TRUSTMARK CORP - FORM 8-K - EX-99.1

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8-K - TRUSTMARK CORPORATION EARNINGS RELEASE - TRUSTMARK CORP	form8k.htm

News Release

Trustmark Corporation Announces Third Quarter 2012 Financial Results

and Declares $0.23 Quarterly Cash Dividend

Jackson, Miss. – October 23, 2012 – Trustmark Corporation (NASDAQ:TRMK) announced net income available to common shareholders of $29.9 million in the third quarter of 2012, which represented diluted earnings per common share of $0.46, an increase of 2.2% from the prior quarter and 9.5% when compared to the third quarter of 2011. Trustmark’s performance during the third quarter of 2012 produced a return on average tangible common equity of 12.61% and a return on average assets of 1.21%. During the first nine months of 2012, Trustmark’s net income available to common shareholders totaled $89.6 million, which represented diluted earnings per common share of $1.38, an increase of 7.0% from the comparable period one year earlier. Trustmark’s performance during the first nine months of 2012 resulted in a return on average tangible common equity of 12.91% and a return on average assets of 1.22%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per common share payable December 15, 2012, to shareholders of record on December 1, 2012.

Gerard R. Host, President and CEO, stated, “Trustmark achieved another solid quarter of financial performance despite sluggish economic conditions and the prolonged low interest rate environment. During the quarter, we continued building upon and expanding customer relationships. This was especially evident in our mortgage banking and insurance businesses. We continued to experience meaningful improvement in credit quality as reflected by significantly lower levels of classified and criticized loans as well as a 30.9% reduction in net charge-offs. Also we made progress toward our pending merger with BancTrust Financial Group, a $2.0 billion financial institution based in Mobile, Alabama. This transaction, which is expected to close during the first two months of 2013, is subject to regulatory approval.”

Credit Quality

·	Nonperforming loans declined 19.1% to $80.7 million

·	Classified and criticized loans declined $15.9 million and $15.2 million, respectively

·	Allowance for loan losses represented 174.1% of nonperforming loans, excluding impaired loans

Trustmark continued to experience significant improvements in credit quality. Nonperforming loans totaled $80.7 million at September 30, 2012, a decline of 19.1% from the prior quarter and 19.0% from the prior year. Foreclosed other real estate increased 11.9% from the prior quarter but decreased 7.9% from the prior year to total $82.5 million. Collectively, nonperforming assets totaled $163.1 million at September 30, 2012, the lowest level since year end 2008 and a decline of 36.4% from the peak of $256.7 million at March 31, 2010. All of the above metrics exclude acquired loans and other real estate covered by FDIC loss-share agreements.

Net charge-offs during the third quarter of 2012 totaled $4.6 million. The third quarter provision for loan losses totaled $3.4 million as sufficient reserves were previously established for both impaired and other substandard credits. During the third quarter, Trustmark experienced a $15.9 million, or 5.5%, decline in classified loans and a $15.2 million, or 4.2%, decline in criticized loans relative to the prior quarter. Relative to balances one year earlier, classified loans decreased $71.1 million, or 20.6%, while criticized loans decreased $69.0 million, or 16.5%.

Allocation of Trustmark’s $83.5 million allowance for loan losses represented 1.79% of commercial loans and 0.84% of consumer and home mortgage loans, resulting in an allowance to total loans of 1.51% at September 30, 2012, which represents a level management considers to be commensurate with the inherent risk in the loan portfolio. The allowance for loan losses represented 174.1% of nonperforming loans, excluding impaired loans. All of the above metrics exclude acquired loans.

Capital Strength

·	Tangible common equity to tangible assets expanded to 10.13%

·	Total risk-based capital ratio increased to 17.25%

Trustmark’s solid capital position reflects the consistent profitability of its diversified financial services businesses as well as prudent balance sheet management. At September 30, 2012, tangible common equity totaled $968.6 million and represented 10.13% of tangible assets while the total risk-based capital ratio was 17.25%. Trustmark’s strong capital base provides the opportunity to support organic loan growth in an improving economy and enhance long-term shareholder value.

Balance Sheet Management

·	Average earning assets remained stable at $8.7 billion

·	Net interest income (FTE) totaled $88.9 million

Loans held for investment and acquired loans totaled $5.7 billion at September 30, 2012, a decrease of $135.0 million from the prior quarter due principally to a $113.5 million decline in single family mortgage loans. During the quarter, many customers continued to take advantage of the opportunity to refinance existing mortgages at more attractive rates. In fact, Trustmark’s mortgage production totaled $514.8 million in the third quarter, an increase of 10.7% from the prior quarter and 50.9% from levels one year earlier. Trustmark elected to sell the vast majority of these lower rate, longer-term home mortgages in the secondary market rather than replacing the runoff in its single family loan portfolio. Trustmark’s decision to discontinue indirect auto financing continued to be reflected in loan totals as this portfolio declined $13.6 million in the third quarter to total $36.2 million. Commercial and industrial loans increased $20.4 million during the quarter, reflecting growth in Trustmark’s Mississippi, Tennessee and Texas markets.

During the third quarter of 2012, average earning assets remained stable at $8.7 billion as growth in investment securities effectively offset declining loan balances. Average deposits decreased $139.0 million, or 1.7%, relative to the prior quarter to total $7.9 billion. Average noninterest-bearing deposits increased 2.1% to represent 26.0% of average deposits in the third quarter of 2012.

While not immune to the extended low interest rate environment and continued sluggish economic conditions that have impacted the banking industry, Trustmark’s prudent asset and liability management produced net interest income (FTE) of $88.9 million in the third quarter of 2012. The net interest margin was 4.06% during the third quarter, down nine basis points from the prior quarter. The decrease is primarily due to the downward repricing of loans and securities, partially offset by modest declines in the cost of interest-bearing deposits.

Noninterest Income

·	Noninterest income totaled $44.9 million, representing 34.5% of total revenue

·	Mortgage banking momentum continued with year-to-date income of $29.6 million

Mortgage banking income continued at record levels due to strong loan production resulting from historically low interest rates. During the third quarter, mortgage banking income totaled $11.2 million, reflecting stable mortgage servicing income and increased secondary marketing gains, which were offset in part by increased mortgage servicing hedge ineffectiveness. Mortgage banking results for the quarter included mark-to-market adjustments on mortgage loans held for sale of $2.6 million due largely to increased refinancing activity resulting from lower mortgage rates.

Insurance revenue during the third quarter totaled $7.5 million, an increase of 4.9% from the prior quarter due to seasonal increases in commercial insurance business as well as a firming of insurance rates as renewals occur. Insurance revenue was stable relative to levels one year earlier. Wealth management income totaled $5.6 million in the third quarter, down approximately $150 thousand from the prior quarter and $381 thousand from levels one year earlier due largely to the diminishing profitability of its proprietary mutual fund business. During the third quarter, Trustmark completed the previously announced sale and reorganization of its proprietary mutual fund business for a pretax payment of $1.2 million, which is reflected in other noninterest income. As a result of this transaction, Trustmark is able to fully embrace open architecture in its wealth management business and focus additional resources on managing client relationships.

Service charges on deposit accounts totaled $13.1 million in the third quarter, reflecting a 4.1% increase from the prior quarter and a 4.0% decrease from levels one year earlier. Bank card and other fee income totaled $6.9 million, down $1.3 million from the prior quarter principally due to reduced commercial credit related fee income, and in-line with levels one year earlier.

Noninterest Expense

·	Noninterest expense remained well-controlled

·	ORE/Foreclosure expense declined to lowest level in 13 quarters

Noninterest expense in the third quarter totaled $83.5 million, down $4.5 million from the prior quarter and $2.0 million from levels one year earlier. Salary and employee benefit expense remained well-controlled, increasing 0.9% from the prior quarter to total $47.4 million. Services and fees as well as equipment expense declined relative to the prior quarter. Occupancy expense totaled $5.4 million, an increase of approximately $400 thousand from the prior quarter due largely to a write-off of leasehold improvements associated with a pending branch office consolidation.

ORE/Foreclosure expense continued to reflect positive trends. During the third quarter of 2012, ORE/Foreclosure expense totaled $1.7 million, a decline of 28.7% relative to the prior quarter and 69.7% when compared to figures one year earlier. Other expense totaled $10.4 million in the third quarter, a decline of $4.5 million from the prior quarter. This decline is directly attributed to Trustmark’s additional $4.0 million reserve for mortgage repurchases in the second quarter of 2012.

ADDITIONAL INFORMATION

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, October 24, 2012, at 10:00 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (877)317-6789, passcode 10008303, or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Thursday, November 8, 2012, in archived format at the same web address or by calling (877)344-7529, passcode 10008303.

Trustmark is a financial services company providing banking and financial solutions through approximately 170 offices in Florida, Mississippi, Tennessee and Texas.

FORWARD-LOOKING STATEMENTS

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

Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, local, state and national economic and market conditions, including the extent and duration of the current volatility in the credit and financial markets, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility of market interest rates, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, including the potential impact of the European financial crisis on the U.S. economy and the markets we serve, and monetary and other governmental actions designed to address the level and volatility of interest rates and the volatility of securities, currency and other markets, the enactment of legislation and changes in existing regulations, or enforcement practices, or the adoption of new regulations, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, changes in our ability to control expenses, changes in our compensation and benefit plans, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, natural disasters, environmental disasters, acts of war or terrorism, the expected timing and likelihood of completion of the proposed merger with BancTrust Financial Group, Inc., (BancTrust), including the timing, receipt and terms and conditions of required regulatory approvals of the proposed merger that could reduce anticipated benefits or cause the parties to abandon the merger, the ability to maintain relationships with customers, employees or suppliers as well as the ability to successfully integrate the business and realize cost savings and any other synergies and the risk that the credit ratings of the combined company or its subsidiaries may be different from what the companies expect, the risk that the proposed merger with BancTrust is terminated prior to completion and results in significant transaction costs to Trustmark, and other risks described in our filings with the Securities and Exchange Commission.

