News ReleaseTrustmark Announces 2005 Financial Results
Jackson, Miss. - January 17, 2006 - Trustmark Corporation (NASDAQ:TRMK) announced net income of $27.7 million in the fourth quarter of 2005, which represented basic earnings per share of $0.50. For the year ended December 31, 2005, Trustmark’s net income totaled $103.0 million, which represented basic earnings per share of $1.82. The impact of Hurricane Katrina reduced net income by $1.4 million, or $0.026 per share in the fourth quarter, and $10.1 million, or $0.178 per share for the year ended December 31, 2005. Highlights included:
| · | Average total loans in the fourth quarter of 2005 increased $618.3 million, or 11.5%, compared to figures one year earlier |
| · | Average total deposits in the fourth quarter of 2005 expanded $533.0 million, or 9.9%, compared to figures one year earlier |
| · | Initiation of a de novo branch expansion program to build approximately 20 retail banking centers within the higher-growth markets of Trustmark’s existing franchise during the next three years |
Richard G. Hickson, Chairman and CEO, stated, “Trustmark continued to make significant advancements during 2005 as evidenced by strong loan and deposit growth, expanding and diversified revenue growth, and prudent investments designed to enhance the value of our franchise. Average total loans during the fourth quarter of 2005 increased $618.3 million, or 11.5%, relative to the comparable period one year earlier. The growth of our loan portfolio was well diversified geographically as well as by loan type. Our Florida Gulf and Houston offices achieved solid growth as did our Dealer Services, Residential Real Estate and Corporate Lending divisions.
“The growth of our loan portfolio has not been at the expense of credit quality, which continues to be an enduring strength of the organization. Non-performing assets were $33.0 million at December 31, 2005, and the allowance coverage for nonperforming loans was 265%. Net charge-offs represented 0.13% of average loans in 2005.
“We are very pleased with the growth of our deposit base. During the fourth quarter of 2005, total average deposits increased $533.0 million, or 9.9%, when compared to figures one year earlier. This growth was also broad-based with increases noted across Trustmark’s franchise. Average non-interest bearing deposits during the fourth quarter increased $125.9 million, or by 9.7% while interest bearing deposits rose $407.1 million, or 9.9%. During the fourth quarter of 2005, average non-interest bearing deposits represented 23.9% of Trustmark’s total deposit base.
“During the year, we continued to implement strategies to mitigate our exposure to cyclical increases in interest rates. As the relatively flat yield curve diminished the profitability of holding longer-term investment securities, we reduced the investment securities portfolio as well as balances of higher-cost funding sources during the year. At December 31, 2005, our investment securities portfolio comprised 15.9% of total assets and had an average duration of 2.5 years. As a consequence of reducing the size of our investment securities portfolio and maintaining a historically short duration, our spread, which is the difference in interest income on our assets less the interest expense on our deposits and other funding, has been constrained as investment yields remain low. As such, we have foregone current earnings in an effort to better position our net interest margin in a rising rate environment. The decline in the investment securities portfolio, coupled with significant loan growth, has resulted in an improved mix of earning assets.
“The fundamental strengths of Trustmark’s key businesses remain despite the challenges posed by the current interest rate environment and relatively flat yield curve. In addition to the growth of our general banking franchise, we have noted significant accomplishments in our other financial services businesses. During 2005, insurance agency revenue increased to $33.0 million while revenue from our wealth management business, which has assets under management and administration of $6.6 billion and brokerage assets of $1.4 billion, increased to $25.0 million. Collectively, revenue from our insurance agencies and wealth management businesses totaled $58.0 million and represented approximately 13.8% of Trustmark’s total revenue in 2005.
“Revenue generation and expense management remain key areas of focus. We have and will continue to make investments to support additional revenue growth and profitability. During the next three years, we will build approximately 20 retail banking centers within the higher growth markets of our existing franchise. Construction is underway on five banking centers in the Jackson, Memphis, and Houston metropolitan areas that are scheduled to open later this year. Investments in these growing markets will provide excellent opportunities for providing additional financial services,” said Hickson.
Return on average shareholders’ equity was 14.65% during the fourth quarter and 13.68% for 2005. Return on average assets was 1.33% for the fourth quarter and 1.25% for 2005. At December 31, 2005, Trustmark reported total loans of $6.0 billion, total assets of $8.4 billion, total deposits of $6.3 billion and shareholders’ equity of $741.5 million.
During 2005, Trustmark repurchased approximately 2.2 million of its common shares, including approximately 181 thousand in the fourth quarter. At December 31, 2005, Trustmark had authority to repurchase up to an additional 3.6 million shares. The repurchase program is subject to market conditions and management discretion and will continue to be implemented through open market purchases or privately negotiated transactions.
Trustmark is a financial services company providing banking and financial solutions through over 145 offices and 2,600 associates in Florida, Mississippi, Tennessee and Texas. For additional information, visit our website at www.trustmark.com.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this earnings release are not statements of historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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. 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.
These risks could cause actual results to differ materially from current expectations of Management and include, but are not limited to, changes in the level of nonperforming assets and charge-offs, local, state and national economic and market conditions, material changes in market interest rates, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, changes in existing regulations or the adoption of new regulations, natural disasters, acts of war or terrorism, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of Trustmark’s borrowers, the ability to control expenses, changes in Trustmark’s compensation and benefit plans, greater than expected costs or difficulties related to the integration of new products and lines of business and other risks described in Trustmark’s filings with the Securities and Exchange Commission.
