UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2026
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 000-03683
Trustmark Corporation
(Exact name of registrant as specified in its charter)
Mississippi
64-0471500
(State or other jurisdiction ofincorporation or organization)
(I.R.S. EmployerIdentification No.)
248 East Capitol Street, Jackson, Mississippi
39201
(Address of principal executive offices)
(Zip Code)
(601) 208-5111
(Registrant’s telephone number, including area code)
Securities registered Pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, no par value
TRMK
Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of July 31, 2026, there were 58,070,577 shares outstanding of the registrant’s common stock (no par value).
Forward-Looking Statements
Certain statements contained in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “project,” “potential,” “seek,” “continue,” “could,” “would,” “future” or the negative of those terms or other words of similar meaning. You should read statements that contain these words carefully because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements include, but are not limited to, statements relating to anticipated future operating and financial performance measures, including net interest margin, credit quality, business initiatives, growth opportunities and growth rates, among other things, and encompass any estimate, prediction, expectation, projection, opinion, anticipation, outlook or statement of belief included therein as well as the management assumptions underlying these forward-looking statements. You should be aware that the occurrence of the events described under the caption “Risk Factors” in Trustmark’s filings with the Securities and Exchange Commission (SEC) could have an adverse effect on our business, results of operations or financial condition. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected.
Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, actions by the Board of Governors of the Federal Reserve System (FRB) that impact the level of market interest rates, local, state, national and international economic and market conditions, conditions in the housing and real estate markets in the regions in which Trustmark operates, conditions and changes, including volatility, in the credit and financial markets, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels, a slowdown in economic growth, changes in our ability to measure the fair value of assets in our portfolio, changes in the level and/or volatility of market interest rates, the impacts related to or resulting from bank failures and other economic and industry volatility, including potential increased regulatory requirements, the demand for the products and services we offer, potential unexpected adverse outcomes in pending litigation matters, our ability to attract and retain noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, cyber-attacks and other breaches which could affect our information system security, natural disasters, environmental disasters, pandemics or other health crises, acts of war or terrorism, potential market or regulatory effects of the current United States presidential administration’s policies, changes to the credit rating of U.S. Government securities and other risks described in our filings with the SEC.
Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Except as required by law, we undertake no obligation to update or revise any of this information, whether as the result of new information, future events or developments or otherwise.
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Trustmark Corporation and Subsidiaries
Consolidated Balance Sheets
($ in thousands)
(Unaudited)
June 30, 2026
December 31, 2025
Assets
Cash and due from banks
$
669,892
668,007
Securities available for sale, at fair value (amortized cost: $1,938,959-2026 $1,842,444-2025; allowance for credit losses (ACL): $0-2026; $0-2025)
1,941,624
1,876,830
Securities held to maturity, net of ACL of $0 (fair value: $1,096,876-2026; $1,180,569-2025)
1,134,823
1,207,454
Loans held for sale (LHFS)
300,529
278,789
Loans held for investment (LHFI)
13,913,023
13,674,233
Less ACL, LHFI
148,189
157,071
Net LHFI
13,764,834
13,517,162
Premises and equipment, net
228,701
225,658
Mortgage servicing rights (MSR)
141,763
131,289
Goodwill
334,605
Other real estate, net
5,208
6,957
Operating lease right-of-use assets
32,947
32,152
Other assets
637,544
646,308
Total Assets
19,192,470
18,925,211
Liabilities
Deposits:
Noninterest-bearing
3,373,546
3,036,504
Interest-bearing
12,697,669
12,463,280
Total deposits
16,071,215
15,499,784
Federal funds purchased
360,000
445,000
Other borrowings
137,853
364,762
Subordinated notes
172,119
171,966
Junior subordinated debt securities
61,856
ACL on off-balance sheet credit exposures
27,534
27,951
Operating lease liabilities
37,091
36,250
Other liabilities
181,171
195,965
Total Liabilities
17,048,839
16,803,534
Shareholders' Equity
Common stock, no par value:
Authorized: 250,000,000 shares Issued and outstanding: 58,225,687 shares - 2026; 59,012,423 shares - 2025
12,132
12,296
Capital surplus
42,695
81,951
Retained earnings
2,131,086
2,041,055
Accumulated other comprehensive income (loss), net of tax
(42,282
)
(13,625
Total Shareholders' Equity
2,143,631
2,121,677
Total Liabilities and Shareholders' Equity
See notes to consolidated financial statements.
3
Consolidated Statements of Income
($ in thousands, except per share data)
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
Interest Income
Interest and fees on LHFS & LHFI
206,627
206,425
408,769
405,670
Interest on securities:
Taxable
26,952
26,269
53,733
52,325
Other interest income
3,854
4,734
7,001
8,580
Total Interest Income
237,433
237,428
469,503
466,575
Interest Expense
Interest on deposits
62,629
68,177
125,348
135,895
Interest on federal funds purchased and securities sold under repurchase agreements
3,748
4,513
7,723
8,811
Other interest expense
5,426
5,982
10,243
11,058
Total Interest Expense
71,803
78,672
143,314
155,764
Net Interest Income
165,630
158,756
326,189
310,811
Provision for credit losses (PCL), LHFI
4,452
5,346
9,140
13,471
PCL, off-balance sheet credit exposures
1,531
(670
(417
(3,501
PCL, LHFI sale of 1-4 family mortgage loans
(9,227
—
Net Interest Income After PCL
168,874
154,080
326,693
300,841
Noninterest Income
Service charges on deposit accounts
10,375
10,585
21,029
21,221
Bank card and other fees
8,743
8,754
16,731
16,418
Mortgage banking, net
8,914
8,602
17,848
17,373
Wealth management
10,922
9,638
21,315
19,181
Other, net
3,617
2,311
7,993
8,281
Total Noninterest Income
42,571
39,890
84,916
82,474
Noninterest Expense
Salaries and employee benefits
72,990
68,298
147,232
136,790
Services and fees
29,748
26,998
57,692
53,245
Net occupancy - premises
7,728
7,507
15,554
14,892
Equipment expense
7,267
6,206
14,265
12,514
Other expense
15,950
16,105
31,099
31,684
Total Noninterest Expense
133,683
125,114
265,842
249,125
Income Before Income Taxes
77,762
68,856
145,767
134,190
Income taxes
14,240
13,015
26,130
24,716
Net Income
63,522
55,841
119,637
109,474
Earnings Per Share (EPS)
Basic EPS
1.09
0.92
2.04
1.81
Diluted EPS
1.08
2.03
1.80
4
Consolidated Statements of Comprehensive Income
Net income per consolidated statements of income
Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on available for sale securities and transferred securities:
Net unrealized holding gains (losses) arising during the period
(11,275
10,493
(23,790
34,943
Change in net unrealized holding loss on securities transferred to held to maturity
1,950
2,587
4,169
5,156
Pension and other postretirement benefit plans:
Reclassification adjustments for changes realized in net income:
Net change in prior service costs
6
Recognized net (gain) loss due to lump sum settlement
(23
(38
Change in net actuarial loss
54
45
118
99
Derivatives:
Change in the accumulated gain (loss) on effective cash flow hedge derivatives
(6,156
3,074
(10,436
8,983
Reclassification adjustment for (gain) loss realized in net income
604
2,011
1,305
4,021
Other comprehensive income (loss), net of tax
(14,846
18,213
(28,657
53,170
Comprehensive income
48,676
74,054
90,980
162,644
5
Consolidated Statements of Changes in Shareholders' Equity
Accumulated
Other
Common Stock
Comprehensive
Shares
Capital
Retained
Income
Outstanding
Amount
Surplus
Earnings
(Loss)
Total
Balance, January 1, 2026
59,012,423
56,115
(13,811
Common stock dividends paid ($0.25 per share)
(14,866
Common stock issued-net, long-term incentive plan
144,364
30
(3,114
(3,084
Repurchase and retirement of common stock
(477,057
(100
(19,704
(19,804
Compensation expense, long-term incentive plan
2,918
Balance, March 31, 2026
58,679,730
12,226
62,051
2,082,304
(27,436
2,129,145
Net income per consolidated statements of income (loss)
(14,740
21,171
(37
(32
(475,214
(99
(20,980
(21,079
1,661
Balance, June 30, 2026
58,225,687
Consolidated Statements of Changes in Shareholders' Equity (continued)
Balance, January 1, 2025
61,008,023
12,711
157,899
1,875,376
(83,659
1,962,327
53,633
34,957
Common stock dividends paid ($0.24 per share)
(14,732
133,628
28
(2,443
(2,415
(423,240
(88
(14,926
(15,014
2,471
Balance, March 31, 2025
60,718,411
12,651
143,001
1,914,277
(48,702
2,021,227
(14,620
24,173
(54
(49
(340,900
(71
(10,939
(11,010
1,187
Balance, June 30, 2025
60,401,684
12,585
133,195
1,955,498
(30,489
2,070,789
7
Consolidated Statements of Cash Flows
Operating Activities
Adjustments to reconcile net income to net cash provided by operating activities:
PCL
(504
9,970
Depreciation and amortization
20,118
18,485
Net (accretion) amortization of securities
(13,399
(11,989
Gains on sales of loans, net
(9,591
(9,850
4,579
3,658
Deferred income tax provision (benefit)
5,300
(925
Proceeds from sales of loans held for sale
606,454
539,318
Purchases and originations of loans held for sale
(620,204
(542,651
Originations of mortgage servicing rights
(9,828
(6,917
Earnings on bank-owned life insurance
(3,795
(3,776
Net change in other assets
15,361
31,228
Net change in other liabilities
(22,157
(20,785
Other operating activities, net
(8,095
4,786
Net cash from operating activities
83,876
120,026
Investing Activities
Proceeds from maturities, prepayments and calls of securities held to maturity
78,100
51,921
Proceeds from maturities, prepayments and calls of securities available for sale
106,201
106,553
Purchases of securities available for sale
(189,227
(137,765
Net proceeds from bank-owned life insurance
2,601
642
Net change in member bank stock
(5,427
(6,518
Net change in LHFI
(314,251
(384,295
Proceeds from sale of 1-4 family mortgage loans
63,108
Purchases of premises and equipment
(13,771
(4,881
Proceeds from sales of premises and equipment
940
3,533
Proceeds from sales of other real estate
4,486
1,814
Purchases of software
(5,102
(4,868
Net investments in tax credit and other partnerships
2,761
(10,950
Net cash from investing activities
(269,581
(384,814
Financing Activities
Net change in deposits
571,431
7,686
Net change in federal funds purchased and securities sold under repurchase agreements
(85,000
132,318
Net change in short-term borrowings
(225,001
250,000
Payments under finance lease obligations
(235
(225
Common stock dividends
(29,606
(29,352
(40,883
(26,024
Shares withheld to pay taxes, long-term incentive plan
(3,116
(2,464
Net cash from financing activities
187,590
331,939
Net change in cash and cash equivalents
1,885
67,151
Cash and cash equivalents at beginning of period
567,251
Cash and cash equivalents at end of period
634,402
8
Notes to Consolidated Financial Statements
Note 1 – Business, Basis of Financial Statement Presentation and Principles of Consolidation
Trustmark Corporation (Trustmark) is a bank holding company headquartered in Jackson, Mississippi. Through its subsidiaries, Trustmark operates as a financial services organization providing banking and financial solutions to corporate institutions and individual customers through offices in Alabama, Florida, Georgia, Mississippi, Tennessee and Texas.
The consolidated financial statements include the accounts of Trustmark and all other entities in which Trustmark has a controlling financial interest. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain reclassifications have been made to prior period amounts to conform to the current period presentation.
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements, and notes thereto, included in Trustmark’s Annual Report on Form 10-K for its fiscal year ended December 31, 2025 (2025 Annual Report).
Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period. In the opinion of Management, all adjustments (consisting of normal recurring accruals) considered necessary for the fair presentation of these consolidated financial statements have been included. The preparation of financial statements in conformity with these accounting principles requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and income and expense during the reporting periods and the related disclosures. Although Management’s estimates contemplate current conditions and how they are expected to change in the future, it is reasonably possible that in 2026 actual conditions could vary from those anticipated, which could affect Trustmark’s financial condition and results of operations. Actual results could differ from those estimates.
Note 2 – Securities Available for Sale and Held to Maturity
The following tables are a summary of the amortized cost and estimated fair value of securities available for sale and held to maturity at June 30, 2026 and December 31, 2025 ($ in thousands):
Securities Available for Sale
Securities Held to Maturity
AmortizedCost
GrossUnrealizedGains
GrossUnrealizedLosses
EstimatedFairValue
U.S. Treasury securities
207,046
574
(567
207,053
30,995
(241
30,754
U.S. Government agency obligations
71,266
85
(1,422
69,929
Mortgage-backed securities
Residential mortgage pass- through securities
Guaranteed by GNMA
44,233
72
(2,189
42,116
12,441
(456
11,992
Issued by FNMA and FHLMC
1,254,190
16,509
(15,192
1,255,507
346,802
363
(11,599
335,566
Other residential mortgage- backed securities
Issued or guaranteed by FNMA, FHLMC or GNMA
84,529
(4,622
79,907
Commercial mortgage- backed securities
362,224
5,385
(590
367,019
660,056
58
(21,457
638,657
1,938,959
22,625
(19,960
428
(38,375
1,096,876
9
U.S. Treasury Securities
205,282
3,666
208,948
30,615
185
30,800
70,924
609
(684
70,849
40,425
106
(1,996
38,535
13,154
22
(393
12,783
1,165,292
33,836
(11,369
1,187,759
372,311
2,070
(7,812
366,569
96,667
(4,233
92,434
360,521
10,698
(480
370,739
694,707
73
(16,797
677,983
1,842,444
48,915
(14,529
2,350
(29,235
1,180,569
During 2022, Trustmark reclassified a total of $766.0 million of securities available for sale to securities held to maturity. At the date of these transfers, the net unrealized holding loss on the available for sale securities totaled $91.9 million ($68.9 million, net of tax). The securities were transferred at fair value, which became the cost basis for the securities held to maturity. The net unrealized holding loss will be amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. There were no gains or losses recognized as a result of these transfers. At June 30, 2026, the net unamortized, unrealized loss on transferred securities included in accumulated other comprehensive income (loss) in the accompanying consolidated balance sheets totaled $32.1 million compared to $36.3 million at December 31, 2025.
ACL on Securities
Quarterly, Trustmark evaluates if any security has a fair value less than its amortized cost. Once these securities are identified, in order to determine whether a decline in fair value resulted from a credit loss or other factors, Trustmark performs further analysis. If Trustmark determines that a credit loss exists, the credit portion of the allowance is measured by a discounted cash flow (DCF) analysis using the effective interest rate as of the security’s purchase date. The amount of credit loss recorded by Trustmark is limited to the amount by which the amortized cost exceeds the fair value. The DCF analysis utilizes contractual maturities, as well as third-party credit ratings and cumulative default rates published annually by Moody’s Investor Service (Moody’s).
At both June 30, 2026 and December 31, 2025, the results of the analysis did not identify any securities that warranted DCF analysis, and no credit loss was recognized on any of the securities available for sale.
Accrued interest receivable is excluded from the estimate of credit losses for securities available for sale. At June 30, 2026, accrued interest receivable totaled $6.2 million for securities available for sale compared to $5.9 million December 31, 2025 and was reported in other assets on the accompanying consolidated balance sheets.
At June 30, 2026 and December 31, 2025, Trustmark identified no securities held to maturity with the potential for credit loss exposure. After applying appropriate analysis, the total amount of current expected credit losses was zero at June 30, 2026 and December 31, 2025. No reserve was recorded at either June 30, 2026 or December 31, 2025.
Accrued interest receivable is excluded from the estimate of credit losses for securities held to maturity. At June 30, 2026 and December 31, 2025, accrued interest receivable totaled $2.0 million and $2.1 million, respectively, for securities held to maturity and was reported in other assets on the accompanying consolidated balance sheets.
10
At both June 30, 2026 and December 31, 2025, Trustmark had no securities held to maturity that were past due 30 days or more as to principal or interest payments or classified as nonaccrual.
Trustmark monitors the credit quality of securities held to maturity on a monthly basis through credit ratings. The following table presents the amortized cost of Trustmark’s securities held to maturity by credit rating, as determined by Moody’s, at June 30, 2026 and December 31, 2025 ($ in thousands):
Aaa
51,286
52,405
Aa1 to Aa3
1,083,537
1,155,049
The tables below include securities with gross unrealized losses for which an allowance for credit losses has not been recorded segregated by length of impairment at June 30, 2026 and December 31, 2025 ($ in thousands):
Less than 12 Months
12 Months or More
EstimatedFair Value
102,264
(808
39,195
(847
15,906
(575
55,101
Residential mortgage pass-through securities
13,167
(138
22,675
(2,507
35,842
(2,645
499,361
(6,791
183,312
(20,000
682,673
(26,791
Other residential mortgage-backed securities
Commercial mortgage-backed securities
86,331
(598
631,362
(21,449
717,693
(22,047
740,318
(9,182
933,162
(49,153
1,673,480
(58,335
3,905
(14
40,952
44,857
5,925
(18
26,946
(2,371
32,871
(2,389
91,230
(234
205,163
(18,947
296,393
(19,181
739,436
(17,277
101,060
(266
1,104,931
(43,498
1,205,991
(43,764
The unrealized losses shown above are due to increases in market rates over the yields available at the time of purchase of the underlying securities and not credit quality. Trustmark does not intend to sell these securities and it is more likely than not that Trustmark will not be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.
11
Securities Gains and Losses
Realized gains and losses are determined using the specific identification method and are included in noninterest income as securities gains (losses), net. During the six months ended June 30, 2026 and 2025, there were no gross realized gains or losses as a result of calls and dispositions of securities.
Securities Pledged
Securities with a carrying value of $1.734 billion and $1.709 billion at June 30, 2026 and December 31, 2025, respectively, were pledged to collateralize public deposits and for other purposes as permitted by law. At both June 30, 2026 and December 31, 2025, none of these securities were pledged under the Federal Reserve Discount Window program to provide additional contingency funding capacity.
Contractual Maturities
The amortized cost and estimated fair value of securities available for sale and held to maturity at June 30, 2026, by contractual maturity, are shown below ($ in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
SecuritiesAvailable for Sale
SecuritiesHeld to Maturity
Due in one year or less
39,835
39,955
Due after one year through five years
67,482
67,743
Due after five years through ten years
170,995
169,284
278,312
276,982
1,660,647
1,664,642
1,103,828
1,066,122
Note 3 – LHFI and ACL, LHFI
At June 30, 2026 and December 31, 2025, LHFI consisted of the following ($ in thousands):
Loans secured by real estate:
Construction, land development and other land
555,731
549,353
Other secured by 1-4 family residential properties
721,362
704,514
Secured by nonfarm, nonresidential properties
3,198,800
3,304,523
Other real estate secured
1,990,550
2,124,272
Other loans secured by real estate:
Other construction
661,069
595,238
Secured by 1-4 family residential properties
2,357,203
2,351,675
Commercial and industrial loans
2,294,721
1,999,464
Consumer loans
160,648
163,754
State and other political subdivision loans
1,046,511
1,061,584
Other commercial loans and leases
926,428
819,856
LHFI
Less ACL
Accrued interest receivable is not included in the amortized cost basis of Trustmark’s LHFI. At June 30, 2026 and December 31, 2025, accrued interest receivable for LHFI totaled $65.7 million and $64.1 million, respectively, with no related ACL and was reported in other assets on the accompanying consolidated balance sheets.
12
Loan Concentrations
Trustmark does not have any loan concentrations other than those reflected in the preceding table, which exceed 10% of total LHFI. At June 30, 2026, Trustmark’s geographic loan distribution was concentrated primarily in its six key market regions: Alabama, Florida, Georgia, Mississippi, Tennessee and Texas. Accordingly, the ultimate collectability of a substantial portion of these loans is susceptible to changes in market conditions in these areas.
Nonaccrual and Past Due LHFI
No material interest income was recognized in the income statement on nonaccrual LHFI for each of the periods ended June 30, 2026 and 2025.
The following tables provide the amortized cost basis of loans on nonaccrual status and loans past due 90 days or more still accruing interest at June 30, 2026 and December 31, 2025 ($ in thousands):
Nonaccrual With No ACL
Total Nonaccrual
Loans Past Due 90 Days or More Still Accruing
150
252
931
9,672
620
1,384
10,515
234
5,844
1,960
320
21,543
348
485
764
1,250
3,783
49,658
3,065
156
355
715
8,991
520
2,105
5,579
399
3,414
64,293
3,133
145
3,615
385
449
995
774
7,533
84,391
5,097
13
The following tables provide an aging analysis of the amortized cost basis of past due LHFI (including nonaccrual LHFI) at June 30, 2026 and December 31, 2025 ($ in thousands):
Past Due
30-59 Days
60-89 Days
90 Daysor More
Total Past Due
CurrentLoans
Total LHFI
2,023
42
200
2,265
553,466
4,953
1,766
4,178
10,897
710,465
901
8,254
8,556
17,711
3,181,089
36
270
1,990,280
11,097
4,482
4,624
20,203
2,337,000
2,492
2,368
18,155
23,015
2,271,706
1,658
430
504
2,592
158,056
766
420
1,188
925,240
23,162
18,108
36,871
78,141
13,834,882
786
139
925
548,428
6,118
1,238
3,868
11,224
693,290
1,798
3,829
5,812
3,298,711
1
316
317
2,123,955
19,838
8,340
34,838
63,016
2,288,659
2,828
352
1,014
4,194
1,995,270
2,109
402
453
2,964
160,790
1,003
1,060,581
15
19
819,837
33,490
10,671
45,313
89,474
13,584,759
Modified LHFI
Occasionally, Trustmark modifies loans for borrowers experiencing financial difficulty by providing payment delays, interest-only payments for an extended period of time, maturity extensions or interest rate reductions. Other concessions may arise from court proceedings or may be imposed by law. In some cases, Trustmark provides multiple types of concessions on one loan.
14
The following tables present the amortized cost of LHFI of loans modified to borrowers experiencing financial difficulty disaggregated by class of loan and type of modification at the end of each of the periods presented ($ in thousands). The percentage of the amortized cost basis of LHFI that were modified to borrowers experiencing financial difficulty as compared to the amortized cost basis of each class of LHFI is also presented below:
Three Months Ended June 30, 2026
Term Extension
% of Total Class of Loan
1,505
0.21
%
188
0.01
1,693
Three Months Ended June 30, 2025
Payment Delay
873
0.13
14,744
0.77
3,643
0.15
570
0.03
19,260
19,830
Six Months Ended June 30, 2026
2,241
0.31
557
0.02
2,798
Six Months Ended June 30, 2025
1,616
0.23
5,751
0.24
12,847
0.70
22,111
34,958
0.26
The following tables detail the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the periods presented:
Financial Effect
Modified four loans and twelve lines of credit to amortize over twenty-four month terms; modified one line of credit to amortize over a fourteen month term
Modified three loans to amortize over twenty-four month terms
Modified one loan and thirteen lines of credit to amortize over twenty-four month terms
Extended maturity of one loan by twelve months
Re-amortized twenty-one loans with term adjusted by weighted average of forty-four months
Three interest-only payments on four loans
Modified seven loans and twenty-four lines of credit to amortize over twenty-four month terms and modified one loan to amortize over a fourteen month term
Reamortized twenty-five loans with terms adjusted by weighted average of thirty-eight months
Modified two loans and twenty-four lines of credit to amortize over a twenty-four month term
Re-amortized thirty-three loans with term adjusted by weighted-average of thirty-eight months
One loan with eight monthly interest payments deferred and four loans with three interest-only monthly payments
16
At June 30, 2026, Trustmark had no unused commitments on modified loans to borrowers experiencing financial difficulty compared to $256 thousand of unused commitments on modified loans to borrowers experiencing financial difficulty at June 30, 2025.
For all loans modified in the previous twelve months to borrowers experiencing financial difficulty, Trustmark had payment defaults during the three and six months ended June 30, 2026 on $129 thousand and $40 thousand of loans in the other secured by 1-4 family residential properties and secured by 1-4 family residential properties, respectively, that had received term extension modifications.
For all loans modified in the previous twelve months to borrowers experiencing financial difficulty, Trustmark had payment defaults during the three months ended June 30, 2025 on $18.4 million of loans in the commercial and industrial loans portfolio that had received payment delay modifications. For all loans modified in the previous twelve months to borrowers experiencing financial difficulty, Trustmark had payment defaults during the six months ended June 30, 2025 on $38 thousand of loans in the other secured by 1-4 family residential properties portfolio that had received term extension modifications and $18.4 million of loans in the commercial and industrial loans portfolio that had received payment delay modifications.
Trustmark has utilized loans 90 days or more past due to define payment default in determining modified loans that have subsequently defaulted. If Trustmark determines that a modified loan (or a portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is charged off against the ACL, LHFI.
Trustmark closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following tables provide details of the performance of such LHFI that have been modified in the preceding twelve months as of June 30, 2026 and 2025 ($ in thousands):
113
212
3,275
3,487
40
597
3,832
4,084
June 30, 2025
128
644
772
2,360
3,132
5,233
5,875
18,372
18,942
770
19,786
22,907
42,693
17
Collateral-Dependent Loans
The following tables present the amortized cost basis of collateral-dependent loans by class of loans and collateral type as of June 30, 2026 and December 31, 2025 ($ in thousands):
Real Estate
Vehicles
Miscellaneous
9,086
15,193
856
19,492
20,348
87
1,184
25,360
1,276
20,343
46,979
848
2,531
15,234
1,554
250
1,804
103
22,183
1,117
24,854
A loan is collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided substantially through the sale of the collateral. The following provides a qualitative description by class of loan of the collateral that secures Trustmark’s collateral-dependent LHFI:
18
Credit Quality Indicators
Trustmark’s LHFI portfolio credit quality indicators focus on six key quality ratios that are compared against bank tolerances. The loan indicators are total classified outstanding, total criticized outstanding, nonperforming loans, nonperforming assets, delinquencies and net loan losses. Due to the homogeneous nature of consumer loans, Trustmark does not assign a formal internal risk rating to each credit and therefore the criticized and classified measures are primarily composed of commercial loans.
