Note 6 –Other Real Estate and Covered Other Real Estate

Other Real Estate, excluding Covered Other Real Estate

At September 30, 2016, Trustmark’s geographic other real estate distribution was concentrated primarily in its five key market regions: Alabama, Florida, Mississippi, Tennessee and Texas. The ultimate recovery of a substantial portion of the carrying amount of other real estate, excluding covered other real estate, is susceptible to changes in market conditions in these areas.

For the periods presented, changes and gains, net on other real estate, excluding covered other real estate, were as follows ($ in thousands):

	Nine Months Ended September 30,
	2016			2015
Balance at beginning of period	$	77,177		$	92,509
Additions		21,972			26,832
Disposals		(30,494	)		(33,015	)
Write-downs		(3,662	)		(2,371	)
Balance at end of period	$	64,993		$	83,955

Gain, net on the sale of other real estate included in other real estate expense	$	5,350		$	2,116

At September 30, 2016 and December 31, 2015, other real estate, excluding covered other real estate, by type of property consisted of the following ($ in thousands):

	September 30, 2016		December 31, 2015
Construction, land development and other land properties	$	38,345	$	47,550
1-4 family residential properties		8,037		10,732
Nonfarm, nonresidential properties		18,611		16,717
Other real estate properties		—		2,178
Total other real estate, excluding covered other real estate	$	64,993	$	77,177

At September 30, 2016 and December 31, 2015, other real estate, excluding covered other real estate, by geographic location consisted of the following ($ in thousands):

	September 30, 2016		December 31, 2015
Alabama	$	15,574	$	21,578
Florida		25,147		29,579
Mississippi (1)		16,659		14,312
Tennessee (2)		6,061		9,974
Texas		1,552		1,734
Total other real estate, excluding covered other real estate	$	64,993	$	77,177

(1)	Mississippi includes Central and Southern Mississippi Regions

(2)	Tennessee includes Memphis, Tennessee and Northern Mississippi Regions

Covered Other Real Estate

On July 1, 2016, $388 thousand of covered other real estate was transferred to other real estate, excluding covered other real estate, as a result of the expiration of a loss-share agreement with the FDIC on June 30, 2016. As of September 30, 2016, Trustmark had no covered other real estate. The remaining loss-share agreement with the FDIC, which covers loans secured by 1-4 family residential properties, will expire in 2021. Should a loan covered by the remaining loss-share agreement be foreclosed, the related property will be classified as covered other real estate.

For the periods presented, changes and gains (losses), net on covered other real estate were as follows ($ in thousands):

	Nine Months Ended September 30,
	2016			2015
Balance at beginning of period	$	1,651		$	6,060
Transfers from covered loans		456			266
FASB ASC 310-30 adjustment for the residual recorded investment		(12	)		(902	)
Net transfers from covered loans		444			(636	)
Disposals		(1,679	)		(1,404	)
Transfers to noncovered other real estate		(388	)		—
Write-downs		(28	)		(1,155	)
Balance at end of period	$	—		$	2,865

Gain (loss), net on the sale of covered other real estate included in other real estate expense	$	801		$	(54	)

At September 30, 2016 and December 31, 2015, covered other real estate by type of property consisted of the following ($ in thousands):

	September 30, 2016		December 31, 2015
Construction, land development and other land properties	$	—	$	638
1-4 family residential properties		—		223
Nonfarm, nonresidential properties		—		399
Other real estate properties		—		391
Total covered other real estate	$	—	$	1,651