<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>8
<FILENAME>f10k_2003annualrpt.txt
<DESCRIPTION>2003 ANNUAL REPORT
<TEXT>
                                                                      Exhibit 13


        Management's Statement on Responsibility for Financial Reporting

The management of Trustmark is responsible  for the content and integrity of the
consolidated  financial  statements,  related  disclosures and other information
included in this annual report. The consolidated  financial statements have been
prepared in conformity  with  accounting  principles  generally  accepted in the
United States.  The financial  statements  presented  include  specific  amounts
determined using Management's best estimates and judgments.

Management has established,  maintains and relies on Trustmark's  accounting and
related systems of procedures,  disclosure controls and internal controls. These
systems provide reasonable  assurance that transactions are properly  authorized
and  recorded  in  the  consolidated  financial  statements  and  safeguard  the
Corporation's  assets  from  material  loss or misuse.  Trustmark  maintains  an
internal audit staff that monitors compliance with the Corporation's  accounting
and internal  control systems and reports to the Audit and Finance  Committee of
the Board of Directors.

The Audit and Finance Committee of the Board of Directors,  composed entirely of
independent  directors,  meets periodically with Management,  internal audit and
the   independent   auditors  to  ensure   that  each  is  carrying   out  their
responsibilities.  The independent  auditors,  internal  auditors and members of
Management  each have full and free access to meet privately as well as together
with the Audit and Finance Committee to discuss internal  controls,  accounting,
auditing or other financial matters.

The  consolidated  financial  statements of Trustmark  have been audited by KPMG
LLP,  independent  auditors,  who were engaged to express an opinion whether the
consolidated  financial  statements  presented  in  this  annual  report  fairly
present, in all material respects, the financial position, results of operations
and cash flows of Trustmark for the periods presented.



/s/ Richard G. Hickson                                        /s/ Zach L. Wasson

Richard G. Hickson                                            Zach L. Wasson
Chairman and                                                  Treasurer
Chief Executive Officer

<PAGE>

Independent Auditors' Report

The Board of Directors and Shareholders
Trustmark Corporation:

We have  audited  the  accompanying  consolidated  balance  sheets of  Trustmark
Corporation  and  subsidiaries as of December 31, 2003 and 2002, and the related
consolidated  statements  of income,  changes in  shareholders'  equity and cash
flows for each of the years in the  three-year  period ended  December 31, 2003.
These   consolidated   financial   statements  are  the  responsibility  of  the
Corporation's  management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in  all  material   respects,   the  financial  position  of  Trustmark
Corporation  and  subsidiaries as of December 31, 2003 and 2002, and the results
of their operations and their cash flows for each of the years in the three-year
period  ended  December 31,  2003,  in  conformity  with  accounting  principles
generally accepted in the United States of America.

As  discussed  in  Notes  1  and 7 to  the  consolidated  financial  statements,
effective January 1, 2002, the Corporation  changed its method of accounting for
goodwill and other intangible assets.

                                  /s/ KPMG LLP

Jackson, Mississippi
February 14, 2004

<PAGE>

Trustmark Corporation
Consolidated Balance Sheets
($ in thousands)


                                                              December 31,
                                                        ------------------------
                                                           2003          2002
                                                        ----------    ----------
Assets
Cash and due from banks (noninterest-bearing)           $  333,096    $  357,427
Federal funds sold and securities purchased
    under reverse repurchase agreements                     37,712        23,957
Securities available for sale (at fair value)            1,933,993     1,262,570
Securities held to maturity (fair value:
    $191,146 - 2003; $578,150 - 2002)                      178,450       549,197
Loans held for sale                                        112,560       199,680
Loans                                                    4,920,052     4,417,686
Less allowance for loan losses                              74,276        74,771
                                                        ----------    ----------
     Net loans                                           4,845,776     4,342,915
Premises and equipment, net                                108,374       104,113
Intangible assets (including goodwill of
     $95,877 - 2003; $48,028 - 2002)                       167,505       119,643
Other assets                                               196,855       179,204
                                                        ----------    ----------
     Total Assets                                       $7,914,321    $7,138,706
                                                        ==========    ==========


Liabilities
Deposits:
     Noninterest-bearing                                $1,329,444    $1,251,240
     Interest-bearing                                    3,760,015     3,435,056
                                                        ----------    ----------
         Total deposits                                  5,089,459     4,686,296
Federal funds purchased                                    253,419       319,985
Securities sold under repurchase agreements                674,716       634,993
Short-term borrowings                                      621,532       275,959
Long-term FHLB advances                                    531,035       475,000
Other liabilities                                           54,587        66,939
                                                        ----------    ----------
     Total Liabilities                                   7,224,748     6,459,172

Commitments and Contingencies

Shareholders' Equity Common stock, no par value:
     Authorized:  250,000,000 shares
     Issued and outstanding:  58,246,733 shares - 2003;
         60,516,668 shares - 2002                           12,136        12,609
Capital surplus                                            132,383       188,652
Retained earnings                                          548,521       470,317
Accumulated other comprehensive (loss) income,
     net of tax                                             (3,467)        7,956
                                                        ----------    ----------
     Total Shareholders' Equity                            689,573       679,534
                                                        ----------    ----------
     Total Liabilities and Shareholders' Equity         $7,914,321    $7,138,706
                                                        ==========    ==========

See notes to consolidated financial statements.

<PAGE>

Trustmark Corporation
Consolidated Statements of Income
($ in thousands except per share data)
<TABLE>
<CAPTION>
                                                             Years Ended December 31,
                                                         --------------------------------
                                                           2003        2002        2001
                                                         --------    --------    --------
<S>                                                      <C>         <C>         <C>
Interest Income
Interest and fees on loans                               $285,684    $305,709    $340,809
Interest on securities:
     Taxable                                               65,332      89,562     123,971
     Tax exempt                                             8,035       8,867       9,463
Interest on federal funds sold and securities
     purchased under reverse repurchase agreements            287         424         921
Other interest income                                          50       1,390         982
                                                         --------    --------    --------
     Total Interest Income                                359,388     405,952     476,146

Interest Expense
Interest on deposits                                       59,327      79,059     126,356
Interest on federal funds purchased and securities
     sold under repurchase agreements                      10,255      12,652      42,390
Other interest expense                                     19,976      22,055      40,496
                                                         --------    --------    --------
     Total Interest Expense                                89,558     113,766     209,242
                                                         --------    --------    --------
Net Interest Income                                       269,830     292,186     266,904
Provision for loan losses                                   9,771      14,107      13,200
                                                         --------    --------    --------

Net Interest Income After Provision
     for Loan Losses                                      260,059     278,079     253,704

Noninterest Income
Service charges on deposit accounts                        54,351      50,056      46,769
Other account charges and fees                             28,101      28,371      29,473
Insurance commissions                                      20,567      17,837      11,635
Mortgage servicing fees                                    16,826      17,247      16,920
Trust service income                                        9,834       9,962       9,423
Securities gains                                           12,231      13,568       2,448
Gains on sales of loans                                    15,938       9,353       9,163
Other income                                                 (305)     (4,524)      6,159
                                                         --------    --------    --------
     Total Noninterest Income                             157,543     141,870     131,990

Noninterest Expense
Salaries and employee benefits                            126,533     119,801     110,540
Net occupancy - premises                                   12,817      12,088      11,576
Equipment expense                                          14,989      15,085      15,651
Services and fees                                          31,283      32,414      30,098
Amortization/impairment of intangible assets               20,874      24,275      14,129
Other expense                                              29,624      30,178      32,273
                                                         ---------   --------    --------
     Total Noninterest Expense                            236,120     233,841     214,267
                                                         ---------   --------    --------

Income Before Income Taxes                                181,482     186,108     171,427
Income taxes                                               62,952      64,968      60,146
                                                         --------    --------    --------
Net Income                                               $118,530    $121,140    $111,281
                                                         ========    ========    ========

Earnings Per Share
     Basic                                               $   2.01    $   1.95    $   1.72
                                                         ========    ========    ========
     Diluted                                             $   2.00    $   1.94    $   1.72
                                                         ========    ========    ========

See notes to consolidated financial statements.
</TABLE>
<PAGE>

Trustmark Corporation
Consolidated Statements of Changes in Shareholders' Equity
($ in thousands except per share data)
<TABLE>
<CAPTION>

                                                                Common Stock                                Accumulated
                                                            --------------------                               Other
                                                              Shares                Capital     Retained   Comprehensive
                                                            Outstanding  Amount     Surplus     Earnings   (Loss) Income    Total
                                                            -----------  -------    --------    --------   -------------   --------
<S>                                                         <C>          <C>        <C>         <C>        <C>             <C>
Balance, January 1, 2001                                     64,755,022  $13,491    $ 94,229    $512,107   $       9,814   $629,641
Comprehensive income:
     Net income per consolidated statements of income                 -        -           -     111,281               -    111,281
     Net change in fair value of
       securities available for sale, net of tax                      -        -           -           -           7,610      7,610
     Net change in fair value of cash flow
       hedges, net of tax                                             -        -           -           -           1,277      1,277
                                                                                                                            -------
          Comprehensive income                                        -        -           -           -               -    120,168
Cash dividends paid ($0.56 per share)                                 -        -           -     (36,001)              -    (36,001)
Common stock issued in business combination                   2,405,630      501      45,521           -               -     46,022
Repurchase and retirement of common stock                    (3,454,981)    (719)    (73,667)          -               -    (74,386)
                                                            -----------  -------    --------    --------   -------------   --------
Balance, December 31, 2001                                   63,705,671   13,273      66,083     587,387          18,701    685,444
Comprehensive income:
     Net income per consolidated statements of income                 -        -           -     121,140               -    121,140
     Net change in fair value of
       securities available for sale, net of tax                      -        -           -           -          (3,845)    (3,845)
     Net change in fair value of cash flow
       hedges, net of tax                                             -        -           -           -          (3,771)    (3,771)
     Net change in unfunded accumulated benefit
       obligation, net of tax                                         -        -           -           -          (3,129)    (3,129)
                                                                                                                           --------
          Comprehensive income                                        -        -           -           -               -    110,395
Cash dividends paid ($0.62 per share)                                 -        -           -     (38,210)              -    (38,210)
Common stock issued, long-term incentive plan                    65,712       14         668           -               -        682
Repurchase and retirement of common stock                    (3,254,715)    (678)    (78,099)          -               -    (78,777)
Transfer to capital surplus                                           -        -     200,000    (200,000)              -          -
                                                            -----------  -------    --------    --------   -------------   --------
Balance, December 31, 2002                                   60,516,668   12,609     188,652     470,317           7,956    679,534
Comprehensive income:
     Net income per consolidated statements of income                 -        -           -     118,530               -    118,530
     Net change in fair value of
       securities available for sale, net of tax                      -        -           -           -         (17,518)   (17,518)
     Net change in fair value of cash flow
       hedges, net of tax                                             -        -           -           -           2,966      2,966
     Net change in unfunded accumulated benefit
        obligation, net of tax                                        -        -           -           -           3,129      3,129
                                                                                                                           --------
          Comprehensive income                                        -        -           -           -               -    107,107
Cash dividends paid ($0.69 per share)                                 -        -           -     (40,326)              -    (40,326)
Common stock issued, long-term incentive plan                   105,916       22       2,185           -               -      2,207
Compensation expense, long-term incentive plan                        -        -         406           -               -        406
Repurchase and retirement of common stock                    (2,375,851)    (495)    (58,860)          -               -    (59,355)
                                                            -----------  -------    --------    --------   -------------   --------
Balance, December 31, 2003                                   58,246,733  $12,136    $132,383    $548,521   $      (3,467)  $689,573
                                                            ===========  =======    ========    ========   =============   ========

See notes to consolidated financial statements.
</TABLE>
<PAGE>

Trustmark Corporation
Consolidated Statements of Cash Flows
($ in thousands)
<TABLE>
<CAPTION>
                                                                            Years Ended December 31,
                                                                     --------------------------------------
                                                                        2003          2002          2001
                                                                     ----------    ----------    ----------
<S>                                                                  <C>           <C>           <C>
Operating Activities
Net income                                                           $  118,530    $  121,140    $  111,281
Adjustments to reconcile net income to net cash provided
     by operating activities:
        Provision for loan losses                                         9,771        14,107        13,200
        Depreciation and amortization/impairment                         33,056        36,871        26,864
        Net amortization of securities                                   19,570         1,062           785
        Securities gains                                                (12,231)      (13,568)       (2,448)
        Gains on sales of loans                                         (15,938)       (9,353)       (9,163)
        Deferred income tax provision (benefit)                           3,238        (5,104)        3,111
        Proceeds from sale of loans held for sale                     1,494,278     1,059,396     1,235,114
        Purchases and originations of loans held for sale            (1,407,158)   (1,138,231)   (1,099,548)
        Net increase in mortgage servicing rights                       (19,806)      (16,859)      (25,037)
        Net (increase) decrease in other assets                         (21,203)       22,972        (8,902)
        Net decrease in other liabilities                                (2,225)       (7,506)       (5,916)
        Other operating activities, net                                    (100)        3,726         3,522
                                                                     ----------    ----------    ----------
Net cash provided by operating activities                               199,782        68,653       242,863

Investing Activities
Proceeds from calls and maturities of securities held to maturity       452,331       267,055       216,611
Proceeds from calls and maturities of securities available for sale     443,375       440,840       573,765
Proceeds from sales of securities available for sale                    267,895       315,597        14,700
Purchases of securities held to maturity                                 (3,978)      (21,887)            -
Purchases of securities available for sale                           (1,496,002)     (956,684)     (407,796)
Net (increase) decrease in federal funds sold and securities
     purchased under reverse repurchase agreements                      (13,755)      113,564       (31,368)
Net increase in loans                                                  (274,279)      (19,682)      (67,359)
Purchases of premises and equipment                                      (7,850)      (17,340)      (12,892)
Proceeds from sales of premises and equipment                             1,306           738           123
Proceeds from sales of other real estate                                  6,010         4,223         3,676
Net cash paid in business combinations                                  (69,802)       (7,799)      (62,739)
                                                                     ----------    ----------    ----------
Net cash (used in) provided by investing activities                    (694,749)      118,625       226,721

Financing Activities
Net increase in deposits                                                193,345        72,931         7,781
Net decrease in federal funds purchased and securities sold
     under repurchase agreements                                        (26,843)      (82,528)     (229,657)
Net increase (decrease) in other borrowings                             345,573      (282,728)     (332,193)
Proceeds from long-term FHLB advances                                    56,035       250,000       225,000
Cash dividends                                                          (40,326)      (38,210)      (36,001)
Proceeds from exercise of stock options                                   2,207           682             -
Repurchase and retirement of common stock                               (59,355)      (78,777)      (74,386)
                                                                     ----------    ----------    ----------
Net cash provided by (used in) financing activities                     470,636      (158,630)     (439,456)
                                                                     ----------    ----------    ----------
(Decrease) increase in cash and cash equivalents                        (24,331)       28,648        30,128
Cash and cash equivalents at beginning of year                          357,427       328,779       298,651
                                                                     ----------    ----------    ----------
Cash and cash equivalents at end of year                             $  333,096    $  357,427    $  328,779
                                                                     ==========    ==========    ==========


See notes to consolidated financial statements.
</TABLE>
<PAGE>

NOTE 1 - BUSINESS, BASIS OF FINANCIAL STATEMENT PRESENTATION, SIGNIFICANT
         ACCOUNTING POLICIES AND RECENT PRONOUNCEMENTS

BUSINESS
Trustmark   Corporation   (Trustmark)   is  a  multi  -  bank  holding   company
headquartered  in  Jackson,  Mississippi.  Through its  subsidiaries,  Trustmark
operates as a financial  services  organization  providing banking and financial
solutions to corporate  institutions and individual  customers  through over 140
offices in Mississippi, Tennessee and Florida.

BASIS OF FINANCIAL STATEMENT PRESENTATION
The consolidated  financial statements include the accounts of Trustmark and its
wholly-owned  subsidiaries,  Trustmark National Bank (TNB) and Somerville Bank &
Trust Company.  All intercompany  accounts and transactions have been eliminated
in consolidation.

The  consolidated  financial  statements  have been prepared in conformity  with
accounting  principles  generally  accepted  in the  United  States of  America.
Management is required to make estimates and assumptions that affect the amounts
reported in the consolidated financial statements and accompanying notes. Actual
results  could  differ  from  those  estimates.   Material  estimates  that  are
particularly  susceptible to  significant  change in the near term relate to the
determination  of the  allowance  for loan losses and the  valuation of mortgage
servicing rights.

Certain  reclassifications  have been made to prior  periods  to  conform to the
current year presentation.

SIGNIFICANT ACCOUNTING POLICIES

Trading Account Securities

Trading account  securities are purchased and held for resale in anticipation of
short-term market  movements.  Trading account  securities  typically consist of
debt securities and are carried at fair value.  Gains and losses,  both realized
and unrealized, are classified as other income.

Securities Available for Sale and Held to Maturity

Management  determines the appropriate  classification of securities at the time
of purchase.  Debt  securities are classified as held to maturity when Trustmark
has the intent and ability to hold the security to maturity.  Securities held to
maturity are stated at amortized cost.

Securities  not  classified  as held to maturity or trading  are  classified  as
available  for sale and are stated at fair value.  Unrealized  gains and losses,
net of tax,  on  these  securities  are  recorded  in  shareholders'  equity  as
accumulated  other  comprehensive  (loss)  income.   Securities   classified  as
available  for  sale  include  securities  that  may  be  used  as  part  of the
asset/liability  strategy  or that  may be sold in  response  to  interest  rate
movements,  liquidity  needs,  changes in prepayment  expectations  or for other
business purposes.

The  amortized  cost of  securities  available  for sale and held to maturity is
adjusted for  amortization  of premiums and  accretion of discounts to maturity,
determined  using the  interest  method.  Such  amortization  and  accretion  is
included in interest income on securities. The specific identification method is
used to determine  realized gains and losses on sales of  securities,  which are
reported as securities gains (losses) in noninterest income.

Loans Held for Sale

Mortgage loans held for sale in the secondary  market that are hedged using fair
value  hedges  are  carried  at  estimated  fair  value on an  aggregate  basis.
Substantially  all  mortgage  loans held for sale are  hedged.  These  loans are
primarily  first-lien  mortgage  loans  originated  or purchased  by  Trustmark.
Adjustments  to reflect market value and realized gains and losses upon ultimate
sale of the loans are  classified as other income.  Deferred loan fees and costs
are  reflected  in the basis of loans held for sale,  and as such,  impacts  the
resulting gain or loss when loans are sold.

Loans

Loans are stated at the amount of unpaid principal,  adjusted for the net amount
of direct costs and  nonrefundable  loan fees associated  with lending.  The net
amount of  nonrefundable  loan origination fees and direct costs associated with
the lending  process,  including  commitment  fees,  is deferred and accreted to
interest income over the lives of the loans using a method that approximates the
interest  method.  Interest on loans is accrued and recorded as interest  income
based on the outstanding principal balance.
<PAGE>

A loan is classified  as nonaccrual  and the accrual of interest on such loan is
discontinued  when the contractual  payment of principal or interest  becomes 90
days past due or if Management has serious  doubts about further  collectibility
of principal or interest,  even though the loan is currently performing.  A loan
may remain on accrual status if it is in the process of collection and is either
guaranteed or well secured.  When a loan is placed on nonaccrual status,  unpaid
interest is reversed against interest  income.  Interest  received on nonaccrual
loans is applied  against  principal.  Loans are restored to accrual status when
the  obligation  is brought  current or has  performed  in  accordance  with the
contractual   terms  for  a   reasonable   period  of  time  and  the   ultimate
collectibility of the total  contractual  principal and interest is no longer in
doubt.

A loan is considered  impaired when, based on current information and events, it
is probable that Trustmark  will be unable to collect the scheduled  payments of
principal or interest  when due according to the  contractual  terms of the loan
agreement.  Loans  classified as nonaccrual,  excluding  residential  mortgages,
consumer and other homogeneous  loans, are considered  impaired loans.  Specific
allowances for impaired loans are based on comparisons of the recorded  carrying
values of the loans to the present value of these loans' estimated cash flows at
each loan's original  effective  interest rate, the fair value of the collateral
or the loans'  observable  market prices.  The policy for recognizing  income on
impaired loans is consistent with the nonaccrual policy.

Allowance for Loan Losses

The allowance for loan losses is  established  through  provisions for estimated
loan losses  charged  against  earnings.  Loans deemed to be  uncollectible  are
charged  against the allowance for loan losses,  and subsequent  recoveries,  if
any, are credited to the allowance.

The  allowance for loan losses is  maintained  at a level  believed  adequate by
Management  to absorb  estimated  probable  loan losses.  Management's  periodic
evaluation  of the  adequacy  of the  allowance  is  based  on  identified  loan
impairments,  Trustmark's past loan loss experience, known and inherent risks in
the portfolio,  adverse  situations  that may affect the  borrower's  ability to
repay  (including  the timing of future  payments),  the estimated  value of any
underlying  collateral,  composition  of the loan  portfolio,  current  economic
conditions and other relevant factors. This evaluation is inherently subjective,
as it requires  material  estimates,  including the amounts and timing of future
cash flows  expected to be received on impaired loans that may be susceptible to
significant change.

Premises and Equipment

Premises and  equipment  are stated at cost less  accumulated  depreciation  and
amortization. Depreciation is charged to expense over the estimated useful lives
of the assets,  which are up to  thirty-nine  years for  buildings  and three to
seven years for furniture and equipment.  Leasehold  improvements  are amortized
over the terms of the respective  leases,  or the estimated  useful lives of the
improvements,  whichever is shorter.  Depreciation and amortization expenses are
computed using both straight-line and accelerated methods. Trustmark continually
evaluates whether events and circumstances have occurred that indicate that such
long-lived  assets have been  impaired.  Measurement  of any  impairment of such
long-lived  assets  is  based  on  those  assets'  fair  values.  There  were no
impairment losses on premises and equipment recorded during 2003, 2002 or 2001.

Intangible Assets

Intangible  assets  consist  of  goodwill,  identifiable  intangible  assets and
mortgage  servicing  rights.  Effective  January 1, 2002,  Trustmark adopted the
provisions  of  Statement  of  Financial  Accounting  Standards  (SFAS) No. 142,
"Goodwill and Other Intangible Assets." This statement requires that goodwill no
longer be amortized,  while amortizing other identifiable intangibles over their
respective  useful lives to their estimated  residual values and measuring these
assets for possible impairment. Included in Note 7 - "Intangible Assets" are the
specific carrying values,  amortization and pro forma disclosures as required by
SFAS No. 142.

Goodwill,  which  represents  the  excess of cost over the fair value of the net
assets of an acquired  business,  was amortized on a straight-line  method up to
twenty years prior to the adoption of SFAS No. 142.  Effective  January 1, 2002,
goodwill is no longer amortized but tested for impairment annually.

Identifiable intangible assets,  comprised primarily of core deposit intangibles
and insurance customer relationship intangibles, represent the net present value
of the future economic  benefits  related to the use of an acquired  deposit and
insurance base. These assets are being amortized on a straight-line method up to
fifteen  years.  The results of  straight-line  amortization  are not materially
different from an accelerated  method. In addition,  during the third quarter of
2003,  Trustmark  purchased  a  banking  charter  for $1.0  million  in order to
facilitate  its entry into the state of Florida.  This  identifiable  intangible
asset is being amortized over 20 years.
<PAGE>

Mortgage  servicing  rights  are rights to service  mortgage  loans for  others,
whether the loans were acquired through purchase or loan origination.  Purchased
mortgage servicing rights are capitalized at cost. For loans originated and sold
where the servicing rights have been retained,  Trustmark  allocates the cost of
the loan and the servicing  right based on their relative fair values.  Mortgage
servicing  rights are  amortized  over the  estimated  period of the related net
servicing income.

