TRUSTMARK CORP
For the period ended Dec 31, 2024. Filed Feb 19, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 19, 2025
TRMK$44.64-0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-15.
0000950170-24-015988
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-19.
0000950170-25-023184
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 264 previous paragraphs and 255 current paragraphs.
122 unchanged; 101 reworded; 31 added; 37 removed; 4 previous and 1 current paragraphs rearranged.
Tables are not compared: 25 previous and 26 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (31)
Current report
On May 31, 2024, TNB closed the sale of its wholly owned subsidiary, FBBI, to Marsh & McLennan Agency LLC, consistent with the terms as previously announced on April 23, 2024. Trustmark recognized a net gain on the sale of $228.3 million ($171.2 million, net of taxes) in income from discontinued operations. The operations of FBBI prior to the sale are included in income from discontinued operations for the current and prior periods.
Current report
Trustmark restructured its investment securities portfolio by selling $1.561 billion of available for sale securities with an average yield of 1.36%, which generated a loss of $182.8 million ($137.1 million, net of taxes) and was recorded to noninterest income (loss) in securities gains (losses), net. Trustmark also purchased $1.378 billion of available for sale securities with an average yield of 4.85%.
Current report
Trustmark sold a portfolio of 1-4 family mortgage loans that were at least three payments delinquent and/or nonaccrual at the time of selection totaling $56.2 million, which resulted in a loss of $13.4 million ($10.1 million, net of taxes). The portion of the loss related to credit totaled $8.6 million ($6.5 million, net of taxes) and was recorded as adjustments to charge-offs and the PCL, LHFI. The noncredit-related portion of the loss totaled $4.8 million ($3.6 million, net of taxes) and was recorded to noninterest income (loss) in other, net.
Current report
On April 8, 2024, Visa commenced an initial exchange offer expiring on May 3, 2024, for any and all outstanding shares of Visa Class B-1 common stock (Visa B-1 shares). Holders participating in the exchange offer would receive a combination of Visa Class B-2 common stock (Visa B-2 shares) and Visa Class C common stock (Visa C shares) in exchange for Visa B-1 shares that were validly tendered and accepted for exchange by Visa. TNB tendered its 38.7 thousand Visa B-1 shares, which were accepted by Visa. In exchange for each Visa B-1 share that was validly tendered and accepted for exchange by Visa, TNB received 50.0% of a newly issued Visa B-2 share and newly issued Visa C shares equivalent in value to 50.0% of a Visa B-1 share. The Visa C shares that were received by TNB were recognized at fair value, which resulted in a gain of $8.1 million ($6.0 million, net of taxes) and was recorded to noninterest income (loss) in other, net during the second quarter of 2024. During the third quarter of 2024, TNB sold all of the Visa C shares for approximately the same carrying value as of June 30, 2024. The Visa B-2 shares were recorded at their nominal carrying value.
Current report
In addition to these significant non-routine transactions, Trustmark's financial results for 2024 reflected continued growth in LHFI, an increase in noninterest income and disciplined expense management. Please see the section captioned "Non-GAAP Financial Measures" for additional information regarding the significant non-routine transactions. Trustmark’s capital position remained solid, reflecting the consistent profitability of its diversified financial services businesses.
Current report
These accomplishments are the result of focused efforts to enhance Trustmark's long-term performance and competitiveness. Trustmark continues to implement technology and streamline processes to enhance its ability to grow and serve customers. Trustmark is well-positioned to compete in changing economic conditions and create long-term value for its shareholders. The Board of Directors of Trustmark announced a 4.3% increase in its regular quarterly cash dividend to $0.24 per share from $0.23 per share. The dividend is payable March 15, 2025, to shareholders of record on March 1, 2025.
Current report
Net interest income for the fourth quarter of 2024 totaled $155.8 million, an increase of $19.1 million, or 14.0%, when compared to the fourth quarter of 2023. Interest income totaled $239.7 million for the fourth quarter of 2024, an increase of $6.9 million, or 2.9%, when compared to the same time period in 2023, principally due to an increase in interest on securities-taxable primarily due to the restructuring of the available for sale securities portfolio during the second quarter of 2024, partially offset by a decline in other interest income primarily due to declines in both the balance held at the FRBA and the rate paid by the FRBA on reserves. Interest expense totaled $83.9 million for the fourth quarter of 2024, a decrease of $12.2 million, or 12.7%, when compared to the same time period in 2023, reflecting declines in interest on deposits, interest on federal funds purchased and securities sold under repurchase agreements (repurchase agreements) and other interest expense. Interest expense on deposits totaled $75.9 million for the fourth quarter of 2024, a decline of $4.9 million, or 6.1%, when compared to the fourth quarter of 2023 primarily due to declines in interest expense on all categories of interest checking accounts and money market demand deposit accounts (MMDA) as well as a decline in interest expense on brokered certificates of deposits (CDs), partially offset by an increase in interest expense on personal CDs. Interest expense on federal funds purchased and repurchase agreements totaled $4.0 million for the fourth quarter of 2024, a decrease of $1.3 million, or 24.5%, when compared to the fourth quarter of 2023 primarily due to a decline in interest expense on federal funds purchased, reflecting a decline in the amount of upstream federal funds purchased and declines by the FRB in the target federal funds rate. Other interest expense totaled $3.9 million for the fourth quarter of 2024, a decrease of $6.0 million, or 60.6%, when compared to the same time period in 2023 primarily due to a decline in interest expense on FHLB advances as a result of a decline in the amount of outstanding short-term FHLB advances with the FHLB of Dallas.
Current report
Noninterest income (loss) for the fourth quarter of 2024 totaled $41.0 million, an increase of $4.3 million, or 11.9%, when compared to the fourth quarter of 2023, principally due to increases in mortgage banking, net and other, net. Mortgage banking, net totaled $7.4 million for the fourth quarter of 2024, an increase of $1.9 million, or 33.9%, when compared to the same time period in 2023, principally due to a decline in the net negative hedge ineffectiveness and an increase in the gain on sales of loans, net. Other, net totaled $4.3 million for the fourth quarter of 2024, an increase of $1.7 million, or 66.8%, when compared to the same time period in 2023, principally due to an increase in other miscellaneous income.
Current report
Noninterest expense for the fourth quarter of 2024 totaled $124.4 million, a decrease of $1.8 million, or 1.4%, when compared to the fourth quarter of 2023, principally due to declines in services and fees and other expense. Services and fees totaled $26.7 million for the fourth quarter of 2024, a decrease of $786 thousand, or 2.9%, when compared to the fourth quarter of 2023 primarily due to declines in outside services and fees partially offset by increase in data processing expenses related to software and business process outsourcing expenses. Other expense totaled $15.1 million for the fourth quarter of 2024, a decrease of $678 thousand, or 4.3%, when compared to the same time period in 2023, principally due to declines in other miscellaneous expenses.
Current report
Trustmark completed the sale of FBBI during the second quarter of 2024. As such, financial results for the years ended December 31, 2024, 2023 and 2022, consist of both continuing and discontinued operations. The discontinued operations include the financial results of FBBI prior to the sale as well as the net gain on the sale. Trustmark reported net income from continuing operations of $45.2 million, $153.3 million and $60.9 million for the years ended December 31, 2024, 2023 and 2022, respectively. Trustmark's reported performance from continuing operations for the year ended December 31, 2024 produced a return on average tangible equity of 3.04%, a return on average assets of 0.24% and a dividend payout ratio of 124.32%, compared to a return on average tangible equity of 12.43%, a return on average assets of 0.82% and a dividend payout ratio of 36.65% for the year ended December 31, 2023, and a return on average tangible equity of 4.86%, a return on average assets of 0.35% and a dividend payout ratio of 92.93%, for the year ended December 31, 2022. The decrease in net income from continuing operations when 2024 is compared to 2023 was principally due to a decline in total revenue partially offset by a decrease in income taxes from continuing operations. The increase in net income from continuing operations when 2023 is compared to 2022 was principally due to an increase in total revenue and a decline in noninterest expense.
Current report
Revenue totaled $561.0 million for the year ended December 31, 2024, compared to $701.3 million and $646.1 million for the years ended December 31, 2023 and 2022, respectively, a decrease of $140.3 million, or 20.0%, and an increase of $55.2 million, or 8.5%, respectively. The decrease in total revenue for 2024 compared to 2023 was principally due to decline in noninterest income (loss), primarily as a result of the loss on the sale of available for sale securities partially offset by increases in other, net and wealth management, and an increase in net interest income, primarily resulting from increases in interest and fees from LHFS and LHFI and interest on securities as well as a decline in other interest expense, partially offset by an increase in interest expense on deposits and a decrease in other interest income.
Current report
Noninterest income (loss) for 2024 totaled a negative $23.4 million, a decrease of $171.9 million when compared to 2023, principally due to the $182.8 million loss on the sale of the available for sale securities during the second quarter of 2024, partially offset by increases in other, net and wealth management. Other, net totaled $17.8 million for 2024, an increase of $7.6 million, or 74.1%, when compared to 2023, principally due to the $8.1 million Visa C shares fair value adjustment during the second quarter of 2024 as well as an increase in cash management service fees and other miscellaneous income, partially offset by the $4.8 million noncredit-related loss on the sale of 1-4 family mortgage loans recorded during the second quarter of 2024. Wealth management totaled $37.3 million for 2024, an increase of $2.2 million, or 6.2%, when compared to 2023, principally due to increases in brokerage asset management fees and commissions as well as income from annuity services.
Current report
Noninterest expense totaled $485.7 million for 2024, a decrease of $10.0 million, or 2.0%, when compared to 2023, principally due to the $6.5 million of litigation settlement expense recorded during 2023 as well as declines in services and fees and salaries and employee benefits, partially offset by an increase in other expense. Services and fees totaled $101.6 million for 2024, a decrease of $6.2 million, or 5.8%, when compared to 2023, principally due to declines in outside services and fees, telephone expense and advertising expense, partially offset by increases in data processing charges related to software and business process outsourcing fees. Salaries and employee benefits totaled $266.2 million for the year ended December 31, 2024, a decrease of $2.0 million, or 0.8%, when compared to the year ended December 31, 2023, principally due to decreases in commission expense due to the decline in mortgage originations, severance expense and medical insurance expense, partially offset by increases in salaries expense, primarily due to general merit increases, accrued management performance incentives and stock compensation expense related to performance awards. Other expense totaled $63.8 million for 2024, an increase of $5.0 million, or 8.6%, when compared to 2023, principally due to increases in FDIC assessment expense, primarily due to an increase in the assessment rate, and other real estate write-downs, partially offset by declines in stationary and supplies and other miscellaneous expenses.
