Trustmark Corporation (NASDAQ:TRMK) reported net income of $29.1 million in the first quarter of 2015, which represented diluted earnings per share of $0.43. Trustmark's performance during the first quarter of 2015 produced a return on average tangible equity of 11.86% and a return on average assets of 0.97%. Trustmark's Board of Directors declared a quarterly cash dividend of $0.23 per share payable June 15, 2015, to shareholders of record on June 1, 2015.

Printer friendly version of earnings release with consolidated financial statements and notes: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=51089231&lang=en

First Quarter Highlights
  • Building traction in higher loan-growth markets: Alabama, Texas and Tennessee
  • Mortgage banking revenue increased 51.5% and insurance revenue increased 10.0% linked quarter
  • Noninterest expense declined $5.2 million from the prior quarter; efficiency ratio improved 270 bps to 66.46%
  • Solid credit quality continued; nonperforming assets declined 2.7% from the prior quarter

Gerard R. Host, President and CEO, stated, "Trustmark posted another quarter of solid financial results, tempered in part by the prolonged low interest rate environment. We continued to expand customer relationships, reflected by legacy loan growth in our Alabama, Texas and Tennessee markets, in addition to growth in our mortgage and insurance businesses. We strengthened our presence in the Greater Birmingham area with additional commercial lending and real estate professionals and are committed to expanding our relationships in this market. During the quarter, revenue remained stable at approximately $140 million, while noninterest expense declined $5.2 million, resulting in an improved efficiency ratio. Credit quality remained strong and continued to be an important contributor to our financial success. 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

  • Legacy loan growth in Alabama, Tennessee and Texas offset by reductions in Mississippi
  • Average noninterest-bearing deposits represented 28.1% of average total deposits in the first quarter
  • Capital base provides opportunity to support additional growth

Loans held for investment totaled $6.4 billion at March 31, 2015, a decrease of $35.6 million, or 0.6%, from the prior quarter and an increase of $490.1 million, or 8.3%, from one year earlier. Construction, land development and other land loans increased $71.8 million from the prior quarter, driven entirely by growth in construction loans across Trustmark's five-state franchise. During the quarter, many customers took advantage of attractive, lower mortgage rates; Trustmark elected to sell the vast majority of these lower-rate, longer-term home mortgages in the secondary market, rather than replacing the runoff in its single-family loan portfolio. Loans secured by nonfarm, nonresidential real estate decreased $36.3 million as growth in owner-occupied real estate in Alabama and Tennessee was more than offset by declines in non-owner occupied loans in Texas and Mississippi. Other real estate secured loans, which include multifamily projects, decreased by $20.5 million, driven primarily by activity in the Mississippi market. Commercial and industrial loans declined $41.6 million as the growth in the Tennessee market was more than offset by seasonal paydowns in the Mississippi market. Other loans, which include nonprofits and real estate investment trusts, increased $6.2 million, reflecting growth in Mississippi, Texas and Alabama. Loans to states and other political divisions increased $11.6 million, primarily reflecting growth in Texas and Alabama.

Acquired loans totaled $498.4 million at March 31, 2015, down $51.0 million from the prior quarter. Collectively, loans held for investment and acquired loans totaled $6.9 billion at March 31, 2015, down $86.6 million from the prior quarter.

Average earning assets during the first quarter totaled $10.6 billion, unchanged from the prior quarter and up 3.9% from one year earlier. Average deposits in the first quarter totaled $9.8 billion, up $234.5 million, from the prior quarter. Noninterest-bearing deposits represented 28.1% of average deposits in the first quarter of 2015.

Trustmark's capital position remained solid, reflecting the consistent profitability of its diversified financial services businesses. At March 31, 2015, Trustmark's tangible equity to tangible assets ratio was 8.91%, while the total risk-based capital ratio was 14.92%. Tangible book value per share was $15.53 at March 31, 2015, up 2.6% from the prior quarter and 8.1% from the prior year.

Credit Quality
  • Continued improvement in classified and criticized loan balances
  • Other real estate declined 2.5% linked quarter and 19.2% year-over-year
  • Net charge-offs were negligible and represented less than one basis point of average loans in the first quarter

Levels of both classified and criticized loans continued to reflect steady improvement. Relative to the prior quarter, Trustmark's classified and criticized loan balances declined 4.7% and 8.9%, respectively. When compared to the prior year, classified loan balances decreased 13.8%, while criticized loan balances decreased 21.3%.

Nonperforming assets declined $4.7 million, or 2.7%, from the prior quarter and $8.4 million, or 4.8%, from the comparable period one year earlier. The decline during the quarter was attributable to a reduction in both nonaccruals and other real estate, while the year-over-year decline was attributable to a reduction in other real estate.

Allocation of Trustmark's $71.3 million allowance for loan losses represented 1.30% of commercial loans and 0.61% of consumer and home mortgage loans, resulting in an allowance to total loans held for investment of 1.11% at March 31, 2015, representing a level management considers commensurate with the inherent risk in the loan portfolio. The allowance for loan losses represented 205.5% of nonperforming loans, excluding impaired loans at March 31, 2015.

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

Revenue Generation
  • Mortgage revenue increased 51.5% from the prior quarter and 31.3% from the prior year; production up 3.7% from the prior quarter and 32.2% from the prior year
  • Insurance revenue increased 10.0% and 6.4% from the prior quarter and year, respectively

Revenue in the first quarter totaled $139.8 million and remained relatively stable compared to the prior quarter, reflecting Trustmark's diversified business model. Net interest income (FTE) in the first quarter totaled $101.5 million, resulting in a net interest margin of 3.88%. Relative to the prior quarter, interest income (FTE) decreased $1.7 million due primarily to lower yields on taxable investment securities and fewer days in the first quarter. The yield on acquired loans in the first quarter totaled 11.62% and included recoveries from settlement of debt of $3.9 million, which represented approximately 2.99% of the annualized total acquired loan yield in the first quarter. Excluding acquired loans, the net interest margin in the first quarter totaled 3.47%. Comparatively, the net interest margin, excluding acquired loans and yield maintenance payments on prepaid securities, totaled 3.46% in the prior quarter.

Noninterest income totaled $42.4 million in the first quarter, an increase of 0.8% from the prior quarter and a decrease of 3.9% from levels one year earlier. The decline from the same period in the prior year was due primarily to debit card interchange-fee standards that became effective for Trustmark on July 1, 2014, and a loss related to the disposition of a former branch office building. Bank card and other fees remained relatively stable compared to the prior quarter, while service charges on deposit accounts declined 11.4% linked quarter, reflecting a seasonal reduction in NSF and overdraft fees. Other income, net declined $1.7 million from the prior quarter; the reduction was due to write-downs of the FDIC indemnification asset as resolution of covered other real estate exceeded expectations, the aforementioned sale of a branch location as well as from insurance proceeds associated with non-qualified benefit plans in the fourth quarter.

Mortgage banking revenue in the first quarter totaled $9.0 million, an increase of 51.5% relative to the prior quarter and 31.3% from the comparable period one year earlier. The increase in mortgage revenue relative to the prior quarter reflects expanded secondary marketing gains, in addition to improved mortgage servicing hedge ineffectiveness and an increased fair value of mortgage loans held for sale. Mortgage loan production in the first quarter totaled $304.6 million, up 3.7% from the prior quarter and 32.2% from levels one year earlier.

Insurance revenue in the first quarter totaled $8.6 million, an increase of 10.0% from the prior quarter and 6.4% relative to levels one year earlier. Due to a continued focus on business development, group health and commercial property and casualty businesses were the primary drivers of growth. In the first quarter, wealth management revenue totaled $8.0 million, a 5.6% decrease from the prior quarter that was primarily attributable to decreased brokerage commissions.

Noninterest Expense
  • Noninterest expense totaled $99.2 million, down 5.0% from the prior quarter
  • Efficiency ratio improved to 66.46%

Noninterest expense totaled $99.2 million in the first quarter. Excluding ORE expense and intangible amortization of $3.1 million, noninterest expense totaled $96.1 million, a decrease of $3.0 million, or 3.0%, from comparable expenses in the prior quarter. Salaries and benefits totaled $57.2 million in the first quarter, unchanged from the prior quarter and up 0.8% relative to the prior year. ORE and foreclosure expense declined by $2.1 million during the quarter, while net occupancy-premises expense declined by $441 thousand. Services and fees decreased $280 thousand during the quarter, reflecting the gradual transition of activities performed by third-party consultants to current associates. Other expense decreased $2.7 million relative to the prior quarter; the reduction was due in part to contingency reserves established in the fourth quarter of 2014 as well as to lower loan-related expenses.

