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 January 26, 2016 - 4:30 PM EST
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Trustmark Corporation Announces 2015 Financial Results

Trustmark Corporation (NASDAQ:TRMK) reported net income of $27.9 million in the fourth quarter of 2015, which represented diluted earnings per share of $0.41. For the full year, Trustmark’s net income totaled $116.0 million, which represented diluted earnings per share of $1.71, and produced a return on average tangible equity of 11.36% and a return on average assets of 0.95%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable March 15, 2016, to shareholders of record on March 1, 2016.

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Fourth Quarter Highlights

  • Loans held for investment increased $299.7 million, or 4.4%, from the prior quarter and $641.9 million, or 10.0%, from the comparable period one year earlier
  • Credit quality remained solid; nonperforming assets declined 8.7% and 22.9% from the prior quarter and year-over-year, respectively
  • Net interest income (FTE) excluding acquired loans in the fourth quarter totaled $92.2 million, up 2.4% from the prior quarter and 3.0% year-over-year
  • Routine noninterest expense, which excludes ORE and intangible amortization, totaled $97.2 million, down 1.0% and 1.9% from the prior quarter and year-over-year, respectively

Gerard R. Host, President and CEO, stated, “We made significant achievements in 2015. Throughout the year, we realigned the expense base and reallocated cost savings into areas such as technology, including enhanced performance measurements systems and myTrustmark℠, our new consumer mobile banking service. We also continued to invest in higher-growth markets via new banking centers and loan production offices, while also retaining additional relationship managers. The initial results of these investments are evident in this past year’s results, but ultimately we anticipate their impact to be greater over time. As we look forward in 2016, we will continue to manage the franchise for the long term by expanding and building sustainable relationships, an ideal that has worked for the past 126 years. Thanks to our associates, solid profitability and strong capital base, Trustmark remains well-positioned to continue meeting the needs of our customers and creating long-term value for our shareholders.”

Balance Sheet Management

  • Loans held for investment expanded $641.9 million, or 10.0%, in 2015
  • Average noninterest-bearing deposits in 2015 increased 2.6% and represented 28.9% of average total deposits
  • Solid capital base provides flexibility to support additional growth

Loans held for investment totaled $7.1 billion at December 31, 2015, an increase of 4.4% from the prior quarter and 10.0% from the same period one year earlier. Compared to the prior quarter, loans secured by nonfarm, nonresidential real estate expanded $132.0 million, resulting from growth in Texas, Alabama, Mississippi and Florida. Commercial and industrial loans increased $72.9 million as growth in Texas, Tennessee and Alabama, more than offset declines in Mississippi and Florida. Loans to state and other political subdivisions increased $57.1 million, led principally by growth in Mississippi and Texas. Construction, land development and other land loans expanded $39.3 million, driven primarily by growth in construction loans.

Acquired loans totaled $390.4 million at December 31, 2015, down $28.8 million from the prior quarter. Collectively, loans held for investment and acquired loans totaled $7.5 billion at December 31, 2015, up $271.0 million, or 3.8%, from the prior quarter.

Deposits totaled $9.6 billion at December 31, 2015, an increase of $175.8 million from the prior quarter. Trustmark continues to maintain an attractive, low-cost deposit base with approximately 60% of deposits in checking accounts and a total cost of deposits of 0.13%. The favorable mix of interest-bearing liabilities yielded a total cost of funds of 0.26% for the fourth quarter of 2015.

Trustmark’s capital position remained solid, reflecting the consistent profitability of its diversified financial services businesses. At December 31, 2015, Trustmark’s tangible equity to tangible assets ratio was 8.79%, while its total risk-based capital ratio was 14.07%. Tangible book value per share was $15.98 at December 31, 2015, up 5.6% year-over-year.

Credit Quality

  • Solid improvement in criticized and classified loan balances
  • Nonperforming loans and other real estate decreased 30.3% and 16.6%, respectively, in 2015
  • Allowance for loan losses represented 210.32% of nonperforming loans, excluding impaired loans

Criticized and classified loan balances continued to reflect steady improvement. Relative to the prior quarter, criticized and classified loan balances decreased 8.0% and 3.4%, respectively. Compared to levels one year earlier, criticized and classified loan balances decreased 15.8% and 18.6%, respectively.

Nonperforming loans totaled $55.3 million at December 31, 2015, down 9.5% from the prior quarter and 30.3% year-over-year. Other real estate totaled $77.2 million, reflecting an 8.1% linked-quarter decrease and a 16.6% year-over-year reduction. Collectively, nonperforming assets totaled $132.5 million, reflecting a linked-quarter and year-over-year decrease of 8.7% and 22.9%, respectively.

Allocation of Trustmark's $67.6 million allowance for loan losses represented 1.05% of commercial loans and 0.66% of consumer and home mortgage loans, resulting in an allowance to total loans held for investment of 0.95% at December 31, 2015, representing a level management considers commensurate with the inherent risk in the loan portfolio. In aggregate, the allowance for both held for investment and acquired loan losses represented 1.06% of total loans, which include held for investment and acquired loans.

Unless noted otherwise, all of the above credit quality metrics exclude acquired loans and other real estate covered by FDIC loss-share agreement.

Revenue Generation

  • Net interest income (FTE) excluding acquired loans in 2015 totaled $357.0 million, up 3.7%, from the prior year
  • Noninterest income for the year totaled $173.1 million, reflecting in part growth from investments in insurance and mortgage businesses
  • Insurance revenue in 2015 totaled $36.4 million, the highest level in Trustmark’s history
  • Mortgage loan production volume in 2015 totaled $1.5 billion, up 24.3% from the prior year

Revenue in the fourth quarter totaled $139.1 million, down 3.1% from the prior quarter, reflecting in part a seasonal reduction in noninterest income. Net interest income (FTE) in the fourth quarter totaled $104.2 million, resulting in a net interest margin of 3.74%. Compared to the prior quarter, net interest income (FTE) increased $2.5 million primarily the result of growth in interest income (FTE) from both the held for sale and held for investment loan portfolios as well as the securities portfolio. The yield on acquired loans in the fourth quarter totaled 11.74% and included recoveries from settlement of debt of $5.4 million, which represented approximately 5.33% of the annualized total acquired loan yield. Excluding acquired loans, the net interest margin in the fourth quarter remained at 3.43%. Net interest income (FTE) in 2015 totaled $408.2 million, resulting in a net interest margin (FTE) of 3.78%; excluding acquired loans, the net interest margin (FTE) was 3.46%.

Noninterest income totaled $39.3 million in the fourth quarter, down from the prior quarter primarily as a result of seasonally lower mortgage banking revenues and insurance commissions, as well as decreased other income. In the fourth quarter, bank card and other fees totaled $7.2 million, up 2.8% from the prior quarter, while service charges on deposit accounts totaled $12.0 million, down 3.5% from the prior quarter. Other income, net decreased $1.9 million linked quarter, reflecting a $932 thousand increase in partnership amortization principally due to an additional tax credit investment as well as a $909 thousand increase in FDIC indemnification asset write-downs, which resulted from decreased write-downs of covered other real estate and the re-estimation of cash flows on covered acquired loans. Noninterest income for the year totaled $173.1 million and remained stable when compared to the prior year.

Insurance revenue in the fourth quarter totaled $8.5 million, reflecting a seasonal decrease of 14.2% from the prior quarter and an increase of 8.6% from levels one year earlier. For the year, insurance revenue totaled $36.4 million, up 8.8% relative to the prior year. The solid performance in 2015 reflects increased business development efforts, investments in additional producers and restructuring initiatives that supported enhanced productivity.

Wealth management revenue totaled $7.8 million in the fourth quarter, remaining stable relative to the prior quarter and down 7.4% from levels one year earlier. The year-over-year decline is primarily attributable to decreased brokerage activity, resulting in part from volatile market conditions. Wealth management revenue in 2015 totaled $31.4 million, down 3.0% relative to the prior year. Despite turbulent investment markets, Trustmark remained focused on servicing clients and realigned processes to enhance productivity.

Mortgage banking revenue in the fourth quarter totaled $4.3 million, down $3.2 million from the prior quarter. The linked-quarter decline is primarily attributable to a $2.5 million decrease in the mortgage servicing hedge ineffectiveness and a $1.6 million decrease in mark-to-market adjustments on mortgage loans held for sale. Mortgage loan production totaled $340.0 million, a seasonal decrease of 19.1% from the prior quarter and an increase of 15.7% year-over-year. In 2015, mortgage banking revenue totaled $30.2 million, up 21.8% from the prior year; mortgage loan production totaled $1.5 billion, up 24.3% from the prior year. The growth in mortgage banking revenue partially reflects a continued focus on productivity and customer service enhancements as well as investments in additional mortgage-loan producers and loan-production offices.

