Trustmark Corporation (NASDAQ:TRMK) reported net income of $33.6 million in the third quarter of 2014, which represented diluted earnings per share of $0.50, an increase of 2.0% from both the prior quarter and third quarter of 2013. Trustmark's performance during the third quarter of 2014 produced a return on average tangible equity of 13.70% and a return on average assets of 1.10%. During the first nine months of 2014, Trustmark's net income totaled $95.5 million, which represented diluted earnings per share of $1.41, an increase of 6.0% from the prior year. Trustmark's Board of Directors declared a quarterly cash dividend of $0.23 per share payable December 15, 2014, to shareholders of record on December 1, 2014.

Printer friendly version of earnings release with consolidated financial statements and notes: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50970499&lang=en.

Gerard R. Host, President and CEO, stated, "Trustmark continued to achieve solid financial results in the third quarter, including the sixth consecutive quarter of growth in our legacy loan portfolio, significant growth in our insurance and wealth management businesses, and improvement in our efficiency ratio. Thanks to our associates, solid profitability and strong capital base, Trustmark remains well-positioned to continue meeting the needs of our customers and creating value for our shareholders."

Balance Sheet Management
  • Loans held for investment increased at an annualized rate of 9.6% in the third quarter
  • Average noninterest-bearing deposits increased $97.8 million from the prior quarter to represent 28.6% of average total deposits

Loans held for investment totaled $6.3 billion at September 30, 2014, an increase of $146.7 million, or 2.4%, from the prior quarter and $637.0 million, or 11.2%, from one year earlier. Construction, land development and other land loans increased $49.1 million during the quarter; this growth was driven entirely by commercial and residential construction primarily in Trustmark's Texas, Mississippi and Alabama markets. The single-family mortgage portfolio increased $43.6 million primarily as a result of growth in Trustmark's Mississippi and Alabama markets. Loans secured by nonfarm and nonresidential real estate increased $16.4 million as growth in owner occupied real estate in Trustmark's Mississippi and Alabama markets was offset in part by declines in Texas, Florida and Tennessee. Other real estate secured loans, which include multifamily projects, declined $10.6 million reflecting reductions primarily in Trustmark's Mississippi and Tennessee markets. Commercial and industrial loans remained relatively stable as growth in Alabama and Tennessee was offset by reductions in Texas and Mississippi. Consumer loans expanded $3.4 million due principally to growth in Trustmark's Mississippi market. Other loans, which include lending to states and municipalities, nonprofits and REITS, increased $48.0 million during the third quarter due to growth in Trustmark's Mississippi, Alabama and Tennessee markets.

Acquired loans totaled $592.1 million at September 30, 2014, down $54.4 million from the prior quarter. Collectively, loans held for investment and acquired loans totaled $6.9 billion at September 30, 2014, up $92.3 million, or 5.6% annualized, from the prior quarter.

Average earning assets during the third quarter increased $149.9 million relative to the prior quarter principally due to increased balances of loans held for investment. Average deposits in the third quarter declined $204.5 million as the $97.8 million increase in average noninterest-bearing deposits was more than offset by a decline in average interest-bearing deposits of $302.3 million.

Trustmark's capital position remained solid, reflecting the consistent profitability of its diversified financial services businesses. At September 30, 2014, Trustmark's tangible equity to tangible assets ratio was 8.67%, up 16 basis points from the prior quarter, while the total risk-based capital ratio expanded 16 basis points to 14.70%. Trustmark's solid capital base provides the opportunity to support organic loan growth in an improving economy and enhance long-term shareholder value.

Credit Quality
  • Other real estate declined 9.3% and 16.6% from the prior quarter and year, respectively
  • Allowance for loan losses represented 178.81% of nonperforming loans, excluding impaired loans

Nonperforming loans totaled $88.3 million at September 30, 2014, an increase of $17.2 million from the prior quarter and $14.9 million from one year earlier. The increase in nonperforming loans was primarily the result of two substandard credit relationships totaling $16.0 million migrating to nonaccrual status. Other real estate totaled $97.0 million, a decrease of $9.9 million, or 9.3%, from the prior quarter. Relative to levels one year earlier, other real estate decreased $19.3 million, or 16.6%. Collectively, nonperforming assets totaled $185.4 million, an increase of $7.3 million from the prior quarter and a decrease of $4.4 million from one year earlier.

Trustmark's net recovery position during the third quarter of 2014 totaled $428 thousand and represented -0.03% of average loans. This compares favorably to net charge-offs in the prior quarter of $1.2 million, or 0.08% of average loans, and to net charge-offs in the third quarter of the prior year of $569 thousand, or 0.04% of average loans. During the third quarter of 2014, the provision for loan losses for loans held for investment totaled $3.1 million, which represented specific reserves related to the aforementioned credit relationships that migrated to nonaccrual status.

Allocation of Trustmark's $70.1 million allowance for loan losses represented 1.26% of commercial loans and 0.69% of consumer and home mortgage loans, resulting in an allowance to total loans held for investment of 1.11% at September 30, 2014, which represents a level management considers commensurate with the inherent risk in the loan portfolio. The allowance for loan losses represented 178.81% of nonperforming loans, excluding impaired loans.

All of the above credit quality metrics exclude acquired loans and other real estate covered by FDIC loss-share agreement.

Revenue Generation
  • Total revenue remained stable at $149.1 million despite the mandated reduction in interchange income
  • Insurance and wealth management revenue expanded 11.3% and 4.3%, respectively, from the prior quarter

Net interest income (FTE) in the third quarter totaled $110.1 million, resulting in a net interest margin of 4.14%. Relative to the prior quarter, interest income (FTE) increased $662 thousand due principally to additional interest and fees on loans held for investment. The yield on acquired loans totaled 14.98% and included recoveries from settlement of debt of $8.7 million, which represented approximately 5.64% of the total acquired annualized loan yield in the third quarter. Excluding acquired loans, the net interest margin in the third quarter totaled 3.47%, down eight basis points from the prior quarter, reflecting declining yields on loans held for investment and loans held for sale.

Noninterest income totaled $42.9 million in the third quarter, down $1.2 million from the prior quarter. Bank card and other fees totaled $7.3 million, a decline of $2.6 million, or 26.4%, from the prior quarter, which reflected the impact of decreased interchange income as a result of Trustmark becoming subject to debit card interchange fee standards effective July 1, 2014. Service charges on deposit accounts totaled $12.7 million in the third quarter, an increase of $897 thousand, or 7.6%, from the prior quarter driven principally by seasonal factors.

As a result of increased property and casualty business, insurance revenue in the third quarter totaled $9.2 million, an increase of 11.3% from the prior quarter. Wealth management revenue totaled $8.0 million, up 4.3% from the prior quarter, due principally to increased brokerage activity.

Mortgage loan production in the third quarter totaled $345.4 million, an increase of 7.2% from the prior quarter, due in part to seasonal factors as well as lower mortgage rates and expanded originations in Trustmark's Alabama markets. During the third quarter, mortgage banking revenue totaled $5.8 million, reflecting increased mortgage servicing income, expanded secondary marketing gains, and stable mortgage servicing hedge ineffectiveness, which was offset in part by a decline in the fair value of mortgage loans held for sale.

Noninterest Expense
  • Routine noninterest expense remained well-controlled
  • Efficiency ratio improved to 62.80%

Noninterest expense in the third quarter declined $2.6 million, or 2.5%, from the prior quarter to total $100.2 million. Excluding ORE and intangible amortization of $3.1 million, noninterest expense during the third quarter remained stable at $97.1 million. Salaries and benefits expense remained well-controlled and totaled $56.7 million in the third quarter, up $541 thousand, or 1.0%, from the prior quarter. Services and fees remained stable at $14.5 million while ORE and foreclosure expense declined $2.9 million from the prior quarter to total $930 thousand. Equipment expense declined $461 thousand, or 7.5%, from the prior quarter to $5.7 million. Net occupancy expense increased $404 thousand to $6.8 million during the quarter while other expense declined $267 thousand to $13.0 million.

Appointment of Chief Administrative Officer

During the third quarter, James M. Outlaw was named Executive Vice President and Chief Administrative Officer of Trustmark National Bank. In this newly created position, Outlaw is responsible for coordinating resources within the organization that support the revenue generating activities of various lines of business and overseeing the Risk Management, Technology, Operations, Human Resources and Corporate Facilities areas of the organization. In his 18-year tenure with Trustmark, Outlaw served as Chief Information Officer prior to serving as President and Chief Operating Officer of Trustmark's banking operations in Texas. Host commented, "I am delighted that Jim has returned to Jackson as Chief Administrative Officer, overseeing all operational and administrative functions across our organization. His proven leadership and broad experience, both on the front line and in the back room, will support our efforts to streamline processes to improve efficiency and profitability across the organization."

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, October 29, 2014, 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) 317-3051 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com, which will also include a slide presentation Management will review during the conference call. A replay of the conference call will also be available through Wednesday, November 12, 2014, in archived format at the same web address or by calling (877) 344-7529, passcode 10008303.

