Trustmark Corporation Announces 2009 Financial Results and Declares $0.23 Quarterly Cash Dividend

Trustmark Corporation (NASDAQ:TRMK) announced net income available to common shareholders of $13.9 million in the fourth quarter of 2009, which represented basic earnings per common share of $0.23. Results during the quarter include a one-time, non-cash charge of $8.2 million, or $0.14 per common share, for the accelerated accretion of the discount associated with the full redemption of the Corporation’s $215 million of Preferred Stock from the U.S. Treasury Department. For the year ended December 31, 2009, Trustmark’s net income available to common shareholders totaled $73.0 million, which represented basic earnings per common share of $1.26. Trustmark’s performance during 2009 resulted in a return on tangible common equity of 10.80%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per common share. The dividend is payable March 15, 2010, to shareholders of record on March 1, 2010.

Printer friendly version of earnings release with consolidated financial statements and notes: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=6154497&lang=en

Richard G. Hickson, Chairman and CEO, stated, "Our financial performance remained strong, particularly in light of the current economic environment, as earnings during the fourth quarter continued to reflect the core operating strengths of Trustmark. Results for the quarter included solid net interest income with an expanded net interest margin, reduced operating expenses, and increased tangible common equity. During the quarter, Trustmark completed an extremely successful follow-on offering of common stock and fully repurchased all preferred stock issued to the U.S. Treasury. Trustmark’s capital strength and solid profitability provide strategic flexibility to take advantage of opportunities in the marketplace and build shareholder value.”

Capital Strength

• Public common stock offering generated net proceeds of $109.3 million
• Repurchased $215 million of Preferred Stock from U.S. Treasury and redeemed warrant
• Tangible common equity to tangible assets increased to 8.67%
• Total risk-based capital of 14.58% significantly exceeded "well-capitalized” standards

During the fourth quarter, Trustmark completed a follow-on offering of 6,216,216 shares of its common stock at a price of $18.50 per share, which increased tangible common equity by $109.3 million, net of expenses. Trustmark also completed the full repurchase of its 215,000 shares of Preferred Stock from the U.S. Treasury at a purchase price of $215.0 million plus a final accrued dividend of $716.7 thousand. In addition, Trustmark repurchased the related warrant issued to the U.S. Treasury for $10.0 million.

"We are pleased with the market’s reception of our common equity offering and the related repurchase of our preferred securities and the redemption of the warrant from the U.S. Treasury. As a result of these transactions, Trustmark has optimized its capital structure and continues to be a leader in capital strength among its mid-cap peers,” said Hickson.

The fundamental strengths of Trustmark’s business, as reflected by pre-tax, pre-provision earnings of $52.9 million in the fourth quarter and $214.2 million in 2009, remain solid despite the challenging economic environment. Based upon the existing capital base and the expectation of the level of profitability going forward, Trustmark believes at this time in the sustainability of its cash dividend to common shareholders.

Credit Quality

• Nonperforming loan growth slowed
• Allowance for loan losses represented 155% of nonperforming loans (excluding impaired loans)
• Florida construction and land development exposure declined 48.5% in 24 months

During the fourth quarter, nonperforming loans increased $2.7 million relative to the prior quarter to total $141.2 million, or 2.16% of total loans, while foreclosed real estate increased $18.4 million. The increase in foreclosed real estate was principally attributable to the Corporation’s Florida market. At December 31, 2009, nonperforming assets totaled $231.3 million, representing 3.48% of total loans and other real estate. Managing credit risks resulting from the current real estate market conditions continues to be a primary focus of the Corporation.

Trustmark’s provision for loan losses totaled $17.7 million during the fourth quarter compared to net charge-offs of $17.1 million. Allocation of Trustmark’s $103.7 million allowance for loan losses represented 2.10% of commercial loans and 0.80% of consumer and home mortgage loans, resulting in an allowance to total loans of 1.64% as of December 31, 2009.

Trustmark has made significant progress in the resolution of its construction and land development portfolio in Florida. Over the last 24 months, this portfolio has been reduced by $187.3 million, or 48.5%, to $198.9 million. At December 31, 2009, Florida non-impaired construction and land development loans totaled $163.0 million with an associated reserve for loan losses of $23.9 million, or 14.69%.

Asset Liability Management

• Investment portfolio increased to $1.9 billion
• Net interest income totaled $90.9 million
• Net interest margin expanded to 4.33%

Loans held for investment totaled $6.3 billion at December 31, 2009, down $62.6 million relative to the prior quarter. This reduction reflects Trustmark’s continued efforts to reduce exposure to construction and land development lending and its decision to discontinue indirect auto financing. Current economic conditions have also resulted in reduced loan demand. At December 31, 2009, Trustmark’s investment securities portfolio totaled $1.9 billion, up $146.2 million from the prior quarter, while total deposits increased $318.0 million to $7.2 billion.

Capital strength and strong liquidity continued to be reflected in lower deposit costs during the fourth quarter while disciplined loan pricing and required minimum loan rates continued to sustain loan yields. As a result, net interest income totaled $90.9 million during the fourth quarter while the net interest margin expanded to 4.33%.

Noninterest Income

• Noninterest income represented 31.3% of total revenue in the fourth quarter
• Service charge income remained stable at $14.1 million
• Mortgage banking income totaled $6.6 million

Noninterest income during the fourth quarter of 2009 totaled $40.3 million. Service charges on deposit accounts remained stable at $14.1 million during the quarter while insurance revenue totaled $6.4 million, reflecting a seasonal decline on a sequential quarter basis. Mortgage banking income during the quarter was $6.6 million, reflecting solid mortgage servicing income and secondary marketing gains. Other general banking income totaled $6.0 million during the quarter, reflecting increased debit card revenue. Despite challenging market conditions, wealth management revenue remained stable at $5.4 million when compared to the prior quarter.

Noninterest Expense

• Noninterest expense declined $3.6 million, or 4.5%, during the fourth quarter
• Salary and benefits expense remained well-controlled
• Foreclosure expense reduced by $2.3 million

During the fourth quarter of 2009, noninterest expense totaled $75.6 million, a decrease of $3.6 million from the prior quarter. Salary and benefit expense totaled $42.2 million during the fourth quarter, a reduction of $420 thousand relative to the prior quarter. The Corporation reduced its full time equivalent workforce by 83, or 3.2%, during 2009, including 26 in the fourth quarter, through attrition. Collectively, services and fees, net occupancy expense, and equipment expense were unchanged in the fourth quarter of 2009 relative to the prior quarter. Other expense in the fourth quarter totaled $14.4 million, a decrease of $3.1 million from the prior quarter resulting from lower real estate foreclosure expense of $2.3 million. Trustmark’s commitment to expense management is reflected in its efficiency ratio of 57.69% in the fourth quarter of 2009.

ADDITIONAL INFORMATION

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, January 27 at 10:00 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (800) 860-2442, passcode 436565 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, February 4, 2010 in archived format at the same web address or by calling (877) 344-7529, passcode 436565.

Trustmark is a financial services company providing banking and financial solutions through over 150 offices and 2,500 associates 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 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 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 effect 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 new products and lines of business, natural disasters, acts of war or terrorism and other risks described in our filings with the Securities and Exchange Commission.

