Trustmark (TRMK) 8-K Trustmark Corporation Announces Third Quarter 2014 Financial Results

  News Release

Trustmark Corporation Announces Third Quarter 2014 Financial Results

JACKSON, Miss. – October 28, 2014 – Trustmark Corporation (NASDAQ:TRMK) reported net income of $33.6 million in the third quarter of 2014, which represented diluted earnings per share of $0.50, an increase of 2.0% from both the prior quarter and third quarter of 2013.  Trustmark’s performance during the third quarter of 2014 produced a return on average tangible equity of 13.70% and a return on average assets of 1.10%.  During the first nine months of 2014, Trustmark’s net income totaled $95.5 million, which represented diluted earnings per share of $1.41, an increase of 6.0% from the prior year.  Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable December 15, 2014, to shareholders of record on December 1, 2014.

Gerard R. Host, President and CEO, stated, “Trustmark continued to achieve solid financial results in the third quarter, including the sixth consecutive quarter of growth in our legacy loan portfolio, significant  growth in our insurance and wealth management businesses, and improvement in our efficiency ratio.  Thanks to our associates, solid profitability and strong capital base, Trustmark remains well-positioned to continue meeting the needs of our customers and creating value for our shareholders.”

Balance Sheet Management

·   Loans held for investment increased at an annualized rate of 9.6% in the third quarter

·   Average noninterest-bearing deposits increased $97.8 million from the prior quarter to represent 28.6% of average total deposits

Loans held for investment totaled $6.3 billion at September 30, 2014, an increase of $146.7 million, or 2.4%, from the prior quarter and $637.0 million, or 11.2%, from one year earlier.  Construction, land development and other land loans increased $49.1 million during the quarter; this growth was driven entirely by commercial and residential construction primarily in Trustmark’s Texas, Mississippi and Alabama markets.  The single-family mortgage portfolio increased $43.6 million primarily as a result of growth in Trustmark’s Mississippi and Alabama markets.  Loans secured by nonfarm and nonresidential real estate increased $16.4 million as growth in owner occupied real estate in Trustmark’s Mississippi and Alabama markets was offset in part by declines in Texas, Florida and Tennessee.  Other real estate secured loans, which include multifamily projects, declined $10.6 million reflecting reductions primarily in Trustmark’s Mississippi and Tennessee markets.  Commercial and industrial loans remained relatively stable as growth in Alabama and Tennessee was offset by reductions in Texas and Mississippi.  Consumer loans expanded $3.4 million due principally to growth in Trustmark’s Mississippi market.  Other loans, which include lending to states and municipalities, nonprofits and REITS, increased $48.0 million during the third quarter due to growth in Trustmark’s Mississippi, Alabama and Tennessee markets.

Acquired loans totaled $592.1 million at September 30, 2014, down $54.4 million from the prior quarter.  Collectively, loans held for investment and acquired loans totaled $6.9 billion at September 30, 2014, up $92.3 million, or 5.6% annualized, from the prior quarter.

Average earning assets during the third quarter increased $149.9 million relative to the prior quarter principally due to increased balances of loans held for investment.  Average deposits in the third quarter declined $204.5 million as the $97.8 million increase in average noninterest-bearing deposits was more than offset by a decline in average interest-bearing deposits of $302.3 million.

Trustmark’s capital position remained solid, reflecting the consistent profitability of its diversified financial services businesses.  At September 30, 2014, Trustmark’s tangible equity to tangible assets ratio was 8.67%, up 16 basis points from the prior quarter, while the total risk-based capital ratio expanded 16 basis points to 14.70%.  Trustmark’s solid capital base provides the opportunity to support organic loan growth in an improving economy and enhance long-term shareholder value.

Credit Quality

·   Other real estate declined 9.3% and 16.6% from the prior quarter and year, respectively

·   Allowance for loan losses represented 178.81% of nonperforming loans, excluding impaired loans

Nonperforming loans totaled $88.3 million at September 30, 2014, an increase of $17.2 million from the prior quarter and $14.9 million from one year earlier.  The increase in nonperforming loans was primarily the result of two substandard credit relationships totaling $16.0 million migrating to nonaccrual status. Other real estate totaled $97.0 million, a decrease of $9.9 million, or 9.3%, from the prior quarter.  Relative to levels one year earlier, other real estate decreased $19.3 million, or 16.6%.  Collectively, nonperforming assets totaled $185.4 million, an increase of $7.3 million from the prior quarter and a decrease of $4.4 million from one year earlier.

Trustmark’s net recovery position during the third quarter of 2014 totaled $428 thousand and represented -0.03% of average loans.  This compares favorably to net charge-offs in the prior quarter of $1.2 million, or 0.08% of average loans, and to net charge-offs in the third quarter of the prior year of $569 thousand, or 0.04% of average loans.  During the third quarter of 2014, the provision for loan losses for loans held for investment totaled $3.1 million, which represented specific reserves related to the aforementioned credit relationships that migrated to nonaccrual status.

Allocation of Trustmark’s $70.1 million allowance for loan losses represented 1.26% of commercial loans and 0.69% of consumer and home mortgage loans, resulting in an allowance to total loans held for investment of 1.11% at September 30, 2014, which represents a level management considers commensurate with the inherent risk in the loan portfolio.  The allowance for loan losses represented 178.81% of nonperforming loans, excluding impaired loans.

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

Revenue Generation

·   Total revenue remained stable at $149.1 million despite the mandated reduction in interchange income

·   Insurance and wealth management revenue expanded 11.3% and 4.3%, respectively, from the prior quarter

Net interest income (FTE) in the third quarter totaled $110.1 million, resulting in a net interest margin of 4.14%.  Relative to the prior quarter, interest income (FTE) increased $662 thousand due principally to additional interest and fees on loans held for investment.  The yield on acquired loans totaled 14.98% and included recoveries from settlement of debt of $8.7 million, which represented approximately 5.64% of the total acquired annualized loan yield in the third quarter.  Excluding acquired loans, the net interest margin in the third quarter totaled 3.47%, down eight basis points from the prior quarter, reflecting declining yields on loans held for investment and loans held for sale.

Noninterest income totaled $42.9 million in the third quarter, down $1.2 million from the prior quarter. Bank card and other fees totaled $7.3 million, a decline of $2.6 million, or 26.4%, from the prior quarter, which reflected the impact of decreased interchange income as a result of Trustmark becoming subject to debit card interchange fee standards effective July 1, 2014.  Service charges on deposit accounts totaled $12.7 million in the third quarter, an increase of $897 thousand, or 7.6%, from the prior quarter driven principally by seasonal factors.

As a result of increased property and casualty business, insurance revenue in the third quarter totaled $9.2 million, an increase of 11.3% from the prior quarter.  Wealth management revenue totaled $8.0 million, up 4.3% from the prior quarter, due principally to increased brokerage activity.

Mortgage loan production in the third quarter totaled $345.4 million, an increase of 7.2% from the prior quarter, due in part to seasonal factors as well as lower mortgage rates and expanded originations in Trustmark’s Alabama markets.  During the third quarter, mortgage banking revenue totaled $5.8 million, reflecting increased mortgage servicing income, expanded secondary marketing gains, and stable mortgage servicing hedge ineffectiveness, which was offset in part by a decline in the fair value of mortgage loans held for sale.

Noninterest Expense

·   Routine noninterest expense remained well-controlled

·   Efficiency ratio improved to 62.80%

Noninterest expense in the third quarter declined $2.6 million, or 2.5%, from the prior quarter to total $100.2 million.  Excluding ORE and intangible amortization of $3.1 million, noninterest expense during the third quarter remained stable at $97.1 million.  Salaries and benefits expense remained well-controlled and totaled $56.7 million in the third quarter, up $541 thousand, or 1.0%, from the prior quarter. Services and fees remained stable at $14.5 million while ORE and foreclosure expense declined $2.9 million from the prior quarter to total $930 thousand.  Equipment expense declined $461 thousand, or 7.5%, from the prior quarter to $5.7 million.  Net occupancy expense increased $404 thousand to $6.8 million during the quarter while other expense declined $267 thousand to $13.0 million.

