94 % 0.95 % ACL LHFI-commercial / commercial LHFI 0.80 % 0.85 % 0.93 % 0.88 % 0.95 % ACL LHFI-consumer / consumer andhome mortgage LHFI 1.54 % 1.41 % 1.20 % 1.14 % 0.96 % ACL LHFI / nonaccrual LHFI 168.90 % 182.22 % 169.37 % 166.22 % 153.32 % ACL LHFI / nonaccrual LHFI(excl individually analyzed loans) 320.80 % 399.19 % 466.03 % 475.27 % 484.01 % CAPITAL RATIOS Total equity / total assets 8.28 % 8.28 % 8.78 % 9.36 % 9.35 % Tangible equity / tangible assets 6.35 % 6.27 % 6.67 % 7.23 % 7.29 % Tangible equity / risk-weighted assets 7.94 % 7.61 % 8.15 % 9.16 % 9.79 % Tier 1 leverage ratio 8.29 % 8.47 % 9.01 % 8.80 % 8.66 % Common equity tier 1 capital ratio 9.76 % 9.74 % 10.63 % 11.01 % 11.23 % Tier 1 risk-based capital ratio 10.17 % 10.15 % 11.06 % 11.47 % 11.70 % Total risk-based capital ratio 11.95 % 11.91 % 12.85 % 13.26 % 13.53 % STOCK PERFORMANCE Market value-Close $ 24.70 $ 34.91 $ 30.63 $ 29.19 $ 30.39 Book value $ 25.59 $ 24.47 $ 24.76 $ 25.93 $ 26.54 Tangible book value $ 19.24 $ 18.11 $ 18.39 $ 19.58 $ 20.22 (1) See Note 7 – Non-GAAP Financial Measures in the Notes to Consolidated Financials for Trustmark’s efficiency ratio calculation. (2) Excludes PPP loans. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands) (unaudited) Note 1 - Litigation Settlement As previously announced, on December 31, 2022, Trustmark National Bank (“Trustmark”) agreed to a settlement in principle (the “Settlement”) relating to litigation involving the Stanford Financial Group that includes a lawsuit initially filed in the District Court of Harris County, Texas on August 23, 2009 and also includes other subsequently-filed Stanford-related lawsuits. Trustmark Corporation, the parent company of Trustmark, has provided disclosure relating to these matters in its current report on Form 8-K filed on January 3, 2023, and in its periodic reports on Forms 10-K and 10-Q throughout the pendency of these actions. The parties to the Settlement are, on the one hand, (i) Ralph S. Janvey, solely in his capacity as the court-appointed receiver (the “Receiver”) for the Stanford Receivership Estate; (ii) the Official Stanford Investors Committee; (iii) each of the plaintiffs in the Rotstain and Smith Actions (as defined below); and, on the other hand, (iv) Trustmark. Under the terms of the Settlement, the parties agreed to settle and dismiss Rotstain, et al. v. Trustmark National Bank, et al., CA No. 4-22-CV-00800 (S.D. Tex.) (the “Rotstain Action”), Smith et al. v. Independent Bank, et al., CA No. 4-20-CV-00675 (S.D. Tex.) (the “Smith Action”), and all current or future claims arising from or related to Stanford. In addition, the Settlement provides that the parties will request dismissal of Jackson, et al., v. Cox, et al., CA No. 3:10-CV-0328 (N.D. Tex.) (the “Jackson Action” and, collectively with the Rotstain Action and the Smith Action, the “Actions”) pursuant to the terms of the bar orders described below. If the Settlement, including the bar orders described below, is approved by the Court and is not subject to further appeal, Trustmark will make a one-time cash payment of $100.0 million to the Receiver. Trustmark was relieved of pre-trial deadlines and the February 27, 2023 trial setting in the Rotstain Action pending final Court approval of a Settlement Agreement reflecting the terms of the Settlement and pending entry of the bar orders. The Smith and Jackson Actions are currently stayed. The Settlement included the parties’ agreement to seek the Northern District of Texas District Court’s entry of bar orders prohibiting any continued or future claims against Trustmark and its related parties relating to Stanford, whether asserted to date or not. The bar orders therefore would prohibit all litigation relating to Stanford described in Trustmark Corporation’s SEC periodic reports, including the Actions and any pending matters, as well as any actions relating to Stanford that may be brought in the future. Final Court approval of these bar orders is a condition of the Settlement. The Settlement was also subject to the execution and delivery of a definitive Settlement Agreement reflecting the terms of the Settlement, which was fully executed by the parties on January 13, 2023, and notice to Stanford’s investor claimants, which the Receiver has effectuated. The Settlement is also subject to final, non-appealable approval by the U.S. District Court for the Northern District of Texas. That Court has scheduled a hearing to approve the Settlement for May 3, 2023, but the timing of any final decision by the Court is subject to the discretion of the Court and any appeal. Robert Allen Stanford (founder of the Stanford Financial Group) is the only person or entity who filed an objection to the Settlement. The Court has previously overruled objections filed by Mr. Stanford in connection with prior Stanford-related settlements. While Trustmark believes that the Settlement is consistent with the terms of prior Stanford-related settlements that have been approved by the Court and were not successfully appealed, it is possible that the Court may decide not to approve the Settlement Agreement or that the Fifth Circuit Court of Appeals could decide to accept an appeal thereof. The Settlement Agreement provides that Trustmark makes no admission of liability or wrongdoing in connection with any Stanford matter. As has been the case throughout the pendency of the Actions, Trustmark expressly denies any liability or wrongdoing with respect to any matter alleged in regard of the multi-billion-dollar Ponzi scheme operated by Stanford for almost 20 years. Trustmark’s relationship with Stanford consisted of ordinary banking services provided to business deposit customers. Trustmark and Trustmark Corporation determined that it was in the best interest of Trustmark, Trustmark Corporation and the shareholders of Trustmark Corporation to enter into the Settlement and the Settlement Agreement to eliminate the risk, ongoing expense, uncertainty as to ultimate outcome, and imposition on management and the business of Trustmark of further litigation of the Actions and related Stanford claims. As the time of the entry into the Settlement, Trustmark Corporation recognized $100.0 million of litigation settlement expense, as well as an additional $750 thousand in legal fees, which were included in noninterest expense related to the Stanford litigation during the fourth quarter of 2022. Trustmark Corporation expects that the Settlement will be tax deductible. Trustmark remains substantially above levels considered to be well-capitalized under all relevant standards. The foregoing description of the Settlement Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Settlement Agreement, a copy of which was filed as an exhibit to Trustmark Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which was filed on February 16, 2023. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands) (unaudited) Note 2 - Securities Available for Sale and Held to Maturity The following table is a summary of the estimated fair value of securities available for sale and the amortized cost of securities held to maturity: 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 SECURITIES AVAILABLE FOR SALE U.S. Treasury securities $ 386,903 $ 391,513 $ 416,278 $ 419,696 $ 361,822 U.S. Government agency obligations 7,254 7,766 9,116 11,947 12,623 Obligations of states and political subdivisions 4,907 4,862 4,763 5,179 5,359 Mortgage-backed securities Residential mortgage pass-through securities Guaranteed by GNMA 26,851 27,097 28,164 32,240 35,117 Issued by FNMA and FHLMC 1,317,848 1,345,463 1,718,057 1,888,546 2,038,331 Other residential mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 108,192 115,140 126,138 144,158 164,506 Commercial mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 132,207 132,241 141,970 142,598 400,488 Total securities available for sale $ 1,984,162 $ 2,024,082 $ 2,444,486 $ 2,644,364 $ 3,018,246 SECURITIES HELD TO MATURITY U.S. Treasury securities $ 28,486 $ 28,295 $ — $ — $ — Obligations of states and political subdivisions 4,507 4,510 4,512 5,320 7,324 Mortgage-backed securities Residential mortgage pass-through securities Guaranteed by GNMA 4,336 4,442 4,527 4,624 4,831 Issued by FNMA and FHLMC 497,854 509,311 179,375 185,554 192,373 Other residential mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 179,334 188,201 197,923 210,479 224,012 Commercial mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 759,821 759,755 770,648 731,777 179,058 Total securities held to maturity $ 1,474,338 $ 1,494,514 $ 1,156,985 $ 1,137,754 $ 607,598 During the fourth quarter of 2022, Trustmark reclassified $422.9 million of securities available for sale to securities held to maturity. The securities were transferred at fair value, which became the cost basis for the securities held to maturity. At the date of transfer, the net unrealized holding loss on the available for sale securities totaled approximately $57.1 million ($42.8 million, net of tax). The net unrealized holding loss will be amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. There were no gains or losses recognized as a result of the transfer. During the second quarter of 2022, Trustmark reclassified $343.1 million of securities available for sale to securities held to maturity. The securities were transferred at fair value, which became the cost basis for the securities held to maturity. At the date of transfer, the net unrealized holding loss on the available for sale securities totaled approximately $34.8 million ($26.1 million, net of tax). The net unrealized holding loss will be amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. There were no gains or losses recognized as a result of the transfer. At March 31, 2023, the net unamortized, unrealized loss included in accumulated other comprehensive income (loss) in the accompanying balance sheet for securities held to maturity transferred from securities available for sale totaled approximately $88.5 million ($66.3 million, net of tax). Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 99.8% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands) (unaudited) Note 3 – Loan Composition LHFI consisted of the following during the periods presented: LHFI BY TYPE 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Loans secured by real estate: Construction, land development and other land loans $ 1,723,772 $ 1,719,542 $ 1,647,395 $ 1,440,058 $ 1,273,959 Secured by 1-4 family residential properties 2,822,048 2,775,847 2,597,112 2,424,962 2,106,998 Secured by nonfarm, nonresidential properties 3,375,579 3,278,830 3,206,946 3,178,079 2,975,039 Other real estate secured 847,527 742,538 593,119 555,311 715,939 Commercial and industrial loans 1,882,360 1,821,259 1,689,532 1,551,001 1,495,060 Consumer loans 162,911 166,425 163,412 160,716 154,215 State and other political subdivision loans 1,193,727 1,223,863 1,188,703 1,110,795 1,215,023 Other loans 489,271 475,735 499,845 523,918 460,896 LHFI 12,497,195 12,204,039 11,586,064 10,944,840 10,397,129 ACL LHFI (122,239 ) (120,214 ) (115,050 ) (103,140 ) (98,734 ) Net LHFI $ 12,374,956 $ 12,083,825 $ 11,471,014 $ 10,841,700 $ 10,298,395 The following table presents the LHFI composition by region and reflects each region’s diversified mix of loans: March 31, 2023 LHFI - COMPOSITION BY REGION Total Alabama Florida Mississippi (Central and Southern Regions) Tennessee (Memphis, TN and Northern MS Regions) Texas Loans secured by real estate: Construction, land development and other land loans $ 1,723,772 $ 909,783 $ 74,625 $ 333,986 $ 25,741 $ 379,637 Secured by 1-4 family residential properties 2,822,048 135,830 52,395 2,522,951 81,540 29,332 Secured by nonfarm, nonresidential properties 3,375,579 901,613 204,533 1,462,426 161,899 645,108 Other real estate secured 847,527 264,170 1,985 334,758 7,018 239,596 Commercial and industrial loans 1,882,360 557,088 28,068 768,940 272,153 256,111 Consumer loans 162,911 23,109 9,401 99,817 19,172 11,412 State and other political subdivision loans 1,193,727 74,925 62,353 845,902 27,380 183,167 Other loans 489,271 101,083 9,165 262,889 53,156 62,978 Loans $ 12,497,195 $ 2,967,601 $ 442,525 $ 6,631,669 $ 648,059 $ 1,807,341 CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION Lots $ 66,925 $ 31,642 $ 10,281 $ 15,010 $ 2,220 $ 7,772 Development 142,477 74,820 1,379 30,507 6,773 28,998 Unimproved land 103,649 22,480 14,148 31,056 4,754 31,211 1-4 family construction 369,163 212,970 19,447 91,177 11,994 33,575 Other construction 1,041,558 567,871 29,370 166,236 — 278,081 Construction, land development and other land loans $ 1,723,772 $ 909,783 $ 74,625 $ 333,986 $ 25,741 $ 379,637 TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands) (unaudited) Note 3 – Loan Composition (continued) March 31, 2023 Total Alabama Florida Mississippi (Central and Southern Regions) Tennessee (Memphis, TN and Northern MS Regions) Texas LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION Non-owner occupied: Retail $ 347,775 $ 124,551 $ 26,625 $ 113,299 $ 21,143 $ 62,157 Office 292,032 102,166 16,905 105,561 10,255 57,145 Hotel/motel 290,681 168,832 40,506 53,942 27,401 — Mini-storage 154,053 28,261 2,058 104,063 481 19,190 Industrial 333,132 69,107 17,524 105,769 2,774 137,958 Health care 70,317 40,435 — 27,002 340 2,540 Convenience stores 33,226 7,318 592 14,709 582 10,025 Nursing homes/senior living 449,014 152,155 — 202,163 5,423 89,273 Other 125,798 40,814 9,840 53,248 8,696 13,200 Total non-owner occupied loans 2,096,028 733,639 114,050 779,756 77,095 391,488 Owner-occupied: Office 167,317 43,797 36,759 49,046 10,104 27,611 Churches 68,028 15,531 4,592 38,625 6,697 2,583 Industrial warehouses 168,429 17,468 4,644 43,359 16,083 86,875 Health care 144,201 11,397 6,272 105,568 2,323 18,641 Convenience stores 133,875 12,194 21,451 63,187 235 36,808 Retail 94,435 11,194 9,588 44,745 18,987 9,921 Restaurants 55,190 4,247 4,105 31,642 11,931 3,265 Auto dealerships 47,930 6,470 222 23,688 17,550 — Nursing homes/senior living 257,998 32,615 — 199,183 — 26,200 Other 142,148 13,061 2,850 83,627 894 41,716 Total owner-occupied loans 1,279,551 167,974 90,483 682,670 84,804 253,620 Loans secured by nonfarm, nonresidential properties $ 3,375,579 $ 901,613 $ 204,533 $ 1,462,426 $ 161,899 $ 645,108 Note 4 – Yields on Earning Assets and Interest-Bearing Liabilities The following table illustrates the yields on earning assets by category as well as the rates paid on interest-bearing liabilities on a tax equivalent basis: Quarter Ended 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Securities – taxable 1.85 % 1.71 % 1.62 % 1.50 % 1.37 % Securities – nontaxable 4.00 % 3.95 % 3.97 % 4.00 % 3.97 % Securities – total 1.86 % 1.72 % 1.63 % 1.50 % 1.38 % PPP loans — 12.39 % 7.51 % 4.16 % 2.35 % Loans - LHFI & LHFS 5.79 % 5.27 % 4.48 % 3.79 % 3.58 % Loans - total 5.79 % 5.27 % 4.48 % 3.79 % 3.58 % Fed funds sold & reverse repurchases 5.11 % 4.29 % 3.51 % 3.65 % — Other earning assets 4.09 % 3.76 % 1.82 % 0.78 % 0.18 % Total earning assets 4.87 % 4.40 % 3.71 % 3.01 % 2.69 % Interest-bearing deposits 1.53 % 0.71 % 0.20 % 0.11 % 0.11 % Fed funds purchased & repurchases 4.49 % 3.44 % 1.95 % 0.24 % 0.13 % Other borrowings 4.87 % 3.73 % 2.89 % 2.52 % 2.26 % Total interest-bearing liabilities 1.98 % 1.03 % 0.31 % 0.17 % 0.16 % Total Deposits 1.13 % 0.51 % 0.14 % 0.07 % 0.07 % Net interest margin 3.39 % 3.66 % 3.50 % 2.90 % 2.58 % Net interest margin excluding PPP loans and the FRB balance 3.36 % 3.66 % 3.53 % 3.06 % 2.88 % TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands) (unaudited) Note 4 – Yields on Earning Assets and Interest-Bearing Liabilities (continued) Reflected in the table above are yields on earning assets and liabilities, along with the net interest margin which equals reported net interest income-FTE, annualized, as a percent of average earning assets. In addition, the table includes net interest margin excluding PPP loans and the balance held at the Federal Reserve Bank of Atlanta (FRB), which equals reported net interest income-FTE excluding interest income on PPP loans and the FRB balance, annualized, as a percent of average earning assets excluding average PPP loans and the FRB balance. At March 31, 2023 and December 31, 2022, the average FRB balance totaled $555.5 million and $299.2 million, respectively, and is included in other earning assets in the accompanying average consolidated balance sheets. The net interest margin excluding PPP loans and the FRB balance decreased 30 basis points when compared to the fourth quarter of 2022, totaling 3.36% for the first quarter of 2023. The decrease in the net interest margin excluding PPP loans and the FRB balance was due to increased costs of interest-bearing deposits, which was partially offset by increases in the yields on the loans held for investment and held for sale portfolio and the securities portfolio. Note 5 – Mortgage Banking Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that offsets the changes in fair value of mortgage servicing rights (MSR) attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under generally accepted accounting principles (GAAP). Changes in the fair value of these exchange-traded derivative instruments, including administrative costs, are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of the MSR. The MSR fair value represents the present value of future cash flows, which among other things includes decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the change in value of hedge instruments to the change in the fair value of the MSR asset attributable to changes in interest rates and other market driven changes in valuation inputs and assumptions. The impact of this strategy resulted in a net negative ineffectiveness of $1.8 million during the first quarter of 2023. The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements: Quarter Ended 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Mortgage servicing income, net $ 6,785 $ 6,636 $ 6,669 $ 6,557 $ 6,429 Change in fair value-MSR from runoff (1,145 ) (2,981 ) (3,462 ) (3,806 ) (3,785 ) Gain on sales of loans, net 3,797 3,328 4,597 6,030 6,223 Mortgage banking income before hedge ineffectiveness 9,437 6,983 7,804 8,781 8,867 Change in fair value-MSR from market changes (3,972 ) (3,348 ) 10,770 8,739 22,020 Change in fair value of derivatives 2,174 (227 ) (11,698 ) (9,371 ) (21,014 ) Net positive (negative) hedge ineffectiveness (1,798 ) (3,575 ) (928 ) (632 ) 1,006 Mortgage banking, net $ 7,639 $ 3,408 $ 6,876 $ 8,149 $ 9,873 TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands) (unaudited) Note 6 – Other Noninterest Income and Expense Other noninterest income consisted of the following for the periods presented: Quarter Ended 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Partnership amortization for tax credit purposes $ (1,961 ) $ (1,869 ) $ (1,531 ) $ (1,475 ) $ (1,336 ) Increase in life insurance cash surrender value 1,693 1,687 1,676 1,683 1,627 Other miscellaneous income 2,782 2,493 2,273 1,699 2,915 Total other, net $ 2,514 $ 2,311 $ 2,418 $ 1,907 $ 3,206 Trustmark invests in partnerships that provide income tax credits on a Federal and/or State basis (i.e., new market tax credits, low-income housing tax credits and historical tax credits). The income tax credits related to these