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

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2009
($ in thousands)
(unaudited)
																		Linked Quarter									Year over Year
QUARTERLY AVERAGE BALANCES			12/31/2009					9/30/2009					12/31/2008					$ Change					% Change				$ Change				% Change
Securities AFS-taxable			$	1,369,022				$	1,377,318				$	1,226,843				$	(8,296	)			-0.6	%			$	142,179			11.6	%
Securities AFS-nontaxable				98,456					89,259					40,708					9,197				10.3	%				57,748			n/m
Securities HTM-taxable				202,235					191,934					169,958					10,301				5.4	%				32,277			19.0	%
Securities HTM-nontaxable				50,411					55,440					71,843					(5,029	)			-9.1	%				(21,432	)		-29.8	%
Total securities				1,720,124					1,713,951					1,509,352					6,173				0.4	%				210,772			14.0	%
Loans (including loans held for sale)				6,544,448					6,693,482					6,908,296					(149,034	)			-2.2	%				(363,848	)		-5.3	%
Fed funds sold and rev repos				10,609					12,821					22,871					(2,212	)			-17.3	%				(12,262	)		-53.6	%
Other earning assets				44,197					43,894					49,197					303				0.7	%				(5,000	)		-10.2	%
Total earning assets				8,319,378					8,464,148					8,489,716					(144,770	)			-1.7	%				(170,338	)		-2.0	%
Allowance for loan losses				(105,223	)				(102,545	)				(91,802	)				(2,678	)			2.6	%				(13,421	)		14.6	%
Cash and due from banks				199,586					205,361					223,774					(5,775	)			-2.8	%				(24,188	)		-10.8	%
Other assets				855,714					871,477					801,890					(15,763	)			-1.8	%				53,824			6.7	%
Total assets			$	9,269,455				$	9,438,441				$	9,423,578				$	(168,986	)			-1.8	%			$	(154,123	)		-1.6	%
Interest-bearing demand deposits			$	1,134,995				$	1,148,537				$	1,149,071				$	(13,542	)			-1.2	%			$	(14,076	)		-1.2	%
Savings deposits				1,801,870					1,797,421					1,709,670					4,449				0.2	%				92,200			5.4	%
Time deposits less than $100,000				1,422,270					1,434,097					1,478,753					(11,827	)			-0.8	%				(56,483	)		-3.8	%
Time deposits of $100,000 or more				1,039,565					1,095,431					1,045,377					(55,866	)			-5.1	%				(5,812	)		-0.6	%
Total interest-bearing deposits				5,398,700					5,475,486					5,382,871					(76,786	)			-1.4	%				15,829			0.3	%
Fed funds purchased and repos				579,616					644,012					809,822					(64,396	)			-10.0	%				(230,206	)		-28.4	%
Short-term borrowings				238,060					263,891					494,928					(25,831	)			-9.8	%				(256,868	)		-51.9	%
Long-term FHLB advances				75,000					75,000					-					-				0.0	%				75,000			n/m
Subordinated notes				49,769					49,760					49,736					9				0.0	%				33			0.1	%
Junior subordinated debt securities				70,104					70,104					70,104					-				0.0	%				-			0.0	%
Total interest-bearing liabilities				6,411,249					6,578,253					6,807,461					(167,004	)			-2.5	%				(396,212	)		-5.8	%
Noninterest-bearing deposits				1,533,588					1,529,381					1,433,361					4,207				0.3	%				100,227			7.0	%
Other liabilities				118,906					113,820					126,704					5,086				4.5	%				(7,798	)		-6.2	%
Total liabilities				8,063,743					8,221,454					8,367,526					(157,711	)			-1.9	%				(303,783	)		-3.6	%
Preferred equity				157,270					206,308					91,385					(49,038	)			-23.8	%				65,885			72.1	%
Common equity				1,048,442					1,010,679					964,667					37,763				3.7	%				83,775			8.7	%
Total shareholders' equity				1,205,712					1,216,987					1,056,052					(11,275	)			-0.9	%				149,660			14.2	%
Total liabilities and equity			$	9,269,455				$	9,438,441				$	9,423,578				$	(168,986	)			-1.8	%			$	(154,123	)		-1.6	%
																		Linked Quarter									Year over Year
PERIOD END BALANCES			12/31/2009					9/30/2009					12/31/2008					$ Change					% Change				$ Change				% Change
Cash and due from banks			$	213,519				$	191,449				$	257,930				$	22,070				11.5	%			$	(44,411	)		-17.2	%
Fed funds sold and rev repos				6,374					8,551					23,401					(2,177	)			-25.5	%				(17,027	)		-72.8	%
Securities available for sale				1,684,396					1,528,625					1,542,841					155,771				10.2	%				141,555			9.2	%
Securities held to maturity				232,984					242,603					259,629					(9,619	)			-4.0	%				(26,645	)		-10.3	%
Loans held for sale				226,225					237,152					238,265					(10,927	)			-4.6	%				(12,040	)		-5.1	%
Loans				6,319,797					6,382,440					6,722,403					(62,643	)			-1.0	%				(402,606	)		-6.0	%
Allowance for loan losses				(103,662	)				(103,016	)				(94,922	)				(646	)			0.6	%				(8,740	)		9.2	%
Net Loans				6,216,135					6,279,424					6,627,481					(63,289	)			-1.0	%				(411,346	)		-6.2	%
Premises and equipment, net				151,161					151,828					156,811					(667	)			-0.4	%				(5,650	)		-3.6	%
Mortgage servicing rights				50,513					56,042					42,882					(5,529	)			-9.9	%				7,631			17.8	%
Goodwill				291,104					291,104					291,104					-				0.0	%				-			0.0	%
Identifiable intangible assets				19,825					20,819					23,821					(994	)			-4.8	%				(3,996	)		-16.8	%
Other assets				433,782					360,901					326,744					72,881				20.2	%				107,038			32.8	%
Total assets			$	9,526,018				$	9,368,498				$	9,790,909				$	157,520				1.7	%			$	(264,891	)		-2.7	%
Deposits:
Noninterest-bearing			$	1,685,187				$	1,493,424				$	1,496,166				$	191,763				12.8	%			$	189,021			12.6	%
Interest-bearing				5,503,278					5,377,011					5,327,704					126,267				2.3	%				175,574			3.3	%
Total deposits				7,188,465					6,870,435					6,823,870					318,030				4.6	%				364,595			5.3	%
Fed funds purchased and repos				653,032					645,057					811,129					7,975				1.2	%				(158,097	)		-19.5	%
Short-term borrowings				253,957					315,105					730,958					(61,148	)			-19.4	%				(477,001	)		-65.3	%
Long-term FHLB advances				75,000					75,000					-					-				n/m					75,000			n/m
Subordinated notes				49,774					49,766					49,741					8				0.0	%				33			0.1	%
Junior subordinated debt securities				70,104					70,104					70,104					-				0.0	%				-			0.0	%
Other liabilities				125,626					121,670					126,641					3,956				3.3	%				(1,015	)		-0.8	%
Total liabilities				8,415,958					8,147,137					8,612,443					268,821				3.3	%				(196,485	)		-2.3	%
Preferred stock				-					206,461					205,126					(206,461	)			-100.0	%				(205,126	)		-100.0	%
Common stock				13,267					11,968					11,944					1,299				10.9	%				1,323			11.1	%
Capital surplus				244,864					145,352					139,471					99,512				68.5	%				105,393			75.6	%
Retained earnings				853,553					854,508					836,642					(955	)			-0.1	%				16,911			2.0	%
Accum other comprehensive (loss) income, net of tax				(1,624	)				3,072					(14,717	)				(4,696	)			n/m					13,093			-89.0	%
Total shareholders' equity				1,110,060					1,221,361					1,178,466					(111,301	)			-9.1	%				(68,406	)		-5.8	%
Total liabilities and equity			$	9,526,018				$	9,368,498				$	9,790,909				$	157,520				1.7	%			$	(264,891	)		-2.7	%
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2009
($ in thousands except per share data)
(unaudited)
			Quarter Ended															Linked Quarter									Year over Year
INCOME STATEMENTS			12/31/2009					9/30/2009					12/31/2008					$ Change					% Change				$ Change					% Change
Interest and fees on loans-FTE			$	87,640				$	89,672				$	101,694				$	(2,032	)			-2.3	%			$	(14,054	)			-13.8	%
Interest on securities-taxable				19,093					19,524					17,108					(431	)			-2.2	%				1,985				11.6	%
Interest on securities-tax exempt-FTE				2,183					2,172					1,891					11				0.5	%				292				15.4	%
Interest on fed funds sold and rev repos				12					16					57					(4	)			-25.0	%				(45	)			-78.9	%
Other interest income				377					381					368					(4	)			-1.0	%				9				2.4	%
Total interest income-FTE				109,305					111,765					121,118					(2,460	)			-2.2	%				(11,813	)			-9.8	%
Interest on deposits				16,513					18,403					26,818					(1,890	)			-10.3	%				(10,305	)			-38.4	%
Interest on fed funds pch and repos				215					282					1,178					(67	)			-23.8	%				(963	)			-81.7	%
Other interest expense				1,716					1,786					3,399					(70	)			-3.9	%				(1,683	)			-49.5	%
Total interest expense				18,444					20,471					31,395					(2,027	)			-9.9	%				(12,951	)			-41.3	%
Net interest income-FTE				90,861					91,294					89,723					(433	)			-0.5	%				1,138				1.3	%
Provision for loan losses				17,709					15,770					16,684					1,939				12.3	%				1,025				6.1	%
Net interest income after provision-FTE				73,152					75,524					73,039					(2,372	)			-3.1	%				113				0.2	%
Service charges on deposit accounts				14,118					14,157					14,044					(39	)			-0.3	%				74				0.5	%
Insurance commissions				6,391					7,894					6,783					(1,503	)			-19.0	%				(392	)			-5.8	%
Wealth management				5,438					5,589					6,583					(151	)			-2.7	%				(1,145	)			-17.4	%
General banking - other				5,951					5,620					5,576					331				5.9	%				375				6.7	%