Trustmark Corporation is a financial services company providing banking and financial solutions through 207 offices in Alabama, 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 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, 2014
($ in thousands)
(unaudited)
 
          Linked Quarter   Year over Year

QUARTERLY AVERAGE BALANCES
9/30/2014 6/30/2014 9/30/2013

$ Change
  % Change

$ Change
  % Change
Securities AFS-taxable $ 2,202,020 $ 2,205,352 $ 3,279,606 $ (3,332 ) -0.2 % $ (1,077,586 ) -32.9 %
Securities AFS-nontaxable 131,305 135,956 172,055 (4,651 ) -3.4 % (40,750 ) -23.7 %
Securities HTM-taxable 1,126,309 1,120,448 59,168 5,861 0.5 % 1,067,141 n/m
Securities HTM-nontaxable   43,114     43,551     11,024     (437 ) -1.0 %   32,090   n/m
Total securities   3,502,748     3,505,307     3,521,853     (2,559 ) -0.1 %   (19,105 ) -0.5 %
Loans (including loans held for sale) 6,387,251 6,160,781 5,784,170 226,470 3.7 % 603,081 10.4 %
Acquired loans:
Noncovered loans 585,675 664,733 888,883 (79,058 ) -11.9 % (303,208 ) -34.1 %
Covered loans 28,971 31,122 39,561 (2,151 ) -6.9 % (10,590 ) -26.8 %
Fed funds sold and rev repos 4,228 2,648 8,978 1,580 59.7 % (4,750 ) -52.9 %
Other earning assets   41,871     36,259     38,226     5,612   15.5 %   3,645   9.5 %
Total earning assets   10,550,744     10,400,850     10,281,671     149,894   1.4 %   269,073   2.6 %
Allowance for loan losses (78,227 ) (77,652 ) (79,696 ) (575 ) 0.7 % 1,469 -1.8 %
Cash and due from banks 272,925 304,441 272,320 (31,516 ) -10.4 % 605 0.2 %
Other assets   1,345,771     1,343,384     1,284,813     2,387   0.2 %   60,958   4.7 %
Total assets $ 12,091,213   $ 11,971,023   $ 11,759,108   $ 120,190   1.0 % $ 332,105   2.8 %
 
Interest-bearing demand deposits $ 1,808,710 $ 1,826,019 $ 1,842,379 $ (17,309 ) -0.9 % $ (33,669 ) -1.8 %
Savings deposits 3,050,743 3,260,634 2,995,110 (209,891 ) -6.4 % 55,633 1.9 %
Time deposits less than $100,000 1,187,794 1,225,706 1,380,954 (37,912 ) -3.1 % (193,160 ) -14.0 %
Time deposits of $100,000 or more   874,333     911,531     993,948     (37,198 ) -4.1 %   (119,615 ) -12.0 %
Total interest-bearing deposits 6,921,580 7,223,890 7,212,391 (302,310 ) -4.2 % (290,811 ) -4.0 %
Fed funds purchased and repos 540,870 387,289 364,446 153,581 39.7 % 176,424 48.4 %
Short-term borrowings 181,114 59,465 59,324 121,649 n/m 121,790 n/m
Long-term FHLB advances 8,050 8,291 8,620 (241 ) -2.9 % (570 ) -6.6 %
Subordinated notes 49,923 49,915 49,890 8 0.0 % 33 0.1 %
Junior subordinated debt securities   61,856     61,856     61,856     -   0.0 %   -   0.0 %
Total interest-bearing liabilities 7,763,393 7,790,706 7,756,527 (27,313 ) -0.4 % 6,866 0.1 %
Noninterest-bearing deposits 2,774,745 2,676,907 2,479,082 97,838 3.7 % 295,663 11.9 %
Other liabilities   140,218     111,170     190,143     29,048   26.1 %   (49,925 ) -26.3 %
Total liabilities 10,678,356 10,578,783 10,425,752 99,573 0.9 % 252,604 2.4 %
Shareholders' equity   1,412,857     1,392,240     1,333,356     20,617   1.5 %   79,501   6.0 %
Total liabilities and equity $ 12,091,213   $ 11,971,023   $ 11,759,108   $ 120,190   1.0 % $ 332,105   2.8 %
 
 
Linked Quarter Year over Year

PERIOD END BALANCES
9/30/2014 6/30/2014 9/30/2013

$ Change
% Change

$ Change
% Change
Cash and due from banks $ 237,497 $ 322,960 $ 335,695 $ (85,463 ) -26.5 % $ (98,198 ) -29.3 %
Fed funds sold and rev repos 4,013 5,000 7,867 (987 ) -19.7 % (3,854 ) -49.0 %
Securities available for sale 2,363,895 2,376,431 3,372,101 (12,536 ) -0.5 % (1,008,206 ) -29.9 %
Securities held to maturity 1,169,640 1,156,790 69,980 12,850 1.1 % 1,099,660 n/m
Loans held for sale (LHFS) 135,562 142,103 119,986 (6,541 ) -4.6 % 15,576 13.0 %
Loans held for investment (LHFI) 6,333,651 6,187,000 5,696,641 146,651 2.4 % 637,010 11.2 %
Allowance for loan losses   (70,134 )   (66,648 )   (68,632 )   (3,486 ) 5.2 %   (1,502 ) 2.2 %
Net LHFI 6,263,517 6,120,352 5,628,009 143,165 2.3 % 635,508 11.3 %
Acquired loans:
Noncovered loans 564,542 616,911 837,875 (52,369 ) -8.5 % (273,333 ) -32.6 %
Covered loans 27,607 29,628 37,250 (2,021 ) -6.8 % (9,643 ) -25.9 %
Allowance for loan losses, acquired loans   (11,949 )   (11,179 )   (5,333 )   (770 ) 6.9 %   (6,616 ) n/m
Net acquired loans   580,200     635,360     869,792     (55,160 ) -8.7 %   (289,592 ) -33.3 %
Net LHFI and acquired loans 6,843,717 6,755,712 6,497,801 88,005 1.3 % 345,916 5.3 %
Premises and equipment, net 200,474 201,639 208,837 (1,165 ) -0.6 % (8,363 ) -4.0 %
Mortgage servicing rights 67,090 65,049 63,150 2,041 3.1 % 3,940 6.2 %
Goodwill 365,500 365,500 372,463 - 0.0 % (6,963 ) -1.9 %
Identifiable intangible assets 35,357 37,506 44,424 (2,149 ) -5.7 % (9,067 ) -20.4 %
Other real estate, excluding covered other real estate 97,037 106,970 116,329 (9,933 ) -9.3 % (19,292 ) -16.6 %
Covered other real estate 4,146 3,872 5,092 274 7.1 % (946 ) -18.6 %
FDIC indemnification asset 8,154 10,866 17,085 (2,712 ) -25.0 % (8,931 ) -52.3 %
Other assets   564,234     569,598     574,387     (5,364 ) -0.9 %   (10,153 ) -1.8 %
Total assets $ 12,096,316   $ 12,119,996   $ 11,805,197   $ (23,680 ) -0.2 % $ 291,119   2.5 %
 
Deposits:
Noninterest-bearing $ 2,723,480 $ 2,729,199 $ 2,643,612 $ (5,719 ) -0.2 % $ 79,868 3.0 %
Interest-bearing   6,789,745     7,131,167     7,143,622     (341,422 ) -4.8 %   (353,877 ) -5.0 %
Total deposits 9,513,225 9,860,366 9,787,234 (347,141 ) -3.5 % (274,009 ) -2.8 %
Fed funds purchased and repos 607,851 559,316 342,465 48,535 8.7 % 265,386 77.5 %
Short-term borrowings 316,666 61,227 60,698 255,439 n/m 255,968 n/m
Long-term FHLB advances 8,003 8,236 8,562 (233 ) -2.8 % (559 ) -6.5 %
Subordinated notes 49,928 49,920 49,896 8 0.0 % 32 0.1 %
Junior subordinated debt securities 61,856 61,856 61,856 - 0.0 % - 0.0 %
Other liabilities   123,689     119,184     164,972     4,505   3.8 %   (41,283 ) -25.0 %
Total liabilities   10,681,218     10,720,105     10,475,683     (38,887 ) -0.4 %   205,535   2.0 %
Common stock 14,051 14,051 13,998 - 0.0 % 53 0.4 %
Capital surplus 354,251 353,196 343,759 1,055 0.3 % 10,492 3.1 %
Retained earnings 1,081,161 1,063,201 1,023,983 17,960 1.7 % 57,178 5.6 %

Accum other comprehensive loss, net of tax
  (34,365 )   (30,557 )   (52,226 )   (3,808 ) 12.5 %   17,861   -34.2 %
Total shareholders' equity   1,415,098     1,399,891     1,329,514     15,207   1.1 %   85,584   6.4 %
Total liabilities and equity $ 12,096,316   $ 12,119,996   $ 11,805,197   $ (23,680 ) -0.2 % $ 291,119   2.5 %
 
n/m - percentage changes greater than +/- 100% are considered not meaningful
 
 
 
 
 
