| Shareholders' Equity |
Note 18 – Shareholders’ Equity
Regulatory Capital
Trustmark and TNB are subject to minimum risk-based capital and leverage capital requirements, as described in the section captioned “Capital Adequacy” included in Part I. Item 1. – Business of 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, 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, 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. 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, 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 and 2015 ($ in thousands):
|
|
|
Actual |
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory Capital |
|
|
Minimum |
|
|
To Be Well |
|
|
|
|
Amount |
|
|
Ratio |
|
|
Requirement |
|
|
Capitalized |
|
|
At December 31, 2016: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Equity Tier 1 Capital (to Risk Weighted Assets) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trustmark Corporation |
|
$ |
1,209,927 |
|
|
|
12.16 |
% |
|
|
5.125 |
% |
|
n/a |
|
|
Trustmark National Bank |
|
|
1,251,329 |
|
|
|
12.58 |
% |
|
|
5.125 |
% |
|
|
6.50 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Capital (to Risk Weighted Assets) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trustmark Corporation |
|
$ |
1,269,660 |
|
|
|
12.76 |
% |
|
|
6.625 |
% |
|
n/a |
|
|
Trustmark National Bank |
|
|
1,251,329 |
|
|
|
12.58 |
% |
|
|
6.625 |
% |
|
|
8.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital (to Risk Weighted Assets) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trustmark Corporation |
|
$ |
1,352,322 |
|
|
|
13.59 |
% |
|
|
8.625 |
% |
|
n/a |
|
|
Trustmark National Bank |
|
|
1,333,991 |
|
|
|
13.41 |
% |
|
|
8.625 |
% |
|
|
10.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Leverage (to Average Assets) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trustmark Corporation |
|
$ |
1,269,660 |
|
|
|
9.90 |
% |
|
|
4.00 |
% |
|
n/a |
|
|
Trustmark National Bank |
|
|
1,251,329 |
|
|
|
9.77 |
% |
|
|
4.00 |
% |
|
|
5.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2015: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Equity Tier 1 Capital (to Risk Weighted Assets) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trustmark Corporation |
|
$ |
1,161,598 |
|
|
|
12.57 |
% |
|
|
4.50 |
% |
|
n/a |
|
|
Trustmark National Bank |
|
|
1,201,113 |
|
|
|
13.00 |
% |
|
|
4.50 |
% |
|
|
6.50 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Capital (to Risk Weighted Assets) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trustmark Corporation |
|
$ |
1,220,535 |
|
|
|
13.21 |
% |
|
|
6.00 |
% |
|
n/a |
|
|
Trustmark National Bank |
|
|
1,201,113 |
|
|
|
13.00 |
% |
|
|
6.00 |
% |
|
|
8.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital (to Risk Weighted Assets) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trustmark Corporation |
|
$ |
1,300,146 |
|
|
|
14.07 |
% |
|
|
8.00 |
% |
|
n/a |
|
|
Trustmark National Bank |
|
|
1,280,724 |
|
|
|
13.86 |
% |
|
|
8.00 |
% |
|
|
10.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Leverage (to Average Assets) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trustmark Corporation |
|
$ |
1,220,535 |
|
|
|
10.03 |
% |
|
|
4.00 |
% |
|
n/a |
|
|
Trustmark National Bank |
|
|
1,201,113 |
|
|
|
9.89 |
% |
|
|
4.00 |
% |
|
|
5.00 |
% |
Dividends on Common Stock
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. TNB will have available in 2017 approximately $98.3 million plus its net income for that year to pay as dividends.
Stock Repurchase Program
On March 11, 2016, the Board of Directors of Trustmark authorized a stock repurchase program under which $100.0 million of Trustmark’s outstanding common stock may be acquired through March 31, 2019. The shares may be purchased from time to time at prevailing market prices, through open market or privately negotiated transactions, depending on market conditions. Trustmark repurchased approximately 34 thousand shares of its common stock valued at approximately $750 thousand during the year ended December 31, 2016.