Mortgage banking, net				6,552					8,871					4,393					(2,319	)			-26.1	%				2,159				49.1	%
Other, net				1,814					994					935					820				82.5	%				879				94.0	%
Nonint inc-excl sec gains, net				40,264					43,125					38,314					(2,861	)			-6.6	%				1,950				5.1	%
Security gains, net				19					1,014					12					(995	)			-98.1	%				7				58.3	%
Total noninterest income				40,283					44,139					38,326					(3,856	)			-8.7	%				1,957				5.1	%
Salaries and employee benefits				42,209					42,629					41,923					(420	)			-1.0	%				286				0.7	%
Services and fees				9,919					10,124					9,638					(205	)			-2.0	%				281				2.9	%
Net occupancy-premises				5,063					4,862					4,704					201				4.1	%				359				7.6	%
Equipment expense				4,084					4,104					4,183					(20	)			-0.5	%				(99	)			-2.4	%
Other expense				14,372					17,515					11,097					(3,143	)			-17.9	%				3,275				29.5	%
Total noninterest expense				75,647					79,234					71,545					(3,587	)			-4.5	%				4,102				5.7	%
Income before income taxes and tax eq adj				37,788					40,429					39,820					(2,641	)			-6.5	%				(2,032	)			-5.1	%
Tax equivalent adjustment				2,569					2,417					2,326					152				6.3	%				243				10.4	%
Income before income taxes				35,219					38,012					37,494					(2,793	)			-7.3	%				(2,275	)			-6.1	%
Income taxes				10,742					12,502					12,162					(1,760	)			-14.1	%				(1,420	)			-11.7	%
Net income				24,477					25,510					25,332					(1,033	)			-4.0	%				(855	)			-3.4	%
Preferred stock dividends				2,061					2,688					1,165					(627	)			-23.3	%				896				76.9	%
Accretion of preferred stock discount				8,539					452					188					8,087				n/m					8,351				n/m
Net income available to common shareholders			$	13,877				$	22,370				$	23,979				$	(8,493	)			-38.0	%			$	(10,102	)			-42.1	%
Per common share data
Earnings per share - basic			$	0.23				$	0.39				$	0.42				$	(0.16	)			-41.0	%			$	(0.19	)			-45.2	%
Earnings per share - diluted			$	0.23				$	0.39				$	0.42				$	(0.16	)			-41.0	%			$	(0.19	)			-45.2	%
Dividends per share			$	0.23				$	0.23				$	0.23				$	-				0.0	%			$	-				0.0	%
Weighted average common shares outstanding
Basic				59,131,451					57,431,128					57,324,710
Diluted				59,287,459					57,559,492					57,375,590
Period end common shares outstanding				63,673,839					57,440,047					57,324,737
OTHER FINANCIAL DATA
Return on common equity				5.25	%				8.78	%				9.89	%
Return on average tangible common equity				7.80	%				13.06	%				15.10	%
Return on equity				8.05	%				8.32	%				9.54	%
Return on assets				1.05	%				1.07	%				1.07	%
Interest margin - Yield - FTE				5.21	%				5.24	%				5.68	%
Interest margin - Cost				0.88	%				0.96	%				1.47	%
Net interest margin - FTE				4.33	%				4.28	%				4.20	%
Efficiency ratio				57.69	%				58.95	%				55.86	%
Full-time equivalent employees				2,524					2,550					2,607
COMMON STOCK PERFORMANCE
Market value-Close			$	22.54				$	19.05				$	21.59
Common book value			$	17.43				$	17.67				$	16.98
Tangible common book value			$	12.55				$	12.24				$	11.49
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2009
($ in thousands)
(unaudited)
			Quarter Ended															Linked Quarter									Year over Year
NONPERFORMING ASSETS			12/31/2009					9/30/2009					12/31/2008					$ Change					% Change				$ Change					% Change
Nonaccrual loans
Florida			$	74,159				$	72,063				$	75,092				$	2,096				2.9	%			$	(933	)			-1.2	%
Mississippi (1)				31,050					28,470					18,703					2,580				9.1	%				12,347				66.0	%
Tennessee (2)				12,749					11,481					3,638					1,268				11.0	%				9,111				n/m
Texas				23,204					26,490					16,605					(3,286	)			-12.4	%				6,599				39.7	%
Total nonaccrual loans				141,162					138,504					114,038					2,658				1.9	%				27,124				23.8	%
Other real estate
Florida				45,927					34,030					21,265					11,897				35.0	%				24,662				n/m
Mississippi (1)				22,373					22,932					6,113					(559	)			-2.4	%				16,260				n/m
Tennessee (2)				10,105					9,809					8,862					296				3.0	%				1,243				14.0	%
Texas				11,690					4,918					2,326					6,772				n/m					9,364				n/m
Total other real estate				90,095					71,689					38,566					18,406				25.7	%				51,529				n/m
Total nonperforming assets			$	231,257				$	210,193				$	152,604				$	21,064				10.0	%			$	78,653				51.5	%
LOANS PAST DUE OVER 90 DAYS
Loans held for investment			$	8,901				$	6,854				$	5,139				$	2,047				29.9	%			$	3,762				73.2	%
Loans HFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)			$	46,661				$	36,686				$	18,095				$	9,975				27.2	%			$	28,566				n/m
			Quarter Ended															Linked Quarter									Year over Year
ALLOWANCE FOR LOAN LOSSES			12/31/2009					9/30/2009					12/31/2008					$ Change					% Change				$ Change					% Change
Beginning Balance			$	103,016				$	101,751				$	90,888				$	1,265				1.2	%			$	12,128				13.3	%
Provision for loan losses				17,709					15,770					16,684					1,939				12.3	%				1,025				6.1	%
Charge-offs				(20,139	)				(18,687	)				(15,039	)				(1,452	)			7.8	%				(5,100	)			33.9	%
Recoveries				3,076					4,182					2,389					(1,106	)			-26.4	%				687				28.8	%
Net charge-offs				(17,063	)				(14,505	)				(12,650	)				(2,558	)			17.6	%				(4,413	)			34.9	%
Ending Balance			$	103,662				$	103,016				$	94,922				$	646				0.6	%			$	8,740				9.2	%
PROVISION FOR LOAN LOSSES
Florida			$	11,371				$	(3,295	)			$	6,491				$	14,666				n/m				$	4,880				75.2	%
Mississippi (1)				6,310					12,009					5,756					(5,699	)			-47.5	%				554				9.6	%
Tennessee (2)				2,097					159					1,461					1,938				n/m					636				43.5	%
Texas				(2,069	)				6,897					2,976					(8,966	)			n/m					(5,045	)			n/m
Total provision for loan losses			$	17,709				$	15,770				$	16,684				$	1,939				12.3	%			$	1,025				6.1	%
NET CHARGE-OFFS
Florida			$	8,174				$	131				$	7,160				$	8,043				n/m				$	1,014				14.2	%
Mississippi (1)				5,448					9,629					4,387					(4,181	)			-43.4	%				1,061				24.2	%
Tennessee (2)				1,169					872					816					297				34.1	%				353				43.3	%
Texas				2,272					3,873					287					(1,601	)			-41.3	%				1,985				n/m
Total net charge-offs			$	17,063				$	14,505				$	12,650				$	2,558				17.6	%			$	4,413				34.9	%
CREDIT QUALITY RATIOS
Net charge offs/average loans				1.03	%				0.86	%				0.73	%
Provision for loan losses/average loans				1.07	%				0.93	%				0.96	%
Nonperforming loans/total loans (incl LHFS)				2.16	%				2.09	%				1.64	%
Nonperforming assets/total loans (incl LHFS)				3.53	%				3.18	%				2.19	%
Nonperforming assets/total loans (incl LHFS) +ORE				3.48	%				3.14	%				2.18	%
ALL/total loans (excl LHFS)				1.64	%				1.61	%				1.41	%
ALL-commercial/total commercial loans				2.10	%				2.08	%				1.79	%
ALL-consumer/total consumer and home mortgage loans				0.80	%				0.76	%				0.72	%
ALL/nonperforming loans				73.43	%				74.38	%				83.24	%
ALL/nonperforming loans (excl impaired loans)				154.91	%				117.93	%				166.07	%
CAPITAL RATIOS
Total equity/total assets				11.65	%				13.04	%				12.04	%
Common equity/total assets				11.65	%				10.83	%				9.94	%
Tangible equity/tangible assets				8.67	%				10.04	%				9.11	%
Tangible common equity/tangible assets				8.67	%				7.76	%				6.95	%
Tangible common equity/risk-weighted assets				11.55	%				10.15	%				9.03	%
Tier 1 leverage ratio				9.74	%				10.70	%				10.42	%
Tier 1 common risk-based capital ratio				11.63	%				10.15	%				9.27	%
Tier 1 risk-based capital ratio				12.61	%				14.11	%				13.01	%
Total risk-based capital ratio				14.58	%				16.09	%				14.95	%
(1) - Mississippi includes Central and Southern Mississippi Regions
(2) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2009
($ in thousands)
(unaudited)
			Quarter Ended																									Year Ended
AVERAGE BALANCES			12/31/2009					9/30/2009					6/30/2009					3/31/2009					12/31/2008					12/31/2009					12/31/2008
Securities AFS-taxable			$	1,369,022				$	1,377,318				$	1,395,303				$	1,505,328				$	1,226,843				$	1,411,275				$	794,443
Securities AFS-nontaxable				98,456					89,259					70,165					43,429					40,708					75,516					38,188
Securities HTM-taxable				202,235					191,934					194,079					178,417					169,958					191,732					182,373
Securities HTM-nontaxable				50,411					55,440					61,166					67,308					71,843					58,526					76,304
Total securities				1,720,124					1,713,951					1,720,713					1,794,482					1,509,352					1,737,049					1,091,308
Loans (including loans held for sale)				6,544,448					6,693,482					6,880,909					6,981,921					6,908,296					6,773,768					7,022,747
Fed funds sold and rev repos				10,609					12,821					20,973					15,988					22,871					15,077					23,422
Other earning assets				44,197					43,894					47,084					40,485					49,197					43,925					41,251
