Trustmark Corporation Announces Second Quarter 2010 Financial Results and Declares $0.23 Quarterly Cash Dividend

Trustmark Corporation (NASDAQ:TRMK) announced net income available to common shareholders of $26.2 million in the second quarter of 2010, which represented basic earnings per common share of $0.41. Trustmark’s second quarter net income produced a return on average tangible common equity of 12.92%. During the first six months of 2010, Trustmark’s net income available to common shareholders totaled $49.6 million, which represented basic earnings per common share of $0.78. Trustmark’s performance during the first half of 2010 resulted in a return on average tangible common equity of 12.45%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per common share. The dividend is payable September 15, 2010, to shareholders of record on September 1, 2010.

Printer friendly version of earnings release with consolidated financial statements and notes: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=6373486&lang=en

Richard G. Hickson, Chairman and CEO, stated, "Trustmark’s financial results reflect revenue growth across our banking, mortgage, insurance, and wealth management businesses. In addition to expanded revenue, Trustmark’s credit quality improved as evidenced by lower nonperforming loans and net charge-offs. Noninterest expense remained well-controlled. Trustmark is positioned to meet the needs of our customers and take advantage of growth opportunities in the marketplace to build shareholder value.”

Credit Quality

• Nonperforming loans declined to $159.9 million
• Net charge-offs improved to 0.72% of average loans
• Allowance for loan losses represented 148.9% of nonperforming loans (excluding impaired loans with no specific reserves)
• Continued to monitor potential impact of Gulf Oil Spill

During the second quarter, nonperforming loans decreased $5.6 million relative to the prior quarter to total $159.9 million, or 2.55% of total loans. This improvement was principally attributable to a reduction in new nonperforming loans of approximately $24.4 million relative to the prior quarter. Foreclosed real estate increased $224 thousand to total $91.4 million. At June 30, 2010, nonperforming assets totaled $251.3 million, a decrease of $5.4 million from the prior quarter, to represent 3.95% of total loans and other real estate.

Net charge-offs totaled $11.4 million, or 0.72% of average loans, while the provision for loan losses totaled $10.4 million during the second quarter. Allocation of Trustmark’s $100.7 million allowance for loan losses represented 2.10% of commercial loans and 0.82% of consumer and home mortgage loans, resulting in an allowance to total loans of 1.66% as of June 30, 2010.

Trustmark continued to make significant progress in the resolution of its construction and land development portfolio in Florida. During the last 12 months, this portfolio has been reduced by 29.2% to $173.9 million. At June 30, 2010, Florida nonimpaired construction and land development loans totaled $137.8 million with an associated reserve for loan losses of $18.6 million, or 13.52%. Managing credit risks resulting from current economic and real estate market conditions continues to be a primary focus for Trustmark.

BP’s Deepwater Horizon oil rig exploded and sank in the Gulf of Mexico on April 20, 2010, resulting in the largest oil spill in U.S. history. While cleanup and recovery efforts are on-going, the long term economic and environmental impacts have yet to be determined. Following the explosion, Trustmark initiated a process to identify loans that could be impacted and began discussions with customers in potentially affected markets and industries to gain additional insight regarding the impact of the Gulf Oil Spill on their businesses. Based upon current information, Trustmark believes its reserve for loan losses is appropriate without an additional reserve for the Gulf Oil Spill. Trustmark will continue to monitor the impact of the Gulf Oil Spill and stands ready to assist impacted customers.

Capital Strength

• Tangible common equity to tangible assets increased to 9.32%
• Total risk-based capital increased to 15.53%, significantly exceeding "well-capitalized” standards

Consistent profitability and sound balance sheet management continued to be reflected in Trustmark’s solid capital position. At June 30, 2010, tangible common equity totaled $833.2 million and represented 9.32% of tangible assets. Total risk-based capital increased to 15.53%, significantly exceeding the 10% regulatory requirement to be classified as "well-capitalized.” Trustmark’s strong capital base provides strategic flexibility to support organic growth as well as acquisition opportunities that strengthen the value of the franchise.

The fundamental strengths of Trustmark’s diversified financial services business were reflected in pre-tax, pre-provision earnings of $49.0 million in the second quarter of 2010. Trustmark continues to believe in the sustainability of its cash dividend to shareholders based upon its existing capital base and the expectation of the level of profitability going forward.

Balance Sheet Management

• Net interest income (FTE) expanded to $91.9 million
• Net interest margin increased to 4.47%

Average loans during the second quarter totaled $6.3 billion, a decline of $111.5 million from the prior quarter, and reflected continued efforts to reduce exposure to construction and land development lending as well as the decision to discontinue indirect auto financing. Current economic conditions also reduced demand for credit. Average investment securities during the second quarter increased $56.4 million to $1.9 billion. As a result, average earning assets remained relatively stable at $8.2 billion during the second quarter.

Average deposits totaled $7.2 billion during the second quarter, an increase of $76.3 million relative to the prior quarter. Lower deposit costs continued to reflect Trustmark’s strong liquidity while disciplined loan pricing and required minimum loan rates increased loan yields. As a result, net interest income (FTE) expanded to $91.9 million while the net interest margin increased to 4.47% during the second quarter.

Noninterest Income

• Noninterest income increased to 32.9% of total revenue
• Service charges expanded to $14.2 million

Noninterest income during the second quarter totaled $44.9 million, an increase of $6.6 million from the prior quarter. Service charges on deposit accounts totaled $14.2 million, reflecting a seasonal increase from the prior quarter and an increase from levels one year earlier. Mortgage banking income during the quarter was $8.9 million, an increase of $2.8 million from the prior quarter. Performance in mortgage banking reflected solid mortgage servicing income and successful hedging initiatives. Bank card and other fees totaled $6.4 million, an increase of $537 thousand from the prior quarter. Insurance revenue and wealth management income remained stable during the quarter at $6.9 million and $5.6 million, respectively. Trustmark took advantage of opportunities presented by the current interest rate environment to reduce the risk profile of its investment securities portfolio with the sale of approximately $51 million in longer duration, higher convexity securities. The sale of these securities resulted in a pre-tax gain of $1.9 million during the second quarter.

Noninterest Expense

• Loan and foreclosure expense increased $7.2 million
• Core noninterest expense remained well-controlled

During the second quarter of 2010, noninterest expense totaled $84.4 million, an increase of $8.1 million from the prior quarter. Approximately 89% of the growth was attributable to increased loan and foreclosure expense. Excluding the increase in these two categories, core noninterest expense increased $899 thousand, or 1.2%.

ADDITIONAL INFORMATION

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, July 28 at 10:00 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (800) 860-2442, passcode 436565 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Wednesday, August 4, 2010 in archived format at the same web address or by calling (877) 344-7529, passcode 436565.

Trustmark is a financial services company providing banking and financial solutions through over 150 offices in Florida, Mississippi, Tennessee and Texas.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as "may,” "hope,” "will,” "should,” "expect,” "plan,” "anticipate,” "intend,” "believe,” "estimate,” "predict,” "potential,” "continue,” "could,” "future” or the negative of those terms or other words of similar meaning. You should read statements that contain these words carefully because they discuss our future expectations or state other "forward-looking” information. These forward-looking statements include, but are not limited to, statements relating to anticipated future operating and financial performance measures, including net interest margin, credit quality, business initiatives, growth opportunities and growth rates, among other things, and encompass any estimate, prediction, expectation, projection, opinion, anticipation, outlook or statement of belief included therein as well as the management assumptions underlying these forward-looking statements. You should be aware that the occurrence of the events described under the caption "Risk Factors” in Trustmark’s filings with the Securities and Exchange Commission could have an adverse effect on our business, results of operations and financial condition. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected.

Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, local, state and national economic and market conditions, including the extent and duration of the current volatility in the credit and financial markets, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility of market interest rates, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions and monetary and other governmental actions designed to address the level and volatility of interest rates and the volatility of securities, currency and other markets, the enactment of legislation and changes in existing regulations, or enforcement practices, or the adoption of new regulations, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, changes in our ability to control expenses, changes in our compensation and benefit plans, greater than expected costs or difficulties related to the integration of new products and lines of business, natural disasters, environmental disasters, acts of war or terrorism and other risks described in our filings with the Securities and Exchange Commission.

