Shareholders' Equity

12 Months Ended

Dec. 31, 2011

Shareholders' Equity [Abstract]

Shareholders' Equity

Note 17 – Shareholders' 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 the Senior Preferred Stock discussed below.

Preferred Stock and Warrant

Issued

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.

The Senior Preferred Stock and the Warrant were initially recorded at an allocated value of the total cash proceeds of $215.0 million in the same proportion as the aggregate estimated fair value of the two securities.  Trustmark retained a widely recognized third party to advise on to the value of the Senior Preferred Stock and the Warrant.

The fair value of the Senior Preferred Stock was estimated by a discounted cash flow method, assuming that Trustmark would not raise new capital in either the debt or equity markets.  The cash flows were discounted using a yield curve that ranged from 5.85% to 10.42%, and averaged approximately 8.75%.  Under this method, the Senior Preferred had an estimated fair value of $182.6 million as of the valuation date of November 21, 2008.

Trustmark's advisor's model analyzed the value of the warrant using a Cox-Ross-Rubenstein Binomial Option Pricing Model.  Model assumptions included the stated terms of the issue, and current and/or historical market data for the assumptions of volatility, interest rates, and dividend yield.  Under this approach, the model reached a recommended value of the Warrant that was estimated to be $9.0 million as of the valuation date.

In total, the Senior Preferred Stock and Warrant fair values were estimated at $191.6 million, at the valuation date.  Trustmark reviewed the model and the recommended valuations and determined that they represented a fair valuation of the Senior Preferred Stock and the Warrant.  At the same proportion as the relative fair values, Trustmark allocated the $215.0 million cash proceeds between the Senior Preferred Stock and the Warrant.  Specifically, $204.9 million was allocated to the Senior Preferred Stock and recorded as Preferred Stock and $10.1 million was allocated to the Warrant and recorded in Capital Surplus.

The Senior Preferred Stock was recorded at a discount to its face value of $215.0 million.  Until the Senior Preferred Stock was repurchased, the discount was being accreted monthly on a constant yield method to the dividend reset date of February 15, 2014.

Repurchased

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 $8.2 million to net income available to common shareholders in Trustmark's fourth quarter 2009 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.

Regulatory Capital

Trustmark and TNB are subject to minimum capital requirements, which are administered by various federal regulatory agencies.  These capital requirements, as defined by federal guidelines, involve quantitative and qualitative measures of assets, liabilities and certain off-balance sheet instruments.  Failure to meet minimum capital requirements can initiate 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 TNB.  As of December 31, 2011, Trustmark and TNB have exceeded all of the minimum capital standards for the parent company and its primary banking subsidiary as established by regulatory requirements.  In addition, TNB has met applicable regulatory guidelines to be considered well-capitalized at December 31, 2011.  To be categorized in this manner, TNB must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the accompanying table.  There are no significant conditions or events that have occurred since December 31, 2011, which Management believes have affected TNB's present classification.

Trustmark's and TNB's actual regulatory capital amounts and ratios are presented in the table below ($ in thousands):

											Minimum Regulatory
	Actual					Minimum Regulatory					Provision to be
	Regulatory Capital					Capital Required					Well-Capitalized
	Amount		Ratio			Amount		Ratio			Amount		Ratio
At December 31, 2011:
Total Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,096,213		16.67	%	$	526,156		8.00	%		n/a		n/a
Trustmark National Bank		1,057,932		16.28	%		519,709		8.00	%	$	649,636		10.00	%
Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation	$	974,034		14.81	%	$	263,078		4.00	%		n/a		n/a
Trustmark National Bank		938,122		14.44	%		259,855		4.00	%	$	389,782		6.00	%
Tier 1 Capital (to Average Assets)
Trustmark Corporation	$	974,034		10.43	%	$	280,162		3.00	%		n/a		n/a
Trustmark National Bank		938,122		10.18	%		276,502		3.00	%	$	460,837		5.00	%
At December 31, 2010:
Total Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,051,933		15.77	%	$	533,774		8.00	%		n/a		n/a
Trustmark National Bank		1,014,219		15.40	%		526,894		8.00	%	$	658,617		10.00	%
Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation	$	918,600		13.77	%	$	266,887		4.00	%		n/a		n/a
Trustmark National Bank		883,549		13.42	%		263,447		4.00	%	$	395,170		6.00	%
Tier 1 Capital (to Average Assets)
Trustmark Corporation	$	918,600		10.14	%	$	271,867		3.00	%		n/a		n/a
Trustmark National Bank		883,549		9.89	%		267,967		3.00	%	$	446,612		5.00	%

Dividends on Common Stock

Dividends paid by Trustmark are substantially funded from dividends received from TNB.  Approval by TNB's regulators is required if the total of all dividends declared in any calendar year exceeds the total of its net income for that year combined with its retained net income of the preceding two years.  TNB will have available in 2012 approximately $85.4 million plus its net income for that year to pay as dividends.

Accumulated Other Comprehensive Income (Loss)

The following table presents the components of accumulated other comprehensive income (loss) and the related tax effects allocated to each component for the years ended December 31, 2011, 2010 and 2009 ($ in thousands):

							Accumaulated
							Other
							Comprehensive
	Before-Tax			Tax			Income
	Amount			Effect			(Loss)
Balance, January 1, 2009	$	(23,800	)	$	9,083		$	(14,717	)
Unrealized gains on available for sale securities:
Unrealized holding gains arising during period		27,639			(10,572	)		17,067
Less: adjustment for net gains realized in net income		(5,467	)		2,091			(3,376	)
Pension and other postretirement benefit plans:
Net change in prior service cost arising during the period		(1,885	)		721			(1,164	)
Net decrease in loss arising during the period		917			(351	)		566
Balance, December 31, 2009		(2,596	)		972			(1,624	)
Unrealized gains on available for sale securities:
Unrealized holding losses arising during period		(15,431	)		5,902			(9,529	)
Less: adjustment for net gains realized in net income		(2,329	)		891			(1,438	)
Pension and other postretirement benefit plans:
Net change in prior service cost arising during the period		123			(47	)		76
Net decrease in loss arising during the period		1,764			(675	)		1,089
Balance, December 31, 2010		(18,469	)		7,043			(11,426	)
Unrealized gains on available for sale securities:
Unrealized holding gains arising during period		39,636			(15,161	)		24,475
Less: adjustment for net gains realized in net income		(80	)		31			(49	)
Pension and other postretirement benefit plans:
Net change in prior service cost arising during the period		(957	)		366			(591	)
Net increase in loss arising during the period		(15,041	)		5,753			(9,288	)
Balance, December 31, 2011	$	5,089		$	(1,968	)	$	3,121