News Release |
Trustmark Corporation Announces 2013 Financial Results
JACKSON, Miss. – January 28, 2014 – Trustmark Corporation (NASDAQ:TRMK) reported net income available to common shareholders of $28.0 million in the fourth quarter of 2013, which represented diluted earnings per common share of $0.42. For the full year 2013, net income available to common shareholders totaled $117.1 million, resulting in diluted earnings per share of $1.75. Excluding non-routine merger costs and litigation expense that reduced after-tax net income by $8.3 million, or approximately $0.12 per diluted share, Trustmark’s net income available to common shareholders in 2013 totaled $125.3 million, or $1.87 per diluted share. Trustmark’s performance during 2013 produced a return on average tangible common equity of 13.09% and a return on average assets of 1.02%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per common share payable March 15, 2014, to shareholders of record on March 1, 2014. Since inception, Trustmark has consistently paid quarterly cash dividends to its shareholders. These dividends have grown over time – and have never decreased – due to the quality and sustainability of earnings.
Gerard R. Host, President and CEO, stated, “Trustmark’s achievements in 2013 were significant. We continued to build upon and expand customer relationships, as reflected by growth in our banking, wealth management and insurance businesses. Over the course of the year, revenue increased 8.9% to a record level of $562.3 million. Credit quality continued to improve and was an important contributor to our financial success. During the year, we successfully completed the largest acquisition in our history, entering a number of new markets throughout Alabama as well as enhancing our position in the Florida panhandle. We also continued investing in technology to increase revenue and improve efficiency. 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 as we enter our 125th year.”
Balance Sheet Management
· | Loans held for investment increased $102.2 million in fourth quarter, $206.1 million in 2013 |
· | Net interest income (FTE) totaled $105.6 million in fourth quarter, resulting in 4.10% net interest margin |
Loans held for investment totaled $5.8 billion at December 31, 2013, an increase of $102.2 million, or 1.8% (7.2% annualized), from the prior quarter and $206.1 million, or 3.7%, from one year earlier. From a geographic perspective, loans in Trustmark’s Alabama, Mississippi, Texas and Tennessee markets expanded $44.2 million, $42.2 million, $12.8 million, and $7.4 million, from the prior quarter respectively, while loans in the Florida market declined $4.5 million.
Growth was also diversified by loan type. During the fourth quarter, increased lending to medical facilities and public entities in Mississippi, Alabama, and Tennessee was reflected in Other loan growth of $49.5 million. Construction lending expanded $24.8 million due to growth in Trustmark’s Texas, Alabama, Tennessee and Mississippi markets. Commercial and industrial loans increased $24.8 million principally due to growth in Trustmark’s Texas and Alabama markets. Commercial real estate loans increased $6.8 million as growth in Mississippi and Alabama was offset in part by declines in Texas and Tennessee. Trustmark’s single-family mortgage portfolio increased $2.6 million as growth in Alabama and Tennessee was offset in part by declines in Mississippi and Florida. Trustmark’s consumer lending portfolio was relatively flat while other real estate secured loans decreased $7.0 million.
Acquired loans totaled $804.2 million at December 31, 2013, down $70.9 million from the prior quarter but up $670.6 million from one year earlier. Collectively, loans held for investment and acquired loans totaled $6.6 billion at year-end 2013, up $31.3 million from the prior quarter and $876.8 million from the prior year.
During the fourth quarter of 2013, average earning assets totaled $10.2 billion; while average deposits were stable at $9.7 billion, average noninterest bearing deposits increased to 27.0% of average total deposits.
Net interest income (FTE) in the fourth quarter totaled $105.6 million, an increase of $3.5 million from the prior quarter, and resulted in a 16 basis point expansion of the net interest margin to 4.10%, principally attributable to increased recoveries on acquired loans. The yield on acquired loans totaled 10.95% and included recoveries on loan pay-offs of $9.3 million, which represented approximately 4.35% of the total acquired annualized loan yield in the fourth quarter. Excluding acquired loans, the net interest margin in the fourth quarter totaled 3.48% compared to 3.52% in the prior quarter.
Trustmark’s solid capital position reflects the consistent profitability of its diversified financial services businesses as well as prudent balance sheet management. At December 31, 2013, Trustmark’s tangible common equity to tangible assets ratio was 8.26% while the total risk-based capital ratio was 14.18%, 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.
Credit Quality
· | Significant reduction in classified and criticized loan balances |
· | Nonperforming loans declined 20.8% during the year |
· | Improved credit quality reflected in net recoveries and negative provisioning in 2013 |
Nonperforming loans totaled $65.2 million at December 31, 2013, a decline of 11.1% from the prior quarter and 20.8% from the prior year. Foreclosed other real estate totaled $106.5 million, a decline of $9.8 million, or 8.4%, from the prior quarter. Relative to levels one-year earlier, other real estate increased $28.4 million; excluding the acquisition-related increase of $44.3 million attributable to BancTrust, other real estate declined $16.0 million, or 20.4%.
Net charge-offs during the fourth quarter of 2013 totaled $201 thousand and represented 0.01% of average loans. During 2013, recoveries exceeded charge-offs, resulting in a net recovery of $1.1 million, which represented a negative 0.02% of average loans. This compares favorably to net charge-offs in 2012 of $17.5 million, or 0.30% of average loans. The provision for loan losses for loans held for investment was a negative $2.0 million in the fourth quarter of 2013, reflecting the net recovery position and improved credit quality. For the year ended December 31, 2013, the provision for loan losses for loans held for investment was a negative $13.4 million; during 2012, the provision for loan losses for loans held for investment was a positive $6.8 million.
During the fourth quarter, Trustmark experienced a decline of $22.6 million, or 9.28%, in classified loans and a decline of $23.9 million, or 8.49%, in criticized loans relative to the prior quarter. Relative to the prior year, classified loan balances decreased $32.9 million, or 12.95%, while criticized loan balances decreased $71.1 million, or 21.63%.
Allocation of Trustmark’s $66.4 million allowance for loan losses represented 1.30% of commercial loans and 0.75% of consumer and home mortgage loans, resulting in an allowance to total loans held for investment of 1.15% at December 31, 2013, which represents a level management considers commensurate with the inherent risk in the loan portfolio. The allowance for loan losses represented 190.70% 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.
Noninterest Income
· | Noninterest income totaled $173.9 million in 2013 |
· | Wealth management revenue achieved record level in 2013 |
· | Tax credit investments reduced effective tax rate to 23.99% in 2013 |
Noninterest income totaled $38.7 million in the fourth quarter, a decrease of $8.5 million from the prior quarter. This decline resulted in part from an increase in partnership amortization of $3.3 million related to additional tax credit investments that reduced the Corporation’s effective tax rate during the fourth quarter as well as a $2.6 million reduction in the FDIC indemnification asset resulting from the re-estimation of cash flows and loan pay-offs. Each of these items was included in other noninterest income.
Mortgage banking revenue in the fourth quarter totaled $5.2 million, a decline of $3.3 million from the prior quarter due principally to lower secondary marketing gains resulting from tightening mortgage spreads and reduced volume during the quarter and lower positive mortgage servicing hedge ineffectiveness. Mortgage loan production in the fourth quarter totaled $276.0 million, down 22.9% from the prior quarter and 44.2% from levels one year earlier, reflecting the decline in refinance activity following an extended low interest rate environment. Mortgage loan production in 2013 totaled $1.45 billion, a decline of 23.3% from levels in 2012, while mortgage banking revenue declined 18.2% to $33.5 million.
Insurance revenue in the fourth quarter totaled $7.3 million, reflecting a seasonal decrease of 10.7% relative to the prior quarter and an increase of 6.6% from levels one year earlier. Improved performance year-over-year resulted from increased business development efforts as well as increasing insurance premium levels. During the fourth quarter, new insurance offices opened in Oxford, MS and Nashville, TN. Insurance revenue in 2013 totaled $30.8 million, an increase of 9.3% relative to the prior year.
Wealth management revenue totaled $8.1 million during the fourth quarter, an increase of 8.3% from the prior quarter and 31.8% from the comparable period one year earlier. This growth is attributable to increased sales within investment services resulting from improved market conditions as well as improved profitability within the trust management business and reflects the merger with BancTrust. Wealth management revenue in 2013 totaled $29.5 million, an increase of 27.9% relative to the prior year.
Bank card and other fees totaled $9.6 million in the fourth quarter, an increase of 7.3% from the prior quarter and 20.1% from the comparable period one year earlier. This growth was due in part to increased interchange income from debit cards. Service charges on deposit accounts totaled $13.1 million, a decrease of 5.3% from the prior quarter primarily resulting from a reduction in NSF and overdraft fees; relative to the fourth quarter of 2012, service charges increased 5.8%.
Noninterest Expense
· | Routine noninterest expense remained well-controlled |
· | Continued realignment of branch network to enhance efficiency and revenue growth |
Noninterest expense totaled $104.9 million in the fourth quarter. Excluding ORE and intangible amortization of $5.5 million, noninterest expense during the fourth quarter totaled $99.4 million, an increase of $3.4 million from comparable expenses in the prior quarter. The increase during the quarter was primarily reflected in salaries and benefits, services and fees and other expenses. Salaries and benefits reflected an increase of $644 thousand, which included an additional year-end incentive accrual of $1.2 million and additional medical expenses of $200 thousand offset by reductions in salaries and commissions of $802 thousand. Services and fees increased by $896 thousand principally due to additional advertising during the fourth quarter of approximately $384 thousand and increased professional service fees of approximately $450 thousand. Other expense increased by $1.9 million, which was primarily attributed to additional reserves for potential mortgage loan repurchases of $615 thousand and increased mortgage foreclosure expenses of $454 thousand.
