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:
•Trustmark sold a portfolio of 1-4 family mortgage loans that were primarily three payments delinquent and/or nonaccrual totaling $73.8 million, which resulted in a loss of $11.3 million. Total reserves released or used due to the sale of 1-4 family mortgage loans were $15.5 million, of which $9.2 million ($6.9 million, net of taxes) were released and recorded to PCL, LHFI sale of 1-4 family mortgage loans and $6.3 million (the credit related portion of the loss) were recorded as charge-offs against the ACL, LHFI. The noncredit-related portion of the loss totaled $5.0 million ($3.8 million, net of taxes) and was recorded to noninterest income in other, net. In total, the sale of the 1-4 family mortgage loans resulted in an increase in pre-tax net income of $4.2 million ($3.2 million net of taxes).
•TB and Visa completed an exchange, offered by Visa to institutional holders of certain classes of its common stock, in which TB received shares of Visa Class B-3 common stock (Visa B-3 shares) and Visa Class C common stock (Visa C shares) for its outstanding shares of Visa Class B-2 common stock (Visa B-2 shares). Two-thirds of the Visa C shares received by TB were converted to Visa Class A common stock (Visa A shares) pursuant to the terms thereof and subsequently sold, resulting in a gain of $3.3 million ($2.5 million, net of taxes). The remaining one-third of the Visa C shares received by TB were recognized at fair value, which resulted in a gain of $1.7 million ($1.2 million, net of taxes). The total gain on the Visa shares was recorded to noninterest income in other, net. The Visa B-3 shares were recorded at their nominal carrying value.
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.
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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:
•On balance, consumer spending was mixed to slightly higher, with affordability pressures, higher prices and elevated fuel costs contributing to greater price sensitivity and substitution toward lower-cost goods and services. Higher-income consumers generally remained more resilient, while middle- and lower-income consumers continued to show signs of financial strain. Auto dealers reported softer or little-changed new vehicle sales, with affordability and fuel costs weighing on demand and some consumers shifting toward used or hybrid vehicles or delaying purchases and increasing spending on repairs.
•Manufacturing activity increased at a modest to moderate pace in most Districts, supported by demand from the data center, machinery and defense sectors. Manufacturers in several Districts noted supply chain constraints related to trade policy and the conflict in the Middle East, which prompted price increases in raw materials and transportation costs. Energy activity increased in certain markets, including increased oil and gas drilling in the later reporting period, although producers remained cautious amid uncertainty regarding fuel prices. Agricultural conditions were generally unchanged or deteriorated, reflecting lower commodity prices, higher input costs and tighter credit conditions. Transportation activity increased modestly amid ongoing supply chain changes related to higher tariffs and the conflict in the Middle East.
•Banking and financial conditions were generally stable on net. Commercial and consumer loan volumes were stable to modestly higher, with commercial lending and commercial real estate opportunities cited as areas of relative strength in some Districts. Commercial loan quality was generally stable, while consumer loan quality weakened modestly and several Districts noted rising delinquencies in residential mortgage, consumer and agricultural loan portfolios. Construction and real estate activity increased slightly overall in the later reporting period, supported in part by data center construction, while residential real estate activity remained constrained by affordability pressures, mortgage rates and limited inventory in some markets. Commercial real estate conditions were mixed, with relatively stronger demand for industrial and data center-related properties and continued softness in portions of the office market.
•Business outlooks were mixed but generally anticipated continued modest expansion in the coming months. Elevated uncertainty remained a common theme, with contacts citing the potential effects of higher fuel costs, tariffs, supply chain adjustments, geopolitical developments and changing consumer behavior. Many firms continued to take a cautious approach to hiring, pricing and capital investment decisions, although sentiment improved in some Districts during the later reporting period.
