Trustmark Corporation (NASDAQ:TRMK) announced net income available to common shareholders of $23.5 million in the first quarter of 2010, which represented basic earnings per common share of $0.37. Trustmark’s first quarter net income produced a return on average tangible common equity of 11.98%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per common share. The dividend is payable June 15, 2010, to shareholders of record on June 1, 2010.

Printer friendly version of earnings release with consolidated financial statements and notes: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=6264998&lang=en.

Richard G. Hickson, Chairman and CEO, stated, “Trustmark continued to produce strong financial results as reflected by our robust net interest margin, solid noninterest income, disciplined management of noninterest expense, and enhanced capital strength. We continue to look forward to the future as solid earnings, coupled with the strength of Trustmark’s human and financial capital, have positioned us to take advantage of growth opportunities in the marketplace and build shareholder value.”

Credit Quality
  • Florida construction and land development exposure declined 33.5% in 12 months
  • Allowance for loan losses represented 131% of nonperforming loans (excluding impaired loans)

Trustmark continued to make significant progress in the resolution of its construction and land development portfolio in Florida. During the last 12 months, this portfolio has been reduced by 33.5% to $183.7 million. At March 31, 2010, Florida nonimpaired construction and land development loans totaled $148.8 million with an associated reserve for loan losses of $19.6 million, or 13.20%. Managing credit risks resulting from current economic and real estate market conditions continues to be a primary focus for Trustmark.

During the first quarter, nonperforming loans increased $24.3 million relative to the prior quarter to total $165.5 million, or 2.61% of total loans. This increase was principally attributable to three residential real estate development credits in the Corporation’s Mississippi and Texas markets which were impaired and written down to net realizable value. Foreclosed real estate increased $1.1 million to total $91.2 million as continued progress was made in the disposition of foreclosed properties in the Corporation’s Florida market. At March 31, 2010, nonperforming assets totaled $256.7 million, representing 3.99% of total loans and other real estate.

Net charge-offs totaled $17.1 million, or 1.08% of average loans, while the provision for loan losses totaled $15.1 million during the first quarter. Allocation of Trustmark’s $101.6 million allowance for loan losses represented 2.10% of commercial loans and 0.80% of consumer and home mortgage loans, resulting in an allowance to total loans of 1.65% as of March 31, 2010.

Capital Strength
  • Tangible common equity to tangible assets expanded to 9.11%
  • Total risk-based capital increased to 15.15%, significantly exceeding “well-capitalized” standards

Sound balance sheet management and consistent profitability continued to be reflected in Trustmark’s solid capital base. At March 31, 2010, tangible common equity totaled $818.5 million and represented 9.11% of tangible assets. Total risk-based capital increased to 15.15%, significantly exceeding the 10% regulatory requirement to be classified as “well-capitalized.” Trustmark’s strong capital base will support organic growth as well as acquisition opportunities that strengthen the value of the franchise.

Pre-tax, pre-provision earnings of $49.4 million in the first quarter of 2010 continued to reflect the fundamental strengths of Trustmark’s diversified financial services businesses. Based upon the existing capital base and the expectation of the level of profitability going forward, Trustmark continues to believe in the sustainability of its cash dividend to shareholders.

Balance Sheet Management
  • Net interest margin expanded to 4.42%
  • Net interest income totaled $90.7 million

Average loans in the first quarter totaled $6.4 billion, a decline of $131.8 million from the prior quarter. This reduction continued to reflect efforts to reduce exposure to construction and land development lending as well as the decision to discontinue indirect auto financing. Current economic conditions also reduced demand for credit. Average investment securities increased $124.9 million during the first quarter to $1.8 billion. As a result of reduced loan balances and increased investment securities, average earning assets remained stable at $8.3 billion during the first quarter.

Average deposits totaled $7.1 billion, an increase of $198.0 million relative to the prior quarter. Lower deposit cost during the first quarter reflected Trustmark’s strong liquidity while disciplined loan pricing and required minimum loan rates continued to sustain loan yields. As a result, net interest income totaled $90.7 million during the first quarter while the net interest margin expanded to 4.42%.

Noninterest Income
  • Fee income represented 30.5% of total revenue
  • Service charges on deposit accounts expand year over year to $13.0 million

Noninterest income during the first quarter totaled $38.4 million. Service charges on deposit accounts totaled $13.0 million, reflecting a seasonal decline from the prior quarter and an increase from levels one year earlier. Insurance revenue expanded $446 thousand from the prior quarter to $6.8 million. Mortgage banking income during the quarter was $6.1 million, reflecting solid mortgage servicing income, stable secondary marketing gains, and successful hedging initiatives. General banking and wealth management income remained stable during the quarter at $5.9 million and $5.4 million, respectively.

Noninterest Expense
  • Noninterest expense remained well-controlled
  • Foreclosure expense declined to $3.0 million

During the first quarter of 2010, noninterest expense totaled $76.4 million, an increase of $714 thousand from the prior quarter. Salary and benefit expense totaled $42.9 million, reflecting a seasonal increase of $645 thousand from the prior quarter. Other expense in the first quarter totaled $13.9 million, a decline of $457 thousand from the prior quarter as increased FDIC insurance expense was more than offset by lower foreclosure expense. Trustmark’s commitment to expense management was reflected in an efficiency ratio of 59.33% during the first quarter.

ADDITIONAL INFORMATION

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, April 28, 2010, at 10:00 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (800) 860-2442, passcode 436565, or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Wednesday, May 5, 2010, in archived format at the same web address or by calling (877) 344-7529, passcode 436565.

Trustmark is a financial services company providing banking and financial solutions through over 150 offices in Florida, 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,” “potential,” “continue,” “could,” “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 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, local, state and national economic and market conditions, including the extent and duration of the current volatility in the credit and financial markets, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility of market interest rates, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions and monetary and other governmental actions designed to address the level and volatility of interest rates and the volatility of securities, currency and other 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, changes in our compensation and benefit plans, greater than expected costs or difficulties related to the integration of new products and lines of business, natural disasters, acts of war or terrorism and other risks described in our filings with the Securities and Exchange Commission.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Except as required by law, we undertake no obligation to update or revise any of this information, whether as the result of new information, future events or developments or otherwise.

