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 Second Quarter 2023 Financial Results By: Trustmark Corporation via Business Wire July 25, 2023 at 16:30 PM EDT Loan and Deposit Growth Continues, Credit Quality Remains Strong, Net Interest Income and Noninterest Income Expand Trustmark Corporation (NASDAQGS:TRMK) reported net income of $45.0 million in the second quarter of 2023, representing diluted earnings per share of $0.74. Trustmark’s performance during the second quarter produced a return on average tangible equity of 15.18% and a return on average assets of 0.96%. The Board of Directors declared a quarterly cash dividend of $0.23 per share payable September 15, 2023, to shareholders of record on September 1, 2023. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230725007677/en/ Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/53477140/en Second Quarter Highlights Loans held for investment (HFI) increased $116.8 million, or 0.9%, from the prior quarter to $12.6 billion Deposits expanded $130.2 million, or 0.9%, linked-quarter to $14.9 billion Total revenue increased $4.5 million, or 2.4%, linked-quarter to $193.5 million Net interest income (FTE) increased $2.2 million linked-quarter to $143.3 million, resulting in a net interest margin of 3.33% Noninterest income totaled $53.6 million, representing 27.7% of total revenue Credit quality remained strong; net charge-offs represented 4 basis points of average loans Duane A. Dewey, President and CEO, stated, “Trustmark continued to post solid financial results in the second quarter, reflecting continued loan and deposit growth, expanding net interest income, and growth in our fee-based businesses. During the first six months of 2023, Trustmark’s net income totaled $95.3 million, which represented diluted earnings of $1.56 per share, an increase of 51.5% from the same period in 2022. We have a tremendous team of associates throughout our system that are focused on expanding existing customer relationships as well as demonstrating the value Trustmark can provide potential customers as their trusted financial partner. We have added very talented people across the organization in numerous production and back office roles to meet our objectives. We continue to implement initiatives to improve efficiency, enhance our ability to grow and serve customers, and build long-term value for our shareholders.” Balance Sheet Management Loans HFI totaled $12.6 billion, up 0.9% from the prior quarter and 15.3% year-over-year Deposits totaled $14.9 billion, up 0.9% from the previous quarter and 1.0% year-over-year Maintained strong capital position with CET1 ratio of 9.87% and total risk-based capital ratio of 12.08% Loans HFI totaled $12.6 billion at June 30, 2023, reflecting an increase of $116.8 million, or 0.9%, linked-quarter and $1.7 billion, or 15.3%, year-over-year. The linked quarter growth reflected increases in other real estate secured loans, nonfarm, nonresidential loans, and 1-4 family residential loans offset in part by declines in other loans, state and political subdivision loans, and construction, land development and other land loans. Trustmark’s loan portfolio continues to be well-diversified by loan type and geography. Deposits totaled $14.9 billion at June 30, 2023, up $130.2 million, or 0.9%, from the prior quarter and up $143.7 million, or 1.0%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 84.6% of total deposits at June 30, 2023. Migration into higher-yielding products continued to drive a change in deposit mix from noninterest-bearing deposits, which represented 23.2% of total deposits at June 30, 2023. Interest-bearing deposit costs totaled 1.96% for the second quarter, while the total cost of deposits was 1.48%. The total cost of interest-bearing liabilities was 2.42% for the second quarter of 2023. 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. As of June 30, 2023, Trustmark had not repurchased any of its outstanding common shares under this program. Trustmark’s regulatory capital ratios continued to exceed all levels to be considered “well-capitalized” as of June 30, 2023. Credit Quality Nonperforming assets represented 0.60% of total loans and other real estate at June 30, 2023 Net charge-offs totaled $1.2 million in the second quarter, representing 0.04% of average loans Allowance for credit losses (ACL) represented 1.03% of loans HFI and 301.4% of nonaccrual loans, excluding individually analyzed loans, at June 30, 2023 Nonaccrual loans totaled $75.0 million at June 30, 2023, up $2.7 million from the prior quarter and an increase of $13.0 million year-over-year. Other real estate totaled $1.1 million, reflecting a $547 thousand decrease from the prior quarter and a $1.9 million decline from the prior year. The provision for credit losses for loans HFI was $8.2 million in the second quarter and was primarily attributable to extended maturities on mortgage loans resulting from lower prepayment speeds, weakening macroeconomic factors, and loan growth. The provision for credit losses for off-balance sheet credit exposures was $245 thousand, primarily driven by weakening macroeconomic factors. Collectively, the provision for credit losses totaled $8.5 million in the second quarter compared to $1.0 million from the prior quarter and $1.1 million in the second quarter of 2022. Allocation of Trustmark’s $129.3 million ACL on loans HFI represented 0.84% of commercial loans and 1.60% of consumer and home mortgage loans, resulting in an ACL to total loans HFI of 1.03% at June 30, 2023. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio. Revenue Generation Total revenue increased $4.5 million, or 2.4%, linked-quarter Net interest income (FTE) totaled $143.3 million in the second quarter, up 1.6% linked-quarter Noninterest income increased 4.2% linked-quarter to total $53.6 million, representing 27.7% of total revenue in the second quarter Revenue in the second quarter totaled $193.5 million, an increase of $4.5 million, or 2.4%, from the prior quarter and $27.5 million, or 16.6%, from the prior year. The linked-quarter increase primarily reflects higher net interest income and solid growth in all fee income business with the exception of mortgage banking. The year-over-year growth in revenue is attributed to higher net interest income. Net interest income (FTE) in the second quarter totaled $143.3 million, resulting in a net interest margin of 3.33%, down 6 basis points from the prior quarter. The decrease in the net interest margin was due to increased costs of interest-bearing deposits which were partially offset by increased yields on the loans HFI and HFS portfolio and securities portfolio. Noninterest income in the second quarter totaled $53.6 million, an increase of $2.2 million, or 4.2%, from the prior quarter and a $300 thousand increase year-over-year. With the exception of mortgage banking, all categories increased linked-quarter with other, net and bank card and other fees increasing $1.2 million and $1.1 million, respectively. Year-over-year increases in insurance, other, net and service charges on deposit accounts, were offset in part by declines in bank card and other fees, mortgage banking and wealth management revenue. Mortgage loan production in the second quarter totaled $431.3 million, an increase of 19.5% from the prior quarter and a decrease of 36.7% year-over-year. Mortgage banking revenue totaled $6.6 million in the second quarter, a decrease of $1.0 million linked-quarter and $1.5 million year-over-year. The linked-quarter decrease was principally attributable to accelerated amortization of mortgage servicing rights offset in part by reduced net negative hedge ineffectiveness. Insurance revenue totaled $14.8 million in the second quarter, up $459 thousand, or 3.2%, from the prior quarter and $1.1 million, or 7.8%, year-over-year. The linked-quarter increase primarily reflected growth in policy fees and other commissions while the year-over-year increase primarily reflected growth in commercial property and casualty commissions. Wealth management revenue in the second quarter totaled $8.9 million, an increase of $102 thousand, or 1.2%, from the prior quarter and a decline of $220 thousand, or 2.4%, year-over-year. The linked-quarter growth reflected higher trust management revenue while the year-over-year decline reflected reduced brokerage revenue. Noninterest Expense Noninterest expense totaled $132.2 million in the second quarter, up 3.0%, from the prior quarter Adjusted noninterest expense, which excludes other real estate expense, amortization of intangibles, and charitable contributions resulting in state tax credits, totaled $131.6 million in the second quarter, an increase of 3.2% from the prior quarter. Please refer to the Consolidated Financial Information, Note 7 – Non-GAAP Financial Measures Noninterest expense in the second quarter totaled $132.2 million, an increase of $3.9 million, or 3.0%, when compared to the prior quarter. Salaries and employee benefits increased $1.9 million linked-quarter principally due to commissions and annual merit increases. Services and fees increased $2.8 million, or 11.2%, linked-quarter primarily due to increases in professional fees. Net occupancy expense declined $521 thousand, or 6.8%, while other expense declined $309 thousand, or 2.1%, linked-quarter. FIT2GROW “In 2022, we announced FIT2GROW, a comprehensive program of Focus, Innovation and Transformation designed to enhance our ability to grow and serve customers. Our Atlanta-based Equipment Finance division, established in late 2022, continues to gain traction as its portfolio has grown to $127 million as of June 30, 2023. Implementation of our technology plans continued during the second quarter with conversion of our credit card platform to a best-in-class product for our customers. In addition, advancements in our loan underwriting system were implemented and plans for conversion of our deposit system continued. During the quarter, work continued on the design of our sales through service process, which will be implemented across the retail branch network in early 2024. These actions are designed to enhance Trustmark’s performance and build long-term value for our shareholders,” said Dewey. Additional Information As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, July 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, August 9, 2023, in archived format at the same web address or by calling (877) 344-7529, passcode 7655682. 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 (including uncertainty regarding the federal government's debt limit or a prolonged shutdown of the federal government), 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 impacts related to or resulting from recent bank failures and other economic and industry volatility, including potential increased regulatory requirements and costs and potential impacts to macroeconomic conditions, 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 June 30, 2023 ($ in thousands) (unaudited) Linked Quarter Year over Year QUARTERLY AVERAGE BALANCES 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change Securities AFS-taxable (1) $ 2,140,505 $ 2,187,121 $ 3,094,364 $ (46,616 ) -2.1 % $ (953,859 ) -30.8 % Securities AFS-nontaxable 4,796 4,812 5,110 (16 ) -0.3 % (314 ) -6.1 % Securities HTM-taxable (1) 1,463,086 1,479,283 811,599 (16,197 ) -1.1 % 651,487 80.3 % Securities HTM-nontaxable 1,718 4,509 5,630 (2,791 ) -61.9 % (3,912 ) -69.5 % Total securities 3,610,105 3,675,725 3,916,703 (65,620 ) -1.8 % (306,598 ) -7.8 % Paycheck protection program loans (PPP) — — 17,746 — n/m (17,746 ) -100.0 % Loans (includes loans held for sale) 12,732,057 12,530,449 10,910,178 201,608 1.6 % 1,821,879 16.7 % Fed funds sold and reverse repurchases 3,275 2,379 110 896 37.7 % 3,165 n/m Other earning assets 903,027 647,760 1,139,312 255,267 39.4 % (236,285 ) -20.7 % Total earning assets 17,248,464 16,856,313 15,984,049 392,151 2.3 % 1,264,415 7.9 % Allowance for credit losses (ACL), loans held for investment (LHFI) (121,960 ) (119,978 ) (99,106 ) (1,982 ) -1.7 % (22,854 ) -23.1 % Other assets 1,648,583 1,762,449 1,513,127 (113,866 ) -6.5 % 135,456 9.0 % Total assets $ 18,775,087 $ 18,498,784 $ 17,398,070 $ 276,303 1.5 % $ 1,377,017 7.9 % Interest-bearing demand deposits $ 4,803,737 $ 4,751,154 $ 4,578,235 $ 52,583 1.1 % $ 225,502 4.9 % Savings deposits 4,002,134 4,193,764 4,638,849 (191,630 ) -4.6 % (636,715 ) -13.7 % Time deposits 2,335,752 1,907,449 1,159,065 428,303 22.5 % 1,176,687 n/m Total interest-bearing deposits 11,141,623 10,852,367 10,376,149 289,256 2.7 % 765,474 7.4 % Fed funds purchased and repurchases 389,834 436,535 118,753 (46,701 ) -10.7 % 271,081 n/m Other borrowings 1,330,010 1,110,843 80,283 219,167 19.7 % 1,249,727 n/m Subordinated notes 123,337 123,281 123,116 56 0.0 % 221 0.2 % Junior subordinated debt securities 61,856 61,856 61,856 — 0.0 % — 0.0 % Total interest-bearing liabilities 13,046,660 12,584,882 10,760,157 461,778 3.7 % 2,286,503 21.2 % Noninterest-bearing deposits 3,595,927 3,813,248 4,590,338 (217,321 ) -5.7 % (994,411 ) -21.7 % Other liabilities 552,209 576,826 439,266 (24,617 ) -4.3 % 112,943 25.7 % Total liabilities 17,194,796 16,974,956 15,789,761 219,840 1.3 % 1,405,035 8.9 % Shareholders' equity 1,580,291 1,523,828 1,608,309 56,463 3.7 % (28,018 ) -1.7 % Total liabilities and equity $ 18,775,087 $ 18,498,784 $ 17,398,070 $ 276,303 1.5 % $ 1,377,017 7.9 % (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June 30, 2023 ($ in thousands) (unaudited) Linked Quarter Year over Year PERIOD END BALANCES 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change Cash and due from banks $ 832,052 $ 1,297,144 $ 742,461 $ (465,092 ) -35.9 % $ 89,591 12.1 % Fed funds sold and reverse repurchases — — — — n/m — n/m Securities available for sale (1) 1,871,883 1,984,162 2,644,364 (112,279 ) -5.7 % (772,481 ) -29.2 % Securities held to maturity (1) 1,458,665 1,474,338 1,137,754 (15,673 ) -1.1 % 320,911 28.2 % PPP loans — — 12,549 — n/m (12,549 ) -100.0 % Loans held for sale (LHFS) 181,094 175,926 190,186 5,168 2.9 % (9,092 ) -4.8 % Loans held for investment (LHFI) 12,613,967 12,497,195 10,944,840 116,772 0.9 % 1,669,127 15.3 % ACL LHFI (129,298 ) (122,239 ) (103,140 ) (7,059 ) -5.8 % (26,158 ) -25.4 % Net LHFI 12,484,669 12,374,956 10,841,700 109,713 0.9 % 1,642,969 15.2 % Premises and equipment, net 227,630 223,975 207,914 3,655 1.6 % 19,716 9.5 % Mortgage servicing rights 134,350 127,206 121,014 7,144 5.6 % 13,336 11.0 % Goodwill 384,237 384,237 384,237 — 0.0 % — 0.0 % Identifiable intangible assets 3,222 3,352 4,264 (130 ) -3.9 % (1,042 ) -24.4 % Other real estate 1,137 1,684 3,034 (547 ) -32.5 % (1,897 ) -62.5 % Operating lease right-of-use assets 38,179 35,315 34,684 2,864 8.1 % 3,495 10.1 % Other assets 805,508 794,883 627,349 10,625 1.3 % 178,159 28.4 % Total assets $ 18,422,626 $ 18,877,178 $ 16,951,510 $ (454,552 ) -2.4 % $ 1,471,116 8.7 % Deposits: Noninterest-bearing $ 3,461,073 $ 3,797,055 $ 4,509,472 $ (335,982 ) -8.8 % $ (1,048,399 ) -23.2 % Interest-bearing 11,452,827 10,986,606 10,260,696 466,221 4.2 % 1,192,131 11.6 % Total deposits 14,913,900 14,783,661 14,770,168 130,239 0.9 % 143,732 1.0 % Fed funds purchased and repurchases 311,179 477,980 70,157 (166,801 ) -34.9 % 241,022 n/m Other borrowings 1,056,714 1,485,181 72,553 (428,467 ) -28.8 % 984,161 n/m Subordinated notes 123,372 123,317 123,152 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 34,841 34,596 32,949 245 0.7 % 1,892 5.7 % Operating lease liabilities 40,845 37,988 37,108 2,857 7.5 % 3,737 10.1 % Other liabilities 308,726 310,500 196,871 (1,774 ) -0.6 % 111,855 56.8 % Total liabilities 16,851,433 17,315,079 15,364,814 (463,646 ) -2.7 % 1,486,619 9.7 % Common stock 12,724 12,720 12,752 4 0.0 % (28 ) -0.2 % Capital surplus 156,834 155,297 160,876 1,537 1.0 % (4,042 ) -2.5 % Retained earnings 1,667,339 1,636,463 1,620,210 30,876 1.9 % 47,129 2.9 % Accumulated other comprehensive income (loss), net of tax (265,704 ) (242,381 ) (207,142 ) (23,323 ) -9.6 % (58,562 ) -28.3 % Total shareholders' equity 1,571,193 1,562,099 1,586,696 9,094 0.6 % (15,503 ) -1.0 % Total liabilities and equity $ 18,422,626 $ 18,877,178 $ 16,951,510 $ (454,552 ) -2.4 % $ 1,471,116 8.7 % (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June 30, 2023 ($ in thousands except per share data) (unaudited) Quarter Ended Linked Quarter Year over Year INCOME STATEMENTS 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change Interest and fees on LHFS & LHFI-FTE $ 192,941 $ 178,967 $ 103,033 $ 13,974 7.8 % $ 89,908 87.3 % Interest and fees on PPP loans — — 184 — n/m (184 ) -100.0 % Interest on securities-taxable 16,779 16,761 14,561 18 0.1 % 2,218 15.2 % Interest on securities-tax exempt-FTE 69 92 107 (23 ) -25.0 % (38 ) -35.5 % Interest on fed funds sold and reverse repurchases 45 30 1 15 50.0 % 44 n/m Other interest income 12,077 6,527 2,214 5,550 85.0 % 9,863 n/m Total interest income-FTE 221,911 202,377 120,100 19,534 9.7 % 101,811 84.8 % Interest on deposits 54,409 40,898 2,774 13,511 33.0 % 51,635 n/m Interest on fed funds purchased and repurchases 4,865 4,832 70 33 0.7 % 4,795 n/m Other interest expense 19,350 15,575 1,664 3,775 24.2 % 17,686 n/m Total interest expense 78,624 61,305 4,508 17,319 28.3 % 74,116 n/m Net interest income-FTE 143,287 141,072 115,592 2,215 1.6 % 27,695 24.0 % Provision for credit losses, LHFI 8,211 3,244 2,716 4,967 n/m 5,495 n/m Provision for credit losses, off-balance sheet credit exposures 245 (2,242 ) (1,568 ) 2,487 n/m 1,813 n/m Net interest income after provision-FTE 134,831 140,070 114,444 (5,239 ) -3.7 % 20,387 17.8 % Service charges on deposit accounts 10,695 10,336 10,226 359 3.5 % 469 4.6 % Bank card and other fees 8,917 7,803 10,167 1,114 14.3 % (1,250 ) -12.3 % Mortgage banking, net 6,600 7,639 8,149 (1,039 ) -13.6 % (1,549 ) -19.0 % Insurance commissions 14,764 14,305 13,702 459 3.2 % 1,062 7.8 % Wealth management 8,882 8,780 9,102 102 1.2 % (220 ) -2.4 % Other, net 3,695 2,514 1,907 1,181 47.0 % 1,788 93.8 % Total noninterest income 53,553 51,377 53,253 2,176 4.2 % 300 0.6 % Salaries and employee benefits 75,940 74,056 71,679 1,884 2.5 % 4,261 5.9 % Services and fees (2) 28,264 25,426 25,659 2,838 11.2 % 2,605 10.2 % Net occupancy-premises 7,108 7,629 6,892 (521 ) -6.8 % 216 3.1 % Equipment expense 6,404 6,405 6,047 (1 ) 0.0 % 357 5.9 % Litigation settlement expense (1) — — — — n/m — n/m Other expense (2) 14,502 14,811 13,490 (309 ) -2.1 % 1,012 7.5 % Total noninterest expense 132,218 128,327 123,767 3,891 3.0 % 8,451 6.8 % Income (loss) before income taxes and tax eq adj 56,166 63,120 43,930 (6,954 ) -11.0 % 12,236 27.9 % Tax equivalent adjustment 3,383 3,477 2,916 (94 ) -2.7 % 467 16.0 % Income (loss) before income taxes 52,783 59,643 41,014 (6,860 ) -11.5 % 11,769 28.7 % Income taxes 7,746 9,343 6,730 (1,597 ) -17.1 % 1,016 15.1 % Net income (loss) $ 45,037 $ 50,300 $ 34,284 $ (5,263 ) -10.5 % $ 10,753 31.4 % Per share data Earnings (loss) per share - basic $ 0.74 $ 0.82 $ 0.56 $ (0.08 ) -9.8 % $ 0.18 32.1 % Earnings (loss) per share - diluted $ 0.74 $ 0.82 $ 0.56 $ (0.08 ) -9.8 % $ 0.18 32.1 % Dividends per share $ 0.23 $ 0.23 $ 0.23 — 0.0 % — 0.0 % Weighted average shares outstanding Basic 61,063,277 61,011,059 61,378,226 Diluted 61,230,031 61,193,275 61,546,285 Period end shares outstanding 61,069,036 61,048,516 61,201,123 (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 June 30, 2023 ($ in thousands) (unaudited) Quarter Ended Linked Quarter Year over Year NONPERFORMING ASSETS (1) 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change Nonaccrual LHFI Alabama (2) $ 11,058 $ 10,919 $ 2,698 $ 139 1.3 % $ 8,360 n/m Florida 334 256 233 78 30.5 % 101 43.3 % Mississippi (3) 36,288 32,560 23,039 3,728 11.4 % 13,249 57.5 % Tennessee (4) 5,088 5,416 9,500 (328 ) -6.1 % (4,412 ) -46.4 % Texas 22,259 23,224 26,582 (965 ) -4.2 % (4,323 ) -16.3 % Total nonaccrual LHFI 75,027 72,375 62,052 2,652 3.7 % 12,975 20.9 % Other real estate Alabama (2) — — 84 — n/m (84 ) -100.0 % Mississippi (3) 1,137 1,495 2,950 (358 ) -23.9 % (1,813 ) -61.5 % Tennessee (4) — 189 — (189 ) -100.0 % — n/m Total other real estate 1,137 1,684 3,034 (547 ) -32.5 % (1,897 ) -62.5 % Total nonperforming assets $ 76,164 $ 74,059 $ 65,086 $ 2,105 2.8 % $ 11,078 17.0 % LOANS PAST DUE OVER 90 DAYS (1) LHFI $ 3,911 $ 2,255 $ 1,347 $ 1,656 73.4 % $ 2,564 n/m LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase) $ 35,766 $ 41,468 $ 51,164 $ (5,702 ) -13.8 % $ (15,398 ) -30.1 % Quarter Ended Linked Quarter