Appointment of Chief Administrative Officer

During the third quarter, James M. Outlaw was named Executive Vice President and Chief Administrative Officer of Trustmark National Bank.  In this newly created position, Outlaw is responsible for coordinating resources within the organization that support the revenue generating activities of various lines of business and overseeing the Risk Management, Technology, Operations, Human Resources and Corporate Facilities areas of the organization.  In his 18-year tenure with Trustmark, Outlaw served as Chief Information Officer prior to serving as President and Chief Operating Officer of Trustmark’s banking operations in Texas.  Host commented, “I am delighted that Jim has returned to Jackson as Chief Administrative Officer, overseeing all operational and administrative functions across our organization.  His proven leadership and broad experience, both on the front line and in the back room, will support our efforts to streamline processes to improve efficiency and profitability across the organization.”

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, October 29, 2014, 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) 317-3051 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com, which will also include a slide presentation Management will review during the conference call.  A replay of the conference call will also be available through Wednesday, November 12, 2014, 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 207 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, 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 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, 2014 ($ in thousands) (unaudited)

										Linked Quarter						Year over Year
QUARTERLY AVERAGE BALANCES	9/30/2014			6/30/2014			9/30/2013			$ Change			% Change			$ Change			% Change
Securities AFS-taxable	$	2,202,020		$	2,205,352		$	3,279,606		$	(3,332	)		-0.2	%	$	(1,077,586	)		-32.9	%
Securities AFS-nontaxable		131,305			135,956			172,055			(4,651	)		-3.4	%		(40,750	)		-23.7	%
Securities HTM-taxable		1,126,309			1,120,448			59,168			5,861			0.5	%		1,067,141			n/m
Securities HTM-nontaxable		43,114			43,551			11,024			(437	)		-1.0	%		32,090			n/m
Total securities		3,502,748			3,505,307			3,521,853			(2,559	)		-0.1	%		(19,105	)		-0.5	%
Loans (including loans held for sale)		6,387,251			6,160,781			5,784,170			226,470			3.7	%		603,081			10.4	%
Acquired loans:
Noncovered loans		585,675			664,733			888,883			(79,058	)		-11.9	%		(303,208	)		-34.1	%
Covered loans		28,971			31,122			39,561			(2,151	)		-6.9	%		(10,590	)		-26.8	%
Fed funds sold and rev repos		4,228			2,648			8,978			1,580			59.7	%		(4,750	)		-52.9	%
Other earning assets		41,871			36,259			38,226			5,612			15.5	%		3,645			9.5	%
Total earning assets		10,550,744			10,400,850			10,281,671			149,894			1.4	%		269,073			2.6	%
Allowance for loan losses		(78,227	)		(77,652	)		(79,696	)		(575	)		0.7	%		1,469			-1.8	%
Cash and due from banks		272,925			304,441			272,320			(31,516	)		-10.4	%		605			0.2	%
Other assets		1,345,771			1,343,384			1,284,813			2,387			0.2	%		60,958			4.7	%
Total assets	$	12,091,213		$	11,971,023		$	11,759,108		$	120,190			1.0	%	$	332,105			2.8	%
Interest-bearing demand deposits	$	1,808,710		$	1,826,019		$	1,842,379		$	(17,309	)		-0.9	%	$	(33,669	)		-1.8	%
Savings deposits		3,050,743			3,260,634			2,995,110			(209,891	)		-6.4	%		55,633			1.9	%
Time deposits less than $100,000		1,187,794			1,225,706			1,380,954			(37,912	)		-3.1	%		(193,160	)		-14.0	%
Time deposits of $100,000 or more		874,333			911,531			993,948			(37,198	)		-4.1	%		(119,615	)		-12.0	%
Total interest-bearing deposits		6,921,580			7,223,890			7,212,391			(302,310	)		-4.2	%		(290,811	)		-4.0	%
Fed funds purchased and repos		540,870			387,289			364,446			153,581			39.7	%		176,424			48.4	%
Short-term borrowings		181,114			59,465			59,324			121,649			n/m			121,790			n/m
Long-term FHLB advances		8,050			8,291			8,620			(241	)		-2.9	%		(570	)		-6.6	%
Subordinated notes		49,923			49,915			49,890			8			0.0	%		33			0.1	%
Junior subordinated debt securities		61,856			61,856			61,856			-			0.0	%		-			0.0	%
Total interest-bearing liabilities		7,763,393			7,790,706			7,756,527			(27,313	)		-0.4	%		6,866			0.1	%
Noninterest-bearing deposits		2,774,745			2,676,907			2,479,082			97,838			3.7	%		295,663			11.9	%
Other liabilities		140,218			111,170			190,143			29,048			26.1	%		(49,925	)		-26.3	%
Total liabilities		10,678,356			10,578,783			10,425,752			99,573			0.9	%		252,604			2.4	%
Shareholders' equity		1,412,857			1,392,240			1,333,356			20,617			1.5	%		79,501			6.0	%
Total liabilities and equity	$	12,091,213		$	11,971,023		$	11,759,108		$	120,190			1.0	%	$	332,105			2.8	%
										Linked Quarter						Year over Year
PERIOD END BALANCES	9/30/2014			6/30/2014			9/30/2013			$ Change			% Change			$ Change			% Change
Cash and due from banks	$	237,497		$	322,960		$	335,695		$	(85,463	)		-26.5	%	$	(98,198	)		-29.3	%
Fed funds sold and rev repos		4,013			5,000			7,867			(987	)		-19.7	%		(3,854	)		-49.0	%
Securities available for sale		2,363,895			2,376,431			3,372,101			(12,536	)		-0.5	%		(1,008,206	)		-29.9	%
Securities held to maturity		1,169,640			1,156,790			69,980			12,850			1.1	%		1,099,660			n/m
Loans held for sale (LHFS)		135,562			142,103			119,986			(6,541	)		-4.6	%		15,576			13.0	%
Loans held for investment (LHFI)		6,333,651			6,187,000			5,696,641			146,651			2.4	%		637,010			11.2	%
Allowance for loan losses		(70,134	)		(66,648	)		(68,632	)		(3,486	)		5.2	%		(1,502	)		2.2	%
Net LHFI		6,263,517			6,120,352			5,628,009			143,165			2.3	%		635,508			11.3	%
Acquired loans:
Noncovered loans		564,542			616,911			837,875			(52,369	)		-8.5	%		(273,333	)		-32.6	%
Covered loans		27,607			29,628			37,250			(2,021	)		-6.8	%		(9,643	)		-25.9	%
Allowance for loan losses, acquired loans		(11,949	)		(11,179	)		(5,333	)		(770	)		6.9	%		(6,616	)		n/m
Net acquired loans		580,200			635,360			869,792			(55,160	)		-8.7	%		(289,592	)		-33.3	%
Net LHFI and acquired loans		6,843,717			6,755,712			6,497,801			88,005			1.3	%		345,916			5.3	%
Premises and equipment, net		200,474			201,639			208,837			(1,165	)		-0.6	%		(8,363	)		-4.0	%
Mortgage servicing rights		67,090			65,049			63,150			2,041			3.1	%		3,940			6.2	%
Goodwill		365,500			365,500			372,463			-			0.0	%		(6,963	)		-1.9	%
Identifiable intangible assets		35,357			37,506			44,424			(2,149	)		-5.7	%		(9,067	)		-20.4	%
Other real estate, excluding covered other real estate		97,037			106,970			116,329			(9,933	)		-9.3	%		(19,292	)		-16.6	%
Covered other real estate		4,146			3,872			5,092			274			7.1	%		(946	)		-18.6	%
FDIC indemnification asset		8,154			10,866			17,085			(2,712	)		-25.0	%		(8,931	)		-52.3	%
Other assets		564,234			569,598			574,387			(5,364	)		-0.9	%		(10,153	)		-1.8	%
Total assets	$	12,096,316		$	12,119,996		$	11,805,197		$	(23,680	)		-0.2	%	$	291,119			2.5	%
Deposits:
Noninterest-bearing	$	2,723,480		$	2,729,199		$	2,643,612		$	(5,719	)		-0.2	%	$	79,868			3.0	%
Interest-bearing		6,789,745			7,131,167			7,143,622			(341,422	)		-4.8	%		(353,877	)		-5.0	%
Total deposits		9,513,225			9,860,366			9,787,234			(347,141	)		-3.5	%		(274,009	)		-2.8	%
Fed funds purchased and repos		607,851			559,316			342,465			48,535			8.7	%		265,386			77.5	%
Short-term borrowings		316,666			61,227			60,698			255,439			n/m			255,968			n/m
Long-term FHLB advances		8,003			8,236			8,562			(233	)		-2.8	%		(559	)		-6.5	%
Subordinated notes		49,928			49,920			49,896			8			0.0	%		32			0.1	%
Junior subordinated debt securities		61,856			61,856			61,856			-			0.0	%		-			0.0	%
Other liabilities		123,689			119,184			164,972			4,505			3.8	%		(41,283	)		-25.0	%
Total liabilities		10,681,218			10,720,105			10,475,683			(38,887	)		-0.4	%		205,535			2.0	%
Common stock		14,051			14,051			13,998			-			0.0	%		53			0.4	%
Capital surplus		354,251			353,196			343,759			1,055			0.3	%		10,492			3.1	%
Retained earnings		1,081,161			1,063,201			1,023,983			17,960			1.7	%		57,178			5.6	%
Accum other comprehensive
loss, net of tax		(34,365	)		(30,557	)		(52,226	)		(3,808	)		12.5	%		17,861			-34.2	%
Total shareholders' equity		1,415,098			1,399,891			1,329,514			15,207			1.1	%		85,584			6.4	%
Total liabilities and equity	$	12,096,316		$	12,119,996		$	11,805,197		$	(23,680	)		-0.2	%	$	291,119			2.5	%
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, 2014 ($ in thousands except per share data) (unaudited)

