Trustmark Corporation (NASDAQ:TRMK) reported net income of $28.1 million in the fourth quarter of 2014, which represented diluted earnings per share of $0.42. For the full year 2014, net income totaled $123.6 million, which resulted in diluted earnings per share of $1.83, an increase of 4.6% from the prior year. Trustmark’s performance during 2014 produced a return on average tangible equity of 12.97% and a return on average assets of 1.03%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable March 15, 2015, to shareholders of record on March 1, 2015.

Printer friendly version of earnings release with consolidated financial statements and notes: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=51026755&lang=en.

Gerard R. Host, President and CEO, stated, “2014 was a year of significant accomplishments for Trustmark. We continued to build upon and expand customer relationships, as reflected by growth in our diversified banking, wealth management and insurance businesses. Over the course of the year, total revenue expanded to $578.5 million, the highest level in Trustmark’s 125-year history. Credit quality continued to improve and remained an important contributor to our financial success. We continued investing in technology to increase revenue, improve efficiency, and ensure compliance with regulatory mandates. We have the necessary infrastructure in place to support a significantly larger organization and are well-positioned to meet the financial needs of our customers and create value for our shareholders.”

Balance Sheet Management

  • Loans held for investment increased $650.6 million, or 11.2%, in 2014
  • Average noninterest-bearing deposits represented 29.0% of average total deposits in the fourth quarter
  • Capital base provides opportunity to support additional growth

Loans held for investment totaled $6.4 billion at December 31, 2014, an increase of $115.8 million, or 7.2% annualized, from the prior quarter and $650.6 million, or 11.2%, from one year earlier. The sequential quarter increase reflected diversified loan growth across Trustmark’s five-state franchise. Construction, land development and other land loans increased $39.1 million during the fourth quarter driven by commercial and residential construction in Trustmark’s Texas, Alabama and Tennessee markets, which was offset in part by reductions in Mississippi. Other loans, which include lending to states and municipalities, nonprofits and real estate investment trusts, increased $38.8 million during the fourth quarter as a result of growth in Trustmark’s Mississippi, Texas and Alabama markets. Commercial and industrial loans increased $23.6 million during the quarter principally due to growth in the Mississippi and Alabama markets. Other real estate secured loans, which include multifamily projects, increased $14.0 million during the quarter as growth in Trustmark’s Mississippi and Alabama markets was offset in part by reductions in Texas. The single-family mortgage portfolio increased $8.9 million during the fourth quarter, reflecting growth in Trustmark’s Alabama and Mississippi markets. Loans secured by nonfarm and nonresidential real estate decreased $7.7 million during the quarter as growth in owner-occupied real estate was more than offset by declines in income producing loans.

Acquired loans totaled $549.4 million at December 31, 2014, down $42.7 million from the prior quarter. Collectively, loans held for investment and acquired loans totaled $7.0 billion at December 31, 2014, up $73.1 million, or 4.2% annualized, from the prior quarter.

Average earning assets during the fourth quarter increased $58.2 million relative to the prior quarter principally due to increased balances of loans held for investment. Average deposits in the fourth quarter declined $163.3 million, reflecting a $150.9 million decrease in average interest-bearing deposits and $12.4 million decline in average noninterest-bearing deposits.

Trustmark’s capital position remained solid, reflecting the consistent profitability of its diversified financial services businesses. At December 31, 2014, Trustmark’s tangible equity to tangible assets ratio was 8.62%, while the total risk-based capital ratio was 14.56%. 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

  • Significant improvement in classified and criticized loan balances
  • Other real estate declined 4.7% and 13.2% from the prior quarter and year, respectively
  • Allowance for loan losses represented 180.95% of nonperforming loans, excluding impaired loans

Nonperforming loans totaled $79.3 million at December 31, 2014, a decrease of $9.0 million from the prior quarter and an increase of $14.1 million from one year earlier. The increase in nonperforming loans year-over-year was primarily the result of a few significant substandard credit relationships migrating to nonaccrual status during the year. Other real estate totaled $92.5 million, a decrease of $4.5 million, or 4.7%, from the prior quarter. Relative to levels one year earlier, other real estate decreased $14.0 million, or 13.2%. Collectively, nonperforming assets totaled $171.9 million, a decrease of $13.5 million from the prior quarter and an increase of $75 thousand from one year earlier.

During the fourth quarter of 2014, recoveries exceeded charge-offs, resulting in a net recovery position of $875 thousand. This compares favorably to the net recovery position in the prior quarter of $428 thousand and net charge-off position of $201 thousand for the comparable period one year earlier. During 2014, Trustmark had a net recovery position of $2.0 million, comparing favorably to a net recovery position of $1.1 million in the prior year. During the fourth quarter of 2014, the provision for loan losses for loans held for investment was a negative $1.4 million; for the year 2014, the provision for loan losses for loans held for investment was $1.2 million compared to a negative $13.4 million for 2013.

During the fourth quarter, Trustmark experienced a 5.4% reduction in classified loan balances and a 14.7% decline in criticized loan balances relative to the prior quarter. When compared to the prior year, classified loan balances decreased 12.3% while criticized loan balances declined 15.9%.

Allocation of Trustmark’s $69.6 million allowance for loan losses represented 1.23% of commercial loans and 0.67% of consumer and home mortgage loans, resulting in an allowance to total loans held for investment of 1.08% at December 31, 2014, which represents a level management considers commensurate with the inherent risk in the loan portfolio. The allowance for loan losses represented 180.95% 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 expanded to $578.5 million in 2014
  • Net interest income (FTE) achieved record level of $421.2 million in 2014
  • Insurance and wealth management revenue increased 8.6% and 9.7%, respectively, during the year

Net interest income (FTE) in the fourth quarter totaled $103.1 million, resulting in a net interest margin of 3.86%. Relative to the prior quarter, interest income (FTE) decreased $7.2 million due principally to a $6.7 million decline in recoveries on acquired loans. The yield on acquired loans in the fourth quarter totaled 9.38% and included recoveries from settlement of debt of $2.0 million, which represented approximately 1.38% of the total acquired annualized loan yield in the fourth quarter. Excluding acquired loans, the net interest margin in the fourth quarter totaled 3.54% and included $2.2 million (eight basis points) of yield maintenance payments on prepaid securities. Net interest income (FTE) in 2014 totaled $421.2 million, an increase of 4.4% from the prior year; the net interest margin (FTE) was 4.03% in 2014 compared to 4.01% in 2013.

Noninterest income totaled $42.0 million in the fourth quarter, a decrease of 2.0% from the prior quarter and an increase of 8.7% from levels one year earlier. Total noninterest income in 2014 was $173.1 million, down 0.4% from the prior year. Bank card and other fees totaled $6.7 million in the fourth quarter, a decrease of 7.8% from the prior quarter and 29.9% from the comparable period one year earlier, reflecting 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 $12.5 million, a decline of 1.8% from the prior quarter and 4.6% from the comparable period one year earlier; the decline was attributable to a reduction in NSF and overdraft fees resulting from changes in customer practices.

Insurance revenue in the fourth quarter totaled $7.8 million, reflecting a seasonal decrease of 15.2% relative to the prior quarter and an increase of 6.6% from levels one year earlier. Improved performance year-over-year resulted from increasing business development efforts. Insurance revenue totaled $33.5 million in 2014, an increase of 8.6% relative to the prior year.

Wealth management revenue totaled $8.5 million in the fourth quarter, an increase of 5.3% from the prior quarter and 3.9% from the comparable period one year earlier. This growth was attributable to improved profitability within the trust management business as well as increased sales within investment services resulting from improved market conditions. Wealth management revenue in 2014 totaled $32.3 million, an increase of 9.7% relative to the prior year.

Mortgage banking revenue in the fourth quarter totaled $5.9 million, an increase of 1.3% relative to the prior quarter and 14.1% from the comparable period one year earlier. Mortgage loan production in the fourth quarter totaled $293.8 million, reflecting a seasonal decrease of 14.9% from the prior quarter and an increase of 6.5% from levels one year earlier due to expanded originations in Trustmark’s Alabama markets. Mortgage loan production in 2014 totaled $1.2 billion, a decline of 17.8% from levels in 2013, while mortgage banking revenue declined 26.0% to $24.8 million principally due to lower secondary marketing gains resulting from tightening mortgage spreads and reduced volume.