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

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2010
($ in thousands)
(unaudited)
																		Linked Quarter									Year over Year
QUARTERLY AVERAGE BALANCES			6/30/2010					3/31/2010					6/30/2009					$ Change					% Change				$ Change					% Change
Securities AFS-taxable			$	1,586,165				$	1,514,029				$	1,395,303				$	72,136				4.8	%			$	190,862				13.7	%
Securities AFS-nontaxable				110,969					105,067					70,165					5,902				5.6	%				40,804				58.2	%
Securities HTM-taxable				162,691					179,076					194,079					(16,385	)			-9.1	%				(31,388	)			-16.2	%
Securities HTM-nontaxable				41,628					46,852					61,166					(5,224	)			-11.2	%				(19,538	)			-31.9	%
Total securities				1,901,453					1,845,024					1,720,713					56,429				3.1	%				180,740				10.5	%
Loans (including loans held for sale)				6,301,201					6,412,671					6,880,909					(111,470	)			-1.7	%				(579,708	)			-8.4	%
Fed funds sold and rev repos				7,478					10,438					20,973					(2,960	)			-28.4	%				(13,495	)			-64.3	%
Other earning assets				38,764					46,199					47,084					(7,435	)			-16.1	%				(8,320	)			-17.7	%
Total earning assets				8,248,896					8,314,332					8,669,679					(65,436	)			-0.8	%				(420,783	)			-4.9	%
Allowance for loan losses				(104,814	)				(106,200	)				(106,491	)				1,386				-1.3	%				1,677				-1.6	%
Cash and due from banks				207,670					216,305					214,633					(8,635	)			-4.0	%				(6,963	)			-3.2	%
Other assets				898,749					910,401					824,724					(11,652	)			-1.3	%				74,025				9.0	%
Total assets			$	9,250,501				$	9,334,838				$	9,602,545				$	(84,337	)			-0.9	%			$	(352,044	)			-3.7	%
Interest-bearing demand deposits			$	1,306,783				$	1,270,827				$	1,131,765				$	35,956				2.8	%			$	175,018				15.5	%
Savings deposits				2,066,612					1,953,711					1,869,794					112,901				5.8	%				196,818				10.5	%
Time deposits less than $100,000				1,307,611					1,356,469					1,493,172					(48,858	)			-3.6	%				(185,561	)			-12.4	%
Time deposits of $100,000 or more				989,397					1,014,027					1,096,170					(24,630	)			-2.4	%				(106,773	)			-9.7	%
Total interest-bearing deposits				5,670,403					5,595,034					5,590,901					75,369				1.3	%				79,502				1.4	%
Fed funds purchased and repos				495,904					600,826					589,542					(104,922	)			-17.5	%				(93,638	)			-15.9	%
Short-term borrowings				181,669					199,550					340,816					(17,881	)			-9.0	%				(159,147	)			-46.7	%
Long-term FHLB advances				15,833					75,000					75,000					(59,167	)			-78.9	%				(59,167	)			-78.9	%
Subordinated notes				49,785					49,777					49,752					8				0.0	%				33				0.1	%
Junior subordinated debt securities				70,104					70,104					70,104					-				0.0	%				-				0.0	%
Total interest-bearing liabilities				6,483,698					6,590,291					6,716,115					(106,593	)			-1.6	%				(232,417	)			-3.5	%
Noninterest-bearing deposits				1,536,153					1,535,209					1,554,642					944				0.1	%				(18,489	)			-1.2	%
Other liabilities				91,715					85,982					124,586					5,733				6.7	%				(32,871	)			-26.4	%
Total liabilities				8,111,566					8,211,482					8,395,343					(99,916	)			-1.2	%				(283,777	)			-3.4	%
Preferred equity				-					-					205,860					-				n/m					(205,860	)			-100.0	%
Common equity				1,138,935					1,123,356					1,001,342					15,579				1.4	%				137,593				13.7	%
Total shareholders' equity				1,138,935					1,123,356					1,207,202					15,579				1.4	%				(68,267	)			-5.7	%
Total liabilities and equity			$	9,250,501				$	9,334,838				$	9,602,545				$	(84,337	)			-0.9	%			$	(352,044	)			-3.7	%
																		Linked Quarter									Year over Year
PERIOD END BALANCES			6/30/2010					3/31/2010					6/30/2009					$ Change					% Change				$ Change					% Change
Cash and due from banks			$	186,365				$	191,973				$	220,706				$	(5,608	)			-2.9	%			$	(34,341	)			-15.6	%
Fed funds sold and rev repos				5,713					11,599					16,367					(5,886	)			-50.7	%				(10,654	)			-65.1	%
Securities available for sale				1,786,710					1,706,565					1,488,428					80,145				4.7	%				298,282				20.0	%
Securities held to maturity				192,860					215,888					254,380					(23,028	)			-10.7	%				(61,520	)			-24.2	%
Loans held for sale				218,369					176,682					280,975					41,687				23.6	%				(62,606	)			-22.3	%
Loans				6,054,995					6,170,878					6,570,582					(115,883	)			-1.9	%				(515,587	)			-7.8	%
Allowance for loan losses				(100,656	)				(101,643	)				(101,751	)				987				-1.0	%				1,095				-1.1	%
Net Loans				5,954,339					6,069,235					6,468,831					(114,896	)			-1.9	%				(514,492	)			-8.0	%
Premises and equipment, net				143,536					145,113					150,233					(1,577	)			-1.1	%				(6,697	)			-4.5	%
Mortgage servicing rights				43,044					50,037					63,316					(6,993	)			-14.0	%				(20,272	)			-32.0	%
Goodwill				291,104					291,104					291,104					-				0.0	%				-				0.0	%
Identifiable intangible assets				18,062					18,944					21,820					(882	)			-4.7	%				(3,758	)			-17.2	%
Other assets				404,443					416,075					370,710					(11,632	)			-2.8	%				33,733				9.1	%
Total assets			$	9,244,545				$	9,293,215				$	9,626,870				$	(48,670	)			-0.5	%			$	(382,325	)			-4.0	%
Deposits:
Noninterest-bearing			$	1,539,598				$	1,511,080				$	1,558,934				$	28,518				1.9	%			$	(19,336	)			-1.2	%
Interest-bearing				5,599,796					5,635,973					5,588,955					(36,177	)			-0.6	%				10,841				0.2	%
Total deposits				7,139,394					7,147,053					7,147,889					(7,659	)			-0.1	%				(8,495	)			-0.1	%
Fed funds purchased and repos				492,367					571,711					627,616					(79,344	)			-13.9	%				(135,249	)			-21.5	%
Short-term borrowings				208,136					132,784					314,751					75,352				56.7	%				(106,615	)			-33.9	%
Long-term FHLB advances				-					75,000					75,000					(75,000	)			n/m					(75,000	)			n/m
Subordinated notes				49,790					49,782					49,758					8				0.0	%				32				0.1	%
Junior subordinated debt securities				70,104					70,104					70,104					-				0.0	%				-				0.0	%
Other liabilities				142,374					118,252					139,638					24,122				20.4	%				2,736				2.0	%
Total liabilities				8,102,165					8,164,686					8,424,756					(62,521	)			-0.8	%				(322,591	)			-3.8	%
Preferred stock				-					-					206,009					-				n/m					(206,009	)			-100.0	%
Common stock				13,311					13,302					11,964					9				0.1	%				1,347				11.3	%
Capital surplus				253,133					250,365					143,654					2,768				1.1	%				109,479				76.2	%
Retained earnings				870,532					860,398					845,882					10,134				1.2	%				24,650				2.9	%
Accum other comprehensive income (loss), net of tax				5,404					4,464					(5,395	)				940				21.1	%				10,799				n/m
Total shareholders' equity				1,142,380					1,128,529					1,202,114					13,851				1.2	%				(59,734	)			-5.0	%
Total liabilities and equity			$	9,244,545				$	9,293,215				$	9,626,870				$	(48,670	)			-0.5	%			$	(382,325	)			-4.0	%
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2010
($ in thousands except per share data)
(unaudited)
			Quarter Ended															Linked Quarter									Year over Year
INCOME STATEMENTS			6/30/2010					3/31/2010					6/30/2009					$ Change					% Change				$ Change					% Change
Interest and fees on loans-FTE			$	84,362				$	84,127				$	91,652				$	235				0.3	%			$	(7,290	)			-8.0	%
Interest on securities-taxable				19,626					19,735					20,444					(109	)			-0.6	%				(818	)			-4.0	%
Interest on securities-tax exempt-FTE				2,151					2,180					2,040					(29	)			-1.3	%				111				5.4	%
Interest on fed funds sold and rev repos				7					8					19					(1	)			-12.5	%				(12	)			-63.2	%
Other interest income				366					383					343					(17	)			-4.4	%				23				6.7	%
Total interest income-FTE				106,512					106,433					114,498					79				0.1	%				(7,986	)			-7.0	%
Interest on deposits				12,785					13,904					21,430					(1,119	)			-8.0	%				(8,645	)			-40.3	%
Interest on fed funds pch and repos				260					226					272					34				15.0	%				(12	)			-4.4	%
Other interest expense				1,597					1,592					1,980					5				0.3	%				(383	)			-19.3	%
Total interest expense				14,642					15,722					23,682					(1,080	)			-6.9	%				(9,040	)			-38.2	%
Net interest income-FTE				91,870					90,711					90,816					1,159				1.3	%				1,054				1.2	%
Provision for loan losses				10,398					15,095					26,767					(4,697	)			-31.1	%				(16,369	)			-61.2	%
Net interest income after provision-FTE				81,472					75,616					64,049					5,856				7.7	%				17,423				27.2	%
Service charges on deposit accounts				14,220					12,977					13,244					1,243				9.6	%				976				7.4	%
Insurance commissions				6,884					6,837					7,372					47				0.7	%				(488	)			-6.6	%
Wealth management				5,558					5,355					5,497					203				3.8	%				61				1.1	%
Bank card and other fees				6,417					5,880					6,063					537				9.1	%				354				5.8	%
Mortgage banking, net				8,910					6,072					2,543					2,838				46.7	%				6,367				n/m
Other, net				1,103					879					1,693					224				25.5	%				(590	)			-34.8	%
Nonint inc-excl sec gains, net				43,092					38,000					36,412					5,092				13.4	%				6,680				18.3	%
Security gains, net				1,855					369					4,404					1,486				n/m					(2,549	)			-57.9	%
Total noninterest income				44,947					38,369					40,816					6,578				17.1	%				4,131				10.1	%
Salaries and employee benefits				43,282					42,854					40,989					428				1.0	%				2,293				5.6	%
Services and fees				10,523					10,255					10,249					268				2.6	%				274				2.7	%
Net occupancy-premises				4,917					5,034					4,948					(117	)			-2.3	%				(31	)			-0.6	%
Equipment expense				4,247					4,303					4,108					(56	)			-1.3	%				139				3.4	%
Other expense				21,459					13,915					18,677					7,544				54.2	%				2,782				14.9	%
Total noninterest expense				84,428					76,361					78,971					8,067				10.6	%				5,457				6.9	%
Income before income taxes and tax eq adj				41,991					37,624					25,894					4,367				11.6	%				16,097				62.2	%
Tax equivalent adjustment				3,384					3,293					2,325					91				2.8	%				1,059				45.5	%
Income before income taxes				38,607					34,331					23,569					4,276				12.5	%				15,038				63.8	%
Income taxes				12,446					10,876					6,994					1,570				14.4	%				5,452				78.0	%
Net income				26,161					23,455					16,575					2,706				11.5	%				9,586				57.8	%
Preferred stock dividends				-					-					2,687					-				n/m					(2,687	)			-100.0	%
Accretion of preferred stock discount				-					-					445					-				n/m					(445	)			-100.0	%
Net income available to common shareholders			$	26,161				$	23,455				$	13,443				$	2,706				11.5	%			$	12,718				94.6	%
Per common share data
Earnings per share - basic			$	0.41				$	0.37				$	0.23				$	0.04				10.8	%			$	0.18				78.3	%
Earnings per share - diluted			$	0.41				$	0.37				$	0.23				$	0.04				10.8	%			$	0.18				78.3	%
Dividends per share			$	0.23				$	0.23				$	0.23				$	-				0.0	%			$	-				0.0	%
Weighted average common shares outstanding
Basic				63,872,879					63,743,302					57,406,499
Diluted				64,054,171					63,933,333					57,546,928
Period end common shares outstanding				63,885,403					63,844,500					57,423,841
OTHER FINANCIAL DATA
Return on common equity				9.21	%				8.47	%				5.38	%
Return on average tangible common equity				12.92	%				11.98	%				8.20	%
Return on equity				9.21	%				8.47	%				5.51	%
Return on assets				1.13	%				1.02	%				0.69	%
Interest margin - Yield - FTE				5.18	%				5.19	%				5.30	%
Interest margin - Cost				0.71	%				0.77	%				1.10	%
Net interest margin - FTE				4.47	%				4.42	%				4.20	%
Efficiency ratio				62.56	%				59.33	%				58.57	%
Full-time equivalent employees				2,527					2,506					2,562
COMMON STOCK PERFORMANCE
Market value-Close			$	20.82				$	24.43				$	19.32