In addition to monitoring portfolio credit quality indicators, Trustmark also measures how effectively the lending process is being managed and risks are being identified. As part of an ongoing monitoring process, Trustmark grades the commercial portfolio segment as it relates to credit file completion and financial statement exceptions, underwriting, collateral documentation and compliance with law as shown below:
Commercial Credits
Trustmark has established a loan grading system that consists of ten individual credit risk grades (risk ratings) that encompass a range from loans where the expectation of loss is negligible to loans where loss has been established. The model is based on the risk of default for an individual credit and establishes certain criteria to delineate the level of risk across the ten unique credit risk grades. Credit risk grade definitions are as follows:
By definition, credit risk grades special mention (RR 7), substandard (RR 8), doubtful (RR 9) and loss (RR 10) are criticized loans while substandard (RR 8), doubtful (RR 9) and loss (RR 10) are classified loans. These definitions are standardized by all bank regulatory agencies and are generally equally applied to each individual lending institution. The remaining credit risk grades are considered pass credits and are solely defined by Trustmark.
To enhance this process, Trustmark has determined that certain loans will be individually assessed, and a formal analysis will be performed and based upon the analysis the loan will be written down to the net realizable value. Trustmark will individually assess and remove loans from the pool in the following circumstances:
Each loan officer assesses the appropriateness of the internal risk rating assigned to their credits on an ongoing basis. Trustmark’s Asset Review area conducts independent credit quality reviews of the majority of Trustmark’s commercial loan portfolio both on the underlying credit quality of each individual loan class as well as the adherence to Trustmark’s loan policy and the loan administration process.
In addition to the ongoing internal risk rate monitoring described above, Trustmark’s Credit Quality Review Committee meets monthly and performs a review of all loans of $100 thousand or more that are either delinquent 30 days or more or on nonaccrual. This review includes recommendations regarding risk ratings, accrual status, charge-offs and appropriate servicing officer as well as evaluation of problem credits for determination of modified status. Quarterly, the Credit Quality Review Committee reviews and modifies continuous action plans for all credits risk rated seven or worse for relationships of $250 thousand or more.
In addition, periodic reviews of significant development, construction, multi-family, nonowner-occupied and other commercial credits are performed. These reviews assess each particular project with respect to location, project valuations, progress of completion, leasing status, current financial information, rents, operating expenses, cash flow, adherence to budget and projections and other information that is pertinent to the particular type of credit as applicable. Summary results are reviewed by Senior and Regional Credit Officers in addition to the Chief Credit and Operations Officer with a determination made as to the appropriateness of existing risk ratings and accrual status.
Consumer Credits
The Retail Credit Review Committee, Management Credit Policy Committee and the Enterprise Risk Committee review the volume and percentage of consumer loan delinquencies and losses to monitor the overall quality of the consumer portfolio.
Trustmark monitors the levels and severity of past due consumer LHFI on a daily basis through its collection activities. A detailed assessment of consumer LHFI delinquencies is performed monthly at both a product and market level.
20
The tables below present the amortized cost basis of loans by credit quality indicator, class of loans and year of origination, renewal or major modification based on analyses performed at June 30, 2026 and December 31, 2025 ($ in thousands):
Term Loans by Origination Year
2024
2023
2022
Prior
Revolving Loans
As of June 30, 2026
Commercial LHFI
Construction, land development and other land:
Pass - RR 1 through RR 6
180,959
195,900
26,601
12,526
11,541
5,198
44,578
477,303
Special Mention - RR 7
3,998
5,289
1,327
10,614
Substandard - RR 8
83
3,360
Doubtful - RR 9
185,040
204,549
27,928
11,741
491,560
Current period gross charge-offs
Other secured by 1-4 family residential properties:
24,735
38,841
20,226
15,835
15,283
13,716
9,135
137,771
61
149
147
369
21
477
107
1,199
2,378
24,756
39,318
20,287
16,091
16,629
14,301
9,136
140,518
Secured by nonfarm, nonresidential properties:
429,939
736,010
362,794
295,567
478,980
606,129
121,542
3,030,961
21,947
5,671
12,705
613
3,937
44,895
6,390
18,595
9,179
8,108
18,301
60,427
1,944
122,944
458,276
760,276
384,678
303,697
497,894
670,493
123,486
Other real estate secured:
136,147
217,453
258,591
613,498
428,325
137,552
46,408
1,837,974
91,719
14,959
44,577
311
366
60,213
628,457
564,621
137,863
46,774
1,989,906
Other construction:
65,316
252,520
265,024
67,840
10,369
Commercial and industrial loans:
419,539
730,984
241,395
132,127
58,493
38,371
615,215
2,236,124
175
13,018
4,038
111
1,812
19,227
9,684
898
913
12,587
1,642
594
12,989
39,307
34
63
429,305
732,057
255,360
148,754
60,248
38,966
630,031
(111
(407
(89
(252
(209
(546
(1,614
State and other political subdivision loans:
49,945
298,542
100,352
60,084
166,980
337,556
33,052
Other commercial loans and leases:
159,486
289,118
107,545
88,150
3,127
50,504
224,751
922,681
2,160
2,175
148
1,248
172
1,570
289,266
109,707
89,398
3,144
224,923
(15
Total commercial LHFI
1,508,271
2,793,981
1,421,927
1,326,847
1,321,257
1,254,881
1,122,349
10,749,513
Total commercial LHFI gross charge-offs
(422
(1,629
Consumer LHFI
Current
10,738
33,366
9,210
6,707
1,913
2,170
64,104
Past due 30-89 days
Past due 90 days or more
Nonaccrual
47
51
9,214
6,754
2,186
64,171
8,745
13,897
15,053
13,139
4,765
11,245
499,516
566,360
76
705
4,130
4,968
544
125
717
37
343
7,668
8,896
8,775
13,909
15,188
13,932
4,813
12,369
511,858
580,844
(5
(64
(677
(746
32
447
134
31
Secured by 1-4 family residential properties:
225,166
308,674
207,401
177,664
674,022
741,114
2,334,041
277
297
4,217
7,538
3,029
15,358
235
606
290
829
448
511
2,289
225,443
308,678
208,381
182,998
684,442
747,261
(278
(39
(1,446
(3,283
(1,726
(6,790
Consumer loans:
32,733
32,675
21,459
4,878
6,381
6,571
53,118
157,815
455
223
55
1,118
2,000
26
129
109
33,211
32,969
21,769
5,053
6,410
6,585
54,651
(2,686
(328
(181
(51
(1
(1,083
(4,330
Total consumer LHFI
278,199
389,369
254,686
208,737
697,578
768,432
566,509
3,163,510
Total consumer LHFI gross charge-offs
(2,704
(606
(220
(1,497
(3,288
(1,791
(1,760
(11,866
1,786,470
3,183,350
1,676,613
1,535,584
2,018,835
2,023,313
1,688,858
Total current period gross charge-offs
(717
(642
(1,586
(3,540
(2,000
(2,306
(13,495
23
2021
As of December 31, 2025
326,423
70,948
16,432
17,197
7,610
1,664
47,981
488,255
3,308
1,409
602
5,404
329,731
72,357
17,799
7,695
493,659
42,929
22,620
18,353
18,748
19,248
3,294
7,497
132,689
25
349
459
299
272
319
747
546
296
2,495
43,228
22,917
18,672
19,844
19,879
3,590
7,513
135,643
(3
(122
(125
817,790
434,506
348,386
614,738
334,813
427,591
145,497
3,123,321
1,298
23,975
284
1,124
26,681
38,224
9,304
2,537
39,015
29,540
33,821
1,979
154,420
856,014
445,108
374,898
654,037
364,353
462,537
147,476
3,304,423
(2,026
290,854
139,454
613,122
678,691
115,394
80,235
61,191
1,978,941
25,376
22,392
69,577
332
26,843
163
119,307
635,514
773,644
115,726
107,078
61,354
2,123,624
(4
24
122,237
275,146
173,752
23,284
819
803,487
303,777
172,506
88,388
39,304
20,251
523,797
1,951,510
4,522
14,230
119
49
77
15,816
35,415
2,059
377
470
3,245
683
434
5,173
98
810,075
304,798
187,222
91,758
40,036
20,763
544,812
(708
(982
(4,016
(432
(6,389
(486
(13,013
300,564
109,516
64,228
180,530
97,517
286,979
22,250
311,342
125,090
113,861
4,356
4,352
55,946
198,576
813,523
414
362
776
1,725
1,917
462
29
1,038
5,554
311,356
127,232
116,140
4,725
4,814
55,975
199,614
(116
(50
3,064,059
1,496,528
1,586,858
1,765,621
650,020
938,586
1,031,819
10,533,491
(766
(4,135
(554
(8,465
(15,388
30,069
9,491
10,191
2,500
1,198
1,638
55,087
222
321
9,713
10,521
1,252
1,639
55,694
22,785
18,105
13,944
5,352
8,656
481,812
555,006
189
643
509
3,632
5,331
518
39
124
192
7,439
8,014
23,132
18,333
14,711
5,437
4,500
9,357
493,401
568,871
(10
(56
(31
(714
(811
100
466
141
41
648
325,999
227,009
193,722
712,091
408,534
395,901
2,263,256
167
3,670
9,108
4,949
3,100
20,994
866
1,598
534
505
13,238
31,622
10,713
7,314
326,504
228,077
211,496
754,419
424,330
406,849
(619
(1,276
(142
(74
(2,111
54,959
27,573
7,898
7,587
6,892
239
55,321
160,469
228
143
1,440
2,452
370
117
43
155
55,701
27,876
8,213
7,655
6,928
241
57,140
(4,847
(494
(474
(114
(24
(26
(2,459
(8,438
435,972
284,140
244,941
770,011
437,010
418,127
550,541
3,140,742
(1,093
(166
(131
(3,173
(11,360
3,500,031
1,780,668
1,831,799
2,535,632
1,087,030
1,356,713
1,582,360
(1,270
(2,075
(5,581
(720
(8,596
(3,659
(26,748
Past Due LHFS
LHFS past due 90 days or more totaled $109.5 million and $98.9 million at June 30, 2026 and December 31, 2025, respectively. LHFS past due 90 days or more are serviced loans eligible for repurchase, which are fully guaranteed by the Government National Mortgage Association (GNMA). GNMA optional repurchase programs allow financial institutions to buy back individual delinquent mortgage loans that meet certain criteria from the securitized loan pool for which the institution provides servicing. At the servicer’s option and without GNMA’s prior authorization, the servicer may repurchase such a delinquent loan for an amount equal to 100% of the remaining principal balance of the loan. This buy-back option is considered a conditional option until the delinquency criteria are met, at which time the option becomes unconditional. When Trustmark is deemed to have regained effective control over these loans under the unconditional buy-back option, the loans can no longer be reported as sold and must be brought back onto the balance sheet as loans held for sale, regardless of whether Trustmark intends to exercise the buy-back option. These loans are reported as held for sale with the offsetting liability being reported as short-term borrowings.
Trustmark did not exercise its buy-back option on any delinquent loans serviced for GNMA during the first six months of 2026 or 2025.
ACL on LHFI
Trustmark’s ACL methodology for LHFI is based upon guidance within the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 326-20, “Financial Instruments-Credit Losses-Measured at Amortized Cost,” as well as applicable regulatory guidance. The ACL is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Credit quality within the LHFI portfolio is continuously monitored by Management and is reflected within the ACL for LHFI. The ACL is an estimate of expected losses inherent within Trustmark’s existing LHFI portfolio. The ACL for LHFI is adjusted through the PCL, LHFI and reduced by the charge off of loan amounts, net of recoveries.
The methodology for estimating the amount of expected credit losses reported in the ACL has two basic components: a collective, or pooled, component for estimated expected credit losses for pools of loans that share similar risk characteristics, and an asset-specific component involving individual loans that do not share risk characteristics with other loans and the measurement of expected credit
27
losses for such individual loans. In estimating the ACL for the collective component, loans are segregated into loan pools based on loan product types and similar risk characteristics.
The loans secured by real estate and other loans secured by real estate portfolio segments include loans for both commercial and residential properties. The underwriting process for these loans includes analysis of the financial position and strength of both the borrower and guarantor, experience with similar projects in the past, market demand and prospects for successful completion of the proposed project within the established budget and schedule, values of underlying collateral, availability of permanent financing, maximum loan-to-value ratios, minimum equity requirements, acceptable amortization periods and minimum debt service coverage requirements, based on property type. The borrower’s financial strength and capacity to repay their obligations remain the primary focus of underwriting. Financial strength is evaluated based upon analytical tools that consider historical and projected cash flows and performance in addition to analysis of the proposed project for income-producing properties. Additional support offered by guarantors is also considered. Ultimate repayment of these loans is sensitive to interest rate changes, general economic conditions, liquidity and availability of long-term financing.
The commercial and industrial loans portfolio segment includes loans made to many types of businesses for various purposes, such as short-term working capital loans that are usually secured by accounts receivable and inventory and term financing for equipment and fixed asset purchases that are secured by those assets. Trustmark’s credit underwriting process for commercial and industrial loans includes analysis of historical and projected cash flows and performance, evaluation of financial strength of both borrowers and guarantors as reflected in current and detailed financial information and evaluation of underlying collateral to support the credit.
The consumer loans portfolio segment is comprised of loans that are centrally underwritten based on the borrower's credit bureau score as well as an evaluation of the borrower’s repayment capacity, credit, and collateral. Property appraisals are obtained to assist in evaluating collateral. Loan-to-value and debt-to-income ratios, loan amount, and lien position are also considered in assessing whether to originate a loan. These borrowers are particularly susceptible to downturns in economic trends such as conditions that negatively affect housing prices and demand and levels of unemployment.
The state and other political subdivision loans and the other commercial loans and leases portfolio segments primarily consist of loans to non-depository financial institutions, such as mortgage companies, finance companies and other financial intermediaries, loans to state and political subdivisions, and loans to non-profit and charitable organizations. These loans are underwritten based on the specific nature or purpose of the loan and underlying collateral with special consideration given to the specific source of repayment for the loan. The lease segment primarily consists of commercial equipment finance leases. Trustmark’s credit underwriting process for equipment finance leases includes analysis of historical and projected cash flows and performance, evaluation of financial strength of both lessees and guarantors as reflected in current and detailed financial information and evaluation of underlying collateral to support the credit.
During the first quarter of 2026, as part of Trustmark's ongoing model monitoring procedures, the annual loss driver analysis was performed. The analysis resulted in changes in the loss drivers for eight discounted cash-flow models and two WARM models. These changes were a result of incorporating data through 2025 coupled with updating the peer group as a result of acquisitions that occurred during 2025. Collectively, these changes enhanced the statistical relationship between the selected loss drivers and historical loss experience, resulting in improved model alignment with observed credit performance. All models were validated by a third party before implementation.
During the first quarter of 2025, as part of Trustmark's ongoing model monitoring procedures, the annual loss driver analysis was performed. The analysis resulted in changes in the loss drivers for four discounted cash-flow models. These changes were a result of incorporating data through 2024 which led to more intuitive loss drivers. All models were validated by a third party before implementation.
The following table provides a description of each of Trustmark’s portfolio segments, loan classes, loan pools and the ACL methodology and loss drivers at June 30, 2026 and December 31, 2025:
Portfolio Segment
Loan Class
Loan Pool
Methodology
Loss Drivers
Loans secured by real estate
1-4 family residential construction
DCF
BBB 7-10 US CBI, National HPI (1)
Lots and development
National HPI, Southern Unemployment (1)
Unimproved land
All other consumer
BBB 7-10 US CBI (2), Southern Unemployment (1)
Consumer 1-4 family - 1st liens
National HPI, Southern Unemployment
Nonresidential owner-occupied
Southern Unemployment, BBB 7-10 US CBI (4)
Nonowner-occupied - hotel/motel
BBB 7-10 US CBI (4), National Unemployment (5)
Nonowner-occupied - office
Nonowner-occupied- Retail
Nonowner-occupied - senior living/nursing homes
Nonowner-occupied - all other
BBB 7-10 US CBI (4), Southern Unemployment
Nonresidential nonowner -occupied - apartments
Other loans secured by real estate
National Unemployment, BBB 7-10 US CBI, (4)
Trustmark mortgage
WARM
Southern Unemployment, National HPI (5)
Commercial and industrial - non-working capital
Trustmark historical data
Commercial and industrial - working capital
Equipment finance loans
Southern Unemployment, BBB 7-10 US CBI (3)
Credit cards
Trustmark call report data
Overdrafts
Loss Rate
Obligations of state and political subdivisions
Moody's Bond Default Study
Other loans
BBB 7-10 US CBI, Southern Unemployment
Equipment finance leases
(1) Loss driver was National Unemployment at December 31, 2025.
(2) Loss driver was National HPI at December 31, 2025.
(3) Loss driver was National GDP at December 31, 2025.
(4) Loss driver was National CRE Price Index at December 31, 2025.
(5) Loss driver was Southern Unemployment at December 31, 2025.
In general, Trustmark utilizes a DCF method to estimate the quantitative portion of the ACL for loan pools. The DCF model consists of two key components, a loss driver analysis (LDA) and a cash flow analysis. For loan pools utilizing the DCF methodology, multiple assumptions are in place, depending on the loan pool. A reasonable and supportable forecast is utilized for each loan pool by developing a LDA for each loan class. The LDA uses charge off data from Federal Financial Institutions Examination Council (FFIEC) reports to construct a periodic default rate (PDR). The PDR is decomposed into a PD. Regressions are run using the data for various macroeconomic variables in order to determine which ones correlate to Trustmark’s losses. These variables are then incorporated into the application to calculate a quarterly PD using a third-party baseline forecast. In addition to the PD, a LGD is derived using a method referred to as Frye-Jacobs. The Frye-Jacobs method is a mathematical formula that traces the relationship between LGD and PD over time and projects the LGD based on the levels of PD forecasts. This model approach is applicable to all pools within the construction, land development and other land, other secured by 1-4 family residential properties, secured by nonfarm, nonresidential properties and other real estate secured loan classes as well as consumer loans and other commercial loans.
An alternative LDA is utilized to support the PD and LGD assumptions necessary to apply a DCF methodology to the other construction pool. Fundamentally, this approach utilizes publicly reported default balances and leverages a generalized linear model (GLM) framework to estimate PD. Taken together, these differences allow for results to be scaled to be specific and directly applicable to the other construction segment. LGD is assumed to be a through-the-cycle constant based on the actual performance of Trustmark’s other construction segment. These assumptions are then input into the DCF model and used in conjunction with prepayment data to calculate the cash flows at the individual loan level. Management believes this methodology is commensurate with the level of risk in the pool.
For the commercial and industrial loans related pools, Trustmark uses its own PD and LGD data, instead of the macroeconomic variables and the Frye-Jacobs method described above, to calculate the PD and LGD as there were no defensible macroeconomic variables that correlated to Trustmark’s losses. Trustmark utilizes a third-party Bond Default Study to derive the PD and LGD for the obligations of state and political subdivisions pool. Due to the lack of losses within this pool, no defensible macroeconomic factors were identified to correlate.
The PD and LGD measures are used in conjunction with prepayment data as inputs into the DCF model to calculate the cash flows at the individual loan level. Contractual cash flows based on loan terms are adjusted for PD, LGD and prepayments to derive loss cash flows. These loss cash flows are discounted by the loan’s coupon rate to arrive at the discounted cash flow based quantitative loss. The prepayment studies are updated quarterly by a third-party for each applicable pool.
An alternate method of estimating the ACL is used for certain loan pools due to specific characteristics of these loans. For the non-DCF pools, specifically, those using the weighted average remaining maturity (WARM) method, the remaining life is incorporated into the ACL quantitative calculation.
Trustmark determined that reasonable and supportable forecasts could be made for a twelve-month period for all of its loan pools. To the extent the lives of the loans in the LHFI portfolio extend beyond this forecast period, Trustmark uses a reversion period of four quarters and reverts to the historical mean on a straight-line basis over the remaining life of the loans. The econometric models currently in production reflect segment or pool level sensitivities of PD to changes in macroeconomic variables. By measuring the relationship between defaults and changes in the economy, the quantitative reserve incorporates reasonable and supportable forecasts of future conditions that will affect the value of Trustmark’s assets, as required by FASB ASC Topic 326. Under stable forecasts, these linear regressions will reasonably predict a pool’s PD. However, upon the occurrence of events that generate significant economic instability (such as the COVID-19 pandemic), the macroeconomic variables used for reasonable and supportable forecasting can change rapidly and the econometric models, which are sensitive to similar future levels of PD, may not produce reasonably representative results.
In order to prevent the econometric models from extrapolating beyond reasonable boundaries of their input variables, Trustmark chose to establish an upper and lower limit process when applying the periodic forecasts. In this way, Management will not rely upon unobserved and untested relationships in the setting of the quantitative reserve. This approach applies to all current input variables, including: Southern Unemployment, National Unemployment, National Home Price Index (HPI) and the BBB 7-10 Year US Corporate Bond Index (CBI). The upper and lower limits are based on the distribution of the macroeconomic variable by selecting extreme percentiles at the upper and lower limits of the distribution, the 1st and 99th percentiles, respectively. These upper and lower limits are then used to calculate the PD for the forecast time period in which the forecasted values are outside of the upper and lower limit range. Additionally, when periods have a PD or LGD at or near zero as a result of the improving macroeconomic forecasts, Management implemented PD and LGD floors to account for the risk associated with each portfolio. The PD and LGD floors are based on Trustmark’s historical loss experience and applied at a portfolio level.
Qualitative factors used in the ACL methodology include the following:
While all these factors are incorporated into the overall methodology, only three are currently considered active at June 30, 2026: (i) economic conditions and concentrations of credit, (ii) nature and volume of the portfolio, and (iii) performance trends.
Two of Trustmark’s largest loan classes are the loans secured by nonfarm, nonresidential properties and the loans secured by other real estate. Trustmark elected to create a qualitative factor specifically for these loan classes which addresses changes in the economic conditions of metropolitan areas and applies additional pool level reserves. This qualitative factor is based on third-party market data and forecast trends and is updated quarterly as information is available, by market and by loan pool.
Trustmark's current quantitative methodologies do not completely incorporate changes in credit quality. As a result, Trustmark utilizes the performance trends qualitative factor. This factor is based on migration analyses, that allocates additional ACL to non-pass/delinquent loans within each pool. In this way, Management believes the ACL will directly reflect changes in risk, based on the performance of the loans within a pool, whether declining or improving.
The performance trends qualitative factor is estimated by properly segmenting loan pools into risk levels by risk rating for commercial credits and delinquency status for consumer credits. A migration analysis is then performed quarterly using a third-party software and the results for each risk level are compiled to calculate the historical PD average for each loan portfolio based on risk levels. This average historical PD rate is updated annually. For the mortgage portfolio, Trustmark uses an internal report to incorporate a roll rate method for the calculation of the PD rate. In addition to the PD rate for each portfolio, Management incorporates the quantitative rate and the k value derived from the Frye-Jacobs method to calculate a loss estimate that includes both PD and LGD. The quantitative rate is used to eliminate any additional reserve that the quantitative reserve already includes. Finally, the loss estimate rate is then applied to the total balances for each risk level for each portfolio to calculate a qualitative reserve.
The nature and volume of the portfolio qualitative factor is utilized for a sub-pool of the secured by 1-4 family residential properties due to its significant size as well as the underlying nature being different. The nature and volume of the portfolio qualitative factor utilizes a WARM methodology that uses Trustmark’s historical data for the assumptions to support the qualitative adjustment. Trustmark’s historical data is used to develop a PD based on credit score ranges initially set up as well as using the same LGD value from the mortgage sale that occurred in 2024 along with the same weighted average life assumption utilized to determine the credit mark on this portfolio. During the second quarter of 2026, Trustmark updated the weighted average life assumption and LGD value as a result of the mortgage sale that occurred during the quarter. The sub-pool of credits is then aggregated into the appropriate credit score bands in which a weighted average loss rate is calculated based on the PD and LGD for each credit score range. This weighted average loss rate is then applied to the expected balance for the sub-segment of credits. This total is then used as the qualitative reserve adjustment.
The external factors qualitative factor is Management’s best judgment on the loan or pool level impact of all factors that affect the portfolio that are not accounted for using any other part of the ACL methodology (e.g., natural disasters, changes in legislation, impacts due to technology and pandemics). During 2024, Trustmark activated the External Factor – Credit Quality Review qualitative factor. This qualitative factor ensures reserve adequacy for collectively evaluated commercial loans that may not have been identified and downgraded timely for various reasons. This qualitative factor population is all commercial loans risk rated 1-5. These loans are then applied to the historical average of the Watch/Special Mention rated percentage. Then the balance of these loans are applied additional reserves based on the same reserve rates utilized in the performance trends qualitative factor for Watch/Special Mention rated loans. Then the Watch/Special Mention population is applied the historical Substandard rated percentage and then subsequently applied the Substandard reserve rate utilized in the performance trends qualitative factor as well. The historical Watch/Special Mention and Substandard rated percentage averages captures the weighted average life of the commercial loan portfolio. Thus, Trustmark will allocate additional reserves to capture the proportion of potential Watch/Special Mention and Substandard rated credits that may not have been categorized as such at any given point in time through the life of the commercial loan portfolio.
During the third quarter of 2025, Management determined that the risk related to delayed identification and downgrading of commercial loans had sufficiently diminished and, as a result, resolved the External Factor – Credit Quality Review qualitative factor and released the associated reserves.
The following tables disaggregate the ACL and the amortized cost basis of the loans by the measurement methodology used at June 30, 2026 and December 31, 2025 ($ in thousands):
ACL
Individually Evaluated for Credit Loss
Collectively Evaluated for Credit Loss
8,048
555,581
14,762
720,431
1,102
29,347
30,449
3,189,714
12,539
1,975,357
5,151
29,238
6,045
25,055
31,100
2,274,373
6,263
6,350
160,561
711
204
9,637
9,841
925,244
7,438
140,751
13,866,044
6,632
549,197
13,485
13,584
703,666
35,042
35,183
3,301,992
20,410
2,109,038
4,889
41,087
2,348,261
811
19,758
20,569
1,997,660
5,740
5,843
163,651
865
8,009
819,092
1,154
155,917
13,649,379
Changes in the ACL, LHFI were as follows for the periods presented ($ in thousands):
Balance at beginning of period
160,431
167,010
160,270
Loans charged-off, sale of 1-4 family mortgage loans
(6,316
Loans charged-off
(3,493
(6,380
(7,179
(10,081
Recoveries
2,342
2,261
4,700
4,577
Net (charge-offs) recoveries
(7,467
(4,119
(8,795
(5,504
PCL, LHFI
Balance at end of period
168,237
The following tables detail changes in the ACL, LHFI by loan class for the periods presented ($ in thousands):
Balance at Beginning of Period
Charge-offs
Balance at End of Period
7,257
761
14,477
(140
353
31,093
291
(935
18,187
(5,649
4,695
452
43,949
(6,472
68
(8,307
24,800
(703
242
6,761
6,137
(2,494
1,530
1,177
773
(62
9,063
104
674
(9,809
(4,775
The negative PCL, LHFI for the three months ended June 30, 2026 was primarily due to the sale of the 1-4 family mortgage loans that resulted in a $9.2 million release of reserves coupled with positive credit migration and was partially offset by an increase in required reserves on individually analyzed loans, loan growth and changes in the macroeconomic forecasts.
