Trustmark Corporation Announces 2010 Financial Results and Declares $0.23 Quarterly Cash Dividend

JACKSON, Miss.--(BUSINESS WIRE)--Trustmark Corporation (NASDAQ:TRMK) announced net income available to common shareholders of $25.2 million in the fourth quarter of 2010, which represented basic earnings per common share of $0.39. For the year ended December 31, 2010, Trustmark’s net income available to common shareholders totaled $100.6 million, which represented basic earnings per common share of $1.58, an increase of 25.4% compared to figures one year earlier. Trustmark’s performance during 2010 produced a return on average tangible common equity of 12.31% and a return on average assets of 1.08%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per common share. The dividend is payable March 15, 2011, to shareholders of record on March 1, 2011.

Printer friendly version of earnings release with consolidated financial statements and notes: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=6583615&lang=en

Richard G. Hickson, Chairman, stated, “Trustmark continued to produce outstanding financial results during the fourth quarter. The Board of Directors and I are delighted with the election of Jerry Host as Chief Executive Officer of Trustmark, which became effective January 1. We are confident that Trustmark, under Jerry’s leadership, will continue to meet the financial needs of our customers and achieve financial results that will enhance shareholder value.”

Credit Quality

• Nonperforming loans declined 10.3% while nonperforming assets fell 5.9%
• Allowance for loan losses represented 188.11% of nonperforming loans (excluding impaired loans)
• Florida construction and land development exposure declined 33.6% in 2010

During the fourth quarter, nonperforming loans decreased $16.4 million, or 10.3%, relative to the prior quarter to total $142.9 million, or 2.30% of total loans. Foreclosed real estate increased $2.0 million from the prior quarter to total $86.7 million. Collectively, nonperforming assets decreased $14.4 million, or 5.9%, to total $229.6 million at December 31, 2010.

Net charge-offs during the fourth quarter totaled $12.7 million, or 0.82% of average loans, and the provision for loan losses totaled $11.8 million. During the fourth quarter, Trustmark experienced a steady and continued reduction in criticized loans, including a $15.3 million decline in its Florida market, relative to the prior quarter. This reduction in criticized loans, coupled with lower migration of new criticized and nonperforming loans, resulted in provisioning being less than net charge-offs during the fourth quarter.

Allocation of Trustmark’s $93.5 million allowance for loan losses represented 1.94% of commercial loans and 0.78% of consumer and home mortgage loans, resulting in an allowance to total loans of 1.54% as of December 31, 2010. The allowance for loan losses represented 188.11% of nonperforming loans, excluding impaired loans.

Trustmark continued to make significant progress in the resolution of its construction and land development portfolio in Florida. During the last 12 months, this portfolio was reduced by 33.6% to total $132.0 million. At December 31, 2010, the associated reserve for loan losses on this portfolio totaled $16.4 million, or 12.41%. Managing credit risks resulting from current economic and real estate market conditions continues to be a primary focus for Trustmark.

Capital Strength

• Tangible common equity to tangible assets totaled 9.11%
• Total risk-based capital increased to 15.77%

The fundamental strengths of Trustmark’s diversified financial services business were reflected in pre-tax, pre-provision earnings of $46.7 million in the fourth quarter of 2010. Consistent profitability and sound balance sheet management continued to be reflected in Trustmark’s solid capital position. At December 31, 2010, tangible common equity totaled $842.1 million and represented 9.11% of tangible assets. Total risk-based capital increased to 15.77%, significantly exceeding the 10% regulatory requirement to be classified as “well-capitalized.” Trustmark’s strong capital base provides strategic flexibility to support organic growth as well as acquisition opportunities that strengthen the value of the franchise.

Balance Sheet Management

• Average earning assets increased to $8.4 billion
• Net interest income (FTE) expanded to $92.0 million, resulting in a 4.36% net interest margin

Average loans during the fourth quarter remained stable at $6.2 billion while average investment securities increased to $2.1 billion. As a result, average earning assets expanded $144.4 million relative to the prior quarter to total $8.4 billion.

Over the course of the year, the success of Trustmark’s continued efforts to reduce exposure to construction and land development lending as well as the decision to discontinue indirect auto financing were reflected in loan totals. At December 31, 2010, total loans held for investment were $6.1 billion, a decrease of $259.6 million relative to figures one year earlier. During this period, construction and land development loans declined $246.8 million while the indirect auto portfolio declined $192.2 million. Loans in Trustmark’s other business lines expanded $179.4 million during 2010.

Average deposits totaled $7.0 billion during the fourth quarter, a decrease of $97.9 million relative to the prior quarter. During this period, average interest bearing deposits declined $174.9 million while average noninterest-bearing deposits increased $77.0 million. Lower deposit costs continued to reflect Trustmark’s strong liquidity while disciplined loan pricing and required minimum loan rates sustained loan yields. As a result, net interest income (FTE) totaled $92.0 million, resulting in a net interest margin of 4.36% during the fourth quarter.

Noninterest Income

• Noninterest income totaled $38.6 million
• Fee income represented 29.6% of total revenue

During the fourth quarter, mortgage production exceeded $480 million, a 6.9% increase relative to the prior quarter. Mortgage banking income totaled $4.5 million during the fourth quarter, reflecting stable mortgage servicing income, solid secondary marketing gains, and successful hedging initiatives. Trustmark has not experienced significant mortgage repurchase activity. Trustmark operates a conservative, full service mortgage banking business and is confident in its mortgage foreclosure processes. Trustmark has not engaged in "robo-signing" and has not participated in private label securitizations, both of which have been a cause of concern in the mortgage industry. Trustmark works diligently to keep borrowers in their homes, resorting to foreclosure only as a last option.

Service charges on deposit accounts totaled $13.5 million, a decline of $1.0 million from the prior quarter. This decline was principally due to a reduction in NSF fees of approximately $872 thousand. Insurance revenue totaled $6.2 million, reflecting a seasonal decline from the prior quarter as well as the consequences of a soft insurance market, while bank card and other fees expanded to $6.5 million. Wealth management income totaled $5.8 million, an increase of 10.8% relative to the prior quarter. During the course of the year, Trustmark’s wealth management assets expanded approximately 4% to $8.8 billion at December 31, 2010.

Other noninterest income included a previously disclosed $2.0 million merger transaction termination fee, approximately half of which was offset by direct transaction expense.

Noninterest Expense

• Foreclosure expense declined 62.1% from the prior quarter to $3.3 million
• Noninterest expense remained well-controlled

Trustmark continued to diligently manage expenses. During the fourth quarter, noninterest expense declined $4.0 million, or 4.7% from the prior quarter, to total $80.4 million, principally due to a $5.4 million reduction in foreclosure expense. Trustmark’s commitment to prudent expense management was reflected in an efficiency ratio of 61.65% during the fourth quarter of 2010.

ADDITIONAL INFORMATION

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, January 26 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], passcode 446676, or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Thursday, February 3, 2011 in archived format at the same web address or by calling [phone], passcode 446676.