Trustmark continued realignment of its branch network to enhance productivity and efficiency as well as promote additional revenue growth. As previously announced, Trustmark consolidated six banking centers during the fourth quarter – two each in Alabama, Mississippi, and Houston, Texas. Over the course of 2013, Trustmark consolidated 14 banking centers and opened three new offices – one each in Houston, Jackson and Memphis. 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, January 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) 317-6789, 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, February 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 208 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, a material decline in, or changes in our ability to measure the fair value of assets in our portfolio (including loans and investment securities), 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, acceleration of significantly extended deterioration in loan performance and default levels, a significant increase in foreclosure activity, 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 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 December 31, 2013 ($ in thousands) (unaudited) |
Linked Quarter | Year over Year | |||||||||||||||||||||||||||
QUARTERLY AVERAGE BALANCES | 12/31/2013 | 9/30/2013 | 12/31/2012 | $ Change | % Change | $ Change | % Change | |||||||||||||||||||||
Securities AFS-taxable | $ | 3,026,186 | $ | 3,279,606 | $ | 2,466,738 | $ | (253,420 | ) | -7.7 | % | $ | 559,448 | 22.7 | % | |||||||||||||
Securities AFS-nontaxable | 160,989 | 172,055 | 169,906 | (11,066 | ) | -6.4 | % | (8,917 | ) | -5.2 | % | |||||||||||||||||
Securities HTM-taxable | 265,792 | 59,168 | 26,510 | 206,624 | n/m | 239,282 | n/m | |||||||||||||||||||||
Securities HTM-nontaxable | 21,172 | 11,024 | 17,443 | 10,148 | 92.1 | % | 3,729 | 21.4 | % | |||||||||||||||||||
Total securities | 3,474,139 | 3,521,853 | 2,680,597 | (47,714 | ) | -1.4 | % | 793,542 | 29.6 | % | ||||||||||||||||||
Loans (including loans held for sale) | 5,847,557 | 5,784,170 | 5,834,525 | 63,387 | 1.1 | % | 13,032 | 0.2 | % | |||||||||||||||||||
Acquired loans: | ||||||||||||||||||||||||||||
Noncovered loans | 812,426 | 888,883 | 82,317 | (76,457 | ) | -8.6 | % | 730,109 | n/m | |||||||||||||||||||
Covered loans | 34,640 | 39,561 | 58,272 | (4,921 | ) | -12.4 | % | (23,632 | ) | -40.6 | % | |||||||||||||||||
Fed funds sold and rev repos | 11,094 | 8,978 | 8,747 | 2,116 | 23.6 | % | 2,347 | 26.8 | % | |||||||||||||||||||
Other earning assets | 32,118 | 38,226 | 31,168 | (6,108 | ) | -16.0 | % | 950 | 3.0 | % | ||||||||||||||||||
Total earning assets | 10,211,974 | 10,281,671 | 8,695,626 | (69,697 | ) | -0.7 | % | 1,516,348 | 17.4 | % | ||||||||||||||||||
Allowance for loan losses | (78,742 | ) | (79,696 | ) | (88,715 | ) | 954 | -1.2 | % | 9,973 | -11.2 | % | ||||||||||||||||
Cash and due from banks | 275,051 | 272,320 | 238,976 | 2,731 | 1.0 | % | 36,075 | 15.1 | % | |||||||||||||||||||
Other assets | 1,360,712 | 1,284,813 | 972,748 | 75,899 | 5.9 | % | 387,964 | 39.9 | % | |||||||||||||||||||
Total assets | $ | 11,768,995 | $ | 11,759,108 | $ | 9,818,635 | $ | 9,887 | 0.1 | % | $ | 1,950,360 | 19.9 | % | ||||||||||||||
Interest-bearing demand deposits | $ | 1,803,956 | $ | 1,842,379 | $ | 1,545,967 | $ | (38,423 | ) | -2.1 | % | $ | 257,989 | 16.7 | % | |||||||||||||
Savings deposits | 2,952,472 | 2,995,110 | 2,275,569 | (42,638 | ) | -1.4 | % | 676,903 | 29.7 | % | ||||||||||||||||||
Time deposits less than $100,000 | 1,344,488 | 1,380,954 | 1,120,735 | (36,466 | ) | -2.6 | % | 223,753 | 20.0 | % | ||||||||||||||||||
Time deposits of $100,000 or more | 961,075 | 993,948 | 760,363 | (32,873 | ) | -3.3 | % | 200,712 | 26.4 | % | ||||||||||||||||||
Total interest-bearing deposits | 7,061,991 | 7,212,391 | 5,702,634 | (150,400 | ) | -2.1 | % | 1,359,357 | 23.8 | % | ||||||||||||||||||
Fed funds purchased and repos | 361,758 | 364,446 | 388,007 | (2,688 | ) | -0.7 | % | (26,249 | ) | -6.8 | % | |||||||||||||||||
Short-term borrowings | 63,531 | 59,324 | 85,313 | 4,207 | 7.1 | % | (21,782 | ) | -25.5 | % | ||||||||||||||||||
Long-term FHLB advances | 8,507 | 8,620 | - | (113 | ) | -1.3 | % | 8,507 | n/m | |||||||||||||||||||
Subordinated notes | 49,898 | 49,890 | 49,866 | 8 | 0.0 | % | 32 | 0.1 | % | |||||||||||||||||||
Junior subordinated debt securities | 61,856 | 61,856 | 61,856 | - | 0.0 | % | - | 0.0 | % | |||||||||||||||||||
Total interest-bearing liabilities | 7,607,541 | 7,756,527 | 6,287,676 | (148,986 | ) | -1.9 | % | 1,319,865 | 21.0 | % | ||||||||||||||||||
Noninterest-bearing deposits | 2,611,209 | 2,479,082 | 2,115,784 | 132,127 | 5.3 | % | 495,425 | 23.4 | % | |||||||||||||||||||
Other liabilities | 203,270 | 190,143 | 126,953 | 13,127 | 6.9 | % | 76,317 | 60.1 | % | |||||||||||||||||||
Total liabilities | 10,422,020 | 10,425,752 | 8,530,413 | (3,732 | ) | 0.0 | % | 1,891,607 | 22.2 | % | ||||||||||||||||||
Shareholders' equity | 1,346,975 | 1,333,356 | 1,288,222 | 13,619 | 1.0 | % | 58,753 | 4.6 | % | |||||||||||||||||||
Total liabilities and equity | $ | 11,768,995 | $ | 11,759,108 | $ | 9,818,635 | $ | 9,887 | 0.1 | % | $ | 1,950,360 | 19.9 | % | ||||||||||||||
Linked Quarter | Year over Year | |||||||||||||||||||||||||||
PERIOD END BALANCES | 12/31/2013 | 9/30/2013 | 12/31/2012 | $ Change | % Change | $ Change | % Change | |||||||||||||||||||||
Cash and due from banks | $ | 345,761 | $ | 335,695 | $ | 231,489 | $ | 10,066 | 3.0 | % | $ | 114,272 | 49.4 | % | ||||||||||||||
Fed funds sold and rev repos | 7,253 | 7,867 | 7,046 | (614 | ) | -7.8 | % | 207 | 2.9 | % | ||||||||||||||||||
Securities available for sale | 2,194,154 | 3,372,101 | 2,657,745 | (1,177,947 | ) | -34.9 | % | (463,591 | ) | -17.4 | % | |||||||||||||||||
Securities held to maturity | 1,168,728 | 69,980 | 42,188 | 1,098,748 | n/m | 1,126,540 | n/m | |||||||||||||||||||||
Loans held for sale (LHFS) | 149,169 | 119,986 | 257,986 | 29,183 | 24.3 | % | (108,817 | ) | -42.2 | % | ||||||||||||||||||
Loans held for investment (LHFI) | 5,798,881 | 5,696,641 | 5,592,754 | 102,240 | 1.8 | % | 206,127 | 3.7 | % | |||||||||||||||||||
Allowance for loan losses | (66,448 | ) | (68,632 | ) | (78,738 | ) | 2,184 | -3.2 | % | 12,290 | -15.6 | % | ||||||||||||||||
Net LHFI | 5,732,433 | 5,628,009 | 5,514,016 | 104,424 | 1.9 | % | 218,417 | 4.0 | % | |||||||||||||||||||
Acquired loans: | ||||||||||||||||||||||||||||
Noncovered loans | 769,990 | 837,875 | 81,523 | (67,885 | ) | -8.1 | % | 688,467 | n/m | |||||||||||||||||||
Covered loans | 34,216 | 37,250 | 52,041 | (3,034 | ) | -8.1 | % | (17,825 | ) | -34.3 | % | |||||||||||||||||
Allowance for loan losses, acquired loans | (9,636 | ) | (5,333 | ) | (6,075 | ) | (4,303 | ) | 80.7 | % | (3,561 | ) | 58.6 | % | ||||||||||||||
Net acquired loans | 794,570 | 869,792 | 127,489 | (75,222 | ) | -8.6 | % | 667,081 | n/m | |||||||||||||||||||
Net LHFI and acquired loans | 6,527,003 | 6,497,801 | 5,641,505 | 29,202 | 0.4 | % | 885,498 | 15.7 | % | |||||||||||||||||||
Premises and equipment, net | 207,283 | 208,837 | 154,841 | (1,554 | ) | -0.7 | % | 52,442 | 33.9 | % | ||||||||||||||||||
Mortgage servicing rights | 67,834 | 63,150 | 47,341 | 4,684 | 7.4 | % | 20,493 | 43.3 | % | |||||||||||||||||||
Goodwill | 372,851 | 372,463 | 291,104 | 388 | 0.1 | % | 81,747 | 28.1 | % | |||||||||||||||||||
Identifiable intangible assets | 41,990 | 44,424 | 17,306 | (2,434 | ) | -5.5 | % | 24,684 | n/m | |||||||||||||||||||
Other real estate, excluding covered other real estate | 106,539 | 116,329 | 78,189 | (9,790 | ) | -8.4 | % | 28,350 | 36.3 | % | ||||||||||||||||||
Covered other real estate | 5,108 | 5,092 | 5,741 | 16 | 0.3 | % | (633 | ) | -11.0 | % | ||||||||||||||||||
FDIC indemnification asset | 14,347 | 17,085 | 21,774 | (2,738 | ) | -16.0 | % | (7,427 | ) | -34.1 | % | |||||||||||||||||
Other assets | 582,363 | 574,387 | 374,412 | 7,976 | 1.4 | % | 207,951 | 55.5 | % | |||||||||||||||||||
Total assets | $ | 11,790,383 | $ | 11,805,197 | $ | 9,828,667 | $ | (14,814 | ) | -0.1 | % | $ | 1,961,716 | 20.0 | % | |||||||||||||
Deposits: | ||||||||||||||||||||||||||||
Noninterest-bearing | $ | 2,663,503 | $ | 2,643,612 | $ | 2,254,211 | $ | 19,891 | 0.8 | % | $ | 409,292 | 18.2 | % | ||||||||||||||
Interest-bearing | 7,196,399 | 7,143,622 | 5,642,306 | 52,777 | 0.7 | % | 1,554,093 | 27.5 | % | |||||||||||||||||||
Total deposits | 9,859,902 | 9,787,234 | 7,896,517 | 72,668 | 0.7 | % | 1,963,385 | 24.9 | % | |||||||||||||||||||
Fed funds purchased and repos | 251,587 | 342,465 | 288,829 | (90,878 | ) | -26.5 | % | (37,242 | ) | -12.9 | % | |||||||||||||||||
Short-term borrowings | 66,385 | 60,698 | 86,920 | 5,687 | 9.4 | % | (20,535 | ) | -23.6 | % | ||||||||||||||||||
Long-term FHLB advances | 8,458 | 8,562 | - | (104 | ) | -1.2 | % | 8,458 | n/m | |||||||||||||||||||
Subordinated notes | 49,904 | 49,896 | 49,871 | 8 | 0.0 | % | 33 | 0.1 | % | |||||||||||||||||||
Junior subordinated debt securities | 61,856 | 61,856 | 61,856 | - | 0.0 | % | - | 0.0 | % | |||||||||||||||||||
Other liabilities | 137,338 | 164,972 | 157,305 | (27,634 | ) | -16.8 | % | (19,967 | ) | -12.7 | % | |||||||||||||||||
Total liabilities | 10,435,430 | 10,475,683 | 8,541,298 | (40,253 | ) | -0.4 | % | 1,894,132 | 22.2 | % | ||||||||||||||||||
Common stock | 14,038 | 13,998 | 13,506 | 40 | 0.3 | % | 532 | 3.9 | % | |||||||||||||||||||
Capital surplus | 349,680 | 343,759 | 285,905 | 5,921 | 1.7 | % | 63,775 | 22.3 | % | |||||||||||||||||||
Retained earnings | 1,034,966 | 1,023,983 | 984,563 | 10,983 | 1.1 | % | 50,403 | 5.1 | % | |||||||||||||||||||
Accum other comprehensive | ||||||||||||||||||||||||||||
(loss) income, net of tax | (43,731 | ) | (52,226 | ) | 3,395 | 8,495 | -16.3 | % | (47,126 | ) | n/m | |||||||||||||||||
Total shareholders' equity | 1,354,953 | 1,329,514 | 1,287,369 | 25,439 | 1.9 | % | 67,584 | 5.2 | % | |||||||||||||||||||
Total liabilities and equity | $ | 11,790,383 | $ | 11,805,197 | $ | 9,828,667 | $ | (14,814 | ) | -0.1 | % | $ | 1,961,716 | 20.0 | % | |||||||||||||