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2014
($ in thousands except per share data)
(unaudited)
               
Quarter Ended Linked Quarter Year over Year

INCOME STATEMENTS
9/30/2014 6/30/2014 9/30/2013

$ Change
% Change

$ Change
% Change
Interest and fees on LHFS & LHFI-FTE $ 70,197 $ 69,618 $ 68,417 $ 579 0.8 % $ 1,780 2.6 %
Interest and fees on acquired loans 23,200 23,250 19,183 (50 ) -0.2 % 4,017 20.9 %
Interest on securities-taxable 19,712 19,522 18,654 190 1.0 % 1,058 5.7 %
Interest on securities-tax exempt-FTE 1,845 1,912 1,960 (67 ) -3.5 % (115 ) -5.9 %
Interest on fed funds sold and rev repos 9 6 8 3 50.0 % 1 12.5 %
Other interest income   386     379     372     7   1.8 %   14   3.8 %
Total interest income-FTE   115,349     114,687     108,594     662   0.6 %   6,755   6.2 %
Interest on deposits 3,606 3,970 4,970 (364 ) -9.2 % (1,364 ) -27.4 %
Interest on fed funds pch and repos 180 110 106 70 63.6 % 74 69.8 %
Other interest expense   1,425     1,375     1,389     50   3.6 %   36   2.6 %
Total interest expense   5,211     5,455     6,465     (244 ) -4.5 %   (1,254 ) -19.4 %
Net interest income-FTE 110,138 109,232 102,129 906 0.8 % 8,009 7.8 %
Provision for loan losses, LHFI 3,058 351 (3,624 ) 2,707 n/m 6,682 n/m
Provision for loan losses, acquired loans   1,145     3,784     3,292     (2,639 ) -69.7 %   (2,147 ) -65.2 %
Net interest income after provision-FTE   105,935     105,097     102,461     838   0.8 %   3,474   3.4 %
Service charges on deposit accounts 12,743 11,846 13,852 897 7.6 % (1,109 ) -8.0 %
Insurance commissions 9,240 8,300 8,227 940 11.3 % 1,013 12.3 %
Wealth management 8,038 7,710 7,520 328 4.3 % 518 6.9 %
Bank card and other fees 7,279 9,894 8,929 (2,615 ) -26.4 % (1,650 ) -18.5 %
Mortgage banking, net 5,842 6,191 8,440 (349 ) -5.6 % (2,598 ) -30.8 %
Other, net   (160 )   199     165     (359 ) n/m   (325 ) n/m
Nonint inc-excl sec gains (losses), net 42,982 44,140 47,133 (1,158 ) -2.6 % (4,151 ) -8.8 %
Security gains (losses), net   (89 )   -     -     (89 ) n/m   (89 ) n/m
Total noninterest income   42,893     44,140     47,133     (1,247 ) -2.8 %   (4,240 ) -9.0 %
Salaries and employee benefits 56,675 56,134 56,043 541 1.0 % 632 1.1 %
Services and fees 14,489 14,543 13,580 (54 ) -0.4 % 909 6.7 %
Net occupancy-premises 6,817 6,413 6,644 404 6.3 % 173 2.6 %
Equipment expense 5,675 6,136 6,271 (461 ) -7.5 % (596 ) -9.5 %
FDIC assessment expense 2,644 2,468 2,376 176 7.1 % 268 11.3 %
ORE/Foreclosure expense 930 3,836 3,079 (2,906 ) -75.8 % (2,149 ) -69.8 %
Other expense   12,964     13,231     13,531     (267 ) -2.0 %   (567 ) -4.2 %
Total noninterest expense   100,194     102,761     101,524     (2,567 ) -2.5 %   (1,330 ) -1.3 %
Income before income taxes and tax eq adj 48,634 46,476 48,070 2,158 4.6 % 564 1.2 %
Tax equivalent adjustment   3,909     3,944     3,700     (35 ) -0.9 %   209   5.6 %
Income before income taxes 44,725 42,532 44,370 2,193 5.2 % 355 0.8 %
Income taxes   11,136     9,635     11,336     1,501   15.6 %   (200 ) -1.8 %
Net income $ 33,589   $ 32,897   $ 33,034   $ 692   2.1 % $ 555   1.7 %
 
Per share data
Earnings per share - basic $ 0.50   $ 0.49   $ 0.49   $ 0.01   2.0 % $ 0.01   2.0 %
 
Earnings per share - diluted $ 0.50   $ 0.49   $ 0.49   $ 0.01   2.0 % $ 0.01   2.0 %
 
Dividends per share $ 0.23   $ 0.23   $ 0.23   $ -   0.0 % $ -   0.0 %
 
Weighted average shares outstanding
Basic   67,439,788     67,439,659     67,177,013  
 
Diluted   67,608,612     67,582,714     67,382,478  
 
Period end shares outstanding   67,439,788     67,439,788     67,181,694  
 

OTHER FINANCIAL DATA
Return on equity 9.43 % 9.48 % 9.83 %
Return on average tangible equity 13.70 % 13.90 % 14.92 %
Return on assets 1.10 % 1.10 % 1.11 %
Interest margin - Yield - FTE 4.34 % 4.42 % 4.19 %
Interest margin - Cost 0.20 % 0.21 % 0.25 %
Net interest margin - FTE 4.14 % 4.21 % 3.94 %
Efficiency ratio (1) 62.80 % 64.31 % 65.32 %
Full-time equivalent employees 3,067 3,095 3,110
 

STOCK PERFORMANCE
Market value-Close $ 23.04 $ 24.69 $ 25.60
Book value $ 20.98 $ 20.76 $ 19.79
Tangible book value $ 15.04 $ 14.78 $ 13.58
 
(1) - The efficiency ratio is noninterest expense to total net interest income (FTE) and noninterest income, excluding security gains (losses), amortization of partnership tax credits, amortization of purchased intangibles, and nonroutine income and expense items.
 
n/m - percentage changes greater than +/- 100% are considered not meaningful
 
 
 
 
 
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2014
($ in thousands)
(unaudited)
 
   

Quarter Ended
  Linked Quarter   Year over Year

NONPERFORMING ASSETS (1)
9/30/2014   6/30/2014   9/30/2013

$ Change
  % Change

$ Change
  % Change
Nonaccrual loans
Alabama $ 852 $ 80 $ 81 $ 772 n/m $ 771 n/m
Florida 10,986 11,041 14,619 (55 ) -0.5 % (3,633 ) -24.9 %
Mississippi (2) 65,751 49,430 43,132 16,321 33.0 % 22,619 52.4 %
Tennessee (3) 5,901 4,244 5,596 1,657 39.0 % 305 5.5 %
Texas   4,824     6,323     9,953     (1,499 ) -23.7 %   (5,129 ) -51.5 %
Total nonaccrual loans 88,314 71,118 73,381 17,196 24.2 % 14,933 20.3 %
Other real estate
Alabama 24,256 24,541 25,308 (285 ) -1.2 % (1,052 ) -4.2 %
Florida 36,608 43,207 39,198 (6,599 ) -15.3 % (2,590 ) -6.6 %
Mississippi (2) 16,419 18,723 25,439 (2,304 ) -12.3 % (9,020 ) -35.5 %
Tennessee (3) 11,347 12,073 14,615 (726 ) -6.0 % (3,268 ) -22.4 %
Texas   8,407     8,426     11,769     (19 ) -0.2 %   (3,362 ) -28.6 %
Total other real estate   97,037     106,970     116,329     (9,933 ) -9.3 %   (19,292 ) -16.6 %
Total nonperforming assets $ 185,351   $ 178,088   $ 189,710   $ 7,263   4.1 % $ (4,359 ) -2.3 %
 

LOANS PAST DUE OVER 90 DAYS (4)
LHFI $ 3,839   $ 1,936   $ 2,344   $ 1,903   98.3 % $ 1,495   63.8 %
 
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase) $ 24,979   $ 21,810   $ 18,432   $ 3,169   14.5 % $ 6,547   35.5 %
 
 
Quarter Ended Linked Quarter Year over Year

ALLOWANCE FOR LOAN LOSSES (4)
9/30/2014 6/30/2014 9/30/2013

$ Change
% Change

$ Change
% Change
Beginning Balance $ 66,648 $ 67,518 $ 72,825 $ (870 ) -1.3 % $ (6,177 ) -8.5 %
Provision for loan losses 3,058 351 (3,624 ) 2,707 n/m 6,682 n/m
Charge-offs (3,216 ) (3,820 ) (3,817 ) 604 -15.8 % 601 -15.7 %
Recoveries   3,644     2,599     3,248     1,045   40.2 %   396   12.2 %
Net recoveries (charge-offs)   428     (1,221 )   (569 )   1,649   n/m   997   n/m
Ending Balance $ 70,134   $ 66,648   $ 68,632   $ 3,486   5.2 % $ 1,502   2.2 %
 