	Quarter Ended									Linked Quarter						Year over Year
INCOME STATEMENTS	9/30/2014			6/30/2014			9/30/2013			$ Change			% Change			$ Change			% Change
Interest and fees on LHFS & LHFI-FTE	$	70,197		$	69,618		$	68,417		$	579			0.8	%	$	1,780			2.6	%
Interest and fees on acquired loans		23,200			23,250			19,183			(50	)		-0.2	%		4,017			20.9	%
Interest on securities-taxable		19,712			19,522			18,654			190			1.0	%		1,058			5.7	%
Interest on securities-tax exempt-FTE		1,845			1,912			1,960			(67	)		-3.5	%		(115	)		-5.9	%
Interest on fed funds sold and rev repos		9			6			8			3			50.0	%		1			12.5	%
Other interest income		386			379			372			7			1.8	%		14			3.8	%
Total interest income-FTE		115,349			114,687			108,594			662			0.6	%		6,755			6.2	%
Interest on deposits		3,606			3,970			4,970			(364	)		-9.2	%		(1,364	)		-27.4	%
Interest on fed funds pch and repos		180			110			106			70			63.6	%		74			69.8	%
Other interest expense		1,425			1,375			1,389			50			3.6	%		36			2.6	%
Total interest expense		5,211			5,455			6,465			(244	)		-4.5	%		(1,254	)		-19.4	%
Net interest income-FTE		110,138			109,232			102,129			906			0.8	%		8,009			7.8	%
Provision for loan losses, LHFI		3,058			351			(3,624	)		2,707			n/m			6,682			n/m
Provision for loan losses, acquired loans		1,145			3,784			3,292			(2,639	)		-69.7	%		(2,147	)		-65.2	%
Net interest income after provision-FTE		105,935			105,097			102,461			838			0.8	%		3,474			3.4	%
Service charges on deposit accounts		12,743			11,846			13,852			897			7.6	%		(1,109	)		-8.0	%
Insurance commissions		9,240			8,300			8,227			940			11.3	%		1,013			12.3	%
Wealth management		8,038			7,710			7,520			328			4.3	%		518			6.9	%
Bank card and other fees		7,279			9,894			8,929			(2,615	)		-26.4	%		(1,650	)		-18.5	%
Mortgage banking, net		5,842			6,191			8,440			(349	)		-5.6	%		(2,598	)		-30.8	%
Other, net		(160	)		199			165			(359	)		n/m			(325	)		n/m
Nonint inc-excl sec gains (losses), net		42,982			44,140			47,133			(1,158	)		-2.6	%		(4,151	)		-8.8	%
Security gains (losses), net		(89	)		-			-			(89	)		n/m			(89	)		n/m
Total noninterest income		42,893			44,140			47,133			(1,247	)		-2.8	%		(4,240	)		-9.0	%
Salaries and employee benefits		56,675			56,134			56,043			541			1.0	%		632			1.1	%
Services and fees		14,489			14,543			13,580			(54	)		-0.4	%		909			6.7	%
Net occupancy-premises		6,817			6,413			6,644			404			6.3	%		173			2.6	%
Equipment expense		5,675			6,136			6,271			(461	)		-7.5	%		(596	)		-9.5	%
FDIC assessment expense		2,644			2,468			2,376			176			7.1	%		268			11.3	%
ORE/Foreclosure expense		930			3,836			3,079			(2,906	)		-75.8	%		(2,149	)		-69.8	%
Other expense		12,964			13,231			13,531			(267	)		-2.0	%		(567	)		-4.2	%
Total noninterest expense		100,194			102,761			101,524			(2,567	)		-2.5	%		(1,330	)		-1.3	%
Income before income taxes and tax eq adj		48,634			46,476			48,070			2,158			4.6	%		564			1.2	%
Tax equivalent adjustment		3,909			3,944			3,700			(35	)		-0.9	%		209			5.6	%
Income before income taxes		44,725			42,532			44,370			2,193			5.2	%		355			0.8	%
Income taxes		11,136			9,635			11,336			1,501			15.6	%		(200	)		-1.8	%
Net income	$	33,589		$	32,897		$	33,034		$	692			2.1	%	$	555			1.7	%
Per share data
Earnings per share - basic	$	0.50		$	0.49		$	0.49		$	0.01			2.0	%	$	0.01			2.0	%
Earnings per share - diluted	$	0.50		$	0.49		$	0.49		$	0.01			2.0	%	$	0.01			2.0	%
Dividends per share	$	0.23		$	0.23		$	0.23		$	-			0.0	%	$	-			0.0	%
Weighted average shares outstanding
Basic		67,439,788			67,439,659			67,177,013
Diluted		67,608,612			67,582,714			67,382,478
Period end shares outstanding		67,439,788			67,439,788			67,181,694
OTHER FINANCIAL DATA
Return on equity		9.43	%		9.48	%		9.83	%
Return on average tangible equity		13.70	%		13.90	%		14.92	%
Return on assets		1.10	%		1.10	%		1.11	%
Interest margin - Yield - FTE		4.34	%		4.42	%		4.19	%
Interest margin - Cost		0.20	%		0.21	%		0.25	%
Net interest margin - FTE		4.14	%		4.21	%		3.94	%
Efficiency ratio (1)		62.80	%		64.31	%		65.32	%
Full-time equivalent employees		3,067			3,095			3,110
STOCK PERFORMANCE
Market value-Close	$	23.04		$	24.69		$	25.60
Book value	$	20.98		$	20.76		$	19.79
Tangible book value	$	15.04		$	14.78		$	13.58
(1) - The efficiency ratio is noninterest expense to total net interest income (FTE) and noninterest income, excluding security gains (losses), amortization of
partnership tax credits, amortization of purchased intangibles, and nonroutine income and expense items.
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, 2014 ($ in thousands) (unaudited)

