Trustmark Corp (TRMK) SEC Filing 10-Q Quarterly Report for the period ending Wednesday, March 31, 2021

Exhibit 99.1

Trustmark Corporation Announces First Quarter 2021 Financial Results

Performance Reflects Continued Balance Sheet Growth and Strong Credit Quality

JACKSON, Miss. – April 27, 2021 – Trustmark Corporation (Nasdaq:TRMK) reported net income of $52.0 million in the first quarter of 2021, representing diluted earnings per share of $0.82.  Net income in the first quarter produced a return on average tangible equity of 15.56% and a return on average assets of 1.26%.  Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable June 15, 2021, to shareholders of record on June 1, 2021.

First Quarter Highlights

Duane A. Dewey, President and CEO, stated, “Our first quarter financial performance reflects solid loan and deposit growth, as well as continued increases in our insurance and wealth management businesses.  Our mortgage banking revenue remained strong following record-setting levels in the prior quarter.  Improvement in the economic outlook resulted in negative provision and expense for credit losses, which also contributed to earnings. We continue to focus on efficiency enhancements throughout the organization, including investments in technology to better serve customers as well as rationalization of the branch network.  Trustmark remains well-positioned to serve and expand our customer base and create long-term value for our shareholders.”

Balance Sheet Management

Loans HFI totaled $10.0 billion at March 31, 2021, reflecting an increase of $159.2 million, or 1.6%, linked-quarter and $415.8 million, or 4.3%, year-over-year.  The linked-quarter growth reflects increases in other real estate secured loans and loans secured by nonfarm, nonresidential properties, which were principally the result of the migration of construction loans as projects were completed.  Trustmark’s loan portfolio is well-diversified by loan type and geography.

Deposits totaled $14.4 billion at March 31, 2021, up $334.7 million, or 2.4%, from the prior quarter and $2.8 billion, or 24.3%, year-over-year.  Trustmark maintains a strong liquidity position as loans HFI represented 69.4% of total deposits at March 31, 2021.  Noninterest-bearing deposits represented 32.7% of total deposits at the end of the first quarter, compared to 31.0% in the prior quarter.  Interest-bearing deposit costs totaled 0.22% for the first quarter, a decrease of 5 basis points from the prior quarter.  The total cost of interest-bearing liabilities was 0.28% for the first quarter of 2021, a decrease of 2 basis points from the prior quarter.  

During the first quarter, Trustmark repurchased $4.2 million, or approximately 145 thousand of its common shares in open market transactions.  At March 31, 2021, Trustmark had $95.8 million in remaining authority under its existing stock repurchase program, which expires 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 March 31, 2021, Trustmark’s tangible equity to tangible assets ratio was 8.30%, while its total risk-based capital ratio was 14.07%.  Tangible book value per share was $21.59 at March 31, 2021, up 8.4% year-over-year.

Credit Quality

Nonaccrual loans totaled $63.5 million at March 31, 2021, up $386 thousand from the prior quarter and $10.5 million year-over-year.  Other real estate totaled $10.7 million, reflecting a $1.0 million decrease from the prior quarter and a decline of $14.2 million year-over-year. Collectively, nonperforming assets totaled $74.2 million at March 31, 2021, reflecting a linked-quarter decrease of $614 thousand and a year-over-year decrease of $3.7 million.

The provision for credit losses was a negative $10.5 million in the first quarter.  Negative provisioning was primarily driven by decreases in quantitative reserves as a result of an improving economic forecast.  

Allocation of Trustmark’s $109.2 million allowance for credit losses on loans HFI represented 1.13% of commercial loans and 0.95% of consumer and home mortgage loans, resulting in an allowance to total loans HFI of 1.09% at March 31, 2021.  Management believes the level of the ACL is commensurate with the present risk in the loan portfolio.  

Revenue Generation

Revenue in the first quarter totaled $162.9 million, down 8.2% from the prior quarter and 3.7% from the same quarter in the prior year.  The linked-quarter decrease primarily reflects lower interest income and fees from PPP loans and loans HFI and lower net gains on sales of mortgage loans.  

Net interest income (FTE) in the first quarter totaled $105.2 million, resulting in a net interest margin of 2.81%, down 34 basis points from the prior quarter.  The net interest margin, excluding PPP loans and Federal Reserve Bank balance, totaled 2.99% for the first quarter, a decrease of 10 basis points when compared to the prior quarter.  Continued low interest rates decreased the yield on the loans held for investment and held for sale portfolio as well as the securities portfolio and were partially offset by lower costs of interest-bearing deposits.  

Noninterest income in the first quarter totaled $60.6 million, a decrease of $5.5 million from the prior quarter and $4.7 million year-over-year.  The linked-quarter increases in insurance, wealth management and bank card revenue were more than offset by declines in mortgage banking revenue and service charges on deposit accounts.  Mortgage loan production in the first quarter totaled $766.6 million, down 2.8% from the record level in the prior quarter and an increase of 67.7% year-over-