CHICAGO--(BUSINESS WIRE)--Fitch Ratings has affirmed the long-term Issuer Default Ratings (IDRs) for Trustmark Corporation (TRMK) and its banking subsidiary, Trustmark National Bank at 'A-'. (A complete list of rating actions follows at the end of this release). The Rating Outlook is Stable
Fitch has affirmed TRMK's ratings based on good profitability measures, strong capital levels, moderating asset quality trends, and a good liquidity profile. TRMK has reported a consistent level of profitability through the recent cycle, with return on assets averaging 1.13% over the past five quarters. Core earnings, as measured by pre-provision net revenues, also reflect solid performance. Earnings benefit from a strong margin and good sources of noninterest income.
Fitch believes that TRMK is appropriately capitalized, particularly given its good funding and profitability, to manage through continued economic challenges ahead. Furthermore, the quality of capital is strong and TRMK's Tier I common ratio at June 30, 2011 was an industry-leading 13.55%.
TRMK has reported generally improving asset quality trends over the past five quarters. TRMK began reporting considerable weakness out of its Florida book beginning in June 2008, especially from its residential construction and land development portfolio. The Florida book, representing 7% of total loans but over 30% of nonperforming assets (NPAs), remains under stress given the weak economic fundamentals in the state. However, existing reserve coverage and ample write-downs taken to date help to mitigate the inherent credit risk in this book. Fitch anticipates asset quality in the dominant Mississippi region will remain relatively stable. NPAs in Mississippi remain relatively low at 1.63% of loans and 2Q'11 quarterly net charge-offs were just 32bps.
TRMK is predominantly core funded. TRMK's borrowings used to supplement deposit funding include Fed Funds purchased, repos, Federal Home Loan Bank advances, and subordinated debt. The current level of interest expense on holding company debt is modest, and more than covered by cash balances.
Moderate asset quality deterioration or pressured levels of profitability could apply downward pressure on TRMK's ratings. In addition, although not anticipated, actions by TRMK to operate with capital levels more in line with peer institutions could adversely impact the company's ratings, which currently benefit from above peer average capital ratios. Conversely, Fitch notes that TRMK's ratings are likely at or near the top of their potential range, so positive rating momentum is currently constrained.
TRMK is a multi-bank holding company headquartered in Jackson, Mississippi, providing banking and financial solutions to corporate institutions and individual customers through over 150 offices in Florida, Mississippi, Tennessee and Texas. TRMK holds the second highest market share in Mississippi with 13% of deposits and highest market share in its home market of Jackson with 34% of deposits, as of June 30, 2010.
Fitch affirms the following ratings with a Stable Outlook:
Trustmark Corporation
--Long-term IDR at 'A-';
--Short-term IDR at 'F1';
--Viability at 'a-';
--Individual at 'B/C';
--Support at '5';
--Support Floor at 'NF'.
Trustmark National Bank
--Long-term IDR at 'A-';
--Short-term IDR at 'F1';
--Long-term deposits at 'A';
--Short-term deposits at 'F1';
--Subordinated debt at 'BBB+';
--Viability at 'a-';
--Individual at 'B/C';
--Support at '5';
--Support Floor at 'NF'.
Additional information is available at www.fitchratings.com.
Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria' (Aug. 16, 2011);
--'Bank Holding Companies' (Aug. 16, 2011).
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=649171
Bank Holding Companies
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=648612
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.