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

Trustmark Investor Contacts:

Louis E. Greer

Treasurer and

Principal Financial Officer

601-208-2310

F. Joseph Rein, Jr.

Senior Vice President

601-208-6898

Trustmark Media Contact:

Melanie A. Morgan

Senior Vice President

601-208-2979

TRUSTMARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

September 30, 2012

($ in thousands)

(unaudited)

										Linked Quarter						Year over Year
QUARTERLY AVERAGE BALANCES	9/30/2012			6/30/2012			9/30/2011			$ Change			% Change			$ Change			% Change
Securities AFS-taxable	$	2,409,292		$	2,341,475		$	2,150,117		$	67,817			2.9	%	$	259,175			12.1	%
Securities AFS-nontaxable		169,037			167,287			170,714			1,750			1.0	%		(1,677	)		-1.0	%
Securities HTM-taxable		28,333			30,136			52,868			(1,803	)		-6.0	%		(24,535	)		-46.4	%
Securities HTM-nontaxable		18,361			19,378			24,062			(1,017	)		-5.2	%		(5,701	)		-23.7	%
Total securities		2,625,023			2,558,276			2,397,761			66,747			2.6	%		227,262			9.5	%
Loans (including loans held for sale)		5,886,447			5,938,168			5,985,730			(51,721	)		-0.9	%		(99,283	)		-1.7	%
Acquired loans:
Noncovered loans		88,562			97,341			-			(8,779	)		-9.0	%		88,562			n/m
Covered loans		65,259			70,217			83,811			(4,958	)		-7.1	%		(18,552	)		-22.1	%
Fed funds sold and rev repos		6,583			5,309			5,801			1,274			24.0	%		782			13.5	%
Other earning assets		31,758			29,654			32,327			2,104			7.1	%		(569	)		-1.8	%
Total earning assets		8,703,632			8,698,965			8,505,430			4,667			0.1	%		198,202			2.3	%
Allowance for loan losses		(86,865	)		(92,223	)		(88,888	)		5,358			-5.8	%		2,023			-2.3	%
Cash and due from banks		236,566			272,283			216,134			(35,717	)		-13.1	%		20,432			9.5	%
Other assets		958,030			947,914			939,780			10,116			1.1	%		18,250			1.9	%
Total assets	$	9,811,363		$	9,826,939		$	9,572,456		$	(15,576	)		-0.2	%	$	238,907			2.5	%

Interest-bearing demand deposits	$	1,534,244		$	1,545,203		$	1,558,318		$	(10,959	)		-0.7	%	$	(24,074	)		-1.5	%
Savings deposits		2,348,413			2,467,546			2,133,437			(119,133	)		-4.8	%		214,976			10.1	%
Time deposits less than $100,000		1,150,620			1,169,532			1,232,374			(18,912	)		-1.6	%		(81,754	)		-6.6	%
Time deposits of $100,000 or more		781,926			813,530			877,951			(31,604	)		-3.9	%		(96,025	)		-10.9	%
Total interest-bearing deposits		5,815,203			5,995,811			5,802,080			(180,608	)		-3.0	%		13,123			0.2	%
Fed funds purchased and repos		374,885			280,726			462,294			94,159			33.5	%		(87,409	)		-18.9	%
Short-term borrowings		81,773			80,275			85,678			1,498			1.9	%		(3,905	)		-4.6	%
Long-term FHLB advances		-			-			2,413			-			n/m			(2,413	)		-100.0	%
Subordinated notes		49,858			49,850			49,825			8			0.0	%		33			0.1	%
Junior subordinated debt securities		61,856			61,856			61,856			-			0.0	%		-			0.0	%
Total interest-bearing liabilities		6,383,575			6,468,518			6,464,146			(84,943	)		-1.3	%		(80,571	)		-1.2	%
Noninterest-bearing deposits		2,039,729			1,998,077			1,811,472			41,652			2.1	%		228,257			12.6	%
Other liabilities		114,454			104,628			85,404			9,826			9.4	%		29,050			34.0	%
Total liabilities		8,537,758			8,571,223			8,361,022			(33,465	)		-0.4	%		176,736			2.1	%
Shareholders' equity		1,273,605			1,255,716			1,211,434			17,889			1.4	%		62,171			5.1	%
Total liabilities and equity	$	9,811,363		$	9,826,939		$	9,572,456		$	(15,576	)		-0.2	%	$	238,907			2.5	%

										Linked Quarter						Year over Year
PERIOD END BALANCES	9/30/2012			6/30/2012			9/30/2011			$ Change			% Change			$ Change			% Change
Cash and due from banks	$	209,188		$	284,735		$	245,132		$	(75,547	)		-26.5	%	$	(35,944	)		-14.7	%
Fed funds sold and rev repos		5,295			6,725			8,810			(1,430	)		-21.3	%		(3,515	)		-39.9	%
Securities available for sale		2,724,446			2,592,807			2,476,905			131,639			5.1	%		247,541			10.0	%
Securities held to maturity		45,484			47,867			71,046			(2,383	)		-5.0	%		(25,562	)		-36.0	%
Loans held for sale (LHFS)		324,897			286,221			210,269			38,676			13.5	%		114,628			54.5	%
Loans held for investment (LHFI)		5,527,963			5,650,548			5,783,712			(122,585	)		-2.2	%		(255,749	)		-4.4	%
Allowance for loan losses		(83,526	)		(84,809	)		(89,463	)		1,283			-1.5	%		5,937			-6.6	%
Net LHFI		5,444,437			5,565,739			5,694,249			(121,302	)		-2.2	%		(249,812	)		-4.4	%
Acquired loans:
Noncovered loans		83,110			94,013			-			(10,903	)		-11.6	%		83,110			n/m
Covered loans		64,503			66,015			79,064			(1,512	)		-2.3	%		(14,561	)		-18.4	%
Allowance for loan losses, acquired loans		(4,343	)		(1,526	)		-			(2,817	)		n/m			(4,343	)		n/m
Net acquired loans		143,270			158,502			79,064			(15,232	)		-9.6	%		64,206			81.2	%
Net LHFI and acquired loans		5,587,707			5,724,241			5,773,313			(136,534	)		-2.4	%		(185,606	)		-3.2	%
Premises and equipment, net		155,467			156,089			141,639			(622	)		-0.4	%		13,828			9.8	%
Mortgage servicing rights		44,211			43,580			43,659			631			1.4	%		552			1.3	%
Goodwill		291,104			291,104			291,104			-			0.0	%		-			0.0	%
Identifiable intangible assets		18,327			19,356			14,861			(1,029	)		-5.3	%		3,466			23.3	%
Other real estate, excluding covered other real estate		82,475			73,673			89,597			8,802			11.9	%		(7,122	)		-7.9	%
Covered other real estate		5,722			6,482			7,197			(760	)		-11.7	%		(1,475	)		-20.5	%
FDIC indemnification asset		23,979			25,309			33,436			(1,330	)		-5.3	%		(9,457	)		-28.3	%
Other assets		353,857			332,657			298,953			21,200			6.4	%		54,904			18.4	%
Total assets	$	9,872,159		$	9,890,846		$	9,705,921		$	(18,687	)		-0.2	%	$	166,238			1.7	%

Deposits:
Noninterest-bearing	$	2,118,853		$	2,063,261		$	1,871,040		$	55,592			2.7	%	$	247,813			13.2	%
Interest-bearing		5,685,188			5,932,596			5,698,684			(247,408	)		-4.2	%		(13,496	)		-0.2	%
Total deposits		7,804,041			7,995,857			7,569,724			(191,816	)		-2.4	%		234,317			3.1	%
Fed funds purchased and repos		408,711			297,669			576,672			111,042			37.3	%		(167,961	)		-29.1	%
Short-term borrowings		83,612			78,594			98,887			5,018			6.4	%		(15,275	)		-15.4	%
Long-term FHLB advances		-			-			741			-			n/m			(741	)		-100.0	%
Subordinated notes		49,863			49,855			49,831			8			0.0	%		32			0.1	%
Junior subordinated debt securities		61,856			61,856			61,856			-			0.0	%		-			0.0	%
Other liabilities		186,061			148,520			126,604			37,541			25.3	%		59,457			47.0	%
Total liabilities		8,594,144			8,632,351			8,484,315			(38,207	)		-0.4	%		109,829			1.3	%
Common stock		13,496			13,496			13,359			-			0.0	%		137			1.0	%
Capital surplus		284,089			283,023			264,750			1,066			0.4	%		19,339			7.3	%
Retained earnings		973,182			958,322			923,891			14,860			1.6	%		49,291			5.3	%
Accum other comprehensive
income, net of tax		7,248			3,654			19,606			3,594			98.4	%		(12,358	)		-63.0	%
Total shareholders' equity		1,278,015			1,258,495			1,221,606			19,520			1.6	%		56,409			4.6	%
Total liabilities and equity	$	9,872,159		$	9,890,846		$	9,705,921		$	(18,687	)		-0.2	%	$	166,238			1.7	%

n/m - percentage changes greater than +/- 100% are considered not meaningful

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

September 30, 2012

($ in thousands except per share data)

