1
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, 1993
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 2-29897
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. (X)
Based on the closing sales price of February 15, 1994, the aggregate market
value of the voting stock held by nonaffiliates of the Registrant was
$385,547,772.
As of March 28, 1994, there were issued and outstanding 31,172,907 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 1993 Annual Report to
Shareholders (Parts I and II), and (2) Proxy Statement for Registrant's Annual
Meeting of Shareholders dated February 11, 1994 (Part III).
2
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
Security Holders
PART II
Item 5. Market for the Registrant's Common Stock
and Related Stockholder Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations
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
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TRUSTMARK CORPORATION
1993 FORM 10-K
PART I
ITEM 1. BUSINESS
GENERAL
Trustmark Corporation (Corporation) is a one-bank holding company which
was incorporated under the Mississippi Business Corporation Act on August 5,
1968 and commenced doing business in November 1968. At December 31, 1993, the
Corporation had total consolidated assets of $4.4 billion and total
consolidated equity of $358.6 million. The Corporation's primary business
activities are generated through its majority-owned subsidiary, Trustmark
National Bank (Trustmark), which accounts for approximately 99.9% of total
assets and total revenues of the Corporation. Trustmark, which was chartered by
the State of Mississippi in 1889, is headquartered in Jackson and is the
largest bank in the state having total assets at December 31, 1993, of
approximately $4.4 billion and deposits of $3.2 billion.
Trustmark's primary means of asset growth has been through mergers and
acquisitions of financial institutions. The most recent acquisition involved
the merger of Trustmark National Bank and the UniSouth Banking Corporation
(UniSouth) of Columbus, Mississippi. This merger was consummated after the
close of business on July 31, 1993, and has been accounted for by the purchase
method of accounting. The stockholders of UniSouth received 1,696,524 shares
of Trustmark Corporation stock and approximately $677,000 in cash in connection
with this merger.
Trustmark's retail banking system offers a variety of deposit, investment
and credit products to its customers through a branch network with facilities
in 142 locations. Trustmark is well established as a provider of depository,
credit and cash management services to middle-market and larger businesses.
These services range from payroll checking, business checking accounts,
corporate savings, secured and unsecured lines of credit and loans to direct
deposit payroll, sweep accounts and letters of credit. Trustmark also offers
MasterCard, VISA and VISA Gold credit card services to consumers and merchants
throughout Mississippi. In addition, customers continue to have access to over
95,000 ATM's worldwide through the Gulfnet and CIRRUS systems. Trustmark's
Trust Services business unit provides services in three areas: custody,
investment management and ancillary services such as a third party fiscal
agent. Trustmark's Investment Services unit provides both institutional and
retail customers with quality investment opportunities through its Dealer Bank
Department and Trustmark Financial Services, Inc. (TFSI), its wholly-owned
subsidiary. During 1993, TFSI opened new offices in Columbus, Meridian and
Hernando with more openings planned for 1994.
In addition, the Corporation directly owns all of the stock of F. S.
Corporation and First Building Corporation, both non-bank Mississippi
corporations. F. S. Corporation previously developed
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automobile financing, including all incidental and related matters. First
Building Corporation previously managed and operated its real estate
investments. Today, F. S. Corporation and First Building Corporation are not
considered significant subsidiaries.
As of January 31, 1994, the Corporation and its subsidiaries employed
approximately 2,058 employees.
COMPETITION
Trustmark competes with national and state banks in its service areas for
all types of depository, credit, investment and trust services. In addition,
Trustmark competes in its respective service areas with other financial
institutions including savings and loan associations, personal loan companies,
consumer finance companies, mortgage companies, insurance companies, brokerage
firms, investment companies, credit unions and financial service operations of
major retailers. Trustmark competes with these financial institutions in the
areas of interest rates, the availability and quality of services and products,
and the pricing of these services and products.
SUPERVISION AND REGULATION
The Corporation is a registered bank holding company under the Bank
Holding Company Act of 1956, as amended. As such, the Corporation is required
to file an annual report and such additional information as the Board of
Governors of the Federal Reserve System may require. The Act requires every
bank holding company to obtain the prior approval of the Board of Governors
before it may acquire substantially all the assets of any bank, or ownership
or control of any voting shares of any bank, if, after the acquisition, it
would own or control, directly or indirectly, more than five percent of
the voting shares of the bank. In addition, a bank holding company is generally
prohibited from engaging in or acquiring direct or indirect control of voting
shares of any company engaged in nonbanking activities. One of the principal
exceptions to this prohibition is for activities found by the Board of
Governors, by order or regulation, to be closely related to banking or managing
or controlling banks "as to be a proper incident thereto." The Board has by
regulation determined that a number of activities are closely related to
banking within the meaning of the Act. In addition, the Corporation is subject
to regulation by the State of Mississippi under its laws of incorporation.
Trustmark is subject to various requirements and restrictions by federal
and state banking authorities including the Office of the Comptroller of the
Currency (OCC) and the Mississippi Department of Banking. Areas subject to
regulation include loans, reserves, investments, issuance of securities,
establishment of branches, loans to directors, executive officers and their
related interests, relationships with correspondent banks, consumer protection
and other aspects of operations. In addition, national banks are subject to
legal limitations on the amount of earnings they may pay as dividends.
Trustmark also is insured by, and
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therefore subject to the regulations of the Federal Deposit Insurance
Corporation.
In December 1991, the Federal Deposit Insurance Corporation Improvement
Act of 1991 (FDICIA) was enacted. FDICIA substantially revised the depository
institution regulatory and funding provisions of the Federal Deposit Insurance
Act and makes revisions to several other federal banking statutes. Among other
things, FDICIA requires banking regulators to take prompt corrective action
whenever financial institutions do not meet minimum capital requirements. In
addition, FDICIA has created restrictions on capital distributions that would
leave a depository institution undercapitalized.
In May of 1993, the FDIC adopted the final rule implementing Section 112
of FDICIA. This regulation includes requirements, procedures and interpretive
guidelines that mandate new audit and reporting requirements for financial
institutions. As a result of these new requirements, certain formal
attestations, assertions and documentation must be imposed on existing control
structures. This regulation became effective for fiscal years ending after
December 31, 1992.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Registrant including their positions with the
Registrant, their ages and their principal occupations for the last five years
are as follows:
Frank R. Day, 62, Director, Chairman of the Board, President
and Chief Executive Officer, Trustmark Corporation; Chairman
of the Board and Chief Executive Officer, Trustmark National
Bank since January, 1988. Assumed additional office of
President of Trustmark Corporation at that time.
David R. Carter, 42, Secretary-Treasurer of Trustmark
Corporation since March 1986; Chief Financial Officer of
Trustmark National Bank since May 1987.
STATISTICAL DISCLOSURES
The statistical disclosures for Trustmark Corporation are contained in
Tables 1 through 12.
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TRUSTMARK CORPORATION
STATISTICAL DISCLOSURES
TABLE 1 - COMPARATIVE AVERAGE BALANCES - YIELDS AND RATES
The Average Assets and Liabilities table below shows the average balances for
all assets and liabilities of the Corporation, the interest income or expense
associated with those assets and liabilities, and the computed yield or rate
based upon the interest income or expense for each of the last three years (Tax
Equivalent Basis - $ in thousands):
1993 1992
------------ --------- -------- ------------ --------- -------
Average Revenue/ Yield/ Average Revenue/ Yield/
Balance Expense Rate Balance Expense Rate
Assets ------------ --------- -------- ------------ --------- -------
Interest-earning assets:
Federal funds sold and securities purchased
under reverse repurchase agreements $152,553 $4,786 3.14% $164,449 $6,574 4.00%
Trading securities 1,445 111 7.68% 1,372 90 6.56%
Securities held for sale 119,728 4,590 3.83% 27,506 956 3.48%
Investment securities:
U.S. Treasury and U.S. Government
agencies 1,559,498 108,501 6.96% 1,375,430 106,762 7.76%
Obligations of states and political
subdivisions 127,470 11,958 9.38% 144,013 14,422 10.01%
Other securities 15,427 914 5.92% 19,613 1,401 7.14%
Loans, net of unearned income 1,959,831 164,932 8.42% 1,853,178 164,404 8.87%
------------ --------- ------------ ---------
Total interest-earning assets 3,935,952 295,792 7.52% 3,585,561 294,609 8.22%
Cash and due from banks 238,472 223,610
Other assets 181,659 168,691
Allowance for loan losses (55,890) (42,540)
------------ ------------
Total Assets $4,300,193 $3,935,322
------------ ------------
------------ ------------
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits $1,078,949 26,126 2.42% $1,004,640 31,546 3.14%
Savings deposits 197,192 4,624 2.34% 171,531 5,182 3.02%
Time deposits 1,294,709 56,208 4.34% 1,464,004 75,922 5.19%
Federal funds purchased and securities sold
under repurchase agreements 762,120 22,044 2.89% 454,062 16,055 3.54%
------------ --------- ------------ ---------
Total interest-bearing liabilities 3,332,970 109,002 3.27% 3,094,237 128,705 4.16%
--------- ---------
Noninterest-bearing demand deposits 590,753 514,163
