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, 1995
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 1, 1996, the aggregate market value of
the voting stock held by nonaffiliates of the Registrant was $517,802,469.
As of March 1, 1996, 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 1995 Annual Report to
Shareholders (Parts I and II), and (2) Proxy Statement for Registrant's Annual
Meeting of Shareholders dated February 16, 1996 (Part III).
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TRUSTMARK CORPORATION
FORM 10-K
INDEX
PART I
Item 1. Business 3
Item 2. Properties 14
Item 3. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of
Security Holders 14
PART II
Item 5. Market for the Registrant's Common Stock
and Related Stockholder Matters 15
Item 6. Selected Financial Data 15
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 15
Item 8. Financial Statements and Supplementary Data 15
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 15
PART III
Item 10. Directors and Executive Officers of the
Registrant 15
Item 11. Executive Compensation 15
Item 12. Security Ownership of Certain Beneficial
Owners and Management 16
Item 13. Certain Relationships and Related Transactions 16
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 16
SIGNATURES 18-21
EXHIBIT INDEX 22
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TRUSTMARK CORPORATION
1995 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. The Corporation's primary
business activities are conducted through its wholly-owned subsidiary, Trustmark
National Bank (Trustmark) and Trustmark's wholly-owned subsidiary, Trustmark
Financial Services, Inc. (TFSI). Trustmark accounts for substantially all of the
assets and 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. The Corporation also owns all of the stock of F. S.
Corporation and First Building Corporation, both nonbank Mississippi
corporations. F. S. Corporation and First Building Corporation are primarily
dormant and are not considered significant subsidiaries.
Trustmark Corporation's primary means of asset growth has been through
mergers and acquisitions of financial institutions. The most recent acquisition
involved the merger of First National Financial Corporation and its wholly-owned
subsidiary, First National Bank of Vicksburg with the Corporation. The business
combination was consummated on October 7, 1994 utilizing the pooling of
interests method of accounting. The Corporation, through its bank subsidiary,
Trustmark, offers a variety of deposit, investment and credit products to its
customers through a branch network with facilities in 162 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 has successfully introduced the Trustmark Express Check
debit card, 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 (ATM). 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 TFSI.
Full service brokerage was added as a service in 1994, and plans are being made
for expansion of offices in Trustmark branch locations. As of January 31, 1996,
the Corporation and its bank subsidiary employed 2,211 full-time equivalent
employees.
COMPETITION
The Corporation's bank subsidiary, 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,
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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 of 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.
The Corporation's bank subsidiary, 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 therefore subject to the regulations of
the Federal Deposit Insurance Corporation (FDIC). Consequently, Trustmark is
subject to FDIC insurance assessments. Trustmark qualifies for the lowest
assessment rate for deposits insured by the Bank Insurance Fund (BIF). In
November 1995, the FDIC reduced this assessment rate from $.04 per $100 of
deposits to zero, effective in 1996. Banks must still pay the mandatory minimum
$2,000 fee to belong to the insurance fund. In addition, Trustmark has
approximately $366 million of deposits insured by the Savings Association
Insurance Fund (SAIF) as the result of assisted purchases made through
transactions defined as "Oakar" by the FDIC. At the present time, this
assessment rate remains at $.23 per $100 of SAIF deposits.
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.
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EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of Trustmark Corporation (the Registrant) and its
bank subsidiary, Trustmark National Bank, including their ages, their positions
and their principal occupations for the last five years are as follows:
Frank R. Day, 64, 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.
Harry M. Walker, 45, Secretary, Trustmark Corporation since January
1995; President and Chief Operating Officer, Trustmark National Bank
since March 1992.
Gerard R. Host, 41, Treasurer, Trustmark Corporation since October
1995; Executive Vice President and Chief Financial Officer, Trustmark
National Bank since October 1995.
Charles Bailey, 64, Executive Vice President and Bank Operations
Manager, Trustmark National Bank from October 1984 until retirement
effective December 31, 1995.
