Trustmark (TRMK) 8-K Trustmark Corporation Announces First Quarter 2018 Financial Results

Exhibit 99.1

News Release

Trustmark Corporation Announces First Quarter 2018 Financial Results

JACKSON, Miss. – April 24, 2018 – Trustmark Corporation (NASDAQ:TRMK) reported net income of $36.8 million in the first quarter of 2018, representing diluted earnings per share of $0.54.Diluted earnings per share in the first quarter of 2018 increased 12.5% when compared to core earnings in the previous quarter and 17.4% when compared to the same period in the prior year. This level of earnings resulted in a return on average tangible equity of 13.05% and a return on average assets of 1.10%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable June 15, 2018, to shareholders of record on June 1, 2018.

First Quarter Highlights

• Revenue, excluding interest and fees on acquired loans, increased 1.7% linked quarter and 4.0% year-over-year to total $144.0 million

• The net interest margin (FTE), excluding acquired loans, was 3.37% in the first quarter, up 2 basis points from the prior quarter and down 1 basis point year-over-year

• Core noninterest expense, which excludes other real estate and intangible amortization, totaled $100.2 million in the first quarter, down 0.6% from the prior quarter and up 1.5% year-over-year

• Sustained strong credit performance reflected in reduced nonperforming assets and net recoveries

Gerard R. Host, President and CEO, stated, “The first quarter marked a positive start to 2018, as we placed continued emphasis on balance sheet optimization, capital deployment and disciplined expense management. The strong performance of our mortgage and insurance businesses shows the value of our diverse business model. Thanks to our talented associates, solid profitability and strong capital base, Trustmark remains well positioned to continue meeting the needs of our customers and creating long-term value for our shareholders.”

Balance Sheet Management

• Continued balance sheet optimization through maturing investment securities run-off and opportunistic share repurchases

• Capital base continues to provide flexibility in pursuing growth opportunities

• Noninterest-bearing deposits represent 27.4% of total deposits

Loans held for investment totaled $8.5 billion at March 31, 2018, a decrease of 0.7% from the prior quarter and an increase of 6.4% from the comparable period one year earlier.Acquired loans totaled $215.5 million at March 31, 2018, down $46.0 million from the prior quarter. Collectively, loans held for investment and acquired loans totaled $8.7 billion at March 31, 2018, down $102.0 million, or 1.2%, from the prior quarter.

Deposits totaled $11.0 billion at March 31, 2018, up $398.3 million, or 3.8%, from the prior quarter. Trustmark continues to maintain an attractive, low-cost deposit base with approximately 60% of deposit balances in checking accounts. Deposit costs remain well controlled with the 9 basis point linked-quarter increase in interest bearing deposit cost driven in part by public fund deposits.

Trustmark’s capital position remained solid, reflecting the consistent profitability of its diversified financial services businesses.  During the first quarter, Trustmark repurchased $2.5 million of its common shares in open market transactions and has $96.7 million in remaining authority under its existing stock repurchase program, which expires March 31, 2019.  At March 31, 2018, Trustmark’s tangible equity to tangible assets ratio was 9.00%, while the total risk-based capital ratio was 13.44%.  

Credit Quality

• Other real estate decreased 8.5% and 29.3% from the prior quarter and year-over-year, respectively

• Recoveries exceeded charge-offs; net recoveries represented -0.03% of average loans

• Allowance for loan losses represented 314.28% of nonperforming loans, excluding specifically reviewed impaired loans

Nonperforming loans totaled $68.7 million at March 31, 2018, up 1.7% from the prior quarter and 12.1% year-over-year.  Other real estate totaled $39.6 million, reflecting a decline of 8.5% from the previous quarter and 29.3% from the same period one year earlier. Collectively, nonperforming assets totaled $108.3 million, reflecting a linked-quarter decrease of 2.3% and year-over-year decrease of 7.7%.

Allocation of Trustmark's $81.2 million allowance for loan losses represented 1.04% of commercial loans and 0.64% of consumer and home mortgage loans, resulting in an allowance to total loans held for investment of 0.95% at March 31, 2018, representing a level management considers commensurate with the inherent risk in the loan portfolio.Collectively, the allowance for both held for investment and acquired loan losses represented 0.98% of total loans, which includes held for investment and acquired loans.      

Unless otherwise noted, all of the above credit quality metrics exclude acquired loans.

Revenue Generation

• Net interest margin, excluding acquired loans, was 3.37%, an increase of 2 basis points from the prior quarter

• Maturing investment securities run-off is accretive to the net interest margin

• Deposit costs remain well controlled

• Noninterest income totaled $46.8 million, up 6.4% linked quarter and 1.7% year-over-year

Net interest income (FTE) in the first quarter totaled $105.3 million, resulting in a net interest margin of 3.46%, down 2 basis points from the prior quarter.  Relative to the prior quarter, net interest income (FTE) decreased $3.8 million, reflecting a $3.2 million decrease in interest income and a $592 thousand increase in interest expense. During the first quarter of 2018, the yield on acquired loans totaled 8.13% and included $594 thousand in recoveries from the settlement of debt, which represented approximately 0.99% of the annualized total acquired loan yield.   The net interest margin was negatively impacted by approximately 6 basis points linked-quarter and year-over-year due to the enactment of the 2017 Tax Cuts and Jobs Act which reduced the fully tax equivalent adjustment as a result of the lower corporate tax rate.  This compression year-over-year is principally offset by the runoff of maturing investment securities, while linked quarter is offset by the runoff of maturing investment securities and quarterly day count.

Noninterest income in the first quarter increased 6.4% from the prior quarter to total $46.8 million, as higher mortgage banking revenues and insurance commissions more than offset seasonal reductions in various fee-income categories.  Mortgage banking revenue totaled $11.3 million in the first quarter, up $5.0 million from the

prior quarter and $1.1 million year-over-year.  The linked-quarter change reflects a net positive mortgage valuation adjustment and a net positive mortgage servicing hedge ineffectiveness that more than offset decreased secondary marketing gains.  Mortgage loan production totaled $289.1 million, down 14.3% from the prior quarter and 4.7% year-over-year. Insurance revenue totaled $9.4 million in the first quarter, up 6.9% from the prior quarter and 2.2% year-over-year; this performance primarily reflects growth in the group health insurance and property and casualty businesses.  

Wealth management revenue in the first quarter totaled $7.6 million, down 2.0% and up 2.1% from the prior quarter and year-over-year, respectively.  The linked-quarter decline is primarily attributable to decreased commission-based transactions within investment services.  Bank card and other fees declined $640 thousand from the prior quarter due to seasonal reductions in interchange income and other miscellaneous bank fees. Service charges on deposit accounts declined $336 thousand from the prior quarter, reflecting seasonal reductions in NSF and overdraft fees.

Noninterest Expense

• Total noninterest expense declined 0.5% linked quarter and increased 0.4% year-over-year to $102.5 million

• Core noninterest expense, which excludes other real estate expense and intangible amortization, totaled $100.2 million, down 0.6% from the prior quarter and up 1.5% year-over-year

Salaries and employee benefits decreased $345 thousand from the prior quarter to total $58.5 million.  Services and fees increased 2.1%, or $327 thousand, linked-quarter.  Other real estate expense totaled $866 thousand, up $200 thousand from the prior quarter, while net occupancy-premises expense totaled $6.5 million, down 1.7% from the prior quarter.  Other expense totaled $11.8 million, a decline of $783 thousand, or 6.2%, on a linked-quarter basis.

Trustmark remains committed to optimization of its retail delivery channels to promote additional growth. In the first quarter, Trustmark opened a location in Pensacola, Florida, that not only serves as a branch, but also as headquarters for the Fisher Brown Bottrell Insurance agency.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, April 25, 2018 at 8:30 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (877) 317-3051 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Wednesday, May 9, 2018, in archived format at the same web address or by calling (877) 344-7529, passcode 10118412.

