Trustmark Corporation Announces Second Quarter 2014 Financial Results

JACKSON, Miss.--(BUSINESS WIRE)--Trustmark Corporation (NASDAQ:TRMK) reported net income of $32.9 million in the second quarter of 2014, which represented diluted earnings per share of $0.49, an increase of 14.0% from the prior quarter and 6.5% from the prior year. Trustmark’s performance during the second quarter of 2014 produced a return on average tangible equity of 13.90% and a return on average assets of 1.10%. During the first six months of 2014, Trustmark’s net income totaled $61.9 million, which represented diluted earnings per share of $0.92, an increase of 9.5% from the prior year. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable September 15, 2014, to shareholders of record on September 1, 2014.

Printer friendly version of earnings release with consolidated financial statements and notes: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50909392&lang=en.

Gerard R. Host, President and CEO, stated, “Trustmark continued to achieve solid financial results in the second quarter, reflecting a 7.5% increase in total revenue as well as the fifth consecutive quarter of growth in our legacy loan portfolio. Thanks to our associates, solid profitability and strong capital base, Trustmark remains well-positioned to continue meeting the needs of our customers and creating value for our shareholders.”

Balance Sheet Management

• Loans held for investment increased at an annualized rate of 17.6% in the second quarter
• Total loans (including acquired and held for investment) expanded at an annualized rate of 9.8%
• Average noninterest-bearing deposits increased $46.1 million to represent 27.0% of total average deposits

Loans held for investment totaled $6.2 billion at June 30, 2014, an increase of $263.2 million, or 4.4%, from the prior quarter and $609.6 million, or 10.9%, from one year earlier. Real estate secured loans increased $126.8 million during the second quarter. Specifically, commercial real estate loans increased $82.6 million, reflecting growth in Trustmark’s Texas, Alabama, Mississippi and Florida markets. The single-family mortgage portfolio increased $48.1 million led by growth in the Mississippi, Alabama and Tennessee markets. Other real estate secured loans, which include multifamily projects, expanded $57.2 million, and reflected growth in Trustmark’s Mississippi, Texas and Alabama markets. Construction and development loans declined $61.0 million from the prior quarter, reflecting in part transition to the non-owner occupied category.

Other loans, which include lending to states and municipalities, increased $88.4 million during the second quarter due to growth in Trustmark’s Mississippi, Texas, Florida and Alabama markets. Commercial and industrial loans increased $42.8 million as growth in Alabama, Tennessee and Texas more than offset reductions in Mississippi and Florida. The consumer lending portfolio expanded $5.2 million during the quarter due to growth in Trustmark’s Mississippi and Alabama markets.

Acquired loans totaled $646.5 million at June 30, 2014, down $99.8 million from the prior quarter. Collectively, loans held for investment and acquired loans totaled $6.8 billion at June 30, 2014, up $163.5 million, or 2.5%, from the prior quarter.

Average earning assets during the second quarter increased $185.4 million relative to the prior quarter principally due to increased loan and investment security balances. Average deposits in the second quarter declined $51.6 million as the $46.1 million increase in noninterest-bearing deposits was offset by a decline in interest-bearing deposits of $97.7 million.

Trustmark’s solid capital position reflects the consistent profitability of its diversified financial services businesses as well as prudent balance sheet management. At June 30, 2014, Trustmark’s tangible equity to tangible assets ratio was 8.51% while the total risk-based capital ratio was 14.54%, significantly exceeding the 10.00% benchmark to be classified as “well-capitalized.” Trustmark’s solid capital base provides the opportunity to support organic loan growth in an improving economy and enhance long-term shareholder value.

Credit Quality

• Continued reduction in classified and criticized loan balances
• Foreclosed other real estate declined 4.1% from the prior quarter
• Allowance for loan losses represented 159.71% of nonperforming loans, excluding impaired loans

Nonperforming loans totaled $71.1 million at June 30, 2014, an increase of 11.1% from the prior quarter and a decline of 4.3% from one year earlier. The increase in nonperforming loans was primarily the result of one substandard credit migrating to nonaccrual status. Foreclosed other real estate totaled $107.0 million, a decrease of $4.6 million, or 4.1%, from the prior quarter. Relative to levels one year earlier, other real estate decreased $10.7 million. Collectively, nonperforming assets totaled $178.1 million, an increase of $2.6 million from the prior quarter and a decrease of $13.9 million from one year earlier.

Net charge-offs during the second quarter of 2014 totaled $1.2 million and represented 0.08% of average loans. This compares to net recoveries in the prior quarter of $1.9 million, or -0.13% of average loans, and to net recoveries in the second quarter of the prior year of $771 thousand, or -0.05% of average loans. The provision for loan losses for loans held for investment was $351 thousand in the second quarter of 2014.

During the second quarter, Trustmark experienced a decline of $10.4 million, or 4.9%, in classified loan balances and a decline of $5.5 million, or 2.2%, in criticized loans relative to the prior quarter. Relative to levels one year earlier, classified loan balances decreased $37.8 million, or 15.7%, while criticized loan balances decreased $43.7 million, or 15.2%.

Allocation of Trustmark’s $66.6 million allowance for loan losses represented 1.20% of commercial loans and 0.75% of consumer and home mortgage loans, resulting in an allowance to total loans held for investment of 1.08% at June 30, 2014, which represents a level management considers commensurate with the inherent risk in the loan portfolio. The allowance for loan losses represented 159.71% of nonperforming loans, excluding impaired loans.

All of the above credit metrics exclude acquired loans and other real estate covered by FDIC loss-share agreement.

Revenue Generation

• Revenue totaled $149.4 million in the second quarter, an increase of 7.5% from the prior quarter
• Net interest income (FTE) expanded 10.7% from the prior quarter to $109.2 million
• Bank card and other fees totaled $9.9 million, up 9.0% from the prior quarter

Net interest income (FTE) in the second quarter totaled $109.2 million, resulting in a net interest margin of 4.21%. Relative to the prior quarter, interest income (FTE) increased $10.2 million due in part to increased loan balances as well as a $5.1 million increase in recoveries on acquired loans. The yield on acquired loans totaled 13.40% and included recoveries from settlement of debt of $8.9 million, which represented approximately 5.15% of the total acquired annualized loan yield in the second quarter. Excluding acquired loans, the net interest margin in the second quarter totaled 3.55%, up three basis points from the prior quarter reflecting increased loan yields and balances.

Noninterest income remained stable at $44.1 million in the second quarter. Service charges on deposit accounts totaled $11.8 million in the second quarter, an increase of $278 thousand, or 2.4%, from the prior quarter. Bank card and other fees totaled $9.9 million in the second quarter, up $813 thousand from the prior quarter, reflecting increased interchange income.

Mortgage loan production in the second quarter totaled $322.2 million, an increase of 39.9% from the prior quarter, due in part to seasonal factors, lower mortgage rates, and expanded originations in Trustmark’s Alabama markets. Mortgage banking revenue totaled $6.2 million in the second quarter, down $638 thousand due principally to decreased positive mortgage servicing hedge ineffectiveness.

As a result of increased property and casualty business, insurance revenue in the second quarter totaled $8.3 million, an increase of 2.5% from the prior quarter. Wealth management revenue totaled $7.7 million, down $425 thousand from the prior quarter, due principally to reduced annuity income.

Noninterest Expense

• Routine noninterest expense remained well-controlled
• Continued to make prudent investments and reallocate resources to promote revenue growth
• Efficiency ratio improved to 64.31%

Noninterest expense totaled $102.8 million in the second quarter; excluding ORE and intangible amortization of $6.0 million, noninterest expense during the second quarter totaled $96.7 million, an increase of $725 thousand from comparable expenses in the prior quarter. Salaries and benefits expense remained well-controlled and totaled $56.1 million in the second quarter, down $592 thousand, or 1.0%, from the prior quarter. Services and fees increased $1.4 million principally due to higher legal and professional service fees.

Trustmark continued to make prudent investments and reallocate resources to support revenue growth and profitability. During the second quarter, Trustmark opened new banking centers and regional administrative offices in Memphis, Tennessee as well as in Montgomery, Alabama. Two banking centers with limited growth opportunities were consolidated into other offices during the quarter. Trustmark is committed to investments to support profitable revenue growth as well as reengineering and efficiency opportunities to enhance shareholder value.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, July 23, 2014, at 10:00 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing [phone] or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com, which will also include a slide presentation Management will review during the conference call. A replay of the conference call will also be available through Wednesday, August 13, 2014, in archived format at the same web address or by calling [phone], passcode 10008303.

Trustmark Corporation is a financial services company providing banking and financial solutions through 207 offices in Alabama, Florida, Mississippi, Tennessee and Texas.

Forward-Looking Statements

Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “continue,” “could,” “future” or the negative of those terms or other words of similar meaning. You should read statements that contain these words carefully because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements include, but are not limited to, statements relating to anticipated future operating and financial performance measures, including net interest margin, credit quality, business initiatives, growth opportunities and growth rates, among other things, and encompass any estimate, prediction, expectation, projection, opinion, anticipation, outlook or statement of belief included therein as well as the management assumptions underlying these forward-looking statements. You should be aware that the occurrence of the events described under the caption “Risk Factors” in Trustmark’s filings with the Securities and Exchange Commission could have an adverse effect on our business, results of operations and financial condition. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected.

Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, local, state and national economic and market conditions, including the extent and duration of the current volatility in the credit and financial markets, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility of market interest rates, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, including the potential impact of the European financial crisis on the U.S. economy and the markets we serve, and monetary and other governmental actions designed to address the level and volatility of interest rates and the volatility of securities, currency and other markets, the enactment of legislation and changes in existing regulations, or enforcement practices, or the adoption of new regulations, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, changes in our ability to control expenses, changes in our compensation and benefit plans, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, natural disasters, environmental disasters, acts of war or terrorism, and other risks described in our filings with the Securities and Exchange Commission.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Except as required by law, we undertake no obligation to update or revise any of this information, whether as the result of new information, future events or developments or otherwise.

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2014
($ in thousands)
(unaudited)
										Linked Quarter					Year over Year
QUARTERLY AVERAGE BALANCES	6/30/2014			3/31/2014			6/30/2013			$ Change			% Change		$ Change			% Change
Securities AFS-taxable	$	2,205,352		$	2,136,392		$	3,259,086		$	68,960		3.2	%	$	(1,053,734	)	-32.3	%
Securities AFS-nontaxable		135,956			149,744			171,974			(13,788	)	-9.2	%		(36,018	)	-20.9	%
Securities HTM-taxable		1,120,448			1,118,747			59,678			1,701		0.2	%		1,060,770		n/m
Securities HTM-nontaxable		43,551			31,039			11,520			12,512		40.3	%		32,031		n/m
Total securities		3,505,307			3,435,922			3,502,258			69,385		2.0	%		3,049		0.1	%
Loans (including loans held for sale)		6,160,781			5,950,720			5,735,296			210,061		3.5	%		425,485		7.4	%
Acquired loans:
Noncovered loans		664,733			751,723			949,367			(86,990	)	-11.6	%		(284,634	)	-30.0	%
Covered loans		31,122			33,805			43,425			(2,683	)	-7.9	%		(12,303	)	-28.3	%
Fed funds sold and rev repos		2,648			6,460			6,808			(3,812	)	-59.0	%		(4,160	)	-61.1	%
Other earning assets		36,259			36,820			34,752			(561	)	-1.5	%		1,507		4.3	%
Total earning assets		10,400,850			10,215,450			10,271,906			185,400		1.8	%		128,944		1.3	%
Allowance for loan losses		(77,652	)		(79,736	)		(84,574	)		2,084		-2.6	%		6,922		-8.2	%
Cash and due from banks		304,441			407,078			284,056			(102,637	)	-25.2	%		20,385		7.2	%
Other assets		1,343,384			1,376,024			1,311,262			(32,640	)	-2.4	%		32,122		2.4	%
Total assets	$	11,971,023		$	11,918,816		$	11,782,650		$	52,207		0.4	%	$	188,373		1.6	%
Interest-bearing demand deposits	$	1,826,019		$	1,900,504		$	1,811,402		$	(74,485	)	-3.9	%	$	14,617		0.8	%
Savings deposits		3,260,634			3,193,098			3,060,437			67,536		2.1	%		200,197		6.5	%
Time deposits less than $100,000		1,225,706			1,280,513			1,419,381			(54,807	)	-4.3	%		(193,675	)	-13.6	%
Time deposits of $100,000 or more		911,531			947,509			1,029,498			(35,978	)	-3.8	%		(117,967	)	-11.5	%
Total interest-bearing deposits		7,223,890			7,321,624			7,320,718			(97,734	)	-1.3	%		(96,828	)	-1.3	%
Fed funds purchased and repos		387,289			282,816			312,865			104,473		36.9	%		74,424		23.8	%
Short-term borrowings		59,465			65,010			51,718			(5,545	)	-8.5	%		7,747		15.0	%
Long-term FHLB advances		8,291			8,406			9,575			(115	)	-1.4	%		(1,284	)	-13.4	%
Subordinated notes		49,915			49,907			49,882			8		0.0	%		33		0.1	%
Junior subordinated debt securities		61,856			61,856			82,460			-		0.0	%		(20,604	)	-25.0	%
Total interest-bearing liabilities		7,790,706			7,789,619			7,827,218			1,087		0.0	%		(36,512	)	-0.5	%
Noninterest-bearing deposits		2,676,907			2,630,785			2,451,547			46,122		1.8	%		225,360		9.2	%
Other liabilities		111,170			130,749			159,525			(19,579	)	-15.0	%		(48,355	)	-30.3	%
Total liabilities		10,578,783			10,551,153			10,438,290			27,630		0.3	%		140,493		1.3	%
Shareholders' equity		1,392,240			1,367,663			1,344,360			24,577		1.8	%		47,880		3.6	%
Total liabilities and equity	$	11,971,023		$	11,918,816		$	11,782,650		$	52,207		0.4	%	$	188,373		1.6	%
										Linked Quarter					Year over Year
PERIOD END BALANCES	6/30/2014			3/31/2014			6/30/2013			$ Change			% Change		$ Change			% Change
Cash and due from banks	$	322,960		$	423,819		$	301,532		$	(100,859	)	-23.8	%	$	21,428		7.1	%
Fed funds sold and rev repos		5,000			-			7,869			5,000		n/m			(2,869	)	-36.5	%
Securities available for sale		2,376,431			2,382,441			3,511,683			(6,010	)	-0.3	%		(1,135,252	)	-32.3	%
Securities held to maturity		1,156,790			1,155,569			70,338			1,221		0.1	%		1,086,452		n/m
Loans held for sale (LHFS)		142,103			120,446			202,699			21,657		18.0	%		(60,596	)	-29.9	%
Loans held for investment (LHFI)		6,187,000			5,923,766			5,577,382			263,234		4.4	%		609,618		10.9	%
Allowance for loan losses		(66,648	)		(67,518	)		(72,825	)		870		-1.3	%		6,177		-8.5	%
Net LHFI		6,120,352			5,856,248			5,504,557			264,104		4.5	%		615,795		11.2	%
Acquired loans:
Noncovered loans		616,911			713,647			922,453			(96,736	)	-13.6	%		(305,542	)	-33.1	%
Covered loans		29,628			32,670			40,820			(3,042	)	-9.3	%		(11,192	)	-27.4	%
Allowance for loan losses, acquired loans		(11,179	)		(10,540	)		(2,690	)		(639	)	6.1	%		(8,489	)	n/m
Net acquired loans		635,360			735,777			960,583			(100,417	)	-13.6	%		(325,223	)	-33.9	%
Net LHFI and acquired loans		6,755,712			6,592,025			6,465,140			163,687		2.5	%		290,572		4.5	%
Premises and equipment, net		201,639			203,771			210,845			(2,132	)	-1.0	%		(9,206	)	-4.4	%
Mortgage servicing rights		65,049			67,614			60,380			(2,565	)	-3.8	%		4,669		7.7	%
Goodwill		365,500			365,500			368,315			-		0.0	%		(2,815	)	-0.8	%
Identifiable intangible assets		37,506			39,697			46,889			(2,191	)	-5.5	%		(9,383	)	-20.0	%
Other real estate, excluding covered other real estate		106,970			111,536			117,712			(4,566	)	-4.1	%		(10,742	)	-9.1	%
Covered other real estate		3,872			4,759			5,147			(887	)	-18.6	%		(1,275	)	-24.8	%
FDIC indemnification asset		10,866			13,487			17,342			(2,621	)	-19.4	%		(6,476	)	-37.3	%
Other assets		569,598			576,390			477,421			(6,792	)	-1.2	%		92,177		19.3	%
Total assets	$	12,119,996		$	12,057,054		$	11,863,312		$	62,942		0.5	%	$	256,684		2.2	%
Deposits:
Noninterest-bearing	$	2,729,199		$	2,879,341		$	2,520,895		$	(150,142	)	-5.2	%	$	208,304		8.3	%
Interest-bearing		7,131,167			7,242,778			7,296,697			(111,611	)	-1.5	%		(165,530	)	-2.3	%
Total deposits		9,860,366			10,122,119			9,817,592			(261,753	)	-2.6	%		42,774		0.4	%
Fed funds purchased and repos		559,316			259,341			374,021			299,975		n/m			185,295		49.5	%
Short-term borrowings		61,227			59,671			56,645			1,556		2.6	%		4,582		8.1	%
Long-term FHLB advances		8,236			8,341			8,679			(105	)	-1.3	%		(443	)	-5.1	%
Subordinated notes		49,920			49,912			49,888			8		0.0	%		32		0.1	%
Junior subordinated debt securities		61,856			61,856			61,856			-		0.0	%		-		0.0	%
Other liabilities		119,184			121,919			167,812			(2,735	)	-2.2	%		(48,628	)	-29.0	%
Total liabilities		10,720,105			10,683,159			10,536,493			36,946		0.3	%		183,612		1.7	%
Common stock		14,051			14,051			13,994			-		0.0	%		57		0.4	%
Capital surplus		353,196			352,402			342,359			794		0.2	%		10,837		3.2	%
Retained earnings		1,063,201			1,045,939			1,006,554			17,262		1.7	%		56,647		5.6	%
Accum other comprehensive loss, net of tax		(30,557	)		(38,497	)		(36,088	)		7,940		-20.6	%		5,531		-15.3	%
Total shareholders' equity		1,399,891			1,373,895			1,326,819			25,996		1.9	%		73,072		5.5	%
Total liabilities and equity	$	12,119,996		$	12,057,054		$	11,863,312		$	62,942		0.5	%	$	256,684		2.2	%
n/m - percentage changes greater than +/- 100% are considered not meaningful