Total earning assets				8,319,378					8,464,148					8,669,679					8,832,876					8,489,716					8,569,819					8,178,728
Allowance for loan losses				(105,223	)				(102,545	)				(106,491	)				(97,986	)				(91,802	)				(103,080	)				(86,124	)
Cash and due from banks				199,586					205,361					214,633					239,508					223,774					214,637					245,748
Other assets				855,714					871,477					824,724					803,416					801,890					839,066					792,835
Total assets			$	9,269,455				$	9,438,441				$	9,602,545				$	9,777,814				$	9,423,578				$	9,520,442				$	9,131,187
Interest-bearing demand deposits			$	1,134,995				$	1,148,537				$	1,131,765				$	1,118,347				$	1,149,071				$	1,133,498				$	1,215,668
Savings deposits				1,801,870					1,797,421					1,869,794					1,815,672					1,709,670					1,821,086					1,776,397
Time deposits less than $100,000				1,422,270					1,434,097					1,493,172					1,485,680					1,478,753					1,458,563					1,539,299
Time deposits of $100,000 or more				1,039,565					1,095,431					1,096,170					1,074,873					1,045,377					1,076,465					1,059,173
Total interest-bearing deposits				5,398,700					5,475,486					5,590,901					5,494,572					5,382,871					5,489,612					5,590,537
Fed funds purchased and repos				579,616					644,012					589,542					674,175					809,822					621,638					626,767
Short-term borrowings				238,060					263,891					340,816					647,604					494,928					371,173					276,974
Long-term FHLB advances				75,000					75,000					75,000					58,333					-					70,890					-
Subordinated notes				49,769					49,760					49,752					49,744					49,736					49,756					49,724
Junior subordinated debt securities				70,104					70,104					70,104					70,104					70,104					70,104					70,104
Total interest-bearing liabilities				6,411,249					6,578,253					6,716,115					6,994,532					6,807,461					6,673,173					6,614,106
Noninterest-bearing deposits				1,533,588					1,529,381					1,554,642					1,470,822					1,433,361					1,522,300					1,412,312
Other liabilities				118,906					113,820					124,586					120,062					126,704					119,327					134,708
Total liabilities				8,063,743					8,221,454					8,395,343					8,585,416					8,367,526					8,314,800					8,161,126
Preferred equity				157,270					206,308					205,860					205,417					91,385					193,616					22,971
Common equity				1,048,442					1,010,679					1,001,342					986,981					964,667					1,012,026					947,090
Total shareholders' equity				1,205,712					1,216,987					1,207,202					1,192,398					1,056,052					1,205,642					970,061
Total liabilities and equity			$	9,269,455				$	9,438,441				$	9,602,545				$	9,777,814				$	9,423,578				$	9,520,442				$	9,131,187
PERIOD END BALANCES			12/31/2009					9/30/2009					6/30/2009					3/31/2009					12/31/2008
Cash and due from banks			$	213,519				$	191,449				$	220,706				$	231,211				$	257,930
Fed funds sold and rev repos				6,374					8,551					16,367					8,014					23,401
Securities available for sale				1,684,396					1,528,625					1,488,428					1,613,047					1,542,841
Securities held to maturity				232,984					242,603					254,380					256,677					259,629
Loans held for sale				226,225					237,152					280,975					301,691					238,265
Loans				6,319,797					6,382,440					6,570,582					6,640,597					6,722,403
Allowance for loan losses				(103,662	)				(103,016	)				(101,751	)				(100,358	)				(94,922	)
Net Loans				6,216,135					6,279,424					6,468,831					6,540,239					6,627,481
Premises and equipment, net				151,161					151,828					156,541					157,068					156,811
Mortgage servicing rights				50,513					56,042					63,316					45,256					42,882
Goodwill				291,104					291,104					291,104					291,104					291,104
Identifiable intangible assets				19,825					20,819					21,820					22,820					23,821
Other assets				433,782					360,901					364,402					308,587					326,744
Total assets			$	9,526,018				$	9,368,498				$	9,626,870				$	9,775,714				$	9,790,909
Deposits:
Noninterest-bearing			$	1,685,187				$	1,493,424				$	1,558,934				$	1,504,032				$	1,496,166
Interest-bearing				5,503,278					5,377,011					5,588,955					5,652,908					5,327,704
Total deposits				7,188,465					6,870,435					7,147,889					7,156,940					6,823,870
Fed funds purchased and repos				653,032					645,057					627,616					607,083					811,129
Short-term borrowings				253,957					315,105					314,751					448,380					730,958
Long-term FHLB advances				75,000					75,000					75,000					75,000					-
Subordinated notes				49,774					49,766					49,758					49,750					49,741
Junior subordinated debt securities				70,104					70,104					70,104					70,104					70,104
Other liabilities				125,626					121,670					139,638					168,089					126,641
Total liabilities				8,415,958					8,147,137					8,424,756					8,575,346					8,612,443
Preferred stock				-					206,461					206,009					205,564					205,126
Common stock				13,267					11,968					11,964					11,955					11,944
Capital surplus				244,864					145,352					143,654					142,167					139,471
Retained earnings				853,553					854,508					845,882					845,779					836,642
Accum other comprehensive (loss) income, net of tax				(1,624	)				3,072					(5,395	)				(5,097	)				(14,717	)
Total shareholders' equity				1,110,060					1,221,361					1,202,114					1,200,368					1,178,466
Total liabilities and equity			$	9,526,018				$	9,368,498				$	9,626,870				$	9,775,714				$	9,790,909
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2009
($ in thousands except per share data)
(unaudited)
			Quarter Ended																									Year Ended
INCOME STATEMENTS			12/31/2009					9/30/2009					6/30/2009					3/31/2009					12/31/2008					12/31/2009					12/31/2008
Interest and fees on loans-FTE			$	87,640				$	89,672				$	91,652				$	92,382				$	101,694				$	361,346				$	436,064
Interest on securities-taxable				19,093					19,524					20,444					21,654					17,108					80,715					46,161
Interest on securities-tax exempt-FTE				2,183					2,172					2,040					1,834					1,891					8,229					7,866
Interest on fed funds sold and rev repos				12					16					19					19					57					66					502
Other interest income				377					381					343					313					368					1,414					1,822
Total interest income-FTE				109,305					111,765					114,498					116,202					121,118					451,770					492,415
Interest on deposits				16,513					18,403					21,430					22,540					26,818					78,886					139,922
Interest on fed funds pch and repos				215					282					272					364					1,178					1,133					10,393
Other interest expense				1,716					1,786					1,980					2,352					3,399					7,834					13,804
Total interest expense				18,444					20,471					23,682					25,256					31,395					87,853					164,119
Net interest income-FTE				90,861					91,294					90,816					90,946					89,723					363,917					328,296
Provision for loan losses				17,709					15,770					26,767					16,866					16,684					77,112					76,412
Net interest income after provision-FTE				73,152					75,524					64,049					74,080					73,039					286,805					251,884
Service charges on deposit accounts				14,118					14,157					13,244					12,568					14,044					54,087					53,717
Insurance commissions				6,391					7,894					7,372					7,422					6,783					29,079					32,440
Wealth management				5,438					5,589					5,497					5,555					6,583					22,079					27,600
General banking - other				5,951					5,620					6,063					5,407					5,576					23,041					23,230
Mortgage banking, net				6,552					8,871					2,543					10,907					4,393					28,873					26,480
Other, net				1,814					994					1,693					1,115					935					5,616					13,286
Nonint inc-excl sec gains, net				40,264					43,125					36,412					42,974					38,314					162,775					176,753
Security gains, net				19					1,014					4,404					30					12					5,467					505
Total noninterest income				40,283					44,139					40,816					43,004					38,326					168,242					177,258
Salaries and employee benefits				42,209					42,629					40,989					43,425					41,923					169,252					171,137
Services and fees				9,919					10,124					10,249					10,000					9,638					40,292					38,379
Net occupancy-premises				5,063					4,862					4,948					5,178					4,704					20,051					19,508
Equipment expense				4,084					4,104					4,108					4,166					4,183					16,462					16,632
Other expense				14,372					17,515					18,677					11,638					11,097					62,202					38,063
Total noninterest expense				75,647					79,234					78,971					74,407					71,545					308,259					283,719
Income before income taxes and tax eq adj				37,788					40,429					25,894					42,677					39,820					146,788					145,423
Tax equivalent adjustment				2,569					2,417					2,325					2,397					2,326					9,708					9,136
Income before income taxes				35,219					38,012					23,569					40,280					37,494					137,080					136,287
Income taxes				10,742					12,502					6,994					13,795					12,162					44,033					43,870