Trustmark Corporation is a financial services company providing banking and financial solutions through 199 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 potential market impacts of efforts by the Federal Reserve Board to reduce the size of its balance sheet and conditions in the housing and real estate markets in the regions in which Trustmark operates and the extent and duration of the current volatility in the credit and financial markets as well as crude oil prices, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility of market interest rates, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, including the potential impact of 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, cyber-attacks and other breaches which could affect our information system security, 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:	Trustmark Media Contact:
Louis E. Greer	Melanie A. Morgan
Treasurer and	Senior Vice President
Principal Financial Officer	601-208-2979
601-208-2310

F. Joseph Rein, Jr.

Senior Vice President

601-208-6898

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	CONSOLIDATED FINANCIAL INFORMATION
	March 31, 2018
	($ in thousands)
	(unaudited)

										Linked Quarter						Year over Year
QUARTERLY AVERAGE BALANCES	3/31/2018			12/31/2017			3/31/2017			$ Change			% Change			$ Change			% Change
Securities AFS-taxable	$	2,141,144		$	2,247,247		$	2,252,162		$	(106,103	)		-4.7	%	$	(111,018	)		-4.9	%
Securities AFS-nontaxable		57,972			61,691			88,522			(3,719	)		-6.0	%		(30,550	)		-34.5	%
Securities HTM-taxable		1,005,721			1,045,723			1,124,692			(40,002	)		-3.8	%		(118,971	)		-10.6	%
Securities HTM-nontaxable		32,734			32,781			33,009			(47	)		-0.1	%		(275	)		-0.8	%
Total securities		3,237,571			3,387,442			3,498,385			(149,871	)		-4.4	%		(260,814	)		-7.5	%
Loans (including loans held for sale)		8,636,967			8,686,916			8,074,449			(49,949	)		-0.6	%		562,518			7.0	%
Acquired loans		243,152			273,918			250,482			(30,766	)		-11.2	%		(7,330	)		-2.9	%
Fed funds sold and rev repos		478			1,724			397			(1,246	)		-72.3	%		81			20.4	%
Other earning assets		213,985			80,218			79,515			133,767		n/m				134,470		n/m
Total earning assets		12,332,153			12,430,218			11,903,228			(98,065	)		-0.8	%		428,925			3.6	%
Allowance for loan losses		(82,304	)		(86,704	)		(83,394	)		4,400			5.1	%		1,090			1.3	%
Cash and due from banks		336,642			315,586			310,542			21,056			6.7	%		26,100			8.4	%
Other assets		1,030,738			1,192,464			1,235,469			(161,726	)		-13.6	%		(204,731	)		-16.6	%
Total assets	$	13,617,229		$	13,851,564		$	13,365,845		$	(234,335	)		-1.7	%	$	251,384			1.9	%
Interest-bearing demand deposits	$	2,404,428		$	2,244,625		$	1,981,982		$	159,803			7.1	%	$	422,446			21.3	%
Savings deposits		3,737,507			3,291,407			3,319,572			446,100			13.6	%		417,935			12.6	%
Time deposits		1,748,645			1,756,576			1,650,251			(7,931	)		-0.5	%		98,394			6.0	%
Total interest-bearing deposits		7,890,580			7,292,608			6,951,805			597,972			8.2	%		938,775			13.5	%
Fed funds purchased and repos		277,877			475,850			498,963			(197,973	)		-41.6	%		(221,086	)		-44.3	%
Short-term borrowings		751,219			1,276,543			887,848			(525,324	)		-41.2	%		(136,629	)		-15.4	%
Long-term FHLB advances		938			954			251,033			(16	)		-1.7	%		(250,095	)		-99.6	%
Junior subordinated debt securities		61,856			61,856			61,856			—			0.0	%		—			0.0	%
Total interest-bearing liabilities		8,982,470			9,107,811			8,651,505			(125,341	)		-1.4	%		330,965			3.8	%
Noninterest-bearing deposits		2,881,374			2,994,292			3,008,176			(112,918	)		-3.8	%		(126,802	)		-4.2	%
Other liabilities		180,871			169,828			173,066			11,043			6.5	%		7,805			4.5	%
Total liabilities		12,044,715			12,271,931			11,832,747			(227,216	)		-1.9	%		211,968			1.8	%
Shareholders' equity		1,572,514			1,579,633			1,533,098			(7,119	)		-0.5	%		39,416			2.6	%
Total liabilities and equity	$	13,617,229		$	13,851,564		$	13,365,845		$	(234,335	)		-1.7	%	$	251,384			1.9	%
n/m - percentage changes greater than +/- 100% are considered not meaningful

See Notes to Consolidated Financials

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	CONSOLIDATED FINANCIAL INFORMATION
	March 31, 2018
	($ in thousands)
	(unaudited)

										Linked Quarter						Year over Year
PERIOD END BALANCES	3/31/2018			12/31/2017			3/31/2017			$ Change			% Change			$ Change			% Change
Cash and due from banks	$	315,276		$	335,768		$	379,590		$	(20,492	)		-6.1	%	$	(64,314	)		-16.9	%
Fed funds sold and rev repos		112			615			500			(503	)		-81.8	%		(388	)		-77.6	%
Securities available for sale		2,097,497			2,238,635			2,365,554			(141,138	)		-6.3	%		(268,057	)		-11.3	%
Securities held to maturity		1,023,975			1,056,486			1,156,067			(32,511	)		-3.1	%		(132,092	)		-11.4	%
Loans held for sale (LHFS)		163,882			180,512			174,090			(16,630	)		-9.2	%		(10,208	)		-5.9	%
Loans held for investment (LHFI)		8,513,985			8,569,967			8,004,657			(55,982	)		-0.7	%		509,328			6.4	%
Allowance for loan losses		(81,235	)		(76,733	)		(72,445	)		(4,502	)		-5.9	%		(8,790	)		-12.1	%
Net LHFI		8,432,750			8,493,234			7,932,212			(60,484	)		-0.7	%		500,538			6.3	%
Acquired loans		215,476			261,517			218,242			(46,041	)		-17.6	%		(2,766	)		-1.3	%
Allowance for loan losses, acquired loans		(4,294	)		(4,079	)		(10,006	)		(215	)		-5.3	%		5,712			57.1	%
Net acquired loans		211,182			257,438			208,236			(46,256	)		-18.0	%		2,946			1.4	%
Net LHFI and acquired loans		8,643,932			8,750,672			8,140,448			(106,740	)		-1.2	%		503,484			6.2	%
Premises and equipment, net		178,584			179,339			183,311			(755	)		-0.4	%		(4,727	)		-2.6	%
Mortgage servicing rights		94,850			84,269			82,758			10,581			12.6	%		12,092			14.6	%
Goodwill		379,627			379,627			366,156			—			0.0	%		13,471			3.7	%
Identifiable intangible assets		14,963			16,360			19,117			(1,397	)		-8.5	%		(4,154	)		-21.7	%
Other real estate		39,554			43,228			55,968			(3,674	)		-8.5	%		(16,414	)		-29.3	%
Other assets		511,187			532,442			566,802			(21,255	)		-4.0	%		(55,615	)		-9.8	%
Total assets	$	13,463,439		$	13,797,953		$	13,490,361		$	(334,514	)		-2.4	%	$	(26,922	)		-0.2	%
Deposits:
Noninterest-bearing	$	3,004,442		$	2,978,074		$	3,209,727		$	26,368			0.9	%	$	(205,285	)		-6.4	%
Interest-bearing		7,971,359			7,599,438			6,894,745			371,921			4.9	%		1,076,614			15.6	%
Total deposits		10,975,801			10,577,512			10,104,472			398,289			3.8	%		871,329			8.6	%
Fed funds purchased and repos		274,833			469,827			524,335			(194,994	)		-41.5	%		(249,502	)		-47.6	%
Short-term borrowings		442,689			971,049			864,690			(528,360	)		-54.4	%		(422,001	)		-48.8	%
Long-term FHLB advances		929			946			250,994			(17	)		-1.8	%		(250,065	)		-99.6	%
Junior subordinated debt securities		61,856			61,856			61,856			—			0.0	%		—			0.0	%
Other liabilities		137,194			145,062			146,053			(7,868	)		-5.4	%		(8,859	)		-6.1	%
Total liabilities		11,893,302			12,226,252			11,952,400			(332,950	)		-2.7	%		(59,098	)		-0.5	%
Common stock		14,121			14,115			14,112			6			0.0	%		9			0.1	%
Capital surplus		366,021			369,124			365,951			(3,103	)		-0.8	%		70			0.0	%
Retained earnings		1,257,881			1,228,187			1,200,903			29,694			2.4	%		56,978			4.7	%
Accum other comprehensive loss, net of tax		(67,886	)		(39,725	)		(43,005	)		(28,161	)		-70.9	%		(24,881	)		-57.9	%
Total shareholders' equity		1,570,137			1,571,701			1,537,961			(1,564	)		-0.1	%		32,176			2.1	%
Total liabilities and equity	$	13,463,439		$	13,797,953		$	13,490,361		$	(334,514	)		-2.4	%	$	(26,922	)		-0.2	%
n/m - percentage changes greater than +/- 100% are considered not meaningful

See Notes to Consolidated Financials

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	CONSOLIDATED FINANCIAL INFORMATION
	March 31, 2018
	($ in thousands except per share data)
	(unaudited)

