Trustmark Corporation Announces Third Quarter 2011 Financial Results And Declares $0.23 Quarterly Cash Dividend

Trustmark Corporation (NASDAQ:TRMK) reported net income available to common shareholders of $27.0 million in the third quarter of 2011, which represented basic and diluted earnings per common share of $0.42. Trustmark’s performance during the quarter produced a return on average tangible common equity of 12.04% and a return on average assets of 1.12%. During the first nine months of 2011, Trustmark’s net income available to common shareholders totaled $82.6 million, which represented basic and diluted earnings per share of $1.29. Trustmark’s performance during the first nine months of 2011 resulted in a return on tangible common equity of 12.80% and a return on average assets of 1.15%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per common share. The dividend is payable December 15, 2011, to shareholders of record on December 1, 2011.

Printer friendly version of earnings release with consolidated financial statements and notes: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50040940&lang=en

Gerard R. Host, President and CEO, stated, “Trustmark continued to post strong financial performance as reflected in expanded profitability in our mortgage banking, wealth management and insurance businesses. Our banking business also experienced solid results due in part to continued improvement in credit quality, including reductions in nonperforming loans and net charge-offs. We continued investments to support revenue growth, including expanding our banking services to the Starkville, Mississippi market as well as opening a mortgage banking office in Birmingham, Alabama. Thanks to our dedicated associates, solid profitability and strong capital base, Trustmark remains well-positioned to continue meeting the needs of our customers and take advantage of opportunities to create value for our shareholders.”

Credit Quality
  • Nonperforming loans declined 17.7% while nonperforming assets fell 10.4%
  • Net charge-offs totaled $5.4 million and represented 0.36% of average loans
  • Allowance for loan losses represented 248.8% of nonperforming loans, excluding impaired loans

During the third quarter, nonperforming loans (excluding covered loans) decreased $21.4 million, or 17.7%, relative to the prior quarter to total $99.6 million, or 1.66% of total loans, marking six consecutive quarters of improvement. Foreclosed other real estate (excluding covered ORE) decreased $402 thousand from the prior quarter to total $89.6 million. Collectively, nonperforming assets decreased $21.8 million, or 10.4%, to total $189.2 million at September 30, 2011. Trustmark has continued to make progress in the resolution of nonperforming assets as balances during the last 12 months decreased $54.9 million, or 22.5%, including a $40.2 million reduction in the Florida market.

Net charge-offs during the third quarter totaled $5.4 million and represented 0.36% of average loans (excluding covered loans). The provision for loan losses totaled $8.0 million. During the third quarter, Trustmark experienced a $26.3 million or 5.9% decline in criticized loans relative to the prior quarter. Relative to figures one year earlier, criticized loan balances decreased $84.4 million, or 16.8%, due in large part to a $51.5 million decline in the Florida market .

Allocation of Trustmark’s $89.5 million allowance for loan losses represented 1.94% of commercial loans and 0.76% of consumer and home mortgage loans, resulting in an allowance to total loans of 1.55% as of September 30, 2011. The allowance for loan losses represented 248.8% of nonperforming loans, excluding impaired loans. All of these ratios exclude covered assets (covered loans and covered other real estate).

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 was reduced by 30.5% to total $101.5 million. At September 30, 2011, the associated reserve for loan losses on this portfolio totaled $11.4 million, or 11.2%. Trustmark remains focused on managing credit risks resulting from current economic and real estate market conditions.

Capital Strength
  • Tangible common equity to tangible assets expanded to 9.74%
  • Total risk-based capital increased to 16.78%

Trustmark’s consistent profitability and sound balance sheet management continued to be reflected in its solid capital position. Tangible common equity totaled $915.6 million and represented 9.74% of tangible assets at September 30, 2011. Total risk-based capital increased to 16.78%, significantly exceeding the 10% regulatory requirement to be classified as “well-capitalized.” Trustmark’s strong capital base provides flexibility to support organic growth as well as acquisition opportunities that strengthen the value of the franchise.

Balance Sheet Management

  • Average earning assets remained stable at $8.5 billion
  • Net interest income (FTE) totaled $89.3 million

Loans, including loans held for investment and covered loans, totaled $5.9 billion at September 30, 2011, a decrease of $132.1 million from the prior quarter. Trustmark’s efforts to reduce exposure to construction and land development lending as well as the decision to discontinue indirect auto financing continued to be reflected in loan totals as these portfolios declined $33.5 million and $27.8 million, respectively. In addition, current economic conditions continued to constrain the demand for credit.

Average earning assets during the third quarter totaled $8.5 billion, a decrease of $49.5 million from the prior quarter. Growth in average investment securities was more than offset by a decline in average loans during the third quarter. Average deposits decreased $117.9 million, or 1.5%, relative to the prior quarter to total $7.6 billion. A seasonal reduction in public funds was the principle cause for the 3.6% decline in average interest-bearing deposits; average noninterest-bearing deposits increased 5.6% to represent 23.8% of average deposits in the third quarter of 2011.

Net interest income (FTE) totaled $89.3 million during the third quarter, a decrease of $2.1 million from the prior quarter. The decline in net interest income was primarily attributable to repricing of fixed rate assets to lower yields as well as accelerated premium amortization within the investment portfolio driven by the decline in interest rates during the quarter. Prudent asset and liability management, including disciplined loan and deposit pricing, continued to produce a strong net interest margin of 4.17% during the third quarter.

Noninterest Income
  • Noninterest income totaled $44.3 million
  • Fee income represented 33.1% of total revenue

Service charges on deposit accounts during the third quarter totaled $13.7 million, an increase of $829 thousand from the prior quarter principally due to an increase in the occurrence of NSF transactions. When compared to figures one year earlier, services charges were down $813 thousand, due in large part to a reduction in NSF fees resulting from the impact of regulatory changes. Bank cards and other fees totaled $7.0 million during the third quarter, up $179 thousand from the prior quarter and up $798 thousand from figures one year earlier as a result of increased debit card usage.

Trustmark continued to achieve solid financial performance from its diverse financial services businesses. Mortgage banking income totaled $9.8 million during the third quarter, an increase of $3.5 million from the prior quarter, reflecting stable mortgage servicing income, increased secondary marketing gains and successful hedging programs. In addition, insurance revenue totaled $7.5 million, an increase of 9.5%, reflecting a seasonal increase in commercial property and casualty income relative to the prior quarter. Income from wealth management services totaled $6.0 million during the third quarter, an increase of 4.0% from the prior quarter. Other income totaled $234 thousand in the third quarter, in line with the prior quarter when adjusted for the $7.5 million nonrecurring bargain purchase gain associated with an FDIC assisted transaction in the second quarter.

Noninterest Expense
  • Salary and employee benefits expense growth contained to 1.1%
  • ORE/Foreclosure expense totaled $5.6 million

During the third quarter of 2011, noninterest expense totaled $85.5 million, an increase of $4.1 million from the prior quarter. There were several notable items in the quarter, including costs associated with the resolution of long-standing litigation, expenses related to the realignment of certain business units, as well as compensatory mortgage foreclosure fees that collectively totaled $2.5 million. Adjusting for these notable items, noninterest expense increased $1.6 million, or 2.0%, relative to the prior quarter.

ADDITIONAL INFORMATION

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, October 26, 2011, at 10:00 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (877)317-6789, passcode 446676, 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 Thursday, November 3, 2011, in archived format at the same web address or by calling (877)344-7529, passcode 446676.

