Trustmark (TRMK) 8-K Trustmark Corporation Announces Third Quarter 2010 Financial Results

  News Release

Trustmark Corporation Announces Third Quarter 2010 Financial Results

and Declares $0.23 Quarterly Cash Dividend

Jackson, Miss. – October 26, 2010 – Trustmark Corporation (NASDAQ:TRMK) announced net income available to common shareholders of $25.9 million in the third quarter of 2010, which represented basic earnings per common share of $0.40.  Trustmark’s third quarter net income produced a return on average tangible common equity of 12.38%.  During the first nine months of 2010, Trustmark’s net income available to common shareholders totaled $75.5 million, which represented basic earnings per common share of $1.18.  Trustmark’s performance during the first nine months of 2010 resulted in a return on average tangible common equity of 12.43%.  Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per common share.  The dividend is payable De cember 15, 2010, to shareholders of record on December 1, 2010.

Richard G. Hickson, Chairman and CEO, stated, “Trustmark continued to produce strong financial results as reflected by robust net interest income, diversified noninterest income, and disciplined expense management.  We look forward to the future as solid earnings, coupled with the strength of Trustmark’s human and financial capital, have positioned us to take advantage of opportunities in the marketplace to build shareholder value.”

Credit Quality

·   Provision for loan losses totaled $12.3 million

·   Nonperforming assets declined, reflecting reduced foreclosed other real estate

Net charge-offs during the quarter totaled $18.5 million, or 1.18% of average loans, and the provision for loan losses totaled $12.3 million.  During the third quarter, Trustmark experienced a $21.1 million reduction in classified loans, including a $14.8 million decline in its Florida market, relative to the prior quarter.  This reduction in classified loans, coupled with a lower migration of new classified loans, resulted in provisioning being less than net charge-offs during the third quarter.

Allocation of Trustmark’s $94.5 million allowance for loan losses represented 1.97% of commercial loans and 0.81% of consumer and home mortgage loans, resulting in an allowance to total loans of 1.57% as of September 30, 2010.  The allowance for loan losses represented 140.9% of nonperforming loans, excluding impaired loans which have been charged down to fair value.

Trustmark continues to make significant progress in the resolution of its construction and land development portfolio in Florida.  During the last 12 months, this portfolio has been reduced by 31.2% to $145.9 million.  At September 30, 2010, Florida nonimpaired construction and land development loans totaled $116.1 million with an associated reserve for loan losses of $13.0 million, or 11.18%.  Managing credit risks resulting from current economic and real estate market conditions continues to be a primary focus for Trustmark.

At September 30, 2010, nonperforming assets totaled $244.0 million, a decrease of $7.2 million, or 2.9%, from the prior quarter.  Nonperforming loans decreased $562 thousand relative to the prior quarter to total $159.3 million, or 2.54% of total loans.  Foreclosed real estate decreased $6.7 million, or 7.3%, from the prior quarter to total $84.7 million.

Capital Strength

·   Tangible common equity to tangible assets increased to 9.34%

·   Total risk-based capital increased to 15.75%

The fundamental strengths of Trustmark’s diversified financial services business were reflected in pre-tax, pre-provision earnings of $47.1 million in the third quarter of 2010.  Consistent profitability and sound balance sheet management continued to be reflected in Trustmark’s solid capital position.  At September 30, 2010, tangible common equity totaled $850.5 million and represented 9.34% of tangible assets.  Total risk-based capital increased to 15.75%, significantly exceeding the 10% regulatory requirement to be classified as “well-capitalized.”  Trustmark’s strong capital base provides strategic flexibility to support organic growth as well as acquisition opportunities that strengthen the value of the franchise.

Balance Sheet Management

·   Average earning assets remained stable at $8.2 billion

·   Net interest income (FTE) totaled $90.9 million

Average loans during the third quarter totaled $6.2 billion, a decline of $70.2 million from the prior quarter, and reflected continued efforts to reduce exposure to construction and land development lending as well as the decision to discontinue indirect auto financing.  Current economic conditions also reduced demand for credit.  Average investment securities during the third quarter increased $45.7 million to $1.9 billion.  As a result, average earning assets remained stable at $8.2 billion during the third quarter.

Average deposits totaled $7.1 billion during the third quarter, a decrease of $92.7 million relative to the prior quarter.  During this period, average interest bearing deposits declined $185.7 million while average noninterest-bearing deposits increased $93.0 million.  Lower deposit costs continued to reflect Trustmark’s strong liquidity while disciplined loan pricing and required minimum loan rates have sustained   loan yields.  As a result, net interest income (FTE) totaled $90.9 million, resulting in a net interest margin of 4.39% during the third quarter.

Noninterest Income

·   Noninterest income (excluding security gains) increased to $44.0 million

·   Fee income represented 32.6% of total revenue

Mortgage banking income during the third quarter totaled $9.9 million, an increase of $1.0 million from the prior quarter.  During the third quarter, mortgage production exceeded $450 million, a 52.5% increase relative to the prior quarter.  Performance in mortgage banking continued to reflect stable mortgage servicing income, solid secondary marketing gains, and successful hedging initiatives.  In addition, Trustmark has not experienced any significant mortgage repurchase activity. Trustmark operates a conservative, full service mortgage banking business and is confident in its mortgage foreclosure processes.  Trustmark has not engaged in "robo-signing" and has not participated in private label securitizations, both of which have been a cause of concern in the mortgage industry.  Trust mark works diligently to keep borrowers in their homes, resorting to foreclosure only as a last option.

In addition to growth in mortgage banking income, service charges on deposit accounts totaled $14.5 million, reflecting an increase from the prior quarter as well as from levels one year earlier.  Insurance revenue totaled $7.7 million, an increase of $862 thousand from the prior quarter while wealth management income totaled $5.2 million.  Bank card and other fees remained stable at $6.2 million in the third quarter.

Noninterest Expense

·   Foreclosure expense totaled $8.7 million

·   Noninterest expense remained well-controlled

Trustmark has substantially completed its 2010 reappraisal of the Florida other real estate (ORE) portfolio.  Year-to-date, Florida ORE balances declined 31% to total $31.7 million at September 30, 2010, and represents approximately 37% of the Corporation’s ORE.  Collectively, Trustmark’s Florida ORE has been written down by approximately 50% from the point at which the loans failed to perform in accordance with contractual terms.   ORE in Trustmark’s Mississippi, Tennessee and Texas markets, which represent approximately 63% of the Corporation’s total, did not experience a significant increase in real estate prices during the current economic cycle as did Florida.  Excluding ORE expense, core noninterest expense remained well-controlled, increasing less than 1% from the prior quarter.

ADDITIONAL INFORMATION

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, October 27 at 10:00 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (800) 860-2442, passcode 436565 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com.  A replay of the conference call will also be available through Thursday, November 4, 2010 in archived format at the same web address or by calling (877) 344-7529, passcode 436565.

Trustmark is a financial services company providing banking and financial solutions through over 150 offices in 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 no t 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 the extent and duration of the current volatility in the credit and financial markets, 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 pri cing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions 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 new products and lines of business, 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 Investor Contacts:

Louis E. Greer

Treasurer and

Principal Financial Officer

601-208-2310

F. Joseph Rein, Jr.

Senior Vice President

601-208-6898

Trustmark Media Contact:

Melanie A. Morgan

Senior Vice President

601-208-2979

  TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION September 30, 2010 ($ in thousands) (unaudited)