Noninterest Expense

  • Routine noninterest expense in 2015 remained well controlled and totaled $388.9 million, partially reflecting the re-allocation of cost savings into revenue-generating areas of the corporation
  • ORE and foreclosure expense decreased $6.4 million for the year, resulting from the continued resolution of problem assets
  • Tax credit investments reduced the effective tax rate to 23.4% in 2015
  • Continued retail delivery channel optimization in 2015: consolidated eight banking centers and opened three banking centers; realigned branch staffing levels; introduced new consumer mobile banking platform, myTrustmark℠

Excluding ORE expense and intangible amortization of $1.4 million, routine noninterest expense in the fourth quarter totaled $97.2 million, a decrease of $1.0 million, or 1.0%, from comparable expenses in the prior quarter. Salaries and benefits totaled $57.4 million in the fourth quarter, down 1.6% linked quarter and reflecting decreased insurance and mortgage-production commissions. Services and fees declined 6.6% from the prior quarter, reflecting in part a reduction in lower communications expense and third-party consulting fees. ORE and foreclosure expense improved from the prior quarter and provided an income benefit because of gains realized on the sale of foreclosed real estate. Relative to 2014, routine noninterest expense remained stable at $388.9 million as savings from realigned staffing levels and technology productivity enhancements were reallocated into new loan-production offices, additional relationship managers and new mobile-banking platforms.

Trustmark continued the optimization of its retail delivery channels to enhance productivity and efficiency as well as promote additional growth. During the fourth quarter, Trustmark opened a mortgage loan-production office in Tuscaloosa, Alabama. In 2015, Trustmark consolidated eight branch offices across Mississippi, Tennessee, Florida and Texas, and reallocated a portion of those resources into three new branch offices across Alabama and Mississippi. Overall, these collective efforts resulted in the consolidation of 27 branch offices and the establishment of eight new branch offices over the past three years. Trustmark is committed to developing and maintaining relationships, while supporting investments that promote 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 27, 2016, 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 10, 2016, in archived format at the same web address or by calling (877) 344-7529, passcode 10078271.

Trustmark Corporation is a financial services company providing banking and financial solutions through 200 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 conditions in the housing and real estate markets in the regions in which Trustmark operates and 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, cyber-attacks and other breaches which could affect our information system security, 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, 2015
($ in thousands)
(unaudited)

Linked Quarter

Year over Year

QUARTERLY AVERAGE BALANCES

  12/31/2015     9/30/2015     12/31/2014  

$ Change

% Change

$ Change

% Change

Securities AFS-taxable $ 2,209,801 $ 2,269,763 $ 2,204,361 $ (59,962 ) -2.6 % $ 5,440 0.2 %
Securities AFS-nontaxable 110,290 116,290 129,403 (6,000 ) -5.2 % (19,113 ) -14.8 %
Securities HTM-taxable 1,145,397 1,151,673 1,117,989 (6,276 ) -0.5 % 27,408 2.5 %
Securities HTM-nontaxable   35,755     36,278     42,040     (523 ) -1.4 %   (6,285 ) -15.0 %
Total securities   3,501,243     3,574,004     3,493,793     (72,761 ) -2.0 %   7,450   0.2 %
Loans (including loans held for sale) 7,089,672 6,771,947 6,494,369 317,725 4.7 % 595,303 9.2 %
Acquired loans:
Noncovered loans 384,306 421,262 544,260 (36,956 ) -8.8 % (159,954 ) -29.4 %
Covered loans 18,341 18,982 27,039 (641 ) -3.4 % (8,698 ) -32.2 %
Fed funds sold and rev repos 1,384 1,167 1,269 217 18.6 % 115 9.1 %
Other earning assets   68,016     58,534     48,224     9,482   16.2 %   19,792   41.0 %
Total earning assets   11,062,962     10,845,896     10,608,954     217,066   2.0 %   454,008   4.3 %
Allowance for loan losses (78,652 ) (84,482 ) (82,851 ) 5,830 -6.9 % 4,199 -5.1 %
Cash and due from banks 272,562 266,174 284,754 6,388 2.4 % (12,192 ) -4.3 %
Other assets   1,266,712     1,286,189     1,317,217     (19,477 ) -1.5 %   (50,505 ) -3.8 %
Total assets $ 12,523,584   $ 12,313,777   $ 12,128,074   $ 209,807   1.7 % $ 395,510   3.3 %
 
Interest-bearing demand deposits $ 1,917,598 $ 1,915,567 $ 1,815,999 $ 2,031 0.1 % $ 101,599 5.6 %
Savings deposits 2,963,318 3,059,183 2,963,771 (95,865 ) -3.1 % (453 ) 0.0 %
Time deposits less than $100,000 1,033,233 1,072,373 1,152,622 (39,140 ) -3.6 % (119,389 ) -10.4 %
Time deposits of $100,000 or more   687,635     712,910     838,309     (25,275 ) -3.5 %   (150,674 ) -18.0 %
Total interest-bearing deposits 6,601,784 6,760,033 6,770,701 (158,249 ) -2.3 % (168,917 ) -2.5 %
Fed funds purchased and repos 563,424 528,232 526,482 35,192 6.7 % 36,942 7.0 %
Short-term borrowings 733,365 534,931 385,841 198,434 37.1 % 347,524 90.1 %
Long-term FHLB advances 50,078 1,195 2,652 48,883 n/m 47,426 n/m
Subordinated notes 49,964 49,955 49,931 9 0.0 % 33 0.1 %
Junior subordinated debt securities   61,856     61,856     61,856     -   0.0 %   -   0.0 %
Total interest-bearing liabilities 8,060,471 7,936,202 7,797,463 124,269 1.6 % 263,008 3.4 %
Noninterest-bearing deposits 2,839,894 2,771,186 2,762,332 68,708 2.5 % 77,562 2.8 %
Other liabilities   141,925     137,134     146,011     4,791   3.5 %   (4,086 ) -2.8 %
Total liabilities 11,042,290 10,844,522 10,705,806 197,768 1.8 % 336,484 3.1 %
Shareholders' equity   1,481,294     1,469,255     1,422,268     12,039   0.8 %   59,026   4.2 %
Total liabilities and equity $ 12,523,584   $ 12,313,777   $ 12,128,074   $ 209,807   1.7 % $ 395,510   3.3 %
 

Linked Quarter

Year over Year

PERIOD END BALANCES

  12/31/2015     9/30/2015     12/31/2014  

$ Change

% Change

$ Change

% Change

Cash and due from banks $ 277,751 $ 220,052 $ 315,973 $ 57,699 26.2 % $ (38,222 ) -12.1 %
Fed funds sold and rev repos 250 - 1,885 250 n/m (1,635 ) -86.7 %
Securities available for sale 2,345,422 2,382,822 2,374,567 (37,400 ) -1.6 % (29,145 ) -1.2 %
Securities held to maturity 1,187,818 1,178,440 1,170,685 9,378 0.8 % 17,133 1.5 %
Loans held for sale (LHFS) 160,189 173,679 132,196 (13,490 ) -7.8 % 27,993 21.2 %
Loans held for investment (LHFI) 7,091,385 6,791,643 6,449,469 299,742 4.4 % 641,916 10.0 %
Allowance for loan losses   (67,619 )   (65,607 )   (69,616 )   (2,012 ) 3.1 %   1,997   -2.9 %
Net LHFI 7,023,766 6,726,036 6,379,853 297,730 4.4 % 643,913 10.1 %
Acquired loans:
Noncovered loans 372,711 400,528 525,783 (27,817 ) -6.9 % (153,072 ) -29.1 %
Covered loans 17,700 18,645 23,626 (945 ) -5.1 % (5,926 ) -25.1 %
Allowance for loan losses, acquired loans   (11,992 )   (12,185 )   (12,059 )   193   -1.6 %   67   -0.6 %
Net acquired loans   378,419     406,988     537,350     (28,569 ) -7.0 %   (158,931 ) -29.6 %
Net LHFI and acquired loans 7,402,185 7,133,024 6,917,203 269,161 3.8 % 484,982 7.0 %
Premises and equipment, net 195,656 196,558 200,781 (902 ) -0.5 % (5,125 ) -2.6 %
Mortgage servicing rights 74,007 69,809 64,358 4,198 6.0 % 9,649 15.0 %
Goodwill 366,156 365,500 365,500 656 0.2 % 656 0.2 %
Identifiable intangible assets 27,546 30,129 33,234 (2,583 ) -8.6 % (5,688 ) -17.1 %
Other real estate, excluding covered other real estate 77,177 83,955 92,509 (6,778 ) -8.1 % (15,332 ) -16.6 %
Covered other real estate 1,651 2,865 6,060 (1,214 ) -42.4 % (4,409 ) -72.8 %
FDIC indemnification asset 738 1,749 6,997 (1,011 ) -57.8 % (6,259 ) -89.5 %
Other assets   562,350     551,694     568,685     10,656   1.9 %   (6,335 ) -1.1 %
Total assets $ 12,678,896   $ 12,390,276   $ 12,250,633   $ 288,620   2.3 % $ 428,263   3.5 %
 