•Employment was little changed to modestly higher overall. The May report indicated little to no change in employment across most Districts, with hiring generally selective and focused on critical roles or replacement hiring. The July report indicated somewhat broader employment gains, with five Districts reporting modest, moderate or solid employment growth and the remaining Districts reporting little to no change. Labor availability improved in many areas, but employers continued to report
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difficulty finding skilled workers, particularly technicians, trades people and certain health care and manufacturing workers. Wage growth remained modest to moderate in most Districts, with some wage increases attributed to competition for skilled workers and cost-of-living adjustments related to higher household costs. Several Districts also noted the growing use of AI in business processes, though contacts generally did not report broad employment reductions attributable to AI.
•Prices continued to increase at a moderate to strong pace overall, with input cost pressures generally outpacing selling price growth in many industries. Contacts reported higher costs for fuel, freight, energy-related inputs, metals, electronic components, insurance and health care. Tariffs continued to contribute to higher costs for some materials, including steel, aluminum and other inputs, and several Districts reported more common supply chain issues. While many firms raised prices to offset higher costs, consumer price sensitivity limited pass-through in some sectors, contributing to margin pressure.
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.
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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
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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.
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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.
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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):
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
Consolidated Statements of Income
Total interest income $ 237,433 $ 237,428 $ 469,503 $ 466,575
Total interest expense 71,803 78,672 143,314 155,764
Net interest income 165,630 158,756 326,189 310,811
PCL, LHFI 4,452 5,346 9,140 13,471
PCL, LHFI sale of 1-4 family mortgage loans (9,227 ) — (9,227 ) —
PCL, off-balance sheet credit exposures 1,531 (670 ) (417 ) (3,501 )
Noninterest income 42,571 39,890 84,916 82,474
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
Total Revenue (1) $ 208,201 $ 198,646 $ 411,105 $ 393,285
Per Share Data
Basic EPS $ 1.09 $ 0.92 $ 2.04 $ 1.81
Diluted EPS $ 1.08 $ 0.92 $ 2.03 $ 1.80
Cash dividends per share $ 0.25 $ 0.24 $ 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 % 13.13 %
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) 0.03 % 0.12 % 0.04 % 0.08 %
PCL, LHFI / average loans (LHFS + LHFI) 0.13 % 0.16 % 0.13 % 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 %
(1)Consistent with Trustmark’s annual financial statements, total revenue is defined as net interest income plus noninterest income.
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June 30,
2026 2025
Consolidated Balance Sheets
Total assets $ 19,192,470 $ 18,615,659
Securities 3,076,447 3,072,664
Total loans (LHFS + LHFI) 14,213,552 13,684,429
Deposits 16,071,215 15,115,861
Total shareholders' equity 2,143,631 2,070,789
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 10.25 % 10.15 %
Common equity Tier 1 risk-based capital ratio 11.87 % 11.70 %
Tier 1 risk-based capital ratio 12.26 % 12.09 %
Total risk-based capital ratio 14.47 % 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.
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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):
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity $ 2,143,847 $ 2,041,209 $ 2,143,641 $ 2,016,519
Less: Goodwill (334,605 ) (334,605 ) (334,605 ) (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 shareholders' equity $ 2,143,631 $ 2,070,789
Less: Goodwill (334,605 ) (334,605 )
Identifiable intangible assets — (63 )
Total tangible equity (a) $ 1,809,026 $ 1,736,121
TANGIBLE ASSETS
Total assets $ 19,192,470 $ 18,615,659
Less: Goodwill (334,605 ) (334,605 )
Identifiable intangible assets — (63 )
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
Net income $ 63,522 $ 55,841 $ 119,637 $ 109,474
Plus: Intangible amortization net of tax — 24 — 48
Net income adjusted for intangible amortization $ 63,522 $ 55,865 $ 119,637 $ 109,522
Period end shares outstanding (d) 58,225,687 60,401,684
TANGIBLE EQUITY MEASUREMENTS
Return on average tangible equity (1) 14.08 % 13.13 % 13.34 % 13.13 %
Tangible equity/tangible assets (a)/(b) 9.59 % 9.50 %
Tangible equity/risk-weighted assets (a)/(c) 11.52 % 11.41 %
Tangible book value (a)/(d)*1,000 $ 31.07 $ 28.74
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity $ 2,143,631 $ 2,070,789
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) (125 ) (955 )
CET1 capital (e) 1,865,035 1,779,568
Additional Tier 1 capital instruments plus related surplus 60,000 60,000
Tier 1 capital $ 1,925,035 $ 1,839,568
Common equity tier 1 risk-based capital ratio (e)/(c) 11.87 % 11.70 %
(1)Calculated using net income adjusted for intangible amortization divided by total average tangible equity.