	Quarter Ended									Linked Quarter						Year over Year
NONPERFORMING ASSETS(1)	9/30/2014			6/30/2014			9/30/2013			$ Change			% Change			$ Change			% Change
Nonaccrual loans
Alabama	$	852		$	80		$	81		$	772			n/m		$	771			n/m
Florida		10,986			11,041			14,619			(55	)		-0.5	%		(3,633	)		-24.9	%
Mississippi (2)		65,751			49,430			43,132			16,321			33.0	%		22,619			52.4	%
Tennessee (3)		5,901			4,244			5,596			1,657			39.0	%		305			5.5	%
Texas		4,824			6,323			9,953			(1,499	)		-23.7	%		(5,129	)		-51.5	%
Total nonaccrual loans		88,314			71,118			73,381			17,196			24.2	%		14,933			20.3	%
Other real estate
Alabama		24,256			24,541			25,308			(285	)		-1.2	%		(1,052	)		-4.2	%
Florida		36,608			43,207			39,198			(6,599	)		-15.3	%		(2,590	)		-6.6	%
Mississippi (2)		16,419			18,723			25,439			(2,304	)		-12.3	%		(9,020	)		-35.5	%
Tennessee (3)		11,347			12,073			14,615			(726	)		-6.0	%		(3,268	)		-22.4	%
Texas		8,407			8,426			11,769			(19	)		-0.2	%		(3,362	)		-28.6	%
Total other real estate		97,037			106,970			116,329			(9,933	)		-9.3	%		(19,292	)		-16.6	%
Total nonperforming assets	$	185,351		$	178,088		$	189,710		$	7,263			4.1	%	$	(4,359	)		-2.3	%
LOANS PAST DUE OVER 90 DAYS(4)
LHFI	$	3,839		$	1,936		$	2,344		$	1,903			98.3	%	$	1,495			63.8	%
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	24,979		$	21,810		$	18,432		$	3,169			14.5	%	$	6,547			35.5	%
	Quarter Ended									Linked Quarter						Year over Year
ALLOWANCE FOR LOAN LOSSES (4)	9/30/2014			6/30/2014			9/30/2013			$ Change			% Change			$ Change			% Change
Beginning Balance	$	66,648		$	67,518		$	72,825		$	(870	)		-1.3	%	$	(6,177	)		-8.5	%
Provision for loan losses		3,058			351			(3,624	)		2,707			n/m			6,682			n/m
Charge-offs		(3,216	)		(3,820	)		(3,817	)		604			-15.8	%		601			-15.7	%
Recoveries		3,644			2,599			3,248			1,045			40.2	%		396			12.2	%
Net recoveries (charge-offs)		428			(1,221	)		(569	)		1,649			n/m			997			n/m
Ending Balance	$	70,134		$	66,648		$	68,632		$	3,486			5.2	%	$	1,502			2.2	%
PROVISION FOR LOAN LOSSES (4)
Alabama	$	1,093		$	696		$	550		$	397			57.0	%	$	543			98.7	%
Florida		(147	)		(2,014	)		(2,642	)		1,867			-92.7	%		2,495			-94.4	%
Mississippi (2)		4,679			2,877			(1,051	)		1,802			62.6	%		5,730			n/m
Tennessee (3)		244			(277	)		(150	)		521			n/m			394			n/m
Texas		(2,811	)		(931	)		(331	)		(1,880	)		n/m			(2,480	)		n/m
Total provision for loan losses	$	3,058		$	351		$	(3,624	)	$	2,707			n/m		$	6,682			n/m
NET CHARGE-OFFS (4)
Alabama	$	172		$	84		$	132		$	88			n/m		$	40			30.3	%
Florida		(89	)		(525	)		(138	)		436			-83.0	%		49			-35.5	%
Mississippi (2)		462			1,518			375			(1,056	)		-69.6	%		87			23.2	%
Tennessee (3)		48			87			(153	)		(39	)		-44.8	%		201			n/m
Texas		(1,021	)		57			353			(1,078	)		n/m			(1,374	)		n/m
Total net (recoveries) charge-offs	$	(428	)	$	1,221		$	569		$	(1,649	)		n/m		$	(997	)		n/m
CREDIT QUALITY RATIOS(1)
Net charge offs/average loans		-0.03	%		0.08	%		0.04	%
Provision for loan losses/average loans		0.19	%		0.02	%		-0.25	%
Nonperforming loans/total loans (incl LHFS)		1.37	%		1.12	%		1.26	%
Nonperforming assets/total loans (incl LHFS)		2.87	%		2.81	%		3.26	%
Nonperforming assets/total loans (incl LHFS) +ORE		2.82	%		2.77	%		3.20	%
ALL/total loans (excl LHFS)		1.11	%		1.08	%		1.20	%
ALL-commercial/total commercial loans		1.26	%		1.20	%		1.39	%
ALL-consumer/total consumer and home mortgage loans		0.69	%		0.75	%		0.73	%
ALL/nonperforming loans		79.41	%		93.71	%		93.53	%
ALL/nonperforming loans -
(excl impaired loans)		178.81	%		159.71	%		161.96	%
CAPITAL RATIOS
Total equity/total assets		11.70	%		11.55	%		11.26	%
Tangible equity/tangible assets		8.67	%		8.51	%		8.01	%
Tangible equity/risk-weighted assets		12.24	%		12.19	%		11.66	%
Tier 1 leverage ratio		9.54	%		9.43	%		8.78	%
Tier 1 common risk-based capital ratio		12.74	%		12.61	%		11.92	%
Tier 1 risk-based capital ratio		13.47	%		13.34	%		12.69	%
Total risk-based capital ratio		14.70	%		14.54	%		14.02	%
(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, 2014 ($ in thousands) (unaudited)

	Quarter Ended															Nine Months Ended
AVERAGE BALANCES	9/30/2014			6/30/2014			3/31/2014			12/31/2013			9/30/2013			9/30/2014			9/30/2013
Securities AFS-taxable	$	2,202,020		$	2,205,352		$	2,136,392		$	3,026,186		$	3,279,606		$	2,181,495		$	3,126,539
Securities AFS-nontaxable		131,305			135,956			149,744			160,989			172,055			138,934			170,616
Securities HTM-taxable		1,126,309			1,120,448			1,118,747			265,792			59,168			1,121,862			55,865
Securities HTM-nontaxable		43,114			43,551			31,039			21,172			11,024			39,279			13,043
Total securities		3,502,748			3,505,307			3,435,922			3,474,139			3,521,853			3,481,570			3,366,063
Loans (including loans held for sale)		6,387,251			6,160,781			5,950,720			5,847,557			5,784,170			6,167,850			5,753,759
Acquired loans:
Noncovered loans		585,675			664,733			751,723			812,426			888,883			666,769			790,943
Covered loans		28,971			31,122			33,805			34,640			39,561			31,282			44,229
Fed funds sold and rev repos		4,228			2,648			6,460			11,094			8,978			4,437			7,477
Other earning assets		41,871			36,259			36,820			32,118			38,226			38,335			35,893
Total earning assets		10,550,744			10,400,850			10,215,450			10,211,974			10,281,671			10,390,243			9,998,364
Allowance for loan losses		(78,227	)		(77,652	)		(79,736	)		(78,742	)		(79,696	)		(78,533	)		(83,547	)
Cash and due from banks		272,925			304,441			407,078			275,051			272,320			327,657			275,711
Other assets		1,345,771			1,343,384			1,376,024			1,360,712			1,284,813			1,354,948			1,260,227
Total assets	$	12,091,213		$	11,971,023		$	11,918,816		$	11,768,995		$	11,759,108		$	11,994,315		$	11,450,755
Interest-bearing demand deposits	$	1,808,710		$	1,826,019		$	1,900,504		$	1,803,956		$	1,842,379		$	1,844,741		$	1,786,215
Savings deposits		3,050,743			3,260,634			3,193,098			2,952,472			2,995,110			3,167,637			2,941,931
Time deposits less than $100,000		1,187,794			1,225,706			1,280,513			1,344,488			1,380,954			1,230,997			1,356,729
Time deposits of $100,000 or more		874,333			911,531			947,509			961,075			993,948			910,857			972,553
Total interest-bearing deposits		6,921,580			7,223,890			7,321,624			7,061,991			7,212,391			7,154,232			7,057,428
Fed funds purchased and repos		540,870			387,289			282,816			361,758			364,446			404,604			315,113
Short-term borrowings		181,114			59,465			65,010			63,531			59,324			102,288			59,319
Long-term FHLB advances		8,050			8,291			8,406			8,507			8,620			8,248			7,606
Subordinated notes		49,923			49,915			49,907			49,898			49,890			49,915			49,882
Junior subordinated debt securities		61,856			61,856			61,856			61,856			61,856			61,856			74,043
Total interest-bearing liabilities		7,763,393			7,790,706			7,789,619			7,607,541			7,756,527			7,781,143			7,563,391
Noninterest-bearing deposits		2,774,745			2,676,907			2,630,785			2,611,209			2,479,082			2,694,673			2,377,583
Other liabilities		140,218			111,170			130,749			203,270			190,143			127,414			175,344
Total liabilities		10,678,356			10,578,783			10,551,153			10,422,020			10,425,752			10,603,230			10,116,318
Shareholders' equity		1,412,857			1,392,240			1,367,663			1,346,975			1,333,356			1,391,085			1,334,437
Total liabilities and equity	$	12,091,213		$	11,971,023		$	11,918,816		$	11,768,995		$	11,759,108		$	11,994,315		$	11,450,755
PERIOD END BALANCES	9/30/2014			6/30/2014			3/31/2014			12/31/2013			9/30/2013
Cash and due from banks	$	237,497		$	322,960		$	423,819		$	345,761		$	335,695
Fed funds sold and rev repos		4,013			5,000			-			7,253			7,867
Securities available for sale		2,363,895			2,376,431			2,382,441			2,194,154			3,372,101
Securities held to maturity		1,169,640			1,156,790			1,155,569			1,168,728			69,980
Loans held for sale (LHFS)		135,562			142,103			120,446			149,169			119,986
Loans held for investment (LHFI)		6,333,651			6,187,000			5,923,766			5,798,881			5,696,641
Allowance for loan losses		(70,134	)		(66,648	)		(67,518	)		(66,448	)		(68,632	)
Net LHFI		6,263,517			6,120,352			5,856,248			5,732,433			5,628,009
Acquired loans:
Noncovered loans		564,542			616,911			713,647			769,990			837,875
Covered loans		27,607			29,628			32,670			34,216			37,250
Allowance for loan losses, acquired loans		(11,949	)		(11,179	)		(10,540	)		(9,636	)		(5,333	)
Net acquired loans		580,200			635,360			735,777			794,570			869,792
Net LHFI and acquired loans		6,843,717			6,755,712			6,592,025			6,527,003			6,497,801
Premises and equipment, net		200,474			201,639			203,771			207,283			208,837
Mortgage servicing rights		67,090			65,049			67,614			67,834			63,150
Goodwill		365,500			365,500			365,500			372,851			372,463
Identifiable intangible assets		35,357			37,506			39,697			41,990			44,424
Other real estate, excluding covered other real estate		97,037			106,970			111,536			106,539			116,329
Covered other real estate		4,146			3,872			4,759			5,108			5,092
FDIC indemnification asset		8,154			10,866			13,487			14,347			17,085
Other assets		564,234			569,598			576,390			582,363			574,387
Total assets	$	12,096,316		$	12,119,996		$	12,057,054		$	11,790,383		$	11,805,197
Deposits:
Noninterest-bearing	$	2,723,480		$	2,729,199		$	2,879,341		$	2,663,503		$	2,643,612
Interest-bearing		6,789,745			7,131,167			7,242,778			7,196,399			7,143,622
Total deposits		9,513,225			9,860,366			10,122,119			9,859,902			9,787,234
Fed funds purchased and repos		607,851			559,316			259,341			251,587			342,465
Short-term borrowings		316,666			61,227			59,671			66,385			60,698
Long-term FHLB advances		8,003			8,236			8,341			8,458			8,562
Subordinated notes		49,928			49,920			49,912			49,904			49,896
Junior subordinated debt securities		61,856			61,856			61,856			61,856			61,856
Other liabilities		123,689			119,184			121,919			137,338			164,972
Total liabilities		10,681,218			10,720,105			10,683,159			10,435,430			10,475,683
Common stock		14,051			14,051			14,051			14,038			13,998
Capital surplus		354,251			353,196			352,402			349,680			343,759
Retained earnings		1,081,161			1,063,201			1,045,939			1,034,966			1,023,983
Accum other comprehensive
loss, net of tax		(34,365	)		(30,557	)		(38,497	)		(43,731	)		(52,226	)
Total shareholders' equity		1,415,098			1,399,891			1,373,895			1,354,953			1,329,514
Total liabilities and equity	$	12,096,316		$	12,119,996		$	12,057,054		$	11,790,383		$	11,805,197
See Notes to Consolidated Financials