n/m - percentage changes greater than +/- 100% are considered not meaningful | ||||||||||||||||||||||||||||
See Notes to Consolidated Financials |
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2013 ($ in thousands except per share data) (unaudited) |
Quarter Ended | Linked Quarter | Year over Year | ||||||||||||||||||||||||||
INCOME STATEMENTS | 12/31/2013 | 9/30/2013 | 12/31/2012 | $ Change | % Change | $ Change | % Change | |||||||||||||||||||||
Interest and fees on LHFS & LHFI-FTE | $ | 67,038 | $ | 68,417 | $ | 69,989 | $ | (1,379 | ) | -2.0 | % | $ | (2,951 | ) | -4.2 | % | ||||||||||||
Interest and fees on acquired loans | 23,384 | 19,183 | 4,859 | 4,201 | 21.9 | % | 18,525 | n/m | ||||||||||||||||||||
Interest on securities-taxable | 19,078 | 18,654 | 15,305 | 424 | 2.3 | % | 3,773 | 24.7 | % | |||||||||||||||||||
Interest on securities-tax exempt-FTE | 1,963 | 1,960 | 2,066 | 3 | 0.2 | % | (103 | ) | -5.0 | % | ||||||||||||||||||
Interest on fed funds sold and rev repos | 14 | 8 | 9 | 6 | 75.0 | % | 5 | 55.6 | % | |||||||||||||||||||
Other interest income | 367 | 372 | 337 | (5 | ) | -1.3 | % | 30 | 8.9 | % | ||||||||||||||||||
Total interest income-FTE | 111,844 | 108,594 | 92,565 | 3,250 | 3.0 | % | 19,279 | 20.8 | % | |||||||||||||||||||
Interest on deposits | 4,768 | 4,970 | 5,061 | (202 | ) | -4.1 | % | (293 | ) | -5.8 | % | |||||||||||||||||
Interest on fed funds pch and repos | 104 | 106 | 140 | (2 | ) | -1.9 | % | (36 | ) | -25.7 | % | |||||||||||||||||
Other interest expense | 1,370 | 1,389 | 1,346 | (19 | ) | -1.4 | % | 24 | 1.8 | % | ||||||||||||||||||
Total interest expense | 6,242 | 6,465 | 6,547 | (223 | ) | -3.4 | % | (305 | ) | -4.7 | % | |||||||||||||||||
Net interest income-FTE | 105,602 | 102,129 | 86,018 | 3,473 | 3.4 | % | 19,584 | 22.8 | % | |||||||||||||||||||
Provision for loan losses, LHFI | (1,983 | ) | (3,624 | ) | (535 | ) | 1,641 | -45.3 | % | (1,448 | ) | n/m | ||||||||||||||||
Provision for loan losses, acquired loans | 4,169 | 3,292 | 1,945 | 877 | 26.6 | % | 2,224 | n/m | ||||||||||||||||||||
Net interest income after provision-FTE | 103,416 | 102,461 | 84,608 | 955 | 0.9 | % | 18,808 | 22.2 | % | |||||||||||||||||||
Service charges on deposit accounts | 13,114 | 13,852 | 12,391 | (738 | ) | -5.3 | % | 723 | 5.8 | % | ||||||||||||||||||
Insurance commissions | 7,343 | 8,227 | 6,887 | (884 | ) | -10.7 | % | 456 | 6.6 | % | ||||||||||||||||||
Wealth management | 8,145 | 7,520 | 6,181 | 625 | 8.3 | % | 1,964 | 31.8 | % | |||||||||||||||||||
Bank card and other fees | 9,580 | 8,929 | 7,978 | 651 | 7.3 | % | 1,602 | 20.1 | % | |||||||||||||||||||
Mortgage banking, net | 5,186 | 8,440 | 11,331 | (3,254 | ) | -38.6 | % | (6,145 | ) | -54.2 | % | |||||||||||||||||
Other, net | (4,802 | ) | 165 | (2,007 | ) | (4,967 | ) | n/m | (2,795 | ) | n/m | |||||||||||||||||
Nonint inc-excl sec gains (losses), net | 38,566 | 47,133 | 42,761 | (8,567 | ) | -18.2 | % | (4,195 | ) | -9.8 | % | |||||||||||||||||
Security gains (losses), net | 107 | - | 18 | 107 | n/m | 89 | n/m | |||||||||||||||||||||
Total noninterest income | 38,673 | 47,133 | 42,779 | (8,460 | ) | -17.9 | % | (4,106 | ) | -9.6 | % | |||||||||||||||||
Salaries and employee benefits | 56,687 | 56,043 | 49,724 | 644 | 1.1 | % | 6,963 | 14.0 | % | |||||||||||||||||||
Services and fees | 14,476 | 13,580 | 12,572 | 896 | 6.6 | % | 1,904 | 15.1 | % | |||||||||||||||||||
Net occupancy-premises | 6,659 | 6,644 | 5,023 | 15 | 0.2 | % | 1,636 | 32.6 | % | |||||||||||||||||||
Equipment expense | 6,400 | 6,271 | 5,288 | 129 | 2.1 | % | 1,112 | 21.0 | % | |||||||||||||||||||
FDIC assessment expense | 2,228 | 2,376 | 1,075 | (148 | ) | -6.2 | % | 1,153 | n/m | |||||||||||||||||||
ORE/Foreclosure expense | 3,009 | 3,079 | 3,173 | (70 | ) | -2.3 | % | (164 | ) | -5.2 | % | |||||||||||||||||
Other expense | 15,408 | 13,531 | 10,454 | 1,877 | 13.9 | % | 4,954 | 47.4 | % | |||||||||||||||||||
Total noninterest expense | 104,867 | 101,524 | 87,309 | 3,343 | 3.3 | % | 17,558 | 20.1 | % | |||||||||||||||||||
Income before income taxes and tax eq adj | 37,222 | 48,070 | 40,078 | (10,848 | ) | -22.6 | % | (2,856 | ) | -7.1 | % | |||||||||||||||||
Tax equivalent adjustment | 3,747 | 3,700 | 3,699 | 47 | 1.3 | % | 48 | 1.3 | % | |||||||||||||||||||
Income before income taxes | 33,475 | 44,370 | 36,379 | (10,895 | ) | -24.6 | % | (2,904 | ) | -8.0 | % | |||||||||||||||||
Income taxes | 5,436 | 11,336 | 8,669 | (5,900 | ) | -52.0 | % | (3,233 | ) | -37.3 | % | |||||||||||||||||
Net income available to common shareholders | $ | 28,039 | $ | 33,034 | $ | 27,710 | $ | (4,995 | ) | -15.1 | % | $ | 329 | 1.2 | % | |||||||||||||
Per common share data | ||||||||||||||||||||||||||||
Earnings per share - basic | $ | 0.42 | $ | 0.49 | $ | 0.43 | $ | (0.07 | ) | -14.3 | % | $ | (0.01 | ) | -2.3 | % | ||||||||||||
Earnings per share - diluted | $ | 0.42 | $ | 0.49 | $ | 0.43 | $ | (0.07 | ) | -14.3 | % | $ | (0.01 | ) | -2.3 | % | ||||||||||||
Dividends per share | $ | 0.23 | $ | 0.23 | $ | 0.23 | $ | - | 0.0 | % | $ | - | 0.0 | % | ||||||||||||||
Weighted average common shares outstanding | ||||||||||||||||||||||||||||
Basic | 67,249,877 | 67,177,013 | 64,785,457 | |||||||||||||||||||||||||
Diluted | 67,449,778 | 67,382,478 | 65,007,281 | |||||||||||||||||||||||||
Period end common shares outstanding | 67,372,980 | 67,181,694 | 64,820,414 | |||||||||||||||||||||||||
OTHER FINANCIAL DATA | ||||||||||||||||||||||||||||
Return on common equity | 8.26 | % | 9.83 | % | 8.56 | % | ||||||||||||||||||||||
Return on average tangible common equity | 12.59 | % | 14.92 | % | 11.51 | % | ||||||||||||||||||||||
Return on assets | 0.95 | % | 1.11 | % | 1.12 | % | ||||||||||||||||||||||
Interest margin - Yield - FTE | 4.35 | % | 4.19 | % | 4.23 | % | ||||||||||||||||||||||
Interest margin - Cost | 0.24 | % | 0.25 | % | 0.30 | % | ||||||||||||||||||||||
Net interest margin - FTE | 4.10 | % | 3.94 | % | 3.94 | % | ||||||||||||||||||||||
Efficiency ratio (1) | 72.74 | % | 68.02 | % | 67.80 | % | ||||||||||||||||||||||
Full-time equivalent employees | 3,110 | 3,110 | 2,666 | |||||||||||||||||||||||||
COMMON STOCK PERFORMANCE | ||||||||||||||||||||||||||||
Market value-Close | $ | 26.84 | $ | 25.60 | $ | 22.46 | ||||||||||||||||||||||
Common book value | $ | 20.11 | $ | 19.79 | $ | 19.86 | ||||||||||||||||||||||
Tangible common book value | $ | 13.95 | $ | 13.58 | $ | 15.10 | ||||||||||||||||||||||
(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 December 31, 2013 ($ in thousands) (unaudited) |
Quarter Ended | Linked Quarter | Year over Year | ||||||||||||||||||||||||||
NONPERFORMING ASSETS (1) | 12/31/2013 | 9/30/2013 | 12/31/2012 | $ Change | % Change | $ Change | % Change | |||||||||||||||||||||
Nonaccrual loans | ||||||||||||||||||||||||||||
Alabama | $ | 14 | $ | 81 | $ | - | $ | (67 | ) | -82.7 | % | $ | 14 | n/m | ||||||||||||||
Florida | 12,278 | 14,619 | 19,314 | (2,341 | ) | -16.0 | % | (7,036 | ) | -36.4 | % | |||||||||||||||||
Mississippi (2) | 42,307 | 43,132 | 38,960 | (825 | ) | -1.9 | % | 3,347 | 8.6 | % | ||||||||||||||||||
Tennessee (3) | 4,390 | 5,596 | 8,401 | (1,206 | ) | -21.6 | % | (4,011 | ) | -47.7 | % | |||||||||||||||||
Texas | 6,249 | 9,953 | 15,688 | (3,704 | ) | -37.2 | % | (9,439 | ) | -60.2 | % | |||||||||||||||||
Total nonaccrual loans | 65,238 | 73,381 | 82,363 | (8,143 | ) | -11.1 | % | (17,125 | ) | -20.8 | % | |||||||||||||||||
Other real estate | ||||||||||||||||||||||||||||
Alabama | 25,912 | 25,308 | - | 604 | 2.4 | % | 25,912 | n/m | ||||||||||||||||||||
Florida | 34,480 | 39,198 | 18,569 | (4,718 | ) | -12.0 | % | 15,911 | 85.7 | % | ||||||||||||||||||
Mississippi (2) | 22,766 | 25,439 | 27,771 | (2,673 | ) | -10.5 | % | (5,005 | ) | -18.0 | % | |||||||||||||||||
Tennessee (3) | 12,892 | 14,615 | 17,589 | (1,723 | ) | -11.8 | % | (4,697 | ) | -26.7 | % | |||||||||||||||||
Texas | 10,489 | 11,769 | 14,260 | (1,280 | ) | -10.9 | % | (3,771 | ) | -26.4 | % | |||||||||||||||||
Total other real estate | 106,539 | 116,329 | 78,189 | (9,790 | ) | -8.4 | % | 28,350 | 36.3 | % | ||||||||||||||||||
Total nonperforming assets | $ | 171,777 | $ | 189,710 | $ | 160,552 | $ | (17,933 | ) | -9.5 | % | $ | 11,225 | 7.0 | % | |||||||||||||
LOANS PAST DUE OVER 90 DAYS (4) | ||||||||||||||||||||||||||||
LHFI | $ | 3,298 | $ | 2,344 | $ | 6,378 | $ | 954 | 40.7 | % | $ | (3,080 | ) | -48.3 | % | |||||||||||||
LHFS-Guaranteed GNMA serviced loans | ||||||||||||||||||||||||||||
(no obligation to repurchase) | $ | 21,540 | $ | 18,432 | $ | 43,073 | $ | 3,108 | 16.9 | % | $ | (21,533 | ) | -50.0 | % | |||||||||||||
Quarter Ended | Linked Quarter | Year over Year | ||||||||||||||||||||||||||
ALLOWANCE FOR LOAN LOSSES (4) | 12/31/2013 | 9/30/2013 | 12/31/2012 | $ Change | % Change | $ Change | % Change | |||||||||||||||||||||
Beginning Balance | $ | 68,632 | $ | 72,825 | $ | 83,526 | $ | (4,193 | ) | -5.8 | % | $ | (14,894 | ) | -17.8 | % | ||||||||||||
Provision for loan losses | (1,983 | ) | (3,624 | ) | (535 | ) | 1,641 | -45.3 | % | (1,448 | ) | n/m | ||||||||||||||||
Charge-offs | (3,305 | ) | (3,817 | ) | (8,829 | ) | 512 | -13.4 | % | 5,524 | -62.6 | % | ||||||||||||||||
Recoveries | 3,104 | 3,248 | 4,576 | (144 | ) | -4.4 | % | (1,472 | ) | -32.2 | % | |||||||||||||||||
Net (charge-offs) recoveries | (201 | ) | (569 | ) | (4,253 | ) | 368 | -64.7 | % | 4,052 | -95.3 | % | ||||||||||||||||
Ending Balance | $ | 66,448 | $ | 68,632 | $ | 78,738 | $ | (2,184 | ) | -3.2 | % | $ | (12,290 | ) | -15.6 | % | ||||||||||||
PROVISION FOR LOAN LOSSES (4) | ||||||||||||||||||||||||||||
Alabama | $ | 332 | $ | 550 | $ | - | $ | (218 | ) | -39.6 | % | $ | 332 | n/m | ||||||||||||||
Florida | (2,350 | ) | (2,642 | ) | (706 | ) | 292 | -11.1 | % | (1,644 | ) | n/m | ||||||||||||||||
Mississippi (2) | 3,336 | (1,051 | ) | 2,031 | 4,387 | n/m | 1,305 | 64.3 | % | |||||||||||||||||||
Tennessee (3) | (117 | ) | (150 | ) | (1,037 | ) | 33 | -22.0 | % | 920 | -88.7 | % | ||||||||||||||||
Texas | (3,184 | ) | (331 | ) | (823 | ) | (2,853 | ) | n/m | (2,361 | ) | n/m | ||||||||||||||||