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2014
($ in thousands except per share data)
(unaudited)
	Quarter Ended									Linked Quarter					Year over Year
INCOME STATEMENTS	6/30/2014			3/31/2014			6/30/2013			$ Change			% Change		$ Change			% Change
Interest and fees on LHFS & LHFI-FTE	$	69,618		$	66,185		$	67,750		$	3,433		5.2	%	$	1,868		2.8	%
Interest and fees on acquired loans		23,250			16,786			20,987			6,464		38.5	%		2,263		10.8	%
Interest on securities-taxable		19,522			19,220			18,547			302		1.6	%		975		5.3	%
Interest on securities-tax exempt-FTE		1,912			1,920			1,974			(8	)	-0.4	%		(62	)	-3.1	%
Interest on fed funds sold and rev repos		6			5			5			1		20.0	%		1		20.0	%
Other interest income		379			375			372			4		1.1	%		7		1.9	%
Total interest income-FTE		114,687			104,491			109,635			10,196		9.8	%		5,052		4.6	%
Interest on deposits		3,970			4,365			5,071			(395	)	-9.0	%		(1,101	)	-21.7	%
Interest on fed funds pch and repos		110			76			88			34		44.7	%		22		25.0	%
Other interest expense		1,375			1,363			1,513			12		0.9	%		(138	)	-9.1	%
Total interest expense		5,455			5,804			6,672			(349	)	-6.0	%		(1,217	)	-18.2	%
Net interest income-FTE		109,232			98,687			102,963			10,545		10.7	%		6,269		6.1	%
Provision for loan losses, LHFI		351			(805	)		(4,846	)		1,156		n/m			5,197		n/m
Provision for loan losses, acquired loans		3,784			63			(1,552	)		3,721		n/m			5,336		n/m
Net interest income after provision-FTE		105,097			99,429			109,361			5,668		5.7	%		(4,264	)	-3.9	%
Service charges on deposit accounts		11,846			11,568			12,929			278		2.4	%		(1,083	)	-8.4	%
Insurance commissions		8,300			8,097			8,014			203		2.5	%		286		3.6	%
Wealth management		7,710			8,135			6,940			(425	)	-5.2	%		770		11.1	%
Bank card and other fees		9,894			9,081			9,507			813		9.0	%		387		4.1	%
Mortgage banking, net		6,191			6,829			8,295			(638	)	-9.3	%		(2,104	)	-25.4	%
Other, net		199			(21	)		(2,145	)		220		n/m			2,344		n/m
Nonint inc-excl sec gains (losses), net		44,140			43,689			43,540			451		1.0	%		600		1.4	%
Security gains (losses), net		-			389			174			(389	)	-100.0	%		(174	)	-100.0	%
Total noninterest income		44,140			44,078			43,714			62		0.1	%		426		1.0	%
Salaries and employee benefits		56,134			56,726			55,405			(592	)	-1.0	%		729		1.3	%
Services and fees		14,543			13,165			12,816			1,378		10.5	%		1,727		13.5	%
Net occupancy-premises		6,413			6,606			6,703			(193	)	-2.9	%		(290	)	-4.3	%
Equipment expense		6,136			6,138			6,193			(2	)	0.0	%		(57	)	-0.9	%
FDIC assessment expense		2,468			2,416			2,376			52		2.2	%		92		3.9	%
ORE/Foreclosure expense		3,836			3,315			5,131			521		15.7	%		(1,295	)	-25.2	%
Other expense		13,231			13,252			18,571			(21	)	-0.2	%		(5,340	)	-28.8	%
Total noninterest expense		102,761			101,618			107,195			1,143		1.1	%		(4,434	)	-4.1	%
Income before income taxes and tax eq adj		46,476			41,889			45,880			4,587		11.0	%		596		1.3	%
Tax equivalent adjustment		3,944			3,783			3,735			161		4.3	%		209		5.6	%
Income before income taxes		42,532			38,106			42,145			4,426		11.6	%		387		0.9	%
Income taxes		9,635			9,103			11,024			532		5.8	%		(1,389	)	-12.6	%
Net income	$	32,897		$	29,003		$	31,121		$	3,894		13.4	%	$	1,776		5.7	%
Per share data
Earnings per share - basic	$	0.49		$	0.43		$	0.46		$	0.06		14.0	%	$	0.03		6.5	%
Earnings per share - diluted	$	0.49		$	0.43		$	0.46		$	0.06		14.0	%	$	0.03		6.5	%
Dividends per share	$	0.23		$	0.23		$	0.23		$	-		0.0	%	$	-		0.0	%
Weighted average shares outstanding
Basic		67,439,659			67,410,147			67,162,530
Diluted		67,582,714			67,550,483			67,344,117
Period end shares outstanding		67,439,788			67,439,562			67,163,195
OTHER FINANCIAL DATA
Return on equity		9.48	%		8.60	%		9.29	%
Return on average tangible equity		13.90	%		12.93	%		14.09	%
Return on assets		1.10	%		0.99	%		1.06	%
Interest margin - Yield - FTE		4.42	%		4.15	%		4.28	%
Interest margin - Cost		0.21	%		0.23	%		0.26	%
Net interest margin - FTE		4.21	%		3.92	%		4.02	%
Efficiency ratio (1)		64.31	%		68.32	%		67.72	%
Full-time equivalent employees		3,095			3,114			3,119
STOCK PERFORMANCE
Market value-Close	$	24.69		$	25.35		$	24.58
Book value	$	20.76		$	20.37		$	19.76
Tangible book value	$	14.78		$	14.36		$	13.57
(1) - The efficiency ratio is noninterest expense to total net interest income (FTE) and noninterest income, excluding security gains (losses), amortization of partnership tax credits, amortization of purchased intangibles, and nonroutine income and expense items.
n/m - percentage changes greater than +/- 100% are considered not meaningful

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2014
($ in thousands)
(unaudited)
	Quarter Ended									Linked Quarter					Year over Year
NONPERFORMING ASSETS (1)	6/30/2014			3/31/2014			6/30/2013			$ Change			% Change		$ Change			% Change
Nonaccrual loans
Alabama	$	80		$	96		$	73		$	(16	)	-16.7	%	$	7		9.6	%
Florida		11,041			9,956			15,916			1,085		10.9	%		(4,875	)	-30.6	%
Mississippi (2)		49,430			44,168			41,761			5,262		11.9	%		7,669		18.4	%
Tennessee (3)		4,244			5,206			4,482			(962	)	-18.5	%		(238	)	-5.3	%
Texas		6,323			4,572			12,086			1,751		38.3	%		(5,763	)	-47.7	%
Total nonaccrual loans		71,118			63,998			74,318			7,120		11.1	%		(3,200	)	-4.3	%
Other real estate
Alabama		24,541			24,103			27,245			438		1.8	%		(2,704	)	-9.9	%
Florida		43,207			42,013			35,025			1,194		2.8	%		8,182		23.4	%
Mississippi (2)		18,723			22,287			26,843			(3,564	)	-16.0	%		(8,120	)	-30.2	%
Tennessee (3)		12,073			13,000			15,811			(927	)	-7.1	%		(3,738	)	-23.6	%
Texas		8,426			10,133			12,788			(1,707	)	-16.8	%		(4,362	)	-34.1	%
Total other real estate		106,970			111,536			117,712			(4,566	)	-4.1	%		(10,742	)	-9.1	%
Total nonperforming assets	$	178,088		$	175,534		$	192,030		$	2,554		1.5	%	$	(13,942	)	-7.3	%
LOANS PAST DUE OVER 90 DAYS (4)
LHFI	$	1,936		$	1,870		$	4,194		$	66		3.5	%	$	(2,258	)	-53.8	%
LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase)	$	21,810		$	20,109		$	14,003		$	1,701		8.5	%	$	7,807		55.8	%
	Quarter Ended									Linked Quarter					Year over Year
ALLOWANCE FOR LOAN LOSSES (4)	6/30/2014			3/31/2014			6/30/2013			$ Change			% Change		$ Change			% Change
Beginning Balance	$	67,518		$	66,448		$	76,900		$	1,070		1.6	%	$	(9,382	)	-12.2	%
Provision for loan losses		351			(805	)		(4,846	)		1,156		n/m			5,197		n/m
Charge-offs		(3,820	)		(3,016	)		(3,031	)		(804	)	26.7	%		(789	)	26.0	%
Recoveries		2,599			4,891			3,802			(2,292	)	-46.9	%		(1,203	)	-31.6	%
Net (charge-offs) recoveries		(1,221	)		1,875			771			(3,096	)	n/m			(1,992	)	n/m
Ending Balance	$	66,648		$	67,518		$	72,825		$	(870	)	-1.3	%	$	(6,177	)	-8.5	%
PROVISION FOR LOAN LOSSES (4)
Alabama	$	696		$	472		$	232		$	224		47.5	%	$	464		n/m
Florida		(2,014	)		(3,499	)		(3,425	)		1,485		-42.4	%		1,411		-41.2	%
Mississippi (2)		2,877			1,983			(520	)		894		45.1	%		3,397		n/m
Tennessee (3)		(277	)		(915	)		(335	)		638		-69.7	%		58		-17.3	%
Texas		(931	)		1,154			(798	)		(2,085	)	n/m			(133	)	16.7	%
Total provision for loan losses	$	351		$	(805	)	$	(4,846	)	$	1,156		n/m		$	5,197		n/m
NET CHARGE-OFFS (4)
Alabama	$	84		$	55		$	67		$	29		52.7	%	$	17		25.4	%
Florida		(525	)		(2,524	)		(1,426	)		1,999		-79.2	%		901		-63.2	%
Mississippi (2)		1,518			676			291			842		n/m			1,227		n/m
Tennessee (3)		87			(1	)		103			88		n/m			(16	)	-15.5	%
Texas		57			(81	)		194			138		n/m			(137	)	-70.6	%
Total net charge-offs (recoveries)	$	1,221		$	(1,875	)	$	(771	)	$	3,096		n/m		$	1,992		n/m
CREDIT QUALITY RATIOS (1)
Net charge offs/average loans		0.08	%		-0.13	%		-0.05	%
Provision for loan losses/average loans		0.02	%		-0.05	%		-0.34	%
Nonperforming loans/total loans (incl LHFS)		1.12	%		1.06	%		1.29	%
Nonperforming assets/total loans (incl LHFS)		2.81	%		2.90	%		3.32	%
Nonperforming assets/total loans (incl LHFS) +ORE		2.77	%		2.85	%		3.26	%
ALL/total loans (excl LHFS)		1.08	%		1.14	%		1.31	%
ALL-commercial/total commercial loans		1.20	%		1.33	%		1.48	%
ALL-consumer/total consumer and home mortgage loans		0.75	%		0.65	%		0.84	%
ALL/nonperforming loans		93.71	%		105.50	%		97.99	%
ALL/nonperforming loans - (excl impaired loans)		159.71	%		180.86	%		158.75	%
CAPITAL RATIOS
Total equity/total assets		11.55	%		11.39	%		11.18	%
Tangible equity/tangible assets		8.51	%		8.31	%		7.96	%
Tangible equity/risk-weighted assets		12.19	%		12.08	%		11.57	%
Tier 1 leverage ratio		9.43	%		9.14	%		8.71	%
Tier 1 common risk-based capital ratio		12.61	%		12.37	%		11.79	%
Tier 1 risk-based capital ratio		13.34	%		13.11	%		12.55	%
Total risk-based capital ratio		14.54	%		14.34	%		13.89	%
(1) - Excludes Acquired Loans and Covered Other Real Estate
(2) - Mississippi includes Central and Southern Mississippi Regions
(3) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
(4) - Excludes Acquired Loans
n/m - percentage changes greater than +/- 100% are considered not meaningful