 

  TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION September 30, 2014 ($ in thousands except per share data) (unaudited)

	Quarter Ended															Nine Months Ended
INCOME STATEMENTS	9/30/2014			6/30/2014			3/31/2014			12/31/2013			9/30/2013			9/30/2014			9/30/2013
Interest and fees on LHFS & LHFI-FTE	$	70,197		$	69,618		$	66,185		$	67,038		$	68,417		$	206,000		$	203,579
Interest and fees on acquired loans		23,200			23,250			16,786			23,384			19,183			63,236			52,952
Interest on securities-taxable		19,712			19,522			19,220			19,078			18,654			58,454			53,740
Interest on securities-tax exempt-FTE		1,845			1,912			1,920			1,963			1,960			5,677			5,952
Interest on fed funds sold and rev repos		9			6			5			14			8			20			17
Other interest income		386			379			375			367			372			1,140			1,099
Total interest income-FTE		115,349			114,687			104,491			111,844			108,594			334,527			317,339
Interest on deposits		3,606			3,970			4,365			4,768			4,970			11,941			14,950
Interest on fed funds pch and repos		180			110			76			104			106			366			275
Other interest expense		1,425			1,375			1,363			1,370			1,389			4,163			4,392
Total interest expense		5,211			5,455			5,804			6,242			6,465			16,470			19,617
Net interest income-FTE		110,138			109,232			98,687			105,602			102,129			318,057			297,722
Provision for loan losses, LHFI		3,058			351			(805	)		(1,983	)		(3,624	)		2,604			(11,438	)
Provision for loan losses, acquired loans		1,145			3,784			63			4,169			3,292			4,992			1,870
Net interest income after provision-FTE		105,935			105,097			99,429			103,416			102,461			310,461			307,290
Service charges on deposit accounts		12,743			11,846			11,568			13,114			13,852			36,157			38,462
Insurance commissions		9,240			8,300			8,097			7,343			8,227			25,637			23,483
Wealth management		8,038			7,710			8,135			8,145			7,520			23,883			21,335
Bank card and other fees		7,279			9,894			9,081			9,580			8,929			26,254			26,381
Mortgage banking, net		5,842			6,191			6,829			5,186			8,440			18,862			28,318
Other, net		(160	)		199			(21	)		(4,802	)		165			18			(3,171	)
Nonint inc-excl sec gains (losses), net		42,982			44,140			43,689			38,566			47,133			130,811			134,808
Security gains (losses), net		(89	)		-			389			107			-			300			378
Total noninterest income		42,893			44,140			44,078			38,673			47,133			131,111			135,186
Salaries and employee benefits		56,675			56,134			56,726			56,687			56,043			169,535			165,040
Services and fees		14,489			14,543			13,165			14,476			13,580			42,197			39,428
Net occupancy-premises		6,817			6,413			6,606			6,659			6,644			19,836			19,302
Equipment expense		5,675			6,136			6,138			6,400			6,271			17,949			18,138
FDIC assessment expense		2,644			2,468			2,416			2,228			2,376			7,528			6,773
ORE/Foreclosure expense		930			3,836			3,315			3,009			3,079			8,081			12,030
Other expense		12,964			13,231			13,252			15,408			13,531			39,447			50,153
Total noninterest expense		100,194			102,761			101,618			104,867			101,524			304,573			310,864
Income before income taxes and tax eq adj		48,634			46,476			41,889			37,222			48,070			136,999			131,612
Tax equivalent adjustment		3,909			3,944			3,783			3,747			3,700			11,636			11,090
Income before income taxes		44,725			42,532			38,106			33,475			44,370			125,363			120,522
Income taxes		11,136			9,635			9,103			5,436			11,336			29,874			31,501
Net income	$	33,589		$	32,897		$	29,003		$	28,039		$	33,034		$	95,489		$	89,021
Per share data
Earnings per share - basic	$	0.50		$	0.49		$	0.43		$	0.42		$	0.49		$	1.42		$	1.33
Earnings per share - diluted	$	0.50		$	0.49		$	0.43		$	0.42		$	0.49		$	1.41		$	1.33
Dividends per share	$	0.23		$	0.23		$	0.23		$	0.23		$	0.23		$	0.69		$	0.69
Weighted average shares outstanding
Basic		67,439,788			67,439,659			67,410,147			67,249,877			67,177,013			67,429,973			66,778,622
Diluted		67,608,612			67,582,714			67,550,483			67,449,778			67,382,478			67,580,209			66,962,534
Period end shares outstanding		67,439,788			67,439,788			67,439,562			67,372,980			67,181,694			67,439,788			67,181,694
OTHER FINANCIAL DATA
Return on equity		9.43	%		9.48	%		8.60	%		8.26	%		9.83	%		9.18	%		8.92	%
Return on average tangible equity		13.70	%		13.90	%		12.93	%		12.59	%		14.92	%		13.52	%		13.25	%
Return on assets		1.10	%		1.10	%		0.99	%		0.95	%		1.11	%		1.06	%		1.04	%
Interest margin - Yield - FTE		4.34	%		4.42	%		4.15	%		4.35	%		4.19	%		4.30	%		4.24	%
Interest margin - Cost		0.20	%		0.21	%		0.23	%		0.24	%		0.25	%		0.21	%		0.26	%
Net interest margin - FTE		4.14	%		4.21	%		3.92	%		4.10	%		3.94	%		4.09	%		3.98	%
Efficiency ratio (1)		62.80	%		64.31	%		68.32	%		68.38	%		65.32	%		65.07	%		66.28	%
Full-time equivalent employees		3,067			3,095			3,114			3,110			3,110
STOCK PERFORMANCE
Market value-Close	$	23.04		$	24.69		$	25.35		$	26.84		$	25.60
Book value	$	20.98		$	20.76		$	20.37		$	20.11		$	19.79
Tangible book value	$	15.04		$	14.78		$	14.36		$	13.95		$	13.58
(1) - The efficiency ratio is noninterest expense to total net interest income (FTE) and noninterest income, excluding security gains (losses), amortization of
partnership tax credits, amortization of purchased intangibles, and nonroutine income and expense items.
See Notes to Consolidated Financials

  TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION September 30, 2014 ($ in thousands) (unaudited)

	Quarter Ended
NONPERFORMING ASSETS(1)	9/30/2014			6/30/2014			3/31/2014			12/31/2013			9/30/2013
Nonaccrual loans
Alabama	$	852		$	80		$	96		$	14		$	81
Florida		10,986			11,041			9,956			12,278			14,619
Mississippi (2)		65,751			49,430			44,168			42,307			43,132
Tennessee (3)		5,901			4,244			5,206			4,390			5,596
Texas		4,824			6,323			4,572			6,249			9,953
Total nonaccrual loans		88,314			71,118			63,998			65,238			73,381
Other real estate
Alabama		24,256			24,541			24,103			25,912			25,308
Florida		36,608			43,207			42,013			34,480			39,198
Mississippi (2)		16,419			18,723			22,287			22,766			25,439
Tennessee (3)		11,347			12,073			13,000			12,892			14,615
Texas		8,407			8,426			10,133			10,489			11,769
Total other real estate		97,037			106,970			111,536			106,539			116,329
Total nonperforming assets	$	185,351		$	178,088		$	175,534		$	171,777		$	189,710
LOANS PAST DUE OVER 90 DAYS(4)
LHFI	$	3,839		$	1,936		$	1,870		$	3,298		$	2,344
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	24,979		$	21,810		$	20,109		$	21,540		$	18,432
	Quarter Ended															Nine Months Ended
ALLOWANCE FOR LOAN LOSSES (4)	9/30/2014			6/30/2014			3/31/2014			12/31/2013			9/30/2013			9/30/2014			9/30/2013
Beginning Balance	$	66,648		$	67,518		$	66,448		$	68,632		$	72,825		$	66,448		$	78,738
Provision for loan losses		3,058			351			(805	)		(1,983	)		(3,624	)		2,604			(11,438	)
Charge-offs		(3,216	)		(3,820	)		(3,016	)		(3,305	)		(3,817	)		(10,052	)		(10,173	)
Recoveries		3,644			2,599			4,891			3,104			3,248			11,134			11,505
Net recoveries (charge-offs)		428			(1,221	)		1,875			(201	)		(569	)		1,082			1,332
Ending Balance	$	70,134		$	66,648		$	67,518		$	66,448		$	68,632		$	70,134		$	68,632
PROVISION FOR LOAN LOSSES (4)
Alabama	$	1,093		$	696		$	472		$	332		$	550		$	2,261		$	1,458
Florida		(147	)		(2,014	)		(3,499	)		(2,350	)		(2,642	)		(5,660	)		(9,742	)
Mississippi (2)		4,679			2,877			1,983			3,336			(1,051	)		9,539			(3,491	)
Tennessee (3)		244			(277	)		(915	)		(117	)		(150	)		(948	)		(863	)
Texas		(2,811	)		(931	)		1,154			(3,184	)		(331	)		(2,588	)		1,200
Total provision for loan losses	$	3,058		$	351		$	(805	)	$	(1,983	)	$	(3,624	)	$	2,604		$	(11,438	)
NET CHARGE-OFFS (4)
Alabama	$	172		$	84		$	55		$	74		$	132		$	311		$	210
Florida		(89	)		(525	)		(2,524	)		(634	)		(138	)		(3,138	)		(2,413	)
Mississippi (2)		462			1,518			676			393			375			2,656			376
Tennessee (3)		48			87			(1	)		506			(153	)		134			199
Texas		(1,021	)		57			(81	)		(138	)		353			(1,045	)		296
Total net (recoveries) charge-offs	$	(428	)	$	1,221		$	(1,875	)	$	201		$	569		$	(1,082	)	$	(1,332	)
CREDIT QUALITY RATIOS(1)
Net charge offs/average loans		-0.03	%		0.08	%		-0.13	%		0.01	%		0.04	%		-0.02	%		-0.03	%
Provision for loan losses/average loans		0.19	%		0.02	%		-0.05	%		-0.13	%		-0.25	%		0.06	%		-0.27	%
Nonperforming loans/total loans (incl LHFS)		1.37	%		1.12	%		1.06	%		1.10	%		1.26	%
Nonperforming assets/total loans (incl LHFS)		2.87	%		2.81	%		2.90	%		2.89	%		3.26	%
Nonperforming assets/total loans (incl LHFS) +ORE		2.82	%		2.77	%		2.85	%		2.84	%		3.20	%
ALL/total loans (excl LHFS)		1.11	%		1.08	%		1.14	%		1.15	%		1.20	%
ALL-commercial/total commercial loans		1.26	%		1.20	%		1.33	%		1.30	%		1.39	%
ALL-consumer/total consumer and home mortgage loans		0.69	%		0.75	%		0.65	%		0.75	%		0.73	%
ALL/nonperforming loans		79.41	%		93.71	%		105.50	%		101.86	%		93.53	%
ALL/nonperforming loans -
(excl impaired loans)		178.81	%		159.71	%		180.86	%		190.70	%		161.96	%
CAPITAL RATIOS
Total equity/total assets		11.70	%		11.55	%		11.39	%		11.49	%		11.26	%
Tangible equity/tangible assets		8.67	%		8.51	%		8.31	%		8.26	%		8.01	%
Tangible equity/risk-weighted assets		12.24	%		12.19	%		12.08	%		11.88	%		11.66	%
Tier 1 leverage ratio		9.54	%		9.43	%		9.14	%		9.06	%		8.78	%
Tier 1 common risk-based capital ratio		12.74	%		12.61	%		12.37	%		12.21	%		11.92	%
Tier 1 risk-based capital ratio		13.47	%		13.34	%		13.11	%		12.97	%		12.69	%
Total risk-based capital ratio		14.70	%		14.54	%		14.34	%		14.18	%		14.02	%
(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, 2014 ($ in thousands) (unaudited)

Note 1 – Business Combinations

Oxford, Mississippi Branches

On July 26, 2013, Trustmark National Bank (TNB), a subsidiary of Trustmark Corporation (Trustmark), completed its acquisition of two branches of SOUTHBank, F.S.B. (SOUTHBank), located in Oxford, Mississippi.  As a result of this acquisition, 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.”

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):

	9/30/2014		6/30/2014		3/31/2014		12/31/2013		9/30/2013
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities	$	100	$	100	$	100	$	502	$	503
U.S. Government agency obligations
Issued by U.S. Government agencies		83,011		117,489		123,368		129,293		133,013
Issued by U.S. Government sponsored agencies		30,779		40,848		40,601		40,179		132,425
Obligations of states and political subdivisions		165,463		171,229		172,437		171,738		212,991
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		12,828		13,492		14,263		14,474		48,240
Issued by FNMA and FHLMC		213,420		225,229		232,488		241,118		214,795
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		1,603,138		1,543,619		1,530,068		1,290,741		2,048,275
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		221,641		229,283		232,072		242,172		354,131
Asset-backed securities and structured financial products		33,515		35,142		37,044		63,937		227,728
Total securities available for sale	$	2,363,895	$	2,376,431	$	2,382,441	$	2,194,154	$	3,372,101
SECURITIES HELD TO MATURITY
U.S. Government agency obligations
Issued by U.S. Government sponsored agencies	$	100,767	$	100,563	$	100,361	$	100,159	$	-
Obligations of states and political subdivisions		64,538		65,193		65,757		65,987		30,229
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		13,368		13,959		12,177		9,433		2,420
Issued by FNMA and FHLMC		11,816		12,165		12,395		12,724		564
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		836,966		822,444		822,135		837,393		-
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		142,185		142,466		142,744		143,032		36,767
Total securities held to maturity	$	1,169,640	$	1,156,790	$	1,155,569	$	1,168,728	$	69,980

During the fourth quarter of 2013, Trustmark reclassified approximately $1.099 billion of securities available for sale to securities held to maturity. The securities were transferred at fair value, which became the cost basis for the securities held to maturity. At the date of transfer, the net unrealized holding loss on the available for sale securities totaled approximately $46.6 million ($28.8 million, net of tax). The net unrealized holding loss is amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. There were no gains or losses recognized as a result of the transfer.  At September 30, 2014, the net unamortized, unrealized loss on the transferred securities included in accumulated other comprehensive (loss) income in the accompanying balance sheet totaled approximately $41.9 million ($25.9 million, net of tax).