	Quarter Ended								Linked Quarter						Year over Year
INCOME STATEMENTS	3/31/2018		12/31/2017			3/31/2017			$ Change			% Change			$ Change			% Change
Interest and fees on LHFS & LHFI-FTE	$	94,712	$	95,816		$	83,790		$	(1,104	)		-1.2	%	$	10,922			13.0	%
Interest and fees on acquired loans		4,877		6,401			5,189			(1,524	)		-23.8	%		(312	)		-6.0	%
Interest on securities-taxable		17,506		18,327			19,197			(821	)		-4.5	%		(1,691	)		-8.8	%
Interest on securities-tax exempt-FTE		824		1,035			1,300			(211	)		-20.4	%		(476	)		-36.6	%
Interest on fed funds sold and rev repos		2		7			1			(5	)		-71.4	%		1			100.0	%
Other interest income		934		473			267			461			97.5	%		667		n/m
Total interest income-FTE		118,855		122,059			109,744			(3,204	)		-2.6	%		9,111			8.3	%
Interest on deposits		9,491		7,284			3,945			2,207			30.3	%		5,546		n/m
Interest on fed funds pch and repos		662		1,116			698			(454	)		-40.7	%		(36	)		-5.2	%
Other interest expense		3,394		4,555			2,673			(1,161	)		-25.5	%		721			27.0	%
Total interest expense		13,547		12,955			7,316			592			4.6	%		6,231			85.2	%
Net interest income-FTE		105,308		109,104			102,428			(3,796	)		-3.5	%		2,880			2.8	%
Provision for loan losses, LHFI		3,961		5,739			2,762			(1,778	)		-31.0	%		1,199			43.4	%
Provision for loan losses, acquired loans		150		(1,573	)		(1,605	)		1,723		n/m				1,755		n/m
Net interest income after provision-FTE		101,197		104,938			101,271			(3,741	)		-3.6	%		(74	)		-0.1	%
Service charges on deposit accounts		10,857		11,193			10,832			(336	)		-3.0	%		25			0.2	%
Bank card and other fees		6,626		7,266			6,500			(640	)		-8.8	%		126			1.9	%
Mortgage banking, net		11,265		6,284			10,185			4,981			79.3	%		1,080			10.6	%
Insurance commissions		9,419		8,813			9,212			606			6.9	%		207			2.2	%
Wealth management		7,567		7,723			7,413			(156	)		-2.0	%		154			2.1	%
Other, net		1,059		2,681			1,891			(1,622	)		-60.5	%		(832	)		-44.0	%
Nonint inc-excl sec gains (losses), net		46,793		43,960			46,033			2,833			6.4	%		760			1.7	%
Security gains (losses), net		—		—			—			—		n/m				—		n/m
Total noninterest income		46,793		43,960			46,033			2,833			6.4	%		760			1.7	%
Salaries and employee benefits		58,475		58,820			55,389			(345	)		-0.6	%		3,086			5.6	%
Defined benefit plan termination		—		—			—			—		n/m				—		n/m
Services and fees		15,746		15,419			15,332			327			2.1	%		414			2.7	%
Net occupancy-premises		6,502		6,617			6,238			(115	)		-1.7	%		264			4.2	%
Equipment expense		6,099		5,996			5,998			103			1.7	%		101			1.7	%
Other real estate expense		866		666			1,759			200			30.0	%		(893	)		-50.8	%
FDIC assessment expense		2,995		2,868			2,640			127			4.4	%		355			13.4	%
Other expense		11,782		12,565			14,701			(783	)		-6.2	%		(2,919	)		-19.9	%
Total noninterest expense		102,465		102,951			102,057			(486	)		-0.5	%		408			0.4	%
Income before income taxes and tax eq adj		45,525		45,947			45,247			(422	)		-0.9	%		278			0.6	%
Tax equivalent adjustment		3,215		5,060			4,838			(1,845	)		-36.5	%		(1,623	)		-33.5	%
Income before income taxes		42,310		40,887			40,409			1,423			3.5	%		1,901			4.7	%
Income taxes		5,480		25,119			9,161			(19,639	)		-78.2	%		(3,681	)		-40.2	%
Net income	$	36,830	$	15,768		$	31,248		$	21,062		n/m			$	5,582			17.9	%
Per share data
Earnings per share - basic	$	0.54	$	0.23		$	0.46		$	0.31		n/m			$	0.08			17.4	%
Earnings per share - diluted	$	0.54	$	0.23		$	0.46		$	0.31		n/m			$	0.08			17.4	%
Dividends per share	$	0.23	$	0.23		$	0.23			—			0.0	%		—			0.0	%
Weighted average shares outstanding
Basic		67,809,234		67,742,792			67,687,365
Diluted		67,960,583		67,938,986			67,845,785
Period end shares outstanding		67,775,068		67,746,094			67,729,434
n/m - percentage changes greater than +/- 100% are considered not meaningful

See Notes to Consolidated Financials

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	CONSOLIDATED FINANCIAL INFORMATION
	March 31, 2018
	($ in thousands)
	(unaudited)

	Quarter Ended									Linked Quarter						Year over Year
NONPERFORMING ASSETS (1)	3/31/2018			12/31/2017			3/31/2017			$ Change			% Change			$ Change			% Change
Nonaccrual loans
Alabama	$	3,121		$	3,083		$	1,649		$	38			1.2	%	$	1,472			89.3	%
Florida		2,116			3,034			3,559			(918	)		-30.3	%		(1,443	)		-40.5	%
Mississippi (2)		48,600			49,129			49,349			(529	)		-1.1	%		(749	)		-1.5	%
Tennessee (3)		5,530			4,436			5,185			1,094			24.7	%		345			6.7	%
Texas		9,329			7,893			1,565			1,436			18.2	%		7,764		n/m
Total nonaccrual loans		68,696			67,575			61,307			1,121			1.7	%		7,389			12.1	%
Other real estate
Alabama		8,962			11,714			13,953			(2,752	)		-23.5	%		(4,991	)		-35.8	%
Florida		12,550			13,937			21,577			(1,387	)		-10.0	%		(9,027	)		-41.8	%
Mississippi (2)		15,737			14,260			14,974			1,477			10.4	%		763			5.1	%
Tennessee (3)		1,523			2,535			4,706			(1,012	)		-39.9	%		(3,183	)		-67.6	%
Texas		782			782			758			—			0.0	%		24			3.2	%
Total other real estate		39,554			43,228			55,968			(3,674	)		-8.5	%		(16,414	)		-29.3	%
Total nonperforming assets	$	108,250		$	110,803		$	117,275		$	(2,553	)		-2.3	%	$	(9,025	)		-7.7	%
LOANS PAST DUE OVER 90 DAYS (1)
LHFI	$	1,419		$	2,171		$	1,307		$	(752	)		-34.6	%	$	112			8.6	%
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	34,826		$	35,544		$	31,147		$	(718	)		-2.0	%	$	3,679			11.8	%
	Quarter Ended									Linked Quarter						Year over Year
ALLOWANCE FOR LOAN LOSSES (1)	3/31/2018			12/31/2017			3/31/2017			$ Change			% Change			$ Change			% Change
Beginning Balance	$	76,733		$	80,332		$	71,265		$	(3,599	)		-4.5	%	$	5,468			7.7	%
Provision for loan losses		3,961			5,739			2,762			(1,778	)		-31.0	%		1,199			43.4	%
Charge-offs		(2,542	)		(12,075	)		(4,202	)		9,533			78.9	%		1,660			39.5	%
Recoveries		3,083			2,737			2,620			346			12.6	%		463			17.7	%
Net (charge-offs) recoveries		541			(9,338	)		(1,582	)		9,879		n/m				2,123		n/m
Ending Balance	$	81,235		$	76,733		$	72,445		$	4,502			5.9	%	$	8,790			12.1	%
PROVISION FOR LOAN LOSSES (1)
Alabama	$	618		$	559		$	1,189		$	59			10.6	%	$	(571	)		-48.0	%
Florida		(863	)		(1,235	)		3			372			30.1	%		(866	)	n/m
Mississippi (2)		2,664			2,779			1,826			(115	)		-4.1	%		838			45.9	%
Tennessee (3)		(268	)		(439	)		208			171			39.0	%		(476	)	n/m
Texas		1,810			4,075			(464	)		(2,265	)		-55.6	%		2,274		n/m
Total provision for loan losses	$	3,961		$	5,739		$	2,762		$	(1,778	)		-31.0	%	$	1,199			43.4	%
NET CHARGE-OFFS (RECOVERIES) (1)
Alabama	$	84		$	196		$	66		$	(112	)		-57.1	%	$	18			27.3	%
Florida		(960	)		(946	)		(155	)		(14	)		-1.5	%		(805	)	n/m
Mississippi (2)		267			5,574			1,759			(5,307	)		-95.2	%		(1,492	)		-84.8	%
Tennessee (3)		109			79			83			30			38.0	%		26			31.3	%
Texas		(41	)		4,435			(171	)		(4,476	)	n/m				130			76.0	%
Total net charge-offs (recoveries)	$	(541	)	$	9,338		$	1,582		$	(9,879	)	n/m			$	(2,123	)	n/m
(1) - Excludes acquired loans.
(2) - Mississippi includes Central and Southern Mississippi Regions.
(3) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
n/m - percentage changes greater than +/- 100% are considered not meaningful

