Trustmark Corporation Announces 2008 Financial Results and Declares $0.23 Quarterly Cash Dividend

Trustmark Corporation (NASDAQ:TRMK) announced net income available to common shareholders of $24.0 million in the fourth quarter of 2008, which represented basic earnings per common share of $0.42. Trustmark’s fourth quarter 2008 net income produced a return on average tangible common equity 15.10% and a return on average assets of 1.07%. For the year ended December 31, 2008, Trustmark’s net income available to common shareholders totaled $91.1 million, which represented basic earnings per common share of $1.59. Trustmark’s performance during 2008 resulted in a return on average tangible common equity of 14.88% and return on average assets of 1.01%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per common share. The dividend is payable March 15, 2009, to shareholders of record on March 1, 2009.

Richard G. Hickson, Chairman and CEO, stated, "We are pleased with our financial performance, particularly in light of the challenging economic environment, as earnings during the fourth quarter continue to reflect the core operating strength of Trustmark. Results for the quarter include enhanced capital strength and continued disciplined expense management. While the magnitude and duration of the economic slowdown remains unknown, Trustmark’s strong capital position, solid balance sheet and diversified financial services businesses are well positioned to face the challenges confronting the banking industry.”

Credit Quality

• Nonperforming assets increased $14.9 million, representing 2.18% of total loans and other real estate
• Net charge-offs totaled $12.7 million, or 0.73% of average loans
• Provision for loan losses totaled $16.7 million

During the fourth quarter, Trustmark’s nonaccrual loans increased $8.8 million primarily due to real estate loans in Florida and one in Mississippi which were reserved for or written-down to net realizable value. Trustmark continued to devote significant resources to managing credit risks resulting from the slowdown in residential real estate. Nonaccrual loans in Trustmark’s Tennessee and Texas markets decreased when compared to the prior quarter. Total other real estate increased $6.1 million during the quarter, principally due to foreclosures in Florida.

Collectively, Trustmark’s nonperforming assets increased $14.9 million during the quarter to total $152.6 million, or 2.18% of total loans and other real estate, as of December 31, 2008. Net charge-offs were $12.7 million in the fourth quarter of 2008 while the provision for loan losses totaled $16.7 million. Allocation of Trustmark’s $94.9 million allowance for loan losses represented 1.79% of commercial loans and 0.72% of consumer and home mortgage loans, resulting in an allowance to total loans of 1.41%.

Enhanced Capital Strength

• Internally generated tangible common equity increased $58.1 million from prior year to $658.4 million
• Issued $215 million in Senior Preferred stock to U.S. Treasury as part of the government’s Capital Purchase Program
• Total risk-based capital expanded to 14.95%

The current economic and financial environments are significantly changing the landscape of the banking industry. In an effort to position Trustmark for continued success in this challenging environment, the Corporation issued $215 million in Senior Preferred stock to the U.S. Treasury as part of the government’s voluntary initiative for financial institutions to support the economy by increasing financing to businesses and consumers. This cost-effective capital will support Trustmark’s growth and expansion opportunities, reinforce our strong capital position, and advance the U.S. Treasury’s efforts to facilitate additional lending in our markets.

Net Interest Margin

• Average earning assets increased due to expanded securities portfolio
• Optimized funding costs as higher rate deposits were replaced with lower cost short-term borrowings

Average loans remained unchanged during the fourth quarter relative to the prior period while average investment securities increased $387.5 million as a positively sloped yield curve created an opportunity to enhance future net interest income. Declining funding costs more than offset lower yields on earning assets, resulting in a 19 basis point increase in the net interest margin to 4.20%. This expansion in the net interest margin is attributable to an increased level of fixed rate securities primarily funded by shorter, floating rate liabilities as well as to the abnormal spread between LIBOR and the overnight Federal Funds rate during the quarter that has since dissipated.

Disciplined Expense Management

• Noninterest expense declined 1.63% relative to prior quarter
• Efficiency ratio improved to 55.86%

In the fourth quarter of 2008, noninterest expense totaled $71.5 million, a decrease of $1.2 million relative to the prior quarter. Ongoing human capital management initiatives and continued awareness of expense management across the organization are reflected in the Corporation’s efficiency ratio of 55.86% during the fourth quarter. Trustmark remains committed to identifying additional reengineering and efficiency opportunities to enhance shareholder value.

ADDITIONAL INFORMATION

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, January 28 at 10:00 a.m. Central Time to discuss the Corporation's financial results. Interested parties may listen to the conference call by dialing (877) 627-6580, passcode 9363244 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Wednesday, February 4, 2009 in archived format at the same web address or by calling (888) 203-1112, passcode 9363244.

Trustmark is a financial services company providing banking and financial solutions through over 150 offices and 2,600 associates in Florida, Mississippi, Tennessee and Texas.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this document 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,” "potential,” "continue,” "could,” "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 "Risk Factors” in Trustmark’s filings with the Securities and Exchange Commission 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 the extent and duration of the current volatility in the credit and financial markets, 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 non-interest 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 and monetary and other governmental actions designed to address the level and volatility of interest rates and the volatility of securities, currency and other 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 effect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of Trustmark’s borrowers, changes in Trustmark’s ability to control expenses, changes in Trustmark’s compensation and benefit plans, greater than expected costs or difficulties related to the integration of new products and lines of business, natural disasters, acts of war or terrorism and other risks described in Trustmark’s filings with the Securities and Exchange Commission.

