Note 14 – Shareholders’ Equity

Regulatory Capital

Trustmark and TNB 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 2015 Annual Report on Form 10-K, 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. Effective January 1, 2016, Trustmark’s and TNB’s minimum risk-based capital requirements include the year-one phased in capital conservation buffer of 0.625%. 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 TNB and limit Trustmark’s and TNB’s ability to pay dividends. As of September 30, 2016, Trustmark and TNB exceeded all applicable minimum capital standards. In addition, Trustmark and TNB met applicable regulatory guidelines to be considered well-capitalized at September 30, 2016. To be categorized in this manner, Trustmark and TNB maintained minimum common equity Tier 1 risk-based capital, Tier 1 risk-based capital, total risk-based capital and Tier 1 leverage ratios as set forth in the accompanying table, 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 September 30, 2016, which Management believes have affected Trustmark’s or TNB’s present classification.

The following table provides Trustmark’s and TNB’s actual regulatory capital amounts and ratios under regulatory capital standards in effect at September 30, 2016 and December 31, 2015 ($ in thousands):

	Actual
	Regulatory Capital					Minimum			To Be Well
	Amount		Ratio			Requirement			Capitalized
At September 30, 2016:
Common Equity Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,194,729		12.35	%		5.125	%	n/a
Trustmark National Bank		1,235,923		12.78	%		5.125	%		6.50	%

Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,254,453		12.97	%		6.625	%	n/a
Trustmark National Bank		1,235,923		12.78	%		6.625	%		8.00	%

Total Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,336,704		13.82	%		8.625	%	n/a
Trustmark National Bank		1,318,174		13.63	%		8.625	%		10.00	%

Tier 1 Leverage (to Average Assets)
Trustmark Corporation	$	1,254,453		9.92	%		4.00	%	n/a
Trustmark National Bank		1,235,923		9.79	%		4.00	%		5.00	%

At December 31, 2015:
Common Equity Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,161,598		12.57	%		4.50	%	n/a
Trustmark National Bank		1,201,113		13.00	%		4.50	%		6.50	%

Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,220,535		13.21	%		6.00	%	n/a
Trustmark National Bank		1,201,113		13.00	%		6.00	%		8.00	%

Total Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,300,146		14.07	%		8.00	%	n/a
Trustmark National Bank		1,280,724		13.86	%		8.00	%		10.00	%

Tier 1 Leverage (to Average Assets)
Trustmark Corporation	$	1,220,535		10.03	%		4.00	%	n/a
Trustmark National Bank		1,201,113		9.89	%		4.00	%		5.00	%

Stock Repurchase Program

On March 11, 2016, the Board of Directors of Trustmark authorized a stock repurchase program under which $100.0 million of Trustmark’s outstanding common stock may be acquired through March 31, 2019. The shares may be purchased from time to time at prevailing market prices, through open market or privately negotiated transactions, depending on market conditions. Trustmark did not repurchase any shares of its common stock during the three months ended September 30, 2016. Trustmark repurchased approximately 34 thousand shares of its common stock during the nine months ended September 30, 2016.

Other Comprehensive Income and Accumulated Other Comprehensive Loss

The following table presents the components of accumulated other comprehensive loss and the related tax effects allocated to each component for the three and nine months ended September 30, 2016 and 2015 ($ in thousands). Reclassification adjustments related to securities available for sale are included in security losses, net in the accompanying consolidated statements of income. The amortization of prior service cost, recognized net loss due to lump sum settlements and change in net actuarial loss on pension and other postretirement benefit plans are included in the computation of net periodic benefit cost (see Note 9 – Defined Benefit and Other Postretirement Benefits for additional details). Reclassification adjustments related to pension and other postretirement benefit plans are included in salaries and employee benefits in the accompanying consolidated statements of income. Reclassification adjustments related to the cash flow hedge derivative are included in other interest expense in the accompanying consolidated statements of income.

	Three Months Ended September 30, 2016									Three Months Ended September 30, 2015
	Before Tax Amount			Tax (Expense) Benefit			Net of Tax Amount			Before Tax Amount			Tax (Expense) Benefit			Net of Tax Amount
Securities available for sale and transferred securities:
Unrealized holding (losses) gains arising during the period	$	(12,657	)	$	4,841		$	(7,816	)	$	17,872		$	(6,837	)	$	11,035
Reclassification adjustment for net losses realized in net income		—			—			—			—			—			—
Change in net unrealized holding loss on securities transferred to held to maturity		2,677			(1,024	)		1,653			1,678			(642	)		1,036
Total securities available for sale and transferred securities		(9,980	)		3,817			(6,163	)		19,550			(7,479	)		12,071
Pension and other postretirement benefit plans:
Net change in prior service costs		63			(24	)		39			63			(24	)		39
Recognized net loss due to lump sum settlements		463			(177	)		286			603			(230	)		373
Change in net actuarial loss		928			(355	)		573			1,216			(465	)		751
Reclassification related to net losses realized in net income		1,454			(556	)		898			1,882			(719	)		1,163
Cash flow hedge derivatives:
Change in accumulated loss on effective cash flow hedge derivatives		417			(160	)		257			(1,216	)		465			(751	)
Reclassification adjustment for loss realized in net income		157			(60	)		97			211			(81	)		130
Total cash flow hedge derivatives		574			(220	)		354			(1,005	)		384			(621	)
Total other comprehensive (loss) income	$	(7,952	)	$	3,041		$	(4,911	)	$	20,427		$	(7,814	)	$	12,613

	Nine Months Ended September 30, 2016									Nine Months Ended September 30, 2015
	Before Tax Amount			Tax (Expense) Benefit			Net of Tax Amount			Before Tax Amount			Tax (Expense) Benefit			Net of Tax Amount
Securities available for sale and transferred securities:
Unrealized holding gains arising during the period	$	32,057		$	(12,261	)	$	19,796		$	13,718		$	(5,248	)	$	8,470
Reclassification adjustment for net losses realized in net income		310			(119	)		191			—			—			—
Change in net unrealized holding loss on securities transferred to held to maturity		8,374			(3,203	)		5,171			4,747			(1,816	)		2,931
Total securities available for sale and transferred securities		40,741			(15,583	)		25,158			18,465			(7,064	)		11,401
Pension and other postretirement benefit plans:
Net change in prior service costs		188			(72	)		116			188			(72	)		116
Recognized net loss due to lump sum settlements		3,134			(1,199	)		1,935			1,499			(573	)		926
Change in net actuarial loss		2,684			(1,026	)		1,658			3,653			(1,397	)		2,256
Reclassification related to net losses realized in net income		6,006			(2,297	)		3,709			5,340			(2,042	)		3,298
Cash flow hedge derivatives:
Change in accumulated loss on effective cash flow hedge derivatives		(1,360	)		520			(840	)		(1,919	)		734			(1,185	)
Reclassification adjustment for loss realized in net income		473			(181	)		292			632			(242	)		390
Total cash flow hedge derivatives		(887	)		339			(548	)		(1,287	)		492			(795	)
Total other comprehensive income	$	45,860		$	(17,541	)	$	28,319		$	22,518		$	(8,614	)	$	13,904

The following table presents the changes in the balances of each component of accumulated other comprehensive loss for the periods presented ($ in thousands). All amounts are presented net of tax.

	Securities Available for Sale and Transferred Securities			Defined Benefit Pension Items			Cash Flow Hedge Derivatives			Total
Balance at January 1, 2016	$	(17,394	)	$	(27,840	)	$	(160	)	$	(45,394	)
Other comprehensive income (loss) before reclassification		24,967			—			(840	)		24,127
Amounts reclassified from accumulated other comprehensive loss		191			3,709			292			4,192
Net other comprehensive income (loss)		25,158			3,709			(548	)		28,319
Balance at September 30, 2016	$	7,764		$	(24,131	)	$	(708	)	$	(17,075	)

Balance at January 1, 2015	$	(11,003	)	$	(31,617	)	$	136		$	(42,484	)
Other comprehensive (loss) income before reclassification		11,401			3,298			(1,185	)		13,514
Amounts reclassified from accumulated other comprehensive loss		—			—			390			390
Net other comprehensive income (loss)		11,401			3,298			(795	)		13,904
Balance at September 30, 2015	$	398		$	(28,319	)	$	(659	)	$	(28,580	)