Trustmark is a financial services company providing banking and financial solutions through over 150 offices in 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 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 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
December 31, 2010
($ in thousands)
(unaudited)
										Linked Quarter					Year over Year
QUARTERLY AVERAGE BALANCES	12/31/2010			9/30/2010			12/31/2009			$ Change			% Change		$ Change			% Change
Securities AFS-taxable	$	1,817,996		$	1,654,335		$	1,369,022		$	163,661		9.9	%	$	448,974		32.8	%
Securities AFS-nontaxable		140,139			111,959			98,456			28,180		25.2	%		41,683		42.3	%
Securities HTM-taxable		121,278			143,124			202,235			(21,846	)	-15.3	%		(80,957	)	-40.0	%
Securities HTM-nontaxable		33,138			37,703			50,411			(4,565	)	-12.1	%		(17,273	)	-34.3	%
Total securities		2,112,551			1,947,121			1,720,124			165,430		8.5	%		392,427		22.8	%
Loans (including loans held for sale)		6,199,875			6,230,961			6,544,448			(31,086	)	-0.5	%		(344,573	)	-5.3	%
Fed funds sold and rev repos		10,766			8,418			10,609			2,348		27.9	%		157		1.5	%
Other earning assets		41,359			33,615			44,197			7,744		23.0	%		(2,838	)	-6.4	%
Total earning assets		8,364,551			8,220,115			8,319,378			144,436		1.8	%		45,173		0.5	%
Allowance for loan losses		(96,559	)		(102,528	)		(105,223	)		5,969		-5.8	%		8,664		-8.2	%
Cash and due from banks		207,874			214,736			199,586			(6,862	)	-3.2	%		8,288		4.2	%
Other assets		888,666			885,600			855,714			3,066		0.3	%		32,952		3.9	%
Total assets	$	9,364,532		$	9,217,923		$	9,269,455		$	146,609		1.6	%	$	95,077		1.0	%
Interest-bearing demand deposits	$	1,347,252		$	1,363,377		$	1,134,995		$	(16,125	)	-1.2	%	$	212,257		18.7	%
Savings deposits		1,794,352			1,888,121			1,801,870			(93,769	)	-5.0	%		(7,518	)	-0.4	%
Time deposits less than $100,000		1,235,529			1,276,088			1,422,270			(40,559	)	-3.2	%		(186,741	)	-13.1	%
Time deposits of $100,000 or more		932,744			957,148			1,039,565			(24,404	)	-2.5	%		(106,821	)	-10.3	%
Total interest-bearing deposits		5,309,877			5,484,734			5,398,700			(174,857	)	-3.2	%		(88,823	)	-1.6	%
Fed funds purchased and repos		701,978			522,523			579,616			179,455		34.3	%		122,362		21.1	%
Short-term borrowings		254,442			202,017			238,060			52,425		26.0	%		16,382		6.9	%
Long-term FHLB advances		-			-			75,000			-		n/m			(75,000	)	-100.0	%
Subordinated notes		49,801			49,793			49,769			8		0.0	%		32		0.1	%
Junior subordinated debt securities		64,546			70,104			70,104			(5,558	)	-7.9	%		(5,558	)	-7.9	%
Total interest-bearing liabilities		6,380,644			6,329,171			6,411,249			51,473		0.8	%		(30,605	)	-0.5	%
Noninterest-bearing deposits		1,706,089			1,629,122			1,533,588			76,967		4.7	%		172,501		11.2	%
Other liabilities		117,741			104,576			118,906			13,165		12.6	%		(1,165	)	-1.0	%
Total liabilities		8,204,474			8,062,869			8,063,743			141,605		1.8	%		140,731		1.7	%
Preferred equity		-			-			157,270			-		n/m			(157,270	)	-100.0	%
Common equity		1,160,058			1,155,054			1,048,442			5,004		0.4	%		111,616		10.6	%
Total shareholders' equity		1,160,058			1,155,054			1,205,712			5,004		0.4	%		(45,654	)	-3.8	%
Total liabilities and equity	$	9,364,532		$	9,217,923		$	9,269,455		$	146,609		1.6	%	$	95,077		1.0	%
										Linked Quarter					Year over Year
PERIOD END BALANCES	12/31/2010			9/30/2010			12/31/2009			$ Change			% Change		$ Change			% Change
Cash and due from banks	$	161,544		$	196,136		$	213,519		$	(34,592	)	-17.6	%	$	(51,975	)	-24.3	%
Fed funds sold and rev repos		11,773			6,655			6,374			5,118		76.9	%		5,399		84.7	%
Securities available for sale		2,177,249			1,968,624			1,684,396			208,625		10.6	%		492,853		29.3	%
Securities held to maturity		140,847			168,849			232,984			(28,002	)	-16.6	%		(92,137	)	-39.5	%
Loans held for sale		153,044			268,137			226,225			(115,093	)	-42.9	%		(73,181	)	-32.3	%
Loans		6,060,242			5,998,704			6,319,797			61,538		1.0	%		(259,555	)	-4.1	%
Allowance for loan losses		(93,510	)		(94,458	)		(103,662	)		948		-1.0	%		10,152		-9.8	%
Net Loans		5,966,732			5,904,246			6,216,135			62,486		1.1	%		(249,403	)	-4.0	%
Premises and equipment, net		142,289			143,393			147,488			(1,104	)	-0.8	%		(5,199	)	-3.5	%
Mortgage servicing rights		51,151			41,972			50,513			9,179		21.9	%		638		1.3	%
Goodwill		291,104			291,104			291,104			-		0.0	%		-		0.0	%
Identifiable intangible assets		16,306			17,181			19,825			(875	)	-5.1	%		(3,519	)	-17.8	%
Other real estate		86,704			84,722			90,095			1,982		2.3	%		(3,391	)	-3.8	%
Other assets		355,159			325,886			347,360			29,273		9.0	%		7,799		2.2	%
Total assets	$	9,553,902		$	9,416,905		$	9,526,018		$	136,997		1.5	%	$	27,884		0.3	%
Deposits:
Noninterest-bearing	$	1,636,625		$	1,709,311		$	1,685,187		$	(72,686	)	-4.3	%	$	(48,562	)	-2.9	%
Interest-bearing		5,407,942			5,316,025			5,503,278			91,917		1.7	%		(95,336	)	-1.7	%
Total deposits		7,044,567			7,025,336			7,188,465			19,231		0.3	%		(143,898	)	-2.0	%
Fed funds purchased and repos		700,138			633,065			653,032			67,073		10.6	%		47,106		7.2	%
Short-term borrowings		425,343			318,457			253,957			106,886		33.6	%		171,386		67.5	%
Long-term FHLB advances		-			-			75,000			-		n/m			(75,000	)	n/m
Subordinated notes		49,806			49,798			49,774			8		0.0	%		32		0.1	%
Junior subordinated debt securities		61,856			70,104			70,104			(8,248	)	-11.8	%		(8,248	)	-11.8	%
Other liabilities		122,708			161,353			125,626			(38,645	)	-24.0	%		(2,918	)	-2.3	%
Total liabilities		8,404,418			8,258,113			8,415,958			146,305		1.8	%		(11,540	)	-0.1	%
Common stock		13,318			13,311			13,267			7		0.1	%		51		0.4	%
Capital surplus		256,675			254,288			244,864			2,387		0.9	%		11,811		4.8	%
Retained earnings		890,917			881,545			853,553			9,372		1.1	%		37,364		4.4	%
Accum other comprehensive (loss) income, net of tax		(11,426	)		9,648			(1,624	)		(21,074	)	n/m			(9,802	)	n/m
Total shareholders' equity		1,149,484			1,158,792			1,110,060			(9,308	)	-0.8	%		39,424		3.6	%
Total liabilities and equity	$	9,553,902		$	9,416,905		$	9,526,018		$	136,997		1.5	%	$	27,884		0.3	%
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2010
($ in thousands except per share data)
(unaudited)
	Quarter Ended									Linked Quarter					Year over Year
INCOME STATEMENTS	12/31/2010			9/30/2010			12/31/2009			$ Change			% Change		$ Change			% Change
Interest and fees on loans-FTE	$	82,664		$	83,374		$	87,640		$	(710	)	-0.9	%	$	(4,976	)	-5.7	%
Interest on securities-taxable		19,076			18,641			19,093			435		2.3	%		(17	)	-0.1	%
Interest on securities-tax exempt-FTE		2,169			2,080			2,183			89		4.3	%		(14	)	-0.6	%
Interest on fed funds sold and rev repos		12			9			12			3		33.3	%		-		0.0	%
Other interest income		328			332			377			(4	)	-1.2	%		(49	)	-13.0	%
Total interest income-FTE		104,249			104,436			109,305			(187	)	-0.2	%		(5,056	)	-4.6	%
Interest on deposits		10,359			11,609			16,513			(1,250	)	-10.8	%		(6,154	)	-37.3	%
Interest on fed funds pch and repos		403			294			215			109		37.1	%		188		87.4	%
Other interest expense		1,535			1,631			1,716			(96	)	-5.9	%		(181	)	-10.5	%
Total interest expense		12,297			13,534			18,444			(1,237	)	-9.1	%		(6,147	)	-33.3	%
Net interest income-FTE		91,952			90,902			90,861			1,050		1.2	%		1,091		1.2	%
Provision for loan losses		11,794			12,259			17,709			(465	)	-3.8	%		(5,915	)	-33.4	%
Net interest income after provision-FTE		80,158			78,643			73,152			1,515		1.9	%		7,006		9.6	%
Service charges on deposit accounts		13,493			14,493			14,118			(1,000	)	-6.9	%		(625	)	-4.4	%
Insurance commissions		6,224			7,746			6,391			(1,522	)	-19.6	%		(167	)	-2.6	%
Wealth management		5,760			5,199			5,438			561		10.8	%		322		5.9	%
Bank card and other fees		6,482			6,235			5,951			247		4.0	%		531		8.9	%
Mortgage banking, net		4,502			9,861			6,552			(5,359	)	-54.3	%		(2,050	)	-31.3	%
Other, net		2,070			441			1,814			1,629		n/m			256		14.1	%
Nonint inc-excl sec gains, net		38,531			43,975			40,264			(5,444	)	-12.4	%		(1,733	)	-4.3	%
Security gains, net		101			4			19			97		n/m			82		n/m
Total noninterest income		38,632			43,979			40,283			(5,347	)	-12.2	%		(1,651	)	-4.1	%
Salaries and employee benefits		44,412			44,034			42,209			378		0.9	%		2,203		5.2	%
Services and fees		10,462			10,709			9,919			(247	)	-2.3	%		543		5.5	%
Net occupancy-premises		4,896			4,961			5,063			(65	)	-1.3	%		(167	)	-3.3	%
Equipment expense		4,229			4,356			4,084			(127	)	-2.9	%		145		3.6	%
FDIC assessment expense		2,942			3,037			2,865			(95	)	-3.1	%		77		2.7	%
ORE/Foreclosure expense		3,310			8,728			3,626			(5,418	)	-62.1	%		(316	)	-8.7	%
Other expense		10,186			8,598			7,881			1,588		18.5	%		2,305		29.2	%
Total noninterest expense		80,437			84,423			75,647			(3,986	)	-4.7	%		4,790		6.3	%
Income before income taxes and tax eq adj		38,353			38,199			37,788			154		0.4	%		565		1.5	%
Tax equivalent adjustment		3,400			3,335			2,569			65		1.9	%		831		32.3	%
Income before income taxes		34,953			34,864			35,219			89		0.3	%		(266	)	-0.8	%
Income taxes		9,793			9,004			10,742			789		8.8	%		(949	)	-8.8	%
Net income		25,160			25,860			24,477			(700	)	-2.7	%		683		2.8	%
Preferred stock dividends		-			-			2,061			-		n/m			(2,061	)	-100.0	%
Accretion of preferred stock discount		-			-			8,539			-		n/m			(8,539	)	-100.0	%
Net income available to common shareholders	$	25,160		$	25,860		$	13,877		$	(700	)	-2.7	%	$	11,283		81.3	%
Per common share data
Earnings per share - basic	$	0.39		$	0.40		$	0.23		$	(0.01	)	-2.5	%	$	0.16		69.6	%
Earnings per share - diluted	$	0.39		$	0.40		$	0.23		$	(0.01	)	-2.5	%	$	0.16		69.6	%
Dividends per share	$	0.23		$	0.23		$	0.23		$	-		0.0	%	$	-		0.0	%
Weighted average common shares outstanding
Basic		63,892,362			63,885,647			59,131,451
Diluted		64,105,064			64,066,798			59,287,459
Period end common shares outstanding		63,917,591			63,885,959			63,673,839
OTHER FINANCIAL DATA
Return on common equity		8.60	%		8.88	%		5.25	%
Return on average tangible common equity		11.96	%		12.38	%		7.80	%
Return on equity		8.60	%		8.88	%		8.05	%
Return on assets		1.07	%		1.11	%		1.05	%
Interest margin - Yield - FTE		4.94	%		5.04	%		5.21	%
Interest margin - Cost		0.58	%		0.65	%		0.88	%
Net interest margin - FTE		4.36	%		4.39	%		4.33	%
Efficiency ratio		61.65	%		62.59	%		57.69	%
Full-time equivalent employees		2,490			2,501			2,524
COMMON STOCK PERFORMANCE
Market value-Close	$	24.84		$	21.74		$	22.54
Common book value	$	17.98		$	18.14		$	17.43
Tangible common book value	$	13.17		$	13.31		$	12.55
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2010
($ in thousands)
(unaudited)
	Quarter Ended									Linked Quarter					Year over Year
NONPERFORMING ASSETS	12/31/2010			9/30/2010			12/31/2009			$ Change			% Change		$ Change			% Change
Nonaccrual loans
Florida	$	53,773		$	65,759		$	74,159		$	(11,986	)	-18.2	%	$	(20,386	)	-27.5	%
Mississippi (1)		39,803			48,962			31,050			(9,159	)	-18.7	%		8,753		28.2	%
Tennessee (2)		14,703			9,207			12,749			5,496		59.7	%		1,954		15.3	%
Texas		34,644			35,388			23,204			(744	)	-2.1	%		11,440		49.3	%
Total nonaccrual loans		142,923			159,316			141,162			(16,393	)	-10.3	%		1,761		1.2	%
Other real estate
Florida		32,370			31,665			45,927			705		2.2	%		(13,557	)	-29.5	%
Mississippi (1)		24,181			24,548			22,373			(367	)	-1.5	%		1,808		8.1	%
Tennessee (2)		16,407			16,456			10,105			(49	)	-0.3	%		6,302		62.4	%
Texas		13,746			12,053			11,690			1,693		14.0	%		2,056		17.6	%
Total other real estate		86,704			84,722			90,095			1,982		2.3	%		(3,391	)	-3.8	%
Total nonperforming assets	$	229,627		$	244,038		$	231,257		$	(14,411	)	-5.9	%	$	(1,630	)	-0.7	%
LOANS PAST DUE OVER 90 DAYS
Loans held for investment	$	3,608		$	5,795		$	8,901		$	(2,187	)	-37.7	%	$	(5,293	)	-59.5	%
Loans HFS-Guaranteed GNMA serviced loans (no obligation to repurchase)	$	15,777		$	50,246		$	46,661		$	(34,469	)	-68.6	%	$	(30,884	)	-66.2	%
	Quarter Ended									Linked Quarter					Year over Year
ALLOWANCE FOR LOAN LOSSES	12/31/2010			9/30/2010			12/31/2009			$ Change			% Change		$ Change			% Change
Beginning Balance	$	94,458		$	100,656		$	103,016		$	(6,198	)	-6.2	%	$	(8,558	)	-8.3	%
Provision for loan losses		11,794			12,259			17,709			(465	)	-3.8	%		(5,915	)	-33.4	%
Charge-offs		(15,883	)		(21,942	)		(20,139	)		6,059		-27.6	%		4,256		-21.1	%
Recoveries		3,141			3,485			3,076			(344	)	-9.9	%		65		2.1	%
Net charge-offs		(12,742	)		(18,457	)		(17,063	)		5,715		-31.0	%		4,321		-25.3	%
Ending Balance	$	93,510		$	94,458		$	103,662		$	(948	)	-1.0	%	$	(10,152	)	-9.8	%
PROVISION FOR LOAN LOSSES
Florida	$	7,473		$	4,520		$	11,371		$	2,953		65.3	%	$	(3,898	)	-34.3	%
Mississippi (1)		2,673			4,398			6,310			(1,725	)	-39.2	%		(3,637	)	-57.6	%
Tennessee (2)		910			(172	)		2,097			1,082		n/m			(1,187	)	-56.6	%
Texas		738			3,513			(2,069	)		(2,775	)	-79.0	%		2,807		n/m
Total provision for loan losses	$	11,794		$	12,259		$	17,709		$	(465	)	-3.8	%	$	(5,915	)	-33.4	%
NET CHARGE-OFFS
Florida	$	4,830		$	8,951		$	8,174		$	(4,121	)	-46.0	%	$	(3,344	)	-40.9	%
Mississippi (1)		4,422			3,879			5,448			543		14.0	%		(1,026	)	-18.8	%
Tennessee (2)		1,646			3,475			1,169			(1,829	)	-52.6	%		477		40.8	%
Texas		1,844			2,152			2,272			(308	)	-14.3	%		(428	)	-18.8	%
Total net charge-offs	$	12,742		$	18,457		$	17,063		$	(5,715	)	-31.0	%	$	(4,321	)	-25.3	%
CREDIT QUALITY RATIOS
Net charge offs/average loans		0.82	%		1.18	%		1.03	%
Provision for loan losses/average loans		0.75	%		0.78	%		1.07	%
Nonperforming loans/total loans (incl LHFS)		2.30	%		2.54	%		2.16	%
Nonperforming assets/total loans (incl LHFS)		3.70	%		3.89	%		3.53	%
Nonperforming assets/total loans (incl LHFS) +ORE		3.64	%		3.84	%		3.48	%
ALL/total loans (excl LHFS)		1.54	%		1.57	%		1.64	%
ALL-commercial/total commercial loans		1.94	%		1.97	%		2.10	%
ALL-consumer/total consumer and home mortgage loans		0.78	%		0.81	%		0.80	%
ALL/nonperforming loans		65.43	%		59.29	%		73.43	%
ALL/nonperforming loans - (excl impaired loans)		188.11	%		140.94	%		150.13	%
CAPITAL RATIOS
Total equity/total assets		12.03	%		12.31	%		11.65	%
Common equity/total assets		12.03	%		12.31	%		11.65	%
Tangible common equity/tangible assets		9.11	%		9.34	%		8.67	%
Tangible common equity/risk-weighted assets		12.62	%		12.78	%		11.55	%
Tier 1 leverage ratio		10.14	%		10.26	%		9.74	%
Tier 1 common risk-based capital ratio		12.87	%		12.72	%		11.63	%
Tier 1 risk-based capital ratio		13.77	%		13.75	%		12.61	%
Total risk-based capital ratio		15.77	%		15.75	%		14.58	%
(1) - Mississippi includes Central and Southern Mississippi Regions
(2) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2010
($ in thousands)
(unaudited)
	Quarter Ended															Year Ended
AVERAGE BALANCES	12/31/2010			9/30/2010			6/30/2010			3/31/2010			12/31/2009			12/31/2010			12/31/2009
Securities AFS-taxable	$	1,817,996		$	1,654,335		$	1,586,165		$	1,514,029		$	1,369,022		$	1,643,995		$	1,411,275
Securities AFS-nontaxable		140,139			111,959			110,969			105,067			98,456			117,116			75,516
Securities HTM-taxable		121,278			143,124			162,691			179,076			202,235			151,361			191,732
Securities HTM-nontaxable		33,138			37,703			41,628			46,852			50,411			39,787			58,526
Total securities		2,112,551			1,947,121			1,901,453			1,845,024			1,720,124			1,952,259			1,737,049
Loans (including loans held for sale)		6,199,875			6,230,961			6,301,201			6,412,671			6,544,448			6,285,443			6,773,768
Fed funds sold and rev repos		10,766			8,418			7,478			10,438			10,609			9,274			15,077
Other earning assets		41,359			33,615			38,764			46,199			44,197			39,954			43,925
Total earning assets		8,364,551			8,220,115			8,248,896			8,314,332			8,319,378			8,286,930			8,569,819
Allowance for loan losses		(96,559	)		(102,528	)		(104,814	)		(106,200	)		(105,223	)		(102,499	)		(103,080	)
Cash and due from banks		207,874			214,736			207,670			216,305			199,586			211,632			214,637
Other assets		888,666			885,600			898,749			910,401			855,714			895,764			839,066
Total assets	$	9,364,532		$	9,217,923		$	9,250,501		$	9,334,838		$	9,269,455		$	9,291,827		$	9,520,442
Interest-bearing demand deposits	$	1,347,252		$	1,363,377		$	1,306,783		$	1,270,827		$	1,134,995		$	1,322,382		$	1,133,498
Savings deposits		1,794,352			1,888,121			2,066,612			1,953,711			1,801,870			1,925,159			1,821,086
Time deposits less than $100,000		1,235,529			1,276,088			1,307,611			1,356,469			1,422,270			1,293,544			1,458,563
Time deposits of $100,000 or more		932,744			957,148			989,397			1,014,027			1,039,565			973,062			1,076,465
Total interest-bearing deposits		5,309,877			5,484,734			5,670,403			5,595,034			5,398,700			5,514,147			5,489,612
Fed funds purchased and repos		701,978			522,523			495,904			600,826			579,616			580,427			621,638
Short-term borrowings		254,442			202,017			181,669			199,550			238,060			209,550			371,173
Long-term FHLB advances		-			-			15,833			75,000			75,000			22,441			70,890
Subordinated notes		49,801			49,793			49,785			49,777			49,769			49,789			49,756
Junior subordinated debt securities		64,546			70,104			70,104			70,104			70,104			68,703			70,104
Total interest-bearing liabilities		6,380,644			6,329,171			6,483,698			6,590,291			6,411,249			6,445,057			6,673,173
Noninterest-bearing deposits		1,706,089			1,629,122			1,536,153			1,535,209			1,533,588			1,602,187			1,522,300
Other liabilities		117,741			104,576			91,715			85,982			118,906			100,102			119,327
Total liabilities		8,204,474			8,062,869			8,111,566			8,211,482			8,063,743			8,147,346			8,314,800
Preferred equity		-			-			-			-			157,270			-			193,616
Common equity		1,160,058			1,155,054			1,138,935			1,123,356			1,048,442			1,144,481			1,012,026
Total shareholders' equity		1,160,058			1,155,054			1,138,935			1,123,356			1,205,712			1,144,481			1,205,642
Total liabilities and equity	$	9,364,532		$	9,217,923		$	9,250,501		$	9,334,838		$	9,269,455		$	9,291,827		$	9,520,442
PERIOD END BALANCES	12/31/2010			9/30/2010			6/30/2010			3/31/2010			12/31/2009
Cash and due from banks	$	161,544		$	196,136		$	186,365		$	191,973		$	213,519
Fed funds sold and rev repos		11,773			6,655			5,713			11,599			6,374
Securities available for sale		2,177,249			1,968,624			1,786,710			1,706,565			1,684,396
Securities held to maturity		140,847			168,849			192,860			215,888			232,984
Loans held for sale		153,044			268,137			218,369			176,682			226,225
Loans		6,060,242			5,998,704			6,054,995			6,170,878			6,319,797
Allowance for loan losses		(93,510	)		(94,458	)		(100,656	)		(101,643	)		(103,662	)
Net Loans		5,966,732			5,904,246			5,954,339			6,069,235			6,216,135
Premises and equipment, net		142,289			143,393			143,536			145,113			147,488
Mortgage servicing rights		51,151			41,972			43,044			50,037			50,513
Goodwill		291,104			291,104			291,104			291,104			291,104
Identifiable intangible assets		16,306			17,181			18,062			18,944			19,825
Other real estate		86,704			84,722			91,400			91,176			90,095
Other assets		355,159			325,886			313,043			324,899			347,360
Total assets	$	9,553,902		$	9,416,905		$	9,244,545		$	9,293,215		$	9,526,018
Deposits:
Noninterest-bearing	$	1,636,625		$	1,709,311		$	1,539,598		$	1,511,080		$	1,685,187
Interest-bearing		5,407,942			5,316,025			5,599,796			5,635,973			5,503,278
Total deposits		7,044,567			7,025,336			7,139,394			7,147,053			7,188,465
Fed funds purchased and repos		700,138			633,065			492,367			571,711			653,032
Short-term borrowings		425,343			318,457			208,136			132,784			253,957
Long-term FHLB advances		-			-			-			75,000			75,000
Subordinated notes		49,806			49,798			49,790			49,782			49,774
Junior subordinated debt securities		61,856			70,104			70,104			70,104			70,104
Other liabilities		122,708			161,353			142,374			118,252			125,626
Total liabilities		8,404,418			8,258,113			8,102,165			8,164,686			8,415,958
Common stock		13,318			13,311			13,311			13,302			13,267
Capital surplus		256,675			254,288			253,133			250,365			244,864
Retained earnings		890,917			881,545			870,532			860,398			853,553
Accum other comprehensive (loss) income, net of tax		(11,426	)		9,648			5,404			4,464			(1,624	)
Total shareholders' equity		1,149,484			1,158,792			1,142,380			1,128,529			1,110,060
Total liabilities and equity	$	9,553,902		$	9,416,905		$	9,244,545		$	9,293,215		$	9,526,018
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2010
($ in thousands except per share data)
(unaudited)
	Quarter Ended															Year Ended
INCOME STATEMENTS	12/31/2010			9/30/2010			6/30/2010			3/31/2010			12/31/2009			12/31/2010			12/31/2009
Interest and fees on loans-FTE	$	82,664		$	83,374		$	84,362		$	84,127		$	87,640		$	334,527		$	361,346
Interest on securities-taxable		19,076			18,641			19,626			19,735			19,093			77,078			80,715
Interest on securities-tax exempt-FTE		2,169			2,080			2,151			2,180			2,183			8,580			8,229
Interest on fed funds sold and rev repos		12			9			7			8			12			36			66
Other interest income		328			332			366			383			377			1,409			1,414
Total interest income-FTE		104,249			104,436			106,512			106,433			109,305			421,630			451,770
Interest on deposits		10,359			11,609			12,785			13,904			16,513			48,657			78,886
Interest on fed funds pch and repos		403			294			260			226			215			1,183			1,133
Other interest expense		1,535			1,631			1,597			1,592			1,716			6,355			7,834
Total interest expense		12,297			13,534			14,642			15,722			18,444			56,195			87,853
Net interest income-FTE		91,952			90,902			91,870			90,711			90,861			365,435			363,917
Provision for loan losses		11,794			12,259			10,398			15,095			17,709			49,546			77,112
Net interest income after provision-FTE		80,158			78,643			81,472			75,616			73,152			315,889			286,805
Service charges on deposit accounts		13,493			14,493			14,220			12,977			14,118			55,183			54,087
Insurance commissions		6,224			7,746			6,884			6,837			6,391			27,691			29,079
Wealth management		5,760			5,199			5,558			5,355			5,438			21,872			22,079
Bank card and other fees		6,482			6,235			6,417			5,880			5,951			25,014			23,041
Mortgage banking, net		4,502			9,861			8,910			6,072			6,552			29,345			28,873
Other, net		2,070			441			1,103			879			1,814			4,493			5,616
Nonint inc-excl sec gains, net		38,531			43,975			43,092			38,000			40,264			163,598			162,775
Security gains, net		101			4			1,855			369			19			2,329			5,467
Total noninterest income		38,632			43,979			44,947			38,369			40,283			165,927			168,242
Salaries and employee benefits		44,412			44,034			43,282			42,854			42,209			174,582			169,252
Services and fees		10,462			10,709			10,523			10,255			9,919			41,949			40,292
Net occupancy-premises		4,896			4,961			4,917			5,034			5,063			19,808			20,051
Equipment expense		4,229			4,356			4,247			4,303			4,084			17,135			16,462
FDIC assessment expense		2,942			3,037			3,035			3,147			2,865			12,161			15,808
ORE/Foreclosure expense		3,310			8,728			9,278			3,061			3,626			24,377			12,860
Other expense		10,186			8,598			9,146			7,707			7,881			35,637			33,534
Total noninterest expense		80,437			84,423			84,428			76,361			75,647			325,649			308,259
Income before income taxes and tax eq adj		38,353			38,199			41,991			37,624			37,788			156,167			146,788
Tax equivalent adjustment		3,400			3,335			3,384			3,293			2,569			13,412			9,708
Income before income taxes		34,953			34,864			38,607			34,331			35,219			142,755			137,080
Income taxes		9,793			9,004			12,446			10,876			10,742			42,119			44,033
Net income		25,160			25,860			26,161			23,455			24,477			100,636			93,047
Preferred stock dividends		-			-			-			-			2,061			-			10,124
Accretion of preferred stock discount		-			-			-			-			8,539			-			9,874
Net income available to common shareholders	$	25,160		$	25,860		$	26,161		$	23,455		$	13,877		$	100,636		$	73,049
Per common share data
Earnings per share - basic	$	0.39		$	0.40		$	0.41		$	0.37		$	0.23		$	1.58		$	1.26
Earnings per share - diluted	$	0.39		$	0.40		$	0.41		$	0.37		$	0.23		$	1.57		$	1.26
Dividends per share	$	0.23		$	0.23		$	0.23		$	0.23		$	0.23		$	0.92		$	0.92
Weighted average common shares outstanding
Basic		63,892,362			63,885,647			63,872,879			63,743,302			59,131,451			63,849,058			57,833,774
Diluted		64,105,064			64,066,798			64,054,171			63,933,333			59,287,459			64,039,389			57,936,433
Period end common shares outstanding		63,917,591			63,885,959			63,885,403			63,844,500			63,673,839			63,917,591			63,673,839
OTHER FINANCIAL DATA
Return on common equity		8.60	%		8.88	%		9.21	%		8.47	%		5.25	%		8.79	%		7.22	%
Return on average tangible common equity		11.96	%		12.38	%		12.92	%		11.98	%		7.80	%		12.31	%		10.80	%
Return on equity		8.60	%		8.88	%		9.21	%		8.47	%		8.05	%		8.79	%		7.72	%
Return on assets		1.07	%		1.11	%		1.13	%		1.02	%		1.05	%		1.08	%		0.98	%
Interest margin - Yield - FTE		4.94	%		5.04	%		5.18	%		5.19	%		5.21	%		5.09	%		5.27	%
Interest margin - Cost		0.58	%		0.65	%		0.71	%		0.77	%		0.88	%		0.68	%		1.03	%
Net interest margin - FTE		4.36	%		4.39	%		4.47	%		4.42	%		4.33	%		4.41	%		4.25	%
Efficiency ratio		61.65	%		62.59	%		62.56	%		59.33	%		57.69	%		61.56	%		57.70	%
Full-time equivalent employees		2,490			2,501			2,527			2,506			2,524
COMMON STOCK PERFORMANCE
Market value-Close	$	24.84		$	21.74		$	20.82		$	24.43		$	22.54
Common book value	$	17.98		$	18.14		$	17.88		$	17.68		$	17.43
Tangible common book value	$	13.17		$	13.31		$	13.04		$	12.82		$	12.55
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2010
($ in thousands)
(unaudited)
	Quarter Ended
NONPERFORMING ASSETS	12/31/2010			9/30/2010			6/30/2010			3/31/2010			12/31/2009
Nonaccrual loans
Florida	$	53,773		$	65,759		$	74,954		$	79,687		$	74,159
Mississippi (1)		39,803			48,962			39,924			41,795			31,050
Tennessee (2)		14,703			9,207			9,778			12,673			12,749
Texas		34,644			35,388			35,222			31,354			23,204
Total nonaccrual loans		142,923			159,316			159,878			165,509			141,162
Other real estate
Florida		32,370			31,665			31,814			40,145			45,927
Mississippi (1)		24,181			24,548			28,020			23,082			22,373
Tennessee (2)		16,407			16,456			12,493			9,769			10,105
Texas		13,746			12,053			19,073			18,180			11,690
Total other real estate		86,704			84,722			91,400			91,176			90,095
Total nonperforming assets	$	229,627		$	244,038		$	251,278		$	256,685		$	231,257
LOANS PAST DUE OVER 90 DAYS
Loans held for investment	$	3,608		$	5,795		$	6,057		$	8,411		$	8,901
Loans HFS-Guaranteed GNMA serviced loans (no obligation to repurchase)	$	15,777		$	50,246		$	49,712		$	48,571		$	46,661
	Quarter Ended															Year Ended
ALLOWANCE FOR LOAN LOSSES	12/31/2010			9/30/2010			6/30/2010			3/31/2010			12/31/2009			12/31/2010			12/31/2009
Beginning Balance	$	94,458		$	100,656		$	101,643		$	103,662		$	103,016		$	103,662		$	94,922
Provision for loan losses		11,794			12,259			10,398			15,095			17,709			49,546			77,112
Charge-offs		(15,883	)		(21,942	)		(14,297	)		(19,775	)		(20,139	)		(71,897	)		(80,711	)
Recoveries		3,141			3,485			2,912			2,661			3,076			12,199			12,339
Net charge-offs		(12,742	)		(18,457	)		(11,385	)		(17,114	)		(17,063	)		(59,698	)		(68,372	)
Ending Balance	$	93,510		$	94,458		$	100,656		$	101,643		$	103,662		$	93,510		$	103,662
PROVISION FOR LOAN LOSSES
Florida	$	7,473		$	4,520		$	2,432		$	5,501		$	11,371		$	19,926		$	47,724
Mississippi (1)		2,673			4,398			3,430			3,748			6,310			14,249			21,661
Tennessee (2)		910			(172	)		3,560			1,314			2,097			5,612			3,218
Texas		738			3,513			976			4,532			(2,069	)		9,759			4,509
Total provision for loan losses	$	11,794		$	12,259		$	10,398		$	15,095		$	17,709		$	49,546		$	77,112
NET CHARGE-OFFS
Florida	$	4,830		$	8,951		$	5,880		$	8,989		$	8,174		$	28,650		$	36,405
Mississippi (1)		4,422			3,879			3,885			6,777			5,448			18,963			21,799
Tennessee (2)		1,646			3,475			1,031			426			1,169			6,578			3,723
Texas		1,844			2,152			589			922			2,272			5,507			6,445
Total net charge-offs	$	12,742		$	18,457		$	11,385		$	17,114		$	17,063		$	59,698		$	68,372
CREDIT QUALITY RATIOS
Net charge offs/average loans		0.82	%		1.18	%		0.72	%		1.08	%		1.03	%		0.95	%		1.01	%
Provision for loan losses/average loans		0.75	%		0.78	%		0.66	%		0.95	%		1.07	%		0.79	%		1.14	%
Nonperforming loans/total loans (incl LHFS)		2.30	%		2.54	%		2.55	%		2.61	%		2.16	%
Nonperforming assets/total loans (incl LHFS)		3.70	%		3.89	%		4.01	%		4.04	%		3.53	%
Nonperforming assets/total loans (incl LHFS) +ORE		3.64	%		3.84	%		3.95	%		3.99	%		3.48	%
ALL/total loans (excl LHFS)		1.54	%		1.57	%		1.66	%		1.65	%		1.64	%
ALL-commercial/total commercial loans		1.94	%		1.97	%		2.10	%		2.10	%		2.10	%
ALL-consumer/total consumer and home mortgage loans		0.78	%		0.81	%		0.82	%		0.80	%		0.80	%
ALL/nonperforming loans		65.43	%		59.29	%		62.96	%		61.41	%		73.43	%
ALL/nonperforming loans - (excl impaired loans)		188.11	%		140.94	%		148.86	%		131.36	%		150.13	%
CAPITAL RATIOS
Total equity/total assets		12.03	%		12.31	%		12.36	%		12.14	%		11.65	%
Common equity/total assets		12.03	%		12.31	%		12.36	%		12.14	%		11.65	%
Tangible common equity/tangible assets		9.11	%		9.34	%		9.32	%		9.11	%		8.67	%
Tangible common equity/risk-weighted assets		12.62	%		12.78	%		12.51	%		12.15	%		11.55	%
Tier 1 leverage ratio		10.14	%		10.26	%		10.07	%		9.81	%		9.74	%
Tier 1 common risk-based capital ratio		12.87	%		12.72	%		12.51	%		12.14	%		11.63	%
Tier 1 risk-based capital ratio		13.77	%		13.75	%		13.53	%		13.15	%		12.61	%
Total risk-based capital ratio		15.77	%		15.75	%		15.53	%		15.15	%		14.58	%
(1) - Mississippi includes Central and Southern Mississippi Regions
(2) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2010
($ in thousands)
(unaudited)
Note 1 - 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):
	12/31/2010		9/30/2010		6/30/2010		3/31/2010		12/31/2009
SECURITIES AVAILABLE FOR SALE
U.S. Government agency obligations
Issued by U.S. Government agencies	$	12	$	14	$	16	$	18	$	20
Issued by U.S. Government sponsored agencies		122,023		149,588		124,566		68,574		47,917
Obligations of states and political subdivisions		159,637		148,772		125,234		123,292		117,508
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		12,442		13,273		13,390		11,986		12,192
Issued by FNMA and FHLMC		426,504		243,220		142,900		51,292		49,279
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		1,400,816		1,366,373		1,333,725		1,387,752		1,382,556
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		55,815		41,359		40,789		57,485		68,735
Corporate debt securities		-		6,025		6,090		6,166		6,189
Total securities available for sale	$	2,177,249	$	1,968,624	$	1,786,710	$	1,706,565	$	1,684,396
SECURITIES HELD TO MATURITY
Obligations of states and political subdivisions	$	53,246	$	61,139	$	64,517	$	69,975	$	74,643
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		6,058		6,462		6,591		6,801		7,044
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		78,526		98,217		118,708		136,054		148,226
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		3,017		3,031		3,044		3,058		3,071
Total securities held to maturity	$	140,847	$	168,849	$	192,860	$	215,888	$	232,984