Net income				24,477					25,510					16,575					26,485					25,332					93,047					92,417
Preferred stock dividends				2,061					2,688					2,687					2,688					1,165					10,124					1,165
Accretion of preferred stock discount				8,539					452					445					438					188					9,874					188
Net income available to common shareholders			$	13,877				$	22,370				$	13,443				$	23,359				$	23,979				$	73,049				$	91,064
Per common share data
Earnings per share - basic			$	0.23				$	0.39				$	0.23				$	0.41				$	0.42				$	1.26				$	1.59
Earnings per share - diluted			$	0.23				$	0.39				$	0.23				$	0.41				$	0.42				$	1.26				$	1.59
Dividends per share			$	0.23				$	0.23				$	0.23				$	0.23				$	0.23				$	0.92				$	0.92
Weighted average common shares outstanding
Basic				59,131,451					57,431,128					57,406,499					57,350,874					57,324,710					57,833,774					57,300,837
Diluted				59,287,459					57,559,492					57,546,928					57,398,375					57,375,590					57,936,433					57,336,909
Period end common shares outstanding				63,673,839					57,440,047					57,423,841					57,378,318					57,324,737					63,673,839					57,324,737
OTHER FINANCIAL DATA
Return on common equity				5.25	%				8.78	%				5.38	%				9.60	%				9.89	%				7.22	%				9.62	%
Return on average tangible common equity				7.80	%				13.06	%				8.20	%				14.46	%				15.10	%				10.80	%				14.88	%
Return on equity				8.05	%				8.32	%				5.51	%				9.01	%				9.54	%				7.72	%				9.53	%
Return on assets				1.05	%				1.07	%				0.69	%				1.10	%				1.07	%				0.98	%				1.01	%
Interest margin - Yield - FTE				5.21	%				5.24	%				5.30	%				5.34	%				5.68	%				5.27	%				6.02	%
Interest margin - Cost				0.88	%				0.96	%				1.10	%				1.16	%				1.47	%				1.03	%				2.01	%
Net interest margin - FTE				4.33	%				4.28	%				4.20	%				4.18	%				4.20	%				4.25	%				4.01	%
Efficiency ratio				57.69	%				58.95	%				58.57	%				55.56	%				55.86	%				57.70	%				56.99	%
Full-time equivalent employees				2,524					2,550					2,562					2,589					2,607
COMMON STOCK PERFORMANCE
Market value-Close			$	22.54				$	19.05				$	19.32				$	18.38				$	21.59
Common book value			$	17.43				$	17.67				$	17.35				$	17.34				$	16.98
Tangible common book value			$	12.55				$	12.24				$	11.90				$	11.87				$	11.49
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2009
($ in thousands)
(unaudited)
			Quarter Ended
NONPERFORMING ASSETS			12/31/2009					9/30/2009					6/30/2009					3/31/2009					12/31/2008
Nonaccrual loans
Florida			$	74,159				$	72,063				$	72,185				$	83,789				$	75,092
Mississippi (1)				31,050					28,470					32,040					21,829					18,703
Tennessee (2)				12,749					11,481					2,941					5,763					3,638
Texas				23,204					26,490					25,824					23,122					16,605
Total nonaccrual loans				141,162					138,504					132,990					134,503					114,038
Other real estate
Florida				45,927					34,030					26,387					19,830					21,265
Mississippi (1)				22,373					22,932					15,542					9,932					6,113
Tennessee (2)				10,105					9,809					10,234					9,051					8,862
Texas				11,690					4,918					3,033					3,322					2,326
Total other real estate				90,095					71,689					55,196					42,135					38,566
Total nonperforming assets			$	231,257				$	210,193				$	188,186				$	176,638				$	152,604
LOANS PAST DUE OVER 90 DAYS
Loans held for investment			$	8,901				$	6,854				$	6,873				$	10,004				$	5,139
Loans HFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)			$	46,661				$	36,686				$	28,523				$	21,128				$	18,095
			Quarter Ended																									Year Ended
ALLOWANCE FOR LOAN LOSSES			12/31/2009					9/30/2009					6/30/2009					3/31/2009					12/31/2008					12/31/2009					12/31/2008
Beginning Balance			$	103,016				$	101,751				$	100,358				$	94,922				$	90,888				$	94,922				$	79,851
Provision for loan losses				17,709					15,770					26,767					16,866					16,684					77,112					76,412
Charge-offs				(20,139	)				(18,687	)				(27,870	)				(14,015	)				(15,039	)				(80,711	)				(71,767	)
Recoveries				3,076					4,182					2,496					2,585					2,389					12,339					10,426
Net charge-offs				(17,063	)				(14,505	)				(25,374	)				(11,430	)				(12,650	)				(68,372	)				(61,341	)
Ending Balance			$	103,662				$	103,016				$	101,751				$	100,358				$	94,922				$	103,662				$	94,922
PROVISION FOR LOAN LOSSES
Florida			$	11,371				$	(3,295	)			$	28,915				$	10,733				$	6,491				$	47,724				$	43,360
Mississippi (1)				6,310					12,009					(1,044	)				4,386					5,756					21,661					20,706
Tennessee (2)				2,097					159					(659	)				1,621					1,461					3,218					4,707
Texas				(2,069	)				6,897					(445	)				126					2,976					4,509					7,639
Total provision for loan losses			$	17,709				$	15,770				$	26,767				$	16,866				$	16,684				$	77,112				$	76,412
NET CHARGE-OFFS
Florida			$	8,174				$	131				$	21,167				$	6,933				$	7,160				$	36,405				$	42,691
Mississippi (1)				5,448					9,629					3,267					3,455					4,387					21,799					14,690
Tennessee (2)				1,169					872					897					785					816					3,723					2,341
Texas				2,272					3,873					43					257					287					6,445					1,619
Total net charge-offs			$	17,063				$	14,505				$	25,374				$	11,430				$	12,650				$	68,372				$	61,341
CREDIT QUALITY RATIOS
Net charge offs/average loans				1.03	%				0.86	%				1.48	%				0.66	%				0.73	%				1.01	%				0.87	%
Provision for loan losses/average loans				1.07	%				0.93	%				1.56	%				0.98	%				0.96	%				1.14	%				1.09	%
Nonperforming loans/total loans (incl LHFS)				2.16	%				2.09	%				1.94	%				1.94	%				1.64	%
Nonperforming assets/total loans (incl LHFS)				3.53	%				3.18	%				2.75	%				2.54	%				2.19	%
Nonperforming assets/total loans (incl LHFS) +ORE				3.48	%				3.14	%				2.72	%				2.53	%				2.18	%
ALL/total loans (excl LHFS)				1.64	%				1.61	%				1.55	%				1.51	%				1.41	%
ALL-commercial/total commercial loans				2.10	%				2.08	%				2.01	%				1.95	%				1.79	%
ALL-consumer/total consumer and home mortgage loans				0.80	%				0.76	%				0.73	%				0.73	%				0.72	%
ALL/nonperforming loans				73.43	%				74.38	%				76.51	%				74.61	%				83.24	%
ALL/nonperforming loans (excl impaired loans)				154.91	%				117.93	%				123.15	%				137.47	%				166.07	%
CAPITAL RATIOS
Total equity/total assets				11.65	%				13.04	%				12.49	%				12.28	%				12.04	%
Common equity/total assets				11.65	%				10.83	%				10.35	%				10.18	%				9.94	%
Tangible equity/tangible assets				8.67	%				10.04	%				9.55	%				9.37	%				9.11	%
Tangible common equity/tangible assets				8.67	%				7.76	%				7.34	%				7.20	%				6.95	%
Tangible common equity/risk-weighted assets				11.55	%				10.15	%				9.56	%				9.43	%				9.03	%
Tier 1 leverage ratio				9.74	%				10.70	%				10.38	%				10.17	%				10.42	%
Tier 1 common risk-based capital ratio				11.63	%				10.15	%				9.66	%				9.55	%				9.27	%
Tier 1 risk-based capital ratio				12.61	%				14.11	%				13.50	%				13.34	%				13.01	%
Total risk-based capital ratio				14.58	%				16.09	%				15.45	%				15.28	%				14.95	%
(1) - Mississippi includes Central and Southern Mississippi Regions
(2) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
December 31, 2009
($ in thousands)
(unaudited)
Note 1 - 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):
			12/31/2009				9/30/2009				6/30/2009				3/31/2009				12/31/2008
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities			$	-			$	-			$	-			$	759			$	6,525
U.S. Government agency obligations
Issued by U.S. Government agencies				20				21				23				25				27
Issued by U.S. Government sponsored agencies				47,917				24,992				25,189				25,235				25,367
Obligations of states and political subdivisions				117,508				151,427				137,799				125,366				98,653
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA				12,192				9,590				10,000				10,658				8,726
Issued by FNMA and FHLMC				49,279				7,229				7,193				79,007				19,186
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA				1,382,556				1,258,779				1,209,677				1,287,745				1,364,988
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA				68,735				70,359				92,395				76,183				11,499
Corporate debt securities				6,189				6,228				6,152				8,069				7,870
Total securities available for sale			$	1,684,396			$	1,528,625			$	1,488,428			$	1,613,047			$	1,542,841
SECURITIES HELD TO MATURITY
Obligations of states and political subdivisions			$	74,643			$	78,522			$	89,331			$	95,799			$	102,901
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA				7,044				7,269				7,298				5,325				-
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA				148,226				153,728				154,655				155,553				156,728
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA				3,071				3,084				3,096				-				-
Total securities held to maturity			$	232,984			$	242,603			$	254,380			$	256,677			$	259,629

