UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the fiscal year ended December 31, 2001
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-3683
TRUSTMARK CORPORATION
(Exact name of Registrant as specified in its charter)
MISSISSIPPI 64-0471500
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
248 East Capitol Street, Jackson, Mississippi 39201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (601) 354-5111
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value Nasdaq Stock Market
(Title of Class) (Name of Exchange on Which Registered)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes(X) No( )
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.( )
Based on the closing sales price of February 11, 2002, the aggregate market
value of the voting stock held by nonaffiliates of the Registrant was
$1,260,568,302.
As of February 28, 2002, there were issued and outstanding 63,469,771 shares of
the Registrant's Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference to Parts I, II
and III of the Form 10-K report: (1) Registrant's 2001 Annual Report to
Shareholders (Parts I and II), and (2) Proxy Statement for Registrant's Annual
Meeting of Shareholders dated March 8, 2002 (Part III).
TRUSTMARK CORPORATION
FORM 10-K
INDEX
PART I
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Securities Holders
PART II
Item 5. Market for the Registrant's Common Stock and Related
Shareholder Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants On Accounting
and Financial Disclosure
PART III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
SIGNATURES
EXHIBIT INDEX
PART I
ITEM 1. BUSINESS
GENERAL
Trustmark Corporation (Trustmark) is a multi-bank holding company headquartered
in Jackson, Mississippi, incorporated under the Mississippi Business Corporation
Act on August 5, 1968, and commenced doing business in November 1968. Through
its subsidiaries, Trustmark operates as a financial services organization
providing banking, investment and insurance solutions to corporate,
institutional and individual customers predominantly within the states of
Mississippi and Tennessee.
Trustmark National Bank (TNB), Trustmark's wholly owned subsidiary, accounts for
substantially all of the assets and revenues of Trustmark. Chartered by the
State of Mississippi in 1889, TNB is also headquartered in Jackson, Mississippi.
In addition to banking activities, TNB provides investment and insurance
products and services to its customers through two of its wholly owned
subsidiaries, Trustmark Financial Services, Inc. and The Bottrell Insurance
Agency, Inc.
Trustmark also engages in banking activities through its wholly owned
subsidiary, Somerville Bank & Trust Company (Somerville) in Somerville,
Tennessee. Somerville was acquired in a business combination during 2001 and
presently has five locations in Somerville, Hickory Withe and Rossville,
Tennessee. In addition to its banking subsidiaries, Trustmark also owns all of
the stock of F.S. Corporation and First Building Corporation, both nonbank
Mississippi corporations, which are not considered significant subsidiaries.
Neither Trustmark nor its subsidiaries have any foreign activities. As of
December 31, 2001, Trustmark and its subsidiaries employed approximately 2,456
full-time equivalent employees.
In 2001, Trustmark began implementation of a new brand position as a "trusted
financial partner" to reflect the move from a bank to a diversified financial
services organization. Trustmark engages in business through its three
reportable segments. Retail Banking provides banking services to individuals and
small business customers. Commercial Banking services corporate and middle
market clients. Financial Services offers a full range of services to meet
specialized financial needs of both individuals and corporate clients.
Retail Banking
Retail Banking provides a full range of financial products and services to
individuals and small business customers through Trustmark's 143 offices in
Mississippi and Tennessee. During 2001, Trustmark evaluated a number of its
major retail markets in an effort to effectively position its branch network
within each market. During the year, seven offices were renovated, three offices
were closed and two new offices were opened. Construction on two additional
offices is currently in process.
Trustmark made significant investments in electronic delivery channels during
the past year with the introduction of two Internet banking services created to
meet the needs of both consumers and businesses. TrustTouchWeb allows customers
to access their bank accounts at their convenience from any Internet-equipped
computer. TrustTouchWeb gives instant access to secured account information
around-the-clock and provides the ability to pay bills electronically and
transfer funds between accounts. TrustNetWeb, Trustmark's Internet banking
product for small to mid-sized businesses, provides the same convenience and
flexibility as TrustTouchWeb with additional features tailored specifically for
businesses.
Customers may access automated teller machines (ATM) through Trustmark's network
of 174 ATMs in 153 locations throughout Mississippi, Tennessee and Louisiana, in
addition to worldwide access through other ATM networks such as Plus, Pulse and
Cirrus. TrustTouch services allow customers to access detailed account
information, via a toll free number 24 hours a day, and TrustTouchpc services
offer customers the flexibility to access account information as well as the
ability to process transactions 24 hours a day via computer. Trustmark provides
Retail Banking customers with various personal loan products and small business
loans. Trustmark also lends to moderate and lower income homeowners through
Community Reinvestment Act programs such as the Downpayment Assistance Program
and Farmers Home Multi-Family Home Program.
Trustmark recognizes the significant impact small businesses have on its market
and have addressed these needs through the creation of a specialized Business
Banking group, which provides banking, investment and insurance solutions to
businesses with annual sales of up to $3 million. The Bank at Work program
serves as an alternative delivery channel that provides banking services on-site
to businesses employing over 100 people.
The collective results of these efforts, as well as many others, are reflected
in Trustmark's leading market position. From a deposit market share perspective,
Trustmark continues to have a significant presence in most of the markets it
serves. In fact, Trustmark's market share ranks first, second or third in 22 of
the 27 counties it serves.
Commercial Banking
Commercial Banking provides various financial products and services to corporate
and middle market clients through TNB's Commercial Lending, Commercial Real
Estate, Indirect Lending and Private Banking groups. Business Advantage is
designed to give businesses a total package of business savings, financial
management and convenient services in one comprehensive package, when combined
with a regular commercial or small business checking account. To better meet the
unique credit needs of larger businesses, the Commercial Lending group has
created relationship managers to work primarily with local middle market firms,
specialized industries, as well as, large regional and national firms.
Trustmark continues to be active in automobile finance directly throughout its
extensive branch network and through a long-established indirect network of
automobile dealers.
Financial Services
Financial Services includes trust and fiduciary services, discount brokerage
services, insurance services, as well as credit card and mortgage services. With
$7.3 billion in trust assets under administration, Trustmark's Trust Department
offers a full line of asset management and custodial services through its
Personal Trust, Employee Benefit and Corporate Trust groups. The Wealth
Management Group provides customized solutions for affluent customers by
integrating investment management, estate planning, insurance products and
private banking.
Trustmark's Correspondent Banking Department maintains relationships with
independent banks across the state, providing competitively priced cash
management services, financing and clearing services. Trustmark's public
services bankers offer cash management products, loans and investment services
tailored for the needs of public entities such as state agencies, municipal
government and school districts.
Included in Financial Services is Trustmark's proprietary mutual fund family,
Performance Funds. The seven mutual funds are designed and managed by Trustmark
investment professionals and are offered through Trustmark Financial Services,
Inc. (TFSI), TNB's full service brokerage subsidiary.
Through The Bottrell Insurance Agency, Inc. (Bottrell), TNB's insurance
subsidiary, Trustmark provides a variety of commercial insurance products as
well as personal life, health, property and casualty insurance. During 2001,
Bottrell expanded its product lines and distribution channels for personal
insurance services.
Additional information on Trustmark's segments can be found in Note 17, "Segment
Information," (page 35) included in Trustmark's 2001 Annual Report to
Shareholders and is incorporated herein by reference.