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 91% of the portfolio in U.S. Government agency-backed obligations and other AAA rated securities. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of membership in the Federal Home Loan Bank of Dallas, Federal Reserve Bank and Depository Trust and Clearing Corporation, Trustmark does not hold any equity investment in government sponsored entities.
Note 2 – Loan Composition
LOANS BY TYPE	12/31/2010			9/30/2010			6/30/2010			3/31/2010			12/31/2009
Loans secured by real estate:
Construction, land development and other land loans	$	583,316		$	615,554		$	737,015		$	803,942		$	830,069
Secured by 1-4 family residential properties		1,732,056			1,672,199			1,630,353			1,637,121			1,650,743
Secured by nonfarm, nonresidential properties		1,498,108			1,531,953			1,463,657			1,466,296			1,467,307
Other real estate secured		231,963			203,931			189,118			194,641			197,421
Commercial and industrial loans		1,068,369			1,016,292			1,040,152			1,041,580			1,059,164
Consumer loans		402,165			444,927			492,262			542,488			606,315
Other loans		544,265			513,848			502,438			484,810			508,778
Loans		6,060,242			5,998,704			6,054,995			6,170,878			6,319,797
Allowance for loan losses		(93,510	)		(94,458	)		(100,656	)		(101,643	)		(103,662	)
Net Loans	$	5,966,732		$	5,904,246		$	5,954,339		$	6,069,235		$	6,216,135