Year over Year ACL LHFI (1) 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change Beginning Balance $ 122,239 $ 120,214 $ 98,734 $ 2,025 1.7 % $ 23,505 23.8 % Provision for credit losses, LHFI 8,211 3,244 2,716 4,967 n/m 5,495 n/m Charge-offs (2,773 ) (2,996 ) (2,277 ) 223 7.4 % (496 ) -21.8 % Recoveries 1,621 1,777 3,967 (156 ) -8.8 % (2,346 ) -59.1 % Net (charge-offs) recoveries (1,152 ) (1,219 ) 1,690 67 5.5 % (2,842 ) n/m Ending Balance $ 129,298 $ 122,239 $ 103,140 $ 7,059 5.8 % $ 26,158 25.4 % NET (CHARGE-OFFS) RECOVERIES (1) Alabama (2) $ (141 ) $ (268 ) $ 1,129 $ 127 -47.4 % $ (1,270 ) n/m Florida (35 ) (36 ) 761 1 2.8 % (796 ) n/m Mississippi (3) (762 ) (775 ) (266 ) 13 1.7 % (496 ) n/m Tennessee (4) (166 ) (124 ) 31 (42 ) -33.9 % (197 ) n/m Texas (48 ) (16 ) 35 (32 ) n/m (83 ) n/m Total net (charge-offs) recoveries $ (1,152 ) $ (1,219 ) $ 1,690 $ 67 5.5 % $ (2,842 ) n/m (1) Excludes PPP loans. (2) Alabama includes the Georgia Loan Production Office. (3) Mississippi includes Central and Southern Mississippi Regions. (4) 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 June 30, 2023 ($ in thousands) (unaudited) Quarter Ended Six Months Ended AVERAGE BALANCES 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Securities AFS-taxable (1) $ 2,140,505 $ 2,187,121 $ 2,572,675 $ 2,824,254 $ 3,094,364 $ 2,163,684 $ 3,169,515 Securities AFS-nontaxable 4,796 4,812 4,828 4,928 5,110 4,804 5,118 Securities HTM-taxable (1) 1,463,086 1,479,283 1,268,952 1,140,685 811,599 1,471,140 612,332 Securities HTM-nontaxable 1,718 4,509 4,514 5,057 5,630 3,106 6,474 Total securities 3,610,105 3,675,725 3,850,969 3,974,924 3,916,703 3,642,734 3,793,439 PPP loans — — 3,235 9,821 17,746 — 23,346 Loans (includes loans held for sale) 12,732,057 12,530,449 12,006,661 11,459,551 10,910,178 12,631,810 10,731,438 Fed funds sold and reverse repurchases 3,275 2,379 6,566 226 110 2,829 83 Other earning assets 903,027 647,760 375,190 325,620 1,139,312 780,657 1,473,655 Total earning assets 17,248,464 16,856,313 16,242,621 15,770,142 15,984,049 17,058,030 16,021,961 ACL LHFI (121,960 ) (119,978 ) (114,948 ) (102,951 ) (99,106 ) (120,974 ) (99,247 ) Other assets 1,648,583 1,762,449 1,630,085 1,576,653 1,513,127 1,700,643 1,531,884 Total assets $ 18,775,087 $ 18,498,784 $ 17,757,758 $ 17,243,844 $ 17,398,070 $ 18,637,699 $ 17,454,598 Interest-bearing demand deposits $ 4,803,737 $ 4,751,154 $ 4,719,303 $ 4,613,733 $ 4,578,235 $ 4,777,591 $ 4,504,058 Savings deposits 4,002,134 4,193,764 4,379,673 4,514,579 4,638,849 4,097,420 4,714,556 Time deposits 2,335,752 1,907,449 1,152,905 1,111,440 1,159,065 2,122,784 1,176,155 Total interest-bearing deposits 11,141,623 10,852,367 10,251,881 10,239,752 10,376,149 10,997,795 10,394,769 Fed funds purchased and repurchases 389,834 436,535 549,406 249,809 118,753 413,055 165,122 Other borrowings 1,330,010 1,110,843 530,993 88,697 80,283 1,221,032 85,657 Subordinated notes 123,337 123,281 123,226 123,171 123,116 123,309 123,089 Junior subordinated debt securities 61,856 61,856 61,856 61,856 61,856 61,856 61,856 Total interest-bearing liabilities 13,046,660 12,584,882 11,517,362 10,763,285 10,760,157 12,817,047 10,830,493 Noninterest-bearing deposits 3,595,927 3,813,248 4,177,113 4,444,370 4,590,338 3,703,987 4,595,693 Other liabilities 552,209 576,826 569,992 429,720 439,266 564,450 367,673 Total liabilities 17,194,796 16,974,956 16,264,467 15,637,375 15,789,761 17,085,484 15,793,859 Shareholders' equity 1,580,291 1,523,828 1,493,291 1,606,469 1,608,309 1,552,215 1,660,739 Total liabilities and equity $ 18,775,087 $ 18,498,784 $ 17,757,758 $ 17,243,844 $ 17,398,070 $ 18,637,699 $ 17,454,598 (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June 30, 2023 ($ in thousands) (unaudited) PERIOD END BALANCES 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Cash and due from banks $ 832,052 $ 1,297,144 $ 734,787 $ 479,637 $ 742,461 Fed funds sold and reverse repurchases — — 4,000 10,098 — Securities available for sale (1) 1,871,883 1,984,162 2,024,082 2,444,486 2,644,364 Securities held to maturity (1) 1,458,665 1,474,338 1,494,514 1,156,985 1,137,754 PPP loans — — — 4,798 12,549 LHFS 181,094 175,926 135,226 165,213 190,186 LHFI 12,613,967 12,497,195 12,204,039 11,586,064 10,944,840 ACL LHFI (129,298 ) (122,239 ) (120,214 ) (115,050 ) (103,140 ) Net LHFI 12,484,669 12,374,956 12,083,825 11,471,014 10,841,700 Premises and equipment, net 227,630 223,975 212,365 210,761 207,914 Mortgage servicing rights 134,350 127,206 129,677 132,615 121,014 Goodwill 384,237 384,237 384,237 384,237 384,237 Identifiable intangible assets 3,222 3,352 3,640 3,952 4,264 Other real estate 1,137 1,684 1,986 2,971 3,034 Operating lease right-of-use assets 38,179 35,315 36,301 37,282 34,684 Other assets 805,508 794,883 770,838 686,585 627,349 Total assets $ 18,422,626 $ 18,877,178 $ 18,015,478 $ 17,190,634 $ 16,951,510 Deposits: Noninterest-bearing $ 3,461,073 $ 3,797,055 $ 4,093,771 $ 4,358,805 $ 4,509,472 Interest-bearing 11,452,827 10,986,606 10,343,877 10,066,375 10,260,696 Total deposits 14,913,900 14,783,661 14,437,648 14,425,180 14,770,168 Fed funds purchased and repurchases 311,179 477,980 449,331 544,068 70,157 Other borrowings 1,056,714 1,485,181 1,050,938 223,172 72,553 Subordinated notes 123,372 123,317 123,262 123,207 123,152 Junior subordinated debt securities 61,856 61,856 61,856 61,856 61,856 ACL on off-balance sheet credit exposures 34,841 34,596 36,838 31,623 32,949 Operating lease liabilities 40,845 37,988 38,932 39,797 37,108 Other liabilities 308,726 310,500 324,405 232,786 196,871 Total liabilities 16,851,433 17,315,079 16,523,210 15,681,689 15,364,814 Common stock 12,724 12,720 12,705 12,700 12,752 Capital surplus 156,834 155,297 154,645 154,150 160,876 Retained earnings 1,667,339 1,636,463 1,600,321 1,648,507 1,620,210 Accumulated other comprehensive income (loss), net of tax (265,704 ) (242,381 ) (275,403 ) (306,412 ) (207,142 ) Total shareholders' equity 1,571,193 1,562,099 1,492,268 1,508,945 1,586,696 Total liabilities and equity $ 18,422,626 $ 18,877,178 $ 18,015,478 $ 17,190,634 $ 16,951,510 (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June 30, 2023 ($ in thousands except per share data) (unaudited) Quarter Ended Six Months Ended INCOME STATEMENTS 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Interest and fees on LHFS & LHFI-FTE $ 192,941 $ 178,967 $ 159,566 $ 129,395 $ 103,033 $ 371,908 $ 196,285 Interest and fees on PPP loans — — 101 186 184 — 352 Interest on securities-taxable 16,779 16,761 16,577 16,222 14,561 33,540 26,918 Interest on securities-tax exempt-FTE 69 92 93 100 107 161 229 Interest on fed funds sold and reverse repurchases 45 30 71 2 1 75 1 Other interest income 12,077 6,527 3,556 1,493 2,214 18,604 3,031 Total interest income-FTE 221,911 202,377 179,964 147,398 120,100 424,288 226,816 Interest on deposits 54,409 40,898 18,438 5,097 2,774 95,307 5,534 Interest on fed funds purchased and repurchases 4,865 4,832 4,762 1,225 70 9,697 140 Other interest expense 19,350 15,575 6,730 1,996 1,664 34,925 3,203 Total interest expense 78,624 61,305 29,930 8,318 4,508 139,929 8,877 Net interest income-FTE 143,287 141,072 150,034 139,080 115,592 284,359 217,939 Provision for credit losses, LHFI 8,211 3,244 6,902 12,919 2,716 11,455 1,856 Provision for credit losses, off-balance sheet credit exposures 245 (2,242 ) 5,215 (1,326 ) (1,568 ) (1,997 ) (2,674 ) Net interest income after provision-FTE 134,831 140,070 137,917 127,487 114,444 274,901 218,757 Service charges on deposit accounts 10,695 10,336 11,162 11,318 10,226 21,031 19,677 Bank card and other fees 8,917 7,803 8,191 9,305 10,167 16,720 18,609 Mortgage banking, net 6,600 7,639 3,408 6,876 8,149 14,239 18,022 Insurance commissions 14,764 14,305 12,019 13,911 13,702 29,069 27,791 Wealth management 8,882 8,780 8,079 8,778 9,102 17,662 18,156 Other, net 3,695 2,514 2,311 2,418 1,907 6,209 5,113 Total noninterest income 53,553 51,377 45,170 52,606 53,253 104,930 107,368 Salaries and employee benefits 75,940 74,056 73,469 72,707 71,679 149,996 141,264 Services and fees (2) 28,264 25,426 27,709 26,787 25,659 53,690 50,973 Net occupancy-premises 7,108 7,629 7,898 7,395 6,892 14,737 13,971 Equipment expense 6,404 6,405 6,268 6,072 6,047 12,809 12,108 Litigation settlement expense (1) — — 100,750 — — — — Other expense (2) 14,502 14,811 15,135 13,737 13,490 29,313 26,970 Total noninterest expense 132,218 128,327 231,229 126,698 123,767 260,545 245,286 Income (loss) before income taxes and tax eq adj 56,166 63,120 (48,142 ) 53,395 43,930 119,286 80,839 Tax equivalent adjustment 3,383 3,477 3,451 2,975 2,916 6,860 5,919 Income (loss) before income taxes 52,783 59,643 (51,593 ) 50,420 41,014 112,426 74,920 Income taxes 7,746 9,343 (17,530 ) 7,965 6,730 17,089 11,425 Net income (loss) $ 45,037 $ 50,300 $ (34,063 ) $ 42,455 $ 34,284 $ 95,337 $ 63,495 Per share data Earnings (loss) per share - basic $ 0.74 $ 0.82 $ (0.56 ) $ 0.69 $ 0.56 $ 1.56 $ 1.03 Earnings (loss) per share - diluted $ 0.74 $ 0.82 $ (0.56 ) $ 0.69 $ 0.56 $ 1.56 $ 1.03 Dividends per share $ 0.23 $ 0.23 $ 0.23 $ 0.23 $ 0.23 $ 0.46 $ 0.46 Weighted average shares outstanding Basic 61,063,277 61,011,059 60,969,400 61,114,804 61,378,226 61,037,312 61,445,934 Diluted 61,230,031 61,193,275 61,173,249 61,318,715 61,546,285 61,206,799 61,624,569 Period end shares outstanding 61,069,036 61,048,516 60,977,686 60,953,864 61,201,123 61,069,036 61,201,123 (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 June 30, 2023 ($ in thousands) (unaudited) Quarter Ended NONPERFORMING ASSETS (1) 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Nonaccrual LHFI Alabama (2) $ 11,058 $ 10,919 $ 12,300 $ 12,710 $ 2,698 Florida 334 256 227 227 233 Mississippi (3) 36,288 32,560 24,683 23,517 23,039 Tennessee (4) 5,088 5,416 5,566 5,120 9,500 Texas 22,259 23,224 23,196 26,353 26,582 Total nonaccrual LHFI 75,027 72,375 65,972 67,927 62,052 Other real estate Alabama (2) — — 194 217 84 Mississippi (3) 1,137 1,495 1,769 2,754 2,950 Tennessee (4) — 189 23 — — Total other real estate 1,137 1,684 1,986 2,971 3,034 Total nonperforming assets $ 76,164 $ 74,059 $ 67,958 $ 70,898 $ 65,086 LOANS PAST DUE OVER 90 DAYS (1) LHFI $ 3,911 $ 2,255 $ 3,929 $ 1,842 $ 1,347 LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase) $ 35,766 $ 41,468 $ 49,320 $ 48,313 $ 51,164 Quarter Ended Six Months Ended ACL LHFI (1) 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Beginning Balance $ 122,239 $ 120,214 $ 115,050 $ 103,140 $ 98,734 $ 120,214 $ 99,457 Provision for credit losses, LHFI 8,211 3,244 6,902 12,919 2,716 11,455 1,856 Charge-offs (2,773 ) (2,996 ) (3,893 ) (2,920 ) (2,277 ) (5,769 ) (4,519 ) Recoveries 1,621 1,777 2,155 1,911 3,967 3,398 6,346 Net (charge-offs) recoveries (1,152 ) (1,219 ) (1,738 ) (1,009 ) 1,690 (2,371 ) 1,827 Ending Balance $ 129,298 $ 122,239 $ 120,214 $ 115,050 $ 103,140 $ 129,298 $ 103,140 NET (CHARGE-OFFS) RECOVERIES (1) Alabama (2) $ (141 ) $ (268 ) $ 98 $ 93 $ 1,129 $ (409 ) $ 1,828 Florida (35 ) (36 ) (60 ) (23 ) 761 (71 ) 735 Mississippi (3) (762 ) (775 ) (1,657 ) (702 ) (266 ) (1,537 ) (354 ) Tennessee (4) (166 ) (124 ) (195 ) (202 ) 31 (290 ) (393 ) Texas (48 ) (16 ) 76 (175 ) 35 (64 ) 11 Total net (charge-offs) recoveries $ (1,152 ) $ (1,219 ) $ (1,738 ) $ (1,009 ) $ 1,690 $ (2,371 ) $ 1,827 (1) Excludes PPP loans. (2) Alabama includes the Georgia Loan Production Office. (3) Mississippi includes Central and Southern Mississippi Regions. (4) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June 30, 2023 ($ in thousands) (unaudited) Quarter Ended Six Months Ended FINANCIAL RATIOS AND OTHER DATA 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Return on average equity 11.43 % 13.39 % -9.05 % 10.48 % 8.55 % 12.39 % 7.71 % Return on average tangible equity 15.18 % 18.03 % -12.14 % 13.90 % 11.36 % 16.56 % 10.16 % Return on average assets 0.96 % 1.10 % -0.76 % 0.98 % 0.79 % 1.03 % 0.73 % Interest margin - Yield - FTE 5.16 % 4.87 % 4.40 % 3.71 % 3.01 % 5.02 % 2.85 % Interest margin - Cost 1.83 % 1.47 % 0.73 % 0.21 % 0.11 % 1.65 % 0.11 % Net interest margin - FTE 3.33 % 3.39 % 3.66 % 3.50 % 2.90 % 3.36 % 2.74 % Efficiency ratio (1) 66.17 % 65.60 % 65.85 % 64.96 % 71.89 % 65.89 % 74.08 % Full-time equivalent employees 2,761 2,758 2,738 2,717 2,727 CREDIT QUALITY RATIOS (2) Net (recoveries) charge-offs / average loans 0.04 % 0.04 % 0.06 % 0.03 % -0.06 % 0.04 % -0.03 % Provision for credit losses, LHFI / average loans 0.26 % 0.10 % 0.23 % 0.45 % 0.10 % 0.18 % 0.03 % Nonaccrual LHFI / (LHFI + LHFS) 0.59 % 0.57 % 0.53 % 0.58 % 0.56 % Nonperforming assets / (LHFI + LHFS) 0.60 % 0.58 % 0.55 % 0.60 % 0.58 % Nonperforming assets / (LHFI + LHFS + other real estate) 0.60 % 0.58 % 0.55 % 0.60 % 0.58 % ACL LHFI / LHFI 1.03 % 0.98 % 0.99 % 0.99 % 0.94 % ACL LHFI-commercial / commercial LHFI 0.84 % 0.80 % 0.85 % 0.93 % 0.88 % ACL LHFI-consumer / consumer and home mortgage LHFI 1.60 % 1.54 % 1.41 % 1.20 % 1.14 % ACL LHFI / nonaccrual LHFI 172.34 % 168.90 % 182.22 % 169.37 % 166.22 % ACL LHFI / nonaccrual LHFI (excl individually analyzed loans) 301.44 % 320.80 % 399.19 % 466.03 % 475.27 % CAPITAL RATIOS Total equity / total assets 8.53 % 8.28 % 8.28 % 8.78 % 9.36 % Tangible equity / tangible assets 6.56 % 6.35 % 6.27 % 6.67 % 7.23 % Tangible equity / risk-weighted assets 7.91 % 7.94 % 7.61 % 8.15 % 9.16 % Tier 1 leverage ratio 8.35 % 8.29 % 8.47 % 9.01 % 8.80 % Common equity tier 1 capital ratio 9.87 % 9.76 % 9.74 % 10.63 % 11.01 % Tier 1 risk-based capital ratio 10.27 % 10.17 % 10.15 % 11.06 % 11.47 % Total risk-based capital ratio 12.08 % 11.95 % 11.91 % 12.85 % 13.26 % STOCK PERFORMANCE Market value-Close $ 21.12 $ 24.70 $ 34.91 $ 30.63 $ 29.19 Book value $ 25.73 $ 25.59 $ 24.47 $ 24.76 $ 25.93 Tangible book value $ 19.38 $ 19.24 $ 18.11 $ 18.39 $ 19.58 (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 June 30, 2023 ($ in thousands) (unaudited) Note 1 - Litigation Settlement As previously announced, on December 31, 2022, Trustmark National Bank (TNB) agreed to a settlement in principle (the Settlement) relating to litigation involving the Stanford Financial Group. On January 13, 2023, TNB entered into a Settlement Agreement (the Settlement Agreement) reflecting the terms of the Settlement. The parties to the Settlement Agreement 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; and, on the other hand, (iv) TNB. Under the terms of the Settlement Agreement, the parties agreed to settle and dismiss the Rotstain Action, the Smith Action, and all current or future claims by plaintiffs in either such Action arising from or related to Stanford. In addition, the Settlement Agreement provided that the parties would request dismissal of the Jackson Action pursuant to the terms of the bar orders described below. If the Court’s approval (as described below) of the Settlement Agreement, including the bar orders described below, is upheld on appeal, TNB will make a one-time cash payment of $100.0 million to the Receiver. The Settlement Agreement included the parties’ agreement to seek the Northern District of Texas District Court’s entry of bar orders prohibiting any continued or future claims by the plaintiffs in the Actions or by any other person or entity against TNB 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 herein, including not only the Actions and any pending matters but also any actions that may be brought in the future. Final Court approval of these bar orders is a condition of the Settlement. The Settlement Agreement is also subject to notice to Stanford’s investor claimants (which has been provided) and final, non-appealable approval by the U.S. District Court for the Northern District of Texas. While TNB believes that the Settlement Agreement 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’s approval of the Settlement Agreement (which has occurred, as described further below) may not be upheld on appeal. The Settlement Agreement also provides that TNB denies and makes no admission of liability or wrongdoing in connection with any Stanford matter. As has been the case throughout the pendency of the Actions, TNB expressly denies any liability or wrongdoing with respect to any matter alleged in regard to the multi-billion-dollar Ponzi scheme operated by Stanford for almost 20 years. TNB’s relationship with Stanford began as a result of TNB’s acquisition of a Houston-based bank in August 2006, and consisted of ordinary banking services provided to business deposit customers. The foregoing description of the terms 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 is filed as Exhibit 10.ai to the 2022 Annual Report and is incorporated herein by reference. On January 20, 2023, the U.S. District Court for the Northern District of Texas entered an order preliminarily finding that the Settlement is fair, reasonable, and equitable; has no obvious deficiencies; and is the product of serious, informed, good faith, and arm’s-length negotiations. Following the provision of notice as required by the Settlement Agreement and by the Court’s preliminary order, the Court (Judge David C. Godbey, presiding) held a Final Approval Hearing on May 3, 2023, at which the Court approved the Settlement from the bench. On May 4, 2023, Judge Godbey signed the written orders confirming his oral ruling, including the bar order contemplated by the Settlement Agreement and the judgment and bar order with respect to the Jackson Action. On May 11, 2023, Robert Allen Stanford, writing from prison, appealed the District Court’s approval of the Settlement to the Fifth Circuit Court of Appeals. On June 12, 2023, the Receiver moved to dismiss the appeal as frivolous. That motion is now fully briefed and awaiting the Fifth Circuit’s decision. The Settlement will become effective when the Fifth Circuit’s ruling in favor of the approval of the Settlement becomes final and non-appealable (the Settlement Effective Date). Within five days of the Settlement Effective Date, the parties to the Rotstain and Smith Actions will file agreed dismissals of those cases. Absent any further appeal in either of the Rotstain or Smith Actions, those dismissals will become final 30 days after entered and signed by the respective judges. TNB will be required to make the Settlement payment within 30 days after those dismissals become final. Any further appeal of any of the orders described above would delay the making of the Settlement payment. Pending the resolution of the settlement approval process, the Rotstain, Smith and Jackson Actions are stayed. TNB and Trustmark Corporation determined that it was in the best interest of TNB, 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 TNB of further litigation of the Actions and related Stanford claims. At the time of the entry into the Settlement, Trustmark Corporation recognized $100.0 million of litigation settlement expense, as well as an additional $750 thousand in legal fees, which were included in noninterest expense related to the Stanford litigation during the fourth quarter of 2022. Trustmark Corporation expects that the Settlement will be tax deductible. Trustmark Corporation and TNB remain substantially above levels considered to be well-capitalized under all relevant standards. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS June 30, 2023 ($ 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: 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 SECURITIES AVAILABLE FOR SALE U.S. Treasury securities $ 362,966 $ 386,903 $ 391,513 $ 416,278 $ 419,696 U.S. Government agency obligations 6,999 7,254 7,766 9,116 11,947 Obligations of states and political subdivisions 4,813 4,907 4,862 4,763 5,179 Mortgage-backed securities Residential mortgage pass-through securities Guaranteed by GNMA 25,336 26,851 27,097 28,164 32,240 Issued by FNMA and FHLMC 1,250,435 1,317,848 1,345,463 1,718,057 1,888,546 Other residential mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 98,388 108,192 115,140 126,138 144,158 Commercial mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 122,946 132,207 132,241 141,970 142,598 Total securities available for sale $ 1,871,883 $ 1,984,162 $ 2,024,082 $ 2,444,486 $ 2,644,364 SECURITIES HELD TO MATURITY U.S. Treasury securities $ 28,679 $ 28,486 $ 28,295 $ — $ — Obligations of states and political subdivisions 1,180 4,507 4,510 4,512 5,320 Mortgage-backed securities Residential mortgage pass-through securities Guaranteed by GNMA 13,235 4,336 4,442 4,527 4,624 Issued by FNMA and FHLMC 484,679 497,854 509,311 179,375 185,554 Other residential mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 171,002 179,334 188,201 197,923 210,479 Commercial mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 759,890 759,821 759,755 770,648 731,777 Total securities held to maturity $ 1,458,665 $ 1,474,338 $ 1,494,514 $ 1,156,985 $ 1,137,754 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 June 30, 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 $63.4 million. Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 99.8% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS June 30, 2023 ($ in thousands) (unaudited) Note 3 – Loan Composition LHFI consisted of the following during the periods presented: LHFI BY TYPE 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Loans secured by real estate: Construction, land development and other land loans $ 1,722,657 $ 1,723,772 $ 1,719,542 $ 1,647,395 $ 1,440,058 Secured by 1-4 family residential properties 2,854,182 2,822,048 2,775,847 2,597,112 2,424,962 Secured by nonfarm, nonresidential properties 3,471,728 3,375,579 3,278,830 3,206,946 3,178,079 Other real estate secured 954,410 847,527 742,538 593,119 555,311 Commercial and industrial loans 1,883,480 1,882,360 1,821,259 1,689,532 1,551,001 Consumer loans 163,788 162,911 166,425 163,412 160,716 State and other political subdivision loans 1,111,710 1,193,727 1,223,863 1,188,703 1,110,795 Other loans 452,012 489,271 475,735 499,845 523,918 LHFI 12,613,967 12,497,195 12,204,039 11,586,064 10,944,840 ACL LHFI (129,298 ) (122,239 ) (120,214 ) (115,050 ) (103,140 ) Net LHFI $ 12,484,669 $ 12,374,956 $ 12,083,825 $ 11,471,014 $ 10,841,700 The following table presents the LHFI composition by region and reflects each region’s diversified mix of loans: June 30, 2023 LHFI - COMPOSITION BY REGION Total Alabama (1) 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 $ 1,722,657 $ 817,793 $ 54,845 $ 395,489 $ 30,387 $ 424,143 Secured by 1-4 family residential properties 2,854,182 136,612 51,817 2,555,191 83,409 27,153 Secured by nonfarm, nonresidential properties 3,471,728 954,604 225,437 1,471,341 159,402 660,944 Other real estate secured 954,410 379,984 1,805 294,497 7,376 270,748 Commercial and industrial loans 1,883,480 576,345 25,686 750,161 257,002 274,286 Consumer loans 163,788 23,925 8,354 101,026 19,411 11,072 State and other political subdivision loans 1,111,710 77,931 61,148 805,342 25,596 141,693 Other loans 452,012 110,395 9,963 219,075 48,806 63,773 Loans $ 12,613,967 $ 3,077,589 $ 439,055 $ 6,592,122 $ 631,389 $ 1,873,812 CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION Lots $ 69,120 $ 29,517 $ 10,179 $ 14,955 $ 4,362 $ 10,107 Development 130,166 55,946 1,366 36,602 7,465 28,787 Unimproved land 96,994 20,854 13,859 29,651 4,564 28,066 1-4 family construction 353,056 191,964 17,325 94,139 13,996 35,632 Other construction 1,073,321 519,512 12,116 220,142 — 321,551 Construction, land development and other land loans $ 1,722,657 $ 817,793 $ 54,845 $ 395,489 $ 30,387 $ 424,143 (1) Includes Georgia Loan Production Office. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS June 30, 2023 ($ in thousands) (unaudited) Note 3 – Loan Composition (continued) June 30, 2023 Total Alabama (1) 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 $ 363,101 $ 125,094 $ 26,313 $ 123,940 $ 20,570 $ 67,184 Office 275,841 102,162 16,822 86,818 2,152 67,887 Hotel/motel 298,632 167,641 50,344 53,705 26,942 — Mini-storage 144,253 23,282 2,002 99,182 464 19,323 Industrial 375,366 89,226 18,416 103,343 9,976 154,405 Health care 70,788 41,098 — 26,846 338 2,506 Convenience stores 32,385 7,207 438 14,279 572 9,889 Nursing homes/senior living 471,414 174,609 — 201,391 5,249 90,165 Other 132,613 44,071 9,381 60,170 8,655 10,336 Total non-owner occupied loans 2,164,393 774,390 123,716 769,674 74,918 421,695 Owner-occupied: Office 153,392 45,525 36,517 43,905 9,906 17,539 Churches 67,325 16,766 4,394 37,537 6,069 2,559 Industrial warehouses 164,540 16,056 4,571 41,402 17,487 85,024 Health care 146,007 10,420 6,141 108,638 2,305 18,503 Convenience stores 149,551 11,834 33,888 68,713 215 34,901 Retail 88,837 11,270 9,271 40,320 18,849 9,127 Restaurants 54,460 4,191 3,925 31,241 11,844 3,259 Auto dealerships 45,878 6,151 213 22,307 17,207 — Nursing homes/senior living 301,226 44,709 — 230,317 — 26,200 Other 136,119 13,292 2,801 77,287 602 42,137 Total owner-occupied loans 1,307,335 180,214 101,721 701,667 84,484 239,249 Loans secured by nonfarm, nonresidential properties $ 3,471,728 $ 954,604 $ 225,437 $ 1,471,341 $ 159,402 $ 660,944 (1) Includes Georgia Loan Production Office. 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 Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Securities – taxable 1.87 % 1.85 % 1.71 % 1.62 % 1.50 % 1.86 % 1.44 % Securities – nontaxable 4.25 % 4.00 % 3.95 % 3.97 % 4.00 % 4.10 % 3.98 % Securities – total 1.87 % 1.86 % 1.72 % 1.63 % 1.50 % 1.87 % 1.44 % PPP loans — — 12.39 % 7.51 % 4.16 % — 3.04 % Loans - LHFI & LHFS 6.08 % 5.79 % 5.27 % 4.48 % 3.79 % 5.94 % 3.69 % Loans - total 6.08 % 5.79 % 5.27 % 4.48 % 3.79 % 5.94 % 3.69 % Fed funds sold & reverse repurchases 5.51 % 5.11 % 4.29 % 3.51 % 3.65 % 5.35 % 2.43 % Other earning assets 5.36 % 4.09 % 3.76 % 1.82 % 0.78 % 4.81 % 0.41 % Total earning assets 5.16 % 4.87 % 4.40 % 3.71 % 3.01 % 5.02 % 2.85 % Interest-bearing deposits 1.96 % 1.53 % 0.71 % 0.20 % 0.11 % 1.75 % 0.11 % Fed funds purchased & repurchases 5.01 % 4.49 % 3.44 % 1.95 % 0.24 % 4.73 % 0.17 % Other borrowings 5.12 % 4.87 % 3.73 % 2.89 % 2.52 % 5.01 % 2.39 % Total interest-bearing liabilities 2.42 % 1.98 % 1.03 % 0.31 % 0.17 % 2.20 % 0.17 % Total Deposits 1.48 % 1.13 % 0.51 % 0.14 % 0.07 % 1.31 % 0.07 % Net interest margin 3.33 % 3.39 % 3.66 % 3.50 % 2.90 % 3.36 % 2.74 % Net interest margin excluding PPP loans and the FRB balance 3.23 % 3.36 % 3.66 % 3.53 % 3.06 % 3.30 % 2.97 % TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS June 30, 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. For the second quarter of 2023, the average FRB balance totaled $777.0 million compared to $555.5 million for the first quarter of 2023 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 13 basis points when compared to the first quarter of 2023, totaling 3.23% for the second 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 hedge ineffectiveness of $1.3 million during the second quarter of 2023. The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements: Quarter Ended Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Mortgage servicing income, net $ 6,764 $ 6,785 $ 6,636 $ 6,669 $ 6,557 $ 13,549 $ 12,986 Change in fair value-MSR from runoff (2,710 ) (1,145 ) (2,981 ) (3,462 ) (3,806 ) (3,855 ) (7,591 ) Gain on sales of loans, net 3,887 3,797 3,328 4,597 6,030 7,684 12,253 Mortgage banking income before hedge ineffectiveness 7,941 9,437 6,983 7,804 8,781 17,378 17,648 Change in fair value-MSR from market changes 5,898 (3,972 ) (3,348 ) 10,770 8,739 1,926 30,759 Change in fair value of derivatives (7,239 ) 2,174 (227 ) (11,698 ) (9,371 ) (5,065 ) (30,385 ) Net positive (negative) hedge ineffectiveness (1,341 ) (1,798 ) (3,575 ) (928 ) (632 ) (3,139 ) 374 Mortgage banking, net $ 6,600 $ 7,639 $ 3,408 $ 6,876 $ 8,149 $ 14,239 $ 18,022 TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS June 30, 2023 ($ in thousands) (unaudited) Note 6 – Other Noninterest Income and Expense Other noninterest income consisted of the following for the periods presented: Quarter Ended Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Partnership amortization for tax credit purposes $ (2,019 ) $ (1,961 ) $ (1,869 ) $ (1,531 ) $ (1,475 ) $ (3,980 ) $ (2,811 ) Increase in life insurance cash surrender value 1,716 1,693 1,687 1,676 1,683 3,409 3,310 Other miscellaneous income 3,998 2,782 2,493 2,273 1,699 6,780 4,614 Total other, net $ 3,695 $ 2,514 $ 2,311 $ 2,418 $ 1,907 $ 6,209 $ 5,113 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 Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Loan expense (1) $ 3,066 $ 2,538 $ 2,908 $ 2,866 $ 2,947 $ 5,604 $ 6,475 Amortization of intangibles 130 288 312 312 328 418 810 FDIC assessment expense 2,550 2,370 2,130 1,945 1,810 4,920 3,310 Other real estate expense, net 171 172 18 497 623 343 658 Other miscellaneous expense 8,585 9,443 9,767 8,117 7,782 18,028 15,717 Total other expense (1) $ 14,502 $ 14,811 $ 15,135 $ 13,737 $ 13,490 $ 29,313 $ 26,970 (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 June 30, 2023 ($ in thousands except per share data) (unaudited) Note 7 – Non-GAAP Financial Measures (continued) Quarter Ended Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 TANGIBLE EQUITY AVERAGE BALANCES Total shareholders' equity $ 1,580,291 $ 1,523,828 $ 1,493,291 $ 1,606,469 $ 1,608,309 $ 1,552,215 $ 1,660,739 Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) Identifiable intangible assets (3,301 ) (3,523 ) (3,816 ) (4,131 ) (4,436 ) (3,411 ) (4,656 ) Total average tangible equity $ 1,192,753 $ 1,136,068 $ 1,105,238 $ 1,218,101 $ 1,219,636 $ 1,164,567 $ 1,271,846 PERIOD END BALANCES Total shareholders' equity $ 1,571,193 $ 1,562,099 $ 1,492,268 $ 1,508,945 $ 1,586,696 Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) Identifiable intangible assets (3,222 ) (3,352 ) (3,640 ) (3,952 ) (4,264 ) Total tangible equity (a) $ 1,183,734 $ 1,174,510 $ 1,104,391 $ 1,120,756 $ 1,198,195 TANGIBLE ASSETS Total assets $ 18,422,626 $ 18,877,178 $ 18,015,478 $ 17,190,634 $ 16,951,510 Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) Identifiable intangible assets (3,222 ) (3,352 ) (3,640 ) (3,952 ) (4,264 ) Total tangible assets (b) $ 18,035,167 $ 18,489,589 $ 17,627,601 $ 16,802,445 $ 16,563,009 Risk-weighted assets (c) $ 14,966,614 $ 14,793,893 $ 14,521,078 $ 13,748,819 $ 13,076,981 NET INCOME (LOSS) ADJUSTED FOR INTANGIBLE AMORTIZATION Net income (loss) $ 45,037 $ 50,300 $ (34,063 ) $ 42,455 $ 34,284 $ 95,337 $ 63,495 Plus: Intangible amortization net of tax 97 216 234 234 246 313 608 Net income (loss) adjusted for intangible amortization $ 45,134 $ 50,516 $ (33,829 ) $ 42,689 $ 34,530 $ 95,650 $ 64,103 Period end common shares outstanding (d) 61,069,036 61,048,516 60,977,686 60,953,864 61,201,123 TANGIBLE COMMON EQUITY MEASUREMENTS Return on average tangible equity (1) 15.18 % 18.03 % -12.14 % 13.90 % 11.36 % 16.56 % 10.16 % Tangible equity/tangible assets (a)/(b) 6.56 % 6.35 % 6.27 % 6.67 % 7.23 % Tangible equity/risk-weighted assets (a)/(c) 7.91 % 7.94 % 7.61 % 8.15 % 9.16 % Tangible book value (a)/(d)*1,000 $ 19.38 $ 19.24 $ 18.11 $ 18.39 $ 19.58 COMMON EQUITY TIER 1 CAPITAL (CET1) Total shareholders' equity $ 1,571,193 $ 1,562,099 $ 1,492,268 $ 1,508,945 $ 1,586,696 CECL transition adjustment 13,000 13,000 19,500 19,500 19,500 AOCI-related adjustments 265,704 242,381 275,403 306,412 207,142 CET1 adjustments and deductions: Goodwill net of associated deferred tax liabilities (DTLs) (370,227 ) (370,234 ) (370,241 ) (370,217 ) (370,229 ) Other adjustments and deductions for CET1 (2) (2,915 ) (3,275 ) (3,258 ) (3,506 ) (3,757 ) CET1 capital (e) 1,476,755 1,443,971 1,413,672 1,461,134 1,439,352 Additional tier 1 capital instruments plus related surplus 60,000 60,000 60,000 60,000 60,000 Tier 1 capital $ 1,536,755 $ 1,503,971 $ 1,473,672 $ 1,521,134 $ 1,499,352 Common equity tier 1 capital ratio (e)/(c) 9.87 % 9.76 % 9.74 % 10.63 % 11.01 % (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 June 30, 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 Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Net interest income (GAAP) $ 139,904 $ 137,595 $ 146,583 $ 136,105 $ 112,676 $ 277,499 $ 212,020 Noninterest income (GAAP) 53,553 51,377 45,170 52,606 53,253 104,930 107,368 Pre-provision revenue (a) $ 193,457 $ 188,972 $ 191,753 $ 188,711 $ 165,929 $ 382,429 $ 319,388 Noninterest expense (GAAP) $ 132,218 $ 128,327 $ 231,229 $ 126,698 $ 123,767 $ 260,545 $ 245,286 Less: Litigation settlement expense — — (100,750 ) — — — — Adjusted noninterest expense - PPNR (Non-GAAP) (b) $ 132,218 $ 128,327 $ 130,479 $ 126,698 $ 123,767 $ 260,545 $ 245,286 PPNR (Non-GAAP) (a)-(b) $ 61,239 $ 60,645 $ 61,274 $ 62,013 $ 42,162 $ 121,884 $ 74,102 The following table presents Trustmark’s calculation of its efficiency ratio for the periods presented: Quarter Ended Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Total noninterest expense (GAAP) $ 132,218 $ 128,327 $ 231,229 $ 126,698 $ 123,767 $ 260,545 $ 245,286 Less: Other real estate expense, net (171 ) (172 ) (18 ) (497 ) (623 ) (343 ) (658 ) Amortization of intangibles (130 ) (288 ) (312 ) (312 ) (328 ) (418 ) (810 ) Charitable contributions resulting in state tax credits (325 ) (325 ) (375 ) (375 ) (375 ) (650 ) (750 ) Litigation settlement expense — — (100,750 ) — — — — Adjusted noninterest expense (Non-GAAP) (c) $ 131,592 $ 127,542 $ 129,774 $ 125,514 $ 122,441 $ 259,134 $ 243,068 Net interest income (GAAP) $ 139,904 $ 137,595 $ 146,583 $ 136,105 $ 112,676 $ 277,499 $ 212,020 Add: Tax equivalent adjustment 3,383 3,477 3,451 2,975 2,916 6,860 5,919 Net interest income-FTE (Non-GAAP) (a) $ 143,287 $ 141,072 $ 150,034 $ 139,080 $ 115,592 $ 284,359 $ 217,939 Noninterest income (GAAP) $ 53,553 $ 51,377 $ 45,170 $ 52,606 $ 53,253 $ 104,930 $ 107,368 Add: Partnership amortization for tax credit purposes 2,019 1,961 1,869 1,531 1,475 3,980 2,811 Adjusted noninterest income (Non-GAAP) (b) $ 55,572 $ 53,338 $ 47,039 $ 54,137 $ 54,728 $ 108,910 $ 110,179 Adjusted revenue (Non-GAAP) (a)+(b) $ 198,859 $ 194,410 $ 197,073 $ 193,217 $ 170,320 $ 393,269 $ 328,118 Efficiency ratio (Non-GAAP) (c)/((a)+(b)) 66.17 % 65.60 % 65.85 % 64.96 % 71.89 % 65.89 % 74.08 % View source version on businesswire.com: https://www.businesswire.com/news/home/20230725007677/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 Second Quarter 2023 Financial Results By: Trustmark Corporation via Business Wire July 25, 2023 at 16:30 PM EDT Loan and Deposit Growth Continues, Credit Quality Remains Strong, Net Interest Income and Noninterest Income Expand Trustmark Corporation (NASDAQGS:TRMK) reported net income of $45.0 million in the second quarter of 2023, representing diluted earnings per share of $0.74. Trustmark’s performance during the second quarter produced a return on average tangible equity of 15.18% and a return on average assets of 0.96%. The Board of Directors declared a quarterly cash dividend of $0.23 per share payable September 15, 2023, to shareholders of record on September 1, 2023. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230725007677/en/ Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/53477140/en Second Quarter Highlights Loans held for investment (HFI) increased $116.8 million, or 0.9%, from the prior quarter to $12.6 billion Deposits expanded $130.2 million, or 0.9%, linked-quarter to $14.9 billion Total revenue increased $4.5 million, or 2.4%, linked-quarter to $193.5 million Net interest income (FTE) increased $2.2 million linked-quarter to $143.3 million, resulting in a net interest margin of 3.33% Noninterest income totaled $53.6 million, representing 27.7% of total revenue Credit quality remained strong; net charge-offs represented 4 basis points of average loans Duane A. Dewey, President and CEO, stated, “Trustmark continued to post solid financial results in the second quarter, reflecting continued loan and deposit growth, expanding net interest income, and growth in our fee-based businesses. During the first six months of 2023, Trustmark’s net income totaled $95.3 million, which represented diluted earnings of $1.56 per share, an increase of 51.5% from the same period in 2022. We have a tremendous team of associates throughout our system that are focused on expanding existing customer relationships as well as demonstrating the value Trustmark can provide potential customers as their trusted financial partner. We have added very talented people across the organization in numerous production and back office roles to meet our objectives. We continue to implement initiatives to improve efficiency, enhance our ability to grow and serve customers, and build long-term value for our shareholders.” Balance Sheet Management Loans HFI totaled $12.6 billion, up 0.9% from the prior quarter and 15.3% year-over-year Deposits totaled $14.9 billion, up 0.9% from the previous quarter and 1.0% year-over-year Maintained strong capital position with CET1 ratio of 9.87% and total risk-based capital ratio of 12.08% Loans HFI totaled $12.6 billion at June 30, 2023, reflecting an increase of $116.8 million, or 0.9%, linked-quarter and $1.7 billion, or 15.3%, year-over-year. The linked quarter growth reflected increases in other real estate secured loans, nonfarm, nonresidential loans, and 1-4 family residential loans offset in part by declines in other loans, state and political subdivision loans, and construction, land development and other land loans. Trustmark’s loan portfolio continues to be well-diversified by loan type and geography. Deposits totaled $14.9 billion at June 30, 2023, up $130.2 million, or 0.9%, from the prior quarter and up $143.7 million, or 1.0%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 84.6% of total deposits at June 30, 2023. Migration into higher-yielding products continued to drive a change in deposit mix from noninterest-bearing deposits, which represented 23.2% of total deposits at June 30, 2023. Interest-bearing deposit costs totaled 1.96% for the second quarter, while the total cost of deposits was 1.48%. The total cost of interest-bearing liabilities was 2.42% for the second quarter of 2023. 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. As of June 30, 2023, Trustmark had not repurchased any of its outstanding common shares under this program. Trustmark’s regulatory capital ratios continued to exceed all levels to be considered “well-capitalized” as of June 30, 2023. Credit Quality Nonperforming assets represented 0.60% of total loans and other real estate at June 30, 2023 Net charge-offs totaled $1.2 million in the second quarter, representing 0.04% of average loans Allowance for credit losses (ACL) represented 1.03% of loans HFI and 301.4% of nonaccrual loans, excluding individually analyzed loans, at June 30, 2023 Nonaccrual loans totaled $75.0 million at June 30, 2023, up $2.7 million from the prior quarter and an increase of $13.0 million year-over-year. Other real estate totaled $1.1 million, reflecting a $547 thousand decrease from the prior quarter and a $1.9 million decline from the prior year. The provision for credit losses for loans HFI was $8.2 million in the second quarter and was primarily attributable to extended maturities on mortgage loans resulting from lower prepayment speeds, weakening macroeconomic factors, and loan growth. The provision for credit losses for off-balance sheet credit exposures was $245 thousand, primarily driven by weakening macroeconomic factors. Collectively, the provision for credit losses totaled $8.5 million in the second quarter compared to $1.0 million from the prior quarter and $1.1 million in the second quarter of 2022. Allocation of Trustmark’s $129.3 million ACL on loans HFI represented 0.84% of commercial loans and 1.60% of consumer and home mortgage loans, resulting in an ACL to total loans HFI of 1.03% at June 30, 2023. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio. Revenue Generation Total revenue increased $4.5 million, or 2.4%, linked-quarter Net interest income (FTE) totaled $143.3 million in the second quarter, up 1.6% linked-quarter Noninterest income increased 4.2% linked-quarter to total $53.6 million, representing 27.7% of total revenue in the second quarter Revenue in the second quarter totaled $193.5 million, an increase of $4.5 million, or 2.4%, from the prior quarter and $27.5 million, or 16.6%, from the prior year. The linked-quarter increase primarily reflects higher net interest income and solid growth in all fee income business with the exception of mortgage banking. The year-over-year growth in revenue is attributed to higher net interest income. Net interest income (FTE) in the second quarter totaled $143.3 million, resulting in a net interest margin of 3.33%, down 6 basis points from the prior quarter. The decrease in the net interest margin was due to increased costs of interest-bearing deposits which were partially offset by increased yields on the loans HFI and HFS portfolio and securities portfolio. Noninterest income in the second quarter totaled $53.6 million, an increase of $2.2 million, or 4.2%, from the prior quarter and a $300 thousand increase year-over-year. With the exception of mortgage banking, all categories increased linked-quarter with other, net and bank card and other fees increasing $1.2 million and $1.1 million, respectively. Year-over-year increases in insurance, other, net and service charges on deposit accounts, were offset in part by declines in bank card and other fees, mortgage banking and wealth management revenue. Mortgage loan production in the second quarter totaled $431.3 million, an increase of 19.5% from the prior quarter and a decrease of 36.7% year-over-year. Mortgage banking revenue totaled $6.6 million in the second quarter, a decrease of $1.0 million linked-quarter and $1.5 million year-over-year. The linked-quarter decrease was principally attributable to accelerated amortization of mortgage servicing rights offset in part by reduced net negative hedge ineffectiveness. Insurance revenue totaled $14.8 million in the second quarter, up $459 thousand, or 3.2%, from the prior quarter and $1.1 million, or 7.8%, year-over-year. The linked-quarter increase primarily reflected growth in policy fees and other commissions while the year-over-year increase primarily reflected growth in commercial property and casualty commissions. Wealth management revenue in the second quarter totaled $8.9 million, an increase of $102 thousand, or 1.2%, from the prior quarter and a decline of $220 thousand, or 2.4%, year-over-year. The linked-quarter growth reflected higher trust management revenue while the year-over-year decline reflected reduced brokerage revenue. Noninterest Expense Noninterest expense totaled $132.2 million in the second quarter, up 3.0%, from the prior quarter Adjusted noninterest expense, which excludes other real estate expense, amortization of intangibles, and charitable contributions resulting in state tax credits, totaled $131.6 million in the second quarter, an increase of 3.2% from the prior quarter. Please refer to the Consolidated Financial Information, Note 7 – Non-GAAP Financial Measures Noninterest expense in the second quarter totaled $132.2 million, an increase of $3.9 million, or 3.0%, when compared to the prior quarter. Salaries and employee benefits increased $1.9 million linked-quarter principally due to commissions and annual merit increases. Services and fees increased $2.8 million, or 11.2%, linked-quarter primarily due to increases in professional fees. Net occupancy expense declined $521 thousand, or 6.8%, while other expense declined $309 thousand, or 2.1%, linked-quarter. FIT2GROW “In 2022, we announced FIT2GROW, a comprehensive program of Focus, Innovation and Transformation designed to enhance our ability to grow and serve customers. Our Atlanta-based Equipment Finance division, established in late 2022, continues to gain traction as its portfolio has grown to $127 million as of June 30, 2023. Implementation of our technology plans continued during the second quarter with conversion of our credit card platform to a best-in-class product for our customers. In addition, advancements in our loan underwriting system were implemented and plans for conversion of our deposit system continued. During the quarter, work continued on the design of our sales through service process, which will be implemented across the retail branch network in early 2024. These actions are designed to enhance Trustmark’s performance and build long-term value for our shareholders,” said Dewey. Additional Information As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, July 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, August 9, 2023, in archived format at the same web address or by calling (877) 344-7529, passcode 7655682. 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 (including uncertainty regarding the federal government's debt limit or a prolonged shutdown of the federal government), 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 impacts related to or resulting from recent bank failures and other economic and industry volatility, including potential increased regulatory requirements and costs and potential impacts to macroeconomic conditions, 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 June 30, 2023 ($ in thousands) (unaudited) Linked Quarter Year over Year QUARTERLY AVERAGE BALANCES 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change Securities AFS-taxable (1) $ 2,140,505 $ 2,187,121 $ 3,094,364 $ (46,616 ) -2.1 % $ (953,859 ) -30.8 % Securities AFS-nontaxable 4,796 4,812 5,110 (16 ) -0.3 % (314 ) -6.1 % Securities HTM-taxable (1) 1,463,086 1,479,283 811,599 (16,197 ) -1.1 % 651,487 80.3 % Securities HTM-nontaxable 1,718 4,509 5,630 (2,791 ) -61.9 % (3,912 ) -69.5 % Total securities 3,610,105 3,675,725 3,916,703 (65,620 ) -1.8 % (306,598 ) -7.8 % Paycheck protection program loans (PPP) — — 17,746 — n/m (17,746 ) -100.0 % Loans (includes loans held for sale) 12,732,057 12,530,449 10,910,178 201,608 1.6 % 1,821,879 16.7 % Fed funds sold and reverse repurchases 3,275 2,379 110 896 37.7 % 3,165 n/m Other earning assets 903,027 647,760 1,139,312 255,267 39.4 % (236,285 ) -20.7 % Total earning assets 17,248,464 16,856,313 15,984,049 392,151 2.3 % 1,264,415 7.9 % Allowance for credit losses (ACL), loans held for investment (LHFI) (121,960 ) (119,978 ) (99,106 ) (1,982 ) -1.7 % (22,854 ) -23.1 % Other assets 1,648,583 1,762,449 1,513,127 (113,866 ) -6.5 % 135,456 9.0 % Total assets $ 18,775,087 $ 18,498,784 $ 17,398,070 $ 276,303 1.5 % $ 1,377,017 7.9 % Interest-bearing demand deposits $ 4,803,737 $ 4,751,154 $ 4,578,235 $ 52,583 1.1 % $ 225,502 4.9 % Savings deposits 4,002,134 4,193,764 4,638,849 (191,630 ) -4.6 % (636,715 ) -13.7 % Time deposits 2,335,752 1,907,449 1,159,065 428,303 22.5 % 1,176,687 n/m Total interest-bearing deposits 11,141,623 10,852,367 10,376,149 289,256 2.7 % 765,474 7.4 % Fed funds purchased and repurchases 389,834 436,535 118,753 (46,701 ) -10.7 % 271,081 n/m Other borrowings 1,330,010 1,110,843 80,283 219,167 19.7 % 1,249,727 n/m Subordinated notes 123,337 123,281 123,116 56 0.0 % 221 0.2 % Junior subordinated debt securities 61,856 61,856 61,856 — 0.0 % — 0.0 % Total interest-bearing liabilities 13,046,660 12,584,882 10,760,157 461,778 3.7 % 2,286,503 21.2 % Noninterest-bearing deposits 3,595,927 3,813,248 4,590,338 (217,321 ) -5.7 % (994,411 ) -21.7 % Other liabilities 552,209 576,826 439,266 (24,617 ) -4.3 % 112,943 25.7 % Total liabilities 17,194,796 16,974,956 15,789,761 219,840 1.3 % 1,405,035 8.9 % Shareholders' equity 1,580,291 1,523,828 1,608,309 56,463 3.7 % (28,018 ) -1.7 % Total liabilities and equity $ 18,775,087 $ 18,498,784 $ 17,398,070 $ 276,303 1.5 % $ 1,377,017 7.9 % (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June 30, 2023 ($ in thousands) (unaudited) Linked Quarter Year over Year PERIOD END BALANCES 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change Cash and due from banks $ 832,052 $ 1,297,144 $ 742,461 $ (465,092 ) -35.9 % $ 89,591 12.1 % Fed funds sold and reverse repurchases — — — — n/m — n/m Securities available for sale (1) 1,871,883 1,984,162 2,644,364 (112,279 ) -5.7 % (772,481 ) -29.2 % Securities held to maturity (1) 1,458,665 1,474,338 1,137,754 (15,673 ) -1.1 % 320,911 28.2 % PPP loans — — 12,549 — n/m (12,549 ) -100.0 % Loans held for sale (LHFS) 181,094 175,926 190,186 5,168 2.9 % (9,092 ) -4.8 % Loans held for investment (LHFI) 12,613,967 12,497,195 10,944,840 116,772 0.9 % 1,669,127 15.3 % ACL LHFI (129,298 ) (122,239 ) (103,140 ) (7,059 ) -5.8 % (26,158 ) -25.4 % Net LHFI 12,484,669 12,374,956 10,841,700 109,713 0.9 % 1,642,969 15.2 % Premises and equipment, net 227,630 223,975 207,914 3,655 1.6 % 19,716 9.5 % Mortgage servicing rights 134,350 127,206 121,014 7,144 5.6 % 13,336 11.0 % Goodwill 384,237 384,237 384,237 — 0.0 % — 0.0 % Identifiable intangible assets 3,222 3,352 4,264 (130 ) -3.9 % (1,042 ) -24.4 % Other real estate 1,137 1,684 3,034 (547 ) -32.5 % (1,897 ) -62.5 % Operating lease right-of-use assets 38,179 35,315 34,684 2,864 8.1 % 3,495 10.1 % Other assets 805,508 794,883 627,349 10,625 1.3 % 178,159 28.4 % Total assets $ 18,422,626 $ 18,877,178 $ 16,951,510 $ (454,552 ) -2.4 % $ 1,471,116 8.7 % Deposits: Noninterest-bearing $ 3,461,073 $ 3,797,055 $ 4,509,472 $ (335,982 ) -8.8 % $ (1,048,399 ) -23.2 % Interest-bearing 11,452,827 10,986,606 10,260,696 466,221 4.2 % 1,192,131 11.6 % Total deposits 14,913,900 14,783,661 14,770,168 130,239 0.9 % 143,732 1.0 % Fed funds purchased and repurchases 311,179 477,980 70,157 (166,801 ) -34.9 % 241,022 n/m Other borrowings 1,056,714 1,485,181 72,553 (428,467 ) -28.8 % 984,161 n/m Subordinated notes 123,372 123,317 123,152 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 34,841 34,596 32,949 245 0.7 % 1,892 5.7 % Operating lease liabilities 40,845 37,988 37,108 2,857 7.5 % 3,737 10.1 % Other liabilities 308,726 310,500 196,871 (1,774 ) -0.6 % 111,855 56.8 % Total liabilities 16,851,433 17,315,079 15,364,814 (463,646 ) -2.7 % 1,486,619 9.7 % Common stock 12,724 12,720 12,752 4 0.0 % (28 ) -0.2 % Capital surplus 156,834 155,297 160,876 1,537 1.0 % (4,042 ) -2.5 % Retained earnings 1,667,339 1,636,463 1,620,210 30,876 1.9 % 47,129 2.9 % Accumulated other comprehensive income (loss), net of tax (265,704 ) (242,381 ) (207,142 ) (23,323 ) -9.6 % (58,562 ) -28.3 % Total shareholders' equity 1,571,193 1,562,099 1,586,696 9,094 0.6 % (15,503 ) -1.0 % Total liabilities and equity $ 18,422,626 $ 18,877,178 $ 16,951,510 $ (454,552 ) -2.4 % $ 1,471,116 8.7 % (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June 30, 2023 ($ in thousands except per share data) (unaudited) Quarter Ended Linked Quarter Year over Year INCOME STATEMENTS 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change Interest and fees on LHFS & LHFI-FTE $ 192,941 $ 178,967 $ 103,033 $ 13,974 7.8 % $ 89,908 87.3 % Interest and fees on PPP loans — — 184 — n/m (184 ) -100.0 % Interest on securities-taxable 16,779 16,761 14,561 18 0.1 % 2,218 15.2 % Interest on securities-tax exempt-FTE 69 92 107 (23 ) -25.0 % (38 ) -35.5 % Interest on fed funds sold and reverse repurchases 45 30 1 15 50.0 % 44 n/m Other interest income 12,077 6,527 2,214 5,550 85.0 % 9,863 n/m Total interest income-FTE 221,911 202,377 120,100 19,534 9.7 % 101,811 84.8 % Interest on deposits 54,409 40,898 2,774 13,511 33.0 % 51,635 n/m Interest on fed funds purchased and repurchases 4,865 4,832 70 33 0.7 % 4,795 n/m Other interest expense 19,350 15,575 1,664 3,775 24.2 % 17,686 n/m Total interest expense 78,624 61,305 4,508 17,319 28.3 % 74,116 n/m Net interest income-FTE 143,287 141,072 115,592 2,215 1.6 % 27,695 24.0 % Provision for credit losses, LHFI 8,211 3,244 2,716 4,967 n/m 5,495 n/m Provision for credit losses, off-balance sheet credit exposures 245 (2,242 ) (1,568 ) 2,487 n/m 1,813 n/m Net interest income after provision-FTE 134,831 140,070 114,444 (5,239 ) -3.7 % 20,387 17.8 % Service charges on deposit accounts 10,695 10,336 10,226 359 3.5 % 469 4.6 % Bank card and other fees 8,917 7,803 10,167 1,114 14.3 % (1,250 ) -12.3 % Mortgage banking, net 6,600 7,639 8,149 (1,039 ) -13.6 % (1,549 ) -19.0 % Insurance commissions 14,764 14,305 13,702 459 3.2 % 1,062 7.8 % Wealth management 8,882 8,780 9,102 102 1.2 % (220 ) -2.4 % Other, net 3,695 2,514 1,907 1,181 47.0 % 1,788 93.8 % Total noninterest income 53,553 51,377 53,253 2,176 4.2 % 300 0.6 % Salaries and employee benefits 75,940 74,056 71,679 1,884 2.5 % 4,261 5.9 % Services and fees (2) 28,264 25,426 25,659 2,838 11.2 % 2,605 10.2 % Net occupancy-premises 7,108 7,629 6,892 (521 ) -6.8 % 216 3.1 % Equipment expense 6,404 6,405 6,047 (1 ) 0.0 % 357 5.9 % Litigation settlement expense (1) — — — — n/m — n/m Other expense (2) 14,502 14,811 13,490 (309 ) -2.1 % 1,012 7.5 % Total noninterest expense 132,218 128,327 123,767 3,891 3.0 % 8,451 6.8 % Income (loss) before income taxes and tax eq adj 56,166 63,120 43,930 (6,954 ) -11.0 % 12,236 27.9 % Tax equivalent adjustment 3,383 3,477 2,916 (94 ) -2.7 % 467 16.0 % Income (loss) before income taxes 52,783 59,643 41,014 (6,860 ) -11.5 % 11,769 28.7 % Income taxes 7,746 9,343 6,730 (1,597 ) -17.1 % 1,016 15.1 % Net income (loss) $ 45,037 $ 50,300 $ 34,284 $ (5,263 ) -10.5 % $ 10,753 31.4 % Per share data Earnings (loss) per share - basic $ 0.74 $ 0.82 $ 0.56 $ (0.08 ) -9.8 % $ 0.18 32.1 % Earnings (loss) per share - diluted $ 0.74 $ 0.82 $ 0.56 $ (0.08 ) -9.8 % $ 0.18 32.1 % Dividends per share $ 0.23 $ 0.23 $ 0.23 — 0.0 % — 0.0 % Weighted average shares outstanding Basic 61,063,277 61,011,059 61,378,226 Diluted 61,230,031 61,193,275 61,546,285 Period end shares outstanding 61,069,036 61,048,516 61,201,123 (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 June 30, 2023 ($ in thousands) (unaudited) Quarter Ended Linked Quarter Year over Year NONPERFORMING ASSETS (1) 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change Nonaccrual LHFI Alabama (2) $ 11,058 $ 10,919 $ 2,698 $ 139 1.3 % $ 8,360 n/m Florida 334 256 233 78 30.5 % 101 43.3 % Mississippi (3) 36,288 32,560 23,039 3,728 11.4 % 13,249 57.5 % Tennessee (4) 5,088 5,416 9,500 (328 ) -6.1 % (4,412 ) -46.4 % Texas 22,259 23,224 26,582 (965 ) -4.2 % (4,323 ) -16.3 % Total nonaccrual LHFI 75,027 72,375 62,052 2,652 3.7 % 12,975 20.9 % Other real estate Alabama (2) — — 84 — n/m (84 ) -100.0 % Mississippi (3) 1,137 1,495 2,950 (358 ) -23.9 % (1,813 ) -61.5 % Tennessee (4) — 189 — (189 ) -100.0 % — n/m Total other real estate 1,137 1,684 3,034 (547 ) -32.5 % (1,897 ) -62.5 % Total nonperforming assets $ 76,164 $ 74,059 $ 65,086 $ 2,105 2.8 % $ 11,078 17.0 % LOANS PAST DUE OVER 90 DAYS (1) LHFI $ 3,911 $ 2,255 $ 1,347 $ 1,656 73.4 % $ 2,564 n/m LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase) $ 35,766 $ 41,468 $ 51,164 $ (5,702 ) -13.8 % $ (15,398 ) -30.1 % Quarter Ended Linked Quarter Year over Year ACL LHFI (1) 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change Beginning Balance $ 122,239 $ 120,214 $ 98,734 $ 2,025 1.7 % $ 23,505 23.8 % Provision for credit losses, LHFI 8,211 3,244 2,716 4,967 n/m 5,495 n/m Charge-offs (2,773 ) (2,996 ) (2,277 ) 223 7.4 % (496 ) -21.8 % Recoveries 1,621 1,777 3,967 (156 ) -8.8 % (2,346 ) -59.1 % Net (charge-offs) recoveries (1,152 ) (1,219 ) 1,690 67 5.5 % (2,842 ) n/m Ending Balance $ 129,298 $ 122,239 $ 103,140 $ 7,059 5.8 % $ 26,158 25.4 % NET (CHARGE-OFFS) RECOVERIES (1) Alabama (2) $ (141 ) $ (268 ) $ 1,129 $ 127 -47.4 % $ (1,270 ) n/m Florida (35 ) (36 ) 761 1 2.8 % (796 ) n/m Mississippi (3) (762 ) (775 ) (266 ) 13 1.7 % (496 ) n/m Tennessee (4) (166 ) (124 ) 31 (42 ) -33.9 % (197 ) n/m Texas (48 ) (16 ) 35 (32 ) n/m (83 ) n/m Total net (charge-offs) recoveries $ (1,152 ) $ (1,219 ) $ 1,690 $ 67 5.5 % $ (2,842 ) n/m (1) Excludes PPP loans. (2) Alabama includes the Georgia Loan Production Office. (3) Mississippi includes Central and Southern Mississippi Regions. (4) 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 June 30, 2023 ($ in thousands) (unaudited) Quarter Ended Six Months Ended AVERAGE BALANCES 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Securities AFS-taxable (1) $ 2,140,505 $ 2,187,121 $ 2,572,675 $ 2,824,254 $ 3,094,364 $ 2,163,684 $ 3,169,515 Securities AFS-nontaxable 4,796 4,812 4,828 4,928 5,110 4,804 5,118 Securities HTM-taxable (1) 1,463,086 1,479,283 1,268,952 1,140,685 811,599 1,471,140 612,332 Securities HTM-nontaxable 1,718 4,509 4,514 5,057 5,630 3,106 6,474 Total securities 3,610,105 3,675,725 3,850,969 3,974,924 3,916,703 3,642,734 3,793,439 PPP loans — — 3,235 9,821 17,746 — 23,346 Loans (includes loans held for sale) 12,732,057 12,530,449 12,006,661 11,459,551 10,910,178 12,631,810 10,731,438 Fed funds sold and reverse repurchases 3,275 2,379 6,566 226 110 2,829 83 Other earning assets 903,027 647,760 375,190 325,620 1,139,312 780,657 1,473,655 Total earning assets 17,248,464 16,856,313 16,242,621 15,770,142 15,984,049 17,058,030 16,021,961 ACL LHFI (121,960 ) (119,978 ) (114,948 ) (102,951 ) (99,106 ) (120,974 ) (99,247 ) Other assets 1,648,583 1,762,449 1,630,085 1,576,653 1,513,127 1,700,643 1,531,884 Total assets $ 18,775,087 $ 18,498,784 $ 17,757,758 $ 17,243,844 $ 17,398,070 $ 18,637,699 $ 17,454,598 Interest-bearing demand deposits $ 4,803,737 $ 4,751,154 $ 4,719,303 $ 4,613,733 $ 4,578,235 $ 4,777,591 $ 4,504,058 Savings deposits 4,002,134 4,193,764 4,379,673 4,514,579 4,638,849 4,097,420 4,714,556 Time deposits 2,335,752 1,907,449 1,152,905 1,111,440 1,159,065 2,122,784 1,176,155 Total interest-bearing deposits 11,141,623 10,852,367 10,251,881 10,239,752 10,376,149 10,997,795 10,394,769 Fed funds purchased and repurchases 389,834 436,535 549,406 249,809 118,753 413,055 165,122 Other borrowings 1,330,010 1,110,843 530,993 88,697 80,283 1,221,032 85,657 Subordinated notes 123,337 123,281 123,226 123,171 123,116 123,309 123,089 Junior subordinated debt securities 61,856 61,856 61,856 61,856 61,856 61,856 61,856 Total interest-bearing liabilities 13,046,660 12,584,882 11,517,362 10,763,285 10,760,157 12,817,047 10,830,493 Noninterest-bearing deposits 3,595,927 3,813,248 4,177,113 4,444,370 4,590,338 3,703,987 4,595,693 Other liabilities 552,209 576,826 569,992 429,720 439,266 564,450 367,673 Total liabilities 17,194,796 16,974,956 16,264,467 15,637,375 15,789,761 17,085,484 15,793,859 Shareholders' equity 1,580,291 1,523,828 1,493,291 1,606,469 1,608,309 1,552,215 1,660,739 Total liabilities and equity $ 18,775,087 $ 18,498,784 $ 17,757,758 $ 17,243,844 $ 17,398,070 $ 18,637,699 $ 17,454,598 (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June 30, 2023 ($ in thousands) (unaudited) PERIOD END BALANCES 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Cash and due from banks $ 832,052 $ 1,297,144 $ 734,787 $ 479,637 $ 742,461 Fed funds sold and reverse repurchases — — 4,000 10,098 — Securities available for sale (1) 1,871,883 1,984,162 2,024,082 2,444,486 2,644,364 Securities held to maturity (1) 1,458,665 1,474,338 1,494,514 1,156,985 1,137,754 PPP loans — — — 4,798 12,549 LHFS 181,094 175,926 135,226 165,213 190,186 LHFI 12,613,967 12,497,195 12,204,039 11,586,064 10,944,840 ACL LHFI (129,298 ) (122,239 ) (120,214 ) (115,050 ) (103,140 ) Net LHFI 12,484,669 12,374,956 12,083,825 11,471,014 10,841,700 Premises and equipment, net 227,630 223,975 212,365 210,761 207,914 Mortgage servicing rights 134,350 127,206 129,677 132,615 121,014 Goodwill 384,237 384,237 384,237 384,237 384,237 Identifiable intangible assets 3,222 3,352 3,640 3,952 4,264 Other real estate 1,137 1,684 1,986 2,971 3,034 Operating lease right-of-use assets 38,179 35,315 36,301 37,282 34,684 Other assets 805,508 794,883 770,838 686,585 627,349 Total assets $ 18,422,626 $ 18,877,178 $ 18,015,478 $ 17,190,634 $ 16,951,510 Deposits: Noninterest-bearing $ 3,461,073 $ 3,797,055 $ 4,093,771 $ 4,358,805 $ 4,509,472 Interest-bearing 11,452,827 10,986,606 10,343,877 10,066,375 10,260,696 Total deposits 14,913,900 14,783,661 14,437,648 14,425,180 14,770,168 Fed funds purchased and repurchases 311,179 477,980 449,331 544,068 70,157 Other borrowings 1,056,714 1,485,181 1,050,938 223,172 72,553 Subordinated notes 123,372 123,317 123,262 123,207 123,152 Junior subordinated debt securities 61,856 61,856 61,856 61,856 61,856 ACL on off-balance sheet credit exposures 34,841 34,596 36,838 31,623 32,949 Operating lease liabilities 40,845 37,988 38,932 39,797 37,108 Other liabilities 308,726 310,500 324,405 232,786 196,871 Total liabilities 16,851,433 17,315,079 16,523,210 15,681,689 15,364,814 Common stock 12,724 12,720 12,705 12,700 12,752 Capital surplus 156,834 155,297 154,645 154,150 160,876 Retained earnings 1,667,339 1,636,463 1,600,321 1,648,507 1,620,210 Accumulated other comprehensive income (loss), net of tax (265,704 ) (242,381 ) (275,403 ) (306,412 ) (207,142 ) Total shareholders' equity 1,571,193 1,562,099 1,492,268 1,508,945 1,586,696 Total liabilities and equity $ 18,422,626 $ 18,877,178 $ 18,015,478 $ 17,190,634 $ 16,951,510 (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June 30, 2023 ($ in thousands except per share data) (unaudited) Quarter Ended Six Months Ended INCOME STATEMENTS 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Interest and fees on LHFS & LHFI-FTE $ 192,941 $ 178,967 $ 159,566 $ 129,395 $ 103,033 $ 371,908 $ 196,285 Interest and fees on PPP loans — — 101 186 184 — 352 Interest on securities-taxable 16,779 16,761 16,577 16,222 14,561 33,540 26,918 Interest on securities-tax exempt-FTE 69 92 93 100 107 161 229 Interest on fed funds sold and reverse repurchases 45 30 71 2 1 75 1 Other interest income 12,077 6,527 3,556 1,493 2,214 18,604 3,031 Total interest income-FTE 221,911 202,377 179,964 147,398 120,100 424,288 226,816 Interest on deposits 54,409 40,898 18,438 5,097 2,774 95,307 5,534 Interest on fed