Deposits:
Noninterest-bearing $ 2,998,694 $ 2,787,454 $ 2,748,635 $ 211,240 7.6 % $ 250,059 9.1 %
Interest-bearing   6,589,536     6,624,950     6,949,723     (35,414 ) -0.5 %   (360,187 ) -5.2 %
Total deposits 9,588,230 9,412,404 9,698,358 175,826 1.9 % (110,128 ) -1.1 %
Fed funds purchased and repos 441,042 534,204 443,543 (93,162 ) -17.4 % (2,501 ) -0.6 %
Short-term borrowings 412,617 709,845 425,077 (297,228 ) -41.9 % (12,460 ) -2.9 %
Long-term FHLB advances 501,155 1,173 1,253 499,982 n/m 499,902 n/m
Subordinated notes 49,969 49,961 49,936 8 0.0 % 33 0.1 %
Junior subordinated debt securities 61,856 61,856 61,856 - 0.0 % - 0.0 %
Other liabilities   150,970     144,077     150,670     6,893   4.8 %   300   0.2 %
Total liabilities   11,205,839     10,913,520     10,830,693     292,319   2.7 %   375,146   3.5 %
Common stock 14,076 14,076 14,060 - 0.0 % 16 0.1 %
Capital surplus 361,467 360,494 356,244 973 0.3 % 5,223 1.5 %
Retained earnings 1,142,908 1,130,766 1,092,120 12,142 1.1 % 50,788 4.7 %
Accum other comprehensive
loss, net of tax   (45,394 )   (28,580 )   (42,484 )   (16,814 ) 58.8 %   (2,910 ) 6.8 %
Total shareholders' equity   1,473,057     1,476,756     1,419,940     (3,699 ) -0.3 %   53,117   3.7 %
Total liabilities and equity $ 12,678,896   $ 12,390,276   $ 12,250,633   $ 288,620   2.3 % $ 428,263   3.5 %
 
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, 2015
($ in thousands except per share data)
(unaudited)
 
 
Quarter Ended Linked Quarter Year over Year

INCOME STATEMENTS

12/31/2015 9/30/2015 12/31/2014

$ Change

% Change

$ Change

% Change
Interest and fees on LHFS & LHFI-FTE $ 74,383 $ 72,951 $ 70,775 $ 1,432 2.0 % $ 3,608 5.1 %
Interest and fees on acquired loans 11,910 11,607 13,500 303 2.6 % (1,590 ) -11.8 %
Interest on securities-taxable 21,149 20,264 21,694 885 4.4 % (545 ) -2.5 %
Interest on securities-tax exempt-FTE 1,565 1,609 1,814 (44 ) -2.7 % (249 ) -13.7 %
Interest on fed funds sold and rev repos 4 2 3 2 100.0 % 1 33.3 %
Other interest income   402     392     384     10   2.6 %   18   4.7 %
Total interest income-FTE   109,413     106,825     108,170     2,588   2.4 %   1,243   1.1 %
Interest on deposits 3,000 3,147 3,382 (147 ) -4.7 % (382 ) -11.3 %
Interest on fed funds pch and repos 274 205 184 69 33.7 % 90 48.9 %
Other interest expense   1,987     1,811     1,510     176   9.7 %   477   31.6 %
Total interest expense   5,261     5,163     5,076     98   1.9 %   185   3.6 %
Net interest income-FTE 104,152 101,662 103,094 2,490 2.4 % 1,058 1.0 %
Provision for loan losses, LHFI 3,043 2,514 (1,393 ) 529 21.0 % 4,436 n/m
Provision for loan losses, acquired loans   997     1,256     1,179     (259 ) -20.6 %   (182 ) -15.4 %
Net interest income after provision-FTE   100,112     97,892     103,308     2,220   2.3 %   (3,196 ) -3.1 %
Service charges on deposit accounts 11,961 12,400 12,514 (439 ) -3.5 % (553 ) -4.4 %
Insurance commissions 8,501 9,906 7,831 (1,405 ) -14.2 % 670 8.6 %
Wealth management 7,831 7,790 8,460 41 0.5 % (629 ) -7.4 %
Bank card and other fees 7,156 6,964 6,712 192 2.8 % 444 6.6 %
Mortgage banking, net 4,287 7,443 5,918 (3,156 ) -42.4 % (1,631 ) -27.6 %
Other, net   (466 )   1,470     596     (1,936 ) n/m   (1,062 ) n/m
Nonint inc-excl sec gains (losses), net 39,270 45,973 42,031 (6,703 ) -14.6 % (2,761 ) -6.6 %
Security gains (losses), net   -     -     -     -   n/m   -   n/m
Total noninterest income   39,270     45,973     42,031     (6,703 ) -14.6 %   (2,761 ) -6.6 %
Salaries and employee benefits 57,366 58,270 57,159 (904 ) -1.6 % 207 0.4 %
Services and fees 13,717 14,691 14,401 (974 ) -6.6 % (684 ) -4.7 %
Net occupancy-premises 6,304 6,580 6,632 (276 ) -4.2 % (328 ) -4.9 %
Equipment expense 6,105 5,877 5,911 228 3.9 % 194 3.3 %
FDIC assessment expense 2,614 2,559 2,669 55 2.1 % (55 ) -2.1 %
ORE/Foreclosure expense (518 ) 3,385 3,240 (3,903 ) n/m (3,758 ) n/m
Other expense   13,032     12,198     14,420     834   6.8 %   (1,388 ) -9.6 %
Total noninterest expense   98,620     103,560     104,432     (4,940 ) -4.8 %   (5,812 ) -5.6 %
Income before income taxes and tax eq adj 40,762 40,305 40,907 457 1.1 % (145 ) -0.4 %
Tax equivalent adjustment   4,334     4,056     4,179     278   6.9 %   155   3.7 %
Income before income taxes 36,428 36,249 36,728 179 0.5 % (300 ) -0.8 %
Income taxes   8,570     7,819     8,655     751   9.6 %   (85 ) -1.0 %
Net income $ 27,858   $ 28,430   $ 28,073   $ (572 ) -2.0 % $ (215 ) -0.8 %
 
Per share data
Earnings per share - basic $ 0.41   $ 0.42   $ 0.42   $ (0.01 ) -2.4 % $ (0.01 ) -2.4 %
 
Earnings per share - diluted $ 0.41   $ 0.42   $ 0.42   $ (0.01 ) -2.4 % $ (0.01 ) -2.4 %
 
Dividends per share $ 0.23   $ 0.23   $ 0.23   $ -   0.0 % $ -   0.0 %
 
Weighted average shares outstanding
Basic   67,557,991     67,557,395     67,445,721  
 
Diluted   67,734,109     67,707,456     67,633,637  
 
Period end shares outstanding   67,559,128     67,557,395     67,481,992  
 

OTHER FINANCIAL DATA

Return on equity 7.46 % 7.68 % 7.83 %
Return on average tangible equity 10.61 % 10.96 % 11.40 %
Return on assets 0.88 % 0.92 % 0.92 %
Interest margin - Yield - FTE 3.92 % 3.91 % 4.05 %
Interest margin - Cost 0.19 % 0.19 % 0.19 %
Net interest margin - FTE 3.74 % 3.72 % 3.86 %
Efficiency ratio (1) 66.03 % 67.87 % 69.16 %
Full-time equivalent employees 2,941 2,963 3,060
 

STOCK PERFORMANCE

Market value-Close $ 23.04 $ 23.17 $ 24.54
Book value $ 21.80 $ 21.86 $ 21.04
Tangible book value $ 15.98 $ 16.00 $ 15.13
 

(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, 2015
($ in thousands)
(unaudited)
    Quarter Ended   Linked Quarter   Year over Year