PROVISION FOR LOAN LOSSES (4)
Alabama $ 1,093 $ 696 $ 550 $ 397 57.0 % $ 543 98.7 %
Florida (147 ) (2,014 ) (2,642 ) 1,867 -92.7 % 2,495 -94.4 %
Mississippi (2) 4,679 2,877 (1,051 ) 1,802 62.6 % 5,730 n/m
Tennessee (3) 244 (277 ) (150 ) 521 n/m 394 n/m
Texas   (2,811 )   (931 )   (331 )   (1,880 ) n/m   (2,480 ) n/m
Total provision for loan losses $ 3,058   $ 351   $ (3,624 ) $ 2,707   n/m $ 6,682   n/m
 

NET CHARGE-OFFS (4)
Alabama $ 172 $ 84 $ 132 $ 88 n/m $ 40 30.3 %
Florida (89 ) (525 ) (138 ) 436 -83.0 % 49 -35.5 %
Mississippi (2) 462 1,518 375 (1,056 ) -69.6 % 87 23.2 %
Tennessee (3) 48 87 (153 ) (39 ) -44.8 % 201 n/m
Texas   (1,021 )   57     353     (1,078 ) n/m   (1,374 ) n/m
Total net (recoveries) charge-offs $ (428 ) $ 1,221   $ 569   $ (1,649 ) n/m $ (997 ) n/m
 

CREDIT QUALITY RATIOS (1)
Net charge offs/average loans -0.03 % 0.08 % 0.04 %
Provision for loan losses/average loans 0.19 % 0.02 % -0.25 %
Nonperforming loans/total loans (incl LHFS) 1.37 % 1.12 % 1.26 %
Nonperforming assets/total loans (incl LHFS) 2.87 % 2.81 % 3.26 %
Nonperforming assets/total loans (incl LHFS) +ORE 2.82 % 2.77 % 3.20 %
ALL/total loans (excl LHFS) 1.11 % 1.08 % 1.20 %
ALL-commercial/total commercial loans 1.26 % 1.20 % 1.39 %
ALL-consumer/total consumer and home mortgage loans 0.69 % 0.75 % 0.73 %
ALL/nonperforming loans 79.41 % 93.71 % 93.53 %

ALL/nonperforming loans - (excl impaired loans)
178.81 % 159.71 % 161.96 %
 

CAPITAL RATIOS
Total equity/total assets 11.70 % 11.55 % 11.26 %
Tangible equity/tangible assets 8.67 % 8.51 % 8.01 %
Tangible equity/risk-weighted assets 12.24 % 12.19 % 11.66 %
Tier 1 leverage ratio 9.54 % 9.43 % 8.78 %
Tier 1 common risk-based capital ratio 12.74 % 12.61 % 11.92 %
Tier 1 risk-based capital ratio 13.47 % 13.34 % 12.69 %
Total risk-based capital ratio 14.70 % 14.54 % 14.02 %
 
(1) - Excludes Acquired Loans and Covered Other Real Estate
(2) - Mississippi includes Central and Southern Mississippi Regions
(3) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
(4) - Excludes Acquired Loans
 
n/m - percentage changes greater than +/- 100% are considered not meaningful
 
 
 
 
 
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2014
($ in thousands)
(unaudited)
    Quarter Ended   Nine Months Ended

AVERAGE BALANCES
9/30/2014   6/30/2014   3/31/2014   12/31/2013   9/30/2013 9/30/2014   9/30/2013
Securities AFS-taxable $ 2,202,020 $ 2,205,352 $ 2,136,392 $ 3,026,186 $ 3,279,606 $ 2,181,495 $ 3,126,539
Securities AFS-nontaxable 131,305 135,956 149,744 160,989 172,055 138,934 170,616
Securities HTM-taxable 1,126,309 1,120,448 1,118,747 265,792 59,168 1,121,862 55,865
Securities HTM-nontaxable   43,114     43,551     31,039     21,172     11,024     39,279     13,043  
Total securities   3,502,748     3,505,307     3,435,922     3,474,139     3,521,853     3,481,570     3,366,063  
Loans (including loans held for sale) 6,387,251 6,160,781 5,950,720 5,847,557 5,784,170 6,167,850 5,753,759
Acquired loans:
Noncovered loans 585,675 664,733 751,723 812,426 888,883 666,769 790,943
Covered loans 28,971 31,122 33,805 34,640 39,561 31,282 44,229
Fed funds sold and rev repos 4,228 2,648 6,460 11,094 8,978 4,437 7,477
Other earning assets   41,871     36,259     36,820     32,118     38,226     38,335     35,893  
Total earning assets   10,550,744     10,400,850     10,215,450     10,211,974     10,281,671     10,390,243     9,998,364  
Allowance for loan losses (78,227 ) (77,652 ) (79,736 ) (78,742 ) (79,696 ) (78,533 ) (83,547 )
Cash and due from banks 272,925 304,441 407,078 275,051 272,320 327,657 275,711
Other assets   1,345,771     1,343,384     1,376,024     1,360,712     1,284,813     1,354,948     1,260,227  
Total assets $ 12,091,213   $ 11,971,023   $ 11,918,816   $ 11,768,995   $ 11,759,108   $ 11,994,315   $ 11,450,755  
 
Interest-bearing demand deposits $ 1,808,710 $ 1,826,019 $ 1,900,504 $ 1,803,956 $ 1,842,379 $ 1,844,741 $ 1,786,215
Savings deposits 3,050,743 3,260,634 3,193,098 2,952,472 2,995,110 3,167,637 2,941,931
Time deposits less than $100,000 1,187,794 1,225,706 1,280,513 1,344,488 1,380,954 1,230,997 1,356,729
Time deposits of $100,000 or more   874,333     911,531     947,509     961,075     993,948     910,857     972,553  
Total interest-bearing deposits 6,921,580 7,223,890 7,321,624 7,061,991 7,212,391 7,154,232 7,057,428
Fed funds purchased and repos 540,870 387,289 282,816 361,758 364,446 404,604 315,113
Short-term borrowings 181,114 59,465 65,010 63,531 59,324 102,288 59,319
Long-term FHLB advances 8,050 8,291 8,406 8,507 8,620 8,248 7,606
Subordinated notes 49,923 49,915 49,907 49,898 49,890 49,915 49,882
Junior subordinated debt securities   61,856     61,856     61,856     61,856     61,856     61,856     74,043  
Total interest-bearing liabilities 7,763,393 7,790,706 7,789,619 7,607,541 7,756,527 7,781,143 7,563,391
Noninterest-bearing deposits 2,774,745 2,676,907 2,630,785 2,611,209 2,479,082 2,694,673 2,377,583
Other liabilities   140,218     111,170     130,749     203,270     190,143     127,414     175,344  
Total liabilities 10,678,356 10,578,783 10,551,153 10,422,020 10,425,752 10,603,230 10,116,318
Shareholders' equity   1,412,857     1,392,240     1,367,663     1,346,975     1,333,356     1,391,085     1,334,437  
Total liabilities and equity $ 12,091,213   $ 11,971,023   $ 11,918,816   $ 11,768,995   $ 11,759,108   $ 11,994,315   $ 11,450,755  
 
 

PERIOD END BALANCES
9/30/2014 6/30/2014 3/31/2014 12/31/2013 9/30/2013
Cash and due from banks $ 237,497 $ 322,960 $ 423,819 $ 345,761 $ 335,695
Fed funds sold and rev repos 4,013 5,000 - 7,253 7,867
Securities available for sale 2,363,895 2,376,431 2,382,441 2,194,154 3,372,101
Securities held to maturity 1,169,640 1,156,790 1,155,569 1,168,728 69,980
Loans held for sale (LHFS) 135,562 142,103 120,446 149,169 119,986
Loans held for investment (LHFI) 6,333,651 6,187,000 5,923,766 5,798,881 5,696,641
Allowance for loan losses   (70,134 )   (66,648 )   (67,518 )   (66,448 )   (68,632 )
Net LHFI 6,263,517 6,120,352 5,856,248 5,732,433 5,628,009
Acquired loans:
Noncovered loans 564,542 616,911 713,647 769,990 837,875
Covered loans 27,607 29,628 32,670 34,216 37,250
Allowance for loan losses, acquired loans   (11,949 )   (11,179 )   (10,540 )   (9,636 )   (5,333 )
Net acquired loans   580,200     635,360     735,777     794,570     869,792  
Net LHFI and acquired loans 6,843,717 6,755,712 6,592,025 6,527,003 6,497,801
Premises and equipment, net 200,474 201,639 203,771 207,283 208,837
Mortgage servicing rights 67,090 65,049 67,614 67,834 63,150
Goodwill 365,500 365,500 365,500 372,851 372,463
Identifiable intangible assets 35,357 37,506 39,697 41,990 44,424
Other real estate, excluding covered other real estate 97,037 106,970 111,536 106,539 116,329
Covered other real estate 4,146 3,872 4,759 5,108 5,092
FDIC indemnification asset 8,154 10,866 13,487 14,347 17,085
Other assets   564,234     569,598     576,390     582,363     574,387  
Total assets $ 12,096,316   $ 12,119,996   $ 12,057,054   $ 11,790,383   $ 11,805,197  
 