Impairment  of  goodwill,   core  deposit  intangibles  and  insurance  customer
relationship intangibles are evaluated annually or whenever events or changes in
circumstances indicate that the carrying amount should be assessed.  Impairment,
if any,  for  mortgage  servicing  rights  is  recognized  through  a  valuation
allowance with a corresponding  charge to noninterest expense that is determined
using  estimated  fair values  based on  specific  risk  characteristics  of the
underlying  mortgages.  During the quarter ended  September 30, 2003,  Trustmark
expanded its risk  characteristics,  which had previously  included product type
and term, to include interest rates on the underlying mortgages.  This change in
estimate was necessary  because of the recent volatile interest rate environment
and reduced income before income taxes during 2003 by approximately $2.7 million
($1.7 million after tax or $0.03 per share).

Other Real Estate Owned

Other real estate owned includes  assets that have been acquired in satisfaction
of debt through foreclosure. Other real estate owned is reported in other assets
and is recorded at the lower of cost or estimated  fair value less the estimated
cost of disposition.  Valuation  adjustments required at foreclosure are charged
to the  allowance  for loan losses.  Subsequent  to  foreclosure,  losses on the
periodic  revaluation of the property are charged to current period  earnings as
other expense. Costs of operating and maintaining the properties, net of related
income and gains (losses) on their disposition,  are charged to other expense as
incurred.  Improvements  made to properties are capitalized if the  expenditures
are expected to be recovered upon the sale of the property.

Derivative Financial Instruments

Trustmark utilizes various derivative financial  instruments as part of its risk
management  strategy.  Trustmark is also required to recognize certain contracts
and commitments as a derivative when the  characteristics of those contracts and
commitments  meet  the  definition  of  a  derivative.   Trustmark's  derivative
financial  instruments  consist of mortgage related  instruments,  interest rate
swaps and interest rate floors/caps.

Under the guidelines of SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," as amended,  all derivative  instruments are required to be
carried at fair value on the balance sheet.  SFAS No. 133 also provides  special
hedge  accounting  provisions.  Derivative  instruments  designated  in a  hedge
relationship  to  mitigate  exposure  to  changes in the fair value of an asset,
liability,  or  firm  commitment  attributable  to a  particular  risk,  such as
interest  rate risk,  are  considered  fair  value  hedges  under SFAS No.  133.
Derivative  instruments  designated in a hedge relationship to mitigate exposure
to  variability  in expected  future cash  flows,  or other types of  forecasted
transactions, are considered cash flow hedges.

Fair  value  hedges  are  accounted  for by  recording  the  fair  value  of the
derivative instrument and the fair value related to the risk being hedged on the
hedged  asset or  liability  on the  balance  sheet with  corresponding  offsets
recorded in other  income.  The  adjustment  to the hedged asset or liability is
included in the basis of the hedged item, while the fair value of the derivative
is recorded as a freestanding asset or liability.

Cash flow hedges are accounted for by recording the fair value of the derivative
instrument  on the balance  sheet as either a  freestanding  asset or liability,
with a corresponding offset recorded in other comprehensive (loss) income within
shareholders'   equity,   net  of  tax.  Amounts  are  reclassified  from  other
comprehensive  (loss)  income to the income  statement  in the period the hedged
forecasted transaction affects net income.

Under  both the fair  value and cash flow hedge  methods,  derivative  gains and
losses not  effective in hedging the change in fair value or expected cash flows
of the hedged item are recognized immediately in other income.

Income Taxes

Trustmark  accounts  for  deferred  income  taxes  using the  liability  method.
Deferred tax assets and liabilities are based on temporary  differences  between
the financial statement carrying amounts and tax basis of Trustmark's assets and
liabilities.  Deferred tax assets and liabilities are measured using the enacted
tax rates  expected  to apply to  taxable  income  in the  years in which  those
temporary differences are expected to be realized or settled.
<PAGE>

Stock - Based Compensation

Effective  January  1,  2003,  Trustmark  adopted  the  fair  value  recognition
provisions  of SFAS No.  123,  "Accounting  for  Stock-Based  Compensation,"  as
amended by SFAS No. 148,  "Accounting for Stock-Based  Compensation - Transition
and Disclosure"  prospectively to all awards granted,  modified or settled after
January 1, 2003. Under the provisions of this statement, compensation expense is
recognized  by the straight line method for grants issued after January 1, 2003,
utilizing the fair value of the grants over the vesting period.  This change did
not have a material  impact on Trustmark's  consolidated  financial  statements.
Trustmark   estimates   the  fair  value  of  each  option   granted  using  the
Black-Scholes   option-pricing  model.  Prior  to  January  1,  2003,  Trustmark
accounted for incentive  stock options  under the  recognition  and  measurement
provisions of Accounting  Principles Board (APB) Opinion No. 25, "Accounting for
Stock Issued to  Employees."  Under APB No. 25,  because the  exercise  price of
Trustmark's  stock options equaled the market price for the underlying  stock on
the date of grant, no compensation  expense was recognized.  The following table
reflects pro forma net income and earnings per share for the periods  presented,
had  Trustmark  elected to adopt the fair  value  approach  for all  outstanding
options prior to January 1, 2003 ($ in thousands except per share data):

                                                   2003       2002        2001
                                                 --------   --------   --------
Net income,
     as reported                                 $118,530   $121,140   $111,281
Add:  Total stock-based employee compensation
      expense included in reported net income,
      net of related tax effects                      256          -          -
Deduct: Total stock-based employee
      compensation expense determined
      under fair value based method for
      all awards, net of related tax effects       (1,344)    (1,530)    (1,315)
                                                 --------   --------   --------
     Pro forma net income                        $117,442   $119,610   $109,966
                                                 ========   ========   ========
Earnings per share:
     As reported
          Basic                                  $   2.01   $   1.95   $   1.72
          Diluted                                    2.00       1.94       1.72
     Pro forma
          Basic                                   $  1.99   $   1.92    $  1.70
          Diluted                                    1.98       1.92       1.70

The following table reflects the fair value of stock options at their grant date
and the weighted average  assumptions  which were utilized in the  Black-Scholes
option-pricing model.

                                                   2003       2002       2001
                                                 --------   --------   --------
Fair value of options                            $  6.45    $  8.51    $  7.54
Risk-free investment rate                           4.01%      5.21%      5.24%
Expected volatility                                24.71%     27.04%     30.60%
Expected dividend yield                             2.72%      2.40%      2.63%
Expected life (in years)                             10         10         10

Statements of Cash Flows

For purposes of reporting cash flows, cash and cash equivalents  include cash on
hand and amounts due from banks. Trustmark paid income taxes approximating $59.1
million in 2003, $70.4 million in 2002 and $55.6 million in 2001.  Interest paid
on deposit liabilities and other borrowings  approximated $91.1 million in 2003,
$119.2  million in 2002 and $222.9 million in 2001. For the years ended December
31, 2003, 2002 and 2001,  noncash transfers from loans to foreclosed  properties
were $5.3 million, $6.8 million and $5.2 million, respectively.  Assets acquired
during 2003 as a result of business  combinations  totaled $233  million,  while
liabilities  assumed  totaled $209  million.  Assets  acquired  during 2001 as a
result of business combinations totaled $671 million,  while liabilities assumed
totaled $573 million.  During 2003,  $50 million of long-term FHLB advances were
transferred to short-term borrowings compared with $100 million in 2002.
<PAGE>

Per Share Data

Basic  earnings  per share  (EPS) is  computed  by  dividing  net  income by the
weighted average shares of common stock outstanding.  Diluted EPS is computed by
dividing net income by the weighted average shares of common stock  outstanding,
adjusted for the effect of potentially dilutive stock options outstanding during
the  period.  The  following  table  reflects  weighted  average  shares used to
calculate basic and diluted EPS for the periods presented (in thousands):

                                         Years Ended December 31,
                                         ------------------------
                                          2003     2002     2001
                                         ------   ------   ------
Basic shares                             59,009   62,251   64,755
Dilutive shares (due to stock options)      235      165      122
                                         ------   ------   ------
Diluted shares                           59,244   62,416   64,877
                                         ======   ======   ======

RECENT PRONOUNCEMENTS

In December 2003, the Financial  Accounting  Standards  Board (FASB) issued FASB
Interpretation  No.  46,  "Consolidation  of  Variable  Interest  Entities"  (as
revised). This interpretation addresses consolidation by business enterprises of
variable   interest   entities,   which  have  one  or  more  of  the  following
characteristics:  1) the equity  investment at risk is not  sufficient to permit
the entity to finance its activities without additional  subordinated  financial
support  provided by any parties  including  the equity  holders;  2) the equity
investors  lack one or more of the  essential  characteristics  of a controlling
financial  interest and 3) the equity  investors have voting rights that are not
proportionate  to their  economic  interests,  and the  activities of the entity
involve or are  conducted  on behalf of an  investor  with a  disproportionately
small  voting  interest.  Application  of this  interpretation  is  required  in
financial statements of public entities that have interests in variable interest
entities or  potential  variable  interest  entities  for periods  ending  after
December 15, 2003. Currently,  Trustmark does not have any interests in variable
interest entities as defined by this interpretation.

In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of  Statement  133 on
Derivative  Instruments  and  Hedging  Activities."  This  statement  amends and
clarifies  financial  accounting  and  reporting  for  derivative   instruments,
including   certain   derivative   instruments   embedded  in  other   contracts
(collectively  referred to as derivatives) and for hedging activities under SFAS
No. 133,  "Accounting for Derivative  Instruments and Hedging  Activities." This
statement is effective  for  contracts  entered into or modified  after June 30,
2003, and for hedging relationships  designated after June 30, 2003. The effects
of this  statement did not have a material  impact on  Trustmark's  consolidated
financial position or results of operations upon adoption on June 30, 2003.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with Characteristics of both Liabilities and Equity." This statement
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with  characteristics of both liabilities and equity. The
statement  applies to the following three  categories of freestanding  financial
instruments:  1) certain mandatorily redeemable instruments, 2) instruments with
repurchase  obligations and 3) instruments  with obligations to issue a variable
number of shares. The statement requires that previously issued instruments that
fall within the scope of the statement must be reclassified as liabilities,  and
subsequent changes in the measurements of the instruments treated as liabilities
must flow through to the income statement. For public companies,  this statement
became  effective for all  freestanding  financial  instruments  entered into or
modified  after May 31, 2003.  Currently,  Trustmark does not have any financial
instruments within the scope of this statement.

NOTE 2 - BUSINESS COMBINATIONS

On  December  9,  2003,  Trustmark  and Allied  Houston  Bank,  Houston,  Texas,
announced the signing of a definitive  Branch Purchase and Assumption  Agreement
pursuant to which  Trustmark  National Bank will acquire five branches of Allied
Houston  Bank  serving the  greater  Houston  market for a $10  million  deposit
premium. The Agreement  contemplates the assumption of selected deposit accounts
of  approximately  $160  million,  the  purchase  of selected  loan  accounts of
approximately  $158 million and the operation of five Allied Houston Bank branch
locations.  At November 30, 2003, Allied Houston Bank deposits and loans totaled
approximately  $199  million  and  $178  million,   respectively.  The  proposed
transaction,  which is subject to the  approval of  regulatory  authorities  and
Allied  Houston  shareholders,  is expected to close during the first quarter of
2004.
<PAGE>

On August 29,  2003,  Trustmark  acquired  seven  Florida  branches  of The Banc
Corporation of Birmingham,  Alabama, in a business combination  accounted for by
the purchase method of accounting.  These  branches,  known as the Emerald Coast
Division,  serve the markets from Destin to Panama City. In connection  with the
transaction,  Trustmark  paid a $46.8  million  deposit  premium in exchange for
$232.8 million in assets and $209.2  million in deposits and other  liabilities.
Assets  consisted  of $224.3  million in loans,  $6.8  million in  premises  and
equipment and $1.7 million in other assets.  These assets and  liabilities  have
been recorded at fair value based on market conditions and risk  characteristics
at the  acquisition  date.  Loans  were  recorded  at a $1.9  million  discount,
consisting  of a discount for general  credit risk of $3.5  million  offset by a
market premium of $1.6 million. This net discount will be recognized as interest
income over the  estimated  life of the loans.  Excess  costs over  tangible net
assets acquired  totaled $49.5 million,  of which $1.7 million and $47.8 million
have been allocated to core deposits and goodwill, respectively.

On June 28, 2002, The Bottrell Insurance Agency, Inc., a wholly-owned subsidiary
of TNB, acquired Chandler-Sampson Insurance, Inc. (CSI) in Jackson, Mississippi.
This business combination, which is not material to Trustmark, was accounted for
under the purchase  method of  accounting.  Excess cost over tangible net assets
acquired  totaled  $10  million,  of which $3 million  and $7 million  have been
allocated to other identifiable intangible assets and goodwill, respectively.

On  December  14,  2001,  Nashoba  Bancshares,  Inc.  (Nashoba)  in  Germantown,
Tennessee,  was merged with Trustmark in a business combination accounted for by
the purchase  method of accounting.  Nashoba was the holding company for Nashoba
Bank,  and at the merger  date,  Nashoba  had $10  million in  securities,  $147
million in total  loans,  $163 million in total assets and $132 million in total
deposits. The shareholders of Nashoba received $28 million in cash in connection
with the  merger.  Excess cost over  tangible  net assets  acquired  totaled $17
million,  of which $3  million  and $14  million  have  been  allocated  to core
deposits and goodwill, respectively.

On April 6, 2001, Barret Bancorp, Inc. (Barret) in Barretville,  Tennessee,  was
merged with  Trustmark in a business  combination  accounted for by the purchase
method of  accounting.  Barret  was the  holding  company  for  Peoples  Bank in
Barretville,  Tennessee,  and  Somerville  Bank & Trust  Company in  Somerville,
Tennessee.  At the merger  date,  Barret had $104  million in  securities,  $307
million in total  loans,  $508 million in total assets and $414 million in total
deposits.  The shareholders of Barret received  approximately 2.4 million shares
of  Trustmark's  common  stock along with $51 million in cash.  Excess cost over
tangible net assets acquired  totaled $27 million,  of which $11 million and $16
million have been allocated to core deposits and goodwill, respectively.

Trustmark's financial statements include the results of operations for the above
purchase  business  combinations from the respective merger dates. The pro forma
impact of these acquisitions on Trustmark's results of operations is immaterial.

NOTE 3 - CASH AND DUE FROM BANKS

Trustmark  is required to maintain  average  reserve  balances  with the Federal
Reserve Bank based on a percentage  of  deposits.  The average  amounts of those
reserves for the years ended December 31, 2003 and 2002,  were $36.8 million and
$15.2 million, respectively.

<PAGE>

NOTE 4 - SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY

A summary of the amortized cost and estimated fair value of securities available
for sale and held to  maturity  at  December  31,  2003 and 2002,  follows ($ in
thousands):
<TABLE>
<CAPTION>

                                        Securities Available for Sale                    Securities Held to Maturity
                               ----------------------------------------------   --------------------------------------------
                                             Gross       Gross      Estimated                Gross       Gross     Estimated
                               Amortized   Unrealized  Unrealized     Fair      Amortized  Unrealized  Unrealized    Fair
                                 Cost        Gains      (Losses)      Value       Cost       Gains      (Losses)     Value
                               ----------  ----------  ----------  ----------   ---------  ----------  ----------  ---------
<S>                            <C>         <C>         <C>         <C>          <C>        <C>         <C>         <C>
2003
----
U.S. Treasury and other U.S.
    Government agencies        $  301,857  $    1,033  $   (3,858) $  299,032   $       -  $        -  $        -  $       -
Obligations of states and
    political subdivisions         72,243       4,439          (6)     76,676     142,169      12,374          (2)   154,541
Mortgage-backed securities      1,382,136       6,143     (14,111)  1,374,168      36,181         369         (45)    36,505
Corporate debt securities         107,418         448        (753)    107,113           -           -           -          -
Other securities                   75,955       1,049           -      77,004         100           -           -        100
                               ----------  ----------  ----------  ----------   ---------  ----------  ----------  ---------
     Total                     $1,939,609  $   13,112  $  (18,728) $1,933,993   $ 178,450  $   12,743  $      (47) $ 191,146
                               ==========  ==========  ==========  ==========   =========  ==========  ==========  =========

2002
----
U.S. Treasury and other U.S.
    Government agencies        $  182,219  $    9,960  $     (125) $  192,054   $       -  $        -  $        -  $       -
Obligations of states and
    political subdivisions         71,544       5,458           -      77,002     153,707      13,662           -    167,369
Mortgage-backed securities        937,753       9,082      (1,620)    945,215     395,390      15,379         (88)   410,681
Other securities                   48,299           -           -      48,299         100           -           -        100
                               ----------  ----------  ----------  ----------   ---------  ----------  ----------  ---------
     Total                     $1,239,815  $   24,500  $   (1,745) $1,262,570   $ 549,197  $   29,041  $      (88) $ 578,150
                               ==========  ==========  ==========  ==========   =========  ==========  ==========  =========
</TABLE>

Temporarily Impaired Securities

The primary  components  that  determine a security's  fair value are its coupon
rate,  maturity  and credit  characteristics.  When the fair value of a security
falls below  amortized cost it becomes  temporarily  impaired with an unrealized
loss.  The table below ($ in  thousands)  includes  securities  with  unrealized
losses at December 31, 2003.

<TABLE>
<CAPTION>
                               Held Less than 12 Months   Held 12 Months or More           Total
                               ------------------------   ----------------------  ----------------------
                               Estimated     Unrealized   Estimated   Unrealized  Estimated   Unrealized
                               Fair Value      Losses     Fair Value    Losses    Fair Value    Losses
                               ----------    ----------   ----------  ----------  ----------  ----------

<S>                            <C>           <C>          <C>         <C>         <C>         <C>
U.S. Treasury and other U.S.
    Government agencies        $  161,295    $    3,858   $        -  $        -  $  161,295  $    3,858
Obligations of states and
    political subdivisions          2,413             8            -           -       2,413           8
Mortgage-backed securities      1,132,374        14,096        1,954          60   1,134,328      14,156
Corporate debt securities          62,106           753            -           -      62,106         753
Other securities                        -             -          100           -         100           -
                               ----------    ----------   ----------  ----------  ----------  ----------
     Total                     $1,358,188    $   18,715   $    2,054  $       60  $1,360,242  $   18,775
                               ==========    ==========   ==========  ==========  ==========  ==========
</TABLE>

The fair market  value of all  securities  were  impacted by an upward  trend in
interest rates during the second half of 2003. Current conditions  indicate that
the contractual  principal value, or the expected maturity,  of these securities
has not been altered to the extent that these  unrealized  losses are considered
anything but temporary in nature.  All of the  securities  held with  unrealized
losses that have continued for longer than twelve months are expected to mature,
at full principal value, during 2004.
<PAGE>

Security Gains and Losses

Gross gains as a result of calls and  dispositions  of securities  available for
sale were $12.2 million in 2003, $13.6 million in 2002 and $1.5 million in 2001.
During 2003, gross losses on calls and dispositions of these securities were $61
thousand,  while  there  were none in 2002 and $28  thousand  realized  in 2001.
During 2003, 2002 and 2001,  there were no sales of securities held to maturity.
Gross gains of $75  thousand,  $7 thousand and $968  thousand  were  realized on
calls of these securities during 2003, 2002 and 2001, respectively.

Securities Pledged

Securities  with a carrying  value of $1.7  billion and $1.3 billion at December
31, 2003 and 2002,  respectively,  were pledged to collateralize public deposits
and securities  sold under  agreements to repurchase,  and for other purposes as
required or permitted by law.

Contractual Maturities

The amortized cost and estimated fair value of securities available for sale and
held to maturity at December 31, 2003, by contractual maturity,  are shown below
($ in thousands).  Expected  maturities may differ from  contractual  maturities
because  borrowers  may have the  right to call or  prepay  obligations  with or
without call or prepayment penalties.
<TABLE>
<CAPTION>

                                            Securities                Securities
                                        Available for Sale         Held to Maturity
                                      -----------------------   -----------------------
                                       Amortized   Estimated     Amortized   Estimated
                                         Cost      Fair Value      Cost      Fair Value
                                      ----------   ----------   ----------   ----------
<S>                                   <C>          <C>          <C>          <C>
Due in one year or less               $   10,061   $   10,243   $    8,929   $    9,188
Due after one year through five years    420,963      421,961       44,306       48,072
Due after five years through ten years    95,225       95,258       52,316       56,964
Due after ten years                       31,224       32,363       36,718       40,417
                                      ----------   ----------   ----------   ----------
                                         557,473      559,825      142,269      154,641
Mortgage-backed securities             1,382,136    1,374,168       36,181       36,505
                                      ----------   ----------   ----------   ----------
     Total                            $1,939,609   $1,933,993   $  178,450   $  191,146
                                      ==========   ==========   ==========   ==========
</TABLE>

NOTE 5 - LOANS

At  December  31,  2003  and  2002,  loans  consisted  of  the  following  ($ in
thousands):

                                                      2003         2002
                                                   ----------   ----------
Real estate loans:
     Construction and land development             $  406,257   $  286,500
     Secured by 1-4 family residential properties   1,663,915    1,330,604
     Secured by nonfarm, nonresidential properties    858,708      811,289
     Other                                            156,524      112,923
Loans to finance agricultural production               30,815       37,452
Commercial and industrial                             787,094      776,510
Consumer                                              787,316      833,384
Obligations of states and political subdivisions      173,296      162,644
Other loans                                            56,127       66,380
                                                   ----------   ----------
     Loans                                          4,920,052    4,417,686
     Less allowance for loan losses                    74,276       74,771
                                                   ----------   ----------
         Net loans                                 $4,845,776   $4,342,915
                                                   ==========   ==========

Trustmark does not have any loan  concentrations  other than those  reflected in
the  preceding  table which  exceed 10% of total  loans.  At December  31, 2003,
Trustmark's  geographic  loan  distribution  was  concentrated  primarily in its
Mississippi, Tennessee and Florida markets.
<PAGE>

Changes in the allowance for loan losses were as follows ($ in thousands):

                                        2003       2002       2001
                                       -------    -------    -------

Balance at January 1                   $74,771    $75,534    $65,850
Provision charged to expense             9,771     14,107     13,200
Loans charged off                      (19,208)   (24,035)   (22,698)
Recoveries                               8,942      9,165      7,604
                                       -------    -------    -------
Net charge-offs                        (10,266)   (14,870)   (15,094)
Allowance applicable to loans
     of acquired banks                       -          -     11,578
                                       -------    -------    -------
Balance at December 31                 $74,276    $74,771    $75,534
                                       =======    =======    =======

At December 31, 2003 and 2002,  the carrying  amounts of  nonaccrual  loans were
$23.9  million and $31.6  million,  respectively.  Included in these  nonaccrual
loans at  December  31,  2003 and 2002,  are  loans  that are  considered  to be
impaired, which totaled $16.5 and $24.2 million,  respectively.  At December 31,
2003,  the total  allowance for loan losses  related to impaired  loans was $4.9
million  compared with $6.8 million at December 31, 2002.  The average  carrying
amounts of impaired loans during 2003,  2002 and 2001 were $21.3 million,  $29.9
million and $22.7 million,  respectively. No material amounts of interest income
were  recognized on impaired loans or nonaccrual  loans for each of the years in
the three-year period ended December 31, 2003.

Trustmark  makes loans in the normal  course of  business to certain  directors,
including  their  immediate  families and  companies in which they are principal
owners. Such loans are made on substantially the same terms,  including interest
rates  and  collateral,   as  those   prevailing  at  the  time  for  comparable
transactions  with  unrelated  persons,  and do not involve more than the normal
risk of collectability at the time of the transaction.  At December 31, 2003 and
2002,  total  loans to these  persons  were  $80.5  million  and $62.2  million,
respectively.  During 2003,  $772.6 million of new loan advances were made while
repayments  were  $754.3  million.  No loans  were  reclassified  as a result of
directors'  retirements or changes in position of executive  officers during the
year.

