Trustmark Corp (TRMK) SEC Filing 10-Q Quarterly Report for the period ending Thursday, September 30, 2021

Exhibit 99.1

Trustmark Corporation Announces Third Quarter 2021 Financial Results

Performance Reflects Continued Balance Sheet Growth, Strong Credit Quality

and Disciplined Expense Management

JACKSON, Miss. – October 26, 2021 – Trustmark Corporation (NASDAQGS: TRMK) reported net income of $21.2 million in the third quarter of 2021, representing diluted earnings per share of $0.34.  Third quarter results include costs of a previously announced voluntary early retirement program, which reduced net income by $4.3 million, or approximately $0.07 per diluted share.  Results for the quarter also include a previously disclosed charge to resolve allegations by regulatory authorities regarding fair lending matters, which reduced net income by $5.0 million, or approximately $0.08 per diluted share.   Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable December 15, 2021, to shareholders of record on December 1, 2021.

Third Quarter Highlights

Duane A. Dewey, President and CEO, stated, “We made significant progress across the organization in the third quarter as reflected by continued balance sheet growth, strong credit quality, and disciplined expense management.  Our associates are focused on expanding customer relationships, which is reflected in the solid performance of our banking, insurance, and wealth management businesses.  

“Our third quarter results were impacted by our previously announced settlement with regulatory authorities to resolve fair lending allegations in our Memphis, Tennessee market.  We entered into these settlements to avoid the distraction of protracted litigation and because we share the common goals of breaking down barriers to home financing and exploring innovative ways to help residents of underserved areas achieve the dream of homeownership.  Our quarterly results also reflect the costs associated with our voluntary early retirement program, which was accepted by 98 associates, or 3.6% of our workforce.  As you may recall, we also had a voluntary early retirement program in the first quarter of 2020 in which 107 associates, or 3.8% of the workforce at that time, elected to participate.  Collectively, these programs have provided additional opportunities to redesign workflows and restructure the organization to leverage investments in technology and improve efficiency.”

Balance Sheet Management

Loans HFI totaled $10.2 billion at September 30, 2021, reflecting an increase of $22.0 million, or 0.2%, linked-quarter and $327.2 million, or 3.3%, year-over-year.  The linked-quarter growth primarily reflects increases in loans secured by nonfarm, nonresidential properties and 1-4 family mortgage loans, which were largely offset by declines in construction loans, other real estate secured loans, and municipal loans. Trustmark’s loan portfolio remains well-diversified by loan type and geography.

Deposits totaled $14.9 billion at September 30, 2021, up $290.8 million, or 2.0%, from the prior quarter and $1.7 billion, or 12.9%, year-over-year.  Trustmark continues to maintain a strong liquidity position as loans HFI represented 68.2% of total deposits at September 30, 2021.  Noninterest-bearing deposits represented 33.4% of total deposits at the end of the third quarter.  Interest-bearing deposit costs totaled 0.14% in the third quarter, a decrease of 5 basis points from the prior quarter. The total cost of interest-bearing liabilities was 0.21% in the third quarter of 2021, a decrease of 4 basis points from the prior quarter.

During the third quarter, Trustmark repurchased $9.7 million, or approximately 319 thousand of its common shares.  During the nine months ended September 30, 2021, Trustmark repurchased $34.6 million, or approximately 1.1 million of its common shares.  At September 30, 2021, Trustmark had $65.4 million in remaining authority under its existing stock repurchase program, which expires on December 31, 2021.  The repurchase program, which is subject to market conditions and management discretion, will continue to be implemented through open market repurchases or privately negotiated transactions.  At September 30, 2021,Trustmark’s tangible equity-to-tangible assets ratio was 8.12% while its total risk-based capital ratio was 14.01%.  

Credit Quality

Nonaccrual loans totaled $66.2 million at September 30, 2021, up $14.8 million from the prior quarter and up $12.4 million year-over-year.  Other real estate totaled $6.2 million, reflecting a $3.2 million decrease from the prior quarter and a decline of $10.0 million year-over-year.  Collectively, nonperforming assets totaled $72.5 million at September 30, 2021, reflecting a linked-quarter increase of $11.6 million and year-over-year increase of $2.3 million.

The provision for credit losses for loans HFI was a negative $2.5 million in the third quarter.  Negative provisioning was primarily due to improvements in credit quality and the economic forecasts. The provision for credit losses for off-balance sheet credit exposures was a negative $1.0 million in the third quarter and was primarily driven by decreases in the total reserve rates applied to the unfunded portion of the loan portfolio.  Collectively, the provision for credit losses totaled a negative $3.5 million in the third quarter compared to an expense of $537 thousand in the prior quarter and a negative $1.2 million in the third quarter of 2020.

Allocation of Trustmark’s $104.1 million allowance for credit losses on loans HFI represented 1.05% of commercial loans and 0.91% of consumer and home mortgage loans, resulting in an allowance to total loans HFI of 1.02% at September 30, 2021.  Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.