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2014
($ in thousands)
(unaudited)
	Quarter Ended															Six Months Ended
AVERAGE BALANCES	6/30/2014			3/31/2014			12/31/2013			9/30/2013			6/30/2013			6/30/2014			6/30/2013
Securities AFS-taxable	$	2,205,352		$	2,136,392		$	3,026,186		$	3,279,606		$	3,259,086		$	2,171,062		$	3,048,737
Securities AFS-nontaxable		135,956			149,744			160,989			172,055			171,974			142,812			169,885
Securities HTM-taxable		1,120,448			1,118,747			265,792			59,168			59,678			1,119,602			54,186
Securities HTM-nontaxable		43,551			31,039			21,172			11,024			11,520			37,330			14,070
Total securities		3,505,307			3,435,922			3,474,139			3,521,853			3,502,258			3,470,806			3,286,878
Loans (including loans held for sale)		6,160,781			5,950,720			5,847,557			5,784,170			5,735,296			6,056,331			5,738,301
Acquired loans:
Noncovered loans		664,733			751,723			812,426			888,883			949,367			707,988			741,162
Covered loans		31,122			33,805			34,640			39,561			43,425			32,456			46,602
Fed funds sold and rev repos		2,648			6,460			11,094			8,978			6,808			4,543			6,714
Other earning assets		36,259			36,820			32,118			38,226			34,752			36,538			34,707
Total earning assets		10,400,850			10,215,450			10,211,974			10,281,671			10,271,906			10,308,662			9,854,364
Allowance for loan losses		(77,652	)		(79,736	)		(78,742	)		(79,696	)		(84,574	)		(78,688	)		(85,505	)
Cash and due from banks		304,441			407,078			275,051			272,320			284,056			355,476			277,435
Other assets		1,343,384			1,376,024			1,360,712			1,284,813			1,311,262			1,359,614			1,247,729
Total assets	$	11,971,023		$	11,918,816		$	11,768,995		$	11,759,108		$	11,782,650		$	11,945,064		$	11,294,023
Interest-bearing demand deposits	$	1,826,019		$	1,900,504		$	1,803,956		$	1,842,379		$	1,811,402		$	1,863,056		$	1,757,668
Savings deposits		3,260,634			3,193,098			2,952,472			2,995,110			3,060,437			3,227,053			2,914,901
Time deposits less than $100,000		1,225,706			1,280,513			1,344,488			1,380,954			1,419,381			1,252,958			1,344,416
Time deposits of $100,000 or more		911,531			947,509			961,075			993,948			1,029,498			929,421			961,678
Total interest-bearing deposits		7,223,890			7,321,624			7,061,991			7,212,391			7,320,718			7,272,488			6,978,663
Fed funds purchased and repos		387,289			282,816			361,758			364,446			312,865			335,341			290,038
Short-term borrowings		59,465			65,010			63,531			59,324			51,718			62,222			59,316
Long-term FHLB advances		8,291			8,406			8,507			8,620			9,575			8,348			7,091
Subordinated notes		49,915			49,907			49,898			49,890			49,882			49,911			49,878
Junior subordinated debt securities		61,856			61,856			61,856			61,856			82,460			61,856			80,237
Total interest-bearing liabilities		7,790,706			7,789,619			7,607,541			7,756,527			7,827,218			7,790,166			7,465,223
Noninterest-bearing deposits		2,676,907			2,630,785			2,611,209			2,479,082			2,451,547			2,653,973			2,325,993
Other liabilities		111,170			130,749			203,270			190,143			159,525			120,906			167,821
Total liabilities		10,578,783			10,551,153			10,422,020			10,425,752			10,438,290			10,565,045			9,959,037
Shareholders' equity		1,392,240			1,367,663			1,346,975			1,333,356			1,344,360			1,380,019			1,334,986
Total liabilities and equity	$	11,971,023		$	11,918,816		$	11,768,995		$	11,759,108		$	11,782,650		$	11,945,064		$	11,294,023
PERIOD END BALANCES		6/30/2014			3/31/2014			12/31/2013			9/30/2013			6/30/2013
Cash and due from banks	$	322,960		$	423,819		$	345,761		$	335,695		$	301,532
Fed funds sold and rev repos		5,000			-			7,253			7,867			7,869
Securities available for sale		2,376,431			2,382,441			2,194,154			3,372,101			3,511,683
Securities held to maturity		1,156,790			1,155,569			1,168,728			69,980			70,338
Loans held for sale (LHFS)		142,103			120,446			149,169			119,986			202,699
Loans held for investment (LHFI)		6,187,000			5,923,766			5,798,881			5,696,641			5,577,382
Allowance for loan losses		(66,648	)		(67,518	)		(66,448	)		(68,632	)		(72,825	)
Net LHFI		6,120,352			5,856,248			5,732,433			5,628,009			5,504,557
Acquired loans:
Noncovered loans		616,911			713,647			769,990			837,875			922,453
Covered loans		29,628			32,670			34,216			37,250			40,820
Allowance for loan losses, acquired loans		(11,179	)		(10,540	)		(9,636	)		(5,333	)		(2,690	)
Net acquired loans		635,360			735,777			794,570			869,792			960,583
Net LHFI and acquired loans		6,755,712			6,592,025			6,527,003			6,497,801			6,465,140
Premises and equipment, net		201,639			203,771			207,283			208,837			210,845
Mortgage servicing rights		65,049			67,614			67,834			63,150			60,380
Goodwill		365,500			365,500			372,851			372,463			368,315
Identifiable intangible assets		37,506			39,697			41,990			44,424			46,889
Other real estate, excluding covered other real estate		106,970			111,536			106,539			116,329			117,712
Covered other real estate		3,872			4,759			5,108			5,092			5,147
FDIC indemnification asset		10,866			13,487			14,347			17,085			17,342
Other assets		569,598			576,390			582,363			574,387			477,421
Total assets	$	12,119,996		$	12,057,054		$	11,790,383		$	11,805,197		$	11,863,312
Deposits:
Noninterest-bearing	$	2,729,199		$	2,879,341		$	2,663,503		$	2,643,612		$	2,520,895
Interest-bearing		7,131,167			7,242,778			7,196,399			7,143,622			7,296,697
Total deposits		9,860,366			10,122,119			9,859,902			9,787,234			9,817,592
Fed funds purchased and repos		559,316			259,341			251,587			342,465			374,021
Short-term borrowings		61,227			59,671			66,385			60,698			56,645
Long-term FHLB advances		8,236			8,341			8,458			8,562			8,679
Subordinated notes		49,920			49,912			49,904			49,896			49,888
Junior subordinated debt securities		61,856			61,856			61,856			61,856			61,856
Other liabilities		119,184			121,919			137,338			164,972			167,812
Total liabilities		10,720,105			10,683,159			10,435,430			10,475,683			10,536,493
Common stock		14,051			14,051			14,038			13,998			13,994
Capital surplus		353,196			352,402			349,680			343,759			342,359
Retained earnings		1,063,201			1,045,939			1,034,966			1,023,983			1,006,554
Accum other comprehensive loss, net of tax		(30,557	)		(38,497	)		(43,731	)		(52,226	)		(36,088	)
Total shareholders' equity		1,399,891			1,373,895			1,354,953			1,329,514			1,326,819
Total liabilities and equity	$	12,119,996		$	12,057,054		$	11,790,383		$	11,805,197		$	11,863,312

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2014
($ in thousands except per share data)
(unaudited)
	Quarter Ended															Six Months Ended
INCOME STATEMENTS	6/30/2014			3/31/2014			12/31/2013			9/30/2013			6/30/2013			6/30/2014			6/30/2013
Interest and fees on LHFS & LHFI-FTE	$	69,618		$	66,185		$	67,038		$	68,417		$	67,750		$	135,803		$	135,162
Interest and fees on acquired loans		23,250			16,786			23,384			19,183			20,987			40,036			33,769
Interest on securities-taxable		19,522			19,220			19,078			18,654			18,547			38,742			35,086
Interest on securities-tax exempt-FTE		1,912			1,920			1,963			1,960			1,974			3,832			3,992
Interest on fed funds sold and rev repos		6			5			14			8			5			11			9
Other interest income		379			375			367			372			372			754			727
Total interest income-FTE		114,687			104,491			111,844			108,594			109,635			219,178			208,745
Interest on deposits		3,970			4,365			4,768			4,970			5,071			8,335			9,980
Interest on fed funds pch and repos		110			76			104			106			88			186			169
Other interest expense		1,375			1,363			1,370			1,389			1,513			2,738			3,003
Total interest expense		5,455			5,804			6,242			6,465			6,672			11,259			13,152
Net interest income-FTE		109,232			98,687			105,602			102,129			102,963			207,919			195,593
Provision for loan losses, LHFI		351			(805	)		(1,983	)		(3,624	)		(4,846	)		(454	)		(7,814	)
Provision for loan losses, acquired loans		3,784			63			4,169			3,292			(1,552	)		3,847			(1,422	)
Net interest income after provision-FTE		105,097			99,429			103,416			102,461			109,361			204,526			204,829
Service charges on deposit accounts		11,846			11,568			13,114			13,852			12,929			23,414			24,610
Insurance commissions		8,300			8,097			7,343			8,227			8,014			16,397			15,256
Wealth management		7,710			8,135			8,145			7,520			6,940			15,845			13,815
Bank card and other fees		9,894			9,081			9,580			8,929			9,507			18,975			17,452
Mortgage banking, net		6,191			6,829			5,186			8,440			8,295			13,020			19,878
Other, net		199			(21	)		(4,802	)		165			(2,145	)		178			(3,336	)
Nonint inc-excl sec gains (losses), net		44,140			43,689			38,566			47,133			43,540			87,829			87,675
Security gains (losses), net		-			389			107			-			174			389			378
Total noninterest income		44,140			44,078			38,673			47,133			43,714			88,218			88,053
Salaries and employee benefits		56,134			56,726			56,687			56,043			55,405			112,860			108,997
Services and fees		14,543			13,165			14,476			13,580			12,816			27,708			25,848
Net occupancy-premises		6,413			6,606			6,659			6,644			6,703			13,019			12,658
Equipment expense		6,136			6,138			6,400			6,271			6,193			12,274			11,867
FDIC assessment expense		2,468			2,416			2,228			2,376			2,376			4,884			4,397
ORE/Foreclosure expense		3,836			3,315			3,009			3,079			5,131			7,151			8,951
Other expense		13,231			13,252			15,408			13,531			18,571			26,483			36,622
Total noninterest expense		102,761			101,618			104,867			101,524			107,195			204,379			209,340
Income before income taxes and tax eq adj		46,476			41,889			37,222			48,070			45,880			88,365			83,542
Tax equivalent adjustment		3,944			3,783			3,747			3,700			3,735			7,727			7,390
Income before income taxes		42,532			38,106			33,475			44,370			42,145			80,638			76,152
Income taxes		9,635			9,103			5,436			11,336			11,024			18,738			20,165
Net income	$	32,897		$	29,003		$	28,039		$	33,034		$	31,121		$	61,900		$	55,987
Per share data
Earnings per share - basic	$	0.49		$	0.43		$	0.42		$	0.49		$	0.46		$	0.92		$	0.84
Earnings per share - diluted	$	0.49		$	0.43		$	0.42		$	0.49		$	0.46		$	0.92		$	0.84
Dividends per share	$	0.23		$	0.23		$	0.23		$	0.23		$	0.23		$	0.46		$	0.46
Weighted average shares outstanding
Basic		67,439,659			67,410,147			67,249,877			67,177,013			67,162,530			67,424,984			66,576,125
Diluted		67,582,714			67,550,483			67,449,778			67,382,478			67,344,117			67,566,640			66,748,713
Period end shares outstanding		67,439,788			67,439,562			67,372,980			67,181,694			67,163,195			67,439,788			67,163,195
OTHER FINANCIAL DATA
Return on equity		9.48	%		8.60	%		8.26	%		9.83	%		9.29	%		9.05	%		8.46	%
Return on average tangible equity		13.90	%		12.93	%		12.59	%		14.92	%		14.09	%		13.43	%		12.43	%
Return on assets		1.10	%		0.99	%		0.95	%		1.11	%		1.06	%		1.05	%		1.00	%
Interest margin - Yield - FTE		4.42	%		4.15	%		4.35	%		4.19	%		4.28	%		4.29	%		4.27	%
Interest margin - Cost		0.21	%		0.23	%		0.24	%		0.25	%		0.26	%		0.22	%		0.27	%
Net interest margin - FTE		4.21	%		3.92	%		4.10	%		3.94	%		4.02	%		4.07	%		4.00	%
Efficiency ratio (1)		64.31	%		68.32	%		68.38	%		65.32	%		67.72	%		66.24	%		66.78	%
Full-time equivalent employees		3,095			3,114			3,110			3,110			3,119
STOCK PERFORMANCE
Market value-Close	$	24.69		$	25.35		$	26.84		$	25.60		$	24.58
Book value	$	20.76		$	20.37		$	20.11		$	19.79		$	19.76
Tangible book value	$	14.78		$	14.36		$	13.95		$	13.58		$	13.57
(1) - The efficiency ratio is noninterest expense to total net interest income (FTE) and noninterest income, excluding security gains (losses), amortization of partnership tax credits, amortization of purchased intangibles, and nonroutine income and expense items.

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2014
($ in thousands)
(unaudited)
	Quarter Ended
NONPERFORMING ASSETS (1)	6/30/2014			3/31/2014			12/31/2013			9/30/2013			6/30/2013
Nonaccrual loans
Alabama	$	80		$	96		$	14		$	81		$	73
Florida		11,041			9,956			12,278			14,619			15,916
Mississippi (2)		49,430			44,168			42,307			43,132			41,761
Tennessee (3)		4,244			5,206			4,390			5,596			4,482
Texas		6,323			4,572			6,249			9,953			12,086
Total nonaccrual loans		71,118			63,998			65,238			73,381			74,318
Other real estate
Alabama		24,541			24,103			25,912			25,308			27,245
Florida		43,207			42,013			34,480			39,198			35,025
Mississippi (2)		18,723			22,287			22,766			25,439			26,843
Tennessee (3)		12,073			13,000			12,892			14,615			15,811
Texas		8,426			10,133			10,489			11,769			12,788
Total other real estate		106,970			111,536			106,539			116,329			117,712
Total nonperforming assets	$	178,088		$	175,534		$	171,777		$	189,710		$	192,030
LOANS PAST DUE OVER 90 DAYS (4)
LHFI	$	1,936		$	1,870		$	3,298		$	2,344		$	4,194
LHFS-Guaranteed GNMA serviced loans (no obligation to repurchase)	$	21,810		$	20,109		$	21,540		$	18,432		$	14,003
	Quarter Ended															Six Months Ended
ALLOWANCE FOR LOAN LOSSES (4)	6/30/2014			3/31/2014			12/31/2013			9/30/2013			6/30/2013			6/30/2014			6/30/2013
Beginning Balance	$	67,518		$	66,448		$	68,632		$	72,825		$	76,900		$	66,448		$	78,738
Provision for loan losses		351			(805	)		(1,983	)		(3,624	)		(4,846	)		(454	)		(7,814	)
Charge-offs		(3,820	)		(3,016	)		(3,305	)		(3,817	)		(3,031	)		(6,836	)		(6,356	)
Recoveries		2,599			4,891			3,104			3,248			3,802			7,490			8,257
Net (charge-offs) recoveries		(1,221	)		1,875			(201	)		(569	)		771			654			1,901
Ending Balance	$	66,648		$	67,518		$	66,448		$	68,632		$	72,825		$	66,648		$	72,825
PROVISION FOR LOAN LOSSES (4)
Alabama	$	696		$	472		$	332		$	550		$	232		$	1,168		$	908
Florida		(2,014	)		(3,499	)		(2,350	)		(2,642	)		(3,425	)		(5,513	)		(7,100	)
Mississippi (2)		2,877			1,983			3,336			(1,051	)		(520	)		4,860			(2,440	)
Tennessee (3)		(277	)		(915	)		(117	)		(150	)		(335	)		(1,192	)		(713	)
Texas		(931	)		1,154			(3,184	)		(331	)		(798	)		223			1,531
Total provision for loan losses	$	351		$	(805	)	$	(1,983	)	$	(3,624	)	$	(4,846	)	$	(454	)	$	(7,814	)
NET CHARGE-OFFS (4)
Alabama	$	84		$	55		$	74		$	132		$	67		$	139		$	78
Florida		(525	)		(2,524	)		(634	)		(138	)		(1,426	)		(3,049	)		(2,275	)
Mississippi (2)		1,518			676			393			375			291			2,194			1
Tennessee (3)		87			(1	)		506			(153	)		103			86			352
Texas		57			(81	)		(138	)		353			194			(24	)		(57	)
Total net charge-offs (recoveries)	$	1,221		$	(1,875	)	$	201		$	569		$	(771	)	$	(654	)	$	(1,901	)
CREDIT QUALITY RATIOS (1)
Net charge offs/average loans		0.08	%		-0.13	%		0.01	%		0.04	%		-0.05	%		-0.02	%		-0.07	%
Provision for loan losses/average loans		0.02	%		-0.05	%		-0.13	%		-0.25	%		-0.34	%		-0.02	%		-0.27	%
Nonperforming loans/total loans (incl LHFS)		1.12	%		1.06	%		1.10	%		1.26	%		1.29	%
Nonperforming assets/total loans (incl LHFS)		2.81	%		2.90	%		2.89	%		3.26	%		3.32	%
Nonperforming assets/total loans (incl LHFS) +ORE		2.77	%		2.85	%		2.84	%		3.20	%		3.26	%
ALL/total loans (excl LHFS)		1.08	%		1.14	%		1.15	%		1.20	%		1.31	%
ALL-commercial/total commercial loans		1.20	%		1.33	%		1.30	%		1.39	%		1.48	%
ALL-consumer/total consumer and home mortgage loans		0.75	%		0.65	%		0.75	%		0.73	%		0.84	%
ALL/nonperforming loans		93.71	%		105.50	%		101.86	%		93.53	%		97.99	%
ALL/nonperforming loans - (excl impaired loans)		159.71	%		180.86	%		190.70	%		161.96	%		158.75	%
CAPITAL RATIOS
Total equity/total assets		11.55	%		11.39	%		11.49	%		11.26	%		11.18	%
Tangible equity/tangible assets		8.51	%		8.31	%		8.26	%		8.01	%		7.96	%
Tangible equity/risk-weighted assets		12.19	%		12.08	%		11.88	%		11.66	%		11.57	%
Tier 1 leverage ratio		9.43	%		9.14	%		9.06	%		8.78	%		8.71	%
Tier 1 common risk-based capital ratio		12.61	%		12.37	%		12.21	%		11.92	%		11.79	%
Tier 1 risk-based capital ratio		13.34	%		13.11	%		12.97	%		12.69	%		12.55	%
Total risk-based capital ratio		14.54	%		14.34	%		14.18	%		14.02	%		13.89	%
(1) - Excludes Acquired Loans and Covered Other Real Estate
(2) - Mississippi includes Central and Southern Mississippi Regions
(3) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
(4) - Excludes Acquired Loans

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2014
($ in thousands)
(unaudited)

Note 1 – Business Combinations

Oxford, Mississippi Branches

On July 26, 2013, Trustmark National Bank (TNB), a subsidiary of Trustmark Corporation (Trustmark), completed its acquisition of two branches of SOUTHBank, F.S.B. (SOUTHBank), located in Oxford, Mississippi. As a result of this acquisition, TNB assumed deposit accounts of approximately $11.7 million in addition to purchasing the two physical branch offices. The transaction was not material to Trustmark’s consolidated financial statements and was not considered a business combination in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 805, “Business Combinations.”

BancTrust Financial Group, Inc.

On February 15, 2013, Trustmark completed its merger with BancTrust Financial Group, Inc. (BancTrust), a 26-year-old bank holding company headquartered in Mobile, Alabama. In accordance with the terms of the definitive agreement, the holders of BancTrust common stock received 0.125 of a share of Trustmark common stock for each share of BancTrust common stock in a tax-free exchange. Trustmark issued approximately 2.24 million shares of its common stock for all issued and outstanding shares of BancTrust common stock. The total value of the 2.24 million shares of Trustmark common stock issued to the BancTrust shareholders on the acquisition date was approximately $53.5 million, based on a closing stock price of $23.83 per share of Trustmark common stock on February 15, 2013. At closing, Trustmark repurchased the $50.0 million of BancTrust preferred stock and associated warrant issued to the U.S. Department of Treasury under the Capital Purchase Program for approximately $52.6 million.

This acquisition was accounted for under the acquisition method in accordance with FASB ASC Topic 805. Accordingly, the assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of the acquisition date. The purchase price allocation was finalized in the first quarter of 2014.

The statement of assets purchased and liabilities assumed in the BancTrust acquisition is presented below at their adjusted estimated fair values as of the acquisition date of February 15, 2013 ($ in thousands):

Assets
Cash and due from banks	$	141,616
Securities		528,016
Loans held for sale		1,050
Acquired noncovered loans		944,235
Premises and equipment, net		54,952
Identifiable intangible assets		33,498
Other real estate		40,103
Other assets		109,423
Total Assets		1,852,893
Liabilities
Deposits		1,740,254
Other borrowings		64,051
Other liabilities		16,761
Total Liabilities		1,821,066
Net identified assets acquired at fair value		31,827
Goodwill		74,247
Net assets acquired at fair value	$	106,074

The excess of the consideration paid over the estimated fair value of the net assets acquired was $74.2 million, which was recorded as goodwill under FASB ASC Topic 805. The identifiable intangible assets acquired represent the core deposit intangible at fair value at the acquisition date. The core deposit intangible is being amortized on an accelerated basis over the estimated useful life, currently expected to be approximately 10 years.

Loans, excluding loans held for sale (LHFS), acquired from BancTrust were evaluated under a fair value process involving various degrees of deterioration in credit quality since origination, and also for those loans for which it was probable at acquisition that Trustmark would not be able to collect all contractually required payments. These loans, with the exception of revolving credit agreements and leases, are referred to as acquired impaired loans and are accounted for in accordance with FASB ASC Topic 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality.”

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2014
($ in thousands)
(unaudited)

Note 2 - Securities Available for Sale and Held to Maturity

The following table is a summary of the estimated fair value of securities available for sale and the amortized cost of securities held to maturity ($ in thousands):

	6/30/2014		3/31/2014		12/31/2013		9/30/2013		6/30/2013
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities	$	100	$	100	$	502	$	503	$	505
U.S. Government agency obligations
Issued by U.S. Government agencies		117,489		123,368		129,293		133,013		139,066
Issued by U.S. Government sponsored agencies		40,848		40,601		40,179		132,425		133,791
Obligations of states and political subdivisions		171,229		172,437		171,738		212,991		212,204
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		13,492		14,263		14,474		48,240		46,330
Issued by FNMA and FHLMC		225,229		232,488		241,118		214,795		227,927
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		1,543,619		1,530,068		1,290,741		2,048,275		2,156,320
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		229,283		232,072		242,172		354,131		361,575
Asset-backed securities and structured financial products		35,142		37,044		63,937		227,728		233,965
Total securities available for sale	$	2,376,431	$	2,382,441	$	2,194,154	$	3,372,101	$	3,511,683
SECURITIES HELD TO MATURITY
U.S. Government agency obligations
Issued by U.S. Government sponsored agencies	$	100,563	$	100,361	$	100,159	$	-	$	-
Obligations of states and political subdivisions		65,193		65,757		65,987		30,229		30,295
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		13,959		12,177		9,433		2,420		2,547
Issued by FNMA and FHLMC		12,165		12,395		12,724		564		567
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		822,444		822,135		837,393		-		-
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		142,466		142,744		143,032		36,767		36,929
Total securities held to maturity	$	1,156,790	$	1,155,569	$	1,168,728	$	69,980	$	70,338

During the fourth quarter of 2013, Trustmark reclassified approximately $1.099 billion of securities available for sale to securities held to maturity. The securities were transferred at fair value, which became the cost basis for the securities held to maturity. At the date of transfer, the net unrealized holding loss on the available for sale securities totaled approximately $46.6 million ($28.8 million, net of tax). The net unrealized holding loss is amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. There were no gains or losses recognized as a result of the transfer. At June 30, 2014, the net unamortized, unrealized loss on the transferred securities included in accumulated other comprehensive (loss) income in the accompanying balance sheet totaled approximately $43.6 million ($26.9 million, net of tax).

During the fourth quarter of 2013, Trustmark sold $135.6 million of Collateralized Loan Obligations (CLO) generating a net gain of $1.3 million. These securities were identified as available for sale and had been carried in the asset-backed securities and structured financial products line item in the table shown above. This sale left Trustmark with a CLO balance of $25.9 million at December 31, 2013, which was subsequently sold in its entirety for a gain of $389 thousand in January 2014.

Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of approximately 93% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE.

TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS June 30, 2014 ($ in thousands) (unaudited)
Note 3 – Loan Composition
LHFI BY TYPE (excluding acquired loans)	6/30/2014			3/31/2014			12/31/2013			9/30/2013			6/30/2013
Loans secured by real estate:
Construction, land development and other land loans	$	531,651		$	592,658		$	596,889		$	572,057		$	519,263
Secured by 1-4 family residential properties		1,581,859			1,533,781			1,485,564			1,482,963			1,414,871
Secured by nonfarm, nonresidential properties		1,544,516			1,461,947			1,415,139			1,408,342			1,406,930
Other real estate secured		250,383			193,221			189,362			196,328			192,568
Commercial and industrial loans		1,250,146			1,207,367			1,157,614			1,132,863			1,169,327
Consumer loans		165,372			160,153			165,308			164,612			160,318
Other loans		863,073			774,639			789,005			739,476			714,105
LHFI		6,187,000			5,923,766			5,798,881			5,696,641			5,577,382
Allowance for loan losses		(66,648	)		(67,518	)		(66,448	)		(68,632	)		(72,825	)
Net LHFI	$	6,120,352		$	5,856,248		$	5,732,433		$	5,628,009		$	5,504,557

ACQUIRED NONCOVERED LOANS BY TYPE	6/30/2014			3/31/2014			12/31/2013			9/30/2013			6/30/2013
Loans secured by real estate:
Construction, land development and other land loans	$	75,353		$	88,683		$	98,928		$	106,655		$	132,116
Secured by 1-4 family residential properties		133,191			145,213			157,914			168,573			184,928
Secured by nonfarm, nonresidential properties		226,967			271,696			287,136			301,686			318,603
Other real estate secured		30,918			34,787			33,948			35,051			34,869
Commercial and industrial loans		114,212			135,114			149,495			186,649			206,338
Consumer loans		14,733			15,024			18,428			22,251			27,420
Other loans		21,537			23,130			24,141			17,010			18,179
Noncovered loans		616,911			713,647			769,990			837,875			922,453
Allowance for loan losses		(9,770	)		(9,952	)		(7,249	)		(3,007	)		(112	)
Net noncovered loans	$	607,141		$	703,695		$	762,741		$	834,868		$	922,341

ACQUIRED COVERED LOANS BY TYPE	6/30/2014			3/31/2014			12/31/2013			9/30/2013			6/30/2013
Loans secured by real estate:
Construction, land development and other land loans	$	2,130		$	2,239		$	2,363		$	2,585		$	3,662
Secured by 1-4 family residential properties		14,565			15,572			16,416			17,785			18,899
Secured by nonfarm, nonresidential properties		8,831			10,629			10,945			12,120			13,341
Other real estate secured		2,376			2,470			2,644			2,817			2,929
Commercial and industrial loans		336			361			394			478			543
Consumer loans		-			49			119			151			173
Other loans		1,390			1,350			1,335			1,314			1,273
Covered loans		29,628			32,670			34,216			37,250			40,820
Allowance for loan losses		(1,409	)		(588	)		(2,387	)		(2,326	)		(2,578	)
Net covered loans	$	28,219		$	32,082		$	31,829		$	34,924		$	38,242

TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS June 30, 2014 ($ in thousands) (unaudited)
Note 3 – Loan Composition (continued)
	June 30, 2014
LHFI - COMPOSITION BY REGION (1)	Total		Alabama		Florida		Mississippi (Central and Southern Regions)		Tennessee (Memphis, TN and Northern MS Regions)		Texas
Loans secured by real estate:
Construction, land development and other land loans	$	531,651	$	45,142	$	57,914	$	250,057	$	35,059	$	143,479
Secured by 1-4 family residential properties		1,581,859		28,518		50,499		1,354,515		130,032		18,295
Secured by nonfarm, nonresidential properties		1,544,516		58,766		160,095		796,797		149,227		379,631
Other real estate secured		250,383		7,569		4,424		164,209		28,192		45,989
Commercial and industrial loans		1,250,146		67,052		10,712		805,120		91,810		275,452
Consumer loans		165,372		15,514		2,898		127,699		16,538		2,723
Other loans		863,073		39,044		46,233		638,622		47,941		91,233
Loans	$	6,187,000	$	261,605	$	332,775	$	4,137,019	$	498,799	$	956,802
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION (1)
Lots	$	49,616	$	1,846	$	27,679	$	15,566	$	1,160	$	3,365
Development		62,201		777		7,573		34,470		1,392		17,989
Unimproved land		132,639		5,402		18,504		63,305		23,574		21,854
1-4 family construction		114,509		20,746		3,507		62,146		2,672		25,438
Other construction		172,686		16,371		651		74,570		6,261		74,833
Construction, land development and other land loans	$	531,651	$	45,142	$	57,914	$	250,057	$	35,059	$	143,479
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION (1)
Income producing:
Retail	$	184,843	$	14,702	$	39,709	$	68,149	$	18,433	$	43,850
Office		207,620		8,912		32,816		85,103		8,219		72,570
Nursing homes/assisted living		125,911		-		-		102,912		5,925		17,074
Hotel/motel		99,120		12,076		16,350		46,667		24,027		-
Industrial		79,698		4,312		7,286		35,661		149		32,290
Health care		28,937		3,539		-		25,348		50		-
Convenience stores		10,086		251		-		5,958		1,294		2,583
Other		153,966		2,389		19,562		82,531		5,023		44,461
Total income producing loans		890,181		46,181		115,723		452,329		63,120		212,828
Owner-occupied:
Office		126,379		3,933		17,191		63,465		10,645		31,145
Churches		93,738		2,314		2,926		44,225		33,082		11,191
Industrial warehouses		82,111		1,051		3,050		28,708		8,038		41,264
Health care		97,851		257		8,807		55,485		14,206		19,096
Convenience stores		56,751		479		1,598		33,304		2,868		18,502
Retail		28,983		539		3,787		18,061		3,125		3,471
Restaurants		35,090		-		2,615		27,096		4,296		1,083
Auto dealerships		8,457		-		176		6,639		1,610		32
Other		124,975		4,012		4,222		67,485		8,237		41,019
Total owner-occupied loans		654,335		12,585		44,372		344,468		86,107		166,803
Loans secured by nonfarm, nonresidential properties	$	1,544,516	$	58,766	$	160,095	$	796,797	$	149,227	$	379,631
(1) Excludes acquired loans.

TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS June 30, 2014 ($ in thousands) (unaudited)
Note 4 – Yields on Earning Assets and Interest-Bearing Liabilities
The following table illustrates the yields on earning assets by category as well as the rates paid on interest-bearing liabilities on a tax equivalent basis:
	Quarter Ended										Six Months Ended
	6/30/2014		3/31/2014		12/31/2013		9/30/2013		6/30/2013		6/30/2014		6/30/2013
Securities – taxable	2.35	%	2.39	%	2.30	%	2.22	%	2.24	%	2.37	%	2.28	%
Securities – nontaxable	4.27	%	4.31	%	4.28	%	4.25	%	4.31	%	4.29	%	4.38	%
Securities – total	2.45	%	2.50	%	2.40	%	2.32	%	2.35	%	2.47	%	2.40	%
Loans - LHFI & LHFS	4.53	%	4.51	%	4.55	%	4.69	%	4.74	%	4.52	%	4.75	%
Acquired loans	13.40	%	8.67	%	10.95	%	8.20	%	8.48	%	10.90	%	8.64	%
Loans - total	5.43	%	5.00	%	5.36	%	5.18	%	5.29	%	5.22	%	5.22	%
FF sold & rev repo	0.91	%	0.31	%	0.50	%	0.35	%	0.29	%	0.49	%	0.27	%
Other earning assets	4.19	%	4.13	%	4.53	%	3.86	%	4.29	%	4.16	%	4.22	%
Total earning assets	4.42	%	4.15	%	4.35	%	4.19	%	4.28	%	4.29	%	4.27	%
Interest-bearing deposits	0.22	%	0.24	%	0.27	%	0.27	%	0.28	%	0.23	%	0.29	%
FF pch & repo	0.11	%	0.11	%	0.11	%	0.12	%	0.11	%	0.11	%	0.12	%
Other borrowings	3.07	%	2.99	%	2.96	%	3.07	%	3.13	%	3.03	%	3.08	%
Total interest-bearing liabilities	0.28	%	0.30	%	0.33	%	0.33	%	0.34	%	0.29	%	0.36	%
Net interest margin	4.21	%	3.92	%	4.10	%	3.94	%	4.02	%	4.07	%	4.00	%
Net interest margin excluding acquired loans	3.55	%	3.52	%	3.48	%	3.52	%	3.55	%	3.54	%	3.60	%

Reflected in the table above are yields on earning assets and liabilities, along with the net interest margin which equals reported net interest income-FTE, annualized, as a percent of average earning assets. In addition, the table includes net interest margin excluding acquired loans, which equals reported net interest income-FTE excluding interest income on acquired loans, annualized, as a percent of average earning assets excluding average acquired loans. The net interest margin increased 29 basis points during the second quarter of 2014 primarily due to an increase in interest and fees on acquired loans, which was the result of increased acquired loan recoveries during the quarter.

During the second quarter of 2014, the yield on average acquired loans includes approximately $8.9 million in recoveries, or an annualized 5.15% of the average acquired loan balance. Excluding the recoveries on acquired loans, the yield on average acquired loans totaled 8.25%.

Note 5 – Mortgage Banking

Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that offsets the changes in fair value of mortgage servicing rights (MSR) attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under generally accepted accounting principles (GAAP). Changes in the fair value of these exchange-traded derivative instruments, including administrative costs, are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of the MSR. The MSR fair value represents the present value of future cash flows, which among other things includes decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the change in value of hedge instruments to the change in the fair value of the MSR asset attributable to changes in interest rates and other market driven changes in valuation inputs and assumptions. The impact of this strategy resulted in a net positive ineffectiveness of $546 thousand and $121 thousand for the quarters ended June 30, 2014 and 2013, respectively.