Deposits:
Noninterest-bearing $ 2,723,480 $ 2,729,199 $ 2,879,341 $ 2,663,503 $ 2,643,612
Interest-bearing   6,789,745     7,131,167     7,242,778     7,196,399     7,143,622  
Total deposits 9,513,225 9,860,366 10,122,119 9,859,902 9,787,234
Fed funds purchased and repos 607,851 559,316 259,341 251,587 342,465
Short-term borrowings 316,666 61,227 59,671 66,385 60,698
Long-term FHLB advances 8,003 8,236 8,341 8,458 8,562
Subordinated notes 49,928 49,920 49,912 49,904 49,896
Junior subordinated debt securities 61,856 61,856 61,856 61,856 61,856
Other liabilities   123,689     119,184     121,919     137,338     164,972  
Total liabilities   10,681,218     10,720,105     10,683,159     10,435,430     10,475,683  
Common stock 14,051 14,051 14,051 14,038 13,998
Capital surplus 354,251 353,196 352,402 349,680 343,759
Retained earnings 1,081,161 1,063,201 1,045,939 1,034,966 1,023,983

Accum other comprehensive loss, net of tax
  (34,365 )   (30,557 )   (38,497 )   (43,731 )   (52,226 )
Total shareholders' equity   1,415,098     1,399,891     1,373,895     1,354,953     1,329,514  
Total liabilities and equity $ 12,096,316   $ 12,119,996   $ 12,057,054   $ 11,790,383   $ 11,805,197  
 
 
 
 
 
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2014
($ in thousands except per share data)
(unaudited)
               
Quarter Ended Nine Months Ended

INCOME STATEMENTS
9/30/2014 6/30/2014 3/31/2014 12/31/2013 9/30/2013 9/30/2014 9/30/2013
Interest and fees on LHFS & LHFI-FTE $ 70,197 $ 69,618 $ 66,185 $ 67,038 $ 68,417 $ 206,000 $ 203,579
Interest and fees on acquired loans 23,200 23,250 16,786 23,384 19,183 63,236 52,952
Interest on securities-taxable 19,712 19,522 19,220 19,078 18,654 58,454 53,740
Interest on securities-tax exempt-FTE 1,845 1,912 1,920 1,963 1,960 5,677 5,952
Interest on fed funds sold and rev repos 9 6 5 14 8 20 17
Other interest income   386     379     375     367     372     1,140     1,099  
Total interest income-FTE   115,349     114,687     104,491     111,844     108,594     334,527     317,339  
Interest on deposits 3,606 3,970 4,365 4,768 4,970 11,941 14,950
Interest on fed funds pch and repos 180 110 76 104 106 366 275
Other interest expense   1,425     1,375     1,363     1,370     1,389     4,163     4,392  
Total interest expense   5,211     5,455     5,804     6,242     6,465     16,470     19,617  
Net interest income-FTE 110,138 109,232 98,687 105,602 102,129 318,057 297,722
Provision for loan losses, LHFI 3,058 351 (805 ) (1,983 ) (3,624 ) 2,604 (11,438 )
Provision for loan losses, acquired loans   1,145     3,784     63     4,169     3,292     4,992     1,870  
Net interest income after provision-FTE   105,935     105,097     99,429     103,416     102,461     310,461     307,290  
Service charges on deposit accounts 12,743 11,846 11,568 13,114 13,852 36,157 38,462
Insurance commissions 9,240 8,300 8,097 7,343 8,227 25,637 23,483
Wealth management 8,038 7,710 8,135 8,145 7,520 23,883 21,335
Bank card and other fees 7,279 9,894 9,081 9,580 8,929 26,254 26,381
Mortgage banking, net 5,842 6,191 6,829 5,186 8,440 18,862 28,318
Other, net   (160 )   199     (21 )   (4,802 )   165     18     (3,171 )
Nonint inc-excl sec gains (losses), net 42,982 44,140 43,689 38,566 47,133 130,811 134,808
Security gains (losses), net   (89 )   -     389     107     -     300     378  
Total noninterest income   42,893     44,140     44,078     38,673     47,133     131,111     135,186  
Salaries and employee benefits 56,675 56,134 56,726 56,687 56,043 169,535 165,040
Services and fees 14,489 14,543 13,165 14,476 13,580 42,197 39,428
Net occupancy-premises 6,817 6,413 6,606 6,659 6,644 19,836 19,302
Equipment expense 5,675 6,136 6,138 6,400 6,271 17,949 18,138
FDIC assessment expense 2,644 2,468 2,416 2,228 2,376 7,528 6,773
ORE/Foreclosure expense 930 3,836 3,315 3,009 3,079 8,081 12,030
Other expense   12,964     13,231     13,252     15,408     13,531     39,447     50,153  
Total noninterest expense   100,194     102,761     101,618     104,867     101,524     304,573     310,864  
Income before income taxes and tax eq adj 48,634 46,476 41,889 37,222 48,070 136,999 131,612
Tax equivalent adjustment   3,909     3,944     3,783     3,747     3,700     11,636     11,090  
Income before income taxes 44,725 42,532 38,106 33,475 44,370 125,363 120,522
Income taxes   11,136     9,635     9,103     5,436     11,336     29,874     31,501  
Net income $ 33,589   $ 32,897   $ 29,003   $ 28,039   $ 33,034   $ 95,489   $ 89,021  
 
Per share data
Earnings per share - basic $ 0.50   $ 0.49   $ 0.43   $ 0.42   $ 0.49   $ 1.42   $ 1.33  
 
Earnings per share - diluted $ 0.50   $ 0.49   $ 0.43   $ 0.42   $ 0.49   $ 1.41   $ 1.33  
 
Dividends per share $ 0.23   $ 0.23   $ 0.23   $ 0.23   $ 0.23   $ 0.69   $ 0.69  
 
Weighted average shares outstanding
Basic   67,439,788     67,439,659     67,410,147     67,249,877     67,177,013     67,429,973     66,778,622  
 
Diluted   67,608,612     67,582,714     67,550,483     67,449,778     67,382,478     67,580,209     66,962,534  
 
Period end shares outstanding   67,439,788     67,439,788     67,439,562     67,372,980     67,181,694     67,439,788     67,181,694  
 
 

OTHER FINANCIAL DATA
Return on equity 9.43 % 9.48 % 8.60 % 8.26 % 9.83 % 9.18 % 8.92 %
Return on average tangible equity 13.70 % 13.90 % 12.93 % 12.59 % 14.92 % 13.52 % 13.25 %
Return on assets 1.10 % 1.10 % 0.99 % 0.95 % 1.11 % 1.06 % 1.04 %
Interest margin - Yield - FTE 4.34 % 4.42 % 4.15 % 4.35 % 4.19 % 4.30 % 4.24 %
Interest margin - Cost 0.20 % 0.21 % 0.23 % 0.24 % 0.25 % 0.21 % 0.26 %
Net interest margin - FTE 4.14 % 4.21 % 3.92 % 4.10 % 3.94 % 4.09 % 3.98 %
Efficiency ratio (1) 62.80 % 64.31 % 68.32 % 68.38 % 65.32 % 65.07 % 66.28 %
Full-time equivalent employees 3,067 3,095 3,114 3,110 3,110
 
 

STOCK PERFORMANCE
Market value-Close $ 23.04 $ 24.69 $ 25.35 $ 26.84 $ 25.60
Book value $ 20.98 $ 20.76 $ 20.37 $ 20.11 $ 19.79
Tangible book value $ 15.04 $ 14.78 $ 14.36 $ 13.95 $ 13.58
 

(1) - The efficiency ratio is noninterest expense to total net interest income (FTE) and noninterest income, excluding security gains (losses), amortization of partnership tax credits, amortization of purchased intangibles, and nonroutine income and expense items.
 