(2)Includes other intangible assets, net of DTLs, disallowed deferred tax assets and threshold deductions, as applicable.
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.
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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):
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
Net income (GAAP) $ 63,522 $ 55,841 $ 119,637 $ 109,474
Non-routine transactions (net of taxes):
PCL, LHFI sale of 1-4 family mortgage loans (6,920 ) — (6,920 ) —
Loss on sale of 1-4 family mortgage loans (incl in Other, net) 3,754 — 3,754 —
Gain on sale of Visa A shares (incl in Other, net) (2,452 ) — (2,452 ) —
Visa C shares fair value adjustment (incl in Other, net) (1,244 ) — (1,244 ) —
Operating net income (Non-GAAP) $ 56,660 $ 55,841 $ 112,775 $ 109,474
Diluted EPS - operating (Non-GAAP) $ 0.97 $ 0.92 $ 1.92 $ 1.80
Financial Ratios - Reported (GAAP)
Return on average equity 11.88 % 10.97 % 11.25 % 10.95 %
Return on average tangible equity 14.08 % 13.13 % 13.34 % 13.13 %
Return on average assets 1.33 % 1.21 % 1.27 % 1.20 %
Financial Ratios - Operating (Non-GAAP)
Return on average equity 10.62 % n/a 10.62 % n/a
Return on average tangible equity 12.59 % n/a 12.58 % n/a
Return on average assets 1.19 % n/a 1.20 % n/a
Results of Operations
Net Interest Income
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
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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 $1.1 million, or 12.3%, respectively, while the rate on federal funds purchased and securities sold under repurchase agreements decreased 60 basis points and 58 basis points to 3.75%, respectively, when compared to the same time periods in 2025, primarily reflecting declines in the target federal funds rate by the FRB during the fourth quarter of 2025.
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The following tables provide the tax equivalent basis yield or rate for each component of the tax equivalent net interest margin for the periods presented ($ in thousands):
Three Months Ended June 30,
2026 2025
Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate
Assets
Interest-earning assets:
Securities $ 3,069,157 $ 26,952 3.52 % $ 3,049,119 $ 26,269 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 3,854 4.18 % 414,733 4,734 4.58 %
Total interest-earning assets 17,624,740 240,363 5.47 % 17,007,357 240,080 5.66 %
Other assets 1,628,588 1,605,786
ACL, LHFI (160,008 ) (166,430 )
Total assets $ 19,093,320 $ 18,446,713
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits $ 12,554,644 62,629 2.00 % $ 11,985,793 68,177 2.28 %
Federal funds purchased and securities sold under repurchase agreements 400,495 3,748 3.75 % 416,104 4,513 4.35 %
Other borrowings 546,347 5,426 3.98 % 617,496 5,982 3.89 %
Total interest-bearing liabilities 13,501,486 71,803 2.13 % 13,019,393 78,672 2.42 %
Noninterest-bearing demand deposits 3,210,375 3,171,796
Other liabilities 237,612 214,315
Shareholders' equity 2,143,847 2,041,209
Total liabilities and shareholders' equity $ 19,093,320 $ 18,446,713
Net interest margin 168,560 3.84 % 161,408 3.81 %
Less tax equivalent adjustment 2,930 2,652
Net interest margin per consolidated statements of income $ 165,630 $ 158,756
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Six Months Ended June 30,
2026 2025
Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate
Assets
Interest-earning assets:
Securities $ 3,054,307 $ 53,733 3.55 % $ 3,050,291 $ 52,325 3.46 %
Loans (LHFS and LHFI) 14,102,645 414,674 5.93 % 13,432,507 411,006 6.17 %