 
 
 
 
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2010
($ in thousands)
(unaudited)
             
Linked Quarter Year over Year
QUARTERLY AVERAGE BALANCES 3/31/2010 12/31/2009 3/31/2009

$ Change
% Change

$ Change
% Change
Securities AFS-taxable $ 1,514,029 $ 1,369,022 $ 1,505,328 $ 145,007 10.6 % $ 8,701 0.6 %
Securities AFS-nontaxable 105,067 98,456 43,429 6,611 6.7 % 61,638 n/m
Securities HTM-taxable 179,076 202,235 178,417 (23,159 ) -11.5 % 659 0.4 %
Securities HTM-nontaxable   46,852     50,411     67,308     (3,559 ) -7.1 %   (20,456 ) -30.4 %
Total securities   1,845,024     1,720,124     1,794,482     124,900   7.3 %   50,542   2.8 %
Loans (including loans held for sale) 6,412,671 6,544,448 6,981,921 (131,777 ) -2.0 % (569,250 ) -8.2 %
Fed funds sold and rev repos 10,438 10,609 15,988 (171 ) -1.6 % (5,550 ) -34.7 %
Other earning assets   46,199     44,197     40,485     2,002   4.5 %   5,714   14.1 %
Total earning assets   8,314,332     8,319,378     8,832,876     (5,046 ) -0.1 %   (518,544 ) -5.9 %
Allowance for loan losses (106,200 ) (105,223 ) (97,986 ) (977 ) 0.9 % (8,214 ) 8.4 %
Cash and due from banks 216,305 199,586 239,508 16,719 8.4 % (23,203 ) -9.7 %
Other assets   910,401     855,714     803,416     54,687   6.4 %   106,985   13.3 %
Total assets $ 9,334,838   $ 9,269,455   $ 9,777,814   $ 65,383   0.7 % $ (442,976 ) -4.5 %
 
Interest-bearing demand deposits $ 1,270,827 $ 1,134,995 $ 1,118,347 $ 135,832 12.0 % $ 152,480 13.6 %
Savings deposits 1,953,711 1,801,870 1,815,672 151,841 8.4 % 138,039 7.6 %
Time deposits less than $100,000 1,356,469 1,422,270 1,485,680 (65,801 ) -4.6 % (129,211 ) -8.7 %
Time deposits of $100,000 or more   1,014,027     1,039,565     1,074,873     (25,538 ) -2.5 %   (60,846 ) -5.7 %
Total interest-bearing deposits 5,595,034 5,398,700 5,494,572 196,334 3.6 % 100,462 1.8 %
Fed funds purchased and repos 600,826 579,616 674,175 21,210 3.7 % (73,349 ) -10.9 %
Short-term borrowings 199,550 238,060 647,604 (38,510 ) -16.2 % (448,054 ) -69.2 %
Long-term FHLB advances 75,000 75,000 58,333 - 0.0 % 16,667 28.6 %
Subordinated notes 49,777 49,769 49,744 8 0.0 % 33 0.1 %
Junior subordinated debt securities   70,104     70,104     70,104     -   0.0 %   -   0.0 %
Total interest-bearing liabilities 6,590,291 6,411,249 6,994,532 179,042 2.8 % (404,241 ) -5.8 %
Noninterest-bearing deposits 1,535,209 1,533,588 1,470,822 1,621 0.1 % 64,387 4.4 %
Other liabilities   85,982     118,906     120,062     (32,924 ) -27.7 %   (34,080 ) -28.4 %
Total liabilities 8,211,482 8,063,743 8,585,416 147,739 1.8 % (373,934 ) -4.4 %
Preferred equity - 157,270 205,417 (157,270 ) -100.0 % (205,417 ) -100.0 %
Common equity   1,123,356     1,048,442     986,981     74,914   7.1 %   136,375   13.8 %
Total shareholders' equity   1,123,356     1,205,712     1,192,398     (82,356 ) -6.8 %   (69,042 ) -5.8 %
Total liabilities and equity $ 9,334,838   $ 9,269,455   $ 9,777,814   $ 65,383   0.7 % $ (442,976 ) -4.5 %
 
 
Linked Quarter Year over Year
PERIOD END BALANCES 3/31/2010 12/31/2009 3/31/2009

$ Change
% Change

$ Change

% Change
Cash and due from banks $ 191,973 $ 213,519 $ 231,211 $ (21,546 ) -10.1 % $ (39,238 ) -17.0 %
Fed funds sold and rev repos 11,599 6,374 8,014 5,225 82.0 % 3,585 44.7 %
Securities available for sale 1,706,565 1,684,396 1,613,047 22,169 1.3 % 93,518 5.8 %
Securities held to maturity 215,888 232,984 256,677 (17,096 ) -7.3 % (40,789 ) -15.9 %
Loans held for sale 176,682 226,225 301,691 (49,543 ) -21.9 % (125,009 ) -41.4 %
Loans 6,170,878 6,319,797 6,640,597 (148,919 ) -2.4 % (469,719 ) -7.1 %
Allowance for loan losses   (101,643 )   (103,662 )   (100,358 )   2,019   -1.9 %   (1,285 ) 1.3 %
Net Loans 6,069,235 6,216,135 6,540,239 (146,900 ) -2.4 % (471,004 ) -7.2 %
Premises and equipment, net 145,113 151,161 157,068 (6,048 ) -4.0 % (11,955 ) -7.6 %
Mortgage servicing rights 50,037 50,513 45,256 (476 ) -0.9 % 4,781 10.6 %
Goodwill 291,104 291,104 291,104 - 0.0 % - 0.0 %
Identifiable intangible assets 18,944 19,825 22,820 (881 ) -4.4 % (3,876 ) -17.0 %
Other assets   416,075     433,782     308,587     (17,707 ) -4.1 %   107,488   34.8 %
Total assets $ 9,293,215   $ 9,526,018   $ 9,775,714   $ (232,803 ) -2.4 % $ (482,499 ) -4.9 %
 
Deposits:
Noninterest-bearing $ 1,511,080 $ 1,685,187 $ 1,504,032 $ (174,107 ) -10.3 % $ 7,048 0.5 %
Interest-bearing   5,635,973     5,503,278     5,652,908     132,695   2.4 %   (16,935 ) -0.3 %
Total deposits 7,147,053 7,188,465 7,156,940 (41,412 ) -0.6 % (9,887 ) -0.1 %
Fed funds purchased and repos 571,711 653,032 607,083 (81,321 ) -12.5 % (35,372 ) -5.8 %
Short-term borrowings 132,784 253,957 448,380 (121,173 ) -47.7 % (315,596 ) -70.4 %
Long-term FHLB advances 75,000 75,000 75,000 - n/m - n/m
Subordinated notes 49,782 49,774 49,750 8 0.0 % 32 0.1 %
Junior subordinated debt securities 70,104 70,104 70,104 - 0.0 % - 0.0 %
Other liabilities   118,252     125,626     168,089     (7,374 ) -5.9 %   (49,837 ) -29.6 %
Total liabilities   8,164,686     8,415,958     8,575,346     (251,272 ) -3.0 %   (410,660 ) -4.8 %
Preferred stock - - 205,564 - n/m (205,564 ) -100.0 %
Common stock 13,302 13,267 11,955 35 0.3 % 1,347 11.3 %
Capital surplus 250,365 244,864 142,167 5,501 2.2 % 108,198 76.1 %
Retained earnings 860,398 853,553 845,779 6,845 0.8 % 14,619 1.7 %

Accum other comprehensive income (loss), net of tax
  4,464     (1,624 )   (5,097 )   6,088   n/m   9,561   n/m
Total shareholders' equity   1,128,529     1,110,060     1,200,368     18,469   1.7 %   (71,839 ) -6.0 %
Total liabilities and equity $ 9,293,215   $ 9,526,018   $ 9,775,714   $ (232,803 ) -2.4 % $ (482,499 ) -4.9 %
 
n/m - percentage changes greater than +/- 100% are considered not meaningful
 
 

See Notes to Consolidated Financials
 
 
 
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2010
($ in thousands except per share data)
(unaudited)
 