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 in this report 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 acquisitions or new products and lines of business, natural disasters, environmental 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
September 30, 2011
($ in thousands)
(unaudited)
 
                Linked Quarter     Year over Year

QUARTERLY AVERAGE BALANCES
9/30/2011 6/30/2011 9/30/2010

$ Change
    % Change

$ Change
    % Change
Securities AFS-taxable $ 2,150,117 $ 2,142,978 $ 1,654,335 $ 7,139 0.3 % $ 495,782 30.0 %
Securities AFS-nontaxable 170,714 151,471 111,959 19,243 12.7 % 58,755 52.5 %
Securities HTM-taxable 52,868 73,739 143,124 (20,871 ) -28.3 % (90,256 ) -63.1 %
Securities HTM-nontaxable   24,062     25,797     37,703     (1,735 ) -6.7 %   (13,641 ) -36.2 %
Total securities   2,397,761     2,393,985     1,947,121     3,776   0.2 %   450,640   23.1 %
Loans (including loans held for sale) 5,985,730 6,044,232 6,230,961 (58,502 ) -1.0 % (245,231 ) -3.9 %
Covered loans 83,811 77,858 - 5,953 7.6 % 83,811 n/m
Fed funds sold and rev repos 5,801 6,807 8,418 (1,006 ) -14.8 % (2,617 ) -31.1 %
Other earning assets   32,327     32,028     33,615     299   0.9 %   (1,288 ) -3.8 %
Total earning assets   8,505,430     8,554,910     8,220,115     (49,480 ) -0.6 %   285,315   3.5 %
Allowance for loan losses (88,888 ) (94,771 ) (102,528 ) 5,883 -6.2 % 13,640 -13.3 %
Cash and due from banks 216,134 216,483 214,736 (349 ) -0.2 % 1,398 0.7 %
Other assets   939,780     937,503     885,600     2,277   0.2 %   54,180   6.1 %
Total assets $ 9,572,456   $ 9,614,125   $ 9,217,923   $ (41,669 ) -0.4 % $ 354,533   3.8 %
 
Interest-bearing demand deposits $ 1,558,318 $ 1,579,894 $ 1,363,377 $ (21,576 ) -1.4 % $ 194,941 14.3 %
Savings deposits 2,133,437 2,277,220 1,888,121 (143,783 ) -6.3 % 245,316 13.0 %
Time deposits less than $100,000 1,232,374 1,255,496 1,276,088 (23,122 ) -1.8 % (43,714 ) -3.4 %
Time deposits of $100,000 or more   877,951     904,106     957,148     (26,155 ) -2.9 %   (79,197 ) -8.3 %
Total interest-bearing deposits 5,802,080 6,016,716 5,484,734 (214,636 ) -3.6 % 317,346 5.8 %
Fed funds purchased and repos 462,294 396,618 522,523 65,676 16.6 % (60,229 ) -11.5 %
Short-term borrowings 85,678 92,077 202,017 (6,399 ) -6.9 % (116,339 ) -57.6 %
Long-term FHLB advances 2,413 2,333 - 80 3.4 % 2,413 n/m
Subordinated notes 49,825 49,817 49,793 8 0.0 % 32 0.1 %
Junior subordinated debt securities   61,856     61,856     70,104     -   0.0 %   (8,248 ) -11.8 %
Total interest-bearing liabilities 6,464,146 6,619,417 6,329,171 (155,271 ) -2.3 % 134,975 2.1 %
Noninterest-bearing deposits 1,811,472 1,714,778 1,629,122 96,694 5.6 % 182,350 11.2 %
Other liabilities   85,404     98,154     104,576     (12,750 ) -13.0 %   (19,172 ) -18.3 %
Total liabilities 8,361,022 8,432,349 8,062,869 (71,327 ) -0.8 % 298,153 3.7 %
Shareholders' equity   1,211,434     1,181,776     1,155,054     29,658   2.5 %   56,380   4.9 %
Total liabilities and equity $ 9,572,456   $ 9,614,125   $ 9,217,923   $ (41,669 ) -0.4 % $ 354,533   3.8 %
 
 
Linked Quarter Year over Year

PERIOD END BALANCES
9/30/2011 6/30/2011 9/30/2010

$ Change
% Change

$ Change
% Change
Cash and due from banks $ 245,132 $ 221,853 $ 196,136 $ 23,279 10.5 % $ 48,996 25.0 %
Fed funds sold and rev repos 8,810 4,576 6,655 4,234 92.5 % 2,155 32.4 %
Securities available for sale 2,476,905 2,399,042 1,968,624 77,863 3.2 % 508,281 25.8 %
Securities held to maturity 71,046 87,923 168,849 (16,877 ) -19.2 % (97,803 ) -57.9 %
Loans held for sale (LHFS) 210,269 123,244 268,137 87,025 70.6 % (57,868 ) -21.6 %
Loans held for investment (LHFI), excluding covered loans 5,783,712 5,906,316 5,998,704 (122,604 ) -2.1 % (214,992 ) -3.6 %
Allowance for loan losses   (89,463 )   (86,846 )   (94,458 )   (2,617 ) 3.0 %   4,995   -5.3 %
Net LHFI, excluding covered loans 5,694,249 5,819,470 5,904,246 (125,221 ) -2.2 % (209,997 ) -3.6 %
Covered loans   79,064     88,558     -     (9,494 ) -10.7 %   79,064   n/m
Net LHFI and covered loans 5,773,313 5,908,028 5,904,246 (134,715 ) -2.3 % (130,933 ) -2.2 %
Premises and equipment, net 141,639 140,640 143,393 999 0.7 % (1,754 ) -1.2 %
Mortgage servicing rights 43,659 50,111 41,972 (6,452 ) -12.9 % 1,687 4.0 %
Goodwill 291,104 291,104 291,104 - 0.0 % - 0.0 %
Identifiable intangible assets 14,861 15,651 17,181 (790 ) -5.0 % (2,320 ) -13.5 %
Other real estate, excluding covered other real estate 89,597 89,999 84,722 (402 ) -0.4 % 4,875 5.8 %
Covered other real estate 7,197 7,485 - (288 ) -3.8 % 7,197 n/m
FDIC indemnification asset 33,436 33,327 - 109 0.3 % 33,436 n/m
Other assets   298,953     325,468     325,886     (26,515 ) -8.1 %   (26,933 ) -8.3 %
Total assets $ 9,705,921   $ 9,698,451   $ 9,416,905   $ 7,470   0.1 % $ 289,016   3.1 %
 
Deposits:
Noninterest-bearing $ 1,871,040 $ 1,806,908 $ 1,709,311 $ 64,132 3.5 % $ 161,729 9.5 %
Interest-bearing   5,698,684     5,825,426     5,316,025     (126,742 ) -2.2 %   382,659   7.2 %
Total deposits 7,569,724 7,632,334 7,025,336 (62,610 ) -0.8 % 544,388 7.7 %
Fed funds purchased and repos 576,672 539,693 633,065 36,979 6.9 % (56,393 ) -8.9 %
Short-term borrowings 98,887 90,156 318,457 8,731 9.7 % (219,570 ) -68.9 %
Long-term FHLB advances 741 2,794 - (2,053 ) -73.5 % 741 n/m
Subordinated notes 49,831 49,823 49,798 8 0.0 % 33 0.1 %
Junior subordinated debt securities 61,856 61,856 70,104 - 0.0 % (8,248 ) -11.8 %
Other liabilities   126,604     129,025     161,353     (2,421 ) -1.9 %   (34,749 ) -21.5 %
Total liabilities   8,484,315     8,505,681     8,258,113     (21,366 ) -0.3 %   226,202   2.7 %
Common stock 13,359 13,359 13,311 - 0.0 % 48 0.4 %
Capital surplus 264,750 263,940 254,288 810 0.3 % 10,462 4.1 %
Retained earnings 923,891 911,797 881,545 12,094 1.3 % 42,346 4.8 %

Accum other comprehensive income, net of tax
  19,606     3,674     9,648     15,932   n/m   9,958   n/m
Total shareholders' equity   1,221,606     1,192,770     1,158,792     28,836   2.4 %   62,814   5.4 %
Total liabilities and equity $ 9,705,921   $ 9,698,451   $ 9,416,905   $ 7,470   0.1 % $ 289,016   3.1 %
 
n/m - percentage changes greater than +/- 100% are considered not meaningful
 

See Notes to Consolidated Financials
 
 
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2011
($ in thousands except per share data)
(unaudited)
 