Current report
At December 31, 2024, nonperforming assets totaled $86.0 million, a decrease of $20.8 million, or 19.5%, compared to December 31, 2023 principally due to a decrease in nonaccrual LHFI. Total nonaccrual LHFI were $80.1 million at December 31, 2024, a decrease of $19.9 million, or 19.9%, relative to December 31, 2023, primarily as a result of the sale of 1-4 family mortgage loans during the second quarter of 2024 as well as the resolution of three large nonaccrual commercial credits in the Texas and Alabama market regions, partially offset by mortgage loans placed on nonaccrual in the Mississippi market region and three large commercial credits placed on nonaccrual in the Alabama and Texas market regions. Trustmark's mortgage loans are primarily included in the Mississippi market region because these loans are centrally analyzed and approved as part of the mortgage line of business, which is located in Jackson, Mississippi. The percentage of total loans (LHFS and LHFI) that are 30 days or more past due and nonaccrual LHFI decreased in 2024 to 1.62% compared to 1.69% in 2023.
Current report
Total deposits were $15.108 billion at December 31, 2024, a decrease of $461.6 million, or 3.0%, compared to December 31, 2023. During 2024, noninterest-bearing deposits decreased $124.1 million, or 3.9%, primarily due to a decline in commercial demand deposit accounts. Interest-bearing deposits decreased $337.5 million, or 2.7%, during 2024, primarily due to intentional declines in public interest checking accounts and brokered deposits as well as a decline in consumer interest checking accounts, partially offset by growth in consumer MMDAs and commercial interest checking accounts and consumer CDs.
Current report
The credit loss estimation process involves procedures to appropriately consider the unique characteristics of Trustmark’s LHFI portfolio segments. These segments are further disaggregated into loan classes, the level at which credit risk is estimated. When computing allowance levels, credit loss assumptions are estimated using a model that categorizes loan pools based on loss history, delinquency status and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Trustmark’s overall ACL methodology incorporates various qualitative factors, including economic conditions and concentrations of credit, nature and volume of the portfolio, performance trends and external factors. The economic conditions and concentrations of credit qualitative factor was created for the loans secured by NFNR properties and the loans secured by other real estate loan class, two of Trustmark’s largest loan classes, to address changes in the economic conditions of metropolitan areas and apply additional pool level reserves based on third-party market data and forecast trends. The performance trend qualitative reserve factor is utilized to incorporate changes in credit quality and is based on migration analyses that allocate additional ACL to non-pass/delinquent loans within each loan pool. The nature and volume of the portfolio qualitative factor applies to a sub-pool of the LHFI secured by 1-4 family residential properties and utilizes a weighted average remaining maturity (WARM) methodology that uses industry data for the assumptions to support the qualitative adjustment. The external factors qualitative factor is Management’s best judgment on the loan or pool level impact of all factors that affect the portfolio that are not accounted for using any other part of the ACL methodology. During the third quarter of 2024, Trustmark activated the External Factor – Credit Quality Review qualitative factor. This qualitative factor ensures reserve adequacy for collectively evaluated commercial loans that may not have been identified and downgraded timely for various reasons. This qualitative factor population is all commercial loans risk rated 1-5. These loans are then applied to the historical average of the Watch/Special Mention rated percentage. Then the balance of these loans are applied additional reserves based on the same reserve rates utilized in the performance trends qualitative factor for Watch/Special Mention rated loans.
Current report
Mortgage Servicing Rights
Current report
Sale of 1-4 Family Mortgage Loans
Current report
Trustmark sold a portfolio of 1-4 family mortgage loans that were at least three payments delinquent and/or nonaccrual at the time of selection totaling $56.2 million, which resulted in a loss of $13.4 million ($10.1 million, net of taxes). The portion of the loss related to credit totaled $8.6 million ($6.5 million, net of taxes) and was recorded as adjustments to charge-offs and the PCL, LHFI. The noncredit-related portion of the loss totaled $4.8 million ($3.6 million, net of taxes) and was recorded to noninterest income (loss) in other, net.
Current report
Visa Shares Conversion
Current report
On April 8, 2024, Visa commenced an initial exchange offer expiring on May 3, 2024, for any and all outstanding shares of Visa Class B-1 common stock (Visa B-1 shares). Holders participating in the exchange offer would receive a combination of Visa Class B-2 common stock (Visa B-2 shares) and Visa Class C common stock (Visa C shares) in exchange for Visa B-1 shares that were validly tendered and accepted for exchange by Visa. TNB tendered its 38.7 thousand Visa B-1 shares, which were accepted by Visa. In exchange for each Visa B-1 share that was validly tendered and accepted for exchange by Visa, TNB received 50.0% of a newly issued Visa B-2 share and newly issued Visa C shares equivalent in value to 50.0% of a Visa B-1 share. The Visa C shares that were received by TNB were recognized at fair value, which resulted in a gain of $8.1 million ($6.0 million, net of taxes) and was recorded to noninterest income (loss) in other, net during the second quarter of 2024. During the third quarter of 2024, TNB sold all of the Visa C shares for approximately the same carrying value as of June 30, 2024. The Visa B-2 shares were recorded at their nominal carrying value.
Current report
Securities Portfolio Restructuring
Current report
Trustmark restructured its investment securities portfolio by selling $1.561 billion of available for sale securities with an average yield of 1.36%, which generated a loss of $182.8 million ($137.1 million, net of taxes) and was recorded to noninterest income (loss) in securities gains (losses), net. Trustmark also purchased $1.378 billion of available for sale securities with an average yield of 4.85%.
Current report
Noninterest Income (Loss)
Current report
Other, Net
Current report
Noninterest expense increased $405 thousand, or 1.3%, during 2024 compared to a decrease of $534 thousand, or 1.6%, during 2023. The increase in noninterest expense for the Wealth Management Segment for 2024 was principally due to an increase in salaries and employee benefits, primarily related to broker commissions and annual portfolio manager incentives. The decrease in noninterest expense for the Wealth Management Segment for 2023 was principally due to a decrease in data processing charges related to software, partially offset by an increase in business process outsourcing expenses.
Current report
Allowance for Credit Losses
Current report
During the second quarter of 2024, Trustmark executed a sale on a portfolio of 1-4 family mortgage loans that were at least three payments delinquent and/or nonaccrual at the time of selection. As a result of this sale, a credit mark was established for a sub-pool of the loans in the sale. Due to the lack of historical experience and the use of industry data for this sub-pool, management elected to use the credit mark for reserving purposes on a go forward basis for this sub-pool that meet the same credit criteria of being three payments delinquent and/or nonaccrual. All loans of the sub-pool that meet the above credit criteria will be removed from the 1-4 family residential properties pool and placed into a separate pool with the credit mark reserve applied to the total balance.
Current report
The external factors qualitative factor is Management’s best judgment on the loan or pool level impact of all factors that affect the portfolio that are not accounted for using any other part of the ACL methodology (i.e., natural disasters, changes in legislation, impacts due to technology and pandemics). During the third quarter of 2024, Trustmark activated the External Factor – Credit Quality Review qualitative factor. This qualitative factor ensures reserve adequacy for collectively evaluated commercial loans that may not have been identified and downgraded timely for various reasons. This qualitative factor population is all commercial loans risk rated 1-5. These loans are then applied to the historical average of the Watch/Special Mention rated percentage. Then the balance of these loans are applied additional reserves based on the same reserve rates utilized in the performance trends qualitative factor for Watch/Special Mention rated loans. Then the Watch/Special Mention population is applied the historical Substandard rated percentage and then subsequently applied the Substandard reserve rate utilized in the performance trends qualitative factor as well. The historical Watch/Special Mention and Substandard rated percentage averages captures the weighted-average life of the commercial loan portfolio. Thus, Trustmark will allocate additional reserves to capture the proportion of potential Watch/Special Mention and Substandard rated credits that may not have been categorized as such at any given point in time through the life of the commercial loan portfolio.
Current report
At December 31, 2024, nonaccrual LHFI totaled $80.1 million, or 0.60% of total LHFS and LHFI, reflecting a decrease of $19.9 million, or 19.9%, relative to December 31, 2023, primarily as a result of the sale of 1-4 family mortgage loans during the second quarter of 2024 as well as the resolution of three large nonaccrual commercial credits in the Texas and Alabama market regions, partially offset by mortgage loans placed on nonaccrual in the Mississippi market region and three large commercial credits placed on nonaccrual in the Alabama and Texas market regions. Trustmark's mortgage loans are primarily included in the Mississippi market region because these loans are centrally analyzed and approved as part of the mortgage line of business which is located in Jackson, Mississippi.
Current report
Trustmark places a significant emphasis on the maintenance of a strong capital position, which promotes investor confidence, provides access to funding sources under favorable terms and enhances Trustmark’s ability to capitalize on business growth and acquisition opportunities. Higher levels of liquidity, however, bear corresponding costs, measured in terms of lower yields on short-term, more liquid earning assets and higher expenses for extended liability maturities. Trustmark manages capital based upon risks and growth opportunities as well as regulatory requirements. Trustmark utilizes a capital model in order to provide Management with a monthly tool for analyzing changes in its strategic capital ratios. This allows Management to hold sufficient capital to provide for growth opportunities and protect the balance sheet against sudden adverse market conditions, while maintaining an attractive return on equity to shareholders.
Removed paragraphs (37)
Previous report
Trustmark is committed to managing the franchise for the long term, supporting investments to promote profitable revenue growth, realigning delivery channels to support changing customer preferences as well as reengineering and efficiency opportunities to enhance long-term shareholder value. The Board of Directors of Trustmark declared a quarterly cash dividend of $0.23 per share. The dividend is payable March 15, 2024, to shareholders of record on March 1, 2024.
Previous report
Net interest income for the fourth quarter of 2023 totaled $136.7 million, a decrease of $9.8 million, or 6.7%, when compared to the fourth quarter of 2022. Interest income totaled $232.9 million for the fourth quarter of 2023, an increase of $56.4 million, or 31.9%, when compared to the same time period in 2022, principally due to increases in interest and fees on LHFS and LHFI primarily due to loan growth and rising interest rates and other interest income primarily due to an increase in the rate paid by the Federal Reserve Bank of Atlanta (FRBA) on reserves. Interest expense totaled $96.1 million for the fourth quarter of 2023, an increase of $66.2 million when compared to the same time period in 2022. The increase in interest expense when the fourth quarter of 2023 is compared to the same time period in 2022 was principally due to an increase in interest on deposits primarily due to rising interest rates, increased competition for deposits and higher average balances, and an increase in other interest expense primarily due to the increase in the rate paid on short-term FHLB advances.
Previous report
Noninterest income for the fourth quarter of 2023 totaled $49.8 million, an increase of $4.6 million, or 10.3%, when compared to the fourth quarter of 2022, principally due to increases in mortgage banking, net and insurance commissions. Mortgage banking, net totaled $5.5 million for the fourth quarter of 2023, an increase of $2.1 million, or 61.9%, when compared to the same time period in 2022, principally due to a decline in the net negative hedge ineffectiveness and an increase in the gain on sales of loans, net. Insurance commissions totaled $13.2 million for the fourth quarter of 2023, an increase of $1.2 million, or 9.8%, when compared to the same time period in 2022, principally due to an increase in other commission income.