NOTE 6 - PREMISES AND EQUIPMENT

At December 31, 2003 and 2002,  premises and equipment are summarized as follows
($ in thousands):


                                                       2003         2002
                                                     --------     --------
Land                                                 $ 24,725     $ 22,059
Buildings and leasehold improvements                  111,037      105,422
Furniture and equipment                               103,983      108,130
                                                     --------     --------
     Total cost of premises and equipment             239,745      235,611
Less accumulated depreciation and amortization        131,371      131,498
                                                     --------     --------
     Premises and equipment, net                     $108,374     $104,113
                                                     ========     ========

NOTE 7 - INTANGIBLE ASSETS

Goodwill

The changes in the carrying amount of goodwill (all within the Consumer Division
segment) for the years ended December 31, 2003, 2002 and 2001, are as follows ($
in thousands):

                                        2003       2002       2001
                                       -------    -------    -------
Balance as of January 1                $48,028    $41,004    $11,913
Additions from business combinations    47,849      6,638     30,492
Purchase accounting adjustments              -        386        (69)
Amortization                                 -          -     (1,332)
                                       -------    -------    -------
Balance as of December 31              $95,877    $48,028    $41,004
                                       =======    =======    =======

Effective  January 1, 2003,  Trustmark changed the composition of its reportable
segments  and as a result,  the  Consumer  Division  segment  now  contains  all
goodwill  reportable by Trustmark.  Within this segment,  the carrying amount by
reporting unit at December 31, 2003,  includes  Retail Banking ($74.0  million),
Bottrell  Insurance Agency ($17.5 million) and Somerville Bank and Trust Company
($4.4  million).  Trustmark  performed an impairment test on its goodwill assets
during 2003 and 2002 which indicated that no impairment charge was required.
<PAGE>

The  following  table sets forth net income  and  earnings  per share  excluding
goodwill amortization for the years ended December 31, 2003, 2002 and 2001 ($ in
thousands, except per share data):

                                         2003       2002       2001
                                       --------   --------   --------
Net income as reported                 $118,530   $121,140   $111,281
Goodwill amortization, net of tax             -          -        866
                                       --------   --------   --------
Pro forma net income                   $118,530   $121,140   $112,147
                                       ========   ========   ========

Earnings per share:
     As reported
       Basic                           $   2.01   $   1.95   $   1.72
       Diluted                             2.00       1.94       1.72
     Pro forma
       Basic                           $   2.01   $   1.95   $   1.73
       Diluted                             2.00       1.94       1.73

Other Identifiable Intangible Assets

At December 31, 2003 and 2002, other identifiable intangible assets consisted of
the following ($ in thousands):
<TABLE>
<CAPTION>

                                      2003                           2002
                          ----------------------------   ----------------------------
                          Gross Carrying  Accumulated    Gross Carrying  Accumulated
                              Amount      Amortization        Amount     Amortization
                          --------------  ------------   --------------  ------------
<S>                       <C>             <C>            <C>             <C>
Core deposit intangibles  $       40,225  $     21,665   $       38,549  $    19,261
Insurance intangibles              3,180           827            3,180          276
Banking charter                    1,025            17                -            -
                          --------------  ------------   --------------  -----------
   Total amortizable              44,430        22,509           41,729       19,537
Pension plan intangible                -             -              596            -
                          --------------  ------------   --------------  -----------
   Total                  $       44,430  $     22,509   $      $42,325  $    19,537
                          ==============  ============   ==============  ===========
</TABLE>

During 2003,  Trustmark  acquired $1.7 million of core deposit intangible assets
resulting from the Emerald Coast branch purchase,  which have a weighted average
amortization  period of 10 years. In order to facilitate its entry into Florida,
Trustmark  acquired an existing Florida state bank charter for $1.0 million from
an unrelated  party.  This bank charter has an amortization  period of 20 years.
During 2002,  Trustmark recorded an intangible asset related to the unrecognized
prior  service cost of the pension plan in the amount of $596  thousand.  During
2003, this unamortized asset was reviewed and subsequently reversed based on the
value  of the  pension  plan's  assets  compared  with its  accumulated  benefit
obligation.  During  2003 and 2002,  Trustmark  recorded  $3.0  million and $3.2
million, respectively, of amortization of other identifiable intangible assets.

Trustmark estimates that amortization expense for intangible assets will be $2.1
million in 2004 and $1.9 million in 2005, 2006, 2007 and 2008.

Mortgage Servicing Rights

The changes in the carrying  amount of mortgage  servicing  rights for the years
ended December 31, 2003, 2002 and 2001, are as follows ($ in thousands):

                                    Gross                     Net
                                   Carrying    Valuation    Carrying
                                    Amount     Allowance     Amount
                                   --------    ---------    --------
Balance as of January 1, 2001      $ 43,153    $       -    $ 43,153
Additions                            20,523            -      20,523
Amortization / impairment            (8,205)      (2,000)    (10,205)
                                   --------    ---------    --------
Balance as of December 31, 2001      55,471       (2,000)     53,471
Additions                            17,376            -      17,376
Amortization / impairment           (11,540)     (10,480)    (22,020)
                                   --------    ---------    --------
Balance as of December 31, 2002      61,307      (12,480)     48,827
Additions                            18,782            -      18,782
Amortization / impairment           (14,515)      (3,387)    (17,902)
                                   --------    ---------    --------
Balance as of December 31, 2003    $ 65,574    $ (15,867)   $ 49,707
                                   ========    =========    ========
<PAGE>

NOTE 8 - DEPOSITS

At  December  31,  2003 and 2002,  deposits  consisted  of the  following  ($ in
thousands):
                                      2003            2002
                                   ----------      ----------
DDA, NOW, MMDA                     $2,543,694      $2,193,422
Savings                               828,256         744,386
Time                                1,717,509       1,748,488
                                   ----------      ----------
    Total deposits                 $5,089,459      $4,686,296
                                   ==========      ==========

The aggregate  amount of time deposits of $100,000 or more at December 31, 2003,
was $454.3 million.

The maturities of interest-bearing deposits at December 31, 2003, are as follows
($ in thousands):

2004                                                                 $1,221,380
2005                                                                    332,726
2006                                                                     89,601
2007                                                                     47,246
2008 and thereafter                                                      26,556
                                                                     ----------
    Total time deposits                                               1,717,509
Interest-bearing deposits with no stated maturity                     2,042,506
                                                                     ----------
       Total interest-bearing deposits                               $3,760,015
                                                                     ==========

NOTE 9 - SECURITIES SOLD UNDER REPURCHASE AGREEMENTS

At December 31, 2003 and 2002,  the  carrying  values of  securities  sold under
repurchase agreements, by contractual maturity, are as follows ($ in thousands):

                                                             2003        2002
                                                           --------    --------
 Demand/In one day                                         $472,040    $554,253
 Term up to 30 days                                          45,006      27,741
 Term of 30 to 90 days                                       93,198      10,999
 Term of 90 days and over                                    64,472      42,000
                                                           --------    --------
      Total                                                $674,716    $634,993
                                                           ========    ========

The weighted average  interest rates for these repurchase  agreements were 0.89%
and 1.12% at December 31, 2003 and 2002,  respectively.  Specific U.S.  Treasury
and other U.S.  Government  agencies  securities  with  carrying  values of $916
million  at  December  31,  2003,   and  $784  million  at  December  31,  2002,
collateralize  the  repurchase  agreements.  The fair  value of this  collateral
approximated $913 million at December 31, 2003, and $800 million at December 31,
2002.

NOTE 10 - BORROWINGS

Short-Term Borrowings

At December 31, 2003 and 2002,  short-term borrowings consisted of the following
($ in thousands):

                                                            2003         2002
                                                           --------    --------
Term federal funds purchased                               $252,000    $100,000
FHLB advances                                               300,000     107,710
Treasury tax and loan note option account                    46,687      45,985
Other                                                        22,845      22,264
                                                           --------    --------
     Total                                                 $621,532    $275,959
                                                           ========    ========
<PAGE>

Trustmark  has  received  advances  from  the  FHLB,  which  are  classified  as
short-term   and  are   collateralized   by  a  blanket   lien  on   Trustmark's
single-family,  multi-family, home equity and commercial mortgage loans. Four of
these  advances  have  fixed  rates and range in size from $25  million  to $100
million with interest rates from 1.06% to 5.30% and  maturities  from January to
September  2004.  An additional  floating  rate advance of $100  million,  which
matures in August 2004,  currently has an interest rate of 1.14%, which is reset
quarterly based on the three-month LIBOR.

The  treasury tax and loan note option  account,  which is  collateralized  by a
pledge  of U.S.  Treasury,  U.S.  Government  agencies  and  state,  county  and
municipal  securities  as  required by the  Department  of the  Treasury,  is an
open-ended  interest-bearing  note  maintained  at  the  Federal  Reserve  Bank.
Interest is charged at the weekly Federal Funds rate minus 25 basis points.

Long-Term Federal Home Loan Bank Advances

Trustmark has received  noncallable  advances  totaling $531 million at December
31, 2003, and $475 million at December 31, 2002, which are  collateralized  by a
blanket  lien  on  Trustmark's  single-family,  multi-family,  home  equity  and
commercial mortgage loans.  Advances totaling $450 million mature in 2005, $75.2
million in 2006,  $4.3 million in 2008 and $1.5 million in 2009.  These advances
have interest rates ranging from 1.11% to 6.80%.  Interest rates on two advances
are reset  quarterly  based on the  three-month  LIBOR.  At December  31,  2003,
Trustmark had $442.6 million available in unused FHLB advances.

Line of Credit

In June  2002,  Trustmark  entered  into a two-year  line of credit  arrangement
enabling borrowings up to $50 million,  subject to certain financial  covenants.
At December 31, 2003, Trustmark had not utilized this line of credit.

NOTE 11 - INCOME TAXES

The income tax provision  included in the  statements of income is as follows ($
in thousands):
                                               2003         2002         2001
                                              -------      -------      -------
Current
     Federal                                  $51,802      $60,969      $49,992
     State                                      7,912        9,103        7,043
Deferred
     Federal                                    2,825       (4,364)       2,782
     State                                        413         (740)         329
                                              -------      -------      -------
          Income tax provision                $62,952      $64,968      $60,146
                                              =======      =======      =======

The income tax  provision  differs  from the amount  computed  by  applying  the
statutory  federal  income tax rate of 35% to income  before  income  taxes as a
result of the following ($ in thousands):

                                               2003         2002         2001
                                              -------      -------      -------

Income tax computed at statutory tax rate     $63,519      $65,138      $59,999
Tax exempt interest                            (5,217)      (5,753)      (6,384)
Nondeductible interest expense                    246          357          703
State income taxes, net                         5,410        5,436        4,792
Other                                          (1,006)        (210)       1,036
                                              -------      -------      -------
          Income tax provision                $62,952      $64,968      $60,146
                                              =======      =======      =======
<PAGE>

Temporary  differences  between the financial statement carrying amounts and the
tax basis of assets and liabilities  give rise to the following net deferred tax
assets at December  31, 2003 and 2002,  which are included in other assets ($ in
thousands):

                                                            2003         2002
                                                           -------      -------
Deferred tax assets
     Allowance for loan losses                             $28,336      $28,467
     Deferred compensation                                   7,449        6,860
     Unrealized losses on available for sale securities      2,148            -
     Interest rate contracts                                 1,832        1,642
     Pension plan                                                -          814
     Other                                                   6,117        4,194
                                                           -------      -------
           Gross deferred tax asset                         45,882       41,977
                                                           -------      -------

Deferred tax liabilities
     Premises and equipment                                  6,291        4,965
     Goodwill and other identifiable intangibles             5,978        5,045
     Pension plan                                            3,325            -
     Securities                                              3,077        1,100
     Mortgage servicing rights                               2,431          890
     Unrealized gains on available for sale securities           -        8,704
     Other                                                   1,477          861
                                                           -------      -------
           Gross deferred tax liability                     22,579       21,565
                                                           -------      -------
              Net deferred tax asset                       $23,303      $20,412
                                                           =======      =======

Trustmark  has evaluated the need for a valuation  allowance  and,  based on the
weight of the available evidence, has determined that it is more likely than not
that all deferred tax assets will be realized.

NOTE 12 - ASSOCIATE BENEFIT PLANS

Early Retirement Program

In February 2003,  Trustmark  announced a voluntary early retirement program for
associates ages 58 and above with ten or more years of service. This program was
accepted by 116 associates,  or 4.75% of Trustmark's workforce. The cost of this
program,  which is included in salaries and benefits,  includes a charge of $2.9
million in salaries, $2.0 million in net periodic pension costs and $1.2 million
in other employee benefits.

Pension Plan

Trustmark  maintains  a  defined   noncontributory  pension  plan  which  covers
substantially  all  associates  with  more  than one year of  service.  The plan
provides  pension  benefits that are based on the length of credited service and
final average compensation as defined in the plan. Trustmark's policy is to fund
amounts allowable for federal income tax purposes.

The following tables present information regarding the benefit obligation,  plan
assets,  funded  status  of the plan,  accumulated  benefit  obligation  and net
periodic pension costs ($ in thousands):
<PAGE>

                                                             December 31,
                                                         -------------------
                                                          2003        2002
                                                         -------     -------
Change in projected benefit obligation
  Benefit obligation, beginning of year                  $72,229     $64,201
  Service cost                                             2,571       2,781
  Interest cost                                            4,569       4,862
  Actuarial loss                                           3,947       4,706
  Benefit payments                                       (15,057)     (4,580)
  Prior service cost                                        (473)        259
                                                         -------     -------
    Projected benefit obligation, end of year             67,786      72,229

Change in plan assets
  Fair value of plan assets, beginning of year            55,233      58,751
  Actual return on plan assets                             7,417      (1,277)
  Employer contributions                                  10,000       2,339
  Benefit payments                                       (15,057)     (4,580)
                                                         -------     -------
    Fair value of plan assets, end of year                57,593      55,233
                                                         -------     -------

Funded status of plan assets
  Plan assets less than projected benefit obligation     (10,193)    (16,996)
  Unrecognized prior service cost                         (2,498)        596
  Unrecognized net loss                                   21,383      19,338
                                                         -------     -------
    Prepaid pension assets recorded in balance sheets    $ 8,692     $ 2,938
                                                         =======     =======

Amounts recognized in the balance sheets
  Prepaid pension asset recorded in balance sheets       $ 8,692     $ 2,938
  Accrued minimum pension liability                            -      (5,663)
  Intangible asset                                             -         596
  Accumulated other comprehensive income                       -       5,067
                                                         -------     -------
    Prepaid pension assets recorded in balance sheets    $ 8,692     $ 2,938
                                                         =======     =======

Accumulated benefit obligation
  Projected benefit obligation                           $67,786     $72,229
  Accumulated benefit obligation                          57,424      57,958
  Fair value of plan assets                               57,593      55,233

                                                   Years Ended December 31,
                                                  --------------------------
                                                   2003      2002      2001
                                                  ------    ------    ------
Net periodic pension cost
  Service cost - benefits earned during
     the period                                   $2,571    $2,781    $3,042
  Interest cost on projected benefit obligation    4,569     4,862     4,194
  Expected return on plan assets                  (5,514)   (5,935)   (5,721)
  Amortization of prior service cost                 242       212       262
  Amortization of net obligation at transition         -      (213)     (364)
  Recognized net loss due to settlement            2,378         -         -
                                                  ------    ------    ------
    Net periodic benefit cost                     $4,246    $1,707    $1,413
                                                  ======    ======    ======

Weighted-average assumptions as of end of year     2003      2002      2001
                                                  ------    ------    ------
  Discount rate for benefit obligations            6.50%     7.00%     7.50%
  Discount rate for net periodic benefit cost      7.00%     7.50%     7.75%
  Expected long-term return on plan assets         9.00%     9.00%     9.00%
  Rate of compensation increase                    4.00%     4.00%     4.00%

Plan Assets

Trustmark's pension plan weighted-average asset allocations at December 31, 2003
and 2002, by asset category are as follows:
                                                             2003      2002
                                                            ------    ------
  Fixed income securities                                    37.2%     40.2%
  Equity mutual funds                                        61.7%     55.6%
  Other                                                       1.1%      4.2%
                                                            ------    ------
    Total                                                   100.0%    100.0%
                                                            ======    ======

<PAGE>

The  strategic  objective  of the plan focuses on capital  growth with  moderate
income.  The plan is managed on a total return  basis with the return  objective
set as a reasonable  actuarial  rate of return on plan assets net of  investment
management  fees.  Moderate  risk  is  assumed  given  the  average  age of plan
participants and the need to meet the required rate of return.  Equity and fixed
income  securities  are utilized to allow for capital  appreciation  while fully
diversifying the portfolio with more conservative fixed income investments.  The
target asset  allocation  range for the  portfolio is 0-15% Cash &  Equivalents,
25-45% Fixed Income,  35-65% Domestic Equity,  and 0-20%  International  Equity.
Changes in allocations are a result of tactical asset  allocation  decisions and
fall within the aforementioned percentage range for each major asset class.

Trustmark selects the expected long-term rate-of-return-on-assets  assumption in
consultation  with their investment  advisors and actuary,  and with concurrence
from their  auditors.  This rate is  intended  to reflect  the  average  rate of
earnings  expected  to be earned  on the funds  invested  or to be  invested  to
provide plan  benefits.  Historical  performance  is reviewed,  especially  with
respect to real rates of return (net of inflation),  for the major asset classes
held or  anticipated  to be held by the trust,  and for the trust itself.  Undue
weight  is not  given  to  recent  experience,  that may not  continue  over the
measurement  period,  with higher  significance  placed on current  forecasts of
future long-term economic conditions.

Because  assets  are held in a  qualified  trust,  anticipated  returns  are not
reduced  for taxes.  Further,  solely for this  purpose,  the plan is assumed to
continue  in force and not  terminate  during  the  period in which  assets  are
invested. However, consideration is given to the potential impact of current and
future  investment  policy,  cash flow into and out of the trust,  and  expenses
(both  investment  and  non-investment)  typically paid from plan assets (to the
extent such expenses are not explicitly estimated within periodic cost).

Contributions

The acceptable range of contributions to the plan is determined each year by the
plan's actuary. In 2004,  Trustmark's minimum required  contribution is expected
to be zero; however,  Trustmark's management and Board of Directors plan to make
a contribution of up to $7 million.  The actual amount of the contribution  will
be determined  based on the plan's funded status and return on plan assets as of
the measurement date, which is October 31st.

Estimated Future Pension Benefit Payments

The  following  pension plan benefit  payments,  which reflect  expected  future
service, are expected to be paid:

  2004                                                     $5,651,708
  2005                                                      5,510,722
  2006                                                      5,133,349
  2007                                                      5,513,491
  2008                                                      6,249,023
  2009 - 2013                                              35,194,830

Post Retirement Benefits

Trustmark  does not  provide  post-retirement  or  post-employment  benefits  to
associates at normal retirement other than pension benefits.

Defined Contribution Plan

Trustmark provides associates with a self-directed  401(k) retirement plan which
allows associates to contribute a percentage of base pay, within limits provided
by the  Internal  Revenue  Code and  accompanying  regulations,  into the  plan.
Trustmark's  contributions  to this plan were $2.8 million in 2003, $3.0 million
in 2002 and $2.7 million in 2001.

Supplemental Retirement Program

Trustmark  provides  a  deferred  compensation  plan  covering  directors,   key
executives and senior officers.  Participants in the deferred  compensation plan
can defer a portion of their  compensation  for payment after  retirement.  Life
insurance contracts have been purchased which may be used to fund payments under
the plan.  Net  expenses  related to this plan were $1.4  million in 2003,  $761
thousand in 2002 and $1.6 million in 2001.
<PAGE>

Long-Term Incentive Plan

Trustmark's  incentive  stock plan provides for the granting of incentive  stock
options and nonqualified stock options. Stock options are granted at an exercise
price  equal  to the  market  value of the  stock  at the date of grant  and are
exercisable  for a period not to exceed  ten years  from the date of grant.  The
maximum  number of shares  that can be granted  under  this plan is 7.0  million
shares.  The following tables summarize  Trustmark's option activities for 2003,
2002 and 2001:
<TABLE>
<CAPTION>

                                        2003                   2002                   2001
                                --------------------   --------------------   --------------------
                                             Average                Average                Average
                                             Option                 Option                 Option
                                 Shares      Price      Shares      Price      Shares      Price
                                ---------    -------   ---------    -------   ---------    -------
<S>                             <C>          <C>       <C>          <C>       <C>          <C>
Outstanding, beginning of year  1,450,161    $ 21.85   1,232,100    $ 20.27     880,500    $ 19.70
Granted                           371,200      24.32     392,350      25.43     371,100      21.68
Exercised                        (109,128)     20.97    (114,414)     17.08     (11,500)     21.67
Forfeited                        (102,063)     22.89     (59,875)     22.13      (8,000)     20.68
                                ---------              ---------              ---------
Outstanding, end of year        1,610,170      22.41   1,450,161      21.85   1,232,100      20.27
                                =========              =========              =========

Exercisable, end of year          759,797      21.11     583,401      20.57     423,101      19.32
                                =========              =========              =========
</TABLE>
<TABLE>
<CAPTION>
                    Options Outstanding                          Options Exercisable
-------------------------------------------------------------   ----------------------
                                                     Weighted                 Weighted
                  Outstanding     Weighted Average   Average    Exercisable   Average
   Range of       December 31,    Remaining Years    Exercise   December 31,  Exercise
Exercise Prices       2003         to Expiration      Price         2003       Price
---------------   ------------   -----------------   --------   -----------   --------
<C>      <C>      <C>                   <C>          <C>           <C>        <C>
$11.76 - $14.70         49,197          3.4          $ 13.53       49,197     $ 13.53
$17.64 - $20.58        258,863          6.3            18.06      178,892       18.06
$20.58 - $23.52        612,385          6.1            22.19      452,117       22.37
$23.52 - $26.46        663,225          8.8            24.77       79,591       25.46
$26.46 - $29.40         26,500          9.7            27.23            -           -
                     ---------                                    -------
                     1,610,170          7.2            22.41      759,797       21.11
                     =========                                    =======
</TABLE>

NOTE 13 - COMMITMENTS AND CONTINGENCIES

Lending Related

Trustmark  makes  commitments to extend credit and issues standby and commercial
letters  of credit in the normal  course of  business  in order to  fulfill  the
financing needs of its customers.

Commitments to extend credit are agreements to lend money to customers  pursuant
to certain  specified  conditions.  Commitments  generally have fixed expiration
dates or other termination clauses. Since many of these commitments are expected
to expire  without  being  drawn  upon,  the  total  commitment  amounts  do not
necessarily  represent  future  cash  requirements.  Trustmark  applies the same
credit  policies  and  standards  as it does in the lending  process when making
these  commitments.   The  collateral   obtained  is  based  upon  the  assessed
creditworthiness of the borrower.  At December 31, 2003 and 2002,  Trustmark had
commitments to extend credit of $1.2 billion and $1.1 billion, respectively.

Standby and commercial  letters of credit are conditional  commitments issued by
Trustmark to insure the  performance  of a customer to a third party.  Trustmark
issues financial and performance  standby letters of credit in the normal course
of  business  in order to  fulfill  the  financing  needs  of its  customers.  A
financial  standby  letter of credit is a commitment by Trustmark to guarantee a
customer's  repayment  of an  outstanding  loan  or debt  instrument.  Trustmark
guarantees  a  customer's  performance  to a third  party  under  a  contractual
nonfinancial  obligation  through  the use of a  performance  standby  letter of
credit.  When issuing  letters of credit,  Trustmark uses  essentially  the same
policies  regarding credit risk and collateral which are followed in the lending
process.  At December 31, 2003 and 2002,  Trustmark's maximum exposure to credit
loss  in the  event  of  nonperformance  by the  other  party  for  standby  and
commercial letters of credit was $73.6 million and $70.4 million,  respectively.
These amounts  consist  primarily of  commitments  with  maturities of less than
three years, which have an immaterial carrying value. Trustmark holds collateral
to support standby letters of credit when deemed  necessary.  As of December 31,
2003, the fair value of collateral held was $22.0 million.
<PAGE>

Lease Commitments

Trustmark  currently has lease  commitments for banking  premises and equipment,
which expire from 2004 to 2020. These commitments contain renewal options, which
extend the base  lease  from 5 to 20 years.  Rental  expense  approximated  $3.9
million in 2003, $3.7 million in 2002 and $3.6 million in 2001.

