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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30,
2025
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission file number
000-03683
Trustmark Corporation
(Exact name of registrant as specified in its charter)
Mississippi
64-0471500
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
248 East Capitol Street
,
Jackson
,
Mississippi
39201
(Address of principal executive offices)
(Zip Code)
(
601
)
208-5111
(Registrant’s telephone number, including area code)
Securities registered Pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, no par value
TRMK
Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes
☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
☒
As of October 31, 2025, there were
59,958,255
shares outstanding of the registrant’s common stock (no par value).
Forward-Looking Statements
Certain statements contained in this Quarterly Report on Form 10-Q 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,” “project,” “potential,” “seek,” “continue,” “could,” “would,” “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 (SEC) could have an adverse effect on our business, results of operations or 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, actions by the Board of Governors of the Federal Reserve System (FRB) that impact the level of market interest rates, local, state, national and international economic and market conditions, conditions in the housing and real estate markets in the regions in which Trustmark operates, conditions and changes, including volatility, in the credit and financial markets, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels, a slowdown in economic growth, changes in our ability to measure the fair value of assets in our portfolio, changes in the level and/or volatility of market interest rates, the impacts related to or resulting from bank failures and other economic and industry volatility, including potential increased regulatory requirements, the demand for the products and services we offer, potential unexpected adverse outcomes in pending litigation matters, our ability to attract and retain 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, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, 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, pandemics or other health crises, acts of war or terrorism, potential market or regulatory effects of the current United States presidential administration’s policies, changes to the credit rating of U.S. Government securities and other risks described in our filings with the SEC.
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.
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Trustmark Corporation and Subsidiaries
Consolidated Balance Sheets
($ in thousands)
(Unaudited)
September 30, 2025
December 31, 2024
Assets
Cash and due from banks
$
732,826
$
567,251
Securities available for sale, at fair value (amortized cost: $
1,784,943
- 2025
$
1,719,537
-2024; allowance for credit losses (ACL): $
0
)
1,814,245
1,692,534
Securities held to maturity, net of ACL of $
0
(fair value: $
1,233,736
- 2025; $
1,259,107
-2024)
1,268,459
1,335,385
Loans held for sale (LHFS)
228,141
200,307
Loans held for investment (LHFI)
13,548,156
13,089,942
Less ACL, LHFI
165,242
160,270
Net LHFI
13,382,914
12,929,672
Premises and equipment, net
227,805
235,410
Mortgage servicing rights (MSR)
131,676
139,317
Goodwill
334,605
334,605
Other real estate, net
8,325
5,917
Operating lease right-of-use assets
33,012
34,668
Other assets
(1)
639,502
677,356
Total Assets
$
18,801,510
$
18,152,422
Liabilities
Deposits:
Noninterest-bearing
$
3,321,132
$
3,073,565
Interest-bearing
12,309,842
12,034,610
Total deposits
15,630,974
15,108,175
Federal funds purchased and securities sold under repurchase agreements
Accumulated other comprehensive income (loss), net of tax
(
19,380
)
(
83,659
)
Total Shareholders' Equity
2,114,268
1,962,327
Total Liabilities and Shareholders' Equity
$
18,801,510
$
18,152,422
(1) During the first quarter of 2025, Trustmark reclassified its identifiable intangible assets, net to other assets. The prior period has been reclassified accordingly.
See notes to consolidated financial statements.
3
Trustmark Corporation and Subsidiaries
Consolidated Statements of Income (Loss)
($ in thousands, except per share data)
(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Interest Income
Interest and fees on LHFS & LHFI
$
211,859
$
217,128
$
617,529
$
636,315
Interest on securities:
Taxable
26,625
26,162
78,950
59,725
Tax exempt
—
—
—
4
Other interest income
4,233
8,302
12,813
24,539
Total Interest Income
242,717
251,592
709,292
720,583
Interest Expense
Interest on deposits
71,065
86,043
206,960
253,440
Interest on federal funds purchased and securities sold under
repurchase agreements
4,626
4,864
13,437
16,118
Other interest expense
4,585
5,971
15,643
22,452
Total Interest Expense
80,276
96,878
236,040
292,010
Net Interest Income
162,441
154,714
473,252
428,573
Provision for credit losses (PCL), LHFI
1,390
7,923
14,861
30,327
PCL, off-balance sheet credit exposures
295
(
1,375
)
(
3,206
)
(
5,167
)
PCL, LHFI sale of 1-4 family mortgage loans
—
—
—
8,633
Net Interest Income After PCL
160,756
148,166
461,597
394,780
Noninterest Income (Loss)
Service charges on deposit accounts
11,251
11,272
32,472
33,154
Bank card and other fees
8,318
7,931
24,736
24,584
Mortgage banking, net
8,182
6,119
25,555
19,238
Wealth management
9,798
9,288
28,979
27,932
Other, net
2,382
2,952
10,663
13,515
Securities gains (losses), net
—
—
—
(
182,792
)
Total Noninterest Income (Loss)
39,931
37,562
122,405
(
64,369
)
Noninterest Expense
Salaries and employee benefits
71,508
66,691
208,298
197,016
Services and fees
28,777
25,724
82,022
74,898
Net occupancy - premises
7,774
7,398
22,666
21,933
Equipment expense
6,410
6,141
18,924
18,707
Other expense
16,464
17,316
48,148
48,706
Total Noninterest Expense
130,933
123,270
380,058
361,260
Income (Loss) From Continuing Operations Before Income Taxes
69,754
62,458
203,944
(
30,849
)
Income taxes from continuing operations
12,967
11,128
37,683
(
19,747
)
Income (Loss) From Continuing Operations
56,787
51,330
166,261
(
11,102
)
Income from discontinued operations before income taxes
—
—
—
237,152
Income taxes from discontinued operations
—
—
—
59,353
Income From Discontinued Operations
—
—
—
177,799
Net Income
$
56,787
$
51,330
$
166,261
$
166,697
Earnings (Loss) Per Share (EPS)
Basic EPS from continuing operations
$
0.94
$
0.84
$
2.75
$
(
0.18
)
Basic EPS from discontinued operations
—
—
—
2.91
Basic EPS
(1)
0.94
0.84
2.75
2.72
Diluted EPS from continuing operations
$
0.94
$
0.84
$
2.74
$
(
0.18
)
Diluted EPS from discontinued operations
—
—
—
2.90
Diluted EPS
(1)
0.94
0.84
2.74
2.72
(1)
Due to rounding, earnings (loss) per share from continuing operations and discontinued operations may not sum to earnings per share from net income.
See notes to consolidated financial statements.
4
Trustmark Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
($ in thousands)
(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Net income per consolidated statements of income (loss)
$
56,787
$
51,330
$
166,261
$
166,697
Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on available for sale securities and
transferred securities:
Net unrealized holding gains (losses) arising during the
period
7,286
41,919
42,229
35,684
Reclassification adjustment for net (gains) losses realized
in net income
—
—
—
137,094
Change in net unrealized holding loss on securities
transferred to held to maturity
2,567
2,766
7,723
8,265
Pension and other postretirement benefit plans:
Reclassification adjustments for changes realized in net
income:
Net change in prior service costs
2
21
8
62
Recognized net (gain) loss due to lump sum settlement
(
21
)
—
(
59
)
(
10
)
Change in net actuarial loss
46
63
145
198
Derivatives:
Change in the accumulated gain (loss) on effective cash
flow hedge derivatives
(
617
)
14,120
8,366
(
1,505
)
Reclassification adjustment for (gain) loss realized in
net income
1,846
3,623
5,867
10,890
Other comprehensive income (loss), net of tax
11,109
62,512
64,279
190,678
Comprehensive income (loss)
$
67,896
$
113,842
$
230,540
$
357,375
See notes to consolidated financial statements.
5
Trustmark Corporation and Subsidiaries
Consolidated Statements of Changes in Shareholders' Equity
($ in thousands, except per share data)
(Unaudited)
Accumulated
Other
Common Stock
Comprehensive
Shares
Capital
Retained
Income
Outstanding
Amount
Surplus
Earnings
(Loss)
Total
Balance, January 1, 2025
61,008,023
$
12,711
$
157,899
$
1,875,376
$
(
83,659
)
$
1,962,327
Net income per consolidated statements
of income (loss)
—
—
—
53,633
—
53,633
Other comprehensive income (loss),
net of tax
—
—
—
—
34,957
34,957
Common stock dividends paid
($
0.24
per share)
—
—
—
(
14,732
)
—
(
14,732
)
Shares withheld to pay taxes, long-term
incentive plan
133,628
28
(
2,443
)
—
—
(
2,415
)
Repurchase and retirement of common stock
(
423,240
)
(
88
)
(
14,926
)
—
—
(
15,014
)
Compensation expense, long-term
incentive plan
—
—
2,471
—
—
2,471
Balance, March 31, 2025
60,718,411
12,651
143,001
1,914,277
(
48,702
)
2,021,227
Net income per consolidated statements
of income (loss)
—
—
—
55,841
—
55,841
Other comprehensive income (loss),
net of tax
—
—
—
—
18,213
18,213
Common stock dividends paid
($
0.24
per share)
—
—
—
(
14,620
)
—
(
14,620
)
Shares withheld to pay taxes, long-term
incentive plan
24,173
5
(
54
)
—
—
(
49
)
Repurchase and retirement of common stock
(
340,900
)
(
71
)
(
10,939
)
—
—
(
11,010
)
Compensation expense, long-term
incentive plan
—
—
1,187
—
—
1,187
Balance, June 30, 2025
60,401,684
12,585
133,195
1,955,498
(
30,489
)
2,070,789
Net income per consolidated statements
of income
—
—
—
56,787
—
56,787
Other comprehensive income (loss), net of tax
—
—
—
—
11,109
11,109
Common stock dividends paid ($
0.24
per share)
—
—
—
(
14,600
)
—
(
14,600
)
Shares withheld to pay taxes, long-term
incentive plan
4,944
2
(
78
)
—
—
(
76
)
Repurchase and retirement of common stock
(
280,252
)
(
59
)
(
10,975
)
—
—
(
11,034
)
Compensation expense, long-term
incentive plan
—
—
1,293
—
—
1,293
Balance, September 30, 2025
60,126,376
$
12,528
$
123,435
$
1,997,685
$
(
19,380
)
$
2,114,268
See notes to consolidated financial statements.
6
Trustmark Corporation and Subsidiaries
Consolidated Statements of Changes in Shareholders' Equity (continued)
($ in thousands, except per share data)
(Unaudited)
Accumulated
Other
Common Stock
Comprehensive
Shares
Capital
Retained
Income
Outstanding
Amount
Surplus
Earnings
(Loss)
Total
Balance, January 1, 2024
61,071,173
$
12,725
$
159,688
$
1,709,157
$
(
219,723
)
$
1,661,847
Net income per consolidated statements
of income (loss)
—
—
—
41,535
—
41,535
Other comprehensive income (loss),
net of tax
—
—
—
—
(
7,431
)
(
7,431
)
Common stock dividends paid
($
0.23
per share)
—
—
—
(
14,207
)
—
(
14,207
)
Shares withheld to pay taxes, long-term
incentive plan
107,193
22
(
1,405
)
—
—
(
1,383
)
Compensation expense, long-term
incentive plan
—
—
2,238
—
—
2,238
Balance, March 31, 2024
61,178,366
12,747
160,521
1,736,485
(
227,154
)
1,682,599
Net income per consolidated statements
of income (loss)
—
—
—
73,832
—
73,832
Other comprehensive income (loss),
net of tax
—
—
—
—
135,597
135,597
Common stock dividends paid
($
0.23
per share)
—
—
—
(
14,206
)
—
(
14,206
)
Shares withheld to pay taxes, long-term
incentive plan
27,603
6
(
65
)
—
—
(
59
)
Compensation expense, long-term
incentive plan
—
—
1,378
—
—
1,378
Balance, June 30, 2024
61,205,969
$
12,753
$
161,834
$
1,796,111
$
(
91,557
)
$
1,879,141
Net income per consolidated statements
of income
—
—
—
51,330
—
51,330
Other comprehensive income (loss), net of tax
—
—
—
—
62,512
62,512
Common stock dividends paid ($
0.23
per share)
—
—
—
(
14,209
)
—
(
14,209
)
Shares withheld to pay taxes, long-term
incentive plan
637
—
(
8
)
—
—
(
8
)
Compensation expense, long-term
incentive plan
—
—
1,330
—
—
1,330
Balance, September 30, 2024
61,206,606
$
12,753
$
163,156
$
1,833,232
$
(
29,045
)
$
1,980,096
See notes to consolidated financial statements.
7
Trustmark Corporation and Subsidiaries
Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
Nine Months Ended September 30,
2025
2024
Operating Activities
Net income per consolidated statements of income (loss)
$
166,261
$
166,697
Adjustments to reconcile net income to net cash provided by operating activities:
PCL
11,655
33,793
Depreciation and amortization
28,232
28,405
Net (accretion) amortization of securities
(
18,233
)
(
4,684
)
Securities (gains) losses, net
—
182,792
Gains on sales of loans, net
(
15,080
)
(
14,808
)
Gain on disposition of business
—
(
228,272
)
Compensation expense, long-term incentive plan
4,951
4,946
Deferred income tax provision
(
582
)
21,500
Proceeds from sales of loans held for sale
872,013
858,895
Purchases and originations of loans held for sale
(
878,989
)
(
864,682
)
Originations of mortgage servicing rights
(
10,853
)
(
9,419
)
Earnings on bank-owned life insurance
(
5,722
)
(
2,640
)
Net change in other assets
28,093
(
21,824
)
Net change in other liabilities
(
4,014
)
(
113,944
)
Other operating activities, net
8,535
(
19,089
)
Net cash from operating activities
186,267
17,666
Investing Activities
Proceeds from maturities, prepayments and calls of securities held to maturity
77,479
89,686
Proceeds from maturities, prepayments and calls of securities available for sale
161,953
186,328
Proceeds from sales of securities available for sale
—
1,378,272
Purchases of securities held to maturity
—
(
10,644
)
Purchases of securities available for sale
(
209,382
)
(
1,475,357
)
Net proceeds from bank-owned life insurance
566
(
27
)
Net change in federal funds sold and securities purchased
under reverse repurchase agreements
—
(
10,000
)
Net change in member bank stock
8,048
6,400
Net change in LHFI
(
473,472
)
(
223,867
)
Proceeds from sale of 1-4 family mortgage loans
—
43,935
Purchases of premises and equipment
(
8,440
)
(
19,530
)
Proceeds from sales of premises and equipment
3,592
2,219
Proceeds from sales of other real estate
2,240
4,555
Purchases of software
(
6,326
)
(
4,906
)
Investments in tax credit and other partnerships
(
11,853
)
(
12,807
)
Proceeds from disposition of business, net
—
321,345
Other, net
—
200
Net cash from investing activities
(
455,595
)
275,802
Financing Activities
Net change in deposits
522,799
(
328,828
)
Net change in federal funds purchased and securities sold under repurchase agreements
95,992
(
40,102
)
Net change in short-term borrowings
(
100,000
)
(
50,000
)
Payments on long-term FHLB advances
—
(
58
)
Payments under finance lease obligations
(
338
)
(
315
)
Common stock dividends
(
43,952
)
(
42,622
)
Repurchase and retirement of common stock
(
37,058
)
—
Shares withheld to pay taxes, long-term incentive plan
(
2,540
)
(
1,450
)
Net cash from financing activities
434,903
(
463,375
)
Net change in cash and cash equivalents
165,575
(
169,907
)
Cash and cash equivalents at beginning of period
567,251
975,343
Cash and cash equivalents at end of period
$
732,826
$
805,436
8
See notes to consolidated financial statements.
Trustmark Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note 1 – Business, Basis of Financial Statement Presentation and Principles of Consolidation
Trustmark Corporation (Trustmark) is a bank holding company headquartered in Jackson, Mississippi. Through its subsidiaries, Trustmark operates as a financial services organization providing banking and financial solutions to corporate institutions and individual customers through offices in Alabama, Florida, Georgia, Mississippi, Tennessee and Texas. As previously disclosed, on August 4, 2025, Trustmark’s principal subsidiary, Trustmark National Bank, initially chartered by the State of Mississippi in 1889, converted from a national banking association to a Mississippi-chartered banking corporation and changed its name to Trustmark Bank (TB).
The consolidated financial statements include the accounts of Trustmark and all other entities in which Trustmark has a controlling financial interest. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain reclassifications have been made to prior period amounts to conform to the current period presentation.
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements, and notes thereto, included in Trustmark’s Annual Report on Form 10-K for its fiscal year ended December 31, 2024 (2024 Annual Report).
Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period. In the opinion of Management, all adjustments (consisting of normal recurring accruals) considered necessary for the fair presentation of these consolidated financial statements have been included. The preparation of financial statements in conformity with these accounting principles requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and income and expense during the reporting periods and the related disclosures. Although Management’s estimates contemplate current conditions and how they are expected to change in the future, it is reasonably possible that in 2025
actual conditions could vary from those anticipated, which could affect Trustmark’s financial condition and results of operations. Actual results could differ from those estimates.
Note 2 - Discontinued Operations
On May 31, 2024, TB completed the sale of its wholly owned subsidiary, Fisher Brown Bottrell Insurance, Inc. (FBBI), to Marsh & McLennan Agency LLC (MMA) for $
336.9
million in cash. The transaction resulted in a pre-tax
net gain
of $
228.3
million. The gain, along with FBBI's historical financial results for periods prior to the sale, is reflected in Trustmark's consolidated financial statements as discontinued operations. FBBI's operating results prior to the sale have been presented as "Income From Discontinued Operations" within the accompanying consolidated statements of income (loss). Cash flows from both continuing and discontinued operations are included in the accompanying consolidated statements of cash flows.
9
The following table summarizes financial information related to FBBI which has been segregated from continuing operations and reported as discontinued operations for the periods presented ($ in thousands):
Three Months Ended
Nine Months Ended
September 30, 2024
September 30, 2024
Noninterest income:
Insurance commissions
$
—
$
27,728
Gain on sale of discontinued operations, net
—
228,272
Other, net
—
527
Total noninterest income
—
256,527
Noninterest expense:
Salaries and employee benefits
—
16,263
Services and fees
—
704
Net occupancy - premises
—
269
Equipment expense
—
93
Other expense
—
2,046
Total noninterest expense
—
19,375
Income from discontinued operations before income taxes
—
237,152
Income taxes from discontinued operations
—
59,353
Income from discontinued operations
$
—
$
177,799
Note 3 – Securities Available for Sale and Held to Maturity
The following tables are a summary of the amortized cost and estimated fair value of securities available for sale and held to maturity at
September 30, 2025 and December 31, 2024 ($ in thousands):
Securities Available for Sale
Securities Held to Maturity
September 30, 2025
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
U.S. Treasury securities
$
204,757
$
3,512
$
—
$
208,269
$
30,421
$
114
$
—
$
30,535
U.S. Government agency
obligations
70,756
575
(
796
)
70,535
—
—
—
—
Mortgage-backed securities
Residential mortgage pass-
through securities
Guaranteed by GNMA
37,815
92
(
2,101
)
35,806
14,353
5
(
445
)
13,913
Issued by FNMA and
FHLMC
1,109,332
30,057
(
12,458
)
1,126,931
384,625
345
(
9,297
)
375,673
Other residential mortgage-
backed securities
Issued or guaranteed by
FNMA, FHLMC or
GNMA
—
—
—
—
103,041
—
(
4,794
)
98,247
Commercial mortgage-
backed securities
Issued or guaranteed by
FNMA, FHLMC or
GNMA
362,283
10,948
(
527
)
372,704
736,019
71
(
20,722
)
715,368
Total
$
1,784,943
$
45,184
$
(
15,882
)
$
1,814,245
$
1,268,459
$
535
$
(
35,258
)
$
1,233,736
10
Securities Available for Sale
Securities Held to Maturity
December 31, 2024
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
U.S. Treasury Securities
$
203,524
$
548
$
(
1,403
)
$
202,669
$
29,842
$
1
$
(
522
)
$
29,321
U.S. Government agency
obligations
41,194
—
(
2,387
)
38,807
—
—
—
—
Mortgage-backed securities
Residential mortgage pass-
through securities
Guaranteed by GNMA
31,365
3
(
2,957
)
28,411
16,218
—
(
844
)
15,374
Issued by FNMA and
FHLMC
1,091,122
1,610
(
22,194
)
1,070,538
423,372
94
(
23,853
)
399,613
Other residential mortgage-
backed securities
Issued or guaranteed by
FNMA, FHLMC or
GNMA
—
—
—
—
123,685
—
(
8,004
)
115,681
Commercial mortgage-
backed securities
Issued or guaranteed by
FNMA, FHLMC or
GNMA
352,332
827
(
1,050
)
352,109
742,268
3
(
43,153
)
699,118
Total
$
1,719,537
$
2,988
$
(
29,991
)
$
1,692,534
$
1,335,385
$
98
$
(
76,376
)
$
1,259,107
During 2022, Trustmark reclassified a total of $
766.0
million of securities available for sale to securities held to maturity. At the date of these transfers, the net unrealized holding loss on the available for sale securities totaled $
91.9
million ($
68.9
million, net of tax). The securities were transferred at fair value, which became the cost basis for the securities held to maturity. The net unrealized holding loss will be 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 these transfers. At
September 30, 2025
, the net unamortized, unrealized loss on transferred securities included in accumulated other comprehensive income (loss) in the accompanying consolidated balance sheets totaled $
38.9
million compared to $
46.6
million at
December 31, 2024.
ACL on Securities
Securities Available for Sale
Quarterly, Trustmark evaluates if any security has a fair value less than its amortized cost. Once these securities are identified, in order to determine whether a decline in fair value resulted from a credit loss or other factors, Trustmark performs further analysis. If Trustmark determines that a credit loss exists, the credit portion of the allowance is measured by a discounted cash flow (DCF) analysis using the effective interest rate as of the security’s purchase date. The amount of credit loss recorded by Trustmark is limited to the amount by which the amortized cost exceeds the fair value. The DCF analysis utilizes contractual maturities, as well as third-party credit ratings and cumulative default rates published annually by Moody’s Investor Service (Moody’s).
At both September 30, 2025 and December 31, 2024
, the results of the analysis did not identify any securities that warranted DCF analysis, and
no
credit loss was recognized on any of the securities available for sale.
Accrued interest receivable is excluded from the estimate of credit losses for securities available for sale. At September 30, 2025
, accrued interest receivable totaled $
5.9
million for securities available for sale compared to $
5.0
million
December 31, 2024
and was reported in other assets on the accompanying consolidated balance sheet.
Securities Held to Maturity
At September 30, 2025 and December 31, 2024
, Trustmark identified no securities held to maturity with the potential for credit loss exposure. After applying appropriate analysis, the total amount of current expected credit losses was
zero
at
September 30, 2025 and December 31, 2024
.
No
reserve was recorded at either
September 30, 2025 or December 31, 2024.
Accrued interest receivable is excluded from the estimate of credit losses for securities held to maturity. At September 30, 2025
, accrued interest receivable totaled $
2.3
million for securities held to maturity compared to $
2.4
million at
December 31, 2024 and was reported in other assets on the accompanying consolidated balance sheet.
11
At both September 30, 2025 and December 31, 2024, Trustmark had
no
securities held to maturity that were past due 30 days or more as to principal or interest payments. Trustmark had
no
securities held to maturity classified as nonaccrual at
September 30, 2025 and December 31, 2024
.
Trustmark monitors the credit quality of securities held to maturity on a monthly basis through credit ratings.
The following table presents the amortized cost of Trustmark’s securities held to maturity by credit rating, as determined by Moody’s, at September 30,2025 and December 31, 2024 ($ in thousands):
September 30, 2025
December 31, 2024
Aaa
$
52,831
$
1,335,385
Aa1 to Aa3
1,215,628
—
Total
$
1,268,459
$
1,335,385
The tables below include securities with gross unrealized losses for which an allowance for credit losses has not been recorded segregated by length of impairment at
September 30, 2025 and December 31, 2024 ($ in thousands):
Less than 12 Months
12 Months or More
Total
September 30, 2025
Estimated
Fair Value
Gross
Unrealized
Losses
Estimated
Fair Value
Gross
Unrealized
Losses
Estimated
Fair Value
Gross
Unrealized
Losses
U.S. Government agency obligations
$
25,624
$
(
313
)
$
19,015
$
(
483
)
$
44,639
$
(
796
)
Mortgage-backed securities
Residential mortgage pass-through
securities
Guaranteed by GNMA
1,212
(
23
)
29,230
(
2,523
)
30,442
(
2,546
)
Issued by FNMA and FHLMC
284,623
(
600
)
228,922
(
21,155
)
513,545
(
21,755
)
Other residential mortgage-backed
securities
Issued or guaranteed by FNMA,
FHLMC or GNMA
—
—
98,247
(
4,794
)
98,247
(
4,794
)
Commercial mortgage-backed securities
Issued or guaranteed by FNMA,
FHLMC or GNMA
—
—
779,016
(
21,249
)
779,016
(
21,249
)
Total
$
311,459
$
(
936
)
$
1,154,430
$
(
50,204
)
$
1,465,889
$
(
51,140
)
December 31, 2024
U.S. Treasury Securities
$
123,277
$
(
1,925
)
$
—
$
—
$
123,277
$
(
1,925
)
U.S. Government agency obligations
38,807
(
2,387
)
—
—
38,807
(
2,387
)
Mortgage-backed securities
Residential mortgage pass-through
securities
Guaranteed by GNMA
15,802
(
293
)
27,803
(
3,508
)
43,605
(
3,801
)
Issued by FNMA and FHLMC
981,747
(
13,848
)
237,487
(
32,199
)
1,219,234
(
46,047
)
Other residential mortgage-backed
securities
Issued or guaranteed by FNMA,
FHLMC or GNMA
—
—
115,681
(
8,004
)
115,681
(
8,004
)
Commercial mortgage-backed securities
Issued or guaranteed by FNMA,
FHLMC or GNMA
164,971
(
536
)
767,566
(
43,667
)
932,537
(
44,203
)
Total
$
1,324,604
$
(
18,989
)
$
1,148,537
$
(
87,378
)
$
2,473,141
$
(
106,367
)
The unrealized losses shown above are due to increases in market rates over the yields available at the time of purchase of the underlying securities and not credit quality. Trustmark does not intend to sell these securities and it is more likely than not that Trustmark will not be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.
12
Securities Gains and Losses
Realized gains and losses are determined using the specific identification method and are included in noninterest income (loss) as securities gains (losses), net.
For the periods presented, gross realized losses as a result of calls and dispositions of securities, as well as any associated proceeds, are shown below ($ in thousands).
There were no gross realized gains during the periods presented.
Three Months Ended September 30,
Nine Months Ended September 30,
Available for Sale
2025
2024
2025
2024
Proceeds from calls and sales of securities
$
—
$
—
$
—
$
1,378,272
Gross realized (losses)
—
—
—
(
182,792
)
During the second quarter of 2024, Trustmark restructured its investment securities portfolio by selling $
1.561
billion of available for sale securities with an average yield of
1.36
%, which generated a loss of $
182.8
million ($
137.1
million, net of taxes) and was recorded to noninterest income (loss) in securities gains (losses), net. Proceeds from the sale were used to purchase $
1.378
billion of available for sale securities with an average yield of
4.85
%.
Securities Pledged
Securities with a carrying value of $
1.749
billion and $
1.910
billion at
September 30, 2025 and December 31, 2024, respectively, were pledged to collateralize public deposits and securities sold under repurchase agreements and for other purposes as permitted by law. At both September 30, 2025 and December 31, 2024
,
none
of these securities were pledged under the Federal Reserve Discount Window program to provide additional contingency funding capacity.
Contractual Maturities
The amortized cost and estimated fair value of securities available for sale and held to maturity at
September 30, 2025, by contractual maturity, are shown below ($ in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Securities
Available for Sale
Securities
Held to Maturity
Amortized
Cost
Estimated
Fair Value
Amortized
Cost
Estimated
Fair Value
Due in one year or less
$
35,927
$
36,122
$
—
$
—
Due after one year through five years
39,643
40,166
30,421
30,535
Due after five years through ten years
199,943
202,516
—
—
275,513
278,804
30,421
30,535
Mortgage-backed securities
1,509,430
1,535,441
1,238,038
1,203,201
Total
$
1,784,943
$
1,814,245
$
1,268,459
$
1,233,736
13
Note 4 – LHFI and ACL, LHFI
At
September 30, 2025 and December 31, 2024, LHFI consisted of the following ($ in thousands):
September 30, 2025
December 31, 2024
Loans secured by real estate:
Construction, land development and other land
$
563,501
$
587,244
Other secured by 1-4 family residential properties
697,177
650,550
Secured by nonfarm, nonresidential properties
3,299,819
3,533,282
Other real estate secured
2,055,712
1,633,830
Other loans secured by real estate:
Other construction
678,326
829,904
Secured by 1-4 family residential properties
2,357,692
2,298,993
Commercial and industrial loans
1,903,606
1,840,722
Consumer loans
158,462
156,569
State and other political subdivision loans
1,028,396
969,836
Other commercial loans and leases
805,465
589,012
LHFI
13,548,156
13,089,942
Less ACL
165,242
160,270
Net LHFI
$
13,382,914
$
12,929,672
Accrued interest receivable is not included in the amortized cost basis of Trustmark’s LHFI. At September 30, 2025 and December 31, 2024
, accrued interest receivable for LHFI totaled $
65.8
million and $
64.7
million, respectively, with no related ACL and was reported in other assets on the accompanying consolidated balance sheets.
Loan Concentrations
Trustmark does not have any loan concentrations other than those reflected in the preceding table, which exceed
10
% of total LHFI. At
September 30, 2025
, Trustmark’s geographic loan distribution was concentrated primarily in its
six
key market regions: Alabama, Florida, Georgia, Mississippi, Tennessee and Texas. Accordingly, the ultimate collectability of a substantial portion of these loans is susceptible to changes in market conditions in these areas.
Nonaccrual and Past Due LHFI
No material interest income was recognized in the income statement on nonaccrual LHFI for each of the periods ended September 30, 2025 and 2024.
The following tables provide the amortized cost basis of loans on nonaccrual status and loans past due 90 days or more still accruing interest at
September 30, 2025 and December 31, 2024 ($ in thousands):
September 30, 2025
Nonaccrual With No ACL
Total Nonaccrual
Loans Past Due 90 Days or More Still Accruing
Loans secured by real estate:
Construction, land development and other land
$
160
$
278
$
—
Other secured by 1-4 family residential properties
461
8,120
648
Secured by nonfarm, nonresidential properties
871
4,301
—
Other real estate secured
234
386
—
Other loans secured by real estate:
Secured by 1-4 family residential properties
1,419
54,006
3,557
Commercial and industrial loans
114
15,637
—
Consumer loans
—
455
648
Other commercial loans and leases
—
772
—
Total
$
3,259
$
83,955
$
4,853
14
December 31, 2024
Nonaccrual With No ACL
Total Nonaccrual
Loans Past Due 90 Days or More Still Accruing
Loans secured by real estate:
Construction, land development and other land
$
—
$
366
$
159
Other secured by 1-4 family residential properties
521
7,275
266
Secured by nonfarm, nonresidential properties
426
13,061
—
Other real estate secured
1,904
1,984
—
Other loans secured by real estate:
Secured by 1-4 family residential properties
1,533
31,583
3,253
Commercial and industrial loans
16
24,525
—
Consumer loans
—
236
414
Other commercial loans and leases
—
1,079
—
Total
$
4,400
$
80,109
$
4,092
The following tables provide an aging
analysis of the amortized cost basis of past due LHFI (including nonaccrual LHFI) at September 30, 2025 and December 31, 2024 ($ in thousands):
September 30, 2025
Past Due
30-59 Days
60-89 Days
90 Days
or More
Total Past Due
Current
Loans
Total LHFI
Loans secured by real estate:
Construction, land development and
other land
$
260
$
45
$
—
$
305
$
563,196
$
563,501
Other secured by 1-4 family residential
properties
5,086
1,081
4,133
10,300
686,877
697,177
Secured by nonfarm, nonresidential
properties
908
98
3,429
4,435
3,295,384
3,299,819
Other real estate secured
78
—
298
376
2,055,336
2,055,712
Other loans secured by real estate:
Other construction
—
—
—
—
678,326
678,326
Secured by 1-4 family residential properties
19,392
10,102
28,648
58,142
2,299,550
2,357,692
Commercial and industrial loans
857
676
12,800
14,333
1,889,273
1,903,606
Consumer loans
1,058
361
680
2,099
156,363
158,462
State and other political subdivision loans
—
—
—
—
1,028,396
1,028,396
Other commercial loans and leases
27
17
—
44
805,421
805,465
Total
$
27,666
$
12,380
$
49,988
$
90,034
$
13,458,122
$
13,548,156
15
December 31, 2024
Past Due
30-59 Days
60-89 Days
90 Days
or
More
Total Past Due
Current
Loans
Total LHFI
Loans secured by real estate:
Construction, land development and
other land
$
199
$
—
$
324
$
523
$
586,721
$
587,244
Other secured by 1-4 family residential
properties
5,656
1,821
3,223
10,700
639,850
650,550
Secured by nonfarm, nonresidential
properties
1,488
380
3,111
4,979
3,528,303
3,533,282
Other real estate secured
1,979
—
28
2,007
1,631,823
1,633,830
Other loans secured by real estate:
Other construction
—
—
—
—
829,904
829,904
Secured by 1-4 family residential properties
17,898
7,111
21,524
46,533
2,252,460
2,298,993
Commercial and industrial loans
1,114
13,300
8,835
23,249
1,817,473
1,840,722
Consumer loans
1,930
600
414
2,944
153,625
156,569
State and other political subdivision loans
24
—
—
24
969,812
969,836
Other commercial loans and leases
168
67
69
304
588,708
589,012
Total
$
30,456
$
23,279
$
37,528
$
91,263
$
12,998,679
$
13,089,942
Modified LHFI
Occasionally, Trustmark modifies loans for borrowers experiencing financial difficulty by providing payment delays, interest-only payments for an extended period of time, maturity extensions or interest rate reductions. Other concessions may arise from court proceedings or may be imposed by law. In some cases, Trustmark provides multiple types of concessions on one loan.
The following tables present the amortized cost of LHFI of loans modified to borrowers experiencing financial difficulty disaggregated by class of loan and type of modification at the end of each of the periods presented ($ in thousands). The percentage of the amortized cost basis of LHFI that were modified to borrowers experiencing financial difficulty as compared to the amortized cost basis of each class of LHFI is also presented below:
Three Months Ended September 30, 2025
Term Extension
Total
% of Total Class of Loan
Loans secured by real estate:
Other secured by 1-4 family residential properties
$
619
$
619
0.09
%
Other loans secured by real estate:
Secured by 1-4 family residential properties
4,632
4,632
0.20
%
Total
$
5,251
$
5,251
0.04
%
Three Months Ended September 30, 2024
Payment Delay
Term Extension
Total
% of Total Class of Loan
Loans secured by real estate:
Other secured by 1-4 family residential
properties
$
—
$
886
$
886
0.14
%
Other loans secured by real estate:
Secured by 1-4 family residential properties
—
30
30
—
Commercial and industrial loans
6,207
—
6,207
0.35
%
Total
$
6,207
$
916
$
7,123
0.05
%
16
Nine Months Ended September 30, 2025
Payment Delay
Term Extension
Total
% of Total Class of Loan
Loans secured by real estate:
Other secured by 1-4 family residential
properties
$
—
$
2,009
$
2,009
0.29
%
Other real estate secured
—
15,000
15,000
0.73
%
Other loans secured by real estate:
Secured by 1-4 family residential properties
—
10,308
10,308
0.44
%
Commercial and industrial loans
12,824
—
12,824
0.67
%
Total
$
12,824
$
27,317
$
40,141
0.30
%
Nine Months Ended September 30, 2024
Payment Delay
Term Extension
Total
% of Total Class of Loan
Loans secured by real estate:
Other secured by 1-4 family residential
properties
$
—
$
2,638
$
2,638
0.41
%
Other loans secured by real estate:
Secured by 1-4 family residential properties
—
30
30
—
Commercial and industrial loans
6,207
—
6,207
0.35
%
Total
$
6,207
$
2,668
$
8,875
0.07
%
The following tables detail the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the periods presented:
Three Months Ended September 30, 2025
Financial Effect
Term Extension
Loans secured by real estate:
Other secured by 1-4 family residential properties
Modified two loans and nine lines of credit to amortize over 24-month terms
Other loans secured by real estate:
Secured by 1-4 family residential properties
Reamortized twenty-seven loans with term adjusted by weighted average of 32 months
Three Months Ended September 30, 2024
Financial Effect
Payment Delay
Term Extension
Loans secured by real estate:
Other secured by 1-4 family residential properties
Modified two loans and seven lines of credit to amortize over 24-month terms
Other loans secured by real estate:
Secured by 1-4 family residential properties
Modified one loan to amortize over 24-month term
Commercial and industrial loans
Thirty-four month principal payment deferral
17
Nine Months Ended September 30, 2025
Financial Effect
Payment Delay
Term Extension
Loans secured by real estate:
Other secured by 1-4 family residential properties
Modified three loans and thirty-three lines of credit to amortize over a 24- month term
Other real estate secured
Extended maturity of one loan by 12 months
Other loans secured by real estate:
Secured by 1-4 family residential properties
Reamortized sixty-one loans with term adjusted by weighted-average of 41 months
Commercial and industrial loans
One loan with eight monthly interest payments deferred and four loans with three interest-only monthly payments
Nine Months Ended September 30, 2024
Financial Effect
Payment Delay
Term Extension
Loans secured by real estate:
Other secured by 1-4 family residential properties
Modified three loans and twenty-seven lines to amortize over 24-month terms
Other loans secured by real estate:
Secured by 1-4 family residential properties
Modified one loan to amortize over 24-month term
Commercial and industrial loans
Thirty-four month principal payment deferral
At both September 30, 2025
and 2024, Trustmark had
no
unused commitments on modified loans to borrowers experiencing financial difficulty.