6,982
194
173
7,349
12,476
(139
123
205
12,665
39,973
(2,005
(2,951
35,017
23,348
157
23,505
9,860
(1,719
8,142
35,602
(550
160
3,773
38,985
25,396
(1,549
264
4,354
28,465
5,238
(2,121
1,458
536
5,111
1,605
(58
1,547
6,530
(16
876
7,451
The PCL, LHFI for the three months ended June 30, 2025 was primarily due to loan growth and changes in the macroeconomic forecast.
The negative PCL, LHFI for the secured by nonfarm, nonresidential properties and other construction loans portfolios for the three months ended June 30, 2025 was primarily due to positive credit migration.
33
60
1,356
169
1,755
(5,051
(7,872
258
(5,172
590
11,555
3,331
1,506
(154
115
1,732
(87
The negative PCL, LHFI for the six months ended June 30, 2026 was primarily due to the sale of the 1-4 family mortgage loans that resulted in a $9.2 million release of reserves coupled with positive credit migration and was partially offset by an increase in required reserves on individually analyzed loans and loan growth.
6,452
196
701
11,347
(307
1,403
37,896
(874
19,491
13,297
(5,158
32,129
(930
441
7,345
27,020
(2,430
499
3,376
5,141
(4,325
3,046
1,249
6,247
(84
93
1,195
The PCL, LHFI for the six months ended June 30, 2025 was primarily due to loan growth, changes in the macroeconomic forecast, coupled with net adjustments to the qualitative factors due to credit migration and modeling assumption updates to utilize bank historical data.
The negative PCL, LHFI for the other construction and secured by nonfarm, nonresidential properties portfolios for the six months ended June 30, 2025 was primarily due to segmentation migration, positive credit migration and a decline in loan balances.
Note 4 – Mortgage Banking
MSR
The activity in the MSR is detailed in the table below for the periods presented ($ in thousands):
139,317
Origination of servicing assets
9,828
6,917
Change in fair value:
Due to market changes
7,282
(7,874
Due to run-off
(6,636
(5,658
132,702
Trustmark determines the fair value of the MSR using a valuation model administered by a third party that calculates the present value of estimated future net servicing income. Trustmark considers the conditional prepayment rate (CPR), which is an estimated loan prepayment rate that uses historical prepayment rates for previous loans similar to the loans being evaluated, the float rate, which is the interest rate earned on escrow balances, and the discount rate as some of the primary assumptions used in determining the fair value of the MSR. An increase in either the CPR or discount rate assumption will result in a decrease in the fair value of the MSR, while a decrease in either assumption will result in an increase in the fair value of the MSR. An increase in the float rate will result in an increase in the fair value of the MSR, while a decrease in the float rate will result in a decrease in the fair value of the MSR. At June 30, 2026, the fair value of the MSR included an assumed average prepayment speed of 9 CPR and an average discount rate of 10.68% compared to an assumed average prepayment speed of 9 CPR and an average discount rate of 10.65% at June 30, 2025.
Mortgage Loans Serviced/Sold
During the first six months of 2026 and 2025, Trustmark sold $596.8 million and $530.6 million, respectively, of residential mortgage loans. Gains on these sales were recorded as noninterest income in mortgage banking, net and totaled $9.6 million for the first six months of 2026 compared to $9.9 million for the first six months of 2025.
The table below details the mortgage loans sold and serviced for others at June 30, 2026 and December 31, 2025 ($ in thousands):
Federal National Mortgage Association
4,706,470
4,745,556
Government National Mortgage Association
3,945,321
3,872,151
Federal Home Loan Mortgage Corporation
354,772
314,383
23,872
Total mortgage loans sold and serviced for others
9,029,911
8,955,962
Trustmark is subject to losses in its loan servicing portfolio due to loan foreclosures. Trustmark has obligations to either repurchase the outstanding principal balance of a loan or make the purchaser whole for the economic benefits of a loan if it is determined that the loan sold was in violation of representations or warranties made by Trustmark at the time of the sale, herein referred to as mortgage loan servicing putback expenses. Such representations and warranties typically include those made regarding loans that had missing or insufficient file documentation, loans that do not meet investor guidelines, loans in which the appraisal does not support the value and/or loans obtained through fraud by the borrowers or other third parties. Generally, putback requests may be made until the loan is paid in full. However, mortgage loans delivered to Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC) on or after January 1, 2013 are subject to the Representations and Warranties Framework, which provides certain instances in which FNMA and FHLMC will not exercise their remedies, including a putback request, for breaches of certain selling representations and warranties, such as payment history and quality control review.
When a putback request is received, Trustmark evaluates the request and takes appropriate actions based on the nature of the request. Trustmark is required by FNMA and FHLMC to provide a response to putback requests within 60 days of the date of receipt. The total mortgage loan servicing putback expense is included in other expense. Trustmark had no mortgage loan servicing putback expense for the three and six months ended June 30, 2026 and 2025. At both June 30, 2026 and 2025, Trustmark had a reserve for mortgage loan servicing putback expenses of $500 thousand.
35
There is inherent uncertainty in reasonably estimating the requirement for reserves against potential future mortgage loan servicing putback expenses. Future putback expenses are dependent on many subjective factors, including the review procedures of the purchasers and the potential refinance activity on loans sold with servicing released and the subsequent consequences under the representations and warranties. Trustmark believes that it has appropriately reserved for potential mortgage loan servicing putback requests.
Note 5 – Other Real Estate
At June 30, 2026, Trustmark’s geographic other real estate distribution was concentrated in its Alabama, Mississippi and Tennessee market regions. The ultimate recovery of a substantial portion of the carrying amount of other real estate is susceptible to changes in market conditions in these regions.
For the periods presented, changes and gains (losses), net on other real estate were as follows ($ in thousands):
5,917
Additions
4,277
5,132
Disposals
(5,846
(1,958
(Write-downs) recoveries
(180
(119
8,972
Gains (losses), net on the sale of other real estate included in other real estate expense
(569
(144
At June 30, 2026 and December 31, 2025, other real estate by type of property consisted of the following ($ in thousands):
Construction, land development and other land properties
1-4 family residential properties
2,661
3,871
Nonfarm, nonresidential properties
2,398
1,273
Other real estate properties
1,750
Total other real estate
At June 30, 2026 and December 31, 2025, other real estate by geographic location consisted of the following ($ in thousands):
Alabama
409
Mississippi (1)
2,870
5,621
Tennessee (2)
982
927
At June 30, 2026, the balance of other real estate included $2.7 million of foreclosed residential real estate properties recorded as a result of obtaining physical possession of the property compared to $3.9 million at December 31, 2025. At June 30, 2026 and December 31, 2025, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process was $2.7 million and $8.1 million, respectively.
Note 6 – Leases
Lessor Arrangements
Trustmark leases certain types of machinery and equipment to its customers through sales-type and direct financing leases as part of its equipment financing portfolio. At June 30, 2026, these leases have remaining lease terms of one to nine years, some of which include renewal options and/or options for the lessee to purchase the leased property near or at the end of the lease term. Trustmark recognized interest income from its sales-type and direct financing leases of $6.3 million and $11.9 million for the three and six months ended June
30, 2026, respectively, compared to $4.2 million and $7.8 million for the three and six months ended June 30, 2025, respectively. Trustmark does not have any significant operating leases in which it is the lessor.
The table below summarizes the components of Trustmark's net investment in its sales-type and direct financing leases for the periods presented ($ in thousands):
Leases receivable
516,234
442,096
Unearned income
(74,249
(68,283
Initial direct costs
3,522
3,236
Unguaranteed lease residual
32,777
24,360
Total net investment
478,284
401,409
The table below details the minimum future lease payments for Trustmark's leases receivable at June 30, 2026 ($ in thousands):
2026 (excluding the six months ended June 30, 2026)
53,234
2027
118,764
2028
107,428
2029
89,282
2030
64,591
Thereafter
82,935
Lease receivable
Lessee Arrangements
The following table details the components of net lease cost for the periods presented ($ in thousands):
Finance leases:
Amortization of right-of-use assets
226
Interest on lease liabilities
59
Operating lease cost
1,398
1,341
2,750
2,682
Short-term lease cost
131
154
Variable lease cost
237
442
Sublease income
(67
(76
(135
Net lease cost
1,841
1,789
3,660
3,602
The following table details the cash payments included in the measurement of lease liabilities during the periods presented ($ in thousands):
Operating cash flows included in operating activities
Financing cash flows included in payments under finance lease obligations
225
Operating leases:
Operating cash flows (fixed payments) included in other operating activities, net
2,712
2,637
Operating cash flows (liability reduction) included in other operating activities, net
1,995
1,957
The following table details balance sheet information, as well as weighted-average lease terms and discount rates, related to leases at June 30, 2026 and December 31, 2025 ($ in thousands):
Finance lease right-of-use assets, net of accumulated depreciation
2,620
2,847
Finance lease liabilities
3,223
3,458
Weighted-average lease term:
Finance leases
5.86 years
6.36 years
Operating leases
8.42 years
8.69 years
Weighted-average discount rate:
3.61
4.11
4.04
At June 30, 2026, future minimum rental commitments under finance and operating leases were as follows ($ in thousands):
Finance Leases
Operating Leases
294
2,873
5,784
599
5,148
633
4,989
4,973
810
20,773
Total minimum lease payments
3,574
44,540
Less imputed interest
(351
(7,449
Lease liabilities
Note 7 – Deposits
At June 30, 2026 and December 31, 2025, deposits consisted of the following ($ in thousands):
Noninterest-bearing demand
Interest-bearing demand
8,113,635
8,020,354
Savings
975,655
970,161
Time
3,608,379
3,472,765
Note 8 – Revenue from Contracts with Customers
Trustmark accounts for revenue from contracts with customers in accordance with FASB ASC Topic 606, “Revenue from Contracts with Customers,” which provides that revenue be recognized in a manner that depicts the transfer of goods or services to a customer in an amount that reflects the consideration Trustmark expects to be entitled to in exchange for those goods or services. Revenue from contracts with customers is recognized either over time in a manner that depicts Trustmark’s performance, or at a point in time when control of the goods or services are transferred to the customer. Trustmark’s noninterest income, excluding all of mortgage banking, net and securities gains (losses), net and portions of bank card and other fees and other, net, are considered within the scope of FASB ASC Topic 606. Gains or losses on the sale of other real estate, which are included in Trustmark’s noninterest expense as other expense, are also within the scope of FASB ASC Topic 606.
Trustmark records a gain or loss from the sale of other real estate when control of the property transfers to the buyer. Trustmark records the gain or loss from the sale of other real estate in noninterest expense as other expense. Other real estate sales for the three and six months ended June 30, 2026 resulted in a net loss of $507 thousand and $569 thousand, respectively, compared to a net loss of $68 thousand and $144 thousand for the three and six months ended June 30, 2025, respectively.
38
The following tables present noninterest income disaggregated by reportable operating segment and revenue stream for the periods presented ($ in thousands):
Topic 606
Not Topic 606 (1)
General Banking Segment
10,299
10,562
7,853
889
8,742
7,968
748
8,716
161
2,318
1,079
3,397
2,388
(224
2,164
Total noninterest income
20,631
10,882
31,513
21,114
9,126
30,240
Wealth Management Segment
10,761
9,442
89
220
10,927
9,557
9,650
Consolidated
7,854
8,006
2,407
1,210
2,442
31,558
11,013
30,671
9,219
20,884
21,177
14,947
1,752
16,699
15,348
993
16,341
314
4,892
2,688
7,580
7,801
7,986
41,037
22,288
63,325
44,703
18,551
63,254
44
21,001
18,804
186
227
413
295
21,364
21,591
19,031
19,220
14,979
15,425
5,078
2,915
7,907
374
62,401
22,515
63,734
18,740
Note 9 – Defined Benefit and Other Postretirement Benefits
Qualified Pension Plan
Trustmark maintains a noncontributory tax-qualified defined benefit pension plan titled the Trustmark Corporation Pension Plan for Certain Employees of Acquired Financial Institutions (the Continuing Plan) to satisfy commitments made by Trustmark to associates covered through plans obtained in acquisitions.
The following table presents information regarding the net periodic benefit cost for the Continuing Plan for the periods presented ($ in thousands):
Service cost
Interest cost
50
69
138
Expected return on plan assets
(19
(63
Recognized net (gain) loss due to lump sum settlements
Recognized net actuarial (gain) loss
(2
(6
Net periodic benefit cost
For the plan year ending December 31, 2026, Trustmark’s minimum required contribution to the Continuing Plan is $91 thousand; however, Management and the Board of Directors of Trustmark will monitor the Continuing Plan throughout 2026 to determine any additional funding requirements by the plan’s measurement date, which is December 31.
Supplemental Retirement Plans
Trustmark maintains a nonqualified supplemental retirement plan covering key executive officers and senior officers as well as directors who have elected to defer fees. The plan provides for retirement and/or death benefits based on a participant’s covered salary or deferred fees. Although plan benefits may be paid from Trustmark’s general assets, Trustmark has purchased life insurance contracts on the participants covered under the plan, which may be used to fund future benefit payments under the plan. The annual measurement date for the plan is December 31. As a result of mergers prior to 2014, Trustmark became the administrator of nonqualified supplemental retirement plans, for which the plan benefits were frozen prior to the merger date.
The following table presents information regarding the net periodic benefit cost for Trustmark’s nonqualified supplemental retirement plans for the periods presented ($ in thousands):
435
475
886
970
Amortization of prior service cost
Recognized net actuarial loss
164
136
513
545
1,054
1,121
Note 10 – Stock and Incentive Compensation
Trustmark has granted restricted stock units subject to the provisions of the Stock and Incentive Compensation Plan (the Stock Plan). Current outstanding and future grants of restricted stock units are subject to the provisions of the Stock Plan, which is designed to provide flexibility to Trustmark regarding its ability to motivate, attract and retain the services of key associates and directors. The Stock Plan also allows Trustmark to grant nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units and performance units to key associates and directors.
Restricted Stock Grants
Performance Units
Trustmark’s performance units vest over three years and are granted to Trustmark’s executive and senior management teams. Performance units granted vest based on performance goals of return on average tangible equity and total shareholder return. Performance units are valued utilizing a Monte Carlo simulation model to estimate fair value of the units at the grant date. The Monte Carlo simulation was performed by an independent valuation consultant and requires the use of subjective modeling assumptions. These units are recognized using the straight-line method over the requisite service period. These units are granted at 100% of target, yet provide for achievement units if performance measures exceed 100%. The restricted stock agreement for these units provides for dividend privileges, but no voting rights.
Time-Based Units
Trustmark’s time-based units granted to Trustmark’s executive and senior management teams vest over three years. Trustmark’s time-based units granted to members of Trustmark’s Board of Directors vest over one year. Time-based units are valued utilizing the fair value of Trustmark’s stock at the grant date. These units are amortized on the straight-line method over the earlier of the requisite service period or at age 65. The restricted stock agreement for these units provides for dividend privileges, but no voting rights.
The following tables summarize the Stock Plan activity for the period presented:
PerformanceUnits
Time-VestedUnits
Nonvested units, beginning of period
201,825
391,248
Granted
24,566
Released from restriction
(21,930
Forfeited
(2,587
Nonvested units, end of period
391,297
205,227
362,253
63,691
157,710
Adjustment for performance factor
43,619
(110,712
(124,448
(4,218
The following table presents information regarding compensation expense for units under the Stock Plan for the periods presented ($ in thousands):
Performance units
618
531
1,010
1,024
Time-vested units
1,043
656
3,569
2,634
Total compensation expense
Note 11 – Contingencies
Lending Related
Trustmark makes commitments to extend credit and issues standby and commercial letters of credit (letters of credit) in the normal course of business in order to fulfill the financing needs of its customers. The carrying amount of commitments to extend credit and letters of credit approximates the fair value of such financial instruments.
Commitments to extend credit are agreements to lend money to customers pursuant to certain specified conditions. Commitments generally have fixed expiration dates or other termination clauses. Because many of these commitments are expected to expire without being fully drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The exposure to credit loss in the event of nonperformance by the other party to the commitments to extend credit is represented by the contract amount of those instruments. Trustmark applies the same credit policies and standards as it does in the lending process when making these commitments. The collateral obtained is based upon the nature of the transaction and the assessed creditworthiness of the borrower. At June 30, 2026 and 2025, Trustmark had unused commitments to extend credit of $4.467 billion and $4.361 billion, respectively.
Letters of credit are conditional commitments issued by Trustmark to insure the performance of a customer to a third-party. A financial standby letter of credit irrevocably obligates Trustmark to pay a third-party beneficiary when a customer fails to repay an outstanding loan or debt instrument. A performance standby letter of credit irrevocably obligates Trustmark to pay a third-party beneficiary when a customer fails to perform some contractual, nonfinancial obligation. When issuing letters of credit, Trustmark uses the same policies regarding credit risk and collateral, which are followed in the lending process. At June 30, 2026 and 2025, Trustmark’s maximum exposure to credit loss in the event of nonperformance by the customer for letters of credit was $169.6 million and $136.4 million, respectively. These amounts consist primarily of commitments with maturities of less than three years, which have an immaterial carrying value. Trustmark holds collateral to support standby letters of credit when deemed necessary.
ACL on Off-Balance Sheet Credit Exposures
Trustmark maintains a separate ACL on off-balance sheet credit exposures, including unfunded loan commitments and letters of credit, which is included on the accompanying consolidated balance sheets as of June 30, 2026 and December 31, 2025.
Management utilizes a performance trends qualitative factor for unfunded commitments. The same assumptions are applied in this calculation that the funded balances utilize with the addition of using the funding rates on the unfunded commitments. The performance trends qualitative factor reserve is then added to the other calculated reserve to get a total reserve for off-balance sheet credit exposures.
During 2024, Management implemented the External Factor – Credit Quality Review qualitative factor for unfunded commitments. The same assumptions were applied in this calculation that the funded balances utilized with the addition of using the funding rates on the unfunded commitments. The External Factor – Credit Quality Review qualitative factor reserve was then added to the other calculated reserve to get a total reserve for off-balance sheet credit exposures. During the third quarter of 2025, Management determined that the
risk related to delayed identification and downgrading of commercial loans had sufficiently diminished and, as a result, resolved the External Factor – Credit Quality Review qualitative factor and released the associated reserves.
Changes in the ACL on off-balance sheet credit exposures were as follows for the periods presented ($ in thousands):
26,003
26,561
29,392
25,891
Adjustments to the ACL on off-balance sheet credit exposures are recorded to PCL, off-balance sheet credit exposures. The increase in the ACL on off-balance sheet credit exposures for the three months ended June 30, 2026 was primarily due to an increase in the quantitative reserve rates related to changes in the macroeconomic forecasts coupled with an increase in the utilization rates for unfunded commitments. The decrease in the ACL on off-balance sheet credit exposures for the six months ended June 30, 2026 was primarily due to a decrease in unfunded commitments and positive credit migration and was partially offset by increases in the quantitative reserve rates related to changes to the macroeconomic forecasts and the utilization rates for unfunded commitments.
The decrease in the ACL on off-balance sheet credit exposures for the three months ended June 30, 2025 was primarily due to positive credit migration partially offset by changes in the macroeconomic forecast. The decrease in the ACL on off-balance sheet credit exposures for the six months ended June 30, 2025 was primarily due to the decrease in required reserves as a result of a decrease in unfunded commitments coupled with positive credit migration.
No credit loss estimate is reported for off-balance sheet credit exposures that are unconditionally cancellable by Trustmark or for undrawn amounts under such arrangements that may be drawn prior to the cancellation of the arrangement.
Legal Proceedings
Trustmark and its subsidiaries are parties to lawsuits and other claims that arise in the ordinary course of business. Some of the lawsuits assert claims related to the lending, collection, servicing, investment, trust and other business activities, and some of the lawsuits allege substantial claims for damages.
In accordance with FASB ASC Subtopic 450-20, “Loss Contingencies,” Trustmark will establish an accrued liability for any litigation matter if and when such matter presents loss contingencies that are both probable and reasonably estimable. At the present time, Trustmark believes, based on its evaluation and the advice of legal counsel, that a loss in any currently pending legal proceeding is not probable and a reasonable estimate cannot be made.
Note 12 – EPS
The following table reflects weighted-average shares used to calculate basic and diluted EPS for the periods presented (in thousands):
Basic shares
58,470
60,463
58,650
60,630
Dilutive shares
231
233
Diluted shares
58,698
60,694
58,870
60,863
Weighted-average antidilutive stock awards are excluded in determining diluted EPS. Trustmark had no weighted-average antidilutive stock awards for the three and six months ended June 30, 2026 and 2025.
Note 13 – Statements of Cash Flows
The following table reflects specific transaction amounts for the periods presented ($ in thousands):
Income taxes paid
4,138
Interest expense paid on deposits and borrowings
141,681
157,912
Noncash transfers from loans to other real estate
Operating right-of-use assets resulting from lease liabilities
1,349
Note 14 – Shareholders’ Equity
Regulatory Capital
Trustmark and TB are subject to minimum risk-based capital and leverage capital requirements, as described in the section captioned “Capital Adequacy” included in Part I. Item 1. – Business of Trustmark’s 2025 Annual Report, which are administered by the federal bank regulatory agencies. These capital requirements, as defined by federal regulations, involve quantitative and qualitative measures of assets, liabilities and certain off-balance sheet instruments. Trustmark’s and TB’s minimum risk-based capital requirements include a capital conservation buffer of 2.50%. Accumulated other comprehensive income (loss), net of tax, is not included in computing regulatory capital. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements of Trustmark and TB and limit Trustmark’s and TB’s ability to pay dividends. As of June 30, 2026, Trustmark and TB exceeded all applicable minimum capital standards. In addition, Trustmark and TB met applicable regulatory guidelines to be considered well-capitalized at June 30, 2026. To be categorized in this manner, Trustmark and TB maintained, as applicable, minimum common equity Tier 1 risk-based capital, Tier 1 risk-based capital, total risk-based capital and Tier 1 leverage ratios as set forth in the accompanying table, and were not subject to any written agreement, order or capital directive, or prompt corrective action directive issued by their primary federal regulators to meet and maintain a specific capital level for any capital measures. There are no significant conditions or events that have occurred since June 30, 2026, which Management believes have affected Trustmark’s or TB’s present classification.
The following table provides Trustmark’s and TB’s actual regulatory capital amounts and ratios under regulatory capital standards in effect at June 30, 2026 and December 31, 2025 ($ in thousands):
Actual
Minimum
To Be Well
Ratio
Requirement
Capitalized
At June 30, 2026:
Common Equity Tier 1 Capital (to Risk Weighted Assets)
1,865,035
11.87
7.00
n/a
Trustmark Bank
1,952,935
12.43
6.50
Tier 1 Capital (to Risk Weighted Assets)
1,925,035
12.26
8.50
8.00
Total Capital (to Risk Weighted Assets)
2,272,877
14.47
10.50
2,128,658
13.55
10.00
Tier 1 Leverage (to Average Assets)
10.25
4.00
10.40
5.00
At December 31, 2025:
1,814,295
11.72
1,908,101
12.33
1,874,295
12.11
2,231,283
14.41
2,093,123
13.52
10.18
10.37
Stock Repurchase Program
On December 3, 2024, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2025, under which $100.0 million of Trustmark’s outstanding shares could be acquired through December 31, 2025. Under this authority, Trustmark repurchased 2.2 million shares of its common stock valued at $80.0 million during the twelve months ended December 31, 2025.
On December 2, 2025, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2026, under which $100.0 million of Trustmark’s outstanding shares could be acquired through December 31, 2026. The repurchase program, which is subject to market conditions and management discretion, will be implemented through open market repurchases or privately negotiated transactions. Under this authority, Trustmark repurchased 952 thousand shares of its common stock valued at $40.9 million during the six months ended June 30, 2026.
Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss)
The following tables present the net change in the components of accumulated other comprehensive income (loss) and the related tax effects allocated to each component for the periods presented ($ in thousands). The amortization of prior service cost, recognized net loss due to lump sum settlements and change in net actuarial loss are included in the computation of net periodic benefit cost (see Note 9 – Defined Benefit and Other Postretirement Benefits for additional details). Reclassification adjustments related to pension and other postretirement benefit plans are included in salaries and employee benefits and other expense in the accompanying consolidated statements of income. Reclassification adjustments related to the cash flow hedge derivatives are included in interest and fees on LHFS and LHFI in the accompanying consolidated statements of income.
Before TaxAmount
Tax (Expense)Benefit
Net of TaxAmount
Securities available for sale and transferred securities:
(15,035
3,760
13,992
(3,499
2,600
(650
3,450
(863
Total securities available for sale and transferred securities
(12,435
3,110
(9,325
17,442
(4,362
13,080
Recognized net loss due to lump sum settlements
Total pension and other postretirement benefit plans
(11
64
48
Cash flow hedge derivatives:
Change in accumulated gain (loss) on effective cash flow hedge derivatives
(8,208
2,052
4,098
(1,024
805
(201
2,681
Total cash flow hedge derivatives
(7,403
1,851
(5,552
6,779
(1,694
5,085
Total other comprehensive income (loss)
(19,796
4,950
24,285
(6,072
46
(31,721
7,931
46,591
(11,648
5,559
(1,390
6,875
(26,162
6,541
(19,621
53,466
(13,367
40,099
158
(40
132
(33
127
95
(22
67
(13,915
3,479
11,977
(2,994
1,740
(435
5,361
(1,340
(12,175
3,044
(9,131
17,338
(4,334
13,004
(38,210
9,553
70,893
(17,723
The following table presents the changes in the balances of each component of accumulated other comprehensive income (loss) for the periods presented ($ in thousands). All amounts are presented net of tax.