Note 2 – Loan Composition (continued)
	December 31, 2010
LOAN COMPOSITION BY REGION	Total		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	$	583,316	$	132,021	$	246,036	$	43,902	$	161,357
Secured by 1-4 family residential properties		1,732,056		72,114		1,471,570		156,210		32,162
Secured by nonfarm, nonresidential properties		1,498,108		183,250		800,096		199,127		315,635
Other real estate secured		231,963		14,038		171,036		8,864		38,025
Commercial and industrial loans		1,068,369		16,053		772,104		81,743		198,469
Consumer loans		402,165		1,487		369,129		24,818		6,731
Other loans		544,265		25,488		466,016		18,538		34,223
Loans	$	6,060,242	$	444,451	$	4,295,987	$	533,202	$	786,602
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots	$	83,183	$	46,907	$	22,764	$	1,955	$	11,557
Development		156,860		21,144		56,717		7,420		71,579
Unimproved land		212,417		57,811		94,586		24,094		35,926
1-4 family construction		89,232		2,277		60,875		5,019		21,061
Other construction		41,624		3,882		11,094		5,414		21,234
Construction, land development and other land loans	$	583,316	$	132,021	$	246,036	$	43,902	$	161,357
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION
Income producing:
Retail	$	173,601	$	48,945	$	69,985	$	25,096	$	29,575
Office		159,603		48,885		79,015		13,769		17,934
Nursing homes/assisted living		122,440		-		112,501		4,564		5,375
Hotel/motel		68,124		13,084		29,849		11,098		14,093
Industrial		36,273		9,355		5,132		1,246		20,540
Health care		13,505		-		12,377		59		1,069
Convenience stores		12,343		456		6,736		2,476		2,675
Other		163,453		13,050		67,199		12,819		70,385
Total income producing loans		749,342		133,775		382,794		71,127		161,646
Owner-occupied:
Office		123,688		18,296		63,318		18,255		23,819
Churches		117,552		2,182		54,153		55,744		5,473
Industrial warehouses		94,574		2,444		57,326		400		34,404
Health care		80,649		11,051		54,918		7,080		7,600
Convenience stores		61,913		1,277		35,271		2,855		22,510
Retail		36,556		5,732		22,688		1,521		6,615
Restaurants		30,537		800		24,053		3,994		1,690
Auto dealerships		20,875		606		15,530		1,516		3,223
Other		182,422		7,087		90,045		36,635		48,655
Total owner-occupied loans		748,766		49,475		417,302		128,000		153,989
Loans secured by nonfarm, nonresidential properties	$	1,498,108	$	183,250	$	800,096	$	199,127	$	315,635

Note 2 – Loan Composition (continued)
	December 31, 2010
								Classified (3)
FLORIDA CREDIT QUALITY	Total Loans		Criticized Loans (1)		Special Mention (2)			Accruing		Nonimpaired Nonaccrual		Impaired Nonaccrual (4)
Construction, land development and other land loans:
Lots	$	46,907	$	15,964	$	671		$	10,037	$	3,233	$	2,023
Development		21,144		11,152		-			3,753		99		7,300
Unimproved land		57,811		37,098		21,676			2,164		779		12,479
1-4 family construction		2,277		1,081		-			-		-		1,081
Other construction		3,882		302		-			302		-		-
Construction, land development and other land loans		132,021		65,597		22,347			16,256		4,111		22,883
Commercial, commercial real estate and consumer		312,430		73,928		12,522			34,627		7,652		19,127
Total Florida loans	$	444,451	$	139,525	$	34,869		$	50,883	$	11,763	$	42,010
FLORIDA LOAN LOSS RESERVES BY LOAN TYPE	Total Loans		Loan Loss Reserves		Loan Loss Reserve % of Total Loans
Construction, land development and other land loans:
Lots	$	46,907	$	4,192		8.94	%
Development		21,144		4,272		20.20	%
Unimproved land		57,811		7,629		13.20	%
1-4 family construction		2,277		32		1.41	%
Other construction		3,882		259		6.67	%
Construction, land development and other land loans		132,021		16,384		12.41	%
Commercial, commercial real estate and consumer		312,430		7,276		2.33	%
Total Florida loans	$	444,451	$	23,660		5.32	%
(1) Criticized loans equal all special mention and classified loans.
(2) Special mention loans exhibit potential credit weaknesses that, if not resolved, may ultimately result in a more severe classification.
(3) Classified loans include those loans identified by management as exhibiting well-defined credit weaknesses that may jeopardize repayment in full of the debt.
(4) All nonaccrual loans over $500 thousand are individually assessed for impairment. Impaired loans have been determined to be collateral dependent and assessed using a fair value approach. Fair value estimates begin with appraised values, normally from recently received and reviewed appraisals. Appraised values are adjusted down for costs associated with asset disposal. At the time a loan is deemed to be impaired, the full difference between book value and the most likely estimate of the asset’s net realizable value is charged off. However, as subsequent events dictate and estimated net realizable values decline, required reserves are established.