Other earning assets 369,544 7,001 3.82 % 390,255 8,580 4.43 %
Total interest-earning assets 17,526,496 475,408 5.47 % 16,873,053 471,911 5.64 %
Other assets 1,638,364 1,615,132
ACL, LHFI (158,256 ) (163,180 )
Total assets $ 19,006,604 $ 18,325,005
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits $ 12,558,913 125,348 2.01 % $ 11,964,318 135,895 2.29 %
Federal funds purchased and securities sold under repurchase agreements 415,056 7,723 3.75 % 410,677 8,811 4.33 %
Other borrowings 530,492 10,243 3.89 % 573,799 11,058 3.89 %
Total interest-bearing liabilities 13,504,461 143,314 2.14 % 12,948,794 155,764 2.43 %
Noninterest-bearing demand deposits 3,122,043 3,113,886
Other liabilities 236,459 245,806
Shareholders' equity 2,143,641 2,016,519
Total liabilities and shareholders' equity $ 19,006,604 $ 18,325,005
Net interest margin 332,094 3.82 % 316,147 3.78 %
Less tax equivalent adjustment 5,905 5,336
Net interest margin per consolidated statements of income $ 326,189 $ 310,811
Provision for Credit Losses
LHFI
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.
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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 $3.1 million, respectively, primarily due to reserves released during the second quarter of 2025 due to positive credit migration as well as increases in the quantitative reserve rates due to changes in the macroeconomic forecast and the historical utilization rates. The PCL, off-balance sheet credit exposures for the three months ended June 30, 2026, was primarily attributable to an increase in the quantitative reserve rate due to changes in the macroeconomic forecast and an increase in the utilization rates for unfunded commitments. The release in the PCL, off-balance sheet credit exposures for the six months ended June 30, 2026, was primarily attributable to a decrease in unfunded commitment balances partially offset by an increase in the quantitative reserve rate due to changes in the macroeconomic forecast and an increase in the utilization rates for unfunded commitments.
See the section captioned “Allowance for Credit Losses” for information regarding Trustmark’s ACL methodology as well as further analysis of the PCL.
Noninterest Income
The following table provides the comparative components of noninterest income for the periods presented ($ in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Service charges on deposit accounts $ 10,375 $ 10,585 $ (210 ) -2.0 % $ 21,029 $ 21,221 $ (192 ) -0.9 %
Bank card and other fees 8,743 8,754 (11 ) -0.1 % 16,731 16,418 313 1.9 %
Mortgage banking, net 8,914 8,602 312 3.6 % 17,848 17,373 475 2.7 %
Wealth management 10,922 9,638 1,284 13.3 % 21,315 19,181 2,134 11.1 %
Other, net 3,617 2,311 1,306 56.5 % 7,993 8,281 (288 ) -3.5 %
Total noninterest income $ 42,571 $ 39,890 $ 2,681 6.7 % $ 84,916 $ 82,474 $ 2,442 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):
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Mortgage servicing income, net $ 7,441 $ 7,142 $ 299 4.2 % $ 14,790 $ 14,303 $ 487 3.4 %
Change in fair value-MSR from runoff (3,531 ) (3,596 ) 65 1.8 % (6,636 ) (5,658 ) (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 7,282 (7,874 ) 15,156 n/m
Change in fair value of derivatives (3,121 ) 1,405 (4,526 ) n/m (7,179 ) 6,752 (13,931 ) n/m
Net hedge ineffectiveness 199 (541 ) 740 n/m 103 (1,122 ) 1,225 n/m
Mortgage banking, net $ 8,914 $ 8,602 $ 312 3.6 % $ 17,848 $ 17,373 $ 475 2.7 %
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.