Securities Available for Sale and Transferred Securities
DefinedBenefit Pension Items
Cash Flow Hedge Derivatives
Balance at January 1, 2026
(10,518
(5,169
2,062
Other comprehensive income (loss) before reclassification
(30,057
Amounts reclassified from accumulated other comprehensive income (loss)
1,400
Net other comprehensive income (loss)
Balance at June 30, 2026
(30,139
(5,074
(7,069
Balance at January 1, 2025
(66,885
(4,721
(12,053
49,082
4,088
Balance at June 30, 2025
(26,786
(4,654
951
Note 15 – Fair Value
Financial Instruments Measured at Fair Value
The methodologies Trustmark uses in determining the fair values are based primarily on the use of independent, market-based data to reflect a value that would be reasonably expected upon exchange of the position in an orderly transaction between market participants at the measurement date. The predominant portion of assets that are stated at fair value are of a nature that can be valued using prices or inputs that are readily observable through a variety of independent data providers. The providers selected by Trustmark for fair valuation data are widely recognized and accepted vendors whose evaluations support the pricing functions of financial institutions, investment and mutual funds, and portfolio managers. Trustmark has documented and evaluated the pricing methodologies used by the vendors and maintains internal processes that regularly test valuations for anomalies.
Trustmark utilizes an independent pricing service to advise it on the carrying value of the securities available for sale portfolio. As part of Trustmark’s procedures, the price provided from the service is evaluated for reasonableness given market changes. When a questionable price exists, Trustmark investigates further to determine if the price is valid. If needed, other market participants may be utilized to determine the correct fair value. Trustmark has also reviewed and confirmed its determinations in thorough discussions with the pricing source regarding their methods of price discovery.
Mortgage loan commitments are valued based on the securities prices of similar collateral, term, rate and delivery for which the loan is eligible to deliver in place of the particular security. Trustmark acquires a broad array of mortgage security prices that are supplied by a market data vendor, which in turn accumulates prices from a broad list of securities dealers. Prices are processed through a mortgage pipeline management system that accumulates and segregates all loan commitment and forward-sale transactions according to the similarity of various characteristics (maturity, term, rate, and collateral). Prices are matched to those positions that are deemed to be an eligible substitute or offset (i.e., “deliverable”) for a corresponding security observed in the marketplace.
Trustmark estimates the fair value of the MSR through the use of prevailing market participant assumptions and market participant valuation processes. This valuation is periodically tested and validated against other third-party firm valuations.
Trustmark obtains the fair value of interest rate swaps from a third-party pricing service that uses an industry standard discounted cash flow methodology. In addition, credit valuation adjustments are incorporated in the fair values to account for potential nonperformance risk. In adjusting the fair value of its interest rate swap contracts for the effect of nonperformance risk, Trustmark has considered any applicable credit enhancements such as collateral postings, thresholds, mutual puts, and guarantees. In conjunction with the FASB’s fair value measurement guidance, Trustmark made an accounting policy election to measure the credit risk of these derivative financial instruments, which are subject to master netting agreements, on a net basis by counterparty portfolio.
Trustmark has determined that the majority of the inputs used to value its interest rate swaps offered to qualified commercial borrowers fall within Level 2 of the fair value hierarchy, while the credit valuation adjustments associated with these derivatives utilize Level 3 inputs, such as estimates of current credit spreads. Trustmark has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its interest rate swaps and has determined that the credit valuation adjustment is not significant to the overall valuation of these derivatives. As a result, Trustmark classifies its interest rate swap valuations in Level 2 of the fair value hierarchy.
Trustmark also utilizes exchange-traded derivative instruments such as Treasury note futures contracts and option contracts to achieve a fair value return that offsets the changes in fair value of the MSR attributable to interest rates. Fair values of these derivative instruments are determined from quoted prices in active markets for identical assets therefore allowing them to be classified within Level 1 of the fair value hierarchy. In addition, Trustmark utilizes derivative instruments such as interest rate lock commitments in its mortgage banking area which lack observable inputs for valuation purposes resulting in their inclusion in Level 3 of the fair value hierarchy.
At this time, Trustmark presents no fair values that are derived through internal modeling. Should positions requiring fair valuation arise that are not relevant to existing methodologies, Trustmark will make every reasonable effort to obtain market participant assumptions, or independent evaluation.
Financial Assets and Liabilities
The following tables summarize financial assets and financial liabilities measured at fair value on a recurring basis at June 30, 2026 and December 31, 2025, segregated by the level of valuation inputs within the fair value hierarchy utilized to measure fair value ($ in thousands). There were no transfers between fair value levels for the six months ended June 30, 2026 and the year ended December 31, 2025.
Level 1
Level 2
Level 3
Securities available for sale
1,734,571
LHFS
13,822
2,690
10,058
1,074
28,454
28,399
1,597,033
1,667,882
16,235
15,226
998
22,832
1,708
21,124
The changes in Level 3 assets measured at fair value on a recurring basis for the six months ended June 30, 2026 and 2025 are summarized as follows ($ in thousands):
Other Assets -Derivatives
Total net (loss) gain included in Mortgage banking, net (1)
646
1,648
Sales
(1,572
The amount of total gains (losses) for the period included in earnings that are attributable to the change in unrealized gains or losses still held at June 30, 2026
2,558
229
(13,532
2,465
(887
1,807
The amount of total gains (losses) for the period included in earnings that are attributable to the change in unrealized gains or losses still held at June 30, 2025
2,338
Trustmark may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP. Assets at June 30, 2026, which have been measured at fair value on a nonrecurring basis, include collateral-dependent LHFI. A loan is collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided substantially through the sale of the collateral. The expected credit loss for collateral-dependent loans is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral, adjusted for the estimated cost to sell. Fair value estimates for collateral-dependent loans are derived from appraised values based on the current market value or as is value of the collateral, normally from recently received and reviewed appraisals. Current appraisals are ordered on an annual basis based on the inspection date or more often if market conditions necessitate. Appraisals are obtained from state-certified appraisers and are based on certain assumptions, which may include construction or development status and the highest and best use of the property. These appraisals are reviewed by Trustmark’s Appraisal Review Department to ensure they are acceptable, and values are adjusted down for costs associated with asset disposal. At June 30, 2026, Trustmark had outstanding balances of $47.0 million with a related ACL of $7.4 million in collateral-dependent LHFI, compared to outstanding balances of $24.9 million with a related ACL of $1.2 million in collateral-dependent LHFI at December 31, 2025. The collateral-dependent LHFI are classified as Level 3 in the fair value hierarchy.
Nonfinancial Assets and Liabilities
Certain nonfinancial assets measured at fair value on a nonrecurring basis include foreclosed assets (upon initial recognition or subsequent impairment), nonfinancial assets and nonfinancial liabilities measured at fair value in the second step of a goodwill impairment test, and intangible assets and other nonfinancial long-lived assets measured at fair value for impairment assessment.
Other real estate includes assets that have been acquired in satisfaction of debt through foreclosure and is recorded at the fair value less cost to sell (estimated fair value) at the time of foreclosure. Fair value is based on independent appraisals and other relevant factors. In the determination of fair value subsequent to foreclosure, Management also considers other factors or recent developments, such as changes in market conditions from the time of valuation and anticipated sales values considering plans for disposition, which could result in an adjustment to lower the collateral value estimates indicated in the appraisals. Periodic revaluations are classified as Level 3 in the fair value hierarchy since assumptions are used that may not be observable in the market.
Foreclosed assets of $714 thousand were re-measured during the first six months of 2026, requiring write-downs of $256 thousand to reach their current fair values compared to $978 thousand of foreclosed assets that were re-measured during the first six months of 2025, requiring write-downs of $200 thousand.
Fair Value of Financial Instruments
FASB ASC Topic 825, “Financial Instruments,” requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis.
The carrying amounts and estimated fair values of financial instruments at June 30, 2026 and December 31, 2025, are as follows ($ in thousands):
CarryingValue
Financial Assets:
Level 2 Inputs:
Cash and short-term investments
Securities held to maturity
Level 3 Inputs:
13,728,828
13,544,873
Financial Liabilities:
Deposits
16,060,968
15,494,681
Federal funds purchased and securities sold under repurchase agreements
174,563
176,750
52,578
52,964
Fair Value Option
Trustmark has elected to account for its LHFS under the fair value option, with interest income on these LHFS reported in interest and fees on LHFS and LHFI. The fair value of the LHFS is determined using quoted prices for a similar asset, adjusted for specific attributes of that loan. The LHFS are actively managed and monitored and certain market risks of the loans may be mitigated through the use of derivatives. These derivative instruments are carried at fair value with changes in fair value recorded as noninterest income in mortgage banking, net. The changes in the fair value of LHFS are largely offset by changes in the fair value of the derivative instruments. For the three and six months ended June 30, 2026, a net gain of $1.4 million and a net loss of $393 thousand, respectively, were recorded as noninterest income in mortgage banking, net for changes in the fair value of LHFS accounted for under the fair value option, compared to net gains of $731 thousand and $1.4 million for the three and six months ended June 30, 2025, respectively. Interest and fees on LHFS and LHFI for the three and six months ended June 30, 2026 included $3.1 million and $5.4 million of interest earned on LHFS accounted for under the fair value option, compared to $2.5 million and $4.4 million for the three and six months ended June 30, 2025, respectively. Election of the fair value option allows Trustmark to reduce the accounting volatility that would otherwise result from the asymmetry created by accounting for the financial instruments at the lower of cost or fair value and the derivatives at fair value. The fair value option election does not apply to GNMA optional repurchase loans which do not meet the requirements under FASB ASC Topic 825 to be accounted for under the fair value option. GNMA optional repurchase loans totaled $134.6 million and $136.3 million at June 30, 2026 and December 31, 2025, respectively, and are included in LHFS on the accompanying consolidated balance sheets. For additional information regarding GNMA optional repurchase loans, please see the section captioned “Past Due LHFS” included in Note 3 – LHFI and ACL, LHFI.
The following table provides information about the fair value and the contractual principal outstanding of the LHFS accounted for under the fair value option at June 30, 2026 and December 31, 2025 ($ in thousands):
Fair value of LHFS
165,898
142,485
LHFS contractual principal outstanding
164,440
143,832
Fair value less unpaid principal
(1,347
Note 16 – Derivative Financial Instruments
Derivatives Designated as Hedging Instruments
Trustmark engages in a cash flow hedging program to add stability to interest income and to manage its exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of fixed-rate amounts from a counterparty in exchange for Trustmark making variable-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate floor spreads designated as cash flow hedges involve the receipt of variable-rate amounts if interest rates fall below the purchased floor strike rate on the contract and payments of variable-rate amounts if interest rates fall below the sold floor strike rate on the contract. Trustmark uses such derivatives to hedge the variable cash flows associated with existing and anticipated variable-rate loan assets. At June 30, 2026, the aggregate notional value of Trustmark's interest rate swaps and floor spreads designated as cash flow hedges totaled $1.645 billion compared to $1.630 billion at December 31, 2025.
Trustmark records any gains or losses on these cash flow hedges in accumulated other comprehensive income (loss). Gains and losses on derivatives representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with Trustmark’s accounting policy election. The earnings recognition of excluded components included in interest and fees on LHFS and LHFI totaled $118 thousand and $241 thousand of amortization expense for the three and six months ended June 30, 2026, respectively, compared to $131 thousand and $261 thousand of amortization expense for the three and six months ended June 30, 2025, respectively. As interest payments are received on Trustmark's variable-rate assets, amounts reported in accumulated other comprehensive income (loss) are reclassified into interest and fees on LHFS and LHFI in the accompanying consolidated statements of income during the same period. During the next twelve months, Trustmark estimates that $4.4 million will be reclassified as a reduction to interest and fees on LHFS and LHFI. This amount could differ due to changes in interest rates, hedge de-designations or the addition of other hedges.
Derivatives not Designated as Hedging Instruments
Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that economically hedges changes in the fair value of the MSR attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting. The total notional amount of these derivative instruments was $354.5 million at June 30, 2026 compared to $345.5 million at December 31, 2025. Changes in the fair value of these exchange-traded derivative instruments are recorded as noninterest income in mortgage banking, net and are offset by changes in the fair value of the MSR. The impact of this strategy resulted in a net positive ineffectiveness of $199 thousand and a net negative ineffectiveness of $541 thousand for the three months ended June 30, 2026 and 2025, respectively. For the six months ended June 30, 2026 and 2025, the impact was a net positive ineffectiveness of $103 thousand and a net negative ineffectiveness of $1.1 million, respectively.
As part of Trustmark’s risk management strategy in the mortgage banking area, derivative instruments such as forward sales contracts are utilized. Trustmark’s obligations under forward sales contracts consist of commitments to deliver mortgage loans, originated and/or purchased, in the secondary market at a future date. Changes in the fair value of these derivative instruments are recorded as noninterest income in mortgage banking, net and are offset by changes in the fair value of LHFS. Trustmark’s off-balance sheet obligations under these derivative instruments totaled $187.5 million at June 30, 2026, with a negative valuation adjustment of $42 thousand, compared to $152.0 million, with a negative valuation adjustment of $287 thousand, at December 31, 2025.
Trustmark also utilizes derivative instruments such as interest rate lock commitments in its mortgage banking area. Interest rate lock commitments are residential mortgage loan commitments with customers, which guarantee a specified interest rate for a specified time period. Changes in the fair value of these derivative instruments are recorded as noninterest income in mortgage banking, net and are offset by the changes in the fair value of forward sales contracts. Trustmark’s off-balance sheet obligations under these derivative instruments totaled $87.2 million at June 30, 2026, with a positive valuation adjustment of $1.1 million, compared to $74.5 million, with a positive valuation adjustment of $998 thousand, at December 31, 2025.
Trustmark offers certain derivatives products directly to qualified commercial lending clients seeking to manage their interest rate risk. Trustmark economically hedges interest rate swap transactions executed with commercial lending clients by entering into offsetting interest rate swap transactions with institutional derivatives market participants. Derivatives transactions executed as part of this program are not designated as qualifying hedging relationships and are, therefore, carried at fair value with the change in fair value recorded as noninterest income in bank card and other fees. Because these derivatives have mirror-image contractual terms, in addition to collateral provisions which mitigate the impact of non-performance risk, the changes in fair value are expected to substantially offset. The offsetting interest rate swap transactions are either cleared through the Chicago Mercantile Exchange for clearable transactions or booked directly with institutional derivatives market participants for non-clearable transactions. The Chicago Mercantile Exchange rules legally characterize variation margin collateral payments made or received for centrally cleared interest rate swaps as settlements rather than collateral. As a result, centrally cleared interest rate swaps included in other assets and other liabilities are presented on a net basis in the accompanying consolidated balance sheets. At June 30, 2026, Trustmark had interest rate swaps with an aggregate notional amount of $2.158 billion related to this program, compared to $1.991 billion at December 31, 2025.
Credit-risk-related Contingent Features
Trustmark has agreements with its financial institution counterparties that contain provisions where if Trustmark defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then Trustmark could also be declared in default on its derivatives obligations.
At June 30, 2026, the termination value of interest rate swaps in a liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements totaled $2.8 million compared to $117 thousand at December 31, 2025. At June 30, 2026 and December 31, 2025, Trustmark had posted collateral of $4.5 million and $2.2 million, respectively, against its obligations because of negotiated thresholds and minimum transfer amounts under these agreements. If Trustmark had breached any of these triggering provisions at June 30, 2026, it could have been required to settle its obligations under the agreements at the termination value.
52
Credit risk participation agreements arise when Trustmark contracts with other financial institutions, as a guarantor or beneficiary, to share credit risk associated with certain interest rate swaps. These agreements provide for reimbursement of losses resulting from a third-party default on the underlying swap. At June 30, 2026, Trustmark had entered into ten risk participation agreements as a beneficiary with aggregate notional amounts of $120.1 million compared to ten risk participation agreements as a beneficiary with an aggregate notional amount of $113.7 million at December 31, 2025. At June 30, 2026, Trustmark had entered into twenty-six risk participation agreements as a guarantor with aggregate notional amounts of $329.8 million compared to twenty-seven risk participation agreements as a guarantor with aggregate notional amounts of $267.9 million at December 31, 2025. The aggregate fair values of these risk participation agreements were immaterial at both June 30, 2026 and December 31, 2025.
Tabular Disclosures
The following tables disclose the fair value of derivative instruments in Trustmark’s consolidated balance sheets at June 30, 2026 and December 31, 2025 as well as the effect of these derivative instruments on Trustmark’s results of operations for the periods presented ($ in thousands):
Derivatives designated as hedging instruments:
Interest rate contracts:
Interest rate swaps included in other assets (1)
350
3,890
Interest rate floors included in other assets
720
1,673
Interest rate swaps included in other liabilities (1)
7,959
611
Derivatives not designated as hedging instruments:
Exchange traded purchased options included in other assets
Over-the-counter written options (rate locks) included in other assets
Futures contracts included in other assets
1,017
8,979
9,654
Credit risk participation agreements included in other assets
Futures contracts included in other liabilities
Forward contracts included in other liabilities
287
Exchange traded written options included in other liabilities
20,321
20,098
Credit risk participation agreements included in other liabilities
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) and recognized in interest and fees on LHFS and LHFI
(805
(2,681
(1,740
(5,361
Amount of gain (loss) recognized in mortgage banking, net
(4,551
1,842
(6,859
6,557
Amount of gain (loss) recognized in bank card and other fees
195
565
364
The following table discloses the amount included in other comprehensive income (loss), net of tax, for derivative instruments designated as cash flow hedges for the periods presented ($ in thousands):
Amount of gain (loss) recognized in other comprehensive income (loss), net of tax
53
Trustmark’s interest rate swap derivative instruments are subject to master netting agreements, and therefore, eligible for offsetting in the consolidated balance sheets. Trustmark has elected to not offset any derivative instruments in its consolidated balance sheets. Information about financial instruments that are eligible for offset in the consolidated balance sheets as of June 30, 2026 and December 31, 2025 is presented in the following tables ($ in thousands):
Offsetting of Derivative Assets
Gross Amounts Not Offset in theStatement of Financial Position
Gross Amounts of Recognized Assets
Gross AmountsOffset in theStatement ofFinancial Position
Net Amounts ofAssets presented inthe Statement ofFinancial Position
Financial Instruments
Cash Collateral Received
Net Amount
Derivatives
10,049
(6,621
3,428
Offsetting of Derivative Liabilities
Gross Amounts Not Offset in the Statement of Financial Position
Gross Amounts of RecognizedLiabilities
Net Amounts of Liabilities presented in the Statement of Financial Position
FinancialInstruments
Cash CollateralPosted
28,280
(4,500
17,159
Cash CollateralReceived
15,217
(6,271
(1,380
7,566
Gross Amounts Offset in the Statement of Financial Position
Net Amounts ofLiabilities presentedin the Statement ofFinancial Position
20,709
(2,200
12,238
Note 17 – Segment Information
Trustmark’s management reporting structure includes two segments: General Banking and Wealth Management. For a complete overview of Trustmark’s operating segments, see Note 20 – Segment Information included in Part II. Item 8. – Financial Statements and Supplementary Data, of Trustmark’s 2025 Annual Report.
Trustmark's reportable segments are determined by the Chief Executive Officer (CEO), who is the designated chief operating decision maker (CODM), based upon information provided about Trustmark's products and services offered. The reportable segments are also distinguished by the level of information provided to the CEO, who uses such information to review performance of various lines of business, which are then aggregated if operating performance, products and services and customers are similar. The CEO evaluates the financial performance of Trustmark's lines of business, such as evaluating revenue streams, significant expenses and budget to actual results, in assessing the performance of Trustmark's reportable segments and in the determination of allocating resources.
The accounting policies of each reportable segment are the same as those of Trustmark except for its internal allocations. Noninterest expenses for back-office operations support are allocated to segments based on estimated uses of those services. Trustmark measures the net interest income of its business segments with a process that assigns cost of funds or earnings credit on a matched-term basis. This process, called “funds transfer pricing”, charges an appropriate cost of funds to assets held by a business unit, or credits the business
unit for potential earnings for carrying liabilities. The net of these charges and credits flows through to the General Banking Segment, which contains the management team responsible for determining TB’s funding and interest rate risk strategies.
The following tables disclose financial information by reportable segment for the periods presented ($ in thousands):
General Banking
Wealth Management
Interest income
234,175
3,258
Interest expense
70,384
1,419
Funds transfer pricing, net
(1,194
1,194
Net interest income
162,597
3,033
(3,240
(3,244
Net interest income after PCL
165,837
3,037
3,528
Internal allocations
Noninterest income
67,304
5,686
29,022
726
Other segment expenses (1)
30,399
30,945
(1,873
1,873
Noninterest expense
124,852
8,831
Income before income taxes
72,498
5,264
12,936
1,304
Consolidated net income
59,562
3,960
Selected Financial Information
Total assets
18,969,028
223,442
10,411
10,475
234,301
77,799
253
(253
156,755
2,001
4,693
(17
4,676
152,062
2,018
2,257
(93
62,831
5,467
26,357
641
29,425
393
29,818
(1,486
1,486
117,127
7,987
65,175
3,681
12,100
915
53,075
2,766
18,417,303
198,356
18,615,659
9,851
9,914
56
463,156
6,347
140,467
(2,453
2,453
320,236
5,953
(727
320,963
5,730
7,807
(227
135,400
11,832
56,271
1,421
59,835
1,083
60,918
(3,754
3,754
247,752
18,090
136,536
9,231
23,842
2,288
112,694
6,943
19,989
57
460,459
6,116
154,096
1,668
713
(713
307,076
3,735
9,990
(20
297,086
3,755
8,175
(189
125,702
11,088
51,956
1,289
58,272
818
59,090
(2,968
2,968
232,962
16,163
127,378
6,812
23,022
1,694
104,356
5,118
18,360
Note 18 – Accounting Policies Recently Adopted and Pending Accounting Pronouncements
Accounting Policies Recently Adopted
Trustmark has consistently applied its accounting policies to all periods presented in the accompanying consolidated financial statements.
Pending Accounting Pronouncements
ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” FASB issued ASU 2024-03 in November 2024, with the objective of providing investors with more decision-useful information regarding a public business entity's expenses by enhancing disclosures on income statement expenses. Investor feedback indicated a strong preference for the disclosure of disaggregated financial reporting information as a top priority for the FASB. Detailed knowledge of an entity's expenses is crucial for understanding its prospects for future cash flows and for making performance comparisons over time and with other entities. Investors emphasized that information regarding cost of sales, selling, general, and administrative expenses, employee compensation costs, depreciation and amortization, and research and development expenditure would enhance their comprehension of an entity's cost structure and ability to forecast future cash flows. The ASU applies exclusively to public business entities and mandates additional disclosures about specific expense categories on both annual and interim bases in the notes to financial statements that are not currently required. The amendments do not alter or eliminate existing expense disclosure requirements nor change requirements for presenting expenses on the face of the income statement. However, they do specify that certain existing disclosures must now appear in the same tabular format as the new disaggregation requirements. The FASB issued ASU 2025-01 in January 2025, clarifying that the amendments in ASU 2024-03 are effective for public business entities for annual reporting periods beginning after December 15, 2026, and for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. Trustmark intends to adopt the amendments of ASU 2024-03 effective
January 1, 2027, and will include the required annual disclosures in its Annual Report on Form 10-K for the year ending December 31, 2027, and required interim disclosures in its Quarterly Report on Form 10-Q for the period ending March 31, 2028. Trustmark is currently evaluating the changes to disclosures required by ASU 2024-03; however, adoption of ASU 2024-03 is not expected to have a material impact to Trustmark’s consolidated financial statements or results of operations.
ASU 2025-06, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software.” Issued in September 2025, ASU 2025-06 seeks to update the guidance on accounting for software due to changes in how software is generally developed. When software accounting guidance was first issued, companies developing software generally followed a prescriptive and sequential development method (e.g., waterfall). Since then, many companies have adopted a more incremental and iterative development method (i.e., agile). As a result, many stakeholders noted the challenges of applying current internal-use software accounting requirements that do not specifically address software developed using an incremental and iterative method, which has led to diversity in practice in determining when to begin capitalizing software costs. The amendments of ASU 2025-06 remove all references to a prescriptive and sequential software development method (referred to as "project stages") throughout FASB ASC Subtopic 350-40, and require an entity to start capitalizing software costs when both of the following occur: (1) Management has authorized and committed to funding the software project; and (2) it is probable that the project will be completed and the software will be used to perform the function intended (referred to as the "probable-to-complete recognition threshold"). In evaluating the probable-to-complete recognition threshold, a company is required to consider whether there is significant uncertainty associated with the development activities of the software. ASU 2025-06 is effective for all entities for annual reporting periods beginning after December 15, 2027, and for interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. Trustmark intends to adopt the amendments of ASU 2025-06 effective January 1, 2028. Trustmark is currently evaluating the impact the amendments of ASU 2025-06 will have with regards to its internal-use software; however, adoption of ASU 2025-06 is not expected to have a material impact to Trustmark’s consolidated financial statements or results of operations.
ASU 2025-08, “Financial Instruments—Credit Losses (Topic 326): Purchased Loans.” Issued in November 2025, ASU 2025-08 expands the gross-up approach for accounting for credit losses on acquired financial assets, addressing complexity and comparability issues caused by previous distinctions between purchased financial assets with credit deterioration (PCD assets) and non-PCD assets. ASU 2025-08 requires loans (excluding credit cards) acquired without significant credit deterioration and deemed "seasoned" to be accounted for using the gross-up approach. For these purchased seasoned loans (loans, excluding credit cards, debt securities and trade receivables, acquired through a business combination accounted for using the acquisition method or other loans acquired through transfers not accounted for as business combinations purchased at least 90 days after origination and not originated by the acquirer), the initial ACL is added to the purchase price to determine the amortized cost basis. Entities can elect to measure this ACL using the amortized cost basis if not employing a discounted cash flow method, with elections being irrevocable. ASU 2025-08 clarifies that purchased seasoned loans are subject to the same accrual policies as originated assets and are not subject to the guidance that permits interest income accrual on PCD assets when there is a reasonable expectation for amounts to be collected or recovery limitations. ASU 2025-08 also amends disclosure requirements for the rollforward of the ACL to present the initial allowance recognized on such loans separately. ASU 2025-08 is effective for annual periods after December 15, 2026, and for interim reporting periods within those annual reporting periods, with early adoption allowed and prospective application required. Trustmark intends to adopt the amendments of ASU 2025-08 on January 1, 2027; however, as the amendments of this ASU must be applied on a prospective basis, adoption of this ASU will have no impact to Trustmark's consolidated financial statements or results of operations until an acquisition occurs.
