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Trustmark Corp. Reports Operating Results (10-Q)

August 08, 2012 | About:

10qk

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Trustmark Corp. (TRMK) filed Quarterly Report for the period ended 2012-06-30.

Trustmark Corp has a market cap of $1.58 billion; its shares were traded at around $24.22 with a P/E ratio of 14.2 and P/S ratio of 2.8. The dividend yield of Trustmark Corp stocks is 3.8%.

Highlight of Business Operations:

Trustmark reported net income available to common shareholders of $29.3 million, or basic and diluted earnings per common share of $0.45 in the second quarter of 2012, compared to $31.6 million, or basic and diluted earnings per common share of $0.49, in the second quarter of 2011. Trustmark s performance during the quarter ended June 30, 2012, produced a return on average tangible common equity of 12.74% and a return on average assets of 1.20% compared to a return on average tangible common equity of 14.71% and a return on average assets of 1.32% during the quarter ended June 30, 2011. During the six months ended June 30, 2012, Trustmark's net income available to common shareholders totaled $59.7 million, or basic and diluted earnings per common share of $0.92, an increase of $4.1 million and $0.05 when compared to the six months ended June 30, 2011. Trustmark's performance during the six months ended June 30, 2012, produced a return on average tangible common equity of 13.07%, a decrease of 0.14% when compared to the six months ended June 30, 2011 and a return on average assets of 1.23%, an increase of 0.06% when compared to the six months ended June 30, 2011. Trustmark s Board of Directors declared a quarterly cash dividend of $0.23 per common share. The dividend is payable September 15, 2012, to shareholders of record on September 1, 2012.

Average interest-earning assets for the first six months of 2012 were $8.698 billion, compared with $8.519 billion for the same time period in 2011, an increase of $178.4 million. The growth in average interest-earning assets was primarily due to an increase in average total securities of $193.5 million, or 8.2%, during the first six months of 2012. The increase in securities was offset by a decrease in average other earning assets of $8.0 million, or 20.1%, during the first six months of 2012. The decrease in average other earning assets is due to a decrease in FHLB and FRB stock of $5.2 million, or 16.1%, and a decrease in exchange-traded derivative instruments of $2.9 million, or 47.5%, during the first six months of 2012. During the first six months of 2012, interest on securities-taxable decreased $4.6 million, or 11.5%, as the yield on taxable securities decreased 69 basis points when compared with the same time period in 2011 due to the run-off of higher yielding securities replaced at lower yields. During the first six months of 2012, interest and fees on loans-FTE decreased $2.6 million, or 1.6%, due to lower average loan balances while the yield on loans fell to 5.16% compared to 5.25% during the same time period in 2011. As a result of these factors, interest income-FTE decreased $7.2 million, or 3.5%, when the first six months of 2012 is compared with the same time period in 2011. The impact of these changes is also illustrated by the decline in the yield on total earning assets, which fell from 4.84% for the first six months of 2011 to 4.56% for the same time period in 2012, a decrease of 28 basis points.

Trustmark s noninterest income continues to play an important role in improving net income and total shareholder value. Noninterest income represented 33.6% and 33.3% of total revenue, before securities gains, net for the first three and six months of 2012 and 34.6% and 32.2% of total revenue, before securities gains, net for the first three and six months of 2011, respectively. Total noninterest income before securities gains, net for the first six months of 2012 totaled $86.5 million, an increase of $3.8 million, or 4.5%, when compared to the same period in 2011. The comparative components of noninterest income for the periods ended June 30, 2012 and 2011 are shown in the accompanying table:

Wealth management income totaled $11.3 million for the first six months of 2012 compared with $11.7 million for the same time period in 2011. Wealth management consists of income related to investment management, trust and brokerage services. Brokerage services experienced slight declines when compared to the same period last year, however, has shown an improved trend over revenue in fourth quarter 2011. The remaining revenue declines are mostly attributed to investment advisory and retirement plan services. These fees tend to lag the performance of the financial markets and are expected to improve in response to recent positive market performance. At June 30, 2012 and 2011, Trustmark held assets under management and administration of $8.7 billion and $7.6 billion, respectively, and brokerage assets of $1.2 billion and $1.3 billion, respectively.

Trustmark uses short-term borrowings to fund growth of earning assets in excess of deposit growth. Short-term borrowings consist primarily of federal funds purchased, securities sold under repurchase agreements and short-term FHLB advances. Short-term borrowings totaled $376.3 million at June 30, 2012, a decrease of $315.9 million, when compared with $692.1 million at December 31, 2011. Of these amounts, $297.2 million and $239.4 million, respectively, were customer related transactions, such as commercial sweep repo balances. The decrease in short-term borrowings resulted primarily from declines of $306.8 million in federal funds purchased and securities sold under repurchase agreements as funding pressures lessened due to strong deposit growth.

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