Accrued expenses and other liabilities 50,194 44,997
Stockholders' equity 326,276 281,925
------------ ------------
Total Liabilities and Stockholders' Equity $4,300,193 $3,935,322
------------ ------------
------------ ------------
Net Interest Margin 186,790 4.75% 165,904 4.63%
Less tax equivalent adjustments:
Investments 3,841 4,547
Loans 1,392 1,399
--------- ---------
Net Interest Margin per Annual Report $181,557 $159,958
--------- ---------
--------- ---------
1991
------------ --------- -------
Average Revenue/ Yield/
Balance Expense Rate
Assets ------------ --------- -------
Interest-earning assets:
Federal funds sold and securities purchased
under reverse repurchase agreements $286,504 $16,360 5.71%
Trading securities 3,277 278 8.48%
Securities held for sale
Investment securities:
U.S. Treasury and U.S. Government
agencies 1,102,843 95,541 8.66%
Obligations of states and political
subdivisions 139,982 15,107 10.79%
Other securities 25,379 1,924 7.58%
Loans, net of unearned income 1,797,006 187,208 10.42%
------------ ---------
Total interest-earning assets 3,354,991 316,418 9.43%
Cash and due from banks 214,974
Other assets 169,232
Allowance for loan losses (34,267)
------------
Total Assets $3,704,930
------------
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits $750,184 34,317 4.57%
Savings deposits 153,673 7,268 4.73%
Time deposits 1,667,825 113,403 6.80%
Federal funds purchased and securities sold
under repurchase agreements 355,274 19,354 5.45%
------------ ---------
Total interest-bearing liabilities 2,926,956 174,342 5.96%
---------
Noninterest-bearing demand deposits 476,411
Accrued expenses and other liabilities 43,093
Stockholders' equity 258,470
------------
Total Liabilities and Stockholders' Equity $3,704,930
------------
------------
Net Interest Margin 142,076 4.23%
Less tax equivalent adjustments:
Investments 4,966
Loans 1,782
---------
Net Interest Margin per Annual Report $135,328
---------
---------
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. 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 1993 and 34% for 1992 and 1991. Certain reclassifications
have been made to the 1992 and 1991 statements to conform to the 1993 method
of presentation.
7
TRUSTMARK CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 2 - VOLUME AND YIELD/RATE VARIANCE ANALYSIS
The Volume and Yield/Rate variance table below shows the change from year to
year for each component of the tax equivalent net interest margin separated
into the amount generated by volume changes and the amount generated by
changes in the yield or rate (Tax Equivalent Basis - $ in thousands):
1993 Compared to 1992 1992 Compared to 1991
Change Due To: Change Due To:
------------------------------------- -------------------------------------
Yield/ Yield/
Volume Rate Net Volume Rate Net
----------- ----------- ----------- ----------- ----------- -----------
Revenue earned on:
Federal funds sold and securities purchased
under reverse repurchase agreements ($450) ($1,338) ($1,788) ($5,746) ($4,040) ($9,786)
Trading securities 5 16 21 (135) (53) (188)
Securities held for sale 3,528 106 3,634 956 0 956
Investment securities:
U.S. Treasury and U.S. Government agencies 13,413 (11,674) 1,739 21,875 (10,654) 11,221
Obligations of states and political subdivision (1,592) (872) (2,464) 427 (1,112) (685)
Other securities (271) (216) (487) (416) (107) (523)
Loans, net of unearned income 9,145 (8,617) 528 5,714 (28,518) (22,804)
----------- ----------- ----------- ----------- ----------- -----------
Total interest-earning assets 23,778 (22,595) 1,183 22,675 (44,484) (21,809)
Interest paid on:
Interest-bearing demand deposits 2,206 (7,626) (5,420) 9,719 (12,490) (2,771)
Savings deposits 708 (1,266) (558) 771 (2,857) (2,086)
Time deposits (8,159) (11,555) (19,714) (12,760) (24,721) (37,481)
Federal funds purchased and securities sold
under repurchase agreements 9,358 (3,369) 5,989 4,545 (7,844) (3,299)
----------- ----------- ----------- ----------- ----------- -----------
Total interest-bearing liabilities 4,113 (23,816) (19,703) 2,275 (47,912) (45,637)
----------- ----------- ----------- ----------- ----------- -----------
Change in net interest income on a
tax equivalent basis $19,665 $1,221 $20,886 $20,400 $3,428 $23,828
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
The change in interest due to both volume and yield/rate has been
allocated to change due to volume and change due to yield/rate in proportion
to the absolute value of the change in each. Tax-exempt income has been
adjusted to a tax equivalent basis using a tax rate of 35% for 1993 and 34%
for 1992 and 1991. The balances of nonaccrual loans and related income
recognized have been included for purposes of these computations.
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TRUSTMARK CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 3 - INVESTMENT PORTFOLIO
The table below indicates book values of investment securities by type at
year-end for each of the last three years ($ in thousands):
December 31,
-----------------------------------------------------------
1993 1992 1991
Securities held for sale ------------- ------------- -------------
U. S. Treasury and U. S. Government agencies $75,858 $89,397
Obligations of states and political subdivision 8,420 13,805
------------- -------------
Total securities held for sale $84,278 $103,202
============ =============
Investment securities
U. S. Treasury and U. S. Government agencies $1,634,212 $1,392,938 $1,188,526
Obligations of states and political subdivision 149,396 122,635 150,654
Other securities 1,251 3,991 12,030
------------- ------------- -------------
Total debt securities 1,784,859 1,519,564 1,351,210
Equity securities 11,969 13,584 10,641
------------- ------------- -------------
Total investment securities $1,796,828 $1,533,148 $1,361,851
============= ============= =============
TABLE 4 - MATURITY DISTRIBUTION AND YIELDS OF INVESTMENT PORTFOLIO
The following table details the maturities of investment securities at December
31, 1993 and the weighted average yield for each range of maturities
(Tax Equivalent Basis - $ in thousands):
Maturing
--------------------------------------------------------------------------
After One,
Within But Within
One Year Yield Five Years Yield
--------- ------- ------------ ------
Securities held for sale
U. S. Treasury and U. S.
Government agencies $48,974 3.40% $26,884 3.71%
Obligations of states and
political subdivisions 8,420 6.01%
--------- ------------
Total securities held $57,394 3.78% $26,884 3.71%
========= ============
Investment securities
U. S. Treasury and U. S.
Government agencies $93,248 8.54% $625,816 6.14%
Obligations of states and
political subdivisions 14,591 8.00% 42,808 7.55%
Other securities 999 7.90%
--------- ------------
Total debt securities $107,839 8.47% $669,623 6.23%
========= ============
Maturing
-----------------------------------------------------------------------------
After Five,
But Within After
Ten Years Yield Ten Years Yield Total
------------- ------ ------------- ---------- -------------
Securities held for sale
U. S. Treasury and U. S.
Government agencies $75,858
Obligations of states and
political subdivisions 8,420
-------------
Total securities held $84,278
=============
Investment securities
U. S. Treasury and U. S.
Government agencies $161,457 6.82% $753,691 6.62% $1,634,212
Obligations of states and
political subdivisions 54,237 7.67% 37,760 10.66% 149,396
Other securities 252 7.06% 1,251
------------- ------------- -------------
Total debt securities $215,694 7.04% $791,703 6.81% 1,784,859
============= =============
Equity securities 11,969
-------------
Total investment
securities $1,796,828
=============
Included in the above maturity schedule are mortgage related securities
totaling $914,918,000 which have contractual maturities as follow: Within One
Year - $6,402,000; After One, But Within Five Years - $17,492,000; After Five,
But Within Ten Years - $137,181,000; After Ten Years - $753,843,000. 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 2.98 years.
As of December 31, 1993 the Corporation 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 $77,348,000
and an approximate fair value of $81,739,000 were held on December 31, 1993.
Included in the aforementioned State of Mississippi holdings are bonds with an
aggregate carrying value of $27,112,000 and an approximate fair value of
$29,459,000 which are known to be prerefunded or escrowed to maturity by U. S.
Government securities.
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TRUSTMARK CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 5 - COMPOSITION OF THE LOAN PORTFOLIO
The table below shows the carrying value of the loan portfolio at the end of
each of the last five years ($ in thousands):
December 31,
-------------------------------------------------------------------------
1993 1992 1991 1990 1989
------------- ------------- ------------- ------------- -------------
Real Estate Loans:
Construction and land development $96,750 $81,188 $88,381 $96,900 $118,299
Secured by 1-4 family residential properties 520,343 437,700 381,762 355,270 343,560
Secured by non-farm, non-residential properties 329,908 295,837 310,926 336,024 320,978
Other real estate loans 49,756 44,478 33,068 33,129 28,612
Term federal funds sold 125,000 120,000
Loans to finance agricultural production 29,248 15,261 13,552 15,243 14,674
Commercial and industrial 471,942 427,384 448,737 500,361 477,975
Loans to individuals for personal expenditures 521,119 403,484 405,625 433,474 428,321
Obligations of states and political subdivisions 36,973 39,622 44,733 53,159 51,509
Loans for purchasing or carrying securities 3,995 6,490 6,549 6,455 7,866
Lease financing receivables 4,427 3,837 2,470 3,428 2,768
Other loans 19,365 25,432 31,288 15,567 18,377
------------- ------------- ------------- ------------- -------------
Loans, net of unearned income $2,083,826 $1,905,713 $1,887,091 $1,849,010 $1,812,939
============= ============= ============= ============= =============
TABLE 6 - LOAN MATURITIES AND SENSITIVITY TO CHANGES IN INTEREST RATES
The table below shows the amounts of loans in certain categories outstanding as
of December 31, 1993, which, based on the remaining scheduled repayments of
principal, are due in the periods indicated ($ in thousands):
Maturing
----------------------------------------------------------
One Year
Within Through After
One Year Five Five
or Less Years Years Total
------------- ------------- ------------- -------------
Construction and land development $76,369 $20,381 $96,750
Other loans secured by real estate (excluding
loans secured by 1-4 family residential
properties) 114,006 189,621 $76,037 379,664
Commercial and industrial 270,503 173,075 28,364 471,942
Other loans (excluding loans to individuals) 47,137 25,254 21,617 94,008
------------- ------------- ------------- -------------
$508,015 $408,331 $126,018 $1,042,364
============= ============= ============= =============
The following table shows all loans due after one year classified according to
their sensitivity to changes in interest rates ($ in thousands):
Maturing
-------------------------------------------
One Year
Through After
Five Five
Years Years Total
------------- ------------- -------------
Above loans due after one year which have:
Predetermined interest rates $223,370 $43,941 $452,759
Floating interest rates 184,961 82,077 589,605
------------- ------------- -------------
$408,331 $126,018 $1,042,364
============= ============= =============
10
TRUSTMARK CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 7 - NONPERFORMING ASSETS AND PAST DUE LOANS
The table below shows the Corporation's nonperforming assets and past due loans
at the end of each of the last five years ($ in thousands):
December 31,
----------------------------------------------------------
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
Loans accounted for on a nonaccrual basis $9,784 $10,338 $15,922 $18,364 $11,119
Restructured loans 2,552 1,373 6,198
---------- ---------- ---------- ---------- ----------
Nonperforming loans 9,784 12,890 17,295 18,364 17,317
Other real estate owned 3,961 6,554 14,631 20,528 7,838
---------- ---------- ---------- ---------- ----------
Nonperforming assets 13,745 19,444 31,926 38,892 25,155
Accruing loans past due 90 days or more 1,217 1,872 1,410 3,270 7,378
---------- ---------- ---------- ---------- ----------
Total nonperforming assets and past due loans $14,962 $21,316 $33,336 $42,162 $32,533
========== ========== ========== ========== ==========
Interest which would have been accrued on nonaccrual and restructured
loans if they had been in compliance with their original terms is immaterial.
At December 31, 1993 the Corporation had no loan concentrations greater
than ten percent of total loans except as shown in Table 5.
At December 31, 1993 there were no interest-earning assets that would be
required to be disclosed if such assets were loans.
It is the Corporation's policy that interest will not be accrued on any
loan for which payment in full of interest or principal is not expected, on any
loan which is seriously delinquent unless the obligation is both well secured
and in the process of collection, or on any loan that is maintained on a cash
basis due to deterioration in the financial condition of the borrower.
Management considers a debt to be "well secured" if it is secured by collateral
in the form of liens on or pledges of real or personal property that have a
realizable value sufficient to discharge the debt in full or by the guaranty of
a financially responsible party. A debt is considered to be "in process of
collection" if, based on a probable specific event, it is expected that the
loan will be repaid or brought current. At December 31, 1993, the Corporation
has no loans about which Management has serious doubts as to their
collectibility other than those disclosed above.
11
TRUSTMARK CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 8 - ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
The table below summarizes the Corporation's loan loss experience for each of
the last five years ($ in thousands):
Year Ended December 31,
-----------------------------------------------------
1993 1992 1991 1990 1989
--------- --------- --------- --------- ---------
Amount of loan loss reserve at beginning of period $49,500 $39,000 $30,610 $32,200 $31,875
Loans charged off:
Real estate loans (2,220) (6,098) (7,651) (9,780) (4,337)
Loans to finance agricultural production (178) (131) (80) (2) (6)
Commercial and industrial (3,251) (5,215) (5,715) (2,765) (4,516)
Loans to individuals for personal expenditures (4,244) (5,172) (5,312) (4,322) (4,108)
Lease financing receivables
All other loans (162) (120) (272) (1,423) (219)
--------- --------- --------- --------- ---------
Total charge-offs (10,055) (16,736) (19,030) (18,292) (13,186)
Recoveries on loans previously charged off:
Real estate loans 545 597 677 194 97
Loans to finance agricultural production 11 0 13 10
Commercial and industrial 2,441 1,004 246 551 515
Loans to individuals for personal expenditures 2,123 1,405 1,175 739 778
Lease financing receivables
All other loans 178 151 115 72 88
--------- --------- --------- --------- ---------
Total recoveries 5,287 3,168 2,213 1,569 1,488
--------- --------- --------- --------- ---------
Net charge-offs (4,768) (13,568) (16,817) (16,723) (11,698)
Additions to allowance charged to operating expense 17,596 24,068 25,207 15,133 11,523
Other additions to loan loss reserve 322 500
--------- --------- --------- --------- ---------
Amount of loan loss reserve at end of period $62,650 $49,500 $39,000 $30,610 $32,200
========= ========= ========= ========= =========
Percentage of net charge-offs during period to average
loans outstanding during the period 0.24% 0.73% 0.94% 0.91% 0.65%
========= ========= ========= ========= =========
The allowance for loan losses is established through a provision for loan
losses charged to expenses. Loans are charged against the allowance for loan
losses when Management believes that the collectibility of the principal is
unlikely.
The allowance for loan losses is maintained at a level which Management
and the Board of Directors believe is adequate to absorb estimated losses
inherent in the loan portfolio. The adequacy of the allowance is reviewed on a
quarterly basis by using the criteria specified in revised Comptroller of the
Currency Banking Circular 201. Each review includes analyses of historical
loss experience, trends in portfolio volume and composition, consideration of
current economic conditions, estimated future losses in significant criticized
loans and other pertinent information. Once this information is analyzed, it
is used as the basis for allocation for pools of criticized loans, loans by
industry or concentration, letters of credit and off-balance sheet commitments
to lend. During 1993, the Corporation felt it was prudent to continue to
increase the allowance given the uncertainty surrounding the national and state
economies and its commitment to sound, conservative banking practices. Because
the current economic recovery is predicted to produce only modest economic
growth during 1994, Management will continue to take a prudent approach to the
evaluation of the allowance for loan losses.
12
TRUSTMARK CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 9 - ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
The following table is a summary by allocation category of the Corporation's
allowance for loan losses at December 31, 1993. These allocations were
determined by internal formulas based upon Management's analyses of the various
types of risk associated with the Corporation's loan portfolio. A discussion of
Management's methodology for performing these analyses follows the table ($ in
thousands):
Allocation for pools of
risk-rated loans $ 22,425
Additional allocation for
risk-rated loans 2,192
Allocation for industry
concentrations 820
General allocation for
all other loans 7,136
Allocation for available lines
of credit and letters of credit 2,055
Discretionary 28,022
----------
TOTAL $ 62,650
==========
The Corporation maintains an allowance for loan losses which is considered
sufficient to absorb potential losses. The methodology employed in order to
determine an amount which is considered adequate utilizes the criteria
specified in the Office of the Comptroller of the Currency's revised Banking
Circular 201 and guidance provided in the recently issued Interagency Policy
Statement. Loss percentages were uniformly applied to pools of risk-rated
loans within the total portfolio. The percentages utilized were determined
based on migration analysis, previously established floors for each category
and economic factors. In addition, relationships of $500,000 or more which
were risk-rated Other Loans Especially Mentioned (OLEM) or Substandard and
all which were risk-related Doubtful were reviewed by the Corporation's
Internal Asset Review staff to determine if the standard percentages
appeared to be sufficient to cover potential loss on each line. In the event
that the percentages on any particular lines were determined to be
insufficient, additional allocations were made based upon recommendations
of lending and asset review personnel.
Industry allocations were made based on concentrations of credit within
the portfolio as well as arbitrary designation of certain other industries by
Management.
The general allocation is included in the allowance to cover potential loan
losses within portions of the loan portfolio not addressed in the preceeding
allocations. The types of loans included in the general allocation were
mortgage loans, direct and indirect installment loans, credit card loans and
overdrafts. The actual allocation amount was based upon the more conservative
estimate of loss experience within these categories during 1993 or 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. Since the Corporation has had
negligible loss experience in these categories, arbitrary percentages, which
represented the same percentages applied to the funded portions of the
commercial and retail loan portfolios, were applied to cover any potential
losses.
The remaining $28,022,000 is discretionary and serves as added protection
in the event that any of the above specific components are determined to be
inadequate or for issues that cannot or have not been measured on a quantitative
basis over a prolonged period of time. During 1993, the Corporation felt it was
prudent to continue to increase the allowance given the uncertainty surrounding
the economy and its commitment to sound, conservative banking practices. Because
of the imprecision inherent in most estimates of expected credit losses,
Management will continue to take a prudent approach in the evaluation of the
allowance for loan losses.
As is shown in Table 8, net charge-offs decreased during 1993 compared to
1992. With a similar decline in nonperforming assets during 1993, it is
anticipated that the level of net charge-offs for 1994 will compare favorably
to those experienced in recent years.
13
TRUSTMARK CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 10 - TIME DEPOSITS OF $100,000 OR MORE
The table below shows maturities on outstanding time deposits of $100,000 or
more at December 31, 1993 ($ in thousands):
Certificates Other Time
of Deposit Deposits
---------- ----------
3 months or less $113,619 $3,900
Over 3 months through 6 months 34,888 4,290
Over 6 months through 12 months 24,364 1,755
Over 12 months 63,903 9,555
---------- ----------
TOTAL $236,774 $19,500
---------- ----------
---------- ----------
TABLE 11 - SELECTED RATIOS
The following ratios are presented for each of the last three years:
1993 1992 1991
---------- ---------- -----------
Return on average assets 1.17% 0.97% 0.74%
Return on average equity 15.37% 13.57% 10.67%
Dividend payout ratio 24.05% 27.76% 37.01%
Equity to assets ratio 7.59% 7.16% 6.98%
TABLE 12 - SHORT-TERM BORROWINGS
The table below presents certain information concerning the Corporation's
short-term borrowings for each of the last three years ($ in thousands):
1993 1992 1991
---------- ---------- -----------
Federal funds purchased and securities
sold under repurchase agreements:
Amount outstanding at end of period $845,135 $555,162 $382,108
Weighted average interest rate at end of period 2.92% 3.07% 4.14%
Maximum amount outstanding at any
month-end during each period $911,888 $555,162 $382,108
Average amount outstanding during each period $762,120 $454,062 $355,274
Weighted average interest rate during each period 2.89% 3.54% 5.45%
14
ITEM 2. PROPERTIES
The Corporation does not directly own or lease any physical properties.
All properties are owned or leased by Trustmark whose main office is located in
Jackson, Mississippi and is housed in a 14-floor combination office and bank
building owned in fee. Approximately 132,000 square feet (50%) of the rentable
space in the building is allocated to bank use with the remainder occupied by
tenants on a lease basis. In total, Trustmark operates 89 full-service
branches, 27 limited-service branches and 26 off-premise automated teller
machines. Trustmark leases 34 of the 142 total locations with the remainder
being owned.
ITEM 3. LEGAL PROCEEDINGS
The Corporation is defendant in various legal actions arising in the
normal course of business. Management and legal counsel are of the opinion
that the outcome of these matters will not have a material adverse effect on
the Corporation's financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to the Corporation's shareholders during
the fourth quarter of 1993.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The Corporation's common stock is listed for trading on the Nasdaq Stock
Market. At February 28, 1994 there were approximately 4,200 shareholders of
record of the Corporation's common stock. Other information required by this
item can be found in Note 14-Stockholders' Equity and the table captioned
"Principal Markets and Prices of the Corporation's Stock" included in the
Registrant's 1993 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" included in the Registrant's 1993 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"
included in the Registrant's 1993 Annual Report to Shareholders and is
incorporated herein by reference.
15
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
1993 Annual Report to Shareholders and are incorporated herein by reference.
The table captioned "Summary of Quarterly Results of Operations" is also
included in the Registrant's 1993 Annual Report to 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, 1993.
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 IX, "Other Information Concerning
Directors" contained in Trustmark Corporation's Proxy Statement dated February
11, 1994 and is incorporated herein by reference. Information on the
Registrant's executive officers is included in Part I of this report.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this item can be found in Section V, "Executive
Compensation", Section VI, "Compensation Committee Report on Executive
Compensation", Section VII, "Compensation Committee Interlocks and Insider
Participation in Compensation Decisions" and Section IX, "Other Information
Concerning Directors" contained in Trustmark Corporation's Proxy Statement
dated February 11, 1994 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 III, "Voting Securities and Principal
Holders Thereof" and Section IV, "Ownership of Equity Securities by Management"
contained in Trustmark Corporation's Proxy Statement dated February 11, 1994
and is incorporated herein by reference.
The Registrant knows of no arrangements which may at a subsequent date
result in a change in control of the Registrant.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related transactions can
be found in Section VIII, "Transactions with
16
Management" contained in Trustmark Corporation's Proxy Statement dated February
11, 1994 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 & Co., independent auditors, and the
following consolidated financial statements of Trustmark Corporation and
Subsidiaries are included in the Registrant's 1993 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, 1993 and 1992
Consolidated Statements of Income for the
Years Ended December 31, 1993, 1992 and 1991
Consolidated Statements of Changes in
Stockholders' Equity for the Years Ended
December 31, 1993, 1992 and 1991
Consolidated Statements of Cash Flows for
the Years Ended December 31, 1993, 1992
and 1991
Notes to Consolidated Financial Statements
(Notes 1 through 15)
Selected Financial Data, Summary of Quarterly
Results of Operations, and Principal
Markets and Prices of the Corporation'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.
A-3. Exhibits
The exhibits listed in the Exhibit Index are filed herewith or are
incorporated herein by reference.
B. Reports on Form 8-K
There have been no reports on Form 8-K filed by the Registrant for the
quarter ended December 31, 1993.
17
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/ FRANK R. DAY BY: /s/ DAVID R. CARTER
Frank R. Day David R. Carter
Chairman of the Board, Secretary-Treasurer
President and Chief
Executive Officer
DATE: March 8, 1994 DATE: March 8, 1994
18
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 8, 1994 BY: /s/ J. KELLY ALLGOOD
J. Kelly Allgood, Director
DATE: March 8, 1994 BY: /s/ REUBEN V. ANDERSON
Reuben V. Anderson, Director
DATE: March 8, 1994 BY: /s/ JOHN L. BLACK, JR.
John L. Black, Jr., Director
DATE: March 8, 1994 BY: /s/ HARRY H. BUSH
Harry H. Bush, Director
DATE: March 8, 1994 BY: /s/ ROBERT P. COOKE III
Robert P. Cooke III, Director
DATE: March 8, 1994 BY: /s/ D. G. FOUNTAIN, JR.
D. G. Fountain, Jr., Director
DATE: March 8, 1994 BY: /s/ C. GERALD GARNETT
C. Gerald Garnett, Director
DATE: March 8, 1994 BY: /s/ WILLIAM F. GOODMAN, JR.
William F. Goodman, Jr., Director
DATE: March 8, 1994 BY: /s/ MATTHEW L. HOLLEMAN III
Matthew L. Holleman III, Director
DATE: March 8, 1994 BY: /s/ AARON J. JOHNSTON
Aaron J. Johnston, Director
DATE: March 8, 1994 BY: /s/ FRED A. JONES
Fred A. Jones, Director
DATE: March 8, 1994 BY: /s/ T. H. KENDALL III
T. H. Kendall III, Director
19
DATE: March 8, 1994 BY: /s/ ROBERT V. MASSENGILL
Robert V. Massengill, Director
DATE: March 8, 1994 BY: /s/ DONALD E. MEINERS
Donald E. Meiners, Director
DATE: March 8, 1994 BY: /s/ WILLIAM NEVILLE III
William Neville III, Director
DATE: March 8, 1994 BY: /s/ GUS A. PRIMOS
Gus A. Primos, Director
DATE: March 8, 1994 BY: /s/ BEN PUCKETT
Ben Puckett, Director
DATE: March 8, 1994 BY:
Clyda S. Rent, Director
DATE: March 8, 1994 BY: /s/ WILLIAM THOMAS SHOWS
William Thomas Shows, Director
DATE: March 8, 1994 BY: /s/ HARRY M. WALKER
Harry M. Walker, Director
DATE: March 8, 1994 BY: /s/ PAUL H. WATSON, JR.
Paul H. Watson, Jr., Director
DATE: March 8, 1994 BY: /s/ ALLEN WOOD, JR.
Allen Wood, Jr., Director
20
EXHIBIT INDEX
3-a Articles of Incorporation, as amended. Filed as
Exhibit 3 to the Corporation's Form 10-K Annual Report
for the year ended December 31, 1990, incorporated
herein by reference
3-b Bylaws, as amended. Filed as Exhibit 3-b to the
Corporation's Form 10-K Annual Report for the year
ended December 31, 1991, incorporated herein by
reference.
10-a Deferred Compensation Plan for Directors of Trustmark
Corporation. Filed as Exhibit 10 to the Corporation's
Form 10-K Annual Report for the year ended December 31,
1991, incorporated herein by reference.
10-b Deferred Compensation Plan for Executive Officers of
Trustmark National Bank.
13 Only those portions of the Registrant's 1993 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.
All other exhibits are omitted as they are inapplicable or not required by
the related instructions.