funds purchased and repurchases 4,865 4,832 4,762 1,225 70 9,697 140 Other interest expense 19,350 15,575 6,730 1,996 1,664 34,925 3,203 Total interest expense 78,624 61,305 29,930 8,318 4,508 139,929 8,877 Net interest income-FTE 143,287 141,072 150,034 139,080 115,592 284,359 217,939 Provision for credit losses, LHFI 8,211 3,244 6,902 12,919 2,716 11,455 1,856 Provision for credit losses, off-balance sheet credit exposures 245 (2,242 ) 5,215 (1,326 ) (1,568 ) (1,997 ) (2,674 ) Net interest income after provision-FTE 134,831 140,070 137,917 127,487 114,444 274,901 218,757 Service charges on deposit accounts 10,695 10,336 11,162 11,318 10,226 21,031 19,677 Bank card and other fees 8,917 7,803 8,191 9,305 10,167 16,720 18,609 Mortgage banking, net 6,600 7,639 3,408 6,876 8,149 14,239 18,022 Insurance commissions 14,764 14,305 12,019 13,911 13,702 29,069 27,791 Wealth management 8,882 8,780 8,079 8,778 9,102 17,662 18,156 Other, net 3,695 2,514 2,311 2,418 1,907 6,209 5,113 Total noninterest income 53,553 51,377 45,170 52,606 53,253 104,930 107,368 Salaries and employee benefits 75,940 74,056 73,469 72,707 71,679 149,996 141,264 Services and fees (2) 28,264 25,426 27,709 26,787 25,659 53,690 50,973 Net occupancy-premises 7,108 7,629 7,898 7,395 6,892 14,737 13,971 Equipment expense 6,404 6,405 6,268 6,072 6,047 12,809 12,108 Litigation settlement expense (1) — — 100,750 — — — — Other expense (2) 14,502 14,811 15,135 13,737 13,490 29,313 26,970 Total noninterest expense 132,218 128,327 231,229 126,698 123,767 260,545 245,286 Income (loss) before income taxes and tax eq adj 56,166 63,120 (48,142 ) 53,395 43,930 119,286 80,839 Tax equivalent adjustment 3,383 3,477 3,451 2,975 2,916 6,860 5,919 Income (loss) before income taxes 52,783 59,643 (51,593 ) 50,420 41,014 112,426 74,920 Income taxes 7,746 9,343 (17,530 ) 7,965 6,730 17,089 11,425 Net income (loss) $ 45,037 $ 50,300 $ (34,063 ) $ 42,455 $ 34,284 $ 95,337 $ 63,495 Per share data Earnings (loss) per share - basic $ 0.74 $ 0.82 $ (0.56 ) $ 0.69 $ 0.56 $ 1.56 $ 1.03 Earnings (loss) per share - diluted $ 0.74 $ 0.82 $ (0.56 ) $ 0.69 $ 0.56 $ 1.56 $ 1.03 Dividends per share $ 0.23 $ 0.23 $ 0.23 $ 0.23 $ 0.23 $ 0.46 $ 0.46 Weighted average shares outstanding Basic 61,063,277 61,011,059 60,969,400 61,114,804 61,378,226 61,037,312 61,445,934 Diluted 61,230,031 61,193,275 61,173,249 61,318,715 61,546,285 61,206,799 61,624,569 Period end shares outstanding 61,069,036 61,048,516 60,977,686 60,953,864 61,201,123 61,069,036 61,201,123 (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 June 30, 2023 ($ in thousands) (unaudited) Quarter Ended NONPERFORMING ASSETS (1) 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Nonaccrual LHFI Alabama (2) $ 11,058 $ 10,919 $ 12,300 $ 12,710 $ 2,698 Florida 334 256 227 227 233 Mississippi (3) 36,288 32,560 24,683 23,517 23,039 Tennessee (4) 5,088 5,416 5,566 5,120 9,500 Texas 22,259 23,224 23,196 26,353 26,582 Total nonaccrual LHFI 75,027 72,375 65,972 67,927 62,052 Other real estate Alabama (2) — — 194 217 84 Mississippi (3) 1,137 1,495 1,769 2,754 2,950 Tennessee (4) — 189 23 — — Total other real estate 1,137 1,684 1,986 2,971 3,034 Total nonperforming assets $ 76,164 $ 74,059 $ 67,958 $ 70,898 $ 65,086 LOANS PAST DUE OVER 90 DAYS (1) LHFI $ 3,911 $ 2,255 $ 3,929 $ 1,842 $ 1,347 LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase) $ 35,766 $ 41,468 $ 49,320 $ 48,313 $ 51,164 Quarter Ended Six Months Ended ACL LHFI (1) 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Beginning Balance $ 122,239 $ 120,214 $ 115,050 $ 103,140 $ 98,734 $ 120,214 $ 99,457 Provision for credit losses, LHFI 8,211 3,244 6,902 12,919 2,716 11,455 1,856 Charge-offs (2,773 ) (2,996 ) (3,893 ) (2,920 ) (2,277 ) (5,769 ) (4,519 ) Recoveries 1,621 1,777 2,155 1,911 3,967 3,398 6,346 Net (charge-offs) recoveries (1,152 ) (1,219 ) (1,738 ) (1,009 ) 1,690 (2,371 ) 1,827 Ending Balance $ 129,298 $ 122,239 $ 120,214 $ 115,050 $ 103,140 $ 129,298 $ 103,140 NET (CHARGE-OFFS) RECOVERIES (1) Alabama (2) $ (141 ) $ (268 ) $ 98 $ 93 $ 1,129 $ (409 ) $ 1,828 Florida (35 ) (36 ) (60 ) (23 ) 761 (71 ) 735 Mississippi (3) (762 ) (775 ) (1,657 ) (702 ) (266 ) (1,537 ) (354 ) Tennessee (4) (166 ) (124 ) (195 ) (202 ) 31 (290 ) (393 ) Texas (48 ) (16 ) 76 (175 ) 35 (64 ) 11 Total net (charge-offs) recoveries $ (1,152 ) $ (1,219 ) $ (1,738 ) $ (1,009 ) $ 1,690 $ (2,371 ) $ 1,827 (1) Excludes PPP loans. (2) Alabama includes the Georgia Loan Production Office. (3) Mississippi includes Central and Southern Mississippi Regions. (4) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June 30, 2023 ($ in thousands) (unaudited) Quarter Ended Six Months Ended FINANCIAL RATIOS AND OTHER DATA 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Return on average equity 11.43 % 13.39 % -9.05 % 10.48 % 8.55 % 12.39 % 7.71 % Return on average tangible equity 15.18 % 18.03 % -12.14 % 13.90 % 11.36 % 16.56 % 10.16 % Return on average assets 0.96 % 1.10 % -0.76 % 0.98 % 0.79 % 1.03 % 0.73 % Interest margin - Yield - FTE 5.16 % 4.87 % 4.40 % 3.71 % 3.01 % 5.02 % 2.85 % Interest margin - Cost 1.83 % 1.47 % 0.73 % 0.21 % 0.11 % 1.65 % 0.11 % Net interest margin - FTE 3.33 % 3.39 % 3.66 % 3.50 % 2.90 % 3.36 % 2.74 % Efficiency ratio (1) 66.17 % 65.60 % 65.85 % 64.96 % 71.89 % 65.89 % 74.08 % Full-time equivalent employees 2,761 2,758 2,738 2,717 2,727 CREDIT QUALITY RATIOS (2) Net (recoveries) charge-offs / average loans 0.04 % 0.04 % 0.06 % 0.03 % -0.06 % 0.04 % -0.03 % Provision for credit losses, LHFI / average loans 0.26 % 0.10 % 0.23 % 0.45 % 0.10 % 0.18 % 0.03 % Nonaccrual LHFI / (LHFI + LHFS) 0.59 % 0.57 % 0.53 % 0.58 % 0.56 % Nonperforming assets / (LHFI + LHFS) 0.60 % 0.58 % 0.55 % 0.60 % 0.58 % Nonperforming assets / (LHFI + LHFS + other real estate) 0.60 % 0.58 % 0.55 % 0.60 % 0.58 % ACL LHFI / LHFI 1.03 % 0.98 % 0.99 % 0.99 % 0.94 % ACL LHFI-commercial / commercial LHFI 0.84 % 0.80 % 0.85 % 0.93 % 0.88 % ACL LHFI-consumer / consumer and home mortgage LHFI 1.60 % 1.54 % 1.41 % 1.20 % 1.14 % ACL LHFI / nonaccrual LHFI 172.34 % 168.90 % 182.22 % 169.37 % 166.22 % ACL LHFI / nonaccrual LHFI (excl individually analyzed loans) 301.44 % 320.80 % 399.19 % 466.03 % 475.27 % CAPITAL RATIOS Total equity / total assets 8.53 % 8.28 % 8.28 % 8.78 % 9.36 % Tangible equity / tangible assets 6.56 % 6.35 % 6.27 % 6.67 % 7.23 % Tangible equity / risk-weighted assets 7.91 % 7.94 % 7.61 % 8.15 % 9.16 % Tier 1 leverage ratio 8.35 % 8.29 % 8.47 % 9.01 % 8.80 % Common equity tier 1 capital ratio 9.87 % 9.76 % 9.74 % 10.63 % 11.01 % Tier 1 risk-based capital ratio 10.27 % 10.17 % 10.15 % 11.06 % 11.47 % Total risk-based capital ratio 12.08 % 11.95 % 11.91 % 12.85 % 13.26 % STOCK PERFORMANCE Market value-Close $ 21.12 $ 24.70 $ 34.91 $ 30.63 $ 29.19 Book value $ 25.73 $ 25.59 $ 24.47 $ 24.76 $ 25.93 Tangible book value $ 19.38 $ 19.24 $ 18.11 $ 18.39 $ 19.58 (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 June 30, 2023 ($ in thousands) (unaudited) Note 1 - Litigation Settlement As previously announced, on December 31, 2022, Trustmark National Bank (TNB) agreed to a settlement in principle (the Settlement) relating to litigation involving the Stanford Financial Group. On January 13, 2023, TNB entered into a Settlement Agreement (the Settlement Agreement) reflecting the terms of the Settlement. The parties to the Settlement Agreement 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; and, on the other hand, (iv) TNB. Under the terms of the Settlement Agreement, the parties agreed to settle and dismiss the Rotstain Action, the Smith Action, and all current or future claims by plaintiffs in either such Action arising from or related to Stanford. In addition, the Settlement Agreement provided that the parties would request dismissal of the Jackson Action pursuant to the terms of the bar orders described below. If the Court’s approval (as described below) of the Settlement Agreement, including the bar orders described below, is upheld on appeal, TNB will make a one-time cash payment of $100.0 million to the Receiver. The Settlement Agreement included the parties’ agreement to seek the Northern District of Texas District Court’s entry of bar orders prohibiting any continued or future claims by the plaintiffs in the Actions or by any other person or entity against TNB 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 herein, including not only the Actions and any pending matters but also any actions that may be brought in the future. Final Court approval of these bar orders is a condition of the Settlement. The Settlement Agreement is also subject to notice to Stanford’s investor claimants (which has been provided) and final, non-appealable approval by the U.S. District Court for the Northern District of Texas. While TNB believes that the Settlement Agreement 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’s approval of the Settlement Agreement (which has occurred, as described further below) may not be upheld on appeal. The Settlement Agreement also provides that TNB denies and makes no admission of liability or wrongdoing in connection with any Stanford matter. As has been the case throughout the pendency of the Actions, TNB expressly denies any liability or wrongdoing with respect to any matter alleged in regard to the multi-billion-dollar Ponzi scheme operated by Stanford for almost 20 years. TNB’s relationship with Stanford began as a result of TNB’s acquisition of a Houston-based bank in August 2006, and consisted of ordinary banking services provided to business deposit customers. The foregoing description of the terms 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 is filed as Exhibit 10.ai to the 2022 Annual Report and is incorporated herein by reference. On January 20, 2023, the U.S. District Court for the Northern District of Texas entered an order preliminarily finding that the Settlement is fair, reasonable, and equitable; has no obvious deficiencies; and is the product of serious, informed, good faith, and arm’s-length negotiations. Following the provision of notice as required by the Settlement Agreement and by the Court’s preliminary order, the Court (Judge David C. Godbey, presiding) held a Final Approval Hearing on May 3, 2023, at which the Court approved the Settlement from the bench. On May 4, 2023, Judge Godbey signed the written orders confirming his oral ruling, including the bar order contemplated by the Settlement Agreement and the judgment and bar order with respect to the Jackson Action. On May 11, 2023, Robert Allen Stanford, writing from prison, appealed the District Court’s approval of the Settlement to the Fifth Circuit Court of Appeals. On June 12, 2023, the Receiver moved to dismiss the appeal as frivolous. That motion is now fully briefed and awaiting the Fifth Circuit’s decision. The Settlement will become effective when the Fifth Circuit’s ruling in favor of the approval of the Settlement becomes final and non-appealable (the Settlement Effective Date). Within five days of the Settlement Effective Date, the parties to the Rotstain and Smith Actions will file agreed dismissals of those cases. Absent any further appeal in either of the Rotstain or Smith Actions, those dismissals will become final 30 days after entered and signed by the respective judges. TNB will be required to make the Settlement payment within 30 days after those dismissals become final. Any further appeal of any of the orders described above would delay the making of the Settlement payment. Pending the resolution of the settlement approval process, the Rotstain, Smith and Jackson Actions are stayed. TNB and Trustmark Corporation determined that it was in the best interest of TNB, 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 TNB of further litigation of the Actions and related Stanford claims. At the time of the entry into the Settlement, Trustmark Corporation recognized $100.0 million of litigation settlement expense, as well as an additional $750 thousand in legal fees, which were included in noninterest expense related to the Stanford litigation during the fourth quarter of 2022. Trustmark Corporation expects that the Settlement will be tax deductible. Trustmark Corporation and TNB remain substantially above levels considered to be well-capitalized under all relevant standards. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS June 30, 2023 ($ 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: 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 SECURITIES AVAILABLE FOR SALE U.S. Treasury securities $ 362,966 $ 386,903 $ 391,513 $ 416,278 $ 419,696 U.S. Government agency obligations 6,999 7,254 7,766 9,116 11,947 Obligations of states and political subdivisions 4,813 4,907 4,862 4,763 5,179 Mortgage-backed securities Residential mortgage pass-through securities Guaranteed by GNMA 25,336 26,851 27,097 28,164 32,240 Issued by FNMA and FHLMC 1,250,435 1,317,848 1,345,463 1,718,057 1,888,546 Other residential mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 98,388 108,192 115,140 126,138 144,158 Commercial mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 122,946 132,207 132,241 141,970 142,598 Total securities available for sale $ 1,871,883 $ 1,984,162 $ 2,024,082 $ 2,444,486 $ 2,644,364 SECURITIES HELD TO MATURITY U.S. Treasury securities $ 28,679 $ 28,486 $ 28,295 $ — $ — Obligations of states and political subdivisions 1,180 4,507 4,510 4,512 5,320 Mortgage-backed securities Residential mortgage pass-through securities Guaranteed by GNMA 13,235 4,336 4,442 4,527 4,624 Issued by FNMA and FHLMC 484,679 497,854 509,311 179,375 185,554 Other residential mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 171,002 179,334 188,201 197,923 210,479 Commercial mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 759,890 759,821 759,755 770,648 731,777 Total securities held to maturity $ 1,458,665 $ 1,474,338 $ 1,494,514 $ 1,156,985 $ 1,137,754 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 June 30, 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 $63.4 million. Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 99.8% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS June 30, 2023 ($ in thousands) (unaudited) Note 3 – Loan Composition LHFI consisted of the following during the periods presented: LHFI BY TYPE 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Loans secured by real estate: Construction, land development and other land loans $ 1,722,657 $ 1,723,772 $ 1,719,542 $ 1,647,395 $ 1,440,058 Secured by 1-4 family residential properties 2,854,182 2,822,048 2,775,847 2,597,112 2,424,962 Secured by nonfarm, nonresidential properties 3,471,728 3,375,579 3,278,830 3,206,946 3,178,079 Other real estate secured 954,410 847,527 742,538 593,119 555,311 Commercial and industrial loans 1,883,480 1,882,360 1,821,259 1,689,532 1,551,001 Consumer loans 163,788 162,911 166,425 163,412 160,716 State and other political subdivision loans 1,111,710 1,193,727 1,223,863 1,188,703 1,110,795 Other loans 452,012 489,271 475,735 499,845 523,918 LHFI 12,613,967 12,497,195 12,204,039 11,586,064 10,944,840 ACL LHFI (129,298 ) (122,239 ) (120,214 ) (115,050 ) (103,140 ) Net LHFI $ 12,484,669 $ 12,374,956 $ 12,083,825 $ 11,471,014 $ 10,841,700 The following table presents the LHFI composition by region and reflects each region’s diversified mix of loans: June 30, 2023 LHFI - COMPOSITION BY REGION Total Alabama (1) 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 $ 1,722,657 $ 817,793 $ 54,845 $ 395,489 $ 30,387 $ 424,143 Secured by 1-4 family residential properties 2,854,182 136,612 51,817 2,555,191 83,409 27,153 Secured by nonfarm, nonresidential properties 3,471,728 954,604 225,437 1,471,341 159,402 660,944 Other real estate secured 954,410 379,984 1,805 294,497 7,376 270,748 Commercial and industrial loans 1,883,480 576,345 25,686 750,161 257,002 274,286 Consumer loans 163,788 23,925 8,354 101,026 19,411 11,072 State and other political subdivision loans 1,111,710 77,931 61,148 805,342 25,596 141,693 Other loans 452,012 110,395 9,963 219,075 48,806 63,773 Loans $ 12,613,967 $ 3,077,589 $ 439,055 $ 6,592,122 $ 631,389 $ 1,873,812 CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION Lots $ 69,120 $ 29,517 $ 10,179 $ 14,955 $ 4,362 $ 10,107 Development 130,166 55,946 1,366 36,602 7,465 28,787 Unimproved land 96,994 20,854 13,859 29,651 4,564 28,066 1-4 family construction 353,056 191,964 17,325 94,139 13,996 35,632 Other construction 1,073,321 519,512 12,116 220,142 — 321,551 Construction, land development and other land loans $ 1,722,657 $ 817,793 $ 54,845 $ 395,489 $ 30,387 $ 424,143 (1) Includes Georgia Loan Production Office. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS June 30, 2023 ($ in thousands) (unaudited) Note 3 – Loan Composition (continued) June 30, 2023 Total Alabama (1) 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 $ 363,101 $ 125,094 $ 26,313 $ 123,940 $ 20,570 $ 67,184 Office 275,841 102,162 16,822 86,818 2,152 67,887 Hotel/motel 298,632 167,641 50,344 53,705 26,942 — Mini-storage 144,253 23,282 2,002 99,182 464 19,323 Industrial 375,366 89,226 18,416 103,343 9,976 154,405 Health care 70,788 41,098 — 26,846 338 2,506 Convenience stores 32,385 7,207 438 14,279 572 9,889 Nursing homes/senior living 471,414 174,609 — 201,391 5,249 90,165 Other 132,613 44,071 9,381 60,170 8,655 10,336 Total non-owner occupied loans 2,164,393 774,390 123,716 769,674 74,918 421,695 Owner-occupied: Office 153,392 45,525 36,517 43,905 9,906 17,539 Churches 67,325 16,766 4,394 37,537 6,069 2,559 Industrial warehouses 164,540 16,056 4,571 41,402 17,487 85,024 Health care 146,007 10,420 6,141 108,638 2,305 18,503 Convenience stores 149,551 11,834 33,888 68,713 215 34,901 Retail 88,837 11,270 9,271 40,320 18,849 9,127 Restaurants 54,460 4,191 3,925 31,241 11,844 3,259 Auto dealerships 45,878 6,151 213 22,307 17,207 — Nursing homes/senior living 301,226 44,709 — 230,317 — 26,200 Other 136,119 13,292 2,801 77,287 602 42,137 Total owner-occupied loans 1,307,335 180,214 101,721 701,667 84,484 239,249 Loans secured by nonfarm, nonresidential properties $ 3,471,728 $ 954,604 $ 225,437 $ 1,471,341 $ 159,402 $ 660,944 (1) Includes Georgia Loan Production Office. 