Company Website: http://www.trustmark.com
JACKSON, Miss. -- (Business Wire)

Trustmark Corporation (NASDAQ:TRMK) announced net income available to common shareholders of $106.8 million for the year ended December 31, 2011, which represented diluted earnings per common share of $1.66, an increase of 5.7% compared to figures one year earlier. Trustmark’s performance during 2011 produced a return on average tangible common equity of 12.25% and a return on average assets of 1.11%. In the fourth quarter of 2011, Trustmark’s net income available to common shareholders totaled $24.3 million, which represented diluted earnings per common share of $0.38. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per common share payable March 15, 2012, to shareholders of record on March 1, 2012.

Printer friendly version of earnings release with consolidated financial statements and notes: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50142491&lang=en

Gerard R. Host, President and CEO, stated, “Trustmark achieved strong financial performance in 2011, particularly in light of the current economic and regulatory environments. We experienced significant improvement in credit quality as reflected by a 17.5% reduction in nonperforming assets, a 40.0% reduction in provisioning for loan losses, and a 43.6% reduction in net charge-offs relative to the prior year. We also made additional inroads in building and strengthening customer relationships as our deposit base increased $521.8 million, or 7.4%, to $7.6 billion at year end 2011.

“We remained active on the acquisition front in 2011. In April, we completed an FDIC assisted transaction of a 90 year-old financial institution with $204.3 million in deposits in Carthage, MS. In November, we announced a merger with Bay Bank & Trust Company, a 76 year-old financial institution with assets of $247.0 million in Panama City, FL. We anticipate this transaction will close during the first quarter of 2012.

“Thanks to our dedicated associates, solid profitability and strong capital base, Trustmark remains well-positioned to continue meeting the needs of our customers and take advantage of opportunities to create value for our shareholders.”

Credit Quality

• Classified and criticized loans declined $30.1 million and $17.9 million, respectively, relative to the prior quarter
• ORE levels declined $10.5 million from the prior quarter
• Net charge-offs totaled $6.0 million in the fourth quarter and represented 0.40% of average loans

During the fourth quarter, nonperforming loans, excluding covered loans (loans with FDIC loss share agreements), increased $10.9 million relative to the prior quarter to total $110.5 million, or 1.82% of total loans. This increase is principally attributable to two credits in the Texas market, which are well-secured based upon current appraisals. Nonperforming loans in Trustmark’s Florida market declined to $23.0 million, marking seven consecutive quarters of improvement. Foreclosed other real estate, excluding covered ORE (ORE covered by FDIC loss share agreements), decreased $10.5 million, or 11.8%, from the prior quarter to total $79.1 million. Collectively, nonperforming assets totaled $189.5 million at December 31, 2011. Trustmark continued to make progress in the resolution of nonperforming assets as balances during the last 12 months decreased $40.1 million, or 17.5%, including a $33.2 million reduction in the Florida market.

Net charge-offs during the fourth quarter totaled $6.0 million and represented 0.40% of average loans, excluding covered loans. The provision for loan losses, excluding covered loans, totaled $6.1 million. During the fourth quarter, Trustmark experienced a $30.1 million, or 8.7%, decline in classified loans and a $17.9 million, or 4.3%, decline in criticized loans relative to the prior quarter. Relative to figures one year earlier, classified loan balances decreased $77.3 million, or 19.7%, while criticized loan balances decreased $80.7 million, or 16.8%.

Allocation of Trustmark’s $89.5 million allowance for loan losses, excluding covered loans, represented 1.91% of commercial loans and 0.76% of consumer and home mortgage loans, resulting in an allowance to total loans of 1.53% as of December 31, 2011. The allowance for loan losses represented 194.2% of nonperforming loans, excluding impaired loans. All of these ratios exclude covered loans and covered other real estate.

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 27.7% to total $95.5 million. At December 31, 2011, the associated reserve for loan losses on this portfolio totaled $10.5 million, or 11.0%. Trustmark remains focused on managing credit risks resulting from current economic and real estate market conditions.

