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

Exhibit 99.1

News Release

Trustmark Corporation Announces Third Quarter 2018 Financial Results

JACKSON, Miss. – October 23, 2018 – Trustmark Corporation (NASDAQ:TRMK) reported net income of $36.3 million in the third quarter of 2018, representing diluted earnings per share of $0.54, an increase of 5.9% year-over-year. This level of earnings resulted in a return on average tangible equity of 12.26% and a return on average assets of 1.07%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable December 15, 2018, to shareholders of record on December 1, 2018.  

Third Quarter Highlights

• Revenue, excluding interest and fees on acquired loans, increased 1.7% linked-quarter and 5.8% year-over-year to total $150.0 million

• The net interest margin (FTE), excluding acquired loans, was 3.50% in the third quarter, up 4 basis points from the prior quarter and 16 basis points year-over-year

• Core noninterest expense, which excludes other real estate expense and intangible amortization, totaled $102.8 million, up 0.2% from the prior quarter and 2.1% year-over-year

Gerard R. Host, President and CEO, stated, “Our third quarter performance continues to reflect our strategic priorities of profitable revenue generation, process improvement and disciplined expense management. During the quarter, we continued to expand banking relationships as well as attract new insurance and wealth management clients. We are privileged to have a #1 deposit share ranking in not only the Jackson metropolitan area, but also the state of Mississippi and, across the franchise, a top-four deposit share ranking in 68% of counties served. Trustmark remains well positioned to continue meeting the needs of our customers and creating long-term value for our shareholders.”

Balance Sheet Management

• Loan growth moderated during the quarter

• Improved composition of average earnings assets as loans replaced maturing investment securities

• Average loans represented 81.8% of average deposits in the third quarter

Loans held for investment totaled $8.7 billion at September 30, 2018, reflecting an increase of $68.0 million, or 0.8%, linked-quarter and $339.7 million, or 4.0%, from the prior year.  During the quarter, growth in residential loans ($58.5 million), other real estate loans ($56.1 million), consumer loans ($7.4 million) and other political subdivision loans ($3.7 million) was offset in part by declines in loans secured by nonfarm, nonresidential properties ($27.4 million), other loans ($16.3 million), construction, land development and other land loans ($7.3 million) and commercial and industrial loans ($6.8 million).

Deposits totaled $11.0 billion at September 30, 2018, down $115.5 million, or 1.0%, from the prior quarter and up $725.2 million, or 7.1%, from one year earlier. The linked-quarter decline is attributable primarily to a seasonal decline in public funds.

Trustmark’s capital position remained solid, reflecting the consistent profitability of its diversified financial services businesses.  At September 30, 2018, Trustmark’s tangible equity to tangible assets ratio was 9.26%, while the total risk-based capital ratio was 13.61%.  During the first nine months of 2018, Trustmark repurchased $7.9 million of its common shares. At September 30, 2018, Trustmark had $91.4 million in remaining authority under its existing stock repurchase program, which expires March 31, 2019.

Credit Quality

• Nonperforming assets increased 3.2% from the prior quarter and declined 11.3% year-over-year

• Other real estate declined 8.0% from the prior quarter and 24.6% year-over-year

• Allowance for loan losses represented 339.79% of nonperforming loans, excluding specifically reviewed impaired loans

Nonperforming loans totaled $67.8 million at September 30, 2018, up $6.5 million from the prior quarter and down $1.5 million year-over-year. The linked-quarter increase in nonperforming loans is due to two specific credits, one, a shared national credit in the limited-service restaurant industry and the other a credit in the healthcare industry. Other real estate totaled $36.5 million, declining $3.2 million from the prior quarter and $11.9 million from the same period one year earlier. Collectively, nonperforming assets totaled $104.3 million, reflecting a linked-quarter increase of 3.2% and year-over-year decrease of 11.3%. Net charge-offs increased $2.5 million in the third quarter primarily due to a write-down on one credit for which reserves had previously been established.

The provision for loan losses totaled $8.7 million in the third quarter and was driven entirely by specific reserves on two impaired loans, one of which is the shared national credit in the limited-service restaurant industry referenced above.  The remainder of the provision was attributable to a previously impaired loan to an industrial parts distributor.

Allocation of Trustmark's $88.9 million allowance for loan losses represented 1.13% of commercial loans and 0.63% of consumer and home mortgage loans, resulting in an allowance to total loans held for investment of 1.02% at September 30, 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 1.02% 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 (FTE), excluding acquired loans, was 3.50%, reflecting its fourth consecutive quarter of expansion

• Maturing investment securities run-off continues to drive accretion to the net interest margin

• Noninterest income totaled $47.1 million, down 0.6% linked-quarter and up 5.9% year-over-year

Net interest income (FTE) in the third quarter totaled $110.1 million, resulting in a net interest margin (FTE) of 3.59%, up 2 basis points from the prior quarter.  Relative to the prior quarter, net interest income (FTE) increased $1.8 million, reflecting a $4.5 million increase in interest income (FTE) and a $2.7 million increase in interest expense. During the third quarter of 2018, the yield on acquired loans totaled 10.82% and included $1.6 million in recoveries from the settlement of debt, which represented approximately 4.40% of the annualized total acquired loan yield. Excluding acquired loans, the net interest margin (FTE) totaled 3.50% for the third quarter of 2018, an increase of 4 basis points when compared to the second quarter of 2018, which was principally due to growth in the yield on the loans held for investment and held for sale portfolio, run-off of maturing investment securities and favorable funding mix offset by higher costs of interest-bearing deposits.

Noninterest income in the third quarter totaled $47.1 million.  Insurance revenue totaled $10.8 million in the third quarter, unchanged from the prior quarter and up 3.5% year-over-year; this performance reflects growth in the property and casualty lines of business. Mortgage banking revenue totaled $8.6 million in the third quarter, down 4.4% from the prior quarter and up 95.4% year-over-year, primarily due to our hedging strategy.  The linked-quarter change reflects a decline in the value of loans held for sale partially offset by an increase in gains on sales of loans, net.  Mortgage loan production in the third quarter totaled $397.7 million, down 3.1% from the prior quarter and up 16.5% year-over-year. Wealth management revenue in the third quarter totaled $7.8 million, up 4.2% from the prior quarter and 3.4% year-over-year, respectively.  The linked-quarter performance is primarily attributable to increased revenue from investment services fee income. Bank card and other fees increased 5.5% from the prior quarter and 4.3% year-over-year primarily due to increased customer derivative revenue. Service charges on deposit accounts increased 4.0% compared to the prior quarter and declined 1.3% year-over-year.

Noninterest Expense

• Total noninterest expense increased 1.4% linked-quarter and 2.1% year-over-year to $105.2 million

• Core noninterest expense, which excludes other real estate expense and intangible amortization, totaled $102.8 million, up 0.2% from the prior quarter and 2.1% year-over-year

Diligent expense management continues to be a priority for Trustmark. Salaries and employee benefits increased $872 thousand, or 1.5%, from the prior quarter to total $60.8 million, due in part to higher brokerage and mortgage commissions as a result of continued growth in both business lines. Services and fees remained relatively flat as increases in data processing were offset by reductions in outside services and fees. Other real estate expense, net was $1.2 million for the quarter while net occupancy-premises expense totaled $6.9 million, up 5.5% from the prior quarter due to increases in routine office occupancy expense.  Other expense totaled $11.7 million, a decline of $611 thousand, or 5.0%, on a linked-quarter basis.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, October 24, 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, November 7, 2018, in archived format at the same web address or by calling (877) 344-7529, passcode 10124583.