For all loans modified in the previous twelve months to borrowers experiencing financial difficulty, Trustmark had payment defaults during the three and nine months ended September 30, 2025 on $
12.3
million of loans in the commercial and industrial portfolio that had received payment delay modifications and $
439
thousand of loans in the other secured by 1-4 family residential properties that had received a term extension modification.
During the three and nine months ended September 30, 2024, payment defaults of LHFI that were modified within the twelve months prior to borrowers experiencing financial difficulty were immaterial.
Trustmark has utilized loans 90 days or more past due to define payment default in determining modified loans that have subsequently defaulted. If Trustmark determines that a modified loan (or a portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is charged off against the ACL, LHFI.
18
Trustmark closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.
The following tables provide details of the performance of such LHFI that have been modified in the preceding twelve months as of September 30, 2025 and 2024 ($ in thousands):
September 30, 2025
Past Due
30-59 Days
60-89 Days
90 Days
or More
Total Past Due
Current
Loans
Total
Loans secured by real estate:
Other secured by 1-4 family residential
properties
$
113
$
52
$
518
$
683
$
2,179
$
2,862
Other real estate secured
—
—
—
—
15,000
$
15,000
Other loans secured by real estate:
Secured by 1-4 family residential properties
765
958
326
2,049
8,354
10,403
Commercial and industrial loans
112
452
12,261
12,825
—
12,825
Total
$
990
$
1,462
$
13,105
$
15,557
$
25,533
$
41,090
September 30, 2024
Past Due
30-59 Days
60-89 Days
90 Days
or More
Total Past Due
Current
Loans
Total
Loans secured by real estate:
Other secured by 1-4 family residential
properties
$
114
$
50
$
42
$
206
$
2,432
$
2,638
Other loans secured by real estate:
Secured by 1-4 family residential properties
—
—
—
—
30
30
Commercial and industrial loans
—
—
—
—
6,207
6,207
Total
$
114
$
50
$
42
$
206
$
8,669
$
8,875
Collateral-Dependent Loans
The following tables present the amortized cost basis of collateral-dependent loans by class of loans and collateral type as of
September 30, 2025 and December 31, 2024 ($ in thousands):
September 30, 2025
Real Estate
Vehicles
Miscellaneous
Total
Loans secured by real estate:
Construction, land development and
other land
$
160
$
—
$
—
$
160
Other secured by 1-4 family residential properties
461
—
—
461
Secured by nonfarm, nonresidential properties
1,489
—
—
1,489
Other real estate secured
15,234
—
—
15,234
Other loans secured by real estate:
Secured by 1-4 family residential properties
1,419
—
—
1,419
Commercial and industrial loans
—
1,758
12,579
14,337
Consumer loans
—
—
114
114
Other commercial loans and leases
—
—
764
764
Total
$
18,763
$
1,758
$
13,457
$
33,978
19
December 31, 2024
Real Estate
Vehicles
Miscellaneous
Total
Loans secured by real estate:
Other secured by 1-4 family residential properties
$
521
$
—
$
—
$
521
Secured by nonfarm, nonresidential properties
9,783
—
—
9,783
Other real estate secured
1,904
—
—
1,904
Other loans secured by real estate:
Secured by 1-4 family residential properties
1,533
—
—
1,533
Commercial and industrial loans
—
1,818
20,685
22,503
Other commercial loans and leases
—
—
896
896
Total
$
13,741
$
1,818
$
21,581
$
37,140
A loan is collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided substantially through the sale of the collateral. The following provides a qualitative description by class of loan of the collateral that secures Trustmark’s collateral-dependent LHFI:
•
Loans secured by real estate – Loans within these loan classes are secured by liens on real estate properties. There have been no significant changes to the collateral that secures these financial assets during the period.
•
Other loans secured by real estate – Loans within these loan classes are secured by liens on real estate properties. There have been no significant changes to the collateral that secures these financial assets during the period.
•
Commercial and industrial loans – Loans within this loan class are primarily secured by inventory, accounts receivables, equipment and other non-real estate collateral. There have been no significant changes to the collateral that secures these financial assets during the period.
•
Other commercial loans and leases – Loans and leases within this loan class are secured by non-real estate collateral. There have been no significant changes to the collateral that secures these financial assets during the period.
Credit Quality Indicators
Trustmark’s LHFI portfolio credit quality indicators focus on
six
key quality ratios that are compared against bank tolerances. The loan indicators are total classified outstanding, total criticized outstanding, nonperforming loans, nonperforming assets, delinquencies and net loan losses. Due to the homogeneous nature of consumer loans, Trustmark does not assign a formal internal risk rating to each credit and therefore the criticized and classified measures are primarily composed of commercial loans.
In addition to monitoring portfolio credit quality indicators, Trustmark also measures how effectively the lending process is being managed and risks are being identified. As part of an ongoing monitoring process, Trustmark grades the commercial portfolio segment as it relates to credit file completion and financial statement exceptions, underwriting, collateral documentation and compliance with law as shown below:
•
Credit File Completeness and Financial Statement Exceptions – evaluates the quality and condition of credit files in terms of content and completeness and focuses on efforts to obtain and document sufficient information to determine the quality and status of credits. Also included is an evaluation of the systems/procedures used to ensure compliance with policy.
•
Underwriting – evaluates whether credits are adequately analyzed, appropriately structured and properly approved within loan policy requirements. A properly approved credit is approved by an adequate authority in a timely manner with all conditions of approval fulfilled. Total policy exceptions measure the level of underwriting and other policy exceptions within a portfolio segment.
•
Collateral Documentation – focuses on the adequacy of documentation to perfect Trustmark’s collateral position and substantiate collateral value. Collateral exceptions measure the level of documentation exceptions within a portfolio segment. Collateral exceptions occur when certain collateral documentation is either not present or not current.
•
Compliance with Law – focuses on underwriting, documentation, approval and reporting in compliance with banking laws and regulations. Primary emphasis is directed to the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), Regulation O requirements and regulations governing appraisals.
20
Commercial Credits
Trustmark has established a loan grading system that consists of ten individual credit risk grades (risk ratings) that encompass a range from loans where the expectation of loss is negligible to loans where loss has been established. The model is based on the risk of default for an individual credit and establishes certain criteria to delineate the level of risk across the ten unique credit risk grades. Credit risk grade definitions are as follows:
•
Risk Rate (RR) 1 through RR 6 – Grades one through six represent groups of loans that are not subject to criticism as defined in regulatory guidance. Loans in these groups exhibit characteristics that represent low to moderate risk measured by using a variety of credit risk criteria such as cash flow coverage, debt service coverage, balance sheet leverage, liquidity, management experience, industry position, prevailing economic conditions, support from secondary sources of repayment and other credit factors that may be relevant to a specific loan. In general, these loans are supported by properly margined collateral and guarantees of principal parties.
•
Other Assets Especially Mentioned (Special Mention) (RR 7) – a loan that has a potential weakness that if not corrected will lead to a more severe rating. This rating is for credits that are currently protected but potentially weak because of an adverse feature or condition that if not corrected will lead to a further downgrade.
•
Substandard (RR 8) – a loan that has at least one identified weakness that is well defined. This rating is for credits where the primary sources of repayment are not viable at the time of evaluation or where either the capital or collateral is not adequate to support the loan and the secondary means of repayment do not provide a sufficient level of support to offset the identified weakness. Loss potential exists in the aggregate amount of substandard loans but does not necessarily exist in individual loans.
•
Doubtful (RR 9) – a loan with an identified weakness that does not have a valid secondary source of repayment. Generally, these credits have an impaired primary source of repayment and secondary sources are not sufficient to prevent a loss in the credit. The exact amount of the loss has not been determined at this time.
•
Loss (RR 10) – a loan or a portion of a loan that is deemed to be uncollectible.
By definition, credit risk grades special mention (RR 7), substandard (RR 8), doubtful (RR 9) and loss (RR 10) are criticized loans while substandard (RR 8), doubtful (RR 9) and loss (RR 10) are classified loans. These definitions are standardized by all bank regulatory agencies and are generally equally applied to each individual lending institution. The remaining credit risk grades are considered pass credits and are solely defined by Trustmark.
To enhance this process, Trustmark has determined that certain loans will be individually assessed, and a formal analysis will be performed and based upon the analysis the loan will be written down to the net realizable value. Trustmark will individually assess and remove loans from the pool in the following circumstances:
•
Commercial nonaccrual loans with total exposure of $
500
thousand (excluding those portions of the debt that are government guaranteed or are secured by Trustmark deposits or marketable securities) or more.
•
Any loan that is believed to not share similar risk characteristics with the rest of the pool will be individually assessed. Otherwise, the loan will be left within the pool based on the results of the assessment.
•
Commercial accruing loans deemed to be a modified loan to a borrower experiencing financial difficulty
with total exposure of $
500
thousand (excluding those portions of the debt that are government guaranteed or are secured by Trustmark deposits or marketable securities) or more. If the loan is believed to not share similar risk characteristics with the rest of the loan pool, the loan will be individually assessed. Otherwise, the loan will be left within the pool and monitored on an ongoing basis.
Each loan officer assesses the appropriateness of the internal risk rating assigned to their credits on an ongoing basis. Trustmark’s Asset Review area conducts independent credit quality reviews of the majority of Trustmark’s commercial loan portfolio both on the underlying credit quality of each individual loan class as well as the adherence to Trustmark’s loan policy and the loan administration process.
In addition to the ongoing internal risk rate monitoring described above, Trustmark’s Credit Quality Review Committee meets monthly and performs a review of all loans of $
100
thousand or more that are either delinquent 30 days or more or on nonaccrual. This review includes recommendations regarding risk ratings, accrual status, charge-offs and appropriate servicing officer as well as evaluation of problem credits for determination of modified status. Quarterly, the Credit Quality Review Committee reviews and modifies continuous action plans for all credits risk rated seven or worse for relationships of $250 thousand or more.
In addition, periodic reviews of significant development, construction, multi-family, nonowner-occupied and other commercial credits are performed. These reviews assess each particular project with respect to location, project valuations, progress of completion, leasing status, current financial information, rents, operating expenses, cash flow, adherence to budget and projections and other information
21
that is pertinent to the particular type of credit as applicable. Summary results are reviewed by Senior and Regional Credit Officers in addition to the Chief Credit and Operations Officer with a determination made as to the appropriateness of existing risk ratings and accrual status.
Consumer Credits
The Retail Credit Review Committee, Management Credit Policy Committee and the Enterprise Risk Committee review the volume and percentage of consumer loan delinquencies and losses to monitor the overall quality of the consumer portfolio.
Trustmark monitors the levels and severity of past due consumer LHFI on a daily basis through its collection activities. A detailed assessment of consumer LHFI delinquencies is performed monthly at both a product and market level.
The tables below present the amortized cost basis of loans by credit quality indicator and class of loans based on analyses performed at
September 30, 2025 and December 31, 2024 ($ in thousands):
Term Loans by Origination Year
2025
2024
2023
2022
2021
Prior
Revolving Loans
Total
As of September 30, 2025
Commercial LHFI
Loans secured by real estate:
Construction, land
development and other
land:
Pass - RR 1 through RR 6
$
264,598
$
120,344
$
29,054
$
23,908
$
15,789
$
2,684
$
45,857
$
502,234
Special Mention - RR 7
—
—
—
—
—
—
—
—
Substandard - RR 8
58
1,473
—
3,808
85
—
—
5,424
Doubtful - RR 9
—
—
—
—
—
—
—
—
Total
264,656
121,817
29,054
27,716
15,874
2,684
45,857
507,658
Current period gross
charge-offs
—
—
—
—
—
—
—
—
Other secured by 1-4 family
residential properties:
Pass - RR 1 through RR 6
$
36,008
$
25,374
$
20,040
$
20,074
$
20,940
$
5,691
$
7,692
$
135,819
Special Mention - RR 7
—
25
—
—
20
—
—
45
Substandard - RR 8
235
127
632
848
529
374
20
2,765
Doubtful - RR 9
—
—
—
—
—
—
—
—
Total
36,243
25,526
20,672
20,922
21,489
6,065
7,712
138,629
Current period gross
charge-offs
—
—
(
2
)
—
—
—
—
(
2
)
Secured by nonfarm,
nonresidential properties:
Pass - RR 1 through RR 6
$
521,204
$
411,095
$
397,566
$
710,182
$
359,348
$
557,028
$
157,544
$
3,113,967
Special Mention - RR 7
17,340
—
8,715
3,883
—
1,140
—
31,078
Substandard - RR 8
6,620
9,232
872
85,794
38,332
11,939
1,980
154,769
Doubtful - RR 9
2
—
—
—
—
3
—
5
Total
545,166
420,327
407,153
799,859
397,680
570,110
159,524
3,299,819
Current period gross
charge-offs
—
—
—
—
—
(
2,026
)
—
(
2,026
)
Other real estate secured:
Pass - RR 1 through RR 6
$
234,894
$
124,385
$
478,392
$
757,436
$
166,357
$
101,318
$
18,905
$
1,881,687
Special Mention - RR 7
—
—
21,500
—
—
—
—
21,500
Substandard - RR 8
14,498
35
22,415
69,552
398
44,861
147
151,906
Doubtful - RR 9
—
—
—
—
—
—
—
—
Total
249,392
124,420
522,307
826,988
166,755
146,179
19,052
2,055,093
Current period gross
charge-offs
—
—
—
—
—
—
—
—
22
Term Loans by Origination Year
2025
2024
2023
2022
2021
Prior
Revolving Loans
Total
As of September 30, 2025
Commercial LHFI
Other loans secured by real
estate:
Other construction:
Pass - RR 1 through RR 6
$
50,779
$
261,828
$
274,153
$
53,630
$
—
$
—
$
32,572
$
672,962
Special Mention - RR 7
—
—
5,364
—
—
—
—
5,364
Substandard - RR 8
—
—
—
—
—
—
—
—
Doubtful - RR 9
—
—
—
—
—
—
—
—
Total
50,779
261,828
279,517
53,630
—
—
32,572
678,326
Current period gross
charge-offs
—
—
—
—
—
—
—
—
Commercial and industrial
loans:
Pass - RR 1 through RR 6
$
565,852
$
334,760
$
228,472
$
99,711
$
54,649
$
32,163
$
510,669
$
1,826,276
Special Mention - RR 7
1,949
700
13,284
5,996
49
16
28,573
50,567
Substandard - RR 8
1,457
1,091
611
3,661
1,520
12,749
5,540
26,629
Doubtful - RR 9
—
48
19
7
—
1
59
134
Total
569,258
336,599
242,386
109,375
56,218
44,929
544,841
1,903,606
Current period gross
charge-offs
—
(
491
)
(
811
)
(
3,943
)
(
214
)
(
455
)
(
335
)
(
6,249
)
State and other political
subdivision loans:
Pass - RR 1 through RR 6
$
158,237
$
158,760
$
71,424
$
192,799
$
105,253
$
329,413
$
12,510
$
1,028,396
Special Mention - RR 7
—
—
—
—
—
—
—
—
Substandard - RR 8
—
—
—
—
—
—
—
—
Doubtful - RR 9
—
—
—
—
—
—
—
—
Total
158,237
158,760
71,424
192,799
105,253
329,413
12,510
1,028,396
Current period gross
charge-offs
—
—
—
—
—
—
—
—
Other commercial loans and
leases:
Pass - RR 1 through RR 6
$
255,778
$
150,526
$
123,593
$
4,586
$
5,167
$
54,413
$
204,724
$
798,787
Special Mention - RR 7
—
426
378
—
—
—
—
804
Substandard - RR 8
16
1,898
2,020
339
489
66
1,043
5,871
Doubtful - RR 9
—
3
—
—
—
—
—
3
Total
255,794
152,853
125,991
4,925
5,656
54,479
205,767
805,465
Current period gross
charge-offs
—
(
73
)
—
(
30
)
—
—
—
(
103
)
Total commercial
LHFI
$
2,129,525
$
1,602,130
$
1,698,504
$
2,036,214
$
768,925
$
1,153,859
$
1,027,835
$
10,416,992
Total commercial LHFI
gross charge-offs
$
—
$
(
564
)
$
(
813
)
$
(
3,973
)
$
(
214
)
$
(
2,481
)
$
(
335
)
$
(
8,380
)
23
Term Loans by Origination Year
2025
2024
2023
2022
2021
Prior
Revolving Loans
Total
As of September 30, 2025
Consumer LHFI
Loans secured by real estate:
Construction, land
development and other
land:
Current
$
21,586
$
16,797
$
11,363
$
2,900
$
1,272
$
1,790
$
—
$
55,708
Past due 30-89 days
—
—
49
—
—
20
—
69
Past due 90 days or more
—
—
—
—
—
—
—
—
Nonaccrual
—
—
9
—
57
—
—
66
Total
21,586
16,797
11,421
2,900
1,329
1,810
—
55,843
Current period gross
charge-offs
—
—
—
—
—
—
—
—
Other secured by 1-4 family
residential properties:
Current
$
15,975
$
20,332
$
15,213
$
5,610
$
4,445
$
9,579
$
475,201
$
546,355
Past due 30-89 days
—
56
51
15
64
313
3,718
4,217
Past due 90 days or more
—
14
28
—
—
—
606
648
Nonaccrual
27
39
101
48
87
339
6,687
7,328
Total
16,002
20,441
15,393
5,673
4,596
10,231
486,212
558,548
Current period gross
charge-offs
—
(
6
)
—
(
53
)
—
(
31
)
(
586
)
(
676
)
Other real estate secured:
Current
$
429
$
144
$
—
$
—
$
—
$
46
$
—
$
619
Past due 30-89 days
—
—
—
—
—
—
—
—
Past due 90 days or more
—
—
—
—
—
—
—
—
Nonaccrual
—
—
—
—
—
—
—
—
Total
429
144
—
—
—
46
—
619
Current period gross
charge-offs
—
—
—
—
—
—
—
—
Other loans secured by real
estate:
Secured by 1-4 family
residential properties
Current
$
203,997
$
296,748
$
200,927
$
737,742
$
421,922
$
413,856
$
—
$
2,275,192
Past due 30-89 days
198
5
5,261
11,013
4,544
3,916
—
24,937
Past due 90 days or more
262
191
2,053
878
135
37
—
3,556
Nonaccrual
4
581
9,747
27,868
9,381
6,426
—
54,007
Total
204,461
297,525
217,988
777,501
435,982
424,235
—
2,357,692
Current period gross
charge-offs
—
—
(
441
)
(
930
)
(
118
)
(
18
)
—
(
1,507
)
Consumer loans:
Current
$
46,400
$
32,340
$
11,011
$
8,639
$
3,022
$
323
$
54,218
$
155,953
Past due 30-89 days
396
143
111
7
1
—
748
1,406
Past due 90 days or more
24
22
27
—
—
—
575
648
Nonaccrual
115
46
174
54
45
3
18
455
Total
46,935
32,551
11,323
8,700
3,068
326
55,559
158,462
Current period gross
charge-offs
(
3,393
)
(
413
)
(
401
)
(
112
)
(
5
)
(
26
)
(
1,943
)
(
6,293
)
Total consumer LHFI
$
289,413
$
367,458
$
256,125
$
794,774
$
444,975
$
436,648
$
541,771
$
3,131,164
Total consumer LHFI
gross charge-offs
$
(
3,393
)
$
(
419
)
$
(
842
)
$
(
1,095
)
$
(
123
)
$
(
75
)
$
(
2,529
)
$
(
8,476
)
Total LHFI
$
2,418,938
$
1,969,588
$
1,954,629
$
2,830,988
$
1,213,900
$
1,590,507
$
1,569,606
$
13,548,156
Total current period
gross charge-offs
$
(
3,393
)
$
(
983
)
$
(
1,655
)
$
(
5,068
)
$
(
337
)
$
(
2,556
)
$
(
2,864
)
$
(
16,856
)
24
Term Loans by Origination Year
2024
2023
2022
2021
2020
Prior
Revolving Loans
Total
As of December 31, 2024
Commercial LHFI
Loans secured by real estate:
Construction, land
development and other
land:
Pass - RR 1 through RR 6
$
324,775
$
83,503
$
33,580
$
23,124
$
8,145
$
1,587
$
42,469
$
517,183
Special Mention - RR 7
2,165
—
—
—
—
—
2,002
4,167
Substandard - RR 8
17
62
226
983
—
—
176
1,464
Doubtful - RR 9
—
—
—
—
—
—
—
—
Total
326,957
83,565
33,806
24,107
8,145
1,587
44,647
522,814
Current period gross
charge-offs
—
—
—
—
—
(
24
)
—
(
24
)
Other secured by 1-4 family
residential properties:
Pass - RR 1 through RR 6
$
31,013
$
24,339
$
22,693
$
24,090
$
11,635
$
2,106
$
7,742
$
123,618
Special Mention - RR 7
27
—
—
32
—
—
—
59
Substandard - RR 8
125
375
555
328
—
191
27
1,601
Doubtful - RR 9
—
—
—
—
—
—
—
—
Total
31,165
24,714
23,248
24,450
11,635
2,297
7,769
125,278
Current period gross
charge-offs
—
—
—
—
—
(
16
)
—
(
16
)
Secured by nonfarm,
nonresidential properties:
Pass - RR 1 through RR 6
$
542,747
$
441,159
$
880,511
$
429,929
$
464,504
$
392,802
$
127,812
$
3,279,464
Special Mention - RR 7
16,266
—
52,093
—
17,978
3,335
—
89,672
Substandard - RR 8
10,007
7,321
41,686
37,915
25,601
41,598
—
164,128
Doubtful - RR 9
11
—
—
—
—
7
—
18
Total
569,031
448,480
974,290
467,844
508,083
437,742
127,812
3,533,282
Current period gross
charge-offs
—
—
—
(
2,529
)
—
(
16
)
—
(
2,545
)
Other real estate secured:
Pass - RR 1 through RR 6
$
152,314
$
157,827
$
726,814
$
233,861
$
137,786
$
43,478
$
7,434
$
1,459,514
Special Mention - RR 7
—
7,450
15,481
41,019
—
—
263
64,213
Substandard - RR 8
14,610
—
26,685
42,636
252
25,419
244
109,846
Doubtful - RR 9
—
—
—
—
—
—
—
—
Total
166,924
165,277
768,980
317,516
138,038
68,897
7,941
1,633,573
Current period gross
charge-offs
—
—
(
89
)
—
—
—
—
(
89
)
25
Term Loans by Origination Year
2024
2023
2022
2021
2020
Prior
Revolving Loans
Total
As of December 31, 2024
Commercial LHFI
Other loans secured by real
estate:
Other construction
Pass - RR 1 through RR 6
$
115,221
$
410,064
$
201,526
$
20,647
$
—
$
—
$
18,400
$
765,858
Special Mention - RR 7
—
2,250
24,557
—
—
—
—
26,807
Substandard - RR 8
—
—
17,820
—
19,419
—
—
37,239
Doubtful - RR 9
—
—
—
—
—
—
—
—
Total
115,221
412,314
243,903
20,647
19,419
—
18,400
829,904
Current period gross
charge-offs
—
(
14
)
(
2,493
)
—
—
—
—
(
2,507
)
Commercial and industrial
loans:
Pass - RR 1 through RR 6
$
505,557
$
365,724
$
231,875
$
98,318
$
45,551
$
27,456
$
462,740
$
1,737,221
Special Mention - RR 7
—
564
14,066
15
—
—
13,836
28,481
Substandard - RR 8
7,204
1,113
39,698
5,091
891
12,905
7,598
74,500
Doubtful - RR 9
227
—
35
145
1
2
110
520
Total
512,988
367,401
285,674
103,569
46,443
40,363
484,284
1,840,722
Current period gross
charge-offs
(
341
)
(
1,211
)
(
640
)
(
3,251
)
(
158
)
(
3,132
)
(
315
)
(
9,048
)
State and other political
subdivision loans:
Pass - RR 1 through RR 6
$
156,130
$
82,532
$
212,528
$
135,251
$
78,543
$
302,709
$
2,143
$
969,836
Special Mention - RR 7
—
—
—
—
—
—
—
—
Substandard - RR 8
—
—
—
—
—
—
—
—
Doubtful - RR 9
—
—
—
—
—
—
—
—
Total
156,130
82,532
212,528
135,251
78,543
302,709
2,143
969,836
Current period gross
charge-offs
—
—
—
—
—
—
—
—
Other commercial loans and
leases:
Pass - RR 1 through RR 6
$
157,619
$
148,099
$
7,371
$
9,800
$
15,606
$
45,227
$
203,345
$
587,067
Special Mention - RR 7
—
—
116
48
—
—
—
164
Substandard - RR 8
55
682
116
12
—
—
901
1,766
Doubtful - RR 9
9
—
6
—
—
—
—
15
Total
157,683
148,781
7,609
9,860
15,606
45,227
204,246
589,012
Current period gross
charge-offs
(
25
)
—
(
38
)
—
—
(
32
)
—
(
95
)
Total commercial
LHFI
$
2,036,099
$
1,733,064
$
2,550,038
$
1,103,244
$
825,912
$
898,822
$
897,242
$
10,044,421
Total commercial LHFI
gross charge-offs
$
(
366
)
$
(
1,225
)
$
(
3,260
)
$
(
5,780
)
$
(
158
)
$
(
3,220
)
$
(
315
)
$
(
14,324
)
26
Term Loans by Origination Year
2024
2023
2022
2021
2020
Prior
Revolving Loans
Total
As of December 31, 2024
Consumer LHFI
Loans secured by real estate:
Construction, land
development and other
land:
Current
$
31,478
$
22,752
$
4,302
$
2,762
$
930
$
1,804
$
—
$
64,028
Past due 30-89 days
—
47
11
—
—
106
—
164
Past due 90 days or more
91
—
—
68
—
—
—
159
Nonaccrual
—
31
21
4
—
23
—
79
Total
31,569
22,830
4,334
2,834
930
1,933
—
64,430
Current period gross
charge-offs
—
—
—
—
—
(
8
)
—
(
8
)
Other secured by 1-4 family
residential properties:
Current
$
24,756
$
17,202
$
6,733
$
5,260
$
3,651
$
9,563
$
445,598
$
512,763
Past due 30-89 days
569
38
67
66
3
579
4,524
5,846
Past due 90 days or more
21
—
8
—
—
17
219
265
Nonaccrual
71
5
69
44
103
593
5,513
6,398
Total
25,417
17,245
6,877
5,370
3,757
10,752
455,854
525,272
Current period gross
charge-offs
(
29
)
(
87
)
(
233
)
(
40
)
(
31
)
(
76
)
—
(
496
)
Other real estate secured:
Current
$
161
$
—
$
—
$
—
$
68
$
28
$
—
$
257
Past due 30-89 days
—
—
—
—
—
—
—
—
Past due 90 days or more
—
—
—
—
—
—
—
—
Nonaccrual
—
—
—
—
—
—
—
—
Total
161
—
—
—
68
28
—
257
Current period gross
charge-offs
—
—
—
—
—
—
—
—
Other loans secured by real
estate:
Secured by 1-4 family
residential properties
Current
$
274,500
$
224,266
$
808,527
$
459,191
$
161,856
$
314,906
$
—
$
2,243,246
Past due 30-89 days
169
4,405
9,883
4,082
814
1,558
—
20,911
Past due 90 days or more
4
1,263
1,098
461
170
257
—
3,253
Nonaccrual
568
3,744
17,306
5,009
1,394
3,562
—
31,583
Total
275,241
233,678
836,814
468,743
164,234
320,283
—
2,298,993
Current period gross
charge-offs
—
(
228
)
(
9,910
)
(
143
)
(
6
)
(
17
)
—
(
10,304
)
Consumer loans:
Current
$
55,908
$
22,226
$
12,922
$
4,654
$
1,188
$
105
$
56,423
$
153,426
Past due 30-89 days
844
396
323
4
—
13
913
2,493
Past due 90 days or more
38
67
17
4
—
—
288
414
Nonaccrual
25
49
63
61
19
—
19
236
Total
56,815
22,738
13,325
4,723
1,207
118
57,643
156,569
Current period gross
charge-offs
(
5,929
)
(
785
)
(
470
)
(
131
)
(
100
)
(
337
)
(
2,065
)
(
9,817
)
Total consumer LHFI
$
389,203
$
296,491
$
861,350
$
481,670
$
170,196
$
333,114
$
513,497
$
3,045,521
Total consumer LHFI
gross charge-offs
$
(
5,958
)
$
(
1,100
)
$
(
10,613
)
$
(
314
)
$
(
137
)
$
(
438
)
$
(
2,065
)
$
(
20,625
)
Total LHFI
$
2,425,302
$
2,029,555
$
3,411,388
$
1,584,914
$
996,108
$
1,231,936
$
1,410,739
$
13,089,942
Total current period
gross charge-offs
$
(
6,324
)
$
(
2,325
)
$
(
13,873
)
$
(
6,094
)
$
(
295
)
$
(
3,658
)
$
(
2,380
)
$
(
34,949
)
27
Past Due LHFS
LHFS past due
90 days
or more totaled $
77.9
million and $
71.3
million at
September 30, 2025 and December 31, 2024
, respectively. LHFS past due 90 days or more are serviced loans eligible for repurchase, which are fully guaranteed by the Government National Mortgage Association (GNMA). GNMA optional repurchase programs allow financial institutions to buy back individual delinquent mortgage loans that meet certain criteria from the securitized loan pool for which the institution provides servicing. At the servicer’s option and without GNMA’s prior authorization, the servicer may repurchase such a delinquent loan for an amount equal to
100
% of the remaining principal balance of the loan. This buy-back option is considered a conditional option until the delinquency criteria are met, at which time the option becomes unconditional. When Trustmark is deemed to have regained effective control over these loans under the unconditional buy-back option, the loans can no longer be reported as sold and must be brought back onto the balance sheet as loans held for sale, regardless of whether Trustmark intends to exercise the buy-back option. These loans are reported as held for sale with the offsetting liability being reported as short-term borrowings.
Trustmark did not exercise its buy-back option on any delinquent loans serviced for GNMA during the first nine months of 2025 or 2024.
ACL on LHFI
Trustmark’s ACL methodology for LHFI is based upon guidance within the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 326-20, “Financial Instruments-Credit Losses-Measured at Amortized Cost,” as well as applicable regulatory guidance. The ACL is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Credit quality within the LHFI portfolio is continuously monitored by Management and is reflected within the ACL for LHFI. The ACL is an estimate of expected losses inherent within Trustmark’s existing LHFI portfolio. The ACL for LHFI is adjusted through the PCL, LHFI and reduced by the charge off of loan amounts, net of recoveries.
The methodology for estimating the amount of expected credit losses reported in the ACL has two basic components: a collective, or pooled, component for estimated expected credit losses for pools of loans that share similar risk characteristics, and an asset-specific component involving individual loans that do not share risk characteristics with other loans and the measurement of expected credit losses for such individual loans. In estimating the ACL for the collective component, loans are segregated into loan pools based on loan product types and similar risk characteristics.
The loans secured by real estate and other loans secured by real estate portfolio segments include loans for both commercial and residential properties. The underwriting process for these loans includes analysis of the financial position and strength of both the borrower and guarantor, experience with similar projects in the past, market demand and prospects for successful completion of the proposed project within the established budget and schedule, values of underlying collateral, availability of permanent financing, maximum loan-to-value ratios, minimum equity requirements, acceptable amortization periods and minimum debt service coverage requirements, based on property type. The borrower’s financial strength and capacity to repay their obligations remain the primary focus of underwriting. Financial strength is evaluated based upon analytical tools that consider historical and projected cash flows and performance in addition to analysis of the proposed project for income-producing properties. Additional support offered by guarantors is also considered. Ultimate repayment of these loans is sensitive to interest rate changes, general economic conditions, liquidity and availability of long-term financing.
The commercial and industrial loans portfolio segment includes loans made to many types of businesses for various purposes, such as short-term working capital loans that are usually secured by accounts receivable and inventory and term financing for equipment and fixed asset purchases that are secured by those assets. Trustmark’s credit underwriting process for commercial and industrial loans includes analysis of historical and projected cash flows and performance, evaluation of financial strength of both borrowers and guarantors as reflected in current and detailed financial information and evaluation of underlying collateral to support the credit.
The consumer loans portfolio segment is comprised of loans that are centrally underwritten based on the borrower's credit bureau score as well as an evaluation of the borrower’s repayment capacity, credit, and collateral. Property appraisals are obtained to assist in evaluating collateral. Loan-to-value and debt-to-income ratios, loan amount, and lien position are also considered in assessing whether to originate a loan. These borrowers are particularly susceptible to downturns in economic trends such as conditions that negatively affect housing prices and demand and levels of unemployment.
The state and other political subdivision loans and the other commercial loans and leases portfolio segments primarily consist of loans to non-depository financial institutions, such as mortgage companies, finance companies and other financial intermediaries, loans to state and political subdivisions, and loans to non-profit and charitable organizations. These loans are underwritten based on the specific nature or purpose of the loan and underlying collateral with special consideration given to the specific source of repayment for the loan. The lease segment primarily consists of commercial equipment finance leases. Trustmark’s credit underwriting process for equipment
28
finance leases includes analysis of historical and projected cash flows and performance, evaluation of financial strength of both borrowers and guarantors as reflected in current and detailed financial information and evaluation of underlying collateral to support the credit.
During the first quarter of 2025, as part of Trustmark's ongoing model monitoring procedures, the annual loss driver analysis was performed. The analysis resulted in changes in the loss drivers for four discounted cash-flow models. These changes were a result of incorporating data through 2024 which led to more intuitive loss drivers. All models were validated by a third party before implementation.
During the first quarter of 2024, as part of Trustmark's ongoing model monitoring procedures, the annual loss driver analysis was performed. The analysis resulted in changes in the loss drivers for all discounted cash-flow models along with changes in the loss drivers for the equipment and finance loans and leases model. These changes were a result of updating Trustmark's peer group and incorporating data through 2022 which led to more intuitive loss drivers. All models were validated by a third party before implementation.
29
The following table provides a description of each of Trustmark’s portfolio segments, loan classes, loan pools and the ACL methodology and loss drivers at
September 30, 2025 and December 31, 2024:
Portfolio Segment
Loan Class
Loan Pool
Methodology
Loss Drivers
Loans secured by real estate
Construction, land
development and other land
1-4 family residential
construction
DCF
BBB 7-10 US CBI
(1)
, National Unemployment
Lots and development
DCF
National HPI, National Unemployment
Unimproved land
DCF
National HPI, National Unemployment
All other consumer
DCF
National HPI, National Unemployment
Other secured by 1-4
family residential properties
Consumer 1-4 family - 1st liens
DCF
National HPI, Southern Unemployment
(2)
All other consumer
DCF
National HPI, National Unemployment
Nonresidential owner-occupied
DCF
Southern Unemployment, National CRE Price Index
Secured by nonfarm,
nonresidential properties
Nonowner-occupied -
hotel/motel
DCF
National CRE Price Index, Southern Unemployment
Nonowner-occupied - office
DCF
National CRE Price Index, Southern Unemployment
Nonowner-occupied- Retail
DCF
National CRE Price Index, Southern Unemployment
Nonowner-occupied - senior
living/nursing homes
DCF
National CRE Price Index, Southern Unemployment
Nonowner-occupied -
all other
DCF
National CRE Price Index, Southern Unemployment
Nonresidential owner-occupied
DCF
Southern Unemployment, National CRE Price Index
Other real estate secured
Nonresidential nonowner
-occupied - apartments
DCF
National CRE Price Index, Southern Unemployment
Nonresidential owner-occupied
DCF
Southern Unemployment, National CRE Price Index
Nonowner-occupied -
all other
DCF
National CRE Price Index, Southern Unemployment
Other loans secured by
real estate
Other construction
Other construction
DCF
National CRE Price Index, National Unemployment, BBB 7-10 US CBI
Secured by 1-4 family
residential properties
Trustmark mortgage
WARM
Southern Unemployment
Commercial and
industrial loans
Commercial and
industrial loans
Commercial and industrial -
non-working capital
DCF
Trustmark historical data
Commercial and industrial -
working capital
DCF
Trustmark historical data
Equipment finance loans
WARM
Southern Unemployment, National GDP
Credit cards
WARM
Trustmark call report data
Consumer loans
Consumer loans
Credit cards
WARM
Trustmark call report data
Overdrafts
Loss Rate
Trustmark historical data
All other consumer
DCF
National HPI, National Unemployment
State and other political
subdivision loans
State and other political
subdivision loans
Obligations of state and
political subdivisions
DCF
Moody's Bond Default Study
Other commercial loans and leases
Other commercial loans and leases
Other loans
DCF
BBB 7-10 US CBI, Southern Unemployment
Commercial and industrial -
non-working capital
DCF
Trustmark historical data
Commercial and industrial -
working capital
DCF
Trustmark historical data
Equipment finance leases
WARM
Southern Unemployment, National GDP
(1)
Loss driver was National HPI at December 31, 2024
.
