<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>f10q_033104.txt
<TEXT>




                                    FORM 10-Q

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2004

OR

[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the transition period from ________ to ___________

Commission file number: 0-3683

                              TRUSTMARK CORPORATION

State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization                                Identification No.)
         Mississippi                                             64-0471500

Trustmark Corporation
248 East Capitol Street
Jackson, MS 39201
(601) 208-5111

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No ____

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes X No ____

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of April 30, 2004.

          Title                                                      Outstanding
Common stock, no par value                                            58,219,033

<PAGE>

                          PART I. FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

                      Trustmark Corporation and Subsidiaries
                           Consolidated Balance Sheets
                                ($ in thousands)

                                                        (Unaudited)
                                                        March 31,  December 31,
                                                           2004        2003
                                                       -----------  -----------
Assets
Cash and due from banks (noninterest-bearing)            $ 340,114    $ 333,096
Federal funds sold and securities purchased
    under reverse repurchase agreements                     19,209       37,712
Securities available for sale (at fair value)            1,958,767    1,933,993
Securities held to maturity (fair value:
    $182,996-2004; $191,146-2003)                          169,708      178,450
Loans held for sale                                        127,933      112,560
Loans                                                    5,070,363    4,920,052
Less allowance for loan losses                              74,179       74,276
                                                       -----------  -----------
   Net loans                                             4,996,184    4,845,776
Premises and equipment                                     113,701      108,374
Intangible assets (including goodwill of
    $110,271-2004; $95,877-2003)                           179,811      167,505
Other assets                                               185,036      196,855
                                                       -----------  -----------
     Total Assets                                      $ 8,090,463  $ 7,914,321
                                                       ===========  ===========

Liabilities
Deposits:
    Noninterest-bearing                                $ 1,316,817  $ 1,329,444
    Interest-bearing                                     4,258,071    3,760,015
                                                       -----------  -----------
         Total deposits                                  5,574,888    5,089,459
Federal funds purchased                                    216,421      253,419
Securities sold under repurchase agreements                497,381      674,716
Short-term borrowings                                      541,716      621,532
Long-term FHLB advances                                    481,004      531,035
Other liabilities                                           60,428       54,587
                                                       -----------  -----------
     Total Liabilities                                   7,371,838    7,224,748

Commitments and Contingencies

Shareholders' Equity
Common stock, no par value:
     Authorized: 250,000,000 shares
     Issued and outstanding:  58,280,233 shares -
        2004; 58,246,733 shares - 2003                      12,143       12,136
Capital surplus                                            133,147      132,383
Retained earnings                                          564,199      548,521
Accumulated other comprehensive income (loss),
     net of tax                                              9,136       (3,467)
                                                       -----------  -----------
     Total Shareholders' Equity                            718,625      689,573
                                                       -----------  -----------
     Total Liabilities and Shareholders' Equity        $ 8,090,463  $ 7,914,321
                                                       ===========  ===========

See notes to consolidated financial statements.
<PAGE>

                     Trustmark Corporation and Subsidiaries
                        Consolidated Statements of Income
                     ($ in thousands except per share data)
                                   (Unaudited)

                                                             Three Months Ended
                                                                  March 31,
                                                            -------------------
                                                              2004       2003
                                                            --------   --------
Interest Income
Interest and fees on loans                                  $ 70,360   $ 70,699
Interest on securities:
     Taxable                                                  16,196     20,155
     Tax exempt                                                1,996      2,069
Interest on federal funds sold and securities
    purchased under reverse repurchase agreements                 43         82
Other interest income                                             12         12
                                                            --------   --------
     Total Interest Income                                    88,607     93,017

Interest Expense
Interest on deposits                                          13,386     16,062
Interest on federal funds purchased and securities
     sold under repurchase agreements                          2,104      2,726
Other interest expense                                         4,758      5,032
                                                            --------   --------

     Total Interest Expense                                   20,248     23,820
                                                            --------   --------
Net Interest Income                                           68,359     69,197
Provision for loan losses                                      1,052      3,000
                                                            --------   --------

Net Interest Income After Provision
     for Loan Losses                                          67,307     66,197

Noninterest Income
Service charges on deposit accounts                           13,326     12,680
Other account charges and fees                                 6,827      6,625
Insurance commissions                                          3,746      3,787
Mortgage servicing fees                                        4,228      4,326
Trust service income                                           2,596      2,311
Gains on sales of loans                                        1,730      3,893
Securities gains                                                  13      8,148
Other income                                                      58       (587)
                                                            --------   --------
     Total Noninterest Income                                 32,524     41,183

Noninterest Expense
Salaries and employee benefits                                30,443     35,924
Net occupancy - premises                                       3,213      2,986
Equipment expense                                              3,542      3,710
Services and fees                                              8,379      7,879
Amortization/impairment of intangible assets                   6,317     11,655
Other expense                                                  7,588      7,572
                                                            --------   --------
     Total Noninterest Expense                                59,482     69,726
                                                            --------   --------
Income Before Income Taxes                                    40,349     37,654
Income taxes                                                  13,598     13,170
                                                            --------   --------

Net Income                                                  $ 26,751   $ 24,484
                                                            ========   ========

Earnings Per Share
     Basic                                                  $   0.46   $   0.41
                                                            ========   ========
     Diluted                                                $   0.46   $   0.41
                                                            ========   ========

Dividends Per Share                                         $ 0.1900   $ 0.1650
                                                           =========  =========

See notes to consolidated financial statements.
<PAGE>

                     Trustmark Corporation and Subsidiaries
           Consolidated Statements of Changes in Shareholders' Equity
                                ($ in thousands)
                                   (Unaudited)

                                                              2004       2003
                                                           ---------  ---------
Balance, January 1,                                        $ 689,573  $ 679,534
Comprehensive income:
     Net income per consolidated statements of income         26,751     24,484
     Net change in fair value of securities available
       for sale, net of tax                                   12,603     (5,550)
     Net change in fair value of cash flow hedges,
       net of tax                                                  -      2,966
                                                           ---------  ---------
          Comprehensive income                                39,354     21,900
Cash dividends paid                                          (11,073)    (9,821)
Common stock issued, long-term incentive plan                    994        563
Compensation expense, long-term incentive plan                   143          -
Repurchase and retirement of common stock                       (366)   (31,533)
                                                           ---------  ---------
Balance, March 31,                                         $ 718,625  $ 660,643
                                                           =========  =========

See notes to consolidated financial statements.
<PAGE>

                     Trustmark Corporation and Subsidiaries
                      Consolidated Statements of Cash Flows
                                ($ in thousands)
                                   (Unaudited)
                                                           Three Months Ended
                                                                 March 31,
                                                          ---------------------
                                                             2004        2003
                                                          ---------   ---------
Operating Activities
Net income                                                 $ 26,751    $ 24,484
Adjustments to reconcile net income to net cash
     provided by operating activities:
        Provision for loan losses                             1,052       3,000
        Depreciation and amortization/impairment              9,449      14,632
        Net amortization of securities                        5,131       1,932
        Securities gains                                        (13)     (8,148)
        Gains on sales of loans                              (1,730)     (3,893)
        Deferred income tax provision (benefit)               3,203      (1,462)
        Proceeds from sales of loans held for sale          216,129     963,965
        Purchases and originations of loans held
           for sale                                        (231,502)   (838,235)
        Net increase in intangible assets                    (2,903)     (1,620)
        Net decrease in other assets                          3,406       1,882
        Net increase in other liabilities                     5,324       9,066
        Other operating activities, net                         205        (155)
                                                          ---------   ---------
Net cash provided by operating activities                    34,502     165,448