Trustmark is a financial services company providing banking and financial solutions through 198 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, 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 issues relating to the European financial system and monetary and other governmental actions designed to address credit, securities, and/or commodity 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, 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
	September 30, 2018
	($ in thousands)
	(unaudited)

										Linked Quarter						Year over Year
QUARTERLY AVERAGE BALANCES	9/30/2018			6/30/2018			9/30/2017			$ Change			% Change			$ Change			% Change
Securities AFS-taxable	$	1,937,807		$	2,038,759		$	2,349,736		$	(100,952	)		-5.0	%	$	(411,929	)		-17.5	%
Securities AFS-nontaxable		41,889			50,035			67,994			(8,146	)		-16.3	%		(26,105	)		-38.4	%
Securities HTM-taxable		933,294			972,571			1,086,773			(39,277	)		-4.0	%		(153,479	)		-14.1	%
Securities HTM-nontaxable		29,183			30,337			32,829			(1,154	)		-3.8	%		(3,646	)		-11.1	%
Total securities		2,942,173			3,091,702			3,537,332			(149,529	)		-4.8	%		(595,159	)		-16.8	%
Loans (including loans held for sale)		8,907,588			8,707,466			8,532,523			200,122			2.3	%		375,065			4.4	%
Acquired loans		147,811			202,140			299,221			(54,329	)		-26.9	%		(151,410	)		-50.6	%
Fed funds sold and rev repos		477			1,063			3,582			(586	)		-55.1	%		(3,105	)		-86.7	%
Other earning assets		189,471			186,224			84,320			3,247			1.7	%		105,151		n/m
Total earning assets		12,187,520			12,188,595			12,456,978			(1,075	)		0.0	%		(269,458	)		-2.2	%
Allowance for loan losses		(86,496	)		(86,315	)		(85,363	)		(181	)		-0.2	%		(1,133	)		-1.3	%
Cash and due from banks		330,949			319,075			312,409			11,874			3.7	%		18,540			5.9	%
Other assets		1,035,327			1,042,156			1,202,766			(6,829	)		-0.7	%		(167,439	)		-13.9	%
Total assets	$	13,467,300		$	13,463,511		$	13,886,790		$	3,789			0.0	%	$	(419,490	)		-3.0	%
Interest-bearing demand deposits	$	2,602,658		$	2,439,777		$	2,192,064		$	162,881			6.7	%	$	410,594			18.7	%
Savings deposits		3,722,533			3,860,096			3,284,323			(137,563	)		-3.6	%		438,210			13.3	%
Time deposits		1,851,866			1,798,855			1,736,683			53,011			2.9	%		115,183			6.6	%
Total interest-bearing deposits		8,177,057			8,098,728			7,213,070			78,329			1.0	%		963,987			13.4	%
Fed funds purchased and repos		347,489			352,256			547,863			(4,767	)		-1.4	%		(200,374	)		-36.6	%
Short-term borrowings		186,293			248,932			1,335,476			(62,639	)		-25.2	%		(1,149,183	)		-86.1	%
Long-term FHLB advances		903			921			970			(18	)		-2.0	%		(67	)		-6.9	%
Junior subordinated debt securities		61,856			61,856			61,856			—			0.0	%		—			0.0	%
Total interest-bearing liabilities		8,773,598			8,762,693			9,159,235			10,905			0.1	%		(385,637	)		-4.2	%
Noninterest-bearing deposits		2,894,061			2,930,726			3,003,763			(36,665	)		-1.3	%		(109,702	)		-3.7	%
Other liabilities		202,053			188,186			145,925			13,867			7.4	%		56,128			38.5	%
Total liabilities		11,869,712			11,881,605			12,308,923			(11,893	)		-0.1	%		(439,211	)		-3.6	%
Shareholders' equity		1,597,588			1,581,906			1,577,867			15,682			1.0	%		19,721			1.2	%
Total liabilities and equity	$	13,467,300		$	13,463,511		$	13,886,790		$	3,789			0.0	%	$	(419,490	)		-3.0	%
n/m - percentage changes greater than +/- 100% are considered not meaningful

See Notes to Consolidated Financials

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	CONSOLIDATED FINANCIAL INFORMATION
	September 30, 2018
	($ in thousands)
	(unaudited)

										Linked Quarter						Year over Year
PERIOD END BALANCES	9/30/2018			6/30/2018			9/30/2017			$ Change			% Change			$ Change			% Change
Cash and due from banks	$	432,471		$	387,119		$	350,123		$	45,352			11.7	%	$	82,348			23.5	%
Fed funds sold and rev repos		1,000			—			3,215			1,000		n/m				(2,215	)		-68.9	%
Securities available for sale		1,864,633			1,974,675			2,369,089			(110,042	)		-5.6	%		(504,456	)		-21.3	%
Securities held to maturity		943,883			985,845			1,102,283			(41,962	)		-4.3	%		(158,400	)		-14.4	%
Loans held for sale (LHFS)		182,664			196,217			204,157			(13,553	)		-6.9	%		(21,493	)		-10.5	%
Loans held for investment (LHFI)		8,747,030			8,678,983			8,407,341			68,047			0.8	%		339,689			4.0	%
Allowance for loan losses, LHFI		(88,874	)		(83,566	)		(80,332	)		(5,308	)		-6.4	%		(8,542	)		-10.6	%
Net LHFI		8,658,156			8,595,417			8,327,009			62,739			0.7	%		331,147			4.0	%
Acquired loans		132,615			173,107			283,757			(40,492	)		-23.4	%		(151,142	)		-53.3	%
Allowance for loan losses, acquired loans		(1,714	)		(3,046	)		(5,768	)		1,332			43.7	%		4,054			70.3	%
Net acquired loans		130,901			170,061			277,989			(39,160	)		-23.0	%		(147,088	)		-52.9	%
Net LHFI and acquired loans		8,789,057			8,765,478			8,604,998			23,579			0.3	%		184,059			2.1	%
Premises and equipment, net		178,739			177,686			181,312			1,053			0.6	%		(2,573	)		-1.4	%
Mortgage servicing rights		101,374			97,411			81,477			3,963			4.1	%		19,897			24.4	%
Goodwill		379,627			379,627			379,627			—			0.0	%		—			0.0	%
Identifiable intangible assets		12,391			13,677			17,883			(1,286	)		-9.4	%		(5,492	)		-30.7	%
Other real estate		36,475			39,667			48,356			(3,192	)		-8.0	%		(11,881	)		-24.6	%
Other assets		517,498			507,863			542,135			9,635			1.9	%		(24,637	)		-4.5	%
Total assets	$	13,439,812		$	13,525,265		$	13,884,655		$	(85,453	)		-0.6	%	$	(444,843	)		-3.2	%
Deposits:
Noninterest-bearing	$	2,786,539		$	2,958,354		$	2,998,013		$	(171,815	)		-5.8	%	$	(211,474	)		-7.1	%
Interest-bearing		8,170,371			8,114,081			7,233,729			56,290			0.7	%		936,642			12.9	%
Total deposits		10,956,910			11,072,435			10,231,742			(115,525	)		-1.0	%		725,168			7.1	%
Fed funds purchased and repos		486,865			477,891			545,603			8,974			1.9	%		(58,738	)		-10.8	%
Short-term borrowings		190,023			186,647			1,322,159			3,376			1.8	%		(1,132,136	)		-85.6	%
Long-term FHLB advances		896			913			962			(17	)		-1.9	%		(66	)		-6.9	%
Junior subordinated debt securities		61,856			61,856			61,856			—			0.0	%		—			0.0	%
Other liabilities		143,658			141,451			139,798			2,207			1.6	%		3,860			2.8	%
Total liabilities		11,840,208			11,941,193			12,302,120			(100,985	)		-0.8	%		(461,912	)		-3.8	%
Common stock		14,089			14,089			14,114			—			0.0	%		(25	)		-0.2	%
Capital surplus		362,868			361,715			368,131			1,153			0.3	%		(5,263	)		-1.4	%
Retained earnings		1,302,593			1,282,007			1,228,115			20,586			1.6	%		74,478			6.1	%
Accum other comprehensive loss, net of tax		(79,946	)		(73,739	)		(27,825	)		(6,207	)		-8.4	%		(52,121	)	n/m
Total shareholders' equity		1,599,604			1,584,072			1,582,535			15,532			1.0	%		17,069			1.1	%
Total liabilities and equity	$	13,439,812		$	13,525,265		$	13,884,655		$	(85,453	)		-0.6	%	$	(444,843	)		-3.2	%
n/m - percentage changes greater than +/- 100% are considered not meaningful

See Notes to Consolidated Financials

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	CONSOLIDATED FINANCIAL INFORMATION
	September 30, 2018
	($ in thousands except per share data)
	(unaudited)