(2)
Loss driver was National Unemployement at December 31, 2024.
In general, Trustmark utilizes a DCF method to estimate the quantitative portion of the ACL for loan pools. The DCF model consists of two key components, a loss driver analysis (LDA) and a cash flow analysis. For loan pools utilizing the DCF methodology, multiple assumptions are in place, depending on the loan pool. A reasonable and supportable forecast is utilized for each loan pool by developing
30
a LDA for each loan class. The LDA uses charge off data from Federal Financial Institutions Examination Council (FFIEC) reports to construct a periodic default rate (PDR). The PDR is decomposed into a PD. Regressions are run using the data for various macroeconomic variables in order to determine which ones correlate to Trustmark’s losses. These variables are then incorporated into the application to calculate a quarterly PD using a third-party baseline forecast. In addition to the PD, a LGD is derived using a method referred to as Frye-Jacobs. The Frye-Jacobs method is a mathematical formula that traces the relationship between LGD and PD over time and projects the LGD based on the levels of PD forecasts. This model approach is applicable to all pools within the construction, land development and other land, other secured by 1-4 family residential properties, secured by nonfarm, nonresidential properties and other real estate secured loan classes as well as consumer loans and other commercial loans.
An alternative LDA is utilized to support the PD and LGD assumptions necessary to apply a DCF methodology to the other construction pool. Fundamentally, this approach utilizes publicly reported default balances and leverages a generalized linear model (GLM) framework to estimate PD. Taken together, these differences allow for results to be scaled to be specific and directly applicable to the other construction segment. LGD is assumed to be a through-the-cycle constant based on the actual performance of Trustmark’s other construction segment. These assumptions are then input into the DCF model and used in conjunction with prepayment data to calculate the cash flows at the individual loan level. Management believes this methodology is commensurate with the level of risk in the pool.
For the commercial and industrial loans related pools, Trustmark uses its own PD and LGD data, instead of the macroeconomic variables and the Frye-Jacobs method described above, to calculate the PD and LGD as there were no defensible macroeconomic variables that correlated to Trustmark’s losses. Trustmark utilizes a third-party Bond Default Study to derive the PD and LGD for the obligations of state and political subdivisions pool. Due to the lack of losses within this pool, no defensible macroeconomic factors were identified to correlate.
The PD and LGD measures are used in conjunction with prepayment data as inputs into the DCF model to calculate the cash flows at the individual loan level. Contractual cash flows based on loan terms are adjusted for PD, LGD and prepayments to derive loss cash flows. These loss cash flows are discounted by the loan’s coupon rate to arrive at the discounted cash flow based quantitative loss. The prepayment studies are updated quarterly by a third-party for each applicable pool.
An alternate method of estimating the ACL is used for certain loan pools due to specific characteristics of these loans. For the non-DCF pools, specifically, those using the weighted average remaining maturity (WARM) method, the remaining life is incorporated into the ACL quantitative calculation.
During the second quarter of 2024, Trustmark executed a sale on a portfolio of 1-4 family mortgage loans that were at least three payments delinquent and/or nonaccrual at the time of selection. As a result of this sale, a credit mark was established for a sub-pool of the loans in the sale. Due to the lack of historical experience and the use of industry data for this sub-pool, management elected to use the credit mark for reserving purposes on a go forward basis for this sub-pool that meets the same credit criteria of being three payments delinquent and/or nonaccrual. All loans of the sub-pool that meet the above credit criteria will be removed from the 1-4 family residential properties pool and placed into a separate pool with the credit mark reserve applied to the total balance.
Trustmark determined that reasonable and supportable forecasts could be made for a twelve-month period for all of its loan pools. To the extent the lives of the loans in the LHFI portfolio extend beyond this forecast period, Trustmark uses a reversion period of four quarters and reverts to the historical mean on a straight-line basis over the remaining life of the loans. The econometric models currently in production reflect segment or pool level sensitivities of PD to changes in macroeconomic variables. By measuring the relationship between defaults and changes in the economy, the quantitative reserve incorporates reasonable and supportable forecasts of future conditions that will affect the value of Trustmark’s assets, as required by FASB ASC Topic 326. Under stable forecasts, these linear regressions will reasonably predict a pool’s PD. However, upon the occurrence of events that generate significant economic instability (such as the COVID-19 pandemic), the macroeconomic variables used for reasonable and supportable forecasting can change rapidly. At the macroeconomic levels experienced during the COVID-19 pandemic, it was not clear that the models in production at that time would produce reasonably representative results since the models at that time were originally estimated using data beginning in 2004 through 2019. During this period, a traditional, albeit severe, economic recession occurred. Thus, econometric models are sensitive to similar future levels of PD.
In order to prevent the econometric models from extrapolating beyond reasonable boundaries of their input variables, Trustmark chose to establish an upper and lower limit process when applying the periodic forecasts. In this way, Management will not rely upon unobserved and untested relationships in the setting of the quantitative reserve. This approach applies to all input variables, including: Southern Unemployment, National Unemployment, National Gross Domestic Product (GDP), National Home Price Index (HPI), National Commercial Real Estate (CRE) Price Index and the BBB 7-10 Year US Corporate Bond Index (CBI). The upper and lower limits are based on the distribution of the macroeconomic variable by selecting extreme percentiles at the upper and lower limits of the distribution, the 1
st
and 99
th
percentiles, respectively. These upper and lower limits are then used to calculate the PD for the forecast time period in which the forecasted values are outside of the upper and lower limit range. Additionally, when periods have a PD or
31
LGD at or near zero as a result of the improving macroeconomic forecasts, Management implemented PD and LGD floors to account for the risk associated with each portfolio. The PD and LGD floors are based on Trustmark’s historical loss experience and applied at a portfolio level.
Qualitative factors used in the ACL methodology include the following:
•
Lending policies and procedures
•
Economic conditions and concentrations of credit
•
Nature and volume of the portfolio
•
Performance trends
•
External factors
While all these factors are incorporated into the overall methodology, only three are currently considered active at September 30, 2025: (i) economic conditions and concentrations of credit, (ii) nature and volume of the portfolio, and (iii) performance trends.
Two of Trustmark’s largest loan classes are the loans secured by nonfarm, nonresidential properties and the loans secured by other real estate. Trustmark elected to create a qualitative factor specifically for these loan classes which addresses changes in the economic conditions of metropolitan areas and applies additional pool level reserves. This qualitative factor is based on third-party market data and forecast trends and is updated quarterly as information is available, by market and by loan pool.
Trustmark's current quantitative methodologies do not completely incorporate changes in credit quality. As a result, Trustmark utilizes the performance trends qualitative factor. This factor is based on migration analyses, that allocates additional ACL to non-pass/delinquent loans within each pool. In this way, Management believes the ACL will directly reflect changes in risk, based on the performance of the loans within a pool, whether declining or improving.
The performance trends qualitative factor is estimated by properly segmenting loan pools into risk levels by risk rating for commercial credits and delinquency status for consumer credits. A migration analysis is then performed quarterly using a third-party software and the results for each risk level are compiled to calculate the historical PD average for each loan portfolio based on risk levels. This average historical PD rate is updated annually. For the mortgage portfolio, Trustmark uses an internal report to incorporate a roll rate method for the calculation of the PD rate. In addition to the PD rate for each portfolio, Management incorporates the quantitative rate and the k value derived from the Frye-Jacobs method to calculate a loss estimate that includes both PD and LGD. The quantitative rate is used to eliminate any additional reserve that the quantitative reserve already includes. Finally, the loss estimate rate is then applied to the total balances for each risk level for each portfolio to calculate a qualitative reserve.
Management elected to activate the nature and volume of the portfolio qualitative factor for a sub-pool of the secured by 1-4 family residential properties due to its significant size as well as the underlying nature being different. The nature and volume of the portfolio qualitative factor utilizes a WARM methodology that uses industry data for the assumptions to support the qualitative adjustment. The industry data is used to compile a PD based on credit score ranges along with using the industry data to compile an LGD. The sub-pool of credits is then aggregated into the appropriate credit score bands in which a weighted average loss rate is calculated based on the PD and LGD for each credit score range. This weighted average loss rate is then applied to the expected balance for the sub-segment of credits. This total is then used as the qualitative reserve adjustment. During the first quarter of 2025, Management elected to utilize Trustmark’s historical data to develop a PD based on the credit score ranges initially established. Additionally, Management elected to use the same LGD value from the mortgage sale that occurred in the second quarter of 2024 along with the same weighted average life assumption utilized to determine the credit mark on this portfolio.
The external factors qualitative factor is Management’s best judgment on the loan or pool level impact of all factors that affect the portfolio that are not accounted for using any other part of the ACL methodology (
e.g.
, natural disasters, changes in legislation, impacts due to technology and pandemics). During the third quarter of 2024, Trustmark activated the External Factor – Credit Quality Review qualitative factor. This qualitative factor ensures reserve adequacy for collectively evaluated commercial loans that may not have been identified and downgraded timely for various reasons. This qualitative factor population is all commercial loans risk rated 1-5. These loans are then applied to the historical average of the Watch/Special Mention rated percentage. Then the balance of these loans are applied additional reserves based on the same reserve rates utilized in the performance trends qualitative factor for Watch/Special Mention rated loans. Then the Watch/Special Mention population is applied the historical Substandard rated percentage and then subsequently applied the Substandard reserve rate utilized in the performance trends qualitative factor as well. The historical Watch/Special Mention and Substandard rated percentage averages captures the weighted average life of the commercial loan portfolio. Thus, Trustmark will allocate additional reserves to capture the proportion of potential Watch/Special Mention and Substandard rated credits that may not have been categorized as such at any given point in time through the life of the commercial loan portfolio.
32
During the third quarter of 2025, Management determined that the risk related to delayed identification and downgrading of commercial loans had sufficiently diminished and, as a result, resolved the External Factor – Credit Quality Review qualitative factor and released the associated reserves.
The following tables disaggregate the ACL and the amortized cost basis of the loans by the measurement methodology used at
September 30, 2025 and December 31, 2024 ($ in thousands):
September 30, 2025
ACL
LHFI
Individually Evaluated for Credit Loss
Collectively Evaluated for Credit Loss
Total
Individually Evaluated for Credit Loss
Collectively Evaluated for Credit Loss
Total
Loans secured by real estate:
Construction, land development and
other land
$
—
$
7,127
$
7,127
$
160
563,341
$
563,501
Other secured by 1-4 family residential
properties
—
13,143
13,143
461
696,716
697,177
Secured by nonfarm, nonresidential
properties
206
33,932
34,138
1,489
3,298,330
3,299,819
Other real estate secured
—
23,909
23,909
15,234
2,040,478
2,055,712
Other loans secured by real estate:
Other construction
—
4,981
4,981
—
678,326
678,326
Secured by 1-4 family residential
properties
—
42,298
42,298
1,419
2,356,273
2,357,692
Commercial and industrial loans
8,414
16,685
25,099
14,337
1,889,269
1,903,606
Consumer loans
114
5,214
5,328
114
158,348
158,462
State and other political subdivision loans
—
859
859
—
1,028,396
1,028,396
Other commercial loans and leases
764
7,596
8,360
764
804,701
805,465
Total
$
9,498
$
155,744
$
165,242
$
33,978
$
13,514,178
$
13,548,156
December 31, 2024
ACL
LHFI
Individually Evaluated for Credit Loss
Collectively Evaluated for Credit Loss
Total
Individually Evaluated for Credit Loss
Collectively Evaluated for Credit Loss
Total
Loans secured by real estate:
Construction, land development and
other land
$
—
$
6,452
$
6,452
$
—
$
587,244
$
587,244
Other secured by 1-4 family residential
properties
—
11,347
11,347
521
650,029
650,550
Secured by nonfarm, nonresidential
properties
2,251
35,645
37,896
9,783
3,523,499
3,533,282
Other real estate secured
—
19,491
19,491
1,904
1,631,926
1,633,830
Other loans secured by real estate:
Other construction
—
13,297
13,297
—
829,904
829,904
Secured by 1-4 family residential
properties
—
32,129
32,129
1,533
2,297,460
2,298,993
Commercial and industrial loans
10,518
16,502
27,020
22,503
1,818,219
1,840,722
Consumer loans
—
5,141
5,141
—
156,569
156,569
State and other political subdivision loans
—
1,250
1,250
—
969,836
969,836
Other commercial loans and leases
892
5,355
6,247
896
588,116
589,012
Total
$
13,661
$
146,609
$
160,270
$
37,140
$
13,052,802
$
13,089,942
33
Changes in the ACL, LHFI were as follows for the periods presented ($ in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Balance at beginning of period
$
168,237
$
154,685
$
160,270
$
139,367
Loans charged-off, sale of 1-4 family mortgage loans
—
—
—
(
8,633
)
Loans charged-off
(
6,775
)
(
7,142
)
(
16,856
)
(
18,586
)
Recoveries
2,390
2,463
6,967
6,821
Net (charge-offs) recoveries
(
4,385
)
(
4,679
)
(
9,889
)
(
20,398
)
PCL, LHFI
1,390
7,923
14,861
30,327
PCL, LHFI sale of 1-4 family mortgage loans
—
—
—
8,633
Balance at end of period
$
165,242
$
157,929
$
165,242
$
157,929
The following tables detail changes in the ACL, LHFI by loan class for the periods presented ($ in thousands):
Three Months Ended September 30, 2025
Balance at Beginning of Period
Charge-offs
Recoveries
PCL
Balance at
End of
Period
Loans secured by real estate:
Construction, land development and other land
$
7,349
$
—
$
9
$
(
231
)
$
7,127
Other secured by 1-4 family residential properties
12,665
(
371
)
37
812
13,143
Secured by nonfarm, nonresidential properties
35,017
(
21
)
124
(
982
)
34,138
Other real estate secured
23,505
—
1
403
23,909
Other loans secured by real estate:
Other construction
8,142
—
2
(
3,163
)
4,981
Secured by 1-4 family residential properties
38,985
(
577
)
29
3,861
42,298
Commercial and industrial loans
28,465
(
3,819
)
746
(
293
)
25,099
Consumer loans
5,111
(
1,968
)
1,436
749
5,328
State and other political subdivision loans
1,547
—
—
(
688
)
859
Other commercial loans and leases
7,451
(
19
)
6
922
8,360
Total
$
168,237
$
(
6,775
)
$
2,390
$
1,390
$
165,242
The PCL, LHFI for the three months ended September 30, 2025 was primarily due to loan growth and changes in the macroeconomic forecast.
The negative PCL, LHFI for the other construction, secured by nonfarm, nonresidential properties and state and other political subdivisions portfolios for the three months ended September 30, 2025 was primarily due to positive credit migration and the release in reserves associated with the resolution of the External Factor - Credit Quality Review qualitative factor.
Three Months Ended September 30, 2024
Balance at Beginning of Period
Charge-offs
Recoveries
PCL
Balance at
End of
Period
Loans secured by real estate:
Construction, land development and other land
$
5,101
$
(
8
)
$
614
$
414
$
6,121
Other secured by 1-4 family residential properties
10,373
(
201
)
55
502
10,729
Secured by nonfarm, nonresidential properties
41,136
—
20
(
4,869
)
36,287
Other real estate secured
12,037
—
—
1,034
13,071
Other loans secured by real estate:
Other construction
13,897
—
69
(
125
)
13,841
Secured by 1-4 family residential properties
30,647
(
632
)
16
1,711
31,742
Commercial and industrial loans
28,735
(
3,611
)
193
7,228
32,545
Consumer loans
5,645
(
2,690
)
1,496
1,248
5,699
State and other political subdivision loans
625
—
—
541
1,166
Other commercial loans and leases
6,489
—
—
239
6,728
Total
$
154,685
$
(
7,142
)
$
2,463
$
7,923
$
157,929
34
The PCL, LHFI for the commercial and industrial portfolio for the three months ended September 30, 2024 was primarily due to specific reserves on individually analyzed credits. The PCL, LHFI for all other portfolios for the three months ended September 30, 2024 was primarily due to net changes in the qualitative factors.
The negative PCL, LHFI for the secured by nonfarm, nonresidential properties portfolio for the three months ended September 30, 2024 was primarily due to changes in the macroeconomic forecast.
Nine Months Ended September 30, 2025
Balance at Beginning of Period
Charge-offs
Recoveries
PCL
Balance at
End of
Period
Loans secured by real estate:
Construction, land development and other land
$
6,452
$
—
$
205
$
470
$
7,127
Other secured by 1-4 family residential properties
11,347
(
678
)
259
2,215
13,143
Secured by nonfarm, nonresidential properties
37,896
(
2,026
)
124
(
1,856
)
34,138
Other real estate secured
19,491
—
78
4,340
23,909
Other loans secured by real estate:
Other construction
13,297
—
5
(
8,321
)
4,981
Secured by 1-4 family residential properties
32,129
(
1,507
)
470
11,206
42,298
Commercial and industrial loans
27,020
(
6,249
)
1,245
3,083
25,099
Consumer loans
5,141
(
6,293
)
4,482
1,998
5,328
State and other political subdivision loans
1,250
—
—
(
391
)
859
Other commercial loans and leases
6,247
(
103
)
99
2,117
8,360
Total
$
160,270
$
(
16,856
)
$
6,967
$
14,861
$
165,242
The PCL, LHFI for the nine months ended September 30, 2025 was primarily due to loan growth, changes in the macroeconomic forecast, coupled with net adjustments to the qualitative factors due to credit migration and modeling assumption updates to utilize bank historical data.
The negative PCL, LHFI for the other construction and secured by nonfarm, nonresidential properties portfolios for the nine months ended September 30, 2025 was primarily due to segmentation migration, positive credit migration and a decline in loan balances.
Nine Months Ended September 30, 2024
Balance at Beginning of Period
Charge-offs
Recoveries
PCL
Balance at
End of
Period
Loans secured by real estate:
Construction, land development and other land
$
17,192
$
(
32
)
$
622
$
(
11,661
)
$
6,121
Other secured by 1-4 family residential properties
12,942
(
381
)
568
(
2,400
)
10,729
Secured by nonfarm, nonresidential properties
24,043
(
2,428
)
46
14,626
36,287
Other real estate secured
4,488
—
—
8,583
13,071
Other loans secured by real estate:
Other construction
5,758
(
2,494
)
341
10,236
13,841
Secured by 1-4 family residential properties
34,794
(
9,823
)
81
6,690
31,742
Commercial and industrial loans
26,638
(
4,386
)
663
9,630
32,545
Consumer loans
5,794
(
7,622
)
4,448
3,079
5,699
State and other political subdivision loans
646
—
—
520
1,166
Other commercial loans and leases
7,072
(
53
)
52
(
343
)
6,728
Total
$
139,367
$
(
27,219
)
$
6,821
$
38,960
$
157,929
The PCL, LHFI for the secured by nonfarm, nonresidential properties, other construction and other real estate secured portfolios for the nine months ended September 30, 2024 was primarily due to changes in the macroeconomic forecast associated with these specific loss driver models as a result of the loss driver update, coupled with net adjustments to the qualitative factors due to credit migration and loan growth. The PCL, LHFI for the secured by 1-4 family residential properties portfolio for the nine months ended September 30, 2024 was primarily due to adjustments to the Nature and Volume of Portfolio qualitative factor, coupled with implementing the credit mark reserve as a result of the mortgage loan sale. The PCL, LHFI for the commercial and industrial portfolio for the nine months ended September 30, 2024 was primarily due to net adjustments to the qualitative factors due to credit migration coupled with an increase in specific reserves for individually analyzed credits.
35
The negative PCL, LHFI for the construction, land development and other land, other secured by 1-4 family residential properties, and other commercial loans and leases portfolios for the nine months ended September 30, 2024 was primarily due to changes in the macroeconomic forecast associated with these specific loss driver models as a result of the loss driver update for these loan portfolios
Note 5 – Mortgage Banking
MSR
The activity in the MSR is detailed in the table below for the periods presented ($ in thousands):
Nine Months Ended September 30,
2025
2024
Balance at beginning of period
$
139,317
$
131,870
Origination of servicing assets
10,853
9,419
Change in fair value:
Due to market changes
(
9,395
)
(
6,909
)
Due to run-off
(
9,099
)
(
8,527
)
Balance at end of period
$
131,676
$
125,853
Trustmark determines the fair value of the MSR using a valuation model administered by a third party that calculates the present value of estimated future net servicing income. Trustmark considers the conditional prepayment rate (CPR), which is an estimated loan prepayment rate that uses historical prepayment rates for previous loans similar to the loans being evaluated, the float rate, which is the interest rate earned on escrow balances, and the discount rate as some of the primary assumptions used in determining the fair value of the MSR. An increase in either the CPR or discount rate assumption will result in a decrease in the fair value of the MSR, while a decrease in either assumption will result in an increase in the fair value of the MSR. An increase in the float rate will result in an increase in the fair value of the MSR, while a decrease in the float rate will result in a decrease in the fair value of the MSR. At September 30, 2025
, the fair value of the MSR included an assumed average prepayment speed of
9
CPR and an average discount rate of
10.66
% compared to an assumed average prepayment speed of
9
CPR and an average discount rate of
10.64
% at
September 30, 2024.
Mortgage Loans Serviced/Sold
During the first nine months of 2025 and 2024
, Trustmark sold $
858.3
million and $
843.6
million, respectively, of residential mortgage loans. Gains on these sales were recorded as noninterest income in mortgage banking, net and totaled $
15.1
million for the first
nine months of 2025
compared to $
14.8
million for the first
nine months of 2024.
The table below details the mortgage loans sold and serviced for others at
September 30, 2025 and December 31, 2024 ($ in thousands):
September 30, 2025
December 31, 2024
Federal National Mortgage Association
$
4,757,987
$
4,821,246
Government National Mortgage Association
3,838,185
3,695,419
Federal Home Loan Mortgage Corporation
289,270
213,358
Other
26,926
32,686
Total mortgage loans sold and serviced for others
$
8,912,368
$
8,762,709
Trustmark is subject to losses in its loan servicing portfolio due to loan foreclosures. Trustmark has obligations to either repurchase the outstanding principal balance of a loan or make the purchaser whole for the economic benefits of a loan if it is determined that the loan sold was in violation of representations or warranties made by Trustmark at the time of the sale, herein referred to as mortgage loan servicing putback expenses. Such representations and warranties typically include those made regarding loans that had missing or insufficient file documentation, loans that do not meet investor guidelines, loans in which the appraisal does not support the value and/or loans obtained through fraud by the borrowers or other third parties. Generally, putback requests may be made until the loan is paid in full. However, mortgage loans delivered to Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC) on or after January 1, 2013 are subject to the Representations and Warranties Framework, which provides certain instances in which FNMA and FHLMC will not exercise their remedies, including a putback request, for breaches of certain selling representations and warranties, such as payment history and quality control review.
When a putback request is received, Trustmark evaluates the request and takes appropriate actions based on the nature of the request. Trustmark is required by FNMA and FHLMC to provide a response to putback requests within
60
days of the date of receipt. The total mortgage loan servicing putback expense is included in other expense. Trustmark had
no
mortgage
loan servicing putback expense for
36
the
three and nine months ended September 30, 2025 and 2024. At both September 30, 2025 and 2024
, Trustmark had a reserve for mortgage loan servicing putback expenses of $
500
thousand.
There is inherent uncertainty in reasonably estimating the requirement for reserves against potential future mortgage loan servicing putback expenses. Future putback expenses are dependent on many subjective factors, including the review procedures of the purchasers and the potential refinance activity on loans sold with servicing released and the subsequent consequences under the representations and warranties. Trustmark believes that it has appropriately reserved for potential mortgage loan servicing putback requests.
Note 6 – Other Real Estate
At September 30, 2025, Trustmark’s geographic other real estate distribution was concentrated in its Alabama, Mississippi, Tennessee and Texas market regions. The ultimate recovery of a substantial portion of the carrying amount of other real estate is susceptible to changes in market conditions in these regions.
For the periods presented, changes and gains (losses), net on other real estate were as follows ($ in thousands):
Nine Months Ended September 30,
2025
2024
Balance at beginning of period
$
5,917
$
6,867
Additions
6,754
4,703
Disposals
(
2,563
)
(
5,609
)
(Write-downs) recoveries
(
1,783
)
(
2,041
)
Balance at end of period
$
8,325
$
3,920
Gains (losses), net on the sale of other real estate included in
other real estate expense
$
(
323
)
$
(
1,054
)
At
September 30, 2025 and December 31, 2024, other real estate by type of property consisted of the following ($ in thousands):
September 30, 2025
December 31, 2024
Construction, land development and other land properties
$
85
$
46
1-4 family residential properties
3,872
2,260
Nonfarm, nonresidential properties
2,550
3,611
Other real estate properties
1,818
—
Total other real estate
$
8,325
$
5,917
At
September 30, 2025 and December 31, 2024, other real estate by geographic location consisted of the following ($ in thousands):
September 30, 2025
December 31, 2024
Alabama
$
656
$
170
Mississippi
(1)
5,843
2,407
Tennessee
(2)
927
1,079
Texas
899
2,261
Total other real estate
$
8,325
$
5,917
(1)
Mississippi includes Central and Southern Mississippi Regions.
(2)
Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
At September 30, 2025
, the balance of other real estate included $
3.9
million of foreclosed residential real estate properties recorded as a result of obtaining physical possession of the property compared to $
2.3
million at
December 31, 2024. At September 30, 2025 and December 31, 2024, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process was
$
7.4
million
and $
7.6
million, respectively.
37
Note 7 – Leases
Lessor Arrangements
Trustmark leases certain types of machinery and equipment to its customers through sales-type and direct financing leases as part of its equipment financing portfolio. These leases generally have remaining lease terms of
one
to
nine years
, some of which include renewal options and/or options for the lessee to purchase the leased property near or at the end of the lease term. Trustmark recognized interest income from its sales-type and direct financing leases of $
5.0
million and $
12.8
million for the three and
nine months ended September 30, 2025
, respectively, compared to $
3.6
million and $
9.1
million for the three and
nine months ended September 30, 2024, respectively. Trustmark does not have any significant operating leases in which it is the lessor.
The table below summarizes the components of Trustmark's net investment in its sales-type and direct financing leases for the periods presented ($ in thousands):
September 30, 2025
December 31, 2024
Leases receivable
$
409,347
$
282,771
Unearned income
(
64,921
)
(
45,585
)
Initial direct costs
3,093
2,252
Unguaranteed lease residual
16,806
7,084
Total net investment
$
364,325
$
246,522
The table below details the minimum future lease payments for Trustmark's leases receivable at
September 30, 2025 ($ in thousands):
September 30, 2025
2025 (excluding the nine months ended September 30, 2025)
$
20,523
2026
74,607
2027
87,105
2028
76,710
2029
61,050
Thereafter
89,352
Lease receivable
$
409,347
Lessee Arrangements
For Trustmark's lessee arrangements, the leases of FBBI are included in discontinued operations and as a result, have been excluded from the amounts below.
The following table details the components of net lease cost for the periods presented ($ in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Finance leases:
Amortization of right-of-use assets
$
113
$
113
$
339
$
339
Interest on lease liabilities
32
37
100
113
Operating lease cost
1,343
1,344
4,025
3,756
Short-term lease cost
162
61
481
173
Variable lease cost
232
218
674
623
Sublease income
(
70
)
(
58
)
(
205
)
(
63
)
Net lease cost
$
1,812
$
1,715
$
5,414
$
4,941
The following table details the cash payments included in the measurement of lease liabilities during the periods presented ($ in thousands):
Nine Months Ended September 30,
2025
2024
Finance leases:
Operating cash flows included in operating activities
$
100
$
113
Financing cash flows included in payments under finance lease obligations
338
315
Operating leases:
Operating cash flows (fixed payments) included in other operating activities, net
3,967
3,535
Operating cash flows (liability reduction) included in other operating activities, net
2,925
2,515
38
The following table details balance sheet information, as well as weighted-average lease terms and discount rates, related to leases at
September 30, 2025 and December 31, 2024 ($ in thousands):
September 30, 2025
December 31, 2024
Finance lease right-of-use assets, net of accumulated depreciation
$
2,960
$
3,299
Finance lease liabilities
3,572
3,910
Operating lease right-of-use assets
33,012
34,668
Operating lease liabilities
37,100
38,698
Weighted-average lease term:
Finance leases
6.61
years
7.35
years
Operating leases
8.90
years
9.31
years
Weighted-average discount rate:
Finance leases
3.61
%
3.61
%
Operating leases
4.03
%
3.72
%
At
September 30, 2025, future minimum rental commitments under finance and operating leases were as follows ($ in thousands):
Finance Leases
Operating Leases
2025 (excluding the nine months ended September 30, 2025)
$
145
$
1,335
2026
589
5,259
2027
594
5,207
2028
599
4,966
2029
633
4,802
Thereafter
1,454
23,299
Total minimum lease payments
4,014
44,868
Less imputed interest
(
442
)
(
7,768
)
Lease liabilities
$
3,572
$
37,100
Note 8 – Deposits
At
September 30, 2025 and December 31, 2024, deposits consisted of the following ($ in thousands):
September 30, 2025
December 31, 2024
Noninterest-bearing demand
$
3,321,132
$
3,073,565
Interest-bearing demand
(1)
7,856,687
7,861,268
Savings
(1)
968,186
980,424
Time
3,484,969
3,192,918
Total
$
15,630,974
$
15,108,175
(1) During the first quarter of 2025, Trustmark ceased the daily sweep from low transaction interest-bearing demand deposits to savings deposits. The prior period has been reclassified accordingly.
Note 9 – Securities Sold Under Repurchase Agreements
Trustmark utilizes securities sold under repurchase agreements as a source of borrowing in connection with overnight repurchase agreements offered to commercial deposit customers by using its unencumbered investment securities as collateral. Trustmark accounts for its securities sold under repurchase agreements as secured borrowings in accordance with FASB ASC Subtopic 860-30, “Transfers and Servicing – Secured Borrowing and Collateral.” Securities sold under repurchase agreements are stated at the amount of cash received in connection with the transaction. Trustmark monitors collateral levels on a continual basis and may be required to provide additional collateral based on the fair value of the underlying securities. Trustmark had
no
securities sold under repurchase agreements at
September 30, 2025. The securities sold under repurchase agreements at December 31, 2024 were secured by securities with a carrying amount of
$
40.3
million. Trustmark’s repurchase agreements are transa
cted under master repurchase agreements that give Trustmark, in the event of default by the counterparty, the right of offset with the same counterparty. At December 31, 2024
,
all repurchase agreements were short-term and consisted primarily of sweep repurchase arrangements, under which excess deposits are
39
“swept”
into overnight repurchase agreements with Trustmark.
The following table presents the securities sold under repurchase agreements by collateral pledged at
December 31, 2024 ($ in thousands):
December 31, 2024
Mortgage-backed securities
Residential mortgage pass-through securities
Issued by FNMA and FHLMC
$
11,685
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC or GNMA
7,487
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC or GNMA
10,169
Total securities sold under repurchase agreements
$
29,341
Note 10 – Revenue from Contracts with Customers
Trustmark accounts for revenue from contracts with customers in accordance with FASB ASC Topic 606, “Revenue from Contracts with Customers,” which provides that revenue be recognized in a manner that depicts the transfer of goods or services to a customer in an amount that reflects the consideration Trustmark expects to be entitled to in exchange for those goods or services. Revenue from contracts with customers is recognized either over time in a manner that depicts Trustmark’s performance, or at a point in time when control of the goods or services are transferred to the customer. Trustmark’s noninterest income (loss), excluding all of mortgage banking, net and securities gains (losses), net and portions of bank card and other fees and other, net, are considered within the scope of FASB ASC Topic 606. Gains or losses on the sale of other real estate, which are included in Trustmark’s noninterest expense as other expense, are also within the scope of FASB ASC Topic 606.
Trustmark records a gain or loss from the sale of other real estate when control of the property transfers to the buyer. Trustmark records the gain or loss from the sale of other real estate in noninterest expense as other expense. Other real estate sales for the three and nine months ended September 30, 2025
resulted in net losses of $
179
thousand and $
323
thousand, respectively, compared to net losses of $
92
thousand and $
1.1
million for the three and
nine months ended September 30, 2024, respectively.
The Insurance Segment is included in discontinued operations for the nine months ended September 30, 2024. See Note 2 - Discontinued Operations for additional information about discontinued operations.
40
The following tables present noninterest income (loss) disaggregated by reportable operating segment and revenue stream for the periods presented ($ in thousands):
Three Months Ended September 30, 2025
Three Months Ended September 30, 2024
Topic 606
Not Topic
606
(1)
Total
Topic 606
Not Topic
606
(1)
Total
General Banking Segment
Service charges on deposit accounts
$
11,188
$
—
$
11,188
$
11,250
$
—
$
11,250
Bank card and other fees
7,625
635
8,260
7,661
218
7,879
Mortgage banking, net
—
8,182
8,182
—
6,119
6,119
Wealth management
185
—
185
175
—
175
Other, net
2,753
(
553
)
2,200
3,136
(
337
)
2,799
Total noninterest income (loss)
$
21,751
$
8,264
$
30,015
$
22,222
$
6,000
$
28,222
Wealth Management Segment
Service charges on deposit accounts
$
63
$
—
$
63
$
22
$
—
$
22
Bank card and other fees
58
—
58
52
—
52
Wealth management
9,613
—
9,613
9,113
—
9,113
Other, net
83
99
182
59
94
153
Total noninterest income (loss)
$
9,817
$
99
$
9,916
$
9,246
$
94
$
9,340
Consolidated
Service charges on deposit accounts
$
11,251
$
—
$
11,251
$
11,272
$
—
$
11,272
Bank card and other fees
7,683
635
8,318
7,713
218
7,931
Mortgage banking, net
—
8,182
8,182
—
6,119
6,119
Wealth management
9,798
—
9,798
9,288
—
9,288
Other, net
2,836
(
454
)
2,382
3,195
(
243
)
2,952
Total noninterest income (loss)
$
31,568
$
8,363
$
39,931
$
31,468
$
6,094
$
37,562
(1)
Noninterest income (loss) not in scope for FASB ASC Topic 606 includes customer derivatives revenue and miscellaneous credit card fee income within bank card and other fees; mortgage banking, net; amortization of tax credits, cash surrender value on various life insurance policies, earnings on Trustmark’s non-qualified deferred compensation plans, other partnership investments and rental income within other, net; and securities
gains (losses), net.
41
Nine Months Ended September 30, 2025
Nine Months Ended September 30, 2024
Topic 606
Not Topic
606
(1)
Total
Topic 606
Not Topic
606
(1)
Total
General Banking Segment
Service charges on deposit accounts
$
32,365
$
—
$
32,365
$
33,089
$
—
$
33,089
Bank card and other fees
22,973
1,628
24,601
23,281
1,176
24,457
Mortgage banking, net
—
25,555
25,555
—
19,238
19,238
Wealth management
562
—
562
538
—
538
Other, net
10,554
(
368
)
10,186
13,735
(
641
)
13,094
Securities gains (losses), net
—
—
—
—
(
182,792
)
(
182,792
)
Total noninterest income (loss)
$
66,454
$
26,815
$
93,269
$
70,643
$
(
163,019
)
$
(
92,376
)
Wealth Management Segment
Service charges on deposit accounts
$
107
$
—
$
107
$
65
$
—
$
65
Bank card and other fees
135
—
135
127
—
127
Wealth management
28,417
—
28,417
27,394
—
27,394
Other, net
189
288
477
139
282
421
Total noninterest income (loss)
$
28,848
$
288
$
29,136
$
27,725
$
282
$
28,007
Consolidated
Service charges on deposit accounts
$
32,472
$
—
$
32,472
$
33,154
$
—
$
33,154
Bank card and other fees
23,108
1,628
24,736
23,408
1,176
24,584
Mortgage banking, net
—
25,555
25,555
—
19,238
19,238
Wealth management
28,979
—
28,979
27,932
—
27,932
Other, net
10,743
(
80
)
10,663
13,874
(
359
)
13,515
Securities gains (losses), net
—
—
—
—
(
182,792
)
(
182,792
)
Total noninterest income (loss)
$
95,302
$
27,103
$
122,405
$
98,368
$
(
162,737
)
$
(
64,369
)
(1)
Noninterest income (loss) not in scope for FASB ASC Topic 606 includes customer derivatives revenue and miscellaneous credit card fee income within bank card and other fees; mortgage banking, net; amortization of tax credits, cash surrender value on various life insurance policies, earnings on Trustmark’s non-qualified deferred compensation plans, other partnership investments and rental income within other, net; and securities
gains (losses), net.