ASU 2025-09, “Derivatives and Hedging (Topic 815): Hedge Accounting Improvements.” Issued in November 2025, ASU 2025-09 updates hedge accounting guidance to address global reference rate reform and better align hedge accounting with entities' risk management practices. Key changes include broadening eligible hedged risks for cash flow hedges via a "similar risk exposure" test, introducing an optional operable model for hedge accounting on choose-your-rate debt instruments, permitting hedge accounting for forecasted spot and forward transactions in nonfinancial assets if price components are clearly related and removing the net written option test for certain derivatives. The amendments of ASU 2025-09 also resolve recognition mismatches in dual hedge strategies involving foreign-currency-denominated debt. The amendments of ASU 2025-09 are effective for annual reporting periods beginning after December 15, 2026, and for interim reporting periods within those annual reporting periods, and should be applied on a prospective basis for all hedging relationships. Early adoption is permitted. Entities may also modify certain critical terms of existing hedging relationships without de-designating the hedge upon adoption. Trustmark intends to adopt the amendments of ASU 2025-09 effective January 1, 2027. Trustmark is currently evaluating the impact the amendments of ASU 2025-09 will have in regard to its derivative and hedging instruments; however, adoption of ASU 2025-09 is not expected to have a material impact to Trustmark’s consolidated financial statements or results of operations.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following provides a narrative discussion and analysis of Trustmark Corporation’s (Trustmark) financial condition and results of operations. This discussion should be read in conjunction with the unaudited consolidated financial statements and the supplemental financial data included in Part I. Item 1. – Financial Statements of this report.
Description of Business
Trustmark, a Mississippi business corporation incorporated in 1968, is a bank holding company headquartered in Jackson, Mississippi. Trustmark’s principal subsidiary is Trustmark Bank (TB), a Mississippi-chartered banking corporation. TB is a member bank of the Federal Reserve System and is supervised by the Federal Reserve Bank of Atlanta (FRBA) and the Mississippi Department of Banking and Consumer Finance (MDBCF). In addition, as a large provider of consumer financial services, TB remains subject to regulation, supervision, enforcement and examination by the Consumer Financial Protection Bureau (CFPB). Dividends from TB are Trustmark’s principal source of cash. Effective July 1, 2026, TB was no longer required to obtain approval from the MDBCF, except under certain enumerated supervisory circumstances, prior to the declaration and payment of its quarterly dividend as a result of the enactment of Mississippi Senate Bill 2383, which amended the Mississippi banking code. At June 30, 2026, TB had total assets of $19.190 billion, which represented 99.99% of the consolidated assets of Trustmark.
Through TB and its other subsidiaries, Trustmark operates as a financial services organization providing banking and other financial solutions through offices and 2,583 full-time equivalent associates (measured at June 30, 2026) located in the states of Alabama, Florida (primarily in the northwest or “Panhandle” region of that state, which is referred to herein as Trustmark’s Florida market), Georgia (primarily in Atlanta, which is referred to herein as Trustmark's Georgia market), Mississippi, Tennessee (in the Memphis and Northern Mississippi regions, which are collectively referred to herein as Trustmark’s Tennessee market), and Texas (primarily in Houston, which is referred to herein as Trustmark’s Texas market). Trustmark’s operations are managed along two operating segments: General Banking Segment and Wealth Management Segment. For a complete overview of Trustmark’s business, see the section captioned “The Corporation” included in Part I. Item 1. – Business of Trustmark’s Annual Report on Form 10-K for its fiscal year ended December 31, 2025 (2025 Annual Report).
Executive Overview
Trustmark completed the following non-routine transactions during the second quarter of 2026:
For further information regarding these non-routine transactions and the impact to Trustmark's financial results, see the section captioned "Non-GAAP Financial Measures."
In addition to these non-routine transactions, Trustmark's financial results for the three and six months ended June 30, 2026 reflected diversified growth in loans held for investment (LHFI), stable credit quality and cost-effective core deposit growth. Trustmark's capital position remained solid, reflecting the consistent profitability of its diversified financial services businesses. Trustmark continued to implement organic growth initiatives and make investments to capitalize on opportunities in its marketplace. With robust capital, liquidity and profitability, Trustmark is well-positioned to continue to compete in changing economic conditions and create long-term value for its shareholders. On July 28, 2026, Trustmark’s Board of Directors declared a quarterly cash dividend of $0.25 per share. The dividend is payable September 15, 2026, to shareholders of record on September 1, 2026.
Recent Economic and Industry Developments
Economic activity during the first six months of 2026 expanded at a moderate pace, supported by continued consumer spending and business investment, including investment in artificial intelligence (AI) infrastructure, while inflationary pressures, elevated energy prices, tariffs and geopolitical uncertainty weighed on the outlook. Labor market conditions remained relatively stable, with unemployment little changed, but inflation remained above the FRB’s longer-run objective and contributed to a more cautious monetary policy posture. Economic concerns remain as a result of the cumulative weight of uncertainty regarding the potential economic impact of geopolitical developments, such as the conflicts in Ukraine and the Middle East, the current United States presidential administration's policies, inflationary and broader pricing pressures, volatility in energy prices and other economic and industry volatility. Concerns surrounding the direction of global markets and the potential impact on the United States economy are expected to persist for the near term. While Trustmark's customer base is wholly domestic, international economic conditions affect domestic economic conditions, and thus may have an impact upon Trustmark's financial condition or results of operations.
The FRB decreased the target federal funds rate to a range of 3.50% to 3.75% and the rate it pays on reserves to 3.65% as of December 2025. The FRB left the target federal funds rate and the rate it pays on reserves unchanged during the first six months of 2026 as policymakers assessed the competing risks of persistent inflation, slowing growth and heightened global uncertainty. Prior period rate increases increased the competitive pressures on Trustmark's deposit cost of funds. While rate cuts potentially reduced those competitive pressures, they increased pressure on Trustmark's net interest margin, a key component to its financial results. It is not possible to predict the direction, pace or magnitude of further changes, if any, in interest rates, or the impact any such rate changes will have on Trustmark's results of operations.
In the May and July 2026 “Summary of Commentary on Current Economic Conditions by Federal Reserve District,” the twelve Federal Reserve Districts’ (Districts) reports suggested that during the reporting periods (covering the periods from April 6, 2026 through May 27, 2026 and May 28, 2026 through July 6, 2026) overall economic activity increased at a slight to moderate pace in most Districts. The May report indicated that economic activity increased at a slight to moderate pace in ten of the twelve Districts, while one District reported a slight decline and one reported no change. The July report indicated that economic activity increased at a slight to moderate pace in eleven of the twelve Districts, while one District reported no change. Reports by the twelve Districts noted the following during the reporting periods:
Reports by the Federal Reserve’s Sixth District, Atlanta (which includes Trustmark’s Alabama, Florida, Georgia and Mississippi market regions), Eighth District, St. Louis (which includes Trustmark’s Tennessee market region), and Eleventh District, Dallas (which includes Trustmark’s Texas market region), noted findings for the reporting periods that were generally consistent with the national observations discussed above. The Federal Reserve’s Sixth District reported that economic activity continued to expand at a modest pace, with consumer spending and travel and tourism increasing modestly, transportation and manufacturing demand continuing to improve, and agricultural conditions deteriorating. Loan growth in the Sixth District was driven by consumer and specialized lending, while residential and commercial real estate conditions were little changed, on balance. The Federal Reserve’s Eighth District noted that economic activity increased slightly, banking conditions were largely unchanged, consumer spending was stable and manufacturing softened slightly, although firms tied to energy and defense reported stronger demand. Eighth District contacts also reported stable credit quality overall, with some early-stage weakness among small business borrowers whose risks were more closely tied to input costs and fuel prices, and an uptick in overdraft frequency that signaled tighter household budgets and reduced discretionary spending. The Federal Reserve’s Eleventh District reported modest economic growth, with loan volume and loan demand increasing, driven in part by commercial real estate lending, while credit standards and terms tightened slightly, loan pricing continued to decline and loan performance weakened modestly. Eleventh District bankers also reported less optimistic outlooks and continued to express concern regarding the impact of higher fuel prices, geopolitical developments, tariffs and uncertainty regarding the future path of interest rates.
Trustmark is continuing to monitor the impact of geopolitical conflicts, tariffs, higher fuel and transportation costs, inflationary pressures, changing consumer behavior and other administrative policies on its customer base, interest rates, loan demand and credit-related issues. Economic uncertainty or disruptions in the marketplace as a result of such factors could reduce loan demand, increase funding costs, pressure net interest margin or increase loan nonperformance. It is not possible to predict the timing or magnitude of changes to policies by the current United States presidential administration, if any, or the impact any such policy changes, geopolitical developments or broader economic conditions could have on Trustmark’s customer base, credit quality, financial condition or results of operations.
Financial Highlights
Trustmark reported net income of $63.5 million, or basic and diluted earnings per share (EPS) of $1.09 and $1.08, respectively, in the second quarter of 2026, compared to $55.8 million, or basic and diluted EPS of $0.92, in the second quarter of 2025. Trustmark’s reported performance during the quarter ended June 30, 2026 produced a return on average tangible equity of 14.08%, a return on average assets of 1.33%, an average equity to average assets ratio of 11.23% and a dividend payout ratio of 22.94%, compared to a return on average tangible equity of 13.13%, a return on average assets of 1.21%, an average equity to average assets ratio of 11.07% and a dividend payout ratio of 26.09% during the quarter ended June 30, 2025.
Trustmark reported net income of $119.6 million, or basic and diluted EPS of $2.04 and $2.03, respectively, for the six months ended June 30, 2026, compared to $109.5 million, or basic and diluted EPS of $1.81 and $1.80, respectively, for the same time period in 2025. Trustmark's reported performance during the first six months of 2026 produced a return on average tangible equity of 13.34%, a return on average assets of 1.27%, an average equity to average assets ratio of 11.28% and a dividend payout ratio of 24.51%, compared to a return on average tangible equity of 13.13%, a return on average assets of 1.20%, an average equity to average assets ratio of 11.00% and a dividend payout ratio of 26.52% for the first six months of 2025.
For further information regarding the calculation of return on average tangible equity, which is not a measure prepared in accordance with U.S. generally accepted accounting principles (GAAP), see the section captioned "Non-GAAP Financial Measures."
Total revenue, which is defined as net interest income plus noninterest income, for the three months ended June 30, 2026 was $208.2 million, an increase of $9.6 million, or 4.8%, when compared to the same time period in 2025. The increase in total revenue when the three months ended June 30, 2026 is compared to the same time period in 2025, reflecting an increase in both net interest income and noninterest income. Total revenue for the six months ended June 30, 2026 was $411.1 million, an increase of $17.8 million, or 4.5%, when compared to the same time period in 2025, principally due to an increase in net interest income.
62
Net interest income for the three and six months ended June 30, 2026 totaled $165.6 million and $326.2 million, respectively, an increase of $6.9 million, or 4.3%, and $15.4 million, or 4.9%, respectively, when compared to the same time periods in 2025. Interest income totaled $237.4 million for the three months ended June 30, 2026, relatively unchanged when compared to the same time period in 2025. Interest income totaled $469.5 million for the six months ended June 30, 2026, an increase of $2.9 million, or 0.6%, when compared to the same time period in 2025, principally due to increases in interest and fees on LHFS and LHFI and interest on securities, partially offset by a decline in other interest income. Interest expense totaled $71.8 million and $143.3 million, respectively, for the three and six months ended June 30, 2026, a decrease of $6.9 million, or 8.7%, and $12.5 million, or 8.0%, respectively, when compared to the same time periods in 2025, principally due to declines in interest on deposits and interest on federal funds purchased and securities sold under repurchase agreements.
Noninterest income for the three months ended June 30, 2026 totaled $42.6 million, an increase of $2.7 million, or 6.7%, when compared to the same time period in 2025, principally due to increases in other, net and wealth management. Noninterest income for the six months ended June 30, 2026 totaled $84.9 million, an increase of $2.4 million, or 3.0%, when compared to the same time period in 2025, principally due to an increase in wealth management. Other, net totaled $3.6 million for the three months ended June 30, 2026, an increase of $1.3 million, or 56.5%, when compared to the same time period in 2025, principally due to the total gain on the sale of the Visa A shares and fair value adjustment of the Visa C shares and an increase in income from other partnership investments, partially offset by the loss on the sale of the 1-4 family mortgage loans. Wealth management totaled $10.9 million and $21.3 million, respectively, for the three and six months ended June 30, 2026, an increase of $1.3 million, or 13.3%, and $2.1 million, or 11.1%, respectively, when compared to the same time periods in 2025, principally due to increases in income from brokerage and trust management services.
Noninterest expense for the three and six months ended June 30, 2026 totaled $133.7 million and $265.8 million, respectively, an increase of $8.6 million, or 6.8%, and $16.7 million, or 6.7%, respectively, when compared to the same time periods in 2025, principally due to increases in salaries and employee benefits, services and fees and equipment expense. Salaries and employee benefits totaled $73.0 million and $147.2 million, respectively, for the three and six months ended June 30, 2026, an increase of $4.7 million, or 6.9%, and $10.4 million, or 7.6%, respectively, when compared to the same time periods in 2025, principally due to increases in salaries expense primarily due to general merit increases and employees, commission expense related to mortgage origination production and brokerage activity, management annual performance incentives, incentive stock compensation expense, payroll taxes, contributions to employee retirement funds and medical insurance expense. Services and fees totaled $29.7 million for the three months ended June 30, 2026, an increase of $2.8 million, or 10.2%, when compared to the same time period in 2025, principally due to increases in data processing expenses related to software. Services and fees totaled $57.7 million for the six months ended June 30, 2026, an increase of $4.4 million, or 8.4%, when compared to the same time period in 2025, principally due to increases in data processing expenses related to software, business process outsourcing expense and advertising expense. Equipment expense totaled $7.3 million and $14.3 million, respectively for the three and six months ended June 30, 2026, an increase of $1.1 million, or 17.1%, and $1.8 million, or 14.0%, respectively, when compared to the same time periods in 2025, principally due to an increase in data processing equipment expense.
Trustmark’s total PCL, LHFI for the three and six months ended June 30, 2026 totaled a negative $4.8 million and a negative $87 thousand, respectively, and included a provision release of $9.2 million as a result of the sale of 1-4 family mortgage loans during the second quarter of 2026. The PCL, LHFI excluding the sale of 1-4 family mortgage loans totaled $4.5 million and $9.1 million, respectively, for the three and six months ended June 30, 2026, compared to a PCL, LHFI of $5.3 million and $13.5 million, respectively, for the same time periods in 2025, a decrease of $894 thousand, or 16.7%, and $4.3 million, or 32.2%, respectively. The decrease in the PCL, LHFI excluding the sale of 1-4 family mortgage loans when the three and six months ended June 30, 2026 are compared to the same time periods in 2025 was principally due to a decline in required reserves as a result of positive credit migration, resolution of the Credit Quality Review Qualitative Factor during the third quarter of 2025, a decline in loan growth and changes in the macroeconomic forecast, partially offset by an increase in required reserves on individually analyzed credits. The PCL, LHFI excluding the sale of 1-4 family mortgage loans for the three months ended June 30, 2026 was principally attributable to specific reserves on individually analyzed loans, changes in the macroeconomic forecast and loan growth, partially offset by positive credit migration. The PCL, LHFI excluding the sale of 1-4 family mortgage loans for the six months ended June 30, 2026 was principally attributable to specific reserves on individually analyzed loans and loan growth, partially offset by positive credit migration and changes in the macroeconomic forecast.
The PCL, off-balance sheet credit exposures totaled $1.5 million and a negative $417 thousand, respectively, for the three and six months ended June 30, 2026, compared to a negative $670 thousand and a negative $3.5 million, respectively, for the same time periods in 2025, an increase in provision expense of $2.2 million and $3.1 million, respectively, primarily due to reserves released during the second quarter of 2025 due to positive credit migration as well as increases in the quantitative reserve rates due to changes in the macroeconomic forecast and the historical utilization rates. The PCL, off-balance sheet credit exposures for the three months ended June 30, 2026, was primarily attributable to an increase in the quantitative reserve rate due to changes in the macroeconomic forecast and an increase in the utilization rates for unfunded commitments. The release in the PCL, off-balance sheet credit exposures for the six months ended June 30, 2026, was primarily attributable to a decrease in unfunded commitment balances partially offset by an increase in the quantitative reserve rate due to changes in the macroeconomic forecast and an increase in the utilization rates for unfunded commitments. Please
see the section captioned “Provision for Credit Losses” for additional information regarding the PCL on LHFI and off-balance sheet credit exposures.
LHFI totaled $13.913 billion at June 30, 2026, an increase of $238.8 million, or 1.7%, compared to December 31, 2025. The increase in LHFI during the first six months of 2026 was primarily due to net growth in commercial and industrial loans and other commercial loans and leases, partially offset by net declines in loans secured by real estate. For additional information regarding changes in LHFI and comparative balances by loan category, see the section captioned “LHFI.”
At June 30, 2026, nonperforming assets totaled $54.9 million, a decrease of $36.5 million, or 39.9%, compared to December 31, 2025, primarily due to the sale of 1-4 family mortgage loans during the second quarter of 2026. Nonaccrual LHFI totaled $49.7 million at June 30, 2026, a decrease of $34.7 million, or 41.2%, relative to December 31, 2025, primarily as a result of the sale of nonaccrual 1-4 family mortgage loans in the Mississippi market region, partially offset by one large commercial credit in the Mississippi market region and one large commercial credit in the Alabama market region placed on nonaccrual status. Other real estate totaled $5.2 million at June 30, 2026, a decrease of $1.7 million, or 25.1%, when compared to December 31, 2025, principally due to properties sold in the Mississippi market region partially offset by properties foreclosed in the Mississippi and Alabama market regions.
Management has continued its practice of maintaining excess funding capacity to provide Trustmark with adequate liquidity for its ongoing operations. In this regard, Trustmark benefits from its strong deposit base, its investment portfolio and its access to funding from a variety of external funding sources such as upstream federal funds lines, FHLB advances and brokered deposits. See the section captioned “Capital Resources and Liquidity” for further discussion of the components of Trustmark’s excess funding capacity.
Total deposits were $16.071 billion at June 30, 2026, an increase of $571.4 million, or 3.7%, compared to December 31, 2025. During the first six months of 2026, noninterest-bearing deposits increased $337.0 million, or 11.1%, principally due to growth in commercial and consumer noninterest-bearing demand deposit accounts. Interest-bearing deposits increased $234.4 million, or 1.9%, during the first six months of 2026, primarily due to growth in public and commercial interest checking accounts, commercial money market deposit accounts (MMDA), brokered certificates of deposits (CDs), commercial and public CDs and consumer savings accounts, partially offset by declines in consumer interest checking accounts, MMDA and CDs.
Federal funds purchased totaled $360.0 million at June 30, 2026, a decrease of $85.0 million, or 19.1%, compared to December 31, 2025. Other borrowings totaled $137.9 million at June 30, 2026, a decrease of $226.9 million, or 62.2%, compared to December 31, 2025, principally due to a decrease in outstanding short-term FHLB advances with the FHLB of Dallas. The decrease in federal funds purchased and short-term FHLB advances during the first six months of 2026 reflected changes in funding needs principally due to deposit growth and a decline in the balance held at the FRBA included in other earning assets.
Recent Legislative and Regulatory Developments
On July 31, 2026, the FRB issued a proposal to revise Regulation O, which governs loans by member banks, including TB, to their executive officers, directors, principal shareholders, and related interests thereof. Among other changes, the proposal would increase the regulation’s dollar-based thresholds, with the result that fewer loans to insiders would be subject to the regulation’s prohibitions, board approval requirements, and disclosure requirements. The proposal would also exclude portfolio companies of qualifying fund complexes from treatment as insiders of the bank.
On June 25, 2026, the FDIC issued a proposal to revise deposit insurance assessment thresholds, rate schedules, and adjustments. Among other changes, the proposal would increase the asset threshold used to distinguish between small and large institutions for deposit insurance assessment purposes from $10 billion to $30 billion, with future adjustments based on a prescribed indexing methodology. As a result, TB would be classified as a small institution under the proposal. The FDIC proposed rules would impose fewer reporting requirements and different deposit insurance pricing methodologies on small institutions compared to large institutions. In addition, the proposal would reduce initial base assessment rate schedules applicable to small institutions, including TB, by two basis points. Trustmark is continuing to evaluate the proposal and its potential impact on TB.
On March 19, 2026, the federal banking agencies issued several proposals to revise the U.S. regulatory capital framework. The proposals would, among other things, eliminate the requirement for all banking organizations to deduct mortgage servicing assets from common equity Tier 1 capital, and, for banking organizations subject to risk-based capital requirements, subject such assets to a uniform risk-weighting treatment instead. The proposals would also modify aspects of the standardized approach to risk‑based capital that applies to Trustmark, including by making the risk weights for certain residential mortgage exposures more risk‑sensitive and decreasing the risk weights of corporate exposures, which could affect certain aspects of Trustmark’s regulatory capital calculations. Trustmark is continuing to evaluate these proposals and their impact on its regulatory capital position.
In March 2026, Mississippi enacted Senate Bill 2383, which amended the Mississippi banking code to, among other things, require prior approval from the MDBCF for the declaration and payment of dividends by a Mississippi-chartered bank only under the following conditions: (i) the bank is subject to a corrective plan or enforcement action; (ii) after making the dividend, the bank would be undercapitalized; or (iii) the Commissioner of MDBCF has determined that conditions exist at the bank that pose a risk to its safety and soundness. Senate Bill 2383 became effective on July 1, 2026.
On October 22, 2024, the CFPB released a final rule to implement Section 1033 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Under the final rule, financial institutions are required, upon request, to make available to a consumer or third party authorized by the consumer certain information TB has concerning a consumer financial product or service covered by the rule, such as a credit card or a deposit account. Industry organizations challenged the final rule in court. On July 29, 2025, the district court granted a motion by the CFPB to stay the proceedings while the CFPB conducts a rulemaking to revise the final rule substantially. On August 22, 2025, the CFPB issued an advance notice of proposed rulemaking to solicit comments and data on several issues relating to the final rule. On October 29, 2025, the district court issued a preliminary injunction preventing the CFPB from enforcing the final rule until the CFPB has completed its reconsideration of the rule. Management is monitoring the status of the litigation and evaluating the impact of this rule.
On July 18, 2025, President Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) into law, establishing a federal licensing and supervisory framework for payment stablecoins and their issuers. The GENIUS Act may accelerate and increase the competition that non-traditional financial institutions pose to banks’ payment services but may also create opportunities for banks to hold stablecoin reserve assets, custody stablecoins or issue stablecoins. Several key provisions of the GENIUS Act require federal regulatory agencies to adopt implementing regulations, and the Act will take effect the earlier of 18 months after its enactment or 120 days after the agencies issue final implementing regulations.
For additional information regarding legislation and regulation applicable to Trustmark, see the section captioned “Supervision and Regulation” included in Part I. Item 1. – Business of Trustmark’s 2025 Annual Report.
65
Selected Financial Data
The following tables present financial data derived from Trustmark’s consolidated financial statements as of and for the periods presented ($ in thousands, except per share data):
Total interest income
Total interest expense
Net income
Total Revenue (1)
208,201
198,646
411,105
393,285
Per Share Data
Cash dividends per share
0.25
0.50
0.48
Performance Ratios
Return on average equity
11.88
10.97
11.25
10.95
Return on average tangible equity
14.08
13.13
13.34
Return on average assets
1.33
1.21
1.27
1.20
Average equity / average assets
11.23
11.07
11.28
11.00
Net interest margin (fully taxable equivalent)
3.84
3.81
3.82
3.78
Dividend payout ratio
22.94
26.09
24.51
26.52
Credit Quality Ratios
Net charge-offs (recoveries) (excl sale of 1-4 family mortgage loans) / average loans (LHFS + LHFI)
0.12
0.04
0.08
PCL, LHFI / average loans (LHFS + LHFI)
0.16
0.20
Nonaccrual LHFI / (LHFS + LHFI)
0.35
0.59
Nonperforming assets / (LHFS + LHFI) plus other real estate
0.39
0.66
ACL, LHFI / LHFI
1.07
1.25
66
June 30,
Securities
3,076,447
3,072,664
Total loans (LHFS + LHFI)
14,213,552
13,684,429
15,115,861
Total shareholders' equity
Stock Performance
Market value - close
46.01
36.46
Book value
36.82
34.28
Tangible book value
31.07
28.74
Capital Ratios
Total equity / total assets
11.17
11.12
Tangible equity / tangible assets
9.59
9.50
Tangible equity / risk-weighted assets
11.52
11.41
Tier 1 leverage ratio
10.15
Common equity Tier 1 risk-based capital ratio
11.70
Tier 1 risk-based capital ratio
12.09
Total risk-based capital ratio
14.15
Non-GAAP Financial Measures
In addition to capital ratios defined by GAAP and banking regulators, Trustmark utilizes various tangible common equity measures when evaluating capital utilization and adequacy. Tangible common equity, as defined by Trustmark, represents common equity less goodwill and identifiable intangible assets. Trustmark's common equity Tier 1 capital includes common stock, capital surplus and retained earnings, and is reduced by goodwill and other intangible assets, net of associated net deferred tax liabilities as well as disallowed deferred tax assets and threshold deductions as applicable.
Trustmark believes these measures are important because they reflect the level of capital available to withstand unexpected market conditions. Additionally, presentation of these measures allows readers to compare certain aspects of Trustmark’s capitalization to other organizations. These ratios differ from capital measures defined by banking regulators principally in that the numerator excludes shareholders’ equity associated with preferred securities, the nature and extent of which varies across organizations. In Management’s experience, many stock analysts use tangible common equity measures in conjunction with more traditional bank capital ratios to compare capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, typically stemming from the use of the purchase accounting method in accounting for mergers and acquisitions.