Investing Activities
Proceeds from calls and maturities of securities
     held to maturity                                         8,718     180,810
Proceeds from calls and maturities of securities
     available for sale                                      81,227      85,375
Proceeds from sales of securities available for sale              -      76,922
Purchases of securities available for sale                  (90,636)   (500,728)
Net decrease (increase) in federal funds sold
     and securities purchased under reverse
     repurchase agreements                                   18,503      (3,058)
Net increase in loans                                       (10,225)   (138,455)
Purchases of premises and equipment                          (7,160)     (2,194)
Proceeds from sales of premises and equipment                     -         480
Proceeds from sales of other real estate                        565         715
Cash received in business combination                         4,622           -
                                                          ---------   ---------
Net cash provided by (used in) investing activities           5,614    (300,133)

Financing Activities
Net increase in deposits                                    321,527     291,703
Net decrease in federal funds purchased and securities
     sold under repurchase agreements                      (214,333)   (138,503)
Net (decrease) increase in other borrowings                (129,847)     28,587
Cash dividends                                              (11,073)     (9,821)
Proceeds from exercise of stock options                         994         563
Repurchase and retirement of common stock                      (366)    (31,533)
                                                          ---------   ---------
Net cash (used in) provided by financing activities         (33,098)    140,996
                                                          ---------   ---------
Increase in cash and cash equivalents                         7,018       6,311
Cash and cash equivalents at beginning of period            333,096     357,427
                                                          ---------   ---------
Cash and cash equivalents at end of period                $ 340,114   $ 363,738
                                                          =========   =========

See notes to consolidated financial statements.
<PAGE>

                      TRUSTMARK CORPORATION & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE  1  -  BASIS  OF  FINANCIAL   STATEMENT   PRESENTATION  AND  PRINCIPLES  OF
            CONSOLIDATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in conformity  with  accounting  principles  generally  accepted in the
United  States  of  America  for  interim  financial  information  and  with the
instructions  to  Form  10-Q.  Accordingly,  they  do  not  include  all  of the
information and footnotes required by accounting  principles  generally accepted
in the United  States of  America  for  complete  financial  statements.  In the
opinion of Management, all adjustments (consisting of normal recurring accruals)
considered  necessary for the fair presentation of these consolidated  financial
statements  have been  included.  The notes  included  herein  should be read in
conjunction with the notes to the consolidated  financial statements included in
Trustmark Corporation's (Trustmark) 2003 annual report on Form 10-K.

The consolidated  financial  statements  include  Trustmark and its wholly-owned
bank  subsidiaries,  Trustmark  National Bank (TNB) and Somerville  Bank & Trust
Company  (Somerville).  All  intercompany  accounts and  transactions  have been
eliminated in consolidation.  Certain  reclassifications have been made to prior
period amounts to conform with the current period presentation.

NOTE 2 - BUSINESS COMBINATIONS

On March 12, 2004,  Trustmark acquired five branches of Allied Houston Bank in a
business  combination  accounted for by the purchase  method of  accounting.  In
connection with the transaction, Trustmark acquired approximately $148.1 million
in assets and assumed $161.7 million in deposits and other liabilities for a $10
million deposit  premium.  Assets consisted of $145.9 million of selected loans,
$585 thousand in premises and  equipment  and $1.6 million in other assets.  The
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 $6.4 million discount,  consisting of a discount for general credit risk of
$7.3 million offset by a market valuation premium of $862 thousand.  Included in
the credit risk  discount of $7.3 million was a specific  amount for  nonaccrual
loans of $1.7 million. Subsequent to the purchase date, the unpaid principal for
these  nonaccrual  loans were written down to their net realizable value against
the recorded  discount.  Excess cost over tangible net assets  acquired  totaled
$15.7  million,  of which $426 thousand and $15.3 million have been allocated to
core  deposits and  goodwill,  respectively.  Trustmark's  financial  statements
include the results of operations for this acquisition from the merger date. The
pro forma impact of this  acquisition  on  Trustmark's  results of operations is
insignificant.

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 selected 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.
Trustmark's  financial  statements  include the results of  operations  for this
acquisition  from the merger date.  The pro forma impact of this  acquisition on
Trustmark's results of operations is insignificant.

<PAGE>

NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES

For the periods presented, loans consisted of the following:

                                                        March 31,   December 31,
                                                          2004          2003
                                                       -----------   -----------
Real estate loans:
   Construction and land development                   $   473,737   $   406,257
   Secured by 1-4 family residential properties          1,667,432     1,663,915
   Secured by nonfarm, nonresidential properties           897,053       858,708
   Other                                                   158,843       156,524
Loans to finance agricultural production                    29,444        30,815
Commercial and industrial                                  838,950       787,094
Consumer                                                   756,597       787,316
Obligations of states and political subdivisions           173,494       173,296
Other loans                                                 74,813        56,127
                                                       -----------   -----------
   Loans                                                 5,070,363     4,920,052
   Less allowance for loan losses                           74,179        74,276
                                                       -----------   -----------
      Net loans                                        $ 4,996,184   $ 4,845,776
                                                       ===========   ===========

The following table summarizes the activity in the allowance for loan losses for
the periods presented ($ in thousands):

                                                            Three Months Ended
                                                                  March 31,
                                                           --------------------
                                                              2004      2003
                                                           ---------  ---------
Balance at beginning of year                               $  74,276  $  74,771
Provision charged to expense                                   1,052      3,000
Loans charged off                                             (3,828)    (5,191)
Recoveries                                                     2,679      2,287
                                                           ---------  ---------
Net charge-offs                                               (1,149)    (2,904)
                                                           ---------  ---------
Balance at end of period                                   $  74,179  $  74,867
                                                           =========  =========

At March 31, 2004 and 2003, the carrying  amounts of nonaccrual loans were $27.5
million and $31.8 million,  respectively.  Included in these nonaccrual loans at
March 31, 2004 and 2003,  are loans that are  considered  to be impaired,  which
totaled $19.5 million and $24.7  million,  respectively.  At March 31, 2004, the
total  allowance  for loan  losses  related to impaired  loans was $5.0  million
compared with $6.5 million at March 31, 2003.  The average  carrying  amounts of
impaired  loans during the first quarter of 2004 and 2003 were $17.4 million and
$25.5  million,  respectively.  No  material  amounts of  interest  income  were
recognized on impaired  loans or nonaccrual  loans for the first quarter of 2004
or 2003.

NOTE 4 - INTANGIBLE ASSETS

At  March  31,  2004  and  December  31,  2003,  intangible  assets,  net of any
applicable  amortization  or  impairment,  consisted  of  the  following  ($  in
thousands):

                                                       March 31,    December 31,
                                                         2004           2003
                                                     ------------   ------------
Mortgage servicing rights                            $     47,476   $     49,707
Goodwill                                                  110,271         95,877
Other identifiable intangible assets:
     Core deposit intangibles                              18,556         18,560
     Other                                                  3,508          3,361
                                                     ------------   ------------
Total intangible assets                              $    179,811   $    167,505
                                                     ============   ============
<PAGE>

NOTE 5 - DEPOSITS

At March 31, 2004 and December 31, 2003,  deposits consisted of the following ($
in thousands):

                                                        March 31,   December 31,
                                                           2004         2003
                                                       -----------   -----------
DDA, NOW, MMDA                                         $ 2,835,488   $ 2,543,694
Savings                                                    978,877       828,256
Time                                                     1,760,523     1,717,509
                                                       -----------   -----------
    Total deposits                                     $ 5,574,888   $ 5,089,459
                                                       ===========   ===========

NOTE 6 - 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 for 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.  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):

                                                             Three Months Ended
                                                                  March 31,
                                                            -------------------
                                                              2004       2003
                                                            --------   --------
Net income, as reported                                     $ 26,751   $ 24,484
Add:  Total stock-based employee compensation
      expense reported in net income, net of taxes               143          -
Deduct:  Total stock-based employee compensation
    expense determined under fair value based
    method for all awards, net of related tax
    effects                                                     (340)      (336)
                                                            --------   --------
Pro forma net income                                        $ 26,554   $ 24,148
                                                            ========   ========
Earnings per share:
  As reported
     Basic                                                  $   0.46   $   0.41
     Diluted                                                    0.46       0.41

  Pro forma
     Basic                                                  $   0.46   $   0.40
     Diluted                                                    0.45       0.40
<PAGE>

NOTE 7 - CONTINGENCIES

Standby Letters of Credit
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.  Standby  letters of credit  are  conditional  commitments  issued by
Trustmark to insure the  performance of a customer to a third party. 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 March 31, 2004, the maximum  potential  amount of future  payments  Trustmark
could be required to make under its standby letters of credit was $74.8 million,
which  also   represented   the  maximum  credit  risk   associated  with  these
commitments.  This amount consisted  primarily of commitments with maturities of
less than  three  years.  These  standby  letters of credit  have an  immaterial
carrying value.  Trustmark holds collateral to support standby letters of credit
when deemed  necessary.  As of March 31, 2004, the fair value of collateral held
was $21.6 million.

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  and  Management's
evaluation, 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.

NOTE 8 - ASSOCIATE PENSION PLAN

Trustmark maintains a noncontributory  defined benefit pension plan which covers
substantially  all  associates  with  more  than one year of  service.  The plan
provides  pension  benefits  that are based on credited  service,  final average
compensation and the benefit formula as defined in the plan.  Trustmark's policy
is to fund amounts allowable for federal income tax purposes,  making sufficient
contributions to satisfy the minumum funding  requirement for each plan year and
making additional contributions, as needed, based on the plan's funded status as
of the October 31 measurement date.

The following table presents information regarding net periodic pension costs as
of March 31, ($ in thousands):

                                                                 2004     2003
                                                               -------  -------
Service cost                                                   $   410  $   643
Interest cost                                                    1,056    1,142
Expected return on plan assets                                  (1,251)  (1,379)
Amortization of prior service cost                                 (22)      61
Recognized net loss due to early retirement                          -    2,378
Recognized net actuarial loss                                      297        -
                                                               -------  -------
    Net Periodic Benefit Cost                                  $   490  $ 2,845
                                                               =======  =======

The table above shows the recognized net loss due to early  retirement of $2.378
million,  resulting  from a voluntary  early  retirement  program  announced  by
Trustmark in February  2003.  This program was offered to associates  age 58 and
above with ten years or more of service and was accepted by 116  associates,  or
4.75% of Trustmark's workforce.
<PAGE>

NOTE 9 - EARNINGS PER SHARE

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 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:
                                                           Three Months Ended
                                                                March 31,
                                                         -----------------------
                                                            2004         2003
                                                         ----------   ----------
Basic                                                    58,267,684   59,912,276
Dilutive shares (related to stock options)                  319,927      143,475
                                                         ----------   ----------
Diluted                                                  58,587,611   60,055,751
                                                         ==========   ==========

NOTE 10 - STATEMENTS OF CASH FLOWS

Trustmark  paid income taxes of $60  thousand and $1.1 million  during the three
months  ended March 31, 2004 and 2003,  respectively.  Interest  paid on deposit
liabilities and other borrowings totaled $20.6 million in the first three months
of 2004 and $23.8  million  in the  first  three  months of 2003.  For the three
months ended March 31, 2004 and 2003, noncash transfers from loans to foreclosed
properties  were $1.9 million and $864 thousand,  respectively.  Assets acquired
during  the first  quarter of 2004 as a result of the  Allied  Houston  business
combination  totaled $148.1 million,  while  liabilities  assumed totaled $161.7
million.  During the first  quarter of 2004,  $50.0  million of  long-term  FHLB
advances were transferred to short-term  borrowings  compared with net transfers
of $17.3 million in the first quarter of 2003.

NOTE 11 - RECENT PRONOUNCEMENTS

On March 9, 2004,  the  Securities  and Exchange  Commission  (SEC) issued Staff
Accounting  Bulletin No. 105,  "Application  of  Accounting  Principles  to Loan
Commitments".  This bulletin summarizes the views of the SEC staff regarding the
application  of generally  accepted  accounting  principles to loan  commitments
accounted for as derivative  instruments.  The adoption of this bulletin did not
impact Trustmark's consolidated financial statements.

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;  therefore, the adoption of
this Statement had no impact on Trustmark's financial statements.
<PAGE>

NOTE 12 - SEGMENT INFORMATION

During the first quarter of 2004,  Trustmark realigned its management  reporting
structure  to  include  four  segments  that  include  general  banking,  wealth
management,  insurance and administration.  The general banking segment realigns
Trustmark's  former  consumer  and  commercial  segment into a single group that
delivers a full range of banking  services to  consumers,  corporate,  small and
middle market businesses  through its extensive branch network.  In an effort to
strengthen existing  relationships and gain the trust of new clients,  Trustmark
realigned  its former  investment  segment  into the wealth  management  segment
incorporating trust, brokerage, investment advisory, and private banking service
under one umbrella.  The insurance  segment,  formerly  included in the consumer
segment,  represents  Trustmark's  retail insurance agency that offers a diverse
mix of insurance products and services.  The administrative segment incorporates
Trustmark's  treasury function with various  non-allocated  corporate  operation
units.

The accounting  policies of each reportable segment are the same as those of the
Corporation except for its internal  allocations.  Trustmark uses a match-funded
transfer pricing process to assess operating segment  performance.  Non-interest
expenses for back-office  operations  support are allocated to segments based on
estimated uses of those services.  Income tax expense for segments is calculated
at the marginal statutory rate.

The following table discloses  financial  information by reportable  segment for
the quarters  ended March 31, 2004 and 2003.  The prior period has been restated
to conform with the current period presentation.

Trustmark Corporation
Segment Information
($ in thousands)
<TABLE>
<CAPTION>

                                          General       Wealth
                                          Banking     Management   Insurance   Administration      Total
For the three months ended              -----------  ----------- ------------  --------------  -----------
March 31, 2004
----------------------------------
<S>                                          <C>          <C>         <C>            <C>          <C>
Net interest income from
    external customers                  $    55,507  $     1,108  $         -  $       11,744  $    68,359
Internal funding                                186          (73)           -            (113)           -
                                        -----------  -----------  -----------  --------------  -----------
Net interest income                          55,693        1,035            -          11,631       68,359
Provision for loan losses                     1,386          (21)           -            (313)       1,052
                                        -----------  -----------  -----------  --------------  -----------
Net interest income after
    provision for loan losses                54,307        1,056            -          11,944       67,307
Noninterest income                           24,821        5,108        3,169            (574)      32,524
Noninterest expense                          46,362        4,311        2,428           6,381       59,482
                                        -----------  -----------  -----------  --------------  -----------
Income before income taxes                   32,766        1,853          741           4,989       40,349
Income taxes                                 11,375          679          245           1,299       13,598
                                        -----------  -----------  -----------  --------------  -----------
Segment net income                      $    21,391  $     1,174  $       496  $        3,690  $    26,751
                                        ===========  ===========  ===========  ==============  ===========

Selected Financial Information
     Average assets                     $ 5,507,086  $    97,138  $    24,430  $    2,300,755  $ 7,929,409
     Depreciation and amortization      $     8,383  $       105  $       172  $          789  $     9,449


For the three months ended
March 31, 2003
----------------------------------
Net interest income from
    external customers                  $    52,966  $     1,225  $         -  $       15,006  $    69,197
Internal funding                              5,446          (32)           -          (5,414)           -
                                        -----------  -----------  -----------  --------------  -----------
Net interest income                          58,412        1,193            -           9,592       69,197
Provision for loan losses                     2,645          (15)           -             370        3,000
                                        -----------  -----------  ------------ --------------  -----------
Net interest income after
    provision for loan losses                55,767        1,208            -           9,222       66,197
Noninterest income                           26,007        4,794        2,995           7,387       41,183
Noninterest expense                          55,312        4,323        2,439           7,652       69,726
                                        -----------  -----------  ------------ --------------  -----------
Income before income taxes                   26,462        1,679          556           8,957       37,654
Income taxes                                  9,288          623          247           3,012       13,170
                                        -----------  -----------  ------------ --------------  -----------
Segment net income                      $    17,174  $     1,056  $       309  $        5,945  $    24,484
                                        ===========  ===========  ===========  ==============  ===========

Selected Financial Information
     Average assets                     $ 5,041,521  $    91,579  $    24,834  $    1,931,180  $ 7,089,114
     Depreciation and amortization      $    13,302  $       105  $       157  $        1,068  $    14,632
</TABLE>
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

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.

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:

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  a
     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  occur.  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.
<PAGE>

Business

Trustmark is a multi-bank holding company headquartered in Jackson, Mississippi,
incorporated under the Mississippi Business Corporation Act in 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, Florida, Tennessee and
Texas.

Trustmark National Bank (TNB), Trustmark's wholly-owned subsidiary, accounts for
substantially  all of the assets and  revenues  of  Trustmark.  In  addition  to
banking activities,  TNB provides investment and insurance products and services
to its customers through three wholly-owned subsidiaries,  Trustmark Securities,
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),  which  serves the
Fayette County, Tennessee market.

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.

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.
<PAGE>

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 are retained,  Trustmark  allocated 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 new
servicing income. At March 31, 2004 Trustmark  serviced $3.4 billion in mortgage
loans for others.

Impairment  for mortgage  servicing  rights occurs when the estimated fair value
falls below the underlying  carrying value.  Fair value is determined  utilizing
specific risk  characteristics  of the mortgage loan, current interest rates and
current  prepayment  speeds.  Trustmark  would  expect to recover a  significant
portion of the valuation  allowance  when mortgage  rates increase and stabilize
and  prepayment  speeds  decrease.  Since March 31,  2004,  mortgage  rates have
increased to December 2003 levels which should eliminate the impairment recorded
through other expenses for the quarter ended March 31, 2004.

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,  wealth management and insurance
solutions with over 145 branches and 185 ATMs in Mississippi, Florida, Tennessee
and Texas.  Net income for the three months ended March 31, 2004,  totaled $26.8
million  compared  with $24.5  million  for the same  period in 2003.  Basic and
diluted earnings per share were $0.46 for the first quarter of 2004, an increase
of 12.2% when compared with $0.41 for the first quarter of 2003. 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.

Management  utilizes certain financial ratios to gauge Trustmark's  performance.
Trustmark  achieved a return on average  assets of 1.36% and a return on average
equity of 15.27% for the three months ended March 31, 2004.  These compared with
ratios of 1.40% for  return on  average  assets and 14.88% for return on average
equity for the three months ended March 31, 2003.

Business Combinations

During  March 2004,  Trustmark  completed  its entry into the  dynamic  Houston,
Texas,  market with the purchase of five branches of Allied Houston Bank.  These
offices,  with  loans  and  deposits  of  $145.9  million  and  $161.7  million,
respectively,  are located in one of Houston's most attractive  areas. In August
2003,  Trustmark  completed its expansion into Florida's  vibrant  Emerald Coast
market with the purchase of seven branches of The Banc Corporation.  The Emerald
Coast branches,  with $224.3 million in loans and $209.2 million in deposits and
other  liabilities,  are  located  in  thriving  areas and well  positioned  for
additional growth.  Strategic acquisitions,  which enhance internal growth, will
continue to be an important component of Trustmark's strategic plan. 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.  Please
see the notes to the  consolidated  financial  statements  for  further  details
concerning these acquisitions.
<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 Table
on page 17  shows  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.  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.  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 26.

Net interest  income-FTE  for the first quarter of 2004 decreased $887 thousand,
or 1.2% when  compared  to the first  quarter of 2003.  Excluding  the  business
combinations  with  Emerald  Coast and Allied  Houston,  this  decrease was $4.4
million,  or 6.1%. The continuing  decline in interest rates experienced  during
2004  and  2003  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.  The result of the continuing decline in interest rates is
a decrease  in net  interest  margin  for the first  quarter of 2004 of 55 basis
points when compared to the same quarter of 2003.

Average  interest-earning  assets  for the first  quarter  of 2004  were  $7.201
billion, compared with $6.452 billion for the first quarter of 2003, an increase
of $749.3 million, or 11.6%. Without the Emerald Coast and Allied Houston branch
purchases, the increase in average interest-earning assets for the first quarter
of 2004 is $483.2  million,  or 7.5%.  This growth is primarily  seen in average
loans,  which  increased 9.7% (3.9% without  business  combinations)  during the
first quarter of 2004 when compared with the first quarter of 2003,  and average
securities,  which  increased  17.5% when the first  quarter of 2004 is compared
with the same period of 2003.  However,  the declining interest rate environment
has negatively  impacted  yields as the yield on average  earning assets dropped
from 5.99%  during the three  months  ended March 31, 2003 to 5.07% for the same
period of 2004, a decrease of 92 basis points. As a result,  interest income-FTE
decreased  by $4.5  million,  or 4.7%,  during  the first  quarter  of 2004 when
compared with the first quarter of 2003.

Average  interest-bearing  liabilities  for the first  quarter  of 2004  totaled
$5.912  billion,  compared with $5.194 billion for the first quarter of 2003, an
increase of $718.1  million,  or 13.8%.  Without  the  Emerald  Coast and Allied
Houston branch purchases, the increase in average  interest-bearing  liabilities
for  the  first  quarter  of  2004  is  $501.2   million,   or  9.6%.   Although
interest-bearing  liabilities  increased  during  the  first  quarter  of  2004,
interest  expense  continued  to decrease  due to the  declining  interest  rate
environment.  The average rates on  interest-bearing  liabilities  for the first
quarters of 2004 and 2003, were 1.38% and 1.86%, respectively,  a decrease of 48
basis points. As a result of these factors, total interest expense for the first
quarter 2004  decreased  $3.6  million,  or 15.0%,  when compared with the first
quarter of 2003.
<PAGE>

Trustmark Corporation
Yield/Rate Analysis Table
($ in thousands)
<TABLE>
<CAPTION>

                                                           For the Three Months Ended March 31,
                                                ----------------------------------------------------------
                                                            2004                          2003
                                                ----------------------------  ----------------------------
                                                  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                  $   17,238  $     43   1.00%  $   29,700  $     82   1.12%
    Securities - taxable                         1,959,518    16,196   3.32%   1,644,002    20,155   4.97%
    Securities - nontaxable                        160,905     3,071   7.68%     160,966     3,183   8.02%
    Loans, including loans held for sale         5,063,411    71,454   5.67%   4,617,076    71,803   6.31%
                                                ----------  --------          ----------  --------
    Total interest-earning assets                7,201,072    90,764   5.07%   6,451,744    95,223   5.99%
Cash and due from banks                            336,755                       302,372
Other assets                                       465,950                       410,141
Allowance for loan losses                          (74,368)                      (75,143)
                                                ----------                    ----------
        Total Assets                            $7,929,409                    $7,089,114
                                                ==========                    ==========

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
    Interest-bearing deposits                   $3,994,704    13,386   1.35%  $3,550,934    16,062   1.83%
    Federal funds purchased and
        securities sold under
        repurchase agreements                      892,204     2,104   0.95%     926,205     2,726   1.19%
    Borrowings                                   1,024,947     4,758   1.87%     716,569     5,032   2.85%
                                                ----------  --------          ----------  --------
        Total interest-bearing liabilities       5,911,855    20,248   1.38%   5,193,708    23,820   1.86%
                                                            --------                      --------
Noninterest-bearing demand deposits              1,258,065                     1,158,944
Other liabilities                                   54,928                        69,053
Shareholders' equity                               704,561                       667,409
                                                ----------                    ----------
        Total Liabilities and
            Shareholders' Equity                $7,929,409                    $7,089,114
                                                ==========                    ==========

        Net Interest Margin                                   70,516   3.94%                71,403   4.49%

Less tax equivalent adjustment                                 2,157                         2,206
                                                            --------                      --------
        Net Interest Margin per Consolidated
             Statements of Income                           $ 68,359                      $ 69,197
                                                            ========                      ========
</TABLE>
<PAGE>
Provision for Loan Losses
Trustmark's  provision for loan losses totaled $1.1 million for the three months
ended March 31,  2004,  compared  with $3.0 million for the same period in 2003.
During the first quarter of 2004,  the provision for loan losses  equaled 92% of
net charge-offs  compared with 103% in the prior year period. As a percentage of
average  loans,  the  provision was 0.08% for the first quarter of 2004 compared
with 0.26% for the first  quarter of 2003.  The  decrease is a direct  result of
consistent  asset quality along with a significant  decrease in net  charge-offs
for the quarter ended March 31, 2004.  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  beginning  on page 14, as well as the
discussion of Loans beginning on page 24.

Noninterest Income
Noninterest  income (NII)  consists of revenues  generated from a broad range of
banking and financial  services.  NII totaled $32.5 million in the first quarter
of  2004  compared  with  $41.2  million  in the  first  quarter  of  2003.  NII
represented 26.9% of total revenues in the first quarter of 2004 versus 30.7% in
the first quarter of 2003. The comparative  components of noninterest income for
the  three  month  periods  ended  March  31,  2004 and  2003,  are shown in the
accompanying  table.  Noninterest  income  contributed  by the Emerald Coast and
Allied Houston branch purchases during 2004 is considered immaterial.
--------------------------------------------------------------------------------
Noninterest Income
($ in thousands)
                                             Quarter Ended
                                               March 31,
                                          ------------------
                                            2004      2003    $ Change  % Change
                                          --------  --------  --------  --------
Service charges on deposit accounts       $ 13,326  $ 12,680     $ 646      5.1%
Other account charges and fees               6,827     6,625       202      3.0%
Insurance commissions                        3,746     3,787       (41)    -1.1%
Mortgage servicing fees                      4,228     4,326       (98)    -2.3%
Trust service income                         2,596     2,311       285     12.3%
Gains on sale of loans                       1,730     3,893    (2,163)   -55.6%
Securities gains                                13     8,148    (8,135)   -99.8%
Other income                                    58      (587)      645   -109.9%
                                          --------  --------  --------
     Total Noninterest Income             $ 32,524  $ 41,183  $ (8,659)   -21.0%
                                          ========  ========  ========
--------------------------------------------------------------------------------
The single  largest  component  of  noninterest  income  continues to be service
charges for deposit  products and services,  which  increased  5.1% in the first
quarter of 2004 over the same period in 2003.  Increases in services charges for
2004  are  primarily  attributed  to an  increase  in fees  charged  for NSF and
overdrafts  combined with increased  transaction  volumes when compared with the
same time period in 2003.

Other  account  charges and fees totaled  $6.8  million in the first  quarter of
2004, an increase of $202 thousand,  or 3.0%, when compared with the same period
in 2003.  Increasing revenues from market driven products was the primary factor
in the  growth as  increases  were seen in cash  management  and  brokerage  and
advisory services.  Offsetting this increase were bankcard fees, which decreased
primarily from changes in the pricing of merchant discount rates.

During the three months ended March 31, 2004,  mortgage  servicing  fees totaled
$4.2 million,  compared to $4.3 million in the first quarter of 2003.  Increased
prepayments  during the quarter  resulting from historical low interest rates on
mortgage loans  contributed to the decline in the mortgage  servicing  portfolio
when compared to the first quarter of 2003.  Trustmark  serviced  mortgage loans
with  average  balances  of $3.4  billion in the first  quarter of 2004 and $3.5
billion in the first quarter of 2003.

Trust service income was $2.6 million for the first quarter of 2004, an increase
of $285 thousand when compared with the same period of 2003. Recent improvements
in the  performance of the capital  markets  positively  impacted growth in this
area. In addition,  further  integration of the Wealth Management  Division into
Trustmark's  Florida and  Tennessee  markets has begun to impact trust  services
income as well. 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 March 31, 2004.
<PAGE>

Gains on sales of loans  were $1.7  million  in the  first  quarter  of 2004,  a
decrease of $2.2  million or 55.6% when  compared  with the same period of 2003.
During the first  quarter of 2004,  Trustmark  sold $39.6 million of its student
loan portfolio for a gain of $1.1 million.  This gain was offset by a decline in
secondary marketing gains from $3.6 million in the first quarter of 2003 to $549
thousand  during the first quarter of 2004. The overall total of loan sales from
secondary marketing activities declined from $369.8 million in the first quarter
of 2003 to  $215.6  million  in the first  quarter  of 2004 as a  sporadic  rate
environment affected both the pricing of loans as well as the consumer demand.