Although Management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Trustmark undertakes 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 AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2008
($ in thousands)
(unaudited)
															Linked Quarter							Year over Year
QUARTERLY AVERAGE BALANCES				12/31/2008				9/30/2008				12/31/2007			$ Change				% Change			$ Change				% Change
Securities AFS-taxable			$	1,226,843			$	822,995			$	435,438			$	403,848			49.1	%		$	791,405			n/m
Securities AFS-nontaxable				40,708				39,886				46,898				822			2.1	%			(6,190	)		-13.2	%
Securities HTM-taxable				169,958				184,001				192,878				(14,043	)		-7.6	%			(22,920	)		-11.9	%
Securities HTM-nontaxable				71,843				74,937				82,963				(3,094	)		-4.1	%			(11,120	)		-13.4	%
Total securities				1,509,352				1,121,819				758,177				387,533			34.5	%			751,175			99.1	%
Loans (including loans held for sale)				6,908,296				6,927,270				7,149,243				(18,974	)		-0.3	%			(240,947	)		-3.4	%
Fed funds sold and rev repos				22,871				17,401				25,960				5,470			31.4	%			(3,089	)		-11.9	%
Other earning assets				49,197				37,323				41,368				11,874			31.8	%			7,829			18.9	%
Total earning assets				8,489,716				8,103,813				7,974,748				385,903			4.8	%			514,968			6.5	%
Allowance for loan losses				(91,802	)			(88,643	)			(73,659	)			(3,159	)		3.6	%			(18,143	)		24.6	%
Cash and due from banks				223,774				246,515				257,319				(22,741	)		-9.2	%			(33,545	)		-13.0	%
Other assets				801,890				810,449				765,939				(8,559	)		-1.1	%			35,951			4.7	%
Total assets			$	9,423,578			$	9,072,134			$	8,924,347			$	351,444			3.9	%		$	499,231			5.6	%
Interest-bearing demand deposits			$	1,149,071			$	1,222,087			$	1,160,823			$	(73,016	)		-6.0	%		$	(11,752	)		-1.0	%
Savings deposits				1,709,670				1,774,188				1,608,125				(64,518	)		-3.6	%			101,545			6.3	%
Time deposits less than $100,000				1,478,753				1,532,630				1,570,687				(53,877	)		-3.5	%			(91,934	)		-5.9	%
Time deposits of $100,000 or more				1,045,377				1,108,677				1,058,165				(63,300	)		-5.7	%			(12,788	)		-1.2	%
Total interest-bearing deposits				5,382,871				5,637,582				5,397,800				(254,711	)		-4.5	%			(14,929	)		-0.3	%
Fed funds purchased and repos				809,822				659,312				517,424				150,510			22.8	%			292,398			56.5	%
Short-term borrowings				494,928				156,880				413,676				338,048			n/m				81,252			19.6	%
Subordinated notes				49,736				49,728				49,703				8			0.0	%			33			0.1	%
Junior subordinated debt securities				70,104				70,104				70,104				-			0.0	%			-			0.0	%
Total interest-bearing liabilities				6,807,461				6,573,606				6,448,707				233,855			3.6	%			358,754			5.6	%
Noninterest-bearing deposits				1,433,361				1,415,402				1,419,364				17,959			1.3	%			13,997			1.0	%
Other liabilities				126,704				136,229				137,197				(9,525	)		-7.0	%			(10,493	)		-7.6	%
Total liabilities				8,367,526				8,125,237				8,005,268				242,289			3.0	%			362,258			4.5	%
Preferred equity				91,385				-				-				91,385			n/m				91,385			n/m
Common equity				964,667				946,897				919,079				17,770			1.9	%			45,588			5.0	%
Total shareholders' equity				1,056,052				946,897				919,079				109,155			11.5	%			136,973			14.9	%
Total liabilities and equity			$	9,423,578			$	9,072,134			$	8,924,347			$	351,444			3.9	%		$	499,231			5.6	%
															Linked Quarter							Year over Year
PERIOD END BALANCES				12/31/2008				9/30/2008				12/31/2007			$ Change				% Change			$ Change				% Change
Cash and due from banks			$	257,930			$	235,016			$	292,983			$	22,914			9.7	%		$	(35,053	)		-12.0	%
Fed funds sold and rev repos				23,401				14,782				17,997				8,619			58.3	%			5,404			30.0	%
Securities available for sale				1,542,841				907,629				442,345				635,212			70.0	%			1,100,496			n/m
Securities held to maturity				259,629				256,323				275,096				3,306			1.3	%			(15,467	)		-5.6	%
Loans held for sale				238,265				154,162				147,508				84,103			54.6	%			90,757			61.5	%
Loans				6,722,403				6,740,730				7,040,792				(18,327	)		-0.3	%			(318,389	)		-4.5	%
Allowance for loan losses				(94,922	)			(90,888	)			(79,851	)			(4,034	)		4.4	%			(15,071	)		18.9	%
Net Loans				6,627,481				6,649,842				6,960,941				(22,361	)		-0.3	%			(333,460	)		-4.8	%
Premises and equipment, net				156,811				156,298				151,680				513			0.3	%			5,131			3.4	%
Mortgage servicing rights				42,882				78,550				67,192				(35,668	)		-45.4	%			(24,310	)		-36.2	%
Goodwill				291,104				291,145				291,177				(41	)		0.0	%			(73	)		0.0	%
Identifiable intangible assets				23,821				24,887				28,102				(1,066	)		-4.3	%			(4,281	)		-15.2	%
Other assets				326,744				317,639				291,781				9,105			2.9	%			34,963			12.0	%
Total assets			$	9,790,909			$	9,086,273			$	8,966,802			$	704,636			7.8	%		$	824,107			9.2	%
Deposits:
Noninterest-bearing			$	1,496,166			$	1,526,374			$	1,477,171			$	(30,208	)		-2.0	%		$	18,995			1.3	%
Interest-bearing				5,327,704				5,411,304				5,392,101				(83,600	)		-1.5	%			(64,397	)		-1.2	%
Total deposits				6,823,870				6,937,678				6,869,272				(113,808	)		-1.6	%			(45,402	)		-0.7	%