Other Comprehensive Income and Accumulated Other Comprehensive Loss
The following table presents the components of accumulated other comprehensive loss and the related tax effects allocated to each component for the years ended December 31, 2016, 2015 and 2014 ($ in thousands). Reclassification adjustments related to securities available for sale are included in securities (losses) gains, net in the accompanying consolidated statements of income. The amortization of prior service cost, recognized net loss due to BancTrust termination, recognized net loss due to lump sum settlements and change in net actuarial loss on pension and other postretirement benefit plans are included in the computation of net periodic benefit cost (see Note 15 – 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 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, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
Change in net unrealized holding loss on securities transferred to held to maturity |
|
|
9,830 |
|
|
|
(3,760 |
) |
|
|
6,070 |
|
|
Total securities available for sale and transferred securities |
|
|
(5,516 |
) |
|
|
2,110 |
|
|
|
(3,406 |
) |
|
Pension and other postretirement benefit plans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in prior service costs |
|
|
250 |
|
|
|
(96 |
) |
|
|
154 |
|
|
Recognized net loss due to lump sum settlements |
|
|
3,906 |
|
|
|
(1,494 |
) |
|
|
2,412 |
|
|
Change in net actuarial loss |
|
|
476 |
|
|
|
(182 |
) |
|
|
294 |
|
|
Total pension and other postretirement benefit plans |
|
|
4,632 |
|
|
|
(1,772 |
) |
|
|
2,860 |
|
|
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 |
|
|
Total cash flow hedge derivatives |
|
|
230 |
|
|
|
(88 |
) |
|
|
142 |
|
|
Total other comprehensive loss |
|
$ |
(654 |
) |
|
$ |
250 |
|
|
$ |
(404 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Change in net unrealized holding loss on securities transferred to held to maturity |
|
|
6,345 |
|
|
|
(2,427 |
) |
|
|
3,918 |
|
|
Total securities available for sale and transferred securities |
|
|
(10,350 |
) |
|
|
3,959 |
|
|
|
(6,391 |
) |
|
Pension and other postretirement benefit plans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in prior service costs |
|
|
250 |
|
|
|
(96 |
) |
|
|
154 |
|
|
Recognized net loss due to lump sum settlements |
|
|
2,221 |
|
|
|
(850 |
) |
|
|
1,371 |
|
|
Change in net actuarial loss |
|
|
3,647 |
|
|
|
(1,395 |
) |
|
|
2,252 |
|
|
Total pension and other postretirement benefit plans |
|
|
6,118 |
|
|
|
(2,341 |
) |
|
|
3,777 |
|
|
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 |
|
|
Total cash flow hedge derivatives |
|
|
(479 |
) |
|
|
183 |
|
|
|
(296 |
) |
|
Total other comprehensive loss |
|
$ |
(4,711 |
) |
|
$ |
1,801 |
|
|
$ |
(2,910 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
) |
|
Change in net unrealized holding loss on securities transferred to held to maturity |
|
|
6,010 |
|
|
|
(2,299 |
) |
|
|
3,711 |
|
|
Total securities available for sale and transferred securities |
|
|
23,415 |
|
|
|
(8,956 |
) |
|
|
14,459 |
|
|
Pension and other postretirement benefit plans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in prior service costs |
|
|
249 |
|
|
|
(95 |
) |
|
|
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 |
) |
|
Total pension and other postretirement benefit plans |
|
|
(19,148 |
) |
|
|
7,324 |
|
|
|
(11,824 |
) |
|
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 |
) |
|
Total cash flow hedge derivatives |
|
|
(2,248 |
) |
|
|
860 |
|
|
|
(1,388 |
) |
|
Total other comprehensive income |
|
$ |
2,019 |
|
|
$ |
(772 |
) |
|
$ |
1,247 |
|
The following table presents the changes in the balances of each component of accumulated other comprehensive loss for the periods presented ($ in thousands). All amounts are presented net of tax.
|
|
|
Securities
Available for Sale
and Transferred
Securities |
|
|
Defined
Benefit
Pension Items |
|
|
Cash Flow Hedge Derivative |
|
|
Total |
|
|
Balance, January 1, 2014 |
|
$ |
(25,462 |
) |
|
$ |
(19,793 |
) |
|
$ |
1,524 |
|
|
$ |
(43,731 |
) |
|
Other comprehensive (loss) income before
reclassification |
|
|
14,644 |
|
|
|
(11,824 |
) |
|
|
(1,387 |
) |
|
|
1,433 |
|
|
Amounts reclassified from accumulated other
comprehensive loss |
|
|
(185 |
) |
|
|
— |
|
|
|
(1 |
) |
|
|
(186 |
) |
|
Net other comprehensive (loss) income |
|
|
14,459 |
|
|
|
(11,824 |
) |
|
|
(1,388 |
) |
|
|
1,247 |
|
|
Balance, December 31, 2014 |
|
|
(11,003 |
) |
|
|
(31,617 |
) |
|
|
136 |
|
|
|
(42,484 |
) |
|
Other comprehensive income (loss) before
reclassification |
|
|
(6,391 |
) |
|
|
3,777 |
|
|
|
(812 |
) |
|
|
(3,426 |
) |
|
Amounts reclassified from accumulated other
comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
516 |
|
|
|
516 |
|
|
Net other comprehensive income (loss) |
|
|
(6,391 |
) |
|
|
3,777 |
|
|
|
(296 |
) |
|
|
(2,910 |
) |
|
Balance, December 31, 2015 |
|
|
(17,394 |
) |
|
|
(27,840 |
) |
|
|
(160 |
) |
|
|
(45,394 |
) |
|
Other comprehensive (loss) income before reclassification |
|
|
(3,597 |
) |
|
|
(148 |
) |
|
|
(228 |
) |
|
|
(3,973 |
) |
|
Amounts reclassified from accumulated other
comprehensive loss |
|
|
191 |
|
|
|
3,008 |
|
|
|
370 |
|
|
|
3,569 |
|
|
Net other comprehensive (loss) income |
|
|
(3,406 |
) |
|
|
2,860 |
|
|
|
142 |
|
|
|
(404 |
) |
|
Balance, December 31, 2016 |
|
$ |
(20,800 |
) |
|
$ |
(24,980 |
) |
|
$ |
(18 |
) |
|
$ |
(45,798 |
) |
|