Note 11 – Defined Benefit and Other Postretirement Benefits
Qualified Pension Plan
Trustmark maintains a noncontributory tax-qualified defined benefit pension plan titled the Trustmark Corporation Pension Plan for Certain Employees of Acquired Financial Institutions (the Continuing Plan) to satisfy commitments made by Trustmark to associates covered through plans obtained in acquisitions.
The following table presents information regarding the net periodic benefit cost for the Continuing Plan for the periods presented ($ in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Service cost
$
9
$
10
$
27
$
30
Interest cost
68
62
206
185
Expected return on plan assets
(
31
)
(
24
)
(
94
)
(
72
)
Recognized net (gain) loss due to lump sum settlements
(
29
)
—
(
79
)
(
13
)
Recognized net actuarial (gain) loss
(
1
)
—
(
5
)
—
Net periodic benefit cost
$
16
$
48
$
55
$
130
For the plan year ending December 31, 2025, Trustmark’s minimum required contribution to the Continuing Plan is
$
109
thousand;
however, Management and the Board of Directors of Trustmark will monitor the Continuing Plan throughout 2025 to determine any additional funding requirements by the plan’s measurement date, which is December 31.
42
Supplemental Retirement Plans
Trustmark maintains a nonqualified supplemental retirement plan covering key executive officers and senior officers as well as directors who have elected to defer fees. The plan provides for retirement and/or death benefits based on a participant’s covered salary or deferred fees. Although plan benefits may be paid from Trustmark’s general assets, Trustmark has purchased life insurance contracts on the participants covered under the plan, which may be used to fund future benefit payments under the plan. The annual measurement date for the plan is December 31. As a result of mergers prior to 2014, Trustmark became the administrator of nonqualified supplemental retirement plans, for which the plan benefits were frozen prior to the merger date.
The following table presents information regarding the net periodic benefit cost for Trustmark’s nonqualified supplemental retirement plans for the periods presented ($ in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Service cost
$
3
$
11
$
11
$
33
Interest cost
476
457
1,446
1,393
Amortization of prior service cost
4
28
11
83
Recognized net actuarial loss
62
84
198
263
Net periodic benefit cost
$
545
$
580
$
1,666
$
1,772
Note 12 – Stock and Incentive Compensation
Trustmark has granted restricted stock units subject to the provisions of the Stock and Incentive Compensation Plan (the Stock Plan). Current outstanding and future grants of restricted stock units are subject to the provisions of the Stock Plan, which is designed to provide flexibility to Trustmark regarding its ability to motivate, attract and retain the services of key associates and directors. The Stock Plan also allows Trustmark to grant nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units and performance units to key associates and directors.
Restricted Stock Grants
Performance Units
Trustmark’s performance units vest over
three years
and are granted to Trustmark’s executive and senior management teams. Performance units granted vest based on performance goals of return on average tangible equity and total shareholder return. Performance units are valued utilizing a Monte Carlo simulation model to estimate fair value of the units at the grant date. The Monte Carlo simulation was performed by an independent valuation consultant and requires the use of subjective modeling assumptions. These units are recognized using the straight-line method over the requisite service period. These units are granted at
100
% of target, yet provide for achievement units if performance measures exceed
100
%. The restricted stock agreement for these units provides for dividend privileges, but no voting rights.
Time-Based Units
Trustmark’s time-based units granted to Trustmark’s executive and senior management teams vest over
three years
. Trustmark’s time-based units granted to members of Trustmark’s Board of Directors vest over
one year
. Time-based units are valued utilizing the fair value of Trustmark’s stock at the grant date. These units are amortized on the straight-line method over the earlier of the requisite service period or at age 65. The restricted stock agreement for these units provides for dividend privileges, but no voting rights.
43
The following tables summarize the Stock Plan activity for the period presented:
Three Months Ended September 30, 2025
Performance
Units
Time-Vested
Units
Nonvested units, beginning of period
205,227
366,566
Granted
—
—
Released from restriction
—
(
6,992
)
Forfeited
—
(
1,337
)
Nonvested units, end of period
205,227
358,237
Nine Months Ended September 30, 2025
Performance
Units
Time-Vested
Units
Nonvested units, beginning of period
208,045
372,276
Granted
63,392
126,224
Adjustment for performance factor
47,415
—
Released from restriction
(
105,951
)
(
123,655
)
Forfeited
(
7,674
)
(
16,608
)
Nonvested units, end of period
205,227
358,237
The following table presents information regarding compensation expense for units under the Stock Plan for the periods presented ($ in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Performance units
$
514
$
522
$
1,538
$
1,506
Time-vested units
779
808
3,413
3,440
Total compensation expense
$
1,293
$
1,330
$
4,951
$
4,946
Note 13 – Contingencies
Lending Related
Trustmark makes commitments to extend credit and issues standby and commercial letters of credit (letters of credit) in the normal course of business in order to fulfill the financing needs of its customers. The carrying amount of commitments to extend credit and letters of credit approximates the fair value of such financial instruments.
Commitments to extend credit are agreements to lend money to customers pursuant to certain specified conditions. Commitments generally have fixed expiration dates or other termination clauses. Because many of these commitments are expected to expire without being fully drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The exposure to credit loss in the event of nonperformance by the other party to the commitments to extend credit is represented by the contract amount of those instruments. Trustmark applies the same credit policies and standards as it does in the lending process when making these commitments. The collateral obtained is based upon the nature of the transaction and the assessed creditworthiness of the borrower. At September 30, 2025 and 2024
, Trustmark had unused commitments to extend credit of $
4.410
billion
and $
4.469
billion, respectively.
Letters of credit are conditional commitments issued by Trustmark to insure the performance of a customer to a third-party. A financial standby letter of credit irrevocably obligates Trustmark to pay a third-party beneficiary when a customer fails to repay an outstanding loan or debt instrument. A performance standby letter of credit irrevocably obligates Trustmark to pay a third-party beneficiary when a customer fails to perform some contractual, nonfinancial obligation. When issuing letters of credit, Trustmark uses the same policies regarding credit risk and collateral, which are followed in the lending process. At September 30, 2025 and 2024, Trustmark’s maximum exposure to credit loss in the event of nonperformance by the customer for letters of credit was
$
142.5
million and $
127.5
million, respectively. These amounts consist primarily of commitments with maturities of less than
three years
,
which have an immaterial carrying value. Trustmark holds collateral to support standby letters of credit when deemed necessary.
ACL on Off-Balance Sheet Credit Exposures
Trustmark maintains a separate ACL on off-balance sheet credit exposures, including unfunded loan commitments and letters of credit, which is included on the accompanying consolidated balance sheets as of September 30, 2025 and December 31, 2024.
44
During the first quarter of 2024, Management decided to implement a performance trends qualitative factor for unfunded commitments. The same assumptions are applied in this calculation that the funded balances utilize with the addition of using the funding rates on the unfunded commitments. The performance trends qualitative factor reserve is then added to the other calculated reserve to get a total reserve for off-balance sheet credit exposures.
During the third quarter of 2024, Management implemented the External Factor – Credit Quality Review qualitative factor for unfunded commitments. The same assumptions are applied in this calculation that the funded balances utilize with the addition of using the funding rates on the unfunded commitments. The Credit Quality Review qualitative factor reserve is then added to the other calculated reserve to get a total reserve for off-balance sheet credit exposures.
During the third quarter of 2025, Management determined that the risk related to delayed identification and downgrading of commercial loans had sufficiently diminished and, as a result, resolved the External Factor – Credit Quality Review qualitative factor and released the associated reserves.
Changes in the ACL on off-balance sheet credit exposures were as follows for the periods presented ($ in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Balance at beginning of period
$
25,891
$
30,265
$
29,392
$
34,057
PCL, off-balance sheet credit exposures
295
(
1,375
)
(
3,206
)
(
5,167
)
Balance at end of period
$
26,186
$
28,890
$
26,186
$
28,890
Adjustments to the ACL on off-balance sheet credit exposures are recorded to PCL, off-balance sheet credit exposures. The increase in the ACL on off-balance sheet credit exposures for the three months ended September 30, 2025 was primarily due to an increase in unfunded commitments and changes to the macroeconomic forecast and was partially offset by adjustments to the qualitative factors. The decrease in the ACL on off-balance sheet credit exposures for the nine months ended September 30, 2025 was primarily due to the decrease in required reserves as a result of a decrease in unfunded commitments coupled with positive credit migration.
The decrease in the ACL on off-balance sheet credit exposures for the three months ended September 30, 2024 was primarily due to the decrease in required reserves as a result of a decrease in unfunded commitments coupled with the decrease in the quantitative reserve rates due to changes in the macroeconomic factors. The decreases were partially offset by an increase in required reserves as a result of implementing the External Factor - Credit Quality Review qualitative factor. The decrease in the ACL on off-balance sheet credit exposures for the nine months ended September 30, 2024 was primarily due to the decrease in required reserves as a result of a decrease in unfunded commitments partially offset by an increase in required reserves as a result of implementing the performance trend and External Factor - Credit Quality Review qualitative factors.
No credit loss estimate is reported for off-balance sheet credit exposures that are unconditionally cancellable by Trustmark or for undrawn amounts under such arrangements that may be drawn prior to the cancellation of the arrangement.
Legal Proceedings
Trustmark and its subsidiaries are parties to lawsuits and other claims that arise in the ordinary course of business. Some of the lawsuits assert claims related to the lending, collection, servicing, investment, trust and other business activities, and some of the lawsuits allege substantial claims for damages.
In accordance with FASB ASC Subtopic 450-20, “Loss Contingencies,” Trustmark will establish an accrued liability for any litigation matter if and when such matter presents loss contingencies that are both probable and reasonably estimable. At the present time, Trustmark believes, based on its evaluation and the advice of legal counsel, that a loss in any currently pending legal proceeding is not probable and a reasonable estimate cannot be made.
45
Note 14 – Earnings Per Share (EPS)
The following table reflects weighted-average shares used to calculate basic and diluted EPS for the periods presented (in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Basic shares
60,299
61,207
60,519
61,177
Dilutive shares
241
241
229
216
Diluted shares
60,540
61,448
60,748
61,393
Weighted-average antidilutive stock awards are excluded in determining diluted EPS.
Trustmark had
no
weighted-average antidilutive stock awards for the three and nine months ended September 30, 2025 and 2024.
Note 15 – Statements of Cash Flows
The following table reflects specific transaction amounts for the periods presented ($ in thousands):
Nine Months Ended September 30,
2025
2024
Income taxes paid
$
40,639
$
19,887
Interest expense paid on deposits and borrowings
237,425
296,939
Noncash transfers from loans to other real estate
6,754
4,703
Operating right-of-use assets resulting from lease liabilities
1,623
1,831
Note 16 – Shareholders’ Equity
Regulatory Capital
Trustmark and TB are subject to minimum risk-based capital and leverage capital requirements, as described in the section captioned “Capital Adequacy” included in Part I. Item 1. – Business of Trustmark’s 2024
Annual Report, which are administered by the federal bank regulatory agencies. These capital requirements, as defined by federal regulations, involve quantitative and qualitative measures of assets, liabilities and certain off-balance sheet instruments. Trustmark’s and TB’s minimum risk-based capital requirements include a capital conservation buffer of
2.50
%. Accumulated other comprehensive income (loss), net of tax, is not included in computing regulatory capital. Trustmark elected the five-year phase-in transition period (through December 31, 2024) related to adopting FASB ASU 2016-13 for regulatory capital purposes. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements of Trustmark and TB and limit Trustmark’s and TB’s ability to pay dividends. As of
September 30, 2025, Trustmark and TB exceeded all applicable minimum capital standards. In addition, Trustmark and TB met applicable regulatory guidelines to be considered well-capitalized at September 30, 2025. To be categorized in this manner, Trustmark and TB maintained, as applicable, minimum common equity Tier 1 risk-based capital, Tier 1 risk-based capital, total risk-based capital and Tier 1 leverage ratios as set forth in the accompanying table, and were not subject to any written agreement, order or capital directive, or prompt corrective action directive issued by their primary federal regulators to meet and maintain a specific capital level for any capital measures. There are no significant conditions or events that have occurred since September 30, 2025, which Management believes have affected Trustmark’s or TB’s present classification.
46
The following table provides Trustmark’s and TB’s actual regulatory capital amounts and ratios under regulatory capital standards in effect at
September 30, 2025 and December 31, 2024 ($ in thousands):
Actual
Regulatory Capital
Minimum
To Be Well
Amount
Ratio
Requirement
Capitalized
At September 30, 2025:
Common Equity Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation
$
1,812,783
11.88
%
7.00
%
n/a
Trustmark Bank
1,888,425
12.37
%
7.00
%
6.50
%
Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation
$
1,872,783
12.27
%
8.50
%
n/a
Trustmark Bank
1,888,425
12.37
%
8.50
%
8.00
%
Total Capital (to Risk Weighted Assets)
Trustmark Corporation
$
2,187,443
14.33
%
10.50
%
n/a
Trustmark Bank
2,079,189
13.62
%
10.50
%
10.00
%
Tier 1 Leverage (to Average Assets)
Trustmark Corporation
$
1,872,783
10.26
%
4.00
%
n/a
Trustmark Bank
1,888,425
10.35
%
4.00
%
5.00
%
At December 31, 2024:
Common Equity Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation
$
1,729,672
11.54
%
7.00
%
n/a
Trustmark Bank
1,828,044
12.20
%
7.00
%
6.50
%
Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation
$
1,789,672
11.94
%
8.50
%
n/a
Trustmark Bank
1,828,044
12.20
%
8.50
%
8.00
%
Total Capital (to Risk Weighted Assets)
Trustmark Corporation
$
2,094,874
13.97
%
10.50
%
n/a
Trustmark Bank
2,009,544
13.41
%
10.50
%
10.00
%
Tier 1 Leverage (to Average Assets)
Trustmark Corporation
$
1,789,672
9.99
%
4.00
%
n/a
Trustmark Bank
1,828,044
10.21
%
4.00
%
5.00
%
Stock Repurchase Program
On December 5, 2023, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2024, under which $
50.0
million of Trustmark’s outstanding shares could be acquired through December 31, 2024. Under this authority, Trustmark repurchased
203
thousand shares of its common stock valued at $
7.5
million during the twelve months ended December 31, 2024.
On December 3, 2024, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2025, under which $
100.0
million of Trustmark’s outstanding shares may be acquired through December 31, 2025. The repurchase program, which is subject to market conditions and management discretion, will be implemented through open market repurchases or privately negotiated transactions. Under this authority, Trustmark repurchased
1.0
million shares of its common stock valued at $
37.1
million during the nine months ended September 30, 2025.
47
Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss)
The following table presents the net change in the components of accumulated other comprehensive income (loss) and the related tax effects allocated to each component for the periods presented ($ in thousands).
The amortization of prior service cost, recognized net loss due to lump sum settlements and change in net actuarial loss are included in the computation of net periodic benefit cost (see Note 11 – Defined Benefit and Other Postretirement Benefits for additional details). Reclassification adjustments related to pension and other postretirement benefit plans are included in salaries and employee benefits and other expense in the accompanying consolidated statements of income (loss). Reclassification adjustments related to the cash flow hedge derivatives are included in interest and fees on LHFS and LHFI in the accompanying consolidated statements of income (loss).
Three Months Ended September 30, 2025
Three Months Ended September 30, 2024
Before Tax
Amount
Tax (Expense)
Benefit
Net of Tax
Amount
Before Tax
Amount
Tax (Expense)
Benefit
Net of Tax
Amount
Securities available for sale and transferred
securities:
Net unrealized holding gains (losses) arising
during the period
$
9,714
$
(
2,428
)
$
7,286
$
55,892
$
(
13,973
)
$
41,919
Reclassification adjustment for net (gains) losses
realized in net income
—
—
—
—
—
—
Change in net unrealized holding loss on
securities transferred to held to maturity
3,422
(
855
)
2,567
3,688
(
922
)
2,766
Total securities available for sale
and transferred securities
13,136
(
3,283
)
9,853
59,580
(
14,895
)
44,685
Pension and other postretirement benefit plans:
Reclassification adjustments for changes
realized in net income:
Net change in prior service costs
4
(
2
)
2
28
(
7
)
21
Recognized net loss due to lump sum
settlements
(
29
)
8
(
21
)
—
—
—
Change in net actuarial loss
61
(
15
)
46
84
(
21
)
63
Total pension and other postretirement
benefit plans
36
(
9
)
27
112
(
28
)
84
Cash flow hedge derivatives:
Change in accumulated gain (loss) on effective
cash flow hedge derivatives
(
822
)
205
(
617
)
18,826
(
4,706
)
14,120
Reclassification adjustment for (gain) loss
realized in net income
2,462
(
616
)
1,846
4,831
(
1,208
)
3,623
Total cash flow hedge derivatives
1,640
(
411
)
1,229
23,657
(
5,914
)
17,743
Total other comprehensive income (loss)
$
14,812
$
(
3,703
)
$
11,109
$
83,349
$
(
20,837
)
$
62,512
48
Nine Months Ended September 30, 2025
Nine Months Ended September 30, 2024
Before Tax
Amount
Tax (Expense)
Benefit
Net of Tax
Amount
Before Tax
Amount
Tax (Expense)
Benefit
Net of Tax
Amount
Securities available for sale and transferred
securities:
Net unrealized holding gains (losses) arising
during the period
$
56,305
$
(
14,076
)
$
42,229
$
47,579
$
(
11,895
)
$
35,684
Reclassification adjustment for net (gains) losses
realized in net income
—
—
—
182,792
(
45,698
)
137,094
Change in net unrealized holding loss on
securities transferred to held to maturity
10,297
(
2,574
)
7,723
11,020
(
2,755
)
8,265
Total securities available for sale
and transferred securities
66,602
(
16,650
)
49,952
241,391
(
60,348
)
181,043
Pension and other postretirement benefit plans:
Reclassification adjustments for changes
realized in net income:
Net change in prior service costs
11
(
3
)
8
83
(
21
)
62
Recognized net loss due to lump sum
settlements
(
79
)
20
(
59
)
(
13
)
3
(
10
)
Change in net actuarial loss
193
(
48
)
145
263
(
65
)
198
Total pension and other postretirement
benefit plans
125
(
31
)
94
333
(
83
)
250
Cash flow hedge derivatives:
Change in accumulated gain (loss) on effective
cash flow hedge derivatives
11,155
(
2,789
)
8,366
(
2,007
)
502
(
1,505
)
Reclassification adjustment for (gain) loss
realized in net income
7,823
(
1,956
)
5,867
14,520
(
3,630
)
10,890
Total cash flow hedge derivatives
18,978
(
4,745
)
14,233
12,513
(
3,128
)
9,385
Total other comprehensive income (loss)
$
85,705
$
(
21,426
)
$
64,279
$
254,237
$
(
63,559
)
$
190,678
The following table presents the changes in the balances of each component of accumulated other comprehensive income (loss) for the periods presented ($ in thousands). All amounts are presented net of tax.
Securities
Available
for Sale
and Transferred
Securities
Defined
Benefit
Pension Items
Cash Flow
Hedge
Derivatives
Total
Balance at January 1, 2025
$
(
66,885
)
$
(
4,721
)
$
(
12,053
)
$
(
83,659
)
Other comprehensive income (loss) before
reclassification
49,952
—
8,366
58,318
Amounts reclassified from accumulated other
comprehensive income (loss)
—
94
5,867
5,961
Net other comprehensive income (loss)
49,952
94
14,233
64,279
Balance at September 30, 2025
$
(
16,933
)
$
(
4,627
)
$
2,180
$
(
19,380
)
Balance at January 1, 2024
$
(
204,670
)
$
(
6,075
)
$
(
8,978
)
$
(
219,723
)
Other comprehensive income (loss) before
reclassification
43,949
—
(
1,505
)
42,444
Amounts reclassified from accumulated other
comprehensive income (loss)
137,094
250
10,890
148,234
Net other comprehensive income (loss)
181,043
250
9,385
190,678
Balance at September 30, 2024
$
(
23,627
)
$
(
5,825
)
$
407
$
(
29,045
)
49
Note 17 – Fair Value
Financial Instruments Measured at Fair Value
The methodologies Trustmark uses in determining the fair values are based primarily on the use of independent, market-based data to reflect a value that would be reasonably expected upon exchange of the position in an orderly transaction between market participants at the measurement date. The predominant portion of assets that are stated at fair value are of a nature that can be valued using prices or inputs that are readily observable through a variety of independent data providers. The providers selected by Trustmark for fair valuation data are widely recognized and accepted vendors whose evaluations support the pricing functions of financial institutions, investment and mutual funds, and portfolio managers. Trustmark has documented and evaluated the pricing methodologies used by the vendors and maintains internal processes that regularly test valuations for anomalies.
Trustmark utilizes an independent pricing service to advise it on the carrying value of the securities available for sale portfolio. As part of Trustmark’s procedures, the price provided from the service is evaluated for reasonableness given market changes. When a questionable price exists, Trustmark investigates further to determine if the price is valid. If needed, other market participants may be utilized to determine the correct fair value. Trustmark has also reviewed and confirmed its determinations in thorough discussions with the pricing source regarding their methods of price discovery.
Mortgage loan commitments are valued based on the securities prices of similar collateral, term, rate and delivery for which the loan is eligible to deliver in place of the particular security. Trustmark acquires a broad array of mortgage security prices that are supplied by a market data vendor, which in turn accumulates prices from a broad list of securities dealers. Prices are processed through a mortgage pipeline management system that accumulates and segregates all loan commitment and forward-sale transactions according to the similarity of various characteristics (maturity, term, rate, and collateral). Prices are matched to those positions that are deemed to be an eligible substitute or offset (
i.e
., “deliverable”) for a corresponding security observed in the marketplace.
Trustmark estimates the fair value of the MSR through the use of prevailing market participant assumptions and market participant valuation processes. This valuation is periodically tested and validated against other third-party firm valuations.
Trustmark obtains the fair value of interest rate swaps from a third-party pricing service that uses an industry standard discounted cash flow methodology. In addition, credit valuation adjustments are incorporated in the fair values to account for potential nonperformance risk. In adjusting the fair value of its interest rate swap contracts for the effect of nonperformance risk, Trustmark has considered any applicable credit enhancements such as collateral postings, thresholds, mutual puts, and guarantees. In conjunction with the FASB’s fair value measurement guidance, Trustmark made an accounting policy election to measure the credit risk of these derivative financial instruments, which are subject to master netting agreements, on a net basis by counterparty portfolio.
Trustmark has determined that the majority of the inputs used to value its interest rate swaps offered to qualified commercial borrowers fall within Level 2 of the fair value hierarchy, while the credit valuation adjustments associated with these derivatives utilize Level 3 inputs, such as estimates of current credit spreads. Trustmark has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its interest rate swaps and has determined that the credit valuation adjustment is not significant to the overall valuation of these derivatives. As a result, Trustmark classifies its interest rate swap valuations in Level 2 of the fair value hierarchy.
Trustmark also utilizes 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 the MSR attributable to interest rates. Fair values of these derivative instruments are determined from quoted prices in active markets for identical assets therefore allowing them to be classified within Level 1 of the fair value hierarchy. In addition, Trustmark utilizes derivative instruments such as interest rate lock commitments in its mortgage banking area which lack observable inputs for valuation purposes resulting in their inclusion in Level 3 of the fair value hierarchy.
At this time, Trustmark presents no fair values that are derived through internal modeling. Should positions requiring fair valuation arise that are not relevant to existing methodologies, Trustmark will make every reasonable effort to obtain market participant assumptions, or independent evaluation.
50
Financial Assets and Liabilities
The following tables summarize financial assets and financial liabilities measured at fair value on a recurring basis at
September 30, 2025 and December 31, 2024, segregated by the level of valuation inputs within the fair value hierarchy utilized to measure fair value ($ in thousands). There were no transfers between fair value levels for the nine months ended September 30, 2025 and the year ended December 31, 2024.
September 30, 2025
Total
Level 1
Level 2
Level 3
U.S. Treasury securities
$
208,269
$
208,269
$
—
$
—
U.S. Government agency obligations
70,535
—
70,535
—
Mortgage-backed securities
1,535,441
—
1,535,441
—
Securities available for sale
1,814,245
208,269
1,605,976
—
LHFS
228,141
—
228,141
—
MSR
131,676
—
—
131,676
Other assets
- derivatives
18,899
1,300
16,259
1,340
Other liabilities
- derivatives
21,081
78
21,003
—
December 31, 2024
Total
Level 1
Level 2
Level 3
U.S. Treasury securities
$
202,669
$
202,669
$
—
$
—
U.S. Government agency obligations
38,807
—
38,807
—
Mortgage-backed securities
1,451,058
—
1,451,058
—
Securities available for sale
1,692,534
202,669
1,489,865
—
LHFS
200,307
—
200,307
—
MSR
139,317
—
—
139,317
Other assets
- derivatives
15,397
18
15,150
229
Other liabilities
- derivatives
41,355
2,183
39,172
—
The changes in Level 3 assets measured at fair value on a recurring basis for the
nine months ended September 30, 2025 and 2024 are summarized as follows ($ in thousands):
MSR
Other Assets -
Derivatives
Balance, January 1, 2025
$
139,317
$
229
Total net (loss) gain included in Mortgage banking, net
(1)
(
18,494
)
3,498
Additions
10,853
—
Sales
—
(
2,387
)
Balance, September 30, 2025
$
131,676
$
1,340
The amount of total gains (losses) for the period included in earnings
that are attributable to the change in unrealized gains or
losses still held at September 30, 2025
$
(
9,395
)
$
4,021
Balance, January 1, 2024
$
131,870
$
845
Total net (loss) gain included in Mortgage banking, net
(1)
(
15,436
)
2,154
Additions
9,419
—
Sales
—
(
2,295
)
Balance, September 30, 2024
$
125,853
$
704
The amount of total gains (losses) for the period included in
earnings that are attributable to the change in unrealized
gains or losses still held at September 30, 2024
$
(
6,908
)
$
1,580
(1)
Total net (loss) gain included in Mortgage banking, net relating to the MSR includes changes in fair value due to market changes and due to run-off.
51
Trustmark may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP. Assets at September 30, 2025, which have been measured at fair value on a nonrecurring basis, include collateral-dependent LHFI. A loan is collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided substantially through the sale of the collateral. The expected credit loss for collateral-dependent loans is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral, adjusted for the estimated cost to sell. Fair value estimates for collateral-dependent loans are derived from appraised values based on the current market value or as is value of the collateral, normally from recently received and reviewed appraisals. Current appraisals are ordered on an annual basis based on the inspection date or more often if market conditions necessitate. Appraisals are obtained from state-certified appraisers and are based on certain assumptions, which may include construction or development status and the highest and best use of the property. These appraisals are reviewed by Trustmark’s Appraisal Review Department to ensure they are acceptable, and values are adjusted down for costs associated with asset disposal. At September 30, 2025
, Trustmark had outstanding balances of $
34.0
million with a related ACL of $
9.5
million in collateral-dependent LHFI, compared to outstanding balances of $
37.1
million with a related ACL of $
13.7
million in collateral-dependent LHFI at
December 31, 2024. The collateral-dependent LHFI are classified as Level 3 in the fair value hierarchy.
Nonfinancial Assets and Liabilities
Certain nonfinancial assets measured at fair value on a nonrecurring basis include foreclosed assets (upon initial recognition or subsequent impairment), nonfinancial assets and nonfinancial liabilities measured at fair value in the second step of a goodwill impairment test, and intangible assets and other nonfinancial long-lived assets measured at fair value for impairment assessment.
Other real estate includes assets that have been acquired in satisfaction of debt through foreclosure and is recorded at the fair value less cost to sell (estimated fair value) at the time of foreclosure. Fair value is based on independent appraisals and other relevant factors. In the determination of fair value subsequent to foreclosure, Management also considers other factors or recent developments, such as changes in market conditions from the time of valuation and anticipated sales values considering plans for disposition, which could result in an adjustment to lower the collateral value estimates indicated in the appraisals. Periodic revaluations are classified as Level 3 in the fair value hierarchy since assumptions are used that may not be observable in the market.
Foreclosed assets of $
2.7
million were remeasured during the first
nine months of 2025
, requiring write-downs of $
502
thousand to reach their current fair values compared to $
803
thousand of foreclosed assets that were remeasured during the first
nine months of 2024
, requiring write-downs of $
130
thousand.
Fair Value of Financial Instruments
FASB ASC Topic 825, “Financial Instruments,” requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis.
The carrying amounts and estimated fair values of financial instruments at
September 30, 2025 and December 31, 2024, are as follows ($ in thousands):
September 30, 2025
December 31, 2024
Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
Financial Assets:
Level 2 Inputs:
Cash and short-term investments
$
732,826
$
732,826
$
567,251
$
567,251
Securities held to maturity
1,268,459
1,233,736
1,335,385
1,259,107
Level 3 Inputs:
Net LHFI
13,382,914
13,427,266
12,929,672
12,886,168
Financial Liabilities:
Level 2 Inputs:
Deposits
15,630,974
15,623,696
15,108,175
15,098,854
Federal funds purchased and securities sold under
repurchase agreements
420,000
420,000
324,008
324,008
Other borrowings
208,366
208,366
301,541
301,541
Subordinated notes
123,867
124,063
123,702
120,625
Junior subordinated debt securities
61,856
52,268
61,856
49,794
52
Fair Value Option
Trustmark has elected to account for its LHFS under the fair value option, with interest income on these LHFS reported in interest and fees on LHFS and LHFI. The fair value of the LHFS is determined using quoted prices for a similar asset, adjusted for specific attributes of that loan. The LHFS are actively managed and monitored and certain market risks of the loans may be mitigated through the use of derivatives. These derivative instruments are carried at fair value with changes in fair value recorded as noninterest income (loss) in mortgage banking, net. The changes in the fair value of LHFS are largely offset by changes in the fair value of the derivative instruments. For the three and nine months ended September 30, 2025
, a net loss of $
207
thousand and a net gain of $
1.2
million, respectively, were recorded as noninterest income (loss) in mortgage banking, net for changes in the fair value of LHFS accounted for under the fair value option, compared to a
net gain of $
480
thousand and a net loss of $
1.2
million, respectively,
for the three and nine months ended September 30, 2024. Interest and fees on LHFS and LHFI for the three and nine months ended September 30, 2025
included $
2.4
million and $
6.8
million, respectively, of interest earned on LHFS accounted for under the fair value option, compared to $
2.4
million and $
6.3
million for the three and
nine months ended September 30, 2024
, respectively. Election of the fair value option allows Trustmark to reduce the accounting volatility that would otherwise result from the asymmetry created by accounting for the financial instruments at the lower of cost or fair value and the derivatives at fair value. The fair value option election does not apply to GNMA optional repurchase loans which do not meet the requirements under FASB ASC Topic 825 to be accounted for under the fair value option. GNMA optional repurchase loans totaled $
104.8
million and $
97.6
million at
September 30, 2025 and December 31, 2024, respectively, and are included in LHFS on the accompanying consolidated balance sheets. For additional information regarding GNMA optional repurchase loans, please see the section captioned “Past Due LHFS” included in Note 3 – LHFI and ACL, LHFI.
The following table provides information about the fair value and the contractual principal outstanding of the LHFS accounted for under the fair value option at
September 30, 2025 and December 31, 2024 ($ in thousands):
September 30, 2025
December 31, 2024
Fair value of LHFS
$
123,347
$
102,676
LHFS contractual principal outstanding
121,055
105,322
Fair value less unpaid principal
$
2,292
$
(
2,646
)
Note 18 – Derivative Financial Instruments
Derivatives Designated as Hedging Instruments
Trustmark engages in a cash flow hedging program to add stability to interest income and to manage its exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of fixed-rate amounts from a counterparty in exchange for Trustmark making variable-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate floor spreads designated as cash flow hedges involve the receipt of variable-rate amounts if interest rates fall below the purchased floor strike rate on the contract and payments of variable-rate amounts if interest rates fall below the sold floor strike rate on the contract. Trustmark uses such derivatives to hedge the variable cash flows associated with existing and anticipated variable-rate loan assets. At September 30, 2025
, the aggregate notional value of Trustmark's interest rate swaps and floor spreads designated as cash flow hedges totaled $
1.515
billion compared to $
1.500
billion at
December 31, 2024.
Trustmark records any gains or losses on these cash flow hedges in accumulated other comprehensive income (loss). Gains and losses on derivatives representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with Trustmark’s accounting policy election. The earnings recognition of excluded components included in interest and fees on LHFS and LHFI totaled $
132
thousand and $
393
thousand of amortization expense for the three and
nine months ended September 30, 2025, respectively, compared to
$
132
thousand and $
341
thousand of amortization expense for the three and
nine months ended September 30, 2024, respectively. As interest payments are received on Trustmark's variable-rate a
ssets, amounts reported in accumulated other comprehensive income (loss) are reclassified into interest and fees on LHFS and LHFI in the accompanying consolidated statements of income (loss) during the same period. During the next twelve months, Trustmark estimates that $
2.7
million will be reclassified as a reduction to interest and fees on LHFS and LHFI. This amount could differ due to changes in interest rates, hedge de-designations or the addition of other hedges.
53
Derivatives not Designated as Hedging Instruments
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 economically hedges changes in the fair value of the MSR attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting. The total notional amount of these derivative instruments was $
337.5
million at
September 30, 2025
compared to $
311.5
million at
December 31, 2024. Changes in the fair value of these exchange-traded derivative instruments are recorded as noninterest income (loss) in mortgage banking, net and are offset by changes in the fair value of the MSR. The impact of this strategy resulted in a net negative
ineffectiveness of $
858
thousand and $
2.5
million for the three months ended
September 30, 2025 and 2024
, respectively. For the nine months ended September 30, 2025 and 2024, the impact was a net negative ineffectiveness of $
2.0
million and $
8.1
million, respectively.
As part of Trustmark’s risk management strategy in the mortgage banking area, derivative instruments such as forward sales contracts are utilized. Trustmark’s obligations under forward sales contracts consist of commitments to deliver mortgage loans, originated and/or purchased, in the secondary market at a future date. Changes in the fair value of these derivative instruments are recorded as noninterest income (loss) in mortgage banking, net and are offset by changes in the fair value of LHFS. Trustmark’s off-balance sheet obligations under these derivative instruments totaled $
149.5
million at
September 30, 2025
, with a negative valuation adjustment of $
215
thousand, compared to $
110.0
million, with a positive valuation adjustment of $
679
thousand, at
December 31, 2024.
Trustmark also utilizes derivative instruments such as interest rate lock commitments in its mortgage banking area. Interest rate lock commitments are residential mortgage loan commitments with customers, which guarantee a specified interest rate for a specified time period. Changes in the fair value of these derivative instruments are recorded as noninterest income (loss) in mortgage banking, net and are offset by the changes in the fair value of forward sales contracts. Trustmark’s off-balance sheet obligations under these derivative instruments totaled $
92.0
million at
September 30, 2025
, with a positive valuation adjustment of $
1.3
million, compared to $
52.1
million, with a positive valuation adjustment of $
229
thousand, at
December 31, 2024.
Trustmark offers certain derivatives products directly to qualified commercial lending clients seeking to manage their interest rate risk. Trustmark economically hedges interest rate swap transactions executed with commercial lending clients by entering into offsetting interest rate swap transactions with institutional derivatives market participants. Derivatives transactions executed as part of this program are not designated as qualifying hedging relationships and are, therefore, carried at fair value with the change in fair value recorded as noninterest income (loss) in bank card and other fees. Because these derivatives have mirror-image contractual terms, in addition to collateral provisions which mitigate the impact of non-performance risk, the changes in fair value are expected to substantially offset. The offsetting interest rate swap transactions are either cleared through the Chicago Mercantile Exchange for clearable transactions or booked directly with institutional derivatives market participants for non-clearable transactions. The Chicago Mercantile Exchange rules legally characterize variation margin collateral payments made or received for centrally cleared interest rate swaps as settlements rather than collateral. As a result, centrally cleared interest rate swaps included in other assets and other liabilities are presented on a net basis in the accompanying consolidated balance sheets. At September 30, 2025
, Trustmark had interest rate swaps with an aggregate notional amount of $
1.800
billion related to this program, compared to $
1.819
billion at
December 31, 2024.
