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, 1994
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. ( )
Based on the closing sales price of March 4, 1995, the aggregate market value
of the voting stock held by nonaffiliates of the Registrant was $392,710,863.
As of March 4, 1995, there were issued and outstanding 34,910,683 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 1994 Annual Report to
Shareholders (Parts I and II), and (2) Proxy Statement for Registrant's Annual
Meeting of Shareholders dated February 15, 1995 (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
3
TRUSTMARK CORPORATION
1994 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, 1994, the
Corporation had total consolidated assets of $4.8 billion and total
consolidated equity of $421 million. The Corporation's primary business
activities are generated through its wholly-owned subsidiary, Trustmark
National Bank (Trustmark). The Corporation became the sole owner of Trustmark
on October 7, 1994 when it exchanged 137,514 shares of the Corporation's common
stock for the minority shareholders' interest. Trustmark accounts for
substantially all of the 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, 1994, of approximately $4.8 billion and deposits of $3.4
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 Corporation and First National Financial Corporation
(FNFC) of Vicksburg, Mississippi. This merger was consummated after the close
of business on October 7, 1994, and has been accounted for as a pooling of
interests. The stockholders of FNFC received 3,600,262 shares of Trustmark
Corporation stock and approximately $1,105,000 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 156 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, Trustmark successfully introduced the
Trustmark Express Check debit card in 1994 which allows customers to access
their checking or savings account through any merchant that accepts MasterCard
and at any Trustmark Express, Gulfnet or Cirrus automated teller machine.
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
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subsidiary. Full-service brokerage was added as a service in 1994, and plans
are being made for expansion of offices in Trustmark branch locations.
In addition, the Corporation directly owns all of the stock of F. S.
Corporation and First Building Corporation, both nonbank Mississippi
corporations. F. S. Corporation previously developed automobile financing,
including all incidental and related matters. First Building Corporation
previously managed and operated its own real estate investments. Today, F. S.
Corporation and First Building Corporation are dormant corporations and are
not significant subsidiaries.
As of January 31, 1995, the Corporation and its subsidiaries employed 2,206
full-time equivalent 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
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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 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 made 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, 63, 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.
Harry M. Walker, 44, Secretary-Treasurer of Trustmark
Corporation since January 1995; Executive Vice President,
Trustmark National Bank from May 1987 to March 1992; since
March 1992, President, Trustmark National Bank.
STATISTICAL DISCLOSURES
The statistical disclosures for Trustmark Corporation are contained in
Tables 1 through 12.
6
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 at year end, 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):
DECEMBER 31,
----------------------------------------------------------------
1994 1993
------------------------------ -----------------------------
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE
---------- -------- ------- ---------- -------- -------
ASSETS
Interest-earning assets:
Federal funds sold and securities purchased
under reverse repurchase agreements $156,650 $6,188 3.95% $162,375 $5,079 3.13%
Trading securities 964 68 7.05% 1,445 111 7.68%
Securities available for sale 628,073 40,599 6.46% 176,359 7,914 4.49%
Securities held to maturity:
U.S. Treasury and U.S. Government agencies 1,148,516 67,360 5.86% 1,575,415 109,557 6.95%
Obligations of states and political subdivisions 173,238 14,396 8.31% 136,380 13,085 9.59%
Other securities 4,433 372 8.39% 24,698 1,598 6.47%
Loans, net of unearned income 2,246,350 191,739 8.54% 2,108,314 178,872 8.48%
---------- -------- ---------- --------
Total interest-earning assets 4,358,224 320,722 7.36% 4,184,986 316,216 7.56%