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 89% 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, Federal Reserve Bank and Depository Trust and Clearing Corporation, Trustmark does not hold any equity investment in government sponsored entities.

Note 2 – Loan Composition
LOANS BY TYPE			12/31/2009					9/30/2009					6/30/2009					3/31/2009					12/31/2008
Loans secured by real estate:
Construction, land development and other land loans			$	830,069				$	872,367				$	960,945				$	1,000,020				$	1,028,788
Secured by 1-4 family residential properties				1,650,743					1,637,322					1,663,575					1,601,600					1,524,061
Secured by nonfarm, nonresidential properties				1,467,307					1,472,147					1,472,212					1,425,937					1,422,658
Other real estate secured				197,421					209,957					186,770					184,204					186,915
Commercial and industrial loans				1,126,676					1,165,970					1,203,230					1,258,887					1,305,938
Consumer loans				606,315					661,075					727,399					804,958					895,046
Other loans				441,266					363,602					356,451					364,991					358,997
Loans				6,319,797					6,382,440					6,570,582					6,640,597					6,722,403
Allowance for loan losses				(103,662	)				(103,016	)				(101,751	)				(100,358	)				(94,922	)
Net Loans			$	6,216,135				$	6,279,424				$	6,468,831				$	6,540,239				$	6,627,481

The allowance for loan losses is maintained at a level believed adequate by Management, based on estimated probable losses within the existing loan portfolio. Trustmark’s allowance for loan loss methodology is based on guidance provided in SEC Staff Accounting Bulletin No. 102, "Selected Loan Loss Allowance Methodology and Documentation Issues,” as well as on other regulatory guidance. Accordingly, Trustmark’s methodology is based on historical loss experience by type of loan and internal risk ratings, homogeneous risk pools and specific loss allocations, with adjustments considering environmental factors such as current economic events, industry and geographical conditions and portfolio performance indicators. The provision for loan losses reflects loan quality trends, including the levels of and trends related to nonaccrual loans, past due loans, potential problem loans, criticized loans and net charge-offs or recoveries, among other factors, in compliance with the Interagency Policy Statement on the Allowance for Loan and Lease Losses published by the governmental regulating agencies for financial services companies.

During the quarter ended June 30, 2009, Trustmark refined its allowance for loan loss methodology for commercial loans classifying them into thirteen separate homogenous loan types, while taking into consideration the uniqueness of our markets. In addition, Trustmark combined its quantitative historical loan loss factors and qualitative risk factors for each of its homogenous loan types. These enhancements were implemented based upon current regulatory guidance from Trustmark’s primary regulator and as a result, approximately $8.0 million in qualitative reserves were reallocated to specific reserves.