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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):
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
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 14 0.7 % 3,797 3,778 19 0.5 %
Loss on sale of 1-4 family mortgage loans (5,005 ) — (5,005 ) n/m (5,005 ) — (5,005 ) n/m
Gain on sale of Visa A shares 3,269 — 3,269 n/m 3,269 — 3,269 n/m
Visa C shares fair value adjustment 1,659 — 1,659 n/m 1,659 — 1,659 n/m
Other miscellaneous income 3,940 2,537 1,403 55.3 % 8,637 8,764 (127 ) -1.4 %
Total other, net $ 3,617 $ 2,311 $ 1,306 56.5 % $ 7,993 $ 8,281 $ (288 ) -3.5 %
n/m - percentage changes greater than +/- 100% are not considered meaningful
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.
Noninterest Expense
The following table illustrates the comparative components of noninterest expense for the periods presented ($ in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Salaries and employee benefits $ 72,990 $ 68,298 $ 4,692 6.9 % $ 147,232 $ 136,790 $ 10,442 7.6 %
Services and fees 29,748 26,998 2,750 10.2 % 57,692 53,245 4,447 8.4 %
Net occupancy-premises 7,728 7,507 221 2.9 % 15,554 14,892 662 4.4 %
Equipment expense 7,267 6,206 1,061 17.1 % 14,265 12,514 1,751 14.0 %
Other expense 15,950 16,105 (155 ) -1.0 % 31,099 31,684 (585 ) -1.8 %
Total noninterest expense $ 133,683 $ 125,114 $ 8,569 6.8 % $ 265,842 $ 249,125 $ 16,717 6.7 %
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,
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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):
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Loan expense $ 3,569 $ 3,377 $ 192 5.7 % $ 6,799 $ 6,169 $ 630 10.2 %
Amortization of intangibles — 32 (32 ) -100.0 % — 63 (63 ) -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 n/m 872 611 261 42.7 %
Other miscellaneous expense 8,303 8,473 (170 ) -2.0 % 16,432 16,617 (185 ) -1.1 %
Total other expense $ 15,950 $ 16,105 $ (155 ) -1.0 % $ 31,099 $ 31,684 $ (585 ) -1.8 %
n/m - percentage changes greater than +/- 100% are not considered meaningful
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.
General Banking
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.”
Wealth Management
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
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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%.
Securities
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 $1.207 billion, or 39.1% of total securities, at December 31, 2025.
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Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of 100.0% of the portfolio in U.S. Treasury securities, direct obligations of government agencies and GSE-backed obligations. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the FHLB of Dallas and FRBA, Trustmark does not hold any other equity investment in a GSE or other governmental entity.
As of June 30, 2026, Trustmark did not hold securities of any one issuer with a carrying value exceeding 10% of total shareholders’ equity, other than certain GSEs which are exempt from inclusion. Management continues to closely monitor the credit quality as well as the ratings of the debt and mortgage-backed securities issued by the GSEs and held in Trustmark’s securities portfolio.
The following tables present Trustmark’s securities portfolio by amortized cost and estimated fair value and by credit rating, as determined by Moody’s Investors Services (Moody’s), at June 30, 2026 and December 31, 2025 ($ in thousands):
June 30, 2026
Amortized Cost Estimated Fair Value
Amount % Amount %
Securities Available for Sale
Aaa $ 39,848 2.1 % $ 40,487 2.1 %
Aa1 to Aa3 1,899,111 97.9 % 1,901,137 97.9 %
Total securities available for sale $ 1,938,959 100.0 % $ 1,941,624 100.0 %
Securities Held to Maturity
Aaa $ 51,286 4.5 % $ 49,027 4.5 %
Aa1 to Aa3 1,083,537 95.5 % 1,047,849 95.5 %
Total securities held to maturity $ 1,134,823 100.0 % $ 1,096,876 100.0 %
December 31, 2025
Amortized Cost Estimated Fair Value
Amount % Amount %
Securities Available for Sale
Aaa $ 39,647 2.2 % $ 41,029 2.2 %
Aa1 to Aa3 1,802,797 97.8 % 1,835,801 97.8 %
Total securities available for sale $ 1,842,444 100.0 % $ 1,876,830 100.0 %
Securities Held to Maturity
Aaa $ 52,405 4.3 % $ 50,363 4.3 %
Aa1 to Aa3 1,155,049 95.7 % 1,130,206 95.7 %
Total securities held to maturity $ 1,207,454 100.0 % $ 1,180,569 100.0 %
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.
LHFS
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 $136.3 million of GNMA optional repurchase loans. Please refer to the nonperforming assets table that follows for information on GNMA loans eligible for repurchase which are past due 90 days or more.
Trustmark did not exercise its buy-back option on any delinquent loans serviced for GNMA during the first six months of 2026 or 2025.
For additional information regarding the GNMA optional repurchase loans, please see the section captioned “Past Due LHFS” included in Note 3 – LHFI and Allowance for Credit Losses, LHFI of Part I. Item 1. – Financial Statements of this report.
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LHFI
At June 30, 2026 and December 31, 2025, LHFI consisted of the following ($ in thousands):
June 30, 2026 December 31, 2025
Amount % Amount %
Loans secured by real estate:
Construction, land development and other land $ 555,731 4.0 % $ 549,353 4.0 %
Other secured by 1-4 family residential properties 721,362 5.2 % 704,514 5.1 %
Secured by nonfarm, nonresidential properties 3,198,800 23.0 % 3,304,523 24.2 %
Other real estate secured 1,990,550 14.3 % 2,124,272 15.5 %
Other loans secured by real estate:
Other construction 661,069 4.8 % 595,238 4.4 %
Secured by 1-4 family residential properties 2,357,203 16.9 % 2,351,675 17.2 %
Commercial and industrial loans 2,294,721 16.5 % 1,999,464 14.6 %
Consumer loans 160,648 1.1 % 163,754 1.2 %
State and other political subdivision loans 1,046,511 7.5 % 1,061,584 7.8 %
Other commercial loans and leases 926,428 6.7 % 819,856 6.0 %
LHFI $ 13,913,023 100.0 % $ 13,674,233 100.0 %
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):
June 30, 2026 December 31, 2025
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 %
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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):
June 30, 2026
Fixed Variable Total
Loans secured by real estate:
Construction, land development and other land $ 109,464 $ 446,267 $ 555,731
Other secured by 1- 4 family residential properties 201,358 520,004 721,362
Secured by nonfarm, nonresidential properties 1,127,883 2,070,917 3,198,800
Other real estate secured 144,029 1,846,521 1,990,550
Other loans secured by real estate:
Other construction 20,371 640,698 661,069
Secured by 1- 4 family residential properties 1,043,911 1,313,292 2,357,203
Commercial and industrial loans 789,092 1,505,629 2,294,721
Consumer loans 134,268 26,380 160,648
State and other political subdivision loans 991,811 54,700 1,046,511
Other commercial loans and leases 603,647 322,781 926,428
LHFI $ 5,165,834 $ 8,747,189 $ 13,913,023
December 31, 2025
Fixed Variable Total
Loans secured by real estate:
Construction, land development and other land $ 105,004 $ 444,349 $ 549,353
Other secured by 1- 4 family residential properties 205,341 499,173 704,514
Secured by nonfarm, nonresidential properties 1,226,244 2,078,279 3,304,523
Other real estate secured 201,897 1,922,375 2,124,272
Other loans secured by real estate:
Other construction 23,419 571,819 595,238
Secured by 1- 4 family residential properties 1,107,156 1,244,519 2,351,675
Commercial and industrial loans 804,490 1,194,974 1,999,464
Consumer loans 138,104 25,650 163,754
State and other political subdivision loans 1,010,960 50,624 1,061,584
Other commercial loans and leases 521,855 298,001 819,856
LHFI $ 5,344,470 $ 8,329,763 $ 13,674,233
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.
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The following table presents the LHFI composition by region at June 30, 2026 and reflects each region’s diversified mix of loans ($ in thousands):
June 30, 2026
LHFI Composition by Region Total Alabama Florida Georgia Mississippi Tennessee Texas
Loans secured by real estate:
Construction, land development and other land $ 555,731 $ 266,296 $ 21,480 $ 13,663 $ 117,933 $ 42,521 $ 93,838
Other secured by 1-4 family residential properties 721,362 173,282 67,062 — 347,133 88,768 45,117
Secured by nonfarm, nonresidential properties 3,198,800 789,274 159,857 164,780 1,455,246 108,017 521,626
Other real estate secured 1,990,550 785,962 1,565 296,998 540,416 7,164 358,445
Other loans secured by real estate:
Other construction 661,069 173,166 — 160,513 177,997 — 149,393
Secured by 1-4 family residential properties 2,357,203 — — — 2,355,629 1,574 —
Commercial and industrial loans 2,294,721 710,644 23,787 403,512 779,786 121,897 255,095
Consumer loans 160,648 19,058 8,781 — 90,426 10,245 32,138
State and other political subdivision loans 1,046,511 52,644 55,003 4,690 813,654 26,441 94,079
Other commercial loans and leases 926,428 24,008 4,940 519,521 274,874 55,913 47,172
LHFI $ 13,913,023 $ 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
Unimproved land 77,615 19,455 6,297 — 19,761 4,841 27,261
1-4 family construction 327,076 169,157 8,090 13,663 66,364 19,058 50,744
Construction, land development and other land loans $ 555,731 $ 266,296 $ 21,480 $ 13,663 $ 117,933 $ 42,521 $ 93,838
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 55,341 774 54,487 87,057 405 441
Industrial and warehouses 528,634 98,255 19,006 41,118 280,029 2,932 87,294
Health care 124,112 105,460 646 — 15,748 299 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
Other 181,431 35,326 7,859 50,000 47,130 5,561 35,555
Total nonowner-occupied loans 1,898,156 562,804 83,159 164,780 760,346 53,020 274,047
Owner-occupied:
Office 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
Industrial and warehouses 219,644 16,073 6,638 — 69,598 8,781 118,554
Health care 116,430 4,635 13,714 — 88,434 2,071 7,576
Convenience stores 94,033 5,260 2,690 — 55,884 — 30,199
Retail 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 1,363 129 — 14,242 1,224 —
Nursing homes/senior living 381,129 108,192 — — 272,937 — —
Other 133,004 17,243 7,237 — 58,629 270 49,625
Total owner-occupied loans 1,300,644 226,470 76,698 — 694,900 54,997 247,579
Loans secured by NFNR properties $ 3,198,800 $ 789,274 $ 159,857 $ 164,780 $ 1,455,246 $ 108,017 $ 521,626
ACL on LHFI and Off-Balance Sheet Credit Exposures
LHFI
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.
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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
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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.
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.
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):
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
Balance at beginning of period $ 160,431 $ 167,010 $ 157,071 $ 160,270
PCL, LHFI 4,452 5,346 9,140 13,471
PCL, LHFI sale of 1-4 family mortgage loans (9,227 ) — (9,227 ) —
Charge-offs, sale of 1-4 family mortgage loans (6,316 ) — (6,316 ) —
Charge-offs (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 )
Balance at end of period $ 148,189 $ 168,237 $ 148,189 $ 168,237
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 $4.3 million, or 32.2%, respectively, when compared to the same time periods in 2025, principally due to a decline in required reserves as a result of positive credit migration, resolution of the Credit Quality Review Qualitative Factor during the third quarter of 2025, a decline in loan growth and changes in the macroeconomic forecast, partially offset by an increase in required reserves on individually analyzed credits.
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The following table presents the net (charge-offs) recoveries by geographic market region for the periods presented ($ in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
Alabama $ (140 ) $ (2,331 ) $ (244 ) $ (2,538 )
Florida 73 151 38 134
Mississippi (7,287 ) (1,647 ) (7,913 ) (2,402 )
Tennessee (185 ) (258 ) (178 ) (559 )
Texas 72 (34 ) (498 ) (139 )
Total net (charge-offs) recoveries $ (7,467 ) $ (4,119 ) $ (8,795 ) $ (5,504 )
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.