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 Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Securities – taxable 1.87 % 1.85 % 1.71 % 1.62 % 1.50 % 1.86 % 1.44 % Securities – nontaxable 4.25 % 4.00 % 3.95 % 3.97 % 4.00 % 4.10 % 3.98 % Securities – total 1.87 % 1.86 % 1.72 % 1.63 % 1.50 % 1.87 % 1.44 % PPP loans — — 12.39 % 7.51 % 4.16 % — 3.04 % Loans - LHFI & LHFS 6.08 % 5.79 % 5.27 % 4.48 % 3.79 % 5.94 % 3.69 % Loans - total 6.08 % 5.79 % 5.27 % 4.48 % 3.79 % 5.94 % 3.69 % Fed funds sold & reverse repurchases 5.51 % 5.11 % 4.29 % 3.51 % 3.65 % 5.35 % 2.43 % Other earning assets 5.36 % 4.09 % 3.76 % 1.82 % 0.78 % 4.81 % 0.41 % Total earning assets 5.16 % 4.87 % 4.40 % 3.71 % 3.01 % 5.02 % 2.85 % Interest-bearing deposits 1.96 % 1.53 % 0.71 % 0.20 % 0.11 % 1.75 % 0.11 % Fed funds purchased & repurchases 5.01 % 4.49 % 3.44 % 1.95 % 0.24 % 4.73 % 0.17 % Other borrowings 5.12 % 4.87 % 3.73 % 2.89 % 2.52 % 5.01 % 2.39 % Total interest-bearing liabilities 2.42 % 1.98 % 1.03 % 0.31 % 0.17 % 2.20 % 0.17 % Total Deposits 1.48 % 1.13 % 0.51 % 0.14 % 0.07 % 1.31 % 0.07 % Net interest margin 3.33 % 3.39 % 3.66 % 3.50 % 2.90 % 3.36 % 2.74 % Net interest margin excluding PPP loans and the FRB balance 3.23 % 3.36 % 3.66 % 3.53 % 3.06 % 3.30 % 2.97 % TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS June 30, 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. For the second quarter of 2023, the average FRB balance totaled $777.0 million compared to $555.5 million for the first quarter of 2023 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 13 basis points when compared to the first quarter of 2023, totaling 3.23% for the second 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 hedge ineffectiveness of $1.3 million during the second quarter of 2023. The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements: Quarter Ended Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Mortgage servicing income, net $ 6,764 $ 6,785 $ 6,636 $ 6,669 $ 6,557 $ 13,549 $ 12,986 Change in fair value-MSR from runoff (2,710 ) (1,145 ) (2,981 ) (3,462 ) (3,806 ) (3,855 ) (7,591 ) Gain on sales of loans, net 3,887 3,797 3,328 4,597 6,030 7,684 12,253 Mortgage banking income before hedge ineffectiveness 7,941 9,437 6,983 7,804 8,781 17,378 17,648 Change in fair value-MSR from market changes 5,898 (3,972 ) (3,348 ) 10,770 8,739 1,926 30,759 Change in fair value of derivatives (7,239 ) 2,174 (227 ) (11,698 ) (9,371 ) (5,065 ) (30,385 ) Net positive (negative) hedge ineffectiveness (1,341 ) (1,798 ) (3,575 ) (928 ) (632 ) (3,139 ) 374 Mortgage banking, net $ 6,600 $ 7,639 $ 3,408 $ 6,876 $ 8,149 $ 14,239 $ 18,022 TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS June 30, 2023 ($ in thousands) (unaudited) Note 6 – Other Noninterest Income and Expense Other noninterest income consisted of the following for the periods presented: Quarter Ended Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Partnership amortization for tax credit purposes $ (2,019 ) $ (1,961 ) $ (1,869 ) $ (1,531 ) $ (1,475 ) $ (3,980 ) $ (2,811 ) Increase in life insurance cash surrender value 1,716 1,693 1,687 1,676 1,683 3,409 3,310 Other miscellaneous income 3,998 2,782 2,493 2,273 1,699 6,780 4,614 Total other, net $ 3,695 $ 2,514 $ 2,311 $ 2,418 $ 1,907 $ 6,209 $ 5,113 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 Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Loan expense (1) $ 3,066 $ 2,538 $ 2,908 $ 2,866 $ 2,947 $ 5,604 $ 6,475 Amortization of intangibles 130 288 312 312 328 418 810 FDIC assessment expense 2,550 2,370 2,130 1,945 1,810 4,920 3,310 Other real estate expense, net 171 172 18 497 623 343 658 Other miscellaneous expense 8,585 9,443 9,767 8,117 7,782 18,028 15,717 Total other expense (1) $ 14,502 $ 14,811 $ 15,135 $ 13,737 $ 13,490 $ 29,313 $ 26,970 (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 June 30, 2023 ($ in thousands except per share data) (unaudited) Note 7 – Non-GAAP Financial Measures (continued) Quarter Ended Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 TANGIBLE EQUITY AVERAGE BALANCES Total shareholders' equity $ 1,580,291 $ 1,523,828 $ 1,493,291 $ 1,606,469 $ 1,608,309 $ 1,552,215 $ 1,660,739 Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) Identifiable intangible assets (3,301 ) (3,523 ) (3,816 ) (4,131 ) (4,436 ) (3,411 ) (4,656 ) Total average tangible equity $ 1,192,753 $ 1,136,068 $ 1,105,238 $ 1,218,101 $ 1,219,636 $ 1,164,567 $ 1,271,846 PERIOD END BALANCES Total shareholders' equity $ 1,571,193 $ 1,562,099 $ 1,492,268 $ 1,508,945 $ 1,586,696 Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) Identifiable intangible assets (3,222 ) (3,352 ) (3,640 ) (3,952 ) (4,264 ) Total tangible equity (a) $ 1,183,734 $ 1,174,510 $ 1,104,391 $ 1,120,756 $ 1,198,195 TANGIBLE ASSETS Total assets $ 18,422,626 $ 18,877,178 $ 18,015,478 $ 17,190,634 $ 16,951,510 Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) Identifiable intangible assets (3,222 ) (3,352 ) (3,640 ) (3,952 ) (4,264 ) Total tangible assets (b) $ 18,035,167 $ 18,489,589 $ 17,627,601 $ 16,802,445 $ 16,563,009 Risk-weighted assets (c) $ 14,966,614 $ 14,793,893 $ 14,521,078 $ 13,748,819 $ 13,076,981 NET INCOME (LOSS) ADJUSTED FOR INTANGIBLE AMORTIZATION Net income (loss) $ 45,037 $ 50,300 $ (34,063 ) $ 42,455 $ 34,284 $ 95,337 $ 63,495 Plus: Intangible amortization net of tax 97 216 234 234 246 313 608 Net income (loss) adjusted for intangible amortization $ 45,134 $ 50,516 $ (33,829 ) $ 42,689 $ 34,530 $ 95,650 $ 64,103 Period end common shares outstanding (d) 61,069,036 61,048,516 60,977,686 60,953,864 61,201,123 TANGIBLE COMMON EQUITY MEASUREMENTS Return on average tangible equity (1) 15.18 % 18.03 % -12.14 % 13.90 % 11.36 % 16.56 % 10.16 % Tangible equity/tangible assets (a)/(b) 6.56 % 6.35 % 6.27 % 6.67 % 7.23 % Tangible equity/risk-weighted assets (a)/(c) 7.91 % 7.94 % 7.61 % 8.15 % 9.16 % Tangible book value (a)/(d)*1,000 $ 19.38 $ 19.24 $ 18.11 $ 18.39 $ 19.58 COMMON EQUITY TIER 1 CAPITAL (CET1) Total shareholders' equity $ 1,571,193 $ 1,562,099 $ 1,492,268 $ 1,508,945 $ 1,586,696 CECL transition adjustment 13,000 13,000 19,500 19,500 19,500 AOCI-related adjustments 265,704 242,381 275,403 306,412 207,142 CET1 adjustments and deductions: Goodwill net of associated deferred tax liabilities (DTLs) (370,227 ) (370,234 ) (370,241 ) (370,217 ) (370,229 ) Other adjustments and deductions for CET1 (2) (2,915 ) (3,275 ) (3,258 ) (3,506 ) (3,757 ) CET1 capital (e) 1,476,755 1,443,971 1,413,672 1,461,134 1,439,352 Additional tier 1 capital instruments plus related surplus 60,000 60,000 60,000 60,000 60,000 Tier 1 capital $ 1,536,755 $ 1,503,971 $ 1,473,672 $ 1,521,134 $ 1,499,352 Common equity tier 1 capital ratio (e)/(c) 9.87 % 9.76 % 9.74 % 10.63 % 11.01 % (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 June 30, 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 Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Net interest income (GAAP) $ 139,904 $ 137,595 $ 146,583 $ 136,105 $ 112,676 $ 277,499 $ 212,020 Noninterest income (GAAP) 53,553 51,377 45,170 52,606 53,253 104,930 107,368 Pre-provision revenue (a) $ 193,457 $ 188,972 $ 191,753 $ 188,711 $ 165,929 $ 382,429 $ 319,388 Noninterest expense (GAAP) $ 132,218 $ 128,327 $ 231,229 $ 126,698 $ 123,767 $ 260,545 $ 245,286 Less: Litigation settlement expense — — (100,750 ) — — — — Adjusted noninterest expense - PPNR (Non-GAAP) (b) $ 132,218 $ 128,327 $ 130,479 $ 126,698 $ 123,767 $ 260,545 $ 245,286 PPNR (Non-GAAP) (a)-(b) $ 61,239 $ 60,645 $ 61,274 $ 62,013 $ 42,162 $ 121,884 $ 74,102 The following table presents Trustmark’s calculation of its efficiency ratio for the periods presented: Quarter Ended Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Total noninterest expense (GAAP) $ 132,218 $ 128,327 $ 231,229 $ 126,698 $ 123,767 $ 260,545 $ 245,286 Less: Other real estate expense, net (171 ) (172 ) (18 ) (497 ) (623 ) (343 ) (658 ) Amortization of intangibles (130 ) (288 ) (312 ) (312 ) (328 ) (418 ) (810 ) Charitable contributions resulting in state tax credits (325 ) (325 ) (375 ) (375 ) (375 ) (650 ) (750 ) Litigation settlement expense — — (100,750 ) — — — — Adjusted noninterest expense (Non-GAAP) (c) $ 131,592 $ 127,542 $ 129,774 $ 125,514 $ 122,441 $ 259,134 $ 243,068 Net interest income (GAAP) $ 139,904 $ 137,595 $ 146,583 $ 136,105 $ 112,676 $ 277,499 $ 212,020 Add: Tax equivalent adjustment 3,383 3,477 3,451 2,975 2,916 6,860 5,919 Net interest income-FTE (Non-GAAP) (a) $ 143,287 $ 141,072 $ 150,034 $ 139,080 $ 115,592 $ 284,359 $ 217,939 Noninterest income (GAAP) $ 53,553 $ 51,377 $ 45,170 $ 52,606 $ 53,253 $ 104,930 $ 107,368 Add: Partnership amortization for tax credit purposes 2,019 1,961 1,869 1,531 1,475 3,980 2,811 Adjusted noninterest income (Non-GAAP) (b) $ 55,572 $ 53,338 $ 47,039 $ 54,137 $ 54,728 $ 108,910 $ 110,179 Adjusted revenue (Non-GAAP) (a)+(b) $ 198,859 $ 194,410 $ 197,073 $ 193,217 $ 170,320 $ 393,269 $ 328,118 Efficiency ratio (Non-GAAP) (c)/((a)+(b)) 66.17 % 65.60 % 65.85 % 64.96 % 71.89 % 65.89 % 74.08 % View source version on businesswire.com: https://www.businesswire.com/news/home/20230725007677/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, Net Interest Income and Noninterest Income Expand
Trustmark Corporation (NASDAQGS:TRMK) reported net income of $45.0 million in the second quarter of 2023, representing diluted earnings per share of $0.74. Trustmark’s performance during the second quarter produced a return on average tangible equity of 15.18% and a return on average assets of 0.96%. The Board of Directors declared a quarterly cash dividend of $0.23 per share payable September 15, 2023, to shareholders of record on September 1, 2023. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230725007677/en/ Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/53477140/en Second Quarter Highlights Loans held for investment (HFI) increased $116.8 million, or 0.9%, from the prior quarter to $12.6 billion Deposits expanded $130.2 million, or 0.9%, linked-quarter to $14.9 billion Total revenue increased $4.5 million, or 2.4%, linked-quarter to $193.5 million Net interest income (FTE) increased $2.2 million linked-quarter to $143.3 million, resulting in a net interest margin of 3.33% Noninterest income totaled $53.6 million, representing 27.7% of total revenue Credit quality remained strong; net charge-offs represented 4 basis points of average loans Duane A. Dewey, President and CEO, stated, “Trustmark continued to post solid financial results in the second quarter, reflecting continued loan and deposit growth, expanding net interest income, and growth in our fee-based businesses. During the first six months of 2023, Trustmark’s net income totaled $95.3 million, which represented diluted earnings of $1.56 per share, an increase of 51.5% from the same period in 2022. We have a tremendous team of associates throughout our system that are focused on expanding existing customer relationships as well as demonstrating the value Trustmark can provide potential customers as their trusted financial partner. We have added very talented people across the organization in numerous production and back office roles to meet our objectives. We continue to implement initiatives to improve efficiency, enhance our ability to grow and serve customers, and build long-term value for our shareholders.” Balance Sheet Management Loans HFI totaled $12.6 billion, up 0.9% from the prior quarter and 15.3% year-over-year Deposits totaled $14.9 billion, up 0.9% from the previous quarter and 1.0% year-over-year Maintained strong capital position with CET1 ratio of 9.87% and total risk-based capital ratio of 12.08% Loans HFI totaled $12.6 billion at June 30, 2023, reflecting an increase of $116.8 million, or 0.9%, linked-quarter and $1.7 billion, or 15.3%, year-over-year. The linked quarter growth reflected increases in other real estate secured loans, nonfarm, nonresidential loans, and 1-4 family residential loans offset in part by declines in other loans, state and political subdivision loans, and construction, land development and other land loans. Trustmark’s loan portfolio continues to be well-diversified by loan type and geography. Deposits totaled $14.9 billion at June 30, 2023, up $130.2 million, or 0.9%, from the prior quarter and up $143.7 million, or 1.0%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 84.6% of total deposits at June 30, 2023. Migration into higher-yielding products continued to drive a change in deposit mix from noninterest-bearing deposits, which represented 23.2% of total deposits at June 30, 2023. Interest-bearing deposit costs totaled 1.96% for the second quarter, while the total cost of deposits was 1.48%. The total cost of interest-bearing liabilities was 2.42% for the second quarter of 2023. 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. As of June 30, 2023, Trustmark had not repurchased any of its outstanding common shares under this program. Trustmark’s regulatory capital ratios continued to exceed all levels to be considered “well-capitalized” as of June 30, 2023. Credit Quality Nonperforming assets represented 0.60% of total loans and other real estate at June 30, 2023 Net charge-offs totaled $1.2 million in the second quarter, representing 0.04% of average loans Allowance for credit losses (ACL) represented 1.03% of loans HFI and 301.4% of nonaccrual loans, excluding individually analyzed loans, at June 30, 2023 Nonaccrual loans totaled $75.0 million at June 30, 2023, up $2.7 million from the prior quarter and an increase of $13.0 million year-over-year. Other real estate totaled $1.1 million, reflecting a $547 thousand decrease from the prior quarter and a $1.9 million decline from the prior year. The provision for credit losses for loans HFI was $8.2 million in the second quarter and was primarily attributable to extended maturities on mortgage loans resulting from lower prepayment speeds, weakening macroeconomic factors, and loan growth. The provision for credit losses for off-balance sheet credit exposures was $245 thousand, primarily driven by weakening macroeconomic factors. Collectively, the provision for credit losses totaled $8.5 million in the second quarter compared to $1.0 million from the prior quarter and $1.1 million in the second quarter of 2022. Allocation of Trustmark’s $129.3 million ACL on loans HFI represented 0.84% of commercial loans and 1.60% of consumer and home mortgage loans, resulting in an ACL to total loans HFI of 1.03% at June 30, 2023. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio. Revenue Generation Total revenue increased $4.5 million, or 2.4%, linked-quarter Net interest income (FTE) totaled $143.3 million in the second quarter, up 1.6% linked-quarter Noninterest income increased 4.2% linked-quarter to total $53.6 million, representing 27.7% of total revenue in the second quarter Revenue in the second quarter totaled $193.5 million, an increase of $4.5 million, or 2.4%, from the prior quarter and $27.5 million, or 16.6%, from the prior year. The linked-quarter increase primarily reflects higher net interest income and solid growth in all fee income business with the exception of mortgage banking. The year-over-year growth in revenue is attributed to higher net interest income. Net interest income (FTE) in the second quarter totaled $143.3 million, resulting in a net interest margin of 3.33%, down 6 basis points from the prior quarter. The decrease in the net interest margin was due to increased costs of interest-bearing deposits which were partially offset by increased yields on the loans HFI and HFS portfolio and securities portfolio. Noninterest income in the second quarter totaled $53.6 million, an increase of $2.2 million, or 4.2%, from the prior quarter and a $300 thousand increase year-over-year. With the exception of mortgage banking, all categories increased linked-quarter with other, net and bank card and other fees increasing $1.2 million and $1.1 million, respectively. Year-over-year increases in insurance, other, net and service charges on deposit accounts, were offset in part by declines in bank card and other fees, mortgage banking and wealth management revenue. Mortgage loan production in the second quarter totaled $431.3 million, an increase of 19.5% from the prior quarter and a decrease of 36.7% year-over-year. Mortgage banking revenue totaled $6.6 million in the second quarter, a decrease of $1.0 million linked-quarter and $1.5 million year-over-year. The linked-quarter decrease was principally attributable to accelerated amortization of mortgage servicing rights offset in part by reduced net negative hedge ineffectiveness. Insurance revenue totaled $14.8 million in the second quarter, up $459 thousand, or 3.2%, from the prior quarter and $1.1 million, or 7.8%, year-over-year. The linked-quarter increase primarily reflected growth in policy fees and other commissions while the year-over-year increase primarily reflected growth in commercial property and casualty commissions. Wealth management revenue in the second quarter totaled $8.9 million, an increase of $102 thousand, or 1.2%, from the prior quarter and a decline of $220 thousand, or 2.4%, year-over-year. The linked-quarter growth reflected higher trust management revenue while the year-over-year decline reflected reduced brokerage revenue. Noninterest Expense Noninterest expense totaled $132.2 million in the second quarter, up 3.0%, from the prior quarter Adjusted noninterest expense, which excludes other real estate expense, amortization of intangibles, and charitable contributions resulting in state tax credits, totaled $131.6 million in the second quarter, an increase of 3.2% from the prior quarter. Please refer to the Consolidated Financial Information, Note 7 – Non-GAAP Financial Measures Noninterest expense in the second quarter totaled $132.2 million, an increase of $3.9 million, or 3.0%, when compared to the prior quarter. Salaries and employee benefits increased $1.9 million linked-quarter principally due to commissions and annual merit increases. Services and fees increased $2.8 million, or 11.2%, linked-quarter primarily due to increases in professional fees. Net occupancy expense declined $521 thousand, or 6.8%, while other expense declined $309 thousand, or 2.1%, linked-quarter. FIT2GROW “In 2022, we announced FIT2GROW, a comprehensive program of Focus, Innovation and Transformation designed to enhance our ability to grow and serve customers. Our Atlanta-based Equipment Finance division, established in late 2022, continues to gain traction as its portfolio has grown to $127 million as of June 30, 2023. Implementation of our technology plans continued during the second quarter with conversion of our credit card platform to a best-in-class product for our customers. In addition, advancements in our loan underwriting system were implemented and plans for conversion of our deposit system continued. During the quarter, work continued on the design of our sales through service process, which will be implemented across the retail branch network in early 2024. These actions are designed to enhance Trustmark’s performance and build long-term value for our shareholders,” said Dewey. Additional Information As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, July 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, August 9, 2023, in archived format at the same web address or by calling (877) 344-7529, passcode 7655682. 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 (including uncertainty regarding the federal government's debt limit or a prolonged shutdown of the federal government), 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 impacts related to or resulting from recent bank failures and other economic and industry volatility, including potential increased regulatory requirements and costs and potential impacts to macroeconomic conditions, 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 June 30, 2023 ($ in thousands) (unaudited) Linked Quarter Year over Year QUARTERLY AVERAGE BALANCES 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change Securities AFS-taxable (1) $ 2,140,505 $ 2,187,121 $ 3,094,364 $ (46,616 ) -2.1 % $ (953,859 ) -30.8 % Securities AFS-nontaxable 4,796 4,812 5,110 (16 ) -0.3 % (314 ) -6.1 % Securities HTM-taxable (1) 1,463,086 1,479,283 811,599 (16,197 ) -1.1 % 651,487 80.3 % Securities HTM-nontaxable 1,718 4,509 5,630 (2,791 ) -61.9 % (3,912 ) -69.5 % Total securities 3,610,105 3,675,725 3,916,703 (65,620 ) -1.8 % (306,598 ) -7.8 % Paycheck protection program loans (PPP) — — 17,746 — n/m (17,746 ) -100.0 % Loans (includes loans held for sale) 12,732,057 12,530,449 10,910,178 201,608 1.6 % 1,821,879 16.7 % Fed funds sold and reverse repurchases 3,275 2,379 110 896 37.7 % 3,165 n/m Other earning assets 903,027 647,760 1,139,312 255,267 39.4 % (236,285 ) -20.7 % Total earning assets 17,248,464 16,856,313 15,984,049 392,151 2.3 % 1,264,415 7.9 % Allowance for credit losses (ACL), loans held for investment (LHFI) (121,960 ) (119,978 ) (99,106 ) (1,982 ) -1.7 % (22,854 ) -23.1 % Other assets 1,648,583 1,762,449 1,513,127 (113,866 ) -6.5 % 135,456 9.0 % Total assets $ 18,775,087 $ 18,498,784 $ 17,398,070 $ 276,303 1.5 % $ 1,377,017 7.9 % Interest-bearing demand deposits $ 4,803,737 $ 4,751,154 $ 4,578,235 $ 52,583 1.1 % $ 225,502 4.9 % Savings deposits 4,002,134 4,193,764 4,638,849 (191,630 ) -4.6 % (636,715 ) -13.7 % Time deposits 2,335,752 1,907,449 1,159,065 428,303 22.5 % 1,176,687 n/m Total interest-bearing deposits 11,141,623 10,852,367 10,376,149 289,256 2.7 % 765,474 7.4 % Fed funds purchased and repurchases 389,834 436,535 118,753 (46,701 ) -10.7 % 271,081 n/m Other borrowings 1,330,010 1,110,843 80,283 219,167 19.7 % 1,249,727 n/m Subordinated notes 123,337 123,281 123,116 56 0.0 % 221 0.2 % Junior subordinated debt securities 61,856 61,856 61,856 — 0.0 % — 0.0 % Total interest-bearing liabilities 13,046,660 12,584,882 10,760,157 461,778 3.7 % 2,286,503 21.2 % Noninterest-bearing deposits 3,595,927 3,813,248 4,590,338 (217,321 ) -5.7 % (994,411 ) -21.7 % Other liabilities 552,209 576,826 439,266 (24,617 ) -4.3 % 112,943 25.7 % Total liabilities 17,194,796 16,974,956 15,789,761 219,840 1.3 % 1,405,035 8.9 % Shareholders' equity 1,580,291 1,523,828 1,608,309 56,463 3.7 % (28,018 ) -1.7 % Total liabilities and equity $ 18,775,087 $ 18,498,784 $ 17,398,070 $ 276,303 1.5 % $ 1,377,017 7.9 % (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June 30, 2023 ($ in thousands) (unaudited) Linked Quarter Year over Year PERIOD END BALANCES 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change Cash and due from banks $ 832,052 $ 1,297,144 $ 742,461 $ (465,092 ) -35.9 % $ 89,591 12.1 % Fed funds sold and reverse repurchases — — — — n/m — n/m Securities available for sale (1) 1,871,883 1,984,162 2,644,364 (112,279 ) -5.7 % (772,481 ) -29.2 % Securities held to maturity (1) 1,458,665 1,474,338 1,137,754 (15,673 ) -1.1 % 320,911 28.2 % PPP loans — — 12,549 — n/m (12,549 ) -100.0 % Loans held for sale (LHFS) 181,094 175,926 190,186 5,168 2.9 % (9,092 ) -4.8 % Loans held for investment (LHFI) 12,613,967 12,497,195 10,944,840 116,772 0.9 % 1,669,127 15.3 % ACL LHFI (129,298 ) (122,239 ) (103,140 ) (7,059 ) -5.8 % (26,158 ) -25.4 % Net LHFI 12,484,669 12,374,956 10,841,700 109,713 0.9 % 1,642,969 15.2 % Premises and equipment, net 227,630 223,975 207,914 3,655 1.6 % 19,716 9.5 % Mortgage servicing rights 134,350 127,206 121,014 7,144 5.6 % 13,336 11.0 % Goodwill 384,237 384,237 384,237 — 0.0 % — 0.0 % Identifiable intangible assets 3,222 3,352 4,264 (130 ) -3.9 % (1,042 ) -24.4 % Other real estate 1,137 1,684 3,034 (547 ) -32.5 % (1,897 ) -62.5 % Operating lease right-of-use assets 38,179 35,315 34,684 2,864 8.1 % 3,495 10.1 % Other assets 805,508 794,883 627,349 10,625 1.3 % 178,159 28.4 % Total assets $ 18,422,626 $ 18,877,178 $ 16,951,510 $ (454,552 ) -2.4 % $ 1,471,116 8.7 % Deposits: Noninterest-bearing $ 3,461,073 $ 3,797,055 $ 4,509,472 $ (335,982 ) -8.8 % $ (1,048,399 ) -23.2 % Interest-bearing 11,452,827 10,986,606 10,260,696 466,221 4.2 % 1,192,131 11.6 % Total deposits 14,913,900 14,783,661 14,770,168 130,239 0.9 % 143,732 1.0 % Fed funds purchased and repurchases 311,179 477,980 70,157 (166,801 ) -34.9 % 241,022 n/m Other borrowings 1,056,714 1,485,181 72,553 (428,467 ) -28.8 % 984,161 n/m Subordinated notes 123,372 123,317 123,152 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 34,841 34,596 32,949 245 0.7 % 1,892 5.7 % Operating lease liabilities 40,845 37,988 37,108 2,857 7.5 % 3,737 10.1 % Other liabilities 308,726 310,500 196,871 (1,774 ) -0.6 % 111,855 56.8 % Total liabilities 16,851,433 17,315,079 15,364,814 (463,646 ) -2.7 % 1,486,619 9.7 % Common stock 12,724 12,720 12,752 4 0.0 % (28 ) -0.2 % Capital surplus 156,834 155,297 160,876 1,537 1.0 % (4,042 ) -2.5 % Retained earnings 1,667,339 1,636,463 1,620,210 30,876 1.9 % 47,129 2.9 % Accumulated other comprehensive income (loss), net of tax (265,704 ) (242,381 ) (207,142 ) (23,323 ) -9.6 % (58,562 ) -28.3 % Total shareholders' equity 1,571,193 1,562,099 1,586,696 9,094 0.6 % (15,503 ) -1.0 % Total liabilities and equity $ 18,422,626 $ 18,877,178 $ 16,951,510 $ (454,552 ) -2.4 % $ 1,471,116 8.7 % (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June 30, 2023 ($ in thousands except per share data) (unaudited) Quarter Ended Linked Quarter Year over Year INCOME STATEMENTS 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change Interest and fees on LHFS & LHFI-FTE $ 192,941 $ 178,967 $ 103,033 $ 13,974 7.8 % $ 89,908 87.3 % Interest and fees on PPP loans — — 184 — n/m (184 ) -100.0 % Interest on securities-taxable 16,779 16,761 14,561 18 0.1 % 2,218 15.2 % Interest on securities-tax exempt-FTE 69 92 107 (23 ) -25.0 % (38 ) -35.5 % Interest on fed funds sold and reverse repurchases 45 30 1 15 50.0 % 44 n/m Other interest income 12,077 6,527 2,214 5,550 85.0 % 9,863 n/m Total interest income-FTE 221,911 202,377 120,100 19,534 9.7 % 101,811 84.8 % Interest on deposits 54,409 40,898 2,774 13,511 33.0 % 51,635 n/m Interest on fed funds purchased and repurchases 4,865 4,832 70 33 0.7 % 4,795 n/m Other interest expense 19,350 15,575 1,664 3,775 24.2 % 17,686 n/m Total interest expense 78,624 61,305 4,508 17,319 28.3 % 74,116 n/m Net interest income-FTE 143,287 141,072 115,592 2,215 1.6 % 27,695 24.0 % Provision for credit losses, LHFI 8,211 3,244 2,716 4,967 n/m 5,495 n/m Provision for credit losses, off-balance sheet credit exposures 245 (2,242 ) (1,568 ) 2,487 n/m 1,813 n/m Net interest income after provision-FTE 134,831 140,070 114,444 (5,239 ) -3.7 % 20,387 17.8 % Service charges on deposit accounts 10,695 10,336 10,226 359 3.5 % 469 4.6 % Bank card and other fees 8,917 7,803 10,167 1,114 14.3 % (1,250 ) -12.3 % Mortgage banking, net 6,600 7,639 8,149 (1,039 ) -13.6 % (1,549 ) -19.0 % Insurance commissions 14,764 14,305 13,702 459 3.2 % 1,062 7.8 % Wealth management 8,882 8,780 9,102 102 1.2 % (220 ) -2.4 % Other, net 3,695 2,514 1,907 1,181 47.0 % 1,788 93.8 % Total noninterest income 53,553 51,377 53,253 2,176 4.2 % 300 0.6 % Salaries and employee benefits 75,940 74,056 71,679 1,884 2.5 % 4,261 5.9 % Services and fees (2) 28,264 25,426 25,659 2,838 11.2 % 2,605 10.2 % Net occupancy-premises 7,108 7,629 6,892 (521 ) -6.8 % 216 3.1 % Equipment expense 6,404 6,405 6,047 (1 ) 0.0 % 357 5.9 % Litigation settlement expense (1) — — — — n/m — n/m Other expense (2) 14,502 14,811 13,490 (309 ) -2.1 % 1,012 7.5 % Total noninterest expense 132,218 128,327 123,767 3,891 3.0 % 8,451 6.8 % Income (loss) before income taxes and tax eq adj 56,166 63,120 43,930 (6,954 ) -11.0 % 12,236 27.9 % Tax equivalent adjustment 3,383 3,477 2,916 (94 ) -2.7 % 467 16.0 % Income (loss) before income taxes 52,783 59,643 41,014 (6,860 ) -11.5 % 11,769 28.7 % Income taxes 7,746 9,343 6,730 (1,597 ) -17.1 % 1,016 15.1 % Net income (loss) $ 45,037 $ 50,300 $ 34,284 $ (5,263 ) -10.5 % $ 10,753 31.4 % Per share data Earnings (loss) per share - basic $ 0.74 $ 0.82 $ 0.56 $ (0.08 ) -9.8 % $ 0.18 32.1 % Earnings (loss) per share - diluted $ 0.74 $ 0.82 $ 0.56 $ (0.08 ) -9.8 % $ 0.18 32.1 % Dividends per share $ 0.23 $ 0.23 $ 0.23 — 0.0 % — 0.0 % Weighted average shares outstanding Basic 61,063,277 61,011,059 61,378,226 Diluted 61,230,031 61,193,275 61,546,285 Period end shares outstanding 61,069,036 61,048,516 61,201,123 (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 June 30, 2023 ($ in thousands) (unaudited) Quarter Ended Linked Quarter Year over Year NONPERFORMING ASSETS (1) 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change Nonaccrual LHFI Alabama (2) $ 11,058 $ 10,919 $ 2,698 $ 139 1.3 % $ 8,360 n/m Florida 334 256 233 78 30.5 % 101 43.3 % Mississippi (3) 36,288 32,560 23,039 3,728 11.4 % 13,249 57.5 % Tennessee (4) 5,088 5,416 9,500 (328 ) -6.1 % (4,412 ) -46.4 % Texas 22,259 23,224 26,582 (965 ) -4.2 % (4,323 ) -16.3 % Total nonaccrual LHFI 75,027 72,375 62,052 2,652 3.7 % 12,975 20.9 % Other real estate Alabama (2) — — 84 — n/m (84 ) -100.0 % Mississippi (3) 1,137 1,495 2,950 (358 ) -23.9 % (1,813 ) -61.5 % Tennessee (4) — 189 — (189 ) -100.0 % — n/m Total other real estate 1,137 1,684 3,034 (547 ) -32.5 % (1,897 ) -62.5 % Total nonperforming assets $ 76,164 $ 74,059 $ 65,086 $ 2,105 2.8 % $ 11,078 17.0 % LOANS PAST DUE OVER 90 DAYS (1) LHFI $ 3,911 $ 2,255 $ 1,347 $ 1,656 73.4 % $ 2,564 n/m LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase) $ 35,766 $ 41,468 $ 51,164 $ (5,702 ) -13.8 % $ (15,398 ) -30.1 % Quarter Ended Linked Quarter Year over Year ACL LHFI (1) 6/30/2023 3/31/2023 6/30/2022 $ Change % Change $ Change % Change Beginning Balance $ 122,239 $ 120,214 $ 98,734 $ 2,025 1.7 % $ 23,505 23.8 % Provision for credit losses, LHFI 8,211 3,244 2,716 4,967 n/m 5,495 n/m Charge-offs (2,773 ) (2,996 ) (2,277 ) 223 7.4 % (496 ) -21.8 % Recoveries 1,621 1,777 3,967 (156 ) -8.8 % (2,346 ) -59.1 % Net (charge-offs) recoveries (1,152 ) (1,219 ) 1,690 67 5.5 % (2,842 ) n/m Ending Balance $ 129,298 $ 122,239 $ 103,140 $ 7,059 5.8 % $ 26,158 25.4 % NET (CHARGE-OFFS) RECOVERIES (1) Alabama (2) $ (141 ) $ (268 ) $ 1,129 $ 127 -47.4 % $ (1,270 ) n/m Florida (35 ) (36 ) 761 1 2.8 % (796 ) n/m Mississippi (3) (762 ) (775 ) (266 ) 13 1.7 % (496 ) n/m Tennessee (4) (166 ) (124 ) 31 (42 ) -33.9 % (197 ) n/m Texas (48 ) (16 ) 35 (32 ) n/m (83 ) n/m Total net (charge-offs) recoveries $ (1,152 ) $ (1,219 ) $ 1,690 $ 67 5.5 % $ (2,842 ) n/m (1) Excludes PPP loans. (2) Alabama includes the Georgia Loan Production Office. (3) Mississippi includes Central and Southern Mississippi Regions. (4) 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 June 30, 2023 ($ in thousands) (unaudited) Quarter Ended Six Months Ended AVERAGE BALANCES 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Securities AFS-taxable (1) $ 2,140,505 $ 2,187,121 $ 2,572,675 $ 2,824,254 $ 3,094,364 $ 2,163,684 $ 3,169,515 Securities AFS-nontaxable 4,796 4,812 4,828 4,928 5,110 4,804 5,118 Securities HTM-taxable (1) 1,463,086 1,479,283 1,268,952 1,140,685 811,599 1,471,140 612,332 Securities HTM-nontaxable 1,718 4,509 4,514 5,057 5,630 3,106 6,474 Total securities 3,610,105 3,675,725 3,850,969 3,974,924 3,916,703 3,642,734 3,793,439 PPP loans — — 3,235 9,821 17,746 — 23,346 Loans (includes loans held for sale) 12,732,057 12,530,449 12,006,661 11,459,551 10,910,178 12,631,810 10,731,438 Fed funds sold and reverse repurchases 3,275 2,379 6,566 226 110 2,829 83 Other earning assets 903,027 647,760 375,190 325,620 1,139,312 780,657 1,473,655 Total earning assets 17,248,464 16,856,313 16,242,621 15,770,142 15,984,049 17,058,030 16,021,961 ACL LHFI (121,960 ) (119,978 ) (114,948 ) (102,951 ) (99,106 ) (120,974 ) (99,247 ) Other assets 1,648,583 1,762,449 1,630,085 1,576,653 1,513,127 1,700,643 1,531,884 Total assets $ 18,775,087 $ 18,498,784 $ 17,757,758 $ 17,243,844 $ 17,398,070 $ 18,637,699 $ 17,454,598 Interest-bearing demand deposits $ 4,803,737 $ 4,751,154 $ 4,719,303 $ 4,613,733 $ 4,578,235 $ 4,777,591 $ 4,504,058 Savings deposits 4,002,134 4,193,764 4,379,673 4,514,579 4,638,849 4,097,420 4,714,556 Time deposits 2,335,752 1,907,449 1,152,905 1,111,440 1,159,065 2,122,784 1,176,155 Total interest-bearing deposits 11,141,623 10,852,367 10,251,881 10,239,752 10,376,149 10,997,795 10,394,769 Fed funds purchased and repurchases 389,834 436,535 549,406 249,809 118,753 413,055 165,122 Other borrowings 1,330,010 1,110,843 530,993 88,697 80,283 1,221,032 85,657 Subordinated notes 123,337 123,281 123,226 123,171 123,116 123,309 123,089 Junior subordinated debt securities 61,856 61,856 61,856 61,856 61,856 61,856 61,856 Total interest-bearing liabilities 13,046,660 12,584,882 11,517,362 10,763,285 10,760,157 12,817,047 10,830,493 Noninterest-bearing deposits 3,595,927 3,813,248 4,177,113 4,444,370 4,590,338 3,703,987 4,595,693 Other liabilities 552,209 576,826 569,992 429,720 439,266 564,450 367,673 Total liabilities 17,194,796 16,974,956 16,264,467 15,637,375 15,789,761 17,085,484 15,793,859 Shareholders' equity 1,580,291 1,523,828 1,493,291 1,606,469 1,608,309 1,552,215 1,660,739 Total liabilities and equity $ 18,775,087 $ 18,498,784 $ 17,757,758 $ 17,243,844 $ 17,398,070 $ 18,637,699 $ 17,454,598 (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June 30, 2023 ($ in thousands) (unaudited) PERIOD END BALANCES 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Cash and due from banks $ 832,052 $ 1,297,144 $ 734,787 $ 479,637 $ 742,461 Fed funds sold and reverse repurchases — — 4,000 10,098 — Securities available for sale (1) 1,871,883 1,984,162 2,024,082 2,444,486 2,644,364 Securities held to maturity (1) 1,458,665 1,474,338 1,494,514 1,156,985 1,137,754 PPP loans — — — 4,798 12,549 LHFS 181,094 175,926 135,226 165,213 190,186 LHFI 12,613,967 12,497,195 12,204,039 11,586,064 10,944,840 ACL LHFI (129,298 ) (122,239 ) (120,214 ) (115,050 ) (103,140 ) Net LHFI 12,484,669 12,374,956 12,083,825 11,471,014 10,841,700 Premises and equipment, net 227,630 223,975 212,365 210,761 207,914 Mortgage servicing rights 134,350 127,206 129,677 132,615 121,014 Goodwill 384,237 384,237 384,237 384,237 384,237 Identifiable intangible assets 3,222 3,352 3,640 3,952 4,264 Other real estate 1,137 1,684 1,986 2,971 3,034 Operating lease right-of-use assets 38,179 35,315 36,301 37,282 34,684 Other assets 805,508 794,883 770,838 686,585 627,349 Total assets $ 18,422,626 $ 18,877,178 $ 18,015,478 $ 17,190,634 $ 16,951,510 Deposits: Noninterest-bearing $ 3,461,073 $ 3,797,055 $ 4,093,771 $ 4,358,805 $ 4,509,472 Interest-bearing 11,452,827 10,986,606 10,343,877 10,066,375 10,260,696 Total deposits 14,913,900 14,783,661 14,437,648 14,425,180 14,770,168 Fed funds purchased and repurchases 311,179 477,980 449,331 544,068 70,157 Other borrowings 1,056,714 1,485,181 1,050,938 223,172 72,553 Subordinated notes 123,372 123,317 123,262 123,207 123,152 Junior subordinated debt securities 61,856 61,856 61,856 61,856 61,856 ACL on off-balance sheet credit exposures 34,841 34,596 36,838 31,623 32,949 Operating lease liabilities 40,845 37,988 38,932 39,797 37,108 Other liabilities 308,726 310,500 324,405 232,786 196,871 Total liabilities 16,851,433 17,315,079 16,523,210 15,681,689 15,364,814 Common stock 12,724 12,720 12,705 12,700 12,752 Capital surplus 156,834 155,297 154,645 154,150 160,876 Retained earnings 1,667,339 1,636,463 1,600,321 1,648,507 1,620,210 Accumulated other comprehensive income (loss), net of tax (265,704 ) (242,381 ) (275,403 ) (306,412 ) (207,142 ) Total shareholders' equity 1,571,193 1,562,099 1,492,268 1,508,945 1,586,696 Total liabilities and equity $ 18,422,626 $ 18,877,178 $ 18,015,478 $ 17,190,634 $ 16,951,510 (1) During the fourth quarter of 2022, Trustmark transferred $422.9 million of securities available for sale to securities held to maturity. See Note 2 - Securities Available for Sale and Held to Maturity in the Notes to Consolidated Financials for additional information. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June 30, 2023 ($ in thousands except per share data) (unaudited) Quarter Ended Six Months Ended INCOME STATEMENTS 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Interest and fees on LHFS & LHFI-FTE $ 192,941 $ 178,967 $ 159,566 $ 129,395 $ 103,033 $ 371,908 $ 196,285 Interest and fees on PPP loans — — 101 186 184 — 352 Interest on securities-taxable 16,779 16,761 16,577 16,222 14,561 33,540 26,918 Interest on securities-tax exempt-FTE 69 92 93 100 107 161 229 Interest on fed funds sold and reverse repurchases 45 30 71 2 1 75 1 Other interest income 12,077 6,527 3,556 1,493 2,214 18,604 3,031 Total interest income-FTE 221,911 202,377 179,964 147,398 120,100 424,288 226,816 Interest on deposits 54,409 40,898 18,438 5,097 2,774 95,307 5,534 Interest on fed funds purchased and repurchases 4,865 4,832 4,762 1,225 70 9,697 140 Other interest expense 19,350 15,575 6,730 1,996 1,664 34,925 3,203 Total interest expense 78,624 61,305 29,930 8,318 4,508 139,929 8,877 Net interest income-FTE 143,287 141,072 150,034 139,080 115,592 284,359 217,939 Provision for credit losses, LHFI 8,211 3,244 6,902 12,919 2,716 11,455 1,856 Provision for credit losses, off-balance sheet credit exposures 245 (2,242 ) 5,215 (1,326 ) (1,568 ) (1,997 ) (2,674 ) Net interest income after provision-FTE 134,831 140,070 137,917 127,487 114,444 274,901 218,757 Service charges on deposit accounts 10,695 10,336 11,162 11,318 10,226 21,031 19,677 Bank card and other fees 8,917 7,803 8,191 9,305 10,167 16,720 18,609 Mortgage banking, net 6,600 7,639 3,408 6,876 8,149 14,239 18,022 Insurance commissions 14,764 14,305 12,019 13,911 13,702 29,069 27,791 Wealth management 8,882 8,780 8,079 8,778 9,102 17,662 18,156 Other, net 3,695 2,514 2,311 2,418 1,907 6,209 5,113 Total noninterest income 53,553 51,377 45,170 52,606 53,253 104,930 107,368 Salaries and employee benefits 75,940 74,056 73,469 72,707 71,679 149,996 141,264 Services and fees (2) 28,264 25,426 27,709 26,787 25,659 53,690 50,973 Net occupancy-premises 7,108 7,629 7,898 7,395 6,892 14,737 13,971 Equipment expense 6,404 6,405 6,268 6,072 6,047 12,809 12,108 Litigation settlement expense (1) — — 100,750 — — — — Other expense (2) 14,502 14,811 15,135 13,737 13,490 29,313 26,970 Total noninterest expense 132,218 128,327 231,229 126,698 123,767 260,545 245,286 Income (loss) before income taxes and tax eq adj 56,166 63,120 (48,142 ) 53,395 43,930 119,286 80,839 Tax equivalent adjustment 3,383 3,477 3,451 2,975 2,916 6,860 5,919 Income (loss) before income taxes 52,783 59,643 (51,593 ) 50,420 41,014 112,426 74,920 Income taxes 7,746 9,343 (17,530 ) 7,965 6,730 17,089 11,425 Net income (loss) $ 45,037 $ 50,300 $ (34,063 ) $ 42,455 $ 34,284 $ 95,337 $ 63,495 Per share data Earnings (loss) per share - basic $ 0.74 $ 0.82 $ (0.56 ) $ 0.69 $ 0.56 $ 1.56 $ 1.03 Earnings (loss) per share - diluted $ 0.74 $ 0.82 $ (0.56 ) $ 0.69 $ 0.56 $ 1.56 $ 1.03 Dividends per share $ 0.23 $ 0.23 $ 0.23 $ 0.23 $ 0.23 $ 0.46 $ 0.46 Weighted average shares outstanding Basic 61,063,277 61,011,059 60,969,400 61,114,804 61,378,226 61,037,312 61,445,934 Diluted 61,230,031 61,193,275 61,173,249 61,318,715 61,546,285 61,206,799 61,624,569 Period end shares outstanding 61,069,036 61,048,516 60,977,686 60,953,864 61,201,123 61,069,036 61,201,123 (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 June 30, 2023 ($ in thousands) (unaudited) Quarter Ended NONPERFORMING ASSETS (1) 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Nonaccrual LHFI Alabama (2) $ 11,058 $ 10,919 $ 12,300 $ 12,710 $ 2,698 Florida 334 256 227 227 233 Mississippi (3) 36,288 32,560 24,683 23,517 23,039 Tennessee (4) 5,088 5,416 5,566 5,120 9,500 Texas 22,259 23,224 23,196 26,353 26,582 Total nonaccrual LHFI 75,027 72,375 65,972 67,927 62,052 Other real estate Alabama (2) — — 194 217 84 Mississippi (3) 1,137 1,495 1,769 2,754 2,950 Tennessee (4) — 189 23 — — Total other real estate 1,137 1,684 1,986 2,971 3,034 Total nonperforming assets $ 76,164 $ 74,059 $ 67,958 $ 70,898 $ 65,086 LOANS PAST DUE OVER 90 DAYS (1) LHFI $ 3,911 $ 2,255 $ 3,929 $ 1,842 $ 1,347 LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase) $ 35,766 $ 41,468 $ 49,320 $ 48,313 $ 51,164 Quarter Ended Six Months Ended ACL LHFI (1) 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Beginning Balance $ 122,239 $ 120,214 $ 115,050 $ 103,140 $ 98,734 $ 120,214 $ 99,457 Provision for credit losses, LHFI 8,211 3,244 6,902 12,919 2,716 11,455 1,856 Charge-offs (2,773 ) (2,996 ) (3,893 ) (2,920 ) (2,277 ) (5,769 ) (4,519 ) Recoveries 1,621 1,777 2,155 1,911 3,967 3,398 6,346 Net (charge-offs) recoveries (1,152 ) (1,219 ) (1,738 ) (1,009 ) 1,690 (2,371 ) 1,827 Ending Balance $ 129,298 $ 122,239 $ 120,214 $ 115,050 $ 103,140 $ 129,298 $ 103,140 NET (CHARGE-OFFS) RECOVERIES (1) Alabama (2) $ (141 ) $ (268 ) $ 98 $ 93 $ 1,129 $ (409 ) $ 1,828 Florida (35 ) (36 ) (60 ) (23 ) 761 (71 ) 735 Mississippi (3) (762 ) (775 ) (1,657 ) (702 ) (266 ) (1,537 ) (354 ) Tennessee (4) (166 ) (124 ) (195 ) (202 ) 31 (290 ) (393 ) Texas (48 ) (16 ) 76 (175 ) 35 (64 ) 11 Total net (charge-offs) recoveries $ (1,152 ) $ (1,219 ) $ (1,738 ) $ (1,009 ) $ 1,690 $ (2,371 ) $ 1,827 (1) Excludes PPP loans. (2) Alabama includes the Georgia Loan Production Office. (3) Mississippi includes Central and Southern Mississippi Regions. (4) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION June 30, 2023 ($ in thousands) (unaudited) Quarter Ended Six Months Ended FINANCIAL RATIOS AND OTHER DATA 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Return on average equity 11.43 % 13.39 % -9.05 % 10.48 % 8.55 % 12.39 % 7.71 % Return on average tangible equity 15.18 % 18.03 % -12.14 % 13.90 % 11.36 % 16.56 % 10.16 % Return on average assets 0.96 % 1.10 % -0.76 % 0.98 % 0.79 % 1.03 % 0.73 % Interest margin - Yield - FTE 5.16 % 4.87 % 4.40 % 3.71 % 3.01 % 5.02 % 2.85 % Interest margin - Cost 1.83 % 1.47 % 0.73 % 0.21 % 0.11 % 1.65 % 0.11 % Net interest margin - FTE 3.33 % 3.39 % 3.66 % 3.50 % 2.90 % 3.36 % 2.74 % Efficiency ratio (1) 66.17 % 65.60 % 65.85 % 64.96 % 71.89 % 65.89 % 74.08 % Full-time equivalent employees 2,761 2,758 2,738 2,717 2,727 CREDIT QUALITY RATIOS (2) Net (recoveries) charge-offs / average loans 0.04 % 0.04 % 0.06 % 0.03 % -0.06 % 0.04 % -0.03 % Provision for credit losses, LHFI / average loans 0.26 % 0.10 % 0.23 % 0.45 % 0.10 % 0.18 % 0.03 % Nonaccrual LHFI / (LHFI + LHFS) 0.59 % 0.57 % 0.53 % 0.58 % 0.56 % Nonperforming assets / (LHFI + LHFS) 0.60 % 0.58 % 0.55 % 0.60 % 0.58 % Nonperforming assets / (LHFI + LHFS + other real estate) 0.60 % 0.58 % 0.55 % 0.60 % 0.58 % ACL LHFI / LHFI 1.03 % 0.98 % 0.99 % 0.99 % 0.94 % ACL LHFI-commercial / commercial LHFI 0.84 % 0.80 % 0.85 % 0.93 % 0.88 % ACL LHFI-consumer / consumer and home mortgage LHFI 1.60 % 1.54 % 1.41 % 1.20 % 1.14 % ACL LHFI / nonaccrual LHFI 172.34 % 168.90 % 182.22 % 169.37 % 166.22 % ACL LHFI / nonaccrual LHFI (excl individually analyzed loans) 301.44 % 320.80 % 399.19 % 466.03 % 475.27 % CAPITAL RATIOS Total equity / total assets 8.53 % 8.28 % 8.28 % 8.78 % 9.36 % Tangible equity / tangible assets 6.56 % 6.35 % 6.27 % 6.67 % 7.23 % Tangible equity / risk-weighted assets 7.91 % 7.94 % 7.61 % 8.15 % 9.16 % Tier 1 leverage ratio 8.35 % 8.29 % 8.47 % 9.01 % 8.80 % Common equity tier 1 capital ratio 9.87 % 9.76 % 9.74 % 10.63 % 11.01 % Tier 1 risk-based capital ratio 10.27 % 10.17 % 10.15 % 11.06 % 11.47 % Total risk-based capital ratio 12.08 % 11.95 % 11.91 % 12.85 % 13.26 % STOCK PERFORMANCE Market value-Close $ 21.12 $ 24.70 $ 34.91 $ 30.63 $ 29.19 Book value $ 25.73 $ 25.59 $ 24.47 $ 24.76 $ 25.93 Tangible