While banking center offices will remain an extremely important delivery channel, banking will continue to evolve as something customers will do, not necessarily some place they will go. As such, Trustmark has made investments in mobile banking products to ensure it continues to meet the evolving needs of customers. In the second quarter of 2015, Trustmark will introduce its new consumer mobile banking service. Once the initial customer adoption period is complete, new features such as mobile deposit, personal financial management, and new payment and transfer options will be incrementally introduced throughout 2015.

Trustmark also continued the realignment of its retail delivery channels to enhance productivity and efficiency, as well as promote additional revenue growth. During the first quarter, Trustmark completed the consolidation of a banking center with limited growth opportunities into another office and announced the consolidation of five banking offices that will be completed during the second quarter of 2015. As part of Trustmark's ongoing branch optimization initiative, Trustmark will have consolidated 28 offices, inclusive of pending closures, since 2012. In conjunction with the completed closures, Trustmark reallocated a portion of those resources and opened five offices in attractive markets, including Birmingham and Montgomery, Alabama; Jackson, Mississippi; Memphis, Tennessee; and Houston, Texas, since 2012. Trustmark is committed to investments to support profitable revenue growth, as well as reengineering and efficiency opportunities to enhance shareholder value.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, April 29, 2015, 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, May 13, 2015, in archived format at the same web address or by calling (877) 344-7529, passcode 10063235.

Trustmark Corporation is a financial services company providing banking and financial solutions through 202 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, as well as crude oil prices, 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, including the potential impact of issues relating to the European financial system, 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
March 31, 2015
($ in thousands)
(unaudited)
        Linked Quarter Year over Year

QUARTERLY AVERAGE BALANCES
  3/31/2015     12/31/2014     3/31/2014   $ Change % Change   $ Change % Change  
Securities AFS-taxable $ 2,190,344 $ 2,204,361 $ 2,136,392 $ (14,017 ) -0.6 % $ 53,952 2.5 %
Securities AFS-nontaxable 127,623 129,403 149,744 (1,780 ) -1.4 % (22,121 ) -14.8 %
Securities HTM-taxable 1,119,979 1,117,989 1,118,747 1,990 0.2 % 1,232 0.1 %
Securities HTM-nontaxable   41,405     42,040     31,039     (635 ) -1.5 %   10,366   33.4 %
Total securities   3,479,351     3,493,793     3,435,922     (14,442 ) -0.4 %   43,429   1.3 %
Loans (including loans held for sale) 6,561,430 6,494,369 5,950,720 67,061 1.0 % 610,710 10.3 %
Acquired loans:
Noncovered loans 502,534 544,260 751,723 (41,726 ) -7.7 % (249,189 ) -33.1 %
Covered loans 23,593 27,039 33,805 (3,446 ) -12.7 % (10,212 ) -30.2 %
Fed funds sold and rev repos 217 1,269 6,460 (1,052 ) -82.9 % (6,243 ) -96.6 %
Other earning assets   46,368     48,224     36,820     (1,856 ) -3.8 %   9,548   25.9 %
Total earning assets   10,613,493     10,608,954     10,215,450     4,539   0.0 %   398,043   3.9 %
Allowance for loan losses (81,993 ) (82,851 ) (79,736 ) 858 -1.0 % (2,257 ) 2.8 %
Cash and due from banks 290,251 284,754 407,078 5,497 1.9 % (116,827 ) -28.7 %
Other assets   1,303,552     1,317,217     1,376,024     (13,665 ) -1.0 %   (72,472 ) -5.3 %
Total assets $ 12,125,303   $ 12,128,074   $ 11,918,816   $ (2,771 ) 0.0 % $ 206,487   1.7 %
 
Interest-bearing demand deposits $ 1,847,374 $ 1,815,999 $ 1,900,504 $ 31,375 1.7 % $ (53,130 ) -2.8 %
Savings deposits 3,252,586 2,963,771 3,193,098 288,815 9.7 % 59,488 1.9 %
Time deposits less than $100,000 1,139,912 1,152,622 1,280,513 (12,710 ) -1.1 % (140,601 ) -11.0 %
Time deposits of $100,000 or more   785,715     838,309     947,509     (52,594 ) -6.3 %   (161,794 ) -17.1 %
Total interest-bearing deposits 7,025,587 6,770,701 7,321,624 254,886 3.8 % (296,037 ) -4.0 %
Fed funds purchased and repos 421,206 526,482 282,816 (105,276 ) -20.0 % 138,390 48.9 %
Short-term borrowings 256,714 385,841 65,010 (129,127 ) -33.5 % 191,704 n/m
Long-term FHLB advances 1,243 2,652 8,406 (1,409 ) -53.1 % (7,163 ) -85.2 %
Subordinated notes 49,939 49,931 49,907 8 0.0 % 32 0.1 %
Junior subordinated debt securities   61,856     61,856     61,856     -   0.0 %   -   0.0 %
Total interest-bearing liabilities 7,816,545 7,797,463 7,789,619 19,082 0.2 % 26,926 0.3 %
Noninterest-bearing deposits 2,741,945 2,762,332 2,630,785 (20,387 ) -0.7 % 111,160 4.2 %
Other liabilities   129,844     146,011     130,749     (16,167 ) -11.1 %   (905 ) -0.7 %
Total liabilities 10,688,334 10,705,806 10,551,153 (17,472 ) -0.2 % 137,181 1.3 %
Shareholders' equity   1,436,969     1,422,268     1,367,663     14,701   1.0 %   69,306   5.1 %
Total liabilities and equity $ 12,125,303   $ 12,128,074   $ 11,918,816   $ (2,771 ) 0.0 % $ 206,487   1.7 %
 
Linked Quarter Year over Year

PERIOD END BALANCES
  3/31/2015     12/31/2014     3/31/2014   $ Change % Change   $ Change % Change  
Cash and due from banks $ 335,244 $ 315,973 $ 423,819 $ 19,271 6.1 % $ (88,575 ) -20.9 %
Fed funds sold and rev repos - 1,885 - (1,885 ) -100.0 % - n/m
Securities available for sale 2,381,459 2,374,567 2,382,441 6,892 0.3 % (982 ) 0.0 %
Securities held to maturity 1,184,554 1,170,685 1,155,569 13,869 1.2 % 28,985 2.5 %
Loans held for sale (LHFS) 150,365 132,196 120,446 18,169 13.7 % 29,919 24.8 %
Loans held for investment (LHFI) 6,413,876 6,449,469 5,923,766 (35,593 ) -0.6 % 490,110 8.3 %
Allowance for loan losses   (71,321 )   (69,616 )   (67,518 )   (1,705 ) 2.4 %   (3,803 ) 5.6 %
Net LHFI 6,342,555 6,379,853 5,856,248 (37,298 ) -0.6 % 486,307 8.3 %
Acquired loans:
Noncovered loans 478,172 525,783 713,647 (47,611 ) -9.1 % (235,475 ) -33.0 %
Covered loans 20,271 23,626 32,670 (3,355 ) -14.2 % (12,399 ) -38.0 %
Allowance for loan losses, acquired loans   (11,837 )   (12,059 )   (10,540 )   222   -1.8 %   (1,297 ) 12.3 %
Net acquired loans   486,606     537,350     735,777     (50,744 ) -9.4 %   (249,171 ) -33.9 %
Net LHFI and acquired loans 6,829,161 6,917,203 6,592,025 (88,042 ) -1.3 % 237,136 3.6 %
Premises and equipment, net 198,039 200,781 203,771 (2,742 ) -1.4 % (5,732 ) -2.8 %
Mortgage servicing rights 62,903 64,358 67,614 (1,455 ) -2.3 % (4,711 ) -7.0 %
Goodwill 365,500 365,500 365,500 - 0.0 % - 0.0 %
Identifiable intangible assets 31,250 33,234 39,697 (1,984 ) -6.0 % (8,447 ) -21.3 %
Other real estate, excluding covered other real estate 90,175 92,509 111,536 (2,334 ) -2.5 % (21,361 ) -19.2 %
Covered other real estate 4,794 6,060 4,759 (1,266 ) -20.9 % 35 0.7 %
FDIC indemnification asset 4,743 6,997 13,487 (2,254 ) -32.2 % (8,744 ) -64.8 %
Other assets   540,977     568,685     576,390     (27,708 ) -4.9 %   (35,413 ) -6.1 %
Total assets $ 12,179,164   $ 12,250,633   $ 12,057,054   $ (71,469 ) -0.6 % $ 122,110   1.0 %
 