George R. Day, 60, Executive Vice President and Chief Credit Officer,
Trustmark National Bank since January 1992.
Richard E. Horne, 48, Executive Vice President and Chief Lending
Officer, Trustmark National Bank since September 1992. Senior Vice
President in Lending and Branch Administration, C & S National Bank,
Fort Lauderdale, Florida from August 1988 to August 1992.
Thomas W. Mullen, 53, Executive Vice President for Strategic Planning,
Trustmark National Bank since November 1991.
William O. Rainey, 56, Executive Vice President and Chief Banking
Officer, Trustmark National Bank since November 1991.
All executive officers, with the exception of Richard E. Horne, have held
executive or senior management positions with the Corporation or Trustmark for
more than five years.
STATISTICAL DISCLOSURES
The consolidated statistical disclosures for Trustmark Corporation and
subsidiaries 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 at year end and the interest
income or expense associated with those assets and liabilities. The yields or
rates have been computed based upon the interest income or expense for each of
the last three years ended (tax equivalent basis - $ in thousands):
December 31,
-----------------------------------------------------------------------------
1995 1994
---------------------------------- ---------------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
---------- --------- ------- ----------- --------- -------
ASSETS
Interest-earning assets:
Federal funds sold and securities purchased
under reverse repurchase agreements $113,594 $6,815 6.00% $156,650 $6,188 3.95%
Trading securities 500 68 13.60% 964 68 7.05%
Securities available for sale:
Taxable 455,176 28,872 6.34% 628,073 40,599 6.46%
Nontaxable
Securities held to maturity:
Taxable 1,291,136 81,052 6.28% 1,215,805 71,797 5.91%
Nontaxable 99,933 9,060 9.07% 110,382 10,331 9.36%
Loans, net of unearned income 2,481,030 227,322 9.16% 2,246,350 191,739 8.54%
----------- --------- ----------- ---------
Total interest-earning assets 4,441,369 353,189 7.95% 4,358,224 320,722 7.36%
Cash and due from banks 275,235 267,107
Other assets 223,468 224,336
Allowance for loan losses (62,547) (64,958)
----------- -----------
TOTAL ASSETS $4,877,525 $4,784,709
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits $1,080,817 31,712 2.93% $1,139,553 28,216 2.48%
Savings deposits 235,223 6,109 2.60% 253,968 6,012 2.37%
Time deposits 1,448,962 74,553 5.15% 1,349,727 56,926 4.22%
Federal funds purchased and securities sold
under repurchase agreements 898,439 49,171 5.47% 873,480 33,136 3.79%
----------- --------- ----------- ---------
Total interest-bearing liabilities 3,663,441 161,545 4.41% 3,616,728 124,290 3.44%
--------- ---------
Noninterest-bearing demand deposits 701,357 695,289
Accrued expenses and other liabilities 60,891 62,876
Stockholders' equity 451,836 409,816
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,877,525 $4,784,709
=========== ===========
NET INTEREST MARGIN 191,644 4.31% 196,432 4.51%
Less tax equivalent adjustments:
Investments 3,171 3,634
Loans 1,677 1,639
--------- ---------
NET INTEREST MARGIN PER ANNUAL REPORT $186,796 $191,159
========= =========
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December 31,
--------------------------------------------
1993
--------------------------------------------
Average Yield/
Balance Interest Rate
-------- -------- -------
ASSETS
Interest-earning assets:
Federal funds sold and securities purchased
under reverse repurchase agreements $162,375 $5,079 3.13%
Trading securities 1,445 111 7.68%
Securities available for sale:
Taxable 165,246 7,180 4.35%
Nontaxable 11,113 734 6.60%
Securities held to maturity:
Taxable 1,626,459 112,920 6.94%
Nontaxable 110,034 11,320 10.29%
Loans, net of unearned income 2,108,314 178,872 8.48%
----------- ----------
Total interest-earning assets 4,184,986 316,216 7.56%
Cash and due from banks 251,115
Other assets 202,789
Allowance for loan losses (58,221)
-----------
TOTAL ASSETS $4,580,669
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits $1,151,466 28,244 2.45%
Savings deposits 234,848 5,807 2.47%
Time deposits 1,393,569 60,657 4.35%
Federal funds purchased and securities sold
under repurchase agreements 762,909 22,062 2.89%
----------- ----------
Total interest-bearing liabilities 3,542,792 116,770 3.30%
----------
Noninterest-bearing demand deposits 622,783
Accrued expenses and other liabilities 59,911
Stockholders' equity 355,183
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,580,669
===========
NET INTEREST MARGIN 199,446 4.77%
Less tax equivalent adjustments:
Investments 4,217
Loans 1,392
-----------
NET INTEREST MARGIN PER ANNUAL REPORT $193,837
===========
Nonaccruing loans have been included in the average loan balances and
interest collected prior to these loans having been placed on nonaccrual has
been included in interest income. Loan fees included in interest associated
with the average loan balances are immaterial. Interest income and average
yield on tax-exempt assets have been calculated on a fully tax equivalent basis
using a tax rate of 35% for each of the three years presented. Certain
reclassifications have been made to the 1994 and 1993 statements to conform to
the 1995 method of presentation.