Previous report
Noninterest expense for the fourth quarter of 2023 totaled $136.4 million, a decrease of $94.8 million, or 41.0%, when compared to the fourth quarter of 2022, principally due to the litigation settlement expense recorded during the fourth quarter of 2022 related to the Stanford Financial Group litigation partially offset by increases in salaries and employee benefits and other expense. Excluding the litigation settlement expense, noninterest expense increased $6.0 million, or 4.6%, when the fourth quarter of 2023 is compared to the fourth quarter of 2022. Salaries and employee benefits totaled $78.0 million for the fourth quarter of 2023, an increase of $4.5 million, or 6.2%, when compared to the same time period in 2022, principally due to increases in salaries expense, primarily due to general merit increases, and accrued management performance incentives, partially offset by a decrease in commission expense due to the decline in mortgage originations. Other expense totaled $16.6 million for the fourth quarter of 2023, an increase of $1.5 million, or 10.0%, when compared to the same time period in 2022, principally due to an increase in FDIC assessment expense.
Previous report
Revenue totaled $759.8 million for the year ended December 31, 2023, compared to $699.9 million and $640.3 million for the years ended December 31, 2022 and 2021, respectively, an increase of $60.0 million, or 8.6%, and $59.6 million, or 9.3%, respectively. The increase in total revenue for 2023 compared to 2022 was principally due an increase in net interest income, principally due to increases in interest and fees on LHFS and LHFI and other interest income largely offset by an increase in total interest expense.
Previous report
Noninterest income for 2023 totaled $207.0 million, an increase of $1.8 million, or 0.9%, when compared to 2022, principally due to increases in insurance commissions, other income, net and service charges on deposit accounts, partially offset by declines in bank card and other fees and mortgage banking, net. Insurance commissions totaled $57.6 million for 2023, an increase of $3.8 million, or 7.2%, when compared to 2022, principally due to increases in commercial property and casualty commissions and other commission income. Other income, net totaled $11.2 million for 2023, an increase of $1.3 million, or 13.7%, when compared to 2022, principally due to an increase in cash management service charges partially offset by an increase in the amortization of tax credit partnerships and a decrease in other miscellaneous income. Service charges on deposit accounts totaled $43.4 million for 2023, an increase of $1.3 million, or 3.0%, when compared to 2022, principally due to an increase in service charges on personal interest checking accounts partially offset by a decline in NSF and overdraft charges on consumer deposit accounts. Bank card and other fees totaled $33.4 million for 2023, a decline of $2.7 million, or 7.4%, when compared to 2022, principally due to declines in customer derivatives revenue and miscellaneous other bank fees. Mortgage banking, net totaled $26.2 million for 2023, a decrease of $2.1 million, or 7.4%, when compared to 2022, principally due to a decline in the gain on sales of loans, net and an increase in the net negative hedge ineffectiveness, partially offset by a decline in the run-off of the MSR.
Previous report
Noninterest expense totaled $537.9 million for 2023, a decrease of $65.3 million, or 10.8%, when compared to 2022, principally due to the $100.8 million litigation settlement expense recorded during the fourth quarter of 2022, partially offset by the $6.5 million of litigation settlement expense recorded during the third quarter of 2023 as well as increases in salaries and employee benefits, other expense, services and fees and equipment expense. Excluding the litigation settlement expenses, noninterest expense increased $29.0 million, or 5.8%, when 2023 is compared to 2022. Salaries and employee benefits totaled $304.7 million for the year ended December 31, 2023, an increase of $17.2 million, or 6.0%, when compared to the year ended December 31, 2022, principally due to increases in salaries expense, primarily due to general merit increases, accrued management performance incentives and commission expense due to improvements in insurance production, partially offset by a decline in commission expense due to the decline in mortgage originations. Other expense totaled $61.7 million for 2023, an increase of $5.8 million, or 10.4%, when compared to 2022, principally due to increases in FDIC assessment expense, primarily due to an increase in the assessment rate, partially offset by a decline in loan expense. Services and fees totaled $109.5 million for 2023, an increase of $4.0 million, or 3.8%, when compared to 2022, principally due to increases in data processing charges related to software and business process outsourcing fees, partially offset by a decrease in other services and fees. Equipment expense totaled $26.1 million for 2023, an increase of $1.7 million, or 6.9%, when compared to 2022, principally due to increases in data processing equipment expenses, depreciation on furniture and equipment and personal property taxes.
Previous report
At December 31, 2023, nonperforming assets totaled $106.9 million, an increase of $38.9 million, or 57.3%, compared to December 31, 2022 principally due to an increase in nonaccrual LHFI. Total nonaccrual LHFI were $100.0 million at December 31, 2023, an increase of $34.0 million, or 51.6%, relative to December 31, 2022, primarily as a result of three large commercial credits placed on nonaccrual as well as an increase in mortgage nonaccruals that were partially offset by other commercial credits that were foreclosed, charged off, returned to accrual or paid off. The percentage of total loans (LHFS and LHFI) that are 30 days or more past due and nonaccrual LHFI increased in 2023 to 1.69% compared to 1.33% in 2022.
Previous report
Total deposits were $15.570 billion at December 31, 2023, an increase of $1.132 billion, or 7.8%, compared to December 31, 2022. During 2023, noninterest-bearing deposits decreased $896.2 million, or 21.9%, as a result of declines in all categories of noninterest-bearing deposits reflecting customers' desire for higher-yielding deposit accounts. Interest-bearing deposits increased $2.028 billion, or 19.6%, during 2023, primarily due to growth in certificates of deposits (CDs), which was principally attributable to deposit campaigns offered during 2023 and the addition of $578.8 million of brokered CDs, business and consumer money market deposit accounts (MMDA) and business interest checking accounts, partially offset by declines in consumer and public interest checking accounts and consumer savings accounts.
Previous report
Allowance for Credit Losses (ACL)
Previous report
Mortgage Servicing Rights (MSR)
Previous report
Voluntary Early Retirement Program
Previous report
During 2021, Trustmark completed a voluntary early retirement program and incurred one-time charges of $5.7 million ($5.6 million of non-routine salaries and employee benefits expense and $89 thousand of non-routine other miscellaneous expense) related to this program.
Previous report
Regulatory Settlement Charge
Previous report
During 2021, Trustmark finalized a settlement with regulatory authorities to resolve fair lending allegations in the Memphis metropolitan statistical area (MSA). Trustmark incurred a one-time settlement expense of $5.0 million and made other commitments to enhance credit opportunities to residents in majority-Black and Hispanic neighborhoods in the Memphis MSA.
Previous report
The average FRBA balance, included in other earning assets, for 2023 totaled $617.6 million, a decrease of $229.3 million, or 27.1%, when compared to 2022. Interest earned on the FRBA balance increased $25.0 million when 2023 is compared to 2022. The yield on the FRBA balance was 5.17% and 0.82% for 2023 and 2022, respectively, an increase of 435 basis points reflecting the FRBA's increase in the interest rate that it pays on reserves during 2023.
Previous report
Noninterest Income
Previous report
Service Charges on Deposit Accounts
Previous report
The increase in service charges on deposit accounts when 2023 is compared to 2022 was principally due to an increase in service charges on personal interest checking accounts partially offset by a decline in NSF and overdraft charges on consumer deposit accounts.
Previous report
Bank Card and Other Fees
Previous report
The decrease in bank card and other fees when 2023 is compared to 2022 was principally due to declines in customer derivatives revenue and miscellaneous other bank fees.
Previous report
Other Income, Net
Previous report
During 2022, Trustmark reclassified its other real estate expense, net to other expense. Prior periods have been reclassified accordingly.
Previous report
Equipment Expense
Previous report
The increase in equipment expense when 2023 is compared to 2022 was principally due to increases in data processing equipment expenses, depreciation on furniture and equipment and personal property taxes.
Previous report
During 2022, Trustmark reclassified its other real estate expense, net to other expense. Prior periods have been reclassified accordingly.
Previous report
Insurance
Previous report
Net income for the Insurance Segment during 2023 increased $1.2 million, or 11.1%, compared to an increase of $1.6 million, or 17.2%, during 2022. Noninterest income for the Insurance Segment, which predominately consists of insurance commissions, increased $4.8 million, or 8.9%, during 2023, compared to an increase of $5.1 million, or 10.5%, during 2022. The increase in noninterest income for the Insurance Segment during 2023 was principally due to increases in commercial property and casualty commissions, other commission income and other miscellaneous income. The increase in noninterest income for the Insurance Segment during 2022 was principally due to increases in property and casualty commissions, other commission income and group health commissions.
Previous report
Noninterest expense for the Insurance Segment increased $3.1 million, or 8.1%, during 2023 and $2.9 million, or 8.1%, during 2022. The increase in noninterest expense for the Insurance Segment for 2023 was principally due to higher salaries expense resulting from modest general merit increases and higher commission expense due to improvements in business volumes. The increase in noninterest expense for the Insurance Segment for 2022 was principally due to higher salaries expense resulting from modest general merit increases and higher commission expense due to improvements in business volumes, partially offset by a decrease in outside services and fees.
Previous report
Trustmark performed an annual impairment test of the book value of goodwill held in the Insurance Segment as of October 1, 2023, 2022, and 2021. Based on this analysis, Trustmark concluded that no impairment charge was required. An extended period of falling prices and suppressed demand for the products of the Insurance Segment could result in impairment of goodwill in the future. FBBI’s ability to maintain the current income trend is dependent on the success of the subsidiary’s continued initiatives to attract new business through cross referrals between practice units and bank relationships and seeking new business in other markets.
Previous report
State and other political subdivision LHFI decreased $135.4 million, or 11.1%, during 2023 reflecting declines across all five market regions.
Previous report
The external factors qualitative factor is Management’s best judgment on the loan or pool level impact of all factors that affect the portfolio that are not accounted for using any other part of the ACL methodology (i.e., natural disasters, changes in legislation, impacts due to technology and pandemics). Trustmark's External Factor – Pandemic ensures reserve adequacy for collectively evaluated loans most likely to be impacted by the unique economic and behavioral conditions created by the COVID-19 pandemic. Additional qualitative reserves are derived based on two principles. The first is the disconnect of economic factors to Trustmark’s modeled PD (derived from the econometric models underpinning the quantitative pooled reserves). During the pandemic, extraordinary measures by the federal government were made available to consumers and businesses, including COVID-19 loan payment concessions, direct transfer payments to households, tax deferrals and reduced interest rates, among others. These government interventions may have extended the lag between economic conditions and default, relative to what was captured in the model development data. Because Trustmark’s econometric PD models rely on the observed relationship from the economic downturn from 2007 to 2009 in both timing and severity, Management does not expect the models to reflect these current conditions. For example, while the models would predict contemporaneous unemployment peaks and loan defaults, this may not occur when borrowers can request payment deferrals. Thus, for the affected population, economic conditions are not fully considered as a part of Trustmark’s quantitative reserve. The second principle is the change in risk that is identified by rating changes. As a part of Trustmark’s credit review process, loans in the affected population have been given more frequent screening to ensure accurate ratings are maintained through this dynamic period. Trustmark’s quantitative reserve does not directly address changes in ratings; thus, a migration qualitative factor was designed to work in concert with the quantitative reserve.