 
Quarter Ended Linked Quarter Year over Year
INCOME STATEMENTS 3/31/2010 12/31/2009 3/31/2009

$ Change
% Change

$ Change
% Change
Interest and fees on loans-FTE $ 84,127 $ 87,640 $ 92,382 $ (3,513 ) -4.0 % $ (8,255 ) -8.9 %
Interest on securities-taxable 19,735 19,093 21,654 642 3.4 % (1,919 ) -8.9 %
Interest on securities-tax exempt-FTE 2,180 2,183 1,834 (3 ) -0.1 % 346 18.9 %
Interest on fed funds sold and rev repos 8 12 19 (4 ) -33.3 % (11 ) -57.9 %
Other interest income   383     377     313     6   1.6 %   70   22.4 %
Total interest income-FTE   106,433     109,305     116,202     (2,872 ) -2.6 %   (9,769 ) -8.4 %
Interest on deposits 13,904 16,513 22,540 (2,609 ) -15.8 % (8,636 ) -38.3 %
Interest on fed funds pch and repos 226 215 364 11 5.1 % (138 ) -37.9 %
Other interest expense   1,592     1,716     2,352     (124 ) -7.2 %   (760 ) -32.3 %
Total interest expense   15,722     18,444     25,256     (2,722 ) -14.8 %   (9,534 ) -37.7 %
Net interest income-FTE 90,711 90,861 90,946 (150 ) -0.2 % (235 ) -0.3 %
Provision for loan losses   15,095     17,709     16,866     (2,614 ) -14.8 %   (1,771 ) -10.5 %
Net interest income after provision-FTE   75,616     73,152     74,080     2,464   3.4 %   1,536   2.1 %
Service charges on deposit accounts 12,977 14,118 12,568 (1,141 ) -8.1 % 409 3.3 %
Insurance commissions 6,837 6,391 7,422 446 7.0 % (585 ) -7.9 %
Wealth management 5,355 5,438 5,555 (83 ) -1.5 % (200 ) -3.6 %
General banking - other 5,880 5,951 5,407 (71 ) -1.2 % 473 8.7 %
Mortgage banking, net 6,072 6,552 10,907 (480 ) -7.3 % (4,835 ) -44.3 %
Other, net   879     1,814     1,115     (935 ) -51.5 %   (236 ) -21.2 %
Nonint inc-excl sec gains, net 38,000 40,264 42,974 (2,264 ) -5.6 % (4,974 ) -11.6 %
Security gains, net   369     19     30     350   n/m   339   n/m
Total noninterest income   38,369     40,283     43,004     (1,914 ) -4.8 %   (4,635 ) -10.8 %
Salaries and employee benefits 42,854 42,209 43,425 645 1.5 % (571 ) -1.3 %
Services and fees 10,255 9,919 10,000 336 3.4 % 255 2.6 %
Net occupancy-premises 5,034 5,063 5,178 (29 ) -0.6 % (144 ) -2.8 %
Equipment expense 4,303 4,084 4,166 219 5.4 % 137 3.3 %
Other expense   13,915     14,372     11,638     (457 ) -3.2 %   2,277   19.6 %
Total noninterest expense   76,361     75,647     74,407     714   0.9 %   1,954   2.6 %
Income before income taxes and tax eq adj 37,624 37,788 42,677 (164 ) -0.4 % (5,053 ) -11.8 %
Tax equivalent adjustment   3,293     2,569     2,397     724   28.2 %   896   37.4 %
Income before income taxes 34,331 35,219 40,280 (888 ) -2.5 % (5,949 ) -14.8 %
Income taxes   10,876     10,742     13,795     134   1.2 %   (2,919 ) -21.2 %
Net income   23,455     24,477     26,485     (1,022 ) -4.2 %   (3,030 ) -11.4 %
 
Preferred stock dividends - 2,061 2,688 (2,061 ) -100.0 % (2,688 ) -100.0 %
Accretion of preferred stock discount   -     8,539     438     (8,539 ) -100.0 %   (438 ) -100.0 %
Net income available to common shareholders $ 23,455   $ 13,877   $ 23,359   $ 9,578   69.0 % $ 96   0.4 %
 
 
Per common share data
Earnings per share - basic $ 0.37   $ 0.23   $ 0.41   $ 0.14   60.9 % $ (0.04 ) -9.8 %
 
Earnings per share - diluted $ 0.37   $ 0.23   $ 0.41   $ 0.14   60.9 % $ (0.04 ) -9.8 %
 
Dividends per share $ 0.23   $ 0.23   $ 0.23   $ -   0.0 % $ -   0.0 %
 
Weighted average common shares outstanding
Basic   63,743,302     59,131,451     57,350,874  
 
Diluted   63,933,333     59,287,459     57,398,375  
 
Period end common shares outstanding   63,844,500     63,673,839     57,378,318  
 
OTHER FINANCIAL DATA
Return on common equity 8.47 % 5.25 % 9.60 %
Return on average tangible common equity 11.98 % 7.80 % 14.46 %
Return on equity 8.47 % 8.05 % 9.01 %
Return on assets 1.02 % 1.05 % 1.10 %
Interest margin - Yield - FTE 5.19 % 5.21 % 5.34 %
Interest margin - Cost 0.77 % 0.88 % 1.16 %
Net interest margin - FTE 4.42 % 4.33 % 4.18 %
Efficiency ratio 59.33 % 57.69 % 55.56 %
Full-time equivalent employees 2,506 2,524 2,589
 
COMMON STOCK PERFORMANCE
Market value-Close $ 24.43 $ 22.54 $ 18.38
Common book value $ 17.68 $ 17.43 $ 17.34
Tangible common book value $ 12.82 $ 12.55 $ 11.87
 
n/m - percentage changes greater than +/- 100% are considered not meaningful
 
 

See Notes to Consolidated Financials
 
 
 
 

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2010
($ in thousands)
(unaudited)
 
Quarter Ended Linked Quarter Year over Year
NONPERFORMING ASSETS 3/31/2010 12/31/2009 3/31/2009

$ Change
% Change

$ Change
% Change
Nonaccrual loans
Florida $ 79,687 $ 74,159 $ 83,789 $ 5,528 7.5 % $ (4,102 ) -4.9 %
Mississippi (1) 41,795 31,050 21,829 10,745 34.6 % 19,966 91.5 %
Tennessee (2) 12,673 12,749 5,763 (76 ) -0.6 % 6,910 n/m
Texas   31,354     23,204     23,122     8,150   35.1 %   8,232   35.6 %
Total nonaccrual loans 165,509 141,162 134,503 24,347 17.2 % 31,006 23.1 %
Other real estate
Florida 40,145 45,927 19,830 (5,782 ) -12.6 % 20,315 n/m
Mississippi (1) 23,082 22,373 9,932 709 3.2 % 13,150 n/m
Tennessee (2) 9,769 10,105 9,051 (336 ) -3.3 % 718 7.9 %
Texas   18,180     11,690     3,322     6,490   55.5 %   14,858   n/m
Total other real estate   91,176     90,095     42,135     1,081   1.2 %   49,041   n/m
Total nonperforming assets $ 256,685   $ 231,257   $ 176,638   $ 25,428   11.0 % $ 80,047   45.3 %
 
LOANS PAST DUE OVER 90 DAYS
Loans held for investment $ 8,411   $ 8,901   $ 10,004   $ (490 ) -5.5 % $ (1,593 ) -15.9 %
 

Loans HFS-Guaranteed GNMA serviced loans (no obligation to repurchase)
$ 48,571   $ 46,661   $ 21,128   $ 1,910   4.1 % $ 27,443   n/m
 
 
 
Quarter Ended Linked Quarter Year over Year
ALLOWANCE FOR LOAN LOSSES 3/31/2010 12/31/2009 3/31/2009

$ Change
% Change

$ Change
% Change
Beginning Balance $ 103,662 $ 103,016 $ 94,922 $ 646 0.6 % $ 8,740 9.2 %
Provision for loan losses 15,095 17,709 16,866 (2,614 ) -14.8 % (1,771 ) -10.5 %
Charge-offs (19,775 ) (20,139 ) (14,015 ) 364 -1.8 % (5,760 ) 41.1 %
Recoveries   2,661     3,076     2,585     (415 ) -13.5 %   76   2.9 %
Net charge-offs   (17,114 )   (17,063 )   (11,430 )   (51 ) 0.3 %   (5,684 ) 49.7 %
Ending Balance $ 101,643   $ 103,662   $ 100,358   $ (2,019 ) -1.9 % $ 1,285   1.3 %
 
PROVISION FOR LOAN LOSSES `
Florida $ 5,501 $ 11,371 $ 10,733 $ (5,870 ) -51.6 % $ (5,232 ) -48.7 %
Mississippi (1) 3,748 6,310 4,386 (2,562 ) -40.6 % (638 ) -14.5 %
Tennessee (2) 1,314 2,097 1,621 (783 ) -37.3 % (307 ) -18.9 %
Texas   4,532     (2,069 )   126     6,601   n/m   4,406   n/m
Total provision for loan losses $ 15,095   $ 17,709   $ 16,866   $ (2,614 ) -14.8 % $ (1,771 ) -10.5 %
 
NET CHARGE-OFFS
Florida $ 8,989 $ 8,174 $ 6,933 $ 815 10.0 % $ 2,056 29.7 %
Mississippi (1) 6,777 5,448 3,455 1,329 24.4 % 3,322 96.2 %
Tennessee (2) 426 1,169 785 (743 ) -63.6 % (359 ) -45.7 %
Texas   922     2,272     257     (1,350 ) -59.4 %   665   n/m
Total net charge-offs $ 17,114   $ 17,063   $ 11,430   $ 51   0.3 % $ 5,684   49.7 %
 
CREDIT QUALITY RATIOS
Net charge offs/average loans 1.08 % 1.03 % 0.66 %
Provision for loan losses/average loans 0.95 % 1.07 % 0.98 %
Nonperforming loans/total loans (incl LHFS) 2.61 % 2.16 % 1.94 %
Nonperforming assets/total loans (incl LHFS) 4.04 % 3.53 % 2.54 %
Nonperforming assets/total loans (incl LHFS) +ORE 3.99 % 3.48 % 2.53 %
ALL/total loans (excl LHFS) 1.65 % 1.64 % 1.51 %
ALL-commercial/total commercial loans 2.10 % 2.10 % 1.95 %
ALL-consumer/total consumer and home mortgage loans 0.80 % 0.80 % 0.73 %
ALL/nonperforming loans 61.41 %

73.43
% 74.61 %
ALL/nonperforming loans (excl impaired loans) 131.36 % 150.13 % 137.47 %
 
CAPITAL RATIOS
Total equity/total assets 12.14 % 11.65 % 12.28 %
Common equity/total assets 12.14 % 11.65 % 10.18 %
Tangible equity/tangible assets 9.11 % 8.67 % 9.37 %
Tangible common equity/tangible assets 9.11 % 8.67 % 7.20 %
Tangible common equity/risk-weighted assets 12.15 % 11.55 % 9.43 %
Tier 1 leverage ratio 9.81 % 9.74 % 10.17 %
Tier 1 common risk-based capital ratio 12.14 % 11.63 % 9.55 %
Tier 1 risk-based capital ratio 13.15 % 12.61 % 13.34 %
Total risk-based capital ratio 15.15 % 14.58 % 15.28 %
 
(1) - Mississippi includes Central and Southern Mississippi Regions
(2) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
n/m - percentage changes greater than +/- 100% are considered not meaningful
 
 

See Notes to Consolidated Financials
 
 
 
 
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2010
($ in thousands)
(unaudited)
           
Quarter Ended
AVERAGE BALANCES 3/31/2010 12/31/2009 9/30/2009 6/30/2009 3/31/2009
Securities AFS-taxable $ 1,514,029 $ 1,369,022 $ 1,377,318 $ 1,395,303 $ 1,505,328
Securities AFS-nontaxable 105,067 98,456 89,259 70,165 43,429
Securities HTM-taxable 179,076 202,235 191,934 194,079 178,417
Securities HTM-nontaxable   46,852     50,411     55,440     61,166     67,308  
Total securities   1,845,024     1,720,124     1,713,951     1,720,713     1,794,482  
Loans (including loans held for sale) 6,412,671 6,544,448 6,693,482 6,880,909 6,981,921
Fed funds sold and rev repos 10,438 10,609 12,821 20,973 15,988
Other earning assets   46,199     44,197     43,894     47,084     40,485  
Total earning assets   8,314,332     8,319,378     8,464,148     8,669,679     8,832,876  
Allowance for loan losses (106,200 ) (105,223 ) (102,545 ) (106,491 ) (97,986 )
Cash and due from banks 216,305 199,586 205,361 214,633 239,508
Other assets   910,401     855,714     871,477     824,724     803,416  
Total assets $ 9,334,838   $ 9,269,455   $ 9,438,441   $ 9,602,545   $ 9,777,814  
 
Interest-bearing demand deposits $ 1,270,827 $ 1,134,995 $ 1,148,537 $ 1,131,765 $ 1,118,347
Savings deposits 1,953,711 1,801,870 1,797,421 1,869,794 1,815,672
Time deposits less than $100,000 1,356,469 1,422,270 1,434,097 1,493,172 1,485,680
Time deposits of $100,000 or more   1,014,027     1,039,565     1,095,431     1,096,170     1,074,873  
Total interest-bearing deposits 5,595,034 5,398,700 5,475,486 5,590,901 5,494,572
Fed funds purchased and repos 600,826 579,616 644,012 589,542 674,175
Short-term borrowings 199,550 238,060 263,891 340,816 647,604
Long-term FHLB advances 75,000 75,000 75,000 75,000 58,333
Subordinated notes 49,777 49,769 49,760 49,752 49,744
Junior subordinated debt securities   70,104     70,104     70,104     70,104     70,104  
Total interest-bearing liabilities 6,590,291 6,411,249 6,578,253 6,716,115 6,994,532
Noninterest-bearing deposits 1,535,209 1,533,588 1,529,381 1,554,642 1,470,822
Other liabilities   85,982     118,906     113,820     124,586     120,062  
Total liabilities 8,211,482 8,063,743 8,221,454 8,395,343 8,585,416
Preferred equity - 157,270 206,308 205,860 205,417
Common equity   1,123,356     1,048,442     1,010,679     1,001,342     986,981  
Total shareholders' equity   1,123,356     1,205,712     1,216,987     1,207,202     1,192,398  
Total liabilities and equity $ 9,334,838   $ 9,269,455   $ 9,438,441   $ 9,602,545   $ 9,777,814  
 
