Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☑ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” ~~and~~ “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ~~(Check one):~~

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes ☐ No ☑

Based on the closing sales price at June ~~30, 2016,~~28, 2019, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the shares of common stock held by nonaffiliates of the registrant was approximately ~~$1.189~~$1.217 billion.

As of ~~February 9, 2017,~~January 31, 2020, there were issued and outstanding ~~67,688,126~~63,843,049 shares of the registrant’s Common Stock.

Portions of the Proxy Statement for Trustmark’s ~~2016~~2020 Annual Meeting of Shareholders to be held April ~~25, 2017~~28, 2020 are incorporated by reference into Part III of the Form 10-K report.

Certain statements contained in this Annual Report on Form 10-K constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “project,” “potential,” “seek,” “continue,” “could,” “would,” “future” or the negative of those terms or other words of similar meaning. You should read statements that contain these words carefully because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements include, but are not limited to, statements relating to anticipated future operating and financial performance measures, including net interest margin, credit quality, business initiatives, growth opportunities and growth rates, among other things, and encompass any estimate, prediction, expectation, projection, opinion, anticipation, outlook or statement of belief included therein as well as the management assumptions underlying these forward-looking statements. You should be aware that the occurrence of the events described under the caption Item 1A. Risk Factors in this report could have an adverse effect on our business, results of operations and financial condition. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected.

Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, local, state and national economic and market conditions, including potential market impacts of efforts by the Board of Governors of the Federal Reserve Board (FRB) to reduce the size of its balance sheet, conditions in the housing and real estate markets in the regions in which Trustmark operates and the extent and duration of the current volatility in the credit and financial markets as well as crude oil prices, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility of market interest rates, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, including the potential impact of issues ~~relating~~related to the European financial system and monetary and other governmental actions designed to address ~~the level and volatility of interest rates and the volatility of~~credit, securities, ~~currency and other~~and/or commodity markets, the enactment of legislation and changes in existing regulations or enforcement practices or the adoption of new regulations, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, changes in our ability to control expenses, ~~changes in our compensation and benefit plans, including those associated with the planned termination of our noncontributory tax-qualified defined benefit pension plan,~~ greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, cyber-attacks and other breaches which could affect our information system security, natural disasters, environmental disasters, acts of war or terrorism, and other risks described in our filings with the Securities and Exchange ~~Commission.~~Commission (SEC).

Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Except as required by law, we undertake no obligation to update or revise any of this information, whether as the result of new information, future events or developments or otherwise.

Trustmark Corporation (Trustmark), a Mississippi business corporation incorporated in 1968, is a bank holding company headquartered in Jackson, Mississippi. Trustmark’s principal subsidiary is Trustmark National Bank (TNB), initially chartered by the State of Mississippi in 1889. At December 31, ~~2016,~~2019, TNB had total assets of ~~$13.350~~$13.496 billion, which represented approximately 99.99% of the consolidated assets of Trustmark.

Through TNB and its subsidiaries, Trustmark operates as a financial services organization providing banking and other financial solutions through 193 offices and ~~2,788~~2,844 full-time equivalent associates (measured at December 31, ~~2016)~~2019) located in the states of Alabama, ~~(primarily in the central and southern regions of that state, which are collectively referred to herein as Trustmark’s Alabama market),~~ Florida (primarily in the northwest or “Panhandle” region of that state, which is referred to herein as Trustmark’s Florida market), Mississippi, Tennessee (in the Memphis and ~~the~~ Northern Mississippi regions, which are collectively referred to herein as Trustmark’s Tennessee market), and Texas (primarily in Houston, which is referred to herein as Trustmark’s Texas market). The principal products produced and services rendered by TNB and Trustmark’s other subsidiaries are as follows:

Commercial Banking – TNB provides a full range of commercial banking services to corporations and other business customers. Loans are provided for a variety of general corporate purposes, including financing for commercial and industrial projects, income producing commercial real estate, owner-occupied real estate and construction and land development. TNB also provides deposit services, including checking, savings and money market accounts and certificates of deposit as well as treasury management services.

Consumer Banking – TNB provides banking services to consumers, including checking, savings, and money market accounts as well as certificates of deposit and individual retirement accounts. In addition, TNB provides consumer customers with installment and real estate loans and lines of credit.

Mortgage Banking – TNB provides mortgage banking services, including construction financing, production of conventional and government insured mortgages, secondary marketing and mortgage servicing.

Insurance – TNB provides a competitive array of insurance solutions for business and individual risk management needs. Business insurance offerings include services and specialized products for medical professionals, construction, manufacturing, hospitality, real estate and group life and health plans. Individual customers are also provided life and health insurance, and personal line policies. TNB provides these services through Fisher Brown Bottrell Insurance, Inc. (FBBI), a Mississippi corporation and a wholly-owned subsidiary of TNB, which is based in Jackson, Mississippi.

Wealth Management and Trust Services – TNB offers specialized services and expertise in the areas of wealth management, trust, investment and custodial services for corporate and individual customers. These services include the administration of personal trusts and estates as well as the management of investment accounts for individuals, employee benefit plans and charitable foundations. TNB also provides corporate trust and institutional custody, securities brokerage, financial and estate planning and retirement plan services. TNB’s ~~wealth management division~~Wealth Management Segment is also assisted by Trustmark Investment Advisors, Inc. (TIA), a ~~Securities and Exchange Commission (SEC)-registered~~SEC-registered investment adviser and a wholly-owned subsidiary of TNB. TIA provides customized investment management services to TNB’s Wealth Management ~~Division,~~Segment, which in ~~turns~~turn relies upon that advice to provide investment management services to TNB’s wealth management customers.

New Market Tax Credits (NMTC) – TNB provides an intermediary vehicle for the provision of loans or investments in Low-Income Communities (LICs) through its subsidiary Southern Community Capital, LLC (SCC). SCC is a Mississippi single member limited liability company, a certified Community Development Entity (CDE) and a wholly-owned subsidiary of TNB. The primary mission of SCC is to provide investment capital for LICs, as defined by Section 45D of the Internal Revenue Code, or for Low-Income Persons (LIPs). As a certified CDE, SCC is able to apply to the Community Development Financial Institutions Fund (CDFI Fund) to receive NMTC allocations to offer investors in exchange for equity investments in qualified projects.

Trustmark Preferred Capital Trust I (the Trust) is a Delaware trust affiliate and a wholly-owned subsidiary of Trustmark formed in 2006 to facilitate a private placement of $60.0 million in trust preferred securities. As defined in applicable accounting standards, the Trust is considered a variable interest entity for which Trustmark is not the primary beneficiary. Accordingly, the accounts of the Trust are not included in Trustmark’s consolidated financial statements.

Trustmark seeks to be a premier diversified financial services company in its markets, providing a broad range of banking, wealth management and insurance solutions to its customers. Trustmark’s products and services are designed to strengthen and expand customer relationships and enhance the organization’s competitive advantages in its markets as well as to provide cross-selling opportunities that will enable Trustmark to continue to diversify its revenue and earnings streams.

The following table sets forth summary data regarding Trustmark’s securities, loans, assets, deposits, equity and revenue over the past five years ($ in thousands)~~. Summary information at and for the year ended December 31, 2013, and each year thereafter, include the results of the merger with BancTrust Financial Group, Inc. (BancTrust) on February 15, 2013.~~:

December 31,	2016			2015			2014			2013			2012			2019			2018			2017			2016			2015
Securities	$	3,515,325		$	3,533,240		$	3,545,252		$	3,362,882		$	2,699,933		$	2,340,503		$	2,721,456		$	3,295,121		$	3,515,325		$	3,533,240
Total securities growth (decline)	$	(17,915	)	$	(12,012	)	$	182,370		$	662,949		$	173,235		$	(380,953	)	$	(573,665	)	$	(220,204	)	$	(17,915	)	$	(12,012	)
Total securities growth (decline)		-0.51	%		-0.34	%		5.42	%		24.55	%		6.86	%		-14.00	%		-17.41	%		-6.26	%		-0.51	%		-0.34	%

Loans *	$	8,123,460		$	7,481,796		$	6,998,878		$	6,603,087		$	5,726,318		$	9,408,229		$	8,942,800		$	8,831,484		$	8,123,460		$	7,481,796
Total loans growth (decline)	$	641,664		$	482,918		$	395,791		$	876,769		$	(207,970	)	$	465,429		$	111,316		$	708,024		$	641,664		$	482,918
Total loans growth (decline)		8.58	%		6.90	%		5.99	%		15.31	%		-3.50	%		5.20	%		1.26	%		8.72	%		8.58	%		6.90	%

Assets	$	13,352,333		$	12,678,896		$	12,250,633		$	11,790,383		$	9,828,667		$	13,497,877		$	13,286,460		$	13,797,953		$	13,352,333		$	12,678,896
Total assets growth	$	673,437		$	428,263		$	460,250		$	1,961,716		$	101,660
Total assets growth		5.31	%		3.50	%		3.90	%		19.96	%		1.05	%
Total assets growth (decline)																$	211,417		$	(511,493	)	$	445,620		$	673,437		$	428,263
Total assets growth (decline)																	1.59	%		-3.71	%		3.34	%		5.31	%		3.50	%

Deposits	$	10,056,012		$	9,588,230		$	9,698,358		$	9,859,902		$	7,896,517		$	11,245,557		$	11,364,411		$	10,577,512		$	10,056,012		$	9,588,230
Total deposits growth (decline)	$	467,782		$	(110,128	)	$	(161,544	)	$	1,963,385		$	330,154		$	(118,854	)	$	786,899		$	521,500		$	467,782		$	(110,128	)
Total deposits growth (decline)		4.88	%		-1.14	%		-1.64	%		24.86	%		4.36	%		-1.05	%		7.44	%		5.19	%		4.88	%		-1.14	%

Equity	$	1,520,208		$	1,473,057		$	1,419,940		$	1,354,953		$	1,287,369		$	1,660,702		$	1,591,453		$	1,571,701		$	1,520,208		$	1,473,057
Total equity growth	$	47,151		$	53,117		$	64,987		$	67,584		$	72,332
Total equity growth		3.20	%		3.74	%		4.80	%		5.25	%		5.95	%
Total equity growth (decline)																$	69,249		$	19,752		$	51,493		$	47,151		$	53,117
Total equity growth (decline)																	4.35	%		1.26	%		3.39	%		3.20	%		3.74	%

Years Ended December 31,
Revenue **	$	561,476		$	564,914		$	578,478		$	562,346		$	516,179		$	613,634		$	604,256		$	592,213		$	561,476		$	564,914
Total revenue growth (decline)	$	(3,438	)	$	(13,564	)	$	16,132		$	46,167		$	7,382		$	9,378		$	12,043		$	30,737		$	(3,438	)	$	(13,564	)
Total revenue growth (decline)		-0.61	%		-2.34	%		2.87	%		8.94	%		1.45	%		1.55	%		2.03	%		5.47	%		-0.61	%		-2.34	%

For additional information regarding the general development of Trustmark’s business, see Part II. Item 6. – Selected Financial Data and Item 7. – Management’s Discussion and Analysis of Financial Condition and Results of Operations ~~– of this report.~~

The following table shows Trustmark’s percentage of loans, deposits and revenue for each of the geographic regions in which it operates as of and for the year ended December 31, 2016 ($ in thousands):

For the year ended December 31, 2016, Trustmark operated through three operating segments: General Banking Division, Insurance Division and Wealth Management Division. The table below presents a summary of segment financial data for each segment for the last three years ($ in thousands):

For more information on Trustmark’s operating segments, please see the section captioned “Results of Segment Operations” in Part II. Item 7. - Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 21 - Segment Information included in Part II. Item 8. - Financial Statements and Supplementary Data – of this report.

Trustmark categorizes loans on its balance sheet into ~~four~~three categories. These categories are described in more detail in Note 1 – Significant Accounting Policies included in Part II. Item 8. - Financial Statements and Supplementary Data – of this report.

The following discussion briefly summarizes Trustmark’s lending business by focusing on LHFI and LHFS, and includes a discussion of the risks inherent in these loans, Trustmark’s underwriting policies for its loans and the characteristics of the real estate loan component of these loans. Acquired loans and covered loans are excluded from this summary, as Trustmark did not underwrite those loans at inception. Discussion of Trustmark’s acquired loans, including covered loans, is contained elsewhere in this report.

As a general matter, extending credit to businesses and consumers exposes Trustmark to credit risk, which is the risk that the principal balance and any related interest may not be collected according to the original terms due to the inability or unwillingness of the borrower to repay the loan. Trustmark mitigates credit risk through a set of internal controls, which includes adherence to

conservative lending practices and underwriting guidelines, collateral monitoring, and oversight of its borrower’s financial performance and collateral. The risks inherent in specific subsets of lending are discussed below.

LHFI Secured by Construction, Land Development, and Other Land – Construction and land development loans include loans for both commercial and residential properties to builders/developers, other commercial borrowers and to consumers. This category also includes loans secured by vacant

land, except land known to be used or usable for agricultural purposes, such as crop and livestock production. Repayment is normally derived from the sale of the underlying property or from permanent financing, which refinances Trustmark’s initial loan. Trustmark’s engagement in this type of lending is generally extended to those builders and developers exhibiting the highest credit quality with significant equity invested in the project and is primarily restricted to projects within ~~its~~Trustmark’s geographic markets. The underwriting process for these loans includes analysis of the financial position and strength of both the borrower and guarantor, experience with similar projects in the past, market demand and prospects for successful completion of the proposed project within the established budget and schedule, values of underlying collateral and availability of permanent financing. Risk within this portfolio is mitigated through adherence to policies and lending limits, periodic target credit reviews of the different segments of this portfolio, inspection of projects throughout the life of the loan and routine monitoring of financial information and collateral values as they are updated.

Inherent in real estate construction lending is the risk that the full value of the collateral does not exist at the time the loan is granted. Construction lending also inherently includes the risk associated with a borrower’s ability to successfully complete a proposed project on time and within budget. Further, adverse changes in the market occurring between the start of construction and completion of the projects can result in slower sales or rental rates and lower sales prices than originally anticipated which could impact the underlying real estate collateral values and timely and full repayment of these loans. Rising interest rates can adversely affect the cost of construction and the financial viability of real estate projects. Higher interest rates may also result in higher capitalization rates, thereby reducing a property’s value. As a result of this risk profile, LHFI secured by construction, land development and other land are considered to be higher risks than other real estate loans.

LHFI and LHFS Secured by Residential Properties – Residential real estate loans consist of first and junior liens on residential properties that are extended in the geographic markets in which Trustmark operates as well as mortgage products, originated and purchased, that are underwritten to secondary market standards. Credit underwriting standards include ~~verification of income, valuation of collateral and~~ evaluation of the borrower’s credit history and repayment ~~capacity.~~capacity, including verification of income and valuation of collateral. Portfolio performance is continuously evaluated through updated credit bureau scores and monitoring of repayment performance.

Credit performance of consumer residential real estate loans is highly dependent on housing values and household income which, in turn are highly dependent on national, regional and local economic factors. Rising interest rates, rising unemployment rates and other adverse changes in these economies may have a negative effect on the ability of Trustmark’s borrowers to repay these loans and negatively affect value of the underlying residential real estate collateral.

LHFI Secured by Nonfarm, Nonresidential Properties – Trustmark provides financing for both owner-occupied commercial real estate as well as income-producing commercial real estate. Trustmark seeks to maintain a balance of owner-occupied and income-producing real estate loans that moderates its risk to the specific risks of each type of loan. Commercial real estate term loans are typically collateralized by liens on real property. Both types of commercial real estate loans are underwritten to lending policies that include maximum loan-to-value ratios, minimum equity requirements, acceptable amortization periods and minimum debt service coverage requirements, based on property type. Income-producing commercial real estate loans also generally require ~~cash~~substantial equity and are subject to exposure limits for a single project. All exceptions to established guidelines are subject to stringent internal review and require specific approval. As with commercial loans, the borrower’s financial strength and capacity to repay their obligations remain the primary focus of underwriting. Financial strength is evaluated based upon analytical tools that consider historical and projected cash flows and performance in addition to analysis of the proposed project for income-producing properties. Additional support offered by guarantors is also considered.

Risk for owner-occupied commercial real estate is driven by the creditworthiness of the underlying borrowers, particularly cash flow from the borrowers’ business operations as well as the risk of a shortfall in collateral. Credit performance of loans secured by commercial income-producing real estate can be negatively affected by national, regional and local economic conditions, which may result in deteriorating tenant credit profiles, tenant losses, reduced rental/lease rates and higher than anticipated vacancy rates, all contributing to declines in value or liquidity of the underlying real estate collateral. Other factors, such as increasing interest rates, may result in higher capitalization rates, thereby reducing a property’s value.

Commercial and Industrial LHFI – Commercial loans (other than commercial loans related to real estate assets, which are summarized above) are made to many types of businesses for various purposes, such as short-term working capital loans that are usually secured by accounts receivable and inventory, equipment and fixed asset purchases that are secured by those assets and term financing for those within Trustmark’s geographic markets. Trustmark’s credit underwriting process for commercial loans includes analysis of historical and projected cash flows and performance, evaluation of financial strength of both borrowers and guarantors as

reflected in current and detailed financial information and evaluation of underlying collateral to support the credit. Credit risk within the commercial loan portfolio is managed through adherence to specific commercial lending policies and internally established lending authorities, diversification within the portfolio and monitoring of the portfolio on a continuing basis.

Credit risk in commercial and industrial loans can arise due to fluctuations in borrowers’ financial condition, deterioration in collateral values and changes in market conditions. The credit risk inherent in these loans depends on, to a significant degree, the general

economic conditions of these areas. Further, credit risk can increase if Trustmark’s loans are concentrated to borrowers engaged in the same or similar activities, or to groups of borrowers who may be uniquely or disproportionately affected by market or economic conditions.

Consumer LHFI – Consumer credit includes loans to individuals for household and personal items, automobile purchases, unsecured loans, personal lines of credit and credit cards. All consumer loans are subject to a standardized underwriting process through Trustmark’s consumer loan center, which uses a custom credit scoring model with emphasis placed upon the borrower’s credit evaluation and historical performance, income evaluation and valuation of collateral (where applicable). Updated credit bureau scores are obtained on all existing consumer loans/lines on a periodic basis in order to monitor portfolio credit quality changes and mitigate risk.

Similar to residential real estate loan portfolios, an inherent risk factor in consumer loans is that they are dependent on national, regional and local economic factors that affect employment in the markets where these loans are originated. Generally, consumer loan portfolios consist of a large number of relatively small-balance loans, some of which are originated as unsecured credit (credit cards and some personal lines of credit), and as such, do not have collateral as a secondary source of repayment. Consumer loans generally pose heightened risks of collectability and loss when compared to other loan types.

Other LHFI – Other loans primarily consist of loans to non-depository financial institutions, such as mortgage companies, finance companies and other financial intermediaries, loans to state and political subdivisions, and loans to non-profit and charitable organizations. These loans are underwritten based on the specific nature or purpose of the loan and underlying collateral with special consideration given to the specific source of repayment for the loan.

Similar to commercial and industrial loans, inherent risk in other loans can arise due to fluctuations in borrowers’ financial condition, deterioration in collateral values and changes in market and economic conditions. Loans to state and political subdivisions have the added inherent risk of being somewhat dependent on the ability and capacity of those entities to generate tax and other revenue to repay the loans. Loans to non-profit and charitable organizations are dependent on those organizations’ ability to generate revenue through their fundraising efforts and other forms of financial support, which can be susceptible to economic downturns.

The economy ~~showed~~continued to show moderate signs of improvement ~~in 2016;~~during 2019; however, economic concerns remain as a result of the cumulative weight of ~~continued soft labor markets in the United States,~~ volatility in crude oil prices ~~slowing~~and uncertain growth prospects in ~~markets in Western Europe, Japan, China, Russia and other~~ emerging markets, combined with uncertainty regarding ~~anticipated further tightening of~~ the potential monetary policy changes by the ~~Board of Governors of the Federal Reserve System (FRB),~~FRB, the consequences of the decision of the United Kingdom to exit the European Union, the potential impact on the economy of the current United States presidential administration’s policies and ~~the recent presidential election.~~United States trade relations, particularly with China. Doubts surrounding the near-term direction of global markets, and the potential impact of these trends on the United States economy, are expected to persist for ~~some time.~~the near term. While Trustmark’s customer base is wholly domestic, international economic conditions affect domestic conditions, and thus may have an impact upon Trustmark’s financial condition or results of operations.

In the January ~~2017~~2020 “Summary of Commentary on Current Economic Conditions by Federal Reserve Districts,” the twelve Federal Reserve Districts’ reports suggested national economic activity ~~continued to expand~~expanded at a modest pace ~~through~~during the ~~end of 2016, and~~reporting period. Reports by the twelve Federal Reserve Districts noted ~~increased manufacturing and non-auto retail~~loan volumes were mostly characterized as steady to expanding moderately, home sales ~~mixed reports on~~trend varied widely but were flat overall, residential rental markets strengthened, new residential construction expanded modestly, commercial real estate activity varied substantially and ~~sales as well as growth~~little change in activity in the energy ~~industry, improvements in labor markets, stable financial conditions and positive outlooks for growth in 2017.~~sector. Reports by the ~~three~~twelve Federal Reserve Districts ~~covering~~also noted employment was steady to rising modestly, though labor markets remained tight throughout the ~~southeast United States, which include Trustmark’s five key market regions, suggested that economic activity increased~~nation, wages rose at a modest to moderate pace ~~with most~~and prices continued to rise at a modest pace. Most Federal Reserve Districts cited widespread labor shortages as a factor constraining job growth. Reports by the twelve Federal Reserve Districts noted tariffs and trade uncertainty continued to weigh on some businesses, ~~reporting improved sales and positive outlooks~~but expectations for the ~~near term.~~ near-term outlook remained modestly favorable across the nation.

The Federal Reserve’s Sixth District, Atlanta (which includes Trustmark’s Alabama, Florida and Mississippi market regions), reported that economic activity expanded at a modest pace, ~~with optimistic outlooks for the first half of 2017, tightening~~ labor markets remained tight and ~~steady~~ wage ~~growth and increased retail and manufacturing sales. The Federal Reserve’s Sixth District also reported that construction and sales of~~pressures persisted for lower-skilled positions, residential real estate ~~was slightly higher than one year earlier, sales of existing homes were mixed and~~conditions continued to improve as lower mortgage rates increased demand for housing, commercial real estate ~~demand continued~~leasing and sales activity was steady and financial conditions at banking institutions within the District remained healthy,

noting improved earnings as increases in noninterest income helped to ~~improve, but cautioned that~~offset ongoing declines in the ~~rate of improvement varied by metropolitan area, submarket,~~net interest margin, asset quality remained stable and ~~property type.~~moderate loan growth. The Federal Reserve’s Eighth District, St. Louis (which includes Trustmark’s Tennessee market region), reported ~~modest expansion in~~that economic conditions improved slightly, employment levels were unchanged, as labor markets remained tight, and moderate growth in ~~employment and~~ wages, ~~improvements in commercial~~residential real estate activity declined slightly and residential construction activity increased slightly while builders remain confident that housing demand will remain robust due to low mortgage rates, commercial construction activity increased modestly, and banking conditions improved modestly as outstanding loan volumes increased ~~loan demand with moderate growth noted across all lending categories.~~by 4.0% during the fourth quarter compared to one year ago. The Federal Reserve’s Eleventh District, Dallas (which includes Trustmark’s Texas market region), reported economic activity expanded ~~moderately,~~solidly, moderate employment growth and ~~noted improvements~~upward wage pressures continued, home sales increased broadly with demand exceeding expectations in ~~manufacturing~~some areas due to healthy job growth and low mortgage rates, apartment demand remained healthy, activity ~~and demand for non-financial services as well as~~in the office market was mixed in Houston, increased growth in ~~housing~~loan demand, growth in loan volumes was broad based with both commercial and ~~commercial leasing activity despite~~residential real estate lending continuing to lead the growth and loan pricing continued ~~weakness in leasing activity in Houston.~~to decline. The Federal Reserve’s Eleventh District also reported that drilling activity was up slightly, though the energy sector remains distressed as access to capital was limited, particularly for small firms, and ~~demand for~~bankruptcies could likely rise; however, U.S. crude oil ~~field services improved modestly at the end of 2016 and outlooks for 2017 were more optimistic due~~production is projected to ~~expected increases~~grow in ~~oil prices and activity; however, broader uncertainty surrounding regulation and global economic developments remains.~~2020.

~~In December 2015,~~During October 2019, the FRB ~~increased~~lowered the target range for the federal funds rate for the ~~first~~third time in ~~over seven years. The~~2019 as anticipated. While recently-released FRB ~~increased~~minutes indicate that a majority of the ~~target range for the federal funds rate again in December 2016, and indicated~~Board believe that ~~it may further increase rates during 2017, depending on economic conditions. It~~there is not ~~possible~~a need to ~~predict~~cut rates further, the ~~timing or amount~~level of ~~any such additional increases. Low~~future rates will likely depend upon the performance of the economy. Interest rates remain within a low range that, when combined with the extended period of historically low interest rates ~~will~~in recent years, continue to place pressure on net interest margins for Trustmark (as well as its competitors)~~, as older, higher-yielding assets that mature or default and can only be replaced with lower-yielding instruments and as~~. Any further declines in interest rates will place additional competitive pressure on net interest margins. Conversely, any increases in interest rates will place competitive pressures on the deposit cost of funds. It is not possible to predict the pace and magnitude of changes to interest rates, or the impact rate changes will have on Trustmark’s results of operations.

For additional discussion of the impact of the current economic environment on the financial condition and results of operations of Trustmark and its subsidiaries, see Part II. Item 7. – Management’s Discussion and Analysis of Financial Condition and Results of Operations – of this report.

There is significant competition within the banking and financial services industry in the markets in which Trustmark operates. Changes in regulation, technology and product delivery systems have resulted in an increasingly competitive environment. Trustmark expects to continue to face increasing competition from online and traditional financial institutions seeking to attract customers by providing access to similar services and products.

Trustmark and its subsidiaries compete with national and state chartered banking institutions of comparable or larger size and resources and with smaller community banking organizations. Trustmark has numerous local, regional and national nonbank competitors, including savings and loan associations, credit unions, mortgage companies, insurance companies, finance companies, financial service operations of major retailers, investment brokerage and financial advisory firms and mutual fund companies. Because nonbank financial institutions are not subject to the same regulatory restrictions as banks and bank holding companies, they can often operate with greater flexibility and lower cost structures. Currently, Trustmark does not face meaningful competition from international banks in its markets, although that could change in the future.

At June 30, ~~2016,~~2019, Trustmark’s deposit market share ranked within the top three positions in ~~57%~~55% of the 5356 counties served and within the top five positions in ~~74%~~71% of the counties served. The table below presents FDIC deposit data regarding TNB’s deposit market share by state as of June 30, ~~2016.~~2019. The FDIC deposit market share data presented below does not align with Trustmark’s reported geographic market regions, which in some instances cross state lines, and Trustmark’s geographic coverage within certain states presented below is not statewide (see the ~~sections~~section captioned “Description of Business” ~~and “Geographic Information”~~ above).

Services provided by the Wealth Management ~~Division~~Segment face competition from many national, regional and local financial institutions. Companies that offer broad services similar to those provided by Trustmark, such as other banks, trust companies and ~~full service~~full-service brokerage firms, as well as companies that specialize in particular services offered by Trustmark, such as investment advisors and mutual fund providers, all compete with Trustmark’s Wealth Management ~~Division.~~Segment.

Trustmark’s insurance subsidiary faces competition from local, regional and national insurance companies, independent insurance agencies as well as from other financial institutions offering insurance products.

Trustmark’s ability to compete effectively is a result of providing customers with desired products and services in a convenient and ~~cost effective~~cost-effective manner. Customers for commercial, consumer and mortgage banking as well as wealth management and insurance services are influenced by convenience, quality of service, personal contacts, availability of products and services and competitive pricing. Trustmark continually reviews its products, locations, alternative delivery channels, and pricing strategies to maintain and enhance its competitive position. While Trustmark’s position varies by market, Management believes it can compete effectively as a result of the quality of Trustmark’s products and services, local market knowledge and awareness of customer needs.

The following discussion sets forth material elements of the regulatory framework applicable to bank holding companies and their subsidiaries and provides specific information relevant to Trustmark. The discussion is a summary of detailed statutes, regulations and policies. The descriptions are not intended to be complete summaries of the statutes, regulations and policies referenced therein.

Such statutes, regulations and policies are continually under the review of the United States Congress and state legislatures as well as federal and state regulatory agencies. A change in statutes, regulations or policies could have a material impact on the business of Trustmark and its subsidiaries.

Trustmark is a registered bank holding company under the Bank Holding Company Act of 1956 (BHC Act). Trustmark and its nonbank subsidiaries are therefore subject to the supervision, examination, enforcement and reporting requirements of the BHC Act, the Federal Deposit Insurance Act (FDI Act), the regulations of the FRB and certain of the requirements imposed by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), as amended by the Economic Growth, Regulatory Relief and Consumer Protection Act (EGRRCPA).

The BHC Act requires every bank holding company to obtain the prior approval of the FRB before: (i) it may acquire direct or indirect ownership or control of any voting shares of any bank if, after such acquisition, the bank holding company will directly or indirectly own or control 5.0% or more of the voting shares of the bank; (ii) it or any of its subsidiaries, other than a bank, may acquire all or substantially all of the assets of any bank; or (iii) it may merge or consolidate with any other bank holding company. The BHC Act further provides that the FRB may not approve any such transaction that would result in a monopoly or would be in furtherance of any combination or conspiracy to monopolize or attempt to monopolize the business of banking in any section of the United States, or the effect of which may be substantially to lessen competition or to tend to create a monopoly in any section of the country, or that in any other manner would be in restraint of trade, unless the anticompetitive effects of the proposed transaction are clearly outweighed by the public interest in meeting the convenience and needs of the community to be served. The FRB is also required to consider the financial and managerial resources and future prospects of the bank holding companies and banks concerned and the convenience and needs of the community to be served. The FRB is also required to take into account in evaluating such a transaction the effectiveness of the parties in combatting money laundering activities. Consideration of financial resources generally focuses on capital adequacy, and consideration of convenience and needs issues includes the parties’ performance under the Community Reinvestment Act of ~~1977.~~1977 (CRA). Provisions of the FDI Act known as the Bank Merger Act impose similar approval standards for an insured depository institution to merge with another insured depository institution.

The BHC Act also generally requires FRB approval for a bank holding company’s acquisition of a company that is not an insured depository institution. Bank holding companies generally may engage, directly or indirectly, only in banking and such other activities as are determined by the FRB to be closely related to banking. The FRB must generally consider whether performance of the activity by a bank holding company can reasonably be expected to produce benefits to the public, such as greater convenience, increased competition, or gains in efficiency, that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interest, or unsound banking practices. The FRB has express statutory authority to also consider the “risk to the stability of the United States banking or financial system” when reviewing the acquisition of such a company by a bank holding company.

The BHC Act, as amended by the interstate banking provisions of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (Riegle-Neal Act), permits a bank holding company, such as Trustmark, to acquire a bank located in any other state, regardless of state law to the contrary, subject to certain deposit-percentage, aging requirements, and other ~~restrictions.~~restrictions, if the company is well-capitalized. The Riegle-Neal Act also generally permits national and state-chartered banks to branch interstate through acquisitions of banks in other ~~states. Bank holding companies must~~states, if the resulting institution would be well-capitalized and ~~well-managed~~well-managed.

The CRA requires an insured depository institution’s appropriate federal banking regulator to ~~obtain federal bank regulatory~~evaluate the institution's record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, and to consider this record in its evaluation of certain applications to banking regulators, such as an application for approval of a merger or the establishment of a branch. A rating of less than “Satisfactory” may provide a basis for denial of such an ~~interstate acquisition without regard~~application. As of its last examination from the Office of the Comptroller of the Currency (OCC), TNB received a CRA rating of “Satisfactory.” On December 12, 2019, the OCC and the FDIC released a proposal that would, among other things, establish a new evaluation framework to ~~state law prohibiting~~assess the ~~transaction.~~distribution of an institution’s retail loans in major retail lending business lines within each assessment area and the value of the institution’s qualifying CRA activities relative to its retail domestic deposits, and would clarify the types of loans, investments, and services that are qualifying CRA activities. Management is reviewing the potential impact of the proposal on TNB.

Under provisions of the BHC Act referred to as the “Volcker Rule,” limitations are placed on the ability of certain insured depository institutions, insured depository institution holding companies and their affiliates (“~~Banking Entities”~~banking entities”), including Trustmark and TNB, to acquire or retain ownership interests in, or act as sponsor to, certain investment funds, including hedge funds and private equity funds. The Volcker Rule also places restrictions on proprietary trading by a ~~Banking Entity.~~banking entity. In October 2019, five federal financial agencies finalized revisions to the Volcker Rule to simplify and tailor compliance requirements relating to the rule. The revisions replace the Volcker Rule’s compliance program requirements for a banking entity with trading assets and liabilities of less than $1 billion, including Trustmark and TNB, with a rebuttable presumption of the entity’s compliance with the rule, and simplify compliance requirements associated with exempt market making, underwriting and risk-mitigating hedging activities for such an entity. The revisions also changed the “short-term intent” prong of the Volcker Rule’s definition of “trading account” by replacing the prong's presumption that financial instruments held for fewer than 60 days are for the trading account with a new presumption that financial instruments held for 60 days or more are not for the trading account. Finally, the revisions adopt an exclusion for customer-driven swaps and matched swaps from the proprietary trading restrictions of the Volcker Rule. Management is reviewing the potential impact of the revisions on Trustmark and TNB. The revisions became effective on January 1, 2020, with a compliance date of January 1, 2021, but banking organizations may voluntarily comply with the revisions earlier than the compliance date.

The ~~Office of the Comptroller of the Currency (OCC)~~OCC has the authority to approve applications by national banks to establish de novo branches, including, under the Riegle-Neal Act, in states other than the bank’s home state if the law of the State in which the branch is located, or is to be located, would permit establishment of the branch if the bank were a State bank chartered by such State.

Certain acquisitions of Trustmark’s voting stock may be subject to regulatory approval or notice under federal law. Investors are responsible for ensuring that they do not, directly or indirectly, acquire shares of Trustmark’s stock in excess of the amount that can be acquired without regulatory approval under the Change in Bank Control Act and the BHC Act, which prohibit any person or company from acquiring control of Trustmark without, in most cases, the prior written approval of the FRB.

Under the FDI Act, Trustmark is expected to act as a source of financial and managerial strength to TNB. Under this policy, a bank holding company is expected to commit resources to support its bank subsidiary, including at times when the holding company may not be inclined or in a financial position to provide it.

Bank holding companies and banks are subject to various regulatory capital requirements administered by state and federal bank regulatory agencies. Capital adequacy regulations and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weighting and other factors. United States capital regulations were substantially revised in 2013 as a result of changes in the Dodd-Frank Act and the Basel Committee on Banking Supervision’s December 2010 final capital framework, referred to as “Basel III.” The FRB and the OCC, the primary regulators of Trustmark and TNB, respectively, have substantially similar risk-based capital ratio and leverage ratio requirements.

Under capital requirements applicable to Trustmark and TNB, ~~as of January 1, 2015,~~ Trustmark and TNB are required to meet a common equity Tier 1 capital to risk-weighted assets ratio of 7.0% (a minimum of 4.5% plus a capital conservation buffer of 2.5%~~, which will be fully phased in by January 1, 2019)~~), a Tier 1 capital to risk-weighted assets ratio of 8.5% (a minimum of 6.0% plus a ~~phased-in~~ capital conservation buffer of 2.5%), a total capital to risk-weighted assets ratio of 10.5% (a minimum of 8%8.0% plus a ~~phased-in~~ capital conservation buffer of 2.5%), and a leverage ratio of Tier 1 capital to total consolidated assets of 4.0%. In addition, for an insured depository institution to be “well-capitalized” under the banking agencies’ prompt corrective action framework, it must have a common equity Tier 1 capital ratio of 6.5%, Tier 1 capital ratio of 8.0%, a total capital ratio of 10.0%, and a leverage ratio of 5.0%, and must not be subject to any written agreement, order or capital directive, or prompt corrective action directive issued by its primary federal regulator to meet and maintain a specific capital level for any capital measure.

For purposes of calculating the denominator of the risk-based capital ratios, a banking institution’s assets and some of its specified off-balance sheet commitments and obligations are assigned to various risk categories. For purposes of calculating the numerator of the capital ratios, capital, at both the holding company and bank level, is classified in one of three tiers depending on the “quality” and loss-absorbing features of the capital instrument. Common equity Tier 1 capital is predominantly comprised of common stock instruments (including related surplus) and retained earnings, net of treasury stock, and after making necessary capital deductions and adjustments. Tier 1 capital is comprised of common equity Tier 1 capital and additional Tier 1 capital, which includes non-cumulative perpetual preferred stock and similar instruments meeting specified eligibility criteria (including related surplus) and “TARP” preferred stock and other instruments issued under the Emergency Economic Stabilization Act of 2008. Newly issued trust preferred securities and cumulative perpetual preferred stock may not be included in Tier 1 capital. ~~However, smaller~~Smaller depository institution holding companies (those with assets less than $15 billion as of year-end 2009) and most mutual holding companies are allowed to continue to count as Tier 1 capital most outstanding trust preferred securities and other non-qualifying securities that were issued prior to May 19, 2010 (up to a limit of 25% of Tier 1 capital, excluding non-qualifying capital instruments) rather than phasing such securities out of regulatory capital. However, a depository institution holding company with less than $15 billion in assets that grows to $15 billion or more in assets as a result of an acquisition of another depository institution holding company generally is no longer allowed to count outstanding non-qualifying capital instruments toward its Tier 1 capital. Trustmark currently has outstanding trust preferred securities that isare permitted to continue to count as Tier 1 capital up to the regulatory limit. Total capital is comprised of Tier 1 capital and Tier 2 capital, which includes certain subordinated debt with a minimum original maturity of five years (including related surplus) and a limited amount of allowance for loan losses. Newly issued trust preferred securities and cumulative perpetual preferred stock generally may be included in Tier 2 capital, provided they do not include features that are disallowed by the capital rules, such as the acceleration of principal other than in the event of a bankruptcy, insolvency, or receivership of the issuer.

In July 2019, the OCC, the FRB, and the FDIC issued a final rule intended to simplify aspects of the regulatory capital rules for banking organizations, such as Trustmark and TNB, that are not advanced approaches banking organizations. The final rule includes amendments to the capital treatment of mortgage servicing assets, certain deferred tax assets, investments in the capital instruments of unconsolidated financial institutions, and minority interests. Trustmark and TNB have adopted these amendments as of January 1, 2020. Management does not expect these amendments to have a material effect on Trustmark’s or TNB’s regulatory capital ratios.

Failure to meet minimum capital requirements could subject a bank to a variety of enforcement remedies. The FDI Act identifies five capital categories for insured depository institutions: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. An insured depository institution is subject to differential regulation corresponding to the capital category within which the institution falls. The FDI Act requires banking regulators to take prompt corrective action whenever financial institutions do not meet minimum capital requirements. Failure to meet the capital guidelines could also subject an insured depository institution to capital raising requirements. In addition, an insured depository institution is generally prohibited from making capital distributions, including paying dividends, or paying management fees to a holding company, if the institution would thereafter be undercapitalized. In addition, the FDI Act requires the various regulatory agencies to prescribe certain noncapital standards for safety and soundness relating generally to operations and management, asset quality and executive compensation, and permits regulatory action against an insured depository institution that does not meet such standards.

An institution’s failure to exceed the capital conservation buffer with common equity Tier 1 capital would result in limitations on an institution’s ability to make capital distributions and discretionary bonus payments. ~~The capital conservation buffer is being phased in until January 1, 2019.~~

At December 31, ~~2016,~~2019, Trustmark exceeded its minimum capital requirements with common equity Tier 1 capital, Tier 1 capital and total capital equal to ~~12.16%~~11.93%, ~~12.76%~~12.48% and ~~13.59%~~13.25% of its total risk-weighted assets, respectively. At December 31, ~~2016,~~2019, TNB also exceeded these requirements with common equity Tier 1 capital, Tier 1 capital and total capital equal to ~~12.58%~~12.30%, ~~12.58%~~12.30% and ~~13.41%~~13.07% of its total risk-weighted assets, respectively. At December 31, ~~2016,~~2019, the leverage ratios for Trustmark and TNB were ~~9.90%~~10.48% and ~~9.77%~~10.35%, respectively. As of December 31, ~~2016,~~2019, the most recent notification from the OCC categorized TNB as well-capitalized based

In December 2018, the federal banking agencies issued a final rule to ~~evaluate~~revise their regulatory capital rules to address the Current Expected Credit Losses (CECL) accounting standard and provide an option to phase in the day-one regulatory capital effects of the adoption of the CECL accounting standard over three years. Under the final rule, an institution that is required to adopt the CECL accounting standard beginning the first quarter of 2020, such as Trustmark, can make a one-time election to phase in the effects of the accounting standard on its regulatory capital calculations, such that the effects of adopting the CECL accounting standard on regulatory capital are fully phased in as of the first quarter of 2023. Based on Trustmark’s assessment of the CECL accounting standard and the impact of adoption on Trustmark’s consolidated financial statements and regulatory capital calculations, Trustmark did not make this one-time election to phase in the ~~capital rules on Trustmark and TNB as they are phased in.~~

Bank holding companies and national banks with average total consolidated assets between $10 billion and $50 billion must conduct annual company-run stress tests using data as of December 31 of each year under one baseline and at least two stress scenarios as provided by the FRB and the OCC, respectively. Stress test results must be provided to the FRB and OCC by July 31effects of the ~~following year. Trustmark has been subject to annual company-run stress test requirements since September 2014.~~accounting standard on its regulatory capital calculations. For additional information regarding Trustmark’s implementation of the CECL accounting standard, see the section captioned “Pending Accounting Pronouncements – ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” included in Note 1 – Significant Accounting Policies – Accounting Policies Recently Adopted and Pending Accounting Pronouncements in Part II. Item 8. – Financial Statements and Supplementary Data of this report.

Trustmark anticipates that capital ratios, as reflected in the stress test calculations under the required stress test scenarios, will be an important factor considered by the agencies in evaluating the capital adequacy of Trustmark and TNB and whether proposed payments of dividends or stock repurchases are consistent with prudential expectations.11

Trustmark is limited in its ability to pay dividends or repurchase its stock by the FRB, including ~~on the basis that~~if doing so would be an unsafe or unsound banking practice. Where a bank holding company intends to declare or pay a dividend that could raise safety and soundness concerns, it generally will be required to inform and consult with the FRB in ~~advance to ensure that such dividend does not raise supervisory concerns.~~advance. It is the policy of the FRB that a bank holding company should generally pay dividends on common stock only out of earnings, and only if prospective earnings retention is consistent with the company’s capital needs and overall current and prospective financial condition.

According to guidance from the FRB, a bank holding company’s dividend policies will be assessed against, among other things, its ability to achieve applicable capital ratio requirements. If a bank holding company does not achieve applicable capital ratio requirements, it may not be able to pay dividends. Although Trustmark currently ~~expects to meet~~meets applicable capital ratio requirements, inclusive of the phased-in capital conservation buffer, ~~when it is fully phased in by the FRB,~~ Trustmark cannot be sure that it will continue to meet those requirements or that even if it does, it will be able to pay dividends.

Trustmark also is ~~required~~expected to consult, and in some cases obtain the approval of, the FRB in advance of redeeming or repurchasing its stock. In evaluating the appropriateness of a proposed redemption or repurchase of stock, the FRB will consider, among other things, the potential loss that a bank holding company may suffer from the prospective need to increase reserves and write down assets as a result of continued asset deterioration, and its ability to raise additional common equity and other capital to replace the stock that will be redeemed or repurchased. The FRB also will consider the potential negative effects on the bank holding company’s capital structure of replacing common stock with any lower-tier form of regulatory capital issued.

Trustmark and TNB are subject to extensive regulations aimed at combatting money laundering and terrorist financing. The USA Patriot Act of 2001 (USA Patriot Act) substantially broadened the scope of United States anti-money laundering laws and regulations by imposing significant compliance and due diligence obligations, creating new crimes and penalties and expanding the extra-territorial jurisdiction of the United States. United States Department of the Treasury regulations implementing the USA Patriot Act impose obligations on financial institutions to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering and terrorist financing and to verify the identity of their customers and of beneficial owners of their legal entity customers. Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with all of the relevant laws or regulations, could have serious legal and financial consequences for the institution.

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is responsible for helping to ~~insure~~ensure that U.S. entities do not engage in transactions with certain prohibited parties, as defined by various Executive Orders and Acts of Congress. OFAC publishes lists of persons, organizations, and countries suspected of aiding, harboring or engaging in terrorist acts, known as Specially Designated Nationals and Blocked Persons. OFAC administers and enforces applicable economic and trade sanctions programs. These sanctions are usually targeted against foreign countries, terrorists, international narcotics traffickers and those believed to be involved in the proliferation of weapons of mass destruction. These regulations generally require either the blocking of accounts or other property of specified entities or individuals, but they may also require the rejection of certain transactions involving specified entities or individuals. Trustmark maintains policies, procedures and other internal controls designed to comply with these sanctions programs.

In addition to being regulated as a bank holding company, Trustmark is subject to regulation by the State of Mississippi under its general business corporation laws. Trustmark is also subject to the disclosure and other regulatory requirements of the Securities Act of 1933 and the Securities Exchange Act of 1934, as administered by the SEC.

TNB is a national bank and, as such, is subject to extensive regulation by the OCC and, to a lesser extent, by the FDIC. In addition, as a large provider of consumer financial services, TNB is subject to regulation, supervision, enforcement and examination by the Consumer Financial Protection Bureau (CFPB). Almost every area of the operations and financial condition of TNB is subject to extensive regulation and supervision and to various requirements and restrictions under federal and state law including loans, reserves, investments, issuance of securities, establishment of branches, capital adequacy, liquidity, earnings, dividends, management practices and the provision of services. TNB is subject to supervision, examination, enforcement and reporting requirements under the National Bank Act, the Federal Reserve Act, the FDI Act, regulations of the OCC and certain of the requirements imposed by the Dodd-Frank Act. Trustmark and TNB are also subject to a wide range of consumer protection laws and regulations.

National banks are limited in the amounts they may lend to one borrower and the amount they may lend to insiders. These single counterparty and insider lending limits extend to loans, derivative transactions, repurchase agreements, reverse repurchase agreements and securities lending or borrowing transactions. In addition, the FDI Act imposes restrictions on insured depository institutions’ purchases of assets from insiders.

Sections 23A and 23B of the Federal Reserve Act establish parameters for an insured bank to conduct “covered transactions” with its affiliates, generally (i) limiting the extent to which the bank or its subsidiaries may engage in “covered transactions” with any one affiliate to an amount equal to ~~10 percent~~10% of the bank’s capital stock and surplus, and limiting the aggregate of all such transactions with all affiliates to an amount equal to ~~20 percent~~20% of the bank’s capital stock and surplus, and (ii) requiring that all such transactions be on terms substantially the same, or at least as favorable, to the bank or subsidiary as those that would be provided to a non-affiliate. In addition, an insured bank’s loans to affiliates must be fully collateralized. The term “covered transaction” includes the making of loans to the affiliate, purchase of assets from the affiliate, issuance of a guarantee on behalf of the affiliate and several other types of transactions.

The principal source of Trustmark’s cash revenue is dividends from TNB. There are various legal and regulatory provisions that limit the amount of dividends TNB can pay to Trustmark without regulatory approval. Under the National Bank Act, approval of the OCC is required if the total of all dividends declared in any calendar year exceeds the total of TNB’s net income for that year combined with its retained net income from the preceding two years. ~~TNB will have available in 2017 approximately $98.3 million plus its net income for that year to pay to Trustmark as dividends.~~ Also, under the National Bank Act, TNB may not pay any dividends in excess of undivided profits (retained earnings). In addition, subsidiary banks of a bank holding company are subject to certain restrictions imposed by the Federal Reserve Act on extensions of credit to the bank holding company or any of its subsidiaries. Further, subsidiary banks of a bank holding company are prohibited from engaging in certain tie-in arrangements in connection with any extension of credit, lease or sale of property or furnishing of any services to the bank holding company. Moreover, an institution’s failure to exceed the capital conservation buffer set forth in the capital rules with common equity Tier 1 capital would result in limitations on an institution’s ability to make capital distributions and discretionary bonus payments.

The Dodd-Frank Act established the CFPB within the Federal Reserve System as an independent bureau with responsibility for consumer financial protection. The CFPB is responsible for issuing rules, orders and guidance implementing federal consumer financial laws. The CFPB has primary enforcement authority over “very large” insured depository institutions or insured credit unions and their affiliates. An insured depository institution is deemed “very large” if it reports assets of more than ~~$10~~$10.0 billion in its quarterly Call Report for four consecutive quarters. The CFPB has near exclusive supervision authority, including examination authority, over these “very large” institutions and their affiliates to assess compliance with federal consumer financial laws, to obtain information about the institutions’ activities and compliance systems and procedures, and to detect and assess risks to consumers and markets. The CFPB has broad authority to prevent “unfair, deceptive or abusive acts or practices” and ensure consistent enforcement of laws so that all consumers have access to markets for consumer financial products and services that are fair, transparent and competitive. The CFPB has rulemaking and interpretive authority under the Dodd-Frank Act and other federal consumer financial services laws, as well as broad supervisory, examination and enforcement authority over large providers of consumer financial products and services, such

as TNB. TNB’s total assets ~~were $13.350~~exceeded $10.0 billion atfor the four quarters ended December 31, ~~2016, and $12.677 billion at December 31, 2015,~~2019, and therefore, TNB is subject to CFPB supervision.

In October 2017, the CFPB issued a final rule generally requiring lenders that make certain covered short-term loans, longer-term balloon-payment loans, or longer-term loans with certain costs and features, to reasonably determine that a borrower of a covered loan has the ability to repay such a loan, make certain disclosures to the borrower before attempting to withdraw payment from the borrower’s account, forego from making three consecutive attempts to withdraw payments and report covered loans to registered information systems. In June 2019, the CFPB issued a final rule to delay from the third quarter of 2019 to the fourth quarter of 2020 the compliance date of the 2017 final rule’s requirements for a lender to determine a consumer’s ability to repay a covered loan and report covered loans to registered information systems. In February 2019, the CFPB issued a proposal that would rescind such requirements. Based on TNB’s current credit portfolio, any covered loans made by TNB are considered exempt “accommodation loans” under the CFPB’s 2017 final rule, and accordingly, Trustmark does not expect that the 2017 final rule, the June 2019 final rule, or the February 2019 proposal will have a material impact on its operations.

Banking organizations are subject to numerous laws and regulations intended to protect consumers in addition to those discussed above. These laws include, among others:, the Truth in Lending Act (TILA); Truth in Savings Act; Electronic Funds Transfer Act (EFTA); Expedited Funds Availability Act; Equal Credit Opportunity Act; Fair and Accurate Credit Transactions Act; Fair Housing

Act; Fair Credit Reporting Act; Fair Debt Collection Act; Gramm-Leach-Bliley Act; Home Mortgage Disclosure Act; Right to Financial Privacy Act; Real Estate Settlement Procedures Act; laws regarding unfair and deceptive acts and practices; and usury laws.

Many states and local jurisdictions have consumer protection laws analogous, and in addition to, those listed above. While TNB’s activities are governed primarily by federal law, the Dodd-Frank Act potentially narrowed National Bank Act preemption of state consumer financial laws, thereby making TNB and other national banks potentially subject to increased state regulation. The Dodd-Frank Act also codified the Supreme Court’s decision in Cuomo v. Clearing House Association. As a result, State Attorneys General may enforce in a court action “an applicable law” against federally-chartered depository institutions like TNB. In addition, under the Dodd-Frank Act, State Attorneys General are authorized to bring civil actions against federally-chartered institutions, like TNB, to enforce regulations prescribed by the CFPB or to secure other remedies.

Finally, the Dodd-Frank Act potentially expanded state regulation over banks by eliminating National Bank Act preemption for national bank operating subsidiaries, including operating subsidiaries of TNB.

The Dodd-Frank Act imposed new standards for mortgage loan originations on lenders. The statute amended TILA to restrict the payment of fees to real-estate mortgage originators. Furthermore, the statute amended TILA to impose minimum underwriting standards on real-estate mortgage creditors (including nonbanks as well as bank creditors) and verifications to check borrowers’ income and their ability to ~~pay.~~repay.

The Gramm-Leach-Bliley Financial Services Modernization Act of 1999 (GLB Act) imposed requirements related to the privacy of customer financial information. In accordance with the GLB Act, federal bank regulators adopted rules that limit the ability of banks and other financial institutions to disclose nonpublic information about consumers to nonaffiliated third parties. ~~These limitations require~~The GLB Act also requires disclosure of privacy policies to consumers and, in some circumstances, ~~allow~~allows consumers to prevent disclosure of certain personal information to a nonaffiliated third party. The privacy provisions of the GLB Act affect how consumer information is transmitted through diversified financial companies and conveyed to outside vendors. Trustmark recognizes the need ~~for~~to comply with legal and regulatory requirements that affect its customers’ privacy.

The FRB has issued rules under the EFTA, as amended by the Dodd-Frank Act, to limit interchange fees that an issuer may receive or charge for an electronic debit card transaction. Under the FRB’s rules, the maximum permissible interchange fee that an issuer may receive for an electronic debit transaction is the sum of 21 cents per transaction and five basis points multiplied by the value of the transaction. In addition, the FRB’s rules allow for an upward adjustment of no more than one cent to an issuer’s debit card interchange fee if the issuer develops and implements policies and procedures reasonably designed to achieve the fraud-prevention standards set out in the rule.

Issuers that, together with their affiliates, have assets of less than $10.0 billion on the annual measurement date (December 31) are exempt from the debit card interchange fee standards. AtSince the December 31, 2013 annual measurement date, Trustmark has had assets greater than $10.0 billion; and, therefore, ~~was~~is required to comply with the debit card interchange fee ~~standards by July 1, 2014.~~standards.

The deposits of TNB are insured by the Deposit Insurance Fund (DIF), as administered by the FDIC, and, accordingly, are subject to deposit insurance assessments to maintain the DIF at minimum levels required by statute. The Dodd-Frank Act increased the minimum reserve ratio requirement for the DIF to ~~1.35 percent~~1.35% of total estimated insured deposits or the comparable percentage of the deposit assessment base.

The FDIC uses a ~~risk based~~risk-based assessment system that imposes insurance premiums as determined by multiplying an insured bank’s assessment base by its assessment rate. The Dodd-Frank Act revised the deposit insurance assessment base to be equal to a bank’s total assets minus the sum of (1) its average tangible equity during the assessment period, and (2) any additional amount the FDIC determines is warranted for custodial and banker’s banks.

The FDIC determines a bank’s assessment rate within a range of base assessment rates using a risk scorecard that takes into account the bank’s financial ratios and supervisory rating (the CAMELS composite rating), among other factors. The CAMELS rating system is a supervisory rating system developed to classify a bank’s overall condition by taking into account capital adequacy, assets, management capability, earnings, liquidity and sensitivity to market and interest rate risk.

In the ~~FDIC in 2011,~~third quarter of 2018, the ~~range of base assessment rates for all banks is to decrease in phases as the DIF’s~~DIF reserve ratio ~~grows to 1.15 percent, 2.00 percent and 2.50 percent. The reserve ratio~~ reached 1.17 percent as of June 30, 2016. In March 2016, the Board of Directors of the FDIC approved a final rule to impose a surcharge of 4.5 cents per $100 of the assessment base, after making certain adjustments, on banks with $10.0 billion or more in assets. The FDIC expects the DIF’s reserve ratio will likely reach the statutorily required minimum level of 1.35 percent after approximately two years of payments of these surcharges. The surcharges became effective and began on July 1, 2016. Following the effectiveness of the decrease in base assessment rates and1.35%, which ended surcharges on ~~July 1, 2016, the total base assessment rate for an institution~~institutions with $10.0 billion or more in assets, ~~ranges from a minimum of 1.5 basis points to a maximum of 40.0 basis points, plus applicable surcharges, but this range is subject to change~~such as ~~the DIF’s reserve ratio continues to grow.~~Trustmark, that had been in effect.

TNB’s FDIC assessment expenses declined ~~as of July 1, 2016~~during 2018 as the lower regular assessment rates and the allowable adjustments more than offset the surcharge of 4.5 cents per $100 of assessment ~~base.~~base that had been in effect. In ~~2016,~~2019, TNB’s expenses related to deposit insurance premiums totaled ~~$10.6~~$6.4 million.

TNB also paid approximately $643 thousand in Financing Corporation (FICO) assessments related to outstanding FICO bonds for which the FDIC serves as collection agent. The bonds issued by FICO are due to mature from 2017 through 2019. For the quarter ended December 31, 2016, the FICO assessment rate was equal to 0.56 basis points.

The Dodd-Frank Act permanently increased the deposit insurance level to ~~$250,000~~$250 thousand per depositor for each insured depository institution.

TNB’s nonbanking subsidiaries are subject to a variety of state and federal laws and regulations. TIA, a registered investment adviser, is subject to regulation by the SEC under the Investment Advisers Act of 1940 and by the State of Mississippi. FBBI is subject to the insurance laws and regulations of the states in which ~~its divisions are~~it is active. SCC is subject to the supervision and regulation of the CDFI Fund and the State of Mississippi.

The GLB Act authorizes national banks to own or control a “financial subsidiary” that engages in activities that are not permissible for national banks to engage in directly. The GLB Act contains a number of provisions dealing with insurance activities by bank subsidiaries. Generally, the GLB Act affirms the role of the states in regulating insurance activities, including the insurance activities of financial subsidiaries of banks, but the GLB Act also preempts certain state laws. As a result of the GLB Act, TNB elected for predecessor subsidiaries that now constitute FBBI to become financial subsidiaries. This enables FBBI to engage in insurance agency activities at any location.

Trustmark’s internet address is www.trustmark.com. Information contained on this website is not a part of this report. Trustmark makes available through this address, free of charge, its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such material is electronically filed, or furnished to, the SEC.

At December 31, ~~2016,~~2019, Trustmark employed ~~2,788~~2,844 full-time equivalent associates, none of which are represented by a collective bargaining agreement. Trustmark believes its employee relations to be satisfactory.

The executive officers of Trustmark ~~(the Registrant)~~ and its primary bank subsidiary, TNB, including their ages, positions and principal occupations for the last five years are as follows:

Executive Vice President, Secretary and General Counsel from December 2015 to June 2016

Executive Vice President and Real Estate Banking Manager from May 2017 to April 2019

Senior Vice President and Corporate Commercial Real Estate Manager from October 2008 to May 2017

Executive Vice President and Chief Information Officer since ~~September 2008~~December 2018

~~President and Chief Operating Officer – Texas from August 2006 to August 2014~~

~~Assistant Treasurer – Asset Liability Management from 2008 to September 2013~~

~~Executive Vice President and Mortgage Services Manager from June 2006 to March 2012~~

~~Executive Vice~~On December 10, 2019, Trustmark announced that the Board of Directors of Trustmark appointed Gerard R. Host to succeed R. Michael Summerford as Chairman of the Board of Trustmark effective April 28, 2020, the date of the 2020 Annual Shareholders’ Meeting. Additionally, on December 10, 2019, the Board of Directors of TNB appointed Duane A. Dewey to serve as President and ~~Insurance Services Manager from June 2006~~

to ~~March 2012~~continue to serve as Chief Operating Officer of TNB effective January 1, 2020. Mr. Host will continue to serve as President and Chief Executive Officer of Trustmark and as Chief Executive Officer of TNB.

Trustmark and its subsidiaries could be adversely impacted by various risks and uncertainties, which are difficult to predict. As a financial institution, Trustmark has significant exposure to market risks, including interest rate risk, liquidity risk and credit risk. This section includes a description of the risks, uncertainties and assumptions identified by Management that could, individually or in combination, materially affect Trustmark’s financial condition and results of operations, as well as the value of Trustmark’s financial instruments in general, and Trustmark common stock, in particular. Additional risks and uncertainties that Management currently deems immaterial or is unaware of may also impair Trustmark’s financial condition and results of operations. This report is qualified in its entirety by the risk factors that are identified below.

Trustmark’s largest source of revenue (net interest income) is subject to interest rate risk.

Trustmark’s profitability depends to a large extent on net interest income, which is the difference between income on interest-earning assets, such as loans and investment securities, and expense on interest-bearing liabilities, such as deposits and borrowings. Trustmark is exposed to interest rate risk in its core banking activities of lending and deposit taking, since assets and liabilities reprice at different times and by different amounts as interest rates change. Trustmark is unable to predict changes in market interest rates, which are affected by many factors beyond Trustmark’s control, including inflation, recession, unemployment, money supply, domestic and international events and changes in the United States and other financial markets. ~~In December 2015 and again in December 2016,~~During October 2019, the FRB ~~increased~~lowered the target range for the federal funds rate ~~by 25 basis points. The~~for the third time in 2019 as anticipated. While recently-released FRB ~~also indicated~~minutes indicate that ~~it may~~a majority of the Board believe that there is not a need to cut rates further, ~~increase~~the level of future rates inwill likely depend upon the ~~future.~~performance of the economy. It is not possible to predict the ~~timing or amount~~pace and magnitude of ~~any further~~ changes to interest rates, or the ~~federal funds rate.~~impact rate changes will have on Trustmark’s results of operations.

Financial simulation models are the primary tools used by Trustmark to measure interest rate exposure. Using a wide range of scenarios, Management is provided with extensive information on the potential impact to net interest income caused by changes in interest rates. Models are structured to simulate cash flows and accrual characteristics of Trustmark’s balance sheet. Assumptions are made about the direction and volatility of interest rates, the slope of the yield curve and the changing composition of ~~Trustmark’s~~Trustmark��s balance sheet, resulting from both strategic plans and customer behavior. In addition, the model incorporates Management’s assumptions and expectations regarding such factors as loan and deposit growth, pricing, prepayment speeds and spreads between interest rates. Trustmark’s simulation model using static balances at December 31, ~~2016,~~2019, estimated that in the event of a hypothetical 200 basis point increase in interest rates, net interest income may ~~decrease 0.12%~~increase 5.7%, while a hypothetical 100 basis point increase in interest rates, may increase net interest income ~~0.04%~~3.0%. In the event of a hypothetical 100 basis point decrease in interest rates using static balances at December 31, ~~2016,~~2019, it is estimated net interest income may decrease by ~~6.33%~~5.2%.

Net interest income is Trustmark’s largest revenue source, and it is important to discuss how ~~Trustmark's~~Trustmark’s interest rate risk may be influenced by the various factors shown below:

Financial instruments do not respond in a parallel fashion to rising or falling interest rates. This causes asymmetry in the magnitude of changes in net interest income, net economic value and investment income resulting from the hypothetical increases and decreases in interest rates. Therefore, Management monitors interest rate risk and adjusts Trustmark’s investment, funding and hedging strategies to mitigate adverse effects of interest rate shifts on Trustmark’s balance sheet.

Trustmark utilizes derivative contracts to hedge the mortgage servicing rights (MSR) in order to offset changes in fair value resulting from changes in interest rate environments. In spite of Trustmark’s due diligence in regard to these hedging strategies, significant risks are involved that, if realized, may prove such strategies to be ineffective, which could adversely affect Trustmark’s financial condition or results of operations. Risks associated with these strategies include the risk that counterparties in any such derivative and other hedging transactions may not perform; the risk that these hedging strategies rely on Management’s assumptions and projections regarding these assets and general market factors, including prepayment risk, basis risk, market volatility and changes in the shape of the yield curve, and that these assumptions and projections may prove to be incorrect; the risk that these hedging strategies do not adequately mitigate the impact of changes in interest rates, prepayment speeds or other forecasted inputs to the hedging model; and the risk that the models used to forecast the effectiveness of hedging instruments may project expectations that differ from actual results. In addition, increased regulation of the derivative markets may increase the cost to Trustmark to implement and maintain an effective hedging strategy.

Trustmark closely monitors the sensitivity of net interest income and investment income to changes in interest rates and attempts to limit the variability of net interest income as interest rates change. Trustmark makes use of both on- and off-balance sheet financial instruments to mitigate exposure to interest rate risk.

Trustmark’s business may be adversely affected by conditions in the financial markets and economic conditions in general.

The economy ~~showed~~continued to show moderate signs of improvement in ~~2016;~~2019; however, economic concerns remain as a result of the cumulative weight of ~~continued soft labor markets in the United States,~~ volatility in crude oil prices and ~~slowing~~uncertain growth prospects in ~~markets in Western Europe, Japan, China, Russia and other~~ emerging markets, combined with uncertainty regarding ~~anticipated further tightening of~~the potential monetary policy changes by the FRB, the consequences of the decision of the United Kingdom to exit the European Union, the potential impact on the economy of the current United States presidential administration’s policies and United States trade relations, particularly with China. Doubts surrounding the near-term direction of global markets, and the ~~recent presidential election. The U.S.~~potential impact of these trends on the United States economy, are expected to persist for the near term. While Trustmark’s customer base is wholly domestic, international economic conditions affect domestic conditions, and ~~European economies and~~thus may have an impact upon Trustmark’s financial ~~markets tend to be closely associated, and therefore significant weakness in Europe would likely dampen domestic growth prospects during 2017.~~condition or results of operations. While domestic demand for loans has improved, ~~particularly for commercial loans,~~ further meaningful gains will depend on sustained economic growth. Strategic risk, including threats to business models from ~~low~~rising rates and ~~sluggish~~modest economic growth, remains high. Management’s ability to plan, prioritize and allocate resources in this new environment will be critical to Trustmark’s ability to sustain earnings that will attract capital. Because of the complexities presented by current economic conditions, Management will continue to be challenged in identifying alternative sources of revenue, prudently diversifying assets, liabilities and revenue and effectively managing the costs of compliance.

~~In December 2016,~~Interest rates remain within a low range that, when combined with the ~~FRB increased the target range for the federal funds rate and indicated that it may further increase rates in the future, depending on economic conditions. Continued~~extended period of historically low interest rates ~~will~~in recent years, continue to place pressure on net interest margins for Trustmark (as well as its competitors)~~, as older, higher-yielding assets that mature~~. Any further declines in interest rates will place additional competitive pressure on net interest margins. Conversely, increases in interest rates will place competitive pressures on the deposit cost of funds. It is not possible to predict the pace and magnitude of changes to interest rates, or ~~default and can only be replaced with lower-yielding instruments. In addition, Management must protect against an increased vulnerability to rapidly changing rates in coming years in~~ the ~~event the current low-rate environment is replaced by a more volatile environment, which could increase exposure to reduced revenue from tighter margins.~~impact rate changes will have on Trustmark’s results of operations.

Despite recent optimism resulting from stabilization in the housing sector, improvement of unemployment data and credit quality improvement, Trustmark does not assume that current uncertain conditions in the economy will improve significantly in the near future. A further weakened economy could affect Trustmark in a variety of substantial and unpredictable ways. In particular, Trustmark may face the following risks in connection with these events:

It is difficult to predict the extent to which these challenging economic conditions will persist or whether recent progress in the economic recovery will instead shift to the potential for further decline. If the economy does weaken in the future, it is uncertain how Trustmark’s business would be affected and whether Trustmark would be able successfully to mitigate any such effects on its business. Accordingly, these factors in the United States (and, indirectly, global) economy could have a material adverse effect on Trustmark’s financial condition and results of operations.

Trustmark is subject to lending risk, which could impact the adequacy of the allowance for loan losses and results of operations.

There are inherent risks associated with Trustmark’s lending activities. While the housing and real estate markets have shown continued improvement, they remain at depressed levels in certain regions. If trends in the housing and real estate markets were to revert or further decline below recession levels, Trustmark may experience higher than normal delinquencies and credit losses. Moreover, if the United States economy returns to a recessionary state, Management expects that it could severely affect economic conditions in Trustmark’s market areas and that Trustmark could experience significantly higher delinquencies and credit losses. In addition, bank regulatory agencies periodically review Trustmark’s allowance for loan losses and may require an increase in the provision for loan losses or the recognition of further charge-offs, based on judgments different from those of Management. As a result, Trustmark may elect, or be required, to to make further increases in its provision for loan losses in the future, particularly if economic conditions deteriorate.

Additionally, Trustmark may rely on information furnished by or on behalf of customers and counterparties in deciding whether to extend credit or enter into other transactions. This information could include financial statements, credit reports, business plans, and other information. Trustmark may also rely on representations of those customers, counterparties, or other third parties, such as independent auditors, as to the accuracy and completeness of that information. Reliance on inaccurate or misleading financial statements, credit reports, or other information could have a material adverse impact on Trustmark’s business, financial condition, and results of operations.

Trustmark is subject to liquidity risk, which could disrupt its ability to meet its financial obligations.

Liquidity refers to Trustmark’s ability to ensure that sufficient cash flow and liquid assets are available to satisfy current and future financial obligations, including demand for loans and deposit withdrawals, funding operating costs and other corporate purposes. Liquidity risk arises whenever the maturities of financial instruments included in assets and liabilities differ or when assets cannot be liquidated at fair market value as needed. Trustmark obtains funding through deposits and various short-term and long-term wholesale

borrowings, including federal funds purchased and securities sold under repurchase agreements, ~~to repurchase,~~ the Federal Reserve Discount Window (Discount Window) and Federal Home Loan Bank (FHLB) advances. Any significant restriction or disruption of Trustmark’s ability to obtain funding from these or other sources could have a negative effect on Trustmark’s ability to satisfy its current and future financial obligations, which could materially affect Trustmark’s financial condition or results of operations.

In addition to the risk that one or more of the funding sources may become constrained due to market conditions unrelated to Trustmark, there is the risk that Trustmark’s credit profile may decline such that one or more of these funding sources becomes partially or wholly unavailable to Trustmark.

Trustmark attempts to quantify such credit event risk by modeling bank specific and systemic scenarios that estimate the liquidity impact. Trustmark estimates such impact by attempting to measure the effect on available unsecured lines of credit, available capacity from secured borrowing sources and securitizable assets. To mitigate such risk, Trustmark maintains available lines of credit with the Federal Reserve Bank of Atlanta and the FHLB of Dallas that are secured by loans and investment securities. Management continuously monitors Trustmark’s liquidity position for compliance with internal policies.

Trustmark is subject to extensive government regulation and supervision and possible enforcement and other legal actions.

Trustmark, primarily through TNB and certain nonbank subsidiaries, is subject to extensive federal and state regulation and supervision, which vests a significant amount of discretion in the various regulatory authorities. Banking regulations are primarily intended to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole, not security holders. These regulations and supervisory guidance affect Trustmark’s lending practices, capital structure, investment practices, dividend policy and growth, among other things. Congress and federal regulatory agencies continually review banking laws, regulations, and policies for possible changes. ~~The Dodd-Frank Act instituted major changes to the banking and financial institutions regulatory regimes. Other changes~~Changes to statutes, regulations or regulatory policies or supervisory guidance, including changes in interpretation

or implementation or statutes, regulations, policies and supervisory guidance, could affect Trustmark in substantial and unpredictable ways. Such changes could subject Trustmark to additional costs, limit the types of financial services and products Trustmark may offer and/or increase the ability of nonbanks to offer competing financial services and products, among other things. Failure to comply with laws, regulations, policies or supervisory guidance could result in enforcement and other legal actions by Federal or state authorities, including criminal and civil penalties, the loss of FDIC insurance, the revocation of a banking charter, civil money penalties, other sanctions by regulatory agencies and/or reputational damage. In this regard, government authorities, including bank regulatory agencies, ~~are pursuing aggressive~~continue to pursue enforcement agendas with respect to compliance and other legal matters involving financial activities, which heightens the risks associated with actual and perceived compliance failures. Any of the foregoing could have a material adverse effect on Trustmark’s financial condition or results of operations.

Trustmark ~~will be~~is subject to ~~increasingly~~ stringent capital requirements.

~~On September 12, 2010,~~Under the ~~Group~~regulatory capital rules of ~~Governors~~the FRB, OCC, and ~~Heads~~FDIC that implement a set of ~~Supervision, the oversight body of~~capital requirements issued by the Basel Committee on Banking Supervision ~~announced agreement on the calibration and phase-in arrangements for a strengthened set of capital requirements,~~ known as Basel ~~III. The FRB, OCC,~~III, Trustmark and ~~FDIC issued final rules establishing regulatory~~TNB are required to maintain a common equity Tier 1 capital ~~requirements consistent with Basel III~~to risk-weighted assets ratio of 7.0% (a minimum of 4.5% plus a capital conservation buffer of 2.5%), a Tier 1 capital to risk-weighted assets ratio of 8.5% (a minimum of 6.0% plus a capital conservation buffer of 2.5%), a total capital to risk-weighted assets ratio of 10.5% (a minimum of 8.0% plus a capital conservation buffer of 2.5%) and ~~implementing~~a leverage ratio of Tier 1 capital to total consolidated assets of 4.0%. In addition, for TNB to be “well-capitalized” under the ~~capital requirements in the Dodd-Frank Act in July 2013. These capital rules require, among other things,~~banking agencies’ prompt corrective action framework, it must have a ~~minimum~~ common equity Tier 1 capital ratio of ~~4.5%~~6.5%, ~~net of regulatory deductions, and establish~~ a capital conservation buffer of an additional 2.5% of common equity to risk-weighted assets above the regulatory minimum capital requirement, effectively establishing a minimum common equity Tier 1 ratio of 7%. In addition, the capital rules increased the minimum Tier 1 capital ~~requirement from 4%~~ratio of 8.0%, a total capital ratio of 10.0% and a leverage ratio of 5.0%, and must not be subject to ~~6% of risk-weighted assets. The~~any written agreement, order or capital ~~rules also specify that~~directive, or prompt corrective action directive issued by its primary federal regulator to meet and maintain a ~~bank with a~~specific capital ~~conservation buffer that does not exceed 2.5% shall face limitations on~~level for any capital ~~distributions and bonus payments to executives.~~measure.

The capital rules also include stringent criteria for capital instruments to qualify as Tier 1 or Tier 2 capital. For instance, the rules effectively disallow newly-issued trust preferred securities to be a component of a holding company’s Tier 1 capital. Trustmark will continue to count $60.0 million in outstanding trust preferred securities issued by the Trust as Tier 1 capital up to the regulatory limit, as permitted by ~~the~~a grandfather provision in the capital ~~rules.~~rules, but this grandfather provision may cease to apply if Trustmark grows to $15 billion or more in total assets as a result of an acquisition of a depository institution holding company.

Additionally, the Financial Accounting Standards Board (FASB) Accounting Standard Update (ASU) 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which implements CECL as a new impairment model based on expected credit losses, will require Trustmark to recognize all expected credit losses over the life of a loan based on historical experience, current conditions and ~~TNB were required~~reasonable and supportable forecasts. CECL generally is expected to ~~comply with~~result in earlier recognition of credit losses, which would increase reserves and decrease capital. Additionally, the ~~revised~~CECL model could be materially impacted by changes in current and forecasted macroeconomic conditions. It is not possible to predict the timing or magnitude of changes in macroeconomic conditions or the impact such changes could have on Trustmark’s allowance for expected credit losses; however, material changes in the allowance for expected credit losses could have a material impact on Trustmark’s reserves and capital.

The regulatory capital rules beginning January 1, 2015. Certain of the requirements of the revised capital rules, such as the capital conservation buffer, will be phased in until January 1, 2019. Once the revised capital requirements are fully phased in, it is expected that Trustmark and TNB will be requiredapplicable to hold a greater amount of capital and a greater amount of common equity than they were previously required to hold. Management does not expect the capital rules to have a significant impact on Trustmark or TNB; however, Management will continue to evaluate the impact of the capital rules on Trustmark and TNB as they are phased in.

~~Unfavorable results from ongoing stress test analyses conducted on~~ Trustmark and TNB may ~~adversely affect Trustmark’s ability~~continue to ~~approve, declare and pay dividends~~evolve as a result of new requirements established by the Basel Committee on Banking Supervision or legislative, regulatory or accounting changes in the United States. Management cannot predict the effect that any changes to ~~shareholders or compete for new business opportunities.~~

~~The FRB and OCC require~~current capital requirements would have on Trustmark and TNB to perform periodic stress tests and analysis to evaluate their ability to absorb losses in various economic and financial scenarios. This stress test analysis uses three economic and financial scenarios generated by the FRB and OCC, including baseline, adverse and severely adverse scenarios. Trustmark and TNB are required to make certain assumptions in modeling future performance and must support these assumptions through statistical analysis and observed market behavior where applicable. Results of the stress tests and analysis performed by Trustmark and TNB must be submitted to the FRB and the OCC annually to be used in the regulators’ analysis.

The outcome of the FRB’s analysis of Trustmark’s projected performance (including capital, earnings and balance sheet changes) could hinder Trustmark’s ability to pay cash dividends to shareholders at levels consistent with prior practice, or at all. The results of the stress tests could also impact decision making regarding future acquisitions by Trustmark as well as Trustmark’s ability to effectively compete for new business opportunities.

Additionally, the FRB and OCC may require Trustmark and TNB to raise additional capital or take other actions, or may impose restrictions on its business, based on the results of the stress tests, including requiring revisions or changes to capital plans. Trustmark and TNB may not be able to raise additional capital if required to do so, or may not be able to do so on favorable terms. Any such capital raises, if required, may also be dilutive to existing shareholders.TNB.

There may be risks resulting from the extensive use of models in Trustmark’s business.

Trustmark relies on quantitative models to measure risks and to estimate certain financial values. Models may be used in such processes as determining the pricing of various products, assessing potential acquisition opportunities, developing presentations made to market analysts and others, creating loans and extending credit, measuring interest rate and other market risks, predicting losses, assessing capital adequacy, ~~conducting capital stress testing,~~ calculating regulatory capital levels and estimating the fair value of financial instruments and balance sheet items. These models reflect assumptions that may not be accurate, particularly in times of market stress or other unforeseen circumstances. Even if these assumptions are adequate, the models may prove to be inadequate or inaccurate because of other flaws in their design or their implementation. If models for determining interest rate risk and asset-liability management are inadequate, Trustmark may incur increased or unexpected losses upon changes in market interest rates or other market measures. If models for determining probable loan losses are inadequate, the allowance for loan losses may not be sufficient to support future charge-offs. If models to measure the fair value of financial instruments are inadequate, the fair value of such financial instruments may fluctuate unexpectedly or may not accurately reflect what Trustmark could realize upon sale or settlement of such financial instruments. Any such failure in the analytical or forecasting models could have a material adverse effect on Trustmark’s financial condition or results of operations.

Also, information Trustmark provides to its regulators based on poorly designed or implemented models could be inaccurate or misleading. Certain decisions that the regulators make, including those related to capital distributions and dividends to Trustmark’s

shareholders, could be adversely affected due to the regulator’s perception that the quality of Trustmark’s models used to generate the relevant information is insufficient.