										Linked Quarter						Year over Year
QUARTERLY AVERAGE BALANCES	9/30/2010			6/30/2010			9/30/2009			$ Change			% Change			$ Change			% Change
Securities AFS-taxable	$	1,654,335		$	1,586,165		$	1,377,318		$	68,170			4.3	%	$	277,017			20.1	%
Securities AFS-nontaxable		111,959			110,969			89,259			990			0.9	%		22,700			25.4	%
Securities HTM-taxable		143,124			162,691			191,934			(19,567	)		-12.0	%		(48,810	)		-25.4	%
Securities HTM-nontaxable		37,703			41,628			55,440			(3,925	)		-9.4	%		(17,737	)		-32.0	%
Total securities		1,947,121			1,901,453			1,713,951			45,668			2.4	%		233,170			13.6	%
Loans (including loans held for sale)		6,230,961			6,301,201			6,693,482			(70,240	)		-1.1	%		(462,521	)		-6.9	%
Fed funds sold and rev repos		8,418			7,478			12,821			940			12.6	%		(4,403	)		-34.3	%
Other earning assets		33,615			38,764			43,894			(5,149	)		-13.3	%		(10,279	)		-23.4	%
Total earning assets		8,220,115			8,248,896			8,464,148			(28,781	)		-0.3	%		(244,033	)		-2.9	%
Allowance for loan losses		(102,528	)		(104,814	)		(102,545	)		2,286			-2.2	%		17			0.0	%
Cash and due from banks		214,736			207,670			205,361			7,066			3.4	%		9,375			4.6	%
Other assets		885,600			898,749			871,477			(13,149	)		-1.5	%		14,123			1.6	%
Total assets	$	9,217,923		$	9,250,501		$	9,438,441		$	(32,578	)		-0.4	%	$	(220,518	)		-2.3	%
Interest-bearing demand deposits	$	1,363,377		$	1,306,783		$	1,148,537		$	56,594			4.3	%	$	214,840			18.7	%
Savings deposits		1,888,121			2,066,612			1,797,421			(178,491	)		-8.6	%		90,700			5.0	%
Time deposits less than $100,000		1,276,088			1,307,611			1,434,097			(31,523	)		-2.4	%		(158,009	)		-11.0	%
Time deposits of $100,000 or more		957,148			989,397			1,095,431			(32,249	)		-3.3	%		(138,283	)		-12.6	%
Total interest-bearing deposits		5,484,734			5,670,403			5,475,486			(185,669	)		-3.3	%		9,248			0.2	%
Fed funds purchased and repos		522,523			495,904			644,012			26,619			5.4	%		(121,489	)		-18.9	%
Short-term borrowings		202,017			181,669			263,891			20,348			11.2	%		(61,874	)		-23.4	%
Long-term FHLB advances		-			15,833			75,000			(15,833	)		-100.0	%		(75,000	)		-100.0	%
Subordinated notes		49,793			49,785			49,760			8			0.0	%		33			0.1	%
Junior subordinated debt securities		70,104			70,104			70,104			-			0.0	%		-			0.0	%
Total interest-bearing liabilities		6,329,171			6,483,698			6,578,253			(154,527	)		-2.4	%		(249,082	)		-3.8	%
Noninterest-bearing deposits		1,629,122			1,536,153			1,529,381			92,969			6.1	%		99,741			6.5	%
Other liabilities		104,576			91,715			113,820			12,861			14.0	%		(9,244	)		-8.1	%
Total liabilities		8,062,869			8,111,566			8,221,454			(48,697	)		-0.6	%		(158,585	)		-1.9	%
Preferred equity		-			-			206,308			-			n/m			(206,308	)		-100.0	%
Common equity		1,155,054			1,138,935			1,010,679			16,119			1.4	%		144,375			14.3	%
Total shareholders' equity		1,155,054			1,138,935			1,216,987			16,119			1.4	%		(61,933	)		-5.1	%
Total liabilities and equity	$	9,217,923		$	9,250,501		$	9,438,441		$	(32,578	)		-0.4	%	$	(220,518	)		-2.3	%
										Linked Quarter						Year over Year
PERIOD END BALANCES	9/30/2010			6/30/2010			9/30/2009			$ Change			% Change			$ Change			% Change
Cash and due from banks	$	196,136		$	186,365		$	191,449		$	9,771			5.2	%	$	4,687			2.4	%
Fed funds sold and rev repos		6,655			5,713			8,551			942			16.5	%		(1,896	)		-22.2	%
Securities available for sale		1,968,624			1,786,710			1,528,625			181,914			10.2	%		439,999			28.8	%
Securities held to maturity		168,849			192,860			242,603			(24,011	)		-12.4	%		(73,754	)		-30.4	%
Loans held for sale		268,137			218,369			237,152			49,768			22.8	%		30,985			13.1	%
Loans		5,998,704			6,054,995			6,382,440			(56,291	)		-0.9	%		(383,736	)		-6.0	%
Allowance for loan losses		(94,458	)		(100,656	)		(103,016	)		6,198			-6.2	%		8,558			-8.3	%
Net Loans		5,904,246			5,954,339			6,279,424			(50,093	)		-0.8	%		(375,178	)		-6.0	%
Premises and equipment, net		143,393			143,536			148,656			(143	)		-0.1	%		(5,263	)		-3.5	%
Mortgage servicing rights		41,972			43,044			56,042			(1,072	)		-2.5	%		(14,070	)		-25.1	%
Goodwill		291,104			291,104			291,104			-			0.0	%		-			0.0	%
Identifiable intangible assets		17,181			18,062			20,819			(881	)		-4.9	%		(3,638	)		-17.5	%
Other assets		410,608			404,443			364,073			6,165			1.5	%		46,535			12.8	%
Total assets	$	9,416,905		$	9,244,545		$	9,368,498		$	172,360			1.9	%	$	48,407			0.5	%
Deposits:
Noninterest-bearing	$	1,709,311		$	1,539,598		$	1,493,424		$	169,713			11.0	%	$	215,887			14.5	%
Interest-bearing		5,316,025			5,599,796			5,377,011			(283,771	)		-5.1	%		(60,986	)		-1.1	%
Total deposits		7,025,336			7,139,394			6,870,435			(114,058	)		-1.6	%		154,901			2.3	%
Fed funds purchased and repos		633,065			492,367			645,057			140,698			28.6	%		(11,992	)		-1.9	%
Short-term borrowings		318,457			208,136			315,105			110,321			53.0	%		3,352			1.1	%
Long-term FHLB advances		-			-			75,000			-			n/m			(75,000	)		n/m
Subordinated notes		49,798			49,790			49,766			8			0.0	%		32			0.1	%
Junior subordinated debt securities		70,104			70,104			70,104			-			0.0	%		-			0.0	%
Other liabilities		161,353			142,374			121,670			18,979			13.3	%		39,683			32.6	%
Total liabilities		8,258,113			8,102,165			8,147,137			155,948			1.9	%		110,976			1.4	%
Preferred stock		-			-			206,461			-			n/m			(206,461	)		-100.0	%
Common stock		13,311			13,311			11,968			-			0.0	%		1,343			11.2	%
Capital surplus		254,288			253,133			145,352			1,155			0.5	%		108,936			74.9	%
Retained earnings		881,545			870,532			854,508			11,013			1.3	%		27,037			3.2	%
Accum other comprehensive
income (loss), net of tax		9,648			5,404			3,072			4,244			78.5	%		6,576			n/m
Total shareholders' equity		1,158,792			1,142,380			1,221,361			16,412			1.4	%		(62,569	)		-5.1	%
Total liabilities and equity	$	9,416,905		$	9,244,545		$	9,368,498		$	172,360			1.9	%	$	48,407			0.5	%
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

  TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION September 30, 2010 ($ in thousands except per share data) (unaudited)