Deposits:
Noninterest-bearing $ 2,936,875 $ 2,748,635 $ 2,879,341 $ 188,240 6.8 % $ 57,534 2.0 %
Interest-bearing   6,970,115     6,949,723     7,242,778     20,392   0.3 %   (272,663 ) -3.8 %
Total deposits 9,906,990 9,698,358 10,122,119 208,632 2.2 % (215,129 ) -2.1 %
Fed funds purchased and repos 523,187 443,543 259,341 79,644 18.0 % 263,846 n/m
Short-term borrowings 50,570 425,077 59,671 (374,507 ) -88.1 % (9,101 ) -15.3 %
Long-term FHLB advances 1,222 1,253 8,341 (31 ) -2.5 % (7,119 ) -85.3 %
Subordinated notes 49,944 49,936 49,912 8 0.0 % 32 0.1 %
Junior subordinated debt securities 61,856 61,856 61,856 - 0.0 % - 0.0 %
Other liabilities   139,311     150,670     121,919     (11,359 ) -7.5 %   17,392   14.3 %
Total liabilities   10,733,080     10,830,693     10,683,159     (97,613 ) -0.9 %   49,921   0.5 %
Common stock 14,076 14,060 14,051 16 0.1 % 25 0.2 %
Capital surplus 358,583 356,244 352,402 2,339 0.7 % 6,181 1.8 %
Retained earnings 1,103,077 1,092,120 1,045,939 10,957 1.0 % 57,138 5.5 %

Accum other comprehensive loss, net of tax
  (29,652 )   (42,484 )   (38,497 )   12,832   -30.2 %   8,845   -23.0 %
Total shareholders' equity   1,446,084     1,419,940     1,373,895     26,144   1.8 %   72,189   5.3 %
Total liabilities and equity $ 12,179,164   $ 12,250,633   $ 12,057,054   $ (71,469 ) -0.6 % $ 122,110   1.0 %
 

n/m - percentage changes greater than +/- 100% are considered not meaningful
 

See Notes to Consolidated Financials
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2015
($ in thousands except per share data)
(unaudited)
               
 
Quarter Ended     Linked Quarter Year over Year

INCOME STATEMENTS
  3/31/2015     12/31/2014     3/31/2014   $ Change % Change   $ Change % Change  
Interest and fees on LHFS & LHFI-FTE $ 69,658 $ 70,775 $ 66,185 $ (1,117 ) -1.6 % $ 3,473 5.2 %
Interest and fees on acquired loans 15,078 13,500 16,786 1,578 11.7 % (1,708 ) -10.2 %
Interest on securities-taxable 19,586 21,694 19,220 (2,108 ) -9.7 % 366 1.9 %
Interest on securities-tax exempt-FTE 1,789 1,814 1,920 (25 ) -1.4 % (131 ) -6.8 %
Interest on fed funds sold and rev repos - 3 5 (3 ) -100.0 % (5 ) -100.0 %
Other interest income   393     384     375     9   2.3 %   18   4.8 %
Total interest income-FTE   106,504     108,170     104,491     (1,666 ) -1.5 %   2,013   1.9 %
Interest on deposits 3,247 3,382 4,365 (135 ) -4.0 % (1,118 ) -25.6 %
Interest on fed funds pch and repos 143 184 76 (41 ) -22.3 % 67 88.2 %
Other interest expense   1,649     1,510     1,363     139   9.2 %   286   21.0 %
Total interest expense   5,039     5,076     5,804     (37 ) -0.7 %   (765 ) -13.2 %
Net interest income-FTE 101,465 103,094 98,687 (1,629 ) -1.6 % 2,778 2.8 %
Provision for loan losses, LHFI 1,785 (1,393 ) (805 ) 3,178 n/m 2,590 n/m
Provision for loan losses, acquired loans   347     1,179     63     (832 ) -70.6 %   284   n/m
Net interest income after provision-FTE   99,333     103,308     99,429     (3,975 ) -3.8 %   (96 ) -0.1 %
Service charges on deposit accounts 11,085 12,514 11,568 (1,429 ) -11.4 % (483 ) -4.2 %
Insurance commissions 8,616 7,831 8,097 785 10.0 % 519 6.4 %
Wealth management 7,990 8,460 8,135 (470 ) -5.6 % (145 ) -1.8 %
Bank card and other fees 6,762 6,712 9,081 50 0.7 % (2,319 ) -25.5 %
Mortgage banking, net 8,965 5,918 6,829 3,047 51.5 % 2,136 31.3 %
Other, net   (1,055 )   596     (21 )   (1,651 ) n/m   (1,034 ) n/m
Nonint inc-excl sec gains (losses), net 42,363 42,031 43,689 332 0.8 % (1,326 ) -3.0 %
Security gains (losses), net   -     -     389     -   n/m   (389 ) -100.0 %
Total noninterest income   42,363     42,031     44,078     332   0.8 %   (1,715 ) -3.9 %
Salaries and employee benefits 57,169 57,159 56,726 10 0.0 % 443 0.8 %
Services and fees 14,121 14,401 13,165 (280 ) -1.9 % 956 7.3 %
Net occupancy-premises 6,191 6,632 6,606 (441 ) -6.6 % (415 ) -6.3 %
Equipment expense 5,974 5,911 6,138 63 1.1 % (164 ) -2.7 %
FDIC assessment expense 2,940 2,669 2,416 271 10.2 % 524 21.7 %
ORE/Foreclosure expense 1,115 3,240 3,315 (2,125 ) -65.6 % (2,200 ) -66.4 %
Other expense   11,706     14,420     13,252     (2,714 ) -18.8 %   (1,546 ) -11.7 %
Total noninterest expense   99,216     104,432     101,618     (5,216 ) -5.0 %   (2,402 ) -2.4 %
Income before income taxes and tax eq adj 42,480 40,907 41,889 1,573 3.8 % 591 1.4 %
Tax equivalent adjustment   4,073     4,179     3,783     (106 ) -2.5 %   290   7.7 %
Income before income taxes 38,407 36,728 38,106 1,679 4.6 % 301 0.8 %
Income taxes   9,259     8,655     9,103     604   7.0 %   156   1.7 %
Net income $ 29,148   $ 28,073   $ 29,003   $ 1,075   3.8 % $ 145   0.5 %
 
Per share data
Earnings per share - basic $ 0.43   $ 0.42   $ 0.43   $ 0.01   2.4 % $ -   0.0 %
 
Earnings per share - diluted $ 0.43   $ 0.42   $ 0.43   $ 0.01   2.4 % $ -   0.0 %
 
Dividends per share $ 0.23   $ 0.23   $ 0.23   $ -   0.0 % $ -   0.0 %
 
Weighted average shares outstanding
Basic   67,525,791     67,445,721     67,410,147  
 
Diluted   67,639,326     67,633,637     67,550,483  
 
Period end shares outstanding   67,556,591     67,481,992     67,439,562  
 

OTHER FINANCIAL DATA
Return on equity 8.23 % 7.83 % 8.60 %
Return on average tangible equity 11.86 % 11.40 % 12.93 %
Return on assets 0.97 % 0.92 % 0.99 %
Interest margin - Yield - FTE 4.07 % 4.05 % 4.15 %
Interest margin - Cost 0.19 % 0.19 % 0.23 %
Net interest margin - FTE 3.88 % 3.86 % 3.92 %
Efficiency ratio (1) 66.46 % 69.16 % 68.32 %
Full-time equivalent employees 3,038 3,060 3,114
 

STOCK PERFORMANCE
Market value-Close $ 24.28 $ 24.54 $ 25.35
Book value $ 21.41 $ 21.04 $ 20.37
Tangible book value $ 15.53 $ 15.13 $ 14.36
 

(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
 

See Notes to Consolidated Financials
 
             
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2015
($ in thousands)
(unaudited)
Quarter Ended Linked Quarter Year over Year

NONPERFORMING ASSETS (1)
  3/31/2015     12/31/2014     3/31/2014   $ Change % Change   $ Change % Change  
Nonaccrual loans
Alabama $ 902 $ 852 $ 96 $ 50 5.9 % $ 806 n/m
Florida 8,179 11,091 9,956 (2,912 ) -26.3 % (1,777 ) -17.8 %
Mississippi (2) 52,145 57,129 44,168 (4,984 ) -8.7 % 7,977 18.1 %
Tennessee (3) 4,197 5,819 5,206 (1,622 ) -27.9 % (1,009 ) -19.4 %
Texas   11,585     4,452     4,572     7,133   n/m   7,013   n/m
Total nonaccrual loans 77,008 79,343 63,998 (2,335 ) -2.9 % 13,010 20.3 %
Other real estate
Alabama 21,795 21,196 24,103 599 2.8 % (2,308 ) -9.6 %
Florida 34,746 35,324 42,013 (578 ) -1.6 % (7,267 ) -17.3 %
Mississippi (2) 15,143 17,397 22,287 (2,254 ) -13.0 % (7,144 ) -32.1 %
Tennessee (3) 10,072 10,292 13,000 (220 ) -2.1 % (2,928 ) -22.5 %
Texas   8,419     8,300     10,133     119   1.4 %   (1,714 ) -16.9 %
Total other real estate   90,175     92,509     111,536     (2,334 ) -2.5 %   (21,361 ) -19.2 %
Total nonperforming assets $ 167,183   $ 171,852   $ 175,534   $ (4,669 ) -2.7 % $ (8,351 ) -4.8 %
 

LOANS PAST DUE OVER 90 DAYS (4)
LHFI $ 1,413   $ 2,764   $ 1,870   $ (1,351 ) -48.9 % $ (457 ) -24.4 %
 
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase) $ 7,584   $ 25,943   $ 20,109   $ (18,359 ) -70.8 % $ (12,525 ) -62.3 %
 
Quarter Ended     Linked Quarter Year over Year

ALLOWANCE FOR LOAN LOSSES (4)
  3/31/2015     12/31/2014     3/31/2014   $ Change % Change   $ Change % Change  
Beginning Balance $ 69,616 $ 70,134 $ 66,448 $ (518 ) -0.7 % $ 3,168 4.8 %
Provision for loan losses 1,785 (1,393 ) (805 ) 3,178 n/m 2,590 n/m
Charge-offs (3,004 ) (3,174 ) (3,016 ) 170 -5.4 % 12 -0.4 %
Recoveries   2,924     4,049     4,891     (1,125 ) -27.8 %   (1,967 ) -40.2 %
Net (charge-offs) recoveries   (80 )   875     1,875     (955 ) n/m   (1,955 ) n/m
Ending Balance $ 71,321   $ 69,616   $ 67,518   $ 1,705   2.4 % $ 3,803   5.6 %
 

PROVISION FOR LOAN LOSSES (4)
Alabama $ 761 $ 283 $ 472 $ 478 n/m $ 289 61.2 %
Florida 1,833 (66 ) (3,499 ) 1,899 n/m 5,332 n/m
Mississippi (2) (2,729 ) (3,065 ) 1,983 336 -11.0 % (4,712 ) n/m
Tennessee (3) 1,432 1,993 (915 ) (561 ) -28.1 % 2,347 n/m
Texas   488     (538 )   1,154     1,026   n/m   (666 ) -57.7 %
Total provision for loan losses $ 1,785   $ (1,393 ) $ (805 ) $ 3,178   n/m $ 2,590   n/m
 

NET CHARGE-OFFS (4)
Alabama $ 144 $ 92 $ 55 $ 52 56.5 % $ 89 n/m
Florida (28 ) (226 ) (2,524 ) 198 -87.6 % 2,496 -98.9 %
Mississippi (2) 143 (880 ) 676 1,023 n/m (533 ) -78.8 %
Tennessee (3) (216 ) 325 (1 ) (541 ) n/m (215 ) n/m
Texas   37     (186 )   (81 )   223   n/m   118   n/m
Total net charge-offs (recoveries) $ 80   $ (875 ) $ (1,875 ) $ 955   n/m $ 1,955   n/m
 

CREDIT QUALITY RATIOS (1)
Net charge-offs/average loans 0.00 % -0.05 % -0.13 %
Provision for loan losses/average loans 0.11 % -0.09 % -0.05 %
Nonperforming loans/total loans (incl LHFS) 1.17 % 1.21 % 1.06 %
Nonperforming assets/total loans (incl LHFS) 2.55 % 2.61 % 2.90 %
Nonperforming assets/total loans (incl LHFS) +ORE 2.51 % 2.57 % 2.85 %
ALL/total loans (excl LHFS) 1.11 % 1.08 % 1.14 %
ALL-commercial/total commercial loans 1.30 % 1.23 % 1.33 %
ALL-consumer/total consumer and home mortgage loans 0.61 % 0.67 % 0.65 %
ALL/nonperforming loans 92.62 % 87.74 % 105.50 %
ALL/nonperforming loans -
(excl impaired loans) 205.52 % 180.95 % 180.86 %
 

CAPITAL RATIOS
Total equity/total assets 11.87 % 11.59 % 11.39 %
Tangible equity/tangible assets 8.91 % 8.62 % 8.31 %
Tangible equity/risk-weighted assets 12.34 % 12.17 % 12.08 %
Tier 1 leverage ratio 9.99 % 9.63 % 9.14 %
Tier 1 common risk-based capital ratio 13.14 % 12.75 % 12.37 %
Tier 1 risk-based capital ratio 13.83 % 13.47 % 13.11 %
Total risk-based capital ratio 14.92 % 14.56 % 14.34 %
 
(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

 

See Notes to Consolidated Financials
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2015
($ in thousands)
(unaudited)
      Quarter Ended

AVERAGE BALANCES
  3/31/2015       12/31/2014       9/30/2014       6/30/2014       3/31/2014  
Securities AFS-taxable $ 2,190,344 $ 2,204,361 $ 2,202,020 $ 2,205,352 $ 2,136,392
Securities AFS-nontaxable 127,623 129,403 131,305 135,956 149,744
Securities HTM-taxable 1,119,979 1,117,989 1,126,309 1,120,448 1,118,747
Securities HTM-nontaxable   41,405     42,040     43,114     43,551     31,039  
Total securities   3,479,351     3,493,793     3,502,748     3,505,307     3,435,922  
Loans (including loans held for sale) 6,561,430 6,494,369 6,387,251 6,160,781 5,950,720
Acquired loans:
Noncovered loans 502,534 544,260 585,675 664,733 751,723
Covered loans 23,593 27,039 28,971 31,122 33,805
Fed funds sold and rev repos 217 1,269 4,228 2,648 6,460
Other earning assets   46,368     48,224     41,871     36,259     36,820  
Total earning assets   10,613,493     10,608,954     10,550,744     10,400,850     10,215,450  
Allowance for loan losses (81,993 ) (82,851 ) (78,227 ) (77,652 ) (79,736 )
Cash and due from banks 290,251 284,754 272,925 304,441 407,078
Other assets   1,303,552     1,317,217     1,345,771     1,343,384     1,376,024  
Total assets $ 12,125,303   $ 12,128,074   $ 12,091,213   $ 11,971,023   $ 11,918,816  
 
Interest-bearing demand deposits $ 1,847,374 $ 1,815,999 $ 1,808,710 $ 1,826,019 $ 1,900,504
Savings deposits 3,252,586 2,963,771 3,050,743 3,260,634 3,193,098
Time deposits less than $100,000 1,139,912 1,152,622 1,187,794 1,225,706 1,280,513
Time deposits of $100,000 or more   785,715     838,309     874,333     911,531     947,509  
Total interest-bearing deposits 7,025,587 6,770,701 6,921,580 7,223,890 7,321,624
Fed funds purchased and repos 421,206 526,482 540,870 387,289 282,816
Short-term borrowings 256,714 385,841 181,114 59,465 65,010
Long-term FHLB advances 1,243 2,652 8,050 8,291 8,406
Subordinated notes 49,939 49,931 49,923 49,915 49,907
Junior subordinated debt securities   61,856     61,856     61,856     61,856     61,856  
Total interest-bearing liabilities 7,816,545 7,797,463 7,763,393 7,790,706 7,789,619
Noninterest-bearing deposits 2,741,945 2,762,332 2,774,745 2,676,907 2,630,785
Other liabilities   129,844     146,011     140,218     111,170     130,749  
Total liabilities 10,688,334 10,705,806 10,678,356 10,578,783 10,551,153
Shareholders' equity   1,436,969     1,422,268     1,412,857     1,392,240     1,367,663  
Total liabilities and equity $ 12,125,303   $ 12,128,074   $ 12,091,213   $ 11,971,023   $ 11,918,816  
 