 
 
 
 
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2014
($ in thousands)
(unaudited)
               
Quarter Ended

NONPERFORMING ASSETS (1)
9/30/2014 6/30/2014 3/31/2014 12/31/2013 9/30/2013
Nonaccrual loans
Alabama $ 852 $ 80 $ 96 $ 14 $ 81
Florida 10,986 11,041 9,956 12,278 14,619
Mississippi (2) 65,751 49,430 44,168 42,307 43,132

Tennessee (3)

5,901

4,244

5,206

4,390

5,596

Texas
 

4,824
   

6,323
   

4,572
   

6,249
   

9,953
 
Total nonaccrual loans 88,314 71,118 63,998 65,238 73,381
Other real estate
Alabama 24,256 24,541 24,103 25,912 25,308
Florida 36,608 43,207 42,013 34,480 39,198
Mississippi (2) 16,419 18,723 22,287 22,766 25,439
Tennessee (3) 11,347 12,073 13,000 12,892 14,615
Texas   8,407     8,426     10,133     10,489     11,769  
Total other real estate   97,037     106,970     111,536     106,539     116,329  
Total nonperforming assets $ 185,351   $ 178,088   $ 175,534   $ 171,777   $ 189,710  
 

LOANS PAST DUE OVER 90 DAYS (4)
LHFI $ 3,839   $ 1,936   $ 1,870   $ 3,298   $ 2,344  
 
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase) $ 24,979   $ 21,810   $ 20,109   $ 21,540   $ 18,432  
 
 
Quarter Ended Nine Months Ended

ALLOWANCE FOR LOAN LOSSES (4)
9/30/2014 6/30/2014 3/31/2014 12/31/2013 9/30/2013 9/30/2014 9/30/2013
Beginning Balance $ 66,648 $ 67,518 $ 66,448 $ 68,632 $ 72,825 $ 66,448 $ 78,738
Provision for loan losses 3,058 351 (805 ) (1,983 ) (3,624 ) 2,604 (11,438 )
Charge-offs (3,216 ) (3,820 ) (3,016 ) (3,305 ) (3,817 ) (10,052 ) (10,173 )
Recoveries   3,644     2,599     4,891     3,104     3,248     11,134     11,505  
Net recoveries (charge-offs)   428     (1,221 )   1,875     (201 )   (569 )   1,082     1,332  
Ending Balance $ 70,134   $ 66,648   $ 67,518   $ 66,448   $ 68,632   $ 70,134   $ 68,632  
 

PROVISION FOR LOAN LOSSES (4)
Alabama $ 1,093 $ 696 $ 472 $ 332 $ 550 $ 2,261 $ 1,458
Florida (147 ) (2,014 ) (3,499 ) (2,350 ) (2,642 ) (5,660 ) (9,742 )
Mississippi (2) 4,679 2,877 1,983 3,336 (1,051 ) 9,539 (3,491 )
Tennessee (3) 244 (277 ) (915 ) (117 ) (150 ) (948 ) (863 )
Texas   (2,811 )   (931 )   1,154     (3,184 )   (331 )   (2,588 )   1,200  
Total provision for loan losses $ 3,058   $ 351   $ (805 ) $ (1,983 ) $ (3,624 ) $ 2,604   $ (11,438 )
 

NET CHARGE-OFFS (4)
Alabama $ 172 $ 84 $ 55 $ 74 $ 132 $ 311 $ 210
Florida (89 ) (525 ) (2,524 ) (634 ) (138 ) (3,138 ) (2,413 )
Mississippi (2) 462 1,518 676 393 375 2,656 376
Tennessee (3) 48 87 (1 ) 506 (153 ) 134 199
Texas   (1,021 )   57     (81 )   (138 )   353     (1,045 )   296  
Total net (recoveries) charge-offs $ (428 ) $ 1,221   $ (1,875 ) $ 201   $ 569   $ (1,082 ) $ (1,332 )
 

CREDIT QUALITY RATIOS (1)
Net charge offs/average loans -0.03 % 0.08 % -0.13 % 0.01 % 0.04 % -0.02 % -0.03 %
Provision for loan losses/average loans 0.19 % 0.02 % -0.05 % -0.13 % -0.25 % 0.06 % -0.27 %
Nonperforming loans/total loans (incl LHFS) 1.37 % 1.12 % 1.06 % 1.10 % 1.26 %
Nonperforming assets/total loans (incl LHFS) 2.87 % 2.81 % 2.90 % 2.89 % 3.26 %

Nonperforming assets/total loans (incl LHFS) +ORE
2.82 % 2.77 % 2.85 % 2.84 % 3.20 %

ALL/total loans (excl LHFS)
1.11 % 1.08 % 1.14 % 1.15 % 1.20 %
ALL-commercial/total commercial loans 1.26 % 1.20 % 1.33 % 1.30 % 1.39 %
ALL-consumer/total consumer and home mortgage loans 0.69 % 0.75 % 0.65 % 0.75 % 0.73 %
ALL/nonperforming loans 79.41 % 93.71 % 105.50 % 101.86 % 93.53 %

ALL/nonperforming loans - (excl impaired loans)
178.81 % 159.71 % 180.86 % 190.70 % 161.96 %
 

CAPITAL RATIOS
Total equity/total assets 11.70 % 11.55 % 11.39 % 11.49 % 11.26 %
Tangible equity/tangible assets 8.67 % 8.51 % 8.31 % 8.26 % 8.01 %
Tangible equity/risk-weighted assets 12.24 % 12.19 % 12.08 % 11.88 % 11.66 %
Tier 1 leverage ratio 9.54 % 9.43 % 9.14 % 9.06 % 8.78 %
Tier 1 common risk-based capital ratio 12.74 % 12.61 % 12.37 % 12.21 % 11.92 %
Tier 1 risk-based capital ratio 13.47 % 13.34 % 13.11 % 12.97 % 12.69 %
Total risk-based capital ratio 14.70 % 14.54 % 14.34 % 14.18 % 14.02 %
 
 
(1) - Excludes Acquired Loans and Covered Other Real Estate
(2) - Mississippi includes Central and Southern Mississippi Regions
(3) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
(4) - Excludes Acquired Loans
 
 
 
 
 
 

TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS September 30, 2014 ($ in thousands) (unaudited)

Note 1 - Business Combinations

Oxford, Mississippi Branches

On July 26, 2013, Trustmark National Bank (TNB), a subsidiary of Trustmark Corporation (Trustmark), completed its acquisition of two branches of SOUTHBank, F.S.B. (SOUTHBank), located in Oxford, Mississippi. As a result of this acquisition, TNB assumed deposit accounts of approximately $11.7 million in addition to purchasing the two physical branch offices. The transaction was not material to Trustmark's consolidated financial statements and was not considered a business combination in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 805, "Business Combinations."

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):
    9/30/2014   6/30/2014   3/31/2014   12/31/2013   9/30/2013

SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities $ 100 $ 100 $ 100 $ 502 $ 503
U.S. Government agency obligations
Issued by U.S. Government agencies 83,011 117,489 123,368 129,293 133,013
Issued by U.S. Government sponsored agencies 30,779 40,848 40,601 40,179 132,425
Obligations of states and political subdivisions 165,463 171,229 172,437 171,738 212,991
Mortgage-backed securities

Residential mortgage pass-through securities

Guaranteed by GNMA
12,828 13,492 14,263 14,474 48,240
Issued by FNMA and FHLMC 213,420 225,229 232,488 241,118 214,795

Other residential mortgage-backed securities

Issued or guaranteed by FNMA, FHLMC, or GNMA
1,603,138 1,543,619 1,530,068 1,290,741 2,048,275

Commercial mortgage-backed securities

Issued or guaranteed by FNMA, FHLMC, or GNMA
221,641 229,283 232,072 242,172 354,131
Asset-backed securities and structured financial products   33,515   35,142   37,044   63,937   227,728
Total securities available for sale $ 2,363,895 $ 2,376,431 $ 2,382,441 $ 2,194,154 $ 3,372,101
 

SECURITIES HELD TO MATURITY
U.S. Government agency obligations
Issued by U.S. Government sponsored agencies $ 100,767 $ 100,563 $ 100,361 $ 100,159 $ -
Obligations of states and political subdivisions 64,538 65,193 65,757 65,987 30,229
Mortgage-backed securities

Residential mortgage pass-through securities

Guaranteed by GNMA
13,368 13,959 12,177 9,433 2,420
Issued by FNMA and FHLMC 11,816 12,165 12,395 12,724 564

Other residential mortgage-backed securities

Issued or guaranteed by FNMA, FHLMC, or GNMA
836,966 822,444 822,135 837,393 -

Commercial mortgage-backed securities

Issued or guaranteed by FNMA, FHLMC, or GNMA
  142,185   142,466   142,744   143,032   36,767
Total securities held to maturity $ 1,169,640 $ 1,156,790 $ 1,155,569 $ 1,168,728 $ 69,980
 

During the fourth quarter of 2013, Trustmark reclassified approximately $1.099 billion of securities available for sale to securities held to maturity. The securities were transferred at fair value, which became the cost basis for the securities held to maturity. At the date of transfer, the net unrealized holding loss on the available for sale securities totaled approximately $46.6 million ($28.8 million, net of tax). The net unrealized holding loss is amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. There were no gains or losses recognized as a result of the transfer. At September 30, 2014, the net unamortized, unrealized loss on the transferred securities included in accumulated other comprehensive (loss) income in the accompanying balance sheet totaled approximately $41.9 million ($25.9 million, net of tax).

During the fourth quarter of 2013, Trustmark sold $135.6 million of Collateralized Loan Obligations (CLO) generating a net gain of $1.3 million. These securities were identified as available for sale and had been carried in the asset-backed securities and structured financial products line item in the table shown above. This sale left Trustmark with a CLO balance of $25.9 million at December 31, 2013, which was subsequently sold in its entirety for a gain of $389 thousand in January 2014.

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 93% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody's. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE.

