Trustmark (TRMK) 8-K Trustmark Corporation Announces Third Quarter 2013 Financial Results

  News Release

Trustmark Corporation Announces Third Quarter 2013 Financial Results

and Declares $0.23 Quarterly Dividend

JACKSON, Miss. – October 22, 2013 – Trustmark Corporation (NASDAQ:TRMK) announced net income available to common shareholders of $33.0 million in the third quarter of 2013, which resulted in diluted earnings per common share of $0.49, an increase of 6.5% from the prior quarter as well as from levels one year earlier.  Trustmark’s performance during the quarter produced a return on average tangible common equity of 14.92% and a return on average assets of 1.11%.  During the first nine months of 2013, Trustmark’s net income available to common shareholders totaled $89.0 million, or $1.33 per common share.   Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per common share payable December 15, 2013, to shareholders of record on December 1, 2013.

Gerard R. Host, President and CEO, stated, “Trustmark posted another quarter of solid financial results.  Total revenue increased to $145.6 million, reflecting the success of our recent merger with BancTrust as well as expanding customer relationships in our legacy banking, wealth management and insurance businesses.  We also continued to benefit from improvements in credit quality.  During the quarter, we completed our previously announced purchase of two branch offices in Oxford, Mississippi, and are pleased to provide our newest customers with an expanded array of financial services.  Thanks to our dedicated associates, solid profitability and strong capital base, we are well-positioned to continue providing value for our customers and shareholders.”

Credit Quality

·   Nonperforming assets declined 1.2% during third quarter

·   Improved credit quality reflected in nominal net charge-offs and negative provisioning

Nonperforming loans totaled $73.4 million at September 30, 2013, a decline of 1.3% from the prior quarter, while foreclosed other real estate totaled $116.3 million, a decline of 1.2% from the prior quarter.  Collectively, nonperforming assets totaled $189.7 million at September 30, 2013, a decrease of 1.2% from the prior quarter.

During the third quarter charge-offs exceeded recoveries, resulting in net charge-offs of $569 thousand, which represented 0.04% of average loans, excluding acquired loans.  This compares to net recoveries of $771 thousand, or -0.05% of average loans, in the prior quarter.  The provision for loan losses for loans held for investment was a negative $3.6 million in the third quarter resulting from the quarterly updated quantitative reserve factors and improved credit quality.

Allocation of Trustmark’s $68.6 million allowance for loan losses represented 1.39% of commercial loans and 0.73% of consumer and home mortgage loans, resulting in an allowance to total loans held for investment of 1.20% at September 30, 2013, which represents a level management considers commensurate with the inherent risk in the loan portfolio.  The allowance for loan losses represented 162.0% of nonperforming loans, excluding impaired loans.

All of the above credit metrics exclude acquired loans and other real estate covered by FDIC loss-share agreement.

Balance Sheet Management

·   Loans held for investment increased $119.3 million

·   Net interest income (FTE) totaled $102.1 million, resulting in 3.94% net interest margin

Loans held for investment totaled $5.7 billion at September 30, 2013, an increase of $119.3 million, or 2.1%, from the prior quarter.  From a geographic perspective, loans in Trustmark’s Mississippi, Alabama, Texas and Tennessee markets expanded $71.8 million, $34.3 million, $13.8 million, and $5.2 million, respectively, while loans in Trustmark’s Florida market declined $5.7 million.

Loan growth was also diversified by loan type.  During the third quarter, Trustmark’s 1-4 family mortgage loan portfolio increased $68.1 million while construction lending expanded $52.8 million due to growth in Trustmark’s Mississippi, Texas and Alabama markets.  Increased lending to public entities in Mississippi and Tennessee was reflected in other loan growth of $25.4 million. Consumer lending increased $4.3 million principally due to growth in Trustmark’s Alabama market.  Other real estate secured loans expanded $3.8 million as growth in Trustmark’s Tennessee market was partially offset by declines in Mississippi. Commercial real estate loans increased $1.4 million as growth in Alabama and Texas was largely offset by declines in other Trustmark markets.  Commercial and industrial loans declined $36.5 million, as growth in Alabama was more than offset by declines in Trustmark’s other markets during the quarter.

During the third quarter of 2013, average earning assets remained stable at $10.3 billion; average deposits totaled $9.7 billion, down $80.8 million, or 0.8%, from the prior quarter.  Average noninterest-bearing deposits increased 1.1% to represent 25.6% of average deposits in the third quarter of 2013.

Net interest income (FTE) in the third quarter totaled $102.1 million, a decrease of $834 thousand from the prior quarter, and resulted in an eight basis point contraction of the net interest margin to 3.94%, principally attributable to lower recoveries on acquired loans.   Excluding acquired loans, the net interest margin in the third quarter totaled 3.52% compared to 3.55% in the prior quarter.

Capital Strength

·   Total risk-based capital ratio expands to 14.02%

·   Tangible common equity totaled $912.6 million

Trustmark’s solid capital position reflects the consistent profitability of its diversified financial services businesses as well as prudent balance sheet management.  At September 30, 2013, Trustmark’s tangible common equity to tangible assets ratio was 8.01% while the total risk-based capital ratio was 14.02%, significantly exceeding the 10.00% benchmark to be classified as “well-capitalized.”  Trustmark’s solid capital base provides the opportunity to support organic loan growth in an improving economy and enhance long-term shareholder value.

Noninterest Income

·   Noninterest income totaled $47.1 million, up 7.8% from prior quarter

·   Service charges increased $923 thousand from prior quarter to $13.9 million

Reflecting the continued success of Trustmark’s diversified financial services businesses, noninterest income totaled $47.1 million during the third quarter, an increase of $3.4 million, or 7.8%, from the prior quarter.   Service charges on deposit accounts totaled $13.9 million in the third quarter, an increase of 7.1% from the prior quarter due in part to seasonality.  Bank card and other fees totaled $8.9 million in the third quarter, a decrease of $578 thousand from the prior quarter resulting principally from a decline in commercial credit related fee income.

Mortgage loan production in the third quarter totaled $357.8 million, down 15.7% from the prior quarter due principally to the decline in refinancing activity following an extended low interest rate environment.  Despite a decline in mortgage production levels, the profitability of Trustmark’s mortgage banking unit increased 1.7% from the prior quarter to $8.4 million.  This level of performance reflected increased mortgage servicing income and effective mortgage servicing hedging strategies that were offset in part by reduced secondary marketing gains.

Insurance revenue totaled $8.2 million in the third quarter of 2013, an increase of 2.7% from the prior quarter due to expanded commercial insurance sales as well as the continued firming of insurance rates.  Wealth management income totaled $7.5 million in the third quarter, an increase of 8.4% from the prior quarter, reflecting expanded trust management revenue and brokerage sales.

Other income in the third quarter increased $2.3 million relative to the prior quarter; results in the second quarter included a $2.3 million write-off of the FDIC indemnification asset resulting from the re-estimation of cash flows and loan payoffs.

Noninterest Expense

·   Operating expense remained well-controlled

·   Continued realignment of branch network to enhance efficiency and revenue growth

Noninterest expense totaled $101.5 million in the third quarter, a decline of $5.7 million from the prior quarter.  Excluding non-routine litigation expense of $4.0 million in the second quarter, noninterest expense declined $1.7 million.  Excluding ORE/foreclosure expense and amortization of intangibles, noninterest expense totaled $95.9 million in the third quarter, relatively unchanged from the prior quarter.

Salary and employee benefit expense totaled $56.0 million in the third quarter, an increase of $638 thousand, or 1.2%, from the prior quarter.  This increase resulted in part from additional pension costs related to settlement charges for retirees electing lump sum distributions.  Services and fees increased $764 thousand relative to the prior quarter due to additional data processing and communication expense.

Trustmark continued realignment of its branch network to enhance productivity and efficiency as well as promote additional revenue growth. During the third quarter, Trustmark announced plans to consolidate six additional banking centers – two each in Alabama, Mississippi, and Houston, Texas.  The closure of these offices with limited growth opportunities will occur during the fourth quarter of 2013.  As previously announced, eight offices were consolidated earlier this year, including five overlapping offices in the Florida Panhandle during the second quarter.  Thus far in 2013, Trustmark opened three new banking offices – one each in Houston, Jackson, and Memphis.  In addition, Trustmark completed the purchase of two branch offices serving the Oxford, Mississippi market during the third quarter of 2013.  Trustmark is committed to investments to support profitable revenue growth as well as reengineering and efficiency opportunities to enhance shareholder value.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, October 23, 2013, at 10:00 a.m. Central Time to discuss the Corporation’s financial results.  Interested parties may listen to the conference call by dialing (877) 317-6789, passcode 10008303, 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 Wednesday, November 6, 2013, in archived format at the same web address or by calling (877) 344-7529, passcode 10008303.