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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):
1995 Compared to 1994 1994 Compared to 1993
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 ($2,007) $2,634 $627 ($184) $1,293 $1,109
Trading securities (43) 43 0 (35) (8) (43)
Securities available for sale:
Taxable (10,985) (742) (11,727) 28,485 4,934 33,419
Nontaxable 0 0 0 (734) 0 (734)
Securities held to maturity:
Taxable 4,604 4,651 9,255 (25,899) (15,224) (41,123)
Nontaxable (958) (313) (1,271) 36 (1,025) (989)
Loans, net of unearned income 20,994 14,589 35,583 11,612 1,255 12,867
-------- -------- -------- -------- -------- --------
Total interest-earning assets 11,605 20,862 32,467 13,281 (8,775) 4,506
Interest paid on:
Interest-bearing demand deposits (1,496) 4,992 3,496 (329) 301 (28)
Savings deposits (463) 560 97 451 (246) 205
Time deposits 4,410 13,217 17,627 (1,913) (1,818) (3,731)
Federal funds purchased and securities sold
under repurchase agreements 971 15,064 16,035 3,517 7,557 11,074
-------- -------- -------- -------- -------- --------
Total interest-bearing liabilities 3,422 33,833 37,255 1,726 5,794 7,520
-------- -------- -------- -------- -------- --------
Change in net interest income on a
tax equivalent basis $8,183 ($12,971) ($4,788) $11,555 ($14,569) ($3,014)
======== ======== ======== ======== ======== ========
The change in interest due to both volume and yield/rate has been
allocated to change due to volume and change due to yield/rate in proportion to
the absolute value of the change in each. Tax-exempt income has been adjusted
to a tax equivalent basis using a tax rate of 35% for 1995, 1994 and 1993. The
balances of nonaccrual loans and related income recognized have been included
for purposes of these computations.
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TRUSTMARK CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 3 - SECURITIES AVAILABLE FOR SALE AND SECURITIES HELD TO MATURITY
The table below indicates amortized costs of securities available for sale and
held to maturity by type at year end for each of the last three years ($ in
thousands):
DECEMBER 31,
---------------------------------------------------
1995 1994 1993
---------- ---------- ----------
SECURITIES AVAILABLE FOR SALE
U. S. Treasury and U. S. Government agencies $413,385 $376,302 $97,484
Obligations of states and political subdivisions 8,420
Mortgage-backed securities 53,382 63,388 51,253
---------- ---------- ----------
Total debt securities 466,767 439,690 157,157
Equity securities 13,080 12,909
---------- ---------- ----------
Total securities available for sale $479,847 $452,599 $157,157
========== ========== ==========
SECURITIES HELD TO MATURITY
U. S. Treasury and U. S. Government agencies $257,335 $316,109 $722,567
Obligations of states and political subdivisions 212,065 192,321 158,193
Mortgage-backed securities 884,132 914,130 927,625
Other securities 100 100 3,055
---------- ---------- ----------
Total debt securities 1,353,632 1,422,660 1,811,440
Equity securities 11,969
---------- ---------- ----------
Total securities held to maturity $1,353,632 $1,422,660 $1,823,409
========== ========== ==========
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 Decmber 31, 1995 and the weighted
average yield for each range of maturities (tax equivalent basis - $ in
thousands):
MATURING
---------------------------------------------------------------------------------------