Quarter Ended Linked Quarter Year over Year

INCOME STATEMENTS
9/30/2011 6/30/2011 9/30/2010

$ Change
% Change

$ Change
% Change
Interest and fees on loans-FTE $ 79,256 $ 80,202 $ 83,374 $ (946 ) -1.2 % $ (4,118 ) -4.9 %
Interest on securities-taxable 18,115 20,374 18,641 (2,259 ) -11.1 % (526 ) -2.8 %
Interest on securities-tax exempt-FTE 2,155 2,115 2,080 40 1.9 % 75 3.6 %
Interest on fed funds sold and rev repos 5 7 9 (2 ) -28.6 % (4 ) -44.4 %
Other interest income   329     333     332     (4 ) -1.2 %   (3 ) -0.9 %
Total interest income-FTE   99,860     103,031     104,436     (3,171 ) -3.1 %   (4,576 ) -4.4 %
Interest on deposits 9,455 9,936 11,609 (481 ) -4.8 % (2,154 ) -18.6 %
Interest on fed funds pch and repos 216 216 294 - 0.0 % (78 ) -26.5 %
Other interest expense   842     1,420     1,631     (578 ) -40.7 %   (789 ) -48.4 %
Total interest expense   10,513     11,572     13,534     (1,059 ) -9.2 %   (3,021 ) -22.3 %
Net interest income-FTE 89,347 91,459 90,902 (2,112 ) -2.3 % (1,555 ) -1.7 %
Provision for loan losses   7,978     8,116     12,259     (138 ) -1.7 %   (4,281 ) -34.9 %
Net interest income after provision-FTE   81,369     83,343     78,643     (1,974 ) -2.4 %   2,726   3.5 %
Service charges on deposit accounts 13,680 12,851 14,493 829 6.5 % (813 ) -5.6 %
Insurance commissions 7,516 6,862 7,746 654 9.5 % (230 ) -3.0 %
Wealth management 5,993 5,760 5,199 233 4.0 % 794 15.3 %
Bank card and other fees 7,033 6,854 6,235 179 2.6 % 798 12.8 %
Mortgage banking, net 9,783 6,269 9,861 3,514 56.1 % (78 ) -0.8 %
Other, net   234     7,785     441     (7,551 ) -97.0 %   (207 ) -46.9 %
Nonint inc-excl sec gains, net 44,239 46,381 43,975 (2,142 ) -4.6 % 264 0.6 %
Security gains, net   33     51     4     (18 ) -35.3 %   29   n/m
Total noninterest income   44,272     46,432     43,979     (2,160 ) -4.7 %   293   0.7 %
Salaries and employee benefits 44,701 44,203 44,034 498 1.1 % 667 1.5 %
Services and fees 11,485 10,780 10,709 705 6.5 % 776 7.2 %
Net occupancy-premises 5,093 5,050 4,961 43 0.9 % 132 2.7 %
Equipment expense 5,038 4,856 4,356 182 3.7 % 682 15.7 %
FDIC assessment expense 1,812 1,938 3,037 (126 ) -6.5 % (1,225 ) -40.3 %
ORE/Foreclosure expense 5,616 4,704 8,728 912 19.4 % (3,112 ) -35.7 %
Other expense   11,736     9,817     8,598     1,919   19.5 %   3,138   36.5 %
Total noninterest expense   85,481     81,348     84,423     4,133   5.1 %   1,058   1.3 %
Income before income taxes and tax eq adj 40,160 48,427 38,199 (8,267 ) -17.1 % 1,961 5.1 %
Tax equivalent adjustment   3,667     3,629     3,335     38   1.0 %   332   10.0 %
Income before income taxes 36,493 44,798 34,864 (8,305 ) -18.5 % 1,629 4.7 %
Income taxes   9,525     13,196     9,004     (3,671 ) -27.8 %   521   5.8 %
Net income available to common shareholders $ 26,968   $ 31,602   $ 25,860   $ (4,634 ) -14.7 % $ 1,108   4.3 %
 
 
Per common share data
Earnings per share - basic $ 0.42   $ 0.49   $ 0.40   $ (0.07 ) -14.3 % $ 0.02   5.0 %
 
Earnings per share - diluted $ 0.42   $ 0.49   $ 0.40   $ (0.07 ) -14.3 % $ 0.02   5.0 %
 
Dividends per share $ 0.23   $ 0.23   $ 0.23   $ -   0.0 % $ -   0.0 %
 
Weighted average common shares outstanding
Basic   64,119,235     64,072,047     63,885,647  
 
Diluted   64,310,453     64,281,348     64,066,798  
 
Period end common shares outstanding   64,119,235     64,119,235     63,885,959  
 
 

OTHER FINANCIAL DATA
Return on common equity 8.83 % 10.73 % 8.88 %
Return on average tangible common equity 12.04 % 14.71 % 12.38 %
Return on equity 8.83 % 10.73 % 8.88 %
Return on assets 1.12 % 1.32 % 1.11 %
Interest margin - Yield - FTE 4.66 % 4.83 % 5.04 %
Interest margin - Cost 0.49 % 0.54 % 0.65 %
Net interest margin - FTE 4.17 % 4.29 % 4.39 %
Efficiency ratio 63.99 % 62.39 % 62.59 %
Full-time equivalent employees 2,542 2,575 2,501
 
 

COMMON STOCK PERFORMANCE
Market value-Close $ 18.15 $ 23.41 $ 21.74
Common book value $ 19.05 $ 18.60 $ 18.14
Tangible common book value $ 14.28 $ 13.82 $ 13.31
 
n/m - percentage changes greater than +/- 100% are considered not meaningful
 

See Notes to Consolidated Financials
 
 
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2011
($ in thousands)
(unaudited)
 
Quarter Ended Linked Quarter Year over Year

NONPERFORMING ASSETS (1)
9/30/2011 6/30/2011 9/30/2010

$ Change
% Change

$ Change
% Change
Nonaccrual loans
Florida $ 27,263 $ 30,752 $ 65,759 $ (3,489 ) -11.3 % $ (38,496 ) -58.5 %
Mississippi (2) 44,825 47,802 48,962 (2,977 ) -6.2 % (4,137 ) -8.4 %
Tennessee (3) 14,575 17,564 9,207 (2,989 ) -17.0 % 5,368 58.3 %
Texas   12,915     24,900     35,388     (11,985 ) -48.1 %   (22,473 ) -63.5 %
Total nonaccrual loans 99,578 121,018 159,316 (21,440 ) -17.7 % (59,738 ) -37.5 %
Other real estate
Florida 29,949 33,823 31,665 (3,874 ) -11.5 % (1,716 ) -5.4 %
Mississippi (2) 21,027 22,921 24,548 (1,894 ) -8.3 % (3,521 ) -14.3 %
Tennessee (3) 17,940 15,760 16,456 2,180 13.8 % 1,484 9.0 %
Texas   20,681     17,495     12,053     3,186   18.2 %   8,628   71.6 %
Total other real estate   89,597     89,999     84,722     (402 ) -0.4 %   4,875   5.8 %
Total nonperforming assets $ 189,175   $ 211,017   $ 244,038   $ (21,842 ) -10.4 % $ (54,863 ) -22.5 %
 

LOANS PAST DUE OVER 90 DAYS (4)
LHFI $ 3,166   $ 6,993   $ 5,795   $ (3,827 ) -54.7 % $ (2,629 ) -45.4 %
 
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase) $ 32,956   $ 24,708   $ 50,246   $ 8,248   33.4 % $ (17,290 ) -34.4 %
 
 
Quarter Ended Linked Quarter Year over Year

ALLOWANCE FOR LOAN LOSSES
  9/30/2011     6/30/2011     9/30/2010   $ Change % Change   $ Change % Change  
Beginning Balance $ 86,846 $ 93,398 $ 100,656 $ (6,552 ) -7.0 % $ (13,810 ) -13.7 %
Provision for loan losses 7,978 8,116 12,259 (138 ) -1.7 % (4,281 ) -34.9 %
Charge-offs (8,675 ) (17,505 ) (21,942 ) 8,830 -50.4 % 13,267 -60.5 %
Recoveries   3,314     2,837     3,485     477   16.8 %   (171 ) -4.9 %
Net charge-offs   (5,361 )   (14,668 )   (18,457 )   9,307   -63.5 %   13,096   -71.0 %
Ending Balance $ 89,463   $ 86,846   $ 94,458   $ 2,617   3.0 % $ (4,995 ) -5.3 %
 

PROVISION FOR LOAN LOSSES
Florida $ 3,046 $ 5,633 $ 4,520 $ (2,587 ) -45.9 % $ (1,474 ) -32.6 %
Mississippi (2) 3,732 1,331 4,398 2,401 n/m (666 ) -15.1 %
Tennessee (3) (105 ) 157 (172 ) (262 ) n/m 67 -39.0 %
Texas   1,305     995     3,513     310   31.2 %   (2,208 ) -62.9 %
Total provision for loan losses $ 7,978   $ 8,116   $ 12,259   $ (138 ) -1.7 % $ (4,281 ) -34.9 %
 

NET CHARGE-OFFS
Florida $ 2,909 $ 7,880 $ 8,951 $ (4,971 ) -63.1 % $ (6,042 ) -67.5 %
Mississippi (2) 1,988 3,401 3,879 (1,413 ) -41.5 % (1,891 ) -48.7 %
Tennessee (3) 499 324 3,475 175 54.0 % (2,976 ) -85.6 %
Texas   (35 )   3,063     2,152     (3,098 ) n/m   (2,187 ) n/m
Total net charge-offs $ 5,361   $ 14,668   $ 18,457   $ (9,307 ) -63.5 % $ (13,096 ) -71.0 %
 