Trustmark may be adversely affected by the transition from the London Interbank Offered Rate (LIBOR) as a reference rate.

In 2017, the United Kingdom’s Financial Conduct Authority announced that after 2021 it would no longer compel banks to submit the rates required to calculate LIBOR. This announcement indicates that the continuation of LIBOR on the current basis cannot and will not be guaranteed after 2021. The Alternative Reference Rates Committee (ARRC), a committee of U.S. financial market participants, has proposed the Secured Overnight Financing Rate (SOFR) as the rate that represents best practice as the alternative to LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. However, there are conceptual and technical differences between LIBOR and SOFR. ARRC has proposed a paced market transition plan to SOFR from LIBOR and organizations are currently working on industry-wide and company-specific transition plans as it relates to derivatives and cash markets exposed to LIBOR.

Trustmark has a significant number of loans, derivative contracts, borrowings and other financial instruments with attributes that are either directly or indirectly dependent on LIBOR. The transition from LIBOR could create considerable costs and additional risk. Since proposed alternative rates are calculated differently, payments under contracts referencing new rates will differ from those referencing LIBOR. The transition will change Trustmark’s market risk profiles, requiring changes to risk and pricing models, valuation tools, product design and hedging strategies. Trustmark has organized an internal initiative to identify operational and contractual best practices, assess its risks, manage the transition, facilitate communication with its customers, and monitor the impacts. Trustmark cannot predict what the ultimate impact of the transition from LIBOR will be; however, failure to adequately manage the transition could have a material adverse effect on Trustmark’s business, financial condition, results of operations and reputation with its customers.

~~When~~If Trustmark consummates an acquisition, a portion of the purchase price iswould generally be allocated to goodwill and other identifiable intangible assets. The amount of the purchase price that is allocated to goodwill and other intangible assets is determined by the excess of the purchase price over the net identifiable assets acquired. At December 31, ~~2016,~~2019, goodwill and other identifiable intangible assets were ~~$386.8~~$387.0 million. Under current accounting standards, if Trustmark determines goodwill or intangible assets are impaired, Trustmark would be required to write down the carrying value of these assets. Trustmark’s annual goodwill impairment evaluation performed during the fourth quarter of ~~2016~~2019 indicated no impairment of goodwill for any reporting segment. Management cannot provide assurance, however, that Trustmark will not be required to take an impairment charge in the future. Any impairment charge would have an adverse effect on Trustmark’s shareholders’ equity and financial condition and could cause a decline in Trustmark’s stock price.

Trustmark holds a significant amount of other real estate and may acquire and hold significant additional amounts, which could lead to increased operating expenses and vulnerability to additional declines in real property values.

As business necessitates, Trustmark forecloses on and takes title to real estate serving as collateral for loans. At December 31, ~~2016,~~2019, Trustmark held ~~$62.1~~$29.2 million of other real estate, compared to ~~$78.8~~$34.7 million at December 31, ~~2015.~~2018. The amount of other real estate held by Trustmark may increase in the future as a result of, among other things, business combinations, increased uncertainties in the housing market or increased levels of credit stress in residential real estate loan portfolios. Increased other real estate balances could

lead to greater expenses as Trustmark incurs costs to manage, maintain and dispose of real properties as well as to remediate any environmental cleanup costs incurred in connection with any contamination discovered on real property on which Trustmark has foreclosed and to which Trustmark has taken title. As a result, Trustmark’s earnings could be negatively affected by various expenses associated with other real estate owned, including personnel costs, insurance and taxes, completion and repair costs, valuation adjustments and other expenses associated with real property ownership, as well as by the funding costs associated with other real estate assets. The expenses associated with holding a significant amount of other real estate could have a material adverse effect on Trustmark’s financial condition or results of operations.

Declines in asset values may result in impairment charges and adversely affect the value of Trustmark’s investments.

Trustmark maintains an investment portfolio that includes, among other asset classes, obligations of states and municipalities, agency debt securities and agency mortgage-related securities. The market value of investments in Trustmark’s investment portfolio may be affected by factors other than interest rates or the underlying performance of the issuer of the securities, such as ratings downgrades, adverse changes in the business climate and a lack of pricing information or liquidity in the secondary market for certain investment securities. In addition, government involvement or intervention in the financial markets or the lack thereof or market perceptions regarding the existence or absence of such activities could affect the market and the market prices for these securities.

On a quarterly basis, Trustmark evaluates investments and other assets for impairment indicators. As of December 31, ~~2016,~~2019, gross unrealized losses on temporarily impaired securities totaled ~~$30.5~~$7.3 million. Trustmark may be required to record impairment charges if these investments suffer a decline in value that is other-than-temporary. If it is determined that a significant impairment has occurred, Trustmark would be required to charge against earnings the credit-related portion of the other-than-temporary impairment, which could have a material adverse effect on results of operations in the period in which a write-off, if any, occurs.

If Trustmark is required to repurchase a significant number of mortgage loans that it had previously sold, such repurchases could negatively affect earnings.

One of Trustmark’s primary business operations is mortgage banking under which residential mortgage loans are sold in the secondary market under agreements that contain representations and warranties related to, among other things, the origination and characteristics of the mortgage loans. Trustmark may be required to either repurchase the outstanding principal balance of a loan or make the purchaser whole for the anticipated economic benefits of a loan if it is determined that the loan sold was in violation of representations or warranties made by Trustmark at the time of the sale, herein referred to as mortgage loan servicing putback expenses. Such representations and warranties typically include those made regarding loans that had missing or insufficient file documentation, loans that do not meet investor guidelines, loans in which the appraisal does not support the value and/or loans obtained through fraud by the borrowers or other third parties. Generally, putback requests may be made until the loan is paid in full. However, mortgage loans delivered to the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC) on or after January 1, 2013 are subject to the Lending and Selling Representations and Warranties Framework updated in May 2014, which provides certain instances in which FNMA and FHLMC will not exercise their remedies, including a putback request, for breaches of certain selling representations and warranties, such as payment history and quality control review.

Trustmark faces substantial competition in all areas of its operations from a variety of different competitors, many of which are larger and may have greater financial resources. Such competitors primarily include national and regional banks, as well as community banks within the various markets in which Trustmark operates. At this time, major international banks do not materially compete directly with Trustmark in its markets, although they may do so in the future. Trustmark also faces competition from many other types of financial institutions, including savings and loans, credit unions, finance companies, brokerage firms, insurance companies, factoring companies and other financial intermediaries. Additionally, fintech developments, such as blockchain and other distributed ledger ~~technology (or blockchain),~~technologies, have the potential to disrupt the financial industry and change the way banks do business. The financial services industry could become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation.

Some of Trustmark’s competitors have fewer regulatory constraints and may have lower cost structures. Additionally, due to their size, many of Trustmark’s larger competitors may be able to achieve economies of scale and, as a result, may offer a broader range of products and services as well as better pricing for those products and services than Trustmark.

Trustmark’s ability to compete successfully depends on a number of factors, including: the ability to develop, maintain and build upon long-term customer relationships based on top quality service, high ethical standards and safe, sound assets; the ability to continue to expand Trustmark’s market position through organic growth and acquisitions; the scope, relevance and pricing of products and services offered to meet customer needs and demands; the rate at which Trustmark introduces new products and services relative to its competitors; and industry and general economic trends. Failure to perform in any of these areas could significantly weaken Trustmark’s competitive position, which could adversely affect Trustmark’s financial condition or results of operations.

Changes in retail distribution strategies and consumer behavior may adversely impact Trustmark’s investments in premises, equipment, technology and other assets and may lead to increased expenditures to change its retail distribution channel.

Trustmark has significant investments in bank premises and equipment for its branch network. Advances in technology such as ecommerce, telephone, internet and mobile banking, and in-branch self-service technologies including interactive teller machines and other equipment, as well as an increasing customer preference for these other methods of accessing Trustmark’s products and services, could decrease the value of its branch network, technology, or other retail distribution physical assets and may cause Trustmark to change its retail distribution strategy, close and/or sell certain branches or parcels of land held for development and restructure or reduce its remaining branches and work force. These actions could lead to losses on these assets or could adversely impact the carrying value of any long-lived assets and may lead to increased expenditures to renovate, reconfigure or close a number of Trustmark’s remaining branches or to otherwise reform its retail distribution channel.

Potential acquisitions by Trustmark may disrupt Trustmark’s business and dilute shareholder value.

Trustmark ~~seeks~~continuously monitors the market for merger or acquisition ~~partners that are culturally~~opportunities and, depending upon business and other considerations, may elect to pursue one or more such opportunities in the future. Any such merger or acquisition candidate would need to have a similar ~~and~~culture to Trustmark, have experienced management and possess either significant market presence or have potential for improved profitability through financial management, economies of scale or expanded ~~services, and Trustmark will likely continue to seek to acquire such businesses in the future.~~services. Acquiring other banks, businesses, or branches involves various risks commonly associated with acquisitions, including: potential exposure to unknown or contingent liabilities of the target company, exposure to potential asset quality issues of the target company, difficulty and expense of integrating the operations and personnel of the target company, potential disruption to Trustmark’s business, potential diversion of Trustmark’s Management’s time and attention, the possible loss of key employees and customers of the target company, difficulty in estimating the value of the target company and potential changes in banking or tax laws or regulations that may affect the target company. Acquisitions may involve the payment of a premium over book and market values, and, therefore, some dilution of Trustmark’s tangible book value and net income per share of common stock may occur in connection with any future transaction. Furthermore, failure to realize the expected revenue projections, cost savings, increases in geographic or product presence, and/or other projected benefits from an acquisition could have a material adverse effect on Trustmark’s financial condition or results of operations.

In addition, the acquisition of an insured depository institution that subsequently fails could significantly adversely affect an affiliated insured depository institution. Under cross-guarantee provisions of the FDI Act, the FDIC may recoup losses to the DIF by assessing a claim against insured depository institutions under common control for losses caused by the failure of an affiliated insured depository institution.

Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships. As a result, defaults by, or questions or rumors about, one or more financial services institutions or the financial services industry in general, could lead to market-wide liquidity problems, which could, in turn, lead to defaults or losses by Trustmark and by other institutions. Trustmark has exposure to many different industries and counterparties, and routinely executes transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks, mutual funds, and other institutional clients. Many of these transactions expose Trustmark to credit risk in the event of default of its counterparty or client. In addition, Trustmark’s credit risk may be exacerbated when the collateral it holds cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the credit or derivative exposure owed to Trustmark. Losses related to these credit risks could materially and adversely affect Trustmark’s results of operations.

Trustmark may experience disruptions of its operating systems or breaches in its information system security.

Trustmark is dependent upon communications and information systems to conduct business as such systems are used to manage virtually all aspects of Trustmark’s business. Trustmark’s operations rely on the secure processing, storage and transmission of confidential and other information within its computer systems and networks. Trustmark has taken protective measures, which are continuously monitored and modified as warranted; however, Trustmark’s computer systems, software and networks may fail to operate properly or become disabled or damaged as a result of a number of factors, including events that are wholly or partially beyond Trustmark’s control. There could be sudden increases in customer transaction volume; electrical, telecommunications or other major physical infrastructure outages; natural disasters; and events arising from local or larger scale political or social matters, including terrorist acts. Further, Trustmark’s operational and security systems and infrastructure may be vulnerable to breaches, unauthorized access, misuse, computer viruses or other malicious codes and cyber-attacks that could affect their information system security. If one or more of these events were to occur, Trustmark’s or its customers’ confidential and other information would be jeopardized, or such an event could cause interruptions or malfunctions in Trustmark’s or its customers’ or counterparties’ operations. Trustmark may be required to expend significant additional resources to modify its protective measures or to investigate and remediate vulnerabilities or other exposures in its computer systems and networks, and Trustmark may be subject to litigation and financial losses that are either not insured against or not fully covered through any insurance maintained by Trustmark. Any such losses, which may be difficult to detect, could adversely affect Trustmark’s financial condition or results of operations. In addition, the occurrence of such a loss could expose Trustmark to reputational risk, the loss of customer business and additional regulatory scrutiny.

Security breaches in Trustmark’s internet and mobile banking activities (myTrustmark^SM) could further expose Trustmark to possible liability and reputational risk. Any compromise in security could deter customers from using Trustmark’s internet and mobile banking services that involve the transmission of confidential information. Trustmark relies on standard internet security systems to provide the security and authentication necessary to effect secure transmission of data. However, these precautions may not protect Trustmark’s systems from compromise or breaches of security, which could result in significant legal liability and significant damage to Trustmark’s reputation and business.

Trustmark relies upon certain third-party vendors to provide products and services necessary to maintain day-to-day operations. Accordingly, Trustmark’s operations are exposed to the risk that these vendors might not perform in accordance with applicable contractual arrangements or service level agreements or that the security of the third-party vendors’ computer systems, software and networks may be vulnerable to compromises that could impact information system security. Trustmark maintains a system of policies and procedures designed to monitor vendor risks. While Trustmark believes these policies and procedures effectively mitigate risk, the failure of an external vendor to perform in accordance with applicable contractual arrangements or service level agreements or any compromise in the security of an external vendor’s information systems could be disruptive to Trustmark’s operations, which could have a material adverse effect on its financial condition or results of operations.

Trustmark must utilize new technologies to deliver its products and services, which could require significant resources and expose Trustmark to additional risks, including cyber-security risks.

In order to deliver new products and services and to improve the productivity of existing products and services, the banking industry relies on rapidly evolving technologies. Trustmark continues to invest in technology to facilitate the ability of its customers to engage in financial transactions, and otherwise enhance the customer experience with respect to its products and services. Trustmark’s ability to effectively utilize new technologies to address customer needs and create operating efficiencies could materially affect future prospects. Management cannot provide any assurances that Trustmark will be successful in utilizing such new technologies. Incorporation of new products and services, such as internet and mobile banking services, may require significant resources and expose Trustmark to additional risks, including cyber-security risks.

Trustmark’s use of third-party service providers and Trustmark’s other ongoing third-party business relationships are subject to increasing regulatory requirements and attention.

Trustmark regularly uses third-party service providers and subcontractors as part of its business. Trustmark also has substantial ongoing business relationships with partners and other third-parties and relies on certain third-parties to provide products and services necessary to maintain day-to-day operations. These types of third-party relationships are subject to increasingly demanding regulatory requirements and attention by regulators, including the FRB, ~~the~~ OCC, CFPB and ~~the~~ FDIC. Under regulatory guidance, Trustmark is required to apply stringent due diligence, conduct ongoing monitoring and maintain effective control over third-party service providers and subcontractors and other ongoing third-party business relationships. Trustmark expects that the regulators will hold Trustmark responsible for deficiencies in its oversight and control of its third-party relationships and in the performance of the parties with which Trustmark has these relationships. Trustmark maintains a system of policies and procedures designed to ensure adequate due diligence is performed and to monitor vendor risks. While Trustmark believes these policies and procedures effectively mitigate risk, if the regulators conclude that Trustmark has not exercised adequate oversight and control over third-party service providers and subcontractors or other ongoing third-party business relationships or that such third-parties have not performed appropriately, Trustmark could be subject to enforcement actions, including civil monetary penalties or other administrative or judicial penalties or fines as well as requirements for customer remediation.

Trustmark’s internal controls, disclosure controls and procedures, and corporate governance policies and procedures are based in part on assumptions, and can provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of Trustmark’s controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on Trustmark’s business, financial condition and results of operations.

The volatility in the stock prices of companies in the financial services industry, such as Trustmark, may make it more difficult for shareholders to resell Trustmark common stock at attractive prices in a timely manner. Trustmark’s stock price can fluctuate significantly in response to a variety of factors, including factors affecting the financial industry as a whole. The factors affecting financial stocks generally and Trustmark’s stock price in particular include:

General market fluctuations, the potential for breakdowns on electronic trading or other platforms for executing securities transactions, industry factors and general economic and political conditions could also cause Trustmark’s stock price to decrease regardless of operating results.

Changes in accounting standards may affect how Trustmark reports its financial condition and results of operations.

Trustmark’s accounting policies and methods are fundamental to how Trustmark records and reports its financial condition and results of operations. From time to time, the ~~Financial Accounting Standards Board (FASB)~~FASB changes the financial accounting and reporting standards that govern the preparation of Trustmark’s financial statements. The most recent economic recession resulted in increased scrutiny of accounting standards by regulators and legislators, particularly as they relate to fair value accounting principles. In addition, ongoing efforts to achieve convergence between U.S. generally accepted accounting principles (GAAP) and International Financial Reporting Standards may result in changes to GAAP. Any such changes can be difficult to predict and can materially affect how Trustmark records and reports its financial condition or results of operations. For additional details regarding recently adopted and pending accounting pronouncements, see Note 1 – Significant Accounting Policies included in Part II. Item 8. - Financial Statements and Supplementary Data of this report.

Trustmark’s success depends substantially on its ability to attract and retain skilled, experienced personnel. Competition for qualified candidates in the activities and markets that Trustmark serves is intense. While Trustmark invests significantly in the training and ~~developments~~development of its employees, it is possible that Trustmark may not be able to retain key employees. If Trustmark were unable to retain its most qualified employees, its performance and competitive positioning could be materially adversely affected.

Natural disasters, such as hurricanes, could have a significant negative impact on Trustmark’s business.

Many of Trustmark’s loans are secured by property or are made to businesses in or near the Gulf Coast regions of Alabama, Florida, Mississippi and Texas, which are often in the path of seasonal hurricanes. Natural disasters, such as hurricanes, could have a significant negative impact on the stability of Trustmark’s deposit base, the ability of borrowers to repay outstanding loans and the value of collateral securing loans, and could cause Trustmark to incur material additional expenses. Although Management has established disaster recovery policies and procedures, the occurrence of a natural disaster, especially if any applicable insurance coverage is not adequate to enable Trustmark’s borrowers to recover from the effects of the event, could have a material adverse effect on Trustmark’s financial condition or results of operations.

Trustmark may be subject to increased claims and litigation, which could result in legal liability and reputational damage.

Trustmark has been named from time to time as a defendant in litigation relating to its businesses and activities. Litigation may include claims for substantial compensatory or punitive damages or claims for indeterminate amounts of damages.

In recent years, a number of judicial decisions have upheld the right of borrowers to sue lending institutions on the basis of various evolving legal theories, collectively termed “lender liability.” Generally, lender liability is founded on the premise that a lender has either violated a duty, whether implied or contractual, of good faith and fair dealing owed to the borrower or has assumed a degree of control over the borrower resulting in the creation of a fiduciary duty owed to the borrower or its other creditors or shareholders.

Substantial legal liability against Trustmark, including its subsidiaries, could materially adversely affect Trustmark’s business, financial condition or results of operations, or cause significant harm to ~~our~~its reputation.

Damage to Trustmark’s reputation could have a significant negative impact on Trustmark’s business.

Trustmark’s ability to attract and retain customers, clients, investors, and highly-skilled management and employees is affected by its reputation. Public perception of the financial services industry declined as a result of the economic downturn and related government response. Trustmark faces increased public and regulatory scrutiny resulting from the financial crisis and economic downturn. Significant harm to Trustmark’s reputation can also arise from other sources, including employee misconduct, actual or perceived

unethical behavior, litigation or regulatory outcomes, failing to deliver minimum or required standards of service and quality, compliance failures, disclosure of confidential information, significant or numerous failures, interruptions or breaches of its information systems and the activities of its clients, customers and counterparties, including vendors. Actions by the financial services industry generally or by certain members or individuals in the industry may have a significant adverse effect on Trustmark’s reputation. Trustmark could also suffer significant reputational harm if it fails to properly identify and manage potential conflicts of interest. Management of potential conflicts of interests has become increasingly complex as Trustmark expands its business activities

through more numerous transactions, obligations and interests with and among its clients. The actual or perceived failure to adequately address conflicts of interest could affect the willingness of clients to deal with Trustmark, which could adversely affect Trustmark’s businesses.

Trustmark’s principal offices are housed in its ~~complex~~main office building located in downtown Jackson, Mississippi and owned by TNB. ~~Approximately 235,000 square feet, or 89%, of the available space in the~~Trustmark’s main office building is primarily allocated tofor bank use with ~~the remainder occupied or~~a small portion available for occupancy by tenants on a lease ~~basis.~~basis, although such incidental leasing activity is not material to Trustmark’s operations. As of December 31, ~~2016,~~2019, Trustmark, through TNB, ~~also~~ operated ~~174~~178 full-service branches, 1915 limited-service branches and an ATM network, which included ~~176 ATMs~~236 automated teller machines (ATMs) and 14 interactive teller machines (ITMs) at ~~on-premise locations~~its branches and ~~69 ATMs located at off-premise sites.~~other locations. In addition, ~~Trustmark’s Mortgage Banking Group utilized four off-site~~Trustmark operated 11 offices in various locations ~~the Wealth Management Division utilized one off-site location~~providing mortgage banking, wealth management and ~~the Insurance Division utilized four off-site locations.~~insurance services. Trustmark leases 8632 of its ~~271~~branch and other office locations with the remainder being owned. Trustmark believes its properties are suitable and adequate to operate its financial services business.

Trustmark’s wholly-owned subsidiary, TNB, has been named as a defendant in ~~three~~several lawsuits related to the collapse of the Stanford Financial Group. ~~The first is~~

On August 23, 2009, a purported class action complaint ~~that~~ was filed ~~on August 23, 2009~~ in the District Court of Harris County, Texas, by Peggy Roif Rotstain, Guthrie Abbott, Catherine Burnell, Steven Queyrouze, Jaime Alexis Arroyo Bornstein and Juan C. Olano (collectively, Class Plaintiffs), on behalf of themselves and all others similarly situated, naming TNB and four other financial institutions and one individual, each of which are unaffiliated with Trustmark, as defendants. The complaint seeks to recover (i) alleged fraudulent transfers from each of the defendants in the amount of fees and other monies received by each defendant from entities controlled by R. Allen Stanford (collectively, the Stanford Financial Group) and (ii) damages allegedly attributable to alleged conspiracies by one or more of the defendants with the Stanford Financial Group to commit fraud and/or aid and abet fraud on the asserted grounds that defendants knew or should have known the Stanford Financial Group was conducting an illegal and fraudulent scheme. Class Plaintiffs have demanded a jury trial. Class Plaintiffs did not quantify damages.

In November 2009, the lawsuit was removed to federal court by certain defendants and then transferred by the United States Panel on Multidistrict Litigation to federal court in the Northern District of Texas (Dallas) where multiple Stanford related matters are being consolidated for pre-trial proceedings. In May 2010, all defendants (including TNB) filed motions to dismiss the lawsuit. In August 2010, the court authorized and approved the formation of an Official Stanford Investors Committee (OSIC) to represent the interests of Stanford investors and, under certain circumstances, to file legal actions for the benefit of Stanford investors. In December 2011, the OSIC filed a motion to intervene in this action. In September 2012, the district court referred the case to a magistrate judge for hearing and determination of certain pretrial issues. In December 2012, the court granted the OSIC’s motion to intervene, and the OSIC filed an Intervenor Complaint against one of the other defendant financial institutions. In February 2013, the OSIC filed a second Intervenor Complaint that asserts claims against TNB and the remaining defendant financial institutions. The OSIC seeks to recover: (i) alleged fraudulent transfers in the amount of the fees each of the defendants allegedly received from Stanford Financial Group, the profits each of the defendants allegedly made from Stanford Financial Group deposits, and other monies each of the defendants allegedly received from Stanford Financial Group; (ii) damages attributable to alleged conspiracies by each of the defendants with the Stanford Financial Group to commit fraud and/or aid and abet fraud and conversion on the asserted grounds that the defendants knew or should have known the Stanford Financial Group was conducting an illegal and fraudulent scheme; and (iii) punitive damages. The OSIC did not quantify damages.

In July 2013, all defendants (including TNB) filed motions to dismiss the OSIC’s claims. In March 2015, the court entered an order authorizing the parties to conduct discovery regarding class certification, staying all other discovery and setting a deadline for the parties to complete briefing on class certification issues. In April 2015, the court granted in part and denied in part the defendants’ motions to dismiss the Class Plaintiffs’ claims and the OSIC’s claims. The court dismissed all of the Class Plaintiffs’ fraudulent

transfer claims and dismissed certain of the OSIC’s claims. The court denied the motions by TNB and the other financial institution defendants to dismiss the OSIC’s constructive fraudulent transfer claims.

motions to dismiss the SAC and to reconsider the court’s prior denial to dismiss the OSIC’s constructive fraudulent transfer claims against TNB and the other financial institutions that are defendants in the action. On July 27, 2016, the court denied the motion by TNB and the other financial institution defendants to dismiss the SAC and also denied the motion by TNB and the other financial institution defendants to reconsider the court’s prior denial to dismiss the OSIC’s constructive fraudulent transfer claims. On August 24, 2016, TNB filed its answer to the SAC. ~~There has been no new activity related~~On October 20, 2017, the OSIC filed a motion seeking an order lifting the discovery stay and establishing a trial schedule. On November 4, 2016, the OSIC filed a First Amended Intervenor Complaint, which added claims for (i) aiding, abetting or participation in violations of the Texas Securities Act and (ii) aiding, abetting or participation in the breach of fiduciary duty. On November 7, 2017, the court denied the Class Plaintiffs’ motion seeking class certification and designation of class representatives and counsel, finding that common issues of fact did not predominate. The court granted the OSIC’s motion to lift the ~~SAC.~~discovery stay that it had previously ordered.

~~The second~~On May 3, 2019, individual investors and entities filed motions to intervene in the action. On September 18, 2019, the court denied the motions to intervene. On October 14, 2019, certain of the proposed intervenors filed a notice of appeal.

On December 14, 2009, a different Stanford-related lawsuit was filed ~~on December 14, 2009~~ in the District Court of Ascension Parish, Louisiana, individually by Harold Jackson, Paul Blaine and Carolyn Bass Smith, Christine Nichols, and Ronald and Ramona Hebert naming TNB (misnamed as Trust National Bank) and other individuals and entities not affiliated with Trustmark as defendants. The complaint seeks to recover the money lost by these individual plaintiffs as a result of the collapse of the Stanford Financial Group (in addition to other damages) under various theories and causes of action, including negligence, breach of contract, breach of fiduciary duty, negligent misrepresentation, detrimental reliance, conspiracy, and violation of Louisiana’s uniform fiduciary, securities, and racketeering laws. The complaint does not quantify the amount of money the plaintiffs seek to recover. In January 2010, the lawsuit was removed to federal court by certain defendants and then transferred by the United States Panel on Multidistrict Litigation to federal court in the Northern District of Texas (Dallas) where multiple Stanford related matters are being consolidated for pre-trial proceedings. On March 29, 2010, the court stayed the case. TNB filed a motion to lift the stay, which was denied on February 28, 2012. In September 2012, the district court referred the case to a magistrate judge for hearing and determination of certain pretrial issues.

On April 11, 2016, Trustmark learned that a ~~third~~different Stanford-related lawsuit had been filed on that date in the Superior Court of Justice in Ontario, Canada, by The Toronto-Dominion Bank (“TD Bank”), naming TNB and three other financial institutions not affiliated with Trustmark as defendants. The complaint seeks a declaration specifying the degree to which each of TNB and the other defendants are liable in respect of any loss and damage for which TD Bank is found to be liable in a litigation commenced against TD Bank brought by the Joint Liquidators of Stanford International Bank Limited in the Superior Court of Justice, Commercial List in Ontario, Canada (the “Joint Liquidators’ Action”), as well as contribution and indemnity in respect of any judgment, interest and costs TD Bank is ordered to pay in the Joint Liquidators’ Action. To date, TNB has not been served in connection with this action.

On November 1, 2019, TNB was named as a defendant in a complaint filed by Paul Blaine Smith, Carolyn Bass Smith and other plaintiffs identified therein (the Smith Complaint). The Smith Complaint was filed in District Court, Harris County, Texas and named TNB and four other financial institutions and one individual, each of which are unaffiliated with Trustmark, as defendants. The Smith Complaint relates to the collapse of the Stanford Financial Group, as does the other pending litigation relating to Stanford summarized above. Plaintiffs in the Smith Complaint have demanded a jury trial.

Trustmark has only recently become aware of the Smith Complaint (which has not yet been served upon TNB). Trustmark and its counsel are carefully evaluating the Smith Complaint in the form that is publicly available, and will update the foregoing description to the extent that additional material facts are ascertained.

TNB’s relationship with the Stanford Financial Group began as a result of Trustmark’s acquisition of a Houston-based bank in August 2006, and consisted of correspondent banking and other traditional banking services in the ordinary course of business. All Stanford-related lawsuits are in pre-trial stages.

and the other was employed either by TNB or one of the other defendant financial institutions, as defendants. The complaint seeks to recover from the ~~Trustee~~defendants, for the benefit of the receivership estate and also for certain investors who were allegedly defrauded by Adams and Madison Timber, damages (including punitive damages) and related costs allegedly attributable to actions of the defendants that allegedly enabled illegal and fraudulent activities engaged in ~~both trusts.~~by Adams and Madison Timber. The ~~lawsuits were filed on June 30, 2014~~Receiver did not quantify damages.

TNB’s relationship with Adams and Madison Timber consisted of traditional banking services in the ~~Chancery Court~~ordinary course of the First Judicial District of Hinds County, Mississippi by Jennifer Davis Michael, Elizabeth Paine Lindigrin, Wilmer Harrison Paine, Kenneth Whitworth Paine, Robert Harvey Paine and Nathan Davis, who are all children of Mrs. Davis and Mr. Paine. The complaints allege that the plaintiffs are vested current beneficiaries of the respective trusts; that the plaintiffs should have been entitled to be considered for distributions of trust income; and that the interests of Mrs. Davis and Mr. Paine were favored over plaintiffs’ interest in both the distribution of income and in the making of trust investments. Plaintiffs seek compensatory damages, refund of trust fees and sweep fees, punitive damages, attorneys’ fees and pre- and post-judgment interest. On March 9, 2015, the court granted TNB’s motion to add Mrs. Davis and Mr. W.K. Paine as cross-defendants. Following a bench trial that concluded on January 20, 2016, the judge ordered the parties to enter into mandatory mediation. On February 22, 2016, the mediator reported to the judge that the mediation had failed to resolve the matter. All post-trial briefings have been completed by the parties and submitted to the court. The judge will consider those submissions and then enter a ruling on the case at some point in the future.business.

Trustmark and its subsidiaries are also parties to other lawsuits and other claims that arise in the ordinary course of business. Some of the lawsuits assert claims related to the lending, collection, servicing, investment, trust and other business activities, and some of the lawsuits allege substantial claims for damages.

All pending legal proceedings described above are being vigorously contested. In accordance FASB Accounting Standards Codification (ASC) ~~Topic~~Subtopic 450-20, “Loss Contingencies,” Trustmark will establish an accrued liability for litigation matters when those matters present loss contingencies that are both probable and reasonably estimable. At the present time, Management believes, based on the advice of legal counsel and Management’s evaluation, that a loss in any such proceeding is not probable and reasonably estimable. All matters will continue to be monitored for further developments that would make such loss contingency both probable and reasonably estimable. In view of the inherent difficulty of predicting the outcome of legal proceedings, Trustmark cannot predict the eventual outcomes of the currently pending matters or the timing of their ultimate resolution. Management currently believes, however, based upon the advice of legal counsel and Management’s evaluation and after taking into account its current insurance coverage, that the legal proceedings currently pending should not have a material adverse effect on Trustmark’s consolidated financial condition.

Trustmark’s common stock is listed on the ~~NASDAQ~~Nasdaq Stock Market and is traded under the symbol ~~TRMK. The table below represents, for each quarter~~“TRMK.”

Trustmark paid quarterly cash dividends to shareholders of ~~2016 and 2015, the high and low intra-day sales price~~$0.23 per share, or $0.92 per share annually, in 2019. As a component of ~~Trustmark’s~~return to common ~~stock and the~~shareholders, Trustmark intends to pay cash dividends when corporate financial performance and capital strength allow it to do so. All dividend payments must be approved and declared ~~per common share.~~

by the Board of Directors of Trustmark and are required to be in compliance with all applicable laws and regulations.

At January 31, ~~2017,~~2020, there were approximately ~~3,900~~3,435 registered shareholders of record and approximately ~~34,000~~21,264 beneficial account holders of shares in nominee name of Trustmark’s common stock. Other information required by this item can be found in Note 1819 - Shareholders’ Equity included in Part II. Item 8. - Financial Statements and Supplementary Data – of this report.

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 could be acquired through March 31, 2019. Trustmark repurchased approximately 1.2 million shares of its common stock valued at $36.9 million during the year ended December 31, 2019, compared to approximately 2.0 million shares of its common stock valued at $62.4 million repurchased during the year ended December 31, 2018. Under the 2016 program, 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, ~~2019.~~2020. The adoption of this new stock repurchase program followed the receipt of non-objection from the FRB. The shares may be purchased from time to time at prevailing market prices, through open market or privately negotiated transactions, depending on market conditions. Under this authority, Trustmark repurchased approximately 34601 thousand shares of its common stock valued at ~~approximately $750 thousand~~$19.7 million during the year ended December 31, ~~2016.~~2019.

Together, with the repurchases under the previous program, Trustmark purchased approximately 1.8 million shares of its common stock valued at $56.6 million during the year ended December 31, 2019.

On January 28, 2020, the Board of Directors of Trustmark authorized a new stock repurchase program, effective April 1, 2020, under which $100.0 million of Trustmark’s outstanding common stock may be acquired through December 31, 2021. The shares may be purchased from time to time at prevailing market prices, through open market or private transactions, depending on market conditions. There is no guarantee as to the number of shares that may be repurchased by Trustmark, and Trustmark may discontinue purchases under the program at any time at Management’s discretion.

The following graph compares Trustmark’s annual percentage change in cumulative total return on common shares over the past five years with the cumulative total return of companies comprising the ~~NASDAQ~~Nasdaq market value index and the Morningstar Banks – Regional – US index. The Morningstar Banks – Regional – US index is an industry index published by Morningstar and consists of 1,000 large, regional, diverse financial institutions serving the corporate, government and consumer needs of retail banking, investment banking, trust management, credit cards and mortgage banking in the United States. This presentation assumes that $100 was invested in shares of the relevant issuers on December 31, ~~2011,~~2014, and that dividends received were immediately invested in additional shares. The graph plots the value of the initial $100 investment at one-year intervals for the fiscal years shown.

Company	2011		2012		2013		2014		2015		2016		2014		2015		2016		2017		2018		2019
Trustmark		100.00		96.13		119.09		113.18		110.43		176.83		100.00		97.57		156.24		143.70		131.89		164.51
Morningstar Banks - Regional - US		100.00		118.79		164.82		177.71		186.29		252.37		100.00		93.77		120.37		142.21		125.41		152.82
NASDAQ		100.00		117.45		164.57		188.84		201.98		219.89
NASDAQ Composite-Total Return														100.00		106.96		116.45		150.96		146.67		200.49

The following unaudited consolidated financial data is derived from Trustmark’s audited financial statements as of and for the five years ended December 31, ~~2016~~2019 ($ in thousands, except per share data). The data should be read in conjunction with Part II. Item 7. - Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 8. – Financial Statements and Supplementary Data.

Years Ended December 31,

2016

2015

2014

2013

2012

Consolidated Statements of Income

Total interest income

$
412,080

$
412,225

$
426,882

$
414,346

$
371,659

Total interest expense

24,547

20,460

21,546

25,859

30,669

Net interest income

387,533

391,765

405,336

388,487

340,990

Provision for loan losses, LHFI

10,957

8,375

1,211

(13,421
)

6,766

Provision for loan losses, acquired loans

3,757

3,425

6,171

6,039

5,528

Noninterest income

173,943

173,149

173,142

173,859

175,189

Noninterest expense

407,298

401,662

409,005

415,731

344,502

Income before income taxes

139,464

151,452

162,091

153,997

159,383

Income taxes

31,053

35,414

38,529

36,937

42,100

Net Income

$
108,411

$
116,038

$
123,562

$
117,060

$
117,283

Revenues (1)

Total revenue

$
561,476

$
564,914

$
578,478

$
562,346

$
516,179

Per Share Data

Basic earnings per share

$
1.60

$
1.72

$
1.83

$
1.75

$
1.81

Diluted earnings per share

1.60

1.71

1.83

1.75

1.81

Cash dividends per share

0.92

0.92

0.92

0.92

0.92

Performance Ratios

Return on average equity

7.14
%

7.94
%

8.83
%

8.75
%

9.30
%
Return on average tangible equity

9.99
%

11.36
%

12.97
%

13.09
%

12.55
%
Return on average assets

0.84
%

0.95
%

1.03
%

1.02
%

1.20
%
Average equity/average assets

11.73
%

11.90
%

11.63
%

11.60
%

12.87
%
Net interest margin (fully taxable equivalent)

3.53
%

3.78
%

4.03
%

4.01
%

4.09
%
Dividend payout ratio

57.50
%

53.49
%

50.27
%

52.57
%

50.83
%

Credit Quality Ratios (2)

Net charge-offs/average loans

0.10
%

0.15
%

-0.03
%

-0.02
%

0.30
%
Provision for loan losses/average loans

0.14
%

0.12
%

0.02
%

-0.23
%

0.11
%
Nonperforming loans/total loans (incl LHFS*)

0.61
%

0.76
%

1.21
%

1.10
%

1.41
%
Nonperforming assets/total loans (incl LHFS*)
plus ORE**

1.38
%

1.81
%

2.57
%

2.84
%

2.71
%
Allowance for loan losses/total loans (excl LHFS*)

0.91
%

0.95
%

1.08
%

1.15
%

1.41
%

December 31,

2016

2015

2014

2013

2012

Consolidated Balance Sheets

Total assets

$
13,352,333

$
12,678,896

$
12,250,633

$
11,790,383

$
9,828,667

Securities

3,515,325

3,533,240

3,545,252

3,362,882

2,699,933

Total loans (incl LHFS* and acquired loans)

8,299,387

7,641,985

7,131,074

6,752,256

5,984,304

Deposits

10,056,012

9,588,230

9,698,358

9,859,902

7,896,517

Total shareholders' equity

1,520,208

1,473,057

1,419,940

1,354,953

1,287,369

Stock Performance

Market value - close

$
35.65

$
23.04

$
24.54

$
26.84

$
22.46

Book value

22.48

21.80

21.04

20.11

19.86

Tangible book value

16.76

15.98

15.13

13.95

15.10

Capital Ratios

Total equity/total assets

11.39
%

11.62
%

11.59
%

11.49
%

13.10
%
Tangible equity/tangible assets

8.74
%

8.79
%

8.62
%

8.26
%

10.28
%
Tangible equity/risk-weighted assets

11.39
%

11.68
%

12.17
%

11.88
%

14.56
%
Tier 1 leverage ratio

9.90
%

10.03
%

9.63
%

9.06
%

10.97
%
Tier 1 common risk-based capital ratio - BASEL I

—

—

12.75
%

12.21
%

14.63
%
Common equity tier 1 risk-based capital ratio - BASEL III

12.16
%

12.57
%

—

—

—

Tier 1 risk-based capital ratio

12.76
%

13.21
%

13.47
%

12.97
%

15.53
%
Total risk-based capital ratio

13.59
%

14.07
%

14.56
%

14.18
%

17.22
%

Years Ended December 31,	2019			2018			2017			2016			2015
Consolidated Statements of Income
Total interest income	$	510,492		$	485,612		$	449,795		$	412,080		$	412,225
Total interest expense		83,903			66,192			42,245			24,547			20,460
Net interest income		426,589			419,420			407,550			387,533			391,765
Provision for loan losses, LHFI		10,797			17,993			15,094			10,957			8,375
Provision for loan losses, acquired loans		42			(1,005	)		(7,395	)		3,757			3,425
Noninterest income		187,045			184,836			184,663			173,943			173,149
Noninterest expense		429,002			415,415			430,169			407,298			401,662
Income before income taxes		173,793			171,853			154,345			139,464			151,452
Income taxes		23,333			22,269			48,715			31,053			35,414
Net Income	$	150,460		$	149,584		$	105,630		$	108,411		$	116,038

Revenue (1)
Total revenue	$	613,634		$	604,256		$	592,213		$	561,476		$	564,914

Per Share Data
Basic earnings per share	$	2.33		$	2.22		$	1.56		$	1.60		$	1.72
Diluted earnings per share		2.32			2.21			1.56			1.60			1.71
Cash dividends per share		0.92			0.92			0.92			0.92			0.92

Performance Ratios
Return on average equity		9.28	%		9.43	%		6.77	%		7.14	%		7.94	%
Return on average tangible equity		12.45	%		12.86	%		9.39	%		9.99	%		11.36	%
Return on average assets		1.11	%		1.11	%		0.77	%		0.84	%		0.95	%
Average equity/average assets		12.02	%		11.78	%		11.38	%		11.73	%		11.90	%
Net interest margin (fully taxable equivalent)		3.62	%		3.54	%		3.48	%		3.53	%		3.78	%
Dividend payout ratio		39.48	%		41.44	%		58.97	%		57.50	%		53.49	%

Credit Quality Ratios (2)
Net charge-offs (recoveries)/average loans		0.06	%		0.19	%		0.11	%		0.10	%		0.15	%
Provision for loan losses/average loans		0.12	%		0.20	%		0.18	%		0.14	%		0.12	%
Nonperforming loans/total loans (incl LHFS)		0.56	%		0.69	%		0.77	%		0.61	%		0.76	%
Nonperforming assets/total loans (incl LHFS) plus other real estate		0.86	%		1.07	%		1.26	%		1.38	%		1.81	%
Allowance for loan losses/total loans (excl LHFS)		0.90	%		0.90	%		0.90	%		0.91	%		0.95	%

The following unaudited tables represent Trustmark’s summary of quarterly operations for the years ended December 31, ~~2016~~2019 and ~~2015~~2018 ($ in thousands, except per share data):

2016	1Q		2Q		3Q		4Q
2019									1Q		2Q		3Q			4Q
Interest income	$	100,598	$	102,331	$	103,786	$	105,365	$	125,491	$	130,136	$	130,228		$	124,637
Interest expense		5,858		5,954		6,222		6,513		20,683		22,412		21,762			19,046
Net interest income		94,740		96,377		97,564		98,852		104,808		107,724		108,466			105,591
Provision for loan losses, LHFI		2,243		2,596		4,284		1,834		1,611		2,486		3,039			3,661
Provision for loan losses, acquired loans		1,309		607		691		1,150		78		106		(140	)		(2	)
Noninterest income		43,276		44,227		44,716		41,724		41,491		49,639		48,337			47,578
Noninterest expense		98,944		110,179		97,908		100,267		106,021		106,101		106,853			110,027
Income before income taxes		35,520		27,222		39,397		37,325		38,589		48,670		47,051			39,483
Income taxes		8,517		5,719		8,415		8,402		5,250		6,530		6,016			5,537
Net income	$	27,003	$	21,503	$	30,982	$	28,923	$	33,339	$	42,140	$	41,035		$	33,946
Earnings per share
Basic	$	0.40	$	0.32	$	0.46	$	0.43	$	0.51	$	0.65	$	0.64		$	0.53
Diluted		0.40		0.32		0.46		0.43		0.51		0.65		0.64			0.53

2015	1Q		2Q		3Q		4Q
2018									1Q		2Q			3Q			4Q
Interest income	$	102,431	$	101,946	$	102,769	$	105,079	$	115,640	$	120,266		$	124,770		$	124,936
Interest expense		5,039		4,997		5,163		5,261		13,547		15,102			17,787			19,756
Net interest income		97,392		96,949		97,606		99,818		102,093		105,164			106,983			105,180
Provision for loan losses, LHFI		1,785		1,033		2,514		3,043		3,961		3,167			8,673			2,192
Provision for loan losses, acquired loans		347		825		1,256		997		150		(441	)		(467	)		(247	)
Noninterest income		42,363		45,543		45,973		39,270		46,793		47,391			47,093			43,559
Noninterest expense		99,216		100,266		103,560		98,620		102,465		103,800			105,223			103,927
Income before income taxes		38,407		40,368		36,249		36,428		42,310		46,029			40,647			42,867
Income taxes		9,259		9,766		7,819		8,570		5,480		6,216			4,394			6,179
Net income	$	29,148	$	30,602	$	28,430	$	27,858	$	36,830	$	39,813		$	36,253		$	36,688
Earnings per share
Basic	$	0.43	$	0.45	$	0.42	$	0.41	$	0.54	$	0.59		$	0.54		$	0.55
Diluted		0.43		0.45		0.42		0.41		0.54		0.59			0.54			0.55

The following provides a narrative discussion and analysis of Trustmark’s financial condition and results of operations. This discussion should be read in conjunction with the consolidated financial statements and the supplemental financial data included in Part II. Item 8. – Financial Statements and Supplementary Data – of this report. Discussion and analysis of Trustmark’s financial condition and results of operations for the years ended December 31, 2018 and 2017 are included in the respective sections within Part II. Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations of Trustmark’s Annual Report filed on Form 10-K for the year ended December 31, 2018.

During 2019, Trustmark ~~continued to achieve~~remained focused on its strategic initiatives of profitably increasing revenue across its financial services businesses, optimizing its balance sheet, deploying capital through stock repurchases and maintaining disciplined expense management. Trustmark achieved solid financial results with total revenue of ~~$140.6~~$153.2 million and ~~$561.5~~$613.6 million for the three months and year ended December 31, ~~2016,~~2019, respectively. Trustmark continued to maintain and expand customer relationships as reflected by growth ~~across all five market regions~~ in the LHFI portfolio ~~which increased $352.0~~of $499.8 million, or ~~4.7%~~5.7%, during the ~~fourth quarter of 2016 and $759.8 million, or 10.7%, during~~ year ended December 31, ~~2016.~~2019. Credit quality remained strong and continued to be an important contributor to Trustmark’s financial success. ~~During the second quarter of 2016,~~ Trustmark completed a voluntary early retirement program (ERP) as a proactive measure to manage noninterest expense. The ERP resulted in non-routine expenses of $9.8 million included in noninterest expense ($9.6 million included in salaries and employee benefits expense and $213 thousand included in other expense) during 2016. As a result of the ERP, Trustmark realized cost savings in salaries and employee benefits expense of $2.1 million during the fourth quarter of 2016 and $4.4 million during the second half of 2016. On July 26, 2016, the Board of Directors of Trustmark authorized the termination of the Trustmark Capital Accumulation Plan (the Plan), a noncontributory tax-qualified defined benefit pension plan, effective December 31, 2016. During the fourth quarter and second half of 2016, Trustmark incurred non-routine pension expense of $664 thousand and $1.3 million, respectively, as a result of the de-risking investment strategy for the plan assets implemented in anticipation of the Plan termination. Trustmark reported net income of $28.9 million, or diluted earnings per share (EPS) of $0.43, and $108.4 million, or diluted EPS of $1.60, for the three months and year ended December 31, 2016, respectively. Trustmark isremains committed to supporting investments to ~~support~~promote profitable revenue growth, ~~as well as~~ reengineering ~~and efficiency opportunities~~processes to enhance ~~shareholder value.~~operational efficiency, realigning delivery channels to support changing customer preferences and managing the franchise for the long-term. Trustmark’s capital position remained solid, reflecting the consistent profitability of its diversified financial services businesses. ~~Trustmark’s~~The Board of Directors of Trustmark declared a quarterly cash dividend of $0.23 per share. The dividend is payable March 15, ~~2017,~~2020, to shareholders of record on March 1, ~~2017.~~2020.

Trustmark reported net income of ~~$28.9~~$33.9 million, or basic and diluted earnings per share (EPS) of $0.53, for the fourth quarter of 2019, compared to $36.7 million, or basic and diluted EPS of ~~$0.43,~~$0.55, in the fourth quarter of ~~2016, compared to $27.9 million, or basic and diluted EPS of $0.41, in the fourth quarter of 2015.~~2018. The ~~increase~~decrease in net income when the fourth quarter of ~~2016~~2019 is compared to the same time period in ~~2015~~2018 was principally due to increases in total noninterest expense of $6.1 million, or 5.9%, and the provision for loan losses, LHFI of $1.5 million, or 67.0%, partially offset by an increase in total ~~revenue,~~noninterest income of $4.0 million, or 9.2%. Trustmark’s reported performance during the quarter ended December 31, 2019, produced a return on average tangible equity of 10.85%, a return on average assets of 1.00%, an average equity to average assets ratio of 12.30% and a dividend payout ratio of 43.40%, compared to a return on average tangible equity of 12.41%, a return on average assets of 1.09%, an average equity to average assets ratio of 11.95% and a dividend payout ratio of 41.82% during the quarter ended December 31, 2018.

Revenue, which is defined as net interest income plus noninterest income, and a decline in the provision for loans losses, LHFI, partially offset by an increase in noninterest expense. Trustmark’s performance during the quarter ended December 31, 2016, produced a return on average tangible equity of 10.41%, a return on average assets of 0.87%, an average equity to average assets ratio of 11.63% and a dividend payout ratio of 53.5%, compared to a return on average tangible equity of 10.61%, a return on average assets of 0.88%, an average equity to average assets ratio of 11.83% and a dividend payout ratio of 56.1% during the quarter ended December 31, 2015.

~~Revenue~~ totaled ~~$140.6~~$153.2 million for the quarter ended December 31, ~~2016~~2019 compared to ~~$139.1~~$148.7 million for the quarter ended December 31, ~~2015,~~2018, an increase of ~~$1.5~~$4.4 million, or ~~1.1%~~3.0%. The increase in total revenue for the fourth quarter of ~~2016~~2019 was principally ~~the~~due to an increase in total noninterest income primarily as a result of increases in ~~interest~~mortgage banking, net and ~~fees on LHFS and LHFI and~~other noninterest income, ~~partially offset by declines in interest and fees on acquired loans and interest on taxable securities and an increase in interest expense.~~net.

~~Interest and fees on LHFS and LHFI~~Mortgage banking, net increased ~~$6.5~~$2.2 million, or ~~9.2%~~38.5%, when the fourth quarter of ~~2016~~2019 is compared to the same time period in ~~2015,~~2018, primarily due to an increase ~~in the LHFI portfolio. LHFI totaled $7.851 billion at December 31, 2016, an increase~~gain of ~~$759.8 million,~~sales or 10.7%, when compared to December 31, 2015, as a result of net growth across all of Trustmark’s market regions and all categories in its LHFI portfolio, with the exception of other loans. Noninterest income for the fourth quarter of 2016 increased $2.5 million, or 6.2%, when compared to the same time period in 2015, primarily due to increases in other income, net and mortgage banking, net. Other income, net increased $2.6 million when the fourth quarter of 2016 is compared to the same time period in 2015, principally due to an increase in other miscellaneous income and the reduction of amortization related to the FDIC indemnification asset and the tax credit partnerships. Mortgage banking, net increased $1.1 million, or 26.6%, when the fourth quarter of 2016 is compared to the same time period in 2015, principally due to a decrease in the negative net hedge ineffectiveness and an increase in the gain on sales of loans, net partially offset by an increase in the negative net hedge ineffectiveness. The net negative hedge ineffectiveness was primarily due to market volatility and adjustments to asset valuation ~~adjustment~~assumptions during the fourth quarter of 2019. See the section captioned “Derivatives” for ~~LHFS, interest rate lock commitments and forward sales contracts. Interest and fees on acquired loans decreased $3.6~~further discussion of the MSR hedge ineffectiveness. Other noninterest income, net increased $1.5 million, or ~~30.4%~~81.3%, when the fourth quarter of ~~2016~~2019 is compared to the same time period in 2015, in accordance with prior expectations. This was primarily due to a $1.6 million decline in recoveries from the settlement of debt and a $1.5 million decline in accretion income as acquired loans have continued to pay down as anticipated. Interest on taxable securities declined $2.4 million, or 11.2%, when the fourth quarter of 2016 is compared to the same time period in 2015, principally due to declines in the yield maintenance payments on prepaid mortgage-backed securities and interest income on U.S. government agency securities as a result of calls and maturities during 2016 and an

increase in premium amortization on mortgage-back securities as a result of pay-downs of the loans underlying these securities. Interest expense for the three months ended December 31, 2016 increased $1.3 million, or 23.8%, when compared to the same time period in 2015 principally due to increased interest expense for advances from the Federal Home Loan Bank (FHLB) of Dallas and federal funds purchased as a result of higher balances of and increased interest rates for these funding sources.

~~Noninterest expense for the fourth quarter of 2016 increased $1.6 million, or 1.7%, when compared to the same time period in 2015,~~2018, primarily due to increases in other ~~real estate expense, services~~miscellaneous income and ~~fees~~gains on sales of premises and salaries and employee benefits expense, partially offset by decreases in other expense. Other real estate expense increased $1.0 million when the fourth quarter of 2016 is compared to the same time period in 2015, principally due toequipment, net as well as a decline in ~~the net gain on sales~~amortization of other real estate. Services and fees increased $1.0 million, or 7.5%, when the fourth quarter of 2016 is compared to the same time period in 2015, principally due to increases in data processing expenses related to software, advertising and other outside services and fees, partially offset by declines in legal and postage expenses. Salaries and employee benefit expense increased $802 thousand, or 1.4%, when the fourth quarter of 2016 is compared to the same time period in 2015, primarily due to non-routine transaction expenses related to the ERP and Plan termination, an increase in commissions expense due to improvements in mortgage loan production and an increase in general incentive expense, partially offset by cost savings resulting from the ERP. Other expense decreased $1.4 million, or 10.5%, when the fourth quarter of 2016 is compared to the same time period in 2015, principally due to declines in franchise taxes and loan expenses.tax credit partnerships.

Trustmark’s provision for loan losses, LHFI for the three months ended December 31, ~~2016~~2019 totaled ~~$1.8~~$3.7 million, ~~a decrease~~an increase of ~~$1.2~~$1.5 million, or ~~39.7%~~67.0%, when compared to a provision for loan losses, LHFI of ~~$3.0~~$2.2 million for the three months ended December 31, 2015. The decrease in the provision for loan losses, LHFI for the fourth quarter of 2016 when compared to the same time period in 2015 was primarily due to the additional provision expense recorded during the fourth quarter of 2015 as a result of revisions to the allowance for loan loss methodology for LHFI and a decline in the amount of specific reserve required for impaired LHFI, primarily in the Mississippi market region, during the fourth quarter of 2016.2018. Please see the section captioned “Provision for Loan Losses, LHFI,” for additional information regarding the provision for loan losses, LHFI.

The ~~provision for loan losses, acquired loans for~~increase in noninterest expense when the ~~three months ended December 31, 2016 totaled $1.2 million, an increase~~fourth quarter of ~~$153 thousand, or 15.3%, when~~2019 is compared to the same time period in 2015. Please see the section captioned “Provision for Loan Losses, Acquired Loans,” for additional information regarding the provision for loan losses, acquired loans. In total, the provision for loan losses, net2018 was ~~$3.0~~principally due to increases in salaries and employee benefits, services and fees and other real estate expense, net. Salaries and employee benefits increased $3.6 million ~~for~~or 6.1% when the fourth quarter of ~~2016, a decrease of $1.1 million, or 26.1%, when~~2019 is compared to the ~~same time period~~fourth quarter of 2018, primarily due to higher commission expense related to improvements in ~~2015.~~mortgage originations and the insurance lines of business and an increase in salaries expense primarily due to general merit increases. Services and fees increased $1.6 million, or 8.9%, when the fourth quarter of 2019 is compared to the fourth quarter of 2018, principally due to increases in data processing charges related to software, professional

services and fees and advertising expense. Other real estate expense, net increased $1.4 million principally due to an increase in write-downs of other real estate properties.

For the year ended December 31, ~~2016,~~2019, Trustmark reported net income of ~~$108.4~~$150.5 million, or basic and diluted EPS of ~~$1.60,~~$2.33 and $2.32, respectively, compared to ~~$116.0~~$149.6 million, or basic and diluted EPS of ~~$1.72~~$2.22 and ~~$1.71,~~$2.21, respectively, for the year ended December 31, ~~2015~~2018 and ~~$123.6~~$105.6 million, or basic and diluted EPS of ~~$1.83,~~$1.56, for the year ended December 31, ~~2014.~~2017. The ~~decline~~increase in net income when ~~2016~~2019 is compared to ~~2015~~2018 was principally ~~the result of~~due to an increase in ~~noninterest expense, primarily due to the non-routine transaction expense resulting from the ERP~~net interest income of $7.2 million, or 1.7%, and ~~Plan termination,~~ a ~~decline in total revenue as discussed in the following paragraph and an increase~~decrease in the provision for loan losses, ~~LHFI.~~LHFI, of $7.2 million, or 40.0%, partially offset by an increase in total noninterest expense of $13.6 million, or 3.3%. Trustmark’s reported performance for the year ended December 31, ~~2016,~~2019, produced a return on average tangible equity of ~~9.99%~~12.45%, a return on average assets of ~~0.84%~~1.11% and a dividend payout ratio of ~~57.5%~~39.48%, compared to a return on average tangible equity of ~~11.36%~~12.86%, a return on average assets of ~~0.95%~~1.11% and a dividend payout ratio of ~~53.5%~~41.44% for the year ended December 31, ~~2015~~2018 and a return on average tangible equity of ~~12.97%~~9.39%, a return on average assets of ~~1.03%~~0.77% and a dividend payout ratio of ~~50.3%~~58.97% for the year ended December 31, ~~2014.~~2017. Trustmark’s average equity to average assets ratio was ~~11.73%~~12.02%, ~~11.90%~~11.78% and ~~11.63%~~11.38% for the years ended December 31, ~~2016, 2015~~2019, 2018 and ~~2014,~~2017, respectively.

Revenue totaled ~~$561.5~~$613.6 million for the year ended December 31, ~~2016,~~2019, compared to ~~$564.9~~$604.3 million and ~~$578.5~~$592.2 million for the years ended December 31, ~~2015~~2018 and ~~2014,~~2017, respectively. ~~Revenue~~The increase in total revenue for ~~2016 decreased $3.4 million, or 0.6%,~~2019 compared to ~~2015~~2018 was principally ~~due to declines in interest and fees on acquired loans, interest on taxable securities, service charges on deposit accounts and mortgage banking, net and~~the result of an increase ~~in other interest expense, which were partially offset by increases~~ in interest and fees on LHFS and LHFI and declines in other ~~income, net.~~interest expense and interest expense on federal funds purchased and securities sold under repurchase agreements (repurchase agreements), partially offset by an increase in interest expense on deposits and decreases in interest on total securities and interest and fees on acquired loans.

Interest and fees on ~~acquired loans decreased $21.0~~LHFS and LHFI for 2019 increased $44.2 million, or ~~41.1%~~11.2%, ~~when 2016 is~~ compared to 2015, primarily due to a $12.1 million decline in accretion income and a $7.8 million decline in recoveries from the settlement of debt as acquired loans have continued to pay down as anticipated. Interest on taxable securities declined $3.1 million, or 3.9%, when 2016 is compared to 2015, principally due to declines in the yield maintenance payments on prepaid mortgage-backed securities and interest income on U.S. government agency securities as a result of calls and maturities during 2016. Service charges on deposit accounts declined $2.1 million, or 4.5%, when 2016 is compared to 2015, primarily due to a decrease in the number of customer transactions resulting in a non-sufficient funds (NSF) or overdraft charge for consumer demand deposit accounts. Mortgage banking, net declined $2.0 million, or 6.5%, when 2016 is compared to 2015, principally due to a net negative hedge ineffectiveness of $2.9 million in 2016 compared to a net positive hedge ineffectiveness of $1.9 million in 2015 partially offset by a $2.6 million increase in gain on sales of loans, net and a $1.1 million increase in mortgage servicing income, net. Other interest expense increased $3.0 million, or 42.8%, when 2016 is compared to 2015,2018, primarily due to an increase in interest ~~expense~~earned on FHLB advances with the FHLB of Dallas, which Trustmark uses as a liquidity source. Interest and fees on LHFS and LHFI increased $25.2 million, or 9.2%, when 2016 is compared to 2015, primarily due to the $759.8 million increase in the LHFI ~~portfolio. Other income, net increased $6.1 million when 2016 is compared~~

to 2015, primarily reflecting a decrease in the net reduction of the FDIC indemnification asset related to the acquired covered loans and covered other real estate, a net gain on the sale of premises and equipmentportfolio as a result of the ~~sale of a former bank branch during 2016~~$499.8 million, or 5.7%, year-over-year increase in the LHFI portfolio and higher interest rates. Other interest expense declined $4.2 million, or 55.7%, when 2019 is compared to 2018, principally due to a ~~net loss~~decrease in interest expense on ~~the sale of premises~~FHLB advances. Interest expense on federal funds purchased and equipment recorded during 2015 on the sale of a former bank branch acquired in the BancTrust merger and an increase in other miscellaneous income related to various vendor contract bonuses and settlements, a one-time arrangement fee and merchant service fees received during 2016.

~~Noninterest expense for 2016 increased $5.6~~repurchase agreements declined $3.4 million, or ~~1.4%~~70.3%, when 2019 is compared to 2018, primarily due to Trustmark’s reduction of its funding from external sources at the end of 2018 as well as the FRB’s reduction of the target rate for federal funds during the second half of 2019. See the section captioned “Borrowings” for further discussion on funding from external sources. Interest expense on deposits for 2019 increased $25.2 million, or 46.8%, when compared to ~~2015~~2018, principally due to increases in ~~salaries and employee benefits expense and services and fees, partially offset by declines~~average balances of interest-bearing demand deposits as well as higher interest rates in ~~other real estate expense and other expense. Salaries and employee benefits expense increased $9.4~~general. Interest on total securities for 2019 declined $12.0 million, or ~~4.1%~~17.5%, ~~when 2016 is~~ compared to ~~2015,~~2018, principally due to a $381.0 million, or 14.0%, decline in total securities primarily due to ~~non-routine transaction expenses~~the run-off of maturing investment securities. Interest and fees on acquired loans for 2019 decreased $8.7 million, or 51.1%, compared to 2018, primarily due to declines in accretion income and loan recovery from settlement of debt related to loans acquired in all four acquisitions and deferred fee amortization and other interest and fees related to loans acquired in the ~~ERP and Plan termination and higher commissions expense~~Reliance merger, as a result of ~~improvements in mortgage loan production, partially offset by cost savings realized related~~paydowns/pay-offs of these loans as well as acquired loans transferred to the ERP. Services and fees expense increased $1.2 million, or 2.0%, when 2016 is compared to 2015, primarily to due to increases in date processing expenses related to software, other outside services and fees and advertising, partially offset by declines in legal and communications expenses. Other real estate expense for 2016 declined $4.3 million, or 88.0%, compared to 2015, principally due to an increase in the net gain on sales of other real estate and a decrease in other real estate carrying costs. Other expense declined $1.2 million, or 2.4%, when 2016 is compared to 2015, primarily due to decreases in franchise taxes, the amortization of the non-taxable core deposit intangible asset and loan expenses, partially offset by increases in customer related fraud losses and a property valuation adjustment recordedLHFI during ~~2016 on assets held for sale.~~2018.

Trustmark’s provision for loan losses, LHFI, for ~~2016~~2019 totaled ~~$11.0~~$10.8 million, ~~an increase~~a decrease of ~~$2.6~~$7.2 million, or ~~30.8%~~40.0%, when compared to a provision for loan losses, LHFI of ~~$8.4~~$18.0 million for 2015. The increase in the provision for loan losses, LHFI when 2016 is compared to 2015 primarily reflects the increase in the amount of required reserves for LHFI, partially offset by a decrease in net charge-offs and the additional provision expense recorded during 2015 as a result of revisions to the allowance for loan loss methodology.2018. Please see the section captioned “Provision for Loan Losses, LHFI,” for additional information regarding the provision for loan losses, LHFI.

The ~~provision~~increase in noninterest expense during 2019 was principally due to increases in salaries and employee benefits and services and fees, partially offset by a decline in FDIC assessment expense. Salaries and employee benefits increased $9.7 million, or 4.1%, when 2019 is compared to 2018, primarily due to increases in commission expense related to improvements in mortgage originations and the insurance lines of business, salaries expense primarily due to general merit increases, insurance expense related to Trustmark’s health plans and stock compensation. Services and fees for ~~loan losses, acquired loans for 2016~~2019 increased $6.9 million, or 10.4%, compared to 2018 primarily due to increases in data processing charges related to software, professional services and fees and advertising expense. FDIC assessment expense declined $3.0 million, or 31.7%, when 2019 is compared to 2018, principally due to the lower regular assessment base and elimination of the additional surcharge of 4.5 cents per $100 of assessment base during the third quarter of 2018.

LHFI totaled ~~$3.8 million,~~$9.336 billion at December 31, 2019, an increase of ~~$332 thousand,~~$499.8 million, or ~~9.7%~~5.7%, ~~when~~ compared to ~~2015. Please see~~ the ~~section captioned “Provision for Loan Losses, Acquired Loans,” for additional information regarding the provision for loan losses, acquired loans. In total, the provision for loan losses,~~balance at December 31, 2018. The increase in LHFI during 2019 was principally due to net ~~was $14.7 million for 2016, an increase of $2.9 million, or 24.7%, when compared to 2015.~~ increases in loans secured by real estate in all five market regions partially offset by declines in commercial and industrial loans in Trustmark’s Mississippi and Tennessee market regions.

At December 31, ~~2016,~~2019, nonperforming assets, excluding acquired loans, ~~and covered other real estate,~~ totaled ~~$111.3~~$82.5 million, a decrease of ~~$21.2~~$13.8 million, or ~~16.0%~~14.4%, compared to December 31, ~~2015~~2018 due to declines in both nonaccrual LHFI and other real ~~estate, excluding covered other real~~ estate. Total nonaccrual LHFI were ~~$49.2~~$53.2 million at December 31, ~~2016,~~2019, representing a decrease of ~~$6.1~~$8.4 million, or ~~11.0%~~13.6%, relative to December 31, ~~2015~~2018 principally due to ~~substandard credits that were paid off or foreclosed~~a reduction and charge-off of one large commercial nonaccrual credit in the Mississippi market region ~~returned to accrual status~~and one large commercial nonaccrual credit in the ~~Florida~~Texas market region, for which reserves were previously established, as well as foreclosure of one large nonaccrual healthcare credit and ~~charged off~~reduction of one large commercial nonaccrual credit in the Mississippi ~~and Texas~~ market, ~~regions partially~~which were largely offset by ~~LHFI migrating to~~a large commercial nonaccrual ~~status~~credit in the Mississippi ~~Florida and Tennessee~~ market ~~regions~~region that was placed on nonaccrual during ~~2016.~~2019. The

percentage of loans, excluding acquired loans, that are 30 days or more past due and nonaccrual LHFI decreased in ~~2016~~2019 to ~~1.33%~~1.28% compared to ~~1.44%~~1.56% in ~~2015~~2018 and ~~2.12%~~1.53% in ~~2014.~~2017. Other real estate ~~excluding covered other real estate,~~ declined ~~$15.1~~$5.4 million, or ~~19.6%~~15.6%, during ~~2016 primarily due to~~2019 as a result of properties sold ~~as well as~~and write-downs ofon foreclosed properties across all five market regions, partially offset by new properties foreclosed in Trustmark’s ~~Florida,~~ Mississippi, Alabama, and Tennessee market ~~regions partially offset by properties foreclosed in these four market~~ regions.

LHFI totaled $7.851 billion at December 31, 2016, an increase of $759.8 million, or 10.7%, compared to December 31, 2015. The increase in LHFI during 2016 represented net growth across all five of Trustmark’s market regions, primarily in loans secured by real estate, commercial and industrial loans and state and other political subdivision loans. For additional information regarding changes in LHFI and comparative balances by loan category, see the section captioned “LHFI.”

While both classified and criticized LHFI balances remain at low levels and continue to reflect strong credit quality, both classified and criticized LHFI increased during the second half of 2016. As of December 31, 2016, classified LHFI balances increased $68.2 million, or 43.2%, while criticized LHFI balances increased $72.2 million, or 39.6%, when compared to balances at December 31, 2015. The increase in the volume of classified and criticized LHFI was primarily a result of downgrades to several commercial and industrial credits in the Texas and Mississippi market regions during the second half of 2016. The downgrades were primarily energy-related credits identified during Trustmark’s ongoing quarterly assessment of its energy portfolio and have been reserved for appropriately.

Management has continued its practice of maintaining excess funding capacity to provide Trustmark with adequate liquidity for its ongoing operations. In this regard, Trustmark benefits from its strong deposit base, its highly liquid investment portfolio and its access to funding from a variety of external funding sources such as upstream federal funds lines, FHLB advances and, on a limited basis, brokered deposits. See the section captioned “Liquidity” for further discussion of the components of Trustmark’s excess funding capacity.

Total deposits were ~~$10.056~~$11.246 billion at December 31, ~~2016, an increase~~2019, a decrease of ~~$467.8~~$118.9 million, or ~~4.9%~~1.0% compared to December 31, ~~2015.~~2018, as a result of declines in both noninterest-bearing and interest-bearing deposits. During ~~2016,~~2019, noninterest-bearing deposits decreased ~~$25.5~~$46.4 million, or ~~0.8%, while interest-bearing deposits increased $493.2 million,~~

~~or 7.5%~~1.6%, primarily due to ~~growth~~a decline in ~~interest-bearing~~public demand deposit accounts ~~predominantly~~partially offset by growth in commercial and consumer demand deposit accounts. Interest-bearing deposits decreased $72.5 million, or 0.9%, principally due to declines in public interest checking accounts and ~~savings accounts partially~~all categories of time deposits, which were largely offset by ~~declines~~growth in ~~certificates of deposits.~~consumer money market deposit accounts and commercial interest checking accounts.

Trustmark uses short-term borrowings to fund growth of earning assets in excess of deposits growth. ~~Other short-term borrowings~~Federal funds purchased and repurchase agreements totaled ~~$1.310 billion at December 31, 2016, an increase of $455.9 million, or 53.4%, when compared with $853.7~~$256.0 million at December 31, ~~2015 as a result~~2019, an increase of ~~the increase in earning assets, principally LHFI, out-pacing the growth in deposits. The increase in other short-term borrowings was principally~~$205.5 million when compared to December 31, 2018, primarily due to a $350.0 million increase in outstanding short-term FHLB advances with the FHLB of Dallas, primarily as a result of a $500.0 million outstanding FHLB advance which was reclassified from long-term to short-term during the fourth quarter of 2016, and a $102.4 millionan increase in upstream federal funds purchased principally as ~~Trustmark continues to utilize these attractively priced funding sources to fund the difference between loan and deposit growth.~~

Long-term FHLB advances totaled $251.0 million at December 31, 2016, a decrease of $250.1 million, or 49.9%, when compared to $501.2 million at December 31, 2015. The decrease in long-term FHLB advances was primarily a result of the ~~$500.0 million long-term FHLB advance obtained~~decline in December 2015 being reclassified to short-term during the fourth quarter of 2016, as noted above. During the second quarter of 2016, Trustmark obtained a $250.0 million long-term FHLB advance from the FHLB of Dallas. Similar to the long-term advance obtained in December 2015, the advance has a variable rate and a two-year maturity. Trustmark chose to utilize FHLB advances with the FHLB of Dallas as a funding source for loan growth due to the advantageous rates available in comparison to other sources of funding.public deposits.

Trustmark’s consolidated financial statements are prepared in accordance with GAAP and follow general practices within the financial services industry. Application of these accounting principles requires Management to make estimates, assumptions and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates, assumptions and judgments are based on information available as of the date of the consolidated financial statements; accordingly, as this information changes, actual financial results could differ from those estimates.

Certain policies inherently have a greater reliance on the use of estimates, assumptions and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. These critical accounting policies are described below.

For additional information regarding the accounting policies discussed below, please see Note 1 – Significant Accounting Policies set forth in Part II. Item 8. – Financial Statements and Supplementary Data – of this report.

The allowance for loan losses, LHFI is established through provisions for estimated loan losses charged against net income. The allowance reflects Management’s best estimate of the probable loan losses related to specifically identified LHFI as well as probable incurred loan losses in the remaining loan portfolio and requires considerable judgment. The allowance is based upon Management’s current judgments ~~and~~about the credit quality of the loan portfolio, including all internal and external factors that impact loan collectibility. Accordingly, the allowance is based upon both past events and current economic conditions.

Trustmark’s allowance for loan losses, LHFI consists of three components: (i) a historical valuation allowance determined in accordance with FASB ASC Topic 450, “Contingencies,” based on historical loan loss experience for LHFI with similar characteristics and trends, (ii) a specific valuation allowance determined in accordance with FASB ASC Topic 310 based on probable losses on specific LHFI and (iii) a qualitative risk valuation allowance determined in accordance with FASB ASC Topic 450 based on general economic conditions and other specific internal and external qualitative risk factors. Each of these components calls for estimates, assumptions and judgments, in particular, the qualitative risk valuation allowance requires significant judgment by Management in developing their estimate. Trustmark’s independent auditor, Crowe LLP, identified Management’s estimate of the qualitative risk valuation allowance as a critical audit matter, please see Report of Independent Registered Public Accounting Firm included in Part II. Item 8. – Financial Statements and Supplementary Data of this report.

A significant shift in one or more factors included in the allowance for loan loss methodology could result in a material change to Trustmark’s allowance for loan losses, LHFI. For example, if there were changes in one or more of the estimates, assumptions or judgments used as they relate to a portfolio of commercial LHFI, Trustmark could find that it needs to increase the level of future provisions for possible loan losses with respect to that portfolio. Additionally, credit deterioration of specific borrowers due to changes in these factors could cause the internally assigned risk rating to shift to a more severe category. As a result, Trustmark could

find that it needs to increase the level of future provisions for possible loan losses with respect to these LHFI. Given the nature of many of these estimates, assumptions and judgments, it is not possible to provide meaningful estimates of the impact of any such potential shifts.

For a complete description of Trustmark’s allowance for loan loss methodology, please see Note 5 – LHFI and Allowance for Loan Losses, LHFI included in Part II. Item 8. – Financial Statements and Supplementary Data – of this report.

Acquired loans are recorded at their estimated fair value as of the acquisition date. The fair value of acquired loans is determined using a discounted cash flow model based on assumptions regarding the amount and timing of principal and interest payments, estimated prepayments, estimated default rates, estimated loss severity in the event of defaults, and current market rates. Estimated

~~credit losses are included in the determination of fair value; therefore, an allowance for loan losses is not recorded on the acquisition date.~~

For acquired impaired loans, Trustmark (a) calculates the contractual amount and timing of undiscounted principal and interest payments (the undiscounted contractual cash flows) and (b) estimates the amount and timing of undiscounted expected principal and interest payments (the undiscounted expected cash flows). Under FASB ASC Topic 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality,” the difference between the undiscounted contractual cash flows and the undiscounted expected cash flows is the nonaccretable difference. The nonaccretable difference represents an estimate of the loss exposure of principal and interest related to the acquired impaired loan portfolio, and such amount is subject to change over time based on the performance of such loans. The excess of undiscounted expected cash flows at acquisition over the initial fair value of acquired impaired loans is referred to as the “accretable yield” and is recorded as interest income over the estimated life of the loans using the effective yield method if the timing and amount of the future cash flows is reasonably estimable. Under the effective yield method, the accretable yield is recorded as an accretion of interest income over the life of the loan.

As required by FASB ASC Topic 310-30, Trustmark periodically re-estimates the expected cash flows to be collected over the life of the acquired impaired loans. If, based on current information and events, it is probable that Trustmark will be unable to collect all cash flows expected at acquisition plus additional cash flows expected to be collected arising from changes in estimate after acquisition, the acquired loans are considered impaired. The decrease in the expected cash flows reduces the carrying value of the acquired impaired loans as well as the accretable yield and results in a charge-off through the allowance for loan losses, acquired loans or the establishment of an allowance for loan losses, acquired loans with a charge to income through the provision for loan losses, acquired loans. If, based on current information and events, it is probable that there is a significant increase in the cash flows previously expected to be collected or if actual cash flows are significantly greater than cash flows previously expected, Trustmark will reduce any remaining allowance for loan losses, acquired loans established on the acquired impaired loans for the increase in the present value of cash flows expected to be collected. The increase in the expected cash flows for the acquired impaired loans over those originally estimated at acquisition increases the carrying value of the acquired impaired loans as well as the accretable yield.

Trustmark accounts for amounts receivable under a loss-share agreement as an indemnification asset in accordance with FASB ASC Topic 805, “Business Combinations.” A FDIC indemnification asset is initially recorded at fair value, based on the discounted value of expected future cash flows under the loss-share agreement. The difference between the present value at the acquisition date and the undiscounted cash flows Trustmark expects to collect from the FDIC is accreted into noninterest income over the life of the FDIC indemnification asset.

The FDIC indemnification asset is revalued concurrent with the loan re-estimation and adjusted for any changes in expected cash flows based on recent performance and expectations for future performance of covered loans and covered other real estate. These adjustments are measured on the same basis as the related covered loans and covered other real estate. Increases in the cash flows of the covered loans and covered other real estate over those expected reduce the FDIC indemnification asset, and decreases in the cash flows of the covered loans and covered other real estate under those expected increase the FDIC indemnification asset. Increases and decreases to the FDIC indemnification asset are recorded as adjustments to noninterest income.

Trustmark recognizes as assets the rights to service mortgage loans based on the estimated fair value of the MSR when loans are sold and the associated servicing rights are retained. Trustmark has elected to account for the MSR at fair value.

The fair value of the MSR is determined using a valuation model administered by a third party that calculates the present value of estimated future net servicing income. The model incorporates assumptions that market participants use in estimating future net servicing income, including estimates of prepayment speeds, discount rate, default rates, cost to service (including delinquency and foreclosure costs), escrow account earnings, contractual servicing fee income and other ancillary income such as late fees. Management reviews all significant assumptions quarterly. Mortgage loan prepayment speeds, a key assumption in the model, is the annual rate at which borrowers are forecasted to repay their mortgage loan principal. The discount rate used to determine the present value of estimated future net servicing income, another key assumption in the model, is an estimate of the required rate of return investors in the market would require for an asset with similar risk. Both assumptions can, and generally will, change as market conditions and interest rates change.

continue to be significant. Therefore, estimating prepayment speed and/or discount rates within ranges that market participants would use in determining the fair value of the MSR requires significant management judgment.

At December 31, ~~2016,~~2019, the MSR fair value was ~~approximately $80.2~~$79.4 million. The impact on the MSR fair value of either a 10% adverse change in prepayment speeds or a 100 basis point increase in discount rates at December 31, ~~2016,~~2019, would be a decline in fair value of approximately ~~$2.5~~$3.5 million and ~~$2.9~~$2.7 million, respectively. Changes of equal magnitude in the opposite direction would produce similar increases in fair value in the respective amounts.