NONPERFORMING ASSETS (1)

12/31/2015   9/30/2015   12/31/2014

$ Change

  % Change

$ Change

  % Change
Nonaccrual loans
Alabama $ 1,776 $ 1,306 $ 852 $ 470 36.0 % $ 924 n/m
Florida 5,180 7,444 11,091 (2,264 ) -30.4 % (5,911 ) -53.3 %
Mississippi (2) 40,754 44,955 57,129 (4,201 ) -9.3 % (16,375 ) -28.7 %
Tennessee (3) 5,106 4,911 5,819 195 4.0 % (713 ) -12.3 %
Texas   2,496     2,515     4,452     (19 ) -0.8 %   (1,956 ) -43.9 %
Total nonaccrual loans 55,312 61,131 79,343 (5,819 ) -9.5 % (24,031 ) -30.3 %
Other real estate
Alabama 21,578 23,822 21,196 (2,244 ) -9.4 % 382 1.8 %
Florida 29,579 30,374 35,324 (795 ) -2.6 % (5,745 ) -16.3 %
Mississippi (2) 14,312 13,180 17,397 1,132 8.6 % (3,085 ) -17.7 %
Tennessee (3) 9,974 9,840 10,292 134 1.4 % (318 ) -3.1 %
Texas   1,734     6,739     8,300     (5,005 ) -74.3 %   (6,566 ) -79.1 %
Total other real estate   77,177     83,955     92,509     (6,778 ) -8.1 %   (15,332 ) -16.6 %
Total nonperforming assets $ 132,489   $ 145,086   $ 171,852   $ (12,597 ) -8.7 % $ (39,363 ) -22.9 %
 

LOANS PAST DUE OVER 90 DAYS (4)

LHFI $ 2,300   $ 9,224   $ 2,764   $ (6,924 ) -75.1 % $ (464 ) -16.8 %
 
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase) $ 21,812   $ 15,165   $ 25,943   $ 6,647   43.8 % $ (4,131 ) -15.9 %
 
Quarter Ended Linked Quarter Year over Year

ALLOWANCE FOR LOAN LOSSES (4)

  12/31/2015     9/30/2015     12/31/2014   $ Change % Change   $ Change % Change  
Beginning Balance $ 65,607 $ 71,166 $ 70,134 $ (5,559 ) -7.8 % $ (4,527 ) -6.5 %
Provision for loan losses 3,043 2,514 (1,393 ) 529 21.0 % 4,436 n/m
Charge-offs (3,781 ) (11,406 ) (3,174 ) 7,625 -66.9 % (607 ) 19.1 %
Recoveries   2,750     3,333     4,049     (583 ) -17.5 %   (1,299 ) -32.1 %
Net (charge-offs) recoveries   (1,031 )   (8,073 )   875     7,042   -87.2 %   (1,906 ) n/m
Ending Balance $ 67,619   $ 65,607   $ 69,616   $ 2,012   3.1 % $ (1,997 ) -2.9 %
 

PROVISION FOR LOAN LOSSES (4)

Alabama $ 1,453 $ (70 ) $ 283 $ 1,523 n/m $ 1,170 n/m
Florida (1,357 ) (1,430 ) (66 ) 73 -5.1 % (1,291 ) n/m
Mississippi (2) 1,842 4,221 (3,065 ) (2,379 ) -56.4 % 4,907 n/m
Tennessee (3) 182 (1,050 ) 1,993 1,232 n/m (1,811 ) -90.9 %
Texas   923     843     (538 )   80   9.5 %   1,461   n/m
Total provision for loan losses $ 3,043   $ 2,514   $ (1,393 ) $ 529   21.0 % $ 4,436   n/m
 

NET CHARGE-OFFS (4)

Alabama $ 422 $ 163 $ 92 $ 259 n/m $ 330 n/m
Florida (389 ) (1,090 ) (226 ) 701 -64.3 % (163 ) 72.1 %
Mississippi (2) 925 7,391 (880 ) (6,466 ) -87.5 % 1,805 n/m
Tennessee (3) 188 448 325 (260 ) -58.0 % (137 ) -42.2 %
Texas   (115 )   1,161     (186 )   (1,276 ) n/m   71   -38.2 %
Total net charge-offs (recoveries) $ 1,031   $ 8,073   $ (875 ) $ (7,042 ) -87.2 % $ 1,906   n/m
 

CREDIT QUALITY RATIOS (1)

Net charge-offs/average loans 0.06 % 0.47 % -0.05 %
Provision for loan losses/average loans 0.17 % 0.15 % -0.09 %
Nonperforming loans/total loans (incl LHFS) 0.76 % 0.88 % 1.21 %
Nonperforming assets/total loans (incl LHFS) 1.83 % 2.08 % 2.61 %
Nonperforming assets/total loans (incl LHFS) +ORE 1.81 % 2.06 % 2.57 %
ALL/total loans (excl LHFS) 0.95 % 0.97 % 1.08 %
ALL-commercial/total commercial loans 1.05 % 1.07 % 1.23 %
ALL-consumer/total consumer and home mortgage loans 0.66 % 0.67 % 0.67 %
ALL/nonperforming loans 122.25 % 107.32 % 87.74 %
ALL/nonperforming loans -
(excl impaired loans) 210.32 % 206.72 % 180.95 %
 

CAPITAL RATIOS

Total equity/total assets 11.62 % 11.92 % 11.59 %
Tangible equity/tangible assets 8.79 % 9.01 % 8.62 %
Tangible equity/risk-weighted assets 11.68 % 12.24 % 12.17 %
Tier 1 leverage ratio 10.03 % 10.09 % 9.63 %
Tier 1 common risk-based capital ratio - BASEL I - - 12.75 %
Common equity tier 1 capital ratio - BASEL III 12.57 % 13.00 % -
Tier 1 risk-based capital ratio 13.21 % 13.66 % 13.47 %
Total risk-based capital ratio 14.07 % 14.66 % 14.56 %
 
(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, 2015
($ in thousands)
(unaudited)
    Quarter Ended   Year Ended

AVERAGE BALANCES

12/31/2015   9/30/2015   6/30/2015   3/31/2015   12/31/2014 12/31/2015   12/31/2014
Securities AFS-taxable $ 2,209,801 $ 2,269,763 $ 2,255,485 $ 2,190,344 $ 2,204,361 $ 2,231,507 $ 2,187,258
Securities AFS-nontaxable 110,290 116,290 120,330 127,623 129,403 118,579 136,532
Securities HTM-taxable 1,145,397 1,151,673 1,143,273 1,119,979 1,117,989 1,140,182 1,120,886
Securities HTM-nontaxable   35,755     36,278     38,173     41,405     42,040     37,883     39,975  
Total securities   3,501,243     3,574,004     3,557,261     3,479,351     3,493,793     3,528,151     3,484,651  
Loans (including loans held for sale) 7,089,672 6,771,947 6,554,739 6,561,430 6,494,369 6,745,970 6,250,151
Acquired loans:
Noncovered loans 384,306 421,262 462,418 502,534 544,260 442,248 635,890
Covered loans 18,341 18,982 20,574 23,593 27,039 20,354 30,212
Fed funds sold and rev repos 1,384 1,167 557 217 1,269 835 3,638
Other earning assets   68,016     58,534     41,242     46,368     48,224     53,613     40,828  
Total earning assets   11,062,962     10,845,896     10,636,791     10,613,493     10,608,954     10,791,171     10,445,370  
Allowance for loan losses (78,652 ) (84,482 ) (84,331 ) (81,993 ) (82,851 ) (82,361 ) (79,621 )
Cash and due from banks 272,562 266,174 272,292 290,251 284,754 275,246 316,843
Other assets   1,266,712     1,286,189     1,288,507     1,303,552     1,317,217     1,286,139     1,345,438  
Total assets $ 12,523,584   $ 12,313,777   $ 12,113,259   $ 12,125,303   $ 12,128,074   $ 12,270,195   $ 12,028,030  
 