At December 31, 2003,  future minimum rental  commitments  under  noncancellable
leases for banking  premises and general offices and equipment are as follows ($
in thousands):

    2004                            $ 2,729
    2005                              1,750
    2006                              1,208
    2007                                973
    2008                                816
    Thereafter                        8,944
                                    -------
       Total                        $16,420
                                    =======

Legal Proceedings

Trustmark  and its  subsidiaries  are parties to lawsuits  and other claims that
arise in the ordinary  course of business.  Some of the lawsuits  assert  claims
related  to the  lending,  collection,  servicing,  investment,  trust and other
business  activities;  and some of the lawsuits  allege  substantial  claims for
damages.  The cases are being  vigorously  contested.  In the regular  course of
business,  Management evaluates estimated losses or costs related to litigation,
and provision is made for anticipated losses whenever  Management  believes that
such losses are probable and can be reasonably  estimated.  At the present time,
Management  believes,  based on the  advice  of legal  counsel,  that the  final
resolution  of pending  legal  proceedings  will not have a  material  impact on
Trustmark's  consolidated financial position or results of operations;  however,
Management  is unable to  estimate a range of  potential  loss on these  matters
because  of the  nature  of the legal  environment  in  states  where  Trustmark
conducts business.
<PAGE>

NOTE 14 - SHAREHOLDERS' EQUITY

Regulatory Capital

Trustmark  and TNB  are  subject  to  minimum  capital  requirements  which  are
administered by various federal regulatory agencies. These capital requirements,
as defined by federal guidelines,  involve quantitative and qualitative measures
of assets,  liabilities and certain  off-balance sheet  instruments.  Failure to
meet minimum capital  requirements can initiate certain mandatory,  and possibly
additional discretionary,  actions by regulators that, if undertaken, could have
a direct material effect on the financial statements of Trustmark and TNB.

Management  believes,  as of December 31, 2003,  that Trustmark and TNB have met
all capital  adequacy  requirements  to which they are subject.  At December 31,
2003,  the most recent  notification  from the Office of the  Comptroller of the
Currency (OCC)  categorized TNB as well  capitalized.  To be categorized as well
capitalized,  TNB must maintain minimum total risk-based,  Tier 1 risk-based and
Tier 1 leverage ratios  (defined in applicable  regulations) as set forth in the
table below.  There are no  significant  conditions or events that have occurred
since the OCC's  notification  that  Management  believes  have  affected  TNB's
present classification.

Trustmark's and TNB's actual regulatory capital amounts and ratios are presented
in the table below ($ in thousands):
<TABLE>
<CAPTION>
                                                                                       Minimum Regulatory
                                                 Actual          Minimum Regulatory     Provision to be
                                           Regulatory Capital     Capital Required      Well Capitalized
                                           ------------------    ------------------    ------------------
                                            Amount     Ratio     Amount       Ratio     Amount     Ratio
                                           --------    ------    -------      -----    --------    ------
<S>                                        <C>         <C>       <C>          <C>      <C>         <C>
At December 31, 2003:
  Total Capital (to Risk Weighted Assets)
    Trustmark Corporation                  $634,995    12.29%   $413,472      8.00%           -         -
    Trustmark National Bank                 601,800    11.90%    404,683      8.00%    $505,853    10.00%

  Tier 1 Capital (to Risk Weighted Assets)
    Trustmark Corporation                  $570,271    11.03%   $206,736      4.00%           -         -
    Trustmark National Bank                 538,460    10.64%    202,341      4.00%    $303,512     6.00%

  Tier 1 Capital (to Average Assets)
    Trustmark Corporation                  $570,271     7.53%   $227,050      3.00%           -         -
    Trustmark National Bank                 538,460     7.26%    222,456      3.00%    $370,760     5.00%

At December 31, 2002:
  Total Capital (to Risk Weighted Assets)
    Trustmark Corporation                  $651,612    13.99%   $372,504      8.00%           -         -
    Trustmark National Bank                 632,096    13.86%    364,835      8.00%    $456,043    10.00%

  Tier 1 Capital (to Risk Weighted Assets)
    Trustmark Corporation                  $593,204    12.74%   $186,252      4.00%           -         -
    Trustmark National Bank                 574,910    12.61%    182,417      4.00%    $273,626     6.00%

  Tier 1 Capital (to Average Assets)
    Trustmark Corporation                  $593,204     8.72%   $204,044      3.00%           -         -
    Trustmark National Bank                 574,910     8.64%    199,562      3.00%    $332,603     5.00%
</TABLE>

Common Stock Repurchase Program

On July 15, 2003,  the Board of Directors of Trustmark  authorized an additional
plan to  repurchase  up to 5% of common  stock,  or  approximately  2.9  million
shares,  subject to market conditions and management  discretion.  Collectively,
the capital management plans adopted by Trustmark since 1998 have authorized the
repurchase  of 21.5  million  shares of common  stock.  Pursuant to these plans,
Trustmark has repurchased  approximately 18.0 million shares for $385.0 million,
including  2.4  million  shares  during  2003 for  $59.4  million.  The  current
remaining authorization is approximately 3.5 million shares.

Shelf Registration

On April 16, 2003, Trustmark filed a registration statement of Form S-3 with the
Securities  and  Exchange  Commission  (SEC)  utilizing  a "shelf"  registration
process, which became effective May 2, 2003. Under this shelf process, Trustmark
may offer  from time to time any  combination  of  securities  described  in the
prospectus in one or more  offerings up to a total amount of $200  million.  The
securities  described in the  prospectus  include  common and  preferred  stock,
depositary  shares,  debt securities,  junior  subordinated  debt securities and
trust preferred securities. Net proceeds from the sale of the offered securities
may be used to redeem or repurchase  outstanding  securities,  repay outstanding
debt,  finance  acquisitions  of companies and other assets and provide  working
capital.
<PAGE>

Authorization of Preferred Shares

On April 9, 2002, the shareholders approved a proposal by the Board of Directors
to amend the Articles of  Incorporation  to  authorize  the issuance of up to 20
million preferred shares with no par value. The Board of Directors believes that
authorizing preferred shares for potential issuance is advisable and in the best
interests of Trustmark. The ability to issue preferred shares in the future will
provide  Trustmark  with  additional  financial and management  flexibility  for
general  corporate and  acquisition  purposes.  As of December 31, 2003, no such
shares have been issued.

Dividends

Dividends paid by Trustmark are  substantially  funded from  dividends  received
from TNB. Approval by TNB's regulators is required if the total of all dividends
declared in any calendar  year exceeds the total of its net income for that year
combined with its retained net income of the preceding two years.  TNB will have
available in 2004  approximately  $8.2 million plus its net income for that year
to pay as dividends.

Comprehensive Income

Comprehensive  income is the change in equity during a period from  transactions
and other  events and  circumstances  from  nonowner  sources.  It includes  all
changes in equity during a period except those  resulting  from  investments  by
owners and distributions to owners.

In addition to net income,  Trustmark has  identified  changes  related to other
nonowner transactions in the Consolidated Statements of Changes in Shareholders'
Equity.  Changes in other nonowner  transactions  consist of changes in the fair
value of securities  available for sale,  cash flow hedges and a minimum pension
liability.

In the calculation of comprehensive income, certain reclassification adjustments
are made to avoid duplicating items that are displayed as part of net income and
other  comprehensive  income in that period or earlier  periods.  The  following
table  reflects  the  reclassification  amounts  and the  related tax effects of
changes in fair value of securities  available for sale,  cash flow hedges and a
minimum  pension  liability for the years ended December 31, 2003, 2002 and 2001
($ in thousands):
<TABLE>
<CAPTION>
                                                                                     Accumulated
                                                                                       Other
                                                           Before-Tax      Tax      Comprehensive
                                                             Amount       Effect    (Loss) Income
Accumulated other comprehensive (loss) income:             ----------    -------    -------------
<S>                                                        <C>           <C>        <C>
Balance, January 1, 2001                                   $   15,925    $(6,111)   $       9,814
Net change in fair value of securities available for sale      14,772     (5,650)           9,122
Net change in fair value of cash flow hedges                    2,068       (791)           1,277
Less adjustment for net gains included in net income           (2,448)       936           (1,512)
                                                           ----------    -------    -------------
Balance, December 31, 2001                                     30,317    (11,616)          18,701
Net change in fair value of securities available for sale       7,341     (2,808)           4,533
Net change in fair value of cash flow hedges                   (6,107)     2,336           (3,771)
Minimum pension liability adjustment                           (5,067)     1,938           (3,129)
Less adjustment for net gains included in net income          (13,568)     5,190           (8,378)
                                                           ----------   --------    -------------
Balance, December 31, 2002                                     12,916     (4,960)           7,956
Net change in fair value of securities available              (16,138)     6,173           (9,965)
Net change in fair value of cash flow hedges                    4,803     (1,837)           2,966
Minimum pension liability adjustment                            5,067     (1,938)           3,129
Less adjustment for net gains included in net income          (12,231)     4,678           (7,553)
                                                           ----------   --------    -------------
Balance, December 31, 2003                                 $   (5,583)  $  2,116    $      (3,467)
                                                           ==========   ========    =============
</TABLE>
<PAGE>

NOTE 15 - FAIR VALUES OF FINANCIAL INSTRUMENTS

The  carrying  amounts and  estimated  fair values of financial  instruments  at
December 31, 2003 and 2002, are as follows ($ in thousands):
<TABLE>
<CAPTION>

                                               2003                      2002
                                     ------------------------    ------------------------
                                      Carrying     Estimated      Carrying      Estimated
                                       Value       Fair Value      Value       Fair Value
                                     ----------    ----------    ----------    ----------
<S>                                  <C>           <C>           <C>           <C>
Financial Assets:
   Cash and short-term investments   $  370,808    $  370,808    $  381,384    $  381,384
   Securities available for sale      1,933,993     1,933,993     1,262,570     1,262,570
   Securities held to maturity          178,450       191,146       549,197       578,150
   Loans held for sale                  112,560       112,560       199,680       199,680
   Net loans                          4,845,776     4,984,690     4,342,915     4,436,602
   Derivative assets                        273           273           730           730

Financial Liabilities:
   Deposits                           5,089,459     5,109,044     4,686,296     4,713,394
   Short-term liabilities             1,549,667     1,549,667     1,230,937     1,230,937
   Long-term FHLB advances              531,035       541,355       475,000       507,031
</TABLE>

The methodology and significant  assumptions  used in estimating the fair values
presented above are as follows:

In cases where quoted market prices are not available, fair values are generally
based  on  estimates  using  present  value  techniques.  Those  techniques  are
significantly  affected by the assumptions used, including the discount rate and
estimates of future cash flows. In that regard, the derived fair value estimates
for those  assets  or  liabilities  cannot be  substantiated  by  comparison  to
independent  markets  and,  in many cases,  could not be  realized in  immediate
settlement of the instruments. The estimated fair value of financial instruments
with  immediate  and  shorter-term  maturities  (generally  90 days or  less) is
assumed to be the same as the recorded book value. All nonfinancial instruments,
by  definition,   have  been  excluded  from  these   disclosure   requirements.
Accordingly,  the aggregate  fair value  amounts  presented do not represent the
underlying value of Trustmark.

Cash and Short-Term Investments

The  carrying  amounts  for cash and due from banks and  short-term  investments
(federal  funds  sold  and  securities   purchased   under  reverse   repurchase
agreements)  approximate  fair values due to their  immediate  and  shorter-term
maturities.

Securities

Estimated fair values for securities  available for sale and securities  held to
maturity are based on quoted  market  prices where  available.  If quoted market
prices are not  available,  estimated  fair  values  are based on quoted  market
prices of comparable instruments.

Loans Held for Sale

The fair  value of loans  held for  sale is based  primarily  on  quoted  market
prices.

Loans

The fair values of loans are  estimated  for  portfolios  of loans with  similar
financial characteristics.  For variable rate loans that reprice frequently with
no significant  change in credit risk, fair values are based on carrying values.
The fair  values of  certain  mortgage  loans,  such as 1-4  family  residential
properties,  are  based  on  quoted  market  prices  of  similar  loans  sold in
conjunction with securitization  transactions,  adjusted for differences in loan
characteristics.  The fair  values  of other  types of loans  are  estimated  by
discounting the future cash flows using the current rates at which similar loans
would  be made  to  borrowers  with  similar  credit  ratings  and for the  same
remaining maturities.

Derivative Assets

The fair value of derivative assets including  interest rate contracts,  such as
caps  and  floors  and  interest  rate  swaps,  is  based  on  standard  pricing
methodology using current market rates and volatility.

<PAGE>

Deposits

The fair values of deposits with no stated maturity, such as noninterest-bearing
demand  deposits,  NOW  accounts,  MMDA  products and savings  accounts  are, by
definition,  equal to the amount payable on demand which is the carrying  value.
Fair values for  certificates  of deposit are based on the  discounted  value of
contractual cash flows. The discount rate is estimated using the rates currently
offered for deposits of similar remaining maturities.

Short-Term Liabilities

The  carrying  amounts  for  federal  funds  purchased,  securities  sold  under
repurchase agreements and other borrowings approximate their fair values.

Long-Term FHLB Advances

Fair values for  long-term  FHLB advances are based on the  discounted  value of
contractual cash flows.

Off-Balance Sheet Instruments

The fair values of loan  commitments and letters of credit  approximate the fees
currently  charged for similar  agreements or the estimated cost to terminate or
otherwise settle similar  obligations.  The fees associated with these financial
instruments, or the estimated cost to terminate, as applicable, are immaterial.

NOTE 16 - DERIVATIVE FINANCIAL INSTRUMENTS

As part of Trustmark's  risk management  strategy in the mortgage  banking area,
derivative  instruments such as interest rate lock commitments and forward sales
contracts are utilized.  Rate lock  commitments  are  residential  mortgage loan
commitments  with  customers,  which  guarantee a specified  interest rate for a
specified time period.  Trustmark's  obligations under forward contracts consist
of commitments to deliver mortgage loans,  originated and/or  purchased,  in the
secondary market at a future date.  These derivative  instruments are designated
as fair value hedges.  Trustmark's  off-balance  sheet  obligations  under these
derivative  instruments totaled $232.2 million,  with a valuation  adjustment of
($1.3)  million as of December  31,  2003,  compared to $426.5  million,  with a
valuation adjustment of ($3.7) million as of December 31, 2002. Prior to January
1, 2003,  Trustmark  accounted  for these  derivative  instruments  as cash flow
hedges.  The impact of the redesignation  decreased other income in 2003 by $1.1
million ($653 thousand after tax or $0.01 per share).

Interest rate swaps are derivative  instruments under which two parties agree to
make interest  payments on a notional  principal  amount. In a generic swap, one
party pays a fixed interest rate and receives a floating interest rate while the
other party  receives a fixed  interest rate and pays a floating  interest rate.
During April 2003,  Trustmark initiated four separate interest rate swaps with a
total notional  principal  amount of $100 million.  During July 2003,  Trustmark
added  another  interest  rate  swap  with a  notional  principal  amount of $25
million.  These swaps are designated as fair value hedges.  Trustmark  initiated
these  swaps to  mitigate  the  effects of further  changes in the fair value of
specific,  noncallable,  nonprepayable,  fixed  rate  advances  from the FHLB by
agreeing to pay a floating  interest rate tied to LIBOR.  The swap contracts are
tied to the maturity of five separate FHLB  advances  maturing  between 2005 and
2006. As of December 31, 2003, these swap contracts had carrying values totaling
$38.9 thousand.

Trustmark utilizes an interest rate risk strategy that includes caps and floors.
The  intent of  utilizing  these  derivative  instruments  is to reduce the risk
associated with the effects of significant movements in interest rates. Caps and
floors, which are not designated as hedging instruments, are options linked to a
notional principal amount and an underlying  indexed interest rate.  Exposure to
loss on these options will increase or decrease as interest rates fluctuate.  At
December 31, 2003,  Trustmark had $300 million  notional amount of interest rate
caps with carrying values totaling $234 thousand.  These caps mature in 2006 and
are linked to the three-month  LIBOR,  with a strike rate of 6%. During 2002 and
2001,   Trustmark   received   payments  of  $1.3  million  and  $982  thousand,
respectively,  on the interest  rate floor as the interest  rate floor  contract
reached its strike price.  These  payments have been recorded as other  interest
income.  No such  payments  were received in 2003, as Trustmark did not hold any
interest rate floor contracts during the year.

NOTE 17 - MANAGED LOANS

During 2003,  Trustmark  sold $1.481  billion of  residential  mortgage loans in
securitization  transactions  compared with $1.049 billion in 2002. Pretax gains
on these sales  totaled $13.6 million in 2003 compared with $8.4 million in 2002
and were  recorded in other  income.  Trustmark  receives  annual  servicing fee
income  approximating  0.36% of the outstanding balance of the underlying loans.
Mortgage servicing rights are discussed further in Note 7 - "Intangible Assets."
The  investors and the  securitization  trusts have no recourse to the assets of
Trustmark for failure of debtors to pay when due.
<PAGE>

In the  determination of the value of mortgage  servicing rights at the dates of
securitization, certain key economic assumptions are made. During 2003, mortgage
servicing  rights  were added based on discount  rates  ranging  from 7% to 10%,
prepayment  rates ranging from 7% to 30% CPR and weighted  average lives ranging
from four to eight years.

At December  31,  2003,  the fair value of mortgage  servicing  rights was $49.7
million, with a weighted average life of approximately five years. Based on this
information,  the following table  illustrates the sensitivity of the fair value
of mortgage  servicing  rights to immediate  10% and 20% adverse  changes in the
following key assumptions ($ in thousands):

                                  Impact on Fair Value
                                    (Adverse Change)
                                  ---------------------
Assumptions           Range          10%          20%
---------------    ------------   --------     --------
Discount Rate      8% - 16%       $(2,040)     $(3,740)
Prepayment Rate    6% - 28% CPR    (2,380)      (4,420)

These  sensitivities  are  hypothetical  and should not be considered to predict
actual future  performance.  As changes in assumptions and changes in fair value
may not be  linear,  it is not  possible  to  extrapolate  the  impact  of other
scenarios from these projections.  Also, changes in one assumption may result in
changes  in  other   assumptions,   which  might  magnify  or   counteract   the
sensitivities.

NOTE 18 - SEGMENT INFORMATION

Effective  January 1, 2003,  Trustmark changed the composition of its reportable
segments  to the  following:  Consumer  Division,  Commercial  Division,  Wealth
Management Division and Operations Division. Segment reclassifications have been
made to prior periods to conform to the current year presentation.  The Consumer
Division  delivers  a full  range of  banking,  investment  and risk  management
products and services to individuals and small  businesses  through  Trustmark's
extensive branch network. Included in this segment are products and services for
insurance,  credit card,  mortgage,  indirect  automobile  financing and student
loans. The Commercial  Division provides various financial products and services
to  corporate  and  middle-market  clients.  Included  among these  products and
services are  specialized  services for commercial and  residential  real estate
development  lending as well as other specialized  lending services.  The Wealth
Management  Division includes trust and fiduciary  services,  discount brokerage
services and services for private banking clients. Also included in this segment
is  a  selection  of  investment   management  services  including   Trustmark's
proprietary   mutual  fund  family.   The   Operations   Division   consists  of
asset/liability management activities including the investment portfolio and the
related gains/losses on sales of securities,  as well as credit risk management,
bank operations, human resources and the controller's department. The Operations
Division also includes  expenses such as corporate  overhead and amortization of
intangible assets.

Trustmark  evaluates  performance and allocates resources based on the profit or
loss of the individual  segments.  Trustmark  utilizes matched maturity transfer
pricing to assign cost of funding to assets and earnings  credits to liabilities
with a  corresponding  offset to the Operations  Division.  Trustmark  allocates
noninterest  expense  based  on  various   activity-based   costing  statistics.
Excluding internal funding,  Trustmark does not have  inter-company  revenues or
expenses.  Additionally,  segment  income tax  expense is  calculated  using the
marginal tax rate. The difference between the marginal and effective tax rate is
included in the Operations Division.

The following  table  discloses  financial  information by segment for the years
ended December 31, 2003, 2002 and 2001 ($ in thousands):
<PAGE>

<TABLE>
<CAPTION>
                                                      Consumer    Commercial   Wealth Mgmt.   Operations
                                                      Division     Division      Division      Division      Total
                                                     ----------   ----------   ------------   ----------   ----------
2003
----
<S>                                                  <C>         <C>          <C>            <C>          <C>
Net interest income from external customers          $  169,068   $   52,395   $      4,723   $   43,644   $  269,830
Internal funding                                         33,141       (8,108)           277      (25,310)           -
                                                     ----------   ----------   ------------   ----------   ----------
Net interest income                                     202,209       44,287          5,000       18,334      269,830
Provision for loan losses                                 8,933          467             26          345        9,771
                                                     ----------   ----------   ------------   ----------   ----------
Net interest income after provision for loan losses     193,276       43,820          4,974       17,989      260,059
Noninterest income                                      112,625        6,942         19,891       18,085      157,543
Noninterest expense                                     183,851       15,070         18,161       19,038      236,120
                                                     ----------   ----------   ------------   ----------   ----------
Income before income taxes                              122,050       35,692          6,704       17,036      181,482
Income taxes                                             42,310       12,314          2,369        5,959       62,952
                                                     ----------   ----------   ------------   ----------   ----------
Segment net income                                   $   79,740   $   23,378   $      4,335   $   11,077   $  118,530
                                                     ==========   ==========   ============   ==========   ==========
Selected Financial Information
     Average assets                                  $4,120,751   $1,115,958   $    122,872   $2,049,041   $7,408,622
     Depreciation and amortization                   $   24,500   $      140   $        416   $    8,000   $   33,056

2002
----
Net interest income from external customers          $  159,923   $   59,157   $      4,962   $   68,144   $  292,186
Internal funding                                         31,888      (15,294)          (795)     (15,799)           -
                                                     ----------   ----------   ------------   ----------   ----------
Net interest income                                     191,811       43,863          4,167       52,345      292,186
Provision for loan losses                                10,709        3,040           (153)         511       14,107
                                                     ----------   ----------   ------------   ----------   ----------
Net interest income after provision for loan losses     181,102       40,823          4,320       51,834      278,079
Noninterest income                                      101,915        6,898         21,368       11,689      141,870
Noninterest expense                                     189,427       14,102         17,053       13,259      233,841
                                                     ----------   ----------   ------------   ----------   ----------
Income before income taxes                               93,590       33,619          8,635       50,264      186,108
Income taxes                                             32,602       11,598          3,211       17,557       64,968
                                                     ----------   ----------   ------------   ----------   ----------
Segment net income                                   $   60,988   $   22,021   $      5,424   $   32,707   $  121,140
                                                     ==========   ==========   ============   ==========   ==========
Selected Financial Information
     Average assets                                  $3,849,519   $1,092,870   $    109,564   $1,789,839   $6,841,792
     Depreciation and amortization                   $   27,557   $      163   $        340   $    8,811   $   36,871

2001
----
Net interest income from external customers          $  127,293   $   66,128   $      5,946   $   67,537   $  266,904
Internal funding                                         52,817      (26,821)        (1,962)     (24,034)           -
                                                     ----------   ----------   ------------   ----------   ----------
Net interest income                                     180,110       39,307          3,984       43,503      266,904
Provision for loan losses                                11,924          822             89          365       13,200
                                                     ----------   ----------   ------------   ----------   ----------
Net interest income after provision for loan losse      168,186       38,485          3,895       43,138      253,704
Noninterest income                                       92,894        7,561         20,851       10,684      131,990
Noninterest expense                                     170,701       12,766         16,979       13,821      214,267
                                                     ----------   ----------   ------------   ----------   ----------
Income before income taxes                               90,379       33,280          7,767       40,001      171,427
Income taxes                                             31,809       11,482          2,410       14,445       60,146
                                                     ----------   ----------   ------------   ----------   ----------
Segment net income                                   $   58,570   $   21,798   $      5,357   $   25,556   $  111,281
                                                     ==========   ==========   ============   ==========   ==========
Selected Financial Information
     Average assets                                  $3,553,815   $1,101,026   $     92,268   $2,240,751   $6,987,860
     Depreciation and amortization                   $   16,024   $      156   $        368   $   10,316   $   26,864
</TABLE>
<PAGE>

NOTE 19 - TRUSTMARK CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION
          ($ in thousands):

                                 BALANCE SHEETS
                                                          December 31,
                                                      --------------------
                                                        2003        2002
                                                      --------    --------
Assets
Investment in banks                                   $669,555    $673,426
Other assets                                            20,018       6,254
                                                      --------    --------
    Total Assets                                      $689,573    $679,680
                                                      ========    ========


Liabilities and Shareholders' Equity
Accrued expense                                       $      -    $    146
Shareholders' equity                                   689,573     679,534
                                                      --------    --------
    Total Liabilities and Shareholders' Equity        $689,573    $679,680
                                                      ========    ========
<TABLE>
<CAPTION>
                           STATEMENTS OF INCOME

                                                          Years Ended December 31,
                                                      ---------------------------------
                                                        2003        2002        2001
                                                      --------    ---------    --------
<S>                                                   <C>         <C>          <C>
Revenue
Dividends received from banks                         $110,410     $118,215    $187,570
Earnings of subsidiaries over (under) distributions      8,200        2,616     (77,202)
Other income                                               152          697       1,418
                                                      --------     --------    --------
    Total Revenue                                      118,762      121,528     111,786
Expense                                                    232          388         505
                                                      --------     --------    --------
Net Income                                            $118,530     $121,140    $111,281
                                                      ========     ========    ========
</TABLE>
<TABLE>
<CAPTION>

                            STATEMENTS OF CASH FLOWS

                                                          Years Ended December 31,
                                                      ---------------------------------
                                                        2003         2002        2001
                                                      --------     --------    --------
<S>                                                   <C>          <C>         <C>
Operating Activities
Net income                                            $118,530     $121,140    $111,281
Adjustments to reconcile net income to net cash
  provided by operating activities:
     (Increase) decrease in investment in
       subsidiaries                                     (8,200)     (2,616)      77,202
     Other                                                 182         (85)          24
                                                      --------    --------     --------
Net cash provided by operating activities              110,512     118,439      188,507

Investing Activities
Net cash paid in business combinations                       -           -      (78,026)
Purchase of securities available for sale              (15,008)          -            -
Proceeds from sales of securities available for sale         -         813        1,546
Purchases of premises and equipment                          -      (4,077)           -
                                                      --------    --------     --------
Net cash used in investing activities                  (15,008)     (3,264)     (76,480)

Financing Activities
Cash dividends                                         (40,326)    (38,210)     (36,001)
Common stock transactions, net                         (57,148)    (78,095)     (74,386)
                                                      --------    --------     --------
Net cash used in financing activities                  (97,474)   (116,305)    (110,387)
                                                      --------    --------     --------
Increase (decrease) in cash and cash equivalents        (1,970)     (1,130)       1,640
Cash and cash equivalents at beginning of year           2,755       3,885        2,245
                                                      --------    --------     --------
Cash and cash equivalents at end of year              $    785    $  2,755     $  3,885
                                                      ========    ========     ========
</TABLE>
<PAGE>

Trustmark (parent company only) paid income taxes of approximately $59.1 million
in 2003,  $70.4  million in 2002 and $55.6 million in 2001. No interest was paid
during 2003, 2002 and 2001.