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. 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 $3.1 million, respectively, primarily due to reserves released during the second quarter of 2025 due to positive credit migration as well as increases in the quantitative reserve rates due to changes in the macroeconomic forecast and the historical utilization rates.
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Nonperforming Assets
The table below provides the components of nonperforming assets by geographic market region at June 30, 2026 and December 31, 2025 ($ in thousands):
June 30, 2026 December 31, 2025
Nonaccrual LHFI
Alabama $ 12,012 $ 4,638
Florida 514 442
Mississippi 31,078 73,045
Tennessee 2,936 2,396
Texas 3,118 3,870
Total nonaccrual LHFI 49,658 84,391
Other real estate
Alabama 1,356 409
Mississippi 2,870 5,621
Tennessee 982 927
Total other real estate 5,208 6,957
Total nonperforming assets $ 54,866 $ 91,348
Nonperforming assets/total loans (LHFS and LHFI) and ORE 0.39 % 0.65 %
Loans past due 90 days or more
LHFI $ 3,065 $ 5,097
LHFS - Guaranteed GNMA serviced loans (1) $ 109,508 $ 98,939
(1)No obligation to repurchase.
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.
Nonaccrual LHFI
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 $1.7 million, or 25.1%, when compared with December 31, 2025. The decrease in other real estate during the first six months of 2026 was principally due to properties sold in the Mississippi market region partially offset by properties foreclosed in the Mississippi and Alabama market regions.
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The following tables illustrate changes in other real estate by geographic market region for the periods presented ($ in thousands):
Three Months Ended June 30, 2026
Total Alabama Mississippi Tennessee
Balance at beginning of period $ 7,316 $ 1,356 $ 5,033 $ 927
Additions 1,935 — 1,880 55
Disposals (3,926 ) — (3,926 ) —
Net (write-downs) recoveries (117 ) — (117 ) —
Balance at end of period $ 5,208 $ 1,356 $ 2,870 $ 982
Three Months Ended June 30, 2025
Total Alabama Mississippi Tennessee Texas
Balance at beginning of period $ 8,348 $ 271 $ 4,837 $ 979 $ 2,261
Additions 1,693 656 1,037 — —
Disposals (1,080 ) (155 ) (925 ) — —
Net (write-downs) recoveries 11 — (89 ) 100 —
Balance at end of period $ 8,972 $ 772 $ 4,860 $ 1,079 $ 2,261
Six Months Ended June 30, 2026
Total Alabama Mississippi Tennessee
Balance at beginning of period $ 6,957 $ 409 $ 5,621 $ 927
Additions 4,277 1,041 3,181 55
Disposals (5,846 ) — (5,846 ) —
Net (write-downs) recoveries (180 ) (94 ) (86 ) —
Balance at end of period $ 5,208 $ 1,356 $ 2,870 $ 982
Six Months Ended June 30, 2025
Total Alabama Mississippi Tennessee Texas
Balance at beginning of period $ 5,917 $ 170 $ 2,407 $ 1,079 $ 2,261
Additions 5,132 699 4,374 59 —
Disposals (1,958 ) (155 ) (1,744 ) (59 ) —
Net (write-downs) recoveries (119 ) 58 (177 ) — —
Balance at end of period $ 8,972 $ 772 $ 4,860 $ 1,079 $ 2,261
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.
Deposits
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.
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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.
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%. 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
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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.
Stock Repurchase Program
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 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 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.
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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.
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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.
Derivatives
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.
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 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
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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.
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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 % Change in Net Interest Income
June 30,
Change in Interest Rates 2026 2025
+200 basis points 3.4 % 1.7 %
+100 basis points 1.7 % 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 % Change in Net Portfolio Value
June 30,
Change in Interest Rates 2026 2025
+200 basis points 0.2 % -1.5 %
+100 basis points 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.
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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.