Trustmark Corporation is a financial services company providing banking and financial solutions through 214 offices in Alabama, 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 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. 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 pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, including the potential impact of the European financial crisis on the U.S. economy and the markets we serve, 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 acquisitions or 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 developmentsor 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, 2013 ($ in thousands) (unaudited)

										Linked Quarter						Year over Year
QUARTERLY AVERAGE BALANCES	9/30/2013			6/30/2013			9/30/2012			$ Change			% Change			$ Change			% Change
Securities AFS-taxable	$	3,279,606		$	3,259,086		$	2,409,292		$	20,520			0.6	%	$	870,314			36.1	%
Securities AFS-nontaxable		172,055			171,974			169,037			81			0.0	%		3,018			1.8	%
Securities HTM-taxable		59,168			59,678			28,333			(510	)		-0.9	%		30,835			n/m
Securities HTM-nontaxable		11,024			11,520			18,361			(496	)		-4.3	%		(7,337	)		-40.0	%
Total securities		3,521,853			3,502,258			2,625,023			19,595			0.6	%		896,830			34.2	%
Loans (including loans held for sale)		5,784,170			5,735,296			5,886,447			48,874			0.9	%		(102,277	)		-1.7	%
Acquired loans:
Noncovered loans		888,883			949,367			88,562			(60,484	)		-6.4	%		800,321			n/m
Covered loans		39,561			43,425			65,259			(3,864	)		-8.9	%		(25,698	)		-39.4	%
Fed funds sold and rev repos		8,978			6,808			6,583			2,170			31.9	%		2,395			36.4	%
Other earning assets		38,226			34,752			31,758			3,474			10.0	%		6,468			20.4	%
Total earning assets		10,281,671			10,271,906			8,703,632			9,765			0.1	%		1,578,039			18.1	%
Allowance for loan losses		(79,696	)		(84,574	)		(86,865	)		4,878			-5.8	%		7,169			-8.3	%
Cash and due from banks		272,320			284,056			236,566			(11,736	)		-4.1	%		35,754			15.1	%
Other assets		1,284,813			1,311,262			958,030			(26,449	)		-2.0	%		326,783			34.1	%
Total assets	$	11,759,108		$	11,782,650		$	9,811,363		$	(23,542	)		-0.2	%	$	1,947,745			19.9	%
Interest-bearing demand deposits	$	1,842,379		$	1,811,402		$	1,534,244		$	30,977			1.7	%	$	308,135			20.1	%
Savings deposits		2,995,110			3,060,437			2,348,413			(65,327	)		-2.1	%		646,697			27.5	%
Time deposits less than $100,000		1,380,954			1,419,381			1,150,620			(38,427	)		-2.7	%		230,334			20.0	%
Time deposits of $100,000 or more		993,948			1,029,498			781,926			(35,550	)		-3.5	%		212,022			27.1	%
Total interest-bearing deposits		7,212,391			7,320,718			5,815,203			(108,327	)		-1.5	%		1,397,188			24.0	%
Fed funds purchased and repos		364,446			312,865			374,885			51,581			16.5	%		(10,439	)		-2.8	%
Short-term borrowings		59,324			51,718			81,773			7,606			14.7	%		(22,449	)		-27.5	%
Long-term FHLB advances		8,620			9,575			-			(955	)		-10.0	%		8,620			n/m
Subordinated notes		49,890			49,882			49,858			8			0.0	%		32			0.1	%
Junior subordinated debt securities		61,856			82,460			61,856			(20,604	)		-25.0	%		-			0.0	%
Total interest-bearing liabilities		7,756,527			7,827,218			6,383,575			(70,691	)		-0.9	%		1,372,952			21.5	%
Noninterest-bearing deposits		2,479,082			2,451,547			2,039,729			27,535			1.1	%		439,353			21.5	%
Other liabilities		190,143			159,525			114,454			30,618			19.2	%		75,689			66.1	%
Total liabilities		10,425,752			10,438,290			8,537,758			(12,538	)		-0.1	%		1,887,994			22.1	%
Shareholders' equity		1,333,356			1,344,360			1,273,605			(11,004	)		-0.8	%		59,751			4.7	%
Total liabilities and equity	$	11,759,108		$	11,782,650		$	9,811,363		$	(23,542	)		-0.2	%	$	1,947,745			19.9	%
										Linked Quarter						Year over Year
PERIOD END BALANCES	9/30/2013			6/30/2013			9/30/2012			$ Change			% Change			$ Change			% Change
Cash and due from banks	$	335,695		$	301,532		$	209,188		$	34,163			11.3	%	$	126,507			60.5	%
Fed funds sold and rev repos		7,867			7,869			5,295			(2	)		0.0	%		2,572			48.6	%
Securities available for sale		3,372,101			3,511,683			2,724,446			(139,582	)		-4.0	%		647,655			23.8	%
Securities held to maturity		69,980			70,338			45,484			(358	)		-0.5	%		24,496			53.9	%
Loans held for sale (LHFS)		119,986			202,699			324,897			(82,713	)		-40.8	%		(204,911	)		-63.1	%
Loans held for investment (LHFI)		5,696,641			5,577,382			5,527,963			119,259			2.1	%		168,678			3.1	%
Allowance for loan losses		(68,632	)		(72,825	)		(83,526	)		4,193			-5.8	%		14,894			-17.8	%
Net LHFI		5,628,009			5,504,557			5,444,437			123,452			2.2	%		183,572			3.4	%
Acquired loans:
Noncovered loans		837,875			922,453			83,110			(84,578	)		-9.2	%		754,765			n/m
Covered loans		37,250			40,820			64,503			(3,570	)		-8.7	%		(27,253	)		-42.3	%
Allowance for loan losses, acquired loans		(5,333	)		(2,690	)		(4,343	)		(2,643	)		98.3	%		(990	)		22.8	%
Net acquired loans		869,792			960,583			143,270			(90,791	)		-9.5	%		726,522			n/m
Net LHFI and acquired loans		6,497,801			6,465,140			5,587,707			32,661			0.5	%		910,094			16.3	%
Premises and equipment, net		208,837			210,845			155,467			(2,008	)		-1.0	%		53,370			34.3	%
Mortgage servicing rights		63,150			60,380			44,211			2,770			4.6	%		18,939			42.8	%
Goodwill		372,463			368,315			291,104			4,148			1.1	%		81,359			27.9	%
Identifiable intangible assets		44,424			46,889			18,327			(2,465	)		-5.3	%		26,097			n/m
Other real estate, excluding covered other real estate		116,329			117,712			82,475			(1,383	)		-1.2	%		33,854			41.0	%
Covered other real estate		5,092			5,147			5,722			(55	)		-1.1	%		(630	)		-11.0	%
FDIC indemnification asset		17,085			17,342			23,979			(257	)		-1.5	%		(6,894	)		-28.8	%
Other assets		574,387			477,421			353,857			96,966			20.3	%		220,530			62.3	%
Total assets	$	11,805,197		$	11,863,312		$	9,872,159		$	(58,115	)		-0.5	%	$	1,933,038			19.6	%
Deposits:
Noninterest-bearing	$	2,643,612		$	2,520,895		$	2,118,853		$	122,717			4.9	%	$	524,759			24.8	%
Interest-bearing		7,143,622			7,296,697			5,685,188			(153,075	)		-2.1	%		1,458,434			25.7	%
Total deposits		9,787,234			9,817,592			7,804,041			(30,358	)		-0.3	%		1,983,193			25.4	%
Fed funds purchased and repos		342,465			374,021			408,711			(31,556	)		-8.4	%		(66,246	)		-16.2	%
Short-term borrowings		60,698			56,645			83,612			4,053			7.2	%		(22,914	)		-27.4	%
Long-term FHLB advances		8,562			8,679			-			(117	)		-1.3	%		8,562			n/m
Subordinated notes		49,896			49,888			49,863			8			0.0	%		33			0.1	%
Junior subordinated debt securities		61,856			61,856			61,856			-			0.0	%		-			0.0	%
Other liabilities		164,972			167,812			186,061			(2,840	)		-1.7	%		(21,089	)		-11.3	%
Total liabilities		10,475,683			10,536,493			8,594,144			(60,810	)		-0.6	%		1,881,539			21.9	%
Common stock		13,998			13,994			13,496			4			0.0	%		502			3.7	%
Capital surplus		343,759			342,359			284,089			1,400			0.4	%		59,670			21.0	%
Retained earnings		1,023,983			1,006,554			973,182			17,429			1.7	%		50,801			5.2	%
Accum other comprehensive
(loss) income, net of tax		(52,226	)		(36,088	)		7,248			(16,138	)		44.7	%		(59,474	)		n/m
Total shareholders' equity		1,329,514			1,326,819			1,278,015			2,695			0.2	%		51,499			4.0	%
Total liabilities and equity	$	11,805,197		$	11,863,312		$	9,872,159		$	(58,115	)		-0.5	%	$	1,933,038			19.6	%
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, 2013 ($ in thousands except per share data) (unaudited)