 
 
 
 

TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS September 30, 2014 ($ in thousands) (unaudited)

Note 3 - Loan Composition

LHFI BY TYPE (excluding acquired loans)
    9/30/2014   6/30/2014   3/31/2014   12/31/2013   9/30/2013
Loans secured by real estate:
Construction, land development and other land loans $ 580,794 $ 531,651 $ 592,658 $ 596,889 $ 572,057
Secured by 1-4 family residential properties 1,625,480 1,581,859 1,533,781 1,485,564 1,482,963
Secured by nonfarm, nonresidential properties 1,560,901 1,544,516 1,461,947 1,415,139 1,408,342
Other real estate secured 239,819 250,383 193,221 189,362 196,328
Commercial and industrial loans 1,246,753 1,250,146 1,207,367 1,157,614 1,132,863
Consumer loans 168,813 165,372 160,153 165,308 164,612
Other loans   911,091     863,073     774,639     789,005     739,476  
LHFI 6,333,651 6,187,000 5,923,766 5,798,881 5,696,641
Allowance for loan losses   (70,134 )   (66,648 )   (67,518 )   (66,448 )   (68,632 )
Net LHFI $ 6,263,517   $ 6,120,352   $ 5,856,248   $ 5,732,433   $ 5,628,009  

ACQUIRED NONCOVERED LOANS BY TYPE
    9/30/2014   6/30/2014   3/31/2014   12/31/2013   9/30/2013
Loans secured by real estate:
Construction, land development and other land loans $ 64,808 $ 75,353 $ 88,683 $ 98,928 $ 106,655
Secured by 1-4 family residential properties 120,366 133,191 145,213 157,914 168,573
Secured by nonfarm, nonresidential properties 214,806 226,967 271,696 287,136 301,686
Other real estate secured 28,036 30,918 34,787 33,948 35,051
Commercial and industrial loans 103,185 114,212 135,114 149,495 186,649
Consumer loans 11,236 14,733 15,024 18,428 22,251
Other loans   22,105     21,537     23,130     24,141     17,010  
Noncovered loans 564,542 616,911 713,647 769,990 837,875
Allowance for loan losses   (11,136 )   (9,770 )   (9,952 )   (7,249 )   (3,007 )
Net noncovered loans $ 553,406   $ 607,141   $ 703,695   $ 762,741   $ 834,868  

ACQUIRED COVERED LOANS BY TYPE
    9/30/2014   6/30/2014   3/31/2014   12/31/2013   9/30/2013
Loans secured by real estate:
Construction, land development and other land loans $ 1,721 $ 2,130 $ 2,239 $ 2,363 $ 2,585
Secured by 1-4 family residential properties 14,114 14,565 15,572 16,416 17,785
Secured by nonfarm, nonresidential properties 8,270 8,831 10,629 10,945 12,120
Other real estate secured 2,949 2,376 2,470 2,644 2,817
Commercial and industrial loans 327 336 361 394 478
Consumer loans - - 49 119 151
Other loans   226     1,390     1,350     1,335     1,314  
Covered loans 27,607 29,628 32,670 34,216 37,250
Allowance for loan losses   (813 )   (1,409 )   (588 )   (2,387 )   (2,326 )
Net covered loans $ 26,794   $ 28,219   $ 32,082   $ 31,829   $ 34,924  
 
 
 
 
 
 
 
 
 
 
 

TRUSTMARK CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIALSSeptember 30, 2014($ in thousands)(unaudited)
 
 
Note 3 - Loan Composition (continued)
    September 30, 2014

LHFI - COMPOSITION BY REGION (1)
Total   Alabama   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 $ 580,794 $ 56,496 $ 59,822 $ 251,931 $ 36,868 $ 175,677
Secured by 1-4 family residential properties 1,625,480 34,915 50,888 1,392,033 128,966 18,678
Secured by nonfarm, nonresidential properties 1,560,901 81,220 169,716 796,158 145,197 368,610
Other real estate secured 239,819 7,236 4,527 155,652 27,064 45,340
Commercial and industrial loans 1,246,753 78,335 10,269 797,307 96,445 264,397
Consumer loans 168,813 16,028 2,804 130,710 16,512 2,759
Other loans   911,091   51,840   46,230   665,139   58,723   89,159
Loans $ 6,333,651 $ 326,070 $ 344,256 $ 4,188,930 $ 509,775 $ 964,620
 
 
 

CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION (1)
Lots $ 51,089 $ 4,319 $ 26,551 $ 14,983 $ 1,154 $ 4,082
Development 58,350 836 6,924 31,889 956 17,745
Unimproved land 121,841 6,529 21,474 60,039 23,518 10,281
1-4 family construction 120,747 21,721 4,724 59,896 2,836 31,570
Other construction   228,767   23,091   149   85,124   8,404   111,999
Construction, land development and other land loans $ 580,794 $ 56,496 $ 59,822 $ 251,931 $ 36,868 $ 175,677
 
 
 

LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION (1)
Income producing:
Retail $ 186,564 $ 18,070 $ 38,968 $ 63,805 $ 16,490 $ 49,231
Office 205,957 9,897 44,271 83,556 8,010 60,223
Nursing homes/assisted living 111,338 - - 92,345 5,848 13,145
Hotel/motel 107,720 11,853 16,067 46,106 23,744 9,950
Industrial 68,183 4,262 6,086 32,871 141 24,823
Health care 29,204 5,147 - 24,014 43 -
Convenience stores 9,225 248 - 5,782 1,266 1,929
Other   144,033   4,677   20,756   68,070   4,327   46,203
Total income producing loans 862,224 54,154 126,148 416,549 59,869 205,504
 
Owner-occupied:
Office 116,451 5,965 15,652 54,700 8,285 31,849
Churches 90,977 2,895 3,345 41,791 32,092 10,854
Industrial warehouses 115,273 332 4,115 61,568 7,830 41,428
Health care 120,906 11,122 8,666 66,029 16,469 18,620
Convenience stores 53,291 522 1,572 32,919 2,818 15,460
Retail 30,268 1,333 3,906 18,532 3,080 3,417
Restaurants 35,077 241 2,062 27,657 4,076 1,041
Auto dealerships 8,123 - 160 6,367 1,569 27
Other   128,311   4,656   4,090   70,046   9,109   40,410
Total owner-occupied loans 698,677 27,066 43,568 379,609 85,328 163,106
           
Loans secured by nonfarm, nonresidential properties $ 1,560,901 $ 81,220 $ 169,716 $ 796,158 $ 145,197 $ 368,610
 
(1) Excludes acquired loans.
 
 
 
 
 
 

TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS September 30, 2014 ($ in thousands) (unaudited)

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
9/30/2014   6/30/2014   3/31/2014   12/31/2013   9/30/2013 9/30/2014   9/30/2013
Securities - taxable 2.35 % 2.35 % 2.39 % 2.30 % 2.22 % 2.37 % 2.26 %
Securities - nontaxable 4.20 % 4.27 % 4.31 % 4.28 % 4.25 % 4.26 % 4.33 %
Securities - total 2.44 % 2.45 % 2.50 % 2.40 % 2.32 % 2.46 % 2.37 %
Loans - LHFI & LHFS 4.36 % 4.53 % 4.51 % 4.55 % 4.69 % 4.47 % 4.73 %
Acquired loans 14.98 % 13.40 % 8.67 % 10.95 % 8.20 % 12.11 % 8.48 %
Loans - total 5.29 % 5.43 % 5.00 % 5.36 % 5.18 % 5.24 % 5.21 %
FF sold & rev repo 0.84 % 0.91 % 0.31 % 0.50 % 0.35 % 0.60 % 0.30 %
Other earning assets 3.66 % 4.19 % 4.13 % 4.53 % 3.86 % 3.98 % 4.09 %
Total earning assets 4.34 % 4.42 % 4.15 % 4.35 % 4.19 % 4.30 % 4.24 %
 
Interest-bearing deposits 0.21 % 0.22 % 0.24 % 0.27 % 0.27 % 0.22 % 0.28 %
FF pch & repo 0.13 % 0.11 % 0.11 % 0.11 % 0.12 % 0.12 % 0.12 %
Other borrowings 1.88 % 3.07 % 2.99 % 2.96 % 3.07 % 2.50 % 3.08 %
Total interest-bearing liabilities 0.27 % 0.28 % 0.30 % 0.33 % 0.33 % 0.28 % 0.35 %
 
Net interest margin 4.14 % 4.21 % 3.92 % 4.10 % 3.94 % 4.09 % 3.98 %
Net interest margin excluding acquired loans 3.47 % 3.55 % 3.52 % 3.48 % 3.52 % 3.52 % 3.57 %
 

Reflected in the table above are yields on earning assets and liabilities, along with the net interest margin which equals reported net interest income-FTE, annualized, as a percent of average earning assets. In addition, the table includes net interest margin excluding acquired loans, which equals reported net interest income-FTE excluding interest income on acquired loans, annualized, as a percent of average earning assets excluding average acquired loans. The net interest margin decreased 7 basis points during the third quarter of 2014 primarily due to declining yields on loans held for investment and loans held for sale.

During the third quarter of 2014, the yield on average acquired loans includes approximately $8.7 million in recoveries, or an annualized 5.64% of the average acquired loan balance. Excluding the recoveries on acquired loans, the yield on average acquired loans totaled 9.34%.