Although Management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Trustmark undertakes no obligation to update or revise any of this information, whether as the result of new information, future events or developments or otherwise.
Trustmark Contacts
| Investors: | Zach Wasson | | Joseph Rein | |
| | Executive Vice President and CFO | | First Vice President | |
| | 601-208-6816 | | 601-208-6898 | |
| | | | | |
| Media: | Gray Wiggers | | | |
| | Senior Vice President | | | |
| | 601-208-5942 | | | |
TRUSTMARK CORPORATION AND SUBSIDIARIES |
CONSOLIDATED FINANCIAL INFORMATION |
December 31, 2005 |
($ in thousands) |
(unaudited) |
| | | Quarter Ended December 31, | | | | | |
AVERAGE BALANCES | | 2005 | | 2004 | | $ Change | | % Change | |
| Securities AFS-taxable | | $ | 1,051,481 | | $ | 1,796,714 | | $ | (745,233 | ) | | -41.5 | % |
| Securities AFS-nontaxable | | | 61,777 | | | 68,745 | | | (6,968 | ) | | -10.1 | % |
| Securities HTM-taxable | | | 203,545 | | | 55,610 | | | 147,935 | | | 266.0 | % |
| Securities HTM-nontaxable | | | 92,105 | | | 86,741 | | | 5,364 | | | 6.2 | % |
Total securities | | | 1,408,908 | | | 2,007,810 | | | (598,902 | ) | | -29.8 | % |
| Loans | | | 6,000,786 | | | 5,382,489 | | | 618,297 | | | 11.5 | % |
| Fed funds sold and rev repos | | | 28,324 | | | 36,388 | | | (8,064 | ) | | -22.2 | % |
Total earning assets | | | 7,438,018 | | | 7,426,687 | | | 11,331 | | | 0.2 | % |
| Allowance for loan losses | | | (76,230 | ) | | (73,955 | ) | | (2,275 | ) | | 3.1 | % |
| Cash and due from banks | | | 339,944 | | | 319,383 | | | 20,561 | | | 6.4 | % |
| Other assets | | | 549,570 | | | 503,218 | | | 46,352 | | | 9.2 | % |
Total assets | | $ | 8,251,302 | | $ | 8,175,333 | | $ | 75,969 | | | 0.9 | % |
| | | | | | | | | | | | | | |
| Interest-bearing demand deposits | | $ | 823,025 | | $ | 1,301,509 | | $ | (478,484 | ) | | -36.8 | % |
| Savings deposits | | | 1,470,637 | | | 939,395 | | | 531,242 | | | 56.6 | % |
| Time deposits less than $100,000 | | | 1,411,691 | | | 1,358,170 | | | 53,521 | | | 3.9 | % |
| Time deposits of $100,000 or more | | | 798,707 | | | 497,876 | | | 300,831 | | | 60.4 | % |
Total interest-bearing deposits | | | 4,504,060 | | | 4,096,950 | | | 407,110 | | | 9.9 | % |
| Fed funds purchased and repos | | | 602,829 | | | 797,724 | | | (194,895 | ) | | -24.4 | % |
| Short-term borrowings | | | 757,148 | | | 1,001,530 | | | (244,382 | ) | | -24.4 | % |
| Long-term FHLB advances | | | 105,778 | | | 164,081 | | | (58,303 | ) | | -35.5 | % |
Total interest-bearing liabilities | | | 5,969,815 | | | 6,060,285 | | | (90,470 | ) | | -1.5 | % |
| Noninterest-bearing deposits | | | 1,417,500 | | | 1,291,621 | | | 125,879 | | | 9.7 | % |
| Other liabilities | | | 112,876 | | | 74,476 | | | 38,400 | | | 51.6 | % |
| Shareholders' equity | | | 751,111 | | | 748,951 | | | 2,160 | | | 0.3 | % |
Total liabilities and equity | | $ | 8,251,302 | | $ | 8,175,333 | | $ | 75,969 | | | 0.9 | % |
| | | Year-to-date December 31, | | | | | |
AVERAGE BALANCES | | 2005 | | 2004 | | $ Change | | % Change | |
| Securities AFS-taxable | | $ | 1,268,472 | | $ | 1,879,324 | | $ | (610,852 | ) | | -32.5 | % |
| Securities AFS-nontaxable | | | 62,970 | | | 70,107 | | | (7,137 | ) | | -10.2 | % |
| Securities HTM-taxable | | | 188,133 | | | 70,585 | | | 117,548 | | | 166.5 | % |
| Securities HTM-nontaxable | | | 91,592 | | | 87,944 | | | 3,648 | | | 4.1 | % |
Total securities | | | 1,611,167 | | | 2,107,960 | | | (496,793 | ) | | -23.6 | % |
| Loans | | | 5,770,178 | | | 5,280,640 | | | 489,538 | | | 9.3 | % |
| Fed funds sold and rev repos | | | 31,399 | | | 27,118 | | | 4,281 | | | 15.8 | % |
Total earning assets | | | 7,412,744 | | | 7,415,718 | | | (2,974 | ) | | 0.0 | % |
| Allowance for loan losses | | | (68,395 | ) | | (74,191 | ) | | 5,796 | | | -7.8 | % |
| Cash and due from banks | | | 336,238 | | | 331,980 | | | 4,258 | | | 1.3 | % |
| Other assets | | | 535,346 | | | 485,983 | | | 49,363 | | | 10.2 | % |
Total assets | | $ | 8,215,933 | | $ | 8,159,490 | | $ | 56,443 | | | 0.7 | % |
| | | | | | | | | | | | | | |
| Interest-bearing demand deposits | | $ | 1,088,107 | | $ | 1,312,071 | | $ | (223,964 | ) | | -17.1 | % |
| Savings deposits | | | 1,262,059 | | | 967,674 | | | 294,385 | | | 30.4 | % |
| Time deposits less than $100,000 | | | 1,338,821 | | | 1,304,925 | | | 33,896 | | | 2.6 | % |
| Time deposits of $100,000 or more | | | 653,537 | | | 467,054 | | | 186,483 | | | 39.9 | % |
Total interest-bearing deposits | | | 4,342,524 | | | 4,051,724 | | | 290,800 | | | 7.2 | % |
| Fed funds purchased and repos | | | 668,389 | | | 887,596 | | | (219,207 | ) | | -24.7 | % |
| Short-term borrowings | | | 892,570 | | | 788,737 | | | 103,833 | | | 13.2 | % |
| Long-term FHLB advances | | | 159,103 | | | 365,659 | | | (206,556 | ) | | -56.5 | % |
Total interest-bearing liabilities | | | 6,062,586 | | | 6,093,716 | | | (31,130 | ) | | -0.5 | % |
| Noninterest-bearing deposits | | | 1,310,597 | | | 1,273,889 | | | 36,708 | | | 2.9 | % |
| Other liabilities | | | 90,353 | | | 65,985 | | | 24,368 | | | 36.9 | % |
| Shareholders' equity | | | 752,397 | | | 725,900 | | | 26,497 | | | 3.7 | % |
Total liabilities and equity | | $ | 8,215,933 | | $ | 8,159,490 | | $ | 56,443 | | | 0.7 | % |
| | | December 31, | | | | | |
PERIOD END BALANCES | | 2005 | | 2004 | | $ Change | | % Change | |
| Securities available for sale | | $ | 1,041,754 | | $ | 1,580,270 | | $ | (538,516 | ) | | -34.1 | % |
| Securities held to maturity | | | 294,902 | | | 136,797 | | | 158,105 | | | 115.6 | % |
Total securities | | | 1,336,656 | | | 1,717,067 | | | (380,411 | ) | | -22.2 | % |
| Loans held for sale | | | 146,936 | | | 101,222 | | | 45,714 | | | 45.2 | % |
| Loans | | | 5,893,439 | | | 5,330,055 | | | 563,384 | | | 10.6 | % |
| Fed funds sold and rev repos | | | 130,115 | | | 86,191 | | | 43,924 | | | 51.0 | % |
Total earning assets | | | 7,507,146 | | | 7,234,535 | | | 272,611 | | | 3.8 | % |
| Allowance for loan losses | | | (76,691 | ) | | (64,757 | ) | | (11,934 | ) | | 18.4 | % |
| Cash and due from banks | | | 387,930 | | | 343,125 | | | 44,805 | | | 13.1 | % |
| Mortgage servicing rights | | | 58,424 | | | 52,463 | | | 5,961 | | | 11.4 | % |
| Goodwill | | | 137,368 | | | 137,225 | | | 143 | | | 0.1 | % |
| Identifiable intangible assets | | | 28,703 | | | 32,004 | | | (3,301 | ) | | -10.3 | % |
| Other assets | | | 346,870 | | | 318,362 | | | 28,508 | | | 9.0 | % |
Total assets | | $ | 8,389,750 | | $ | 8,052,957 | | $ | 336,793 | | | 4.2 | % |