Noninterest Expense

  • Routine noninterest expense remained well-controlled
  • Continued realignment of branch network to enhance efficiency and revenue growth
  • Tax credit investments reduced the effective tax rate to 23.8% in 2014

Noninterest expense totaled $104.4 million in the fourth quarter. Excluding ORE expense and intangible amortization of $5.4 million, noninterest expense during the fourth quarter totaled $99.1 million, an increase of $2.0 million from comparable expenses in the prior quarter. The increase during the quarter was primarily reflected in salaries and benefits and other expenses. Salaries and benefits reflected an increase of $484 thousand, which included an additional year-end incentive accrual of $1.3 million offset by reductions in commissions of $742 thousand. Other expense increased $1.5 million, which was principally attributable to contingency reserves. Noninterest expense in 2014 totaled $409.0 million, a decrease of 1.6% relative to the prior year.

Trustmark continued realignment of its branch network to enhance productivity and efficiency as well as promote additional revenue growth. During the fourth quarter, Trustmark consolidated two banking centers with limited growth opportunities. Over the course of 2014, Trustmark consolidated five banking centers and opened three new offices – one each in Birmingham and Montgomery, Alabama, and Memphis, Tennessee. 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, January 28, 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, February 11, 2015, in archived format at the same web address or by calling (877) 344-7529, passcode 10058131.

Trustmark Corporation is a financial services company providing banking and financial solutions through 205 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
December 31, 2014
($ in thousands)
(unaudited)
 
                  Linked Quarter     Year over Year

QUARTERLY AVERAGE BALANCES

12/31/20149/30/201412/31/2013

$ Change

     % Change

$ Change

     % Change
Securities AFS-taxable $ 2,204,361 $ 2,202,020 $ 3,026,186 $ 2,341 0.1 % $ (821,825 ) -27.2 %
Securities AFS-nontaxable 129,403 131,305 160,989 (1,902 ) -1.4 % (31,586 ) -19.6 %
Securities HTM-taxable 1,117,989 1,126,309 265,792 (8,320 ) -0.7 % 852,197 n/m
Securities HTM-nontaxable   42,040     43,114     21,172     (1,074 ) -2.5 %   20,868   98.6 %
Total securities   3,493,793     3,502,748     3,474,139     (8,955 ) -0.3 %   19,654   0.6 %
Loans (including loans held for sale) 6,494,369 6,387,251 5,847,557 107,118 1.7 % 646,812 11.1 %

Acquired loans:

Noncovered loans 544,260 585,675 812,426 (41,415 ) -7.1 % (268,166 ) -33.0 %
Covered loans 27,039 28,971 34,640 (1,932 ) -6.7 % (7,601 ) -21.9 %
Fed funds sold and rev repos 1,269 4,228 11,094 (2,959 ) -70.0 % (9,825 ) -88.6 %
Other earning assets   48,224     41,871     32,118     6,353   15.2 %   16,106   50.1 %
Total earning assets   10,608,954     10,550,744     10,211,974     58,210   0.6 %   396,980   3.9 %
Allowance for loan losses (82,851 ) (78,227 ) (78,742 ) (4,624 ) 5.9 % (4,109 ) 5.2 %
Cash and due from banks 284,754 272,925 275,051 11,829 4.3 % 9,703 3.5 %
Other assets   1,317,217     1,345,771     1,360,712     (28,554 ) -2.1 %   (43,495 ) -3.2 %
Total assets $ 12,128,074   $ 12,091,213   $ 11,768,995   $ 36,861   0.3 % $ 359,079   3.1 %
 
Interest-bearing demand deposits $ 1,815,999 $ 1,808,710 $ 1,803,956 $ 7,289 0.4 % $ 12,043 0.7 %
Savings deposits 2,963,771 3,050,743 2,952,472 (86,972 ) -2.9 % 11,299 0.4 %
Time deposits less than $100,000 1,152,622 1,187,794 1,344,488 (35,172 ) -3.0 % (191,866 ) -14.3 %
Time deposits of $100,000 or more   838,309     874,333     961,075     (36,024 ) -4.1 %   (122,766 ) -12.8 %
Total interest-bearing deposits 6,770,701 6,921,580 7,061,991 (150,879 ) -2.2 % (291,290 ) -4.1 %
Fed funds purchased and repos 526,482 540,870 361,758 (14,388 ) -2.7 % 164,724 45.5 %
Short-term borrowings 385,841 181,114 63,531 204,727 n/m 322,310 n/m
Long-term FHLB advances 2,652 8,050 8,507 (5,398 ) -67.1 % (5,855 ) -68.8 %
Subordinated notes 49,931 49,923 49,898 8 0.0 % 33 0.1 %
Junior subordinated debt securities   61,856     61,856     61,856     -   0.0 %   -   0.0 %
Total interest-bearing liabilities 7,797,463 7,763,393 7,607,541 34,070 0.4 % 189,922 2.5 %
Noninterest-bearing deposits 2,762,332 2,774,745 2,611,209 (12,413 ) -0.4 % 151,123 5.8 %
Other liabilities   146,011     140,218     203,270     5,793   4.1 %   (57,259 ) -28.2 %
Total liabilities 10,705,806 10,678,356 10,422,020 27,450 0.3 % 283,786 2.7 %
Shareholders' equity   1,422,268     1,412,857     1,346,975     9,411   0.7 %   75,293   5.6 %
Total liabilities and equity $ 12,128,074   $ 12,091,213   $ 11,768,995   $ 36,861   0.3 % $ 359,079   3.1 %
 
 
Linked QuarterYear over Year

PERIOD END BALANCES

12/31/20149/30/201412/31/2013$Change% Change$Change% Change
Cash and due from banks $ 315,973 $ 237,497 $ 345,761 $ 78,476 33.0 % $ (29,788 ) -8.6 %
Fed funds sold and rev repos 1,885 4,013 7,253 (2,128 ) -53.0 % (5,368 ) -74.0 %
Securities available for sale 2,374,567 2,363,895 2,194,154 10,672 0.5 % 180,413 8.2 %
Securities held to maturity 1,170,685 1,169,640 1,168,728 1,045 0.1 % 1,957 0.2 %
Loans held for sale (LHFS) 132,196 135,562 149,169 (3,366 ) -2.5 % (16,973 ) -11.4 %
Loans held for investment (LHFI) 6,449,469 6,333,651 5,798,881 115,818 1.8 % 650,588 11.2 %
Allowance for loan losses   (69,616 )   (70,134 )   (66,448 )   518   -0.7 %   (3,168 ) 4.8 %
Net LHFI 6,379,853 6,263,517 5,732,433 116,336 1.9 % 647,420 11.3 %
Acquired loans:
Noncovered loans 525,783 564,542 769,990 (38,759 ) -6.9 % (244,207 ) -31.7 %
Covered loans 23,626 27,607 34,216 (3,981 ) -14.4 % (10,590 ) -31.0 %
Allowance for loan losses, acquired loans   (12,059 )   (11,949 )   (9,636 )   (110 ) 0.9 %   (2,423 ) 25.1 %
Net acquired loans   537,350     580,200     794,570     (42,850 ) -7.4 %   (257,220 ) -32.4 %
Net LHFI and acquired loans 6,917,203 6,843,717 6,527,003 73,486 1.1 % 390,200 6.0 %
Premises and equipment, net 200,781 200,474 207,283 307 0.2 % (6,502 ) -3.1 %
Mortgage servicing rights 64,358 67,090 67,834 (2,732 ) -4.1 % (3,476 ) -5.1 %
Goodwill 365,500 365,500 372,851 - 0.0 % (7,351 ) -2.0 %
Identifiable intangible assets 33,234 35,357 41,990 (2,123 ) -6.0 % (8,756 ) -20.9 %
Other real estate, excluding covered other real estate 92,509 97,037 106,539 (4,528 ) -4.7 % (14,030 ) -13.2 %
Covered other real estate 6,060 4,146 5,108 1,914 46.2 % 952 18.6 %
FDIC indemnification asset 6,997 8,154 14,347 (1,157 ) -14.2 % (7,350 ) -51.2 %
Other assets   568,685     564,234     582,363     4,451   0.8 %   (13,678 ) -2.3 %
Total assets $ 12,250,633   $ 12,096,316   $ 11,790,383   $ 154,317   1.3 % $ 460,250   3.9 %
 