SELECTED FINANCIAL DATA
($ in thousands except per share data)
<TABLE>
<CAPTION>
                       Years Ended December 31,      2003         2002         2001         2000         1999
-----------------------------------------------   ----------   ----------   ----------   ----------   ----------
<S>                                               <C>         <C>           <C>          <C>          <C>
Consolidated Statements of Income
  Total interest income                           $  359,388   $  405,952   $  476,146   $  488,176   $  447,481
  Total interest expense                              89,558      113,766      209,242      255,196      205,079
                                                  ----------   ----------   ----------   ----------   ----------
  Net interest income                                269,830      292,186      266,904      232,980      242,402
  Provision for loan losses                            9,771       14,107       13,200       10,401        9,072
  Noninterest income                                 157,543      141,870      131,990      124,540      101,943
  Noninterest expense                                236,120      233,841      214,267      188,794      186,043
                                                  ----------   ----------   ----------   ----------   ----------
  Income before income taxes and
    cumulative effect of a change in
    accounting principle                             181,482      186,108      171,427      158,325      149,230
  Income taxes                                        62,952       64,968       60,146       54,124       51,236
                                                  ----------   ----------   ----------   ----------   ----------
  Income before cumulative effect
    of a change in accounting principle              118,530      121,140      111,281      104,201       97,994
  Cumulative effect of a change in
    accounting principle (net of tax)                      -            -            -       (2,464)           -
                                                  ----------   ----------   ----------   ----------   ----------
  Net Income                                      $  118,530   $  121,140   $  111,281   $  101,737   $   97,994
                                                  ==========   ==========   ==========   ==========   ==========

Per Share Data
  Basic earnings per share before
      cumulative change                           $     2.01   $     1.95   $     1.72   $     1.53   $     1.36
  Cumulative effect of a change
       in accounting principle                             -            -            -        (0.03)           -
                                                  ----------   ----------   ----------   ----------   ----------
  Basic earnings per share                        $     2.01   $     1.95   $     1.72   $     1.50   $     1.36
                                                  ==========   ==========   ==========   ==========   ==========

  Diluted earnings per share before
       cumulative change                          $     2.00   $     1.94   $     1.72   $     1.53   $     1.36
  Cumulative effect of a change
       in accounting principle                             -            -            -        (0.03)           -
                                                  ----------   ----------   ----------   ----------   ----------
  Diluted earnings per share                      $     2.00   $     1.94   $     1.72   $     1.50   $     1.36
                                                  ==========   ==========   ==========   ==========   ==========


     Cash dividends per share                     $     0.69   $     0.62   $     0.56   $     0.51   $     0.44
                                                  ==========   ==========   ==========   ==========   ==========
</TABLE>
<TABLE>
<CAPTION>

                                  December 31,       2003          2002        2001         2000         1999
----------------------------------------------    ----------   ----------   ----------   ----------   ----------
<S>                                               <C>          <C>          <C>          <C>          <C>
Consolidated Balance Sheets
   Total assets                                   $7,914,321   $7,138,706   $7,180,339   $6,886,988   $6,743,404
   Securities                                      2,112,443    1,811,767    1,853,547    2,125,098    2,174,201
   Gross loans (including loans held for sale)     5,032,612    4,617,366    4,524,366    4,143,933    4,014,935
   Deposits                                        5,089,459    4,686,296    4,613,365    4,058,418    3,924,796
</TABLE>
<PAGE>

SUMMARY OF QUARTERLY RESULTS OF OPERATIONS
(unaudited)
($ in thousands except per share data)
<TABLE>
<CAPTION>
                                          2003       1st          2nd          3rd           4th
----------------------------------------------    ----------   ----------   ----------   ----------
<S>                                               <C>          <C>          <C>          <C>
Interest income                                   $   93,017   $   91,674   $   85,185   $   89,512
Net interest income                                   69,197       68,189       63,831       68,613
Provision for loan losses                              3,000        2,649        1,771        2,351
Income before income taxes                            37,654       47,679       49,247       46,902
Net income                                            24,484       31,164       32,418       30,464
Earnings per share
      Basic and Diluted                                 0.41         0.53         0.55         0.52

                                          2002       1st          2nd          3rd           4th
----------------------------------------------    ----------   ----------   ----------   ----------
Interest income                                   $  104,837   $  103,499   $  101,421   $   96,195
Net interest income                                   73,929       74,791       73,093       70,373
Provision for loan losses                              4,307        3,000        3,000        3,800
Income before income taxes                            46,618       48,727       46,533       44,230
Net income                                            30,329       31,403       30,062       29,346
Earnings per share
      Basic and Diluted                                 0.48         0.50         0.49         0.48
</TABLE>


PRINCIPAL MARKETS AND PRICES OF TRUSTMARK'S STOCK

                                               Stock Prices
                            Dividends    -----------------------
                            Per Share       High         Low
                            ---------    ----------   ----------
  2003
----------
4th Quarter                  $ 0.190      $ 30.000     $ 27.050
3rd Quarter                    0.165        28.000       25.030
2nd Quarter                    0.165        27.000       23.540
1st Quarter                    0.165        24.800       22.560

  2002
----------
4th Quarter                  $ 0.165      $ 24.300     $ 20.350
3rd Quarter                    0.150        26.150       21.290
2nd Quarter                    0.150        27.140       24.560
1st Quarter                    0.150        25.500       23.380

Trustmark's  common  stock is listed for trading on the NASDAQ  stock  market as
stock symbol TRMK.
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS

The  following  provides  a  narrative  discussion  and  analysis  of  Trustmark
Corporation's  (Trustmark)  financial condition and results of operations.  This
discussion  should  be read  in  conjunction  with  the  consolidated  financial
statements  and the  supplemental  financial  data  included  elsewhere  in this
report.

BUSINESS

Trustmark is a multi-bank holding company headquartered in Jackson, Mississippi,
incorporated under the Mississippi  Business  Corporation Act on August 5, 1968.
Trustmark  commenced doing business in November 1968.  Through its subsidiaries,
Trustmark  operates as a financial services  organization  providing banking and
financial  solutions  to  corporate,   institutional  and  individual  customers
predominantly within the states of Mississippi, Tennessee and Florida.

Trustmark National Bank (TNB), Trustmark's wholly-owned subsidiary, accounts for
substantially  all of the assets and  revenues of  Trustmark.  Chartered  by the
state of Mississippi in 1889, TNB is also headquartered in Jackson, Mississippi.
In  addition  to banking  activities,  TNB  provides  investment  and  insurance
products and services to its customers through three wholly-owned  subsidiaries,
Trustmark  Securities,  Inc.  (formerly  Trustmark  Financial  Services,  Inc.),
Trustmark Investment Advisors, Inc. and The Bottrell Insurance Agency, Inc.

Trustmark  also  engages  in  banking   activities   through  its   wholly-owned
subsidiary,  Somerville  Bank & Trust  Company  (Somerville),  headquartered  in
Somerville,  Tennessee. Somerville was acquired in a business combination during
2001  and  presently  has  five  locations  in  Somerville,  Hickory  Withe  and
Rossville,  Tennessee.  In addition to its banking subsidiaries,  Trustmark also
owns all of the stock of F. S. Corporation and First Building Corporation,  both
inactive   nonbank   Mississippi   corporations.   Neither   Trustmark  nor  its
subsidiaries have any foreign activities. As of December 31, 2003, Trustmark and
its subsidiaries employed 2,356 full-time equivalent employees.

Trustmark  engages in business  through its four reportable  segments:  Consumer
Division,   Commercial  Division,  Wealth  Management  Division  and  Operations
Division. The Consumer Division delivers a full range of banking, investment and
risk  management  products  and  services to  individuals  and small  businesses
through Trustmark's  extensive branch network.  The Commercial Division provides
various financial products and services to corporate and middle-market  clients.
The Wealth Management Division includes trust and fiduciary services,  brokerage
services and services  for private  banking  clients.  The  Operations  Division
consists of  asset/liability  management  activities that include the investment
portfolio and the related gains/losses on sales of securities, as well as credit
risk  management,   bank  operations,   human  resources  and  the  controller's
department.  See Note 18 of the Consolidated Financial Statements for additional
financial information on Trustmark's reportable segments.

FORWARD-LOOKING STATEMENTS

Certain  statements  contained in  Management's  Discussion and Analysis are not
statements of historical fact and constitute  forward-looking  statements within
the  meaning of the  Private  Securities  Litigation  Reform Act of 1995.  These
forward-looking  statements relate to anticipated future operating and financial
performance measures,  including net interest margin,  credit quality,  business
initiatives,  growth  opportunities and growth rates, among other things.  Words
such as  "expects,"  "anticipates,"  "believes,"  "estimates"  and other similar
expressions  are intended to identify  these  forward-looking  statements.  Such
forward-looking  statements  are  subject to certain  risks,  uncertainties  and
assumptions.  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.
These  risks  could  cause  actual  results to differ  materially  from  current
expectations of Management and include the following:
<PAGE>

     o    The level of nonperforming  assets,  charge-offs and provision expense
          can be  affected  by local,  state and  national  economic  and market
          conditions as well as Management's judgments regarding  collectability
          of loans.
     o    Material  changes in market interest rates can materially  affect many
          aspects of Trustmark's  financial condition and results of operations.
          Trustmark is exposed to the  potential of losses  arising from adverse
          changes in market interest rates and prices which can adversely impact
          the  value  of  financial  products,   including  securities,   loans,
          deposits, debt and derivative financial instruments.  Factors that may
          affect the market interest rates include local,  regional and national
          economic conditions;  utilization and effectiveness of market interest
          rate contracts;  and the  availability of wholesale and retail funding
          sources to Trustmark.  Many of these  factors are outside  Trustmark's
          control.
     o    Increases in prepayment  speeds of mortgage  loans  resulting  from an
          historically low interest rate environment would have an impact on the
          fair value of the mortgage servicing portfolio.  In addition,  premium
          amortization on mortgage  related  securities  included in Trustmark's
          securities  portfolio  would also be  accelerated as prepayment of the
          mortgage loans securing these  securities  occurs.  The combination of
          these  events  could   materially   affect   Trustmark's   results  of
          operations.
     o    The costs and  effects  of  litigation  and of  unexpected  or adverse
          outcomes in such litigation can materially affect Trustmark's  results
          of operations.
     o    Competition in loan and deposit  pricing,  as well as the entry of new
          competitors   into  our  markets   through  de  novo   expansion   and
          acquisitions,  among other means,  could have an effect on Trustmark's
          operations in our existing markets.
     o    Trustmark is subject to  regulation  by federal  banking  agencies and
          authorities  and the  Securities and Exchange  Commission.  Changes in
          existing  regulations or the adoption of new regulations could make it
          more costly for Trustmark to do business or could force changes in the
          manner  Trustmark  does  business,  which  could  have  an  impact  on
          Trustmark's financial condition or results of operations.

Although   Management   believes  that  the   expectations   reflected  in  such
forward-looking  statements are  reasonable,  it can give no assurance that such
expectations will prove to be correct.  These statements are representative only
as of the date hereof,  and Trustmark  does not assume any  obligation to update
these  forward-looking  statements  or to update the reasons why actual  results
could differ from those projected in the forward-looking statements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Trustmark's  consolidated  financial  statements are prepared in accordance with
accounting principles generally accepted in the United States of America,  which
require the use of estimates and assumptions that affect the amounts reported in
those  consolidated  financial  statements.  Critical  accounting  policies  and
estimates  are  defined as  policies  that are  important  to the  portrayal  of
Trustmark's  financial  condition  and results of  operations  and that  require
Management's most difficult,  subjective or complex judgments.  Actual financial
results could differ  significantly if different  judgments are applied to these
policies and estimates.

Fair Value Accounting Estimates

Generally  accepted  accounting  principles  require  the use of fair  values in
determining  the  carrying  values of assets  and  liabilities,  as well as, for
specific  disclosures.  The  most  significant  include  securities,  derivative
instruments,  loans  held for sale,  mortgage  servicing  rights  and net assets
acquired  in a  business  combination.  Certain  of these  assets  do not have a
readily  available  market to determine fair value and require an estimate based
on specific parameters. When market prices are unavailable, Trustmark determines
fair values  utilizing  parameters,  which are  constantly  changing,  including
interest rates,  duration,  prepayment speeds and other specific conditions.  In
most cases,  these specific  parameters require a significant amount of judgment
by Management.

Allowance for Loan Losses

The allowance for loan losses is maintained at a level  Management and the Board
of Directors believe is adequate to absorb estimated  probable losses within the
loan portfolio.  A formal analysis is prepared monthly to assess the risk in the
loan  portfolio  and to determine the adequacy of the allowance for loan losses.
The analysis for loan losses  considers any identified  impairment and estimates
determined by applying specific allowance factors to the commercial and consumer
loan portfolios.
<PAGE>
Commercial  loans, as well as commercial real estate loans,  carry an internally
assigned  risk  grade  based on a scale of one to ten.  An  allowance  factor is
assigned to each loan grade based on historical loan losses in addition to other
factors such as the level and trend of delinquencies,  classified and criticized
loans and nonperforming  loans.  Other factors are also taken into consideration
such as local,  regional and national economic trends,  industry and other types
of concentrations and loan loss trends that run counter to historical  averages.
All  classified  loans greater than $500 thousand are reviewed  quarterly by the
Asset Review  Department  to determine if a higher  allowance  factor  should be
applied to the loan based on a greater level of risk and probability of loss.

Consumer loans carry  allowance  factors  applied to pools of homogeneous  loans
such as direct and indirect loans,  credit cards, home equity loans, other types
of  revolving  consumer  lines of credit and  residential  mortgage  loans.  The
allowance factor applied to each pool is based on historical loan loss trends as
well  as  current  and  projected  trends  in  loan  losses.   Also  taken  into
consideration are trends in consumer  delinquencies,  consumer  bankruptcies and
the  effectiveness  of  Trustmark's  collection  function  as well  as  economic
conditions and trends referred to above.

Mortgage Servicing Rights

Mortgage  servicing  rights  are rights to service  mortgage  loans for  others,
whether the loans were acquired through purchase or loan origination.  Purchased
mortgage servicing rights are capitalized at cost. For loans originated and sold
where the servicing rights have been retained,  Trustmark  allocates the cost of
the  loan  and  the  servicing  right  based  on  their  relative  fair  values.
Impairment,  if any,  for  mortgage  servicing  rights is  recognized  through a
valuation  allowance with a corresponding  charge to noninterest expense that is
determined using estimated fair values based on specific risk characteristics of
the underlying mortgages. During the quarter ended September 30, 2003, Trustmark
expanded its risk  characteristics,  which had previously  included product type
and term, to include interest rates on the underlying mortgages.  This change in
estimate was necessary  because of the recent volatile interest rate environment
and reduced income before income taxes during 2003 by approximately $2.7 million
before tax ($1.7 million after tax or $0.03 per share). As of December 31, 2003,
mortgage  servicing  rights had a gross carrying  amount of $65.6 million with a
valuation  allowance  of  $15.9  million.  As of  December  31,  2002,  mortgage
servicing  rights had a gross carrying  amount of $61.3 million with a valuation
allowance of $12.5 million.

Contingent Liabilities

Trustmark estimates its contingent liabilities based on Management's  evaluation
of the  probability  of  outcomes  and their  ability to  estimate  the range of
exposure. As stated by Statement of Financial Accounting Standards (SFAS) No. 5,
"Accounting for  Contingencies,"  a liability is contingent if the amount is not
presently  known,  but  may  become  known  in the  future  as a  result  of the
occurrence of some uncertain future event.  Accounting  standards require that a
liability be recorded if Management  determines  that it is probable that a loss
has occurred and the loss can be reasonably  estimated.  In addition, it must be
probable  that the loss will be confirmed by some future  event.  As part of the
estimation  process,  Management is required to make  assumptions  about matters
that are, by their  nature,  highly  uncertain.  The  assessment  of  contingent
liabilities,  including legal contingencies and income tax liabilities, involves
the use of critical estimates, assumptions and judgments. Management's estimates
are  based  on their  belief  that  future  events  will  validate  the  current
assumptions  regarding the ultimate outcome of these exposures.  However,  there
can be no  assurance  that future  events,  such as court  decisions or Internal
Revenue  Service  positions,  will not  differ  from  Management's  assessments.
Whenever  practicable,  Management  consults  with outside  experts  (attorneys,
independent  accountants,  claims  administrators,  etc.)  to  assist  with  the
gathering and evaluation of information related to contingent liabilities.

EXECUTIVE SUMMARY

Trustmark is an integrated provider of banking financial solutions with over 140
branches and 175 ATMs throughout Mississippi,  Tennessee and Florida. Net income
for the year ended  December 31, 2003,  totaled  $118.5  million  compared  with
$121.1  million for 2002 and $111.3  million for 2001.  Basic earnings per share
were $2.01 for 2003,  an  increase  of 3.1% when  compared  with $1.95 for 2002.
Basic  earnings per share were $1.72 for 2001.  Diluted  earnings per share were
$2.00 for 2003, $1.94 for 2002 and $1.72 for 2001. Earnings during 2003 included
an  after-tax  charge of $4.1  million,  or $0.07  per  share,  associated  with
Trustmark's  Voluntary Early Retirement Program. At December 31, 2003, Trustmark
reported gross loans,  including loans held for sale, of $5.033  billion,  total
assets of $7.914  billion,  total deposits of $5.089  billion and  shareholders'
equity of $689.6 million.
<PAGE>

Management  utilizes certain financial ratios to gauge Trustmark's  performance.
Trustmark  achieved a return on average  assets of 1.60% and a return on average
equity of 17.56% for the year ended December 31, 2003.  These compared with 2002
ratios of 1.77% for  return on  average  assets and 17.93% for return on average
equity,  while in 2001 the return on average  assets was 1.59% and the return on
average equity was 16.98%.

For 2004,  Trustmark's  strategic  focus will center  primarily  on investing in
higher  growth  markets  to  become  a  regional  financial  services  provider,
maximizing  profitability  in  lower  growth  markets,  integrating  the  Wealth
Management Division  throughout the organization,  making prudent investments to
support revenue growth and continuing to build shareholder value.

BUSINESS COMBINATIONS

On  December  9,  2003,  Trustmark  and Allied  Houston  Bank,  Houston,  Texas,
announced the signing of a definitive  Branch Purchase and Assumption  Agreement
pursuant to which  Trustmark  National Bank will acquire five branches of Allied
Houston  Bank  serving the  greater  Houston  market for a $10  million  deposit
premium. The Agreement  contemplates the assumption of selected deposit accounts
of  approximately  $160  million,  the  purchase  of selected  loan  accounts of
approximately  $158 million and the operation of five Allied Houston Bank branch
locations.  At November 30, 2003, Allied Houston Bank deposits and loans totaled
approximately  $199  million  and  $178  million,   respectively.  The  proposed
transaction,  which is subject to the  approval of  regulatory  authorities  and
Allied  Houston  shareholders,  is expected to close during the first quarter of
2004.

On August 29,  2003,  Trustmark  acquired  seven  Florida  branches  of The Banc
Corporation of Birmingham,  Alabama, in a business combination  accounted for by
the purchase method of accounting.  These  branches,  known as the Emerald Coast
Division,  serve the markets from Destin to Panama City. In connection  with the
transaction,  Trustmark  paid a $46.8  million  deposit  premium in exchange for
$232.8 million in assets and $209.2  million in deposits and other  liabilities.
Assets  consisted  of $224.3  million in loans,  $6.8  million in  premises  and
equipment and $1.7 million in other assets.  These assets and  liabilities  have
been recorded at fair value based on market conditions and risk  characteristics
at the  acquisition  date.  Loans  were  recorded  at a $1.9  million  discount,
consisting  of a discount for general  credit risk of $3.5  million  offset by a
market premium of $1.6 million. This net discount will be recognized as interest
income over the  estimated  life of the loans.  Excess  costs over  tangible net
assets acquired  totaled $49.5 million,  of which $1.7 million and $47.8 million
have been allocated to core deposits and goodwill, respectively.

On June 28, 2002, The Bottrell Insurance Agency, Inc., a wholly-owned subsidiary
of TNB, acquired Chandler-Sampson Insurance, Inc. (CSI) in Jackson, Mississippi.
This business combination, which is not material to Trustmark, was accounted for
under the purchase  method of accounting.  The  shareholders  of CSI received $8
million in cash in  connection  with the merger.  Excess cost over  tangible net
assets  acquired  totaled $10  million,  of which $3 million and $7 million have
been   allocated  to  other   identifiable   intangible   assets  and  goodwill,
respectively. Trustmark's financial statements include the results of operations
for the CSI acquisition from the merger date.

On  December  14,  2001,  Nashoba  Bancshares,  Inc.  (Nashoba)  in  Germantown,
Tennessee,  was merged with Trustmark in a business combination accounted for by
the purchase  method of accounting.  Nashoba was the holding company for Nashoba
Bank,  and at the merger date,  had $10 million in  securities,  $147 million in
total loans,  $163  million in total assets and $132 million in total  deposits.
The  shareholders of Nashoba received $28 million in cash in connection with the
merger.  Excess cost over tangible net assets acquired  totaled $17 million,  of
which $3 million  and $14  million  have been  allocated  to core  deposits  and
goodwill, respectively.

On April 6, 2001, Barret Bancorp (Barret) in Barretville,  Tennessee, was merged
with Trustmark in a business combination accounted for by the purchase method of
accounting.  Barret was the holding  company for  Peoples  Bank in  Barretville,
Tennessee, and Somerville Bank & Trust Company in Somerville,  Tennessee. At the
merger date, Barret had $104 million in securities, $307 million in total loans,
$508  million  in  total  assets  and  $414  million  in  total  deposits.   The
shareholders of Barret received  approximately 2.4 million shares of Trustmark's
common  stock along with $51  million in cash.  Excess  cost over  tangible  net
assets acquired  totaled $27 million,  of which $11 million and $16 million have
been allocated to core deposits and goodwill, respectively.

Trustmark's financial statements include the results of operations for the above
purchase  business  combinations from the respective merger dates. The pro forma
impact of these acquisitions on Trustmark's results of operations is immaterial.
<PAGE>

RESULTS OF OPERATIONS

Net Interest Income

Net interest income is the principal  component of Trustmark's income stream and
represents the difference,  or spread, between interest and fee income generated
from  earning  assets and the  interest  expense  paid on deposits  and borrowed
funds.  Fluctuations  in  interest  rates,  as well as volume and mix changes in
earning  assets  and  interest-bearing  liabilities  can  materially  impact net
interest  income.  The net interest  margin (NIM) is computed by dividing  fully
taxable  equivalent net interest income by average  interest-earning  assets and
measures  how  effectively  Trustmark  utilizes its  interest-earning  assets in
relationship  to the interest  cost of funding  them.  The  Yield/Rate  Analysis
Tables on page 51 show the average  balances for all assets and  liabilities  of
Trustmark and the interest income or expense  associated with earning assets and
interest-bearing liabilities. The yields and rates have been computed based upon
interest income and expense  adjusted to a fully taxable  equivalent (FTE) basis
using a 35% federal  marginal tax rate for all periods shown.  Trading  accounts
with average balances of $11 thousand in 2002 and $69 thousand in 2001 have been
included in federal funds sold and securities purchased under reverse repurchase
agreements.  Nonaccruing  loans have been  included in the average loan balances
and interest collected prior to these loans having been placed on nonaccrual has
been included in interest income. Loan fees included in interest associated with
the average loan balances are immaterial.

As  interest  rates  remain at  historically  low  levels,  Management  has been
challenged  to position  the balance  sheet to mitigate the  compression  of net
interest  income.  Funds  provided  from  maturities,  pay  downs  and  sales of
securities  have been used to fund  loan  growth  and  purchases  of  additional
securities to maintain  sufficient levels of earning assets.  Trustmark has also
reduced interest expense on FHLB advances by engaging in various swap agreements
beginning in the second  quarter of 2003.  Trustmark will continue to manage the
overall risk exposure present during significant movements in interest rates and
reduce  the  impact of  interest  rate  movement  on net  interest  income.  For
additional  discussion,  see Market/Interest  Rate Risk Management  beginning on
page 63.

Net  interest  income-FTE  for 2003,  decreased  $23.1  million,  or 7.7%,  when
compared  with 2002.  Excluding  the Emerald Coast  business  combination,  this
decrease was $26.8 million,  or 8.9%.  The continuing  decline in interest rates
experienced  during  2003 and 2002 has  impacted  both  assets and  liabilities;
however,  since  Trustmark's  cost of funds  are  driven  primarily  by its core
deposit  base,  rates  on  interest-bearing  liabilities  have not seen the same
magnitude of decline as earning asset yields.  Additional  items  impacting this
decline in NIM during 2003 include  increased  premium  amortization on mortgage
related securities. Interest rates on mortgages fell to historical lows in 2003,
prompting a significant  refinance boom across the country.  As excess principal
pay downs  occurred,  net premium  amortization on mortgage  related  securities
accelerated.  Premium  amortization  during 2003 on mortgage related  securities
increased by $18.1 million,  or 254.2%, when compared with 2002. The combination
of these factors  resulted in declines in the NIM during 2003 of 74 basis points
when compared with 2002.
<PAGE>

Yield/Rate Analysis Table
($ in thousands)
<TABLE>
<CAPTION>
                                                                    Years Ended December 31,
                                                  ----------------------------------------------------------
                                                              2003                          2002
                                                  ----------------------------  ----------------------------
                                                   Average              Yield/   Average              Yield/
                                                   Balance    Interest   Rate    Balance    Interest   Rate
                                                  ----------  --------  ------  ----------  --------  ------
<S>                                               <C>         <C>       <C>     <C>         <C>       <C>
Assets
Interest-earning assets:
  Federal funds sold and securities purchased
    under reverse repurchase agreements           $   25,174  $    287   1.14%  $   26,275  $    424   1.61%
  Securities available for sale:
    Taxable                                        1,518,170    45,566   3.00%     885,070    50,426   5.70%
    Nontaxable                                        67,188     5,280   7.86%      81,883     6,522   7.97%
  Securities held to maturity:
    Taxable                                          236,994    19,766   8.34%     588,193    39,136   6.65%
    Nontaxable                                        90,755     7,082   7.80%      89,698     7,120   7.94%
  Loans, net of unearned income                    4,822,350   289,672   6.01%   4,544,611   311,376   6.85%
                                                  ----------  --------          ----------  --------
    Total interest-earning assets                  6,760,631   367,653   5.43%   6,215,730   415,004   6.68%
Cash and due from banks                              296,724                       280,543
Other assets                                         426,157                       421,037
Allowance for loan losses                            (74,890)                      (75,518)
                                                  ----------                    ----------
    Total Assets                                  $7,408,622                    $6,841,792
                                                  ==========                    ==========

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
  Interest-bearing demand deposits                $1,134,243  $ 11,938   1.05%  $  957,410  $ 11,991   1.25%
  Savings deposits                                   832,490     3,429   0.41%     735,885     4,840   0.66%
  Time deposits                                    1,676,700    43,960   2.62%   1,819,130    62,228   3.42%
  Federal funds purchased and securities
    sold under repurchase agreements                 947,050    10,255   1.08%     788,618    12,652   1.60%
  Short-term borrowings                              391,366     6,041   1.54%     384,481     8,206   2.13%
  Long-term FHLB advances                            472,819    13,935   2.95%     327,054    13,849   4.23%
                                                  ----------  --------          ----------  --------
Total interest-bearing liabilities                 5,454,668    89,558   1.64%   5,012,578   113,766   2.27%
Noninterest-bearing demand deposits                1,216,523  --------           1,086,487  --------
Other liabilities                                     62,288                        66,996
Shareholders' equity                                 675,143                       675,731
                                                  ----------                    ----------
    Total Liabilities and Shareholders' Equity    $7,408,622                    $6,841,792
                                                  ==========                    ==========
    Net Interest Margin                                        278,095   4.11%               301,238   4.85%

Less tax equivalent adjustments:
  Investments                                                    4,327                         4,775
  Loans                                                          3,938                         4,277
                                                              --------                      --------
    Net Interest Margin per Annual Report                     $269,830                      $292,186
                                                              ========                      ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                     Year Ended December 31,
                                                  ----------------------------
                                                              2001
                                                  ----------------------------
                                                   Average              Yield/
                                                   Balance    Interest   Rate
                                                  ----------  --------  ------
<S>                                               <C>         <C>       <C>
Assets
Interest-earning assets:
  Federal funds sold and securities purchased
    under reverse repurchase agreements           $   24,698  $    921   3.73%
  Securities available for sale:
    Taxable                                        1,078,519    68,174   6.32%
    Nontaxable                                        91,750     7,289   7.94%
  Securities held to maturity:
    Taxable                                          835,946    55,797   6.67%
    Nontaxable                                        90,867     7,269   8.00%
  Loans, net of unearned income                    4,302,485   346,571   8.06%
                                                  ----------  --------
    Total interest-earning assets                  6,424,265   486,021   7.57%
Cash and due from banks                              258,776
Other assets                                         376,469
Allowance for loan losses                            (71,650)
                                                  ----------
    Total Assets                                  $6,987,860
                                                  ==========

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
  Interest-bearing demand deposits                $  795,890  $ 19,864   2.50%
  Savings deposits                                   637,973     7,759   1.22%
  Time deposits                                    1,895,677    98,733   5.21%
  Federal funds purchased and securities
    sold under repurchase agreements               1,117,059    42,390   3.79%
  Short-term borrowings                              495,607    22,167   4.47%
  Long-term FHLB advances                            351,301    18,329   5.22%
                                                  ----------  --------
Total interest-bearing liabilities                 5,293,507   209,242   3.95%
Noninterest-bearing demand deposits                  966,437  --------
Other liabilities                                     72,478
Shareholders' equity                                 655,438
                                                  ----------
    Total Liabilities and Shareholders' Equity    $6,987,860
                                                  ==========
    Net Interest Margin                                        276,779    4.31%

Less tax equivalent adjustments:
  Investments                                                    5,095
  Loans                                                          4,780
                                                              --------
    Net Interest Margin per Annual Report                     $266,904
                                                              ========
</TABLE>

Net interest  income-FTE for the year ended December 31, 2002,  increased  $24.5
million, or 8.8%, when compared with 2001. Excluding business combinations, this
increase  would have been $17.5  million,  or 6.6%.  The  continuing  decline in
interest  rates  experienced  during  2002 had a  greater  impact on the cost of
interest-bearing   liabilities  as  Trustmark  benefited  from  being  liability
sensitive for a large portion of the year.  This interest  sensitivity  position
illustrates that Trustmark was generally able to increase net interest income in
a declining rate environment, since a greater proportion of liabilities was tied
to  short-term  rates  than  assets.  This  combination  resulted  in an overall
positive  impact to the NIM of 54 basis  points,  when  comparing  2002 to 2001.
Additionally,  during  2002,  Trustmark's  use of interest  rate caps and floors
provided  $1.3 million of  additional  interest  income as the floor reached its
strike  price  during a falling  interest  rate  environment,  compared  to $982
thousand during 2001.
<PAGE>

Average  interest-earning  assets for 2003 were $6.761  billion,  compared  with
$6.216  billion for 2002, an increase of $544.9  million,  or 8.8%.  Without the
Emerald Coast branch purchase, the increase in average  interest-earning  assets
for 2003 is  $474.7  million,  or 7.6%.  Growth  for 2003 is  primarily  seen in
average loans,  which  increased 6.1% (4.6% without Emerald Coast) when compared
with 2002, and average  securities,  which increased 16.3% when 2003 is compared
with 2002.  However,  the declining  interest rate  environment  has  negatively
impacted yields as the yield on average earning assets dropped from 6.68% during
2002 to 5.43% for 2003, a decrease of 125 basis  points.  As a result,  interest
income-FTE  decreased by $47.4 million, or 11.4%, during 2003 when compared with
2002.

Average interest-bearing  liabilities for 2003 totaled $5.455 billion,  compared
with $5.013 billion for 2002, an increase of $442.1  million,  or 8.8%.  Without
the Emerald  Coast branch  purchase,  the  increase in average  interest-bearing
liabilities  for  2003 is  $381.2  million,  or 7.6%.  Average  interest-bearing
deposits increased,  as well as federal funds purchased,  repurchase  agreements
and borrowings.  Although  interest-bearing  liabilities  increased during 2003,
interest  expense  continued  to decrease  due to the  declining  interest  rate
environment.  The average  rates on  interest-bearing  liabilities  for 2003 and
2002, were 1.64% and 2.27%,  respectively,  a decrease of 63 basis points.  As a
result  of these  factors,  total  interest  expense  for 2003  decreased  $24.2
million, or 21.3%, when compared with 2002.

Average  interest-earning  assets for 2002 were $6.216  billion,  compared  with
$6.424  billion in 2001, a decrease of $208.5  million,  or 3.2%.  This decrease
resulted  from  Management's  utilization  of  liquidity  provided  by  maturing
securities  to reduce  Trustmark's  reliance on wholesale  funding  sources.  In
addition,  a  positive  impact  to the NIM when  comparing  2002  with  2001 was
realized  from  the  change  in mix of  interest  earning  assets  as  Trustmark
effectively  utilized the liquidity from maturing  lower yielding  securities to
fund loan growth.  The yield on average earning assets dropped from 7.57% during
2001 to 6.68% in 2002,  a decrease  of 89 basis  points.  The  combination  of a
decrease in the earning asset base and declining  yields  resulted in a decrease
in interest  income-FTE  during 2002 of $71.0 million,  or 14.6%,  when compared
with 2001.

Average interest-bearing  liabilities for 2002 totaled $5.013 billion,  compared
with $5.294  billion for 2001, a decrease of $280.9  million,  or 5.3%.  Average
interest-bearing  deposits  increased while federal funds purchased,  repurchase
agreements and borrowings  decreased,  continuing the trend from the prior year.
This change in mix proved  beneficial in reducing  interest  expense through the
growth of lower cost core  deposits  versus  borrowings.  The  average  rates on
interest-bearing   liabilities   for  2002  and  2001,  were  2.27%  and  3.95%,
respectively,  a decrease  of 168 basis  points.  As a result of these  factors,
total interest expense for 2002 decreased $95.5 million, or 45.6%, when compared
with 2001.

Provision for Loan Losses

Trustmark's  provision  for loan  losses  totaled  $9.8  million in 2003,  $14.1
million in 2002 and $13.2 million in 2001.  During 2003,  the provision for loan
losses equaled 95% of net charge-offs compared with 95% in 2002 and 87% in 2001.
As a percentage of average loans, the provision was 0.20% for 2003 compared with
0.31%  for  both  2002  and  2001.  The  provision  for  loan  losses   reflects
Management's  assessment  of the  adequacy of the  allowance  for loan losses to
absorb probable  losses inherent in the loan portfolio.  The amount of provision
for each period is  dependent  upon many  factors  including  loan  growth,  net
charge-offs,  changes in the composition of the loan  portfolio,  delinquencies,
Management's  assessment of loan portfolio quality,  the value of collateral and
general  economic  factors.  See further  discussion  of the  Allowance for Loan
Losses in Critical  Accounting  Policies and Estimates  beginning on page 47, as
well as the discussion of Loans beginning on page 59.
<PAGE>

Noninterest Income
($ in thousands)
<TABLE>
<CAPTION>
                                          2003                   2002                   2001
                                  -------------------    -------------------    -------------------
                                   Amount    % Change     Amount    % Change     Amount    % Change
                                  --------   --------    --------   --------    --------   --------
<S>                               <C>        <C>         <C>        <C>         <C>        <C>
Service charges on deposit
  accounts                        $ 54,351      8.6%     $ 50,056      7.0%     $ 46,769     11.7%
Other account charges and fees      28,101     -1.0%       28,371     -3.7%       29,473     -8.9%
Insurance commissions               20,567     15.3%       17,837     53.3%       11,635     15.9%
Mortgage servicing fees             16,826     -2.4%       17,247      1.9%       16,920     14.5%
Trust service income                 9,834     -1.3%        9,962      5.7%        9,423     -4.9%
Securities gains                    12,231     -9.9%       13,568    454.2%        2,448    -73.9%
Gains on sales of loans             15,938     70.4%        9,353      2.1%        9,163    207.7%
Other income                          (305)    93.3%       (4,524)  -173.5%        6,159     92.5%
                                  --------               --------               --------
  Total Noninterest Income        $157,543     11.0%     $141,870      7.5%     $131,990      6.0%
                                  ========               ========               ========
</TABLE>

Noninterest Income

Noninterest  income (NII)  consists of revenues  generated from a broad range of
banking and financial services. NII totaled $157.5 million in 2003 compared with
$141.9  million in 2002 and $132.0  million in 2001.  NII  represented  30.5% of
total revenues in 2003 versus 25.9% in 2002 and 21.7% in 2001. The components of
noninterest income for the years ended December 31, 2003, 2002 and 2001, and the
percentage change from the prior year are shown in the accompanying table above.
Noninterest  income contributed by the Emerald Coast branch purchase during 2003
is considered immaterial.

The single  largest  component  of  noninterest  income  continues to be service
charges for deposit products and services, which increased 8.6% in 2003 after an
increase  of 7.0% in 2002.  Increases  in service  charges for 2003 and 2002 are
primarily  attributed  to an  increase in fees  charged  for NSF and  overdrafts
combined with increased transaction volumes during both years.

Other account charges and fees totaled $28.1 million in 2003, a decrease of $270
thousand, or 1.0%, when compared with 2002. Similar circumstances were seen when
comparing 2002 to 2001 as other account charges and fees decreased $1.1 million,
or 3.7%. In both years,  decreasing revenues from market driven products was the
primary  factor in the  decline  as  reductions  were  seen in cash  management,
brokerage and advisory  services and  float-related  revenues.  Offsetting  this
decrease in both years were bankcard fees,  which increased $1.1 million in 2003
and $1.2  million in 2002  primarily  from  changes in the  pricing of  merchant
discount rates and growth in debit card usage by individuals and businesses.

Insurance  commissions were $20.6 million in 2003 compared with $17.8 million in
2002 and $11.6  million in 2001.  The growth in 2003 and 2002 is primarily  from
the CSI business  combination which was completed on June 28, 2002. In addition,
2002 growth can also be linked to growth in sales of fixed annuity products.

During 2003,  mortgage  servicing fees totaled $16.8 million,  compared to $17.2
million in 2002 and $16.9  million  in 2001.  Increased  prepayments  during the
period   resulting  from   historical  low  interest  rates  on  mortgage  loans
contributed to the decline in the mortgage servicing  portfolio when compared to
2002. Trustmark serviced mortgage loans with average balances of $3.3 billion in
2003, $3.6 billion in 2002 and $3.5 billion in 2001.

Trust service income was $9.8 million for 2003, a decrease of $128 thousand when
compared with 2002, as continued  weakness in capital  markets  slowed growth in
this area. Uncertain market conditions  contributed to a decline in valuation of
assets managed,  which directly impacted corporate trust fees and advisory fees.
Trustmark,  which  continues  to be  one  of  the  largest  providers  of  asset
management  services in Mississippi,  held assets under  administration  of $6.9
billion at December 31, 2003.

Gains on sales of loans were $15.9  million  in 2003,  $9.4  million in 2002 and
$9.2  million in 2001.  During the second  quarter of 2003,  Trustmark  sold $63
million  of  its  student   loan   portfolio   for  a  gain  of  $1.8   million.
Intermittently,  Trustmark  sells  delinquent  GNMA  loans  from  its  servicing
portfolio,  which  allows  Trustmark  to eliminate  costly  collection  efforts.
Trustmark has recorded gains of $3.0 million from these sales in 2003,  compared
with $1.1 million in 2002 and $1.2 million in 2001.  In addition,  during 2001 a
gain of $3.9  million  was  realized  from the sale of $191  million in mortgage
loans with significant  prepayment risk.  Remaining gains on sales of loans from
secondary  marketing  activities  totaled $11.1 million in 2003, $8.3 million in
2002 and $4.1 million in 2001, with growth primarily  attributed to an increased
volume  of  branch-originated  loans  and the  continued  benefit  of a  falling
interest rate environment during those periods.
<PAGE>

Other  income was a loss of $305  thousand  and $4.5  million for 2003 and 2002,
respectively,  compared with a gain of $6.2 million in 2001. During these years,
valuation  adjustments  on  Trustmark's  interest  rate caps and  floors had the
greatest  impact on other income,  with losses of $496 thousand and $6.0 million
for 2003 and 2002,  respectively,  compared with a recorded gain of $4.9 million
in 2001.  Although  the  intent of  interest  rate caps and floors is to provide
protection  against excessive interest rate movement over a period of years that
may be  detrimental to Trustmark's  earnings,  fair value  accounting is used to
carry  derivative  financial   instruments  with  changes  in  value  recognized
currently in earnings as other income.  These noncash charges against income may
be  reversed,  in whole or in part,  if  interest  rates  increase  prior to the
expiration of the interest rate caps currently  held by Trustmark,  which expire
in 2006.  The fair value of these  interest rate  contracts was $234 thousand at
December  31,  2003,  $730  thousand  at December  31, 2002 and $9.3  million at
December 31, 2001. In addition,  valuation adjustments on fair value hedges used
in conjunction with Trustmark's mortgage servicing portfolio were a loss of $1.5
million in 2003 compared with a gain of $1.1 million in 2002.

Securities gains totaled $12.2 million during 2003,  compared with $13.6 million
during 2002 and $2.4 million during 2001. During 2003, significant price changes
in  certain  available  for sale  (AFS)  securities  enabled  Trustmark  to sell
securities with a fair value of $290.1 million which provided the opportunity to
restructure  a  portion  of the  portfolio  to  reduce  price  volatility  in an
extremely  low  interest  rate cycle.  The increase  experienced  during 2002 is
primarily from sales of $216.5  million in available for sale (AFS)  securities.
These  securities  were  sold  as  significant  price  increases   provided  the
opportunity to restructure a portion of the portfolio to reduce price volatility
in an  extremely  low interest  rate cycle.  In  addition,  securities  sold had
performed exceedingly well during a bond rally, but also had features that would
have  exposed  Trustmark  to  excessive  downside  price risk during a period of
rising  interest  rates.  Management  considers the  investment  portfolio as an
integral tool in the management of interest rate risk.

Noninterest Expense
($ in thousands)
<TABLE>
<CAPTION>
                                          2003                   2002                   2001
                                  -------------------    --------------------   --------------------
                                   Amount    % Change     Amount     % Change    Amount     % Change
                                  --------   --------    --------    --------   --------    --------
<S>                               <C>        <C>         <C>         <C>        <C>         <C>
Salaries and employee benefits    $126,533      5.6%     $119,801       8.4%    $110,540      10.3%
Net occupancy - premises            12,817      6.0%       12,088       4.4%      11,576      11.3%
Equipment expense                   14,989     -0.6%       15,085      -3.6%      15,651       0.9%
Services and fees                   31,283     -3.5%       32,414       7.7%      30,098      14.8%
Amortization/impairment of
  intangible assets                 20,874    -14.0%       24,275      71.8%      14,129      63.9%
Other expense                       29,624     -1.8%       30,178      -6.5%      32,273      16.1%
                                  --------               --------               --------
  Total Noninterest Expense       $236,120      1.0%     $233,841       9.1%    $214,267      13.5%
                                  ========               ========               ========
</TABLE>

Noninterest Expense

Trustmark's  noninterest  expense  increased  $2.3 million,  or 1.0%, in 2003 to
$236.1 million, compared with $233.8 million in 2002 and $214.3 million in 2001.
The increase for 2003 is primarily  seen in one category,  salaries and employee
benefits.  Noninterest  expense contributed by the Emerald Coast branch purchase
during the third quarter of 2003 is considered immaterial.  The increase in 2002
relates  primarily to $2.8 million  from the CSI business  combination  that was
consummated  on June 28,  2002  and  $4.4  million  from  business  combinations
completed during 2001. This increase in noninterest expense is also attributable
to Trustmark's recognition of $10.5 million in impairment allowance for mortgage
servicing  rights in 2002  compared  with $2.0  million for 2001.  Growth in the
impairment  allowance results from the continued reduction in long-term mortgage
rates  experienced  during  2002 and the  related  increase  in  prepayments  of
mortgage loans which had a negative impact on the value of Trustmark's  mortgage
servicing portfolio. The comparative components of noninterest expense for 2003,
2002 and 2001 are shown in the accompanying table above.

<PAGE>

Salaries and employee  benefits,  the largest  category of noninterest  expense,
were $126.5 million in 2003,  $119.8 million in 2002 and $110.5 million in 2001.
This  increase  is  primarily  from  $6.1  million  of  expense  recognized  for
Trustmark's early retirement  program,  which was accepted by 116 employees,  or
4.75% of the  workforce.  The benefit of this program can be seen in the decline
in Trustmark's full-time equivalent employees from 2,443 at December 31, 2002 to
2,356 at December 31, 2003.  For 2002,  salaries  and  benefits  increased  $9.3
million,  or  8.4%.  Excluding  business  combinations,  the  increase  was $5.0
million, or 4.7%. During 2002, Trustmark changed its discretionary  contribution
to the employee  401(k) plan to a matching plan. The impact of this change along
with  normal  annual  merit  increases  and an  increase  in the cost of  health
benefits  were the major  factors  behind the rise in  salaries  and the cost of
employee benefits during 2002.