Common book value			$	17.88				$	17.68				$	17.35
Tangible common book value			$	13.04				$	12.82				$	11.90
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2010
($ in thousands)
(unaudited)
			Quarter Ended															Linked Quarter									Year over Year
NONPERFORMING ASSETS			6/30/2010					3/31/2010					6/30/2009					$ Change					% Change				$ Change					% Change
Nonaccrual loans
Florida			$	74,954				$	79,687				$	72,185				$	(4,733	)			-5.9	%			$	2,769				3.8	%
Mississippi (1)				39,924					41,795					32,040					(1,871	)			-4.5	%				7,884				24.6	%
Tennessee (2)				9,778					12,673					2,941					(2,895	)			-22.8	%				6,837				n/m
Texas				35,222					31,354					25,824					3,868				12.3	%				9,398				36.4	%
Total nonaccrual loans				159,878					165,509					132,990					(5,631	)			-3.4	%				26,888				20.2	%
Other real estate
Florida				31,814					40,145					26,387					(8,331	)			-20.8	%				5,427				20.6	%
Mississippi (1)				28,020					23,082					15,542					4,938				21.4	%				12,478				80.3	%
Tennessee (2)				12,493					9,769					10,234					2,724				27.9	%				2,259				22.1	%
Texas				19,073					18,180					3,033					893				4.9	%				16,040				n/m
Total other real estate				91,400					91,176					55,196					224				0.2	%				36,204				65.6	%
Total nonperforming assets			$	251,278				$	256,685				$	188,186				$	(5,407	)			-2.1	%			$	63,092				33.5	%
LOANS PAST DUE OVER 90 DAYS
Loans held for investment			$	6,057				$	8,411				$	6,873				$	(2,354	)			-28.0	%			$	(816	)			-11.9	%
Loans HFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)			$	49,712				$	48,571				$	28,523				$	1,141				2.3	%			$	21,189				74.3	%
			Quarter Ended															Linked Quarter									Year over Year
ALLOWANCE FOR LOAN LOSSES			6/30/2010					3/31/2010					6/30/2009					$ Change					% Change				$ Change					% Change
Beginning Balance			$	101,643				$	103,662				$	100,358				$	(2,019	)			-1.9	%			$	1,285				1.3	%
Provision for loan losses				10,398					15,095					26,767					(4,697	)			-31.1	%				(16,369	)			-61.2	%
Charge-offs				(14,297	)				(19,775	)				(27,870	)				5,478				-27.7	%				13,573				-48.7	%
Recoveries				2,912					2,661					2,496					251				9.4	%				416				16.7	%
Net charge-offs				(11,385	)				(17,114	)				(25,374	)				5,729				-33.5	%				13,989				-55.1	%
Ending Balance			$	100,656				$	101,643				$	101,751				$	(987	)			-1.0	%			$	(1,095	)			-1.1	%
PROVISION FOR LOAN LOSSES
Florida			$	2,432				$	5,501				$	28,915				$	(3,069	)			-55.8	%			$	(26,483	)			-91.6	%
Mississippi (1)				3,430					3,748					(1,044	)				(318	)			-8.5	%				4,474				n/m
Tennessee (2)				3,560					1,314					(659	)				2,246				n/m					4,219				n/m
Texas				976					4,532					(445	)				(3,556	)			-78.5	%				1,421				n/m
Total provision for loan losses			$	10,398				$	15,095				$	26,767				$	(4,697	)			-31.1	%			$	(16,369	)			-61.2	%
NET CHARGE-OFFS
Florida			$	5,880				$	8,989				$	21,167				$	(3,109	)			-34.6	%			$	(15,287	)			-72.2	%
Mississippi (1)				3,885					6,777					3,267					(2,892	)			-42.7	%				618				18.9	%
Tennessee (2)				1,031					426					897					605				n/m					134				14.9	%
Texas				589					922					43					(333	)			-36.1	%				546				n/m
Total net charge-offs			$	11,385				$	17,114				$	25,374				$	(5,729	)			-33.5	%			$	(13,989	)			-55.1	%
CREDIT QUALITY RATIOS
Net charge offs/average loans				0.72	%				1.08	%				1.48	%
Provision for loan losses/average loans				0.66	%				0.95	%				1.56	%
Nonperforming loans/total loans (incl LHFS)				2.55	%				2.61	%				1.94	%
Nonperforming assets/total loans (incl LHFS)				4.01	%				4.04	%				2.75	%
Nonperforming assets/total loans (incl LHFS) +ORE				3.95	%				3.99	%				2.72	%
ALL/total loans (excl LHFS)				1.66	%				1.65	%				1.55	%
ALL-commercial/total commercial loans				2.10	%				2.10	%				2.01	%
ALL-consumer/total consumer and home mortgage loans				0.82	%				0.80	%				0.73	%
ALL/nonperforming loans				62.96	%				61.41	%				76.51	%
ALL/nonperforming loans - (excl impaired loans with no specific reserves)				148.86	%				131.36	%				123.15	%
CAPITAL RATIOS
Total equity/total assets				12.36	%				12.14	%				12.49	%
Common equity/total assets				12.36	%				12.14	%				10.35	%
Tangible common equity/tangible assets				9.32	%				9.11	%				7.34	%
Tangible common equity/risk-weighted assets				12.51	%				12.15	%				9.56	%
Tier 1 leverage ratio				10.07	%				9.81	%				10.38	%
Tier 1 common risk-based capital ratio				12.51	%				12.14	%				9.66	%
Tier 1 risk-based capital ratio				13.53	%				13.15	%				13.50	%
Total risk-based capital ratio				15.53	%				15.15	%				15.45	%
(1) - Mississippi includes Central and Southern Mississippi Regions
(2) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2010
($ in thousands)
(unaudited)
			Quarter Ended																									Six Months Ended
AVERAGE BALANCES			6/30/2010					3/31/2010					12/31/2009					9/30/2009					6/30/2009					6/30/2010					6/30/2009
Securities AFS-taxable			$	1,586,165				$	1,514,029				$	1,369,022				$	1,377,318				$	1,395,303				$	1,550,296				$	1,450,012
Securities AFS-nontaxable				110,969					105,067					98,456					89,259					70,165					108,034					56,871
Securities HTM-taxable				162,691					179,076					202,235					191,934					194,079					170,838					186,291
Securities HTM-nontaxable				41,628					46,852					50,411					55,440					61,166					44,226					64,220
Total securities				1,901,453					1,845,024					1,720,124					1,713,951					1,720,713					1,873,394					1,757,394
Loans (including loans held for sale)				6,301,201					6,412,671					6,544,448					6,693,482					6,880,909					6,356,628					6,931,136
Fed funds sold and rev repos				7,478					10,438					10,609					12,821					20,973					8,950					18,494
Other earning assets				38,764					46,199					44,197					43,894					47,084					42,461					43,803
Total earning assets				8,248,896					8,314,332					8,319,378					8,464,148					8,669,679					8,281,433					8,750,827
Allowance for loan losses				(104,814	)				(106,200	)				(105,223	)				(102,545	)				(106,491	)				(105,503	)				(102,262	)
Cash and due from banks				207,670					216,305					199,586					205,361					214,633					211,964					227,002
Other assets				898,749					910,401					855,714					871,477					824,724					904,543					814,128
Total assets			$	9,250,501				$	9,334,838				$	9,269,455				$	9,438,441				$	9,602,545				$	9,292,437				$	9,689,695
Interest-bearing demand deposits			$	1,306,783				$	1,270,827				$	1,134,995				$	1,148,537				$	1,131,765				$	1,288,904				$	1,125,093
Savings deposits				2,066,612					1,953,711					1,801,870					1,797,421					1,869,794					2,010,473					1,842,883
Time deposits less than $100,000				1,307,611					1,356,469					1,422,270					1,434,097					1,493,172					1,331,905					1,489,446
Time deposits of $100,000 or more				989,397					1,014,027					1,039,565					1,095,431					1,096,170					1,001,644					1,085,580
Total interest-bearing deposits				5,670,403					5,595,034					5,398,700					5,475,486					5,590,901					5,632,926					5,543,002
Fed funds purchased and repos				495,904					600,826					579,616					644,012					589,542					548,075					631,625
Short-term borrowings				181,669					199,550					238,060					263,891					340,816					190,560					493,363
Long-term FHLB advances				15,833					75,000					75,000					75,000					75,000					45,253					66,713
Subordinated notes				49,785					49,777					49,769					49,760					49,752					49,781					49,748
Junior subordinated debt securities				70,104					70,104					70,104					70,104					70,104					70,104					70,104
Total interest-bearing liabilities				6,483,698					6,590,291					6,411,249					6,578,253					6,716,115					6,536,699					6,854,555
Noninterest-bearing deposits				1,536,153					1,535,209					1,533,588					1,529,381					1,554,642					1,535,683					1,512,963
Other liabilities				91,715					85,982					118,906					113,820					124,586					88,866					122,336
Total liabilities				8,111,566					8,211,482					8,063,743					8,221,454					8,395,343					8,161,248					8,489,854
Preferred equity				-					-					157,270					206,308					205,860					-					205,640
Common equity				1,138,935					1,123,356					1,048,442					1,010,679					1,001,342					1,131,189					994,201
Total shareholders' equity				1,138,935					1,123,356					1,205,712					1,216,987					1,207,202					1,131,189					1,199,841
Total liabilities and equity			$	9,250,501				$	9,334,838				$	9,269,455				$	9,438,441				$	9,602,545				$	9,292,437				$	9,689,695
PERIOD END BALANCES			6/30/2010					3/31/2010					12/31/2009					9/30/2009					6/30/2009
Cash and due from banks			$	186,365				$	191,973				$	213,519				$	191,449				$	220,706
Fed funds sold and rev repos				5,713					11,599					6,374					8,551					16,367
Securities available for sale				1,786,710					1,706,565					1,684,396					1,528,625					1,488,428
Securities held to maturity				192,860					215,888					232,984					242,603					254,380
Loans held for sale				218,369					176,682					226,225					237,152					280,975
Loans				6,054,995					6,170,878					6,319,797					6,382,440					6,570,582
Allowance for loan losses				(100,656	)				(101,643	)				(103,662	)				(103,016	)				(101,751	)
Net Loans				5,954,339					6,069,235					6,216,135					6,279,424					6,468,831
Premises and equipment, net				143,536					145,113					147,488					148,656					150,233
Mortgage servicing rights				43,044					50,037					50,513					56,042					63,316
Goodwill				291,104					291,104					291,104					291,104					291,104
Identifiable intangible assets				18,062					18,944					19,825					20,819					21,820
Other assets				404,443					416,075					437,455					364,073					370,710
Total assets			$	9,244,545				$	9,293,215				$	9,526,018				$	9,368,498				$	9,626,870
Deposits:
Noninterest-bearing			$	1,539,598				$	1,511,080				$	1,685,187				$	1,493,424				$	1,558,934
Interest-bearing				5,599,796					5,635,973					5,503,278					5,377,011					5,588,955
Total deposits				7,139,394					7,147,053					7,188,465					6,870,435					7,147,889
Fed funds purchased and repos				492,367					571,711					653,032					645,057					627,616
Short-term borrowings				208,136					132,784					253,957					315,105					314,751
Long-term FHLB advances				-					75,000					75,000					75,000					75,000
Subordinated notes				49,790					49,782					49,774					49,766					49,758
Junior subordinated debt securities				70,104					70,104					70,104					70,104					70,104
Other liabilities				142,374					118,252					125,626					121,670					139,638
Total liabilities				8,102,165					8,164,686					8,415,958					8,147,137					8,424,756
Preferred stock				-					-					-					206,461					206,009
Common stock				13,311					13,302					13,267					11,968					11,964
Capital surplus				253,133					250,365					244,864					145,352					143,654
Retained earnings				870,532					860,398					853,553					854,508					845,882
Accum other comprehensive income (loss), net of tax				5,404					4,464					(1,624	)				3,072					(5,395	)
Total shareholders' equity				1,142,380					1,128,529					1,110,060					1,221,361					1,202,114
Total liabilities and equity			$	9,244,545				$	9,293,215				$	9,526,018				$	9,368,498				$	9,626,870
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2010
($ in thousands except per share data)
(unaudited)
			Quarter Ended																									Six Months Ended
INCOME STATEMENTS			6/30/2010					3/31/2010					12/31/2009					9/30/2009					6/30/2009					6/30/2010					6/30/2009
Interest and fees on loans-FTE			$	84,362				$	84,127				$	87,640				$	89,672				$	91,652				$	168,489				$	184,034
Interest on securities-taxable				19,626					19,735					19,093					19,524					20,444					39,361					42,098