Deposits:
Noninterest-bearing $ 2,748,635 $ 2,723,480 $ 2,663,503 $ 25,155 0.9 % $ 85,132 3.2 %
Interest-bearing   6,949,723     6,789,745     7,196,399     159,978   2.4 %   (246,676 ) -3.4 %
Total deposits 9,698,358 9,513,225 9,859,902 185,133 1.9 % (161,544 ) -1.6 %
Fed funds purchased and repos 443,543 607,851 251,587 (164,308 ) -27.0 % 191,956 76.3 %
Short-term borrowings 425,077 316,666 66,385 108,411 34.2 % 358,692 n/m
Long-term FHLB advances 1,253 8,003 8,458 (6,750 ) -84.3 % (7,205 ) -85.2 %
Subordinated notes 49,936 49,928 49,904 8 0.0 % 32 0.1 %
Junior subordinated debt securities 61,856 61,856 61,856 - 0.0 % - 0.0 %
Other liabilities   150,670     123,689     137,338     26,981   21.8 %   13,332   9.7 %
Total liabilities   10,830,693     10,681,218     10,435,430     149,475   1.4 %   395,263   3.8 %
Common stock 14,060 14,051 14,038 9 0.1 % 22 0.2 %
Capital surplus 356,244 354,251 349,680 1,993 0.6 % 6,564 1.9 %
Retained earnings 1,092,120 1,081,161 1,034,966 10,959 1.0 % 57,154 5.5 %

Accum other comprehensive loss, net of tax

  (42,484 )   (34,365 )   (43,731 )   (8,119 ) 23.6 %   1,247   -2.9 %
Total shareholders' equity   1,419,940     1,415,098     1,354,953     4,842   0.3 %   64,987   4.8 %
Total liabilities and equity $ 12,250,633   $ 12,096,316   $ 11,790,383   $ 154,317   1.3 % $ 460,250   3.9 %
 
n/m - percentage changes greater than +/- 100% are considered not meaningful
 

See Notes to Consolidated Financials

 
 
 
 
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2014
($ in thousands except per share data)
(unaudited)
                             
Quarter EndedLinked QuarterYear over Year

INCOME STATEMENTS

12/31/20149/30/201412/31/2013$Change% Change$Change% Change
Interest and fees on LHFS & LHFI-FTE $ 70,775 $ 70,197 $ 67,038 $ 578 0.8 % $ 3,737 5.6 %
Interest and fees on acquired loans 13,500 23,200 23,384 (9,700 ) -41.8 % (9,884 ) -42.3 %
Interest on securities-taxable 21,694 19,712 19,078 1,982 10.1 % 2,616 13.7 %
Interest on securities-tax exempt-FTE 1,814 1,845 1,963 (31 ) -1.7 % (149 ) -7.6 %
Interest on fed funds sold and rev repos 3 9 14 (6 ) -66.7 % (11 ) -78.6 %
Other interest income   384     386     367     (2 ) -0.5 %   17   4.6 %
Total interest income-FTE   108,170     115,349     111,844     (7,179 ) -6.2 %   (3,674 ) -3.3 %
Interest on deposits 3,382 3,606 4,768 (224 ) -6.2 % (1,386 ) -29.1 %
Interest on fed funds pch and repos 184 180 104 4 2.2 % 80 76.9 %
Other interest expense   1,510     1,425     1,370     85   6.0 %   140   10.2 %
Total interest expense   5,076     5,211     6,242     (135 ) -2.6 %   (1,166 ) -18.7 %
Net interest income-FTE 103,094 110,138 105,602 (7,044 ) -6.4 % (2,508 ) -2.4 %
Provision for loan losses, LHFI (1,393 ) 3,058 (1,983 ) (4,451 ) n/m 590 -29.8 %
Provision for loan losses, acquired loans   1,179     1,145     4,169     34   3.0 %   (2,990 ) -71.7 %
Net interest income after provision-FTE   103,308     105,935     103,416     (2,627 ) -2.5 %   (108 ) -0.1 %
Service charges on deposit accounts 12,514 12,743 13,114 (229 ) -1.8 % (600 ) -4.6 %
Insurance commissions 7,831 9,240 7,343 (1,409 ) -15.2 % 488 6.6 %
Wealth management 8,460 8,038 8,145 422 5.3 % 315 3.9 %
Bank card and other fees 6,712 7,279 9,580 (567 ) -7.8 % (2,868 ) -29.9 %
Mortgage banking, net 5,918 5,842 5,186 76 1.3 % 732 14.1 %
Other, net   596     (160 )   (4,802 )   756   n/m   5,398   n/m
Nonint inc-excl sec gains (losses), net 42,031 42,982 38,566 (951 ) -2.2 % 3,465 9.0 %
Security gains (losses), net   -     (89 )   107     89   -100.0 %   (107 ) -100.0 %
Total noninterest income   42,031     42,893     38,673     (862 ) -2.0 %   3,358   8.7 %
Salaries and employee benefits 57,159 56,675 56,687 484 0.9 % 472 0.8 %
Services and fees 14,401 14,489 14,476 (88 ) -0.6 % (75 ) -0.5 %
Net occupancy-premises 6,632 6,817 6,659 (185 ) -2.7 % (27 ) -0.4 %
Equipment expense 5,911 5,675 6,400 236 4.2 % (489 ) -7.6 %
FDIC assessment expense 2,669 2,644 2,228 25 0.9 % 441 19.8 %
ORE/Foreclosure expense 3,240 930 3,009 2,310 n/m 231 7.7 %
Other expense   14,420     12,964     15,408     1,456   11.2 %   (988 ) -6.4 %
Total noninterest expense   104,432     100,194     104,867     4,238   4.2 %   (435 ) -0.4 %
Income before income taxes and tax eq adj 40,907 48,634 37,222 (7,727 ) -15.9 % 3,685 9.9 %
Tax equivalent adjustment   4,179     3,909     3,747     270   6.9 %   432   11.5 %
Income before income taxes 36,728 44,725 33,475 (7,997 ) -17.9 % 3,253 9.7 %
Income taxes   8,655     11,136     5,436     (2,481 ) -22.3 %   3,219   59.2 %
Net income $ 28,073   $ 33,589   $ 28,039   $ (5,516 ) -16.4 % $ 34   0.1 %
 
Per share data
Earnings per share - basic $ 0.42   $ 0.50   $ 0.42   $ (0.08 ) -16.0 % $ -   0.0 %
 
Earnings per share - diluted $ 0.42   $ 0.50   $ 0.42   $ (0.08 ) -16.0 % $ -   0.0 %
 
Dividends per share $ 0.23   $ 0.23   $ 0.23   $ -   0.0 % $ -   0.0 %
 
Weighted average shares outstanding
Basic   67,445,721     67,439,788     67,249,877  
 
Diluted   67,633,637     67,608,612     67,449,778  
 
Period end shares outstanding   67,481,992     67,439,788     67,372,980  
 

OTHER FINANCIAL DATA

Return on equity 7.83 % 9.43 % 8.26 %
Return on average tangible equity 11.40 % 13.70 % 12.59 %
Return on assets 0.92 % 1.10 % 0.95 %
Interest margin - Yield - FTE 4.05 % 4.34 % 4.35 %
Interest margin - Cost 0.19 % 0.20 % 0.24 %
Net interest margin - FTE 3.86 % 4.14 % 4.10 %
Efficiency ratio (1) 69.16 % 62.80 % 68.38 %
Full-time equivalent employees 3,060 3,067 3,110
 

STOCK PERFORMANCE

Market value-Close $ 24.54 $ 23.04 $ 26.84
Book value $ 21.04 $ 20.98 $ 20.11
Tangible book value $ 15.13 $ 15.04 $ 13.95
 
(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
December 31, 2014
($ in thousands)
(unaudited)
 
      Quarter Ended           Linked Quarter     Year over Year

NONPERFORMING ASSETS (1)

12/31/2014     9/30/2014   12/31/2013

$ Change

     % Change

$ Change

     % Change
Nonaccrual loans
Alabama $ 852 $ 852 $ 14 $ - 0.0 % $ 838 n/m
Florida 11,091 10,986 12,278 105 1.0 % (1,187 ) -9.7 %
Mississippi (2) 57,129 65,751 42,307 (8,622 ) -13.1 % 14,822 35.0 %
Tennessee (3) 5,819 5,901 4,390 (82 ) -1.4 % 1,429 32.6 %
Texas   4,452     4,824     6,249     (372 ) -7.7 %   (1,797 ) -28.8 %
Total nonaccrual loans 79,343 88,314 65,238 (8,971 ) -10.2 % 14,105 21.6 %
Other real estate
Alabama 21,196 24,256 25,912 (3,060 ) -12.6 % (4,716 ) -18.2 %
Florida 35,324 36,608 34,480 (1,284 ) -3.5 % 844 2.4 %
Mississippi (2) 17,397 16,419 22,766 978 6.0 % (5,369 ) -23.6 %
Tennessee (3) 10,292 11,347 12,892 (1,055 ) -9.3 % (2,600 ) -20.2 %
Texas   8,300     8,407     10,489     (107 ) -1.3 %   (2,189 ) -20.9 %
Total other real estate   92,509     97,037     106,539     (4,528 ) -4.7 %   (14,030 ) -13.2 %
Total nonperforming assets $ 171,852   $ 185,351   $ 171,777   $ (13,499 ) -7.3 % $ 75   0.0 %
 