		Quarter Ended									Linked Quarter						Year over Year
INCOME STATEMENTS		9/30/2013			6/30/2013			9/30/2012			$ Change			% Change			$ Change			% Change
Interest and fees on LHFS & LHFI-FTE		$	68,417		$	67,750		$	72,554		$	667			1.0	%	$	(4,137	)		-5.7	%
Interest and fees on acquired loans			19,183			20,987			5,229			(1,804	)		-8.6	%		13,954			n/m
Interest on securities-taxable			18,654			18,547			15,909			107			0.6	%		2,745			17.3	%
Interest on securities-tax exempt-FTE			1,960			1,974			2,089			(14	)		-0.7	%		(129	)		-6.2	%
Interest on fed funds sold and rev repos			8			5			6			3			60.0	%		2			33.3	%
Other interest income			372			372			339			-			0.0	%		33			9.7	%
Total interest income-FTE			108,594			109,635			96,126			(1,041	)		-0.9	%		12,468			13.0	%
Interest on deposits			4,970			5,071			5,725			(101	)		-2.0	%		(755	)		-13.2	%
Interest on fed funds pch and repos			106			88			135			18			20.5	%		(29	)		-21.5	%
Other interest expense			1,389			1,513			1,358			(124	)		-8.2	%		31			2.3	%
Total interest expense			6,465			6,672			7,218			(207	)		-3.1	%		(753	)		-10.4	%
Net interest income-FTE			102,129			102,963			88,908			(834	)		-0.8	%		13,221			14.9	%
Provision for loan losses, LHFI			(3,624	)		(4,846	)		3,358			1,222			-25.2	%		(6,982	)		n/m
Provision for loan losses, acquired loans			3,292			(1,552	)		2,105			4,844			n/m			1,187			56.4	%
Net interest income after provision-FTE			102,461			109,361			83,445			(6,900	)		-6.3	%		19,016			22.8	%
Service charges on deposit accounts			13,852			12,929			13,135			923			7.1	%		717			5.5	%
Insurance commissions			8,227			8,014			7,533			213			2.7	%		694			9.2	%
Wealth management			7,520			6,940			5,612			580			8.4	%		1,908			34.0	%
Bank card and other fees			8,929			9,507			6,924			(578	)		-6.1	%		2,005			29.0	%
Mortgage banking, net			8,440			8,295			11,150			145			1.7	%		(2,710	)		-24.3	%
Other, net			165			(2,145	)		512			2,310			n/m			(347	)		-67.8	%
Nonint inc-excl sec gains (losses), net			47,133			43,540			44,866			3,593			8.3	%		2,267			5.1	%
Security gains (losses), net			-			174			(1	)		(174	)		-100.0	%		1			-100.0	%
Total noninterest income	��		47,133			43,714			44,865			3,419			7.8	%		2,268			5.1	%
Salaries and employee benefits			56,043			55,405			47,404			638			1.2	%		8,639			18.2	%
Services and fees			13,580			12,816			11,682			764			6.0	%		1,898			16.2	%
Net occupancy-premises			6,644			6,703			5,352			(59	)		-0.9	%		1,292			24.1	%
Equipment expense			6,271			6,193			5,095			78			1.3	%		1,176			23.1	%
FDIC assessment expense			2,376			2,376			1,826			-			0.0	%		550			30.1	%
ORE/Foreclosure expense			3,079			5,131			1,702			(2,052	)		-40.0	%		1,377			80.9	%
Other expense			13,531			18,571			10,399			(5,040	)		-27.1	%		3,132			30.1	%
Total noninterest expense			101,524			107,195			83,460			(5,671	)		-5.3	%		18,064			21.6	%
Income before income taxes and tax eq adj			48,070			45,880			44,850			2,190			4.8	%		3,220			7.2	%
Tax equivalent adjustment			3,700			3,735			3,629			(35	)		-0.9	%		71			2.0	%
Income before income taxes			44,370			42,145			41,221			2,225			5.3	%		3,149			7.6	%
Income taxes			11,336			11,024			11,317			312			2.8	%		19			0.2	%
Net income available to common shareholders		$	33,034		$	31,121		$	29,904		$	1,913			6.1	%	$	3,130			10.5	%
Per common share data
Earnings per share - basic		$	0.49		$	0.46		$	0.46		$	0.03			6.5	%	$	0.03			6.5	%
Earnings per share - diluted		$	0.49		$	0.46		$	0.46		$	0.03			6.5	%	$	0.03			6.5	%
Dividends per share		$	0.23		$	0.23		$	0.23		$	-			0.0	%	$	-			0.0	%
Weighted average common shares outstanding
Basic			67,177,013			67,162,530			64,778,329
Diluted			67,382,478			67,344,117			64,992,614
Period end common shares outstanding			67,181,694			67,163,195			64,779,937
OTHER FINANCIAL DATA
Return on common equity			9.83	%		9.29	%		9.34	%
Return on average tangible common equity			14.92	%		14.09	%		12.61	%
Return on assets			1.11	%		1.06	%		1.21	%
Interest margin - Yield - FTE			4.19	%		4.28	%		4.39	%
Interest margin - Cost			0.25	%		0.26	%		0.33	%
Net interest margin - FTE			3.94	%		4.02	%		4.06	%
Efficiency ratio (1)			68.02	%		70.44	%		62.39	%
Full-time equivalent employees			3,110			3,119			2,632
COMMON STOCK PERFORMANCE
Market value-Close		$	25.60		$	24.58		$	24.34
Common book value		$	19.79		$	19.76		$	19.73
Tangible common book value		$	13.58		$	13.57		$	14.95
(1) - Excludes nonrecurring income and expense items such as securities gains or losses, bargain purchase gains and non-routine acquisition related transaction expenses.
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, 2013 ($ in thousands) (unaudited)

	Quarter Ended									Linked Quarter						Year over Year
NONPERFORMING ASSETS(1)	9/30/2013			6/30/2013			9/30/2012			$ Change			% Change			$ Change			% Change
Nonaccrual loans
Alabama	$	81		$	73		$	-		$	8			11.0	%	$	81			n/m
Florida		14,619			15,916			21,456			(1,297	)		-8.1	%		(6,837	)		-31.9	%
Mississippi (2)		43,132			41,761			32,041			1,371			3.3	%		11,091			34.6	%
Tennessee (3)		5,596			4,482			7,388			1,114			24.9	%		(1,792	)		-24.3	%
Texas		9,953			12,086			19,773			(2,133	)		-17.6	%		(9,820	)		-49.7	%
Total nonaccrual loans		73,381			74,318			80,658			(937	)		-1.3	%		(7,277	)		-9.0	%
Other real estate
Alabama		25,308			27,245			-			(1,937	)		-7.1	%		25,308			n/m
Florida		39,198			35,025			22,340			4,173			11.9	%		16,858			75.5	%
Mississippi (2)		25,439			26,843			27,113			(1,404	)		-5.2	%		(1,674	)		-6.2	%
Tennessee (3)		14,615			15,811			18,545			(1,196	)		-7.6	%		(3,930	)		-21.2	%
Texas		11,769			12,788			14,477			(1,019	)		-8.0	%		(2,708	)		-18.7	%
Total other real estate		116,329			117,712			82,475			(1,383	)		-1.2	%		33,854			41.0	%
Total nonperforming assets	$	189,710		$	192,030		$	163,133		$	(2,320	)		-1.2	%	$	26,577			16.3	%
LOANS PAST DUE OVER 90 DAYS(4)
LHFI	$	2,344		$	4,194		$	5,699		$	(1,850	)		-44.1	%	$	(3,355	)		-58.9	%
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	18,432		$	14,003		$	39,492		$	4,429			31.6	%	$	(21,060	)		-53.3	%
	Quarter Ended									Linked Quarter						Year over Year
ALLOWANCE FOR LOAN LOSSES (4)	9/30/2013			6/30/2013			9/30/2012			$ Change			% Change			$ Change			% Change
Beginning Balance	$	72,825		$	76,900		$	84,809		$	(4,075	)		-5.3	%	$	(11,984	)		-14.1	%
Provision for loan losses		(3,624	)		(4,846	)		3,358			1,222			-25.2	%		(6,982	)		n/m
Charge-offs		(3,817	)		(3,031	)		(7,907	)		(786	)		25.9	%		4,090			-51.7	%
Recoveries		3,248			3,802			3,266			(554	)		-14.6	%		(18	)		-0.6	%
Net (charge-offs) recoveries		(569	)		771			(4,641	)		(1,340	)		n/m			4,072			-87.7	%
Ending Balance	$	68,632		$	72,825		$	83,526		$	(4,193	)		-5.8	%	$	(14,894	)		-17.8	%
PROVISION FOR LOAN LOSSES (4)
Alabama	$	550		$	232		$	-		$	318			n/m		$	550			n/m
Florida		(2,642	)		(3,425	)		7			783			-22.9	%		(2,649	)		n/m
Mississippi (2)		(1,051	)		(520	)		466			(531	)		n/m			(1,517	)		n/m
Tennessee (3)		(150	)		(335	)		687			185			-55.2	%		(837	)		n/m
Texas		(331	)		(798	)		2,198			467			-58.5	%		(2,529	)		n/m
Total provision for loan losses	$	(3,624	)	$	(4,846	)	$	3,358		$	1,222			-25.2	%	$	(6,982	)		n/m
NET CHARGE-OFFS (4)
Alabama	$	132		$	67		$	-		$	65			97.0	%	$	132			n/m
Florida		(138	)		(1,426	)		(488	)		1,288			-90.3	%		350			-71.7	%
Mississippi (2)		375			291			4,726			84			28.9	%		(4,351	)		-92.1	%
Tennessee (3)		(153	)		103			438			(256	)		n/m			(591	)		n/m
Texas		353			194			(35	)		159			82.0	%		388			n/m
Total net charge-offs (recoveries)	$	569		$	(771	)	$	4,641		$	1,340			n/m		$	(4,072	)		-87.7	%
CREDIT QUALITY RATIOS(1)
Net charge offs/average loans		0.04	%		-0.05	%		0.31	%
Provision for loan losses/average loans		-0.25	%		-0.34	%		0.23	%
Nonperforming loans/total loans (incl LHFS)		1.26	%		1.29	%		1.38	%
Nonperforming assets/total loans (incl LHFS)		3.26	%		3.32	%		2.79	%
Nonperforming assets/total loans (incl LHFS) +ORE		3.20	%		3.26	%		2.75	%
ALL/total loans (excl LHFS)		1.20	%		1.31	%		1.51	%
ALL-commercial/total commercial loans		1.39	%		1.48	%		1.79	%
ALL-consumer/total consumer and home mortgage loans		0.73	%		0.84	%		0.84	%
ALL/nonperforming loans		93.53	%		97.99	%		103.56	%
ALL/nonperforming loans -
(excl impaired loans)		161.96	%		158.75	%		174.09	%
CAPITAL RATIOS
Common equity/total assets		11.26	%		11.18	%		12.95	%
Tangible common equity/tangible assets		8.01	%		7.96	%		10.13	%
Tangible common equity/risk-weighted assets		11.66	%		11.57	%		14.49	%
Tier 1 leverage ratio		8.78	%		8.71	%		10.83	%
Tier 1 common risk-based capital ratio		11.92	%		11.79	%		14.50	%
Tier 1 risk-based capital ratio		12.69	%		12.55	%		15.40	%
Total risk-based capital ratio		14.02	%		13.89	%		17.25	%
(1) - Excludes Acquired Loans and Covered Other Real Estate
(2) - Mississippi includes Central and Southern Mississippi Regions
(3) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
(4) - Excludes Acquired Loans
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, 2013 ($ in thousands) (unaudited)

