Moody's Downgrades Trustmark, Outlook Negative

NEW YORK (AP) — Moody's Investors Service on Tuesday downgraded the ratings of Trustmark Corp. and said the regional bank's outlook is negative.

Moody's cut the parent corporation's ratings by one notch to Baa1 from A3. The lead bank subsidiary, Trustmark National Bank, which operates in Florida, Mississippi, Tennessee and Texas, had its long-term bank deposits rating cut to A3 from A2, and its bank financial strength rating cut to C from C+.

The bank's short-term ratings were lowered to Prime-2 from Prime-1. The ratings remain investment grade.

Moody's said the downgrade and negative outlook reflects its view that Trustmark's financial strength, particularly its capital levels and earnings generation, is likely to be pressured by deterioration in its commercial real estate portfolio.

Commercial real estate exposure accounts for about three times Trustmark's tangible common equity, with construction lending comprising nearly 60 percent of the total.

Moody's noted that Trustmark's commercial real estate lending is highly concentrated in Mississippi, where half of its related portfolio was originated. Nearly 20 percent of the portfolio is in Florida.