Interest-bearing demand deposits $ 1,917,598 $ 1,915,567 $ 1,924,447 $ 1,847,374 $ 1,815,999 $ 1,901,478 $ 1,837,496
Savings deposits 2,963,318 3,059,183 3,226,380 3,252,586 2,963,771 3,124,393 3,116,251
Time deposits less than $100,000 1,033,233 1,072,373 1,101,477 1,139,912 1,152,622 1,086,417 1,211,242
Time deposits of $100,000 or more   687,635     712,910     751,129     785,715     838,309     734,020     892,571  
Total interest-bearing deposits 6,601,784 6,760,033 7,003,433 7,025,587 6,770,701 6,846,308 7,057,560
Fed funds purchased and repos 563,424 528,232 497,606 421,206 526,482 503,077 435,324
Short-term borrowings 733,365 534,931 128,761 256,714 385,841 415,081 173,759
Long-term FHLB advances 50,078 1,195 1,213 1,243 2,652 13,533 6,837
Subordinated notes 49,964 49,955 49,947 49,939 49,931 49,951 49,919
Junior subordinated debt securities   61,856     61,856     61,856     61,856     61,856     61,856     61,856  
Total interest-bearing liabilities 8,060,471 7,936,202 7,742,816 7,816,545 7,797,463 7,889,806 7,785,255
Noninterest-bearing deposits 2,839,894 2,771,186 2,772,741 2,741,945 2,762,332 2,781,682 2,711,727
Other liabilities   141,925     137,134     143,201     129,844     146,011     138,057     132,103  
Total liabilities 11,042,290 10,844,522 10,658,758 10,688,334 10,705,806 10,809,545 10,629,085
Shareholders' equity   1,481,294     1,469,255     1,454,501     1,436,969     1,422,268     1,460,650     1,398,945  
Total liabilities and equity $ 12,523,584   $ 12,313,777   $ 12,113,259   $ 12,125,303   $ 12,128,074   $ 12,270,195   $ 12,028,030  
 

PERIOD END BALANCES

  12/31/2015     9/30/2015     6/30/2015     3/31/2015     12/31/2014  
Cash and due from banks $ 277,751 $ 220,052 $ 255,050 $ 335,244 $ 315,973
Fed funds sold and rev repos 250 - - - 1,885
Securities available for sale 2,345,422 2,382,822 2,446,383 2,381,459 2,374,567
Securities held to maturity 1,187,818 1,178,440 1,190,161 1,184,554 1,170,685
Loans held for sale (LHFS) 160,189 173,679 147,539 150,365 132,196
Loans held for investment (LHFI) 7,091,385 6,791,643 6,447,073 6,413,876 6,449,469
Allowance for loan losses   (67,619 )   (65,607 )   (71,166 )   (71,321 )   (69,616 )
Net LHFI 7,023,766 6,726,036 6,375,907 6,342,555 6,379,853
Acquired loans:
Noncovered loans 372,711 400,528 447,160 478,172 525,783
Covered loans 17,700 18,645 19,239 20,271 23,626
Allowance for loan losses, acquired loans   (11,992 )   (12,185 )   (12,629 )   (11,837 )   (12,059 )
Net acquired loans   378,419     406,988     453,770     486,606     537,350  
Net LHFI and acquired loans 7,402,185 7,133,024 6,829,677 6,829,161 6,917,203
Premises and equipment, net 195,656 196,558 196,220 198,039 200,781
Mortgage servicing rights 74,007 69,809 71,422 62,903 64,358
Goodwill 366,156 365,500 365,500 365,500 365,500
Identifiable intangible assets 27,546 30,129 32,042 31,250 33,234
Other real estate, excluding covered other real estate 77,177 83,955 90,748 90,175 92,509
Covered other real estate 1,651 2,865 3,755 4,794 6,060
FDIC indemnification asset 738 1,749 2,632 4,743 6,997
Other assets   562,350     551,694     551,319     540,977     568,685  
Total assets $ 12,678,896   $ 12,390,276   $ 12,182,448   $ 12,179,164   $ 12,250,633  
 
Deposits:
Noninterest-bearing $ 2,998,694 $ 2,787,454 $ 2,819,171 $ 2,936,875 $ 2,748,635
Interest-bearing   6,589,536     6,624,950     6,973,003     6,970,115     6,949,723  
Total deposits 9,588,230 9,412,404 9,792,174 9,906,990 9,698,358
Fed funds purchased and repos 441,042 534,204 477,462 523,187 443,543
Short-term borrowings 412,617 709,845 201,744 50,570 425,077
Long-term FHLB advances 501,155 1,173 1,204 1,222 1,253
Subordinated notes 49,969 49,961 49,953 49,944 49,936
Junior subordinated debt securities 61,856 61,856 61,856 61,856 61,856
Other liabilities   150,970     144,077     147,646     139,311     150,670  
Total liabilities   11,205,839     10,913,520     10,732,039     10,733,080     10,830,693  
Common stock 14,076 14,076 14,076 14,076 14,060
Capital surplus 361,467 360,494 359,533 358,583 356,244
Retained earnings 1,142,908 1,130,766 1,117,993 1,103,077 1,092,120
Accum other comprehensive
loss, net of tax   (45,394 )   (28,580 )   (41,193 )   (29,652 )   (42,484 )
Total shareholders' equity   1,473,057     1,476,756     1,450,409     1,446,084     1,419,940  
Total liabilities and equity $ 12,678,896 $ 12,390,276 $ 12,182,448 $ 12,179,164 $ 12,250,633
 

See Notes to Consolidated Financials

 
               
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2015
($ in thousands except per share data)
(unaudited)
 
 
Quarter Ended Year Ended

INCOME STATEMENTS

12/31/2015 9/30/2015 6/30/2015 3/31/2015 12/31/2014 12/31/2015 12/31/2014
Interest and fees on LHFS & LHFI-FTE $ 74,383 $ 72,951 $ 71,546 $ 69,658 $ 70,775 $ 288,538 $ 276,775
Interest and fees on acquired loans 11,910 11,607 12,557 15,078 13,500 51,152 76,736
Interest on securities-taxable 21,149 20,264 19,731 19,586 21,694 80,730 80,148
Interest on securities-tax exempt-FTE 1,565 1,609 1,688 1,789 1,814 6,651 7,491
Interest on fed funds sold and rev repos 4 2 2 - 3 8 23
Other interest income   402     392     392     393     384     1,579     1,524  
Total interest income-FTE   109,413     106,825     105,916     106,504     108,170     428,658     442,697  
Interest on deposits 3,000 3,147 3,204 3,247 3,382 12,598 15,323
Interest on fed funds pch and repos 274 205 179 143 184 801 550
Other interest expense   1,987     1,811     1,614     1,649     1,510     7,061     5,673  
Total interest expense   5,261     5,163     4,997     5,039     5,076     20,460     21,546  
Net interest income-FTE 104,152 101,662 100,919 101,465 103,094 408,198 421,151
Provision for loan losses, LHFI 3,043 2,514 1,033 1,785 (1,393 ) 8,375 1,211
Provision for loan losses, acquired loans   997     1,256     825     347     1,179     3,425     6,171  
Net interest income after provision-FTE   100,112     97,892     99,061     99,333     103,308     396,398     413,769  
Service charges on deposit accounts 11,961 12,400 11,920 11,085 12,514 47,366 48,671
Insurance commissions 8,501 9,906 9,401 8,616 7,831 36,424 33,468
Wealth management 7,831 7,790 7,758 7,990 8,460 31,369 32,343
Bank card and other fees 7,156 6,964 7,416 6,762 6,712 28,298 32,966
Mortgage banking, net 4,287 7,443 9,481 8,965 5,918 30,176 24,780
Other, net   (466 )   1,470     (433 )   (1,055 )   596     (484 )   614  
Nonint inc-excl sec gains (losses), net 39,270 45,973 45,543 42,363 42,031 173,149 172,842
Security gains (losses), net   -     -     -     -     -     -     300  
Total noninterest income   39,270     45,973     45,543     42,363     42,031     173,149     173,142  
Salaries and employee benefits 57,366 58,270 57,393 57,169 57,159 230,198 226,694
Services and fees 13,717 14,691 15,005 14,121 14,401 57,534 56,598
Net occupancy-premises 6,304 6,580 6,243 6,191 6,632 25,318 26,468
Equipment expense 6,105 5,877 5,903 5,974 5,911 23,859 23,860
FDIC assessment expense 2,614 2,559 2,615 2,940 2,669 10,728 10,197
ORE/Foreclosure expense (518 ) 3,385 921 1,115 3,240 4,903 11,321
Other expense   13,032     12,198     12,186     11,706     14,420     49,122     53,867  
Total noninterest expense   98,620     103,560     100,266     99,216     104,432     401,662     409,005  
Income before income taxes and tax eq adj 40,762 40,305 44,338 42,480 40,907 167,885 177,906
Tax equivalent adjustment   4,334     4,056     3,970     4,073     4,179     16,433     15,815  
Income before income taxes 36,428 36,249 40,368 38,407 36,728 151,452 162,091
Income taxes   8,570     7,819     9,766     9,259     8,655     35,414     38,529  
Net income $ 27,858   $ 28,430   $ 30,602   $ 29,148   $ 28,073   $ 116,038   $ 123,562  
 