 
 
 
PERIOD END BALANCES 3/31/2010 12/31/2009 9/30/2009 6/30/2009 3/31/2009
Cash and due from banks $ 191,973 $ 213,519 $ 191,449 $ 220,706 $ 231,211
Fed funds sold and rev repos 11,599 6,374 8,551 16,367 8,014
Securities available for sale 1,706,565 1,684,396 1,528,625 1,488,428 1,613,047
Securities held to maturity 215,888 232,984 242,603 254,380 256,677
Loans held for sale 176,682 226,225 237,152 280,975 301,691
Loans 6,170,878 6,319,797 6,382,440 6,570,582 6,640,597
Allowance for loan losses   (101,643 )   (103,662 )   (103,016 )   (101,751 )   (100,358 )
Net Loans 6,069,235 6,216,135 6,279,424 6,468,831 6,540,239
Premises and equipment, net 145,113 151,161 151,828 156,541 157,068
Mortgage servicing rights 50,037 50,513 56,042 63,316 45,256
Goodwill 291,104 291,104 291,104 291,104 291,104
Identifiable intangible assets 18,944 19,825 20,819 21,820 22,820
Other assets   416,075     433,782     360,901     364,402     308,587  
Total assets $ 9,293,215   $ 9,526,018   $ 9,368,498   $ 9,626,870   $ 9,775,714  
 
Deposits:
Noninterest-bearing $ 1,511,080 $ 1,685,187 $ 1,493,424 $ 1,558,934 $ 1,504,032
Interest-bearing   5,635,973     5,503,278     5,377,011     5,588,955     5,652,908  

Total deposits
7,147,053 7,188,465 6,870,435 7,147,889 7,156,940
Fed funds purchased and repos 571,711 653,032 645,057 627,616 607,083
Short-term borrowings 132,784 253,957 315,105 314,751 448,380
Long-term FHLB advances 75,000 75,000 75,000 75,000 75,000
Subordinated notes 49,782 49,774 49,766 49,758 49,750
Junior subordinated debt securities 70,104 70,104 70,104 70,104 70,104
Other liabilities   118,252     125,626     121,670     139,638     168,089  
Total liabilities   8,164,686     8,415,958     8,147,137     8,424,756     8,575,346  
Preferred stock - - 206,461 206,009 205,564
Common stock 13,302 13,267 11,968 11,964 11,955
Capital surplus 250,365 244,864 145,352 143,654 142,167
Retained earnings 860,398 853,553 854,508 845,882 845,779

Accum other comprehensive income (loss), net of tax
  4,464     (1,624 )   3,072     (5,395 )   (5,097 )
Total shareholders' equity   1,128,529     1,110,060     1,221,361     1,202,114     1,200,368  
Total liabilities and equity $ 9,293,215   $ 9,526,018   $ 9,368,498   $ 9,626,870   $ 9,775,714  
 
 

See Notes to Consolidated Financials
 
 
 
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2010
($ in thousands except per share data)
(unaudited)
 
Quarter Ended
INCOME STATEMENTS 3/31/2010 12/31/2009 9/30/2009 6/30/2009 3/31/2009
Interest and fees on loans-FTE $ 84,127 $ 87,640 $ 89,672 $ 91,652 $ 92,382
Interest on securities-taxable 19,735 19,093 19,524 20,444 21,654
Interest on securities-tax exempt-FTE 2,180 2,183 2,172 2,040 1,834
Interest on fed funds sold and rev repos 8 12 16 19 19
Other interest income   383     377     381     343     313  
Total interest income-FTE   106,433     109,305     111,765     114,498     116,202  
Interest on deposits 13,904 16,513 18,403 21,430 22,540
Interest on fed funds pch and repos 226 215 282 272 364
Other interest expense   1,592     1,716     1,786     1,980     2,352  
Total interest expense   15,722     18,444     20,471     23,682     25,256  
Net interest income-FTE 90,711 90,861 91,294 90,816 90,946
Provision for loan losses   15,095     17,709     15,770     26,767     16,866  
Net interest income after provision-FTE   75,616     73,152     75,524     64,049     74,080  
Service charges on deposit accounts 12,977 14,118 14,157 13,244 12,568
Insurance commissions 6,837 6,391 7,894 7,372 7,422
Wealth management 5,355 5,438 5,589 5,497 5,555
General banking - other 5,880 5,951 5,620 6,063 5,407
Mortgage banking, net 6,072 6,552 8,871 2,543 10,907
Other, net   879     1,814     994     1,693     1,115  
Nonint inc-excl sec gains, net 38,000 40,264 43,125 36,412 42,974
Security gains, net   369     19     1,014     4,404     30  
Total noninterest income   38,369     40,283     44,139     40,816     43,004  
Salaries and employee benefits 42,854 42,209 42,629 40,989 43,425
Services and fees 10,255 9,919 10,124 10,249 10,000
Net occupancy-premises 5,034 5,063 4,862 4,948 5,178
Equipment expense 4,303 4,084 4,104 4,108 4,166
Other expense   13,915     14,372     17,515     18,677     11,638  
Total noninterest expense   76,361     75,647     79,234     78,971     74,407  
Income before income taxes and tax eq adj 37,624 37,788 40,429 25,894 42,677
Tax equivalent adjustment   3,293     2,569     2,417     2,325     2,397  
Income before income taxes 34,331 35,219 38,012 23,569 40,280
Income taxes   10,876     10,742     12,502     6,994     13,795  
Net income   23,455     24,477     25,510     16,575     26,485  
 
Preferred stock dividends - 2,061 2,688 2,687 2,688
Accretion of preferred stock discount   -     8,539     452     445     438  
Net income available to common shareholders $ 23,455   $ 13,877   $ 22,370   $ 13,443   $ 23,359  
 
Per common share data
Earnings per share - basic $ 0.37   $ 0.23   $ 0.39   $ 0.23   $ 0.41  
 
Earnings per share - diluted $ 0.37   $ 0.23   $ 0.39   $ 0.23   $ 0.41  
 
Dividends per share $ 0.23   $ 0.23   $ 0.23   $ 0.23   $ 0.23  
 
Weighted average common shares outstanding
Basic   63,743,302     59,131,451     57,431,128     57,406,499     57,350,874  
 
Diluted   63,933,333     59,287,459     57,559,492     57,546,928     57,398,375  
 
Period end common shares outstanding   63,844,500     63,673,839     57,440,047     57,423,841     57,378,318  
 