CREDIT QUALITY RATIOS (1)
Net charge offs/average loans 0.36 % 0.97 % 1.18 %
Provision for loan losses/average loans 0.53 % 0.54 % 0.78 %
Nonperforming loans/total loans (incl LHFS) 1.66 % 2.01 % 2.54 %
Nonperforming assets/total loans (incl LHFS) 3.16 % 3.50 % 3.89 %
Nonperforming assets/total loans (incl LHFS) +ORE 3.11 % 3.45 % 3.84 %
ALL/total loans (excl LHFS) 1.55 % 1.47 % 1.57 %
ALL-commercial/total commercial loans 1.94 % 1.84 % 1.97 %
ALL-consumer/total consumer and home mortgage loans 0.76 % 0.76 % 0.81 %
ALL/nonperforming loans 89.84 % 71.76 % 59.29 %

ALL/nonperforming loans - (excl impaired loans)
248.82 % 181.95 % 140.94 %
 

CAPITAL RATIOS
Total equity/total assets 12.59 % 12.30 % 12.31 %
Common equity/total assets 12.59 % 12.30 % 12.31 %
Tangible common equity/tangible assets 9.74 % 9.43 % 9.34 %
Tangible common equity/risk-weighted assets 14.04 % 13.51 % 12.78 %
Tier 1 leverage ratio 10.38 % 10.18 % 10.26 %
Tier 1 common risk-based capital ratio 13.84 % 13.55 % 12.72 %
Tier 1 risk-based capital ratio 14.76 % 14.46 % 13.75 %
Total risk-based capital ratio 16.78 % 16.47 % 15.75 %
 
(1) - Excludes Covered Assets (Loans and Other Real Estate)
(2) - Mississippi includes Central and Southern Mississippi Regions
(3) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
(4) - Excludes Covered Loans
n/m - percentage changes greater than +/- 100% are considered not meaningful
 

See Notes to Consolidated Financials
 
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2011
($ in thousands)
(unaudited)
 
    Quarter Ended     Nine Months Ended

AVERAGE BALANCES
9/30/2011     6/30/2011     3/31/2011     12/31/2010     9/30/2010 9/30/2011     9/30/2010
Securities AFS-taxable $ 2,150,117 $ 2,142,978 $ 2,050,502 $ 1,817,996 $ 1,654,335 $ 2,114,897 $ 1,585,357
Securities AFS-nontaxable 170,714 151,471 144,921 140,139 111,959 155,796 109,357
Securities HTM-taxable 52,868 73,739 97,710 121,278 143,124 74,608 161,499
Securities HTM-nontaxable   24,062     25,797     27,099     33,138     37,703     25,641     42,027  
Total securities   2,397,761     2,393,985     2,320,232     2,112,551     1,947,121     2,370,942     1,898,240  
Loans (including loans held for sale) 5,985,730 6,044,232 6,107,025 6,199,875 6,230,961 6,045,218 6,314,279
Covered loans 83,811 77,858 - - - 54,197 -
Fed funds sold and rev repos 5,801 6,807 8,359 10,766 8,418 6,980 8,771
Other earning assets   32,327     32,028     47,851     41,359     33,615     37,345     39,480  
Total earning assets   8,505,430     8,554,910     8,483,467     8,364,551     8,220,115     8,514,682     8,260,770  
Allowance for loan losses (88,888 ) (94,771 ) (96,065 ) (96,559 ) (102,528 ) (93,215 ) (104,501 )
Cash and due from banks 216,134 216,483 222,380 207,874 214,736 218,310 212,898
Other assets   939,780     937,503     899,524     888,666     885,600     925,750     898,159  
Total assets $ 9,572,456   $ 9,614,125   $ 9,509,306   $ 9,364,532   $ 9,217,923   $ 9,565,527   $ 9,267,326  
 
Interest-bearing demand deposits $ 1,558,318 $ 1,579,894 $ 1,465,390 $ 1,347,252 $ 1,363,377 $ 1,534,874 $ 1,314,001
Savings deposits 2,133,437 2,277,220 2,045,874 1,794,352 1,888,121 2,152,498 1,969,241
Time deposits less than $100,000 1,232,374 1,255,496 1,210,219 1,235,529 1,276,088 1,232,777 1,313,094
Time deposits of $100,000 or more   877,951     904,106     876,975     932,744     957,148     886,348     986,649  
Total interest-bearing deposits 5,802,080 6,016,716 5,598,458 5,309,877 5,484,734 5,806,497 5,582,985
Fed funds purchased and repos 462,294 396,618 647,881 701,978 522,523 501,585 539,464
Short-term borrowings 85,678 92,077 254,451 254,442 202,017 143,450 194,421
Long-term FHLB advances 2,413 2,333 - - - 1,591 30,003
Subordinated notes 49,825 49,817 49,809 49,801 49,793 49,817 49,785
Junior subordinated debt securities   61,856     61,856     61,856     64,546     70,104     61,856     70,104  
Total interest-bearing liabilities 6,464,146 6,619,417 6,612,455 6,380,644 6,329,171 6,564,796 6,466,762
Noninterest-bearing deposits 1,811,472 1,714,778 1,620,554 1,706,089 1,629,122 1,716,300 1,567,172
Other liabilities   85,404     98,154     116,399     117,741     104,576     99,873     94,161  
Total liabilities 8,361,022 8,432,349 8,349,408 8,204,474 8,062,869 8,380,969 8,128,095
Shareholders' equity   1,211,434     1,181,776     1,159,898     1,160,058     1,155,054     1,184,558     1,139,231  
Total liabilities and equity $ 9,572,456   $ 9,614,125   $ 9,509,306   $ 9,364,532   $ 9,217,923   $ 9,565,527   $ 9,267,326  
 
 

PERIOD END BALANCES
9/30/2011 6/30/2011 3/31/2011 12/31/2010 9/30/2010
Cash and due from banks $ 245,132 $ 221,853 $ 193,087 $ 161,544 $ 196,136
Fed funds sold and rev repos 8,810 4,576 1,726 11,773 6,655
Securities available for sale 2,476,905 2,399,042 2,309,704 2,177,249 1,968,624
Securities held to maturity 71,046 87,923 110,054 140,847 168,849
Loans held for sale (LHFS) 210,269 123,244 112,981 153,044 268,137
Loans held for investment (LHFI), excluding covered loans 5,783,712 5,906,316 5,964,089 6,060,242 5,998,704
Allowance for loan losses   (89,463 )   (86,846 )   (93,398 )   (93,510 )   (94,458 )
Net LHFI, excluding covered loans 5,694,249 5,819,470 5,870,691 5,966,732 5,904,246
Covered loans   79,064     88,558     -     -     -  
Net LHFI and covered loans 5,773,313 5,908,028 5,870,691 5,966,732 5,904,246
Premises and equipment, net 141,639 140,640 141,524 142,289 143,393
Mortgage servicing rights 43,659 50,111 53,598 51,151 41,972
Goodwill 291,104 291,104 291,104 291,104 291,104
Identifiable intangible assets 14,861 15,651 15,532 16,306 17,181
Other real estate, excluding covered other real estate 89,597 89,999 89,198 86,704 84,722
Covered other real estate 7,197 7,485 - - -
FDIC indemnification asset 33,436 33,327 - - -
Other assets   298,953     325,468     325,263     355,159     325,886  
Total assets $ 9,705,921   $ 9,698,451   $ 9,514,462   $ 9,553,902   $ 9,416,905  
 
Deposits:
Noninterest-bearing $ 1,871,040 $ 1,806,908 $ 1,668,104 $ 1,636,625 $ 1,709,311
Interest-bearing   5,698,684     5,825,426     5,758,170     5,407,942     5,316,025  
Total deposits 7,569,724 7,632,334 7,426,274 7,044,567 7,025,336
Fed funds purchased and repos 576,672 539,693 550,919 700,138 633,065
Short-term borrowings 98,887 90,156 154,585 425,343 318,457
Long-term FHLB advances 741 2,794 - - -
Subordinated notes 49,831 49,823 49,814 49,806 49,798
Junior subordinated debt securities 61,856 61,856 61,856 61,856 70,104
Other liabilities   126,604     129,025     110,785     122,708     161,353  
Total liabilities   8,484,315     8,505,681     8,354,233     8,404,418     8,258,113  
Common stock 13,359 13,359 13,333 13,318 13,311
Capital surplus 264,750 263,940 260,297 256,675 254,288
Retained earnings 923,891 911,797 898,222 890,917 881,545