These calculations are intended to complement the capital ratios defined by GAAP and banking regulators. Because GAAP does not include these capital ratio measures, Trustmark believes there are no comparable GAAP financial measures to these tangible common equity ratios. Despite the importance of these measures to Trustmark, there are no standardized definitions for them and, as a result, Trustmark’s calculation methods may not be comparable with those of other organizations. Also, there may be limits in the usefulness of these measures to investors. As a result, Trustmark encourages readers to consider its consolidated financial statements and the notes related thereto in their entirety and not to rely on any single financial measure.
The following table reconciles Trustmark’s calculation of these measures to amounts reported under GAAP for the periods presented ($ in thousands, except per share data):
TANGIBLE EQUITY
AVERAGE BALANCES
2,143,847
2,041,209
2,143,641
2,016,519
Less: Goodwill
(334,605
Identifiable intangible assets
(80
(97
Total average tangible equity
1,809,242
1,706,524
1,809,036
1,681,817
PERIOD END BALANCES
Total tangible equity
(a)
1,809,026
1,736,121
TANGIBLE ASSETS
Total tangible assets
(b)
18,857,865
18,280,991
Risk-weighted assets
(c)
15,707,804
15,215,021
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Plus: Intangible amortization net of tax
Net income adjusted for intangible amortization
55,865
109,522
Period end shares outstanding
(d)
TANGIBLE EQUITY MEASUREMENTS
Return on average tangible equity (1)
Tangible equity/tangible assets
(a)/(b)
Tangible equity/risk-weighted assets
(a)/(c)
(a)/(d)*1,000
COMMON EQUITY TIER 1 CAPITAL (CET1)
AOCI-related adjustments
42,282
30,489
CET1 adjustments and deductions:
Goodwill net of associated deferred tax liabilities (DTLs)
(320,753
(320,755
Other adjustments and deductions for CET1 (2)
(955
CET1 capital
(e)
1,779,568
Additional Tier 1 capital instruments plus related surplus
60,000
Tier 1 capital
1,839,568
Common equity tier 1 risk-based capital ratio
(e)/(c)
Trustmark discloses certain non-GAAP financial measures, including operating net income, because Management uses these measures for business planning purposes, including to manage Trustmark’s business against internal projected results of operations and to measure Trustmark’s performance. Trustmark views these as measures of its core operating business, which exclude the impact of the items detailed below, as these items are generally not operational in nature. These non-GAAP financial measures also provide another basis for comparing period-to-period results as presented in the accompanying selected financial data table and the consolidated financial statements by excluding potential differences caused by non-operational and unusual or non-recurring items. Readers are cautioned that these adjustments are not permitted under GAAP. Trustmark encourages readers to consider its consolidated financial statements and the notes related thereto in their entirety, and not to rely on any single financial measure.
The following table presents a reconciliation of net income (GAAP) to operating net income (Non-GAAP) along with selected financial ratios for the periods presented ($ in thousands, except per share data):
Net income (GAAP)
Non-routine transactions (net of taxes):
(6,920
Loss on sale of 1-4 family mortgage loans (incl in Other, net)
Gain on sale of Visa A shares (incl in Other, net)
(2,452
Visa C shares fair value adjustment (incl in Other, net)
(1,244
Operating net income (Non-GAAP)
56,660
112,775
Diluted EPS - operating (Non-GAAP)
0.97
1.92
Financial Ratios - Reported (GAAP)
Financial Ratios - Operating (Non-GAAP)
10.62
12.59
12.58
1.19
Results of Operations
Net interest income is the principal component of Trustmark’s income stream and represents the difference, or spread, between interest and fee income generated from earning assets and the interest expense paid on deposits and borrowed funds. Fluctuations in interest rates, as well as volume and mix changes in earning assets and interest-bearing liabilities, can materially impact net interest income. The net interest margin is computed by dividing annualized fully taxable equivalent (FTE) net interest income by average interest-earning assets and measures how effectively Trustmark utilizes its interest-earning assets in relationship to the interest cost of funding them. The accompanying yield/rate analysis tables show the average balances for all assets and liabilities of Trustmark and the interest income or expense associated with earning assets and interest-bearing liabilities. The yields and rates have been computed based upon interest income and expense adjusted to an FTE basis using the federal statutory corporate tax rate in effect for each of the periods shown. Loans on nonaccrual have been included in the average loan balances, and interest collected prior to these loans having been placed on nonaccrual has been included in interest income. Loan fees included in interest associated with the average LHFS and LHFI balances were immaterial.
Net interest income-FTE for the three and six months ended June 30, 2026 increased $7.2 million, or 4.4%, and $15.9 million, or 5.0%, respectively, when compared with the same time periods in 2025. The increase in net interest income-FTE when the three months ended June 30, 2026 is compared to the same time period in 2025 was principally due to declines in interest on deposits and interest on federal funds purchased and securities sold under repurchase agreements. The increase in net interest income-FTE when the six months ended June 30, 2026 is compared to the same time period in 2025 was principally due to a decline in interest on deposits and interest on federal funds purchased and securities sold under repurchase agreements and increases in interest and fees on LHFS and LHFI-FTE and interest on securities, partially offset by a decline in other interest income. The net interest margin-FTE for the three and six months ended June 30, 2026 increased 3 basis points to 3.84% and 4 basis points to 3.82%, respectively, when compared to the same time periods in 2025, principally due to a decrease in the cost of interest-bearing liabilities, partially offset by a decline in the yield on loans (LHFS and LHFI).
Average interest-earning assets for the three and six months ended June 30, 2026 totaled $17.625 billion and $17.526 billion, respectively, compared to $17.007 billion and $16.873 billion, respectively, for the same time periods in 2025, an increase of $617.4 million, or 3.6%, and $653.4 million, or 3.9%, respectively, primarily reflecting increases in average LHFI and average LHFS. Average LHFI increased $553.7 million, or 4.2%, and $577.8 million, or 4.4%, respectively, when the three and six months ended June 30, 2026 are compared to the same time periods in 2025, principally due to net growth in average balances of commercial and industrial loans, other commercial loans and leases and state and other political subdivision loans, partially offset by net declines in average LHFI secured by real estate. Average LHFS increased $88.3 million, or 43.1%, and $92.4 million, or 47.6%, respectively, when the three and six
months ended June 30, 2026 are compared to the same time periods in 2025, reflecting increases in average balances of loans in the process of being sold and GNMA loans eligible for repurchase.
Interest income-FTE for the three and six months ended June 30, 2026 totaled $240.4 million and $475.4 million, respectively, relatively unchanged when the second quarter of 2026 is compared to the second quarter of 2025, and an increase of $3.5 million, or 0.7%, when the first six months of 2026 is compared to the same time period in 2025. The yield on total interest-earning assets for the three and six months ended June 30, 2026 decreased 19 basis points and 17 basis points, respectively, to 5.47%, when compared to the same time periods in 2025. The increase in interest income-FTE for the six months ended June 30, 2026 was primarily due to increases in interest and fees on LHFS and LHFI-FTE and interest on securities partially offset by a decline in other interest income. During the six months ended June 30, 2026, interest and fees on LHFS and LHFI-FTE increased $3.7 million, or 0.9%, while the yield on LHFS and LHFI decreased 24 basis points to 5.93%, when compared to the same time period in 2025, primarily due to loan growth partially offset by a decline in interest rates. Interest on securities increased $1.4 million, or 2.7%, when the six months ended June 30, 2026 is compared to the same time period in 2025, while the yield on securities increased 9 basis points to 3.55%, principally due to purchases of securities available for sale net of calls, pay-downs and maturities of securities available for sale. Other interest income declined $1.6 million, or 18.4%, when the six months ended June 30, 2026 is compared to the same time period in 2025, while the rate on other earning assets declined 61 basis points to 3.82%, principally due to a decline in the interest earned on balances held at the FRBA which was primarily attributable to the FRB’s decision to reduce the rate paid on balances held at the FRBA during the fourth quarter of 2025.
Average interest-bearing liabilities for the three and six months ended June 30, 2026 totaled $13.501 billion and $13.504 billion, respectively, compared to $13.019 billion and $12.949 billion, respectively, for the same time periods in 2025, an increase of $482.1 million, or 3.7%, and $555.7 million, or 4.3%, respectively, primarily due to an increase in average interest-bearing deposits, partially offset by a decline in average other borrowings. Average interest-bearing deposits for the three and six months ended June 30, 2026 increased $568.9 million, or 4.7%, and $594.6 million, or 5.0%, respectively, when compared to the same time periods in 2025, reflecting increases in average interest-bearing demand deposits and average time deposits partially offset by a decrease in average savings deposits. Average other borrowings for the three and six months ended June 30, 2026 decreased $71.1 million, or 11.5%, and $43.3 million, or 7.5%, respectively, when compared to the same time periods in 2025, principally due to the decrease in average short-term FHLB advances outstanding with the FHLB of Dallas partially offset by increases in average balances of GNMA loans eligible for repurchase and average subordinated notes. The increase in the average subordinated notes for the three and six months ended June 30, 2026 when compared to the same time periods in 2025 was due to the $175.0 million aggregate principal amount of subordinated notes (the 2025 Notes) that were issued and sold by Trustmark during the fourth quarter of 2025, partially offset by the pay-off of the $125.0 million aggregate principal amount of the notes issued and sold in 2020.
Interest expense for the three and six months ended June 30, 2026 totaled $71.8 million and $143.3 million, respectively, a decrease of $6.9 million, or 8.7%, and $12.5 million, or 8.0%, respectively, when compared with the same time periods in 2025, while the rate on total interest-bearing liabilities decreased 29 basis points to 2.13% and 2.14%, respectively, primarily reflecting declines in interest on deposits and interest on federal funds purchased and securities sold under repurchase agreements. Interest on deposits for the three and six months ended June 30, 2026 decreased $5.5 million, or 8.1%, and $10.5 million, or 7.8%, while the rate on interest-bearing deposits decreased 28 basis points to 2.00% and 2.01%, respectively, when compared to the same time periods in 2025, primarily due to declines in interest rates paid on interest-bearing deposit accounts. Interest on federal funds purchased and securities sold under repurchase agreements for the three and six ended June 30, 2026 declined $765 thousand, or 17.0%, and $1.1 million, or 12.3%, respectively, while the rate on federal funds purchased and securities sold under repurchase agreements decreased 60 basis points and 58 basis points to 3.75%, respectively, when compared to the same time periods in 2025, primarily reflecting declines in the target federal funds rate by the FRB during the fourth quarter of 2025.
70
The following tables provide the tax equivalent basis yield or rate for each component of the tax equivalent net interest margin for the periods presented ($ in thousands):
AverageBalance
Interest
Yield/Rate
Interest-earning assets:
3,069,157
3.52
3,049,119
3.46
Loans (LHFS and LHFI)
14,185,503
209,557
5.93
13,543,505
209,077
6.19
Other earning assets
370,080
4.18
414,733
4.58
Total interest-earning assets
17,624,740
240,363
5.47
17,007,357
240,080
5.66
1,628,588
1,605,786
ACL, LHFI
(160,008
(166,430
19,093,320
18,446,713
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits
12,554,644
2.00
11,985,793
2.28
400,495
3.75
416,104
4.35
546,347
3.98
617,496
3.89
Total interest-bearing liabilities
13,501,486
2.13
13,019,393
2.42
Noninterest-bearing demand deposits
3,210,375
3,171,796
237,612
214,315
Shareholders' equity
Total liabilities and shareholders' equity
Net interest margin
168,560
161,408
Less tax equivalent adjustment
2,930
2,652
Net interest margin per consolidated statements of income
71
3,054,307
3.55
3,050,291
14,102,645
414,674
13,432,507
411,006
6.17
369,544
390,255
4.43
17,526,496
475,408
16,873,053
471,911
5.64
1,638,364
1,615,132
(158,256
(163,180
19,006,604
18,325,005
12,558,913
2.01
11,964,318
2.29
415,056
410,677
4.33
530,492
573,799
13,504,461
2.14
12,948,794
2.43
3,122,043
3,113,886
236,459
245,806
332,094
316,147
5,905
5,336
Provision for Credit Losses
The PCL, LHFI is the amount necessary to maintain the ACL for LHFI at the amount of expected credit losses inherent within the LHFI portfolio. The amount of PCL and the related ACL for LHFI are based on Trustmark’s ACL methodology. The total PCL, LHFI for the three and six months ended June 30, 2026 totaled a negative $4.8 million and a negative $87 thousand, respectively, and included a provision release of $9.2 million as a result of the sale of 1-4 family mortgage loans during the second quarter of 2026. The PCL, LHFI excluding the sale of 1-4 family mortgage loans totaled $4.5 million and $9.1 million, respectively, for the three and six months ended June 30, 2026, compared to a PCL, LHFI of $5.3 million and $13.5 million, respectively, for the same time periods in 2025, a decrease of $894 thousand, or 16.7%, and $4.3 million, or 32.2%, respectively. The decrease in the PCL, LHFI excluding the sale of 1-4 family mortgage loans when the three and six months ended June 30, 2026 are compared to the same time periods in 2025 was principally due to a decline in required reserves as a result of positive credit migration, resolution of the Credit Quality Review Qualitative Factor during the third quarter of 2025, a decline in loan growth and changes in the macroeconomic forecast, partially offset by an increase in required reserves on individually analyzed credits. The PCL, LHFI excluding the sale of 1-4 family mortgage loans for the three months ended June 30, 2026 was principally attributable to specific reserves on individually analyzed loans, changes in the macroeconomic forecast and loan growth, partially offset by positive credit migration. The PCL, LHFI excluding the sale of 1-4 family mortgage loans for the six months ended June 30, 2026 was principally attributable to specific reserves on individually analyzed loans and loan growth, partially offset by positive credit migration and changes in the macroeconomic forecast.
Off-Balance Sheet Credit Exposures
FASB ASC Topic 326 requires Trustmark to estimate expected credit losses for off-balance sheet credit exposures which are not unconditionally cancellable by Trustmark. Trustmark maintains a separate ACL for off-balance sheet credit exposures, including unfunded commitments and letters of credit. Adjustments to the ACL on off-balance sheet credit exposures are recorded to the PCL, off-balance sheet credit exposures. The PCL, off-balance sheet credit exposures totaled $1.5 million and a negative $417 thousand, respectively, for the three and six months ended June 30, 2026, compared to a negative $670 thousand and a negative $3.5 million, respectively, for the same time periods in 2025, an increase in provision expense of $2.2 million and $3.1 million, respectively, primarily due to reserves released during the second quarter of 2025 due to positive credit migration as well as increases in the quantitative reserve rates due to changes in the macroeconomic forecast and the historical utilization rates. The PCL, off-balance sheet credit exposures for the three months ended June 30, 2026, was primarily attributable to an increase in the quantitative reserve rate due to changes in the macroeconomic forecast and an increase in the utilization rates for unfunded commitments. The release in the PCL, off-balance sheet credit exposures for the six months ended June 30, 2026, was primarily attributable to a decrease in unfunded commitment balances partially offset by an increase in the quantitative reserve rate due to changes in the macroeconomic forecast and an increase in the utilization rates for unfunded commitments.
See the section captioned “Allowance for Credit Losses” for information regarding Trustmark’s ACL methodology as well as further analysis of the PCL.
The following table provides the comparative components of noninterest income for the periods presented ($ in thousands):
$ Change
% Change
(210
-2.0
(192
-0.9
-0.1
313
1.9
312
3.6
2.7
1,284
13.3
2,134
11.1
1,306
56.5
(288
-3.5
6.7
3.0
Changes in various components of noninterest income are discussed in further detail below. For analysis of Trustmark’s wealth management income, please see the section captioned “Results of Segment Operations.”
Mortgage Banking, Net
The following table illustrates the components of mortgage banking, net included in noninterest income for the periods presented ($ in thousands):
Mortgage servicing income, net
7,441
7,142
4.2
14,790
14,303
487
3.4
Change in fair value-MSR from runoff
(3,531
(3,596
1.8
(978
-17.3
Gain on sales of loans, net
4,805
5,597
(792
-14.2
9,591
9,850
(259
-2.6
Mortgage banking income before net hedge ineffectiveness
8,715
9,143
(428
-4.7
17,745
18,495
(750
-4.1
Change in fair value-MSR from market changes
3,320
(1,946
5,266
n/m
15,156
Change in fair value of derivatives
(3,121
1,405
(4,526
6,752
(13,931
Net hedge ineffectiveness
199
(541
740
(1,122
1,225
n/m - percentage changes greater than +/- 100% are not considered meaningful
Mortgage loan production for the three and six months ended June 30, 2026 was $477.0 million and $852.1 million, respectively, an increase of $50.8 million, or 11.9%, and $107.0 million, or 14.4%, respectively, when compared to the same time periods in 2025.
Loans serviced for others totaled $9.030 billion at June 30, 2026, compared with $8.859 billion at June 30, 2025, an increase of $171.2 million, or 1.9%.
Representing a significant component of mortgage banking income is the gain on sales of loans, net. The decrease in the gain on sales of loans, net when the three and six months ended June 30, 2026 are compared to the same time periods in 2025, was primarily the result of a decrease in the market valuation adjustment partially offset by an increase in the volume of loans sold. Loan sales totaled $306.7 million and $596.8 million, respectively, for the three and six months ended June 30, 2026, an increase of $31.8 million, or 11.6%, and $66.1 million, or 12.5%, respectively, when compared with the same time period in 2025.
Other, Net
The following table illustrates the components of other, net included in noninterest income for the periods presented ($ in thousands):
Partnership amortization for tax credit purposes
(2,171
(2,137
(34
-1.6
(4,364
(4,261
(103
-2.4
Increase in life insurance cash surrender value
1,925
1,911
0.7
3,797
3,778
0.5
Loss on sale of 1-4 family mortgage loans
(5,005
Gain on sale of Visa A shares
3,269
Visa C shares fair value adjustment
1,659
Other miscellaneous income
3,940
55.3
8,637
8,764
(127
-1.4
Total other, net
The increase in other, net when the three months ended June 30, 2026 is compared to the same time period in 2025 was principally due to the total gain on the sale of the Visa A shares and fair value adjustment of the Visa C shares and an increase in income from other partnership investments, partially offset by the loss on the sale of the 1-4 family mortgage loans.
The following table illustrates the comparative components of noninterest expense for the periods presented ($ in thousands):
4,692
6.9
10,442
7.6
10.2
4,447
8.4
Net occupancy-premises
221
2.9
662
4.4
1,061
17.1
1,751
14.0
(155
-1.0
(585
-1.8
Total noninterest expense
8,569
6.8
16,717
Changes in the various components of noninterest expense are discussed in further detail below. Management considers disciplined expense management a key area of focus in the support of improving shareholder value.
Salaries and Employee Benefits
The increase in salaries and employee benefits when the three and six months ended June 30, 2026 are compared to the same time periods in 2025 was principally due to increases in salaries expense primarily due to general merit increases, commission expense related to mortgage origination production and brokerage activity, management annual performance incentives, incentive stock compensation expense, payroll taxes, contributions to employee retirement funds and medical insurance expense.
Services and Fees
The increase in services and fees when the three months ended June 30, 2026 is compared to the same time period in 2025 was principally due to increases in data processing expenses related to software. The increase in services and fees when the six months ended June 30,
74
2026 is compared to the same time period in 2025 was principally due to increases in data processing expenses related to software, business process outsourcing expense and advertising expense.
Equipment Expense
The increase in equipment expense when the three and six months ended June 30, 2026 are compared to the same time periods in 2025 was principally due to an increase in data processing equipment expense.
Other Expense
The following table illustrates the comparative components of other noninterest expense for the periods presented ($ in thousands):
Loan expense
3,377
5.7
6,799
6,169
630
Amortization of intangibles
-100.0
FDIC assessment expense
3,389
4,064
(675
-16.6
6,996
8,224
(1,228
-14.9
Other real estate expense, net
689
159
530
872
261
42.7
Other miscellaneous expense
8,303
8,473
(170
16,617
(185
-1.1
Total other expense
Results of Segment Operations
For a description of the methodologies used to measure financial performance and financial information by reportable segment, please see Note 17 – Segment Information included in Part I. Item 1. – Financial Statements of this report. The following discusses changes in the results of operations of each reportable segment for the six months ended June 30, 2026 and 2025.
Net interest income for the General Banking Segment increased $13.2 million, or 4.3%, when the six months ended June 30, 2026 is compared with the same time period in 2025. The increase in net interest income was primarily due to declines in interest on deposits, interest on federal funds purchased and securities sold under repurchase agreements and interest on FHLB advances as well as increases in interest and fees on LHFS and LHFI and interest on securities, partially offset by a decline in other interest income. The net PCL (LHFI and off-balance sheet credit exposures) for the General Banking Segment for the six months ended June 30, 2026 totaled a negative $727 thousand compared to a net PCL of $10.0 million for the same time period in 2025, a decrease of $10.7 million, principally due to reserves released as a result of the sale of 1-4 family mortgage loans during the second quarter of 2026. For more information on these net interest income and PCL items, please see the sections captioned “Financial Highlights” and “Results of Operations.”
Noninterest income for the General Banking Segment was relatively unchanged when the first six months of 2026 is compared to the same time period in 2025. Noninterest income for the General Banking Segment includes service charges on deposit accounts; bank card and other fees; mortgage banking, net; wealth management; other, net and securities gains (losses), net. For more information on these noninterest income items, please see the analysis included in the section captioned “Noninterest Income.”
Noninterest expense for the General Banking Segment increased $14.8 million, or 6.3%, when the first six months of 2026 is compared with the same time period in 2025, principally due to increases in salaries and employee benefits, services and fees and equipment expense. For more information on these noninterest expense items, please see the analysis included in the section captioned “Noninterest Expense.”
Net income for the Wealth Management Segment for the first six months of 2026 increased $1.8 million, or 35.7%, when compared to the same time period in 2025, reflecting increases in net interest income and noninterest income, partially offset by an increase in noninterest expense. Net interest income for the Wealth Management Segment for the six months ended June 30, 2026 increased $2.2 million, or 59.4%, when compared to the same time period in 2025, principally due to an increase in the earnings credits assigned to the Wealth Management Segment related to deposits generated by the Private Banking group. The net PCL for the six months ended June 30, 2026 totaled $223 thousand compared to a negative net PCL of $20 thousand for the same period in 2025, an increase of $243 thousand. Noninterest income for the Wealth Management Segment, which primarily includes income related to investment
75
management, trust and brokerage services, increased $2.4 million, or 12.3%, when the first six months of 2026 is compared to the same time period in 2025, primarily due to an increase in income from brokerage and trust management services. Noninterest expense for the Wealth Management Segment increased $1.9 million, or 11.9%, when the first six months of 2026 is compared to the same time period in 2025, principally due to an increase in salaries and employee benefits, primarily related to broker commissions and general merit increases.
At June 30, 2026 and 2025, Trustmark held assets under management and administration of $11.435 billion and $9.818 billion, respectively, and brokerage assets of $2.901 billion and $2.757 billion, respectively.
Income Taxes
For the three and six months ended June 30, 2026, Trustmark’s combined effective tax rate was 18.3% and 17.9%, respectively, compared to 18.9% and 18.4%, respectively, for the same time periods in 2025. Trustmark’s effective tax rate continues to be less than the statutory rate primarily due to various tax-exempt income items and its utilization of income tax credit programs. Trustmark invests in partnerships that provide income tax credits on a Federal and/or State basis (i.e., new market tax credits, low-income housing tax credits or historical tax credits). The income tax credits related to these partnerships are utilized as specifically allowed by income tax law and are recorded as a reduction in income tax expense.
Financial Condition
Earning assets serve as the primary revenue streams for Trustmark and are comprised of securities, loans and other earning assets. Average earning assets totaled $17.526 billion, or 92.2% of total average assets, for the six months ended June 30, 2026, compared to $16.873 billion, or 92.1% of total average assets, for the six months ended June 30, 2025, an increase of $653.4 million, or 3.9%.
The securities portfolio is utilized by Management to manage interest rate risk, generate interest income, provide liquidity and use as collateral for public deposits and wholesale funding. Risk and return can be adjusted by altering duration, composition and/or balance of the portfolio. The weighted-average life of the portfolio was 4.3 years at both June 30, 2026 and December 31, 2025, respectively.
When compared to December 31, 2025, total investment securities decreased by $7.8 million, or 0.3%, during the first six months of 2026. This decrease resulted primarily from calls, maturities and pay-downs of the loans underlying GSE guaranteed securities and a decrease in the fair market value of the available for sale securities, partially offset by purchases of available for sale securities. Trustmark sold no securities during the first six months of 2026 or 2025.
During 2022, Trustmark reclassified $766.0 million of securities available for sale to securities held to maturity to mitigate the potential adverse impact of a rising interest rate environment on the fair value of the available for sale securities and the related impact on tangible common equity. At the date of these transfers, the net unrealized holding loss on the available for sale securities totaled $91.9 million ($68.9 million net of tax). The resulting net unrealized holding losses are being amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security.
At June 30, 2026, the net unamortized, unrealized loss on all transferred securities included in accumulated other comprehensive income (loss) (AOCI) in the accompanying consolidated balance sheets totaled $32.1 million compared to $36.3 million at December 31, 2025.
Available for sale securities are carried at their estimated fair value with unrealized gains or losses recognized, net of taxes, in AOCI, a separate component of shareholders’ equity. At June 30, 2026, available for sale securities totaled $1.942 billion, which represented 63.1% of the securities portfolio, compared to $1.877 billion, or 60.9% of total securities, at December 31, 2025. At June 30, 2026, unrealized gains, net on available for sale securities totaled $2.7 million compared to unrealized gains, net of $34.4 million at December 31, 2025. At June 30, 2026, available for sale securities consisted of U.S. Treasury securities, direct obligations of government agencies and GSE guaranteed mortgage-related securities.
Held to maturity securities are carried at amortized cost and represent those securities that Trustmark both intends and has the ability to hold to maturity. At June 30, 2026, held to maturity securities totaled $1.135 billion, which represented 36.9% of the total securities portfolio, compared to $1.207 billion, or 39.1% of total securities, at December 31, 2025.
Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 100.0% of the portfolio in U.S. Treasury securities, direct obligations of government agencies and GSE-backed obligations. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the FHLB of Dallas and FRBA, Trustmark does not hold any other equity investment in a GSE or other governmental entity.