(unaudited)

	Quarter Ended									Linked Quarter						Year over Year
INCOME STATEMENTS	9/30/2012			6/30/2012			9/30/2011			$ Change			% Change			$ Change			% Change
Interest and fees on loans-FTE	$	77,783		$	78,046		$	79,256		$	(263	)		-0.3	%	$	(1,473	)		-1.9	%
Interest on securities-taxable		15,909			17,352			18,115			(1,443	)		-8.3	%		(2,206	)		-12.2	%
Interest on securities-tax exempt-FTE		2,089			2,086			2,155			3			0.1	%		(66	)		-3.1	%
Interest on fed funds sold and rev repos		6			5			5			1			20.0	%		1			20.0	%
Other interest income		339			336			329			3			0.9	%		10			3.0	%
Total interest income-FTE		96,126			97,825			99,860			(1,699	)		-1.7	%		(3,734	)		-3.7	%
Interest on deposits		5,725			6,465			8,911			(740	)		-11.4	%		(3,186	)		-35.8	%
Interest on fed funds pch and repos		135			142			216			(7	)		-4.9	%		(81	)		-37.5	%
Other interest expense		1,358			1,359			1,386			(1	)		-0.1	%		(28	)		-2.0	%
Total interest expense		7,218			7,966			10,513			(748	)		-9.4	%		(3,295	)		-31.3	%
Net interest income-FTE		88,908			89,859			89,347			(951	)		-1.1	%		(439	)		-0.5	%
Provision for loan losses, excluding acquired loans		3,358			650			7,978			2,708			n/m			(4,620	)		-57.9	%
Provision for acquired loan losses		2,105			1,672			-			433			25.9	%		2,105			n/m
Net interest income after provision-FTE		83,445			87,537			81,369			(4,092	)		-4.7	%		2,076			2.6	%
Service charges on deposit accounts		13,135			12,614			13,680			521			4.1	%		(545	)		-4.0	%
Insurance commissions		7,533			7,179			7,516			354			4.9	%		17			0.2	%
Wealth management		5,612			5,762			5,993			(150	)		-2.6	%		(381	)		-6.4	%
Bank card and other fees		6,924			8,179			7,033			(1,255	)		-15.3	%		(109	)		-1.5	%
Mortgage banking, net		11,150			11,184			9,783			(34	)		-0.3	%		1,367			14.0	%
Other, net		512			(1,150	)		234			1,662			n/m			278			n/m
Nonint inc-excl sec gains, net		44,866			43,768			44,239			1,098			2.5	%		627			1.4	%
Security (losses) gains, net		(1	)		(8	)		33			7			-87.5	%		(34	)		n/m
Total noninterest income		44,865			43,760			44,272			1,105			2.5	%		593			1.3	%
Salaries and employee benefits		47,404			46,959			44,701			445			0.9	%		2,703			6.0	%
Services and fees		11,682			11,750			11,485			(68	)		-0.6	%		197			1.7	%
Net occupancy-premises		5,352			4,954			5,093			398			8.0	%		259			5.1	%
Equipment expense		5,095			5,183			5,038			(88	)		-1.7	%		57			1.1	%
FDIC assessment expense		1,826			1,826			1,812			-			0.0	%		14			0.8	%
ORE/Foreclosure expense		1,702			2,388			5,616			(686	)		-28.7	%		(3,914	)		-69.7	%
Other expense		10,399			14,899			11,736			(4,500	)		-30.2	%		(1,337	)		-11.4	%
Total noninterest expense		83,460			87,959			85,481			(4,499	)		-5.1	%		(2,021	)		-2.4	%
Income before income taxes and tax eq adj		44,850			43,338			40,160			1,512			3.5	%		4,690			11.7	%
Tax equivalent adjustment		3,629			3,411			3,667			218			6.4	%		(38	)		-1.0	%
Income before income taxes		41,221			39,927			36,493			1,294			3.2	%		4,728			13.0	%
Income taxes		11,317			10,578			9,525			739			7.0	%		1,792			18.8	%
Net income available to common shareholders	$	29,904		$	29,349		$	26,968		$	555			1.9	%	$	2,936			10.9	%


Per common share data
Earnings per share - basic	$	0.46		$	0.45		$	0.42		$	0.01			2.2	%	$	0.04			9.5	%

Earnings per share - diluted	$	0.46		$	0.45		$	0.42		$	0.01			2.2	%	$	0.04			9.5	%

Dividends per share	$	0.23		$	0.23		$	0.23		$	-			0.0	%	$	-			0.0	%

Weighted average common shares outstanding
Basic		64,778,329			64,771,530			64,119,235

Diluted		64,992,614			64,938,697			64,310,453

Period end common shares outstanding		64,779,937			64,775,694			64,119,235

OTHER FINANCIAL DATA
Return on common equity		9.34	%		9.40	%		8.83	%
Return on average tangible common equity		12.61	%		12.74	%		12.04	%
Return on equity		9.34	%		9.40	%		8.83	%
Return on assets		1.21	%		1.20	%		1.12	%
Interest margin - Yield - FTE		4.39	%		4.52	%		4.66	%
Interest margin - Cost		0.33	%		0.37	%		0.49	%
Net interest margin - FTE		4.06	%		4.15	%		4.17	%
Efficiency ratio (1)		62.39	%		66.26	%		63.99	%
Full-time equivalent employees		2,632			2,598			2,542

COMMON STOCK PERFORMANCE
Market value-Close	$	24.34		$	24.48		$	18.15
Common book value	$	19.73		$	19.43		$	19.05
Tangible common book value	$	14.95		$	14.64		$	14.28


(1) - Excludes nonrecurring income and expense items such as securities gains or losses, bargain purchase gains and one-time acquisition related transaction expenses.

n/m - percentage changes greater than +/- 100% are considered not meaningful

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

September 30, 2012

($ in thousands)

(unaudited)

	Quarter Ended									Linked Quarter						Year over Year
NONPERFORMING ASSETS (1)	9/30/2012			6/30/2012			9/30/2011			$ Change			% Change			$ Change			% Change
Nonaccrual loans
Florida	$	21,456		$	22,260		$	27,263		$	(804	)		-3.6	%	$	(5,807	)		-21.3	%
Mississippi (2)		32,041			47,322			44,825			(15,281	)		-32.3	%		(12,784	)		-28.5	%
Tennessee (3)		7,388			11,171			14,575			(3,783	)		-33.9	%		(7,187	)		-49.3	%
Texas		19,773			18,927			12,915			846			4.5	%		6,858			53.1	%
Total nonaccrual loans		80,658			99,680			99,578			(19,022	)		-19.1	%		(18,920	)		-19.0	%
Other real estate
Florida		22,340			23,324			29,949			(984	)		-4.2	%		(7,609	)		-25.4	%
Mississippi (2)		27,113			19,511			21,027			7,602			39.0	%		6,086			28.9	%
Tennessee (3)		18,545			18,850			17,940			(305	)		-1.6	%		605			3.4	%
Texas		14,477			11,988			20,681			2,489			20.8	%		(6,204	)		-30.0	%
Total other real estate		82,475			73,673			89,597			8,802			11.9	%		(7,122	)		-7.9	%
Total nonperforming assets	$	163,133		$	173,353		$	189,175		$	(10,220	)		-5.9	%	$	(26,042	)		-13.8	%

LOANS PAST DUE OVER 90 DAYS (4)
LHFI	$	5,699		$	1,843		$	3,166		$	3,856			n/m		$	2,533			80.0	%

LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	39,492		$	35,270		$	32,956		$	4,222			12.0	%	$	6,536			19.8	%

	Quarter Ended									Linked Quarter						Year over Year
ALLOWANCE FOR LOAN LOSSES (4)	9/30/2012			6/30/2012			9/30/2011			$ Change			% Change			$ Change			% Change
Beginning Balance	$	84,809		$	90,879		$	86,846		$	(6,070	)		-6.7	%	$	(2,037	)		-2.3	%
Provision for loan losses		3,358			650			7,978			2,708			n/m			(4,620	)		-57.9	%
Charge-offs		(7,907	)		(9,264	)		(8,675	)		1,357			-14.6	%		768			-8.9	%
Recoveries		3,266			2,544			3,314			722			28.4	%		(48	)		-1.4	%
Net charge-offs		(4,641	)		(6,720	)		(5,361	)		2,079			-30.9	%		720			-13.4	%
Ending Balance	$	83,526		$	84,809		$	89,463		$	(1,283	)		-1.5	%	$	(5,937	)		-6.6	%

PROVISION FOR LOAN LOSSES (4)
Florida	$	7		$	(770	)	$	3,046		$	777			n/m		$	(3,039	)		-99.8	%
Mississippi (2)		466			1,141			3,732			(675	)		-59.2	%		(3,266	)		-87.5	%
Tennessee (3)		687			839			(105	)		(152	)		-18.1	%		792			n/m
Texas		2,198			(560	)		1,305			2,758			n/m			893			68.4	%
Total provision for loan losses	$	3,358		$	650		$	7,978		$	2,708			n/m		$	(4,620	)		-57.9	%