Per share data
Earnings per share - basic $ 0.41   $ 0.42   $ 0.45   $ 0.43   $ 0.42   $ 1.72   $ 1.83  
 
Earnings per share - diluted $ 0.41   $ 0.42   $ 0.45   $ 0.43   $ 0.42   $ 1.71   $ 1.83  
 
Dividends per share $ 0.23   $ 0.23   $ 0.23   $ 0.23   $ 0.23   $ 0.92   $ 0.92  
 
Weighted average shares outstanding
Basic   67,557,991     67,557,395     67,556,825     67,525,791     67,445,721     67,549,611     67,433,942  
 
Diluted   67,734,109     67,707,456     67,685,449     67,639,326     67,633,637     67,691,821     67,594,010  
 
Period end shares outstanding   67,559,128     67,557,395     67,557,395     67,556,591     67,481,992     67,559,128     67,481,992  
 
 

OTHER FINANCIAL DATA

Return on equity 7.46 % 7.68 % 8.44 % 8.23 % 7.83 % 7.94 % 8.83 %
Return on average tangible equity 10.61 % 10.96 % 12.05 % 11.86 % 11.40 % 11.36 % 12.97 %
Return on assets 0.88 % 0.92 % 1.01 % 0.97 % 0.92 % 0.95 % 1.03 %
Interest margin - Yield - FTE 3.92 % 3.91 % 3.99 % 4.07 % 4.05 % 3.97 % 4.24 %
Interest margin - Cost 0.19 % 0.19 % 0.19 % 0.19 % 0.19 % 0.19 % 0.21 %
Net interest margin - FTE 3.74 % 3.72 % 3.81 % 3.88 % 3.86 % 3.78 % 4.03 %
Efficiency ratio (1) 66.03 % 67.87 % 66.00 % 66.46 % 69.16 % 66.60 % 66.07 %
Full-time equivalent employees 2,941 2,963 2,989 3,038 3,060
 
 

STOCK PERFORMANCE

Market value-Close $ 23.04 $ 23.17 $ 24.98 $ 24.28 $ 24.54
Book value $ 21.80 $ 21.86 $ 21.47 $ 21.41 $ 21.04
Tangible book value $ 15.98 $ 16.00 $ 15.58 $ 15.53 $ 15.13
 

(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, 2015
($ in thousands)
(unaudited)
 
Quarter Ended

NONPERFORMING ASSETS (1)

12/31/2015 9/30/2015 6/30/2015 3/31/2015 12/31/2014
Nonaccrual loans
Alabama $ 1,776 $ 1,306 $ 713 $ 902 $ 852
Florida 5,180 7,444 7,892 8,179 11,091
Mississippi (2) 40,754 44,955 52,051 52,145 57,129
Tennessee (3) 5,106 4,911 5,468 4,197 5,819
Texas   2,496     2,515     2,314     11,585     4,452  
Total nonaccrual loans 55,312 61,131 68,438 77,008 79,343
Other real estate
Alabama 21,578 23,822 21,849 21,795 21,196
Florida 29,579 30,374 31,059 34,746 35,324
Mississippi (2) 14,312 13,180 14,094 15,143 17,397
Tennessee (3) 9,974 9,840 9,707 10,072 10,292
Texas   1,734     6,739     14,039     8,419     8,300  
Total other real estate   77,177     83,955     90,748     90,175     92,509  
Total nonperforming assets $ 132,489   $ 145,086   $ 159,186   $ 167,183   $ 171,852  
 

LOANS PAST DUE OVER 90 DAYS (4)

LHFI $ 2,300   $ 9,224   $ 1,771   $ 1,413   $ 2,764  
 
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase) $ 21,812   $ 15,165   $ 11,987   $ 7,584   $ 25,943  
 
 
Quarter Ended Year Ended

ALLOWANCE FOR LOAN LOSSES (4)

12/31/2015 9/30/2015 6/30/2015 3/31/2015 12/31/2014 12/31/2015 12/31/2014
Beginning Balance $ 65,607 $ 71,166 $ 71,321 $ 69,616 $ 70,134 $ 69,616 $ 66,448
Provision for loan losses 3,043 2,514 1,033 1,785 (1,393 ) 8,375 1,211
Charge-offs (3,781 ) (11,406 ) (4,278 ) (3,004 ) (3,174 ) (22,469 ) (13,226 )
Recoveries   2,750     3,333     3,090     2,924     4,049     12,097     15,183  
Net (charge-offs) recoveries   (1,031 )   (8,073 )   (1,188 )   (80 )   875     (10,372 )   1,957  
Ending Balance $ 67,619   $ 65,607   $ 71,166   $ 71,321   $ 69,616   $ 67,619   $ 69,616  
 

PROVISION FOR LOAN LOSSES (4)

Alabama $ 1,453 $ (70 ) $ 623 $ 761 $ 283 $ 2,767 $ 2,544
Florida (1,357 ) (1,430 ) (1,168 ) 1,833 (66 ) (2,122 ) (5,726 )
Mississippi (2) 1,842 4,221 2,046 (2,729 ) (3,065 ) 5,380 6,474
Tennessee (3) 182 (1,050 ) (483 ) 1,432 1,993 81 1,045
Texas   923     843     15     488     (538 )   2,269     (3,126 )
Total provision for loan losses $ 3,043   $ 2,514   $ 1,033   $ 1,785   $ (1,393 ) $ 8,375   $ 1,211  
 

NET CHARGE-OFFS (4)

Alabama $ 422 $ 163 $ 216 $ 144 $ 92 $ 945 $ 403
Florida (389 ) (1,090 ) 539 (28 ) (226 ) (968 ) (3,364 )
Mississippi (2) 925 7,391 1,028 143 (880 ) 9,487 1,776
Tennessee (3) 188 448 105 (216 ) 325 525 459
Texas   (115 )   1,161     (700 )   37     (186 )   383     (1,231 )
Total net charge-offs (recoveries) $ 1,031   $ 8,073   $ 1,188   $ 80   $ (875 ) $ 10,372   $ (1,957 )
 

CREDIT QUALITY RATIOS (1)

Net charge-offs/average loans 0.06 % 0.47 % 0.07 % 0.00 % -0.05 % 0.15 % -0.03 %
Provision for loan losses/average loans 0.17 % 0.15 % 0.06 % 0.11 % -0.09 % 0.12 % 0.02 %
Nonperforming loans/total loans (incl LHFS) 0.76 % 0.88 % 1.04 % 1.17 % 1.21 %
Nonperforming assets/total loans (incl LHFS) 1.83 % 2.08 % 2.41 % 2.55 % 2.61 %
Nonperforming assets/total loans (incl LHFS) +ORE 1.81 % 2.06 % 2.38 % 2.51 % 2.57 %
ALL/total loans (excl LHFS) 0.95 % 0.97 % 1.10 % 1.11 % 1.08 %
ALL-commercial/total commercial loans 1.05 % 1.07 % 1.30 % 1.30 % 1.23 %
ALL-consumer/total consumer and home mortgage loans 0.66 % 0.67 % 0.59 % 0.61 % 0.67 %
ALL/nonperforming loans 122.25 % 107.32 % 103.99 % 92.62 % 87.74 %
ALL/nonperforming loans -
(excl impaired loans) 210.32 % 206.72 % 192.60 % 205.52 % 180.95 %
 

CAPITAL RATIOS

Total equity/total assets 11.62 % 11.92 % 11.91 % 11.87 % 11.59 %
Tangible equity/tangible assets 8.79 % 9.01 % 8.93 % 8.91 % 8.62 %
Tangible equity/risk-weighted assets 11.68 % 12.24 % 12.34 % 12.34 % 12.17 %
Tier 1 leverage ratio 10.03 % 10.09 % 10.14 % 9.99 % 9.63 %
Tier 1 common risk-based capital ratio - BASEL I - - - - 12.75 %
Common equity tier 1 capital ratio - BASEL III 12.57 % 13.00 % 13.28 % 13.14 % -
Tier 1 risk-based capital ratio 13.21 % 13.66 % 13.97 % 13.83 % 13.47 %
Total risk-based capital ratio 14.07 % 14.66 % 15.07 % 14.92 % 14.56 %
 
 
(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, 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):