Cash and due from banks 267,107 251,115
Other assets 224,336 202,789
Allowance for loan losses (64,958) (58,221)
---------- ----------
TOTAL ASSETS $4,784,709 $4,580,669
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits $1,139,553 28,216 2.48% $1,151,466 28,244 2.45%
Savings deposits 253,968 6,012 2.37% 234,848 5,807 2.47%
Time deposits 1,349,727 56,926 4.22% 1,393,569 60,657 4.35%
Federal funds purchased and securities sold
under repurchase agreements 873,480 33,136 3.79% 762,909 22,062 2.89%
---------- -------- ---------- --------
Total interest-bearing liabilities 3,616,728 124,290 3.44% 3,542,792 116,770 3.30%
-------- --------
Noninterest-bearing demand deposits 695,289 622,783
Accrued expenses and other liabilities 62,876 59,911
Stockholders' equity 409,816 355,183
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,784,709 $4,580,669
========== ==========
NET INTEREST MARGIN 196,432 4.51% 199,446 4.77%
Less tax equivalent adjustments:
Investments 3,634 4,217
Loans 1,639 1,392
-------- --------
NET INTEREST MARGIN PER ANNUAL REPORT $191,159 $193,837
======== ========
7
DECEMBER 31,
-------------------------------
1992
-------------------------------
AVERAGE YIELD/
BALANCE INTEREST RATE
---------- -------- --------
ASSETS
Interest-earning assets:
Federal funds sold and securities purchased
under reverse repurchase agreements $172,215 $6,862 3.98%
Trading securities 1,372 90 6.56%
Securities available for sale 27,506 956 3.48%
Securities held to maturity:
U.S. Treasury and U.S. Government agencies 1,433,333 111,906 7.81%
Obligations of states and political subdivisions 156,771 16,083 10.26%
Other securities 31,437 1,657 5.27%
Loans, net of unearned income 2,008,855 179,582 8.94%
---------- --------
Total interest-earning assets 3,831,489 317,136 8.28%
Cash and due from banks 233,234
Other assets 185,806
Allowance for loan losses (46,360)
----------
TOTAL ASSETS $4,204,169
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits $1,072,145 34,019 3.17%
Savings deposits 207,149 6,556 3.16%
Time deposits 1,571,772 81,736 5.20%
Federal funds purchased and securities sold
under repurchase agreements 454,128 16,058 3.54%
---------- --------
Total interest-bearing liabilities 3,305,194 138,369 4.19%
--------
Noninterest-bearing demand deposits 542,823
Accrued expenses and other liabilities 47,491
Stockholders' equity 308,661
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,204,169
==========
NET INTEREST MARGIN 178,767 4.67%
Less tax equivalent adjustments:
Investments 5,111
Loans 1,399
--------
NET INTEREST MARGIN PER ANNUAL REPORT $172,257
========
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 1994 and 1993 and 34% for 1992. Certain reclassifications
have been made to the 1993 and 1992 statements to conform to the 1994 method of
presentation.
8
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):
1994 COMPARED TO 1993 1993 COMPARED TO 1992
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 ($184) $1,293 $1,109 ($377) ($1,406) ($1,783)
Trading securities (35) (8) (43) 5 16 21
Securities available for sale 27,905 4,780 32,685 5,390 1,568 6,958
Securities held to maturity:
U.S. Treasury and U.S. Government agencies (26,727) (15,470) (42,197) 10,567 (12,916) (2,349)
Obligations of states and political subdivisions 3,215 (1,904) 1,311 (1,996) (1,002) (2,998)
Other securities (1,597) 371 (1,226) (394) 335 (59)
Loans, net of unearned income 11,612 1,255 12,867 8,715 (9,425) (710)
------- -------- ------- ------- ------ -------
Total interest-earning assets 14,189 (9,683) 4,506 21,910 (22,830) (920)
INTEREST PAID ON:
Interest-bearing demand deposits (329) 301 (28) 2,374 (8,149) (5,775)
Savings deposits 451 (246) 205 801 (1,550) (749)
Time deposits (1,913) (1,818) (3,731) (8,633) (12,446) (21,079)
Federal funds purchased and securities sold
under repurchase agreements 3,517 7,557 11,074 9,376 (3,372) 6,004
------- -------- ------- ------- ------ -------
Total interest-bearing liabilities 1,726 5,794 7,520 3,918 (25,517) (21,599)
------- -------- ------- ------- ------ -------
CHANGE IN NET INTEREST INCOME ON A
TAX EQUIVALENT BASIS $12,463 ($15,477) ($3,014) $17,992 $2,687 $20,679
======= ======== ======= ======= ====== =======
The change in interest due to both volume and yield/rate has been
allocated to change due to volume and change due to yield/rate in proportion to
the absolute value of the change in each. Tax-exempt income has been adjusted
to a tax equivalent basis using a tax rate of 35% for 1994 and 1993 and 34% for
1992. The balances of nonaccrual loans and related income recognized have been
included for purposes of these computations.