Fed funds purchased and repos				811,129				592,818				460,763				218,311			36.8	%			350,366			76.0	%
Short-term borrowings				730,958				369,037				474,354				361,921			98.1	%			256,604			54.1	%
Subordinated notes				49,741				49,733				49,709				8			0.0	%			32			0.1	%
Junior subordinated debt securities				70,104				70,104				70,104				-			0.0	%			-			0.0	%
Other liabilities				126,641				117,905				122,964				8,736			7.4	%			3,677			3.0	%
Total liabilities				8,612,443				8,137,275				8,047,166				475,168			5.8	%			565,277			7.0	%
Preferred Stock				205,126				-				-				205,126			n/m				205,126			n/m
Common stock				11,944				11,944				11,933				-			0.0	%			11			0.1	%
Capital surplus				139,471				128,617				124,161				10,854			8.4	%			15,310			12.3	%
Retained earnings				836,642				824,768				797,993				11,874			1.4	%			38,649			4.8	%
Accum other comprehensive loss, net of tax				(14,717	)			(16,331	)			(14,451	)			1,614			-9.9	%			(266	)		1.8	%
Total shareholders' equity				1,178,466				948,998				919,636				229,468			24.2	%			258,830			28.1	%
Total liabilities and equity			$	9,790,909			$	9,086,273			$	8,966,802			$	704,636			7.8	%		$	824,107			9.2	%
n/m - percentage changes greater than +/- 100% are considered not meaningful
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2008
($ in thousands except per share data)
(unaudited)
			Quarter Ended												Linked Quarter							Year over Year
INCOME STATEMENTS				12/31/2008				9/30/2008				12/31/2007			$ Change				% Change			$ Change				% Change
Interest and fees on loans-FTE			$	101,694			$	105,706			$	133,088			$	(4,012	)		-3.8	%		$	(31,394	)		-23.6	%
Interest on securities-taxable				17,108				12,117				6,505				4,991			41.2	%			10,603			n/m
Interest on securities-tax exempt-FTE				1,891				1,946				2,352				(55	)		-2.8	%			(461	)		-19.6	%
Interest on fed funds sold and rev repos				57				98				317				(41	)		-41.8	%			(260	)		-82.0	%
Other interest income				368				407				501				(39	)		-9.6	%			(133	)		-26.5	%
Total interest income-FTE				121,118				120,274				142,763				844			0.7	%			(21,645	)		-15.2	%
Interest on deposits				26,818				32,860				47,911				(6,042	)		-18.4	%			(21,093	)		-44.0	%
Interest on fed funds pch and repos				1,178				3,123				5,499				(1,945	)		-62.3	%			(4,321	)		-78.6	%
Other interest expense				3,399				2,653				7,055				746			28.1	%			(3,656	)		-51.8	%
Total interest expense				31,395				38,636				60,465				(7,241	)		-18.7	%			(29,070	)		-48.1	%
Net interest income-FTE				89,723				81,638				82,298				8,085			9.9	%			7,425			9.0	%
Provision for loan losses				16,684				14,473				17,001				2,211			15.3	%			(317	)		-1.9	%
Net interest income after provision-FTE				73,039				67,165				65,297				5,874			8.7	%			7,742			11.9	%
Service charges on deposit accounts				14,044				13,886				13,908				158			1.1	%			136			1.0	%
Insurance commissions				6,783				9,007				7,630				(2,224	)		-24.7	%			(847	)		-11.1	%
Wealth management				6,583				6,788				6,969				(205	)		-3.0	%			(386	)		-5.5	%
General banking - other				5,576				5,813				6,177				(237	)		-4.1	%			(601	)		-9.7	%
Mortgage banking, net				4,393				4,323				4,967				70			1.6	%			(574	)		-11.6	%
Other, net				935				2,131				2,604				(1,196	)		-56.1	%			(1,669	)		-64.1	%
Nonint inc-excl sec gains, net				38,314				41,948				42,255				(3,634	)		-8.7	%			(3,941	)		-9.3	%
Security gains, net				12				2				2				10			n/m				10			n/m
Total noninterest income				38,326				41,950				42,257				(3,624	)		-8.6	%			(3,931	)		-9.3	%
Salaries and employee benefits				41,923				42,859				42,446				(936	)		-2.2	%			(523	)		-1.2	%
Services and fees				9,638				9,785				9,375				(147	)		-1.5	%			263			2.8	%
Net occupancy-premises				4,704				5,153				4,716				(449	)		-8.7	%			(12	)		-0.3	%
Equipment expense				4,183				4,231				4,165				(48	)		-1.1	%			18			0.4	%
Other expense				11,097				10,706				9,020				391			3.7	%			2,077			23.0	%
Total noninterest expense				71,545				72,734				69,722				(1,189	)		-1.6	%			1,823			2.6	%
Income before income taxes and tax eq adj				39,820				36,381				37,832				3,439			9.5	%			1,988			5.3	%
Tax equivalent adjustment				2,326				2,242				2,375				84			3.8	%			(49	)		-2.1	%
Income before income taxes				37,494				34,139				35,457				3,355			9.8	%			2,037			5.7	%
Income taxes				12,162				10,785				11,628				1,377			12.8	%			534			4.6	%
Net income				25,332				23,354				23,829				1,978			8.5	%			1,503			6.3	%
Preferred stock dividends				1,165				-				-				1,165			n/m				1,165			n/m
Accretion of preferred stock discount				188				-				-				188			n/m				188			n/m
Net income available to common shareholders			$	23,979			$	23,354			$	23,829			$	625			2.7	%		$	150			0.6	%
Per common share data
Earnings per share - basic			$	0.42			$	0.41			$	0.42			$	0.01			2.4	%		$	-			0.0	%
Earnings per share - diluted			$	0.42			$	0.41			$	0.42			$	0.01			2.4	%		$	-			0.0	%
Dividends per share			$	0.23			$	0.23			$	0.23			$	-			0.0	%		$	-			0.0	%
Weighted average common shares outstanding
Basic				57,324,710				57,298,710				57,272,408
Diluted				57,375,590				57,337,342				57,341,472