Business Combinations
In an effort to further enhance shareholder value, Trustmark has focused on
expanding its franchise through the selective acquisition of financial services
firms in higher growth markets within a 500-mile radius of Jackson. Trustmark
acquired two banking organizations in the dynamic Memphis, Tennessee, market in
2001.
On April 6, Trustmark acquired Barret Bancorp, Inc. (Barret), the holding
company for Peoples Bank (Peoples) in Barretville, Tennessee, and Somerville
Bank & Trust Company in Somerville, Tennessee, which collectively had 13 offices
and $508 million in total assets. The shareholders of Barret received
approximately 2.4 million shares of Trustmark's common stock as well as $51
million in cash. Peoples was merged into TNB, while Somerville remains a
separately chartered banking subsidiary and continues to operate and serve its
customers as such.
On December 14, Trustmark completed its acquisition of Nashoba Bancshares, Inc.
(Nashoba), paying Nashoba's shareholders $28 million in cash. Nashoba was the
holding company for Nashoba Bank and at the merger date had three offices and
$163 million in total assets. Like Peoples, Nashoba was merged into TNB. Both
business combinations were accounted for under the purchase method of accounting
and their results of operations, which were not material, have been included in
the financial statements from the merger dates.
Forward-Looking Statements
This report contains forward-looking statements with respect to the adequacy of
the allowance for loan losses; the effect of legal proceedings on Trustmark's
financial condition, results of operations and liquidity; and market risk
disclosures. Although Management believes that the expectations reflected in
such forward-looking statements are reasonable, it can give no assurance that
such expectations will prove to be correct. Such forward-looking statements are
subject to certain risks, uncertainties and assumptions. 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. Factors that could cause actual
results to differ materially from current expectations by Management include,
but are not limited to:
o Legislative or regulatory changes, including changes in accounting
standards;
o General economic conditions, either nationally or regionally;
o Changes in interest rates, yield curves and interest rate spread
relationships;
o Deposit attrition, customer loss or revenue loss in the ordinary course
of business;
o Increases in competitive pressure in the banking industry;
o Changes in the rate of inflation;
o Changes in securities markets;
o Changes in technology.
Forward-looking statements speak only as of the date they are made. Trustmark
does not undertake any obligation to update any forward-looking statement to
reflect subsequent circumstances or events.
COMPETITION
Changes in regulation, technology and product delivery systems have resulted in
an increasingly competitive environment. Trustmark and its subsidiaries compete
with other local, regional and national providers of banking, investment and
insurance products and services such as other bank holding companies, commercial
and state banks, savings and loan associations, consumer finance companies,
mortgage companies, insurance agencies, brokerage firms, credit unions and
financial service operations of major retailers. Trustmark competes in its
markets by offering quality and innovative products and services at competitive
prices. Within Trustmark's market area, none of the competitors are dominant.
SUPERVISION AND REGULATION
The following discussion sets forth certain material elements of the regulatory
framework applicable to bank holding companies and their subsidiaries and
provides certain specific information relevant to Trustmark.
General
Trustmark is a registered bank holding company under the Bank Holding Company
Act (BHC) of 1956, as amended. As such, Trustmark and its nonbank subsidiaries
are subject to the supervision, examination and reporting requirements of the
BHC Act and the regulations of the Federal Reserve Board. In addition, as part
of Federal Reserve policy, a bank holding company is expected to act as a source
of financial and managerial strength to subsidiary banks and to maintain
resources adequate to support each subsidiary bank. Under the BHC Act, bank
holding companies generally may not own or control more than 5% of the voting
shares or substantially all the assets of any company, including a bank, without
the Federal Reserve Board's prior approval. The BHC Act also prohibits the
acquisition by a bank holding company of more than 5% of the outstanding voting
shares of a bank located outside the state in which the operations of its
banking subsidiaries are principally conducted, unless such acquisition is
specifically authorized by statute of the state in which the bank to be acquired
is located. In addition, bank holding companies generally may engage, directly
or indirectly, only in banking and such other activities as are determined by
the Federal Reserve Board to be closely related to banking. Trustmark is also
subject to regulation by the State of Mississippi under its laws of
incorporation. In addition to the impact of regulation, Trustmark and its
subsidiaries may be affected by legislation which can change banking statutes in
substantial and unexpected ways, and by the actions of the Federal Reserve Board
as it attempts to control the money supply and credit availability in order to
influence the economy.
TNB is a national banking association and, as such, is subject to regulation
primarily by the Office of the Comptroller of the Currency (OCC) and,
secondarily, by the Federal Deposit Insurance Corporation (FDIC), the Federal
Reserve Board and the Mississippi Department of Banking and Consumer Finance.
Almost every area of the operations and financial condition of TNB is subject to
extensive regulation and supervision and to various requirements and
restrictions under federal and state law including loans, reserves, investments,
issuance of securities, establishment of branches, capital adequacy, liquidity,
earnings, dividends, management practices and the provision of services.
Somerville is a state-chartered commercial bank, subject to regulation primarily
by the FDIC and secondarily by the Tennessee Department of Financial
Institutions.
TNB's nonbanking subsidiaries are subject to a variety of state and federal
laws. TFSI, TNB's full service brokerage subsidiary, is subject to supervision
and regulation by the Securities and Exchange Commission (SEC), the National
Association of Securities Dealers, Inc., state securities regulators and the
various exchanges through which it conducts business. Bottrell is subject to the
insurance laws and regulations of the states in which it is active. The Federal
Reserve Board supervises Trustmark's nonbanking subsidiaries.
Trustmark is also under the jurisdiction of the SEC for matters relating to the
offering and sale of its securities. Trustmark is subject to the disclosure and
regulatory requirements of the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, as administered by the SEC.
Capital Adequacy
Trustmark is subject to capital requirements and guidelines imposed on bank
holding companies by the Federal Reserve Board. The OCC imposes similar capital
requirements and guidelines on TNB. Somerville is not discussed in this section
as it is not a significant subsidiary as defined by the SEC. These capital
guidelines involve quantitative and qualitative measures of assets, liabilities
and certain off-balance sheet instruments.
Trustmark and TNB are required to maintain Tier 1 and total capital equal to at
least 4% and 8% of their total risk-weighted assets, respectively. At December
31, 2001, Trustmark exceeded both requirements with Tier 1 capital and total
capital equal to 13.14% and 14.40% of its total risk-weighted assets,
respectively. At December 31, 2001, TNB also exceeded both requirements with
Tier 1 capital and total capital equal to 13.14% and 14.39% of its total
risk-weighted assets, respectively.
The Federal Reserve Board also requires bank holding companies to maintain a
minimum leverage ratio. The guidelines provide for a minimum leverage ratio of
3% for banks and bank holding companies that meet certain specified criteria,
including having the highest regulatory rating. At December 31, 2001, the
leverage ratios for Trustmark and TNB were 8.74% and 8.73%, respectively.
Failure to meet minimum capital requirements could subject a bank to a variety
of enforcement remedies. The Federal Deposit Insurance Corporation Improvement
Act of 1991 (FDICIA), among other things, identifies five capital categories for
insured depository institutions. These include well capitalized, adequately
capitalized, undercapitalized, significantly undercapitalized and critically
undercapitalized. FDICIA requires banking regulators to take prompt corrective
action whenever financial institutions do not meet minimum capital requirements.