Note 2 – Loan Composition (continued)
		December 31, 2009
LOAN COMPOSITION BY REGION		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		$	830,069		$	198,906		$	302,918		$	59,322		$	268,923
Secured by 1-4 family residential properties			1,650,743			87,282			1,367,633			165,016			30,812
Secured by nonfarm, nonresidential properties			1,467,307			180,267			828,954			216,520			241,566
Other real estate secured			197,421			5,388			162,607			9,969			19,457
Commercial and industrial loans			1,126,676			19,869			832,166			60,351			214,290
Consumer loans			606,315			2,287			565,973			28,946			9,109
Other loans			441,266			29,655			365,162			22,576			23,873
Loans		$	6,319,797		$	523,654		$	4,425,413		$	562,700		$	808,030
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots		$	99,738		$	61,725		$	24,791		$	4,551		$	8,671
Development			187,384			27,227			68,443			9,185			82,529
Unimproved land			277,723			76,762			108,130			32,623			60,208
1-4 family construction			120,813			10,929			70,440			5,825			33,619
Other construction			144,411			22,263			31,114			7,138			83,896
Construction, land development and other land loans		$	830,069		$	198,906		$	302,918		$	59,322		$	268,923

												Classified (3)
FLORIDA CREDIT QUALITY		Total Loans			Criticized Loans (1)			Special Mention (2)				Accruing			Nonimpaired Nonaccrual				Impaired Nonaccrual (4)
Construction, land development and other land loans:
Lots		$	61,725		$	24,735		$	-			$	11,335		$	10,987			$	2,413
Development			27,227			17,336			-				3,964			770				12,602
Unimproved land			76,762			50,515			19,945				12,064			1,210				17,296
1-4 family construction			10,929			4,608			1,489				-			419				2,700
Other construction			22,263			13,355			2,735				9,215			489				916
Construction, land development and other land loans			198,906			110,549			24,169				36,578			13,875				35,927
Commercial, commercial real estate and consumer			324,748			79,793			32,005				23,431			14,963				9,394
Total Florida loans		$	523,654		$	190,342		$	56,174			$	60,009		$	28,838			$	45,321
FLORIDA CREDIT QUALITY (continued)		Total Loans Less Impaired Loans			Loan Loss Reserves			Loan Loss Reserve % of NonImpaired Loans
Construction, land development and other land loans:
Lots		$	59,312		$	7,588			12.79	%
Development			14,625			2,578			17.63	%
Unimproved land			59,466			9,707			16.32	%
1-4 family construction			8,229			449			5.46	%
Other construction			21,347			3,622			16.97	%
Construction, land development and other land loans			162,979			23,944			14.69	%
Commercial, commercial real estate and consumer			315,354			8,439			2.68	%
Total Florida loans		$	478,333		$	32,383			6.77	%
(1) Criticized loans equal all special mention and classified loans.
(2) Special mention loans exhibit potential credit weaknesses that, if not resolved, may ultimately result in a more severe classification.
(3) Classified loans include those loans identified by management as exhibiting well-defined credit weaknesses that may jeopardize repayment in full of the debt.
(4) All nonaccrual loans over $1 million are individually assessed for impairment.  Impaired loans have been determined to be collateral dependent and assessed using a fair value approach.  Fair value estimates begin with appraised values, normally from recently received and reviewed appraisals.  Appraised values are adjusted down for costs associated with asset disposal.  When a loan is deemed to be impaired, the full difference between book value and the most likely estimate of the asset’s net realizable value is charged off.

Note 2 - Loan Composition (continued)
LOAN COMPOSITION - FLORIDA			12/31/2009			9/30/2009			6/30/2009			3/31/2009			12/31/2008
Loans secured by real estate:
Construction, land development and other land loans			$ 198,906			$ 211,974			$ 245,494			$ 276,315			$ 294,473
Secured by 1-4 family residential properties			87,282			92,088			88,007			93,911			91,559
Secured by nonfarm, nonresidential properties			180,267			182,548			180,559			180,649			179,123
Other real estate secured			5,388			12,891			12,900			12,747			12,632
Commercial and industrial loans			19,869			19,762			19,907			18,049			18,814
Consumer loans			2,287			2,276			2,238			2,531			3,206
Other loans			29,655			29,880			21,692			21,823			18,505
Loans			$ 523,654			$ 551,419			$ 570,797			$ 606,025			$ 618,312
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS - FLORIDA
Lots			$ 61,725			$ 63,645			$ 69,005			$ 74,002			$ 76,849
Development			27,227			28,376			33,533			41,769			35,927
Unimproved land			76,762			83,437			93,379			99,063			114,232
1-4 family construction			10,929			13,237			17,344			25,878			29,246
Other construction			22,263			23,279			32,233			35,603			38,219
Construction, land development and other land loans			$ 198,906			$ 211,974			$ 245,494			$ 276,315			$ 294,473

Note 3 – Stockholders’ Equity

Common Stock Offering

On December 7, 2009, Trustmark completed a public offering of 6,216,216 shares of its common stock, including 810,810 shares issued pursuant to the exercise of the underwriters’ over-allotment option, at a price of $18.50 per share. Trustmark received net proceeds of approximately $109.3 million after deducting underwriting discounts, commissions and estimated offering expenses. Proceeds from this offering were used in the redemption of preferred stock discussed below.

Repurchase of Preferred Stock

On November 21, 2008, Trustmark issued 215,000 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A, (Preferred Stock) to the U.S. Treasury (Treasury) in a private placement transaction as part of the Troubled Assets Relief Program Capital Purchase Program (TARP CPP), a voluntary initiative for healthy U.S. financial institutions. As part of its participation in the TARP CPP, Trustmark also issued to the Treasury a ten-year warrant (the Warrant) to purchase up to 1,647,931 shares of Trustmark’s common stock, at an initial exercise price of $19.57 per share, subject to customary anti-dilution adjustments.

On December 9, 2009, Trustmark completed the repurchase of its 215,000 shares of Preferred Stock from the Treasury at a purchase price of $215.0 million plus a final accrued dividend of $716.7 thousand. The repurchase of the Preferred Stock resulted in a one-time, non-cash charge of approximately $8.2 million in Trustmark’s fourth quarter financial statements for the unaccreted discount recorded at the date of issuance of the Preferred Stock. In addition, on December 30, 2009, Trustmark repurchased in full from the Treasury, the Warrant to purchase 1,647,931 shares of Trustmark’s common stock, which was issued to the Treasury pursuant to the TARP CPP. The purchase price paid by Trustmark to the Treasury for the Warrant was $10.0 million.

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																				Year Ended
			12/31/2009				9/30/2009				6/30/2009				3/31/2009				12/31/2008				12/31/2009				12/31/2008
Securities – Taxable			4.82	%			4.94	%			5.16	%			5.22	%			4.87	%			5.04	%			4.73	%
Securities – Nontaxable			5.82	%			5.96	%			6.23	%			6.72	%			6.68	%			6.14	%			6.87	%
Securities – Total			4.91	%			5.02	%			5.24	%			5.31	%			5.01	%			5.12	%			4.95	%
Loans			5.31	%			5.32	%			5.34	%			5.37	%			5.86	%			5.33	%			6.21	%
FF Sold & Rev Repo			0.45	%			0.50	%			0.36	%			0.48	%			0.99	%			0.44	%			2.14	%
Other Earning Assets			3.38	%			3.44	%			2.92	%			3.14	%			2.98	%			3.22	%			4.42	%
Total Earning Assets			5.21	%			5.24	%			5.30	%			5.34	%			5.68	%			5.27	%			6.02	%
Interest-bearing Deposits			1.21	%			1.33	%			1.54	%			1.66	%			1.98	%			1.44	%			2.50	%
FF Pch & Repo			0.15	%			0.17	%			0.19	%			0.22	%			0.58	%			0.18	%			1.66	%
Borrowings			1.57	%			1.54	%			1.48	%			1.16	%			2.20	%			1.39	%			3.48	%
Total Interest-bearing Liabilities			1.14	%			1.23	%			1.41	%			1.46	%			1.83	%			1.32	%			2.48	%
Net interest margin			4.33	%			4.28	%			4.20	%			4.18	%			4.20	%			4.25	%			4.01	%

During the fourth quarter of 2009, the net interest margin increased 5 basis points to 4.33%, from 4.28% for the third quarter of 2009. The increase is due to decreasing deposit costs, offset somewhat by a modest decline in earning asset yields.

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

During 2009, Trustmark’s net interest margin expanded to 4.25%, up 24 basis points compared to 2008. This increase is primarily a result of three factors including the impact of an increased level of fixed rate securities funded primarily through short-term and floating rate liabilities, moderating certificate of deposit costs and improved loan pricing trends. These benefits have outweighed the continued downward repricing of fixed rate assets.