Previous report
As discussed above, the disconnect of economic factors means that changes in rating caused by deteriorating and weak economic conditions as a result of the pandemic are not being captured in the quantitative reserve. During 2020, due to unforeseen pandemic conditions that varied from Management’s expectations, additional reserves were further dimensioned in order to appropriately reflect the risk within the portfolio related to the COVID-19 pandemic. In an effort to ensure the External Factor – Pandemic qualitative factor is reasonable and supportable, historical Trustmark loss data was leveraged to construct a framework that is quantitative in nature. To dimension the additional reserve, Management uses the sensitivity of the quantitative commercial loan reserve to changes in macroeconomic conditions to apply to loans rated acceptable or better (risk rates 1-4). In addition, to account for the known changes in risk, a weighted average of the commercial loan portfolio loss rate, derived from the performance trends qualitative factor, is used to dimension additional reserves for downgraded credits. Loans rated acceptable with risk (risk rate 5) or watch (risk rate 6) received the additional reserves based on the average of the macroeconomic conditions and weighted average of the commercial loan portfolio loss rate while the loans rated special mention (risk rate 7) and substandard (risk rate 8) received additional reserves based on the weighted-average described above. During 2022, Management noted that all pass rate loans (risk rate 5 and 6) related to the External Factor - Pandemic qualitative factor either did not experience significant stress related to the pandemic or have since recovered and does not expect future stresses attributed to the pandemic that may affect these loans. As a result, Management decided to accelerate the release of the additional pandemic reserves on all pass rate loans as a result of pandemic conditions resolving. During the fourth quarter of 2023, Management decided to resolve the External Factor-Pandemic qualitative factor as a result of the remaining loan balances that were identified as COVID affected loans were immaterial from both a reserve and balance perspective. The remaining loans were incorporated back into the performance qualitative factor as a result of this resolution. Further, due to this resolution there is no longer any active External Factor as of December 31, 2023.
Previous report
During the first quarter of 2022, in order to account for the potential uncertainty related to higher prices and low economic growth, Trustmark chose to enact a portion of the qualitative framework, External Factor - Stagflation. Management calculated the reserve using a third-party stagflation forecast and compared it to the third-party baseline forecast used in the quantitative modeling. The weighted differential was added as qualitative reserves to account for potential uncertainty. During the fourth quarter of 2022, Management determined that the likelihood of a stagflation scenario had sufficiently diminished. Management identified that the potential had already been reduced and effectively captured within a nominally more negative baseline economic forecast. As a result, Management elected to resolve the External Factor - Stagflation and fully release the reserves.
Previous report
At December 31, 2023, nonaccrual LHFI totaled $100.0 million, or 0.76% of total LHFS and LHFI, reflecting an increase of $34.0 million, or 51.6%, relative to December 31, 2022. The increase in nonaccrual LHFI was primarily as a result of three large commercial credits placed on nonaccrual as well as an increase in mortgage nonaccruals that were partially offset by other commercial credits that were foreclosed, charged off, returned to accrual or paid off.
Previous report
Additionally, on March 15, 2020, in response to the COVID-19 pandemic, the FRB reduced reserve requirements for insured depository institutions to zero percent, which increased TNB’s available liquidity.
Previous report
On March 12, 2023, the U.S. Treasury Department, the FRB and the FDIC jointly announced the establishment of the Bank Term Funding Program (BTFP), in response to recent liquidity concerns within the banking industry in part due to recent deposit runs that resulted in a few large bank failures. The BTFP was designed to provide available additional funding to eligible depository institutions to help assure that banks have the ability to meet the needs of all their depositors. Under the program, eligible depository institutions can obtain loans of up to one year in length by pledging U.S. Treasuries, agency debt and mortgage-backed securities and other qualifying assets (valued at par) as collateral. The BTFP is intended to eliminate the need for depository institutions to quickly sell their securities when they are experiencing stress on their liquidity. As of December 31, 2023, Trustmark had not accessed the BTFP.
Reworded paragraphs (101)
Previous wording
Trustmark has been committed to meeting the banking and financial needs of its customers and communities for over 130 years and remains focused on providing support, advice and solutions to its customers' unique needs. Trustmark produced strong financial results during 2023, despite the challenging financial services environment and increasingly competitive deposit costs, reflected by significant growth in LHFI of $746.5 million, or 6.1%, and deposits of $1.132 billion, or 7.8%, an increase in net interest income of $58.2 million, or 11.8%, and solid credit quality. Trustmark’s capital position remained solid, reflecting the consistent profitability of its diversified financial services businesses.
Current wording
Trustmark has been committed to meeting the banking and financial needs of its customers and communities for over 130 years and remains focused on providing support, advice and solutions to its customers' unique needs. Trustmark completed the following significant non-routine transactions during the second quarter of 2024:
Previous wording
Trustmark reported net income of $36.1 million, or basic and diluted earnings per share (EPS) of $0.59, for the fourth quarter of 2023, compared to a net loss of $34.1 million, or basic and diluted EPS of -$0.56, in the fourth quarter of 2022. Trustmark’s reported performance during the quarter ended December 31, 2023, produced a return on average tangible equity of 11.92%, a return on average assets of 0.77%, an average equity to average assets ratio of 8.51% and a dividend payout ratio of 38.98%, compared to a return on average tangible equity of -12.14%, a return on average assets of -0.76%, an average equity to average assets ratio of 8.41% and a dividend payout ratio of -41.07% during the quarter ended December 31, 2022.
Current wording
Trustmark reported net income of $56.3 million, or basic and diluted EPS of $0.92, for the fourth quarter of 2024, compared to a net income of $36.1 million, or basic and diluted EPS of $0.59, in the fourth quarter of 2023. Trustmark’s reported performance during the quarter ended December 31, 2024, produced a return on average tangible equity of 13.68%, a return on average assets of 1.23%, an average equity to average assets ratio of 10.82% and a dividend payout ratio of 25.00%, compared to a return on average tangible equity of 11.92%, a return on average assets of 0.77%, an average equity to average assets ratio of 8.51% and a dividend payout ratio of 38.98% during the quarter ended December 31, 2023.
Previous wording
The increase in net income when the fourth quarter of 2023 is compared to the fourth quarter of 2022 was principally due to the litigation settlement expense recorded during the fourth quarter of 2022 related to the Stanford Financial Group litigation. Excluding the litigation settlement expense, net income decreased $5.4 million, or 13.0%, when the fourth quarter of 2023 is compared to the fourth quarter of 2022, principally due to a decrease in revenue and an increase in noninterest expense, excluding the litigation settlement expense, partially offset by a decrease in the PCL on off-balance sheet credit exposures. Revenue, which is defined as net interest income plus noninterest income, totaled $186.5 million for the quarter ended December 31, 2023 compared to $191.8 million for the quarter ended December 31, 2022, a decrease of $5.2 million, or 2.7%. The decrease in total revenue for the fourth quarter of 2023 compared to the same time period in 2022, resulted from a decrease in net interest income, principally due to increases in interest on deposits and other interest expense largely offset by increases in interest and fees on LHFS and LHFI and other interest income, partially offset by an increase in noninterest income, principally due to increases in mortgage banking, net and insurance commissions.
Current wording
The increase in net income when the fourth quarter of 2024 is compared to the fourth quarter of 2023 was principally due to an increase in revenue. Revenue, which is defined as net interest income plus noninterest income (loss), totaled $196.8 million for the quarter ended December 31, 2024 compared to $173.3 million for the quarter ended December 31, 2023, an increase of $23.5 million, or 13.5%. The increase in total revenue for the fourth quarter of 2024 compared to the same time period in 2023 resulted from an increase in net interest income, principally due to declines in total interest expense as well as an increase in interest on securities-taxable partially offset by a decline in other interest income, and an increase in noninterest income (loss), principally due to increases in mortgage banking, net and other, net.
Previous wording
Trustmark’s PCL, LHFI for the three months ended December 31, 2023 totaled $7.6 million compared to $6.9 million for the three months ended December 31, 2022, an increase of $683 thousand, or 9.9%. The PCL, LHFI for the fourth quarter of 2023 primarily reflected an increase in required reserves as a result of net adjustments to the qualitative reserve factors, loan growth and changes in the macroeconomic forecasts, partially offset by a decline in specific reserves for individually analyzed LHFI. The PCL, off-balance sheet credit exposures totaled a negative $888 thousand for the three months ended December 31, 2023 compared to $5.2 million for the three months ended December 31, 2022, a decrease of $6.1 million. The PCL, off-balance sheet credit exposures for the fourth quarter of 2023 primarily reflected declines in required reserves as a result of a decline in unfunded commitments. Please see the section captioned “Provision for Credit Losses,” for additional information regarding the PCL on LHFI and off-balance sheet credit exposures.
Current wording
Trustmark’s PCL, LHFI for the three months ended December 31, 2024 totaled $7.0 million compared to $7.6 million for the three months ended December 31, 2023, a decrease of $625 thousand, or 8.2%. The PCL, LHFI for the fourth quarter of 2024 primarily reflected an increase in required reserves as a result of net adjustments to the qualitative reserve factors and changes to the macroeconomic forecasts, partially offset by a decline in specific reserves for individually analyzed LHFI. The PCL, off-balance sheet credit exposures totaled $502 thousand for the three months ended December 31, 2024 compared to a negative $888 thousand for the three months ended December 31, 2023, an increase of $1.4 million. The PCL, off-balance sheet credit exposures for the fourth quarter of 2024 primarily reflected increases in required reserves as a result of credit migration and implementation of the External Factor - Credit Quality Review qualitative factor as well as an increase in unfunded commitments, partially offset by a decline in required reserves as a result of changes in the total reserve rate. Please see the section captioned “Provision for Credit Losses,” for additional information regarding the PCL on LHFI and off-balance sheet credit exposures.
Previous wording
For the year ended December 31, 2023, Trustmark reported net income of $165.5 million, or basic and diluted EPS of $2.71 and $2.70, respectively, compared to $71.9 million, or basic and diluted EPS of $1.17, for the year ended December 31, 2022 and $147.4 million, or basic and diluted EPS of $2.35 and $2.34, respectively, for the year ended December 31, 2021. Trustmark’s reported performance for the year ended December 31, 2023, produced a return on average tangible equity of 14.04%, a return on average assets of 0.89% and a dividend payout ratio of 33.95%, compared to a return on average tangible equity of 6.00%, a return on average assets of 0.41% and a dividend payout ratio of 78.63% for the year ended December 31, 2022 and a return on average tangible equity of 10.81%, a return on average assets of 0.86% and a dividend payout ratio of 39.15% for the year ended December 31, 2021. Trustmark’s average equity to average assets ratio was 8.41%, 9.18% and 10.38% for the years ended December 31, 2023, 2022 and 2021, respectively.
Current wording
For the year ended December 31, 2024, Trustmark reported net income of $223.0 million, or basic and diluted EPS of $3.65 and $3.63, respectively, compared to $165.5 million, or basic and diluted EPS of $2.71 and $2.70, respectively, for the year ended December 31, 2023 and $71.9 million, or basic and diluted EPS of $1.17, for the year ended December 31, 2022. Trustmark’s reported performance for the year ended December 31, 2024, produced a return on average tangible equity of 15.20%, a return on average assets of 1.20% and a dividend payout ratio of 25.21%, compared to a return on average tangible equity of 14.04%, a return on average assets of 0.89% and a dividend payout ratio of 33.95% for the year ended December 31, 2023 and a return on average tangible equity of 6.00%, a return on average assets of 0.41% and a dividend payout ratio of 78.63% for the year ended December 31, 2022. Trustmark’s average equity to average assets ratio was 9.84%, 8.41% and 9.18% for the years ended December 31, 2024, 2023 and 2022, respectively.
Previous wording
Net interest income for the year ended December 31, 2023 totaled $552.9 million, an increase of $58.2 million, or 11.8%, when compared to the year ended December 31, 2022. Interest income totaled $878.8 million for the year ended December 31, 2023, an increase of $337.0 million, or 62.2%, when compared to the year ended December 31, 2022, principally due to increases in interest and fees on LHFS and LHFI, primarily due to loan growth and rising interest rates, and other interest income, primarily due to an increase in the rate paid by the FRBA on reserves. Interest expense totaled $326.0 million for the year ended December 31, 2023, an increase of $278.8 million, when compared to the year ended December 31, 2022. The increase in interest expense when 2023 is compared to 2022 was due to an increase in interest on deposits primarily due to rising interest rates, increased competition for deposits and higher average balances, an increase in other interest expense primarily due to the increase in the amount of short-term FHLB advances held throughout 2023 as well as an increase in the rate paid for short-term FHLB advances and an increase in interest on federal funds purchased and securities sold under repurchase agreements primarily due to increases to the target rate for federal funds purchased by the FRB.
Current wording
Net interest income for the year ended December 31, 2024 totaled $584.4 million, an increase of $31.5 million, or 5.7%, when compared to the year ended December 31, 2023. Interest income totaled $960.3 million for the year ended December 31, 2024, an increase of $81.5 million, or 9.3%, when compared to the year ended December 31, 2023, principally due to increases in interest and fees on LHFS and LHFI, primarily as a result of the higher interest rate environment and loan growth, and interest on securities, primarily as a result of restructuring the securities portfolio during the second quarter of 2024, partially offset by a decline in other interest income, primarily due to a decline in the balance held at the FRBA as well as a decline in dividend income from FHLB stock. Interest expense totaled $375.9 million for the year ended December 31, 2024, an increase of $50.0 million, or 15.3%, when compared to the year ended December 31, 2023. The increase in interest expense when 2024 is compared to 2023 was principally due to an increase in interest on deposits primarily due to rising interest rates, increased competition for deposits and higher average balances, partially offset by a decrease in other interest expense primarily due to a decrease in the amount of short-term FHLB advances held throughout 2024.
Previous wording
Trustmark’s PCL, LHFI for 2023 totaled $27.4 million compared to $21.7 million for 2022, an increase of $5.7 million, or 26.2%. The PCL, LHFI for 2023 primarily reflected an increase in required reserves as a result of loan growth, net changes in the qualitative reserve factors, changes in the macroeconomic forecasts and extended maturities on the secured by 1-4 family residential properties portfolio resulting from lower prepayment speeds, partially offset by a decline in specific reserves for individually analyzed LHFI. The PCL, off-balance sheet credit exposures totaled a negative $2.8 million for 2023 compared to $1.2 million for 2022, a decrease of $4.0 million. The release in PCL on off-balance sheet credit exposures for 2023 primarily reflected a decrease in required reserves due to a decline in unfunded commitments partially offset by an increase in required reserves as a result of changes in the total reserve rate. Please see the section captioned “Provision for Credit Losses” for additional information regarding the PCL on LHFI and off-balance sheet credit exposures.
Current wording
The PCL, LHFI for 2024 totaled $45.9 million and included an $8.6 million PCL, LHFI sale of 1-4 family mortgage loans for the credit-related portion of the loss on the sale of the 1-4 family mortgage loans. The PCL, LHFI, excluding the PCL, LHFI sale of 1-4 family mortgage loans, for 2024 totaled $37.3 million compared to $27.4 million for 2023, an increase of $9.9 million, or 36.3%. The PCL, LHFI, excluding the PCL, LHFI sale of 1-4 family mortgage loans, for 2024 primarily reflected an increase in required reserves as a result of credit migrations and other net changes in the qualitative reserve factors, loan growth, changes in the macroeconomic forecast and an increase in specific reserves for individually analyzed credits. The PCL, off-balance sheet credit exposures totaled a negative $4.7 million for 2024 compared to a negative $2.8 million for 2023, a decrease of $1.9 million, or 67.7%. The release in PCL, off-balance sheet credit exposures for 2024 primarily reflected a decrease in required reserves as a result of changes in the total reserve rate coupled with a decrease in unfunded commitments which was partially offset by an increase in required reserves as a result of implementing the Performance Trend and the External Factor-Credit Quality Review qualitative reserve factors. Please see the section captioned “Provision for Credit Losses” for additional information regarding the PCL on LHFI and off-balance sheet credit exposures.
Previous wording
LHFI totaled $12.951 billion at December 31, 2023, an increase of $746.5 million, or 6.1%, compared to December 31, 2022. The increase in LHFI during 2023 was primarily due to net growth in LHFI secured by real estate, commercial and industrial LHFI and other commercial LHFI and leases partially offset by a decline in state and other political subdivision LHFI. For additional information regarding changes in LHFI and comparative balances by loan category, see the section captioned “LHFI.”
Current wording
LHFI totaled $13.090 billion at December 31, 2024, an increase of $139.4 million, or 1.1%, compared to December 31, 2023. The increase in LHFI during 2024 was primarily due to net growth in LHFI secured by real estate and other commercial loans and leases partially offset by net declines in commercial and industrial LHFI and state and other political subdivision LHFI. For additional information regarding changes in LHFI and comparative balances by loan category, see the section captioned “LHFI.”
Previous wording
Federal funds purchased and repurchase agreements totaled $405.7 million at December 31, 2023 compared to $449.3 million at December 31, 2022, a decrease of $43.6 million, or 9.7%, principally due to a decrease in customer sweep transactions. Trustmark had $370.0 million of upstream federal funds purchased at December 31, 2023, compared to $383.0 million at December 31, 2022. Other borrowings totaled $483.2 million at December 31, 2023, a decrease of $567.7 million, or 54.0%, when compared with $1.051 billion at December 31, 2022, principally due to a decline in outstanding short-term FHLB advances obtained from the FHLB of Dallas.
Current wording
Federal funds purchased and repurchase agreements totaled $324.0 million at December 31, 2024 compared to $405.7 million at December 31, 2023, a decrease of $81.7 million, or 20.1%, principally due to a decrease in upstream federal funds purchased. Trustmark had $285.0 million of upstream federal funds purchased at December 31, 2024, compared to $370.0 million at December 31, 2023. Other borrowings totaled $301.5 million at December 31, 2024, a decrease of $181.7 million, or 37.6%, when compared with $483.2 million at December 31, 2023, principally due to a decline in outstanding short-term FHLB advances obtained from the FHLB of Dallas.
Previous wording
The credit loss estimation process involves procedures to appropriately consider the unique characteristics of Trustmark’s LHFI portfolio segments. These segments are further disaggregated into loan classes, the level at which credit risk is estimated. When computing allowance levels, credit loss assumptions are estimated using a model that categorizes loan pools based on loss history, delinquency status and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Evaluations of the portfolio and individual credits are inherently subjective, as they require estimates, assumptions and judgments as to the facts and circumstances of particular situations. Determining the appropriateness of the ACL, LHFI is complex and requires judgment by Management about the effect of matters that are inherently uncertain. While Management utilizes its best judgment and information available, the ultimate adequacy of Trustmark’s ACL, LHFI is dependent upon a variety of factors beyond its controls, including the performance of the portfolios, the economy, changes in interest rates and the view of regulatory authorities toward classification of assets. In future periods, evaluations of the overall LHFI portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the ACL and PCL for LHFI. Given the nature of many of the factors, forecasts and assumptions in the ACL methodology for LHFI, it is not possible to provide meaningful estimates of the impact of any such potential change.
Current wording
Evaluations of the portfolio and individual credits are inherently subjective, as they require estimates, assumptions and judgments as to the facts and circumstances of particular situations. Determining the appropriateness of the ACL, LHFI is complex and requires judgment by Management about the effect of matters that are inherently uncertain. While Management utilizes its best judgment and information available, the ultimate adequacy of Trustmark’s ACL, LHFI is dependent upon a variety of factors beyond its controls, including the performance of the portfolios, the economy, changes in interest rates and the view of regulatory authorities toward classification of assets. In future periods, evaluations of the overall LHFI portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the ACL and PCL for LHFI. Given the nature of many of the factors, forecasts and assumptions in the ACL methodology for LHFI, it is not possible to provide meaningful estimates of the impact of any such potential change.
Previous wording
For a complete description of Trustmark’s ACL methodology for the LHFI portfolio, please see Note 4 – LHFI and Allowance for Credit Losses, LHFI included in Part II. Item 8. – Financial Statements and Supplementary Data of this report.
Current wording
For a complete description of Trustmark’s ACL methodology for the LHFI portfolio, please see Note 5 – LHFI and ACL, LHFI included in Part II. Item 8. – Financial Statements and Supplementary Data of this report.
Previous wording
Expected credit losses for off-balance sheet credit exposures are estimated by calculating a commitment usage factor over the contractual period for exposures that are not unconditionally cancellable by Trustmark. Trustmark calculates a loan pool level unfunded amount for the period. In addition to the unfunded balances, Trustmark uses a funding rate for loan pools that are considered open-ended. In order to mitigate volatility and incorporate historical experience in the funding rate, Trustmark uses a twelve-quarter moving average. For the closed-ended loan pools, Trustmark takes a conservative approach and uses a 100% funding rate. The expected funding rate is applied to each pool’s unfunded commitment balances to ensure that reserves will be applied to each pool based upon balances expected to be funded based upon historical levels. In addition to the funding rate being applied to the unfunded commitment balance, a reserve rate is applied that is loan pool specific and is applied to the unfunded amount to ensure loss factors, both quantitative and qualitative, are being considered on the unfunded portion of the loan pool, consistent with the methodology applied to the funded loan pools.
Current wording
Expected credit losses for off-balance sheet credit exposures are estimated by calculating a commitment usage factor over the contractual period for exposures that are not unconditionally cancellable by Trustmark. Trustmark calculates a loan pool level unfunded amount for the period. In addition to the unfunded balances, Trustmark uses a funding rate for loan pools that are considered open-ended. In order to mitigate volatility and incorporate historical experience in the funding rate, Trustmark uses a twelve-quarter moving average. For the closed-ended loan pools, Trustmark takes a conservative approach and uses a 100% funding rate. The expected funding rate is applied to each pool’s unfunded commitment balances to ensure that reserves will be applied to each pool based upon balances expected to be funded based upon historical levels. In addition to the funding rate being applied to the unfunded commitment balance, a reserve rate is applied that is loan pool specific and is applied to the unfunded amount, which includes both quantitative and a majority of the qualitative aspects of the current period's expected credit loss rate. During 2024, Management implemented a performance trends qualitative factor for unfunded commitments and an External Factor - Credit Quality Review qualitative factor for unfunded commitments. For both qualitative factors, the same assumptions are applied in the unfunded commitment calculation that are used in the funded balance calculation with the only difference being the unfunded commitment calculation includes the funding rates for the unfunded commitments. The reserves for these two qualitative factors are added to the other calculated reserve to get a total reserve for off-balance sheet credit exposures.
Previous wording
At December 31, 2023, the MSR fair value was $131.9 million. The impact on the MSR fair value of either a 10% adverse change in prepayment speeds or a 100 basis point increase in discount rates at December 31, 2023, would be a decline in fair value of approximately $4.8 million and $5.4 million, respectively. Changes of equal magnitude in the opposite direction would produce similar increases in fair value in the respective amounts. See the section captioned “MSR” in Note 6 – Mortgage Banking included in Part II. Item 8. – Financial Statements and Supplementary Data of this report for additional information regarding the valuation of the MSR.
Current wording
At December 31, 2024, the MSR fair value was $139.3 million. The impact on the MSR fair value of either a 10% adverse change in prepayment speeds or a 100 basis point increase in discount rates at December 31, 2024, would be a decline in fair value of approximately $4.9 million and $5.6 million, respectively. Changes of equal magnitude in the opposite direction would produce similar increases in fair value in the respective amounts. See the section captioned “MSR” in Note 7 – Mortgage Banking included in Part II. Item 8. – Financial Statements and Supplementary Data of this report for additional information regarding the valuation of the MSR.
Previous wording
Calculated using net income adjusted for intangible amortization divided by total average tangible equity.
Current wording
Calculated using net income from continuing operations adjusted for intangible amortization divided by total average tangible equity.
Previous wording
The following table presents adjustments to net income and select financial ratios as reported in accordance with GAAP resulting from significant non-routine items occurring during the periods presented ($ in thousands, except per share data):
Current wording
The following table presents adjustments to net income (loss) from continuing operations and select financial ratios as reported in accordance with GAAP resulting from significant non-routine items occurring during the periods presented ($ in thousands, except per share data):
Previous wording
On October 9, 2023, Trustmark entered into a settlement agreement that resolved all current and potential future claims relating to litigation involving Adams/Madison Timber. As a result, Trustmark recognized $6.5 million of litigation settlement expense which was included in noninterest expense for the third quarter of 2023.
Current wording
On October 9, 2023, Trustmark entered into a settlement agreement that resolved all current and potential future claims relating to litigation involving Adams/Madison Timber. As a result of this settlement, Trustmark recognized a one-time charge of $6.5 million of litigation settlement expense during the third quarter of 2023.
Previous wording
On January 13, 2023, TNB entered into a settlement agreement relating to the litigation involving the Stanford Financial Group. Information regarding this settlement and related litigation is set forth under the heading “Legal Proceedings” of Note 16 – Commitments and Contingencies in Part II. Item 8. – Financial Statements and Supplementary Data of this report. As a result of this settlement, Trustmark recognized a one-time charge of $100.0 million of litigation settlement expense as well as an additional $750 thousand of legal fees during the fourth quarter of 2022.
Current wording
On January 13, 2023, TNB entered into a settlement agreement relating to the litigation involving the Stanford Financial Group. As a result of this settlement, Trustmark recognized a one-time charge of $100.0 million of litigation settlement expense as well as an additional $750 thousand of legal fees during the fourth quarter of 2022.
Previous wording
Net interest income-FTE for the year ended December 31, 2023 increased $59.3 million, or 11.7%, when compared with the year ended December 31, 2022. The increase in net interest income-FTE when 2023 is compared to 2022 was principally due to increases in interest and fees on LHFS and LHFI-FTE and other interest income, partially offset by an increase in total interest expense. The net interest margin-FTE for 2023 increased 15 basis points to 3.32% when compared to 2022. The net interest margin-FTE excluding PPP loans and the balance held at the FRBA, which equals the reported net interest income-FTE excluding interest and fees on PPP loans and interest on the FRBA balance, as a percentage of average earning assets excluding average PPP loans and the average FRBA balance, was 3.25% for 2023, a decrease of 5 basis points when compared to 3.30% for 2022. The decrease in the net interest margin-FTE excluding PPP loans and the balance held at the FRBA for 2023 was principally due to higher costs of interest-bearing liabilities, partially offset by increases in the yields on the LHFS and LHFI and securities portfolios reflecting the higher interest rate environment.
Current wording
Net interest income-FTE for the year ended December 31, 2024 increased $30.6 million, or 5.4%, when compared with the year ended December 31, 2023. The increase in net interest income-FTE when 2024 is compared to 2023 was principally due to increases in interest and fees on LHFS and LHFI-FTE and interest on securities-taxable as well as a decline in other interest expense, partially offset by an increase in total interest on deposits and a decline in other interest income. The net interest margin-FTE for 2024 increased 19 basis points to 3.51% when compared to 2023. The increase in the net interest margin-FTE for 2024 was principally due to increases in the yields on the LHFS and LHFI and securities portfolios reflecting the higher interest rate environment and the restructuring of the securities portfolio during 2024, partially offset by higher costs of interest-bearing liabilities.
Previous wording
Average interest-earning assets for 2023 were $17.082 billion compared to $16.014 billion for 2022, an increase of $1.068 billion, or 6.7%. The increase in average earning assets during 2023 was primarily due to an increase in average loans (LHFS and LHFI) of $1.565 billion, or 13.9%, which was partially offset by decreases in average securities of $302.5 million, or 7.9%, and average other earning assets of $179.2 million, or 19.8%. The increase in average loans (LHFS and LHFI) was primarily attributable to an increase in the average balance of the LHFI portfolio of $1.596 billion, or 14.5%, partially offset by a decrease in the average balance of the LHFS portfolio of $30.8 million, or 15.9%, when balances at December 31, 2023 are compared to balances at December 31, 2022. See the sections captioned "LHFS" and "LHFI" for additional information regarding changes in the LHFS and LHFI portfolios. The decrease in average securities when 2023 is compared to 2022 was principally due to calls, maturities and pay-downs of the underlying loans of government-sponsored enterprise (GSE) guaranteed securities. The decrease in average other earning assets when 2023 is compared to 2022 was primarily due to a decrease in reserves held at the FRBA.
Current wording
Average interest-earning assets for 2024 were $17.010 billion compared to $17.082 billion for 2023, a decrease of $71.9 million, or 0.4%, reflecting declines in average securities and average other earning assets partially offset by growth in average loans (LHFS and LHFI). Average total securities declined $372.8 million, or 10.5%, when 2024 is compared to 2023, principally due to available for sale securities sold net of available for sale securities purchased as part of the restructuring of the available for sale securities portfolio during the second quarter of 2024 as well as calls, maturities and pay-downs of the loans underlying GSE guaranteed securities. Average other earning assets decreased $181.3 million, or 24.9%, when 2024 is compared to 2023, primarily due to decreases in reserves held at the FRBA and investments in FHLB stock. Average loans (LHFS and LHFI) increased $482.3 million, or 3.8%, when 2024 is compared to 2023, primarily attributable to an increase in the average balance of the LHFI portfolio of $458.5 million, or 3.6%. The increase in the average LHFI portfolio when the balances at December 31, 2024 are compared to December 31, 2023 was principally due to net growth in average LHFI secured by real estate and average other commercial loans and leases partially offset by declines in average state and other political subdivision loans. See the sections captioned "LHFS" and "LHFI" for additional information regarding changes in the LHFS and LHFI portfolios.
Previous wording
Interest income-FTE totaled $892.3 million for 2023, an increase of $338.1 million, or 61.0%, while the yield on total earning assets increased 176 basis points to 5.22% when compared to 2022. The increase in interest income-FTE in 2023 primarily reflects increases in interest and fees on LHFS and LHFI-FTE and other interest income. During 2023, interest and fees on LHFS and LHFI-FTE increased $303.5 million, or 62.5%, when compared to 2022, while the yield on loans (LHFS and LHFI) increased to 6.16% compared to 4.32% as a result of the increase in the average balance of the LHFI portfolio as well as higher interest rates. During 2023, other interest income increased $29.1 million when compared to 2022, while the yield on other earning assets increased to 5.10% compared to 0.89%, principally due to the FRBA's increase in the interest rate paid on reserves during 2023. See the discussion above regarding changes in interest income and yields on balances held at the FRBA.
Current wording
Interest income-FTE totaled $972.9 million for 2024, an increase of $80.6 million, or 9.0%, while the yield on total earning assets increased 50 basis points to 5.72% when compared to 2023. The increase in interest income-FTE in 2024 primarily reflects increases in interest and fees on LHFS and LHFI-FTE and interest on securities-taxable partially offset by a decline in other interest income. During 2024, interest and fees on LHFS and LHFI-FTE increased $68.6 million, or 8.7%, when compared to 2023, while the yield on loans (LHFS and LHFI) increased to 6.45% compared to 6.16% reflecting the higher interest rate environment and the increase in the average balance of the LHFI portfolio. During 2024, interest on securities-taxable increased $19.8 million, or 30.0%, when compared to 2023, while the yield on taxable securities increased to 2.70% compared to 1.86% principally due to the restructuring of the securities portfolio. During 2024, other interest income decreased $7.5 million, or 20.3%, when compared to 2023, while the yield on other earning assets increased to 5.41% compared to 5.10%, primarily due to declines in the balance held at the FRBA and dividend income from FHLB stock.
Previous wording
Average interest-bearing liabilities for 2023 totaled $12.983 billion compared to $10.987 billion for 2022, an increase of $1.996 billion, or 18.2%. The increase in average interest-bearing liabilities was primarily the result of increases in average interest-bearing deposits, average other borrowings and average federal funds purchased and securities sold under repurchase agreements. Average interest-bearing deposits for 2023 increased $1.083 billion, or 10.5%, when compared to 2022, reflecting growth in average time deposits and average interest-bearing demand deposits partially offset by declines in average savings deposits. Average other borrowings for 2023 increased $785.6 million when compared to 2022, principally due to the increase in short-term FHLB advances outstanding during the year. Average federal funds purchased and securities sold under repurchase agreements increased $127.6 million, or 45.0%, when 2023 is compared to 2022, principally due to an increase in upstream federal funds purchased during the year.
Current wording
Average interest-bearing liabilities for 2024 totaled $13.159 billion compared to $12.983 billion for 2023, an increase of $176.1 million, or 1.4%. The increase in average interest-bearing liabilities was primarily the result of increases in average interest-bearing deposits partially offset by a decline in average other borrowings. Average interest-bearing deposits for 2024 increased $784.0 million, or 6.9%, when compared to 2023, reflecting growth in average time deposits and average interest-bearing demand deposits partially offset by declines in average savings deposits. Average other borrowings for 2024 decreased $596.0 million, or 60.6%, when compared to 2023, principally due to the decrease in short-term FHLB advances outstanding during the year.
Previous wording
Interest expense for 2023 totaled $326.0 million, an increase of $278.8 million when compared with 2022, while the rate on total interest-bearing liabilities increased to 2.51% compared to 0.43%. The increase in total interest expense for 2023 reflected increases in interest on deposits, interest on federal funds purchased and securities sold under repurchase agreements and other interest expense. Interest on deposits increased $216.9 million, while the rate on interest-bearing deposits increased to 2.16% compared to 0.28% when 2023 is compared to 2022, primarily due to increases in interest on all categories of interest checking accounts, CDs and MMDAs, reflecting rising interest rates and higher average balances. Other interest expense increased $47.7 million, while the rate on other borrowings increased to 5.09% compared to 3.11%, when 2023 is compared to 2022, principally due to an increase in the amount of short-term FHLB advances obtained from the FHLB of Dallas during the year as well as the interest rate paid on short-term FHLB advances. Interest expense on federal funds purchased and securities sold under repurchase agreements increased $14.3 million, while the rate on federal funds purchased and securities sold under repurchase agreements increased to 4.97% compared to 2.16%, when 2023 is compared to 2022, principally due to the FRB’s increase in the target range for the federal funds rate as well as an increase in upstream federal funds purchased during the year.
Current wording
Interest expense for 2024 totaled $375.9 million, an increase of $50.0 million, or 15.3%, when compared with 2023, while the rate on total interest-bearing liabilities increased to 2.86% compared to 2.51%. The increase in interest expense for 2024 was principally due to the increase in interest on deposits partially offset by a decline in other interest expense. Interest on deposits increased $83.4 million, or 33.9%, while the rate on interest-bearing deposits increased to 2.70% compared to 2.16% when 2024 is compared to 2023, primarily due to increases in interest on commercial interest checking accounts and all categories of CDs and MMDAs, primarily due to rising interest rates, increased competition for deposits and higher average balances. Other interest expense decreased $33.2 million, or 55.7%, while the rate on other borrowings decreased to 4.60% compared to 5.09%, when 2024 is compared to 2023, principally due to a decrease in the amount of short-term FHLB advances obtained from the FHLB of Dallas during the year.
Previous wording
The PCL, LHFI is the amount necessary to maintain the ACL, LHFI at the amount of expected credit losses inherent within the LHFI portfolio. The amount of PCL and the related ACL for LHFI are based on Trustmark’s ACL methodology. The PCL, LHFI totaled $27.4 million for 2023, compared to a PCL, LHFI of $21.7 million for 2022 and a negative PCL, LHFI of $21.5 million for 2021. The PCL, LHFI for 2023 primarily reflected an increase in required reserves as a result of loan growth, net changes in the qualitative reserve factors, changes in the macroeconomic forecasts and extended maturities on the secured by 1-4 family residential properties portfolio resulting from lower prepayment speeds, partially offset by a decline in specific reserves for individually analyzed LHFI.
Current wording
The PCL, LHFI is the amount necessary to maintain the ACL, LHFI at the amount of expected credit losses inherent within the LHFI portfolio. The amount of PCL and the related ACL for LHFI are based on Trustmark’s ACL methodology. The PCL, LHFI, excluding the PCL, LHFI sale of 1-4 family mortgage loans, totaled $37.3 million for 2024, compared to a PCL, LHFI of $27.4 million for 2023 and $21.7 million for 2022. The PCL, LHFI, excluding the PCL, LHFI sale of 1-4 family mortgage loans, for 2024 primarily reflected an increase in required reserves as a result of credit migrations and other net changes in the qualitative reserve factors, loan growth, changes in the macroeconomic forecast and an increase in specific reserves for individually analyzed credits.
Previous wording
FASB ASC Topic 326 requires Trustmark to estimate expected credit losses for off-balance sheet credit exposures which are not unconditionally cancellable by Trustmark. Trustmark maintains a separate ACL on off-balance sheet credit exposures, including unfunded commitments and letters of credit. Adjustments to the ACL on off-balance sheet credit exposures are recorded to the PCL, off-balance sheet credit exposures. The PCL, off-balance sheet credit exposures totaled a negative $2.8 million for 2023 compared to $1.2 million for 2022, and a negative $2.9 million for 2021. The release in PCL on off-balance sheet credit exposures for 2023 primarily reflected a decrease in required reserves due to a decline in unfunded commitments partially offset by an increase in required reserves as a result of changes in the total reserve rate.
Current wording
FASB ASC Topic 326 requires Trustmark to estimate expected credit losses for off-balance sheet credit exposures which are not unconditionally cancellable by Trustmark. Trustmark maintains a separate ACL for off-balance sheet credit exposures, including unfunded commitments and letters of credit. Adjustments to the ACL on off-balance sheet credit exposures are recorded to the PCL, off-balance sheet credit exposures. The PCL, off-balance sheet credit exposures totaled a negative $4.7 million for 2024 compared to a negative $2.8 million for 2023, and $1.2 million for 2022. The release in PCL on off-balance sheet credit exposures for 2024 primarily reflected a decrease in required reserves as a result of changes in the total reserve rate coupled with a decrease in unfunded commitments which was partially offset by an increase in required reserves as a result of implementing the Performance Trend and the External Factor-Credit Quality Review qualitative reserve factors.
Previous wording
Noninterest income represented 27.2%, 29.3% and 34.7% of total revenue, before securities gains (losses), net in 2023, 2022 and 2021, respectively. The following table provides the comparative components of noninterest income for the periods presented ($ in thousands):
Current wording
The following table provides the comparative components of noninterest income (loss) for the periods presented ($ in thousands):
Previous wording
Changes in various components of noninterest income for the year ended December 31, 2023 are discussed in further detail below. For analysis of Trustmark’s insurance commissions and wealth management income, please see the section captioned “Results of Segment Operations.”
Current wording
Changes in various components of noninterest income (loss) for the year ended December 31, 2024 are discussed in further detail below. For analysis of Trustmark’s wealth management income, please see the section captioned “Results of Segment Operations.”
Previous wording
The following table illustrates the components of mortgage banking, net included in noninterest income for the periods presented ($ in thousands):
Current wording
The following table illustrates the components of mortgage banking, net included in noninterest income (loss) for the periods presented ($ in thousands):
Previous wording
The decrease in mortgage banking, net when 2023 is compared to 2022 was principally due to a decline in the gain on sales of loans, net and an increase in the net negative hedge ineffectiveness, partially offset by a decline in the run-off of the MSR. Mortgage loan production totaled $1.454 billion for 2023, a decrease of $670.7 million, or 31.6%, when compared to 2022. Mortgage loan production totaled $2.125 billion for 2022, a decrease of $678.1 million, or 24.2%, when compared to 2021. Loans serviced for others totaled $8.477 billion at December 31, 2023, compared with $8.116 billion at December 31, 2022, and $7.953 billion at December 31, 2021.
Current wording
The increase in mortgage banking, net when 2024 is compared to 2023 was principally due to an increase in the gain on sales of loans, net partially offset by an increase in the net negative hedge ineffectiveness. Mortgage loan production totaled $1.418 billion for 2024, a decrease of $36.4 million, or 2.5%, when compared to 2023. Loans serviced for others totaled $8.763 billion at December 31, 2024, compared with $8.477 billion at December 31, 2023, and $8.116 billion at December 31, 2022.
Previous wording
Representing a significant component of mortgage banking income is gain on sales of loans, net. The decrease in the gain on sales of loans, net when 2023 is compared to 2022 was primarily the result of decreases in the volume of loans sold as well as lower profit margins in secondary marketing activities partially offset by an increase in the mortgage valuation adjustment. Loan sales decreased $107.0 million, or 8.6%, during 2023 to total $1.136 billion compared to a decrease of $1.043 billion, or 45.6%, during 2022 to total $1.243 billion. The decrease in loan sales during 2023 and 2022 was principally due to a decline in mortgage lending activity as result of rising interest rates.
Current wording
Representing a significant component of mortgage banking income is gain on sales of loans, net. The increase in the gain on sales of loans, net when 2024 is compared to 2023 was primarily the result of higher profit margins in secondary marketing activities partially offset by a decrease in the mortgage valuation adjustment. Loan sales increased $5.3 million, or 0.5%, during 2024 to total $1.141 billion compared to a decrease of $107.0 million, or 8.6%, during 2023 to total $1.136 billion.
Previous wording
The following table illustrates the components of other income, net included in noninterest income for the periods presented ($ in thousands):
Current wording
The following table illustrates the components of other, net included in noninterest income (loss) for the periods presented ($ in thousands):
Previous wording
The increase in other income, net when 2023 is compared to 2022 was primarily due to an increase in other miscellaneous income partially offset by an increase in the amortization of tax credit partnerships as a result of investment in new tax credit partnerships. The increase in other miscellaneous income when 2023 is compared with 2022 was principally due to increases in cash management service charges partially offset by declines in gains on the sales of premises and equipment and gain on non-qualified benefit plans.
Current wording
The increase in other, net when 2024 is compared to 2023 was principally due to the $8.1 million Visa C shares fair value adjustment during the second quarter of 2024 as well as an increase in other miscellaneous income, partially offset by the $4.8 million noncredit-related loss on the sale of 1-4 family mortgage loans recorded during the second quarter of 2024. The increase in other miscellaneous income when 2024 is compared with 2023 was principally due to increases in cash management service charges and other partnership investments.
Previous wording
The increase in salaries and employee benefits expense when 2023 is compared to 2022 was principally due to increases in salaries expense, primarily due to general merit increases, accrued management performance incentives and commission expense due to improvements in insurance production, partially offset by a decline in commission expense due to the decline in mortgage originations.