Total provision for loan losses | $ | (1,983 | ) | $ | (3,624 | ) | $ | (535 | ) | $ | 1,641 | -45.3 | % | $ | (1,448 | ) | n/m | |||||||||||
NET CHARGE-OFFS (4) | ||||||||||||||||||||||||||||
Alabama | $ | 74 | $ | 132 | $ | - | $ | (58 | ) | -43.9 | % | $ | 74 | n/m | ||||||||||||||
Florida | (634 | ) | (138 | ) | (237 | ) | (496 | ) | n/m | (397 | ) | n/m | ||||||||||||||||
Mississippi (2) | 393 | 375 | 874 | 18 | 4.8 | % | (481 | ) | -55.0 | % | ||||||||||||||||||
Tennessee (3) | 506 | (153 | ) | (43 | ) | 659 | n/m | 549 | n/m | |||||||||||||||||||
Texas | (138 | ) | 353 | 3,659 | (491 | ) | n/m | (3,797 | ) | n/m | ||||||||||||||||||
Total net charge-offs (recoveries) | $ | 201 | $ | 569 | $ | 4,253 | $ | (368 | ) | -64.7 | % | $ | (4,052 | ) | -95.3 | % | ||||||||||||
CREDIT QUALITY RATIOS (1) | ||||||||||||||||||||||||||||
Net charge offs/average loans | 0.01 | % | 0.04 | % | 0.29 | % | ||||||||||||||||||||||
Provision for loan losses/average loans | -0.13 | % | -0.25 | % | -0.04 | % | ||||||||||||||||||||||
Nonperforming loans/total loans (incl LHFS) | 1.10 | % | 1.26 | % | 1.41 | % | ||||||||||||||||||||||
Nonperforming assets/total loans (incl LHFS) | 2.89 | % | 3.26 | % | 2.74 | % | ||||||||||||||||||||||
Nonperforming assets/total loans (incl LHFS) +ORE | 2.84 | % | 3.20 | % | 2.71 | % | ||||||||||||||||||||||
ALL/total loans (excl LHFS) | 1.15 | % | 1.20 | % | 1.41 | % | ||||||||||||||||||||||
ALL-commercial/total commercial loans | 1.30 | % | 1.39 | % | 1.59 | % | ||||||||||||||||||||||
ALL-consumer/total consumer and home mortgage loans | 0.75 | % | 0.73 | % | 0.97 | % | ||||||||||||||||||||||
ALL/nonperforming loans | 101.86 | % | 93.53 | % | 95.60 | % | ||||||||||||||||||||||
ALL/nonperforming loans - | ||||||||||||||||||||||||||||
(excl impaired loans) | 190.70 | % | 161.96 | % | 174.46 | % | ||||||||||||||||||||||
CAPITAL RATIOS | ||||||||||||||||||||||||||||
Common equity/total assets | 11.49 | % | 11.26 | % | 13.10 | % | ||||||||||||||||||||||
Tangible common equity/tangible assets | 8.26 | % | 8.01 | % | 10.28 | % | ||||||||||||||||||||||
Tangible common equity/risk-weighted assets | 11.88 | % | 11.66 | % | 14.56 | % | ||||||||||||||||||||||
Tier 1 leverage ratio | 9.06 | % | 8.78 | % | 10.97 | % | ||||||||||||||||||||||
Tier 1 common risk-based capital ratio | 12.21 | % | 11.92 | % | 14.63 | % | ||||||||||||||||||||||
Tier 1 risk-based capital ratio | 12.97 | % | 12.69 | % | 15.53 | % | ||||||||||||||||||||||
Total risk-based capital ratio | 14.18 | % | 14.02 | % | 17.22 | % | ||||||||||||||||||||||
(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 December 31, 2013 ($ in thousands) (unaudited) |
Quarter Ended | Year Ended | |||||||||||||||||||||||||||
AVERAGE BALANCES | 12/31/2013 | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 12/31/2013 | 12/31/2012 | |||||||||||||||||||||
Securities AFS-taxable | $ | 3,026,186 | $ | 3,279,606 | $ | 3,259,086 | $ | 2,836,051 | $ | 2,466,738 | $ | 3,101,245 | $ | 2,386,552 | ||||||||||||||
Securities AFS-nontaxable | 160,989 | 172,055 | 171,974 | 167,773 | 169,906 | 168,190 | 166,790 | |||||||||||||||||||||
Securities HTM-taxable | 265,792 | 59,168 | 59,678 | 48,632 | 26,510 | 108,778 | 29,551 | |||||||||||||||||||||
Securities HTM-nontaxable | 21,172 | 11,024 | 11,520 | 16,648 | 17,443 | 15,092 | 19,188 | |||||||||||||||||||||
Total securities | 3,474,139 | 3,521,853 | 3,502,258 | 3,069,104 | 2,680,597 | 3,393,305 | 2,602,081 | |||||||||||||||||||||
Loans (including loans held for sale) | 5,847,557 | 5,784,170 | 5,735,296 | 5,741,340 | 5,834,525 | 5,777,401 | 5,918,002 | |||||||||||||||||||||
Acquired loans: | ||||||||||||||||||||||||||||
Noncovered loans | 812,426 | 888,883 | 949,367 | 530,643 | 82,317 | 796,358 | 72,111 | |||||||||||||||||||||
Covered loans | 34,640 | 39,561 | 43,425 | 49,815 | 58,272 | 41,812 | 67,310 | |||||||||||||||||||||
Fed funds sold and rev repos | 11,094 | 8,978 | 6,808 | 6,618 | 8,747 | 8,388 | 7,552 | |||||||||||||||||||||
Other earning assets | 32,118 | 38,226 | 34,752 | 34,661 | 31,168 | 34,941 | 31,669 | |||||||||||||||||||||
Total earning assets | 10,211,974 | 10,281,671 | 10,271,906 | 9,432,181 | 8,695,626 | 10,052,205 | 8,698,725 | |||||||||||||||||||||
Allowance for loan losses | (78,742 | ) | (79,696 | ) | (84,574 | ) | (86,447 | ) | (88,715 | ) | (82,336 | ) | (89,954 | ) | ||||||||||||||
Cash and due from banks | 275,051 | 272,320 | 284,056 | 270,740 | 238,976 | 275,545 | 244,952 | |||||||||||||||||||||
Other assets | 1,360,712 | 1,284,813 | 1,311,262 | 1,183,493 | 972,748 | 1,285,555 | 949,328 | |||||||||||||||||||||
Total assets | $ | 11,768,995 | $ | 11,759,108 | $ | 11,782,650 | $ | 10,799,967 | $ | 9,818,635 | $ | 11,530,969 | $ | 9,803,051 | ||||||||||||||
Interest-bearing demand deposits | $ | 1,803,956 | $ | 1,842,379 | $ | 1,811,402 | $ | 1,703,336 | $ | 1,545,967 | $ | 1,790,687 | $ | 1,542,601 | ||||||||||||||
Savings deposits | 2,952,472 | 2,995,110 | 3,060,437 | 2,767,747 | 2,275,569 | 2,944,588 | 2,357,424 | |||||||||||||||||||||
Time deposits less than $100,000 | 1,344,488 | 1,380,954 | 1,419,381 | 1,268,619 | 1,120,735 | 1,353,643 | 1,157,822 | |||||||||||||||||||||
Time deposits of $100,000 or more | 961,075 | 993,948 | 1,029,498 | 893,104 | 760,363 | 969,660 | 795,126 | |||||||||||||||||||||
Total interest-bearing deposits | 7,061,991 | 7,212,391 | 7,320,718 | 6,632,806 | 5,702,634 | 7,058,578 | 5,852,973 | |||||||||||||||||||||
Fed funds purchased and repos | 361,758 | 364,446 | 312,865 | 266,958 | 388,007 | 326,870 | 370,283 | |||||||||||||||||||||
Short-term borrowings | 63,531 | 59,324 | 51,718 | 66,999 | 85,313 | 60,381 | 83,042 | |||||||||||||||||||||
Long-term FHLB advances | 8,507 | 8,620 | 9,575 | 4,580 | - | 7,833 | - | |||||||||||||||||||||
Subordinated notes | 49,898 | 49,890 | 49,882 | 49,874 | 49,866 | 49,886 | 49,854 | |||||||||||||||||||||
Junior subordinated debt securities | 61,856 | 61,856 | 82,460 | 77,989 | 61,856 | 70,971 | 61,856 | |||||||||||||||||||||
Total interest-bearing liabilities | 7,607,541 | 7,756,527 | 7,827,218 | 7,099,206 | 6,287,676 | 7,574,519 | 6,418,008 | |||||||||||||||||||||
Noninterest-bearing deposits | 2,611,209 | 2,479,082 | 2,451,547 | 2,199,043 | 2,115,784 | 2,436,470 | 2,006,230 | |||||||||||||||||||||
Other liabilities | 203,270 | 190,143 | 159,525 | 176,210 | 126,953 | 182,383 | 117,196 | |||||||||||||||||||||
Total liabilities | 10,422,020 | 10,425,752 | 10,438,290 | 9,474,459 | 8,530,413 | 10,193,372 | 8,541,434 | |||||||||||||||||||||
Shareholders' equity | 1,346,975 | 1,333,356 | 1,344,360 | 1,325,508 | 1,288,222 | 1,337,597 | 1,261,617 | |||||||||||||||||||||
Total liabilities and equity | $ | 11,768,995 | $ | 11,759,108 | $ | 11,782,650 | $ | 10,799,967 | $ | 9,818,635 | $ | 11,530,969 | $ | 9,803,051 | ||||||||||||||
PERIOD END BALANCES | 12/31/2013 | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | |||||||||||||||||||||||
Cash and due from banks | $ | 345,761 | $ | 335,695 | $ | 301,532 | $ | 242,896 | $ | 231,489 | ||||||||||||||||||
Fed funds sold and rev repos | 7,253 | 7,867 | 7,869 | 5,926 | 7,046 | |||||||||||||||||||||||
Securities available for sale | 2,194,154 | 3,372,101 | 3,511,683 | 3,546,083 | 2,657,745 | |||||||||||||||||||||||
Securities held to maturity | 1,168,728 | 69,980 | 70,338 | 73,666 | 42,188 | |||||||||||||||||||||||
Loans held for sale (LHFS) | 149,169 | 119,986 | 202,699 | 207,758 | 257,986 | |||||||||||||||||||||||
Loans held for investment (LHFI) | 5,798,881 | 5,696,641 | 5,577,382 | 5,531,788 | 5,592,754 | |||||||||||||||||||||||
Allowance for loan losses | (66,448 | ) | (68,632 | ) | (72,825 | ) | (76,900 | ) | (78,738 | ) | ||||||||||||||||||
Net LHFI | 5,732,433 | 5,628,009 | 5,504,557 | 5,454,888 | 5,514,016 | |||||||||||||||||||||||
Acquired loans: | ||||||||||||||||||||||||||||
Noncovered loans | 769,990 | 837,875 | 922,453 | 1,003,127 | 81,523 | |||||||||||||||||||||||
Covered loans | 34,216 | 37,250 | 40,820 | 47,589 | 52,041 | |||||||||||||||||||||||
Allowance for loan losses, acquired loans | (9,636 | ) | (5,333 | ) | (2,690 | ) | (6,458 | ) | (6,075 | ) | ||||||||||||||||||
Net acquired loans | 794,570 | 869,792 | 960,583 | 1,044,258 | 127,489 | |||||||||||||||||||||||
Net LHFI and acquired loans | 6,527,003 | 6,497,801 | 6,465,140 | 6,499,146 | 5,641,505 | |||||||||||||||||||||||
Premises and equipment, net | 207,283 | 208,837 | 210,845 | 210,789 | 154,841 | |||||||||||||||||||||||
Mortgage servicing rights | 67,834 | 63,150 | 60,380 | 51,529 | 47,341 | |||||||||||||||||||||||
Goodwill | 372,851 | 372,463 | 368,315 | 366,366 | 291,104 | |||||||||||||||||||||||
Identifiable intangible assets | 41,990 | 44,424 | 46,889 | 49,361 | 17,306 | |||||||||||||||||||||||
Other real estate, excluding covered other real estate | 106,539 | 116,329 | 117,712 | 118,406 | 78,189 | |||||||||||||||||||||||
Covered other real estate | 5,108 | 5,092 | 5,147 | 5,879 | 5,741 | |||||||||||||||||||||||
FDIC indemnification asset | 14,347 | 17,085 | 17,342 | 20,198 | 21,774 | |||||||||||||||||||||||
Other assets | 582,363 | 574,387 | 477,421 | 452,512 | 374,412 | |||||||||||||||||||||||
Total assets | $ | 11,790,383 | $ | 11,805,197 | $ | 11,863,312 | $ | 11,850,515 | $ | 9,828,667 | ||||||||||||||||||
Deposits: | ||||||||||||||||||||||||||||
Noninterest-bearing | $ | 2,663,503 | $ | 2,643,612 | $ | 2,520,895 | $ | 2,534,287 | $ | 2,254,211 | ||||||||||||||||||
Interest-bearing | 7,196,399 | 7,143,622 | 7,296,697 | 7,375,144 | 5,642,306 | |||||||||||||||||||||||
Total deposits | 9,859,902 | 9,787,234 | 9,817,592 | 9,909,431 | 7,896,517 | |||||||||||||||||||||||
Fed funds purchased and repos | 251,587 | 342,465 | 374,021 | 219,769 | 288,829 | |||||||||||||||||||||||
Short-term borrowings | 66,385 | 60,698 | 56,645 | 46,325 | 86,920 | |||||||||||||||||||||||
Long-term FHLB advances | 8,458 | 8,562 | 8,679 | 10,969 | - | |||||||||||||||||||||||
Subordinated notes | 49,904 | 49,896 | 49,888 | 49,879 | 49,871 | |||||||||||||||||||||||
Junior subordinated debt securities | 61,856 | 61,856 | 61,856 | 94,856 | 61,856 | |||||||||||||||||||||||