Interest on securities-tax exempt-FTE				2,151					2,180					2,183					2,172					2,040					4,331					3,874
Interest on fed funds sold and rev repos				7					8					12					16					19					15					38
Other interest income				366					383					377					381					343					749					656
Total interest income-FTE				106,512					106,433					109,305					111,765					114,498					212,945					230,700
Interest on deposits				12,785					13,904					16,513					18,403					21,430					26,689					43,970
Interest on fed funds pch and repos				260					226					215					282					272					486					636
Other interest expense				1,597					1,592					1,716					1,786					1,980					3,189					4,332
Total interest expense				14,642					15,722					18,444					20,471					23,682					30,364					48,938
Net interest income-FTE				91,870					90,711					90,861					91,294					90,816					182,581					181,762
Provision for loan losses				10,398					15,095					17,709					15,770					26,767					25,493					43,633
Net interest income after provision-FTE				81,472					75,616					73,152					75,524					64,049					157,088					138,129
Service charges on deposit accounts				14,220					12,977					14,118					14,157					13,244					27,197					25,812
Insurance commissions				6,884					6,837					6,391					7,894					7,372					13,721					14,794
Wealth management				5,558					5,355					5,438					5,589					5,497					10,913					11,052
Bank card and other fees				6,417					5,880					5,951					5,620					6,063					12,297					11,470
Mortgage banking, net				8,910					6,072					6,552					8,871					2,543					14,982					13,450
Other, net				1,103					879					1,814					994					1,693					1,982					2,808
Nonint inc-excl sec gains, net				43,092					38,000					40,264					43,125					36,412					81,092					79,386
Security gains, net				1,855					369					19					1,014					4,404					2,224					4,434
Total noninterest income				44,947					38,369					40,283					44,139					40,816					83,316					83,820
Salaries and employee benefits				43,282					42,854					42,209					42,629					40,989					86,136					84,414
Services and fees				10,523					10,255					9,919					10,124					10,249					20,778					20,249
Net occupancy-premises				4,917					5,034					5,063					4,862					4,948					9,951					10,126
Equipment expense				4,247					4,303					4,084					4,104					4,108					8,550					8,274
Other expense				21,459					13,915					14,372					17,515					18,677					35,374					30,315
Total noninterest expense				84,428					76,361					75,647					79,234					78,971					160,789					153,378
Income before income taxes and tax eq adj				41,991					37,624					37,788					40,429					25,894					79,615					68,571
Tax equivalent adjustment				3,384					3,293					2,569					2,417					2,325					6,677					4,722
Income before income taxes				38,607					34,331					35,219					38,012					23,569					72,938					63,849
Income taxes				12,446					10,876					10,742					12,502					6,994					23,322					20,789
Net income				26,161					23,455					24,477					25,510					16,575					49,616					43,060
Preferred stock dividends				-					-					2,061					2,688					2,687					-					5,375
Accretion of preferred stock discount				-					-					8,539					452					445					-					883
Net income available to common shareholders			$	26,161				$	23,455				$	13,877				$	22,370				$	13,443				$	49,616				$	36,802
Per common share data
Earnings per share - basic			$	0.41				$	0.37				$	0.23				$	0.39				$	0.23				$	0.78				$	0.64
Earnings per share - diluted			$	0.41				$	0.37				$	0.23				$	0.39				$	0.23				$	0.78				$	0.64
Dividends per share			$	0.23				$	0.23				$	0.23				$	0.23				$	0.23				$	0.46				$	0.46
Weighted average common shares outstanding
Basic				63,872,879					63,743,302					59,131,451					57,431,128					57,406,499					63,808,448					57,378,840
Diluted				64,054,171					63,933,333					59,287,459					57,559,492					57,546,928					63,993,460					57,446,888
Period end common shares outstanding				63,885,403					63,844,500					63,673,839					57,440,047					57,423,841					63,885,403					57,423,841
OTHER FINANCIAL DATA
Return on common equity				9.21	%				8.47	%				5.25	%				8.78	%				5.38	%				8.85	%				7.46	%
Return on average tangible common equity				12.92	%				11.98	%				7.80	%				13.06	%				8.20	%				12.45	%				11.28	%
Return on equity				9.21	%				8.47	%				8.05	%				8.32	%				5.51	%				8.85	%				7.24	%
Return on assets				1.13	%				1.02	%				1.05	%				1.07	%				0.69	%				1.08	%				0.90	%
Interest margin - Yield - FTE				5.18	%				5.19	%				5.21	%				5.24	%				5.30	%				5.19	%				5.32	%
Interest margin - Cost				0.71	%				0.77	%				0.88	%				0.96	%				1.10	%				0.74	%				1.13	%
Net interest margin - FTE				4.47	%				4.42	%				4.33	%				4.28	%				4.20	%				4.45	%				4.19	%
Efficiency ratio				62.56	%				59.33	%				57.69	%				58.95	%				58.57	%				60.98	%				58.46	%
Full-time equivalent employees				2,527					2,506					2,524					2,550					2,562
COMMON STOCK PERFORMANCE
Market value-Close			$	20.82				$	24.43				$	22.54				$	19.05				$	19.32
Common book value			$	17.88				$	17.68				$	17.43				$	17.67				$	17.35
Tangible common book value			$	13.04				$	12.82				$	12.55				$	12.24				$	11.90
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 2010
($ in thousands)
(unaudited)
			Quarter Ended
NONPERFORMING ASSETS			6/30/2010					3/31/2010					12/31/2009					9/30/2009					6/30/2009
Nonaccrual loans
Florida			$	74,954				$	79,687				$	74,159				$	72,063				$	72,185
Mississippi (1)				39,924					41,795					31,050					28,470					32,040
Tennessee (2)				9,778					12,673					12,749					11,481					2,941
Texas				35,222					31,354					23,204					26,490					25,824
Total nonaccrual loans				159,878					165,509					141,162					138,504					132,990
Other real estate
Florida				31,814					40,145					45,927					34,030					26,387
Mississippi (1)				28,020					23,082					22,373					22,932					15,542
Tennessee (2)				12,493					9,769					10,105					9,809					10,234
Texas				19,073					18,180					11,690					4,918					3,033
Total other real estate				91,400					91,176					90,095					71,689					55,196
Total nonperforming assets			$	251,278				$	256,685				$	231,257				$	210,193				$	188,186
LOANS PAST DUE OVER 90 DAYS
Loans held for investment			$	6,057				$	8,411				$	8,901				$	6,854				$	6,873
Loans HFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)			$	49,712				$	48,571				$	46,661				$	36,686				$	28,523
			Quarter Ended																									Six Months Ended
ALLOWANCE FOR LOAN LOSSES			6/30/2010					3/31/2010					12/31/2009					9/30/2009					6/30/2009					6/30/2010					6/30/2009
Beginning Balance			$	101,643				$	103,662				$	103,016				$	101,751				$	100,358				$	103,662				$	94,922
Provision for loan losses				10,398					15,095					17,709					15,770					26,767					25,493					43,633
Charge-offs				(14,297	)				(19,775	)				(20,139	)				(18,687	)				(27,870	)				(34,072	)				(41,885	)
Recoveries				2,912					2,661					3,076					4,182					2,496					5,573					5,081
Net charge-offs				(11,385	)				(17,114	)				(17,063	)				(14,505	)				(25,374	)				(28,499	)				(36,804	)
Ending Balance			$	100,656				$	101,643				$	103,662				$	103,016				$	101,751				$	100,656				$	101,751
PROVISION FOR LOAN LOSSES
Florida			$	2,432				$	5,501				$	11,371				$	(3,295	)			$	28,915				$	7,933				$	39,648
Mississippi (1)				3,430					3,748					6,310					12,009					(1,044	)				7,178					3,342
Tennessee (2)				3,560					1,314					2,097					159					(659	)				4,874					962
Texas				976					4,532					(2,069	)				6,897					(445	)				5,508					(319	)
Total provision for loan losses			$	10,398				$	15,095				$	17,709				$	15,770				$	26,767				$	25,493				$	43,633
NET CHARGE-OFFS
Florida			$	5,880				$	8,989				$	8,174				$	131				$	21,167				$	14,869				$	28,100
Mississippi (1)				3,885					6,777					5,448					9,629					3,267					10,662					6,722
Tennessee (2)				1,031					426					1,169					872					897					1,457					1,682
Texas				589					922					2,272					3,873					43					1,511					300
Total net charge-offs			$	11,385				$	17,114				$	17,063				$	14,505				$	25,374				$	28,499				$	36,804
CREDIT QUALITY RATIOS
Net charge offs/average loans				0.72	%				1.08	%				1.03	%				0.86	%				1.48	%				0.90	%				1.07	%
Provision for loan losses/average loans				0.66	%				0.95	%				1.07	%				0.93	%				1.56	%				0.81	%				1.27	%
Nonperforming loans/total loans (incl LHFS)				2.55	%				2.61	%				2.16	%				2.09	%				1.94	%
Nonperforming assets/total loans (incl LHFS)				4.01	%				4.04	%				3.53	%				3.18	%				2.75	%
Nonperforming assets/total loans (incl LHFS) +ORE				3.95	%				3.99	%				3.48	%				3.14	%				2.72	%
ALL/total loans (excl LHFS)				1.66	%				1.65	%				1.64	%				1.61	%				1.55	%
ALL-commercial/total commercial loans				2.10	%				2.10	%				2.10	%				2.08	%				2.01	%
ALL-consumer/total consumer and home mortgage loans				0.82	%				0.80	%				0.80	%				0.76	%				0.73	%
ALL/nonperforming loans				62.96	%				61.41	%				73.43	%				74.38	%				76.51	%
ALL/nonperforming loans - (excl impaired loans with no specific reserves)				148.86	%				131.36	%				150.13	%				117.93	%				123.15	%
CAPITAL RATIOS
Total equity/total assets				12.36	%				12.14	%				11.65	%				13.04	%				12.49	%
Common equity/total assets				12.36	%				12.14	%				11.65	%				10.83	%				10.35	%
Tangible common equity/tangible assets				9.32	%				9.11	%				8.67	%				7.76	%				7.34	%
Tangible common equity/risk-weighted assets				12.51	%				12.15	%				11.55	%				10.15	%				9.56	%
Tier 1 leverage ratio				10.07	%				9.81	%				9.74	%				10.70	%				10.38	%
Tier 1 common risk-based capital ratio				12.51	%				12.14	%				11.63	%				10.15	%				9.66	%
Tier 1 risk-based capital ratio				13.53	%				13.15	%				12.61	%				14.11	%				13.50	%
Total risk-based capital ratio				15.53	%				15.15	%				14.58	%				16.09	%				15.45	%
(1) - Mississippi includes Central and Southern Mississippi Regions
(2) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
June 30, 2010
($ in thousands)
(unaudited)
Note 1 - Securities Available for Sale and Held to Maturity
The following table is a summary of the estimated fair value of securities available for sale and the amortized cost of securities held to maturity ($ in thousands):
			6/30/2010				3/31/2010				12/31/2009				9/30/2009				6/30/2009
SECURITIES AVAILABLE FOR SALE
U.S. Government agency obligations
Issued by U.S. Government agencies			$	16			$	18			$	20			$	21			$	23
Issued by U.S. Government sponsored agencies				124,566				68,574				47,917				24,992				25,189
Obligations of states and political subdivisions				125,234				123,292				117,508				151,427				137,799
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA				13,390				11,986				12,192				9,590				10,000
Issued by FNMA and FHLMC				142,900				51,292				49,279				7,229				7,193
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA				1,333,725				1,387,752				1,382,556				1,258,779				1,209,677
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA				40,789				57,485				68,735				70,359				92,395
Corporate debt securities				6,090				6,166				6,189				6,228				6,152
Total securities available for sale			$	1,786,710			$	1,706,565			$	1,684,396			$	1,528,625			$	1,488,428
SECURITIES HELD TO MATURITY
Obligations of states and political subdivisions			$	64,517			$	69,975			$	74,643			$	78,522			$	89,331
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA				6,591				6,801				7,044				7,269				7,298
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA				118,708				136,054				148,226				153,728				154,655
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA				3,044				3,058				3,071				3,084				3,096
Total securities held to maturity			$	192,860			$	215,888			$	232,984			$	242,603			$	254,380

Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of approximately 90% of the portfolio in U.S. Government agency-backed obligations and other AAA rated securities. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of membership in the Federal Home Loan Bank of Dallas, Federal Reserve Bank and Depository Trust and Clearing Corporation, Trustmark does not hold any equity investment in government sponsored entities.
Note 2 – Loan Composition
LOANS BY TYPE			6/30/2010					3/31/2010					12/31/2009					9/30/2009					6/30/2009
Loans secured by real estate:
Construction, land development and other land loans			$	737,015				$	803,942				$	830,069				$	872,367				$	960,945
Secured by 1-4 family residential properties				1,630,353					1,637,121					1,650,743					1,637,322					1,663,575
Secured by nonfarm, nonresidential properties				1,463,657					1,466,296					1,467,307					1,472,147					1,472,212
Other real estate secured				189,118					194,641					197,421					209,957					186,770
Commercial and industrial loans				1,040,152					1,041,580					1,059,164					1,101,967					1,138,631
Consumer loans				492,262					542,488					606,315					661,075					727,399
Other loans				502,438					484,810					508,778					427,605					421,050
Loans				6,054,995					6,170,878					6,319,797					6,382,440					6,570,582
Allowance for loan losses				(100,656	)				(101,643	)				(103,662	)				(103,016	)				(101,751	)
Net Loans			$	5,954,339				$	6,069,235				$	6,216,135				$	6,279,424				$	6,468,831

Note 2 – Loan Composition (continued)
			June 30, 2010
LOAN COMPOSITION BY REGION			Total				Florida				Mississippi (Central and Southern Regions)				Tennessee (Memphis, TN and Northern MS Regions)				Texas
Loans secured by real estate:
Construction, land development and other land loans			$	737,015			$	173,932			$	285,595			$	53,215			$	224,273
Secured by 1-4 family residential properties				1,630,353				77,680				1,353,489				161,662				37,522
Secured by nonfarm, nonresidential properties				1,463,657				178,297				801,981				211,588				271,791
Other real estate secured				189,118				8,062				162,620				9,465				8,971
Commercial and industrial loans				1,040,152				25,254				754,571				70,819				189,508
Consumer loans				492,262				1,756				456,091				26,456				7,959
Other loans				502,438				29,354				421,512				19,323				32,249
Loans			$	6,054,995			$	494,335			$	4,235,859			$	552,528			$	772,273
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION
Lots			$	93,100			$	54,406			$	23,030			$	2,726			$	12,938
Development				174,092				24,632				62,624				10,889				75,947
Unimproved land				243,038				69,003				99,955				26,348				47,732
1-4 family construction				112,854				9,148				72,087				5,426				26,193
Other construction				113,931				16,743				27,899				7,826				61,463
Construction, land development and other land loans			$	737,015			$	173,932			$	285,595			$	53,215			$	224,273
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION
Income producing:
Retail			$	180,158			$	37,510			$	80,024			$	28,936			$	33,688
Office				161,271				54,455				82,221				13,920				10,675
Nursing homes/assisted living				118,731				-				108,628				4,728				5,375
Hotel/motel				67,545				12,752				30,411				10,960				13,422
Industrial				30,908				7,101				5,532				1,189				17,086
Health care				10,521				-				10,457				64				-
Convenience stores				9,429				277				4,735				2,562				1,855
Other				156,089				13,148				61,366				17,244				64,331
Total income producing loans				734,652				125,243				383,374				79,603				146,432
Owner-occupied:
Office				122,607				21,380				64,283				17,682				19,262
Churches				120,572				2,306				54,951				59,353				3,962
Industrial warehouses				84,962				1,373				55,472				416				27,701
Health care				71,082				11,232				50,025				3,741				6,084
Convenience stores				59,377				1,296				38,891				2,903				16,287
Retail				33,251				5,925				19,633				1,444				6,249
Restaurants				32,810				855				24,562				6,040				1,353
Auto dealerships				20,976				624				15,473				1,602				3,277
Other				183,368				8,063				95,317				38,804				41,184
Total owner-occupied loans				729,005				53,054				418,607				131,985				125,359
Loans secured by nonfarm, nonresidential properties			$	1,463,657			$	178,297			$	801,981			$	211,588			$	271,791

Note 2 – Loan Composition (continued)
			June 30, 2010
																Classified (3)
FLORIDA CREDIT QUALITY			Total Loans				Criticized Loans (1)				Special Mention (2)					Accruing				Nonimpaired Nonaccrual				Impaired Nonaccrual (4)
Construction, land development and other land loans:
Lots			$	54,406			$	24,053			$	1,470				$	9,024			$	10,677			$	2,882
Development				24,632				14,334				-					3,657				337				10,340
Unimproved land				69,003				45,873				21,847					9,544				1,147				13,335
1-4 family construction				9,148				7,222				1,480					2,992				442				2,308
Other construction				16,743				9,904				-					1,121				1,475				7,308
Construction, land development and other land loans				173,932				101,386				24,797					26,338				14,078				36,173
Commercial, commercial real estate and consumer				320,403				68,566				13,073					30,790				14,790				9,913
Total Florida loans			$	494,335			$	169,952			$	37,870				$	57,128			$	28,868			$	46,086
FLORIDA CREDIT QUALITY (continued)			Total Loans Less Impaired Loans				Loan Loss Reserves				Loan Loss Reserve % of Nonimpaired Loans
Construction, land development and other land loans:
Lots			$	51,524			$	7,643				14.83	%
Development				14,292				1,573				11.01	%
Unimproved land				55,668				7,195				12.92	%
1-4 family construction				6,840				1,269				18.55	%
Other construction				9,435				943				9.99	%
Construction, land development and other land loans				137,759				18,623				13.52	%
Commercial, commercial real estate and consumer				310,490				6,825				2.20	%
Total Florida loans			$	448,249			$	25,448				5.68	%
(1) Criticized loans equal all special mention and classified loans.
(2) Special mention loans exhibit potential credit weaknesses that, if not resolved, may ultimately result in a more severe classification.
(3) Classified loans include those loans identified by management as exhibiting well-defined credit weaknesses that may jeopardize repayment in full of the debt.
(4) All nonaccrual loans over $1 million are individually assessed for impairment. Impaired loans have been determined to be collateral dependent
and assessed using a fair value approach. Fair value estimates begin with appraised values, normally from recently received and reviewed
appraisals. Appraised values are adjusted down for costs associated with asset disposal. When a loan is deemed to be impaired, the full
difference between book value and the most likely estimate of the asset’s net realizable value is charged off.

LOAN COMPOSITION -FLORIDA			6/30/2010				3/31/2010				12/31/2009				9/30/2009				6/30/2009
Loans secured by real estate:
Construction, land development and other land loans			$	173,932			$	183,670			$	198,906			$	211,974			$	245,494
Secured by 1-4 family residential properties				77,680				81,297				87,282				92,088				88,007
Secured by nonfarm, nonresidential properties				178,297				179,637				180,267				182,548				180,559
Other real estate secured				8,062				5,195				5,388				12,891				12,900
Commercial and industrial loans				25,254				22,100				19,869				19,762				19,907
Consumer loans				1,756				2,077				2,287				2,276				2,238
Other loans				29,354				29,480				29,655				29,880				21,692
Loans			$	494,335			$	503,456			$	523,654			$	551,419			$	570,797
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS - FLORIDA
Lots			$	54,406			$	57,436			$	61,725			$	63,645			$	69,005
Development				24,632				27,381				27,227				28,376				33,533
Unimproved land				69,003				71,271				76,762				83,437				93,379
1-4 family construction				9,148				10,247				10,929				13,237				17,344
Other construction				16,743				17,335				22,263				23,279				32,233
Construction, land development and other land loans			$	173,932			$	183,670			$	198,906			$	211,974			$	245,494

Note 3 – Stockholders’ Equity
Common Stock Offering
On December 7, 2009, Trustmark completed a public offering of 6,216,216 shares of its common stock, including 810,810 shares issued pursuant to the exercise of the underwriters’ over-allotment option, at a price of $18.50 per share. Trustmark received net proceeds of approximately $109.3 million after deducting underwriting discounts, commissions and estimated offering expenses. Proceeds from this offering were used in the redemption of preferred stock discussed below.
Repurchase of Preferred Stock
On November 21, 2008, Trustmark issued 215,000 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A, (Senior Preferred Stock) to the U.S. Treasury (Treasury) in a private placement transaction as part of the Troubled Assets Relief Program Capital Purchase Program (TARP CPP), a voluntary initiative for healthy U.S. financial institutions. As part of its participation in the TARP CPP, Trustmark also issued to the Treasury a ten-year warrant (the Warrant) to purchase up to 1,647,931 shares of Trustmark’s common stock, at an initial exercise price of $19.57 per share, subject to customary anti-dilution adjustments.
On December 9, 2009, Trustmark completed the repurchase of its 215,000 shares of Senior Preferred Stock from the Treasury at a purchase price of $215.0 million plus a final accrued dividend of $716.7 thousand. The repurchase of the Senior Preferred Stock resulted in a one-time, non-cash charge of approximately $8.2 million to net income available to common shareholders in Trustmark’s fourth quarter financial statements for the unaccreted discount recorded at the date of issuance of the Senior Preferred Stock. In addition, on December 30, 2009, Trustmark repurchased in full from the Treasury, the Warrant to purchase 1,647,931 shares of Trustmark’s common stock, which was issued to the Treasury pursuant to the TARP CPP. The purchase price paid by Trustmark to the Treasury for the Warrant was its fair value of $10.0 million.
Note 4 – Yields on Earning Assets and Interest-Bearing Liabilities
The following table illustrates the yields on earning assets by category as well as the rates paid on interest-bearing liabilities on a tax equivalent basis:
			Quarter Ended																				Six Months Ended
			6/30/2010				3/31/2010				12/31/2009				9/30/2009				6/30/2009				6/30/2010				6/30/2009
Securities – Taxable			4.50	%			4.73	%			4.82	%			4.94	%			5.16	%			4.61	%			5.19	%
Securities – Nontaxable			5.65	%			5.82	%			5.82	%			5.96	%			6.23	%			5.74	%			6.45	%
Securities – Total			4.59	%			4.82	%			4.91	%			5.02	%			5.24	%			4.70	%			5.28	%
Loans			5.37	%			5.32	%			5.31	%			5.32	%			5.34	%			5.35	%			5.35	%
FF Sold & Rev Repo			0.38	%			0.31	%			0.45	%			0.50	%			0.36	%			0.34	%			0.41	%
Other Earning Assets			3.79	%			3.36	%			3.38	%			3.44	%			2.92	%			3.56	%			3.02	%
Total Earning Assets			5.18	%			5.19	%			5.21	%			5.24	%			5.30	%			5.19	%			5.32	%
Interest-bearing Deposits			0.90	%			1.01	%			1.21	%			1.33	%			1.54	%			0.96	%			1.60	%
FF Pch & Repo			0.21	%			0.15	%			0.15	%			0.17	%			0.19	%			0.18	%			0.20	%
Borrowings			2.02	%			1.64	%			1.57	%			1.54	%			1.48	%			1.81	%			1.28	%
Total Interest-bearing Liabilities			0.91	%			0.97	%			1.14	%			1.23	%			1.41	%			0.94	%			1.44	%
Net interest margin			4.47	%			4.42	%			4.33	%			4.28	%			4.20	%			4.45	%			4.19	%

During the second quarter of 2010, the net interest margin increased 5 basis points to 4.47%, from 4.42% for the first quarter of 2010. The increase is due to decreasing deposit costs, offset somewhat by a modest decline in earning asset yields.
Note 5 – Other Noninterest Expense
Other noninterest expense consisted of the following ($ in thousands):
			Quarter Ended																				Six Months Ended
			6/30/2010				3/31/2010				12/31/2009				9/30/2009				6/30/2009				6/30/2010				6/30/2009
FDIC assessment expense			$	3,035			$	3,147			$	2,865			$	2,913			$	7,253			$	6,182			$	10,030
ORE/Foreclosure expense				9,206				3,011				3,581				5,870				2,733				12,217				3,363
Other expense				9,218				7,757				7,926				8,732				8,691				16,975				16,922
Total other expense			$	21,459			$	13,915			$	14,372			$	17,515			$	18,677			$	35,374			$	30,315