book value $ 19.38 $ 19.24 $ 18.11 $ 18.39 $ 19.58 (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 June 30, 2023 ($ in thousands) (unaudited) Note 1 - Litigation Settlement As previously announced, on December 31, 2022, Trustmark National Bank (TNB) agreed to a settlement in principle (the Settlement) relating to litigation involving the Stanford Financial Group. On January 13, 2023, TNB entered into a Settlement Agreement (the Settlement Agreement) reflecting the terms of the Settlement. The parties to the Settlement Agreement 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; and, on the other hand, (iv) TNB. Under the terms of the Settlement Agreement, the parties agreed to settle and dismiss the Rotstain Action, the Smith Action, and all current or future claims by plaintiffs in either such Action arising from or related to Stanford. In addition, the Settlement Agreement provided that the parties would request dismissal of the Jackson Action pursuant to the terms of the bar orders described below. If the Court’s approval (as described below) of the Settlement Agreement, including the bar orders described below, is upheld on appeal, TNB will make a one-time cash payment of $100.0 million to the Receiver. The Settlement Agreement included the parties’ agreement to seek the Northern District of Texas District Court’s entry of bar orders prohibiting any continued or future claims by the plaintiffs in the Actions or by any other person or entity against TNB 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 herein, including not only the Actions and any pending matters but also any actions that may be brought in the future. Final Court approval of these bar orders is a condition of the Settlement. The Settlement Agreement is also subject to notice to Stanford’s investor claimants (which has been provided) and final, non-appealable approval by the U.S. District Court for the Northern District of Texas. While TNB believes that the Settlement Agreement 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’s approval of the Settlement Agreement (which has occurred, as described further below) may not be upheld on appeal. The Settlement Agreement also provides that TNB denies and makes no admission of liability or wrongdoing in connection with any Stanford matter. As has been the case throughout the pendency of the Actions, TNB expressly denies any liability or wrongdoing with respect to any matter alleged in regard to the multi-billion-dollar Ponzi scheme operated by Stanford for almost 20 years. TNB’s relationship with Stanford began as a result of TNB’s acquisition of a Houston-based bank in August 2006, and consisted of ordinary banking services provided to business deposit customers. The foregoing description of the terms 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 is filed as Exhibit 10.ai to the 2022 Annual Report and is incorporated herein by reference. On January 20, 2023, the U.S. District Court for the Northern District of Texas entered an order preliminarily finding that the Settlement is fair, reasonable, and equitable; has no obvious deficiencies; and is the product of serious, informed, good faith, and arm’s-length negotiations. Following the provision of notice as required by the Settlement Agreement and by the Court’s preliminary order, the Court (Judge David C. Godbey, presiding) held a Final Approval Hearing on May 3, 2023, at which the Court approved the Settlement from the bench. On May 4, 2023, Judge Godbey signed the written orders confirming his oral ruling, including the bar order contemplated by the Settlement Agreement and the judgment and bar order with respect to the Jackson Action. On May 11, 2023, Robert Allen Stanford, writing from prison, appealed the District Court’s approval of the Settlement to the Fifth Circuit Court of Appeals. On June 12, 2023, the Receiver moved to dismiss the appeal as frivolous. That motion is now fully briefed and awaiting the Fifth Circuit’s decision. The Settlement will become effective when the Fifth Circuit’s ruling in favor of the approval of the Settlement becomes final and non-appealable (the Settlement Effective Date). Within five days of the Settlement Effective Date, the parties to the Rotstain and Smith Actions will file agreed dismissals of those cases. Absent any further appeal in either of the Rotstain or Smith Actions, those dismissals will become final 30 days after entered and signed by the respective judges. TNB will be required to make the Settlement payment within 30 days after those dismissals become final. Any further appeal of any of the orders described above would delay the making of the Settlement payment. Pending the resolution of the settlement approval process, the Rotstain, Smith and Jackson Actions are stayed. TNB and Trustmark Corporation determined that it was in the best interest of TNB, 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 TNB of further litigation of the Actions and related Stanford claims. At the time of the entry into the Settlement, Trustmark Corporation recognized $100.0 million of litigation settlement expense, as well as an additional $750 thousand in legal fees, which were included in noninterest expense related to the Stanford litigation during the fourth quarter of 2022. Trustmark Corporation expects that the Settlement will be tax deductible. Trustmark Corporation and TNB remain substantially above levels considered to be well-capitalized under all relevant standards. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS June 30, 2023 ($ 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: 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 SECURITIES AVAILABLE FOR SALE U.S. Treasury securities $ 362,966 $ 386,903 $ 391,513 $ 416,278 $ 419,696 U.S. Government agency obligations 6,999 7,254 7,766 9,116 11,947 Obligations of states and political subdivisions 4,813 4,907 4,862 4,763 5,179 Mortgage-backed securities Residential mortgage pass-through securities Guaranteed by GNMA 25,336 26,851 27,097 28,164 32,240 Issued by FNMA and FHLMC 1,250,435 1,317,848 1,345,463 1,718,057 1,888,546 Other residential mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 98,388 108,192 115,140 126,138 144,158 Commercial mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 122,946 132,207 132,241 141,970 142,598 Total securities available for sale $ 1,871,883 $ 1,984,162 $ 2,024,082 $ 2,444,486 $ 2,644,364 SECURITIES HELD TO MATURITY U.S. Treasury securities $ 28,679 $ 28,486 $ 28,295 $ — $ — Obligations of states and political subdivisions 1,180 4,507 4,510 4,512 5,320 Mortgage-backed securities Residential mortgage pass-through securities Guaranteed by GNMA 13,235 4,336 4,442 4,527 4,624 Issued by FNMA and FHLMC 484,679 497,854 509,311 179,375 185,554 Other residential mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 171,002 179,334 188,201 197,923 210,479 Commercial mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 759,890 759,821 759,755 770,648 731,777 Total securities held to maturity $ 1,458,665 $ 1,474,338 $ 1,494,514 $ 1,156,985 $ 1,137,754 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 June 30, 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 $63.4 million. Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 99.8% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS June 30, 2023 ($ in thousands) (unaudited) Note 3 – Loan Composition LHFI consisted of the following during the periods presented: LHFI BY TYPE 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Loans secured by real estate: Construction, land development and other land loans $ 1,722,657 $ 1,723,772 $ 1,719,542 $ 1,647,395 $ 1,440,058 Secured by 1-4 family residential properties 2,854,182 2,822,048 2,775,847 2,597,112 2,424,962 Secured by nonfarm, nonresidential properties 3,471,728 3,375,579 3,278,830 3,206,946 3,178,079 Other real estate secured 954,410 847,527 742,538 593,119 555,311 Commercial and industrial loans 1,883,480 1,882,360 1,821,259 1,689,532 1,551,001 Consumer loans 163,788 162,911 166,425 163,412 160,716 State and other political subdivision loans 1,111,710 1,193,727 1,223,863 1,188,703 1,110,795 Other loans 452,012 489,271 475,735 499,845 523,918 LHFI 12,613,967 12,497,195 12,204,039 11,586,064 10,944,840 ACL LHFI (129,298 ) (122,239 ) (120,214 ) (115,050 ) (103,140 ) Net LHFI $ 12,484,669 $ 12,374,956 $ 12,083,825 $ 11,471,014 $ 10,841,700 The following table presents the LHFI composition by region and reflects each region’s diversified mix of loans: June 30, 2023 LHFI - COMPOSITION BY REGION Total Alabama (1) 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 $ 1,722,657 $ 817,793 $ 54,845 $ 395,489 $ 30,387 $ 424,143 Secured by 1-4 family residential properties 2,854,182 136,612 51,817 2,555,191 83,409 27,153 Secured by nonfarm, nonresidential properties 3,471,728 954,604 225,437 1,471,341 159,402 660,944 Other real estate secured 954,410 379,984 1,805 294,497 7,376 270,748 Commercial and industrial loans 1,883,480 576,345 25,686 750,161 257,002 274,286 Consumer loans 163,788 23,925 8,354 101,026 19,411 11,072 State and other political subdivision loans 1,111,710 77,931 61,148 805,342 25,596 141,693 Other loans 452,012 110,395 9,963 219,075 48,806 63,773 Loans $ 12,613,967 $ 3,077,589 $ 439,055 $ 6,592,122 $ 631,389 $ 1,873,812 CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION Lots $ 69,120 $ 29,517 $ 10,179 $ 14,955 $ 4,362 $ 10,107 Development 130,166 55,946 1,366 36,602 7,465 28,787 Unimproved land 96,994 20,854 13,859 29,651 4,564 28,066 1-4 family construction 353,056 191,964 17,325 94,139 13,996 35,632 Other construction 1,073,321 519,512 12,116 220,142 — 321,551 Construction, land development and other land loans $ 1,722,657 $ 817,793 $ 54,845 $ 395,489 $ 30,387 $ 424,143 (1) Includes Georgia Loan Production Office. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS June 30, 2023 ($ in thousands) (unaudited) Note 3 – Loan Composition (continued) June 30, 2023 Total Alabama (1) 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 $ 363,101 $ 125,094 $ 26,313 $ 123,940 $ 20,570 $ 67,184 Office 275,841 102,162 16,822 86,818 2,152 67,887 Hotel/motel 298,632 167,641 50,344 53,705 26,942 — Mini-storage 144,253 23,282 2,002 99,182 464 19,323 Industrial 375,366 89,226 18,416 103,343 9,976 154,405 Health care 70,788 41,098 — 26,846 338 2,506 Convenience stores 32,385 7,207 438 14,279 572 9,889 Nursing homes/senior living 471,414 174,609 — 201,391 5,249 90,165 Other 132,613 44,071 9,381 60,170 8,655 10,336 Total non-owner occupied loans 2,164,393 774,390 123,716 769,674 74,918 421,695 Owner-occupied: Office 153,392 45,525 36,517 43,905 9,906 17,539 Churches 67,325 16,766 4,394 37,537 6,069 2,559 Industrial warehouses 164,540 16,056 4,571 41,402 17,487 85,024 Health care 146,007 10,420 6,141 108,638 2,305 18,503 Convenience stores 149,551 11,834 33,888 68,713 215 34,901 Retail 88,837 11,270 9,271 40,320 18,849 9,127 Restaurants 54,460 4,191 3,925 31,241 11,844 3,259 Auto dealerships 45,878 6,151 213 22,307 17,207 — Nursing homes/senior living 301,226 44,709 — 230,317 — 26,200 Other 136,119 13,292 2,801 77,287 602 42,137 Total owner-occupied loans 1,307,335 180,214 101,721 701,667 84,484 239,249 Loans secured by nonfarm, nonresidential properties $ 3,471,728 $ 954,604 $ 225,437 $ 1,471,341 $ 159,402 $ 660,944 (1) Includes Georgia Loan Production Office. 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 Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Securities – taxable 1.87 % 1.85 % 1.71 % 1.62 % 1.50 % 1.86 % 1.44 % Securities – nontaxable 4.25 % 4.00 % 3.95 % 3.97 % 4.00 % 4.10 % 3.98 % Securities – total 1.87 % 1.86 % 1.72 % 1.63 % 1.50 % 1.87 % 1.44 % PPP loans — — 12.39 % 7.51 % 4.16 % — 3.04 % Loans - LHFI & LHFS 6.08 % 5.79 % 5.27 % 4.48 % 3.79 % 5.94 % 3.69 % Loans - total 6.08 % 5.79 % 5.27 % 4.48 % 3.79 % 5.94 % 3.69 % Fed funds sold & reverse repurchases 5.51 % 5.11 % 4.29 % 3.51 % 3.65 % 5.35 % 2.43 % Other earning assets 5.36 % 4.09 % 3.76 % 1.82 % 0.78 % 4.81 % 0.41 % Total earning assets 5.16 % 4.87 % 4.40 % 3.71 % 3.01 % 5.02 % 2.85 % Interest-bearing deposits 1.96 % 1.53 % 0.71 % 0.20 % 0.11 % 1.75 % 0.11 % Fed funds purchased & repurchases 5.01 % 4.49 % 3.44 % 1.95 % 0.24 % 4.73 % 0.17 % Other borrowings 5.12 % 4.87 % 3.73 % 2.89 % 2.52 % 5.01 % 2.39 % Total interest-bearing liabilities 2.42 % 1.98 % 1.03 % 0.31 % 0.17 % 2.20 % 0.17 % Total Deposits 1.48 % 1.13 % 0.51 % 0.14 % 0.07 % 1.31 % 0.07 % Net interest margin 3.33 % 3.39 % 3.66 % 3.50 % 2.90 % 3.36 % 2.74 % Net interest margin excluding PPP loans and the FRB balance 3.23 % 3.36 % 3.66 % 3.53 % 3.06 % 3.30 % 2.97 % TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS June 30, 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. For the second quarter of 2023, the average FRB balance totaled $777.0 million compared to $555.5 million for the first quarter of 2023 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 13 basis points when compared to the first quarter of 2023, totaling 3.23% for the second 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 hedge ineffectiveness of $1.3 million during the second quarter of 2023. The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements: Quarter Ended Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Mortgage servicing income, net $ 6,764 $ 6,785 $ 6,636 $ 6,669 $ 6,557 $ 13,549 $ 12,986 Change in fair value-MSR from runoff (2,710 ) (1,145 ) (2,981 ) (3,462 ) (3,806 ) (3,855 ) (7,591 ) Gain on sales of loans, net 3,887 3,797 3,328 4,597 6,030 7,684 12,253 Mortgage banking income before hedge ineffectiveness 7,941 9,437 6,983 7,804 8,781 17,378 17,648 Change in fair value-MSR from market changes 5,898 (3,972 ) (3,348 ) 10,770 8,739 1,926 30,759 Change in fair value of derivatives (7,239 ) 2,174 (227 ) (11,698 ) (9,371 ) (5,065 ) (30,385 ) Net positive (negative) hedge ineffectiveness (1,341 ) (1,798 ) (3,575 ) (928 ) (632 ) (3,139 ) 374 Mortgage banking, net $ 6,600 $ 7,639 $ 3,408 $ 6,876 $ 8,149 $ 14,239 $ 18,022 TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS June 30, 2023 ($ in thousands) (unaudited) Note 6 – Other Noninterest Income and Expense Other noninterest income consisted of the following for the periods presented: Quarter Ended Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Partnership amortization for tax credit purposes $ (2,019 ) $ (1,961 ) $ (1,869 ) $ (1,531 ) $ (1,475 ) $ (3,980 ) $ (2,811 ) Increase in life insurance cash surrender value 1,716 1,693 1,687 1,676 1,683 3,409 3,310 Other miscellaneous income 3,998 2,782 2,493 2,273 1,699 6,780 4,614 Total other, net $ 3,695 $ 2,514 $ 2,311 $ 2,418 $ 1,907 $ 6,209 $ 5,113 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 Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Loan expense (1) $ 3,066 $ 2,538 $ 2,908 $ 2,866 $ 2,947 $ 5,604 $ 6,475 Amortization of intangibles 130 288 312 312 328 418 810 FDIC assessment expense 2,550 2,370 2,130 1,945 1,810 4,920 3,310 Other real estate expense, net 171 172 18 497 623 343 658 Other miscellaneous expense 8,585 9,443 9,767 8,117 7,782 18,028 15,717 Total other expense (1) $ 14,502 $ 14,811 $ 15,135 $ 13,737 $ 13,490 $ 29,313 $ 26,970 (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 June 30, 2023 ($ in thousands except per share data) (unaudited) Note 7 – Non-GAAP Financial Measures (continued) Quarter Ended Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 TANGIBLE EQUITY AVERAGE BALANCES Total shareholders' equity $ 1,580,291 $ 1,523,828 $ 1,493,291 $ 1,606,469 $ 1,608,309 $ 1,552,215 $ 1,660,739 Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) Identifiable intangible assets (3,301 ) (3,523 ) (3,816 ) (4,131 ) (4,436 ) (3,411 ) (4,656 ) Total average tangible equity $ 1,192,753 $ 1,136,068 $ 1,105,238 $ 1,218,101 $ 1,219,636 $ 1,164,567 $ 1,271,846 PERIOD END BALANCES Total shareholders' equity $ 1,571,193 $ 1,562,099 $ 1,492,268 $ 1,508,945 $ 1,586,696 Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) Identifiable intangible assets (3,222 ) (3,352 ) (3,640 ) (3,952 ) (4,264 ) Total tangible equity (a) $ 1,183,734 $ 1,174,510 $ 1,104,391 $ 1,120,756 $ 1,198,195 TANGIBLE ASSETS Total assets $ 18,422,626 $ 18,877,178 $ 18,015,478 $ 17,190,634 $ 16,951,510 Less: Goodwill (384,237 ) (384,237 ) (384,237 ) (384,237 ) (384,237 ) Identifiable intangible assets (3,222 ) (3,352 ) (3,640 ) (3,952 ) (4,264 ) Total tangible assets (b) $ 18,035,167 $ 18,489,589 $ 17,627,601 $ 16,802,445 $ 16,563,009 Risk-weighted assets (c) $ 14,966,614 $ 14,793,893 $ 14,521,078 $ 13,748,819 $ 13,076,981 NET INCOME (LOSS) ADJUSTED FOR INTANGIBLE AMORTIZATION Net income (loss) $ 45,037 $ 50,300 $ (34,063 ) $ 42,455 $ 34,284 $ 95,337 $ 63,495 Plus: Intangible amortization net of tax 97 216 234 234 246 313 608 Net income (loss) adjusted for intangible amortization $ 45,134 $ 50,516 $ (33,829 ) $ 42,689 $ 34,530 $ 95,650 $ 64,103 Period end common shares outstanding (d) 61,069,036 61,048,516 60,977,686 60,953,864 61,201,123 TANGIBLE COMMON EQUITY MEASUREMENTS Return on average tangible equity (1) 15.18 % 18.03 % -12.14 % 13.90 % 11.36 % 16.56 % 10.16 % Tangible equity/tangible assets (a)/(b) 6.56 % 6.35 % 6.27 % 6.67 % 7.23 % Tangible equity/risk-weighted assets (a)/(c) 7.91 % 7.94 % 7.61 % 8.15 % 9.16 % Tangible book value (a)/(d)*1,000 $ 19.38 $ 19.24 $ 18.11 $ 18.39 $ 19.58 COMMON EQUITY TIER 1 CAPITAL (CET1) Total shareholders' equity $ 1,571,193 $ 1,562,099 $ 1,492,268 $ 1,508,945 $ 1,586,696 CECL transition adjustment 13,000 13,000 19,500 19,500 19,500 AOCI-related adjustments 265,704 242,381 275,403 306,412 207,142 CET1 adjustments and deductions: Goodwill net of associated deferred tax liabilities (DTLs) (370,227 ) (370,234 ) (370,241 ) (370,217 ) (370,229 ) Other adjustments and deductions for CET1 (2) (2,915 ) (3,275 ) (3,258 ) (3,506 ) (3,757 ) CET1 capital (e) 1,476,755 1,443,971 1,413,672 1,461,134 1,439,352 Additional tier 1 capital instruments plus related surplus 60,000 60,000 60,000 60,000 60,000 Tier 1 capital $ 1,536,755 $ 1,503,971 $ 1,473,672 $ 1,521,134 $ 1,499,352 Common equity tier 1 capital ratio (e)/(c) 9.87 % 9.76 % 9.74 % 10.63 % 11.01 % (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 June 30, 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 Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Net interest income (GAAP) $ 139,904 $ 137,595 $ 146,583 $ 136,105 $ 112,676 $ 277,499 $ 212,020 Noninterest income (GAAP) 53,553 51,377 45,170 52,606 53,253 104,930 107,368 Pre-provision revenue (a) $ 193,457 $ 188,972 $ 191,753 $ 188,711 $ 165,929 $ 382,429 $ 319,388 Noninterest expense (GAAP) $ 132,218 $ 128,327 $ 231,229 $ 126,698 $ 123,767 $ 260,545 $ 245,286 Less: Litigation settlement expense — — (100,750 ) — — — — Adjusted noninterest expense - PPNR (Non-GAAP) (b) $ 132,218 $ 128,327 $ 130,479 $ 126,698 $ 123,767 $ 260,545 $ 245,286 PPNR (Non-GAAP) (a)-(b) $ 61,239 $ 60,645 $ 61,274 $ 62,013 $ 42,162 $ 121,884 $ 74,102 The following table presents Trustmark’s calculation of its efficiency ratio for the periods presented: Quarter Ended Six Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Total noninterest expense (GAAP) $ 132,218 $ 128,327 $ 231,229 $ 126,698 $ 123,767 $ 260,545 $ 245,286 Less: Other real estate expense, net (171 ) (172 ) (18 ) (497 ) (623 ) (343 ) (658 ) Amortization of intangibles (130 ) (288 ) (312 ) (312 ) (328 ) (418 ) (810 ) Charitable contributions resulting in state tax credits (325 ) (325 ) (375 ) (375 ) (375 ) (650 ) (750 ) Litigation settlement expense — — (100,750 ) — — — — Adjusted noninterest expense (Non-GAAP) (c) $ 131,592 $ 127,542 $ 129,774 $ 125,514 $ 122,441 $ 259,134 $ 243,068 Net interest income (GAAP) $ 139,904 $ 137,595 $ 146,583 $ 136,105 $ 112,676 $ 277,499 $ 212,020 Add: Tax equivalent adjustment 3,383 3,477 3,451 2,975 2,916 6,860 5,919 Net interest income-FTE (Non-GAAP) (a) $ 143,287 $ 141,072 $ 150,034 $ 139,080 $ 115,592 $ 284,359 $ 217,939 Noninterest income (GAAP) $ 53,553 $ 51,377 $ 45,170 $ 52,606 $ 53,253 $ 104,930 $ 107,368 Add: Partnership amortization for tax credit purposes 2,019 1,961 1,869 1,531 1,475 3,980 2,811 Adjusted noninterest income (Non-GAAP) (b) $ 55,572 $ 53,338 $ 47,039 $ 54,137 $ 54,728 $ 108,910 $ 110,179 Adjusted revenue (Non-GAAP) (a)+(b) $ 198,859 $ 194,410 $ 197,073 $ 193,217 $ 170,320 $ 393,269 $ 328,118 Efficiency ratio (Non-GAAP) (c)/((a)+(b)) 66.17 % 65.60 % 65.85 % 64.96 % 71.89 % 65.89 % 74.08 % View source version on businesswire.com: https://www.businesswire.com/news/home/20230725007677/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