Shareholders' Equity

3 Months Ended

Mar. 31, 2019

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 2018 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 a capital conservation buffer of 2.500% at March 31, 2019 and 1.875% at December 31, 2018. 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 March 31, 2019, Trustmark and TNB exceeded all applicable minimum capital standards. In addition, Trustmark and TNB met applicable regulatory guidelines to be considered well-capitalized at March 31, 2019. 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 March 31, 2019, 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 March 31, 2019 and December 31, 2018 ($ in thousands):

	Actual
	Regulatory Capital					Minimum			To Be Well
	Amount		Ratio			Requirement			Capitalized
At March 31, 2019:
Common Equity Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,253,096		11.88	%		7.000	%	n/a
Trustmark National Bank		1,294,212		12.27	%		7.000	%		6.50	%

Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,313,096		12.45	%		8.500	%	n/a
Trustmark National Bank		1,294,212		12.27	%		8.500	%		8.00	%

Total Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,393,398		13.21	%		10.500	%	n/a
Trustmark National Bank		1,374,514		13.03	%		10.500	%		10.00	%

Tier 1 Leverage (to Average Assets)
Trustmark Corporation	$	1,313,096		10.05	%		4.00	%	n/a
Trustmark National Bank		1,294,212		9.92	%		4.00	%		5.00	%

At December 31, 2018:
Common Equity Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,271,538		11.77	%		6.375	%	n/a
Trustmark National Bank		1,311,548		12.14	%		6.375	%		6.50	%

Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,331,538		12.33	%		7.875	%	n/a
Trustmark National Bank		1,311,548		12.14	%		7.875	%		8.00	%

Total Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,412,059		13.07	%		9.875	%	n/a
Trustmark National Bank		1,392,069		12.89	%		9.875	%		10.00	%

Tier 1 Leverage (to Average Assets)
Trustmark Corporation	$	1,331,538		10.26	%		4.00	%	n/a
Trustmark National Bank		1,311,548		10.13	%		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. Trustmark repurchased approximately 1.2 million shares of its common stock valued at $36.9 million during the three months ended March 31, 2019, compared to 81 thousand shares valued at $2.5 million repurchased during the three months ended March 31, 2018. Under this authority, Trustmark repurchased approximately 3.2 million shares valued at $100.0 million.

The Board of Directors of Trustmark authorized a new stock repurchase program effective April 1, 2019 under which $100.0 million of Trustmark’s outstanding common stock may be acquired through March 31, 2020. The adoption of this new stock repurchase program followed the receipt of non-objection from the Board of Governors of the Federal Reserve System. The shares may be purchased from time to time at prevailing market prices, through open market or privately negotiated transactions, depending on market conditions.

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). The amortization of prior service cost, recognized net loss due to lump sum settlements and change in net actuarial loss 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 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 March 31, 2019									Three Months Ended March 31, 2018
	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	$	18,824		$	(4,706	)	$	14,118		$	(28,039	)	$	7,009		$	(21,030	)
Change in net unrealized holding loss on securities transferred to held to maturity		747			(187	)		560			965			(241	)		724
Total securities available for sale and transferred securities		19,571			(4,893	)		14,678			(27,074	)		6,768			(20,306	)
Pension and other postretirement benefit plans:
Reclassification adjustments for changes realized in net income:
Net change in prior service costs		63			(16	)		47			63			(16	)		47
Recognized net loss due to lump sum settlements		31			(7	)		24			40			(9	)		31
Change in net actuarial loss		255			(65	)		190			368			(92	)		276
Total pension and other postretirement benefit plans		349			(88	)		261			471			(117	)		354
Cash flow hedge derivatives:
Change in accumulated gain (loss) on effective cash flow hedge derivatives		(63	)		16			(47	)		427			(107	)		320
Reclassification adjustment for (gain) loss realized in net income		(171	)		43			(128	)		(6	)		1			(5	)
Total cash flow hedge derivatives		(234	)		59			(175	)		421			(106	)		315
Total other comprehensive income (loss)	$	19,686		$	(4,922	)	$	14,764		$	(26,182	)	$	6,545		$	(19,637	)

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, 2019	$	(43,824	)	$	(12,324	)	$	469		$	(55,679	)
Other comprehensive income (loss) before reclassification		14,678			—			(47	)		14,631
Amounts reclassified from accumulated other comprehensive loss		—			261			(128	)		133
Net other comprehensive income (loss)		14,678			261			(175	)		14,764
Balance at March 31, 2019	$	(29,146	)	$	(12,063	)	$	294		$	(40,915	)

Balance at January 1, 2018	$	(26,535	)	$	(13,468	)	$	278		$	(39,725	)
Other comprehensive income (loss) before reclassification		(20,306	)		—			320			(19,986	)
Amounts reclassified from accumulated other comprehensive loss		—			354			(5	)		349
Net other comprehensive income (loss)		(20,306	)		354			315			(19,637	)
Reclassification of certain income tax effects related to the change in the federal statutory income tax rate under the Tax Reform Act		(5,694	)		(2,890	)		60			(8,524	)
Balance at March 31, 2018	$	(52,535	)	$	(16,004	)	$	653		$	(67,886	)