Credit-risk-related Contingent Features
Trustmark has agreements with its financial institution counterparties that contain provisions where if Trustmark defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then Trustmark could also be declared in default on its derivatives obligations.
At September 30, 2025, there was
no
te
rmination value of interest rate swaps in a liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements compared to
$
568
thousand at
December 31, 2024. At September 30, 2025 and December 31, 2024
, Trustmark had posted collateral of $
2.2
million and $
1.5
million, respectively, against its obligations because of negotiated thresholds and minimum transfer amounts under these agreements. If Trustmark had breached any of these triggering provisions at
September 30, 2025, it could have been required to settle its obligations under the agreements at the termination value.
Credit risk participation agreements arise when Trustmark contracts with other financial institutions, as a guarantor or beneficiary, to share credit risk associated with certain interest rate swaps. These agreements provide for reimbursement of losses resulting from a third-party default on the underlying swap. At September 30, 2025
, Trustmark had entered into
ten
risk p
articipation agreements as a beneficiary with aggregate notional amounts of $
111.1
million compared to
eleven
risk participation agreements as a beneficiary with an aggregate notional amount of $
83.9
million at
December 31, 2024. At September 30, 2025, Trustmark had entered into
twenty-eight
risk participation agreements as a guarantor with aggregate notional amounts of $
283.3
million compared to
twenty-eight
risk participation agreements as a guarantor with aggregate notional amounts of $
229.1
million at
December 31, 2024. The aggregate fair values of these risk participation agreements were immaterial at both September 30, 2025 and December 31, 2024.
54
Tabular Disclosures
The following tables disclose the fair value of derivative instruments in Trustmark’s consolidated balance sheets at
September 30, 2025 and December 31, 2024 as well as the effect of these derivative instruments on Trustmark’s results of operations for the periods presented ($ in thousands):
September 30, 2025
December 31, 2024
Derivatives designated as hedging instruments:
Interest rate contracts:
Interest rate swaps included in other assets
(1)
$
4,674
$
74
Interest rate floors included in other assets
1,931
1,582
Interest rate swaps included in other liabilities
(1)
268
5,958
Derivatives not designated as hedging instruments:
Interest rate contracts:
Exchange traded purchased options included in other assets
$
20
$
18
OTC written options (rate locks) included in other assets
1,340
229
Futures contracts included in other assets
1,280
—
Interest rate swaps included in other assets
(1)
9,640
13,478
Credit risk participation agreements included in other assets
14
16
Futures contracts included in other liabilities
—
1,972
Forward contracts included in other liabilities
(
215
)
(
679
)
Exchange traded written options included in other liabilities
78
211
Interest rate swaps included in other liabilities
(1)
20,793
33,817
Credit risk participation agreements included in other liabilities
157
76
(1)
In accordance with GAAP, the variation margin collateral payments made or received for interest rate swaps that are centrally cleared are legally characterized as settled. As a result, the centrally cleared interest rate swaps included in other assets and other liabilities are presented on a net basis in the accompanying consolidated balance sheets.
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Derivatives designated as hedging instruments:
Amount of gain (loss) reclassified from accumulated other
comprehensive income (loss) and recognized in
interest and fees on LHFS and LHFI
$
(
2,462
)
$
(
4,831
)
$
(
7,823
)
$
(
14,520
)
Derivatives not designated as hedging instruments:
Amount of gain (loss) recognized in mortgage banking, net
$
1,076
$
7,655
$
7,633
$
(
478
)
Amount of gain (loss) recognized in bank card and other fees
196
(
93
)
560
(
98
)
The following table discloses the amount included in other comprehensive income (loss), net of tax, for derivative instruments designated as cash flow hedges for the periods presented ($ in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Derivatives designated as hedging instruments:
Amount of gain (loss) recognized in other comprehensive
income (loss), net of tax
$
(
617
)
$
14,120
$
8,366
$
(
1,505
)
55
Trustmark’s interest rate swap derivative instruments are subject to master netting agreements, and therefore, eligible for offsetting in the consolidated balance sheets. Trustmark has elected to not offset any derivative instruments in its consolidated balance sheets.
Information about financial instruments that are eligible for offset in the consolidated balance sheets as of
September 30, 2025 and December 31, 2024 is presented in the following tables ($ in thousands):
Offsetting of Derivative Assets
As of September 30, 2025
Gross Amounts Not Offset in the
Statement of Financial Position
Gross
Amounts of
Recognized
Assets
Gross Amounts
Offset in the
Statement of
Financial Position
Net Amounts of
Assets presented in
the Statement of
Financial Position
Financial
Instruments
Cash Collateral
Received
Net Amount
Derivatives
$
16,245
$
—
$
16,245
$
(
6,236
)
$
(
690
)
$
9,319
Offsetting of Derivative Liabilities
As of September 30, 2025
Gross Amounts Not Offset in the
Statement of Financial Position
Gross
Amounts of
Recognized
Liabilities
Gross Amounts
Offset in the
Statement of
Financial Position
Net Amounts of
Liabilities presented
in the Statement of
Financial Position
Financial
Instruments
Cash Collateral
Posted
Net Amount
Derivatives
$
21,061
$
—
$
21,061
$
(
6,236
)
$
(
2,200
)
$
12,625
Offsetting of Derivative Assets
As of December 31, 2024
Gross Amounts Not Offset in the
Statement of Financial Position
Gross
Amounts of
Recognized
Assets
Gross Amounts
Offset in the
Statement of
Financial Position
Net Amounts of
Assets presented in
the Statement of
Financial Position
Financial
Instruments
Cash Collateral
Received
Net Amount
Derivatives
$
15,134
$
—
$
15,134
$
(
7,956
)
$
(
2,000
)
$
5,178
Offsetting of Derivative Liabilities
As of December 31, 2024
Gross Amounts Not Offset in the
Statement of Financial Position
Gross
Amounts of
Recognized
Liabilities
Gross Amounts
Offset in the
Statement of
Financial Position
Net Amounts of
Liabilities presented
in the Statement of
Financial Position
Financial
Instruments
Cash Collateral
Posted
Net Amount
Derivatives
$
39,775
$
—
$
39,775
$
(
7,956
)
$
(
1,460
)
$
30,359
Note 19 – Segment Information
Trustmark’s management reporting structure includes
two
segments: General Banking and Wealth Management. For a complete overview of Trustmark’s operating segments, see Note 21 – Segment Information included in Part II. Item 8. – Financial Statements and Supplementary Data, of Trustmark’s
2024 Annual Report.
Trustmark's reportable segments are determined by the
Chief Executive Officer
(CEO), who is the designated chief operating decision maker (CODM), based upon information provided about Trustmark's products and services offered. The reportable segments are also distinguished by the level of information provided to the CEO, who uses such information to review performance of various lines of business, which are then aggregated if operating performance, products and services and customers are similar.
The CEO evaluates the financial performance of Trustmark's lines of business, such as evaluating revenue streams, significant expenses and budget to actual results, in assessing the performance of Trustmark's reportable segments and in the determination of allocating resources.
The Insurance Segment is included in discontinued operations for the nine months ended September 30, 2024 in the accompanying consolidated statements of income (loss). See Note 2 - Discontinued Operations for additional information about discontinued operations.
56
The accounting policies of each reportable segment are the same as those of Trustmark except for its internal allocations. Noninterest expenses for back-office operations support are allocated to segments based on estimated uses of those services. Trustmark measures the net interest income of its business segments with a process that assigns cost of funds or earnings credit on a matched-term basis. This process, called “funds transfer pricing”, charges an appropriate cost of funds to assets held by a business unit, or credits the business unit for potential earnings for carrying liabilities. The net of these charges and credits flows through to the General Banking Segment, which contains the management team responsible for determining TB’s funding and interest rate risk strategies.
The following tables disclose financial information by reportable segment for the periods presented ($ in thousands):
Three Months Ended September 30, 2025
General Banking
Wealth Management
Consolidated
Interest income
$
239,614
$
3,103
$
242,717
Interest expense
78,528
1,748
80,276
Funds transfer pricing, net
(
1,488
)
1,488
—
Net interest income
159,598
2,843
162,441
PCL
1,687
(
2
)
1,685
Net interest income after PCL
157,911
2,845
160,756
Service charges on deposit accounts
11,188
63
11,251
Bank card and other fees
8,260
58
8,318
Mortgage banking, net
8,182
—
8,182
Wealth management
185
9,613
9,798
Other, net
2,299
83
2,382
Internal allocations
(
99
)
99
—
Noninterest income (loss)
30,015
9,916
39,931
Salaries and employee benefits
65,678
5,830
71,508
Services and fees
28,083
694
28,777
Other segment expenses
(1)
30,253
395
30,648
Internal allocations
(
1,699
)
1,699
—
Noninterest expense
122,315
8,618
130,933
Income from continuing operations before income taxes
65,611
4,143
69,754
Income taxes from continuing operations
11,939
1,028
12,967
Consolidated income from continuing operations
$
53,672
$
3,115
$
56,787
Selected Financial Information
Total assets from continuing operations
$
18,600,667
$
200,843
$
18,801,510
Depreciation and amortization from continuing operations
$
9,682
$
65
$
9,747
(1)
Other segment expenses for the General Banking Segment include net occupancy-premises, equipment expense, FDIC assessment expense, other real estate expense, net, loan expense and other miscellaneous expense. Other segment expenses for the Wealth Management Segment include net occupancy-premises, equipment expense, FDIC assessment expense, loan expense and other miscellaneous expense.
57
Three Months Ended September 30, 2024
General Banking
Wealth Management
Consolidated
Interest income
$
248,817
$
2,775
$
251,592
Interest expense
96,178
700
96,878
Funds transfer pricing, net
550
(
550
)
—
Net interest income
153,189
1,525
154,714
PCL
6,551
(
3
)
6,548
Net interest income after PCL
146,638
1,528
148,166
Service charges on deposit accounts
11,250
22
11,272
Bank card and other fees
7,879
52
7,931
Mortgage banking, net
6,119
—
6,119
Wealth management
175
9,113
9,288
Other, net
2,893
59
2,952
Internal allocations
(
94
)
94
—
Noninterest income (loss)
28,222
9,340
37,562
Salaries and employee benefits
61,144
5,547
66,691
Services and fees
25,019
705
25,724
Other segment expenses
(1)
30,447
408
30,855
Internal allocations
(
1,453
)
1,453
—
Noninterest expense
115,157
8,113
123,270
Income from continuing operations before income taxes
59,703
2,755
62,458
Income taxes from continuing operations
10,445
683
11,128
Consolidated income from continuing operations
$
49,258
$
2,072
$
51,330
Selected Financial Information
Total assets from continuing operations
$
18,282,757
$
197,615
$
18,480,372
Depreciation and amortization from continuing operations
$
9,656
$
62
$
9,718
(1)
Other segment expenses for the General Banking Segment include net occupancy-premises, equipment expense, FDIC assessment expense, other real estate expense, net, loan expense and other miscellaneous expense. Other segment expenses for the Wealth Management Segment include net occupancy-premises, equipment expense, FDIC assessment expense, loan expense and other miscellaneous expense.
58
Nine Months Ended September 30, 2025
General Banking
Wealth Management
Consolidated
Interest income
$
700,073
$
9,219
$
709,292
Interest expense
232,624
3,416
236,040
Funds transfer pricing, net
(
775
)
775
—
Net interest income
466,674
6,578
473,252
PCL
11,677
(
22
)
11,655
Net interest income after PCL
454,997
6,600
461,597
Service charges on deposit accounts
32,365
107
32,472
Bank card and other fees
24,601
135
24,736
Mortgage banking, net
25,555
—
25,555
Wealth management
562
28,417
28,979
Other, net
10,474
189
10,663
Internal allocations
(
288
)
288
—
Noninterest income (loss)
93,269
29,136
122,405
Salaries and employee benefits
191,380
16,918
208,298
Services and fees
80,039
1,983
82,022
Other segment expenses
(1)
88,525
1,213
89,738
Internal allocations
(
4,667
)
4,667
—
Noninterest expense
355,277
24,781
380,058
Income from continuing operations before income taxes
192,989
10,955
203,944
Income taxes from continuing operations
34,961
2,722
37,683
Consolidated income from continuing operations
$
158,028
$
8,233
$
166,261
Selected Financial Information
Total assets from continuing operations
$
18,600,667
$
200,843
$
18,801,510
Depreciation and amortization from continuing operations
$
28,042
$
190
$
28,232
(1)
Other segment expenses for the General Banking Segment include net occupancy-premises, equipment expense, FDIC assessment expense, other real estate expense, net, loan expense and other miscellaneous expense. Other segment expenses for the Wealth Management Segment include net occupancy-premises, equipment expense, FDIC assessment expense, loan expense and other miscellaneous expense.
59
Nine Months Ended September 30, 2024
General Banking
Wealth Management
Consolidated
Interest income
$
712,843
$
7,740
$
720,583
Interest expense
290,165
1,845
292,010
Funds transfer pricing, net
1,558
(
1,558
)
—
Net interest income
424,236
4,337
428,573
PCL
33,631
162
33,793
Net interest income after PCL
390,605
4,175
394,780
Service charges on deposit accounts
33,089
65
33,154
Bank card and other fees
24,457
127
24,584
Mortgage banking, net
19,238
—
19,238
Wealth management
538
27,394
27,932
Other, net
13,376
139
13,515
Securities gains (losses), net
(
182,792
)
—
(
182,792
)
Internal allocations
(
282
)
282
—
Noninterest income (loss)
(
92,376
)
28,007
(
64,369
)
Salaries and employee benefits
180,359
16,657
197,016
Services and fees
72,830
2,068
74,898
Other segment expenses
(1)
88,030
1,316
89,346
Internal allocations
(
4,384
)
4,384
—
Noninterest expense
336,835
24,425
361,260
Income from continuing operations before income taxes
(
38,606
)
7,757
(
30,849
)
Income taxes from continuing operations
(
21,675
)
1,928
(
19,747
)
Consolidated income from continuing operations
$
(
16,931
)
$
5,829
$
(
11,102
)
Selected Financial Information
Total assets from continuing operations
$
18,282,757
$
197,615
$
18,480,372
Depreciation and amortization from continuing operations
$
27,998
$
188
$
28,186
(1)
Other segment expenses for the General Banking Segment include net occupancy-premises, equipment expense, FDIC assessment expense, other real estate expense, net, loan expense and other miscellaneous expense. Other segment expenses for the Wealth Management Segment include net occupancy-premises, equipment expense, FDIC assessment expense, loan expense and other miscellaneous expense.
Except for the changes detailed below, Trustmark has consistently applied its accounting policies to all periods presented in the accompanying consolidated financial statements.
ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.”
Issued
in November 2023, ASU 2023-07 is intended to improve disclosures about a public entity’s reportable segments and address requests from investors and other allocators of capital for additional, more detailed information about a reportable segment’s expenses. The amendments of ASU 2023-07 require a public entity to disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss, and an amount for other segment items by reportable segment and a description of its composition. The other segment items category is the difference between segment revenue less the significant expenses disclosed and each reported measure of segment profit or loss. ASU 2023-07 also requires a public entity to provide all annual disclosures about a reportable segment’s profit or loss and assets currently required under FASB ASC Topic 280 in interim periods. The amendments of ASU 2023-07 clarify that if the CODM uses more than one measure of a segment's profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit. However, at least one of the reported segment profit or loss measures (or the single reported measure if only one is disclosed) should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity's consolidated financial statements. ASU 2023-07 requires a public entity to disclose the title and position of the CODM, together with an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. In addition, ASU 2023-07 requires that a public entity with a single reportable segment provide all the disclosures required by the amendments of ASU 2023-07 and all existing segment
60
disclosures
in FASB ASC Topic 280. The amendments of ASU 2023-07 were effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments in ASU 2023-07 should be applied retrospectively to all periods presented on the financial statements. Upon implementation, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. Trustmark
adopted
the amendments of ASU 2023-07 related to annual disclosure requirements effective
January 1, 2024
, and the newly required annual disclosures were included in Note 21 – Segment Information of the 2024 Annual Report. Trustmark adopted the amendments of ASU 2023-07 related to interim disclosure requirements effective January 1, 2025, and the newly required interim disclosures are included in Note 19 - Segment Information of this report. Adoption of ASU 2023-07 did
no
t have a material impact to Trustmark’s consolidated financial statements or results of operations.
ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.”
Issued in December 2023, ASU 2023-09 is intended to improve the disclosures for income taxes to address requests from investors, lenders, creditors and other allocators of capital (collectively, "investors") that use the financial statements to make capital allocation decisions. During the FASB's 2021 agenda consultation process and other stakeholder outreach, investors highlighted that the current system of income tax disclosures does not provide enough information to understand the tax provision for an entity that operates in multiple jurisdictions. Investors currently rely on the rate reconciliation table and other disclosures, including total income taxes paid in the statement of cash flows, to evaluate income tax risks and opportunities. The amendments in ASU 2023-09 will require consistent categories and greater disaggregation of information in the rate reconciliation disclosure as well as disclosure of income taxes paid disaggregated by jurisdiction. The amendments of ASU 2023-09 are effective for annual periods beginning after December 15, 2024, and early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. Trustmark
adopted
the amendments of ASU 2023-09 effective
January 1, 2025
, and will include the required disclosures in its Annual Report on Form 10-K for the year ending December 31, 2025. Trustmark is currently evaluating the changes to disclosures required by ASU 2023-09; however, adoption of ASU 2023-09 is
no
t expected to have a material impact to Trustmark’s consolidated financial statements or results of operations.
Pending Accounting Pronouncements
ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.”
Issued in November 2024, ASU 2024-03 with the objective of providing investors with more decision-useful information regarding a public business entity's expenses by enhancing disclosures on income statement expenses. Investor feedback indicated a strong preference for the disclosure of disaggregated financial reporting information as a top priority for the FASB. Detailed knowledge of an entity's expenses is crucial for understanding its prospects for future cash flows and for making performance comparisons over time and with other entities. Investors emphasized that information regarding cost of sales, selling, general, and administrative expenses, employee compensation costs, depreciation and amortization, and research and development expenditure would enhance their comprehension of an entity's cost structure and ability to forecast future cash flows. The ASU applies exclusively to public business entities and mandates additional disclosures about specific expense categories on both annual and interim bases in the notes to financial statements that are not currently required. The amendments do not alter or eliminate existing expense disclosure requirements nor change requirements for presenting expenses on the face of the income statement. However, they do specify that certain existing disclosures must now appear in the same tabular format as the new disaggregation requirements. The FASB issued ASU 2025-01 in January 2025, clarifying that the amendments in ASU 2024-03 are effective for public business entities for annual reporting periods beginning after December 15, 2026, and for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. Trustmark intends to adopt the amendments of ASU 2024-03 effective
January 1, 2027
, and will include the required annual disclosures in its Annual Report on Form 10-K for the year ending December 31, 2027, and required interim disclosures in its Quarterly Report on Form 10-Q for the period ending March 31, 2028. Trustmark is currently evaluating the changes to disclosures required by ASU 2024-03; however, adoption of ASU 2024-03 is
no
t expected to have a material impact to Trustmark’s consolidated financial statements or results of operations.
ASU 2025-06, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software.”
Issued in September 2025, ASU 2025-06 seeks to update the guidance on accounting for software due to changes in how software is generally developed. When software accounting guidance was first issued, companies developing software generally followed a prescriptive and sequential development method (
e.g.
, waterfall). Since then, many companies have adopted a more incremental and iterative development method (
i.e.
,
agile). As a result, many stakeholders noted the challenges of applying current internal-use software accounting requirements that do not specifically address software developed using an incremental and iterative method, which has led to diversity in practice in determining when to begin capitalizing software costs. The amendments of ASU 2025-06 remove all references to a prescriptive and sequential software development method (referred to as "project stages") throughout FASB ASC Subtopic 350-40, and require an entity to start capitalizing software costs when both of the following occur: (1) Management has authorized and committed to funding the software project; and (2) it is probable that the project will be completed and the software will be used to perform the function intended (referred to as the "probable-to-complete recognition threshold"). In evaluating the probable-to-complete recognition threshold, a company is required to consider whether there is significant uncertainty associated with the development activities of the software. ASU 2025-06 is effective for all entities for annual reporting periods beginning after
61
December
15, 2027, and for interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. Trustmark intends to adopt the amendments of ASU 2025-06 effective January 1, 2028. Trustmark is currently evaluating the impact the amendments of ASU 2025-06 will have in regards to its internal-use software; however, adoption of ASU 2025-06 is not expected to have a material impact to Trustmark’s consolidated financial statements or results of operations.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following provides a narrative discussion and analysis of Trustmark Corporation’s (Trustmark) financial condition and results of operations. This discussion should be read in conjunction with the unaudited consolidated financial statements and the supplemental financial data included in Part I. Item 1. – Financial Statements of this report.
Description of Business
Trustmark, a Mississippi business corporation incorporated in 1968, is a bank holding company headquartered in Jackson, Mississippi. As previously disclosed, on August 4, 2025, Trustmark’s principal subsidiary, Trustmark National Bank, initially chartered by the State of Mississippi in 1889, converted from a national banking association to a Mississippi-chartered banking corporation and changed its name to Trustmark Bank (TB). TB is a member bank of the Federal Reserve System and is supervised by the Federal Reserve Bank of Atlanta (FRBA) and the Mississippi Department of Banking and Consumer Finance (MDBCF). In addition, as a large provider of consumer financial services, TB remains subject to regulation, supervision, enforcement and examination by the Consumer Financial Protection Bureau (CFPB). As a Mississippi state-chartered banking corporation, TB must obtain the approval of the MDBCF prior to declaring or paying a dividend on its common stock. Dividends from TB are Trustmark’s principal source of cash. At September 30, 2025, TB had total assets of $18.799 billion, which represented 99.99% of the consolidated assets of Trustmark.
Through TB and its other subsidiaries, Trustmark operates as a financial services organization providing banking and other financial solutions through offices and 2,539 full-time equivalent associates (measured at September 30, 2025) located in the states of Alabama, Florida (primarily in the northwest or “Panhandle” region of that state, which is referred to herein as Trustmark’s Florida market), Georgia (primarily in Atlanta, which is referred to herein as Trustmark's Georgia market), Mississippi, Tennessee (in the Memphis and Northern Mississippi regions, which are collectively referred to herein as Trustmark’s Tennessee market), and Texas (primarily in Houston, which is referred to herein as Trustmark’s Texas market). Trustmark’s operations are managed along two operating segments: General Banking Segment and Wealth Management Segment. For a complete overview of Trustmark’s business, see the section captioned “The Corporation” included in Part I. Item 1. – Business of Trustmark’s Annual Report on Form 10-K for its fiscal year ended December 31, 2024 (2024 Annual Report).
Executive Overview
Trustmark's financial results for the first nine months of 2025 reflected diversified growth in loans held for investment (LHFI), stable credit quality and cost-effective core deposit growth. Trustmark's capital position remained solid, reflecting the consistent profitability of its diversified financial services businesses. Trustmark continued to implement organic growth initiatives and make investments to capitalize on opportunities in its marketplace. With robust capital, liquidity and profitability, Trustmark is well-positioned to compete in changing economic conditions and create long-term value for its shareholders. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.24 per share. The dividend is payable December 15, 2025, to shareholders of record on December 1, 2025. Trustmark’s payment of the dividend will be fully funded by a dividend from TB to Trustmark, which the MDBCF approved on October 30, 2025.
Recent Economic and Industry Developments
Economic activity improved slightly during the third quarter of 2025, but was characterized by mixed signals, notably, strong equity market performance, continued consumer spending and a Federal Reserve Board (FRB) rate cut, but also a softening labor market and persistent inflationary pressures, driven partly by new tariffs. United States stocks performed strongly during the third quarter of 2025, supported by optimistic sentiment around lower interest rates, better-than-expected corporate earnings and strong performance in the technology and artificial intelligence (AI) sectors. However, economic concerns remain as a result of the cumulative weight of uncertainty regarding the potential economic impact of geopolitical developments, such as the conflicts in Ukraine and the Middle East, the current United States presidential administration's policies, the United States government shutdown, inflationary and broader pricing pressures and other economic and industry volatility. Concerns surrounding the near-term direction of global markets and the potential impact on the United States economy are expected to persist for the near term. While Trustmark's customer base is wholly domestic, international economic conditions affect domestic economic conditions, and thus may have an impact upon Trustmark's financial condition or results of operations.
62
In September 2024, the FRB began lowering the target federal funds rate, making multiple decreases during the fourth quarter of 2024 to a range of 4.25% to 4.50% as of December 2024, based on its confidence that inflation was moving substantially toward 2.00% and that the risks to achieving the FRB's employment and inflation goals were roughly balanced. In addition, in September 2024, the FRB made the first of multiple reductions in the rate it pays on reserves, lowering the rate to 4.40% as of December 2024. The FRB left the target federal funds rate unchanged at a range of 4.25% to 4.50% and maintained the rate it pays on reserves at 4.40% until the September 2025 meeting of the FRB's Federal Open Market Committee, at which time the FRB lowered the target federal funds rate to a range of 4.00% to 4.25% and lowered the rate it pays on reserves to 4.15%. Prior period rate increases increased the competitive pressures on the deposit cost of funds. While rate cuts potentially reduced those competitive pressures, they increased pressure on Trustmark's net interest margin, a key component to its financial results. It is not possible to predict the direction, pace or magnitude of further changes, if any, in interest rates, or the impact any such rate changes will have on Trustmark's results of operations.
In the August 2025 and October 2025 “Summary of Commentary on Current Economic Conditions by Federal Reserve District,” the twelve Federal Reserve Districts’ reports suggested that during the reporting periods (covering the periods from July 8, 2025 through August 25, 2025 and August 26, 2025 through October 6, 2025) there was little to no change in the level of economic activity. Reports by the twelve Federal Reserve Districts (Districts) noted the following during the reporting periods:
•
Consumer spending was flat to declining, particularly with retail sales, with wages failing to keep up with rising prices for many households. Auto sales were boosted in some Districts by strong demand for electric vehicles ahead of the expiration of a federal tax credit at the end of September as well as an increase in consumer demand for parts and services to repair older vehicles. Several reports noted that lower- and middle-income households continued to seek discounts and promotions in the face of rising prices and elevated economic uncertainty.
•
Manufacturing activity varied by Districts, and most reports noted challenging conditions due to higher tariffs and waning overall demand. Activity in agriculture, energy and transportation was generally down. Conditions in the financial services sector and other interest rate-sensitive sectors, such as residential and commercial real estate, were mixed. Some reports noted improved business lending in recent weeks due to lower interest rates, while other reports continued to highlight muted activity.
•
The outlook for future economic growth varied by District and sector. Sentiment reportedly improved in a few Districts, with some contacts expecting an uptick in demand over the next six to twelve months. However, many others continued to expect elevated uncertainty to weigh down activity, with one District highlighting the downside risk to growth from a prolonged government shutdown.
•
Employment levels were largely stable and demand for labor was generally muted across Districts and sectors. In most Districts, more employers reported lowering head counts through layoffs and attrition, with contacts citing weaker demand, elevated economic uncertainty and, in some cases, increased investment in AI technologies. Employers that reported hiring generally noted improved labor availability, and some favored hiring temporary and part-time workers over offering full-time employment opportunities. Nevertheless, labor supply in the hospitality, agriculture, construction and manufacturing sectors was reportedly strained in several Districts due to recent changes to immigration policies. Wages grew at a modest to moderate pace and labor cost pressures intensified due to outsized increases in employer-sponsored health insurance expenses.
•
Prices rose further, as several District reports indicated that input costs increased at a faster pace due to higher import costs and the higher cost of services such as insurance, health care and technology solutions. Tariff-induced input cost increases were reported across many Districts, but the extent of those higher costs passing through to final prices varied. Some firms facing tariff-induced cost pressures kept their selling prices largely unchanged to preserve market share and in response to pushback from price-sensitive clients. However, there were also reports of firms in manufacturing and retail trades fully passing higher import costs along to their customers. Waning demand in some markets reportedly pushed prices down for some materials, such as steel and lumber.
Reports by the Federal Reserve’s Sixth District, Atlanta (which includes Trustmark’s Alabama, Florida, Georgia and Mississippi market regions), Eighth District, St. Louis (which includes Trustmark’s Tennessee market region), and Eleventh District, Dallas (which includes Trustmark’s Texas market region), noted similar findings for the reporting period as those discussed above. The Federal Reserve's Sixth District reported overall loan growth was flat, loan demand from both corporate and consumer borrowers was muted amid persistent economic uncertainty, consumer lending contracted further, and while banks reported healthy credit quality, delinquencies ticked up. The Federal Reserve's Sixth District also reported that multiple bank mergers were announced, affecting the banking landscape across the southeast. The Federal Reserve’s Eighth District reported that banking activity remained unchanged, with moderate loan demand and overall credit conditions remaining strong. The Federal Reserve’s Eighth District also reported bankers tightening their lending standards with higher equity requirements, more scrutiny of small business loans and limited access to credit for smaller investors. The Federal Reserve’s Eleventh District reported that loan volume and loan demand increased in September 2025, credit tightening continued and loan pricing declined. The Federal Reserve’s Eleventh District also noted that overall loan performance deteriorated slightly, though performance for commercial real estate sharply improved, bankers reported stable general business activity and mixed outlooks.
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Trustmark is intently monitoring the impact of tariffs, the United States government shutdown and other administrative policies on its customer base, interest rates and credit-related issues. Economic uncertainty or disruptions in the marketplace as a result of such policies could reduce loan demand or increase loan nonperformance. It is not possible to predict the timing or magnitude of changes to policies by the current United States presidential administration, if any, or the impact any such policy changes could have on Trustmark's customer base, credit quality or results of operations.
Financial Highlights
Trustmark reported net income of $56.8 million, or basic and diluted earnings per share (EPS) of $0.94, in the third quarter of 2025, compared to $51.3 million, or basic and diluted EPS of $0.84, in the third quarter of 2024. Trustmark’s reported performance during the quarter ended September 30, 2025 produced a return on average tangible equity of 12.84%, a return on average assets of 1.21%, an average equity to average assets ratio of 11.26% and a dividend payout ratio of 25.53%, compared to a return on average tangible equity of 12.86%, a return on average assets of 1.10%, an average equity to average assets ratio of 10.39% and a dividend payout ratio of 27.38% during the quarter ended September 30, 2024.
Trustmark reported net income of $166.3 million, or basic and diluted EPS of $2.75 and $2.74, respectively, for the nine months ended September 30, 2025, compared to $166.7 million, or basic and diluted EPS of $2.72, for the same time period in 2024. Trustmark's reported performance during the first nine months of 2025 produced a return on average tangible equity of 13.03%, a return on average assets of 1.21%, an average equity to average assets ratio of 11.09% and a dividend payout ratio of 26.18%, compared to a return on average tangible equity of 15.79%, a return on average assets of 1.19%, an average equity to average assets ratio of 9.52% and a dividend payout ratio of 25.37% for the same time period in 2024.
For further information regarding the calculation of return on average tangible equity, which is not a measure prepared in accordance with U.S. generally accepted accounting principles (GAAP), see “Non-GAAP Financial Measures.
Trustmark completed the sale of FBBI during the second quarter of 2024. As such, financial results for the nine months ended September 30, 2024 consisted of both continuing and discontinued operations. The discontinued operations included the financial results of FBBI prior to the sale. Trustmark reported a net loss from continuing operations of $11.1 million for the nine months ended September 30, 2024. Trustmark's reported performance from continuing operations for the nine months ended September 30, 2024 produced a return on average tangible equity from continuing operations of -1.02% and a return on average assets from continuing operations of -0.08%. The net loss from continuing operations for the nine months ended September 30, 2024 was principally due to the $182.8 million loss on the sale of available for sale securities during the second quarter of 2024.
Total revenue, which is defined as net interest income plus noninterest income (loss), for the three months ended September 30, 2025 was $202.4 million, an increase of $10.1 million, or 5.3%, when compared to the same time period in 2024. Total revenue for the nine months ended September 30, 2025 was $595.7 million, an increase of $231.5 million, or 63.6%, when compared to the same time period in 2024. The increase in total revenue when the three months ended September 30, 2025 is compared to the same time period in 2024, was principally due to increases in net interest income, primarily due to a decrease in interest on deposits partially offset by declines in interest and fees on loans held for sale (LHFS) and LHFI and other interest income, and noninterest income, primarily due to an increase in mortgage banking, net. The increase in total revenue when the nine months ended September 30, 2025 is compared to the same time period in 2024, was principally due to an increase in noninterest income, principally due to the significant non-routine transactions that occurred during the second quarter of 2024, and an increase in net interest income, primarily due to declines in all categories of interest expense and an increase in interest on securities partially offset by declines in interest and fees on LHFS and LHFI and other interest income.
Net interest income for the three and nine months ended September 30, 2025 totaled $162.4 million and $473.3 million, respectively, an increase of $7.7 million, or 5.0%, and $44.7 million, or 10.4%, respectively, when compared to the same time periods in 2024. Interest income totaled $242.7 million for the three months ended September 30, 2025, a decrease of $8.9 million, or 3.5%, when compared to the same time period in 2024, principally due to a decrease in interest and fees on LHFS and LHFI, primarily as a result of a decline in yields on the LHFS and LHFI portfolios, and a decrease in other interest income, primarily due to a decline in interest earned on balances held at the FRBA. Interest income totaled $709.3 million for the nine months ended September 30, 2025, a decrease of $11.3 million, or 1.6%, when compared to the same time period in 2024, principally due to a decrease in interest and fees on LHFS and LHFI, primarily as a result of a decline in yields on the LHFS and LHFI portfolios, and a decrease in other interest income, primarily due to a decline in interest earned on balances held at the FRBA, partially offset by an increase in interest on securities, primarily as a result of restructuring the available for sale securities portfolio during the second quarter of 2024. Interest expense totaled $80.3 million for the three months ended September 30, 2025, a decrease of $16.6 million, or 17.1%, when compared to the same time period in 2024 principally due to a decline in interest expense on deposits. Interest expense totaled $236.0 million for the nine months ended September 30, 2025, a decrease of $56.0 million, or 19.2%, when compared to the same time period in 2024 reflecting declines in all categories of interest expense.
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Noninterest income (loss) for the three months ended September 30, 2025 totaled $39.9 million, an increase of $2.4 million, or 6.3%, when compared to the same time period in 2024 principally due to an increase in mortgage banking, net. Noninterest income (loss) for the nine months ended September 30, 2025 totaled $122.4 million, an increase of $186.8 million when compared to the same time period in 2024 principally due to the significant non-routine transactions that occurred during the second quarter of 2024, which included the $182.8 million loss on the sale of available for sale securities included in securities gains (losses), net and the $4.8 million noncredit-related loss on the sale of 1-4 family mortgage loans partially offset by the $8.1 million fair value adjustment for the Visa C shares included in other, net as well as an increase in mortgage banking, net. Mortgage banking, net totaled $8.2 million and $25.6 million for the three and nine months ended September 30, 2025, respectively, an increase of $2.1 million, or 33.7%, and $6.3 million, or 32.8%, respectively, when compared to the same time periods in 2024 principally due to improvement in the net negative hedge ineffectiveness and an increase in the gain on sales of loans.
Noninterest expense for the three and nine months ended September 30, 2025 totaled $130.9 million and $380.1 million, respectively, an increase of $7.7 million, or 6.2%, and $18.8 million, or 5.2%, respectively, when compared to the same time periods in 2024, principally due to increases in salaries and employee benefits and services and fees. Salaries and employee benefits totaled $71.5 million and $208.3 million for the three and nine months ended September 30, 2025, respectively, an increase of $4.8 million, or 7.2%, and $11.3 million, or 5.7%, respectively, when compared to the same time periods in 2024. The increase in salaries and employee benefits when the three months ended September 30, 2025 is compared to the same time period in 2024 was principally due to increase in salaries expense primarily due to general merit increases, management annual performance incentives and other salaries expense. The increase in salaries and employee benefits when the nine months ended September 30, 2025 is compared to the same time period in 2024 was principally due to increases in salaries expense primarily due to general merit increases, management annual performance incentives, medical insurance expense, commissions related to mortgage originations and other salaries expense. Services and fees totaled $28.8 million and $82.0 million for the three and nine months ended September 30, 2025, respectively, an increase of $3.1 million, or 11.9%, and $7.1 million, or 9.5%, respectively, when compared to the same time periods in 2024, principally due to increases in data processing expenses related to software, business process operations outsourcing expense, legal expense and advertising expense.