See Notes to Consolidated Financials

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	CONSOLIDATED FINANCIAL INFORMATION
	March 31, 2018
	($ in thousands)
	(unaudited)

	Quarter Ended
AVERAGE BALANCES	3/31/2018			12/31/2017			9/30/2017			6/30/2017			3/31/2017
Securities AFS-taxable	$	2,141,144		$	2,247,247		$	2,349,736		$	2,334,600		$	2,252,162
Securities AFS-nontaxable		57,972			61,691			67,994			75,640			88,522
Securities HTM-taxable		1,005,721			1,045,723			1,086,773			1,108,158			1,124,692
Securities HTM-nontaxable		32,734			32,781			32,829			32,878			33,009
Total securities		3,237,571			3,387,442			3,537,332			3,551,276			3,498,385
Loans (including loans held for sale)		8,636,967			8,686,916			8,532,523			8,348,758			8,074,449
Acquired loans		243,152			273,918			299,221			315,558			250,482
Fed funds sold and rev repos		478			1,724			3,582			3,184			397
Other earning assets		213,985			80,218			84,320			77,770			79,515
Total earning assets		12,332,153			12,430,218			12,456,978			12,296,546			11,903,228
Allowance for loan losses		(82,304	)		(86,704	)		(85,363	)		(83,328	)		(83,394	)
Cash and due from banks		336,642			315,586			312,409			307,966			310,542
Other assets		1,030,738			1,192,464			1,202,766			1,229,981			1,235,469
Total assets	$	13,617,229		$	13,851,564		$	13,886,790		$	13,751,165		$	13,365,845
Interest-bearing demand deposits	$	2,404,428		$	2,244,625		$	2,192,064		$	2,035,491		$	1,981,982
Savings deposits		3,737,507			3,291,407			3,284,323			3,337,374			3,319,572
Time deposits		1,748,645			1,756,576			1,736,683			1,777,529			1,650,251
Total interest-bearing deposits		7,890,580			7,292,608			7,213,070			7,150,394			6,951,805
Fed funds purchased and repos		277,877			475,850			547,863			525,523			498,963
Short-term borrowings		751,219			1,276,543			1,335,476			1,047,107			887,848
Long-term FHLB advances		938			954			970			141,097			251,033
Junior subordinated debt securities		61,856			61,856			61,856			61,856			61,856
Total interest-bearing liabilities		8,982,470			9,107,811			9,159,235			8,925,977			8,651,505
Noninterest-bearing deposits		2,881,374			2,994,292			3,003,763			3,110,125			3,008,176
Other liabilities		180,871			169,828			145,925			162,823			173,066
Total liabilities		12,044,715			12,271,931			12,308,923			12,198,925			11,832,747
Shareholders' equity		1,572,514			1,579,633			1,577,867			1,552,240			1,533,098
Total liabilities and equity	$	13,617,229		$	13,851,564		$	13,886,790		$	13,751,165		$	13,365,845

See Notes to Consolidated Financials

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	CONSOLIDATED FINANCIAL INFORMATION
	March 31, 2018
	($ in thousands)
	(unaudited)

PERIOD END BALANCES	3/31/2018			12/31/2017			9/30/2017			6/30/2017			3/31/2017
Cash and due from banks	$	315,276		$	335,768		$	350,123		$	318,329		$	379,590
Fed funds sold and rev repos		112			615			3,215			6,900			500
Securities available for sale		2,097,497			2,238,635			2,369,089			2,447,688			2,365,554
Securities held to maturity		1,023,975			1,056,486			1,102,283			1,139,754			1,156,067
Loans held for sale (LHFS)		163,882			180,512			204,157			203,652			174,090
Loans held for investment (LHFI)		8,513,985			8,569,967			8,407,341			8,296,045			8,004,657
Allowance for loan losses		(81,235	)		(76,733	)		(80,332	)		(76,184	)		(72,445	)
Net LHFI		8,432,750			8,493,234			8,327,009			8,219,861			7,932,212
Acquired loans		215,476			261,517			283,757			314,910			218,242
Allowance for loan losses, acquired loans		(4,294	)		(4,079	)		(5,768	)		(7,423	)		(10,006	)
Net acquired loans		211,182			257,438			277,989			307,487			208,236
Net LHFI and acquired loans		8,643,932			8,750,672			8,604,998			8,527,348			8,140,448
Premises and equipment, net		178,584			179,339			181,312			182,315			183,311
Mortgage servicing rights		94,850			84,269			81,477			82,628			82,758
Goodwill		379,627			379,627			379,627			379,627			366,156
Identifiable intangible assets		14,963			16,360			17,883			19,422			19,117
Other real estate		39,554			43,228			48,356			49,958			55,968
Other assets		511,187			532,442			542,135			551,517			566,802
Total assets	$	13,463,439		$	13,797,953		$	13,884,655		$	13,909,138		$	13,490,361
Deposits:
Noninterest-bearing	$	3,004,442		$	2,978,074		$	2,998,013		$	3,092,915		$	3,209,727
Interest-bearing		7,971,359			7,599,438			7,233,729			7,330,476			6,894,745
Total deposits		10,975,801			10,577,512			10,231,742			10,423,391			10,104,472
Fed funds purchased and repos		274,833			469,827			545,603			508,068			524,335
Short-term borrowings		442,689			971,049			1,322,159			1,222,592			864,690
Long-term FHLB advances		929			946			962			978			250,994
Junior subordinated debt securities		61,856			61,856			61,856			61,856			61,856
Other liabilities		137,194			145,062			139,798			130,335			146,053
Total liabilities		11,893,302			12,226,252			12,302,120			12,347,220			11,952,400
Common stock		14,121			14,115			14,114			14,114			14,112
Capital surplus		366,021			369,124			368,131			367,075			365,951
Retained earnings		1,257,881			1,228,187			1,228,115			1,209,238			1,200,903
Accum other comprehensive loss, net of tax		(67,886	)		(39,725	)		(27,825	)		(28,509	)		(43,005	)
Total shareholders' equity		1,570,137			1,571,701			1,582,535			1,561,918			1,537,961
Total liabilities and equity	$	13,463,439		$	13,797,953		$	13,884,655		$	13,909,138		$	13,490,361

See Notes to Consolidated Financials

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	CONSOLIDATED FINANCIAL INFORMATION
	March 31, 2018
	($ in thousands except per share data)
	(unaudited)

	Quarter Ended
INCOME STATEMENTS	3/31/2018		12/31/2017			9/30/2017			6/30/2017			3/31/2017
Interest and fees on LHFS & LHFI-FTE	$	94,712	$	95,816		$	93,703		$	89,486		$	83,790
Interest and fees on acquired loans		4,877		6,401			6,625			6,263			5,189
Interest on securities-taxable		17,506		18,327			19,291			19,377			19,197
Interest on securities-tax exempt-FTE		824		1,035			1,104			1,178			1,300
Interest on fed funds sold and rev repos		2		7			14			11			1
Other interest income		934		473			355			371			267
Total interest income-FTE		118,855		122,059			121,092			116,686			109,744
Interest on deposits		9,491		7,284			6,381			5,107			3,945
Interest on fed funds pch and repos		662		1,116			1,301			1,037			698
Other interest expense		3,394		4,555			4,520			3,628			2,673
Total interest expense		13,547		12,955			12,202			9,772			7,316
Net interest income-FTE		105,308		109,104			108,890			106,914			102,428
Provision for loan losses, LHFI		3,961		5,739			3,672			2,921			2,762
Provision for loan losses, acquired loans		150		(1,573	)		(1,653	)		(2,564	)		(1,605	)
Net interest income after provision-FTE		101,197		104,938			106,871			106,557			101,271
Service charges on deposit accounts		10,857		11,193			11,223			10,755			10,832
Bank card and other fees		6,626		7,266			7,150			7,370			6,500
Mortgage banking, net		11,265		6,284			4,425			9,008			10,185
Insurance commissions		9,419		8,813			10,398			9,745			9,212
Wealth management		7,567		7,723			7,530			7,674			7,413
Other, net		1,059		2,681			3,740			5,637			1,891
Nonint inc-excl sec gains (losses), net		46,793		43,960			44,466			50,189			46,033
Security gains (losses), net		—		—			14			1			—
Total noninterest income		46,793		43,960			44,480			50,190			46,033
Salaries and employee benefits		58,475		58,820			57,871			57,185			55,389
Defined benefit plan termination		—		—			—			17,644			—
Services and fees		15,746		15,419			15,133			15,009			15,332
Net occupancy-premises		6,502		6,617			6,702			6,210			6,238
Equipment expense		6,099		5,996			6,297			6,162			5,998
Other real estate expense		866		666			864			383			1,759
FDIC assessment expense		2,995		2,868			2,816			2,686			2,640
Other expense		11,782		12,565			13,403			16,796			14,701
Total noninterest expense		102,465		102,951			103,086			122,075			102,057
Income before income taxes and tax eq adj		45,525		45,947			48,265			34,672			45,247
Tax equivalent adjustment		3,215		5,060			4,978			4,910			4,838
Income before income taxes		42,310		40,887			43,287			29,762			40,409
Income taxes		5,480		25,119			8,708			5,727			9,161
Net income	$	36,830	$	15,768		$	34,579		$	24,035		$	31,248
Per share data
Earnings per share - basic	$	0.54	$	0.23		$	0.51		$	0.35		$	0.46
Earnings per share - diluted	$	0.54	$	0.23		$	0.51		$	0.35		$	0.46
Dividends per share	$	0.23	$	0.23		$	0.23		$	0.23		$	0.23
Weighted average shares outstanding
Basic		67,809,234		67,742,792			67,741,655			67,736,298			67,687,365
Diluted		67,960,583		67,938,986			67,916,418			67,892,532			67,845,785
Period end shares outstanding		67,775,068		67,746,094			67,742,135			67,740,901			67,729,434

See Notes to Consolidated Financials

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	CONSOLIDATED FINANCIAL INFORMATION
	March 31, 2018
	($ in thousands)
	(unaudited)

	Quarter Ended
NONPERFORMING ASSETS (1)	3/31/2018			12/31/2017			9/30/2017			6/30/2017			3/31/2017
Nonaccrual loans
Alabama	$	3,121		$	3,083		$	1,629		$	1,723		$	1,649
Florida		2,116			3,034			3,242			3,174			3,559
Mississippi (2)		48,600			49,129			59,483			63,889			49,349
Tennessee (3)		5,530			4,436			4,589			4,975			5,185
Texas		9,329			7,893			346			383			1,565
Total nonaccrual loans		68,696			67,575			69,289			74,144			61,307
Other real estate
Alabama		8,962			11,714			12,726			13,301			13,953
Florida		12,550			13,937			16,100			17,377			21,577
Mississippi (2)		15,737			14,260			15,319			14,377			14,974
Tennessee (3)		1,523			2,535			2,671			3,363			4,706
Texas		782			782			1,540			1,540			758
Total other real estate		39,554			43,228			48,356			49,958			55,968
Total nonperforming assets	$	108,250		$	110,803		$	117,645		$	124,102		$	117,275
LOANS PAST DUE OVER 90 DAYS (1)
LHFI	$	1,419		$	2,171		$	2,244		$	1,216		$	1,307
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	34,826		$	35,544		$	32,332		$	29,906		$	31,147
	Quarter Ended
ALLOWANCE FOR LOAN LOSSES(1)	3/31/2018			12/31/2017			9/30/2017			6/30/2017			3/31/2017
Beginning Balance	$	76,733		$	80,332		$	76,184		$	72,445		$	71,265
Provision for loan losses		3,961			5,739			3,672			2,921			2,762
Charge-offs		(2,542	)		(12,075	)		(2,752	)		(2,118	)		(4,202	)
Recoveries		3,083			2,737			3,228			2,936			2,620
Net (charge-offs) recoveries		541			(9,338	)		476			818			(1,582	)
Ending Balance	$	81,235		$	76,733		$	80,332		$	76,184		$	72,445
PROVISION FOR LOAN LOSSES (1)
Alabama	$	618		$	559		$	1,218		$	866		$	1,189
Florida		(863	)		(1,235	)		(744	)		(975	)		3
Mississippi (2)		2,664			2,779			1,860			2,268			1,826
Tennessee (3)		(268	)		(439	)		(72	)		322			208
Texas		1,810			4,075			1,410			440			(464	)
Total provision for loan losses	$	3,961		$	5,739		$	3,672		$	2,921		$	2,762
NET CHARGE-OFFS (RECOVERIES) (1)
Alabama	$	84		$	196		$	314		$	(29	)	$	66
Florida		(960	)		(946	)		(796	)		(973	)		(155	)
Mississippi (2)		267			5,574			(11	)		33			1,759
Tennessee (3)		109			79			85			146			83
Texas		(41	)		4,435			(68	)		5			(171	)
Total net charge-offs (recoveries)	$	(541	)	$	9,338		$	(476	)	$	(818	)	$	1,582
(1) - Excludes acquired loans.
(2) - Mississippi includes Central and Southern Mississippi Regions.
(3) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.

See Notes to Consolidated Financials

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	CONSOLIDATED FINANCIAL INFORMATION
	March 31, 2018
	(unaudited)

	Quarter Ended
FINANCIAL RATIOS AND OTHER DATA	3/31/2018				12/31/2017			9/30/2017			6/30/2017			3/31/2017
Return on equity		9.50	%			3.96	%		8.69	%		6.21	%		8.27	%
Return on average tangible equity		13.05	%			5.60	%		11.95	%		8.68	%		11.39	%
Return on assets		1.10	%			0.45	%		0.99	%		0.70	%		0.95	%
Interest margin - Yield - FTE		3.91	%			3.90	%		3.86	%		3.81	%		3.74	%
Interest margin - Cost		0.45	%			0.41	%		0.39	%		0.32	%		0.25	%
Net interest margin - FTE		3.46	%			3.48	%		3.47	%		3.49	%		3.49	%
Efficiency ratio (1)		65.50	%			65.21	%		65.14	%		64.50	%		66.67	%
Full-time equivalent employees		2,905				2,893			2,878			2,858			2,799
CREDIT QUALITY RATIOS (2)
Net charge-offs/average loans		-0.03	%			0.43	%		-0.02	%		-0.04	%		0.08	%
Provision for loan losses/average loans		0.19	%			0.26	%		0.17	%		0.14	%		0.14	%
Nonperforming loans/total loans (incl LHFS)		0.79	%			0.77	%		0.80	%		0.87	%		0.75	%
Nonperforming assets/total loans (incl LHFS)		1.25	%			1.27	%		1.37	%		1.46	%		1.43	%
Nonperforming assets/total loans (incl LHFS) +ORE		1.24	%			1.26	%		1.36	%		1.45	%		1.42	%
ALL/total loans (excl LHFS)		0.95	%			0.90	%		0.96	%		0.92	%		0.91	%
ALL-commercial/total commercial loans		1.04	%	��		0.95	%		1.02	%		0.99	%		0.97	%
ALL-consumer/total consumer and home mortgage loans		0.64	%			0.68	%		0.73	%		0.67	%		0.67	%
ALL/nonperforming loans		118.25	%			113.55	%		115.94	%		102.75	%		118.17	%
ALL/nonperforming loans (excl specifically reviewed impaired loans)		314.28	%			320.84	%		301.50	%		277.42	%		263.73	%
CAPITAL RATIOS
Total equity/total assets		11.66	%			11.39	%		11.40	%		11.23	%		11.40	%
Tangible equity/tangible assets		9.00	%			8.77	%		8.79	%		8.61	%		8.80	%
Tangible equity/risk-weighted assets		11.25	%			11.13	%		11.29	%		11.19	%		11.49	%
Tier 1 leverage ratio (3)		9.96	%			9.67	%		9.61	%		9.56	%		9.86	%
Common equity tier 1 capital ratio (3)		12.05	%			11.77	%		11.80	%		11.73	%		12.19	%
Tier 1 risk-based capital ratio (3)		12.62	%			12.33	%		12.37	%		12.30	%		12.79	%
Total risk-based capital ratio (3)		13.44	%			13.10	%		13.19	%		13.11	%		13.61	%
STOCK PERFORMANCE
Market value-Close	$	31.16			$	31.86		$	33.12		$	32.16		$	31.79
Book value	$	23.17			$	23.20		$	23.36		$	23.06		$	22.71
Tangible book value	$	17.34			$	17.35		$	17.49		$	17.17		$	17.02
(1) - The efficiency ratio is noninterest expense to total net interest income (FTE) and noninterest income, excluding security gains (losses), amortization
of partnership tax credits, amortization of purchased intangibles, and significant non-routine income and expense items.
(2) - Excludes acquired loans.
(3) -The regulatory capital ratios for December 31, 2017 contain a reclassification adjustment of $8.5 million from AOCI to retained earnings as allowed by         regulatory agencies in an interagency statement released January 18, 2018 to address disproportionate tax effect in AOCI resulting from the recent enactment         of the Tax Cuts and Jobs Act of 2017 and the application of Financial Accounting Standards Board Accounting Standards Codification Topic 740, Income Taxes.

See Notes to Consolidated Financials

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	NOTES TO CONSOLIDATED FINANCIALS
	March 31, 2018
	($ in thousands)
	(unaudited)

Note 1 – Business Combinations

On April 7, 2017, Trustmark Corporation completed its merger with RB Bancorporation (Reliance), the holding company for Reliance Bank, which had seven offices serving the Huntsville, Alabama metropolitan service area (MSA).  Reliance Bank was merged into Trustmark National Bank simultaneously with the merger of Trustmark and RB Bancorporation. Under the terms of the Merger Agreement dated November 14, 2016, Trustmark paid $22.00 in cash for each share of Reliance common stock outstanding, which represented total consideration for Reliance common shareholders of approximately $23.7 million.  In addition, Trustmark paid off Reliance Preferred Stock of $1.1 million bringing the total consideration paid to $24.8 million.

This merger was accounted for in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 805, “Business Combinations.”  Accordingly, the assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of the merger date.  The fair values of the assets acquired and liabilities assumed are subject to adjustment if additional information relative to the closing date fair values becomes available through the measurement period, which is not to exceed one year from the merger date of April 7, 2017.

The excess of the consideration paid over the estimated fair value of the net assets acquired was $13.5 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 merger date.  The core deposit intangible is being amortized on an accelerated basis over the estimated useful life, currently expected to be approximately ten years.

Loans acquired from Reliance were evaluated under a fair value process.  Loans with evidence of deterioration in credit quality and for which it was probable at acquisition that Trustmark would not be able to collect all contractually required payments are referred to as acquired impaired loans and accounted for in accordance with FASB ASC Topic 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality.”  

The operations of Reliance are included in Trustmark’s operating results from April 7, 2017 and did not have a material impact on Trustmark’s results of operations.  During the second quarter of 2017, Trustmark included non-routine merger transaction expenses in other noninterest expense totaling $3.2 million (change in control expense of $1.3 million; professional fees, contract termination and other expenses of $1.9 million).  

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):

	3/31/2018		12/31/2017		9/30/2017		6/30/2017		3/31/2017
SECURITIES AVAILABLE FOR SALE
U.S. Government agency obligations
Issued by U.S. Government agencies	$	40,118	$	45,018	$	49,723	$	51,277	$	53,247
Issued by U.S. Government sponsored agencies		263		267		271		272		274
Obligations of states and political subdivisions		75,013		79,229		89,144		96,514		109,895
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		62,457		65,746		60,902		58,422		42,667
Issued by FNMA and FHLMC		767,676		814,450		860,131		860,571		733,214
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		954,537		1,016,790		1,087,169		1,157,241		1,202,719
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		197,433		217,135		221,749		223,391		223,538
Total securities available for sale	$	2,097,497	$	2,238,635	$	2,369,089	$	2,447,688	$	2,365,554
SECURITIES HELD TO MATURITY
U.S. Government agency obligations
Issued by U.S. Government sponsored agencies	$	3,703	$	3,692	$	3,680	$	3,669	$	3,658
Obligations of states and political subdivisions		46,011		46,039		46,069		46,098		46,273
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		12,974		13,539		14,191		14,399		14,977
Issued by FNMA and FHLMC		128,517		133,975		139,172		144,282		118,733
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		653,325		678,926		708,715		740,042		771,296
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		179,445		180,315		190,456		191,264		201,130
Total securities held to maturity	$	1,023,975	$	1,056,486	$	1,102,283	$	1,139,754	$	1,156,067

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	NOTES TO CONSOLIDATED FINANCIALS
	March 31, 2018
	($ in thousands)
	(unaudited)

Note 2 - Securities Available for Sale and Held to Maturity (continued)

At March 31, 2018, the net unamortized, unrealized loss included in accumulated other comprehensive loss in the accompanying balance sheet for securities held to maturity previously transferred from securities available for sale totaled approximately $18.5 million ($13.9 million, net of tax).

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 96% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE.

Note 3 – Loan Composition

LHFI BY TYPE (excluding acquired loans)	3/31/2018			12/31/2017			9/30/2017			6/30/2017			3/31/2017
Loans secured by real estate:
Construction, land development and other land loans	$	986,188		$	987,624		$	950,144		$	922,029		$	859,927
Secured by 1-4 family residential properties		1,698,885			1,675,311			1,648,733			1,655,968			1,656,837
Secured by nonfarm, nonresidential properties		2,257,899			2,193,823			2,172,885			2,109,367			2,064,352
Other real estate secured		425,664			517,956			482,163			432,208			399,636
Commercial and industrial loans		1,561,967			1,570,345			1,568,588			1,635,000			1,540,783
Consumer loans		168,469			171,918			173,061			170,858			166,314
State and other political subdivision loans		936,014			952,483			936,614			936,860			910,493
Other loans		478,899			500,507			475,153			433,755			406,315
LHFI		8,513,985			8,569,967			8,407,341			8,296,045			8,004,657
Allowance for loan losses		(81,235	)		(76,733	)		(80,332	)		(76,184	)		(72,445	)
Net LHFI	$	8,432,750		$	8,493,234		$	8,327,009		$	8,219,861		$	7,932,212

ACQUIRED LOANS BY TYPE	3/31/2018			12/31/2017			9/30/2017			6/30/2017			3/31/2017
Loans secured by real estate:
Construction, land development and other land loans	$	17,575		$	23,586		$	29,384		$	35,054		$	17,651
Secured by 1-4 family residential properties		49,289			61,751			65,746			74,313			54,721
Secured by nonfarm, nonresidential properties		100,285			114,694			122,200			132,663			92,075
Other real estate secured		14,581			16,746			18,431			19,553			16,275
Commercial and industrial loans		21,808			31,506			34,124			34,375			20,691
Consumer loans		1,920			2,600			2,749			2,833			2,664
Other loans		10,018			10,634			11,123			16,119			14,165
Acquired loans		215,476			261,517			283,757			314,910			218,242
Allowance for loan losses, acquired loans		(4,294	)		(4,079	)		(5,768	)		(7,423	)		(10,006	)
Net acquired loans	$	211,182		$	257,438		$	277,989		$	307,487		$	208,236

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	NOTES TO CONSOLIDATED FINANCIALS
	March 31, 2018
	($ in thousands)
	(unaudited)

Note 3 – Loan Composition (continued)

	March 31, 2018
LHFI - COMPOSITION BY REGION (1)	Total		Alabama		Florida		Mississippi (Central and Southern Regions)		Tennessee (Memphis, TN and NorthernMS Regions)		Texas
Loans secured by real estate:
Construction, land development and other land loans	$	986,188	$	350,661	$	60,705	$	281,582	$	20,428	$	272,812
Secured by 1-4 family residential properties		1,698,885		111,756		49,456		1,430,525		90,317		16,831
Secured by nonfarm, nonresidential properties		2,257,899		417,309		228,019		935,116		142,576		534,879
Other real estate secured		425,664		76,262		2,471		211,356		11,930		123,645
Commercial and industrial loans		1,561,967		221,467		22,148		788,547		346,888		182,917
Consumer loans		168,469		21,845		4,676		122,027		17,638		2,283
State and other political subdivision loans		936,014		82,261		28,185		602,043		24,613		198,912
Other loans		478,899		67,408		17,013		307,852		47,868		38,758
Loans	$	8,513,985	$	1,348,969	$	412,673	$	4,679,048	$	702,258	$	1,371,037
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION(1)
Lots	$	56,150	$	14,303	$	14,456	$	22,368	$	1,586	$	3,437
Development		51,113		5,277		7,298		23,352		406		14,780
Unimproved land		91,838		13,048		14,505		31,874		13,891		18,520
1-4 family construction		198,651		65,877		11,816		85,337		1,806		33,815
Other construction		588,436		252,156		12,630		118,651		2,739		202,260
Construction, land development and other land loans	$	986,188	$	350,661	$	60,705	$	281,582	$	20,428	$	272,812
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION(1)
Income producing:
Retail	$	321,962	$	90,321	$	52,846	$	105,837	$	17,914	$	55,044
Office		217,886		60,820		20,915		70,956		5,626		59,569
Nursing homes/senior living		185,545		20,643		—		158,572		6,330		—
Hotel/motel		279,788		56,295		60,164		55,766		34,698		72,865
Mini-storage		133,013		14,249		6,238		43,575		552		68,399
Industrial		87,509		11,396		9,295		15,795		3,476		47,547
Health care		34,264		10,471		771		20,154		—		2,868
Convenience stores		30,576		2,847		—		17,367		831		9,531
Other		91,338		13,520		14,572		16,620		7,627		38,999
Total income producing loans		1,381,881		280,562		164,801		504,642		77,054		354,822
Owner-occupied:
Office		160,852		27,109		20,512		70,398		5,124		37,709
Churches		95,883		17,277		6,508		49,319		17,592		5,187
Industrial warehouses		141,520		10,264		2,974		56,096		14,734		57,452
Health care		114,396		24,202		5,838		67,202		2,999		14,155
Convenience stores		101,933		12,762		12,431		51,667		1,275		23,798
Retail		50,748		15,248		6,596		20,258		1,836		6,810
Restaurants		32,272		2,817		666		24,977		1,897		1,915
Auto dealerships		31,372		8,754		155		12,964		9,499		—
Other		147,042		18,314		7,538		77,593		10,566		33,031
Total owner-occupied loans		876,018		136,747		63,218		430,474		65,522		180,057
Loans secured by nonfarm, nonresidential properties	$	2,257,899	$	417,309	$	228,019	$	935,116	$	142,576	$	534,879

(1) Excludes acquired loans.

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	NOTES TO CONSOLIDATED FINANCIALS
	March 31, 2018
	($ 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
	3/31/2018			12/31/2017			9/30/2017			6/30/2017			3/31/2017
Securities – taxable		2.26	%		2.21	%		2.23	%		2.26	%		2.31	%
Securities – nontaxable		3.68	%		4.35	%		4.34	%		4.35	%		4.34	%
Securities – total		2.30	%		2.27	%		2.29	%		2.32	%		2.38	%
Loans - LHFI & LHFS		4.45	%		4.38	%		4.36	%		4.30	%		4.21	%
Acquired loans		8.13	%		9.27	%		8.78	%		7.96	%		8.40	%
Loans - total		4.55	%		4.53	%		4.51	%		4.43	%		4.33	%
FF sold & rev repo		1.70	%		1.61	%		1.55	%		1.39	%		1.02	%
Other earning assets		1.77	%		2.34	%		1.67	%		1.91	%		1.36	%
Total earning assets		3.91	%		3.90	%		3.86	%		3.81	%		3.74	%
Interest-bearing deposits		0.49	%		0.40	%		0.35	%		0.29	%		0.23	%
FF pch & repo		0.97	%		0.93	%		0.94	%		0.79	%		0.57	%
Other borrowings		1.69	%		1.35	%		1.28	%		1.16	%		0.90	%
Total interest-bearing liabilities		0.61	%		0.56	%		0.53	%		0.44	%		0.34	%
Net interest margin		3.46	%		3.48	%		3.47	%		3.49	%		3.49	%
Net interest margin excluding acquired loans		3.37	%		3.35	%		3.34	%		3.37	%		3.38	%

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.  

During the first quarter of 2018, the yield on acquired loans totaled 8.13% and included $594 thousand in recoveries from the settlement of debt, which represented approximately 0.99% of the annualized total acquired loan yield.  The net interest margin was negatively impacted by approximately 6 basis points linked quarter and year-over-year due to the enactment of the 2017 Tax Cuts and Jobs Act (Tax Reform Act) which reduced the fully tax equivalent adjustment as a result of the lower corporate tax rate.  This compression year-over-year is principally offset by the runoff of maturing investment securities, while linked quarter is offset by the runoff of maturing investment securities and quarterly day count.

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

	Quarter Ended
	3/31/2018			12/31/2017			9/30/2017			6/30/2017			3/31/2017
Mortgage servicing income, net	$	5,588		$	5,471		$	5,295		$	5,439		$	5,458
Change in fair value-MSR from runoff		(2,507	)		(2,605	)		(2,892	)		(2,896	)		(2,387	)
Gain on sales of loans, net		4,585			5,300			5,083			5,001			3,550
Other, net		295			(1,120	)		(450	)		629			772
Mortgage banking income before hedge ineffectiveness		7,961			7,046			7,036			8,173			7,393
Change in fair value-MSR from market changes		9,521			1,168			(2,393	)		(1,291	)		1,466
Change in fair value of derivatives		(6,217	)		(1,930	)		(218	)		2,126			1,326
Net positive (negative) hedge ineffectiveness		3,304			(762	)		(2,611	)		835			2,792
Mortgage banking, net	$	11,265		$	6,284		$	4,425		$	9,008		$	10,185

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	NOTES TO CONSOLIDATED FINANCIALS
	March 31, 2018
	($ in thousands)
	(unaudited)

Note 6 – Salaries and Employee Benefit Plans

Defined Benefit Pension Plan

Prior to 2017, Trustmark maintained a noncontributory tax-qualified defined benefit pension plan (Trustmark Capital Accumulation Plan, the “Plan”), in which substantially all associates who began employment prior to 2007 participated.  As previously reported, on July 26, 2016, the Board of Directors of Trustmark authorized the termination of the Plan, effective as of December 31, 2016. To satisfy commitments made by Trustmark to associates (collectively, the “Continuing Associates”) covered through acquired plans that were merged into the Plan, the Board also approved the spin-off of the portion of the Plan associated with the accrued benefits of the Continuing Associates into a new plan titled the Trustmark Corporation Pension Plan for Certain Employees of Acquired Financial Institutions (the “Spin-Off Plan”), effective as of December 31, 2016, immediately prior to the termination of the Plan.  In order to terminate the Plan, in accordance with Internal Revenue Service and Pension Benefit Guaranty Corporation requirements, Trustmark was required to fully fund the Plan on a termination basis and contributed the additional assets necessary to do so. The final distributions were made from current plan assets and a one-time pension settlement expense of $17.6 million was recognized when paid by Trustmark during the second quarter of 2017.    

Note 7 – Other Noninterest Income and Expense

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

	Quarter Ended
	3/31/2018			12/31/2017			9/30/2017			6/30/2017			3/31/2017
Partnership amortization for tax credit purposes	$	(2,202	)	$	(2,478	)	$	(2,521	)	$	(2,287	)	$	(2,274	)
Increase in life insurance cash surrender value		1,738			1,816			1,813			1,782			1,714
Other miscellaneous income		1,523			3,343			4,448			6,142			2,451
Total other, net	$	1,059		$	2,681		$	3,740		$	5,637		$	1,891

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 and historical tax credits). 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.

Trustmark received no nontaxable proceeds related to bank-owned life insurance during the first quarter of 2018 compared to nontaxable proceeds of $1.7 million and $2.7 million during the fourth and third quarters of 2017, respectively, and $4.9 million related to life insurance acquired as part of a previous acquisition during the second quarter of 2017, which were recorded in other miscellaneous income in the table above.  

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

	Quarter Ended
	3/31/2018		12/31/2017		9/30/2017		6/30/2017		3/31/2017
Loan expense	$	2,791	$	2,276	$	3,013	$	2,827	$	2,792
Amortization of intangibles		1,397		1,522		1,539		1,544		1,564
Defined benefit plans non-service cost reclass    from salaries and employee benefits		885		968		966		1,875		1,913
Other miscellaneous expense		6,709		7,799		7,885		10,550		8,432
Total other expense	$	11,782	$	12,565	$	13,403	$	16,796	$	14,701

Trustmark adopted ASU 2017-07, “Compensation-Retirement Benefits (Topic 715)-Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” effective January 1, 2018 and was required to reclassify the defined benefit plans non-service cost from salaries and employee benefits to other expense on the consolidated statements of income for each period presented.  

As previously discussed in Note 1 – Business Combinations, non-routine Reliance merger transaction expenses totaled $3.2 million and were included in other miscellaneous expense during the second quarter of 2017.

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	NOTES TO CONSOLIDATED FINANCIALS
	March 31, 2018
	($ in thousands)
	(unaudited)

Note 8 – Income Taxes

The income tax provision consisted of the following for the periods presented ($ in thousands):

	Quarter Ended
	3/31/2018		12/31/2017			9/30/2017		6/30/2017		3/31/2017
Current	$	2,180	$	3,850		$	8,108	$	5,427	$	5,261
Deferred		3,300		4,300			600		300		3,900
Elimination of deferred tax valuation allowance		—		(8,650	)		—		—		—
Income tax provision before re-measurement		5,480		(500	)		8,708		5,727		9,161
Re-measurement of net deferred tax assets		—		25,619			—		—		—
Income tax provision	$	5,480	$	25,119		$	8,708	$	5,727	$	9,161

During 2013, a deferred tax valuation allowance was created as a result of Trustmark’s merger with BancTrust Financial Group, Inc. and was established to reduce deferred tax assets to the amount that was more likely than not to be realized in future years.  Trustmark has continually evaluated this allowance since inception and, based on the weight of the available evidence, has determined that the deferred tax assets will not be subject to the limitations on the deductibility of built-in losses (Internal Revenue Service Code, Section 382) in future years.  Therefore, during the fourth quarter of 2017, the valuation allowance was eliminated creating a decrease in deferred income tax expense of $8.7 million.

Following the recent enactment of the Tax Reform Act which resulted in the reduction of the corporate federal income tax rate, Trustmark re-measured its net deferred tax assets and recorded an increase in deferred income tax expense of $25.6 million during the fourth quarter of 2017.  

Note 9 – Non-GAAP Financial Measures

In addition to capital ratios defined by U.S. generally accepted accounting principles (GAAP) and banking regulators, Trustmark utilizes various tangible common equity measures when evaluating capital utilization and adequacy.  Tangible common equity, as defined by Trustmark, represents common equity less goodwill and identifiable intangible assets.

Trustmark believes these measures are important because they reflect the level of capital available to withstand unexpected market conditions.  Additionally, presentation of these measures allows readers to compare certain aspects of Trustmark’s capitalization to other organizations.  These ratios differ from capital measures defined by banking regulators principally in that the numerator excludes shareholders’ equity associated with preferred securities, the nature and extent of which varies across organizations.  In Management’s experience, many stock analysts use tangible common equity measures in conjunction with more traditional bank capital ratios to compare capital adequacy of banking organizations with significant amounts of goodwill or other tangible assets, typically stemming from the use of the purchase accounting method in accounting for mergers and acquisitions.

These calculations are intended to complement the capital ratios defined by GAAP and banking regulators.  Because GAAP does not include these capital ratio measures, Trustmark believes there are no comparable GAAP financial measures to these tangible common equity ratios.  Despite the importance of these measures to Trustmark, there are no standardized definitions for them and, as a result, Trustmark’s calculations may not be comparable with other organizations.  Also there may be limits in the usefulness of these measures to investors.  As a result, Trustmark encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.  The following table reconciles Trustmark’s calculation of these measures to amounts reported under GAAP.

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	NOTES TO CONSOLIDATED FINANCIALS
	March 31, 2018
	($ in thousands except per share data)
	(unaudited)

Note 9 – Non-GAAP Financial Measures (continued)

		Quarter Ended
		3/31/2018			12/31/2017			9/30/2017			6/30/2017				3/31/2017
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity		$	1,572,514		$	1,579,633		$	1,577,867		$	1,552,240			$	1,533,098
Less:  Goodwill			(379,627	)		(379,627	)		(379,627	)		(378,191	)			(366,156	)
Identifiable intangible assets			(15,782	)		(17,196	)		(18,714	)		(19,713	)			(19,950	)
Total average tangible equity		$	1,177,105		$	1,182,810		$	1,179,526		$	1,154,336		��	$	1,146,992
PERIOD END BALANCES
Total shareholders' equity		$	1,570,137		$	1,571,701		$	1,582,535		$	1,561,918			$	1,537,961
Less:  Goodwill			(379,627	)		(379,627	)		(379,627	)		(379,627	)			(366,156	)
Identifiable intangible assets			(14,963	)		(16,360	)		(17,883	)		(19,422	)			(19,117	)
Total tangible equity	(a)	$	1,175,547		$	1,175,714		$	1,185,025		$	1,162,869			$	1,152,688
TANGIBLE ASSETS
Total assets		$	13,463,439		$	13,797,953		$	13,884,655		$	13,909,138			$	13,490,361
Less:  Goodwill			(379,627	)		(379,627	)		(379,627	)		(379,627	)			(366,156	)
Identifiable intangible assets			(14,963	)		(16,360	)		(17,883	)		(19,422	)			(19,117	)
Total tangible assets	(b)	$	13,068,849		$	13,401,966		$	13,487,145		$	13,510,089			$	13,105,088
Risk-weighted assets	(c)	$	10,449,352		$	10,566,818		$	10,498,582		$	10,391,912			$	10,031,410
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income		$	36,830		$	15,768		$	34,579		$	24,035			$	31,248
Plus: Intangible amortization net of tax			1,049			940			950			954				966
Net income adjusted for intangible amortization		$	37,879		$	16,708		$	35,529		$	24,989			$	32,214
Period end common shares outstanding	(d)		67,775,068			67,746,094			67,742,135			67,740,901				67,729,434
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity (1)			13.05	%		5.60	%		11.95	%		8.68	%			11.39	%
Tangible equity/tangible assets	(a)/(b)		9.00	%		8.77	%		8.79	%		8.61	%			8.80	%
Tangible equity/risk-weighted assets	(a)/(c)		11.25	%		11.13	%		11.29	%		11.19	%			11.49	%
Tangible book value	(a)/(d)*1,000	$	17.34		$	17.35		$	17.49		$	17.17			$	17.02
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity		$	1,570,137		$	1,571,701		$	1,582,535		$	1,561,918			$	1,537,961
AOCI-related adjustments (3)			67,886			48,248			27,825			28,509				43,005
CET1 adjustments and deductions:
Goodwill net of associated deferred tax liabilities (DTLs)			(366,248	)		(366,461	)		(359,841	)		(360,198	)			(347,085	)
Other adjustments and deductions for CET1 (2)			(12,233	)		(10,248	)		(11,359	)		(11,267	)			(10,803	)
CET1  capital	(e)		1,259,542			1,243,240			1,239,160			1,218,962				1,223,078
Additional tier 1 capital instruments plus related surplus			60,000			60,000			60,000			60,000				60,000
Less:  additional tier 1 capital deductions			(714	)		(2	)		(471	)		(247	)			(159	)
Additional tier 1 capital			59,286			59,998			59,529			59,753				59,841
Tier 1 capital		$	1,318,828		$	1,303,238		$	1,298,689		$	1,278,715			$	1,282,919
Common equity tier 1 capital ratio	(e)/(c)		12.05	%		11.77	%		11.80	%		11.73	%			12.19	%

(1) Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity

(2) Includes other intangible assets, net of DTLs, disallowed deferred tax assets (DTAS), threshold deductions and transition adjustments, as applicable.

(3) The December 31, 2017 amount contains a reclassification adjustment of $8.5 million from AOCI to retained earnings as allowed by regulatory agencies in an interagency statement released January 18, 2018 to address disproportionate tax effect in AOCI resulting from the recent enactment of the Tax Cuts and Jobs Act of 2017 and the application of Financial Accounting Standards Board Accounting Standards Codification Topic 740, Income Taxes.

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	NOTES TO CONSOLIDATED FINANCIALS
	March 31, 2018
	($ in thousands except per share data)
	(unaudited)

Note 9 – Non-GAAP Financial Measures (continued)

Trustmark discloses certain non-GAAP financial measures, including net income adjusted for significant non-routine transactions, because Management uses these measures for business planning purposes, including to manage Trustmark’s business against internal projected results of operations and to measure Trustmark’s performance. Trustmark views net income adjusted for significant non-routine transactions as a measure of our core operating business, which excludes the impact of the items detailed below, as these items are generally not operational in nature. This non-GAAP measure also provides another basis for comparing period-to-period results as presented in the accompanying selected financial data table and the audited consolidated financial statements by excluding potential differences caused by non-operational and unusual or non-recurring items. Readers are cautioned that these adjustments are not permitted under GAAP. Trustmark encourages readers to consider its consolidated financial statements and the notes related thereto in their entirety, and not to rely on any single financial measure.

The following table presents adjustments to net income and select financial ratios as reported in accordance with GAAP resulting from significant non-routine items occurring during the periods presented ($ in thousands, except per share data):

	Quarter Ended
	3/31/2018					12/31/2017						3/31/2017
	Amount			Diluted EPS		Amount			Diluted EPS			Amount			Diluted EPS
Net Income (GAAP)	$	36,830		$	0.542	$	15,768		$	0.232		$	31,248		$	0.461
Significant non-routine transactions (net of taxes):
Re-measurement of net deferred taxes		—			—		25,619			0.377			—			—
Elimination of deferred tax valuation allowance		—			—		(8,650	)		(0.127	)		—			—
Net Income adjusted for significant non-routine      transactions (Non-GAAP)	$	36,830		$	0.542	$	32,737		$	0.482		$	31,248		$	0.461
	Reported			Adjusted		Reported			Adjusted			Reported			Adjusted
	(GAAP)			(Non-GAAP)		(GAAP)			(Non-GAAP)			(GAAP)			(Non-GAAP)
Return on equity		9.50	%	n/a			3.96	%		8.22	%		8.27	%	n/a
Return on average tangible equity		13.05	%	n/a			5.60	%		11.30	%		11.39	%	n/a
Return on assets		1.10	%	n/a			0.45	%		0.94	%		0.95	%	n/a
n/a - not applicable