Trustmark records all assets and liabilities acquired in purchase acquisitions, including goodwill and other intangible assets, at fair value as required by FASB ASC Topic 805. The carrying amount of goodwill at December 31, ~~2016~~2019 totaled ~~$321.1~~$334.6 million for the General Banking ~~Division~~Segment and $45.0 million for the Insurance ~~Division,~~Segment, a consolidated total of ~~$366.2~~$379.6 million. Trustmark’s goodwill is not amortized but is subject to annual tests for impairment or more often if events or circumstances indicate it may be impaired. Trustmark’s identifiable intangible assets, which totaled ~~$20.7~~$7.3 million at December 31, ~~2016,~~2019, are amortized over their estimated useful lives and are subject to impairment tests if events or circumstances indicate a possible inability to realize the carrying amount.

The initial recording and subsequent impairment testing of goodwill requires subjective judgments concerning estimates of the fair value of the acquired assets. The goodwill impairment test is performed in two phases. The first step compares the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired; however, if the carrying amount of the reporting unit exceeds its fair value, an additional procedure must be performed. That additional procedure, or a second step, compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. An impairment loss would be recorded to the extent that the carrying amount of goodwill exceeds its implied fair value. Trustmark performed an annual impairment test of goodwill for reporting units contained in both the General Banking and Insurance ~~Divisions~~Segments as of October 1, ~~2016, 2015,~~2019, 2018, and ~~2014,~~2017, respectively, which indicated that no impairment charge was required. The impairment test for the General Banking ~~Division~~Segment utilized valuations based on comparable deal values for financial institutions while the test for the Insurance ~~Division~~Segment utilizes varying valuation scenarios for the multiple of earnings before interest, income taxes, depreciation and amortization method based on recent acquisition activity. Based on this analysis, Trustmark concluded that the fair value of the reporting units exceeded the carrying value for both the General Banking ~~Division~~Segment and the Insurance ~~Division;~~Segment; therefore, no impairment charge was required. Significant changes in future profitability and value of ~~our~~its reporting units could affect Trustmark’s impairment evaluation.

The carrying amount of Trustmark’s identifiable intangible assets subject to amortization is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition. That assessment ~~shall be~~is based on the carrying amount of the intangible assets subject to amortization at the date it is tested for recoverability. Intangible assets subject to

amortization shall be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

Fair ~~value~~values may be determined using market prices, comparison to similar assets, market multiples and other determinants. Factors that may significantly affect the estimates include, among others, competitive forces, customer behavior and attrition, changes in revenue growth trends and specific industry or market sector conditions. Other key judgments in accounting for intangibles include determining the useful life of the particular asset and classifying assets as either goodwill (which does not require amortization) or identifiable intangible assets (which does require amortization).

Other real estate includes assets that have been acquired in satisfaction of debt through foreclosure and is ~~recorded~~carried at the lower of cost or estimated fair value less the estimated cost of disposition. Fair value is based on independent appraisals and other relevant factors. Valuation adjustments required at foreclosure are charged to the allowance for loan losses. Other real estate is revalued on an annual basis or more often if market conditions necessitate. An other real estate specific reserve may be recorded through other real estate expense for declines in fair value subsequent to foreclosure based on recent appraisals or changes in market conditions. Subsequent to foreclosure, losses on the periodic revaluation of the property are charged against a reserve specific to other real estate or to noninterest expense in other real estate expense if a reserve does not exist. Significant judgments and complex estimates are required in estimating the fair value of other real estate, and the period of time within which such estimates can be considered current is significantly shortened during periods of market volatility. As a result, the net proceeds realized from sales transactions could differ significantly from appraisals, comparable sales, and other estimates used to determine the fair value of other real estate.

Trustmark’s plan assets, projected benefit liabilities and pension cost are determined utilizing actuarially-determined present value calculations. The valuation of the projected benefit obligation and net periodic pension expense for the Plan and Trustmark’s nonqualified supplemental retirement plans requires Management to make estimates regarding the amount and timing of expected cash outflows. Several variables affect these calculations, including (i) size and characteristics of the associate population, (ii) discount rate, (iii) expected long-term rate of return on plan assets and (iv) recognition of actual returns on plan assets. Below is a brief description of the variables that introduce material uncertainty into Management’s estimates and the effect they have on estimated pension cost.

On July 26, 2016, the Board of Directors of Trustmark authorized the termination of the Plan with a termination date of December 31, 2016. As disclosed in a Current Report on Form 8-K filed by Trustmark with the SEC on December 21, 2016, Trustmark estimates that it will incur a one-time pension settlement expense in connection with the termination of the Plan of approximately $17.5 million upon the final distribution of plan assets during the second quarter of 2017. Trustmark does not expect this estimated amount to change materially between the date of this report and the final distribution of plan assets although if a material number of participants in the Plan elect to receive annuity payments rather than a lump sum cash payment pursuant to the termination of the Plan, Trustmark’s costs in effecting the termination of the Plan would change, and would likely increase, perhaps materially. The Board of Directors of Trustmark reserved the right to defer or revoke the termination of the Plan if circumstances change such that deferral or revocation would be warranted, but has no intent to do so at this time.

Trustmark estimates contingent liabilities based on Management’s evaluation of the probability of outcomes and their ability to estimate the range of exposure. As stated in FASB ASC Topic 450, “Contingencies,” a liability is contingent if the amount is not presently known but may become known in the future as a result of the occurrence of some uncertain future event. Accounting standards require that a liability be recorded if Management determines that it is probable that a loss has occurred, and the loss can be reasonably estimated. It is implicit in this standard that it must be probable that the loss will be confirmed by some future event. As part of the estimation process, Management is required to make assumptions about matters that are, by their nature, highly uncertain. The assessment of contingent liabilities, including legal contingencies and income tax liabilities, involves the use of critical estimates, assumptions and judgments. Management’s estimates are based on their belief that future events will validate the current assumptions regarding the ultimate outcome of these exposures. However, there can be no assurance that future events, such as court decisions or

Internal Revenue Service (IRS) positions, will not differ from Management’s assessments. Whenever practicable, Management consults with outside experts (attorneys, consultants, claims administrators, etc.) to assist with the gathering and evaluation of information related to contingent liabilities.

For information regarding legislation and regulation applicable to Trustmark, see the section captioned “Supervision and Regulation” included in Part I. Item 1. – Business – of this report.

In addition to capital ratios defined by GAAP and banking regulators, Trustmark utilizes various tangible common equity measures when evaluating capital utilization and adequacy. Tangible common equity, as defined by Trustmark, represents common equity less goodwill and identifiable intangible assets.

Trustmark believes these measures are important because they reflect the level of capital available to withstand unexpected market conditions. Additionally, presentation of these measures allows readers to compare certain aspects of Trustmark’s capitalization to other organizations. These ratios differ from capital measures defined by banking regulators principally in that the numerator excludes shareholders’ equity associated with preferred securities, the nature and extent of which varies across organizations. In Management’s experience, many stock analysts use tangible common equity measures in conjunction with more traditional bank capital ratios to compare capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, typically stemming from the use of the purchase accounting method in accounting for mergers and acquisitions.

These calculations are intended to complement the capital ratios defined by GAAP and banking regulators. Because GAAP does not include these capital ratio measures, Trustmark believes there are no comparable GAAP financial measures to these tangible common equity ratios. Despite the importance of these measures to Trustmark, there are no standardized definitions for them and, as a result, Trustmark’s calculations may not be comparable with other organizations. Also, there may be limits in the usefulness of these

measures to investors. As a result, Trustmark encourages readers to consider its audited consolidated financial statements and the notes related thereto in their entirety and not to rely on any single financial measure.

The following table reconciles Trustmark’s calculation of these measures to amounts reported under GAAP for the periods presented ($ in thousands, except per share data):

		Years Ended December 31,										Years Ended December 31,
TANGIBLE EQUITY		2016			2015			2014				2019			2018			2017
AVERAGE BALANCES
Total shareholders' equity		$	1,517,955		$	1,460,650		$	1,398,945			$	1,622,013		$	1,586,877		$	1,560,884
Less: Goodwill			(366,156	)		(365,613	)		(367,281	)			(379,627	)		(379,627	)		(375,947	)
Identifiable intangible assets			(24,132	)		(30,686	)		(37,651	)			(9,212	)		(13,751	)		(18,885	)
Total average tangible equity		$	1,127,667		$	1,064,351		$	994,013			$	1,233,174		$	1,193,499		$	1,166,052
PERIOD END BALANCES
Total shareholders' equity		$	1,520,208		$	1,473,057		$	1,419,940			$	1,660,702		$	1,591,453		$	1,571,701
Less: Goodwill			(366,156	)		(366,156	)		(365,500	)			(379,627	)		(379,627	)		(379,627	)
Identifiable intangible assets			(20,680	)		(27,546	)		(33,234	)			(7,343	)		(11,112	)		(16,360	)
Total tangible equity	(a)	$	1,133,372		$	1,079,355		$	1,021,206		(a)	$	1,273,732		$	1,200,714		$	1,175,714

TANGIBLE ASSETS
Total assets		$	13,352,333		$	12,678,896		$	12,250,633			$	13,497,877		$	13,286,460		$	13,797,953
Less: Goodwill			(366,156	)		(366,156	)		(365,500	)			(379,627	)		(379,627	)		(379,627	)
Identifiable intangible assets			(20,680	)		(27,546	)		(33,234	)			(7,343	)		(11,112	)		(16,360	)
Total tangible assets	(b)	$	12,965,497		$	12,285,194		$	11,851,899		(b)	$	13,110,907		$	12,895,721		$	13,401,966
Risk-weighted assets	(c)	$	9,952,123		$	9,242,902		$	8,387,799		(c)	$	11,002,877		$	10,803,313		$	10,566,818

NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income		$	108,411		$	116,038		$	123,562			$	150,460		$	149,584		$	105,630
Plus: Intangible amortization net of tax			4,240			4,829			5,410				3,088			3,938			3,810
Net income adjusted for intangible amortization		$	112,651		$	120,867		$	128,972			$	153,548		$	153,522		$	109,440
Period end common shares outstanding	(d)		67,628,618			67,559,128			67,481,992		(d)		64,200,111			65,834,395			67,746,094
TANGIBLE EQUITY MEASUREMENTS
Return on average tangible equity (1)			9.99	%		11.36	%		12.97	%			12.45	%		12.86	%		9.39	%
Tangible equity/tangible assets	(a)/(b)		8.74	%		8.79	%		8.62	%	(a)/(b)		9.72	%		9.31	%		8.77	%
Tangible equity/risk-weighted assets	(a)/(c)		11.39	%		11.68	%		12.17	%	(a)/(c)		11.58	%		11.11	%		11.13	%
Tangible book value	(a)/(d)*1,000	$	16.76		$	15.98		$	15.13		(a)/(d)*1,000	$	19.84		$	18.24		$	17.35
TIER 1 COMMON RISK-BASED CAPITAL - BASEL I
Total shareholders' equity								$	1,419,940
Eliminate qualifying AOCI									42,484
Qualifying tier 1 capital									60,000
Disallowed goodwill									(365,500	)
Adjustment to goodwill allowed for deferred taxes									15,855
Other disallowed intangibles									(33,234	)
Disallowed servicing intangible									(6,436	)
Disallowed deferred taxes									(3,479	)
Total tier 1 capital								$	1,129,630
Less: Qualifying tier 1 capital									(60,000	)
Total tier 1 common capital	(e)							$	1,069,630
Tier 1 common risk-based capital ratio	(e)/(c)								12.75	%
COMMON EQUITY TIER 1 CAPITAL (CET1) - BASEL III
Total shareholders' equity		$	1,520,208		$	1,473,057						$	1,660,702		$	1,591,453		$	1,571,701
AOCI-related adjustments			45,798			45,394
AOCI-related adjustments (2)													23,600			55,679			48,248
CET1 adjustments and deductions:
Goodwill net of associated deferred tax liabilities (DTLs)			(347,442	)		(348,873	)						(365,738	)		(365,779	)		(366,461	)
Other adjustments and deductions for CET1 (2)			(8,637	)		(7,980	)
Other adjustments and deductions for CET1 (3)													(5,896	)		(9,815	)		(10,248	)
CET1 capital	(f)		1,209,927			1,161,598					(e)		1,312,668			1,271,538			1,243,240
Additional tier 1 capital instruments plus related surplus			60,000			60,000							60,000			60,000			60,000
Less: Additional tier 1 capital deductions			(267	)		(1,063	)						—			—			(2	)
Additional tier 1 capital			59,733			58,937							60,000			60,000			59,998
Tier 1 capital		$	1,269,660		$	1,220,535						$	1,372,668		$	1,331,538		$	1,303,238
Common equity tier 1 risk-based capital ratio	(f)/(c)		12.16	%		12.57	%				(e)/(c)		11.93	%		11.77	%		11.77	%

Trustmark discloses certain non-GAAP financial measures, including net income adjusted for significant non-routine transactions, because Management uses these measures for business planning purposes, including to manage Trustmark’s business against internal

projected results of operations and to measure Trustmark’s performance. Trustmark views net income adjusted for significant non-routine transactions as a measure of its core operating business, which excludes the impact of the items detailed below, as these items are generally not operational in nature. This non-GAAP measure also provides another basis for comparing period-to-period results as presented in the accompanying selected financial data table and the audited consolidated financial statements by excluding potential

differences caused by non-operational and unusual or non-recurring items. Readers are cautioned that these adjustments are not permitted under GAAP. Trustmark encourages readers to consider its audited consolidated financial statements and the notes related thereto, included in Part II. Item 8. – Financial Statements and Supplementary Data – of this report, in their entirety, and not to rely on any single financial measure.

The following table presents adjustments to net income and select financial ratios as reported in accordance with GAAP resulting from significant non-routine items occurring during the periods presented ($ in thousands, except per share data):

	Years Ended December 31,																Years Ended December 31,
	2016						2015					2014					2019					2018					2017
	Amount			Diluted EPS			Amount			Diluted EPS		Amount			Diluted EPS		Amount			Diluted EPS		Amount			Diluted EPS		Amount			Diluted EPS
Net Income (GAAP)	$	108,411		$	1.599		$	116,038		$	1.714	$	123,562		$	1.828	$	150,460		$	2.323	$	149,584		$	2.211	$	105,630		$	1.556

Significant non-routine transactions (net of taxes):
Non-routine early retirement program expense		6,049			0.089			—			—		—			—
Non-routine pension expense due to de-risking strategy in Plan assets portfolio		820			0.012			—			—		—			—
		6,869			0.101			—			—		—			—
Significant non-routine transactions:
Re-measurement of net deferred taxes																		—			—		—			—		25,619			0.377
Elimination of deferred tax valuation allowance																		—			—		—			—		(8,650	)		(0.127	)
Defined benefit plan termination, net of tax																		—			—		—			—		10,895			0.160
Reliance merger transaction expenses, net of tax																		—			—		—			—		1,999			0.029
Non-taxable gain on acquired life insurance proceeds																		—			—		—			—		(4,894	)		(0.072	)
Net Income adjusted for significant non-routine transactions (Non-GAAP)	$	115,280		$	1.700		$	116,038		$	1.714	$	123,562		$	1.828	$	150,460		$	2.323	$	149,584		$	2.211	$	130,599		$	1.923

	Reported (GAAP)			Adjusted (Non-GAAP)			Reported (GAAP)			Adjusted (Non-GAAP)		Reported (GAAP)			Adjusted (Non-GAAP)		Reported (GAAP)			Adjusted (Non-GAAP)		Reported (GAAP)			Adjusted (Non-GAAP)		Reported (GAAP)			Adjusted (Non-GAAP)
Return on average equity		7.14	%		7.59	%		7.94	%	n/a			8.83	%	n/a			9.28	%	n/a			9.43	%	n/a			6.77	%		8.37	%
Return on average tangible equity		9.99	%		10.60	%		11.36	%	n/a			12.97	%	n/a			12.45	%	n/a			12.86	%	n/a			9.39	%		11.53	%
Return on average assets		0.84	%		0.89	%		0.95	%	n/a			1.03	%	n/a			1.11	%	n/a			1.11	%	n/a			0.77	%		0.95	%

~~Non-routine Early Retirement Program Expense~~Re-measurement of Net Deferred Taxes

During the ~~second~~fourth quarter of ~~2016,~~2017, Trustmark ~~completed~~re-measured its net deferred tax assets subsequent to the enactment of the Tax Reform Act which resulted in the reduction of the corporate federal income tax rate. In accordance with FASB ASC Topic 740, Trustmark recorded a ~~voluntary ERP as a proactive measure to manage noninterest expense. Included~~one-time increase in ~~noninterest~~deferred income tax expense of $25.6 million for the year ended December 31, ~~2016 were non-routine expenses related~~2017.

During 2013, a deferred tax valuation allowance was created as a result of Trustmark’s merger with BancTrust Financial Group, Inc. (BancTrust) and was established to reduce deferred tax assets to the ~~ERP totaling $9.8 million, before taxes, ($9.6 million included~~amount that was more likely than not to be realized in ~~salaries~~future years. Trustmark has continually evaluated this allowance since inception and, ~~employee benefits~~based on the weight of the available evidence, has determined that the deferred tax assets will not be subject to the limitations of Internal Revenue Code, Section 382 on the deductibility of built-in losses in future years. During the fourth quarter of 2017, Trustmark eliminated the valuation allowance and recorded a one-time decrease in deferred income tax expense ~~and $213 thousand included in other expense).~~of $8.7 million.

OnAs previously reported, on July 26, 2016, the Board of Directors of Trustmark authorized the termination of the Trustmark Capital Accumulation Plan (the Plan), a noncontributory tax-qualified defined benefit pension plan, effective as of December 31, 2016. ~~As a result of Trustmark’s de-risking investment strategy for the Plan as of June 30, 2016, the expected rate of return on~~The final distributions were made from current plan assets ~~during the second half~~and a one-time pension settlement expense of ~~2016 decreased from 6.0% to 2.5%,~~$17.6 million, before taxes, which ~~resulted~~is included in ~~increased periodic benefit costs for the Plan. Included in salaries and employee benefits~~noninterest expense for the year ended December 31, ~~2016, were~~2017.

On April 7, 2017, Trustmark completed its previously announced merger with Reliance. The operations of Reliance are included in Trustmark’s operating results from April 7, 2017 and did not have a material impact on Trustmark’s results of operations. During the second quarter of 2017, Trustmark included non-routine ~~pension~~merger transaction expenses ~~related to the de-risking investment strategy for the plan assets~~in other expense totaling ~~$1.3~~$3.2 million, before tax.

During the second quarter of 2017, Trustmark received non-routine, non-taxable proceeds related to life insurance acquired in a previous acquisition. Included in other income, net for the year ended December 31, 2017 were non-routine, non-taxable proceeds of $4.9 million.

Net interest income is the principal component of Trustmark’s income stream and represents the difference, or spread, between interest and fee income generated from earning assets and the interest expense paid on deposits and borrowed funds. Fluctuations in interest rates, as well as volume and mix changes in earning assets and interest-bearing liabilities, can materially impact net interest income. The net interest margin is computed by dividing fully taxable equivalent (FTE) net interest income by average interest-earning assets and measures how effectively Trustmark utilizes its interest-earning assets in relationship to the interest cost of funding them. The accompanying Yield/Rate Analysis Table shows the average balances for all assets and liabilities of Trustmark and the interest income or expense associated with earning assets and interest-bearing liabilities. The yields and rates have been computed based upon interest income and expense adjusted to a FTE basis using ~~a 35%~~the federal ~~marginal~~statutory corporate tax rate in effect for ~~all~~each of the periods shown. Loans on nonaccrual have been included in the average loan balances, and interest collected prior to these loans having been placed on

nonaccrual has been included in interest income. Loan fees included in interest associated with the average loan balances are immaterial.

Net interest income-FTE for ~~2016 decreased $2.3~~2019 increased $7.2 million, or ~~0.6%~~1.7%, when compared with ~~2015.~~2018. The net interest margin ~~decreased 25~~increased 8 basis points to ~~3.53%~~3.62% for ~~2016~~2019 when compared to ~~2015.~~2018. The ~~decrease~~increase in the net interest margin ~~reflected the prolonged low interest rate environment in the United States, and~~ was ~~primarily the result of decreases~~principally due to growth in the yield on ~~acquired loans principally due to declines in accretion income~~the LHFI and ~~recoveries on settlement~~LHFS portfolios, run-off of ~~debt related to acquired loans, downward repricing~~maturing investment securities and a favorable funding mix, partially offset by higher costs of ~~LHFI in response to increased competitive pricing pressures and decreases in the yield on taxable securities.~~interest-bearing deposits. The net interest margin excluding acquired loans, which equals the reported net interest income-FTE excluding interest and fees on acquired loans, as a percentage of average earning assets excluding average acquired loans, for ~~2016~~2019 was ~~3.37%~~3.58%, ~~a decrease~~an increase of 912 basis ~~points~~point when compared to ~~2015,~~2018, due to ~~similar~~the factors as discussed above.

Average interest-earning assets for ~~2016 were $11.485~~2019 totaled $12.131 billion compared to ~~$10.791~~$12.194 billion for ~~2015 an increase~~2018 a decrease of ~~$693.4~~$62.9 million, or ~~6.4%~~0.5%. The ~~growth~~decline in average earning assets during ~~2016~~2019 was primarily due to decreases in average taxable securities of $507.9 million, or 17.3%, and average acquired loans of $90.9 million, or 50.6%, partially offset by an increase in average loans (LHFS and LHFI) of ~~$846.3~~$504.5 million, or ~~12.5%, partially offset by a~~5.7%. The decrease in average taxable securities was primarily due to calls, maturities and pay-downs of the underlying loans of government-sponsored enterprise (GSE) guaranteed securities. The decline in average acquired loans during 2019 was primarily attributable to pay-downs and pay-offs of ~~$130.9 million, or 28.3% and a decline in average total securities of $38.7 million, or 1.1%.~~the acquired loans. The increase in average loans (LHFS and LHFI) was primarily attributable to the ~~$759.8~~$499.8 million, or ~~10.7%~~5.7%, increase in the LHFI portfolio when balances at December 31, ~~2016~~2019 are compared to balances at December 31, ~~2015.~~2018. This increase primarily represented net ~~growth across~~increases in loans secured by real estate in all ~~of Trustmark’s~~five market regions partially offset by declines commercial and ~~all categories~~industrial loans in its LHFI portfolio, with the exception of other loans. The decline in average acquired loans during 2016 was primarily attributable to anticipated pay-offs of acquired loans, principally related to the BancTrust merger. The decline in average total securities during 2016 was primarily attributable to calls, maturitiesTrustmark’s Mississippi and ~~pay-downs of the loans underlying these securities.~~Tennessee market regions.

During ~~2016,~~2019, interest and fees on LHFS and LHFI-FTE increased ~~$27.5~~$44.4 million, or ~~9.5%~~10.9%, when compared to ~~2015,~~2018, due principally to growth in the LHFI portfolio, while the yield on loans (LHFS and LHFI) ~~fell 12~~increased 23 basis points to ~~4.16%~~4.87% as a result of ~~downward repricing of LHFI~~higher interest rates during 2019. During 2019, interest on taxable securities decreased $11.4 million, or 17.3%, compared to 2018, primarily due to the ~~current interest rate environment and related competitive pressures. During 2016, interest~~run-off of maturing investment securities. The yield on total securities for 2019 remained flat at 2.28% compared to 2018. Interest and fees on acquired loans ~~decreased $21.0~~declined $8.7 million, or ~~41.1%~~51.1%, when 2019 is compared to ~~2015,~~2018, while the yield on acquired loans decreased 10 basis points to 9.42%, primarily due to declines in accretion income and ~~recoveries on~~loan recovery from settlement of debt related to loans acquired in each of the BancTrust, Bay Bank, Heritage and Reliance transactions and deferred fee amortization and other interest and fees related to loans acquired in the Reliance merger, as a result of paydowns/pay-offs of these loans as well as acquired loans ~~continue~~transferred to ~~pay-down as anticipated. As a result, the yield on acquired loans decreased to 9.09% compared to 11.06%~~LHFI during 2015. During 2016, interest on securities-taxable decreased $3.1 million, or 3.9%, and the yield on taxable securities declined 8 basis points to 2.31% principally due to calls, maturities and pay-downs of the underlying loans of higher yielding securities being replaced with lower yielding securities reflecting the current interest rate environment as well as a decline in the yield maintenance payments on prepaid mortgage-backed securities.2018. As a result of these factors, interest income-FTE increased ~~$1.8~~$25.0 million, or ~~0.4%~~5.0%, when ~~2016~~2019 is compared to ~~2015. The impact of these changes is also illustrated by the decline in~~2018, while the yield on total earning assets ~~which fell from 3.97% for 2015 to 3.75% for 2016, a decrease of~~increased 22 basis ~~points.~~points to 4.31%.

Average interest-bearing liabilities for ~~2016~~2019 totaled ~~$8.281~~$8.741 billion compared to ~~$7.890~~$8.797 billion for ~~2015, an increase~~2018, a decrease of ~~$391.0~~$56.7 million, or ~~5.0%~~0.6%. The ~~increase~~decrease in average interest-bearing liabilities was attributable to an increase in average long-term FHLB advances partially offset by declines in all other categories of average interest-bearing liabilities. Average long-term FHLB advances increased $620.8 million during 2016, primarily due to the $500.0 million long-term FHLB advance obtained from the FHLB of Dallas during December 2015 and the $250.0 million long-term FHLB advance obtained from the FHLB of Dallas during May 2016. Average interest-bearing deposits for 2016 decreased $174.5 million, or 2.5%, when compared to 2015, principally due to declines in average ~~time deposits, reflecting Trustmark’s continued efforts to reduce high-cost deposit balances~~other borrowings and ~~customers continued movement away from longer-term commitments as a result of the low interest rate environment.~~average federal funds purchased and repurchase agreements which were largely offset by an increase in average interest-bearing deposits. Average ~~short-term~~other borrowings for 2019 decreased ~~$45.1~~$235.2 million, or ~~10.9%~~74.0%, when ~~2016 is~~ compared to ~~2015, which was~~2018, primarily ~~attributable to~~reflecting a ~~decrease~~decline in the ~~amount~~average balance of outstanding short-term FHLB advances obtained from the FHLB of ~~Dallas~~Dallas. Average federal funds purchased and repurchase agreements for 2019 declined $218.7 million, or 66.4%, when compared to 2018, primarily due to a decrease in upstream federal funds purchased as a result of the reduction in Trustmark’s external funding needs during ~~2016 partially offset by~~2018 due to deposit growth out-pacing growth in LHFI and the ~~$500.0~~run-off of maturing investment securities. Average interest-bearing deposits for 2019 increased $397.3 million, ~~FHLB advance with the FHLB~~or 4.9%, when compared to 2018 due principally to growth in average interest-bearing demand deposits primarily as a result of ~~Dallas that was reclassified from long-term to short-term during December 2016.~~increases in interest rates in general.

Total interest expense ~~during 2016~~for 2019 increased ~~$4.1~~$17.7 million, or ~~20.0%~~26.8%, when compared with ~~2015,~~2018, principally due to ~~the~~an increase in interest on deposits, in conjunction with rising interest rates in general, partially offset by declines in other interest ~~expense. Other~~expense (excluding interest on junior subordinated debt securities) and interest expense on federal funds purchased and repurchase agreements. Interest on deposits for 2019 increased ~~$3.0~~$25.2 million, or ~~42.8%~~46.8%, while the rate on interest-bearing deposits increased 26 basis points to 0.93% when ~~2016 is~~ compared to ~~2015, primarily~~2018, principally due to increases in average balances of interest-bearing demand deposits as well as higher interest rates in general. Other interest expense ~~on long-term FHLB advances and short-term borrowings. Interest expense on long-term FHLB advances increased $2.1~~for 2019 decreased $4.3 million, ~~during 2016,~~or 86.1%, while the rate on ~~long-term FHLB advances increased 3~~other borrowings decreased 73 basis points to 0.33% for 2016, reflecting the increase in the outstanding long-term FHLB advances with the FHLB of Dallas. Interest expense on short-term borrowings increased $836 thousand, or 29.2%, during 2016 primarily0.85% when compared to 2018, principally due to a ~~$1.1 million increase~~decrease in the average balance of and the related interest expense on short-term FHLB ~~advances, while the rate for short-term borrowings increased 31 basis points to 1.00%.~~advances. Interest expense on federal funds purchased and ~~securities sold under reverse~~ repurchase agreements ~~increased $916 thousand~~declined $3.4 million, or 70.3%, while the rate of federal fund purchased and repurchase agreements declined 17 basis points to 1.28% when ~~2016~~2019 is compared to ~~2015, while~~2018, primarily due to Trustmark’s reduction of its funding from external sources at the end of 2018 as well as the FRB’s reduction of the target rate onfor federal funds ~~purchased and securities sold under reverse repurchase agreements increased 19 basis points to 0.35%. The increase in~~during the ~~rate on federal funds purchased and securities sold under reverse repurchase agreements during 2016 was principally due to the increase in rates by the FRB.~~second half of 2019. As a result of these factors, the overall ~~yield~~rate on interest-bearing liabilities increased 421 basis points to ~~0.30%~~0.96% when ~~2016~~2019 is compared with ~~2015.~~2018.

Net interest income-FTE for 2015 decreased $13.0 million, or 3.1%, when compared with 2014. The net interest margin decreased 25 basis points to 3.78% for 2015 when compared to 2014. The decrease in the net interest margin reflected the prolonged low interest rate environment in the United States, and was primarily the result of a downward repricing of LHFI in response to increased competitive pricing pressures and decreases in the yield on acquired loans principally due to declines in accretion income on acquired loans, which was partially offset by lower deposit and short-term borrowing costs. The net interest margin excluding acquired loans, which equals the reported net interest income-FTE excluding interest and fees on acquired loans, as a percentage of average earning assets excluding average acquired loans, for 2015 was 3.46%, a decrease of 6 basis points when compared to 2014, due to similar factors as discussed above.

Average interest-earning assets for 2015 were $10.791 billion compared to $10.445 billion for 2014, an increase of $345.8 million, or 3.3%. The growth in average earning assets during 2015 was primarily due to an increase in average loans (LHFS and LHFI) of $495.8 million, or 7.9%, and average securities-taxable of $63.5 million, or 1.9%, partially offset by a decrease in average acquired loans of $203.5 million, or 30.6%. The increase in average loans (LHFS and LHFI) was primarily attributable to increases in the LHFI portfolio when compared to balances at December 31, 2014. The increase in average securities-taxable was primarily attributable to purchases of U.S. Government-sponsored agency (GSE) guaranteed securities, partially offset by maturities and pay-downs of the loans underlying these securities.

During 2015, interest and fees on LHFS and LHFI-FTE increased $11.8 million, or 4.3%, when compared to 2014, due to growth in LHFI, while the yield on loans (LHFS and LHFI) fell 15 basis points to 4.28% due to downward repricing of LHFI due to the current interest rate environment and related competitive pressures. During 2015, interest and fees on acquired loans decreased $25.6 million, or 33.3%, compared to 2014, due to declines in accretion income as acquired loans continue to pay-down as well as a decline in recoveries on loan pay-offs of loans acquired in connection with the February 2013 merger with BancTrust. As a result, the yield on acquired loans decreased to 11.06% compared to 11.52% during 2014. As a result of these factors, interest income-FTE decreased $14.0 million, or 3.2%, during 2015 compared to 2014. The impact of these changes is also illustrated by the decline in the yield on total earning assets, which fell from 4.24% for 2014 to 3.97% for 2015, a decrease of 27 basis points.

Average interest-bearing liabilities for 2015 totaled $7.890 billion compared to $7.785 billion for 2014, an increase of $104.6 million, or 1.3%. Average interest-bearing deposits for 2015 decreased $211.3 million, or 3.0%, when compared to 2014, principally due to declines in certificates of deposits, reflecting Trustmark’s continued efforts to reduce high-cost deposit balances and customers continued movement away from longer-term commitments as a result of the low interest rate environment. The combination of average federal funds purchased, securities sold under repurchase agreements and other borrowings increased $315.8 million, or 43.4%, when 2015 is compared to 2014, which was primarily attributable to increased balances of short-term FHLB advances obtained from the FHLB of Dallas as well as federal funds purchased and securities sold under repurchase agreements as Trustmark chose to utilize these less costly sources of funding. Total interest expense during 2015 decreased $1.1 million, or 5.0%, when compared with 2014, principally due to the $2.7 million, or 17.8%, decrease in interest expense on deposit accounts as a result of the decline in interest-bearing deposits. As a result of these factors, the overall yield on interest-bearing liabilities declined 2 basis points to 0.26% when 2015 is compared with 2014.

The following table provides the tax equivalent basis yield or rate for each component of the tax equivalent net interest margin for the periods presented ($ in thousands):

	Years Ended December 31,																								Years Ended December 31,
	2016								2015								2014								2019								2018								2017
	Average					Yield/			Average					Yield/			Average					Yield/			Average					Yield/			Average					Yield/			Average					Yield/
	Balance			Interest		Rate			Balance			Interest		Rate			Balance			Interest		Rate			Balance			Interest		Rate			Balance			Interest		Rate			Balance			Interest		Rate
Assets
Interest-earning assets:
Federal funds sold and securities purchased under reverse repurchase agreements	$	1,105		$	14		1.27	%	$	835		$	8		0.96	%	$	3,638		$	23		0.63	%	$	9,529		$	240		2.52	%	$	716		$	14		1.96	%	$	2,229		$	33		1.48	%
Securities available for sale:
Taxable		2,236,663			53,005		2.37	%		2,231,507			55,621		2.49	%		2,187,258			55,722		2.55	%		1,633,496			37,717		2.31	%		1,990,332			45,380		2.28	%		2,296,070			52,806		2.30	%
Nontaxable		97,942			3,982		4.07	%		118,579			4,763		4.02	%		136,532			5,302		3.88	%		29,948			1,116		3.73	%		47,112			1,636		3.47	%		73,373			3,042		4.15	%
Securities held to maturity:
Taxable		1,120,267			24,609		2.20	%		1,140,182			25,109		2.20	%		1,120,886			24,426		2.18	%		799,726			16,932		2.12	%		950,836			20,702		2.18	%		1,091,108			23,386		2.14	%
Nontaxable		34,616			1,672		4.83	%		37,883			1,888		4.98	%		39,975			2,189		5.48	%		26,874			1,050		3.91	%		30,336			1,194		3.94	%		32,874			1,575		4.79	%
Loans (LHFS and LHFI)		7,592,223			316,007		4.16	%		6,745,970			288,538		4.28	%		6,250,151			276,775		4.43	%		9,302,037			452,578		4.87	%		8,797,498			408,175		4.64	%		8,412,673			362,795		4.31	%
Acquired loans		331,736			30,144		9.09	%		462,602			51,152		11.06	%		666,102			76,736		11.52	%		88,903			8,373		9.42	%		179,808			17,115		9.52	%		284,898			24,478		8.59	%
Other earning assets		70,029			988		1.41	%		53,613			1,579		2.95	%		40,828			1,524		3.73	%		240,622			5,363		2.23	%		197,431			4,196		2.13	%		80,468			1,466		1.82	%
Total interest-earning assets		11,484,581			430,421		3.75	%		10,791,171			428,658		3.97	%		10,445,370			442,697		4.24	%		12,131,135			523,369		4.31	%		12,194,069			498,412		4.09	%		12,273,693			469,581		3.83	%
Cash and due from banks		291,868								275,246								316,843
Other assets		1,243,985								1,286,139								1,345,438								1,452,012								1,364,420								1,526,661
Allowance for loan losses		(82,414	)							(82,361	)							(79,621	)							(83,559	)							(85,252	)							(84,708	)
Total Assets	$	12,938,020							$	12,270,195							$	12,028,030							$	13,499,588							$	13,473,237							$	13,715,646

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits	$	1,866,225			3,297		0.18	%	$	1,901,478			3,235		0.17	%	$	1,837,496			3,151		0.17	%	$	3,051,170			35,428		1.16	%	$	2,543,463			18,479		0.73	%	$	2,114,475			6,820		0.32	%
Savings deposits		3,140,060			2,657		0.08	%		3,124,393			2,547		0.08	%		3,116,251			2,949		0.09	%		3,650,178			19,462		0.53	%		3,720,987			17,980		0.48	%		3,308,027			6,047		0.18	%
Time deposits		1,665,516			6,794		0.41	%		1,820,437			6,816		0.37	%		2,103,813			9,223		0.44	%		1,783,928			24,281		1.36	%		1,823,562			17,477		0.96	%		1,730,569			9,850		0.57	%
Federal funds purchased and securities sold under repurchase agreements		495,197			1,717		0.35	%		503,077			801		0.16	%		435,324			550		0.13	%		110,915			1,420		1.28	%		329,649			4,788		1.45	%		512,085			4,152		0.81	%
Short-term borrowings		370,008			3,695		1.00	%		415,081			2,859		0.69	%		173,759			1,506		0.87	%
Long-term FHLB advances		634,300			2,104		0.33	%		13,533			49		0.36	%		6,837			45		0.66	%
Subordinated notes		47,662			2,775		5.82	%		49,951			2,895		5.80	%		49,919			2,895		5.80	%
Other borrowings																										82,476			697		0.85	%		317,687			5,016		1.58	%		1,235,914			13,547		1.10	%
Junior subordinated debt securities		61,856			1,508		2.44	%		61,856			1,258		2.03	%		61,856			1,227		1.98	%		61,856			2,615		4.23	%		61,856			2,452		3.96	%		61,856			1,829		2.96	%
Total interest-bearing liabilities		8,280,824			24,547		0.30	%		7,889,806			20,460		0.26	%		7,785,255			21,546		0.28	%		8,740,523			83,903		0.96	%		8,797,204			66,192		0.75	%		8,962,926			42,245		0.47	%
Noninterest-bearing demand deposits		2,996,886								2,781,682								2,711,727								2,918,836								2,892,033								3,028,982
Other liabilities		142,355								138,057								132,103								218,216								197,123								162,854
Shareholders' equity		1,517,955								1,460,650								1,398,945								1,622,013								1,586,877								1,560,884
Total Liabilities and Shareholders' Equity	$	12,938,020							$	12,270,195							$	12,028,030							$	13,499,588							$	13,473,237							$	13,715,646

Net Interest Margin					405,874		3.53	%					408,198		3.78	%					421,151		4.03	%					439,466		3.62	%					432,220		3.54	%					427,336		3.48	%

Less tax equivalent adjustments:
Investments					1,979								2,328								2,622								455								594								1,616
Loans					16,362								14,105								13,193								12,422								12,206								18,170
Net Interest Margin per Income Statements				$	387,533							$	391,765							$	405,336
Net Interest Margin per Consolidated Statements of Income																												$	426,589							$	419,420							$	407,550

The table below shows the change from year to year for each component of the tax equivalent net interest margin in the amount generated by volume changes and the amount generated by changes in the yield or rate (tax equivalent basis) for the periods presented ($ in thousands):

	2016 Compared to 2015									2015 Compared to 2014									2019 Compared to 2018									2018 Compared to 2017
	Increase (Decrease) Due To:									Increase (Decrease) Due To:									Increase (Decrease) Due To:									Increase (Decrease) Due To:
				Yield/									Yield/									Yield/									Yield/
	Volume			Rate			Net			Volume			Rate			Net			Volume			Rate			Net			Volume			Rate			Net
Interest earned on:
Federal funds sold and securities purchased under reverse repurchase agreements	$	3		$	3		$	6		$	(23	)	$	8		$	(15	)	$	221		$	5		$	226		$	(27	)	$	8		$	(19	)
Securities available for sale:
Taxable		125			(2,741	)		(2,616	)		1,166			(1,267	)		(101	)		(8,252	)		589			(7,663	)		(6,971	)		(455	)		(7,426	)
Nontaxable		(839	)		58			(781	)		(723	)		184			(539	)		(634	)		114			(520	)		(964	)		(442	)		(1,406	)
Securities held to maturity:
Taxable		(500	)		—			(500	)		446			237			683			(3,213	)		(557	)		(3,770	)		(3,105	)		421			(2,684	)
Nontaxable		(160	)		(56	)		(216	)		(110	)		(191	)		(301	)		(135	)		(9	)		(144	)		(116	)		(265	)		(381	)
Loans, net of unearned income (LHFS and LHFI)		35,684			(8,215	)		27,469			21,385			(9,622	)		11,763			23,818			20,585			44,403			16,972			28,408			45,380
Acquired loans		(12,891	)		(8,117	)		(21,008	)		(22,627	)		(2,957	)		(25,584	)		(8,564	)		(178	)		(8,742	)		(9,789	)		2,426			(7,363	)
Other earning assets		392			(983	)		(591	)		415			(360	)		55			961			206			1,167			2,444			286			2,730
Total interest-earning assets		21,814			(20,051	)		1,763			(71	)		(13,968	)		(14,039	)		4,202			20,755			24,957			(1,556	)		30,387			28,831

Interest paid on:
Interest-bearing demand deposits		(76	)		138			62			84			—			84			4,290			12,659			16,949			1,594			10,065			11,659
Savings deposits		110			—			110			5			(407	)		(402	)		(346	)		1,828			1,482			831			11,102			11,933
Time deposits		(651	)		629			(22	)		(1,104	)		(1,303	)		(2,407	)		(385	)		7,189			6,804			555			7,072			7,627
Federal funds purchased and securities sold under repurchase agreements		(13	)		929			916			101			150			251			(2,863	)		(505	)		(3,368	)		(1,839	)		2,475			636
Short-term borrowings		(338	)		1,174			836			1,722			(369	)		1,353
Long-term FHLB advances		2,055			—			2,055			4			—			4
Subordinated notes		(130	)		10			(120	)		—			—			—
Other borrowings																				(2,659	)		(1,660	)		(4,319	)		(12,849	)		4,318			(8,531	)
Junior subordinated debt securities		—			250			250			—			31			31			—			163			163			—			623			623
Total interest-bearing liabilities		957			3,130			4,087			812			(1,898	)		(1,086	)		(1,963	)		19,674			17,711			(11,708	)		35,655			23,947
Change in net interest income on a tax equivalent basis	$	20,857		$	(23,181	)	$	(2,324	)	$	(883	)	$	(12,070	)	$	(12,953	)	$	6,165		$	1,081		$	7,246		$	10,152		$	(5,268	)	$	4,884

The change in interest due to both volume and yield or rate has been allocated to change due to volume and change due to yield or rate in proportion to the absolute value of the change in each. Tax-exempt income has been adjusted to a tax equivalent basis using athe federal statutory corporate tax rate ~~of 35%~~in effect for each of the three years presented. The balances of nonaccrual loans and related income recognized have been included for purposes of these computations.

The provision for loan losses, LHFI is determined by Management as the amount necessary to adjust the allowance for loan losses, LHFI to a level, which, in Management’s best estimate, is necessary to absorb probable losses within the existing loan portfolio. The provision for loan losses, LHFI reflects loan quality trends, including the levels of and trends related to nonaccrual LHFI, past due LHFI, potential problem LHFI, criticized LHFI, net charge-offs or recoveries and growth in the LHFI portfolio among other factors. Accordingly, the amount of the provision reflects the necessary increases or decreases in the allowance for loan losses, LHFI related to ~~newly identified criticized LHFI as well as the actions taken related to other LHFI including, among other things, any necessary increases or decreases in required allowances~~adjustments for specific loans or loan ~~pools.~~ pools as a result of growth in the portfolio and evaluation of current impairment analyses, actions taken with respect to risk ratings on loans and other adjustments resulting from changes in qualitative factors.

The provision for loan losses, LHFI totaled ~~$11.0~~$10.8 million for ~~2016, $8.4~~2019, $18.0 million for ~~2015~~2018 and ~~$1.2~~$15.1 million for ~~2014.~~2017. The decrease in the provision for loan losses, LHFI when 2019 is compared to 2018 was primarily due to decreases in net charge-offs and specific reserves for impaired LHFI, partially offset by increases in reserves required as a result of changes in qualitative reserve factors and growth of the LHFI portfolio. See the section captioned “Allowance for Loan Losses, LHFI” for further analysis of the provision for loan losses, LHFI.

The provision for loan losses, acquired loans is recognized subsequent to acquisition to the extent it is probable that Trustmark will be unable to collect all cash flows expected at acquisition plus additional cash flows expected to be collected arising from changes in estimates after acquisition, considering both the timing and amount of those expected cash flows. Provisions may be required when

actual losses of unpaid principal incurred exceed previous loss expectations to date, or future cash flows previously expected to be collectible are no longer probable of collection. The provision for loan losses, acquired loans is reflected as a valuation allowance

netted against the carrying value of the acquired ~~loans accounted for under FASB ASC Topic 310-30.~~ loans.

The increase in the provision for loan losses, acquired loans when ~~2016~~2019 is compared to ~~2015~~2018 was principally due to changes in expectations based on the periodic re-estimations performed during the ~~year, primarily~~respective periods related to the loans acquired ~~from BancTrust. The decrease~~ in the ~~provision for loan losses, acquired loans during 2015 was principally due to an increase in recoveries of acquired loans,~~BancTrust merger, partially offset by ~~increased charge-offs during 2015 compared to 2014, and changes in expectations based on~~ the ~~periodic re-estimations performed during the period, primarily related to~~remaining loans acquired in the Bay Bank, Heritage and Reliance acquisitions that were transferred from ~~BancTrust.~~acquired impaired loans to LHFI during 2018.

The following table presents the provision for loan losses, acquired loans, by acquisition for the periods presented ($ in thousands):

	Years Ended December 31,									Years Ended December 31,
	2016			2015			2014			2019		2018			2017
BancTrust	$	4,143		$	3,899		$	6,672		$	42	$	(1,415	)	$	(6,089	)
Bay Bank		(50	)		(24	)		482			—		377			(1,323	)
Heritage		(336	)		(450	)		(983	)		—		60			(122	)
Reliance											—		(27	)		139
Total provision for loan losses, acquired loans	$	3,757		$	3,425		$	6,171		$	42	$	(1,005	)	$	(7,395	)

Noninterest income represented ~~31.0%~~30.5%, ~~30.7%~~30.6% and ~~29.9%~~31.2% of total revenue, before securities gains (losses) ~~gains,~~, net in ~~2016, 2015~~2019, 2018 and ~~2014,~~2017, respectively. The following table provides the comparative components of noninterest income for the periods presented ($ in thousands):

	Years Ended December 31,																	Years Ended December 31,
	2016						2015						2014					2019					2018					2017
	Amount			% Change			Amount			% Change			Amount		% Change			Amount		% Change			Amount		% Change			Amount		% Change
Service charges on deposit accounts	$	45,253			-4.5	%	$	47,366			-2.7	%	$	48,671		-5.6	%	$	42,603		-2.5	%	$	43,702		-0.7	%	$	44,003		-2.8	%
Bank card and other fees		27,906			-1.4	%		28,298			-14.2	%		32,966		-8.3	%		31,736		9.8	%		28,905		2.2	%		28,286		1.4	%
Mortgage banking, net		28,212			-6.5	%		30,176			21.8	%		24,780		-26.0	%		29,822		-14.0	%		34,674		16.0	%		29,902		6.0	%
Insurance commissions		36,764			0.9	%		36,424			8.8	%		33,468		8.6	%		42,396		4.7	%		40,481		6.1	%		38,168		3.8	%
Wealth management		30,492			-2.8	%		31,369			-3.0	%		32,343		9.7	%		30,679		1.1	%		30,338		—			30,340		-0.5	%
Other, net		5,626		n/m				(484	)	n/m				614	n/m				9,809		45.6	%		6,736		-51.7	%		13,949	n/m
Total Noninterest Income before securities (losses) gains, net		174,253			0.6	%		173,149			0.2	%		172,842		-0.3	%
Securities (losses) gains, net		(310	)	n/m				—		n/m				300		-38.1	%
Total Noninterest Income before securities gains (losses), net																			187,045		1.2	%		184,836		0.1	%		184,648		6.0	%
Securities gains (losses), net																			—		—			—		-100.0	%		15	n/m
Total Noninterest Income	$	173,943			0.5	%	$	173,149			—		$	173,142		-0.4	%	$	187,045		1.2	%	$	184,836		0.1	%	$	184,663		6.2	%

Changes in various components of noninterest income for the year ended December 31, 2019 are discussed in further detail below. For analysis of Trustmark’s insurance commissions and wealth management income, please see the section captioned “Results of Segment Operations.”

The decline in service charges on deposit accounts when 2016 is compared to 2015 was principally due to a $1.5 million, or 4.6%, decrease in NSF and overdraft charges on consumer deposit accounts and a $436 thousand, or 4.7%, decrease in service charges on consumer deposit accounts. The decline in NSF and overdraft charges on deposit accounts during 2016 was primarily the result of balances in consumer deposit accounts increasing 3.5% during 2016 providing more available funds to complete banking.

The decline in service charges on deposit accounts when 2015 is compared to 2014 was principally due to a $1.8 million, or 5.1%, decrease in NSF and overdraft charges on consumer deposit accounts and a $297 thousand, or 15.4%, decrease in NSF and overdraft charges on commercial demand deposit accounts, which was partially offset by a $585 thousand, or 10.1%, increase in service charges on commercial demand deposit accounts. The decline in NSF and overdraft charges on deposit accounts during 2015 was primarily the result of a decrease in the number of customer transactions that would result in an NSF or overdraft charge as customers have more availability to complete banking transactions through mobile and online banking sites as well as extended hours for making deposits at Trustmark’s ATMs.

Bank card and other fees consist primarily of fees earned on bank card products as well as fees on various bank products and services and safe deposit box fees. Bank card and other fees remained relatively stable when 2016 is compared to 2015 as slight declines in

~~miscellaneous other bank fees, interchange income and ATM transaction income were partially offset by an~~The increase net revenue related to interest rate swaps entered into with qualified commercial borrowing customers. See the section captioned “Derivatives” for additional information related to the derivative products offered to qualified commercial borrowing customers. The decrease in bank card and other fees ~~for 2015~~ when ~~compared to 2014 was primarily the result of declines in interchange income.~~

The FRB has issued rules under the EFTA, as amended by the Dodd-Frank Act, to limit interchange fees that an issuer may receive or charge for an electronic debit card transaction. See the section captioned “Debit Interchange Regulation” included in Part I. Item 1. – Business – of this report. As a result of the regulations, Trustmark’s noninterest income declined $11.5 million when 20152019 is compared to ~~2014.~~2018 was principally due to increases in income from customer derivatives, interchange income and ATM surcharges.

The following table illustrates the components of mortgage banking, ~~income~~net included in noninterest income for the periods presented ($ in thousands):

	Years Ended December 31,																		Years Ended December 31,
	2016						2015						2014						2019						2018						2017
	Amount			% Change			Amount			% Change			Amount			% Change			Amount			% Change			Amount			% Change			Amount			% Change
Mortgage servicing income, net	$	20,724			5.6	%	$	19,625			5.4	%	$	18,619			4.1	%	$	22,883			2.9	%	$	22,248			2.7	%	$	21,663			4.5	%
Change in fair value-MSR from runoff		(10,106	)		6.1	%		(9,527	)		11.2	%		(8,566	)		-12.6	%		(11,835	)		0.5	%		(11,774	)		9.2	%		(10,780	)		6.7	%
Gain on sales of loans, net(1)		20,535			14.3	%		17,965			66.8	%		10,770			-59.2	%		30,296			39.0	%		21,800			16.2	%		18,765			-8.2	%
Other, net		(84	)	n/m				233			-74.2	%		904		n/m
Mortgage banking income before hedge ineffectiveness		31,069			9.8	%		28,296			30.2	%		21,727			-27.1	%
Mortgage banking income before net hedge ineffectiveness																				41,344			28.1	%		32,274			8.9	%		29,648			-4.6	%
Change in fair value-MSR from market changes		(406	)	n/m				1,577		n/m				(7,203	)	n/m				(21,078	)	n/m				7,342		n/m				(1,050	)	n/m
Change in fair value of derivatives		(2,451	)	n/m				303			-97.0	%		10,256		n/m				9,556		n/m				(4,942	)	n/m				1,304		n/m
Net hedge ineffectiveness		(2,857	)	n/m				1,880			-38.4	%		3,053			-17.6	%		(11,522	)	n/m				2,400		n/m				254		n/m
Mortgage banking, net	$	28,212			-6.5	%	$	30,176			21.8	%	$	24,780			-26.0	%	$	29,822			-14.0	%	$	34,674			16.0	%	$	29,902			6.0	%

The decrease in ~~net revenue from~~ mortgage banking, net for ~~2016~~2019 when compared to ~~2015~~2018 was principally due to athe net negative hedge ineffectiveness partially offset by an increase in the gain on sales of loans, net. The net negative hedge ineffectiveness for ~~2016 compared to~~the year ended December 31, 2019 was primarily the result of lower interest rates, a ~~net positive hedge ineffectiveness for 2015, partially offset by increases in gain on sales of loans, net~~flatter yield curve, increased market volatility and mortgage servicing income, net. The increase in net revenue from mortgage banking during 2015 was principally due to an increase in gain on sales of loans, net partially offset by a decline in the net positive hedge ineffectiveness.greater borrower prepayment capacity. Mortgage loan production increased ~~$124.2~~$361.1 million, or ~~8.4%~~25.8%, during ~~2016~~2019 to total ~~$1.606 billion, which continued to reflect increased mortgage lending activity due to low mortgage rates.~~$1.762 billion. Mortgage loan production increased ~~$290.0~~$45.8 million, or ~~24.3%~~3.4%, during ~~2015~~2018 to total $1.482 billion, reflecting industry-wide improvements in real estate and construction activity as well as increased mortgage lending activity due to low mortgage rates. In addition, during the second quarter of 2015, Trustmark expanded its mortgage banking capabilities with the addition of ten mortgage producers in the Alabama and Florida market regions.$1.401 billion. Loans serviced for others totaled ~~$6.371~~$7.157 billion at December 31, ~~2016,~~2019, compared with ~~$5.971~~$6.835 billion at December 31, ~~2015,~~2018, and ~~$5.636~~$6.624 billion at December 31, ~~2014.~~2017.

Representing a significant component of mortgage banking income is gain on sales of loans, net. The increase in the gain on sales of loans, net when ~~2016~~2019 is compared to ~~2015 and when 2015 is compared to 2014~~2018 resulted primarily from ~~both higher profit margins from secondary marketing activities as well as~~ higher volumes of loans ~~sold.~~sold and an increase in the mortgage loan valuation adjustment. Loan sales increased ~~$138.0~~$311.3 million, or 28.5%, during ~~2016~~2019 to total ~~$1.384~~$1.404 billion compared to ~~an increase~~a decrease of ~~$332.8~~$86.5 million, or 7.3%, during ~~2015~~2018 to total ~~$1.246~~$1.092 billion. The ~~increase~~increases in ~~loans~~loan sales during 2016 and 2015 was due to increased mortgage lending activity and Trustmark’s decision during 2015 to sell the vast majority of these lower-rate, longer-term home mortgages in the secondary market, rather than replacing the run-off in its single-family loan portfolio.

Other mortgage banking income, net includes the net valuation adjustment recognized in income in accordance with FASB ASC Topic 825, “Financial Instruments,” for the fair value of LHFS accounted for under the fair value option and the net valuation adjustment recognized in income in accordance with FASB ASC Topic 815, “Derivatives and Hedging,” for the fair value of interest rate lock commitments and forward sales contracts. Valuation adjustments are primarily the result of changes in volume and profit margins for the related instruments during the period. The slight decrease in other mortgage banking income, net during 2016 was the result of a negative net valuation adjustment in the fair value of LHFS, interest rate lock commitments and forward sales contracts for 2016 compared to a positive net valuation adjustment for 2015, which2019 was principally due to ~~higher increases~~the increase in ~~volumes during 2015 offset partially by~~mortgage lending activity as a result of lower declines in profit margins during 2016. The decrease in other mortgage banking income, net when comparing 2015 with 2014 primarily resulted from a decrease in the net valuation adjustment in the fair value of LHFS, interest rate lock commitments and forward sales contracts during the period, which was principally due to higher increases in profit margins during 2014 offset partially by higher increases in volumes during 2015. For additional information regarding the LHFS accounted for under

the fair value option, please see the section captioned “Fair Value Option” included in Note 19 – Fair Value set forth in Part II. Item 8. – Financial Statements and Supplementary Data – of this report. See the section captioned “Derivatives” for further discussion of the mortgage related derivative instruments.rates.

The following table illustrates the components of other income, net included in noninterest income for the periods presented ($ in thousands):

	Years Ended December 31,																		Years Ended December 31,
	2016						2015						2014						2019						2018						2017
	Amount			% Change			Amount			% Change			Amount			% Change			Amount			% Change			Amount			% Change			Amount			% Change
Partnership amortization for tax credit purposes	$	(9,916	)		-1.3	%	$	(10,050	)		-15.0	%	$	(11,824	)		-4.4	%	$	(7,644	)		-12.2	%	$	(8,707	)		-8.9	%	$	(9,560	)		-3.6	%
Decrease in FDIC indemnification asset		(369	)		-89.5	%		(3,513	)		22.2	%		(2,874	)		-51.3	%
Increase in life insurance cash surrender value		6,891			2.8	%		6,702			-8.7	%		7,340			98.3	%		7,202			1.1	%		7,121			-0.1	%		7,125			3.4	%
Other miscellaneous income		9,020			41.4	%		6,377			-20.0	%		7,972			20.9	%		10,251			23.2	%		8,322			-49.2	%		16,384			89.4	%
Total other, net	$	5,626		n/m			$	(484	)	n/m			$	614		n/m			$	9,809			45.6	%	$	6,736			-51.7	%	$	13,949		n/m

The increase in other income, net when ~~2016~~2019 is compared to ~~2015,~~2018 was primarily due to a decrease in the net reduction of the FDIC indemnification asset related to the acquired covered loans and covered other real estate, a net gain on the sale of premises and equipment as a result of the sale of a former bank branch during 2016 compared to a net loss on the sale of premises and equipment recorded during 2015 on the sale of a former bank branch acquired in the BancTrust merger and an increase in other miscellaneous income, related to various vendor contract bonuses and settlements, an one-time arrangement fee and merchant service fees received during 2016. The decrease in other income, net during 2015 was primarily the result of a decline in other miscellaneous incomeprincipally due to a net ~~loss~~gains on ~~the sale~~sales of ~~a former bank branch acquired~~premises and equipment and an increase in ~~the merger with BancTrust during the first quarter of 2015,~~cash management fees, and a decrease in the amount of revenue received during 2015 related to Trustmark’s non-qualified deferred compensation plan and a one-time arrangement fee received during the second quarter of 2014; a decrease in the net cash surrender value related to Trustmark’s supplemental employee retirement plan and the increase in the net reduction of the FDIC indemnification asset primarily due to increases in the amortization of ~~the FDIC indemnification asset and the negative valuation adjustments for covered acquired loans, which was partially offset by the decrease in partnership amortization for~~ tax credit ~~purposes.~~partnerships.

The following table illustrates the comparative components of noninterest expense for the periods presented ($ in thousands):

	Years Ended December 31,																		Years Ended December 31,
	2016						2015						2014						2019					2018						2017
	Amount			% Change			Amount			% Change			Amount			% Change			Amount		% Change			Amount			% Change			Amount			% Change
Salaries and employee benefits	$	239,637			4.1	%	$	230,198			1.5	%	$	226,694			2.2	%	$	247,717		4.1	%	$	238,033			3.8	%	$	229,265			—
Defined benefit plan termination																				—		—			—			-100.0	%		17,644		n/m
Services and fees		58,695			2.0	%		57,534			1.7	%		56,598			5.0	%		73,315		10.4	%		66,382			9.0	%		60,893			3.7	%
Net occupancy-premises		24,982			-1.3	%		25,318			-4.3	%		26,468			2.0	%		26,149		-2.1	%		26,703			3.6	%		25,767			3.1	%
Equipment expense		24,225			1.5	%		23,859			—			23,860			-2.8	%		23,733		-4.4	%		24,830			1.5	%		24,453			0.9	%
Other real estate expense:
Write-downs		4,463			7.0	%		4,171			-50.7	%		8,458			18.2	%		2,544	n/m				873			-73.5	%		3,296			-26.1	%
Net (gain)/loss on sale		(7,030	)		74.0	%		(4,040	)		8.6	%		(3,721	)	n/m				291	n/m				(700	)		-66.5	%		(2,091	)		-70.3	%
Carrying costs		3,153			-33.9	%		4,772			-27.5	%		6,584			-7.4	%		1,071		-41.4	%		1,829			-25.9	%		2,467			-21.8	%
Total other real estate expense		586			-88.0	%		4,903			-56.7	%		11,321			-24.7	%
Total other real estate expense, net																				3,906		95.1	%		2,002			-45.5	%		3,672		n/m
FDIC assessment expense		11,243			4.8	%		10,728			5.2	%		10,197			13.3	%		6,444		-31.7	%		9,429			-14.4	%		11,010			-2.1	%
Other expense		47,930			-2.4	%		49,122			-8.8	%		53,867			-17.8	%		47,738		-0.6	%		48,036			-16.4	%		57,465			-1.5	%
Total noninterest expense	$	407,298			1.4	%	$	401,662			-1.8	%	$	409,005			-1.6	%	$	429,002		3.3	%	$	415,415			-3.4	%	$	430,169			5.6	%

Changes in the various component of noninterest expense for the year ended December 31, 2019 are discussed in further detail below. Management considers disciplined expense management a key area of focus in the support of improving shareholder value.

During the second quarter of 2016, Trustmark completed a voluntary ERP as a proactive measure to manage noninterest expense. As a result of the ERP, 188 of the eligible associates retired from Trustmark by June 30, 2016. The ERP resulted in non-routine expenses totaling $9.8 million ($9.6 million included in salaries and employee benefits expense and $213 thousand included in other expense) during 2016. As a result of the ERP, Trustmark realized cost savings in salaries and employee benefits expense of $4.4 million during 2016.

On July 26, 2016, the Board of Directors of Trustmark authorized the termination of the Plan, a noncontributory tax-qualified defined benefit pension plan, effective December 31, 2016. As a result of Trustmark’s de-risking investment strategy for the Plan as of June 30, 2016, the expected rate of return on plan assets during the second half of 2016 decreased from 6.0% to 2.5%, which resulted in increased periodic benefit costs for the Plan. Included in salaries and employee benefits expense for the year ended December 31, 2016, were non-routine pension expenses related to the de-risking investment strategy for the plan assets totaling $1.3 million.

The increase in salaries and employee benefits, the largest ~~category~~component of noninterest expense, when ~~2016~~2019 is compared to ~~2015,~~2018 was primarily due to ~~non-routine transaction expenses~~increases in commission expense related to ~~the ERP and Plan termination and higher commissions expense as a result of~~ improvements in mortgage ~~loan production, partially offset by cost savings realized related to~~originations and the ~~ERP. The increase in~~insurance lines of business, salaries ~~and employee benefits during 2015 was~~expense primarily due to ~~an increase in commission~~general merit increases, insurance expense ~~as a result of expanded mortgage and insurance production, a net gain recorded during 2014 related to the termination and distribution of the BancTrust Pension Plan, and an increase in expenses~~ related to Trustmark’s ~~qualified defined benefit pension plan attributable to lump sum settlements, partially offset by a decline in general incentives expense.~~health plans and stock compensation.

The increase in services and fees expense when ~~2016~~2019 is compared to 2015, was primarily to due to increases in data processing expenses related to software, other outside services and fees and advertising, partially offset by declines in legal and communications expenses. The increase in services and fees during 2015 was primarily due to higher data processing expenses related to software and legal expense, which were partially offset by declines in outside services and fees, advertising and telephone expenses. During the second quarter of 2015, Trustmark introduced its new consumer mobile banking service, ~~myTrustmark~~^SM~~. Trustmark has partnered with third party vendors to employ several security control mechanisms to assure secure access to~~ ~~myTrustmark~~^SM ~~as well as the security of the data processing and storage behind the site.~~

The decrease in net occupancy-premises expense during 2016 was principally due to decreases in utility and janitorial costs partially offset by increases in depreciation of building improvements and buildings rent expense. The decrease in net occupancy-premises expense during 2015 was principally due to declines in ~~ad valorem~~ ~~taxes and building repairs and maintenance expense, which were partially offset by increases in building rental expense.~~

During 2016, Trustmark consolidated nine branch offices across the Alabama, Florida and Mississippi market regions, and reallocated a portion of those resources into a new banking center in Tuscaloosa, Alabama, and a new loan production office in Pensacola, Florida. During 2015, Trustmark completed the consolidation of eight banking offices with limited growth opportunities, expanded its mortgage-banking platform with the addition of two new mortgage loan production offices in the Alabama and Florida market regions, and opened two new banking offices in the Alabama market region and one new banking office in the Mississippi market region.

~~The slight increase in equipment expense during 2016~~2018 was primarily due to increases in data processing ~~equipment expense partially offset by declines in equipment maintenance contract expense~~charges related to software, professional services and ~~depreciation of furniture, fixtures~~fees and ~~equipment. Equipment expense remained flat when comparing 2015 with 2014.~~advertising expense.

The ~~decrease~~increase in other real estate expense, net for ~~2016~~2019 compared to ~~2015~~2018 was principally due to an increase in ~~the~~write-downs of other real estate as well as a net ~~gain~~loss on sales of other real estate and a decrease in other real estate carrying costs. The decrease in other real estate expense during 2015 was principally due to a decrease in the provision for other real estate write-downs as well as declines in other real estate carrying costs. The net gain on sale of other real estate for 2016 totaled $7.0 million, compared to a net gain on the sale of other real estate of $4.0 million for 2015 and $3.7 million for 2014.properties. For additional analysis of other real estate and foreclosure expenses, please see the section captioned “Nonperforming Assets, Excluding Acquired ~~Loans and Covered Other Real Estate.~~Loans.”

The ~~increase~~decrease in the FDIC assessment expense ~~for 2016~~when 2019 is compared to 2018 was ~~primarily~~principally due to a projected increase in Trustmark’s assessment rate during the first half of the year due to an increase in FDIC defined higher-risk assets partially offset by a projected decline in the assessment rate during the last part of 2016 due to changes in the assessment rate under a revised FDIC rule, which became effective on July 1, 2016. The increase in FDIC assessment expense for 2015 primarily resulted from the increase in Trustmark’s assessment base.

As required by the Dodd-Frank Act, the FDIC revised the deposit insurance assessment system to base assessments on the average total consolidated assets of insured depository institutions less the average tangible equity during the assessment period. In addition, the Dodd-Frank Act requires the minimum reserve ratio for the Deposit Insurance Fund (DIF) be increased from 1.15% to 1.35% of estimated insurable deposits, or the comparable percentage of the assessment base, by September 30, 2020. In March 2016, the Board of Directors of the FDIC approved a final rule to increase the DIF to the statutorily required minimum level of 1.35%. Under the rule adopted by the FDIC in 2011, regular assessment rates for all banks decrease once the reserve ratio reaches 1.15%. On August 30, 2016, the FDIC announced that the reserve ratio was 1.17% as of June 30, 2016. The final rule approved in March 2016 imposes a surcharge of 4.5 cents per $100 of the assessment base, after making certain adjustments, on banks with at least $10.0 billion in assets. The FDIC expects the reserve ratio will likely reach 1.35% after approximately two years of payments of these surcharges. The final rule became effective and surcharges began on July 1, 2016. Trustmark expects that its FDIC assessment expense will decline under this final rule as the lower regular assessment ~~rates~~base and elimination of the ~~allowable adjustments will more than offset the~~additional surcharge of 4.5 cents per $100 of assessment ~~base.~~base during the third quarter of 2018.

The following table illustrates the comparative components of other noninterest expense for the periods presented ($ in thousands):

	Years Ended December 31,															Years Ended December 31,
	2016					2015					2014					2019					2018					2017
	Amount		% Change			Amount		% Change			Amount		% Change			Amount		% Change			Amount		% Change			Amount		% Change
Loan expense	$	12,226		-4.7	%	$	12,835		-0.9	%	$	12,953		-14.1	%	$	11,554		4.2	%	$	11,086		1.6	%	$	10,908		-10.8	%
Amortization of intangibles		6,866		-12.2	%		7,819		-10.7	%		8,756		-0.7	%		4,116		-21.6	%		5,248		-14.9	%		6,169		-10.2	%
Other miscellaneous expense		28,838		1.3	%		28,468		-11.5	%		32,158		-4.7	%		32,068		1.2	%		31,702		-21.5	%		40,388		3.0	%
Total other expense	$	47,930		-2.4	%	$	49,122		-8.8	%	$	53,867		-17.8	%	$	47,738		-0.6	%	$	48,036		-16.4	%	$	57,465		-1.5	%

The ~~decline~~slight decrease in other expense for 2019 when ~~2016 is~~ compared to 2015 was primarily due to decreases in franchise taxes, the amortization of the non-taxable core deposit intangible asset and loan expenses, partially offset by increases in customer related fraud losses and a property valuation adjustment recorded during 2016 related to properties transferred to assets held for sale. During 2016, Trustmark continued its measured approach to the optimization of its retail delivery channels by consolidated nine branch offices across the Alabama, Florida and Mississippi market regions, and reallocated a portion of those resources into a new banking center in Tuscaloosa, Alabama, and a new loan production office in Pensacola, Florida. Seven of the closed branches as well as two pieces of property previously purchased in anticipation of a future branch were transferred to assets held for sale during 2016 at the lower of the current book value or the fair value less costs to sell. A property valuation adjustment of $750 thousand was recorded as a result of transferring these properties to assets held for sale.

~~The decline in other expenses during 2015~~2018 was principally due to ~~declines~~the decrease in amortization of intangibles, which was largely offset by an increase in other miscellaneous ~~expenses primarily resulting from a legal reserve recorded during 2014 and decreases in franchise taxes and customer~~expense due to charitable contributions related ~~fraud losses as well as a decline in~~to the ~~amortization of the core deposit intangible asset.~~Mississippi Children’s Promise Act.

Trustmark’s operations are managed along three operating segments: General Banking, ~~Division,~~ Wealth Management ~~Division~~ and ~~Insurance Division.~~Insurance. A description of each segment and the methodologies used to measure financial performance and financial information by reportable segment are included in Note 2122 – Segment Information located in Part II. Item 8. – Financial Statements and Supplementary Data – of this report. During the first quarter of 2019, Trustmark revised the composition of its operating segments by moving the Private Banking Group from the General Banking Segment to the Wealth Management Segment as a result of a change in supervision of this group for segment reporting purposes. Prior periods include reclassifications to conform to current period presentation.

The following table provides the net income by reportable segment for the periods presented ($ in thousands):

	Years Ended December 31,						Years Ended December 31,
	2016		2015		2014		2019		2018		2017
General Banking	$	99,083	$	106,738	$	114,870	$	136,364	$	138,541	$	96,846
Wealth Management		4,124		3,850		4,222		6,141		3,671		3,104
Insurance		5,204		5,450		4,470		7,955		7,372		5,680
Consolidated Net Income	$	108,411	$	116,038	$	123,562	$	150,460	$	149,584	$	105,630

Net interest income for the General Banking ~~Division~~Segment for ~~2016 decreased $4.5~~2019 increased $7.1 million, or ~~1.1%~~1.7%, when compared with ~~2015.~~2018. The ~~decrease~~increase in net interest income was principally due to declines in interest and fees on acquired loans and interest on taxable securities and an increase in other interest expense, which were partially offset by an increase in interest and fees on LHFS and LHFI. Net interest income for the General Banking Division for 2015 decreased $13.1 million, or 3.2%, when compared with 2014. The decline in net interest income was mostly due to declines in interest and fees on acquired loans, which was partially offset by an increaseincreases in interest and fees on LHFS and LHFI and decreases in other interest expense and interest expense on federal funds purchased and repurchase agreements, which were largely offset by an increase in interest on deposits and declines in interest on securities and interest and fees on acquired loans. Net interest income for the ~~cost of interest-bearing deposits.~~General Banking Segment for 2018 increased $13.1 million, or 3.2%, when compared with 2017. The increase in net interest income was principally due to increases in interest and fees on LHFS and LHFI and other interest income and a decrease in other interest expense, partially offset by an increase in interest on deposits and declines in interest on securities and interest and fees on acquired loans. The provision for loan losses, net during ~~2016~~2019 totaled ~~$14.7~~$10.8 million compared with ~~$11.8~~$17.0 million during ~~2015~~2018 and ~~$7.4~~$7.5 million during ~~2014.~~2017. For more information on these net interest income items, please see the sections captioned “Financial Highlights” and “Results of Operations.”

Noninterest income for the General Banking ~~Division increased $1.6 million,~~Segment decreased $175 thousand, or ~~1.5%~~0.2%, during ~~2016~~2019 compared to a decrease of ~~$2.0~~$2.1 million, or 1.8%, during ~~2015.~~2018. The slight decrease in noninterest income for the General Banking Segment during 2019 was primarily due to the declines in mortgage banking, net and service charges on deposit accounts, which were largely offset by increases in bank card and other fees and other noninterest income, net. The decrease in noninterest income for the General Banking Segment during 2018 was primarily due to the non-taxable life insurance proceeds received during 2017 partially offset by an increase in mortgage banking, net. During 2017, Trustmark received $4.9 million in non-taxable proceeds related to life insurance acquired in a previous acquisition and $4.4 million of non-taxable proceeds related to bank-owned life insurance. Noninterest income for the General Banking ~~Division~~Segment represented ~~21.7%~~21.2% of total revenue for ~~2016, 21.2%~~2019, 21.5% for ~~2015~~2018 and ~~21.0%~~22.4% for ~~2014.~~2017. Noninterest income for the General Banking ~~Division~~Segment includes service charges on deposit accounts; bank card and other fees; mortgage banking, net; other income, net and securities gains (losses) ~~gains,~~, net. For more information on these noninterest income items, please see the analysis included in the section captioned “Noninterest Income.”

Noninterest expense for the General Banking ~~Division~~Segment increased ~~$6.3~~$15.1 million, or ~~1.8%~~4.2%, during ~~2016~~2018 compared to a decrease of ~~$7.4~~$15.4 million, or ~~2.1%~~4.2%, during ~~2015.~~2018. The increase in noninterest expense for ~~2016~~2019 was principally due to increases in salaries and employee

benefits, principally as a result of increases in commission expense related to improvements in mortgage originations, salaries expense primarily due to general merit increases, insurance expense related to Trustmark’s health plans and stock compensation; increases in services and fees, primarily related to increases in data processing charges related to software, professional services and fees and advertising expense; increases in other real estate expense, net, primarily due to an increase in write-downs of other real estate; and the increase in charitable contributions related to the Mississippi Children’s Promise Act. The decrease in noninterest expense for 2018 was principally due to non-routine transaction expenses related to the termination of the defined benefit pension plan and the Reliance merger incurred during 2017, partially offset by increases in salaries and employee benefits, primarily as a result of ~~non-routine expenses related to the ERP, increased~~general merit increases and higher mortgage origination commission expense, ~~due to improved mortgage loan production and non-routine pension expense resulting from the de-risking strategy for plan assets in anticipation of the termination of the Plan,~~ and services and fees, ~~partially offset by declines in other real estate expense and other~~primarily related to data processing software expense. For more information on these noninterest expense items, please see the analysis included in the section captioned “Noninterest Expense.”

During ~~2016,~~2019, net income for the Wealth Management ~~Division~~Segment increased ~~$274 thousand,~~$2.5 million, or ~~7.1%~~67.3%, compared to ~~a decrease~~an increase of ~~$372~~$567 thousand, or ~~8.8%~~18.3%, during ~~2015.~~2018. Net interest income for the Wealth Management ~~Division, which primarily consists~~Segment increased $53 thousand, or 1.5%, during 2019 compared to a decrease of ~~interest~~$1.2 million, or 24.5%, during 2018. Noninterest income ~~earned on deposit accounts held by~~for the Wealth Management ~~Division, increased $389 thousand during 2016 compared to a decline of $514 thousand, or 60.4%, during 2015. Noninterest income,~~Segment, which includes income related to investment management, trust and brokerage services, ~~decreased $1.1 million,~~increased $441 thousand, or ~~3.6%~~1.4%, during ~~2016, compared to a decrease of $964 thousand, or 3.0%, during 2015.~~2019. The ~~decrease~~slight increase in noninterest income for the Wealth Management ~~Division~~Segment during ~~2016~~2019 was primarily attributable to ~~declines in commissions and annuity income generated by the brokerage services unit and trust fees related to retirement planning and personal estate services, partially offset by growth~~an increase in trust ~~asset~~ management ~~fee income from mutual funds and custody services. The decrease in noninterest~~fees. Noninterest income for the Wealth Management ~~Division~~Segment was unchanged during ~~2015 was primarily attributable to~~2018 as declines in ~~fixed annuity income and commissions generated by the brokerage services unit and~~ trust management fees ~~partially~~were offset by ~~growth~~increases in ~~asset management~~ fees ~~and variable annuity income generated by the brokerage services unit.~~from investment services. Noninterest expense decreased ~~$1.2~~$2.8 million, or ~~4.7%~~9.6%, during ~~2016~~2019 compared to a decrease of ~~$1.4 million,~~$819 thousand, or ~~5.2%~~2.7%, during ~~2015.~~2018. The decrease in noninterest expense for the Wealth Management ~~Division~~Segment during ~~2016~~2019 was principally due to ~~decreases~~a decrease in ~~salaries and employee benefits, primarily due~~professional service fees as well as insurance settlement proceeds received during 2019 related to ~~lower commissions and salary expense partially offset by an increase~~a legal case settled in ~~trust incentives expense, and data processing charges.~~2018. The decrease in noninterest expense for the Wealth Management ~~Division~~Segment during ~~2015~~2018 was principally due to a ~~legal reserve recorded during 2014.~~decrease in other miscellaneous expense partially offset by increases in data processing expense related to software and salaries and employee benefits resulting from improvements in retail brokerage activity.

At December 31, ~~2016~~2019 and ~~2015,~~2018, Trustmark held assets under management and administration of ~~$10.255~~$11.782 billion and ~~$10.697~~$10.592 billion and brokerage assets of ~~$1.643~~$1.993 billion and ~~$1.564~~$1.723 billion, respectively.

Net income for the Insurance ~~Division~~Segment during ~~2016 decreased $246~~2019 increased $583 thousand, or ~~4.5%~~7.9%, compared to an increase of ~~$980 thousand,~~$1.7 million, or ~~21.9%~~29.8%, during ~~2015.~~2018. Noninterest income for the Insurance ~~Division,~~Segment, which predominately consists of insurance commissions, increased ~~$340 thousand,~~$1.9 million, or ~~0.9%~~4.8%, during ~~2016,~~2019, compared to an increase of ~~$3.0~~$2.3 million, or ~~8.8%~~6.0%, during ~~2015.~~2018. The ~~slight~~ increase in

~~insurance commissions~~ noninterest income for the Insurance Segment during ~~2016~~2019 was primarily due to new ~~business~~insurance commission volume across all lines of business. The increase in noninterest income for the Insurance Segment during 2018 was primarily due to new insurance commission volume primarily in ~~group health coverage and an increase in contingent commissions from insurance companies, which was mostly offset by declines in business commission volume in~~ property and casualty ~~coverage and policy fees and other income. The increase in insurance commissions during 2015 was due to new business commission volume primarily in commercial property and casualty and group health~~ coverage. Growth in new business commission volumes reflected both a continued focus on new business and the addition of experienced account executives with an established book of business during 2015. General business activity in Trustmark’s geographic markets continues to improve marginally, resulting in increases in the demand for coverage on inventories, property, equipment, general liability and workers’ compensation.