Other liabilities | 137,338 | 164,972 | 167,812 | 166,340 | 157,305 | |||||||||||||||||||||||
Total liabilities | 10,435,430 | 10,475,683 | 10,536,493 | 10,497,569 | 8,541,298 | |||||||||||||||||||||||
Common stock | 14,038 | 13,998 | 13,994 | 13,992 | 13,506 | |||||||||||||||||||||||
Capital surplus | 349,680 | 343,759 | 342,359 | 342,233 | 285,905 | |||||||||||||||||||||||
Retained earnings | 1,034,966 | 1,023,983 | 1,006,554 | 991,012 | 984,563 | |||||||||||||||||||||||
Accum other comprehensive | ||||||||||||||||||||||||||||
(loss) income, net of tax | (43,731 | ) | (52,226 | ) | (36,088 | ) | 5,709 | 3,395 | ||||||||||||||||||||
Total shareholders' equity | 1,354,953 | 1,329,514 | 1,326,819 | 1,352,946 | 1,287,369 | |||||||||||||||||||||||
Total liabilities and equity | $ | 11,790,383 | $ | 11,805,197 | $ | 11,863,312 | $ | 11,850,515 | $ | 9,828,667 | ||||||||||||||||||
See Notes to Consolidated Financials |
TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2013 ($ in thousands except per share data) (unaudited) |
Quarter Ended | Year Ended | |||||||||||||||||||||||||||
INCOME STATEMENTS | 12/31/2013 | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 12/31/2013 | 12/31/2012 | |||||||||||||||||||||
Interest and fees on LHFS & LHFI-FTE | $ | 67,038 | $ | 68,417 | $ | 67,750 | $ | 67,412 | $ | 69,989 | $ | 270,617 | $ | 291,273 | ||||||||||||||
Interest and fees on acquired loans | 23,384 | 19,183 | 20,987 | 12,782 | 4,859 | 76,336 | 18,122 | |||||||||||||||||||||
Interest on securities-taxable | 19,078 | 18,654 | 18,547 | 16,539 | 15,305 | 72,818 | 66,950 | |||||||||||||||||||||
Interest on securities-tax exempt-FTE | 1,963 | 1,960 | 1,974 | 2,018 | 2,066 | 7,915 | 8,343 | |||||||||||||||||||||
Interest on fed funds sold and rev repos | 14 | 8 | 5 | 4 | 9 | 31 | 26 | |||||||||||||||||||||
Other interest income | 367 | 372 | 372 | 355 | 337 | 1,466 | 1,342 | |||||||||||||||||||||
Total interest income-FTE | 111,844 | 108,594 | 109,635 | 99,110 | 92,565 | 429,183 | 386,056 | |||||||||||||||||||||
Interest on deposits | 4,768 | 4,970 | 5,071 | 4,909 | 5,061 | 19,718 | 24,604 | |||||||||||||||||||||
Interest on fed funds pch and repos | 104 | 106 | 88 | 81 | 140 | 379 | 588 | |||||||||||||||||||||
Other interest expense | 1,370 | 1,389 | 1,513 | 1,490 | 1,346 | 5,762 | 5,477 | |||||||||||||||||||||
Total interest expense | 6,242 | 6,465 | 6,672 | 6,480 | 6,547 | 25,859 | 30,669 | |||||||||||||||||||||
Net interest income-FTE | 105,602 | 102,129 | 102,963 | 92,630 | 86,018 | 403,324 | 355,387 | |||||||||||||||||||||
Provision for loan losses, LHFI | (1,983 | ) | (3,624 | ) | (4,846 | ) | (2,968 | ) | (535 | ) | (13,421 | ) | 6,766 | |||||||||||||||
Provision for loan losses, acquired loans | 4,169 | 3,292 | (1,552 | ) | 130 | 1,945 | 6,039 | 5,528 | ||||||||||||||||||||
Net interest income after provision-FTE | 103,416 | 102,461 | 109,361 | 95,468 | 84,608 | 410,706 | 343,093 | |||||||||||||||||||||
Service charges on deposit accounts | 13,114 | 13,852 | 12,929 | 11,681 | 12,391 | 51,576 | 50,351 | |||||||||||||||||||||
Insurance commissions | 7,343 | 8,227 | 8,014 | 7,242 | 6,887 | 30,826 | 28,205 | |||||||||||||||||||||
Wealth management | 8,145 | 7,520 | 6,940 | 6,875 | 6,181 | 29,480 | 23,056 | |||||||||||||||||||||
Bank card and other fees | 9,580 | 8,929 | 9,507 | 7,945 | 7,978 | 35,961 | 30,445 | |||||||||||||||||||||
Mortgage banking, net | 5,186 | 8,440 | 8,295 | 11,583 | 11,331 | 33,504 | 40,960 | |||||||||||||||||||||
Other, net | (4,802 | ) | 165 | (2,145 | ) | (1,191 | ) | (2,007 | ) | (7,973 | ) | 1,113 | ||||||||||||||||
Nonint inc-excl sec gains (losses), net | 38,566 | 47,133 | 43,540 | 44,135 | 42,761 | 173,374 | 174,130 | |||||||||||||||||||||
Security gains (losses), net | 107 | - | 174 | 204 | 18 | 485 | 1,059 | |||||||||||||||||||||
Total noninterest income | 38,673 | 47,133 | 43,714 | 44,339 | 42,779 | 173,859 | 175,189 | |||||||||||||||||||||
Salaries and employee benefits | 56,687 | 56,043 | 55,405 | 53,592 | 49,724 | 221,727 | 190,519 | |||||||||||||||||||||
Services and fees | 14,476 | 13,580 | 12,816 | 13,032 | 12,572 | 53,904 | 46,751 | |||||||||||||||||||||
Net occupancy-premises | 6,659 | 6,644 | 6,703 | 5,955 | 5,023 | 25,961 | 20,267 | |||||||||||||||||||||
Equipment expense | 6,400 | 6,271 | 6,193 | 5,674 | 5,288 | 24,538 | 20,478 | |||||||||||||||||||||
FDIC assessment expense | 2,228 | 2,376 | 2,376 | 2,021 | 1,075 | 9,001 | 6,502 | |||||||||||||||||||||
ORE/Foreclosure expense | 3,009 | 3,079 | 5,131 | 3,820 | 3,173 | 15,039 | 11,165 | |||||||||||||||||||||
Other expense | 15,408 | 13,531 | 18,571 | 18,051 | 10,454 | 65,561 | 48,820 | |||||||||||||||||||||
Total noninterest expense | 104,867 | 101,524 | 107,195 | 102,145 | 87,309 | 415,731 | 344,502 | |||||||||||||||||||||
Income before income taxes and tax eq adj | 37,222 | 48,070 | 45,880 | 37,662 | 40,078 | 168,834 | 173,780 | |||||||||||||||||||||
Tax equivalent adjustment | 3,747 | 3,700 | 3,735 | 3,655 | 3,699 | 14,837 | 14,397 | |||||||||||||||||||||
Income before income taxes | 33,475 | 44,370 | 42,145 | 34,007 | 36,379 | 153,997 | 159,383 | |||||||||||||||||||||
Income taxes | 5,436 | 11,336 | 11,024 | 9,141 | 8,669 | 36,937 | 42,100 | |||||||||||||||||||||
Net income available to common shareholders | $ | 28,039 | $ | 33,034 | $ | 31,121 | $ | 24,866 | $ | 27,710 | $ | 117,060 | $ | 117,283 | ||||||||||||||
Per common share data | ||||||||||||||||||||||||||||
Earnings per share - basic | $ | 0.42 | $ | 0.49 | $ | 0.46 | $ | 0.38 | $ | 0.43 | $ | 1.75 | $ | 1.81 | ||||||||||||||
Earnings per share - diluted | $ | 0.42 | $ | 0.49 | $ | 0.46 | $ | 0.38 | $ | 0.43 | $ | 1.75 | $ | 1.81 | ||||||||||||||
Dividends per share | $ | 0.23 | $ | 0.23 | $ | 0.23 | $ | 0.23 | $ | 0.23 | $ | 0.92 | $ | 0.92 | ||||||||||||||
Weighted average common shares outstanding | ||||||||||||||||||||||||||||
Basic | 67,249,877 | 67,177,013 | 67,162,530 | 65,983,204 | 64,785,457 | 66,897,404 | 64,658,765 | |||||||||||||||||||||
Diluted | 67,449,778 | 67,382,478 | 67,344,117 | 66,149,656 | 65,007,281 | 67,073,072 | 64,850,550 | |||||||||||||||||||||
Period end common shares outstanding | 67,372,980 | 67,181,694 | 67,163,195 | 67,151,087 | 64,820,414 | 67,372,980 | 64,820,414 | |||||||||||||||||||||
OTHER FINANCIAL DATA | ||||||||||||||||||||||||||||
Return on common equity | 8.26 | % | 9.83 | % | 9.29 | % | 7.61 | % | 8.56 | % | 8.75 | % | 9.30 | % | ||||||||||||||
Return on average tangible common equity | 12.59 | % | 14.92 | % | 14.09 | % | 10.82 | % | 11.51 | % | 13.09 | % | 12.55 | % | ||||||||||||||
Return on assets | 0.95 | % | 1.11 | % | 1.06 | % | 0.93 | % | 1.12 | % | 1.02 | % | 1.20 | % | ||||||||||||||
Interest margin - Yield - FTE | 4.35 | % | 4.19 | % | 4.28 | % | 4.26 | % | 4.23 | % | 4.27 | % | 4.44 | % | ||||||||||||||
Interest margin - Cost | 0.24 | % | 0.25 | % | 0.26 | % | 0.28 | % | 0.30 | % | 0.26 | % | 0.35 | % | ||||||||||||||
Net interest margin - FTE | 4.10 | % | 3.94 | % | 4.02 | % | 3.98 | % | 3.94 | % | 4.01 | % | 4.09 | % | ||||||||||||||
Efficiency ratio (1) | 72.74 | % | 68.02 | % | 70.44 | % | 67.84 | % | 67.80 | % | 69.77 | % | 65.02 | % | ||||||||||||||
Full-time equivalent employees | 3,110 | 3,110 | 3,119 | 3,164 | 2,666 | |||||||||||||||||||||||
COMMON STOCK PERFORMANCE | ||||||||||||||||||||||||||||
Market value-Close | $ | 26.84 | $ | 25.60 | $ | 24.58 | $ | 25.01 | $ | 22.46 | ||||||||||||||||||
Common book value | $ | 20.11 | $ | 19.79 | $ | 19.76 | $ | 20.15 | $ | 19.86 | ||||||||||||||||||
Tangible common book value | $ | 13.95 | $ | 13.58 | $ | 13.57 | $ | 13.96 | $ | 15.10 | ||||||||||||||||||
(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 December 31, 2013 ($ in thousands) (unaudited) |
Quarter Ended | ||||||||||||||||||||||||||||
NONPERFORMING ASSETS (1) | 12/31/2013 | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | |||||||||||||||||||||||
Nonaccrual loans | ||||||||||||||||||||||||||||
Alabama | $ | 14 | $ | 81 | $ | 73 | $ | - | $ | - | ||||||||||||||||||
Florida | 12,278 | 14,619 | 15,916 | 14,046 | 19,314 | |||||||||||||||||||||||
Mississippi (2) | 42,307 | 43,132 | 41,761 | 46,697 | 38,960 | |||||||||||||||||||||||
Tennessee (3) | 4,390 | 5,596 | 4,482 | 4,877 | 8,401 | |||||||||||||||||||||||
Texas | 6,249 | 9,953 | 12,086 | 17,702 | 15,688 | |||||||||||||||||||||||
Total nonaccrual loans | 65,238 | 73,381 | 74,318 | 83,322 | 82,363 | |||||||||||||||||||||||
Other real estate | ||||||||||||||||||||||||||||
Alabama | 25,912 | 25,308 | 27,245 | 28,870 | - | |||||||||||||||||||||||
Florida | 34,480 | 39,198 | 35,025 | 30,662 | 18,569 | |||||||||||||||||||||||
Mississippi (2) | 22,766 | 25,439 | 26,843 | 26,457 | 27,771 | |||||||||||||||||||||||
Tennessee (3) | 12,892 | 14,615 | 15,811 | 18,339 | 17,589 | |||||||||||||||||||||||
Texas | 10,489 | 11,769 | 12,788 | 14,078 | 14,260 | |||||||||||||||||||||||
Total other real estate | 106,539 | 116,329 | 117,712 | 118,406 | 78,189 | |||||||||||||||||||||||
Total nonperforming assets | $ | 171,777 | $ | 189,710 | $ | 192,030 | $ | 201,728 | $ | 160,552 | ||||||||||||||||||
LOANS PAST DUE OVER 90 DAYS (4) | ||||||||||||||||||||||||||||
LHFI | $ | 3,298 | $ | 2,344 | $ | 4,194 | $ | 2,772 | $ | 6,378 | ||||||||||||||||||
LHFS-Guaranteed GNMA serviced loans | ||||||||||||||||||||||||||||
(no obligation to repurchase) | $ | 21,540 | $ | 18,432 | $ | 14,003 | $ | 4,469 | $ | 43,073 | ||||||||||||||||||
Quarter Ended | Year Ended | |||||||||||||||||||||||||||
ALLOWANCE FOR LOAN LOSSES (4) | 12/31/2013 | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 12/31/2013 | 12/31/2012 | |||||||||||||||||||||
Beginning Balance | $ | 68,632 | $ | 72,825 | $ | 76,900 | $ | 78,738 | $ | 83,526 | $ | 78,738 | $ | 89,518 | ||||||||||||||
Provision for loan losses | (1,983 | ) | (3,624 | ) | (4,846 | ) | (2,968 | ) | (535 | ) | (13,421 | ) | 6,766 | |||||||||||||||
Charge-offs | (3,305 | ) | (3,817 | ) | (3,031 | ) | (3,325 | ) | (8,829 | ) | (13,478 | ) | (31,376 | ) | ||||||||||||||
Recoveries | 3,104 | 3,248 | 3,802 | 4,455 | 4,576 | 14,609 | 13,830 | |||||||||||||||||||||