During 2003, net  occupancy-premises  expense increased $729 thousand,  or 6.0%,
following a 4.4% increase during 2002. The increase during 2003 can be traced to
additional maintenance on existing premises,  higher utility costs and increased
taxes due to property reassessment. Business combinations accounted for over 99%
of the increase during 2002.

Equipment expense totaled $15.0 million in 2003, $15.1 million in 2002 and $15.7
million in 2001. Trustmark has been able to control expenses in this category by
integrating new technology into various aspects of its operations,  which allows
for improved productivity and efficiency while increasing customer satisfaction.

Services and fees for 2003 totaled $31.3  million  compared to $32.4 million for
2002 and $30.1 million for 2001.  Projects related to human resource and revenue
enhancements,  that were  completed  during  2002,  allowed for more  controlled
growth  during 2003.  In addition,  higher costs for  software-related  expense,
legal and  audit-related  fees  contributed to the increase  experienced  during
2002.

Amortization/impairment  expense associated with intangible assets totaled $20.9
million in 2003  compared  with $24.3 million in 2002 and $14.1 million in 2001.
Amortization/impairment  expense of  mortgage  servicing  rights is the  primary
component of this category. For 2003, total amortization/impairment  expense for
mortgage  servicing  rights was $17.9 million,  or $14.5 million in amortization
expense and $3.4 million in impairment. For 2002, total  amortization/impairment
expense for mortgage servicing rights was $22.0 million but was broken down into
$11.5 million in  amortization  expense and $10.5 million in  impairment.  While
mortgage  servicing rights  amortization  increased during 2003,  impairment was
reduced during the year.  However,  a closer look at amortization and impairment
during  2003 shows  recent  positive  trends that have slowed the growth of both
amortization  and  impairment  of mortgage  servicing  rights.  During the third
quarter of 2003,  long-term  mortgage  rates  increased to the highest  point in
2003,  which slowed  prepayments of mortgage loans and had a positive  impact on
the fair value of Trustmark's mortgage servicing portfolio.  This can be seen by
a reduction in the  impairment  allowance from $22.4 million at June 30, 2003 to
$15.9 million at December 31, 2003.  While  amortization  of mortgage  servicing
rights  during  2003  increased  by  $3.0  million  as  a  result  of  increased
refinancings, amortization expense decreased from $8.7 million in the first half
of the year to $5.8  million  for the second  half of 2003  indicating  that the
expected life of the mortgage servicing  portfolio has lengthened in response to
slower prepayment  speeds.  Future changes in the amortization and impairment of
mortgage  servicing  rights will continue to be closely tied to  fluctuations in
long-term mortgage rates.

When compared  with 2001,  the increase  during 2002 included  $10.5 million for
additional  impairment of mortgage  servicing  rights compared with $2.0 million
for the prior period.  Amortization of mortgage  servicing  rights  increased by
$3.3  million  as  a  result  of  increased  refinancings  during  a  period  of
historically  low interest  rates,  which  shortened  the  expected  life of the
mortgage  servicing  portfolio  and required a faster  amortization  of existing
mortgage   servicing  rights.   The  growth  in  amortization  of  core  deposit
intangibles and insurance customer  relationship  intangibles is attributable to
business  combinations  completed  during 2002 and 2001.  These  increases  were
partially offset by the $1.3 million  reduction in goodwill  amortization as the
result of Trustmark's  adoption of SFAS No. 142,  "Goodwill and Other Intangible
Assets,"  which  required  Trustmark  to  discontinue  amortization  of goodwill
effective January 1, 2002.

Other expense totaled $29.6 million in 2003 compared with $30.2 million for 2002
and $32.3 million for 2001. The decrease in 2003 and 2002 is attributable to the
impact of Management's expense control efforts over various controllable expense
categories,  such as travel  and  entertainment.  In  addition,  more  stringent
security measures, along with centralized recovery efforts, led to a decrease in
operational losses during both 2003 and 2002.
<PAGE>

Income Taxes

For the year ended December 31, 2003,  Trustmark's  combined  effective tax rate
was 34.7%,  compared with 34.9% for 2002 and 35.1% for 2001. The slight decrease
in  Trustmark's  effective  tax rate for 2003 is due to  immaterial  changes  in
permanent items as a percentage of pretax income.

LIQUIDITY

The liquidity position of Trustmark is monitored on a daily basis by Trustmark's
Treasury  department.   In  addition,  the  Asset/Liability   Committee  reviews
liquidity  on a regular  basis and  approves  any changes in  strategy  that are
necessary as a result of anticipated  balance sheet or cash flow changes.  Also,
on a monthly  basis,  Management  compares  Trustmark's  liquidity  position  to
established corporate policies.  Trustmark was able to improve overall liquidity
capacity  over the last  year,  as  indicated  by the  reduction  in the loan to
deposit  ratio and  reliance  on  wholesale  funding.  The  ability to  maintain
consistent cash flows from operations as well as adequate  capital also enhances
Trustmark's liquidity.

The  primary  source of  liquidity  on the asset side of the  balance  sheet are
maturities and cash flows from both loans and securities, as well as the ability
to sell certain loans and  securities.  With mortgage rates at historical  lows,
increased  prepayments on mortgage loans have also provided an additional source
of liquidity for Trustmark. Liquidity on the liability side of the balance sheet
is generated  primarily through growth in core deposits.  To provide  additional
liquidity,   Trustmark   utilizes   economical   short-term   wholesale  funding
arrangements  for federal funds purchased and securities  sold under  repurchase
agreements in both regional and national  markets.  At December 31, 2003,  these
arrangements gave Trustmark  approximately $1.668 billion in borrowing capacity,
compared  with $1.482  billion as of December 31, 2002.  In addition,  Trustmark
maintains a borrowing  relationship with the FHLB, which provided $300.0 million
in short-term  advances and $531.0 million in long-term advances at December 31,
2003,  compared with $107.7 million in short-term advances and $475.0 million in
long-term  advances at December 31, 2002. These advances are collateralized by a
blanket  lien  on  Trustmark's  single-family,  multi-family,  home  equity  and
commercial mortgage loans. Under the existing borrowing agreement, Trustmark has
$442.6 million  available in unused FHLB advances.  Another  borrowing source is
the Federal Reserve  Discount Window  (Discount  Window).  At December 31, 2003,
Trustmark had approximately  $539.9 million  available in borrowing  capacity at
the Discount  Window from pledges of auto loans and  securities,  compared  with
$541 million  available at December 31, 2002.  In June 2002,  Trustmark  entered
into a  two-year  line  of  credit  arrangement  enabling  borrowings  up to $50
million,  subject to certain  financial  covenants.  As of  December  31,  2003,
Trustmark had not drawn upon this line of credit.

On April 16, 2003, Trustmark filed a registration statement on Form S-3 with the
Securities  and  Exchange  Commission  (SEC)  utilizing  a "shelf"  registration
process, which became effective May 2, 2003. Under this shelf process, Trustmark
may offer  from time to time any  combination  of  securities  described  in the
prospectus in one or more  offerings up to a total amount of $200  million.  The
securities  described in the  prospectus  include  common and  preferred  stock,
depositary  shares,  debt securities,  junior  subordinated  debt securities and
trust preferred securities. Net proceeds from the sale of the offered securities
may be used to redeem or repurchase  outstanding  securities,  repay outstanding
debt,  finance  acquisitions  of companies and other assets and provide  working
capital.

On April 9, 2002, the shareholders approved a proposal by the Board of Directors
to amend the Articles of  Incorporation  to  authorize  the issuance of up to 20
million preferred shares with no par value. The Board of Directors believes that
authorizing preferred shares for potential issuance is advisable and in the best
interests of Trustmark. The ability to issue preferred shares in the future will
provide Trustmark with additional  financial and management  flexibility.  As of
December 31, 2003, no such shares have been issued.

CAPITAL RESOURCES

At December 31, 2003,  Trustmark's  shareholders'  equity was $689.6 million, an
increase of $10.0 million,  or 1.5%,  from its level at December 31, 2002.  This
increase  is  primarily  related to net income for 2003,  which  totaled  $118.5
million,  being offset by dividends of $40.3  million,  shares  repurchased at a
cost of $59.4 million and net  reductions  in  accumulated  other  comprehensive
income of $11.4 million.  Trustmark  continues to improve  shareholder  value by
utilizing  strategic  capital  management plans designed to improve earnings per
share and  return on equity  while  maintaining  sufficient  regulatory  capital
levels.  Since  implementation  of these  plans in 1998,  Trustmark's  return on
average  equity  increased  to 17.56% in 2003 from  13.53% in 1998,  while basic
earnings  per share have risen from $1.14 in 1998 to $2.01 in 2003,  an increase
of 76.3%.
<PAGE>

Common Stock Repurchase Program

On July 15, 2003,  the Board of Directors of Trustmark  authorized an additional
plan to  repurchase  up to 5% of common  stock,  or  approximately  2.9  million
shares,  subject to market conditions and management  discretion.  Collectively,
the capital management plans adopted by Trustmark since 1998 have authorized the
repurchase  of 21.5  million  shares of common  stock.  Pursuant to these plans,
Trustmark has repurchased  approximately 18.0 million shares for $385.0 million,
including  2.4  million  shares  during  2003 for  $59.4  million.  The  current
remaining authorization is approximately 3.5 million shares.

Dividends

Another strategy  designed to enhance  shareholder  value has been to maintain a
consistent  dividend  payout  ratio,  which is  dividends  per share  divided by
earnings per share. For 2003,  Trustmark  increased  dividends per share for the
twentieth consecutive year. Dividends for 2003 were $0.69 per share,  increasing
11.3% when  compared  with  dividends of $0.62 per share in 2002.  Dividends per
share have increased  23.2% since 2001.  Trustmark's  dividend  payout ratio was
34.1% for 2003,  compared with 31.5% for 2002 and 32.3% for 2001. During October
2003, the Board of Directors announced a 15.2% increase in the regular quarterly
dividend  to $0.19 per share  from  $0.165  per share.  The Board  declared  the
dividend  payable on  December  15 to  shareholders  of record as of December 1,
2003.  This action raised the indicated  annual dividend to $0.76 per share from
$0.66 per share.

Regulatory Capital Table
($ in thousands)
<TABLE>
<CAPTION>
                                                                 December 31, 2003
                                            ------------------------------------------------------------
                                                                                      Minimum Regulatory
                                                  Actual         Minimum Regulatory    Provision to be
                                            Regulatory Capital    Capital Required     Well Capitalized
                                            ------------------   ------------------   ------------------
                                             Amount     Ratio     Amount      Ratio    Amount     Ratio
                                            --------    ------   --------     -----   --------    ------
<S>                                         <C>         <C>      <C>          <C>     <C>         <C>
Total Capital (to Risk Weighted Assets)
  Trustmark Corporation                     $634,995    12.29%   $413,472     8.00%          -         -
  Trustmark National Bank                    601,800    11.90%    404,683     8.00%   $505,853    10.00%
Tier 1 Capital (to Risk Weighted Assets)
  Trustmark Corporation                     $570,271    11.03%   $206,736     4.00%          -         -
  Trustmark National Bank                    538,460    10.64%    202,341     4.00%   $303,512     6.00%
Tier 1 Capital (to Average Assets)
  Trustmark Corporation                     $570,271     7.53%   $227,050     3.00%          -         -
  Trustmark National Bank                    538,460     7.26%    222,456     3.00%   $370,760     5.00%
</TABLE>

Regulatory Capital

Trustmark  and TNB are  subject  to  minimum  capital  requirements,  which  are
administered by various federal regulatory agencies. These capital requirements,
as defined by federal guidelines,  involve quantitative and qualitative measures
of assets,  liabilities and certain  off-balance sheet  instruments.  Failure to
meet minimum capital  requirements can initiate certain mandatory,  and possibly
additional discretionary,  actions by regulators that, if undertaken, could have
a direct material effect on the financial  statements of both Trustmark and TNB.
Trustmark aims not only to exceed the minimum  capital  standards,  but also the
well capitalized  guidelines for regulatory capital.  Management believes, as of
December  31,  2003,  that  Trustmark  and TNB have met or  exceeded  all of the
minimum  capital  standards  for the  parent  company  and its  primary  banking
subsidiary as established by regulatory requirements.  At December 31, 2003, the
most recent  notification  from the Office of the  Comptroller  of the  Currency
(OCC),  TNB's  primary  federal  banking  regulator,  categorized  TNB  as  well
capitalized.  To be categorized in this manner,  TNB must maintain minimum total
risk-based,  Tier 1 risk-based and Tier 1 leverage ratios (defined in applicable
regulations)  as set forth in the  accompanying  table on page 57.  There are no
significant conditions or events that have occurred since the OCC's notification
that Management believes have affected TNB's present classification.

EARNING ASSETS

Earning  assets  serve as the  primary  revenue  streams for  Trustmark  and are
comprised of  securities,  loans,  federal funds sold and  securities  purchased
under  resale  agreements.  At December  31,  2003,  earning  assets were $7.183
billion,  or 90.8% of total assets,  compared with $6.453  billion,  or 90.4% of
total  assets at December  31, 2002,  an increase of $730.0  million,  or 11.3%.
Excluding the Emerald  Coast branch  purchase,  earning  assets  totaled  $6.967
billion, an increase of $514.1 million, or 8.0%, when compared with December 31,
2002.
<PAGE>

Securities

The  securities  portfolio  consists  primarily  of debt  securities,  which are
utilized to provide Trustmark with a quality investment alternative and a stable
source of interest income,  as well as collateral for pledges on public deposits
and repurchase agreements.  Additionally,  the securities portfolio is used as a
tool to manage risk from movements in interest rates,  to support  profitability
and to offset risks incurred by business units.  When evaluating the performance
of the securities  portfolio,  Management considers not only interest income but
also the  flexibility  and  liquidity  provided  by  changes in fair  value.  At
December 31, 2003,  Trustmark's  securities  portfolio  totaled $2.112  billion,
compared to $1.812 billion at December 31, 2002, an increase of $300.7  million,
or 16.6%.

The  securities  portfolio  is a  powerful  risk  management  tool that  enables
Management to control both the invested  balance and the duration of securities.
Trustmark has utilized a strategy of reducing price volatility in the investment
portfolio  as  indicated  by  duration,  which has  remained  relatively  stable
throughout 2003. The estimated duration of the portfolio was measured to be 2.30
years at December  31,  2003,  1.94 years at December 31, 2002 and 2.83 years at
December 31, 2001.  By reducing the  duration of the  portfolio,  Trustmark  has
reduced  exposure to volatile  interest  rates while  increasing  liquidity  and
flexibility.  Management  intends to keep the portfolio  near  historically  low
duration levels while the interest rate cycle is in a stage of lower yields.

AFS securities are carried at their estimated fair value with  unrealized  gains
or losses recognized, net of taxes, in accumulated other comprehensive income, a
separate component of shareholders' equity. At December 31, 2003, AFS securities
totaled $1.934 billion,  which  represented  91.6% of the securities  portfolio,
compared to $1.263  billion,  or 69.7%,  at December 31,  2002.  At December 31,
2003,  unrealized losses on AFS securities of $5.6 million,  net of $2.1 million
of deferred  income taxes,  were  included in  accumulated  other  comprehensive
income,  compared with gains of $22.8  million,  net of $8.7 million in deferred
income  taxes,  at December 31,  2002.  At December  31,  2003,  AFS  securities
consisted of U.S.  Treasury  and Agency  securities,  obligations  of states and
political  subdivisions,  mortgage related securities,  corporate securities and
other  securities,  primarily  Federal  Reserve Bank and FHLB stock.  During the
third quarter of 2003, an  allocation of corporate  securities  was added to AFS
securities as an investment  alternative that produces an attractive return and,
at the same time,  reduces  exposure to mortgage  related  securities while also
reducing  reliance  on issues of the  various  government  agencies.  This group
currently  consists of  well-diversified  investment grade corporate  securities
with a book value of $107.4  million and a noncallable  average  maturity of 4.3
years.  Management  expects to continue  this  strategy as an ongoing  part of a
diversified investment approach in the securities portfolio.

Held to maturity  (HTM)  securities  are carried at amortized cost and represent
those  securities  that  Trustmark  both  intends and has the ability to hold to
maturity.  At December 31,  2003,  HTM  securities  totaled  $178.4  million and
represented 8.4% of the total portfolio, compared with $549.2 million, or 30.3%,
at the end of 2002.  This  decline  in HTM  securities  as a  percentage  of the
securities  portfolio  should  continue as  Management  utilizes  the  increased
flexibility in AFS securities to manage its investment strategy.

Management  continues to focus on asset quality as one of the strategic goals of
the  securities  portfolio,  which is evidenced by the investment of over 90% of
the portfolio in U.S. Treasury,  U.S. Government agencies  obligations and other
AAA rated securities.

Loans and Allowance for Loan Losses

Loans,  including  loans held for sale,  represented  70.1% of earning assets at
December 31, 2003,  compared  with 71.6% at year end 2002. At December 31, 2003,
loans totaled $5.033  billion,  a 9.0% increase from its level of $4.617 billion
at December 31, 2002.  Excluding the Emerald Coast branch purchase,  loan growth
was $200  million,  or 4.3%.  Real estate  lending  continued  to be  positively
impacted  by  record  low  interest  rates  while  other  loan  areas  have been
negatively affected by a weakened economy.

Trustmark  makes loans in the normal  course of  business to certain  directors,
including  their  immediate  families and  companies in which they are principal
owners. Such loans are made on substantially the same terms,  including interest
rates  and  collateral,   as  those   prevailing  at  the  time  for  comparable
transactions with unrelated persons and do not involve more than the normal risk
of collectibility at the time of the transaction.
<PAGE>

Trustmark's  lending policies have resulted in consistently sound asset quality.
One measure of asset quality in the financial  services industry is the level of
nonperforming  assets.  The  details  of  Trustmark's  nonperforming  assets  at
December 31, 2003 and December 31, 2002, are shown in the accompanying table.

Nonperforming Assets
($ in thousands)
                                                          December 31,
                                                       ------------------
                                                        2003       2002
                                                       -------    -------
Nonaccrual and restructured loans                      $23,921    $31,642
Other real estate (ORE)                                  5,929      6,298
                                                       -------    -------
  Total nonperforming assets                           $29,850    $37,940
                                                       =======    =======
Accruing loans past due 90 days or more                $ 2,606    $ 2,946
                                                       =======    =======
Nonperforming assets/total loans and ORE                 0.59%      0.82%
                                                       =======    =======

Total  nonperforming  assets decreased $8.1 million, or 21.3%, during 2003. This
decrease can be  attributed  to a concerted  effort to address  problem loans as
well as  approximately  $1.4 million of loans  returned to accrual status as the
result of an intensified review of nonaccrual loans less than $100 thousand. The
allowance  coverage of nonperforming  loans remains strong at 310.5% at December
31, 2003, compared with 236.3% at December 31, 2002.

At December 31, 2003,  the allowance for loan losses was $74.3 million  compared
with  $74.8  million  at  December  31,  2002.  The  allowance  for loan  losses
represented 1.48% of total loans  outstanding at December 31, 2003,  compared to
1.62% at December 31, 2002.  This  decline in the  allowance as a percentage  of
total loans is the result of an increase in loans from the Emerald  Coast branch
purchase.  Loans purchased totaled $224.3 million, which included a $1.9 million
discount,  consisting  of a discount  for general  credit  risk of $3.5  million
offset by a market premium of $1.6 million. As of December 31, 2003,  Management
believes  that the  allowance for loan losses  provides  adequate  protection in
regards to charge-off experience and the current level of nonperforming assets.

Net  charge-offs  were  $10.3  million,  or 0.21% of  average  loans,  for 2003,
compared  with  $14.9  million,  or 0.33% of average  loans,  for the prior year
period.  This  improvement  can  primarily be attributed to the 20.1% decline in
charge-offs   recorded  during  2003.   Supporting  this  reduction  were  gross
charge-offs  of commercial  purpose  loans,  which  decreased  $3.7 million when
comparing 2003 and 2002.

Other Earning Assets

Federal funds sold and securities purchased under reverse repurchase  agreements
were $37.7  million at December  31,  2003,  an increase of $13.8  million  when
compared with year-end 2002.  Trustmark  utilizes these products as a short-term
investment alternative whenever it has excess liquidity.

DEPOSITS AND OTHER INTEREST-BEARING LIABILITIES

Trustmark's  deposit base is its primary  source of funding and consists of core
deposits   from  the   communities   served  by  Trustmark.   Deposits   include
interest-bearing and noninterest-bearing demand accounts, savings, money market,
certificates of deposit,  individual retirement accounts and brokered CDs. Total
deposits were $5.089 billion at December 31, 2003,  compared with $4.686 billion
at December 31, 2002,  an increase of $403.2  million,  or 8.6%.  Excluding  the
Emerald Coast branch purchase,  deposits increased $182.3 million, or 3.9%, when
compared with December 31, 2002.  The primary area of growth in deposits  during
2003 was accounts that were transactional in nature such as demand deposit,  NOW
and MMDA. When compared to year-end 2002,  transaction accounts increased $350.3
million,  or 16.0%.  Historically low rates for certificates of deposit, as well
as uncertain  market  conditions,  have  resulted in more growth in  traditional
deposit products.  During the third quarter of 2003,  Trustmark began a brokered
CD program to provide  additional  low cost deposit  funding which totaled $98.9
million at December  31,  2003.  Trustmark  will  continue  to seek  deposits by
expanding  its  presence  in higher  growth  markets and  evaluating  additional
wholesale deposit funding sources.
<PAGE>

Short-term borrowings consist of federal funds purchased,  securities sold under
repurchase agreements, FHLB borrowings and the treasury tax and loan note option
account.  Short-term  borrowings totaled $1.550 billion at December 31, 2003, an
increase of $318.7  million,  compared with $1.231  billion at year-end 2002. An
increase in term federal funds  purchased and short-term  FHLB advances were the
primary  contributors  to this growth as  Management  sought  funding from lower
priced  short-term   borrowings  during  this  historically  low  interest  rate
environment.

Long-term FHLB advances totaled $531.0 million at December 31, 2003, an increase
of $56.0 million from December 31, 2002.  These totals include $350.0 million in
advances with interest rates adjusting  quarterly,  while the remaining advances
are fixed rate,  primarily  maturing in 2005 and 2006.  Beginning  in the second
quarter  of  2003,  Trustmark  implemented  the use of swap  agreements  and has
effectively  converted  $125.0  million of the fixed rate  advances  to variable
rates.  For  further  discussion,   see  Market/Interest  Rate  Risk  Management
beginning on page 63.

LEGAL ENVIRONMENT

Trustmark  and its  subsidiaries  are parties to lawsuits  and other claims that
arise in the ordinary  course of business.  Some of the lawsuits  assert  claims
related  to the  lending,  collection,  servicing,  investment,  trust and other
business  activities;  and some of the lawsuits  allege  substantial  claims for
damages.  The cases are being  vigorously  contested.  In the regular  course of
business,  Management evaluates estimated losses or costs related to litigation,
and provision is made for anticipated losses whenever  Management  believes that
such losses are probable and can be reasonably  estimated.  In recent years, the
legal  environment in Mississippi  has been  considered by many to be adverse to
business  interests  in regards to the overall  treatment  of tort and  contract
litigation  as well as the  award of  punitive  damages.  However,  tort  reform
legislation  that became  effective  during 2003,  may reduce the  likelihood of
unexpected sizable awards. At the present time,  Management  believes,  based on
the  advice  of legal  counsel,  that the  final  resolution  of  pending  legal
proceedings  will  not  have  a  material  impact  on  Trustmark's  consolidated
financial  position or results of operations;  however,  Management is unable to
estimate a range of potential loss on these matters because of the nature of the
legal environment in states where Trustmark conducts business.