Noninterest expense for the Insurance ~~Division~~Segment increased ~~$532 thousand,~~$1.3 million, or ~~1.9%~~4.2%, during ~~2016~~2019 and $1.5 million, or ~~5.5%~~5.0%, during ~~2015. The slight increase~~2018. Increases in noninterest expense for the Insurance ~~Division~~Segment during ~~2016 was principally due to increases in salaries~~2019 and ~~insurance expenses. The increase in noninterest expense during 2015 was~~2018 were primarily due to higher ~~commissions~~commission expense due to improvements in business volumes and higher salaries expense resulting from ~~improved performance in the Insurance Division and~~ modest general merit ~~increases and higher services and fees expense resulting from increases in professional fees and software maintenance fees.~~increases.

~~During 2016, business conditions improved slightly in the markets served by FBBI.~~ Trustmark performed an annual impairment test of the book value of ~~capital~~goodwill held in the Insurance ~~Division~~Segment as of October 1, ~~2016, 2015,~~2019, 2018, and ~~2014.~~2017. Based on this analysis, Trustmark concluded that no impairment charge was required. A renewed period of falling prices and suppressed demand for the products of the Insurance ~~Division may~~Segment could result in impairment of goodwill in the future. FBBI’s ability to maintain the current income trend is dependent on the success of the subsidiary’s continued initiatives to attract new business through cross referrals between practice units and bank relationships and seeking new business in other markets.

For the year ended December 31, ~~2016,~~2019, Trustmark’s combined effective tax rate was ~~22.3%~~13.4% compared to ~~23.4%~~13.0% in ~~2015~~2018 and ~~23.8%~~31.6% in ~~2014.~~2017. During the fourth quarter of 2017, Trustmark incurred non-routine income tax expenses of $17.0 million related to the re-measurement of Trustmark’s net deferred tax assets due to the enactment of the Tax Reform Act and the elimination of a deferred tax valuation allowance related to a prior merger. Excluding the effect of these non-routine income tax expenses, Trustmark’s combined effective tax rate for 2017 was 20.6%. The decrease in the effective tax rate for 2018 compared to 2017, was primarily due to the lower statutory corporate tax rate as a result of the enactment of the Tax Reform Act. Trustmark’s effective tax rate continues to be less than the statutory rate primarily due to various tax-exempt income items and its utilization of income tax credit programs. Trustmark invests in partnerships that provide income tax credits on a Federal and/or State basis (i.e., NMTC, low income housing tax credits and historical tax credits). The income tax credits related to these partnerships are utilized as specifically allowed by income

tax law and are recorded as a reduction in income tax expense. The Tax Reform Act did not impact the availability or accounting for these income tax credits in general; however, as a result of the lower combined effective tax rate, Trustmark is limited in its ability to invest in any new tax credits.

Earning assets serve as the primary revenue streams for Trustmark and are comprised of securities, loans, federal funds sold, securities purchased under reverse repurchase agreements and other earning assets. Average earning assets totaled ~~$11.485~~$12.131 billion, or ~~88.8%~~89.9% of total average assets, at December 31, ~~2016,~~2019, compared with ~~$10.791~~$12.194 billion, or ~~88.0%~~90.5% of total average assets, at December 31, ~~2015, an increase~~2018, a decrease of ~~$693.4~~$62.9 million, or ~~6.4%~~0.5%.

The securities portfolio is utilized by Management to manage interest rate risk, generate interest income, provide liquidity and use as collateral for public and wholesale funding. Risk and return can be adjusted by altering duration, composition and/or balance of the portfolio. The weighted-average life of the portfolio ~~decreased to 4.1 years~~ at December 31, ~~2016, compared to 5.2~~2019 and 2018 was 3.5 and 3.8 years, ~~at December 31, 2015.~~respectively.

When compared with December 31, ~~2015,~~2018, total investment securities decreased by ~~$17.9~~$381.0 million, or ~~0.5%~~14.0%, during ~~2016.~~2019. This decrease resulted primarily from calls, maturities and pay-downs of the underlying loans of ~~government-sponsored enterprise (GSE)~~GSE guaranteed securities, partially offset by purchases of ~~GSE securities.~~available for sale securities as well as a net increase in the fair market value of the securities available for sale. Trustmark sold ~~$25.0 million of~~no securities during ~~2016, which generated a net loss of $310 thousand, compared to no securities sold during 2015.~~2019 or 2018.

During 2013, Trustmark reclassified approximately $1.099 billion of securities available for sale as securities held to maturity to mitigate the potential adverse impact of a rising interest rate environment on the fair value of the available for sale securities and the related impact on tangible common equity. The ~~securities were transferred at fair value, which became the cost basis for the securities held to maturity. At the date of transfer, the~~resulting net unrealized holding loss ~~on the available for sale securities totaled approximately $46.6 million. The net unrealized holding loss~~ is being amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. ~~There were no gains or losses recognized as a result of the transfer.~~ At December 31, ~~2016,~~2019, the net unamortized, unrealized loss on the transferred securities included in accumulated other comprehensive loss (AOCL) in the accompanying consolidated balance sheets totaled ~~$24.2~~$12.1 million ($~~14.9~~9.1 million net of tax) compared to ~~$34.0~~$15.7 million ($~~21.0~~11.8 million net of tax) at December 31, ~~2015.~~2018.

Available for sale securities are carried at their estimated fair value with unrealized gains or losses recognized, net of taxes, in AOCL, a separate component of shareholders’ equity. At December 31, ~~2016,~~2019, available for sale securities totaled ~~$2.357~~$1.602 billion, which

represented ~~67.0%~~68.5% of the securities portfolio, compared to ~~$2.345~~$1.812 billion, or ~~66.4%~~66.6%, at December 31, ~~2015.~~2018. At December 31, ~~2016,~~2019, unrealized ~~losses,~~gains, net on available for sale securities totaled ~~$9.5~~$1.4 million compared to unrealized ~~gains,~~losses, net of ~~$5.9~~$42.7 million at December 31, ~~2015.~~2018. At December 31, ~~2016,~~2019, available for sale securities consisted of obligations of states and political subdivisions, GSE guaranteed mortgage-related securities and direct obligations of government agencies and GSEs.

Held to maturity securities are carried at amortized cost and represent those securities that Trustmark both intends and has the ability to hold to maturity. At December 31, ~~2016,~~2019, held to maturity securities totaled ~~$1.159 billion~~$738.1 million and represented ~~33.0%~~31.5% of the total securities portfolio, compared with ~~$1.188 billion,~~$909.6 million, or ~~33.6%~~33.4%, at December 31, ~~2015.~~2018.

The table below indicates the amortized cost of securities available for sale and held to maturity by type at December 31, ~~2016, 2015~~2019, 2018 and ~~2014~~2017 ($ in thousands):

	December 31,						December 31,
	2016		2015		2014		2019		2018		2017
Securities available for sale
U.S. Treasury securities	$	—	$	—	$	100
U.S. Government agency obligations							$	22,965	$	31,235	$	45,763
Issued by U.S. Government agencies		56,272		68,314		79,788
Issued by U.S. Government sponsored agencies		257		258		32,725
Obligations of states and political subdivisions		113,541		134,719		157,001		24,952		50,503		78,433
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		43,222		25,602		11,897		69,196		69,648		66,634
Issued by FNMA and FHLMC		638,809		222,899		199,599		714,350		685,520		824,872
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC or GNMA		1,271,198		1,584,338		1,655,733		656,162		830,129		1,028,176
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC or GNMA		242,869		278,429		184,394		113,359		187,494		218,252
Asset-backed securities and structured financial products		—		25,003		30,776
Total securities available for sale	$	2,366,168	$	2,339,562	$	2,352,013	$	1,600,984	$	1,854,529	$	2,262,130

Securities held to maturity
U.S. Government agency obligations							$	3,781	$	3,736	$	3,692
Issued by U.S. Government sponsored agencies	$	3,647	$	101,782	$	100,971
Obligations of states and political subdivisions		46,303		55,892		63,505		31,781		35,783		46,039
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		15,478		17,363		19,115		10,820		12,090		13,539
Issued by FNMA and FHLMC		81,299		10,368		11,437		96,631		115,133		133,975
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC or GNMA		803,474		820,012		834,176		485,324		578,827		678,926
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC or GNMA		208,442		182,401		141,481		109,762		164,074		180,315
Total securities held to maturity	$	1,158,643	$	1,187,818	$	1,170,685	$	738,099	$	909,643	$	1,056,486

The following table details the maturities of securities available for sale and held to maturity using the amortized cost at December 31, ~~2016,~~2019, and the weighted-average yield for each range of maturities (tax equivalent basis) ($ in thousands):

	Maturing																						Maturing
	Within One Year		Yield			After One, But Within Five Years		Yield			After Five, But Within Ten Years		Yield			After Ten Years		Yield			Total		Within One Year		Yield			After One, But Within Five Years		Yield			After Five, But Within Ten Years		Yield			After Ten Years		Yield			Total
Securities available for sale
U.S. Government agency obligations																							$	251		3.85	%	$	643		4.33	%	$	4,715		4.01	%	$	17,356		3.31	%	$	22,965
Issued by U.S. Government agencies	$	—		—		$	—		—		$	12,680		2.93	%	$	43,592		2.42	%	$	56,272
Issued by U.S. Government sponsored agencies		—		—			257		3.85	%		—		—			—		—			257
Obligations of states and political subdivisions		33,591		3.80	%		79,323		4.00	%		627		3.95	%		—		—			113,541		19,693		3.83	%		1,064		2.57	%		273		2.87	%		3,922		4.52	%		24,952
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		—		—			137		3.89	%		1,831		1.66	%		41,254		2.94	%		43,222		8		—			1,380		2.18	%		3,399		2.13	%		64,409		2.76	%		69,196
Issued by FNMA and FHLMC		3		4.51	%		41		2.53	%		91,841		2.35	%		546,924		1.92	%		638,809		—		—			2,635		3.29	%		330,414		2.04	%		381,301		2.24	%		714,350
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		392		5.00	%		8,926		2.00	%		51,977		2.60	%		1,209,903		2.40	%		1,271,198		88		2.50	%		4,867		2.35	%		24,088		2.44	%		627,119		2.41	%		656,162
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		—		—			95,118		2.92	%		138,641		2.32	%		9,110		2.71	%		242,869		—		—			105,249		2.34	%		1,396		3.41	%		6,714		2.77	%		113,359
Total securities available for sale	$	33,986		3.81	%	$	183,802		3.34	%	$	297,597		2.41	%	$	1,850,783		2.27	%	$	2,366,168	$	20,040		3.82	%	$	115,838		2.37	%	$	364,285		2.10	%	$	1,100,821		2.39	%	$	1,600,984

Securities held to maturity
U.S. Government agency obligations																							$	—		—		$	3,781		2.52	%	$	—		—		$	—		—		$	3,781
Issued by U.S. Government sponsored agencies	$	—		—		$	—		—		$	3,647		2.53	%	$	—		—		$	3,647
Obligations of states and political subdivisions		145		8.01	%		35,983		5.25	%		10,175		5.12	%		—		—			46,303		5,071		4.81	%		26,710		4.08	%		—		—			—		—			31,781
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		—		—			—		—			—		—			15,478		2.90	%		15,478		—		—			—		—			—		—			10,820		3.14	%		10,820
Issued by FNMA and FHLMC		—		—			—		—			—		—			81,299		2.19	%		81,299		—		—			—		—			27,060		1.98	%		69,571		2.40	%		96,631
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		—		—			—		—			—		—			803,474		1.98	%		803,474		—		—			—		—			—		—			485,324		2.01	%		485,324
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA		—		—			36,514		2.07	%		129,786		2.29	%		42,142		2.39	%		208,442		—		—			86,123		2.17	%		—		—			23,639		2.43	%		109,762
Total securities held to maturity	$	145		8.01	%	$	72,497		3.65	%	$	143,608		2.50	%	$	942,393		2.03	%	$	1,158,643	$	5,071		4.81	%	$	116,614		2.62	%	$	27,060		1.98	%	$	589,354		2.09	%	$	738,099

Mortgage-backed securities and collateralized mortgage obligations are included in maturity categories based on their stated maturity date. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.

Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of approximately ~~95%~~97.5% of the portfolio in GSE-backed obligations and other Aaa-rated securities as determined by Moody’s Investors Services (Moody’s). None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the FHLB of Dallas, FHLB of Atlanta and Federal Reserve Bank of Atlanta, Trustmark does not hold any other equity investment in a GSE.

As of December 31, ~~2016,~~2019, Trustmark did not hold securities of any one issuer with a carrying value exceeding ten percent of total shareholders’ equity, other than certain GSEs which are exempt from inclusion. Management continues to closely monitor the credit quality as well as the ratings of the debt and mortgage-backed securities issued by the GSEs and held in Trustmark’s securities portfolio.

The following table presents Trustmark’s securities portfolio by amortized cost and estimated fair value and by credit rating, as determined by Moody’s, at December 31, ~~2016~~2019 ($ in thousands):

	Amortized Cost					Estimated Fair Value					Amortized Cost					Estimated Fair Value
	Amount		%			Amount		%			Amount		%			Amount		%
Securities Available for Sale
Aaa	$	2,252,627		95.2	%	$	2,241,309		95.1	%	$	1,576,031		98.4	%	$	1,576,939		98.4	%
Aa1 to Aa3		75,328		3.2	%		76,666		3.3	%		16,630		1.0	%		16,690		1.0	%
A1 to A3		186		—			191		—			200		—			200		—
Baa1 to Baa3		219		—			216		—			1,082		0.1	%		1,105		0.1	%
Not Rated (1)		37,808		1.6	%		38,300		1.6	%		7,041		0.5	%		7,470		0.5	%
Total securities available for sale	$	2,366,168		100.0	%	$	2,356,682		100.0	%	$	1,600,984		100.0	%	$	1,602,404		100.0	%

Securities Held to Maturity
Aaa	$	1,112,341		96.0	%	$	1,109,295		95.9	%	$	706,318		95.7	%	$	714,041		95.7	%
Aa1 to Aa3		33,554		2.9	%		34,852		3.0	%		26,229		3.6	%		26,456		3.5	%
Baa1 to Baa3		419		—			433		—
Not Rated (1)		12,329		1.1	%		12,466		1.1	%		5,552		0.7	%		5,705		0.8	%
Total securities held to maturity	$	1,158,643		100.0	%	$	1,157,046		100.0	%	$	738,099		100.0	%	$	746,202		100.0	%

The table above presenting the credit rating of Trustmark’s securities is formatted to show the securities according to the credit rating category, and not by category of the underlying security. At December 31, ~~2016,~~2019, approximately ~~95.1%~~98.4% of the available for sale securities, measured at the estimated fair value, and ~~96.0%~~95.7% of the held to maturity securities, measured at amortized cost, were rated Aaa.

At December 31, ~~2016,~~2019, LHFS totaled ~~$175.9~~$226.3 million, consisting of ~~$132.0~~$169.3 million of residential real estate mortgage loans in the process of being sold to third parties and ~~$43.9~~$57.1 million of Government National Mortgage Association (GNMA) optional repurchase loans. At December 31, ~~2015,~~2018, LHFS totaled ~~$160.2~~$153.8 million, consisting of ~~$124.2~~$92.2 million of residential real estate mortgage loans in the process of being sold to third parties and ~~$36.0~~$61.6 million of GNMA optional repurchase loans. Please refer to the nonperforming assets table that follows for information on GNMA loans eligible for repurchase which are past due 90 days or more.

During 2015, Trustmark exercised its option to repurchase approximately $28.5 million delinquent loans serviced for GNMA. These loans were subsequently sold to a third party under different repurchase provisions. Trustmark retained the servicing for these loans, which are subject to guarantees by FHA/VA. As a result of this repurchase and sale, the loans were no longer carried as LHFS. The transaction resulted in a gain of $304 thousand, which is included in mortgage banking, net for 2015. Trustmark did not exercise its buy-back option on any delinquent loans serviced for GNMA during ~~2016.~~2019 or 2018.

For additional information regarding the GNMA optional repurchase loans, please see the section captioned “Past Due LHFS” included in Note 5 – LHFI and Allowance for Loan Losses, LHFI of Part II. Item 8. – Financial Statements and Supplementary Data – of this report.

The table below provides the carrying value of the LHFI portfolio by loan type for each year of the five-year period ended
December 31, ~~2016~~2019 ($ in thousands):

	December 31,																									December 31,
	2016					2015					2014					2013					2012					2019					2018					2017					2016					2015
	Amount		%			Amount		%			Amount		%			Amount		%			Amount		%			Amount		%			Amount		%			Amount		%			Amount		%			Amount		%
Loans secured by real estate:
Construction, land development and other land	$	831,437		10.6	%	$	824,723		11.6	%	$	619,877		9.6	%	$	596,889		10.3	%	$	468,975		8.4	%	$	1,162,791		12.4	%	$	1,056,601		12.0	%	$	987,624		11.5	%	$	831,437		10.6	%	$	824,723		11.6	%
Secured by 1-4 family residential properties		1,660,043		21.1	%		1,649,501		23.3	%		1,634,397		25.4	%		1,485,564		25.6	%		1,497,480		26.8	%		1,855,913		19.9	%		1,825,492		20.7	%		1,675,311		19.6	%		1,660,043		21.1	%		1,649,501		23.3	%
Secured by nonfarm, nonresidential properties		2,034,176		25.9	%		1,736,476		24.5	%		1,553,193		24.1	%		1,415,139		24.4	%		1,410,264		25.2	%		2,475,245		26.5	%		2,220,914		25.1	%		2,193,823		25.6	%		2,034,176		25.9	%		1,736,476		24.5	%
Other real estate secured		318,148		4.0	%		211,228		3.0	%		253,787		3.9	%		189,362		3.3	%		189,949		3.4	%		724,480		7.8	%		543,820		6.1	%		517,956		6.1	%		318,148		4.0	%		211,228		3.0	%
Commercial and industrial loans		1,528,434		19.5	%		1,343,211		18.9	%		1,270,350		19.7	%		1,157,614		20.0	%		1,169,513		20.9	%		1,477,896		15.8	%		1,538,715		17.4	%		1,570,345		18.3	%		1,528,434		19.5	%		1,343,211		18.9	%
Consumer loans		170,562		2.2	%		169,135		2.4	%		167,964		2.6	%		165,308		2.8	%		171,660		3.1	%		175,738		1.9	%		182,448		2.1	%		171,918		2.0	%		170,562		2.2	%		169,135		2.4	%
State and other political subdivision loans		917,515		11.7	%		734,615		10.4	%		602,727		9.3	%		499,963		8.6	%		443,665		7.9	%		967,944		10.4	%		973,818		11.0	%		952,483		11.1	%		917,515		11.7	%		734,615		10.4	%
Other loans		390,898		5.0	%		422,496		5.9	%		347,174		5.4	%		289,042		5.0	%		241,248		4.3	%		495,621		5.3	%		494,060		5.6	%		500,507		5.8	%		390,898		5.0	%		422,496		5.9	%
LHFI	$	7,851,213		100.0	%	$	7,091,385		100.0	%	$	6,449,469		100.0	%	$	5,798,881		100.0	%	$	5,592,754		100.0	%	$	9,335,628		100.0	%	$	8,835,868		100.0	%	$	8,569,967		100.0	%	$	7,851,213		100.0	%	$	7,091,385		100.0	%

LHFI at December 31, 2019 increased ~~$759.8~~$499.8 million, or ~~10.7%~~5.7%, compared to December 31, ~~2015.~~2018. The increase in LHFI during ~~2016 represented~~2019 was principally due to net ~~growth across all five of Trustmark’s market regions, primarily~~increases in ~~the~~ loans secured by real estate in all five market regions partially offset by declines in commercial and industrial loans in Trustmark’s Mississippi and ~~state and other political subdivision loans categories.~~ Tennessee market regions.

During ~~2016,~~2019, LHFI secured by real estate increased ~~$421.9~~$571.6 million, or ~~9.5%~~10.1%, ~~across~~due to net growth in loans secured by nonfarm, nonresidential properties, other real estate secured loans, construction, land development and other land loans and loans secured by 1-4 family residential properties. LHFI secured by nonfarm, nonresidential properties (NFNR LHFI) increased $254.3 million, or 11.5%, during 2019, principally due to movement from the other construction loans category. Excluding other construction loan reclassifications, the NFNR LHFI portfolio declined $184.1 million, or 8.3%, during 2019. The decrease in the NFNR LHFI portfolio, excluding the other construction reclassifications, was primarily attributable to declines in nonowner-occupied loans in Trustmark’s Mississippi and Alabama market regions as well as declines in owner-occupied loans in all five market regions. Other real estate secured LHFI increased $180.7 million, or 33.2%, during 2019, primarily due to multi-family residential loans in Trustmark’s Alabama, Texas, Mississippi and Florida market regions that were moved from the other construction loan category. Excluding the other construction loan reclassifications, other real estate secured LHFI decreased $152.1 million, or 28.0%, during 2019 principally due to declines in multi-family residential properties in all five market regions. LHFI secured by construction, land development and other land increased ~~$6.7~~$106.2 million, or ~~0.8%~~10.1%, during ~~2016,~~2019, principally due to new loan growth in the other construction ~~1-4 family construction and lots categories,~~category, partially offset by other construction loans that were moved to other loan categories upon completion of the ~~appropriate permanent categories.~~related construction project. During ~~2016, $524.6~~2019, $773.8 million ~~in other construction~~ loans were moved from other construction to ~~the appropriate permanent~~other loan categories, ~~upon completion,~~ including ~~$323.7 million in non-owner occupied, $84.1 million in owner occupied, $116.6~~$334.2 million in multi-family residential loans, $353.4 million in nonowner-occupied loans and ~~$283 thousand~~$86.2 million in ~~state and other political subdivision~~owner-occupied loans. Excluding all reclassifications between loan categories, growth in other construction loans across all five market regions totaled ~~$500.1~~$833.9 million for 2016. The 1-4 family construction and lots loan portfolios increased $19.3 million, or 12.5%, and $10.9 million, or 21.9%, respectively, during 2016, principally due to growth in Trustmark’s Alabama, Mississippi and Tennessee market regions.

The commercial real estate loan portfolio increased $297.7 million, or 17.1%, during 2016, principally due to other construction loans that moved to permanent financing. Excluding the reclassifications from other construction loans, the commercial real estate loans portfolio declined $109.3 million, or 6.3%, during 2016. The decrease in the commercial real estate loan portfolio, excluding the other construction reclassifications, was primarily attributable to declines in non-owner occupied loans in Trustmark’s Texas, Mississippi and Alabama market regions as well as declines in owner occupied loans in the Mississippi, Texas and Tennessee market regions. Other real estate secured LHFI increased $106.9 million, or 50.6%, during 2016, primarily due to multi-family residential loans in Trustmark’s Texas, Tennessee, Mississippi and Alabama market regions that were moved from other construction loans to permanent financing. Excluding the reclassifications from other construction loans, other real estate secured LHFI decreased $9.7 million, or 4.6%, during 2016 as declines in the Texas, Tennessee and Florida market regions were partially offset by growth in the Mississippi and Alabama market regions.2019. LHFI secured by 1-4 family residential properties increased ~~$10.5~~$30.4 million, or ~~0.6%~~1.7%, during ~~2016, reflecting~~2019 primarily due to growth in mortgage loans in the ~~Alabama,~~ Mississippi and ~~Florida~~Alabama market ~~regions partially offset by declines in the Tennessee and Texas market~~ regions. Trustmark made the decision in 2015 to sell the vast majority of these lower-rate, longer-term home mortgages in the secondary market, rather than replacing the run-off in its single-family loan portfolio. However, in the fourth quarter of 2016, Trustmark decided to replace a portion of the run-off in its single-family loan portfolio due to the increase in rates on mortgage loans resulting in the slight increase in LHFI secured by 1-4 family residential properties during 2016.

The commercial and industrial loan portfolio ~~increased $185.2~~decreased $60.8 million, or ~~13.8%~~4.0%, during ~~2016,~~2019, due to ~~growth~~declines in the Mississippi ~~Tennessee, Alabama~~ and ~~Florida~~Tennessee market regions, partially offset by ~~declines~~growth in the ~~Texas~~Alabama market region. Trustmark’s exposure to the energy sector is primarily included in the commercial and industrial loan portfolio in Trustmark’s Mississippi and Texas market regions. At December 31, ~~2016~~2019 and ~~2015,~~2018, energy-related LHFI had outstanding balances of approximately ~~$271.5~~$122.9 million and ~~$213.0~~$172.1 million, respectively, which represented approximately ~~3.5%~~1.3% of Trustmark’s total LHFI portfolio at December 31, ~~2016~~2019 compared to approximately ~~3.0%~~2.0% of the total LHFI portfolio at December 31, ~~2015.~~2018. Trustmark has no loan exposure where the source of repayment, or the underlying security of such exposure, is tied to the realization of value from energy reserves. Should oil prices ~~remain at~~fall below current levels ~~or below~~ for a prolonged period of time, there is potential for downgrades to occur. Management will continue to monitor this exposure.

State and other political subdivision LHFI increased $182.9 million, or 24.9%, during 2016 principally due to growth in traditional public finance loans, such as investments that entail the use of tax anticipation notes, public school improvements, facility improvements and renovations, in all five of Trustmark’s market regions. The other loan portfolio, which includes lending to nonprofits and real estate investment trusts, decreased $31.6 million, or 7.5%, during 2016, which represented declines in all of Trustmark’s market with the exception of the Alabama market region.

The following table provides information regarding Trustmark’s home equity loans and home equity lines of credit which are included in the LHFI secured by 1-4 family residential properties as of December 31, ~~2016~~2019 and ~~2015~~2018 ($ in thousands):

	December 31,						December 31,
	2016			2015			2019			2018
Home equity loans	$	54,687		$	61,635		$	52,348		$	54,778
Home equity lines of credit		390,629			376,998			388,217			393,134
Percentage of loans and lines for which Trustmark holds first lien		59.7	%		58.9	%		59.4	%		59.8	%
Percentage of loans and lines for which Trustmark does not hold first lien		40.3	%		41.1	%		40.6	%		40.2	%

Due to the increased risk associated with second liens, loan terms and underwriting guidelines differ from those used for products secured by first liens. Loan amounts and loan-to-value ratios are limited and are lower for second liens than first liens. Also, interest rates and maximum amortization periods are adjusted accordingly. In addition, regardless of lien position, the passing credit score for approval of all home equity lines of credit is higher than that of term loans. The allowance for loan losses, LHFI is also reflective of the increased risk related to second liens through application of a greater loss factor to this portion of the portfolio.

In the following tables, LHFI reported by region (along with related nonperforming assets and net charge-offs) are associated with location of origination except for loans secured by 1-4 family residential properties (representing traditional mortgages) and credit cards. These loans are included in the Mississippi market region because they are centrally analyzed and approved as part of a specific line of business located at Trustmark’s headquarters in Jackson, Mississippi.

The following table presents the LHFI composition by region at December 31, ~~2016~~2019 and reflects a diversified mix of loans by region ($ in thousands):

		December 31, 2016													December 31, 2019
		Total		Alabama		Florida		Mississippi		Tennessee		Texas			Total		Alabama		Florida		Mississippi		Tennessee		Texas
LHFI Composition by Region
Loans secured by real estate:
Construction, land development and other land		$	831,437	$	167,886	$	57,780	$	316,518	$	52,747	$	236,506		$	1,162,791	$	396,640	$	87,073	$	360,458	$	22,998	$	295,622
Secured by 1-4 family residential properties			1,660,043		79,087		49,393		1,412,078		102,076		17,409			1,855,913		126,541		39,111		1,594,235		82,644		13,382
Secured by nonfarm, nonresidential properties			2,034,176		283,756		177,455		908,591		169,499		494,875			2,475,245		622,714		255,996		923,335		165,393		507,807
Other real estate secured			318,148		28,866		3,511		159,369		17,688		108,714			724,480		190,099		26,011		283,201		9,627		215,542
Commercial and industrial loans			1,528,434		129,621		15,194		795,311		308,380		279,928			1,477,896		227,792		22,479		721,854		315,794		189,977
Consumer loans			170,562		20,811		3,683		126,711		17,180		2,177			175,738		24,124		5,002		124,395		19,777		2,440
State and other political subdivision loans			917,515		76,228		29,450		564,707		32,714		214,416			967,944		106,218		38,763		613,476		27,447		182,040
Other loans			390,898		37,394		19,140		261,612		38,946		33,806			495,621		79,404		16,452		301,144		67,526		31,095
LHFI		$	7,851,213	$	823,649	$	355,606	$	4,544,897	$	739,230	$	1,387,831		$	9,335,628	$	1,773,532	$	490,887	$	4,922,098	$	711,206	$	1,437,905

Construction, Land Development and Other Land Loans by Region	Construction, Land Development and Other Land Loans by Region													Construction, Land Development and Other Land Loans by Region
Lots		$	60,820	$	14,045	$	18,952	$	23,405	$	2,564	$	1,854		$	73,058	$	16,166	$	22,625	$	25,592	$	2,032	$	6,643
Development			52,669		6,763		5,534		21,421		615		18,336			60,881		13,327		8,365		28,390		4,714		6,085
Unimproved land			111,418		15,436		16,240		45,451		16,011		18,280			98,550		22,947		17,050		28,202		11,987		18,364
1-4 family construction			174,344		41,324		9,058		82,576		2,964		38,422			252,073		117,405		21,723		84,277		3,437		25,231
Other construction			432,186		90,318		7,996		143,665		30,593		159,614			678,229		226,795		17,310		193,997		828		239,299
Construction, land development and other land loans		$	831,437	$	167,886	$	57,780	$	316,518	$	52,747	$	236,506		$	1,162,791	$	396,640	$	87,073	$	360,458	$	22,998	$	295,622

Loans Secured by Nonfarm, Nonresidential Properties by Region	Loans Secured by Nonfarm, Nonresidential Properties by Region													Loans Secured by Nonfarm, Nonresidential Properties by Region
Non-owner occupied:
Nonowner-occupied:
Retail		$	279,040	$	74,393	$	36,196	$	96,009	$	21,850	$	50,592		$	426,995	$	165,213	$	41,542	$	117,382	$	27,709	$	75,149
Office			220,750		31,966		30,479		76,745		9,259		72,301			232,572		46,550		27,788		60,682		11,816		85,736
Nursing homes/assisted living			116,307		—		—		109,579		6,728		—
Hotel/motel			227,088		46,007		31,121		62,395		41,794		45,771			315,270		114,786		96,401		52,375		40,708		11,000
Mini-storage			145,456		9,963		5,300		58,430		13,999		57,764			110,097		12,301		3,832		47,561		579		45,824
Industrial			121,906		10,159		10,210		20,983		5,467		75,087			169,165		57,741		10,833		28,790		2,322		69,479
Health care			25,937		2,050		826		22,002		—		1,059			37,366		11,065		3,462		19,055		—		3,784
Convenience stores			19,624		1,554		—		10,905		993		6,172			24,283		3,137		—		11,680		639		8,827
Nursing homes/senior living																38,370		18,792		—		2,366		—		17,212
Other			73,364		8,031		10,519		25,269		2,804		26,741			63,485		4,219		6,875		11,965		5,804		34,622
Total non-owner occupied loans			1,229,472		184,123		124,651		482,317		102,894		335,487
Total nonowner-occupied loans																1,417,603		433,804		190,733		351,856		89,577		351,633

Owner-occupied:
Office			146,004		17,886		23,697		74,816		7,041		22,564			155,787		35,147		27,512		58,023		7,389		27,716
Churches			87,031		10,379		2,098		44,962		22,730		6,862			99,737		22,690		6,350		42,265		13,794		14,638
Industrial warehouses			127,544		6,414		3,517		64,274		10,082		43,257			139,685		11,778		3,372		63,204		16,289		45,042
Health care			116,585		22,859		6,830		62,925		4,661		19,310			132,838		18,305		6,175		92,828		2,542		12,988
Convenience stores			94,618		7,732		7,088		54,080		1,168		24,550			106,175		13,277		7,044		63,969		667		21,218
Retail			38,173		4,746		5,012		20,720		1,995		5,700			69,311		15,610		7,377		27,333		2,788		16,203
Restaurants			34,741		3,530		912		24,781		3,474		2,044			56,369		3,730		1,857		32,722		16,542		1,518
Auto dealerships			14,909		9,144		41		4,600		1,124		—			30,123		8,257		300		13,288		8,278		—
Nursing homes/senior living																179,737		55,174		—		118,707		5,856		—
Other			145,099		16,943		3,609		75,116		14,330		35,101			87,880		4,942		5,276		59,140		1,671		16,851
Total owner-occupied loans			804,704		99,633		52,804		426,274		66,605		159,388			1,057,642		188,910		65,263		571,479		75,816		156,174
Loans secured by nonfarm, nonresidential properties		$	2,034,176	$	283,756	$	177,455	$	908,591	$	169,499	$	494,875		$	2,475,245	$	622,714	$	255,996	$	923,335	$	165,393	$	507,807

Due to the short-term nature of most commercial real estate lending and the practice of annual renewal of commercial lines of credit, approximately one-third of Trustmark’s portfolio matures in less than one year. Such a short-term maturity profile is not unusual for a commercial bank and provides Trustmark the opportunity to obtain updated financial information from its borrowers and to actively monitor its borrowers’ creditworthiness. This maturity profile is well matched with many of Trustmark’s sources of funding, which are also short-term in nature.

The following table provides information regarding Trustmark’s LHFI maturities by loan type at December 31, ~~2016~~2019 ($ in thousands):

	Maturing								Maturing
			One Year								One Year
	Within		Through		After				Within		Through		After
	One Year		Five		Five				One Year		Five		Five
	or Less		Years		Years		Total		or Less		Years		Years		Total
Loans secured by real estate:
Construction, land development and other land	$	494,840	$	263,116	$	73,481	$	831,437	$	912,570	$	201,976	$	48,245	$	1,162,791
Secured by 1-4 family residential properties		507,211		224,072		928,760		1,660,043		499,633		241,830		1,114,450		1,855,913
Other real estate secured		881,524		1,143,136		327,664		2,352,324		1,713,273		1,152,947		333,505		3,199,725
Commercial and industrial loans		754,558		647,437		126,439		1,528,434		811,343		579,060		87,493		1,477,896
Consumer loans		48,604		115,483		6,475		170,562		50,175		121,041		4,522		175,738
Other loans		406,623		350,592		551,198		1,308,413		428,455		398,748		636,362		1,463,565
LHFI	$	3,093,360	$	2,743,836	$	2,014,017	$	7,851,213	$	4,415,449	$	2,695,602	$	2,224,577	$	9,335,628

The following table provides information regarding Trustmark’s LHFI maturities by interest rate sensitivity at December 31, ~~2016~~2019 ($ in thousands):

	Maturing								Maturing
			One Year								One Year
	Within		Through		After				Within		Through		After
	One Year		Five		Five				One Year		Five		Five
	or Less		Years		Years		Total		or Less		Years		Years		Total
Loan Type
Predetermined interest rates	$	954,619	$	2,007,342	$	1,851,916	$	4,813,877	$	858,154	$	2,141,050	$	1,851,038	$	4,850,242
Floating interest rates:
Loans which are at contractual floor		148,976		73,789		3,142		225,907		200,087		41,663		20,813		262,563
Loans which are free to float		1,989,765		662,705		158,959		2,811,429		3,357,208		512,889		352,726		4,222,823
Total floating interest rates		2,138,741		736,494		162,101		3,037,336		3,557,295		554,552		373,539		4,485,386
LHFI	$	3,093,360	$	2,743,836	$	2,014,017	$	7,851,213	$	4,415,449	$	2,695,602	$	2,224,577	$	9,335,628

Trustmark’s variable rate LHFI are based primarily on various prime and LIBOR interest rate bases. The following tables provide information regarding the interest rate terms of Trustmark’s LHFI as of December 31, ~~2016~~2019 and ~~2015~~2018 ($ in thousands)~~. Trustmark’s variable rate LHFI are based primarily on various prime and LIBOR interest rate bases.~~:

	December 31, 2016						December 31, 2019
	Fixed		Variable		Total		Fixed		Variable		Total
Loans secured by real estate:
Construction, land development and other land	$	210,862	$	620,575	$	831,437	$	201,055	$	961,736	$	1,162,791
Secured by 1- 4 family residential properties		1,616,289		43,754		1,660,043		1,004,079		851,834		1,855,913
Secured by nonfarm, nonresidential properties		1,131,720		902,456		2,034,176		1,430,132		1,045,113		2,475,245
Other real estate secured		167,250		150,898		318,148		189,023		535,457		724,480
Commercial and industrial loans		518,125		1,010,309		1,528,434		636,518		841,378		1,477,896
Consumer loans		150,304		20,258		170,562		152,970		22,768		175,738
State and other political subdivision loans		827,969		89,546		917,515		925,990		41,954		967,944
Other loans		191,358		199,540		390,898		310,475		185,146		495,621
LHFI	$	4,813,877	$	3,037,336	$	7,851,213	$	4,850,242	$	4,485,386	$	9,335,628

	December 31, 2015						December 31, 2018
	Fixed		Variable		Total		Fixed		Variable		Total
Loans secured by real estate:
Construction, land development and other land	$	311,049	$	513,674	$	824,723	$	306,590	$	750,011	$	1,056,601
Secured by 1- 4 family residential properties		1,573,640		75,861		1,649,501		1,051,290		774,202		1,825,492
Secured by nonfarm, nonresidential properties		1,116,689		619,787		1,736,476		1,490,035		730,879		2,220,914
Other real estate secured		160,147		51,081		211,228		197,549		346,271		543,820
Commercial and industrial loans		611,198		732,013		1,343,211		821,343		717,372		1,538,715
Consumer loans		149,742		19,393		169,135		162,940		19,508		182,448
State and other political subdivision loans		682,028		52,587		734,615		907,685		66,133		973,818
Other loans		210,186		212,310		422,496		265,277		228,783		494,060
LHFI	$	4,814,679	$	2,276,706	$	7,091,385	$	5,202,709	$	3,633,159	$	8,835,868

Trustmark’s allowance for loan loss methodology is based on guidance provided in SEC Staff Accounting Bulletin (SAB) No. 102, “Selected Loan Loss Allowance Methodology and Documentation Issues,” as well as other regulatory guidance. Trustmark’s allowance has been developed using different factors to estimate losses based upon specific evaluation of identified individual LHFI considered impaired, estimated identified losses on various pools of LHFI and/or groups of risk rated LHFI with common risk characteristics and other external and internal factors of estimated probable losses based on other facts and circumstances. The level of Trustmark’s allowance reflects Management’s continuing evaluation of specific credit risks, loan loss experience, current loan portfolio growth, present economic, political and regulatory conditions and unidentified losses inherent in the current loan portfolio. For a complete description of Trustmark’s allowance for loan loss methodology and the quantitative and qualitative factors included in the valuation allowance, please see Note 5 – LHFI and Allowance for Loan Losses, LHFI included in Part II. Item 8. – Financial Statements and Supplementary Data – of this report.

The table below illustrates the changes in Trustmark’s allowance for loan losses, LHFI as well as Trustmark’s loan loss experience for the periods presented ($ in thousands):

	Years Ended December 31,															Years Ended December 31,
	2016			2015			2014			2013			2012			2019			2018			2017			2016			2015
Balance at beginning of period	$	67,619		$	69,616		$	66,448		$	78,738		$	89,518		$	79,290		$	76,733		$	71,265		$	67,619		$	69,616
Transfers (1)																	—			1,554			—			—			—
LHFI charged off:
Construction, land development and other land loans		(311	)		(2,435	)		(1,100	)		(1,441	)		(3,480	)		(40	)		(123	)		(79	)		(311	)		(2,435	)
Loans secured by 1-4 family residential properties		(1,319	)		(2,473	)		(2,505	)		(1,298	)		(5,532	)		(531	)		(1,629	)		(950	)		(1,319	)		(2,473	)
Loans secured by nonfarm, nonresidential properties		(3,067	)		(1,439	)		(390	)		(1,002	)		(5,410	)		(322	)		(1,184	)		(4,231	)		(3,067	)		(1,439	)
Other loans secured by real estate		(27	)		(24	)		(277	)		(910	)		(1,601	)		—			—			(5	)		(27	)		(24	)
Commercial and industrial loans		(6,602	)		(8,081	)		(2,092	)		(1,371	)		(6,922	)		(5,344	)		(18,823	)		(8,286	)		(6,602	)		(8,081	)
Consumer loans		(1,864	)		(2,171	)		(1,965	)		(2,425	)		(3,082	)		(2,278	)		(2,089	)		(2,546	)		(1,864	)		(2,171	)
State and other political subdivision loans		—			—			—			—			—			—			—			—			—			—
Other loans		(5,740	)		(5,846	)		(4,897	)		(5,031	)		(5,349	)		(5,966	)		(5,641	)		(5,050	)		(5,740	)		(5,846	)
Total charge-offs		(18,930	)		(22,469	)		(13,226	)		(13,478	)		(31,376	)		(14,481	)		(29,489	)		(21,147	)		(18,930	)		(22,469	)
Recoveries on LHFI previously charged off:
Construction, land development and other land loans		1,380			1,773			3,608			3,077			—			894			1,124			1,428			1,380			1,773
Loans secured by 1-4 family residential properties		1,122			920			922			427			435			666			646			1,833			1,122			920
Loans secured by nonfarm, nonresidential properties		976			605			944			225			—			472			133			396			976			605
Other loans secured by real estate		7			136			—			229			—			29			23			69			7			136
Commercial and industrial loans		732			1,761			2,657			2,298			3,916			1,257			5,410			2,578			732			1,761
Consumer loans		4,007			3,289			3,883			4,798			6,211			1,829			2,019			1,938			4,007			3,289
State and other political subdivision loans		—			—			—			—			—			—			—			—			—			—
Other loans		3,395			3,613			3,169			3,555			3,268			3,524			3,144			3,279			3,395			3,613
Total recoveries		11,619			12,097			15,183			14,609			13,830			8,671			12,499			11,521			11,619			12,097
Net (charge-offs) recoveries		(7,311	)		(10,372	)		1,957			1,131			(17,546	)		(5,810	)		(16,990	)		(9,626	)		(7,311	)		(10,372	)
Provision for loan losses, LHFI		10,957			8,375			1,211			(13,421	)		6,766			10,797			17,993			15,094			10,957			8,375
Balance at end of period	$	71,265		$	67,619		$	69,616		$	66,448		$	78,738		$	84,277		$	79,290		$	76,733		$	71,265		$	67,619

Percentage of net charge-offs (recoveries) during period to average loans (LHFS and LHFI) outstanding during the period		0.10	%		0.15	%		-0.03	%		-0.02	%		0.30	%		0.06	%		0.19	%		0.11	%		0.10	%		0.15	%

~~At December 31, 2016, the allowance for loan losses, LHFI, was $71.3 million, an increase of $3.6 million, or 5.4%, when compared with December 31, 2015. The increase~~

The allowance for loan loss, LHFI increased $5.0 million, or 6.3%, during ~~2016 was~~2019 principally due to ~~an increase~~increases in reserves required related to growth in the ~~required~~LHFI portfolio and changes in qualitative reserve for commercial LHFI across all five of Trustmark’s market regions as a result of loan growth, partially offset by a decline in the required specific reserve for impaired LHFI in the Mississippi, Texas and Alabama market regions.factors. Total allowance coverage of nonperforming LHFI, excluding specifically reviewed impaired LHFI, increased to ~~267.40%~~410.52% at December 31, ~~2016,~~2019, compared to ~~210.32%~~350.77% at December 31, ~~2015~~2018 principally due to ~~a $7.6 million, or 12.6%,~~the increase in the allowance for loan losses, LHFI, excluding ~~the~~ specific ~~reserve~~reserves for ~~LHFI and a $3.3 million, or 11.5%, decrease in nonperforming LHFI excluding the specifically reviewed~~ impaired ~~LHFI during 2016.~~LHFI. Allocation of Trustmark’s ~~$71.3 million~~ allowance for loan losses, LHFI, represented ~~0.97%~~0.98% of commercial LHFI and ~~0.68%~~0.61% of consumer and home mortgage LHFI, resulting in an allowance to total LHFI of ~~0.91%~~0.90% as of December 31, ~~2016.~~2019. This compares with an allowance to total LHFI of ~~0.95%~~0.90% at December 31, ~~2015,~~2018, which was allocated to commercial LHFI at ~~1.05%~~0.99% and to consumer and home mortgage LHFI at ~~0.66%~~0.57%.

The following tables present changes in the allowance for loan losses, LHFI by geographic market region for the periods presented ($ in thousands):

	Year Ended December 31, 2016																		Year Ended December 31, 2019
	Total			Alabama			Florida			Mississippi			Tennessee			Texas			Total			Alabama			Florida			Mississippi			Tennessee			Texas
Balance at beginning of period	$	67,619		$	5,469		$	2,766		$	43,183		$	5,230		$	10,971		$	79,290		$	11,175		$	3,242		$	40,592		$	8,422		$	15,859
LHFI charged-off		(18,930	)		(1,238	)		(658	)		(10,228	)		(1,274	)		(5,532	)		(14,481	)		(1,327	)		(293	)		(10,335	)		(1,371	)		(1,155	)
Recoveries		11,619			333			2,598			6,464			948			1,276			8,671			573			1,143			5,897			663			395
Net (charge-offs) recoveries		(7,311	)		(905	)		1,940			(3,764	)		(326	)		(4,256	)		(5,810	)		(754	)		850			(4,438	)		(708	)		(760	)
Provision for loan losses, LHFI		10,957			2,624			(1,806	)		3,591			897			5,651			10,797			2,430			(809	)		4,827			4,411			(62	)
Balance at end of period	$	71,265		$	7,188		$	2,900		$	43,010		$	5,801		$	12,366		$	84,277		$	12,851		$	3,283		$	40,981		$	12,125		$	15,037

	Year Ended December 31, 2015																		Year Ended December 31, 2018
	Total			Alabama			Florida			Mississippi			Tennessee			Texas			Total			Alabama			Florida			Mississippi			Tennessee			Texas
Balance at beginning of period	$	69,616		$	3,647		$	3,920		$	47,290		$	5,674		$	9,085		$	76,733		$	10,473		$	2,819		$	44,388		$	5,427		$	13,626
Transfers (1)																				1,554			—			782			772			—			—
LHFI charged-off		(22,469	)		(1,294	)		(1,924	)		(15,848	)		(1,630	)		(1,773	)		(29,489	)		(1,025	)		(184	)		(13,496	)		(8,815	)		(5,969	)
Recoveries		12,097			349			2,892			6,361			1,105			1,390			12,499			428			2,090			8,720			857			404
Net (charge-offs) recoveries		(10,372	)		(945	)		968			(9,487	)		(525	)		(383	)		(16,990	)		(597	)		1,906			(4,776	)		(7,958	)		(5,565	)
Provision for loan losses, LHFI		8,375			2,767			(2,122	)		5,380			81			2,269			17,993			1,299			(2,265	)		208			10,953			7,798
Balance at end of period	$	67,619		$	5,469		$	2,766		$	43,183		$	5,230		$	10,971		$	79,290		$	11,175		$	3,242		$	40,592		$	8,422		$	15,859

	Year Ended December 31, 2014																		Year Ended December 31, 2017
	Total			Alabama			Florida			Mississippi			Tennessee			Texas			Total			Alabama			Florida			Mississippi			Tennessee			Texas
Balance at beginning of period	$	66,448		$	1,506		$	6,282		$	42,592		$	5,088		$	10,980		$	71,265		$	7,188		$	2,900		$	43,010		$	5,801		$	12,366
LHFI charged-off		(13,226	)		(623	)		(1,059	)		(10,068	)		(1,255	)		(221	)		(21,147	)		(986	)		(339	)		(13,910	)		(1,157	)		(4,755	)
Recoveries		15,183			220			4,423			8,292			796			1,452			11,521			439			3,209			6,555			764			554
Net (charge-offs) recoveries		1,957			(403	)		3,364			(1,776	)		(459	)		1,231			(9,626	)		(547	)		2,870			(7,355	)		(393	)		(4,201	)
Provision for loan losses, LHFI		1,211			2,544			(5,726	)		6,474			1,045			(3,126	)		15,094			3,832			(2,951	)		8,733			19			5,461
Balance at end of period	$	69,616		$	3,647		$	3,920		$	47,290		$	5,674		$	9,085		$	76,733		$	10,473		$	2,819		$	44,388		$	5,427		$	13,626

Charge-offs exceeded recoveries for ~~2016~~2019 resulting in a net charge-off of ~~$7.3~~$5.8 million, or ~~0.10%~~0.06% of average loans (LHFS and LHFI), compared to a net charge-off of ~~$10.4~~$17.0 million, or ~~0.15%~~0.19% of average loans (LHFS and LHFI), in ~~2015,~~2018, and a net ~~recovery~~charge-off of ~~$2.0~~$9.6 million, or ~~-0.03%~~0.11% of average loans (LHFS and LHFI), in ~~2014.~~2017. The decrease in ~~total~~ net charge-offs during ~~2016~~2019 was principally due to declines in charge-offs in the ~~Mississippi, Florida,~~ Tennessee, Texas and ~~Alabama~~Mississippi market regions ~~partially offset by an increase in charge-offs in the Texas market region,~~ primarily due to three large ~~substandard~~problem commercial credits in these market regions that were charged off during 2016. The increase in total net charge-offs during 2015 can be primarily attributed to an increase in charge-offs in the Mississippi market region, principally due to two large substandard credits that were charged off during 2015 which totaled $8.0 million, a decrease in recoveries of loans previously charged down, principally due to a $1.9 million decline in recoveries in the Mississippi market region and a $1.5 million decline in recoveries in the Florida market region, and an increase in charge-offs in the Texas market region as a result of a large substandard credit that was charged off during the third quarter of 2015.

The provision for loan losses, LHFI represents the change in the estimated loan losses determined utilizing Trustmark’s allowance for loan loss methodology net of charge-offs and recoveries of LHFI charged against net income. The provision for loan losses, LHFI, for ~~2016~~2019 totaled ~~0.14%~~0.12% of average loans (LHFS and LHFI), compared to ~~0.12%~~0.20% of average loans (LHFS and LHFI) in ~~2015~~2018 and ~~0.02%~~0.18% of average loans (LHFS and LHFI) in ~~2014.~~2017. The ~~increase~~decrease in the provision for loan losses, LHFI for 2019 when ~~2016 is~~ compared to ~~2015~~2018 was primarily ~~reflects the increase~~due to decreases in ~~the amount of required~~net charge-offs and specific reserves for impaired LHFI, partially offset by a decrease in net charge-offs and the additional provision expense recorded during 2015 as a result of revisions to the allowance for loan loss methodology. The provision for loans losses, LHFI for the Texas market region increased $3.4 million when 2016 is compared to 2015, principally resulting from increases in charge-offs as well as the required reserves for LHFI. The provision for loan losses, LHFI for the Mississippi market region decreased $1.8 million when 2016 is compared to 2015, principally due to the decrease in charge-offs and additional provision expense recorded during 2015 as a result of revisions to the allowance for loan loss methodology.

During 2015, Trustmark made revisions to both the quantitative and qualitative portions of the allowance for loan loss methodology for commercial and consumer LHFI. In total, these revisions resulted in an additional provision expense of $9.5 million during 2015. For a complete description of the revisions made to Trustmark’s allowance for loan loss methodology during 2015, please see Note 5 – LHFI and Allowance for Loan Losses, LHFI included in Part II. Item 8. – Financial Statements and Supplementary Data – of this report.

The increase in the provision for loan losses, LHFI during 2015 resulted primarily from changes to Trustmark’s allowance for loan loss methodology, an increase in charge-offs of LHFI, principally in the Mississippi and Texas market regions, a decline in recoveries on LHFI, principally in the Mississippi and Florida market regions, and a decline in the amount of reserves released, principally in the Texas and Florida market regions, compared to 2014. The provision for loan losses, LHFI for the Texas market region increased $5.4 million during 2015 primarily due to a decline in the amount of reserves released compared to 2014, a large substandard credit that was charged off during 2015, increases in reserves required based on balance and risk rate changes of LHFI and the additional provision expense recorded during 2015 due to the changes in the allowance for loan loss methodology. The $3.6 million increase in provision for the Florida market region was primarily due to the additional provision expense recorded during 2015 for changes in the allowance for loan loss methodology and a decline in recoveries, principally resulting from pay-downs received during 2014 of loans previously charged down partially offset by pay-downs received during 2015. The provision for loan losses, LHFI for the Mississippi market region declined $1.1 million primarily due to a decline in the amount of reserves required based on the qualitative reserve factor calculation and an increase in charge-offs principally due to the charge off of two large substandard credits during 2015,

partially offset by an increase in the amount of reserves required based on the quantitative reserve factor calculation, a decrease in the amount of recoveries received during 2015 compared to 2014 and the additional provision expense recorded during 2015 as a result of changes in qualitative reserve factors and growth of the ~~allowance for loan loss methodology.~~LHFI portfolio.

Nonperforming Assets, Excluding Acquired Loans ~~and Covered Other Real Estate~~

The table below provides the components of the nonperforming assets, excluding acquired loans, ~~and covered other real estate,~~ by geographic market region for each year in the five-year period ended December 31, ~~2016~~2019 ($ in thousands):

	December 31,															December 31,
	2016			2015			2014			2013			2012			2019			2018			2017			2016			2015
Nonaccrual LHFI
Alabama	$	665		$	1,776		$	852		$	14		$	—		$	1,870		$	3,361		$	3,083		$	665		$	1,776
Florida		3,644			5,180			11,091			12,278			19,314			267			1,175			3,034			3,644			5,180
Mississippi		37,771			40,754			57,129			42,307			38,960			41,493			44,331			49,129			37,771			40,754
Tennessee		6,213			5,106			5,819			4,390			8,401			8,980			8,696			4,436			6,213			5,106
Texas		941			2,496			4,452			6,249			15,688			616			4,061			7,893			941			2,496
Total nonaccrual LHFI		49,234			55,312			79,343			65,238			82,363			53,226			61,624			67,575			49,234			55,312
Other real estate
Alabama		15,989			21,578			21,196			25,912			—			8,133			6,873			11,714			15,989			21,578
Florida		22,582			29,579			35,324			34,480			18,569			5,877			8,771			13,937			22,582			29,579
Mississippi		15,646			14,312			17,397			22,766			27,771			14,919			17,255			14,260			15,646			14,312
Tennessee		6,183			9,974			10,292			12,892			17,589			319			1,025			2,535			6,183			9,974
Texas		1,651			1,734			8,300			10,489			14,260			—			744			782			1,651			1,734
Total other real estate, excluding covered other real estate		62,051			77,177			92,509			106,539			78,189
Total other real estate																	29,248			34,668			43,228			62,051			77,177
Total nonperforming assets	$	111,285		$	132,489		$	171,852		$	171,777		$	160,552		$	82,474		$	96,292		$	110,803		$	111,285		$	132,489

Nonperforming assets/total loans (LHFS and LHFI) and ORE		1.38	%		1.81	%		2.57	%		2.84	%		2.71	%
Nonperforming assets/total loans (LHFS and LHFI) and other real estate																	0.86	%		1.07	%		1.26	%		1.38	%		1.81	%

Loans Past Due 90 days or more
LHFI	$	1,832		$	2,300		$	2,764		$	3,298		$	6,378		$	642		$	856		$	2,171		$	1,832		$	2,300
LHFS - Guaranteed GNMA services loans (1)	$	28,345		$	21,812		$	25,943		$	21,540		$	43,073		$	41,648		$	37,384		$	35,544		$	28,345		$	21,812

See the previous discussion of LHFS for more information on Trustmark’s serviced GNMA loans eligible for repurchase and the impact of Trustmark’s repurchases of delinquent mortgage loans under the GNMA optional repurchase program.

At December 31, ~~2016,~~2019, nonaccrual LHFI totaled ~~$49.2~~$53.2 million, or ~~0.61%~~0.56% of total LHFS and LHFI, reflecting a decrease of ~~$6.1~~$8.4 million, or ~~0.08%~~0.09% of total LHFS and LHFI, relative to December 31, ~~2015.~~2018. The decrease in nonaccrual LHFI was principally due to ~~substandard credits that were paid off or foreclosed~~a reduction and charge-off of one large commercial nonaccrual credit in the Mississippi market region ~~returned to accrual status~~and one large commercial nonaccrual credit in the ~~Florida~~Texas market region, for which reserves were previously established, as well as foreclosure of one large nonaccrual healthcare credit and ~~charged off~~reduction of one large commercial nonaccrual credit in the Mississippi ~~and Texas~~ market, ~~regions partially~~which were largely offset by ~~LHFI migrating to~~a large commercial nonaccrual ~~status~~credit in the Mississippi ~~Florida and Tennessee market regions during 2016. LHFI migrating to nonaccrual status in Trustmark’s Mississippi~~ market region ~~totaled approximately $21.1 million~~that was placed on nonaccrual during ~~2016. Of this total $14.9 million, or 70.8%, represented five substandard credits, three energy-related loans and two healthcare providers.~~2019. As of December 31, ~~2016,~~2019, nonaccrual energy-related LHFI totaled ~~$11.4~~$10.6 million and represented ~~4.2%~~8.6% of Trustmark’s total energy-related ~~portfolio. Predominately all~~portfolio, compared to $12.0 million, or 7.0% of ~~the nonaccrual~~Trustmark’s total energy-related ~~LHFI as of~~portfolio at December 31, ~~2106 were in the oil field services category.~~2018. For additional information regarding nonaccrual LHFI, see the section captioned ~~“Nonaccrual/Impaired~~“Nonaccrual and Past Due LHFI” in Note 5 – LHFI and Allowance for Loan Losses, LHFI included in Part II. Item 8. – Financial Statements and Supplementary Data – of this report.

The following table illustrates nonaccrual LHFI by loan type for each year in the five-year period ended December 31, ~~2016~~2019 ($ in thousands):

	December 31,										December 31,
	2016		2015		2014		2013		2012		2019		2018		2017		2016		2015
Loans secured by real estate:
Construction, land development and other land	$	3,323	$	6,123	$	13,867	$	13,327	$	27,105	$	897	$	2,218	$	2,105	$	3,323	$	6,123
Secured by 1-4 family residential properties		20,329		23,079		25,621		21,603		27,114		16,810		14,718		19,022		20,329		23,079
Secured by nonfarm, nonresidential properties		8,482		17,800		25,717		21,809		18,289		7,700		9,621		12,608		8,482		17,800
Other real estate secured		402		145		1,318		1,327		3,956		1,032		927		212		402		145
Commercial and industrial loans		15,824		7,622		12,104		6,286		4,741		21,775		23,938		33,338		15,824		7,622
Consumer loans		300		31		88		151		360		108		205		135		300		31
State and other political subdivision loans		—		—		—		—		—		4,079		8,595		—		—		—
Other loans		574		512		628		735		798		825		1,402		155		574		512
Total nonaccrual LHFI	$	49,234	$	55,312	$	79,343	$	65,238	$	82,363	$	53,226	$	61,624	$	67,575	$	49,234	$	55,312

Other real estate ~~excluding covered other real estate,~~ at December 31, ~~2016~~2019 decreased ~~$15.1~~$5.4 million, or ~~19.6%~~15.6%, when compared with December 31, ~~2015. The decrease in other real estate, excluding covered other real estate, during 2016 was primarily due to~~2018 as a result of properties sold ~~as well as~~and write-downs ofon foreclosed properties across all five market regions, partially offset by new properties foreclosed in Trustmark’s ~~Florida,~~ Mississippi, Alabama, and Tennessee market ~~regions partially offset by properties foreclosed in these four market~~ regions.

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 December 31, 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.

The following tables illustrate changes in ~~other real estate, excluding covered~~ other real estate by geographic market region for the periods presented ($ in thousands):

	Year Ended December 31, 2016																		Year Ended December 31, 2019
	Total			Alabama			Florida			Mississippi			Tennessee			Texas			Total			Alabama			Florida			Mississippi			Tennessee			Texas
Balance at beginning of period	$	77,177		$	21,578		$	29,579		$	14,312		$	9,974		$	1,734		$	34,668		$	6,873		$	8,771		$	17,255		$	1,025		$	744
Additions		24,348			2,363			10,523			9,514			1,849			99			8,598			2,908			—			5,575			115			—
Disposals		(35,075	)		(6,934	)		(16,815	)		(6,841	)		(4,303	)		(182	)		(11,474	)		(1,198	)		(2,783	)		(5,967	)		(800	)		(726	)
Write-downs		(4,399	)		(1,018	)		(705	)		(1,339	)		(1,337	)		—			(2,544	)		(450	)		(111	)		(1,944	)		(21	)		(18	)
Balance at end of period	$	62,051		$	15,989		$	22,582		$	15,646		$	6,183		$	1,651		$	29,248		$	8,133		$	5,877		$	14,919		$	319		$	—

	Year Ended December 31, 2015																		Year Ended December 31, 2018
	Total			Alabama			Florida			Mississippi			Tennessee			Texas			Total			Alabama			Florida			Mississippi			Tennessee			Texas
Balance at beginning of period	$	92,509		$	21,196		$	35,324		$	17,397		$	10,292		$	8,300		$	43,228		$	11,714		$	13,937		$	14,260		$	2,535		$	782
Additions		33,396			8,791			8,330			6,004			1,374			8,897			12,115			1,563			2,637			7,533			382			—
Disposals		(45,826	)		(8,506	)		(12,689	)		(7,504	)		(1,701	)		(15,426	)		(19,802	)		(5,217	)		(7,747	)		(5,035	)		(1,803	)		—
Write-downs		(2,902	)		(745	)		(1,386	)		(743	)		9			(37	)		(873	)		(133	)		(56	)		(557	)		(89	)		(38	)
Adjustments		—			842			—			(842	)		—			—			—			(1,054	)		—			1,054			—			—
Balance at end of period	$	77,177		$	21,578		$	29,579		$	14,312		$	9,974		$	1,734		$	34,668		$	6,873		$	8,771		$	17,255		$	1,025		$	744

	Year Ended December 31, 2014																		Year Ended December 31, 2017
	Total			Alabama			Florida			Mississippi			Tennessee			Texas			Total			Alabama			Florida			Mississippi			Tennessee			Texas
Balance at beginning of period	$	106,539		$	25,912		$	34,480		$	22,766		$	12,892		$	10,489		$	62,051		$	15,989		$	22,582		$	15,646		$	6,183		$	1,651
Additions		37,428			8,489			16,353			12,146			440			—			9,235			1,226			504			5,970			753			782
Disposals		(43,802	)		(10,167	)		(14,684	)		(15,684	)		(1,078	)		(2,189	)		(24,762	)		(4,562	)		(7,993	)		(6,183	)		(4,373	)		(1,651	)
Write-downs		(7,656	)		(3,122	)		(825	)		(1,747	)		(1,962	)		—			(3,296	)		(939	)		(1,156	)		(1,173	)		(28	)		—
Adjustments		—			84			—			(84	)		—			—
Balance at end of period	$	92,509		$	21,196		$	35,324		$	17,397		$	10,292		$	8,300		$	43,228		$	11,714		$	13,937		$	14,260		$	2,535		$	782

Write-downs of other real estate ~~excluding covered other real estate,~~ increased ~~$1.5~~$1.7 million during ~~2016,~~2019 compared to a decrease of ~~$4.8~~$2.4 million, or 73.5%, during ~~2015 and an increase of $1.3 million during 2014.~~2018. The increase in write-downs ~~on other real estate, excluding~~

~~covered~~of other real estate during ~~2016~~2019 compared to 2018 was ~~primarily~~principally due to ~~$2.2 million of~~changes in reserves for ~~other real estate~~ write-downs ~~used or released during 2015 in the Alabama, Tennessee and Mississippi market regions. The decrease in write-downs on other real estate, excluding covered~~of other real estate during ~~2015 was~~ the result of the $3.7 million decrease in the provision for other real estate write-downs due to provision recapture in Trustmark’s Alabama, Tennessee and Mississippi market regions as reserves for other real estate write-downs previously recorded were used or released during the year, partially offset by provision expense in the Florida market region and decreases in write-downs on other real estate that was revalued during the year, principally in the Tennessee, Florida and Mississippi market regions.respective periods.

Other real estate in Trustmark’s Florida market region included $8.4 million of BancTrust properties foreclosed during 2016, $360 thousand of write-downs of BancTrust other real estate and the sale of $12.6 million of BancTrust other real estate in Florida during 2016. Excluding other real estate resulting from the BancTrust merger, other real estate, excluding covered other real estate, decreased $4.0 million during 2016. Other real estate, excluding covered other real estate, in Trustmark’s Florida market region included $5.9 million of BancTrust properties foreclosed during 2015, $665 thousand of write-downs of BancTrust other real estate and the sale of $8.3 million of BancTrust other real estate during 2015. Excluding other real estate resulting from the BancTrust merger, other real estate, excluding covered other real estate, decreased $11.9 million during 2015.58

The following table illustrates ~~other real estate, excluding covered~~ other real estate by type of property for each year in the five-year period ended December 31, ~~2016~~2019 ($ in thousands):

	December 31,										December 31,
	2016		2015		2014		2013		2012		2019		2018		2017		2016		2015
Construction, land development and other land properties	$	36,871	$	47,550	$	61,015	$	65,273	$	46,957	$	11,482	$	16,206	$	27,491	$	36,871	$	47,550
1-4 family residential properties		7,926		10,732		10,150		14,696		8,134		3,453		4,983		5,081		7,926		10,732
Nonfarm, nonresidential properties		16,817		16,717		19,696		26,433		22,760		14,313		13,296		10,468		16,817		16,717
Other real estate properties		437		2,178		1,648		137		338		—		183		188		437		2,178
Total other real estate, excluding covered other real estate	$	62,051	$	77,177	$	92,509	$	106,539	$	78,189
Total other real estate											$	29,248	$	34,668	$	43,228	$	62,051	$	77,177

For additional information regarding other real estate, including covered other real estate, see Note 10 – Other Real Estate and Covered Other Real Estate included in Part II. Item 8. – Financial Statements and Supplementary Data – of this report.

Trustmark’s loss share agreement with the FDIC covering the acquired covered loans secured by 1-4 family residential properties will expire in 2021.

The table below provides the carrying value of the acquired loan portfolio by loan type for each year of the five-year period ended December 31, ~~2016~~2019 ($ in thousands):

	December 31,										December 31,
	2016		2015		2014		2013		2012		2019		2018		2017		2016		2015
Noncovered loans:
Loans secured by real estate:
Construction, land development and other land	$	20,850	$	41,623	$	58,309	$	98,928	$	10,056	$	4,771	$	5,878	$	23,586	$	20,850	$	42,644
Secured by 1-4 family residential properties		65,926		86,950		116,920		157,914		19,404		17,525		22,556		61,751		69,540		97,008
Secured by nonfarm, nonresidential properties		103,820		135,626		202,323		287,136		45,649		38,206		47,979		114,694		103,820		140,264
Other real estate secured		19,010		23,860		27,813		33,948		669		3,946		8,253		16,746		19,010		25,146
Commercial and industrial loans		36,896		55,075		88,256		149,495		3,035		5,035		15,267		31,506		36,896		55,699
Consumer loans		3,365		5,641		9,772		18,428		2,610		520		1,356		2,600		3,365		5,641
Other loans		18,766		23,936		22,390		24,141		100		2,598		5,643		10,634		18,766		24,009
Noncovered acquired loans		268,633		372,711		525,783		769,990		81,523
Acquired loans												72,601		106,932		261,517		272,247		390,411
Less allowance for loan losses, acquired loans		11,312		11,259		10,541		7,249		1,885		815		1,231		4,079		11,397		11,992
Net noncovered acquired loans	$	257,321	$	361,452	$	515,242	$	762,741	$	79,638

Covered loans: (1)
Loans secured by real estate:
Construction, land development and other land	$	—	$	1,021	$	1,197	$	2,363	$	3,924
Secured by 1-4 family residential properties		3,614		10,058		13,180		16,416		23,990
Secured by nonfarm, nonresidential properties		—		4,638		7,672		10,945		18,407
Other real estate secured		—		1,286		1,096		2,644		3,567
Commercial and industrial loans		—		624		277		394		747
Consumer loans		—		—		—		119		177
Other loans		—		73		204		1,335		1,229
Covered acquired loans		3,614		17,700		23,626		34,216		52,041
Less allowance for loan losses, acquired loans		85		733		1,518		2,387		4,190
Net covered acquired loans	$	3,529	$	16,967	$	22,108	$	31,829	$	47,851
Net acquired loans											$	71,786	$	105,701	$	257,438	$	260,850	$	378,419

Trustmark’s loss share agreement with the FDIC covering the acquired loans other than loans secured by 1-4 family residential properties expired on June 30, 2016. Trustmark’s loss share agreement with the FDIC covering the acquired loans secured by 1-4 family residential properties will expire in 2021. Effective July 1, 2016, all covered acquired loans excluding the covered acquired loans secured by 1-4 family residential properties were reclassified to noncovered acquired loans.

During ~~2016, noncovered and covered~~2019, acquired loans declined ~~$104.1~~$34.3 million, or ~~27.9%~~32.1%, ~~and $14.1 million, or 79.6%, respectively,~~ compared to balances at December 31, ~~2015. The decrease in noncovered acquired loans during 2016 was~~2018, primarily ~~the result of~~due to pay-downs and pay-offs of these acquired loans partially offset by the reclassification of covered acquired loans to noncovered acquired loans as of July 1, 2016 due to the expiration of the related loss share agreement with the FDIC. Total acquired loans declined $118.2 million, or 30.3%, during 2016. Based on the most recent re-estimation of expected cash flows, Trustmark anticipates that acquired loan balances, excluding any settlement of debt, will decline approximately $20.0 million to $25.0 million during the first quarter of 2017. Trustmark also expects the yield on the acquired loans, excluding any recoveries, to be approximately 5.5% to 6.5% for the first quarter of 2017.loans. As the balances in the acquired loan portfolio continue to run-off, Trustmark expects that the income benefit provided by this portfolio will also decline.

For additional information regarding acquired loans, including changes in the net carrying value, see Note 6 – Acquired Loans included in Part II. Item 8. – Financial Statements and Supplementary Data – of this report.

Trustmark’s deposits are its primary source of funding and consist primarily of core deposits from the communities Trustmark serves. Deposits include interest-bearing and noninterest-bearing demand accounts, savings, money market, certificates of deposit and individual retirement accounts. Total deposits were ~~$10.056~~$11.246 billion at December 31, ~~2016~~2019 compared to ~~$9.588~~$11.364 billion at December 31, ~~2015, an increase~~2018, a decrease of ~~$467.8~~$118.9 million, or ~~4.9%.~~1.0%, as a result of declines in both noninterest-bearing and interest-bearing deposits. During ~~2016,~~2019, noninterest-bearing deposits decreased ~~$25.5~~$46.4 million, or ~~0.8%~~1.6%, primarily due to ~~declines~~a decline in public demand deposit accounts ~~which were mostly~~partially offset by growth in commercial and consumer demand deposit

~~accounts, while interest-bearing~~ accounts. Interest-bearing deposits ~~increased $493.2~~decreased $72.5 million, or ~~7.5%~~0.9%, ~~primarily~~during 2019 principally due to ~~growth in interest-bearing demand deposit accounts, predominantly in public interest checking, and savings accounts partially offset by~~ declines ~~in certificates of deposits. Public interest checking accounts increased $421.5 million, or 41.1%, during 2016, principally during the fourth quarter of 2016. The increase~~ in public interest checking accounts ~~was primarily due to an increase~~and all categories of time deposits, which were largely offset by growth in ~~non-core public deposits as a result of the FRB’s increase in the target range for the federal funds rate during December 2016.~~consumer money market deposit accounts and commercial interest checking accounts.

Trustmark uses short-term borrowings to fund growth of earning assets in excess of deposit growth. ~~Short-term borrowings consist primarily of federal~~

Federal funds purchased ~~securities sold under~~and repurchase agreements ~~short-term FHLB advances and GNMA optional repurchase loans. Short-term borrowings~~ totaled ~~$1.310 billion at December 31, 2016, an increase of $455.9 million, or 53.4%, when compared with $853.7~~$256.0 million at December 31, ~~2015, primarily due~~2019 compared to a $500.0 million FHLB advance with the FHLB of Dallas that was reclassified from long-term to short-term in December 2016. Federal funds purchased and securities sold under repurchase agreements totaled $539.8$50.5 million at December 31, ~~2016 compared to $441.0 million at December 31, 2015,~~2018, an increase of ~~$98.8 million, or 22.4%.~~$205.5 million. Of these amounts ~~$140.5~~$62.5 million and ~~$144.0~~$50.5 million, respectively, represented customer related transactions, such as commercial sweep repurchase balances. Excluding customer related transactions, Trustmark had $193.5 million of upstream federal funds purchased at December 31, 2019 compared to none at December 31, 2018 primarily due to the decline in public deposits.

Other borrowings totaled ~~$399.4~~$85.4 million at December 31, ~~2016,~~2019, an increase of ~~$102.4~~$5.5 million, or 6.9%, when compared with ~~$297.0~~$79.9 million at December 31, 2015, as Trustmark increased its utilization of this attractively priced funding source, along with FHLB advances, to fund the difference between loan and deposit growth. Other short-term borrowings increased $357.2 million, or 86.6%, during 2016 primarily due to an increase of $350.0 million in outstanding short-term FHLB advances. The increase in outstanding short-term FHLB advances during 2016 was2018, primarily due to the ~~$500.0 million FHLB advance with~~addition of building and equipment finance lease liabilities resulting from the ~~FHLB~~adoption of ~~Dallas that was reclassified from long-term to short-term in December 2016~~FASB ASU 2016-02, “Leases (Topic 842),” partially offset by a ~~$150.0 million~~ decline in ~~other short-term advances with~~GNMA optional repurchase loans.

During 2018, Trustmark reduced its funding needs from external sources as a result of growth in deposits out-pacing growth in LHFI and Management’s decision to suspend reinvestment of security cash flows and allow the ~~FHLB~~run-off of ~~Dallas. For additional information regarding Trustmark’s short-term FHLB advances, please see~~maturing investment securities. See the section captioned ~~“Liquidity.”~~“Liquidity” for further discussion of the components of Trustmark’s excess funding capacity.

The table below presents information concerning qualifying components of Trustmark’s ~~short-term~~ borrowings for each of the last three years ($ in thousands):

	2016			2015			2014			2019			2018			2017
Federal funds purchased and securities sold under repurchase agreements:
Amount outstanding at end of period	$	539,817		$	441,042		$	443,543		$	256,020		$	50,471		$	469,827
Weighted average interest rate at end of period		0.52	%		0.25	%		0.10	%		1.31	%		0.37	%		1.06	%
Maximum amount outstanding at any month end during each period	$	606,336		$	673,360		$	692,242		$	376,712		$	524,208		$	620,698
Average amount outstanding during each period		495,197			503,077			435,324			110,915			329,649			512,085
Weighted average interest rate during each period		0.35	%		0.16	%		0.13	%		1.28	%		1.45	%		0.81	%

Short-term borrowings:
Other borrowings:
Amount outstanding at end of period	$	769,778		$	412,617		$	425,077		$	85,396		$	79,885		$	971,995
Weighted average interest rate at end of period		0.72	%		0.58	%		0.49	%		1.48	%		1.05	%		1.35	%
Maximum amount outstanding at any month end during each period	$	769,778		$	858,827		$	425,077		$	85,396		$	977,011		$	1,424,760
Average amount outstanding during each period		370,008			415,081			173,759			82,476			317,687			1,235,914
Weighted average interest rate during each period		1.00	%		0.69	%		0.87	%		0.85	%		1.58	%		1.10	%

Long-term FHLB advances totaled $251.0 million at December 31, 2016, a decrease of $250.1 million, or 49.9%, when compared with $501.2 million at December 31, 2015. During the second quarter of 2016, Trustmark obtained a $250.0 million long-term FHLB advance from the FHLB of Dallas. Similar to the long-term advance obtained in December 2015, the advance has a variable rate and a two-year maturity. As noted above, during the fourth quarter of 2016, the $500.0 million long-term FHLB advance obtained in December 2015 was reclassified to short-term. Trustmark chose to utilize FHLB advances with the FHLB of Dallas as a funding source for loan growth due to the advantageous rates available in comparison to other sources of funding. For additional information regarding Trustmark’s long-term FHLB advances, please see the section captioned “Liquidity.”

As disclosed in Note 1516 – Defined Benefit and Other Postretirement Benefits included in Part II. Item 8. – Financial Statements and Supplementary Data – of this report, Trustmark ~~maintains~~maintained a noncontributory tax-qualified defined benefit pension plan, ~~(the Plan),~~the Plan, in which substantially all associates who began employment prior to 2007 ~~participate. The Plan provides retirement benefits that are based~~participated. As previously reported, on the length of credited service and final average compensation, as defined in the Plan, and vest upon three years of service. Benefit accruals under the plan have been frozen since 2009, with the exception of certain associates covered through plans obtained in acquisitions that were subsequently merged into the Plan. Other than the associates covered through these acquired plans that were merged into the Plan, associates have not earned additional benefits, except for interest as required by law, since the Plan was frozen. Current and former associates who participate in the Plan retain their right to receive benefits that accrued before the Plan was frozen.

On July 26, 2016, the Board of Directors of Trustmark authorized the termination of the Plan, effective as of December 31, 2016.

During the second quarter of 2017, Trustmark fully funded the Plan on a termination basis by contributing additional assets in the amount of $17.6 million in accordance with the IRS and Pension Benefit Guaranty Corporation requirements. Participants in the plan elected to receive either a lump sum cash payment or annuity payments under a group annuity contract purchased from an insurance carrier. Final distributions were made to participants from the Plan’s assets and a one-time pension settlement expense was recognized totaling $17.6 million.

To satisfy commitments made by Trustmark to associates covered through ~~acquired~~ plans ~~that were~~obtained in acquisitions and subsequently merged into the Plan (collectively, the ~~“Continuing Associates”)~~Continuing Associates), on July 26, 2016, the Board of Directors of Trustmark also approved the spin-off of the portion of the Plan associated with the accrued benefits of the Continuing Associates into a new plan, ~~titled~~ the ~~Trustmark Corporation Pension~~Continuing Plan, ~~for Certain Employees of Acquired Financial Institutions (the “Spin-Off Plan”),~~ effective as of December 30, 2016, immediately prior to the termination of the Plan.

In order to terminate the Plan, in accordance with IRS and Pension Benefit Guaranty Corporation (PBGC) requirements, Trustmark is required to fully fund the Plan on a termination basis and will contribute the additional assets necessary to do so. The final distributions will be made from current plan assets and a one-time pension settlement expense of approximately $17.5 million will be recognized when paid by Trustmark during the second quarter of 2017. Trustmark does not expect this estimated amount to change materially between the date of this report and the final distribution of plan assets although if a material number of participants in the Plan elect to receive annuity payments rather than a lump sum cash payment pursuant to the termination of the Plan, Trustmark’s costs in effecting the termination of the Plan would change, and would likely increase, perhaps materially. Further, as a result of Trustmark’s de-risking investment strategy for the Plan as of June 30, 2016, the expected rate of return on plan assets during the second half of 2016 decreased from 6.0% to 2.5%. Accordingly, Trustmark’s increased periodic benefit costs for the Plan during the second half of 2016 was $1.3 million. Participants in the Plan will have a choice of receiving a lump sum cash payment or annuity payments under a group annuity contract purchased from an insurance carrier, subject to certain exceptions. As a result of the termination of the Plan, each participant will become fully vested in his or her accrued benefits under the Plan. After the distribution of plan assets during the second quarter of 2017, Trustmark estimates that the annual pension expense will be reduce by approximately $3.0 million to $4.0 million.

The Board of Directors reserved the right to defer or revoke the termination of the Plan if circumstances change such that deferral or revocation would be warranted, but has no intent to do so at this time.

As a result of the merger with BancTrust on February 15, 2013, Trustmark became the sponsor of the Retirement Plan for Employees of BancTrust Financial Group (BancTrust Pension Plan), a tax-qualified defined benefit pension plan, which was frozen prior to the merger date. On January 28, 2014, Trustmark’s Board of Directors authorized the termination of the BancTrust Pension Plan effective as of April 15, 2014. On October 1, 2015, Trustmark received a favorable determination letter from the IRS with respect to the BancTrust Pension Plan’s termination. In addition, as required by law, a termination notice was filed with the PBGC, and it is not anticipated that the PBGC will raise any issues with respect to the BancTrust Pension Plan’s termination. During 2014, the assets of the BancTrust Pension Plan were held in trust and distributed in conjunction with the plan termination. All assets of the BancTrust Pension Plan were distributed as of December 31, 2014. Benefits that were not paid to participants were annuitized under annuity contracts. As a result of the termination of the BancTrust Pension Plan, Trustmark recognized a pre-tax gain of $1.2 million during 2014.

At December 31, ~~2016,~~2019, the fair value of the Continuing Plan’s assets totaled ~~$54.7~~$3.4 million and was exceeded by the projected benefit obligation of ~~$75.9~~$9.1 million by ~~$21.2~~$5.6 million. Net periodic benefit cost equaled ~~$7.5~~$1.1 million in ~~2016,~~both 2019 and 2018, compared ~~with $4.9~~to $20.5 million in ~~2015 and 1.5~~2017. The decrease in the net periodic benefit cost during 2018 was principally due to the $17.6 million ~~in 2014.~~one-time pension settlement expense incurred during 2017 as a result of the termination of the Plan. Excluding this one-time pension settlement expense, net periodic benefit cost during 2017 totaled $2.8 million.

The fair value of plan assets is determined utilizing current market quotes, while the benefit obligation and periodic benefit costs are determined utilizing actuarial methodology with certain weighted-average assumptions. For ~~2016, 2015~~2019, 2018 and ~~2014,~~2017, the process used to select the discount rate assumption under FASB ASC Topic 715 takes into account the benefit cash flow and the segmented yields on high-quality corporate bonds that would be available to provide for the payment of the benefit cash flow. Assumptions, which have been chosen to represent the estimate of a particular event as required by GAAP, have been reviewed and approved by Management based on recommendations from its actuaries. ~~For additional information regarding the assumptions used by Management, please refer to the section captioned “Critical Accounting Policies – Defined Benefit Plans.”~~

The range of potential contributions to the Continuing Plan is determined annually by the Continuing Plan’s actuary in accordance with applicable IRS rules and regulations. Trustmark’s policy is to fund amounts that are sufficient to satisfy the annual minimum funding requirements and do not exceed the maximum that is deductible for federal income tax purposes. The actual amount of the contribution is determined annually based on the Continuing Plan’s funded status and return on plan assets as of the measurement date, which is December 31. For the plan ~~years~~year ending December 31, ~~2016 and 2015,~~2019, Trustmark’s minimum required contribution to the Continuing Plan was ~~zero. Since the Plan has terminated, there will be no additional contributions required in the future other than amounts necessary to facilitate the Plan termination.~~$157 thousand; however, Trustmark contributed $285 thousand. For the plan year ending December 31, ~~2017,~~2020, Trustmark’s minimum required contribution to the ~~Spin-Off~~Continuing Plan is expected to be ~~zero;~~$175 thousand; however, Management and the Board of Directors of Trustmark will monitor the ~~Spin-Off~~Continuing Plan throughout ~~2017~~2020 to determine any additional funding requirements by the plan’s measurement date.

As disclosed in Note 1516 – Defined Benefit and Other Postretirement Benefits included in Part II. Item 8. – Financial Statements and Supplementary Data – of this report, Trustmark maintains a nonqualified supplemental retirement plan covering key executive officers and senior officers as well as directors who have elected to defer fees. The plan provides for retirement and/or death benefits based on a participant’s covered salary or deferred fees. Although plan benefits may be paid from Trustmark’s general assets, Trustmark has purchased life insurance contracts on the participants covered under the plan, which may be used to fund future benefit payments under the plan. The measurement date for the plan is December 31. As a result of mergers prior to 2014, Trustmark became the administrator of small nonqualified supplemental retirement plans, for which the plan benefits were frozen prior to the merger ~~date.~~dates.

At December 31, ~~2016,~~2019, the accrued benefit obligation for the supplemental retirement plans equaled ~~$58.5~~$57.5 million, while the net periodic benefit cost equaled ~~$3.6~~$3.0 million in ~~2016, $3.8~~2019, $3.1 million in ~~2015~~2018 and $3.4 million in ~~2014.~~2017. The net periodic benefit cost and projected benefit obligation are determined using actuarial assumptions as of the plans’ measurement date, which is December 31. The process used to select the discount rate assumption under FASB ASC Topic 715 takes into account the benefit cash flow and the segmented yields on high-quality corporate bonds that would be available to provide for the payment of the benefit cash flow. At December 31, ~~2016,~~2019, unrecognized actuarial losses and unrecognized prior service costs continue to be amortized over future service periods.

Information required in this section is set forth under the heading “Legal Proceedings” of Note 1718 – Commitments and Contingencies in Part II. Item 8. – Financial Statements and Supplementary Data – of this report.

Information required in this section is set forth under the heading “Lending Related” of Note 1718 – Commitments and Contingencies in Part II. Item 8. – Financial Statements and Supplementary Data – of this report.

Trustmark is obligated to make payments under specific long-term and certain other binding contractual arrangements. The following table provides a schedule of the amount of the payments due under those obligations as of December 31, ~~2016~~2019 ($ in thousands):

	Less than		One to Three		Three to Five		After				Less than		One to Three		Three to Five		After
	One Year		Years		Years		Five Years		Total		One Year		Years		Years		Five Years		Total
Time deposits	$	1,225,303	$	345,452	$	48,374	$	1,964	$	1,621,093	$	1,359,100	$	240,918	$	35,311	$	2,590	$	1,637,919
Securities sold under repurchase agreements		127,007		—		—		—		127,007		53,572		—		—		—		53,572
FHLB advances		700,008		250,039		821		189		951,057		—		676		—		135		811
Junior subordinated debt securities		—		—		—		61,856		61,856		—		—		—		61,856		61,856
Finance lease obligations												1,715		2,764		1,131		3,910		9,520
Operating lease obligations		9,561		14,112		9,766		24,611		58,050		3,864		6,935		6,749		14,806		32,354
Total	$	2,061,879	$	609,603	$	58,961	$	88,620	$	2,819,063	$	1,418,251	$	251,293	$	43,191	$	83,297	$	1,796,032

At December 31, ~~2016,~~2019, Trustmark’s total shareholders’ equity was ~~$1.520~~$1.661 billion, an increase of ~~$47.2~~$69.2 million, or ~~3.2%~~4.4%, ~~from its level at~~when compared to December 31, ~~2015.~~2018. During ~~2016,~~2019, shareholders’ equity increased primarily as a result of net income of ~~$108.4~~$150.5 million ~~which was~~as well as an increase in the fair market value of available for sale securities, net of tax, of $33.1 million, partially offset by common stock dividends of ~~$62.7~~$59.8 million and common stock repurchases of $56.6 million. Trustmark utilizes a capital model in order to

provide Management with a monthly tool for analyzing changes in its strategic capital ratios. This allows Management to hold sufficient capital to provide for growth opportunities and protect the balance sheet against sudden adverse market conditions, while maintaining an attractive return on equity to shareholders.

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 this report, 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%. Accumulated other comprehensive loss, net of tax~~2.500% and 1.875% at December 31, 2019 and 2018, respectively. AOCL 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 December 31, ~~2016,~~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 December 31, ~~2016.~~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, 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 December 31, ~~2016,~~2019, which Management believes have affected Trustmark’s or TNB’s present classification.

~~During~~In 2006, Trustmark enhanced its capital structure with the issuance of trust preferred ~~securities and Subordinated Notes (the Notes).~~securities. For regulatory capital purposes, the trust preferred securities ~~currently qualify~~qualified as Tier 1 ~~capital.~~capital at December 31, 2019 and 2018. Trustmark intends to continue to utilize $60.0 million in trust preferred securities issued by the Trust as Tier 1 capital up to the regulatory limit, as permitted by the grandfather provision in the Dodd-Frank Act and the Basel III Final Rule.

Refer to the section captioned “Regulatory Capital” included in Note 1819 – Shareholders’ Equity in Part II. Item 8. – Financial Statements and Supplementary Data – of this report for an illustration of Trustmark’s and TNB’s actual regulatory capital amounts and ratios under regulatory capital standards in effect at December 31, ~~2016~~2019 and ~~2015.~~2018.

Dividends per common share for each of the years ended December 31, ~~2016, 2015~~2019, 2018 and ~~2014~~2017 were $0.92. Trustmark’s dividend payout ratio for ~~2016, 2015~~2019, 2018 and ~~2014~~2017 was ~~57.5%~~39.48%, ~~53.5%~~41.44%, and ~~50.3%~~58.97%, respectively. 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. In 2020, TNB will have available ~~in 2017~~ approximately ~~$98.3~~$56.8 million plus its net income for that year to pay as dividends to Trustmark. The actual amount of any dividends declared in ~~2016~~2020 by Trustmark will be determined by Trustmark’s Board of Directors.

Liquidity is the ability to ensure that sufficient cash flow and liquid assets are available to satisfy current and future financial obligations, including demand for loans and deposit withdrawals, funding operating costs and other corporate purposes. Consistent cash flows from operations and adequate capital provide internally generated liquidity. Furthermore, Management maintains funding capacity from a variety of external sources to meet daily funding needs, such as those required to meet deposit withdrawals, loan disbursements and security settlements. Liquidity strategy also includes the use of wholesale funding sources to provide for the seasonal fluctuations of deposit and loan demand and the cyclical fluctuations of the economy that impact the availability of funds. Management keeps excess funding capacity available to meet potential demands associated with adverse circumstances.

The asset side of the balance sheet provides liquidity primarily through maturities and cash flows from loans and securities as well as the ability to sell certain loans and securities while the liability portion of the balance sheet provides liquidity primarily through noninterest and interest-bearing deposits. Trustmark utilizes federal funds purchased, FHLB advances, ~~securities sold under~~ repurchase agreements as well as the ~~Federal Reserve~~ Discount Window ~~(Discount Window)~~ and, on a limited basis as discussed below, brokered deposits to provide additional liquidity. Access to these additional sources represents Trustmark’s incremental borrowing capacity.

During 2018, Trustmark reduced its funding needs from external sources as a result of growth in deposits out-pacing growth in LHFI and Management’s decision to suspend reinvestment of security cash flows and allow the run-off of maturing investment securities. The reduction in Trustmark’s funding needs from external sources during 2018 is reflected in the changes in balances from various borrowing sources which are discussed below.

Deposit accounts represent Trustmark’s largest funding source. Average deposits totaled to ~~$9.669~~$11.404 billion for ~~2016~~2019 and represented approximately ~~74.7%~~84.5% of average liabilities and shareholders’ equity, compared to average deposits of ~~$9.628~~$10.980 billion, which represented ~~78.5%~~81.5% of average liabilities and shareholders’ equity for ~~2015.~~2018.

Trustmark utilizes a limited amount of brokered deposits to supplement other wholesale funding sources. At December 31, ~~2016,~~2019, brokered sweep Money Market Deposit Account (MMDA) deposits totaled ~~$34.2~~$26.2 million compared to ~~$42.3~~$23.9 million at December 31, ~~2015.~~2018.

At December 31, ~~2016,~~2019, Trustmark had ~~$399.4~~$193.5 million inof upstream federal funds purchased, compared to ~~$297.0 million~~none at December 31, ~~2015.~~2018. The increase in upstream federal funds purchased during 2019 was primarily due to the decline in public deposits. Trustmark maintains adequate federal funds lines to provide sufficient short-term liquidity. ~~Trustmark increased its utilization of this attractively priced funding source, along with FHLB advances, to fund the difference between loan and deposit growth.~~

Trustmark maintains a relationship with the FHLB of Dallas, which provided ~~$700.0 million of~~no outstanding short-term ~~advances and $250.0 million of outstanding~~or long-term advances at December 31, ~~2016 compared to $350.0 million of outstanding short-term advances~~2019 and $500.0 million of outstanding long-term advances at December 31, 2015. The outstanding short-term FHLB advances at December 31, 2016 included a $500.0 million FHLB advance that was reclassified from long-term to short-term during December 2016. Trustmark chose to utilize FHLB advances with the FHLB of Dallas as a funding source for loan growth due to the advantageous rates available in comparison to other sources of funding.

2018. Under the existing borrowing agreement, Trustmark had sufficient qualifying collateral to increase FHLB advances with the FHLB of Dallas by ~~$1.511~~$3.178 billion at December 31, ~~2016.~~ 2019.

In addition, at December 31, ~~2016,~~2019, Trustmark had ~~$1.1 million~~$811 thousand in FHLB advances outstanding with the FHLB of Atlanta, which were acquired in the BancTrust merger, compared to ~~$1.2 million~~$879 thousand at December 31, ~~2015.~~2018. Trustmark has non-member status and thus no additional borrowing capacity with the FHLB of Atlanta.

Additionally, Trustmark has the ability to ~~enter into wholesale funding repurchase agreements as a source of borrowing by utilizing~~leverage its unencumbered investment securities as collateral. At December 31, ~~2016,~~2019, Trustmark had approximately ~~$1.373 billion~~$546.0 million available in ~~repurchase agreement capacity~~unencumbered agency securities compared to ~~$1.194 billion~~$496.2 million at December 31, 2015. The increase in repurchase agreement capacity at December 31, 2016, was primarily due to an increase in the unencumbered investment portfolio balance resulting in part from a lower public deposit pledge requirement.2018.

Another borrowing source is the Discount Window. At December 31, ~~2016,~~2019, Trustmark had approximately ~~$998.1~~$982.7 million available in collateral capacity at the Discount Window primarily from pledges of commercial and industrial LHFI, compared with ~~$883.7 million~~$1.012 billion at December 31, ~~2015. This increase was due to the increase in the commercial and industrial LHFI portfolio during 2016.~~

On December 15, 2016, TNB repaid the $50.0 million in aggregate principal amount of the Notes. The Notes, which had a maturity date of December 15, 2016, were unsecured and subordinate and junior in right of payment to TNB’s obligations to its depositors, its obligations under bankers’ acceptances and letters of credit, its obligations to any Federal Reserve Bank or the FDIC and its obligations to its other creditors, and to any rights acquired by the FDIC as a result of loans made by the FDIC to TNB.2018.

During 2006, Trustmark completed a private placement of $60.0 million of trust preferred securities through a newly formed Delaware trust affiliate, the Trust. The trust preferred securities mature September 30, 2036 and are redeemable at Trustmark’s option. The proceeds from the sale of the trust preferred securities were used by the Trust to purchase $61.9 million in aggregate principal amount of Trustmark’s junior subordinated debentures.

The Board of Directors of Trustmark currently has the authority to issue up to 20.0 million preferred shares with no par value. The ability to issue preferred shares in the future will provide Trustmark with additional financial and management flexibility for general corporate and acquisition purposes. At December 31, ~~2016,~~2019, Trustmark had no shares of preferred stock issued and outstanding.

Liquidity position and strategy are reviewed regularly by Management and continuously adjusted in relationship to Trustmark’s overall strategy. Management believes that Trustmark has sufficient liquidity and capital resources to meet presently known cash flow requirements arising from ongoing business transactions.

Market risk reflects the potential risk of loss arising from adverse changes in interest rates and market prices. Trustmark has risk management policies to monitor and limit exposure to market risk. Trustmark’s primary market risk is interest rate risk created by core banking activities. Interest rate risk is the potential variability of the income generated by Trustmark’s financial products or services, which results from changes in various market interest rates. Market rate changes may take the form of absolute shifts, variances in the relationships between different rates and changes in the shape or slope of the interest rate term structure.

Management continually develops and applies cost-effective strategies to manage these risks. Management’s Asset/Liability Committee sets the day-to-day operating guidelines, approves strategies affecting net interest income and coordinates activities within policy limits established by the Board of Directors of Trustmark. A key objective of the asset/liability management program is to quantify, monitor and manage interest rate risk and to assist Management in maintaining stability in the net interest margin under varying interest rate environments.

Trustmark uses financial derivatives for management of interest rate risk. Management’s Asset/Liability Committee, in its oversight role for the management of interest rate risk, approves the use of derivatives in balance sheet hedging strategies. The most common

derivatives employed by Trustmark are interest rate lock commitments, forward contracts (both futures contracts and options on futures contracts), interest rate swaps, interest rate caps and interest rate floors. As a general matter, the values of these instruments are designed to be inversely related to the values of the assets that they hedge (i.e., if the value of the hedged asset falls, the value of the related hedge rises). In addition, Trustmark has entered into derivatives contracts as counterparty to one or more customers in connection with loans extended to those customers. These transactions are designed to hedge interest rate, currency or other exposures of the customers and are not entered into by Trustmark for speculative purposes. Increased federal regulation of the derivatives markets may increase the cost to Trustmark to administer derivatives programs.

On April 4, 2013, Trustmark entered into a forward interest rate swap contract on junior subordinated debentures with a total notional amount of $60.0 million. The interest rate swap contract was designated as a derivative instrument in a cash flow hedge under FASB ASC Topic 815, with the objective of protecting the quarterly interest payments on Trustmark’s $60.0 million of junior subordinated debentures issued to the Trust throughout the five-year period ~~beginning~~which began December 31, 2014 and ~~ending~~ended December 31, 2019 from the risk of variability of those payments resulting from changes in the three-month LIBOR interest rate. Under the swap, which became effective on December 31, 2014, Trustmark ~~pays~~paid a fixed interest rate of 1.66% and ~~receives~~received a variable interest rate based on three-month LIBOR on a total notional amount of $60.0 million, with quarterly net settlements.

No ineffectiveness related to the interest rate swap designated as a cash flow hedge was recognized in the consolidated statements of income during the years ended December 31, ~~2016, 2015~~2019, 2018 and ~~2014.~~2017. The interest rate swap matured on December 31, 2019; therefore, there was no accumulated net after-tax ~~loss~~amount related to the effective cash flow hedge included in AOCL ~~totaled $17 thousand and $160~~at December 31, 2019 compared to a net after-tax gain of $469 thousand at December 31, ~~2016 and 2015, respectively.~~2018. Amounts reported in AOCL related to this derivative ~~are~~were reclassified to other interest expense as interest payments ~~are~~were made on Trustmark’s variable rate junior subordinated debentures. ~~During the next twelve months, Trustmark estimates that $298 thousand will be reclassified as an increase to other interest expense.~~

As part of Trustmark’s risk management strategy in the mortgage banking business, various derivative instruments such as interest rate lock commitments and forward sales contracts are utilized. Rate lock commitments are residential mortgage loan commitments with customers, which guarantee a specified interest rate for a specified period of time. Trustmark’s obligations under forward contracts consist of commitments to deliver mortgage loans, originated and/or purchased, in the secondary market at a future date. The gross notional amount of Trustmark’s off-balance sheet obligations under these derivative instruments totaled ~~$292.9~~$301.1 million at December 31, ~~2016,~~2019, with a positive valuation adjustment of ~~$3.8 million,~~$953 thousand, compared to ~~$298.6~~$203.2 million, with a ~~positive~~negative valuation adjustment of ~~$1.4 million~~$586 thousand at December 31, ~~2015.~~2018.

Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that economically hedges changes in fair value of the MSR attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under GAAP. The total notional amount of these derivative instruments ~~were $262.0~~was $564.0 million at December 31, ~~2016~~2019 compared to ~~$264.5~~$318.0 million at December 31, ~~2015.~~2018. These exchange-traded derivative instruments are accounted for at fair value with changes in the fair value recorded inas noninterest income in mortgage banking, net and are offset by the changes in the fair value of the MSR. The MSR fair value represents the present value of future cash flows, which among other things includes decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the change in value of hedge instruments to the change in the fair value of the MSR asset attributable to changes in interest rates and other market driven changes in valuation inputs and assumptions. The impact of this strategy resulted in a net negative ineffectiveness of ~~$2.9~~$11.5 million for the year ended December 31, ~~2016,~~2019, compared to a net positive ineffectiveness of ~~$1.9 million and $3.1~~$2.4 million for the ~~years~~year ended December 31, ~~2015~~2018 and ~~2014, respectively.~~a net positive ineffectiveness of $254 thousand for the year ended December 31, 2017. The net negative hedge ineffectiveness for the year ended December 31, 2019 was primarily ~~due to~~ the ~~tightening in the mortgage spread during 2016 compared to 2015. The net positive ineffectiveness was primarily due to the mortgage spread widening coupled with~~result of lower interest rates, a ~~decline in mortgage rates during 2015 compared to 2014.~~flatter yield curve, increased market volatility and greater borrower prepayment capacity.

Trustmark offers certain interest rate derivatives products directly to qualified commercial lending clients seeking to manage their interest rate risk under loans they have entered into with TNB. Trustmark economically hedges interest rate swap transactions executed with commercial lending clients by entering into offsetting interest rate swap transactions with institutional derivatives market participants. Derivatives transactions executed as part of this program are not designated as qualifying hedging relationships under GAAP and are, therefore, carried on Trustmark’s financial statements at fair value with the change in fair value recorded inas noninterest income in bank card and other fees. Because these derivatives have mirror-image contractual terms, in addition to collateral provisions which mitigate the impact of non-performance risk, the changes in fair value are expected to substantially offset. As of December 31, ~~2016,~~2019, Trustmark had interest rate swaps with an aggregate notional amount of ~~$340.2~~$893.1 million related to this program, compared to ~~$359.3~~$475.8 million as of December 31, ~~2015.~~2018.

Trustmark has agreements with its financial institution counterparties that contain provisions where if Trustmark defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then Trustmark could also be deemed to be in default on its derivatives obligations.

As of December 31, ~~2016~~2019 and ~~2015,~~2018, the termination value of interest rate swaps in a liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was ~~$1.2~~$1.0 million and ~~$2.6 million,~~$75 thousand, respectively. As of December 31, ~~2016,~~2019, Trustmark had posted collateral of ~~$1.8~~$1.4 million against its obligations because of negotiated thresholds and minimum transfer amounts under these agreements. If Trustmark had breached any of these triggering provisions at December 31, ~~2016,~~2019, it could have been required to settle its obligations under the agreements at the termination value (which is expected to approximate fair market value).

Credit risk participation agreements arise when Trustmark contracts with other financial institutions, as a guarantor or beneficiary, to share credit risk associated with certain interest rate swaps. These agreements provide for reimbursement of losses resulting from a third party default on the underlying swap. At both December 31, ~~2016~~2019 and ~~2015,~~2018, Trustmark had entered into ~~two~~three risk participation agreements as a beneficiary with an aggregate notional ~~amount~~amounts of ~~$14.2~~$37.6 million and ~~$14.8~~$23.1 million, respectively. As of December 31, ~~2016,~~2019, Trustmark had entered into ~~five~~ten risk participation ~~agreement~~agreements as a guarantor with an aggregate notional amount of ~~$28.0~~$79.3 million compared to ~~one~~seven risk participation ~~agreement~~agreements as a guarantor with an aggregate notional amount of ~~$5.9~~$39.0 million at December 31, ~~2015.~~2018. The aggregate fair values of these risk participation agreements were immaterial at December 31, ~~2016~~2019 and ~~2015.~~2018.

Trustmark’s participation in the derivatives markets is subject to increased federal regulation of these markets. Trustmark believes that it may continue to use financial derivatives to manage interest rate risk and also to offer derivatives products to certain qualified commercial lending clients in compliance with the Volcker Rule. However, the increased federal regulation of the derivatives markets has increased the cost to Trustmark of administering its derivatives programs. Some of these costs (particularly compliance costs related to the Volcker Rule and other federal regulations) are expected to recur in the future.

The primary purpose in managing interest rate risk is to invest capital effectively and preserve the value created by the core banking business. This is accomplished through the development and implementation of lending, funding, pricing and hedging strategies designed to maximize net interest income performance under varying interest rate environments subject to specific liquidity and interest rate risk guidelines.

Financial simulation models are the primary tools used by Management’s Asset/Liability Committee to measure interest rate exposure. Using a wide range of scenarios, Management is provided with extensive information on the potential impact on net interest income caused by changes in interest rates. Models are structured to simulate cash flows and accrual characteristics of Trustmark’s balance sheet. Assumptions are made about the direction and volatility of interest rates, the slope of the yield curve and the changing composition of Trustmark’s balance sheet, resulting from both strategic plans and customer behavior. In addition, the model incorporates Management’s assumptions and expectations regarding such factors as loan and deposit growth, pricing, prepayment speeds and spreads between interest rates.

Based on the results of the simulation models using static balances, the table below summarizes the effect various one-year interest rate shift scenarios would have on net interest income compared to a base case, flat scenario at December 31, ~~2016~~2019 and ~~2015.~~2018. At December 31, ~~2016~~2019 and ~~2015,~~2018, the impact of a 200 basis point drop scenario was not calculated due to the low interest rate environment.

	Estimated % Change						Estimated % Change
	in Net Interest Income						in Net Interest Income
Change in Interest Rates	2016			2015			2019			2018
+200 basis points		-0.1	%		-0.5	%		5.7	%		-0.9	%
+100 basis points		0.0	%		-0.3	%		3.0	%		-0.5	%
-100 basis points		-6.3	%		-6.7	%		-5.2	%		-1.2	%

As shown in the table above, the interest rate shocks for 2016 illustrate little change in net interest income in rising rate scenarios while displaying modest exposure to a falling rate environment. The exposure to falling rates is primarily due to a downward repricing of various earning assets with minimal contribution from liabilities given the already low cost of deposits in the base scenario. Management cannot provide any assurance about the actual effect of changes in interest rates on net interest income. The estimates provided do not include the effects of possible strategic changes in the balances of various assets and liabilities throughout ~~2017~~2020 or additional actions Trustmark could undertake in response to changes in interest rates. Management will continue to prudently manage the balance sheet in an effort to control interest rate risk and maintain profitability over the long term.

Another component of interest rate risk management is measuring the economic value-at-risk for a given change in market interest rates. The economic value-at-risk may indicate risks associated with longer-term balance sheet items that may not affect net interest income at risk over shorter time periods. Trustmark uses computer-modeling techniques to determine the present value of all asset and liability cash flows (both on- and off-balance sheet), adjusted for prepayment expectations, using a market discount rate. The economic value of equity (EVE), also known as net portfolio value, is defined as the difference between the present value of asset cash flows and the present value of liability cash flows. The resulting change in EVE in different market rate environments, from the base

case scenario, is the amount of EVE at risk from those rate environments. The following table summarizes the effect that various interest rate shifts would have on net portfolio value at December 31, ~~2016~~2019 and ~~2015.~~2018. At December 31, ~~2016~~2019 and ~~2015,~~2018, the impact of a 200 basis point drop scenario was not calculated due to the ~~historically~~ low interest rate environment.

	Estimated % Change						Estimated % Change
	in Net Portfolio Value						in Net Portfolio Value
Change in Interest Rates	2016			2015			2019			2018
+200 basis points		7.0	%		0.6	%		5.3	%		-3.2	%
+100 basis points		4.0	%		0.7	%		3.4	%		-1.1	%
-100 basis points		-11.3	%		-7.2	%		-7.7	%		-1.8	%

Trustmark determines the fair value of the MSR using a valuation model administered by a third party that calculates the present value of estimated future net servicing income. The model incorporates assumptions that market participants use in estimating future net servicing income, including estimates of prepayment speeds, discount rate, default rates, cost to service (including delinquency and foreclosure costs), escrow account earnings, contractual servicing fee income and other ancillary income such as late fees. Management reviews all significant assumptions quarterly. Mortgage loan prepayment speeds, a key assumption in the model, is the annual rate at which borrowers are forecasted to repay their mortgage loan principal. The discount rate used to determine the present value of estimated future net servicing income, another key assumption in the model, is an estimate of the required rate of return investors in the market would require for an asset with similar risk. Both assumptions can, and generally will, change as market conditions and interest rates change.

By way of example, an increase in either the prepayment speed or discount rate assumption will result in a decrease in the fair value of the MSR, while a decrease in either assumption will result in an increase in the fair value of the MSR. In recent years, there have been significant market-driven fluctuations in loan prepayment speeds and discount rates. These fluctuations can be rapid and may continue to be significant. Therefore, estimating prepayment speed and/or discount rates within ranges that market participants would use in determining the fair value of the MSR requires significant management judgment.

At December 31, ~~2016,~~2019, the MSR fair value was ~~approximately $80.2~~$79.4 million, compared to ~~$74.0~~$95.6 million at December 31, ~~2015.~~2018. The impact on the MSR fair value of a 10% adverse change in prepayment speeds or a 100 basis point increase in discount rates at December 31, ~~2016,~~2019, would be a decline in fair value of approximately ~~$2.5~~$3.5 million and ~~$2.9~~$2.7 million, respectively, compared to a decline in fair value of approximately ~~$2.4~~$3.3 million and ~~$2.6~~$3.7 million, respectively, at December 31, ~~2015.~~2018. Changes of equal magnitude in the opposite direction would produce similar increases in fair value in the respective amounts.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance ~~sheet~~sheets of Trustmark Corporation and subsidiaries (the ~~Corporation)~~“Corporation”) as of December 31, ~~2016,~~2019 and 2018, the related consolidated statements of income, comprehensive income, changes in ~~shareholders'~~shareholders’ equity, and cash flows for each of the ~~year~~years in the three-year period ended December 31, ~~2016.~~2019, and the related notes (collectively referred to as the “financial statements”). We also have audited the Corporation’s internal control over financial reporting as of December 31, ~~2016,~~2019, based on criteria established in ~~2013 in~~ Internal ~~Control—~~Control – Integrated ~~Framework~~Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Corporation as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2019 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO.

The Corporation’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on ~~these~~the Corporation’s financial statements and an opinion on the ~~effectiveness of the company's~~Corporation’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the ~~Public Company Accounting Oversight Board (United States).~~PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our ~~audit~~audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence ~~supporting~~regarding the amounts and disclosures in the financial ~~statements, assessing~~statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, ~~and~~as well as evaluating the overall presentation of the financial ~~statement presentation.~~ statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A ~~company's~~company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A ~~company's~~company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the ~~company~~Corporation are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the ~~company's~~Corporation’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.

Allowance for Loan Losses, Loans Held for Investment – Qualitative Risk Valuation Allowance

As described in Note 1 “Significant Accounting Policies” and Note 5 “LHFI and Allowance for Loan Losses, LHFI” to the consolidated financial statements, ~~referred~~the Corporation’s allowance for loan losses consists of three components: (i) a historical valuation allowance on loans collectively evaluated for impairment determined in accordance with ASC topic 450 based on historical loan loss experience, (ii) a specific valuation allowance on loans individually evaluated for impairment determined in accordance with ASC topic 310 based on probable incurred losses on specific loans held for investment (LHFI), and (iii) a qualitative risk valuation allowance on loans collectively evaluated for impairment determined in accordance with ASC topic 450 based on general economic conditions and other specific internal and external qualitative risk factors. The allowance for loan losses is material to ~~above present fairly, in all material respects,~~ the financial ~~position~~statements in total, however the component of ~~Trustmark~~the estimate requiring significant judgment by management in developing their estimate is component (iii), the qualitative risk valuation allowance.

The Corporation estimates an allowance for loan losses for LHFI collectively evaluated for impairment in accordance with ASC topic 450 by segregating commercial and ~~subsidiaries as~~consumer loans into pools by loan type and market region, utilizing a 12-quarter rolling average loss rate adjusted for certain qualitative risk factors. Qualitative risk factors used in the allowance methodology for commercial loans include the following within the Corporation’s five key market regions: the experience, ability, and effectiveness of ~~December 31, 2016,~~the Corporation’s lending management and staff; adherence to Trustmark’s loans policies, procedures and internal controls; the volume of exceptions relating to collateral, underwriting and financial documentation; credit concentrations; recent performance trends; regional economic trends; the impact of recent acquisitions; and the ~~results~~impact of ~~their operations~~significant natural disasters. Qualitative factors used in the allowance methodology for consumer loans include: economic indicators, performance trends, management experience, credit concentrations, and ~~their cash flows~~loan policy exceptions. Each qualitative risk factor is converted to a scale ranging from 0 (no risk) to 100 (high risk), other than the impact of recent acquisitions and the impact of significant natural disasters, which are applied on a dollar-for-dollar basis to ensure the combination of such factors is proportional. The resulting factors are weighted to establish a weighted-average qualitative risk factor within each key region. The determination of risk measurement for consumer factors is accomplished for all markets combined and converted to a risk scale similar to commercial. The qualitative portion of the allowance for loan loss also incorporates the use of maximum observed gross historical losses through the last economic cycle as a way to calculate the maximum qualitative reserve limit. The historical valuation allowance is deducted from the maximum observed loss through the last economic cycle to determine the maximum possible qualitative reserve limit. The established weighted average qualitative risk factor by region is then applied to determine the qualitative risk valuation allowance.

Significant judgment is exercised by the Corporation in the determination of the qualitative risk valuation allowance, including the following:

Given these factors, we identified auditing management’s estimate of the qualitative risk valuation allowance as a critical audit matter as it involved especially subjective auditor judgment.

Our primary audit procedures related to auditing management’s estimate of the qualitative risk valuation allowance included the following:

We tested the design and operating effectiveness of management’s controls over the qualitative risk valuation allowance including:

We also performed substantive testing over the qualitative risk valuation allowance including:

We have served as the Corporation’s auditor since 2015, which is the year the engagement letter was signed for the ~~year ended December 31,~~audit of the 2016 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Corporation maintained, in all material respects, effective internal control over financial ~~reporting as of December 31, 2016, based on criteria established in 2013 in~~ ~~Internal Control—Integrated Framework~~ ~~issued by the COSO.~~statements.

We have audited the accompanying consolidated balance sheet of Trustmark Corporation and subsidiaries (the Corporation) as of December 31, 2015, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the two year period ended December 31, 2015. These consolidated financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Trustmark Corporation and subsidiaries as of December 31, 2015, and the results of their operations and their cash flows for each of the years in the two year period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles.

	December 31,						December 31,
	2016			2015			2019			2018
Assets
Cash and due from banks (noninterest-bearing)	$	327,706		$	277,751
Cash and due from banks							$	358,916		$	349,561
Federal funds sold and securities purchased under reverse repurchase agreements		500			250			—			830
Securities available for sale (at fair value)		2,356,682			2,345,422			1,602,404			1,811,813
Securities held to maturity (fair value: $1,157,046-2016; $1,195,367-2015)		1,158,643			1,187,818
Securities held to maturity (fair value: $746,202-2019; $889,733-2018)								738,099			909,643
Loans held for sale (LHFS)		175,927			160,189			226,347			153,799
Loans held for investment (LHFI)		7,851,213			7,091,385			9,335,628			8,835,868
Less allowance for loan losses, LHFI		71,265			67,619			84,277			79,290
Net LHFI		7,779,948			7,023,766			9,251,351			8,756,578
Acquired loans:
Noncovered loans		268,633			372,711
Covered loans		3,614			17,700
Acquired loans								72,601			106,932
Less allowance for loan losses, acquired loans		11,397			11,992			815			1,231
Net acquired loans		260,850			378,419			71,786			105,701
Net LHFI and acquired loans		8,040,798			7,402,185			9,323,137			8,862,279
Premises and equipment, net		184,987			195,656			189,791			178,668
Mortgage servicing rights		80,239			74,007			79,394			95,596
Goodwill		366,156			366,156			379,627			379,627
Identifiable intangible assets		20,680			27,546
Other real estate, excluding covered other real estate		62,051			77,177
Covered other real estate		—			1,651
FDIC indemnification asset		—			738
Identifiable intangible assets, net								7,343			11,112
Other real estate								29,248			34,668
Operating lease right-of-use assets								31,182			—
Other assets		577,964			562,350			532,389			498,864
Total Assets	$	13,352,333		$	12,678,896		$	13,497,877		$	13,286,460

Liabilities
Deposits:
Noninterest-bearing	$	2,973,238		$	2,998,694		$	2,891,215		$	2,937,594
Interest-bearing		7,082,774			6,589,536			8,354,342			8,426,817
Total deposits		10,056,012			9,588,230			11,245,557			11,364,411
Federal funds purchased and securities sold under repurchase agreements		539,817			441,042			256,020			50,471
Short-term borrowings		769,778			412,617
Long-term FHLB advances		251,049			501,155
Subordinated notes		—			49,969
Other borrowings								85,396			79,885
Junior subordinated debt securities		61,856			61,856			61,856			61,856
Operating lease liabilities								32,354			—
Other liabilities		153,613			150,970			155,992			138,384
Total Liabilities		11,832,125			11,205,839			11,837,175			11,695,007

Shareholders' Equity
Common stock, no par value:
Authorized: 250,000,000 shares
Issued and outstanding: 67,628,618 shares - 2016; 67,559,128 shares - 2015		14,091			14,076
Issued and outstanding: 64,200,111 shares - 2019; 65,834,395 shares - 2018								13,376			13,717
Capital surplus		366,563			361,467			256,400			309,545
Retained earnings		1,185,352			1,142,908			1,414,526			1,323,870
Accumulated other comprehensive loss, net of tax		(45,798	)		(45,394	)		(23,600	)		(55,679	)
Total Shareholders' Equity		1,520,208			1,473,057			1,660,702			1,591,453
Total Liabilities and Shareholders' Equity	$	13,352,333		$	12,678,896		$	13,497,877		$	13,286,460

	Years Ended December 31,								Years Ended December 31,
	2016			2015			2014		2019		2018			2017
Interest Income
Interest and fees on LHFS & LHFI	$	299,645		$	274,433		$	263,582	$	440,156	$	395,969		$	344,625
Interest and fees on acquired loans		30,144			51,152			76,736		8,373		17,115			24,478
Interest on securities:
Taxable		77,614			80,730			80,148		54,649		66,082			76,192
Tax exempt		3,675			4,323			4,869		1,711		2,236			3,001
Interest on federal funds sold and securities purchased under reverse repurchase agreements		14			8			23		240		14			33
Other interest income		988			1,579			1,524		5,363		4,196			1,466
Total Interest Income		412,080			412,225			426,882		510,492		485,612			449,795
Interest Expense
Interest on deposits		12,748			12,598			15,323		79,171		53,936			22,717
Interest on federal funds purchased and securities sold under repurchase agreements		1,717			801			550		1,420		4,788			4,152
Other interest expense		10,082			7,061			5,673		3,312		7,468			15,376
Total Interest Expense		24,547			20,460			21,546		83,903		66,192			42,245
Net Interest Income		387,533			391,765			405,336		426,589		419,420			407,550
Provision for loan losses, LHFI		10,957			8,375			1,211		10,797		17,993			15,094
Provision for loan losses, acquired loans		3,757			3,425			6,171		42		(1,005	)		(7,395	)
Net Interest Income After Provision for Loan Losses		372,819			379,965			397,954		415,750		402,432			399,851
Noninterest Income
Service charges on deposit accounts		45,253			47,366			48,671		42,603		43,702			44,003
Bank card and other fees		27,906			28,298			32,966		31,736		28,905			28,286
Mortgage banking, net		28,212			30,176			24,780		29,822		34,674			29,902
Insurance commissions		36,764			36,424			33,468		42,396		40,481			38,168
Wealth management		30,492			31,369			32,343		30,679		30,338			30,340
Other, net		5,626			(484	)		614		9,809		6,736			13,949
Securities (losses) gains, net		(310	)		—			300
Securities gains (losses), net										—		—			15
Total Noninterest Income		173,943			173,149			173,142		187,045		184,836			184,663
Noninterest Expense
Salaries and employee benefits		239,637			230,198			226,694		247,717		238,033			229,265
Defined benefit plan termination										—		—			17,644
Services and fees		58,695			57,534			56,598		73,315		66,382			60,893
Net occupancy - premises		24,982			25,318			26,468		26,149		26,703			25,767
Equipment expense		24,225			23,859			23,860		23,733		24,830			24,453
Other real estate expense		586			4,903			11,321		3,906		2,002			3,672
FDIC assessment expense		11,243			10,728			10,197		6,444		9,429			11,010
Other expense		47,930			49,122			53,867		47,738		48,036			57,465
Total Noninterest Expense		407,298			401,662			409,005		429,002		415,415			430,169
Income Before Income Taxes		139,464			151,452			162,091		173,793		171,853			154,345
Income taxes		31,053			35,414			38,529		23,333		22,269			48,715
Net Income	$	108,411		$	116,038		$	123,562	$	150,460	$	149,584		$	105,630

Earnings Per Share
Basic	$	1.60		$	1.72		$	1.83	$	2.33	$	2.22		$	1.56
Diluted	$	1.60		$	1.71		$	1.83	$	2.32	$	2.21		$	1.56

Accumulated

Other

Common Stock

Comprehensive

Shares

Capital

Retained

Income

Outstanding

Amount

Surplus

Earnings

(Loss)

Total

Balance, January 1, 2014

67,372,980

14,038

349,680

1,034,966

(43,731
)

1,354,953

Net income per consolidated statements of
   income

—

—

—

123,562

—

123,562

Other comprehensive income, net of tax

—

—

—

—

1,247

1,247

Cash dividends paid on common stock
   ($0.92 per share)

—

—

—

(62,474
)

—

(62,474
)
Common stock issued, long-term
   incentive plan

109,012

22

2,412

(3,934
)

—

(1,500
)
Compensation expense, long-term
   incentive plan

—

—

4,152

—

—

4,152

Balance, December 31, 2014

67,481,992

14,060

356,244

1,092,120

(42,484
)

1,419,940

Net income per consolidated statements of
   income

—

—

—

116,038

—

116,038

Other comprehensive loss, net of tax

—

—

—

—

(2,910
)

(2,910
)
Cash dividends paid on common stock
   ($0.92 per share)

—

—

—

(62,605
)

—

(62,605
)
Common stock issued, long-term
   incentive plan

77,136

16

1,555

(2,645
)

—

(1,074
)
Compensation expense, long-term
   incentive plan

—

—

3,668

—

—

3,668

Balance, December 31, 2015

67,559,128

14,076

361,467

1,142,908

(45,394
)

1,473,057

Net income per consolidated statements of
   income

—

—

—

108,411

—

108,411

Other comprehensive loss, net of tax

—

—

—

—

(404
)

(404
)
Cash dividends paid on common stock
   ($0.92 per share)

—

—

—

(62,666
)

—

(62,666
)
Common stock issued, long-term
   incentive plan

103,112

22

2,155

(3,301
)

—

(1,124
)
Repurchase and retirement of common stock

(33,622
)

(7
)

(743
)

—

—

(750
)
Compensation expense, long-term
   incentive plan

—

—

3,684

—

—

3,684

Balance, December 31, 2016

67,628,618

$
14,091

$
366,563

$
1,185,352

$
(45,798
)

$
1,520,208

													Accumulated
													Other
	Common Stock												Comprehensive
	Shares						Capital			Retained			Income
	Outstanding			Amount			Surplus			Earnings			(Loss)			Total
Balance, January 1, 2017		67,628,618		$	14,091		$	366,563		$	1,185,352		$	(45,798	)	$	1,520,208
Net income per consolidated statements of income		—			—			—			105,630			—			105,630
Other comprehensive income (loss), net of tax		—			—			—			—			6,073			6,073
Cash dividends paid on common stock ($0.92 per share)		—			—			—			(62,795	)		—			(62,795	)
Shares withheld to pay taxes, long-term incentive plan		117,476			24			(1,748	)		—			—			(1,724	)
Compensation expense, long-term incentive plan		—			—			4,309			—			—			4,309
Balance, December 31, 2017		67,746,094			14,115			369,124			1,228,187			(39,725	)		1,571,701
Net income per consolidated statements of income		—			—			—			149,584			—			149,584
Other comprehensive income (loss), net of tax		—			—			—			—			(7,430	)		(7,430	)
Cash dividends paid on common stock ($0.92 per share)		—			—			—			(62,425	)		—			(62,425	)
Shares withheld to pay taxes, long-term incentive plan		118,108			25			(1,451	)		—			—			(1,426	)
Accumulated other comprehensive loss adjustment, Tax Reform Act		—			—			—			8,524			(8,524	)		—
Repurchase and retirement of common stock		(2,029,807	)		(423	)		(61,998	)		—			—			(62,421	)
Compensation expense, long-term incentive plan		—			—			3,870			—			—			3,870
Balance, December 31, 2018		65,834,395			13,717			309,545			1,323,870			(55,679	)		1,591,453
Net income per consolidated statements of income		—			—			—			150,460			—			150,460
Other comprehensive income (loss), net of tax		—			—			—			—			32,079			32,079
Cash dividends paid on common stock ($0.92 per share)		—			—			—			(59,804	)		—			(59,804	)
Shares withheld to pay taxes, long-term incentive plan		134,564			28			(1,686	)		—			—			(1,658	)
Repurchase and retirement of common stock		(1,768,848	)		(369	)		(56,246	)		—		��	—			(56,615	)
Compensation expense, long-term incentive plan		—			—			4,787			—			—			4,787
Balance, December 31, 2019		64,200,111		$	13,376		$	256,400		$	1,414,526		$	(23,600	)	$	1,660,702

	Years Ended December 31,									Years Ended December 31,
	2016			2015			2014			2019			2018			2017
Operating Activities
Net income per consolidated statements of income	$	108,411		$	116,038		$	123,562		$	150,460		$	149,584		$	105,630
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses, net		14,714			11,800			7,382			10,839			16,988			7,699
Depreciation and amortization		36,613			37,056			36,072			39,420			38,940			38,471
Net amortization of securities		9,664			7,793			7,701			7,789			9,181			10,964
Securities losses (gains), net		310			—			(300	)
Securities (gains) losses, net											—			—			(15	)
Gains on sales of loans, net		(20,531	)		(17,953	)		(10,762	)		(27,301	)		(21,615	)		(18,933	)
Compensation expense, long-term incentive plan											4,787			3,870			4,309
Deferred income tax provision		18,000			14,800			18,700			(3,880	)		11,740			26,068
Proceeds from sales of loans held for sale		1,404,852			1,264,303			924,289			1,431,003			1,114,020			1,197,821
Purchases and originations of loans held for sale		(1,392,155	)		(1,279,321	)		(893,569	)		(1,480,752	)		(1,052,339	)		(1,179,187	)
Originations of mortgage servicing rights		(16,745	)		(17,598	)		(12,293	)		(16,711	)		(15,759	)		(15,860	)
Earnings on bank-owned life insurance		(4,883	)		(4,824	)		(4,728	)		(5,592	)		(5,358	)		(5,025	)
Net (increase) decrease in other assets		(20,129	)		28,794			4,886
Net increase (decrease) in other liabilities		7,284			6,608			(6,010	)
Net change in other assets											(30,729	)		(1,891	)		23,451
Net change in other liabilities											13,276			(1,277	)		9,093
Other operating activities, net		2,022			4,391			16,337			23,838			(6,886	)		2,121
Net cash provided by operating activities		147,427			171,887			211,267
Net cash from operating activities											116,447			239,198			206,607

Investing Activities
Proceeds from maturities, prepayments and calls of securities held to maturity		277,373			126,546			93,471			173,385			149,308			174,976
Proceeds from maturities, prepayments and calls of securities available for sale		486,915			479,927			405,186			425,260			423,617			467,194
Proceeds from sales of securities available for sale		24,693			—			56,814			—			—			27,682
Purchases of securities held to maturity		(239,446	)		(107,679	)		(90,114	)		—			—			(69,989	)
Purchases of securities available for sale		(547,112	)		(504,920	)		(631,713	)		(177,739	)		(23,901	)		(346,159	)
Net proceeds from bank-owned life insurance		2,585			648			—			4,140			1,824			3,623
Net (increase) decrease in federal funds sold and securities purchased under reverse repurchase agreements		(250	)		1,635			5,368
Net increase in member bank stock		(8,386	)		(18,480	)		—
Net increase in loans		(677,296	)		(528,050	)		(437,240	)
Net change in federal funds sold and securities purchased under reverse repurchase agreements											830			(215	)		6,785
Net change in member bank stock											262			35,451			4,474
Net change in loans											(480,295	)		(140,710	)		(608,886	)
Purchases of premises and equipment		(10,208	)		(12,757	)		(12,389	)		(17,327	)		(14,644	)		(13,219	)
Proceeds from sales of premises and equipment		6,799			3,061			4,641			3,248			772			8,377
Proceeds from sales of other real estate		42,809			48,898			48,119			11,182			20,502			26,849
Purchases of software		(8,024	)		(8,741	)		—			(13,412	)		(13,195	)		(5,498	)
Investments in tax credit and other partnerships		(116	)		(4,578	)		(5,435	)		(3,426	)		(22	)		(5,296	)
Distributions received for investments in tax credit and other partnerships		—			—			7,037
Purchase of insurance book of business		—			(2,787	)		—			(347	)		—			—
Net cash used in investing activities		(649,664	)		(527,277	)		(556,255	)
Net cash used in business acquisition											—			—			(19,775	)
Net cash from investing activities											(74,239	)		438,787			(348,862	)

Financing Activities
Net increase (decrease) in deposits		467,782			(110,128	)		(161,544	)
Net increase (decrease) in federal funds purchased and securities sold under repurchase agreements		98,775			(2,501	)		191,956
Net (decrease) increase in short-term borrowings		(150,748	)		(7,293	)		348,920
Proceeds from long-term FHLB advances		250,000			500,000			—
Net change in deposits											(118,854	)		786,899			355,342
Net change in federal funds purchased and securities sold under repurchase agreements											205,549			(419,356	)		(69,990	)
Net change in short-term borrowings											561			(905,396	)		(67,451	)
Payments on long-term FHLB advances		(94	)		(94	)		(156	)		(68	)		(67	)		(65	)
Payment of subordinated debt		(50,000	)		—			—
Payments under finance lease obligations											(1,964	)		—			—
Redemption of junior subordinated debt securities											—			—			(3,000	)
Common stock dividends		(62,666	)		(62,605	)		(62,474	)		(59,804	)		(62,425	)		(62,795	)
Common stock issued-net, long-term incentive plan		—			—			(1,307	)
Repurchase and retirement of common stock		(750	)		—			—			(56,615	)		(62,421	)		—
Excess tax expense from stock-based compensation arrangements		(107	)		(211	)		(195	)
Net cash provided by financing activities		552,192			317,168			315,200
Shares withheld to pay taxes, long-term incentive plan											(1,658	)		(1,426	)		(1,724	)
Net cash from financing activities											(32,853	)		(664,192	)		150,317

Increase (Decrease) in cash and cash equivalents		49,955			(38,222	)		(29,788	)
Net change in cash and cash equivalents											9,355			13,793			8,062
Cash and cash equivalents at beginning of year		277,751			315,973			345,761			349,561			335,768			327,706
Cash and cash equivalents at end of year	$	327,706		$	277,751		$	315,973		$	358,916		$	349,561		$	335,768

Trustmark Corporation (Trustmark) is a bank holding company headquartered in Jackson, Mississippi. Through its subsidiaries, Trustmark operates as a financial services organization providing banking and financial solutions to corporate institutions and individual customers through 193 offices in Alabama, Florida, Mississippi, Tennessee and Texas.

The consolidated financial statements include the accounts of Trustmark and all other entities in which Trustmark has a controlling financial interest. All significant intercompany accounts and transactions have been eliminated in consolidation.

The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (GAAP). The preparation of financial statements in conformity with these accounting principles requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and income and expense during the reporting periods and the related disclosures. Although Management’s estimates contemplate current conditions and how they are expected to change in the future, it is reasonably possible that in ~~2017~~2020 actual conditions could vary from those anticipated, which could affect Trustmark’s financial condition and results of operations. Actual results could differ from those estimates.

Securities are classified as either held to maturity or available for ~~sale or trading.~~sale. Securities are classified as held to maturity and carried at amortized cost when Management has the positive intent and the ability to hold them until maturity. Securities to be held for indefinite periods of time are classified as available for sale and carried at fair value, with the unrealized holding gains and losses reported as a component of other comprehensive income (loss), net of tax. Securities available for sale are used as part of Trustmark’s interest rate risk management strategy and may be sold in response to changes in interest rates, changes in prepayment rates and other factors. Management determines the appropriate classification of securities at the time of purchase. ~~Trustmark currently has no securities classified as trading.~~

The amortized cost of debt securities classified as securities held to maturity or securities available for sale is adjusted for amortization of premiums and accretion of discounts to maturity of the security using the interest method. Such amortization or accretion is included in interest on securities. Realized gains and losses are determined using the specific identification method and are included in noninterest income as securities gains (losses) ~~gains,~~, net.

Securities transferred from the available for sale category to the held to maturity category are recorded at fair value at the date of transfer. Unrealized holding gains or losses associated with the transfer of securities from available for sale to held to maturity are included in the balance of accumulated other comprehensive ~~loss~~income (loss), net of tax, in the consolidated balance sheets. These unrealized holding gains or losses are amortized over the remaining life of the security as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security.

Trustmark reviews securities for impairment quarterly. Declines in the fair value of held to maturity and available for sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized as a component of other comprehensive income (loss), net of tax. In estimating other-than-temporary impairment losses, Management considers, among other things, the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer and Trustmark’s intent and ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value.

Primarily, all mortgage loans purchased from wholesale customers or originated in Trustmark’s General Banking ~~Division~~Segment are considered to be held for sale. In certain circumstances, Trustmark will retain a mortgage loan in its portfolio based on banking relationships or certain investment strategies. Trustmark has elected to account for its ~~mortgage loans purchased or originated which are held for sale~~LHFS under the fair value option permitted by Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 825, “Financial Instruments,” with interest income on the ~~mortgage~~ LHFS reported in interest and fees on LHFS and LHFI. ~~Mortgage LHFS~~Trustmark reports unrealized gains and losses resulting from changes in the ~~secondary market~~fair value of the LHFS accounted for under the fair value option as noninterest income in mortgage banking, net. LHFS are actively managed and monitored and certain market risks of the loans may be mitigated through the use of derivatives. ~~Trustmark reports unrealized gains and losses resulting from~~These derivative instruments are carried at fair value with changes in the fair value reported as noninterest income in mortgage banking, net. Changes in the fair value of the LHFS are largely offset by changes in the fair value of the ~~mortgage LHFS accounted for under~~derivative instruments. Election of the fair value option ~~as noninterest income in mortgage banking, net.~~allows Trustmark to reduce the accounting volatility that would otherwise result from the asymmetry

created by accounting for its LHFS at the lower of cost or fair value and the derivative instruments at fair value. Realized gains and losses upon ultimate sale of the loans are ~~recorded in~~reported as noninterest income in mortgage banking, net.

Government National Mortgage Association (GNMA) optional repurchase programs allow financial institutions to buy back individual delinquent mortgage loans that meet certain criteria from the securitized loan pool for which the institution provides servicing. At the servicer’s option and without GNMA’s prior authorization, the servicer may repurchase such a delinquent loan for an amount equal to 100 percent of the remaining principal balance of the loan. Under FASB ASC Topic 860, “Transfers and Servicing,” this buy-back option is considered a conditional option until the delinquency criteria are met, at which time the option becomes unconditional. When Trustmark is deemed to have regained effective control over these loans under the unconditional buy-back option, the loans can no longer be reported as sold and must be brought back onto the balance sheet as LHFS, regardless of whether Trustmark intends to exercise the buy-back option. These loans are reported as LHFS with the offsetting liability being reported as short-term borrowings. The fair value option election does not apply to the GNMA optional repurchase loans which do not meet the requirements under FASB ASC Topic 825 to be accounted for under the fair value option.

Trustmark defers the upfront loan fees and costs related to the ~~mortgage~~ LHFS. In general, the ~~mortgage~~ LHFS are only retained on Trustmark’s balance sheet for 30 to 45 days before they are pooled and sold in the secondary market. The difference between deferring these loan fees and costs until the loans are sold and recognizing them in earnings as incurred as required by FASB ASC ~~Topic~~Subtopic 825-10 is considered immaterial. Deferred loan fees and costs are reflected in the basis of the LHFS and, as such, impact the resulting gain or loss when the loans are sold.

LHFI are stated at the amount of unpaid principal, adjusted for the net amount of direct costs and nonrefundable loan fees associated with lending. The net amount of nonrefundable loan origination fees and direct costs associated with the lending process, including commitment fees, is deferred and accreted to interest income over the lives of the loans using a method that approximates the interest method. Interest on LHFI is accrued and recorded as interest income based on the outstanding principal balance.

Past due LHFI are loans contractually past due 30 days or more as to principal or interest payments. A LHFI is classified as nonaccrual, and the accrual of interest on such loan is discontinued, when the contractual payment of principal or interest becomes 90 days past due on commercial credits and 120 days past due on non-business purpose credits. In addition, a credit may be placed on nonaccrual at any other time Management has serious doubts about further collectibility of principal or interest according to the contractual terms, even though the loan is currently performing. A LHFI may remain in accrual status if it is in the process of collection and well secured. When a LHFI is placed in nonaccrual status, interest accrued but not received is reversed against interest income. Interest payments received on nonaccrual LHFI are applied against principal under the cost-recovery method, until qualifying for return to accrual status. Under the cost-recovery method, interest income is not recognized until the principal balance is reduced to zero. LHFI are restored to accrual status when the obligation is brought current or has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectibility of the total contractual principal and interest is no longer in doubt.

A LHFI is considered impaired when, based on current information and events, it is probable that Trustmark will be unable to collect ~~the scheduled payments of principal or interest when~~all amounts due according to the contractual terms of the loan agreement. In accordance with FASB ASC Subtopic 310-40-35, “Troubled Debt Restructurings by Creditors: Subsequent Measurement,” all loans restructured in a troubled debt restructuring (TDR), without regard to a loan’s accrual status, are impaired loans. Additionally, Trustmark specifically reviews all commercial nonaccrual relationships of $500 thousand or more for impairment. Trustmark considers all commercial nonaccrual relationships of $500 thousand or more, which have been specifically reviewed for impairment and deemed impaired, and all LHFI classified as TDRs to be individually evaluated impaired LHFI. At the time a LHFI that has been specifically reviewed for impairment is deemed to be impaired, ~~loans. If a LHFI~~the full difference between book value and the most likely estimate of the collateral’s net realizable value is ~~impaired,~~charged off or a specific ~~valuation allowance~~reserve is ~~allocated, if necessary, so that the loan is reported~~established. As subsequent events dictate and estimated net at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. All classes of commercial LHFI of $500,000 or more, whichrealizable values change, further adjustments may be necessary. Commercial nonaccrual relationships under $500 thousand are ~~classified as nonaccrual, are identified~~not specifically reviewed for impairment ~~analysis (specifically evaluated impaired LHFI). Specific impairment analysis on commercial nonaccrual LHFI under $500,000 is not performed~~ due to the insignificant number and dollar amount of these types of loans. Nonaccrual LHFI includes both individually evaluated impaired LHFI as well as smaller balance homogeneous loans that are collectively evaluated for impairment. Consistent with the policy for nonaccrual LHFI, interest payments on impaired LHFI, with the exception of TDRs in accrual status, are applied to principal. Impaired LHFI, or portions thereof, are charged off when deemed uncollectible.

proceedings or may be imposed by law. In addition, TDRs also include those credits that are extended or renewed to a borrower who is not able to obtain funds from sources other than Trustmark at a market interest rate for new debt with similar risk.

A formal TDR may include, but is not necessarily limited to, one or a combination of the following situations:

Troubled debt restructurings are addressed in Trustmark’s loan policy, and in accordance with that policy, any modifications or concessions that may result in a TDR are subject to a special approval process which allows for control, identification, and monitoring of these arrangements. Prior to granting a concession, a revised borrowing arrangement is proposed which is structured so as to improve collectability of the loan in accordance with a reasonable repayment schedule with any loss promptly identified. It is supported by a thorough evaluation of the borrower’s financial condition and prospects for repayment under those revised terms. Other TDRs arising from renewals or extensions of existing debt are routinely identified through the processes utilized in the Problem Loan Committee and in the Credit Quality Review Committee. TDRs are subsequently reported to the Directors’ Credit Policy Committee on a quarterly basis and are disclosed in Trustmark’s consolidated financial statements in accordance with GAAP and regulatory reporting guidance.

All loans whose terms have been modified in a troubled debt restructuring are evaluated for impairment under FASB ASC Topic 310, “Receivables.” Accordingly, Trustmark measures any loss on the restructuring in accordance with that guidance. A TDR in which Trustmark receives physical possession of the borrower’s assets, regardless of whether formal foreclosure or repossession proceedings take place, is accounted for in accordance with FASB ASC Subtopic 310-40. Thus, the loan is treated as if assets have been received in satisfaction of the loan and reported as a foreclosed asset.

A TDR may be returned to accrual status if Trustmark is reasonably assured of repayment of principal and interest under the modified terms and the borrower has demonstrated sustained performance under those terms for a period of at least six months. Otherwise, the restructured loan must remain on nonaccrual.

The allowance for loan losses, LHFI is established through provisions for estimated loan losses charged against net income. The allowance account is maintained at a level which is believed to be adequate by Management based on estimated probable losses within the LHFI portfolio. Evaluations of the portfolio and individual credits are inherently subjective, as they require estimates, assumptions and judgments as to the facts and circumstances of particular situations. Some of the factors considered, such as amounts and timing of future cash flows expected to be received, may be susceptible to significant change.

Trustmark’s allowance methodology is based on guidance provided in Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) No. 102, “Selected Loan Loss Allowance Methodology and Documentation Issues,” as well as other regulatory guidance. The allowance for loan losses, LHFI consists of ~~three~~3 components: (i) a historical valuation allowance determined in accordance with FASB ASC Topic 450, “Contingencies,” based on historical loan loss experience for LHFI with similar characteristics and trends, (ii) a specific valuation allowance determined in accordance with FASB ASC Topic 310 ~~“Receivables,”~~ based on probable losses on specific LHFI and (iii) a qualitative risk valuation allowance determined in accordance with FASB ASC

Topic 450 based on general economic conditions and other specific internal and external qualitative risk factors. Each of these components calls for estimates, assumptions and judgments as described below.

The historical valuation allowance is derived by application of a historical net loss percentage to the outstanding balances of LHFI contained in designated pools and risk rating categories. Pools are established by grouping credits that display similar characteristics

and trends such as commercial LHFI for working capital purposes and non-working capital purposes, commercial purpose LHFI secured by real estate ~~LHFI~~ (which are further segregated into 1-4 family construction, non 1-4 family construction, land, lots and development, owner-occupied and ~~non-owner occupied~~nonowner-occupied categories), other commercial loans, 1-4 family LHFI, 1-4 family LHFI secured by junior liens and other consumer LHFI. Within these pools, LHFI are further segregated based on Trustmark’s internal credit risk rating process that evaluates, among other things: the obligor’s ability and willingness to pay, the value of underlying collateral, the ability of guarantors to meet their payment obligations, management experience and effectiveness, and the economic environment and industry in which the borrower operates. The historical net loss percentages, calculated on a quarterly basis, are proportionally distributed to each risk rate within loan groups based upon degree of risk. Using third-party default data, which is updated annually to incorporate the most recent year’s information, average cumulative issuer-weighted global default rates by alphanumeric rating are aggregated by Trustmark’s commercial loan risk rates. Management uses the long-term default rates to measure the relative risk across the risk rates while the 12-quarter quantitative loss rate sets the absolute level of allowance for loan loss reserve. Further, given the volatility in the default data, the longer look-back period provides for a more stable allowance for loan loss estimate which better reflects the incremental risk across the risk rates.

The historical net loss percentages are calculated using a 12 quarter look-back period, which is the period that best reflects losses inherent in the current loan portfolio. The look-back period sufficiently captures the volatility in net charge-off rates from quarter to quarter and affects the qualitative adjustments that are required to capture the differences in conditions between the current period and those that were prevailing during the look-back period.

The loss emergence period (LEP) refers to the period of time between the events that trigger a loss and charge-off of that loss. Losses are usually not immediately known and determining the loss event can be difficult. It takes time for the borrower and extent of loss to be identified and determined. Management may not be aware that the loss event has occurred until the borrower exhibits the inability to pay or other evidence of credit deterioration. The LEP is evaluated annually to incorporate the most recent year’s data and adjusted as necessary.

Once a LHFI is classified, it is subject to periodic review to determine whether or not the loan is impaired. If determined to be impaired, the loan is evaluated using one of the valuation criteria contained in FASB ASC Topic ~~310. A formal impairment analysis~~310 (i.e., individually or collectively evaluated), and a specific valuation allowance is ~~performed on all commercial non-accrual LHFI with an outstanding balance of $500,000 or more, and based upon this analysis LHFI are written down to~~allocated, if necessary, so that the loan is reported at the net realizable value.

The qualitative risk valuation allowance is based on general economic conditions and other internal and external factors affecting Trustmark as a whole as well as specific LHFI. Factors considered include the following within Trustmark’s ~~five~~5 key market regions: the experience, ability, and effectiveness of Trustmark’s lending management and staff; adherence to Trustmark’s loans policies, procedures and internal controls; the volume of exceptions relating to collateral, underwriting and financial documentation; credit concentrations; recent performance trends; regional economic trends; the impact of recent acquisitions; and the impact of significant natural disasters. These factors are evaluated on a quarterly basis with the results representing Trustmark’s qualitative risk profile in the current period which is used to establish an appropriate allowance. The qualitative portion of the commercial and consumer LHFI allowance for loan loss methodology also incorporates the use of maximum observed gross historical losses observed through the last economic cycle as a way to calculate a maximum qualitative reserve limit. The maximum observed gross historical losses as a percentage of the loan balances results in a maximum observed gross historical loss rate. Once the quantitative component of the allowance for loan loss methodology is calculated, the quantitative reserve percentage is deducted from the maximum observed gross historical loss rate to determine the maximum possible qualitative reserve limit. Management uses its qualitative factor evaluation process in conjunction with this maximum to determine the appropriate estimate of the qualitative considerations not captured by Trustmark’s historical loss rates.

Other factors included in the qualitative risk valuation allowance include consideration of: commercial loan facility risk that embodies the nature, frequency and duration of the repayment structure as it pertains to the actual source of loan repayment, commercial nonaccrual ~~loans~~relationships under $500 thousand which are below the threshold to perform ana specific impairment analysis, and independent consumer credit bureau scores that are monitored to identify shifts in risk that are represented in the retail portfolio. These factors are also

evaluated on a quarterly basis with the exception of the commercial nonaccrual ~~loans~~relationships under $500 thousand which are evaluated monthly.

Commercial purpose LHFI are charged off when a determination is made that the loan is uncollectible and continuance as a bankable asset is not warranted. Consumer LHFI secured by 1-4 family residential real estate are generally charged off or written down to the fair value of the collateral less cost to sell at no later than 180 days of delinquency. Non-real estate consumer purpose LHFI, including both secured and unsecured loans, are generally charged off by 120 days of delinquency. Consumer revolving lines of credit

and credit card debt are generally charged off on or prior to 180 days of delinquency. LHFI are charged off against the allowance for loan losses, LHFI, with any subsequent recoveries credited back to the allowance account.

Acquired loans are accounted for under the acquisition method of accounting. The acquired loans are recorded at their estimated fair value at the time of acquisition. The fair value of acquired loans is determined using a discounted cash flow model based on assumptions regarding the amount and timing of principal and interest payments, estimated prepayments, estimated default rates, estimated loss severity in the event of defaults and current market rates. Estimated credit losses are included in the determination of fair value; therefore, an allowance for loan losses is not recorded on the acquisition date.

Trustmark accounts for acquired impaired loans under FASB ASC ~~Topic~~Subtopic 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality.” An acquired loan is considered impaired when there is evidence of credit deterioration since origination and it is probable at the date of acquisition that Trustmark would be unable to collect all contractually required payments. Acquired loans accounted for under FASB ASC ~~Topic~~Subtopic 310-30 are referred to as “acquired impaired loans.” Revolving credit agreements, such as home equity lines, and commercial leases are excluded from acquired impaired loan accounting requirements.

For acquired impaired loans, Trustmark ~~(a)~~(i) calculates the contractual amount and timing of undiscounted principal and interest payments (the “undiscounted contractual cash flows”) and ~~(b)~~(ii) estimates the amount and timing of undiscounted expected principal and interest payments (the “undiscounted expected cash flows”). Under FASB ASC ~~Topic~~Subtopic 310-30, the difference between the undiscounted contractual cash flows and the undiscounted expected cash flows is the nonaccretable difference. The nonaccretable difference represents an estimate of the loss exposure of principal and interest related to the acquired impaired loan portfolio, and such amount is subject to change over time based on the performance of such loans. The excess of undiscounted expected cash flows at acquisition over the initial fair value of acquired impaired loans is referred to as the “accretable yield” and is recorded as interest income over the estimated life of the loans using the effective yield method if the timing and amount of the future cash flows is reasonably estimable. Under the effective yield method, the accretable yield is recorded as an accretion of interest income over the life of the loan.

Trustmark aggregates certain acquired impaired loans into pools of loans with common credit risk characteristics such as loan type and risk rating. To establish accounting pools of acquired impaired loans, loans are first categorized by similar purpose, collateral and geographic region. Within each category, the acquired impaired loans are further segmented by ranges of risk determinants observed at the time of acquisition. For commercial loans, the primary risk determinant is the risk rating as assigned by Trustmark. For consumer ~~acquired impaired~~ loans, the risk determinants include delinquency, delinquency history and FICO scores. Statistical comparison of the pools reflect that each pool is comprised of acquired impaired loans generally of similar characteristics, including loan type, loan risk and weighted average life. Each pool is then reviewed for similarity of the pool constituents, including standard deviation of purchase price, weighted average life and concentration of the largest loans. Loan pools are initially booked at the aggregate fair value of the loan pool constituents, based on the present value of Trustmark's expected cash flows from the acquired impaired loans. An acquired impaired loan is removed from a pool of loans only if the loan is sold, foreclosed, payment is received in full satisfaction of the loan or the loan is fully charged off. The acquired impaired loan is removed from the pool at the carrying value. When an individual acquired impaired loan is removed from a pool of loans, the difference between its relative carrying amount and ~~its~~the cash, collateral (measured at fair ~~value of the collateral,~~value) or other assets received will be recognized as a gain or loss immediately in interest income on acquired loans and would not affect the effective yield used to recognize the accretable yield on the remaining pool. Certain acquired impaired loans are not pooled and are accounted for individually. Such acquired impaired loans are withheld from pools due to the inherent uncertainty of the timing and amount of their cash flows or because they are not a suitable similar constituent to the established pools.

As required by FASB ASC ~~Topic~~Subtopic 310-30, Trustmark periodically re-estimates the expected cash flows to be collected over the life of the acquired impaired loans. If, based on current information and events, it is probable that Trustmark will be unable to collect all cash flows expected at acquisition plus additional cash flows expected to be collected arising from changes in estimate after acquisition, the acquired loans are considered impaired. The decrease in the expected cash flows reduces the carrying value of the acquired impaired loans as well as the accretable yield and results in a charge-off through the allowance for loan losses, acquired loans or the establishment of an allowance for loan losses, acquired loans with a charge to income through the provision for loan losses, acquired loans. If, based on current information and events, it is probable that there is a significant increase in the cash flows previously expected to be collected or if actual cash flows are significantly greater than cash flows previously expected, Trustmark

will reduce any remaining allowance for loan losses, acquired loans established on the acquired impaired loans for the increase in the present value of cash flows expected to be collected. The increase in the expected cash flows for the acquired impaired loans over those originally estimated at acquisition increases the carrying value of the acquired impaired loans as well as the accretable yield. The increase in the accretable yield is recognized as interest income prospectively over the remaining life of the acquired impaired loans. The carrying value of acquired impaired loans is reduced by payments received, both principal and interest, and increased by the portion of the accretable yield recognized as interest income.

Under FASB ASC ~~Topic~~Subtopic 310-30, acquired impaired loans are generally considered accruing and performing loans as the loans accrete interest income over the estimated life of the loan when expected cash flows are reasonably estimable. Accordingly, acquired impaired loans that are contractually past due are still considered to be accruing and performing loans as long as the estimated cash flows are received as expected. If the timing and amount of cash flows is not reasonably estimable, the loans may be classified as nonaccrual loans and interest income may be recognized on a cash basis or as a reduction of the principal amount outstanding.

Loans acquired in a FDIC-assisted transaction and covered under loss-share agreements are referred to as “covered loans” and are reported separately in Trustmark’s consolidated financial statements. Covered loans are recorded at their estimated fair value at the time of acquisition exclusive of the expected reimbursement cash flows from the Federal Deposit Insurance Corporation (FDIC).

The FDIC indemnification asset is reduced as expected losses on covered loans and covered other real estate decline or as loss-share claims are submitted to the FDIC. The FDIC indemnification asset is revalued concurrent with the loan re-estimation and adjusted for any changes in expected cash flows based on recent performance and expectations for future performance of covered loans and covered other real estate. These adjustments are measured on the same basis as the related covered loans and covered other real estate. Increases in the cash flows of the covered loans and covered other real estate over those expected reduce the FDIC indemnification asset, and decreases in the cash flows of the covered loans and covered other real estate below those expected increase the FDIC indemnification asset. Increases and decreases to the FDIC indemnification asset are recorded as adjustments to noninterest income in other, net.

Write-downs of the FDIC indemnification asset resulting from improvements in expected cash flows and covered losses based on the re-estimation of acquired covered loans are amortized over the lesser of the remaining life or contractual FDIC agreement period of the acquired covered loan as a yield adjustment consistent with the associated acquired covered loan. All other valuation changes of the FDIC indemnification asset (i.e., pay-offs of acquired covered loans, sales of covered other real estate, and reductions of FDIC loss claims) are accounted for under the “collectibility method,” which recognized write-downs of the FDIC indemnification asset immediately in noninterest income.

Premises and equipment are ~~stated~~reported at cost, less accumulated depreciation and amortization. Depreciation is charged to expense over the estimated useful lives of the assets, which are up to thirty-nine years for buildings and three to ten years for furniture and equipment. Leasehold improvements are amortized over the terms of the respective leases or the estimated useful lives of the improvements, whichever is shorter. In cases where Trustmark has the right to renew the lease for additional periods, the lease term for the purpose of calculating amortization of the capitalized cost of the leasehold improvements is extended when Trustmark is “reasonably assured” that it will renew the lease. Depreciation and amortization expenses are computed using the straight-line method. Trustmark continually evaluates whether events and circumstances have occurred that indicate that such long-lived assets have become impaired. Measurement of any impairment of such long-lived assets is based on the fair values of those assets.

Branch closures and purchased land held for future branch expansion for more than five years are evaluated to determine if the related land, buildings and building improvements should be transferred to assets held for sale in accordance with FASB ASC Topic 360, “Property, Plant and Equipment.” The property is transferred to assets held for sale at the lower of its carrying value or fair value less cost to sell. An impairment loss is recorded at the time of transfer if the carrying value of the assets exceeds the fair value.

Impairment losses are recorded toas non-interest expense in other expense. ~~There were $750 thousand of impairment losses on premises and equipment recorded during 2016, compared to no impairment losses on premises and equipment recorded during 2015 or 2014.~~

The fair value of the MSR is determined using discounted cash flow techniques benchmarked against third-party valuations. Estimates of fair value involve several assumptions, including the key valuation assumptions about market expectations of future prepayment rates, interest rates and discount rates which are provided by a third-party firm. Prepayment rates are projected using an industry standard prepayment model. The model considers other key factors, such as a wide range of standard industry assumptions tied to specific portfolio characteristics such as remittance cycles, escrow payment requirements, geographic factors, foreclosure loss exposure, VA no-bid exposure, delinquency rates and cost of servicing, including base cost and cost to service delinquent mortgages. Prevailing market conditions at the time of analysis are factored into the accumulation of assumptions and determination of servicing value.

Trustmark economically hedges changes in the fair value of the MSR attributable to interest rates. See Note 1 – Significant Accounting Policies, “Derivative Financial Instruments – Derivatives ~~not~~Not Designated as Hedging Instruments” for information regarding these derivative instruments.

Trustmark receives annual servicing fee income for loans serviced, which is recorded toas noninterest income in mortgage banking, net. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when earned. Late fees and ancillary fees related to loan servicing are not considered material.

Trustmark accounts for goodwill and other intangible assets in accordance with FASB ASC Topic 350, “Intangibles – Goodwill and Other.” Goodwill, which represents the excess of cost over the fair value of the net assets of an acquired business, is not amortized but tested for impairment on an annual basis, which is October 1 for Trustmark, or more often if events or circumstances indicate that there may be impairment.

Identifiable intangible assets are acquired assets that lack physical substance but can be distinguished from goodwill because of contractual or legal rights or because the assets are capable of being sold or exchanged either on their own or in combination with a related contract, asset or liability. Trustmark’s identifiable intangible assets primarily relate to core deposits, insurance customer relationships and borrower relationships. These intangibles, which have definite useful lives, are amortized on an accelerated basis over their estimated useful lives. In addition, these intangibles are evaluated ~~annually~~ for impairment or whenever events and changes in circumstances indicate that the carrying amount should be reevaluated. Trustmark also purchased banking charters in order to facilitate its entry into the states of Florida and Texas. These identifiable intangible assets are being amortized on a straight-line method over 20 years.