 
12/31/2015 9/30/2015 6/30/2015 3/31/2015 12/31/2014

SECURITIES AVAILABLE FOR SALE

U.S. Treasury securities $ - $ - $ - $ - $ 100
U.S. Government agency obligations
Issued by U.S. Government agencies 68,135 71,282 74,409 78,115 79,656
Issued by U.S. Government sponsored agencies 281 23,016 33,009 33,076 32,818
Obligations of states and political subdivisions 138,609 147,794 151,322 160,154 162,258
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA 25,812 26,651 20,651 12,010 12,427
Issued by FNMA and FHLMC 225,542 177,411 185,651 195,470 204,441
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 1,582,860 1,630,402 1,662,476 1,646,710 1,661,833
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 279,226 279,609 290,398 225,826 189,334
Asset-backed securities and structured financial products   24,957   26,657   28,467   30,098   31,700
Total securities available for sale $ 2,345,422 $ 2,382,822 $ 2,446,383 $ 2,381,459 $ 2,374,567
 

SECURITIES HELD TO MATURITY

U.S. Government agency obligations
Issued by U.S. Government sponsored agencies $ 101,782 $ 101,578 $ 101,374 $ 101,171 $ 100,971
Obligations of states and political subdivisions 55,892 56,661 56,978 62,928 63,505
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA 17,363 17,783 18,265 18,861 19,115
Issued by FNMA and FHLMC 10,368 10,669 10,965 11,341 11,437
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA 820,012 808,763 838,989 842,827 834,176
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA   182,401   182,986   163,590   147,426   141,481
Total securities held to maturity $ 1,187,818 $ 1,178,440 $ 1,190,161 $ 1,184,554 $ 1,170,685
 

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, 2015, the net unamortized, unrealized loss on the transferred securities included in accumulated other comprehensive loss in the accompanying balance sheet totaled approximately $34.0 million ($21.0 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 94% 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, 2015
($ in thousands)
(unaudited)

 

Note 2 – Loan Composition

 

LHFI BY TYPE (excluding acquired loans)

12/31/2015 9/30/2015 6/30/2015 3/31/2015 12/31/2014
Loans secured by real estate:
Construction, land development and other land loans $ 824,723 $ 785,472 $ 682,444 $ 691,657 $ 619,877
Secured by 1-4 family residential properties 1,649,501 1,638,639 1,637,933 1,613,993 1,634,397
Secured by nonfarm, nonresidential properties 1,736,476 1,604,453 1,567,035 1,516,895 1,553,193
Other real estate secured 211,228 225,523 240,056 233,322 253,787
Commercial and industrial loans 1,343,211 1,270,277 1,219,684 1,228,788 1,270,350
Consumer loans 169,135 169,509 165,215 161,535 167,964
State and other political subdivision loans 734,615 677,539 574,265 614,330 602,727
Other loans   422,496     420,231     360,441     353,356     347,174  
LHFI 7,091,385 6,791,643 6,447,073 6,413,876 6,449,469
Allowance for loan losses   (67,619 )   (65,607 )   (71,166 )   (71,321 )   (69,616 )
Net LHFI $ 7,023,766   $ 6,726,036   $ 6,375,907   $ 6,342,555   $ 6,379,853  
 
           

ACQUIRED NONCOVERED LOANS BY TYPE

12/31/2015 9/30/2015 6/30/2015 3/31/2015 12/31/2014
Loans secured by real estate:
Construction, land development and other land loans $ 41,623 $ 45,299 $ 50,867 $ 51,363 $ 58,309
Secured by 1-4 family residential properties 86,950 96,870 101,027 111,830 116,920
Secured by nonfarm, nonresidential properties 135,626 146,614 168,698 177,210 202,323
Other real estate secured 23,860 23,816 25,666 26,819 27,813
Commercial and industrial loans 55,075 57,748 73,732 81,261 88,256
Consumer loans 5,641 6,295 7,273 8,494 9,772
Other loans   23,936     23,886     19,897     21,195     22,390  
Noncovered loans 372,711 400,528 447,160 478,172 525,783
Allowance for loan losses   (11,259 )   (11,417 )   (11,927 )   (11,106 )   (10,541 )
Net noncovered loans $ 361,452   $ 389,111   $ 435,233   $ 467,066   $ 515,242  
 
           

ACQUIRED COVERED LOANS BY TYPE

12/31/2015 9/30/2015 6/30/2015 3/31/2015 12/31/2014
Loans secured by real estate:
Construction, land development and other land loans $ 1,021 $ 966 $ 904 $ 1,447 $ 1,197
Secured by 1-4 family residential properties 10,058 10,546 11,080 11,200 13,180
Secured by nonfarm, nonresidential properties 4,638 5,363 5,206 5,844 7,672
Other real estate secured 1,286 1,511 1,622 1,469 1,096
Commercial and industrial loans 624 205 371 255 277
Consumer loans - - - - -
Other loans   73     54     56     56     204  
Covered loans 17,700 18,645 19,239 20,271 23,626
Allowance for loan losses   (733 )   (768 )   (702 )   (731 )   (1,518 )
Net covered loans $ 16,967   $ 17,877   $ 18,537   $ 19,540   $ 22,108  
 
             

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2015
($ in thousands)
(unaudited)

 

Note 2 – Loan Composition (continued)

 
December 31, 2015

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 $ 824,723 $ 125,498 $ 55,546 $ 313,173 $ 44,043 $ 286,463
Secured by 1-4 family residential properties 1,649,501 58,893 49,176 1,409,421 112,529 19,482
Secured by nonfarm, nonresidential properties 1,736,476 218,852 165,992 807,331 145,551 398,750
Other real estate secured 211,228 18,581 5,954 108,176 17,807 60,710
Commercial and industrial loans 1,343,211 107,549 12,763 702,876 220,294 299,729
Consumer loans 169,135 18,059 2,871 128,357 17,038 2,810
State and other political subdivision loans 734,615 45,559 27,361 513,481 24,784 123,430
Other loans   422,496   26,617   19,335   288,698   42,783   45,063
Loans $ 7,091,385 $ 619,608 $ 338,998 $ 4,271,513 $ 624,829 $ 1,236,437
 
 
 

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

Lots $ 49,906 $ 6,655 $ 20,054 $ 16,671 $ 2,164 $ 4,362
Development 54,174 8,760 4,210 25,451 764 14,989
Unimproved land 109,681 8,799 18,485 43,945 18,698 19,754
1-4 family construction 155,008 30,226 9,317 75,090 1,826 38,549
Other construction   455,954   71,058   3,480   152,016   20,591   208,809
Construction, land development and other land loans $ 824,723 $ 125,498 $ 55,546 $ 313,173 $ 44,043 $ 286,463
 
 
 
 

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

Income producing:
Retail $ 215,549 $ 51,801 $ 36,545 $ 69,580 $ 19,122 $ 38,501
Office 216,832 31,277 31,794 74,840 7,275 71,646
Nursing homes/assisted living 95,170 - - 89,716 5,454 -
Hotel/motel 149,813 33,468 22,200 38,257 32,668 23,220
Industrial 70,422 7,053 8,493 9,994 3,949 40,933
Health care 24,515 530 871 23,111 3 -
Convenience stores 16,783 233 - 10,855 1,121 4,574
Other   186,930   20,452   17,992   80,627   3,902   63,957
Total income producing loans 976,014 144,814 117,895 396,980 73,494 242,831
 
Owner-occupied:
Office 119,550 9,506 20,902 59,584 8,971 20,587
Churches 93,227 8,049 2,267 45,311 28,212 9,388
Industrial warehouses 129,216 5,049 4,117 63,085 10,840 46,125
Health care 118,931 19,632 7,905 60,774 10,428 20,192
Convenience stores 81,653 6,787 1,798 47,007 2,802 23,259
Retail 29,568 2,482 5,648 15,884 2,822 2,732
Restaurants 28,214 2,466 1,768 22,624 - 1,356
Auto dealerships 10,842 8,246 105 2,491 - -
Other   149,261   11,821   3,587   93,591   7,982   32,280
Total owner-occupied loans   760,462   74,038   48,097   410,351   72,057   155,919
Loans secured by nonfarm, nonresidential properties $ 1,736,476 $ 218,852 $ 165,992 $ 807,331 $ 145,551 $ 398,750
 
(1) Excludes acquired loans.
 
     

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 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 Year Ended
12/31/2015   9/30/2015   6/30/2015   3/31/2015   12/31/2014 12/31/2015   12/31/2014
Securities – taxable 2.50% 2.35% 2.33% 2.40% 2.59% 2.39% 2.42%
Securities – nontaxable 4.25% 4.18% 4.27% 4.29% 4.20% 4.25% 4.24%
Securities – total 2.57% 2.43% 2.42% 2.49% 2.67% 2.48% 2.52%
Loans - LHFI & LHFS 4.16% 4.27% 4.38% 4.31% 4.32% 4.28% 4.43%
Acquired loans 11.74% 10.46% 10.43% 11.62% 9.38% 11.06% 11.52%
Loans - total 4.57% 4.65% 4.79% 4.85% 4.73% 4.71% 5.11%
FF sold & rev repo 1.15% 0.68% 1.44% 0.00% 0.94% 0.96% 0.63%
Other earning assets 2.34% 2.66% 3.81% 3.44% 3.16% 2.95% 3.73%
Total earning assets 3.92% 3.91% 3.99% 4.07% 4.05% 3.97% 4.24%
 
Interest-bearing deposits 0.18% 0.18% 0.18% 0.19% 0.20% 0.18% 0.22%
FF pch & repo 0.19% 0.15% 0.14% 0.14% 0.14% 0.16% 0.13%
Other borrowings 0.88% 1.11% 2.68% 1.81% 1.20% 1.31% 1.94%
Total interest-bearing liabilities 0.26% 0.26% 0.26% 0.26% 0.26% 0.26% 0.28%
 
Net interest margin 3.74% 3.72% 3.81% 3.88% 3.86% 3.78% 4.03%
Net interest margin excluding acquired loans 3.43% 3.43% 3.49% 3.47% 3.54% 3.46% 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.

During the fourth quarter of 2015, the net interest margin included $902 thousand of yield maintenance payments on prepaid securities. The net interest margin, excluding acquired loans and the yield maintenance payments on prepaid securities, totaled 3.40% during the fourth quarter of 2015.

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 negative ineffectiveness of $2.0 million compared to a net positive ineffectiveness of $61 thousand for the quarters ended December 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 Years Ended
12/31/2015   9/30/2015   6/30/2015   3/31/2015   12/31/2014 12/31/2015   12/31/2014
Mortgage servicing income, net $ 5,126 $ 4,906 $ 4,696 $ 4,897 $ 4,814 $ 19,625 $ 18,619
Change in fair value-MSR from runoff (2,091 ) (2,636 ) (2,587 ) (2,213 ) (1,999 ) (9,527 ) (8,566 )
Gain on sales of loans, net 4,656 4,479 5,114 3,716 2,910 17,965 10,770
Other, net   (1,433 )   215     206     1,245     132     233     904  
Mortgage banking income before hedge ineffectiveness   6,258     6,964     7,429     7,645     5,857     28,296     21,727  
Change in fair value-MSR from market changes 2,010 (4,141 ) 6,076 (2,368 ) (4,142 ) 1,577 (7,203 )
Change in fair value of derivatives   (3,981 )   4,620     (4,024 )   3,688     4,203     303     10,256  
Net (negative) positive hedge ineffectiveness   (1,971 )   479     2,052     1,320     61     1,880     3,053  
Mortgage banking, net $ 4,287   $ 7,443   $ 9,481   $ 8,965   $ 5,918   $ 30,176   $ 24,780  
 

During the first quarter of 2015, Trustmark exercised its option to repurchase approximately $28.5 million of 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 subject to guarantees 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
December 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 Year Ended
12/31/2015   9/30/2015   6/30/2015   3/31/2015   12/31/2014 12/31/2015   12/31/2014
Partnership amortization for tax credit purposes $ (3,015 ) $ (2,083 ) $ (2,480 ) $ (2,472 ) $ (2,806 ) $ (10,050 ) $ (11,824 )
(Decrease) Increase in FDIC indemnification asset (827 ) 82 (1,798 ) (970 ) (735 ) (3,513 ) (2,874 )
Increase in life insurance cash surrender value 1,667 1,687 1,673 1,675 1,693 6,702 7,340
Other miscellaneous income   1,709     1,784     2,172     712     2,444     6,377     7,972  
Total other, net $ (466 ) $ 1,470   $ (433 ) $ (1,055 ) $ 596   $ (484 ) $ 614  
 

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 2015, other noninterest income included a net downward adjustment of the FDIC indemnification asset of $827 thousand on acquired covered loans and covered other real estate obtained from the Heritage Banking Group primarily as a result of decreases in write-downs of covered other real estate when compared to the third quarter of 2015.

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

     
Quarter Ended Year Ended
12/31/2015   9/30/2015   6/30/2015   3/31/2015   12/31/2014 12/31/2015   12/31/2014
Loan expense $ 3,356 $ 3,416 $ 3,342 $ 2,721 $ 3,312 $ 12,835 $ 12,953
Amortization of intangibles 1,927 1,942 1,959 1,991 2,123 7,819 8,756
Other miscellaneous expense   7,749   6,840   6,885   6,994   8,985   28,468   32,158
Total other expense $ 13,032 $ 12,198 $ 12,186 $ 11,706 $ 14,420 $ 49,122 $ 53,867
 

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, 2015
($ in thousands)
(unaudited)

 

Note 6 - Non-GAAP Financial Measures (continued)

 
Quarter Ended Year Ended
12/31/2015 9/30/2015 6/30/2015 3/31/2015 12/31/2014 12/31/2015 12/31/2014

TANGIBLE EQUITY

 

AVERAGE BALANCES
Total shareholders' equity $ 1,481,294 $ 1,469,255 $ 1,454,501 $ 1,436,969 $ 1,422,268 $ 1,460,650 $ 1,398,945

 

Less: Goodwill (365,945 ) (365,500 ) (365,500 ) (365,500 ) (365,500 ) (365,613 )

(367,281

)

Identifiable intangible assets   (28,851 )   (31,144 )   (30,385 )   (32,398 )   (34,411 )   (30,686 )   (37,651

)

Total average tangible equity $ 1,086,498   $ 1,072,611   $ 1,058,616   $ 1,039,071   $ 1,022,357   $ 1,064,351   $ 994,013

 

 
PERIOD END BALANCES
Total shareholders' equity $ 1,473,057 $ 1,476,756 $ 1,450,409 $ 1,446,084 $ 1,419,940
Less: Goodwill (366,156 ) (365,500 ) (365,500 ) (365,500 ) (365,500 )
Identifiable intangible assets   (27,546 )   (30,129 )   (32,042 )   (31,250 )   (33,234 )
Total tangible equity (a) $ 1,079,355   $ 1,081,127   $ 1,052,867   $ 1,049,334   $ 1,021,206  
 

TANGIBLE ASSETS

Total assets $ 12,678,896 $ 12,390,276 $ 12,182,448 $ 12,179,164 $ 12,250,633
Less: Goodwill (366,156 ) (365,500 ) (365,500 ) (365,500 ) (365,500 )
Identifiable intangible assets   (27,546 )   (30,129 )   (32,042 )   (31,250 )   (33,234 )
Total tangible assets (b) $ 12,285,194   $ 11,994,647   $ 11,784,906   $ 11,782,414   $ 11,851,899  
 
Risk-weighted assets (c) $ 9,242,902   $ 8,831,355   $ 8,530,144   $ 8,503,102   $ 8,387,799  
 

NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION

Net income $ 27,858 $ 28,430 $ 30,602 $ 29,148 $ 28,073 $ 116,038 $ 123,562
Plus: Intangible amortization net of tax   1,191     1,199     1,210     1,229     1,312     4,829     5,410
Net income adjusted for intangible amortization $ 29,049   $ 29,629   $ 31,812   $ 30,377   $ 29,385   $ 120,867   $ 128,972
 
Period end common shares outstanding (d)   67,559,128     67,557,395     67,557,395     67,556,591     67,481,992  
 

TANGIBLE COMMON EQUITY MEASUREMENTS

Return on average tangible equity (1) 10.61 % 10.96 % 12.05 % 11.86 % 11.40 % 11.36 % 12.97 %
Tangible equity/tangible assets (a)/(b) 8.79 % 9.01 % 8.93 % 8.91 % 8.62 %
Tangible equity/risk-weighted assets (a)/(c) 11.68 % 12.24 % 12.34 % 12.34 % 12.17 %
Tangible book value (a)/(d)*1,000 $ 15.98 $ 16.00 $ 15.58 $ 15.53 $ 15.13
 

TIER 1 COMMON RISK-BASED CAPITAL - BASEL I

Total shareholders' equity $ 1,419,940
Eliminate qualifying AOCI 42,484
Qualifying tier 1 capital 60,000
Disallowed goodwill