 
OTHER FINANCIAL DATA
Return on common equity 8.47 % 5.25 % 8.78 % 5.38 % 9.60 %
Return on average tangible common equity 11.98 % 7.80 % 13.06 % 8.20 % 14.46 %
Return on equity 8.47 % 8.05 % 8.32 % 5.51 % 9.01 %
Return on assets 1.02 % 1.05 % 1.07 % 0.69 % 1.10 %
Interest margin - Yield - FTE 5.19 % 5.21 % 5.24 % 5.30 % 5.34 %
Interest margin - Cost 0.77 % 0.88 % 0.96 % 1.10 % 1.16 %
Net interest margin - FTE 4.42 % 4.33 % 4.28 % 4.20 % 4.18 %
Efficiency ratio 59.33 % 57.69 % 58.95 % 58.57 % 55.56 %
Full-time equivalent employees 2,506 2,524 2,550 2,562 2,589
 
 
COMMON STOCK PERFORMANCE
Market value-Close $ 24.43 $ 22.54 $ 19.05 $ 19.32 $ 18.38
Common book value $ 17.68 $ 17.43 $ 17.67 $ 17.35 $ 17.34
Tangible common book value $ 12.82 $ 12.55 $ 12.24 $ 11.90 $ 11.87
 
 

See Notes to Consolidated Financials
 
 
 
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2010
($ in thousands)
(unaudited)
 
Quarter Ended
NONPERFORMING ASSETS 3/31/2010 12/31/2009 9/30/2009 6/30/2009 3/31/2009
Nonaccrual loans
Florida $ 79,687 $ 74,159 $ 72,063 $ 72,185 $ 83,789
Mississippi (1) 41,795 31,050 28,470 32,040 21,829
Tennessee (2) 12,673 12,749 11,481 2,941 5,763
Texas   31,354     23,204     26,490     25,824     23,122  
Total nonaccrual loans 165,509 141,162 138,504 132,990 134,503
Other real estate
Florida 40,145 45,927 34,030 26,387 19,830
Mississippi (1) 23,082 22,373 22,932 15,542 9,932
Tennessee (2) 9,769 10,105 9,809 10,234 9,051
Texas   18,180     11,690     4,918     3,033     3,322  
Total other real estate   91,176     90,095     71,689     55,196     42,135  
Total nonperforming assets $ 256,685   $ 231,257   $ 210,193   $ 188,186   $ 176,638  
 
LOANS PAST DUE OVER 90 DAYS
Loans held for investment $ 8,411   $ 8,901   $ 6,854   $ 6,873   $ 10,004  
 

Loans HFS-Guaranteed GNMA serviced loans (no obligation to repurchase)
$ 48,571   $ 46,661   $ 36,686   $ 28,523   $ 21,128  
 
 
Quarter Ended
ALLOWANCE FOR LOAN LOSSES 3/31/2010 12/31/2009 9/30/2009 6/30/2009 3/31/2009
Beginning Balance $ 103,662 $ 103,016 $ 101,751 $ 100,358 $ 94,922
Provision for loan losses 15,095 17,709 15,770 26,767 16,866
Charge-offs (19,775 ) (20,139 ) (18,687 ) (27,870 ) (14,015 )
Recoveries   2,661     3,076     4,182     2,496     2,585  

Net charge-offs
  (17,114 )   (17,063 )   (14,505 )   (25,374 )   (11,430 )
Ending Balance $ 101,643   $ 103,662   $ 103,016   $ 101,751   $ 100,358  
 
PROVISION FOR LOAN LOSSES
Florida $ 5,501 $ 11,371 $ (3,295 ) $ 28,915 $ 10,733
Mississippi (1) 3,748 6,310 12,009 (1,044 ) 4,386
Tennessee (2) 1,314 2,097 159 (659 ) 1,621
Texas   4,532     (2,069 )   6,897     (445 )   126  
Total provision for loan losses $ 15,095   $ 17,709   $ 15,770   $ 26,767   $ 16,866  
 
NET CHARGE-OFFS
Florida $ 8,989 $ 8,174 $ 131 $ 21,167 $ 6,933
Mississippi (1) 6,777 5,448 9,629 3,267 3,455
Tennessee (2) 426 1,169 872 897 785
Texas   922     2,272     3,873     43     257  
Total net charge-offs $ 17,114   $ 17,063   $ 14,505   $ 25,374   $ 11,430  
 
CREDIT QUALITY RATIOS
Net charge offs/average loans 1.08 % 1.03 % 0.86 % 1.48 % 0.66 %
Provision for loan losses/average loans 0.95 % 1.07 % 0.93 % 1.56 % 0.98 %
Nonperforming loans/total loans (incl LHFS) 2.61 % 2.16 % 2.09 % 1.94 % 1.94 %
Nonperforming assets/total loans (incl LHFS) 4.04 % 3.53 % 3.18 % 2.75 % 2.54 %
Nonperforming assets/total loans (incl LHFS) +ORE 3.99 % 3.48 % 3.14 % 2.72 % 2.53 %
ALL/total loans (excl LHFS) 1.65 % 1.64 % 1.61 % 1.55 % 1.51 %
ALL-commercial/total commercial loans 2.10 % 2.10 % 2.08 % 2.01 % 1.95 %
ALL-consumer/total consumer and home mortgage loans 0.80 % 0.80 % 0.76 % 0.73 % 0.73 %
ALL/nonperforming loans 61.41 %

73.43
% 74.38 % 76.51 % 74.61 %
ALL/nonperforming loans (excl impaired loans) 131.36 % 150.13 % 117.93 % 123.15 % 137.47 %
 
CAPITAL RATIOS
Total equity/total assets 12.14 % 11.65 % 13.04 % 12.49 % 12.28 %
Common equity/total assets 12.14 % 11.65 % 10.83 % 10.35 % 10.18 %
Tangible equity/tangible assets 9.11 % 8.67 % 10.04 % 9.55 % 9.37 %
Tangible common equity/tangible assets 9.11 % 8.67 % 7.76 % 7.34 % 7.20 %
Tangible common equity/risk-weighted assets 12.15 % 11.55 % 10.15 % 9.56 % 9.43 %
Tier 1 leverage ratio 9.81 % 9.74 % 10.70 % 10.38 % 10.17 %
Tier 1 common risk-based capital ratio 12.14 % 11.63 % 10.15 % 9.66 % 9.55 %
Tier 1 risk-based capital ratio 13.15 % 12.61 % 14.11 % 13.50 % 13.34 %
Total risk-based capital ratio 15.15 % 14.58 % 16.09 % 15.45 % 15.28 %
 
 
(1) - Mississippi includes Central and Southern Mississippi Regions
(2) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
 
 

See Notes to Consolidated Financials
 
 
 
 
 
 

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

March 31, 2010

($ in thousands)

(unaudited)
 

Note 1 - 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 ($ in thousands):
 
  3/31/2010   12/31/2009   9/30/2009   6/30/2009   3/31/2009
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities $ - $ - $ - $ - $ 759
U.S. Government agency obligations
Issued by U.S. Government agencies 18 20 21 23 25
Issued by U.S. Government sponsored agencies 68,574 47,917 24,992 25,189 25,235
Obligations of states and political subdivisions 123,292 117,508 151,427 137,799 125,366
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA 11,986 12,192 9,590 10,000 10,658
Issued by FNMA and FHLMC 51,292 49,279 7,229 7,193 79,007
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 1,387,752 1,382,556 1,258,779 1,209,677 1,287,745

Commercial mortgage-backed securities

Issued or guaranteed by FNMA, FHLMC, or GNMA
57,485 68,735 70,359 92,395 76,183
Corporate debt securities   6,166   6,189   6,228   6,152   8,069
Total securities available for sale $ 1,706,565 $ 1,684,396 $ 1,528,625 $ 1,488,428 $ 1,613,047
 
SECURITIES HELD TO MATURITY
Obligations of states and political subdivisions $ 69,975 $ 74,643 $ 78,522 $ 89,331 $ 95,799
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA 6,801 7,044 7,269 7,298 5,325
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 136,054 148,226 153,728 154,655 155,553

Commercial mortgage-backed securities

Issued or guaranteed by FNMA, FHLMC, or GNMA
  3,058   3,071   3,084   3,096   -
Total securities held to maturity $ 215,888 $ 232,984 $ 242,603 $ 254,380 $ 256,677
 

Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of approximately 90% of the portfolio in U.S. Government agency-backed obligations and other AAA rated securities.  None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of membership in the Federal Home Loan Bank of Dallas, Federal Reserve Bank and Depository Trust and Clearing Corporation, Trustmark does not hold any equity investment in government sponsored entities.
 
 
 

Note 2 – Loan Composition
 
LOANS BY TYPE   3/31/2010   12/31/2009   9/30/2009   6/30/2009   3/31/2009
Loans secured by real estate:
Construction, land development and other land loans $ 803,942 $ 830,069 $ 872,367 $ 960,945 $ 1,000,020
Secured by 1-4 family residential properties 1,637,121 1,650,743 1,637,322 1,663,575 1,601,600
Secured by nonfarm, nonresidential properties 1,466,296 1,467,307 1,472,147 1,472,212 1,425,937
Other real estate secured 194,641 197,421 209,957 186,770 184,204
Commercial and industrial loans 1,041,580 1,059,164 1,101,967 1,138,631 1,189,928
Consumer loans 542,488 606,315 661,075 727,399 804,958
Other loans   484,810     508,778     427,605     421,050     433,950  
Loans 6,170,878 6,319,797 6,382,440 6,570,582 6,640,597
Allowance for loan losses   (101,643 )   (103,662 )   (103,016 )   (101,751 )   (100,358 )
Net Loans $ 6,069,235   $ 6,216,135   $ 6,279,424   $ 6,468,831   $ 6,540,239  
 

The allowance for loan losses is maintained at a level believed adequate by Management, based on estimated probable losses within the existing loan portfolio.  Trustmark’s allowance for loan loss methodology is based on guidance provided in SEC Staff Accounting Bulletin No. 102, “Selected Loan Loss Allowance Methodology and Documentation Issues,” as well as on other regulatory guidance. Accordingly, Trustmark’s methodology is based on historical loss experience by type of loan and internal risk ratings, homogeneous risk pools and specific loss allocations, along with adjustments considering environmental factors such as current economic events, industry and geographical conditions and portfolio performance indicators.  The provision for loan losses reflects loan quality trends, including the levels of and trends related to nonaccrual loans, past due loans, potential problem loans, criticized loans and net charge-offs or recoveries, among other factors, in compliance with the Interagency Policy Statement on the Allowance for Loan and Lease Losses published by the governmental regulating agencies for financial services companies.
         
 
 
Note 2 – Loan Composition (continued)
March 31, 2010
LOAN COMPOSITION BY REGION Total 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 $ 803,942 $ 183,670 $ 299,664 $ 57,320 $ 263,288
Secured by 1-4 family residential properties 1,637,121 81,297 1,362,648 163,410 29,766
Secured by nonfarm, nonresidential properties 1,466,296 179,637 828,599 213,224 244,836
Other real estate secured 194,641 5,195 161,955 9,586 17,905
Commercial and industrial loans 1,041,580 22,100 767,215 68,973 183,292
Consumer loans 542,488 2,077 504,555 27,674 8,182
Other loans   484,810   29,480   404,848   19,637   30,845
Loans $ 6,170,878 $ 503,456 $ 4,329,484 $ 559,824 $ 778,114
 
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots $ 91,812 $ 57,436 $ 23,634 $ 3,315 $ 7,427
Development 187,378 27,381 64,546 10,851 84,600
Unimproved land 267,386 71,271 106,402 31,136 58,577
1-4 family construction 121,518 10,247 76,440 5,031 29,800
Other construction   135,848   17,335   28,642   6,987   82,884
Construction, land development and other land loans $ 803,942 $ 183,670 $ 299,664 $ 57,320 $ 263,288
           
 

Classified (3)
FLORIDA CREDIT QUALITY Total Loans

Criticized

Loans (1)

Special

Mention (2)
Accruing

Nonimpaired

Nonaccrual

Impaired

Nonaccrual (4)
Construction, land development and other land loans:
Lots $ 57,436 $ 23,282 $ 1,323 $ 8,630 $ 9,878 $ 3,451
Development 27,381 17,026 - 3,682 1,088 12,256
Unimproved land 71,271 46,649 19,915 12,469 1,513 12,752
1-4 family construction 10,247 8,314 1,487 3,013 442 3,372
Other construction   17,335   10,336   -     1,136   6,184   3,016

Construction, land development and other land loans
183,670 105,607 22,725 28,930 19,105 34,847
Commercial, commercial real estate and consumer   319,786   64,047   19,189     19,123   14,133   11,602
 
Total Florida loans $ 503,456 $ 169,654 $ 41,914   $ 48,053 $ 33,238 $ 46,449
 
 
 
FLORIDA CREDIT QUALITY (continued)

Total Loans

Less Impaired

Loans

Loan Loss

Reserves

Loan Loss

Reserve % of

NonImpaired Loans
Construction, land development and other land loans:
Lots $ 53,985 $ 6,631 12.28 %
Development 15,125 1,943 12.85 %
Unimproved land 58,519 7,913 13.52 %
1-4 family construction 6,875 1,029 14.97 %
Other construction   14,319   2,131 14.88 %
Construction, land development and other land loans 148,823 19,647 13.20 %
Commercial, commercial real estate and consumer   308,184   5,529 1.79 %
 
Total Florida loans $ 457,007 $ 25,176 5.51 %

 

(1) Criticized loans equal all special mention and classified loans.

(2) Special mention loans exhibit potential credit weaknesses that, if not resolved, may ultimately result in a more severe classification.

(3) Classified loans include those loans identified by management as exhibiting well-defined credit weaknesses that may jeopardize repayment in full of the debt.

(4) All nonaccrual loans over $1 million are individually assessed for impairment.  Impaired loans have been determined to be collateral dependent and assessed using a fair value approach.  Fair value estimates begin with appraised values, normally from recently received and reviewed appraisals.  Appraised values are adjusted down for costs associated with asset disposal.  When a loan is deemed to be impaired, the full difference between book value and the most likely estimate of the asset’s net realizable value is charged off.
 