	Quarter Ended									Linked Quarter						Year over Year
INCOME STATEMENTS	9/30/2018			6/30/2018			9/30/2017			$ Change			% Change			$ Change			% Change
Interest and fees on LHFS & LHFI-FTE	$	105,993		$	99,761		$	93,703		$	6,232			6.2	%	$	12,290			13.1	%
Interest and fees on acquired loans		4,033			5,022			6,625			(989	)		-19.7	%		(2,592	)		-39.1	%
Interest on securities-taxable		16,186			16,894			19,291			(708	)		-4.2	%		(3,105	)		-16.1	%
Interest on securities-tax exempt-FTE		656			733			1,104			(77	)		-10.5	%		(448	)		-40.6	%
Interest on fed funds sold and rev repos		3			5			14			(2	)		-40.0	%		(11	)		-78.6	%
Other interest income		1,050			1,054			355			(4	)		-0.4	%		695		n/m
Total interest income-FTE		127,921			123,469			121,092			4,452			3.6	%		6,829			5.6	%
Interest on deposits		14,972			12,139			6,381			2,833			23.3	%		8,591		n/m
Interest on fed funds pch and repos		1,348			1,250			1,301			98			7.8	%		47			3.6	%
Other interest expense		1,467			1,713			4,520			(246	)		-14.4	%		(3,053	)		-67.5	%
Total interest expense		17,787			15,102			12,202			2,685			17.8	%		5,585			45.8	%
Net interest income-FTE		110,134			108,367			108,890			1,767			1.6	%		1,244			1.1	%
Provision for loan losses, LHFI		8,673			3,167			3,672			5,506		n/m				5,001		n/m
Provision for loan losses, acquired loans		(467	)		(441	)		(1,653	)		(26	)		-5.9	%		1,186			71.7	%
Net interest income after provision-FTE		101,928			105,641			106,871			(3,713	)		-3.5	%		(4,943	)		-4.6	%
Service charges on deposit accounts		11,075			10,647			11,223			428			4.0	%		(148	)		-1.3	%
Bank card and other fees		7,459			7,070			7,150			389			5.5	%		309			4.3	%
Mortgage banking, net		8,647			9,046			4,425			(399	)		-4.4	%		4,222			95.4	%
Insurance commissions		10,765			10,735			10,398			30			0.3	%		367			3.5	%
Wealth management		7,789			7,478			7,530			311			4.2	%		259			3.4	%
Other, net		1,358			2,415			3,740			(1,057	)		-43.8	%		(2,382	)		-63.7	%
Nonint inc-excl sec gains (losses), net		47,093			47,391			44,466			(298	)		-0.6	%		2,627			5.9	%
Security gains (losses), net		—			—			14			—		n/m				(14	)		-100.0	%
Total noninterest income		47,093			47,391			44,480			(298	)		-0.6	%		2,613			5.9	%
Salaries and employee benefits		60,847			59,975			57,871			872			1.5	%		2,976			5.1	%
Defined benefit plan termination		—			—			—			—		n/m				—		n/m
Services and fees		16,404			16,322			15,133			82			0.5	%		1,271			8.4	%
Net occupancy-premises		6,910			6,550			6,702			360			5.5	%		208			3.1	%
Equipment expense		6,200			6,202			6,297			(2	)		0.0	%		(97	)		-1.5	%
Other real estate expense, net		1,168			(93	)		864			1,261		n/m				304			35.2	%
FDIC assessment expense		1,999			2,538			2,816			(539	)		-21.2	%		(817	)		-29.0	%
Other expense		11,695			12,306			13,403			(611	)		-5.0	%		(1,708	)		-12.7	%
Total noninterest expense		105,223			103,800			103,086			1,423			1.4	%		2,137			2.1	%
Income before income taxes and tax eq adj		43,798			49,232			48,265			(5,434	)		-11.0	%		(4,467	)		-9.3	%
Tax equivalent adjustment		3,151			3,203			4,978			(52	)		-1.6	%		(1,827	)		-36.7	%
Income before income taxes		40,647			46,029			43,287			(5,382	)		-11.7	%		(2,640	)		-6.1	%
Income taxes		4,394			6,216			8,708			(1,822	)		-29.3	%		(4,314	)		-49.5	%
Net income	$	36,253		$	39,813		$	34,579		$	(3,560	)		-8.9	%	$	1,674			4.8	%
Per share data
Earnings per share - basic	$	0.54		$	0.59		$	0.51		$	(0.05	)		-8.5	%	$	0.03			5.9	%
Earnings per share - diluted	$	0.54		$	0.59		$	0.51		$	(0.05	)		-8.5	%	$	0.03			5.9	%
Dividends per share	$	0.23		$	0.23		$	0.23			—			0.0	%		—			0.0	%
Weighted average shares outstanding
Basic		67,621,345			67,758,097			67,741,655
Diluted		67,796,346			67,907,267			67,916,418
Period end shares outstanding		67,621,369			67,621,111			67,742,135
n/m - percentage changes greater than +/- 100% are considered not meaningful

See Notes to Consolidated Financials

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	CONSOLIDATED FINANCIAL INFORMATION
	September 30, 2018
	($ in thousands)
	(unaudited)

	Quarter Ended									Linked Quarter						Year over Year
NONPERFORMING ASSETS (1)	9/30/2018			6/30/2018			9/30/2017			$ Change			% Change			$ Change			% Change
Nonaccrual loans
Alabama	$	3,953		$	3,685		$	1,629		$	268			7.3	%	$	2,324		n/m
Florida		1,180			2,978			3,242			(1,798	)		-60.4	%		(2,062	)		-63.6	%
Mississippi (2)		41,351			39,006			59,483			2,345			6.0	%		(18,132	)		-30.5	%
Tennessee (3)		13,195			5,338			4,589			7,857		n/m				8,606		n/m
Texas		8,157			10,356			346			(2,199	)		-21.2	%		7,811		n/m
Total nonaccrual loans		67,836			61,363			69,289			6,473			10.5	%		(1,453	)		-2.1	%
Other real estate
Alabama		7,526			8,290			12,726			(764	)		-9.2	%		(5,200	)		-40.9	%
Florida		8,931			9,789			16,100			(858	)		-8.8	%		(7,169	)		-44.5	%
Mississippi (2)		18,191			19,358			15,319			(1,167	)		-6.0	%		2,872			18.7	%
Tennessee (3)		1,083			1,486			2,671			(403	)		-27.1	%		(1,588	)		-59.5	%
Texas		744			744			1,540			—			0.0	%		(796	)		-51.7	%
Total other real estate		36,475			39,667			48,356			(3,192	)		-8.0	%		(11,881	)		-24.6	%
Total nonperforming assets	$	104,311		$	101,030		$	117,645		$	3,281			3.2	%	$	(13,334	)		-11.3	%
LOANS PAST DUE OVER 90 DAYS (1)
LHFI	$	726		$	529		$	2,244		$	197			37.2	%	$	(1,518	)		-67.6	%
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	34,115		$	34,693		$	32,332		$	(578	)		-1.7	%	$	1,783			5.5	%
	Quarter Ended									Linked Quarter						Year over Year
ALLOWANCE FOR LOAN LOSSES (1)	9/30/2018			6/30/2018			9/30/2017			$ Change			% Change			$ Change			% Change
Beginning Balance	$	83,566		$	81,235		$	76,184		$	2,331			2.9	%	$	7,382			9.7	%
Transfers (4)		772			782			—			(10	)		-1.3	%		772		n/m
Provision for loan losses		8,673			3,167			3,672			5,506		n/m				5,001		n/m
Charge-offs		(7,017	)		(3,421	)		(2,752	)		(3,596	)	n/m				(4,265	)	n/m
Recoveries		2,880			1,803			3,228			1,077			59.7	%		(348	)		-10.8	%
Net (charge-offs) recoveries		(4,137	)		(1,618	)		476			(2,519	)	n/m				(4,613	)	n/m
Ending Balance	$	88,874		$	83,566		$	80,332		$	5,308			6.4	%	$	8,542			10.6	%
PROVISION FOR LOAN LOSSES (1)
Alabama	$	593		$	434		$	1,218		$	159			36.6	%	$	(625	)		-51.3	%
Florida		(431	)		(811	)		(744	)		380			46.9	%		313			42.1	%
Mississippi (2)		(1,630	)		2,768			1,860			(4,398	)	n/m				(3,490	)	n/m
Tennessee (3)		8,100			82			(72	)		8,018		n/m				8,172		n/m
Texas		2,041			694			1,410			1,347		n/m				631			44.8	%
Total provision for loan losses	$	8,673		$	3,167		$	3,672		$	5,506		n/m			$	5,001		n/m
NET CHARGE-OFFS (RECOVERIES) (1)
Alabama	$	198		$	112		$	314		$	86			76.8	%	$	(116	)		-36.9	%
Florida		(586	)		(122	)		(796	)		(464	)	n/m				210			26.4	%
Mississippi (2)		4,677			1,705			(11	)		2,972		n/m				4,688		n/m
Tennessee (3)		(96	)		70			85			(166	)	n/m				(181	)	n/m
Texas		(56	)		(147	)		(68	)		91			61.9	%		12			17.6	%
Total net charge-offs (recoveries)	$	4,137		$	1,618		$	(476	)	$	2,519		n/m			$	4,613		n/m
(1) - Excludes acquired loans.
(2) - Mississippi includes Central and Southern Mississippi Regions.
(3) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
(4) - The allowance for loan losses balance related to the remaining loans acquired in the Bay Bank merger, which were transferred from acquired impaired loans to        LHFI during the second quarter of 2018, and the remaining loans acquired in the Heritage acquisition and the Reliance merger, which were transferred from        acquired impaired loans to LHFI during the third quarter of 2018.
n/m - percentage changes greater than +/- 100% are considered not meaningful