	Quarter Ended									Linked Quarter						Year over Year
INCOME STATEMENTS	9/30/2010			6/30/2010			9/30/2009			$ Change			% Change			$ Change			% Change
Interest and fees on loans-FTE	$	83,374		$	84,362		$	89,672		$	(988	)		-1.2	%	$	(6,298	)		-7.0	%
Interest on securities-taxable		18,641			19,626			19,524			(985	)		-5.0	%		(883	)		-4.5	%
Interest on securities-tax exempt-FTE		2,080			2,151			2,172			(71	)		-3.3	%		(92	)		-4.2	%
Interest on fed funds sold and rev repos		9			7			16			2			28.6	%		(7	)		-43.8	%
Other interest income		332			366			381			(34	)		-9.3	%		(49	)		-12.9	%
Total interest income-FTE		104,436			106,512			111,765			(2,076	)		-1.9	%		(7,329	)		-6.6	%
Interest on deposits		11,609			12,785			18,403			(1,176	)		-9.2	%		(6,794	)		-36.9	%
Interest on fed funds pch and repos		294			260			282			34			13.1	%		12			4.3	%
Other interest expense		1,631			1,597			1,786			34			2.1	%		(155	)		-8.7	%
Total interest expense		13,534			14,642			20,471			(1,108	)		-7.6	%		(6,937	)		-33.9	%
Net interest income-FTE		90,902			91,870			91,294			(968	)		-1.1	%		(392	)		-0.4	%
Provision for loan losses		12,259			10,398			15,770			1,861			17.9	%		(3,511	)		-22.3	%
Net interest income after provision-FTE		78,643			81,472			75,524			(2,829	)		-3.5	%		3,119			4.1	%
Service charges on deposit accounts		14,493			14,220			14,157			273			1.9	%		336			2.4	%
Insurance commissions		7,746			6,884			7,894			862			12.5	%		(148	)		-1.9	%
Wealth management		5,199			5,558			5,589			(359	)		-6.5	%		(390	)		-7.0	%
Bank card and other fees		6,235			6,417			5,620			(182	)		-2.8	%		615			10.9	%
Mortgage banking, net		9,861			8,910			8,871			951			10.7	%		990			11.2	%
Other, net		441			1,103			994			(662	)		-60.0	%		(553	)		-55.6	%
Nonint inc-excl sec gains, net		43,975			43,092			43,125			883			2.0	%		850			2.0	%
Security gains, net		4			1,855			1,014			(1,851	)		-99.8	%		(1,010	)		-99.6	%
Total noninterest income		43,979			44,947			44,139			(968	)		-2.2	%		(160	)		-0.4	%
Salaries and employee benefits		44,034			43,282			42,629			752			1.7	%		1,405			3.3	%
Services and fees		10,709			10,523			10,124			186			1.8	%		585			5.8	%
Net occupancy-premises		4,961			4,917			4,862			44			0.9	%		99			2.0	%
Equipment expense		4,356			4,247			4,104			109			2.6	%		252			6.1	%
Other expense		20,363			21,459			17,515			(1,096	)		-5.1	%		2,848			16.3	%
Total noninterest expense		84,423			84,428			79,234			(5	)		0.0	%		5,189			6.5	%
Income before income taxes and tax eq adj		38,199			41,991			40,429			(3,792	)		-9.0	%		(2,230	)		-5.5	%
Tax equivalent adjustment		3,335			3,384			2,417			(49	)		-1.4	%		918			38.0	%
Income before income taxes		34,864			38,607			38,012			(3,743	)		-9.7	%		(3,148	)		-8.3	%
Income taxes		9,004			12,446			12,502			(3,442	)		-27.7	%		(3,498	)		-28.0	%
Net income		25,860			26,161			25,510			(301	)		-1.2	%		350			1.4	%
Preferred stock dividends		-			-			2,688			-			n/m			(2,688	)		-100.0	%
Accretion of preferred stock discount		-			-			452			-			n/m			(452	)		-100.0	%
Net income available to common shareholders	$	25,860		$	26,161		$	22,370		$	(301	)		-1.2	%	$	3,490			15.6	%
Per common share data
Earnings per share - basic	$	0.40		$	0.41		$	0.39		$	(0.01	)		-2.4	%	$	0.01			2.6	%
Earnings per share - diluted	$	0.40		$	0.41		$	0.39		$	(0.01	)		-2.4	%	$	0.01			2.6	%
Dividends per share	$	0.23		$	0.23		$	0.23		$	-			0.0	%	$	-			0.0	%
Weighted average common shares outstanding
Basic		63,885,647			63,872,879			57,431,128
Diluted		64,066,798			64,054,171			57,559,492
Period end common shares outstanding		63,885,959			63,885,403			57,440,047
OTHER FINANCIAL DATA
Return on common equity		8.88	%		9.21	%		8.78	%
Return on average tangible common equity		12.38	%		12.92	%		13.06	%
Return on equity		8.88	%		9.21	%		8.32	%
Return on assets		1.11	%		1.13	%		1.07	%
Interest margin - Yield - FTE		5.04	%		5.18	%		5.24	%
Interest margin - Cost		0.65	%		0.71	%		0.96	%
Net interest margin - FTE		4.39	%		4.47	%		4.28	%
Efficiency ratio		62.59	%		62.56	%		58.95	%
Full-time equivalent employees		2,501			2,527			2,550
COMMON STOCK PERFORMANCE
Market value-Close	$	21.74		$	20.82		$	19.05
Common book value	$	18.14		$	17.88		$	17.67
Tangible common book value	$	13.31		$	13.04		$	12.24
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

  TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION September 30, 2010 ($ in thousands) (unaudited)

	Quarter Ended									Linked Quarter						Year over Year
NONPERFORMING ASSETS	9/30/2010			6/30/2010			9/30/2009			$ Change			% Change			$ Change			% Change
Nonaccrual loans
Florida	$	65,759		$	74,954		$	72,063		$	(9,195	)		-12.3	%	$	(6,304	)		-8.7	%
Mississippi (1)		48,962			39,924			28,470			9,038			22.6	%		20,492			72.0	%
Tennessee (2)		9,207			9,778			11,481			(571	)		-5.8	%		(2,274	)		-19.8	%
Texas		35,388			35,222			26,490			166			0.5	%		8,898			33.6	%
Total nonaccrual loans		159,316			159,878			138,504			(562	)		-0.4	%		20,812			15.0	%
Other real estate
Florida		31,665			31,814			34,030			(149	)		-0.5	%		(2,365	)		-6.9	%
Mississippi (1)		24,548			28,020			22,932			(3,472	)		-12.4	%		1,616			7.0	%
Tennessee (2)		16,456			12,493			9,809			3,963			31.7	%		6,647			67.8	%
Texas		12,053			19,073			4,918			(7,020	)		-36.8	%		7,135			n/m
Total other real estate		84,722			91,400			71,689			(6,678	)		-7.3	%		13,033			18.2	%
Total nonperforming assets	$	244,038		$	251,278		$	210,193		$	(7,240	)		-2.9	%	$	33,845			16.1	%
LOANS PAST DUE OVER 90 DAYS
Loans held for investment	$	5,795		$	6,057		$	6,854		$	(262	)		-4.3	%	$	(1,059	)		-15.5	%
Loans HFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	50,246		$	49,712		$	36,686		$	534			1.1	%	$	13,560			37.0	%
	Quarter Ended									Linked Quarter						Year over Year
ALLOWANCE FOR LOAN LOSSES	9/30/2010			6/30/2010			9/30/2009			$ Change			% Change			$ Change			% Change
Beginning Balance	$	100,656		$	101,643		$	101,751		$	(987	)		-1.0	%	$	(1,095	)		-1.1	%
Provision for loan losses		12,259			10,398			15,770			1,861			17.9	%		(3,511	)		-22.3	%
Charge-offs		(21,942	)		(14,297	)		(18,687	)		(7,645	)		53.5	%		(3,255	)		17.4	%
Recoveries		3,485			2,912			4,182			573			19.7	%		(697	)		-16.7	%
Net charge-offs		(18,457	)		(11,385	)		(14,505	)		(7,072	)		62.1	%		(3,952	)		27.2	%
Ending Balance	$	94,458		$	100,656		$	103,016		$	(6,198	)		-6.2	%	$	(8,558	)		-8.3	%
PROVISION FOR LOAN LOSSES
Florida	$	4,520		$	2,432		$	(3,295	)	$	2,088			85.9	%	$	7,815			n/m
Mississippi (1)		4,398			3,430			12,009			968			28.2	%		(7,611	)		-63.4	%
Tennessee (2)		(172	)		3,560			159			(3,732	)		n/m			(331	)		n/m
Texas		3,513			976			6,897			2,537			n/m			(3,384	)		-49.1	%
Total provision for loan losses	$	12,259		$	10,398		$	15,770		$	1,861			17.9	%	$	(3,511	)		-22.3	%
NET CHARGE-OFFS
Florida	$	8,951		$	5,880		$	131		$	3,071			52.2	%	$	8,820			n/m
Mississippi (1)		3,879			3,885			9,629			(6	)		-0.2	%		(5,750	)		-59.7	%
Tennessee (2)		3,475			1,031			872			2,444			n/m			2,603			n/m
Texas		2,152			589			3,873			1,563			n/m			(1,721	)		-44.4	%
Total net charge-offs	$	18,457		$	11,385		$	14,505		$	7,072			62.1	%	$	3,952			27.2	%
CREDIT QUALITY RATIOS
Net charge offs/average loans		1.18	%		0.72	%		0.86	%
Provision for loan losses/average loans		0.78	%		0.66	%		0.93	%
Nonperforming loans/total loans (incl LHFS)		2.54	%		2.55	%		2.09	%
Nonperforming assets/total loans (incl LHFS)		3.89	%		4.01	%		3.18	%
Nonperforming assets/total loans (incl LHFS) +ORE		3.84	%		3.95	%		3.14	%
ALL/total loans (excl LHFS)		1.57	%		1.66	%		1.61	%
ALL-commercial/total commercial loans		1.97	%		2.10	%		2.08	%
ALL-consumer/total consumer and home mortgage loans		0.81	%		0.82	%		0.76	%
ALL/nonperforming loans		59.29	%		62.96	%		74.38	%
ALL/nonperforming loans -
(excl impaired loans with no specific reserves)		140.94	%		148.86	%		117.93	%
CAPITAL RATIOS
Total equity/total assets		12.31	%		12.36	%		13.04	%
Common equity/total assets		12.31	%		12.36	%		10.83	%
Tangible common equity/tangible assets		9.34	%		9.32	%		7.76	%
Tangible common equity/risk-weighted assets		12.78	%		12.51	%		10.15	%
Tier 1 leverage ratio		10.26	%		10.07	%		10.70	%
Tier 1 common risk-based capital ratio		12.72	%		12.51	%		10.15	%
Tier 1 risk-based capital ratio		13.75	%		13.53	%		14.11	%
Total risk-based capital ratio		15.75	%		15.53	%		16.09	%
(1) - Mississippi includes Central and Southern Mississippi Regions
(2) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

  TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION September 30, 2010 ($ in thousands) (unaudited)

	Quarter Ended															Nine Months Ended
AVERAGE BALANCES	9/30/2010			6/30/2010			3/31/2010			12/31/2009			9/30/2009			9/30/2010			9/30/2009
Securities AFS-taxable	$	1,654,335		$	1,586,165		$	1,514,029		$	1,369,022		$	1,377,318		$	1,585,357		$	1,425,514
Securities AFS-nontaxable		111,959			110,969			105,067			98,456			89,259			109,357			67,786
Securities HTM-taxable		143,124			162,691			179,076			202,235			191,934			161,499			188,193
Securities HTM-nontaxable		37,703			41,628			46,852			50,411			55,440			42,027			61,261
Total securities		1,947,121			1,901,453			1,845,024			1,720,124			1,713,951			1,898,240			1,742,754
Loans (including loans held for sale)		6,230,961			6,301,201			6,412,671			6,544,448			6,693,482			6,314,279			6,851,047
Fed funds sold and rev repos		8,418			7,478			10,438			10,609			12,821			8,771			16,582
Other earning assets		33,615			38,764			46,199			44,197			43,894			39,480			43,833
Total earning assets		8,220,115			8,248,896			8,314,332			8,319,378			8,464,148			8,260,770			8,654,216
Allowance for loan losses		(102,528	)		(104,814	)		(106,200	)		(105,223	)		(102,545	)		(104,501	)		(102,357	)
Cash and due from banks		214,736			207,670			216,305			199,586			205,361			212,898			219,709
Other assets		885,600			898,749			910,401			855,714			871,477			898,159			833,456
Total assets	$	9,217,923		$	9,250,501		$	9,334,838		$	9,269,455		$	9,438,441		$	9,267,326		$	9,605,024
Interest-bearing demand deposits	$	1,363,377		$	1,306,783		$	1,270,827		$	1,134,995		$	1,148,537		$	1,314,001		$	1,132,994
Savings deposits		1,888,121			2,066,612			1,953,711			1,801,870			1,797,421			1,969,241			1,827,562
Time deposits less than $100,000		1,276,088			1,307,611			1,356,469			1,422,270			1,434,097			1,313,094			1,470,794
Time deposits of $100,000 or more		957,148			989,397			1,014,027			1,039,565			1,095,431			986,649			1,088,900
Total interest-bearing deposits		5,484,734			5,670,403			5,595,034			5,398,700			5,475,486			5,582,985			5,520,250
Fed funds purchased and repos		522,523			495,904			600,826			579,616			644,012			539,464			635,799
Short-term borrowings		202,017			181,669			199,550			238,060			263,891			194,421			416,031
Long-term FHLB advances		-			15,833			75,000			75,000			75,000			30,003			69,505
Subordinated notes		49,793			49,785			49,777			49,769			49,760			49,785			49,752
Junior subordinated debt securities		70,104			70,104			70,104			70,104			70,104			70,104			70,104
Total interest-bearing liabilities		6,329,171			6,483,698			6,590,291			6,411,249			6,578,253			6,466,762			6,761,441
Noninterest-bearing deposits		1,629,122			1,536,153			1,535,209			1,533,588			1,529,381			1,567,172			1,518,496
Other liabilities		104,576			91,715			85,982			118,906			113,820			94,161			119,468
Total liabilities		8,062,869			8,111,566			8,211,482			8,063,743			8,221,454			8,128,095			8,399,405
Preferred equity		-			-			-			157,270			206,308			-			205,865
Common equity		1,155,054			1,138,935			1,123,356			1,048,442			1,010,679			1,139,231			999,754
Total shareholders' equity		1,155,054			1,138,935			1,123,356			1,205,712			1,216,987			1,139,231			1,205,619
Total liabilities and equity	$	9,217,923		$	9,250,501		$	9,334,838		$	9,269,455		$	9,438,441		$	9,267,326		$	9,605,024
PERIOD END BALANCES	9/30/2010			6/30/2010			3/31/2010			12/31/2009			9/30/2009
Cash and due from banks	$	196,136		$	186,365		$	191,973		$	213,519		$	191,449
Fed funds sold and rev repos		6,655			5,713			11,599			6,374			8,551
Securities available for sale		1,968,624			1,786,710			1,706,565			1,684,396			1,528,625
Securities held to maturity		168,849			192,860			215,888			232,984			242,603
Loans held for sale		268,137			218,369			176,682			226,225			237,152
Loans		5,998,704			6,054,995			6,170,878			6,319,797			6,382,440
Allowance for loan losses		(94,458	)		(100,656	)		(101,643	)		(103,662	)		(103,016	)
Net Loans		5,904,246			5,954,339			6,069,235			6,216,135			6,279,424
Premises and equipment, net		143,393			143,536			145,113			147,488			148,656
Mortgage servicing rights		41,972			43,044			50,037			50,513			56,042
Goodwill		291,104			291,104			291,104			291,104			291,104
Identifiable intangible assets		17,181			18,062			18,944			19,825			20,819
Other assets		410,608			404,443			416,075			437,455			364,073
Total assets	$	9,416,905		$	9,244,545		$	9,293,215		$	9,526,018		$	9,368,498
Deposits:
Noninterest-bearing	$	1,709,311		$	1,539,598		$	1,511,080		$	1,685,187		$	1,493,424
Interest-bearing		5,316,025			5,599,796			5,635,973			5,503,278			5,377,011
Total deposits		7,025,336			7,139,394			7,147,053			7,188,465			6,870,435
Fed funds purchased and repos		633,065			492,367			571,711			653,032			645,057
Short-term borrowings		318,457			208,136			132,784			253,957			315,105
Long-term FHLB advances		-			-			75,000			75,000			75,000
Subordinated notes		49,798			49,790			49,782			49,774			49,766
Junior subordinated debt securities		70,104			70,104			70,104			70,104			70,104
Other liabilities		161,353			142,374			118,252			125,626			121,670
Total liabilities		8,258,113			8,102,165			8,164,686			8,415,958			8,147,137
Preferred stock		-			-			-			-			206,461
Common stock		13,311			13,311			13,302			13,267			11,968
Capital surplus		254,288			253,133			250,365			244,864			145,352
Retained earnings		881,545			870,532			860,398			853,553			854,508
Accum other comprehensive
income (loss), net of tax		9,648			5,404			4,464			(1,624	)		3,072
Total shareholders' equity		1,158,792			1,142,380			1,128,529			1,110,060			1,221,361
Total liabilities and equity	$	9,416,905		$	9,244,545		$	9,293,215		$	9,526,018		$	9,368,498
See Notes to Consolidated Financials

  TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION September 30, 2010 ($ in thousands execpt per share data) (unaudited)

	Quarter Ended															Nine Months Ended
INCOME STATEMENTS	9/30/2010			6/30/2010			3/31/2010			12/31/2009			9/30/2009			9/30/2010			9/30/2009
Interest and fees on loans-FTE	$	83,374		$	84,362		$	84,127		$	87,640		$	89,672		$	251,863		$	273,706
Interest on securities-taxable		18,641			19,626			19,735			19,093			19,524			58,002			61,622
Interest on securities-tax exempt-FTE		2,080			2,151			2,180			2,183			2,172			6,411			6,046
Interest on fed funds sold and rev repos		9			7			8			12			16			24			54
Other interest income		332			366			383			377			381			1,081			1,037
Total interest income-FTE		104,436			106,512			106,433			109,305			111,765			317,381			342,465
Interest on deposits		11,609			12,785			13,904			16,513			18,403			38,298			62,373
Interest on fed funds pch and repos		294			260			226			215			282			780			918
Other interest expense		1,631			1,597			1,592			1,716			1,786			4,820			6,118
Total interest expense		13,534			14,642			15,722			18,444			20,471			43,898			69,409
Net interest income-FTE		90,902			91,870			90,711			90,861			91,294			273,483			273,056
Provision for loan losses		12,259			10,398			15,095			17,709			15,770			37,752			59,403
Net interest income after provision-FTE		78,643			81,472			75,616			73,152			75,524			235,731			213,653
Service charges on deposit accounts		14,493			14,220			12,977			14,118			14,157			41,690			39,969
Insurance commissions		7,746			6,884			6,837			6,391			7,894			21,467			22,688
Wealth management		5,199			5,558			5,355			5,438			5,589			16,112			16,641
Bank card and other fees		6,235			6,417			5,880			5,951			5,620			18,532			17,090
Mortgage banking, net		9,861			8,910			6,072			6,552			8,871			24,843			22,321
Other, net		441			1,103			879			1,814			994			2,423			3,802
Nonint inc-excl sec gains, net		43,975			43,092			38,000			40,264			43,125			125,067			122,511
Security gains, net		4			1,855			369			19			1,014			2,228			5,448
Total noninterest income		43,979			44,947			38,369			40,283			44,139			127,295			127,959
Salaries and employee benefits		44,034			43,282			42,854			42,209			42,629			130,170			127,043
Services and fees		10,709			10,523			10,255			9,919			10,124			31,487			30,373
Net occupancy-premises		4,961			4,917			5,034			5,063			4,862			14,912			14,988
Equipment expense		4,356			4,247			4,303			4,084			4,104			12,906			12,378
Other expense		20,363			21,459			13,915			14,372			17,515			55,737			47,830
Total noninterest expense		84,423			84,428			76,361			75,647			79,234			245,212			232,612
Income before income taxes and tax eq adj		38,199			41,991			37,624			37,788			40,429			117,814			109,000
Tax equivalent adjustment		3,335			3,384			3,293			2,569			2,417			10,012			7,139
Income before income taxes		34,864			38,607			34,331			35,219			38,012			107,802			101,861
Income taxes		9,004			12,446			10,876			10,742			12,502			32,326			33,291
Net income		25,860			26,161			23,455			24,477			25,510			75,476			68,570
Preferred stock dividends		-			-			-			2,061			2,688			-			8,063
Accretion of preferred stock discount		-			-			-			8,539			452			-			1,335
Net income available to common shareholders	$	25,860		$	26,161		$	23,455		$	13,877		$	22,370		$	75,476		$	59,172
Per common share data
Earnings per share - basic	$	0.40		$	0.41		$	0.37		$	0.23		$	0.39		$	1.18		$	1.03
Earnings per share - diluted	$	0.40		$	0.41		$	0.37		$	0.23		$	0.39		$	1.18		$	1.03
Dividends per share	$	0.23		$	0.23		$	0.23		$	0.23		$	0.23		$	0.69		$	0.69
Weighted average common shares outstanding
Basic		63,885,647			63,872,879			63,743,302			59,131,451			57,431,128			63,834,464			57,396,461
Diluted		64,066,798			64,054,171			63,933,333			59,287,459			57,559,492			64,016,341			57,496,230
Period end common shares outstanding		63,885,959			63,885,403			63,844,500			63,673,839			57,440,047			63,885,959			57,440,047
OTHER FINANCIAL DATA
Return on common equity		8.88	%		9.21	%		8.47	%		5.25	%		8.78	%		8.86	%		7.91	%
Return on average tangible common equity		12.38	%		12.92	%		11.98	%		7.80	%		13.06	%		12.43	%		11.89	%
Return on equity		8.88	%		9.21	%		8.47	%		8.05	%		8.32	%		8.86	%		7.60	%
Return on assets		1.11	%		1.13	%		1.02	%		1.05	%		1.07	%		1.09	%		0.95	%
Interest margin - Yield - FTE		5.04	%		5.18	%		5.19	%		5.21	%		5.24	%		5.14	%		5.29	%
Interest margin - Cost		0.65	%		0.71	%		0.77	%		0.88	%		0.96	%		0.71	%		1.07	%
Net interest margin - FTE		4.39	%		4.47	%		4.42	%		4.33	%		4.28	%		4.43	%		4.22	%
Efficiency ratio		62.59	%		62.56	%		59.33	%		57.69	%		58.95	%		61.53	%		57.70	%
Full-time equivalent employees		2,501			2,527			2,506			2,524			2,550
COMMON STOCK PERFORMANCE
Market value-Close	$	21.74		$	20.82		$	24.43		$	22.54		$	19.05
Common book value	$	18.14		$	17.88		$	17.68		$	17.43		$	17.67
Tangible common book value	$	13.31		$	13.04		$	12.82		$	12.55		$	12.24
See Notes to Consolidated Financials

  TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION September 30, 2010 ($ in thousands) (unaudited)

	Quarter Ended
NONPERFORMING ASSETS	9/30/2010			6/30/2010			3/31/2010			12/31/2009			9/30/2009
Nonaccrual loans
Florida	$	65,759		$	74,954		$	79,687		$	74,159		$	72,063
Mississippi (1)		48,962			39,924			41,795			31,050			28,470
Tennessee (2)		9,207			9,778			12,673			12,749			11,481
Texas		35,388			35,222			31,354			23,204			26,490
Total nonaccrual loans		159,316			159,878			165,509			141,162			138,504
Other real estate
Florida		31,665			31,814			40,145			45,927			34,030
Mississippi (1)		24,548			28,020			23,082			22,373			22,932
Tennessee (2)		16,456			12,493			9,769			10,105			9,809
Texas		12,053			19,073			18,180			11,690			4,918
Total other real estate		84,722			91,400			91,176			90,095			71,689
Total nonperforming assets	$	244,038		$	251,278		$	256,685		$	231,257		$	210,193
LOANS PAST DUE OVER 90 DAYS
Loans held for investment	$	5,795		$	6,057		$	8,411		$	8,901		$	6,854
Loans HFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	50,246		$	49,712		$	48,571		$	46,661		$	36,686
	Quarter Ended															Nine Months Ended
ALLOWANCE FOR LOAN LOSSES	9/30/2010			6/30/2010			3/31/2010			12/31/2009			9/30/2009			9/30/2010			9/30/2009
Beginning Balance	$	100,656		$	101,643		$	103,662		$	103,016		$	101,751		$	103,662		$	94,922
Provision for loan losses		12,259			10,398			15,095			17,709			15,770			37,752			59,403
Charge-offs		(21,942	)		(14,297	)		(19,775	)		(20,139	)		(18,687	)		(56,014	)		(60,572	)
Recoveries		3,485			2,912			2,661			3,076			4,182			9,058			9,263
Net charge-offs		(18,457	)		(11,385	)		(17,114	)		(17,063	)		(14,505	)		(46,956	)		(51,309	)
Ending Balance	$	94,458		$	100,656		$	101,643		$	103,662		$	103,016		$	94,458		$	103,016
PROVISION FOR LOAN LOSSES
Florida	$	4,520		$	2,432		$	5,501		$	11,371		$	(3,295	)	$	12,453		$	36,353
Mississippi (1)		4,398			3,430			3,748			6,310			12,009			11,576			15,351
Tennessee (2)		(172	)		3,560			1,314			2,097			159			4,702			1,121
Texas		3,513			976			4,532			(2,069	)		6,897			9,021			6,578
Total provision for loan losses	$	12,259		$	10,398		$	15,095		$	17,709		$	15,770		$	37,752		$	59,403
NET CHARGE-OFFS
Florida	$	8,951		$	5,880		$	8,989		$	8,174		$	131		$	23,820		$	28,231
Mississippi (1)		3,879			3,885			6,777			5,448			9,629			14,541			16,351
Tennessee (2)		3,475			1,031			426			1,169			872			4,932			2,554
Texas		2,152			589			922			2,272			3,873			3,663			4,173
Total net charge-offs	$	18,457		$	11,385		$	17,114		$	17,063		$	14,505		$	46,956		$	51,309
CREDIT QUALITY RATIOS
Net charge offs/average loans		1.18	%		0.72	%		1.08	%		1.03	%		0.86	%		0.99	%		1.00	%
Provision for loan losses/average loans		0.78	%		0.66	%		0.95	%		1.07	%		0.93	%		0.80	%		1.16	%
Nonperforming loans/total loans (incl LHFS)		2.54	%		2.55	%		2.61	%		2.16	%		2.09	%
Nonperforming assets/total loans (incl LHFS)		3.89	%		4.01	%		4.04	%		3.53	%		3.18	%
Nonperforming assets/total loans (incl LHFS) +ORE		3.84	%		3.95	%		3.99	%		3.48	%		3.14	%
ALL/total loans (excl LHFS)		1.57	%		1.66	%		1.65	%		1.64	%		1.61	%
ALL-commercial/total commercial loans		1.97	%		2.10	%		2.10	%		2.10	%		2.08	%
ALL-consumer/total consumer and home mortgage loans		0.81	%		0.82	%		0.80	%		0.80	%		0.76	%
ALL/nonperforming loans		59.29	%		62.96	%		61.41	%		73.43	%		74.38	%
ALL/nonperforming loans -
(excl impaired loans with no specific reserves)		140.94	%		148.86	%		131.36	%		150.13	%		117.93	%
CAPITAL RATIOS
Total equity/total assets		12.31	%		12.36	%		12.14	%		11.65	%		13.04	%
Common equity/total assets		12.31	%		12.36	%		12.14	%		11.65	%		10.83	%
Tangible common equity/tangible assets		9.34	%		9.32	%		9.11	%		8.67	%		7.76	%
Tangible common equity/risk-weighted assets		12.78	%		12.51	%		12.15	%		11.55	%		10.15	%
Tier 1 leverage ratio		10.26	%		10.07	%		9.81	%		9.74	%		10.70	%
Tier 1 common risk-based capital ratio		12.72	%		12.51	%		12.14	%		11.63	%		10.15	%
Tier 1 risk-based capital ratio		13.75	%		13.53	%		13.15	%		12.61	%		14.11	%
Total risk-based capital ratio		15.75	%		15.53	%		15.15	%		14.58	%		16.09	%
(1) - Mississippi includes Central and Southern Mississippi Regions
(2) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
See Notes to Consolidated Financials

  TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS September 30, 2010 ($ 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):

	9/30/2010		6/30/2010		3/31/2010		12/31/2009		9/30/2009
SECURITIES AVAILABLE FOR SALE
U.S. Government agency obligations
Issued by U.S. Government agencies	$	14	$	16	$	18	$	20	$	21
Issued by U.S. Government sponsored agencies		149,588		124,566		68,574		47,917		24,992
Obligations of states and political subdivisions		148,772		125,234		123,292		117,508		151,427
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		13,273		13,390		11,986		12,192		9,590
Issued by FNMA and FHLMC		243,220		142,900		51,292		49,279		7,229
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		1,366,373		1,333,725		1,387,752		1,382,556		1,258,779
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		41,359		40,789		57,485		68,735		70,359
Corporate debt securities		6,025		6,090		6,166		6,189		6,228
Total securities available for sale	$	1,968,624	$	1,786,710	$	1,706,565	$	1,684,396	$	1,528,625
SECURITIES HELD TO MATURITY
Obligations of states and political subdivisions	$	61,139	$	64,517	$	69,975	$	74,643	$	78,522
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		6,462		6,591		6,801		7,044		7,269
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		98,217		118,708		136,054		148,226		153,728
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		3,031		3,044		3,058		3,071		3,084
Total securities held to maturity	$	168,849	$	192,860	$	215,888	$	232,984	$	242,603

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 91% of the portfolio in U.S. Government agency-backed obligations and other AAA rated securities.  None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of membership in the Federal Home Loan Bank of Dallas, Federal Reserve Bank and Depository Trust and Clearing Corporation, Trustmark does not hold any equity investment in government sponsored entities.

Note 2 – Loan Composition

LOANS BY TYPE	9/30/2010			6/30/2010			3/31/2010			12/31/2009			9/30/2009
Loans secured by real estate:
Construction, land development and other land loans	$	615,554		$	737,015		$	803,942		$	830,069		$	872,367
Secured by 1-4 family residential properties		1,672,199			1,630,353			1,637,121			1,650,743			1,637,322
Secured by nonfarm, nonresidential properties		1,531,953			1,463,657			1,466,296			1,467,307			1,472,147
Other real estate secured		203,931			189,118			194,641			197,421			209,957
Commercial and industrial loans		1,016,292			1,040,152			1,041,580			1,059,164			1,101,967
Consumer loans		444,927			492,262			542,488			606,315			661,075
Other loans		513,848			502,438			484,810			508,778			427,605
Loans		5,998,704			6,054,995			6,170,878			6,319,797			6,382,440
Allowance for loan losses		(94,458	)		(100,656	)		(101,643	)		(103,662	)		(103,016	)
Net Loans	$	5,904,246		$	5,954,339		$	6,069,235		$	6,216,135		$	6,279,424

  TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS September 30, 2010 ($ in thousands) (unaudited)

Note 2 – Loan Composition (continued)
	September 30, 2010
LOAN COMPOSITION BY REGION	Total		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	$	615,554	$	145,907	$	258,054	$	44,090	$	167,503
Secured by 1-4 family residential properties		1,672,199		73,738		1,397,624		161,451		39,386
Secured by nonfarm, nonresidential properties		1,531,953		184,992		821,502		208,986		316,473
Other real estate secured		203,931		12,223		159,059		9,102		23,547
Commercial and industrial loans		1,016,292		17,512		733,089		78,949		186,742
Consumer loans		444,927		1,636		410,578		25,175		7,538
Other loans		513,848		28,194		432,396		17,805		35,453
Loans	$	5,998,704	$	464,202	$	4,212,302	$	545,558	$	776,642
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots	$	85,993	$	48,700	$	24,075	$	2,638	$	10,580
Development		169,767		24,060		61,000		7,978		76,729
Unimproved land		227,186		61,676		104,034		25,646		35,830
1-4 family construction		99,193		7,864		63,322		4,726		23,281
Other construction		33,415		3,607		5,623		3,102		21,083
Construction, land development and other land loans	$	615,554	$	145,907	$	258,054	$	44,090	$	167,503
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION
Income producing:
Retail	$	174,038	$	40,237	$	73,008	$	26,760	$	34,033
Office		170,355		59,339		80,703		15,100		15,213
Nursing homes/assisted living		123,731		-		113,713		4,643		5,375
Hotel/motel		66,109		11,362		30,128		10,876		13,743
Industrial		32,704		9,830		4,879		1,176		16,819
Health care		13,294		-		12,156		62		1,076
Convenience stores		11,288		262		5,783		2,519		2,724
Other		172,711		13,153		74,436		11,071		74,051
Total income producing loans		764,230		134,183		394,806		72,207		163,034
Owner-occupied:
Office		126,041		17,824		64,925		18,765		24,527
Churches		120,535		2,291		55,495		58,983		3,766
Industrial warehouses		96,010		2,468		58,158		409		34,975
Health care		80,918		11,138		54,803		7,210		7,767
Convenience stores		65,514		1,287		38,876		2,884		22,467
Retail		33,843		5,837		17,764		1,569		8,673
Restaurants		32,779		828		24,017		6,627		1,307
Auto dealerships		21,308		615		15,883		1,559		3,251
Other		190,775		8,521		96,775		38,773		46,706
Total owner-occupied loans		767,723		50,809		426,696		136,779		153,439
Loans secured by nonfarm, nonresidential properties	$	1,531,953	$	184,992	$	821,502	$	208,986	$	316,473

  TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS September 30, 2010 ($ in thousands) (unaudited)

Note 2 – Loan Composition (continued)
	September 30, 2010
								Classified (3)
FLORIDA CREDIT QUALITY	Total Loans		Criticized  Loans (1)		Special Mention (2)			Accruing		Nonimpaired Nonaccrual		Impaired Nonaccrual (4)
Construction, land development and other land loans:
Lots	$	48,700	$	19,616	$	93		$	9,271	$	4,830	$	5,422
Development		24,060		13,862		-			3,573		328		9,961
Unimproved land		61,676		38,876		21,771			5,447		1,417		10,241
1-4 family construction		7,864		5,660		-			1,474		-		4,186
Other construction		3,607		-		-			-		-		-
Construction, land development and other land loans		145,907		78,014		21,864			19,765		6,575		29,810
Commercial, commercial real estate and consumer		318,295		76,766		15,623			31,769		10,173		19,201
Total Florida loans	$	464,202	$	154,780	$	37,487		$	51,534	$	16,748	$	49,011
FLORIDA CREDIT QUALITY (continued)	Total Loans Less Impaired  Loans		Loan Loss Reserves		Loan Loss  Reserve % of Nonimpaired Loans
Construction, land development and other land loans:
Lots	$	43,278	$	4,654		10.75	%
Development		14,099		1,546		10.97	%
Unimproved land		51,435		6,158		11.97	%
1-4 family construction		3,678		435		11.83	%
Other construction		3,607		185		5.13	%
Construction, land development and other land loans		116,097		12,978		11.18	%
Commercial, commercial real estate and consumer		299,094		6,787		2.27	%
Total Florida loans	$	415,191	$	19,765		4.76	%

(1)   Criticized loans equal all special mention and classified loans.

(2)   Special mention loans exhibit potential credit weaknesses that, if not resolved, may ultimately result in a more severe classification.

(3)   Classified loans include those loans identified by management as exhibiting well-defined credit weaknesses that may jeopardize repayment in full of the debt.

(4)   All nonaccrual loans over $500 thousand are individually assessed for impairment.  Impaired loans have been determined to be collateral dependent and assessed using a fair value approach.  Fair value estimates begin with appraised values, normally from recently received and reviewed appraisals.  Appraised values are adjusted down for costs associated with asset disposal.  When a loan is deemed to be impaired, the full difference between book value and the most likely estimate of the asset’s net realizable value is charged off.

LOAN COMPOSITION -FLORIDA	9/30/2010		6/30/2010		3/31/2010		12/31/2009		9/30/2009
Loans secured by real estate:
Construction, land development and other land loans	$	145,907	$	173,932	$	183,670	$	198,906	$	211,974
Secured by 1-4 family residential properties		73,738		77,680		81,297		87,282		92,088
Secured by nonfarm, nonresidential properties		184,992		178,297		179,637		180,267		182,548
Other real estate secured		12,223		8,062		5,195		5,388		12,891
Commercial and industrial loans		17,512		25,254		22,100		19,869		19,762
Consumer loans		1,636		1,756		2,077		2,287		2,276
Other loans		28,194		29,354		29,480		29,655		29,880
Loans	$	464,202	$	494,335	$	503,456	$	523,654	$	551,419
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS - FLORIDA
Lots	$	48,700	$	54,406	$	57,436	$	61,725	$	63,645
Development		24,060		24,632		27,381		27,227		28,376
Unimproved land		61,676		69,003		71,271		76,762		83,437
1-4 family construction		7,864		9,148		10,247		10,929		13,237
Other construction		3,607		16,743		17,335		22,263		23,279
Construction, land development and other land loans	$	145,907	$	173,932	$	183,670	$	198,906	$	211,974

  TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS September 30, 2010 ($ in thousands) (unaudited)

Note 3 – Stockholders’ Equity

Common Stock Offering

On December 7, 2009, Trustmark completed a public offering of 6,216,216 shares of its common stock, including 810,810 shares issued pursuant to the exercise of the underwriters’ over-allotment option, at a price of $18.50 per share. Trustmark received net proceeds of approximately $109.3 million after deducting underwriting discounts, commissions and estimated offering expenses.  Proceeds from this offering were used in the redemption of preferred stock discussed below.

Repurchase of Preferred Stock

On November 21, 2008, Trustmark issued 215,000 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A, (Senior Preferred Stock) to the U.S. Treasury (Treasury) in a private placement transaction as part of the Troubled Assets Relief Program Capital Purchase Program (TARP CPP), a voluntary initiative for healthy U.S. financial institutions. As part of its participation in the TARP CPP, Trustmark also issued to the Treasury a ten-year warrant (the Warrant) to purchase up to 1,647,931 shares of Trustmark’s common stock, at an initial exercise price of $19.57 per share, subject to customary anti-dilution adjustments.

On December 9, 2009, Trustmark completed the repurchase of its 215,000 shares of Senior Preferred Stock from the Treasury at a purchase price of $215.0 million plus a final accrued dividend of $716.7 thousand.  The repurchase of the Senior Preferred Stock resulted in a one-time, non-cash charge of approximately $8.2 million to net income available to common shareholders in Trustmark’s fourth quarter financial statements for the unaccreted discount recorded at the date of issuance of the Senior Preferred Stock.  In addition, on December 30, 2009, Trustmark repurchased in full from the Treasury, the Warrant to purchase 1,647,931 shares of Trustmark’s common stock, which was issued to the Treasury pursuant to the TARP CPP.  The purchase price paid by Trustmark to the Treasury for the Warrant was i ts fair value of $10.0 million.

Note 4 – 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															Nine Months Ended
	9/30/2010			6/30/2010			3/31/2010			12/31/2009			9/30/2009			9/30/2010			9/30/2009
Securities – Taxable		4.11	%		4.50	%		4.73	%		4.82	%		4.94	%		4.44	%		5.11	%
Securities – Nontaxable		5.51	%		5.65	%		5.82	%		5.82	%		5.96	%		5.66	%		6.26	%
Securities – Total		4.22	%		4.59	%		4.82	%		4.91	%		5.02	%		4.54	%		5.19	%
Loans		5.31	%		5.37	%		5.32	%		5.31	%		5.32	%		5.33	%		5.34	%
FF Sold & Rev Repo		0.42	%		0.38	%		0.31	%		0.45	%		0.50	%		0.37	%		0.44	%
Other Earning Assets		3.92	%		3.79	%		3.36	%		3.38	%		3.44	%		3.66	%		3.16	%
Total Earning Assets		5.04	%		5.18	%		5.19	%		5.21	%		5.24	%		5.14	%		5.29	%
Interest-bearing Deposits		0.84	%		0.90	%		1.01	%		1.21	%		1.33	%		0.92	%		1.51	%
FF Pch & Repo		0.22	%		0.21	%		0.15	%		0.15	%		0.17	%		0.19	%		0.19	%
Borrowings		2.01	%		2.02	%		1.64	%		1.57	%		1.54	%		1.87	%		1.35	%
Total Interest-bearing Liabilities		0.85	%		0.91	%		0.97	%		1.14	%		1.23	%		0.91	%		1.37	%
Net interest margin		4.39	%		4.47	%		4.42	%		4.33	%		4.28	%		4.43	%		4.22	%

During the third quarter of 2010, the net interest margin decreased 8 basis points to 4.39%, from 4.47% for the second quarter of 2010. The decrease is primarily a result of the downward repricing of fixed-rate assets, mostly within Trustmark's investment securities portfolio, which was partially offset by declines in interest-bearing deposit costs.

Note 5 – Other Noninterest Expense

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

	Quarter Ended										Nine Months Ended
	9/30/2010		6/30/2010		3/31/2010		12/31/2009		9/30/2009		9/30/2010		9/30/2009
FDIC assessment expense	$	3,037	$	3,035	$	3,147	$	2,865	$	2,913	$	9,219	$	12,943
ORE/Foreclosure expense		8,728		9,278		3,061		3,626		5,871		21,067		9,234
Other expense		8,598		9,146		7,707		7,881		8,731		25,451		25,653
Total other expense	$	20,363	$	21,459	$	13,915	$	14,372	$	17,515	$	55,737	$	47,830

Note 6 – Mortgage Banking

Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and exchange-traded option contracts, to achieve a fair value return that offsets the changes in fair value of MSR attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting.  Changes in the fair value of these exchange-traded derivative instruments are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of MSR.  The MSR fair value represents the effect of present value decay and the effect of changes in interest rates.  Ineffectiveness of hedging the MSR fair value is measured by comparing the total hedge cost to the changes in the fair value of the MSR asset a ttributable to interest rate changes.  The impact of this strategy resulted in a net positive ineffectiveness of $2.9 million and $2.1 million for the quarters ended September 30, 2010 and 2009, respectively.  For the nine months ended September 30, 2010 and 2009, the impact was a net positive ineffectiveness of $7.6 million and a net negative ineffectiveness of $0.4 million, respectively.  The accompanying table shows that the MSR value decreased $3.1 million for the quarter ended September 30, 2010 primarily due to a decline in mortgage rates.  More than offsetting the MSR change is a $6.0 million increase in the value of derivative instruments primarily due to a decline in the 10-year Treasury note yield.

  TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS September 30, 2010 ($ in thousands) (unaudited)

Note 6 – Mortgage Banking (continued)

The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements:

	Quarter Ended															Nine Months Ended
	9/30/2010			6/30/2010			3/31/2010			12/31/2009			9/30/2009			9/30/2010			9/30/2009
Mortgage servicing income, net	$	3,406		$	3,495		$	3,449		$	3,763		$	4,092		$	10,350		$	12,122
Change in fair value-MSR from runoff		(2,255	)		(1,374	)		(1,170	)		(1,219	)		(1,608	)		(4,799	)		(7,348	)
Gain on sales of loans, net		3,911			1,897			3,755			3,738			4,081			9,563			17,017
Other, net		1,919			1,193			(1,002	)		(139	)		179			2,110			961
Mortgage banking income before hedge ineffectiveness		6,981			5,211			5,032			6,143			6,744			17,224			22,752
Change in fair value-MSR from market changes		(3,115	)		(8,631	)		(3,067	)		2,710			(9,344	)		(14,813	)		3,897
Change in fair value of derivatives		5,995			12,330			4,107			(2,301	)		11,471			22,432			(4,328	)
Net positive (negative) hedge ineffectiveness		2,880			3,699			1,040			409			2,127			7,619			(431	)
Mortgage banking, net	$	9,861		$	8,910		$	6,072		$	6,552		$	8,871		$	24,843		$	22,321

During the first quarter of 2010, Trustmark completed the final settlement of the sale of approximately $920.9 million in mortgages serviced for others, which reduced Trustmark’s MSR by approximately $8.5 million.   The effect of this transaction did not have a material impact on Trustmark's results of operations.

Note 7 – Non-GAAP Financial Measures

In addition to capital ratios defined by generally accepted accounting principles (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 September 30, 2010 ($ in thousands) (unaudited)

Note 7 - Non-GAAP Financial Measures (continued)
			Quarter Ended															Nine Months Ended
			9/30/2010			6/30/2010			3/31/2010			12/31/2009			9/30/2009			9/30/2010			9/30/2009
TANGIBLE COMMON EQUITY
AVERAGE BALANCES
Total shareholders' equity			$	1,155,054		$	1,138,935		$	1,123,356		$	1,205,712		$	1,216,987		$	1,139,231		$	1,205,619
Less:	Preferred stock			-			-			-			(157,270	)		(206,308	)		-			(205,865	)
Total average common equity				1,155,054			1,138,935			1,123,356			1,048,442			1,010,679			1,139,231			999,754
Less:	Goodwill			(291,104	)		(291,104	)		(291,104	)		(291,104	)		(291,104	)		(291,104	)		(291,104	)
	Identifiable intangible assets			(17,716	)		(18,596	)		(19,484	)		(20,426	)		(21,430	)		(18,594	)		(22,424	)
Total average tangible common equity			$	846,234		$	829,235		$	812,768		$	736,912		$	698,145		$	829,533		$	686,226
PERIOD END BALANCES
Total shareholders' equity			$	1,158,792		$	1,142,380		$	1,128,529		$	1,110,060		$	1,221,361
Less:	Preferred stock			-			-			-			-			(206,461	)
Total common equity				1,158,792			1,142,380			1,128,529			1,110,060			1,014,900
Less:	Goodwill			(291,104	)		(291,104	)		(291,104	)		(291,104	)		(291,104	)
	Identifiable intangible assets			(17,181	)		(18,062	)		(18,944	)		(19,825	)		(20,819	)
Total tangible common equity		(a)	$	850,507		$	833,214		$	818,481		$	799,131		$	702,977
TANGIBLE ASSETS
Total assets			$	9,416,905		$	9,244,545		$	9,293,215		$	9,526,018		$	9,368,498
Less:	Goodwill			(291,104	)		(291,104	)		(291,104	)		(291,104	)		(291,104	)
	Identifiable intangible assets			(17,181	)		(18,062	)		(18,944	)		(19,825	)		(20,819	)
Total tangible assets		(b)	$	9,108,620		$	8,935,379		$	8,983,167		$	9,215,089		$	9,056,575
Risk-weighted assets		(c)	$	6,653,479		$	6,658,897		$	6,737,084		$	6,918,802		$	6,923,907
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income available to common shareholders			$	25,860		$	26,161		$	23,455		$	13,877		$	22,370		$	75,476		$	59,172
Plus:	Intangible amortization net of tax			545			545			545			614			619			1,635			1,855
Net income adjusted for intangible amortization			$	26,405		$	26,706		$	24,000		$	14,491		$	22,989		$	77,111		$	61,027
Period end common shares outstanding		(d)		63,885,959			63,885,403			63,844,500			63,673,839			57,440,047
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible common equity 1				12.38	%		12.92	%		11.98	%		7.80	%		13.06	%		12.43	%		11.89	%
Tangible common equity/tangible assets		(a)/(b)		9.34	%		9.32	%		9.11	%		8.67	%		7.76	%
Tangible common equity/risk-weighted assets		(a)/(c)		12.78	%		12.51	%		12.15	%		11.55	%		10.15	%
Tangible common book value		(a)/(d)*1,000	$	13.31		$	13.04		$	12.82		$	12.55		$	12.24
TIER 1 COMMON RISK-BASED CAPITAL
Total shareholders' equity			$	1,158,792		$	1,142,380		$	1,128,529		$	1,110,060		$	1,221,361
Eliminate qualifying AOCI				(9,648	)		(5,404	)		(4,464	)		1,624			(3,072	)
Qualifying tier 1 capital				68,000			68,000			68,000			68,000			68,000
Disallowed goodwill				(291,104	)		(291,104	)		(291,104	)		(291,104	)		(291,104	)
Adj to goodwill allowed for deferred taxes				9,863			9,510			9,158			8,805			8,453
Other disallowed intangibles				(17,181	)		(18,062	)		(18,944	)		(19,825	)		(20,819	)
Disallowed servicing intangible				(4,197	)		(4,304	)		(5,004	)		(5,051	)		(5,604	)
Total tier 1 capital			$	914,525		$	901,016		$	886,171		$	872,509		$	977,215
Less:	Qualifying tier 1 capital			(68,000	)		(68,000	)		(68,000	)		(68,000	)		(68,000	)
	Preferred stock			-			-			-			-			(206,461	)
Total tier 1 common capital		(e)	$	846,525		$	833,016		$	818,171		$	804,509		$	702,754
Tier 1 common risk-based capital ratio		(e)/(c)		12.72	%		12.51	%		12.14	%		11.63	%		10.15	%
1Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible common equity