Note 16 – 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 2017 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. Trustmark’s and TNB’s minimum risk-based capital requirements include the phased in capital conservation buffer of 1.875% at September 30, 2018 and 1.250% at December 31, 2017. Accumulated other comprehensive loss, net of tax, is not included in computing regulatory capital. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements of Trustmark and TNB and limit Trustmark’s and TNB’s ability to pay dividends. As of September 30, 2018, 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, 2018. 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, 2018, 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, 2018 and December 31, 2017 ($ in thousands):

	Actual
	Regulatory Capital					Minimum			To Be Well
	Amount		Ratio			Requirement			Capitalized
At September 30, 2018:
Common Equity Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,302,859		12.20	%		6.375	%	n/a
Trustmark National Bank		1,344,029		12.59	%		6.375	%		6.50	%

Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,362,859		12.76	%		7.875	%	n/a
Trustmark National Bank		1,344,029		12.59	%		7.875	%		8.00	%

Total Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,453,447		13.61	%		9.875	%	n/a
Trustmark National Bank		1,434,617		13.44	%		9.875	%		10.00	%

Tier 1 Leverage (to Average Assets)
Trustmark Corporation	$	1,362,859		10.41	%		4.00	%	n/a
Trustmark National Bank		1,344,029		10.29	%		4.00	%		5.00	%

At December 31, 2017:
Common Equity Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,243,240		11.77	%		5.750	%	n/a
Trustmark National Bank		1,284,575		12.16	%		5.750	%		6.50	%

Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,303,238		12.33	%		7.250	%	n/a
Trustmark National Bank		1,284,575		12.16	%		7.250	%		8.00	%

Total Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,384,050		13.10	%		9.250	%	n/a
Trustmark National Bank		1,365,387		12.93	%		9.250	%		10.00	%

Tier 1 Leverage (to Average Assets)
Trustmark Corporation	$	1,303,238		9.67	%		4.00	%	n/a
Trustmark National Bank		1,284,575		9.54	%		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 repurchased approximately 243 thousand shares of its common stock valued at $7.9 million during the nine months ended September 30, 2018, compared to no shares repurchased during the nine months ended September 30, 2017.

Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss

The following tables present the net change in the components of accumulated other comprehensive loss and the related tax effects allocated to each component for the periods presented ($ in thousands). Reclassification adjustments related to securities available for sale are included in security gains (losses), net in the accompanying consolidated statements of income. The amortization of prior service cost, recognized net loss due to lump sum settlements, change in net actuarial loss and recognized net loss due to defined benefit plan termination on pension and other postretirement benefit plans are included in the computation of net periodic benefit cost (see Note 11 – 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, defined benefit plan termination and other expense 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, 2018									Three Months Ended September 30, 2017
	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:
Net unrealized holding gains (losses) arising during the period	$	(9,660	)	$	2,414		$	(7,246	)	$	(535	)	$	204		$	(331	)
Reclassification adjustment for net (gains) losses realized in net income		—			—			—			(14	)		6			(8	)
Change in net unrealized holding loss on securities transferred to held to maturity		973			(243	)		730			1,130			(432	)		698
Total securities available for sale and transferred securities		(8,687	)		2,171			(6,516	)		581			(222	)		359
Pension and other postretirement benefit plans:
Net change in prior service costs		63			(16	)		47			63			(24	)		39
Recognized net loss due to lump sum settlements		41			(10	)		31			—			—			—
Change in net actuarial loss		361			(90	)		271			356			(137	)		219
Total pension and other postretirement benefit plans		465			(116	)		349			419			(161	)		258
Cash flow hedge derivatives:
Change in accumulated gain (loss) on effective cash flow hedge derivatives		52			(13	)		39			53			(20	)		33
Reclassification adjustment for (gain) loss realized in net income		(104	)		25			(79	)		55			(21	)		34
Total cash flow hedge derivatives		(52	)		12			(40	)		108			(41	)		67
Total other comprehensive income (loss)	$	(8,274	)	$	2,067		$	(6,207	)	$	1,108		$	(424	)	$	684

	Nine Months Ended September 30, 2018									Nine Months Ended September 30, 2017
	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:
Net unrealized holding gains (losses) arising during the period	$	(46,974	)	$	11,743		$	(35,231	)	$	6,335		$	(2,423	)	$	3,912
Reclassification adjustment for net (gains) losses realized in net income		—			—			—			(15	)		6			(9	)
Change in net unrealized holding loss on securities transferred to held to maturity		2,909			(727	)		2,182			3,551			(1,358	)		2,193
Total securities available for sale and transferred securities		(44,065	)		11,016			(33,049	)		9,871			(3,775	)		6,096
Pension and other postretirement benefit plans:
Net change in prior service costs		188			(48	)		140			188			(72	)		116
Recognized net loss due to lump sum settlements		121			(29	)		92			—			—			—
Change in net actuarial loss		1,092			(273	)		819			1,923			(736	)		1,187
Recognized net loss due to defined benefit plan termination		—			—			—			16,991			(6,499	)		10,492
Total pension and other postretirement benefit plans		1,401			(350	)		1,051			19,102			(7,307	)		11,795
Cash flow hedge derivatives:
Change in accumulated gain (loss) on effective cash flow hedge derivatives		611			(153	)		458			(99	)		38			(61	)
Reclassification adjustment for (gain) loss realized in net income		(209	)		52			(157	)		232			(89	)		143
Total cash flow hedge derivatives		402			(101	)		301			133			(51	)		82
Total other comprehensive income (loss)	$	(42,262	)	$	10,565		$	(31,697	)	$	29,106		$	(11,133	)	$	17,973

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, 2018	$	(26,535	)	$	(13,468	)	$	278		$	(39,725	)
Other comprehensive income (loss) before reclassification		(33,049	)		—			458			(32,591	)
Amounts reclassified from accumulated other comprehensive loss		—			1,051			(157	)		894
Net other comprehensive income (loss)		(33,049	)		1,051			301			(31,697	)
Reclassification of certain income tax effects related to the change in the federal statutory income tax rate under the Tax Cuts and Jobs Act of 2017 (Tax Reform Act)		(5,694	)		(2,890	)		60			(8,524	)
Balance at September 30, 2018	$	(65,278	)	$	(15,307	)	$	639		$	(79,946	)

Balance at January 1, 2017	$	(20,800	)	$	(24,980	)	$	(18	)	$	(45,798	)
Other comprehensive income (loss) before reclassification		6,105			—			(61	)		6,044
Amounts reclassified from accumulated other comprehensive loss		(9	)		11,795			143			11,929
Net other comprehensive income (loss)		6,096			11,795			82			17,973
Balance at September 30, 2017	$	(14,704	)	$	(13,185	)	$	64		$	(27,825	)