| | | | | | | | | | | | | | |
| Noninterest-bearing deposits | | $ | 1,556,142 | | $ | 1,354,749 | | $ | 201,393 | | | 14.9 | % |
| Interest-bearing deposits | | | 4,726,672 | | | 4,095,344 | | | 631,328 | | | 15.4 | % |
Total deposits | | | 6,282,814 | | | 5,450,093 | | | 832,721 | | | 15.3 | % |
| Fed funds purchased and repos | | | 492,853 | | | 617,546 | | | (124,693 | ) | | -20.2 | % |
| Short-term borrowings | | | 775,402 | | | 980,318 | | | (204,916 | ) | | -20.9 | % |
| Long-term FHLB advances | | | 5,726 | | | 180,894 | | | (175,168 | ) | | -96.8 | % |
| Other liabilities | | | 91,492 | | | 73,710 | | | 17,782 | | | 24.1 | % |
Total liabilities | | | 7,648,287 | | | 7,302,561 | | | 345,726 | | | 4.7 | % |
| Common stock | | | 11,620 | | | 12,055 | | | (435 | ) | | -3.6 | % |
| Surplus | | | 65,374 | | | 121,705 | | | (56,331 | ) | | -46.3 | % |
| Retained earnings | | | 677,781 | | | 620,588 | | | 57,193 | | | 9.2 | % |
| Accum other comprehensive | | | | | | | | | | | | | |
| loss, net of tax | | | (13,312 | ) | | (3,952 | ) | | (9,360 | ) | | n/m | |
Total shareholders' equity | | | 741,463 | | | 750,396 | | | (8,933 | ) | | -1.2 | % |
Total liabilities and equity | | $ | 8,389,750 | | $ | 8,052,957 | | $ | 336,793 | | | 4.2 | % |
| | | | | | | | | | | | | | |
| Total interest-bearing liabilities | | $ | 6,000,653 | | $ | 5,874,102 | | $ | 126,551 | | | 2.2 | % |
| | | | | | | | | | | | | | |
n/m - not meaningful | | | | | | | | | | | | | |
| | | Quarter Ended December 31, | | | | | |
| INCOME STATEMENTS | | 2005 | | 2004 | | $ Change | | % Change | |
| Interest and fees on loans-FTE | | $ | 97,569 | | $ | 77,418 | | $ | 20,151 | | | 26.0 | % |
| Interest on securities-taxable | | | 13,483 | | | 14,596 | | | (1,113 | ) | | -7.6 | % |
| Interest on securities-tax exempt-FTE | | | 2,843 | | | 2,930 | | | (87 | ) | | -3.0 | % |
| Interest on fed funds sold and rev repos | | | 291 | | | 191 | | | 100 | | | 52.4 | % |
| Other interest income | | | 73 | | | 18 | | | 55 | | | 305.6 | % |
Total interest income-FTE | | | 114,259 | | | 95,153 | | | 19,106 | | | 20.1 | % |
| Interest on deposits | | | 25,851 | | | 14,864 | | | 10,987 | | | 73.9 | % |
| Interest on fed funds pch and repos | | | 5,445 | | | 3,378 | | | 2,067 | | | 61.2 | % |
| Other interest expense | | | 9,657 | | | 7,071 | | | 2,586 | | | 36.6 | % |
Total interest expense | | | 40,953 | | | 25,313 | | | 15,640 | | | 61.8 | % |
Net interest income-FTE | | | 73,306 | | | 69,840 | | | 3,466 | | | 5.0 | % |
| Provision for loan losses | | | 3,189 | | | (6,971 | ) | | 10,160 | | | n/m | |
Net interest income after provision-FTE | | | 70,117 | | | 76,811 | | | (6,694 | ) | | -8.7 | % |
| Service charges on deposit accounts | | | 12,069 | | | 13,979 | | | (1,910 | ) | | -13.7 | % |
| Insurance commissions | | | 7,480 | | | 5,079 | | | 2,401 | | | 47.3 | % |
| Wealth management | | | 5,629 | | | 5,265 | | | 364 | | | 6.9 | % |
| Retail banking - other | | | 5,573 | | | 4,972 | | | 601 | | | 12.1 | % |
| Mortgage banking, net | | | 1,950 | | | 2,304 | | | (354 | ) | | -15.4 | % |
| Other, net | | | 1,342 | | | 962 | | | 380 | | | 39.5 | % |
| Nonint inc-excl sec gains (losses) | | | 34,043 | | | 32,561 | | | 1,482 | | | 4.6 | % |
| Security gains (losses) | | | 365 | | | (4,664 | ) | | 5,029 | | | n/m | |
Total noninterest income | | | 34,408 | | | 27,897 | | | 6,511 | | | 23.3 | % |
| Salaries and employee benefits | | | 37,405 | | | 35,499 | | | 1,906 | | | 5.4 | % |
| Services and fees | | | 8,672 | | | 8,825 | | | (153 | ) | | -1.7 | % |
| Net occupancy-premises | | | 3,972 | | | 4,250 | | | (278 | ) | | -6.5 | % |
| Equipment expense | | | 3,719 | | | 3,885 | | | (166 | ) | | -4.3 | % |
| Other expense | | | 7,126 | | | 6,908 | | | 218 | | | 3.2 | % |
Total noninterest expense | | | 60,894 | | | 59,367 | | | 1,527 | | | 2.6 | % |
Income before income taxes | | | 43,631 | | | 45,341 | | | (1,710 | ) | | -3.8 | % |
| Tax equivalent adjustment | | | 2,170 | | | 2,053 | | | 117 | | | 5.7 | % |
| Income taxes | | | 13,718 | | | 14,440 | | | (722 | ) | | -5.0 | % |
Net income | | $ | 27,743 | | $ | 28,848 | | $ | (1,105 | ) | | -3.8 | % |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Earnings per share | | | | | | | | | | | | | |
Basic | | $ | 0.50 | | $ | 0.50 | | $ | - | | | 0.0 | % |
| | | | | | | | | | | | | | |
Diluted | | $ | 0.50 | | $ | 0.50 | | $ | - | | | 0.0 | % |
| | | | | | | | | | | | | | |
Weighted average shares outstanding | | | | | | | | | | | | | |
Basic | | | 55,823,191 | | | 57,863,624 | | | | | | -3.5 | % |
| | | | | | | | | | | | | | |
Diluted | | | 55,950,917 | | | 58,200,352 | | | | | | -3.9 | % |
| | | | | | | | | | | | | | |
Period end shares outstanding | | | 55,771,459 | | | 57,858,497 | | | | | | -3.6 | % |
| | | | | | | | | | | | | | |
Dividends per share | | $ | 0.2100 | | $ | 0.2000 | | | | | | 5.0 | % |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
n/m - not meaningful | | | | | | | | | | | | | |
| | | Year-to-date December 31, | | | | | |
| INCOME STATEMENTS | | 2005 | | 2004 | | $ Change | | % Change | |
| Interest and fees on loans-FTE | | $ | 354,843 | | $ | 298,463 | | $ | 56,380 | | | 18.9 | % |
| Interest on securities-taxable | | | 56,568 | | | 61,779 | | | (5,211 | ) | | -8.4 | % |
| Interest on securities-tax exempt-FTE | | | 11,469 | | | 11,988 | | | (519 | ) | | -4.3 | % |
| Interest on fed funds sold and rev repos | | | 994 | | | 417 | | | 577 | | | 138.4 | % |
| Other interest income | | | 130 | | | 55 | | | 75 | | | 136.4 | % |
Total interest income-FTE | | | 424,004 | | | 372,702 | | | 51,302 | | | 13.8 | % |
| Interest on deposits | | | 81,960 | | | 55,123 | | | 26,837 | | | 48.7 | % |
| Interest on fed funds pch and repos | | | 19,138 | | | 10,881 | | | 8,257 | | | 75.9 | % |
| Other interest expense | | | 38,158 | | | 22,734 | | | 15,424 | | | 67.8 | % |
Total interest expense | | | 139,256 | | | 88,738 | | | 50,518 | | | 56.9 | % |
Net interest income-FTE | | | 284,748 | | | 283,964 | | | 784 | | | 0.3 | % |
| Provision for loan losses | | | 19,541 | | | (3,055 | ) | | 22,596 | | | n/m | |
Net interest income after provision-FTE | | | 265,207 | | | 287,019 | | | (21,812 | ) | | -7.6 | % |
| Service charges on deposit accounts | | | 51,019 | | | 56,274 | | | (5,255 | ) | | -9.3 | % |
| Insurance commissions | | | 33,006 | | | 17,807 | | | 15,199 | | | 85.4 | % |
| Wealth management | | | 21,579 | | | 20,319 | | | 1,260 | | | 6.2 | % |
| Retail banking - other | | | 20,835 | | | 18,467 | | | 2,368 | | | 12.8 | % |
| Mortgage banking, net | | | 5,845 | | | 8,571 | | | (2,726 | ) | | -31.8 | % |
| Other, net | | | 14,467 | | | 7,233 | | | 7,234 | | | 100.0 | % |
| Nonint inc-excl sec losses | | | 146,751 | | | 128,671 | | | 18,080 | | | 14.1 | % |
| Security losses | | | (3,644 | ) | | (4,643 | ) | | 999 | | | n/m | |
Total noninterest income | | | 143,107 | | | 124,028 | | | 19,079 | | | 15.4 | % |
| Salaries and employee benefits | | | 149,817 | | | 132,799 | | | 17,018 | | | 12.8 | % |
| Services and fees | | | 34,003 | | | 35,240 | | | (1,237 | ) | | -3.5 | % |
| Net occupancy-premises | | | 15,280 | | | 15,023 | | | 257 | | | 1.7 | % |
| Equipment expense | | | 15,180 | | | 15,007 | | | 173 | | | 1.2 | % |
| Other expense | | | 28,996 | | | 27,240 | | | 1,756 | | | 6.4 | % |
Total noninterest expense | | | 243,276 | | | 225,309 | | | 17,967 | | | 8.0 | % |
Income before income taxes | | | 165,038 | | | 185,738 | | | (20,700 | ) | | -11.1 | % |
| Tax equivalent adjustment | | | 8,307 | | | 8,347 | | | (40 | ) | | -0.5 | % |
| Income taxes | | | 53,780 | | | 60,682 | | | (6,902 | ) | | -11.4 | % |
Net income | | $ | 102,951 | | $ | 116,709 | | $ | (13,758 | ) | | -11.8 | % |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Earnings per share | | | | | | | | | | | | | |
Basic | | $ | 1.82 | | $ | 2.01 | | $ | (0.19 | ) | | -9.5 | % |
| | | | | | | | | | | | | | |
Diluted | | $ | 1.81 | | $ | 2.00 | | $ | (0.19 | ) | | -9.5 | % |
| | | | | | | | | | | | | | |
Weighted average shares outstanding | | | | | | | | | | | | | |
Basic | | | 56,609,494 | | | 57,998,328 | | | | | | -2.4 | % |
| | | | | | | | | | | | | | |
Diluted | | | 56,742,730 | | | 58,273,309 | | | | | | -2.6 | % |
| | | | | | | | | | | | | | |
Period end shares outstanding | | | 55,771,459 | | | 57,858,497 | | | | | | -3.6 | % |
| | | | | | | | | | | | | | |
Dividends per share | | $ | 0.8100 | | $ | 0.7700 | | | | | | 5.2 | % |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
n/m - not meaningful | | | | | | | | | | | | | |
| | | December 31, | | | | | |
NONPERFORMING ASSETS | | 2005 | | 2004 | | $ Change | | % Change | |
| Nonaccrual loans | | $ | 28,914 | | $ | 21,864 | | $ | 7,050 | | | 32.2 | % |
| Restructured loans | | | - | | | - | | | - | | | - | |
Total nonperforming loans | | | 28,914 | | | 21,864 | | | 7,050 | | | 32.2 | % |
| Other real estate | | | 4,107 | | | 5,615 | | | (1,508 | ) | | -26.9 | % |
Total nonperforming assets | | | 33,021 | | | 27,479 | | | 5,542 | | | 20.2 | % |
| Loans past due over 90 days | | | | | | | | | | | | | |
| Included in Loan Portfolio | | | 2,719 | | | 5,284 | | | (2,565 | ) | | -48.5 | % |
| Serviced GNMA loans eligible for repch | | | 22,769 | | | - | | | 22,769 | | | n/m | |
Total loans past due over 90 days | | | 25,488 | | | 5,284 | | | 20,204 | | | 382.4 | % |
Total nonperforming assets plus past | | | | | | | | | | | | | |
due over 90 days | | $ | 58,509 | | $ | 32,763 | | $ | 25,746 | | | 78.6 | % |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | Quarter Ended December 31, | | | | | | | |
ALLOWANCE FOR LOAN LOSSES | | | 2005 | | | 2004 | | $ | Change | | | % Change | |
| Beginning Balance | | $ | 75,750 | | $ | 74,179 | | $ | 1,571 | | | 2.1 | % |
| Charge-offs | | | (4,659 | ) | | (4,451 | ) | | (208 | ) | | 4.7 | % |
| Recoveries | | | 2,411 | | | 2,000 | | | 411 | | | 20.6 | % |
| Provision for loan losses | | | 3,189 | | | (6,971 | ) | | 10,160 | | | n/m | |
| Ending Balance | | $ | 76,691 | | $ | 64,757 | | $ | 11,934 | | | 18.4 | % |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
RATIOS | | | | | | | | | | | | | |
| ROA | | | 1.33 | % | | 1.40 | % | | | | | | |
| ROE | | | 14.65 | % | | 15.32 | % | | | | | | |
| Equity generation rate | | | 8.50 | % | | 9.19 | % | | | | | | |
| EOP equity/ EOP assets | | | 8.84 | % | | 9.32 | % | | | | | | |
| Average equity/average assets | | | 9.10 | % | | 9.16 | % | | | | | | |
| Interest margin - Yield - FTE | | | 6.09 | % | | 5.10 | % | | | | | | |
| Interest margin - Cost - FTE | | | 2.18 | % | | 1.36 | % | | | | | | |
| Net interest margin - FTE | | | 3.91 | % | | 3.74 | % | | | | | | |
| Rate on interest-bearing liabilities | | | 2.72 | % | | 1.66 | % | | | | | | |
| Efficiency ratio | | | 56.24 | % | | 58.71 | % | | | | | | |
| Net charge offs/average loans | | | 0.15 | % | | 0.18 | % | | | | | | |
| Provision for loan losses/average loans | | | 0.21 | % | | -0.52 | % | | | | | | |
| Nonperforming loans/total loans | | | 0.49 | % | | 0.41 | % | | | | | | |
| Nonperforming assets/total loans | | | 0.56 | % | | 0.52 | % | | | | | | |
| Nonperforming assets/total loans+ORE | | | 0.56 | % | | 0.52 | % | | | | | | |
| ALL/nonperforming loans | | | 265.24 | % | | 296.18 | % | | | | | | |
| ALL/total loans | | | 1.30 | % | | 1.21 | % | | | | | | |
| Net loans/total assets | | | 69.33 | % | | 65.38 | % | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
COMMON STOCK PERFORMANCE | | | | | | | | | | | | | |
| Market value of stock-Close | | $ | 27.470 | | $ | 31.070 | | | | | | | |
| Market value of stock-High | | $ | 29.830 | | $ | 32.780 | | | | | | | |
| Market value of stock-Low | | $ | 24.000 | | $ | 29.120 | | | | | | | |
| Book value of stock | | $ | 13.29 | | $ | 12.97 | | | | | | | |
| Tangible book value of stock | | $ | 10.32 | | $ | 10.04 | | | | | | | |
| Tangible equity | | $ | 575,392 | | $ | 581,167 | | | | | | | |
| Market/Book value of stock | | | 206.70 | % | | 239.55 | % | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
OTHER DATA | | | | | | | | | | | | | |
| EOP Employees - FTE | | | 2,582 | | | 2,598 | | | | | | | |
| | | | | | | | | | | | | | |
n/m - not meaningful | | | | | | | | | | | | | |
| | | Year-to-date December 31, | | | | | |
ALLOWANCE FOR LOAN LOSSES | | 2005 | | 2004 | | $ Change | | % Change | |
| Beginning Balance | | $ | 64,757 | | $ | 74,276 | | $ | (9,519 | ) | | -12.8 | % |
| Charge-offs | | | (16,822 | ) | | (15,402 | ) | | (1,420 | ) | | 9.2 | % |
| Recoveries | | | 9,215 | | | 8,938 | | | 277 | | | 3.1 | % |
| Provision for loan losses | | | 19,541 | | | (3,055 | ) | | 22,596 | | | n/m | |
| Ending Balance | | $ | 76,691 | | $ | 64,757 | | $ | 11,934 | | | 18.4 | % |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
RATIOS | | | | | | | | | | | | | |
| ROA | | | 1.25 | % | | 1.43 | % | | | | | | |
| ROE | | | 13.68 | % | | 16.08 | % | | | | | | |
| Equity generation rate | | | 7.59 | % | | 9.92 | % | | | | | | |
| EOP equity/ EOP assets | | | 8.84 | % | | 9.32 | % | | | | | | |
| Average equity/average assets | | | 9.16 | % | | 8.90 | % | | | | | | |
| Interest margin - Yield - FTE | | | 5.72 | % | | 5.03 | % | | | | | | |
| Interest margin - Cost - FTE | | | 1.88 | % | | 1.20 | % | | | | | | |
| Net interest margin - FTE | | | 3.84 | % | | 3.83 | % | | | | | | |
| Rate on interest-bearing liabilities | | | 2.30 | % | | 1.46 | % | | | | | | |
| Efficiency ratio | | | 56.95 | % | | 55.10 | % | | | | | | |
| Net charge offs/average loans | | | 0.13 | % | | 0.12 | % | | | | | | |
| Provision for loan losses/average loans | | | 0.34 | % | | -0.06 | % | | | | | | |
| Nonperforming loans/total loans | | | 0.49 | % | | 0.41 | % | | | | | | |
| Nonperforming assets/total loans | | | 0.56 | % | | 0.52 | % | | | | | | |
| Nonperforming assets/total loans+ORE | | | 0.56 | % | | 0.52 | % | | | | | | |
| ALL/nonperforming loans | | | 265.24 | % | | 296.18 | % | | | | | | |
| ALL/total loans | | | 1.30 | % | | 1.21 | % | | | | | | |
| Net loans/total assets | | | 69.33 | % | | 65.38 | % | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
COMMON STOCK PERFORMANCE | | | | | | | | | | | | | |
| Market value of stock-Close | | $ | 27.470 | | $ | 31.070 | | | | | | | |
| Market value of stock-High | | $ | 31.150 | | $ | 32.780 | | | | | | | |
| Market value of stock-Low | | $ | 24.000 | | $ | 25.890 | | | | | | | |
| Book value of stock | | $ | 13.29 | | $ | 12.97 | | | | | | | |
| Tangible book value of stock | | $ | 10.32 | | $ | 10.04 | | | | | | | |
| Tangible equity | | $ | 575,392 | | $ | 581,167 | | | | | | | |
| Market/Book value of stock | | | 206.70 | % | | 239.55 | % | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
n/m - not meaningful | | | | | | | | | | | | | |
| | Quarter Ended | | | | | |
AVERAGE BALANCES | | | 12/31/2005 | | | 9/30/2005 | | | Change | | | % Change | |
| Securities AFS-taxable | | $ | 1,051,481 | | $ | 1,133,718 | | $ | (82,237 | ) | | -7.3 | % |
| Securities AFS-nontaxable | | | 61,777 | | | 60,075 | | | 1,702 | | | 2.8 | % |
| Securities HTM-taxable | | | 203,545 | | | 208,221 | | | (4,676 | ) | | -2.2 | % |
| Securities HTM-nontaxable | | | 92,105 | | | 94,811 | | | (2,706 | ) | | -2.9 | % |
Total securities | | | 1,408,908 | | | 1,496,825 | | | (87,917 | ) | | -5.9 | % |
| Loans | | | 6,000,786 | | | 5,914,589 | | | 86,197 | | | 1.5 | % |
| Fed funds sold and rev repos | | | 28,324 | | | 31,152 | | | (2,828 | ) | | -9.1 | % |
Total earning assets | | | 7,438,018 | | | 7,442,566 | | | (4,548 | ) | | -0.1 | % |
| Allowance for loan losses | | | (76,230 | ) | | (66,120 | ) | | (10,110 | ) | | 15.3 | % |
| Cash and due from banks | | | 339,944 | | | 313,434 | | | 26,510 | | | 8.5 | % |
| Other assets | | | 549,570 | | | 527,897 | | | 21,673 | | | 4.1 | % |
Total assets | | $ | 8,251,302 | | $ | 8,217,777 | | $ | 33,525 | | | 0.4 | % |
| | | | | | | | | | | | | | |
| Interest-bearing demand deposits | | $ | 823,025 | | $ | 829,106 | | $ | (6,081 | ) | | -0.7 | % |
| Savings deposits | | | 1,470,637 | | | 1,488,974 | | | (18,337 | ) | | -1.2 | % |
| Time deposits less than $100,000 | | | 1,411,691 | | | 1,323,998 | | | 87,693 | | | 6.6 | % |
| Time deposits of $100,000 or more | | | 798,707 | | | 674,440 | | | 124,267 | | | 18.4 | % |
Total interest-bearing deposits | | | 4,504,060 | | | 4,316,518 | | | 187,542 | | | 4.3 | % |
| Fed funds purchased and repos | | | 602,829 | | | 637,923 | | | (35,094 | ) | | -5.5 | % |
| Short-term borrowings | | | 757,148 | | | 959,605 | | | (202,457 | ) | | -21.1 | % |
| Long-term FHLB advances | | | 105,778 | | | 205,812 | | | (100,034 | ) | | -48.6 | % |
Total interest-bearing liabilities | | | 5,969,815 | | | 6,119,858 | | | (150,043 | ) | | -2.5 | % |
| Noninterest-bearing deposits | | | 1,417,500 | | | 1,245,573 | | | 171,927 | | | 13.8 | % |
| Other liabilities | | | 112,876 | | | 99,102 | | | 13,774 | | | 13.9 | % |
| Shareholders' equity | | | 751,111 | | | 753,244 | | | (2,133 | ) | | -0.3 | % |
Total liabilities and equity | | $ | 8,251,302 | | $ | 8,217,777 | | $ | 33,525 | | | 0.4 | % |
PERIOD END BALANCES | | 12/31/2005 | | 9/30/2005 | | $ Change | | % Change | |
| Securities available for sale | | $ | 1,041,754 | | $ | 1,143,524 | | $ | (101,770 | ) | | -8.9 | % |
| Securities held to maturity | | | 294,902 | | | 296,962 | | | (2,060 | ) | | -0.7 | % |
Total securities | | | 1,336,656 | | | 1,440,486 | | | (103,830 | ) | | -7.2 | % |
| Loans held for sale | | | 146,936 | | | 127,209 | | | 19,727 | | | 15.5 | % |
| Loans | | | 5,893,439 | | | 5,873,257 | | | 20,182 | | | 0.3 | % |
| Fed funds sold and rev repos | | | 130,115 | | | 15,685 | | | 114,430 | | | 729.6 | % |
Total earning assets | | | 7,507,146 | | | 7,456,637 | | | 50,509 | | | 0.7 | % |
| Allowance for loan losses | | | (76,691 | ) | | (75,750 | ) | | (941 | ) | | 1.2 | % |
| Cash and due from banks | | | 387,930 | | | 398,027 | | | (10,097 | ) | | -2.5 | % |
| Mortgage servicing rights | | | 58,424 | | | 57,345 | | | 1,079 | | | 1.9 | % |
| Goodwill | | | 137,368 | | | 137,268 | | | 100 | | | 0.1 | % |
| Identifiable intangible assets | | | 28,703 | | | 29,637 | | | (934 | ) | | -3.2 | % |
| Other assets | | | 346,870 | | | 325,716 | | | 21,154 | | | 6.5 | % |
Total assets | | $ | 8,389,750 | | $ | 8,328,880 | | $ | 60,870 | | | 0.7 | % |
| | | | | | | | | | | | | | |
| Noninterest-bearing deposits | | $ | 1,556,142 | | $ | 1,358,192 | | $ | 197,950 | | | 14.6 | % |
| Interest-bearing deposits | | | 4,726,672 | | | 4,487,250 | | | 239,422 | | | 5.3 | % |
Total deposits | | | 6,282,814 | | | 5,845,442 | | | 437,372 | | | 7.5 | % |
| Fed funds purchased and repos | | | 492,853 | | | 519,173 | | | (26,320 | ) | | -5.1 | % |
| Short-term borrowings | | | 775,402 | | | 926,595 | | | (151,193 | ) | | -16.3 | % |
| Long-term FHLB advances | | | 5,726 | | | 205,789 | | | (200,063 | ) | | -97.2 | % |
| Other liabilities | | | 91,492 | | | 99,327 | | | (7,835 | ) | | -7.9 | % |
Total liabilities | | | 7,648,287 | | | 7,596,326 | | | 51,961 | | | 0.7 | % |
| Common stock | | | 11,620 | | | 11,655 | | | (35 | ) | | -0.3 | % |
| Surplus | | | 65,374 | | | 69,362 | | | (3,988 | ) | | -5.7 | % |
| Retained earnings | | | 677,781 | | | 661,764 | | | 16,017 | | | 2.4 | % |
| Accum other comprehensive | | | | | | | | | | | | | |
| loss, net of tax | | | (13,312 | ) | | (10,227 | ) | | (3,085 | ) | | n/m | |
Total shareholders' equity | | | 741,463 | | | 732,554 | | | 8,909 | | | 1.2 | % |
Total liabilities and equity | | $ | 8,389,750 | | $ | 8,328,880 | | $ | 60,870 | | | 0.7 | % |
| | | | | | | | | | | | | | |
| Total interest-bearing liabilities | | $ | 6,000,653 | | $ | 6,138,807 | | $ | (138,154 | ) | | -2.3 | % |
| | | | | | | | | | | | | | |
n/m - not meaningful | | | | | | | | | | | | | |
| | | Quarter Ended | | | | | |
| INCOME STATEMENTS | | 12/31/2005 | | 9/30/2005 | | $ Change | | % Change | |
| Interest and fees on loans-FTE | | $ | 97,569 | | $ | 92,589 | | $ | 4,980 | | | 5.4 | % |
| Interest on securities-taxable | | | 13,483 | | | 13,358 | | | 125 | | | 0.9 | % |
| Interest on securities-tax exempt-FTE | | | 2,843 | | | 2,846 | | | (3 | ) | | -0.1 | % |
| Interest on fed funds sold and rev repos | | | 291 | | | 287 | | | 4 | | | 1.4 | % |
| Other interest income | | | 73 | | | 15 | | | 58 | | | 386.7 | % |
Total interest income-FTE | | | 114,259 | | | 109,095 | | | 5,164 | | | 4.7 | % |
| Interest on deposits | | | 25,851 | | | 21,415 | | | 4,436 | | | 20.7 | % |
| Interest on fed funds pch and repos | | | 5,445 | | | 5,050 | | | 395 | | | 7.8 | % |
| Other interest expense | | | 9,657 | | | 11,591 | | | (1,934 | ) | | -16.7 | % |
Total interest expense | | | 40,953 | | | 38,056 | | | 2,897 | | | 7.6 | % |
Net interest income-FTE | | | 73,306 | | | 71,039 | | | 2,267 | | | 3.2 | % |
| Provision for loan losses | | | 3,189 | | | 12,127 | | | (8,938 | ) | | -73.7 | % |
Net interest income after provision-FTE | | | 70,117 | | | 58,912 | | | 11,205 | | | 19.0 | % |
| Service charges on deposit accounts | | | 12,069 | | | 13,025 | | | (956 | ) | | -7.3 | % |
| Insurance commissions | | | 7,480 | | | 9,294 | | | (1,814 | ) | | -19.5 | % |
| Wealth management | | | 5,629 | | | 5,293 | | | 336 | | | 6.3 | % |
| Retail banking - other | | | 5,573 | | | 5,226 | | | 347 | | | 6.6 | % |
| Mortgage banking, net | | | 1,950 | | | 3,290 | | | (1,340 | ) | | -40.7 | % |
| Other, net | | | 1,342 | | | 8,028 | | | (6,686 | ) | | -83.3 | % |
| Nonint inc-excl sec gains | | | 34,043 | | | 44,156 | | | (10,113 | ) | | -22.9 | % |
| Security gains | | | 365 | | | 45 | | | 320 | | | n/m | |
Total noninterest income | | | 34,408 | | | 44,201 | | | (9,793 | ) | | -22.2 | % |
| Salaries and employee benefits | | | 37,405 | | | 37,808 | | | (403 | ) | | -1.1 | % |
| Services and fees | | | 8,672 | | | 8,269 | | | 403 | | | 4.9 | % |
| Net occupancy-premises | | | 3,972 | | | 3,956 | | | 16 | | | 0.4 | % |
| Equipment expense | | | 3,719 | | | 3,653 | | | 66 | | | 1.8 | % |
| Other expense | | | 7,126 | | | 7,293 | | | (167 | ) | | -2.3 | % |
Total noninterest expense | | | 60,894 | | | 60,979 | | | (85 | ) | | -0.1 | % |
Income before income taxes | | | 43,631 | | | 42,134 | | | 1,497 | | | 3.6 | % |
| Tax equivalent adjustment | | | 2,170 | | | 2,052 | | | 118 | | | 5.8 | % |
| Income taxes | | | 13,718 | | | 13,861 | | | (143 | ) | | -1.0 | % |
Net income | | $ | 27,743 | | $ | 26,221 | | $ | 1,522 | | | 5.8 | % |
| | | | | | | | | | | | | | |
Earnings per share | | | | | | | | | | | | | |
Basic | | $ | 0.50 | | $ | 0.46 | | $ | 0.04 | | | 8.7 | % |
| | | | | | | | | | | | | | |
Diluted | | $ | 0.50 | | $ | 0.46 | | $ | 0.04 | | | 8.7 | % |
| | | | | | | | | | | | | | |
Weighted average shares outstanding | | | | | | | | | | | | | |
Basic | | | 55,823,191 | | | 56,406,072 | | | | | | -1.0 | % |
| | | | | | | | | | | | | | |
Diluted | | | 55,950,917 | | | 56,543,248 | | | | | | -1.0 | % |
| | | | | | | | | | | | | | |
Period end shares outstanding | | | 55,771,459 | | | 55,935,184 | | | | | | -0.3 | % |
| | | | | | | | | | | | | | |
Dividends per share | | $ | 0.2100 | | $ | 0.2000 | | | | | | 5.0 | % |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
n/m - not meaningful | | | | | | | | | | | | | |
NONPERFORMING ASSETS | | 12/31/2005 | | 9/30/2005 | | $ Change | | % Change | |
| Nonaccrual loans | | $ | 28,914 | | $ | 27,153 | | $ | 1,761 | | | 6.5 | % |
| Restructured loans | | | - | | | - | | | - | | | | |
Total nonperforming loans | | | 28,914 | | | 27,153 | | | 1,761 | | | 6.5 | % |
| Other real estate | | | 4,107 | | | 2,649 | | | 1,458 | | | 55.0 | % |
Total nonperforming assets | | | 33,021 | | | 29,802 | | | 3,219 | | | 10.8 | % |
| Loans past due over 90 days | | | | | | | | | | | | | |
| Included in Loan Portfolio | | | 2,719 | | | 1,655 | | | 1,064 | | | 64.3 | % |
| Serviced GNMA loans eligible for repch | | | 22,769 | | | 8,434 | | | 14,335 | | | 170.0 | % |
Total loans past due over 90 days | | | 25,488 | | | 10,089 | | | 15,399 | | | 152.6 | % |
Total nonperforming assets plus past | | | | | | | | | | | | | |
due over 90 days | | $ | 58,509 | | $ | 39,891 | | $ | 18,618 | | | 46.7 | % |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | Quarter Ended | | | | | | | |
ALLOWANCE FOR LOAN LOSSES | | | 12/31/2005 | | | 9/30/2005 | | $ | Change | | | % Change | |
| Beginning Balance | | $ | 75,750 | | $ | 65,902 | | $ | 9,848 | | | 14.9 | % |
| Charge-offs | | | (4,659 | ) | | (4,538 | ) | | (121 | ) | | 2.7 | % |
| Recoveries | | | 2,411 | | | 2,259 | | | 152 | | | 6.7 | % |
| Provision for loan losses | | | 3,189 | | | 12,127 | | | (8,938 | ) | | -73.7 | % |
| Ending Balance | | $ | 76,691 | | $ | 75,750 | | $ | 941 | | | 1.2 | % |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
RATIOS | | | | | | | | | | | | | |
| ROA | | | 1.33 | % | | 1.27 | % | | | | | | |
| ROE | | | 14.65 | % | | 13.81 | % | | | | | | |
| Equity generation rate | | | 8.50 | % | | 7.81 | % | | | | | | |
| EOP equity/ EOP assets | | | 8.84 | % | | 8.80 | % | | | | | | |
| Average equity/average assets | | | 9.10 | % | | 9.17 | % | | | | | | |
| Interest margin - Yield - FTE | | | 6.09 | % | | 5.82 | % | | | | | | |
| Interest margin - Cost - FTE | | | 2.18 | % | | 2.03 | % | | | | | | |
| Net interest margin - FTE | | | 3.91 | % | | 3.79 | % | | | | | | |
| Rate on interest-bearing liabilities | | | 2.72 | % | | 2.47 | % | | | | | | |
| Efficiency ratio | | | 56.24 | % | | 55.89 | % | | | | | | |
| Net charge offs/average loans | | | 0.15 | % | | 0.15 | % | | | | | | |
| Provision for loan losses/average loans | | | 0.21 | % | | 0.81 | % | | | | | | |
| Nonperforming loans/total loans | | | 0.49 | % | | 0.46 | % | | | | | | |
| Nonperforming assets/total loans | | | 0.56 | % | | 0.51 | % | | | | | | |
| Nonperforming assets/total loans+ORE | | | 0.56 | % | | 0.51 | % | | | | | | |
| ALL/nonperforming loans | | | 265.24 | % | | 278.97 | % | | | | | | |
| ALL/total loans | | | 1.30 | % | | 1.29 | % | | | | | | |
| Net loans/total assets | | | 69.33 | % | | 69.61 | % | | | | | | |
| | | | | | | | | | | | | | |
COMMON STOCK PERFORMANCE | | | | | | | | | | | | | |
| Market value of stock-Close | | $ | 27.470 | | $ | 27.850 | | | | | | | |
| Market value of stock-High | | $ | 29.830 | | $ | 30.800 | | | | | | | |
| Market value of stock-Low | | $ | 24.000 | | $ | 26.630 | | | | | | | |
| Book value of stock | | $ | 13.29 | | $ | 13.10 | | | | | | | |
| Tangible book value of stock | | $ | 10.32 | | $ | 10.11 | | | | | | | |
| Tangible equity | | $ | 575,392 | | $ | 565,649 | | | | | | | |
| Market/Book value of stock | | | 206.70 | % | | 212.60 | % | | | | | | |
| | | | | | | | | | | | | | |
OTHER DATA | | | | | | | | | | | | | |
| EOP Employees - FTE | | | 2,582 | | | 2,601 | | | | | | | |
| | | | | | | | | | | | | | |
n/m - not meaningful | | | | | | | | | | | | | |
Note 1 - Financial Performance Non-GAAP - Quarter and Year-to-Date ended December 31, 2005
Management is presenting in the following table adjustments to net income as reported in accordance with generally accepted accounting principles for significant items resulting from Hurricane Katrina and the sale of its merchant services portfolio. Management believes this information will help users compare Trustmark’s current results to prior periods.
Financial Performance | | | | | | | | | |
Net Income Adjusted for Specific Items (Non-GAAP) | | | | | | | |
| | | Quarter Ended 12/31/2005 | | | | Year-to-Date 12/31/2005 | |
| | | $ | | Basic EPS | | | | $ | | Basic EPS | |
Net Income as reported - GAAP | | $ | 27,743 | | $ | 0.497 | | | | | $ | 102,951 | | $ | 1.819 | |
| | | | | | | | | | | | | | | | | |
Adjustments (net of taxes): | | | | | | | | | | | | | | | | |
Add charges related to Hurricane Katrina | | | | | | | | | | | | | | | | |
| Provision for loan losses | | | - | | | - | | | | | | 6,054 | | | 0.107 | |
| Mortgage related charges | | | 627 | | | 0.011 | | | | | | 2,047 | | | 0.036 | |
| Non-interest income - lost revenues | | | 810 | | | 0.015 | | | | | | 1,649 | | | 0.029 | |
| Non-interest expenses - additional expenses | | | - | | | - | | | | | | 333 | | | 0.006 | |
| | | | 1,437 | | | 0.026 | | | | | | 10,083 | | | 0.178 | |
Subtract sale of Merchant Service Portfolio | | | - | | | - | | | | | | (3,551 | ) | | (0.063 | ) |
| | | | | | | | | | | | | | | | | |
Net Income adjusted for specific items (Non-GAAP) | | $ | 29,180 | | $ | 0.523 | | | | | $ | 109,483 | | $ | 1.934 | |
Hurricane Katrina
On August 29, 2005, Hurricane Katrina struck the Mississippi Gulf Coast, central and eastern Mississippi causing significant damages. Immediately following the storm, Trustmark initiated a process to assess the storm’s impact on its customers and on Trustmark’s consolidated financial statements. In accordance with Statement of Financial Accounting Standards (SFAS) No. 5, “Accounting for Contingencies," Trustmark has determined, through reasonable estimates, that specific losses were probable and have been reflected in the consolidated financial statements as of December 31, 2005.
Trustmark identified customers impacted by the storm in an effort to estimate the loss of collateral value and customer payment abilities. As a result of customer surveys, collateral inspections and review of risk characteristics, Trustmark has increased its allowance for loan losses through provision for loan losses by $9.8 million on a pre-tax basis. Specifically, $3.5 million and $1.5 million have been allocated for losses due to collateral impairment on 1-4 residential mortgages and consumer loans, respectively. General reserves of $4.8 million for consumer and commercial loans have been allocated for losses due to economic disruption caused by the storm.
Trustmark’s mortgage division’s quarterly and annual income was additionally impacted by $1.0 million and $3.3 million, respectively, pre-tax resulting from adjusted fair values on loans held for sale, increased prepayment speeds on mortgage servicing rights and waived ancillary fees in the impacted areas. In addition, Trustmark experienced lost revenues of $1.3 million for the quarter and $2.7 million for the year pre-tax resulting from customer assistance in retail account fees and incurred additional expenses of $539 thousand for the year. Management’s estimates, assumptions and judgments are based on information available as of the date of the consolidated financial statements; accordingly, as this information changes, actual results could differ from those estimates.
Sale of Merchant Services
Trustmark evaluated its strategic alternatives in payment processing systems and selected NOVA Information systems as its provider of card processing services for its commercial merchant services customers. In connection with this alliance, Trustmark sold its existing payment processing portfolio in the third quarter for a pre-tax gain of $5.75 million, which is included in other noninterest income. Currently, Trustmark is continuing to evaluate this transaction as potential discontinued operations for financial reporting purposes.
Note 2 - Nonperforming Assets
Government National Mortgage Association (GNMA) optional repurchase programs allow financial institutions to buy back individual delinquent mortgage loans that meet certain criteria from the securitized loan pool for which the institution provides servicing. At the servicer's option and without GNMA's prior authorization, the servicer may repurchase such a delinquent loan for an amount equal to 100 percent of the remaining principal balance of the loan. Under Financial Accounting Standards Board Statement (FASB) No. 140,“Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities-a replacement of FASB Statement No. 125,” this buy-back option is considered a conditional option until the delinquency criteria are met, at which time the option becomes unconditional. When Trustmark is deemed to have regained effective control over these loans, the loans can no longer be reported as sold and must be brought back onto the balance sheet as loans held for sale, regardless of whether Trustmark intends to exercise the buy-back option. During 2005, Trustmark began reporting delinquent GNMA loans that are eligible for repurchase as past due in accordance with their contractual repayment terms. At December 31, 2005, GNMA loans eligible for repurchase totaled $22.8 million compared with $8.4 million at September 30, 2005. This increase is directly related to the impact of Hurricane Katrina (please see Note 1).
Note 3 - Loans and Allowance for Loan Losses
For the periods presented, loans consisted of the following:
| | | 12/31/05 | | 9/30/05 | | 12/31/04 | |
| Real estate loans: | | | | | | | | | | |
| Construction and land development | | $ | 652,535 | | $ | 653,003 | | $ | 526,321 | |
| Secured by 1-4 family residential properties | | | 2,041,726 | | | 2,059,045 | | | 1,849,267 | |
| Secured by nonfarm, nonresidential properties | | | 1,008,672 | | | 981,793 | | | 882,507 | |
| Other | | | 141,791 | | | 143,477 | | | 135,938 | |
| Loans to finance agricultural production | | | 40,162 | | | 48,008 | | | 29,885 | |
| Commercial and industrial | | | 861,167 | | | 863,815 | | | 865,436 | |
| Consumer | | | 880,868 | | | 873,742 | | | 812,133 | |
| Obligations of states and political subdivisions | | | 210,310 | | | 189,902 | | | 178,222 | |
| Other loans | | | 56,208 | | | 60,472 | | | 50,346 | |
| Loans | | | 5,893,439 | | | 5,873,257 | | | 5,330,055 | |
| Less Allowance for loan losses | | | 76,691 | | | 75,750 | | | 64,757 | |
| Net Loans | | $ | 5,816,748 | | $ | 5,797,507 | | $ | 5,265,298 | |
The allowance for loans losses is maintained at a level believed adequate by management, based on estimated probable losses within the existing loan portfolio. Trustmark’s allowance for possible loan loss methodology is based on guidance provided in SEC Staff Accounting Bulletin No. 102, “Selected Loan Loss Allowance Methodology and Documentation Issues,” as well as other regulatory guidance. Accordingly, Trustmark’s methodology is based on historical loss experience by type of loan and internal risk ratings, homogeneous risk pools, and specific loss allocations, with adjustments considering current economic events and conditions. The provision for loan losses reflects loan quality trends, including the levels of and trends related to nonaccrual loans, past due loans, potential problem loans, criticized loans and net charge-offs or recoveries and other factors. During the fourth quarter of 2004, Trustmark recorded a release of $9.4 million to the allowance for loan losses resulting from changes in estimates to specific factors for pooled loans and a specific class of commercial loans, both of which experienced positive trends.