As of June 30, 2026, Trustmark did not hold securities of any one issuer with a carrying value exceeding 10% of total shareholders’ equity, other than certain GSEs which are exempt from inclusion. Management continues to closely monitor the credit quality as well as the ratings of the debt and mortgage-backed securities issued by the GSEs and held in Trustmark’s securities portfolio.
The following tables present Trustmark’s securities portfolio by amortized cost and estimated fair value and by credit rating, as determined by Moody’s Investors Services (Moody’s), at June 30, 2026 and December 31, 2025 ($ in thousands):
Amortized Cost
Estimated Fair Value
39,848
2.1
40,487
1,899,111
97.9
1,901,137
Total securities available for sale
100.0
4.5
49,027
95.5
1,047,849
Total securities held to maturity
39,647
2.2
41,029
1,802,797
97.8
1,835,801
4.3
50,363
95.7
1,130,206
The table above presenting the credit rating of Trustmark’s securities is formatted to show the securities according to the credit rating category, and not by category of the underlying security.
At June 30, 2026, LHFS totaled $300.5 million, consisting of $165.9 million of residential real estate mortgage loans in the process of being sold to third parties and $134.6 million of GNMA optional repurchase loans. At December 31, 2025, LHFS totaled $278.8 million, consisting of $142.5 million of residential real estate mortgage loans in the process of being sold to third parties and $136.3 million of GNMA optional repurchase loans. Please refer to the nonperforming assets table that follows for information on GNMA loans eligible for repurchase which are past due 90 days or more.
For additional information regarding the GNMA optional repurchase loans, please see the section captioned “Past Due LHFS” included in Note 3 – LHFI and Allowance for Credit Losses, LHFI of Part I. Item 1. – Financial Statements of this report.
4.0
5.2
5.1
23.0
24.2
14.3
15.5
4.8
16.9
17.2
16.5
14.6
1.1
1.2
7.5
7.8
6.0
LHFI increased $238.8 million, or 1.7%, compared to December 31, 2025. The increase in LHFI during the first six months of 2026 was primarily due to net growth in commercial and industrial loans and other commercial loans and leases, partially offset by net declines in loans secured by real estate.
Commercial and industrial loans increased $295.3 million, or 14.8%, during the first six months of 2026, reflecting growth in the Alabama, Mississippi, Georgia, Texas and Florida market regions partially offset by a decline in the Tennessee market region. Other commercial loans and leases increased $106.6 million, or 13.0%, during the first six months of 2026, principally due to increases in equipment finance leases in the Georgia and Alabama market regions and other commercial loans in the Mississippi, Tennessee and Georgia market regions, partially offset by a decline in other commercial loans in the Texas market region. The equipment finance leases are primarily reported in the Georgia market region because they are centrally analyzed and approved as part of the Equipment Finance line of business which is located in Atlanta, Georgia.
Loans secured by real estate decreased $144.9 million, or 1.5%, during the first six months of 2026, principally due to net declines in other real estate secured loans and loans secured by nonfarm, nonresidential properties (NFNR loans), partially offset by growth in other construction loans. Other real estate secured loans decreased $133.7 million, or 6.3%, during the first six months of 2026, primarily due to declines in loans secured by multi-family residential properties in the Alabama, Mississippi, Texas and Georgia market regions partially offset by other construction loans that moved to loans secured by multi-family residential properties in the Alabama, Georgia, Mississippi and Texas market regions. Excluding other construction loan reclassifications, other real estate secured loans decreased $409.1 million, or 19.3%, during the first six months of 2026. NFNR loans declined $105.7 million, or 3.2%, during the first six months of 2026, principally due to declines in nonowner-occupied and owner-occupied loans in the Texas, Mississippi, Alabama, Florida and Tennessee market regions, partially offset by other construction loans that moved to NFNR loans in the Mississippi, Texas, Georgia and Alabama market regions and growth in nonowner-occupied loans in the Georgia market region. Excluding the other construction loan reclassifications, NFNR loans declined $210.6 million, or 6.4%, during the first six months of 2026. Other construction loans increased $65.8 million, or 11.1%, during the first six months of 2026 primarily due to new construction loans in the Mississippi, Alabama, Georgia and Texas market regions partially offset by other construction loans moved to other loan categories upon the completion of the related construction project in the Alabama, Georgia, Mississippi and Texas market regions. During the first six months of 2026, $380.3 million of loans were moved from other construction to other loan categories, including $275.4 million to multi-family residential loans, $94.1 million to nonowner-occupied loans and $10.8 million to owner-occupied loans. Excluding all reclassifications between loan categories, growth in other construction loans totaled $446.1 million, or 75.0%, during the first six months of 2026.
The following table provides information regarding Trustmark’s home equity loans and home equity lines of credit which are included in the other LHFI secured by 1-4 family residential properties for the periods presented ($ in thousands):
Home equity loans
68,162
72,895
Home equity lines of credit
512,589
497,937
Percentage of loans and lines for which Trustmark holds first lien
43.7
44.5
Percentage of loans and lines for which Trustmark does not hold first lien
56.3
55.5
78
Due to the increased risk associated with second liens, loan terms and underwriting guidelines differ from those used for products secured by first liens. Loan amounts and loan-to-value ratios are limited and are lower for second liens than first liens. Also, interest rates and maximum amortization periods are adjusted accordingly. In addition, regardless of lien position, the passing credit score for approval of all home equity lines of credit is generally higher than that of term loans. The ACL on LHFI is also reflective of the increased risk related to second liens through application of a greater loss factor to this portion of the portfolio.
Trustmark’s variable rate LHFI are based primarily on various prime and SOFR interest rate bases. The following tables provide information regarding the interest rate terms of Trustmark’s LHFI as of June 30, 2026 and December 31, 2025 ($ in thousands):
Fixed
Variable
109,464
446,267
Other secured by 1- 4 family residential properties
201,358
520,004
1,127,883
2,070,917
144,029
1,846,521
20,371
640,698
Secured by 1- 4 family residential properties
1,043,911
1,313,292
789,092
1,505,629
134,268
26,380
991,811
54,700
603,647
322,781
5,165,834
8,747,189
105,004
444,349
205,341
499,173
1,226,244
2,078,279
201,897
1,922,375
23,419
571,819
1,107,156
1,244,519
804,490
1,194,974
138,104
25,650
1,010,960
50,624
521,855
298,001
5,344,470
8,329,763
In the following tables, LHFI reported by region (along with related nonperforming assets and net charge-offs) are associated with location of origination except for loans secured by 1-4 family residential properties (representing traditional mortgages), credit cards and equipment finance loans and leases. Loans secured by 1-4 family residential properties and credit cards are primarily included in the Mississippi market region because they are centrally analyzed and approved as part of a specific line of business located at Trustmark’s headquarters in Jackson, Mississippi. The equipment finance loans and leases are primarily reported in the Georgia market region because they are centrally analyzed and approved as part of the Equipment Finance line of business which is located in Atlanta, Georgia.
79
The following table presents the LHFI composition by region at June 30, 2026 and reflects each region’s diversified mix of loans ($ in thousands):
LHFI Composition by Region
Florida
Georgia
Tennessee
Texas
266,296
21,480
13,663
117,933
42,521
93,838
173,282
67,062
347,133
88,768
45,117
789,274
159,857
164,780
1,455,246
108,017
521,626
785,962
1,565
296,998
540,416
7,164
358,445
173,166
160,513
177,997
149,393
2,355,629
1,574
710,644
23,787
403,512
779,786
121,897
255,095
19,058
8,781
90,426
10,245
32,138
52,644
55,003
4,690
813,654
26,441
94,079
24,008
4,940
519,521
274,874
55,913
47,172
2,994,334
342,475
1,563,677
6,953,094
462,540
1,596,903
Construction, Land Development and Other Land Loans by Region
Lots
79,698
38,214
7,093
18,193
4,971
11,227
Development
71,342
39,470
13,615
13,651
4,606
77,615
19,455
6,297
19,761
4,841
27,261
1-4 family construction
327,076
169,157
8,090
66,364
50,744
Construction, land development and other land loans
Loans Secured by NFNR Properties by Region
Nonowner-occupied:
Retail
256,434
84,989
10,765
19,175
68,170
16,996
56,339
Office
187,827
44,889
17,101
84,687
2,633
38,517
Hotel/motel
222,598
123,284
26,650
51,680
20,984
Mini-storage
198,505
55,341
54,487
87,057
405
Industrial and warehouses
528,634
98,255
19,006
41,118
280,029
2,932
87,294
Health care
124,112
105,460
15,748
1,959
Convenience stores
16,318
1,312
358
8,756
135
5,757
Nursing homes/senior living
182,297
13,948
117,089
3,075
48,185
181,431
35,326
7,859
50,000
47,130
5,561
35,555
Total nonowner-occupied loans
1,898,156
562,804
83,159
760,346
53,020
274,047
Owner-occupied:
145,525
46,020
28,098
34,677
10,035
26,695
Churches
40,508
9,253
3,481
22,826
1,738
3,210
219,644
16,073
6,638
69,598
118,554
116,430
4,635
13,714
88,434
2,071
7,576
94,033
5,260
55,884
30,199
82,382
16,122
13,067
39,807
6,718
6,668
Restaurants
71,031
2,309
1,644
37,866
24,160
5,052
Auto dealerships
16,958
1,363
14,242
1,224
381,129
108,192
272,937
133,004
17,243
7,237
58,629
49,625
Total owner-occupied loans
1,300,644
226,470
76,698
694,900
54,997
247,579
Loans secured by NFNR properties
ACL on LHFI and Off-Balance Sheet Credit Exposures
Trustmark’s ACL methodology for LHFI is based upon guidance within FASB ASC Subtopic 326-20, “Financial Instruments – Credit Losses – Measured at Amortized Cost,” as well as applicable regulatory guidance from its primary regulator. The ACL is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Credit quality within the LHFI portfolio is continuously monitored by Management and is reflected within the ACL for loans. The ACL is an estimate of expected losses inherent within Trustmark’s existing LHFI portfolio. The ACL on LHFI is adjusted through the PCL, LHFI and reduced by the charge off of loan amounts, net of recoveries.
80
The loan loss estimation process involves procedures to appropriately consider the unique characteristics of Trustmark’s LHFI portfolio segments. These segments are further disaggregated into loan classes, the level at which credit risk is estimated. When computing allowance levels, credit loss assumptions are estimated using a model that categorizes loan pools based on loss history, delinquency status and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Evaluations of the portfolio and individual credits are inherently subjective, as they require estimates, assumptions and judgments as to the facts and circumstances of particular situations.
During 2024, Trustmark executed a sale on a portfolio of 1-4 family mortgage loans that were at least three payments delinquent and/or nonaccrual at the time of selection. As a result of this sale, a credit mark was established for a sub-pool of the loans in the sale. Due to the lack of historical experience and the use of industry data for this sub-pool, management elected to use the credit mark for reserving purposes on a go forward basis for this sub-pool that meet the same credit criteria of being three payments delinquent and/or nonaccrual. All loans of the sub-pool that meet the above credit criteria will be removed from the 1-4 family residential properties pool and placed into a separate pool with the credit mark reserve applied to the total balance. During the second quarter of 2026, Trustmark executed another sale of 1-4 family mortgage loans that were primarily at least three payments delinquent and/or nonaccrual at the time of selection. Trustmark elected to update the loss rate for this sub-pool of loans as a result of this sale.
The econometric models currently in production reflect segment or pool level sensitivities of probability of default (PD) to changes in macroeconomic variables. By measuring the relationship between defaults and changes in the economy, the quantitative reserve incorporates reasonable and supportable forecasts of future conditions that will affect the value of Trustmark's assets, as required by FASB ASC Topic 326. Under stable forecasts, these linear regressions will reasonably predict a pool’s PD. However, upon the occurrence of events that generate significant economic instability (such as the COVID-19 pandemic), the macroeconomic variables used for reasonable and supportable forecasting can change rapidly and the econometric models, which are sensitive to similar future levels of PD, may not produce reasonably representative results.
In order to prevent the econometric models from extrapolating beyond reasonable boundaries of their input variables, Trustmark chose to establish an upper and lower limit process when applying the periodic forecasts. In this way, Management will not rely upon unobserved and untested relationships in the setting of the quantitative reserve. This approach applies to all current input variables, including: Southern Unemployment, National Unemployment, National Home Price Index (HPI) and the BBB 7-10 Year US Corporate Bond Index. The upper and lower limits are based on the distribution of the macroeconomic variable by selecting extreme percentiles at the upper and lower limits of the distribution, the 1st and 99th percentiles, respectively. These upper and lower limits are then used to calculate the PD for the forecast time period in which the forecasted values are outside of the upper and lower limit range. Additionally, for periods having a PD or loss given default (LGD) at or near zero as a result of the improving macroeconomic forecasts, Management implemented PD and LGD floors to account for the risk associated with each portfolio. The PD and LGD floors are based on Trustmark's historical loss experience and applied at a portfolio level.
The external factors qualitative factor is Management’s best judgment on the loan or pool level impact of all factors that affect the portfolio that are not accounted for using any other part of the ACL methodology (e.g., natural disasters, changes in legislation, impacts due to technology and pandemics). During 2024, Trustmark activated the External Factor – Credit Quality Review qualitative factor. This qualitative factor ensures reserve adequacy for collectively evaluated commercial loans that may not have been identified and downgraded timely for various reasons. This qualitative factor population is all commercial loans risk rated 1-5. These loans are then applied to the historical average of the Watch/Special Mention rated percentage. Then the balance of these loans are applied additional reserves based on the same reserve rates utilized in the performance trends qualitative factor for Watch/Special Mention rated loans. Then the Watch/Special Mention population is applied the historical Substandard rated percentage and then subsequently applied the Substandard reserve rate utilized in the performance trends qualitative factor as well. The historical Watch/Special Mention and Substandard rated percentage averages capture the weighted-average life of the commercial loan portfolio. Thus, Trustmark will allocate additional reserves to capture the proportion of potential Watch/Special Mention and Substandard rated credits that may not have been categorized as such at any given point in time through the life of the commercial loan portfolio. During the third quarter of 2025, Management determined that the risk related to delayed identification and downgrading of commercial loans had sufficiently diminished and, as a result, resolved the External Factor – Credit Quality Review qualitative factor and released the associated reserves.
The nature and volume of the portfolio qualitative factor is utilized for a sub-pool of the secured by 1-4 family residential properties due to its significant size as well as the underlying nature being different. The nature and volume of the portfolio qualitative factor utilizes a WARM methodology that uses Trustmark's historical data for the assumptions to support the qualitative adjustment. Trustmark’s historical data is used to develop a PD based on credit score ranges initially set up as well as using the same LGD value from the mortgage sale that occurred in 2024 along with the same weighted average life assumption utilized to determine the credit mark on this portfolio. During the second quarter of 2026, Trustmark updated the weighted average life assumption and LGD value as a result of the sale of 1-4 family mortgage loans that occurred during the quarter. The sub-pools of credits are then aggregated into the appropriate credit score bands in which a weighted-average loss rate is calculated based on the PD and LGD for each credit score range. This
81
weighted-average loss rate is then applied to the expected balance for the sub-segment of credits. This total is then used as the qualitative reserve adjustment.
Determining the appropriateness of the allowance is complex and requires judgment by Management about the effect of matters that are inherently uncertain. In future periods, evaluations of the overall LHFI portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the allowance and credit loss expense.
For a complete description of Trustmark’s ACL methodology and the quantitative and qualitative factors included in the calculation, please see Note 3 – LHFI and Allowance for Credit Losses, LHFI included in Part I. Item 1. – Financial Statements of this report.
At June 30, 2026, the ACL, LHFI was $148.2 million, a decrease of $8.9 million, or 5.7%, when compared with December 31, 2025. The decrease in the ACL during the first six months of 2026 was principally due to reserves released due to the sale of 1-4 family mortgage loans, positive credit migration and changes in the macroeconomic forecast, partially offset by an increase in reserves on individually analyzed loans and loan growth. Total reserves released or used due to the sale of 1-4 family mortgage loans during the second quarter of 2026 were $15.5 million, of which $9.2 million were released and $6.3 million (the credit related portion of the loss) was used for charge-offs. Allocation of Trustmark’s $148.2 million ACL, LHFI, represented 0.90% of commercial LHFI and 1.63% of consumer and home mortgage LHFI, resulting in an ACL to total LHFI of 1.07% at June 30, 2026. This compares with an ACL to total LHFI of 1.15% at December 31, 2025, which was allocated to commercial LHFI at 0.91% and to consumer and mortgage LHFI at 1.94%.
The following table presents changes in the ACL, LHFI for the periods presented ($ in thousands):
Charge-offs, sale of 1-4 family mortgage loans
The PCL, LHFI excluding the sale of 1-4 family mortgage loans for both the three and six months ended June 30, 2026 totaled 0.13% of average loans (LHFS and LHFI), respectively, compared to 0.16% and 0.20% of average loans (LHFS and LHFI), respectively, for the same time periods in 2025. The PCL, LHFI excluding the sale of 1-4 family mortgage loans for the three and six months ended June 30, 2026 decreased $894 thousand, or 16.7%, and $4.3 million, or 32.2%, respectively, when compared to the same time periods in 2025, principally due to a decline in required reserves as a result of positive credit migration, resolution of the Credit Quality Review Qualitative Factor during the third quarter of 2025, a decline in loan growth and changes in the macroeconomic forecast, partially offset by an increase in required reserves on individually analyzed credits.
82
The following table presents the net (charge-offs) recoveries by geographic market region for the periods presented ($ in thousands):
(2,331
(244
(2,538
151
(7,287
(1,647
(7,913
(2,402
(258
(178
(559
(498
Total net (charge-offs) recoveries
The increase in net charge-offs when the three and six months ended June 30, 2026 are compared to the same time period in 2025 was principally due to the $6.3 million of charge-offs in the Mississippi market region related to the sale of 1-4 family mortgage loans during the second quarter of 2026, partially offset by decreases in charge-offs in the Alabama and Mississippi market regions.
Trustmark maintains a separate ACL on off-balance sheet credit exposures, including unfunded loan commitments and letters of credit, which is included on the accompanying consolidated balance sheets. Expected credit losses for off-balance sheet credit exposures are estimated by calculating a commitment usage factor over the contractual period for exposures that are not unconditionally cancellable by Trustmark. Trustmark calculates a loan pool level unfunded amount for the period. Trustmark calculates an expected funding rate each period which is applied to each pool’s unfunded commitment balances to ensure that reserves will be applied to each pool based upon balances expected to be funded based upon historical levels. Additionally, a reserve rate is applied to the unfunded commitment balance, which includes both quantitative and a majority of the qualitative aspects of the current period’s expected credit loss rate. During 2024, Management implemented a performance trends qualitative factor and an External Factor – Credit Quality Review qualitative factor for unfunded commitments. For both qualitative factors, the same assumptions are applied in the unfunded commitment calculation that are used in the funded balance calculation with the only difference being the unfunded commitment calculation includes the funding rates for the unfunded commitments. The reserves for these two qualitative factors are added to the other calculated reserve to get a total reserve for off-balance sheet credit exposures. During the third quarter of 2025, Management determined that the risk related to delayed identification and downgrading of commercial loans had sufficiently diminished and, as a result, resolved the External Factor – Credit Quality Review qualitative factor and released the associated reserves. See the section captioned “ACL on Off-Balance Sheet Credit Exposures” in Note 11 – Contingencies included in Part I. Item 1. – Financial Statements of this report for complete description of Trustmark’s ACL methodology on off-balance sheet credit exposures.
Adjustments to the ACL on off-balance sheet credit exposures are recorded to the PCL, off-balance sheet credit exposures. At June 30, 2026, the ACL on off-balance sheet credit exposures totaled $27.5 million compared to $28.0 million at December 31, 2025, a decrease of $417 thousand, or 1.5%, primarily attributable to a decrease in unfunded commitment balances partially offset by an increase in the quantitative reserve rate due to changes in the macroeconomic forecast and an increase in the utilization rates for unfunded commitments. The PCL, off-balance sheet credit exposures totaled $1.5 million and a negative $417 thousand, respectively, for the three and six months ended June 30, 2026, compared to a negative $670 thousand and a negative $3.5 million, respectively, for the same time periods in 2025, an increase in provision expense of $2.2 million and $3.1 million, respectively, primarily due to reserves released during the second quarter of 2025 due to positive credit migration as well as increases in the quantitative reserve rates due to changes in the macroeconomic forecast and the historical utilization rates.
Nonperforming Assets
The table below provides the components of nonperforming assets by geographic market region at June 30, 2026 and December 31, 2025 ($ in thousands):
Nonaccrual LHFI
12,012
4,638
514
31,078
73,045
2,936
2,396
3,118
3,870
Total nonaccrual LHFI
Other real estate
Total nonperforming assets
54,866
91,348
Nonperforming assets/total loans (LHFS and LHFI) and ORE
0.65
Loans past due 90 days or more
LHFS - Guaranteed GNMA serviced loans (1)
109,508
98,939
See the previous discussion of LHFS for more information on Trustmark’s serviced GNMA loans eligible for repurchase and the impact of Trustmark’s repurchases of delinquent mortgage loans under the GNMA optional repurchase program.
At June 30, 2026, nonaccrual LHFI totaled $49.7 million, or 0.35% of total LHFS and LHFI, reflecting a decrease of $34.7 million, or 41.2%, relative to December 31, 2025. The decrease in nonaccrual LHFI during the first six months of 2026 was primarily due to the sale of nonaccrual 1-4 family mortgage loans in the Mississippi market region during the second quarter of 2026, partially offset by one large commercial credit in the Mississippi market region and one large commercial credit in the Alabama market region placed on nonaccrual status. Trustmark's mortgage loans are primarily included in the Mississippi market region because these loans are centrally analyzed and approved as part of the mortgage line of business which is located in Jackson, Mississippi.
For additional information regarding nonaccrual LHFI, see the section captioned “Nonaccrual and Past Due LHFI” included in Note 3 – LHFI and Allowance for Credit Losses, LHFI in Part I. Item 1. – Financial Statements of this report.
Other Real Estate
Other real estate at June 30, 2026 decreased $1.7 million, or 25.1%, when compared with December 31, 2025. The decrease in other real estate during the first six months of 2026 was principally due to properties sold in the Mississippi market region partially offset by properties foreclosed in the Mississippi and Alabama market regions.
84
The following tables illustrate changes in other real estate by geographic market region for the periods presented ($ in thousands):
7,316
5,033
1,935
1,880
(3,926
Net (write-downs) recoveries
(117
8,348
271
4,837
979
1,037
(1,080
4,860
1,041
3,181
(94
(86
170
699
4,374
(1,744
(59
(177
Other real estate is revalued on an annual basis or more often if market conditions necessitate. Subsequent to foreclosure, losses on the periodic revaluation of the property are charged against the reserve for other real estate write-downs or net income in other real estate expense, if a reserve does not exist. Write-downs of other real estate increased $61 thousand, or 51.3%, when the first six months of 2026 is compared to the same time period in 2025, reflecting an increase in write-downs of other real estate in the Alabama market region, partially offset by a decrease in the reserve for other real estate write-downs and a decrease in write-downs of other real estate in the Mississippi market region.
For additional information regarding other real estate, please see Note 5 – Other Real Estate included in Part I. Item 1. – Financial Statements of this report.
Trustmark’s deposits are its primary source of funding and primarily consist of core deposits from the communities Trustmark serves. Deposits include interest-bearing and noninterest-bearing demand accounts, savings, MMDA, CDs and individual retirement accounts. Total deposits were $16.071 billion at June 30, 2026 compared to $15.500 billion at December 31, 2025, an increase of $571.4 million, or 3.7%. During the first six months of 2026, noninterest-bearing deposits increased $337.0 million, or 11.1%, principally due to growth in commercial and consumer noninterest-bearing demand deposit accounts. Interest-bearing deposits increased $234.4 million, or 1.9%, during the first six months of 2026, primarily due to growth in public and commercial interest checking accounts, commercial MMDA, brokered CDs, commercial and public CDs and consumer savings accounts, partially offset by declines in consumer interest checking accounts, MMDA and CDs.
At June 30, 2026, Trustmark's total uninsured deposits were $6.003 billion, or 37.4% of total deposits, compared to $5.478 billion, or 35.3% of total deposits, at December 31, 2025.
Borrowings
Trustmark uses short-term borrowings, such as federal funds purchased and short-term FHLB advances, to fund growth of earning assets in excess of deposit growth. See the section captioned “Liquidity” for further discussion of the components of Trustmark’s excess funding capacity.
Federal funds purchased totaled $360.0 million at June 30, 2026 compared to $445.0 million at December 31, 2025, a decrease of $85.0 million, or 19.1%. Trustmark's federal funds purchased are over-night upstream federal funds purchased as needed for liquidity. Other borrowings totaled $137.9 million at June 30, 2026, a decrease of $226.9 million, or 62.2%, when compared with $364.8 million at December 31, 2025, principally due to a decrease in outstanding short-term FHLB advances with the FHLB of Dallas. The decrease in federal funds purchased and short-term FHLB advances during the first six months of 2026 reflected changes in funding needs principally due to deposit growth and a decline in the balance held at the FRBA included in other earning assets.
Legal Environment
Information required in this section is set forth under the heading “Legal Proceedings” of Note 11 – Contingencies included in Part I. Item 1. – Financial Statements of this report.
Off-Balance Sheet Arrangements
Information required in this section is set forth under the heading “Lending Related” of Note 11 – Contingencies included in Part I. Item 1. – Financial Statements of this report.
Capital Resources and Liquidity
Trustmark places a significant emphasis on the maintenance of a strong capital position, which promotes investor confidence, provides access to funding sources under favorable terms and enhances Trustmark’s ability to capitalize on business growth and acquisition opportunities. Higher levels of liquidity, however, bear corresponding costs, measured in terms of lower yields on short-term, more liquid earning assets and higher expenses for extended liability maturities. Trustmark manages capital based upon risks and growth opportunities as well as regulatory requirements. Trustmark utilizes a capital model in order to provide Management with a tool for analyzing changes in its strategic capital ratios. This allows Management to hold sufficient capital to provide for growth opportunities and protect the balance sheet against sudden adverse market conditions, while maintaining an attractive return on equity to shareholders.