LOAN COMPOSITION -FLORIDA	12/31/2010		9/30/2010		6/30/2010		3/31/2010		12/31/2009
Loans secured by real estate:
Construction, land development and other land loans	$	132,021	$	145,907	$	173,932	$	183,670	$	198,906
Secured by 1-4 family residential properties		72,114		73,738		77,680		81,297		87,282
Secured by nonfarm, nonresidential properties		183,250		184,992		178,297		179,637		180,267
Other real estate secured		14,038		12,223		8,062		5,195		5,388
Commercial and industrial loans		16,053		17,512		25,254		22,100		19,869
Consumer loans		1,487		1,636		1,756		2,077		2,287
Other loans		25,488		28,194		29,354		29,480		29,655
Loans	$	444,451	$	464,202	$	494,335	$	503,456	$	523,654
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS - FLORIDA
Lots	$	46,907	$	48,700	$	54,406	$	57,436	$	61,725
Development		21,144		24,060		24,632		27,381		27,227
Unimproved land		57,811		61,676		69,003		71,271		76,762
1-4 family construction		2,277		7,864		9,148		10,247		10,929
Other construction		3,882		3,607		16,743		17,335		22,263
Construction, land development and other land loans	$	132,021	$	145,907	$	173,932	$	183,670	$	198,906
Note 3 – Stockholders’ Equity
Common Stock Offering
On December 7, 2009, Trustmark completed a public offering of 6,216,216 shares of its common stock, including 810,810 shares issued pursuant to the exercise of the underwriters’ over-allotment option, at a price of $18.50 per share. Trustmark received net proceeds of approximately $109.3 million after deducting underwriting discounts, commissions and estimated offering expenses. Proceeds from this offering were used in the redemption of preferred stock discussed below.
Repurchase of Preferred Stock
On November 21, 2008, Trustmark issued 215,000 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A, (Senior Preferred Stock) to the U.S. Treasury (Treasury) in a private placement transaction as part of the Troubled Assets Relief Program Capital Purchase Program (TARP CPP), a voluntary initiative for healthy U.S. financial institutions. As part of its participation in the TARP CPP, Trustmark also issued to the Treasury a ten-year warrant (the Warrant) to purchase up to 1,647,931 shares of Trustmark’s common stock, at an initial exercise price of $19.57 per share, subject to customary anti-dilution adjustments.
On December 9, 2009, Trustmark completed the repurchase of its 215,000 shares of Senior Preferred Stock from the Treasury at a purchase price of $215.0 million plus a final accrued dividend of $716.7 thousand. The repurchase of the Senior Preferred Stock resulted in a one-time, non-cash charge of approximately $8.2 million to net income available to common shareholders in Trustmark’s fourth quarter financial statements for the unaccreted discount recorded at the date of issuance of the Senior Preferred Stock. In addition, on December 30, 2009, Trustmark repurchased in full from the Treasury, the Warrant to purchase 1,647,931 shares of Trustmark’s common stock, which was issued to the Treasury pursuant to the TARP CPP. The purchase price paid by Trustmark to the Treasury for the Warrant was its fair value of $10.0 million.

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										Year Ended
	12/31/2010		9/30/2010		6/30/2010		3/31/2010		12/31/2009		12/31/2010		12/31/2009
Securities – Taxable	3.90	%	4.11	%	4.50	%	4.73	%	4.82	%	4.29	%	5.04	%
Securities – Nontaxable	4.97	%	5.51	%	5.65	%	5.82	%	5.82	%	5.47	%	6.14	%
Securities – Total	3.99	%	4.22	%	4.59	%	4.82	%	4.91	%	4.39	%	5.12	%
Loans	5.29	%	5.31	%	5.37	%	5.32	%	5.31	%	5.32	%	5.33	%
FF Sold & Rev Repo	0.44	%	0.42	%	0.38	%	0.31	%	0.45	%	0.39	%	0.44	%
Other Earning Assets	3.15	%	3.92	%	3.79	%	3.36	%	3.38	%	3.53	%	3.22	%
Total Earning Assets	4.94	%	5.04	%	5.18	%	5.19	%	5.21	%	5.09	%	5.27	%
Interest-bearing Deposits	0.77	%	0.84	%	0.90	%	1.01	%	1.21	%	0.88	%	1.44	%
FF Pch & Repo	0.23	%	0.22	%	0.21	%	0.15	%	0.15	%	0.20	%	0.18	%
Other Borrowings	1.65	%	2.01	%	2.02	%	1.64	%	1.57	%	1.81	%	1.39	%
Total Interest-bearing Liabilities	0.76	%	0.85	%	0.91	%	0.97	%	1.14	%	0.87	%	1.32	%
Net interest margin	4.36	%	4.39	%	4.47	%	4.42	%	4.33	%	4.41	%	4.25	%
During the fourth quarter of 2010, the net interest margin decreased 3 basis points to 4.36%, from 4.39% for the third quarter of 2010. The decrease is primarily a result of the downward repricing of fixed-rate assets, mostly within Trustmark's investment securities portfolio, which was partially offset by declines in interest-bearing deposit costs.

