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Trustmark Corp. Reports Operating Results (10-Q)

November 07, 2012 | About:
gurugk

10qk

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Trustmark Corp. (TRMK) filed Quarterly Report for the period ended 2012-09-30.

Trustmark Corporation has a market cap of $1.52 billion; its shares were traded at around $22.85 with a P/E ratio of 13.3 and P/S ratio of 2.7. The dividend yield of Trustmark Corporation stocks is 3.9%.

Highlight of Business Operations:

Trustmark reported net income available to common shareholders of $29.9 million, or basic and diluted earnings per common share of $0.46, in the third quarter of 2012 compared to $27.0 million, or basic and diluted earnings per share of $0.42, in the third quarter of 2011. Trustmark's performance during the quarter ended September 30, 2012, produced a return on average tangible common equity of 12.61% and a return on average assets of 1.21% compared to a return on average tangible common equity of 12.04% and a return on average assets of 1.12% during the quarter ended September 30, 2011. During the nine months ended September 30, 2012, Trustmark's net income available to common shareholders totaled $89.6 million or basic and diluted earnings per common share of $1.39 and $1.38, respectively, an increase of $7.0 million and $0.10 and $0.09 when compared to the nine months ended September 30, 2011, respectively. Trustmark's performance during the nine months ended September 30, 2012, produced a return on average tangible common equity of 12.91% and a return on average assets of 1.22%, an increase of 0.11% and 0.07% when compared to the nine months ended September 30, 2011, respectively. Trustmark s Board of Directors declared a quarterly cash dividend of $0.23 per common share. The dividend is payable December 15, 2012, to shareholders of record on December 1, 2012.

Average interest-earning assets for the first nine months of 2012 were $8.700 billion, compared with $8.515 billion for the same time period in 2011, an increase of $185.1 million. The growth in average earning assets was primarily due to an increase in average total securities of $204.8 million, or 8.6%, during the first nine months of 2012. The increase in securities, which resulted primarily from purchases of U.S. Government-sponsored agency guaranteed securities net of maturities and paydowns, was partially offset by a decrease in average other earning assets of $5.5 million, or 14.7%, during the first nine months of 2012. The decrease in average other earning assets is due to a decrease in FHLB and FRB stock of $5.5 million, or 17.3%, and a decrease in exchange-traded derivative instruments of $2.5 million, or 42.0%, during the first nine months of 2012. During the first nine months of 2012, interest on securities-taxable decreased $6.8 million, or 11.7%, as the yield on taxable securities decreased 68 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 nine months of 2012, interest and fees on loans-FTE decreased $4.0 million, or 1.7%, due to lower average loan balances while the yield on loans fell slightly to 5.15% compared to 5.23% during the same time period in 2011. As a result of these factors, interest income-FTE decreased $11.0 million, or 3.6%, when the first nine 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 4.78% for the first nine months of 2011 to 4.51% for the same time period in 2012, a decrease of 27 basis points.

Trustmark s noninterest income continues to play an important role in improving net income and total shareholder value. Noninterest income represented 34.5% and 33.7% of total revenue, before securities gains, net for the first three and nine months of 2012 and 34.1% and 32.8% of total revenue, before securities gains, net for the first three and nine months of 2011, respectively. Total noninterest income before securities gains, net for the first nine months of 2012 totaled $131.4 million, an increase of $4.4 million, or 3.5%, when compared to the same period in 2011. The comparative components of noninterest income for the periods ended September 30, 2012 and 2011 are shown in the accompanying table:

Representing a significant component of mortgage banking income are gains on the sales of loans, which equaled $21.9 million during the first nine months of 2012 (including $9.1 million during the third quarter) compared with $7.3 million for the same time period in 2011 (including $2.4 million during the third quarter). The increase in the gain on sales of loans during both the three and nine months ended September 30, 2012 resulted from an increase in loan sales from secondary marketing activities as well as higher profit margins. Loan sales totaled $513.8 million during the third quarter of 2012 and $1.309 billion during the first nine months of 2012, an increase of $293.0 million and $651.8 million when compared with the same time periods in 2011.

Wealth management income totaled $16.9 million for the first nine months of 2012 compared with $17.7 million for the same time period in 2011. Wealth management consists of income related to investment management, trust and brokerage services. The revenue declines are mostly attributable to investment advisory services on the Performance Funds and retirement plan services. At September 30, 2012 and 2011, Trustmark held assets under management and administration of $6.932 billion and $7.211 billion, respectively, and brokerage assets of $1.266 billion and $1.134 billion, respectively.

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