See Notes to Consolidated Financials

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	CONSOLIDATED FINANCIAL INFORMATION
	September 30, 2018
	($ in thousands)
	(unaudited)

	Quarter Ended															Nine Months Ended
AVERAGE BALANCES	9/30/2018			6/30/2018			3/31/2018			12/31/2017			9/30/2017			9/30/2018			9/30/2017
Securities AFS-taxable	$	1,937,807		$	2,038,759		$	2,141,144		$	2,247,247		$	2,349,736		$	2,038,492		$	2,312,523
Securities AFS-nontaxable		41,889			50,035			57,972			61,691			67,994			49,906			77,310
Securities HTM-taxable		933,294			972,571			1,005,721			1,045,723			1,086,773			970,263			1,106,402
Securities HTM-nontaxable		29,183			30,337			32,734			32,781			32,829			30,738			32,905
Total securities		2,942,173			3,091,702			3,237,571			3,387,442			3,537,332			3,089,399			3,529,140
Loans (including loans held for sale)		8,907,588			8,707,466			8,636,967			8,686,916			8,532,523			8,751,665			8,320,255
Acquired loans		147,811			202,140			243,152			273,918			299,221			197,352			288,599
Fed funds sold and rev repos		477			1,063			478			1,724			3,582			673			2,399
Other earning assets		189,471			186,224			213,985			80,218			84,320			196,470			80,553
Total earning assets		12,187,520			12,188,595			12,332,153			12,430,218			12,456,978			12,235,559			12,220,946
Allowance for loan losses		(86,496	)		(86,315	)		(82,304	)		(86,704	)		(85,363	)		(85,054	)		(84,036	)
Cash and due from banks		330,949			319,075			336,642			315,586			312,409			328,868			310,313
Other assets		1,035,327			1,042,156			1,030,738			1,192,464			1,202,766			1,036,091			1,222,619
Total assets	$	13,467,300		$	13,463,511		$	13,617,229		$	13,851,564		$	13,886,790		$	13,515,464		$	13,669,842
Interest-bearing demand deposits	$	2,602,658		$	2,439,777		$	2,404,428		$	2,244,625		$	2,192,064		$	2,483,014		$	2,070,615
Savings deposits		3,722,533			3,860,096			3,737,507			3,291,407			3,284,323			3,773,324			3,313,627
Time deposits		1,851,866			1,798,855			1,748,645			1,756,576			1,736,683			1,800,167			1,721,804
Total interest-bearing deposits		8,177,057			8,098,728			7,890,580			7,292,608			7,213,070			8,056,505			7,106,046
Fed funds purchased and repos		347,489			352,256			277,877			475,850			547,863			326,129			524,295
Short-term borrowings		186,293			248,932			751,219			1,276,543			1,335,476			393,412			1,091,783
Long-term FHLB advances		903			921			938			954			970			921			130,117
Junior subordinated debt securities		61,856			61,856			61,856			61,856			61,856			61,856			61,856
Total interest-bearing liabilities		8,773,598			8,762,693			8,982,470			9,107,811			9,159,235			8,838,823			8,914,097
Noninterest-bearing deposits		2,894,061			2,930,726			2,881,374			2,994,292			3,003,763			2,902,100			3,040,672
Other liabilities		202,053			188,186			180,871			169,828			145,925			190,446			160,507
Total liabilities		11,869,712			11,881,605			12,044,715			12,271,931			12,308,923			11,931,369			12,115,276
Shareholders' equity		1,597,588			1,581,906			1,572,514			1,579,633			1,577,867			1,584,095			1,554,566
Total liabilities and equity	$	13,467,300		$	13,463,511		$	13,617,229		$	13,851,564		$	13,886,790		$	13,515,464		$	13,669,842

See Notes to Consolidated Financials

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	CONSOLIDATED FINANCIAL INFORMATION
	September 30, 2018
	($ in thousands)
	(unaudited)

PERIOD END BALANCES	9/30/2018			6/30/2018			3/31/2018			12/31/2017			9/30/2017
Cash and due from banks	$	432,471		$	387,119		$	315,276		$	335,768		$	350,123
Fed funds sold and rev repos		1,000			—			112			615			3,215
Securities available for sale		1,864,633			1,974,675			2,097,497			2,238,635			2,369,089
Securities held to maturity		943,883			985,845			1,023,975			1,056,486			1,102,283
Loans held for sale (LHFS)		182,664			196,217			163,882			180,512			204,157
Loans held for investment (LHFI)		8,747,030			8,678,983			8,513,985			8,569,967			8,407,341
Allowance for loan losses, LHFI		(88,874	)		(83,566	)		(81,235	)		(76,733	)		(80,332	)
Net LHFI		8,658,156			8,595,417			8,432,750			8,493,234			8,327,009
Acquired loans		132,615			173,107			215,476			261,517			283,757
Allowance for loan losses, acquired loans		(1,714	)		(3,046	)		(4,294	)		(4,079	)		(5,768	)
Net acquired loans		130,901			170,061			211,182			257,438			277,989
Net LHFI and acquired loans		8,789,057			8,765,478			8,643,932			8,750,672			8,604,998
Premises and equipment, net		178,739			177,686			178,584			179,339			181,312
Mortgage servicing rights		101,374			97,411			94,850			84,269			81,477
Goodwill		379,627			379,627			379,627			379,627			379,627
Identifiable intangible assets		12,391			13,677			14,963			16,360			17,883
Other real estate		36,475			39,667			39,554			43,228			48,356
Other assets		517,498			507,863			511,187			532,442			542,135
Total assets	$	13,439,812		$	13,525,265		$	13,463,439		$	13,797,953		$	13,884,655
Deposits:
Noninterest-bearing	$	2,786,539		$	2,958,354		$	3,004,442		$	2,978,074		$	2,998,013
Interest-bearing		8,170,371			8,114,081			7,971,359			7,599,438			7,233,729
Total deposits		10,956,910			11,072,435			10,975,801			10,577,512			10,231,742
Fed funds purchased and repos		486,865			477,891			274,833			469,827			545,603
Short-term borrowings		190,023			186,647			442,689			971,049			1,322,159
Long-term FHLB advances		896			913			929			946			962
Junior subordinated debt securities		61,856			61,856			61,856			61,856			61,856
Other liabilities		143,658			141,451			137,194			145,062			139,798
Total liabilities		11,840,208			11,941,193			11,893,302			12,226,252			12,302,120
Common stock		14,089			14,089			14,121			14,115			14,114
Capital surplus		362,868			361,715			366,021			369,124			368,131
Retained earnings		1,302,593			1,282,007			1,257,881			1,228,187			1,228,115
Accum other comprehensive loss, net of tax		(79,946	)		(73,739	)		(67,886	)		(39,725	)		(27,825	)
Total shareholders' equity		1,599,604			1,584,072			1,570,137			1,571,701			1,582,535
Total liabilities and equity	$	13,439,812		$	13,525,265		$	13,463,439		$	13,797,953		$	13,884,655