partnerships are utilized as specifically allowed by income tax law and are recorded as a reduction in income tax expense. Other noninterest expense consisted of the following for the periods presented: Quarter Ended 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Loan expense (1) $ 2,538 $ 2,908 $ 2,866 $ 2,947 $ 3,528 Amortization of intangibles 288 312 312 328 482 FDIC assessment expense 2,370 2,130 1,945 1,810 1,500 Other real estate expense, net 172 18 497 623 35 Other miscellaneous expense 9,443 9,767 8,117 7,782 7,935 Total other expense (1) $ 14,811 $ 15,135 $ 13,737 $ 13,490 $ 13,480 (1) During the first quarter of 2023, Trustmark reclassified its debit card transaction fees from other expense to services and fees. Prior periods have been reclassified accordingly. Note 7 – Non-GAAP Financial Measures In addition to capital ratios defined by GAAP and banking regulators, Trustmark utilizes various tangible common equity measures when evaluating capital utilization and adequacy. Tangible common equity, as defined by Trustmark, represents common equity less goodwill and identifiable intangible assets. Trustmark’s Common Equity Tier 1 capital includes common stock, capital surplus and retained earnings, and is reduced by goodwill and other intangible assets, net of associated net deferred tax liabilities as well as disallowed deferred tax assets and threshold deductions as applicable. Trustmark believes these measures are important because they reflect the level of capital available to withstand unexpected market conditions. Additionally, presentation of these measures allows readers to compare certain aspects of Trustmark’s capitalization to other organizations. These ratios differ from capital measures defined by banking regulators principally in that the numerator excludes shareholders’ equity associated with preferred securities, the nature and extent of which varies across organizations. In Management’s experience, many stock analysts use tangible common equity measures in conjunction with more traditional bank capital ratios to compare capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, typically stemming from the use of the purchase accounting method in accounting for mergers and acquisitions. These calculations are intended to complement the capital ratios defined by GAAP and banking regulators. Because GAAP does not include these capital ratio measures, Trustmark believes there are no comparable GAAP financial measures to these tangible common equity ratios. Despite the importance of these measures to Trustmark, there are no standardized definitions for them and, as a result, Trustmark’s calculations may not be comparable with other organizations. Also, there may be limits in the usefulness of these measures to investors. As a result, Trustmark encourages readers to consider its audited consolidated financial statements and the notes related thereto in their entirety and not to rely on any single financial measure. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands except per share data) (unaudited) Note 7 – Non-GAAP Financial Measures (continued) Quarter Ended 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 TANGIBLE EQUITY AVERAGE BALANCES Total shareholders' equity $ 1,523,828 $ 1,493,291 $ 1,606,469 $ 1,608,309 $ 1,713,752 Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) Identifiable intangible assets (3,523 ) (3,816 ) (4,131 ) (4,436 ) (4,879 ) Total average tangible equity $ 1,136,068 $ 1,105,238 $ 1,218,101 $ 1,219,636 $ 1,324,636 PERIOD END BALANCES Total shareholders' equity $ 1,562,099 $ 1,492,268 $ 1,508,945 $ 1,586,696 $ 1,631,382 Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) Identifiable intangible assets (3,352 ) (3,640 ) (3,952 ) (4,264 ) (4,591 ) Total tangible equity (a) $ 1,174,510 $ 1,104,391 $ 1,120,756 $ 1,198,195 $ 1,242,554 TANGIBLE ASSETS Total assets $ 18,877,178 $ 18,015,478 $ 17,190,634 $ 16,951,510 $ 17,441,551 Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) Identifiable intangible assets (3,352 ) (3,640 ) (3,952 ) (4,264 ) (4,591 ) Total tangible assets (b) $ 18,489,589 $ 17,627,601 $ 16,802,445 $ 16,563,009 $ 17,052,723 Risk-weighted assets (c) $ 14,793,893 $ 14,521,078 $ 13,748,819 $ 13,076,981 $ 12,691,545 NET INCOME (LOSS) ADJUSTED FOR INTANGIBLE AMORTIZATION Net income (loss) $ 50,300 $ (34,063 ) $ 42,455 $ 34,284 $ 29,211 Plus: Intangible amortization net of tax 216 234 234 246 362 Net income (loss) adjusted for intangible amortization $ 50,516 $ (33,829 ) $ 42,689 $ 34,530 $ 29,573 Period end common shares outstanding (d) 61,048,516 60,977,686 60,953,864 61,201,123 61,463,392 TANGIBLE COMMON EQUITY MEASUREMENTS Return on average tangible equity (1) 18.03 % -12.14 % 13.90 % 11.36 % 9.05 % Tangible equity/tangible assets (a)/(b) 6.35 % 6.27 % 6.67 % 7.23 % 7.29 % Tangible equity/risk-weighted assets (a)/(c) 7.94 % 7.61 % 8.15 % 9.16 % 9.79 % Tangible book value (a)/(d)*1,000 $ 19.24 $ 18.11 $ 18.39 $ 19.58 $ 20.22 COMMON EQUITY TIER 1 CAPITAL (CET1) Total shareholders' equity $ 1,562,099 $ 1,492,268 $ 1,508,945 $ 1,586,696 $ 1,631,382 CECL transition adjustment 13,000 19,500 19,500 19,500 19,500 AOCI-related adjustments 242,381 275,403 306,412 207,142 148,656 CET1 adjustments and deductions: Goodwill net of associated deferred tax liabilities (DTLs) (370,234 ) (370,241 ) (370,217 ) (370,229 ) (370,240 ) Other adjustments and deductions for CET1 (2) (3,275 ) (3,258 ) (3,506 ) (3,757 ) (4,015 ) CET1 capital (e) 1,443,971 1,413,672 1,461,134 1,439,352 1,425,283 Additional tier 1 capital instruments plus related surplus 60,000 60,000 60,000 60,000 60,000 Tier 1 capital $ 1,503,971 $ 1,473,672 $ 1,521,134 $ 1,499,352 $ 1,485,283 Common equity tier 1 capital ratio (e)/(c) 9.76 % 9.74 % 10.63 % 11.01 % 11.23 % (1) Calculation = ((net income (loss) adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity. (2) Includes other intangible assets, net of DTLs, disallowed deferred tax assets (DTAs), threshold deductions and transition adjustments, as applicable. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands) (unaudited) Note 7 – Non-GAAP Financial Measures (continued) Trustmark discloses certain non-GAAP financial measures because Management uses these measures for business planning purposes, including to manage Trustmark’s business against internal projected results of operations and to measure Trustmark’s performance. Trustmark views these as measures of our core operating business, which exclude the impact of the items detailed below, as these items are generally not operational in nature. These non-GAAP financial measures also provide another basis for comparing period-to-period results as presented in the accompanying selected financial data table and the audited consolidated financial statements by excluding potential differences caused by non-operational and unusual or non-recurring items. Readers are cautioned that these adjustments are not permitted under GAAP. Trustmark encourages readers to consider its consolidated financial statements and the notes related thereto in their entirety, and not to rely on any single financial measure. The following table presents pre-provision net revenue (PPNR) during the periods presented: Quarter Ended 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Net interest income (GAAP) $ 137,595 $ 146,583 $ 136,105 $ 112,676 $ 99,344 Noninterest income (GAAP) 51,377 45,170 52,606 53,253 54,115 Pre-provision revenue (a) $ 188,972 $ 191,753 $ 188,711 $ 165,929 $ 153,459 Noninterest expense (GAAP) $ 128,327 $ 231,229 $ 126,698 $ 123,767 $ 121,519 Less: Litigation settlement expense — (100,750 ) — — — Adjusted noninterest expense - PPNR (Non-GAAP) (b) $ 128,327 $ 130,479 $ 126,698 $ 123,767 $ 121,519 PPNR (Non-GAAP) (a)-(b) $ 60,645 $ 61,274 $ 62,013 $ 42,162 $ 31,940 The following table presents Trustmark’s calculation of its efficiency ratio for the periods presented: Quarter Ended 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Total noninterest expense (GAAP) $ 128,327 $ 231,229 $ 126,698 $ 123,767 $ 121,519 Less: Other real estate expense, net (172 ) (18 ) (497 ) (623 ) (35 ) Amortization of intangibles (288 ) (312 ) (312 ) (328 ) (482 ) Charitable contributions resulting in state tax credits (325 ) (375 ) (375 ) (375 ) (375 ) Litigation settlement expense — (100,750 ) — — — Adjusted noninterest expense (Non-GAAP) (c) $ 127,542 $ 129,774 $ 125,514 $ 122,441 $ 120,627 Net interest income (GAAP) $ 137,595 $ 146,583 $ 136,105 $ 112,676 $ 99,344 Add: Tax equivalent adjustment 3,477 3,451 2,975 2,916 3,003 Net interest income-FTE (Non-GAAP) (a) $ 141,072 $ 150,034 $ 139,080 $ 115,592 $ 102,347 Noninterest income (GAAP) $ 51,377 $ 45,170 $ 52,606 $ 53,253 $ 54,115 Add: Partnership amortization for tax credit purposes 1,961 1,869 1,531 1,475 1,336 Adjusted noninterest income (Non-GAAP) (b) $ 53,338 $ 47,039 $ 54,137 $ 54,728 $ 55,451 Adjusted revenue (Non-GAAP) (a)+(b) $ 194,410 $ 197,073 $ 193,217 $ 170,320 $ 157,798 Efficiency ratio (Non-GAAP) (c)/((a)+(b)) 65.60 % 65.85 % 64.96 % 71.89 % 76.44 % View source version on businesswire.com: https://www.businesswire.com/news/home/20230425005438/en/Contacts Trustmark Investor Contacts: Thomas C. Owens Treasurer and Principal Financial Officer 601-208-7853 F. Joseph Rein, Jr. Senior Vice President 601-208-6898 Trustmark Media Contact: Melanie A. Morgan Senior Vice President 601-208-2979 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Trustmark Corporation Announces First Quarter 2023 Financial Results By: Trustmark Corporation via Business Wire April 25, 2023 at 16:30 PM EDT Loan and Deposit Growth Continues, Credit Quality Remains Strong, Mortgage Banking, Insurance and Wealth Management Revenue Expands Trustmark Corporation (NASDAQGS:TRMK) reported net income of $50.3 million in the first quarter of 2023, representing diluted earnings per share of $0.82. Trustmark’s performance during the first quarter produced a return on average tangible equity of 18.03% and a return on average assets of 1.10%. The Board of Directors declared a quarterly cash dividend of $0.23 per share payable June 15, 2023, to shareholders of record on June 1, 2023. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230425005438/en/ Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/53386997/en First Quarter Highlights Loan and deposit growth continued during the first quarter Credit quality remained strong Noninterest income increased linked-quarter, reflecting the strength of diversified business lines Expense discipline continued, noninterest expense decreased linked-quarter Duane A. Dewey, President and CEO, stated, “Our first quarter financial performance reflects solid loan and deposit growth, strong performance in our mortgage, insurance and wealth management businesses, and diligent expense management. Our overall strong performance was impacted by increasingly competitive deposit costs during the quarter, which compressed our net interest margin. Trustmark has a strong, diversified and proven business model that has stood the test of time. We remain well-positioned and committed to meeting our customers’ needs despite the challenging financial services environment. Our balance sheet is well-positioned for additional increases in interest rates and credit quality remains solid. We continue to focus on efficiency enhancements throughout the organization as well as investments in technology to better serve customers.” Balance Sheet Management Loans held for investment (HFI) increased $293.2 million, or 2.4%, during the quarter Total deposits increased $346.0 million, or 2.4%, during the quarter Maintained strong capital position with CET1 ratio of 9.76% and total risk-based capital ratio of 11.95% Loans HFI totaled $12.5 billion at March 31, 2023, reflecting an increase of $293.2 million, or 2.4%, linked-quarter and $2.1 billion, or 20.2%, year-over-year. The linked-quarter growth was broad-based and reflected increases in all categories with the exception of state and political subdivisions and consumer loans. Trustmark’s loan portfolio remains well-diversified by loan type and geography. Deposits totaled $14.8 billion at March 31, 2023, up $346.0 million, or 2.4%, from the prior quarter and down $329.6 million, or 2.2%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 84.5% of total deposits at March 31, 2023. Migration into higher-yielding products continued to drive a change in deposit mix from noninterest-bearing deposits, which represented 25.7% of total deposits at March 31, 2023. Interest-bearing deposit costs totaled 1.53% for the first quarter, while the total cost of deposits was 1.13%. The total cost of interest-bearing liabilities was 1.98% for the first quarter of 2023. During the first quarter, Trustmark did not repurchase any of its outstanding common shares. As previously announced, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2023, under which $50.0 million of Trustmark’s outstanding shares may be acquired through December 31, 2023. At March 31, 2023, Trustmark’s tangible equity to tangible assets ratio was 6.35%, while the total risk-based capital ratio was 11.95%. Tangible book value per share was $19.24 at March 31, 2023, an increase of 6.2% from the prior quarter. Credit Quality Nonperforming assets represented 0.58% of loans HFI and loans held for sale (HFS) at March 31, 2023 Net charge-offs totaled 0.04% of average loans in the first quarter Allowance for credit losses (ACL) represented 0.98% of loans HFI and 320.80% of nonaccrual loans, excluding individually analyzed loans at March 31, 2023 Nonaccrual loans totaled $72.4 million at March 31, 2023, up $6.4 million from the prior quarter and an increase of $8.0 million year-over-year. Other real estate totaled $1.7 million, reflecting a $302 thousand decrease from the prior quarter and a $1.5 million decline from the prior year. The provision for credit losses for loans HFI was $3.2 million in the first quarter and was primarily attributable to loan growth. The provision for credit losses for off-balance sheet credit exposures was a negative $2.2 million primarily driven by decreases in unfunded commitments. Collectively, the provision for credit losses totaled $1.0 million in the first quarter compared to $12.1 million in the prior quarter and a negative $2.0 million in the first quarter of 2022. Allocation of Trustmark’s $122.2 million ACL on loans HFI represented 0.80% of commercial loans and 1.54% of consumer and home mortgage loans, resulting in an ACL to total loans HFI of 0.98% at March 31, 2023. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio. Revenue Generation Noninterest income increased 13.7% linked-quarter to total $51.4 million, reflecting growth in mortgage banking, insurance and wealth management revenue Net interest income (FTE) totaled $141.1 million in the first quarter, down 6.0% linked-quarter Revenue in the first quarter totaled $189.0 million, a decline of 1.5% from the prior quarter and an increase of 23.1% from the same quarter in the prior year. The linked-quarter decline primarily reflects lower net interest income offset in part by higher mortgage banking, insurance and wealth management revenue while the year-over-year growth is attributed to higher net interest income offset in part by reduced mortgage banking revenue. Net interest income (FTE) in the first quarter totaled $141.1 million, resulting in a net interest margin of 3.39%, down 27 basis points from the prior quarter. The contraction of the net interest margin was primarily due to the costs of interest-bearing deposits more than offsetting the increased yields on the loans HFI and HFS portfolio and securities portfolio. Additionally, the margin was impacted by costs associated with the approximately $300 million increase in average on-balance sheet liquidity added during the quarter due to the uncertainty in the broader banking industry. Noninterest income in the first quarter totaled $51.4 million, an increase of $6.2 million, or 13.7%, from the prior quarter and a decrease of $2.7 million, or 5.1%, year-over-year. The linked-quarter increases in mortgage banking, insurance, and wealth management revenue were offset in part by declines in service charges on deposit accounts and bank card and other fees. The decrease in noninterest income year-over-year is principally due to lower mortgage banking revenue. Mortgage loan production in the first quarter totaled $361.1 million, down 7.6% from the prior quarter and 33.7% year-over-year. Mortgage banking revenue totaled $7.6 million in the first quarter, an increase of $4.2 million linked-quarter and a decrease of $2.2 million year-over-year. The linked-quarter increase was principally attributable to a decrease in net negative hedge ineffectiveness as well as a decline in runoff of mortgage servicing rights while the year-over-year decline was principally due to a decrease in net hedge ineffectiveness. Insurance revenue totaled $14.3 million in the first quarter, up $2.3 million, or 19.0%, from the prior quarter and $216 thousand, or 1.5%, year-over-year. The linked-quarter and year-over-year increases primarily reflected growth in commercial property and casualty commissions. Wealth management revenue in the first quarter totaled $8.8 million, an increase of $701 thousand, or 8.7%, from the prior quarter and a decline of $274 thousand, or 3.0%, year-over-year. The linked-quarter growth reflected higher trust management revenue while the year-over-year decline reflected reduced brokerage revenue. Noninterest Expense Salaries and employee benefits expense increased $587 thousand, or 0.8%, linked-quarter Services and fees declined $2.3 million, or 8.2%, linked-quarter Adjusted noninterest expense, which excludes ORE expense, amortization of intangibles, charitable contributions resulting in state tax credits, and litigation settlement expense totaled $127.5 million in the first quarter, down 1.7% from the prior quarter. Please refer to the Consolidated Financial Information, Note 7 – Non-GAAP Financial Measures Noninterest expense in the first quarter totaled $128.3 million, a decrease of $2.2 million, or 1.6%, when compared to the prior quarter excluding the litigation settlement expense. Salaries and employee benefits increased $587 thousand linked-quarter as declines in salaries and commissions were more than offset by a seasonal increase in payroll taxes. Services and fees declined $2.3 million, or 8.2%, principally due to lower professional fees. FIT2GROW “In 2022 we announced FIT2GROW, a comprehensive program of Focus, Innovation and Transformation designed to enhance Trustmark’s ability to grow and serve customers. During the first quarter, we refocused our community bank efforts on commercial, small business, and consumer lines of business to provide additional expertise for our customers and enhance profitable revenue growth. We continue to rollout new technology to enhance the customer experience and improve efficiency and productivity. Additionally, our Atlanta loan production office is now fully functioning and is focused on Commercial Real Estate, Residential Real Estate, Corporate Banking, and Equipment Finance. We look forward to the contributions of these businesses to our financial results going forward,” said Dewey. Additional Information As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, April 26, 2023, at 8:30 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (877) 317-3051 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Wednesday, May 10, 2023, in archived format at the same web address or by calling (877) 344-7529, passcode 2946740. Trustmark is a financial services company providing banking and financial solutions through offices in Alabama, Florida, Georgia, Mississippi, Tennessee and Texas. Forward-Looking Statements Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “project,” “potential,” “seek,” “continue,” “could,” “would,” “future” or the negative of those terms or other words of similar meaning. You should read statements that contain these words carefully because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements include, but are not limited to, statements relating to anticipated future operating and financial performance measures, including net interest margin, credit quality, business initiatives, growth opportunities and growth rates, among other things, and encompass any estimate, prediction, expectation, projection, opinion, anticipation, outlook or statement of belief included therein as well as the management assumptions underlying these forward-looking statements. You should be aware that the occurrence of the events described under the caption “Risk Factors” in Trustmark’s filings with the Securities and Exchange Commission (SEC) could have an adverse effect on our business, results of operations and financial condition. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected. Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels and slowdowns in economic growth, actions by the Board of Governors of the Federal Reserve System (FRB) that impact the level of market interest rates, local, state and national economic and market conditions, conditions in the housing and real estate markets in the regions in which Trustmark operates and the extent and duration of the current volatility in the credit and financial markets, levels of and volatility in crude oil prices, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility of market interest rates, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, including the potential impact of issues related to the European financial system and monetary and other governmental actions designed to address credit, securities, and/or commodity markets, the enactment of legislation and changes in existing regulations or enforcement practices or the adoption of new regulations, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, changes in our ability to control expenses, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, cyber-attacks and other breaches which could affect our information system security, natural disasters, environmental disasters, pandemics or other health crises, acts of war or terrorism, and other risks described in our filings with the SEC. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Except as required by law, we undertake no obligation to update or revise any of this information, whether as the result of new information, future events or developments or otherwise. TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands) (unaudited) Linked Quarter Year over Year QUARTERLY AVERAGE BALANCES 3/31/2023 12/31/2022 3/31/2022 $ Change % Change $ Change % Change Securities AFS-taxable (1) $ 2,187,121 $ 2,572,675 $ 3,245,502 $ (385,554 ) -15.0 % $ (1,058,381 ) -32.6 % Securities AFS-nontaxable 4,812 4,828 5,127 (16 ) -0.3 % (315 ) -6.1 % Securities HTM-taxable (1) 1,479,283 1,268,952 410,851 210,331 16.6 % 1,068,432 n/m Securities HTM-nontaxable 4,509 4,514 7,327 (5 ) -0.1 % (2,818 ) -38.5 % Total securities 3,675,725 3,850,969 3,668,807 (175,244 ) -4.6 % 6,918 0.2 % Paycheck protection program loans (PPP) — 3,235 29,009 (3,235 ) -100.0 % (29,009 ) -100.0 % Loans (includes loans held for sale) 12,530,449 12,006,661 10,550,712 523,788 4.4 % 1,979,737 18.8 % Fed funds sold and reverse repurchases 2,379 6,566 56 (4,187 ) -63.8 % 2,323 n/m Other earning assets 647,760 375,190 1,811,713 272,570 72.6 % (1,163,953 ) -64.2 % Total earning assets 16,856,313 16,242,621 16,060,297 613,692 3.8 % 796,016 5.0 % Allowance for credit losses (ACL), loans heldfor investment (LHFI) (119,978 ) (114,948 ) (99,390 ) (5,030 ) -4.4 % (20,588 ) -20.7 % Other assets 1,762,449 1,630,085 1,550,848 132,364 8.1 % 211,601 13.6 % Total assets $ 18,498,784 $ 17,757,758 $ 17,511,755 $ 741,026 4.2 % $ 987,029 5.6 % Interest-bearing demand deposits $ 4,751,154 $ 4,719,303 $ 4,429,056 $ 31,851 0.7 % $ 322,098 7.3 % Savings deposits 4,193,764 4,379,673 4,791,104 (185,909 ) -4.2 % (597,340 ) -12.5 % Time deposits 1,907,449 1,152,905 1,193,435 754,544 65.4 % 714,014 59.8 % Total interest-bearing deposits 10,852,367 10,251,881 10,413,595 600,486 5.9 % 438,772 4.2 % Fed funds purchased and repurchases 436,535 549,406 212,006 (112,871 ) -20.5 % 224,529 n/m Other borrowings 1,110,843 530,993 91,090 579,850 n/m 1,019,753 n/m Subordinated notes 123,281 123,226 123,061 55 0.0 % 220 0.2 % Junior subordinated debt securities 61,856 61,856 61,856 — 0.0 % — 0.0 % Total interest-bearing liabilities 12,584,882 11,517,362 10,901,608 1,067,520 9.3 % 1,683,274 15.4 % Noninterest-bearing deposits 3,813,248 4,177,113 4,601,108 (363,865 ) -8.7 % (787,860 ) -17.1 % Other liabilities 576,826 569,992 295,287 6,834 1.2 % 281,539 95.3 % Total liabilities 16,974,956 16,264,467 15,798,003 710,489 4.4 % 1,176,953 7.5 % Shareholders' equity 1,523,828 1,493,291 1,713,752 30,537 2.0 % (189,924 ) -11.1 % Total liabilities and equity $ 18,498,784 $ 17,757,758 $ 17,511,755 $ 741,026 4.2 % $ 987,029 5.6 % (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands) (unaudited) Linked Quarter Year over Year PERIOD END BALANCES 3/31/2023 12/31/2022 3/31/2022 $ Change % Change $ Change % Change Cash and due from banks $ 1,297,144 $ 734,787 $ 1,917,564 $ 562,357 76.5 % $ (620,420 ) -32.4 % Fed funds sold and reverse repurchases — 4,000 — (4,000 ) -100.0 % — n/m Securities available for sale (1) 1,984,162 2,024,082 3,018,246 (39,920 ) -2.0 % (1,034,084 ) -34.3 % Securities held to maturity (1) 1,474,338 1,494,514 607,598 (20,176 ) -1.4 % 866,740 n/m PPP loans — — 18,579 — n/m (18,579 ) -100.0 % Loans held for sale (LHFS) 175,926 135,226 222,538 40,700 30.1 % (46,612 ) -20.9 % Loans held for investment (LHFI) 12,497,195 12,204,039 10,397,129 293,156 2.4 % 2,100,066 20.2 % ACL LHFI (122,239 ) (120,214 ) (98,734 ) (2,025 ) -1.7 % (23,505 ) -23.8 % Net LHFI 12,374,956 12,083,825 10,298,395 291,131 2.4 % 2,076,561 20.2 % Premises and equipment, net 223,975 212,365 207,301 11,610 5.5 % 16,674 8.0 % Mortgage servicing rights 127,206 129,677 111,050 (2,471 ) -1.9 % 16,156 14.5 % Goodwill 384,237 384,237 384,237 — 0.0 % — 0.0 % Identifiable intangible assets 3,352 3,640 4,591 (288 ) -7.9 % (1,239 ) -27.0 % Other real estate 1,684 1,986 3,187 (302 ) -15.2 % (1,503 ) -47.2 % Operating lease right-of-use assets 35,315 36,301 34,048 (986 ) -2.7 % 1,267 3.7 % Other assets 794,883 770,838 614,217 24,045 3.1 % 180,666 29.4 % Total assets $ 18,877,178 $ 18,015,478 $ 17,441,551 $ 861,700 4.8 % $ 1,435,627 8.2 % Deposits: Noninterest-bearing $ 3,797,055 $ 4,093,771 $ 4,739,102 $ (296,716 ) -7.2 % $ (942,047 ) -19.9 % Interest-bearing 10,986,606 10,343,877 10,374,190 642,729 6.2 % 612,416 5.9 % Total deposits 14,783,661 14,437,648 15,113,292 346,013 2.4 % (329,631 ) -2.2 % Fed funds purchased and repurchases 477,980 449,331 170,499 28,649 6.4 % 307,481 n/m Other borrowings 1,485,181 1,050,938 84,644 434,243 41.3 % 1,400,537 n/m Subordinated notes 123,317 123,262 123,097 55 0.0 % 220 0.2 % Junior subordinated debt securities 61,856 61,856 61,856 — 0.0 % — 0.0 % ACL on off-balance sheet credit exposures 34,596 36,838 34,517 (2,242 ) -6.1 % 79 0.2 % Operating lease liabilities 37,988 38,932 35,912 (944 ) -2.4 % 2,076 5.8 % Other liabilities 310,500 324,405 186,352 (13,905 ) -4.3 % 124,148 66.6 % Total liabilities 17,315,079 16,523,210 15,810,169 791,869 4.8 % 1,504,910 9.5 % Common stock 12,720 12,705 12,806 15 0.1 % (86 ) -0.7 % Capital surplus 155,297 154,645 167,094 652 0.4 % (11,797 ) -7.1 % Retained earnings 1,636,463 1,600,321 1,600,138 36,142 2.3 % 36,325 2.3 % Accumulated other comprehensiveincome (loss), net of tax (242,381 ) (275,403 ) (148,656 ) 33,022 12.0 % (93,725 ) -63.0 % Total shareholders' equity 1,562,099 1,492,268 1,631,382 69,831 4.7 % (69,283 ) -4.2 % Total liabilities and equity $ 18,877,178 $ 18,015,478 $ 17,441,551 $ 861,700 4.8 % $ 1,435,627 8.2 % (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands except per share data) (unaudited) Quarter Ended Linked Quarter Year over Year INCOME STATEMENTS 3/31/2023 12/31/2022 3/31/2022 $ Change % Change $ Change % Change Interest and fees on LHFS & LHFI-FTE $ 178,967 $ 159,566 $ 93,252 $ 19,401 12.2 % $ 85,715 91.9 % Interest and fees on PPP loans — 101 168 (101 ) -100.0 % (168 ) -100.0 % Interest on securities-taxable 16,761 16,577 12,357 184 1.1 % 4,404 35.6 % Interest on securities-tax exempt-FTE 92 93 122 (1 ) -1.1 % (30 ) -24.6 % Interest on fed funds sold and reverserepurchases 30 71 — (41 ) -57.7 % 30 n/m Other interest income 6,527 3,556 817 2,971 83.5 % 5,710 n/m Total interest income-FTE 202,377 179,964 106,716 22,413 12.5 % 95,661 89.6 % Interest on deposits 40,898 18,438 2,760 22,460 n/m 38,138 n/m Interest on fed funds purchased and repurchases 4,832 4,762 70 70 1.5 % 4,762 n/m Other interest expense 15,575 6,730 1,539 8,845 n/m 14,036 n/m Total interest expense 61,305 29,930 4,369 31,375 n/m 56,936 n/m Net interest income-FTE 141,072 150,034 102,347 (8,962 ) -6.0 % 38,725 37.8 % Provision for credit losses, LHFI 3,244 6,902 (860 ) (3,658 ) -53.0 % 4,104 n/m Provision for credit losses, off-balance sheetcredit exposures (2,242 ) 5,215 (1,106 ) (7,457 ) n/m (1,136 ) n/m Net interest income after provision-FTE 140,070 137,917 104,313 2,153 1.6 % 35,757 34.3 % Service charges on deposit accounts 10,336 11,162 9,451 (826 ) -7.4 % 885 9.4 % Bank card and other fees 7,803 8,191 8,442 (388 ) -4.7 % (639 ) -7.6 % Mortgage banking, net 7,639 3,408 9,873 4,231 n/m (2,234 ) -22.6 % Insurance commissions 14,305 12,019 14,089 2,286 19.0 % 216 1.5 % Wealth management 8,780 8,079 9,054 701 8.7 % (274 ) -3.0 % Other, net 2,514 2,311 3,206 203 8.8 % (692 ) -21.6 % Total noninterest income 51,377 45,170 54,115 6,207 13.7 % (2,738 ) -5.1 % Salaries and employee benefits 74,056 73,469 69,585 587 0.8 % 4,471 6.4 % Services and fees (2) 25,426 27,709 25,314 (2,283 ) -8.2 % 112 0.4 % Net occupancy-premises 7,629 7,898 7,079 (269 ) -3.4 % 550 7.8 % Equipment expense 6,405 6,268 6,061 137 2.2 % 344 5.7 % Litigation settlement expense (1) — 100,750 — (100,750 ) -100.0 % — n/m Other expense (2) 14,811 15,135 13,480 (324 ) -2.1 % 1,331 9.9 % Total noninterest expense 128,327 231,229 121,519 (102,902 ) -44.5 % 6,808 5.6 % Income (loss) before income taxes and tax eq adj 63,120 (48,142 ) 36,909 111,262 n/m 26,211 71.0 % Tax equivalent adjustment 3,477 3,451 3,003 26 0.8 % 474 15.8 % Income (loss) before income taxes 59,643 (51,593 ) 33,906 111,236 n/m 25,737 75.9 % Income taxes 9,343 (17,530 ) 4,695 26,873 n/m 4,648 99.0 % Net income (loss) $ 50,300 $ (34,063 ) $ 29,211 $ 84,363 n/m $ 21,089 72.2 % Per share data Earnings (loss) per share - basic $ 0.82 $ (0.56 ) $ 0.47 $ 1.38 n/m $ 0.35 74.5 % Earnings (loss) per share - diluted $ 0.82 $ (0.56 ) $ 0.47 $ 1.38 n/m $ 0.35 74.5 % Dividends per share $ 0.23 $ 0.23 $ 0.23 — 0.0 % — 0.0 % Weighted average shares outstanding Basic 61,011,059 60,969,400 61,514,395 Diluted 61,193,275 61,173,249 61,709,797 Period end shares outstanding 61,048,516 60,977,686 61,463,392 (1) See Note 1 - Litigation Settlement in the Notes to Consolidated Financials for additional information. (2) During the first quarter of 2023, Trustmark reclassified its debit card transaction fees from other expense to services and fees. Prior periods have been reclassified accordingly. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands) (unaudited) Quarter Ended Linked Quarter Year over Year NONPERFORMING ASSETS (1) 3/31/2023 12/31/2022 3/31/2022 $ Change % Change $ Change % Change Nonaccrual LHFI Alabama $ 10,919 $ 12,300 $ 7,506 $ (1,381 ) -11.2 % $ 3,413 45.5 % Florida 256 227 310 29 12.8 % (54 ) -17.4 % Mississippi (2) 32,560 24,683 21,318 7,877 31.9 % 11,242 52.7 % Tennessee (3) 5,416 5,566 9,266 (150 ) -2.7 % (3,850 ) -41.5 % Texas 23,224 23,196 25,999 28 0.1 % (2,775 ) -10.7 % Total nonaccrual LHFI 72,375 65,972 64,399 6,403 9.7 % 7,976 12.4 % Other real estate Alabama — 194 — (194 ) -100.0 % — n/m Mississippi (2) 1,495 1,769 3,187 (274 ) -15.5 % (1,692 ) -53.1 % Tennessee (3) 189 23 — 166 n/m 189 n/m Total other real estate 1,684 1,986 3,187 (302 ) -15.2 % (1,503 ) -47.2 % Total nonperforming assets $ 74,059 $ 67,958 $ 67,586 $ 6,101 9.0 % $ 6,473 9.6 % LOANS PAST DUE OVER 90 DAYS (1) LHFI $ 2,255 $ 3,929 $ 1,503 $ (1,674 ) -42.6 % $ 752 50.0 % LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase) $ 41,468 $ 49,320 $ 62,078 $ (7,852 ) -15.9 % $ (20,610 ) -33.2 % Quarter Ended Linked Quarter Year over Year ACL LHFI (1) 3/31/2023 12/31/2022 3/31/2022 $ Change % Change $ Change % Change Beginning Balance $ 120,214 $ 115,050 $ 99,457 $ 5,164 4.5 % $ 20,757 20.9 % Provision for credit losses, LHFI 3,244 6,902 (860 ) (3,658 ) -53.0 % 4,104 n/m Charge-offs (2,996 ) (3,893 ) (2,242 ) 897 23.0 % (754 ) -33.6 % Recoveries 1,777 2,155 2,379 (378 ) -17.5 % (602 ) -25.3 % Net (charge-offs) recoveries (1,219 ) (1,738 ) 137 519 29.9 % (1,356 ) n/m Ending Balance $ 122,239 $ 120,214 $ 98,734 $ 2,025 1.7 % $ 23,505 23.8 % NET (CHARGE-OFFS) RECOVERIES (1) Alabama $ (268 ) $ 98 $ 699 $ (366 ) n/m $ (967 ) n/m Florida (36 ) (60 ) (26 ) 24 40.0 % (10 ) -38.5 % Mississippi (2) (775 ) (1,657 ) (88 ) 882 53.2 % (687 ) n/m Tennessee (3) (124 ) (195 ) (424 ) 71 36.4 % 300 70.8 % Texas (16 ) 76 (24 ) (92 ) n/m 8 33.3 % Total net (charge-offs) recoveries $ (1,219 ) $ (1,738 ) $ 137 $ 519 29.9 % $ (1,356 ) n/m (1) Excludes PPP loans. (2) Mississippi includes Central and Southern Mississippi Regions. (3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands) (unaudited) Quarter Ended AVERAGE BALANCES 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Securities AFS-taxable (1) $ 2,187,121 $ 2,572,675 $ 2,824,254 $ 3,094,364 $ 3,245,502 Securities AFS-nontaxable 4,812 4,828 4,928 5,110 5,127 Securities HTM-taxable (1) 1,479,283 1,268,952 1,140,685 811,599 410,851 Securities HTM-nontaxable 4,509 4,514 5,057 5,630 7,327 Total securities 3,675,725 3,850,969 3,974,924 3,916,703 3,668,807 PPP loans — 3,235 9,821 17,746 29,009 Loans (includes loans held for sale) 12,530,449 12,006,661 11,459,551 10,910,178 10,550,712 Fed funds sold and reverse repurchases 2,379 6,566 226 110 56 Other earning assets 647,760 375,190 325,620 1,139,312 1,811,713 Total earning assets 16,856,313 16,242,621 15,770,142 15,984,049 16,060,297 ACL LHFI (119,978 ) (114,948 ) (102,951 ) (99,106 ) (99,390 ) Other assets 1,762,449 1,630,085 1,576,653 1,513,127 1,550,848 Total assets $ 18,498,784 $ 17,757,758 $ 17,243,844 $ 17,398,070 $ 17,511,755 Interest-bearing demand deposits $ 4,751,154 $ 4,719,303 $ 4,613,733 $ 4,578,235 $ 4,429,056 Savings deposits 4,193,764 4,379,673 4,514,579 4,638,849 4,791,104 Time deposits 1,907,449 1,152,905 1,111,440 1,159,065 1,193,435 Total interest-bearing deposits 10,852,367 10,251,881 10,239,752 10,376,149 10,413,595 Fed funds purchased and repurchases 436,535 549,406 249,809 118,753 212,006 Other borrowings 1,110,843 530,993 88,697 80,283 91,090 Subordinated notes 123,281 123,226 123,171 123,116 123,061 Junior subordinated debt securities 61,856 61,856 61,856 61,856 61,856 Total interest-bearing liabilities 12,584,882 11,517,362 10,763,285 10,760,157 10,901,608 Noninterest-bearing deposits 3,813,248 4,177,113 4,444,370 4,590,338 4,601,108 Other liabilities 576,826 569,992 429,720 439,266 295,287 Total liabilities 16,974,956 16,264,467 15,637,375 15,789,761 15,798,003 Shareholders' equity 1,523,828 1,493,291 1,606,469 1,608,309 1,713,752 Total liabilities and equity $ 18,498,784 $ 17,757,758 $ 17,243,844 $ 17,398,070 $ 17,511,755 (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands) (unaudited) PERIOD END BALANCES 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Cash and due from banks $ 1,297,144 $ 734,787 $ 479,637 $ 742,461 $ 1,917,564 Fed funds sold and reverse repurchases — 4,000 10,098 — — Securities available for sale (1) 1,984,162 2,024,082 2,444,486 2,644,364 3,018,246 Securities held to maturity (1) 1,474,338 1,494,514 1,156,985 1,137,754 607,598 PPP loans — — 4,798 12,549 18,579 LHFS 175,926 135,226 165,213 190,186 222,538 LHFI 12,497,195 12,204,039 11,586,064 10,944,840 10,397,129 ACL LHFI (122,239 ) (120,214 ) (115,050 ) (103,140 ) (98,734 ) Net LHFI 12,374,956 12,083,825 11,471,014 10,841,700 10,298,395 Premises and equipment, net 223,975 212,365 210,761 207,914 207,301 Mortgage servicing rights 127,206 129,677 132,615 121,014 111,050 Goodwill 384,237 384,237 384,237 384,237 384,237 Identifiable intangible assets 3,352 3,640 3,952 4,264 4,591 Other real estate 1,684 1,986 2,971 3,034 3,187 Operating lease right-of-use assets 35,315 36,301 37,282 34,684 34,048 Other assets 794,883 770,838 686,585 627,349 614,217 Total assets $ 18,877,178 $ 18,015,478 $ 17,190,634 $ 16,951,510 $ 17,441,551 Deposits: Noninterest-bearing $ 3,797,055 $ 4,093,771 $ 4,358,805 $ 4,509,472 $ 4,739,102 Interest-bearing 10,986,606 10,343,877 10,066,375 10,260,696 10,374,190 Total deposits 14,783,661 14,437,648 14,425,180 14,770,168 15,113,292 Fed funds purchased and repurchases 477,980 449,331 544,068 70,157 170,499 Other borrowings 1,485,181 1,050,938 223,172 72,553 84,644 Subordinated notes 123,317 123,262 123,207 123,152 123,097 Junior subordinated debt securities 61,856 61,856 61,856 61,856 61,856 ACL on off-balance sheet credit exposures 34,596 36,838 31,623 32,949 34,517 Operating lease liabilities 37,988 38,932 39,797 37,108 35,912 Other liabilities 310,500 324,405 232,786 196,871 186,352 Total liabilities 17,315,079 16,523,210 15,681,689 15,364,814 15,810,169 Common stock 12,720 12,705 12,700 12,752 12,806 Capital surplus 155,297 154,645 154,150 160,876 167,094 Retained earnings 1,636,463 1,600,321 1,648,507 1,620,210 1,600,138 Accumulated other comprehensive income (loss),net of tax (242,381 ) (275,403 ) (306,412 ) (207,142 ) (148,656 ) Total shareholders' equity 1,562,099 1,492,268 1,508,945 1,586,696 1,631,382 Total liabilities and equity $ 18,877,178 $ 18,015,478 $ 17,190,634 $ 16,951,510 $ 17,441,551 (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands except per share data) (unaudited) Quarter Ended INCOME STATEMENTS 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Interest and fees on LHFS & LHFI-FTE $ 178,967 $ 159,566 $ 129,395 $ 103,033 $ 93,252 Interest and fees on PPP loans — 101 186 184 168 Interest on securities-taxable 16,761 16,577 16,222 14,561 12,357 Interest on securities-tax exempt-FTE 92 93 100 107 122 Interest on fed funds sold and reverse repurchases 30 71 2 1 — Other interest income 6,527 3,556 1,493 2,214 817 Total interest income-FTE 202,377 179,964 147,398 120,100 106,716 Interest on deposits 40,898 18,438 5,097 2,774 2,760 Interest on fed funds purchased and repurchases 4,832 4,762 1,225 70 70 Other interest expense 15,575 6,730 1,996 1,664 1,539 Total interest expense 61,305 29,930 8,318 4,508 4,369 Net interest income-FTE 141,072 150,034 139,080 115,592 102,347 Provision for credit losses, LHFI 3,244 6,902 12,919 2,716 (860 ) Provision for credit losses, off-balance sheetcredit exposures (2,242 ) 5,215 (1,326 ) (1,568 ) (1,106 ) Net interest income after provision-FTE 140,070 137,917 127,487 114,444 104,313 Service charges on deposit accounts 10,336 11,162 11,318 10,226 9,451 Bank card and other fees 7,803 8,191 9,305 10,167 8,442 Mortgage banking, net 7,639 3,408 6,876 8,149 9,873 Insurance commissions 14,305 12,019 13,911 13,702 14,089 Wealth management 8,780 8,079 8,778 9,102 9,054 Other, net 2,514 2,311 2,418 1,907 3,206 Total noninterest income 51,377 45,170 52,606 53,253 54,115 Salaries and employee benefits 74,056 73,469 72,707 71,679 69,585 Services and fees (2) 25,426 27,709 26,787 25,659 25,314 Net occupancy-premises 7,629 7,898 7,395 6,892 7,079 Equipment expense 6,405 6,268 6,072 6,047 6,061 Litigation settlement expense (1) — 100,750 — — — Other expense (2) 14,811 15,135 13,737 13,490 13,480 Total noninterest expense 128,327 231,229 126,698 123,767 121,519 Income (loss) before income taxes and tax eq adj 63,120 (48,142 ) 53,395 43,930 36,909 Tax equivalent adjustment 3,477 3,451 2,975 2,916 3,003 Income (loss) before income taxes 59,643 (51,593 ) 50,420 41,014 33,906 Income taxes 9,343 (17,530 ) 7,965 6,730 4,695 Net income (loss) $ 50,300 $ (34,063 ) $ 42,455 $ 34,284 $ 29,211 Per share data Earnings (loss) per share - basic $ 0.82 $ (0.56 ) $ 0.69 $ 0.56 $ 0.47 Earnings (loss) per share - diluted $ 0.82 $ (0.56 ) $ 0.69 $ 0.56 $ 0.47 Dividends per share $ 0.23 $ 0.23 $ 0.23 $ 0.23 $ 0.23 Weighted average shares outstanding Basic 61,011,059 60,969,400 61,114,804 61,378,226 61,514,395 Diluted 61,193,275 61,173,249 61,318,715 61,546,285 61,709,797 Period end shares outstanding 61,048,516 60,977,686 60,953,864 61,201,123 61,463,392 (1) See Note 1 - Litigation Settlement in the Notes to Consolidated Financials for additional information. (2) During the first quarter of 2023, Trustmark reclassified its debit card transaction fees from other expense to services and fees. Prior periods have been reclassified accordingly. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands) (unaudited) Quarter Ended NONPERFORMING ASSETS (1) 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Nonaccrual LHFI Alabama $ 10,919 $ 12,300 $ 12,710 $ 2,698 $ 7,506 Florida 256 227 227 233 310 Mississippi (2) 32,560 24,683 23,517 23,039 21,318 Tennessee (3) 5,416 5,566 5,120 9,500 9,266 Texas 23,224 23,196 26,353 26,582 25,999 Total nonaccrual LHFI 72,375 65,972 67,927 62,052 64,399 Other real estate Alabama — 194 217 84 — Mississippi (2) 1,495 1,769 2,754 2,950 3,187 Tennessee (3) 189 23 — — — Total other real estate 1,684 1,986 2,971 3,034 3,187 Total nonperforming assets $ 74,059 $ 67,958 $ 70,898 $ 65,086 $ 67,586 LOANS PAST DUE OVER 90 DAYS (1) LHFI $ 2,255 $ 3,929 $ 1,842 $ 1,347 $ 1,503 LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase) $ 41,468 $ 49,320 $ 48,313 $ 51,164 $ 62,078 Quarter Ended ACL LHFI (1) 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Beginning Balance $ 120,214 $ 115,050 $ 103,140 $ 98,734 $ 99,457 Provision for credit losses, LHFI 3,244 6,902 12,919 2,716 (860 ) Charge-offs (2,996 ) (3,893 ) (2,920 ) (2,277 ) (2,242 ) Recoveries 1,777 2,155 1,911 3,967 2,379 Net (charge-offs) recoveries (1,219 ) (1,738 ) (1,009 ) 1,690 137 Ending Balance $ 122,239 $ 120,214 $ 115,050 $ 103,140 $ 98,734 NET (CHARGE-OFFS) RECOVERIES (1) Alabama $ (268 ) $ 98 $ 93 $ 1,129 $ 699 Florida (36 ) (60 ) (23 ) 761 (26 ) Mississippi (2) (775 ) (1,657 ) (702 ) (266 ) (88 ) Tennessee (3) (124 ) (195 ) (202 ) 31 (424 ) Texas (16 ) 76 (175 ) 35 (24 ) Total net (charge-offs) recoveries $ (1,219 ) $ (1,738 ) $ (1,009 ) $ 1,690 $ 137 (1) Excludes PPP loans. (2) Mississippi includes Central and Southern Mississippi Regions. (3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands) (unaudited) Quarter Ended FINANCIAL RATIOS AND OTHER DATA 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Return on average equity 13.39 % -9.05 % 10.48 % 8.55 % 6.91 % Return on average tangible equity 18.03 % -12.14 % 13.90 % 11.36 % 9.05 % Return on average assets 1.10 % -0.76 % 0.98 % 0.79 % 0.68 % Interest margin - Yield - FTE 4.87 % 4.40 % 3.71 % 3.01 % 2.69 % Interest margin - Cost 1.47 % 0.73 % 0.21 % 0.11 % 0.11 % Net interest margin - FTE 3.39 % 3.66 % 3.50 % 2.90 % 2.58 % Efficiency ratio (1) 65.60 % 65.85 % 64.96 % 71.89 % 76.44 % Full-time equivalent employees 2,758 2,738 2,717 2,727 2,725 CREDIT QUALITY RATIOS (2) Net (recoveries) charge-offs / average loans 0.04 % 0.06 % 0.03 % -0.06 % -0.01 % Provision for credit losses, LHFI / average loans 0.10 % 0.23 % 0.45 % 0.10 % -0.03 % Nonaccrual LHFI / (LHFI + LHFS) 0.57 % 0.53 % 0.58 % 0.56 % 0.61 % Nonperforming assets / (LHFI + LHFS) 0.58 % 0.55 % 0.60 % 0.58 % 0.64 % Nonperforming assets / (LHFI + LHFS+ other real estate) 0.58 % 0.55 % 0.60 % 0.58 % 0.64 % ACL LHFI / LHFI 0.98 % 0.99 % 0.99 % 0.94 % 0.95 % ACL LHFI-commercial / commercial LHFI 0.80 % 0.85 % 0.93 % 0.88 % 0.95 % ACL LHFI-consumer / consumer andhome mortgage LHFI 1.54 % 1.41 % 1.20 % 1.14 % 0.96 % ACL LHFI / nonaccrual LHFI 168.90 % 182.22 % 169.37 % 166.22 % 153.32 % ACL LHFI / nonaccrual LHFI(excl individually analyzed loans) 320.80 % 399.19 % 466.03 % 475.27 % 484.01 % CAPITAL RATIOS Total equity / total assets 8.28 % 8.28 % 8.78 % 9.36 % 9.35 % Tangible equity / tangible assets 6.35 % 6.27 % 6.67 % 7.23 % 7.29 % Tangible equity / risk-weighted assets 7.94 % 7.61 % 8.15 % 9.16 % 9.79 % Tier 1 leverage ratio 8.29 % 8.47 % 9.01 % 8.80 % 8.66 % Common equity tier 1 capital ratio 9.76 % 9.74 % 10.63 % 11.01 % 11.23 % Tier 1 risk-based capital ratio 10.17 % 10.15 % 11.06 % 11.47 % 11.70 % Total risk-based capital ratio 11.95 % 11.91 % 12.85 % 13.26 % 13.53 % STOCK PERFORMANCE Market value-Close $ 24.70 $ 34.91 $ 30.63 $ 29.19 $ 30.39 Book value $ 25.59 $ 24.47 $ 24.76 $ 25.93 $ 26.54 Tangible book value $ 19.24 $ 18.11 $ 18.39 $ 19.58 $ 20.22 (1) See Note 7 – Non-GAAP Financial Measures in the Notes to Consolidated Financials for Trustmark’s efficiency ratio calculation. (2) Excludes PPP loans. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands) (unaudited) Note 1 - Litigation Settlement As previously announced, on December 31, 2022, Trustmark National Bank (“Trustmark”) agreed to a settlement in principle (the “Settlement”) relating to litigation involving the Stanford Financial Group that includes a lawsuit initially filed in the District Court of Harris County, Texas on August 23, 2009 and also includes other subsequently-filed Stanford-related lawsuits. Trustmark Corporation, the parent company of Trustmark, has provided disclosure relating to these matters in its current report on Form 8-K filed on January 3, 2023, and in its periodic reports on Forms 10-K and 10-Q throughout the pendency of these actions. The parties to the Settlement are, on the one hand, (i) Ralph S. Janvey, solely in his capacity as the court-appointed receiver (the “Receiver”) for the Stanford Receivership Estate; (ii) the Official Stanford Investors Committee; (iii) each of the plaintiffs in the Rotstain and Smith Actions (as defined below); and, on the other hand, (iv) Trustmark. Under the terms of the Settlement, the parties agreed to settle and dismiss Rotstain, et al. v. Trustmark National Bank, et al., CA No. 4-22-CV-00800 (S.D. Tex.) (the “Rotstain Action”), Smith et al. v. Independent Bank, et al., CA No. 4-20-CV-00675 (S.D. Tex.) (the “Smith Action”), and all current or future claims arising from or related to Stanford. In addition, the Settlement provides that the parties will request dismissal of Jackson, et al., v. Cox, et al., CA No. 3:10-CV-0328 (N.D. Tex.) (the “Jackson Action” and, collectively with the Rotstain Action and the Smith Action, the “Actions”) pursuant to the terms of the bar orders described below. If the Settlement, including the bar orders described below, is approved by the Court and is not subject to further appeal, Trustmark will make a one-time cash payment of $100.0 million to the Receiver. Trustmark was relieved of pre-trial deadlines and the February 27, 2023 trial setting in the Rotstain Action pending final Court approval of a Settlement Agreement reflecting the terms of the Settlement and pending entry of the bar orders. The Smith and Jackson Actions are currently stayed. The Settlement included the parties’ agreement to seek the Northern District of Texas District Court’s entry of bar orders prohibiting any continued or future claims against Trustmark and its related parties relating to Stanford, whether asserted to date or not. The bar orders therefore would prohibit all litigation relating to Stanford described in Trustmark Corporation’s SEC periodic reports, including the Actions and any pending matters, as well as any actions relating to Stanford that may be brought in the future. Final Court approval of these bar orders is a condition of the Settlement. The Settlement was also subject to the execution and delivery of a definitive Settlement Agreement reflecting the terms of the Settlement, which was fully executed by the parties on January 13, 2023, and notice to Stanford’s investor claimants, which the Receiver has effectuated. The Settlement is also subject to final, non-appealable approval by the U.S. District Court for the Northern District of Texas. That Court has scheduled a hearing to approve the Settlement for May 3, 2023, but the timing of any final decision by the Court is subject to the discretion of the Court and any appeal. Robert Allen Stanford (founder of the Stanford Financial Group) is the only person or entity who filed an objection to the Settlement. The Court has previously overruled objections filed by Mr. Stanford in connection with prior Stanford-related settlements. While Trustmark believes that the Settlement is consistent with the terms of prior Stanford-related settlements that have been approved by the Court and were not successfully appealed, it is possible that the Court may decide not to approve the Settlement Agreement or that the Fifth Circuit Court of Appeals could decide to accept an appeal thereof. The Settlement Agreement provides that Trustmark makes no admission of liability or wrongdoing in connection with any Stanford matter. As has been the case throughout the pendency of the Actions, Trustmark expressly denies any liability or wrongdoing with respect to any matter alleged in regard of the multi-billion-dollar Ponzi scheme operated by Stanford for almost 20 years. Trustmark’s relationship with Stanford consisted of ordinary banking services provided to business deposit customers. Trustmark and Trustmark Corporation determined that it was in the best interest of Trustmark, Trustmark Corporation and the shareholders of Trustmark Corporation to enter into the Settlement and the Settlement Agreement to eliminate the risk, ongoing expense, uncertainty as to ultimate outcome, and imposition on management and the business of Trustmark of further litigation of the Actions and related Stanford claims. As the time of the entry into the Settlement, Trustmark Corporation recognized $100.0 million of litigation settlement expense, as well as an additional $750 thousand in legal fees, which were included in noninterest expense related to the Stanford litigation during the fourth quarter of 2022. Trustmark Corporation expects that the Settlement will be tax deductible. Trustmark remains substantially above levels considered to be well-capitalized under all relevant standards. The foregoing description of the Settlement Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Settlement Agreement, a copy of which was filed as an exhibit to Trustmark Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which was filed on February 16, 2023. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands) (unaudited) Note 2 - Securities Available for Sale and Held to Maturity The following table is a summary of the estimated fair value of securities available for sale and the amortized cost of securities held to maturity: 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 SECURITIES AVAILABLE FOR SALE U.S. Treasury securities $ 386,903 $ 391,513 $ 416,278 $ 419,696 $ 361,822 U.S. Government agency obligations 7,254 7,766 9,116 11,947 12,623 Obligations of states and political subdivisions 4,907 4,862 4,763 5,179 5,359 Mortgage-backed securities Residential mortgage pass-through securities Guaranteed by GNMA 26,851 27,097 28,164 32,240 35,117 Issued by FNMA and FHLMC 1,317,848 1,345,463 1,718,057 1,888,546 2,038,331 Other residential mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 108,192 115,140 126,138 144,158 164,506 Commercial mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 132,207 132,241 141,970 142,598 400,488 Total securities available for sale $ 1,984,162 $ 2,024,082 $ 2,444,486 $ 2,644,364 $ 3,018,246 SECURITIES HELD TO MATURITY U.S. Treasury securities $ 28,486 $ 28,295 $ — $ — $ — Obligations of states and political subdivisions 4,507 4,510 4,512 5,320 7,324 Mortgage-backed securities Residential mortgage pass-through securities Guaranteed by GNMA 4,336 4,442 4,527 4,624 4,831 Issued by FNMA and FHLMC 497,854 509,311 179,375 185,554 192,373 Other residential mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 179,334 188,201 197,923 210,479 224,012 Commercial mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 759,821 759,755 770,648 731,777 179,058 Total securities held to maturity $ 1,474,338 $ 1,494,514 $ 1,156,985 $ 1,137,754 $ 607,598 During the fourth quarter of 2022, Trustmark reclassified $422.9 million of securities available for sale to securities held to maturity. The securities were transferred at fair value, which became the cost basis for the securities held to maturity. At the date of transfer, the net unrealized holding loss on the available for sale securities totaled approximately $57.1 million ($42.8 million, net of tax). The net unrealized holding loss will be amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. There were no gains or losses recognized as a result of the transfer. During the second quarter of 2022, Trustmark reclassified $343.1 million of securities available for sale to securities held to maturity. The securities were transferred at fair value, which became the cost basis for the securities held to maturity. At the date of transfer, the net unrealized holding loss on the available for sale securities totaled approximately $34.8 million ($26.1 million, net of tax). The net unrealized holding loss will be amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. There were no gains or losses recognized as a result of the transfer. At March 31, 2023, the net unamortized, unrealized loss included in accumulated other comprehensive income (loss) in the accompanying balance sheet for securities held to maturity transferred from securities available for sale totaled approximately $88.5 million ($66.3 million, net of tax). Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 99.8% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands) (unaudited) Note 3 – Loan Composition LHFI consisted of the following during the periods presented: LHFI BY TYPE 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Loans secured by real estate: Construction, land development and other land loans $ 1,723,772 $ 1,719,542 $ 1,647,395 $ 1,440,058 $ 1,273,959 Secured by 1-4 family residential properties 2,822,048 2,775,847 2,597,112 2,424,962 2,106,998 Secured by nonfarm, nonresidential properties 3,375,579 3,278,830 3,206,946 3,178,079 2,975,039 Other real estate secured 847,527 742,538 593,119 555,311 715,939 Commercial and industrial loans 1,882,360 1,821,259 1,689,532 1,551,001 1,495,060 Consumer loans 162,911 166,425 163,412 160,716 154,215 State and other political subdivision loans 1,193,727 1,223,863 1,188,703 1,110,795 1,215,023 Other loans 489,271 475,735 499,845 523,918 460,896 LHFI 12,497,195 12,204,039 11,586,064 10,944,840 10,397,129 ACL LHFI (122,239 ) (120,214 ) (115,050 ) (103,140 ) (98,734 ) Net LHFI $ 12,374,956 $ 12,083,825 $ 11,471,014 $ 10,841,700 $ 10,298,395 The following table presents the LHFI composition by region and reflects each region’s diversified mix of loans: March 31, 2023 LHFI - COMPOSITION BY REGION Total Alabama Florida Mississippi (Central and Southern Regions) Tennessee (Memphis, TN and Northern MS Regions) Texas Loans secured by real estate: Construction, land development and other land loans $ 1,723,772 $ 909,783 $ 74,625 $ 333,986 $ 25,741 $ 379,637 Secured by 1-4 family residential properties 2,822,048 135,830 52,395 2,522,951 81,540 29,332 Secured by nonfarm, nonresidential properties 3,375,579 901,613 204,533 1,462,426 161,899 645,108 Other real estate secured 847,527 264,170 1,985 334,758 7,018 239,596 Commercial and industrial loans 1,882,360 557,088 28,068 768,940 272,153 256,111 Consumer loans 162,911 23,109 9,401 99,817 19,172 11,412 State and other political subdivision loans 1,193,727 74,925 62,353 845,902 27,380 183,167 Other loans 489,271 101,083 9,165 262,889 53,156 62,978 Loans $ 12,497,195 $ 2,967,601 $ 442,525 $ 6,631,669 $ 648,059 $ 1,807,341 CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION Lots $ 66,925 $ 31,642 $ 10,281 $ 15,010 $ 2,220 $ 7,772 Development 142,477 74,820 1,379 30,507 6,773 28,998 Unimproved land 103,649 22,480 14,148 31,056 4,754 31,211 1-4 family construction 369,163 212,970 19,447 91,177 11,994 33,575 Other construction 1,041,558 567,871 29,370 166,236 — 278,081 Construction, land development and other land loans $ 1,723,772 $ 909,783 $ 74,625 $ 333,986 $ 25,741 $ 379,637 TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands) (unaudited) Note 3 – Loan Composition (continued) March 31, 2023 Total Alabama Florida Mississippi (Central and Southern Regions) Tennessee (Memphis, TN and Northern MS Regions) Texas LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION Non-owner occupied: Retail $ 347,775 $ 124,551 $ 26,625 $ 113,299 $ 21,143 $ 62,157 Office 292,032 102,166 16,905 105,561 10,255 57,145 Hotel/motel 290,681 168,832 40,506 53,942 27,401 — Mini-storage 154,053 28,261 2,058 104,063 481 19,190 Industrial 333,132 69,107 17,524 105,769 2,774 137,958 Health care 70,317 40,435 — 27,002 340 2,540 Convenience stores 33,226 7,318 592 14,709 582 10,025 Nursing homes/senior living 449,014 152,155 — 202,163 5,423 89,273 Other 125,798 40,814 9,840 53,248 8,696 13,200 Total non-owner occupied loans 2,096,028 733,639 114,050 779,756 77,095 391,488 Owner-occupied: Office 167,317 43,797 36,759 49,046 10,104 27,611 Churches 68,028 15,531 4,592 38,625 6,697 2,583 Industrial warehouses 168,429 17,468 4,644 43,359 16,083 86,875 Health care 144,201 11,397 6,272 105,568 2,323 18,641 Convenience stores 133,875 12,194 21,451 63,187 235 36,808 Retail 94,435 11,194 9,588 44,745 18,987 9,921 Restaurants 55,190 4,247 4,105 31,642 11,931 3,265 Auto dealerships 47,930 6,470 222 23,688 17,550 — Nursing homes/senior living 257,998 32,615 — 199,183 — 26,200 Other 142,148 13,061 2,850 83,627 894 41,716 Total owner-occupied loans 1,279,551 167,974 90,483 682,670 84,804 253,620 Loans secured by nonfarm, nonresidential properties $ 3,375,579 $ 901,613 $ 204,533 $ 1,462,426 $ 161,899 $ 645,108 Note 4 – Yields on Earning Assets and Interest-Bearing Liabilities The following table illustrates the yields on earning assets by category as well as the rates paid on interest-bearing liabilities on a tax equivalent basis: Quarter Ended 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Securities – taxable 1.85 % 1.71 % 1.62 % 1.50 % 1.37 % Securities – nontaxable 4.00 % 3.95 % 3.97 % 4.00 % 3.97 % Securities – total 1.86 % 1.72 % 1.63 % 1.50 % 1.38 % PPP loans — 12.39 % 7.51 % 4.16 % 2.35 % Loans - LHFI & LHFS 5.79 % 5.27 % 4.48 % 3.79 % 3.58 % Loans - total 5.79 % 5.27 % 4.48 % 3.79 % 3.58 % Fed funds sold & reverse repurchases 5.11 % 4.29 % 3.51 % 3.65 % — Other earning assets 4.09 % 3.76 % 1.82 % 0.78 % 0.18 % Total earning assets 4.87 % 4.40 % 3.71 % 3.01 % 2.69 % Interest-bearing deposits 1.53 % 0.71 % 0.20 % 0.11 % 0.11 % Fed funds purchased & repurchases 4.49 % 3.44 % 1.95 % 0.24 % 0.13 % Other borrowings 4.87 % 3.73 % 2.89 % 2.52 % 2.26 % Total interest-bearing liabilities 1.98 % 1.03 % 0.31 % 0.17 % 0.16 % Total Deposits 1.13 % 0.51 % 0.14 % 0.07 % 0.07 % Net interest margin 3.39 % 3.66 % 3.50 % 2.90 % 2.58 % Net interest margin excluding PPP loans and the FRB balance 3.36 % 3.66 % 3.53 % 3.06 % 2.88 % TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands) (unaudited) Note 4 – Yields on Earning Assets and Interest-Bearing Liabilities (continued) Reflected in the table above are yields on earning assets and liabilities, along with the net interest margin which equals reported net interest income-FTE, annualized, as a percent of average earning assets. In addition, the table includes net interest margin excluding PPP loans and the balance held at the Federal Reserve Bank of Atlanta (FRB), which equals reported net interest income-FTE excluding interest income on PPP loans and the FRB balance, annualized, as a percent of average earning assets excluding average PPP loans and the FRB balance. At March 31, 2023 and December 31, 2022, the average FRB balance totaled $555.5 million and $299.2 million, respectively, and is included in other earning assets in the accompanying average consolidated balance sheets. The net interest margin excluding PPP loans and the FRB balance decreased 30 basis points when compared to the fourth quarter of 2022, totaling 3.36% for the first quarter of 2023. The decrease in the net interest margin excluding PPP loans and the FRB balance was due to increased costs of interest-bearing deposits, which was partially offset by increases in the yields on the loans held for investment and held for sale portfolio and the securities portfolio. Note 5 – Mortgage Banking Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that offsets the changes in fair value of mortgage servicing rights (MSR) attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under generally accepted accounting principles (GAAP). Changes in the fair value of these exchange-traded derivative instruments, including administrative costs, are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of the MSR. The MSR fair value represents the present value of future cash flows, which among other things includes decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the change in value of hedge instruments to the change in the fair value of the MSR asset attributable to changes in interest rates and other market driven changes in valuation inputs and assumptions. The impact of this strategy resulted in a net negative ineffectiveness of $1.8 million during the first quarter of 2023. The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements: Quarter Ended 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Mortgage servicing income, net $ 6,785 $ 6,636 $ 6,669 $ 6,557 $ 6,429 Change in fair value-MSR from runoff (1,145 ) (2,981 ) (3,462 ) (3,806 ) (3,785 ) Gain on sales of loans, net 3,797 3,328 4,597 6,030 6,223 Mortgage banking income before hedge ineffectiveness 9,437 6,983 7,804 8,781 8,867 Change in fair value-MSR from market changes (3,972 ) (3,348 ) 10,770 8,739 22,020 Change in fair value of derivatives 2,174 (227 ) (11,698 ) (9,371 ) (21,014 ) Net positive (negative) hedge ineffectiveness (1,798 ) (3,575 ) (928 ) (632 ) 1,006 Mortgage banking, net $ 7,639 $ 3,408 $ 6,876 $ 8,149 $ 9,873 TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands) (unaudited) Note 6 – Other Noninterest Income and Expense Other noninterest income consisted of the following for the periods presented: Quarter Ended 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Partnership amortization for tax credit purposes $ (1,961 ) $ (1,869 ) $ (1,531 ) $ (1,475 ) $ (1,336 ) Increase in life insurance cash surrender value 1,693 1,687 1,676 1,683 1,627 Other miscellaneous income 2,782 2,493 2,273 1,699 2,915 Total other, net $ 2,514 $ 2,311 $ 2,418 $ 1,907 $ 3,206 Trustmark invests in partnerships that provide income tax credits on a Federal and/or State basis (i.e., new market tax credits, low-income housing tax credits and historical tax credits). The income tax credits related to these partnerships are utilized as specifically allowed by income tax law and are recorded as a reduction in income tax expense. Other noninterest expense consisted of the following for the periods presented: Quarter Ended 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Loan expense (1) $ 2,538 $ 2,908 $ 2,866 $ 2,947 $ 3,528 Amortization of intangibles 288 312 312 328 482 FDIC assessment expense 2,370 2,130 1,945 1,810 1,500 Other real estate expense, net 172 18 497 623 35 Other miscellaneous expense 9,443 9,767 8,117 7,782 7,935 Total other expense (1) $ 14,811 $ 15,135 $ 13,737 $ 13,490 $ 13,480 (1) During the first quarter of 2023, Trustmark reclassified its debit card transaction fees from other expense to services and fees. Prior periods have been reclassified accordingly. Note 7 – Non-GAAP Financial Measures In addition to capital ratios defined by GAAP and banking regulators, Trustmark utilizes various tangible common equity measures when evaluating capital utilization and adequacy. Tangible common equity, as defined by Trustmark, represents common equity less goodwill and identifiable intangible assets. Trustmark’s Common Equity Tier 1 capital includes common stock, capital surplus and retained earnings, and is reduced by goodwill and other intangible assets, net of associated net deferred tax liabilities as well as disallowed deferred tax assets and threshold deductions as applicable. Trustmark believes these measures are important because they reflect the level of capital available to withstand unexpected market conditions. Additionally, presentation of these measures allows readers to compare certain aspects of Trustmark’s capitalization to other organizations. These ratios differ from capital measures defined by banking regulators principally in that the numerator excludes shareholders’ equity associated with preferred securities, the nature and extent of which varies across organizations. In Management’s experience, many stock analysts use tangible common equity measures in conjunction with more traditional bank capital ratios to compare capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, typically stemming from the use of the purchase accounting method in accounting for mergers and acquisitions. These calculations are intended to complement the capital ratios defined by GAAP and banking regulators. Because GAAP does not include these capital ratio measures, Trustmark believes there are no comparable GAAP financial measures to these tangible common equity ratios. Despite the importance of these measures to Trustmark, there are no standardized definitions for them and, as a result, Trustmark’s calculations may not be comparable with other organizations. Also, there may be limits in the usefulness of these measures to investors. As a result, Trustmark encourages readers to consider its audited consolidated financial statements and the notes related thereto in their entirety and not to rely on any single financial measure. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands except per share data) (unaudited) Note 7 – Non-GAAP Financial Measures (continued) Quarter Ended 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 TANGIBLE EQUITY AVERAGE BALANCES Total shareholders' equity $ 1,523,828 $ 1,493,291 $ 1,606,469 $ 1,608,309 $ 1,713,752 Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) Identifiable intangible assets (3,523 ) (3,816 ) (4,131 ) (4,436 ) (4,879 ) Total average tangible equity $ 1,136,068 $ 1,105,238 $ 1,218,101 $ 1,219,636 $ 1,324,636 PERIOD END BALANCES Total shareholders' equity $ 1,562,099 $ 1,492,268 $ 1,508,945 $ 1,586,696 $ 1,631,382 Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) Identifiable intangible assets (3,352 ) (3,640 ) (3,952 ) (4,264 ) (4,591 ) Total tangible equity (a) $ 1,174,510 $ 1,104,391 $ 1,120,756 $ 1,198,195 $ 1,242,554 TANGIBLE ASSETS Total assets $ 18,877,178 $ 18,015,478 $ 17,190,634 $ 16,951,510 $ 17,441,551 Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) Identifiable intangible assets (3,352 ) (3,640 ) (3,952 ) (4,264 ) (4,591 ) Total tangible assets (b) $ 18,489,589 $ 17,627,601 $ 16,802,445 $ 16,563,009 $ 17,052,723 Risk-weighted assets (c) $ 14,793,893 $ 14,521,078 $ 13,748,819 $ 13,076,981 $ 12,691,545 NET INCOME (LOSS) ADJUSTED FOR INTANGIBLE AMORTIZATION Net income (loss) $ 50,300 $ (34,063 ) $ 42,455 $ 34,284 $ 29,211 Plus: Intangible amortization net of tax 216 234 234 246 362 Net income (loss) adjusted for intangible amortization $ 50,516 $ (33,829 ) $ 42,689 $ 34,530 $ 29,573 Period end common shares outstanding (d) 61,048,516 60,977,686 60,953,864 61,201,123 61,463,392 TANGIBLE COMMON EQUITY MEASUREMENTS Return on average tangible equity (1) 18.03 % -12.14 % 13.90 % 11.36 % 9.05 % Tangible equity/tangible assets (a)/(b) 6.35 % 6.27 % 6.67 % 7.23 % 7.29 % Tangible equity/risk-weighted assets (a)/(c) 7.94 % 7.61 % 8.15 % 9.16 % 9.79 % Tangible book value (a)/(d)*1,000 $ 19.24 $ 18.11 $ 18.39 $ 19.58 $ 20.22 COMMON EQUITY TIER 1 CAPITAL (CET1) Total shareholders' equity $ 1,562,099 $ 1,492,268 $ 1,508,945 $ 1,586,696 $ 1,631,382 CECL transition adjustment 13,000 19,500 19,500 19,500 19,500 AOCI-related adjustments 242,381 275,403 306,412 207,142 148,656 CET1 adjustments and deductions: Goodwill net of associated deferred tax liabilities (DTLs) (370,234 ) (370,241 ) (370,217 ) (370,229 ) (370,240 ) Other adjustments and deductions for CET1 (2) (3,275 ) (3,258 ) (3,506 ) (3,757 ) (4,015 ) CET1 capital (e) 1,443,971 1,413,672 1,461,134 1,439,352 1,425,283 Additional tier 1 capital instruments plus related surplus 60,000 60,000 60,000 60,000 60,000 Tier 1 capital $ 1,503,971 $ 1,473,672 $ 1,521,134 $ 1,499,352 $ 1,485,283 Common equity tier 1 capital ratio (e)/(c) 9.76 % 9.74 % 10.63 % 11.01 % 11.23 % (1) Calculation = ((net income (loss) adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity. (2) Includes other intangible assets, net of DTLs, disallowed deferred tax assets (DTAs), threshold deductions and transition adjustments, as applicable. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands) (unaudited) Note 7 – Non-GAAP Financial Measures (continued) Trustmark discloses certain non-GAAP financial measures because Management uses these measures for business planning purposes, including to manage Trustmark’s business against internal projected results of operations and to measure Trustmark’s performance. Trustmark views these as measures of our core operating business, which exclude the impact of the items detailed below, as these items are generally not operational in nature. These non-GAAP financial measures also provide another basis for comparing period-to-period results as presented in the accompanying selected financial data table and the audited consolidated financial statements by excluding potential differences caused by non-operational and unusual or non-recurring items. Readers are cautioned that these adjustments are not permitted under GAAP. Trustmark encourages readers to consider its consolidated financial statements and the notes related thereto in their entirety, and not to rely on any single financial measure. The following table presents pre-provision net revenue (PPNR) during the periods presented: Quarter Ended 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Net interest income (GAAP) $ 137,595 $ 146,583 $ 136,105 $ 112,676 $ 99,344 Noninterest income (GAAP) 51,377 45,170 52,606 53,253 54,115 Pre-provision revenue (a) $ 188,972 $ 191,753 $ 188,711 $ 165,929 $ 153,459 Noninterest expense (GAAP) $ 128,327 $ 231,229 $ 126,698 $ 123,767 $ 121,519 Less: Litigation settlement expense — (100,750 ) — — — Adjusted noninterest expense - PPNR (Non-GAAP) (b) $ 128,327 $ 130,479 $ 126,698 $ 123,767 $ 121,519 PPNR (Non-GAAP) (a)-(b) $ 60,645 $ 61,274 $ 62,013 $ 42,162 $ 31,940 The following table presents Trustmark’s calculation of its efficiency ratio for the periods presented: Quarter Ended 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Total noninterest expense (GAAP) $ 128,327 $ 231,229 $ 126,698 $ 123,767 $ 121,519 Less: Other real estate expense, net (172 ) (18 ) (497 ) (623 ) (35 ) Amortization of intangibles (288 ) (312 ) (312 ) (328 ) (482 ) Charitable contributions resulting in state tax credits (325 ) (375 ) (375 ) (375 ) (375 ) Litigation settlement expense — (100,750 ) — — — Adjusted noninterest expense (Non-GAAP) (c) $ 127,542 $ 129,774 $ 125,514 $ 122,441 $ 120,627 Net interest income (GAAP) $ 137,595 $ 146,583 $ 136,105 $ 112,676 $ 99,344 Add: Tax equivalent adjustment 3,477 3,451 2,975 2,916 3,003 Net interest income-FTE (Non-GAAP) (a) $ 141,072 $ 150,034 $ 139,080 $ 115,592 $ 102,347 Noninterest income (GAAP) $ 51,377 $ 45,170 $ 52,606 $ 53,253 $ 54,115 Add: Partnership amortization for tax credit purposes 1,961 1,869 1,531 1,475 1,336 Adjusted noninterest income (Non-GAAP) (b) $ 53,338 $ 47,039 $ 54,137 $ 54,728 $ 55,451 Adjusted revenue (Non-GAAP) (a)+(b) $ 194,410 $ 197,073 $ 193,217 $ 170,320 $ 157,798 Efficiency ratio (Non-GAAP) (c)/((a)+(b)) 65.60 % 65.85 % 64.96 % 71.89 % 76.44 % View source version on businesswire.com: https://www.businesswire.com/news/home/20230425005438/en/Contacts Trustmark Investor Contacts: Thomas C. Owens Treasurer and Principal Financial Officer 601-208-7853 F. Joseph Rein, Jr. Senior Vice President 601-208-6898 Trustmark Media Contact: Melanie A. Morgan Senior Vice President 601-208-2979
Loan and Deposit Growth Continues, Credit Quality Remains Strong, Mortgage Banking, Insurance and Wealth Management Revenue Expands
Trustmark Corporation (NASDAQGS:TRMK) reported net income of $50.3 million in the first quarter of 2023, representing diluted earnings per share of $0.82. Trustmark’s performance during the first quarter produced a return on average tangible equity of 18.03% and a return on average assets of 1.10%. The Board of Directors declared a quarterly cash dividend of $0.23 per share payable June 15, 2023, to shareholders of record on June 1, 2023. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230425005438/en/ Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/53386997/en First Quarter Highlights Loan and deposit growth continued during the first quarter Credit quality remained strong Noninterest income increased linked-quarter, reflecting the strength of diversified business lines Expense discipline continued, noninterest expense decreased linked-quarter Duane A. Dewey, President and CEO, stated, “Our first quarter financial performance reflects solid loan and deposit growth, strong performance in our mortgage, insurance and wealth management businesses, and diligent expense management. Our overall strong performance was impacted by increasingly competitive deposit costs during the quarter, which compressed our net interest margin. Trustmark has a strong, diversified and proven business model that has stood the test of time. We remain well-positioned and committed to meeting our customers’ needs despite the challenging financial services environment. Our balance sheet is well-positioned for additional increases in interest rates and credit quality remains solid. We continue to focus on efficiency enhancements throughout the organization as well as investments in technology to better serve customers.” Balance Sheet Management Loans held for investment (HFI) increased $293.2 million, or 2.4%, during the quarter Total deposits increased $346.0 million, or 2.4%, during the quarter Maintained strong capital position with CET1 ratio of 9.76% and total risk-based capital ratio of 11.95% Loans HFI totaled $12.5 billion at March 31, 2023, reflecting an increase of $293.2 million, or 2.4%, linked-quarter and $2.1 billion, or 20.2%, year-over-year. The linked-quarter growth was broad-based and reflected increases in all categories with the exception of state and political subdivisions and consumer loans. Trustmark’s loan portfolio remains well-diversified by loan type and geography. Deposits totaled $14.8 billion at March 31, 2023, up $346.0 million, or 2.4%, from the prior quarter and down $329.6 million, or 2.2%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 84.5% of total deposits at March 31, 2023. Migration into higher-yielding products continued to drive a change in deposit mix from noninterest-bearing deposits, which represented 25.7% of total deposits at March 31, 2023. Interest-bearing deposit costs totaled 1.53% for the first quarter, while the total cost of deposits was 1.13%. The total cost of interest-bearing liabilities was 1.98% for the first quarter of 2023. During the first quarter, Trustmark did not repurchase any of its outstanding common shares. As previously announced, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2023, under which $50.0 million of Trustmark’s outstanding shares may be acquired through December 31, 2023. At March 31, 2023, Trustmark’s tangible equity to tangible assets ratio was 6.35%, while the total risk-based capital ratio was 11.95%. Tangible book value per share was $19.24 at March 31, 2023, an increase of 6.2% from the prior quarter. Credit Quality Nonperforming assets represented 0.58% of loans HFI and loans held for sale (HFS) at March 31, 2023 Net charge-offs totaled 0.04% of average loans in the first quarter Allowance for credit losses (ACL) represented 0.98% of loans HFI and 320.80% of nonaccrual loans, excluding individually analyzed loans at March 31, 2023 Nonaccrual loans totaled $72.4 million at March 31, 2023, up $6.4 million from the prior quarter and an increase of $8.0 million year-over-year. Other real estate totaled $1.7 million, reflecting a $302 thousand decrease from the prior quarter and a $1.5 million decline from the prior year. The provision for credit losses for loans HFI was $3.2 million in the first quarter and was primarily attributable to loan growth. The provision for credit losses for off-balance sheet credit exposures was a negative $2.2 million primarily driven by decreases in unfunded commitments. Collectively, the provision for credit losses totaled $1.0 million in the first quarter compared to $12.1 million in the prior quarter and a negative $2.0 million in the first quarter of 2022. Allocation of Trustmark’s $122.2 million ACL on loans HFI represented 0.80% of commercial loans and 1.54% of consumer and home mortgage loans, resulting in an ACL to total loans HFI of 0.98% at March 31, 2023. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio. Revenue Generation Noninterest income increased 13.7% linked-quarter to total $51.4 million, reflecting growth in mortgage banking, insurance and wealth management revenue Net interest income (FTE) totaled $141.1 million in the first quarter, down 6.0% linked-quarter Revenue in the first quarter totaled $189.0 million, a decline of 1.5% from the prior quarter and an increase of 23.1% from the same quarter in the prior year. The linked-quarter decline primarily reflects lower net interest income offset in part by higher mortgage banking, insurance and wealth management revenue while the year-over-year growth is attributed to higher net interest income offset in part by reduced mortgage banking revenue. Net interest income (FTE) in the first quarter totaled $141.1 million, resulting in a net interest margin of 3.39%, down 27 basis points from the prior quarter. The contraction of the net interest margin was primarily due to the costs of interest-bearing deposits more than offsetting the increased yields on the loans HFI and HFS portfolio and securities portfolio. Additionally, the margin was impacted by costs associated with the approximately $300 million increase in average on-balance sheet liquidity added during the quarter due to the uncertainty in the broader banking industry. Noninterest income in the first quarter totaled $51.4 million, an increase of $6.2 million, or 13.7%, from the prior quarter and a decrease of $2.7 million, or 5.1%, year-over-year. The linked-quarter increases in mortgage banking, insurance, and wealth management revenue were offset in part by declines in service charges on deposit accounts and bank card and other fees. The decrease in noninterest income year-over-year is principally due to lower mortgage banking revenue. Mortgage loan production in the first quarter totaled $361.1 million, down 7.6% from the prior quarter and 33.7% year-over-year. Mortgage banking revenue totaled $7.6 million in the first quarter, an increase of $4.2 million linked-quarter and a decrease of $2.2 million year-over-year. The linked-quarter increase was principally attributable to a decrease in net negative hedge ineffectiveness as well as a decline in runoff of mortgage servicing rights while the year-over-year decline was principally due to a decrease in net hedge ineffectiveness. Insurance revenue totaled $14.3 million in the first quarter, up $2.3 million, or 19.0%, from the prior quarter and $216 thousand, or 1.5%, year-over-year. The linked-quarter and year-over-year increases primarily reflected growth in commercial property and casualty commissions. Wealth management revenue in the first quarter totaled $8.8 million, an increase of $701 thousand, or 8.7%, from the prior quarter and a decline of $274 thousand, or 3.0%, year-over-year. The linked-quarter growth reflected higher trust management revenue while the year-over-year decline reflected reduced brokerage revenue. Noninterest Expense Salaries and employee benefits expense increased $587 thousand, or 0.8%, linked-quarter Services and fees declined $2.3 million, or 8.2%, linked-quarter Adjusted noninterest expense, which excludes ORE expense, amortization of intangibles, charitable contributions resulting in state tax credits, and litigation settlement expense totaled $127.5 million in the first quarter, down 1.7% from the prior quarter. Please refer to the Consolidated Financial Information, Note 7 – Non-GAAP Financial Measures Noninterest expense in the first quarter totaled $128.3 million, a decrease of $2.2 million, or 1.6%, when compared to the prior quarter excluding the litigation settlement expense. Salaries and employee benefits increased $587 thousand linked-quarter as declines in salaries and commissions were more than offset by a seasonal increase in payroll taxes. Services and fees declined $2.3 million, or 8.2%, principally due to lower professional fees. FIT2GROW “In 2022 we announced FIT2GROW, a comprehensive program of Focus, Innovation and Transformation designed to enhance Trustmark’s ability to grow and serve customers. During the first quarter, we refocused our community bank efforts on commercial, small business, and consumer lines of business to provide additional expertise for our customers and enhance profitable revenue growth. We continue to rollout new technology to enhance the customer experience and improve efficiency and productivity. Additionally, our Atlanta loan production office is now fully functioning and is focused on Commercial Real Estate, Residential Real Estate, Corporate Banking, and Equipment Finance. We look forward to the contributions of these businesses to our financial results going forward,” said Dewey. Additional Information As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, April 26, 2023, at 8:30 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (877) 317-3051 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Wednesday, May 10, 2023, in archived format at the same web address or by calling (877) 344-7529, passcode 2946740. Trustmark is a financial services company providing banking and financial solutions through offices in Alabama, Florida, Georgia, Mississippi, Tennessee and Texas. Forward-Looking Statements Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “project,” “potential,” “seek,” “continue,” “could,” “would,” “future” or the negative of those terms or other words of similar meaning. You should read statements that contain these words carefully because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements include, but are not limited to, statements relating to anticipated future operating and financial performance measures, including net interest margin, credit quality, business initiatives, growth opportunities and growth rates, among other things, and encompass any estimate, prediction, expectation, projection, opinion, anticipation, outlook or statement of belief included therein as well as the management assumptions underlying these forward-looking statements. You should be aware that the occurrence of the events described under the caption “Risk Factors” in Trustmark’s filings with the Securities and Exchange Commission (SEC) could have an adverse effect on our business, results of operations and financial condition. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected. Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels and slowdowns in economic growth, actions by the Board of Governors of the Federal Reserve System (FRB) that impact the level of market interest rates, local, state and national economic and market conditions, conditions in the housing and real estate markets in the regions in which Trustmark operates and the extent and duration of the current volatility in the credit and financial markets, levels of and volatility in crude oil prices, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility of market interest rates, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, including the potential impact of issues related to the European financial system and monetary and other governmental actions designed to address credit, securities, and/or commodity markets, the enactment of legislation and changes in existing regulations or enforcement practices or the adoption of new regulations, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, changes in our ability to control expenses, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, cyber-attacks and other breaches which could affect our information system security, natural disasters, environmental disasters, pandemics or other health crises, acts of war or terrorism, and other risks described in our filings with the SEC. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Except as required by law, we undertake no obligation to update or revise any of this information, whether as the result of new information, future events or developments or otherwise. TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands) (unaudited) Linked Quarter Year over Year QUARTERLY AVERAGE BALANCES 3/31/2023 12/31/2022 3/31/2022 $ Change % Change $ Change % Change Securities AFS-taxable (1) $ 2,187,121 $ 2,572,675 $ 3,245,502 $ (385,554 ) -15.0 % $ (1,058,381 ) -32.6 % Securities AFS-nontaxable 4,812 4,828 5,127 (16 ) -0.3 % (315 ) -6.1 % Securities HTM-taxable (1) 1,479,283 1,268,952 410,851 210,331 16.6 % 1,068,432 n/m Securities HTM-nontaxable 4,509 4,514 7,327 (5 ) -0.1 % (2,818 ) -38.5 % Total securities 3,675,725 3,850,969 3,668,807 (175,244 ) -4.6 % 6,918 0.2 % Paycheck protection program loans (PPP) — 3,235 29,009 (3,235 ) -100.0 % (29,009 ) -100.0 % Loans (includes loans held for sale) 12,530,449 12,006,661 10,550,712 523,788 4.4 % 1,979,737 18.8 % Fed funds sold and reverse repurchases 2,379 6,566 56 (4,187 ) -63.8 % 2,323 n/m Other earning assets 647,760 375,190 1,811,713 272,570 72.6 % (1,163,953 ) -64.2 % Total earning assets 16,856,313 16,242,621 16,060,297 613,692 3.8 % 796,016 5.0 % Allowance for credit losses (ACL), loans heldfor investment (LHFI) (119,978 ) (114,948 ) (99,390 ) (5,030 ) -4.4 % (20,588 ) -20.7 % Other assets 1,762,449 1,630,085 1,550,848 132,364 8.1 % 211,601 13.6 % Total assets $ 18,498,784 $ 17,757,758 $ 17,511,755 $ 741,026 4.2 % $ 987,029 5.6 % Interest-bearing demand deposits $ 4,751,154 $ 4,719,303 $ 4,429,056 $ 31,851 0.7 % $ 322,098 7.3 % Savings deposits 4,193,764 4,379,673 4,791,104 (185,909 ) -4.2 % (597,340 ) -12.5 % Time deposits 1,907,449 1,152,905 1,193,435 754,544 65.4 % 714,014 59.8 % Total interest-bearing deposits 10,852,367 10,251,881 10,413,595 600,486 5.9 % 438,772 4.2 % Fed funds purchased and repurchases 436,535 549,406 212,006 (112,871 ) -20.5 % 224,529 n/m Other borrowings 1,110,843 530,993 91,090 579,850 n/m 1,019,753 n/m Subordinated notes 123,281 123,226 123,061 55 0.0 % 220 0.2 % Junior subordinated debt securities 61,856 61,856 61,856 — 0.0 % — 0.0 % Total interest-bearing liabilities 12,584,882 11,517,362 10,901,608 1,067,520 9.3 % 1,683,274 15.4 % Noninterest-bearing deposits 3,813,248 4,177,113 4,601,108 (363,865 ) -8.7 % (787,860 ) -17.1 % Other liabilities 576,826 569,992 295,287 6,834 1.2 % 281,539 95.3 % Total liabilities 16,974,956 16,264,467 15,798,003 710,489 4.4 % 1,176,953 7.5 % Shareholders' equity 1,523,828 1,493,291 1,713,752 30,537 2.0 % (189,924 ) -11.1 % Total liabilities and equity $ 18,498,784 $ 17,757,758 $ 17,511,755 $ 741,026 4.2 % $ 987,029 5.6 % (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands) (unaudited) Linked Quarter Year over Year PERIOD END BALANCES 3/31/2023 12/31/2022 3/31/2022 $ Change % Change $ Change % Change Cash and due from banks $ 1,297,144 $ 734,787 $ 1,917,564 $ 562,357 76.5 % $ (620,420 ) -32.4 % Fed funds sold and reverse repurchases — 4,000 — (4,000 ) -100.0 % — n/m Securities available for sale (1) 1,984,162 2,024,082 3,018,246 (39,920 ) -2.0 % (1,034,084 ) -34.3 % Securities held to maturity (1) 1,474,338 1,494,514 607,598 (20,176 ) -1.4 % 866,740 n/m PPP loans — — 18,579 — n/m (18,579 ) -100.0 % Loans held for sale (LHFS) 175,926 135,226 222,538 40,700 30.1 % (46,612 ) -20.9 % Loans held for investment (LHFI) 12,497,195 12,204,039 10,397,129 293,156 2.4 % 2,100,066 20.2 % ACL LHFI (122,239 ) (120,214 ) (98,734 ) (2,025 ) -1.7 % (23,505 ) -23.8 % Net LHFI 12,374,956 12,083,825 10,298,395 291,131 2.4 % 2,076,561 20.2 % Premises and equipment, net 223,975 212,365 207,301 11,610 5.5 % 16,674 8.0 % Mortgage servicing rights 127,206 129,677 111,050 (2,471 ) -1.9 % 16,156 14.5 % Goodwill 384,237 384,237 384,237 — 0.0 % — 0.0 % Identifiable intangible assets 3,352 3,640 4,591 (288 ) -7.9 % (1,239 ) -27.0 % Other real estate 1,684 1,986 3,187 (302 ) -15.2 % (1,503 ) -47.2 % Operating lease right-of-use assets 35,315 36,301 34,048 (986 ) -2.7 % 1,267 3.7 % Other assets 794,883 770,838 614,217 24,045 3.1 % 180,666 29.4 % Total assets $ 18,877,178 $ 18,015,478 $ 17,441,551 $ 861,700 4.8 % $ 1,435,627 8.2 % Deposits: Noninterest-bearing $ 3,797,055 $ 4,093,771 $ 4,739,102 $ (296,716 ) -7.2 % $ (942,047 ) -19.9 % Interest-bearing 10,986,606 10,343,877 10,374,190 642,729 6.2 % 612,416 5.9 % Total deposits 14,783,661 14,437,648 15,113,292 346,013 2.4 % (329,631 ) -2.2 % Fed funds purchased and repurchases 477,980 449,331 170,499 28,649 6.4 % 307,481 n/m Other borrowings 1,485,181 1,050,938 84,644 434,243 41.3 % 1,400,537 n/m Subordinated notes 123,317 123,262 123,097 55 0.0 % 220 0.2 % Junior subordinated debt securities 61,856 61,856 61,856 — 0.0 % — 0.0 % ACL on off-balance sheet credit exposures 34,596 36,838 34,517 (2,242 ) -6.1 % 79 0.2 % Operating lease liabilities 37,988 38,932 35,912 (944 ) -2.4 % 2,076 5.8 % Other liabilities 310,500 324,405 186,352 (13,905 ) -4.3 % 124,148 66.6 % Total liabilities 17,315,079 16,523,210 15,810,169 791,869 4.8 % 1,504,910 9.5 % Common stock 12,720 12,705 12,806 15 0.1 % (86 ) -0.7 % Capital surplus 155,297 154,645 167,094 652 0.4 % (11,797 ) -7.1 % Retained earnings 1,636,463 1,600,321 1,600,138 36,142 2.3 % 36,325 2.3 % Accumulated other comprehensiveincome (loss), net of tax (242,381 ) (275,403 ) (148,656 ) 33,022 12.0 % (93,725 ) -63.0 % Total shareholders' equity 1,562,099 1,492,268 1,631,382 69,831 4.7 % (69,283 ) -4.2 % Total liabilities and equity $ 18,877,178 $ 18,015,478 $ 17,441,551 $ 861,700 4.8 % $ 1,435,627 8.2 % (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands except per share data) (unaudited) Quarter Ended Linked Quarter Year over Year INCOME STATEMENTS 3/31/2023 12/31/2022 3/31/2022 $ Change % Change $ Change % Change Interest and fees on LHFS & LHFI-FTE $ 178,967 $ 159,566 $ 93,252 $ 19,401 12.2 % $ 85,715 91.9 % Interest and fees on PPP loans — 101 168 (101 ) -100.0 % (168 ) -100.0 % Interest on securities-taxable 16,761 16,577 12,357 184 1.1 % 4,404 35.6 % Interest on securities-tax exempt-FTE 92 93 122 (1 ) -1.1 % (30 ) -24.6 % Interest on fed funds sold and reverserepurchases 30 71 — (41 ) -57.7 % 30 n/m Other interest income 6,527 3,556 817 2,971 83.5 % 5,710 n/m Total interest income-FTE 202,377 179,964 106,716 22,413 12.5 % 95,661 89.6 % Interest on deposits 40,898 18,438 2,760 22,460 n/m 38,138 n/m Interest on fed funds purchased and repurchases 4,832 4,762 70 70 1.5 % 4,762 n/m Other interest expense 15,575 6,730 1,539 8,845 n/m 14,036 n/m Total interest expense 61,305 29,930 4,369 31,375 n/m 56,936 n/m Net interest income-FTE 141,072 150,034 102,347 (8,962 ) -6.0 % 38,725 37.8 % Provision for credit losses, LHFI 3,244 6,902 (860 ) (3,658 ) -53.0 % 4,104 n/m Provision for credit losses, off-balance sheetcredit exposures (2,242 ) 5,215 (1,106 ) (7,457 ) n/m (1,136 ) n/m Net interest income after provision-FTE 140,070 137,917 104,313 2,153 1.6 % 35,757 34.3 % Service charges on deposit accounts 10,336 11,162 9,451 (826 ) -7.4 % 885 9.4 % Bank card and other fees 7,803 8,191 8,442 (388 ) -4.7 % (639 ) -7.6 % Mortgage banking, net 7,639 3,408 9,873 4,231 n/m (2,234 ) -22.6 % Insurance commissions 14,305 12,019 14,089 2,286 19.0 % 216 1.5 % Wealth management 8,780 8,079 9,054 701 8.7 % (274 ) -3.0 % Other, net 2,514 2,311 3,206 203 8.8 % (692 ) -21.6 % Total noninterest income 51,377 45,170 54,115 6,207 13.7 % (2,738 ) -5.1 % Salaries and employee benefits 74,056 73,469 69,585 587 0.8 % 4,471 6.4 % Services and fees (2) 25,426 27,709 25,314 (2,283 ) -8.2 % 112 0.4 % Net occupancy-premises 7,629 7,898 7,079 (269 ) -3.4 % 550 7.8 % Equipment expense 6,405 6,268 6,061 137 2.2 % 344 5.7 % Litigation settlement expense (1) — 100,750 — (100,750 ) -100.0 % — n/m Other expense (2) 14,811 15,135 13,480 (324 ) -2.1 % 1,331 9.9 % Total noninterest expense 128,327 231,229 121,519 (102,902 ) -44.5 % 6,808 5.6 % Income (loss) before income taxes and tax eq adj 63,120 (48,142 ) 36,909 111,262 n/m 26,211 71.0 % Tax equivalent adjustment 3,477 3,451 3,003 26 0.8 % 474 15.8 % Income (loss) before income taxes 59,643 (51,593 ) 33,906 111,236 n/m 25,737 75.9 % Income taxes 9,343 (17,530 ) 4,695 26,873 n/m 4,648 99.0 % Net income (loss) $ 50,300 $ (34,063 ) $ 29,211 $ 84,363 n/m $ 21,089 72.2 % Per share data Earnings (loss) per share - basic $ 0.82 $ (0.56 ) $ 0.47 $ 1.38 n/m $ 0.35 74.5 % Earnings (loss) per share - diluted $ 0.82 $ (0.56 ) $ 0.47 $ 1.38 n/m $ 0.35 74.5 % Dividends per share $ 0.23 $ 0.23 $ 0.23 — 0.0 % — 0.0 % Weighted average shares outstanding Basic 61,011,059 60,969,400 61,514,395 Diluted 61,193,275 61,173,249 61,709,797 Period end shares outstanding 61,048,516 60,977,686 61,463,392 (1) See Note 1 - Litigation Settlement in the Notes to Consolidated Financials for additional information. (2) During the first quarter of 2023, Trustmark reclassified its debit card transaction fees from other expense to services and fees. Prior periods have been reclassified accordingly. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands) (unaudited) Quarter Ended Linked Quarter Year over Year NONPERFORMING ASSETS (1) 3/31/2023 12/31/2022 3/31/2022 $ Change % Change $ Change % Change Nonaccrual LHFI Alabama $ 10,919 $ 12,300 $ 7,506 $ (1,381 ) -11.2 % $ 3,413 45.5 % Florida 256 227 310 29 12.8 % (54 ) -17.4 % Mississippi (2) 32,560 24,683 21,318 7,877 31.9 % 11,242 52.7 % Tennessee (3) 5,416 5,566 9,266 (150 ) -2.7 % (3,850 ) -41.5 % Texas 23,224 23,196 25,999 28 0.1 % (2,775 ) -10.7 % Total nonaccrual LHFI 72,375 65,972 64,399 6,403 9.7 % 7,976 12.4 % Other real estate Alabama — 194 — (194 ) -100.0 % — n/m Mississippi (2) 1,495 1,769 3,187 (274 ) -15.5 % (1,692 ) -53.1 % Tennessee (3) 189 23 — 166 n/m 189 n/m Total other real estate 1,684 1,986 3,187 (302 ) -15.2 % (1,503 ) -47.2 % Total nonperforming assets $ 74,059 $ 67,958 $ 67,586 $ 6,101 9.0 % $ 6,473 9.6 % LOANS PAST DUE OVER 90 DAYS (1) LHFI $ 2,255 $ 3,929 $ 1,503 $ (1,674 ) -42.6 % $ 752 50.0 % LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase) $ 41,468 $ 49,320 $ 62,078 $ (7,852 ) -15.9 % $ (20,610 ) -33.2 % Quarter Ended Linked Quarter Year over Year ACL LHFI (1) 3/31/2023 12/31/2022 3/31/2022 $ Change % Change $ Change % Change Beginning Balance $ 120,214 $ 115,050 $ 99,457 $ 5,164 4.5 % $ 20,757 20.9 % Provision for credit losses, LHFI 3,244 6,902 (860 ) (3,658 ) -53.0 % 4,104 n/m Charge-offs (2,996 ) (3,893 ) (2,242 ) 897 23.0 % (754 ) -33.6 % Recoveries 1,777 2,155 2,379 (378 ) -17.5 % (602 ) -25.3 % Net (charge-offs) recoveries (1,219 ) (1,738 ) 137 519 29.9 % (1,356 ) n/m Ending Balance $ 122,239 $ 120,214 $ 98,734 $ 2,025 1.7 % $ 23,505 23.8 % NET (CHARGE-OFFS) RECOVERIES (1) Alabama $ (268 ) $ 98 $ 699 $ (366 ) n/m $ (967 ) n/m Florida (36 ) (60 ) (26 ) 24 40.0 % (10 ) -38.5 % Mississippi (2) (775 ) (1,657 ) (88 ) 882 53.2 % (687 ) n/m Tennessee (3) (124 ) (195 ) (424 ) 71 36.4 % 300 70.8 % Texas (16 ) 76 (24 ) (92 ) n/m 8 33.3 % Total net (charge-offs) recoveries $ (1,219 ) $ (1,738 ) $ 137 $ 519 29.9 % $ (1,356 ) n/m (1) Excludes PPP loans. (2) Mississippi includes Central and Southern Mississippi Regions. (3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands) (unaudited) Quarter Ended AVERAGE BALANCES 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Securities AFS-taxable (1) $ 2,187,121 $ 2,572,675 $ 2,824,254 $ 3,094,364 $ 3,245,502 Securities AFS-nontaxable 4,812 4,828 4,928 5,110 5,127 Securities HTM-taxable (1) 1,479,283 1,268,952 1,140,685 811,599 410,851 Securities HTM-nontaxable 4,509 4,514 5,057 5,630 7,327 Total securities 3,675,725 3,850,969 3,974,924 3,916,703 3,668,807 PPP loans — 3,235 9,821 17,746 29,009 Loans (includes loans held for sale) 12,530,449 12,006,661 11,459,551 10,910,178 10,550,712 Fed funds sold and reverse repurchases 2,379 6,566 226 110 56 Other earning assets 647,760 375,190 325,620 1,139,312 1,811,713 Total earning assets 16,856,313 16,242,621 15,770,142 15,984,049 16,060,297 ACL LHFI (119,978 ) (114,948 ) (102,951 ) (99,106 ) (99,390 ) Other assets 1,762,449 1,630,085 1,576,653 1,513,127 1,550,848 Total assets $ 18,498,784 $ 17,757,758 $ 17,243,844 $ 17,398,070 $ 17,511,755 Interest-bearing demand deposits $ 4,751,154 $ 4,719,303 $ 4,613,733 $ 4,578,235 $ 4,429,056 Savings deposits 4,193,764 4,379,673 4,514,579 4,638,849 4,791,104 Time deposits 1,907,449 1,152,905 1,111,440 1,159,065 1,193,435 Total interest-bearing deposits 10,852,367 10,251,881 10,239,752 10,376,149 10,413,595 Fed funds purchased and repurchases 436,535 549,406 249,809 118,753 212,006 Other borrowings 1,110,843 530,993 88,697 80,283 91,090 Subordinated notes 123,281 123,226 123,171 123,116 123,061 Junior subordinated debt securities 61,856 61,856 61,856 61,856 61,856 Total interest-bearing liabilities 12,584,882 11,517,362 10,763,285 10,760,157 10,901,608 Noninterest-bearing deposits 3,813,248 4,177,113 4,444,370 4,590,338 4,601,108 Other liabilities 576,826 569,992 429,720 439,266 295,287 Total liabilities 16,974,956 16,264,467 15,637,375 15,789,761 15,798,003 Shareholders' equity 1,523,828 1,493,291 1,606,469 1,608,309 1,713,752 Total liabilities and equity $ 18,498,784 $ 17,757,758 $ 17,243,844 $ 17,398,070 $ 17,511,755 (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands) (unaudited) PERIOD END BALANCES 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Cash and due from banks $ 1,297,144 $ 734,787 $ 479,637 $ 742,461 $ 1,917,564 Fed funds sold and reverse repurchases — 4,000 10,098 — — Securities available for sale (1) 1,984,162 2,024,082 2,444,486 2,644,364 3,018,246 Securities held to maturity (1) 1,474,338 1,494,514 1,156,985 1,137,754 607,598 PPP loans — — 4,798 12,549 18,579 LHFS 175,926 135,226 165,213 190,186 222,538 LHFI 12,497,195 12,204,039 11,586,064 10,944,840 10,397,129 ACL LHFI (122,239 ) (120,214 ) (115,050 ) (103,140 ) (98,734 ) Net LHFI 12,374,956 12,083,825 11,471,014 10,841,700 10,298,395 Premises and equipment, net 223,975 212,365 210,761 207,914 207,301 Mortgage servicing rights 127,206 129,677 132,615 121,014 111,050 Goodwill 384,237 384,237 384,237 384,237 384,237 Identifiable intangible assets 3,352 3,640 3,952 4,264 4,591 Other real estate 1,684 1,986 2,971 3,034 3,187 Operating lease right-of-use assets 35,315 36,301 37,282 34,684 34,048 Other assets 794,883 770,838 686,585 627,349 614,217 Total assets $ 18,877,178 $ 18,015,478 $ 17,190,634 $ 16,951,510 $ 17,441,551 Deposits: Noninterest-bearing $ 3,797,055 $ 4,093,771 $ 4,358,805 $ 4,509,472 $ 4,739,102 Interest-bearing 10,986,606 10,343,877 10,066,375 10,260,696 10,374,190 Total deposits 14,783,661 14,437,648 14,425,180 14,770,168 15,113,292 Fed funds purchased and repurchases 477,980 449,331 544,068 70,157 170,499 Other borrowings 1,485,181 1,050,938 223,172 72,553 84,644 Subordinated notes 123,317 123,262 123,207 123,152 123,097 Junior subordinated debt securities 61,856 61,856 61,856 61,856 61,856 ACL on off-balance sheet credit exposures 34,596 36,838 31,623 32,949 34,517 Operating lease liabilities 37,988 38,932 39,797 37,108 35,912 Other liabilities 310,500 324,405 232,786 196,871 186,352 Total liabilities 17,315,079 16,523,210 15,681,689 15,364,814 15,810,169 Common stock 12,720 12,705 12,700 12,752 12,806 Capital surplus 155,297 154,645 154,150 160,876 167,094 Retained earnings 1,636,463 1,600,321 1,648,507 1,620,210 1,600,138 Accumulated other comprehensive income (loss),net of tax (242,381 ) (275,403 ) (306,412 ) (207,142 ) (148,656 ) Total shareholders' equity 1,562,099 1,492,268 1,508,945 1,586,696 1,631,382 Total liabilities and equity $ 18,877,178 $ 18,015,478 $ 17,190,634 $ 16,951,510 $ 17,441,551 (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands except per share data) (unaudited) Quarter Ended INCOME STATEMENTS 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Interest and fees on LHFS & LHFI-FTE $ 178,967 $ 159,566 $ 129,395 $ 103,033 $ 93,252 Interest and fees on PPP loans — 101 186 184 168 Interest on securities-taxable 16,761 16,577 16,222 14,561 12,357 Interest on securities-tax exempt-FTE 92 93 100 107 122 Interest on fed funds sold and reverse repurchases 30 71 2 1 — Other interest income 6,527 3,556 1,493 2,214 817 Total interest income-FTE 202,377 179,964 147,398 120,100 106,716 Interest on deposits 40,898 18,438 5,097 2,774 2,760 Interest on fed funds purchased and repurchases 4,832 4,762 1,225 70 70 Other interest expense 15,575 6,730 1,996 1,664 1,539 Total interest expense 61,305 29,930 8,318 4,508 4,369 Net interest income-FTE 141,072 150,034 139,080 115,592 102,347 Provision for credit losses, LHFI 3,244 6,902 12,919 2,716 (860 ) Provision for credit losses, off-balance sheetcredit exposures (2,242 ) 5,215 (1,326 ) (1,568 ) (1,106 ) Net interest income after provision-FTE 140,070 137,917 127,487 114,444 104,313 Service charges on deposit accounts 10,336 11,162 11,318 10,226 9,451 Bank card and other fees 7,803 8,191 9,305 10,167 8,442 Mortgage banking, net 7,639 3,408 6,876 8,149 9,873 Insurance commissions 14,305 12,019 13,911 13,702 14,089 Wealth management 8,780 8,079 8,778 9,102 9,054 Other, net 2,514 2,311 2,418 1,907 3,206 Total noninterest income 51,377 45,170 52,606 53,253 54,115 Salaries and employee benefits 74,056 73,469 72,707 71,679 69,585 Services and fees (2) 25,426 27,709 26,787 25,659 25,314 Net occupancy-premises 7,629 7,898 7,395 6,892 7,079 Equipment expense 6,405 6,268 6,072 6,047 6,061 Litigation settlement expense (1) — 100,750 — — — Other expense (2) 14,811 15,135 13,737 13,490 13,480 Total noninterest expense 128,327 231,229 126,698 123,767 121,519 Income (loss) before income taxes and tax eq adj 63,120 (48,142 ) 53,395 43,930 36,909 Tax equivalent adjustment 3,477 3,451 2,975 2,916 3,003 Income (loss) before income taxes 59,643 (51,593 ) 50,420 41,014 33,906 Income taxes 9,343 (17,530 ) 7,965 6,730 4,695 Net income (loss) $ 50,300 $ (34,063 ) $ 42,455 $ 34,284 $ 29,211 Per share data Earnings (loss) per share - basic $ 0.82 $ (0.56 ) $ 0.69 $ 0.56 $ 0.47 Earnings (loss) per share - diluted $ 0.82 $ (0.56 ) $ 0.69 $ 0.56 $ 0.47 Dividends per share $ 0.23 $ 0.23 $ 0.23 $ 0.23 $ 0.23 Weighted average shares outstanding Basic 61,011,059 60,969,400 61,114,804 61,378,226 61,514,395 Diluted 61,193,275 61,173,249 61,318,715 61,546,285 61,709,797 Period end shares outstanding 61,048,516 60,977,686 60,953,864 61,201,123 61,463,392 (1) See Note 1 - Litigation Settlement in the Notes to Consolidated Financials for additional information. (2) During the first quarter of 2023, Trustmark reclassified its debit card transaction fees from other expense to services and fees. Prior periods have been reclassified accordingly. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands) (unaudited) Quarter Ended NONPERFORMING ASSETS (1) 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Nonaccrual LHFI Alabama $ 10,919 $ 12,300 $ 12,710 $ 2,698 $ 7,506 Florida 256 227 227 233 310 Mississippi (2) 32,560 24,683 23,517 23,039 21,318 Tennessee (3) 5,416 5,566 5,120 9,500 9,266 Texas 23,224 23,196 26,353 26,582 25,999 Total nonaccrual LHFI 72,375 65,972 67,927 62,052 64,399 Other real estate Alabama — 194 217 84 — Mississippi (2) 1,495 1,769 2,754 2,950 3,187 Tennessee (3) 189 23 — — — Total other real estate 1,684 1,986 2,971 3,034 3,187 Total nonperforming assets $ 74,059 $ 67,958 $ 70,898 $ 65,086 $ 67,586 LOANS PAST DUE OVER 90 DAYS (1) LHFI $ 2,255 $ 3,929 $ 1,842 $ 1,347 $ 1,503 LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase) $ 41,468 $ 49,320 $ 48,313 $ 51,164 $ 62,078 Quarter Ended ACL LHFI (1) 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Beginning Balance $ 120,214 $ 115,050 $ 103,140 $ 98,734 $ 99,457 Provision for credit losses, LHFI 3,244 6,902 12,919 2,716 (860 ) Charge-offs (2,996 ) (3,893 ) (2,920 ) (2,277 ) (2,242 ) Recoveries 1,777 2,155 1,911 3,967 2,379 Net (charge-offs) recoveries (1,219 ) (1,738 ) (1,009 ) 1,690 137 Ending Balance $ 122,239 $ 120,214 $ 115,050 $ 103,140 $ 98,734 NET (CHARGE-OFFS) RECOVERIES (1) Alabama $ (268 ) $ 98 $ 93 $ 1,129 $ 699 Florida (36 ) (60 ) (23 ) 761 (26 ) Mississippi (2) (775 ) (1,657 ) (702 ) (266 ) (88 ) Tennessee (3) (124 ) (195 ) (202 ) 31 (424 ) Texas (16 ) 76 (175 ) 35 (24 ) Total net (charge-offs) recoveries $ (1,219 ) $ (1,738 ) $ (1,009 ) $ 1,690 $ 137 (1) Excludes PPP loans. (2) Mississippi includes Central and Southern Mississippi Regions. (3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION March 31, 2023 ($ in thousands) (unaudited) Quarter Ended FINANCIAL RATIOS AND OTHER DATA 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Return on average equity 13.39 % -9.05 % 10.48 % 8.55 % 6.91 % Return on average tangible equity 18.03 % -12.14 % 13.90 % 11.36 % 9.05 % Return on average assets 1.10 % -0.76 % 0.98 % 0.79 % 0.68 % Interest margin - Yield - FTE 4.87 % 4.40 % 3.71 % 3.01 % 2.69 % Interest margin - Cost 1.47 % 0.73 % 0.21 % 0.11 % 0.11 % Net interest margin - FTE 3.39 % 3.66 % 3.50 % 2.90 % 2.58 % Efficiency ratio (1) 65.60 % 65.85 % 64.96 % 71.89 % 76.44 % Full-time equivalent employees 2,758 2,738 2,717 2,727 2,725 CREDIT QUALITY RATIOS (2) Net (recoveries) charge-offs / average loans 0.04 % 0.06 % 0.03 % -0.06 % -0.01 % Provision for credit losses, LHFI / average loans 0.10 % 0.23 % 0.45 % 0.10 % -0.03 % Nonaccrual LHFI / (LHFI + LHFS) 0.57 % 0.53 % 0.58 % 0.56 % 0.61 % Nonperforming assets / (LHFI + LHFS) 0.58 % 0.55 % 0.60 % 0.58 % 0.64 % Nonperforming assets / (LHFI + LHFS+ other real estate) 0.58 % 0.55 % 0.60 % 0.58 % 0.64 % ACL LHFI / LHFI 0.98 % 0.99 % 0.99 % 0.94 % 0.95 % ACL LHFI-commercial / commercial LHFI 0.80 % 0.85 % 0.93 % 0.88 % 0.95 % ACL LHFI-consumer / consumer andhome mortgage LHFI 1.54 % 1.41 % 1.20 % 1.14 % 0.96 % ACL LHFI / nonaccrual LHFI 168.90 % 182.22 % 169.37 % 166.22 % 153.32 % ACL LHFI / nonaccrual LHFI(excl individually analyzed loans) 320.80 % 399.19 % 466.03 % 475.27 % 484.01 % CAPITAL RATIOS Total equity / total assets 8.28 % 8.28 % 8.78 % 9.36 % 9.35 % Tangible equity / tangible assets 6.35 % 6.27 % 6.67 % 7.23 % 7.29 % Tangible equity / risk-weighted assets 7.94 % 7.61 % 8.15 % 9.16 % 9.79 % Tier 1 leverage ratio 8.29 % 8.47 % 9.01 % 8.80 % 8.66 % Common equity tier 1 capital ratio 9.76 % 9.74 % 10.63 % 11.01 % 11.23 % Tier 1 risk-based capital ratio 10.17 % 10.15 % 11.06 % 11.47 % 11.70 % Total risk-based capital ratio 11.95 % 11.91 % 12.85 % 13.26 % 13.53 % STOCK PERFORMANCE Market value-Close $ 24.70 $ 34.91 $ 30.63 $ 29.19 $ 30.39 Book value $ 25.59 $ 24.47 $ 24.76 $ 25.93 $ 26.54 Tangible book value $ 19.24 $ 18.11 $ 18.39 $ 19.58 $ 20.22 (1) See Note 7 – Non-GAAP Financial Measures in the Notes to Consolidated Financials for Trustmark’s efficiency ratio calculation. (2) Excludes PPP loans. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands) (unaudited) Note 1 - Litigation Settlement As previously announced, on December 31, 2022, Trustmark National Bank (“Trustmark”) agreed to a settlement in principle (the “Settlement”) relating to litigation involving the Stanford Financial Group that includes a lawsuit initially filed in the District Court of Harris County, Texas on August 23, 2009 and also includes other subsequently-filed Stanford-related lawsuits. Trustmark Corporation, the parent company of Trustmark, has provided disclosure relating to these matters in its current report on Form 8-K filed on January 3, 2023, and in its periodic reports on Forms 10-K and 10-Q throughout the pendency of these actions. The parties to the Settlement are, on the one hand, (i) Ralph S. Janvey, solely in his capacity as the court-appointed receiver (the “Receiver”) for the Stanford Receivership Estate; (ii) the Official Stanford Investors Committee; (iii) each of the plaintiffs in the Rotstain and Smith Actions (as defined below); and, on the other hand, (iv) Trustmark. Under the terms of the Settlement, the parties agreed to settle and dismiss Rotstain, et al. v. Trustmark National Bank, et al., CA No. 4-22-CV-00800 (S.D. Tex.) (the “Rotstain Action”), Smith et al. v. Independent Bank, et al., CA No. 4-20-CV-00675 (S.D. Tex.) (the “Smith Action”), and all current or future claims arising from or related to Stanford. In addition, the Settlement provides that the parties will request dismissal of Jackson, et al., v. Cox, et al., CA No. 3:10-CV-0328 (N.D. Tex.) (the “Jackson Action” and, collectively with the Rotstain Action and the Smith Action, the “Actions”) pursuant to the terms of the bar orders described below. If the Settlement, including the bar orders described below, is approved by the Court and is not subject to further appeal, Trustmark will make a one-time cash payment of $100.0 million to the Receiver. Trustmark was relieved of pre-trial deadlines and the February 27, 2023 trial setting in the Rotstain Action pending final Court approval of a Settlement Agreement reflecting the terms of the Settlement and pending entry of the bar orders. The Smith and Jackson Actions are currently stayed. The Settlement included the parties’ agreement to seek the Northern District of Texas District Court’s entry of bar orders prohibiting any continued or future claims against Trustmark and its related parties relating to Stanford, whether asserted to date or not. The bar orders therefore would prohibit all litigation relating to Stanford described in Trustmark Corporation’s SEC periodic reports, including the Actions and any pending matters, as well as any actions relating to Stanford that may be brought in the future. Final Court approval of these bar orders is a condition of the Settlement. The Settlement was also subject to the execution and delivery of a definitive Settlement Agreement reflecting the terms of the Settlement, which was fully executed by the parties on January 13, 2023, and notice to Stanford’s investor claimants, which the Receiver has effectuated. The Settlement is also subject to final, non-appealable approval by the U.S. District Court for the Northern District of Texas. That Court has scheduled a hearing to approve the Settlement for May 3, 2023, but the timing of any final decision by the Court is subject to the discretion of the Court and any appeal. Robert Allen Stanford (founder of the Stanford Financial Group) is the only person or entity who filed an objection to the Settlement. The Court has previously overruled objections filed by Mr. Stanford in connection with prior Stanford-related settlements. While Trustmark believes that the Settlement is consistent with the terms of prior Stanford-related settlements that have been approved by the Court and were not successfully appealed, it is possible that the Court may decide not to approve the Settlement Agreement or that the Fifth Circuit Court of Appeals could decide to accept an appeal thereof. The Settlement Agreement provides that Trustmark makes no admission of liability or wrongdoing in connection with any Stanford matter. As has been the case throughout the pendency of the Actions, Trustmark expressly denies any liability or wrongdoing with respect to any matter alleged in regard of the multi-billion-dollar Ponzi scheme operated by Stanford for almost 20 years. Trustmark’s relationship with Stanford consisted of ordinary banking services provided to business deposit customers. Trustmark and Trustmark Corporation determined that it was in the best interest of Trustmark, Trustmark Corporation and the shareholders of Trustmark Corporation to enter into the Settlement and the Settlement Agreement to eliminate the risk, ongoing expense, uncertainty as to ultimate outcome, and imposition on management and the business of Trustmark of further litigation of the Actions and related Stanford claims. As the time of the entry into the Settlement, Trustmark Corporation recognized $100.0 million of litigation settlement expense, as well as an additional $750 thousand in legal fees, which were included in noninterest expense related to the Stanford litigation during the fourth quarter of 2022. Trustmark Corporation expects that the Settlement will be tax deductible. Trustmark remains substantially above levels considered to be well-capitalized under all relevant standards. The foregoing description of the Settlement Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Settlement Agreement, a copy of which was filed as an exhibit to Trustmark Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which was filed on February 16, 2023. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands) (unaudited) Note 2 - Securities Available for Sale and Held to Maturity The following table is a summary of the estimated fair value of securities available for sale and the amortized cost of securities held to maturity: 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 SECURITIES AVAILABLE FOR SALE U.S. Treasury securities $ 386,903 $ 391,513 $ 416,278 $ 419,696 $ 361,822 U.S. Government agency obligations 7,254 7,766 9,116 11,947 12,623 Obligations of states and political subdivisions 4,907 4,862 4,763 5,179 5,359 Mortgage-backed securities Residential mortgage pass-through securities Guaranteed by GNMA 26,851 27,097 28,164 32,240 35,117 Issued by FNMA and FHLMC 1,317,848 1,345,463 1,718,057 1,888,546 2,038,331 Other residential mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 108,192 115,140 126,138 144,158 164,506 Commercial mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 132,207 132,241 141,970 142,598 400,488 Total securities available for sale $ 1,984,162 $ 2,024,082 $ 2,444,486 $ 2,644,364 $ 3,018,246 SECURITIES HELD TO MATURITY U.S. Treasury securities $ 28,486 $ 28,295 $ — $ — $ — Obligations of states and political subdivisions 4,507 4,510 4,512 5,320 7,324 Mortgage-backed securities Residential mortgage pass-through securities Guaranteed by GNMA 4,336 4,442 4,527 4,624 4,831 Issued by FNMA and FHLMC 497,854 509,311 179,375 185,554 192,373 Other residential mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 179,334 188,201 197,923 210,479 224,012 Commercial mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 759,821 759,755 770,648 731,777 179,058 Total securities held to maturity $ 1,474,338 $ 1,494,514 $ 1,156,985 $ 1,137,754 $ 607,598 During the fourth quarter of 2022, Trustmark reclassified $422.9 million of securities available for sale to securities held to maturity. The securities were transferred at fair value, which became the cost basis for the securities held to maturity. At the date of transfer, the net unrealized holding loss on the available for sale securities totaled approximately $57.1 million ($42.8 million, net of tax). The net unrealized holding loss will be amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. There were no gains or losses recognized as a result of the transfer. During the second quarter of 2022, Trustmark reclassified $343.1 million of securities available for sale to securities held to maturity. The securities were transferred at fair value, which became the cost basis for the securities held to maturity. At the date of transfer, the net unrealized holding loss on the available for sale securities totaled approximately $34.8 million ($26.1 million, net of tax). The net unrealized holding loss will be amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. There were no gains or losses recognized as a result of the transfer. At March 31, 2023, the net unamortized, unrealized loss included in accumulated other comprehensive income (loss) in the accompanying balance sheet for securities held to maturity transferred from securities available for sale totaled approximately $88.5 million ($66.3 million, net of tax). Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 99.8% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands) (unaudited) Note 3 – Loan Composition LHFI consisted of the following during the periods presented: LHFI BY TYPE 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Loans secured by real estate: Construction, land development and other land loans $ 1,723,772 $ 1,719,542 $ 1,647,395 $ 1,440,058 $ 1,273,959 Secured by 1-4 family residential properties 2,822,048 2,775,847 2,597,112 2,424,962 2,106,998 Secured by nonfarm, nonresidential properties 3,375,579 3,278,830 3,206,946 3,178,079 2,975,039 Other real estate secured 847,527 742,538 593,119 555,311 715,939 Commercial and industrial loans 1,882,360 1,821,259 1,689,532 1,551,001 1,495,060 Consumer loans 162,911 166,425 163,412 160,716 154,215 State and other political subdivision loans 1,193,727 1,223,863 1,188,703 1,110,795 1,215,023 Other loans 489,271 475,735 499,845 523,918 460,896 LHFI 12,497,195 12,204,039 11,586,064 10,944,840 10,397,129 ACL LHFI (122,239 ) (120,214 ) (115,050 ) (103,140 ) (98,734 ) Net LHFI $ 12,374,956 $ 12,083,825 $ 11,471,014 $ 10,841,700 $ 10,298,395 The following table presents the LHFI composition by region and reflects each region’s diversified mix of loans: March 31, 2023 LHFI - COMPOSITION BY REGION Total Alabama Florida Mississippi (Central and Southern Regions) Tennessee (Memphis, TN and Northern MS Regions) Texas Loans secured by real estate: Construction, land development and other land loans $ 1,723,772 $ 909,783 $ 74,625 $ 333,986 $ 25,741 $ 379,637 Secured by 1-4 family residential properties 2,822,048 135,830 52,395 2,522,951 81,540 29,332 Secured by nonfarm, nonresidential properties 3,375,579 901,613 204,533 1,462,426 161,899 645,108 Other real estate secured 847,527 264,170 1,985 334,758 7,018 239,596 Commercial and industrial loans 1,882,360 557,088 28,068 768,940 272,153 256,111 Consumer loans 162,911 23,109 9,401 99,817 19,172 11,412 State and other political subdivision loans 1,193,727 74,925 62,353 845,902 27,380 183,167 Other loans 489,271 101,083 9,165 262,889 53,156 62,978 Loans $ 12,497,195 $ 2,967,601 $ 442,525 $ 6,631,669 $ 648,059 $ 1,807,341 CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION Lots $ 66,925 $ 31,642 $ 10,281 $ 15,010 $ 2,220 $ 7,772 Development 142,477 74,820 1,379 30,507 6,773 28,998 Unimproved land 103,649 22,480 14,148 31,056 4,754 31,211 1-4 family construction 369,163 212,970 19,447 91,177 11,994 33,575 Other construction 1,041,558 567,871 29,370 166,236 — 278,081 Construction, land development and other land loans $ 1,723,772 $ 909,783 $ 74,625 $ 333,986 $ 25,741 $ 379,637 TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands) (unaudited) Note 3 – Loan Composition (continued) March 31, 2023 Total Alabama Florida Mississippi (Central and Southern Regions) Tennessee (Memphis, TN and Northern MS Regions) Texas LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION Non-owner occupied: Retail $ 347,775 $ 124,551 $ 26,625 $ 113,299 $ 21,143 $ 62,157 Office 292,032 102,166 16,905 105,561 10,255 57,145 Hotel/motel 290,681 168,832 40,506 53,942 27,401 — Mini-storage 154,053 28,261 2,058 104,063 481 19,190 Industrial 333,132 69,107 17,524 105,769 2,774 137,958 Health care 70,317 40,435 — 27,002 340 2,540 Convenience stores 33,226 7,318 592 14,709 582 10,025 Nursing homes/senior living 449,014 152,155 — 202,163 5,423 89,273 Other 125,798 40,814 9,840 53,248 8,696 13,200 Total non-owner occupied loans 2,096,028 733,639 114,050 779,756 77,095 391,488 Owner-occupied: Office 167,317 43,797 36,759 49,046 10,104 27,611 Churches 68,028 15,531 4,592 38,625 6,697 2,583 Industrial warehouses 168,429 17,468 4,644 43,359 16,083 86,875 Health care 144,201 11,397 6,272 105,568 2,323 18,641 Convenience stores 133,875 12,194 21,451 63,187 235 36,808 Retail 94,435 11,194 9,588 44,745 18,987 9,921 Restaurants 55,190 4,247 4,105 31,642 11,931 3,265 Auto dealerships 47,930 6,470 222 23,688 17,550 — Nursing homes/senior living 257,998 32,615 — 199,183 — 26,200 Other 142,148 13,061 2,850 83,627 894 41,716 Total owner-occupied loans 1,279,551 167,974 90,483 682,670 84,804 253,620 Loans secured by nonfarm, nonresidential properties $ 3,375,579 $ 901,613 $ 204,533 $ 1,462,426 $ 161,899 $ 645,108 Note 4 – Yields on Earning Assets and Interest-Bearing Liabilities The following table illustrates the yields on earning assets by category as well as the rates paid on interest-bearing liabilities on a tax equivalent basis: Quarter Ended 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Securities – taxable 1.85 % 1.71 % 1.62 % 1.50 % 1.37 % Securities – nontaxable 4.00 % 3.95 % 3.97 % 4.00 % 3.97 % Securities – total 1.86 % 1.72 % 1.63 % 1.50 % 1.38 % PPP loans — 12.39 % 7.51 % 4.16 % 2.35 % Loans - LHFI & LHFS 5.79 % 5.27 % 4.48 % 3.79 % 3.58 % Loans - total 5.79 % 5.27 % 4.48 % 3.79 % 3.58 % Fed funds sold & reverse repurchases 5.11 % 4.29 % 3.51 % 3.65 % — Other earning assets 4.09 % 3.76 % 1.82 % 0.78 % 0.18 % Total earning assets 4.87 % 4.40 % 3.71 % 3.01 % 2.69 % Interest-bearing deposits 1.53 % 0.71 % 0.20 % 0.11 % 0.11 % Fed funds purchased & repurchases 4.49 % 3.44 % 1.95 % 0.24 % 0.13 % Other borrowings 4.87 % 3.73 % 2.89 % 2.52 % 2.26 % Total interest-bearing liabilities 1.98 % 1.03 % 0.31 % 0.17 % 0.16 % Total Deposits 1.13 % 0.51 % 0.14 % 0.07 % 0.07 % Net interest margin 3.39 % 3.66 % 3.50 % 2.90 % 2.58 % Net interest margin excluding PPP loans and the FRB balance 3.36 % 3.66 % 3.53 % 3.06 % 2.88 % TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands) (unaudited) Note 4 – Yields on Earning Assets and Interest-Bearing Liabilities (continued) Reflected in the table above are yields on earning assets and liabilities, along with the net interest margin which equals reported net interest income-FTE, annualized, as a percent of average earning assets. In addition, the table includes net interest margin excluding PPP loans and the balance held at the Federal Reserve Bank of Atlanta (FRB), which equals reported net interest income-FTE excluding interest income on PPP loans and the FRB balance, annualized, as a percent of average earning assets excluding average PPP loans and the FRB balance. At March 31, 2023 and December 31, 2022, the average FRB balance totaled $555.5 million and $299.2 million, respectively, and is included in other earning assets in the accompanying average consolidated balance sheets. The net interest margin excluding PPP loans and the FRB balance decreased 30 basis points when compared to the fourth quarter of 2022, totaling 3.36% for the first quarter of 2023. The decrease in the net interest margin excluding PPP loans and the FRB balance was due to increased costs of interest-bearing deposits, which was partially offset by increases in the yields on the loans held for investment and held for sale portfolio and the securities portfolio. Note 5 – Mortgage Banking Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that offsets the changes in fair value of mortgage servicing rights (MSR) attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under generally accepted accounting principles (GAAP). Changes in the fair value of these exchange-traded derivative instruments, including administrative costs, are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of the MSR. The MSR fair value represents the present value of future cash flows, which among other things includes decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the change in value of hedge instruments to the change in the fair value of the MSR asset attributable to changes in interest rates and other market driven changes in valuation inputs and assumptions. The impact of this strategy resulted in a net negative ineffectiveness of $1.8 million during the first quarter of 2023. The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements: Quarter Ended 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Mortgage servicing income, net $ 6,785 $ 6,636 $ 6,669 $ 6,557 $ 6,429 Change in fair value-MSR from runoff (1,145 ) (2,981 ) (3,462 ) (3,806 ) (3,785 ) Gain on sales of loans, net 3,797 3,328 4,597 6,030 6,223 Mortgage banking income before hedge ineffectiveness 9,437 6,983 7,804 8,781 8,867 Change in fair value-MSR from market changes (3,972 ) (3,348 ) 10,770 8,739 22,020 Change in fair value of derivatives 2,174 (227 ) (11,698 ) (9,371 ) (21,014 ) Net positive (negative) hedge ineffectiveness (1,798 ) (3,575 ) (928 ) (632 ) 1,006 Mortgage banking, net $ 7,639 $ 3,408 $ 6,876 $ 8,149 $ 9,873 TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands) (unaudited) Note 6 – Other Noninterest Income and Expense Other noninterest income consisted of the following for the periods presented: Quarter Ended 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Partnership amortization for tax credit purposes $ (1,961 ) $ (1,869 ) $ (1,531 ) $ (1,475 ) $ (1,336 ) Increase in life insurance cash surrender value 1,693 1,687 1,676 1,683 1,627 Other miscellaneous income 2,782 2,493 2,273 1,699 2,915 Total other, net $ 2,514 $ 2,311 $ 2,418 $ 1,907 $ 3,206 Trustmark invests in partnerships that provide income tax credits on a Federal and/or State basis (i.e., new market tax credits, low-income housing tax credits and historical tax credits). The income tax credits related to these partnerships are utilized as specifically allowed by income tax law and are recorded as a reduction in income tax expense. Other noninterest expense consisted of the following for the periods presented: Quarter Ended 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Loan expense (1) $ 2,538 $ 2,908 $ 2,866 $ 2,947 $ 3,528 Amortization of intangibles 288 312 312 328 482 FDIC assessment expense 2,370 2,130 1,945 1,810 1,500 Other real estate expense, net 172 18 497 623 35 Other miscellaneous expense 9,443 9,767 8,117 7,782 7,935 Total other expense (1) $ 14,811 $ 15,135 $ 13,737 $ 13,490 $ 13,480 (1) During the first quarter of 2023, Trustmark reclassified its debit card transaction fees from other expense to services and fees. Prior periods have been reclassified accordingly. Note 7 – Non-GAAP Financial Measures In addition to capital ratios defined by GAAP and banking regulators, Trustmark utilizes various tangible common equity measures when evaluating capital utilization and adequacy. Tangible common equity, as defined by Trustmark, represents common equity less goodwill and identifiable intangible assets. Trustmark’s Common Equity Tier 1 capital includes common stock, capital surplus and retained earnings, and is reduced by goodwill and other intangible assets, net of associated net deferred tax liabilities as well as disallowed deferred tax assets and threshold deductions as applicable. Trustmark believes these measures are important because they reflect the level of capital available to withstand unexpected market conditions. Additionally, presentation of these measures allows readers to compare certain aspects of Trustmark’s capitalization to other organizations. These ratios differ from capital measures defined by banking regulators principally in that the numerator excludes shareholders’ equity associated with preferred securities, the nature and extent of which varies across organizations. In Management’s experience, many stock analysts use tangible common equity measures in conjunction with more traditional bank capital ratios to compare capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, typically stemming from the use of the purchase accounting method in accounting for mergers and acquisitions. These calculations are intended to complement the capital ratios defined by GAAP and banking regulators. Because GAAP does not include these capital ratio measures, Trustmark believes there are no comparable GAAP financial measures to these tangible common equity ratios. Despite the importance of these measures to Trustmark, there are no standardized definitions for them and, as a result, Trustmark’s calculations may not be comparable with other organizations. Also, there may be limits in the usefulness of these measures to investors. As a result, Trustmark encourages readers to consider its audited consolidated financial statements and the notes related thereto in their entirety and not to rely on any single financial measure. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands except per share data) (unaudited) Note 7 – Non-GAAP Financial Measures (continued) Quarter Ended 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 TANGIBLE EQUITY AVERAGE BALANCES Total shareholders' equity $ 1,523,828 $ 1,493,291 $ 1,606,469 $ 1,608,309 $ 1,713,752 Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) Identifiable intangible assets (3,523 ) (3,816 ) (4,131 ) (4,436 ) (4,879 ) Total average tangible equity $ 1,136,068 $ 1,105,238 $ 1,218,101 $ 1,219,636 $ 1,324,636 PERIOD END BALANCES Total shareholders' equity $ 1,562,099 $ 1,492,268 $ 1,508,945 $ 1,586,696 $ 1,631,382 Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) Identifiable intangible assets (3,352 ) (3,640 ) (3,952 ) (4,264 ) (4,591 ) Total tangible equity (a) $ 1,174,510 $ 1,104,391 $ 1,120,756 $ 1,198,195 $ 1,242,554 TANGIBLE ASSETS Total assets $ 18,877,178 $ 18,015,478 $ 17,190,634 $ 16,951,510 $ 17,441,551 Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) Identifiable intangible assets (3,352 ) (3,640 ) (3,952 ) (4,264 ) (4,591 ) Total tangible assets (b) $ 18,489,589 $ 17,627,601 $ 16,802,445 $ 16,563,009 $ 17,052,723 Risk-weighted assets (c) $ 14,793,893 $ 14,521,078 $ 13,748,819 $ 13,076,981 $ 12,691,545 NET INCOME (LOSS) ADJUSTED FOR INTANGIBLE AMORTIZATION Net income (loss) $ 50,300 $ (34,063 ) $ 42,455 $ 34,284 $ 29,211 Plus: Intangible amortization net of tax 216 234 234 246 362 Net income (loss) adjusted for intangible amortization $ 50,516 $ (33,829 ) $ 42,689 $ 34,530 $ 29,573 Period end common shares outstanding (d) 61,048,516 60,977,686 60,953,864 61,201,123 61,463,392 TANGIBLE COMMON EQUITY MEASUREMENTS Return on average tangible equity (1) 18.03 % -12.14 % 13.90 % 11.36 % 9.05 % Tangible equity/tangible assets (a)/(b) 6.35 % 6.27 % 6.67 % 7.23 % 7.29 % Tangible equity/risk-weighted assets (a)/(c) 7.94 % 7.61 % 8.15 % 9.16 % 9.79 % Tangible book value (a)/(d)*1,000 $ 19.24 $ 18.11 $ 18.39 $ 19.58 $ 20.22 COMMON EQUITY TIER 1 CAPITAL (CET1) Total shareholders' equity $ 1,562,099 $ 1,492,268 $ 1,508,945 $ 1,586,696 $ 1,631,382 CECL transition adjustment 13,000 19,500 19,500 19,500 19,500 AOCI-related adjustments 242,381 275,403 306,412 207,142 148,656 CET1 adjustments and deductions: Goodwill net of associated deferred tax liabilities (DTLs) (370,234 ) (370,241 ) (370,217 ) (370,229 ) (370,240 ) Other adjustments and deductions for CET1 (2) (3,275 ) (3,258 ) (3,506 ) (3,757 ) (4,015 ) CET1 capital (e) 1,443,971 1,413,672 1,461,134 1,439,352 1,425,283 Additional tier 1 capital instruments plus related surplus 60,000 60,000 60,000 60,000 60,000 Tier 1 capital $ 1,503,971 $ 1,473,672 $ 1,521,134 $ 1,499,352 $ 1,485,283 Common equity tier 1 capital ratio (e)/(c) 9.76 % 9.74 % 10.63 % 11.01 % 11.23 % (1) Calculation = ((net income (loss) adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity. (2) Includes other intangible assets, net of DTLs, disallowed deferred tax assets (DTAs), threshold deductions and transition adjustments, as applicable. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS March 31, 2023 ($ in thousands) (unaudited) Note 7 – Non-GAAP Financial Measures (continued) Trustmark discloses certain non-GAAP financial measures because Management uses these measures for business planning purposes, including to manage Trustmark’s business against internal projected results of operations and to measure Trustmark’s performance. Trustmark views these as measures of our core operating business, which exclude the impact of the items detailed below, as these items are generally not operational in nature. These non-GAAP financial measures also provide another basis for comparing period-to-period results as presented in the accompanying selected financial data table and the audited consolidated financial statements by excluding potential differences caused by non-operational and unusual or non-recurring items. Readers are cautioned that these adjustments are not permitted under GAAP. Trustmark encourages readers to consider its consolidated financial statements and the notes related thereto in their entirety, and not to rely on any single financial measure. The following table presents pre-provision net revenue (PPNR) during the periods presented: Quarter Ended 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Net interest income (GAAP) $ 137,595 $ 146,583 $ 136,105 $ 112,676 $ 99,344 Noninterest income (GAAP) 51,377 45,170 52,606 53,253 54,115 Pre-provision revenue (a) $ 188,972 $ 191,753 $ 188,711 $ 165,929 $ 153,459 Noninterest expense (GAAP) $ 128,327 $ 231,229 $ 126,698 $ 123,767 $ 121,519 Less: Litigation settlement expense — (100,750 ) — — — Adjusted noninterest expense - PPNR (Non-GAAP) (b) $ 128,327 $ 130,479 $ 126,698 $ 123,767 $ 121,519 PPNR (Non-GAAP) (a)-(b) $ 60,645 $ 61,274 $ 62,013 $ 42,162 $ 31,940 The following table presents Trustmark’s calculation of its efficiency ratio for the periods presented: Quarter Ended 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Total noninterest expense (GAAP) $ 128,327 $ 231,229 $ 126,698 $ 123,767 $ 121,519 Less: Other real estate expense, net (172 ) (18 ) (497 ) (623 ) (35 ) Amortization of intangibles (288 ) (312 ) (312 ) (328 ) (482 ) Charitable contributions resulting in state tax credits (325 ) (375 ) (375 ) (375 ) (375 ) Litigation settlement expense — (100,750 ) — — — Adjusted noninterest expense (Non-GAAP) (c) $ 127,542 $ 129,774 $ 125,514 $ 122,441 $ 120,627 Net interest income (GAAP) $ 137,595 $ 146,583 $ 136,105 $ 112,676 $ 99,344 Add: Tax equivalent adjustment 3,477 3,451 2,975 2,916 3,003 Net interest income-FTE (Non-GAAP) (a) $ 141,072 $ 150,034 $ 139,080 $ 115,592 $ 102,347 Noninterest income (GAAP) $ 51,377 $ 45,170 $ 52,606 $ 53,253 $ 54,115 Add: Partnership amortization for tax credit purposes 1,961 1,869 1,531 1,475 1,336 Adjusted noninterest income (Non-GAAP) (b) $ 53,338 $ 47,039 $ 54,137 $ 54,728 $ 55,451 Adjusted revenue (Non-GAAP) (a)+(b) $ 194,410 $ 197,073 $ 193,217 $ 170,320 $ 157,798 Efficiency ratio (Non-GAAP) (c)/((a)+(b)) 65.60 % 65.85 % 64.96 % 71.89 % 76.44 % View source version on businesswire.com: https://www.businesswire.com/news/home/20230425005438/en/
Trustmark Investor Contacts: Thomas C. Owens Treasurer and Principal Financial Officer 601-208-7853 F. Joseph Rein, Jr. Senior Vice President 601-208-6898 Trustmark Media Contact: Melanie A. Morgan Senior Vice President 601-208-2979