Trustmark’s total PCL on LHFI for the three and nine months ended September 30, 2025 totaled $1.4 million and $14.9 million, respectively, compared to a total PCL on LHFI of $7.9 million and $39.0 million, respectively, for the same time periods in 2024. The total PCL on LHFI for the nine months ended September 30, 2024 included a $8.6 million PCL, LHFI sale of 1-4 family mortgage loans for the credit-related portion of the loss on the sale of the 1-4 family mortgage loans during the second quarter of 2024. The PCL, LHFI, excluding the PCL, LHFI sale of 1-4 family mortgage loans, decreased $15.5 million, or 51.0%, when the nine months ended September 30, 2025 is compared to the same time period in 2024. The PCL, LHFI for the three months ended September 30, 2025 primarily reflected increases in required reserves as a result of loan growth, changes in macroeconomic forecasts and updates to various reserve factors partially offset by declines in required reserves as a result of positive credit migration and reserves released associated with the resolution of the External Factor-Credit Quality Review qualitative factor. The PCL, LHFI for the nine months ended September 30, 2025 primarily reflected increases in required reserves as a result of loan growth and changes in macroeconomic forecasts partially offset by reserves released associated with the resolution of the External Factor-Credit Quality Review qualitative factor. The PCL, off-balance sheet credit exposures totaled $295 thousand and a negative $3.2 million for the three and nine months ended September 30, 2025, respectively, compared to a negative $1.4 million and a negative $5.2 million, respectively, for the same time periods in 2024. The PCL, off-balance sheet credit exposures for the three months ended September 30, 2025, primarily reflected an increase in required reserves as a result of changes in the total reserve rate, primarily related to consumer credits and commercial and industrial credits, credit migration and an increase in unfunded commitments, partially offset by reserves released associated with the resolution of the External Factor-Credit Quality Review qualitative factor. The release in PCL, off-balance sheet credit exposures for the nine months ended September 30, 2025, primarily reflected a decrease in required reserves as a result of positive credit migration, reserves released associated with the resolution of the External Factor-Credit Quality Review qualitative factor and a decrease in unfunded commitments. Please see the section captioned “Provision for Credit Losses” for additional information regarding the PCL on LHFI and off-balance sheet credit exposures.
At September 30, 2025, nonperforming assets totaled $92.3 million, an increase of $6.3 million, or 7.3%, compared to December 31, 2024, reflecting increases in both nonaccrual LHFI and other real estate. Nonaccrual LHFI totaled $84.0 million at September 30, 2025, an increase of $3.8 million, or 4.8%, relative to December 31, 2024, primarily as a result of 1-4 family mortgage loans placed on nonaccrual status in the Mississippi market region largely offset by the resolution of nonaccrual credits in the Alabama and Mississippi market regions. Other real estate totaled $8.3 million at September 30, 2025, an increase of $2.4 million, or 40.7%, when compared to December 31, 2024, principally due to properties foreclosed in the Mississippi market region partially offset by properties sold in the Mississippi and Alabama market regions and a reserve for other real estate write-down for a property in the Texas market region recorded during the third quarter of 2025.
LHFI totaled $13.548 billion at September 30, 2025, an increase of $458.2 million, or 3.5%, compared to December 31, 2024. The increase in LHFI during the first nine months of 2025 was primarily due to net growth in other commercial loans and leases, loans
65
secured by real estate, commercial and industrial loans and state and other political subdivision loans. For additional information regarding changes in LHFI and comparative balances by loan category, see the section captioned “LHFI.”
Management has continued its practice of maintaining excess funding capacity to provide Trustmark with adequate liquidity for its ongoing operations. In this regard, Trustmark benefits from its strong deposit base, its investment portfolio and its access to funding from a variety of external funding sources such as upstream federal funds lines, FHLB advances and brokered deposits. See the section captioned “Capital Resources and Liquidity” for further discussion of the components of Trustmark’s excess funding capacity.
Total deposits were $15.631 billion at September 30, 2025, an increase of $522.8 million, or 3.5%, compared to December 31, 2024. During the first nine months of 2025, noninterest-bearing deposits increased $247.6 million, or 8.1%, principally due to growth in commercial and public noninterest-bearing demand deposit accounts. Interest-bearing deposits increased $275.2 million, or 2.3%, during the first nine months of 2025, primarily due to growth in all categories of certificates of deposits (CDs) and money market deposit accounts (MMDA), partially offset by declines in all categories of interest checking accounts and savings accounts.
Federal funds purchased and securities sold under repurchase agreements totaled $420.0 million at September 30, 2025, an increase of $96.0 million, or 29.6%, compared to December 31, 2024, principally due to an increase in upstream federal funds purchased. Other borrowings totaled $208.4 million at September 30, 2025, a decrease of $93.2 million, or 30.9%, compared to December 31, 2024, principally due to a decrease in outstanding short-term FHLB advances with the FHLB of Dallas.
Recent Legislative and Regulatory Developments
On October 24, 2023, the federal banking agencies released a final rule significantly revising the framework that the agencies use to evaluate banks’ records of meeting the credit needs of their entire communities under the Community Reinvestment Act (CRA). On July 16, 2025, the agencies issued a notice of proposed rulemaking to rescind the October 2023 final rule and restore the CRA framework that existed previously, which has remained in effect due to a preliminary injunction that stayed implementation of the October 2023 rule. TB received a rating of “Outstanding” in its most recent CRA performance evaluation, which was conducted using the CRA framework that existed prior to the October 2023 final rule.
On July 30, 2024, the FDIC issued a proposed rule that would revise the FDIC’s regulations governing the classification and treatment of brokered deposits. On March 3, 2025, the FDIC withdrew the proposed rule.
On October 22, 2024, the CFPB released a final rule to implement Section 1033 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Under the final rule, financial institutions are required, upon request, to make available to a consumer or third party authorized by the consumer certain information TB has concerning a consumer financial product or service covered by the rule, such as a credit card or a deposit account. Industry organizations challenged the final rule in court. On July 29, 2025, the district court granted a motion by the CFPB to stay the proceedings while the CFPB conducts a rulemaking to revise the final rule substantially. On August 22, 2025, the CFPB issued an advance notice of proposed rulemaking to solicit comments and data on several issues relating to the final rule. On October 29, 2025, the district court issued a preliminary injunction preventing the CFPB from enforcing the final rule until the CFPB has completed its reconsideration of the rule.
On July 18, 2025, President Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) into law, establishing a federal licensing and supervisory framework for payment stablecoins and their issuers. The GENIUS Act may accelerate and increase the competition that non-traditional financial institutions pose to banks’ payment services but may also create opportunities for banks to hold stablecoin reserve assets, custody stablecoins or issue stablecoins. Several key provisions of the GENIUS Act require federal regulatory agencies to adopt implementing regulations, and the Act will take effect the earlier of 18 months after its enactment or 120 days after the agencies issue final implementing regulations.
For additional information regarding legislation and regulation applicable to Trustmark, see the section captioned “Supervision and Regulation” included in Part I. Item 1. – Business of Trustmark’s 2024 Annual Report.
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Selected Financial Data
The following tables present financial data derived from Trustmark’s consolidated financial statements as of and for the periods presented ($ in thousands, except per share data):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Consolidated Statements of Income (Loss)
Total interest income
$
242,717
$
251,592
$
709,292
$
720,583
Total interest expense
80,276
96,878
236,040
292,010
Net interest income
162,441
154,714
473,252
428,573
PCL, LHFI
1,390
7,923
14,861
30,327
PCL, LHFI sale of 1-4 family mortgage loans
—
—
—
8,633
PCL, off-balance sheet credit exposures
295
(1,375
)
(3,206
)
(5,167
)
Noninterest income (loss)
39,931
37,562
122,405
(64,369
)
Noninterest expense
130,933
123,270
380,058
361,260
Income (loss) from continuing operations before income taxes
69,754
62,458
203,944
(30,849
)
Income taxes from continuing operations
12,967
11,128
37,683
(19,747
)
Income (loss) from continuing operations
56,787
51,330
166,261
(11,102
)
Income from discontinued operations before income taxes
—
—
—
237,152
Income taxes from discontinued operations
—
—
—
59,353
Income from discontinued operations
—
—
—
177,799
Net income
$
56,787
$
51,330
$
166,261
$
166,697
Total Revenue
(1)
$
202,372
$
192,276
$
595,657
$
364,204
Per Share Data
(2)
Basic earnings (loss) per share (EPS) from continuing operations
$
0.94
$
0.84
$
2.75
$
(0.18
)
Basic EPS from discontinued operations
$
—
$
—
$
—
$
2.91
Basic EPS - total
$
0.94
$
0.84
$
2.75
$
2.72
Diluted EPS from continuing operations
$
0.94
$
0.84
$
2.74
$
(0.18
)
Diluted EPS from discontinued operations
$
—
$
—
$
—
$
2.90
Diluted EPS - total
$
0.94
$
0.84
$
2.74
$
2.72
Cash dividends per share
$
0.24
$
0.23
$
0.72
$
0.69
Performance Ratios
Return on average equity
10.78
%
10.62
%
10.89
%
12.54
%
Return on average equity from continuing operations
10.78
%
10.62
%
10.89
%
-0.83
%
Return on average tangible equity
12.84
%
12.86
%
13.03
%
15.79
%
Return on average tangible equity from continuing operations
12.84
%
12.86
%
13.03
%
-1.02
%
Return on average assets
1.21
%
1.10
%
1.21
%
1.19
%
Return on average assets from continuing operations
1.21
%
1.10
%
1.21
%
-0.08
%
Average equity / average assets
11.26
%
10.39
%
11.09
%
9.52
%
Net interest margin (fully taxable equivalent)
3.83
%
3.69
%
3.80
%
3.43
%
Dividend payout ratio
25.53
%
27.38
%
26.18
%
25.37
%
Dividend payout ratio from continuing operations
25.53
%
27.38
%
26.18
%
-383.33
%
Credit Quality Ratios
Net charge-offs (recoveries) (excl sale of 1-4 family mortgage loans) / average loans
0.13
%
0.14
%
0.10
%
0.12
%
PCL, LHFI (excl PCL, LHFI sale of 1-4 family mortgage loans) / average loans
0.04
%
0.24
%
0.15
%
0.30
%
Nonaccrual LHFI / (LHFI + LHFS)
0.61
%
0.55
%
Nonperforming assets / (LHFI + LHFS) plus other real estate
0.67
%
0.58
%
ACL, LHFI / LHFI
1.22
%
1.21
%
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(1)
Consistent with Trustmark’s annual financial statements, total revenue is defined as net interest income plus noninterest income (loss).
(2)
Due to rounding, EPS from continuing operations and discontinued operations may not sum to EPS from net income.
September 30,
2025
2024
Consolidated Balance Sheets
Total assets
$
18,801,510
$
18,480,372
Securities
3,082,704
3,084,153
Total loans (LHFI + LHFS)
13,776,297
13,316,565
Deposits
15,630,974
15,240,935
Total shareholders' equity
2,114,268
1,980,096
Stock Performance
Market value - close
$
39.60
$
31.82
Book value
35.16
32.35
Tangible book value
29.60
26.88
Capital Ratios
Total equity / total assets
11.25
%
10.71
%
Tangible equity / tangible assets
9.64
%
9.07
%
Tangible equity / risk-weighted assets
11.66
%
10.97
%
Tier 1 leverage ratio
10.26
%
9.65
%
Common equity Tier 1 risk-based capital ratio
11.88
%
11.30
%
Tier 1 risk-based capital ratio
12.27
%
11.70
%
Total risk-based capital ratio
14.33
%
13.71
%
Non-GAAP Financial Measures
In addition to capital ratios defined by 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's common equity Tier 1 capital includes common stock, capital surplus and retained earnings, and is reduced by goodwill and other intangible assets, net of associated net deferred tax liabilities as well as disallowed deferred tax assets and threshold deductions as applicable.
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 intangible 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 calculation methods may not be comparable with those of 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 and the notes related thereto in their entirety and not to rely on any single financial measure.
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The following table reconciles Trustmark’s calculation of these measures to amounts reported under GAAP for the periods presented ($ in thousands, except per share data):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity
$
2,090,373
$
1,923,248
$
2,041,407
$
1,776,291
Less: Goodwill
(334,605
)
(334,605
)
(334,605
)
(334,605
)
Identifiable intangible assets
(49
)
(168
)
(80
)
(196
)
Total average tangible equity
$
1,755,719
$
1,588,475
$
1,706,722
$
1,441,490
PERIOD END BALANCES
Total shareholders' equity
$
2,114,268
$
1,980,096
Less: Goodwill
(334,605
)
(334,605
)
Identifiable intangible assets
(32
)
(153
)
Total tangible equity
(a)
$
1,779,631
$
1,645,338
TANGIBLE ASSETS
Total assets
$
18,801,510
$
18,480,372
Less: Goodwill
(334,605
)
(334,605
)
Identifiable intangible assets
(32
)
(153
)
Total tangible assets
(b)
$
18,466,873
$
18,145,614
Risk-weighted assets
(c)
$
15,263,314
$
15,004,024
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income (loss) from continuing operations
$
56,787
$
51,330
$
166,261
$
(11,102
)
Plus: Intangible amortization net of tax from
continuing operations
24
21
72
61
Net income (loss) from continuing operations adjusted for
intangible amortization
$
56,811
$
51,351
$
166,333
$
(11,041
)
Period end shares outstanding
(d)
60,126,376
61,206,606
TANGIBLE EQUITY MEASUREMENTS
Return on average tangible equity from
continuing operations
(1)
12.84
%
12.86
%
13.03
%
-1.02
%
Tangible equity/tangible assets
(a)/(b)
9.64
%
9.07
%
Tangible equity/risk-weighted assets
(a)/(c)
11.66
%
10.97
%
Tangible book value
(a)/(d)*1,000
$
29.60
$
26.88
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity
$
2,114,268
$
1,980,096
CECL transitional adjustment
—
6,500
AOCI-related adjustments
19,380
29,045
CET1 adjustments and deductions:
Goodwill net of associated deferred tax liabilities (DTLs)
(320,754
)
(320,757
)
Other adjustments and deductions for CET1
(2)
(111
)
(115
)
CET1 capital
(e)
1,812,783
1,694,769
Additional Tier 1 capital instruments plus related surplus
60,000
60,000
Tier 1 capital
$
1,872,783
$
1,754,769
Common equity tier 1 risk-based capital ratio
(e)/(c)
11.88
%
11.30
%
(1)
Calculated using annualized net income (loss) from continuing operations adjusted for intangible amortization divided by total average tangible equity.
(2)
Includes other intangible assets, net of DTLs, disallowed deferred tax assets and threshold deductions, as applicable.
Trustmark discloses certain non-GAAP financial measures, including net income adjusted for significant non-routine transactions, because Management uses these measures for business planning purposes, including to manage Trustmark’s business against internal projected results of operations and to measure Trustmark’s performance. Trustmark views these as measures of its core operating business, which exclude the impact of the items detailed below, as these items are generally not operational in nature. These non-GAAP financial measures also provide another basis for comparing period-to-period results as presented in the accompanying selected financial data table and the consolidated financial statements by excluding potential differences caused by non-operational and unusual or non-recurring items. Readers are cautioned that these adjustments are not permitted under GAAP. Trustmark encourages readers to consider its consolidated financial statements and the notes related thereto in their entirety, and not to rely on any single financial measure.
69
The following table presents adjustments to net income and selected financial ratios as reported in accordance with GAAP resulting from significant non-routine items occurring during the periods presented ($ in thousands, except per share data):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Net Income (loss) from continuing operations (GAAP)
$
56,787
$
51,330
$
166,261
$
(11,102
)
Significant non-routine transactions (net of taxes):
PCL, LHFI sale of 1-4 family mortgage loans
—
—
—
6,475
Loss on sale of 1-4 family mortgage loans
—
—
—
3,598
Visa C shares fair value adjustment
—
—
—
(6,042
)
Securities gains (losses), net
—
—
—
137,094
Net income adjusted for significant non-routine
transactions (Non-GAAP)
$
56,787
$
51,330
$
166,261
$
130,023
Diluted EPS from adjusted continuing operations
$
0.94
$
0.84
$
2.74
$
2.12
Financial Ratios - Reported (GAAP)
Return on average equity from continuing operations
10.78
%
10.62
%
10.89
%
-0.83
%
Return on average tangible equity from continuing operations
12.84
%
12.86
%
13.03
%
-1.02
%
Return on average assets from continuing operations
1.21
%
1.10
%
1.21
%
-0.08
%
Financial Ratios - Adjusted (Non-GAAP)
Return on average equity from adjusted continuing operations
n/a
n/a
n/a
9.40
%
Return on average tangible equity from adjusted continuing
operations
n/a
n/a
n/a
11.49
%
Return on average assets from adjusted continuing operations
n/a
n/a
n/a
0.93
%
Results of Operations
Net Interest Income
Net interest income is the principal component of Trustmark’s income stream and represents the difference, or spread, between interest and fee income generated from earning assets and the interest expense paid on deposits and borrowed funds. Fluctuations in interest rates, as well as volume and mix changes in earning assets and interest-bearing liabilities, can materially impact net interest income. The net interest margin is computed by dividing fully taxable equivalent (FTE) net interest income by average interest-earning assets and measures how effectively Trustmark utilizes its interest-earning assets in relationship to the interest cost of funding them. The accompanying yield/rate analysis tables show the average balances for all assets and liabilities of Trustmark and the interest income or expense associated with earning assets and interest-bearing liabilities. The yields and rates have been computed based upon interest income and expense adjusted to a FTE basis using the federal statutory corporate tax rate in effect for each of the periods shown. Loans on nonaccrual have been included in the average loan balances, and interest collected prior to these loans having been placed on nonaccrual has been included in interest income. Loan fees included in interest associated with the average LHFS and LHFI balances were immaterial.
Net interest income-FTE for the three and nine months ended September 30, 2025 increased $7.2 million, or 4.6%, and $42.8 million, or 9.8%, respectively, when compared with the same time periods in 2024. The increase in net interest income-FTE when the three months ended September 30, 2025 is compared to the same time period in 2024 was principally due to a decline in interest on deposits partially offset by declines in interest and fees on LHFS and LHFI-FTE and other interest income. The increase in net interest income-FTE when the nine months ended September 30, 2025 is compared to the same time period in 2024 was principally due to declines in all categories of interest expense as well as an increase in interest on securities, partially offset by declines in interest and fees on LHFS and LHFI-FTE and other interest income. The net interest margin-FTE for the three and nine months ended September 30, 2025 increased 14 basis points and 37 basis points to 3.83% and 3.80%, respectively, when compared to the same time periods in 2024, principally due to an increase in the yield on the securities portfolio, primarily due to the restructuring of the available for sale securities portfolio during the second quarter of 2024, as well as decreases in the cost of interest-bearing liabilities, partially offset by declines in the yield on loan (LHFS and LHFI) and other earning assets.
Average interest-earning assets for the three months ended September 30, 2025 totaled $17.111 billion compared to $17.016 billion for the same time period in 2024, an increase of $95.2 million, or 0.6%, reflecting an increase in average loans (LHFS and LHFI) partially offset by declines in average other earning assets and average total securities. Average interest-earning assets for the nine months ended September 30, 2025 totaled $16.953 billion compared to $17.097 billion for the same time period in 2024, a decrease of $144.1 million,
70
or 0.8%, reflecting declines in average other earning assets and average total securities partially offset by an increase in average loans (LHFS and LHFI). Average total securities declined $8.3 million, or 0.3%, and $180.0 million, or 5.6%, respectively, when the three and nine months ended September 30, 2025 are compared to the same time periods in 2024, principally due to available for sale securities sold net of available for sale securities purchased as part of the restructuring of the available for sale securities portfolio during the second quarter of 2024 as well as calls, maturities and pay-downs of the loans underlying GSE guaranteed securities net of securities purchased. Average other earning assets decreased $218.9 million, or 36.0%, and $200.9 million, or 34.0%, respectively, when the three and nine months ended September 30, 2025 are compared to the same time periods in 2024, primarily due to a decrease in reserves held at the FRBA. Average loans (LHFS and LHFI) increased $322.4 million, or 2.4%, and $236.8 million, or 1.8%, respectively, when the three and nine months ended September 30, 2025 are compared to the same time periods in 2024, principally due to an increase in the average balance of the LHFI portfolio of $296.0 million, or 2.2%, and $215.4 million, or 1.6%, respectively. The increase in the LHFI portfolio when the average balances at September 30, 2025 are compared to September 30, 2024 was principally due to net growth in LHFI secured by real estate and other commercial loans and leases partially offset by declines in state and other political subdivision loans and commercial and industrial loans.
Interest income-FTE for the three and nine months ended September 30, 2025 totaled $245.5 million and $717.4 million, respectively, a decrease of $9.4 million, or 3.7%, and $13.2 million, or 1.8%, respectively. The yield on total earning assets for the three and nine months ended September 30, 2025 decreased 27 basis points to 5.69% and 5 basis points to 5.66%, respectively, when compared to the same time periods in 2024. The decrease in interest income-FTE for the three months ended September 30, 2025 was primarily due to decreases in interest and fees on LHFS and LHFI-FTE and other interest income. The decrease in interest income-FTE for the nine months ended September 30, 2025 was primarily due to decreases in interest and fees on LHFS and LHFI-FTE and other interest income partially offset by an increase in interest on securities-taxable. During the three and nine months ended September 30, 2025, interest and fees on LHFS and LHFI-FTE decreased $5.8 million, or 2.6%, and $20.6 million, or 3.2%, respectively, while the yield on LHFS and LHFI decreased 34 basis points to 6.21% and 31 basis points to 6.19%, respectively, when compared to the same time periods in 2024, primarily due to a decline in interest rates. During the three and nine months ended September 30, 2025, other interest income declined $4.1 million, or 49.0%, and $11.7 million, or 47.8%, respectively, principally due to a decline in interest earned on reserves held at the FRBA reflecting a decline in the average balance of reserves held at the FRBA, while the yield on other earning assets decreased 111 basis points and 116 basis points to 4.32% and 4.39%, respectively, when compared to the same time periods in 2024, principally due to a decline in the rate paid by the FRB on reserve balances. Interest on securities-taxable increased $463 thousand, or 1.8%, and $19.2 million, or 32.2%, respectively, when the three and nine months ended September 30, 2025 are compared to the same time periods in 2024, while the yield on securities-taxable increased to 3.50% and 3.47%, respectively, for the three and nine months ended September 30, 2025, compared to 3.44% and 2.48%, respectively, for the same time periods in 2024. The increase in interest on securities-taxable and the yield on securities-taxable when the nine months ended September 30, 2025 is compared to the same time period in 2024 was principally due to the restructuring of the available for sale securities portfolio during the second quarter of 2024.
Average interest-bearing liabilities for the three months ended September 30, 2025 totaled $13.052 billion compared to $13.088 billion for the three months ended September 30, 2024, a decrease of $35.5 million, or 0.3%, reflecting declines in average other borrowings and average interest-bearing deposits partially offset by an increase in average federal funds purchased and securities sold under repurchase agreements. Average interest-bearing liabilities for the nine months ended September 30, 2025 totaled $12.984 billion compared to $13.280 billion for the nine months ended September 30, 2024, a decrease of $296.0 million, or 2.2%, principally due to declines in average interest-bearing deposits and average other borrowings. Average interest-bearing deposits for the three months ended September 30, 2025 decreased $24.2 million, or 0.2%, when compared to the same time period in 2024, reflecting declines in average interest-bearing demand deposits and average savings deposits partially offset by an increase in average time deposits. Average interest-bearing deposits for the nine months ended September 30, 2025 decreased $204.9 million, or 1.7%, when compared to the same time period in 2024, reflecting declines in all categories of average interest-bearing deposits. Average other borrowings for the three and nine months ended September 30, 2025 decreased $55.6 million, or 10.6%, and $92.2 million, or 14.6%, respectively, when compared to the same time periods in 2024, principally due to the decrease in average short-term FHLB advances outstanding with the FHLB of Dallas as a result of changes in funding needs. Average federal funds purchased and securities sold under repurchase agreements for the three and nine months ended September 30, 2025 increased $44.2 million, or 11.8%, and $1.1 million, or 0.3%, respectively, when compared to the same time periods in 2024. The increase in average federal funds purchased and securities sold under repurchase agreements when the three months ended September 30, 2025 is compared to the same time period in 2024, was principally due to an increase in average upstream federal funds purchased.
Interest expense for the three and nine months ended September 30, 2025 totaled $80.3 million and $236.0 million, respectively, a decrease of $16.6 million, or 17.1%, and $56.0 million, or 19.2%, respectively, when compared with the same time periods in 2024, while the rate on total interest-bearing liabilities decreased 50 basis points and 51 basis points to 2.44% and 2.43%, respectively, reflecting declines in all categories of interest expense. Interest on deposits for the three and nine months ended September 30, 2025 decreased $15.0 million, or 17.4%, and $46.5 million, or 18.3%, respectively, while the rate on interest-bearing deposits decreased 49 basis points and 47 basis points to 2.32% and 2.30%, respectively, when compared to the same time periods in 2024, primarily due to declines in rates on interest-bearing deposits as well as declines in average balances of public interest checking accounts and brokered
71
deposits. Other interest expense for the three and nine months ended September 30, 2025 decreased $1.4 million, or 23.2%, and $6.8 million, or 30.3%, respectively, while the rate on other borrowings decreased 65 basis points and 87 basis points, respectively, to 3.88% for both periods when compared to the same time periods in 2024, primarily due to the decrease in average outstanding short-term FHLB advances with the FHLB of Dallas as well as a decline in the rate on short-term FHLB advances. Interest expense on federal funds purchased and securities sold under repurchase agreements for the three and nine months ended September 30, 2025 decreased $238 thousand, or 4.9%, and $2.7 million, or 16.6%, respectively, while the rate on federal funds purchased and securities sold under repurchase agreements decreased 78 basis points and 88 basis points to 4.37% and 4.34%, respectively, when compared to the same time periods in 2024, reflecting a decrease in the target rate on federal funds purchased by the FRB.
The following tables provide the tax equivalent basis yield or rate for each component of the tax equivalent net interest margin for the periods presented ($ in thousands):
Three Months Ended September 30,
2025
2024
Average
Balance
Interest
Yield/
Rate
Average
Balance
Interest
Yield/
Rate
Assets
Interest-earning assets:
Securities - taxable
$
3,019,667
$
26,625
3.50
%
$
3,027,942
$
26,162
3.44
%
Loans (LHFS and LHFI)
13,702,038
214,636
6.21
%
13,379,658
220,433
6.55
%
Other earning assets
389,021
4,233
4.32
%
607,928
8,302
5.43
%
Total interest-earning assets
17,110,726
245,494
5.69
%
17,015,528
254,897
5.96
%
Other assets
1,627,362
1,646,241
ACL, LHFI
(167,775
)
(154,476
)
Total assets
$
18,570,313
$
18,507,293
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits
$
12,163,324
71,065
2.32
%
$
12,187,523
86,043
2.81
%
Federal funds purchased and
securities sold under repurchase
agreements
419,802
4,626
4.37
%
375,559
4,864
5.15
%
Other borrowings
469,316
4,585
3.88
%
524,884
5,971
4.53
%
Total interest-bearing liabilities
13,052,442
80,276
2.44
%
13,087,966
96,878
2.94
%
Noninterest-bearing demand deposits
3,194,587
3,221,516
Other liabilities
232,911
274,563
Shareholders' equity
2,090,373
1,923,248
Total liabilities and
shareholders' equity
$
18,570,313
$
18,507,293
Net interest margin
165,218
3.83
%
158,019
3.69
%
Less tax equivalent adjustment
2,777
3,305
Net interest margin per
consolidated statements
of income (loss)
$
162,441
$
154,714
72
Nine Months Ended September 30,
2025
2024
Average
Balance
Interest
Yield/
Rate
Average
Balance
Interest
Yield/
Rate
Assets
Interest-earning assets:
Securities - taxable
$
3,039,971
$
78,950
3.47
%
$
3,219,800
$
59,725
2.48
%
Securities - nontaxable
—
—
—
150
5
4.45
%
Loans (LHFS and LHFI)
13,523,338
625,642
6.19
%
13,286,538
646,288
6.50
%
Other earning assets
389,839
12,813
4.39
%
590,727
24,539
5.55
%
Total interest-earning assets
16,953,148
717,405
5.66
%
17,097,215
730,557
5.71
%
Other assets
1,619,253
1,705,473
ACL, LHFI
(164,728
)
(145,510
)
Total assets
$
18,407,673
$
18,657,178
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits
$
12,031,383
206,960
2.30
%
$
12,236,259
253,440
2.77
%
Federal funds purchased and
securities sold under repurchase
agreements
413,752
13,437
4.34
%
412,679
16,118
5.22
%
Other borrowings
538,588
15,643
3.88
%
630,766
22,452
4.75
%
Total interest-bearing liabilities
12,983,723
236,040
2.43
%
13,279,704
292,010
2.94
%
Noninterest-bearing demand deposits
3,141,082
3,175,371
Other liabilities
241,461
425,812
Shareholders' equity
2,041,407
1,776,291
Total liabilities and
shareholders' equity
$
18,407,673
$
18,657,178
Net interest margin
481,365
3.80
%
438,547
3.43
%
Less tax equivalent adjustment
8,113
9,974
Net interest margin per
consolidated statements
of income (loss)
$
473,252
$
428,573
Provision for Credit Losses
The PCL, LHFI is the amount necessary to maintain the ACL for LHFI at the amount of expected credit losses inherent within the LHFI portfolio. The amount of PCL and the related ACL for LHFI are based on Trustmark’s ACL methodology. The PCL, LHFI totaled $1.4 million and $14.9 million for the three and nine months ended September 30, 2025, respectively, compared to a PCL, LHFI, excluding the PCL, LHFI sale of 1-4 family mortgage loans, of $7.9 million and $30.3 million, respectively, for the same time periods in 2024. The PCL, LHFI for the three months ended September 30, 2025 primarily reflected increases in required reserves as a result of loan growth, changes in macroeconomic forecasts and updates to various reserve factors, partially offset by declines in required reserves as a result of positive credit migration and reserves released associated with the resolution of the External Factor-Credit Quality Review qualitative factor. The PCL, LHFI for the nine months ended September 30, 2025 primarily reflected increases in required reserves as a result of loan growth and changes in macroeconomic forecasts partially offset by reserves released associated with the resolution of the External Factor-Credit Quality Review qualitative factor.
FASB ASC Topic 326 requires Trustmark to estimate expected credit losses for off-balance sheet credit exposures which are not unconditionally cancellable by Trustmark. Trustmark maintains a separate ACL for off-balance sheet credit exposures, including unfunded commitments and letters of credit. Adjustments to the ACL on off-balance sheet credit exposures are recorded to the PCL, off-balance sheet credit exposures. The PCL, off-balance sheet credit exposures totaled $295 thousand and a negative $3.2 million for the three and nine months ended September 30, 2025, respectively, compared to a negative $1.4 million and a negative $5.2 million, respectively, for the same time periods in 2024. The PCL, off-balance sheet credit exposures for the three months ended September 30,
73
2025, primarily reflected an increase in required reserves as a result of changes in the total reserve rate, primarily related to consumer credits and commercial and industrial credits, credit migration and an increase in unfunded commitments, partially offset by reserves released associated with the resolution of the External Factor-Credit Quality Review qualitative factor. The release in PCL, off-balance sheet credit exposures for the nine months ended September 30, 2025, primarily reflected a decrease in required reserves as a result of positive credit migration, reserves released associated with the resolution of the External Factor-Credit Quality Review qualitative factor and a decrease in unfunded commitments.
See the section captioned “Allowance for Credit Losses” for information regarding Trustmark’s ACL methodology as well as further analysis of the PCL.
Noninterest Income (Loss)
The following table provides the comparative components of noninterest income (loss) for the periods presented ($ in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
$ Change
% Change
2025
2024
$ Change
% Change
Service charges on deposit
accounts
$
11,251
$
11,272
$
(21
)
-0.2
%
$
32,472
$
33,154
$
(682
)
-2.1
%
Bank card and other fees
8,318
7,931
387
4.9
%
24,736
24,584
152
0.6
%
Mortgage banking, net
8,182
6,119
2,063
33.7
%
25,555
19,238
6,317
32.8
%
Wealth management
9,798
9,288
510
5.5
%
28,979
27,932
1,047
3.7
%
Other, net
2,382
2,952
(570
)
-19.3
%
10,663
13,515
(2,852
)
-21.1
%
Securities gains (losses), net
—
—
—
—
—
(182,792
)
182,792
100.0
%
Total noninterest income
(loss)
$
39,931
$
37,562
$
2,369
6.3
%
$
122,405
$
(64,369
)
$
186,774
n/m
n/m - percentage changes greater than +/- 100% are not considered meaningful
Changes in various components of noninterest income (loss) are discussed in further detail below. For analysis of Trustmark’s wealth management income, please see the section captioned “Results of Segment Operations.”
Mortgage Banking, Net
The following table illustrates the components of mortgage banking, net included in noninterest income (loss) for the periods presented ($ in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
$ Change
% Change
2025
2024
$ Change
% Change
Mortgage servicing income, net
$
7,251
$
7,127
$
124
1.7
%
$
21,554
$
21,054
$
500
2.4
%
Change in fair value-MSR
from runoff
(3,441
)
(3,154
)
(287
)
-9.1
%
(9,099
)
(8,527
)
(572
)
-6.7
%
Gain on sales of loans, net
5,230
4,648
582
12.5
%
15,080
14,808
272
1.8
%
Mortgage banking income
before net hedge
ineffectiveness
9,040
8,621
419
4.9
%
27,535
27,335
200
0.7
%
Change in fair value-MSR from
market changes
(1,521
)
(10,406
)
8,885
85.4
%
(9,395
)
(6,909
)
(2,486
)
-36.0
%
Change in fair value of
derivatives
663
7,904
(7,241
)
-91.6
%
7,415
(1,188
)
8,603
n/m
Net hedge ineffectiveness
(858
)
(2,502
)
1,644
65.7
%
(1,980
)
(8,097
)
6,117
75.5
%
Mortgage banking, net
$
8,182
$
6,119
$
2,063
33.7
%
$
25,555
$
19,238
$
6,317
32.8
%
n/m - percentage changes greater than +/- 100% are not considered meaningful
The increase in mortgage banking, net for the three and nine months ended September 30, 2025 when compared to the same time periods in 2024 was principally due to improvement in the net negative hedge ineffectiveness and an increase in the gain on sales of loans. Mortgage loan production for the three and nine months ended September 30, 2025 was $389.4 million and $1.134 billion, respectively, a decrease of $2.7 million, or 0.7%, and an increase of $88.9 million, or 8.5%, respectively, when compared to the same time periods in 2024. Loans serviced for others totaled $8.912 billion at September 30, 2025, compared with $8.691 billion at September 30, 2024, an increase of $221.1 million, or 2.5%.
74
Representing a significant component of mortgage banking income is the gain on sales of loans, net. The increase in the gain on sale of loans, net when the three months ended September 30, 2025 is compared to the same time period in 2024 was principally due to an increase in the volume of loans sold and higher profit margins in secondary marketing activities. The increase in the gain on sales of loans, net when the nine months ended September 30, 2025 is compared to the same time period in 2024, was primarily the result of an increase in the mortgage valuation adjustment partially offset by lower profit margins in secondary marketing activities. Loan sales totaled $327.7 million and $858.3 million for the three and nine months ended September 30, 2025, respectively, an increase of $39.1 million, or 13.6%, and $14.7 million, or 1.7%, respectively, when compared with the same time periods in 2024.
Other, Net
The following table illustrates the components of other, net included in noninterest income (loss) for the periods presented ($ in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
$ Change
% Change
2025
2024
$ Change
% Change
Partnership amortization for tax
credit purposes
$
(2,385
)
$
(1,977
)
$
(408
)
-20.6
%
$
(6,646
)
$
(5,635
)
$
(1,011
)
-17.9
%
Increase in life insurance cash
surrender value
1,945
1,883
62
3.3
%
5,723
5,587
136
2.4
%
Loss on sale of 1-4 family
mortgage loans
—
—
—
—
—
(4,798
)
4,798
100.0
%
Visa C shares fair value
adjustment
—
—
—
—
—
8,056
(8,056
)
-100.0
%
Other miscellaneous income
2,822
3,046
(224
)
-7.4
%
11,586
10,305
1,281
12.4
%
Total other, net
$
2,382
$
2,952
$
(570
)
-19.3
%
$
10,663
$
13,515
$
(2,852
)
-21.1
%
The decrease in other, net when the nine months ended September 30, 2025 is compared to the same time period in 2024 was principally due to the $8.1 million fair value adjustment for the Visa C shares during the second quarter of 2024 partially offset by the $4.8 million noncredit-related loss on the sale of 1-4 family mortgage loans during the second quarter of 2024.