Net (charge-offs) recoveries | (201 | ) | (569 | ) | 771 | 1,130 | (4,253 | ) | 1,131 | (17,546 | ) | |||||||||||||||||
Ending Balance | $ | 66,448 | $ | 68,632 | $ | 72,825 | $ | 76,900 | $ | 78,738 | $ | 66,448 | $ | 78,738 | ||||||||||||||
PROVISION FOR LOAN LOSSES (4) | ||||||||||||||||||||||||||||
Alabama | $ | 332 | $ | 550 | $ | 232 | $ | 676 | $ | - | $ | 1,790 | $ | - | ||||||||||||||
Florida | (2,350 | ) | (2,642 | ) | (3,425 | ) | (3,675 | ) | (706 | ) | (12,092 | ) | (730 | ) | ||||||||||||||
Mississippi (2) | 3,336 | (1,051 | ) | (520 | ) | (1,920 | ) | 2,031 | (155 | ) | 7,790 | |||||||||||||||||
Tennessee (3) | (117 | ) | (150 | ) | (335 | ) | (378 | ) | (1,037 | ) | (980 | ) | 460 | |||||||||||||||
Texas | (3,184 | ) | (331 | ) | (798 | ) | 2,329 | (823 | ) | (1,984 | ) | (754 | ) | |||||||||||||||
Total provision for loan losses | $ | (1,983 | ) | $ | (3,624 | ) | $ | (4,846 | ) | $ | (2,968 | ) | $ | (535 | ) | $ | (13,421 | ) | $ | 6,766 | ||||||||
NET CHARGE-OFFS (4) | ||||||||||||||||||||||||||||
Alabama | $ | 74 | $ | 132 | $ | 67 | $ | 11 | $ | - | $ | 284 | $ | - | ||||||||||||||
Florida | (634 | ) | (138 | ) | (1,426 | ) | (849 | ) | (237 | ) | (3,047 | ) | 5,261 | |||||||||||||||
Mississippi (2) | 393 | 375 | 291 | (290 | ) | 874 | 769 | 7,602 | ||||||||||||||||||||
Tennessee (3) | 506 | (153 | ) | 103 | 249 | (43 | ) | 705 | 1,154 | |||||||||||||||||||
Texas | (138 | ) | 353 | 194 | (251 | ) | 3,659 | 158 | 3,529 | |||||||||||||||||||
Total net charge-offs (recoveries) | $ | 201 | $ | 569 | $ | (771 | ) | $ | (1,130 | ) | $ | 4,253 | $ | (1,131 | ) | $ | 17,546 | |||||||||||
CREDIT QUALITY RATIOS (1) | ||||||||||||||||||||||||||||
Net charge offs/average loans | 0.01 | % | 0.04 | % | -0.05 | % | -0.08 | % | 0.29 | % | -0.02 | % | 0.30 | % | ||||||||||||||
Provision for loan losses/average loans | -0.13 | % | -0.25 | % | -0.34 | % | -0.21 | % | -0.04 | % | -0.23 | % | 0.11 | % | ||||||||||||||
Nonperforming loans/total loans (incl LHFS) | 1.10 | % | 1.26 | % | 1.29 | % | 1.45 | % | 1.41 | % | ||||||||||||||||||
Nonperforming assets/total loans (incl LHFS) | 2.89 | % | 3.26 | % | 3.32 | % | 3.51 | % | 2.74 | % | ||||||||||||||||||
Nonperforming assets/total loans (incl LHFS) +ORE | 2.84 | % | 3.20 | % | 3.26 | % | 3.44 | % | 2.71 | % | ||||||||||||||||||
ALL/total loans (excl LHFS) | 1.15 | % | 1.20 | % | 1.31 | % | 1.39 | % | 1.41 | % | ||||||||||||||||||
ALL-commercial/total commercial loans | 1.30 | % | 1.39 | % | 1.48 | % | 1.56 | % | 1.59 | % | ||||||||||||||||||
ALL-consumer/total consumer and home mortgage loans | 0.75 | % | 0.73 | % | 0.84 | % | 0.94 | % | 0.97 | % | ||||||||||||||||||
ALL/nonperforming loans | 101.86 | % | 93.53 | % | 97.99 | % | 92.29 | % | 95.60 | % | ||||||||||||||||||
ALL/nonperforming loans - | ||||||||||||||||||||||||||||
(excl impaired loans) | 190.70 | % | 161.96 | % | 158.75 | % | 145.83 | % | 174.46 | % | ||||||||||||||||||
CAPITAL RATIOS | ||||||||||||||||||||||||||||
Common equity/total assets | 11.49 | % | 11.26 | % | 11.18 | % | 11.42 | % | 13.10 | % | ||||||||||||||||||
Tangible common equity/tangible assets | 8.26 | % | 8.01 | % | 7.96 | % | 8.20 | % | 10.28 | % | ||||||||||||||||||
Tangible common equity/risk-weighted assets | 11.88 | % | 11.66 | % | 11.57 | % | 11.92 | % | 14.56 | % | ||||||||||||||||||
Tier 1 leverage ratio | 9.06 | % | 8.78 | % | 8.71 | % | 9.83 | % | 10.97 | % | ||||||||||||||||||
Tier 1 common risk-based capital ratio | 12.21 | % | 11.92 | % | 11.79 | % | 11.79 | % | 14.63 | % | ||||||||||||||||||
Tier 1 risk-based capital ratio | 12.97 | % | 12.69 | % | 12.55 | % | 12.97 | % | 15.53 | % | ||||||||||||||||||
Total risk-based capital ratio | 14.18 | % | 14.02 | % | 13.89 | % | 14.42 | % | 17.22 | % | ||||||||||||||||||
(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 December 31, 2013 ($ 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.”
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.
Since the end of the first quarter of 2013, Trustmark has recorded an additional $6.3 million in goodwill based on changes to the estimated fair value of certain acquired loans, other real estate and premises and equipment, net. These measurement period adjustments have been presented on a retrospective basis, consistent with applicable accounting guidance. The estimated fair values were considered preliminary as of December 31, 2013 and are subject to refinement as additional information relative to the closing date fair values becomes available through the measurement period. The statement of assets purchased and liabilities assumed in the BancTrust acquisition is presented below at their adjusted estimated fair values as of the acquisition date of February 15, 2013 ($ 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 | 54,952 | |||
Identifiable intangible assets | 33,498 | |||
Other real estate | 40,103 | |||
Other assets | 102,073 | |||
Total Assets | 1,845,543 | |||
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 | 24,477 | |||
Goodwill | 81,597 | |||
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 $81.6 million, which was recorded as goodwill under FASB ASC Topic 805. The identifiable intangible assets acquired represent the core deposit intangible at fair value at the acquisition date. The core deposit intangible is being amortized on an accelerated basis over the estimated useful life, currently expected to be approximately 10 years.
Loans, excluding loans held for sale (LHFS), acquired from BancTrust were evaluated under a fair value process involving various degrees of deterioration in credit quality since origination, and also for those loans for which it was probable at acquisition that Trustmark would not be able to collect all contractually required payments. These loans, with the exception of revolving credit agreements and leases, are referred to as acquired impaired loans and are accounted for in accordance with FASB ASC Topic 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality.”
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL INFORMATION December 31, 2013 ($ 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 $21.4 million and net income available to common shareholders of $3.7 million for the fourth quarter of 2013. 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 $1.9 million included in other expense).
Loans acquired from Bay Bank were evaluated under a fair value process involving various degrees of deterioration in credit quality since origination, and also for those loans for which it was probable at acquisition that Trustmark would not be able to collect all contractually required payments. These loans, with the exception of revolving credit agreements, are referred to as acquired impaired loans and are accounted for in accordance with FASB ASC Topic 310-30.
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL INFORMATION December 31, 2013 ($ 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):
12/31/2013 | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | ||||||||||||||||
SECURITIES AVAILABLE FOR SALE | ||||||||||||||||||||
U.S. Treasury securities | $ | 502 | $ | 503 | $ | 505 | $ | 506 | $ | - | ||||||||||
U.S. Government agency obligations | ||||||||||||||||||||
Issued by U.S. Government agencies | 129,293 | 133,013 | 139,066 | 141,226 | 10 | |||||||||||||||
Issued by U.S. Government sponsored agencies | 40,179 | 132,425 | 133,791 | 186,293 | 105,735 | |||||||||||||||
Obligations of states and political subdivisions | 171,738 | 212,991 | 212,204 | 218,467 | 215,761 | |||||||||||||||
Mortgage-backed securities | ||||||||||||||||||||
Residential mortgage pass-through securities | ||||||||||||||||||||
Guaranteed by GNMA | 14,474 | 48,240 | 46,330 | 51,138 | 19,902 | |||||||||||||||
Issued by FNMA and FHLMC | 241,118 | 214,795 | 227,927 | 241,365 | 208,564 | |||||||||||||||
Other residential mortgage-backed securities | ||||||||||||||||||||
Issued or guaranteed by FNMA, FHLMC, or GNMA | 1,290,741 | 2,048,275 | 2,156,320 | 2,090,516 | 1,466,366 | |||||||||||||||
Commercial mortgage-backed securities | ||||||||||||||||||||
Issued or guaranteed by FNMA, FHLMC, or GNMA | 242,172 | 354,131 | 361,575 | 377,070 | 399,780 | |||||||||||||||
Asset-backed securities and structured financial products | 63,937 | 227,728 | 233,965 | 239,502 | 241,627 | |||||||||||||||
Total securities available for sale | $ | 2,194,154 | $ | 3,372,101 | $ | 3,511,683 | $ | 3,546,083 | $ | 2,657,745 | ||||||||||
SECURITIES HELD TO MATURITY | ||||||||||||||||||||
U.S. Government agency obligations | ||||||||||||||||||||
Issued by U.S. Government sponsored agencies | $ | 100,159 | $ | - | $ | - | $ | - | $ | - | ||||||||||
Obligations of states and political subdivisions | 65,987 | 30,229 | 30,295 | 33,071 | 36,206 | |||||||||||||||
Mortgage-backed securities | ||||||||||||||||||||
Residential mortgage pass-through securities | ||||||||||||||||||||
Guaranteed by GNMA | 9,433 | 2,420 | 2,547 | 2,932 | 3,245 | |||||||||||||||
Issued by FNMA and FHLMC | 12,724 | 564 | 567 | 569 | 572 | |||||||||||||||
Other residential mortgage-backed securities | ||||||||||||||||||||
Issued or guaranteed by FNMA, FHLMC, or GNMA | 837,393 | - | - | - | - | |||||||||||||||
Commercial mortgage-backed securities | ||||||||||||||||||||
Issued or guaranteed by FNMA, FHLMC, or GNMA | 143,032 | 36,767 | 36,929 | 37,094 | 2,165 | |||||||||||||||
Total securities held to maturity | $ | 1,168,728 | $ | 69,980 | $ | 70,338 | $ | 73,666 | $ | 42,188 |
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). These unrealized holding losses are amortized over the remaining life of the security 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 December 31, 2013, the net unamortized, unrealized loss on the transferred securities included in accumulated other comprehensive (loss) income in the accompanying balance sheet totaled approximately $46.4 million ($28.6 million, net of tax).
During the 4th 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 leaves Trustmark with a CLO balance of $25.8 million at December 31, 2013, which was subsequently sold in January 2014.
Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of approximately 93% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of membership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any equity investment in any GSE.
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL INFORMATION December 31, 2013 ($ in thousands) (unaudited) |
Note 3 – Loan Composition
LHFI BY TYPE (excluding acquired loans) | 12/31/2013 | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | |||||||||||||||
Loans secured by real estate: | ||||||||||||||||||||
Construction, land development and other land loans | $ | 596,889 | $ | 572,057 | $ | 519,263 | $ | 485,419 | $ | 468,975 | ||||||||||
Secured by 1-4 family residential properties (1) | 1,485,564 | 1,482,963 | 1,414,871 | 1,430,293 | 1,497,480 | |||||||||||||||
Secured by nonfarm, nonresidential properties | 1,415,139 | 1,408,342 | 1,406,930 | 1,385,669 | 1,410,264 | |||||||||||||||
Other real estate secured | 189,362 | 196,328 | 192,568 | 174,680 | 189,949 | |||||||||||||||
Commercial and industrial loans | 1,157,614 | 1,132,863 | 1,169,327 | 1,206,851 | 1,169,513 | |||||||||||||||
Consumer loans | 165,308 | 164,612 | 160,318 | 160,253 | 171,660 | |||||||||||||||
Other loans | 789,005 | 739,476 | 714,105 | 688,623 | 684,913 | |||||||||||||||
LHFI | 5,798,881 | 5,696,641 | 5,577,382 | 5,531,788 | 5,592,754 | |||||||||||||||
Allowance for loan losses | (66,448 | ) | (68,632 | ) | (72,825 | ) | (76,900 | ) | (78,738 | ) | ||||||||||
Net LHFI | $ | 5,732,433 | $ | 5,628,009 | $ | 5,504,557 | $ | 5,454,888 | $ | 5,514,016 | ||||||||||
(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 | 12/31/2013 | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | |||||||||||||||
Loans secured by real estate: | ||||||||||||||||||||
Construction, land development and other land loans | $ | 98,928 | $ | 106,655 | $ | 132,116 | $ | 138,442 | $ | 10,056 | ||||||||||
Secured by 1-4 family residential properties | 157,914 | 168,573 | 184,928 | 209,658 | 19,404 | |||||||||||||||
Secured by nonfarm, nonresidential properties | 287,136 | 301,686 | 318,603 | 339,953 | 45,649 | |||||||||||||||
Other real estate secured | 33,948 | 35,051 | 34,869 | 32,208 | 669 | |||||||||||||||
Commercial and industrial loans | 149,495 | 186,649 | 206,338 | 235,286 | 3,035 | |||||||||||||||
Consumer loans | 18,428 | 22,251 | 27,420 | 32,694 | 2,610 | |||||||||||||||
Other loans | 24,141 | 17,010 | 18,179 | 14,886 | 100 | |||||||||||||||
Noncovered loans | 769,990 | 837,875 | 922,453 | 1,003,127 | 81,523 | |||||||||||||||
Allowance for loan losses | (7,249 | ) | (3,007 | ) | (112 | ) | (1,961 | ) | (1,885 | ) | ||||||||||
Net noncovered loans | $ | 762,741 | $ | 834,868 | $ | 922,341 | $ | 1,001,166 | $ | 79,638 |
ACQUIRED COVERED LOANS BY TYPE | 12/31/2013 | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | |||||||||||||||
Loans secured by real estate: | ||||||||||||||||||||
Construction, land development and other land loans | $ | 2,363 | $ | 2,585 | $ | 3,662 | $ | 3,875 | $ | 3,924 | ||||||||||
Secured by 1-4 family residential properties | 16,416 | 17,785 | 18,899 | 20,980 | 23,990 | |||||||||||||||
Secured by nonfarm, nonresidential properties | 10,945 | 12,120 | 13,341 | 17,355 | 18,407 | |||||||||||||||
Other real estate secured | 2,644 | 2,817 | 2,929 | 3,365 | 3,567 | |||||||||||||||
Commercial and industrial loans | 394 | 478 | 543 | 648 | 747 | |||||||||||||||
Consumer loans | 119 | 151 | 173 | 179 | 177 | |||||||||||||||
Other loans | 1,335 | 1,314 | 1,273 | 1,187 | 1,229 | |||||||||||||||
Covered loans | 34,216 | 37,250 | 40,820 | 47,589 | 52,041 | |||||||||||||||
Allowance for loan losses | (2,387 | ) | (2,326 | ) | (2,578 | ) | (4,497 | ) | (4,190 | ) | ||||||||||
Net covered loans | $ | 31,829 | $ | 34,924 | $ | 38,242 | $ | 43,092 | $ | 47,851 |
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL INFORMATION December 31, 2013 ($ in thousands) (unaudited) |
Note 3 – Loan Composition (continued) | ||||||||||||||||||||||||
December 31, 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 | $ | 596,889 | $ | 19,996 | $ | 76,240 | $ | 289,112 | $ | 44,066 | $ | 167,475 | ||||||||||||
Secured by 1-4 family residential properties | 1,485,564 | 15,041 | 47,462 | 1,263,409 | 137,133 | 22,519 | ||||||||||||||||||
Secured by nonfarm, nonresidential properties | 1,415,139 | 24,628 | 148,350 | 756,457 | 148,372 | 337,332 | ||||||||||||||||||
Other real estate secured | 189,362 | 3,441 | 4,873 | 132,925 | 22,092 | 26,031 | ||||||||||||||||||
Commercial and industrial loans | 1,157,614 | 26,147 | 12,182 | 760,366 | 85,615 | 273,304 | ||||||||||||||||||
Consumer loans | 165,308 | 12,934 | 2,617 | 128,922 | 18,443 | 2,392 | ||||||||||||||||||
Other loans | 789,005 | 20,496 | 24,458 | 630,116 | 51,302 | 62,633 | ||||||||||||||||||
Loans | $ | 5,798,881 | $ | 122,683 | $ | 316,182 | $ | 3,961,307 | $ | 507,023 | $ | 891,686 | ||||||||||||
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION (1) | ||||||||||||||||||||||||
Lots | $ | 47,605 | $ | 885 | $ | 29,155 | $ | 13,461 | $ | 1,539 | $ | 2,565 | ||||||||||||
Development | 95,672 | 766 | 25,252 | 41,399 | 3,601 | 24,654 | ||||||||||||||||||
Unimproved land | 112,758 | 1,467 | 18,997 | 61,926 | 14,338 | 16,030 | ||||||||||||||||||
1-4 family construction | 96,518 | 9,419 | 2,214 | 58,020 | 3,060 | 23,805 | ||||||||||||||||||
Other construction | 244,336 | 7,459 | 622 | 114,306 | 21,528 | 100,421 | ||||||||||||||||||
Construction, land development and other land loans | $ | 596,889 | $ | 19,996 | $ | 76,240 | $ | 289,112 | $ | 44,066 | $ | 167,475 | ||||||||||||
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION (1) | ||||||||||||||||||||||||
Income producing: | ||||||||||||||||||||||||
Retail | $ | 160,086 | $ | 2,930 | $ | 40,720 | $ | 63,776 | $ | 17,000 | $ | 35,660 | ||||||||||||
Office | 168,741 | 3,868 | 34,578 | 85,385 | 6,801 | 38,109 | ||||||||||||||||||
Nursing homes/assisted living | 101,771 | - | - | 93,542 | 4,280 | 3,949 | ||||||||||||||||||
Hotel/motel | 68,339 | - | 367 | 34,307 | 24,500 | 9,165 | ||||||||||||||||||
Industrial | 68,173 | 693 | 6,018 | 26,458 | 152 | 34,852 | ||||||||||||||||||
Health care | 13,908 | 3,100 | - | 10,711 | 97 | - | ||||||||||||||||||
Convenience stores | 10,806 | 256 | - | 6,652 | 706 | 3,192 | ||||||||||||||||||
Other | 154,761 | 5,264 | 19,950 | 75,792 | 3,818 | 49,937 | ||||||||||||||||||
Total income producing loans | 746,585 | 16,111 | 101,633 | 396,623 | 57,354 | 174,864 | ||||||||||||||||||
Owner-occupied: | ||||||||||||||||||||||||
Office | 104,576 | 1,550 | 14,910 | 60,003 | 4,458 | 23,655 | ||||||||||||||||||
Churches | 81,312 | 2,008 | 2,983 | 40,363 | 25,342 | 10,616 | ||||||||||||||||||
Industrial warehouses | 97,403 | 928 | 3,142 | 42,143 | 7,358 | 43,832 | ||||||||||||||||||
Health care | 101,187 | - | 14,169 | 56,948 | 14,917 | 15,153 | ||||||||||||||||||
Convenience stores | 56,026 | - | 1,649 | 31,496 | 3,277 | 19,604 | ||||||||||||||||||
Retail | 28,374 | 464 | 3,665 | 17,003 | 3,258 | 3,984 | ||||||||||||||||||
Restaurants | 34,714 | - | 1,830 | 28,400 | 3,330 | 1,154 | ||||||||||||||||||
Auto dealerships | 12,056 | - | 246 | 10,077 | 1,692 | 41 | ||||||||||||||||||
Other | 152,906 | 3,567 | 4,123 | 73,401 | 27,386 | 44,429 | ||||||||||||||||||
Total owner-occupied loans | 668,554 | 8,517 | 46,717 | 359,834 | 91,018 | 162,468 | ||||||||||||||||||
Loans secured by nonfarm, nonresidential properties | $ | 1,415,139 | $ | 24,628 | $ | 148,350 | $ | 756,457 | $ | 148,372 | $ | 337,332 | ||||||||||||
(1) Excludes acquired loans. |
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL INFORMATION December 31, 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 | Year Ended | |||||||||||||||||||||||||||
12/31/2013 | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 12/31/2013 | 12/31/2012 | ||||||||||||||||||||||
Securities – taxable | 2.30 | % | 2.22 | % | 2.24 | % | 2.33 | % | 2.44 | % | 2.27 | % | 2.77 | % | ||||||||||||||
Securities – nontaxable | 4.28 | % | 4.25 | % | 4.31 | % | 4.44 | % | 4.39 | % | 4.32 | % | 4.49 | % | ||||||||||||||
Securities – total | 2.40 | % | 2.32 | % | 2.35 | % | 2.45 | % | 2.58 | % | 2.38 | % | 2.89 | % | ||||||||||||||
Loans - LHFI & LHFS | 4.55 | % | 4.69 | % | 4.74 | % | 4.76 | % | 4.77 | % | 4.68 | % | 4.92 | % | ||||||||||||||
Acquired loans | 10.95 | % | 8.20 | % | 8.48 | % | 8.93 | % | 13.75 | % | 9.11 | % | 13.00 | % | ||||||||||||||
Loans - total | 5.36 | % | 5.18 | % | 5.29 | % | 5.14 | % | 4.98 | % | 5.24 | % | 5.11 | % | ||||||||||||||
FF sold & rev repo | 0.50 | % | 0.35 | % | 0.29 | % | 0.25 | % | 0.41 | % | 0.37 | % | 0.34 | % | ||||||||||||||
Other earning assets | 4.53 | % | 3.86 | % | 4.29 | % | 4.15 | % | 4.30 | % | 4.20 | % | 4.24 | % | ||||||||||||||
Total earning assets | 4.35 | % | 4.19 | % | 4.28 | % | 4.26 | % | 4.23 | % | 4.27 | % | 4.44 | % | ||||||||||||||
Interest-bearing deposits | 0.27 | % | 0.27 | % | 0.28 | % | 0.30 | % | 0.35 | % | 0.28 | % | 0.42 | % | ||||||||||||||
FF pch & repo | 0.11 | % | 0.12 | % | 0.11 | % | 0.12 | % | 0.14 | % | 0.12 | % | 0.16 | % | ||||||||||||||
Other borrowings | 2.96 | % | 3.07 | % | 3.13 | % | 3.03 | % | 2.72 | % | 3.05 | % | 2.81 | % | ||||||||||||||
Total interest-bearing liabilities | 0.33 | % | 0.33 | % | 0.34 | % | 0.37 | % | 0.41 | % | 0.34 | % | 0.48 | % | ||||||||||||||
Net interest margin | 4.10 | % | 3.94 | % | 4.02 | % | 3.98 | % | 3.94 | % | 4.01 | % | 4.09 | % | ||||||||||||||
Net interest margin excluding acquired loans | 3.48 | % | 3.52 | % | 3.55 | % | 3.66 | % | 3.77 | % | 3.55 | % | 3.94 | % |
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 improved 16 basis points during the fourth quarter of 2013 primarily due to an increase in interest and fees on acquired loans, which was the result of increased acquired loan recoveries during the quarter.
During the fourth quarter of 2013, the yield on average acquired loans includes approximately $9.3 million in recoveries, or an annualized 4.35% of the average acquired loan balance. Excluding the recoveries on acquired loans, the yield on average acquired loans totaled 6.60%.
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 $1.0 million for the quarter ended December 31, 2013 compared to a net negative ineffectiveness of $724 thousand for the quarter ended December 31, 2012.
The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements:
Quarter Ended | Year Ended | |||||||||||||||||||||||||||
12/31/2013 | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 12/31/2013 | 12/31/2012 | ||||||||||||||||||||||
Mortgage servicing income, net | $ | 4,688 | $ | 4,552 | $ | 4,385 | $ | 4,267 | $ | 4,441 | $ | 17,892 | $ | 16,202 | ||||||||||||||
Change in fair value-MSR from runoff | (2,182 | ) | (2,407 | ) | (2,756 | ) | (2,460 | ) | (2,631 | ) | (9,805 | ) | (9,808 | ) | ||||||||||||||
Gain on sales of loans, net | 2,202 | 6,465 | 7,597 | 10,165 | 12,034 | 26,429 | 33,919 | |||||||||||||||||||||
Other, net | (533 | ) | (1,485 | ) | (1,052 | ) | (1,649 | ) | (1,789 | ) | (4,719 | ) | 4,022 | |||||||||||||||
Mortgage banking income before hedge ineffectiveness | 4,175 | 7,125 | 8,174 | 10,323 | 12,055 | 29,797 | 44,335 | |||||||||||||||||||||
Change in fair value-MSR from market changes | 3,937 | 287 | 6,467 | 1,127 | (418 | ) | 11,818 | (9,378 | ) | |||||||||||||||||||
Change in fair value of derivatives | (2,926 | ) | 1,028 | (6,346 | ) | 133 | (306 | ) | (8,111 | ) | 6,003 | |||||||||||||||||
Net positive (negative) hedge ineffectiveness | 1,011 | 1,315 | 121 | 1,260 | (724 | ) | 3,707 | (3,375 | ) | |||||||||||||||||||
Mortgage banking, net | $ | 5,186 | $ | 8,440 | $ | 8,295 | $ | 11,583 | $ | 11,331 | $ | 33,504 | $ | 40,960 |
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 $534 thousand, which was recorded during the first quarter of 2013 and is included in the table above as "Gain on sales of loans, net.”
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL INFORMATION December 31, 2013 ($ 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 | Year Ended | |||||||||||||||||||||||||||
12/31/2013 | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 12/31/2013 | 12/31/2012 | ||||||||||||||||||||||
Partnership amortization for tax credit purposes | $ | (5,642 | ) | $ | (2,388 | ) | $ | (2,221 | ) | $ | (2,117 | ) | $ | (3,202 | ) | $ | (12,368 | ) | $ | (8,417 | ) | |||||||
Bargain purchase gain on Bay Bank acquisition | - | - | - | - | - | - | 3,635 | |||||||||||||||||||||
(Decrease) increase in FDIC indemnification asset | (2,429 | ) | 211 | (2,317 | ) | (1,365 | ) | (743 | ) | (5,900 | ) | (3,722 | ) | |||||||||||||||
Other miscellaneous income | 3,269 | 2,342 | 2,393 | 2,291 | 1,938 | 10,295 | 9,617 | |||||||||||||||||||||
Total other, net | $ | (4,802 | ) | $ | 165 | $ | (2,145 | ) | $ | (1,191 | ) | $ | (2,007 | ) | $ | (7,973 | ) | $ | 1,113 |
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 fourth quarter of 2013, other noninterest income included a write-down of the FDIC indemnification asset of $2.4 million on acquired covered loans obtained from Heritage as a result of loan pay-offs, improved cash flow projections and lower loss expectations for loan pools.
Other noninterest expense consisted of the following for the periods presented ($ in thousands):
Quarter Ended | Year Ended | |||||||||||||||||||||||||||
12/31/2013 | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 12/31/2013 | 12/31/2012 | ||||||||||||||||||||||
Loan expense | $ | 4,419 | $ | 3,390 | $ | 4,267 | $ | 2,995 | $ | 3,274 | $ | 15,071 | $ | 20,248 | ||||||||||||||
Non-routine transaction expenses on acquisitions | - | - | - | 7,920 | - | 7,920 | 1,917 | |||||||||||||||||||||
Amortization of intangibles | 2,434 | 2,466 | 2,472 | 1,442 | 1,022 | 8,814 | 3,788 | |||||||||||||||||||||
Other miscellaneous expense | 8,555 | 7,675 | 11,832 | 5,694 | 6,158 | 33,756 | 22,867 | |||||||||||||||||||||
Total other expense | $ | 15,408 | $ | 13,531 | $ | 18,571 | $ | 18,051 | $ | 10,454 | $ | 65,561 | $ | 48,820 |
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. During the third quarter of 2013, the United States District Court for the Southern District of Mississippi preliminarily approved the settlement. The court will hold a hearing on March 25, 2014 to determine whether to issue final approval of the settlement.
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 $5.7 million of contract termination and other expenses.
Note 7 – Non-GAAP Financial Measures
In addition to capital ratios defined by GAAP and banking regulators, Trustmark utilizes various tangible common equity measures when evaluating capital utilization and adequacy. Tangible common equity, as defined by Trustmark, represents common equity less goodwill and identifiable intangible assets.
Trustmark believes these measures are important because they reflect the level of capital available to withstand unexpected market conditions. Additionally, presentation of these measures allows readers to compare certain aspects of Trustmark’s capitalization to other organizations. These ratios differ from capital measures defined by banking regulators principally in that the numerator excludes shareholders’ equity associated with preferred securities, the nature and extent of which varies across organizations.
These calculations are intended to complement the capital ratios defined by GAAP and banking regulators. Because GAAP does not include these capital ratio measures, Trustmark believes there are no comparable GAAP financial measures to these tangible common equity ratios. Despite the importance of these measures to Trustmark, there are no standardized definitions for them and, as a result, Trustmark’s calculations may not be comparable with other organizations. Also there may be limits in the usefulness of these measures to investors. As a result, Trustmark encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure. The following table reconciles Trustmark’s calculation of these measures to amounts reported under GAAP.
TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL INFORMATION December 31, 2013 ($ in thousands) (unaudited) |
Note 7 - Non-GAAP Financial Measures (continued) | ||||||||||||||||||||||||||||||
Quarter Ended | Year Ended | |||||||||||||||||||||||||||||
12/31/2013 | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 12/31/2013 | 12/31/2012 | ||||||||||||||||||||||||
TANGIBLE COMMON EQUITY | ||||||||||||||||||||||||||||||
AVERAGE BALANCES | ||||||||||||||||||||||||||||||
Total shareholders' common equity | $ | 1,346,975 | $ | 1,333,356 | $ | 1,344,360 | $ | 1,325,508 | $ | 1,288,222 | $ | 1,337,597 | $ | 1,261,617 | ||||||||||||||||
Less: | Goodwill | (372,468 | ) | (368,482 | ) | (366,592 | ) | (324,902 | ) | (291,104 | ) | (358,270 | ) | (291,104 | ) | |||||||||||||||
Identifiable intangible assets | (43,532 | ) | (45,988 | ) | (48,402 | ) | (35,187 | ) | (17,933 | ) | (43,308 | ) | (17,348 | ) | ||||||||||||||||
Total average tangible common equity | $ | 930,975 | $ | 918,886 | $ | 929,366 | $ | 965,419 | $ | 979,185 | $ | 936,020 | $ | 953,165 | ||||||||||||||||
PERIOD END BALANCES | ||||||||||||||||||||||||||||||
Total shareholders' common equity | $ | 1,354,953 | $ | 1,329,514 | $ | 1,326,819 | $ | 1,352,946 | $ | 1,287,369 | ||||||||||||||||||||
Less: | Goodwill | (372,851 | ) | (372,463 | ) | (368,315 | ) | (366,366 | ) | (291,104 | ) | |||||||||||||||||||
Identifiable intangible assets | (41,990 | ) | (44,424 | ) | (46,889 | ) | (49,361 | ) | (17,306 | ) | ||||||||||||||||||||
Total tangible common equity | (a) | $ | 940,112 | $ | 912,627 | $ | 911,615 | $ | 937,219 | $ | 978,959 | |||||||||||||||||||
TANGIBLE ASSETS | ||||||||||||||||||||||||||||||
Total assets | $ | 11,790,383 | $ | 11,805,197 | $ | 11,863,312 | $ | 11,850,515 | $ | 9,828,667 | ||||||||||||||||||||
Less: | Goodwill | (372,851 | ) | (372,463 | ) | (368,315 | ) | (366,366 | ) | (291,104 | ) | |||||||||||||||||||
Identifiable intangible assets | (41,990 | ) | (44,424 | ) | (46,889 | ) | (49,361 | ) | (17,306 | ) | ||||||||||||||||||||
Total tangible assets | (b) | $ | 11,375,542 | $ | 11,388,310 | $ | 11,448,108 | $ | 11,434,788 | $ | 9,520,257 | |||||||||||||||||||
Risk-weighted assets | (c) | $ | 7,916,378 | $ | 7,825,839 | $ | 7,878,281 | $ | 7,862,884 | $ | 6,723,259 | |||||||||||||||||||
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION | ||||||||||||||||||||||||||||||
Net income available to common shareholders | $ | 28,039 | $ | 33,034 | $ | 31,121 | $ | 24,866 | $ | 27,710 | $ | 117,060 | $ | 117,283 | ||||||||||||||||
Plus: | Intangible amortization net of tax | 1,503 | 1,523 | 1,526 | 890 | 631 | 5,442 | 2,339 | ||||||||||||||||||||||
Net income adjusted for intangible amortization | $ | 29,542 | $ | 34,557 | $ | 32,647 | $ | 25,756 | $ | 28,341 | $ | 122,502 | $ | 119,622 | ||||||||||||||||
Period end common shares outstanding | (d) | 67,372,980 | 67,181,694 | 67,163,195 | 67,151,087 | 64,820,414 | ||||||||||||||||||||||||
TANGIBLE COMMON EQUITY MEASUREMENTS | ||||||||||||||||||||||||||||||
Return on average tangible common equity 1 | 12.59 | % | 14.92 | % | 14.09 | % | 10.82 | % | 11.51 | % | 13.09 | % | 12.55 | % | ||||||||||||||||
Tangible common equity/tangible assets | (a)/(b) | 8.26 | % | 8.01 | % | 7.96 | % | 8.20 | % | 10.28 | % | |||||||||||||||||||
Tangible common equity/risk-weighted assets | (a)/(c) | 11.88 | % | 11.66 | % | 11.57 | % | 11.92 | % | 14.56 | % | |||||||||||||||||||
Tangible common book value | (a)/(d)*1,000 | $ | 13.95 | $ | 13.58 | $ | 13.57 | $ | 13.96 | $ | 15.10 | |||||||||||||||||||
TIER 1 COMMON RISK-BASED CAPITAL | ||||||||||||||||||||||||||||||
Total shareholders' equity | $ | 1,354,953 | $ | 1,329,514 | $ | 1,326,819 | $ | 1,352,946 | $ | 1,287,369 | ||||||||||||||||||||
Eliminate qualifying AOCI | 43,731 | 52,226 | 36,088 | (5,709 | ) | (3,395 | ) | |||||||||||||||||||||||
Qualifying tier 1 capital | 60,000 | 60,000 | 60,000 | 93,000 | 60,000 | |||||||||||||||||||||||||
Disallowed goodwill | (372,851 | ) | (372,463 | ) | (368,315 | ) | (366,366 | ) | (291,104 | ) | ||||||||||||||||||||
Adj to goodwill allowed for deferred taxes | 14,445 | 14,093 | 13,740 | 13,388 | 13,035 | |||||||||||||||||||||||||
Other disallowed intangibles | (41,990 | ) | (44,424 | ) | (46,889 | ) | (49,361 | ) | (17,306 | ) | ||||||||||||||||||||
Disallowed servicing intangible | (6,783 | ) | (6,315 | ) | (6,038 | ) | (5,153 | ) | (4,734 | ) | ||||||||||||||||||||
Disallowed deferred taxes | (24,647 | ) | (39,476 | ) | (26,411 | ) | (12,575 | ) | - | |||||||||||||||||||||
Total tier 1 capital | 1,026,858 | 993,155 | 988,994 | 1,020,170 | 1,043,865 | |||||||||||||||||||||||||
Less: | Qualifying tier 1 capital | (60,000 | ) | (60,000 | ) | (60,000 | ) | (93,000 | ) | (60,000 | ) | |||||||||||||||||||
Total tier 1 common capital | (e) | $ | 966,858 | $ | 933,155 | $ | 928,994 | $ | 927,170 | $ | 983,865 | |||||||||||||||||||
Tier 1 common risk-based capital ratio | (e)/(c) | 12.21 | % | 11.92 | % | 11.79 | % | 11.79 | % | 14.63 | % | |||||||||||||||||||
1 Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible common equity |