		Quarter Ended															Nine Months Ended
AVERAGE BALANCES		9/30/2013			6/30/2013			3/31/2013			12/31/2012			9/30/2012			9/30/2013			9/30/2012
Securities AFS-taxable		$	3,279,606		$	3,259,086		$	2,836,051		$	2,466,738		$	2,409,292		$	3,126,539		$	2,359,628
Securities AFS-nontaxable			172,055			171,974			167,773			169,906			169,037			170,616			165,743
Securities HTM-taxable			59,168			59,678			48,632			26,510			28,333			55,865			30,571
Securities HTM-nontaxable			11,024			11,520			16,648			17,443			18,361			13,043			19,774
Total securities			3,521,853			3,502,258			3,069,104			2,680,597			2,625,023			3,366,063			2,575,716
Loans (including loans held for sale)			5,784,170			5,735,296			5,741,340			5,834,525			5,886,447			5,753,759			5,946,031
Acquired loans:
Noncovered loans			888,883			949,367			530,643			82,317			88,562			790,943			68,684
Covered loans			39,561			43,425			49,815			58,272			65,259			44,229			70,344
Fed funds sold and rev repos			8,978			6,808			6,618			8,747			6,583			7,477			7,151
Other earning assets			38,226			34,752			34,661			31,168			31,758			35,893			31,838
Total earning assets			10,281,671			10,271,906			9,432,181			8,695,626			8,703,632			9,998,364			8,699,764
Allowance for loan losses			(79,696	)		(84,574	)		(86,447	)		(88,715	)		(86,865	)		(83,547	)		(90,371	)
Cash and due from banks			272,320			284,056			270,740			238,976			236,566			275,711			246,958
Other assets			1,284,813			1,311,262			1,183,493			972,748			958,030			1,260,227			941,468
Total assets		$	11,759,108		$	11,782,650		$	10,799,967		$	9,818,635		$	9,811,363		$	11,450,755		$	9,797,819
Interest-bearing demand deposits		$	1,842,379		$	1,811,402		$	1,703,336		$	1,545,967		$	1,534,244		$	1,786,215		$	1,541,471
Savings deposits			2,995,110			3,060,437			2,767,747			2,275,569			2,348,413			2,941,931			2,384,908
Time deposits less than $100,000			1,380,954			1,419,381			1,268,619			1,120,735			1,150,620			1,356,729			1,170,274
Time deposits of $100,000 or more			993,948			1,029,498			893,104			760,363			781,926			972,553			806,799
Total interest-bearing deposits			7,212,391			7,320,718			6,632,806			5,702,634			5,815,203			7,057,428			5,903,452
Fed funds purchased and repos			364,446			312,865			266,958			388,007			374,885			315,113			364,332
Short-term borrowings			59,324			51,718			66,999			85,313			81,773			59,319			82,280
Long-term FHLB advances			8,620			9,575			4,580			-			-			7,606			-
Subordinated notes			49,890			49,882			49,874			49,866			49,858			49,882			49,850
Junior subordinated debt securities			61,856			82,460			77,989			61,856			61,856			74,043			61,856
Total interest-bearing liabilities			7,756,527			7,827,218			7,099,206			6,287,676			6,383,575			7,563,391			6,461,770
Noninterest-bearing deposits			2,479,082			2,451,547			2,199,043			2,115,784			2,039,729			2,377,583			1,969,445
Other liabilities			190,143			159,525			176,210			126,953			114,454			175,344			113,920
Total liabilities			10,425,752			10,438,290			9,474,459			8,530,413			8,537,758			10,116,318			8,545,135
Shareholders' equity			1,333,356			1,344,360			1,325,508			1,288,222			1,273,605			1,334,437			1,252,684
Total liabilities and equity		$	11,759,108		$	11,782,650		$	10,799,967		$	9,818,635		$	9,811,363		$	11,450,755		$	9,797,819
PERIOD END BALANCES		9/30/2013			6/30/2013			3/31/2013			12/31/2012			9/30/2012
Cash and due from banks		$	335,695		$	301,532		$	242,896		$	231,489		$	209,188
Fed funds sold and rev repos			7,867			7,869			5,926			7,046			5,295
Securities available for sale			3,372,101			3,511,683			3,546,083			2,657,745			2,724,446
Securities held to maturity			69,980			70,338			73,666			42,188			45,484
Loans held for sale (LHFS)			119,986			202,699			207,758			257,986			324,897
Loans held for investment (LHFI)			5,696,641			5,577,382			5,531,788			5,592,754			5,527,963
Allowance for loan losses			(68,632	)		(72,825	)		(76,900	)		(78,738	)		(83,526	)
Net LHFI			5,628,009			5,504,557			5,454,888			5,514,016			5,444,437
Acquired loans:
Noncovered loans			837,875			922,453			1,003,127			81,523			83,110
Covered loans			37,250			40,820			47,589			52,041			64,503
Allowance for loan losses, acquired loans			(5,333	)		(2,690	)		(6,458	)		(6,075	)		(4,343	)
Net acquired loans			869,792			960,583			1,044,258			127,489			143,270
Net LHFI and acquired loans			6,497,801			6,465,140			6,499,146			5,641,505			5,587,707
Premises and equipment, net			208,837			210,845			210,789			154,841			155,467
Mortgage servicing rights			63,150			60,380			51,529			47,341			44,211
Goodwill			372,463			368,315			366,366			291,104			291,104
Identifiable intangible assets			44,424			46,889			49,361			17,306			18,327
Other real estate, excluding covered other real estate			116,329			117,712			118,406			78,189			82,475
Covered other real estate			5,092			5,147			5,879			5,741			5,722
FDIC indemnification asset			17,085			17,342			20,198			21,774			23,979
Other assets			574,387			477,421			452,512			374,412			353,857
Total assets		$	11,805,197		$	11,863,312		$	11,850,515		$	9,828,667		$	9,872,159
Deposits:
Noninterest-bearing		$	2,643,612		$	2,520,895		$	2,534,287		$	2,254,211		$	2,118,853
Interest-bearing			7,143,622			7,296,697			7,375,144			5,642,306			5,685,188
Total deposits			9,787,234			9,817,592			9,909,431			7,896,517			7,804,041
Fed funds purchased and repos			342,465			374,021			219,769			288,829			408,711
Short-term borrowings			60,698			56,645			46,325			86,920			83,612
Long-term FHLB advances			8,562			8,679			10,969			-			-
Subordinated notes	��		49,896			49,888			49,879			49,871			49,863
Junior subordinated debt securities			61,856			61,856			94,856			61,856			61,856
Other liabilities			164,972			167,812			166,340			157,305			186,061
Total liabilities			10,475,683			10,536,493			10,497,569			8,541,298			8,594,144
Common stock			13,998			13,994			13,992			13,506			13,496
Capital surplus			343,759			342,359			342,233			285,905			284,089
Retained earnings			1,023,983			1,006,554			991,012			984,563			973,182
Accum other comprehensive
(loss) income, net of tax			(52,226	)		(36,088	)		5,709			3,395			7,248
Total shareholders' equity			1,329,514			1,326,819			1,352,946			1,287,369			1,278,015
Total liabilities and equity		$	11,805,197		$	11,863,312		$	11,850,515		$	9,828,667		$	9,872,159
See Notes to Consolidated Financials

  TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION September 30, 2013 ($ in thousands except per share data) (unaudited)