Noninterest Expense
The following table illustrates the comparative components of noninterest expense for the periods presented ($ in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
$ Change
%
Change
2025
2024
$ Change
% Change
Salaries and employee benefits
$
71,508
$
66,691
$
4,817
7.2
%
$
208,298
$
197,016
$
11,282
5.7
%
Services and fees
28,777
25,724
3,053
11.9
%
82,022
74,898
7,124
9.5
%
Net occupancy-premises
7,774
7,398
376
5.1
%
22,666
21,933
733
3.3
%
Equipment expense
6,410
6,141
269
4.4
%
18,924
18,707
217
1.2
%
Other expense
16,464
17,316
(852
)
-4.9
%
48,148
48,706
(558
)
-1.1
%
Total noninterest expense
$
130,933
$
123,270
$
7,663
6.2
%
$
380,058
$
361,260
$
18,798
5.2
%
Changes in the various components of noninterest expense are discussed in further detail below. Management considers disciplined expense management a key area of focus in the support of improving shareholder value.
Salaries and Employee Benefits
The increase in salaries and employee benefits when the three months ended September 30, 2025 is compared to the same time period in 2024 was principally due to increase in salaries expense primarily due to general merit increases, management annual performance incentives and other salaries expense. The increase in salaries and employee benefits when the nine months ended September 30, 2025 is compared to the same time period in 2024 was principally due to increases in salaries expense primarily due to general merit increases, management annual performance incentives, medical insurance expense, commissions related to mortgage originations and other salaries expense.
75
Services and Fees
The increases in services and fees when the three and nine months ended September 30, 2025 are compared to the same time periods in 2024 were principally due to increases in data processing expenses related to software, business process operations outsourcing expense, legal expense and advertising expense.
Other Expense
The following table illustrates the comparative components of other noninterest expense for the periods presented ($ in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
$ Change
% Change
2025
2024
$ Change
% Change
Loan expense
$
3,287
$
2,824
$
463
16.4
%
$
9,456
$
8,659
$
797
9.2
%
Amortization of intangibles
31
28
3
10.7
%
94
83
11
13.3
%
FDIC assessment expense
3,935
5,071
(1,136
)
-22.4
%
12,159
14,396
(2,237
)
-15.5
%
Other real estate expense, net
1,932
2,452
(520
)
-21.2
%
2,543
3,450
(907
)
-26.3
%
Other miscellaneous expense
7,279
6,941
338
4.9
%
23,896
22,118
1,778
8.0
%
Total other expense
$
16,464
$
17,316
$
(852
)
-4.9
%
$
48,148
$
48,706
$
(558
)
-1.1
%
Results of Segment Operations
For a description of the methodologies used to measure financial performance and financial information by reportable segment, please see Note 19 – Segment Information included in Part I. Item 1. – Financial Statements of this report. The Insurance Segment is included in discontinued operations for the nine months ended September 30, 2024. For additional information about discontinued operations, please see Note 2 - Discontinued Operations included in Part I. Item 1. – Financial Statements of this report. The following discusses changes in the results of operations of each reportable segment for the nine months ended September 30, 2025 and 2024.
General Banking
Net interest income for the General Banking Segment increased $42.4 million, or 10.0%, when the nine months ended September 30, 2025 is compared with the same time period in 2024. The increase in net interest income was primarily due to declines in all categories of interest expense and an increase in interest on securities partially offset by a decline in interest and fees on LHFS and LHFI and other interest income. The net PCL (LHFI and off-balance sheet credit exposures) for the General Banking Segment for the nine months ended September 30, 2025 totaled $11.7 million compared to a net PCL of $33.6 million for the same time period in 2024, a decrease of $22.0 million, or 65.3%. Excluding the $8.6 million PCL, LHFI sale of 1-4 family mortgage loans recorded in the second quarter of 2024, the net PCL for the General Banking Segment decreased $13.3 million, or 53.3%, when the nine months ended September 30, 2025 is compared to the same time period in 2024. For more information on these net interest income and PCL items, please see the sections captioned “Financial Highlights” and “Results of Operations.”
Noninterest income (loss) for the General Banking Segment increased $185.6 million when the first nine months of 2025 is compared to the same time period in 2024, principally due to the $182.8 million loss on the sale of the available for sale securities and the $4.8 million noncredit-related loss on the sale of 1-4 family mortgage loans during the second quarter of 2024 and an increase in mortgage banking, net, partially offset by the $8.1 million fair value adjustment for the Visa C shares during the second quarter of 2024. Noninterest income (loss) for the General Banking Segment includes service charges on deposit accounts; wealth management; bank card and other fees; mortgage banking, net; other, net and securities gains (losses), net. For more information on these noninterest income (loss) items, please see the analysis included in the section captioned “Noninterest Income (Loss).”
Noninterest expense for the General Banking Segment increased $18.4 million, or 5.5%, when the first nine months of 2025 is compared with the same time period in 2024, principally due to increases in salaries and employee benefits and services and fees. For more information on these noninterest expense items, please see the analysis included in the section captioned “Noninterest Expense.”
Wealth Management
Net income for the Wealth Management Segment for the first nine months of 2025 increased $2.4 million, or 41.2%, when compared to the same time period in 2024, primarily due to increases in net interest income and noninterest income. Net interest income for the Wealth Management Segment for the nine months ended September 30, 2025 increased $2.2 million, or 51.7%, when compared to the same time period in 2024, principally due to a decline in interest expense on deposits as well as an increase in interest and fees on loans generated by the Private Banking group. The net PCL for the nine months ended September 30, 2025 totaled a negative $22 thousand compared to a net PCL of $162 thousand for the same period in 2024, a decrease of $184 thousand. Noninterest income for the Wealth
76
Management Segment, which primarily includes income related to investment management, trust and brokerage services, increased $1.1 million, or 4.0%, when the first nine months of 2025 is compared to the same time period in 2024, primarily due to an increase in income from trust management services. Noninterest expense for the Wealth Management Segment reflected a slight increase of $356 thousand, or 1.5%, when the first nine months of 2025 is compared to the same time period in 2024.
At September 30, 2025 and 2024, Trustmark held assets under management and administration of $10.120 billion and $9.425 billion, respectively, and brokerage assets of $2.154 billion and $2.742 billion, respectively. The decrease in the balance of managed brokerage assets at September 30, 2025 compared to September 30, 2024 was principally due to a change in brokerage companies and assets in the process of being transitioned over.
Income Taxes
For the three and nine months ended September 30, 2025, Trustmark’s combined effective tax rate from continuing operations was 18.6% and 18.5%, respectively, compared to 17.8% and 64.0%, respectively, for the same time periods in 2024. The elevated effective tax rate from continuing operations for the nine months ended September 30, 2024 was principally due to the significant non-routine transactions that occurred during the second quarter of 2024. Excluding the significant non-routine transactions, Trustmark’s combined effective tax rate from continuing operations for the nine months ended September 30, 2024 was 17.4%. Trustmark’s effective tax rate continues to be less than the statutory rate primarily due to various tax-exempt income items and its utilization of income tax credit programs. 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 or 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.
Financial Condition
Earning assets serve as the primary revenue streams for Trustmark and are comprised of securities, loans and other earning assets. Average earning assets totaled $16.953 billion, or 92.1% of total average assets, for the nine months ended September 30, 2025, compared to $17.097 billion, or 91.6% of total average assets, for the nine months ended September 30, 2024, a decrease of $144.1 million, or 0.8%.
Securities
The securities portfolio is utilized by Management to manage interest rate risk, generate interest income, provide liquidity and use as collateral for public deposits and wholesale funding. Risk and return can be adjusted by altering duration, composition and/or balance of the portfolio. The weighted-average life of the portfolio was 4.4 years at September 30, 2025 compared to 4.8 years at December 31, 2024.
When compared to December 31, 2024, total investment securities increased by $54.8 million, or 1.8%, during the first nine months of 2025. This increase resulted primarily from purchases of available for sale securities and an increase in the fair market value of the available for sale securities, partially offset by calls, maturities and pay-downs of the loans underlying GSE guaranteed securities. Trustmark sold no securities during the first nine months of 2025, compared to $1.561 billion of available for sale securities sold generating a loss of $182.8 million during the first nine months of 2024.
During 2022, Trustmark reclassified $766.0 million of securities available for sale to securities held to maturity to mitigate the potential adverse impact of a rising interest rate environment on the fair value of the available for sale securities and the related impact on tangible common equity. At the date of these transfers, the net unrealized holding loss on the available for sale securities totaled $91.9 million ($68.9 million net of tax). The resulting net unrealized holding losses are being 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.
At September 30, 2025, the net unamortized, unrealized loss on all transferred securities included in accumulated other comprehensive income (loss) (AOCI) in the accompanying consolidated balance sheets totaled $38.9 million compared to $46.6 million at December 31, 2024.
Available for sale securities are carried at their estimated fair value with unrealized gains or losses recognized, net of taxes, in AOCI, a separate component of shareholders’ equity. At September 30, 2025, available for sale securities totaled $1.814 billion, which represented 58.9% of the securities portfolio, compared to $1.693 billion, or 55.9% of total securities, at December 31, 2024. At September 30, 2025, unrealized gains, net on available for sale securities totaled $29.3 million compared to unrealized losses, net of $27.0 million at December 31, 2024. At September 30, 2025, available for sale securities consisted of U.S. Treasury securities, direct obligations of government agencies and GSE guaranteed mortgage-related securities.
77
Held to maturity securities are carried at amortized cost and represent those securities that Trustmark both intends and has the ability to hold to maturity. At September 30, 2025, held to maturity securities totaled $1.268 billion, which represented 41.1% of the total securities portfolio, compared to $1.335 billion, or 44.1% of total securities, at December 31, 2024.
Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 100.0% of the portfolio in U.S. Treasury securities, direct obligations of government agencies and GSE-backed obligations. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the FHLB of Dallas and FRBA, Trustmark does not hold any other equity investment in a GSE or other governmental entity.
As of September 30, 2025, Trustmark did not hold securities of any one issuer with a carrying value exceeding 10% of total shareholders’ equity, other than certain GSEs which are exempt from inclusion. Management continues to closely monitor the credit quality as well as the ratings of the debt and mortgage-backed securities issued by the GSEs and held in Trustmark’s securities portfolio.
The following tables present Trustmark’s securities portfolio by amortized cost and estimated fair value and by credit rating, as determined by Moody’s Investors Services (Moody’s), at September 30, 2025 and December 31, 2024 ($ in thousands):
September 30, 2025
Amortized Cost
Estimated Fair Value
Amount
%
Amount
%
Securities Available for Sale
Aaa
$
39,533
2.2
%
$
40,937
2.3
%
Aa1 to Aa3
1,745,410
97.8
%
1,773,308
97.7
%
Total securities available for sale
$
1,784,943
100.0
%
$
1,814,245
100.0
%
Securities Held to Maturity
Aaa
$
52,831
4.2
%
$
50,474
4.1
%
Aa1 to Aa3
1,215,628
95.8
%
1,183,262
95.9
%
Total securities held to maturity
$
1,268,459
100.0
%
$
1,233,736
100.0
%
December 31, 2024
Amortized Cost
Estimated Fair Value
Amount
%
Amount
%
Securities Available for Sale
Aaa
$
1,719,537
100.0
%
$
1,692,534
100.0
%
Securities Held to Maturity
Aaa
$
1,335,385
100.0
%
$
1,259,107
100.0
%
The table above presenting the credit rating of Trustmark’s securities is formatted to show the securities according to the credit rating category, and not by category of the underlying security. As noted in the tables above, a significant portion of Trustmark's investment portfolio moved from the Aaa credit rating to the Aa1 to Aa3 credit rating as of September 30, 2025. The change in the credit rating of Trustmark's investment portfolio was the result of Moody's downgrade of the United States' credit rating from Aaa to Aa1 during the second quarter of 2025. The downgrade was primarily due to concerns about the rising federal debt, increasing interest costs and a perceived weakening of the government's ability to respond to future economic shocks.
LHFS
At September 30, 2025, LHFS totaled $228.1 million, consisting of $123.3 million of residential real estate mortgage loans in the process of being sold to third parties and $104.8 million of GNMA optional repurchase loans. At December 31, 2024, LHFS totaled $200.3 million, consisting of $102.7 million of residential real estate mortgage loans in the process of being sold to third parties and $97.6 million of GNMA optional repurchase loans. Please refer to the nonperforming assets table that follows for information on GNMA loans eligible for repurchase which are past due 90 days or more.
Trustmark did not exercise its buy-back option on any delinquent loans serviced for GNMA during the first nine months of 2025 or 2024.
78
For additional information regarding the GNMA optional repurchase loans, please see the section captioned “Past Due LHFS” included in Note 4 – LHFI and Allowance for Credit Losses, LHFI of Part I. Item 1. – Financial Statements of this report.
LHFI
At September 30, 2025 and December 31, 2024, LHFI consisted of the following ($ in thousands):
September 30, 2025
December 31, 2024
Amount
%
Amount
%
Loans secured by real estate:
Construction, land development and other land
$
563,501
4.2
%
$
587,244
4.5
%
Other secured by 1-4 family residential properties
697,177
5.1
%
650,550
5.0
%
Secured by nonfarm, nonresidential properties
3,299,819
24.4
%
3,533,282
27.0
%
Other real estate secured
2,055,712
15.2
%
1,633,830
12.5
%
Other loans secured by real estate:
Other construction
678,326
5.0
%
829,904
6.3
%
Secured by 1-4 family residential properties
2,357,692
17.4
%
2,298,993
17.6
%
Commercial and industrial loans
1,903,606
14.0
%
1,840,722
14.0
%
Consumer loans
158,462
1.2
%
156,569
1.2
%
State and other political subdivision loans
1,028,396
7.6
%
969,836
7.4
%
Other commercial loans and leases
805,465
5.9
%
589,012
4.5
%
LHFI
$
13,548,156
100.0
%
$
13,089,942
100.0
%
LHFI increased $458.2 million, or 3.5%, compared to December 31, 2024. The increase in LHFI during the first nine months of 2025 was primarily due to net growth in other commercial loans and leases, loans secured by real estate, commercial and industrial loans and state and other political subdivision loans.
Other commercial loans and leases increased $216.5 million, or 36.8%, during the first nine months of 2025, principally due to increases in other commercial loans in the Mississippi and Georgia market regions and equipment finance leases in the Georgia market region, partially offset by declines in other commercial loans in the Alabama market region. The equipment finance leases are primarily reported in the Georgia market region because they are centrally analyzed and approved as part of the Equipment Finance line of business which is located in Atlanta, Georgia.
Loans secured by real estate increased $118.4 million, or 1.2%, during the first nine months of 2025, reflecting net growth in other real estate secured loans, loans secured by 1-4 family residential properties and other loans secured by 1-4 family residential properties, partially offset by net declines in loans secured by nonfarm, nonresidential properties (NFNR loans), other construction loans and construction, land development and other land loans. Other real estate secured loans increased $421.9 million, or 25.8%, during the first nine months of 2025, primarily due to other construction loans that moved to loans secured by multi-family residential properties in the Alabama, Texas, Mississippi and Georgia market regions. Excluding other construction loan reclassifications, other real estate secured loans decreased $313.7 million, or 19.2%, during the first nine months of 2025 principally due to declines in loans secured by multi-family residential properties in the Alabama and Texas market regions partially offset by growth in the Georgia and Mississippi market regions. Loans secured by 1-4 family residential properties increased $58.7 million, or 2.6%, during the first nine months of 2025 principally due to an increase in mortgage loan originations in the Mississippi market region. Loans secured by 1-4 family residential properties are primarily included in the Mississippi market region because they are centrally analyzed and approved as part of a specific line of business located at Trustmark’s headquarters in Jackson, Mississippi. Other loans secured by 1-4 family residential properties increased $46.6 million, or 7.2%, during the first nine months of 2025, reflecting growth in the Mississippi, Alabama, Tennessee, Texas and Florida market regions. NFNR loans declined $233.5 million, or 6.6%, during the first nine months of 2025 principally due to declines in nonowner-occupied loans across all six market regions and owner-occupied loans in the Alabama market region, partially offset by growth in owner-occupied loans in the Mississippi and Texas market regions and other construction loans that moved to NFNR loans in the Alabama, Mississippi, Georgia, Texas and Florida market regions. Excluding the other construction loan reclassifications, NFNR loans declined $343.0 million, or 9.7%, during the first nine months of 2025. Other construction loans decreased $151.6 million, or 18.3%, during the first nine months of 2025 primarily due to other construction loans moved to other loan categories upon the completion of the related construction project in the Alabama, Mississippi, Texas and Georgia market regions partially offset by new construction loans in the Alabama, Georgia, Mississippi, Texas and Florida market regions. During the first nine months of 2025, $845.1 million loans were moved from other construction to other loan categories, including $735.6 million to multi-family residential loans, $72.7 million to nonowner-occupied loans and $36.9 million to owner-occupied loans. Excluding all reclassifications between loan categories, growth in other construction loans totaled $691.8 million, or 83.4%, during the first nine months of 2025. Loans secured by construction, land development and other land decreased $23.7 million, or 4.0%, during the first nine months of 2025
79
primarily due to declines in 1-4 family construction loans in the Mississippi market region, unimproved land loans in the Texas and Florida market regions and land development loans in the Alabama market region, partially offset by growth in 1-4 family construction loans in the Alabama and Tennessee market regions, unimproved land loans in the Mississippi market region and land development loans in the Tennessee and Texas market regions.
Commercial and industrial loans increased $62.9 million, or 3.4%, during the first nine months of 2025, reflecting growth in the Georgia and Texas market regions partially offset by declines in the Alabama, Tennessee, Mississippi and Florida market regions. State and other political subdivision loans increased $58.6 million, or 6.0%, during the first nine months of 2025, reflecting growth in the Mississippi, Texas, Georgia and Tennessee market regions partially offset by declines in the Alabama and Florida market regions.
The following table provides information regarding Trustmark’s home equity loans and home equity lines of credit which are included in the other LHFI secured by 1-4 family residential properties for the periods presented ($ in thousands):
September 30, 2025
December 31, 2024
Home equity loans
$
74,727
$
72,183
Home equity lines of credit
487,769
458,327
Percentage of loans and lines for which Trustmark holds first lien
45.4
%
46.7
%
Percentage of loans and lines for which Trustmark does not hold first lien
54.6
%
53.3
%
Due to the increased risk associated with second liens, loan terms and underwriting guidelines differ from those used for products secured by first liens. Loan amounts and loan-to-value ratios are limited and are lower for second liens than first liens. Also, interest rates and maximum amortization periods are adjusted accordingly. In addition, regardless of lien position, the passing credit score for approval of all home equity lines of credit is generally higher than that of term loans. The ACL on LHFI is also reflective of the increased risk related to second liens through application of a greater loss factor to this portion of the portfolio.
Trustmark’s variable rate LHFI are based primarily on various prime and SOFR interest rate bases. The following tables provide information regarding the interest rate terms of Trustmark’s LHFI as of September 30, 2025 and December 31, 2024 ($ in thousands):
September 30, 2025
Fixed
Variable
Total
Loans secured by real estate:
Construction, land development and other land
$
134,768
$
428,733
$
563,501
Other secured by 1- 4 family residential properties
203,960
493,217
697,177
Secured by nonfarm, nonresidential properties
1,236,712
2,063,107
3,299,819
Other real estate secured
168,110
1,887,602
2,055,712
Other loans secured by real estate:
Other construction
19,685
658,641
678,326
Secured by 1- 4 family residential properties
1,153,198
1,204,494
2,357,692
Commercial and industrial loans
756,402
1,147,204
1,903,606
Consumer loans
133,325
25,137
158,462
State and other political subdivision loans
972,826
55,570
1,028,396
Other commercial loans and leases
491,630
313,835
805,465
LHFI
$
5,270,616
$
8,277,540
$
13,548,156
December 31, 2024
Fixed
Variable
Total
Loans secured by real estate:
Construction, land development and other land
$
139,526
$
447,718
$
587,244
Other secured by 1- 4 family residential properties
187,912
462,638
650,550
Secured by nonfarm, nonresidential properties
1,381,111
2,152,171
3,533,282
Other real estate secured
159,839
1,473,991
1,633,830
Other loans secured by real estate:
Other construction
31,466
798,438
829,904
Secured by 1- 4 family residential properties
1,256,835
1,042,158
2,298,993
Commercial and industrial loans
762,649
1,078,073
1,840,722
Consumer loans
130,905
25,664
156,569
State and other political subdivision loans
906,250
63,586
969,836
Other commercial loans and leases
376,705
212,307
589,012
LHFI
$
5,333,198
$
7,756,744
$
13,089,942
80
In the following tables, LHFI reported by region (along with related nonperforming assets and net charge-offs) are associated with location of origination except for loans secured by 1-4 family residential properties (representing traditional mortgages), credit cards and equipment finance loans and leases. Loans secured by 1-4 family residential properties and credit cards are primarily included in the Mississippi market region because they are centrally analyzed and approved as part of a specific line of business located at Trustmark’s headquarters in Jackson, Mississippi. The equipment finance loans and leases are primarily reported in the Georgia market region because they are centrally analyzed and approved as part of the Equipment Finance line of business which is located in Atlanta, Georgia.
The following table presents the LHFI composition by region at September 30, 2025 and reflects each region’s diversified mix of loans ($ in thousands):
September 30, 2025
LHFI Composition by Region
Total
Alabama
Florida
Georgia
Mississippi
Tennessee
Texas
Loans secured by real estate:
Construction, land development and
other land
$
563,501
$
248,931
$
22,788
$
15,666
$
129,958
$
43,459
$
102,699
Other secured by 1-4 family residential
properties
697,177
161,973
63,336
—
338,756
88,922
44,190
Secured by nonfarm, nonresidential
properties
3,299,819
829,676
170,171
60,878
1,508,949
127,852
602,293
Other real estate secured
2,055,712
907,895
1,652
171,482
617,269
5,388
352,026
Other loans secured by real estate:
Other construction
678,326
219,065
10,586
160,746
137,622
338
149,969
Secured by 1-4 family residential
properties
2,357,692
—
—
—
2,355,537
2,155
—
Commercial and industrial loans
1,903,606
457,368
18,234
327,697
699,709
131,245
269,353
Consumer loans
158,462
21,944
7,169
—
97,302
14,747
17,300
State and other political subdivision loans
1,028,396
48,096
65,965
9,135
785,311
24,232
95,657
Other commercial loans and leases
805,465
24,831
3,551
403,541
263,444
64,153
45,945
LHFI
$
13,548,156
$
2,919,779
$
363,452
$
1,149,145
$
6,933,857
$
502,491
$
1,679,432
Construction, Land Development and Other Land Loans by Region
Lots
$
65,262
$
24,678
$
7,167
$
—
$
14,822
$
1,937
$
16,658
Development
96,504
44,542
264
—
17,716
13,177
20,805
Unimproved land
92,054
17,593
6,647
—
31,100
9,007
27,707
1-4 family construction
309,681
162,118
8,710
15,666
66,320
19,338
37,529
Construction, land development and
other land loans
$
563,501
$
248,931
$
22,788
$
15,666
$
129,958
$
43,459
$
102,699
Loans Secured by Nonfarm, Nonresidential Properties by Region
Nonowner-occupied:
Retail
$
262,194
$
89,046
$
13,612
$
—
$
74,590
$
19,438
$
65,508
Office
228,449
81,832
17,712
—
88,232
2,753
37,920
Hotel/motel
251,904
124,303
36,998
—
68,057
22,546
—
Mini-storage
166,633
38,708
1,347
39,316
86,224
581
457
Industrial
464,272
88,495
16,616
21,562
208,035
2,463
127,101
Health care
147,697
122,393
660
—
22,284
316
2,044
Convenience stores
20,326
2,076
379
—
11,758
172
5,941
Nursing homes/senior living
282,668
42,880
—
—
144,164
3,638
91,986
Other
93,765
25,378
7,491
—
44,736
7,117
9,043
Total nonowner-occupied loans
1,917,908
615,111
94,815
60,878
748,080
59,024
340,000
Owner-occupied:
Office
146,481
47,026
30,979
—
42,355
7,839
18,282
Churches
47,981
10,425
4,016
—
25,940
2,783
4,817
Industrial warehouses
216,119
14,724
7,098
—
65,780
10,885
117,632
Health care
120,961
10,911
8,877
—
91,786
2,135
7,252
Convenience stores
111,386
7,945
2,022
—
57,987
—
43,432
Retail
75,275
7,541
13,021
—
41,246
6,686
6,781
Restaurants
64,616
2,567
2,301
—
29,317
24,266
6,165
Auto dealerships
37,196
3,143
152
—
19,918
13,983
—
Nursing homes/senior living
452,696
93,829
—
—
333,028
—
25,839
Other
109,200
16,454
6,890
—
53,512
251
32,093
Total owner-occupied loans
1,381,911
214,565
75,356
—
760,869
68,828
262,293
Loans secured by nonfarm,
nonresidential properties
$
3,299,819
$
829,676
$
170,171
$
60,878
$
1,508,949
$
127,852
$
602,293
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Allowance for Credit Losses
LHFI
Trustmark’s ACL methodology for LHFI is based upon guidance within FASB ASC Subtopic 326-20, “Financial Instruments – Credit Losses – Measured at Amortized Cost,” as well as applicable regulatory guidance from its primary regulator. The ACL is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Credit quality within the LHFI portfolio is continuously monitored by Management and is reflected within the ACL for loans. The ACL is an estimate of expected losses inherent within Trustmark’s existing LHFI portfolio. The ACL on LHFI is adjusted through the PCL, LHFI and reduced by the charge off of loan amounts, net of recoveries.
The loan loss estimation process involves procedures to appropriately consider the unique characteristics of Trustmark’s LHFI portfolio segments. These segments are further disaggregated into loan classes, the level at which credit risk is estimated. When computing allowance levels, credit loss assumptions are estimated using a model that categorizes loan pools based on loss history, delinquency status and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Evaluations of the portfolio and individual credits are inherently subjective, as they require estimates, assumptions and judgments as to the facts and circumstances of particular situations.
During the second quarter of 2024, Trustmark executed a sale on a portfolio of 1-4 family mortgage loans that were at least three payments delinquent and/or nonaccrual at the time of selection. As a result of this sale, a credit mark was established for a sub-pool of the loans in the sale. Due to the lack of historical experience and the use of industry data for this sub-pool, management elected to use the credit mark for reserving purposes on a go forward basis for this sub-pool that meet the same credit criteria of being three payments delinquent and/or nonaccrual. All loans of the sub-pool that meet the above credit criteria will be removed from the 1-4 family residential properties pool and placed into a separate pool with the credit mark reserve applied to the total balance.
The econometric models currently in production reflect segment or pool level sensitivities of probability of default (PD) to changes in macroeconomic variables. By measuring the relationship between defaults and changes in the economy, the quantitative reserve incorporates reasonable and supportable forecasts of future conditions that will affect the value of Trustmark's assets, as required by FASB ASC Topic 326. Under stable forecasts, these linear regressions will reasonably predict a pool’s PD. However, upon the occurrence of events that generate significant economic instability (such as the COVID-19 pandemic), the macroeconomic variables used for reasonable and supportable forecasting changed rapidly. At the macroeconomic levels experienced during the COVID-19 pandemic, it was not clear that the models in production would produce reasonably representative results since the models were originally estimated using data beginning in 2004 through 2019. During this period, a traditional, albeit severe, economic recession occurred. Thus, econometric models are sensitive to similar future levels of PD.
In order to prevent the econometric models from extrapolating beyond reasonable boundaries of their input variables, Trustmark chose to establish an upper and lower limit process when applying the periodic forecasts. In this way, Management will not rely upon unobserved and untested relationships in the setting of the quantitative reserve. This approach applies to all input variables, including: Southern Unemployment, National Unemployment, National Gross Domestic Product (GDP), National Home Price Index (HPI), National Commercial Real Estate (CRE) Price Index and the BBB 7-10 Year US Corporate Bond Index. The upper and lower limits are based on the distribution of the macroeconomic variable by selecting extreme percentiles at the upper and lower limits of the distribution, the 1st and 99th percentiles, respectively. These upper and lower limits are then used to calculate the PD for the forecast time period in which the forecasted values are outside of the upper and lower limit range. Additionally, for periods having a PD or loss given default (LGD) at or near zero as a result of the improving macroeconomic forecasts, Management implemented PD and LGD floors to account for the risk associated with each portfolio. The PD and LGD floors are based on Trustmark's historical loss experience and applied at a portfolio level.
The external factors qualitative factor is Management’s best judgment on the loan or pool level impact of all factors that affect the portfolio that are not accounted for using any other part of the ACL methodology (
e.g.
, natural disasters, changes in legislation, impacts due to technology and pandemics). During the third quarter of 2024, Trustmark activated the External Factor – Credit Quality Review qualitative factor. This qualitative factor ensures reserve adequacy for collectively evaluated commercial loans that may not have been identified and downgraded timely for various reasons. This qualitative factor population is all commercial loans risk rated 1-5. These loans are then applied to the historical average of the Watch/Special Mention rated percentage. Then the balance of these loans are applied additional reserves based on the same reserve rates utilized in the performance trends qualitative factor for Watch/Special Mention rated loans. Then the Watch/Special Mention population is applied the historical Substandard rated percentage and then subsequently applied the Substandard reserve rate utilized in the performance trends qualitative factor as well. The historical Watch/Special Mention and Substandard rated percentage averages capture the weighted-average life of the commercial loan portfolio. Thus, Trustmark will allocate additional reserves to capture the proportion of potential Watch/Special Mention and Substandard rated credits that may not have been categorized as such at any given point in time through the life of the commercial loan portfolio. During the third quarter of 2025, Management determined that the risk related to delayed identification and downgrading of commercial loans
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had sufficiently diminished and, as a result, resolved the External Factor – Credit Quality Review qualitative factor and released the associated reserves.
Management elected to activate the nature and volume of the portfolio qualitative factor for a sub-pool of the secured by 1-4 family residential properties due to its significant size as well as the underlying nature being different. The nature and volume of the portfolio qualitative factor utilizes a WARM methodology that uses industry data for the assumptions to support the qualitative adjustment. The industry data is used to compile a PD based on credit score ranges along with using the industry data to compile an LGD. The sub-pools of credits are then aggregated into the appropriate credit score bands in which a weighted-average loss rate is calculated based on the PD and LGD for each credit score range. This weighted-average loss rate is then applied to the expected balance for the sub-segment of credits. This total is then used as the qualitative reserve adjustment. During the first quarter of 2025, Management elected to utilize Trustmark’s historical data to develop a PD based on the credit score ranges initially set up. Additionally, Management elected to use the same LGD value from the mortgage sale that occurred in the second quarter of 2024 along with the same weighted average life assumption utilized to determine the credit mark on this portfolio.
Trustmark's current quantitative methodologies do not completely incorporate changes in credit quality. As a result, Trustmark utilizes the performance trends qualitative factor. This factor is based on migration analyses, that allocates additional ACL to non-pass/delinquent loans within each pool. In this way, Management believes the ACL will directly reflect changes in risk, based on the performance of the loans within a pool, whether declining or improving.
The performance trends qualitative factor is estimated by properly segmenting loan pools into risk levels by risk rating for commercial credits and delinquency status for consumer credits. A migration analysis is then performed quarterly using a third-party software and the results for each risk level are compiled to calculate the historical PD average for each loan portfolio based on risk levels. This average historical PD rate is updated annually. For the mortgage portfolio, Trustmark uses an internal report to incorporate a roll rate method for the calculation of the PD rate. In addition to the PD rate for each portfolio, Management incorporates the quantitative rate and the k value derived from the Frye-Jacobs method to calculate a loss estimate that includes both PD and LGD. The quantitative rate is used to eliminate any additional reserve that the quantitative reserve already includes. Finally, the loss estimate rate is then applied to the total balances for each risk level for each portfolio to calculate a qualitative reserve.
Determining the appropriateness of the allowance is complex and requires judgment by Management about the effect of matters that are inherently uncertain. In future periods, evaluations of the overall LHFI portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the allowance and credit loss expense.
For a complete description of Trustmark’s ACL methodology and the quantitative and qualitative factors included in the calculation, please see Note 4 – LHFI and Allowance for Credit Losses, LHFI included in Part I. Item 1. – Financial Statements of this report.
At September 30, 2025, the ACL on LHFI was $165.2 million, an increase of $5.0 million, or 3.1%, when compared with December 31, 2024. The increase in the ACL during the first nine months of 2025 was principally due to increases in required reserves as a result of loan growth and changes in macroeconomic forecasts partially offset by reserves released associated with the resolution of the External Factor-Credit Quality Review qualitative factor and charge-offs of credits which were specifically reserved for in a prior period. Allocation of Trustmark’s $165.2 million ACL on LHFI, represented 1.00% of commercial LHFI and 1.95% of consumer and home mortgage LHFI, resulting in an ACL to total LHFI of 1.22% as of September 30, 2025. This compares with an ACL to total LHFI of 1.22% at December 31, 2024, which was allocated to commercial LHFI at 1.10% and to consumer and mortgage LHFI at 1.62%.
The following table presents changes in the ACL on LHFI for the periods presented ($ in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Balance at beginning of period
$
168,237
$
154,685
$
160,270
$
139,367
PCL, LHFI
1,390
7,923
14,861
30,327
PCL, LHFI sale of 1-4 family mortgage loans
—
—
—
8,633
Charge-offs
(6,775
)
(7,142
)
(16,856
)
(18,586
)
Charge-offs, sale of 1-4 family mortgage loans
—
—
—
(8,633
)
Recoveries
2,390
2,463
6,967
6,821
Net (charge-offs) recoveries
(4,385
)
(4,679
)
(9,889
)
(20,398
)
Balance at end of period
$
165,242
$
157,929
$
165,242
$
157,929
The PCL, LHFI, excluding the PCL, LHFI sale of 1-4 family mortgage loans, for the three and nine months ended September 30, 2025 totaled 0.04% and 0.15% of average loans (LHFS and LHFI), respectively, compared to 0.24% and 0.30% of average loans (LHFS and
83
LHFI), respectively, for the same time periods in 2024. The PCL, LHFI for the three months ended September 30, 2025 primarily reflected increases in required reserves as a result of loan growth, changes in macroeconomic forecasts and updates to various reserve factors partially offset by declines in required reserves as a result of positive credit migration and reserves released associated with the resolution of the External Factor-Credit Quality Review qualitative factor. The PCL, LHFI for the nine months ended September 30, 2025 primarily reflected increases in required reserves as a result of loan growth and changes in macroeconomic forecasts partially offset by reserves released associated with the resolution of the External Factor-Credit Quality Review qualitative factor.
The following table presents the net (charge-offs) recoveries by geographic market region for the periods presented ($ in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Alabama
$
(3,069
)
$
(3,098
)
$
(5,607
)
$
(3,380
)
Florida
2
595
136
876
Mississippi
(1,520
)
(1,881
)
(3,922
)
(3,849
)
Tennessee
(182
)
(296
)
(741
)
(597
)
Texas
384
1
245
(4,815
)
Net (charge-offs) recoveries, excluding sale of
1-4 mortgage loans
(4,385
)
(4,679
)
(9,889
)
(11,765
)
Mississippi - sale of 1-4 family mortgage loans
—
—
—
(8,633
)
Total net (charge-offs) recoveries
$
(4,385
)
$
(4,679
)
$
(9,889
)
$
(20,398
)
The decrease in net charge-offs when the nine months ended September 30, 2025 is compared to the same time period in 2024 was principally due to the charge-offs related to the sale of 1-4 family mortgage loans during the second quarter of 2024. The decrease in net charge-offs, excluding the sale of 1-4 family mortgage loans, when the nine months ended September 30, 2025 is compared to the same time period in 2024 was principally due to two large nonaccrual commercial credits in the Texas market region and one large nonaccrual commercial credit in the Alabama market region that were charged off during the first nine months of 2024, partially offset by two large nonaccrual commercial credits in the Alabama market region that were charged off during the first nine months of 2025.