NET CHARGE-OFFS (4)
Florida	$	(488	)	$	4,491		$	2,909		$	(4,979	)		n/m		$	(3,397	)		n/m
Mississippi (2)		4,726			1,751			1,988			2,975			n/m			2,738			n/m
Tennessee (3)		438			536			499			(98	)		-18.3	%		(61	)		-12.2	%
Texas		(35	)		(58	)		(35	)		23			-39.7	%		-			0.0	%
Total net charge-offs	$	4,641		$	6,720		$	5,361		$	(2,079	)		-30.9	%	$	(720	)		-13.4	%

CREDIT QUALITY RATIOS (1)
Net charge offs/average loans		0.31	%		0.46	%		0.36	%
Provision for loan losses/average loans		0.23	%		0.04	%		0.53	%
Nonperforming loans/total loans (incl LHFS)		1.38	%		1.68	%		1.66	%
Nonperforming assets/total loans (incl LHFS)		2.79	%		2.92	%		3.16	%
Nonperforming assets/total loans (incl LHFS) +ORE		2.75	%		2.88	%		3.11	%
ALL/total loans (excl LHFS)		1.51	%		1.50	%		1.55	%
ALL-commercial/total commercial loans		1.79	%		1.81	%		1.94	%
ALL-consumer/total consumer and home mortgage loans		0.84	%		0.81	%		0.76	%
ALL/nonperforming loans		103.56	%		85.08	%		89.84	%
ALL/nonperforming loans -
(excl impaired loans)		174.09	%		186.45	%		248.82	%

CAPITAL RATIOS
Total equity/total assets		12.95	%		12.72	%		12.59	%
Common equity/total assets		12.95	%		12.72	%		12.59	%
Tangible common equity/tangible assets		10.13	%		9.90	%		9.74	%
Tangible common equity/risk-weighted assets		14.49	%		14.30	%		14.04	%
Tier 1 leverage ratio		10.83	%		10.63	%		10.38	%
Tier 1 common risk-based capital ratio		14.50	%		14.36	%		13.84	%
Tier 1 risk-based capital ratio		15.40	%		15.26	%		14.76	%
Total risk-based capital ratio		17.25	%		17.12	%		16.78	%

(1) - Excludes Acquired Loans and Covered Other Real Estate
(2) - Mississippi includes Central and Southern Mississippi Regions
(3) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
(4) - Excludes Acquired Loans

n/m - percentage changes greater than +/- 100% are considered not meaningful

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

September 30, 2012

($ in thousands)

(unaudited)

	Quarter Ended															Nine Months Ended
AVERAGE BALANCES	9/30/2012			6/30/2012			3/31/2012			12/31/2011			9/30/2011			9/30/2012			9/30/2011
Securities AFS-taxable	$	2,409,292		$	2,341,475		$	2,327,572		$	2,241,361		$	2,150,117		$	2,359,628		$	2,114,897
Securities AFS-nontaxable		169,037			167,287			160,870			164,057			170,714			165,743			155,796
Securities HTM-taxable		28,333			30,136			33,270			41,106			52,868			30,571			74,608
Securities HTM-nontaxable		18,361			19,378			21,598			22,664			24,062			19,774			25,641
Total securities		2,625,023			2,558,276			2,543,310			2,469,188			2,397,761			2,575,716			2,370,942
Loans (including loans held for sale)		5,886,447			5,938,168			6,014,133			5,999,221			5,985,730			5,946,031			6,045,218
Acquired loans:
Noncovered loans		88,562			97,341			19,931			-			-			68,684			-
Covered loans		65,259			70,217			75,612			77,934			83,811			70,344			54,197
Fed funds sold and rev repos		6,583			5,309			9,568			10,516			5,801			7,151			6,980
Other earning assets		31,758			29,654			34,102			34,859			32,327			31,838			37,345
Total earning assets		8,703,632			8,698,965			8,696,656			8,591,718			8,505,430			8,699,764			8,514,682
Allowance for loan losses		(86,865	)		(92,223	)		(92,062	)		(90,857	)		(88,888	)		(90,371	)		(93,215	)
Cash and due from banks		236,566			272,283			232,139			221,278			216,134			246,958			218,310
Other assets		958,030			947,914			918,273			914,468			939,780			941,468			925,750
Total assets	$	9,811,363		$	9,826,939		$	9,755,006		$	9,636,607		$	9,572,456		$	9,797,819		$	9,565,527

Interest-bearing demand deposits	$	1,534,244		$	1,545,203		$	1,545,045		$	1,511,422		$	1,558,318		$	1,541,471		$	1,534,874
Savings deposits		2,348,413			2,467,546			2,339,166			2,067,431			2,133,437			2,384,908			2,152,498
Time deposits less than $100,000		1,150,620			1,169,532			1,190,888			1,212,190			1,232,374			1,170,274			1,232,777
Time deposits of $100,000 or more		781,926			813,530			825,214			844,565			877,951			806,799			886,348
Total interest-bearing deposits		5,815,203			5,995,811			5,900,313			5,635,608			5,802,080			5,903,452			5,806,497
Fed funds purchased and repos		374,885			280,726			437,270			526,740			462,294			364,332			501,585
Short-term borrowings		81,773			80,275			84,797			141,600			85,678			82,280			143,450
Long-term FHLB advances		-			-			-			197			2,413			-			1,591
Subordinated notes		49,858			49,850			49,842			49,833			49,825			49,850			49,817
Junior subordinated debt securities		61,856			61,856			61,856			61,856			61,856			61,856			61,856
Total interest-bearing liabilities		6,383,575			6,468,518			6,534,078			6,415,834			6,464,146			6,461,770			6,564,796
Noninterest-bearing deposits		2,039,729			1,998,077			1,869,758			1,897,398			1,811,472			1,969,445			1,716,300
Other liabilities		114,454			104,628			122,668			100,274			85,404			113,920			99,873
Total liabilities		8,537,758			8,571,223			8,526,504			8,413,506			8,361,022			8,545,135			8,380,969
Shareholders' equity		1,273,605			1,255,716			1,228,502			1,223,101			1,211,434			1,252,684			1,184,558
Total liabilities and equity	$	9,811,363		$	9,826,939		$	9,755,006		$	9,636,607		$	9,572,456		$	9,797,819		$	9,565,527

PERIOD END BALANCES	9/30/2012			6/30/2012			3/31/2012			12/31/2011			9/30/2011
Cash and due from banks	$	209,188		$	284,735		$	213,500		$	202,625		$	245,132
Fed funds sold and rev repos		5,295			6,725			6,301			9,258			8,810
Securities available for sale		2,724,446			2,592,807			2,595,664			2,468,993			2,476,905
Securities held to maturity		45,484			47,867			52,010			57,705			71,046
Loans held for sale (LHFS)		324,897			286,221			227,449			216,553			210,269
Loans held for investment (LHFI)		5,527,963			5,650,548			5,774,753			5,857,484			5,783,712
Allowance for loan losses		(83,526	)		(84,809	)		(90,879	)		(89,518	)		(89,463	)
Net LHFI		5,444,437			5,565,739			5,683,874			5,767,966			5,694,249
Acquired loans:
Noncovered loans		83,110			94,013			100,669			-			-
Covered loans		64,503			66,015			74,419			76,804			79,064
Allowance for loan losses, acquired loans		(4,343	)		(1,526	)		(773	)		(502	)		-
Net acquired loans		143,270			158,502			174,315			76,302			79,064
Net LHFI and acquired loans		5,587,707			5,724,241			5,858,189			5,844,268			5,773,313
Premises and equipment, net		155,467			156,089			156,158			142,582			141,639
Mortgage servicing rights		44,211			43,580			45,893			43,274			43,659
Goodwill		291,104			291,104			291,104			291,104			291,104
Identifiable intangible assets		18,327			19,356			18,821			14,076			14,861
Other real estate, excluding covered other real estate		82,475			73,673			75,742			79,053			89,597
Covered other real estate		5,722			6,482			5,824			6,331			7,197
FDIC indemnification asset		23,979			25,309			28,260			28,348			33,436
Other assets		353,857			332,657			356,678			322,837			298,953
Total assets	$	9,872,159		$	9,890,846		$	9,931,593		$	9,727,007		$	9,705,921

Deposits:
Noninterest-bearing	$	2,118,853		$	2,063,261		$	2,024,290		$	2,033,442		$	1,871,040
Interest-bearing		5,685,188			5,932,596			6,066,456			5,532,921			5,698,684
Total deposits		7,804,041			7,995,857			8,090,746			7,566,363			7,569,724
Fed funds purchased and repos		408,711			297,669			254,878			604,500			576,672
Short-term borrowings		83,612			78,594			82,023			87,628			98,887
Long-term FHLB advances		-			-			-			-			741
Subordinated notes		49,863			49,855			49,847			49,839			49,831
Junior subordinated debt securities		61,856			61,856			61,856			61,856			61,856
Other liabilities		186,061			148,520			150,723			141,784			126,604
Total liabilities		8,594,144			8,632,351			8,690,073			8,511,970			8,484,315
Common stock		13,496			13,496			13,494			13,364			13,359
Capital surplus		284,089			283,023			282,388			266,026			264,750
Retained earnings		973,182			958,322			944,101			932,526			923,891
Accum other comprehensive
income, net of tax		7,248			3,654			1,537			3,121			19,606
Total shareholders' equity		1,278,015			1,258,495			1,241,520			1,215,037			1,221,606
Total liabilities and equity	$	9,872,159		$	9,890,846		$	9,931,593		$	9,727,007		$	9,705,921

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

September 30, 2012

($ in thousands except per share data)

(unaudited)