Note 4 - Mortgage Banking
For the periods presented, the carrying amount of mortgage servicing rights are as follows:
| | | 12/31/05 | | 9/30/05 | | 12/31/04 | |
| Mortgage Servicing Rights | | $ | 62,425 | | $ | 61,751 | | $ | 58,507 | |
| Valuation Allowance | | | (4,001 | ) | | (4,406 | ) | | (6,044 | ) |
| Mortgage Servicing Rights, net | | $ | 58,424 | | $ | 57,345 | | $ | 52,463 | |
Mortgage servicing rights are rights to service mortgage loans for others, whether the loans were acquired through purchase or loan origination. Purchased mortgage servicing rights are capitalized at cost. For loans originated and sold where the servicing rights are retained, Trustmark allocated the cost of the loan and the servicing right based on their relative fair values. Mortgage servicing rights are amortized over the estimated period of the related net servicing income. At December 31, 2005, Trustmark serviced $3.7 billion in mortgage loans for others.
Impairment for mortgage servicing rights occurs when the estimated fair value falls below the underlying carrying value. Fair value is determined utilizing specific risk characteristics of the mortgage loan, current interest rates and current prepayment speeds. As a direct result of Hurricane Katrina, the recovery of mortgage servicing rights for estimated prepayments on mortgages serviced in the affected areas reflected in the table below were reduced by $800 thousand and $1.0 million for the third and fourth quarters of 2005, respectively. During 2004, Trustmark reclassified $7.1 million of mortgage servicing right impairment from temporary to other-than-temporary which reduced the valuation allowance for impairment and the gross mortgage servicing rights balance with no effect to the net mortgage servicing rights assets. Impairment is considered to be other-than-temporary when Trustmark determines that the carrying value is expected to exceed the fair value for an extended period of time.
The following table illustrates the components of mortgage banking included in noninterest income in the accompanying income statements:
| | | Quarter Ended | | Year-to-date | |
| | | 12/31/05 | | 9/30/05 | | 12/31/04 | | 12/31/05 | | 12/31/04 | |
| Mortgage servicing income | | $ | 4,315 | | $ | 4,188 | | $ | 4,252 | | $ | 16,915 | | $ | 16,864 | |
| Mortgage guaranty fees | | | (1,158 | ) | | (1,118 | ) | | (1,093 | ) | | (4,504 | ) | | (4,395 | ) |
| Mortgage servicing, net | | | 3,157 | | | 3,070 | | | 3,159 | | | 12,411 | | | 12,469 | |
| Amortization of mortgage | | | | | | | | | | | | | | | | |
| servicing rights | | | (2,475 | ) | | (2,750 | ) | | (2,750 | ) | | (10,465 | ) | | (11,826 | ) |
| Recovery/(Impairment) of mortgage | | | | | | | | | | | | | | | | |
| servicing rights | | | 405 | | | 3,727 | | | 1,275 | | | 2,043 | | | 2,791 | |
| Gain (loss) on sale of loans | | | 574 | | | (64 | ) | | 357 | | | 1,218 | | | 4,283 | |
| Other, net | | | 289 | | | (693 | ) | | 263 | | | 638 | | | 854 | |
| Mortgage banking, net | | $ | 1,950 | | $ | 3,290 | | $ | 2,304 | | $ | 5,845 | | $ | 8,571 | |
Note 5 - 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-to-date | |
| | | 12/31/05 | | 9/30/05 | | 12/31/04 | | 12/31/05 | | 12/31/04 | |
| Securities - Taxable | | | 4.26 | % | | 3.95 | % | | 3.13 | % | | 3.88 | % | | 3.17 | % |
| Securities - Nontaxable | | | 7.33 | % | | 7.29 | % | | 7.50 | % | | 7.42 | % | | 7.58 | % |
| Securities - Total | | | 4.60 | % | | 4.29 | % | | 3.47 | % | | 4.22 | % | | 3.50 | % |
| Loans | | | 6.45 | % | | 6.21 | % | | 5.72 | % | | 6.15 | % | | 5.65 | % |
| FF Sold & Rev Repo | | | 4.08 | % | | 3.66 | % | | 2.09 | % | | 3.17 | % | | 1.54 | % |
| Total Earning Assets | | | 6.09 | % | | 5.82 | % | | 5.10 | % | | 5.72 | % | | 5.03 | % |
| | | | | | | | | | | | | | | | | |
| Interest-bearing Deposits | | | 2.28 | % | | 1.97 | % | | 1.44 | % | | 1.89 | % | | 1.36 | % |
| FF Pch & Repo | | | 3.58 | % | | 3.14 | % | | 1.68 | % | | 2.86 | % | | 1.23 | % |
| Borrowings | | | 4.44 | % | | 3.95 | % | | 2.41 | % | | 3.63 | % | | 1.97 | % |
| Total Interest-bearing Liabilities | | | 2.72 | % | | 2.47 | % | | 1.66 | % | | 2.30 | % | | 1.46 | % |
| | | | | | | | | | | | | | | | | |
| Net interest margin | | | 3.91 | % | | 3.79 | % | | 3.74 | % | | 3.84 | % | | 3.83 | % |
Trustmark’s net interest margin increased by 12 basis points to 3.91% in the fourth quarter of 2005. Contributing to this growth was the yield on taxable securities, which increased by 31 basis points to 4.26%, and the yield on loans, which increased by 24 basis points to 6.45% during the fourth quarter. The yield on taxable securities was impacted significantly by a single dividend of $800 thousand received in the fourth quarter from capital gains recognized within mutual funds classified as Available for Sale. The change in loan yield can be attributed to a rise in interest rates as well as additional discount accretion of $1.2 million on acquired loans. The combination of these changes increased the net interest margin by 11 basis points for the fourth quarter of 2005 and 3 basis points on a year-to-date basis.
During the third quarter of 2005, Trustmark moved $4.5 million in book value of held to maturity (HTM) securities to available for sale (AFS) as allowed by paragraph 8 of SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities.” These securities were general obligation municipal bonds issued by seven different entities along the Mississippi Gulf Coast that incurred serious damage by Hurricane Katrina. These entities are facing severe fiscal and economic strain; which resulted in a material deterioration in their financial stability, at least in the short-term. Transferring these securities to AFS will provide a more transparent impact of the current value of the bonds in Trustmark’s consolidated financial statements and give management more flexibility in managing the exposure to these entities as additional information emerges on their creditworthiness.
Note 6 - Business Combinations
On December 1, 2004, Trustmark acquired Fisher-Brown, Incorporated, located in Pensacola, Florida. This business combination was accounted for under the purchase method of accounting. Excess cost over tangible net assets acquired totaled $36.2 million, of which $9.3 million and $26.9 million have been allocated to identifiable intangibles and goodwill, respectively.
On March 12, 2004, Trustmark acquired five branches of Allied Houston Bank in a business combination accounted for by the purchase method of accounting. In connection with the transaction, Trustmark acquired approximately $148.1 million in assets and assumed $161.7 million in deposits and other liabilities for a $10 million deposit premium. Assets consisted of $145.9 million of selected loans, $585 thousand in premises and equipment and $1.6 million in other assets. The assets and liabilities have been recorded at fair value based on market conditions and risk characteristics at the acquisition date. Loans were recorded at a $6.4 million discount, consisting of a discount for general credit risk of $7.3 million offset by a market valuation premium of $862 thousand. Included in the credit risk discount of $7.3 million was a specific amount for nonaccrual loans of $1.7 million. Subsequent to the purchase date, the unpaid principal for these nonaccrual loans was written down to their net realizable value against the recorded discount. Excess cost over tangible net assets acquired totaled $15.7 million, of which $426 thousand and $15.3 million have been allocated to identifiable intangibles (core deposits) and goodwill, respectively. The purchase price was finalized during the first quarter of 2005 after completion of an evaluation of the adequacy of the discount for general credit risk mentioned above.
Trustmark’s financial statements include the results of operations for the above purchase business combinations from the respective merger dates. The pro forma impact of these acquisitions on Trustmark’s results of operations is immaterial.
Note 7 - Basis of Presentation
Certain reclassifications have been made to prior period amounts to conform with current period presentation.