Capital Strength

• Tangible common equity to tangible assets totaled 9.66%
• Total risk-based capital ratio totaled 16.67%

Consistent profitability of Trustmark’s diversified financial services business, coupled with prudent balance sheet management, continued to be reflected in its solid capital position. At December 31, 2011, tangible common equity totaled $909.9 million and represented 9.66% of tangible assets while the total risk-based capital ratio was 16.67%. 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

• Total loans increased $71.5 million relative to the prior quarter
• Average earning assets increased to $8.6 billion in the fourth quarter
• Net interest income (FTE) totaled $92.7 million in the fourth quarter

Loans, including loans held for investment and covered loans, totaled $5.9 billion at December 31, 2011, an increase of $71.5 million from the prior quarter. During the fourth quarter, Trustmark’s commercial and industrial loan portfolio expanded $56.8 million while 1-4 family residential mortgage loans and other loans increased $42.7 million and $21.5 million, respectively. This growth was offset in part by a $22.0 million reduction in indirect auto lending, a $14.5 million decline in nonfarm, nonresidential lending, and a $7.6 million reduction in construction and land development lending.

Average earning assets during the fourth quarter increased $86.3 million, or 1.0%, relative to the prior quarter to total $8.6 billion; growth was attributable to an increase in investment securities and loans. Average deposits decreased $80.5 million, or 1.1%, relative to the prior quarter to total $7.5 billion as growth in noninterest-bearing deposits was more than offset by a seasonal decrease in public funds. Average noninterest-bearing deposits increased 4.7% to represent 25.2% of average deposits in the fourth quarter of 2011.

Prudent asset and liability management, including disciplined loan and deposit pricing, continued to produce solid net interest income and a strong net interest margin. Net interest income (FTE) totaled $92.7 million during the fourth quarter, an increase of $3.4 million from the prior quarter, which resulted in a net interest margin of 4.28%. Net interest income during the fourth quarter included $3.8 million of recovery and accretion resulting from improved cash flows on acquired loans. Excluding this recovery and accretion, the net interest margin was 4.10% during the fourth quarter.

Noninterest Income

• Noninterest income totaled $159.9 million in 2011 and represented 31.4% of total revenue
• Tax credit investments reduced the effective tax rate to 24.5% in the fourth quarter

Noninterest income totaled $32.8 million in the fourth quarter, a decrease of $11.5 million from the prior quarter. A significant portion of the decline occurred in other noninterest income and was attributable to a $4.2 million write-down of the FDIC indemnification asset resulting from improved cash flow projections on covered loans as well as an increase in partnership amortization of $1.3 million related to tax credit investments, which reduced the Corporation’s effective tax rate during the quarter by approximately 3.5%. In addition, mortgage banking performance included a reduction in the net hedge ineffectiveness of mortgage servicing rights of $3.1 million while insurance revenue experienced a seasonal reduction of $1.4 million. Collectively, these items reduced noninterest income by approximately $10.0 million.

Trustmark continued to achieve solid financial performance from its diverse financial services businesses. During the fourth quarter, mortgage production exceeded $420 million, a 23.5% increase relative to the prior quarter. Mortgage banking income totaled $6.0 million during the fourth quarter and continued to reflect stable mortgage servicing income and increased secondary marketing gains. Insurance revenue totaled $6.1 million in the fourth quarter while income from wealth management services totaled $5.2 million.

Noninterest Expense

• Noninterest expense remained well-controlled, increasing 1.3% during 2011
• ORE/Foreclosure expense declined 50.9% from the prior quarter to $2.8 million

Total noninterest expense in 2011 increased $4.2 million, or 1.3%, relative to the prior year. Salary and employee benefit expense increased $4.0 million, or 2.3%, from the prior year due in part to the purchase of Heritage Banking Group from the FDIC in April 2011. During the fourth quarter of 2011, noninterest expense declined $2.5 million, or 2.9%, from the prior quarter to total $83.0 million, principally due to a $2.9 million reduction in ORE/Foreclosure expense.

Trustmark continued to make prudent investments and reallocate resources to support revenue growth and profitability. During the fourth quarter, Trustmark opened a new mortgage banking office in Birmingham, AL, as well as a new banking center in Starkville, MS. In addition, a new corporate office was opened in Tupelo, MS, consolidating existing retail, commercial and mortgage banking as well as wealth management and insurance services into a convenient location that complements Trustmark’s other Tupelo locations.

ADDITIONAL INFORMATION

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, January 25, 2012, at 10:00 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (877) 317-6789, passcode 10008303, 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 2, 2012, in archived format at the same web address or by calling (877) 344-7529, passcode 10008303.

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 in this report 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 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.