9
TRUSTMARK CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 3 - SECURITIES AVAILABLE FOR SALE AND SECURITIES HELD TO MATURITY
The table below indicates amortized costs of securities available for sale and
held to maturity by type at year-end for each of the last three years ($ in
thousands):
DECEMBER 31,
--------------------------------------------------------
1994 1993 1992
---------- ---------- ----------
SECURITIES AVAILABLE FOR SALE
U. S. Treasury and U. S. Government agencies $ 439,690 $ 148,737 $ 89,397
Obligations of states and political subdivisions 8,420 13,805
Equity securities 12,909
---------- ---------- ----------
Total securities available for sale $ 452,599 $ 157,157 $ 103,202
========== ========== ==========
SECURITIES HELD TO MATURITY
U. S. Treasury and U. S. Government agencies $1,226,913 $1,650,040 $1,463,220
Obligations of states and political subdivisions 192,321 158,193 132,765
Other securities 3,426 3,207 5,864
---------- ---------- ----------
Total debt securities 1,422,660 1,811,440 1,601,849
Equity securities 11,969 13,584
---------- ---------- ----------
Total securities held to maturity $1,422,660 $1,823,409 $1,615,433
========== ========== ==========
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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, 1994 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
ONE YEAR YIELD FIVE YEARS YIELD TEN YEARS YIELD
------- ------- ---------- ----- ---------- -----
SECURITIES AVAILABLE FOR SALE
U. S. Treasury and U. S.
Government agencies $63,123 4.73% $312,166 5.78% $ 14,959 7.66%
======= ======== ========
Equity securities
Total securities available for sale
SECURITIES HELD TO MATURITY
U. S. Treasury and U. S.
Government agencies $12,423 5.94% $315,451 6.34% $134,393 6.78%
Obligations of states and
political subdivisions 18,616 8.19% 56,534 7.73% 66,316 7.63%
Other securities 3,277 8.38%
------- -------- --------
Total securities held to maturity $31,039 7.29% $371,985 6.55% $203,986 7.08%
======= ======== ========
MATURING
--------------------------------
AFTER
TEN YEARS YIELD TOTAL
--------- ----- ----------
SECURITIES AVAILABLE FOR SALE
U. S. Treasury and U. S.
Government agencies $ 49,442 7.27% $439,690
Equity securities ======== 12,909
--------
Total securities available for sale $452,599
========
SECURITIES HELD TO MATURITY
U. S. Treasury and U. S.
Government agencies $764,646 6.48% $1,226,913
Obligations of states and
political subdivisions 50,855 9.43% 192,321
Other securities 149 8.28% 3,426
-------- ----------
Total securities held to maturity $815,650 6.66% $1,422,660
======== ==========
Included in the above maturity schedule are mortgage related securities
totaling $977,518,000 which have contractual maturities as follow: Within One
Year - $924,000; After One, But Within Five Years - $17,437,000; After Five,
But Within Ten Years - $144,920,000; After Ten Years - $814,237,000. 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 4.18 years.
As of December 31, 1994 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 $104,702,000
and an approximate fair value of $102,336,000 were held on December 31, 1994.
Included in the aforementioned State of Mississippi holdings are bonds with an
aggregate carrying value of $24,786,000 and an approximate fair value of
$24,891,000 which are known to be prerefunded or escrowed to maturity by U. S.
Government securities.