During the fourth quarter of 2013, Trustmark sold $135.6 million of Collateralized Loan Obligations (CLO) generating a net gain of $1.3 million. These securities were identified as available for sale and had been carried in the asset-backed securities and structured financial products line item in the table shown above. This sale left Trustmark with a CLO balance of $25.9 million at December 31, 2013, which was subsequently sold in its entirety for a gain of $389 thousand in January 2014.

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 93% 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 stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE.

  TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL INFORMATION September 30, 2014 ($ in thousands) (unaudited)

Note 3 – Loan Composition

LHFI BY TYPE (excluding acquired loans)	9/30/2014			6/30/2014			3/31/2014			12/31/2013			9/30/2013
Loans secured by real estate:
Construction, land development and other land loans	$	580,794		$	531,651		$	592,658		$	596,889		$	572,057
Secured by 1-4 family residential properties		1,625,480			1,581,859			1,533,781			1,485,564			1,482,963
Secured by nonfarm, nonresidential properties		1,560,901			1,544,516			1,461,947			1,415,139			1,408,342
Other real estate secured		239,819			250,383			193,221			189,362			196,328
Commercial and industrial loans		1,246,753			1,250,146			1,207,367			1,157,614			1,132,863
Consumer loans		168,813			165,372			160,153			165,308			164,612
Other loans		911,091			863,073			774,639			789,005			739,476
LHFI		6,333,651			6,187,000			5,923,766			5,798,881			5,696,641
Allowance for loan losses		(70,134	)		(66,648	)		(67,518	)		(66,448	)		(68,632	)
Net LHFI	$	6,263,517		$	6,120,352		$	5,856,248		$	5,732,433		$	5,628,009

ACQUIRED NONCOVERED LOANS BY TYPE	9/30/2014			6/30/2014			3/31/2014			12/31/2013			9/30/2013
Loans secured by real estate:
Construction, land development and other land loans	$	64,808		$	75,353		$	88,683		$	98,928		$	106,655
Secured by 1-4 family residential properties		120,366			133,191			145,213			157,914			168,573
Secured by nonfarm, nonresidential properties		214,806			226,967			271,696			287,136			301,686
Other real estate secured		28,036			30,918			34,787			33,948			35,051
Commercial and industrial loans		103,185			114,212			135,114			149,495			186,649
Consumer loans		11,236			14,733			15,024			18,428			22,251
Other loans		22,105			21,537			23,130			24,141			17,010
Noncovered loans		564,542			616,911			713,647			769,990			837,875
Allowance for loan losses		(11,136	)		(9,770	)		(9,952	)		(7,249	)		(3,007	)
Net noncovered loans	$	553,406		$	607,141		$	703,695		$	762,741		$	834,868

ACQUIRED COVERED LOANS BY TYPE	9/30/2014			6/30/2014			3/31/2014			12/31/2013			9/30/2013
Loans secured by real estate:
Construction, land development and other land loans	$	1,721		$	2,130		$	2,239		$	2,363		$	2,585
Secured by 1-4 family residential properties		14,114			14,565			15,572			16,416			17,785
Secured by nonfarm, nonresidential properties		8,270			8,831			10,629			10,945			12,120
Other real estate secured		2,949			2,376			2,470			2,644			2,817
Commercial and industrial loans		327			336			361			394			478
Consumer loans		-			-			49			119			151
Other loans		226			1,390			1,350			1,335			1,314
Covered loans		27,607			29,628			32,670			34,216			37,250
Allowance for loan losses		(813	)		(1,409	)		(588	)		(2,387	)		(2,326	)
Net covered loans	$	26,794		$	28,219		$	32,082		$	31,829		$	34,924

  TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL INFORMATION September 30, 2014 ($ in thousands) (unaudited)

Note 3 – Loan Composition (continued)
	September 30, 2014
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	$	580,794	$	56,496	$	59,822	$	251,931	$	36,868	$	175,677
Secured by 1-4 family residential properties		1,625,480		34,915		50,888		1,392,033		128,966		18,678
Secured by nonfarm, nonresidential properties		1,560,901		81,220		169,716		796,158		145,197		368,610
Other real estate secured		239,819		7,236		4,527		155,652		27,064		45,340
Commercial and industrial loans		1,246,753		78,335		10,269		797,307		96,445		264,397
Consumer loans		168,813		16,028		2,804		130,710		16,512		2,759
Other loans		911,091		51,840		46,230		665,139		58,723		89,159
Loans	$	6,333,651	$	326,070	$	344,256	$	4,188,930	$	509,775	$	964,620
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION(1)
Lots	$	51,089	$	4,319	$	26,551	$	14,983	$	1,154	$	4,082
Development		58,350		836		6,924		31,889		956		17,745
Unimproved land		121,841		6,529		21,474		60,039		23,518		10,281
1-4 family construction		120,747		21,721		4,724		59,896		2,836		31,570
Other construction		228,767		23,091		149		85,124		8,404		111,999
Construction, land development and other land loans	$	580,794	$	56,496	$	59,822	$	251,931	$	36,868	$	175,677
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION (1)
Income producing:
Retail	$	186,564	$	18,070	$	38,968	$	63,805	$	16,490	$	49,231
Office		205,957		9,897		44,271		83,556		8,010		60,223
Nursing homes/assisted living		111,338		-		-		92,345		5,848		13,145
Hotel/motel		107,720		11,853		16,067		46,106		23,744		9,950
Industrial		68,183		4,262		6,086		32,871		141		24,823
Health care		29,204		5,147		-		24,014		43		-
Convenience stores		9,225		248		-		5,782		1,266		1,929
Other		144,033		4,677		20,756		68,070		4,327		46,203
Total income producing loans		862,224		54,154		126,148		416,549		59,869		205,504
Owner-occupied:
Office		116,451		5,965		15,652		54,700		8,285		31,849
Churches		90,977		2,895		3,345		41,791		32,092		10,854
Industrial warehouses		115,273		332		4,115		61,568		7,830		41,428
Health care		120,906		11,122		8,666		66,029		16,469		18,620
Convenience stores		53,291		522		1,572		32,919		2,818		15,460
Retail		30,268		1,333		3,906		18,532		3,080		3,417
Restaurants		35,077		241		2,062		27,657		4,076		1,041
Auto dealerships		8,123		-		160		6,367		1,569		27
Other		128,311		4,656		4,090		70,046		9,109		40,410
Total owner-occupied loans		698,677		27,066		43,568		379,609		85,328		163,106
Loans secured by nonfarm, nonresidential properties	$	1,560,901	$	81,220	$	169,716	$	796,158	$	145,197	$	368,610
(1) Excludes acquired loans.

  TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL INFORMATION September 30, 2014 ($ 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
	9/30/2014			6/30/2014			3/31/2014			12/31/2013			9/30/2013			9/30/2014			9/30/2013
Securities – taxable		2.35	%		2.35	%		2.39	%		2.30	%		2.22	%		2.37	%		2.26	%
Securities – nontaxable		4.20	%		4.27	%		4.31	%		4.28	%		4.25	%		4.26	%		4.33	%
Securities – total		2.44	%		2.45	%		2.50	%		2.40	%		2.32	%		2.46	%		2.37	%
Loans - LHFI & LHFS		4.36	%		4.53	%		4.51	%		4.55	%		4.69	%		4.47	%		4.73	%
Acquired loans		14.98	%		13.40	%		8.67	%		10.95	%		8.20	%		12.11	%		8.48	%
Loans - total		5.29	%		5.43	%		5.00	%		5.36	%		5.18	%		5.24	%		5.21	%
FF sold & rev repo		0.84	%		0.91	%		0.31	%		0.50	%		0.35	%		0.60	%		0.30	%
Other earning assets		3.66	%		4.19	%		4.13	%		4.53	%		3.86	%		3.98	%		4.09	%
Total earning assets		4.34	%		4.42	%		4.15	%		4.35	%		4.19	%		4.30	%		4.24	%
Interest-bearing deposits		0.21	%		0.22	%		0.24	%		0.27	%		0.27	%		0.22	%		0.28	%
FF pch & repo		0.13	%		0.11	%		0.11	%		0.11	%		0.12	%		0.12	%		0.12	%
Other borrowings		1.88	%		3.07	%		2.99	%		2.96	%		3.07	%		2.50	%		3.08	%
Total interest-bearing liabilities		0.27	%		0.28	%		0.30	%		0.33	%		0.33	%		0.28	%		0.35	%
Net interest margin		4.14	%		4.21	%		3.92	%		4.10	%		3.94	%		4.09	%		3.98	%
Net interest margin excluding acquired loans		3.47	%		3.55	%		3.52	%		3.48	%		3.52	%		3.52	%		3.57	%

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 decreased 7 basis points during the third quarter of 2014 primarily due to declining yields on loans held for investment and loans held for sale.