LOANS PAST DUE OVER 90 DAYS (4)

LHFI $ 2,764   $ 3,839   $ 3,298   $ (1,075 ) -28.0 % $ (534 ) -16.2 %
 
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase) $ 25,943   $ 24,979   $ 21,540   $ 964   3.9 % $ 4,403   20.4 %
 
Quarter Ended     Linked QuarterYear over Year

ALLOWANCE FOR LOAN LOSSES (4)

   12/31/2014     9/30/2014     12/31/2013   $Change% Change   $Change% Change  
Beginning Balance $ 70,134 $ 66,648 $ 68,632 $ 3,486 5.2 % $ 1,502 2.2 %
Provision for loan losses (1,393 ) 3,058 (1,983 ) (4,451 ) n/m 590 -29.8 %
Charge-offs (3,174 ) (3,216 ) (3,305 ) 42 -1.3 % 131 -4.0 %
Recoveries   4,049     3,644     3,104     405   11.1 %   945   30.4 %
Net recoveries (charge-offs)   875     428     (201 )   447   n/m   1,076   n/m
Ending Balance $ 69,616   $ 70,134   $ 66,448   $ (518 ) -0.7 % $ 3,168   4.8 %
 

PROVISION FOR LOAN LOSSES (4)

Alabama $ 283 $ 1,093 $ 332 $ (810 ) -74.1 % $ (49 ) -14.8 %
Florida (66 ) (147 ) (2,350 ) 81 -55.1 % 2,284 -97.2 %
Mississippi (2) (3,065 ) 4,679 3,336 (7,744 ) n/m (6,401 ) n/m
Tennessee (3) 1,993 244 (117 ) 1,749 n/m 2,110 n/m
Texas   (538 )   (2,811 )   (3,184 )   2,273   -80.9 %   2,646   -83.1 %
Total provision for loan losses $ (1,393 ) $ 3,058   $ (1,983 ) $ (4,451 ) n/m $ 590   -29.8 %
 

NET CHARGE-OFFS (4)

Alabama $ 92 $ 172 $ 74 $ (80 ) -46.5 % $ 18 24.3 %
Florida (226 ) (89 ) (634 ) (137 ) n/m 408 -64.4 %
Mississippi (2) (880 ) 462 393 (1,342 ) n/m (1,273 ) n/m
Tennessee (3) 325 48 506 277 n/m (181 ) -35.8 %
Texas   (186 )   (1,021 )   (138 )   835   -81.8 %   (48 ) 34.8 %
Total net (recoveries) charge-offs $ (875 ) $ (428 ) $ 201   $ (447 ) n/m $ (1,076 ) n/m
 

CREDIT QUALITY RATIOS (1)

Net charge offs/average loans -0.05 % -0.03 % 0.01 %
Provision for loan losses/average loans -0.09 % 0.19 % -0.13 %
Nonperforming loans/total loans (incl LHFS) 1.21 % 1.37 % 1.10 %
Nonperforming assets/total loans (incl LHFS) 2.61 % 2.87 % 2.89 %
Nonperforming assets/total loans (incl LHFS) +ORE 2.57 % 2.82 % 2.84 %
ALL/total loans (excl LHFS) 1.08 % 1.11 % 1.15 %
ALL-commercial/total commercial loans 1.23 % 1.26 % 1.30 %
ALL-consumer/total consumer and home mortgage loans 0.67 % 0.69 % 0.75 %
ALL/nonperforming loans 87.74 % 79.41 % 101.86 %

ALL/nonperforming loans - (excl impaired loans)

180.95 % 178.81 % 190.70 %
 

CAPITAL RATIOS

Total equity/total assets 11.59 % 11.70 % 11.49 %
Tangible equity/tangible assets 8.62 % 8.67 % 8.26 %
Tangible equity/risk-weighted assets 12.17 % 12.24 % 11.88 %
Tier 1 leverage ratio 9.63 % 9.54 % 9.06 %
Tier 1 common risk-based capital ratio 12.75 % 12.74 % 12.21 %
Tier 1 risk-based capital ratio 13.47 % 13.47 % 12.97 %
Total risk-based capital ratio 14.56 % 14.70 % 14.18 %
 
(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
December 31, 2014
($ in thousands)
(unaudited)
 
      Quarter Ended     Year Ended

AVERAGE BALANCES

12/31/2014     9/30/2014     6/30/2014     3/31/2014     12/31/201312/31/2014     12/31/2013
Securities AFS-taxable $ 2,204,361 $ 2,202,020 $ 2,205,352 $ 2,136,392 $ 3,026,186 $ 2,187,258 $ 3,101,245
Securities AFS-nontaxable 129,403 131,305 135,956 149,744 160,989 136,532 168,190
Securities HTM-taxable 1,117,989 1,126,309 1,120,448 1,118,747 265,792 1,120,886 108,778
Securities HTM-nontaxable   42,040     43,114     43,551     31,039     21,172     39,975     15,092  
Total securities   3,493,793     3,502,748     3,505,307     3,435,922     3,474,139     3,484,651     3,393,305  
Loans (including loans held for sale) 6,494,369 6,387,251 6,160,781 5,950,720 5,847,557 6,250,151 5,777,401
Acquired loans:
Noncovered loans 544,260 585,675 664,733 751,723 812,426 635,890 796,358
Covered loans 27,039 28,971 31,122 33,805 34,640 30,212 41,812
Fed funds sold and rev repos 1,269 4,228 2,648 6,460 11,094 3,638 8,388
Other earning assets   48,224     41,871     36,259     36,820     32,118     40,828     34,941  
Total earning assets   10,608,954     10,550,744     10,400,850     10,215,450     10,211,974     10,445,370     10,052,205  
Allowance for loan losses (82,851 ) (78,227 ) (77,652 ) (79,736 ) (78,742 ) (79,621 ) (82,336 )
Cash and due from banks 284,754 272,925 304,441 407,078 275,051 316,843 275,545
Other assets   1,317,217     1,345,771     1,343,384     1,376,024     1,360,712     1,345,438     1,285,555  
Total assets $ 12,128,074   $ 12,091,213   $ 11,971,023   $ 11,918,816   $ 11,768,995   $ 12,028,030   $ 11,530,969  
 
Interest-bearing demand deposits $ 1,815,999 $ 1,808,710 $ 1,826,019 $ 1,900,504 $ 1,803,956 $ 1,837,496 $ 1,790,687
Savings deposits 2,963,771 3,050,743 3,260,634 3,193,098 2,952,472 3,116,251 2,944,588
Time deposits less than $100,000 1,152,622 1,187,794 1,225,706 1,280,513 1,344,488 1,211,242 1,353,643
Time deposits of $100,000 or more   838,309     874,333     911,531     947,509     961,075     892,571     969,660  
Total interest-bearing deposits 6,770,701 6,921,580 7,223,890 7,321,624 7,061,991 7,057,560 7,058,578
Fed funds purchased and repos 526,482 540,870 387,289 282,816 361,758 435,324 326,870
Short-term borrowings 385,841 181,114 59,465 65,010 63,531 173,759 60,381
Long-term FHLB advances 2,652 8,050 8,291 8,406 8,507 6,837 7,833
Subordinated notes 49,931 49,923 49,915 49,907 49,898 49,919 49,886
Junior subordinated debt securities   61,856     61,856     61,856     61,856     61,856     61,856     70,971  
Total interest-bearing liabilities 7,797,463 7,763,393 7,790,706 7,789,619 7,607,541 7,785,255 7,574,519
Noninterest-bearing deposits 2,762,332 2,774,745 2,676,907 2,630,785 2,611,209 2,711,727 2,436,470
Other liabilities   146,011     140,218     111,170     130,749     203,270     132,103     182,383  
Total liabilities 10,705,806 10,678,356 10,578,783 10,551,153 10,422,020 10,629,085 10,193,372
Shareholders' equity   1,422,268     1,412,857     1,392,240     1,367,663     1,346,975     1,398,945     1,337,597  
Total liabilities and equity $ 12,128,074   $ 12,091,213   $ 11,971,023   $ 11,918,816   $ 11,768,995   $ 12,028,030   $ 11,530,969  
 
 

PERIOD END BALANCES

   12/31/2014     9/30/2014     6/30/2014     3/31/2014     12/31/2013  
Cash and due from banks $ 315,973 $ 237,497 $ 322,960 $ 423,819 $ 345,761
Fed funds sold and rev repos 1,885 4,013 5,000 - 7,253
Securities available for sale 2,374,567 2,363,895 2,376,431 2,382,441 2,194,154
Securities held to maturity 1,170,685 1,169,640 1,156,790 1,155,569 1,168,728
Loans held for sale (LHFS) 132,196 135,562 142,103 120,446 149,169
Loans held for investment (LHFI) 6,449,469 6,333,651 6,187,000 5,923,766 5,798,881
Allowance for loan losses   (69,616 )   (70,134 )   (66,648 )   (67,518 )   (66,448 )
Net LHFI 6,379,853 6,263,517 6,120,352 5,856,248 5,732,433
Acquired loans:
Noncovered loans 525,783 564,542 616,911 713,647 769,990
Covered loans 23,626 27,607 29,628 32,670 34,216
Allowance for loan losses, acquired loans   (12,059 )   (11,949 )   (11,179 )   (10,540 )   (9,636 )
Net acquired loans   537,350     580,200     635,360     735,777     794,570  
Net LHFI and acquired loans 6,917,203 6,843,717 6,755,712 6,592,025 6,527,003
Premises and equipment, net 200,781 200,474 201,639 203,771 207,283
Mortgage servicing rights 64,358 67,090 65,049 67,614 67,834
Goodwill 365,500 365,500 365,500 365,500 372,851
Identifiable intangible assets 33,234 35,357 37,506 39,697 41,990
Other real estate, excluding covered other real estate 92,509 97,037 106,970 111,536 106,539
Covered other real estate 6,060 4,146 3,872 4,759 5,108
FDIC indemnification asset 6,997 8,154 10,866 13,487 14,347
Other assets   568,685     564,234     569,598     576,390     582,363  
Total assets $ 12,250,633   $ 12,096,316   $ 12,119,996   $ 12,057,054   $ 11,790,383  
 
Deposits:
Noninterest-bearing $ 2,748,635 $ 2,723,480 $ 2,729,199 $ 2,879,341 $ 2,663,503
Interest-bearing   6,949,723     6,789,745     7,131,167     7,242,778     7,196,399  
Total deposits 9,698,358 9,513,225 9,860,366 10,122,119 9,859,902
Fed funds purchased and repos 443,543 607,851 559,316 259,341 251,587
Short-term borrowings 425,077 316,666 61,227 59,671 66,385
Long-term FHLB advances 1,253 8,003 8,236 8,341 8,458
Subordinated notes 49,936 49,928 49,920 49,912 49,904
Junior subordinated debt securities 61,856 61,856 61,856 61,856 61,856
Other liabilities   150,670     123,689     119,184     121,919     137,338  
Total liabilities   10,830,693     10,681,218     10,720,105     10,683,159     10,435,430  
Common stock 14,060 14,051 14,051 14,051 14,038
Capital surplus 356,244 354,251 353,196 352,402 349,680
Retained earnings 1,092,120 1,081,161 1,063,201 1,045,939 1,034,966

Accum other comprehensive loss, net of tax

  (42,484 )   (34,365 )   (30,557 )   (38,497 )   (43,731 )
Total shareholders' equity   1,419,940     1,415,098     1,399,891     1,373,895     1,354,953  
Total liabilities and equity $ 12,250,633   $ 12,096,316   $ 12,119,996   $ 12,057,054   $ 11,790,383  
 

See Notes to Consolidated Financials

 
 
 
 
 
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2014
($ in thousands except per share data)
(unaudited)
                             
 
Quarter EndedYear Ended

INCOME STATEMENTS

12/31/20149/30/20146/30/20143/31/201412/31/201312/31/201412/31/2013
Interest and fees on LHFS & LHFI-FTE $ 70,775 $ 70,197 $ 69,618 $ 66,185 $ 67,038 $ 276,775 $ 270,617
Interest and fees on acquired loans 13,500 23,200 23,250 16,786 23,384 76,736 76,336
Interest on securities-taxable 21,694 19,712 19,522 19,220 19,078 80,148 72,818
Interest on securities-tax exempt-FTE 1,814 1,845 1,912 1,920 1,963 7,491 7,915
Interest on fed funds sold and rev repos 3 9 6 5 14 23 31
Other interest income   384     386     379     375     367     1,524     1,466  
Total interest income-FTE   108,170     115,349     114,687     104,491     111,844     442,697     429,183  
Interest on deposits 3,382 3,606 3,970 4,365 4,768 15,323 19,718
Interest on fed funds pch and repos 184 180 110 76 104 550 379
Other interest expense   1,510     1,425     1,375     1,363     1,370     5,673     5,762  
Total interest expense   5,076     5,211     5,455     5,804     6,242     21,546     25,859  
Net interest income-FTE 103,094 110,138 109,232 98,687 105,602 421,151 403,324
Provision for loan losses, LHFI (1,393 ) 3,058 351 (805 ) (1,983 ) 1,211 (13,421 )
Provision for loan losses, acquired loans   1,179     1,145     3,784     63     4,169     6,171     6,039  
Net interest income after provision-FTE   103,308     105,935     105,097     99,429     103,416     413,769     410,706  
Service charges on deposit accounts 12,514 12,743 11,846 11,568 13,114 48,671 51,576
Insurance commissions 7,831 9,240 8,300 8,097 7,343 33,468 30,826
Wealth management 8,460 8,038 7,710 8,135 8,145 32,343 29,480
Bank card and other fees 6,712 7,279 9,894 9,081 9,580 32,966 35,961
Mortgage banking, net 5,918 5,842 6,191 6,829 5,186 24,780 33,504
Other, net   596     (160 )   199     (21 )   (4,802 )   614     (7,973 )
Nonint inc-excl sec gains (losses), net 42,031 42,982 44,140 43,689 38,566 172,842 173,374
Security gains (losses), net   -     (89 )   -     389     107     300     485  
Total noninterest income   42,031     42,893     44,140     44,078     38,673     173,142     173,859  
Salaries and employee benefits 57,159 56,675 56,134 56,726 56,687 226,694 221,727
Services and fees 14,401 14,489 14,543 13,165 14,476 56,598 53,904
Net occupancy-premises 6,632 6,817 6,413 6,606 6,659 26,468 25,961
Equipment expense 5,911 5,675 6,136 6,138 6,400 23,860 24,538
FDIC assessment expense 2,669 2,644 2,468 2,416 2,228 10,197 9,001
ORE/Foreclosure expense 3,240 930 3,836 3,315 3,009 11,321 15,039
Other expense   14,420     12,964     13,231     13,252     15,408     53,867     65,561  
Total noninterest expense   104,432     100,194     102,761     101,618     104,867     409,005     415,731  
Income before income taxes and tax eq adj 40,907 48,634 46,476 41,889 37,222 177,906 168,834
Tax equivalent adjustment   4,179     3,909     3,944     3,783     3,747     15,815     14,837  
Income before income taxes 36,728 44,725 42,532 38,106 33,475 162,091 153,997
Income taxes   8,655     11,136     9,635     9,103     5,436     38,529     36,937  
Net income $ 28,073   $ 33,589   $ 32,897   $ 29,003   $ 28,039   $ 123,562   $ 117,060  
 
Per share data
Earnings per share - basic $ 0.42   $ 0.50   $ 0.49   $ 0.43   $ 0.42   $ 1.83   $ 1.75  
 
Earnings per share - diluted $ 0.42   $ 0.50   $ 0.49   $ 0.43   $ 0.42   $ 1.83   $ 1.75  
 
Dividends per share $ 0.23   $ 0.23   $ 0.23   $ 0.23   $ 0.23   $ 0.92   $ 0.92  
 
Weighted average shares outstanding
Basic   67,445,721     67,439,788     67,439,659     67,410,147     67,249,877     67,433,942     66,897,404  
 
Diluted   67,633,637     67,608,612     67,582,714     67,550,483     67,449,778     67,594,010     67,073,072  
 
Period end shares outstanding   67,481,992     67,439,788     67,439,788     67,439,562     67,372,980     67,481,992     67,372,980  
 
 

OTHER FINANCIAL DATA

Return on equity 7.83 % 9.43 % 9.48 % 8.60 % 8.26 % 8.83 % 8.75 %
Return on average tangible equity 11.40 % 13.70 % 13.90 % 12.93 % 12.59 % 12.97 % 13.09 %
Return on assets 0.92 % 1.10 % 1.10 % 0.99 % 0.95 % 1.03 % 1.02 %
Interest margin - Yield - FTE 4.05 % 4.34 % 4.42 % 4.15 % 4.35 % 4.24 % 4.27 %
Interest margin - Cost 0.19 % 0.20 % 0.21 % 0.23 % 0.24 % 0.21 % 0.26 %
Net interest margin - FTE 3.86 % 4.14 % 4.21 % 3.92 % 4.10 % 4.03 % 4.01 %
Efficiency ratio (1) 69.16 % 62.80 % 64.31 % 68.32 % 68.38 % 66.07 % 66.81 %
Full-time equivalent employees 3,060 3,067 3,095 3,114 3,110
 
 

STOCK PERFORMANCE

Market value-Close $ 24.54 $ 23.04 $ 24.69 $ 25.35 $ 26.84
Book value $ 21.04 $ 20.98 $ 20.76 $ 20.37 $ 20.11
Tangible book value $ 15.13 $ 15.04 $ 14.78 $ 14.36 $ 13.95
 
(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
December 31, 2014
($ in thousands)
(unaudited)
                             
Quarter Ended

NONPERFORMING ASSETS (1)

12/31/20149/30/20146/30/20143/31/201412/31/2013
Nonaccrual loans
Alabama $ 852 $ 852 $ 80 $ 96 $ 14
Florida 11,091 10,986 11,041 9,956 12,278
Mississippi (2) 57,129 65,751 49,430 44,168 42,307
Tennessee (3) 5,819 5,901 4,244 5,206 4,390
Texas   4,452     4,824     6,323     4,572     6,249  
Total nonaccrual loans 79,343 88,314 71,118 63,998 65,238
Other real estate
Alabama 21,196 24,256 24,541 24,103 25,912
Florida 35,324 36,608 43,207 42,013 34,480
Mississippi (2) 17,397 16,419 18,723 22,287 22,766
Tennessee (3) 10,292 11,347 12,073 13,000 12,892
Texas   8,300     8,407     8,426     10,133     10,489  
Total other real estate   92,509     97,037     106,970     111,536     106,539  
Total nonperforming assets $ 171,852   $ 185,351   $ 178,088   $ 175,534   $ 171,777  
 

LOANS PAST DUE OVER 90 DAYS (4)

LHFI $ 2,764   $ 3,839   $ 1,936   $ 1,870   $ 3,298  
 
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase) $ 25,943   $ 24,979   $ 21,810   $ 20,109   $ 21,540  
 
 
Quarter EndedYear Ended

ALLOWANCE FOR LOAN LOSSES (4)

12/31/20149/30/20146/30/20143/31/201412/31/201312/31/201412/31/2013
Beginning Balance $ 70,134 $ 66,648 $ 67,518 $ 66,448 $ 68,632 $ 66,448 $ 78,738
Provision for loan losses (1,393 ) 3,058 351 (805 ) (1,983 ) 1,211 (13,421 )
Charge-offs (3,174 ) (3,216 ) (3,820 ) (3,016 ) (3,305 ) (13,226 ) (13,478 )
Recoveries   4,049     3,644     2,599     4,891     3,104     15,183     14,609  
Net recoveries (charge-offs)   875     428     (1,221 )   1,875     (201 )   1,957     1,131  
Ending Balance $ 69,616   $ 70,134   $ 66,648   $ 67,518   $ 66,448   $ 69,616   $ 66,448  
 

PROVISION FOR LOAN LOSSES (4)

Alabama $ 283 $ 1,093 $ 696 $ 472 $ 332 $ 2,544 $ 1,790
Florida (66 ) (147 ) (2,014 ) (3,499 ) (2,350 ) (5,726 ) (12,092 )
Mississippi (2) (3,065 ) 4,679 2,877 1,983 3,336 6,474 (155 )
Tennessee (3) 1,993 244 (277 ) (915 ) (117 ) 1,045 (980 )
Texas   (538 )   (2,811 )   (931 )   1,154     (3,184 )   (3,126 )   (1,984 )
Total provision for loan losses $ (1,393 ) $ 3,058   $ 351   $ (805 ) $ (1,983 ) $ 1,211   $ (13,421 )
 

NET CHARGE-OFFS (4)

Alabama $ 92 $ 172 $ 84 $ 55 $ 74 $ 403 $ 284
Florida (226 ) (89 ) (525 ) (2,524 ) (634 ) (3,364 ) (3,047 )
Mississippi (2) (880 ) 462 1,518 676 393 1,776 769
Tennessee (3) 325 48 87 (1 ) 506 459 705
Texas   (186 )   (1,021 )   57     (81 )   (138 )   (1,231 )   158  
Total net (recoveries) charge-offs $ (875 ) $ (428 ) $ 1,221   $ (1,875 ) $ 201   $ (1,957 ) $ (1,131 )
 

CREDIT QUALITY RATIOS (1)

Net charge offs/average loans -0.05 % -0.03 % 0.08 % -0.13 % 0.01 % -0.03 % -0.02 %
Provision for loan losses/average loans -0.09 % 0.19 % 0.02 % -0.05 % -0.13 % 0.02 % -0.23 %
Nonperforming loans/total loans (incl LHFS) 1.21 % 1.37 % 1.12 % 1.06 % 1.10 %
Nonperforming assets/total loans (incl LHFS) 2.61 % 2.87 % 2.81 % 2.90 % 2.89 %
Nonperforming assets/total loans (incl LHFS) +ORE 2.57 % 2.82 % 2.77 % 2.85 % 2.84 %
ALL/total loans (excl LHFS) 1.08 % 1.11 % 1.08 % 1.14 % 1.15 %
ALL-commercial/total commercial loans 1.23 % 1.26 % 1.20 % 1.33 % 1.30 %
ALL-consumer/total consumer and home mortgage loans 0.67 % 0.69 % 0.75 % 0.65 % 0.75 %
ALL/nonperforming loans 87.74 % 79.41 % 93.71 % 105.50 % 101.86 %

ALL/nonperforming loans - (excl impaired loans)

180.95 % 178.81 % 159.71 % 180.86 % 190.70 %
 

CAPITAL RATIOS

Total equity/total assets 11.59 % 11.70 % 11.55 % 11.39 % 11.49 %
Tangible equity/tangible assets 8.62 % 8.67 % 8.51 % 8.31 % 8.26 %
Tangible equity/risk-weighted assets 12.17 % 12.24 % 12.19 % 12.08 % 11.88 %
Tier 1 leverage ratio 9.63 % 9.54 % 9.43 % 9.14 % 9.06 %
Tier 1 common risk-based capital ratio 12.75 % 12.74 % 12.61 % 12.37 % 12.21 %
Tier 1 risk-based capital ratio 13.47 % 13.47 % 13.34 % 13.11 % 12.97 %
Total risk-based capital ratio 14.56 % 14.70 % 14.54 % 14.34 % 14.18 %
 
 
(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
December 31, 2014
($ 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):

                     
12/31/20149/30/20146/30/20143/31/201412/31/2013

SECURITIES AVAILABLE FOR SALE

U.S. Treasury securities $ 100 $ 100 $ 100 $ 100 $ 502
U.S. Government agency obligations
Issued by U.S. Government agencies 79,656 83,011 117,489 123,368 129,293
Issued by U.S. Government sponsored agencies 32,818 30,779 40,848 40,601 40,179
Obligations of states and political subdivisions 162,258 165,463 171,229 172,437 171,738
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA 12,427 12,828 13,492 14,263 14,474
Issued by FNMA and FHLMC 204,441 213,420 225,229 232,488 241,118
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 1,661,833 1,603,138 1,543,619 1,530,068 1,290,741
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 189,334 221,641 229,283 232,072 242,172
Asset-backed securities and structured financial products   31,700   33,515   35,142   37,044   63,937
Total securities available for sale $ 2,374,567 $ 2,363,895 $ 2,376,431 $ 2,382,441 $ 2,194,154
 