Current wording
The decrease in salaries and employee benefits expense when 2024 is compared to 2023 was principally due to decreases in commission expense due to the decline in mortgage originations, severance expense and medical insurance expense, partially offset by increases in salaries expense, primarily due to general merit increases, accrued management performance incentives and stock compensation expense related to performance awards.
Previous wording
The increase in services and fees when 2023 is compared to 2022 was principally due to increases in data processing charges related to software and business process outsourcing fees, partially offset by a decrease in other services and fees.
Current wording
The decrease in services and fees when 2024 is compared to 2023 was principally due to declines in outside services and fees, telephone expense and advertising expense, partially offset by increases in data processing charges related to software and business process outsourcing fees.
Previous wording
The increase in other expense when 2023 is compared to 2022 was principally due to an increase in FDIC assessment expense, primarily due to an increase in the assessment rate, partially offset by a decline in loan expense.
Current wording
The increase in other expense when 2024 is compared to 2023 was principally due to increases in FDIC assessment expense, primarily due to an increase in the assessment rate, and other real estate write-downs, partially offset by declines in stationary and supplies and other miscellaneous expenses.
Previous wording
Trustmark’s operations are managed along three operating segments: General Banking, Wealth Management and Insurance. A description of each segment and the methodologies used to measure financial performance and financial information by reportable segment are included in Note 20 – Segment Information located in Part II. Item 8. – Financial Statements and Supplementary Data of this report.
Current wording
Trustmark’s operations are managed along two operating segments: General Banking and Wealth Management. A description of each segment and the methodologies used to measure financial performance and financial information by reportable segment are included in Note 21 – Segment Information located in Part II. Item 8. – Financial Statements and Supplementary Data of this report. The Insurance Segment is included in discontinued operations for all periods presented in the accompanying consolidated balance sheets and the consolidated statements of income (loss). For additional information about discontinued operations, please see Note 2 - Discontinued Operations included in Part I. Item 1. – Financial Statements of this report.
Previous wording
Net interest income for the General Banking Segment for 2023 increased $57.6 million, or 11.8%, when compared with 2022, principally due to increases in interest and fees on LHFS and LHFI, other interest income and interest on securities, partially offset by an increase in total interest expense. Net interest income for the General Banking Segment for 2022 increased $76.2 million, or 18.4%, when compared with 2021, principally due to increases in interest and fees on LHFS and LHFI and interest on securities, partially offset by a decline in interest and fees on PPP loans and an increase in total interest expense. The PCL (LHFI and off-balance sheet credit exposures) for the General Banking Segment for 2023 totaled $26.7 million compared to a PCL of $22.9 million during 2022 and a negative PCL of $24.4 million during 2021. For more information on these net interest income items, please see the sections captioned “Financial Highlights” and “Results of Operations.”
Current wording
Net interest income for the General Banking Segment for 2024 increased $31.5 million, or 5.8%, when compared with 2023, primarily resulting from increases in interest and fees from LHFS and LHFI and interest on securities as well as a decline in other interest expense, partially offset by an increase in interest expense on deposits and a decrease in other interest income. Net interest income for the General Banking Segment for 2023 increased $57.6 million, or 11.8%, when compared with 2022, principally due to increases in interest and fees on LHFS and LHFI, other interest income and interest on securities, partially offset by an increase in total interest expense. The PCL (LHFI and off-balance sheet credit exposures) for the General Banking Segment for 2024 totaled $41.1 million compared to a PCL of $26.7 million during 2023 and a PCL of $22.9 million during 2022. For more information on these net interest income items, please see the sections captioned “Financial Highlights” and “Results of Operations.”
Previous wording
Noninterest income for the General Banking Segment decreased $2.9 million, or 2.5%, during 2023 compared to a decrease of $21.5 million, or 15.6%, during 2022. The decrease in noninterest income for the General Banking Segment during 2023 was primarily due to the decreases in bank card and other fees and mortgage banking, net, partially offset by increases in service charges on deposit accounts and other income, net. The decrease in noninterest income for the General Banking Segment during 2022 was primarily due to the decrease in mortgage banking, net, partially offset by increases in service charges on deposit accounts and other income, net. Noninterest income for the General Banking Segment represented 17.2% of total revenue for 2023, 19.2% for 2022 and 25.0% for 2021. Noninterest income for the General Banking Segment includes service charges on deposit accounts; wealth management; bank card and other fees; mortgage banking, net; other income, net and securities gains (losses), net. For more information on these noninterest income items, please see the analysis included in the section captioned “Noninterest Income.”
Current wording
Noninterest income (loss) for the General Banking Segment decreased $174.2 million during 2024 compared to a decrease of $2.9 million, or 2.5%, during 2023. The decrease in noninterest income (loss) for the General Banking Segment during 2024 was primarily due to the net loss on the sale of available for sale securities, the noncredit-related loss on the sale of 1-4 family mortgage loans and a decrease in mortgage banking, net, partially offset by the gain on the conversion of Visa Class B-1 shares to Visa Class C shares and increases in cash management service fees and other miscellaneous income. The decrease in noninterest income (loss) for the General Banking Segment during 2023 was primarily due to the decreases in bank card and other fees and mortgage banking, net, partially offset by increases in service charges on deposit accounts and other, net. Noninterest income (loss) for the General Banking Segment represented a negative 11.7% of total revenue for 2024, 17.2% for 2023 and 19.2% for 2022. Noninterest income (loss) for the General Banking Segment includes service charges on deposit accounts; wealth management; bank card and other fees; mortgage banking, net; other, net and securities gains (losses), net. For more information on these noninterest income (loss) items, please see the analysis included in the section captioned “Noninterest Income (Loss).”
Previous wording
Noninterest expense for the General Banking Segment decreased $67.9 million, or 12.8%, during 2023 compared to an increase of $109.8 million, or 26.1%, during 2022. The decrease in noninterest expense for the General Banking Segment for 2023 was principally due to decreases in litigation settlement expense, outside services and fees and loan expenses, partially offset by increases in salaries and employee benefits, data processing expenses related to software and FDIC assessment expense. During 2023, Trustmark recognized litigation settlement expense of $6.5 million as a result of the settlement relating to the litigation involving the Adams/Madison timber compared to litigation settlement expense of $100.0 million and legal fees of $750 thousand recognized in 2022 as a result of the settlement relating to the litigation involving the Stanford Financial Group. The increase in noninterest expense for the General Banking Segment for 2022 was principally due to increases in litigation settlement expense, services and fees, net occupancy-premises and salaries and employee benefits, partially offset by non-routine transaction expenses incurred during 2021. For more information on these noninterest expense items, please see the analysis included in the section captioned “Noninterest Expense.”
Current wording
Noninterest expense for the General Banking Segment decreased $10.4 million, or 2.2%, during 2024 compared to a decrease of $67.9 million, or 12.8%, during 2023. The decrease in noninterest expense for the General Banking Segment for 2024 was principally due to the $6.5 million of litigation settlement expense recorded during 2023 as well as declines in services and fees and salaries and employee benefits, partially offset by an increase in other expense. The decrease in noninterest expense for the General Banking Segment for 2023 was principally due to decreases in litigation settlement expense, outside services and fees and loan expenses, partially offset by increases in salaries and employee benefits, data processing expenses related to software and FDIC assessment expense. During 2023, Trustmark recognized litigation settlement expense of $6.5 million as a result of the settlement relating to the litigation involving Adams/Madison timber compared to litigation settlement expense of $100.0 million and legal fees of $750 thousand recognized in 2022 as a result of the settlement relating to the litigation involving the Stanford Financial Group. For more information on these noninterest expense items, please see the analysis included in the section captioned “Noninterest Expense.”
Previous wording
During 2023, net income for the Wealth Management Segment increased $2.3 million, or 40.3%, compared to a decrease of $979 thousand, or 14.7%, during 2022. The increase in net income for the Wealth Management Segment during 2023 was principally due to an increase in the negative PCL. The decrease in net income for the Wealth Management Segment during 2022 was principally due to an increase in noninterest expense.
Current wording
During 2024, net income for the Wealth Management Segment decreased $157 thousand, or 2.0%, compared to an increase of $2.3 million, or 40.3%, during 2023. The decrease in net income for the Wealth Management Segment during 2024 was principally due to increases in the PCL and noninterest expense largely offset by an increase in noninterest income. The increase in net income for the Wealth Management Segment during 2023 was principally due to an increase in the negative PCL.
Previous wording
Net interest income for the Wealth Management Segment increased $558 thousand, or 10.5%, during 2023 compared to an increase of $160 thousand, or 3.1%, during 2022. The increase in net interest income for the Wealth Management Segment during 2023 and 2022 was principally due to an increase in interest and fees on loans partially offset by an increase in interest on deposits generated by the Private Banking Group. The PCL for the Wealth Management Segment for 2023 totaled a negative $2.1 million compared to a negative PCL of $21 thousand during 2022 and a negative PCL of $9 thousand during 2021.
Current wording
Net interest income for the Wealth Management Segment increased $80 thousand, or 1.4%, during 2024 compared to an increase of $558 thousand, or 10.5%, during 2023. The slight increase in net interest income for the Wealth Management Segment during 2024 was principally due to an increase in interest and fees on LHFS and LHFI largely offset by an increase in interest expense on deposits. The increase in net interest income for the Wealth Management Segment during 2023 was principally due to an increase in interest and fees on loans partially offset by an increase in interest on deposits generated by the Private Banking Group. The PCL for the Wealth Management Segment for 2024 totaled $154 thousand compared to a negative PCL of $2.1 million during 2023 and a negative PCL of $21 thousand during 2022.
Showing the first 40 of 101 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
LHFI secured by real estate (loans secured by real estate and other loans secured by real estate) increased $316.4 million, or 3.4%, during 2024, principally due to net growth in other real estate secured LHFI, LHFI secured by nonfarm, nonresidential properties (NFNR
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Trustmark elected the five-year phase-in transition period related to adopting FASB ASU 2016-13 for regulatory capital purposes.
Previous report — wording carried elsewhere
On October 9, 2023, Trustmark entered into a settlement agreement that resolved all current and potential future claims relating to litigation involving Adams/Madison Timber. Information regarding this settlement and related litigation is set forth under the heading “Legal Proceedings” of Note 16 – Commitments and Contingencies in Part II. Item 8. – Financial Statements and Supplementary Data of this report. As a result of this settlement, Trustmark recognized a one-time charge of $6.5 million of litigation settlement expense during the third quarter of 2023.
Previous report — wording carried elsewhere
At both December 31, 2023 and 2022, Trustmark had no PPP loans outstanding.
Previous report — wording carried elsewhere
ACL to total LHFI of 1.08% at December 31, 2023. This compares with an ACL to total LHFI of 0.99% at December 31, 2022, which was allocated to commercial LHFI at 0.85% and to consumer and home mortgage LHFI at 1.41%.