PERIOD END BALANCES
  3/31/2015     12/31/2014     9/30/2014     6/30/2014     3/31/2014  
Cash and due from banks $ 335,244 $ 315,973 $ 237,497 $ 322,960 $ 423,819
Fed funds sold and rev repos - 1,885 4,013 5,000 -
Securities available for sale 2,381,459 2,374,567 2,363,895 2,376,431 2,382,441
Securities held to maturity 1,184,554 1,170,685 1,169,640 1,156,790 1,155,569
Loans held for sale (LHFS) 150,365 132,196 135,562 142,103 120,446
Loans held for investment (LHFI) 6,413,876 6,449,469 6,333,651 6,187,000 5,923,766
Allowance for loan losses   (71,321 )   (69,616 )   (70,134 )   (66,648 )   (67,518 )
Net LHFI 6,342,555 6,379,853 6,263,517 6,120,352 5,856,248
Acquired loans:
Noncovered loans 478,172 525,783 564,542 616,911 713,647
Covered loans 20,271 23,626 27,607 29,628 32,670
Allowance for loan losses, acquired loans   (11,837 )   (12,059 )   (11,949 )   (11,179 )   (10,540 )
Net acquired loans   486,606     537,350     580,200     635,360     735,777  
Net LHFI and acquired loans 6,829,161 6,917,203 6,843,717 6,755,712 6,592,025
Premises and equipment, net 198,039 200,781 200,474 201,639 203,771
Mortgage servicing rights 62,903 64,358 67,090 65,049 67,614
Goodwill 365,500 365,500 365,500 365,500 365,500
Identifiable intangible assets 31,250 33,234 35,357 37,506 39,697
Other real estate, excluding covered other real estate 90,175 92,509 97,037 106,970 111,536
Covered other real estate 4,794 6,060 4,146 3,872 4,759
FDIC indemnification asset 4,743 6,997 8,154 10,866 13,487
Other assets   540,977     568,685     564,234     569,598     576,390  
Total assets $ 12,179,164   $ 12,250,633   $ 12,096,316   $ 12,119,996   $ 12,057,054  
 
Deposits:
Noninterest-bearing $ 2,936,875 $ 2,748,635 $ 2,723,480 $ 2,729,199 $ 2,879,341
Interest-bearing   6,970,115     6,949,723     6,789,745     7,131,167     7,242,778  
Total deposits 9,906,990 9,698,358 9,513,225 9,860,366 10,122,119
Fed funds purchased and repos 523,187 443,543 607,851 559,316 259,341
Short-term borrowings 50,570 425,077 316,666 61,227 59,671
Long-term FHLB advances 1,222 1,253 8,003 8,236 8,341
Subordinated notes 49,944 49,936 49,928 49,920 49,912
Junior subordinated debt securities 61,856 61,856 61,856 61,856 61,856
Other liabilities   139,311     150,670     123,689     119,184     121,919  
Total liabilities   10,733,080     10,830,693     10,681,218     10,720,105     10,683,159  
Common stock 14,076 14,060 14,051 14,051 14,051
Capital surplus 358,583 356,244 354,251 353,196 352,402
Retained earnings 1,103,077 1,092,120 1,081,161 1,063,201 1,045,939

 

Accum other comprehensive loss, net of tax
  (29,652 )   (42,484 )   (34,365 )   (30,557 )   (38,497 )
Total shareholders' equity   1,446,084     1,419,940     1,415,098     1,399,891     1,373,895  
Total liabilities and equity $ 12,179,164   $ 12,250,633   $ 12,096,316   $ 12,119,996   $ 12,057,054  
 

See Notes to Consolidated Financials
 
   
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2015
($ in thousands except per share data)
(unaudited)
     
 
Quarter Ended

INCOME STATEMENTS
  3/31/2015     12/31/2014     9/30/2014     6/30/2014     3/31/2014  
Interest and fees on LHFS & LHFI-FTE $ 69,658 $ 70,775 $ 70,197 $ 69,618 $ 66,185
Interest and fees on acquired loans 15,078 13,500 23,200 23,250 16,786
Interest on securities-taxable 19,586 21,694 19,712 19,522 19,220
Interest on securities-tax exempt-FTE 1,789 1,814 1,845 1,912 1,920
Interest on fed funds sold and rev repos - 3 9 6 5
Other interest income   393     384     386     379     375  
Total interest income-FTE   106,504     108,170     115,349     114,687     104,491  
Interest on deposits 3,247 3,382 3,606 3,970 4,365
Interest on fed funds pch and repos 143 184 180 110 76
Other interest expense   1,649     1,510     1,425     1,375     1,363  
Total interest expense   5,039     5,076     5,211     5,455     5,804  
Net interest income-FTE 101,465 103,094 110,138 109,232 98,687
Provision for loan losses, LHFI 1,785 (1,393 ) 3,058 351 (805 )
Provision for loan losses, acquired loans   347     1,179     1,145     3,784     63  
Net interest income after provision-FTE   99,333     103,308     105,935     105,097     99,429  
Service charges on deposit accounts 11,085 12,514 12,743 11,846 11,568
Insurance commissions 8,616 7,831 9,240 8,300 8,097
Wealth management 7,990 8,460 8,038 7,710 8,135
Bank card and other fees 6,762 6,712 7,279 9,894 9,081
Mortgage banking, net 8,965 5,918 5,842 6,191 6,829
Other, net   (1,055 )   596     (160 )   199     (21 )
Nonint inc-excl sec gains (losses), net 42,363 42,031 42,982 44,140 43,689
Security gains (losses), net   -     -     (89 )   -     389  
Total noninterest income   42,363     42,031     42,893     44,140     44,078  
Salaries and employee benefits 57,169 57,159 56,675 56,134 56,726
Services and fees 14,121 14,401 14,489 14,543 13,165
Net occupancy-premises 6,191 6,632 6,817 6,413 6,606
Equipment expense 5,974 5,911 5,675 6,136 6,138
FDIC assessment expense 2,940 2,669 2,644 2,468 2,416
ORE/Foreclosure expense 1,115 3,240 930 3,836 3,315
Other expense   11,706     14,420     12,964     13,231     13,252  
Total noninterest expense   99,216     104,432     100,194     102,761     101,618  
Income before income taxes and tax eq adj 42,480 40,907 48,634 46,476 41,889
Tax equivalent adjustment   4,073     4,179     3,909     3,944     3,783  
Income before income taxes 38,407 36,728 44,725 42,532 38,106
Income taxes   9,259     8,655     11,136     9,635     9,103  
Net income $ 29,148   $ 28,073   $ 33,589   $ 32,897   $ 29,003  
 
Per share data
Earnings per share - basic $ 0.43   $ 0.42   $ 0.50   $ 0.49   $ 0.43  
 
Earnings per share - diluted $ 0.43   $ 0.42   $ 0.50   $ 0.49   $ 0.43  
 
Dividends per share $ 0.23   $ 0.23   $ 0.23   $ 0.23   $ 0.23  
 
Weighted average shares outstanding
Basic   67,525,791     67,445,721     67,439,788     67,439,659     67,410,147  
 
Diluted   67,639,326     67,633,637     67,608,612     67,582,714     67,550,483  
 
Period end shares outstanding   67,556,591     67,481,992     67,439,788     67,439,788     67,439,562  
 
 

OTHER FINANCIAL DATA
Return on equity 8.23 % 7.83 % 9.43 % 9.48 % 8.60 %
Return on average tangible equity 11.86 % 11.40 % 13.70 % 13.90 % 12.93 %
Return on assets 0.97 % 0.92 % 1.10 % 1.10 % 0.99 %
Interest margin - Yield - FTE 4.07 % 4.05 % 4.34 % 4.42 % 4.15 %
Interest margin - Cost 0.19 % 0.19 % 0.20 % 0.21 % 0.23 %
Net interest margin - FTE 3.88 % 3.86 % 4.14 % 4.21 % 3.92 %
Efficiency ratio (1) 66.46 % 69.16 % 62.80 % 64.31 % 68.32 %
Full-time equivalent employees 3,038 3,060 3,067 3,095 3,114
 
 

STOCK PERFORMANCE
Market value-Close $ 24.28 $ 24.54 $ 23.04 $ 24.69 $ 25.35
Book value $ 21.41 $ 21.04 $ 20.98 $ 20.76 $ 20.37
Tangible book value $ 15.53 $ 15.13 $ 15.04 $ 14.78 $ 14.36
 

(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.

 

See Notes to Consolidated Financials
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2015
($ in thousands)
(unaudited)
         
Quarter Ended

NONPERFORMING ASSETS (1)
  3/31/2015     12/31/2014     9/30/2014     6/30/2014     3/31/2014  
Nonaccrual loans
Alabama $ 902 $ 852 $ 852 $ 80 $ 96
Florida 8,179 11,091 10,986 11,041 9,956
Mississippi (2) 52,145 57,129 65,751 49,430 44,168
Tennessee (3) 4,197 5,819 5,901 4,244 5,206
Texas   11,585     4,452     4,824     6,323     4,572  
Total nonaccrual loans 77,008 79,343 88,314 71,118 63,998
Other real estate
Alabama 21,795 21,196 24,256 24,541 24,103
Florida 34,746 35,324 36,608 43,207 42,013
Mississippi (2) 15,143 17,397 16,419 18,723 22,287
Tennessee (3) 10,072 10,292 11,347 12,073 13,000
Texas   8,419     8,300     8,407     8,426     10,133  
Total other real estate   90,175     92,509     97,037     106,970     111,536  
Total nonperforming assets $ 167,183   $ 171,852   $ 185,351   $ 178,088   $ 175,534  
 

LOANS PAST DUE OVER 90 DAYS (4)
LHFI $ 1,413   $ 2,764   $ 3,839   $ 1,936   $ 1,870  
 
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase) $ 7,584   $ 25,943   $ 24,979   $ 21,810   $ 20,109  
 
 
Quarter Ended

ALLOWANCE FOR LOAN LOSSES (4)
  3/31/2015     12/31/2014     9/30/2014     6/30/2014     3/31/2014  
Beginning Balance $ 69,616 $ 70,134 $ 66,648 $ 67,518 $ 66,448
Provision for loan losses 1,785 (1,393 ) 3,058 351 (805 )
Charge-offs (3,004 ) (3,174 ) (3,216 ) (3,820 ) (3,016 )
Recoveries   2,924     4,049     3,644     2,599     4,891  
Net (charge-offs) recoveries   (80 )   875     428     (1,221 )   1,875  
Ending Balance $ 71,321   $ 69,616   $ 70,134   $ 66,648   $ 67,518  
 

PROVISION FOR LOAN LOSSES (4)
Alabama $ 761 $ 283 $ 1,093 $ 696 $ 472
Florida 1,833 (66 ) (147 ) (2,014 ) (3,499 )
Mississippi (2) (2,729 ) (3,065 ) 4,679 2,877 1,983
Tennessee (3) 1,432 1,993 244 (277 ) (915 )
Texas   488     (538 )   (2,811 )   (931 )   1,154  
Total provision for loan losses $ 1,785   $ (1,393 ) $ 3,058   $ 351   $ (805 )
 

NET CHARGE-OFFS (4)
Alabama $ 144 $ 92 $ 172 $ 84 $ 55
Florida (28 ) (226 ) (89 ) (525 ) (2,524 )
Mississippi (2) 143 (880 ) 462 1,518 676
Tennessee (3) (216 ) 325 48 87 (1 )
Texas   37     (186 )   (1,021 )   57     (81 )
Total net charge-offs (recoveries) $ 80   $ (875 ) $ (428 ) $ 1,221   $ (1,875 )
 

CREDIT QUALITY RATIOS (1)
Net charge-offs/average loans 0.00 % -0.05 % -0.03 % 0.08 % -0.13 %
Provision for loan losses/average loans 0.11 % -0.09 % 0.19 % 0.02 % -0.05 %
Nonperforming loans/total loans (incl LHFS) 1.17 % 1.21 % 1.37 % 1.12 % 1.06 %
Nonperforming assets/total loans (incl LHFS) 2.55 % 2.61 % 2.87 % 2.81 % 2.90 %
Nonperforming assets/total loans (incl LHFS) +ORE 2.51 % 2.57 % 2.82 % 2.77 % 2.85 %
ALL/total loans (excl LHFS) 1.11 % 1.08 % 1.11 % 1.08 % 1.14 %
ALL-commercial/total commercial loans 1.30 % 1.23 % 1.26 % 1.20 % 1.33 %
ALL-consumer/total consumer and home mortgage loans 0.61 % 0.67 % 0.69 % 0.75 % 0.65 %
ALL/nonperforming loans 92.62 % 87.74 % 79.41 % 93.71 % 105.50 %
ALL/nonperforming loans -
(excl impaired loans) 205.52 % 180.95 % 178.81 % 159.71 % 180.86 %
 

CAPITAL RATIOS
Total equity/total assets 11.87 % 11.59 % 11.70 % 11.55 % 11.39 %
Tangible equity/tangible assets 8.91 % 8.62 % 8.67 % 8.51 % 8.31 %
Tangible equity/risk-weighted assets 12.34 % 12.17 % 12.24 % 12.19 % 12.08 %
Tier 1 leverage ratio 9.99 % 9.63 % 9.54 % 9.43 % 9.14 %
Tier 1 common risk-based capital ratio 13.14 % 12.75 % 12.74 % 12.61 % 12.37 %
Tier 1 risk-based capital ratio 13.83 % 13.47 % 13.47 % 13.34 % 13.11 %
Total risk-based capital ratio 14.92 % 14.56 % 14.70 % 14.54 % 14.34 %
 
 

(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
 

See Notes to Consolidated Financials
 
 

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

March 31, 2015

($ in thousands)

(unaudited)
 

Note 1 - Securities Available for Sale and Held to Maturity

The following table is a summary of the estimated fair value of securities available for sale and the amortized cost of securities held to maturity ($ in thousands):
  3/31/2015     12/31/2014     9/30/2014     6/30/2014     3/31/2014

SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities $ - $ 100 $ 100 $ 100 $ 100
U.S. Government agency obligations
Issued by U.S. Government agencies 78,115 79,656 83,011 117,489 123,368
Issued by U.S. Government sponsored agencies 33,076 32,818 30,779 40,848 40,601
Obligations of states and political subdivisions 160,154 162,258 165,463 171,229 172,437
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA 12,010 12,427 12,828 13,492 14,263
Issued by FNMA and FHLMC 195,470 204,441 213,420 225,229 232,488
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 1,646,710 1,661,833 1,603,138 1,543,619 1,530,068
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 225,826 189,334 221,641 229,283 232,072
Asset-backed securities and structured financial products   30,098   31,700   33,515   35,142   37,044
Total securities available for sale $ 2,381,459 $ 2,374,567 $ 2,363,895 $ 2,376,431 $ 2,382,441
 

SECURITIES HELD TO MATURITY
U.S. Government agency obligations
Issued by U.S. Government sponsored agencies $ 101,171 $ 100,971 $ 100,767 $ 100,563 $ 100,361
Obligations of states and political subdivisions 62,928 63,505 64,538 65,193 65,757
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA 18,861 19,115 13,368 13,959 12,177
Issued by FNMA and FHLMC 11,341 11,437 11,816 12,165 12,395
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 842,827 834,176 836,966 822,444 822,135
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA   147,426   141,481   142,185   142,466   142,744
Total securities held to maturity $ 1,184,554 $ 1,170,685 $ 1,169,640 $ 1,156,790 $ 1,155,569
 

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 March 31, 2015, the net unamortized, unrealized loss on the transferred securities included in accumulated other comprehensive (loss) income in the accompanying balance sheet totaled approximately $39.0 million ($24.1 million, net of tax).

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

March 31, 2015

($ in thousands)

(unaudited)
 

Note 2 - Loan Composition
         

LHFI BY TYPE (excluding acquired loans)
  3/31/2015     12/31/2014     9/30/2014     6/30/2014     3/31/2014  
Loans secured by real estate:
Construction, land development and other land loans $ 691,657 $ 619,877 $ 580,794 $ 531,651 $ 592,658
Secured by 1-4 family residential properties 1,613,993 1,634,397 1,625,480 1,581,859 1,533,781
Secured by nonfarm, nonresidential properties 1,516,895 1,553,193 1,560,901 1,544,516 1,461,947
Other real estate secured 233,322 253,787 239,819 250,383 193,221
Commercial and industrial loans 1,228,788 1,270,350 1,246,753 1,250,146 1,207,367
Consumer loans 161,535 167,964 168,813 165,372 160,153
State and other political subdivision loans 614,330 602,727 585,382 562,415 493,220
Other loans   353,356     347,174     325,709     300,658     281,419  
LHFI 6,413,876 6,449,469 6,333,651 6,187,000 5,923,766
Allowance for loan losses   (71,321 )   (69,616 )   (70,134 )   (66,648 )   (67,518 )
Net LHFI $ 6,342,555   $ 6,379,853   $ 6,263,517   $ 6,120,352   $ 5,856,248  
 

ACQUIRED NONCOVERED LOANS BY TYPE
  3/31/2015       12/31/2014       9/30/2014       6/30/2014       3/31/2014  
Loans secured by real estate:
Construction, land development and other land loans $ 51,363 $ 58,309 $ 64,808 $ 75,353 $ 88,683
Secured by 1-4 family residential properties 111,830 116,920 120,366 133,191 145,213
Secured by nonfarm, nonresidential properties 177,210 202,323 214,806 226,967 271,696
Other real estate secured 26,819 27,813 28,036 30,918 34,787
Commercial and industrial loans 81,261 88,256 103,185 114,212 135,114
Consumer loans 8,494 9,772 11,236 14,733 15,024
Other loans   21,195     22,390     22,105     21,537     23,130  
Noncovered loans 478,172 525,783 564,542 616,911 713,647
Allowance for loan losses   (11,106 )   (10,541 )   (11,136 )   (9,770 )   (9,952 )
Net noncovered loans $ 467,066   $ 515,242   $ 553,406   $ 607,141   $ 703,695  
         

ACQUIRED COVERED LOANS BY TYPE
  3/31/2015     12/31/2014     9/30/2014     6/30/2014     3/31/2014  
Loans secured by real estate:
Construction, land development and other land loans $ 1,447 $ 1,197 $ 1,721 $ 2,130 $ 2,239
Secured by 1-4 family residential properties 11,200 13,180 14,114 14,565 15,572
Secured by nonfarm, nonresidential properties 5,844 7,672 8,270 8,831 10,629
Other real estate secured 1,469 1,096 2,949 2,376 2,470
Commercial and industrial loans 255 277 327 336 361
Consumer loans - - - - 49
Other loans   56     204     226     1,390     1,350  
Covered loans 20,271 23,626 27,607 29,628 32,670
Allowance for loan losses   (731 )   (1,518 )   (813 )   (1,409 )   (588 )
Net covered loans $ 19,540   $ 22,108   $ 26,794   $ 28,219   $ 32,082  
 

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

March 31, 2015

($ in thousands)

(unaudited)
 

Note 2 - Loan Composition (continued)
 
March 31, 2015

LHFI - COMPOSITION BY REGION (1)
Total   Alabama   Florida  

Mississippi(Central andSouthernRegions)
 

Tennessee(Memphis, TNand NorthernMS Regions)
Texas
Loans secured by real estate:
Construction, land development and other land loans $ 691,657 $ 84,244 $ 61,909 $ 244,335 $ 50,198 $ 250,971
Secured by 1-4 family residential properties 1,613,993 45,686 48,707 1,378,256 124,642 16,702
Secured by nonfarm, nonresidential properties 1,516,895 108,858 167,899 754,282 149,548 336,308
Other real estate secured 233,322 14,771 5,526 151,607 26,038 35,380
Commercial and industrial loans 1,228,788 81,484 11,289 772,678 109,535 253,802
Consumer loans 161,535 16,579 2,380 123,415 16,352 2,809
State and other political subdivision loans 614,330 44,108 27,434 449,339 20,327 73,122
Other loans   353,356   18,921   18,632   241,744   37,690   36,369
Loans $ 6,413,876 $ 414,651 $ 343,776 $ 4,115,656 $ 534,330 $ 1,005,463
 
 
 

CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION (1)
Lots $ 46,700 $ 4,696 $ 22,204 $ 13,802 $ 1,956 $ 4,042
Development 53,793 5,143 6,524 32,184 886 9,056
Unimproved land 109,869 7,835 22,231 47,341 22,509 9,953
1-4 family construction 148,566 27,066 10,804 70,670 3,387 36,639
Other construction   332,729   39,504   146   80,338   21,460   191,281
Construction, land development and other land loans $ 691,657 $ 84,244 $ 61,909 $ 244,335 $ 50,198 $ 250,971
 
 
 
 

LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION (1)
Income producing:
Retail $ 194,635 $ 21,719 $ 41,559 $ 64,736 $ 19,853 $ 46,768
Office 195,111 14,306 41,765 79,718 7,593 51,729
Nursing homes/assisted living 78,785 - - 72,893 5,892 -
Hotel/motel 112,494 11,555 19,187 37,702 33,941 10,109
Industrial 45,236 5,342 4,595 11,573 1,109 22,617
Health care 25,824 2,389 - 23,408 27 -
Convenience stores 10,165 242 - 5,230 1,209 3,484
Other   154,018   5,548   17,834   69,896   4,988   55,752
Total income producing loans 816,268 61,101 124,940 365,156 74,612 190,459
 
Owner-occupied:
Office 109,847 6,919 16,186 56,121 7,953 22,668
Churches 96,168 3,953 3,161 47,597 31,071 10,386
Industrial warehouses 117,065 3,406 3,979 59,813 11,343 38,524
Health care 111,405 13,512 7,770 60,731 9,434 19,958
Convenience stores 63,363 484 1,519 45,868 2,962 12,530
Retail 37,976 2,208 4,035 25,396 3,305 3,032
Restaurants 27,915 1,651 1,948 23,356 - 960
Auto dealerships 13,503 6,210 90 5,837 1,349 17
Other   123,385   9,414   4,271   64,407   7,519   37,774
Total owner-occupied loans   700,627   47,757   42,959   389,126   74,936   145,849
Loans secured by nonfarm, nonresidential properties $ 1,516,895 $ 108,858 $ 167,899 $ 754,282 $ 149,548 $ 336,308
 

(1) - Excludes Acquired Loans
 
 

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

March 31, 2015

($ in thousands)

(unaudited)
 

Note 3 - Yields on Earning Assets and Interest-Bearing Liabilities

The following table illustrates the yields on earning assets by category as well as the rates paid on interest-bearing liabilities on a tax equivalent basis:
Quarter Ended
3/31/2015     12/31/2014     9/30/2014     6/30/2014     3/31/2014  
Securities - taxable 2.40 % 2.59 % 2.35 % 2.35 % 2.39 %
Securities - nontaxable 4.29 % 4.20 % 4.20 % 4.27 % 4.31 %
Securities - total 2.49 % 2.67 % 2.44 % 2.45 % 2.50 %
Loans - LHFI & LHFS 4.31 % 4.32 % 4.36 % 4.53 % 4.51 %
Acquired loans 11.62 % 9.38 % 14.98 % 13.40 % 8.67 %
Loans - total 4.85 % 4.73 % 5.29 % 5.43 % 5.00 %
FF sold & rev repo 0.00 % 0.94 % 0.84 % 0.91 % 0.31 %
Other earning assets 3.44 % 3.16 % 3.66 % 4.19 % 4.13 %
Total earning assets 4.07 % 4.05 % 4.34 % 4.42 % 4.15 %
 
Interest-bearing deposits 0.19 % 0.20 % 0.21 % 0.22 % 0.24 %
FF pch & repo 0.14 % 0.14 % 0.13 % 0.11 % 0.11 %
Other borrowings 1.81 % 1.20 % 1.88 % 3.07 % 2.99 %
Total interest-bearing liabilities 0.26 % 0.26 % 0.27 % 0.28 % 0.30 %
 
Net interest margin 3.88 % 3.86 % 4.14 % 4.21 % 3.92 %
Net interest margin excluding acquired loans 3.47 % 3.54 % 3.47 % 3.55 % 3.52 %
 

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 increased 2 basis points during the first quarter of 2015. The slight increase in the net interest margin was primarily due to an increase in recoveries on acquired loans from $2.0 million during the fourth quarter of 2014 to $3.9 million during the first quarter of 2015. Excluding the recoveries on acquired loans, the yield on average acquired loans totaled 8.63% during the first quarter of 2015.

The net interest margin, excluding acquired loans, totaled 3.47% during the first quarter of 2015 compared to a net interest margin, excluding acquired loans as well as $2.2 million of yield maintenance payments on prepaid securities, of 3.46% during the fourth quarter of 2014.

Note 4 - 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 $1.3 million and $1.9 million for the quarters ended March 31, 2015 and 2014, respectively.

The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements:
  Quarter Ended
  3/31/2015       12/31/2014       9/30/2014       6/30/2014       3/31/2014  
Mortgage servicing income, net $ 4,897 $ 4,814 $ 4,674 $ 4,592 $ 4,539
Change in fair value-MSR from runoff (2,213 ) (1,999 ) (2,364 ) (2,391 ) (1,812 )
Gain on sales of loans, net 3,716 2,910 3,272 2,749 1,839
Other, net   1,245     132     (323 )   695     400  
Mortgage banking income before hedge ineffectiveness   7,645     5,857     5,259     5,645     4,966  
Change in fair value-MSR from market changes (2,368 ) (4,142 ) 700 (3,038 ) (723 )
Change in fair value of derivatives   3,688     4,203     (117 )   3,584     2,586  
Net positive hedge ineffectiveness   1,320     61     583     546     1,863  
Mortgage banking, net $ 8,965   $ 5,918   $ 5,842   $ 6,191   $ 6,829  
 

During the first quarter of 2015, Trustmark exercised its option to repurchase delinquent loans serviced for GNMA. These loans were subsequently sold to a third party under different repurchase provisions. Trustmark retained the servicing for these loans, which are fully guaranteed by FHA/VA. As a result of this repurchase and sale, the loans are no longer carried as "LHFS-Guaranteed GNMA serviced loans" (see pages 3 and 6). The transaction resulted in a gain of $304 thousand, which was recorded during the first quarter of 2015 and is included in the table above as "Gain on sales of loans, net."
 

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

March 31, 2015

($ in thousands)

(unaudited)
 

Note 5 - Other Noninterest Income and Expense

Other noninterest income consisted of the following for the periods presented ($ in thousands):
  Quarter Ended
  3/31/2015       12/31/2014       9/30/2014       6/30/2014       3/31/2014  
Partnership amortization for tax credit purposes $ (2,472 ) $ (2,806 ) $ (3,006 ) $ (3,006 ) $ (3,006 )
Decrease in FDIC indemnification asset (970 ) (735 ) (452 ) (999 ) (688 )
Increase in life insurance cash surrender value 1,675 1,693 1,702 1,857 2,087
Other miscellaneous income   712     2,444     1,596     2,347     1,586  
Total other, net $ (1,055 ) $ 596   $ (160 ) $ 199   $ (21 )
 

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 first quarter of 2015, other noninterest income included a write-down of the FDIC indemnification asset of $970 thousand on acquired covered loans and covered other real estate obtained from the Heritage Banking Group as a result of loan pay-offs, real estate sales, improved cash flow projections and valuation of covered other real estate.

Other noninterest expense consisted of the following for the periods presented ($ in thousands):
  Quarter Ended
  3/31/2015     12/31/2014     9/30/2014     6/30/2014     3/31/2014
Loan expense $ 2,721 $ 3,312 $ 3,070 $ 3,107 $ 3,464
Amortization of intangibles 1,991 2,123 2,150 2,190 2,293
Other miscellaneous expense   6,994   8,985   7,744   7,934   7,495
Total other expense $ 11,706 $ 14,420 $ 12,964 $ 13,231 $ 13,252
 

Note 6 - 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 SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

March 31, 2015

($ in thousands)

(unaudited)
 
Note 6 - Non-GAAP Financial Measures (continued)          
Quarter Ended
  3/31/2015     12/31/2014     9/30/2014     6/30/2014     3/31/2014  

TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity $ 1,436,969 $ 1,422,268 $ 1,412,857 $ 1,392,240 $ 1,367,663

Less: Goodwill
(365,500 ) (365,500 ) (365,500 ) (365,500 ) (372,720 )
Identifiable intangible assets   (32,398 )   (34,411 )   (36,553 )   (38,711 )   (41,015 )
Total average tangible equity $ 1,039,071   $ 1,022,357   $ 1,010,804   $ 988,029   $ 953,928  
 
PERIOD END BALANCES
Total shareholders' equity $ 1,446,084 $ 1,419,940 $ 1,415,098 $ 1,399,891 $ 1,373,895
Less:Goodwill (365,500 ) (365,500 ) (365,500 ) (365,500 ) (365,500 )
Identifiable intangible assets   (31,250 )   (33,234 )   (35,357 )   (37,506 )   (39,697 )
Total tangible equity (a) $ 1,049,334   $ 1,021,206   $ 1,014,241   $ 996,885   $ 968,698  
 

TANGIBLE ASSETS
Total assets $ 12,179,164 $ 12,250,633 $ 12,096,316 $ 12,119,996 $ 12,057,054

Less: Goodwill
(365,500 ) (365,500 ) (365,500 ) (365,500 ) (365,500 )
Identifiable intangible assets   (31,250 )   (33,234 )   (35,357 )   (37,506 )   (39,697 )
Total tangible assets (b) $ 11,782,414   $ 11,851,899   $ 11,695,459   $ 11,716,990   $ 11,651,857  
 
Risk-weighted assets (c) $ 8,503,102   $ 8,387,799   $ 8,287,608   $ 8,175,622   $ 8,016,482  
 

NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income $ 29,148 $ 28,073 $ 33,589 $ 32,897 $ 29,003

Plus: Intangible amortization net of tax
  1,229     1,312     1,328     1,353     1,417  
Net income adjusted for intangible amortization $ 30,377   $ 29,385   $ 34,917   $ 34,250   $ 30,420  
 
Period end common shares outstanding (d)   67,556,591     67,481,992     67,439,788     67,439,788     67,439,562  
 

TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity (1) 11.86 % 11.40 % 13.70 % 13.90 % 12.93 %
Tangible equity/tangible assets (a)/(b) 8.91 % 8.62 % 8.67 % 8.51 % 8.31 %
Tangible equity/risk-weighted assets (a)/(c) 12.34 % 12.17 % 12.24 % 12.19 % 12.08 %
Tangible book value (a)/(d)*1,000 $ 15.53 $ 15.13 $ 15.04 $ 14.78 $ 14.36
 

TIER 1 COMMON RISK-BASED CAPITAL - BASEL I
Total shareholders' equity $ 1,419,940 $ 1,415,098 $ 1,399,891 $ 1,373,895
Eliminate qualifying AOCI 42,484 34,365 30,557 38,497
Qualifying tier 1 capital 60,000 60,000 60,000 60,000
Disallowed goodwill (365,500 ) (365,500 ) (365,500 ) (365,500 )
Adj to goodwill allowed for deferred taxes 15,855 15,503 15,150 14,798
Other disallowed intangibles (33,234 ) (35,357 ) (37,506 ) (39,697 )
Disallowed servicing intangible (6,436 ) (6,709 ) (6,505 ) (6,761 )
Disallowed deferred taxes   (3,479 )   (1,234 )   (5,134 )   (23,969 )
Total tier 1 capital 1,129,630 1,116,166 1,090,953 1,051,263
Less:Qualifying tier 1 capital   (60,000 )   (60,000 )   (60,000 )   (60,000 )
Total tier 1 common capital (e) $ 1,069,630   $ 1,056,166   $ 1,030,953   $ 991,263  
 
Tier 1 common risk-based capital ratio (e)/(c) 12.75 % 12.74 % 12.61 % 12.37 %
 

COMMON EQUITY TIER 1 CAPITAL (CET1) - BASEL III
Total shareholders' equity $ 1,446,084
AOCI-related adjustments 29,652
CET1 adjustments and deductions:
Goodwill net of associated deferred tax liabilities (DTLs) (349,292 )
Other adjustments and deductions for CET1 (2)   (9,104 )
CET1 capital (f) 1,117,340
Additional tier 1 capital instruments plus related surplus 60,000
Less: additional tier 1 capital deductions   (1,762 )
Additional tier 1 capital   58,238  
Tier 1 capital $ 1,175,578  
 
Tier 1 common risk-based capital ratio (f)/(c) 13.14 %
 
(1) Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity
(2) Includes other intangible assets, net of DTLs, disallowed deferred tax assets (DTAS), threshold deductions and transition adjustments, as applicable.

Copyright Business Wire 2010