	Quarter Ended															Nine Months Ended
INCOME STATEMENTS	9/30/2012			6/30/2012			3/31/2012			12/31/2011			9/30/2011			9/30/2012			9/30/2011
Interest and fees on loans-FTE	$	77,783		$	78,046		$	78,718		$	82,230		$	79,256		$	234,547		$	238,574
Interest on securities-taxable		15,909			17,352			18,384			17,362			18,115			51,645			58,481
Interest on securities-tax exempt-FTE		2,089			2,086			2,102			2,133			2,155			6,277			6,398
Interest on fed funds sold and rev repos		6			5			6			10			5			17			20
Other interest income		339			336			330			327			329			1,005			994
Total interest income-FTE		96,126			97,825			99,540			102,062			99,860			293,491			304,467
Interest on deposits		5,725			6,465			7,353			7,728			8,911			19,543			29,110
Interest on fed funds pch and repos		135			142			171			195			216			448			770
Other interest expense		1,358			1,359			1,414			1,418			1,386			4,131			3,815
Total interest expense		7,218			7,966			8,938			9,341			10,513			24,122			33,695
Net interest income-FTE		88,908			89,859			90,602			92,721			89,347			269,369			270,772
Provision for loan losses, excluding acquired loans		3,358			650			3,293			6,073			7,978			7,301			23,631
Provision for acquired loan losses		2,105			1,672			(194	)		624			-			3,583			-
Net interest income after provision-FTE		83,445			87,537			87,503			86,024			81,369			258,485			247,141
Service charges on deposit accounts		13,135			12,614			12,211			13,269			13,680			37,960			38,438
Insurance commissions		7,533			7,179			6,606			6,076			7,516			21,318			20,890
Wealth management		5,612			5,762			5,501			5,223			5,993			16,875			17,739
Bank card and other fees		6,924			8,179			7,364			7,112			7,033			22,467			20,362
Mortgage banking, net		11,150			11,184			7,295			6,038			9,783			29,629			20,774
Other, net		512			(1,150	)		3,758			(4,928	)		234			3,120			8,781
Nonint inc-excl sec gains, net		44,866			43,768			42,735			32,790			44,239			131,369			126,984
Security (losses) gains, net		(1	)		(8	)		1,050			(11	)		33			1,041			91
Total noninterest income		44,865			43,760			43,785			32,779			44,272			132,410			127,075
Salaries and employee benefits		47,404			46,959			46,432			45,616			44,701			140,795			132,940
Services and fees		11,682			11,750			10,747			11,323			11,485			34,179			32,535
Net occupancy-premises		5,352			4,954			4,938			5,038			5,093			15,244			15,216
Equipment expense		5,095			5,183			4,912			5,139			5,038			15,190			15,038
FDIC assessment expense		1,826			1,826			1,775			1,484			1,812			5,427			6,500
ORE/Foreclosure expense		1,702			2,388			3,902			2,760			5,616			7,992			13,533
Other expense		10,399			14,899			13,068			11,643			11,736			38,366			31,085
Total noninterest expense		83,460			87,959			85,774			83,003			85,481			257,193			246,847
Income before income taxes and tax eq adj		44,850			43,338			45,514			35,800			40,160			133,702			127,369
Tax equivalent adjustment		3,629			3,411			3,658			3,663			3,667			10,698			10,887
Income before income taxes		41,221			39,927			41,856			32,137			36,493			123,004			116,482
Income taxes		11,317			10,578			11,536			7,879			9,525			33,431			33,899
Net income available to common shareholders	$	29,904		$	29,349		$	30,320		$	24,258		$	26,968		$	89,573		$	82,583

Per common share data
Earnings per share - basic	$	0.46		$	0.45		$	0.47		$	0.38		$	0.42		$	1.39		$	1.29

Earnings per share - diluted	$	0.46		$	0.45		$	0.47		$	0.38		$	0.42		$	1.38		$	1.29

Dividends per share	$	0.23		$	0.23		$	0.23		$	0.23		$	0.23		$	0.69		$	0.69

Weighted average common shares outstanding
Basic		64,778,329			64,771,530			64,297,038			64,122,188			64,119,235			64,616,226			64,047,866

Diluted		64,992,614			64,938,697			64,477,277			64,330,242			64,310,453			64,804,661			64,251,025

Period end common shares outstanding		64,779,937			64,775,694			64,765,581			64,142,498			64,119,235			64,779,937			64,119,235


OTHER FINANCIAL DATA
Return on common equity		9.34	%		9.40	%		9.93	%		7.87	%		8.83	%		9.55	%		9.32	%
Return on average tangible common equity		12.61	%		12.74	%		13.41	%		10.70	%		12.04	%		12.91	%		12.80	%
Return on equity		9.34	%		9.40	%		9.93	%		7.87	%		8.83	%		9.55	%		9.32	%
Return on assets		1.21	%		1.20	%		1.25	%		1.00	%		1.12	%		1.22	%		1.15	%
Interest margin - Yield - FTE		4.39	%		4.52	%		4.60	%		4.71	%		4.66	%		4.51	%		4.78	%
Interest margin - Cost		0.33	%		0.37	%		0.41	%		0.43	%		0.49	%		0.37	%		0.53	%
Net interest margin - FTE		4.06	%		4.15	%		4.19	%		4.28	%		4.17	%		4.14	%		4.25	%
Efficiency ratio (1)		62.39	%		66.26	%		63.70	%		66.13	%		63.99	%		64.12	%		63.25	%
Full-time equivalent employees		2,632			2,598			2,611			2,537			2,542


COMMON STOCK PERFORMANCE
Market value-Close	$	24.34		$	24.48		$	24.98		$	24.29		$	18.15
Common book value	$	19.73		$	19.43		$	19.17		$	18.94		$	19.05
Tangible common book value	$	14.95		$	14.64		$	14.38		$	14.18		$	14.28


(1) - Excludes nonrecurring income and expense items such as securities gains or losses, bargain purchase gains and one-time acquisition related transaction expenses.

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

September 30, 2012

($ in thousands)

(unaudited)

	Quarter Ended
NONPERFORMING ASSETS (1)	9/30/2012			6/30/2012			3/31/2012			12/31/2011			9/30/2011
Nonaccrual loans
Florida	$	21,456		$	22,260		$	22,174		$	23,002		$	27,263
Mississippi (2)		32,041			47,322			48,648			46,746			44,825
Tennessee (3)		7,388			11,171			13,972			15,791			14,575
Texas		19,773			18,927			20,979			24,919			12,915
Total nonaccrual loans		80,658			99,680			105,773			110,458			99,578
Other real estate
Florida		22,340			23,324			26,226			29,963			29,949
Mississippi (2)		27,113			19,511			19,240			19,483			21,027
Tennessee (3)		18,545			18,850			17,665			16,879			17,940
Texas		14,477			11,988			12,611			12,728			20,681
Total other real estate		82,475			73,673			75,742			79,053			89,597
Total nonperforming assets	$	163,133		$	173,353		$	181,515		$	189,511		$	189,175

LOANS PAST DUE OVER 90 DAYS (4)
LHFI	$	5,699		$	1,843		$	1,553		$	4,230		$	3,166

LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)	$	39,492		$	35,270		$	39,496		$	39,379		$	32,956


	Quarter Ended															Nine Months Ended
ALLOWANCE FOR LOAN LOSSES (4)	9/30/2012			6/30/2012			3/31/2012			12/31/2011			9/30/2011			9/30/2012			9/30/2011
Beginning Balance	$	84,809		$	90,879		$	89,518		$	89,463		$	86,846		$	89,518		$	93,510
Provision for loan losses		3,358			650			3,293			6,073			7,978			7,301			23,631
Charge-offs		(7,907	)		(9,264	)		(5,376	)		(8,457	)		(8,675	)		(22,547	)		(37,312	)
Recoveries		3,266			2,544			3,444			2,439			3,314			9,254			9,634
Net charge-offs		(4,641	)		(6,720	)		(1,932	)		(6,018	)		(5,361	)		(13,293	)		(27,678	)
Ending Balance	$	83,526		$	84,809		$	90,879		$	89,518		$	89,463		$	83,526		$	89,463

PROVISION FOR LOAN LOSSES (4)
Florida	$	7		$	(770	)	$	739		$	4,797		$	3,046		$	(24	)	$	11,703
Mississippi (2)		466			1,141			4,152			3,783			3,732			5,759			6,134
Tennessee (3)		687			839			(29	)		(885	)		(105	)		1,497			1,671
Texas		2,198			(560	)		(1,569	)		(1,622	)		1,305			69			4,123
Total provision for loan losses	$	3,358		$	650		$	3,293		$	6,073		$	7,978		$	7,301		$	23,631

NET CHARGE-OFFS (4)
Florida	$	(488	)	$	4,491		$	1,495		$	2,576		$	2,909		$	5,498		$	16,267
Mississippi (2)		4,726			1,751			251			2,556			1,988			6,728			5,799
Tennessee (3)		438			536			223			773			499			1,197			1,802
Texas		(35	)		(58	)		(37	)		113			(35	)		(130	)		3,810
Total net charge-offs	$	4,641		$	6,720		$	1,932		$	6,018		$	5,361		$	13,293		$	27,678

CREDIT QUALITY RATIOS (1)
Net charge offs/average loans		0.31	%		0.46	%		0.13	%		0.40	%		0.36	%		0.30	%		0.61	%
Provision for loan losses/average loans		0.23	%		0.04	%		0.22	%		0.40	%		0.53	%		0.16	%		0.52	%
Nonperforming loans/total loans (incl LHFS)		1.38	%		1.68	%		1.76	%		1.82	%		1.66	%
Nonperforming assets/total loans (incl LHFS)		2.79	%		2.92	%		3.02	%		3.12	%		3.16	%
Nonperforming assets/total loans (incl LHFS) +ORE		2.75	%		2.88	%		2.99	%		3.08	%		3.11	%
ALL/total loans (excl LHFS)		1.51	%		1.50	%		1.57	%		1.53	%		1.55	%
ALL-commercial/total commercial loans		1.79	%		1.81	%		1.97	%		1.91	%		1.94	%
ALL-consumer/total consumer and home mortgage loans		0.84	%		0.81	%		0.75	%		0.76	%		0.76	%
ALL/nonperforming loans		103.56	%		85.08	%		85.92	%		81.04	%		89.84	%
ALL/nonperforming loans -
(excl impaired loans)		174.09	%		186.45	%		181.11	%		194.19	%		248.82	%

CAPITAL RATIOS
Total equity/total assets		12.95	%		12.72	%		12.50	%		12.49	%		12.59	%
Common equity/total assets		12.95	%		12.72	%		12.50	%		12.49	%		12.59	%
Tangible common equity/tangible assets		10.13	%		9.90	%		9.68	%		9.66	%		9.74	%
Tangible common equity/risk-weighted assets		14.49	%		14.30	%		13.89	%		13.83	%		14.04	%
Tier 1 leverage ratio		10.83	%		10.63	%		10.55	%		10.43	%		10.38	%
Tier 1 common risk-based capital ratio		14.50	%		14.36	%		13.98	%		13.90	%		13.84	%
Tier 1 risk-based capital ratio		15.40	%		15.26	%		14.87	%		14.81	%		14.76	%
Total risk-based capital ratio		17.25	%		17.12	%		16.72	%		16.67	%		16.78	%


(1) - Excludes Acquired Loans and Covered Other Real Estate
(2) - Mississippi includes Central and Southern Mississippi Regions
(3) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
(4) - Excludes Acquired Loans

See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2012

($ in thousands)

(unaudited)

Note 1 – Business Combinations

BancTrust Financial Group, Inc.

On May 29, 2012, Trustmark Corporation (Trustmark) and BancTrust Financial Group, Inc. (BancTrust) announced the signing of a definitive agreement pursuant to which BancTrust will merge into Trustmark. BancTrust has 49 offices throughout Alabama and the Florida Panhandle with $1.3 billion in loans and $1.8 billion in deposits at March 31, 2012.

Under the terms of the definitive agreement, which was approved unanimously by the Boards of Directors of both companies, holders of BancTrust common stock will receive 0.125 of a share of Trustmark common stock for each share of BancTrust common stock in a tax-free exchange. Trustmark will issue approximately 2,245,923 shares of its common stock for all issued and outstanding shares of BancTrust common stock. Based upon a price of $24.66 per share of Trustmark common stock, the transaction is valued at approximately $55.4 million, or $3.08 per share of BancTrust common stock. Trustmark intends to repurchase the $50.0 million of BancTrust preferred stock and associated warrant issued to the U.S. Department of Treasury under the Capital Purchase Program.

BancTrust shareholders approved the merger on September 26, 2012. Regulatory approval is still pending. On October 9, 2012, Trustmark and BancTrust announced that the definitive agreement dated May 28, 2012, pursuant to which BancTrust will merge into Trustmark has been amended to accommodate the closing of the merger in early 2013. As such, the latest possible closing date for the merger has been extended from December 31, 2012, to February 28, 2013. This extension provides additional time in which to receive regulatory approval as well as to ensure a smooth transition and operational conversion to Trustmark systems in early 2013. All other material aspects of the definitive agreement remain unchanged.

Bay Bank & Trust Company

On March 16, 2012, Trustmark National Bank (TNB) completed its merger with Bay Bank & Trust Co. (Bay Bank), a 76-year old financial institution headquartered in Panama City, Florida. Trustmark acquired all outstanding common stock of Bay Bank for approximately $22 million in cash and stock, comprised of $10 million in cash and the issuance of approximately 510 thousand shares of Trustmark common stock value at $12 million. This acquisition was accounted for under the acquisition method in accordance with FASB ASC Topic 805, “Business Combinations.” Accordingly, the assets and liabilities, both tangible and intangible, are recorded at their estimated fair values as of the acquisition date. The purchase price allocation was deemed preliminary as of March 31, 2012 and was finalized in the second quarter of 2012.

The statement of assets purchased and liabilities assumed in the Bay Bank acquisition is presented below at their estimated fair values as of the acquisition date of March 16, 2012 ($ in thousands):


Assets
Cash and due from banks	$	88,154
Securities available for sale		26,369
Acquired noncovered loans		97,914
Premises and equipment, net		9,466
Identifiable intangible assets		7,017
Other real estate		2,569
Other assets		3,471
Total Assets		234,960

Liabilities
Deposits		208,796
Other liabilities		526
Total Liabilities		209,322

Net assets acquired at fair value		25,638
Consideration paid to Bay Bank		22,003

Bargain purchase gain		3,635
Income taxes		-
Bargain purchase gain, net of taxes	$	3,635

The bargain purchase gain represents the excess of the net of the estimated fair value of the assets acquired and liabilities assumed over the consideration paid to Bay Bank. Initially, Trustmark recognized a bargain purchase gain of $2.8 million during the first quarter of 2012 and subsequently increased the bargain purchase gain $881 thousand during the second quarter of 2012 as the fair values associated with the Bay Bank acquisition were finalized. The gain of $3.6 million recognized by Trustmark is considered a gain from a bargain purchase under FASB ASC Topic 805 and is included in other noninterest income. Included in noninterest expense during the first quarter of 2012 are non-routine Bay Bank transaction expenses totaling approximately $2.6 million (change in control and severance expense of $672 thousand included in salaries and benefits; contract termination and other expenses of $1.9 million included in other expense).

All loans acquired from Bay Bank, with the exception of revolving credit agreements, were evaluated under a fair value process involving various degrees of deterioration in credit quality since origination, and also for those loans for which it was probable at acquisition that TNB would not be able to collect all contractually required payments. These loans are referred to as acquired impaired loans and are accounted for in accordance with FASB ASC Topic 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality.”

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2012

($ in thousands)

(unaudited)

Note 1 – Business Combinations (continued)

Heritage Banking Group

On April 15, 2011, the Mississippi Department of Banking and Consumer Finance closed the Heritage Banking Group (Heritage), a 90-year old financial institution headquartered in Carthage, Mississippi, and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. On the same date, Trustmark National Bank (TNB) entered into a purchase and assumption agreement with the FDIC in which TNB agreed to assume all of the deposits and purchased essentially all of the assets of Heritage. The FDIC and TNB entered into a loss-share transaction on approximately $151.9 million of Heritage assets, which covers substantially all loans and all other real estate. Under the loss-share agreement, the FDIC will cover 80% of covered loan and other real estate losses incurred. Because of the loss protection provided by the FDIC, the risk characteristics of the Heritage loans and other real estate covered by the loss-share agreement are significantly different from those assets not covered by this agreement. As a result, Trustmark will refer to loans and other real estate subject to the loss-share agreement as “covered” while loans and other real estate that are not subject to the loss-share agreement will be referred to as “noncovered” or “excluding covered.” The loss-share agreement applicable to single family residential mortgage loans and related foreclosed real estate provides for FDIC loss sharing and TNB’s reimbursement to the FDIC for recoveries of covered losses for ten years from the date on which the loss-share agreement was entered. The loss-share agreement applicable to commercial loans and related foreclosed real estate provides for FDIC loss sharing for five years from the date on which the loss-share agreement was entered and TNB’s reimbursement to the FDIC for recoveries of covered losses for an additional three years thereafter.

The assets purchased and liabilities assumed for the Heritage acquisition have been accounted for under the acquisition method of accounting (formerly the purchase method). The assets and liabilities, both tangible and intangible, are recorded at their estimated fair values as of the acquisition date. The fair value amounts are subject to change for up to one year after the closing date as additional information relating to closing date fair values becomes available. The amounts are also subject to adjustments based upon final settlement with the FDIC.

The bargain purchase gain from the Heritage acquisition represents the net of the estimated fair value of the assets acquired and liabilities assumed and is influenced significantly by the FDIC-assisted transaction process. Under the FDIC-assisted transaction process, only certain assets and liabilities are transferred to the acquirer and, depending on the nature and amount of the acquirer's bid, the FDIC may be required to make a cash payment to the acquirer. The pretax gain of $7.5 million ($4.6 million after tax) recognized by TNB is considered a bargain purchase transaction under FASB ASC Topic 805. The gain was recognized as other noninterest income in Trustmark’s consolidated statements of income for the three months ended June 30, 2011.