Note 5 – Other Noninterest Expense
Other noninterest expense consisted of the following ($ in thousands):
			Quarter Ended																				Year Ended
			12/31/2009				9/30/2009				6/30/2009				3/31/2009				12/31/2008				12/31/2009				12/31/2008
FDIC assessment expense			$	2,865			$	2,913			$	7,253			$	2,777			$	1,502			$	15,808			$	3,471
ORE/Foreclosure expense				3,581				5,870				2,733				630				684				12,814				2,380
Other expense				7,926				8,732				8,691				8,231				8,911				33,580				32,212
Total other expense			$	14,372			$	17,515			$	18,677			$	11,638			$	11,097			$	62,202			$	38,063

Note 6 – Mortgage Banking

Trustmark utilizes derivative instruments to offset changes in the fair value of mortgage servicing rights (MSR) attributable to changes in interest rates. Changes in the fair value of the derivative instrument are recorded in mortgage banking income, net and are offset by the changes in the fair value of MSR, as shown in the accompanying table. The MSR fair value represents the effect of present value decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing total hedge cost to the fair value of the MSR asset attributable to market changes. The impact of this strategy resulted in a net positive ineffectiveness of $409 thousand and $314 thousand for the quarters ended December 31, 2009 and 2008, respectively. For the years ended December 31, 2009 and 2008, the impact was a net negative ineffectiveness of $22 thousand and a net positive ineffectiveness of $11.1 million, respectively. The accompanying table shows that the MSR value increased $2.7 million for the quarter ended December 31, 2009 due to an increase in mortgage rates. Offsetting the MSR change is a $2.3 million decrease in the value of derivative instruments primarily due to growth in 10-year Treasury note yields.

The following table illustrates the components of mortgage banking income included in noninterest income in the accompanying income statements:
			Quarter Ended																									Year Ended
			12/31/2009					9/30/2009					6/30/2009					3/31/2009					12/31/2008					12/31/2009					12/31/2008
Mortgage servicing income, net			$	3,763				$	4,092				$	4,029				$	4,001				$	4,188				$	15,885				$	15,741
Change in fair value-MSR from runoff				(1,219	)				(1,608	)				(3,097	)				(2,643	)				(2,101	)				(8,567	)				(8,986	)
Gain on sales of loans				3,738					4,081					8,932					4,004					473					20,755					5,968
Other, net				(139	)				179					(2,708	)				3,490					1,519					822					2,609
Mortgage banking income before hedge ineffectiveness				6,143					6,744					7,156					8,852					4,079					28,895					15,332
Change in fair value-MSR from market changes				2,710					(9,344	)				13,593					(352	)				(36,846	)				6,607					(34,838	)
Change in fair value of derivatives				(2,301	)				11,471					(18,206	)				2,407					37,160					(6,629	)				45,986
Net positive (negative) hedge ineffectiveness				409					2,127					(4,613	)				2,055					314					(22	)				11,148
Mortgage banking, net			$	6,552				$	8,871				$	2,543				$	10,907				$	4,393				$	28,873				$	26,480

During the fourth quarter, Trustmark completed the sale of approximately $1.0 billion in mortgages serviced for others, which reduced Trustmark’s MSR by approximately $9.6 million. The effect of this transaction did not have a material impact on Trustmark's results of operations.

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. The following table reconciles Trustmark’s calculation of these measures to amounts reported under GAAP. 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.

Note 7 - Non-GAAP Financial Measures (continued)
					Quarter Ended																									Year Ended
					12/31/2009					9/30/2009					6/30/2009					3/31/2009					12/31/2008					12/31/2009					12/31/2008
TANGIBLE COMMON EQUITY
AVERAGE BALANCES
Total shareholders' equity					$	1,205,712				$	1,216,987				$	1,207,202				$	1,192,398				$	1,056,052				$	1,205,642				$	970,061
Less: Preferred stock						(157,270	)				(206,308	)				(205,860	)				(205,417	)				(91,385	)				(193,616	)				(22,971	)
Total average common equity						1,048,442					1,010,679					1,001,342					986,981					964,667					1,012,026					947,090
Less: Goodwill						(291,104	)				(291,104	)				(291,104	)				(291,104	)				(291,123	)				(291,104	)				(291,153	)
Identifiable intangible assets						(20,426	)				(21,430	)				(22,424	)				(23,440	)				(24,466	)				(21,920	)				(26,069	)
Total average tangible common equity					$	736,912				$	698,145				$	687,814				$	672,437				$	649,078				$	699,002				$	629,868
PERIOD END BALANCES
Total shareholders' equity					$	1,110,060				$	1,221,361				$	1,202,114				$	1,200,368				$	1,178,466
Less: Preferred stock						-					(206,461	)				(206,009	)				(205,564	)				(205,126	)
Total common equity						1,110,060					1,014,900					996,105					994,804					973,340
Less: Goodwill						(291,104	)				(291,104	)				(291,104	)				(291,104	)				(291,104	)
Identifiable intangible assets						(19,825	)				(20,819	)				(21,820	)				(22,820	)				(23,821	)
Total tangible common equity		(a)			$	799,131				$	702,977				$	683,181				$	680,880				$	658,415
TANGIBLE ASSETS
Total assets					$	9,526,018				$	9,368,498				$	9,626,870				$	9,775,714				$	9,790,909
Less: Goodwill						(291,104	)				(291,104	)				(291,104	)				(291,104	)				(291,104	)
Identifiable intangible assets						(19,825	)				(20,819	)				(21,820	)				(22,820	)				(23,821	)
Total tangible assets		(b)			$	9,215,089				$	9,056,575				$	9,313,946				$	9,461,790				$	9,475,984
Risk-weighted assets		(c)			$	6,918,802				$	6,923,907				$	7,144,278				$	7,216,846				$	7,294,633
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income available to common shareholders					$	13,877				$	22,370				$	13,443				$	23,359				$	23,979				$	73,049				$	91,064
Plus:Intangible amortization net of tax						614					619					618					618					658					2,469					2,644
Net income adjusted for intangible amortization					$	14,491				$	22,989				$	14,061				$	23,977				$	24,637				$	75,518				$	93,708
Period end common shares outstanding		(d)				63,673,839					57,440,047					57,423,841					57,378,318					57,324,737
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible common equity 1						7.80	%				13.06	%				8.20	%				14.46	%				15.10	%				10.80	%				14.88	%
Tangible common equity/tangible assets		(a)/(b)				8.67	%				7.76	%				7.34	%				7.20	%				6.95	%
Tangible common equity/risk-weighted assets		(a)/(c)				11.55	%				10.15	%				9.56	%				9.43	%				9.03	%
Tangible common book value		(a)/(d)*1,000			$	12.55				$	12.24				$	11.90				$	11.87				$	11.49
TIER 1 COMMON RISK-BASED CAPITAL
Total shareholders' equity					$	1,110,060				$	1,221,361				$	1,202,114				$	1,200,368				$	1,178,466
Eliminate qualifying AOCI						1,624					(3,072	)				5,395					5,097					14,717
Qualifying tier 1 capital						68,000					68,000					68,000					68,000					68,000
Disallowed goodwill						(291,104	)				(291,104	)				(291,104	)				(291,104	)				(291,104	)
Adj to goodwill allowed for deferred taxes						8,805					8,453					8,100					7,748					7,395
Other disallowed intangibles						(19,825	)				(20,819	)				(21,820	)				(22,820	)				(23,821	)
Disallowed servicing intangible						(5,051	)				(5,604	)				(6,331	)				(4,526	)				(4,288	)
Total tier 1 capital					$	872,509				$	977,215				$	964,354				$	962,763				$	949,365
Less: Qualifying tier 1 capital						(68,000	)				(68,000	)				(68,000	)				(68,000	)				(68,000	)
Preferred stock						-					(206,461	)				(206,009	)				(205,564	)				(205,126	)
Total tier 1 common capital		(e)			$	804,509				$	702,754				$	690,345				$	689,199				$	676,239
Tier 1 common risk-based capital ratio		(e)/(c)				11.63	%				10.15	%				9.66	%				9.55	%				9.27	%
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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