11
TRUSTMARK CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 5 - COMPOSITION OF THE LOAN PORTFOLIO
The table below shows the carrying value of the loan portfolio at the end of
each of the last five years ($ in thousands):
DECEMBER 31,
-----------------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
Real estate loans:
Construction and land development $ 123,364 $ 102,873 $ 86,164 $ 92,189 $ 99,830
Secured by 1-4 family residential properties 504,078 569,411 485,378 436,540 405,730
Secured by nonfarm, nonresidential properties 345,130 340,058 308,755 325,029 352,358
Other real estate loans 63,169 52,295 50,550 39,935 37,248
Term federal funds sold 125,000 120,000
Loans to finance agricultural production 34,910 35,490 21,213 18,887 20,435
Commercial and industrial 594,836 531,054 487,322 505,370 552,379
Loans to individuals for personal expenditures 606,444 529,907 413,457 418,215 452,031
Obligations of states and political subdivisions 50,033 38,407 41,320 46,675 55,282
Loans for purchasing or carrying securities 1,840 3,995 6,490 6,549 6,455
Lease financing receivables 3,871 4,427 3,837 2,470 3,428
Other loans 19,890 23,101 30,014 34,108 16,247
---------- ---------- ---------- ---------- ----------
Loans, net of unearned income $2,347,565 $2,231,018 $2,059,500 $2,045,967 $2,001,423
========== ========== ========== ========== ==========
TABLE 6 - LOAN MATURITIES AND SENSITIVITY TO CHANGES IN INTEREST RATES
The table below shows the amounts of loans in certain categories outstanding as
of December 31, 1994, which, based on the remaining scheduled repayments of
principal, are due in the periods indicated ($ in thousands):
MATURING
--------------------------------------------------
ONE YEAR
WITHIN THROUGH AFTER
ONE YEAR FIVE FIVE
OR LESS YEARS YEARS TOTAL
-------- -------- -------- ----------
Construction and land development $ 95,482 $ 27,882 $ 123,364
Other loans secured by real estate (excluding
loans secured by 1-4 family residential
properties) 99,339 204,498 $104,462 408,299
Commercial and industrial 349,629 196,215 48,992 594,836
Other loans (excluding loans to individuals) 50,415 35,590 24,539 110,544
-------- -------- -------- ----------
Total $594,865 $464,185 $177,993 $1,237,043
======== ======== ======== ==========
The following table shows all loans due after one year classified according to
their sensitivity to changes in interest rates ($ in thousands):
MATURING
-------------------------------------
ONE YEAR
THROUGH AFTER
FIVE FIVE
YEARS YEARS TOTAL
-------- -------- --------
Above loans due after one year which have:
Predetermined interest rates $266,395 $ 75,361 $341,756
Floating interest rates 197,790 102,632 300,422
-------- -------- --------
Total $464,185 $177,993 $642,178
======== ======== ========
12
TRUSTMARK CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 7 - NONPERFORMING ASSETS AND PAST DUE LOANS
The table below shows the Corporation's nonperforming assets and past due loans
at the end of each of the last five years ($ in thousands):
DECEMBER 31,
-------------------------------------------------
1994 1993 1992 1991 1990
------- ------- ------- ------- -------
Loans accounted for on a nonaccrual basis $12,817 $13,730 $14,008 $20,023 $20,227
Restructured loans 2,552 1,373
------- ------- ------- ------- -------
Nonperforming loans 12,817 13,730 16,560 21,396 20,227
Other real estate owned 3,723 5,709 9,711 16,670 21,896
------- ------- ------- ------- -------
Nonperforming assets 16,540 19,439 26,271 38,066 42,123
Accruing loans past due 90 days or more 2,252 1,816 2,396 3,133 4,964
------- ------- ------- ------- -------
Total nonperforming assets and past due loans $18,792 $21,255 $28,667 $41,199 $47,087
======= ======= ======= ======= =======
Interest which would have been accrued on nonaccrual and restructured
loans if they had been in compliance with their original terms is immaterial.
At December 31, 1994 the Corporation had no loan concentrations greater
than ten percent of total loans except as shown in Table 5.
At December 31, 1994 there were no interest-earning assets that would be
required to be disclosed if such assets were loans.
It is the Corporation's policy that interest will not be accrued on any
loan for which payment in full of interest or principal is not expected, on any
loan which is seriously delinquent unless the obligation is both well secured
and in the process of collection, or on any loan that is maintained on a cash
basis due to deterioration in the financial condition of the borrower.
Management considers a debt to be "well secured" if it is secured by collateral
in the form of liens on or pledges of real or personal property that have a
realizable value sufficient to discharge the debt in full or by the guaranty of
a financially responsible party. A debt is considered to be "in process of
collection" if, based on a probable specific event, it is expected that the
loan will be repaid or brought current. At December 31, 1994, the Corporation
has no loans about which Management has serious doubts as to their
collectibility other than those disclosed above.
13
TRUSTMARK CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 8 - ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
The table below summarizes the Corporation's loan loss experience for each of
the last five years ($ in thousands):
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1994 1993 1992 1991 1990
------- ------- ------- ------- -------
Amount of loan loss reserve at beginning of period $65,014 $51,871 $41,542 $32,456 $33,929
Loans charged off:
Real estate loans (1,034) (2,451) (6,728) (7,855) (9,780)
Loans to finance agricultural production (21) (178) (131) (80) (2)
Commercial and industrial (979) (4,278) (7,698) (6,778) (3,740)
Loans to individuals for personal expenditures (4,780) (4,496) (5,499) (5,631) (4,601)
Lease financing receivables
All other loans (267) (162) (120) (272) (1,423)
------- ------- ------- ------- -------
Total charge-offs (7,081) (11,565) (20,176) (20,616) (19,546)
Recoveries on loans previously charged off:
Real estate loans 732 590 890 787 194
Loans to finance agricultural production 8 11 13
Commercial and industrial 581 2,796 1,221 401 734
Loans to individuals for personal expenditures 2,703 2,226 1,495 1,222 812
Lease financing receivables
All other loans 271 178 151 115 72
------- ------- ------- ------- -------
Total recoveries 4,295 5,790 3,768 2,525 1,825
------- ------- ------- ------- -------
Net charge-offs (2,786) (5,775) (16,408) (18,091) (17,721)
Additions to allowance charged to operating expense 2,786 18,596 26,737 27,177 16,248
Other additions to loan loss reserve 322
------- ------- ------- ------- -------
Amount of loan loss reserve at end of period $65,014 $65,014 $51,871 $41,542 $32,456
======= ======= ======= ======= =======
Percentage of net charge-offs during period to average
loans outstanding during the period 0.12% 0.27% 0.82% 0.93% 0.90%
======= ======= ======= ======= =======
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 collection 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, as well as additional guidance provided by
regulatory authorities. Each review includes analyses of historical loss
experience, trends in portfolio volume and composition and consideration of
current economic conditions. Once this information is analyzed, it is used as
the basis for allocations for significant credits that are individually
analyzed and for pools of other problem credits, homogeneous uncriticized
loans, credits by industry or concentration, and other off-balance sheet
commitments to lend. During 1994, the provision for loan losses equalled net
charge-offs. Management considered it prudent to maintain the allowance for
loan losses at $65.014 million at December 31, 1994 in light of recent
improvements in net charge-offs and nonperforming assets.
14
TRUSTMARK CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 9 - ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
The following table is a summary by allocation category of the Corporation's
allowance for loan losses at December 31, 1994. These allocations were
determined by internal formulas based upon Management's analyses of the various
types of risk associated with the Corporation's loan portfolio. A discussion
of Management's methodology for performing these analyses follows the table ($
in thousands):
Allocation for pools of
risk-rated loans $ 22,986
Additional allocation for
risk-rated loans 2,522
Allocation for selected
industries 1,030
General allocation for
all other loans 8,842
Allocation for available lines
of credit and letters of credit 2,194
Discretionary 27,440
--------
Total $ 65,014
========
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 as well as guidance provided in the Interagency Policy Statement.
Loss percentages were uniformly applied to pools of risk-rated loans within the
commercial 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-rated 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 residential 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
1994, 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. Arbitrary percentages, which were
the same as those applied to the funded portions of the commercial and retail
loan portfolios, were applied to cover any potential losses in these
off-balance sheet categories.
The remaining $27,440,000 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. Because of the imprecision
inherent in most estimates of expected credit losses, Management will continue
to take a prudent, yet conservative approach in the evaluation of the allowance
for loan losses.
15
TRUSTMARK CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 10 - TIME DEPOSITS OF $100,000 OR MORE
The table below shows maturities on outstanding time deposits of $100,000 or
more at December 31, 1994 ($ in thousands):
CERTIFICATES OTHER TIME
OF DEPOSIT DEPOSITS
---------- --------
3 months or less $151,495
Over 3 months through 6 months 53,036
Over 6 months through 12 months 40,568
Over 12 months 83,226
-------- -------
Total $328,325 $ 0
======== =======
TABLE 11 - SELECTED RATIOS
The following ratios are presented for each of the last three years:
1994 1993 1992
------ ------ ------
Return on average assets 1.15% 1.14% 0.97%
Return on average equity 13.42% 14.71% 13.21%
Dividend payout ratio 25.95% 23.87% 27.64%
Equity to assets ratio 8.57% 7.75% 7.34%
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):
1994 1993 1992
-------- -------- --------
Federal funds purchased and securities
sold under repurchase agreements:
Amount outstanding at end of period $851,038 $842,733 $555,162
Weighted average interest rate at end of period 5.38% 2.92% 3.07%
Maximum amount outstanding at any
month-end during each period $997,525 $911,888 $555,162
Average amount outstanding during each period $873,480 $762,909 $454,128
Weighted average interest rate during each period 3.79% 2.89% 3.54%
16
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. Trustmark operates 98 full-service and 27
limited-service branches. In addition, the Bank's ATM Network includes 68 ATMs
at on-premise locations with 42 located at off-premise sites. Trustmark leases
35 of the 156 total locations with the remainder being owned.
ITEM 3. LEGAL PROCEEDINGS
In January 1995, a judgment was rendered in a Mississippi circuit court
against the Corporation's subsidiary, Trustmark National Bank, in a case
related to the placement of collateral protection insurance ("CPI") by
Trustmark on a particular loan. The judgment awarded $500 thousand in actual
damages and $38 million in punitive damages to the plaintiffs. Several other
suits relating to CPI have been filed against Trustmark and are pending at
various stages. Management of the Corporation is vigorously pursuing the appeal
of the judgment mentioned above and the defense of the other pending suits.
While the ultimate outcome of any litigation is uncertain, Management believes,
based on the advice of legal counsel, that the judgment referred to above will
be reversed or substantially reduced and that the impact of this matter, the
other CPI related suits or any additional claims related to CPI will not be
material to the results of operations or financial position of the Corporation.
Trustmark is involved in various other legal matters and claims which are
being defended and handled in the ordinary course of business. None of these
other matters is expected, in the opinion of Management, to have a material
adverse effect upon the financial position or results of operations of the
Corporation.
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 1994.
17
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, 1995 there were approximately 5,300 shareholders of
record of the Corporation's common stock. Other information required by this
item can be found in Note 13, "Stockholders' Equity," (page 32) and the table
captioned "Principal Markets and Prices of the Corporation's Stock" (page 34)
included in the Registrant's 1994 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 33) included in the Registrant's 1994 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 35-40) included in the Registrant's 1994 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
1994 Annual Report to Shareholders (pages 19-40) and are incorporated herein by
reference. The table captioned "Summary of Quarterly Results of Operations"
(page 34) is also included in the Registrant's 1994 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, 1994.
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 VIII, "Other
18
Information Concerning Directors," contained in Trustmark Corporation's Proxy
Statement dated February 15, 1995 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 VI,
"Compensation of Executive Officers and Directors," and Section VIII, "Other
Information Concerning Directors," contained in Trustmark Corporation's Proxy
Statement dated February 15, 1995 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, "Voting Securities and Principal Holders
Thereof," and Section V, "Ownership of Equity Securities by Management,"
contained in Trustmark Corporation's Proxy Statement dated February 15, 1995
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 VII, "Transactions with Management," contained in Trustmark
Corporation's Proxy Statement dated February 15, 1995 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 1994 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, 1994 and 1993
Consolidated Statements of Income for the
Years Ended December 31, 1994, 1993 and 1992
Consolidated Statements of Changes in
Stockholders' Equity for the Years Ended
December 31, 1994, 1993 and 1992
19
Consolidated Statements of Cash Flows for
the Years Ended December 31, 1994, 1993
and 1992
Notes to Consolidated Financial Statements
(Notes 1 through 14)
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
Report on Form 8-K filed on October 21, 1994 reporting the merger of First
National Financial Corporation of Vicksburg, Mississippi with Trustmark
Corporation.
20
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/ HARRY M. WALKER
------------------ --------------------
Frank R. Day Harry M. Walker
Chairman of the Board, Secretary-Treasurer
President and Chief
Executive Officer
DATE: March 14, 1995 DATE: March 14, 1995
21
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 14, 1995 BY: /s/ J. Kelly Allgood
---------------------------------
J. Kelly Allgood, Director
DATE: March 14, 1995 BY: /s/ Reuben V. Anderson
---------------------------------
Reuben V. Anderson, Director
DATE: March 14, 1995 BY: /s/ John L. Black, Jr.
---------------------------------
John L. Black, Jr., Director
DATE: March 14, 1995 BY: /s/ Harry H. Bush
---------------------------------
Harry H. Bush, Director
DATE: March 14, 1995 BY: /s/ Robert P. Cooke III
---------------------------------
Robert P. Cooke III, Director
DATE: March 14, 1995 BY: /s/ William C. Deviney, Jr.
---------------------------------
William C. Deviney, Jr., Director
DATE: March 14, 1995 BY: /s/ D. G. Fountain, Jr.
---------------------------------
D. G. Fountain, Jr., Director
DATE: March 14, 1995 BY: /s/ C. Gerald Garnett
---------------------------------
C. Gerald Garnett, Director
DATE: March 14, 1995 BY: /s/ Matthew L. Holleman III
---------------------------------
Matthew L. Holleman III, Director
DATE: March 14, 1995 BY: /s/ Fred A. Jones
---------------------------------
Fred A. Jones, Director
DATE: March 14, 1995 BY: /s/ T. H. Kendall III
---------------------------------
T. H. Kendall III, Director
22
DATE: March 14, 1995 BY:
---------------------------------
Larry L. Lambiotte, Director
DATE: March 14, 1995 BY: /s/ Robert V. Massengill
---------------------------------
Robert V. Massengill, Director
DATE: March 14, 1995 BY: /s/ Donald E. Meiners
---------------------------------
Donald E. Meiners, Director
DATE: March 14, 1995 BY: /s/ William Neville III
---------------------------------
William Neville III, Director
DATE: March 14, 1995 BY: /s/ Richard H. Puckett
---------------------------------
Richard H. Puckett, Director
DATE: March 14, 1995 BY: /s/ Charles W. Renfrow
---------------------------------
Charles W. Renfrow, Director
DATE: March 14, 1995 BY: /s/ Clyda S. Rent
---------------------------------
Clyda S. Rent, Director
DATE: March 14, 1995 BY: /s/ William Thomas Shows
---------------------------------
William Thomas Shows, Director
DATE: March 14, 1995 BY: /s/ Harry M. Walker
---------------------------------
Harry M. Walker, Director
DATE: March 14, 1995 BY: /s/ LeRoy G. Walker, Jr.
---------------------------------
LeRoy G. Walker, Jr., Director
DATE: March 14, 1995 BY: /s/ Paul H. Watson, Jr.
---------------------------------
Paul H. Watson, Jr., Director
DATE: March 14, 1995 BY: /s/ John C. Wheeless, Jr.
---------------------------------
John C. Wheeless, Jr., Director
DATE: March 14, 1995 BY: /s/ Allen Wood, Jr.
---------------------------------
Allen Wood, Jr., Director
23
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.
3-c Articles of Incorporation, as amended. Filed as
Exhibit 3-c to the Corporation's Form 10-K Annual Report
for the year ended December 31, 1994.
10-a Deferred Compensation Plan for Directors of Trustmark
Corporation, as amended. 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. Filed as Exhibit 10-b to the
Corporation's Form 10-K Annual Report for the year
ended December 31, 1993.
10-c Deferred Compensation Plan for Directors of First
National Financial Corporation, acquired October 7, 1994.
Filed as Exhibit 10-c to the Corporation's Form 10-K
Annual Report for the year ended December 31, 1994.
10-d Life Insurance Plan for Executive Officers of First
National Financial Corporation, acquired October 7, 1994.
Filed as Exhibit 10-d to the Corporation's Form 10-K
Annual Report for the year ended December 31, 1994.
13 Only those portions of the Registrant's 1994 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.
27 Financial Data Schedule.
All other exhibits are omitted as they are inapplicable or not required by
the related instructions.