Note 6 – Mortgage Banking
Trustmark utilizes a portfolio of derivative instruments to achieve a fair value return that offsets the changes in the fair value of mortgage servicing rights (MSR) attributable to interest rates. Changes in the fair value of these derivative instruments are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of MSR. The MSR fair value represents the effect of present value decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the total hedge cost to the changes in the fair value of the MSR asset attributable to interest rate changes. The impact of this strategy resulted in a net positive ineffectiveness of $3.7 million and $1.0 million for the quarters ended June 30, 2010 and March 31, 2010, respectively, and a net negative ineffectiveness of $4.6 million for the quarter ended June 30, 2009. The accompanying table shows that the MSR value decreased $8.6 million for the quarter ended June 30, 2010 primarily due to a decline in mortgage rates. More than offsetting the MSR change is a $12.3 million increase in the value of derivative instruments primarily due to a large decline in the 10-year Treasury note yield. The resulting $3.7 million net positive ineffectiveness is primarily caused by the spread widening between primary mortgage rates and the 10-year Treasury note yield.
Note 6 – Mortgage Banking (continued)
The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements:
			Quarter Ended																									Six Months Ended
			6/30/2010					3/31/2010					12/31/2009					9/30/2009					6/30/2009					6/30/2010					6/30/2009
Mortgage servicing income, net			$	3,495				$	3,449				$	3,763				$	4,092				$	4,029				$	6,944				$	8,031
Change in fair value-MSR from runoff				(1,374	)				(1,170	)				(1,219	)				(1,608	)				(3,097	)				(2,544	)				(5,739	)
Gain on sales of loans, net				1,897					3,755					3,738					4,081					8,932					5,652					12,935
Other, net				1,193					(1,002	)				(139	)				179					(2,708	)				191					782
Mortgage banking income before hedge ineffectiveness				5,211					5,032					6,143					6,744					7,156					10,243					16,009
Change in fair value-MSR from market changes				(8,631	)				(3,067	)				2,710					(9,344	)				13,593					(11,698	)				13,240
Change in fair value of derivatives				12,330					4,107					(2,301	)				11,471					(18,206	)				16,437					(15,799	)
Net positive (negative) hedge ineffectiveness				3,699					1,040					409					2,127					(4,613	)				4,739					(2,559	)
Mortgage banking, net			$	8,910				$	6,072				$	6,552				$	8,871				$	2,543				$	14,982				$	13,450

During the first quarter of 2010, Trustmark completed the final settlement of the sale of approximately $920.9 million in mortgages serviced for others, which reduced Trustmark’s MSR by approximately $8.5 million. The effect of this transaction did not have a material impact on Trustmark's results of operations.

Note 7 – Non-GAAP Financial Measures

In addition to capital ratios defined by generally accepted accounting principles (GAAP) and banking regulators, Trustmark utilizes various tangible common equity measures when evaluating capital utilization and adequacy. Tangible common equity, as defined by Trustmark, represents common equity less goodwill and identifiable intangible assets.

Trustmark believes these measures are important because they reflect the level of capital available to withstand unexpected market conditions. Additionally, presentation of these measures allows readers to compare certain aspects of Trustmark’s capitalization to other organizations. These ratios differ from capital measures defined by banking regulators principally in that the numerator excludes shareholders’ equity associated with preferred securities, the nature and extent of which varies across organizations.

These calculations are intended to complement the capital ratios defined by GAAP and banking regulators. Because GAAP does not include these capital ratio measures, Trustmark believes there are no comparable GAAP financial measures to these tangible common equity ratios. Despite the importance of these measures to Trustmark, there are no standardized definitions for them and, as a result, Trustmark’s calculations may not be comparable with other organizations. Also there may be limits in the usefulness of these measures to investors. As a result, Trustmark encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure. The following table reconciles Trustmark’s calculation of these measures to amounts reported under GAAP.

Note 7 - Non-GAAP Financial Measures (continued)
				Quarter Ended																									Six Months Ended
				6/30/2010					3/31/2010					12/31/2009					9/30/2009					6/30/2009					6/30/2010					6/30/2009
TANGIBLE COMMON EQUITY
AVERAGE BALANCES
Total shareholders' equity				$	1,138,935				$	1,123,356				$	1,205,712				$	1,216,987				$	1,207,202				$	1,131,189				$	1,199,841
Less: Preferred stock					-					-					(157,270	)				(206,308	)				(205,860	)				-					(205,640	)
Total average common equity					1,138,935					1,123,356					1,048,442					1,010,679					1,001,342					1,131,189					994,201
Less: Goodwill					(291,104	)				(291,104	)				(291,104	)				(291,104	)				(291,104	)				(291,104	)				(291,104	)
Identifiable intangible assets					(18,596	)				(19,484	)				(20,426	)				(21,430	)				(22,424	)				(19,038	)				(22,929	)
Total average tangible common equity				$	829,235				$	812,768				$	736,912				$	698,145				$	687,814				$	821,047				$	680,168
PERIOD END BALANCES
Total shareholders' equity				$	1,142,380				$	1,128,529				$	1,110,060				$	1,221,361				$	1,202,114
Less: Preferred stock					-					-					-					(206,461	)				(206,009	)
Total common equity					1,142,380					1,128,529					1,110,060					1,014,900					996,105
Less: Goodwill					(291,104	)				(291,104	)				(291,104	)				(291,104	)				(291,104	)
Identifiable intangible assets					(18,062	)				(18,944	)				(19,825	)				(20,819	)				(21,820	)
Total tangible common equity	(a)			$	833,214				$	818,481				$	799,131				$	702,977				$	683,181
TANGIBLE ASSETS
Total assets				$	9,244,545				$	9,293,215				$	9,526,018				$	9,368,498				$	9,626,870
Less: Goodwill					(291,104	)				(291,104	)				(291,104	)				(291,104	)				(291,104	)
Identifiable intangible assets					(18,062	)				(18,944	)				(19,825	)				(20,819	)				(21,820	)
Total tangible assets	(b)			$	8,935,379				$	8,983,167				$	9,215,089				$	9,056,575				$	9,313,946
Risk-weighted assets	(c)			$	6,658,897				$	6,737,084				$	6,918,802				$	6,923,907				$	7,144,278
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income available to common shareholders				$	26,161				$	23,455				$	13,877				$	22,370				$	13,443				$	49,616				$	36,802
Plus: Intangible amortization net of tax					545					545					614					619					618					1,090					1,236
Net income adjusted for intangible amortization				$	26,706				$	24,000				$	14,491				$	22,989				$	14,061				$	50,706				$	38,038
Period end common shares outstanding	(d)				63,885,403					63,844,500					63,673,839					57,440,047					57,423,841
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible common equity 1					12.92	%				11.98	%				7.80	%				13.06	%				8.20	%				12.45	%				11.28	%
Tangible common equity/tangible assets	(a)/(b)				9.32	%				9.11	%				8.67	%				7.76	%				7.34	%
Tangible common equity/risk-weighted assets	(a)/(c)				12.51	%				12.15	%				11.55	%				10.15	%				9.56	%
Tangible common book value	(a)/(d)*1,000			$	13.04				$	12.82				$	12.55				$	12.24				$	11.90
TIER 1 COMMON RISK-BASED CAPITAL
Total shareholders' equity				$	1,142,380				$	1,128,529				$	1,110,060				$	1,221,361				$	1,202,114
Eliminate qualifying AOCI					(5,404	)				(4,464	)				1,624					(3,072	)				5,395
Qualifying tier 1 capital					68,000					68,000					68,000					68,000					68,000
Disallowed goodwill					(291,104	)				(291,104	)				(291,104	)				(291,104	)				(291,104	)
Adj to goodwill allowed for deferred taxes					9,510					9,158					8,805					8,453					8,100
Other disallowed intangibles					(18,062	)				(18,944	)				(19,825	)				(20,819	)				(21,820	)
Disallowed servicing intangible					(4,304	)				(5,004	)				(5,051	)				(5,604	)				(6,331	)
Total tier 1 capital				$	901,016				$	886,171				$	872,509				$	977,215				$	964,354
Less: Qualifying tier 1 capital					(68,000	)				(68,000	)				(68,000	)				(68,000	)				(68,000	)
Preferred stock					-					-					-					(206,461	)				(206,009	)
Total tier 1 common capital	(e)			$	833,016				$	818,171				$	804,509				$	702,754				$	690,345
Tier 1 common risk-based capital ratio	(e)/(c)				12.51	%				12.14	%				11.63	%				10.15	%				9.66	%
1 Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible common equity

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