Other real estate includes assets that have been acquired in satisfaction of debt through foreclosure and is ~~recorded~~carried at the lower of cost or estimated fair value. Fair value is based on independent appraisals and other relevant factors. Valuation adjustments required at foreclosure are charged to the allowance for loan losses. Other real estate is revalued on an annual basis or more often if market conditions necessitate. An other real estate specific reserve may be recorded through other real estate expense for declines in fair value subsequent to foreclosure based on recent appraisals or changes in market conditions. Subsequent to foreclosure, losses on the periodic revaluation of the property are charged against an existing other real estate specific reserve or toas noninterest expense in other real estate expense if a reserve does not exist. Costs of operating and maintaining the properties as well as gains or losses on their disposition are also included in other real estate expense as incurred. Improvements made to properties are capitalized if the expenditures are expected to be recovered upon the sale of the properties.

ASU 2016-02, “Leases (Topic 842),” became effective for Trustmark on January 1, 2019. Trustmark adopted FASB ASC Topic 842utilizing the modified-retrospective transition approach prescribed by ASU 2018-11, “Leases (Topic 842): Targeted Improvements”.Trustmark did not elect to adopt the package of practical expedients, which includes reassessing whether any expired or existing contracts are or contain leases, reassessing the lease classification and reassessing initial direct costs. Also, Trustmark did not elect to adopt the hindsight practical expedient therefore maintaining the lease terms previously determined under FASB ASC Topic 840, “Leases”. Trustmark made an accounting policy election to not recognize short-term leases (12 months or less) on the balance sheet. Trustmark accounts for the lease and nonlease components separately as such amounts are readily determinable.

Once Trustmark identifies and determines certain contracts are leases according to FASB ASC Topic 842, Trustmark classifies it as an operating or a finance lease and recognizes a right-of-use asset and a lease liability at the lease commencement date. The lease liability represents the present value of the lease payments that remain unpaid as of the commencement date and the right-of-use asset is the initial lease liability recognized for the lease plus any lease payments made to the lessor at or before the commencement date as well as any initial direct costs less any lease incentives received.

Trustmark’s finance leases consist of building and equipment leases. Trustmark recognizes interest expense based on the discount rate of the lease as interest expense in other interest expense and recognizes depreciation expense on a straight-line basis over the lease term as noninterest expense in net occupancy – premises for building leases and in equipment expense for equipment leases. Trustmark amortizes the right-of-use asset over the life of the lease term on a straight-line basis. Trustmark’s lease liabilities are measured as the present value of the remaining lease payments throughout the lease term. Trustmark records its finance lease right-of-use assets in premises and equipment, net and its finance lease liabilities in other borrowings.

Trustmark’s operating leases primarily consist of building and land leases. Trustmark recognizes lease rent expense on a straight-line basis over the term of the lease contract and records it as noninterest expense in net occupancy – premises for building and land leases and in equipment expense for equipment leases. Trustmark’s amortization of the right-of-use asset is the difference between the straight-line lease expense and the interest expense recognized on the lease liability during the period. Trustmark’s lease liabilities are measured as the present value of the remaining lease payments throughout the lease term.

Trustmark’s leases typically have one or more renewal options included in the lease contract. Due to the nature of Trustmark’s leases, for leases with renewal options available, Trustmark considers the first renewal option as reasonably certain to renew and is therefore included in the measurement of the right-of-use assets and lease liabilities.

In order to calculate its right-of-use assets and lease liabilities, FASB ASC Topic 842 requires Trustmark to use the rate of interest implicit in the lease when readily determinable. If the rate implicit in the lease is not readily determinable, Trustmark is required to use its incremental borrowing rate, which is the rate of interest Trustmark would have to pay to borrow on a collateralized basis over a similar term in a similar economic environment. Trustmark was able to determine the implicit interest rate for its equipment leases and used that rate as its discount rate. Since the implicit interest rate for most of its building and land leases were not readily determinable, Trustmark used its incremental borrowing rate.

Trustmark’s short-term leases primarily include automated teller machines. For short-term leases, Trustmark recognizes lease expense on a straight-line basis over the lease term. As previously stated, Trustmark has elected not to include short-term leases on its balance sheet.

~~Securities with limited marketability, such as stock~~Trustmark accounts for its investments in ~~the~~FHLB and Federal Reserve Bank of Atlanta stock in accordance with FASB ASC Subtopic 942-325, “Financial Services-Depository and ~~the~~Lending-Investments-Other.” FHLB and Federal Reserve Bank stock are equity

securities that do not have a readily determinable fair value because its ownership is restricted and it lacks a market. FHLB and Federal Reserve Bank stock are carried at ~~cost.~~cost and evaluated for impairment. Trustmark’s investment in member bank stock is included in other assets in the accompanying consolidated balance ~~sheets because these equity securities do not have a readily determinable fair value, which places them outside the scope of FASB ASC Topic 320, “Investments – Debt and Equity Securities.”~~sheets. At December 31, ~~2016~~2019 and ~~2015,~~2018, Trustmark’s investment in member bank stock totaled

$~~71.0~~31.9 million and ~~$62.6~~$32.2 million, respectively. The carrying value of Trustmark’s member bank stock gave rise to no other-than-temporary impairment for the years ended December 31, ~~2016, 2015~~2019, 2018 and ~~2014.~~2017.

~~Commission~~Trustmark accounts for revenue from contracts with customers in accordance with FASB ASC Topic 606, “Revenue from Contracts with Customers,” which provides that revenue be recognized in a manner that depicts the transfer of goods or services to a customer in an amount that reflects the consideration Trustmark expects to be entitled to in exchange for those goods or services. Revenue from contracts with customers is recognized either over time in a manner that depicts Trustmark’s performance, or at a point in time when control of the goods or services are transferred to the customer. Trustmark’s noninterest income, excluding all of mortgage banking, net and securities gains (losses), net and portions of bank card and other fees and other income, are considered within the scope of FASB ASC Topic 606. Gains or losses on the sale of other real estate, which are included in Trustmark’s noninterest expense as other real estate expense, are also within the scope of FASB ASC Topic 606.

In general, deposit accounts represent contracts with customers with no fixed duration and can be terminated or modified by either party at any time without compensation to the other party. According to FASB ASC Topic 606, a contract that can be terminated by either party without compensation does not exist for periods beyond the then-current period. Therefore, deposit contracts are considered to renew day-to-day if not minute-to-minute.

Deposit contracts have a single continuous or stand-ready service obligation whereby Trustmark makes customer funds available for use by the customer as and when the customer chooses as well as other services such as statement rendering and online banking. The specific services provided vary based on the type of deposit account. These services are not individually distinct, but are distinct as a group, and therefore, constitute a single performance obligation which is satisfied over time and qualifies as a series of distinct service periods.

Trustmark receives a fixed service charge amount as consideration monthly for services rendered. The service charge amount varies based on the type of deposit account. Some of the service charge revenue is subject to refund provisions, which is variable consideration under the guidelines of FASB ASC Topic 606. Trustmark has elected the ‘as-invoiced’ practical expedient permitted under FASB ASC Topic 606 for recognition of service charge revenue. Therefore, revenue is recognized ~~as of~~at the ~~effective date of~~time and in the ~~insurance policy or the date~~amount the customer is ~~billed, whichever~~charged. The service charge revenue is ~~later.~~presented net of refunded amounts on Trustmark’s consolidated statements of income.

Services related to non-sufficient funds, overdrafts, excess account activity, stop payments, dormant accounts, etc. are considered optional purchases for a deposit contract because there is no performance obligation for Trustmark ~~also receives contingent commissions from insurance companies as additional incentive for achieving specified premium volume goals and/~~until the service is requested by the customer or the ~~loss experience~~occurrence of a triggering event. Fees for these services are fixed amounts and are charged to the customer when the service is performed. Revenue is recognized at the time the customer is charged.

Revenue from contracts with customers in bank card and other fees includes income related to interchange fees and various other contracts which primarily consists of contracts with a single performance obligation that is satisfied at a point in time. Trustmark receives a fixed consideration amount once the performance obligation is completed for these contracts. Trustmark reports revenue from these contracts net of amounts refunded or due to a third party.

As both a debit and credit card issuer, Trustmark receives an interchange fee for every card transaction completed by its customers with a merchant. Trustmark receives 2 types of interchange fees: point-of-sale transactions in which the customer must enter the PIN associated with the card to complete the transaction (a debit card transaction), and signature transactions in which the signature of the ~~insurance placed~~customer is required to complete the transaction (a credit card transaction).

Trustmark, as the card issuing or settlement bank, has a contract (implied based on customary business practices) with the payment network in which Trustmark has a single continuous service obligation to make funds available for settlement of the card transaction. Trustmark’s service obligation is satisfied over time and qualifies as a series of distinct service periods. Trustmark receives interchange fees as consideration for services rendered in the amount established by the respective payment network. The interchange

fees are established by the payment network based on the type of transaction and is posted on their website. Trustmark receives and records interchange fee revenue from the payment networks daily net of all fees and amounts due to the payment network.

Revenue from contracts with customers in other income includes income related to cash management services and other contracts with a single performance obligation that is satisfied at a point in time. Trustmark receives a fixed consideration amount once the performance obligation is completed for these contracts. Trustmark reports revenue from these contracts net of amounts refunded or due to a third party.

Trustmark provides cash management services through the delivery of various products and services offered to its business and municipal customers including various departments of state, city and local governments, universities and other non-profit entities. Similar to the deposit account contracts, the cash management contracts primarily represent contracts with customers with no fixed duration and can be terminated or modified by either party at any time without compensation to the other party. Therefore, cash management contracts are generally considered to renew day-to-day if not minute-to-minute.

Cash management contracts have a single continuous or stand-ready service obligation whereby Trustmark makes a specific service or group of services available for use by the customer as and when the customer chooses. The specific services provided vary based on the type of account or product. These services are not individually distinct, but are distinct as a group, and therefore, constitute a single performance obligation which is satisfied over time and qualifies as a series of distinct service periods.

Trustmark receives a set service charge or maintenance fee amount as consideration monthly for services rendered. However, some of the fees are based on the number of transactions that occur (i.e. flat fee for a set number of transactions per month then an additional charge for each transaction after that) or the average daily account balance maintained by the customer during the month and a small amount of the cash management fee revenue is subject to refund provisions. These fees represent variable consideration under the guidelines of FASB ASC Topic 606. Trustmark has elected the ‘as-invoiced’ practical expedient permitted under FASB ASC Topic 606 for recognition of cash management fee revenue. The cash management revenue is presented net of any refunded amounts on Trustmark’s consolidated statements of income.

Trustmark’s merchant services provider contracts directly with Trustmark business customers and provides Trustmark’s merchant customers card processing equipment and transaction processing services. Trustmark’s contract with the merchant services provider has a single-continuous service obligation to provide customer referrals for potential new accounts which is satisfied over time and qualifies as a series of distinct service periods. Trustmark receives a flat fee for each new account established and a percentage of the residual income related to transactions processed for Trustmark’s merchant customers each month as provided in the contract. Under the guidelines of FASB ASC Topic 606, the fee received for each new account and the profit sharing represent variable consideration. Revenue from merchant card services contracts is recognized monthly using a time-elapsed measure of progress. Trustmark has elected the ‘as-invoiced’ practical expedient permitted under FASB ASC Topic 606 for recognition of the merchant card services revenue.

Trustmark records a gain or loss from the sale of other real estate when control of the property transfers to the buyer. Trustmark records the gain or loss from the sale of other real estate in noninterest expense as other real estate expense. Other real estate sales for the year ended December 31, 2019 resulted in net losses of $291 thousand compared to net gains of $700 thousand for the year ended December 31, 2018 and $2.1 million for the year ended December 31, 2017.

In general, purchases of Trustmark’s other real estate property are not financed by Trustmark. ~~Contingent commissions~~Financing the purchase of other real estate is evaluated based upon the same lending policies and procedures as all other types of loans. Under FASB ASC Subtopic 610-20, “Other Income – Gains and Losses from ~~insurance companies~~the Derecognition of Nonfinancial Assets,” when Trustmark finances the sale of its other real estate to a buyer, Trustmark is required to assess whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these two criteria are ~~recognized throughout~~met, Trustmark derecognizes the ~~calendar year using reasonable estimates that are continuously reviewed~~other real estate asset and ~~revised~~records a gain or loss on the sale once control of the property is transferred to ~~reflect current experience. Trustmark maintains reserves for commission adjustments and doubtful accounts receivable which were not considered significant at December 31, 2016 or 2015.~~the buyer.

There are 5 categories of revenue included in trust management: personal trust and investments, retirement plan services, institutional custody, corporate trust and other. Each of these categories includes multiple types of contracts, service obligations and fee income. However, the majority of these contracts include a single service obligation that is satisfied over time, the customer is

charged in arrears for services rendered and revenue is recognized when payment is received. In general, the time period between when the service obligation is completed and when payment from the customer is received is less than 30 days. Revenue from trust management contracts is primarily related to monthly service periods and based on the prior month-end’s market value. Some trust management revenue is mandated by a court order, while other revenue consists of flat fees. Trust management revenue based on an account’s market value represents variable consideration under the guidelines of FASB ASC Topic 606. Trustmark has elected the ‘as-invoiced’ practical expedient allowed under FASB ASC Topic 606 to account for the trust management revenue.

Assets under administration held by Trustmark in a fiduciary or agency capacity for customers are not included in Trustmark’s consolidated balance sheets.

Investment services includes both brokerage and annuity income. Trustmark has a contract with a third-party investment services company which contains a single continuous service obligation, to provide broker-dealer and advisory services to customers on behalf of the third-party, which is satisfied over time and qualifies as a series of distinct service periods. Trustmark serves as the agent between the third-party investment services company, the principle, and the customer. In accordance with the contract, Trustmark receives a monthly payment from the investment services company for commissions and advisory fees (asset management fees) earned on transactions completed in the prior month net of all charges and ~~trust~~fees due to the investment services company. Trustmark recognizes revenue from the investment services company, net of the revenue sharing expense due to the investment services company, when the payments are received. Commissions vary from month-to-month based on the specific products and transactions completed. The advisory fees vary based on the average daily balance of the managed assets for the period. The commissions and advisory fees represent variable consideration under FASB ASC Topic 606. Trustmark has elected the ‘as-invoiced’ practical expedient allowed under FASB ASC Topic 606 to recognize revenue from the investment services company.

Fisher Brown Bottrell Insurance, Inc. (FBBI), a wholly-owned subsidiary of Trustmark National Bank (TNB), operates as an insurance broker representing the policyholder and has no allegiance with any one insurance provider. FBBI serves as the agent between the insurance provider (either insurance carrier or broker), the principal, and the policy holder, the customer. FBBI has 4 general categories of insurance contracts: commercial, commercial installments, personal and employee benefits. FBBI’s insurance contracts contain a single performance obligation, policy placement, which is satisfied at a point in time. FBBI’s performance obligation is satisfied as of the policy effective date.

In addition to policy placement, FBBI provides various other periodic services to the policyholders for which no additional fee ~~income~~ is ~~recorded~~charged. These additional services are not considered material to the overall contract. Trustmark has elected the immaterial promises practical expedient allowed under FASB ASC Topic 606, which allows Trustmark to not assess whether promised services are performance obligations if the promised services are immaterial in the context of the contract. Therefore, the immaterial additional services offered to policyholders are not considered a performance obligation and no amount of the contract transaction price is allocated to these services.

In general, the transaction price for the insurance contracts is an established commission amount agreed upon by FBBI and the insurance provider. The commission amount varies based on the insurance provider and the type of policy. There are a ~~cash basis,~~small number of insurance contracts which FBBI does not receive a commission, but charges a fee directly to the policyholder.

Most of the commissions from insurance contracts are subject to clawback provisions which require FBBI to refund a prorated amount of the commissions received as a result of policy cancellations or lapses. Commissions subject to clawback provisions are considered variable consideration under FASB ASC Topic 606. Trustmark believes the expected value method of estimating the commissions subject to clawback provisions would best predict the amount of commissions FBBI will be entitled to because of the ~~regularity~~large number of insurance contracts with similar characteristics and the number of possible outcomes. FBBI calculates a separate weighted-average percentage (returned commissions percentage) based on actual cancellations over the previous three years for commercial lines, bonds, and personal lines. FBBI applies the respective returned commissions percentage to the commission revenue earned related to insurance contracts within these three lines each month to calculate the estimated returned commissions amount, which represents the variable consideration subject to variable constraint. Revenue from insurance contracts is reported net of the ~~billing cycles, approximates~~variable consideration subject to variable constraint. FBBI performs an analysis of the returned commissions reserve quarterly and adjusts the reserve balance based on all available information including actual cancellations and the remaining term of the contract. The returned commission percentage is updated annually.

Insurance Producers at FBBI earn commission as compensation for each policy they are responsible for placing. Commissions are not paid to Producers immediately at the policy effective date, can be subject to clawback provisions and can vary by Producer. Effective April 1, 2018, FBBI implemented a ‘pay when paid’ system. Under the ‘pay when paid’ system, Producers receive the commissions

for which they are entitled at the end of the month following the month in which FBBI receives payment from the insurance provider or customer. Under FASB ASC Subtopic 340-40, “Other Assets and Deferred Costs: Contracts with Customers,” the commission paid to the Producers is an incremental cost of obtaining a contract, which should be capitalized and amortized in a manner consistent with the pattern of transfer of the service related to the contract acquisition asset. Insurance contracts have a term of one year or less; therefore, Trustmark has elected the cost of obtaining a contract practical expedient allowed under FASB ASC Subtopic 340-40, which allows FBBI to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the contract asset that FBBI otherwise would have recognized is one year or less. Commission expense is recorded as noninterest expense in salaries and employee benefits when paid to the Producers.

Revenue from FBBI’s commercial insurance contracts (both agency billed and direct billed) consists of a set commission amount, which is subject to clawback provisions. Revenue from commercial installment insurance contracts consists of a set commission amount, which is not subject to clawback provisions. An estimated commission amount is entered in the agency management system when a commercial insurance contract is placed. FBBI records a top line receivable based on the estimated commission amount entered in the system each month, along with a corresponding amount recognized as revenue, and then adjusts the estimated receivable when the commissions are received from the insurance provider or customer.

Revenue from FBBI’s personal insurance contracts consists of a set commission amount, which is subject to clawback provisions, and is recognized when payment is received (generally 30-60 days after the policy effective date). Personal insurance contracts have a term of one year; therefore, recognizing the revenue from these contracts when payment is received is not materially different than recognizing the revenue at the policy effective date for any given period.

Revenue from FBBI’s employee benefits insurance contracts consists of a variable commission amount, which is not subject to clawback provisions, and is recognized when payment is received, typically on a monthly basis. Employee benefits insurance contracts have a set commission rate, but can vary from period to period based on changes in the number of employees covered by the policy (i.e. new hires and terminations). FBBI generally receives twelve monthly commission payments for these contracts with the initial payment being received approximately 60-90 days after the policy effective date. Under the guidelines of FASB ASC Topic 606, commissions from employee benefits insurance contracts represent fixed consideration because at contract inception (policy effective date) there is a set commission rate times a known number of covered employees. Changes in the number of covered employees are not known, nor can they be predicted, at contract inception. An increase or decrease in the number of covered employees after the policy effective date is considered a contract modification resulting from a change in scope and transaction price under FASB ASC Topic 606. This modification is treated as part of the existing contract because it does not add a distinct service. Employee benefits insurance contracts have a term of one year; therefore, recognizing the revenue from these contracts when payment is received is not materially different than recognizing the revenue at the policy effective date or the contract modification date for any given period.

In addition to the insurance contracts discussed above, FBBI has contracts with various insurance providers for which it receives contingency income based on volume of business and claims experience. FBBI is the principal and the insurance provider is the customer for these contingency commission insurance contracts. The contingency commission contracts have a single continuous or stand-ready service obligation whereby FBBI places policies with policyholders when acceptable to the insurance provider, which is satisfied over time. The contract term for these contingency commission contracts is one year. Revenue is recognized from the contingency commission contracts monthly using a time-elapsed measure of progress. FBBI accrues throughout the current year the amount of contingency commission income it expects to receive in the following year adjusted for a degree of uncertainty. FBBI updates a detail by insurance provider with the contingency commission income received, which is then compared to the total amount that was expected to be received. If actual receipts are higher or lower than the amount accrued in the prior year, the monthly accrual for the current year is adjusted accordingly.

Under the guidelines of FASB ASC Topic 606, revenue from contingency commission insurance contracts represents variable consideration and should be estimated using one of the two allowable methods subject to the variable consideration constraint. FBBI believes the most likely amount method ~~in accordance with industry practice.~~to be the most appropriate method for estimating the variable consideration as there are only a few possible outcomes for each contract.

Trustmark maintains an overall interest rate risk management strategy that incorporates the use of derivative instruments to minimize significant unplanned fluctuations in earnings and cash flows caused by interest rate volatility. Trustmark’s interest rate risk management strategy involves modifying the repricing characteristics of certain assets and liabilities so that changes in interest rates do not adversely affect the net interest margin and cash flows. Under the guidelines of FASB ASC Topic 815, “Derivatives and Hedging,” all derivative instruments are required to be recognized as either assets or liabilities and carried at fair value on the balance sheet. The fair value of derivative positions outstanding is included in other assets and/or other liabilities in the accompanying consolidated balance sheets and in the net change in these financial statement line items in the accompanying consolidated statements of cash flows as well as included in noninterest income in the accompanying consolidated statements of income and other comprehensive income (loss), net of tax in the accompanying consolidated statements of comprehensive income. Trustmark’s interest rate swap derivative instruments are subject to master netting agreements, and therefore, eligible for offsetting in the consolidated balance sheets. Trustmark has elected to not offset any derivative instruments in its consolidated balance sheets.

~~During 2013,~~ Trustmark entered into a forward interest rate swap contract on its junior subordinated debentures, with the objective of protecting the quarterly interest payments from the risk of variability of those payments resulting from changes in the three-month LIBOR interest rate, for the five-year period ~~beginning~~which began December 31, 2014 and ~~ending~~ended December 31, 2019. This derivative instrument was designated as a cash flow hedge under FASB ASC Topic 815. The interest rate swap matured on December 31, 2019; therefore, there was 0 accumulated net after-tax amount related to the effective cash flow hedge included in accumulated other comprehensive loss at December 31, 2019. Any accumulated net after-tax gains or losses related to effective cash flow hedge ~~are~~in the relevant periods were included in accumulated other comprehensive ~~loss.~~income (loss), net of tax. Any ineffective portion of the interest rate swap iswas reclassified from accumulated other comprehensive ~~loss~~income (loss), net of tax to noninterest expense in the consolidated statements of income for the relevant periods. ~~Beginning December 31, 2014, the effective date of the interest rate swap, amounts~~Amounts reported in accumulated other comprehensive ~~loss~~income (loss), net of tax related to this derivative ~~will be~~in the relevant periods were reclassified to other interest expense as interest payments ~~are~~were made on Trustmark’s variable rate junior subordinated debentures.

~~contracts no longer qualify as derivative instruments designated as fair value hedges under FASB ASC Topic 815.~~ Changes in the fair value of these derivative instruments are recorded inas noninterest income in mortgage banking, net and are offset by changes in the fair value of LHFS. See Note 1 – Significant Accounting Policies, “Loans Held for Sale (LHFS)” for information regarding the fair value option election.

Trustmark also utilizes derivative instruments such as interest rate lock commitments in its mortgage banking area. Rate lock commitments are residential mortgage loan commitments with customers, which guarantee a specified interest rate for a specified time period. Changes in the fair value of these derivative instruments are recorded inas noninterest income in mortgage banking, net and are offset by the changes in the fair value of forward sales contracts.

Trustmark offers certain derivatives products directly to qualified commercial lending clients seeking to manage their interest rate risk. Trustmark economically hedges interest rate swap transactions executed with commercial lending clients by entering into offsetting interest rate swap transactions with institutional derivatives market participants. Derivative transactions executed as part of this program are not designated as qualifying hedging relationships and are, therefore, carried at fair value with the change in fair value recorded inas noninterest income in bank card and other fees. Because these derivatives have mirror-image contractual terms, in addition to collateral provisions which mitigate the impact of non-performance risk, the changes in fair value are expected to substantially offset.

Trustmark accounts for uncertain tax positions in accordance with FASB ASC Topic 740, “Income Taxes,” which clarifies the accounting and disclosure for uncertainty in tax positions. Under the guidance of FASB ASC Topic 740, Trustmark accounts for deferred income taxes using the liability method. Deferred tax assets and liabilities are based on temporary differences between the financial statement carrying amounts and the tax basis of Trustmark’s assets and liabilities. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be realized or settled and are presented net in the accompanying consolidated balance ~~sheet~~sheets in other assets.

Trustmark accounts for the stock and incentive compensation under the provisions of FASB ASC Topic 718, “Compensation – Stock Compensation.” Under this accounting guidance, fair value is established as the measurement objective in accounting for stock awards and requires the application of a fair value based measurement method in accounting for compensation cost, which is recognized over the requisite service period. Trustmark has elected to account for forfeitures of stock awards as they occur.

For purposes of reporting cash flows, cash and cash equivalents include cash on hand and amounts due from banks. The following table reflects specific transaction amounts for the periods presented ($ in thousands):

	Years Ended December 31,						Years Ended December 31,
	2016		2015		2014		2019		2018		2017
Income taxes paid	$	24,836	$	16,321	$	13,710	$	24,809	$	12,435	$	7,371
Interest expense paid on deposits and borrowings		24,312		20,733		22,268
Noncash transfers from loans to foreclosed properties (1)		23,965		32,782		39,778
Interest paid on deposits and borrowings								83,997		66,358		41,472
Noncash transfers from loans to other real estate								8,598		12,115		8,760
Investment in tax credit partnership not funded								5,000		—		—
Financing right-of-use assets resulting from lease liabilities								9,326		—		—
Operating right-of-use assets resulting from lease liabilities								31,182		—		—
Transfer of long-term FHLB advances to short-term		500,009		—		6,644		—		—		250,038
Assets acquired in business combination								—		—		196,265
Liabilities assumed in business combination								—		—		184,949

Trustmark accounts for per share data in accordance with FASB ASC Topic 260, “Earnings Per Share,” which provides that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share (EPS) pursuant to the two-class method. Trustmark has determined that its outstanding unvested stock awards ~~and deferred stock units~~ are not participating securities. Based on this determination, no change has been made to Trustmark’s current computation for basic and diluted EPS.

Basic EPS is computed by dividing net income by the weighted-average shares of common stock outstanding. Diluted EPS is computed by dividing net income by the weighted-average shares of common stock outstanding, adjusted for the effect of potentially dilutive stock awards outstanding during the period.

The following table reflects weighted-average shares used to calculate basic and diluted EPS for the periods presented (in thousands):

	Years Ended December 31,						Years Ended December 31,
	2016		2015		2014		2019		2018		2017
Basic shares		67,620		67,550		67,434		64,630		67,505		67,727
Dilutive shares		164		142		160		142		154		160
Diluted shares		67,784		67,692		67,594		64,772		67,659		67,887

Weighted-average antidilutive stock awards were excluded in determining diluted EPS. The following table reflects weighted-average antidilutive stock awards for the periods presented (in thousands):

FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and requires certain disclosures about fair value measurements. The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. Depending on the nature of the asset or liability, Trustmark uses various valuation techniques and assumptions when estimating fair value. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability. FASB ASC Topic 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1 Inputs – Valuation is based upon quoted prices (unadjusted) in active markets for identical assets or liabilities that Trustmark has the ability to access at the measurement date.

Level 2 Inputs – Valuation is based upon quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability such as interest rates, yield curves, volatilities and default rates and inputs that are derived principally from or corroborated by observable market data.

Level 3 Inputs – Unobservable inputs reflecting the reporting entity’s own determination about the assumptions that market participants would use in pricing the asset or liability based on the best information available.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the fair value measurement in its entirety is classified is based on the lowest level input that is significant to the fair value measurement in its entirety. Trustmark’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. Transfers between levels of the fair value hierarchy are recognized on the actual date of the event or circumstances that caused the transfer.

Except for the changes detailed below, Trustmark has consistently applied its accounting policies to all periods presented in the accompanying consolidated financial statements.

ASU ~~2016-15, “Statement of Cash Flows~~2017-12, “Derivatives and Hedging (Topic ~~230)~~815): ~~Classification of Certain Cash Receipts and Cash Payments.~~Targeted Improvements to Accounting for Hedging Activities.”Issued in August ~~2016,~~2017, ASU ~~2016-15 provides guidance~~2017-12 aims to ~~reduce~~improve the ~~diversity~~financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in ~~practice~~its financial statements. The amendments in ASU 2017-12 aim to better align an entity’s risk management activities and financial reporting for hedging relationships by expanding and refining hedge accounting for both non-financial and financial risk components and aligning the recognition and presentation of ~~how certain cash receipts~~the effects of the hedging instrument and ~~cash payments are presented and classified~~the hedged item in the ~~statement~~financial statements. The amendments in ASU 2017-12 (i) permit hedge accounting for risk components in hedging relationships involving nonfinancial risk and interest rate risk; (ii) change the guidance for designating fair value hedges of ~~cash flows.~~interest rate risk and for measuring the change in fair value of the hedged item in fair value hedges of interest rate risk; (iii) continue to allow an entity to exclude option premiums and forward points from the assessment of hedge effectiveness; and (iv) permit an entity to exclude the portion of the change in fair value of a currency swap that is attributable to a cross-country basis spread from the assessment of hedge effectiveness. The amendments of ASU 2016-15 provide guidance on eight specific cash flow: (i) debt prepayment or debt extinguishment costs; (ii) settlement of zero-coupon bonds; (iii) contingent consideration payments made after a business combination; (iv) proceeds from2017-12 also include targeted improvements intended to simplify the settlement of insurance claims; (v) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (vi) distributions received from equity method investees; (vii) beneficial interests in securitization transactions and (viii) separately identifiable cash flows and application of hedge accounting. All transition requirements and elections must be applied to all hedging relationships existing at the ~~predominance principle.~~date of adoption. The amendments of ASU 2016-15 are effective for interim and annual periods beginning after December 15, 2017. Management has evaluated the amendments of ASU 2016-15 and does not believe that adoption of this ASU will impact Trustmark’s existing presentation of the applicable cash receipts and cash payments on its consolidated statements of cash flows.

~~ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.”~~ Issued in June 2016, ASU 2016-13 will add FASB ASC Topic 326, “Financial Instruments-Credit Losses” and finalizes amendments to FASB ASC Subtopic 825-15, “Financial Instruments-Credit Losses.” The amendments of ASU 2016-13 are intended to provide financial statement users with more decision-useful information related to expected credit losses on financial instruments and other commitments to extend credit by replacing the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss

estimates. The amendments of ASU 2016-13 eliminate the probable initial recognition threshold and, in turn, reflect an entity’s current estimate of all expected credit losses. ASU 2016-13 does not specify the method for measuring expected credit losses, and an entity is allowed to apply methods that reasonably reflect its expectations of the credit loss estimate. Additionally, the amendments of ASU 2016-13 require that credit losses on available for sale debt securities be presented as an allowance rather than as a write-down. The amendments of ASU 2016-13 are effective for interim and annual periods beginning after December 15, 2019. Earlier application is permitted for interim and annual periods beginning after December 15, 2018. Trustmark plans to adopt the amendments of ASU 2016-13 during the first quarter of 2020. Trustmark has established a steering committee which includes the appropriate members of Management to evaluate the impact this ASU will have on Trustmark’s financial position, results of operations and financial statement disclosures and determine the most appropriate method of implementing the amendments in this ASU as well as any resources needed to implement the amendments.

~~ASU 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.”~~ Issued in March 2016, ASU 2016-09 seeks to reduce complexity in accounting standards by simplifying several aspects of the accounting for share-based payment transactions. The amendments of ASU 2016-09 include: (i) requiring all excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement; (ii) requiring excess tax benefits to be classified along with other income tax cash flows as an operating activity on the statement of cash flow; (iii) allowing an entity to make an entity-wide accounting policy election to either estimate the number of awards that expect to vest or account for forfeitures when they occur; (iv) change the threshold to qualify for equity classification to permit withholding up to the maximum statutory tax rates in the applicable jurisdictions; and (v) requiring that cash paid by an employer when directly withholding shares for tax-withholding purposes to be classified as a financing activity on the statement of cash flows. The amendments of ASU 2016-092017-12 became effective for Trustmark on January 1, ~~2017 and~~2019. ASU 2017-12 did not have any impact to Trustmark’s existing hedging relationships at adoption; therefore, the adoption of ASU 2017-12 did not have a material impact on Trustmark’s consolidated financial statements. ~~Trustmark has made~~

ASU 2017-08, “Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” Issued in March 2017, ASU 2017-08 amends the amortization period for certain purchased callable debt securities held at a premium. In particular, the amendments in ASU 2017-08 require the premium to be amortized to the earliest call date. The amendments do not, however, require an ~~entity-wide~~ accounting ~~policy election~~change for securities held at a discount; instead, the discount continues to ~~account for forfeitures~~be amortized to maturity. Notably, the amendments in this ASU more closely align the amortization period of ~~stock awards as they occur. Changes~~premiums and discounts to ~~Trustmark’s consolidated statement~~expectations incorporated in market pricing on the underlying securities. Securities within the scope of ~~cash flows required by the~~ASU 2017-08 are purchased debt securities that have explicit, noncontingent call features that are callable at fixed prices and on preset dates. The amendments of ASU ~~2016-09 will be presented in~~2017-08 became effective for Trustmark on January 1, 2019. Trustmark’s total unamortized premium for purchased debt securities within the ~~Quarterly Report~~scope of ASU 2017-08 is immaterial; therefore, the adoption of ASU 2017-08 did not have a material impact on Form 10-Q for the three month period ending March 31, 2017. Excess tax expense and cash paid by Trustmark for shares withheld for tax-withholding purposes for the year ended December 31, 2016 totaled $107 thousand and $1.0 million, respectively.Trustmark’s consolidated financial statements.

ASU 2016-02, “Leases (Topic 842).” Issued in February 2016, ASU 2016-02 was issued by the FASB to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and by disclosing key

ASU 2018-14, “Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans.” Issued in August 2018, ASU 2018-14 modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The amendments in ASU 2018-14 remove certain disclosure requirements that are no longer considered cost beneficial, clarify the specific requirements of disclosures and add disclosure requirements identified as relevant. The amendments of ASU 2018-14 become effective for fiscal years beginning after December 15, 2020. Trustmark plans to adopt these amendments during the first quarter of 2021. Management is currently assessing all the potential impacts of the amendments in ASU 2018-14 on Trustmark’s consolidated financial statements; however, the adoption of ASU ~~2016-02~~2018-14 is not expected to have a material impact on Trustmark’s consolidated financial statements.

ASU ~~2016-01, “Financial Instruments-Overall (Subtopic 825-10)~~2018-13, “Fair Value Measurement (Topic 820): ~~Recognition~~Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.” Issued in August 2018, the amendments in this ASU remove disclosure requirements in FASB ASC Topic 820 related to (1) the amount of, and ~~Measurement of Financial Assets~~reasons for, transfers between Level 1 and ~~Financial Liabilities (An Amendment~~Level 2 of the ~~FASB Accounting Standards Codification).”~~ ~~Issued~~fair value hierarchy; (2) the policy for timing of transfers between levels; (3) the valuation processes for Level 3 fair value measurements; and (4) for non-public entities, the changes in ~~January 2016, ASU 2016-01 is intended to enhance~~unrealized gains and losses for the period included in earnings for recurring Level 3 fair value measurements held at the end of the reporting ~~model~~period. The ASU also modifies disclosure requirements such that (1) in place of a rollforward for ~~financial instruments~~Level 3 fair value measurements, a non-public entity is required to ~~provide users~~disclose transfers into and out of ~~financial statements with improved decision-making information.~~Level 3 of the fair value hierarchy and purchases and issues of Level 3 assets and liabilities; (2) for investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date that restrictions from redemption might lapse, only if the investee has communicated the timing to the entity or announced the timing publicly; and (3) it is clear that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. Additionally, this ASU adds disclosure requirements for public entities about (1) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period, and (2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments of ASU ~~2016-01 include: (i) requiring equity investments, except those accounted~~2018-13 became effective for ~~under~~Trustmark on January 1, 2020. Adoption of ASU 2018-13 did not have a material impact on Trustmark’s consolidated financial statements, and changes to disclosures as required by the ~~equity method~~amendments of ~~accounting or those that result~~ASU 2018-13 will be presented beginning with the Quarterly Report on Form 10-Q for the period ending March 31, 2020.

ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” Issued in January 2017, ASU 2017-04 simplifies the ~~consolidation of~~manner in which an ~~investee,~~entity is required to ~~be measured at~~test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with ~~changes in~~the carrying amount of that goodwill. In computing the implied fair value ~~recognized~~of goodwill under Step 2, an entity, prior to the amendments in ~~net income; (ii) requiring a qualitative assessment~~ASU 2017-04, had to ~~identify impairment of equity investments without readily determinable fair values; (iii) eliminating the requirement~~perform procedures to ~~disclose the method and significant assumptions used to estimate~~determine the fair value ~~for financial instruments measured~~ at ~~amortized cost on~~ the ~~balance sheet; (iv) requiring~~impairment testing date of its assets and liabilities, including unrecognized assets and liabilities, in accordance with the ~~use of the exit price notion when measuring~~procedure that would be required in determining the fair value of ~~financial instruments for disclosure purposes; (v) requiring~~assets acquired and liabilities assumed in a business combination. However, under the amendments in ASU 2017-04, an entity ~~that has elected the fair value option to measure~~should (1) perform its annual or interim goodwill impairment test by comparing the fair value of a ~~liability~~reporting unit with its carrying amount, and (2) recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, with the understanding that the loss recognized should not exceed the total amount of goodwill allocated to ~~present separately in other comprehensive income~~that reporting unit. Additionally, ASU 2017-04 removes the ~~portion~~requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails such qualitative test, to perform Step 2 of the ~~change in~~goodwill impairment test. ASU 2017-04 became effective for Trustmark on January 1, 2020, and the amendments of this ASU will be applicable to the annual goodwill impairment

test performed as of October 1, 2020. Based on Trustmark’s annual goodwill impairment test performed as of October 1, 2019, the fair value ~~resulting from a change in~~of its reporting units exceeded the ~~instrument-specific credit risk; (vi) requiring separate presentation of financial assets~~carrying value and, ~~financial liabilities by measurement category and form of financial asset on~~therefore, the ~~balance sheet or the accompanying notes to the financial statements and (vii) clarifying that an entity should evaluate the need for a valuation allowance on a deferred tax asset~~ related to available for sale securities in combination with the entity’s other deferred tax assets. The amendments of ASU 2016-01 are effective for interim and annual periods beginning after December 15, 2017. Trustmark plans to adopt the amendments of ASU 2016-01 during

the first quarter of 2018. Management has evaluated the impact this ASU will have on Trustmark’s consolidated financial statements. Through this evaluation, Management has determined that the principal areas impacted by the amendments of ASU 2016-01 will be Trustmark’s investment in member bank stock, which are equity securities that dogoodwill was not have readily determinable fair values, and various fair value related disclosures. See Note 1 – Significant Accounting Policies, “Federal Home Loan Bank (FHLB) and Federal Reserve Bank of Atlanta Stock” for information regarding Trustmark’s investment in member bank stock.impaired. The adoption of ASU ~~2016-01~~2017-04 is not expected to have a material impact on Trustmark’s consolidated financial statements.

ASU ~~2014-09, “Revenue from Contracts with Customers~~2016-13, “Financial Instruments-Credit Losses (Topic ~~606).~~326): Measurement of Credit Losses on Financial Instruments.” Issued in ~~May 2014,~~June 2016, ASU ~~2014-09~~2016-13 will add FASB ASC Topic ~~606, “Revenue from Contracts with Customers,”~~326, “Financial Instruments-Credit Losses” and ~~will supersede revenue recognition requirements in~~finalizes amendments to FASB ASC ~~Topic 605, “Revenue Recognition,~~Subtopic 825-15, “Financial Instruments-Credit Losses.” as well as certain cost guidance in FASB ASC Topic 605-35, “Revenue Recognition – Construction-Type and Production-Type Contracts.” ASU 2014-09 provides a framework for revenue recognition that replaces the existing industry and transaction specific requirements under the existing standards. ASU 2014-09 requires an entity to apply a five-step model to determine when to recognize revenue and at what amount. The model specifies that revenue should be recognized when (or as) an entity transfers control of goods or services to a customer at the amount in which the entity expects to be entitled. Depending on whether certain criteria are met, revenue should be recognized either over time, in a manner that depicts the entity’s performance, or at a point in time, when control of the goods or services are transferred to the customer. ASU 2014-09 provides that an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation. In addition, the existing requirements for the recognition of a gain or loss on the transfer of non-financial assets that are not in a contract with a customer are amended to be consistent with the guidance on recognition and measurement in ASU 2014-09. The amendments of ASU ~~2014-09 may~~2016-13 are intended to provide financial statement users with more decision-useful information related to expected credit losses on financial instruments and other commitments to extend credit by replacing the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates. The amendments of ASU 2016-13 eliminate the probable initial recognition threshold and, in turn, reflect an entity’s current estimate of all expected credit losses. ASU 2016-13 does not specify the method for measuring expected credit losses, and an entity is allowed to apply methods that reasonably reflect its expectations of the credit loss estimate. Additionally, the amendments of ASU 2016-13 require that credit losses on available for sale debt securities be ~~applied either retrospectively~~presented as an allowance rather than as a write-down. The amendments of ASU 2016-13, and all subsequent ASUs issued by FASB to ~~each prior reporting period presented or retrospectively~~provide additional guidance and clarification related to this Topic, became effective for Trustmark on January 1, 2020.

As previously disclosed, Trustmark established a cross-functional Current Expected Credit Loss (CECL) Steering Committee, a CECL Solution Development Working Group and a CECL Working Group which included the appropriate members of Management to evaluate the impact this ASU, and all subsequent ASUs issued by FASB, will have on Trustmark’s financial position, results of operations and financial statement disclosures and determine the most appropriate method of implementing the amendments in these ASUs as well as any resources needed to implement the amendments. Trustmark selected a third-party vendor to provide allowance for loan loss software as well as advisory services in developing a new methodology that would be compliant with amendments of ASU 2016-13, and is working with the approved third-party vendor to finalize the impact to Trustmark.

Based upon preliminary modeling results, Management estimates the allowance related to loans will increase. Trustmark expects to recognize a one-time cumulative effect ~~of initially applying ASU 2014-09 recognized~~adjustment through retained earnings at the date of ~~initial application. If~~adoption. Trustmark intends to estimate losses over an approximate one-year forecast period using Moody’s baseline economic forecasts, and then revert to longer term historical loss experience over a one-year period to estimate losses. Currently, Trustmark expects the transition method of application is elected, the entity should also provide the additional disclosures in reporting periods that include the date of initial application of (1) the amount by which each financial statement line item is affectedincrease in the ~~current reporting period, as compared~~allowance to be in the range of $10.0 million to $35.0 million, primarily driven by unfunded commitment exposure, economic forecasts and uncertainty. This estimated range includes a qualitative adjustment to the ~~guidance that was in effect before~~allowance for credit losses related to loans and an allowance on unfunded loan commitments. The estimate is subject to further refinement based on continuing reviews and testing of Management’s judgements, current and forecasted macroeconomic conditions and the ~~change, and (2) an explanation~~composition of the reasons for significant changes. ASU 2015-14, “Revenue from Contracts with Customers (Topic 606)-Deferral of the Effective Date,” issued in August 2015, defers the effective date of ASU 2014-09 by one year. ASU 2015-14 provides that the amendments of ASU 2014-09 become effective for interim and annual periods beginning after December 15, 2017. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. All subsequently issued ASUs which provide additional guidance and clarifications to various aspects of FASB ASC Topic 606 will become effective when the amendments of ASU 2014-09 become effective. Trustmark plans to adopt these amendments during the first quarter of 2018. Management is continuing to evaluate the impact ASU 2014-09 will have on Trustmark’s consolidated financial statementsloan portfolio, as well as finalization of internal controls to ensure model effectiveness.

Trustmark does not expect a material allowance for credit losses to be recorded on held-to-maturity securities under the ~~most appropriate transition method~~CECL model due to the composition of ~~application. Based~~the portfolio being primarily government agency-backed securities for which the risk of loss is minimal. Additionally, Trustmark does not expect a material allowance for credit losses to be recorded on ~~this evaluation to date, Management has determined that~~available-for-sale debt securities, as the majority of the ~~revenues earned~~portfolio consists of government agency-backed securities for which the risk of loss is minimal.

Disclosures required by ~~Trustmark are not within the scope of ASU 2014-09. Management also believes that for most revenue streams within the scope of ASU 2014-09,~~ the amendments ASU 2016-13 will ~~not change~~be presented beginning with the ~~timing of when~~Quarterly Report on Form 10-Q for the revenue is recognized. Management will continue to evaluate the impact the adoption of ASU 2014-09 will have on Trustmark’s consolidated financial statements, focusing on noninterest income sources within the scope of ASU 2014-09 as well as new disclosures required by these amendments; however, the adoption of ASU 2014-09 is not expected to have a material impact on Trustmark’s consolidated financial statements.

On ~~November 14, 2016,~~April 7, 2017, Trustmark ~~and~~completed its merger with RB Bancorporation ~~announced the signing of a definitive agreement pursuant to which RB Bancorporation would merge into Trustmark. RB Bancorporation, with assets of $217.7 million as of December 31, 2016, is~~(Reliance), the holding company for Reliance Bank, which ~~has seven~~had 7 offices serving the Huntsville, Alabama ~~MSA. On January 20, 2017,~~metropolitan service area (MSA). Reliance Bank was merged into Trustmark ~~announced that all required regulatory approvals have been received in connection~~National Bank simultaneously with the ~~proposed~~ merger of ~~RB Bancorporation into Trustmark.~~

Trustmark and Reliance. Under the terms of the ~~definitive agreement, which has been approved unanimously by the Boards of Directors of both companies, holders of RB Bancorporation common stock will receive~~Merger Agreement dated November 14, 2016, Trustmark paid $22.00 in cash for each ~~share;~~share of Reliance common stock outstanding, which represented payment to Reliance common shareholders of approximately $23.7 million. In addition, Trustmark paid off Reliance Preferred Stock of $1.1 million bringing the ~~aggregate~~total consideration paid to $24.8 million.

The merger with Reliance was consistent with Trustmark’s strategic plan to selectively expand the Trustmark franchise and enhance the Trustmark franchise in north Alabama.

This merger was accounted for in accordance with FASB ASC Topic 805, “Business Combinations.” Accordingly, the assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of the merger date.

The statement of assets purchased and liabilities assumed in the Reliance merger is presented below at their estimated fair values as of the merger date of April 7, 2017 ($ in thousands):

The excess of the consideration paid over the estimated fair value of the net assets acquired was $13.5 million, which was recorded as goodwill under FASB ASC Topic 805. The identifiable intangible assets acquired represent the core deposit intangible at fair value at the merger date. The core deposit intangible is being amortized on an accelerated basis over the estimated useful life, currently expected to be approximately ten years.

Loans acquired from Reliance were evaluated under a fair value process. Loans with evidence of deterioration in credit quality and for which it was probable at acquisition that Trustmark would not be able to collect all contractually required payments are referred to as acquired impaired loans and accounted for in accordance with FASB ASC Subtopic 310-30. See Note 6 – Acquired Loans for additional information on acquired loans.

The operations of Reliance are included in Trustmark’s operating results from April 7, 2017 and did not have a material impact on Trustmark’s results of operations. During the second quarter of 2017, Trustmark included merger transaction expenses in other noninterest expense totaling $3.2 million (change in control expense of $1.3 million; professional fees, contract termination and other expenses of $1.9 million).

For financial instruments measured at fair value, Trustmark utilized inputs within Level 2 of the fair value hierarchy to determine the fair value of securities available for sale (included in securities above), time deposits (included in deposits above) and FHLB advances (included in other borrowings above). Level 3 inputs were used to determine the fair value of acquired loans, identifiable intangible assets and other real estate. The methodology and significant assumptions used in estimating the fair values of these financial assets and liabilities are as follows:

Estimated fair values for securities available for sale are based on quoted market prices where available. If quoted market prices are not available, estimated fair values are based on quoted market prices of comparable instruments.

Fair value of acquired loans is ~~approximately $25.6 million. Subject~~determined using a discounted cash flow model based on assumptions regarding the amount and timing of principal and interest payments, estimated prepayments, estimated default rates, estimated loss severity in the event of default and current market rates.

The fair value assigned to the ~~receipt~~identifiable intangible assets, in this case the core deposit intangible, represents the future economic benefits of ~~shareholder approval of RB Bancorporation and customary closing conditions contained~~the potential cost savings from acquiring core deposits in the merger ~~agreement,~~compared to the ~~transaction is expected to close during the first half~~cost of ~~2017. RB Bancorporation’s bank subsidiary, Reliance Bank, will merge into TNB simultaneously with~~obtaining alternative funding from market sources.

Other real estate was initially recorded at its estimated fair value on the merger date based on independent appraisals less estimated selling costs.

Time deposits were valued by projecting expected cash flows into the future based on each account’s contracted rate and then determining the present value of those expected cash flows using current rates for deposits with similar maturities.

FHLB advances were valued by projecting expected cash flows into the ~~respective parent companies.~~future based on each advance’s contracted rate and then determining the present value of those expected cash flows using current rates for advances with similar maturities.

Please refer to Note 20 – Fair Value for more information on Trustmark’s classification of financial instruments based on valuation inputs within the fair value hierarchy.

Trustmark is required to maintain average reserve balances with the Federal Reserve Bank of Atlanta based on a percentage of deposits. The average amounts of those reserves for the years ended December 31, ~~2016~~2019 and ~~2015~~2018 were ~~$94.7~~$122.4 million and ~~$82.1~~$112.4 million, respectively.

The following tables are a summary of the amortized cost and estimated fair value of securities available for sale and held to maturity at December 31, ~~2016~~2019 and ~~2015~~2018 ($ in thousands):

	Securities Available for Sale									Securities Held to Maturity									Securities Available for Sale									Securities Held to Maturity
			Gross		Gross			Estimated				Gross		Gross			Estimated				Gross		Gross			Estimated				Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair		Amortized		Unrealized		Unrealized			Fair		Amortized		Unrealized		Unrealized			Fair		Amortized		Unrealized		Unrealized			Fair
December 31, 2016	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
December 31, 2019																			Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
U.S. Government agency obligations																			$	22,965	$	69	$	(707	)	$	22,327	$	3,781	$	220	$	—		$	4,001
Issued by U.S. Government agencies	$	56,272	$	416	$	(925	)	$	55,763	$	—	$	—	$	—		$	—
Issued by U.S. Government sponsored agencies		257		19		—			276		3,647		355		—			4,002
Obligations of states and political subdivisions		113,541		1,945		(113	)		115,373		46,303		1,476		(27	)		47,752		24,952		513		—			25,465		31,781		434		(53	)		32,162
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		43,222		340		(776	)		42,786		15,478		280		(52	)		15,706		69,196		425		(369	)		69,252		10,820		266		(10	)		11,076
Issued by FNMA and FHLMC		638,809		1,773		(9,498	)		631,084		81,299		223		(1,084	)		80,438		714,350		2,171		(3,165	)		713,356		96,631		286		(370	)		96,547
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC or GNMA		1,271,198		5,865		(9,112	)		1,267,951		803,474		3,208		(6,519	)		800,163		656,162		3,777		(1,713	)		658,226		485,324		7,026		(656	)		491,694
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC or GNMA		242,869		1,766		(1,186	)		243,449		208,442		1,758		(1,215	)		208,985		113,359		625		(206	)		113,778		109,762		1,042		(82	)		110,722
Total	$	2,366,168	$	12,124	$	(21,610	)	$	2,356,682	$	1,158,643	$	7,300	$	(8,897	)	$	1,157,046	$	1,600,984	$	7,580	$	(6,160	)	$	1,602,404	$	738,099	$	9,274	$	(1,171	)	$	746,202

December 31, 2015
December 31, 2018
U.S. Government agency obligations																			$	31,235	$	109	$	(1,009	)	$	30,335	$	3,736	$	78	$	—		$	3,814
Issued by U.S. Government agencies	$	68,314	$	555	$	(734	)	$	68,135	$	—	$	—	$	—		$	—
Issued by U.S. Government sponsored agencies		258		23		—			281		101,782		3,282		—			105,064
Obligations of states and political subdivisions		134,719		3,922		(32	)		138,609		55,892		2,918		—			58,810		50,503		200		(27	)		50,676		35,783		255		(139	)		35,899
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		25,602		399		(189	)		25,812		17,363		342		(49	)		17,656		69,648		147		(2,301	)		67,494		12,090		45		(257	)		11,878
Issued by FNMA and FHLMC		222,899		2,956		(313	)		225,542		10,368		311		—			10,679		685,520		127		(18,963	)		666,684		115,133		43		(2,887	)		112,289
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC or GNMA		1,584,338		9,541		(11,019	)		1,582,860		820,012		4,951		(4,742	)		820,221		830,129		67		(18,595	)		811,601		578,827		189		(15,441	)		563,575
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC or GNMA		278,429		2,689		(1,892	)		279,226		182,401		1,700		(1,164	)		182,937		187,494		191		(2,662	)		185,023		164,074		299		(2,095	)		162,278
Asset-backed securities and structured financial products		25,003		79		(125	)		24,957		—		—		—			—
Total	$	2,339,562	$	20,164	$	(14,304	)	$	2,345,422	$	1,187,818	$	13,504	$	(5,955	)	$	1,195,367	$	1,854,529	$	841	$	(43,557	)	$	1,811,813	$	909,643	$	909	$	(20,819	)	$	889,733

During 2013, Trustmark reclassified approximately $1.099 billion of securities available for sale to securities held to maturity. The securities were transferred at fair value, which became the cost basis for the securities held to maturity. At the date of transfer, the net unrealized holding loss on the available for sale securities totaled approximately $46.6 million ($28.8 million, net of tax). The net unrealized holding loss is amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. There were no gains or losses

recognized as a result of the transfer. At December 31, ~~2016,~~2019 and 2018, the net unamortized, unrealized loss on the transferred securities included in accumulated other comprehensive loss in the accompanying balance sheet totaled approximately ~~$24.2~~$12.1 million ($~~14.9~~9.1 million, net of tax). and $15.7 million ($11.8 million, net of tax), respectively.

The table below includes securities with gross unrealized losses segregated by length of impairment at December 31, ~~2016~~2019 and ~~2015~~2018 ($ in thousands):

	Less than 12 Months					12 Months or More					Total					Less than 12 Months					12 Months or More					Total
			Gross					Gross					Gross					Gross					Gross					Gross
	Estimated		Unrealized			Estimated		Unrealized			Estimated		Unrealized			Estimated		Unrealized			Estimated		Unrealized			Estimated		Unrealized
December 31, 2016	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
December 31, 2019																Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
U.S. Government agency obligations																$	6,585	$	(105	)	$	12,886	$	(602	)	$	19,471	$	(707	)
Issued by U.S. Government agencies	$	9,420	$	(142	)	$	33,248	$	(783	)	$	42,668	$	(925	)
Obligations of states and political subdivisions		20,539		(135	)		654		(5	)		21,193		(140	)		—		—			6,216		(53	)		6,216		(53	)
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		43,615		(822	)		222		(6	)		43,837		(828	)		23,544		(107	)		18,529		(272	)		42,073		(379	)
Issued by FNMA and FHLMC		588,352		(10,582	)		—		—			588,352		(10,582	)		112,879		(230	)		278,120		(3,305	)		390,999		(3,535	)
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC or GNMA		1,127,501		(12,722	)		76,196		(2,909	)		1,203,697		(15,631	)		158,341		(738	)		151,271		(1,631	)		309,612		(2,369	)
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC or GNMA		244,050		(2,311	)		4,655		(90	)		248,705		(2,401	)		51,312		(167	)		14,155		(121	)		65,467		(288	)
Total	$	2,033,477	$	(26,714	)	$	114,975	$	(3,793	)	$	2,148,452	$	(30,507	)	$	352,661	$	(1,347	)	$	481,177	$	(5,984	)	$	833,838	$	(7,331	)

December 31, 2015
December 31, 2018
U.S. Government agency obligations																$	—	$	—		$	25,045	$	(1,009	)	$	25,045	$	(1,009	)
Issued by U.S. Government agencies	$	18,924	$	(81	)	$	30,591	$	(653	)	$	49,515	$	(734	)
Obligations of states and political subdivisions		4,289		(12	)		2,842		(20	)		7,131		(32	)		4,954		(9	)		12,802		(157	)		17,756		(166	)
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA		20,300		(222	)		1,863		(16	)		22,163		(238	)		9,163		(54	)		61,141		(2,504	)		70,304		(2,558	)
Issued by FNMA and FHLMC		82,177		(313	)		—		—			82,177		(313	)		31,931		(172	)		731,749		(21,678	)		763,680		(21,850	)
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC or GNMA		1,135,533		(8,832	)		238,152		(6,929	)		1,373,685		(15,761	)		46,643		(110	)		1,296,221		(33,926	)		1,342,864		(34,036	)
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC or GNMA		238,668		(2,902	)		11,090		(154	)		249,758		(3,056	)		5,497		(37	)		272,789		(4,720	)		278,286		(4,757	)
Asset-backed securities and structured financial products		6,778		(125	)		—		—			6,778		(125	)
Total	$	1,506,669	$	(12,487	)	$	284,538	$	(7,772	)	$	1,791,207	$	(20,259	)	$	98,188	$	(382	)	$	2,399,747	$	(63,994	)	$	2,497,935	$	(64,376	)

The unrealized losses shown above are due to increases in market rates over the yields available at the time of purchase of the underlying securities and not credit quality. Because Trustmark does not intend to sell these securities and it is more likely than not

that Trustmark will not be required to sell the investments before recovery of their amortized cost bases, which may be maturity, Trustmark does not consider these investments to be other-than-temporarily impaired at December 31, ~~2016.~~2019. There were no0 other-than-temporary impairments for the years ended December 31, ~~2016, 2015~~2019, 2018 and ~~2014.~~2017.

For the periods presented, gross realized gains ~~and~~or losses as a result of calls and dispositions of securities, as well as any associated proceeds, were as follows ($ in thousands):

	Years Ended December 31,								Years Ended December 31,
Available for Sale	2016			2015		2014			2019		2018		2017
Proceeds from calls and sales of securities	$	24,693		$	—	$	56,815		$	—	$	—	$	27,682
Gross realized gains		32			—		456			—		—		16
Gross realized losses		(342	)		—		(156	)		—		—		(1	)

Securities with a carrying value of ~~$1.999~~$1.770 billion and ~~$2.157~~$2.144 billion at December 31, ~~2016~~2019 and ~~2015,~~2018, respectively, were pledged to collateralize public deposits and securities sold under repurchase agreements and for other purposes as permitted by law. At both December 31, ~~2016~~2019 and ~~2015, none~~2018, NaN of these securities were pledged under the Federal Reserve Discount Window program to provide additional contingency funding capacity.

The amortized cost and estimated fair value of securities available for sale and held to maturity at December 31, ~~2016,~~2019, by contractual maturity, are shown below ($ in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Securities				Securities
	Available for Sale				Held to Maturity				Securities				Securities
			Estimated				Estimated		Available for Sale				Held to Maturity
	Amortized		Fair		Amortized		Fair		Amortized		Estimated		Amortized		Estimated
	Cost		Value		Cost		Value		Cost		Fair Value		Cost		Fair Value
Due in one year or less	$	33,592	$	33,793	$	145	$	145	$	22,480	$	22,623	$	5,071	$	5,115
Due after one year through five years		90,084		92,100		35,983		37,249		1,598		1,614		30,491		31,048
Due after five years through ten years		7,500		7,522		13,822		14,360		2,561		2,513		—		—
Due after ten years		38,894		37,997		—		—		21,278		21,042		—		—
		170,070		171,412		49,950		51,754		47,917		47,792		35,562		36,163
Mortgage-backed securities		2,196,098		2,185,270		1,108,693		1,105,292		1,553,067		1,554,612		702,537		710,039
Total	$	2,366,168	$	2,356,682	$	1,158,643	$	1,157,046	$	1,600,984	$	1,602,404	$	738,099	$	746,202

At December 31, ~~2016~~2019 and ~~2015,~~2018, LHFI consisted of the following ($ in thousands):

	December 31,				December 31,
	2016		2015		2019		2018
Loans secured by real estate:
Construction, land development and other land	$	831,437	$	824,723	$	1,162,791	$	1,056,601
Secured by 1-4 family residential properties		1,660,043		1,649,501		1,855,913		1,825,492
Secured by nonfarm, nonresidential properties		2,034,176		1,736,476		2,475,245		2,220,914
Other real estate secured		318,148		211,228		724,480		543,820
Commercial and industrial loans		1,528,434		1,343,211		1,477,896		1,538,715
Consumer loans		170,562		169,135		175,738		182,448
State and other political subdivision loans		917,515		734,615		967,944		973,818
Other loans		390,898		422,496		495,621		494,060
LHFI		7,851,213		7,091,385		9,335,628		8,835,868
Less allowance for loan losses, LHFI		71,265		67,619		84,277		79,290
Net LHFI	$	7,779,948	$	7,023,766	$	9,251,351	$	8,756,578

Trustmark does not have any loan concentrations other than those reflected in the preceding table, which exceed 10% of total LHFI. At December 31, ~~2016,~~2019, Trustmark’s geographic loan distribution was concentrated primarily in its ~~five~~5 key market regions: Alabama, Florida, Mississippi, Tennessee and Texas. Accordingly, the ultimate collectability of a substantial portion of these loans is susceptible to changes in market conditions in these areas.

At December 31, ~~2016~~2019 and ~~2015,~~2018, loans to certain executive officers and directors, including their immediate families and companies in which they are principal owners, totaled ~~$47.1~~$35.5 million and ~~$82.2~~$49.0 million, respectively. During ~~2016, $390.9~~2019, $464.6 million of new loan advances were made, while repayments were ~~$389.6~~$478.1 million. ~~In addition, decreases~~There were 0 increases in loans due to changes in executive officers and ~~directors totaled $36.4 million.~~directors.

At December 31, 2016 and 2015, the carrying amounts of nonaccrual LHFI were $49.2 million and $55.3 million, respectively. Included in these amounts were $14.4 million and $7.4 million, respectively, of nonaccrual LHFI classified as troubled debt restructurings (TDRs). No material interest income was recognized in the income statement on nonaccrual LHFI for each of the years in the three-year period ended December 31, ~~2016.~~ 2019.

~~Trustmark considers all~~The following tables provide an aging analysis of past due and nonaccrual LHFI to be impaired loans. All commercial nonaccrual LHFI (including those classified as TDRs) over $500 thousand were specifically evaluated for impairment (specifically evaluated impaired LHFI) using a fair value approach. The remaining nonaccrual LHFI, which primarily consist of consumer loans secured by 1-4 family residential property, are not specifically reviewed. Consumer loans secured by 1-4 family residential property are generally charged off or written down when the credit becomes severely delinquent and the balance exceeds the fair value of the property less costs to sell.

Atloan type at December 31, ~~2016~~2019 and ~~2015, specifically~~2018 ($ in thousands):

Trustmark’s individually evaluated impaired LHFI ~~totaled $23.7 million~~include all commercial nonaccrual relationships of $500 thousand or more, which are specifically reviewed for impairment and ~~$26.5 million, respectively. Trustmark’s specifically evaluated~~deemed impaired, and all LHFI classified as TDRs in accordance with FASB ASC Subtopic 310-10-50-20 “Impaired Loans,” and are primarily collateral dependent loans. Fair value estimates for collateral dependent loans are derived from appraised values based on the current market value or as is value of the collateral, normally from recently received and reviewed appraisals. Current appraisals are ordered on an annual basis based on the inspection ~~date.~~date or more often if market conditions necessitate. Appraisals are obtained from state-certified appraisers and are based on certain assumptions, which may include construction or development status and the highest and best use of the property. These appraisals are reviewed by Trustmark’s Appraisal Review Department to ensure they are acceptable, and values are adjusted down for costs associated with asset disposal. Once this estimated net realizable value has been determined, the value used in the impairment assessment is updated. At the time a LHFI that has been specifically ~~evaluated impaired LHFI~~reviewed for impairment is deemed to be impaired, the full difference between book value and the most likely estimate of the collateral’s net realizable value is charged ~~off. Charge-offs related to specifically evaluated impaired LHFI totaled $6.4 million, $10.1 million and $137 thousand for 2016, 2015 and 2014, respectively.~~off or a specific reserve is established. As subsequent events dictate and estimated net realizable values ~~decline, required reserves~~change, further adjustments may be established or further adjustments recorded. At December 31, 2016 and 2015, reserves related to specifically evaluated impaired LHFI totaled $3.0 million and $7.0 million, respectively. Provision recapture on specifically evaluated impaired LHFI totaled $2.2 million for 2016, compared to provision expense of $4.8 million and $3.5 million for 2015 and 2014, respectively.necessary.

At December 31, 2016 and 2015, impaired LHFI, excluding the specifically evaluated impaired LHFI, totaled $25.5 million and $28.8 million, respectively. In addition, these impaired LHFI had allocated allowance for loan losses of $2.5 million and $2.0 million at the end of the respective periods. No material interest income was recognized in the accompanying consolidated statements of income ~~statement~~ on impaired LHFI for each of the years in the three-year period ended December 31, ~~2016.~~

~~The following tables detail LHFI individually and collectively evaluated for impairment at December 31, 2016 and 2015 ($ in thousands):~~

At December 31, ~~2016~~2019 and ~~2015, the carrying amount of LHFI~~2018, individually evaluated for ~~impairment~~impaired LHFI consisted of the following ($ in thousands):

	December 31, 2016												December 31, 2019
	LHFI												LHFI
	Unpaid		With No Related		With an		Total				Average		Unpaid		With No Related		With an		Total				Average
	Principal		Allowance		Allowance		Carrying		Related		Recorded		Principal		Allowance		Allowance		Carrying		Related		Recorded
	Balance		Recorded		Recorded		Amount		Allowance		Investment		Balance		Recorded		Recorded		Amount		Allowance		Investment
Loans secured by real estate:
Construction, land development and other land	$	6,743	$	2,260	$	1,063	$	3,323	$	616	$	4,723	$	926	$	610	$	16	$	626	$	—	$	1,089
Secured by 1-4 family residential properties		24,805		221		20,108		20,329		1,420		21,704		6,513		2,104		3,360		5,464		35		4,713
Secured by nonfarm, nonresidential properties		11,227		5,784		2,698		8,482		851		13,141		7,295		1,462		5,255		6,717		2,355		8,096
Other real estate secured		429		—		402		402		118		274		69		—		68		68		—		158
Commercial and industrial loans		16,887		11,461		4,363		15,824		2,425		11,723		27,178		19,374		4,084		23,458		707		27,088
Consumer loans		303		—		300		300		3		165		22		—		21		21		—		11
State and other political subdivision loans		—		—		—		—		—		—		4,079		—		4,079		4,079		1,809		6,337
Other loans		756		95		479		574		111		543		1,207		—		784		784		553		1,033
Total	$	61,150	$	19,821	$	29,413	$	49,234	$	5,544	$	52,273	$	47,289	$	23,550	$	17,667	$	41,217	$	5,459	$	48,525

	December 31, 2015												December 31, 2018
	LHFI												LHFI
	Unpaid		With No Related		With an		Total				Average		Unpaid		With No Related		With an		Total				Average
	Principal		Allowance		Allowance		Carrying		Related		Recorded		Principal		Allowance		Allowance		Carrying		Related		Recorded
	Balance		Recorded		Recorded		Amount		Allowance		Investment		Balance		Recorded		Recorded		Amount		Allowance		Investment
Loans secured by real estate:
Construction, land development and other land	$	11,113	$	3,395	$	2,728	$	6,123	$	909	$	9,995	$	1,794	$	1,528	$	24	$	1,552	$	—	$	1,738
Secured by 1-4 family residential properties		27,678		283		22,796		23,079		1,230		24,350		4,951		95		3,868		3,963		39		4,328
Secured by nonfarm, nonresidential properties		20,387		8,037		9,763		17,800		3,402		21,758		8,282		6,728		2,748		9,476		413		8,898
Other real estate secured		160		—		145		145		15		732		—		—		248		248		—		124
Commercial and industrial loans		9,880		1,137		6,485		7,622		3,304		9,863		37,786		12,893		17,824		30,717		4,334		26,725
Consumer loans		34		—		31		31		—		59		2		—		2		2		—		6
State and other political subdivision loans		—		—		—		—		—		—		8,688		4,079		4,516		8,595		516		4,297
Other loans		642		—		512		512		128		570		1,418		230		1,052		1,282		1,052		804
Total	$	69,894	$	12,852	$	42,460	$	55,312	$	8,988	$	67,327	$	62,921	$	25,553	$	30,282	$	55,835	$	6,354	$	46,920

A TDR occurs when a borrower is experiencing financial difficulties, and for related economic or legal reasons, a concession is granted to the borrower that Trustmark would not otherwise consider. Whatever the form of concession that might be granted by Trustmark, Management’s objective is to enhance collectibility by obtaining more cash or other value from the borrower or by increasing the probability of receipt by granting the concession than by not granting it. Other concessions may arise from court proceedings or may be imposed by law. In addition, TDRs also include those credits that are extended or renewed to a borrower who is not able to obtain funds from sources other than Trustmark at a market interest rate for new debt with similar risk.

~~A formal TDR may include, but is not necessarily limited to, one or a combination of the following situations:~~

Troubled debt restructurings are addressed in Trustmark’s loan policy, and in accordance with that policy, any modifications or concessions that may result in a TDR are subject to a special approval process which allows for control, identification, and monitoring of these arrangements. Prior to granting a concession, a revised borrowing arrangement is proposed which is structured so as to improve collectability of the loan in accordance with a reasonable repayment schedule with any loss promptly identified. It is supported by a thorough evaluation of the borrower’s financial condition and prospects for repayment under those revised terms. Other TDRs arising from renewals or extensions of existing debt are routinely identified through the processes utilized in the Problem Loan Committees and in the Credit Quality Review Committee. All TDRs are subsequently reported to the Director Credit Policy Committee on a quarterly basis and are disclosed in Trustmark’s consolidated financial statements in accordance with GAAP and regulatory reporting guidance.

All loans whose terms have been modified in a troubled debt restructuring are evaluated for impairment under FASB ASC Topic 310. Accordingly, Trustmark measures any loss on the restructuring in accordance with that guidance. A TDR in which Trustmark receives physical possession of the borrower’s assets, regardless of whether formal foreclosure or repossession proceedings take place, is accounted for in accordance with FASB ASC Subtopic 310-40, “Troubled Debt Restructurings ~~by Creditors.” Thus, the loan is treated as if assets have been received in satisfaction of the loan and reported as a foreclosed asset.~~

At December 31, ~~2016~~2019, 2018 and 2015, Trustmark held $269 thousand and $1.0 million, respectively, of foreclosed residential real estate as a result of foreclosure or in substance repossession of consumer mortgage LHFI classified as TDRs. Consumer mortgage LHFI classified as TDRs in the process of formal foreclosure proceedings totaled $101 thousand at December 31, 2016 compared to $83 thousand at December 31, 2015.

~~At December 31, 2016, 2015 and 2014,~~2017, LHFI classified as TDRs totaled ~~$14.5~~$31.5 million, ~~$9.7~~$28.2 million and ~~$11.3~~$23.9 million, respectively, and were primarily comprised of credits with interest-only payments for an extended period of time and credits renewed at a rate that was not commensurate with that of new debt with similar risk which totaled ~~$9.8~~$20.8 million, ~~$5.9~~$23.8 million and ~~$7.4~~$20.5 million, respectively. The remaining TDRs at December 31, ~~2016, 2015~~2019, 2018 and ~~2014~~2017 resulted from ~~real estate loans discharged through Chapter 7 bankruptcy that were not reaffirmed~~bankruptcies or from payment or maturity extensions. Trustmark had $7.0 million of unused commitments on TDRs at December 31, 2019, compared to $4.4 million of unused commitments on TDRs at December 31, 2018 and 0 material unused commitments on TDRs at December 31, 2017.

For TDRs, Trustmark had a related loan loss allowance of ~~$2.2~~$3.2 million at December 31, ~~2016, $1.8~~2019, $2.3 million at December 31, ~~2015~~2018 and ~~$1.7 million~~$458 thousand at December 31, ~~2014.~~2017. LHFI classified as TDRs are charged down to the most likely fair value estimate less an estimated cost to sell for collateral dependent loans, which would approximate net realizable value. Specific charge-offs related to TDRs totaled ~~$1.0~~$1.6 million, ~~$806 thousand~~$18.4 million and ~~$75~~$127 thousand for the years ended December 31, ~~2016, 2015~~2019, 2018 and ~~2014,~~2017, respectively.

The following tables illustrate the impact of modifications classified as TDRs ~~as well as those~~for the periods presented ($ in thousands):

The table below includes the balances at default for TDRs modified within the last 12 months for which there was a payment default during the ~~period for the~~ periods presented ($ in thousands):

	Years Ended December 31,												Years Ended December 31,
	2016				2015				2014				2019				2018				2017
TDRs that Subsequently Defaulted	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Construction, land development and other land loans														—	$	—		1	$	22		—	$	—
Loans secured by 1-4 family residential properties		1	$	—		5	$	260		1	$	103		3		446		5		734		4		78
Commercial and industrial		2		2,154		—		—		—		—
Commercial and industrial loans														7		192		6		15,178		3		9,526
Consumer loans														1		27		1		1		—		—
Total		3	$	2,154		5	$	260		1	$	103		11	$	665		13	$	15,935		7	$	9,604

Trustmark’s TDRs have resulted primarily from allowing the borrower to pay interest-only for an extended period of time and credits renewed at a rate that was not commensurate with that of new debt with similar risk rather than from forgiveness. Accordingly, as shown above, these TDRs have a similar recorded investment for both the pre-modification and post-modification disclosure. Trustmark has utilized loans 90 days or more past due to define payment default in determining TDRs that have subsequently defaulted.

The following tables detail LHFI classified as TDRs by loan type at December 31, ~~2016, 2015~~2019, 2018 and ~~2014~~2017 ($ in thousands):

	December 31, 2016						December 31, 2019
	Accruing		Nonaccrual		Total		Accruing		Nonaccrual		Total
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	405	$	405
Construction, land development and other land							$	—	$	15	$	15
Secured by 1-4 family residential properties		—		2,873		2,873		77		3,865		3,942
Secured by nonfarm, nonresidential properties		—		881		881		—		5,176		5,176
Commercial and industrial loans		53		10,266		10,319		3,319		18,913		22,232
Consumer loans		—		2		2		—		21		21
Other loans								—		137		137
Total TDRs	$	53	$	14,427	$	14,480	$	3,396	$	28,127	$	31,523

	December 31, 2015						December 31, 2018
	Accruing		Nonaccrual		Total		Accruing		Nonaccrual		Total
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	869	$	869
Construction, land development and other land							$	—	$	24	$	24
Secured by 1-4 family residential properties		1,426		2,424		3,850		743		3,125		3,868
Secured by nonfarm, nonresidential properties		809		3,662		4,471		1,734		395		2,129
Commercial and industrial loans		—		463		463		9,007		12,620		21,627
Consumer loans								—		2		2
Other loans								—		540		540
Total TDRs	$	2,235	$	7,418	$	9,653	$	11,484	$	16,706	$	28,190

	December 31, 2014						December 31, 2017
	Accruing		Nonaccrual		Total		Accruing		Nonaccrual		Total
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	3,665	$	3,665
Construction, land development and other land							$	—	$	199	$	199
Secured by 1-4 family residential properties		1,385		3,733		5,118		51		3,140		3,191
Secured by nonfarm, nonresidential properties		—		1,854		1,854		—		421		421
Other real estate secured		—		149		149
Commercial and industrial loans		—		509		509		53		19,434		19,487
Consumer loans								—		17		17
Other loans								556		—		556
Total TDRs	$	1,385	$	9,910	$	11,295	$	660	$	23,211	$	23,871

Trustmark’s loan portfolio credit quality indicators focus on ~~six~~6 key quality ratios that are compared against bank tolerances. The loan indicators are total classified outstanding, total criticized outstanding, nonperforming loans, nonperforming assets, delinquencies and net loan losses. Due to the homogenous nature of consumer loans, Trustmark does not assign a formal internal risk rating to each credit and therefore the criticized and classified measures are ~~unique to~~primarily composed of commercial loans.

In addition to monitoring portfolio credit quality indicators, Trustmark also measures how effectively the lending process is being managed and risks are being identified. As part of an ongoing monitoring process, Trustmark grades the commercial portfolio as it relates to credit file completion and financial statement exceptions, underwriting, collateral documentation and compliance with law as shown below:

Trustmark has established a loan grading system that consists of ten individual credit risk grades (risk ratings) that encompass a range from loans where the expectation of loss is negligible to loans where loss has been established. The model is based on the risk of default for an individual credit and establishes certain criteria to delineate the level of risk across the ten unique credit risk grades. Credit risk grade definitions are as follows:

By definition, credit risk grades special mention (RR 7), substandard (RR 8), doubtful (RR 9) and loss (RR 10) are criticized loans while substandard (RR 8), doubtful (RR 9) and loss (RR 10) are classified loans. These definitions are standardized by all bank regulatory agencies and are generally equally applied to each individual lending institution. The remaining credit risk grades are considered pass credits and are solely defined by Trustmark.

Each commercial loan is assigned a credit risk grade that is an indication for the likelihood of default and is not a direct indication of loss at default. The loss at default aspect of the subject risk ratings is neither uniform across the nine primary commercial loan groups or constant between the geographic areas. To account for the variance in the loss at default aspects of the risk rating system, the loss expectations for each risk rating are integrated into the allowance for loan loss methodology where the calculated loss at default is allotted for each individual risk rating with respect to the individual loan group and unique geographic area. The loss at default aspect of the reserve methodology is calculated each quarter as a component of the overall reserve factor for each risk grade by loan group and geographic area.

To enhance this process, commercial nonaccrual ~~LHFI~~relationships of $500 thousand or more are routinely reviewed to establish an expectation of loss, if any, and if such examination indicates that the level of reserve is not adequate to cover the expectation of loss, a special reserve or impairment is generally applied.

The distribution of the losses is accomplished by means of a loss distribution model that assigns a loss factor to each risk rating (1 to 9) in each commercial loan pool. A factor is not applied to risk rate 10 as loans classified as ~~Losses~~losses are charged off ~~with~~within the period that the loss is determined and are not carried on Trustmark’s books over quarter-end.

The expected loss distribution is spread across the various risk ratings by the perceived level of risk for loss. The nine grade scale described above ranges from a negligible risk of loss to an identified loss across its breadth. The loss distribution factors are

graduated through the scale on a basis proportional to the degree of risk that appears manifest in each individual rating and assumes that migration through the loan grading system will occur.

