Trustmark Corp (TRMK) SEC Filing 10-Q Quarterly Report for the period ending Friday, September 30, 2022

Exhibit 99.1

Trustmark Corporation Announces Third Quarter 2022 Financial Results

Performance Reflects Continued Loan Growth, Strong Credit Quality,

Asset Sensitive Balance Sheet and Diversified Fee Income

JACKSON, Miss. – October 25, 2022 – Trustmark Corporation (NASDAQGS: TRMK) reported net income of $42.5 million in the third quarter of 2022, representing diluted earnings per share of $0.69. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable December 15, 2022, to shareholders of record on December 1, 2022.

Third Quarter Highlights

Duane A. Dewey, President and CEO, stated, “Trustmark’s solid financial performance during the third quarter reflected significant loan growth, net interest margin expansion, solid performance in our insurance and wealth management businesses, and strong credit quality. We continued to invest in technology enhancements, rationalize our branch network and add business lines to grow and serve customers. Trustmark is well-positioned to respond to changing economic conditions and create long-term value for our shareholders.”

Balance Sheet Management

Loans HFI totaled $11.6 billion at September 30, 2022, reflecting an increase of $641.2 million, or 5.9%, linked-quarter and $1.4 billion, or 13.9%, year-over-year. The linked-quarter growth was broad-based, reflecting increases in virtually every category. Trustmark’s loan portfolio remains well-diversified by loan type and geography.

Deposits totaled $14.4 billion at September 30, 2022, down $345.0 million, or 2.3%, from the prior quarter and $497.7 million, or 3.3%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 80.3% of total deposits at September 30, 2022. Noninterest-bearing deposits represented 30.2% of total deposits at the end of the third quarter. Interest-bearing deposit costs totaled 0.20% in the third quarter, an increase of 9 basis points from the prior quarter. The total cost of interest-bearing liabilities was 0.31% in the third quarter of 2022, an increase of 14 basis points from the prior quarter.

During the third quarter Trustmark initiated a cash flow hedging program under which interest rate swaps convert floating rate loans to fixed rate. The intent of the program is to manage the natural asset sensitivity of Trustmark’s balance sheet. As of September 30, 2022, notional balances totaled $675.0 million with a weighted average receive fixed rate of 2.98%.

Trustmark repurchased $8.0 million, or approximately 247 thousand of its common shares during the third quarter. During the nine months ended September 30, 2022, Trustmark repurchased $24.6 million, or approximately 789 thousand of its common shares. At September 30, 2022, Trustmark had $75.4 million in remaining authority under its existing stock repurchase program, which expires on December 31, 2022. 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, 2022, Trustmark’s tangible equity-to-tangible assets ratio was 6.67% while its total risk-based capital ratio was 12.85%. Tangible book value per share was $18.39 at September 30, 2022, down 6.1% from the prior quarter reflecting a decline in accumulated other comprehensive income due to mark-to-market adjustments on securities available for sale resulting from the increase in market interest rates during the third quarter.

Credit Quality

Nonaccrual loans totaled $67.9 million at September 30, 2022, up $5.9 million from the prior quarter and $1.7 million year-over-year. Other real estate totaled $3.0 million, reflecting a $63 thousand decrease from the prior quarter and a decline of $3.2 million year-over-year. Collectively, nonperforming assets totaled $70.9 million at September 30, 2022, reflecting a linked-quarter increase of $5.8 million and a year-over-year decrease of $1.6 million.

The provision for credit losses for loans HFI was $12.9 million in the third quarter. This provisioning was primarily driven by reserves related to loan growth, individually analyzed reserves, and a less positive outlook within the macroeconomic forecasts partially offset by adjustments to the pandemic reserve. The provision for credit losses for off-balance sheet credit exposures was a negative $1.3 million in the third quarter. Collectively, the provision for credit losses totaled $11.6 million in the third quarter compared to $1.1 million in the prior quarter and a negative $3.5 million in the third quarter of 2021.

Allocation of Trustmark’s $115.1 million allowance for credit losses on loans HFI represented 0.93% of commercial loans and 1.20% of consumer and home mortgage loans, resulting in an allowance to total loans HFI of 0.99% at September 30, 2022. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.