Note 5 - Mortgage Banking

Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that offsets the changes in fair value of mortgage servicing rights (MSR) attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under generally accepted accounting principles (GAAP). Changes in the fair value of these exchange-traded derivative instruments, including administrative costs, are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of the MSR. The MSR fair value represents the present value of future cash flows, which among other things includes decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the change in value of hedge instruments to the change in the fair value of the MSR asset attributable to changes in interest rates and other market driven changes in valuation inputs and assumptions. The impact of this strategy resulted in a net positive ineffectiveness of $583 thousand and $1.3 million for the quarters ended September 30, 2014 and 2013, 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
9/30/2014   6/30/2014   3/31/2014   12/31/2013   9/30/2013 9/30/2014   9/30/2013
Mortgage servicing income, net $ 4,674 $ 4,592 $ 4,539 $ 4,688 $ 4,552 $ 13,805 $ 13,204
Change in fair value-MSR from runoff (2,364 ) (2,391 ) (1,812 ) (2,182 ) (2,407 ) (6,567 ) (7,623 )
Gain on sales of loans, net 3,272 2,749 1,839 2,202 6,465 7,860 24,227
Other, net   (323 )   695     400     (533 )   (1,485 )   772     (4,186 )
Mortgage banking income before hedge ineffectiveness   5,259     5,645     4,966     4,175     7,125     15,870     25,622  
Change in fair value-MSR from market changes 700 (3,038 ) (723 ) 3,937 287 (3,061 ) 7,881
Change in fair value of derivatives   (117 )   3,584     2,586     (2,926 )   1,028     6,053     (5,185 )
Net positive hedge ineffectiveness   583     546     1,863     1,011     1,315     2,992     2,696  
Mortgage banking, net $ 5,842   $ 6,191   $ 6,829   $ 5,186   $ 8,440   $ 18,862   $ 28,318  
 
 
 
 
 
 

TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS September 30, 2014 ($ in thousands) (unaudited)

Note 6 - Other Noninterest Income and Expense

Other noninterest income consisted of the following for the periods presented ($ in thousands):
    Quarter Ended   Nine Months Ended
9/30/2014   6/30/2014   3/31/2014   12/31/2013   9/30/2013 9/30/2014   9/30/2013
Partnership amortization for tax credit purposes $ (3,006 ) $ (3,006 ) $ (3,006 ) $ (5,642 ) $ (2,388 ) $ (9,018 ) $ (6,726 )
(Decrease) increase in FDIC indemnification asset (452 ) (999 ) (688 ) (2,429 ) 211 (2,139 ) (3,471 )
Other miscellaneous income   3,298     4,204     3,673     3,269     2,342     11,175     7,026  
Total other, net $ (160 ) $ 199   $ (21 ) $ (4,802 ) $ 165   $ 18   $ (3,171 )
 

Trustmark invests in partnerships that provide income tax credits on a Federal and/or State basis (i.e., new market tax credits, low income housing tax credits or historical tax credits). These investments are recorded based on the equity method of accounting, which requires the equity in partnership losses to be recognized when incurred and are recorded as a reduction in other income. The income tax credits related to these partnerships are utilized as specifically allowed by income tax law and are recorded as a reduction in income tax expense.

During the third quarter of 2014, other noninterest income included a write-down of the FDIC indemnification asset of $452 thousand on acquired covered loans obtained from Heritage as a result of loan pay-offs, improved cash flow projections and lower loss expectations for loan pools.

Other noninterest expense consisted of the following for the periods presented ($ in thousands):
    Quarter Ended   Nine Months Ended
9/30/2014   6/30/2014   3/31/2014   12/31/2013   9/30/2013 9/30/2014   9/30/2013
Loan expense $ 3,070 $ 3,107 $ 3,464 $ 4,419 $ 3,390 $ 9,641 $ 10,652
Non-routine transaction expenses on acquisitions - - - - - - 7,920
Amortization of intangibles 2,150 2,190 2,293 2,434 2,466 6,633 6,380
Other miscellaneous expense   7,744   7,934   7,495   8,555   7,675   23,173   25,201
Total other expense $ 12,964 $ 13,231 $ 13,252 $ 15,408 $ 13,531 $ 39,447 $ 50,153
 

Note 7 - Non-GAAP Financial Measures

In addition to capital ratios defined by GAAP and banking regulators, Trustmark utilizes various tangible common equity measures when evaluating capital utilization and adequacy. Tangible common equity, as defined by Trustmark, represents common equity less goodwill and identifiable intangible assets.

Trustmark 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.
 
 
 
 
 
 

TRUSTMARK CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIALSSeptember 30, 2014($ in thousands)(unaudited)
 
 
Note 7 - Non-GAAP Financial Measures (continued)
      Quarter Ended   Nine Months Ended
9/30/2014   6/30/2014   3/31/2014   12/31/2013   9/30/2013 9/30/2014   9/30/2013

TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity $ 1,412,857 $ 1,392,240 $ 1,367,663 $ 1,346,975 $ 1,333,356 $ 1,391,085 $ 1,334,437
Less: Goodwill (365,500 ) (365,500 ) (372,720 ) (372,468 ) (368,482 ) (367,880 ) (353,485 )
Identifiable intangible assets   (36,553 )   (38,711 )   (41,015 )   (43,532 )   (45,988 )   (38,743 )   (43,232 )
Total average tangible equity $ 1,010,804   $ 988,029   $ 953,928   $ 930,975   $ 918,886   $ 984,462   $ 937,720  
 
PERIOD END BALANCES
Total shareholders' equity $ 1,415,098 $ 1,399,891 $ 1,373,895 $ 1,354,953 $ 1,329,514
Less: Goodwill (365,500 ) (365,500 ) (365,500 ) (372,851 ) (372,463 )
Identifiable intangible assets   (35,357 )   (37,506 )   (39,697 )   (41,990 )   (44,424 )
Total tangible equity (a) $ 1,014,241   $ 996,885   $ 968,698   $ 940,112   $ 912,627  
 

TANGIBLE ASSETS
Total assets $ 12,096,316 $ 12,119,996 $ 12,057,054 $ 11,790,383 $ 11,805,197
Less: Goodwill (365,500 ) (365,500 ) (365,500 ) (372,851 ) (372,463 )
Identifiable intangible assets   (35,357 )   (37,506 )   (39,697 )   (41,990 )   (44,424 )
Total tangible assets (b) $ 11,695,459   $ 11,716,990   $ 11,651,857   $ 11,375,542   $ 11,388,310  
 
Risk-weighted assets (c) $ 8,287,608   $ 8,175,622   $ 8,016,482   $ 7,916,378   $ 7,825,839  
 

NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income $ 33,589 $ 32,897 $ 29,003 $ 28,039 $ 33,034 $ 95,489 $ 89,021
Plus: Intangible amortization net of tax   1,328     1,353     1,417     1,503     1,523     4,098     3,939  
Net income adjusted for intangible amortization $ 34,917   $ 34,250   $ 30,420   $ 29,542   $ 34,557   $ 99,587   $ 92,960  
 
Period end common shares outstanding (d)   67,439,788     67,439,788     67,439,562     67,372,980     67,181,694  
 

TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity 1 13.70 % 13.90 % 12.93 % 12.59 % 14.92 % 13.52 % 13.25 %
Tangible equity/tangible assets (a)/(b) 8.67 % 8.51 % 8.31 % 8.26 % 8.01 %
Tangible equity/risk-weighted assets (a)/(c) 12.24 % 12.19 % 12.08 % 11.88 % 11.66 %
Tangible book value (a)/(d)*1,000 $ 15.04 $ 14.78 $ 14.36 $ 13.95 $ 13.58
 

TIER 1 COMMON RISK-BASED CAPITAL
Total shareholders' equity $ 1,415,098 $ 1,399,891 $ 1,373,895 $ 1,354,953 $ 1,329,514
Eliminate qualifying AOCI 34,365 30,557 38,497 43,731 52,226
Qualifying tier 1 capital 60,000 60,000 60,000 60,000 60,000
Disallowed goodwill (365,500 ) (365,500 ) (365,500 ) (372,851 ) (372,463 )
Adj to goodwill allowed for deferred taxes 15,503 15,150 14,798 14,445 14,093
Other disallowed intangibles (35,357 ) (37,506 ) (39,697 ) (41,990 ) (44,424 )
Disallowed servicing intangible (6,709 ) (6,505 ) (6,761 ) (6,783 ) (6,315 )
Disallowed deferred taxes   (1,234 )   (5,134 )   (23,969 )   (24,647 )   (39,476 )
Total tier 1 capital 1,116,166 1,090,953 1,051,263 1,026,858 993,155
Less: Qualifying tier 1 capital   (60,000 )   (60,000 )   (60,000 )   (60,000 )   (60,000 )
Total tier 1 common capital (e) $ 1,056,166   $ 1,030,953   $ 991,263   $ 966,858   $ 933,155  
 
Tier 1 common risk-based capital ratio (e)/(c)

12.74

%
12.61 % 12.37 % 12.21 % 11.92 %
 
1 Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity
 
 
 
 

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