During the third quarter of 2014, the yield on average acquired loans includes approximately $8.7 million in recoveries, or an annualized 5.64% of the average acquired loan balance.  Excluding the recoveries on acquired loans, the yield on average acquired loans totaled 9.34%.

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 $583 thousand and $1.3 million for the quarters ended September 30, 2014 and 2013, respectively.

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

	Quarter Ended															Nine Months Ended
	9/30/2014			6/30/2014			3/31/2014			12/31/2013			9/30/2013			9/30/2014			9/30/2013
Mortgage servicing income, net	$	4,674		$	4,592		$	4,539		$	4,688		$	4,552		$	13,805		$	13,204
Change in fair value-MSR from runoff		(2,364	)		(2,391	)		(1,812	)		(2,182	)		(2,407	)		(6,567	)		(7,623	)
Gain on sales of loans, net		3,272			2,749			1,839			2,202			6,465			7,860			24,227
Other, net		(323	)		695			400			(533	)		(1,485	)		772			(4,186	)
Mortgage banking income before hedge ineffectiveness		5,259			5,645			4,966			4,175			7,125			15,870			25,622
Change in fair value-MSR from market changes		700			(3,038	)		(723	)		3,937			287			(3,061	)		7,881
Change in fair value of derivatives		(117	)		3,584			2,586			(2,926	)		1,028			6,053			(5,185	)
Net positive hedge ineffectiveness		583			546			1,863			1,011			1,315			2,992			2,696
Mortgage banking, net	$	5,842		$	6,191		$	6,829		$	5,186		$	8,440		$	18,862		$	28,318

  TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL INFORMATION September 30, 2014 ($ 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
	9/30/2014			6/30/2014			3/31/2014			12/31/2013			9/30/2013			9/30/2014			9/30/2013
Partnership amortization for tax credit purposes	$	(3,006	)	$	(3,006	)	$	(3,006	)	$	(5,642	)	$	(2,388	)	$	(9,018	)	$	(6,726	)
(Decrease) increase in FDIC indemnification asset		(452	)		(999	)		(688	)		(2,429	)		211			(2,139	)		(3,471	)
Other miscellaneous income		3,298			4,204			3,673			3,269			2,342			11,175			7,026
Total other, net	$	(160	)	$	199		$	(21	)	$	(4,802	)	$	165		$	18		$	(3,171	)

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 2014, other noninterest income included a write-down of the FDIC indemnification asset of $452 thousand on acquired covered loans obtained from Heritage as a result of loan pay-offs, improved cash flow projections and lower loss expectations for loan pools.

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

	Quarter Ended										Nine Months Ended
	9/30/2014		6/30/2014		3/31/2014		12/31/2013		9/30/2013		9/30/2014		9/30/2013
Loan expense	$	3,070	$	3,107	$	3,464	$	4,419	$	3,390	$	9,641	$	10,652
Non-routine transaction expenses on acquisitions		-		-		-		-		-		-		7,920
Amortization of intangibles		2,150		2,190		2,293		2,434		2,466		6,633		6,380
Other miscellaneous expense		7,744		7,934		7,495		8,555		7,675		23,173		25,201
Total other expense	$	12,964	$	13,231	$	13,252	$	15,408	$	13,531	$	39,447	$	50,153

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, 2014 ($ in thousands) (unaudited)

Note 7 - Non-GAAP Financial Measures (continued)
			Quarter Ended															Nine Months Ended
			9/30/2014			6/30/2014			3/31/2014			12/31/2013			9/30/2013			9/30/2014			9/30/2013
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity			$	1,412,857		$	1,392,240		$	1,367,663		$	1,346,975		$	1,333,356		$	1,391,085		$	1,334,437
Less:	Goodwill			(365,500	)		(365,500	)		(372,720	)		(372,468	)		(368,482	)		(367,880	)		(353,485	)
	Identifiable intangible assets			(36,553	)		(38,711	)		(41,015	)		(43,532	)		(45,988	)		(38,743	)		(43,232	)
Total average tangible equity			$	1,010,804		$	988,029		$	953,928		$	930,975		$	918,886		$	984,462		$	937,720
PERIOD END BALANCES
Total shareholders' equity			$	1,415,098		$	1,399,891		$	1,373,895		$	1,354,953		$	1,329,514
Less:	Goodwill			(365,500	)		(365,500	)		(365,500	)		(372,851	)		(372,463	)
	Identifiable intangible assets			(35,357	)		(37,506	)		(39,697	)		(41,990	)		(44,424	)
Total tangible equity		(a)	$	1,014,241		$	996,885		$	968,698		$	940,112		$	912,627
TANGIBLE ASSETS
Total assets			$	12,096,316		$	12,119,996		$	12,057,054		$	11,790,383		$	11,805,197
Less:	Goodwill			(365,500	)		(365,500	)		(365,500	)		(372,851	)		(372,463	)
	Identifiable intangible assets			(35,357	)		(37,506	)		(39,697	)		(41,990	)		(44,424	)
Total tangible assets		(b)	$	11,695,459		$	11,716,990		$	11,651,857		$	11,375,542		$	11,388,310
Risk-weighted assets		(c)	$	8,287,608		$	8,175,622		$	8,016,482		$	7,916,378		$	7,825,839
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income			$	33,589		$	32,897		$	29,003		$	28,039		$	33,034		$	95,489		$	89,021
Plus:	Intangible amortization net of tax			1,328			1,353			1,417			1,503			1,523			4,098			3,939
Net income adjusted for intangible amortization			$	34,917		$	34,250		$	30,420		$	29,542		$	34,557		$	99,587		$	92,960
Period end common shares outstanding		(d)		67,439,788			67,439,788			67,439,562			67,372,980			67,181,694
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity 1				13.70	%		13.90	%		12.93	%		12.59	%		14.92	%		13.52	%		13.25	%
Tangible equity/tangible assets		(a)/(b)		8.67	%		8.51	%		8.31	%		8.26	%		8.01	%
Tangible equity/risk-weighted assets		(a)/(c)		12.24	%		12.19	%		12.08	%		11.88	%		11.66	%
Tangible book value		(a)/(d)*1,000	$	15.04		$	14.78		$	14.36		$	13.95		$	13.58
TIER 1 COMMON RISK-BASED CAPITAL
Total shareholders' equity			$	1,415,098		$	1,399,891		$	1,373,895		$	1,354,953		$	1,329,514
Eliminate qualifying AOCI				34,365			30,557			38,497			43,731			52,226
Qualifying tier 1 capital				60,000			60,000			60,000			60,000			60,000
Disallowed goodwill				(365,500	)		(365,500	)		(365,500	)		(372,851	)		(372,463	)
Adj to goodwill allowed for deferred taxes				15,503			15,150			14,798			14,445			14,093
Other disallowed intangibles				(35,357	)		(37,506	)		(39,697	)		(41,990	)		(44,424	)
Disallowed servicing intangible				(6,709	)		(6,505	)		(6,761	)		(6,783	)		(6,315	)
Disallowed deferred taxes				(1,234	)		(5,134	)		(23,969	)		(24,647	)		(39,476	)
Total tier 1 capital				1,116,166			1,090,953			1,051,263			1,026,858			993,155
Less:	Qualifying tier 1 capital			(60,000	)		(60,000	)		(60,000	)		(60,000	)		(60,000	)
Total tier 1 common capital		(e)	$	1,056,166		$	1,030,953		$	991,263		$	966,858		$	933,155
Tier 1 common risk-based capital ratio		(e)/(c)		12.74	%		12.61	%		12.37	%		12.21	%		11.92	%
1Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity