EX-99.1 2 trmk-ex991_7.htm EX-99.1

Exhibit 99.1

| News Release

Trustmark Corporation Announces First Quarter 2017 Financial Results

JACKSON, Miss. – April 25, 2017 – Trustmark Corporation (NASDAQ:TRMK) reported net income of $31.2 million in the first quarter of 2017, representing diluted earnings per share of $0.46. Diluted earnings per share in the first quarter of 2017 increased 7.0% when compared to the previous quarter and 15.0% when compared to the same period in the prior year. This level of earnings resulted in a return on average tangible common equity of 11.39% and a return on average assets of 0.95%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable June 15, 2017, to shareholders of record on June 1, 2017.

First Quarter Highlights

• | Revenue excluding interest and fees on acquired loans increased 4.6% linked quarter and 5.7% year-over-year to total $138.4 million

• | Routine noninterest expense, which excludes ORE and intangible amortization, totaled $98.7 million, remaining well-controlled from both the prior quarter and year-over-year

• | Sustained strong credit performance

Gerard R. Host, President and CEO, stated, “The first quarter marked a great start to 2017 for Trustmark. We maintained and expanded customer relationships by growing loans across our franchise while continuing to maintain solid credit quality. Our low-cost, core deposit base remains a significant strength of the organization. The strong performance of our mortgage and insurance businesses was reflected in solid noninterest income growth. While we continued to make investments to enhance the customer experience, we maintained our focus on disciplined expense management. We recently welcomed the associates and customers of Reliance Bank to the Trustmark family with the completion of our previously announced merger on April 7. We are delighted to serve the greater Huntsville, Alabama, market and look forward to their contributions going forward. Thanks to our talented associates, solid profitability and strong capital base, Trustmark remains well positioned to continue meeting the needs of our customers and creating long-term value for our shareholders.”

Balance Sheet Management

• | Diversified loan growth demonstrates value of Trustmark’s five-state footprint

• | Noninterest-bearing deposits represent 31.8% of total deposits

• | Capital base continues to provide flexibility in pursuing growth opportunities

Loans held for investment totaled $8.0 billion at March 31, 2017, an increase of 2.0% from the prior quarter and 10.1% from the comparable period one year earlier. During the first quarter of 2017, Trustmark reclassified $36.7 million of acquired loans to loans held for investment due to the discount on these loans being fully amortized. Excluding this reclassification, loans held for investment increased $116.7 million, or 1.5% from the prior quarter and 9.6% from the comparable period one year earlier.

The following discussion of loan growth excludes the aforementioned reclassified acquired loans. Other real estate secured loans, which include multifamily projects, expanded $79.8 million, which was a result of the migration of construction loans as projects were completed. Construction and land development loans grew $28.0 million, primarily due to increased construction in Alabama. Nonfarm-nonresidential loans increased $26.2 million, primarily due to strength in Alabama and Florida. Other loans, which include loans to nonprofits and real estate investment trusts, increased $11.4 million, driven principally by growth in Alabama, Texas and Mississippi. Single-family home loans decreased $14.2 million as growth in Alabama and Florida was more than offset by declines in Mississippi and Tennessee. State and other political loans decreased $7.0 million as growth in Texas and Alabama was more than offset by declines in Mississippi and Tennessee.

Acquired loans totaled $218.2 million at March 31, 2017, down $54.0 million from the prior quarter, primarily due to the previously mentioned reclassification of $36.7 million of acquired loans to loans held for investment. Collectively, loans held for investment and acquired loans totaled $8.2 billion at March 31, 2017, up $99.4 million, or 1.2%, from the prior quarter.

Deposits totaled $10.1 billion at March 31, 2017, remaining stable from the prior quarter. Trustmark continues to maintain an attractive, low-cost deposit base with approximately 60% of deposit balances in checking accounts and a total cost of deposits of 0.16%. The cost of interest-bearing liabilities was 0.34% for the first quarter of 2017.

Trustmark’s capital position remained solid, reflecting the consistent profitability of its diversified financial services businesses. At March 31, 2017, Trustmark’s tangible equity to tangible assets ratio was 8.80%, while the total risk-based capital ratio was 13.61%.

Credit Quality

• | Other real estate decreased 9.8% and 22.1% from the prior quarter and year-over-year, respectively

• | Net charge-offs represented 0.08% of average loans

• | Allowance for loan losses represented 263.73% of nonperforming loans, excluding specifically reviewed impaired loans

Nonperforming loans totaled $61.3 million at March 31, 2017, up 24.5% from the prior quarter and down 13.3% year-over-year; the linked-quarter increase was primarily a result of one substandard energy- related credit migrating to nonaccrual status. Other real estate totaled $56.0 million, reflecting a decline of 9.8% from the previous quarter and 22.1% from the same period one year earlier. Collectively, nonperforming assets totaled $117.3 million, reflecting a linked-quarter increase of 5.4% and year-over-year decrease of 17.7%.

Allocation of Trustmark's $72.4 million allowance for loan losses represented 0.97% of commercial loans and 0.67% of consumer and home mortgage loans, resulting in an allowance to total loans held for investment of 0.91% at March 31, 2017, representing a level management considers commensurate with the inherent risk in the loan portfolio. Collectively, the allowance for both held for investment and acquired loan losses represented 1.00% of total loans, which include held for investment and acquired loans.

Unless noted otherwise, all of the above credit quality metrics exclude acquired loans and other real estate covered by FDIC loss-share agreement.

Revenue Generation

• | Net interest income (FTE) excluding acquired loans totaled $97.2 million in the first quarter, an increase of 2.0% from the prior quarter and 5.5% year-over-year

• | Net interest margin excluding acquired loans was 3.38%, an increase of 7 basis points from the prior quarter

• | Noninterest income totaled $46.0 million, up 10.3% linked quarter and 6.4% year-over-year

Net interest income (FTE) in the first quarter totaled $102.4 million, resulting in a net interest margin of 3.49%, down 3 basis points from the prior quarter. Relative to the prior quarter, net interest income (FTE) decreased $1.1 million as growth in interest income from both the held for sale and held for investment loan portfolios was more than offset by decreased interest income from the acquired loan portfolio as well as increased total interest expense. The yield on acquired loans in the first quarter totaled 8.40% and included recoveries from settlement of debt of $1.2 million; this compares to $3.8 million in recoveries from settlement of debt in the prior quarter. Excluding acquired loans, the net interest margin in the first quarter totaled 3.38%, an increase of 7 basis points when compared to the fourth quarter of 2016. The increase was primarily due to growth in the yields on the securities portfolio and the loans held for investment and held for sale portfolios.

Noninterest income in the first quarter increased 10.3% from the prior quarter to total $46.0 million, as higher mortgage banking revenues and insurance commissions more than offset seasonal reductions in various fee-income categories. Mortgage banking revenue totaled $10.2 million in the first quarter, up $4.8 million from the prior quarter and $1.5 million year-over-year. The linked-quarter change reflects a net positive mortgage valuation adjustment and a net positive mortgage servicing hedge ineffectiveness that more than offset decreased secondary marketing gains. Mortgage loan production totaled $303.5 million, down 25.4% from the prior quarter and 1.3% year-over-year. Insurance revenue totaled $9.2 million in the first quarter, up 8.9% from the prior quarter and 7.2% year-over-year; this performance primarily reflects growth in the group health insurance and property and casualty businesses.

Wealth management revenue in the first quarter totaled $7.4 million, down 1.2% and up 0.1% from the prior quarter and year-over-year, respectively. The linked-quarter decline is primarily attributable to decreased commission-based transactions within investment services. Bank card and other fees declined $296 thousand from the prior quarter due to seasonal reductions in interchange income and lower revenue on interest rate swaps for commercial loan customers. Service charges on deposit accounts declined $612 thousand from the prior quarter, reflecting seasonal reductions in NSF and overdraft fees.

Noninterest Expense

• | Routine noninterest expense, which excludes ORE and intangible amortization, totaled $98.7 million, remaining stable from both the prior quarter and year-over-year

• | Total noninterest expense increased 1.8% linked quarter and 3.1% year-over-year to $102.1 million

• | Full-time equivalent employees totaled 2,799 at the end of the first quarter, a decrease of 147 or 5.0% when compared to levels one year earlier

Salaries and benefits decreased $866 thousand from the prior quarter to total $57.3 million. Services and fees increased 3.9%, or $581 thousand, linked quarter primarily due to additional advertising and outside services expense. ORE and foreclosure expense totaled $1.8 million, up from the prior quarter, while net occupancy-premises expense totaled $6.2 million, down 2.9% from the prior quarter. Other expense totaled $12.8 million, up $1.1 million on a linked-quarter basis, primarily due to a property valuation adjustment associated with a branch closure and other miscellaneous expenses.

Trustmark remains committed to diligent expense management. As previously announced, Trustmark terminated its defined benefit pension plan as of December 31, 2016. In order to terminate the plan, Trustmark is required to fully fund the plan on a termination basis and will contribute the additional assets necessary to do so. The final distributions will be made from current plan assets and a one-time pension settlement expense of approximately $17.5 million (pre-tax) will be recognized when paid by Trustmark during the second quarter of 2017. After the distribution of plan assets during the second quarter of 2017, Trustmark estimates that the annual pension expense will be reduced by $3.0 million to $4.0 million.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, April 26, 2017, at 10:00 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (877) 317-3051 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com, which will also include a slide presentation Management will review during the conference call. A replay of the conference call will also be available through Wednesday, May 10, 2017, in archived format at the same web address or by calling (877) 344-7529, passcode 10103777.

Trustmark Corporation is a financial services company providing banking and financial solutions through 200 offices in Alabama, Florida, Mississippi, Tennessee and Texas.

Forward-Looking Statements

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

Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, local, state and national economic and market conditions, including conditions in the housing and real estate markets in the regions in which Trustmar k operates and the extent and duration of the current volatility in the credit and financial markets as well as crude oil prices, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility o f market interest rates, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts, the costs and effects of litigation and of unexpected or adverse outcomes in such litigatio n, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, including th e potential impact of issues relating to the European financial system and monetary and other governmental actions designed to address the level and volatility of interest rates and the volatility of securities, currency and other markets, the enactment of legislation and changes in existing regulations or enforcement practices or the adoption of new regulations, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financi al statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, changes in our ability to control expenses, changes in our compensation and benefit plans, including those associated with the planned termination of our noncontributory tax-qualified defined benefit pension plan, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, cyber-attacks and other breaches which could affect our information system security, natural disasters, environmental disasters, acts of war or terrorism, and other risks described in our filings with the Securities and Exchange Commission.

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

Trustmark Investor Contacts: | Trustmark Media Contact:
Louis E. Greer | Melanie A. Morgan
Treasurer and | Senior Vice President
Principal Financial Officer | 601-208-2979
601-208-2310 |

F. Joseph Rein, Jr.

Senior Vice President

601-208-6898

|  | TRUSTMARK CORPORATION AND SUBSIDIARIES
| CONSOLIDATED FINANCIAL INFORMATION
| March 31, 2017
| ($ in thousands)
| (unaudited)

|  |  |  |  |  |  |  |  |  |  |  |  | Linked Quarter |  |  | Year over Year |
QUARTERLY AVERAGE BALANCES | 3/31/2017 |  |  | 12/31/2016 |  |  | 3/31/2016 |  |  | $ Change |  |  | % Change |  |  | $ Change |  |  | % Change |
Securities AFS-taxable | $ | 2,252,162 |  |  | $ | 2,271,503 |  |  | $ | 2,211,479 |  |  | $ | (19,341 | ) |  |  | -0.9 | % |  | $ | 40,683 |  |  |  | 1.8 | %
Securities AFS-nontaxable |  | 88,522 |  |  |  | 91,495 |  |  |  | 105,844 |  |  |  | (2,973 | ) |  |  | -3.2 | % |  |  | (17,322 | ) |  |  | -16.4 | %
Securities HTM-taxable |  | 1,124,692 |  |  |  | 1,101,382 |  |  |  | 1,142,434 |  |  |  | 23,310 |  |  |  | 2.1 | % |  |  | (17,742 | ) |  |  | -1.6 | %
Securities HTM-nontaxable |  | 33,009 |  |  |  | 33,675 |  |  |  | 35,841 |  |  |  | (666 | ) |  |  | -2.0 | % |  |  | (2,832 | ) |  |  | -7.9 | %
Total securities |  | 3,498,385 |  |  |  | 3,498,055 |  |  |  | 3,495,598 |  |  |  | 330 |  |  |  | 0.0 | % |  |  | 2,787 |  |  |  | 0.1 | %
Loans (including loans held for sale) |  | 8,074,449 |  |  |  | 7,855,444 |  |  |  | 7,346,333 |  |  |  | 219,005 |  |  |  | 2.8 | % |  |  | 728,116 |  |  |  | 9.9 | %
Acquired loans |  | 250,482 |  |  |  | 282,197 |  |  |  | 378,435 |  |  |  | (31,715 | ) |  |  | -11.2 | % |  |  | (127,953 | ) |  |  | -33.8 | %
Fed funds sold and rev repos |  | 397 |  |  |  | 1,418 |  |  |  | 382 |  |  |  | (1,021 | ) |  |  | -72.0 | % |  |  | 15 |  |  |  | 3.9 | %
Other earning assets |  | 79,515 |  |  |  | 80,608 |  |  |  | 66,702 |  |  |  | (1,093 | ) |  |  | -1.4 | % |  |  | 12,813 |  |  |  | 19.2 | %
Total earning assets |  | 11,903,228 |  |  |  | 11,717,722 |  |  |  | 11,287,450 |  |  |  | 185,506 |  |  |  | 1.6 | % |  |  | 615,778 |  |  |  | 5.5 | %
Allowance for loan losses |  | (83,394 | ) |  |  | (82,604 | ) |  |  | (81,138 | ) |  |  | (790 | ) |  |  | 1.0 | % |  |  | (2,256 | ) |  |  | 2.8 | %
Cash and due from banks |  | 310,542 |  |  |  | 314,420 |  |  |  | 281,912 |  |  |  | (3,878 | ) |  |  | -1.2 | % |  |  | 28,630 |  |  |  | 10.2 | %
Other assets |  | 1,235,469 |  |  |  | 1,238,029 |  |  |  | 1,253,282 |  |  |  | (2,560 | ) |  |  | -0.2 | % |  |  | (17,813 | ) |  |  | -1.4 | %
Total assets | $ | 13,365,845 |  |  | $ | 13,187,567 |  |  | $ | 12,741,506 |  |  | $ | 178,278 |  |  |  | 1.4 | % |  | $ | 624,339 |  |  |  | 4.9 | %
Interest-bearing demand deposits | $ | 1,981,982 |  |  | $ | 1,920,273 |  |  | $ | 1,866,043 |  |  | $ | 61,709 |  |  |  | 3.2 | % |  | $ | 115,939 |  |  |  | 6.2 | %
Savings deposits |  | 3,319,572 |  |  |  | 3,049,733 |  |  |  | 3,188,916 |  |  |  | 269,839 |  |  |  | 8.8 | % |  |  | 130,656 |  |  |  | 4.1 | %
Time deposits |  | 1,650,251 |  |  |  | 1,638,853 |  |  |  | 1,677,576 |  |  |  | 11,398 |  |  |  | 0.7 | % |  |  | (27,325 | ) |  |  | -1.6 | %
Total interest-bearing deposits |  | 6,951,805 |  |  |  | 6,608,859 |  |  |  | 6,732,535 |  |  |  | 342,946 |  |  |  | 5.2 | % |  |  | 219,270 |  |  |  | 3.3 | %
Fed funds purchased and repos |  | 498,963 |  |  |  | 494,193 |  |  |  | 517,180 |  |  |  | 4,770 |  |  |  | 1.0 | % |  |  | (18,217 | ) |  |  | -3.5 | %
Short-term borrowings |  | 887,848 |  |  |  | 435,576 |  |  |  | 413,616 |  |  |  | 452,272 |  |  | n/m |  |  |  | 474,232 |  |  | n/m |
Long-term FHLB advances |  | 251,033 |  |  |  | 685,844 |  |  |  | 501,144 |  |  |  | (434,811 | ) |  |  | -63.4 | % |  |  | (250,111 | ) |  |  | -49.9 | %
Subordinated notes |  | — |  |  |  | 40,757 |  |  |  | 49,972 |  |  |  | (40,757 | ) |  |  | -100.0 | % |  |  | (49,972 | ) |  |  | -100.0 | %
Junior subordinated debt securities |  | 61,856 |  |  |  | 61,856 |  |  |  | 61,856 |  |  |  | — |  |  |  | 0.0 | % |  |  | — |  |  |  | 0.0 | %
Total interest-bearing liabilities |  | 8,651,505 |  |  |  | 8,327,085 |  |  |  | 8,276,303 |  |  |  | 324,420 |  |  |  | 3.9 | % |  |  | 375,202 |  |  |  | 4.5 | %
Noninterest-bearing deposits |  | 3,008,176 |  |  |  | 3,160,959 |  |  |  | 2,836,283 |  |  |  | (152,783 | ) |  |  | -4.8 | % |  |  | 171,893 |  |  |  | 6.1 | %
Other liabilities |  | 173,066 |  |  |  | 166,379 |  |  |  | 134,236 |  |  |  | 6,687 |  |  |  | 4.0 | % |  |  | 38,830 |  |  |  | 28.9 | %
Total liabilities |  | 11,832,747 |  |  |  | 11,654,423 |  |  |  | 11,246,822 |  |  |  | 178,324 |  |  |  | 1.5 | % |  |  | 585,925 |  |  |  | 5.2 | %
Shareholders' equity |  | 1,533,098 |  |  |  | 1,533,144 |  |  |  | 1,494,684 |  |  |  | (46 | ) |  |  | 0.0 | % |  |  | 38,414 |  |  |  | 2.6 | %
Total liabilities and equity | $ | 13,365,845 |  |  | $ | 13,187,567 |  |  | $ | 12,741,506 |  |  | $ | 178,278 |  |  |  | 1.4 | % |  | $ | 624,339 |  |  |  | 4.9 | %
n/m - percentage changes greater than +/- 100% are considered not meaningful |  |  |

See Notes to Consolidated Financials

|  | TRUSTMARK CORPORATION AND SUBSIDIARIES
| CONSOLIDATED FINANCIAL INFORMATION
| March 31, 2017
| ($ in thousands)
| (unaudited)

|  |  |  |  |  |  |  |  |  |  |  |  | Linked Quarter |  |  | Year over Year |
PERIOD END BALANCES | 3/31/2017 |  |  | 12/31/2016 |  |  | 3/31/2016 |  |  | $ Change |  |  | % Change |  |  | $ Change |  |  | % Change |
Cash and due from banks | $ | 379,590 |  |  | $ | 327,706 |  |  | $ | 228,498 |  |  | $ | 51,884 |  |  |  | 15.8 | % |  | $ | 151,092 |  |  |  | 66.1 | %
Fed funds sold and rev repos |  | 500 |  |  |  | 500 |  |  |  | — |  |  |  | — |  |  |  | 0.0 | % |  |  | 500 |  |  | n/m |
Securities available for sale |  | 2,365,554 |  |  |  | 2,356,682 |  |  |  | 2,368,120 |  |  |  | 8,872 |  |  |  | 0.4 | % |  |  | (2,566 | ) |  |  | -0.1 | %
Securities held to maturity |  | 1,156,067 |  |  |  | 1,158,643 |  |  |  | 1,168,203 |  |  |  | (2,576 | ) |  |  | -0.2 | % |  |  | (12,136 | ) |  |  | -1.0 | %
Loans held for sale (LHFS) |  | 174,090 |  |  |  | 175,927 |  |  |  | 191,028 |  |  |  | (1,837 | ) |  |  | -1.0 | % |  |  | (16,938 | ) |  |  | -8.9 | %
Loans held for investment (LHFI) |  | 8,004,657 |  |  |  | 7,851,213 |  |  |  | 7,268,022 |  |  |  | 153,444 |  |  |  | 2.0 | % |  |  | 736,635 |  |  |  | 10.1 | %
Allowance for loan losses |  | (72,445 | ) |  |  | (71,265 | ) |  |  | (69,668 | ) |  |  | (1,180 | ) |  |  | 1.7 | % |  |  | (2,777 | ) |  |  | 4.0 | %
Net LHFI |  | 7,932,212 |  |  |  | 7,779,948 |  |  |  | 7,198,354 |  |  |  | 152,264 |  |  |  | 2.0 | % |  |  | 733,858 |  |  |  | 10.2 | %
Acquired loans |  | 218,242 |  |  |  | 272,247 |  |  |  | 364,755 |  |  |  | (54,005 | ) |  |  | -19.8 | % |  |  | (146,513 | ) |  |  | -40.2 | %
Allowance for loan losses, acquired loans |  | (10,006 | ) |  |  | (11,397 | ) |  |  | (13,535 | ) |  |  | 1,391 |  |  |  | -12.2 | % |  |  | 3,529 |  |  |  | -26.1 | %
Net acquired loans |  | 208,236 |  |  |  | 260,850 |  |  |  | 351,220 |  |  |  | (52,614 | ) |  |  | -20.2 | % |  |  | (142,984 | ) |  |  | -40.7 | %
Net LHFI and acquired loans |  | 8,140,448 |  |  |  | 8,040,798 |  |  |  | 7,549,574 |  |  |  | 99,650 |  |  |  | 1.2 | % |  |  | 590,874 |  |  |  | 7.8 | %
Premises and equipment, net |  | 183,311 |  |  |  | 184,987 |  |  |  | 194,453 |  |  |  | (1,676 | ) |  |  | -0.9 | % |  |  | (11,142 | ) |  |  | -5.7 | %
Mortgage servicing rights |  | 82,758 |  |  |  | 80,239 |  |  |  | 68,208 |  |  |  | 2,519 |  |  |  | 3.1 | % |  |  | 14,550 |  |  |  | 21.3 | %
Goodwill |  | 366,156 |  |  |  | 366,156 |  |  |  | 366,156 |  |  |  | — |  |  |  | 0.0 | % |  |  | — |  |  |  | 0.0 | %
Identifiable intangible assets |  | 19,117 |  |  |  | 20,680 |  |  |  | 25,751 |  |  |  | (1,563 | ) |  |  | -7.6 | % |  |  | (6,634 | ) |  |  | -25.8 | %
Other real estate |  | 55,968 |  |  |  | 62,051 |  |  |  | 72,302 |  |  |  | (6,083 | ) |  |  | -9.8 | % |  |  | (16,334 | ) |  |  | -22.6 | %
Other assets |  | 566,802 |  |  |  | 577,964 |  |  |  | 542,903 |  |  |  | (11,162 | ) |  |  | -1.9 | % |  |  | 23,899 |  |  |  | 4.4 | %
Total assets | $ | 13,490,361 |  |  | $ | 13,352,333 |  |  | $ | 12,775,196 |  |  | $ | 138,028 |  |  |  | 1.0 | % |  | $ | 715,165 |  |  |  | 5.6 | %
Deposits: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noninterest-bearing | $ | 3,209,727 |  |  | $ | 2,973,238 |  |  | $ | 2,874,306 |  |  | $ | 236,489 |  |  |  | 8.0 | % |  | $ | 335,421 |  |  |  | 11.7 | %
Interest-bearing |  | 6,894,745 |  |  |  | 7,082,774 |  |  |  | 6,759,337 |  |  |  | (188,029 | ) |  |  | -2.7 | % |  |  | 135,408 |  |  |  | 2.0 | %
Total deposits |  | 10,104,472 |  |  |  | 10,056,012 |  |  |  | 9,633,643 |  |  |  | 48,460 |  |  |  | 0.5 | % |  |  | 470,829 |  |  |  | 4.9 | %
Fed funds purchased and repos |  | 524,335 |  |  |  | 539,817 |  |  |  | 466,436 |  |  |  | (15,482 | ) |  |  | -2.9 | % |  |  | 57,899 |  |  |  | 12.4 | %
Short-term borrowings |  | 864,690 |  |  |  | 769,778 |  |  |  | 411,385 |  |  |  | 94,912 |  |  |  | 12.3 | % |  |  | 453,305 |  |  | n/m |
Long-term FHLB advances |  | 250,994 |  |  |  | 251,049 |  |  |  | 501,124 |  |  |  | (55 | ) |  |  | 0.0 | % |  |  | (250,130 | ) |  |  | -49.9 | %
Subordinated notes |  | — |  |  |  | — |  |  |  | 49,977 |  |  |  | — |  |  | n/m |  |  |  | (49,977 | ) |  |  | -100.0 | %
Junior subordinated debt securities |  | 61,856 |  |  |  | 61,856 |  |  |  | 61,856 |  |  |  | — |  |  |  | 0.0 | % |  |  | — |  |  |  | 0.0 | %
Other liabilities |  | 146,053 |  |  |  | 153,613 |  |  |  | 142,519 |  |  |  | (7,560 | ) |  |  | -4.9 | % |  |  | 3,534 |  |  |  | 2.5 | %
Total liabilities |  | 11,952,400 |  |  |  | 11,832,125 |  |  |  | 11,266,940 |  |  |  | 120,275 |  |  |  | 1.0 | % |  |  | 685,460 |  |  |  | 6.1 | %
Common stock |  | 14,112 |  |  |  | 14,091 |  |  |  | 14,093 |  |  |  | 21 |  |  |  | 0.1 | % |  |  | 19 |  |  |  | 0.1 | %
Capital surplus |  | 365,951 |  |  |  | 366,563 |  |  |  | 363,979 |  |  |  | (612 | ) |  |  | -0.2 | % |  |  | 1,972 |  |  |  | 0.5 | %
Retained earnings |  | 1,200,903 |  |  |  | 1,185,352 |  |  |  | 1,151,757 |  |  |  | 15,551 |  |  |  | 1.3 | % |  |  | 49,146 |  |  |  | 4.3 | %
Accum other comprehensive loss, net of tax |  | (43,005 | ) |  |  | (45,798 | ) |  |  | (21,573 | ) |  |  | 2,793 |  |  |  | -6.1 | % |  |  | (21,432 | ) |  |  | 99.3 | %
Total shareholders' equity |  | 1,537,961 |  |  |  | 1,520,208 |  |  |  | 1,508,256 |  |  |  | 17,753 |  |  |  | 1.2 | % |  |  | 29,705 |  |  |  | 2.0 | %
Total liabilities and equity | $ | 13,490,361 |  |  | $ | 13,352,333 |  |  | $ | 12,775,196 |  |  | $ | 138,028 |  |  |  | 1.0 | % |  | $ | 715,165 |  |  |  | 5.6 | %
n/m - percentage changes greater than +/- 100% are considered not meaningful |  |  |

See Notes to Consolidated Financials

|  | TRUSTMARK CORPORATION AND SUBSIDIARIES
| CONSOLIDATED FINANCIAL INFORMATION
| March 31, 2017
| ($ in thousands except per share data)
| (unaudited)

| Quarter Ended |  |  | Linked Quarter |  |  | Year over Year |
INCOME STATEMENTS | 3/31/2017 |  |  | 12/31/2016 |  |  | 3/31/2016 |  |  | $ Change |  |  | % Change |  |  | $ Change |  |  | % Change |
Interest and fees on LHFS & LHFI-FTE | $ | 83,790 |  |  | $ | 81,346 |  |  | $ | 76,235 |  |  | $ | 2,444 |  |  |  | 3.0 | % |  | $ | 7,555 |  |  |  | 9.9 | %
Interest and fees on acquired loans |  | 5,189 |  |  |  | 8,290 |  |  |  | 7,022 |  |  |  | (3,101 | ) |  |  | -37.4 | % |  |  | (1,833 | ) |  |  | -26.1 | %
Interest on securities-taxable |  | 19,197 |  |  |  | 18,775 |  |  |  | 20,086 |  |  |  | 422 |  |  |  | 2.2 | % |  |  | (889 | ) |  |  | -4.4 | %
Interest on securities-tax exempt-FTE |  | 1,300 |  |  |  | 1,340 |  |  |  | 1,497 |  |  |  | (40 | ) |  |  | -3.0 | % |  |  | (197 | ) |  |  | -13.2 | %
Interest on fed funds sold and rev repos |  | 1 |  |  |  | 4 |  |  |  | 1 |  |  |  | (3 | ) |  |  | -75.0 | % |  |  | — |  |  |  | 0.0 | %
Other interest income |  | 267 |  |  |  | 335 |  |  |  | 230 |  |  |  | (68 | ) |  |  | -20.3 | % |  |  | 37 |  |  |  | 16.1 | %
Total interest income-FTE |  | 109,744 |  |  |  | 110,090 |  |  |  | 105,071 |  |  |  | (346 | ) |  |  | -0.3 | % |  |  | 4,673 |  |  |  | 4.4 | %
Interest on deposits |  | 3,945 |  |  |  | 3,380 |  |  |  | 3,038 |  |  |  | 565 |  |  |  | 16.7 | % |  |  | 907 |  |  |  | 29.9 | %
Interest on fed funds pch and repos |  | 698 |  |  |  | 471 |  |  |  | 431 |  |  |  | 227 |  |  |  | 48.2 | % |  |  | 267 |  |  |  | 61.9 | %
Other interest expense |  | 2,673 |  |  |  | 2,662 |  |  |  | 2,389 |  |  |  | 11 |  |  |  | 0.4 | % |  |  | 284 |  |  |  | 11.9 | %
Total interest expense |  | 7,316 |  |  |  | 6,513 |  |  |  | 5,858 |  |  |  | 803 |  |  |  | 12.3 | % |  |  | 1,458 |  |  |  | 24.9 | %
Net interest income-FTE |  | 102,428 |  |  |  | 103,577 |  |  |  | 99,213 |  |  |  | (1,149 | ) |  |  | -1.1 | % |  |  | 3,215 |  |  |  | 3.2 | %
Provision for loan losses, LHFI |  | 2,762 |  |  |  | 1,834 |  |  |  | 2,243 |  |  |  | 928 |  |  |  | 50.6 | % |  |  | 519 |  |  |  | 23.1 | %
Provision for loan losses, acquired loans |  | (1,605 | ) |  |  | 1,150 |  |  |  | 1,309 |  |  |  | (2,755 | ) |  | n/m |  |  |  | (2,914 | ) |  | n/m |
Net interest income after provision-FTE |  | 101,271 |  |  |  | 100,593 |  |  |  | 95,661 |  |  |  | 678 |  |  |  | 0.7 | % |  |  | 5,610 |  |  |  | 5.9 | %
Service charges on deposit accounts |  | 10,832 |  |  |  | 11,444 |  |  |  | 11,081 |  |  |  | (612 | ) |  |  | -5.3 | % |  |  | (249 | ) |  |  | -2.2 | %
Bank card and other fees |  | 6,500 |  |  |  | 6,796 |  |  |  | 6,918 |  |  |  | (296 | ) |  |  | -4.4 | % |  |  | (418 | ) |  |  | -6.0 | %
Mortgage banking, net |  | 10,185 |  |  |  | 5,428 |  |  |  | 8,699 |  |  |  | 4,757 |  |  |  | 87.6 | % |  |  | 1,486 |  |  |  | 17.1 | %
Insurance commissions |  | 9,212 |  |  |  | 8,459 |  |  |  | 8,593 |  |  |  | 753 |  |  |  | 8.9 | % |  |  | 619 |  |  |  | 7.2 | %
Wealth management |  | 7,413 |  |  |  | 7,505 |  |  |  | 7,407 |  |  |  | (92 | ) |  |  | -1.2 | % |  |  | 6 |  |  |  | 0.1 | %
Other, net |  | 1,891 |  |  |  | 2,092 |  |  |  | 888 |  |  |  | (201 | ) |  |  | -9.6 | % |  |  | 1,003 |  |  | n/m |
Nonint inc-excl sec gains (losses), net |  | 46,033 |  |  |  | 41,724 |  |  |  | 43,586 |  |  |  | 4,309 |  |  |  | 10.3 | % |  |  | 2,447 |  |  |  | 5.6 | %
Security gains (losses), net |  | — |  |  |  | — |  |  |  | (310 | ) |  |  | — |  |  | n/m |  |  |  | 310 |  |  |  | -100.0 | %
Total noninterest income |  | 46,033 |  |  |  | 41,724 |  |  |  | 43,276 |  |  |  | 4,309 |  |  |  | 10.3 | % |  |  | 2,757 |  |  |  | 6.4 | %
Salaries and employee benefits |  | 57,302 |  |  |  | 58,168 |  |  |  | 57,201 |  |  |  | (866 | ) |  |  | -1.5 | % |  |  | 101 |  |  |  | 0.2 | %
Services and fees |  | 15,332 |  |  |  | 14,751 |  |  |  | 14,475 |  |  |  | 581 |  |  |  | 3.9 | % |  |  | 857 |  |  |  | 5.9 | %
Net occupancy-premises |  | 6,238 |  |  |  | 6,426 |  |  |  | 6,188 |  |  |  | (188 | ) |  |  | -2.9 | % |  |  | 50 |  |  |  | 0.8 | %
Equipment expense |  | 5,998 |  |  |  | 6,172 |  |  |  | 6,094 |  |  |  | (174 | ) |  |  | -2.8 | % |  |  | (96 | ) |  |  | -1.6 | %
Other real estate expense |  | 1,759 |  |  |  | 525 |  |  |  | 181 |  |  |  | 1,234 |  |  | n/m |  |  |  | 1,578 |  |  | n/m |
FDIC assessment expense |  | 2,640 |  |  |  | 2,562 |  |  |  | 2,811 |  |  |  | 78 |  |  |  | 3.0 | % |  |  | (171 | ) |  |  | -6.1 | %
Other expense |  | 12,788 |  |  |  | 11,663 |  |  |  | 11,994 |  |  |  | 1,125 |  |  |  | 9.6 | % |  |  | 794 |  |  |  | 6.6 | %
Total noninterest expense |  | 102,057 |  |  |  | 100,267 |  |  |  | 98,944 |  |  |  | 1,790 |  |  |  | 1.8 | % |  |  | 3,113 |  |  |  | 3.1 | %
Income before income taxes and tax eq adj |  | 45,247 |  |  |  | 42,050 |  |  |  | 39,993 |  |  |  | 3,197 |  |  |  | 7.6 | % |  |  | 5,254 |  |  |  | 13.1 | %
Tax equivalent adjustment |  | 4,838 |  |  |  | 4,725 |  |  |  | 4,473 |  |  |  | 113 |  |  |  | 2.4 | % |  |  | 365 |  |  |  | 8.2 | %
Income before income taxes |  | 40,409 |  |  |  | 37,325 |  |  |  | 35,520 |  |  |  | 3,084 |  |  |  | 8.3 | % |  |  | 4,889 |  |  |  | 13.8 | %
Income taxes |  | 9,161 |  |  |  | 8,402 |  |  |  | 8,517 |  |  |  | 759 |  |  |  | 9.0 | % |  |  | 644 |  |  |  | 7.6 | %
Net income | $ | 31,248 |  |  | $ | 28,923 |  |  | $ | 27,003 |  |  | $ | 2,325 |  |  |  | 8.0 | % |  | $ | 4,245 |  |  |  | 15.7 | %
Per share data |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Earnings per share - basic | $ | 0.46 |  |  | $ | 0.43 |  |  | $ | 0.40 |  |  | $ | 0.03 |  |  |  | 7.0 | % |  | $ | 0.06 |  |  |  | 15.0 | %
Earnings per share - diluted | $ | 0.46 |  |  | $ | 0.43 |  |  | $ | 0.40 |  |  | $ | 0.03 |  |  |  | 7.0 | % |  | $ | 0.06 |  |  |  | 15.0 | %
Dividends per share | $ | 0.23 |  |  | $ | 0.23 |  |  | $ | 0.23 |  |  |  | — |  |  |  | 0.0 | % |  |  | — |  |  |  | 0.0 | %
Weighted average shares outstanding |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | 67,687,365 |  |  |  | 67,627,496 |  |  |  | 67,609,662 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Diluted |  | 67,845,785 |  |  |  | 67,817,770 |  |  |  | 67,746,592 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Period end shares outstanding |  | 67,729,434 |  |  |  | 67,628,618 |  |  |  | 67,639,832 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
n/m - percentage changes greater than +/- 100% are considered not meaningful |

See Notes to Consolidated Financials

|  | TRUSTMARK CORPORATION AND SUBSIDIARIES
| CONSOLIDATED FINANCIAL INFORMATION
| March 31, 2017
| ($ in thousands)
| (unaudited)

| Quarter Ended |  |  | Linked Quarter |  |  | Year over Year |
NONPERFORMING ASSETS (1) | 3/31/2017 |  |  | 12/31/2016 |  |  | 3/31/2016 |  |  | $ Change |  |  | % Change |  |  | $ Change |  |  | % Change |
Nonaccrual loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Alabama | $ | 1,649 |  |  | $ | 665 |  |  | $ | 1,788 |  |  | $ | 984 |  |  | n/m |  |  | $ | (139 | ) |  |  | -7.8 | %
Florida |  | 3,559 |  |  |  | 3,644 |  |  |  | 4,952 |  |  |  | (85 | ) |  |  | -2.3 | % |  |  | (1,393 | ) |  |  | -28.1 | %
Mississippi (2) |  | 49,349 |  |  |  | 37,771 |  |  |  | 56,590 |  |  |  | 11,578 |  |  |  | 30.7 | % |  |  | (7,241 | ) |  |  | -12.8 | %
Tennessee (3) |  | 5,185 |  |  |  | 6,213 |  |  |  | 5,849 |  |  |  | (1,028 | ) |  |  | -16.5 | % |  |  | (664 | ) |  |  | -11.4 | %
Texas |  | 1,565 |  |  |  | 941 |  |  |  | 1,515 |  |  |  | 624 |  |  |  | 66.3 | % |  |  | 50 |  |  |  | 3.3 | %
Total nonaccrual loans |  | 61,307 |  |  |  | 49,234 |  |  |  | 70,694 |  |  |  | 12,073 |  |  |  | 24.5 | % |  |  | (9,387 | ) |  |  | -13.3 | %
Other real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Alabama |  | 13,953 |  |  |  | 15,989 |  |  |  | 19,137 |  |  |  | (2,036 | ) |  |  | -12.7 | % |  |  | (5,184 | ) |  |  | -27.1 | %
Florida |  | 21,577 |  |  |  | 22,582 |  |  |  | 27,907 |  |  |  | (1,005 | ) |  |  | -4.5 | % |  |  | (6,330 | ) |  |  | -22.7 | %
Mississippi (2) |  | 14,974 |  |  |  | 15,646 |  |  |  | 14,511 |  |  |  | (672 | ) |  |  | -4.3 | % |  |  | 463 |  |  |  | 3.2 | %
Tennessee (3) |  | 4,706 |  |  |  | 6,183 |  |  |  | 8,699 |  |  |  | (1,477 | ) |  |  | -23.9 | % |  |  | (3,993 | ) |  |  | -45.9 | %
Texas |  | 758 |  |  |  | 1,651 |  |  |  | 1,552 |  |  |  | (893 | ) |  |  | -54.1 | % |  |  | (794 | ) |  |  | -51.2 | %
Total other real estate |  | 55,968 |  |  |  | 62,051 |  |  |  | 71,806 |  |  |  | (6,083 | ) |  |  | -9.8 | % |  |  | (15,838 | ) |  |  | -22.1 | %
Total nonperforming assets | $ | 117,275 |  |  | $ | 111,285 |  |  | $ | 142,500 |  |  | $ | 5,990 |  |  |  | 5.4 | % |  | $ | (25,225 | ) |  |  | -17.7 | %
LOANS PAST DUE OVER 90 DAYS (4) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
LHFI | $ | 1,307 |  |  | $ | 1,832 |  |  | $ | 611 |  |  | $ | (525 | ) |  |  | -28.7 | % |  | $ | 696 |  |  | n/m |
LHFS-Guaranteed GNMA serviced loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(no obligation to repurchase) | $ | 31,147 |  |  | $ | 28,345 |  |  | $ | 24,110 |  |  | $ | 2,802 |  |  |  | 9.9 | % |  | $ | 7,037 |  |  |  | 29.2 | %
| Quarter Ended |  |  | Linked Quarter |  |  | Year over Year |
ALLOWANCE FOR LOAN LOSSES (4) | 3/31/2017 |  |  | 12/31/2016 |  |  | 3/31/2016 |  |  | $ Change |  |  | % Change |  |  | $ Change |  |  | % Change |
Beginning Balance | $ | 71,265 |  |  | $ | 70,871 |  |  | $ | 67,619 |  |  | $ | 394 |  |  |  | 0.6 | % |  | $ | 3,646 |  |  |  | 5.4 | %
Provision for loan losses |  | 2,762 |  |  |  | 1,834 |  |  |  | 2,243 |  |  |  | 928 |  |  |  | 50.6 | % |  |  | 519 |  |  |  | 23.1 | %
Charge-offs |  | (4,202 | ) |  |  | (4,037 | ) |  |  | (3,363 | ) |  |  | (165 | ) |  |  | 4.1 | % |  |  | (839 | ) |  |  | 24.9 | %
Recoveries |  | 2,620 |  |  |  | 2,597 |  |  |  | 3,169 |  |  |  | 23 |  |  |  | 0.9 | % |  |  | (549 | ) |  |  | -17.3 | %
Net charge-offs |  | (1,582 | ) |  |  | (1,440 | ) |  |  | (194 | ) |  |  | (142 | ) |  |  | 9.9 | % |  |  | (1,388 | ) |  | n/m |
Ending Balance | $ | 72,445 |  |  | $ | 71,265 |  |  | $ | 69,668 |  |  | $ | 1,180 |  |  |  | 1.7 | % |  | $ | 2,777 |  |  |  | 4.0 | %
PROVISION FOR LOAN LOSSES (4) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Alabama | $ | 1,189 |  |  | $ | 763 |  |  | $ | 540 |  |  | $ | 426 |  |  |  | 55.8 | % |  | $ | 649 |  |  | n/m |
Florida |  | 3 |  |  |  | (655 | ) |  |  | (818 | ) |  |  | 658 |  |  | n/m |  |  |  | 821 |  |  | n/m |
Mississippi (2) |  | 1,826 |  |  |  | 1,873 |  |  |  | 1,848 |  |  |  | (47 | ) |  |  | -2.5 | % |  |  | (22 | ) |  |  | -1.2 | %
Tennessee (3) |  | 208 |  |  |  | (118 | ) |  |  | 138 |  |  |  | 326 |  |  | n/m |  |  |  | 70 |  |  |  | 50.7 | %
Texas |  | (464 | ) |  |  | (29 | ) |  |  | 535 |  |  |  | (435 | ) |  | n/m |  |  |  | (999 | ) |  | n/m |
Total provision for loan losses | $ | 2,762 |  |  | $ | 1,834 |  |  | $ | 2,243 |  |  | $ | 928 |  |  |  | 50.6 | % |  | $ | 519 |  |  |  | 23.1 | %
NET CHARGE-OFFS (4) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Alabama | $ | 66 |  |  | $ | 368 |  |  | $ | 63 |  |  | $ | (302 | ) |  |  | -82.1 | % |  | $ | 3 |  |  |  | 4.8 | %
Florida |  | (155 | ) |  |  | (502 | ) |  |  | (674 | ) |  |  | 347 |  |  |  | -69.1 | % |  |  | 519 |  |  |  | -77.0 | %
Mississippi (2) |  | 1,759 |  |  |  | 1,591 |  |  |  | (74 | ) |  |  | 168 |  |  |  | 10.6 | % |  |  | 1,833 |  |  | n/m |
Tennessee (3) |  | 83 |  |  |  | (8 | ) |  |  | 8 |  |  |  | 91 |  |  | n/m |  |  |  | 75 |  |  | n/m |
Texas |  | (171 | ) |  |  | (9 | ) |  |  | 871 |  |  |  | (162 | ) |  | n/m |  |  |  | (1,042 | ) |  | n/m |
Total net charge-offs | $ | 1,582 |  |  | $ | 1,440 |  |  | $ | 194 |  |  | $ | 142 |  |  |  | 9.9 | % |  | $ | 1,388 |  |  | n/m |
(1) - Excludes acquired loans and covered other real estate |  |  |  |  |
(2) - Mississippi includes Central and Southern Mississippi Regions |  |  |  |  |
(3) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions |  |  |  |  |
(4) - Excludes acquired loans |  |  |  |  |
n/m - percentage changes greater than +/- 100% are considered not meaningful |  |  |  |  |

See Notes to Consolidated Financials

|  | TRUSTMARK CORPORATION AND SUBSIDIARIES
| CONSOLIDATED FINANCIAL INFORMATION
| March 31, 2017
| ($ in thousands)
| (unaudited)

|  | Quarter Ended |
AVERAGE BALANCES |  | 3/31/2017 |  |  | 12/31/2016 |  |  | 9/30/2016 |  |  | 6/30/2016 |  |  | 3/31/2016 |
Securities AFS-taxable |  | $ | 2,252,162 |  |  | $ | 2,271,503 |  |  | $ | 2,249,109 |  |  | $ | 2,214,040 |  |  | $ | 2,211,479 |
Securities AFS-nontaxable |  |  | 88,522 |  |  |  | 91,495 |  |  |  | 95,233 |  |  |  | 99,296 |  |  |  | 105,844 |
Securities HTM-taxable |  |  | 1,124,692 |  |  |  | 1,101,382 |  |  |  | 1,115,053 |  |  |  | 1,122,463 |  |  |  | 1,142,434 |
Securities HTM-nontaxable |  |  | 33,009 |  |  |  | 33,675 |  |  |  | 34,179 |  |  |  | 34,785 |  |  |  | 35,841 |
Total securities |  |  | 3,498,385 |  |  |  | 3,498,055 |  |  |  | 3,493,574 |  |  |  | 3,470,584 |  |  |  | 3,495,598 |
Loans (including loans held for sale) |  |  | 8,074,449 |  |  |  | 7,855,444 |  |  |  | 7,658,089 |  |  |  | 7,505,409 |  |  |  | 7,346,333 |
Acquired loans |  |  | 250,482 |  |  |  | 282,197 |  |  |  | 317,273 |  |  |  | 349,740 |  |  |  | 378,435 |
Fed funds sold and rev repos |  |  | 397 |  |  |  | 1,418 |  |  |  | 1,352 |  |  |  | 1,263 |  |  |  | 382 |
Other earning assets |  |  | 79,515 |  |  |  | 80,608 |  |  |  | 68,706 |  |  |  | 64,000 |  |  |  | 66,702 |
Total earning assets |  |  | 11,903,228 |  |  |  | 11,717,722 |  |  |  | 11,538,994 |  |  |  | 11,390,996 |  |  |  | 11,287,450 |
Allowance for loan losses |  |  | (83,394 | ) |  |  | (82,604 | ) |  |  | (82,301 | ) |  |  | (83,614 | ) |  |  | (81,138 | )
Cash and due from banks |  |  | 310,542 |  |  |  | 314,420 |  |  |  | 299,670 |  |  |  | 271,135 |  |  |  | 281,912 |
Other assets |  |  | 1,235,469 |  |  |  | 1,238,029 |  |  |  | 1,243,854 |  |  |  | 1,240,846 |  |  |  | 1,253,282 |
Total assets |  | $ | 13,365,845 |  |  | $ | 13,187,567 |  |  | $ | 13,000,217 |  |  | $ | 12,819,363 |  |  | $ | 12,741,506 |
Interest-bearing demand deposits |  | $ | 1,981,982 |  |  | $ | 1,920,273 |  |  | $ | 1,848,084 |  |  | $ | 1,830,107 |  |  | $ | 1,866,043 |
Savings deposits |  |  | 3,319,572 |  |  |  | 3,049,733 |  |  |  | 3,101,161 |  |  |  | 3,221,850 |  |  |  | 3,188,916 |
Time deposits |  |  | 1,650,251 |  |  |  | 1,638,853 |  |  |  | 1,667,345 |  |  |  | 1,678,564 |  |  |  | 1,677,576 |
Total interest-bearing deposits |  |  | 6,951,805 |  |  |  | 6,608,859 |  |  |  | 6,616,590 |  |  |  | 6,730,521 |  |  |  | 6,732,535 |
Fed funds purchased and repos |  |  | 498,963 |  |  |  | 494,193 |  |  |  | 481,071 |  |  |  | 488,512 |  |  |  | 517,180 |
Short-term borrowings |  |  | 887,848 |  |  |  | 435,576 |  |  |  | 311,473 |  |  |  | 319,288 |  |  |  | 413,616 |
Long-term FHLB advances |  |  | 251,033 |  |  |  | 685,844 |  |  |  | 751,095 |  |  |  | 597,269 |  |  |  | 501,144 |
Subordinated notes |  |  | — |  |  |  | 40,757 |  |  |  | 49,988 |  |  |  | 49,980 |  |  |  | 49,972 |
Junior subordinated debt securities |  |  | 61,856 |  |  |  | 61,856 |  |  |  | 61,856 |  |  |  | 61,856 |  |  |  | 61,856 |
Total interest-bearing liabilities |  |  | 8,651,505 |  |  |  | 8,327,085 |  |  |  | 8,272,073 |  |  |  | 8,247,426 |  |  |  | 8,276,303 |
Noninterest-bearing deposits |  |  | 3,008,176 |  |  |  | 3,160,959 |  |  |  | 3,060,331 |  |  |  | 2,927,469 |  |  |  | 2,836,283 |
Other liabilities |  |  | 173,066 |  |  |  | 166,379 |  |  |  | 136,971 |  |  |  | 131,627 |  |  |  | 134,236 |
Total liabilities |  |  | 11,832,747 |  |  |  | 11,654,423 |  |  |  | 11,469,375 |  |  |  | 11,306,522 |  |  |  | 11,246,822 |
Shareholders' equity |  |  | 1,533,098 |  |  |  | 1,533,144 |  |  |  | 1,530,842 |  |  |  | 1,512,841 |  |  |  | 1,494,684 |
Total liabilities and equity |  | $ | 13,365,845 |  |  | $ | 13,187,567 |  |  | $ | 13,000,217 |  |  | $ | 12,819,363 |  |  | $ | 12,741,506 |

See Notes to Consolidated Financials

|  | TRUSTMARK CORPORATION AND SUBSIDIARIES
| CONSOLIDATED FINANCIAL INFORMATION
| March 31, 2017
| ($ in thousands)
| (unaudited)

PERIOD END BALANCES |  | 3/31/2017 |  |  | 12/31/2016 |  |  | 9/30/2016 |  |  | 6/30/2016 |  |  | 3/31/2016 |
Cash and due from banks |  | $ | 379,590 |  |  | $ | 327,706 |  |  | $ | 383,945 |  |  | $ | 322,049 |  |  | $ | 228,498 |
Fed funds sold and rev repos |  |  | 500 |  |  |  | 500 |  |  |  | 500 |  |  |  | 3,198 |  |  |  | — |
Securities available for sale |  |  | 2,365,554 |  |  |  | 2,356,682 |  |  |  | 2,410,947 |  |  |  | 2,388,306 |  |  |  | 2,368,120 |
Securities held to maturity |  |  | 1,156,067 |  |  |  | 1,158,643 |  |  |  | 1,143,234 |  |  |  | 1,173,204 |  |  |  | 1,168,203 |
Loans held for sale (LHFS) |  |  | 174,090 |  |  |  | 175,927 |  |  |  | 242,097 |  |  |  | 213,546 |  |  |  | 191,028 |
Loans held for investment (LHFI) |  |  | 8,004,657 |  |  |  | 7,851,213 |  |  |  | 7,499,204 |  |  |  | 7,405,181 |  |  |  | 7,268,022 |
Allowance for loan losses |  |  | (72,445 | ) |  |  | (71,265 | ) |  |  | (70,871 | ) |  |  | (71,796 | ) |  |  | (69,668 | )
Net LHFI |  |  | 7,932,212 |  |  |  | 7,779,948 |  |  |  | 7,428,333 |  |  |  | 7,333,385 |  |  |  | 7,198,354 |
Acquired loans |  |  | 218,242 |  |  |  | 272,247 |  |  |  | 295,737 |  |  |  | 339,035 |  |  |  | 364,755 |
Allowance for loan losses, acquired loans |  |  | (10,006 | ) |  |  | (11,397 | ) |  |  | (11,380 | ) |  |  | (12,480 | ) |  |  | (13,535 | )
Net acquired loans |  |  | 208,236 |  |  |  | 260,850 |  |  |  | 284,357 |  |  |  | 326,555 |  |  |  | 351,220 |
Net LHFI and acquired loans |  |  | 8,140,448 |  |  |  | 8,040,798 |  |  |  | 7,712,690 |  |  |  | 7,659,940 |  |  |  | 7,549,574 |
Premises and equipment, net |  |  | 183,311 |  |  |  | 184,987 |  |  |  | 190,930 |  |  |  | 192,732 |  |  |  | 194,453 |
Mortgage servicing rights |  |  | 82,758 |  |  |  | 80,239 |  |  |  | 65,514 |  |  |  | 62,814 |  |  |  | 68,208 |
Goodwill |  |  | 366,156 |  |  |  | 366,156 |  |  |  | 366,156 |  |  |  | 366,156 |  |  |  | 366,156 |
Identifiable intangible assets |  |  | 19,117 |  |  |  | 20,680 |  |  |  | 22,366 |  |  |  | 24,058 |  |  |  | 25,751 |
Other real estate |  |  | 55,968 |  |  |  | 62,051 |  |  |  | 64,993 |  |  |  | 69,890 |  |  |  | 72,302 |
Other assets |  |  | 566,802 |  |  |  | 577,964 |  |  |  | 558,166 |  |  |  | 554,456 |  |  |  | 542,903 |
Total assets |  | $ | 13,490,361 |  |  | $ | 13,352,333 |  |  | $ | 13,161,538 |  |  | $ | 13,030,349 |  |  | $ | 12,775,196 |
Deposits: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noninterest-bearing |  | $ | 3,209,727 |  |  | $ | 2,973,238 |  |  | $ | 3,111,603 |  |  | $ | 2,921,016 |  |  | $ | 2,874,306 |
Interest-bearing |  |  | 6,894,745 |  |  |  | 7,082,774 |  |  |  | 6,574,098 |  |  |  | 6,610,508 |  |  |  | 6,759,337 |
Total deposits |  |  | 10,104,472 |  |  |  | 10,056,012 |  |  |  | 9,685,701 |  |  |  | 9,531,524 |  |  |  | 9,633,643 |
Fed funds purchased and repos |  |  | 524,335 |  |  |  | 539,817 |  |  |  | 514,918 |  |  |  | 606,336 |  |  |  | 466,436 |
Short-term borrowings |  |  | 864,690 |  |  |  | 769,778 |  |  |  | 412,792 |  |  |  | 360,434 |  |  |  | 411,385 |
Long-term FHLB advances |  |  | 250,994 |  |  |  | 251,049 |  |  |  | 751,075 |  |  |  | 751,106 |  |  |  | 501,124 |
Subordinated notes |  |  | — |  |  |  | — |  |  |  | 49,993 |  |  |  | 49,985 |  |  |  | 49,977 |
Junior subordinated debt securities |  |  | 61,856 |  |  |  | 61,856 |  |  |  | 61,856 |  |  |  | 61,856 |  |  |  | 61,856 |
Other liabilities |  |  | 146,053 |  |  |  | 153,613 |  |  |  | 150,442 |  |  |  | 145,641 |  |  |  | 142,519 |
Total liabilities |  |  | 11,952,400 |  |  |  | 11,832,125 |  |  |  | 11,626,777 |  |  |  | 11,506,882 |  |  |  | 11,266,940 |
Common stock |  |  | 14,112 |  |  |  | 14,091 |  |  |  | 14,090 |  |  |  | 14,090 |  |  |  | 14,093 |
Capital surplus |  |  | 365,951 |  |  |  | 366,563 |  |  |  | 365,553 |  |  |  | 364,516 |  |  |  | 363,979 |
Retained earnings |  |  | 1,200,903 |  |  |  | 1,185,352 |  |  |  | 1,172,193 |  |  |  | 1,157,025 |  |  |  | 1,151,757 |
Accum other comprehensive loss, net of tax |  |  | (43,005 | ) |  |  | (45,798 | ) |  |  | (17,075 | ) |  |  | (12,164 | ) |  |  | (21,573 | )
Total shareholders' equity |  |  | 1,537,961 |  |  |  | 1,520,208 |  |  |  | 1,534,761 |  |  |  | 1,523,467 |  |  |  | 1,508,256 |
Total liabilities and equity |  | $ | 13,490,361 |  |  | $ | 13,352,333 |  |  | $ | 13,161,538 |  |  | $ | 13,030,349 |  |  | $ | 12,775,196 |

See Notes to Consolidated Financials

|  | TRUSTMARK CORPORATION AND SUBSIDIARIES
| CONSOLIDATED FINANCIAL INFORMATION
| March 31, 2017
| ($ in thousands except per share data)
| (unaudited)

|  | Quarter Ended |
INCOME STATEMENTS |  | 3/31/2017 |  |  | 12/31/2016 |  |  | 9/30/2016 |  |  | 6/30/2016 |  |  | 3/31/2016 |
Interest and fees on LHFS & LHFI-FTE |  | $ | 83,790 |  |  | $ | 81,346 |  |  | $ | 80,649 |  |  | $ | 77,777 |  |  | $ | 76,235 |
Interest and fees on acquired loans |  |  | 5,189 |  |  |  | 8,290 |  |  |  | 6,781 |  |  |  | 8,051 |  |  |  | 7,022 |
Interest on securities-taxable |  |  | 19,197 |  |  |  | 18,775 |  |  |  | 19,351 |  |  |  | 19,402 |  |  |  | 20,086 |
Interest on securities-tax exempt-FTE |  |  | 1,300 |  |  |  | 1,340 |  |  |  | 1,388 |  |  |  | 1,429 |  |  |  | 1,497 |
Interest on fed funds sold and rev repos |  |  | 1 |  |  |  | 4 |  |  |  | 5 |  |  |  | 4 |  |  |  | 1 |
Other interest income |  |  | 267 |  |  |  | 335 |  |  |  | 223 |  |  |  | 200 |  |  |  | 230 |
Total interest income-FTE |  |  | 109,744 |  |  |  | 110,090 |  |  |  | 108,397 |  |  |  | 106,863 |  |  |  | 105,071 |
Interest on deposits |  |  | 3,945 |  |  |  | 3,380 |  |  |  | 3,208 |  |  |  | 3,122 |  |  |  | 3,038 |
Interest on fed funds pch and repos |  |  | 698 |  |  |  | 471 |  |  |  | 411 |  |  |  | 404 |  |  |  | 431 |
Other interest expense |  |  | 2,673 |  |  |  | 2,662 |  |  |  | 2,603 |  |  |  | 2,428 |  |  |  | 2,389 |
Total interest expense |  |  | 7,316 |  |  |  | 6,513 |  |  |  | 6,222 |  |  |  | 5,954 |  |  |  | 5,858 |
Net interest income-FTE |  |  | 102,428 |  |  |  | 103,577 |  |  |  | 102,175 |  |  |  | 100,909 |  |  |  | 99,213 |
Provision for loan losses, LHFI |  |  | 2,762 |  |  |  | 1,834 |  |  |  | 4,284 |  |  |  | 2,596 |  |  |  | 2,243 |
Provision for loan losses, acquired loans |  |  | (1,605 | ) |  |  | 1,150 |  |  |  | 691 |  |  |  | 607 |  |  |  | 1,309 |
Net interest income after provision-FTE |  |  | 101,271 |  |  |  | 100,593 |  |  |  | 97,200 |  |  |  | 97,706 |  |  |  | 95,661 |
Service charges on deposit accounts |  |  | 10,832 |  |  |  | 11,444 |  |  |  | 11,677 |  |  |  | 11,051 |  |  |  | 11,081 |
Bank card and other fees |  |  | 6,500 |  |  |  | 6,796 |  |  |  | 6,756 |  |  |  | 7,436 |  |  |  | 6,918 |
Mortgage banking, net |  |  | 10,185 |  |  |  | 5,428 |  |  |  | 7,364 |  |  |  | 6,721 |  |  |  | 8,699 |
Insurance commissions |  |  | 9,212 |  |  |  | 8,459 |  |  |  | 10,074 |  |  |  | 9,638 |  |  |  | 8,593 |
Wealth management |  |  | 7,413 |  |  |  | 7,505 |  |  |  | 7,571 |  |  |  | 8,009 |  |  |  | 7,407 |
Other, net |  |  | 1,891 |  |  |  | 2,092 |  |  |  | 1,274 |  |  |  | 1,372 |  |  |  | 888 |
Nonint inc-excl sec gains (losses), net |  |  | 46,033 |  |  |  | 41,724 |  |  |  | 44,716 |  |  |  | 44,227 |  |  |  | 43,586 |
Security gains (losses), net |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (310 | )
Total noninterest income |  |  | 46,033 |  |  |  | 41,724 |  |  |  | 44,716 |  |  |  | 44,227 |  |  |  | 43,276 |
Salaries and employee benefits |  |  | 57,302 |  |  |  | 58,168 |  |  |  | 57,250 |  |  |  | 67,018 |  |  |  | 57,201 |
Services and fees |  |  | 15,332 |  |  |  | 14,751 |  |  |  | 14,947 |  |  |  | 14,522 |  |  |  | 14,475 |
Net occupancy-premises |  |  | 6,238 |  |  |  | 6,426 |  |  |  | 6,440 |  |  |  | 5,928 |  |  |  | 6,188 |
Equipment expense |  |  | 5,998 |  |  |  | 6,172 |  |  |  | 6,063 |  |  |  | 5,896 |  |  |  | 6,094 |
Other real estate expense |  |  | 1,759 |  |  |  | 525 |  |  |  | (1,313 | ) |  |  | 1,193 |  |  |  | 181 |
FDIC assessment expense |  |  | 2,640 |  |  |  | 2,562 |  |  |  | 2,911 |  |  |  | 2,959 |  |  |  | 2,811 |
Other expense |  |  | 12,788 |  |  |  | 11,663 |  |  |  | 11,610 |  |  |  | 12,663 |  |  |  | 11,994 |
Total noninterest expense |  |  | 102,057 |  |  |  | 100,267 |  |  |  | 97,908 |  |  |  | 110,179 |  |  |  | 98,944 |
Income before income taxes and tax eq adj |  |  | 45,247 |  |  |  | 42,050 |  |  |  | 44,008 |  |  |  | 31,754 |  |  |  | 39,993 |
Tax equivalent adjustment |  |  | 4,838 |  |  |  | 4,725 |  |  |  | 4,611 |  |  |  | 4,532 |  |  |  | 4,473 |
Income before income taxes |  |  | 40,409 |  |  |  | 37,325 |  |  |  | 39,397 |  |  |  | 27,222 |  |  |  | 35,520 |
Income taxes |  |  | 9,161 |  |  |  | 8,402 |  |  |  | 8,415 |  |  |  | 5,719 |  |  |  | 8,517 |
Net income |  | $ | 31,248 |  |  | $ | 28,923 |  |  | $ | 30,982 |  |  | $ | 21,503 |  |  | $ | 27,003 |
Per share data |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Earnings per share - basic |  | $ | 0.46 |  |  | $ | 0.43 |  |  | $ | 0.46 |  |  | $ | 0.32 |  |  | $ | 0.40 |
Earnings per share - diluted |  | $ | 0.46 |  |  | $ | 0.43 |  |  | $ | 0.46 |  |  | $ | 0.32 |  |  | $ | 0.40 |
Dividends per share |  | $ | 0.23 |  |  | $ | 0.23 |  |  | $ | 0.23 |  |  | $ | 0.23 |  |  | $ | 0.23 |
Weighted average shares outstanding |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 67,687,365 |  |  |  | 67,627,496 |  |  |  | 67,625,085 |  |  |  | 67,619,571 |  |  |  | 67,609,662 |
Diluted |  |  | 67,845,785 |  |  |  | 67,817,770 |  |  |  | 67,793,203 |  |  |  | 67,770,174 |  |  |  | 67,746,592 |
Period end shares outstanding |  |  | 67,729,434 |  |  |  | 67,628,618 |  |  |  | 67,626,939 |  |  |  | 67,623,601 |  |  |  | 67,639,832 |

See Notes to Consolidated Financials

|  | TRUSTMARK CORPORATION AND SUBSIDIARIES
| CONSOLIDATED FINANCIAL INFORMATION
| March 31, 2017
| ($ in thousands)
| (unaudited)

|  | Quarter Ended |
NONPERFORMING ASSETS (1) |  | 3/31/2017 |  |  | 12/31/2016 |  |  | 9/30/2016 |  |  | 6/30/2016 |  |  | 3/31/2016 |
Nonaccrual loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Alabama |  | $ | 1,649 |  |  | $ | 665 |  |  | $ | 1,403 |  |  | $ | 1,379 |  |  | $ | 1,788 |
Florida |  |  | 3,559 |  |  |  | 3,644 |  |  |  | 3,719 |  |  |  | 1,806 |  |  |  | 4,952 |
Mississippi (2) |  |  | 49,349 |  |  |  | 37,771 |  |  |  | 41,968 |  |  |  | 54,543 |  |  |  | 56,590 |
Tennessee (3) |  |  | 5,185 |  |  |  | 6,213 |  |  |  | 6,620 |  |  |  | 5,345 |  |  |  | 5,849 |
Texas |  |  | 1,565 |  |  |  | 941 |  |  |  | 700 |  |  |  | 2,055 |  |  |  | 1,515 |
Total nonaccrual loans |  |  | 61,307 |  |  |  | 49,234 |  |  |  | 54,410 |  |  |  | 65,128 |  |  |  | 70,694 |
Other real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Alabama |  |  | 13,953 |  |  |  | 15,989 |  |  |  | 15,574 |  |  |  | 18,031 |  |  |  | 19,137 |
Florida |  |  | 21,577 |  |  |  | 22,582 |  |  |  | 25,147 |  |  |  | 28,052 |  |  |  | 27,907 |
Mississippi (2) |  |  | 14,974 |  |  |  | 15,646 |  |  |  | 16,659 |  |  |  | 14,435 |  |  |  | 14,511 |
Tennessee (3) |  |  | 4,706 |  |  |  | 6,183 |  |  |  | 6,061 |  |  |  | 7,432 |  |  |  | 8,699 |
Texas |  |  | 758 |  |  |  | 1,651 |  |  |  | 1,552 |  |  |  | 1,552 |  |  |  | 1,552 |
Total other real estate |  |  | 55,968 |  |  |  | 62,051 |  |  |  | 64,993 |  |  |  | 69,502 |  |  |  | 71,806 |
Total nonperforming assets |  | $ | 117,275 |  |  | $ | 111,285 |  |  | $ | 119,403 |  |  | $ | 134,630 |  |  | $ | 142,500 |
LOANS PAST DUE OVER 90 DAYS (4) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
LHFI |  | $ | 1,307 |  |  | $ | 1,832 |  |  | $ | 953 |  |  | $ | 3,382 |  |  | $ | 611 |
LHFS-Guaranteed GNMA serviced loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(no obligation to repurchase) |  | $ | 31,147 |  |  | $ | 28,345 |  |  | $ | 25,570 |  |  | $ | 23,473 |  |  | $ | 24,110 |
|  | Quarter Ended |
ALLOWANCE FOR LOAN LOSSES (4) |  | 3/31/2017 |  |  | 12/31/2016 |  |  | 9/30/2016 |  |  | 6/30/2016 |  |  | 3/31/2016 |
Beginning Balance |  | $ | 71,265 |  |  | $ | 70,871 |  |  | $ | 71,796 |  |  | $ | 69,668 |  |  | $ | 67,619 |
Provision for loan losses |  |  | 2,762 |  |  |  | 1,834 |  |  |  | 4,284 |  |  |  | 2,596 |  |  |  | 2,243 |
Charge-offs |  |  | (4,202 | ) |  |  | (4,037 | ) |  |  | (8,279 | ) |  |  | (3,251 | ) |  |  | (3,363 | )
Recoveries |  |  | 2,620 |  |  |  | 2,597 |  |  |  | 3,070 |  |  |  | 2,783 |  |  |  | 3,169 |
Net charge-offs |  |  | (1,582 | ) |  |  | (1,440 | ) |  |  | (5,209 | ) |  |  | (468 | ) |  |  | (194 | )
Ending Balance |  | $ | 72,445 |  |  | $ | 71,265 |  |  | $ | 70,871 |  |  | $ | 71,796 |  |  | $ | 69,668 |
PROVISION FOR LOAN LOSSES (4) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Alabama |  | $ | 1,189 |  |  | $ | 763 |  |  | $ | 132 |  |  | $ | 1,189 |  |  | $ | 540 |
Florida |  |  | 3 |  |  |  | (655 | ) |  |  | 31 |  |  |  | (364 | ) |  |  | (818 | )
Mississippi (2) |  |  | 1,826 |  |  |  | 1,873 |  |  |  | 703 |  |  |  | (833 | ) |  |  | 1,848 |
Tennessee (3) |  |  | 208 |  |  |  | (118 | ) |  |  | 151 |  |  |  | 726 |  |  |  | 138 |
Texas |  |  | (464 | ) |  |  | (29 | ) |  |  | 3,267 |  |  |  | 1,878 |  |  |  | 535 |
Total provision for loan losses |  | $ | 2,762 |  |  | $ | 1,834 |  |  | $ | 4,284 |  |  | $ | 2,596 |  |  | $ | 2,243 |
NET CHARGE-OFFS (4) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Alabama |  | $ | 66 |  |  | $ | 368 |  |  | $ | 38 |  |  | $ | 436 |  |  | $ | 63 |
Florida |  |  | (155 | ) |  |  | (502 | ) |  |  | (169 | ) |  |  | (595 | ) |  |  | (674 | )
Mississippi (2) |  |  | 1,759 |  |  |  | 1,591 |  |  |  | 2,484 |  |  |  | (237 | ) |  |  | (74 | )
Tennessee (3) |  |  | 83 |  |  |  | (8 | ) |  |  | 74 |  |  |  | 252 |  |  |  | 8 |
Texas |  |  | (171 | ) |  |  | (9 | ) |  |  | 2,782 |  |  |  | 612 |  |  |  | 871 |
Total net charge-offs |  | $ | 1,582 |  |  | $ | 1,440 |  |  | $ | 5,209 |  |  | $ | 468 |  |  | $ | 194 |
(1) - Excludes acquired loans and covered other real estate |  |  |  |  |
(2) - Mississippi includes Central and Southern Mississippi Regions |  |  |  |  |
(3) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions |  |  |  |  |
(4) - Excludes acquired loans |  |  |  |  |

See Notes to Consolidated Financials

|  | TRUSTMARK CORPORATION AND SUBSIDIARIES
| CONSOLIDATED FINANCIAL INFORMATION
| March 31, 2017
| (unaudited)

|  | Quarter Ended |
FINANCIAL RATIOS AND OTHER DATA |  | 3/31/2017 |  |  | 12/31/2016 |  |  | 9/30/2016 |  |  | 6/30/2016 |  |  | 3/31/2016 |
Return on equity |  |  | 8.27 | % |  |  | 7.51 | % |  |  | 8.05 | % |  |  | 5.72 | % |  |  | 7.27 | %
Return on average tangible equity |  |  | 11.39 | % |  |  | 10.41 | % |  |  | 11.16 | % |  |  | 8.08 | % |  |  | 10.26 | %
Return on assets |  |  | 0.95 | % |  |  | 0.87 | % |  |  | 0.95 | % |  |  | 0.67 | % |  |  | 0.85 | %
Interest margin - Yield - FTE |  |  | 3.74 | % |  |  | 3.74 | % |  |  | 3.74 | % |  |  | 3.77 | % |  |  | 3.74 | %
Interest margin - Cost |  |  | 0.25 | % |  |  | 0.22 | % |  |  | 0.21 | % |  |  | 0.21 | % |  |  | 0.21 | %
Net interest margin - FTE |  |  | 3.49 | % |  |  | 3.52 | % |  |  | 3.52 | % |  |  | 3.56 | % |  |  | 3.54 | %
Efficiency ratio (1) |  |  | 66.67 | % |  |  | 66.08 | % |  |  | 63.81 | % |  |  | 67.20 | % |  |  | 66.87 | %
Full-time equivalent employees |  |  | 2,799 |  |  |  | 2,788 |  |  |  | 2,787 |  |  |  | 2,818 |  |  |  | 2,946 |
CREDIT QUALITY RATIOS (2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net charge-offs/average loans |  |  | 0.08 | % |  |  | 0.07 | % |  |  | 0.27 | % |  |  | 0.03 | % |  |  | 0.01 | %
Provision for loan losses/average loans |  |  | 0.14 | % |  |  | 0.09 | % |  |  | 0.22 | % |  |  | 0.14 | % |  |  | 0.12 | %
Nonperforming loans/total loans (incl LHFS) |  |  | 0.75 | % |  |  | 0.61 | % |  |  | 0.70 | % |  |  | 0.85 | % |  |  | 0.95 | %
Nonperforming assets/total loans (incl LHFS) |  |  | 1.43 | % |  |  | 1.39 | % |  |  | 1.54 | % |  |  | 1.77 | % |  |  | 1.91 | %
Nonperforming assets/total loans (incl LHFS) +ORE |  |  | 1.42 | % |  |  | 1.38 | % |  |  | 1.53 | % |  |  | 1.75 | % |  |  | 1.89 | %
ALL/total loans (excl LHFS) |  |  | 0.91 | % |  |  | 0.91 | % |  |  | 0.95 | % |  |  | 0.97 | % |  |  | 0.96 | %
ALL-commercial/total commercial loans |  |  | 0.97 | % |  |  | 0.97 | % |  |  | 1.02 | % |  |  | 1.05 | % |  |  | 1.06 | %
ALL-consumer/total consumer and home mortgage loans |  |  | 0.67 | % |  |  | 0.68 | % |  |  | 0.68 | % |  |  | 0.70 | % |  |  | 0.65 | %
ALL/nonperforming loans |  |  | 118.17 | % |  |  | 144.75 | % |  |  | 130.25 | % |  |  | 110.24 | % |  |  | 98.55 | %
ALL/nonperforming loans (excl specifically reviewed impaired loans) | 263.73 | % |  |  | 267.40 | % |  |  | 256.56 | % |  |  | 231.13 | % |  |  | 203.24 | %
CAPITAL RATIOS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total equity/total assets |  |  | 11.40 | % |  |  | 11.39 | % |  |  | 11.66 | % |  |  | 11.69 | % |  |  | 11.81 | %
Tangible equity/tangible assets |  |  | 8.80 | % |  |  | 8.74 | % |  |  | 8.97 | % |  |  | 8.97 | % |  |  | 9.01 | %
Tangible equity/risk-weighted assets |  |  | 11.49 | % |  |  | 11.39 | % |  |  | 11.85 | % |  |  | 11.85 | % |  |  | 11.84 | %
Tier 1 leverage ratio |  |  | 9.86 | % |  |  | 9.90 | % |  |  | 9.92 | % |  |  | 9.93 | % |  |  | 9.93 | %
Common equity tier 1 capital ratio |  |  | 12.19 | % |  |  | 12.16 | % |  |  | 12.35 | % |  |  | 12.32 | % |  |  | 12.41 | %
Tier 1 risk-based capital ratio |  |  | 12.79 | % |  |  | 12.76 | % |  |  | 12.97 | % |  |  | 12.94 | % |  |  | 13.04 | %
Total risk-based capital ratio |  |  | 13.61 | % |  |  | 13.59 | % |  |  | 13.82 | % |  |  | 13.82 | % |  |  | 13.92 | %
STOCK PERFORMANCE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Market value-Close |  | $ | 31.79 |  |  | $ | 35.65 |  |  | $ | 27.56 |  |  | $ | 24.85 |  |  | $ | 23.03 |
Book value |  | $ | 22.71 |  |  | $ | 22.48 |  |  | $ | 22.69 |  |  | $ | 22.53 |  |  | $ | 22.30 |
Tangible book value |  | $ | 17.02 |  |  | $ | 16.76 |  |  | $ | 16.95 |  |  | $ | 16.76 |  |  | $ | 16.50 |
(1) - The efficiency ratio is noninterest expense to total net interest income (FTE) and noninterest income, excluding security gains (losses), amortization |
of partnership tax credits, amortization of purchased intangibles, and nonroutine income and expense items. |
(2) - Excludes acquired loans and covered other real estate |  |  |  |  |

See Notes to Consolidated Financials

|  | TRUSTMARK CORPORATION AND SUBSIDIARIES
| NOTES TO CONSOLIDATED FINANCIALS
| March 31, 2017
| ($ in thousands)
| (unaudited)

Note 1 – Business Combinations

On April 7, 2017, Trustmark Corporation (Trustmark) completed its merger with RB Bancorporation. RB Bancorporation, with assets of $201.2 million as of March 31, 2017, is the holding company for Reliance Bank, which had seven offices serving the Huntsville, Alabama MSA. Reliance Bank was merged into Trustmark National Bank simultaneously with the merger of Trustmark and RB Bancorporation. Under the terms of the Merger Agreement dated November 14, 2016, Trustmark paid $22.00 in cash for each share of RB Bancorporation common stock outstanding, which represents total consideration for common shareholders of approximately $23.7 million.

Note 2 - Securities Available for Sale and Held to Maturity

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

|  | 3/31/2017 |  |  | 12/31/2016 |  |  | 9/30/2016 |  |  | 6/30/2016 |  |  | 3/31/2016 |
SECURITIES AVAILABLE FOR SALE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government agency obligations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Issued by U.S. Government agencies |  | $ | 53,247 |  |  | $ | 55,763 |  |  | $ | 58,234 |  |  | $ | 61,359 |  |  | $ | 63,814 |
Issued by U.S. Government sponsored agencies |  |  | 274 |  |  |  | 276 |  |  |  | 283 |  |  |  | 286 |  |  |  | 286 |
Obligations of states and political subdivisions |  |  | 109,895 |  |  |  | 115,373 |  |  |  | 124,641 |  |  |  | 129,285 |  |  |  | 135,655 |
Mortgage-backed securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential mortgage pass-through securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Guaranteed by GNMA |  |  | 42,667 |  |  |  | 42,786 |  |  |  | 36,788 |  |  |  | 29,282 |  |  |  | 25,081 |
Issued by FNMA and FHLMC |  |  | 733,214 |  |  |  | 631,084 |  |  |  | 561,989 |  |  |  | 428,542 |  |  |  | 330,558 |
Other residential mortgage-backed securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Issued or guaranteed by FNMA, FHLMC, or GNMA |  |  | 1,202,719 |  |  |  | 1,267,951 |  |  |  | 1,374,399 |  |  |  | 1,474,357 |  |  |  | 1,540,541 |
Commercial mortgage-backed securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Issued or guaranteed by FNMA, FHLMC, or GNMA |  |  | 223,538 |  |  |  | 243,449 |  |  |  | 254,613 |  |  |  | 265,195 |  |  |  | 272,185 |
Total securities available for sale |  | $ | 2,365,554 |  |  | $ | 2,356,682 |  |  | $ | 2,410,947 |  |  | $ | 2,388,306 |  |  | $ | 2,368,120 |
SECURITIES HELD TO MATURITY |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government agency obligations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Issued by U.S. Government sponsored agencies |  | $ | 3,658 |  |  | $ | 3,647 |  |  | $ | 3,636 |  |  | $ | 31,142 |  |  | $ | 63,085 |
Obligations of states and political subdivisions |  |  | 46,273 |  |  |  | 46,303 |  |  |  | 52,937 |  |  |  | 53,473 |  |  |  | 54,278 |
Mortgage-backed securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential mortgage pass-through securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Guaranteed by GNMA |  |  | 14,977 |  |  |  | 15,478 |  |  |  | 16,183 |  |  |  | 16,415 |  |  |  | 16,590 |
Issued by FNMA and FHLMC |  |  | 118,733 |  |  |  | 81,299 |  |  |  | 39,989 |  |  |  | 42,267 |  |  |  | 9,871 |
Other residential mortgage-backed securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Issued or guaranteed by FNMA, FHLMC, or GNMA |  |  | 771,296 |  |  |  | 803,474 |  |  |  | 831,662 |  |  |  | 824,175 |  |  |  | 818,201 |
Commercial mortgage-backed securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Issued or guaranteed by FNMA, FHLMC, or GNMA |  |  | 201,130 |  |  |  | 208,442 |  |  |  | 198,827 |  |  |  | 205,732 |  |  |  | 206,178 |
Total securities held to maturity |  | $ | 1,156,067 |  |  | $ | 1,158,643 |  |  | $ | 1,143,234 |  |  | $ | 1,173,204 |  |  | $ | 1,168,203 |

During 2013, Trustmark reclassified approximately $1.099 billion of securities available for sale to securities held to maturity. The securities were transferred at fair value, which became the cost basis for the securities held to maturity. At the date of transfer, the net unrealized holding loss on the available for sale securities totaled approximately $46.6 million ($28.8 million, net of tax). The net unrealized holding loss is amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. There were no gains or losses recognized as a result of the transfer. At March 31, 2017, the net unamortized, unrealized loss on the transferred securities included in accumulated other comprehensive loss in the accompanying balance sheet totaled approximately $23.0 million ($14.2 million, net of tax).

Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of approximately 96% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE.

|  | TRUSTMARK CORPORATION AND SUBSIDIARIES
| NOTES TO CONSOLIDATED FINANCIALS
| March 31, 2017
| ($ in thousands)
| (unaudited)

Note 3 – Loan Composition

LHFI BY TYPE (excluding acquired loans) |  | 3/31/2017 |  |  | 12/31/2016 |  |  | 9/30/2016 |  |  | 6/30/2016 |  |  | 3/31/2016 |
Loans secured by real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction, land development and other land loans |  | $ | 859,927 |  |  | $ | 831,437 |  |  | $ | 766,685 |  |  | $ | 718,438 |  |  | $ | 697,500 |
Secured by 1-4 family residential properties |  |  | 1,656,837 |  |  |  | 1,660,043 |  |  |  | 1,592,453 |  |  |  | 1,620,013 |  |  |  | 1,640,015 |
Secured by nonfarm, nonresidential properties |  |  | 2,064,352 |  |  |  | 2,034,176 |  |  |  | 1,916,153 |  |  |  | 1,900,784 |  |  |  | 1,893,240 |
Other real estate secured |  |  | 399,636 |  |  |  | 318,148 |  |  |  | 317,680 |  |  |  | 323,734 |  |  |  | 273,752 |
Commercial and industrial loans |  |  | 1,540,783 |  |  |  | 1,528,434 |  |  |  | 1,421,382 |  |  |  | 1,466,511 |  |  |  | 1,368,464 |
Consumer loans |  |  | 166,314 |  |  |  | 170,562 |  |  |  | 170,073 |  |  |  | 166,436 |  |  |  | 164,544 |
State and other political subdivision loans |  |  | 910,493 |  |  |  | 917,515 |  |  |  | 875,973 |  |  |  | 805,401 |  |  |  | 787,049 |
Other loans |  |  | 406,315 |  |  |  | 390,898 |  |  |  | 438,805 |  |  |  | 403,864 |  |  |  | 443,458 |
LHFI |  |  | 8,004,657 |  |  |  | 7,851,213 |  |  |  | 7,499,204 |  |  |  | 7,405,181 |  |  |  | 7,268,022 |
Allowance for loan losses |  |  | (72,445 | ) |  |  | (71,265 | ) |  |  | (70,871 | ) |  |  | (71,796 | ) |  |  | (69,668 | )
Net LHFI |  | $ | 7,932,212 |  |  | $ | 7,779,948 |  |  | $ | 7,428,333 |  |  | $ | 7,333,385 |  |  | $ | 7,198,354 |

ACQUIRED LOANS BY TYPE (1) |  | 3/31/2017 |  |  | 12/31/2016 |  |  | 9/30/2016 |  |  | 6/30/2016 |  |  | 3/31/2016 |
Loans secured by real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction, land development and other land loans |  | $ | 17,651 |  |  | $ | 20,850 |  |  | $ | 25,040 |  |  | $ | 38,016 |  |  | $ | 41,484 |
Secured by 1-4 family residential properties |  |  | 54,721 |  |  |  | 69,540 |  |  |  | 76,601 |  |  |  | 81,676 |  |  |  | 89,878 |
Secured by nonfarm, nonresidential properties |  |  | 92,075 |  |  |  | 103,820 |  |  |  | 110,606 |  |  |  | 119,698 |  |  |  | 129,856 |
Other real estate secured |  |  | 16,275 |  |  |  | 19,010 |  |  |  | 20,903 |  |  |  | 25,272 |  |  |  | 25,506 |
Commercial and industrial loans |  |  | 20,691 |  |  |  | 36,896 |  |  |  | 39,519 |  |  |  | 49,760 |  |  |  | 52,806 |
Consumer loans |  |  | 2,664 |  |  |  | 3,365 |  |  |  | 3,878 |  |  |  | 4,295 |  |  |  | 5,027 |
Other loans |  |  | 14,165 |  |  |  | 18,766 |  |  |  | 19,190 |  |  |  | 20,318 |  |  |  | 20,198 |
Acquired loans |  |  | 218,242 |  |  |  | 272,247 |  |  |  | 295,737 |  |  |  | 339,035 |  |  |  | 364,755 |
Allowance for loan losses, acquired loans |  |  | (10,006 | ) |  |  | (11,397 | ) |  |  | (11,380 | ) |  |  | (12,480 | ) |  |  | (13,535 | )
Net acquired loans |  | $ | 208,236 |  |  | $ | 260,850 |  |  | $ | 284,357 |  |  | $ | 326,555 |  |  | $ | 351,220 |

(1) Trustmark revised the presentation of acquired loans by eliminating the segmentation of acquired noncovered loans and acquired covered loans due to the significantly reduced size of the acquired covered loan portfolio.

During the first quarter of 2017, Trustmark transferred the remaining balance of the acquired loans not accounted for under FASB ASC Topic 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality” to LHFI due to the discount on these loans being fully amortized. The balance of these transferred loans totaled $36.7 million.

|  | TRUSTMARK CORPORATION AND SUBSIDIARIES
| NOTES TO CONSOLIDATED FINANCIALS
| March 31, 2017
| ($ in thousands)
| (unaudited)

Note 3 – Loan Composition (continued)

|  | March 31, 2017 |
LHFI - COMPOSITION BY REGION (1) |  | Total |  |  | Alabama |  |  | Florida |  |  | Mississippi (Central and Southern Regions) |  |  | Tennessee (Memphis, TN and Northern MS Regions) |  |  | Texas |
Loans secured by real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction, land development and other land loans |  | $ | 859,927 |  |  | $ | 226,553 |  |  | $ | 58,778 |  |  | $ | 307,859 |  |  | $ | 36,848 |  |  | $ | 229,889 |
Secured by 1-4 family residential properties |  |  | 1,656,837 |  |  |  | 91,536 |  |  |  | 51,476 |  |  |  | 1,397,976 |  |  |  | 98,906 |  |  |  | 16,943 |
Secured by nonfarm, nonresidential properties |  |  | 2,064,352 |  |  |  | 310,000 |  |  |  | 191,923 |  |  |  | 909,040 |  |  |  | 167,572 |  |  |  | 485,817 |
Other real estate secured |  |  | 399,636 |  |  |  | 34,944 |  |  |  | 3,324 |  |  |  | 194,715 |  |  |  | 38,153 |  |  |  | 128,500 |
Commercial and industrial loans |  |  | 1,540,783 |  |  |  | 128,705 |  |  |  | 22,970 |  |  |  | 793,558 |  |  |  | 333,052 |  |  |  | 262,498 |
Consumer loans |  |  | 166,314 |  |  |  | 21,676 |  |  |  | 3,684 |  |  |  | 122,046 |  |  |  | 16,776 |  |  |  | 2,132 |
State and other political subdivision loans |  |  | 910,493 |  |  |  | 79,393 |  |  |  | 29,450 |  |  |  | 548,224 |  |  |  | 31,595 |  |  |  | 221,831 |
Other loans |  |  | 406,315 |  |  |  | 55,457 |  |  |  | 18,214 |  |  |  | 263,337 |  |  |  | 32,627 |  |  |  | 36,680 |
Loans |  | $ | 8,004,657 |  |  | $ | 948,264 |  |  | $ | 379,819 |  |  | $ | 4,536,755 |  |  | $ | 755,529 |  |  | $ | 1,384,290 |
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION (1) |  |  |  |  |  |  |  |  |
Lots |  | $ | 61,643 |  |  | $ | 12,769 |  |  | $ | 17,776 |  |  | $ | 24,734 |  |  | $ | 2,263 |  |  | $ | 4,101 |
Development |  |  | 52,501 |  |  |  | 7,682 |  |  |  | 6,033 |  |  |  | 19,110 |  |  |  | 612 |  |  |  | 19,064 |
Unimproved land |  |  | 108,177 |  |  |  | 16,203 |  |  |  | 15,721 |  |  |  | 41,533 |  |  |  | 15,947 |  |  |  | 18,773 |
1-4 family construction |  |  | 185,213 |  |  |  | 47,561 |  |  |  | 10,675 |  |  |  | 86,919 |  |  |  | 2,277 |  |  |  | 37,781 |
Other construction |  |  | 452,393 |  |  |  | 142,338 |  |  |  | 8,573 |  |  |  | 135,563 |  |  |  | 15,749 |  |  |  | 150,170 |
Construction, land development and other land loans |  | $ | 859,927 |  |  | $ | 226,553 |  |  | $ | 58,778 |  |  | $ | 307,859 |  |  | $ | 36,848 |  |  | $ | 229,889 |
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION (1) |  |  |  |  |  |  |  |  |
Income producing: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  | $ | 276,475 |  |  | $ | 82,560 |  |  | $ | 35,717 |  |  | $ | 94,736 |  |  | $ | 18,056 |  |  | $ | 45,406 |
Office |  |  | 218,611 |  |  |  | 31,346 |  |  |  | 30,096 |  |  |  | 74,722 |  |  |  | 6,853 |  |  |  | 75,594 |
Nursing homes/assisted living |  |  | 128,578 |  |  |  | — |  |  |  | — |  |  |  | 121,935 |  |  |  | 6,643 |  |  |  | — |
Hotel/motel |  |  | 232,458 |  |  |  | 53,118 |  |  |  | 29,329 |  |  |  | 64,244 |  |  |  | 41,322 |  |  |  | 44,445 |
Mini-storage |  |  | 152,285 |  |  |  | 12,390 |  |  |  | 7,346 |  |  |  | 57,869 |  |  |  | 14,163 |  |  |  | 60,517 |
Industrial |  |  | 121,092 |  |  |  | 10,640 |  |  |  | 10,073 |  |  |  | 21,802 |  |  |  | 5,066 |  |  |  | 73,511 |
Health care |  |  | 31,347 |  |  |  | 2,126 |  |  |  | 815 |  |  |  | 27,373 |  |  |  | — |  |  |  | 1,033 |
Convenience stores |  |  | 17,179 |  |  |  | 258 |  |  |  | — |  |  |  | 9,830 |  |  |  | 962 |  |  |  | 6,129 |
Other |  |  | 95,059 |  |  |  | 15,486 |  |  |  | 24,534 |  |  |  | 24,493 |  |  |  | 2,229 |  |  |  | 28,317 |
Total income producing loans |  |  | 1,273,084 |  |  |  | 207,924 |  |  |  | 137,910 |  |  |  | 497,004 |  |  |  | 95,294 |  |  |  | 334,952 |
Owner-occupied: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Office |  |  | 140,556 |  |  |  | 18,537 |  |  |  | 23,312 |  |  |  | 68,778 |  |  |  | 7,226 |  |  |  | 22,703 |
Churches |  |  | 87,616 |  |  |  | 12,751 |  |  |  | 2,074 |  |  |  | 44,235 |  |  |  | 21,746 |  |  |  | 6,810 |
Industrial warehouses |  |  | 128,630 |  |  |  | 6,325 |  |  |  | 3,541 |  |  |  | 64,960 |  |  |  | 13,242 |  |  |  | 40,562 |
Health care |  |  | 117,865 |  |  |  | 22,541 |  |  |  | 6,688 |  |  |  | 68,678 |  |  |  | 4,530 |  |  |  | 15,428 |
Convenience stores |  |  | 93,577 |  |  |  | 9,599 |  |  |  | 6,983 |  |  |  | 52,864 |  |  |  | 1,135 |  |  |  | 22,996 |
Retail |  |  | 44,329 |  |  |  | 4,428 |  |  |  | 7,012 |  |  |  | 21,421 |  |  |  | 5,826 |  |  |  | 5,642 |
Restaurants |  |  | 33,653 |  |  |  | 3,593 |  |  |  | 885 |  |  |  | 23,768 |  |  |  | 3,424 |  |  |  | 1,983 |
Auto dealerships |  |  | 18,849 |  |  |  | 8,817 |  |  |  | 39 |  |  |  | 8,902 |  |  |  | 1,091 |  |  |  | — |
Other |  |  | 126,193 |  |  |  | 15,485 |  |  |  | 3,479 |  |  |  | 58,430 |  |  |  | 14,058 |  |  |  | 34,741 |
Total owner-occupied loans |  |  | 791,268 |  |  |  | 102,076 |  |  |  | 54,013 |  |  |  | 412,036 |  |  |  | 72,278 |  |  |  | 150,865 |
Loans secured by nonfarm, nonresidential properties |  | $ | 2,064,352 |  |  | $ | 310,000 |  |  | $ | 191,923 |  |  | $ | 909,040 |  |  | $ | 167,572 |  |  | $ | 485,817 |

(1) Excludes acquired loans.

|  | TRUSTMARK CORPORATION AND SUBSIDIARIES
| NOTES TO CONSOLIDATED FINANCIALS
| March 31, 2017
| ($ in thousands)
| (unaudited)

Note 4 – Yields on Earning Assets and Interest-Bearing Liabilities

The following table illustrates the yields on earning assets by category as well as the rates paid on interest-bearing liabilities on a tax equivalent basis:

|  | Quarter Ended |
|  | 3/31/2017 |  |  | 12/31/2016 |  |  | 9/30/2016 |  |  | 6/30/2016 |  |  | 3/31/2016 |
Securities – taxable |  |  | 2.31 | % |  |  | 2.21 | % |  |  | 2.29 | % |  |  | 2.34 | % |  |  | 2.41 | %
Securities – nontaxable |  |  | 4.34 | % |  |  | 4.26 | % |  |  | 4.27 | % |  |  | 4.29 | % |  |  | 4.25 | %
Securities – total |  |  | 2.38 | % |  |  | 2.29 | % |  |  | 2.36 | % |  |  | 2.41 | % |  |  | 2.48 | %
Loans - LHFI & LHFS |  |  | 4.21 | % |  |  | 4.12 | % |  |  | 4.19 | % |  |  | 4.17 | % |  |  | 4.17 | %
Acquired loans |  |  | 8.40 | % |  |  | 11.69 | % |  |  | 8.50 | % |  |  | 9.26 | % |  |  | 7.46 | %
Loans - total |  |  | 4.33 | % |  |  | 4.38 | % |  |  | 4.36 | % |  |  | 4.39 | % |  |  | 4.33 | %
FF sold & rev repo |  |  | 1.02 | % |  |  | 1.12 | % |  |  | 1.47 | % |  |  | 1.27 | % |  |  | 1.05 | %
Other earning assets |  |  | 1.36 | % |  |  | 1.65 | % |  |  | 1.29 | % |  |  | 1.26 | % |  |  | 1.39 | %
Total earning assets |  |  | 3.74 | % |  |  | 3.74 | % |  |  | 3.74 | % |  |  | 3.77 | % |  |  | 3.74 | %
Interest-bearing deposits |  |  | 0.23 | % |  |  | 0.20 | % |  |  | 0.19 | % |  |  | 0.19 | % |  |  | 0.18 | %
FF pch & repo |  |  | 0.57 | % |  |  | 0.38 | % |  |  | 0.34 | % |  |  | 0.33 | % |  |  | 0.34 | %
Other borrowings |  |  | 0.90 | % |  |  | 0.87 | % |  |  | 0.88 | % |  |  | 0.95 | % |  |  | 0.94 | %
Total interest-bearing liabilities |  |  | 0.34 | % |  |  | 0.31 | % |  |  | 0.30 | % |  |  | 0.29 | % |  |  | 0.28 | %
Net interest margin |  |  | 3.49 | % |  |  | 3.52 | % |  |  | 3.52 | % |  |  | 3.56 | % |  |  | 3.54 | %
Net interest margin excluding acquired loans |  |  | 3.38 | % |  |  | 3.31 | % |  |  | 3.38 | % |  |  | 3.38 | % |  |  | 3.40 | %

Reflected in the table above are yields on earning assets and liabilities, along with the net interest margin which equals reported net interest income-FTE, annualized, as a percent of average earning assets. In addition, the table includes net interest margin excluding acquired loans, which equals reported net interest income-FTE excluding interest income on acquired loans, annualized, as a percent of average earning assets excluding average acquired loans.

During the first quarter of 2017, the yield on acquired loans totaled 8.40% and included $1.2 million in recoveries from the settlement of debt, which represented approximately 2.02% of the annualized total acquired loan yield. Excluding acquired loans, the net interest margin totaled 3.38% for the first quarter of 2017, an increase of 7 basis points when compared to the fourth quarter of 2016. This increase was primarily due to growth in the yields on the securities portfolio and the loans held for investment and held for sale portfolio.

Note 5 – Mortgage Banking

Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that offsets the changes in fair value of mortgage servicing rights (MSR) attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under generally accepted accounting principles (GAAP). Changes in the fair value of these exchange-traded derivative instruments, including administrative costs, are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of the MSR. The MSR fair value represents the present value of future cash flows, which among other things includes decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the change in value of hedge instruments to the change in the fair value of the MSR asset attributable to changes in interest rates and other market driven changes in valuation inputs and assumptions. The impact of this strategy resulted in a net positive ineffectiveness of $2.8 million and $413 thousand for the quarters ended March 31, 2017 and 2016, respectively.

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

|  | Quarter Ended |
|  | 3/31/2017 |  |  | 12/31/2016 |  |  | 9/30/2016 |  |  | 6/30/2016 |  |  | 3/31/2016 |
Mortgage servicing income, net |  | $ | 5,458 |  |  | $ | 5,218 |  |  | $ | 5,271 |  |  | $ | 5,177 |  |  | $ | 5,058 |
Change in fair value-MSR from runoff |  |  | (2,387 | ) |  |  | (2,739 | ) |  |  | (2,862 | ) |  |  | (2,500 | ) |  |  | (2,005 | )
Gain on sales of loans, net |  |  | 3,550 |  |  |  | 6,054 |  |  |  | 6,410 |  |  |  | 5,480 |  |  |  | 2,591 |
Other, net |  |  | 772 |  |  |  | (2,925 | ) |  |  | (299 | ) |  |  | 498 |  |  |  | 2,642 |
Mortgage banking income before hedge ineffectiveness |  |  | 7,393 |  |  |  | 5,608 |  |  |  | 8,520 |  |  |  | 8,655 |  |  |  | 8,286 |
Change in fair value-MSR from market changes |  |  | 1,466 |  |  |  | 13,112 |  |  |  | 381 |  |  |  | (7,033 | ) |  |  | (6,866 | )
Change in fair value of derivatives |  |  | 1,326 |  |  |  | (13,292 | ) |  |  | (1,537 | ) |  |  | 5,099 |  |  |  | 7,279 |
Net positive (negative) hedge ineffectiveness |  |  | 2,792 |  |  |  | (180 | ) |  |  | (1,156 | ) |  |  | (1,934 | ) |  |  | 413 |
Mortgage banking, net |  | $ | 10,185 |  |  | $ | 5,428 |  |  | $ | 7,364 |  |  | $ | 6,721 |  |  | $ | 8,699 |

|  | TRUSTMARK CORPORATION AND SUBSIDIARIES
| NOTES TO CONSOLIDATED FINANCIALS
| March 31, 2017
| ($ in thousands)
| (unaudited)

Note 6 – Salaries and Employee Benefit Plans

Early Retirement Program

During the second quarter of 2016, Trustmark announced a voluntary early retirement program (ERP) for associates age 60 and above with five or more years of service. The cost of this program is reflected in a one-time, pre-tax charge of approximately $9.3 million (salaries and employee benefits expense of $9.1 million and other miscellaneous expense of $230 thousand), or $0.085 per basic share net of tax, in Trustmark’s second quarter 2016 earnings. As a result of the ERP, during the third and fourth quarters of 2016, Trustmark incurred additional expense of $236 thousand and $268 thousand, respectively, which primarily resulted from additional settlements from pension lump sum elections.

Defined Benefit Pension Plan

Trustmark maintains a noncontributory tax-qualified defined benefit pension plan (Trustmark Capital Accumulation Plan, the “Plan”), in which substantially all associates who began employment prior to 2007 participate. The Plan provides retirement benefits that are based on the length of credited service and final average compensation, as defined in the Plan, and vest upon three years of service. Benefit accruals under the plan have been frozen since 2009, with the exception of certain associates covered through plans obtained in acquisitions that were subsequently merged into the Plan. On July 26, 2016, the Board of Directors of Trustmark authorized the termination of the Plan, effective as of December 31, 2016. To satisfy commitments made by Trustmark to associates (collectively, the “Continuing Associates”) covered through acquired plans that were merged into the Plan, the Board also approved the spin-off of the portion of the Plan associated with the accrued benefits of the Continuing Associates into a new plan titled the Trustmark Corporation Pension Plan for Certain Employees of Acquired Financial Institutions (the “Spin-Off Plan”), effective as of December 31, 2016, immediately prior to the termination of the Plan. In order to terminate the Plan, in accordance with Internal Revenue Service and Pension Benefit Guaranty Corporation requirements, Trustmark is required to fully fund the Plan on a termination basis and will contribute the additional assets necessary to do so. The final distributions will be made from current plan assets and a one-time pension settlement expense of approximately $17.5 million will be recognized when paid by Trustmark during the second quarter of 2017. After the distribution of Plan assets during the second quarter of 2017, Trustmark estimates that the annual pension expense will be reduced by $3.0 million to $4.0 million.

Note 7 – Other Noninterest Income and Expense

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

|  | Quarter Ended |
|  | 3/31/2017 |  |  | 12/31/2016 |  |  | 9/30/2016 |  |  | 6/30/2016 |  |  | 3/31/2016 |
Partnership amortization for tax credit purposes |  | $ | (2,274 | ) |  | $ | (2,479 | ) |  | $ | (2,479 | ) |  | $ | (2,479 | ) |  | $ | (2,479 | )
Increase in life insurance cash surrender value |  |  | 1,714 |  |  |  | 1,751 |  |  |  | 1,746 |  |  |  | 1,702 |  |  |  | 1,692 |
Other miscellaneous income |  |  | 2,451 |  |  |  | 2,820 |  |  |  | 2,007 |  |  |  | 2,149 |  |  |  | 1,675 |
Total other, net |  | $ | 1,891 |  |  | $ | 2,092 |  |  | $ | 1,274 |  |  | $ | 1,372 |  |  | $ | 888 |

Trustmark invests in partnerships that provide income tax credits on a Federal and/or State basis (i.e., new market tax credits, low income housing tax credits and historical tax credits). The income tax credits related to these partnerships are utilized as specifically allowed by income tax law and are recorded as a reduction in income tax expense.

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

|  | Quarter Ended |
|  | 3/31/2017 |  |  | 12/31/2016 |  |  | 9/30/2016 |  |  | 6/30/2016 |  |  | 3/31/2016 |
Loan expense |  | $ | 2,792 |  |  | $ | 2,823 |  |  | $ | 3,336 |  |  | $ | 3,024 |  |  | $ | 3,043 |
Amortization of intangibles |  |  | 1,564 |  |  |  | 1,686 |  |  |  | 1,692 |  |  |  | 1,692 |  |  |  | 1,796 |
Other miscellaneous expense |  |  | 8,432 |  |  |  | 7,154 |  |  |  | 6,582 |  |  |  | 7,947 |  |  |  | 7,155 |
Total other expense |  | $ | 12,788 |  |  | $ | 11,663 |  |  | $ | 11,610 |  |  | $ | 12,663 |  |  | $ | 11,994 |

|  | TRUSTMARK CORPORATION AND SUBSIDIARIES
| NOTES TO CONSOLIDATED FINANCIALS
| March 31, 2017
| ($ in thousands)
| (unaudited)

Note 8 – Non-GAAP Financial Measures

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

Trustmark believes these measures are important because they reflect the level of capital available to withstand unexpected market conditions. Additionally, presentation of these measures allows readers to compare certain aspects of Trustmark’s capitalization to other organizations. These ratios differ from capital measures defined by banking regulators principally in that the numerator excludes shareholders’ equity associated with preferred securities, the nature and extent of which varies across organizations. In Management’s experience, many stock analysts use tangible common equity measures in conjunction with more traditional bank capital ratios to compare capital adequacy of banking organizations with significant amounts of goodwill or other tangible assets, typically stemming from the use of the purchase accounting method in accounting for mergers and acquisitions.

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

|  | TRUSTMARK CORPORATION AND SUBSIDIARIES
| NOTES TO CONSOLIDATED FINANCIALS
| March 31, 2017
| ($ in thousands)
| (unaudited)

|  |  |  | Quarter Ended |
|  |  |  | 3/31/2017 |  |  | 12/31/2016 |  |  | 9/30/2016 |  |  | 6/30/2016 |  |  | 3/31/2016 |
TANGIBLE EQUITY |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
AVERAGE BALANCES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total shareholders' equity |  |  |  | $ | 1,533,098 |  |  | $ | 1,533,144 |  |  | $ | 1,530,842 |  |  | $ | 1,512,841 |  |  | $ | 1,494,684 |
Less: Goodwill |  |  |  |  | (366,156 | ) |  |  | (366,156 | ) |  |  | (366,156 | ) |  |  | (366,156 | ) |  |  | (366,156 | )
Identifiable intangible assets |  |  |  |  | (19,950 | ) |  |  | (21,585 | ) |  |  | (23,311 | ) |  |  | (24,961 | ) |  |  | (26,709 | )
Total average tangible equity |  |  |  | $ | 1,146,992 |  |  | $ | 1,145,403 |  |  | $ | 1,141,375 |  |  | $ | 1,121,724 |  |  | $ | 1,101,819 |
PERIOD END BALANCES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total shareholders' equity |  |  |  | $ | 1,537,961 |  |  | $ | 1,520,208 |  |  | $ | 1,534,761 |  |  | $ | 1,523,467 |  |  | $ | 1,508,256 |
Less: Goodwill |  |  |  |  | (366,156 | ) |  |  | (366,156 | ) |  |  | (366,156 | ) |  |  | (366,156 | ) |  |  | (366,156 | )
Identifiable intangible assets |  |  |  |  | (19,117 | ) |  |  | (20,680 | ) |  |  | (22,366 | ) |  |  | (24,058 | ) |  |  | (25,751 | )
Total tangible equity |  | (a) |  | $ | 1,152,688 |  |  | $ | 1,133,372 |  |  | $ | 1,146,239 |  |  | $ | 1,133,253 |  |  | $ | 1,116,349 |
TANGIBLE ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total assets |  |  |  | $ | 13,490,361 |  |  | $ | 13,352,333 |  |  | $ | 13,161,538 |  |  | $ | 13,030,349 |  |  | $ | 12,775,196 |
Less: Goodwill |  |  |  |  | (366,156 | ) |  |  | (366,156 | ) |  |  | (366,156 | ) |  |  | (366,156 | ) |  |  | (366,156 | )
Identifiable intangible assets |  |  |  |  | (19,117 | ) |  |  | (20,680 | ) |  |  | (22,366 | ) |  |  | (24,058 | ) |  |  | (25,751 | )
Total tangible assets |  | (b) |  | $ | 13,105,088 |  |  | $ | 12,965,497 |  |  | $ | 12,773,016 |  |  | $ | 12,640,135 |  |  | $ | 12,383,289 |
Risk-weighted assets |  | (c) |  | $ | 10,031,410 |  |  | $ | 9,952,123 |  |  | $ | 9,670,302 |  |  | $ | 9,559,816 |  |  | $ | 9,431,021 |
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income |  |  |  | $ | 31,248 |  |  | $ | 28,923 |  |  | $ | 30,982 |  |  | $ | 21,503 |  |  | $ | 27,003 |
Plus: Intangible amortization net of tax |  |  |  |  | 966 |  |  |  | 1,041 |  |  |  | 1,045 |  |  |  | 1,045 |  |  |  | 1,109 |
Net income adjusted for intangible amortization |  |  |  | $ | 32,214 |  |  | $ | 29,964 |  |  | $ | 32,027 |  |  | $ | 22,548 |  |  | $ | 28,112 |
Period end common shares outstanding |  | (d) |  |  | 67,729,434 |  |  |  | 67,628,618 |  |  |  | 67,626,939 |  |  |  | 67,623,601 |  |  |  | 67,639,832 |
TANGIBLE COMMON EQUITY MEASUREMENTS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Return on average tangible equity (1) |  |  |  |  | 11.39 | % |  |  | 10.41 | % |  |  | 11.16 | % |  |  | 8.08 | % |  |  | 10.26 | %
Tangible equity/tangible assets |  | (a)/(b) |  |  | 8.80 | % |  |  | 8.74 | % |  |  | 8.97 | % |  |  | 8.97 | % |  |  | 9.01 | %
Tangible equity/risk-weighted assets |  | (a)/(c) |  |  | 11.49 | % |  |  | 11.39 | % |  |  | 11.85 | % |  |  | 11.85 | % |  |  | 11.84 | %
Tangible book value |  | (a)/(d)*1,000 |  | $ | 17.02 |  |  | $ | 16.76 |  |  | $ | 16.95 |  |  | $ | 16.76 |  |  | $ | 16.50 |
COMMON EQUITY TIER 1 CAPITAL (CET1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total shareholders' equity |  |  |  | $ | 1,537,961 |  |  | $ | 1,520,208 |  |  | $ | 1,534,761 |  |  | $ | 1,523,467 |  |  | $ | 1,508,256 |
AOCI-related adjustments |  |  |  |  | 43,005 |  |  |  | 45,798 |  |  |  | 17,075 |  |  |  | 12,164 |  |  |  | 21,573 |
CET1 adjustments and deductions: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill net of associated deferred tax liabilities (DTLs) |  |  |  |  | (347,085 | ) |  |  | (347,442 | ) |  |  | (347,800 | ) |  |  | (348,158 | ) |  |  | (348,515 | )
Other adjustments and deductions for CET1 (2) |  |  |  |  | (10,803 | ) |  |  | (8,637 | ) |  |  | (9,307 | ) |  |  | (10,042 | ) |  |  | (10,861 | )
CET1 capital |  | (e) |  |  | 1,223,078 |  |  |  | 1,209,927 |  |  |  | 1,194,729 |  |  |  | 1,177,431 |  |  |  | 1,170,453 |
Additional tier 1 capital instruments plus related surplus |  |  |  |  | 60,000 |  |  |  | 60,000 |  |  |  | 60,000 |  |  |  | 60,000 |  |  |  | 60,000 |
Less: additional tier 1 capital deductions |  |  |  |  | (159 | ) |  |  | (267 | ) |  |  | (276 | ) |  |  | (328 | ) |  |  | (434 | )
Additional tier 1 capital |  |  |  |  | 59,841 |  |  |  | 59,733 |  |  |  | 59,724 |  |  |  | 59,672 |  |  |  | 59,566 |
Tier 1 capital |  |  |  | $ | 1,282,919 |  |  | $ | 1,269,660 |  |  | $ | 1,254,453 |  |  | $ | 1,237,103 |  |  | $ | 1,230,019 |
Common equity tier 1 capital ratio |  | (e)/(c) |  |  | 12.19 | % |  |  | 12.16 | % |  |  | 12.35 | % |  |  | 12.32 | % |  |  | 12.41 | %

(1) Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity

(2) Includes other intangible assets, net of DTLs, disallowed deferred tax assets (DTAS), threshold deductions and transition adjustments, as applicable.