	Quarter Ended															Nine Months Ended
INCOME STATEMENTS	9/30/2013			6/30/2013			3/31/2013			12/31/2012			9/30/2012			9/30/2013			9/30/2012
Interest and fees on LHFS & LHFI-FTE	$	68,417		$	67,750		$	67,412		$	69,989		$	72,554		$	203,579		$	221,284
Interest and fees on acquired loans		19,183			20,987			12,782			4,859			5,229			52,952			13,263
Interest on securities-taxable		18,654			18,547			16,539			15,305			15,909			53,740			51,645
Interest on securities-tax exempt-FTE		1,960			1,974			2,018			2,066			2,089			5,952			6,277
Interest on fed funds sold and rev repos		8			5			4			9			6			17			17
Other interest income		372			372			355			337			339			1,099			1,005
Total interest income-FTE		108,594			109,635			99,110			92,565			96,126			317,339			293,491
Interest on deposits		4,970			5,071			4,909			5,061			5,725			14,950			19,543
Interest on fed funds pch and repos		106			88			81			140			135			275			448
Other interest expense		1,389			1,513			1,490			1,346			1,358			4,392			4,131
Total interest expense		6,465			6,672			6,480			6,547			7,218			19,617			24,122
Net interest income-FTE		102,129			102,963			92,630			86,018			88,908			297,722			269,369
Provision for loan losses, LHFI		(3,624	)		(4,846	)		(2,968	)		(535	)		3,358			(11,438	)		7,301
Provision for loan losses, acquired loans		3,292			(1,552	)		130			1,945			2,105			1,870			3,583
Net interest income after provision-FTE		102,461			109,361			95,468			84,608			83,445			307,290			258,485
Service charges on deposit accounts		13,852			12,929			11,681			12,391			13,135			38,462			37,960
Insurance commissions		8,227			8,014			7,242			6,887			7,533			23,483			21,318
Wealth management		7,520			6,940			6,875			6,181			5,612			21,335			16,875
Bank card and other fees		8,929			9,507			7,945			7,978			6,924			26,381			22,467
Mortgage banking, net		8,440			8,295			11,583			11,331			11,150			28,318			29,629
Other, net		165			(2,145	)		(1,191	)		(2,007	)		512			(3,171	)		3,120
Nonint inc-excl sec gains (losses), net		47,133			43,540			44,135			42,761			44,866			134,808			131,369
Security gains (losses), net		-			174			204			18			(1	)		378			1,041
Total noninterest income		47,133			43,714			44,339			42,779			44,865			135,186			132,410
Salaries and employee benefits		56,043			55,405			53,592			49,724			47,404			165,040			140,795
Services and fees		13,580			12,816			13,032			12,572			11,682			39,428			34,179
Net occupancy-premises		6,644			6,703			5,955			5,023			5,352			19,302			15,244
Equipment expense		6,271			6,193			5,674			5,288			5,095			18,138			15,190
FDIC assessment expense		2,376			2,376			2,021			1,075			1,826			6,773			5,427
ORE/Foreclosure expense		3,079			5,131			3,820			3,173			1,702			12,030			7,992
Other expense		13,531			18,571			18,051			10,454			10,399			50,153			38,366
Total noninterest expense		101,524			107,195			102,145			87,309			83,460			310,864			257,193
Income before income taxes and tax eq adj		48,070			45,880			37,662			40,078			44,850			131,612			133,702
Tax equivalent adjustment		3,700			3,735			3,655			3,699			3,629			11,090			10,698
Income before income taxes		44,370			42,145			34,007			36,379			41,221			120,522			123,004
Income taxes		11,336			11,024			9,141			8,669			11,317			31,501			33,431
Net income available to common shareholders	$	33,034		$	31,121		$	24,866		$	27,710		$	29,904		$	89,021		$	89,573
Per common share data
Earnings per share - basic	$	0.49		$	0.46		$	0.38		$	0.43		$	0.46		$	1.33		$	1.39
Earnings per share - diluted	$	0.49		$	0.46		$	0.38		$	0.43		$	0.46		$	1.33		$	1.38
Dividends per share	$	0.23		$	0.23		$	0.23		$	0.23		$	0.23		$	0.69		$	0.69
Weighted average common shares outstanding
Basic		67,177,013			67,162,530			65,983,204			64,785,457			64,778,329			66,778,622			64,616,226
Diluted		67,382,478			67,344,117			66,149,656			65,007,281			64,992,614			66,962,534			64,804,661
Period end common shares outstanding		67,181,694			67,163,195			67,151,087			64,820,414			64,779,937			67,181,694			64,779,937
OTHER FINANCIAL DATA
Return on common equity		9.83	%		9.29	%		7.61	%		8.56	%		9.34	%		8.92	%		9.55	%
Return on average tangible common equity		14.92	%		14.09	%		10.82	%		11.51	%		12.61	%		13.25	%		12.91	%
Return on assets		1.11	%		1.06	%		0.93	%		1.12	%		1.21	%		1.04	%		1.22	%
Interest margin - Yield - FTE		4.19	%		4.28	%		4.26	%		4.23	%		4.39	%		4.24	%		4.51	%
Interest margin - Cost		0.25	%		0.26	%		0.28	%		0.30	%		0.33	%		0.26	%		0.37	%
Net interest margin - FTE		3.94	%		4.02	%		3.98	%		3.94	%		4.06	%		3.98	%		4.14	%
Efficiency ratio (1)		68.02	%		70.44	%		67.84	%		67.80	%		62.39	%		68.78	%		64.12	%
Full-time equivalent employees		3,110			3,119			3,164			2,666			2,632
COMMON STOCK PERFORMANCE
Market value-Close	$	25.60		$	24.58		$	25.01		$	22.46		$	24.34
Common book value	$	19.79		$	19.76		$	20.15		$	19.86		$	19.73
Tangible common book value	$	13.58		$	13.57		$	13.96		$	15.10		$	14.95
(1) - Excludes nonrecurring income and expense items such as securities gains or losses, bargain purchase gains and non-routine acquisition related transaction expenses.
See Notes to Consolidated Financials

  TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION September 30, 2013 ($ in thousands) (unaudited)

	Quarter Ended
NONPERFORMING ASSETS(1)	9/30/2013			6/30/2013			3/31/2013			12/31/2012			9/30/2012
Nonaccrual loans
Alabama	$	81		$	73		$	-		$	-		$	-
Florida		14,619			15,916			14,046			19,314			21,456
Mississippi (2)		43,132			41,761			46,697			38,960			32,041
Tennessee (3)		5,596			4,482			4,877			8,401			7,388
Texas		9,953			12,086			17,702			15,688			19,773
Total nonaccrual loans		73,381			74,318			83,322			82,363			80,658
Other real estate
Alabama		25,308			27,245			28,870			-			-
Florida		39,198			35,025			30,662			18,569			22,340
Mississippi (2)		25,439			26,843			26,457			27,771			27,113
Tennessee (3)		14,615			15,811			18,339			17,589			18,545
Texas		11,769			12,788			14,078			14,260			14,477
Total other real estate		116,329			117,712			118,406			78,189			82,475
Total nonperforming assets	$	189,710		$	192,030		$	201,728		$	160,552		$	163,133
LOANS PAST DUE OVER 90 DAYS(4)
LHFI	$	2,344		$	4,194		$	2,772		$	6,378		$	5,699
LHFS-Guaranteed GNMA serviced loans				��
(no obligation to repurchase)	$	18,432		$	14,003		$	4,469		$	43,073		$	39,492
	Quarter Ended															Nine Months Ended
ALLOWANCE FOR LOAN LOSSES (4)	9/30/2013			6/30/2013			3/31/2013			12/31/2012			9/30/2012			9/30/2013			9/30/2012
Beginning Balance	$	72,825		$	76,900		$	78,738		$	83,526		$	84,809		$	78,738		$	89,518
Provision for loan losses		(3,624	)		(4,846	)		(2,968	)		(535	)		3,358			(11,438	)		7,301
Charge-offs		(3,817	)		(3,031	)		(3,325	)		(8,829	)		(7,907	)		(10,173	)		(22,547	)
Recoveries		3,248			3,802			4,455			4,576			3,266			11,505			9,254
Net (charge-offs) recoveries		(569	)		771			1,130			(4,253	)		(4,641	)		1,332			(13,293	)
Ending Balance	$	68,632		$	72,825		$	76,900		$	78,738		$	83,526		$	68,632		$	83,526
PROVISION FOR LOAN LOSSES (4)
Alabama	$	550		$	232		$	676		$	-		$	-		$	1,458		$	-
Florida		(2,642	)		(3,425	)		(3,675	)		(706	)		7			(9,742	)		(24	)
Mississippi (2)		(1,051	)		(520	)		(1,920	)		2,031			466			(3,491	)		5,759
Tennessee (3)		(150	)		(335	)		(378	)		(1,037	)		687			(863	)		1,497
Texas		(331	)		(798	)		2,329			(823	)		2,198			1,200			69
Total provision for loan losses	$	(3,624	)	$	(4,846	)	$	(2,968	)	$	(535	)	$	3,358		$	(11,438	)	$	7,301
NET CHARGE-OFFS (4)
Alabama	$	132		$	67		$	11		$	-		$	-		$	210		$	-
Florida		(138	)		(1,426	)		(849	)		(237	)		(488	)		(2,413	)		5,498
Mississippi (2)		375			291			(290	)		874			4,726			376			6,728
Tennessee (3)		(153	)		103			249			(43	)		438			199			1,197
Texas		353			194			(251	)		3,659			(35	)		296			(130	)
Total net charge-offs (recoveries)	$	569		$	(771	)	$	(1,130	)	$	4,253		$	4,641		$	(1,332	)	$	13,293
CREDIT QUALITY RATIOS(1)
Net charge offs/average loans		0.04	%		-0.05	%		-0.08	%		0.29	%		0.31	%		-0.03	%		0.30	%
Provision for loan losses/average loans		-0.25	%		-0.34	%		-0.21	%		-0.04	%		0.23	%		-0.27	%		0.16	%
Nonperforming loans/total loans (incl LHFS)		1.26	%		1.29	%		1.45	%		1.41	%		1.38	%
Nonperforming assets/total loans (incl LHFS)		3.26	%		3.32	%		3.51	%		2.74	%		2.79	%
Nonperforming assets/total loans (incl LHFS) +ORE		3.20	%		3.26	%		3.44	%		2.71	%		2.75	%
ALL/total loans (excl LHFS)		1.20	%		1.31	%		1.39	%		1.41	%		1.51	%
ALL-commercial/total commercial loans		1.39	%		1.48	%		1.56	%		1.59	%		1.79	%
ALL-consumer/total consumer and home mortgage loans		0.73	%		0.84	%		0.94	%		0.97	%		0.84	%
ALL/nonperforming loans		93.53	%		97.99	%		92.29	%		95.60	%		103.56	%
ALL/nonperforming loans -
(excl impaired loans)		161.96	%		158.75	%		145.83	%		174.46	%		174.09	%
CAPITAL RATIOS
Common equity/total assets		11.26	%		11.18	%		11.42	%		13.10	%		12.95	%
Tangible common equity/tangible assets		8.01	%		7.96	%		8.20	%		10.28	%		10.13	%
Tangible common equity/risk-weighted assets		11.66	%		11.57	%		11.92	%		14.56	%		14.49	%
Tier 1 leverage ratio		8.78	%		8.71	%		9.83	%		10.97	%		10.83	%
Tier 1 common risk-based capital ratio		11.92	%		11.79	%		11.79	%		14.63	%		14.50	%
Tier 1 risk-based capital ratio		12.69	%		12.55	%		12.97	%		15.53	%		15.40	%
Total risk-based capital ratio		14.02	%		13.89	%		14.42	%		17.22	%		17.25	%
(1) - Excludes Acquired Loans and Covered Other Real Estate
(2) - Mississippi includes Central and Southern Mississippi Regions
(3) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
(4) - Excludes Acquired Loans
See Notes to Consolidated Financials

  TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL INFORMATION September 30, 2013 ($ in thousands) (unaudited)

Note 1 – Business Combinations

Oxford, Mississippi Branches

On March 29, 2013, Trustmark National Bank (TNB), a subsidiary of Trustmark, announced the signing of a definitive Branch Purchase and Assumption Agreement (the Agreement) pursuant to which TNB would acquire the two branches of SOUTHBank, F.S.B. (SOUTHBank), serving the Oxford, Mississippi market. TNB completed its purchase of the two branches from SOUTHBank effective as of the close of business on July 26, 2013. Pursuant to the Agreement, TNB assumed deposit accounts of approximately $11.7 million in addition to purchasing the two physical branch offices. The transaction was not material to Trustmark’s consolidated financial statements and was not considered a business combination in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 805, “Business Combinations.”

BancTrust Financial Group, Inc.

On February 15, 2013, Trustmark completed its merger with BancTrust Financial Group, Inc. (BancTrust), a 26-year-old bank holding company headquartered in Mobile, Alabama.  In accordance with the terms of the definitive agreement, the holders of BancTrust common stock received 0.125 of a share of Trustmark common stock for each share of BancTrust common stock in a tax-free exchange.  Trustmark issued approximately 2.24 million shares of its common stock for all issued and outstanding shares of BancTrust common stock.  The total value of the 2.24 million shares of Trustmark common stock issued to the BancTrust shareholders on the acquisition date was approximately $53.5 million, based on a closing stock price of $23.83 per share of Trustmark common stock on February 15, 2013.  At closing, Trustmark repurchased the $50.0 million of BancTrust preferred stock and associated warrant issued to the U.S. Department of Treasury under the Capital Purchase Program for approximately $52.6 million.

The acquisition of BancTrust is consistent with Trustmark’s strategic plan to selectively expand the Trustmark franchise.  The acquisition of BancTrust provided Trustmark entry into more than 15 markets in Alabama and enhanced the Trustmark franchise in the Florida Panhandle.

This acquisition was accounted for under the acquisition method in accordance with FASB ASC Topic 805. Accordingly, the assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of the acquisition date. The fair values of assets acquired and liabilities assumed are subject to adjustment if additional information becomes available to indicate a more accurate or appropriate value for an asset or liability during the measurement period, which is not to exceed one year from the acquisition date of February 15, 2013. Assets that are particularly susceptible to adjustment include certain loans, other real estate and certain premises and equipment.

During the second and third quarters of 2013, Trustmark recorded an additional $1.9 million and $4.0 million, respectively, in goodwill based on changes to the estimated fair value of certain acquired loans and other real estate.  These measurement period adjustments have been presented on a retrospective basis, consistent with applicable accounting guidance.  The estimated fair values were considered preliminary as of September 30, 2013 and are subject to refinement as additional information relative to the closing date fair values becomes available through the measurement period.  The statement of assets purchased and liabilities assumed in the BancTrust acquisition is presented below at their adjusted estimated fair values as of the acquisition date of February 15, 2013 ($ in thousands):

Assets
Cash and due from banks	$	141,616
Securities		528,016
Loans held for sale		1,050
Acquired noncovered loans		944,235
Premises and equipment, net		55,579
Identifiable intangible assets		33,498
Other real estate		40,103
Other assets		101,833
Total Assets		1,845,930
Liabilities
Deposits		1,740,254
Other borrowings		64,051
Other liabilities		16,761
Total Liabilities		1,821,066
Net identified assets acquired at fair value		24,864
Goodwill		81,210
Net assets acquired at fair value	$	106,074

The excess of the consideration paid over the estimated fair value of the net assets acquired was $81.2 million, which was recorded as goodwill under FASB ASC Topic 805.  The identifiable intangible assets acquired represent the core deposit intangible at fair value at the acquisition date.  The core deposit intangible is being amortized on an accelerated basis over the estimated useful life, currently expected to be approximately 10 years.

Loans, excluding loans held for sale (LHFS), acquired from BancTrust were evaluated under a fair value process involving various degrees of deterioration in credit quality since origination, and also for those loans for which it was probable at acquisition that Trustmark would not be able to collect all contractually required payments.  These loans, with the exception of revolving credit agreements and leases, are referred to as acquired impaired loans and are accounted for in accordance with FASB ASC Topic 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality.”

  TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL INFORMATION September 30, 2013 ($ in thousands) (unaudited)

Note 1 – Business Combinations (continued)

The operations of BancTrust are included in Trustmark’s operating results from February 15, 2013, and added revenue of $21.3 million and net income available to common shareholders of $4.9 million for the third quarter of 2013.  Included in BancTrust’s net income available to common shareholders for the third quarter of 2013 are recoveries on pay-offs of acquired loans of $2.2 million (after tax).

Included in Trustmark’s noninterest expense during the first quarter of 2013 are non-routine BancTrust transaction expenses totaling approximately $9.4 million (change in control and severance expense of $1.4 million included in salaries and benefits; professional fees, contract termination and other expenses of $7.9 million included in other expense).

Bay Bank & Trust Company

On March 16, 2012, Trustmark completed its merger with Bay Bank & Trust Co. (Bay Bank), a 76-year old financial institution headquartered in Panama City, Florida.  Trustmark acquired all outstanding common stock of Bay Bank for approximately $22 million in cash and stock, comprised of $10 million in cash and the issuance of approximately 510 thousand shares of Trustmark common stock valued at $12 million.  This acquisition was accounted for under the acquisition method in accordance with FASB ASC Topic 805.  Accordingly, the assets and liabilities, both tangible and intangible, are recorded at their estimated fair values as of the acquisition date.  The purchase price allocation was deemed preliminary as of March 31, 2012 and was finalized in the second quarter of 2012.

The statement of assets purchased and liabilities assumed in the Bay Bank acquisition is presented below at their estimated fair values as of the acquisition date of March 16, 2012 ($ in thousands):

Assets
Cash and due from banks	$	88,154
Securities available for sale		26,369
Acquired noncovered loans		97,914
Premises and equipment, net		9,466
Identifiable intangible assets		7,017
Other real estate		2,569
Other assets		3,471
Total Assets		234,960
Liabilities
Deposits		208,796
Other liabilities		526
Total Liabilities		209,322
Net assets acquired at fair value		25,638
Consideration paid to Bay Bank		22,003
Bargain purchase gain		3,635
Income taxes		-
Bargain purchase gain, net of taxes	$	3,635

The bargain purchase gain represents the excess of the net of the estimated fair value of the assets acquired and liabilities assumed over the consideration paid to Bay Bank.  Initially, Trustmark recognized a bargain purchase gain of $2.8 million during the first quarter of 2012 and subsequently increased the bargain purchase gain by $881 thousand during the second quarter of 2012 as the fair values associated with the Bay Bank acquisition were finalized.  The gain of $3.6 million recognized by Trustmark is considered a gain from a bargain purchase under FASB ASC Topic 805 and is included in other noninterest income.  Included in noninterest expense during the first quarter of 2012 are non-routine Bay Bank transaction expenses totaling approximately $2.6 million (change in control and severance expense of $672 thousand included in salaries and benefits; contract termination and other expenses of $1.9 million included in other expense).

Loans acquired from Bay Bank were evaluated under a fair value process involving various degrees of deterioration in credit quality since origination, and also for those loans for which it was probable at acquisition that Trustmark would not be able to collect all contractually required payments.  These loans, with the exception of revolving credit agreements, are referred to as acquired impaired loans and are accounted for in accordance with FASB ASC Topic 310-30.

  TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL INFORMATION September 30, 2013 ($ in thousands) (unaudited)

Note 2 - 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):

	9/30/2013		6/30/2013		3/31/2013		12/31/2012		9/30/2012
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities	$	503	$	505	$	506	$	-	$	-
U.S. Government agency obligations
Issued by U.S. Government agencies		133,013		139,066		141,226		10		18
Issued by U.S. Government sponsored agencies		132,425		133,791		186,293		105,735		60,671
Obligations of states and political subdivisions		212,991		212,204		218,467		215,761		215,900
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		48,240		46,330		51,138		19,902		21,352
Issued by FNMA and FHLMC		214,795		227,927		241,365		208,564		237,886
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		2,048,275		2,156,320		2,090,516		1,466,366		1,565,290
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		354,131		361,575		377,070		399,780		381,207
Asset-backed securities and structured financial products		227,728		233,965		239,502		241,627		242,122
Total securities available for sale	$	3,372,101	$	3,511,683	$	3,546,083	$	2,657,745	$	2,724,446
SECURITIES HELD TO MATURITY
Obligations of states and political subdivisions	$	30,229	$	30,295	$	33,071	$	36,206	$	37,669
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		2,420		2,547		2,932		3,245		3,435
Issued by FNMA and FHLMC		564		567		569		572		580
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		-		-		-		-		1,624
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		36,767		36,929		37,094		2,165		2,176
Total securities held to maturity	$	69,980	$	70,338	$	73,666	$	42,188	$	45,484

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 92% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. 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 Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any equity investment in any GSE.

  TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL INFORMATION September 30, 2013 ($ in thousands) (unaudited)

Note 3 – Loan Composition

LHFI BY TYPE (excluding acquired loans)	9/30/2013			6/30/2013			3/31/2013			12/31/2012			9/30/2012
Loans secured by real estate:
Construction, land development and other land loans	$	572,057		$	519,263		$	485,419		$	468,975		$	460,599
Secured by 1-4 family residential properties (1)		1,482,963			1,414,871			1,430,293			1,497,480			1,511,514
Secured by nonfarm, nonresidential properties		1,408,342			1,406,930			1,385,669			1,410,264			1,397,536
Other real estate secured		196,328			192,568			174,680			189,949			184,804
Commercial and industrial loans		1,132,863			1,169,327			1,206,851			1,169,513			1,163,681
Consumer loans		164,612			160,318			160,253			171,660			181,896
Other loans		739,476			714,105			688,623			684,913			627,933
LHFI		5,696,641			5,577,382			5,531,788			5,592,754			5,527,963
Allowance for loan losses		(68,632	)		(72,825	)		(76,900	)		(78,738	)		(83,526	)
Net LHFI	$	5,628,009		$	5,504,557		$	5,454,888		$	5,514,016		$	5,444,437
(1) Previously reported 3/31/2013 balance was increased by $57.4 million due to the misclassification
of the proceeds received from the GNMA delinquent loan sale, which should have decreased Other Assets.

ACQUIRED NONCOVERED LOANS BY TYPE	9/30/2013			6/30/2013			3/31/2013			12/31/2012			9/30/2012
Loans secured by real estate:
Construction, land development and other land loans	$	106,655		$	132,116		$	138,442		$	10,056		$	11,504
Secured by 1-4 family residential properties		168,573			184,928			209,658			19,404			18,032
Secured by nonfarm, nonresidential properties		301,686			318,603			339,953			45,649			47,114
Other real estate secured		35,051			34,869			32,208			669			378
Commercial and industrial loans		186,649			206,338			235,286			3,035			3,371
Consumer loans		22,251			27,420			32,694			2,610			2,575
Other loans		17,010			18,179			14,886			100			136
Noncovered loans		837,875			922,453			1,003,127			81,523			83,110
Allowance for loan losses		(3,007	)		(112	)		(1,961	)		(1,885	)		(817	)
Net noncovered loans	$	834,868		$	922,341		$	1,001,166		$	79,638		$	82,293

ACQUIRED COVERED LOANS BY TYPE	9/30/2013			6/30/2013			3/31/2013			12/31/2012			9/30/2012
Loans secured by real estate:
Construction, land development and other land loans	$	2,585		$	3,662		$	3,875		$	3,924		$	3,714
Secured by 1-4 family residential properties		17,785			18,899			20,980			23,990			24,949
Secured by nonfarm, nonresidential properties		12,120			13,341			17,355			18,407			28,291
Other real estate secured		2,817			2,929			3,365			3,567			4,198
Commercial and industrial loans		478			543			648			747			1,803
Consumer loans		151			173			179			177			172
Other loans		1,314			1,273			1,187			1,229			1,376
Covered loans		37,250			40,820			47,589			52,041			64,503
Allowance for loan losses		(2,326	)		(2,578	)		(4,497	)		(4,190	)		(3,526	)
Net covered loans	$	34,924		$	38,242		$	43,092		$	47,851		$	60,977

  TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL INFORMATION September 30, 2013 ($ in thousands) (unaudited)

Note 3 – Loan Composition (continued)
	September 30, 2013
LHFI - COMPOSITION BY REGION(1)	Total		Alabama		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	$	572,057	$	14,305	$	77,506	$	287,825	$	42,259	$	150,162
Secured by 1-4 family residential properties		1,482,963		6,920		50,725		1,266,813		135,703		22,802
Secured by nonfarm, nonresidential properties		1,408,342		15,704		147,717		742,171		149,689		353,061
Other real estate secured		196,328		4,465		5,337		137,331		22,055		27,140
Commercial and industrial loans		1,132,863		15,325		12,182		759,569		84,947		260,840
Consumer loans		164,612		10,555		2,500		130,618		18,450		2,489
Other loans		739,476		11,181		24,672		594,734		46,538		62,351
Loans	$	5,696,641	$	78,455	$	320,639	$	3,919,061	$	499,641	$	878,845
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION(1)
Lots	$	45,538	$	609	$	29,256	$	12,316	$	688	$	2,669
Development		75,160		-		8,965		40,548		3,804		21,843
Unimproved land		137,448		2,844		37,417		64,306		15,695		17,186
1-4 family construction		98,067		7,718		1,728		62,548		2,440		23,633
Other construction		215,844		3,134		140		108,107		19,632		84,831
Construction, land development and other land loans	$	572,057	$	14,305	$	77,506	$	287,825	$	42,259	$	150,162
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION (1)
Income producing:
Retail	$	145,103	$	562	$	41,302	$	56,350	$	16,434	$	30,455
Office		171,325		3,613		34,992		86,843		7,033		38,844
Nursing homes/assisted living		98,441		-		-		90,088		4,404		3,949
Hotel/motel		63,289		-		375		28,706		24,985		9,223
Industrial		70,469		698		6,346		27,165		144		36,116
Health care		24,981		3,168		-		10,395		105		11,313
Convenience stores		11,154		-		-		7,010		725		3,419
Other		154,278		2,790		18,755		67,998		4,448		60,287
Total income producing loans		739,040		10,831		101,770		374,555		58,278		193,606
Owner-occupied:
Office		106,476		1,454		15,150		62,181		3,649		24,042
Churches		80,975		1,711		3,011		42,520		26,036		7,697
Industrial warehouses		97,960		940		3,164		43,308		7,114		43,434
Health care		102,437		-		13,917		58,051		15,163		15,306
Convenience stores		55,993		-		1,674		30,276		3,721		20,322
Retail		36,272		-		3,668		25,102		2,777		4,725
Restaurants		30,883		-		864		24,920		3,386		1,713
Auto dealerships		12,768		-		290		10,699		1,733		46
Other		145,538		768		4,209		70,559		27,832		42,170
Total owner-occupied loans		669,302		4,873		45,947		367,616		91,411		159,455
Loans secured by nonfarm, nonresidential properties	$	1,408,342	$	15,704	$	147,717	$	742,171	$	149,689	$	353,061
(1) Excludes acquired loans.

  TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL INFORMATION September 30, 2013 ($ in thousands) (unaudited)

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
	9/30/2013			6/30/2013			3/31/2013			12/31/2012			9/30/2012			9/30/2013			9/30/2012
Securities – taxable		2.22	%		2.24	%		2.33	%		2.44	%		2.60	%		2.26	%		2.89	%
Securities – nontaxable		4.25	%		4.31	%		4.44	%		4.39	%		4.43	%		4.33	%		4.52	%
Securities – total		2.32	%		2.35	%		2.45	%		2.58	%		2.73	%		2.37	%		3.00	%
Loans - LHFI & LHFS		4.69	%		4.74	%		4.76	%		4.77	%		4.90	%		4.73	%		4.97	%
Acquired loans		8.20	%		8.48	%		8.93	%		13.75	%		13.52	%		8.48	%		12.74	%
Loans - total		5.18	%		5.29	%		5.14	%		4.98	%		5.12	%		5.21	%		5.15	%
FF sold & rev repo		0.35	%		0.29	%		0.25	%		0.41	%		0.36	%		0.30	%		0.32	%
Other earning assets		3.86	%		4.29	%		4.15	%		4.30	%		4.25	%		4.09	%		4.22	%
Total earning assets		4.19	%		4.28	%		4.26	%		4.23	%		4.39	%		4.24	%		4.51	%
Interest-bearing deposits		0.27	%		0.28	%		0.30	%		0.35	%		0.39	%		0.28	%		0.44	%
FF pch & repo		0.12	%		0.11	%		0.12	%		0.14	%		0.14	%		0.12	%		0.16	%
Other borrowings		3.07	%		3.13	%		3.03	%		2.72	%		2.79	%		3.08	%		2.84	%
Total interest-bearing liabilities		0.33	%		0.34	%		0.37	%		0.41	%		0.45	%		0.35	%		0.50	%
Net interest margin		3.94	%		4.02	%		3.98	%		3.94	%		4.06	%		3.98	%		4.14	%
Net interest margin excluding acquired loans		3.52	%		3.55	%		3.66	%		3.77	%		3.89	%		3.57	%		4.00	%

Reflected in the table above are yields on earning assets and liabilities, along with the net interest margin which equals reported net interest income-FTE, annualized, as a percent of average earning assets.  In addition, the table includes net interest margin excluding acquired loans, which equals reported net interest income-FTE excluding interest income on acquired loans, annualized, as a percent of average earning assets excluding average acquired loans.

The net interest margin declined 8 basis points during the third quarter of 2013 primarily due to the growth of lower yielding investment securities as well as a decrease in interest and fees on acquired loans, which was the result of reduced acquired loan recoveries during the quarter.  The impact of this was partially offset by declines in acquired loan average balances as well as the cost of interest-bearing liabilities.

During the third quarter of 2013, the yield on average acquired loans includes approximately $4.7 million in recoveries, or an annualized 2.00% of the average acquired loan balance.

Note 5 – Mortgage Banking

Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that offsets the changes in fair value of mortgage servicing rights (MSR) attributable to interest rates.  These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under generally accepted accounting principles (GAAP).  Changes in the fair value of these exchange-traded derivative instruments, including administrative costs, are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of the MSR.  The MSR fair value represents the present value of future cash flows, which among other things includes decay and the effect of changes in interest rates.  Ineffectiveness of hedging the MSR fair value is measured by comparing the change in value of hedge instruments to the change in the fair value of the MSR asset attributable to changes in interest rates and other market driven changes in valuation inputs and assumptions.  The impact of this strategy resulted in a net positive ineffectiveness of $1.3 million for the quarter ended September 30, 2013 compared to a net negative ineffectiveness of $1.8 million for the quarter ended September 30, 2012.

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

	Quarter Ended															Nine Months Ended
	9/30/2013			6/30/2013			3/31/2013			12/31/2012			9/30/2012			9/30/2013			9/30/2012
Mortgage servicing income, net	$	4,552		$	4,385		$	4,267		$	4,441		$	3,984		$	13,204		$	11,761
Change in fair value-MSR from runoff		(2,407	)		(2,756	)		(2,460	)		(2,631	)		(2,751	)		(7,623	)		(7,177	)
Gain on sales of loans, net		6,465			7,597			10,165			12,034			9,114			24,227			21,885
Other, net		(1,485	)		(1,052	)		(1,649	)		(1,789	)		2,608			(4,186	)		5,811
Mortgage banking income before hedge ineffectiveness		7,125			8,174			10,323			12,055			12,955			25,622			32,280
Change in fair value-MSR from market changes		287			6,467			1,127			(418	)		(3,282	)		7,881			(8,960	)
Change in fair value of derivatives		1,028			(6,346	)		133			(306	)		1,477			(5,185	)		6,309
Net positive (negative) hedge ineffectiveness		1,315			121			1,260			(724	)		(1,805	)		2,696			(2,651	)
Mortgage banking, net	$	8,440		$	8,295		$	11,583		$	11,331		$	11,150		$	28,318		$	29,629

During the first quarter of 2013, Trustmark exercised its option to repurchase delinquent loans serviced for GNMA. These loans were subsequently sold to a third party under different repurchase provisions. Trustmark retained the servicing for these loans, which are fully guaranteed by FHA/VA. As a result of this repurchase and sale, the loans are no longer carried as "LHFS-Guaranteed GNMA serviced loans" (see pages 3 and 6).  The transaction resulted in a gain of $534 thousand, which was recorded during the first quarter of 2013 and is included in the table above as "Gain on sales of loans, net.”

  TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL INFORMATION September 30, 2013 ($ in thousands) (unaudited)

Note 6 – Other Noninterest Income and Expense

Other noninterest income consisted of the following for the periods presented ($ in thousands):

	Quarter Ended															Nine Months Ended
	9/30/2013			6/30/2013			3/31/2013			12/31/2012			9/30/2012			9/30/2013			9/30/2012
Partnership amortization for tax credit purposes	$	(2,388	)	$	(2,221	)	$	(2,117	)	$	(3,202	)	$	(2,302	)	$	(6,726	)	$	(5,215	)
Bargain purchase gain on Bay Bank acquisition		-			-			-			-			-			-			3,635
Increase (decrease) in FDIC indemnification asset		211			(2,317	)		(1,365	)		(743	)		(609	)		(3,471	)		(2,979	)
Other miscellaneous income		2,342			2,393			2,291			1,938			3,423			7,026			7,679
Total other, net	$	165		$	(2,145	)	$	(1,191	)	$	(2,007	)	$	512		$	(3,171	)	$	3,120

Trustmark invests in partnerships that provide income tax credits on a Federal and/or State basis (i.e., new market tax credits, low income housing tax credits or historical tax credits).  These investments are recorded based on the equity method of accounting, which requires the equity in partnership losses to be recognized when incurred and are recorded as a reduction in other income.  The income tax credits related to these partnerships are utilized as specifically allowed by income tax law and are recorded as a reduction in income tax expense.

During the third quarter of 2013, other noninterest income included an upward adjustment of the FDIC indemnification asset of $211 thousand on acquired covered loans obtained from Heritage as a result of a slight increase in loss expectations for loan pools.  During the third quarter of 2012, Trustmark recognized a gain of $1.2 million in other miscellaneous income, which resulted from the sale of the Performance Funds by Trustmark Investment Advisors, Inc. to Federated Investors, Inc.

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

	Quarter Ended										Nine Months Ended
	9/30/2013		6/30/2013		3/31/2013		12/31/2012		9/30/2012		9/30/2013		9/30/2012
Loan expense	$	3,390	$	4,267	$	2,995	$	3,274	$	3,150	$	10,652	$	16,974
Non-routine transaction expenses on acquisitions		-		-		7,920		-		-		7,920		1,917
Amortization of intangibles		2,466		2,472		1,442		1,022		1,028		6,380		2,766
Other miscellaneous expense		7,675		11,832		5,694		6,158		6,221		25,201		16,709
Total other expense	$	13,531	$	18,571	$	18,051	$	10,454	$	10,399	$	50,153	$	38,366

Other miscellaneous expense increased during the second quarter of 2013 due to a non-routine litigation expense of $4.0 million related to a proposed settlement on Trustmark’s overdraft fees for insufficient funds on debit card purchases and ATM withdrawals as previously disclosed in the Form 8-K filed on June 26, 2013.  The settlement has now been temporarily approved by the Federal District Judge.

As previously mentioned in Note 1 – Business Combinations, during the first quarter of 2013, Trustmark incurred $7.9 million of non-routine BancTrust transaction expenses in other noninterest expense.  These non-routine transaction expenses include $2.2 million of professional fees and $5.7 million of contract termination and other expenses.

Note 7 – Non-GAAP Financial Measures

In addition to capital ratios defined by 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 FINANCIAL INFORMATION September 30, 2013 ($ in thousands) (unaudited)

Note 7 - Non-GAAP Financial Measures (continued)
			Quarter Ended															Nine Months Ended
			9/30/2013			6/30/2013			3/31/2013			12/31/2012			9/30/2012			9/30/2013			9/30/2012
TANGIBLE COMMON EQUITY
AVERAGE BALANCES
Total shareholders' common equity			$	1,333,356		$	1,344,360		$	1,325,508		$	1,288,222		$	1,273,605		$	1,334,437		$	1,252,684
Less:	Goodwill			(368,482	)		(366,592	)		(324,902	)		(291,104	)		(291,104	)		(353,485	)		(291,104	)
	Identifiable intangible assets			(45,988	)		(48,402	)		(35,187	)		(17,933	)		(18,971	)		(43,232	)		(17,152	)
Total average tangible common equity			$	918,886		$	929,366		$	965,419		$	979,185		$	963,530		$	937,720		$	944,428
PERIOD END BALANCES
Total shareholders' common equity			$	1,329,514		$	1,326,819		$	1,352,946		$	1,287,369		$	1,278,015
Less:	Goodwill			(372,463	)		(368,315	)		(366,366	)		(291,104	)		(291,104	)
	Identifiable intangible assets			(44,424	)		(46,889	)		(49,361	)		(17,306	)		(18,327	)
Total tangible common equity		(a)	$	912,627		$	911,615		$	937,219		$	978,959		$	968,584
TANGIBLE ASSETS
Total assets			$	11,805,197		$	11,863,312		$	11,850,515		$	9,828,667		$	9,872,159
Less:	Goodwill			(372,463	)		(368,315	)		(366,366	)		(291,104	)		(291,104	)
	Identifiable intangible assets			(44,424	)		(46,889	)		(49,361	)		(17,306	)		(18,327	)
Total tangible assets		(b)	$	11,388,310		$	11,448,108		$	11,434,788		$	9,520,257		$	9,562,728
Risk-weighted assets		(c)	$	7,825,839		$	7,878,281		$	7,862,884		$	6,723,259		$	6,684,820
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income available to common shareholders			$	33,034		$	31,121		$	24,866		$	27,710		$	29,904		$	89,021		$	89,573
Plus:	Intangible amortization net of tax			1,523			1,526			890			631			635			3,939			1,708
Net income adjusted for intangible amortization			$	34,557		$	32,647		$	25,756		$	28,341		$	30,539		$	92,960		$	91,281
Period end common shares outstanding		(d)		67,181,694			67,163,195			67,151,087			64,820,414			64,779,937
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible common equity 1				14.92	%		14.09	%		10.82	%		11.51	%		12.61	%		13.25	%		12.91	%
Tangible common equity/tangible assets		(a)/(b)		8.01	%		7.96	%		8.20	%		10.28	%		10.13	%
Tangible common equity/risk-weighted assets		(a)/(c)		11.66	%		11.57	%		11.92	%		14.56	%		14.49	%
Tangible common book value		(a)/(d)*1,000	$	13.58		$	13.57		$	13.96		$	15.10		$	14.95
TIER 1 COMMON RISK-BASED CAPITAL
Total shareholders' equity			$	1,329,514		$	1,326,819		$	1,352,946		$	1,287,369		$	1,278,015
Eliminate qualifying AOCI				52,226			36,088			(5,709	)		(3,395	)		(7,248	)
Qualifying tier 1 capital				60,000			60,000			93,000			60,000			60,000
Disallowed goodwill				(372,463	)		(368,315	)		(366,366	)		(291,104	)		(291,104	)
Adj to goodwill allowed for deferred taxes				14,093			13,740			13,388			13,035			12,683
Other disallowed intangibles				(44,424	)		(46,889	)		(49,361	)		(17,306	)		(18,327	)
Disallowed servicing intangible				(6,315	)		(6,038	)		(5,153	)		(4,734	)		(4,421	)
Disallowed deferred taxes				(39,476	)		(26,411	)		(12,575	)		-			-
Total tier 1 capital				993,155			988,994			1,020,170			1,043,865			1,029,598
Less:	Qualifying tier 1 capital			(60,000	)		(60,000	)		(93,000	)		(60,000	)		(60,000	)
Total tier 1 common capital		(e)	$	933,155		$	928,994		$	927,170		$	983,865		$	969,598
Tier 1 common risk-based capital ratio		(e)/(c)		11.92	%		11.79	%		11.79	%		14.63	%		14.50	%
1Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible common equity