 
 
Note 2 - Loan Composition (continued)
         

LOAN COMPOSITION - FLORIDA
3/31/2010 12/31/2009 9/30/2009 6/30/2009 3/31/2009
Loans secured by real estate:
Construction, land development and other land loans $ 183,670 $ 198,906 $ 211,974 $ 245,494 $ 276,315
Secured by 1-4 family residential properties 81,297 87,282 92,088 88,007 93,911
Secured by nonfarm, nonresidential properties 179,637 180,267 182,548 180,559 180,649
Other real estate secured 5,195 5,388 12,891 12,900 12,747
Commercial and industrial loans 22,100 19,869 19,762 19,907 18,049
Consumer loans 2,077 2,287 2,276 2,238 2,531
Other loans   29,480   29,655   29,880   21,692   21,823
Loans $ 503,456 $ 523,654 $ 551,419 $ 570,797 $ 606,025
 
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS - FLORIDA
Lots $ 57,436 $ 61,725 $ 63,645 $ 69,005 $ 74,002
Development 27,381 27,227 28,376 33,533 41,769
Unimproved land 71,271 76,762 83,437 93,379 99,063
1-4 family construction 10,247 10,929 13,237 17,344 25,878
Other construction   17,335   22,263   23,279   32,233   35,603
Construction, land development and other land loans $ 183,670 $ 198,906 $ 211,974 $ 245,494 $ 276,315
 

Note 3 – Stockholders’ Equity

Common Stock Offering

On December 7, 2009, Trustmark completed a public offering of 6,216,216 shares of its common stock, including 810,810 shares issued pursuant to the exercise of the underwriters’ over-allotment option, at a price of $18.50 per share. Trustmark received net proceeds of approximately $109.3 million after deducting underwriting discounts, commissions and estimated offering expenses. Proceeds from this offering were used in the redemption of preferred stock discussed below.

Repurchase of Preferred Stock

On November 21, 2008, Trustmark issued 215,000 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A, (Senior Preferred Stock) to the U.S. Treasury (Treasury) in a private placement transaction as part of the Troubled Assets Relief Program Capital Purchase Program (TARP CPP), a voluntary initiative for healthy U.S. financial institutions. As part of its participation in the TARP CPP, Trustmark also issued to the Treasury a ten-year warrant (the Warrant) to purchase up to 1,647,931 shares of Trustmark’s common stock, at an initial exercise price of $19.57 per share, subject to customary anti-dilution adjustments.

On December 9, 2009, Trustmark completed the repurchase of its 215,000 shares of Senior Preferred Stock from the Treasury at a purchase price of $215.0 million plus a final accrued dividend of $716.7 thousand. The repurchase of the Senior Preferred Stock resulted in a one-time, non-cash charge of approximately $8.2 million to net income available to common shareholders in Trustmark’s fourth quarter financial statements for the unaccreted discount recorded at the date of issuance of the Senior Preferred Stock. In addition, on December 30, 2009, Trustmark repurchased in full from the Treasury, the Warrant to purchase 1,647,931 shares of Trustmark’s common stock, which was issued to the Treasury pursuant to the TARP CPP. The purchase price paid by Trustmark to the Treasury for the Warrant was its fair value of $10.0 million.
 
 

Note 4 – Yields on Earning Assets and Interest-Bearing Liabilities
 

The following table illustrates the yields on earning assets by category as well as the rates paid on interest-bearing liabilities on a tax equivalent basis:
 
  Quarter Ended
3/31/2010   12/31/2009   9/30/2009   6/30/2009   3/31/2009
Securities – Taxable 4.73% 4.82% 4.94% 5.16% 5.22%
Securities – Nontaxable 5.82% 5.82% 5.96% 6.23% 6.72%
Securities – Total 4.82% 4.91% 5.02% 5.24% 5.31%
Loans 5.32% 5.31% 5.32% 5.34% 5.37%
FF Sold & Rev Repo 0.31% 0.45% 0.50% 0.36% 0.48%
Other Earning Assets 3.36% 3.38% 3.44% 2.92% 3.14%
Total Earning Assets 5.19% 5.21% 5.24% 5.30% 5.34%
 
Interest-bearing Deposits 1.01% 1.21% 1.33% 1.54% 1.66%
FF Pch & Repo 0.15% 0.15% 0.17% 0.19% 0.22%
Borrowings 1.64% 1.57% 1.54% 1.48% 1.16%
Total Interest-bearing Liabilities 0.97% 1.14% 1.23% 1.41% 1.46%
 
Net interest margin 4.42% 4.33% 4.28% 4.20% 4.18%
 

During the first quarter of 2010, the net interest margin increased 24 basis points to 4.42%, from 4.18% for the first quarter of 2009. The increase is due to decreasing deposit costs, offset somewhat by a modest decline in earning asset yields.
     
 
 

Note 5 – Other Noninterest Expense

 

Other noninterest expense consisted of the following ($ in thousands):
 
                                      Quarter Ended    
    3/31/2010               12/31/2009               9/30/2009               6/30/2009               3/31/2009    
FDIC assessment expense     $ 3,147         $ 2,865         $ 2,913         $ 7,253         $ 2,777
ORE/Foreclosure expense 3,011 3,581 5,870 2,733 630
Other expense       7,757           7,926           8,732           8,691           8,231    
Total other expense     $ 13,915         $ 14,372         $ 17,515         $ 18,677         $ 11,638    
 
 
 

Note 6 – Mortgage Banking
 

Trustmark utilizes a portfolio of derivative instruments to achieve a fair value return that offsets the changes in the fair value of mortgage servicing rights (MSR) attributable to interest rates. Changes in the fair value of these derivative instruments are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of MSR.  MSR fair values represent the effect of present value decay and the effect of changes in interest rates.  Ineffectiveness of hedging MSR fair value is measured by comparing total hedge cost to the change in fair value of the MSR attributable to interest rate changes. The impact of implementing this strategy resulted in a net positive ineffectiveness of $1.0 million and $2.1 million for the quarters ended March 31, 2010 and 2009, respectively.  The accompanying table shows that the MSR value decreased $3.1 million for the quarter ended March 31, 2010 primarily due to a decline in mortgage rates.  Offsetting the MSR change is a $4.1 million increase in the value of derivative instruments primarily from hedge income resulting from a steep yield curve and option premium.
 

The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements:
 
  Quarter Ended
3/31/2010   12/31/2009   9/30/2009   6/30/2009   3/31/2009
Mortgage servicing income, net $ 3,449 $ 3,763 $ 4,092 $ 4,029 $ 4,001
Change in fair value-MSR from runoff (1,170 ) (1,219 ) (1,608 ) (3,097 ) (2,643 )
Gain on sales of loans, net 3,755 3,738 4,081 8,932 4,004
Other, net   (1,002 )   (139 )   179     (2,708 )   3,490  
Mortgage banking income before hedge ineffectiveness   5,032     6,143     6,744     7,156     8,852  
Change in fair value-MSR from market changes (3,067 ) 2,710 (9,344 ) 13,593 (352 )
Change in fair value of derivatives   4,107     (2,301 )   11,471     (18,206 )   2,407  
Net positive (negative) hedge ineffectiveness   1,040     409     2,127     (4,613 )   2,055  
Mortgage banking, net $ 6,072   $ 6,552   $ 8,871   $