Note 2 - Securities Available for Sale and Held to Maturity

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

	9/30/2012		6/30/2012		3/31/2012		12/31/2011		9/30/2011
SECURITIES AVAILABLE FOR SALE
U.S. Government agency obligations
Issued by U.S. Government agencies	$	18	$	22	$	31	$	3	$	5
Issued by U.S. Government sponsored agencies		60,671		72,923		101,941		64,802		61,870
Obligations of states and political subdivisions		215,900		213,826		208,234		202,827		207,781
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		21,352		22,367		20,064		12,445		14,637
Issued by FNMA and FHLMC		237,886		264,018		286,169		347,932		400,589
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		1,565,290		1,570,226		1,619,920		1,614,965		1,579,698
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		381,207		354,453		330,318		226,019		212,325
Asset-backed securities / structured financial products		242,122		91,293		23,693		-		-
Corporate debt securities		-		3,679		5,294		-		-
Total securities available for sale	$	2,724,446	$	2,592,807	$	2,595,664	$	2,468,993	$	2,476,905

SECURITIES HELD TO MATURITY
Obligations of states and political subdivisions	$	37,669	$	38,351	$	40,393	$	42,619	$	43,246
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		3,435		3,745		4,089		4,538		5,291
Issued by FNMA and FHLMC		580		583		586		588		753
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		1,624		3,000		4,743		7,749		19,534
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		2,176		2,188		2,199		2,211		2,222
Total securities held to maturity	$	45,484	$	47,867	$	52,010	$	57,705	$	71,046

Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of approximately 90% of the portfolio in U.S. Government agency-backed obligations and other Aaa rated securities. None of the securities owned by Trustmark are collateralized by assets, which are considered sub-prime. Furthermore, outside of membership in the Federal Home Loan Bank of Dallas, Independent Bankers Bank of Florida and Federal Reserve Bank, Trustmark does not hold any equity investment in government sponsored entities.

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2012

($ in thousands)

(unaudited)

Note 3 – Loan Composition

LHFI BY TYPE (excluding acquired loans)	9/30/2012			6/30/2012			3/31/2012			12/31/2011			9/30/2011
Loans secured by real estate:
Construction, land development and other land loans	$	460,599		$	464,349		$	465,486		$	474,082		$	481,821
Secured by 1-4 family residential properties		1,511,514			1,621,865			1,722,357			1,760,930			1,717,366
Secured by nonfarm, nonresidential properties		1,397,536			1,392,293			1,419,902			1,425,774			1,437,573
Other real estate secured		184,804			192,376			199,400			204,849			207,984
Commercial and industrial loans		1,163,681			1,142,282			1,142,813			1,139,365			1,083,753
Consumer loans		181,896			196,718			210,713			243,756			268,002
Other loans		627,933			640,665			614,082			608,728			587,213
LHFI		5,527,963			5,650,548			5,774,753			5,857,484			5,783,712
Allowance for loan losses		(83,526	)		(84,809	)		(90,879	)		(89,518	)		(89,463	)
Net LHFI	$	5,444,437		$	5,565,739		$	5,683,874		$	5,767,966		$	5,694,249


ACQUIRED NONCOVERED LOANS BY TYPE	9/30/2012			6/30/2012			3/31/2012			12/31/2011			9/30/2011
Loans secured by real estate:
Construction, land development and other land loans	$	11,504		$	13,154		$	14,346		$	-		$	-
Secured by 1-4 family residential properties		18,032			18,954			20,409			-			-
Secured by nonfarm, nonresidential properties		47,114			53,272			54,954			-			-
Other real estate secured		378			512			695			-			-
Commercial and industrial loans		3,371			4,822			5,732			-			-
Consumer loans		2,575			3,153			4,188			-			-
Other loans		136			146			345			-			-
Noncovered loans		83,110			94,013			100,669			-			-
Allowance for loan losses		(817	)		(62	)		(37	)		-			-
Net noncovered loans	$	82,293		$	93,951		$	100,632		$	-		$	-

ACQUIRED COVERED LOANS BY TYPE	9/30/2012			6/30/2012			3/31/2012			12/31/2011			9/30/2011
Loans secured by real estate:
Construction, land development and other land loans	$	3,714		$	3,683		$	3,940		$	4,209		$	4,024
Secured by 1-4 family residential properties		24,949			27,218			30,221			31,874			32,735
Secured by nonfarm, nonresidential properties		28,291			27,464			30,737			30,889			33,601
Other real estate secured		4,198			4,580			5,087			5,126			5,294
Commercial and industrial loans		1,803			1,382			2,768			2,971			1,772
Consumer loans		172			205			206			290			158
Other loans		1,376			1,483			1,460			1,445			1,480
Covered loans		64,503			66,015			74,419			76,804			79,064
Allowance for loan losses		(3,526	)		(1,464	)		(736	)		(502	)		-
Net covered loans	$	60,977		$	64,551		$	73,683		$	76,302		$	79,064

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2012

($ in thousands)

(unaudited)

Note 3 – Loan Composition (continued)
	September 30, 2012
LHFI - COMPOSITION BY REGION (1)	Total		Florida		Mississippi (Central and Southern Regions)		Tennessee (Memphis, TN and Northern MS Regions)		Texas
Loans secured by real estate:
Construction, land development and other land loans	$	460,599	$	87,187	$	222,776	$	37,905	$	112,731
Secured by 1-4 family residential properties		1,511,514		53,023		1,289,279		142,852		26,360
Secured by nonfarm, nonresidential properties		1,397,536		154,121		742,922		175,051		325,442
Other real estate secured		184,804		8,760		133,434		5,031		37,579
Commercial and industrial loans		1,163,681		13,972		782,879		86,768		280,062
Consumer loans		181,896		1,308		157,253		19,241		4,094
Other loans		627,933		24,861		532,101		25,139		45,832
Loans	$	5,527,963	$	343,232	$	3,860,644	$	491,987	$	832,100



CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION (1)
Lots	$	56,286	$	34,302	$	16,303	$	1,475	$	4,206
Development		84,524		8,615		50,250		5,836		19,823
Unimproved land		152,884		42,735		65,785		16,382		27,982
1-4 family construction		73,417		1,261		54,820		2,503		14,833
Other construction		93,488		274		35,618		11,709		45,887
Construction, land development and other land loans	$	460,599	$	87,187	$	222,776	$	37,905	$	112,731




LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION (1)
Income producing:
Retail	$	165,600	$	42,253	$	67,787	$	23,260	$	32,300
Office		138,458		37,107		67,044		9,703		24,604
Nursing homes/assisted living		87,028		-		77,963		4,146		4,919
Hotel/motel		96,569		8,498		28,244		32,483		27,344
Industrial		52,094		8,545		13,238		374		29,937
Health care		15,425		-		10,535		139		4,751
Convenience stores		9,209		-		4,564		1,441		3,204
Other		133,806		14,050		69,874		6,348		43,534
Total income producing loans		698,189		110,453		339,249		77,894		170,593

Owner-occupied:
Office		117,073		14,804		72,779		6,693		22,797
Churches		86,602		3,149		50,759		27,575		5,119
Industrial warehouses		83,132		1,126		41,766		319		39,921
Health care		98,511		14,120		51,077		15,909		17,405
Convenience stores		60,778		1,770		37,997		4,000		17,011
Retail		39,123		3,769		25,538		3,135		6,681
Restaurants		32,467		1,136		25,158		4,837		1,336
Auto dealerships		20,077		479		17,697		1,838		63
Other		161,584		3,315		80,902		32,851		44,516
Total owner-occupied loans		699,347		43,668		403,673		97,157		154,849

Loans secured by nonfarm, nonresidential properties	$	1,397,536	$	154,121	$	742,922	$	175,051	$	325,442

(1) Excludes acquired loans.

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2012

($ in thousands)

(unaudited)

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

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

	Quarter Ended															Nine Months Ended
	9/30/2012			6/30/2012			3/31/2012			12/31/2011			9/30/2011			9/30/2012			9/30/2011
Securities – Taxable		2.60	%		2.94	%		3.13	%		3.02	%		3.26	%		2.89	%		3.57	%
Securities – Nontaxable		4.43	%		4.49	%		4.63	%		4.53	%		4.39	%		4.52	%		4.71	%
Securities – Total		2.73	%		3.06	%		3.24	%		3.13	%		3.35	%		3.00	%		3.66	%
Loans		5.12	%		5.14	%		5.18	%		5.37	%		5.18	%		5.15	%		5.23	%
FF Sold & Rev Repo		0.36	%		0.38	%		0.25	%		0.38	%		0.34	%		0.32	%		0.38	%
Other Earning Assets		4.25	%		4.56	%		3.89	%		3.72	%		4.04	%		4.22	%		3.56	%
Total Earning Assets		4.39	%		4.52	%		4.60	%		4.71	%		4.66	%		4.51	%		4.78	%

Interest-bearing Deposits		0.39	%		0.43	%		0.50	%		0.54	%		0.61	%		0.44	%		0.67	%
FF Pch & Repo		0.14	%		0.20	%		0.16	%		0.15	%		0.19	%		0.16	%		0.21	%
Other Borrowings		2.79	%		2.85	%		2.89	%		2.22	%		2.75	%		2.84	%		1.99	%
Total Interest-bearing Liabilities		0.45	%		0.50	%		0.55	%		0.58	%		0.65	%		0.50	%		0.69	%

Net interest margin		4.06	%		4.15	%		4.19	%		4.28	%		4.17	%		4.14	%		4.25	%

The net interest margin for the third quarter of 2012 totaled 4.06% compared to a net interest margin in the prior quarter of 4.15% resulting in a decrease of nine basis points. The decrease is primarily due to the downward repricing of loans and securities partially offset by modest declines in the cost of interest-bearing deposits.

Note 5 – Mortgage Banking

Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that offsets the changes in fair value of MSR attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting. Changes in the fair value of these exchange-traded derivative instruments are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of 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 changes 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 $1.8 million for the quarter ended September 30, 2012 compared to a net positive ineffectiveness of $2.8 million for the quarter ended September 30, 2011.

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

	Quarter Ended															Nine Months Ended
	9/30/2012			6/30/2012			3/31/2012			12/31/2011			9/30/2011			9/30/2012			9/30/2011
Mortgage servicing income, net	$	3,984		$	3,891		$	3,886		$	3,725		$	3,738		$	11,761		$	11,065
Change in fair value-MSR from runoff		(2,751	)		(2,320	)		(2,106	)		(2,122	)		(2,039	)		(7,177	)		(4,785	)
Gain on sales of loans, net		9,114			6,302			6,469			4,633			2,366			21,885			7,319
Other, net		2,608			3,139			64			133			2,926			5,811			2,409
Mortgage banking income before hedge ineffectiveness		12,955			11,012			8,313			6,369			6,991			32,280			16,008
Change in fair value-MSR from market changes		(3,282	)		(5,926	)		248			(2,842	)		(7,614	)		(8,960	)		(12,288	)
Change in fair value of derivatives		1,477			6,098			(1,266	)		2,511			10,406			6,309			17,054
Net (negative) positive hedge ineffectiveness		(1,805	)		172			(1,018	)		(331	)		2,792			(2,651	)		4,766
Mortgage banking, net	$	11,150		$	11,184		$	7,295		$	6,038		$	9,783		$	29,629		$	20,774

Note 6 – Other Noninterest Income and Expense

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

	Quarter Ended															Nine Months Ended
	9/30/2012			6/30/2012			3/31/2012			12/31/2011			9/30/2011			9/30/2012			9/30/2011
Partnership amortization for tax credit purposes	$	(2,302	)	$	(1,491	)	$	(1,422	)	$	(2,690	)	$	(1,417	)	$	(5,215	)	$	(3,676	)
Bargain purchase gain on acquisition		-			881			2,754			-			-			3,635			7,456
Decrease in FDIC indemnification asset		(609	)		(2,289	)		(81	)		(4,157	)		-			(2,979	)		-
Other miscellaneous income		3,423			1,749			2,507			1,919			1,651			7,679			5,001
Total other, net	$	512		$	(1,150	)	$	3,758		$	(4,928	)	$	234		$	3,120		$	8,781

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2012

($ in thousands)

(unaudited)

Note 6 – Other Noninterest Income and Expense (continued)

Trustmark invests in partnerships that provide income tax credits on a Federal and/or State basis (i.e., new market tax credits, low income housing tax credits and historical tax credits). These investments are recorded based on the equity method of accounting, which requires the equity in partnership losses to be recognized when incurred and are recorded as a reduction in other income. 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.

As previously mentioned in Note 1 – Business Combinations, during the second quarter of 2012, the bargain purchase gain for Bay Bank was increased $881 thousand from $2.8 million that was recorded during the first quarter of 2012, as the fair values associated with the Bay Bank acquisition were finalized. In addition, during the third quarter of 2012, other noninterest income included a write-down of the FDIC indemnification asset of $609 thousand on acquired covered loans obtained from Heritage as a result of loan payoffs and improved cash flow projections and lower loss expectations for loan pools.

During the third quarter of 2012, Trustmark completed a sale of assets by Trustmark Investment Advisors, Inc. (TIA) to Federated Investors, Inc. (Federated) and certain of Federated’s subsidiaries, pursuant to the terms of a previously announced definitive agreement between Federated, TIA and Trustmark National Bank. The sale resulted in a gain of $1.2 million for Trustmark, which was recorded as other miscellaneous income.

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

	Quarter Ended										Nine Months Ended
	9/30/2012		6/30/2012		3/31/2012		12/31/2011		9/30/2011		9/30/2012		9/30/2011
Loan expense	$	3,150	$	8,299	$	5,525	$	5,788	$	4,632	$	16,974	$	12,444
Non-routine transaction expenses on acquisition		-		-		1,917		-		-		1,917		-
Amortization of intangibles		1,028		1,028		710		799		792		2,766		2,330
Other miscellaneous expense		6,221		5,572		4,916		5,056		6,312		16,709		16,311
Total other expense	$	10,399	$	14,899	$	13,068	$	11,643	$	11,736	$	38,366	$	31,085

During the second quarter of 2012, Trustmark updated its quarterly analysis of mortgage loan repurchase exposure. This analysis, along with recent trends of increased mortgage loan repurchase activity in the mortgage industry, resulted in Trustmark providing an additional reserve of approximately $4.0 million in the second quarter. At September 30, 2012, the reserve for mortgage loan repurchases totaled $8.6 million. Notwithstanding significant changes in future behaviors and the demand patterns of investors, Trustmark believes that it is appropriately reserved for potential mortgage loan repurchase requests.

Note 7 – Non-GAAP Financial Measures

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

Trustmark believes these measures are important because they reflect the level of capital available to withstand unexpected market conditions. Additionally, presentation of these measures allows readers to compare certain aspects of Trustmark’s capitalization to other organizations. These ratios differ from capital measures defined by banking regulators principally in that the numerator excludes shareholders’ equity associated with preferred securities, the nature and extent of which varies across organizations.

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

TRUSTMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALS

September 30, 2012

($ in thousands)

(unaudited)

Note 7 - Non-GAAP Financial Measures (continued)
			Quarter Ended															Nine Months Ended
			9/30/2012			6/30/2012			3/31/2012			12/31/2011			9/30/2011			9/30/2012			9/30/2011
TANGIBLE COMMON EQUITY
AVERAGE BALANCES
Total shareholders' common equity			$	1,273,605		$	1,255,716		$	1,228,502		$	1,223,101		$	1,211,434		$	1,252,684		$	1,184,558
Less:	Goodwill			(291,104	)		(291,104	)		(291,104	)		(291,104	)		(291,104	)		(291,104	)		(291,104	)
	Identifiable intangible assets			(18,971	)		(17,762	)		(14,703	)		(14,550	)		(15,343	)		(17,152	)		(15,772	)
Total average tangible common equity			$	963,530		$	946,850		$	922,695		$	917,447		$	904,987		$	944,428		$	877,682

PERIOD END BALANCES
Total shareholders' common equity			$	1,278,015		$	1,258,495		$	1,241,520		$	1,215,037		$	1,221,606
Less:	Goodwill			(291,104	)		(291,104	)		(291,104	)		(291,104	)		(291,104	)
	Identifiable intangible assets			(18,327	)		(19,356	)		(18,821	)		(14,076	)		(14,861	)
Total tangible common equity		(a)	$	968,584		$	948,035		$	931,595		$	909,857		$	915,641

TANGIBLE ASSETS
Total assets			$	9,872,159		$	9,890,846		$	9,931,593		$	9,727,007		$	9,705,291
Less:	Goodwill			(291,104	)		(291,104	)		(291,104	)		(291,104	)		(291,104	)
	Identifiable intangible assets			(18,327	)		(19,356	)		(18,821	)		(14,076	)		(14,861	)
Total tangible assets		(b)	$	9,562,728		$	9,580,386		$	9,621,668		$	9,421,827		$	9,399,326

Risk-weighted assets		(c)	$	6,684,820		$	6,631,887		$	6,707,026		$	6,576,953		$	6,522,468

NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income available to common shareholders			$	29,904		$	29,349		$	30,320		$	24,258		$	26,968		$	89,573		$	82,583
Plus:	Intangible amortization net of tax			635			635			438			493			489			1,708			1,452
Net income adjusted for intangible amortization			$	30,539		$	29,984		$	30,758		$	24,751		$	27,457		$	91,281		$	84,035

Period end common shares outstanding		(d)		64,779,937			64,775,694			64,765,581			64,142,498			64,119,235

TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible common equity 1				12.61	%		12.74	%		13.41	%		10.70	%		12.04	%		12.91	%		12.80	%
Tangible common equity/tangible assets		(a)/(b)		10.13	%		9.90	%		9.68	%		9.66	%		9.74	%
Tangible common equity/risk-weighted assets		(a)/(c)		14.49	%		14.30	%		13.89	%		13.83	%		14.04	%
Tangible common book value		(a)/(d)*1,000	$	14.95		$	14.64		$	14.38		$	14.18		$	14.28

TIER 1 COMMON RISK-BASED CAPITAL
Total shareholders' equity			$	1,278,015		$	1,258,495		$	1,241,520		$	1,215,037		$	1,221,606
Eliminate qualifying AOCI				(7,248	)		(3,654	)		(1,537	)		(3,121	)		(19,606	)
Qualifying tier 1 capital				60,000			60,000			60,000			60,000			60,000
Disallowed goodwill				(291,104	)		(291,104	)		(291,104	)		(291,104	)		(291,104	)
Adj to goodwill allowed for deferred taxes				12,683			12,330			11,978			11,625			11,273
Other disallowed intangibles				(18,327	)		(19,356	)		(18,821	)		(14,076	)		(14,861	)
Disallowed servicing intangible				(4,421	)		(4,358	)		(4,589	)		(4,327	)		(4,366	)
Total tier 1 capital			$	1,029,598		$	1,012,353		$	997,447		$	974,034		$	962,942
Less:	Qualifying tier 1 capital			(60,000	)		(60,000	)		(60,000	)		(60,000	)		(60,000	)
Total tier 1 common capital		(e)	$	969,598		$	952,353		$	937,447		$	914,034		$	902,942

Tier 1 common risk-based capital ratio		(e)/(c)		14.50	%		14.36	%		13.98	%		13.90	%		13.84	%

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

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