Each loan officer assesses the appropriateness of the internal risk rating assigned to their credits on an ongoing basis. Trustmark’s Asset Review area conducts independent credit quality reviews of the majority of Trustmark’s commercial loan portfolio ~~concentrations~~ both on the underlying credit quality of each individual loan portfolio as well as the adherence to Trustmark’s loan policy and the loan administration process. In general, Asset Review conducts reviews of each lending area within a six to eighteen month window depending on the overall credit quality results of the individual area.

In addition to the ongoing internal risk rate monitoring described above, Trustmark’s Credit Quality Review Committee meets monthly and performs a review of all loans of $100 thousand or more that are either delinquent thirty days or more or on nonaccrual. This review includes recommendations regarding risk ratings, accrual status, charge-offs and appropriate servicing officer as well as evaluation of problem credits for determination of TDRs. Quarterly, the Credit Quality Review Committee reviews and modifies continuous action plans for all credits risk rated seven or worse for relationships of $100 thousand or more.

In addition, ~~the following reviews are performed on~~a semi-annual review of significant development and commercial construction projects and an annual ~~basis:~~

Consumer LHFI that do not meet a minimum custom credit score are reviewed quarterly by Management. The Retail Credit Review Committee reviews the volume and percentage of approvals that did not meet the minimum passing custom score by region, individual location, and officer to ensure that Trustmark continues to originate quality loans.

Trustmark monitors the levels and severity of past due consumer LHFI on a daily basis through its collection activities. A detailed assessment of consumer LHFI delinquencies is performed monthly at both a product and market level by delivery channel, which incorporates the perceived level of risk at time of underwriting. ~~Trustmark also monitors its consumer LHFI delinquency trends by comparing them to quarterly industry averages.~~

The tables below ~~illustrate the carrying amount of~~present LHFI by loan type and credit quality indicator at December 31, ~~2016~~2019 and ~~2015~~2018 ($ in thousands):

	December 31, 2016										December 31, 2019
	Commercial LHFI										Commercial LHFI
	Pass -		Special Mention -		Substandard -		Doubtful -				Pass -		Special Mention -		Substandard -		Doubtful -
	Categories 1-6		Category 7		Category 8		Category 9		Subtotal		Categories 1-6		Category 7		Category 8		Category 9		Subtotal
Loans secured by real estate:
Construction, land development and other land	$	752,318	$	9,567	$	8,086	$	465	$	770,436	$	1,075,146	$	—	$	15,726	$	42	$	1,090,914
Secured by 1-4 family residential properties		124,615		170		6,162		129		131,076		116,592		45		6,355		41		123,033
Secured by nonfarm, nonresidential properties		1,989,554		4,394		38,913		584		2,033,445		2,430,761		—		44,001		328		2,475,090
Other real estate secured		315,829		762		890		—		317,481		721,238		—		2,547		—		723,785
Commercial and industrial loans		1,386,155		7,095		134,199		985		1,528,434		1,407,837		909		68,262		888		1,477,896
Consumer loans		—		—		—		—		—		—		—		—		—		—
State and other political subdivision loans		899,935		6,450		11,130		—		917,515		957,948		4,650		5,346		—		967,944
Other loans		382,890		—		2,685		350		385,925		469,095		3,445		16,926		30		489,496
Total	$	5,851,296	$	28,438	$	202,065	$	2,513	$	6,084,312	$	7,178,617	$	9,049	$	159,163	$	1,329	$	7,348,158

													December 31, 2018
	Consumer LHFI												Commercial LHFI
			Past Due		Past Due								Pass -		Special Mention -		Substandard -		Doubtful -
	Current		30-89 Days		90 Days or More		Nonaccrual		Subtotal		Total LHFI		Categories 1-6		Category 7		Category 8		Category 9		Subtotal
Loans secured by real estate:
Construction, land development and other land	$	60,701	$	188	$	54	$	58	$	61,001	$	831,437	$	982,305	$	75	$	5,645	$	203	$	988,228
Secured by 1-4 family residential properties		1,503,096		7,377		1,436		17,058		1,528,967		1,660,043		123,191		216		2,731		229		126,367
Secured by nonfarm, nonresidential properties		731		—		—		—		731		2,034,176		2,182,106		1,250		37,025		473		2,220,854
Other real estate secured		667		—		—		—		667		318,148		537,958		323		4,610		—		542,891
Commercial and industrial loans		—		—		—		—		—		1,528,434		1,468,262		12,431		55,943		2,079		1,538,715
Consumer loans		168,031		1,891		341		299		170,562		170,562		—		—		—		—		—
State and other political subdivision loans		—		—		—		—		—		917,515		958,214		5,250		10,354		—		973,818
Other loans		4,940		33		—		—		4,973		390,898		460,568		17,842		10,323		49		488,782
Total	$	1,738,166	$	9,489	$	1,831	$	17,415	$	1,766,901	$	7,851,213	$	6,712,604	$	37,387	$	126,631	$	3,033	$	6,879,655

	December 31, 2015
	Commercial LHFI										Consumer LHFI
	Pass -		Special Mention -		Substandard -		Doubtful -						Past Due		Past Due
	Categories 1-6		Category 7		Category 8		Category 9		Subtotal		Current		30-89 Days		90 Days or More		Nonaccrual		Subtotal		Total LHFI
Loans secured by real estate:
Construction, land development and other land	$	746,227	$	—	$	15,637	$	529	$	762,393	$	67,913	$	124	$	—	$	336	$	68,373	$	1,056,601
Secured by 1-4 family residential properties		125,268		345		7,525		190		133,328		1,675,455		9,872		569		13,229		1,699,125		1,825,492
Secured by nonfarm, nonresidential properties		1,680,846		2,031		52,485		361		1,735,723		60		—		—		—		60		2,220,914
Other real estate secured		205,097		—		4,768		—		209,865		929		—		—		—		929		543,820
Commercial and industrial loans		1,295,760		9,473		37,284		694		1,343,211		—		—		—		—		—		1,538,715
Consumer loans		—		—		—		—		—		179,802		2,153		288		205		182,448		182,448
State and other political subdivision loans		713,616		12,478		8,521		—		734,615		—		—		—		—		—		973,818
Other loans		414,089		183		2,663		375		417,310		5,278		—		—		—		5,278		494,060
Total	$	5,180,903	$	24,510	$	128,883	$	2,149	$	5,336,445	$	1,929,437	$	12,149	$	857	$	13,770	$	1,956,213	$	8,835,868

~~The following tables provide an aging analysis of past due and nonaccrual LHFI by loan type at December 31, 2016 and 2015 ($ in thousands):~~

LHFS past due 90 days or more totaled ~~$28.3~~$41.6 million and ~~$21.8~~$37.4 million at December 31, ~~2016~~2019 and ~~2015,~~2018, respectively.

During 2015, Trustmark exercised its option to repurchase approximately $28.5 million of delinquent loans serviced for GNMA. These loans were subsequently sold to a third party under different repurchase provisions. Trustmark retained the servicing for these loans, which are subject to guarantees by FHA/VA. As a result of this repurchase and sale, the loans are no longer carried as LHFS. The transaction resulted in a gain of $304 thousand, which is included in mortgage banking, net for 2015. Trustmark did not exercise its buy-back option on any delinquent loans serviced for GNMA during ~~2016.~~2019 or 2018.

Trustmark’s allowance for loan loss methodology for commercial LHFI is based upon regulatory guidance from its primary regulator and GAAP. The methodology segregates the commercial purpose and commercial construction LHFI portfolios into ~~nine~~9 separate loan types (or pools) which have similar characteristics such as repayment, collateral and risk profiles. The nine basic loan pools are further segregated into Trustmark’s five key market regions, Alabama, Florida, Mississippi, Tennessee and Texas, to take into consideration the uniqueness of each market. A 10-point risk rating system is utilized for each separate loan pool to apply a reserve

factor consisting of quantitative and qualitative components to determine the needed allowance by each loan type. As a result, there are 450 risk rate factors for commercial loan types. The nine separate pools are shown below:

The quantitative factors of the allowance methodology reflect a twelve-quarter rolling average of net charge-offs by loan type within each key market region. This allows for a greater sensitivity to current trends, such as economic changes, as well as current loss profiles and creates a more accurate depiction of historical losses.

During 2015, the LEP, a component of the quantitative portion of the allowance for loan loss methodology for commercial LHFI, was revised to reflect a 1.5 year period rather than a one year period. An additional provision of approximately $2.3 million was recorded in 2015 as result of this revision to the quantitative portion of the allowance for loan loss methodology for commercial LHFI. The LEP refers to the period of time between the events that trigger a loss and a charge-off of that loss. Losses are usually not immediately known, and determining the loss event can be challenging. It takes time for the borrower and extent of loss to be identified and determined. Trustmark may not be aware that the loss trigger has occurred until the borrower exhibits the inability to pay or other evidence of credit deterioration. Trustmark estimates the loss event to have occurred within a nine month period prior to the event of default. The charge-off of the loss occurs within a ten month period after the event of default, resulting in a 1.5 year LEP.

During 2015, Trustmark also revised the quantitative portion of the allowance for loan loss methodology for commercial LHFI to incorporate third-party default data. The default data is used in conjunction with each market/commercial loan pool’s loss rate and the commercial loan LEP in calculating a total quantitative loss factor for each risk rating within each market and pool. The quantitative reserves are a result of the total quantitative loss factor multiplied by the outstanding balances within each loan group and risk rate. An additional provision of approximately $1.3 million was recorded in 2015 as a result of this revision to the quantitative portion of the allowance for loan loss methodology for commercial LHFI.

Each qualitative factor is converted to a scale ranging from 0 (No risk) to 100 (High Risk), other than the last two factors, which are applied on a dollar-for-dollar basis to ensure that the combination of such factors is proportional. The resulting ratings from the individual factors are weighted and summed to establish the weighted-average qualitative factor within each key market region.

During 2015, Trustmark eliminated caps and floors from the criticized risk grades in the qualitative portion and adjusted the Florida market region’s distribution factors in the qualitative and quantitative portions of the allowance for loan loss methodology for commercial LHFI. The caps and floors for criticized risk ratings were eliminated in order to allow the risk associated with those credits to be reflected without constraint of pre-existing limits (caps or floors) on the risk ratings. When the current allowance for loan loss methodology was originally established, the vast majority of the reserve for the Florida market region’s assets was covered by the quantitative features of the allowance for loan loss methodology due to the amount of gross charge-offs at that time and captured the vast majority of the embedded risk in the portfolio. The distribution for the Florida market region was adjusted to be the same as Trustmark’s other key market regions since the credit metrics in the Florida market region now more closely resemble Trustmark as a whole. The elimination of the caps and floors for criticized risk ratings in the qualitative portion of the allowance for loan loss methodology for commercial LHFI resulted in a provision recapture of $1.8 million in 2015. The change in the Florida market region distribution resulted in an additional provision expense of $2.1 million related to the qualitative portion and an additional provision expense of $785 thousand related to the quantitative portion of the allowance for loan loss methodology for commercial LHFI in 2015. Combined, these revisions to the allowance for loan loss methodology for commercial LHFI resulted in an additional provision of approximately $1.1 million recorded during 2015.

In addition, Trustmark revised the qualitative portion of the commercial LHFI allowance for loan loss methodology to incorporate the use of maximum observed gross historical losses as a way to calculate a maximum qualitative reserve limit. The maximum observed gross historical losses for each market were observed for a three-year period reflecting the last economic downturn (i.e., 2008-2010). The aggregate of these losses as a percentage of the three-year average commercial LHFI balance results in an entity wide maximum observed gross historical loss rate for commercial LHFI. Once the quantitative component of the allowance for loan loss methodology is calculated, the quantitative reserve percentage is deducted from the maximum observed gross historical loss rate, resulting in the maximum possible qualitative reserve limit. The overall Qualitative Risk Factor (QRF) percentage is calculated by weighting each market’s QRF and applied as a percentage to the maximum qualitative reserve limit. The result is the amount of qualitative adjustment to be distributed to each market. The distribution of qualitative reserves incorporates the nine separate commercial loan groups that are ranked in ascending order of risk by their respective weighted-average risk rates. The distribution of the qualitative adjustment among the risk rates was derived by an analysis that determines the probability of future credit deterioration. An additional provision of approximately $4.4 million was recorded in 2015 as a result of these revisions.

During 2015, Trustmark also revised the qualitative portion of the allowance for loan loss methodology for commercial LHFI regarding the loan facility risk component. Loan facility risk embodies the nature, frequency and duration of the repayment structure as it pertains to the actual source of loan repayment. The underlying loan structure and nature of the credit either is risk neutral for traditional structures or adds risk to the credit for any variance that represents additional credit risk from the traditional structures. If the facility structure adds additional credit risk, qualitative reserves are added to individual loans based on their respective commercial loan pools. Factors considered in assigning facility risk include whether the principal is amortizing or not amortizing, revolving or not revolving, the payment frequency and the duration of the payment structure. In order to estimate the facility reserve for amortizing and interest only structures, loan level detail is used to estimate the incremental payment amount at risk, which is then assigned a reserve factor based upon probability of default, loss given default and the degree of deviation from the traditional structures. A provision recapture of approximately $2.1 million was recorded in 2015 as a result of this revision to the qualitative portion of the allowance for loan loss methodology for commercial LHFI.

During 2014, Trustmark revised the qualitative portion of the allowance for loan loss methodology for commercial LHFI to incorporate an additional reserve component for commercial nonaccrual loans under $500 thousand. A LHFI is considered impaired when, based on current information and events, it is probable that Trustmark will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. A formal impairment analysis is performed on all commercial nonaccrual LHFI with an outstanding balance of $500 thousand or more, and based upon this analysis LHFI are written down to net realizable value. The implementation of this commercial qualitative factor will allow Trustmark to address additional credit risk and loss potential due to inadequate source of repayment and collateral for commercial nonaccrual LHFI below the $500 thousand threshold for a formal analysis. For such loans, it is currently unlikely that full repayment of both principal and interest will be realized. An additional provision of approximately $822 thousand was recorded in 2014 as result of this revision to the qualitative portion of the allowance for loan loss methodology for commercial LHFI.

~~Trustmark made no revisions to the allowance for loan loss methodology for commercial LHFI during 2016.~~

The allowance for loan loss methodology segregates the consumer LHFI portfolio into homogeneous pools of loans that contain similar structure, repayment, collateral and risk profiles. These homogeneous pools of loans are shown below:

The historical loss experience for these pools is determined by calculating a 12-quarter rolling average of net charge-offs, which is applied to each pool to establish the quantitative aspect of the methodology. Where, in Management’s estimation, the calculated loss experience does not fully cover the anticipated loss for a pool, an estimate is also applied to each pool to establish the qualitative aspect of the methodology, which represents the perceived risks across the loan portfolio at the current point in time. This qualitative methodology utilizes five separate factors made up of unique components that when weighted and combined produce an estimated level of reserve for each of the loan pools. The ~~five~~5 qualitative factors include the following:

The risk measure for each factor is converted to a scale ranging from 0 (No risk) to 100 (High Risk) to ensure that the combination of such factors is proportional. The ~~determination of the risk measurement for each qualitative factor is done for all markets combined. The resulting estimated reserve factor is then applied to each pool.~~

During 2015, Trustmark revised the qualitative portion of the allowance for loan loss methodology for consumer LHFI by recalibrating the loss expectation component to be more representative of current conditions as well as recalculating the expected loss potential component, which reflects the consumer 12-quarter rolling average of net charge-offs, for each of the respective consumer loan groups. An additional provision of $2.2 million was recorded in 2015 as a result of these revisions to the qualitative portion of the allowance for loan loss methodology for consumer LHFI.

In addition, Trustmark revised the quantitative portion of the allowance for loan loss methodology for the consumer mortgage portfolio. When the current allowance for loan loss methodology was originally established, the Florida market mortgages and non-Florida mortgages were treated separately due to the vast difference in loss experience. Since the credit metrics in the Florida market region now more closely resemble Trustmark as a whole, the quantitative portion of the loan loss methodology was revised to no longer segregate the mortgage portfolio into Florida and non-Florida portions. A provision recapture of approximately $455 thousand was recorded in 2015 as a result of this revision to the quantitative portion of the allowance for loan loss methodology for consumer LHFI.

During 2015, Trustmark also revised the qualitative portion of the consumer LHFI allowance for loan loss methodology to incorporate the use of maximum observed gross historical losses as a way to calculate a maximum qualitative reserve limit. The maximum observed gross historical losses for each consumer loan portfolio were observed for a three-year period reflecting the last economic downturn (i.e., 2008-2010). The aggregate of these losses as a percentage of the respective pool’s loan balance results in a maximum observed gross historical loss rate. Once the quantitative component of the allowance for loan loss methodology is calculated, the quantitative reserve is deducted from the maximum observed gross historical loss rate, resulting in the maximum possible qualitative reserve limit. The QRF percentage is calculated and applied as a percentage to the maximum qualitative reserve limit. The result is the amount of qualitative adjustment to be distributed to each consumer loan pool, with the exception of overdrafts due to their specific nature. An additional provision of approximately $750 thousand was recorded in 2015 as a result of this revision to the qualitative portion of the allowance for loan loss methodology for consumer LHFI.

During 2014, Trustmark revised the qualitative portion of the allowance for loan loss methodology for consumer LHFI to incorporate the use of consumer credit bureau scores developed and provided by an independent third party. The credit bureau scores reflect the customer’s historical willingness and ability to service their debt. These credit bureau scores are monitored on an ongoing basis and represent a consumer’s credit payment history with all of their creditors including their repayment performance with Trustmark. The implementation of this consumer qualitative factor will allow Trustmark to better monitor shifts in risk that are represented in the retail portfolio and ensure that it is reflective in the allowance for loan loss calculation. An additional provision of approximately $1.4 million was recorded in 2014 as a result of this revision to the qualitative portion of the allowance for loan loss methodology for consumer LHFI.

~~Trustmark made no revisions to the allowance for loan loss methodology for consumer LHFI during 2016.~~

~~The~~ resulting ratings from the individual factors are weighted and summed to establish the weighted-average qualitative factor of a specific loan portfolio. This weighted-average qualitative factor is then applied over the ~~five~~5 loan pools.

Trustmark’s loan policy dictates the guidelines to be followed in determining when a loan is charged off. Commercial purpose loans are charged off when a determination is made that the loan is uncollectible and continuance as a bankable asset is not warranted or an impairment evaluation indicates that a value adjustment is necessary. Consumer loans secured by 1-4 family residential real estate are generally charged off or written down when the credit becomes severely delinquent and the balance exceeds the fair value of the property less costs to sell. Non-real estate consumer purpose loans, both secured and unsecured, are generally charged off in full during the month in which the loan becomes 120 days past due. Credit card loans are generally charged off in full when the loan becomes 180 days past due.

The following tables detail the balance in the allowance for loan losses, LHFI allocated to each loan type segmented by the impairment evaluation methodology used at December 31, 2019 and 2018 ($ in thousands):

The following tables detail LHFI by loan type related to each balance in the allowance for loan losses, LHFI segregated by the impairment evaluation methodology used at December 31, 2019 and 2018 ($ in thousands):

Changes in the allowance for loan losses, LHFI were as follows for the periods presented ($ in thousands):

	Years Ended December31,									Years Ended December 31,
	2016			2015			2014			2019			2018			2017
Balance at beginning of period	$	67,619		$	69,616		$	66,448		$	79,290		$	76,733		$	71,265
Transfers (1)											—			1,554			—
Loans charged-off		(18,930	)		(22,469	)		(13,226	)		(14,481	)		(29,489	)		(21,147	)
Recoveries		11,619			12,097			15,183			8,671			12,499			11,521
Net (charge-offs) recoveries		(7,311	)		(10,372	)		1,957			(5,810	)		(16,990	)		(9,626	)
Provision for loan losses, LHFI		10,957			8,375			1,211			10,797			17,993			15,094
Balance at end of period	$	71,265		$	67,619		$	69,616		$	84,277		$	79,290		$	76,733

The following tables detail ~~the balance~~changes in the allowance for loan losses, LHFI by loan type atfor the years ended December 31, ~~2016~~2019 and ~~2015,~~2018, respectively ($ in thousands):

	2016												2019
	Balance							Provision for			Balance		Balance January 1,							Provision for Loan Losses		Balance December 31,
	January 1,		Charge-offs			Recoveries		Loan Losses			December 31,		Balance January 1,		Charge-offs			Recoveries		Provision for Loan Losses		Balance December 31,
Loans secured by real estate:
Construction, land development and other land	$	11,587	$	(311	)	$	1,380	$	(3,571	)	$	9,085	$	7,390	$	(40	)	$	894	$	16	$	8,260
Secured by 1-4 family residential properties		10,678		(1,319	)		1,122		(134	)		10,347		8,641		(531	)		666		156		8,932
Secured by nonfarm, nonresidential properties		21,563		(3,067	)		976		1,495			20,967		22,376		(322	)		472		3,632		26,158
Other real estate secured		2,467		(27	)		7		(184	)		2,263		3,450		—			29		545		4,024
Commercial and industrial loans		15,815		(6,602	)		732		12,066			22,011		27,359		(5,344	)		1,257		2,720		25,992
Consumer loans		2,879		(1,864	)		4,007		(1,781	)		3,241		2,890		(2,278	)		1,829		938		3,379
State and other political subdivision loans		809		—			—		50			859		990		—			—		1,239		2,229
Other loans		1,821		(5,740	)		3,395		3,016			2,492		6,194		(5,966	)		3,524		1,551		5,303
Total allowance for loan losses, LHFI	$	67,619	$	(18,930	)	$	11,619	$	10,957		$	71,265	$	79,290	$	(14,481	)	$	8,671	$	10,797	$	84,277

							2018
	Disaggregated by Impairment Method						Balance January 1,									Provision for Loan Losses			Balance December 31,
	Individually		Collectively		Total		Balance January 1,		Transfers (1)		Charge-offs			Recoveries		Provision for Loan Losses			Balance December 31,
Loans secured by real estate:
Construction, land development and other land	$	616	$	8,469	$	9,085	$	7,865	$	584	$	(123	)	$	1,124	$	(2,060	)	$	7,390
Secured by 1-4 family residential properties		1,420		8,927		10,347		10,874		182		(1,629	)		646		(1,432	)		8,641
Secured by nonfarm, nonresidential properties		851		20,116		20,967		23,428		446		(1,184	)		133		(447	)		22,376
Other real estate secured		118		2,145		2,263		2,790		291		—			23		346			3,450
Commercial and industrial loans		2,425		19,586		22,011		22,851		46		(18,823	)		5,410		17,875			27,359
Consumer loans		3		3,238		3,241		3,470		5		(2,089	)		2,019		(515	)		2,890
State and other political subdivision loans		—		859		859		789		—		—			—		201			990
Other loans		111		2,381		2,492		4,666		—		(5,641	)		3,144		4,025			6,194
Total allowance for loan losses, LHFI	$	5,544	$	65,721	$	71,265	$	76,733	$	1,554	$	(29,489	)	$	12,499	$	17,993		$	79,290

Trustmark’s loss share agreement with the FDIC covering the acquired covered loans secured by 1-4 family residential properties will expire in 2021.

At December 31, ~~2016~~2019 and ~~2015,~~2018, acquired loans consisted of the following ($ in thousands):

The following table presents changes in the net carrying value of the acquired loans for the periods presented ($ in thousands):

Under FASB ASC ~~Topic~~Subtopic 310-30, the accretable yield is the excess of expected cash flows at acquisition over the initial fair value of acquired impaired loans and is recorded as interest income over the estimated life of the loans using the effective yield method if the timing and amount of the future cash flows is reasonably estimable. The following table presents changes in the accretable yield for the periods presented ($ in thousands):

	Years Ended December 31,						Years Ended December 31,
	2016			2015			2019			2018			2017
Accretable yield at beginning of period	$	(52,672	)	$	(77,149	)	$	(17,722	)	$	(31,426	)	$	(38,918	)
Additions due to acquisition (1)								—			—			(784	)
Accretion to interest income		18,405			30,501			5,532			9,514			14,924
Disposals		6,488			10,013
Reclassification from nonaccretable difference (1)		(11,139	)		(16,037	)
Disposals, net								2,072			3,926			2,868
Transfers (2)								—			5,874			—
Reclassification from nonaccretable difference (3)								(4,698	)		(5,610	)		(9,516	)
Accretable yield at end of period	$	(38,918	)	$	(52,672	)	$	(14,816	)	$	(17,722	)	$	(31,426	)

The following tables present the components of the allowance for loan losses on acquired impaired loans for the periods presented ($ in thousands):

As discussed in Note 5 - LHFI and Allowance for Loan Losses, LHFI, Trustmark has established a loan grading system that consists of ~~ten~~10 individual credit risk grades (risk ratings) that encompass a range from loans where the expectation of loss is negligible to loans where loss has been established. The model is based on the risk of default for an individual credit and establishes certain criteria to segregate the level of risk across the ten unique risk ratings. These credit quality measures are unique to commercial loans. Credit quality for consumer loans is based on individual credit scores, aging status of the loan and payment activity.

The tables below ~~illustrate~~present the ~~carrying amount of~~ acquired loans by loan type and credit quality indicator at December 31, ~~2016~~2019 and ~~2015~~2018 ($ in thousands):

	December 31, 2016										December 31, 2019
	Commercial Loans											Commercial Loans
	Pass -		Special Mention -		Substandard -		Doubtful -					Pass -		Special Mention -		Substandard -		Doubtful -
	Categories 1-6		Category 7		Category 8		Category 9		Subtotal			Categories 1-6		Category 7		Category 8		Category 9		Subtotal
Noncovered Loans:
Loans secured by real estate:
Construction, land development and other land	$	12,148	$	99	$	6,469	$	322	$	19,038		$	4,022	$	—	$	192	$	—	$	4,214
Secured by 1-4 family residential properties		14,400		50		4,010		69		18,529			3,164		42		580		—		3,786
Secured by nonfarm, nonresidential properties		83,271		435		19,553		511		103,770			27,848		—		9,972		386		38,206
Other real estate secured		15,344		—		2,673		565		18,582			3,878		—		68		—		3,946
Commercial and industrial loans		22,024		18		13,494		1,354		36,890			3,419		—		—		1,616		5,035
Consumer loans		—		—		—		—		—			—		—		—		—		—
Other loans		12,954		—		5,649		161		18,764			2,591		—		7		—		2,598
Total noncovered loans		160,141		602		51,848		2,982		215,573

Covered Loans: (1)
Loans secured by real estate:
Construction, land development and other land		—		—		—		—		—
Secured by 1-4 family residential properties		152		11		56		—		219
Secured by nonfarm, nonresidential properties		—		—		—		—		—
Other real estate secured		—		—		—		—		—
Commercial and industrial loans		—		—		—		—		—
Other loans		—		—		—		—		—
Total covered loans		152		11		56		—		219
Total acquired loans	$	160,293	$	613	$	51,904	$	2,982	$	215,792		$	44,922	$	42	$	10,819	$	2,002	$	57,785

	Consumer Loans												Consumer Loans
			Past Due		Past Due						Total				Past Due		Past Due						Total
	Current		30-89 Days		90 Days or More		Nonaccrual (2)		Subtotal		Acquired Loans		Current		30-89 Days		90 Days or More		Nonaccrual (1)		Subtotal		Acquired Loans
Noncovered Loans:
Loans secured by real estate:
Construction, land development and other land	$	1,801	$	—	$	11	$	—	$	1,812	$	20,850	$	463	$	94	$	—	$	—	$	557	$	4,771
Secured by 1-4 family residential properties		45,533		1,227		613		24		47,397		65,926		12,843		615		281		—		13,739		17,525
Secured by nonfarm, nonresidential properties		50		—		—		—		50		103,820		—		—		—		—		—		38,206
Other real estate secured		428		—		—		—		428		19,010		—		—		—		—		—		3,946
Commercial and industrial loans		6		—		—		—		6		36,896		—		—		—		—		—		5,035
Consumer loans		3,250		51		64		—		3,365		3,365		489		31		—		—		520		520
Other loans		2		—		—		—		2		18,766		—		—		—		—		—		2,598
Total noncovered loans		51,070		1,278		688		24		53,060		268,633

Covered Loans: (1)
Loans secured by real estate:
Construction, land development and other land		—		—		—		—		—		—
Secured by 1-4 family residential properties		3,162		137		96		—		3,395		3,614
Secured by nonfarm, nonresidential properties		—		—		—		—		—		—
Other real estate secured		—		—		—		—		—		—
Commercial and industrial loans		—		—		—		—		—		—
Other loans		—		—		—		—		—		—
Total covered loans		3,162		137		96		—		3,395		3,614
Total acquired loans	$	54,232	$	1,415	$	784	$	24	$	56,455	$	272,247	$	13,795	$	740	$	281	$	—	$	14,816	$	72,601

Consumer Loans

Past Due

Past Due

Total

Current

30-89 Days

90 Days or More

Nonaccrual (2)

Subtotal

Acquired Loans

Noncovered Loans:

Loans secured by real estate:

Construction, land development and other land

$
2,353

$
24

$
28

$
—

$
2,405

$
41,623

Secured by 1-4 family residential properties

56,371

1,841

930

145

59,287

86,950

Secured by nonfarm, nonresidential properties

—

—

—

—

—

135,626

Other real estate secured

6

—

—

—

6

23,860

Commercial and industrial loans

—

—

—

—

—

55,075

Consumer loans

5,498

142

1

—

5,641

5,641

Other loans

—

—

—

—

—

23,936

Total noncovered loans

64,228

2,007

959

145

67,339

372,711

Covered Loans: (1)

Loans secured by real estate:

Construction, land development and other land

70

9

—

—

79

1,021

Secured by 1-4 family residential properties

7,472

314

762

—

8,548

10,058

Secured by nonfarm, nonresidential properties

71

—

—

—

71

4,638

Other real estate secured

445

—

—

—

445

1,286

Commercial and industrial loans

—

—

—

—

—

624

Other loans

3

—

—

—

3

73

Total covered loans

8,061

323

762

—

9,146

17,700

Total acquired loans

$
72,289

$
2,330

$
1,721

$
145

$
76,485

$
390,411

At December 31, 2016 and 2015, there were no acquired impaired loans accounted for under FASB ASC Topic 310-30 classified as nonaccrual loans. At December 31, 2016, approximately $631 thousand of acquired loans not accounted for under FASB ASC Topic 310-30 were classified as nonaccrual loans, compared to approximately $1.0 million of acquired loans at December 31, 2015.

The following tables provide an aging analysis of contractually past due and nonaccrual acquired loans by loan type at December 31, ~~2016~~2019 and ~~2015~~2018 ($ in thousands):

	December 31, 2016														December 31, 2019
	Past Due														Past Due

	30-59 Days		60-89 Days		90 Days or More (1)		Total		Nonaccrual (2)		Current Loans		Total Acquired Loans		30-59 Days		60-89 Days		90 Days or More (1)		Total		Nonaccrual (2)		Current Loans		Total Acquired Loans
Noncovered loans:
Loans secured by real estate:
Construction, land development and other land	$	321	$	100	$	821	$	1,242	$	—	$	19,608	$	20,850	$	94	$	—	$	38	$	132	$	—	$	4,639	$	4,771
Secured by 1-4 family residential properties		1,425		322		918		2,665		41		63,220		65,926		696		131		366		1,193		—		16,332		17,525
Secured by nonfarm, nonresidential properties		1,658		38		343		2,039		328		101,453		103,820		36		—		851		887		—		37,319		38,206
Other real estate secured		769		—		1,445		2,214		—		16,796		19,010		1		—		52		53		—		3,893		3,946
Commercial and industrial loans		60		39		—		99		262		36,535		36,896		—		—		—		—		—		5,035		5,035
Consumer loans		51		—		64		115		—		3,250		3,365		16		15		—		31		—		489		520
Other loans		—		—		—		—		—		18,766		18,766		—		—		—		—		—		2,598		2,598
Total noncovered loans		4,284		499		3,591		8,374		631		259,628		268,633

Covered loans:
Loans secured by real estate:
Construction, land development and other land		—		—		—		—		—		—		—
Secured by 1-4 family residential properties		70		90		139		299		—		3,315		3,614
Secured by nonfarm, nonresidential properties		—		—		—		—		—		—		—
Other real estate secured		—		—		—		—		—		—		—
Commercial and industrial loans		—		—		—		—		—		—		—
Other loans		—		—		—		—		—		—		—
Total covered loans		70		90		139		299		—		3,315		3,614
Total acquired loans	$	4,354	$	589	$	3,730	$	8,673	$	631	$	262,943	$	272,247	$	843	$	146	$	1,307	$	2,296	$	—	$	70,305	$	72,601

	December 31, 2015														December 31, 2018
	Past Due														Past Due

	30-59 Days		60-89 Days		90 Days or More (1)		Total		Nonaccrual (2)		Current Loans		Total Acquired Loans		30-59 Days		60-89 Days		90 Days or More (1)		Total		Nonaccrual (2)		Current Loans		Total Acquired Loans
Noncovered loans:
Loans secured by real estate:
Construction, land development and other land	$	24	$	114	$	13,021	$	13,159	$	—	$	28,464	$	41,623	$	5	$	—	$	87	$	92	$	—	$	5,786	$	5,878
Secured by 1-4 family residential properties		1,544		636		1,220		3,400		387		83,163		86,950		664		108		481		1,253		—		21,303		22,556
Secured by nonfarm, nonresidential properties		192		195		5,913		6,300		144		129,182		135,626		206		—		978		1,184		—		46,795		47,979
Other real estate secured		9		—		737		746		—		23,114		23,860		2		14		—		16		—		8,237		8,253
Commercial and industrial loans		82		4		184		270		429		54,376		55,075		—		—		—		—		—		15,267		15,267
Consumer loans		119		23		1		143		—		5,498		5,641		1		9		—		10		—		1,346		1,356
Other loans		85		16		—		101		—		23,835		23,936		—		—		—		—		—		5,643		5,643
Total noncovered loans		2,055		988		21,076		24,119		960		347,632		372,711

Covered loans:
Loans secured by real estate:
Construction, land development and other land		9		—		119		128		—		893		1,021
Secured by 1-4 family residential properties		428		132		978		1,538		—		8,520		10,058
Secured by nonfarm, nonresidential properties		167		478		—		645		—		3,993		4,638
Other real estate secured		—		—		—		—		—		1,286		1,286
Commercial and industrial loans		—		—		—		—		51		573		624
Other loans		—		—		—		—		—		73		73
Total covered loans		604		610		1,097		2,311		51		15,338		17,700
Total acquired loans	$	2,659	$	1,598	$	22,173	$	26,430	$	1,011	$	362,970	$	390,411	$	878	$	131	$	1,546	$	2,555	$	—	$	104,377	$	106,932

At December 31, ~~2016~~2019 and ~~2015,~~2018, premises and equipment, net consisted of the following ($ in thousands):

	December 31,				December 31,
	2016		2015		2019		2018
Land	$	51,097	$	57,334	$	52,454	$	52,779
Buildings and leasehold improvements		195,296		200,475		210,362		202,912
Furniture and equipment		172,170		168,357		174,257		169,652
Total cost of premises and equipment		418,563		426,166		437,073		425,343
Less accumulated depreciation and amortization		239,319		230,510		256,608		247,160
Premises and equipment, net		179,244		195,656		180,465		178,183
Financing lease right-of-use assets						9,326		—
Assets held for sale		5,743		—		—		485
Total premises and equipment, net	$	184,987	$	195,656	$	189,791	$	178,668

~~As of~~At December 31, ~~2016,~~2019, there were 0 closed branches in assets held for sale ~~consisted of five~~compared to 3 closed branches ~~and two parcels of land previously purchased for expansion.~~at December 31, 2018. These properties were transferred from ~~land~~premises and ~~premises~~equipment, net to assets held for sale ~~due to Trustmark’s intent to sell~~while Trustmark sold these properties ~~over the next twelve months~~ as a result of its strategic branch initiatives. As a result, there were 0 property valuation adjustments ~~of $750~~for 2019 compared to $173 thousand ~~were~~and $338 thousand recognized and included in other expense for ~~2016 with no property valuation adjustments recognized in 2015 or 2014.~~2018 and 2017, respectively.

Depreciation and amortization of premises and equipment totaled ~~$13.2~~$15.7 million in ~~2016, $14.0~~2019 and $14.3 million in ~~2015~~both 2018 and ~~$14.1 million in 2014.~~2017.

The activity in the MSR is detailed in the table below for the periods presented ($ in thousands):

	Years Ended December 31,						Years Ended December 31,
	2016			2015			2019			2018
Balance at beginning of period	$	74,007		$	64,358		$	95,596		$	84,269
Origination of servicing assets		16,745			17,598			16,711			15,759
Change in fair value:
Due to market changes		(407	)		1,578			(21,078	)		7,342
Due to runoff		(10,106	)		(9,527	)		(11,835	)		(11,774	)
Balance at end of period	$	80,239		$	74,007		$	79,394		$	95,596

~~In the determination of~~Trustmark determines the fair value of the MSR atusing a valuation model administered by a third party that calculates the ~~date~~present value of ~~securitization, certain key economic assumptions are made. For instance,~~estimated future net servicing income. Trustmark considers the conditional prepayment rate (CPR), which is an estimated loan prepayment rate that uses historical prepayment rates for previous loans similar to the loans being evaluated, and the discount rate in determining the fair value of the MSR. An increase in either the CPR or discount rate assumption will result in a decrease in the fair value of the MSR, while a decrease in either assumption will result in an increase in the fair value of the MSR. At December 31, ~~2016,~~2019, the fair value of the MSR included an assumed average prepayment speed of ~~7.94~~11 CPR and an average discount rate of ~~10.32%~~10.03% compared to an assumed average prepayment speed of ~~9.32~~8 CPR and an average discount rate of ~~10.35%~~10.04% at December 31, ~~2015.~~2018. In recent years, there have been significant market-driven fluctuations in loan prepayment speeds and discount rates. These fluctuations can be rapid and may continue to be significant. Therefore, estimating prepayment speed and/or discount rates within ranges that market participants would use in determining the fair value of the MSR requires significant management judgment.

During ~~2016, 2015~~2019, 2018 and ~~2014,~~2017, Trustmark sold ~~$1.384~~$1.404 billion, ~~$1.246~~$1.092 billion and ~~$913.5 million,~~$1.179 billion, respectively, of residential mortgage loans. ~~Pretax gains~~Gain on ~~these~~ sales of loans, net totaled ~~$20.5~~$30.3 million in ~~2016, $18.0~~2019, $21.8 million in ~~2015~~2018 and ~~$10.8~~$18.8 million in ~~2014.~~2017. Trustmark receives annual servicing fee income approximating ~~0.33%~~0.32% of the outstanding balance of the underlying loans, ~~and~~which totaled ~~$20.4~~$22.6 million in ~~2016, $19.3~~2019, $21.9 million in ~~2015~~2018 and ~~$18.6~~$21.4 million in ~~2014.~~2017. The ~~pretax~~ gains on the sale of residential mortgage loans and the annual servicing fee are both recorded to noninterest income in mortgage banking, net in the accompanying consolidated statements of income. The investors and the securitization trusts have no recourse to the assets of Trustmark for failure of debtors to pay when due.

The table below details the mortgage loans sold and serviced for others at December 31, ~~2016~~2019 and ~~2015~~2018 ($ in thousands):

	December 31,				December 31,
	2016		2015		2019		2018
Federal National Mortgage Association	$	3,992,349	$	3,750,685	$	4,411,914	$	4,204,336
Government National Mortgage Association		2,291,398		2,111,797		2,652,782		2,537,238
Federal Home Loan Mortgage Corporation		55,006		67,817		73,134		71,343
Other		32,589		41,013		19,404		21,957
Total mortgage loans sold and serviced for others	$	6,371,342	$	5,971,312	$	7,157,234	$	6,834,874

Trustmark is subject to losses in its loan servicing portfolio due to loan foreclosures. Trustmark has obligations to either repurchase the outstanding principal balance of a loan or make the purchaser whole for the economic benefits of a loan if it is determined that the loan sold was in violation of representations or warranties made by Trustmark at the time of the sale, herein referred to as mortgage loan servicing putback expenses. Such representations and warranties typically include those made regarding loans that had missing or insufficient file documentation, loans that do not meet investor guidelines, loans in which the appraisal does not support the value and/or loans obtained through fraud by the borrowers or other third parties. Generally, putback requests may be made until the loan is paid in full. However, mortgage loans delivered to Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC) on or after January 1, 2013 are subject to the Lending and Selling Representations and Warranties Framework updated in May 2014, which provides certain instances in which FNMA and FHLMC will not exercise their remedies, including a putback request, for breaches of certain selling representations and warranties, such as payment history and quality control review.

When a putback request is received, Trustmark evaluates the request and takes appropriate actions based on the nature of the request. Trustmark is required by FNMA and FHLMC to provide a response to putback requests within 60 days of the date of receipt. ~~Currently, putback requests primarily relate to 2009 through 2013 vintage mortgage loans.~~ The total mortgage loan servicing putback

expenses were included in other ~~expense, incurred by~~expense. At December 31, 2019 and 2018, Trustmark ~~during 2016, 2015 and 2014 were $420 thousand, $315 thousand and $600 thousand, respectively.~~

~~Changes in the~~had a reserve for mortgage loan servicing putback ~~expense for mortgage loans were as follows for the periods presented ($ in thousands):~~expenses of $500 thousand and $1.0 million, respectively.

There is inherent uncertainty in reasonably estimating the requirement for reserves against potential future mortgage loan servicing putback expenses. Future putback expenses are dependent on many subjective factors, including the review procedures of the purchasers and the potential refinance activity on loans sold with servicing released and the subsequent consequences under the representations and warranties. Trustmark believes that it has appropriately reserved for potential mortgage loan servicing putback requests.

The table below illustrates goodwill by segment for the years ended December 31, ~~2016~~2019 and ~~2015~~2018 ($ in thousands):

Trustmark’s General Banking Segment delivers a full range of banking services to consumer, corporate, small and middle-market businesses through its extensive branch network.

The Insurance ~~segment~~Segment includes TNB’s wholly-owned retail insurance subsidiary that offers a diverse mix of insurance products and services. ~~During 2015, Trustmark purchased an insurance book of business that increased goodwill $656 thousand for the Insurance segment.~~ Trustmark performed goodwill impairment tests for the General Banking and Insurance ~~segments~~Segments during ~~2016, 2015~~2019, 2018 and ~~2014.~~2017. Based on these tests, Trustmark concluded that the fair value of both the General Banking and Insurance ~~segments~~Segments substantially exceeded the book value and no0 impairment charge was required.

At December 31, ~~2016~~2019 and ~~2015,~~2018, identifiable intangible assets consisted of the following ($ in thousands):

	December 31, 2016						December 31, 2015						December 31, 2019						December 31, 2018
	Gross Carrying		Accumulated		Net Carrying		Gross Carrying		Accumulated		Net Carrying		Gross Carrying		Accumulated		Net Carrying		Gross Carrying		Accumulated		Net Carrying
	Amount		Amortization		Amount		Amount		Amortization		Amount		Amount		Amortization		Amount		Amount		Amortization		Amount
Core deposit intangibles	$	85,824	$	67,843	$	17,981	$	85,824	$	61,603	$	24,221	$	87,674	$	82,096	$	5,578	$	87,674	$	78,353	$	9,321
Insurance intangibles		13,824		11,615		2,209		13,824		11,117		2,707		14,171		12,655		1,516		13,824		12,348		1,476
Banking charters		1,325		877		448		1,325		811		514		1,325		1,076		249		1,325		1,010		315
Borrower relationship intangible		690		648		42		690		586		104
Total	$	101,663	$	80,983	$	20,680	$	101,663	$	74,117	$	27,546	$	103,170	$	95,827	$	7,343	$	102,823	$	91,711	$	11,112

Trustmark recorded ~~$6.9~~$4.1 million of amortization of identifiable intangible assets in ~~2016, $7.8~~2019, $5.2 million in ~~2015~~2018 and ~~$8.8~~$6.2 million in ~~2014.~~2017. Trustmark estimates that amortization expense for identifiable intangible assets will be ~~$5.9 million in 2017, $4.9 million in 2018, $3.8 million in 2019, $2.5~~$2.8 million in 2020, ~~and $1.7~~$2.0 million in ~~2021.~~2021, $1.2 million in 2022, $411 thousand in 2023 and $224 thousand in 2024. Trustmark continually evaluates whether events and circumstances have occurred that indicate that identifiable intangible assets have become impaired. Measurement of any impairment of such identifiable intangible assets is based on the fair values of those assets. There were no0 impairment losses on identifiable intangible assets recorded during ~~2016, 2015~~2019, 2018 or ~~2014.~~2017.

The following table illustrates the carrying amounts and remaining weighted-average amortization periods of identifiable intangible assets as of December 31, ~~2016~~2019 ($ in thousands):

			Remaining				Remaining
			Weighted-				Weighted-
			Average				Average
	Net Carrying		Amortization		Net Carrying		Amortization
	Amount		Period in Years		Amount		Period in Years
Core deposit intangibles	$	17,981		5.6	$	5,578		3.8
Insurance intangibles		2,209		15.1		1,516		12.9
Banking charters		448		6.7		249		3.7
Borrower relationship intangible		42		0.6
Total	$	20,680		6.6	$	7,343		5.7

At December 31, ~~2016,~~2019, 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 (losses), net on ~~other real estate, excluding covered~~ other real estate were as follows ($ in thousands):

	Years Ended December 31,									Years Ended December 31,
	2016			2015			2014			2019			2018			2017
Balance at beginning of period	$	77,177		$	92,509		$	106,539		$	34,668		$	43,228		$	62,051
Additions (1)		24,348			33,396			37,428			8,598			12,115			9,235
Disposals		(35,075	)		(45,826	)		(43,802	)		(11,474	)		(19,802	)		(24,762	)
Write-downs		(4,399	)		(2,902	)		(7,656	)		(2,544	)		(873	)		(3,296	)
Balance at end of period	$	62,051		$	77,177		$	92,509		$	29,248		$	34,668		$	43,228

Gain, net on the sale of other real estate included in other real estate expense	$	6,151		$	3,995		$	3,697
Gain (losses), net on the sale of other real estate included in other real estate expense										$	(291	)	$	700		$	2,087

At December 31, ~~2016~~2019 and ~~2015, other real estate, excluding covered~~2018, other real estate by type of property consisted of the following ($ in thousands):

	December 31,				December 31,
	2016		2015		2019		2018
Construction, land development and other land properties	$	36,871	$	47,550	$	11,482	$	16,206
1-4 family residential properties		7,926		10,732		3,453		4,983
Nonfarm, nonresidential properties		16,817		16,717		14,313		13,296
Other real estate properties		437		2,178		—		183
Total other real estate, excluding covered other real estate	$	62,051	$	77,177
Total other real estate					$	29,248	$	34,668

At December 31, ~~2016~~2019 and ~~2015, other real estate, excluding covered~~2018, other real estate by geographic location consisted of the following ($ in thousands):

	December 31,				December 31,
	2016		2015		2019		2018
Alabama	$	15,989	$	21,578	$	8,133	$	6,873
Florida		22,582		29,579		5,877		8,771
Mississippi (1)		15,646		14,312		14,919		17,255
Tennessee (2)		6,183		9,974		319		1,025
Texas		1,651		1,734		—		744
Total other real estate, excluding covered other real estate	$	62,051	$	77,177
Total other real estate					$	29,248	$	34,668

~~On July 1, 2016, $388 thousand~~At December 31, 2019 and 2018, the balance of ~~covered~~ other real estate ~~was transferred to other~~included $3.5 million and $5.0 million, respectively, of foreclosed residential real estate ~~excluding covered other real estate,~~properties recorded as a result of ~~the expiration~~obtaining physical possession of the ~~related loss-share agreement with the FDIC on June 30, 2016. As of~~property. At December 31, ~~2016, Trustmark had no covered other real estate. The remaining loss-share agreement with~~2019 and 2018, the ~~FDIC, which covers acquired covered~~recorded investment of consumer mortgage loans secured by ~~1-4 family~~ residential ~~property, 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, net on covered other~~ real estate properties for which formal foreclosure proceedings are in process was $953 thousand and $1.1 million, respectively.

The table below details the components of net lease cost for the period presented ($ in thousands):

The table below details the cash payments included in the measurement of lease liabilities during the period presented ($ in thousands):

The table below details balance sheet information, as well as weighted-average lease terms and discount rates, related to leases at December 31, 2019 ($ in thousands):

At December 31, 2019, future minimum rental commitments under finance and operating leases were as follows ($ in thousands):

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

On April 15, 2011, the Mississippi Department of Banking and Consumer Finance closed the Heritage Banking Group (Heritage) and appointed the FDIC as receiver. On the same date, TNB entered into a purchase and assumption agreement with the FDIC in which TNB agreed to assume all of the deposits and purchase essentially all of the assets of Heritage. The FDIC and TNB also entered into loss-share agreements covering substantially all loans and all other real estate acquired. Under the loss-share agreements, the FDIC will cover 80% of covered loan and other real estate losses incurred. Pursuant to the provisions of the loss-share agreements, TNB may be required to make a true-up payment to the FDIC at the termination of the loss-share agreements should actual losses be less

than certain thresholds established in the agreement. TNB calculates the projected true-up payable to the FDIC quarterly and records a FDIC true-up provision for the present value of the projected true-up payable to the FDIC at the termination of the loss-share agreements. TNB’s FDIC true-up payable totaled $2.6 million and $2.5 million at December 31, 2016 and 2015, respectively.

TNB’s loss-share agreement with the FDIC covering the acquired covered loans and related covered other real estate, excluding those secured by 1-4 family residential property, expired on June 30, 2016. The remaining loss-share agreement covering acquired covered loans secured by 1-4 family residential property and the related covered other real estate will expire in 2021.

Trustmark periodically re-estimates the expected cash flows on the acquired covered loans as required by FASB ASC Topic 310-30. For 2016, 2015 and 2014, this analysis resulted in improvements in the estimated future cash flows of the acquired covered loans that remain outstanding as well as lower expected remaining losses on those loans, primarily due to pay-offs of acquired covered loans. The pay-offs and improvements in the estimated expected cash flows of the acquired covered loans resulted in a reduction of the expected loss-share receivable from the FDIC. Reductions of the FDIC indemnification asset resulting from improvements in expected cash flows and covered losses based on the re-estimation of acquired covered loans are amortized over the lesser of the remaining life or contractual period of the acquired covered loan as a yield adjustment consistent with the associated acquired covered loan. Other income, net for 2016, 2015 and 2014 included $550 thousand, $2.6 million and $2.1 million, respectively, of amortization of the FDIC indemnification asset. Amortization of the FDIC indemnification asset resulted from improvements in the expected cash flows and lower loss expectations. During 2016, other income, net also included an increase of the FDIC indemnification asset of $180 thousand, compared to a reduction of the FDIC indemnification asset of $929 thousand in 2015 and $800 thousand in 2014, primarily resulting from loan pay-offs partially offset by loan pools of acquired covered loans with increased loss expectations.

At December 31, 2016, the FDIC indemnification asset, net of the true-up payable, was included in other liabilities in the accompanying consolidated balance sheet. For the periods presented, changes in the FDIC indemnification asset were as follows ($ in thousands):

At December 31, ~~2016~~2019 and ~~2015,~~2018, deposits consisted of the following ($ in thousands):

	December 31,				December 31,
	2016		2015		2019		2018
Noninterest-bearing demand	$	2,973,238	$	2,998,694	$	2,891,215	$	2,937,594
Interest-bearing demand		1,875,312		1,938,497		3,125,914		2,633,259
Savings		3,586,369		2,970,997		3,590,509		3,905,659
Time		1,621,093		1,680,042		1,637,919		1,887,899
Total	$	10,056,012	$	9,588,230	$	11,245,557	$	11,364,411

Interest expense on deposits by type consisted of the following for the periods presented ($ in thousands):

	Years Ended December 31,						Years Ended December 31,
	2016		2015		2014		2019		2018		2017
Interest-bearing demand	$	3,297	$	3,235	$	3,151	$	35,428	$	18,479	$	6,820
Savings		2,657		2,547		2,949		19,462		17,980		6,047
Time		6,794		6,816		9,223		24,281		17,477		9,850
Total	$	12,748	$	12,598	$	15,323	$	79,171	$	53,936	$	22,717

Time deposits that exceed the FDIC insurance limit of ~~$250,000~~$250 thousand totaled ~~$229.9~~$285.7 million and ~~$218.0~~$406.6 million at December 31, ~~2016~~2019 and ~~2015,~~2018, respectively. ~~The maturities of time deposits of $100,000 or more at December 31, 2016 and 2015 are as follows ($ in thousands):~~

The maturities of interest-bearing deposits at December 31, ~~2016,~~2019, are as follows ($ in thousands):

2017	$	1,225,303
2018		283,564
2019		61,888
2020		27,293	$	1,359,100
2021 and thereafter		23,045
2021				190,554
2022				50,364
2023				20,995
2024				14,316
Thereafter				2,590
Total time deposits		1,621,093		1,637,919
Interest-bearing deposits with no stated maturity		5,461,681		6,716,423
Total interest-bearing deposits	$	7,082,774	$	8,354,342

Trustmark utilizes securities sold under repurchase agreements as a source of borrowing in connection with overnight repurchase agreements offered to commercial deposit customers by using its unencumbered investment securities as collateral. Trustmark accounts for its securities sold under repurchase agreements as secured borrowings in accordance with FASB ASC ~~Topic~~Subtopic 860-30, “Transfers and Servicing – Secured Borrowing and Collateral.” Securities sold under repurchase agreements are stated at the amount of cash received in connection with the transaction. Trustmark monitors collateral levels on a continual basis and may be required to provide additional collateral based on the fair value of the underlying securities. Securities sold under repurchase agreements are secured by securities with a carrying amount of ~~$284.4~~$105.6 million and ~~$290.0~~$163.3 million at December 31, ~~2016~~2019 and ~~2015,~~2018, respectively. ~~Trustmark’s repurchase agreements are transacted under master repurchase agreements that give Trustmark, in the event of default by the counterparty, the right of offset with the same counterparty.~~ As of December 31, ~~2016,~~2019, all repurchase agreements were short-term and consisted primarily of sweep repurchase arrangements, under which excess deposits are “swept” into overnight repurchase agreements with Trustmark. The following table presents the securities sold under repurchase agreements by collateral pledged at December 31, ~~2016~~2019 and ~~2015~~2018 ($ in thousands):

	December 31,				December 31,
	2016		2015		2019		2018
U.S. Government agency obligations
Issued by U.S. Government sponsored agencies	$	—	$	22,516
Mortgage-backed securities
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC or GNMA		75,795		102,604	$	24,282	$	6,721
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC or GNMA		51,212		—		29,290		38,788
Total securities sold under repurchase agreements	$	127,007	$	125,120	$	53,572	$	45,509

At December 31, ~~2016~~2019 and ~~2015, short-term~~2018, other borrowings consisted of the following ($ in thousands):

	December 31,				December 31,
	2016		2015		2019		2018
FHLB advances	$	700,008	$	350,000	$	811	$	879
Serviced GNMA loans eligible for repurchase		43,925		36,025		57,062		61,564
Finance lease liabilities						9,520		—
Other		25,845		26,592		18,003		17,442
Total short-term borrowings	$	769,778	$	412,617
Total other borrowings					$	85,396	$	79,885

At both December 31, 2019 and 2018, Trustmark had 0 outstanding short-term FHLB advances. At December 31, ~~2016,~~2019 and 2018, Trustmark had three outstanding short-term FHLB advances totaling $700.0 million with the FHLB of Dallas. Two of these outstanding advances with the FHLB of Dallas had fixed interest rates 0.55% and 0.80% and balances of $100.0 million each. At December 31, 2016, these two fixed rate advances had a weighted-average remaining maturity of 7 days with a weighted-average cost of 0.68%. At December 31, 2016, Trustmark had one outstanding short-term FHLB advance with a balance of $500.0 million with the FHLB of Dallas that reprices on a monthly basis and is set to mature on December 20, 2017. This advance has a remaining maturity of 354 days and had an average cost of 0.36% during 2016. Trustmark had two outstanding short-term FHLB advances totaling $350.0 million with the FHLB of Dallas at December 31, 2015. These outstanding advances with the FHLB of Dallas had fixed interest rates of 0.31% and balances of $100.0 million and $250.0 million. At December 31, 2015, these advances had a weighted-average remaining maturity of 13 days with a weighted-average cost of 0.31%.

~~At December 31, 2016 and 2015, Trustmark had $1.511~~$3.178 billion and ~~$1.328~~$2.827 billion, respectively, available in additional ~~short and long-term~~ borrowing capacity from the FHLB of Dallas.

Trustmark incurred 0 interest expense on short-term FHLB advances in 2019, compared to $4.4 million of interest expense in 2018 and $11.4 million in 2017.

At both December 31, ~~2016,~~2019 and 2018, Trustmark had ~~one~~0 outstanding ~~short-term~~long-term FHLB advances with the FHLB of ~~Atlanta, which was assumed through the BancTrust merger. This outstanding advance had a balance of $8 thousand with a fixed interest rate of 6.50% with a remaining maturity of 310 days.~~ Dallas.

At both December 31, ~~2015,~~2019 and 2018, Trustmark had no2 outstanding ~~short-term~~long-term FHLB advances totaling $811 thousand and $879 thousand, respectively, with the FHLB of Atlanta. ~~Trustmark has a non-member status and no additional borrowing capacity with the FHLB of Atlanta.~~

~~Interest expense on short-term FHLB advances totaled $1.8 million in 2016, $727 thousand in 2015 and $197 thousand in 2014.~~

At both December 31, 2016 and 2015, Trustmark had one outstanding long-term FHLB advance with the FHLB of Dallas totaling $250.0 million and $500.0 million, respectively. The long-term FHLB advance outstanding at December 31, 2016 reprices on a monthly basis and is set to mature on May 25, 2018. At December 31, 2016, this advance had a remaining maturity of 1.4 years and had an average cost of 0.24% during 2016. The long-term FHLB advance outstanding at December 31, 2015 repriced on a monthly basis and is set to mature on December 20, 2017. At December 31, 2015, this advance had a remaining maturity of 1.97 years and had an average cost of 0.32% during 2015.

At December 31, 2016, Trustmark had three outstanding long-term FHLB advances totaling $1.0 million with the FHLB of Atlanta, compared to four outstanding long-term FHLB advances totaling $1.2 million with the FHLB of Atlanta at December 31, 2015. AllBoth of these advances were assumed through the BancTrust merger. The advances outstanding had fixed interest rates ~~ranging from~~of 0.08% ~~to 6.12%~~and 0.75% with outstanding balances ~~ranging from $38~~of $135 thousand ~~to $800~~and $676 thousand at December 31, ~~2016.~~2019 and $153 thousand and $726 thousand at December 31, 2018. At December 31, ~~2016,~~2019, these advances had a weighted-average remaining maturity of ~~5.32~~2.37 years with a weighted-average cost of ~~0.82%.~~0.64% during 2019. At December 31, 2015, the four outstanding long-term FHLB advances with the FHLB of Atlanta had interest rates ranging from 0.08% to 6.50% with outstanding balances ranging from $15 thousand to $868 thousand. At December 31, 2015,2018, the outstanding long-term advances had a weighted-average remaining maturity of ~~6.21~~3.41 years with a weighted-average cost of ~~1.00%. A~~0.63% during 2018. There was 0 fair market value adjustment ~~of $1 thousand and $3 thousand~~ associated with the BancTrust merger ~~was~~ included in the long-term FHLB advances at December 31, ~~2016~~2019 and ~~2015, respectively.~~2018. Trustmark’s long-term FHLB advances are collateralized by securities held in safekeeping with the FHLB of Atlanta.

Trustmark incurred ~~$2.1 million~~$5 thousand of interest expense on long-term FHLB advances in ~~2016,~~2019, compared to ~~$49~~$6 thousand of interest expense in ~~2015~~2018 and ~~$45~~$566 thousand of interest expense in ~~2014.~~2017.

During 2006, TNB issued $50.0 million aggregate principal amount of Subordinated Notes (the Notes) which matured on December 15, 2016. Proceeds from the sale of the Notes were used for general corporate purposes. At December 31, 2015, the carrying amount

of the Notes was $50.0 million. The Notes were not, and were not required to be, registered with the SEC under the Securities Act of 1933, as amended. The Notes were sold pursuant to the terms of regulations issued by the Office of the Comptroller of the Currency (OCC) and in reliance upon an exemption provided by the Securities Act of 1933, as amended. The Notes bore interest at the rate of 5.673% per annum from December 13, 2006, until the principal of the Notes was paid in full. Interest on the Notes was payable semi-annually in arrears on June 15 and December 15 of each year, commencing June 15, 2007, and through the date of maturity. The Notes were unsecured and subordinate and junior in right of payment to TNB’s obligations to its depositors, its obligations under bankers’ acceptances and letters of credit, its obligations to any Federal Reserve Bank or the FDIC and its obligations to its other creditors, and to any rights acquired by the FDIC as a result of loans made by the FDIC to TNB. Because the Notes, which were not redeemable prior to maturity, had a remaining maturity of less than one year at December 31, 2015, none of the remaining balance qualified as Tier 2 capital for both TNB and Trustmark.

On August 18, 2006, Trustmark completed a private placement of $60.0 million of trust preferred securities through a newly formed Delaware trust affiliate, Trustmark Preferred Capital Trust I (the Trust). The trust preferred securities mature September 30, 2036, are redeemable at Trustmark’s option and bear interest at a variable rate per annum equal to the three-month LIBOR plus 1.72%. Under applicable regulatory guidelines, these trust preferred securities qualify as Tier 1 capital. The proceeds from the sale of the trust preferred securities were used by the Trust to purchase $61.9 million in aggregate principal amount of Trustmark’s junior subordinated debentures.

The debentures were issued pursuant to a Junior Subordinated Indenture, dated August 18, 2006, between Trustmark, as issuer, and Wilmington Trust Company, National Association, as trustee. Like the trust preferred securities, the debentures bear interest at a variable rate per annum equal to the three-month LIBOR plus 1.72% and mature on September 30, 2036. The debentures may be redeemed at Trustmark’s option at any time. The interest payments by Trustmark will be used to pay the quarterly distributions payable by the Trust to the holder of the trust preferred securities. However, so long as no event of default has occurred under the debentures, Trustmark may defer interest payments on the debentures (in which case the Trust will also defer distributions otherwise due on the trust preferred securities) for up to 20 consecutive quarters.

The debentures are subordinated to the prior payment of any other indebtedness of Trustmark that, by its terms, is not similarly subordinated. The trust preferred securities are recorded as a long-term liability on Trustmark’s balance sheet; however, for regulatory purposes the trust preferred securities are treated as Tier 1 capital under the rules of the ~~FRB,~~Federal Reserve Board (FRB), Trustmark’s primary federal regulatory agency.

Trustmark also entered into a Guarantee Agreement, dated August 18, 2006, pursuant to which it has agreed to guarantee the payment by the Trust of distributions on the trust preferred securities and the payment of principal of the trust preferred securities when due, either at maturity or on redemption, but only if and to the extent that the Trust fails to pay distributions on or principal of the trust preferred securities after having received interest payments or principal payments on the junior subordinated debentures from Trustmark for the purpose of paying those distributions or the principal amount of the trust preferred securities.

As defined in applicable accounting standards, the Trust, a wholly-owned subsidiary of Trustmark, is considered a variable interest entity for which Trustmark is not the primary beneficiary. Accordingly, the accounts of the Trust are not included in Trustmark’s consolidated financial statements.

At December 31, ~~2016~~2019 and ~~2015,~~2018, assets for the Trust totaled $61.9 million, resulting from the investment in junior subordinated debentures issued by Trustmark. Liabilities and shareholder’s equity for the Trust also totaled $61.9 million at December 31, ~~2016~~2019 and ~~2015,~~2018, resulting from the issuance of trust preferred securities in the amount of $60.0 million as well as $1.9 million in common securities issued to Trustmark. During ~~2016,~~2019, net income for the Trust equaled ~~$45~~$79 thousand resulting from interest income from the junior subordinated debt securities issued by Trustmark to the Trust, compared with net income of ~~$38~~$74 thousand during ~~2015~~2018 and ~~$37~~$55 thousand during ~~2014.~~2017. Dividends issued to Trustmark by the Trust during ~~2016~~2019 totaled ~~$45~~$79 thousand, compared to ~~$38~~$74 thousand during ~~2015~~2018 and ~~$37~~$55 thousand during ~~2014.~~2017.

The following table presents noninterest income disaggregated by reportable operating segment and revenue stream for the periods presented ($ in thousands):

	Year Ended December 31, 2019							Year Ended December 31, 2018 (1)							Year Ended December 31, 2017 (1)(2)
	Topic 606		Not Topic 606 (3)			Total		Topic 606		Not Topic 606 (3)			Total		Topic 606		Not Topic 606 (3)		Total
General Banking Segment
Service charges on deposit accounts	$	42,509	$	—		$	42,509	$	43,614	$	—		$	43,614	$	43,928	$	—	$	43,928
Bank card and other fees		27,972		3,706			31,678		26,904		1,897			28,801		27,958		250		28,208
Mortgage banking, net		—		29,822			29,822		—		34,674			34,674		—		29,902		29,902
Wealth management		379		—			379		296		—			296		210		—		210
Other, net		9,527		(160	)		9,367		6,762		(217	)		6,545		6,547		7,234		13,781
Security gains (losses), net		—		—			—		—		—			—		—		15		15
Total noninterest income	$	80,387	$	33,368		$	113,755	$	77,576	$	36,354		$	113,930	$	78,643	$	37,401	$	116,044

Wealth Management Segment
Service charges on deposit accounts	$	94	$	—		$	94	$	88	$	—		$	88	$	75	$	—	$	75
Bank card and other fees		58		—			58		104		—			104		78		—		78
Wealth management		30,300		—			30,300		30,042		—			30,042		30,130		—		30,130
Other, net		306		103			409		69		117			186		20		118		138
Total noninterest income	$	30,758	$	103		$	30,861	$	30,303	$	117		$	30,420	$	30,303	$	118	$	30,421

Insurance Segment
Insurance commissions	$	42,396	$	—		$	42,396	$	40,481	$	—		$	40,481	$	38,168	$	—	$	38,168
Other, net		33		—			33		5		—			5		30		—		30
Total noninterest income	$	42,429	$	—		$	42,429	$	40,486	$	—		$	40,486	$	38,198	$	—	$	38,198

Consolidated
Service charges on deposit accounts	$	42,603	$	—		$	42,603	$	43,702	$	—		$	43,702	$	44,003	$	—	$	44,003
Bank card and other fees		28,030		3,706			31,736		27,008		1,897			28,905		28,036		250		28,286
Mortgage banking, net		—		29,822			29,822		—		34,674			34,674		—		29,902		29,902
Insurance commissions		42,396		—			42,396		40,481		—			40,481		38,168		—		38,168
Wealth management		30,679		—			30,679		30,338		—			30,338		30,340		—		30,340
Other, net		9,866		(57	)		9,809		6,836		(100	)		6,736		6,597		7,352		13,949
Security gains (losses), net		—		—			—		—		—			—		—		15		15
Total noninterest income	$	153,574	$	33,471		$	187,045	$	148,365	$	36,471		$	184,836	$	147,144	$	37,519	$	184,663

The income tax provision included in the consolidated statements of income was as follows for the periods presented ($ in thousands):

							Years Ended December 31,
	Years Ended December 31,						2019			2018		2017
Current	2016		2015		2014
Federal	$	10,355	$	18,448	$	17,761	$	20,068		$	4,532	$	16,959
State		2,698		2,166		2,068		7,145			5,997		5,687
Deferred
Federal		15,647		12,865		16,256		(3,104	)		9,392		7,280
State		2,353		1,935		2,444		(776	)		2,348		1,820
Income tax provision excluding deferred tax asset revaluation and reversal of valuation allowance								23,333			22,269		31,746

Deferred tax expense (benefit) - re-measurement of deferred tax assets								—			—		25,619
Deferred tax expense (benefit) - reversal of valuation allowance								—			—		(8,650	)
Income tax provision	$	31,053	$	35,414	$	38,529	$	23,333		$	22,269	$	48,715

Trustmark maintained a valuation allowance for deferred tax assets of $8.7 million at December 31, 2016 that was related to unrealized built-in losses from a prior acquisition. Trustmark determined that based on the weight of the available evidence that it is more likely than not that all deferred tax assets will be realized as of December 31, 2017. Therefore, the valuation allowance was reversed as of December 31, 2017, resulting in a decrease of $8.7 million to income tax expense for the year.

The re-measurement of the deferred tax assets and liabilities during 2017 resulted from the enactment of the Tax Reform Act, which was signed into law on December 22, 2017. Under the Tax Reform Act, corporate statutory income tax rates were reduced from 35.0% to 21.0% effective January 1, 2018. Trustmark re-measured its deferred tax assets and liabilities to reflect the future realization of these assets and liabilities at the lower tax rate. This re-measurement resulted in an increase to tax expense and a decrease to the net deferred tax asset of $25.6 million for the year ended December 31, 2017.

For the periods presented, the income tax provision differs from the amount computed by applying the statutory federal income tax rate ~~of 35%~~in effect for each respective period to income before income taxes as a result of the following ($ in thousands):

	Years Ended December 31,									Years Ended December 31,
	2016			2015			2014			2019			2018			2017
Income tax computed at statutory tax rate	$	48,812		$	53,008		$	56,732		$	36,497		$	36,089		$	54,021
Tax exempt interest		(6,780	)		(5,908	)		(5,612	)		(4,951	)		(4,533	)		(7,611	)
Nondeductible interest expense		201			119			107			564			416			407
State income taxes, net		1,754			1,408			2,933			5,645			4,738			3,697
Income tax credits		(16,183	)		(15,283	)		(15,212	)
Income tax credits, net											(13,473	)		(15,404	)		(15,793	)
Death benefit gains											(123	)		(268	)		(3,268	)
Reversal of valuation allowance											—			—			(8,650	)
Re-measurement of deferred tax assets											—			—			25,619
Other		3,249			2,070			(419	)		(826	)		1,231			293
Income tax provision	$	31,053		$	35,414		$	38,529		$	23,333		$	22,269		$	48,715

Temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities gave rise to the following net deferred tax assets at December 31, ~~2016~~2019 and ~~2015,~~2018, which are included in other assets on the accompanying consolidated balance sheets ($ in thousands):

	December 31,						December 31,
	2016			2015			2019		2018
Deferred tax assets:
Loan purchase accounting	$	9,341		$	26,049		$	845	$	1,564
Other real estate		25,750			32,664			5,845		7,284
Allowance for loan losses		31,618			30,451			21,774		20,638
Deferred compensation		21,893			21,102			16,498		15,607
Realized built in losses		18,699			16,215
Financing and operating lease liabilities								10,469		—
Realized built-in losses								11,431		12,182
Securities		9,256			13,016			3,028		3,929
Pension and other postretirement benefit plans		15,545			14,433			5,194		4,108
Nonaccrual loans		2,093			3,137
Interest on nonaccrual loans								942		806
Unrealized losses on securities available for sale		3,629			-			—		10,679
Stock-based compensation		3,031			3,137			2,527		2,192
Federal carryovers								—		1,606
Other		13,731			15,820			8,790		9,179
Gross deferred tax asset		154,586			176,024			87,343		89,774
Valuation allowance		(8,650	)		(8,650	)
Deferred tax asset net of valuation allowance		145,936			167,374

Deferred tax liabilities:
Goodwill and other identifiable intangibles		25,666			26,651			15,336		16,229
Premises and equipment		19,391			21,257			11,913		12,109
Unrealized gains on securities available for sale		—			2,241
Financing and operating lease right-of-use assets								10,127		—
Mortgage servicing rights		12,159			9,924			11,002		14,415
Securities		1,697			1,474			2,115		1,519
Leases		60			106
Other		6,891			4,764			5,192		5,600
Gross deferred tax liability		65,864			66,417			55,685		49,872
Net deferred tax asset	$	80,072		$	100,957		$	31,658	$	39,902

Trustmark has evaluated the need for a valuation allowance and, based on the weight of the available evidence, has determined that it is more likely than not that a portion of deferred tax assets will not be realized due to limitations on the deductibility of built in losses in future years. A valuation allowance, which was created as a result of the BancTrust merger in 2013 and reduced in 2014 as a result of measurement period adjustments, has been established to reduce deferred tax assets to the amount that will more likely than not be realized in future years.

The following table provides a summary of the changes during the ~~2016~~2019 calendar year in the amount of unrecognized tax benefits that are included in other liabilities in the consolidated balance sheet ($ in thousands):

Interest and penalties related to unrecognized tax benefits, if any, are recorded in income tax expense. With limited exception, Trustmark is no longer subject to U.S. federal, state and local audits by tax authorities for ~~2010~~2013 and earlier tax years. Trustmark does not anticipate a significant change to the total amount of unrecognized tax benefits within the next twelve months.

Trustmark maintained a noncontributory tax-qualified defined benefit pension plan ~~(Trustmark~~titled the Trustmark Capital Accumulation Plan ~~the “Plan”),~~(the Plan) in which substantially all associates who began employment prior to 2007 ~~participate.~~participated. The Plan ~~provides~~provided for retirement benefits ~~that are~~ based on the length of credited service and final average compensation, as defined in the Plan, ~~and vest~~which vested upon three years of service. Benefit accruals under the Plan ~~have been~~were frozen ~~since~~in 2009, with the exception of benefit accruals for certain ~~associates~~employees of acquired financial institutions covered through plans ~~obtained in acquisitions~~ that were subsequently merged into the Plan. Other than ~~the associates covered through these~~certain employees of acquired ~~plans that were merged into the Plan,~~financial institutions, associates have not earned additional benefits, except for interest as required by law, since the Plan was frozen. Current and former associates who ~~participate~~participated in the Plan ~~retain~~retained their right to receive benefits that accrued before the Plan was frozen.

On As previously reported, on July 26, 2016 the Board of Directors of Trustmark authorized the termination of the Plan, effective as of December 31, 2016. As a result of the termination of the Plan, each participant became fully vested in their accrued benefits under the Plan.

During the second quarter of 2017, Trustmark fully funded the Plan on a termination basis by contributing additional assets in the amount of $17.6 million in accordance with Internal Revenue Service (IRS) and Pension Benefit Guaranty Corporation requirements. Participants in the Plan elected to receive either a lump sum cash payment or annuity payments under a group annuity contract purchased from an insurance carrier. Final distributions were made to participants from the Plan assets and a one-time pension settlement expense was recognized totaling $17.6 million.

Trustmark Corporation Pension Plan for Certain Employees of Acquired Financial Institutions

To satisfy commitments made by Trustmark to associates ~~(collectively, the “Continuing Associates”)~~ covered through ~~acquired~~ plans ~~that were~~obtained in acquisitions and subsequently merged into the Plan (collectively, the Continuing Associates), on July 26, 2016, the Board of Directors of Trustmark also approved the spin-off of the portion of the Plan associated with the accrued benefits of the Continuing Associates into a new plan titled the Trustmark Corporation Pension Plan for Certain Employees of Acquired Financial Institutions (the ~~“Spin-Off Plan”)~~Continuing Plan), effective as of December 30, 2016, immediately prior to the termination of the Plan.

In order to terminate the Plan, in accordance with Internal Revenue Service (IRS) and Pension Benefit Guaranty Corporation (PBGC) requirements, Trustmark is required to fully fund the Plan on a termination basis and will contribute the additional assets necessary to do so. The final distributions will be made from current plan assets and a one-time pension settlement expense will be recognized when paid by Trustmark during the second quarter of 2017. Further, as a result of Trustmark’s de-risking investment strategy for the Plan as of June 30, 2016, the expected rate of return on plan assets during the second half of 2016 decreased from 6.0% to 2.5%. Accordingly, Trustmark's increased periodic benefit costs for the Plan during the second half of 2016 was $1.3 million. Participants in the Plan will have a choice of receiving a lump sum cash payment or annuity payments under a group annuity contract purchased from an insurance carrier, subject to certain exceptions. As a result of the termination of the Plan, each participant will become fully vested in his or her accrued benefits under the Plan.

The Board of Directors of Trustmark reserved the right to defer or revoke the termination of the Plan if circumstances change such that deferral or revocation would be warranted, but has no intent to do so at this time.

As a result of the merger with BancTrust on February 15, 2013, Trustmark became the sponsor of the Retirement Plan for Employees of BancTrust Financial Group, Inc. (BancTrust Pension Plan), a tax-qualified defined benefit pension plan, which was frozen prior to the merger date. On January 28, 2014, the Board of Directors of Trustmark authorized the termination of the BancTrust Pension Plan

effective as of April 15, 2014. On October 1, 2015, Trustmark received a favorable determination letter from the IRS with respect to the BancTrust Pension Plan’s termination. In addition, as required by law, a termination notice was filed with the PBGC, and it is not anticipated that the PBGC will raise any issues with respect to the BancTrust Pension Plan’s termination. During 2014, the assets of the BancTrust Pension Plan were held in trust and distributed in conjunction with the plan termination. All assets of the BancTrust Pension Plan were distributed as of December 31, 2014. Benefits that were not paid to participants were annuitized under annuity contracts. As a result of the termination of the BancTrust Pension Plan, Trustmark recognized a pre-tax gain of $1.2 million during 2014.

The following tables present information regarding the benefit obligation, plan assets, funded status, amounts recognized in accumulated other comprehensive loss, net periodic benefit cost and other statistical disclosures for ~~Trustmark’s tax-qualified defined benefit pension plans (Trustmark Capital Accumulation~~the Continuing Plan and ~~BancTrust Pension Plan)~~the Plan for the periods presented ($ in thousands):

The weighted-average asset allocations by asset category are presented below for the Continuing Plan at December 31, ~~2016~~2019 and ~~2015 are presented below.~~

	December 31,						December 31,
	2016			2015			2019			2018
Money market fund		13.0	%		3.6	%		2.0	%		8.0	%
Fixed income mutual funds		—			29.0	%
Equity mutual funds		—			16.1	%
Exchange traded funds:
Equity securities		—			51.3	%		46.0	%		52.0	%
U.S. Treasuries		87.0	%		—
Fixed income								41.0	%		29.0	%
International								11.0	%		11.0	%
Total		100.0	%		100.0	%		100.0	%		100.0	%

The strategic objective of the investments of the assets in the Continuing Plan ~~was changed significantly after the decision~~aims to ~~terminate the Plan.~~provide long-term capital growth with moderate income. The ~~Plan~~allocation is ~~no longer~~ managed on a total return ~~basis.~~basis with the average participant age in mind. It is constructed with an intermediate investment time frame with a moderate to high risk tolerance or a long-term investment time frame with a low to moderate risk tolerance. The ~~Plan~~plan allocation is ~~managed with as little market value fluctuation as possible. Given~~typically balanced between equity and fixed income. The equity exposure has the ~~known~~potential to earn a return greater than inflation while the fixed ~~actuarial discount rate used until termination to match liabilities,~~income exposure may reduce the ~~asset allocation~~risk and volatility of the ~~Plan has been changed~~portfolio to reflect a very conservative posture. Money market and individual U.S. Treasury securities are used solely to maintain a stable market value and achieve a small level of interest income. The Treasury securities will mature at or beforewhich the ~~projected distribution date. Similarly, a money market~~equity allocation ~~will be maintained for liquidity purposes due to monthly reoccurring distributions and lump sum distributions until final termination.~~contributes.

At this time, Trustmark presents no fair values that are derived through internal modeling. Should positions requiring fair valuation arise that are not relevant to existing methodologies, Trustmark will make every reasonable effort to obtain market participant assumptions, or independent evaluation.

The following table sets forth by level, within the fair value hierarchy, the Continuing Plan’s assets measured at fair value at December 31, ~~2016~~2019 and ~~2015~~2018 ($ in thousands):

	December 31, 2016								December 31, 2019
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Money market fund	$	6,859	$	6,859	$	—	$	—	$	51	$	51	$	—	$	—
U.S. Treasuries		47,875		47,875		—		—
Exchange traded funds:
Equity securities										1,592		1,592		—		—
Fixed income										1,417		1,417		—		—
International										383		383		—		—
Total assets at fair value	$	54,734	$	54,734	$	—	$	—	$	3,443	$	3,443	$	—	$	—

	December 31, 2015								December 31, 2018
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Money market fund	$	2,678	$	2,678	$	—	$	—	$	304	$	304	$	—	$	—
Fixed income mutual funds		21,472		21,472		—		—
Equity mutual funds		11,922		11,922		—		—
Exchange traded funds:
Equity securities		38,065		38,065		—		—		2,044		2,044		—		—
Fixed income										1,162		1,162		—		—
International										444		444		—		—
Total assets at fair value	$	74,137	$	74,137	$	—	$	—	$	3,954	$	3,954	$	—	$	—

There have been no changes in the methodologies used in estimating the fair value of plan assets at December 31, ~~2016.~~2019. The money market fund approximates fair value due to its immediate maturity.

The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although Trustmark believes their valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

~~years~~ year ending December 31, ~~2016 and 2015,~~2019, Trustmark’s minimum required contribution to the Continuing Plan was ~~zero. Since the Plan has terminated, there will be no additional contributions required in the future other than amounts necessary to facilitate the Plan termination.~~$157 thousand; however, Trustmark contributed $285 thousand. For the plan year ending December 31, ~~2017,~~2020, Trustmark’s minimum required contribution to the ~~Spin-Off~~Continuing Plan is expected to be ~~zero;~~$175 thousand; however, Management and the Board of Directors of Trustmark will monitor the ~~Spin-Off~~Continuing Plan throughout ~~2017~~2020 to determine any additional funding requirements by the plan’s measurement date.

The following table presents the expected benefit payments, which reflect expected future service, for the Continuing Plan ($ in thousands):

Amounts in accumulated other comprehensive loss expected to be recognized as components of net periodic benefit cost during ~~2017~~2020 include a net loss of ~~$18.4 million.~~$324 thousand.

Trustmark maintains a nonqualified supplemental retirement plan covering key executive officers and senior officers as well as directors who have elected to defer fees. The plan provides for retirement and/or death benefits based on a participant’s covered salary or deferred fees. Although plan benefits may be paid from Trustmark’s general assets, Trustmark has purchased life insurance contracts on the participants covered under the plan, which may be used to fund future benefit payments under the plan. The measurement date for the plan is December 31. As a result of mergers prior to 2014, Trustmark became the administrator of small nonqualified supplemental retirement plans, for which the plan benefits were frozen prior to the merger date.

The following tables present information regarding the benefit obligation, plan assets, funded status, amounts recognized in accumulated other comprehensive loss, net periodic benefit cost and other statistical disclosures for Trustmark’s nonqualified supplemental retirement plans for the periods presented ($ in thousands):

	December 31,						December 31,
	2016			2015			2019			2018
Change in benefit obligation:
Benefit obligation, beginning of year	$	57,766		$	59,744		$	53,257		$	57,930
Service cost		295			431			109			116
Interest cost		2,223			2,082			2,044			1,865
Actuarial loss (gain)		1,537			(1,702	)
Actuarial (gain) loss								5,498			(3,228	)
Benefits paid		(3,326	)		(2,789	)		(3,426	)		(3,426	)
Benefit obligation, end of year	$	58,495		$	57,766		$	57,482		$	53,257
Change in plan assets:
Fair value of plan assets, beginning of year	$	—		$	—		$	—		$	—
Employer contributions		3,326			2,789			3,426			3,426
Benefit payments		(3,326	)		(2,789	)		(3,426	)		(3,426	)
Fair value of plan assets, end of year	$	—		$	—		$	—		$	—

Funded status at end of year - net liability	$	(58,495	)	$	(57,766	)	$	(57,482	)	$	(53,257	)

Amounts recognized in accumulated other comprehensive loss:
Net loss	$	17,739		$	18,548		$	18,275		$	13,403
Prior service cost		1,359			1,609			609			859
Amounts recognized	$	19,098		$	20,157		$	18,884		$	14,262

	Years Ended December 31,									Years Ended December 31,
	2016			2015			2014			2019			2018			2017
Net periodic benefit cost:
Service cost	$	295		$	431		$	296		$	109		$	116		$	141
Interest cost		2,223			2,082			2,198			2,044			1,865			2,103
Amortization of prior service cost		250			250			250			250			250			250
Recognized net actuarial loss		864			992			661			627			884			866
Net periodic benefit cost	$	3,632		$	3,755		$	3,405		$	3,030		$	3,115		$	3,360

Other changes in plan assets and benefit obligation recognized in other comprehensive income (loss), before taxes:
Net (gain) loss	$	(810	)	$	(2,694	)	$	6,733		$	4,872		$	(4,111	)	$	(224	)
Amortization of prior service cost		(250	)		(250	)		(250	)		(250	)		(250	)		(250	)
Total recognized in other comprehensive income (loss)	$	(1,060	)	$	(2,944	)	$	6,483		$	4,622		$	(4,361	)	$	(474	)
Total recognized in net periodic benefit cost and other comprehensive income (loss)	$	2,572		$	811		$	9,888		$	7,652		$	(1,246	)	$	2,886

Weighted-average assumptions as of end of year:
Discount rate for benefit obligation		3.71	%		3.86	%		3.57	%		2.84	%		3.97	%		3.32	%
Discount rate for net periodic benefit cost		3.86	%		3.57	%		4.30	%		3.97	%		3.32	%		3.71	%

The following table presents the expected benefits payments for Trustmark’s supplemental retirement plans ($ in thousands):

Amounts in accumulated other comprehensive loss expected to be recognized as components of net periodic benefit cost during ~~2017~~2020 include a loss of ~~$866~~$957 thousand and prior service cost of ~~$250~~$149 thousand.

Trustmark provides associates with a self-directed 401(k) retirement plan that allows associates to contribute a percentage of base pay, within limits provided by the Internal Revenue Code and accompanying regulations, into the plan. Trustmark matches 100% of associate contributions to the plan based on the amount of each participant’s contributions up to a maximum of 6% of eligible compensation. Associates may become eligible to make elective deferral contributions the first of the month following 30 days of employment. Eligible associates must complete one year of service in order to vest in Trustmark’s matching contributions. Trustmark’s contributions to this plan were ~~$7.2~~$8.2 million in ~~2016, $7.0~~2019, $7.9 million in ~~2015~~2018 and ~~$6.7~~$7.5 million in ~~2014.~~2017.

Trustmark has granted stock and incentive compensation awards subject to the provisions of the Stock and Incentive Compensation Plan (the Stock Plan). Current outstanding and future grants of stock and incentive compensation awards are subject to the provisions of the Stock Plan, which is designed to provide flexibility to Trustmark regarding its ability to motivate, attract and retain the services of key associates and directors. The Stock Plan also allows Trustmark to grant nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units and performance units to key associates and directors. At December 31, ~~2016,~~2019, the maximum number of shares of Trustmark’s common stock available for issuance under the Stock Plan was ~~1,230,368~~909,818 shares.

Trustmark’s performance awards vest over three years and are granted to Trustmark’s executive and senior management teams. Performance awards granted vest based on performance goals of return on average tangible equity and total shareholder ~~return compared to a defined peer group.~~return. Performance awards are valued utilizing a Monte Carlo simulation model to estimate fair value of the awards at the grant date. These awards are recognized using the straight-line method over the requisite service period. These awards provide for achievement shares if performance measures exceed 100%. The restricted share agreement provides for voting rights and dividend privileges.

The following table summarizes Trustmark’s performance award activity for the periods presented:

	Years Ended December 31,															Years Ended December 31,
	2016					2015					2014					2019					2018					2017
				Weighted-					Weighted-					Weighted-					Weighted-					Weighted-					Weighted-
				Average					Average					Average					Average					Average					Average
				Grant-Date					Grant-Date					Grant-Date					Grant-Date					Grant-Date					Grant-Date
	Shares			Fair Value		Shares			Fair Value		Shares			Fair Value		Shares			Fair Value		Shares			Fair Value		Shares			Fair Value
Nonvested shares, beginning of year		212,309		$	24.14		181,195		$	24.98		160,520		$	25.20		177,695		$	27.10		213,516		$	25.37		237,136		$	26.27
Granted		99,116			20.18		84,899			22.71		73,726			25.58		50,862			33.44		51,174			31.88		58,406			33.31
Released from restriction		(40,888	)		32.84		(47,360	)		24.97		(38,580	)		25.40		(61,347	)		20.18		(55,351	)		25.32		(67,279	)		34.78
Forfeited		(33,401	)		30.01		(6,425	)		24.97		(14,471	)		24.86		(17,296	)		20.18		(31,644	)		26.26		(14,747	)		28.42
Nonvested shares, end of year		237,136		$	26.27		212,309		$	24.14		181,195		$	24.98		149,914		$	32.88		177,695		$	27.10		213,516		$	25.37

Trustmark’s time-vested awards vest over three years and are granted to members of Trustmark’s Board of Directors as well as Trustmark’s executive and senior management teams. Time-vested awards are valued utilizing the fair value of Trustmark’s stock at the grant date. These awards are recognized on the straight-line method over the requisite service period.

The following table summarizes Trustmark’s time-vested award activity for the periods presented:

	Years Ended December 31,															Years Ended December 31,
	2016					2015					2014					2019					2018					2017
				Weighted-					Weighted-					Weighted-					Weighted-					Weighted-					Weighted-
				Average					Average					Average					Average					Average					Average
				Grant-Date					Grant-Date					Grant-Date					Grant-Date					Grant-Date					Grant-Date
	Shares			Fair Value		Shares			Fair Value		Shares			Fair Value		Shares			Fair Value		Shares			Fair Value		Shares			Fair Value
Nonvested shares, beginning of year		306,657		$	24.56		263,905		$	24.66		291,634		$	24.48		321,870		$	28.48		320,357		$	25.40		322,056		$	22.65
Granted		139,791			20.66		121,314			23.61		105,690			24.91		113,673			33.42		118,325			31.96		105,524			33.79
Released from restriction		(108,241	)		23.74		(67,087	)		24.31		(124,869	)		24.74		(124,598	)		21.64		(107,180	)		23.02		(101,289	)		25.35
Forfeited		(16,151	)		22.24		(11,475	)		24.22		(8,550	)		24.77		(10,939	)		32.73		(9,632	)		29.30		(5,934	)		26.52
Nonvested shares, end of year		322,056		$	22.65		306,657		$	24.56		263,905		$	24.66		300,006		$	33.04		321,870		$	28.48		320,357		$	25.40

The following table presents information regarding compensation expense for awards under the Stock Plan for the periods presented ($ in thousands):

									Weighted
									Average Life								At December 31, 2019
	Recognized Compensation Expense						Unrecognized		of Unrecognized		Recognized Compensation Expense						Unrecognized		Weighted Average
	for Years Ended December 31,						Compensation		Compensation		for Years Ended December 31,						Compensation		Life of Unrecognized
	2016		2015		2014		Expense		Expense		2019		2018		2017		Expense		Compensation Expense
Performance awards	$	1,171	$	1,201	$	1,065	$	1,813		1.69	$	1,524	$	861	$	1,387	$	1,914		1.59
Time-vested awards		2,513		2,467		3,087		2,571		1.74		3,263		3,009		2,922		3,726		1.73
Total	$	3,684	$	3,668	$	4,152	$	4,384			$	4,787	$	3,870	$	4,309	$	5,640

Trustmark makes commitments to extend credit and issues standby and commercial letters of credit (letters of credit) in the normal course of business in order to fulfill the financing needs of its customers. The carrying amount of commitments to extend credit and letters of credit approximates the fair value of such financial instruments. ~~These amounts are not material to Trustmark’s financial statements.~~

Commitments to extend credit are agreements to lend money to customers pursuant to certain specified conditions. Commitments generally have fixed expiration dates or other termination clauses. Because many of these commitments are expected to expire without being fully drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The exposure to credit loss in the event of nonperformance by the other party to the commitments to extend credit is represented by the contract amount of those instruments. Trustmark applies the same credit policies and standards as it does in the lending process when making these commitments. The collateral obtained is based upon the nature of the transaction and the assessed creditworthiness of the borrower. At December 31, ~~2016~~2019 and ~~2015,~~2018, Trustmark had unused commitments to extend credit of ~~$3.131~~$4.349 billion and ~~$2.873~~$3.918 billion, respectively.

Letters of credit are conditional commitments issued by Trustmark to insure the performance of a customer to a third-party. A financial standby letter of credit irrevocably obligates Trustmark to pay a third-party beneficiary when a customer fails to repay an outstanding loan or debt instrument. A performance standby letter of credit irrevocably obligates Trustmark to pay a third-party beneficiary when a customer fails to perform some contractual, nonfinancial obligation. When issuing letters of credit, Trustmark uses ~~essentially~~ the same policies regarding credit risk and collateral which are followed in the lending process. At December 31, ~~2016~~2019 and ~~2015,~~2018, Trustmark’s maximum exposure to credit loss in the event of nonperformance by the other party for letters of credit was ~~$111.3~~$105.2 million and ~~$113.6~~$100.2 million, respectively. These amounts consist primarily of commitments with maturities of less than three years, which have an immaterial carrying value. Trustmark holds collateral to support standby letters of credit when deemed necessary. As of December 31, ~~2016~~2019 and ~~2015,~~2018, the fair value of collateral held was ~~$32.7~~$26.3 million and ~~$30.5~~$29.8 million, respectively.

Trustmark currently has operating lease commitments for banking premises and equipment, which expire from 2017 to 2029. It is expected that certain leases will be renewed, or equipment replaced, as leases expire. Rental expense totaled $9.8 million in 2016, $9.3 million in 2015 and $8.5 million in 2014.

~~At December 31, 2016, future minimum rental commitments under non-cancellable operating leases are as follows ($ in thousands):~~

Trustmark’s wholly-owned subsidiary, TNB, has been named as a defendant in ~~three~~several lawsuits related to the collapse of the Stanford Financial Group. ~~The first is~~

2010, the court authorized and approved the formation of an Official Stanford Investors Committee (OSIC) to represent the interests of Stanford investors and, under certain circumstances, to file legal actions for the benefit of Stanford investors. In December 2011, the OSIC filed a motion to intervene in this action. In September 2012, the district court referred the case to a magistrate judge for hearing and determination of certain pretrial issues. In December 2012, the court granted the OSIC’s motion to intervene, and the OSIC filed an Intervenor Complaint against one of the other defendant financial institutions. In February 2013, the OSIC filed a second Intervenor Complaint that asserts claims against TNB and the remaining defendant financial institutions. The OSIC seeks to recover: (i) alleged fraudulent transfers in the amount of the fees each of the defendants allegedly received from Stanford Financial Group, the profits each of the defendants allegedly made from Stanford Financial Group deposits, and other monies each of the defendants allegedly received from Stanford Financial Group; (ii) damages attributable to alleged conspiracies by each of the defendants with the Stanford Financial Group to commit fraud and/or aid and abet fraud and conversion on the asserted grounds that the defendants knew or should have known the Stanford Financial Group was conducting an illegal and fraudulent scheme; and (iii) punitive damages. The OSIC did not quantify damages.

On June 23, 2015, the court allowed the Class Plaintiffs to file a Second Amended Class Action Complaint (SAC), which asserted new claims against TNB and certain of the other defendants for (i) aiding, abetting and participating in a fraudulent scheme, (ii) aiding, abetting and participating in violations of the Texas Securities Act, (iii) aiding, abetting and participating in breaches of fiduciary duty, (iv) aiding, abetting and participating in conversion and (v) conspiracy. On July 14, 2015, the defendants (including TNB) filed motions to dismiss the SAC and to reconsider the court’s prior denial to dismiss the OSIC’s constructive fraudulent transfer claims against TNB and the other financial institutions that are defendants in the action. On July 27, 2016, the court denied the motion by TNB and the other financial institution defendants to dismiss the SAC and also denied the motion by TNB and the other financial institution defendants to reconsider the court’s prior denial to dismiss the OSIC’s constructive fraudulent transfer claims. On August 24, 2016, TNB filed its answer to the SAC. ~~There has been no new activity related~~On October 20, 2017, the OSIC filed a motion seeking an order lifting the discovery stay and establishing a trial schedule. On November 4, 2016, the OSIC filed a First Amended Intervenor Complaint, which added claims for (i) aiding, abetting or participation in violations of the Texas Securities Act and (ii) aiding, abetting or participation in the breach of fiduciary duty. On November 7, 2017, the court denied the Class Plaintiffs’ motion seeking class certification and designation of class representatives and counsel, finding that common issues of fact did not predominate. The court granted the OSIC’s motion to lift the ~~SAC.~~discovery stay that it had previously ordered.

other damages) under various theories and causes of action, including negligence, breach of contract, breach of fiduciary duty, negligent misrepresentation, detrimental reliance, conspiracy, and violation of Louisiana’s uniform fiduciary, securities, and racketeering laws. The complaint does not quantify the amount of money the plaintiffs seek to recover. In January 2010, the lawsuit was removed to federal court by certain defendants and then transferred by the United States Panel on Multidistrict Litigation to federal court in the Northern District of Texas (Dallas) where multiple Stanford related matters are being consolidated for pre-trial proceedings. On March 29, 2010, the court stayed the case. TNB filed a motion to lift the stay, which was denied on February 28, 2012. In September 2012, the district court referred the case to a magistrate judge for hearing and determination of certain pretrial issues.

~~TNB has been named as~~On December 30, 2019, a ~~defendant in two separately~~complaint was filed ~~but now consolidated lawsuits involving two testamentary trusts created~~ in the ~~will~~United States District Court for the Southern District of ~~Kathleen Killebrew Paine~~Mississippi, Northern Division (the Court) by Alysson Mills in her capacity as Court-appointed Receiver (the Receiver) for ~~her~~Arthur Lamar Adams (Adams) and Madison Timber Properties, LLC (Madison Timber), naming TNB, two ~~children, Carolyn Paine Davis~~other Mississippi-based financial institutions both of which are unaffiliated with Trustmark and ~~W.K. Paine.~~two individuals, one of who was employed by TNB ~~is named~~at all times relevant to the complaint and the other was employed either by TNB or one of the other defendant financial institutions, as defendants. The complaint seeks to recover from the ~~Trustee~~defendants, for the benefit of the receivership estate and also for certain investors who were allegedly defrauded by Adams and Madison Timber, damages (including punitive damages) and related costs allegedly attributable to actions of the defendants that allegedly enabled illegal and fraudulent activities engaged in ~~both trusts.~~by Adams and Madison Timber. The ~~lawsuits were filed on June 30, 2014~~Receiver did not quantify damages.

beneficiaries of the respective trusts; that the plaintiffs should have been entitled to be considered for distributions of trust income; and that the interests of Mrs. Davis and Mr. Paine were favored over plaintiffs’ interest in both the distribution of income and in the making of trust investments. Plaintiffs seek compensatory damages, refund of trust fees and sweep fees, punitive damages, attorneys’ fees and pre- and post-judgment interest. On March 9, 2015, the court granted TNB’s motion to add Mrs. Davis and Mr. W.K. Paine as cross-defendants. Following a bench trial that concluded on January 20, 2016, the judge ordered the parties to enter into mandatory mediation. On February 22, 2016, the mediator reported to the judge that the mediation had failed to resolve the matter. All post-trial briefings have been completed by the parties and submitted to the court. The judge will consider those submissions and then enter a ruling on the case at some point in the future.business.

All pending legal proceedings described above are being vigorously contested. In accordance FASB ASC ~~Topic~~Subtopic 450-20, “Loss Contingencies,” Trustmark will establish an accrued liability for litigation matters when those matters present loss contingencies that are both probable and reasonably estimable. At the present time, Trustmark believes, based on its evaluation and the advice of legal counsel, that a loss in any such proceeding is not probable and a reasonable estimate cannot reasonably be made.

phased in capital conservation buffer of ~~0.625%.~~2.500% at December 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 December 31, ~~2016,~~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 December 31, ~~2016.~~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 December 31, ~~2016,~~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 December 31, ~~2016~~2019 and ~~2015~~2018 ($ in thousands):

	Actual											Actual
	Regulatory Capital					Minimum			To Be Well			Regulatory Capital					Minimum			To Be Well
	Amount		Ratio			Requirement			Capitalized			Amount		Ratio			Requirement			Capitalized
At December 31, 2016:
At December 31, 2019:
Common Equity Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,209,927		12.16	%		5.125	%	n/a			$	1,312,668		11.93	%		7.000	%	n/a
Trustmark National Bank		1,251,329		12.58	%		5.125	%		6.50	%		1,352,893		12.30	%		7.000	%		6.50	%

Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,269,660		12.76	%		6.625	%	n/a			$	1,372,668		12.48	%		8.500	%	n/a
Trustmark National Bank		1,251,329		12.58	%		6.625	%		8.00	%		1,352,893		12.30	%		8.500	%		8.00	%

Total Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,352,322		13.59	%		8.625	%	n/a			$	1,457,760		13.25	%		10.500	%	n/a
Trustmark National Bank		1,333,991		13.41	%		8.625	%		10.00	%		1,437,985		13.07	%		10.500	%		10.00	%

Tier 1 Leverage (to Average Assets)
Trustmark Corporation	$	1,269,660		9.90	%		4.00	%	n/a			$	1,372,668		10.48	%		4.00	%	n/a
Trustmark National Bank		1,251,329		9.77	%		4.00	%		5.00	%		1,352,893		10.35	%		4.00	%		5.00	%

At December 31, 2015:
At December 31, 2018:
Common Equity Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,161,598		12.57	%		4.50	%	n/a			$	1,271,538		11.77	%		6.375	%	n/a
Trustmark National Bank		1,201,113		13.00	%		4.50	%		6.50	%		1,311,548		12.14	%		6.375	%		6.50	%

Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,220,535		13.21	%		6.00	%	n/a			$	1,331,538		12.33	%		7.875	%	n/a
Trustmark National Bank		1,201,113		13.00	%		6.00	%		8.00	%		1,311,548		12.14	%		7.875	%		8.00	%

Total Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,300,146		14.07	%		8.00	%	n/a			$	1,412,059		13.07	%		9.875	%	n/a
Trustmark National Bank		1,280,724		13.86	%		8.00	%		10.00	%		1,392,069		12.89	%		9.875	%		10.00	%

Tier 1 Leverage (to Average Assets)
Trustmark Corporation	$	1,220,535		10.03	%		4.00	%	n/a			$	1,331,538		10.26	%		4.00	%	n/a
Trustmark National Bank		1,201,113		9.89	%		4.00	%		5.00	%		1,311,548		10.13	%		4.00	%		5.00	%

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. In 2020, TNB will have available ~~in 2017~~ approximately ~~$98.3~~$56.8 million plus its net income for that year to pay as dividends.

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 could be acquired through March 31, 2019. Trustmark repurchased approximately 1.2 million shares of its common stock valued at $36.9 million during the year ended December 31, 2019, compared to 2.0 million shares of its common stock valued at $62.4 million repurchased during the year ended December 31, 2018 and 0 common stock repurchased during the year ended December 31, 2017. Under the 2016 program, Trustmark repurchased approximately 3.2 million shares valued at $100.0 million.

The Board of Directors of Trustmark authorized a stock repurchase program effective April 1, 2019 under which $100.0 million of Trustmark’s outstanding common stock may be acquired through March 31, ~~2019.~~2020. The adoption of this stock repurchase program followed the receipt of non-objection from the FRB. The shares may be purchased from time to time at prevailing market prices, through open market or privately negotiated transactions, depending on market conditions. Under this authority, Trustmark repurchased approximately 34601 thousand shares of its common stock valued at ~~approximately $750 thousand~~$19.7 million during the year ended December 31, ~~2016.~~2019.

Together, with the repurchases under the 2016 program, Trustmark purchased approximately 1.8 million shares of its common stock valued at $56.6 million during the year ended December 31, 2019.

On January 28, 2020, the Board of Directors of Trustmark authorized a new stock repurchase program effective April 1, 2020 under which $100.0 million of Trustmark’s outstanding common stock may be acquired through December 31, 2021. The shares may be purchased from time to time at prevailing market prices, through open market or privately negotiated transactions, depending on market conditions. There is no guarantee as to the number of shares that may be repurchased by Trustmark, and Trustmark may discontinue purchases at any time at Management’s discretion.

The following ~~table presents~~tables present the net change in the components of accumulated other comprehensive loss and the related tax effects allocated to each component for the years ended December 31, ~~2016, 2015~~2019, 2018 and ~~2014~~2017 ($ in thousands). Reclassification adjustments related to securities available for sale are included in securities gains (losses) ~~gains,~~, net in the accompanying consolidated statements of income. The amortization of prior service cost, recognized net loss due to ~~BancTrust termination,~~lump sum settlements, change in net actuarial loss and recognized net loss due to ~~lump sum settlements and change in net actuarial loss on~~defined benefit plan termination for pension and other postretirement benefit plans are included in the computation of net periodic benefit cost (see Note 1516 – 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, ~~as well as~~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.

	Before Tax			Tax (Expense)			Net of Tax			Before Tax			Tax (Expense)			Net of Tax
	Amount			Benefit			Amount			Amount			Benefit			Amount
Year Ended December 31, 2016
Year Ended December 31, 2019
Securities available for sale and transferred securities:
Unrealized holding losses arising during the period	$	(15,656	)	$	5,989		$	(9,667	)
Reclassification adjustment for net losses realized in net income		310			(119	)		191
Net unrealized holding gains (losses) arising during the period										$	44,136		$	(11,033	)	$	33,103
Change in net unrealized holding loss on securities transferred to held to maturity		9,830			(3,760	)		6,070			3,605			(901	)		2,704
Total securities available for sale and transferred securities		(5,516	)		2,110			(3,406	)		47,741			(11,934	)		35,807
Pension and other postretirement benefit plans:
Change in the actuarial loss of pension and other postretirement benefit plans											(5,703	)		1,425			(4,278	)
Reclassification adjustments for changes realized in net income:
Net change in prior service costs		250			(96	)		154			250			(63	)		187
Recognized net loss due to lump sum settlements		3,906			(1,494	)		2,412			312			(77	)		235
Change in net actuarial loss		476			(182	)		294			796			(199	)		597
Total pension and other postretirement benefit plans		4,632			(1,772	)		2,860			(4,345	)		1,086			(3,259	)
Cash flow hedge derivatives:
Change in accumulated loss on effective cash flow hedge derivatives		(369	)		141			(228	)
Reclassification adjustment for loss realized in net income		599			(229	)		370
Change in accumulated gain (loss) on effective cash flow hedge derivatives											(145	)		36			(109	)
Reclassification adjustment for (gain) loss realized in net income											(479	)		119			(360	)
Total cash flow hedge derivatives		230			(88	)		142			(624	)		155			(469	)
Total other comprehensive loss	$	(654	)	$	250		$	(404	)
Total other comprehensive income (loss)										$	42,772		$	(10,693	)	$	32,079

Year Ended December 31, 2015
Year Ended December 31, 2018
Securities available for sale and transferred securities:
Unrealized holding losses arising during the period	$	(16,695	)	$	6,386		$	(10,309	)
Reclassification adjustment for net gains realized in net income		—			—			—
Net unrealized holding gains (losses) arising during the period										$	(19,221	)	$	4,805		$	(14,416	)
Change in net unrealized holding loss on securities transferred to held to maturity		6,345			(2,427	)		3,918			3,761			(940	)		2,821
Total securities available for sale and transferred securities		(10,350	)		3,959			(6,391	)		(15,460	)		3,865			(11,595	)
Pension and other postretirement benefit plans:
Change in the actuarial loss of pension and other postretirement benefit plans											3,742			(936	)		2,806
Reclassification adjustments for changes realized in net income:
Net change in prior service costs		250			(96	)		154			250			(63	)		187
Recognized net loss due to lump sum settlements		2,221			(850	)		1,371			161			(39	)		122
Change in net actuarial loss		3,647			(1,395	)		2,252			1,225			(306	)		919
Total pension and other postretirement benefit plans		6,118			(2,341	)		3,777			5,378			(1,344	)		4,034
Cash flow hedge derivatives:
Change in accumulated loss on effective cash flow hedge derivatives		(1,315	)		503			(812	)
Reclassification adjustment for loss realized in net income		836			(320	)		516
Change in accumulated gain (loss) on effective cash flow hedge derivatives											497			(124	)		373
Reclassification adjustment for (gain) loss realized in net income											(322	)		80			(242	)
Total cash flow hedge derivatives		(479	)		183			(296	)		175			(44	)		131
Total other comprehensive loss	$	(4,711	)	$	1,801		$	(2,910	)
Total other comprehensive income (loss)										$	(9,907	)	$	2,477		$	(7,430	)

Year Ended December 31, 2014
Year Ended December 31, 2017
Securities available for sale and transferred securities:
Unrealized holding gains arising during the period	$	17,705		$	(6,772	)	$	10,933
Reclassification adjustment for net gains realized in net income		(300	)		115			(185	)
Net unrealized holding gains (losses) arising during the period										$	(13,994	)	$	5,353		$	(8,641	)
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		6,010			(2,299	)		3,711			4,721			(1,806	)		2,915
Total securities available for sale and transferred securities		23,415			(8,956	)		14,459			(9,288	)		3,553			(5,735	)
Pension and other postretirement benefit plans:
Change in the actuarial loss of pension and other postretirement benefit plans											(1,231	)		471			(760	)
Reclassification adjustments for changes realized in net income:
Net change in prior service costs		249			(95	)		154			250			(96	)		154
Recognized net loss due to BancTrust termination		1,355			(518	)		837
Recognized net loss due to lump sum settlements		905			(346	)		559
Change in net actuarial loss		(21,657	)		8,283			(13,374	)		1,962			(751	)		1,211
Recognized net loss due to defined benefit plan termination											17,662			(6,755	)		10,907
Total pension and other postretirement benefit plans		(19,148	)		7,324			(11,824	)		18,643			(7,131	)		11,512
Cash flow hedge derivatives:
Change in accumulated gain on effective cash flow hedge derivatives		(2,246	)		859			(1,387	)
Reclassification adjustment for loss realized in net income		(2	)		1			(1	)
Change in accumulated gain (loss) on effective cash flow hedge derivatives											198			(76	)		122
Reclassification adjustment for (gain) loss realized in net income											282			(108	)		174
Total cash flow hedge derivatives		(2,248	)		860			(1,388	)		480			(184	)		296
Total other comprehensive income	$	2,019		$	(772	)	$	1,247
Total other comprehensive income (loss)										$	9,835		$	(3,762	)	$	6,073

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.

The methodologies Trustmark uses in determining the fair values are based primarily on the use of independent, market-based data to reflect a value that would be reasonably expected upon exchange of the position in an orderly transaction between market participants at the measurement date. The predominant portion of assets that are stated at fair value are of a nature that can be valued using prices or inputs that are readily observable through a variety of independent data providers. The providers selected by Trustmark for fair valuation data are widely recognized and accepted vendors whose evaluations support the pricing functions of financial institutions, investment and mutual funds, and portfolio managers. Trustmark has documented and evaluated the pricing methodologies used by the vendors and maintains internal processes that regularly test valuations for anomalies.

Trustmark utilizes an independent pricing service to advise it on the carrying value of the securities available for sale portfolio. As part of Trustmark’s procedures, the price provided from the service is evaluated for reasonableness given market changes. When a questionable price exists, Trustmark investigates further to determine if the price is valid. If needed, other market participants may be utilized to determine the correct fair value. Trustmark has also reviewed and confirmed its determinations in thorough discussions with the pricing source regarding their methods of price discovery.

Mortgage loan commitments are valued based on the securities prices of similar collateral, term, rate and delivery for which the loan is eligible to deliver in place of the particular security. Trustmark acquires a broad array of mortgage security prices that are supplied by a market data vendor, which in turn accumulates prices from a broad list of securities dealers. Prices are processed through a mortgage pipeline management system that accumulates and segregates all loan commitment and forward-sale transactions according to the similarity of various characteristics (maturity, term, rate, and collateral). Prices are matched to those positions that are deemed to be an eligible substitute or offset (i.e., “deliverable”) for a corresponding security observed in the market place.

Trustmark estimates fair value of the MSR through the use of prevailing market participant assumptions and market participant valuation processes. This valuation is periodically tested and validated against other third-party firm valuations.

Trustmark obtains the fair value of interest rate swaps from a third-party pricing service that uses an industry standard discounted cash flow methodology. In addition, credit valuation adjustments are incorporated in the fair values to account for potential nonperformance risk. In adjusting the fair value of its interest rate swap contracts for the effect of nonperformance risk, Trustmark has considered any applicable credit enhancements such as collateral postings, thresholds, mutual puts, and guarantees. In conjunction

with the FASB’s fair value measurement guidance, Trustmark made an accounting policy election to measure the credit risk of these derivative financial instruments, which are subject to master netting agreements, on a net basis by counterparty portfolio.

Trustmark has determined that the majority of the inputs used to value its interest rate swaps offered to qualified commercial borrowers fall within Level 2 of the fair value hierarchy, while the credit valuation adjustments associated with these derivatives utilize Level 3 inputs, such as estimates of current credit spreads. Trustmark has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its interest rate swaps and has determined that the credit valuation adjustment is not significant to the overall valuation of these derivatives. As a result, Trustmark classifies its interest rate swap valuations in Level 2 of the fair value hierarchy.

Trustmark also utilizes exchange-traded derivative instruments such as Treasury note futures contracts and option contracts to achieve a fair value return that offsets the changes in fair value of the MSR attributable to interest rates. Fair values of these derivative instruments are determined from quoted prices in active markets for identical assets therefore allowing them to be classified within Level 1 of the fair value hierarchy. In addition, Trustmark utilizes derivative instruments such as interest rate lock commitments in its mortgage banking area which lack observable inputs for valuation purposes resulting in their inclusion in Level 3 of the fair value hierarchy.

The following tables summarize financial assets and financial liabilities measured at fair value on a recurring basis as of December 31, ~~2016~~2019 and ~~2015,~~2018, segregated by the level of valuation inputs within the fair value hierarchy utilized to measure fair value ($ in thousands). There were no transfers between fair value levels for the years ended December 31, ~~2016~~2019 and ~~2015.~~2018.

	December 31, 2016										December 31, 2019
	Total		Level 1			Level 2			Level 3		Total		Level 1		Level 2		Level 3
U.S. Government agency obligations	$	56,039	$	—		$	56,039		$	—	$	22,327	$	—	$	22,327	$	—
Obligations of states and political subdivisions		115,373		—			115,373			—		25,465		—		25,465		—
Mortgage-backed securities		2,185,270		—			2,185,270			—		1,554,612		—		1,554,612		—
Securities available for sale		2,356,682		—			2,356,682			—		1,602,404		—		1,602,404		—
Loans held for sale		175,927		—			175,927			—		226,347		—		226,347		—
Mortgage servicing rights		80,239		—			—			80,239		79,394		—		—		79,394
Other assets - derivatives		2,518		(524	)		2,041			1,001		17,956		244		16,273		1,439
Other liabilities - derivatives		412		1,174			(762	)		—		6,063		4,414		1,649		—

	December 31, 2015									December 31, 2018
	Total		Level 1			Level 2		Level 3		Total		Level 1		Level 2		Level 3
U.S. Government agency obligations	$	68,416	$	—		$	68,416	$	—	$	30,335	$	—	$	30,335	$	—
Obligations of states and political subdivisions		138,609		—			138,609		—		50,676		—		50,676		—
Mortgage-backed securities		2,113,440		—			2,113,440		—		1,730,802		—		1,730,802		—
Asset-backed securities and structured financial products		24,957		—			24,957		—
Securities available for sale		2,345,422		—			2,345,422		—		1,811,813		—		1,811,813		—
Loans held for sale		160,189		—			160,189		—		153,799		—		153,799		—
Mortgage servicing rights		74,007		—			—		74,007		95,596		—		—		95,596
Other assets - derivatives		3,611		(149	)		2,647		1,113		12,347		5,006		6,154		1,187
Other liabilities - derivatives		3,929		1,220			2,709		—		4,213		66		4,147		—

The changes in Level 3 assets measured at fair value on a recurring basis for the years ended December 31, ~~2016~~2019 and ~~2015~~2018 are summarized as follows ($ in thousands):

	MSR			Other Assets - Derivatives			MSR			Other Assets - Derivatives
Balance, January 1, 2016	$	74,007		$	1,113
Balance, January 1, 2019							$	95,596		$	1,187
Total net (loss) gain included in Mortgage banking, net (1)		(10,513	)		10,128			(32,913	)		6,775
Additions		16,745			—			16,711			—
Sales		—			(10,240	)		—			(6,523	)
Balance, December 31, 2016	$	80,239		$	1,001
Balance, December 31, 2019							$	79,394		$	1,439

The amount of total (losses) gains for the period included in earnings that are attributable to the change in unrealized gains or losses still held at December 31, 2016	$	(407	)	$	753
The amount of total gains (losses) for the period included in earnings that are attributable to the change in unrealized gains or losses still held at December 31, 2019							$	(21,078	)	$	1,284

Balance, January 1, 2015	$	64,358		$	1,299
Balance, January 1, 2018							$	84,269		$	900
Total net (loss) gain included in Mortgage banking, net (1)		(7,949	)		6,900			(4,432	)		4,390
Additions		17,598			—			15,759			—
Sales		—			(7,086	)		—			(4,103	)
Balance, December 31, 2015	$	74,007		$	1,113
Balance, December 31, 2018							$	95,596		$	1,187

The amount of total gains (losses) for the period included in earnings that are attributable to the change in unrealized gains or losses still held at December 31, 2015	$	1,578		$	(419	)
The amount of total gains (losses) for the period included in earnings that are attributable to the change in unrealized gains or losses still held at December 31, 2018							$	7,342		$	636

Trustmark may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP. Assets at December 31, ~~2016,~~2019, which have been measured at fair value on a nonrecurring basis, include impaired LHFI. Loans for which it is probable Trustmark will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement are considered impaired. Specific allowances for impaired LHFI are based on comparisons of the recorded carrying values of the loans to the present value of the estimated cash flows of these loans at each loan’s original effective interest rate, the fair value of the collateral or the observable market prices of the loans. Impaired LHFI are primarily collateral dependent loans and are assessed using a fair value approach. Fair value estimates for collateral dependent loans are derived from appraised values based on the current market value or as-is value of the property being appraised, normally from recently received and reviewed appraisals. Appraisals are obtained from state-certified appraisers and are based on certain assumptions, which may include construction or development status and the highest and best use of the property. These appraisals are reviewed by Trustmark’s Appraisal Review Department to ensure they are acceptable. Appraised values are adjusted down for costs associated with asset disposal. At December 31, ~~2016,~~2019, Trustmark had outstanding balances of ~~$23.7~~$41.2 million with a related allowance of $5.5 million in impaired LHFI that were ~~specifically identified~~individually evaluated for ~~evaluation~~impairment and written down to fair value of the underlying collateral less cost to sell based on the fair value of the collateral or other unobservable input compared to ~~$26.5~~$55.8 million with a related allowance of $6.4 million at December 31, ~~2015.~~2018. These ~~specifically~~individually evaluated impaired LHFI are classified as Level 3 in the fair value hierarchy. Impaired LHFI are periodically reviewed and evaluated for additional impairment and adjusted accordingly based on the same factors identified above.

The debentures are subordinated to the prior payment of any other indebtedness of Trustmark that, by its terms, is not similarly subordinated. The trust preferred securities are recorded as a long-term liability on Trustmark’s balance sheet; however, for regulatory purposes the trust preferred securities are treated as Tier 1 capital under the rules of the Federal Reserve Board (FRB), Trustmark’s primary federal regulatory agency.

At December 31, 2019 and 2018, assets for the Trust totaled $61.9 million, resulting from the investment in junior subordinated debentures issued by Trustmark. Liabilities and shareholder’s equity for the Trust also totaled $61.9 million at December 31, 2019 and 2018, resulting from the issuance of trust preferred securities in the amount of $60.0 million as well as $1.9 million in common securities issued to Trustmark. During 2019, net income for the Trust equaled $79 thousand resulting from interest income from the junior subordinated debt securities issued by Trustmark to the Trust, compared with net income of $74 thousand during 2018 and $55 thousand during 2017. Dividends issued to Trustmark by the Trust during 2019 totaled $79 thousand, compared to $74 thousand during 2018 and $55 thousand during 2017.

The following table presents noninterest income disaggregated by reportable operating segment and revenue stream for the periods presented ($ in thousands):

	Year Ended December 31, 2019							Year Ended December 31, 2018 (1)							Year Ended December 31, 2017 (1)(2)
	Topic 606		Not Topic 606 (3)			Total		Topic 606		Not Topic 606 (3)			Total		Topic 606		Not Topic 606 (3)		Total
General Banking Segment
Service charges on deposit accounts	$	42,509	$	—		$	42,509	$	43,614	$	—		$	43,614	$	43,928	$	—	$	43,928
Bank card and other fees		27,972		3,706			31,678		26,904		1,897			28,801		27,958		250		28,208
Mortgage banking, net		—		29,822			29,822		—		34,674			34,674		—		29,902		29,902
Wealth management		379		—			379		296		—			296		210		—		210
Other, net		9,527		(160	)		9,367		6,762		(217	)		6,545		6,547		7,234		13,781
Security gains (losses), net		—		—			—		—		—			—		—		15		15
Total noninterest income	$	80,387	$	33,368		$	113,755	$	77,576	$	36,354		$	113,930	$	78,643	$	37,401	$	116,044

Wealth Management Segment
Service charges on deposit accounts	$	94	$	—		$	94	$	88	$	—		$	88	$	75	$	—	$	75
Bank card and other fees		58		—			58		104		—			104		78		—		78
Wealth management		30,300		—			30,300		30,042		—			30,042		30,130		—		30,130
Other, net		306		103			409		69		117			186		20		118		138
Total noninterest income	$	30,758	$	103		$	30,861	$	30,303	$	117		$	30,420	$	30,303	$	118	$	30,421

Insurance Segment
Insurance commissions	$	42,396	$	—		$	42,396	$	40,481	$	—		$	40,481	$	38,168	$	—	$	38,168
Other, net		33		—			33		5		—			5		30		—		30
Total noninterest income	$	42,429	$	—		$	42,429	$	40,486	$	—		$	40,486	$	38,198	$	—	$	38,198

Consolidated
Service charges on deposit accounts	$	42,603	$	—		$	42,603	$	43,702	$	—		$	43,702	$	44,003	$	—	$	44,003
Bank card and other fees		28,030		3,706			31,736		27,008		1,897			28,905		28,036		250		28,286
Mortgage banking, net		—		29,822			29,822		—		34,674			34,674		—		29,902		29,902
Insurance commissions		42,396		—			42,396		40,481		—			40,481		38,168		—		38,168
Wealth management		30,679		—			30,679		30,338		—			30,338		30,340		—		30,340
Other, net		9,866		(57	)		9,809		6,836		(100	)		6,736		6,597		7,352		13,949
Security gains (losses), net		—		—			—		—		—			—		—		15		15
Total noninterest income	$	153,574	$	33,471		$	187,045	$	148,365	$	36,471		$	184,836	$	147,144	$	37,519	$	184,663

The income tax provision included in the consolidated statements of income was as follows for the periods presented ($ in thousands):

For the periods presented, the income tax provision differs from the amount computed by applying the statutory federal income tax rate in effect for each respective period to income before income taxes as a result of the following ($ in thousands):

Temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities gave rise to the following net deferred tax assets at December 31, 2019 and 2018, which are included in other assets on the accompanying consolidated balance sheets ($ in thousands):

The following table provides a summary of the changes during the 2019 calendar year in the amount of unrecognized tax benefits that are included in other liabilities in the consolidated balance sheet ($ in thousands):

Interest and penalties related to unrecognized tax benefits, if any, are recorded in income tax expense. With limited exception, Trustmark is no longer subject to U.S. federal, state and local audits by tax authorities for 2013 and earlier tax years. Trustmark does not anticipate a significant change to the total amount of unrecognized tax benefits within the next twelve months.

Trustmark maintained a noncontributory tax-qualified defined benefit pension plan titled the Trustmark Capital Accumulation Plan (the Plan) in which substantially all associates who began employment prior to 2007 participated. The Plan provided for retirement benefits based on the length of credited service and final average compensation, as defined in the Plan, which vested upon three years of service. Benefit accruals under the Plan were frozen in 2009, with the exception of benefit accruals for certain employees of acquired financial institutions covered through plans that were subsequently merged into the Plan. Other than certain employees of acquired financial institutions, associates have not earned additional benefits, except for interest as required by law, since the Plan was frozen. Current and former associates who participated in the Plan retained their right to receive benefits that accrued before the Plan was frozen. As previously reported, on July 26, 2016 the Board of Directors of Trustmark authorized the termination of the Plan, effective as of December 31, 2016. As a result of the termination of the Plan, each participant became fully vested in their accrued benefits under the Plan.

Trustmark Corporation Pension Plan for Certain Employees of Acquired Financial Institutions

To satisfy commitments made by Trustmark to associates covered through plans obtained in acquisitions and subsequently merged into the Plan (collectively, the Continuing Associates), on July 26, 2016, the Board of Directors of Trustmark also approved the spin-off of the portion of the Plan associated with the accrued benefits of the Continuing Associates into a new plan titled the Trustmark Corporation Pension Plan for Certain Employees of Acquired Financial Institutions (the Continuing Plan), effective as of December 30, 2016, immediately prior to the termination of the Plan.

The following tables present information regarding the benefit obligation, plan assets, funded status, amounts recognized in accumulated other comprehensive loss, net periodic benefit cost and other statistical disclosures for the Continuing Plan and the Plan for the periods presented ($ in thousands):

The weighted-average asset allocations by asset category are presented below for the Continuing Plan at December 31, 2019 and 2018.

The strategic objective of the investments of the assets in the Continuing Plan aims to provide long-term capital growth with moderate income. The allocation is managed on a total return basis with the average participant age in mind. It is constructed with an intermediate investment time frame with a moderate to high risk tolerance or a long-term investment time frame with a low to moderate risk tolerance. The plan allocation is typically balanced between equity and fixed income. The equity exposure has the potential to earn a return greater than inflation while the fixed income exposure may reduce the risk and volatility of the portfolio to which the equity allocation contributes.

The following table sets forth by level, within the fair value hierarchy, the Continuing Plan’s assets measured at fair value at December 31, 2019 and 2018 ($ in thousands):

There have been no changes in the methodologies used in estimating the fair value of plan assets at December 31, 2019. The money market fund approximates fair value due to its immediate maturity.

The range of potential contributions to the Continuing Plan is determined annually by the Continuing Plan’s actuary in accordance with applicable IRS rules and regulations. Trustmark’s policy is to fund amounts that are sufficient to satisfy the annual minimum funding requirements and do not exceed the maximum that is deductible for federal income tax purposes. The actual amount of the contribution is determined annually based on the Continuing Plan’s funded status and return on plan assets as of the measurement date, which is December 31. For the plan year ending December 31, 2019, Trustmark’s minimum required contribution to the Continuing Plan was $157 thousand; however, Trustmark contributed $285 thousand. For the plan year ending December 31, 2020, Trustmark’s minimum required contribution to the Continuing Plan is expected to be $175 thousand; however, Management and the Board of Directors of Trustmark will monitor the Continuing Plan throughout 2020 to determine any additional funding requirements by the plan’s measurement date.

The following table presents the expected benefit payments, which reflect expected future service, for the Continuing Plan ($ in thousands):

Amounts in accumulated other comprehensive loss expected to be recognized as components of net periodic benefit cost during 2020 include a net loss of $324 thousand.

The following tables present information regarding the benefit obligation, plan assets, funded status, amounts recognized in accumulated other comprehensive loss, net periodic benefit cost and other statistical disclosures for Trustmark’s nonqualified supplemental retirement plans for the periods presented ($ in thousands):

The following table presents the expected benefits payments for Trustmark’s supplemental retirement plans ($ in thousands):

Amounts in accumulated other comprehensive loss expected to be recognized as components of net periodic benefit cost during 2020 include a loss of $957 thousand and prior service cost of $149 thousand.

Trustmark provides associates with a self-directed 401(k) retirement plan that allows associates to contribute a percentage of base pay, within limits provided by the Internal Revenue Code and accompanying regulations, into the plan. Trustmark matches 100% of associate contributions to the plan based on the amount of each participant’s contributions up to a maximum of 6% of eligible compensation. Associates may become eligible to make elective deferral contributions the first of the month following 30 days of employment. Eligible associates must complete one year of service in order to vest in Trustmark’s matching contributions. Trustmark’s contributions to this plan were $8.2 million in 2019, $7.9 million in 2018 and $7.5 million in 2017.

Trustmark has granted stock and incentive compensation awards subject to the provisions of the Stock and Incentive Compensation Plan (the Stock Plan). Current outstanding and future grants of stock and incentive compensation awards are subject to the provisions of the Stock Plan, which is designed to provide flexibility to Trustmark regarding its ability to motivate, attract and retain the services of key associates and directors. The Stock Plan also allows Trustmark to grant nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units and performance units to key associates and directors. At December 31, 2019, the maximum number of shares of Trustmark’s common stock available for issuance under the Stock Plan was 909,818 shares.

Trustmark’s performance awards vest over three years and are granted to Trustmark’s executive and senior management teams. Performance awards granted vest based on performance goals of return on average tangible equity and total shareholder return. Performance awards are valued utilizing a Monte Carlo simulation model to estimate fair value of the awards at the grant date. These awards are recognized using the straight-line method over the requisite service period. These awards provide for achievement shares if performance measures exceed 100%. The restricted share agreement provides for voting rights and dividend privileges.

The following table summarizes Trustmark’s performance award activity for the periods presented:

The following table summarizes Trustmark’s time-vested award activity for the periods presented:

The following table presents information regarding compensation expense for awards under the Stock Plan for the periods presented ($ in thousands):

Commitments to extend credit are agreements to lend money to customers pursuant to certain specified conditions. Commitments generally have fixed expiration dates or other termination clauses. Because many of these commitments are expected to expire without being fully drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The exposure to credit loss in the event of nonperformance by the other party to the commitments to extend credit is represented by the contract amount of those instruments. Trustmark applies the same credit policies and standards as it does in the lending process when making these commitments. The collateral obtained is based upon the nature of the transaction and the assessed creditworthiness of the borrower. At December 31, 2019 and 2018, Trustmark had unused commitments to extend credit of $4.349 billion and $3.918 billion, respectively.

Letters of credit are conditional commitments issued by Trustmark to insure the performance of a customer to a third-party. A financial standby letter of credit irrevocably obligates Trustmark to pay a third-party beneficiary when a customer fails to repay an outstanding loan or debt instrument. A performance standby letter of credit irrevocably obligates Trustmark to pay a third-party beneficiary when a customer fails to perform some contractual, nonfinancial obligation. When issuing letters of credit, Trustmark uses the same policies regarding credit risk and collateral which are followed in the lending process. At December 31, 2019 and 2018, Trustmark’s maximum exposure to credit loss in the event of nonperformance by the other party for letters of credit was $105.2 million and $100.2 million, respectively. These amounts consist primarily of commitments with maturities of less than three years, which have an immaterial carrying value. Trustmark holds collateral to support standby letters of credit when deemed necessary. As of December 31, 2019 and 2018, the fair value of collateral held was $26.3 million and $29.8 million, respectively.

Trustmark’s wholly-owned subsidiary, TNB, has been named as a defendant in several lawsuits related to the collapse of the Stanford Financial Group.

On August 23, 2009, a purported class action complaint was filed in the District Court of Harris County, Texas, by Peggy Roif Rotstain, Guthrie Abbott, Catherine Burnell, Steven Queyrouze, Jaime Alexis Arroyo Bornstein and Juan C. Olano (collectively, Class Plaintiffs), on behalf of themselves and all others similarly situated, naming TNB and four other financial institutions and one individual, each of which are unaffiliated with Trustmark, as defendants. The complaint seeks to recover (i) alleged fraudulent transfers from each of the defendants in the amount of fees and other monies received by each defendant from entities controlled by R. Allen Stanford (collectively, the Stanford Financial Group) and (ii) damages allegedly attributable to alleged conspiracies by one or more of the defendants with the Stanford Financial Group to commit fraud and/or aid and abet fraud on the asserted grounds that defendants knew or should have known the Stanford Financial Group was conducting an illegal and fraudulent scheme. Class Plaintiffs have demanded a jury trial. Class Plaintiffs did not quantify damages.

On June 23, 2015, the court allowed the Class Plaintiffs to file a Second Amended Class Action Complaint (SAC), which asserted new claims against TNB and certain of the other defendants for (i) aiding, abetting and participating in a fraudulent scheme, (ii) aiding, abetting and participating in violations of the Texas Securities Act, (iii) aiding, abetting and participating in breaches of fiduciary duty, (iv) aiding, abetting and participating in conversion and (v) conspiracy. On July 14, 2015, the defendants (including TNB) filed motions to dismiss the SAC and to reconsider the court’s prior denial to dismiss the OSIC’s constructive fraudulent transfer claims against TNB and the other financial institutions that are defendants in the action. On July 27, 2016, the court denied the motion by TNB and the other financial institution defendants to dismiss the SAC and also denied the motion by TNB and the other financial institution defendants to reconsider the court’s prior denial to dismiss the OSIC’s constructive fraudulent transfer claims. On August 24, 2016, TNB filed its answer to the SAC. On October 20, 2017, the OSIC filed a motion seeking an order lifting the discovery stay and establishing a trial schedule. On November 4, 2016, the OSIC filed a First Amended Intervenor Complaint, which added claims for (i) aiding, abetting or participation in violations of the Texas Securities Act and (ii) aiding, abetting or participation in the breach of fiduciary duty. On November 7, 2017, the court denied the Class Plaintiffs’ motion seeking class certification and designation of class representatives and counsel, finding that common issues of fact did not predominate. The court granted the OSIC’s motion to lift the discovery stay that it had previously ordered.

On May 3, 2019, individual investors and entities filed motions to intervene in the action. On September 18, 2019, the court denied the motions to intervene. On October 14, 2019, certain of the proposed intervenors filed a notice of appeal.

On December 14, 2009, a different Stanford-related lawsuit was filed in the District Court of Ascension Parish, Louisiana, individually by Harold Jackson, Paul Blaine and Carolyn Bass Smith, Christine Nichols, and Ronald and Ramona Hebert naming TNB (misnamed as Trust National Bank) and other individuals and entities not affiliated with Trustmark as defendants. The complaint seeks to recover the money lost by these individual plaintiffs as a result of the collapse of the Stanford Financial Group (in addition to

On April 11, 2016, Trustmark learned that a different Stanford-related lawsuit had been filed on that date in the Superior Court of Justice in Ontario, Canada, by The Toronto-Dominion Bank (“TD Bank”), naming TNB and three other financial institutions not affiliated with Trustmark as defendants. The complaint seeks a declaration specifying the degree to which each of TNB and the other defendants are liable in respect of any loss and damage for which TD Bank is found to be liable in a litigation commenced against TD Bank brought by the Joint Liquidators of Stanford International Bank Limited in the Superior Court of Justice, Commercial List in Ontario, Canada (the “Joint Liquidators’ Action”), as well as contribution and indemnity in respect of any judgment, interest and costs TD Bank is ordered to pay in the Joint Liquidators’ Action. To date, TNB has not been served in connection with this action.

On December 30, 2019, a complaint was filed in the United States District Court for the Southern District of Mississippi, Northern Division (the Court) by Alysson Mills in her capacity as Court-appointed Receiver (the Receiver) for Arthur Lamar Adams (Adams) and Madison Timber Properties, LLC (Madison Timber), naming TNB, two other Mississippi-based financial institutions both of which are unaffiliated with Trustmark and two individuals, one of who was employed by TNB at all times relevant to the complaint and the other was employed either by TNB or one of the other defendant financial institutions, as defendants. The complaint seeks to recover from the defendants, for the benefit of the receivership estate and also for certain investors who were allegedly defrauded by Adams and Madison Timber, damages (including punitive damages) and related costs allegedly attributable to actions of the defendants that allegedly enabled illegal and fraudulent activities engaged in by Adams and Madison Timber. The Receiver did not quantify damages.

TNB’s relationship with Adams and Madison Timber consisted of traditional banking services in the ordinary course of business.

All pending legal proceedings described above are being vigorously contested. In accordance FASB ASC Subtopic 450-20, “Loss Contingencies,” Trustmark will establish an accrued liability for litigation matters when those matters present loss contingencies that are both probable and reasonably estimable. At the present time, Trustmark believes, based on its evaluation and the advice of legal counsel, that a loss in any such proceeding is not probable and a reasonable estimate cannot reasonably be made.

phased in capital conservation buffer of 2.500% at December 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 December 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 December 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 December 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 December 31, 2019 and 2018 ($ in thousands):

	Actual
	Regulatory Capital					Minimum			To Be Well
	Amount		Ratio			Requirement			Capitalized
At December 31, 2019:
Common Equity Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,312,668		11.93	%		7.000	%	n/a
Trustmark National Bank		1,352,893		12.30	%		7.000	%		6.50	%

Tier 1 Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,372,668		12.48	%		8.500	%	n/a
Trustmark National Bank		1,352,893		12.30	%		8.500	%		8.00	%

Total Capital (to Risk Weighted Assets)
Trustmark Corporation	$	1,457,760		13.25	%		10.500	%	n/a
Trustmark National Bank		1,437,985		13.07	%		10.500	%		10.00	%

Tier 1 Leverage (to Average Assets)
Trustmark Corporation	$	1,372,668		10.48	%		4.00	%	n/a
Trustmark National Bank		1,352,893		10.35	%		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	%

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. In 2020, TNB will have available approximately $56.8 million plus its net income for that year to pay as dividends.

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 could be acquired through March 31, 2019. Trustmark repurchased approximately 1.2 million shares of its common stock valued at $36.9 million during the year ended December 31, 2019, compared to 2.0 million shares of its common stock valued at $62.4 million repurchased during the year ended December 31, 2018 and 0 common stock repurchased during the year ended December 31, 2017. Under the 2016 program, Trustmark repurchased approximately 3.2 million shares valued at $100.0 million.

The Board of Directors of Trustmark authorized a 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 stock repurchase program followed the receipt of non-objection from the FRB. The shares may be purchased from time to time at prevailing market prices, through open market or privately negotiated transactions, depending on market conditions. Under this authority, Trustmark repurchased approximately 601 thousand shares of its common stock valued at $19.7 million during the year ended December 31, 2019.

Together, with the repurchases under the 2016 program, Trustmark purchased approximately 1.8 million shares of its common stock valued at $56.6 million during the year ended December 31, 2019.

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 years ended December 31, 2019, 2018 and 2017 ($ in thousands). Reclassification adjustments related to securities available for sale are included in securities 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 for pension and other postretirement benefit plans are included in the computation of net periodic benefit cost (see Note 16 – 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.

	Before Tax			Tax (Expense)			Net of Tax
	Amount			Benefit			Amount
Year Ended December 31, 2019
Securities available for sale and transferred securities:
Net unrealized holding gains (losses) arising during the period	$	44,136		$	(11,033	)	$	33,103
Change in net unrealized holding loss on securities transferred to held to maturity		3,605			(901	)		2,704
Total securities available for sale and transferred securities		47,741			(11,934	)		35,807
Pension and other postretirement benefit plans:
Change in the actuarial loss of pension and other postretirement benefit plans		(5,703	)		1,425			(4,278	)
Reclassification adjustments for changes realized in net income:
Net change in prior service costs		250			(63	)		187
Recognized net loss due to lump sum settlements		312			(77	)		235
Change in net actuarial loss		796			(199	)		597
Total pension and other postretirement benefit plans		(4,345	)		1,086			(3,259	)
Cash flow hedge derivatives:
Change in accumulated gain (loss) on effective cash flow hedge derivatives		(145	)		36			(109	)
Reclassification adjustment for (gain) loss realized in net income		(479	)		119			(360	)
Total cash flow hedge derivatives		(624	)		155			(469	)
Total other comprehensive income (loss)	$	42,772		$	(10,693	)	$	32,079

Year Ended December 31, 2018
Securities available for sale and transferred securities:
Net unrealized holding gains (losses) arising during the period	$	(19,221	)	$	4,805		$	(14,416	)
Change in net unrealized holding loss on securities transferred to held to maturity		3,761			(940	)		2,821
Total securities available for sale and transferred securities		(15,460	)		3,865			(11,595	)
Pension and other postretirement benefit plans:
Change in the actuarial loss of pension and other postretirement benefit plans		3,742			(936	)		2,806
Reclassification adjustments for changes realized in net income:
Net change in prior service costs		250			(63	)		187
Recognized net loss due to lump sum settlements		161			(39	)		122
Change in net actuarial loss		1,225			(306	)		919
Total pension and other postretirement benefit plans		5,378			(1,344	)		4,034
Cash flow hedge derivatives:
Change in accumulated gain (loss) on effective cash flow hedge derivatives		497			(124	)		373
Reclassification adjustment for (gain) loss realized in net income		(322	)		80			(242	)
Total cash flow hedge derivatives		175			(44	)		131
Total other comprehensive income (loss)	$	(9,907	)	$	2,477		$	(7,430	)

Year Ended December 31, 2017
Securities available for sale and transferred securities:
Net unrealized holding gains (losses) arising during the period	$	(13,994	)	$	5,353		$	(8,641	)
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		4,721			(1,806	)		2,915
Total securities available for sale and transferred securities		(9,288	)		3,553			(5,735	)
Pension and other postretirement benefit plans:
Change in the actuarial loss of pension and other postretirement benefit plans		(1,231	)		471			(760	)
Reclassification adjustments for changes realized in net income:
Net change in prior service costs		250			(96	)		154
Change in net actuarial loss		1,962			(751	)		1,211
Recognized net loss due to defined benefit plan termination		17,662			(6,755	)		10,907
Total pension and other postretirement benefit plans		18,643			(7,131	)		11,512
Cash flow hedge derivatives:
Change in accumulated gain (loss) on effective cash flow hedge derivatives		198			(76	)		122
Reclassification adjustment for (gain) loss realized in net income		282			(108	)		174
Total cash flow hedge derivatives		480			(184	)		296
Total other comprehensive income (loss)	$	9,835		$	(3,762	)	$	6,073

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.

~~Certain nonfinancial~~The following tables summarize financial assets and financial liabilities measured at fair value on a recurring basis as of December 31, 2019 and 2018, segregated by the level of valuation inputs within the fair value hierarchy utilized to measure fair value ($ in thousands). There were no transfers between fair value levels for the years ended December 31, 2019 and 2018.

The changes in Level 3 assets measured at fair value on a recurring basis for the years ended December 31, 2019 and 2018 are summarized as follows ($ in thousands):

Trustmark may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP. Assets at December 31, 2019, which have been measured at fair value on a nonrecurring basis, include ~~foreclosed assets (upon initial recognition~~impaired LHFI. Loans for which it is probable Trustmark will be unable to collect the scheduled payments of principal or ~~subsequent impairment), nonfinancial assets and nonfinancial liabilities measured~~interest when due according to the contractual terms of the loan agreement are considered impaired. Specific allowances for impaired LHFI are based on comparisons of the recorded carrying values of the loans to the present value of the estimated cash flows of these loans at each loan’s original effective interest rate, the fair value inof the ~~second step~~collateral or the observable market prices of ~~a goodwill impairment test,~~the loans. Impaired LHFI are primarily collateral dependent loans and ~~intangible assets and other nonfinancial long-lived assets measured at~~are assessed using a fair value ~~for impairment assessment.~~

Other real estate, excluding covered other real estate, includes assets that have been acquired in satisfaction of debt through foreclosure and is recorded at the lower of cost or estimated fair value.approach. Fair value isestimates for collateral dependent loans are derived from appraised values based on ~~independent~~the current market value or as-is value of the property being appraised, normally from recently received and reviewed appraisals. Appraisals are obtained from state-certified appraisers and are based on certain assumptions, which may include construction or development status and the highest and best use of the property. These appraisals ~~and other relevant factors. In the determination of fair value subsequent~~are reviewed by Trustmark’s Appraisal Review Department to ~~foreclosure, Management also considers other factors or recent developments, such as changes in market conditions from the time of valuation and anticipated sales~~ensure they are acceptable. Appraised values ~~considering plans~~are adjusted down for ~~disposition, which could result in an adjustment to lower the collateral value estimates indicated in the appraisals.~~costs associated with asset disposal. At December 31, ~~2016, Trustmark’s geographic other real estate distribution was concentrated primarily~~2019, Trustmark had outstanding balances of $41.2 million with a related allowance of $5.5 million in ~~its five key market regions: Alabama, Florida, Mississippi, Tennessee~~impaired LHFI that were individually evaluated for impairment and ~~Texas. The ultimate recovery of a substantial portion~~written down to fair value of the ~~carrying amount~~underlying collateral less cost to sell based on the fair value of the collateral or other ~~real estate,~~

~~excluding covered other real estate, is susceptible~~unobservable input compared to ~~changes in market conditions in these areas. Periodic revaluations~~$55.8 million with a related allowance of $6.4 million at December 31, 2018. These individually evaluated impaired LHFI are classified as Level 3 in the fair value ~~hierarchy since assumptions are used that may not be observable in the market.~~

Certain foreclosed assets, upon initial recognition, are remeasured and reported at fair value through a charge-off to the allowance for loan losses based upon the fair value of the foreclosed asset. The fair value of a foreclosed asset, upon initial recognition, is estimated using Level 3 inputs based on adjusted observable market data. Foreclosed assets measured at fair value upon initial recognition totaled $24.3 million (utilizing Level 3 valuation inputs) during the year ended December 31, 2016 compared with $33.4 million for the same period in 2015. In connection with the measurement and initial recognition of the foregoing foreclosed assets, Trustmark recognized charge-offs of the allowance for loan losses totaling $20.0 million and $7.9 million for 2016 and 2015, respectively. Other than foreclosed assets measured at fair value upon initial recognition, $32.2 million of foreclosed assets were remeasured during 2016 requiring write-downs of $4.4 million to reach their current fair values compared to $44.5 million of foreclosed assets that were remeasured during 2015, requiring write-downs of $2.9 million.

~~The carrying amounts and estimated fair values of financial instruments at December 31, 2016 and 2015 were as follows ($ in thousands):~~

FASB ASC Topic 825 requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The methodology and significant assumptions used in estimating the fair values presented above are as follows:

In cases where quoted market prices are not available, fair values are generally based on estimates using present value techniques. Trustmark’s premise in present value techniques is to represent the fair values on a basis of replacement value of the existing instrument given observed market rates on the measurement date. These techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates for those assets or liabilities cannot be necessarily substantiated by comparison to independent markets and, in many cases, may not be realizable in immediate settlement of the instruments. The estimated fair value of financial instruments with immediate and shorter-term maturities (generally 90 days or less) is assumed to be the same as the recorded book value. All nonfinancial instruments, by definition, have been excluded from these disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of Trustmark.

The carrying amounts for cash and due from banks and short-term investments (federal funds sold and securities purchased under reverse repurchase agreements) approximate fair values due to their immediate and shorter-term maturities.

Estimated fair values for securities held to maturity are based on quoted market prices where available. If quoted market prices are not available, estimated fair values are based on quoted market prices of comparable instruments.

~~The fair values of net~~hierarchy. Impaired LHFI are ~~estimated~~periodically reviewed and evaluated for portfolios of loans with similar financial characteristics. For variable rate LHFI that reprice frequently with no significant change in credit risk, fair values are based on carrying values. The fair values of certain mortgage LHFI, such as 1-4 family residential properties, are based on quoted market prices of similar loans sold in conjunction with securitization transactions,additional impairment and adjusted for differences in loan characteristics. The fair values of other types of LHFI are estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. The processes for estimating the fair value of net LHFI described above do not represent an exit price under FASB ASC Topic 820 and such an exit price could potentially produce a different fair value estimate at December 31, 2016 and 2015.

The fair value of net acquired loans is based on estimates of future loan cash flows and appropriate discount rates, which incorporate Trustmark’s assumptions about market funding cost and liquidity premium. The estimates of future loan cash flows are determined using Trustmark’s assumptions concerning the amount and timing of principal and interest payments, prepayments and credit losses.

~~The fair value of the FDIC indemnification asset is estimated by discounting estimated future cash flows based on market rates observed at the time of acquisition.~~

The fair values of deposits with no stated maturity, such as noninterest-bearing demand deposits, NOW accounts, MMDA products and savings accounts are, by definition, equal to the amount payable on demand, which is the carrying value. Fair values for certificates of deposit areaccordingly based on the ~~discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits with similar remaining maturities.~~same factors identified above.

~~The carrying amounts for federal funds purchased, securities sold under repurchase agreements and other borrowings, including short-term FHLB advances, approximate their fair values.~~

FHLB advances were valued by projecting expected cash flows into the future based on each advance’s contracted rate and then determining the present value of those expected cash flows using current rates for advances with similar maturities.

The fair value of the subordinated notes equals quoted market prices, if available. If a quoted market price is not available, the fair value is estimated using quoted market prices for similar subordinated notes.

On August 18, 2006, Trustmark completed a private placement of $60.0 million of trust preferred securities through a newly formed Delaware trust affiliate, Trustmark Preferred Capital Trust I (the Trust). The ~~fair value~~trust preferred securities mature September 30, 2036, are redeemable at Trustmark’s option and bear interest at a variable rate per annum equal to the three-month LIBOR plus 1.72%. Under applicable regulatory guidelines, these trust preferred securities qualify as Tier 1 capital. The proceeds from the sale of the trust preferred securities were used by the Trust to purchase $61.9 million in aggregate principal amount of Trustmark’s junior subordinated debentures.

The debentures are subordinated to the prior payment of any other indebtedness of Trustmark that, by its terms, is not similarly subordinated. The trust preferred securities are recorded as a long-term liability on Trustmark’s balance sheet; however, for regulatory purposes the trust preferred securities are treated as Tier 1 capital under the rules of the Federal Reserve Board (FRB), Trustmark’s primary federal regulatory agency.

At December 31, 2019 and 2018, assets for the Trust totaled $61.9 million, resulting from the investment in junior subordinated debentures issued by Trustmark. Liabilities and shareholder’s equity for the Trust also totaled $61.9 million at December 31, 2019 and 2018, resulting from the issuance of trust preferred securities in the amount of $60.0 million as well as $1.9 million in common securities issued to Trustmark. During 2019, net income for the Trust equaled $79 thousand resulting from interest income from the junior subordinated debt securities ~~equals quoted~~issued by Trustmark to the Trust, compared with net income of $74 thousand during 2018 and $55 thousand during 2017. Dividends issued to Trustmark by the Trust during 2019 totaled $79 thousand, compared to $74 thousand during 2018 and $55 thousand during 2017.

The following table presents noninterest income disaggregated by reportable operating segment and revenue stream for the periods presented ($ in thousands):

	Year Ended December 31, 2019							Year Ended December 31, 2018 (1)							Year Ended December 31, 2017 (1)(2)
	Topic 606		Not Topic 606 (3)			Total		Topic 606		Not Topic 606 (3)			Total		Topic 606		Not Topic 606 (3)		Total
General Banking Segment
Service charges on deposit accounts	$	42,509	$	—		$	42,509	$	43,614	$	—		$	43,614	$	43,928	$	—	$	43,928
Bank card and other fees		27,972		3,706			31,678		26,904		1,897			28,801		27,958		250		28,208
Mortgage banking, net		—		29,822			29,822		—		34,674			34,674		—		29,902		29,902
Wealth management		379		—			379		296		—			296		210		—		210
Other, net		9,527		(160	)		9,367		6,762		(217	)		6,545		6,547		7,234		13,781
Security gains (losses), net		—		—			—		—		—			—		—		15		15
Total noninterest income	$	80,387	$	33,368		$	113,755	$	77,576	$	36,354		$	113,930	$	78,643	$	37,401	$	116,044

Wealth Management Segment
Service charges on deposit accounts	$	94	$	—		$	94	$	88	$	—		$	88	$	75	$	—	$	75
Bank card and other fees		58		—			58		104		—			104		78		—		78
Wealth management		30,300		—			30,300		30,042		—			30,042		30,130		—		30,130
Other, net		306		103			409		69		117			186		20		118		138
Total noninterest income	$	30,758	$	103		$	30,861	$	30,303	$	117		$	30,420	$	30,303	$	118	$	30,421

Insurance Segment
Insurance commissions	$	42,396	$	—		$	42,396	$	40,481	$	—		$	40,481	$	38,168	$	—	$	38,168
Other, net		33		—			33		5		—			5		30		—		30
Total noninterest income	$	42,429	$	—		$	42,429	$	40,486	$	—		$	40,486	$	38,198	$	—	$	38,198

Consolidated
Service charges on deposit accounts	$	42,603	$	—		$	42,603	$	43,702	$	—		$	43,702	$	44,003	$	—	$	44,003
Bank card and other fees		28,030		3,706			31,736		27,008		1,897			28,905		28,036		250		28,286
Mortgage banking, net		—		29,822			29,822		—		34,674			34,674		—		29,902		29,902
Insurance commissions		42,396		—			42,396		40,481		—			40,481		38,168		—		38,168
Wealth management		30,679		—			30,679		30,338		—			30,338		30,340		—		30,340
Other, net		9,866		(57	)		9,809		6,836		(100	)		6,736		6,597		7,352		13,949
Security gains (losses), net		—		—			—		—		—			—		—		15		15
Total noninterest income	$	153,574	$	33,471		$	187,045	$	148,365	$	36,471		$	184,836	$	147,144	$	37,519	$	184,663

The income tax provision included in the consolidated statements of income was as follows for the periods presented ($ in thousands):

Temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities gave rise to the following net deferred tax assets at December 31, 2019 and 2018, which are included in other assets on the accompanying consolidated balance sheets ($ in thousands):

Interest and penalties related to unrecognized tax benefits, if any, are recorded in income tax expense. With limited exception, Trustmark is no longer subject to U.S. federal, state and local audits by tax authorities for 2013 and earlier tax years. Trustmark does not anticipate a significant change to the total amount of unrecognized tax benefits within the next twelve months.

Trustmark Corporation Pension Plan for Certain Employees of Acquired Financial Institutions

The following tables present information regarding the benefit obligation, plan assets, funded status, amounts recognized in accumulated other comprehensive loss, net periodic benefit cost and other statistical disclosures for the Continuing Plan and the Plan for the periods presented ($ in thousands):

The weighted-average asset allocations by asset category are presented below for the Continuing Plan at December 31, 2019 and 2018.

At this time, Trustmark presents no fair values that are derived through internal modeling. Should positions requiring fair valuation arise that are not relevant to existing methodologies, Trustmark will make every reasonable effort to obtain market ~~prices, if available. If a quoted market price is not available,~~participant assumptions, or independent evaluation.

The following table sets forth by level, within the fair value hierarchy, the Continuing Plan’s assets measured at fair value at December 31, 2019 and 2018 ($ in thousands):

There have been no changes in the methodologies used in estimating the fair value of plan assets at December 31, 2019. The money market fund approximates fair value due to its immediate maturity.

The range of potential contributions to the Continuing Plan is ~~estimated~~determined annually by the Continuing Plan’s actuary in accordance with applicable IRS rules and regulations. Trustmark’s policy is to fund amounts that are sufficient to satisfy the annual minimum funding requirements and do not exceed the maximum that is deductible for federal income tax purposes. The actual amount of the contribution is determined annually based on the Continuing Plan’s funded status and return on plan assets as of the measurement date, which is December 31. For the plan year ending December 31, 2019, Trustmark’s minimum required contribution to the Continuing Plan was $157 thousand; however, Trustmark contributed $285 thousand. For the plan year ending December 31, 2020, Trustmark’s minimum required contribution to the Continuing Plan is expected to be $175 thousand; however, Management and the Board of Directors of Trustmark will monitor the Continuing Plan throughout 2020 to determine any additional funding requirements by the plan’s measurement date.

The following table presents the expected benefit payments, which reflect expected future service, for the Continuing Plan ($ in thousands):

Amounts in accumulated other comprehensive loss expected to be recognized as components of net periodic benefit cost during 2020 include a net loss of $324 thousand.

The following tables present information regarding the benefit obligation, plan assets, funded status, amounts recognized in accumulated other comprehensive loss, net periodic benefit cost and other statistical disclosures for Trustmark’s nonqualified supplemental retirement plans for the periods presented ($ in thousands):

The following table presents the expected benefits payments for Trustmark’s supplemental retirement plans ($ in thousands):

Trustmark provides associates with a self-directed 401(k) retirement plan that allows associates to contribute a percentage of base pay, within limits provided by the Internal Revenue Code and accompanying regulations, into the plan. Trustmark matches 100% of associate contributions to the plan based on the amount of each participant’s contributions up to a maximum of 6% of eligible compensation. Associates may become eligible to make elective deferral contributions the first of the month following 30 days of employment. Eligible associates must complete one year of service in order to vest in Trustmark’s matching contributions. Trustmark’s contributions to this plan were $8.2 million in 2019, $7.9 million in 2018 and $7.5 million in 2017.

Trustmark has granted stock and incentive compensation awards subject to the provisions of the Stock and Incentive Compensation Plan (the Stock Plan). Current outstanding and future grants of stock and incentive compensation awards are subject to the provisions of the Stock Plan, which is designed to provide flexibility to Trustmark regarding its ability to motivate, attract and retain the services of key associates and directors. The Stock Plan also allows Trustmark to grant nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units and performance units to key associates and directors. At December 31, 2019, the maximum number of shares of Trustmark’s common stock available for issuance under the Stock Plan was 909,818 shares.

Trustmark’s performance awards vest over three years and are granted to Trustmark’s executive and senior management teams. Performance awards granted vest based on performance goals of return on average tangible equity and total shareholder return. Performance awards are valued utilizing a Monte Carlo simulation model to estimate fair value of the awards at the grant date. These awards are recognized using ~~quoted~~the straight-line method over the requisite service period. These awards provide for achievement shares if performance measures exceed 100%. The restricted share agreement provides for voting rights and dividend privileges.