The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements:

	Quarter Ended															Six Months Ended
	6/30/2014			3/31/2014			12/31/2013			9/30/2013			6/30/2013			6/30/2014			6/30/2013
Mortgage servicing income, net	$	4,592		$	4,539		$	4,688		$	4,552		$	4,385		$	9,131		$	8,652
Change in fair value-MSR from runoff		(2,391	)		(1,812	)		(2,182	)		(2,407	)		(2,756	)		(4,203	)		(5,216	)
Gain on sales of loans, net		2,749			1,839			2,202			6,465			7,597			4,588			17,762
Other, net		695			400			(533	)		(1,485	)		(1,052	)		1,095			(2,701	)
Mortgage banking income before hedge ineffectiveness		5,645			4,966			4,175			7,125			8,174			10,611			18,497
Change in fair value-MSR from market changes		(3,038	)		(723	)		3,937			287			6,467			(3,761	)		7,594
Change in fair value of derivatives		3,584			2,586			(2,926	)		1,028			(6,346	)		6,170			(6,213	)
Net positive hedge ineffectiveness		546			1,863			1,011			1,315			121			2,409			1,381
Mortgage banking, net	$	6,191		$	6,829		$	5,186		$	8,440		$	8,295		$	13,020		$	19,878

TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS June 30, 2014 ($ in thousands) (unaudited)
Note 6 – Other Noninterest Income and Expense
Other noninterest income consisted of the following for the periods presented ($ in thousands):
	Quarter Ended															Six Months Ended
	6/30/2014			3/31/2014			12/31/2013			9/30/2013			6/30/2013			6/30/2014			6/30/2013
Partnership amortization for tax credit purposes	$	(3,006	)	$	(3,006	)	$	(5,642	)	$	(2,388	)	$	(2,221	)	$	(6,012	)	$	(4,338	)
(Decrease) increase in FDIC indemnification asset		(999	)		(688	)		(2,429	)		211			(2,317	)		(1,687	)		(3,682	)
Other miscellaneous income		4,204			3,673			3,269			2,342			2,393			7,877			4,684
Total other, net	$	199		$	(21	)	$	(4,802	)	$	165		$	(2,145	)	$	178		$	(3,336	)

Trustmark invests in partnerships that provide income tax credits on a Federal and/or State basis (i.e., new market tax credits, low income housing tax credits or historical tax credits). These investments are recorded based on the equity method of accounting, which requires the equity in partnership losses to be recognized when incurred and are recorded as a reduction in other income. The income tax credits related to these partnerships are utilized as specifically allowed by income tax law and are recorded as a reduction in income tax expense.

During the second quarter of 2014, other noninterest income included a write-down of the FDIC indemnification asset of $999 thousand on acquired covered loans obtained from Heritage as a result of loan pay-offs, improved cash flow projections and lower loss expectations for loan pools.

Other noninterest expense consisted of the following for the periods presented ($ in thousands):

	Quarter Ended										Six Months Ended
	6/30/2014		3/31/2014		12/31/2013		9/30/2013		6/30/2013		6/30/2014		6/30/2013
Loan expense	$	3,107	$	3,464	$	4,419	$	3,390	$	4,267	$	6,571	$	7,262
Non-routine transaction expenses on acquisitions		-		-		-		-		-		-		7,920
Amortization of intangibles		2,190		2,293		2,434		2,466		2,472		4,483		3,914
Other miscellaneous expense		7,934		7,495		8,555		7,675		11,832		15,429		17,526
Total other expense	$	13,231	$	13,252	$	15,408	$	13,531	$	18,571	$	26,483	$	36,622

Other miscellaneous expense increased during the second quarter of 2013 due to a non-routine litigation expense of $4.0 million related to a proposed settlement on Trustmark’s overdraft fees for insufficient funds on debit card purchases and ATM withdrawals as previously disclosed in the Form 8-K filed on June 26, 2013. During the first quarter of 2014, the United States District Court for the Southern District of Mississippi issued a final judgment approving the settlement.

Note 7 – Non-GAAP Financial Measures

In addition to capital ratios defined by GAAP and banking regulators, Trustmark utilizes various tangible common equity measures when evaluating capital utilization and adequacy. Tangible common equity, as defined by Trustmark, represents common equity less goodwill and identifiable intangible assets.

Trustmark believes these measures are important because they reflect the level of capital available to withstand unexpected market conditions. Additionally, presentation of these measures allows readers to compare certain aspects of Trustmark’s capitalization to other organizations. These ratios differ from capital measures defined by banking regulators principally in that the numerator excludes shareholders’ equity associated with preferred securities, the nature and extent of which varies across organizations.

These calculations are intended to complement the capital ratios defined by GAAP and banking regulators. Because GAAP does not include these capital ratio measures, Trustmark believes there are no comparable GAAP financial measures to these tangible common equity ratios. Despite the importance of these measures to Trustmark, there are no standardized definitions for them and, as a result, Trustmark’s calculations may not be comparable with other organizations. Also there may be limits in the usefulness of these measures to investors. As a result, Trustmark encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure. The following table reconciles Trustmark’s calculation of these measures to amounts reported under GAAP.

TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS June 30, 2014 ($ in thousands) (unaudited)
Note 7 - Non-GAAP Financial Measures (continued)
			Quarter Ended															Six Months Ended
			6/30/2014			3/31/2014			12/31/2013			9/30/2013			6/30/2013			6/30/2014			6/30/2013
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity			$	1,392,240		$	1,367,663		$	1,346,975		$	1,333,356		$	1,344,360		$	1,380,019		$	1,334,986
Less:	Goodwill			(365,500	)		(372,720	)		(372,468	)		(368,482	)		(366,592	)		(369,090	)		(345,862	)
	Identifiable intangible assets			(38,711	)		(41,015	)		(43,532	)		(45,988	)		(48,402	)		(39,857	)		(41,831	)
Total average tangible equity			$	988,029		$	953,928		$	930,975		$	918,886		$	929,366		$	971,072		$	947,293
PERIOD END BALANCES
Total shareholders' equity			$	1,399,891		$	1,373,895		$	1,354,953		$	1,329,514		$	1,326,819
Less:	Goodwill			(365,500	)		(365,500	)		(372,851	)		(372,463	)		(368,315	)
	Identifiable intangible assets			(37,506	)		(39,697	)		(41,990	)		(44,424	)		(46,889	)
Total tangible equity		(a)	$	996,885		$	968,698		$	940,112		$	912,627		$	911,615
TANGIBLE ASSETS
Total assets			$	12,119,996		$	12,057,054		$	11,790,383		$	11,805,197		$	11,863,312
Less:	Goodwill			(365,500	)		(365,500	)		(372,851	)		(372,463	)		(368,315	)
	Identifiable intangible assets			(37,506	)		(39,697	)		(41,990	)		(44,424	)		(46,889	)
Total tangible assets		(b)	$	11,716,990		$	11,651,857		$	11,375,542		$	11,388,310		$	11,448,108
Risk-weighted assets		(c)	$	8,175,622		$	8,016,482		$	7,916,378		$	7,825,839		$	7,878,281
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income			$	32,897		$	29,003		$	28,039		$	33,034		$	31,121		$	61,900		$	55,987
Plus:	Intangible amortization net of tax			1,353			1,417			1,503			1,523			1,526			2,770			2,416
Net income adjusted for intangible amortization			$	34,250		$	30,420		$	29,542		$	34,557		$	32,647		$	64,670		$	58,403
Period end common shares outstanding		(d)		67,439,788			67,439,562			67,372,980			67,181,694			67,163,195
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity ^1				13.90	%		12.93	%		12.59	%		14.92	%		14.09	%		13.43	%		12.43	%
Tangible equity/tangible assets		(a)/(b)		8.51	%		8.31	%		8.26	%		8.01	%		7.96	%
Tangible equity/risk-weighted assets		(a)/(c)		12.19	%		12.08	%		11.88	%		11.66	%		11.57	%
Tangible book value		(a)/(d)*1,000	$	14.78		$	14.36		$	13.95		$	13.58		$	13.57
TIER 1 COMMON RISK-BASED CAPITAL
Total shareholders' equity			$	1,399,891		$	1,373,895		$	1,354,953		$	1,329,514		$	1,326,819
Eliminate qualifying AOCI				30,557			38,497			43,731			52,226			36,088
Qualifying tier 1 capital				60,000			60,000			60,000			60,000			60,000
Disallowed goodwill				(365,500	)		(365,500	)		(372,851	)		(372,463	)		(368,315	)
Adj to goodwill allowed for deferred taxes				15,150			14,798			14,445			14,093			13,740
Other disallowed intangibles				(37,506	)		(39,697	)		(41,990	)		(44,424	)		(46,889	)
Disallowed servicing intangible				(6,505	)		(6,761	)		(6,783	)		(6,315	)		(6,038	)
Disallowed deferred taxes				(5,134	)		(23,969	)		(24,647	)		(39,476	)		(26,411	)
Total tier 1 capital				1,090,953			1,051,263			1,026,858			993,155			988,994
Less:	Qualifying tier 1 capital			(60,000	)		(60,000	)		(60,000	)		(60,000	)		(60,000	)
Total tier 1 common capital		(e)	$	1,030,953		$	991,263		$	966,858		$	933,155		$	928,994
Tier 1 common risk-based capital ratio		(e)/(c)		12.61	%		12.37	%		12.21	%		11.92	%		11.79	%
^1 Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity