Moody's Downgrades Trustmark, Outlook Negative

The ratings agency said it had previously incorporated Trustmark's real estate lending exposure into its ratings, but the sharp decline in real estate prices and anticipated deterioration in loan performance has led to considerably higher loss expectations in the segment, especially from construction and land development.

While most of Trustmark's commercial real estate losses to date stem from its construction portfolio in Florida, Moody's expects its other holdings will generate higher credit costs in the future because of the weak economy. Moody's also expects further losses from Trustmark's Florida exposures.

The downgrade was limited to one notch because Trustmark still has good capital and liquidity, Moody's said.

Trustmark shares closed Tuesday down $1.94, or 9.6 percent, at $18.24, echoing a sharp decline across the banking sector as the broader market fell about 2 percent. Shares have traded between $14.18 and $34 in the past 52 weeks, and are down about 16 percent for the year.