Off-Balance Sheet Credit Exposures
Trustmark maintains a separate ACL on off-balance sheet credit exposures, including unfunded loan commitments and letters of credit, which is included on the accompanying consolidated balance sheets. Expected credit losses for off-balance sheet credit exposures are estimated by calculating a commitment usage factor over the contractual period for exposures that are not unconditionally cancellable by Trustmark. Trustmark calculates a loan pool level unfunded amount for the period. Trustmark calculates an expected funding rate each period which is applied to each pool’s unfunded commitment balances to ensure that reserves will be applied to each pool based upon balances expected to be funded based upon historical levels. Additionally, a reserve rate is applied to the unfunded commitment balance, which includes both quantitative and a majority of the qualitative aspects of the current period’s expected credit loss rate. During 2024, Management implemented a performance trends qualitative factor and an External Factor – Credit Quality Review qualitative factor for unfunded commitments. For both qualitative factors, the same assumptions are applied in the unfunded commitment calculation that are used in the funded balance calculation with the only difference being the unfunded commitment calculation includes the funding rates for the unfunded commitments. The reserves for these two qualitative factors are added to the other calculated reserve to get a total reserve for off-balance sheet credit exposures. During the third quarter of 2025, Management determined that the risk related to delayed identification and downgrading of commercial loans had sufficiently diminished and, as a result, resolved the External Factor – Credit Quality Review qualitative factor and released the associated reserves. See the section captioned “ACL on Off-Balance Sheet Credit Exposures” in Note 13 – Contingencies included in Part I. Item 1. – Financial Statements of this report for complete description of Trustmark’s ACL methodology on off-balance sheet credit exposures.
Adjustments to the ACL on off-balance sheet credit exposures are recorded to the PCL, off-balance sheet credit exposures. At September 30, 2025, the ACL on off-balance sheet credit exposures totaled $26.2 million compared to $29.4 million at December 31, 2024, a decrease of $3.2 million, or 10.9%. The PCL, off-balance sheet credit exposures totaled $295 thousand and a negative $3.2 million for the three and nine months ended September 30, 2025, respectively, compared to a negative $1.4 million and a negative $5.2 million, respectively, for the same time periods in 2024. The PCL, off-balance sheet credit exposures for the three months ended September 30, 2025 primarily reflected an increase in required reserves as a result of changes in the total reserve rate, primarily related to consumer credits and commercial and industrial credits, credit migration and an increase in unfunded commitments, partially offset by reserves released associated with the resolution of the External Factor-Credit Quality Review qualitative factor. The release in PCL, off-balance sheet credit exposures for the nine months ended September 30, 2025, primarily reflected a decrease in required reserves as a result of positive credit migration, reserves released associated with the resolution of the External Factor-Credit Quality Review qualitative factor and a decrease in unfunded commitments.
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Nonperforming Assets
The table below provides the components of nonperforming assets by geographic market region at September 30, 2025 and December 31, 2024 ($ in thousands):
September 30, 2025
December 31, 2024
Nonaccrual LHFI
Alabama
$
3,475
$
18,601
Florida
460
305
Mississippi
62,502
42,203
Tennessee
2,293
2,431
Texas
15,225
16,569
Total nonaccrual LHFI
83,955
80,109
Other real estate
Alabama
656
170
Mississippi
5,843
2,407
Tennessee
927
1,079
Texas
899
2,261
Total other real estate
8,325
5,917
Total nonperforming assets
$
92,280
$
86,026
Nonperforming assets/total loans (LHFS and LHFI) and ORE
0.67
%
0.65
%
Loans past due 90 days or more
LHFI
$
4,853
$
4,092
LHFS - Guaranteed GNMA serviced loans
(1)
$
77,859
$
71,255
(1)
No obligation to repurchase.
See the previous discussion of LHFS for more information on Trustmark’s serviced GNMA loans eligible for repurchase and the impact of Trustmark’s repurchases of delinquent mortgage loans under the GNMA optional repurchase program.
Nonaccrual LHFI
At September 30, 2025, nonaccrual LHFI totaled $84.0 million, or 0.61% of total LHFS and LHFI, reflecting an increase of $3.8 million, or 4.8%, relative to December 31, 2024. The increase in nonaccrual LHFI during the first nine months of 2025 was primarily as a result of 1-4 family mortgage loans placed on nonaccrual status in the Mississippi market region largely offset by the resolution of nonaccrual credits in the Alabama and Mississippi market regions. Trustmark's mortgage loans are primarily included in the Mississippi market region because these loans are centrally analyzed and approved as part of the mortgage line of business which is located in Jackson, Mississippi.
For additional information regarding nonaccrual LHFI, see the section captioned “Nonaccrual and Past Due LHFI” included in Note 4 – LHFI and Allowance for Credit Losses, LHFI in Part I. Item 1. – Financial Statements of this report.
Other Real Estate
Other real estate at September 30, 2025 increased $2.4 million, or 40.7%, when compared with December 31, 2024. The increase in other real estate was principally due to properties foreclosed in the Mississippi market region partially offset by properties sold in the Mississippi and Alabama market regions and a reserve for other real estate write-down for a property in the Texas market region recorded during the third quarter of 2025.
85
The following tables illustrate changes in other real estate by geographic market region for the periods presented ($ in thousands):
Three Months Ended September 30, 2025
Total
Alabama
Mississippi
Tennessee
Texas
Balance at beginning of period
$
8,972
$
772
$
4,860
$
1,079
$
2,261
Additions
1,622
—
1,622
—
—
Disposals
(605
)
(116
)
(489
)
—
—
Net (write-downs) recoveries
(1,664
)
—
(150
)
(152
)
(1,362
)
Balance at end of period
$
8,325
$
656
$
5,843
$
927
$
899
Three Months Ended September 30, 2024
Total
Alabama
Mississippi
Tennessee
Texas
Balance at beginning of period
$
6,586
$
485
$
1,787
$
86
$
4,228
Additions
575
—
575
—
—
Disposals
(914
)
(315
)
(513
)
(86
)
—
Net (write-downs) recoveries
(2,327
)
—
(77
)
—
(2,250
)
Balance at end of period
$
3,920
$
170
$
1,772
$
—
$
1,978
Nine Months Ended September 30, 2025
Total
Alabama
Florida
Mississippi
Tennessee
Texas
Balance at beginning of period
$
5,917
$
170
$
—
$
2,407
$
1,079
$
2,261
Additions
6,754
699
—
5,996
59
—
Disposals
(2,563
)
(271
)
—
(2,233
)
(59
)
—
Net (write-downs) recoveries
(1,783
)
58
—
(327
)
(152
)
(1,362
)
Balance at end of period
$
8,325
$
656
$
—
$
5,843
$
927
$
899
Nine Months Ended September 30, 2024
Total
Alabama
Florida
Mississippi
Tennessee
Texas
Balance at beginning of period
$
6,867
$
1,397
$
—
$
1,242
$
—
$
4,228
Additions
4,703
92
—
4,577
34
—
Disposals
(5,609
)
(1,475
)
(71
)
(3,977
)
(86
)
—
Net (write-downs) recoveries
(2,041
)
156
—
1
52
(2,250
)
Adjustments
—
—
71
(71
)
—
—
Balance at end of period
$
3,920
$
170
$
—
$
1,772
$
—
$
1,978
Other real estate is revalued on an annual basis or more often if market conditions necessitate. Subsequent to foreclosure, losses on the periodic revaluation of the property are charged against the reserve for other real estate write-downs or net income in other real estate expense, if a reserve does not exist. Write-downs of other real estate decreased $258 thousand, or 12.6%, when the first nine months of 2025 is compared to the same time period in 2024, principally due to a decrease in the reserve for other real estate write-downs in the Texas market region partially offset by an increase in write-downs in the Mississippi and Tennessee market regions as well as a decline in recoveries in the Alabama market region.
For additional information regarding other real estate, please see Note 6 – Other Real Estate included in Part I. Item 1. – Financial Statements of this report.
Deposits
Trustmark’s deposits are its primary source of funding and primarily consist of core deposits from the communities Trustmark serves. Deposits include interest-bearing and noninterest-bearing demand accounts, savings, MMDA, CDs and individual retirement accounts. Total deposits were $15.631 billion at September 30, 2025 compared to $15.108 billion at December 31, 2024, an increase of $522.8 million, or 3.5%. During the first nine months of 2025, noninterest-bearing deposits increased $247.6 million, or 8.1%, principally due to growth in commercial and public noninterest-bearing demand deposit accounts. Interest-bearing deposits increased $275.2 million, or 2.3%, during the first nine months of 2025, primarily due to growth in all categories of CDs and MMDA, partially offset by declines in all categories of interest checking accounts and savings accounts.
At September 30, 2025, Trustmark's total uninsured deposits were $5.785 billion, or 37.0% of total deposits, compared to $5.359 billion, or 35.5% of total deposits, at December 31, 2024.
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Borrowings
Trustmark uses short-term borrowings, such as federal funds purchased, securities sold under repurchase agreements and short-term FHLB advances, to fund growth of earning assets in excess of deposit growth. See the section captioned “Liquidity” for further discussion of the components of Trustmark’s excess funding capacity.
Federal funds purchased and securities sold under repurchase agreements totaled $420.0 million at September 30, 2025 compared to $324.0 million at December 31, 2024, an increase of $96.0 million, or 29.6%, principally due to an increase in upstream federal funds purchased. At September 30, 2025, none represented customer related transactions, such as commercial sweep repurchase balances compared to $39.0 million at December 31, 2024. Trustmark discontinued the customer sweep product during the third quarter of 2025. Trustmark had $420.0 million of upstream federal funds purchased at September 30, 2025 compared to $285.0 million at December 31, 2024.
Other borrowings totaled $208.4 million at September 30, 2025, a decrease of $93.2 million, or 30.9%, when compared with $301.5 million at December 31, 2024, principally due to a decrease in outstanding short-term FHLB advances with the FHLB of Dallas.
Legal Environment
Information required in this section is set forth under the heading “Legal Proceedings” of Note 13 – Contingencies included in Part I. Item 1. – Financial Statements of this report.
Off-Balance Sheet Arrangements
Information required in this section is set forth under the heading “Lending Related” of Note 13 – Contingencies included in Part I. Item 1. – Financial Statements of this report.
Capital Resources and Liquidity
Trustmark places a significant emphasis on the maintenance of a strong capital position, which promotes investor confidence, provides access to funding sources under favorable terms and enhances Trustmark’s ability to capitalize on business growth and acquisition opportunities. Higher levels of liquidity, however, bear corresponding costs, measured in terms of lower yields on short-term, more liquid earning assets and higher expenses for extended liability maturities. Trustmark manages capital based upon risks and growth opportunities as well as regulatory requirements. Trustmark utilizes a capital model in order to provide Management with a monthly tool for analyzing changes in its strategic capital ratios. This allows Management to hold sufficient capital to provide for growth opportunities and protect the balance sheet against sudden adverse market conditions, while maintaining an attractive return on equity to shareholders.
At September 30, 2025, Trustmark’s total shareholders’ equity was $2.114 billion, an increase of $151.9 million, or 7.7%, when compared to December 31, 2024. During the first nine months of 2025, shareholders’ equity increased primarily as a result of net income of $166.3 million, a $42.2 million positive net change in the fair market value of securities available for sale and a $14.2 million positive net change in the fair market value of the cash flow hedges, partially offset by common stock dividends of $44.0 million and common stock repurchases of $37.1 million.
Regulatory Capital
Trustmark and TB are subject to minimum risk-based capital and leverage capital requirements, as described in the section captioned “Capital Adequacy” included in Part I. Item 1. – Business of Trustmark’s 2024 Annual Report, which are administered by the federal bank regulatory agencies. These capital requirements, as defined by federal regulations, involve quantitative and qualitative measures of assets, liabilities and certain off-balance sheet instruments. Trustmark’s and TB’s minimum risk-based capital requirements include a capital conservation buffer of 2.5%. AOCI is not included in computing regulatory capital. Trustmark elected the five-year phase-in transition period (through December 31, 2024) related to adopting FASB ASU 2016-13 for regulatory capital purposes. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements of Trustmark and TB and limit Trustmark’s and TB’s ability to pay dividends. At September 30, 2025, Trustmark and TB exceeded all applicable minimum capital standards. In addition, Trustmark and TB met applicable regulatory guidelines to be considered well-capitalized at September 30, 2025. To be categorized in this manner, Trustmark and TB maintained minimum common equity Tier 1 risk-based capital, Tier 1 risk-based capital, total risk-based capital and Tier 1 leverage ratios, and were not subject to any written agreement, order or capital directive, or prompt corrective action directive issued by their primary federal regulators to meet and maintain a specific capital level for any capital measures. There are no significant
87
conditions or events that have occurred since September 30, 2025 which Management believes have affected Trustmark’s or TB’s present classification.
In 2020, Trustmark enhanced its capital structure with the issuance of $125.0 million of subordinated notes. At September 30, 2025, the carrying amount of the subordinated notes was $123.9 million compared to $123.7 million at December 31, 2024. The subordinated notes mature December 1, 2030 and are redeemable at Trustmark’s option under certain circumstances. For regulatory capital purposes, the subordinated notes qualified as Tier 2 capital for Trustmark at September 30, 2025 and December 31, 2024. Trustmark may utilize the full carrying value of the subordinated notes as Tier 2 capital until December 1, 2025 (five years prior to maturity). Beginning December 1, 2025, the subordinated notes will phase out of Tier 2 capital 20.0% each year until maturity.
In 2006, Trustmark enhanced its capital structure with the issuance of trust preferred securities. For regulatory capital purposes, the trust preferred securities qualified as Tier 1 capital at September 30, 2025 and December 31, 2024. Trustmark intends to continue to utilize $60.0 million in trust preferred securities issued by Trustmark Preferred Capital Trust I (the Trust) as Tier 1 capital up to the regulatory limit, as permitted by the grandfather provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III Final Rule.
Refer to the section captioned “Regulatory Capital” included in Note 16 – Shareholders’ Equity in Part I. Item 1. – Financial Statements of this report for an illustration of Trustmark’s and TB’s actual regulatory capital amounts and ratios under regulatory capital standards in effect at September 30, 2025 and December 31, 2024.
Dividends on Common Stock
Dividends per common share for the nine months ended September 30, 2025 and 2024 were $0.72 and $0.69, respectively. Trustmark’s indicated dividend for 2025 is $0.96 per common share, an increase of $0.04 per common share when compared to $0.92 per common share in 2024.
Stock Repurchase Program
From time to time, Trustmark's Board of Directors has authorized stock repurchase plans. In general, stock repurchase plans allow Trustmark to proactively manage its capital position and return excess capital to shareholders. Shares purchased also provide Trustmark with shares of common stock necessary to satisfy obligations related to stock compensation awards.
On December 5, 2023, the Board of Directors of Trustmark authorized a stock repurchase program, effective January 1, 2024, under which $50.0 million of Trustmark's outstanding common stock could be acquired through December 31, 2024. Under this authority, Trustmark repurchased 203 thousand shares of its common stock valued at $7.5 million during the year ended December 31, 2024.
On December 3, 2024, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2025, under which $100.0 million of Trustmark’s outstanding shares may be acquired through December 31, 2025. The repurchase program, which is subject to market conditions and management discretion, will be implemented through open market repurchases or privately negotiated transactions. Under this authority, Trustmark repurchased 1.0 million shares of its common stock valued at $37.1 million during the first nine months of 2025.
Liquidity
Liquidity is the ability to ensure that sufficient cash flow and liquid assets are available to satisfy current and future financial obligations, including demand for loans and deposit withdrawals, funding operating costs and other corporate purposes. Consistent cash flows from operations and adequate capital provide internally generated liquidity. Furthermore, Management maintains funding capacity from a variety of external sources to meet daily funding needs, such as those required to meet deposit withdrawals, loan disbursements and security settlements. Liquidity strategy also includes the use of wholesale funding sources to provide for the seasonal fluctuations of deposit and loan demand and the cyclical fluctuations of the economy that impact the availability of funds. Management keeps excess funding capacity available to meet potential demands associated with adverse circumstances.
The asset side of the balance sheet provides liquidity primarily through maturities and cash flows from loans and securities as well as the ability to pledge or sell certain loans and securities. The liability portion of the balance sheet provides liquidity primarily through noninterest and interest-bearing deposits. Trustmark utilizes federal funds purchased, FHLB advances, securities sold under repurchase agreements, the Federal Reserve Discount Window (Discount Window) and brokered deposits to provide additional liquidity. Access to these additional sources represents Trustmark’s incremental borrowing capacity.
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Trustmark's liquidity position is continuously monitored and adjustments are made to manage the balance as deemed appropriate. Liquidity risk management is an important element to Trustmark's asset/liability management process. Trustmark regularly models liquidity stress scenarios to assess potential liquidity outflows or funding problems resulting from economic disruptions or other significant occurrences as deemed appropriate by Management. These scenarios are incorporated into Trustmark's contingency funding plan, which provides the basis for the identification of its liquidity needs.
Deposit accounts represent Trustmark’s largest funding source. Average deposits totaled $15.172 billion for the first nine months of 2025 and represented 82.4% of average liabilities and shareholders’ equity, compared to average deposits of $15.412 billion, which represented 82.6% of average liabilities and shareholders’ equity for the first nine months of 2024. For more information on average interest-bearing deposits, please see the analysis included in the section captioned “Net Interest Income.”
Trustmark had $453.8 million held in an interest-bearing account at the FRBA at September 30, 2025, compared to $297.3 million held at December 31, 2024.
Trustmark utilizes brokered deposits to supplement other wholesale funding sources. At September 30, 2025 and December 31, 2024, brokered sweep MMDA deposits totaled $8.9 million and $10.6 million, respectively. In addition, Trustmark had $300.0 million of brokered CDs at September 30, 2025 compared to $250.0 million at December 31, 2024.
At September 30, 2025, Trustmark had $420.0 million of upstream federal funds purchased compared to $285.0 million of upstream federal funds purchased at December 31, 2024. Trustmark maintains adequate federal funds lines to provide sufficient short-term liquidity.
Trustmark maintains a relationship with the FHLB of Dallas, which provided $100.0 million of outstanding short-term and no long-term advances at September 30, 2025, compared to $200.0 million of outstanding short-term and no long-term advances at December 31, 2024. Under the existing borrowing agreement, Trustmark had sufficient qualifying collateral to increase FHLB advances or letters of credit with the FHLB of Dallas by $2.020 billion at September 30, 2025.
Additionally, Trustmark has the ability to leverage its unencumbered investment securities as collateral. At September 30, 2025, Trustmark had $1.329 billion available in unencumbered Treasury and agency securities compared to $1.107 billion in unencumbered Treasury and agency securities at December 31, 2024.
Another borrowing source is the Discount Window. At September 30, 2025, Trustmark had $1.235 billion available in collateral capacity at the Discount Window primarily from pledges of commercial and industrial LHFI, compared with $1.187 billion at December 31, 2024.
During 2020, Trustmark issued $125.0 million aggregate principal amount of its 3.625% fixed-to-floating rate subordinated notes. At September 30, 2025, the carrying amount of the subordinated notes was $123.9 million
compared to $123.7 million at December 31, 2024. The subordinated notes mature December 1, 2030 and are redeemable at Trustmark’s option under certain circumstances. The subordinated notes are unsecured obligations and are subordinated in right of payment to all of Trustmark’s existing and future senior indebtedness, whether secured or unsecured. The subordinated notes are obligations of Trustmark only and are not obligations of, and are not guaranteed by, any of its subsidiaries, including TB.
During 2006, Trustmark completed a private placement of $60.0 million of trust preferred securities through a newly formed Delaware trust affiliate, the Trust. The trust preferred securities mature September 30, 2036 and are redeemable at Trustmark’s option. The proceeds from the sale of the trust preferred securities were used by the Trust to purchase $61.9 million in aggregate principal amount of Trustmark’s junior subordinated debentures.
The Board of Directors of Trustmark currently has the authority to issue up to 20.0 million preferred shares with no par value. The ability to issue preferred shares in the future will provide Trustmark with additional financial and management flexibility for general corporate and acquisition purposes. At September 30, 2025, Trustmark had no shares of preferred stock issued and outstanding.
Management believes that Trustmark has sufficient liquidity and capital resources to meet presently known cash flow requirements arising from ongoing business transactions. As of September 30, 2025, Management is not aware of any events that are reasonably likely to have a material adverse effect on Trustmark's liquidity, capital resources or operations. In addition, Management is not aware of any regulatory recommendations regarding liquidity that would have a material adverse effect on Trustmark.
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In the ordinary course of business, Trustmark has entered into contractual obligations and has made other commitments to make future payments. Please refer to the accompanying notes to the consolidated financial statements included in Part I. Item 1. – Financial Statements of this report and Trustmark's 2024 Annual Report for the expected timing of such payments as of September 30, 2025 and December 31, 2024. There have been no material changes in Trustmark's contractual obligations since year-end.
Asset/Liability Management
Overview
Market risk reflects the potential risk of loss arising from adverse changes in interest rates and market prices. Trustmark has risk management policies to monitor and limit exposure to market risk. Trustmark’s primary market risk is interest rate risk created by core banking activities. Interest rate risk is the potential variability of the income generated by Trustmark’s financial products or services, which results from changes in various market interest rates. Market rate changes may take the form of absolute shifts, variances in the relationships between different rates and changes in the shape or slope of the interest rate term structure.
Management continually develops and applies cost-effective strategies to manage these risks. Management’s Asset/Liability Committee sets the day-to-day operating guidelines, approves strategies affecting net interest income and coordinates activities within policy limits established by the Board of Directors of Trustmark. A key objective of the asset/liability management program is to quantify, monitor and manage interest rate risk and to assist Management in maintaining stability in the net interest margin under varying interest rate environments.
Derivatives
Trustmark uses financial derivatives for management of interest rate risk. Management’s Asset/Liability Committee, in its oversight role for the management of interest rate risk, approves the use of derivatives in balance sheet hedging strategies. The most common derivatives employed by Trustmark are interest rate lock commitments, forward contracts (both futures contracts and options on futures contracts), interest rate swaps, interest rate caps and interest rate floors. As a general matter, the values of these instruments are designed to be inversely related to the values of the assets that they hedge (
i.e
., if the value of the hedged asset falls, the value of the related hedge rises). In addition, Trustmark has entered into derivatives contracts as counterparty to one or more customers in connection with loans extended to those customers. These transactions are designed to hedge interest rate exposure of the customers and are not entered into by Trustmark for speculative purposes. Increased federal regulation of the derivatives markets may increase the cost to Trustmark to administer derivatives programs.
Derivatives Designated as Hedging Instruments
Trustmark engages in a cash flow hedging program to add stability to interest income and to manage its exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of fixed-rate amounts from a counterparty in exchange for Trustmark making variable-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate floor spreads designated as cash flow hedges involve the receipt of variable-rate amounts if interest rates fall below the purchased floor strike rate on the contract and payments of variable rate amounts if interest rates fall below the sold floor strike rate on the contract. Trustmark uses such derivatives to hedge the variable cash flows associated with existing and anticipated variable-rate loan assets. At September 30, 2025, the aggregate notional value of Trustmark's interest rate swaps and floor spreads designated as cash flow hedges totaled $1.515 billion compared to $1.500 billion at December 31, 2024.
Trustmark records any gains or losses on these cash flow hedges in AOCI. Gains and losses on derivatives representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with Trustmark’s accounting policy election. The earnings recognition of excluded components included in interest and fees on LHFS and LHFI totaled $132 thousand and $393 thousand of amortization expense for the three and nine months ended September 30, 2025, respectively, compared to $132 thousand and $341 thousand of amortization expense for the three and nine months ended September 30, 2024, respectively. As interest payments are received on Trustmark's variable-rate assets, amounts reported in AOCI are reclassified into interest and fees on LHFS and LHFI in the accompanying consolidated statements of income (loss) during the same period. For the three and nine months ended September 30, 2025, Trustmark reclassified a loss, net of tax, of $1.8 million and $5.9 million, respectively, into interest and fees on LHFS and LHFI, compared to a loss, net of tax, of $3.6 million and $10.9 million, respectively, for the same time periods in 2024. During the next twelve months, Trustmark estimates that $2.7 million will be reclassified as a reduction to interest and fees on LHFS and LHFI. This amount could differ due to changes in interest rates, hedge de-designations or the addition of other hedges.
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Derivatives Not Designated as Hedging Instruments
As part of Trustmark’s risk management strategy in the mortgage banking business, various derivative instruments such as interest rate lock commitments and forward sales contracts are utilized. Rate lock commitments are residential mortgage loan commitments with customers, which guarantee a specified interest rate for a specified period of time. Changes in the fair value of these derivative instruments are recorded as noninterest income (loss) in mortgage banking, net and are offset by the changes in the fair value of forward sales contracts. The gross notional amount of Trustmark’s off-balance sheet obligations under these derivative instruments totaled $92.0 million at September 30, 2025, with a positive valuation adjustment of $1.3 million, compared to $52.1 million, with a positive valuation adjustment of $229 thousand at December 31, 2024. Trustmark’s obligations under forward contracts consist of commitments to deliver mortgage loans, originated and/or purchased, in the secondary market at a future date. Changes in the fair value of these derivative instruments are recorded as noninterest income (loss) in mortgage banking, net and are offset by changes in the fair value of LHFS. The gross notional amount of Trustmark’s off-balance sheet obligations under these derivative instruments totaled $149.5 million at September 30, 2025, with a negative valuation adjustment of $215 thousand, compared to $110.0 million, with a positive valuation adjustment of $679 thousand at December 31, 2024.
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 economically hedges changes in fair value of the MSR attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under GAAP. The total notional amount of these derivative instruments was $337.5 million at September 30, 2025 compared to $311.5 million at December 31, 2024. These exchange-traded derivative instruments are accounted for at fair value with changes in the fair value recorded as noninterest income (loss) 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 negative ineffectiveness of $858 thousand and $2.5 million for the three months ended September 30, 2025 and 2024, respectively. For the nine months ended September 30, 2025 and 2024, the impact was a net negative ineffectiveness of $2.0 million and $8.1 million, respectively.
Trustmark offers certain interest rate derivatives products directly to qualified commercial lending clients seeking to manage their interest rate risk under loans they have entered into with TB. Trustmark economically hedges interest rate swap transactions executed with commercial lending clients by entering into offsetting interest rate swap transactions with institutional derivatives market participants. Derivatives transactions executed as part of this program are not designated as qualifying hedging relationships under GAAP and are, therefore, carried on Trustmark’s financial statements at fair value with the change in fair value recorded as noninterest income (loss) in bank card and other fees. Because these derivatives have mirror-image contractual terms, in addition to collateral provisions which mitigate the impact of non-performance risk, the changes in fair value are expected to substantially offset. The Chicago Mercantile Exchange rules legally characterize variation margin collateral payments made or received for centrally cleared interest rate swaps as settlements rather than collateral. As a result, centrally cleared interest rate swaps included in other assets and other liabilities are presented on a net basis in the accompanying consolidated balance sheets. At September 30, 2025, Trustmark had interest rate swaps with an aggregate notional amount of $1.800 billion related to this program, compared to $1.819 billion at December 31, 2024.
Credit-Risk-Related Contingent Features
Trustmark has agreements with its financial institution counterparties that contain provisions where if Trustmark defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then Trustmark could also be deemed to be in default on its derivatives obligations.
At September 30, 2025, there was no termination value of interest rate swaps in a liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements compared to $568 thousand at December 31, 2024. At September 30, 2025 and December 31, 2024, Trustmark had posted collateral of $2.2 million and $1.5 million, respectively, against its obligations because of negotiated thresholds and minimum transfer amounts under these agreements. If Trustmark had breached any of these triggering provisions at September 30, 2025, it could have been required to settle its obligations under the agreements at the termination value (which is expected to approximate fair market value).
Credit risk participation agreements arise when Trustmark contracts with other financial institutions, as a guarantor or beneficiary, to share credit risk associated with certain interest rate swaps. These agreements provide for reimbursement of losses resulting from a third-party default on the underlying swap. At September 30, 2025, Trustmark had entered into ten risk participation agreements as a beneficiary with an aggregate notional amount of $111.1 million compared to eleven risk participation agreements as a beneficiary with an aggregate notional amount of $83.9 million at December 31, 2024. At September 30, 2025, Trustmark had entered into twenty-eight risk participation agreements as a guarantor with an aggregate notional amount of $283.3 million compared to twenty-eight risk
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participation agreements as a guarantor with an aggregate notional amount of $229.1 million at December 31, 2024. The aggregate fair values of these risk participation agreements were immaterial at both September 30, 2025 and December 31, 2024.
Trustmark’s participation in the derivatives markets is subject to increased federal regulation of these markets. Trustmark believes that it may continue to use financial derivatives to manage interest rate risk and also to offer derivatives products to certain qualified commercial lending clients in compliance with the Volcker Rule. However, the increased federal regulation of the derivatives markets has increased the cost to Trustmark of administering its derivatives programs. Some of these costs (particularly compliance costs related to the Volcker Rule and other federal regulations) are expected to recur in the future.
Market/Interest Rate Risk Management
The primary purpose in managing interest rate risk is to invest capital effectively and preserve the value created by the core banking business. This is accomplished through the development and implementation of lending, funding, pricing and hedging strategies designed to maximize net interest income performance under varying interest rate environments subject to specific liquidity and interest rate risk guidelines.
Financial simulation models are the primary tools used by Management’s Asset/Liability Committee to measure interest rate exposure. The significant increase in short-term market interest rates and the overall interest rate environment is likely to affect the balance sheet composition and rates. The simulation incorporates assumptions regarding the effects of such changes based on a combination of historical analysis and expected behavior. Using a wide range of scenarios, Management is provided with extensive information on the potential impact on net interest income caused by changes in interest rates. Models are structured to simulate cash flows and accrual characteristics of Trustmark’s balance sheet. Assumptions are made about the direction and volatility of interest rates, the slope of the yield curve and the changing composition of Trustmark’s balance sheet, resulting from both strategic plans and customer behavior. In addition, the model incorporates Management’s assumptions and expectations regarding such factors as loan and deposit growth, pricing, prepayment speeds and spreads between interest rates.
Based on the results of the simulation models using static balances, the table below summarizes the effect various one-year interest rate shift scenarios would have on net interest income compared to a base case, flat scenario at September 30, 2025 and 2024.
Estimated % Change
in Net Interest Income
September 30,
Change in Interest Rates
2025
2024
+200 basis points
2.8
%
2.2
%
+100 basis points
1.3
%
1.0
%
-100 basis points
-2.1
%
-1.4
%
-200 basis points
-4.7
%
-3.5
%
Management cannot provide any assurance about the actual effect of changes in interest rates on net interest income. The estimates provided do not include the effects of possible strategic changes in the balances of various assets and liabilities throughout 2025 or additional actions Trustmark could undertake in response to changes in interest rates. Management will continue to prudently manage the balance sheet in an effort to control interest rate risk and maintain profitability over the long term.
Another component of interest rate risk management is measuring the economic value-at-risk for a given change in market interest rates. The economic value-at-risk may indicate risks associated with longer-term balance sheet items that may not affect net interest income at risk over shorter time periods. Trustmark uses computer-modeling techniques to determine the present value of all asset and liability cash flows (both on- and off-balance sheet), adjusted for prepayment expectations, using a market discount rate. The economic value of equity (EVE), also known as net portfolio value, is defined as the difference between the present value of asset cash flows and the
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present value of liability cash flows. The resulting change in EVE in different market rate environments, from the base case scenario, is the amount of EVE at risk from those rate environments.
The following table summarizes the effect that various interest rate shifts would have on net portfolio value at September 30, 2025 and 2024.
Estimated % Change
in Net Portfolio Value
September 30,
Change in Interest Rates
2025
2024
+200 basis points
-0.7
%
-0.9
%
+100 basis points
-0.2
%
-0.1
%
Trustmark determines the fair value of the MSR using a valuation model administered by a third party that calculates the present value of estimated future net servicing income. The model incorporates assumptions that market participants use in estimating future net servicing income, including estimates of prepayment speeds, discount rate, default rates, cost to service (including delinquency and foreclosure costs), escrow account earnings, contractual servicing fee income and other ancillary income such as late fees. Management reviews all significant assumptions quarterly. Mortgage loan prepayment speeds, a key assumption in the model, is the annual rate at which borrowers are forecasted to repay their mortgage loan principal. The discount rate used to determine the present value of estimated future net servicing income, another key assumption in the model, is an estimate of the required rate of return investors in the market would require for an asset with similar risk. Both assumptions can, and generally will, change as market conditions and interest rates change.
By way of example, an increase in either the prepayment speed or discount rate assumption will result in a decrease in the fair value of the MSR, while a decrease in either assumption will result in an increase in the fair value of the MSR. In recent years, there have been significant market-driven fluctuations in loan prepayment speeds and discount rates. These fluctuations can be rapid and may continue to be significant. Therefore, estimating prepayment speed and/or discount rates within ranges that market participants would use in determining the fair value of the MSR requires significant management judgment.
At September 30, 2025, the MSR fair value was $131.7 million, compared to $125.9 million at September 30, 2024. The impact on the MSR fair value of a 10% adverse change in prepayment speed or a 100 basis point increase in discount rate at September 30, 2025, would be a decline in fair value of $5.0 million and $5.2 million, respectively, compared to a decline in fair value of $4.7 million and $4.9 million, respectively, at September 30, 2024. Changes of equal magnitude in the opposite direction would produce similar increases in fair value in the respective amounts.
Critical Accounting Policies
For an overview of Trustmark’s critical accounting policies, see the section captioned “Critical Accounting Policies” included in Part II. Item 7. – Management’s Discussion and Analysis of Financial Condition and Results of Operations, of Trustmark’s 2024 Annual Report. There have been no significant changes in Trustmark’s critical accounting policies during the first nine months of 2025.
For additional information regarding Trustmark’s basis of presentation and accounting policies, see Note 1 – Business, Basis of Financial Statement Presentation and Principles of Consolidation included in Part I. Item 1. – Financial Statements of this report.
Accounting Policies Recently Adopted and Pending Accounting Pronouncements
For a complete list of recently adopted and pending accounting policies and the impact on Trustmark, see Note 20 – Accounting Policies Recently Adopted and Pending Accounting Pronouncements included in Part I. Item 1. – Financial Statements of this report.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is included in the discussion of Market/Interest Rate Risk Management found in Management’s Discussion and Analysis.
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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out by Trustmark’s Management, with the participation of its Chief Executive Officer and Treasurer and Principal Financial Officer (Principal Financial Officer), of the effectiveness of Trustmark’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, the Chief Executive Officer and the Principal Financial Officer concluded that Trustmark’s disclosure controls and procedures were effective as of the end of the period covered by this report.
Changes in Internal Control over Financial Reporting
There has been no change in Trustmark’s internal control over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, Trustmark’s internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Information required in this section is set forth under the heading “Legal Proceedings” of Note 13 – Contingencies in Part I. Item 1 – Financial Statements of this report.
In accordance with FASB Accounting Standards Codification (ASC) Topic 450-20, “Loss Contingencies,” Trustmark will establish an accrued liability for litigation matters when those matters present loss contingencies that are both probable and reasonably estimable. At the present time, Trustmark believes, based on its evaluation and the advice of legal counsel, that a loss in any such proceeding is not probable and reasonably estimable. All matters will continue to be monitored for further developments that would make such loss contingency both probable and reasonably estimable. In view of the inherent difficulty of predicting the outcome of legal proceedings, Trustmark cannot predict the eventual outcomes of the currently pending matters or the timing of their ultimate resolution. Trustmark currently believes, however, based upon the advice of legal counsel and Management’s evaluation and after taking into account its current insurance coverage, that the legal proceedings currently pending should not have a material adverse effect on Trustmark’s consolidated financial condition.
ITEM 1A. RISK FACTORS
There has been no material change in the risk factors previously disclosed in Trustmark’s 2024 Annual Report.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On December 3, 2024, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2025, under which $100.0 million of Trustmark’s outstanding shares may be acquired through December 31, 2025. The repurchase program, which is subject to market conditions and management discretion, will be implemented through open market repurchases or privately negotiated transactions.
The following table provides information with respect to purchases by Trustmark or made on behalf of Trustmark of its common stock during the three months ended September 30, 2025 ($ in thousands, except per share amounts):
Period
Total Number of Shares Purchased
Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plan
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan at the End of the Period
July 1, 2025 to July 31, 2025
40,055
$
37.47
40,055
$
72,475
August 1, 2025 to August 31, 2025
84,693
38.73
84,693
69,195
September 1, 2025 to September 30, 2025
155,504
40.21
155,504
62,942
Total
280,252
280,252
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
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ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Securities Trading Plans of Directors and Executive Officers
During the three months ended September 30, 2025
, none of Trustmark’s directors or executive officers
adopted
or
terminated
any contract, instruction or written plan for the purchase or sale of Trustmark’s securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” (as defined in Item 408(c) of Regulation S-K)
.
ITEM 6. EXHIBITS
The exhibits listed in the Exhibit Index are filed herewith or are incorporated herein by reference.
Cover Page Interactive Data File (embedded within the Inline XBRL document).
* - Denotes management contract.
All other exhibits are omitted, as they are inapplicable or not required by the related instructions.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(We are using algorithms to extract and display detailed data. This is a hard problem and we are working continuously to classify data in an accurate and useful manner.)