Failure to meet the capital guidelines could also subject a depository
institution to capital raising requirements. In addition, a depository
institution is generally prohibited from making capital distributions, including
paying dividends, or paying management fees to a holding company if the
institution would thereafter be undercapitalized. As of December 31, 2001, the
most recent notification from the OCC categorized TNB as well capitalized based
on the prompt corrective action ratios and guidelines described above.
Payment of Dividends and Other Restrictions
There are various legal and regulatory provisions, which limit the amount of
dividends TNB can pay to Trustmark without regulatory approval. Approval of the
OCC is required if the total of all dividends declared in any calendar year
exceeds the total of its net income for that year combined with its retained net
income of the preceding two years. During the fourth quarter of 2001, TNB
applied for and received approval from its regulators to pay an additional $83.0
million in dividends to continue the capital management plan, as discussed in
Note 13, "Shareholders' Equity," included in Trustmark's 2001 Annual Report to
Shareholders. TNB will have available in 2002 approximately $16.5 million plus
its net income for that year to pay as dividends. In addition, subsidiary banks
of a bank holding company are subject to certain restrictions imposed by the
Federal Reserve Act on extensions of credit to the bank holding company or any
of its subsidiaries. Further, subsidiary banks of a bank holding company are
prohibited from engaging in certain tie-in arrangements in connection with any
extension of credit, lease or sale of property or furnishing of any services to
the bank holding company.
FDIC Insurance Assessments
The deposits of TNB are insured up to regulatory limits set by the FDIC and,
accordingly, are subject to deposit insurance assessments. The FDIC has the
authority to raise or lower assessment rates on insured deposits in order to
achieve certain designated ratios in the Bank Insurance Fund (BIF) and the
Savings Association Insurance Fund (SAIF) and to impose special assessments. The
FDIC applies a risk-based assessment system that places each financial
institution into one of nine categories based on capital levels and supervisory
evaluations provided to the FDIC by the institution's primary federal regulator.
Each institution's insurance assessment rate is then determined by the risk
category in which it is classified. At December 31, 2001, TNB's annual BIF and
SAIF assessment rates and Somerville's BIF rate were $0.0182 per $100 of insured
deposits.
Financial Modernization - The Gramm-Leach-Bliley Act
The Gramm-Leach-Bliley Financial Services Modernization Act of 1999 (Act)
affects every facet of a depository institution's operations. The Act does three
fundamental things that affect the banking industry: (a) repeals key provisions
of the Glass Steagall Act to permit commercial banks to affiliate with
securities firms, insurance companies and other financial service providers; (b)
establishes a statutory framework pursuant to which full affiliations can occur
between these entities; and (c) provides financial services organizations with
flexibility in structuring these new financial affiliations through a financial
holding company structure or a financial subsidiary.
As a result of the Act, banks are able to offer customers a wide range of
financial products and services without the restraints of previous legislation.
In addition, bank holding companies and other financial services providers have
been able to commence new activities and develop new affiliations much more
readily. The primary provisions of the Act related to the establishment of
financial holding companies and financial subsidiaries became effective on March
11, 2000. The Act authorizes national banks to own or control a "financial
subsidiary" that engages in activities that are not permissible for national
banks to engage in directly. The Act contains a number of provisions dealing
with insurance activities by bank subsidiaries. Generally, the Act affirms the
role of the states in regulating insurance activities, including the insurance
activities of financial subsidiaries of banks, but the Act also preempts certain
state laws. As a result of the Act, in 2001 TNB elected for Bottrell to become a
financial subsidiary. This enables TNB to engage in insurance agency activities,
through its financial subsidiary Bottrell, at any location.
The Act also imposed new requirements related to the privacy of customer
financial information. The Act requires financial institutions to disclose their
information sharing policies and procedures, and if the institution shares
information with nonaffiliated third parties, the institution must provide
customers with the opportunity to "opt out" of the sharing arrangements. The Act
also prohibits financial institutions from disclosing a customer's account
number to nonaffiliated third parties for use in marketing programs, including
telemarketing and direct mail programs. Finally, the Act prohibits most persons
from obtaining customer information through the use of false, fictitious or
fraudulent statements or representations. Trustmark has complied with these
requirements and recognizes the need for its customers' privacy.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of Trustmark Corporation (the Registrant) and its primary
bank subsidiary, Trustmark National Bank, including their ages, positions and
principal occupations for the last five years are as follows:
Richard G. Hickson, 57, President and Chief Executive Officer, Trustmark
Corporation and Vice Chairman and Chief Executive Officer, Trustmark National
Bank since May 1997.
T. H. Kendall III, 65, President and General Manager, The Gaddis Farms, Inc.
(Farming, Banking and Oil Production); Chairman of the Board, Trustmark National
Bank since February 1999; Chairman of the Board, Trustmark Corporation since
April 1999.
Harry M. Walker, 51, Secretary, Trustmark Corporation; President and Chief
Operating Officer - General Banking Group, Trustmark National Bank since March
1992.
Gerard R. Host, 47, Treasurer, Trustmark Corporation since September 1995;
President and Chief Operating Officer - Financial Services Group, Trustmark
National Bank since September 1999; Executive Vice President and Chief Financial
Officer from November 1995 to September 1999.
William O. Rainey, 62, Executive Vice President and Chief Banking Officer,
Trustmark National Bank since November 1991.
James S. Lenoir, 59, Executive Vice President and Chief Risk Officer, Trustmark
National Bank since March 1999; Executive Vice President and Chief Credit
Officer for Deposit Guaranty Corp. and Deposit Guaranty National Bank from
February 1983 to April 1998.
Thomas F. Darnell, 51, Executive Vice President and Chief Credit Officer,
Trustmark National Bank since October 1999; Senior Vice President and Manager of
Commercial Lending from January 1993 to October 1999.
George C. Gunn, 50, Executive Vice President and Commercial Banking Manager,
Trustmark National Bank since September 1999; Senior Vice President and Real
Estate Lending Manager from April 1987 to September 1999.
Thomas W. Mullen, 59, Executive Vice President and Chief Retail Administration
Officer, Trustmark National Bank since November 1991.
James M. Outlaw, Jr., 48, Executive Vice President and Chief Information
Officer, Trustmark National Bank since September 1999; Senior Vice President and
Operations Manager from February 1996 to September 1999.
Zach L. Wasson, Jr., 48, Executive Vice President and Chief Financial Officer,
Trustmark National Bank since September 1999; Senior Vice President and Chief
Investment Officer from November 1995 to September 1999.
STATISTICAL DISCLOSURES
The consolidated statistical disclosures for Trustmark Corporation and
subsidiaries are contained in the following Tables 1 through 12.
TRUSTMARK CORPORATION
STATISTICAL DISCLOSURES
TABLE 1 - COMPARATIVE AVERAGE BALANCES - YIELDS AND RATES
The table below shows the average balances for all assets and liabilities of
Trustmark and the interest income or expense associated with those assets and
liabilities. The yields or rates have been computed based upon the interest
income or expense for each of the last three years ended (tax equivalent basis -
$ in thousands):
Years Ended December 31,
----------------------------------------------------------
2001 2000
---------------------------- ----------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
---------- -------- ------ ---------- -------- ------
Assets
Interest-earning assets:
Federal funds sold and securities purchased
under reverse repurchase agreements $ 24,629 $ 921 3.74% $ 32,496 $ 2,155 6.63%
Securities available for sale:
Taxable 1,078,588 68,174 6.32% 1,060,986 71,876 6.77%
Nontaxable 91,750 7,289 7.94% 68,754 5,765 8.38%
Securities held to maturity:
Taxable 835,946 55,797 6.67% 938,793 61,866 6.59%
Nontaxable 90,867 7,269 8.00% 77,015 6,086 7.90%
Loans, net of unearned income 4,302,485 348,245 8.09% 4,079,870 349,580 8.57%
---------- -------- ---------- --------
Total interest-earning assets 6,424,265 487,695 7.59% 6,257,914 497,328 7.95%
Cash and due from banks 258,776 268,544
Other assets 376,469 320,329
Allowance for loan losses (71,650) (65,758)
---------- ----------
Total Assets $6,987,860 $6,781,029
========== ==========
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits $ 795,890 $ 19,864 2.50% $ 661,889 $ 23,641 3.57%
Savings deposits 637,973 7,759 1.22% 640,557 11,189 1.75%
Time deposits 1,895,677 98,733 5.21% 1,745,591 91,499 5.24%
Federal funds purchased and securities sold
under repurchase agreements 1,117,059 42,390 3.79% 1,212,016 68,618 5.66%
Short-term borrowings 495,607 22,167 4.47% 878,275 56,837 6.47%
Long-term FHLB advances 351,301 18,329 5.22% 51,230 3,412 6.66%
---------- -------- ---------- ---------
Total interest-bearing liabilities 5,293,507 209,242 3.95% 5,189,558 255,196 4.92%
-------- ---------
Noninterest-bearing demand deposits 966,437 880,020
Other liabilities 72,478 62,429
Shareholders' equity 655,438 649,022
---------- ----------
Total Liabilities and Shareholders' Equity $6,987,860 $6,781,029
========== ==========
Net Interest Margin 278,453 4.33% 242,132 3.87%
Less tax equivalent adjustments:
Investments 5,095 4,148
Loans 4,780 4,421
-------- --------
Net Interest Margin per Annual Report $268,578 $233,563
======== ========
Year Ended December 31,
----------------------------
1999
----------------------------
Average Yield/
Balance Interest Rate
---------- -------- ------
Assets
Interest-earning assets:
Federal funds sold and securities purchased
under reverse repurchase agreements $ 159,566 $ 7,917 4.96%
Securities available for sale:
Taxable 747,885 46,997 6.28%
Nontaxable - - -
Securities held to maturity:
Taxable 1,178,849 73,813 6.26%
Nontaxable 122,931 10,048 8.17%
Loans, net of unearned income 3,833,333 317,158 8.27%
---------- --------
Total interest-earning assets 6,042,564 455,933 7.55%
Cash and due from banks 296,675
Other assets 304,968
Allowance for loan losses (65,856)
----------
Total Assets $6,578,351
==========
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits $ 719,981 $ 19,128 2.66%
Savings deposits 684,368 11,795 1.72%
Time deposits 1,558,788 75,828 4.86%
Federal funds purchased and securities sold
under repurchase agreements 1,491,515 70,847 4.75%
Short-term borrowings 522,243 27,481 5.26%
Long-term FHLB advances - - -
---------- --------
Total interest-bearing liabilities 4,976,895 205,079 4.12%
--------
Noninterest-bearing demand deposits 880,468
Other liabilities 64,538
Shareholders' equity 656,450
----------
Total Liabilities and Shareholders' Equity $6,578,351
==========
Net Interest Margin 250,854 4.15%
Less tax equivalent adjustments:
Investments 3,517
Loans 3,907
--------
Net Interest Margin per Annual Report $243,430
========
Nonaccruing loans have been included in the average loan balances and interest
collected prior to these loans having been placed on nonaccrual has been
included in interest income. Loan fees included in interest income are
immaterial. Interest income and average yield on tax-exempt assets have been
calculated on a fully tax equivalent basis using a tax rate of 35% for each of
the three years presented. Certain reclassifications have been made to the 2000
and 1999 amounts to conform to the 2001 presentation.
TABLE 2 - VOLUME AND YIELD/RATE VARIANCE ANALYSIS
The table below shows the change from year to year for each component of the tax
equivalent net interest margin in the amount generated by volume changes and the
amount generated by changes in the yield or rate (tax equivalent basis - $ in
thousands):
2001 Compared to 2000 2000 Compared to 1999
Increase (Decrease) Due To: Increase (Decrease) Due To:
-------------------------------------- --------------------------------------
Yield/ Yield/
Volume Rate Net Volume Rate Net
---------- ---------- ---------- ---------- ---------- ----------
Interest earned on:
Federal funds sold and securities
purchased under reverse repurchase
agreements $ (441) $ (793) $ (1,234) $ (7,796) $ 2,034 $ (5,762)
Securities available for sale:
Taxable 1,168 (4,870) (3,702) 20,970 3,909 24,879
Nontaxable 1,841 (317) 1,524 - 5,765 5,765
Securities held to maturity:
Taxable (6,816) 747 (6,069) (15,671) 3,724 (11,947)
Nontaxable 1,105 78 1,183 (3,640) (322) (3,962)
Loans, net of unearned income 18,668 (20,003) (1,335) 20,730 11,692 32,422
-------- -------- --------- -------- -------- --------
Total interest-earning assets 15,525 (25,158) (9,633) 14,593 26,802 41,395
Interest paid on:
Interest-bearing demand deposits 4,188 (7,965) (3,777) (1,639) 6,152 4,513
Savings deposits (45) (3,385) (3,430) (799) 193 (606)
Time deposits 7,765 (531) 7,234 9,484 6,187 15,671
Federal funds purchased and securities
sold under repurchase agreements (5,028) (21,200) (26,228) (14,525) 12,296 (2,229)
Short-term borrowings (20,281) (14,389) (34,670) 21,950 7,406 29,356
Long-term FHLB advances 15,809 (892) 14,917 - 3,412 3,412
-------- --------- -------- -------- -------- --------
Total interest-bearing liabilities 2,408 (48,362) (45,954) 14,471 35,646 50,117
-------- -------- -------- -------- -------- --------
Change in net interest income on a
tax equivalent basis $ 13,117 $ 23,204 $ 36,321 $ 122 $ (8,844) $ (8,722)
======== ======== ======== ======== ======== ========
The change in interest due to both volume and yield/rate has been allocated to
change due to volume and change due to yield/rate in proportion to the absolute
value of the change in each. Tax-exempt income has been adjusted to a tax
equivalent basis using a tax rate of 35% for 2001, 2000 and 1999. The balances
of nonaccrual loans and related income recognized have been included for
purposes of these computations.
TABLE 3 - SECURITIES AVAILABLE FOR SALE AND SECURITIES HELD TO MATURITY
The table below indicates amortized costs of securities available for sale and
held to maturity by type at year end for each of the last three years ($ in
thousands):
December 31,
--------------------------------------
2001 2000 1999
---------- ---------- ----------
Securities available for sale
U.S. Treasury and U.S. Government agencies $ 275,250 $ 398,930 $ 387,465
Obligations of states and political subdivisions 94,271 65,529 -
Mortgage-backed securities 616,044 596,884 347,817
---------- ---------- ----------
Total debt securities 985,565 1,061,343 735,282
Equity securities 46,946 41,642 44,109
---------- ---------- ----------
Total securities available for sale $1,032,511 $1,102,985 $ 779,391
========== ========== ==========
Securities held to maturity
U.S. Treasury and U.S. Government agencies $ - $ - $ 188,792
Obligations of states and political subdivisions 184,368 229,684 270,566
Mortgage-backed securities 607,584 775,671 931,523
Other securities 100 100 100
---------- ---------- ----------
Total securities held to maturity $ 792,052 $1,005,455 $1,390,981
========== ========== ==========
TABLE 4 - MATURITY DISTRIBUTION AND YIELDS OF SECURITIES AVAILABLE FOR SALE
AND SECURITIES HELD TO MATURITY
The following table details the maturities of securities available for sale and
held to maturity using amortized cost at December 31, 2001, and the weighted
average yield for each range of maturities (tax equivalent basis - $ in
thousands):
Maturing
-------------------------------------------------------------------------------
After One, After Five,
Within But Within But Within After
One Year Yield Five Years Yield Ten Years Yield Ten Years Yield Total
-------- ----- ---------- ----- ----------- ----- --------- ----- ----------
Securities available for sale
U.S. Treasury and U.S.
Government agencies $ 47,240 6.36% $ 82,931 6.41% $ 134,408 3.63% $ 10,671 7.12% $ 275,250
Obligations of states and
political subdivisions 16,275 7.66% 40,654 7.40% 35,131 7.87% 2,211 6.57% 94,271
Mortgage-backed securities 179 8.14% 8,075 6.86% 40,579 6.70% 567,211 7.08% 616,044
-------- ---------- ---------- --------- ----------
Total debt securities $ 63,694 6.70% $ 131,660 6.74% $ 210,118 4.93% $ 580,093 7.08% 985,565
======== ========== ========== =========
Equity securities 46,946
----------
Total securities available for sale $1,032,511
==========
Securities held to maturity
Obligations of states and
political subdivisions $ 16,999 6.80% $ 58,928 7.00% $ 52,593 7.03% $ 55,848 7.80% $ 184,368
Mortgage-backed securities - - 1,574 6.50% 64,531 6.69% 541,479 6.62% 607,584
Other securities - - 100 7.50% - - - - 100
-------- ---------- ---------- --------- ----------
Total securities held to maturity $ 16,999 6.80% $ 60,602 6.99% $ 117,124 6.84% $ 597,327 6.73% $ 792,052
======== ========== ========== ========= ==========
Due to the nature of mortgage related securities, the actual maturities of these
investments can be substantially shorter than their contractual maturity.
Management believes the actual weighted average maturity of the entire
mortgage-related portfolio to be approximately 3.04 years.
As of December 31, 2001 Trustmark held securities of one issuer with a carrying
value exceeding ten percent of total stockholders' equity. General obligations
of the State of Mississippi with a carrying value of $63.5 million and an
approximate fair value of $66.2 million were held on December 31, 2001. Included
in the aforementioned State of Mississippi holdings are bonds with an aggregate
carrying value of $16.7 million and an approximate fair value of $18.3 million,
which are known to be prerefunded or escrowed to maturity by U.S. Government
securities.
TABLE 5 - COMPOSITION OF THE LOAN PORTFOLIO
The table below shows the carrying value of the loan portfolio at the end of
each of the last five years ($ in thousands):
December 31,
--------------------------------------------------------------------------
2001 2000 1999 1998 1997
---------- ---------- ---------- ---------- ----------
Real estate loans:
Construction and land development $ 401,744 $ 309,532 $ 297,231 $ 251,654 $ 195,728
Secured by 1-4 family residential properties 1,385,490 1,250,767 1,175,775 1,106,735 699,486
Secured by nonfarm, nonresidential properties 703,674 602,920 555,255 508,194 446,492
Other real estate loans 103,305 86,046 78,090 72,445 70,592
Loans to finance agricultural production 33,509 38,369 35,412 39,682 38,466
Commercial and industrial 788,982 819,948 824,017 721,483 702,361
Loans to individuals for personal expenditures 876,582 809,808 841,059 773,578 701,132
Obligations of states and political subdivisions 166,342 164,059 151,759 141,152 79,178
Loans for purchasing or carrying securities 10,691 11,127 16,160 24,854 17,622
Other loans 54,047 51,357 40,177 62,541 32,598
---------- ---------- ---------- ---------- ----------
Loans, net of unearned income $4,524,366 $4,143,933 $4,014,935 $3,702,318 $2,983,655
========== ========== ========== ========== ==========
TABLE 6 - LOAN MATURITIES AND SENSITIVITY TO CHANGES IN INTEREST RATES
The table below shows the amounts of loans in certain categories outstanding as
of December 31, 2001, which, based on the remaining scheduled repayments of
principal, are due in the periods indicated ($ in thousands):
Maturing
------------------------------------
One Year
Within Through After
One Year Five Five
or Less Years Years Total
---------- --------- --------- ----------
Construction and land development $ 224,441 $ 177,303 $ - $ 401,744
Other loans secured by real estate (excluding
loans secured by 1-4 family residential
properties) 286,179 373,295 147,505 806,979
Commercial and industrial 503,452 245,893 39,637 788,982
Other loans (excluding loans to individuals) 81,087 52,641 130,861 264,589
---------- --------- --------- ----------
Total $1,095,159 $ 849,132 $ 318,003 $2,262,294
========== ========= ========= ==========
The following table shows all loans in certain categories due after one year
classified according to their sensitivity to changes in interest rates ($ in
thousands):
Maturing
----------------------
One Year
Through After
Five Five
Years Years Total
--------- --------- ----------
Above loans due after one year which have:
Predetermined interest rates $ 703,266 $ 263,205 $ 966,471
Floating interest rates 145,866 54,798 200,664
--------- --------- ----------
Total $ 849,132 $ 318,003 $1,167,135
========= ========= ==========
TABLE 7 - NONPERFORMING ASSETS AND PAST DUE LOANS
The table below shows Trustmark's nonperforming assets and past due loans at the
end of each of the last five years ($ in thousands):
December 31,
-------------------------------------------------------
2001 2000 1999 1998 1997
-------- -------- -------- -------- --------
Loans accounted for on a nonaccrual basis $ 36,901 $ 15,958 $ 16,671 $ 13,253 $ 14,242
Other real estate (ORE) 5,110 2,280 1,987 1,859 2,340
-------- -------- -------- -------- --------
Total nonperforming assets $ 42,011 $ 18,238 $ 18,658 $ 15,112 $ 16,582
======== ======== ======== ======== ========
Accruing loans past due 90 days or more $ 2,740 $ 2,494 $ 2,043 $ 2,431 $ 2,570
======== ======== ======== ======== ========
Nonperforming assets/total loans and ORE 0.93% 0.44% 0.46% 0.41% 0.56%
======== ======== ======== ======== ========
A loan is classified as nonaccrual and the accrual of interest on such loan is
discontinued if: (1) the loan is maintained on a cash basis because of a
deterioration in the financial condition of the borrower, (2) payment in full of
the principal and interest is not expected or (3) principal or interest has been
in default for a period of 90 days or more unless the loan is both well secured
and in the process of collection. When a loan is placed in nonaccrual status,
unpaid interest credited to income in the current and prior years is reversed
against interest income. Interest received on nonaccrual loans is applied
against principal. Generally, loans may be restored to accrual status when (1)
none of the principal and interest is due and unpaid and the bank expects
repayment of the remaining contractual principal and interest or (2) when it
otherwise becomes well secured and in the process of collection. Loans are
generally measured for impairment based on the present value of the loan's
effective interest rate, except when foreclosure or liquidation is probable or
when the primary source of repayment is provided by real estate collateral. The
policy for recognizing income on impaired loans is consistent with the
nonaccrual policy.
At December 31, 2001, Management is not aware of any additional credits, other
than those identified above, where serious doubts as to the repayment of
principal and interest exist. There are no interest-earning assets which would
be required to be disclosed above if those assets were loans. Trustmark had no
loan concentrations greater than ten percent of total loans other than those
loan categories shown in Table 5.
Explanation of the changes in 2001 can be found in the table captioned
"Nonperforming Assets" and the related discussion (page 48) included in the
Registrant's 2001 Annual Report to Shareholders and is incorporated herein by
reference.
TABLE 8 - ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
The table below summarizes Trustmark's loan loss experience for each of the last
five years ($ in thousands):
Years Ended December 31,
--------------------------------------------------------
2001 2000 1999 1998 1997
-------- -------- -------- -------- --------
Balance at beginning of period $ 65,850 $ 65,850 $ 66,150 $ 64,100 $ 63,000
Loans charged off:
Real estate loans 4,609 2,176 1,953 1,121 503
Loans to finance agricultural production 288 107 243 73 79
Commercial and industrial 4,317 3,228 3,242 2,561 1,406
Loans to individuals for personal expenditures 10,982 9,470 7,863 6,698 6,353
All other loans 2,502 2,417 1,685 1,819 619
-------- -------- -------- -------- --------
Total charge-offs 22,698 17,398 14,986 12,272 8,960
Recoveries on loans previously charged off:
Real estate loans 6 145 156 72 92
Loans to finance agricultural production - - - 2 7
Commercial and industrial 721 1,177 791 1,181 877
Loans to individuals for personal expenditures 4,774 3,967 3,319 2,960 2,283
All other loans 2,103 1,708 1,348 1,036 775
-------- -------- -------- -------- --------
Total recoveries 7,604 6,997 5,614 5,251 4,034
-------- -------- -------- -------- --------
Net charge-offs (15,094) (10,401) (9,372) (7,021) (4,926)
Additions to allowance charged to operating expense 13,200 10,401 9,072 7,771 4,682
Allowance applicable to loans of acquired banks 11,578 - - 1,300 1,344
-------- -------- -------- -------- --------
Balance at end of period $ 75,534 $ 65,850 $ 65,850 $ 66,150 $ 64,100
======== ======== ======== ======== ========
Percentage of net charge-offs during period to
average loans outstanding during the period 0.35% 0.25% 0.24% 0.21% 0.18%
======== ======== ======== ======== ========
The allowance for loan losses is maintained at a level believed adequate by
Management to absorb estimated probable losses in the loan portfolio, in
addition to losses associated with off-balance sheet credit instruments such as
letters of credit and unfunded lines of credit. Management's periodic evaluation
of the adequacy of the allowance is based on identified loan impairments,
Trustmark's past loan loss expericence, known and inherent risks in the
portfolio, adverse situations that may affect the borrower's ability to repay
(including the timing of future payments), the estimated value of any underlying
collateral, composition of the loan portfolio, current economic conditions and
other relevant factors. This evaluation is inherently subjective as it requires
material estimates, including the amounts and timing of future cash flows
expected to be received on impaired loans, that may be susceptible to
significant change.
TABLE 9 - ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
The following table is a summary by allocation category of Trustmark's allowance
for loan losses at December 31, 2001. These allocations were determined based
upon Management's analysis of the various types of risk associated with
Trustmark's loan portfolio. A discussion of Management's methodology for
performing the analysis follows the table ($ in thousands):
Allocation for pools of risk-rated loans $ 40,248
Additional allocation for risk-rated loans 3,600
Allocation for selected industries 4,582
General allocation for all other loans 21,029
Allocation for available lines of credit and letters of credit 2,004
Unallocated 4,071
--------
Total $ 75,534
========
The allowance for loan losses is maintained at a level believed adequate by
Management to absorb probable losses in the loan portfolio, in addition to
losses associated with off-balance sheet credit instruments such as letters of
credit and unfunded lines of credit. The adequacy of the allowance is reviewed
monthly utilizing the criteria specified in the Office of the Comptroller of the
Currency's Handbook "Allowance for Loan and Lease Losses", as well as additional
guidance provided in the Interagency Policy Statement. Loss percentages are
uniformly applied to pools of risk-rated loans within the commercial portfolio.
These percentages are determined based on migration analysis, previously
established floors for each category and economic factors. In addition,
relationships of $500,000 or more which are risk-rated as other loans especially
mentioned or substandard and all which are risk-rated doubtful are reviewed by
Trustmark's Asset Review Department staff to determine if standard percentages
appear to be sufficient to cover probable losses in each category. In the event
that the percentages on any particular lines are determined to be insufficient,
additional allocations are made based upon recommendations of lending, credit
and Asset Review Department personnel.
Industry allocations are made based on concentrations of credit within the
portfolio, as well as designation of certain other industries by Management.
The general allocation is included in the allowance to cover probable loan
losses within portions of the loan portfolio not addressed in the preceding
allocations. The types of loans included in the general allocation are
residential mortgage loans, direct and indirect consumer loans, credit card
loans and overdrafts. The actual allocation amount is based upon the more
conservative of either the loss experience within these categories during the
year, the historical 5-year moving average for each category, or previously
established floors.
The amount included in the allocation for lines of credit and letters of credit
consists of a percentage of the unused portion of those lines and the amount
outstanding in letters of credit. Percentages, which are the same as those
applied to the funded portions of the commercial and retail loan portfolios, are
applied to cover any potential losses in these off-balance sheet categories.
As the review of the allowance for loan losses involves a significant degree of
judgment by Management and is imprecise by nature, the unallocated $4.1 million
relates to issues that cannot be measured on a quantitative basis over a
prolonged period of time.
TABLE 10 - TIME DEPOSITS OF $100,000 OR MORE
The table below shows maturities on outstanding time deposits of $100,000 or
more at December 31, 2001 ($ in thousands):
3 months or less $ 249,662
Over 3 months through 6 months 91,180
Over 6 months through 12 months 111,444
Over 12 months 95,496
---------
Total $ 547,782
=========
TABLE 11 - SELECTED RATIOS
The following ratios are presented for each of the last three years:
2001 2000 1999
------ ------ ------
Return on average assets 1.59% 1.50% 1.49%
Return on average equity 16.98% 15.68% 14.93%
Dividend payout ratio 32.27% 34.00% 32.35%
Equity to assets ratio 9.38% 9.57% 9.98%
TABLE 12 - SHORT-TERM BORROWINGS
The table below presents certain information concerning Trustmark's short-term
borrowings for each of the last three years ($ in thousands):
2001 2000 1999
---------- ---------- ----------
Federal funds purchased and securities sold
under repurchase agreements:
Amount outstanding at end of period $1,037,506 $1,255,013 $1,377,420
Weighted average interest rate at end of period 1.59% 5.70% 4.51%
Maximum amount outstanding at any
month end during each period $1,318,720 $1,466,362 $1,630,136
Average amount outstanding during each period $1,117,059 $1,212,016 $1,491,515
Weighted average interest rate during each period 3.79% 5.66% 4.75%
2001 2000 1999
---------- ---------- ----------
Short-term borrowings:
Amount outstanding at end of period $ 558,687 $ 632,964 $ 733,024
Weighted average interest rate at end of period 2.32% 6.55% 5.86%
Maximum amount outstanding at any
month end during each period $ 984,297 $1,138,874 $ 757,854
Average amount outstanding during each period $ 495,607 $ 878,275 $ 522,243
Weighted average interest rate during each period 4.47% 6.47% 5.26%
ITEM 2. PROPERTIES
Trustmark's principal offices are housed in its complex located in downtown
Jackson, Mississippi and owned by TNB. Approximately 209,000 square feet, or
79%, of the available space in the main office building is allocated to bank use
with the remainder occupied by tenants on a lease basis. Trustmark, through its
two banking subsidiaries, also operates 113 full-service branches, 21
limited-service branches, 9 in-store branches and an ATM network which includes
99 ATMs at on-premise locations and 75 ATMs located at off-premise sites.
Trustmark leases 72 of its 197 locations with the remainder being owned.
ITEM 3. LEGAL PROCEEDINGS
Trustmark and its subsidiaries are parties to lawsuits and other claims that
arise in the ordinary course of business; some of the lawsuits assert claims
related to the lending, collection, servicing, investment, trust and other
business activities; and some of the lawsuits allege substantial claims for
damages. The cases are being vigorously contested. In the regular course of
business, Management evaluates estimated losses or costs related to litigation,
and provision is made for anticipated losses whenever Management believes that
such losses are probable and can be reasonably estimated. At the present time,
Management believes, based on the advice of legal counsel, that the final
resolution of pending legal proceedings will not have a material impact on
Trustmark's consolidated financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to Trustmark's shareholders during the fourth
quarter of 2001.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS
Trustmark's common stock is listed for trading on the Nasdaq Stock Market. At
March 1, 2002, there were approximately 5,000 shareholders of record of
Trustmark's common stock. Other information required by this item can be found
in Note 13, "Shareholders' Equity," (pages 31-32) and the table captioned
"Principal Markets and Prices of Trustmark's Stock" (page 40) included in the
Registrant's 2001 Annual Report to Shareholders and is incorporated herein by
reference.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item can be found in the table captioned
"Selected Financial Data" (page 39) included in the Registrant's 2001 Annual
Report to Shareholders and is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The information required by this item can be found in "Management's Discussion
and Analysis of Financial Condition and Results of Operations" (pages 41-54)
included in the Registrant's 2001 Annual Report to Shareholders and is
incorporated herein by reference.
Critical Accounting Policies
The accounting principles followed by Trustmark and the methods of applying
these principles conform with accounting principles generally accepted in the
United States and with general practices followed by the banking industry.
Critical accounting policies relate to securities, loans, allowance for loan
losses, intangibles, derivatives and hedging. These policies, which
significantly affect the determination of financial position, results of
operations and cash flows, are summarized in Note 1, "Basis of Financial
Statement Presentation, Accounting Policies and Recent Pronouncements" (pages
18-22), in the "Notes to Consolidated Financial Statements," included in the
Registrant's 2001 Annual Report to Shareholders and is incorporated herein by
reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item can be found in "Management's Discussion
and Analysis of Financial Condition and Results of Operations" (pages 50-54)
included in the Registrant's 2001 Annual Report to Shareholders and is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements of Trustmark Corporation and subsidiaries,
the accompanying Notes to Consolidated Financial Statements and the Report of
Independent Public Accountants are contained in the Registrant's 2001 Annual
Report to Shareholders (pages 13-38) and are incorporated herein by reference.
The table captioned "Summary of Quarterly Results of Operations" (page 40) is
also included in the Registrant's 2001 Annual Report of Shareholders and is
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There has been no change of accountants within the two-year period prior to
December 31, 2001.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information on the directors of the Registrant can be found in Section II,
"Election of Directors," and Section VII, "Section 16(a) Beneficial Ownership
Reporting Compliance," contained in Trustmark Corporation's Proxy Statement
(pages 1-2 and 10, respectively) dated March 8, 2002, and is incorporated herein
by reference. Information on the Registrant's executive officers is included in
Part I, pages 7-8 of this report.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this item can be found in Section V, "Compensation of
Executive Officers and Directors," contained in Trustmark Corporation's Proxy
Statement (pages 6-9) dated March 8, 2002, and is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding security ownership of certain beneficial owners and
Management can be found in Section IV, "Ownership of Equity Securities by
Certain Beneficial Owners and Management," contained in Trustmark Corporation's
Proxy Statement (pages 4-5) dated March 8, 2002, and is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related transactions can be
found in Section VI, "Transactions with Management," contained in Trustmark
Corporation's Proxy Statement (page 10) dated March 8, 2002, and is incorporated
herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
A-1. Financial Statements
The report of Arthur Andersen LLP, independent auditors, and the following
consolidated financial statements of Trustmark Corporation and subsidiaries are
included in the Registrant's 2001 Annual Report to Shareholders and are
incorporated into Part II, Item 8 herein by reference:
Report of Independent Public Accountants
Consolidated Balance Sheets as of December 31, 2001 and 2000
Consolidated Statements of Income for the Years Ended December 31, 2001,
2000 and 1999
Consolidated Statements of Changes in Shareholders' Equity for the Years
Ended December 31, 2001, 2000 and 1999
Consolidated Statements of Cash Flows for the Years Ended December 31,
2001, 2000 and 1999
Notes to Consolidated Financial Statements (Notes 1 through 18)
Selected Financial Data, Summary of Quarterly Results of Operations, and
Principal Markets and Prices of Trustmark's Stock
A-2. Financial Statement Schedules
The schedules to the consolidated financial statements set forth by Article 9 of
Regulation S-X are not required under the related instructions or are
inapplicable and therefore have been omitted.
B. Reports on Form 8-K
There were no reports on Form 8-K filed during the fourth quarter of 2001.
C. Exhibits
The exhibits listed in the Exhibit Index are filed herewith or are incorporated
herein by reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
TRUSTMARK CORPORATION
BY: /s/ Richard G. Hickson BY: /s/ Gerard R. Host
------------------------------- ---------------------------------
Richard G. Hickson Gerard R. Host
President & Chief Treasurer (Principal
Executive Officer Financial Officer)
DATE: March 12, 2002 DATE: March 12, 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated:
DATE: March 12, 2002 BY: /s/ J. Kelly Allgood
---------------------------------
J. Kelly Allgood, Director
DATE: March 12, 2002 BY: /s/ Reuben V. Anderson
---------------------------------
Reuben V. Anderson, Director
DATE: March 12, 2002 BY: /s/ Adolphus B. Baker
---------------------------------
Adolphus B. Baker, Director
DATE: BY:
---------------------------------
John L. Black, Jr., Director
DATE: March 12, 2002 BY: /s/ Harry H. Bush
---------------------------------
Harry H. Bush, Director
DATE: March 12, 2002 BY: /s/ William C. Deviney, Jr.
---------------------------------
William C. Deviney, Jr., Director
DATE: March 12, 2002 BY: /s/ D. G. Fountain, Jr.
---------------------------------
D. G. Fountain, Jr., Director
DATE: March 12, 2002 BY: /s/ C. Gerald Garnett
---------------------------------
C. Gerald Garnett, Director
DATE: March 12, 2002 BY: /s/ Richard G. Hickson
---------------------------------
Richard G. Hickson, President &
Chief Executive Officer and
Director
DATE: March 12, 2002 BY: /s/ Matthew L. Holleman III
---------------------------------
Matthew L. Holleman III, Director
DATE: March 12, 2002 BY: /s/ Gerard R. Host
---------------------------------
Gerard R. Host, Treasurer
(Principal Financial Officer) and
Director
DATE: March 12, 2002 BY: /s/ Fred A. Jones
---------------------------------
Fred A. Jones, Director
DATE: BY:
---------------------------------
T. H. Kendall III, Chairman of
the Board and Director
DATE: March 12, 2002 BY: /s/ Larry L. Lambiotte
---------------------------------
Larry L. Lambiotte, Director
DATE: March 12, 2002 BY: /s/ Frances Lucas-Tauchar
---------------------------------
Dr. Frances Lucas-Tauchar,
Director
DATE: March 12, 2002 BY: /s/ Donald E. Meiners
---------------------------------
Donald E. Meiners, Director
DATE: March 12, 2002 BY: /s/ William Neville III
---------------------------------
William Neville III, Director
DATE: March 12, 2002 BY: /s/ Richard H. Puckett
---------------------------------
Richard H. Puckett, Director
DATE: March 12, 2002 BY: /s/ William K. Ray
---------------------------------
William K. Ray, Director
DATE: March 12, 2002 BY: /s/ Charles W. Renfrow
---------------------------------
Charles W. Renfrow, Director
DATE: March 12, 2002 BY: /s/ Carolyn C. Shanks
---------------------------------
Carolyn C. Shanks, Director
DATE: BY:
---------------------------------
William Thomas Shows, Director
DATE: March 12, 2002 BY: /s/ Harry M. Walker
---------------------------------
Harry M. Walker, Secretary and
Director
DATE: March 12, 2002 BY: /s/ LeRoy G. Walker, Jr.
---------------------------------
LeRoy G. Walker, Jr., Director
DATE: March 12, 2002 BY: /s/ Paul H. Watson, Jr.
---------------------------------
Paul H. Watson, Jr., Director
DATE: March 12, 2002 BY: /s/ Kenneth W. Williams
---------------------------------
Kenneth W. Williams, Director
DATE: March 12, 2002 BY: /s/ Allen Wood, Jr.
---------------------------------
Allen Wood, Jr., Director
DATE: March 12, 2002 BY: /s/ William G. Yates, Jr.
---------------------------------
William G. Yates, Jr., Director
EXHIBIT INDEX
3-a Articles of Incorporation, as amended. Filed as Exhibit 3-e to
Trustmark's Form 10-K Annual Report for the year ended December 31,
1998, incorporated herein by reference.
3-b Bylaws, as amended. Filed as Exhibit 3-d to Trustmark's Form 10-K
Annual Report for the year ended December 31, 1997, incorporated herein
by reference.
10-a Deferred Compensation Plan for Executive Officers of Trustmark National
Bank. Filed as Exhibit 10-b to Trustmark's Form 10-K Annual Report for
the year ended December 31, 1993, incorporated herein by reference.
10-b Deferred Compensation Plan for Directors of First National Financial
Corporation acquired October 7, 1994. Filed as Exhibit 10-c to
Trustmark's Form 10-K Annual Report for the year ended December 31,
1994, incorporated herein by reference.
10-c Life Insurance Plan for Executive Officers of First National Financial
Corporation acquired October 7, 1994. Filed as Exhibit 10-d to
Trustmark's Form 10-K Annual Report for the year ended December 31,
1994, incorporated herein by reference.
10-d Long Term Incentive Plan for key employees of Trustmark Corporation and
its subsidiaries approved March 11, 1997. Filed as Exhibit 10-e to
Trustmark's Form 10-K Annual Report for the year ended December 31,
1996, incorporated herein by reference.
10-e Employment Agreement between Trustmark Corporation and Richard G.
Hickson dated May 13, 1997. Filed as Exhibit 10-f to Trustmark's Form
10-K Annual Report for the year ended December 31, 1997, incorporated
herein by reference.
10-f Change in Control Agreement between Trustmark Corporation and Harry M.
Walker dated December 22, 1997. Filed as Exhibit 10-g to Trustmark's
Form 10-K Annual Report for the year ended December 31, 1997,
incorporated herein by reference.
10-g Change in Control Agreement between Trustmark Corporation and Gerard R.
Host dated December 22, 1997. Filed as Exhibit 10-h to Trustmark's Form
10-K Annual Report for the year ended December 31, 1997, incorporated
herein by reference.
10-h Deferred Compensation Plan for Directors of Trustmark National Bank, as
amended. Filed as Exhibit 10-i to Trustmark's Form 10-K Annual Report
for the year ended December 31, 1999, incorporated herein by reference.
10-i Deferred Compensation Plan for Executive of Trustmark National Bank, as
amended. Filed as Exhibit 10-j to Trustmark's Form 10-K Annual Report
for the year ended December 31, 1999, incorporated herein by reference.
13 Only those portions of the Registrant's 2001 Annual Report to
Shareholders expressly incorporated by reference herein are included in
this exhibit and, therefore, are filed as a part of this report on Form
10-K.
21 List of Subsidiaries.
23 Consent of Arthur Andersen LLP.
99 Temporary Note 3T to Article 3 of Regulation S-X.
All other exhibits are omitted, as they are inapplicable or not required by the
related instructions.
Exhibit 21
LIST OF SUBSIDIARIES
The following is a list of all subsidiaries of Trustmark as of December 31,
2001, and the jurisdiction in which each was organized. Each subsidiary does
business under its own name.
Name Jurisdiction Where Organized
- ----------------------------------------- ----------------------------
Trustmark National Bank Mississippi
F.S. Corporation Mississippi
First Building Corporation Mississippi
Somerville Bank & Trust Company Tennessee
Trustmark Financial Services, Inc. (1) Mississippi
The Bottrell Insurance Agency, Inc. (1) Mississippi
Trustmark Investment Advisors, Inc. (1) Mississippi
(1) Subsidiary of Trustmark National Bank.
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in an exhibit in this Form 10-K, into Trustmark Corporation's
previously filed Registration Statements on Forms S-8 (File Numbers 333-39786,
333-35889, 333-07141 and 333-74448).
/s/ Arthur Andersen LLP
- -----------------------
Arthur Andersen LLP
Jackson, Mississippi
March 21, 2002
Exhibit 99
TEMPORARY NOTE 3T TO ARTICLE 3 OF REGULATION S-X
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Ladies and Gentlemen:
In accordance with the requirements of the Securities and Exchange Commission,
Trustmark Corporation has received the following written representation from
Arthur Andersen LLP, dated as of March 21, 2002:
"We have audited the consolidated financial statements of Trustmark Corporation
and subsidiaries as of December 31, 2001 and for the year then ended and have
issued our report thereon dated January 8, 2002. We represent that this audit
was subject to our quality control system for the U.S. accounting and auditing
practice to provide reasonable assurance that the engagement was conducted in
compliance with professional standards, that there was appropriate continuity of
Arthur Andersen personnel working on the audit, availability of national office
consultation, and availability of personnel at foreign affiliates of Arthur
Andersen to conduct the relevant portions of the audit."
TRUSTMARK CORPORATION
By: /s/ Gerard R. Host
---------------------------------------
Gerard R. Host
Treasurer (Principal Financial Officer)
Date: March 22, 2002