AFTER ONE, AFTER FIVE,
WITHIN BUT WITHIN BUT WITHIN AFTER
ONE YEAR YIELD FIVE YEARS YIELD TEN YEARS YIELD TEN YEARS YIELD TOTAL
--------- ------ ---------- ----- ----------- ------ --------- ----- ---------
SECURITIES AVAILABLE FOR SALE
U. S. Treasury and U. S.
Government agencies $122,351 5.47% $291,034 5.55% $413,385
Mortgage-backed securities $23,785 7.54% $29,597 7.33% 53,382
-------- -------- -------- -------- ----------
Total debt securities 122,351 291,034 23,785 29,597 466,767
Equity securities 13,080
-------- -------- -------- -------- ----------
Total securities available for
sale $122,351 $291,034 $23,785 $29,597 $479,847
======== ======== ======== ======== ==========
SECURITIES HELD TO MATURITY
U. S. Treasury and U. S.
Government agencies $41,691 7.35% $215,644 6.18% $257,335
Obligations of states and
political subdivisions 21,009 8.00% 62,317 7.18% $ 86,498 7.63% $ 42,241 8.91% $ 212,065
Mortgage-backed securities 1,863 6.52% 17,694 6.99% 209,181 6.61% 655,394 6.44% 884,132
Other securities 100 7.50% 100
-------- -------- -------- -------- ----------
Total securities held to maturity $64,563 7.54% $295,655 6.44% $295,779 6.91% $697,635 6.59% $1,353,632
======== ======== ======== ======== ==========
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 2.95 years.
As of December 31, 1995 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 $122,202,000
and an approximate fair value of $126,807,000 were held on December 31, 1995.
Included in the aforementioned State of Mississippi holdings are bonds with an
aggregate carrying value of $21,183,000 and an approximate fair value of
$21,694,000 which are known to be prerefunded or escrowed to maturity by U. S.
Government securities.
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TRUSTMARK CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 5 - COMPOSITION OF THE LOAN PORTFOLIO
The table below shows the carrying value of the loan portfolio at the
end of each of the last five years ($ in thousands):
DECEMBER 31,
-------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
Real estate loans:
Construction and land development $144,010 $123,364 $102,873 $86,164 $92,189
Secured by 1-4 family residential properties 553,997 504,078 569,411 485,378 436,540
Secured by nonfarm, nonresidential properties 380,734 345,130 340,058 308,755 325,029
Other real estate loans 69,422 63,169 52,295 50,550 39,935
Term federal funds sold 125,000 120,000
Loans to finance agricultural production 37,434 34,910 35,490 21,213 18,887
Commercial and industrial 616,949 594,836 531,054 487,322 505,370
Loans to individuals for personal expenditures 641,409 606,444 529,907 413,457 418,215
Obligations of states and political subdivisions 63,557 50,033 38,407 41,320 46,675
Loans for purchasing or carrying securities 11,626 1,840 3,995 6,490 6,549
Lease financing receivables 2,360 3,871 4,427 3,837 2,470
Other loans 50,593 19,890 23,101 30,014 34,108
---------- ---------- ---------- ---------- ----------
Loans, net of unearned income $2,572,091 $2,347,565 $2,231,018 $2,059,500 $2,045,967
========== ========== ========== ========== ==========
TABLE 6 - LOAN MATURITIES AND SENSITIVITY TO CHANGES IN INTEREST RATES
The table below shows the amounts of loans in certain categories
outstanding as of December 31, 1995, which, based on the remaining scheduled
repayments of principal, are due in the periods indicated ($ in thousands):
MATURING
-------------------------------------------------
ONE YEAR
WITHIN THROUGH AFTER
ONE YEAR FIVE FIVE
OR LESS YEARS YEARS TOTAL
---------- ---------- ---------- ----------
Construction and land development $123,156 $20,854 $144,010
Other loans secured by real estate (excluding
loans secured by 1-4 family residential
properties) 217,484 157,592 $75,080 450,156
Commercial and industrial 391,691 180,580 44,678 616,949
Other loans (excluding loans to individuals) 115,015 21,308 29,247 165,570
---------- ---------- ---------- ----------
Total $847,346 $380,334 $149,005 $1,376,685
========== ========== ========== ==========
The following table shows all loans due after one year classified
according to their sensitivity to changes in interest rates ($ in thousands):
MATURING
------------------------------------
ONE YEAR AFTER
THROUGH FIVE
FIVE YEARS YEARS TOTAL
---------- ---------- ----------
Above loans due after one year which have: $333,960 $134,598 $468,558
Predetermined interest rates 46,374 14,407 60,781
Floating interest rates ---------- ---------- ----------
Total $380,334 $149,005 $529,339
========== ========== ==========
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TRUSTMARK CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 7 - NONPERFORMING ASSETS AND PAST DUE LOANS
The table below shows the Corporation's nonperforming assets and past due loans
at the end of each of the last five years ($ in thousands):
DECEMBER 31,
-----------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
Nonaccrual loans $10,055 $12,817 $13,730 $14,008 $20,023
Restructured loans 2,552 1,373
------- ------- ------- ------- -------
Nonperforming loans 10,055 12,817 13,730 16,560 21,396
Other real estate 3,982 3,723 5,709 9,711 16,670
------- ------- ------- ------- -------
Nonperforming assets 14,037 16,540 19,439 26,271 38,066
Accruing loans past due 90 days or more 1,810 2,252 1,816 2,396 3,133
------- ------- ------- ------- -------
Total nonperforming assets and loans past due
90 days or more $15,847 $18,792 $21,255 $28,667 $41,199
======= ======= ======= ======= =======
Generally, a loan is classified as nonaccrual and the accrual of interest
on such loan is discontinued when the contractual payment of principal or
interest has become 90 days past due or Management has serious doubts about
further collectibility of principal or interest, even though the loan is
currently performing. A loan may remain on nonaccrual status if it is in the
process of collection and is either guaranteed or well secured. When a loan is
placed on nonaccrual status, unpaid interest credited to income in the current
and prior years is reversed against interest income. Interest received on
nonaccrual loans is applied against principal. Loans are restored to accrual
status when the obligation is brought current or has performed in accordance
with the contractual terms for a reasonable period of time and the ultimate
collectibility of the total contractual principal and interest is no longer in
doubt. Interest which would have been accrued on nonaccrual and restructured
loans if they had been in compliance with their original terms is immaterial. In
addition, interest income on these loans that was included in net income for the
periods presented was immaterial.
At December 31, 1995 Management is not aware of any additional credits,
other than those identified above, where serious doubts as to the repayment of
principal and interest exist. There are no interest-earning assets which would
be required to be disclosed above if those assets were loans. The Corporation
had no loan concentrations greater than ten percent of total loans other than
those loan categories shown in Table 5.
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TRUSTMARK CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 8 - ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
The table below summarizes the Corporation's loan loss experience for
each of the last five years ($ in thousands):
Year Ended December 31,
---------------------------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
Balance at beginning of period $65,014 $65,014 $51,871 $41,542 $32,456
Loans charged off:
Real estate loans (1,663) (1,034) (2,451) (6,728) (7,855)
Loans to finance agricultural production (115) (21) (178) (131) (80)
Commercial and industrial (764) (979) (4,278) (7,698) (6,778)
Loans to individuals for personal expenditures (6,300) (4,780) (4,496) (5,499) (5,631)
Lease financing receivables
All other loans (648) (267) (162) (120) (272)
--------- --------- --------- --------- ---------
Total charge-offs (9,490) (7,081) (11,565) (20,176) (20,616)
Recoveries on loans previously charged off:
Real estate loans 981 732 590 890 787
Loans to finance agricultural production 10 8 11
Commercial and industrial 736 581 2,796 1,221 401
Loans to individuals for personal expenditures 1,848 2,703 2,226 1,495 1,222
Lease financing receivables
All other loans 462 271 178 151 115
--------- --------- --------- --------- ---------
Total recoveries 4,037 4,295 5,790 3,768 2,525
--------- --------- --------- --------- ---------
Net charge-offs (5,453) (2,786) (5,775) (16,408) (18,091)
Additions to allowance charged to operating expense 2,439 2,786 18,596 26,737 27,177
Other additions to allowance for loan losses 322
--------- --------- --------- --------- ---------
Balance at end of period $62,000 $65,014 $65,014 $51,871 $41,542
========= ========= ========= ========= =========
Percentage of net charge-offs during period to average
loans outstanding during the period 0.22% 0.12% 0.27% 0.82% 0.93%
========= ========= ========= ========= =========
The allowance for loan losses is maintained at a level believed adequate by
Management to absorb estimated probable loan losses. Management's periodic
evaluation of the adequacy of the allowance is based on the Corporation's past
loan loss experience, known and inherent risks in the portfolio, adverse
situations that may affect the borrower's ability to repay (including the
timing of future payments), the estimated value of any underlying collateral,
composition of the loan portfolio, current economic conditions, and other
relevant factors. This evaluation is inherently subjective as it requires
material estimates including the amounts and timing of future cash flows
expected to be received on impaired loans that may be susceptible to
significant change.
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TRUSTMARK CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 9 - ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
The following table is a summary by allocation category of the
Corporation's allowance for loan losses at December 31, 1995. These
allocations were determined by internal formulas based upon Management's
analyses of the various types of risk associated with the Corporation's loan
portfolio. A discussion of Management's methodology for performing these
analyses follows the table ($ in thousands):
Allocation for pools of
risk-rated loans $ 24,229
Additional allocation for
risk-rated loans 923
Allocation for selected
industries 1,187
General allocation for
all other loans 8,935
Allocation for available lines
of credit and letters of credit 1,816
Discretionary 24,910
---------
Total $ 62,000
=========
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, plus estimated losses associated with
off-balance sheet credit instruments such as letters of credit and unfunded
lines of credit. The adequacy of the allowance is reviewed quarterly utilizing
the criteria specified in the Office of the Comptroller of the Currency's
revised Banking Circular 201 as well as additional guidance provided in the
Interagency Policy Statement. Loss percentages were uniformly applied to pools
of risk-rated loans within the commercial portfolio. These percentages 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 consumer loans, credit
card loans and overdrafts. The actual allocation amount was based upon the
more conservative estimate of loss experience within these categories during
1995, 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 $24,910,000 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 stability shown by the Corporation's level of nonperforming
assets, Management estimates that the anticipated amount of net charge-offs for
1996 will be at approximately the same level as 1995. However, 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.
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TRUSTMARK CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 10 - TIME DEPOSITS OF $100,000 OR MORE
The table below shows maturities on outstanding time deposits of $100,000 or
more at December 31, 1995 ($ in thousands):
3 months or less $163,518
Over 3 months through 6 months 69,689
Over 6 months through 12 months 66,957
Over 12 months 56,885
--------
Total $357,049
========
TABLE 11 - SELECTED RATIOS
The following ratios are presented for each of the last three years:
1995 1994 1993
============ ============ =============
Return on average assets 1.23% 1.15% 1.14%
Return on average equity 13.23% 13.42% 14.71%
Dividend payout ratio 25.73% 25.95% 23.87%
Equity to assets ratio 9.26% 8.57% 7.75%
TABLE 12 - SHORT-TERM BORROWINGS
The table below presents certain information concerning the Corporation's
short-term borrowings for each of the last three years ($ in thousands):
1995 1994 1993
============ ============ =============
Federal funds purchased and securities
sold under repurchase agreements:
Amount outstanding at end of period $932,983 $851,038 $842,733
Weighted average interest rate at end of period 5.13% 5.38% 2.92%
Maximum amount outstanding at any
month end during each period $945,207 $997,525 $911,888
Average amount outstanding during each period $898,439 $873,480 $762,909
Weighted average interest rate during each period 5.47% 3.79% 2.89%
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ITEM 2. PROPERTIES
The Corporation's principal offices are housed in a 14-floor
combination office and bank building located in Jackson, Mississippi. This
building, along with all other physical properties of the Corporation, are
owned by its bank subsidiary, Trustmark. Approximately 155,000 square feet
(55%) of the available space in the main office building is allocated to bank
use with the remainder occupied by tenants on a lease basis. Trustmark also
operates 97 full-service branches, 28 limited-service branches and an ATM
network which includes 71 ATMs at on-premise locations and 49 ATMs located at
off-premise sites. Trustmark leases 36 of its 162 total locations with the
remainder being owned.
ITEM 3. LEGAL PROCEEDINGS
In January 1995, a judgment was rendered in a Mississippi trial 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
(against Trustmark and the insurance agent, jointly and severally) and $38
million in punitive damages (against Trustmark only). Trustmark filed motions
for entry of judgment in its favor, or for a new trial, or to reduce the
verdicts. The judge took the motions under advisement in April 1995. On
August 4, 1995, the court reduced the punitive damage award from $38 million to
$5 million. The judge left the actual damage award intact. Notice of appeal
has been filed by Trustmark appealing this case to the Mississippi Supreme
Court. Notice of cross-appeal has been filed by the plaintiffs.
There are 11 other CPI-related suits in state courts and ten suits in
federal courts. On September 18, 1995, one of the federal court suits was
certified as a class action, with the class broadly defined to include all
persons who financed an automobile through Trustmark and whose loan accounts
were charged for CPI premiums. One of the CPI insurers, the CPI underwriter
and the insurance agent are also defendants to the class action. The court
proceedings are matters of public record.
The cases are being vigorously contested. Investigation is continuing.
Similar, but not identical, cases in other states have had a variety of
results, including settlements. Trustmark's program was consistent with those
of numerous other banks, including banks in Mississippi which are in the
process of defending similar suits. While the ultimate outcome of this legal
matter cannot be predicted with reasonable certainty, Management believes that
the resolution of this matter will not have a material adverse effect on the
Corporation's consolidated financial position. However, Management cannot
predict with reasonable certainty the impact it might have on the Corporation's
consolidated results of operations during periods until the litigation is
terminated.
In addition, Trustmark is defendant in various other pending and
threatened legal actions arising in the normal course of business. In the
opinion of Management, and based on the advice of legal counsel, the ultimate
resolution of these matters will not have a material effect on the
Corporation's consolidated financial statements.
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 1995.
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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 January 26, 1996 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 12, "Stockholders' Equity," (page 33) and the table
captioned "Principal Markets and Prices of the Corporation's Stock" (page 37)
included in the Registrant's 1995 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 36) included in the Registrant's 1995 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 37-43) included in the Registrant's 1995 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
1995 Annual Report to Shareholders (pages 19-43) and are incorporated herein by
reference. The table captioned "Summary of Quarterly Results of Operations"
(page 36) is also included in the Registrant's 1995 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, 1995.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information on the directors of the Registrant can be found in Section II,
"Election of Directors," and Section VII, "Other Information Concerning
Directors," contained in Trustmark Corporation's Proxy Statement dated February
16, 1996 and is incorporated herein by reference. Information on the
Registrant's executive officers is included in Part I, page 5 of this report.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this item can be found in Section V, "Compensation
of Executive Officers and Directors," and Section VII, "Other Information
Concerning Directors," contained in Trustmark
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Corporation's Proxy Statement dated February 16, 1996 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 16, 1996 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 VI, "Transactions with Management," contained in Trustmark
Corporation's Proxy Statement dated February 16, 1996 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 1995 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, 1995 and 1994
Consolidated Statements of Income for the
Years Ended December 31, 1995, 1994 and 1993
Consolidated Statements of Changes in
Stockholders' Equity for the Years Ended
December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows for
the Years Ended December 31, 1995, 1994
and 1993
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.
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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
No reports on Form 8-K were filed during the last quarter of the period
covered by this report.
C. Exhibits
The response to this portion of Item 14 is submitted as a separate section
of this report.
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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/ Gerard R. Host
------------------------- -------------------------
Frank R. Day Gerard R. Host
Chairman of the Board, Treasurer
President and Chief
Executive Officer
DATE: March 12, 1996 DATE: March 12, 1996
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
DATE: March 12, 1996 BY: /s/ J. Kelly Allgood
------------------------------
J. Kelly Allgood, Director
DATE: March 12, 1996 BY: /s/ Reuben V. Anderson
------------------------------
Reuben V. Anderson, Director
DATE: March 12, 1996 BY:
------------------------------
John L. Black, Jr., Director
DATE: March 12, 1996 BY: /s/ Harry H. Bush
------------------------------
Harry H. Bush, Director
DATE: March 12, 1996 BY: /s/ Robert P. Cooke III
------------------------------
Robert P. Cooke III, Director
DATE: March 12, 1996 BY: /s/ Frank R. Day
------------------------------
Frank R. Day, Principal
Executive Officer and Director
DATE: March 12, 1996 BY:
------------------------------
William C. Deviney, Jr.,
Director
DATE: March 12, 1996 BY: /s/ D. G. Fountain, Jr.
------------------------------
D. G. Fountain, Jr., Director
DATE: March 12, 1996 BY: /s/ C. Gerald Garnett
------------------------------
C. Gerald Garnett, Director
DATE: March 12, 1996 BY: /s/ Matthew L. Holleman III
------------------------------
Matthew L. Holleman III, Director
DATE: March 12, 1996 BY: /s/ Fred A. Jones
------------------------------
Fred A. Jones, Director
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DATE: March 12, 1996 BY: /s/ T. H. Kendall III
------------------------------
T. H. Kendall III, Director
DATE: March 12, 1996 BY:
------------------------------
Larry L. Lambiotte, Director
DATE: March 12, 1996 BY: /s/ Robert V. Massengill
------------------------------
Robert V. Massengill, Director
DATE: March 12, 1996 BY: /s/ Donald E. Meiners
------------------------------
Donald E. Meiners, Director
DATE: March 12, 1996 BY: /s/ William Neville III
------------------------------
William Neville III, Director
DATE: March 12, 1996 BY: /s/ Richard H. Puckett
------------------------------
Richard H. Puckett, Director
DATE: March 12, 1996 BY: /s/ Charles W. Renfrow
------------------------------
Charles W. Renfrow, Director
DATE: March 12, 1996 BY: /s/ Clyda S. Rent
------------------------------
Clyda S. Rent, Director
DATE: March 12, 1996 BY: /s/ William Thomas Shows
------------------------------
William Thomas Shows, Director
DATE: March 12, 1996 BY: /s/ Harry M. Walker
------------------------------
Harry M. Walker, Director
DATE: March 12, 1996 BY: /s/ LeRoy G. Walker, Jr.
------------------------------
LeRoy G. Walker, Jr., Director
DATE: March 12, 1996 BY: /s/ Paul H. Watson, Jr.
------------------------------
Paul H. Watson, Jr., Director
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DATE: March 12, 1996 BY: /s/ John C. Wheeless, Jr.
------------------------------
John C. Wheeless, Jr., Director
DATE: March 12, 1996 BY: /s/ Allen Wood, Jr.
------------------------------
Allen Wood, Jr., Director
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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 1995 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.
22