See Notes to Consolidated Financials

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	CONSOLIDATED FINANCIAL INFORMATION
	September 30, 2018
	($ in thousands except per share data)
	(unaudited)

	Quarter Ended														Nine Months Ended
INCOME STATEMENTS	9/30/2018			6/30/2018			3/31/2018		12/31/2017			9/30/2017			9/30/2018			9/30/2017
Interest and fees on LHFS & LHFI-FTE	$	105,993		$	99,761		$	94,712	$	95,816		$	93,703		$	300,466		$	266,979
Interest and fees on acquired loans		4,033			5,022			4,877		6,401			6,625			13,932			18,077
Interest on securities-taxable		16,186			16,894			17,506		18,327			19,291			50,586			57,865
Interest on securities-tax exempt-FTE		656			733			824		1,035			1,104			2,213			3,582
Interest on fed funds sold and rev repos		3			5			2		7			14			10			26
Other interest income		1,050			1,054			934		473			355			3,038			993
Total interest income-FTE		127,921			123,469			118,855		122,059			121,092			370,245			347,522
Interest on deposits		14,972			12,139			9,491		7,284			6,381			36,602			15,433
Interest on fed funds pch and repos		1,348			1,250			662		1,116			1,301			3,260			3,036
Other interest expense		1,467			1,713			3,394		4,555			4,520			6,574			10,821
Total interest expense		17,787			15,102			13,547		12,955			12,202			46,436			29,290
Net interest income-FTE		110,134			108,367			105,308		109,104			108,890			323,809			318,232
Provision for loan losses, LHFI		8,673			3,167			3,961		5,739			3,672			15,801			9,355
Provision for loan losses, acquired loans		(467	)		(441	)		150		(1,573	)		(1,653	)		(758	)		(5,822	)
Net interest income after provision-FTE		101,928			105,641			101,197		104,938			106,871			308,766			314,699
Service charges on deposit accounts		11,075			10,647			10,857		11,193			11,223			32,579			32,810
Bank card and other fees		7,459			7,070			6,626		7,266			7,150			21,155			21,020
Mortgage banking, net		8,647			9,046			11,265		6,284			4,425			28,958			23,618
Insurance commissions		10,765			10,735			9,419		8,813			10,398			30,919			29,355
Wealth management		7,789			7,478			7,567		7,723			7,530			22,834			22,617
Other, net		1,358			2,415			1,059		2,681			3,740			4,832			11,268
Nonint inc-excl sec gains (losses), net		47,093			47,391			46,793		43,960			44,466			141,277			140,688
Security gains (losses), net		—			—			—		—			14			—			15
Total noninterest income		47,093			47,391			46,793		43,960			44,480			141,277			140,703
Salaries and employee benefits		60,847			59,975			58,475		58,820			57,871			179,297			170,445
Defined benefit plan termination		—			—			—		—			—			—			17,644
Services and fees		16,404			16,322			15,746		15,419			15,133			48,472			45,474
Net occupancy-premises		6,910			6,550			6,502		6,617			6,702			19,962			19,150
Equipment expense		6,200			6,202			6,099		5,996			6,297			18,501			18,457
Other real estate expense, net		1,168			(93	)		866		666			864			1,941			3,006
FDIC assessment expense		1,999			2,538			2,995		2,868			2,816			7,532			8,142
Other expense		11,695			12,306			11,782		12,565			13,403			35,783			44,900
Total noninterest expense		105,223			103,800			102,465		102,951			103,086			311,488			327,218
Income before income taxes and tax eq adj		43,798			49,232			45,525		45,947			48,265			138,555			128,184
Tax equivalent adjustment		3,151			3,203			3,215		5,060			4,978			9,569			14,726
Income before income taxes		40,647			46,029			42,310		40,887			43,287			128,986			113,458
Income taxes		4,394			6,216			5,480		25,119			8,708			16,090			23,596
Net income	$	36,253		$	39,813		$	36,830	$	15,768		$	34,579		$	112,896		$	89,862
Per share data
Earnings per share - basic	$	0.54		$	0.59		$	0.54	$	0.23		$	0.51		$	1.67		$	1.33
Earnings per share - diluted	$	0.54		$	0.59		$	0.54	$	0.23		$	0.51		$	1.67		$	1.32
Dividends per share	$	0.23		$	0.23		$	0.23	$	0.23		$	0.23		$	0.69		$	0.69
Weighted average shares outstanding
Basic		67,621,345			67,758,097			67,809,234		67,742,792			67,741,655			67,728,871			67,721,971
Diluted		67,796,346			67,907,267			67,960,583		67,938,986			67,916,418			67,875,925			67,876,295
Period end shares outstanding		67,621,369			67,621,111			67,775,068		67,746,094			67,742,135			67,621,369			67,742,135

See Notes to Consolidated Financials

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	CONSOLIDATED FINANCIAL INFORMATION
	September 30, 2018
	($ in thousands)
	(unaudited)

	Quarter Ended
NONPERFORMING ASSETS (1)	9/30/2018			6/30/2018			3/31/2018			12/31/2017			9/30/2017
Nonaccrual loans
Alabama	$	3,953		$	3,685		$	3,121		$	3,083		$	1,629
Florida		1,180			2,978			2,116			3,034			3,242
Mississippi (2)		41,351			39,006			48,600			49,129			59,483
Tennessee (3)		13,195			5,338			5,530			4,436			4,589
Texas		8,157			10,356			9,329			7,893			346
Total nonaccrual loans		67,836			61,363			68,696			67,575			69,289
Other real estate
Alabama		7,526			8,290			8,962			11,714			12,726
Florida		8,931			9,789			12,550			13,937			16,100
Mississippi (2)		18,191			19,358			15,737			14,260			15,319
Tennessee (3)		1,083			1,486			1,523			2,535			2,671
Texas		744			744			782			782			1,540
Total other real estate		36,475			39,667			39,554			43,228			48,356
Total nonperforming assets	$	104,311		$	101,030		$	108,250		$	110,803		$	117,645
LOANS PAST DUE OVER 90 DAYS (1)
LHFI	$	726		$	529		$	1,419		$	2,171		$	2,244
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	34,115		$	34,693		$	34,826		$	35,544		$	32,332
	Quarter Ended															Nine Months Ended
ALLOWANCE FOR LOAN LOSSES(1)	9/30/2018			6/30/2018			3/31/2018			12/31/2017			9/30/2017			9/30/2018			9/30/2017
Beginning Balance	$	83,566		$	81,235		$	76,733		$	80,332		$	76,184		$	76,733		$	71,265
Transfers (4)		772			782			—			—			—			1,554			—
Provision for loan losses		8,673			3,167			3,961			5,739			3,672			15,801			9,355
Charge-offs		(7,017	)		(3,421	)		(2,542	)		(12,075	)		(2,752	)		(12,980	)		(9,072	)
Recoveries		2,880			1,803			3,083			2,737			3,228			7,766			8,784
Net (charge-offs) recoveries		(4,137	)		(1,618	)		541			(9,338	)		476			(5,214	)		(288	)
Ending Balance	$	88,874		$	83,566		$	81,235		$	76,733		$	80,332		$	88,874		$	80,332
PROVISION FOR LOAN LOSSES (1)
Alabama	$	593		$	434		$	618		$	559		$	1,218		$	1,645		$	3,273
Florida		(431	)		(811	)		(863	)		(1,235	)		(744	)		(2,105	)		(1,716	)
Mississippi (2)		(1,630	)		2,768			2,664			2,779			1,860			3,802			5,954
Tennessee (3)		8,100			82			(268	)		(439	)		(72	)		7,914			458
Texas		2,041			694			1,810			4,075			1,410			4,545			1,386
Total provision for loan losses	$	8,673		$	3,167		$	3,961		$	5,739		$	3,672		$	15,801		$	9,355
NET CHARGE-OFFS (RECOVERIES) (1)
Alabama	$	198		$	112		$	84		$	196		$	314		$	394		$	351
Florida		(586	)		(122	)		(960	)		(946	)		(796	)		(1,668	)		(1,924	)
Mississippi (2)		4,677			1,705			267			5,574			(11	)		6,649			1,781
Tennessee (3)		(96	)		70			109			79			85			83			314
Texas		(56	)		(147	)		(41	)		4,435			(68	)		(244	)		(234	)
Total net charge-offs (recoveries)	$	4,137		$	1,618		$	(541	)	$	9,338		$	(476	)	$	5,214		$	288
(1) - Excludes acquired loans.
(2) - Mississippi includes Central and Southern Mississippi Regions.
(3) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
(4) - The allowance for loan losses balance related to the remaining loans acquired in the Bay Bank merger, which were transferred from acquired        impaired loans to LHFI during the second quarter of 2018, and the remaining loans acquired in the Heritage acquisition and the Reliance        merger, which were transferred from acquired impaired loans to LHFI during the third quarter of 2018.

See Notes to Consolidated Financials

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	CONSOLIDATED FINANCIAL  INFORMATION
	September 30, 2018
	(unaudited)

	Quarter Ended															Nine Months Ended
FINANCIAL RATIOS AND OTHER DATA	9/30/2018			6/30/2018			3/31/2018			12/31/2017			9/30/2017			9/30/2018			9/30/2017
Return on equity		9.00	%		10.09	%		9.50	%		3.96	%		8.69	%		9.53	%		7.73	%
Return on average tangible equity		12.26	%		13.77	%		13.05	%		5.60	%		11.95	%		13.02	%		10.68	%
Return on assets		1.07	%		1.19	%		1.10	%		0.45	%		0.99	%		1.12	%		0.88	%
Interest margin - Yield - FTE		4.16	%		4.06	%		3.91	%		3.90	%		3.86	%		4.05	%		3.80	%
Interest margin - Cost		0.58	%		0.50	%		0.45	%		0.41	%		0.39	%		0.51	%		0.32	%
Net interest margin - FTE		3.59	%		3.57	%		3.46	%		3.48	%		3.47	%		3.54	%		3.48	%
Efficiency ratio (1)		65.19	%		64.90	%		65.50	%		65.21	%		65.14	%		65.20	%		65.43	%
Full-time equivalent employees		2,889			2,890			2,905			2,893			2,878
CREDIT QUALITY RATIOS (2)
Net charge-offs/average loans		0.18	%		0.07	%		-0.03	%		0.43	%		-0.02	%		0.08	%		0.00	%
Provision for loan losses/average loans		0.39	%		0.15	%		0.19	%		0.26	%		0.17	%		0.24	%		0.15	%
Nonperforming loans/total loans (incl LHFS)		0.76	%		0.69	%		0.79	%		0.77	%		0.80	%
Nonperforming assets/total loans (incl LHFS)		1.17	%		1.14	%		1.25	%		1.27	%		1.37	%
Nonperforming assets/total loans (incl LHFS) +ORE		1.16	%		1.13	%		1.24	%		1.26	%		1.36	%
ALL/total loans (excl LHFS)		1.02	%		0.96	%		0.95	%		0.90	%		0.96	%
ALL-commercial/total commercial loans		1.13	%		1.05	%		1.04	%		0.95	%		1.02	%
ALL-consumer/total consumer and home mortgage loans		0.63	%		0.63	%		0.64	%		0.68	%		0.73	%
ALL/nonperforming loans		131.01	%		136.18	%		118.25	%		113.55	%		115.94	%
ALL/nonperforming loans (excl specifically reviewed impaired loans)		339.79	%		345.87	%		314.28	%		320.84	%		301.50	%
CAPITAL RATIOS
Total equity/total assets		11.90	%		11.71	%		11.66	%		11.39	%		11.40	%
Tangible equity/tangible assets		9.26	%		9.07	%		9.00	%		8.77	%		8.79	%
Tangible equity/risk-weighted assets		11.31	%		11.20	%		11.25	%		11.13	%		11.29	%
Tier 1 leverage ratio (3)		10.41	%		10.22	%		9.96	%		9.67	%		9.61	%
Common equity tier 1 capital ratio (3)		12.20	%		12.01	%		12.05	%		11.77	%		11.80	%
Tier 1 risk-based capital ratio (3)		12.76	%		12.58	%		12.62	%		12.33	%		12.37	%
Total risk-based capital ratio (3)		13.61	%		13.39	%		13.44	%		13.10	%		13.19	%
STOCK PERFORMANCE
Market value-Close	$	33.65		$	32.63		$	31.16		$	31.86		$	33.12
Book value	$	23.66		$	23.43		$	23.17		$	23.20		$	23.36
Tangible book value	$	17.86		$	17.61		$	17.34		$	17.35		$	17.49
(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.

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	NOTES TO CONSOLIDATED FINANCIALS
	September 30, 2018
	($ in thousands)
	(unaudited)

Note 1 – Subsequent Events

On October 10, 2018, Hurricane Michael struck the Florida Panhandle causing significant damages.  As of September 30, 2018, Trustmark had 1,786 loans with a balance of $239.5 million and exposure of $281.5 million in the Federal Emergency Management Agency (FEMA) designated disaster areas which includes 12 counties in Florida and 13 counties in Georgia.  Immediately following the storm, Trustmark initiated a process to identify all customers in the FEMA disaster areas.  Efforts are now ongoing to contact those borrowers to offer assistance as well as to establish reasonable estimates of uninsured damage and to adequately assess potential risk to the bank.  As of the date of this earnings release, Management continues to evaluate the impact of Hurricane Michael and is unable to provide a reasonable estimate of the financial impact on Trustmark’s consolidated financial statements.

Note 2 - Securities Available for Sale and Held to Maturity

The following table is a summary of the estimated fair value of securities available for sale and the amortized cost of securities held to maturity ($ in thousands):

	9/30/2018		6/30/2018		3/31/2018		12/31/2017		9/30/2017
SECURITIES AVAILABLE FOR SALE
U.S. Government agency obligations
Issued by U.S. Government agencies	$	32,371	$	36,414	$	40,381	$	45,285	$	49,994
Obligations of states and political subdivisions		57,264		65,348		75,013		79,229		89,144
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		65,847		60,245		62,457		65,746		60,902
Issued by FNMA and FHLMC		684,474		727,433		767,676		814,450		860,131
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		840,073		897,652		954,537		1,016,790		1,087,169
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		184,604		187,583		197,433		217,135		221,749
Total securities available for sale	$	1,864,633	$	1,974,675	$	2,097,497	$	2,238,635	$	2,369,089
SECURITIES HELD TO MATURITY
U.S. Government agency obligations
Issued by U.S. Government sponsored agencies	$	3,725	$	3,714	$	3,703	$	3,692	$	3,680
Obligations of states and political subdivisions		42,623		42,458		46,011		46,039		46,069
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		12,316		12,756		12,974		13,539		14,191
Issued by FNMA and FHLMC		119,040		123,377		128,517		133,975		139,172
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		600,635		627,470		653,325		678,926		708,715
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		165,544		176,070		179,445		180,315		190,456
Total securities held to maturity	$	943,883	$	985,845	$	1,023,975	$	1,056,486	$	1,102,283

At September 30, 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 $16.6 million ($12.4 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.

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	NOTES TO CONSOLIDATED FINANCIALS
	September 30, 2018
	($ in thousands)
	(unaudited)

Note 3 – Loan Composition

LHFI BY TYPE (excluding acquired loans)	9/30/2018			6/30/2018			3/31/2018			12/31/2017			9/30/2017
Loans secured by real estate:
Construction, land development and other land loans	$	1,031,491		$	1,038,745		$	986,188		$	987,624		$	950,144
Secured by 1-4 family residential properties		1,801,029			1,742,496			1,698,885			1,675,311			1,648,733
Secured by nonfarm, nonresidential properties		2,294,289			2,321,734			2,257,899			2,193,823			2,172,885
Other real estate secured		453,687			397,538			425,664			517,956			482,163
Commercial and industrial loans		1,565,922			1,572,764			1,561,967			1,570,345			1,568,588
Consumer loans		182,709			175,261			168,469			171,918			173,061
State and other political subdivision loans		929,178			925,452			936,014			952,483			936,614
Other loans		488,725			504,993			478,899			500,507			475,153
LHFI		8,747,030			8,678,983			8,513,985			8,569,967			8,407,341
Allowance for loan losses		(88,874	)		(83,566	)		(81,235	)		(76,733	)		(80,332	)
Net LHFI	$	8,658,156		$	8,595,417		$	8,432,750		$	8,493,234		$	8,327,009

ACQUIRED LOANS BY TYPE	9/30/2018			6/30/2018			3/31/2018			12/31/2017			9/30/2017
Loans secured by real estate:
Construction, land development and other land loans	$	6,657		$	11,900		$	17,575		$	23,586		$	29,384
Secured by 1-4 family residential properties		25,274			36,419			49,289			61,751			65,746
Secured by nonfarm, nonresidential properties		66,865			85,117			100,285			114,694			122,200
Other real estate secured		8,507			9,862			14,581			16,746			18,431
Commercial and industrial loans		16,610			20,485			21,808			31,506			34,124
Consumer loans		1,514			1,700			1,920			2,600			2,749
Other loans		7,188			7,624			10,018			10,634			11,123
Acquired loans		132,615			173,107			215,476			261,517			283,757
Allowance for loan losses, acquired loans		(1,714	)		(3,046	)		(4,294	)		(4,079	)		(5,768	)
Net acquired loans	$	130,901		$	170,061		$	211,182		$	257,438		$	277,989

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	NOTES TO CONSOLIDATED FINANCIALS
	September 30, 2018
	($ in thousands)
	(unaudited)

Note 3 – Loan Composition (continued)

	September 30, 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	$	1,031,491	$	335,338	$	79,432	$	333,614	$	19,974	$	263,133
Secured by 1-4 family residential properties		1,801,029		113,369		48,527		1,539,417		86,379		13,337
Secured by nonfarm, nonresidential properties		2,294,289		517,795		222,194		913,676		157,188		483,436
Other real estate secured		453,687		70,306		11,603		215,792		11,070		144,916
Commercial and industrial loans		1,565,922		197,278		17,065		783,217		378,433		189,929
Consumer loans		182,709		23,823		5,473		130,527		20,095		2,791
State and other political subdivision loans		929,178		87,807		42,144		586,996		28,355		183,876
Other loans		488,725		77,492		16,291		318,691		38,273		37,978
Loans	$	8,747,030	$	1,423,208	$	442,729	$	4,821,930	$	739,767	$	1,319,396
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION(1)
Lots	$	62,886	$	14,899	$	19,168	$	23,758	$	1,508	$	3,553
Development		58,520		7,621		7,663		29,243		680		13,313
Unimproved land		88,965		13,869		15,305		28,918		13,297		17,576
1-4 family construction		211,270		81,997		12,567		82,019		2,024		32,663
Other construction		609,850		216,952		24,729		169,676		2,465		196,028
Construction, land development and other land loans	$	1,031,491	$	335,338	$	79,432	$	333,614	$	19,974	$	263,133
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION(1)
Non-owner occupied:
Retail	$	391,342	$	139,168	$	54,539	$	100,954	$	24,585	$	72,096
Office		142,098		70,872		21,027		—		7,988		42,211
Nursing homes/senior living		205,700		33,075		—		166,435		6,190		—
Hotel/motel		255,710		74,450		51,916		53,097		34,156		42,091
Mini-storage		121,764		12,665		6,198		36,264		615		66,022
Industrial		102,793		20,577		7,081		17,630		2,259		55,246
Health care		52,464		22,594		748		26,310		—		2,812
Convenience stores		31,322		2,766		116		17,028		764		10,648
Other		149,606		5,297		8,530		87,415		22,425		25,939
Total non-owner occupied loans		1,452,799		381,464		150,155		505,133		98,982		317,065
Owner-occupied:
Office		164,111		29,926		28,039		60,073		6,588		39,485
Churches		92,797		19,036		6,656		45,949		16,262		4,894
Industrial warehouses		140,636		11,390		3,337		54,987		14,559		56,363
Health care		109,006		21,652		6,465		63,265		2,827		14,797
Convenience stores		115,278		14,613		12,956		63,379		1,229		23,101
Retail		86,833		24,035		7,746		33,231		3,686		18,135
Restaurants		35,360		2,712		1,529		27,224		1,832		2,063
Auto dealerships		31,240		8,480		149		13,600		9,011		—
Other		66,229		4,487		5,162		46,835		2,212		7,533
Total owner-occupied loans		841,490		136,331		72,039		408,543		58,206		166,371
Loans secured by nonfarm, nonresidential properties	$	2,294,289	$	517,795	$	222,194	$	913,676	$	157,188	$	483,436

(1) Excludes acquired loans.

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	NOTES TO CONSOLIDATED FINANCIALS
	September 30, 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															Nine Months Ended
	9/30/2018			6/30/2018			3/31/2018			12/31/2017			9/30/2017			9/30/2018			9/30/2017
Securities – taxable		2.24	%		2.25	%		2.26	%		2.21	%		2.23	%		2.25	%		2.26	%
Securities – nontaxable		3.66	%		3.66	%		3.68	%		4.35	%		4.34	%		3.67	%		4.35	%
Securities – total		2.27	%		2.29	%		2.30	%		2.27	%		2.29	%		2.28	%		2.33	%
Loans - LHFI & LHFS		4.72	%		4.60	%		4.45	%		4.38	%		4.36	%		4.59	%		4.29	%
Acquired loans		10.82	%		9.96	%		8.13	%		9.27	%		8.78	%		9.44	%		8.37	%
Loans - total		4.82	%		4.72	%		4.55	%		4.53	%		4.51	%		4.70	%		4.43	%
FF sold & rev repo		2.50	%		1.89	%		1.70	%		1.61	%		1.55	%		1.99	%		1.45	%
Other earning assets		2.20	%		2.27	%		1.77	%		2.34	%		1.67	%		2.07	%		1.65	%
Total earning assets		4.16	%		4.06	%		3.91	%		3.90	%		3.86	%		4.05	%		3.80	%
Interest-bearing deposits		0.73	%		0.60	%		0.49	%		0.40	%		0.35	%		0.61	%		0.29	%
FF pch & repo		1.54	%		1.42	%		0.97	%		0.93	%		0.94	%		1.34	%		0.77	%
Other borrowings		2.34	%		2.20	%		1.69	%		1.35	%		1.28	%		1.93	%		1.13	%
Total interest-bearing liabilities		0.80	%		0.69	%		0.61	%		0.56	%		0.53	%		0.70	%		0.44	%
Net interest margin		3.59	%		3.57	%		3.46	%		3.48	%		3.47	%		3.54	%		3.48	%
Net interest margin excluding acquired loans		3.50	%		3.46	%		3.37	%		3.35	%		3.34	%		3.44	%		3.36	%

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 third quarter of 2018, the yield on acquired loans totaled 10.82% and included $1.6 million in recoveries from the settlement of debt, which represented approximately 4.40% of the annualized total acquired loan yield.  Excluding acquired loans, the net interest margin totaled 3.50% for the third quarter of 2018, an increase of 4 basis points when compared to the second quarter of 2018, which was principally due to growth in the yield on the loans held for investment and held for sale portfolio, runoff of maturing investment securities, and favorable funding mix offset by higher costs of interest-bearing deposits.

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															Nine Months Ended
	9/30/2018			6/30/2018			3/31/2018			12/31/2017			9/30/2017			9/30/2018			9/30/2017
Mortgage servicing income, net	$	5,428		$	5,502		$	5,588		$	5,471		$	5,295		$	16,518		$	16,192
Change in fair value-MSR from runoff		(3,181	)		(3,334	)		(2,507	)		(2,605	)		(2,892	)		(9,022	)		(8,175	)
Gain on sales of loans, net		6,411			5,414			4,585			5,300			5,083			16,410			13,634
Other, net		(83	)		1,365			295			(1,120	)		(450	)		1,577			951
Mortgage banking income before hedge ineffectiveness		8,575			8,947			7,961			7,046			7,036			25,483			22,602
Change in fair value-MSR from market changes		2,615			1,743			9,521			1,168			(2,393	)		13,879			(2,218	)
Change in fair value of derivatives		(2,543	)		(1,644	)		(6,217	)		(1,930	)		(218	)		(10,404	)		3,234
Net positive (negative) hedge ineffectiveness		72			99			3,304			(762	)		(2,611	)		3,475			1,016
Mortgage banking, net	$	8,647		$	9,046		$	11,265		$	6,284		$	4,425		$	28,958		$	23,618

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	NOTES TO CONSOLIDATED FINANCIALS
	September 30, 2018
	($ in thousands)
	(unaudited)

Note 6 – Other Noninterest Income and Expense

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

	Quarter Ended															Nine Months Ended
	9/30/2018			6/30/2018			3/31/2018			12/31/2017			9/30/2017			9/30/2018			9/30/2017
Partnership amortization for tax credit purposes	$	(2,202	)	$	(2,202	)	$	(2,202	)	$	(2,478	)	$	(2,521	)	$	(6,606	)	$	(7,082	)
Increase in life insurance cash surrender value		1,805			1,770			1,738			1,816			1,813			5,313			5,309
Other miscellaneous income		1,755			2,847			1,523			3,343			4,448			6,125			13,041
Total other, net	$	1,358		$	2,415		$	1,059		$	2,681		$	3,740		$	4,832		$	11,268

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 $13 thousand of nontaxable proceeds related to bank-owned life insurance during the third quarter of 2018 compared to $1.2 million received during the second quarter of 2018.  Trustmark received no nontaxable proceeds related to bank-owned life insurance during the first quarter of 2018 compared to $1.7 million and $2.7 million during the fourth and third quarters of 2017, respectively.  These proceeds 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										Nine Months Ended
	9/30/2018		6/30/2018		3/31/2018		12/31/2017		9/30/2017		9/30/2018		9/30/2017
Loan expense	$	2,824	$	3,046	$	2,791	$	2,276	$	3,013	$	8,661	$	8,632
Amortization of intangibles		1,286		1,286		1,397		1,522		1,539		3,969		4,647
Defined benefit plans non-service cost reclass from salaries and employee benefits		885		885		885		968		966		2,655		4,754
Other miscellaneous expense		6,700		7,089		6,709		7,799		7,885		20,498		26,867
Total other expense	$	11,695	$	12,306	$	11,782	$	12,565	$	13,403	$	35,783	$	44,900

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.  

	TRUSTMARK CORPORATION AND SUBSIDIARIES
	NOTES TO CONSOLIDATED FINANCIALS
	September 30, 2018
	($ in thousands)
	(unaudited)

Note 7 – Income Taxes

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

	Quarter Ended											Nine Months Ended
	9/30/2018		6/30/2018		3/31/2018		12/31/2017			9/30/2017		9/30/2018		9/30/2017
Current	$	2,782	$	5,516	$	2,180	$	3,850		$	8,108	$	10,478	$	18,796
Deferred		1,612		700		3,300		4,300			600		5,612		4,800
Elimination of deferred tax valuation allowance		—		—		—		(8,650	)		—		—		—
Income tax provision before re-measurement		4,394		6,216		5,480		(500	)		8,708		16,090		23,596
Re-measurement of net deferred tax assets		—		—		—		25,619			—		—		—
Income tax provision	$	4,394	$	6,216	$	5,480	$	25,119		$	8,708	$	16,090	$	23,596

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 8 – 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
	September 30, 2018
	($ in thousands except per share data)
	(unaudited)

Note 8 – Non-GAAP Financial Measures (continued)

		Quarter Ended															Nine Months Ended
		9/30/2018			6/30/2018			3/31/2018			12/31/2017			9/30/2017			9/30/2018			9/30/2017
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity		$	1,597,588		$	1,581,906		$	1,572,514		$	1,579,633		$	1,577,867		$	1,584,095		$	1,554,566
Less:  Goodwill			(379,627	)		(379,627	)		(379,627	)		(379,627	)		(379,627	)		(379,627	)		(374,707	)
Identifiable intangible assets			(13,083	)		(14,380	)		(15,782	)		(17,196	)		(18,714	)		(14,405	)		(19,454	)
Total average tangible equity		$	1,204,878		$	1,187,899		$	1,177,105		$	1,182,810		$	1,179,526		$	1,190,063		$	1,160,405
PERIOD END BALANCES
Total shareholders' equity		$	1,599,604		$	1,584,072		$	1,570,137		$	1,571,701		$	1,582,535
Less:  Goodwill			(379,627	)		(379,627	)		(379,627	)		(379,627	)		(379,627	)
Identifiable intangible assets			(12,391	)		(13,677	)		(14,963	)		(16,360	)		(17,883	)
Total tangible equity	(a)	$	1,207,586		$	1,190,768		$	1,175,547		$	1,175,714		$	1,185,025
TANGIBLE ASSETS
Total assets		$	13,439,812		$	13,525,265		$	13,463,439		$	13,797,953		$	13,884,655
Less:  Goodwill			(379,627	)		(379,627	)		(379,627	)		(379,627	)		(379,627	)
Identifiable intangible assets			(12,391	)		(13,677	)		(14,963	)		(16,360	)		(17,883	)
Total tangible assets	(b)	$	13,047,794		$	13,131,961		$	13,068,849		$	13,401,966		$	13,487,145
Risk-weighted assets	(c)	$	10,681,621		$	10,633,646		$	10,449,352		$	10,566,818		$	10,498,582
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income		$	36,253		$	39,813		$	36,830		$	15,768		$	34,579		$	112,896		$	89,862
Plus: Intangible amortization net of tax			965			965			1,049			940			950			2,979			2,870
Net income adjusted for intangible amortization		$	37,218		$	40,778		$	37,879		$	16,708		$	35,529		$	115,875		$	92,732
Period end common shares outstanding	(d)		67,621,369			67,621,111			67,775,068			67,746,094			67,742,135
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity (1)			12.26	%		13.77	%		13.05	%		5.60	%		11.95	%		13.02	%		10.68	%
Tangible equity/tangible assets	(a)/(b)		9.26	%		9.07	%		9.00	%		8.77	%		8.79	%
Tangible equity/risk-weighted assets	(a)/(c)		11.31	%		11.20	%		11.25	%		11.13	%		11.29	%
Tangible book value	(a)/(d)*1,000	$	17.86		$	17.61		$	17.34		$	17.35		$	17.49
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity		$	1,599,604		$	1,584,072		$	1,570,137		$	1,571,701		$	1,582,535
AOCI-related adjustments (3)			79,946			73,739			67,886			48,248			27,825
CET1 adjustments and deductions:
Goodwill net of associated deferred tax liabilities (DTLs)			(365,823	)		(366,036	)		(366,248	)		(366,461	)		(359,841	)
Other adjustments and deductions for CET1 (2)			(10,868	)		(14,204	)		(12,233	)		(10,248	)		(11,359	)
CET1  capital	(e)		1,302,859			1,277,571			1,259,542			1,243,240			1,239,160
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	)
Additional tier 1 capital			60,000			60,000			59,286			59,998			59,529
Tier 1 capital		$	1,362,859		$	1,337,571		$	1,318,828		$	1,303,238		$	1,298,689
Common equity tier 1 capital ratio	(e)/(c)		12.20	%		12.01	%		12.05	%		11.77	%		11.80	%

(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
	September 30, 2018
	($ in thousands except per share data)
	(unaudited)

Note 8 – 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):

	Nine Months Ended
	9/30/2018					9/30/2017
	Amount			Diluted EPS		Amount			Diluted EPS
Net Income (GAAP)	$	112,896		$	1.668	$	89,862		$	1.324
Significant non-routine transactions (net of taxes):		��
Defined benefit plan termination		—			—		10,895			0.161
Reliance merger transaction expenses		—			—		1,999			0.029
Gain on life insurance proceeds		—			—		(4,894	)		(0.072	)
Net Income adjusted for significant
non-routine transactions (Non-GAAP)	$	112,896		$	1.668	$	97,862		$	1.442
	Reported			Adjusted		Reported			Adjusted
	(GAAP)			(Non-GAAP)		(GAAP)			(Non-GAAP)
Return on equity		9.53	%	n/a			7.73	%		8.42	%
Return on average tangible equity		13.02	%	n/a			10.68	%		11.61	%
Return on assets		1.12	%	n/a			0.88	%		0.96	%
n/a - not applicable