SECURITIES HELD TO MATURITY

U.S. Government agency obligations
Issued by U.S. Government sponsored agencies $ 100,971 $ 100,767 $ 100,563 $ 100,361 $ 100,159
Obligations of states and political subdivisions 63,505 64,538 65,193 65,757 65,987
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA 19,115 13,368 13,959 12,177 9,433
Issued by FNMA and FHLMC 11,437 11,816 12,165 12,395 12,724
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 834,176 836,966 822,444 822,135 837,393
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA   141,481   142,185   142,466   142,744   143,032
Total securities held to maturity $ 1,170,685 $ 1,169,640 $ 1,156,790 $ 1,155,569 $ 1,168,728
 

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 December 31, 2014, the net unamortized, unrealized loss on the transferred securities included in accumulated other comprehensive (loss) income in the accompanying balance sheet totaled approximately $40.4 million ($24.9 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
December 31, 2014
($ in thousands)
(unaudited)

Note 2 – Loan Composition

                     

LHFI BY TYPE (excluding acquired loans)

12/31/20149/30/20146/30/20143/31/201412/31/2013
Loans secured by real estate:
Construction, land development and other land loans $ 619,877 $ 580,794 $ 531,651 $ 592,658 $ 596,889
Secured by 1-4 family residential properties 1,634,397 1,625,480 1,581,859 1,533,781 1,485,564
Secured by nonfarm, nonresidential properties 1,553,193 1,560,901 1,544,516 1,461,947 1,415,139
Other real estate secured 253,787 239,819 250,383 193,221 189,362
Commercial and industrial loans 1,270,350 1,246,753 1,250,146 1,207,367 1,157,614
Consumer loans 167,964 168,813 165,372 160,153 165,308
Other loans   949,901     911,091     863,073     774,639     789,005  
LHFI 6,449,469 6,333,651 6,187,000 5,923,766 5,798,881
Allowance for loan losses   (69,616 )   (70,134 )   (66,648 )   (67,518 )   (66,448 )
Net LHFI $ 6,379,853   $ 6,263,517   $ 6,120,352   $ 5,856,248   $ 5,732,433  
                     

ACQUIRED NONCOVERED LOANS BY TYPE

12/31/20149/30/20146/30/20143/31/201412/31/2013
Loans secured by real estate:
Construction, land development and other land loans $ 58,309 $ 64,808 $ 75,353 $ 88,683 $ 98,928
Secured by 1-4 family residential properties 116,920 120,366 133,191 145,213 157,914
Secured by nonfarm, nonresidential properties 202,323 214,806 226,967 271,696 287,136
Other real estate secured 27,813 28,036 30,918 34,787 33,948
Commercial and industrial loans 88,256 103,185 114,212 135,114 149,495
Consumer loans 9,772 11,236 14,733 15,024 18,428
Other loans   22,390     22,105     21,537     23,130     24,141  
Noncovered loans 525,783 564,542 616,911 713,647 769,990
Allowance for loan losses   (10,541 )   (11,136 )   (9,770 )   (9,952 )   (7,249 )
Net noncovered loans $ 515,242   $ 553,406   $ 607,141   $ 703,695   $ 762,741  
                     

ACQUIRED COVERED LOANS BY TYPE

12/31/20149/30/20146/30/20143/31/201412/31/2013
Loans secured by real estate:
Construction, land development and other land loans $ 1,197 $ 1,721 $ 2,130 $ 2,239 $ 2,363
Secured by 1-4 family residential properties 13,180 14,114 14,565 15,572 16,416
Secured by nonfarm, nonresidential properties 7,672 8,270 8,831 10,629 10,945
Other real estate secured 1,096 2,949 2,376 2,470 2,644
Commercial and industrial loans 277 327 336 361 394
Consumer loans - - - 49 119
Other loans   204     226     1,390     1,350     1,335  
Covered loans 23,626 27,607 29,628 32,670 34,216
Allowance for loan losses   (1,518 )   (813 )   (1,409 )   (588 )   (2,387 )
Net covered loans $ 22,108   $ 26,794   $ 28,219   $ 32,082   $ 31,829  
 
 
 
 
 

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2014
($ in thousands)
(unaudited)

 
Note 2 – Loan Composition (continued)
 
      December 31, 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 $ 619,877 $ 65,331 $ 61,688 $ 236,571 $ 44,165 $ 212,122
Secured by 1-4 family residential properties 1,634,397 41,779 51,169 1,396,497 127,872 17,080
Secured by nonfarm, nonresidential properties 1,553,193 91,507 168,941 776,102 150,489 366,154
Other real estate secured 253,787 13,017 4,438 174,275 26,653 35,404
Commercial and industrial loans 1,270,350 84,244 10,881 820,428 95,117 259,680
Consumer loans 167,964 16,483 2,307 129,489 16,990 2,695
Other loans   949,901   56,204   46,156   690,005   59,517   98,019
Loans $ 6,449,469 $ 368,565 $ 345,580 $ 4,223,367 $ 520,803 $ 991,154
 
 
 

CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION (1)

Lots $ 48,056 $ 4,697 $ 24,764 $ 13,402 $ 1,975 $ 3,218
Development 50,745 764 6,997 33,732 920 8,332
Unimproved land 114,106 6,607 22,619 50,104 22,744 12,032
1-4 family construction 136,693 22,108 7,160 69,888 3,926 33,611
Other construction   270,277   31,155   148   69,445   14,600   154,929
Construction, land development and other land loans $ 619,877 $ 65,331 $ 61,688 $ 236,571 $ 44,165 $ 212,122
 
 
 
 

LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION (1)

Income producing:
Retail $ 189,291 $ 19,701 $ 41,904 $ 63,464 $ 16,887 $ 47,335
Office 202,804 10,254 41,803 81,629 8,089 61,029
Nursing homes/assisted living 114,769 - - 89,654 5,974 19,141
Hotel/motel 111,998 11,700 18,013 38,238 33,934 10,113
Industrial 46,423 5,409 4,892 11,581 1,130 23,411
Health care 25,949 2,414 - 23,498 37 -
Convenience stores 10,679 245 - 5,491 1,238 3,705
Other   147,212   4,942   18,269   67,990   9,054   46,957
Total income producing loans 849,125 54,665 124,881 381,545 76,343 211,691
 
Owner-occupied:
Office 128,248 6,554 16,831 63,820 10,617 30,426
Churches 98,364 3,839 3,195 49,382 31,599 10,349
Industrial warehouses 116,876 3,338 4,037 62,513 7,677 39,311
Health care 112,555 14,333 8,535 63,308 7,519 18,860
Convenience stores 50,561 504 1,546 32,873 2,766 12,872
Retail 38,566 2,014 4,101 25,754 3,339 3,358
Restaurants 31,566 1,621 1,984 23,147 3,613 1,201
Auto dealerships 7,847 - 100 6,196 1,529 22
Other   119,485   4,639   3,731   67,564   5,487   38,064
Total owner-occupied loans   704,068   36,842   44,060   394,557   74,146   154,463
Loans secured by nonfarm, nonresidential properties $ 1,553,193 $ 91,507 $ 168,941 $ 776,102 $ 150,489 $ 366,154
 
(1) Excludes acquired loans.
 
 
 
 
 
 

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2014
($ 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 EndedYear Ended
12/31/2014     9/30/2014     6/30/2014     3/31/2014     12/31/201312/31/2014     12/31/2013
Securities – taxable 2.59 % 2.35 % 2.35 % 2.39 % 2.30 % 2.42 % 2.27 %
Securities – nontaxable 4.20 % 4.20 % 4.27 % 4.31 % 4.28 % 4.24 % 4.32 %
Securities – total 2.67 % 2.44 % 2.45 % 2.50 % 2.40 % 2.52 % 2.38 %
Loans - LHFI & LHFS 4.32 % 4.36 % 4.53 % 4.51 % 4.55 % 4.43 % 4.68 %
Acquired loans 9.38 % 14.98 % 13.40 % 8.67 % 10.95 % 11.52 % 9.11 %
Loans - total 4.73 % 5.29 % 5.43 % 5.00 % 5.36 % 5.11 % 5.24 %
FF sold & rev repo 0.94 % 0.84 % 0.91 % 0.31 % 0.50 % 0.63 % 0.37 %
Other earning assets 3.16 % 3.66 % 4.19 % 4.13 % 4.53 % 3.73 % 4.20 %
Total earning assets 4.05 % 4.34 % 4.42 % 4.15 % 4.35 % 4.24 % 4.27 %
 
Interest-bearing deposits 0.20 % 0.21 % 0.22 % 0.24 % 0.27 % 0.22 % 0.28 %
FF pch & repo 0.14 % 0.13 % 0.11 % 0.11 % 0.11 % 0.13 % 0.12 %
Other borrowings 1.20 % 1.88 % 3.07 % 2.99 % 2.96 % 1.94 % 3.05 %
Total interest-bearing liabilities 0.26 % 0.27 % 0.28 % 0.30 % 0.33 % 0.28 % 0.34 %
 
Net interest margin 3.86 % 4.14 % 4.21 % 3.92 % 4.10 % 4.03 % 4.01 %
Net interest margin excluding acquired loans 3.54 % 3.47 % 3.55 % 3.52 % 3.48 % 3.52 % 3.55 %
 

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 28 basis points during the fourth quarter of 2014 primarily due to a decline in recoveries on acquired loans from $8.7 million during the third quarter of 2014 to $2.0 million during the fourth quarter of 2014, which was partially offset by yield maintenance payments on prepaid securities of $2.2 million.

Excluding the recoveries on acquired loans, the yield on average acquired loans totaled 8.0% during the fourth quarter of 2014. The net interest margin, excluding acquired loans and yield maintenance payments on prepaid securities, totaled 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 $61 thousand and $1.0 million for the quarters ended December 31, 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     Year Ended
12/31/2014     9/30/2014     6/30/2014     3/31/2014     12/31/201312/31/2014     12/31/2013
Mortgage servicing income, net $ 4,814 $ 4,674 $ 4,592 $ 4,539 $ 4,688 $ 18,619 $ 17,892
Change in fair value-MSR from runoff (1,999 ) (2,364 ) (2,391 ) (1,812 ) (2,182 ) (8,566 ) (9,805 )
Gain on sales of loans, net 2,910 3,272 2,749 1,839 2,202 10,770 26,429
Other, net   132     (323 )   695     400     (533 )   904     (4,719 )
Mortgage banking income before hedge ineffectiveness   5,857     5,259     5,645     4,966     4,175     21,727     29,797  
Change in fair value-MSR from market changes (4,142 ) 700 (3,038 ) (723 ) 3,937 (7,203 ) 11,818
Change in fair value of derivatives   4,203     (117 )   3,584     2,586     (2,926 )   10,256     (8,111 )
Net positive hedge ineffectiveness   61     583     546     1,863     1,011     3,053     3,707  
Mortgage banking, net $ 5,918   $ 5,842   $ 6,191   $ 6,829   $ 5,186   $ 24,780   $ 33,504  
 
 
 
 
 
 

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2014
($ in thousands)
(unaudited)

Note 5 – Other Noninterest Income and Expense

Other noninterest income consisted of the following for the periods presented ($ in thousands):

         
Quarter EndedYear Ended
12/31/2014     9/30/2014     6/30/2014     3/31/2014     12/31/201312/31/2014     12/31/2013
Partnership amortization for tax credit purposes $ (2,806 ) $ (3,006 ) $ (3,006 ) $ (3,006 ) $ (5,642 ) $ (11,824 ) $ (12,368 )
(Decrease) increase in FDIC indemnification asset (735 ) (452 ) (999 ) (688 ) (2,429 ) (2,874 ) (5,900 )
Other miscellaneous income   4,137     3,298     4,204     3,673     3,269     15,312     10,295  
Total other, net $ 596   $ (160 ) $ 199   $ (21 ) $ (4,802 ) $ 614   $ (7,973 )
 

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 fourth quarter of 2014, other noninterest income included a write-down of the FDIC indemnification asset of $735 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     Year Ended
12/31/2014     9/30/2014     6/30/2014     3/31/2014     12/31/201312/31/2014     12/31/2013
Loan expense $ 3,312 $ 3,070 $ 3,107 $ 3,464 $ 4,419 $ 12,953 $ 15,071
Non-routine transaction expenses on acquisitions - - - - - - 7,920
Amortization of intangibles 2,123 2,150 2,190 2,293 2,434 8,756 8,814
Other miscellaneous expense   8,985   7,744   7,934   7,495   8,555   32,158   33,756
Total other expense $ 14,420 $ 12,964 $ 13,231 $ 13,252 $ 15,408 $ 53,867 $ 65,561
 
 
 

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
December 31, 2014
($ in thousands)
(unaudited)

 

Note 6 – Non-GAAP Financial Measures (continued)

 

        Quarter Ended     Year Ended
12/31/2014     9/30/2014     6/30/2014     3/31/2014     12/31/201312/31/2014     12/31/2013

TANGIBLE EQUITY

AVERAGE BALANCES
Total shareholders' equity $ 1,422,268 $ 1,412,857 $ 1,392,240 $ 1,367,663 $ 1,346,975 $ 1,398,945 $ 1,337,597
Less: Goodwill (365,500 ) (365,500 ) (365,500 ) (372,720 ) (372,468 ) (367,281 ) (358,270 )
Identifiable intangible assets   (34,411 )   (36,553 )   (38,711 )   (41,015 )   (43,532 )   (37,651 )   (43,307 )
Total average tangible equity $ 1,022,357   $ 1,010,804   $ 988,029   $ 953,928   $ 930,975   $ 994,013   $ 936,020  
 
PERIOD END BALANCES
Total shareholders' equity $ 1,419,940 $ 1,415,098 $ 1,399,891 $ 1,373,895 $ 1,354,953
Less: Goodwill (365,500 ) (365,500 ) (365,500 ) (365,500 ) (372,851 )
Identifiable intangible assets   (33,234 )   (35,357 )   (37,506 )   (39,697 )   (41,990 )
Total tangible equity (a) $ 1,021,206   $ 1,014,241   $ 996,885   $ 968,698   $ 940,112  
 

TANGIBLE ASSETS

Total assets $ 12,250,633 $ 12,096,316 $ 12,119,996 $ 12,057,054 $ 11,790,383
Less: Goodwill (365,500 ) (365,500 ) (365,500 ) (365,500 ) (372,851 )
Identifiable intangible assets   (33,234 )   (35,357 )   (37,506 )   (39,697 )   (41,990 )
Total tangible assets (b) $ 11,851,899   $ 11,695,459   $ 11,716,990   $ 11,651,857   $ 11,375,542  
 
Risk-weighted assets (c) $ 8,387,799   $ 8,287,608   $ 8,175,622   $ 8,016,482   $ 7,916,378  
 

NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION

Net income $ 28,073 $ 33,589 $ 32,897 $ 29,003 $ 28,039 $ 123,562 $ 117,060
Plus: Intangible amortization net of tax   1,312     1,328     1,353     1,417     1,503     5,410     5,442  
Net income adjusted for intangible amortization $ 29,385   $ 34,917   $ 34,250   $ 30,420   $ 29,542   $ 128,972   $ 122,502  
 
Period end common shares outstanding (d)   67,481,992     67,439,788     67,439,788     67,439,562     67,372,980  
 

TANGIBLE COMMON EQUITY MEASUREMENTS

Return on average tangible equity 1 11.40 % 13.70 % 13.90 % 12.93 % 12.59 % 12.97 % 13.09 %
Tangible equity/tangible assets (a)/(b) 8.62 % 8.67 % 8.51 % 8.31 % 8.26 %
Tangible equity/risk-weighted assets (a)/(c) 12.17 % 12.24 % 12.19 % 12.08 % 11.88 %
Tangible book value (a)/(d)*1,000 $ 15.13 $ 15.04 $ 14.78 $ 14.36 $ 13.95
 

TIER 1 COMMON RISK-BASED CAPITAL

Total shareholders' equity $ 1,419,940 $ 1,415,098 $ 1,399,891 $ 1,373,895 $ 1,354,953
Eliminate qualifying AOCI 42,484 34,365 30,557 38,497 43,731
Qualifying tier 1 capital 60,000 60,000 60,000 60,000 60,000
Disallowed goodwill (365,500 ) (365,500 ) (365,500 ) (365,500 ) (372,851 )
Adj to goodwill allowed for deferred taxes 15,855 15,503 15,150 14,798 14,445
Other disallowed intangibles (33,234 ) (35,357 ) (37,506 ) (39,697 ) (41,990 )
Disallowed servicing intangible (6,436 ) (6,709 ) (6,505 ) (6,761 ) (6,783 )
Disallowed deferred taxes   (3,479 )   (1,234 )   (5,134 )   (23,969 )   (24,647 )
Total tier 1 capital 1,129,630 1,116,166 1,090,953 1,051,263 1,026,858
Less: Qualifying tier 1 capital   (60,000 )   (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   $ 966,858  
 
Tier 1 common risk-based capital ratio (e)/(c) 12.75 % 12.74 % 12.61 % 12.37 % 12.21 %
 
1 Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity