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JACKSON, Miss.--(BUSINESS WIRE)--Trustmark Corporation (NASDAQ:TRMK) reported net income of $51.2 million in the fourth quarter of 2020, representing diluted earnings per share of $0.81. Net income in the fourth quarter produced a return on average tangible equity of 15.47% and a return on average assets of 1.28%. For the full year, Trustmarks net income totaled a record level of $160.0 million, representing diluted earnings per share of $2.51. Diluted earnings per share in 2020 increased 8.2% when compared to the prior year. Trustmarks net income in 2020 produced a return on average tangible equity of 12.58% and a return on average assets of 1.05%. Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/52367350/en Trustmarks Board of Directors declared a quarterly cash dividend of $0.23 per share payable March 15, 2021, to shareholders of record on March 1, 2021. Gerard R. Host, Executive Chairman, stated, This past year has been extremely challenging for everyone. The effects of COVID-19 have significantly impacted the ways in which we live, work and interact with one another. We extend our deepest sympathies to all who lost loved ones and all who have been impacted by this pandemic. We also extend our sincere appreciation and gratitude to healthcare professionals for their tireless and self-sacrificing work during this pandemic. Also, we want to thank our associates for their countless efforts to serve our customers and support our communities and businesses. Trustmark remains committed to providing solutions to meet customers unique needs during these unprecedented times. 2020 Highlights Duane A. Dewey, President and CEO, commented, Our financial results demonstrate the value of Trustmarks diversified financial services businesses. Despite a challenging environment, our banking, insurance and wealth management businesses all performed well while our mortgage banking business achieved record results. We experienced significant loan and deposit growth, and credit quality remained extremely strong as did capital ratios. Trustmark continues to be well-positioned to serve and expand its customer base and create long-term value for its shareholders. Balance Sheet Management Loans held for investment totaled $9.8 billion at December 31, 2020, reflecting an increase of 5.2% from the prior year. At December 31, 2020, Trustmarks gross PPP loans totaled $623.0 million. Net of deferred fees and costs of $12.9 million, PPP loans totaled $610.1 million. Collectively, loans held for investment and PPP loans totaled $10.4 billion at year end 2020, an increase of $1.1 billion, or 11.8% from the prior year. Deposits totaled $14.0 billion at December 31, 2020, up $826.4 million, or 6.2%, from the prior quarter and $2.8 billion, or 24.9%, year-over-year primarily reflecting the impact of additional customer liquidity. Noninterest bearing deposits represented 31.0% of total deposits at December 31, 2020. Interest-bearing deposit costs totaled 0.27% for the fourth quarter, a decrease of 4 basis points linked-quarter. The total cost of interest-bearing liabilities was 0.30% for the fourth quarter of 2020, a decrease of 3 basis points from the prior quarter. Trustmarks capital position remained solid, reflecting the strength and diversity of its financial services businesses. During the fourth quarter of 2020, Trustmark Corporation issued $125 million of 3.625% fixed-to-floating rate subordinated notes due in 2030 for general corporate purposes, further strengthening its regulatory capital position. At December 31, 2020, Trustmarks tangible equity to tangible assets ratio was 8.34%, while the total risk-based capital ratio increased to 14.12%. As previously announced, Trustmarks Board of Directors authorized a stock repurchase program effective April 1, 2020, under which $100 million of Trustmarks outstanding shares may be acquired through December 31, 2021. While Trustmark suspended its share repurchase program during the first quarter of 2020 to preserve capital given the economic uncertainty associated with the COVID-19 pandemic, Trustmark expects to resume the repurchase of its shares from time to time at prevailing market prices, through open market or private transactions, depending on market conditions, and in conjunction with its disciplined share repurchase framework. There is no guarantee as to the number of shares that may be repurchased by Trustmark, and Trustmark may discontinue purchases at any time at managements discretion. Credit Quality Nonperforming loans totaled $63.1 million at December 31, 2020, an increase of $9.3 million from the prior quarter and $9.9 million year-over-year. Other real estate totaled $11.7 million, reflecting a $4.6 million decrease from the prior quarter and a $17.6 million decline from the prior year. Collectively, nonperforming assets totaled $74.8 million, reflecting a linked-quarter increase of 6.7% and year-over-year reduction of 9.3%. Allocation of Trustmarks $117.3 million allowance for credit losses on loans held for investment represented 1.20% of commercial loans and 1.16% of consumer and home mortgage loans, resulting in an allowance for credit losses to total loans held for investment of 1.19% at December 31, 2020, representing a level management considers commensurate with the present risk in the loan portfolio. Revenue Generation Revenue in the fourth quarter totaled $177.5 million, a decrease of 1.3% from the prior quarter and an increase of 15.9% from the same quarter in the prior year. The linked-quarter decline reflects higher net interest income, which was more than offset by reduced mortgage banking revenue. In 2020, revenue totaled $701.1 million, an increase of 14.3% from the prior year. Excluding interest and fees on PPP loans, revenue totaled $674.5 million in 2020, an increase of $60.9 million, or 9.9%, from the prior year principally due to growth in mortgage banking revenue. Net interest income (FTE) in the fourth quarter totaled $114.3 million, resulting in a net interest margin of 3.15%. Relative to the prior quarter, net interest income (FTE) increased $5.1 million reflecting an increase of $4.5 million in interest income as well as a $611 thousand reduction in interest expense. Excluding interest and fees on PPP loans, net interest income (FTE) totaled $99.4 million, resulting in a net interest margin of 2.91%, a linked-quarter decline of 14 basis points. Continued low interest rates decreased the yield on the loans held for investment and held for sale portfolio as well as the securities portfolio and were partially offset by lower costs of interest-bearing deposits. Noninterest income in the fourth quarter totaled $66.1 million, a decrease of $7.6 million from the prior quarter and an increase of $18.5 million from the prior year. The linked-quarter change reflects increases in service charges on deposit accounts and bank card and other fees, which were more than offset by a decline in mortgage banking revenue and a seasonal decline in insurance revenue. The increase in noninterest income year-over-year is principally due to increased mortgage banking revenue. Mortgage loan production in the fourth quarter totaled $788.4 million, a seasonal decline of 11.0% from the prior quarter and a 58.1% increase year-over-year. Mortgage banking revenue before hedge ineffectiveness totaled $29.1 million in the fourth quarter, a decline of $6.6 million from the prior quarter primarily due to lower gains on sale of loans in the secondary market. In 2020, mortgage loan production totaled a record $2.98 billion, up 69.4% from the prior year. Mortgage banking revenue totaled $125.8 million in 2020, an increase of $96.0 million from the prior year. Insurance revenue in the fourth quarter totaled $10.2 million, a seasonal decline of $1.4 million from the prior quarter and an increase of $832 thousand from the prior year. Insurance revenue in 2020 totaled $45.2 million, up $2.8 million, or 6.6%, from the prior year. The solid performance during the year reflects an expanded producer workforce as well as the realization of operational efficiencies from investments in technology and improved processes. Wealth management revenue totaled $7.8 million in the fourth quarter, up 2.1% from the prior quarter and 1.0% from the prior year. In 2020, wealth management revenue totaled $31.6 million, an increase of 3.1% from the prior year. During 2020, Trustmark continued to enhance its competitive positioning and efficiency of its wealth management businesses as well as expand its Private Banking capabilities in key markets. Noninterest Expense Adjusted noninterest expense in the fourth quarter was $119.6 million, up $4.9 million, or 4.3%, from the prior quarter. Salaries and employee benefits increased $2.3 million linked-quarter principally due to increases for performance-based incentives. Total services and fees increased $1.3 million during the fourth quarter due to continued investments in technology and higher professional fees. Other expense increased $1.2 million from the prior quarter principally due to increased operational losses and other expenses. Credit loss expense related to off-balance sheet credit exposures was a negative $1.1 million in the fourth quarter, reflecting the improvement of the macroeconomic factors used to determine the necessary reserves for off-balance sheet credit exposures. Other real estate expense was a negative $812 thousand for the fourth quarter, a decrease of approximately $2.0 million from the prior quarter, which is attributed to lower write-downs of ORE of $716 thousand and a net gain on the sale of ORE property of $1.3 million. During 2020, Trustmark consolidated six offices and expanded deployment of interactive teller machines. In January 2021, Trustmark opened a new office featuring a design that integrates myTeller interactive teller machine technology as well as provides enhanced areas for customer engagement. With the opening of this office, two other offices were closed. Looking forward, Trustmark will focus upon efficiency, growth and innovation opportunities while building upon its solid risk management processes, corporate culture and core values. We will continue to optimize delivery channels to reflect changing customer preferences and introduce technology to enhance growth and efficiency opportunities. We will provide the services and advice our customers have come to expect while building term value for our shareholders, said Dewey. Additional Information As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, January 27, 2021 at 8:30 a.m. Central Time to discuss the Corporations financial results. Interested parties may listen to the conference call by dialing (877) 317-3051 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Wednesday, February 10, 2021, in archived format at the same web address or by calling (877) 344-7529, passcode 10151113. Trustmark is a financial services company providing banking and financial solutions through 183 offices in Alabama, Florida, Mississippi, Tennessee and Texas. Forward-Looking Statements Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as may, hope, will, should, expect, plan, anticipate, intend, believe, estimate, predict, project, potential, seek, continue, could, would, future or the negative of those terms or other words of similar meaning. You should read statements that contain these words carefully because they discuss our future expectations or state other forward-looking information. These forward-looking statements include, but are not limited to, statements relating to anticipated future operating and financial performance measures, including net interest margin, credit quality, business initiatives, growth opportunities and growth rates, among other things, and encompass any estimate, prediction, expectation, projection, opinion, anticipation, outlook or statement of belief included therein as well as the management assumptions underlying these forward-looking statements. You should be aware that the occurrence of the events described under the caption Risk Factors in Trustmarks filings with the Securities and Exchange Commission (SEC) could have an adverse effect on our business, results of operations and financial condition. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected. Furthermore, many of these risks and uncertainties are currently amplified by and may continue to be amplified by or may, in the future, be amplified by, the novel coronavirus (COVID-19) pandemic, and also by the effectiveness of varying governmental responses in ameliorating the impact of the pandemic on our customers and the economies where they operate. Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels and slowdowns in economic growth, our ability to manage the impact of the COVID-19 pandemic on our markets and our customers, as well as the effectiveness of actions of federal, state and local governments and agencies (including the Board of Governors of the Federal Reserve Board (FRB)) to mitigate its spread and economic impact, local, state and national economic and market conditions, conditions in the housing and real estate markets in the regions in which Trustmark operates and the extent and duration of the current volatility in the credit and financial markets, levels of and volatility in crude oil prices, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility of market interest rates, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, including the potential impact of issues related to the European financial system and monetary and other governmental actions designed to address credit, securities, and/or commodity markets, the enactment of legislation and changes in existing regulations or enforcement practices or the adoption of new regulations, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, changes in our ability to control expenses, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, cyber-attacks and other breaches which could affect our information system security, natural disasters, environmental disasters, pandemics or other health crises, acts of war or terrorism, and other risks described in our filings with the SEC. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Except as required by law, we undertake no obligation to update or revise any of this information, whether as the result of new information, future events or developments or otherwise. TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2020 ($ in thousands) (unaudited) Linked Quarter Year over Year QUARTERLY AVERAGE BALANCES 12/31/2020 9/30/2020 12/31/2019 $ Change % Change $ Change % Change Securities AFS-taxable $ 1,902,162 $ 1,857,050 $ 1,551,358 $ 45,112 2.4 % $ 350,804 22.6 % Securities AFS-nontaxable 5,206 5,973 23,300 (767 ) -12.8 % (18,094 ) -77.7 % Securities HTM-taxable 550,563 608,585 734,474 (58,022 ) -9.5 % (183,911 ) -25.0 % Securities HTM-nontaxable 24,752 25,508 25,703 (756 ) -3.0 % (951 ) -3.7 % Total securities 2,482,683 2,497,116 2,334,835 (14,433 ) -0.6 % 147,848 6.3 % Paycheck protection program loans (PPP) 875,098 941,456 (66,358 ) -7.0 % 875,098 n/m Loans (includes loans held for sale) (1) 10,231,671 10,162,379 9,467,437 69,292 0.7 % 764,234 8.1 % Acquired loans (1) 77,797 n/m (77,797 ) -100.0 % Fed funds sold and reverse repurchases 303 301 184 2 0.7 % 119 64.7 % Other earning assets 860,540 722,917 227,116 137,623 19.0 % 633,424 n/m Total earning assets 14,450,295 14,324,169 12,107,369 126,126 0.9 % 2,342,926 19.4 % Allowance for credit losses (ACL), loans held for investment (LHFI) (1) (124,088 ) (121,842 ) (86,211 ) (2,246 ) -1.8 % (37,877 ) -43.9 % Other assets 1,620,694 1,564,825 1,445,075 55,869 3.6 % 175,619 12.2 % Total assets $ 15,946,901 $ 15,767,152 $ 13,466,233 $ 179,749 1.1 % $ 2,480,668 18.4 % Interest-bearing demand deposits $ 3,649,590 $ 3,669,249 $ 3,167,256 $ (19,659 ) -0.5 % $ 482,334 15.2 % Savings deposits 4,350,783 4,416,046 3,448,899 (65,263 ) -1.5 % 901,884 26.1 % Time deposits 1,436,677 1,507,348 1,663,741 (70,671 ) -4.7 % (227,064 ) -13.6 % Total interest-bearing deposits 9,437,050 9,592,643 8,279,896 (155,593 ) -1.6 % 1,157,154 14.0 % Fed funds purchased and repurchases 170,474 84,077 164,754 86,397 n/m 5,720 3.5 % Other borrowings 173,525 167,262 79,512 6,263 3.7 % 94,013 n/m Subordinated notes 42,828 42,828 n/m 42,828 n/m Junior subordinated debt securities 61,856 61,856 61,856 0.0 % 0.0 % Total interest-bearing liabilities 9,885,733 9,905,838 8,586,018 (20,105 ) -0.2 % 1,299,715 15.1 % Noninterest-bearing deposits 4,100,849 3,921,867 3,017,824 178,982 4.6 % 1,083,025 35.9 % Other liabilities 235,284 244,544 205,786 (9,260 ) -3.8 % 29,498 14.3 % Total liabilities 14,221,866 14,072,249 11,809,628 149,617 1.1 % 2,412,238 20.4 % Shareholders' equity 1,725,035 1,694,903 1,656,605 30,132 1.8 % 68,430 4.1 % Total liabilities and equity $ 15,946,901 $ 15,767,152 $ 13,466,233 $ 179,749 1.1 % $ 2,480,668 18.4 % (1) See Note 1 Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2020 ($ in thousands) (unaudited) Linked Quarter Year over Year PERIOD END BALANCES 12/31/2020 9/30/2020 12/31/2019 $ Change % Change $ Change % Change Cash and due from banks $ 1,952,504 $ 564,588 $ 358,916 $ 1,387,916 n/m $ 1,593,588 n/m Fed funds sold and reverse repurchases 50 50 0.0 % 50 n/m Securities available for sale 1,991,815 1,922,728 1,602,404 69,087 3.6 % 389,411 24.3 % Securities held to maturity 538,072 611,280 738,099 (73,208 ) -12.0 % (200,027 ) -27.1 % PPP loans 610,134 944,270 (334,136 ) -35.4 % 610,134 n/m Loans held for sale (LHFS) 446,951 485,103 226,347 (38,152 ) -7.9 % 220,604 97.5 % Loans held for investment (LHFI) (1) 9,824,524 9,847,728 9,335,628 (23,204 ) -0.2 % 488,896 5.2 % ACL LHFI (1) (117,306 ) (122,010 ) (84,277 ) 4,704 3.9 % (33,029 ) -39.2 % Net LHFI 9,707,218 9,725,718 9,251,351 (18,500 ) -0.2 % 455,867 4.9 % Acquired loans (1) 72,601 n/m (72,601 ) -100.0 % Allowance for loan losses, acquired loans (1) (815 ) n/m 815 -100.0 % Net acquired loans 71,786 n/m (71,786 ) -100.0 % Net LHFI and acquired loans 9,707,218 9,725,718 9,323,137 (18,500 ) -0.2 % 384,081 4.1 % Premises and equipment, net 194,278 192,722 189,791 1,556 0.8 % 4,487 2.4 % Mortgage servicing rights 66,464 61,613 79,394 4,851 7.9 % (12,930 ) -16.3 % Goodwill 385,270 385,270 379,627 0.0 % 5,643 1.5 % Identifiable intangible assets 7,390 8,142 7,343 (752 ) -9.2 % 47 0.6 % Other real estate 11,651 16,248 29,248 (4,597 ) -28.3 % (17,597 ) -60.2 % Operating lease right-of-use assets 30,901 30,508 31,182 393 1.3 % (281 ) -0.9 % Other assets 609,142 609,922 532,389 (780 ) -0.1 % 76,753 14.4 % Total assets $ 16,551,840 $ 15,558,162 $ 13,497,877 $ 993,678 6.4 % $ 3,053,963 22.6 % Deposits: Noninterest-bearing $ 4,349,010 $ 3,964,023 $ 2,891,215 $ 384,987 9.7 % $ 1,457,795 50.4 % Interest-bearing 9,699,754 9,258,390 8,354,342 441,364 4.8 % 1,345,412 16.1 % Total deposits 14,048,764 13,222,413 11,245,557 826,351 6.2 % 2,803,207 24.9 % Fed funds purchased and repurchases 164,519 153,834 256,020 10,685 6.9 % (91,501 ) -35.7 % Other borrowings 168,252 178,599 85,396 (10,347 ) -5.8 % 82,856 97.0 % Subordinated notes 122,921 122,921 n/m 122,921 n/m Junior subordinated debt securities 61,856 61,856 61,856 0.0 % 0.0 % ACL on off-balance sheet credit exposures (1) 38,572 39,659 (1,087 ) -2.7 % 38,572 n/m Operating lease liabilities 32,290 31,838 32,354 452 1.4 % (64 ) -0.2 % Other liabilities 173,549 159,922 155,992 13,627 8.5 % 17,557 11.3 % Total liabilities 14,810,723 13,848,121 11,837,175 962,602 7.0 % 2,973,548 25.1 % Common stock 13,215 13,215 13,376 0.0 % (161 ) -1.2 % Capital surplus 233,120 231,836 256,400 1,284 0.6 % (23,280 ) -9.1 % Retained earnings 1,495,833 1,459,306 1,414,526 36,527 2.5 % 81,307 5.7 % Accum other comprehensive income (loss), net of tax (1,051 ) 5,684 (23,600 ) (6,735 ) n/m 22,549 95.5 % Total shareholders' equity 1,741,117 1,710,041 1,660,702 31,076 1.8 % 80,415 4.8 % Total liabilities and equity $ 16,551,840 $ 15,558,162 $ 13,497,877 $ 993,678 6.4 % $ 3,053,963 22.6 % (1) See Note 1 Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2020 ($ in thousands except per share data) (unaudited) Quarter Ended Linked Quarter Year over Year INCOME STATEMENTS 12/31/2020 9/30/2020 12/31/2019 $ Change % Change $ Change % Change Interest and fees on LHFS & LHFI-FTE $ 96,453 $ 97,429 $ 111,383 $ (976 ) -1.0 % $ (14,930 ) -13.4 % Interest and fees on PPP loans 14,870 6,729 8,141 n/m 14,870 n/m Interest and fees on acquired loans (1) 2,138 n/m (2,138 ) -100.0 % Interest on securities-taxable 9,998 12,542 12,884 (2,544 ) -20.3 % (2,886 ) -22.4 % Interest on securities-tax exempt-FTE 293 301 484 (8 ) -2.7 % (191 ) -39.5 % Interest on fed funds sold and reverse repurchases 1 1 (1 ) -100.0 % (1 ) -100.0 % Other interest income 249 331 896 (82 ) -24.8 % (647 ) -72.2 % Total interest income-FTE 121,863 117,333 127,786 4,530 3.9 % (5,923 ) -4.6 % Interest on deposits 6,363 7,437 17,716 (1,074 ) -14.4 % (11,353 ) -64.1 % Interest on fed funds purchased and repurchases 56 32 504 24 75.0 % (448 ) -88.9 % Other interest expense 1,127 688 826 439 63.8 % 301 36.4 % Total interest expense 7,546 8,157 19,046 (611 ) -7.5 % (11,500 ) -60.4 % Net interest income-FTE 114,317 109,176 108,740 5,141 4.7 % 5,577 5.1 % Provision for credit losses, LHFI (1) (4,413 ) 1,760 3,661 (6,173 ) n/m (8,074 ) n/m Provision for loan losses, acquired loans (1) (2 ) n/m 2 100.0 % Net interest income after provision-FTE 118,730 107,416 105,081 11,314 10.5 % 13,649 13.0 % Service charges on deposit accounts 8,283 7,577 10,894 706 9.3 % (2,611 ) -24.0 % Bank card and other fees 9,107 8,843 8,192 264 3.0 % 915 11.2 % Mortgage banking, net 28,155 36,439 7,914 (8,284 ) -22.7 % 20,241 n/m Insurance commissions 10,196 11,562 9,364 (1,366 ) -11.8 % 832 8.9 % Wealth management 7,838 7,679 7,763 159 2.1 % 75 1.0 % Other, net 2,538 1,601 3,451 937 58.5 % (913 ) -26.5 % Total noninterest income 66,117 73,701 47,578 (7,584 ) -10.3 % 18,539 39.0 % Salaries and employee benefits 69,660 67,342 62,319 2,318 3.4 % 7,341 11.8 % Services and fees 22,327 20,992 19,500 1,335 6.4 % 2,827 14.5 % Net occupancy-premises 6,616 7,000 6,461 (384 ) -5.5 % 155 2.4 % Equipment expense 6,213 5,828 5,880 385 6.6 % 333 5.7 % Other real estate expense, net (812 ) 1,203 1,491 (2,015 ) n/m (2,303 ) n/m Credit loss expense related to off-balance sheet credit exposures (1) (1,087 ) (3,004 ) 1,917 63.8 % (1,087 ) n/m Other expense 15,890 14,598 14,376 1,292 8.9 % 1,514 10.5 % Total noninterest expense 118,807 113,959 110,027 4,848 4.3 % 8,780 8.0 % Income before income taxes and tax eq adj 66,040 67,158 42,632 (1,118 ) -1.7 % 23,408 54.9 % Tax equivalent adjustment 2,939 2,969 3,149 (30 ) -1.0 % (210 ) -6.7 % Income before income taxes 63,101 64,189 39,483 (1,088 ) -1.7 % 23,618 59.8 % Income taxes 11,884 9,749 5,537 2,135 21.9 % 6,347 n/m Net income $ 51,217 $ 54,440 $ 33,946 $ (3,223 ) -5.9 % $ 17,271 50.9 % Per share data Earnings per share - basic $ 0.81 $ 0.86 $ 0.53 $ (0.05 ) -5.8 % $ 0.28 52.8 % Earnings per share - diluted $ 0.81 $ 0.86 $ 0.53 $ (0.05 ) -5.8 % $ 0.28 52.8 % Dividends per share $ 0.23 $ 0.23 $ 0.23 0.0 % 0.0 % Weighted average shares outstanding Basic 63,424,219 63,422,692 64,255,716 Diluted 63,616,767 63,581,964 64,435,276 Period end shares outstanding 63,424,526 63,423,820 64,200,111 (1) See Note 1 Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details. n/m - percentage changes greater than +/- 100% are considered not meaningful TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2020 ($ in thousands) (unaudited) Quarter Ended Linked Quarter Year over Year NONPERFORMING ASSETS (1) 12/31/2020 9/30/2020 12/31/2019 $ Change % Change $ Change % Change Nonaccrual LHFI Alabama $ 9,221 $ 3,860 $ 1,870 $ 5,361 n/m $ 7,351 n/m Florida 572 617 267 (45 ) -7.3 % 305 n/m Mississippi (2) 35,015 35,617 41,493 (602 ) -1.7 % (6,478 ) -15.6 % Tennessee (3) 12,572 13,041 8,980 (469 ) -3.6 % 3,592 40.0 % Texas 5,748 721 616 5,027 n/m 5,132 n/m Total nonaccrual LHFI 63,128 53,856 53,226 9,272 17.2 % 9,902 18.6 % Other real estate Alabama 3,271 3,725 8,133 (454 ) -12.2 % (4,862 ) -59.8 % Florida 3,665 5,877 (3,665 ) -100.0 % (5,877 ) -100.0 % Mississippi (2) 8,330 8,718 14,919 (388 ) -4.5 % (6,589 ) -44.2 % Tennessee (3) 50 140 319 (90 ) -64.3 % (269 ) -84.3 % Texas n/m n/m Total other real estate 11,651 16,248 29,248 (4,597 ) -28.3 % (17,597 ) -60.2 % Total nonperforming assets $ 74,779 $ 70,104 $ 82,474 $ 4,675 6.7 % $ (7,695 ) -9.3 % LOANS PAST DUE OVER 90 DAYS (1) LHFI $ 1,576 $ 782 $ 642 $ 794 n/m $ 934 n/m LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase) $ 119,409 $ 121,281 $ 41,648 $ (1,872 ) -1.5 % $ 77,761 n/m Quarter Ended Linked Quarter Year over Year ACL LHFI (1)(4) 12/31/2020 9/30/2020 12/31/2019 $ Change % Change $ Change % Change Beginning Balance $ 122,010 $ 119,188 $ 83,226 $ 2,822 2.4 % $ 38,784 46.6 % CECL adoption adjustments: LHFI n/m n/m Acquired loan transfers n/m n/m Provision for credit losses (4,413 ) 1,760 3,661 (6,173 ) n/m (8,074 ) n/m Charge-offs (2,797 ) (1,263 ) (4,619 ) (1,534 ) n/m 1,822 39.4 % Recoveries 2,506 2,325 2,009 181 7.8 % 497 24.7 % Net (charge-offs) recoveries (291 ) 1,062 (2,610 ) (1,353 ) n/m 2,319 88.9 % Ending Balance $ 117,306 $ 122,010 $ 84,277 $ (4,704 ) -3.9 % $ 33,029 39.2 % NET (CHARGE-OFFS) RECOVERIES (1) Alabama $ (1,011 ) $ 117 $ (132 ) $ (1,128 ) n/m $ (879 ) n/m Florida 66 387 357 (321 ) -82.9 % (291 ) -81.5 % Mississippi (2) 332 442 (1,792 ) (110 ) -24.9 % 2,124 n/m Tennessee (3) 303 42 (131 ) 261 n/m 434 n/m Texas 19 74 (912 ) (55 ) -74.3 % 931 n/m Total net (charge-offs) recoveries $ (291 ) $ 1,062 $ (2,610 ) $ (1,353 ) n/m $ 2,319 -88.9 % (1) Excludes PPP and acquired loans. (2) Mississippi includes Central and Southern Mississippi Regions. (3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions. (4) See Note 1 Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details. n/m - percentage changes greater than +/- 100% are considered not meaningful See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2020 ($ in thousands) (unaudited) Quarter Ended Year Ended AVERAGE BALANCES 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 12/31/2020 12/31/2019 Securities AFS-taxable $ 1,902,162 $ 1,857,050 $ 1,724,320 $ 1,620,422 $ 1,551,358 $ 1,776,555 $ 1,633,496 Securities AFS-nontaxable 5,206 5,973 9,827 22,056 23,300 10,737 29,948 Securities HTM-taxable 550,563 608,585 655,085 694,740 734,474 626,983 799,726 Securities HTM-nontaxable 24,752 25,508 25,538 25,673 25,703 25,366 26,874 Total securities 2,482,683 2,497,116 2,414,770 2,362,891 2,334,835 2,439,641 2,490,044 PPP loans 875,098 941,456 764,416 646,680 Loans (includes loans held for sale) (1) 10,231,671 10,162,379 9,908,132 9,678,174 9,467,437 9,996,192 9,302,037 Acquired loans (1) 77,797 88,903 Fed funds sold and reverse repurchases 303 301 113 164 184 221 9,529 Other earning assets 860,540 722,917 854,642 187,327 227,116 657,096 240,622 Total earning assets 14,450,295 14,324,169 13,942,073 12,228,556 12,107,369 13,739,830 12,131,135 ACL LHFI (1) (124,088 ) (121,842 ) (103,006 ) (85,015 ) (86,211 ) (108,567 ) (83,559 ) Other assets 1,620,694 1,564,825 1,685,317 1,498,725 1,445,075 1,592,393 1,452,012 Total assets $ 15,946,901 $ 15,767,152 $ 15,524,384 $ 13,642,266 $ 13,466,233 $ 15,223,656 $ 13,499,588 Interest-bearing demand deposits $ 3,649,590 $ 3,669,249 $ 3,832,372 $ 3,184,134 $ 3,167,256 $ 3,584,249 $ 3,051,170 Savings deposits 4,350,783 4,416,046 4,180,540 3,646,936 3,448,899 4,149,860 3,650,178 Time deposits 1,436,677 1,507,348 1,578,737 1,617,307 1,663,741 1,534,673 1,783,928 Total interest-bearing deposits 9,437,050 9,592,643 9,591,649 8,448,377 8,279,896 9,268,782 8,485,276 Fed funds purchased and repurchases 170,474 84,077 105,696 247,513 164,754 151,805 110,915 Other borrowings 173,525 167,262 107,533 85,279 79,512 133,602 82,476 Subordinated notes 42,828 10,766 Junior subordinated debt securities 61,856 61,856 61,856 61,856 61,856 61,856 61,856 Total interest-bearing liabilities 9,885,733 9,905,838 9,866,734 8,843,025 8,586,018 9,626,811 8,740,523 Noninterest-bearing deposits 4,100,849 3,921,867 3,645,761 2,910,951 3,017,824 3,646,860 2,918,836 Other liabilities 235,284 244,544 346,173 248,220 205,786 268,398 218,216 Total liabilities 14,221,866 14,072,249 13,858,668 12,002,196 11,809,628 13,542,069 11,877,575 Shareholders' equity 1,725,035 1,694,903 1,665,716 1,640,070 1,656,605 1,681,587 1,622,013 Total liabilities and equity $ 15,946,901 $ 15,767,152 $ 15,524,384 $ 13,642,266 $ 13,466,233 $ 15,223,656 $ 13,499,588 (1) See Note 1 Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2020 ($ in thousands) (unaudited) PERIOD END BALANCES 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 Cash and due from banks $ 1,952,504 $ 564,588 $ 1,026,640 $ 404,341 $ 358,916 Fed funds sold and reverse repurchases 50 50 2,000 Securities available for sale 1,991,815 1,922,728 1,884,153 1,833,779 1,602,404 Securities held to maturity 538,072 611,280 660,048 704,276 738,099 PPP loans 610,134 944,270 939,783 Loans held for sale (LHFS) 446,951 485,103 355,089 325,389 226,347 Loans held for investment (LHFI) (1) 9,824,524 9,847,728 9,659,806 9,567,920 9,335,628 ACL LHFI (1) (117,306 ) (122,010 ) (119,188 ) (100,564 ) (84,277 ) Net LHFI 9,707,218 9,725,718 9,540,618 9,467,356 9,251,351 Acquired loans (1) 72,601 Allowance for loan losses, acquired loans (1) (815 ) Net acquired loans 71,786 Net LHFI and acquired loans 9,707,218 9,725,718 9,540,618 9,467,356 9,323,137 Premises and equipment, net 194,278 192,722 190,567 190,179 189,791 Mortgage servicing rights 66,464 61,613 57,811 56,437 79,394 Goodwill 385,270 385,270 385,270 381,717 379,627 Identifiable intangible assets 7,390 8,142 8,895 7,537 7,343 Other real estate 11,651 16,248 18,276 24,847 29,248 Operating lease right-of-use assets 30,901 30,508 29,819 30,839 31,182 Other assets 609,142 609,922 595,110 591,132 532,389 Total assets $ 16,551,840 $ 15,558,162 $ 15,692,079 $ 14,019,829 $ 13,497,877 Deposits: Noninterest-bearing $ 4,349,010 $ 3,964,023 $ 3,880,540 $ 2,977,058 $ 2,891,215 Interest-bearing 9,699,754 9,258,390 9,624,933 8,598,706 8,354,342 Total deposits 14,048,764 13,222,413 13,505,473 11,575,764 11,245,557 Fed funds purchased and repurchases 164,519 153,834 70,255 421,821 256,020 Other borrowings 168,252 178,599 152,860 84,230 85,396 Subordinated notes 122,921 Junior subordinated debt securities 61,856 61,856 61,856 61,856 61,856 ACL on off-balance sheet credit exposures (1) 38,572 39,659 42,663 36,421 Operating lease liabilities 32,290 31,838 31,076 32,055 32,354 Other liabilities 173,549 159,922 153,952 155,283 155,992 Total liabilities 14,810,723 13,848,121 14,018,135 12,367,430 11,837,175 Common stock 13,215 13,215 13,214 13,209 13,376 Capital surplus 233,120 231,836 230,613 229,403 256,400 Retained earnings 1,495,833 1,459,306 1,419,552 1,402,089 1,414,526 Accum other comprehensive income (loss), net of tax (1,051 ) 5,684 10,565 7,698 (23,600 ) Total shareholders' equity 1,741,117 1,710,041 1,673,944 1,652,399 1,660,702 Total liabilities and equity $ 16,551,840 $ 15,558,162 $ 15,692,079 $ 14,019,829 $ 13,497,877 (1) See Note 1 Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2020 ($ in thousands except per share data) (unaudited) Quarter Ended Year Ended INCOME STATEMENTS 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 12/31/2020 12/31/2019 Interest and fees on LHFS & LHFI-FTE $ 96,453 $ 97,429 $ 99,300 $ 109,357 $ 111,383 $ 402,539 $ 452,578 Interest and fees on PPP loans 14,870 6,729 5,044 26,643 Interest and fees on acquired loans (1) 2,138 8,373 Interest on securities-taxable 9,998 12,542 12,762 12,948 12,884 48,250 54,649 Interest on securities-tax exempt-FTE 293 301 315 457 484 1,366 2,166 Interest on fed funds sold and reverse repurchases 1 1 1 240 Other interest income 249 331 239 740 896 1,559 5,363 Total interest income-FTE 121,863 117,333 117,660 123,502 127,786 480,358 523,369 Interest on deposits 6,363 7,437 8,730 14,957 17,716 37,487 79,171 Interest on fed funds purchased and repurchases 56 32 42 625 504 755 1,420 Other interest expense 1,127 688 881 860 826 3,556 3,312 Total interest expense 7,546 8,157 9,653 16,442 19,046 41,798 83,903 Net interest income-FTE 114,317 109,176 108,007 107,060 108,740 438,560 439,466 Provision for credit losses, LHFI (1) (4,413 ) 1,760 18,185 20,581 3,661 36,113 10,797 Provision for loan losses, acquired loans (1) (2 ) 42 Net interest income after provision-FTE 118,730 107,416 89,822 86,479 105,081 402,447 428,627 Service charges on deposit accounts 8,283 7,577 6,397 10,032 10,894 32,289 42,603 Bank card and other fees 9,107 8,843 7,717 5,355 8,192 31,022 31,736 Mortgage banking, net 28,155 36,439 33,745 27,483 7,914 125,822 29,822 Insurance commissions 10,196 11,562 11,868 11,550 9,364 45,176 42,396 Wealth management 7,838 7,679 7,571 8,537 7,763 31,625 30,679 Other, net 2,538 1,601 2,213 2,307 3,451 8,659 9,809 Total noninterest income 66,117 73,701 69,511 65,264 47,578 274,593 187,045 Salaries and employee benefits 69,660 67,342 66,107 69,148 62,319 272,257 247,717 Services and fees 22,327 20,992 20,567 19,930 19,500 83,816 73,315 Net occupancy-premises 6,616 7,000 6,587 6,286 6,461 26,489 26,149 Equipment expense 6,213 5,828 5,620 5,616 5,880 23,277 23,733 Other real estate expense, net (812 ) 1,203 271 1,294 1,491 1,956 3,906 Credit loss expense related to off-balance sheet credit exposures (1) (1,087 ) (3,004 ) 6,242 6,783 8,934 Other expense 15,890 14,598 13,265 14,753 14,376 58,506 54,182 Total noninterest expense 118,807 113,959 118,659 123,810 110,027 475,235 429,002 Income before income taxes and tax eq adj 66,040 67,158 40,674 27,933 42,632 201,805 186,670 Tax equivalent adjustment 2,939 2,969 3,007 3,108 3,149 12,023 12,877 Income before income taxes 63,101 64,189 37,667 24,825 39,483 189,782 173,793 Income taxes 11,884 9,749 5,517 2,607 5,537 29,757 23,333 Net income $ 51,217 $ 54,440 $ 32,150 $ 22,218 $ 33,946 $ 160,025 $ 150,460 Per share data Earnings per share - basic $ 0.81 $ 0.86 $ 0.51 $ 0.35 $ 0.53 $ 2.52 $ 2.33 Earnings per share - diluted $ 0.81 $ 0.86 $ 0.51 $ 0.35 $ 0.53 $ 2.51 $ 2.32 Dividends per share $ 0.23 $ 0.23 $ 0.23 $ 0.23 $ 0.23 $ 0.92 $ 0.92 Weighted average shares outstanding Basic 63,424,219 63,422,692 63,416,307 63,756,629 64,255,716 63,504,516 64,629,457 Diluted 63,616,767 63,581,964 63,555,065 63,913,603 64,435,276 63,645,599 64,771,770 Period end shares outstanding 63,424,526 63,423,820 63,422,439 63,396,912 64,200,111 63,424,526 64,200,111 (1) See Note 1 Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details. See Notes to Consolidated Financials TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2020 ($ in thousands) (unaudited) Quarter Ended NONPERFORMING ASSETS (1) 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 Nonaccrual LHFI Alabama $ 9,221 $ 3,860 $ 4,392 $ 4,769 $ 1,870 Florida 572 617 687 254 267 Mississippi (2) 35,015 35,617 37,884 40,815 41,493 Tennessee (3) 12,572 13,041 6,125 6,153 8,980 Texas 5,748 721 906 1,001 616 Total nonaccrual LHFI 63,128 53,856 49,994 52,992 53,226 Other real estate Alabama 3,271 3,725 4,766 6,229 8,133 Florida 3,665 3,665 4,835 5,877 Mississippi (2) 8,330 8,718 9,408 13,296 14,919 Tennessee (3) 50 140 437 487 319 Texas Total other real estate 11,651 16,248 18,276 24,847 29,248 Total nonperforming assets $ 74,779 $ 70,104 $ 68,270 $ 77,839 $ 82,474 LOANS PAST DUE OVER 90 DAYS (1) LHFI $ 1,576 $ 782 $ 807 $ 708 $ 642 LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase) $ 119,409 $ 121,281 $ 56,269 $ 43,564 $ 41,648 Quarter Ended Year Ended ACL LHFI (1)(4) 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 12/31/2020 12/31/2019 Beginning Balance $ 122,010 $ 119,188 $ 100,564 $ 84,277 $ 83,226 $ 84,277 $ 79,290 CECL adoption adjustments: LHFI (3,039 ) (3,039 ) Acquired loan transfers 1,822 1,822 Provision for credit losses (4,413 ) 1,760 18,185 20,581 3,661 36,113 10,797 Charge-offs (2,797 ) (1,263 ) (1,870 ) (5,545 ) (4,619 ) (11,475 ) (14,481 ) Recoveries 2,506 2,325 2,309 2,468 2,009 9,608 8,671 Net (charge-offs) recoveries (291 ) 1,062 439 (3,077 ) (2,610 ) (1,867 ) (5,810 ) Ending Balance $ 117,306 $ 122,010 $ 119,188 $ 100,564 $ 84,277 $ 117,306 $ 84,277 NET (CHARGE-OFFS) RECOVERIES (1) Alabama $ (1,011 ) $ 117 $ 526 $ (1,080 ) $ (132 ) $ (1,448 ) $ (754 ) Florida 66 387 (127 ) 64 357 390 850 Mississippi (2) 332 442 (86 ) 126 (1,792 ) 814 (4,438 ) Tennessee (3) 303 42 66 (2,186 ) (131 ) (1,775 ) (708 ) Texas 19 74 60 (1 ) (912 ) 152 (760 ) Total net (charge-offs) recoveries $ (291 ) $ 1,062 $ 439 $ (3,077 ) $ (2,610 ) $ (1,867 ) $ (5,810 ) (1) Excludes PPP and acquired loans. (2) Mississippi includes Central and Southern Mississippi Regions. (3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions. (4) See Note 1 Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details. TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION December 31, 2020 (unaudited) Quarter Ended Year Ended FINANCIAL RATIOS AND OTHER DATA 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 12/31/2020 12/31/2019 Return on average equity 11.81 % 12.78 % 7.76 % 5.45 % 8.13 % 9.52 % 9.28 % Return on average tangible equity 15.47 % 16.82 % 10.32 % 7.34 % 10.85 % 12.58 % 12.45 % Return on average assets 1.28 % 1.37 % 0.83 % 0.66 % 1.00 % 1.05 % 1.11 % Interest margin - Yield - FTE 3.35 % 3.26 % 3.39 % 4.06 % 4.19 % 3.50 % 4.31 % Interest margin - Cost 0.21 % 0.23 % 0.28 % 0.54 % 0.62 % 0.30 % 0.69 % Net interest margin - FTE 3.15 % 3.03 % 3.12 % 3.52 % 3.56 % 3.19 % 3.62 % Efficiency ratio (1) 65.59 % 62.19 % 62.13 % 63.50 % 68.08 % 63.35 % 66.38 % Full-time equivalent employees 2,797 2,807 2,798 2,761 2,844 CREDIT QUALITY RATIOS (2) Net (recoveries) charge-offs / average loans 0.01 % -0.04 % -0.02 % 0.13 % 0.11 % 0.02 % 0.06 % Provision for credit losses / average loans (3) -0.17 % 0.07 % 0.74 % 0.86 % 0.15 % 0.36 % 0.12 % Nonaccrual LHFI / (LHFI + LHFS) 0.61 % 0.52 % 0.50 % 0.54 % 0.56 % Nonperforming assets / (LHFI + LHFS) 0.73 % 0.68 % 0.68 % 0.79 % 0.86 % Nonperforming assets / (LHFI + LHFS + other real estate) 0.73 % 0.68 % 0.68 % 0.78 % 0.86 % ACL LHFI / LHFI (3) 1.19 % 1.24 % 1.23 % 1.05 % 0.90 % ACL LHFI-commercial / commercial LHFI (3) 1.20 % 1.20 % 1.15 % 0.97 % 0.98 % ACL LHFI-consumer / consumer and home mortgage LHFI (3) 1.16 % 1.41 % 1.56 % 1.35 % 0.61 % ACL LHFI / nonaccrual LHFI (3) 185.82 % 226.55 % 238.40 % 189.77 % 158.34 % ACL LHFI / nonaccrual LHFI (excl individually evaluated loans) (3) 572.69 % 593.72 % 561.04 % 468.84 % 410.52 % CAPITAL RATIOS (3) Total equity / total assets 10.52 % 10.99 % 10.67 % 11.79 % 12.30 % Tangible equity / tangible assets 8.34 % 8.68 % 8.37 % 9.27 % 9.72 % Tangible equity / risk-weighted assets 11.22 % 11.01 % 11.09 % 11.05 % 11.58 % Tier 1 leverage ratio 9.33 % 9.20 % 9.08 % 10.21 % 10.48 % Common equity tier 1 capital ratio 11.62 % 11.36 % 11.42 % 11.35 % 11.93 % Tier 1 risk-based capital ratio 12.11 % 11.86 % 11.94 % 11.88 % 12.48 % Total risk-based capital ratio 14.12 % 12.88 % 13.00 % 12.78 % 13.25 % STOCK PERFORMANCE Market value-Close $ 27.31 $ 21.41 $ 24.52 $ 23.30 $ 34.51 Book value $ 27.45 $ 26.96 $ 26.39 $ 26.06 $ 25.87 Tangible book value $ 21.26 $ 20.76 $ 20.18 $ 19.92 $ 19.84 (1) See Note 10 Non-GAAP Financial Measures in the Notes to Consolidated Financials for Trustmarks efficiency ratio calculation. (2) Excludes PPP and acquired loans. (3) See Note 1 Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2020 ($ in thousands) (unaudited) Note 1 Recently Effective Accounting Pronouncements ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments was adopted by Trustmark Corporation (Trustmark) on January 1, 2020. At the date of adoption, Trustmark recorded a decrease to its ACL, LHFI of $3.0 million and an increase to its ACL on off-balance sheet credit exposures of $29.6 million resulting in a one-time cumulative effect adjustment of $26.6 million ($19.9 million, net of tax) through retained earnings. In accordance with the amendments of ASU 2016-13, Trustmark estimates the ACL using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts including the COVID-19 pandemic effects. Trustmark uses a third-party software application to calculate the quantitative portion of the ACL using a methodology and assumptions specific to each loan pool. The qualitative portion of the ACL is based on general economic conditions and other internal and external factors affecting Trustmark as a whole as well as specific LHFI. The total quantitative and qualitative portions of the ACL reflect Managements expectations of future conditions based on reasonable and supportable forecasts. Based upon the factors discussed above, during the fourth quarter of 2020, Trustmark recorded a negative provision for credit losses of $4.4 million and a negative credit loss expense related to off-balance sheet credit exposures of $1.1 million compared to a provision for credit losses of $1.8 million and a negative credit loss expense related to off-balance sheet credit exposures of $3.0 million recorded during the third quarter of 2020. Upon adoption of FASB ASC Topic 326, Trustmark elected to account for its existing acquired loans as purchased credit deteriorated loans included within the LHFI portfolio. As a result, acquired loans of $72.6 million, as well as the necessary calculated allowance of $1.8 million, were transferred during the first quarter of 2020. The acquired loans and related allowance transferred were acquired in the BancTrust Financial Group, Inc. merger on February 13, 2013. LHFI presented in prior periods exclude acquired loans and thus may not be comparable to the current period presentation. In accordance with FASB ASC Subtopic 326-20, Financial Instruments Credit Losses Measured at Amortized Cost, Trustmark has developed an allowance for credit losses methodology effective January 1, 2020, which replaces its previous allowance for loan losses methodology. The ACL for LHFI is adjusted through the provision for credit losses and reduced by the charge off of loan amounts, net of recoveries. Prior periods present the allowance for loan losses and provision for loan losses methodology under the incurred loss model and thus may not be comparable to the current period presentation. Trustmarks estimated allowance for credit losses on securities available for sale and held to maturity under ASU 2016-13 was deemed immaterial due to the composition of these portfolios. Both portfolios consist primarily of U.S. government agency guaranteed mortgage-backed securities for which the risk of loss is minimal. Therefore, Trustmark did not recognize a cumulative effect adjustment through retained earnings related to the available for sale or held to maturity securities. Trustmark has elected the five-year phase-in transition period related to adopting the CECL methodology for its regulatory capital. Note 2 - Paycheck Protection Program At December 31, 2020, Trustmark had outstanding 7,398 PPP loans totaling $610.1 million (net of $12.9 million of deferred fees and costs) under the Coronavirus Aid, Relief, and Economic Security Act, which was signed into law on March 27, 2020. Due to amount and nature of the PPP loans, these loans were not included in the LHFI portfolio and are presented separately in the accompanying consolidated balance sheets. The PPP loans are fully guaranteed by the SBA; therefore, no ACL was estimated for these loans. Note 3 - Securities Available for Sale and Held to Maturity The following table is a summary of the estimated fair value of securities available for sale and the amortized cost of securities held to maturity: 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 SECURITIES AVAILABLE FOR SALE U.S. Government agency obligations $ 18,041 $ 19,011 $ 19,898 $ 21,190 $ 22,327 Obligations of states and political subdivisions 5,835 8,315 11,176 23,572 25,465 Mortgage-backed securities Residential mortgage pass-through securities Guaranteed by GNMA 56,862 62,156 69,637 71,971 69,252 Issued by FNMA and FHLMC 1,441,321 1,279,919 1,121,604 967,329 713,356 Other residential mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 419,437 500,858 574,940 634,075 658,226 Commercial mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 50,319 52,469 86,898 115,642 113,778 Total securities available for sale $ 1,991,815 $ 1,922,728 $ 1,884,153 $ 1,833,779 $ 1,602,404 SECURITIES HELD TO MATURITY U.S. Government agency obligations $ $ $ $ $ 3,781 Obligations of states and political subdivisions 26,584 31,605 31,629 31,758 31,781 Mortgage-backed securities Residential mortgage pass-through securities Guaranteed by GNMA 7,598 8,244 10,306 10,492 10,820 Issued by FNMA and FHLMC 67,944 78,213 86,346 91,971 96,631 Other residential mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 360,361 399,400 435,333 463,175 485,324 Commercial mortgage-backed securities Issued or guaranteed by FNMA, FHLMC, or GNMA 75,585 93,818 96,434 106,880 109,762 Total securities held to maturity $ 538,072 $ 611,280 $ 660,048 $ 704,276 $ 738,099 TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2020 ($ in thousands) (unaudited) Note 3 - Securities Available for Sale and Held to Maturity (continued) At December 31, 2020, the net unamortized, unrealized loss included in accumulated other comprehensive income (loss) in the accompanying balance sheet for securities held to maturity previously transferred from securities available for sale totaled approximately $8.9 million ($6.7 million, net of tax). Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 98.7% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moodys. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE. Note 4 Loan Composition LHFI consisted of the following during the periods presented: LHFI BY TYPE (1) 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 Loans secured by real estate: Construction, land development and other land loans $ 1,309,039 $ 1,385,947 $ 1,277,277 $ 1,136,389 $ 1,162,791 Secured by 1-4 family residential properties 1,741,132 1,775,400 1,813,525 1,852,065 1,855,913 Secured by nonfarm, nonresidential properties 2,709,026 2,707,627 2,610,392 2,575,422 2,475,245 Other real estate secured 1,065,964 887,792 884,815 838,573 724,480 Commercial and industrial loans 1,309,078 1,398,468 1,413,255 1,476,777 1,477,896 Consumer loans 161,174 160,960 161,620 170,678 175,738 State and other political subdivision loans 1,000,776 935,349 931,536 938,637 967,944 Other loans 528,335 596,185 567,386 579,379 495,621 LHFI 9,824,524 9,847,728 9,659,806 9,567,920 9,335,628 ACL LHFI (117,306 ) (122,010 ) (119,188 ) (100,564 ) (84,277 ) Net LHFI $ 9,707,218 $ 9,725,718 $ 9,540,618 $ 9,467,356 $ 9,251,351 (1) See Note 1 Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details. The following table presents the LHFI composition by region at December 31, 2020 and reflects each regions diversified mix of loans: December 31, 2020 LHFI - COMPOSITION BY REGION Total Alabama Florida Mississippi (Central and Southern Regions) Tennessee (Memphis, TN and Northern MS Regions) Texas Loans secured by real estate: Construction, land development and other land loans $ 1,309,039 $ 494,486 $ 62,963 $ 315,555 $ 30,618 $ 405,417 Secured by 1-4 family residential properties 1,741,132 118,205 37,062 1,501,505 73,039 11,321 Secured by nonfarm, nonresidential properties 2,709,026 710,266 262,697 984,508 186,405 565,150 Other real estate secured 1,065,964 312,295 6,332 392,986 6,621 347,730 Commercial and industrial loans 1,309,078 199,301 22,774 611,743 271,940 203,320 Consumer loans 161,174 23,402 6,641 107,133 20,062 3,936 State and other political subdivision loans 1,000,776 87,468 35,179 670,883 41,698 165,548 Other loans 528,335 81,631 14,247 349,217 61,709 21,531 Loans $ 9,824,524 $ 2,027,054 $ 447,895 $ 4,933,530 $ 692,092 $ 1,723,953 CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION Lots $ 74,177 $ 24,842 $ 12,945 $ 28,546 $ 1,231 $ 6,613 Development 94,443 37,537 315 33,059 12,505 11,027 Unimproved land 99,857 30,260 15,863 24,742 10,746 18,246 1-4 family construction 245,579 112,709 23,641 71,815 5,061 32,353 Other construction 794,983 289,138 10,199 157,393 1,075 337,178 Construction, land development and other land loans $ 1,309,039 $ 494,486 $ 62,963 $ 315,555 $ 30,618 $ 405,417 TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2020 ($ in thousands) (unaudited) Note 4 Loan Composition (continued) December 31, 2020 Total Alabama Florida Mississippi (Central and Southern Regions) Tennessee (Memphis, TN and Northern MS Regions) Texas LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION Non-owner occupied: Retail $ 389,905 $ 149,401 $ 31,965 $ 108,724 $ 26,257 $ 73,558 Office 228,094 64,625 26,697 68,056 12,122 56,594 Hotel/motel 341,972 146,542 91,819 52,883 39,728 11,000 Mini-storage 130,995 23,499 2,344 61,359 397 43,396 Industrial 183,795 47,135 15,805 40,308 1,087 79,460 Health care 46,597 23,088 2,462 18,462 389 2,196 Convenience stores 16,148 3,304 3,351 383 9,110 Nursing homes/senior living 112,256 35,941 31,456 6,923 37,936 Other 71,670 4,505 6,715 24,133 8,450 27,867 Total non-owner occupied loans 1,521,432 498,040 177,807 408,732 95,736 341,117 Owner-occupied: Office 188,960 42,679 45,651 49,120 8,814 42,696 Churches 105,832 22,604 6,768 51,499 10,231 14,730 Industrial warehouses 161,050 13,732 3,097 50,969 16,362 76,890 Health care 136,246 24,485 4,466 94,695 2,341 10,259 Convenience stores 122,155 18,744 9,516 65,919 556 27,420 Retail 73,832 15,308 6,574 26,447 10,653 14,850 Restaurants 59,856 4,255 4,446 34,681 15,097 1,377 Auto dealerships 54,805 7,542 279 21,009 25,975 Nursing homes/senior living 175,442 57,846 117,596 Other 109,416 5,031 4,093 63,841 640 35,811 Total owner-occupied loans 1,187,594 212,226 84,890 575,776 90,669 224,033 Loans secured by nonfarm, nonresidential properties $ 2,709,026 $ 710,266 $ 262,697 $ 984,508 $ 186,405 $ 565,150 Note 5 - Subordinated Notes Payable During the fourth quarter of 2020, Trustmark agreed to issue and sell $125.0 million aggregate principal amount of its 3.625% Fixed-to-Floating Rate Subordinated Notes (the Notes) due December 1, 2030. The Notes were sold at an underwriting discount of 1.2%, resulting in net proceeds to Trustmark of $123.5 million before deducting offering expenses of $600 thousand. At December 31, 2020, the carrying amount of the Notes was $122.9 million. The Notes are unsecured obligations and are subordinated in right of payment to all our existing and future senior indebtedness, whether secured or unsecured. The Notes are obligations of Trustmark only and are not obligations of, and are not guaranteed by, any of its subsidiaries, including Trustmark National Bank. From the date of issuance until November 30, 2025, the Notes bear interest at a fixed rate of 3.625% per year, payable semi-annually in arrears on June 1 and December 1 of each year. Beginning December 1, 2025, the Notes will bear interest at a floating rate per year equal to the Benchmark rate, which is the Three-Month Term Secured Overnight Financing Rate (SOFR), plus 338.7 basis points, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year. The Notes qualify as Tier 2 capital for Trustmark. The Notes may be redeemed at Trustmarks option under certain circumstances. Trustmark intends to use the net proceeds for general corporate purposes. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2020 ($ in thousands) (unaudited) Note 6 Yields on Earning Assets and Interest-Bearing Liabilities The following table illustrates the yields on earning assets by category as well as the rates paid on interest-bearing liabilities on a tax equivalent basis: Quarter Ended Year Ended 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 12/31/2020 12/31/2019 Securities taxable 1.62 % 2.02 % 2.16 % 2.25 % 2.24 % 2.01 % 2.25 % Securities nontaxable 3.89 % 3.80 % 3.58 % 3.85 % 3.92 % 3.78 % 3.81 % Securities total 1.65 % 2.05 % 2.18 % 2.28 % 2.27 % 2.03 % 2.28 % PPP loans 6.76 % 2.84 % 2.65 % 4.12 % Loans - LHFI & LHFS 3.75 % 3.81 % 4.03 % 4.54 % 4.67 % 4.03 % 4.87 % Acquired loans 10.90 % 9.42 % Loans - total 3.99 % 3.73 % 3.93 % 4.54 % 4.72 % 4.03 % 4.91 % Fed funds sold & reverse repurchases 1.32 % 2.16 % 0.45 % 2.52 % Other earning assets 0.12 % 0.18 % 0.11 % 1.59 % 1.57 % 0.24 % 2.23 % Total earning assets 3.35 % 3.26 % 3.39 % 4.06 % 4.19 % 3.50 % 4.31 % Interest-bearing deposits 0.27 % 0.31 % 0.37 % 0.71 % 0.85 % 0.40 % 0.93 % Fed funds purchased & repurchases 0.13 % 0.15 % 0.16 % 1.02 % 1.21 % 0.50 % 1.28 % Other borrowings 1.61 % 1.19 % 2.09 % 2.35 % 2.32 % 1.72 % 2.29 % Total interest-bearing liabilities 0.30 % 0.33 % 0.39 % 0.75 % 0.88 % 0.43 % 0.96 % Net interest margin 3.15 % 3.03 % 3.12 % 3.52 % 3.56 % 3.19 % 3.62 % Net interest margin excluding PPP and acquired loans 2.91 % 3.05 % 3.14 % 3.52 % 3.52 % 3.15 % 3.58 % Reflected in the table above are yields on earning assets and liabilities, along with the net interest margin which equals reported net interest income-FTE, annualized, as a percent of average earning assets. In addition, the table includes net interest margin excluding PPP and acquired loans, which equals reported net interest income-FTE excluding interest income on PPP and acquired loans, annualized, as a percent of average earning assets excluding average PPP and acquired loans. The net interest margin excluding PPP and acquired loans totaled 2.91% for the fourth quarter of 2020, a decrease of 14 basis points when compared to the third quarter of 2020. Continued low interest rates decreased the yield on the loans held for investment and held for sale portfolio as well as the securities portfolio and were partially offset by lower costs of interest-bearing deposits. Note 7 Mortgage Banking Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that offsets the changes in fair value of mortgage servicing rights (MSR) attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under generally accepted accounting principles (GAAP). Changes in the fair value of these exchange-traded derivative instruments, including administrative costs, are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of the MSR. The MSR fair value represents the present value of future cash flows, which among other things includes decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the change in value of hedge instruments to the change in the fair value of the MSR asset attributable to changes in interest rates and other market driven changes in valuation inputs and assumptions. The impact of this strategy resulted in a net negative ineffectiveness of $909 thousand during the fourth quarter of 2020. The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements: Quarter Ended Year Ended 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 12/31/2020 12/31/2019 Mortgage servicing income, net $ 6,227 $ 5,742 $ 5,893 $ 5,819 $ 5,854 $ 23,681 $ 22,883 Change in fair value-MSR from runoff (5,177 ) (4,590 ) (4,214 ) (2,607 ) (2,950 ) (16,588 ) (11,835 ) Gain on sales of loans, net 28,014 34,472 34,078 14,339 7,984 110,903 30,296 Mortgage banking income before hedge ineffectiveness 29,064 35,624 35,757 17,551 10,888 117,996 41,344 Change in fair value-MSR from market changes 951 60 (3,159 ) (23,999 ) 4,048 (26,147 ) (21,078 ) Change in fair value of derivatives (1,860 ) 755 1,147 33,931 (7,022 ) 33,973 9,556 Net positive (negative) hedge ineffectiveness (909 ) 815 (2,012 ) 9,932 (2,974 ) 7,826 (11,522 ) Mortgage banking, net $ 28,155 $ 36,439 $ 33,745 $ 27,483 $ 7,914 $ 125,822 $ 29,822 Note 8 Salaries and Employee Benefit Plans Early Retirement Program In January 2020, Trustmark announced a voluntary early retirement program for associates age 60 and above with five or more years of continuous service. The cost of this program is reflected in a one-time, pre-tax charge of approximately $4.4 million (salaries and benefits of $4.3 million and other miscellaneous expense of $102 thousand; or $0.05 per basic share net of tax) in Trustmarks first quarter 2020 earnings. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2020 ($ in thousands) (unaudited) Note 9 Other Noninterest Income and Expense Other noninterest income consisted of the following for the periods presented: Quarter Ended Year Ended 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 12/31/2020 12/31/2019 Partnership amortization for tax credit purposes $ (1,877 ) $ (1,457 ) $ (1,205 ) $ (1,161 ) $ (1,630 ) $ (5,700 ) $ (7,644 ) Increase in life insurance cash surrender value 1,708 1,755 1,696 1,722 1,802 6,881 7,202 Other miscellaneous income 2,707 1,303 1,722 1,746 3,279 7,478 10,251 Total other, net $ 2,538 $ 1,601 $ 2,213 $ 2,307 $ 3,451 $ 8,659 $ 9,809 Trustmark invests in partnerships that provide income tax credits on a Federal and/or State basis (i.e., new market tax credits, low income housing tax credits and historical tax credits). The income tax credits related to these partnerships are utilized as specifically allowed by income tax law and are recorded as a reduction in income tax expense. Other noninterest expense consisted of the following for the periods presented: Quarter Ended Year Ended 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 12/31/2020 12/31/2019 Loan expense $ 3,696 $ 3,485 $ 2,954 $ 2,799 $ 2,968 $ 12,934 $ 11,554 Amortization of intangibles 752 752 736 812 1,002 3,052 4,116 FDIC assessment expense 1,500 1,410 1,590 1,590 1,450 6,090 6,444 Other miscellaneous expense 9,942 8,951 7,985 9,552 8,956 36,430 32,068 Total other expense $ 15,890 $ 14,598 $ 13,265 $ 14,753 $ 14,376 $ 58,506 $ 54,182 Note 10 Non-GAAP Financial Measures In addition to capital ratios defined by U.S. generally accepted accounting principles (GAAP) and banking regulators, Trustmark utilizes various tangible common equity measures when evaluating capital utilization and adequacy. Tangible common equity, as defined by Trustmark, represents common equity less goodwill and identifiable intangible assets. Trustmark believes these measures are important because they reflect the level of capital available to withstand unexpected market conditions. Additionally, presentation of these measures allows readers to compare certain aspects of Trustmarks capitalization to other organizations. These ratios differ from capital measures defined by banking regulators principally in that the numerator excludes shareholders equity associated with preferred securities, the nature and extent of which varies across organizations. In Managements experience, many stock analysts use tangible common equity measures in conjunction with more traditional bank capital ratios to compare capital adequacy of banking organizations with significant amounts of goodwill or other tangible assets, typically stemming from the use of the purchase accounting method in accounting for mergers and acquisitions. These calculations are intended to complement the capital ratios defined by GAAP and banking regulators. Because GAAP does not include these capital ratio measures, Trustmark believes there are no comparable GAAP financial measures to these tangible common equity ratios. Despite the importance of these measures to Trustmark, there are no standardized definitions for them and, as a result, Trustmarks calculations may not be comparable with other organizations. Also, there may be limits in the usefulness of these measures to investors. As a result, Trustmark encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure. The following table reconciles Trustmarks calculation of these measures to amounts reported under GAAP. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2020 ($ in thousands except per share data) (unaudited) Note 10 Non-GAAP Financial Measures (continued) Quarter Ended Year Ended 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 12/31/2020 12/31/2019 TANGIBLE EQUITY AVERAGE BALANCES Total shareholders' equity $ 1,725,035 $ 1,694,903 $ 1,665,716 $ 1,640,070 $ 1,656,605 $ 1,681,587 $ 1,622,013 Less: Goodwill (385,270 ) (385,270 ) (383,081 ) (380,671 ) (379,627 ) (383,582 ) (379,627 ) Identifiable intangible assets (7,803 ) (8,550 ) (7,834 ) (8,049 ) (7,882 ) (8,060 ) (9,212 ) Total average tangible equity $ 1,331,962 $ 1,301,083 $ 1,274,801 $ 1,251,350 $ 1,269,096 $ 1,289,945 $ 1,233,174 PERIOD END BALANCES Total shareholders' equity $ 1,741,117 $ 1,710,041 $ 1,673,944 $ 1,652,399 $ 1,660,702 Less: Goodwill (385,270 ) (385,270 ) (385,270 ) (381,717 ) (379,627 ) Identifiable intangible assets (7,390 ) (8,142 ) (8,895 ) (7,537 ) (7,343 ) Total tangible equity (a) $ 1,348,457 $ 1,316,629 $ 1,279,779 $ 1,263,145 $ 1,273,732 TANGIBLE ASSETS Total assets $ 16,551,840 $ 15,558,162 $ 15,692,079 $ 14,019,829 $ 13,497,877 Less: Goodwill (385,270 ) (385,270 ) (385,270 ) (381,717 ) (379,627 ) Identifiable intangible assets (7,390 ) (8,142 ) (8,895 ) (7,537 ) (7,343 ) Total tangible assets (b) $ 16,159,180 $ 15,164,750 $ 15,297,914 $ 13,630,575 $ 13,110,907 Risk-weighted assets (c) $ 12,017,378 $ 11,963,269 $ 11,539,157 $ 11,427,297 $ 11,002,877 NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION Net income $ 51,217 $ 54,440 $ 32,150 $ 22,218 $ 33,946 $ 160,025 $ 150,460 Plus: Intangible amortization net of tax 564 564 552 609 752 2,289 3,088 Net income adjusted for intangible amortization $ 51,781 $ 55,004 $ 32,702 $ 22,827 $ 34,698 $ 162,314 $ 153,548 Period end common shares outstanding (d) 63,424,526 63,423,820 63,422,439 63,396,912 64,200,111 TANGIBLE COMMON EQUITY MEASUREMENTS Return on average tangible equity (1) 15.47 % 16.82 % 10.32 % 7.34 % 10.85 % 12.58 % 12.45 % Tangible equity/tangible assets (a)/(b) 8.34 % 8.68 % 8.37 % 9.27 % 9.72 % Tangible equity/risk-weighted assets (a)/(c) 11.22 % 11.01 % 11.09 % 11.05 % 11.58 % Tangible book value (a)/(d)*1,000 $ 21.26 $ 20.76 $ 20.18 $ 19.92 $ 19.84 COMMON EQUITY TIER 1 CAPITAL (CET1) Total shareholders' equity $ 1,741,117 $ 1,710,041 $ 1,673,944 $ 1,652,399 $ 1,660,702 CECL transition adjustment (3) 31,199 32,647 32,693 26,476 AOCI-related adjustments 1,051 (5,684 ) (10,565 ) (7,698 ) 23,600 CET1 adjustments and deductions: Goodwill net of associated deferred tax liabilities (DTLs) (371,333 ) (371,345 ) (371,342 ) (367,825 ) (365,738 ) Other adjustments and deductions for CET1 (2) (6,190 ) (6,770 ) (7,352 ) (6,269 ) (5,896 ) CET1 capital (e) 1,395,844 1,358,889 1,317,378 1,297,083 1,312,668 Additional tier 1 capital instruments plus related surplus 60,000 60,000 60,000 60,000 60,000 Tier 1 capital $ 1,455,844 $ 1,418,889 $ 1,377,378 $ 1,357,083 $ 1,372,668 Common equity tier 1 capital ratio (e)/(c) 11.62 % 11.36 % 11.42 % 11.35 % 11.93 % (1)Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity. TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2020 ($ in thousands except per share data) (unaudited) Note 10 Non-GAAP Financial Measures (continued) Trustmark discloses certain non-GAAP financial measures because Management uses these measures for business planning purposes, including to manage Trustmarks business against internal projected results of operations and to measure Trustmarks performance. Trustmark views these as measures of our core operating business, which exclude the impact of the items detailed below, as these items are generally not operational in nature. These non-GAAP financial measures also provide another basis for comparing period-to-period results as presented in the accompanying selected financial data table and the audited consolidated financial statements by excluding potential differences caused by non-operational and unusual or non-recurring items. Readers are cautioned that these adjustments are not permitted under GAAP. Trustmark encourages readers to consider its consolidated financial statements and the notes related thereto in their entirety, and not to rely on any single financial measure. The following table presents pre-provision net revenue (PPNR) during the periods presented: Quarter Ended Year Ended 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 12/31/2020 12/31/2019 Net interest income (GAAP) $ 111,378 $ 106,207 $ 105,000 $ 103,952 $ 105,591 $ 426,537 $ 426,589 Noninterest income (GAAP) 66,117 73,701 69,511 65,264 47,578 274,593 187,045 Pre-provision revenue (a) $ 177,495 $ 179,908 $ 174,511 $ 169,216 $ 153,169 $ 701,130 $ 613,634 Noninterest expense (GAAP) $ 118,807 $ 113,959 $ 118,659 $ 123,810 $ 110,027 $ 475,235 $ 429,002 (4,375 ) (4,375 ) 1,087 3,004 (6,242 ) (6,783 ) (8,934 ) Adjusted noninterest expense - PPNR (Non-GAAP) (b) $ 119,894 $ 116,963 $ 112,417 $ 112,652 $ 110,027 $ 461,926 $ 429,002 PPNR (Non-GAAP) (a)-(b) $ 57,601 $ 62,945 $ 62,094 $ 56,564 $ 43,142 $ 239,204 $ 184,632 The following table presents adjustments to net income and select financial ratios as reported in accordance with GAAP resulting from significant non-routine items occurring during the periods presented: Quarter Ended Year Ended 12/31/2020 12/31/2019 12/31/2020 12/31/2019 Amount Diluted EPS Amount Diluted EPS Amount Diluted EPS Amount Diluted EPS Net Income (GAAP) $ 51,217 $ 0.81 $ 33,946 $ 0.53 $ 160,025 $ 2.51 $ 150,460 $ 2.32 Significant non-routine transactions (net of taxes): Voluntary early retirement program 3,281 0.05 Net Income adjusted for significant non-routine transactions (Non-GAAP) $ 51,217 $ 0.81 $ 33,946 $ 0.53 $ 163,306 $ 2.56 $ 150,460 $ 2.32 Reported (GAAP) Adjusted Reported (GAAP) Adjusted Reported (GAAP) Adjusted Reported (GAAP) Adjusted (Non-GAAP) (Non-GAAP) (Non-GAAP) (Non-GAAP) Return on average equity 11.81 % n/a 8.13 % n/a 9.52 % 9.69 % 9.28 % n/a Return on average tangible equity 15.47 % n/a 10.85 % n/a 12.58 % 12.81 % 12.45 % n/a Return on average assets 1.28 % n/a 1.00 % n/a 1.05 % 1.07 % 1.11 % n/a n/a - not applicable TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS December 31, 2020 ($ in thousands) (unaudited) Note 10 Non-GAAP Financial Measures (continued) The following table presents Trustmarks calculation of its efficiency ratio for the periods presented: Quarter Ended Year Ended 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 12/31/2020 12/31/2019 Total noninterest expense (GAAP) $ 118,807 $ 113,959 $ 118,659 $ 123,810 $ 110,027 $ 475,235 $ 429,002 Less: Other real estate expense, net 812 (1,203 ) (271 ) (1,294 ) (1,491 ) (1,956 ) (3,906 ) Amortization of intangibles (752 ) (752 ) (736 ) (812 ) (1,002 ) (3,052 ) (4,116 ) Voluntary early retirement program (4,375 ) (4,375 ) Credit loss expense related to off-balance sheet exposures 1,087 3,004 (6,242 ) (6,783 ) (8,934 ) Charitable contributions resulting in state tax credits (375 ) (375 ) (375 ) (375 ) (1,500 ) Adjusted noninterest expense (Non-GAAP) (c) $ 119,579 $ 114,633 $ 111,035 $ 110,171 $ 107,534 $ 455,418 $ 420,980 Net interest income (GAAP) $ 111,378 $ 106,207 $ 105,000 $ 103,952 $ 105,591 $ 426,537 $ 426,589 Add: Tax equivalent adjustment 2,939 2,969 3,007 3,108 3,149 12,023 12,877 Net interest income-FTE (Non-GAAP) (a) $ 114,317 $ 109,176 $ 108,007 $ 107,060 $ 108,740 $ 438,560 $ 439,466 Noninterest income (GAAP) $ 66,117 $ 73,701 $ 69,511 $ 65,264 $ 47,578 $ 274,593 $ 187,045 Add: Partnership amortization for tax credit purposes 1,877 1,457 1,205 1,161 1,630 5,700 7,644 Adjusted noninterest income (Non-GAAP) (b) $ 67,994 $ 75,158 $ 70,716 $ 66,425 $ 49,208 $ 280,293 $ 194,689 Adjusted revenue (Non-GAAP) (a)+(b) $ 182,311 $ 184,334 $ 178,723 $ 173,485 $ 157,948 $ 718,853 $ 634,155 Efficiency ratio (Non-GAAP) (c)/((a)+(b)) 65.59 % 62.19 % 62.13 % 63.50 % 68.08 % 63.35 % 66.38 %

Answer: Trustmark Corporation Announces Fourth Quarter and Fiscal Year 2020 Financial Results Record earnings in 2020 reflect value of diversified financial services businesses Solid balance sheet, credit quality and capital base provide strength and stability