PENSION PLAN

Trustmark's defined noncontributory benefit pension plan (the Plan) is accounted
for  using  SFAS No.  87,  "Employers'  Accounting  for  Pensions."  Under  this
statement,  pension  expense is recognized  on an accrual basis over  employees'
approximate  service  periods.  Pension expense  calculated under SFAS No. 87 is
generally independent of funding decisions or requirements. Trustmark recognized
expense related to the Plan in the amount of $4.2 million, $1.7 million and $1.4
million  in 2003,  2002 and 2001,  respectively.  In  February  2003,  Trustmark
announced a voluntary early retirement  program for associates ages 58 and above
with ten or more years of service.  This program was accepted by 116  associates
and  increased  net  periodic  pension  costs by $2.0 million  during 2003.  The
calculation of pension expense and liabilities is based on actuarial assumptions
including rates of  termination,  retirement,  disability,  mortality and salary
increases.  While these  assumptions have been chosen to individually  represent
the best estimate of a particular  event as required by SFAS No. 87 and SFAS No.
132, "Employers' Disclosures about Pensions and Other Postretirement  Benefits,"
actual experience may differ from the assumptions.  Any changes in the actuarial
assumptions may produce changes in the pension expense and plan liabilities.

Trustmark's  pension plan has  historically  performed well and was fully funded
through 2001. At October 31, 2002,  Trustmark's pension plan became under-funded
for the  first  time in  plan  history  as the  accumulated  benefit  obligation
(pension  liability)  exceeded  plan  assets by $2.7  million.  Because of these
factors,  Management  and the Board of  Directors  spent many  hours  evaluating
numerous  scenarios  regarding  historical and future pension expense.  Based on
these  evaluations,  Trustmark's  Board of Directors made a one-time special $10
million  contribution to the plan during 2003. This contribution  eliminated the
under-funded  accumulated  benefit  obligation at October 31, 2003. In addition,
the Board of Directors adopted  amendments to the pension plan during the fourth
quarter of 2003 to ensure the plan will continue to provide meaningful  benefits
for associates in retirement while maintaining a consistent and affordable trend
in the overall  cost of  associate  benefits.  As a result,  pension  expense is
expected  to be $1.9  million  in 2004  instead of $4.2  million  as  originally
projected.  The amendments  listed below will become effective  January 1, 2004,
and will have no impact on benefits associates have earned prior to that date.

     o    Future  pension  equity  credits for each plan year will be reduced by
          15%.
     o    The  period  for  determining  final  average   compensation  will  be
          increased from three to five years.
     o    Plan  compensation  will  exclude  pay for  incentives,  bonuses,  and
          commissions.
<PAGE>

Trustmark  discounted future pension benefit obligations using a rate of 6.5% at
December 31, 2003,  compared to 7.0% at December 31, 2002,  and 7.5% at December
31, 2001.  Trustmark determines the appropriate discount rate each year based on
current rates such as Moody's AA Bond Index with the discount rate typically set
0.25% to 0.50% above that rate. The discount rate for 2004 will be determined as
of the October 31 measurement date.

The fair value of plan assets increased from $55.2 million at December 31, 2002,
to $57.6 million at December 31, 2003. Trustmark's pension plan weighted-average
asset  allocations  at December  31,  2003 and 2002,  by asset  category  are as
follows:
                                                       2003      2002
                                                      ------    ------
Fixed income securities                                37.2%     40.2%
Equity mutual funds                                    61.7%     55.6%
Other                                                   1.1%      4.2%
                                                      ------    ------
  Total                                               100.0%    100.0%
                                                      ======    ======

The  strategic  objective  of the plan focuses on capital  growth with  moderate
income.  The plan is managed on a total return  basis with the return  objective
set as a reasonable  actuarial  rate of return on plan assets net of  investment
management  fees.  Moderate  risk  is  assumed  given  the  average  age of plan
participants and the need to meet the required rate of return.  Equity and fixed
income  securities  are utilized to allow for capital  appreciation  while fully
diversifying the portfolio with more conservative fixed income investments.  The
target asset  allocation  range for the  portfolio is 0-15% Cash &  Equivalents,
25-45% Fixed Income,  35-65% Domestic Equity,  and 0-20%  International  Equity.
Changes in allocations are a result of tactical asset  allocation  decisions and
fall within the aforementioned percentage range for each major asset class.

Trustmark selects the expected long-term rate-of-return-on-assets  assumption in
consultation  with their investment  advisors and actuary,  and with concurrence
from their independent accountants. This rate is intended to reflect the average
rate of earnings  expected to be earned on the funds  invested or to be invested
to provide plan benefits.  Historical  performance is reviewed - especially with
respect to real rates of return (net of inflation),  for the major asset classes
held or  anticipated  to be held by the trust,  and for the trust itself.  Undue
weight  is not  given  to  recent  experience,  that may not  continue  over the
measurement  period,  with higher  significance  placed on current  forecasts of
future long-term economic conditions.

Because  assets  are held in a  qualified  trust,  anticipated  returns  are not
reduced  for taxes.  Further,  solely for this  purpose,  the plan is assumed to
continue in force and not  terminate  during the period  during which assets are
invested. However, consideration is given to the potential impact of current and
future  investment  policy,  cash flow into and out of the trust,  and  expenses
(both  investment  and  non-investment)  typically paid from plan assets (to the
extent such expenses are not explicitly estimated within periodic cost).

A market  related  value of  assets  is used to  determine  the  annual  pension
expense.  The market related value is determined by  recognizing  the difference
between the expected market value of assets (based on the assumed long-term rate
of return) and the actual  market value over a period of five years.  The effect
of using this method is a smoothing of fluctuations in pension expense - expense
will neither  increase  during a down market nor decrease during an up market as
rapidly as it might if actual market values were used. Through the duration of a
complete market cycle, the impact on expense should be negligible.

Trustmark  contributed  $10.0  million  in cash to the  Plan  during  2003.  The
acceptable  range of  contributions  to the plan is determined  each year by the
plan's actuary. In 2004,  Trustmark's minimum required  contribution is expected
to be zero; however,  Trustmark's Management and Board of Directors plan to make
a contribution of up to $7 million.  The actual amount of the contribution  will
be determined  based on the plan's funded status and return on plan assets as of
the measurement date, which is October 31.

OFF-BALANCE SHEET ARRANGEMENTS

Trustmark  makes  commitments to extend credit and issues standby and commercial
letters  of credit in the normal  course of  business  in order to  fulfill  the
financing needs of its customers.  These loan  commitments and letters of credit
are off-balance sheet arrangements.

Commitments to extend credit are agreements to lend money to customers  pursuant
to certain  specified  conditions.  Commitments  generally have fixed expiration
dates or other termination clauses. Since many of these commitments are expected
to expire  without  being  drawn  upon,  the  total  commitment  amounts  do not
necessarily  represent  future  cash  requirements.  Trustmark  applies the same
credit  policies  and  standards  as it does in the lending  process when making
these  commitments.   The  collateral   obtained  is  based  upon  the  assessed
creditworthiness of the borrower.  At December 31, 2003 and 2002,  Trustmark had
commitments to extend credit of $1.2 billion and $1.1 billion, respectively.
<PAGE>

Standby and commercial  letters of credit are conditional  commitments issued by
Trustmark to insure the performance of a customer to a third party. When issuing
letters of credit, Trustmark uses essentially the same policies regarding credit
risk and collateral which are followed in the lending  process.  At December 31,
2003 and 2002,  Trustmark's  maximum  exposure  to  credit  loss in the event of
nonperformance  by the other party for  letters of credit was $73.6  million and
$70.4 million, respectively. These amounts consist primarily of commitments with
maturities  of less than three  years.  Trustmark  holds  collateral  to support
certain letters of credit when deemed necessary.

CONTRACTUAL OBLIGATIONS

Trustmark is obligated  under certain  contractual  arrangements.  The amount of
payments due under those obligations is shown below ($ in thousands):
<TABLE>
<CAPTION>
                              Less than     One to      Three to     After
                               One Year   Three Years  Five Years  Five Years     Total
                              ----------  -----------  ----------  ----------  ----------
<S>                           <C>         <C>          <C>         <C>         <C>
Long-term FHLB advances       $        -  $   525,179  $    4,356  $    1,500  $  531,035
Operating lease obligations        2,729        2,958       1,789       8,944      16,420
Time deposits                  1,221,380      422,327      71,998       1,804   1,717,509
Securities sold under
  repurchase agreements          674,716            -           -           -     674,716
                              ----------  -----------  ----------  ----------  ----------
    Total                     $1,898,825  $   950,464  $   78,143  $   12,248  $2,939,680
                              ==========  ===========  ==========  ==========  ==========
</TABLE>

ASSET/LIABILITY MANAGEMENT

Overview

Market risk is the risk of loss arising from  adverse  changes in market  prices
and rates.  Trustmark has risk management policies to monitor and limit exposure
to market risk.  Trustmark's market risk is comprised primarily of interest rate
risk created by core banking  activities.  Interest rate risk is the risk to net
interest  income  represented by the impact of higher or lower  interest  rates.
Management continually develops and applies cost-effective  strategies to manage
these  risks.  The  Asset/Liability  Committee  sets  the  day-to-day  operating
guidelines,  approves  strategies  affecting net interest income and coordinates
activities  within policy limits  established  by the Board of Directors.  A key
objective of the asset/liability  management program is to quantify, monitor and
manage interest rate risk and to assist  Management in maintaining  stability in
the net interest margin under varying interest rate environments.

Market/Interest Rate Risk Management

The  primary  purpose  in  managing  interest  rate  risk is to  invest  capital
effectively and preserve the value created by the core banking business. This is
accomplished  through the development and  implementation  of lending,  funding,
pricing  and  hedging  strategies  designed  to  maximize  net  interest  income
performance  under  varying  interest  rate  environments  subject  to  specific
liquidity and interest rate risk guidelines.

Management  has  continued to maintain a balance sheet  position that  mitigates
adverse effects of rising interest rates.  Asset sensitivity has been positively
impacted with increases in floating rate  commercial  lending and by controlling
the duration of the securities portfolio. While our growth in core deposits also
improved asset sensitivity,  added short borrowings and securities growth offset
this with the result being a lower,  albeit  slightly  positive,  sensitivity to
rising rates.  Modeling  static balances from December 31, 2003, it is estimated
that net interest income may increase, possibly as much as 0.95%, in a one-year,
shocked,  up 200 basis point rate shift scenario,  compared to a base case, flat
rate scenario for the same time period. In a shocked,  down 200 basis point rate
shift  scenario,  net interest  income may decline from the base case as much as
12.22% in a one-year horizon.  In this scenario,  Trustmark uses the approach of
shifting rates the greater of 200 basis points or the amount that implies a near
zero rate for each category.  Management  cannot provide any assurance about the
actual effect of changes in interest rates on net interest income. The estimates
provided  do not  include  the  effects  of  possible  strategic  changes in the
balances of various assets and  liabilities  throughout  2004.  Management  will
continue  to  monitor  the  balance  sheet as  balances  change  and  maintain a
proactive stance to manage interest rate risk.
<PAGE>

The primary tool  utilized by the  Asset/Liability  Committee  is a  third-party
modeling  system,  which  is  widely  accepted  in  the  financial  institutions
industry. This system provides information used to evaluate exposure to interest
rate risk,  project  earnings and manage  balance  sheet  growth.  This modeling
system utilizes the following  scenarios in order to give Management a method of
evaluating  Trustmark's interest rate, basis and prepayment risk under different
conditions:

     o    Rate shocked scenarios of up-and-down 100, 200 and 300 basis points.
     o    Yield curve twist of +/- 2 standard deviations of the change in spread
          of the three-month Treasury bill and the 10-year Treasury note yields.
     o    Basis risk  scenarios  where  federal  funds/LIBOR  spread  widens and
          tightens  to the high and low  spread  determined  by using 2 standard
          deviations.
     o    Prepayment  risk  scenarios  where  projected   prepayment  speeds  in
          up-and-down  200 basis point rate  scenarios  are  compared to current
          projected prepayment speeds.

A static gap analysis is a tool used mainly for interest rate risk  measurement,
in which the balance sheet amounts as of a certain date are stratified  based on
repricing  frequency.  The assets and  liabilities  repricing  in a certain time
frame are then compared to determine the gap between assets and  liabilities for
that  period.  If assets are greater than  liabilities  for the  specified  time
period,  then  the  balance  sheet  is  said to be in an  asset  gap,  or  asset
sensitive,  position.  Management feels that this method for analyzing  interest
rate sensitivity does not provide a complete picture of Trustmark's  exposure to
interest rate changes  since it  illustrates a  point-in-time  measurement  and,
therefore,  does not  incorporate  the effects of future  balance  sheet trends,
repricing  behavior  of  certain  deposit  products  or  varying  interest  rate
scenarios. This analysis is a relatively straightforward tool that is helpful in
highlighting  significant  short-term repricing volume mismatches.  Management's
assumptions  related to the prepayment of certain loans and securities,  as well
as the  maturity for rate  sensitive  assets and  liabilities,  are utilized for
sensitivity static gap analysis.  Three-month gap analysis projected at December
31 2003, reflected a liability gap of $691 million compared with an asset gap of
$52 million at December  31, 2002.  One-year gap analysis  projected at December
31, 2003,  reflected a liability gap of $352 million  compared with an asset gap
of $321 million at December 31, 2002.  These changes in  Trustmark's  static gap
position  can be  traced  to a  reduction  in  mortgage  work-in-process,  fewer
securities with remaining maturities under three months, as well as Management's
decision to reallocate  wholesale  borrowings  into floating,  rather than fixed
rates.  This effectively  lowers the current funding cost and provides relief to
the compression of net interest income.

As part of Trustmark's  risk management  strategy in the mortgage  banking area,
various  derivative  instruments  such as  interest  rate lock  commitments  and
forward  sales  contracts  are utilized.  Forward  contracts  are  agreements to
purchase  or sell  securities  or other  money  market  instruments  at a future
specified  date at a specified  price or yield.  Trustmark's  obligations  under
forward contracts  consist of commitments to deliver mortgage loans,  originated
and/or purchased, in the secondary market at a future date. Effective January 1,
2003, Trustmark  redesignated these derivative  instruments as fair value hedges
as permitted by Statement  of  Financial  Accounting  Standards  (SFAS) No. 133,
"Accounting  for Derivatives  Instruments  and Hedging  Activities," as amended.
Under SFAS No.  133,  changes in the values of  derivatives  designated  as fair
value hedges are  recognized  in earnings.  In this case,  Trustmark  recognizes
changes in the values of the designated  derivatives in earnings  simultaneously
with changes in the values of the designated hedged loans. To the extent changes
in the values of the derivatives are 100% effective in offsetting changes in the
values of hedged loans, the fair value adjustments on the derivatives and hedged
loans would offset one another. In contrast, Trustmark's previous designation of
these  derivatives  as cash flow  hedges  resulted  in  changes  in value  being
recognized in accumulated other comprehensive  income, net of taxes, a component
of  Shareholders'  Equity,  and in earnings.  Management  anticipates  that this
change will help mitigate the potential for earnings  volatility  related to the
valuation of these hedging instruments in the future.

Trustmark continued a risk controlling strategy utilizing caps and floors, which
may be further implemented over time. As of December 31, 2003, Trustmark was not
utilizing interest rate floors but had interest rate cap contracts with notional
amounts  totaling  $300 million,  which mature in 2006.  The intent of utilizing
these financial instruments is to reduce the risk associated with the effects of
significant  movements  in  interest  rates.  Caps  and  floors,  which  are not
designated as hedging instruments for accounting purposes, are options linked to
a notional principal amount and an underlying indexed interest rate. Exposure to
loss on these options will increase or decrease as interest rates fluctuate.
<PAGE>

Another  tool used for interest  rate risk  management  is interest  rate swaps.
Interest rate swaps are  derivative  contracts  under which two parties agree to
make interest  payments on a notional  principal  amount. In a generic swap, one
party pays a fixed interest rate and receives a floating interest rate while the
other party  receives a fixed  interest rate and pays a floating  interest rate.
During April 2003,  Trustmark initiated four separate interest rate swaps with a
total notional  principal  amount of $100 million.  During July 2003,  Trustmark
added  another  interest  rate  swap  with a  notional  principal  amount of $25
million.  These swaps are designated as fair value hedges.  Trustmark  initiated
these  swaps to  mitigate  the  effects of further  changes in the fair value of
specific  noncallable,  nonprepayable,  fixed  rate  advances  from  the FHLB by
agreeing to pay a floating  interest rate tied to LIBOR.  The swap contracts are
tied to the maturity of five separate FHLB  advances  maturing  between 2005 and
2006.

RECENT PRONOUNCEMENTS

In December 2003, the Financial  Accounting  Standards  Board (FASB) issued FASB
Interpretation  No.  46,  "Consolidation  of  Variable  Interest  Entities"  (as
revised). This interpretation addresses consolidation by business enterprises of
variable   interest   entities,   which  have  one  or  more  of  the  following
characteristics:  1) the equity  investment at risk is not  sufficient to permit
the entity to finance its activities without additional  subordinated  financial
support  provided by any parties  including  the equity  holders;  2) the equity
investors  lack one or more of the  essential  characteristics  of a controlling
financial  interest and 3) the equity  investors have voting rights that are not
proportionate  to their  economic  interests,  and the  activities of the entity
involve or are  conducted  on behalf of an  investor  with a  disproportionately
small  voting  interest.  Application  of this  interpretation  is  required  in
financial statements of public entities that have interests in variable interest
entities or  potential  variable  interest  entities  for periods  ending  after
December 15, 2003. Currently,  Trustmark does not have any interests in variable
interest entities as defined by this interpretation.

In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of  Statement  133 on
Derivative  Instruments  and  Hedging  Activities."  This  statement  amends and
clarifies  financial  accounting  and  reporting  for  derivative   instruments,
including   certain   derivative   instruments   embedded  in  other   contracts
(collectively  referred to as derivatives) and for hedging activities under SFAS
No. 133,  "Accounting for Derivative  Instruments and Hedging  Activities." This
statement is effective  for  contracts  entered into or modified  after June 30,
2003, and for hedging relationships  designated after June 30, 2003. The effects
of this  statement did not have a material  impact on  Trustmark's  consolidated
financial position or results of operations upon adoption on June 30, 2003.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with Characteristics of both Liabilities and Equity." This statement
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with  characteristics of both liabilities and equity. The
statement  applies to the following three  categories of freestanding  financial
instruments:  1) certain mandatorily redeemable instruments, 2) instruments with
repurchase  obligations and 3) instruments  with obligations to issue a variable
number of shares. The statement requires that previously issued instruments that
fall within the scope of the statement must be reclassified as liabilities,  and
subsequent changes in the measurements of the instruments treated as liabilities
must flow through to the income statement. For public companies,  this statement
became  effective for all  freestanding  financial  instruments  entered into or
modified  after May 31, 2003.  Currently,  Trustmark does not have any financial
instruments within the scope of this statement.
<PAGE>
<TABLE>
<CAPTION>
Interest Rate Sensitivity Table
($ in thousands)
                                                                                                                Estimated
December 31, 2003                      2004       2005      2006      2007      2008    Thereafter    Total     Fair Value
-----------------                   ----------  --------  --------  --------  --------  ----------  ----------  ----------
<S>                                 <C>         <C>       <C>       <C>       <C>        <C>        <C>         <C>
Loans, Net
  Fixed Rate                        $1,247,926  $724,102  $523,633  $335,475  $260,850   $312,161   $3,404,147  $3,543,061
   Average Int Rate                      5.89%     6.32%     6.25%     5.81%     5.65%      5.47%        5.97%
  Floating Rate                     $  820,608  $157,792  $119,067  $119,175  $111,859   $225,688   $1,554,189  $1,554,189
   Average Int Rate                      4.21%     4.44%     4.63%     4.42%     4.34%      4.95%        4.40%
Investment Securities
  Fixed Rate                        $  509,354  $485,489  $262,640  $445,690  $212,585   $196,058   $2,111,816  $2,124,512
   Average Int Rate                      0.97%     2.95%     3.67%     3.12%     4.17%      3.81%        2.80%
  Floating Rate                     $      189  $    126  $     90  $     65  $     48   $    109   $      627  $      627
   Average Int Rate                      3.53%     3.55%     3.53%     3.51%     3.50%      3.49%        3.52%
Other Earning Assets
  Floating Rate                     $   37,712         -         -         -         -          -   $   37,712  $   37,712
   Average Int Rate                      0.95%         -         -         -         -          -        0.95%
Interest-Bearing Deposits
  Fixed Rate                        $1,223,415  $326,841  $ 88,388  $ 46,026  $ 23,794   $  1,716   $1,710,180  $1,729,765
   Average Int Rate                      1.85%     2.83%     3.64%     4.61%     3.29%      5.15%        2.24%
  Floating Rate                     $  724,367  $332,177  $332,177  $332,177  $328,937          -   $2,049,835  $2,049,835
   Average Int Rate                      0.63%     0.62%     0.62%     0.62%     0.62%          -        0.62%
Other Interest-Bearing Liabilities
  Fixed Rate                        $  119,114  $100,000  $ 75,179         -  $  4,356   $  1,500   $  300,149  $  310,469
   Average Int Rate                      1.94%     5.49%     5.60%         -     5.33%      6.05%        4.22%
  Floating Rate                     $1,430,553  $350,000         -         -         -          -   $1,780,553  $1,780,553
   Average Int Rate                      0.68%     1.18%         -         -         -          -        0.78%
</TABLE>
<TABLE>
<CAPTION>

                                                                                                                Estimated
December 31, 2002                      2003       2004      2005      2006      2007    Thereafter    Total     Fair Value
-----------------                   ----------  --------  --------  --------  --------  ----------  ----------  ----------
<S>                                 <C>         <C>       <C>       <C>       <C>        <C>        <C>         <C>
Loans, Net
  Fixed Rate                        $1,283,674  $683,449  $436,074  $266,986  $165,721    $270,216  $3,106,120  $3,199,807
   Average Int Rate                      6.64%     7.24%     7.35%     6.78%     6.51%       6.38%       6.84%
  Floating Rate                     $  647,862  $168,279  $126,153  $108,939  $113,253    $271,989  $1,436,475  $1,436,475
   Average Int Rate                      3.90%     3.29%     3.37%     3.27%     3.49%       3.06%       3.54%
Investment Securities
  Fixed Rate                        $  674,209  $339,747  $318,475  $204,734  $ 85,336    $187,916  $1,810,417  $1,839,370
   Average Int Rate                      7.08%     3.94%     3.72%     3.97%     4.21%       4.32%       5.13%
  Floating Rate                     $     887   $    169  $    106  $     67  $     42    $     79  $    1,350  $    1,350
   Average Int Rate                      2.56%     4.21%     4.22%     4.22%     4.23%       4.23%       3.13%
Other Earning Assets
  Floating Rate                     $   23,957         -         -         -         -           -  $   23,957  $   23,957
   Average Int Rate                      1.41%         -         -         -         -           -       1.41%
Interest-Bearing Deposits
  Fixed Rate                        $1,279,358  $265,831  $114,833  $ 37,109  $ 43,708    $  1,840  $1,742,679  $1,769,777
   Average Int Rate                      2.58%     3.75%     4.71%     5.09%     4.65%       5.21%       3.02%
  Floating Rate                     $  601,275  $273,440  $273,440  $273,440  $270,782           -  $1,692,377  $1,692,377
   Average Int Rate                      0.81%     0.73%     0.73%     0.73%     0.73%           -       0.76%
Other Interest-Bearing Liabilities
  Fixed Rate                        $   69,771  $ 50,000  $100,000  $ 75,243         -    $  5,945  $  300,959  $  332,990
   Average Int Rate                      2.90%     4.65%     5.49%     5.60%         -       5.53%       4.78%
  Floating Rate                     $1,404,978         -         -         -         -           -  $1,404,978  $1,404,978
   Average Int Rate                      1.00%         -         -         -         -           -       1.00%
</TABLE>


</TEXT>
</DOCUMENT>