Accum other comprehensive income (loss), net of tax
  19,606     3,674     (11,623 )   (11,426 )   9,648  
Total shareholders' equity   1,221,606     1,192,770     1,160,229     1,149,484     1,158,792  
Total liabilities and equity $ 9,705,921   $ 9,698,451   $ 9,514,462   $ 9,553,902   $ 9,416,905  
 

See Notes to Consolidated Financials
 
 
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2011
($ in thousands except per share data)
(unaudited)
 
Quarter Ended Nine Months Ended

INCOME STATEMENTS
9/30/2011 6/30/2011 3/31/2011 12/31/2010 9/30/2010 9/30/2011 9/30/2010
Interest and fees on loans-FTE $ 79,256 $ 80,202 $ 79,116 $ 82,664 $ 83,374 $ 238,574 $ 251,863
Interest on securities-taxable 18,115 20,374 19,992 19,076 18,641 58,481 58,002
Interest on securities-tax exempt-FTE 2,155 2,115 2,128 2,169 2,080 6,398 6,411
Interest on fed funds sold and rev repos 5 7 8 12 9 20 24
Other interest income   329     333     332     328     332     994     1,081  
Total interest income-FTE   99,860     103,031     101,576     104,249     104,436     304,467     317,381  
Interest on deposits 9,455 9,936 9,719 10,359 11,609 29,110 38,298
Interest on fed funds pch and repos 216 216 338 403 294 770 780
Other interest expense   842     1,420     1,553     1,535     1,631     3,815     4,820  
Total interest expense   10,513     11,572     11,610     12,297     13,534     33,695     43,898  
Net interest income-FTE 89,347 91,459 89,966 91,952 90,902 270,772 273,483
Provision for loan losses   7,978     8,116     7,537     11,794     12,259     23,631     37,752  
Net interest income after provision-FTE   81,369     83,343     82,429     80,158     78,643     247,141     235,731  
Service charges on deposit accounts 13,680 12,851 11,907 13,493 14,493 38,438 41,690
Insurance commissions 7,516 6,862 6,512 6,224 7,746 20,890 21,467
Wealth management 5,993 5,760 5,986 5,760 5,199 17,739 16,112
Bank card and other fees 7,033 6,854 6,475 6,482 6,235 20,362 18,532
Mortgage banking, net 9,783 6,269 4,722 4,502 9,861 20,774 24,843
Other, net   234     7,785     762     2,070     441     8,781     2,423  
Nonint inc-excl sec gains, net 44,239 46,381 36,364 38,531 43,975 126,984 125,067
Security gains, net   33     51     7     101     4     91     2,228  
Total noninterest income   44,272     46,432     36,371     38,632     43,979     127,075     127,295  
Salaries and employee benefits 44,701 44,203 44,036 44,412 44,034 132,940 130,170
Services and fees 11,485 10,780 10,270 10,462 10,709 32,535 31,487
Net occupancy-premises 5,093 5,050 5,073 4,896 4,961 15,216 14,912
Equipment expense 5,038 4,856 5,144 4,229 4,356 15,038 12,906
FDIC assessment expense 1,812 1,938 2,750 2,942 3,037 6,500 9,219
ORE/Foreclosure expense 5,616 4,704 3,213 3,310 8,728 13,533 21,067
Other expense   11,736     9,817     9,532     10,186     8,598     31,085     25,451  
Total noninterest expense   85,481     81,348     80,018     80,437     84,423     246,847     245,212  
Income before income taxes and tax eq adj 40,160 48,427 38,782 38,353 38,199 127,369 117,814
Tax equivalent adjustment   3,667     3,629     3,591     3,400     3,335     10,887     10,012  
Income before income taxes 36,493 44,798 35,191 34,953 34,864 116,482 107,802
Income taxes   9,525     13,196     11,178     9,793     9,004     33,899     32,326  
Net income available to common shareholders $ 26,968   $ 31,602   $ 24,013   $ 25,160   $ 25,860   $ 82,583   $ 75,476  
 
Per common share data
Earnings per share - basic $ 0.42   $ 0.49   $ 0.38   $ 0.39   $ 0.40   $ 1.29   $ 1.18  
 
Earnings per share - diluted $ 0.42   $ 0.49   $ 0.37   $ 0.39   $ 0.40   $ 1.29   $ 1.18  
 
Dividends per share $ 0.23   $ 0.23   $ 0.23   $ 0.23   $ 0.23   $ 0.69   $ 0.69  
 
Weighted average common shares outstanding
Basic   64,119,235     64,072,047     63,950,461     63,892,362     63,885,647     64,047,866     63,834,464  
 
Diluted   64,310,453     64,281,348     64,181,752     64,105,064     64,066,798     64,251,025     64,016,341  
 
Period end common shares outstanding   64,119,235     64,119,235     63,987,064     63,917,591     63,885,959     64,119,235     63,885,959  
 
 

OTHER FINANCIAL DATA
Return on common equity 8.83 % 10.73 % 8.40 % 8.60 % 8.88 % 9.32 % 8.86 %
Return on average tangible common equity 12.04 % 14.71 % 11.65 % 11.96 % 12.38 % 12.80 % 12.43 %
Return on equity 8.83 % 10.73 % 8.40 % 8.60 % 8.88 % 9.32 % 8.86 %
Return on assets 1.12 % 1.32 % 1.02 % 1.07 % 1.11 % 1.15 % 1.09 %
Interest margin - Yield - FTE 4.66 % 4.83 % 4.86 % 4.94 % 5.04 % 4.78 % 5.14 %
Interest margin - Cost 0.49 % 0.54 % 0.56 % 0.58 % 0.65 % 0.53 % 0.71 %
Net interest margin - FTE 4.17 % 4.29 % 4.30 % 4.36 % 4.39 % 4.25 % 4.43 %
Efficiency ratio 63.99 % 62.39 % 63.34 % 61.65 % 62.59 % 63.25 % 61.53 %
Full-time equivalent employees 2,542 2,575 2,489 2,490 2,501
 
 

COMMON STOCK PERFORMANCE
Market value-Close $ 18.15 $ 23.41 $ 23.42 $ 24.84 $ 21.74
Common book value $ 19.05 $ 18.60 $ 18.13 $ 17.98 $ 18.14
Tangible common book value $ 14.28 $ 13.82 $ 13.34 $ 13.17 $ 13.31
 

See Notes to Consolidated Financials
 
 
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2011
($ in thousands)
(unaudited)
 
Quarter Ended

NONPERFORMING ASSETS (1)
9/30/2011 6/30/2011 3/31/2011 12/31/2010 9/30/2010
Nonaccrual loans
Florida $ 27,263 $ 30,752 $ 44,548 $ 53,773 $ 65,759
Mississippi (2) 44,825 47,802 40,226 39,803 48,962
Tennessee (3) 14,575 17,564 13,886 14,703 9,207
Texas   12,915     24,900     28,130     34,644     35,388  
Total nonaccrual loans 99,578 121,018 126,790 142,923 159,316
Other real estate
Florida 29,949 33,823 31,339 32,370 31,665
Mississippi (2) 21,027 22,921 22,084 24,181 24,548
Tennessee (3) 17,940 15,760 16,920 16,407 16,456
Texas   20,681     17,495     18,855     13,746     12,053  
Total other real estate   89,597     89,999     89,198     86,704     84,722  
Total nonperforming assets $ 189,175   $ 211,017   $ 215,988   $ 229,627   $ 244,038  
 

LOANS PAST DUE OVER 90 DAYS (4)
LHFI $ 3,166   $ 6,993   $ 5,010   $ 3,608   $ 5,795  
 
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase) $ 32,956   $ 24,708   $ 19,808   $ 15,777   $ 50,246  
 
 
Quarter Ended Nine Months Ended

ALLOWANCE FOR LOAN LOSSES
9/30/2011 6/30/2011 3/31/2011 12/31/2010 9/30/2010 9/30/2011 9/30/2010
Beginning Balance $ 86,846 $ 93,398 $ 93,510 $ 94,458 $ 100,656 $ 93,510 $ 103,662
Provision for loan losses 7,978 8,116 7,537 11,794 12,259 23,631 37,752
Charge-offs (8,675 ) (17,505 ) (11,132 ) (15,883 ) (21,942 ) (37,312 ) (56,014 )
Recoveries   3,314     2,837     3,483     3,141     3,485     9,634     9,058  
Net charge-offs   (5,361 )   (14,668 )   (7,649 )   (12,742 )   (18,457 )   (27,678 )   (46,956 )
Ending Balance $ 89,463   $ 86,846   $ 93,398   $ 93,510   $ 94,458   $ 89,463   $ 94,458  
 

PROVISION FOR LOAN LOSSES
Florida $ 3,046 $ 5,633 $ 3,024 $ 7,473 $ 4,520 $ 11,703 $ 12,453
Mississippi (2) 3,732 1,331 1,071 2,673 4,398 6,134 11,576
Tennessee (3) (105 ) 157 1,619 910 (172 ) 1,671 4,702
Texas   1,305     995     1,823     738     3,513     4,123     9,021  
Total provision for loan losses $ 7,978   $ 8,116   $ 7,537   $ 11,794   $ 12,259   $ 23,631   $ 37,752  
 

NET CHARGE-OFFS
Florida $ 2,909 $ 7,880 $ 5,478 $ 4,830 $ 8,951 $ 16,267 $ 23,820
Mississippi (2) 1,988 3,401 410 4,422 3,879 5,799 14,541
Tennessee (3) 499 324 979 1,646 3,475 1,802 4,932
Texas   (35 )   3,063     782     1,844     2,152     3,810     3,663  
Total net charge-offs $ 5,361   $ 14,668   $ 7,649   $ 12,742   $ 18,457   $ 27,678   $ 46,956  
 

CREDIT QUALITY RATIOS (1)
Net charge offs/average loans 0.36 % 0.97 % 0.51 % 0.82 % 1.18 % 0.61 % 0.99 %
Provision for loan losses/average loans 0.53 % 0.54 % 0.50 % 0.75 % 0.78 % 0.52 % 0.80 %
Nonperforming loans/total loans (incl LHFS) 1.66 % 2.01 % 2.09 % 2.30 % 2.54 %
Nonperforming assets/total loans (incl LHFS) 3.16 % 3.50 % 3.55 % 3.70 % 3.89 %
Nonperforming assets/total loans (incl LHFS) +ORE 3.11 % 3.45 % 3.50 % 3.64 % 3.84 %
ALL/total loans (excl LHFS) 1.55 % 1.47 % 1.57 % 1.54 % 1.57 %
ALL-commercial/total commercial loans 1.94 % 1.84 % 1.98 % 1.94 % 1.97 %
ALL-consumer/total consumer and home mortgage loans 0.76 % 0.76 % 0.76 % 0.78 % 0.81 %
ALL/nonperforming loans 89.84 % 71.76 % 73.66 % 65.43 % 59.29 %

ALL/nonperforming loans - (excl impaired loans)
248.82 % 181.95 % 215.40 % 188.11 % 140.94 %
 

CAPITAL RATIOS
Total equity/total assets 12.59 % 12.30 % 12.19 % 12.03 % 12.31 %
Common equity/total assets 12.59 % 12.30 % 12.19 % 12.03 % 12.31 %
Tangible common equity/tangible assets 9.74 % 9.43 % 9.27 % 9.11 % 9.34 %
Tangible common equity/risk-weighted assets 14.04 % 13.51 % 13.06 % 12.62 % 12.78 %
Tier 1 leverage ratio 10.38 % 10.18 % 10.10 % 10.14 % 10.26 %
Tier 1 common risk-based capital ratio 13.84 % 13.55 % 13.32 % 12.87 % 12.72 %
Tier 1 risk-based capital ratio 14.76 % 14.46 % 14.24 % 13.77 % 13.75 %
Total risk-based capital ratio 16.78 % 16.47 % 16.25 % 15.77 % 15.75 %
 
(1) - Excludes Covered Assets (Loans and Other Real Estate)
(2) - Mississippi includes Central and Southern Mississippi Regions
(3) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
(4) - Excludes Covered Loans
 

See Notes to Consolidated Financials
 
 

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2011

($ in thousands)

(unaudited)
 

Note 1 – Business Combinations
 
On April 15, 2011, the Mississippi Department of Banking and Consumer Finance closed the Heritage Banking Group (Heritage), a 90-year old financial institution headquartered in Carthage Mississippi, and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. On the same date, Trustmark National Bank (TNB) entered into a purchase and assumption agreement with the FDIC in which TNB agreed to assume all of the deposits and purchased essentially all of the assets of Heritage. The FDIC and TNB entered into a loss-share transaction on approximately $151.9 million of Heritage assets, which covers substantially all loans and other real estate. Under the loss share agreement, the FDIC will cover 80% of covered loan and other real estate losses incurred. Because of the loss protection provided by the FDIC, the risk characteristics of the Heritage loans and other real estate are significantly different from those assets not covered by this agreement. As a result, Trustmark will refer to loans and other real estate subject to the loss share agreements as “covered” while loans and other real estate that are not subject to the loss share agreement will be referred to as “excluding covered.” The loss share agreements applicable to single family residential mortgage loans and related foreclosed real estate provide for FDIC loss sharing and TNB’s reimbursement to the FDIC for recoveries of covered losses for ten years from the date on which the loss share agreement was entered. The loss share agreements applicable to commercial loans and related foreclosed real estate provide for FDIC loss sharing for five years from the date on which the loss share agreement was entered and TNB’s reimbursement to the FDIC for recoveries of covered losses for an additional three years thereafter.
 
The assets purchased and liabilities assumed for the Heritage acquisition have been accounted for under the acquisition method of accounting (formerly the purchase method). The assets and liabilities, both tangible and intangible, are recorded at their estimated fair values as of the acquisition date. The fair value amounts are subject to change for up to one year after the closing date as additional information relating to closing date fair values becomes available. The amounts are also subject to adjustments based upon final settlement with the FDIC.
 
The statement of assets purchased and liabilities assumed in the Heritage acquisition are presented below at their estimated fair values as of the acquisition date of April 15, 2011 ($ in thousands):
 
Assets        
Cash and due from banks $ 50,447
Federal funds sold 1,000
Securities available for sale 6,389
LHFI, excluding covered loans 9,644
Covered loans 97,770
Premises and equipment, net 55
Identifiable intangible assets 902
Covered other real estate 7,485
FDIC indemnification asset 33,333
Other assets   218  
Total Assets   207,243  
 
Liabilities
Deposits 204,349
Short-term borrowings 23,157
Other liabilities   730  
Total Liabilities   228,236  
 
Net assets acquired at fair value (20,993 )
 
Cash received on acquisition   28,449  
 
Bargain purchase gain 7,456
 
Income taxes 2,852
 
Bargain purchase gain, net of taxes $ 4,604  
 

The bargain purchase gain represents the net of the estimated fair value of the assets acquired and liabilities assumed and is influenced significantly by the FDIC-assisted transaction process. Under the FDIC-assisted transaction process, only certain assets and liabilities are transferred to the acquirer and, depending on the nature and amount of the acquirer’s bid, the FDIC may be required to make a cash payment to the acquirer. The pretax gain of $7.5 million recognized by Trustmark is considered a bargain purchase transaction under FASB ASC Topic 805, “Business Combinations.” The gain was recognized as other noninterest income in Trustmark’s consolidated statements of income for the three and six months ended June 30, 2011.

The operations of Heritage are included in Trustmark’s operating results from April 15, 2011, and added revenue of $11.1 million and net income available to common shareholders of $5.9 million through September 30, 2011. Such operating results are not necessarily indicative of future operating results.

 

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 ($ in thousands):
 
    9/30/2011     6/30/2011     3/31/2011     12/31/2010     9/30/2010

SECURITIES AVAILABLE FOR SALE
U.S. Government agency obligations
Issued by U.S. Government agencies $ 5 $ 7 $ 10 $ 12 $ 14
Issued by U.S. Government sponsored agencies 61,870 102,940 136,168 122,023 149,588
Obligations of states and political subdivisions 207,781 186,034 161,909 159,637 148,772
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA 14,637 14,990 12,079 12,442 13,273
Issued by FNMA and FHLMC 400,589 413,493 417,022 426,504 243,220
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 1,579,698 1,556,676 1,486,872 1,400,816 1,366,373
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 212,325 124,902 95,644 55,815 41,359
Corporate debt securities   -   -   -   -   6,025
Total securities available for sale $ 2,476,905 $ 2,399,042 $ 2,309,704 $ 2,177,249 $ 1,968,624
 

SECURITIES HELD TO MATURITY
Obligations of states and political subdivisions $ 43,246 $ 46,931 $ 49,129 $ 53,246 $ 61,139
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA 5,291 5,547 5,650 6,058 6,462
Issued by FNMA and FHLMC 753 753 759 763 766
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 19,534 32,456 52,272 78,526 98,217
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA   2,222   2,236   2,244   2,254   2,265
Total securities held to maturity $ 71,046 $ 87,923 $ 110,054 $ 140,847 $ 168,849
 

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 3 – Loan Composition
 

LHFI BY TYPE (excluding covered loans)
    9/30/2011     6/30/2011     3/31/2011     12/31/2010     9/30/2010
Loans secured by real estate:
Construction, land development and other land loans $ 481,821 $ 510,867 $ 552,956 $ 583,316 $ 615,554
Secured by 1-4 family residential properties 1,717,366 1,737,744 1,737,018 1,732,056 1,672,199
Secured by nonfarm, nonresidential properties 1,437,573 1,457,328 1,488,711 1,498,108 1,531,953
Other real estate secured 207,984 208,797 216,986 231,963 203,931
Commercial and industrial loans 1,083,753 1,082,127 1,082,258 1,068,369 1,016,292
Consumer loans 268,002 332,032 357,870 402,165 444,927
Other loans   587,213     577,421     528,290     544,265     513,848  
LHFI, excluding covered loans 5,783,712 5,906,316 5,964,089 6,060,242 5,998,704
Allowance for loan losses   (89,463 )   (86,846 )   (93,398 )   (93,510 )   (94,458 )
Net LHFI, excluding covered loans $ 5,694,249   $ 5,819,470   $ 5,870,691   $ 5,966,732   $ 5,904,246  
 
 

COVERED LOANS BY TYPE
  9/30/2011     6/30/2011     3/31/2011     12/31/2010     9/30/2010  
Loans secured by real estate:
Construction, land development and other land loans $ 4,024 $ 8,477 $ - $ - $ -
Secured by 1-4 family residential properties 32,735 32,124 - - -
Secured by nonfarm, nonresidential properties 33,601 35,846 - - -
Other real estate secured 5,294 5,363 - - -
Commercial and industrial loans 1,772 5,570 - - -
Consumer loans 158 163 - - -
Other loans   1,480     1,015     -     -     -  
Covered loans $ 79,064   $ 88,558   $ -   $ -   $ -  
 
Note 3 – Loan Composition (continued)
 
    September 30, 2011

LHFI - COMPOSITION BY REGION (1)
Total     Florida    

Mississippi(Central andSouthernRegions)
   

Tennessee(Memphis, TNand NorthernMS Regions)
    Texas
Loans secured by real estate:
Construction, land development and other land loans $ 481,821 $ 101,450 $ 232,555 $ 32,155 $ 115,661
Secured by 1-4 family residential properties 1,717,366 62,236 1,477,200 146,086 31,844
Secured by nonfarm, nonresidential properties 1,437,573 160,701 779,899 173,977 322,996
Other real estate secured 207,984 11,046 149,807 7,410 39,721
Commercial and industrial loans 1,083,753 12,670 781,978 81,902 207,203
Consumer loans 268,002 1,241 239,837 21,752 5,172
Other loans   587,213   27,252   492,283   27,976   39,702
Loans $ 5,783,712 $ 376,596 $ 4,153,559 $ 491,258 $ 762,299
 
 

CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION (1)
Lots $ 68,439 $ 41,099 $ 20,682 $ 1,717 $ 4,941
Development 119,820 11,885 58,492 5,751 43,692
Unimproved land 181,649 47,303 82,084 18,825 33,437
1-4 family construction 74,398 872 54,510 3,771 15,245
Other construction   37,515   291   16,787   2,091   18,346
Construction, land development and other land loans $ 481,821 $ 101,450 $ 232,555 $ 32,155 $ 115,661
 
 

LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION (1)
Income producing:
Retail $ 159,569 $ 39,954 $ 63,786 $ 24,366 $ 31,463
Office 147,390 41,795 76,938 11,702 16,955
Nursing homes/assisted living 124,533 - 114,673 4,510 5,350
Hotel/motel 79,150 10,869 29,946 10,808 27,527
Industrial 32,266 8,879 6,182 450 16,755
Health care 12,978 - 11,880 50 1,048
Convenience stores 9,878 203 4,998 2,337 2,340
Other   164,536   13,806   72,629   13,509   64,592
Total income producing loans 730,300 115,506 381,032 67,732 166,030
 
Owner-occupied:
Office 112,458 16,396 60,061 9,878 26,123
Churches 91,303 2,119 51,746 32,499 4,939
Industrial warehouses 90,182 3,521 51,166 502 34,993
Health care 84,395 10,761 52,602 14,236 6,796
Convenience stores 64,844 1,246 36,454 2,634 24,510
Retail 34,271 4,061 21,408 1,855 6,947
Restaurants 33,510 631 25,298 5,913 1,668
Auto dealerships 18,689 549 14,422 1,981 1,737
Other   177,621   5,911   85,710   36,747   49,253
Total owner-occupied loans 707,273 45,195 398,867 106,245 156,966
         
Loans secured by nonfarm, nonresidential properties $ 1,437,573 $ 160,701 $ 779,899 $ 173,977 $ 322,996
 
(1) Excludes covered loans.
 
Note 3 – Loan Composition (continued)
 
    September 30, 2011
                   
Classified (3)

FLORIDA CREDIT QUALITY
Total Loans

CriticizedLoans (1)

Special Mention(2)
Accruing

NonimpairedNonaccrual

ImpairedNonaccrual (4)
Construction, land development and other land loans:
Lots $ 41,099 $ 13,991 $ 2,347 $ 8,005 $ 1,940 $ 1,699
Development 11,885 2,356 - - 85 2,271
Unimproved land 47,303 29,982 20,114 4,768 447 4,653
1-4 family construction 872 - - - - -
Other construction   291   291   -     291   -   -
Construction, land development and other land loans 101,450 46,620 22,461 13,064 2,472 8,623
Commercial, commercial real estate and consumer   275,146   56,626   8,472     31,986   3,303   12,865
 
Total Florida loans $ 376,596 $ 103,246 $ 30,933   $ 45,050 $ 5,775 $ 21,488
 
 

FLORIDA LOAN LOSS RESERVES BY LOAN TYPE
Total Loans

Loan LossReserves

Loan LossReserve % ofTotal Loans
Construction, land development and other land loans:
Lots $ 41,099 $ 3,956 9.63 %
Development 11,885 952 8.01 %
Unimproved land 47,303 6,365 13.46 %
1-4 family construction 872 28 3.21 %
Other construction   291   73 25.09 %
Construction, land development and other land loans 101,450 11,374 11.21 %
Commercial, commercial real estate and consumer   275,146   7,722 2.81 %
 
Total Florida loans $ 376,596 $ 19,096 5.07 %
 

(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 $500 thousand 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. At the time 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. However, as subsequent events dictate and estimated net realizable values decline, required reserves are established.
 

LOAN COMPOSITION - FLORIDA
    9/30/2011     6/30/2011     3/31/2011     12/31/2010     9/30/2010
Loans secured by real estate:
Construction, land development and other land loans $ 101,450 $ 111,131 $ 122,445 $ 132,021 $ 145,907
Secured by 1-4 family residential properties 62,236 65,532 69,552 72,114 73,738
Secured by nonfarm, nonresidential properties 160,701 174,655 177,943 183,250 184,992
Other real estate secured 11,046 12,852 13,472 14,038 12,223
Commercial and industrial loans 12,670 14,267 14,774 16,053 17,512
Consumer loans 1,241 1,256 1,476 1,487 1,636
Other loans   27,252   27,471   27,694   25,488   28,194
Loans $ 376,596 $ 407,164 $ 427,356 $ 444,451 $ 464,202
 
 

CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS - FLORIDA
Lots $ 41,099 $ 42,990 $ 44,742 $ 46,907 $ 48,700
Development 11,885 13,086 20,524 21,144 24,060
Unimproved land 47,303 49,910 52,177 57,811 61,676
1-4 family construction 872 1,130 1,078 2,277 7,864
Other construction   291   4,015   3,924   3,882   3,607
Construction, land development and other land loans $ 101,450 $ 111,131 $ 122,445 $ 132,021 $ 145,907
 

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     Nine Months Ended
9/30/2011     6/30/2011     3/31/2011     12/31/2010     9/30/2010 9/30/2011     9/30/2010
Securities – Taxable 3.26 % 3.69 % 3.77 % 3.90 % 4.11 % 3.57 % 4.44 %
Securities – Nontaxable 4.39 % 4.79 % 5.02 % 4.97 % 5.51 % 4.71 % 5.66 %
Securities – Total 3.35 % 3.77 % 3.87 % 3.99 % 4.22 % 3.66 % 4.54 %
Loans 5.18 % 5.25 % 5.25 % 5.29 % 5.31 % 5.23 % 5.33 %
FF Sold & Rev Repo 0.34 % 0.41 % 0.39 % 0.44 % 0.42 % 0.38 % 0.37 %
Other Earning Assets 4.04 % 4.17 % 2.81 % 3.15 % 3.92 % 3.56 % 3.66 %
Total Earning Assets 4.66 % 4.83 % 4.86 % 4.94 % 5.04 % 4.78 % 5.14 %
 
Interest-bearing Deposits 0.65 % 0.66 % 0.70 % 0.77 % 0.84 % 0.67 % 0.92 %
FF Pch & Repo 0.19 % 0.22 % 0.21 % 0.23 % 0.22 % 0.21 % 0.19 %
Other Borrowings 1.67 % 2.76 % 1.72 % 1.65 % 2.01 % 1.99 % 1.87 %
Total Interest-bearing Liabilities 0.65 % 0.70 % 0.71 % 0.76 % 0.85 % 0.69 % 0.91 %
 
Net interest margin 4.17 % 4.29 % 4.30 % 4.36 % 4.39 % 4.25 % 4.43 %
 

During the third quarter of 2011, the net interest margin declined 12 basis points to 4.17%, from 4.29% during the second quarter of 2011. The decline is due to the downward repricing of Trustmark's earning assets, primarily securities, which were only partially offset by a modest decrease in liability costs.

Note 5 – Mortgage Banking

Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and exchange-traded option contracts, to achieve a fair value return that offsets the changes in fair value of MSR attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting. Changes in the fair value of these exchange-traded derivative instruments are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of MSR. The MSR fair value represents the effect of present value decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the total hedge cost to the changes in the fair value of the MSR asset attributable to interest rate changes. The impact of this strategy resulted in a net positive ineffectiveness of $2.8 million and $2.9 million for the quarters ended September 30, 2011 and 2010, respectively.
 

The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements:
 
    Quarter Ended     Nine Months Ended
9/30/2011     6/30/2011     3/31/2011     12/31/2010     9/30/2010 9/30/2011     9/30/2010
Mortgage servicing income, net $ 3,738 $ 3,713 $ 3,614 $ 3,577 $ 3,406 $ 11,065 $ 10,350
Change in fair value-MSR from runoff (2,039 ) (1,455 ) (1,291 ) (2,506 ) (2,255 ) (4,785 ) (4,799 )
Gain on sales of loans, net 2,366 1,852 3,101 5,754 3,911 7,319 9,563
Other, net   2,926     448     (965 )   (2,016 )   1,919     2,409     2,110  
Mortgage banking income before hedge ineffectiveness   6,991     4,558     4,459     4,809     6,981     16,008     17,224  
Change in fair value-MSR from market changes (7,614 ) (4,931 ) 257 5,870 (3,115 ) (12,288 ) (14,813 )
Change in fair value of derivatives   10,406     6,642     6     (6,177 )   5,995     17,054     22,432  
Net positive (negative) hedge ineffectiveness   2,792     1,711     263     (307 )   2,880     4,766     7,619  
Mortgage banking, net $ 9,783   $ 6,269   $ 4,722   $ 4,502   $ 9,861   $ 20,774   $ 24,843  
 

During the first quarter of 2010, Trustmark completed the final settlement of the sale of approximately $920.9 million in mortgages serviced for others, which reduced Trustmark’s MSR by approximately $8.5 million. In addition, during December of 2010, Trustmark purchased approximately $53.9 million of GNMA serviced loans, which were subsequently sold to a third party. Trustmark will retain the servicing for these loans, which are fully guaranteed by FHA/VA. The effect of these transactions did not have a material impact on Trustmark's results of operations.

Note 6 – Non-GAAP Financial Measures

In addition to capital ratios defined by generally accepted accounting principles (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 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.

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 consolidated financial statements in their entirety and not to rely on any single financial measure. The following table reconciles Trustmark’s calculation of these measures to amounts reported under GAAP.
 
Note 6 - Non-GAAP Financial Measures (continued)
 
    Quarter Ended     Nine Months Ended
9/30/2011     6/30/2011     3/31/2011     12/31/2010     9/30/2010 9/30/2011     9/30/2010

TANGIBLE COMMON EQUITY
AVERAGE BALANCES
Total shareholders' common equity $ 1,211,434 $ 1,181,776 $ 1,159,898 $ 1,160,058 $ 1,155,054 $ 1,184,558 $ 1,139,231

Less: Goodwill
(291,104 ) (291,104 ) (291,104 ) (291,104 ) (291,104 ) (291,104 ) (291,104 )
Identifiable intangible assets   (15,343 )   (15,976 )   (16,003 )   (16,835 )   (17,716 )   (15,772 )   (18,594 )
Total average tangible common equity $ 904,987   $ 874,696   $ 852,791   $ 852,119   $ 846,234   $ 877,682   $ 829,533  
 
PERIOD END BALANCES
Total shareholders' common equity $ 1,221,606 $ 1,192,770 $ 1,160,229 $ 1,149,484 $ 1,158,792

Less: Goodwill
(291,104 ) (291,104 ) (291,104 ) (291,104 ) (291,104 )
Identifiable intangible assets   (14,861 )   (15,651 )   (15,532 )   (16,306 )   (17,181 )
Total tangible common equity (a) $ 915,641   $ 886,015   $ 853,593   $ 842,074   $ 850,507  
 

TANGIBLE ASSETS
Total assets $ 9,705,291 $ 9,698,451 $ 9,514,462 $ 9,553,902 $ 9,416,905

Less: Goodwill
(291,104 ) (291,104 ) (291,104 ) (291,104 ) (291,104 )
Identifiable intangible assets   (14,861 )   (15,651 )   (15,532 )   (16,306 )   (17,181 )
Total tangible assets (b) $ 9,399,326   $ 9,391,696   $ 9,207,826   $ 9,246,492   $ 9,108,620  
 
Risk-weighted assets (c) $ 6,522,468   $ 6,556,690   $ 6,536,056   $ 6,672,174   $ 6,653,479  
 

NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income available to common shareholders $ 26,968 $ 31,602 $ 24,013 $ 25,160 $ 25,860 $ 82,583 $ 75,476

Plus: Intangible amortization net of tax
  489     483     480     538     545     1,452     1,635  
Net income adjusted for intangible amortization $ 27,457   $ 32,085   $ 24,493   $ 25,698   $ 26,405   $ 84,035   $ 77,111  
 
Period end common shares outstanding (d)   64,119,235     64,119,235     63,987,064     63,917,591     63,885,959  
 

TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible common equity 1 12.04 % 14.71 % 11.65 % 11.96 % 12.38 % 12.80 % 12.43 %
Tangible common equity/tangible assets (a)/(b) 9.74 % 9.43 % 9.27 % 9.11 % 9.34 %
Tangible common equity/risk-weighted assets (a)/(c) 14.04 % 13.51 % 13.06 % 12.62 % 12.78 %
Tangible common book value (a)/(d)*1,000 $ 14.28 $ 13.82 $ 13.34 $ 13.17 $ 13.31
 

TIER 1 COMMON RISK-BASED CAPITAL
Total shareholders' equity $ 1,221,606 $ 1,192,770 $ 1,160,229 $ 1,149,484 $ 1,158,792
Eliminate qualifying AOCI (19,606 ) (3,674 ) 11,623 11,426 (9,648 )
Qualifying tier 1 capital 60,000 60,000 60,000 60,000 68,000
Disallowed goodwill (291,104 ) (291,104 ) (291,104 ) (291,104 ) (291,104 )
Adj to goodwill allowed for deferred taxes 11,273 10,920 10,568 10,215 9,863
Other disallowed intangibles (14,861 ) (15,651 ) (15,532 ) (16,306 ) (17,181 )
Disallowed servicing intangible   (4,366 )   (5,011 )   (5,360 )   (5,115 )   (4,197 )
Total tier 1 capital $ 962,942 $ 948,250 $ 930,424 $ 918,600 $ 914,525

Less: Qualifying tier 1 capital
  (60,000 )   (60,000 )   (60,000 )   (60,000 )   (68,000 )
Total tier 1 common capital (e) $ 902,942   $ 888,250   $ 870,424   $ 858,600   $ 846,525  
 
Tier 1 common risk-based capital ratio (e)/(c) 13.84 % 13.55 % 13.32 % 12.87 % 12.72 %
 
1 Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible common equity
 

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