At June 30, 2026, Trustmark’s total shareholders’ equity was $2.144 billion, an increase of $22.0 million, or 1.0%, when compared to December 31, 2025. During the first six months of 2026, shareholders’ equity increased primarily as a result of net income of $119.6 million, partially offset by common stock repurchases of $40.9 million, common stock dividends of $29.6 million and a $23.8 million negative net change in the fair market value of securities available for sale.
Trustmark and TB are subject to minimum risk-based capital and leverage capital requirements, as described in the section captioned “Capital Adequacy” included in Part I. Item 1. – Business of Trustmark’s 2025 Annual Report, which are administered by the federal bank regulatory agencies. These capital requirements, as defined by federal regulations, involve quantitative and qualitative measures of assets, liabilities and certain off-balance sheet instruments. Trustmark’s and TB’s minimum risk-based capital requirements include a capital conservation buffer of 2.50%. AOCI is not included in computing regulatory capital. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements of Trustmark and TB and limit Trustmark’s and TB’s ability to pay dividends. At June 30, 2026, Trustmark and TB exceeded all applicable minimum capital standards. In addition, Trustmark and TB met applicable regulatory guidelines to be considered well-capitalized at June 30, 2026. To be categorized in this manner, Trustmark and TB maintained minimum common equity Tier 1 risk-based capital, Tier 1 risk-based capital, total risk-based capital and Tier 1 leverage ratios, and were not subject to any written agreement, order or capital directive, or prompt corrective action directive issued by their primary federal regulators to meet and maintain a specific capital level for any capital measures. There are no significant conditions or events that have occurred since June 30, 2026 which Management believes have affected Trustmark’s or TB’s present classification.
During the fourth quarter of 2025, Trustmark enhanced its capital structure with the issuance of $175.0 million of the 2025 Notes. The 2025 Notes mature on December 1, 2035 and are redeemable at Trustmark's option under certain circumstances. Trustmark used the net proceeds from the offering, after the payment of offering expenses, to repay the $125.0 million of aggregate principal amount of the 2020 Notes plus accrued interest and for general corporate purposes. At June 30, 2026 and December 31, 2025, the carrying amount of the 2025 Notes was $172.1 million and $172.0 million, respectively. The 2025 Notes qualified as Tier 2 capital for Trustmark at June
86
30, 2026 and December 31, 2025. Trustmark may utilize the full carrying value of the 2025 Notes as Tier 2 capital until December 1, 2030 (five years prior to maturity). Beginning December 1, 2030, the 2025 Notes will phase out of Tier 2 capital 20.0% each year until maturity.
In 2006, Trustmark enhanced its capital structure with the issuance of trust preferred securities. For regulatory capital purposes, the trust preferred securities qualified as Tier 1 capital at June 30, 2026 and December 31, 2025. Trustmark intends to continue to utilize $60.0 million in trust preferred securities issued by Trustmark Preferred Capital Trust I (the Trust) as Tier 1 capital up to the regulatory limit, as permitted by the grandfather provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III Final Rule.
Refer to the section captioned “Regulatory Capital” included in Note 14 – Shareholders’ Equity in Part I. Item 1. – Financial Statements of this report for an illustration of Trustmark’s and TB’s actual regulatory capital amounts and ratios under regulatory capital standards in effect at June 30, 2026 and December 31, 2025.
Dividends on Common Stock
Dividends per common share for the six months ended June 30, 2026 and 2025 were $0.50 and $0.48, respectively. Trustmark’s indicated dividend for 2026 is $1.00 per common share, an increase of $0.04 per common share when compared to $0.96 per common share in 2025.
From time to time, Trustmark's Board of Directors has authorized stock repurchase plans. In general, stock repurchase plans allow Trustmark to proactively manage its capital position and return excess capital to shareholders. Shares purchased also provide Trustmark with shares of common stock necessary to satisfy obligations related to stock compensation awards.
On December 2, 2025, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2026, under which $100.0 million of Trustmark’s outstanding shares may be acquired through December 31, 2026. The repurchase program, which is subject to market conditions and management discretion, will be implemented through open market repurchases or privately negotiated transactions. Under this authority, Trustmark repurchased 952 thousand shares of its common stock valued at $40.9 million during the first six months of 2026.
Liquidity
Liquidity is the ability to ensure that sufficient cash flow and liquid assets are available to satisfy current and future financial obligations, including demand for loans and deposit withdrawals, funding operating costs and other corporate purposes. Consistent cash flows from operations and adequate capital provide internally generated liquidity. Furthermore, Management maintains funding capacity from a variety of external sources to meet daily funding needs, such as those required to meet deposit withdrawals, loan disbursements and security settlements. Liquidity strategy also includes the use of wholesale funding sources to provide for the seasonal fluctuations of deposit and loan demand and the cyclical fluctuations of the economy that impact the availability of funds. Management keeps excess funding capacity available to meet potential demands associated with adverse circumstances.
The asset side of the balance sheet provides liquidity primarily through maturities and cash flows from loans and securities as well as the ability to pledge or sell certain loans and securities. The liability portion of the balance sheet provides liquidity primarily through noninterest and interest-bearing deposits. Trustmark utilizes federal funds purchased, FHLB advances, the Federal Reserve Discount Window (Discount Window) and brokered deposits to provide additional liquidity. Access to these additional sources represents Trustmark’s incremental borrowing capacity.
Trustmark's liquidity position is continuously monitored and adjustments are made to manage the balance as deemed appropriate. Liquidity risk management is an important element to Trustmark's asset/liability management process. Trustmark regularly models liquidity stress scenarios to assess potential liquidity outflows or funding problems resulting from economic disruptions or other significant occurrences as deemed appropriate by Management. These scenarios are incorporated into Trustmark's contingency funding plan, which provides the basis for the identification of its liquidity needs.
Deposit accounts represent Trustmark’s largest funding source. Average deposits totaled $15.681 billion for the first six months of 2026 and represented 82.5% of average liabilities and shareholders’ equity, compared to average deposits of $15.078 billion, which represented 82.3% of average liabilities and shareholders’ equity for the first six months of 2025. For more information on average interest-bearing deposits, please see the analysis included in the section captioned “Net Interest Income.”
Trustmark had $352.1 million held in an interest-bearing account at the FRBA at June 30, 2026, compared to $408.4 million held at December 31, 2025.
Trustmark utilizes brokered deposits to supplement other wholesale funding sources. At June 30, 2026 and December 31, 2025, brokered sweep MMDA deposits totaled $11.1 million and $9.6 million, respectively. In addition, Trustmark had $397.6 million of brokered CDs at June 30, 2026 compared to $299.9 million at December 31, 2025.
At June 30, 2026, Trustmark had $360.0 million of upstream federal funds purchased compared to $445.0 million of upstream federal funds purchased at December 31, 2025. Trustmark maintains adequate federal funds lines to provide sufficient short-term liquidity.
Trustmark maintains a relationship with the FHLB of Dallas, which provided no outstanding short-term advances at June 30, 2026, compared to $225.0 million of outstanding short-term advances at December 31, 2025. Under the existing borrowing agreement, Trustmark had sufficient qualifying collateral to increase FHLB advances or letters of credit with the FHLB of Dallas by $2.182 billion at June 30, 2026.
Additionally, Trustmark has the ability to leverage its unencumbered investment securities as collateral. At June 30, 2026, Trustmark had $1.338 billion available in unencumbered Treasury and agency securities compared to $1.371 billion in unencumbered Treasury and agency securities at December 31, 2025.
Another borrowing source is the Discount Window. At June 30, 2026, Trustmark had $8.215 billion available in collateral capacity at the Discount Window primarily from pledges of commercial and consumer LHFI, compared with $7.771 billion at December 31, 2025.
During the fourth quarter of 2025, Trustmark issued and sold $175.0 million aggregate principal amount of the 2025 Notes. Trustmark used the net proceeds from the offering, after the payment of offering expenses, to repay the existing $125.0 million of aggregate principal amount of the 2020 Notes plus accrued interest and for general corporate purposes. At June 30, 2026 and December 31, 2025, the carrying amount of the subordinated notes was $172.1 million and $172.0 million, respectively. The 2025 Notes mature December 1, 2035 and are redeemable at Trustmark’s option under certain circumstances. The 2025 Notes are unsecured obligations and are subordinated in right of payment to all of Trustmark’s existing and future senior indebtedness, whether secured or unsecured. The 2025 Notes are obligations of Trustmark only and are not obligations of, and are not guaranteed by, any of its subsidiaries, including TB.
During 2006, Trustmark completed a private placement of $60.0 million of trust preferred securities through a newly formed Delaware trust affiliate, the Trust. The trust preferred securities mature September 30, 2036 and are redeemable at Trustmark’s option. The proceeds from the sale of the trust preferred securities were used by the Trust to purchase $61.9 million in aggregate principal amount of Trustmark’s junior subordinated debentures.
The Board of Directors of Trustmark currently has the authority to issue up to 20.0 million preferred shares with no par value. The ability to issue preferred shares in the future will provide Trustmark with additional financial and management flexibility for general corporate and acquisition purposes. At June 30, 2026, Trustmark had no shares of preferred stock issued and outstanding.
Management believes that Trustmark has sufficient liquidity and capital resources to meet presently known cash flow requirements arising from ongoing business transactions. As of June 30, 2026, Management is not aware of any events that are reasonably likely to have a material adverse effect on Trustmark's liquidity, capital resources or operations. In addition, Management is not aware of any regulatory recommendations regarding liquidity that would have a material adverse effect on Trustmark.
In the ordinary course of business, Trustmark has entered into contractual obligations and has made other commitments to make future payments. Please refer to the accompanying notes to the consolidated financial statements included in Part I. Item 1. – Financial Statements of this report and Trustmark's 2025 Annual Report for the expected timing of such payments as of June 30, 2026 and December 31, 2025. There have been no material changes in Trustmark's contractual obligations since year-end.
88
Asset/Liability Management
Overview
Market risk reflects the potential risk of loss arising from adverse changes in interest rates and market prices. Trustmark has risk management policies to monitor and limit exposure to market risk. Trustmark’s primary market risk is interest rate risk created by core banking activities. Interest rate risk is the potential variability of the income generated by Trustmark’s financial products or services, which results from changes in various market interest rates. Market rate changes may take the form of absolute shifts, variances in the relationships between different rates and changes in the shape or slope of the interest rate term structure.
Management continually develops and applies cost-effective strategies to manage these risks. Management’s Asset/Liability Committee sets the day-to-day operating guidelines, approves strategies affecting net interest income and coordinates activities within policy limits established by the Board of Directors of Trustmark. A key objective of the asset/liability management program is to quantify, monitor and manage interest rate risk and to assist Management in maintaining stability in the net interest margin under varying interest rate environments.
Trustmark uses financial derivatives for management of interest rate risk. Management’s Asset/Liability Committee, in its oversight role for the management of interest rate risk, approves the use of derivatives in balance sheet hedging strategies. The most common derivatives employed by Trustmark are interest rate lock commitments, forward contracts (both futures contracts and options on futures contracts), interest rate swaps, interest rate caps and interest rate floors. As a general matter, the values of these instruments are designed to be inversely related to the values of the assets that they hedge (i.e., if the value of the hedged asset falls, the value of the related hedge rises). In addition, Trustmark has entered into derivatives contracts as counterparty to one or more customers in connection with loans extended to those customers. These transactions are designed to hedge interest rate exposure of the customers and are not entered into by Trustmark for speculative purposes. Increased federal regulation of the derivatives markets may increase the cost to Trustmark to administer derivatives programs.
Trustmark engages in a cash flow hedging program to add stability to interest income and to manage its exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of fixed-rate amounts from a counterparty in exchange for Trustmark making variable-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate floor spreads designated as cash flow hedges involve the receipt of variable-rate amounts if interest rates fall below the purchased floor strike rate on the contract and payments of variable rate amounts if interest rates fall below the sold floor strike rate on the contract. Trustmark uses such derivatives to hedge the variable cash flows associated with existing and anticipated variable-rate loan assets. At June 30, 2026, the aggregate notional value of Trustmark's interest rate swaps and floor spreads designated as cash flow hedges totaled $1.645 billion compared to $1.630 billion at December 31, 2025.
Trustmark records any gains or losses on these cash flow hedges in AOCI. Gains and losses on derivatives representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with Trustmark’s accounting policy election. The earnings recognition of excluded components included in interest and fees on LHFS and LHFI totaled $118 thousand and $241 thousand of amortization expense for the three and six months ended June 30, 2026, respectively, compared to $131 thousand and $261 thousand of amortization expense for the three and six months ended June 30, 2025, respectively. As interest payments are received on Trustmark's variable-rate assets, amounts reported in AOCI are reclassified into interest and fees on LHFS and LHFI in the accompanying consolidated statements of income during the same period. For the three and six months ended June 30, 2026, Trustmark reclassified a loss, net of tax, of $604 thousand and $1.3 million into interest and fees on LHFS and LHFI, compared to a loss, net of tax, of $2.0 million and $4.0 million, respectively, for the same time periods in 2025. During the next twelve months, Trustmark estimates that $4.4 million will be reclassified as a reduction to interest and fees on LHFS and LHFI. This amount could differ due to changes in interest rates, hedge de-designations or the addition of other hedges.
Derivatives Not Designated as Hedging Instruments
As part of Trustmark’s risk management strategy in the mortgage banking business, various derivative instruments such as interest rate lock commitments and forward sales contracts are utilized. Rate lock commitments are residential mortgage loan commitments with customers, which guarantee a specified interest rate for a specified period of time. Changes in the fair value of these derivative instruments are recorded as noninterest income in mortgage banking, net and are offset by the changes in the fair value of forward sales contracts. The gross notional amount of Trustmark’s off-balance sheet obligations under these derivative instruments totaled $87.2 million at June 30, 2026, with a positive valuation adjustment of $1.1 million, compared to $74.5 million, with a positive valuation
adjustment of $998 thousand at December 31, 2025. Trustmark’s obligations under forward contracts consist of commitments to deliver mortgage loans, originated and/or purchased, in the secondary market at a future date. Changes in the fair value of these derivative instruments are recorded as noninterest income in mortgage banking, net and are offset by changes in the fair value of LHFS. The gross notional amount of Trustmark’s off-balance sheet obligations under these derivative instruments totaled $187.5 million at June 30, 2026, with a negative valuation adjustment of $42 thousand, compared to $152.0 million, with a negative valuation adjustment of $287 thousand at December 31, 2025.
Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that economically hedges changes in fair value of the MSR attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under GAAP. The total notional amount of these derivative instruments was $354.5 million at June 30, 2026 compared to $345.5 million at December 31, 2025. These exchange-traded derivative instruments are accounted for at fair value with changes in the fair value recorded as noninterest income in mortgage banking, net and are offset by the changes in the fair value of the MSR. The MSR fair value represents the present value of future cash flows, which among other things includes decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the change in value of hedge instruments to the change in the fair value of the MSR asset attributable to changes in interest rates and other market driven changes in valuation inputs and assumptions. The impact of this strategy resulted in a net positive ineffectiveness of $199 thousand and a net negative ineffectiveness of $541 thousand for the three months ended June 30, 2026 and 2025, respectively. For the six months ended June 30, 2026 and 2025, the impact was a net positive ineffectiveness of $103 thousand and a net negative ineffectiveness of $1.1 million, respectively.
Trustmark offers certain interest rate derivatives products directly to qualified commercial lending clients seeking to manage their interest rate risk under loans they have entered into with TB. Trustmark economically hedges interest rate swap transactions executed with commercial lending clients by entering into offsetting interest rate swap transactions with institutional derivatives market participants. Derivatives transactions executed as part of this program are not designated as qualifying hedging relationships under GAAP and are, therefore, carried on Trustmark’s financial statements at fair value with the change in fair value recorded as noninterest income in bank card and other fees. Because these derivatives have mirror-image contractual terms, in addition to collateral provisions which mitigate the impact of non-performance risk, the changes in fair value are expected to substantially offset. The offsetting interest rate swap transactions are either cleared through the Chicago Mercantile Exchange for clearable transactions or booked directly with institutional derivations market participants for non-clearable transactions. The Chicago Mercantile Exchange rules legally characterize variation margin collateral payments made or received for centrally cleared interest rate swaps as settlements rather than collateral. As a result, centrally cleared interest rate swaps included in other assets and other liabilities are presented on a net basis in the accompanying consolidated balance sheets. At June 30, 2026, Trustmark had interest rate swaps with an aggregate notional amount of $2.158 billion related to this program, compared to $1.991 billion at December 31, 2025.
Credit-Risk-Related Contingent Features
Trustmark has agreements with its financial institution counterparties that contain provisions where if Trustmark defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then Trustmark could also be deemed to be in default on its derivatives obligations.
At June 30, 2026, the termination value of interest rate swaps in a liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements totaled $2.8 million compared to $117 thousand at December 31, 2025. At June 30, 2026 and December 31, 2025, Trustmark had posted collateral of $4.5 million and $2.2 million, respectively, against its obligations because of negotiated thresholds and minimum transfer amounts under these agreements. If Trustmark had breached any of these triggering provisions at June 30, 2026, it could have been required to settle its obligations under the agreements at the termination value (which is expected to approximate fair market value).
Credit risk participation agreements arise when Trustmark contracts with other financial institutions, as a guarantor or beneficiary, to share credit risk associated with certain interest rate swaps. These agreements provide for reimbursement of losses resulting from a third-party default on the underlying swap. At June 30, 2026, Trustmark had entered into ten risk participation agreements as a beneficiary with an aggregate notional amount of $120.1 million compared to ten risk participation agreements as a beneficiary with an aggregate notional amount of $113.7 million at December 31, 2025. At June 30, 2026, Trustmark had entered into twenty-six risk participation agreements as a guarantor with an aggregate notional amount of $329.8 million compared to twenty-seven risk participation agreements as a guarantor with an aggregate notional amount of $267.9 million at December 31, 2025. The aggregate fair values of these risk participation agreements were immaterial at both June 30, 2026 and December 31, 2025.
Trustmark’s participation in the derivatives markets is subject to increased federal regulation of these markets. Trustmark believes that it may continue to use financial derivatives to manage interest rate risk and also to offer derivatives products to certain qualified commercial lending clients in compliance with the Volcker Rule.
90
Market/Interest Rate Risk Management
The primary purpose in managing interest rate risk is to invest capital effectively and preserve the value created by the core banking business. This is accomplished through the development and implementation of lending, funding, pricing and hedging strategies designed to maximize net interest income performance under varying interest rate environments subject to specific liquidity and interest rate risk guidelines.
Financial simulation models are the primary tools used by Management’s Asset/Liability Committee to measure interest rate exposure. The simulation incorporates assumptions regarding the effects of such changes based on a combination of historical analysis and expected behavior. Using a wide range of scenarios, Management is provided with extensive information on the potential impact on net interest income caused by changes in interest rates. Models are structured to simulate cash flows and accrual characteristics of Trustmark’s balance sheet. Assumptions are made about the direction and volatility of interest rates, the slope of the yield curve and the changing composition of Trustmark’s balance sheet, resulting from both strategic plans and customer behavior. In addition, the model incorporates Management’s assumptions and expectations regarding such factors as loan and deposit growth, pricing, prepayment speeds and spreads between interest rates.
Based on the results of the simulation models using static balances, the table below summarizes the effect various one-year interest rate shift scenarios would have on net interest income compared to a base case, flat scenario at June 30, 2026 and 2025.
Estimated % Changein Net Interest Income
Change in Interest Rates
+200 basis points
1.7
+100 basis points
0.8
-100 basis points
-2.3
-1.5
-200 basis points
-5.1
-3.7
Management cannot provide any assurance about the actual effect of changes in interest rates on net interest income. The estimates provided do not include the effects of possible strategic changes in the balances of various assets and liabilities throughout 2026 or additional actions Trustmark could undertake in response to changes in interest rates. Management will continue to prudently manage the balance sheet in an effort to control interest rate risk and maintain profitability over the long term.
Another component of interest rate risk management is measuring the economic value-at-risk for a given change in market interest rates. The economic value-at-risk may indicate risks associated with longer-term balance sheet items that may not affect net interest income at risk over shorter time periods. Trustmark uses computer-modeling techniques to determine the present value of all asset and liability cash flows (both on- and off-balance sheet), adjusted for prepayment expectations, using a market discount rate. The economic value of equity (EVE), also known as net portfolio value, is defined as the difference between the present value of asset cash flows and the present value of liability cash flows. The resulting change in EVE in different market rate environments, from the base case scenario, is the amount of EVE at risk from those rate environments.
The following table summarizes the effect that various interest rate shifts would have on net portfolio value at June 30, 2026 and 2025.
Estimated % Changein Net Portfolio Value
0.2
0.3
-0.5
Trustmark determines the fair value of the MSR using a valuation model administered by a third party that calculates the present value of estimated future net servicing income. The model incorporates assumptions that market participants use in estimating future net servicing income, including estimates of prepayment speeds, discount rate, default rates, cost to service (including delinquency and foreclosure costs), escrow account earnings, contractual servicing fee income and other ancillary income such as late fees. Management reviews all significant assumptions quarterly. Mortgage loan prepayment speed, a key assumption in the model, is the annual rate at which borrowers are forecasted to repay their mortgage loan principal. The discount rate used to determine the present value of estimated future net servicing income, another key assumption in the model, is an estimate of the required rate of return investors in the market would require for an asset with similar risk. Both assumptions can, and generally will, change as market conditions and interest rates change.
91
By way of example, an increase in either the prepayment speed or discount rate assumption will result in a decrease in the fair value of the MSR, while a decrease in either assumption will result in an increase in the fair value of the MSR. In recent years, there have been significant market-driven fluctuations in loan prepayment speeds and discount rates. These fluctuations can be rapid and may continue to be significant. Therefore, estimating prepayment speed and/or discount rates within ranges that market participants would use in determining the fair value of the MSR requires significant management judgment.
At June 30, 2026, the MSR fair value was $141.8 million, compared to $132.7 million at June 30, 2025. The impact on the MSR fair value of a 10% adverse change in prepayment speed or a 100 basis point increase in discount rate at June 30, 2026, would be a decline in fair value of $5.2 million and $5.7 million, respectively, compared to a decline in fair value of $4.9 million and $5.2 million, respectively, at June 30, 2025. Changes of equal magnitude in the opposite direction would produce similar increases in fair value in the respective amounts.
Critical Accounting Policies
For an overview of Trustmark’s critical accounting policies, see the section captioned “Critical Accounting Policies” included in Part II. Item 7. – Management’s Discussion and Analysis of Financial Condition and Results of Operations, of Trustmark’s 2025 Annual Report. There have been no significant changes in Trustmark’s critical accounting policies during the first six months of 2026.
For additional information regarding Trustmark’s basis of presentation and accounting policies, see Note 1 – Business, Basis of Financial Statement Presentation and Principles of Consolidation included in Part I. Item 1. – Financial Statements of this report.
Accounting Policies Recently Adopted and Pending Accounting Pronouncements
For a complete list of recently adopted and pending accounting policies and the impact on Trustmark, see Note 18 – Accounting Policies Recently Adopted and Pending Accounting Pronouncements included in Part I. Item 1. – Financial Statements of this report.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is included in the discussion of Market/Interest Rate Risk Management found in Management’s Discussion and Analysis.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out by Trustmark’s Management, with the participation of its Chief Executive Officer and Treasurer and Principal Financial Officer (Principal Financial Officer), of the effectiveness of Trustmark’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, the Chief Executive Officer and the Principal Financial Officer concluded that Trustmark’s disclosure controls and procedures were effective as of the end of the period covered by this report.
Changes in Internal Control over Financial Reporting
There has been no change in Trustmark’s internal control over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, Trustmark’s internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Information required in this section is set forth under the heading “Legal Proceedings” of Note 11 – Contingencies in Part I. Item 1 – Financial Statements of this report.
In accordance with FASB Accounting Standards Codification (ASC) Topic 450-20, “Loss Contingencies,” Trustmark will establish an accrued liability for litigation matters when those matters present loss contingencies that are both probable and reasonably estimable. At the present time, Trustmark believes, based on its evaluation and the advice of legal counsel, that a loss in any such proceeding is not probable and reasonably estimable. All matters will continue to be monitored for further developments that would make such loss contingency both probable and reasonably estimable. In view of the inherent difficulty of predicting the outcome of legal proceedings, Trustmark cannot predict the eventual outcomes of the currently pending matters or the timing of their ultimate resolution. Trustmark
92
currently believes, however, based upon the advice of legal counsel and Management’s evaluation and after taking into account its current insurance coverage, that the legal proceedings currently pending should not have a material adverse effect on Trustmark’s consolidated financial condition.
ITEM 1A. RISK FACTORS
There has been no material change in the risk factors previously disclosed in Trustmark’s 2025 Annual Report.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On December 2, 2025, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2026, under which $100.0 million of Trustmark’s outstanding shares may be acquired through December 31, 2026. The repurchase program, which is subject to market conditions and management discretion, will be implemented through open market repurchases or privately negotiated transactions.
The following table provides information with respect to purchases by Trustmark or made on behalf of Trustmark of its common stock during the three months ended June 30, 2026 ($ in thousands, except per share amounts):
Period
Total Number of Shares Purchased
Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plan
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan at the End of the Period
April 1, 2026 to April 30, 2026
93,613
43.45
76,138
May 1, 2026 to May 31, 2026
221,087
44.26
66,354
June 1, 2026 to June 30, 2026
160,514
44.96
59,137
475,214
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Securities Trading Plans of Directors and Executive Officers
During the three months ended June 30, 2026, none of Trustmark’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Trustmark’s securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” (as defined in Item 408(c) of Regulation S-K).
ITEM 6. EXHIBITS
The exhibits listed in the Exhibit Index are filed herewith or are incorporated herein by reference.
EXHIBIT INDEX
31-a
Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31-b
Certification by Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32-a
Certification by Chief Executive Officer pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32-b
Certification by Principal Financial Officer pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101
Inline XBRL Interactive Data.
Cover Page Interactive Data File (embedded within the Inline XBRL document).
All other exhibits are omitted, as they are inapplicable or not required by the related instructions.
94
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TRUSTMARK CORPORATION
BY:
/s/ Duane A. Dewey
/s/ Joseph E. Bond
Duane A. Dewey
Joseph E. Bond
President and Chief Executive Officer
Treasurer and Principal Financial Officer
DATE:
August 5, 2026