Other  income  during the three  months  ended March 31,  2004 was $58  thousand
compared to a loss of $587  thousand  for the same period of 2003.  During these
periods,  valuation  adjustments on fair value hedges used in  conjunction  with
Trustmark's  mortgage  servicing  portfolio  had the  greatest  impact  on other
income,  with a loss of $53 thousand for the first quarter of 2004 compared with
a loss of $698 thousand for the first quarter of 2003.

Securities  gains totaled $13 thousand during the first quarter of 2004 compared
with $8.1 million  during the first  quarter of 2003.  During 2003,  significant
price changes in certain  available for sale (AFS) securities  enabled Trustmark
to sell  securities  with a fair  value of $99.1  million,  which  provided  the
opportunity to restructure a portion of the portfolio to reduce price volatility
in an extremely low interest  rate cycle.  Management  considers the  investment
portfolio as an integral tool in the management of interest rate risk.

Noninterest Expense

Trustmark's  noninterest expense decreased $10.2 million, or 14.7%, in the first
quarter  of 2004 to $59.5  million,  compared  with  $69.7  million in the first
quarter of 2003. The decrease is primarily seen in two categories,  salaries and
employee benefits and  amortization/impairment of intangible assets. Noninterest
expense  contributed by the Emerald Coast and Allied Houston branch purchases is
considered immaterial. The comparative components of noninterest expense for the
three months ended March 31, 2004 and 2003, are shown in the accompanying table.
--------------------------------------------------------------------------------
Noninterest Expense
($ in thousands)
                                             Quarter Ended
                                               March 31,
                                          ------------------
                                            2004      2003    $ Change  % Change
                                          --------  --------  --------  --------
Salaries and employee benefits            $ 30,443  $ 35,924  $ (5,481)   -15.3%
Net-occupany - premises                      3,213     2,986       227      7.6%
Equipment expense                            3,542     3,710      (168)    -4.5%
Services and fees                            8,379     7,879       500      6.3%
Amortization/impairment of intangible
   assets                                    6,317    11,655    (5,338)   -45.8%
Other expense                                7,588     7,572        16      0.2%
                                          --------  --------  --------
     Total Noninterest Expense            $ 59,482  $ 69,726  $(10,244)   -14.7%
                                          ========  ========  ========
--------------------------------------------------------------------------------
Salaries and employee  benefits,  the largest  category of noninterest  expense,
were $30.4  million in the first  quarter of 2004 and $35.9 million in the first
quarter  of 2003,  a decrease  of $5.5  million.  In  February  2003,  Trustmark
announced  a  voluntary  early  retirement  program,  which was  accepted by 116
employees,  or 4.75% of the  workforce,  and resulted in $6.3 million of expense
recognized in the first quarter of 2003. The decrease  associated with the early
retirement  program was offset by an increase in employees  primarily  resulting
from the Emerald  Coast and Allied  Houston  branch  acquisitions.  Salaries and
employee  benefits  attributed to Emerald Coast and Allied Houston  totaled $749
thousand  during the first  quarter of 2004.  Trustmark's  full-time  equivalent
employees were 2,425 and 2,283 at March 31, 2004 and 2003, respectively.
<PAGE>

Net  occupancy-premises  expense  increased  $227 thousand,  or 7.6%,  from $3.0
million  in the first  quarter of 2003 to $3.2  million in the first  quarter of
2004. The increase is attributable to occupancy costs associated with facilities
acquired in the Emerald Coast and Allied Houston business combinations. Business
combinations accounted for approximately 60% of the increase.

Equipment  expense totaled $3.5 million in the first quarter of 2004, a decrease
of 4.5% over the same  period of 2003.  The  decrease  is  primarily a result of
decreased data processing  related expenses.  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 the first quarter of 2004 totaled $8.4 million compared to
$7.9 million for the first  quarter of 2003.  Higher costs for  software-related
expense and advertising expense contributed to the increase in 2004.

Amortization/impairment  expense  associated with intangible assets totaled $6.3
million in the first  quarter of 2004  compared  with $11.7 million in the first
quarter of 2003. Amortization/impairment expense of mortgage servicing rights is
the primary component of this category.  During the first quarter of 2004, total
amortization/impairment  expense for mortgage servicing rights was $5.7 million,
or $3.6 million in amortization expense and $2.1 million in impairment.  For the
same time period in 2003,  total  amortization/impairment  expense for  mortgage
servicing  rights was $10.8  million  but was broken  down into $4.1  million in
amortization  expense and $6.7  million in  impairment.  Though  mortgage  rates
reached historical lows during the first quarter of 2004, they have increased to
December 2003 levels during April 2004. As a result,  refinances have slowed and
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.

Income Taxes
For the quarter ended March 31, 2004,  Trustmark's  combined  effective tax rate
was 33.7%, compared to 35.0% for the first quarter of 2003. This decrease is the
result of permanent deductions received for Trustmark's ESOP feature implemented
in  its  401(k)  plan  effective  January  1,  2004,  permanent  deductions  for
Trustmark's  Long Term  Incentive  Plan and the  utilization  of  available  tax
credits.

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 March 31, 2004,  these
arrangements gave Trustmark  approximately $1.668 billion in borrowing capacity,
which  approximated  the  level  at the  end of  2003.  In  addition,  Trustmark
maintains a borrowing  relationship with the FHLB, which provided $300.0 million
in  short-term  advances and $481.0  million in long-term  advances at March 31,
2004,  compared with $300.0 million in short-term advances and $531.0 million in
long-term  advances at December 31, 2003. 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
$443.7 million  available in unused FHLB advances.  Another  borrowing source is
the Federal  Reserve  Discount  Window  (Discount  Window).  At March 31,  2004,
Trustmark had approximately  $557.4 million  available in borrowing  capacity at
the Discount  Window from pledges of auto loans and  securities,  compared  with
$539.9 million  available at December 31, 2003. 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 March 31, 2004, Trustmark
had not drawn upon this line of credit.
<PAGE>

During  2003,  Trustmark  filed a  registration  statement  on Form S-3 with the
Securities  and  Exchange  Commission  (SEC)  utilizing  a "shelf"  registration
process.  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.

During 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
March 31, 2004, no such shares have been issued.

Capital Resources

At March 31,  2004,  Trustmark's  shareholders'  equity was $718.6  million,  an
increase of $29.1 million,  or 4.2%,  from its level at December 31, 2003.  This
increase is primarily related to net income for the first quarter of 2004, which
totaled $26.8  million,  and net increases in  accumulated  other  comprehensive
income of $12.6 million, being offset by dividends of $11.1 million.

Common Stock Repurchase Program
Trustmark  currently has  authorization  for the repurchase of up to 3.5 million
shares  of  its  common  stock  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 $385.4 million, including 12 thousand shares during the first
quarter of 2004. See further  discussion of the Common Stock Repurchase  Program
on page 29 in Part II, Item 2, "Changes in Securities and Use of Proceeds".

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.  Dividends for the first three months of 2004 were $0.19 per
share,  increasing 15.2% when compared with dividends of $0.165 per share in the
same period in 2003.  Trustmark's  dividend payout ratio was 41.3% for the first
quarter of 2004, compared with 40.2% for the same period in 2003.

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
March 31, 2004,  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 March 31,  2004,  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. There are no significant  conditions or events
that have occurred since the OCC's  notification  that Management  believes have
affected TNB's present classification.
<PAGE>

Regulatory Capital Table
($ in thousands)
<TABLE>
<CAPTION>
                                                                   March 31, 2004
                                             -----------------------------------------------------------
                                                                                      Minimum Regulatory
                                             Actual Regulatory   Minimum Regulatory      Provision to be
                                                  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                     $639,341   11.96%   $427,809     8.00%          -         -
   Trustmark National Bank                    605,007   11.54%    419,426     8.00%   $524,282    10.00%
Tier 1 Capital (to Risk Weighted Assets)
   Trustmark Corporation                     $572,406   10.70%   $213,904     4.00%          -         -
   Trustmark National Bank                    539,396   10.29%    209,713     4.00%   $314,569     6.00%
Tier 1 Capital (to Average Assets)
   Trustmark Corporation                     $572,406    7.35%   $233,770     3.00%          -         -
   Trustmark National Bank                    539,396    7.06%    229,160     3.00%   $381,933     5.00%
</TABLE>
--------------------------------------------------------------------------------
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 March 31, 2004, earning assets were $7.346 billion,
or 90.8% of total assets, compared with $7.183 billion, or 90.8% of total assets
at December 31, 2003,  an increase of $163.2  million,  or 2.3%.  Excluding  the
Allied Houston branch  purchase,  earning  assets  totaled  $7.202  billion,  an
increase of $19.7 million when compared with December 31, 2003.

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 March
31, 2004, Trustmark's  securities portfolio totaled $2.128 billion,  compared to
$2.112 billion at December 31, 2003, an increase of $16.0 million, or 0.8%.

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  2004 and 2003. The estimated  duration of the portfolio was measured
to be 2.17 years at March 31, 2004,  2.30 years at December  31, 2003,  and 1.73
years at March 31, 2003. By stabilizing 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
(loss),  a separate  component of shareholders'  equity.  At March 31, 2004, AFS
securities  totaled $1.959 billion,  which  represented  92.0% of the securities
portfolio,  compared to $1.934 billion, or 91.6%, at December 31, 2003. At March
31, 2004,  unrealized  gains on AFS  securities  of $14.8  million,  net of $5.7
million  of  deferred   income  taxes,   were  included  in  accumulated   other
comprehensive  income (loss),  compared with losses of $5.6 million, net of $2.1
million in deferred  income taxes,  at December 31, 2003. At March 31, 2004, 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 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  $118.8  million  and a  noncallable  average  maturity  of 4.2  years.
Management expects to continue this strategy as an ongoing part of a diversified
investment approach in the securities portfolio.
<PAGE>

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  March  31,  2004,  HTM  securities  totaled  $169.7  million  and
represented 8.0% of the total portfolio,  compared with $178.4 million, or 8.4%,
at the end of 2003.  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 89% 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  70.8% of earning assets at
March 31, 2004,  compared with 70.1% at year-end 2003. At March 31, 2004,  loans
totaled  $5.198  billion,  a 3.3% increase  from its level of $5.033  billion at
December 31, 2003.  Adjusted  loan growth was $61.8  million,  or 1.2%,  for the
first quarter of 2004, if both the Allied Houston  branch  purchase and the sale
of $39.6 million in student loans are excluded.  Real estate lending,  primarily
construction  and  land  development  as well as  loans  secured  by 1-4  family
properties, continued to be positively impacted by record low interest rates. In
addition,  commercial and industrial  loans have also increased when compared to
December 31, 2003,  as a result of growth  centered in the Emerald Coast area of
Florida.

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.

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 March
31, 2004 and December 31, 2003, are shown in the accompanying table.
--------------------------------------------------------------------------------
Nonperforming Assets
($ in thousands)
                                                        March 31,   December 31,
                                                           2004          2003
                                                      ------------  ------------
Nonaccrual and restructured loans                     $     27,482  $     23,921
Other real estate (ORE)                                      7,149         5,929
                                                      ------------  ------------
      Total nonperforming assets                      $     34,631  $     29,850
                                                      ============  ============

Accruing loans past due 90 days or more               $      5,443  $      2,606
                                                      ============  ============

Nonperforming assets/total loans and ORE                     0.67%         0.59%
                                                      ============  ============
--------------------------------------------------------------------------------
Total  nonperforming  assets increased $4.8 million,  or 16.0%, during the first
quarter of 2004.  Excluding the Allied Houston branch  purchases,  nonperforming
assets  decreased  $5  thousand.  Management  will  continue to make a concerted
effort to address problem loans. The allowance  coverage of nonperforming  loans
remains strong at 269.9% at March 31, 2004, compared with 310.5% at December 31,
2003.
<PAGE>

At March 31, 2004, the allowance for loan losses was $74.2 million compared with
$74.3 million at December 31, 2003.  The  allowance for loan losses  represented
1.43%  of total  loans  outstanding  at March  31,  2004,  compared  to 1.48% at
December 31, 2003.  This  decline in the  allowance  for loan losses to loans is
directly  related to the  accounting  treatment for the acquired loans of Allied
Houston Bank. Generally accepted accounting principles provide that the purchase
of  selected  loans be  recorded  at fair  value  net of any  credit  or  market
discounts;  therefore,  no specific  allowance for loan losses has been recorded
for the Allied Houston loans purchased.  Loans purchased totaled $145.9 million,
which  included a $6.4 million  discount;  consisting  of a discount for general
credit risk of $7.3 million offset by a market  premium of $862 thousand.  As of
March 31, 2004,  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 $1.1 million,  or 0.09% of average  loans,  for the first
quarter of 2004,  compared with $2.9 million, or 0.26% of average loans, for the
same period of 2003.  This  improvement can primarily be attributed to the 26.3%
decline in charge-offs  recorded during the first quarter of 2004 resulting from
the improvement in credit quality experienced during 2003.

Other Earning Assets
Federal funds sold and securities purchased under reverse repurchase agreements
were $19.2 million at March 31, 2004, an decrease of $18.5 million when compared
with year-end 2003. 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 CD's. Total
deposits were $5.575 billion at March 31, 2004,  compared with $5.089 billion at
December 31, 2003, an increase of $485.4 million, or 9.5%.  Excluding the Allied
Houston branch  purchase,  deposits  increased  $324.5  million,  or 6.4%,  when
compared with December 31, 2003.  The primary area of growth in deposits  during
the first quarter of 2004 was accounts that were transactional in nature such as
demand  deposit,  NOW and MMDA.  When  compared  to year-end  2003,  transaction
accounts  increased  $291.8  million,  or 11.5%,  primarily from public deposits
resulting from seasonal tax collections. In addition, historically low rates for
certificates of deposit,  as well as uncertain market conditions,  have resulted
in more growth in traditional deposit products.  During 2003,  Trustmark began a
brokered CD program to provide additional low cost deposit funding. At March 31,
2004,  brokered CD's totaled  $117.2  million.  Trustmark  will continue to seek
deposits by  expanding  its  presence in higher  growth  markets and  evaluating
additional wholesale deposit funding sources.

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  $1.256  billion at March 31,  2004, a
decrease of $294.1  million,  compared with $1.550 billion at year-end 2003. The
growth in Trustmark's core deposits allowed Management to reduce the reliance on
wholesale funding products such as these.  Management  expects this effect to be
seasonal in nature.

Long-term FHLB advances  totaled $481.0 million at March 31, 2004, a decrease of
$50.0 million from December 31, 2003.  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 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 26.
<PAGE>

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.

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 March 31, 2004 and 2003,  Trustmark  had
commitments to extend credit of $537.3 million and $487.6 million, respectively.

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 March 31, 2004
and  2003,  Trustmark's  maximum  exposure  to  credit  loss  in  the  event  of
nonperformance  by the other party for  letters of credit was $76.1  million and
$70.1 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.

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.
<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.

Based on the results of the simulation models using static balances at March 31,
2004, it is estimated that net interest income may increase, possibly as much as
3.68%, 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 the event of a
100 basis point  decrease in interest  rates  (utilized  in place of a 200 basis
point drop scenario due to the historically low interest rate  environment),  it
is  estimated  net  interest  income may  decrease by 3.30%.  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.

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 March 31,
2004, reflected a liability gap of $270 million compared with a liability gap of
$691 million at December 31, 2003.  One-year gap analysis projected at March 31,
2004,  reflected an asset gap of $69 million  compared  with a liability  gap of
$352  million at December  31,  2003.  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  loans, by controlling  the duration of the securities  portfolio and
growth in core deposits with the result being a lower, albeit slightly positive,
sensitivity to rising rates.

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.
<PAGE>

Trustmark continued a risk controlling strategy utilizing caps and floors, which
may be further  implemented  over time. As of March 31, 2004,  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.

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.  Although this strategy
exposes Trustmark  somewhat to a rising rate  environment,  Management felt this
was more economical in light of the significant  prepayment  charges  associated
with  these  advances.  The  swap  contracts  are tied to the  maturity  of five
separate FHLB advances maturing between 2005 and 2006.

Recent Pronouncements

Please see Note 11 of the Notes to  Consolidated  Financial  Statements for more
information on recent pronouncements.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by this item is included in "Market/Interest  Rate Risk
Management"  (pages 26-28) of "Item 2.  Management's  Discussion and Analysis of
Financial Condition and Results of Operations."

ITEM 4.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures
For the period ended March 31, 2004,  Trustmark  evaluated the  effectiveness of
the design and operation of its disclosure  controls and procedures  pursuant to
Rules 13a-14 and 15d-14 under the  Securities  Exchange Act of 1934,  as amended
(Exchange  Act),  under  the  supervision  and  with  the  participation  of its
management,  including  the  Chief  Executive  Officer  and the  Treasurer  (the
Principal  Financial Officer).  Based upon this evaluation,  the Chief Executive
Officer and the  Treasurer  concluded  that,  as of March 31, 2004,  Trustmark's
disclosure  controls and  procedures  were  adequate to ensure that  information
required to be disclosed  by  Trustmark in the reports  filed or submitted by it
under the Exchange Act is recorded,  processed,  summarized and reported  within
the time periods specified in the rules and forms of the Securities and Exchange
Commission. Subsequent to this review, there have been no significant changes in
Trustmark's  internal  controls  or in other  factors  that could  significantly
affect these controls.

Internal Control over Financial Reporting
During  the  period  covered  by this  report,  there  have been no  changes  in
Trustmark's  internal  control over  financial  reporting  that have  materially
affected or are  reasonably  likely to materially  affect  Trustmark's  internal
control over financial reporting.
<PAGE>

PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

There were no material  developments for the quarter ended March 31, 2004, other
than those  disclosed  in the Notes to  Consolidated  Financial  Statements  and
Management's Discussion and Analysis of this Form 10-Q.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

The  following  table shows  information  relating to the  repurchase  of common
shares by Trustmark Corporation during the three months ended March 31, 2004:

<TABLE>
<CAPTION>
                                                          Total Number of      Maximum Number
                                                         Shares Purchased    of Shares that May
                           Total Number     Average    as Part of Publicly    Yet be Purchased
                             of Shares    Price Paid     Announced Plans       Under the Plans
           Period            Purchased     Per Share       or Programs           or Programs
-------------------------  ------------   ----------   -------------------   ------------------
<S>                              <C>         <C>                     <C>              <C>
January 1, 2004 through
January 31, 2004                      -      $     -                     -            3,493,465

February 1, 2004 through
February 29, 2004                 7,000      $ 30.45                 7,000            3,486,465

March 1, 2004 through
March 31, 2004                    5,000      $ 30.11                 5,000            3,481,465
                           ------------                -------------------
        Total                    12,000                             12,000
                           ============                ===================
</TABLE>

On October 15, 2002,  the Board of  Directors of Trustmark  authorized a plan to
repurchase 5% of current  outstanding shares, or 3,083,020 shares. An additional
plan was approved by the Board of Directors on July 15, 2003,  also allowing for
a 5% repurchase of current  outstanding  shares,  or 2,936,571  shares.  Both of
these plans are subject to market conditions and management  discretion and will
continue to be implemented through open market purchases or privately negotiated
transactions. No expiration date has been given to either of these plans.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

A.   Exhibits

     The  exhibits  listed  in the  Exhibit  Index  are  filed  herewith  or are
     incorporated herein by reference.

B.   Reports on Form 8-K

     1.   On January 20, 2004,  Trustmark  filed a report on Form 8-K announcing
          its financial results for the period ended December 31, 2003.
     2.   On January 27, 2004,  Trustmark  filed a report on Form 8-K announcing
          that  Chairman  and Chief  Executive  Officer  Richard G.  Hickson was
          making a presentation  to analysts  attending the 2004 Citigroup Smith
          Barney  Financial  Services   Conference.   The  report  included  the
          financial data that was presented at the conference.
     3.   On February 12, 2004,  Trustmark filed a report on Form 8-K announcing
          that  Trustmark's  wholly-owned  subsidiary,  Trustmark  National Bank
          filed applications to be become a Fed-member,  state-chartered banking
          institution.
     4.   On March 15, 2004, Trustmark filed a report on Form 8-K announcing the
          completion of the Allied Houston Bank branch purchase.

<PAGE>

                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.

                              TRUSTMARK CORPORATION


BY:   /s/ Richard G. Hickson                         BY:   /s/ Zach L. Wasson
      ----------------------                               ---------------------
      Richard G. Hickson                                   Zach L. Wasson
      Chairman of the Board, President                     Treasurer (Principal
      & Chief Executive Officer                            Financial Officer)

DATE: May 7, 2004                                    DATE: May 7, 2004
<PAGE>

                                  EXHIBIT INDEX


31-a Certification  by Chief  Executive  Officer  pursuant to Section 302 of the
     Sarbanes-Oxley Act of 2002.

31-b Certification  by Chief  Financial  Officer  pursuant to Section 302 of the
     Sarbanes-Oxley Act of 2002.

32-a Certification by Chief Executive Officer pursuant to 18 U.S.C. ss. 1350.

32-b Certification by Chief Financial Officer pursuant to 18 U.S.C. ss. 1350.


All other exhibits are omitted,  as they are inapplicable or not required by the
related instructions.


</TEXT>
</DOCUMENT>