Note 5 – Mortgage Banking

Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and exchange-traded option contracts, to achieve a fair value return that offsets the changes in fair value of MSR attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting. Changes in the fair value of these exchange-traded derivative instruments are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of MSR. The MSR fair value represents the effect of present value decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the total hedge cost to the changes in the fair value of the MSR asset attributable to interest rate changes. The impact of this strategy resulted in a net negative ineffectiveness of $307 thousand and a net positive ineffectiveness of $409 thousand for the quarters ended December 31, 2010 and 2009, respectively. For the year ended December 31, 2010 and 2009, the impact was a net positive ineffectiveness of $7.3 million and a net negative ineffectiveness of $22 thousand, respectively. The accompanying table shows that the MSR value increased $5.9 million for the quarter ended December 31, 2010 primarily due to an increase in mortgage rates. More than offsetting the MSR change is a $6.2 million decrease in the value of derivative instruments primarily due to an increase in the 10-year Treasury note yield.

Note 5 – Mortgage Banking (continued)
The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements:
	Quarter Ended															Year Ended
	12/31/2010			9/30/2010			6/30/2010			3/31/2010			12/31/2009			12/31/2010			12/31/2009
Mortgage servicing income, net	$	3,577		$	3,406		$	3,495		$	3,449		$	3,763		$	13,927		$	15,885
Change in fair value-MSR from runoff		(2,506	)		(2,255	)		(1,374	)		(1,170	)		(1,219	)		(7,305	)		(8,567	)
Gain on sales of loans, net		5,754			3,911			1,897			3,755			3,738			15,317			20,755
Other, net		(2,016	)		1,919			1,193			(1,002	)		(139	)		94			822
Mortgage banking income before hedge ineffectiveness		4,809			6,981			5,211			5,032			6,143			22,033			28,895
Change in fair value-MSR from market changes		5,870			(3,115	)		(8,631	)		(3,067	)		2,710			(8,943	)		6,607
Change in fair value of derivatives		(6,177	)		5,995			12,330			4,107			(2,301	)		16,255			(6,629	)
Net (negative) positive hedge ineffectiveness		(307	)		2,880			3,699			1,040			409			7,312			(22	)
Mortgage banking, net	$	4,502		$	9,861		$	8,910		$	6,072		$	6,552		$	29,345		$	28,873
During the first quarter of 2010, Trustmark completed the final settlement of the sale of approximately $920.9 million in mortgages serviced for others, which reduced Trustmark’s MSR by approximately $8.5 million. In addition, during December of 2010, Trustmark purchased approximately $54 million of GNMA serviced loans, which were subsequently sold to a third party. Trustmark will retain the servicing for these loans, which are fully guaranteed by FHA/VA. The effect of these transactions did not have a material impact on Trustmark's results of operations.

Note 6 – Non-GAAP Financial Measures

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

Trustmark believes these measures are important because they reflect the level of capital available to withstand unexpected market conditions. Additionally, presentation of these measures allows readers to compare certain aspects of 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.

Note 6 - Non-GAAP Financial Measures (continued)
		Quarter Ended															Year Ended
		12/31/2010			9/30/2010			6/30/2010			3/31/2010			12/31/2009			12/31/2010			12/31/2009
TANGIBLE COMMON EQUITY
AVERAGE BALANCES
Total shareholders' equity		$	1,160,058		$	1,155,054		$	1,138,935		$	1,123,356		$	1,205,712		$	1,144,481		$	1,205,642
Less: Preferred stock			-			-			-			-			(157,270	)		-			(193,616	)
Total average common equity			1,160,058			1,155,054			1,138,935			1,123,356			1,048,442			1,144,481			1,012,026
Less: Goodwill			(291,104	)		(291,104	)		(291,104	)		(291,104	)		(291,104	)		(291,104	)		(291,104	)
Identifiable intangible assets			(16,835	)		(17,716	)		(18,596	)		(19,484	)		(20,426	)		(18,149	)		(21,920	)
Total average tangible common equity		$	852,119		$	846,234		$	829,235		$	812,768		$	736,912		$	835,228		$	699,002
PERIOD END BALANCES
Total shareholders' equity		$	1,149,484		$	1,158,792		$	1,142,380		$	1,128,529		$	1,110,060
Less: Preferred stock			-			-			-			-			-
Total common equity			1,149,484			1,158,792			1,142,380			1,128,529			1,110,060
Less: Goodwill			(291,104	)		(291,104	)		(291,104	)		(291,104	)		(291,104	)
Identifiable intangible assets			(16,306	)		(17,181	)		(18,062	)		(18,944	)		(19,825	)
Total tangible common equity	(a)	$	842,074		$	850,507		$	833,214		$	818,481		$	799,131
TANGIBLE ASSETS
Total assets		$	9,553,902		$	9,416,905		$	9,244,545		$	9,293,215		$	9,526,018
Less: Goodwill			(291,104	)		(291,104	)		(291,104	)		(291,104	)		(291,104	)
Identifiable intangible assets			(16,306	)		(17,181	)		(18,062	)		(18,944	)		(19,825	)
Total tangible assets	(b)	$	9,246,492		$	9,108,620		$	8,935,379		$	8,983,167		$	9,215,089
Risk-weighted assets	(c)	$	6,672,174		$	6,653,479		$	6,658,897		$	6,737,084		$	6,918,802
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income available to common shareholders		$	25,160		$	25,860		$	26,161		$	23,455		$	13,877		$	100,636		$	73,049
Plus: Intangible amortization net of tax			538			545			545			545			614			2,173			2,469
Net income adjusted for intangible amortization		$	25,698		$	26,405		$	26,706		$	24,000		$	14,491		$	102,809		$	75,518
Period end common shares outstanding	(d)		63,917,591			63,885,959			63,885,403			63,844,500			63,673,839
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible common equity ^1			11.96	%		12.38	%		12.92	%		11.98	%		7.80	%		12.31	%		10.80	%
Tangible common equity/tangible assets	(a)/(b)		9.11	%		9.34	%		9.32	%		9.11	%		8.67	%
Tangible common equity/risk-weighted assets	(a)/(c)		12.62	%		12.78	%		12.51	%		12.15	%		11.55	%
Tangible common book value	(a)/(d)*1,000	$	13.17		$	13.31		$	13.04		$	12.82		$	12.55
TIER 1 COMMON RISK-BASED CAPITAL
Total shareholders' equity		$	1,149,484		$	1,158,792		$	1,142,380		$	1,128,529		$	1,110,060
Eliminate qualifying AOCI			11,426			(9,648	)		(5,404	)		(4,464	)		1,624
Qualifying tier 1 capital			60,000			68,000			68,000			68,000			68,000
Disallowed goodwill			(291,104	)		(291,104	)		(291,104	)		(291,104	)		(291,104	)
Adj to goodwill allowed for deferred taxes			10,215			9,863			9,510			9,158			8,805
Other disallowed intangibles			(16,306	)		(17,181	)		(18,062	)		(18,944	)		(19,825	)
Disallowed servicing intangible			(5,115	)		(4,197	)		(4,304	)		(5,004	)		(5,051	)
Total tier 1 capital		$	918,600		$	914,525		$	901,016		$	886,171		$	872,509
Less: Qualifying tier 1 capital			(60,000	)		(68,000	)		(68,000	)		(68,000	)		(68,000	)
Preferred stock			-			-			-			-			-
Total tier 1 common capital	(e)	$	858,600		$	846,525		$	833,016		$	818,171		$	804,509
Tier 1 common risk-based capital ratio	(e)/(c)		12.87	%		12.72	%		12.51	%		12.14	%		11.63	%
^1 Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible common equity

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