Period end common shares outstanding				57,324,737				57,324,627				57,272,408
OTHER FINANCIAL DATA
Return on common equity				9.89	%			9.81	%			10.29	%
Return on average tangible common equity				15.10	%			15.16	%			16.28	%
Return on equity				9.54	%			9.81	%			10.29	%
Return on assets				1.07	%			1.02	%			1.06	%
Interest margin - Yield - FTE				5.68	%			5.90	%			6.94	%
Interest margin - Cost				1.47	%			1.90	%			3.01	%
Net interest margin - FTE				4.20	%			4.01	%			3.93	%
Efficiency ratio				55.86	%			58.85	%			56.80	%
Full-time equivalent employees				2,607				2,623				2,612
COMMON STOCK PERFORMANCE
Market value-Close			$	21.59			$	20.74			$	25.36
Common book value			$	16.98			$	16.55			$	16.06
Tangible common book value			$	11.49			$	11.04			$	10.48
n/m - percentage changes greater than +/- 100% are considered not meaningful
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2008
($ in thousands)
(unaudited)
			Quarter Ended												Linked Quarter							Year over Year
NONPERFORMING ASSETS				12/31/2008				9/30/2008				12/31/2007			$ Change				% Change			$ Change				% Change
Nonaccrual loans
Florida			$	75,092			$	71,125			$	43,787			$	3,967			5.6	%		$	31,305			71.5	%
Mississippi (1)				18,703				12,727				13,723				5,976			47.0	%			4,980			36.3	%
Tennessee (2)				3,638				4,012				4,431				(374	)		-9.3	%			(793	)		-17.9	%
Texas				16,605				17,418				3,232				(813	)		-4.7	%			13,373			n/m
Total nonaccrual loans				114,038				105,282				65,173				8,756			8.3	%			48,865			75.0	%
Other real estate
Florida				21,265				18,265				995				3,000			16.4	%			20,270			n/m
Mississippi (1)				6,113				6,062				1,123				51			0.8	%			4,990			n/m
Tennessee (2)				8,862				7,924				6,084				938			11.8	%			2,778			45.7	%
Texas				2,326				214				146				2,112			n/m				2,180			n/m
Total other real estate				38,566				32,465				8,348				6,101			18.8	%			30,218			n/m
Total nonperforming assets			$	152,604			$	137,747			$	73,521			$	14,857			10.8	%		$	79,083			n/m
LOANS PAST DUE OVER 90 DAYS
Loans			$	5,139			$	3,622			$	4,853			$	1,517			41.9	%		$	286			5.9	%
Loans HFS-Guaranteed GNMA serviced loans				18,095				20,332				11,847				(2,237	)		-11.0	%			6,248			52.7	%
Total loans past due over 90 days			$	23,234			$	23,954			$	16,700			$	(720	)		-3.0	%		$	6,534			39.1	%
			Quarter Ended												Linked Quarter							Year over Year
ALLOWANCE FOR LOAN LOSSES				12/31/2008				9/30/2008				12/31/2007			$ Change				% Change			$ Change				% Change
Beginning Balance			$	90,888			$	86,576			$	72,368			$	4,312			5.0	%		$	18,520			25.6	%
Provision for loan losses				16,684				14,473				17,001				2,211			15.3	%			(317	)		-1.9	%
Charge-offs				(15,039	)			(12,732	)			(11,904	)			(2,307	)		18.1	%			(3,135	)		26.3	%
Recoveries				2,389				2,571				2,386				(182	)		-7.1	%			3			0.1	%
Net charge-offs				(12,650	)			(10,161	)			(9,518	)			(2,489	)		24.5	%			(3,132	)		32.9	%
Ending Balance			$	94,922			$	90,888			$	79,851			$	4,034			4.4	%		$	15,071			18.9	%
PROVISION FOR LOAN LOSSES																									`
Florida			$	6,491			$	3,167			$	12,523			$	3,324			n/m			$	(6,032	)		-48.2	%
Mississippi (1)				5,756				8,476				2,724				(2,720	)		-32.1	%			3,032			n/m
Tennessee (2)				1,461				27				1,056				1,434			n/m				405			38.4	%
Texas				2,976				2,803				698				173			6.2	%			2,278			n/m
Total provision for loan losses			$	16,684			$	14,473			$	17,001			$	2,211			15.3	%		$	(317	)		-1.9	%
NET CHARGE-OFFS
Florida			$	7,160			$	3,779			$	3,665			$	3,381			89.5	%		$	3,495			95.4	%
Mississippi (1)				4,387				4,515				3,999				(128	)		-2.8	%			388			9.7	%
Tennessee (2)				816				1,291				1,284				(475	)		-36.8	%			(468	)		-36.4	%
Texas				287				576				570				(289	)		-50.2	%			(283	)		-49.6	%
Total net charge-offs			$	12,650			$	10,161			$	9,518			$	2,489			24.5	%		$	3,132			32.9	%
CREDIT QUALITY RATIOS
Net charge offs/average loans				0.73	%			0.58	%			0.53	%
Provision for loan losses/average loans				0.96	%			0.83	%			0.94	%
Nonperforming loans/total loans (incl LHFS)				1.64	%			1.53	%			0.91	%
Nonperforming assets/total loans (incl LHFS)				2.19	%			2.00	%			1.02	%
Nonperforming assets/total loans (incl LHFS) +ORE				2.18	%			1.99	%			1.02	%
ALL/total loans (excl LHFS)				1.41	%			1.35	%			1.13	%
ALL-commercial/total commercial loans				1.79	%			1.76	%			1.48	%
ALL-consumer/total consumer and home mortgage loans				0.72	%			0.64	%			0.59	%
ALL/nonperforming loans				83.24	%			86.33	%			122.52	%
CAPITAL RATIOS
Total equity/total assets				12.04	%			10.44	%			10.26	%
Common equity/total assets				9.94	%			10.44	%			10.26	%
Tangible equity/tangible assets				9.11	%			7.22	%			6.94	%
Tangible common equity/tangible assets				6.95	%			7.22	%			6.94	%
Tier 1 leverage ratio				10.42	%			8.11	%			7.86	%
Tier 1 risk-based capital ratio				13.01	%			9.86	%			9.17	%
Total risk-based capital ratio				14.95	%			11.80	%			10.93	%
(1) - Mississippi includes Central and Southern Mississippi Regions
(2) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
n/m - percentage changes greater than +/- 100% are considered not meaningful

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2008
($ in thousands)
(unaudited)
			Quarter Ended																				Year Ended
QUARTERLY AVERAGE BALANCES				12/31/2008				9/30/2008				6/30/2008				3/31/2008				12/31/2007				12/31/2008				12/31/2007
Securities AFS-taxable			$	1,226,843			$	822,995			$	769,790			$	353,079			$	435,438			$	794,443			$	573,940
Securities AFS-nontaxable				40,708				39,886				35,869				36,241				46,898				38,188				50,763
Securities HTM-taxable				169,958				184,001				186,047				189,604				192,878				182,373				195,468
Securities HTM-nontaxable				71,843				74,937				76,940				81,559				82,963				76,304				86,030
Total securities				1,509,352				1,121,819				1,068,646				660,483				758,177				1,091,308				906,201
Loans (including loans held for sale)				6,908,296				6,927,270				7,080,495				7,177,233				7,149,243				7,022,747				6,893,402
Fed funds sold and rev repos				22,871				17,401				30,567				22,921				25,960				23,422				40,850
Other earning assets				49,197				37,323				41,481				36,958				41,368				41,251				37,133
Total earning assets				8,489,716				8,103,813				8,221,189				7,897,595				7,974,748				8,178,728				7,877,586
Allowance for loan losses				(91,802	)			(88,643	)			(82,962	)			(80,998	)			(73,659	)			(86,124	)			(72,365	)
Cash and due from banks				223,774				246,515				253,545				259,392				257,319				245,748				287,113
Other assets				801,890				810,449				782,986				775,722				765,939				792,835				753,503
Total assets			$	9,423,578			$	9,072,134			$	9,174,758			$	8,851,711			$	8,924,347			$	9,131,187			$	8,845,837
Interest-bearing demand deposits			$	1,149,071			$	1,222,087			$	1,258,281			$	1,233,892			$	1,160,823			$	1,215,668			$	1,186,683
Savings deposits				1,709,670				1,774,188				1,867,438				1,755,048				1,608,125				1,776,397				1,708,378
Time deposits less than $100,000				1,478,753				1,532,630				1,568,802				1,577,753				1,570,687				1,539,299				1,593,945
Time deposits of $100,000 or more				1,045,377				1,108,677				1,051,716				1,030,527				1,058,165				1,059,173				1,031,382
Total interest-bearing deposits				5,382,871				5,637,582				5,746,237				5,597,220				5,397,800				5,590,537				5,520,388
Fed funds purchased and repos				809,822				659,312				618,227				417,338				517,424				626,767				447,438
Short-term borrowings				494,928				156,880				202,778				252,234				413,676				276,974				269,102
Subordinated notes				49,736				49,728				49,720				49,712				49,703				49,724				49,692
Junior subordinated debt securities				70,104				70,104				70,104				70,104				70,104				70,104				70,104
Total interest-bearing liabilities				6,807,461				6,573,606				6,687,066				6,386,608				6,448,707				6,614,106				6,356,724
Noninterest-bearing deposits				1,433,361				1,415,402				1,409,371				1,390,843				1,419,364				1,412,312				1,455,494
Other liabilities				126,704				136,229				134,237				141,741				137,197				134,708				130,244
Total liabilities				8,367,526				8,125,237				8,230,674				7,919,192				8,005,268				8,161,126				7,942,462
Preferred equity				91,385				-				-				-				-				22,971				-
Common equity				964,667				946,897				944,084				932,519				919,079				947,090				903,375
Total shareholders' equity				1,056,052				946,897				944,084				932,519				919,079				970,061				903,375
Total liabilities and equity			$	9,423,578			$	9,072,134			$	9,174,758			$	8,851,711			$	8,924,347			$	9,131,187			$	8,845,837
PERIOD END BALANCES				12/31/2008				9/30/2008				6/30/2008				3/31/2008				12/31/2007
Cash and due from banks			$	257,930			$	235,016			$	296,628			$	290,200			$	292,983
Fed funds sold and rev repos				23,401				14,782				23,901				16,022				17,997
Securities available for sale				1,542,841				907,629				908,949				585,746				442,345
Securities held to maturity				259,629				256,323				260,741				267,315				275,096
Loans held for sale				238,265				154,162				184,858				198,245				147,508
Loans				6,722,403				6,740,730				6,859,375				7,012,034				7,040,792
Allowance for loan losses				(94,922	)			(90,888	)			(86,576	)			(81,818	)			(79,851	)
Net Loans				6,627,481				6,649,842				6,772,799				6,930,216				6,960,941
Premises and equipment, net				156,811				156,298				154,026				151,469				151,680
Mortgage servicing rights				42,882				78,550				76,209				59,047				67,192
Goodwill				291,104				291,145				291,145				291,210				291,177
Identifiable intangible assets				23,821				24,887				25,958				27,030				28,102
Other assets				326,744				317,639				319,835				280,653				291,781
Total assets			$	9,790,909			$	9,086,273			$	9,315,049			$	9,097,153			$	8,966,802
Deposits:
Noninterest-bearing			$	1,496,166			$	1,526,374			$	1,443,553			$	1,475,976			$	1,477,171
Interest-bearing				5,327,704				5,411,304				5,680,130				5,868,359				5,392,101
Total deposits				6,823,870				6,937,678				7,123,683				7,344,335				6,869,272
Fed funds purchased and repos				811,129				592,818				748,137				433,431				460,763
Short-term borrowings				730,958				369,037				260,812				93,453				474,354
Subordinated notes				49,741				49,733				49,725				49,717				49,709
Junior subordinated debt securities				70,104				70,104				70,104				70,104				70,104
Other liabilities				126,641				117,905				126,703				168,772				122,964
Total liabilities				8,612,443				8,137,275				8,379,164				8,159,812				8,047,166
Preferred Stock				205,126				-				-				-				-
Common stock				11,944				11,944				11,938				11,938				11,933
Capital surplus				139,471				128,617				126,881				126,003				124,161
Retained earnings				836,642				824,768				814,674				810,369				797,993
Accum other comprehensive loss, net of tax				(14,717	)			(16,331	)			(17,608	)			(10,969	)			(14,451	)
Total shareholders' equity				1,178,466				948,998				935,885				937,341				919,636
Total liabilities and equity			$	9,790,909			$	9,086,273			$	9,315,049			$	9,097,153			$	8,966,802
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2008
($ in thousands except per share data)
(unaudited)
			Quarter Ended																				Year Ended
INCOME STATEMENTS				12/31/2008				9/30/2008				6/30/2008				3/31/2008				12/31/2007				12/31/2008				12/31/2007
Interest and fees on loans-FTE			$	101,694			$	105,706			$	109,023			$	119,641			$	133,088			$	436,064			$	506,671
Interest on securities-taxable				17,108				12,117				11,079				5,857				6,505				46,161				31,784
Interest on securities-tax exempt-FTE				1,891				1,946				1,943				2,086				2,352				7,866				9,943
Interest on fed funds sold and rev repos				57				98				168				179				317				502				2,147
Other interest income				368				407				475				572				501				1,822				2,116
Total interest income-FTE				121,118				120,274				122,688				128,335				142,763				492,415				552,661
Interest on deposits				26,818				32,860				36,881				43,363				47,911				139,922				200,375
Interest on fed funds pch and repos				1,178				3,123				3,019				3,073				5,499				10,393				20,224
Other interest expense				3,399				2,653				2,923				4,829				7,055				13,804				21,761
Total interest expense				31,395				38,636				42,823				51,265				60,465				164,119				242,360
Net interest income-FTE				89,723				81,638				79,865				77,070				82,298				328,296				310,301
Provision for loan losses				16,684				14,473				31,012				14,243				17,001				76,412				23,784
Net interest income after provision-FTE				73,039				67,165				48,853				62,827				65,297				251,884				286,517
Service charges on deposit accounts				14,044				13,886				13,223				12,564				13,908				53,717				54,179
Insurance commissions				6,783				9,007				8,394				8,256				7,630				32,440				35,286
Wealth management				6,583				6,788				7,031				7,198				6,969				27,600				25,755
General banking - other				5,576				5,813				6,053				5,788				6,177				23,230				24,876
Mortgage banking, net				4,393				4,323				6,708				11,056				4,967				26,480				12,024
Other, net				935				2,131				6,999				3,221				2,604				13,286				10,215
Nonint inc-excl sec gains, net				38,314				41,948				48,408				48,083				42,255				176,753				162,335
Security gains, net				12				2				58				433				2				505				112
Total noninterest income				38,326				41,950				48,466				48,516				42,257				177,258				162,447
Salaries and employee benefits				41,923				42,859				42,771				43,584				42,446				171,137				170,722
Services and fees				9,638				9,785				9,526				9,430				9,375				38,379				37,259
Net occupancy-premises				4,704				5,153				4,850				4,801				4,716				19,508				18,517
Equipment expense				4,183				4,231				4,144				4,074				4,165				16,632				16,039
Other expense				11,097				10,706				8,323				7,937				9,020				38,063				33,912
Total noninterest expense				71,545				72,734				69,614				69,826				69,722				283,719				276,449
Income before income taxes and tax eq adj				39,820				36,381				27,705				41,517				37,832				145,423				172,515
Tax equivalent adjustment				2,326				2,242				2,247				2,321				2,375				9,136				9,518
Income before income taxes				37,494				34,139				25,458				39,196				35,457				136,287				162,997
Income taxes				12,162				10,785				7,906				13,017				11,628				43,870				54,402
Net income				25,332				23,354				17,552				26,179				23,829				92,417				108,595
Preferred stock dividends				1,165				-				-				-				-				1,165				-
Accretion of preferred stock discount				188				-				-				-				-				188				-
Net income available to common shareholders			$	23,979			$	23,354			$	17,552			$	26,179			$	23,829			$	91,064			$	108,595
Per common share data
Earnings per share - basic			$	0.42			$	0.41			$	0.31			$	0.46			$	0.42			$	1.59			$	1.88
Earnings per share - diluted			$	0.42			$	0.41			$	0.31			$	0.46			$	0.42			$	1.59			$	1.88
Dividends per share			$	0.23			$	0.23			$	0.23			$	0.23			$	0.23			$	0.92			$	0.89
Weighted average common shares outstanding
Basic				57,324,710				57,298,710				57,296,449				57,283,240				57,272,408				57,300,837				57,709,217
Diluted				57,375,590				57,337,342				57,335,393				57,312,428				57,341,472				57,336,909				57,786,223
Period end common shares outstanding				57,324,737				57,324,627				57,296,449				57,296,449				57,272,408				57,324,737				57,272,408
OTHER FINANCIAL DATA
Return on common equity				9.89	%			9.81	%			7.48	%			11.29	%			10.29	%			9.62	%			12.02	%
Return on average tangible common equity				15.10	%			15.16	%			11.70	%			17.59	%			16.28	%			14.88	%			19.17	%
Return on equity				9.54	%			9.81	%			7.48	%			11.29	%			10.29	%			9.53	%			12.02	%
Return on assets				1.07	%			1.02	%			0.77	%			1.19	%			1.06	%			1.01	%			1.23	%
Interest margin - Yield - FTE				5.68	%			5.90	%			6.00	%			6.54	%			6.94	%			6.02	%			6.98	%
Interest margin - Cost				1.47	%			1.90	%			2.10	%			2.61	%			3.01	%			2.01	%			3.08	%
Net interest margin - FTE				4.20	%			4.01	%			3.91	%			3.92	%			3.93	%			4.01	%			3.91	%
Efficiency ratio				55.86	%			58.85	%			56.64	%			56.64	%			56.80	%			56.99	%			58.80	%
Full-time equivalent employees				2,607				2,623				2,637				2,627				2,612
COMMON STOCK PERFORMANCE
Market value-Close			$	21.59			$	20.74			$	17.65			$	22.28			$	25.36
Common book value			$	16.98			$	16.55			$	16.33			$	16.36			$	16.06
Tangible common book value			$	11.49			$	11.04			$	10.80			$	10.81			$	10.48
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
December 31, 2008
($ in thousands except per share data)
(unaudited)
			Quarter Ended
NONPERFORMING ASSETS				12/31/2008				9/30/2008				6/30/2008				3/31/2008				12/31/2007
Nonaccrual loans
Florida			$	75,092			$	71,125			$	70,484			$	49,654			$	43,787
Mississippi (1)				18,703				12,727				12,572				14,583				13,723
Tennessee (2)				3,638				4,012				5,216				6,550				4,431
Texas				16,605				17,418				7,039				7,207				3,232
Total nonaccrual loans				114,038				105,282				95,311				77,994				65,173
Other real estate
Florida				21,265				18,265				10,398				1,067				995
Mississippi (1)				6,113				6,062				5,258				1,741				1,123
Tennessee (2)				8,862				7,924				6,778				6,634				6,084
Texas				2,326				214				438				146				146
Total other real estate				38,566				32,465				22,872				9,588				8,348
Total nonperforming assets			$	152,604			$	137,747			$	118,183			$	87,582			$	73,521
LOANS PAST DUE OVER 90 DAYS
Loans			$	5,139			$	3,622			$	3,056			$	4,986			$	4,853
Loans HFS-Guaranteed GNMA serviced loans				18,095				20,332				15,809				15,868				11,847
Total loans past due over 90 days			$	23,234			$	23,954			$	18,865			$	20,854			$	16,700
			Quarter Ended																				Year Ended
ALLOWANCE FOR LOAN LOSSES				12/31/2008				9/30/2008				6/30/2008				3/31/2008				12/31/2007				12/31/2008				12/31/2007
Beginning Balance			$	90,888			$	86,576			$	81,818			$	79,851			$	72,368			$	79,851			$	72,098
Provision for loan losses				16,684				14,473				31,012				14,243				17,001				76,412				23,784
Charge-offs				(15,039	)			(12,732	)			(28,820	)			(15,176	)			(11,904	)			(71,767	)			(26,790	)
Recoveries				2,389				2,571				2,566				2,900				2,386				10,426				10,759
Net charge-offs				(12,650	)			(10,161	)			(26,254	)			(12,276	)			(9,518	)			(61,341	)			(16,031	)
Ending Balance			$	94,922			$	90,888			$	86,576			$	81,818			$	79,851			$	94,922			$	79,851
PROVISION FOR LOAN LOSSES
Florida			$	6,491			$	3,167			$	24,145			$	9,557			$	12,523			$	43,360			$	16,463
Mississippi (1)				5,756				8,476				3,667				2,807				2,724				20,706				3,488
Tennessee (2)				1,461				27				2,440				779				1,056				4,707				1,837
Texas				2,976				2,803				760				1,100				698				7,639				1,996
Total provision for loan losses			$	16,684			$	14,473			$	31,012			$	14,243			$	17,001			$	76,412			$	23,784
NET CHARGE-OFFS
Florida			$	7,160			$	3,779			$	22,064			$	9,688			$	3,665			$	42,691			$	4,545
Mississippi (1)				4,387				4,515				4,214				1,574				3,999				14,690				8,737
Tennessee (2)				816				1,291				48				186				1,284				2,341				1,500
Texas				287				576				(72	)			828				570				1,619				1,249
Total net charge-offs			$	12,650			$	10,161			$	26,254			$	12,276			$	9,518			$	61,341			$	16,031
CREDIT QUALITY RATIOS
Net charge offs/average loans				0.73	%			0.58	%			1.49	%			0.69	%			0.53	%			0.87	%			0.23	%
Provision for loan losses/average loans				0.96	%			0.83	%			1.76	%			0.80	%			0.94	%			1.09	%			0.35	%
Nonperforming loans/total loans (incl LHFS)				1.64	%			1.53	%			1.35	%			1.08	%			0.91	%
Nonperforming assets/total loans (incl LHFS)				2.19	%			2.00	%			1.68	%			1.21	%			1.02	%
Nonperforming assets/total loans (incl LHFS) +ORE				2.18	%			1.99	%			1.67	%			1.21	%			1.02	%
ALL/total loans (excl LHFS)				1.41	%			1.35	%			1.26	%			1.17	%			1.13	%
ALL-commercial/total commercial loans				1.79	%			1.76	%			1.67	%			1.52	%			1.48	%
ALL-consumer/total consumer and home mortgage loans				0.72	%			0.64	%			0.60	%			0.60	%			0.59	%
ALL/nonperforming loans				83.24	%			86.33	%			90.84	%			104.90	%			122.52	%
CAPITAL RATIOS
Total equity/total assets				12.04	%			10.44	%			10.05	%			10.30	%			10.26	%
Common equity/total assets				9.94	%			10.44	%			10.05	%			10.30	%			10.26	%
Tangible equity/tangible assets				9.11	%			7.22	%			6.88	%			7.05	%			6.94	%
Tangible common equity/tangible assets				6.95	%			7.22	%			6.88	%			7.05	%			6.94	%
Tier 1 leverage ratio				10.42	%			8.11	%			7.87	%			8.12	%			7.86	%
Tier 1 risk-based capital ratio				13.01	%			9.86	%			9.58	%			9.42	%			9.17	%
Total risk-based capital ratio				14.95	%			11.80	%			11.46	%			11.21	%			10.93	%
(1) - Mississippi includes Central and Southern Mississippi Regions
(2) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions

TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS       December 31, 2008 ($ in thousands except per share data) (unaudited)
Note 1 – Issuance of Preferred Stock   On November 21, 2008, Trustmark issued a total of 215,000 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A, (no par) liquidation preference $1,000 per share, (Senior Preferred) to the United States Department of the Treasury (Treasury) in a private placement transaction as part of the Troubled Assets Relief Program Capital Purchase Program, a voluntary initiative for U.S. financial institutions designed to support the economy by increasing financing to businesses and consumers. In the same transaction, Trustmark also issued to the Treasury a warrant to purchase 1,647,931 shares of Trustmark’s common stock at an exercise price of $19.57 per share.
The Senior Preferred pays cumulative dividends at the rate of 5.00% of the liquidation preference per year, payable on February 15, May 15, August 15 and November 15 of each year, in arrears, until, but excluding, February 15, 2014, and from that date thereafter at the rate of 9.00% of the liquidation preference per year. Trustmark may not redeem the Senior Preferred prior to February 15, 2012, unless the Senior Preferred is redeemed with the proceeds of an offering of perpetual preferred stock or common stock that (1) qualifies as Tier 1 Capital for bank regulatory purposes and (2) results in gross proceeds to Trustmark of not less than $53.8 million. Any redemption of the Senior Preferred will be at $1,000 per share plus any accrued and unpaid dividends and shall be subject to the approval of Trustmark’s primary federal banking regulator, the Board of Governors of the Federal Reserve System.
Prior to November 21, 2011, unless Trustmark has redeemed the Senior Preferred or the Treasury has transferred all of its shares of the Senior Preferred to a third party, the consent of Treasury will be required for Trustmark to declare or pay any dividend or make any distribution on its common stock (other than regular quarterly cash dividends of not more than $0.23 per share of common stock) or (ii) redeem, purchase or acquire any shares of its common stock or other equity or capital securities, other than in connection with benefit plans consistent with past practice and certain other circumstances specified in the purchase agreement for the Senior Preferred.
The Senior Preferred stock was recorded at issue for $204.9 million, with the remainder of the $10.1 million in cash proceeds recorded as warrants in Capital Surplus. This allocation was derived by a third-party evaluation of the fair value of the Senior Preferred and warrant at the time of issuance. The cash proceeds were then apportioned to the Senior Preferred and the warrants using their relative fair values. The basis of the Senior Preferred will be accreted to the $215 million redemption value on a constant yield method over five years, and the accretion will be represented as an additional carrying cost of the equity. The warrant is not subject to mark-to-market accounting, and will be carried in Capital Surplus at its original basis until exercise or expiration. The warrant’s effect on shares outstanding will be included in dilutive shares using the treasury stock method.
Note 2 – Loan Composition
LOANS BY TYPE		12/31/2008				9/30/2008				6/30/2008				3/31/2008				12/31/2007
Loans secured by real estate:
Construction, land development and other land loans		$	1,028,788			$	1,062,319			$	1,158,549			$	1,212,052			$	1,194,940
Secured by 1-4 family residential properties			1,524,061				1,561,024				1,633,021				1,660,148				1,694,757
Secured by nonfarm, nonresidential properties			1,422,658				1,345,624				1,300,753				1,315,449				1,325,379
Other real estate secured			186,915				175,877				148,588				160,373				167,610
Commercial and industrial loans			1,305,938				1,328,035				1,313,620				1,286,578				1,283,014
Consumer loans			895,046				947,113				994,475				1,056,346				1,087,337
Other loans			358,997				320,738				310,369				321,088				287,755
Loans			6,722,403				6,740,730				6,859,375				7,012,034				7,040,792
Allowance for loan losses			(94,922	)			(90,888	)			(86,576	)			(81,818	)			(79,851	)
Net Loans		$	6,627,481			$	6,649,842			$	6,772,799			$	6,930,216			$	6,960,941
		December 31 ,2008
LOAN COMPOSITION BY REGION		Total				Florida				Mississippi (Central and Southern Regions)				Tennessee (Memphis, TN and Northern MS Regions)				Texas
Loans secured by real estate:
Construction, land development and other land loans		$	1,028,788			$	294,473			$	397,779			$	83,668			$	252,868
Secured by 1-4 family residential properties			1,524,061				91,559				1,224,662				175,321				32,519
Secured by nonfarm, nonresidential properties			1,422,658				179,123				804,186				208,751				230,598
Other real estate secured			186,915				12,632				141,951				13,551				18,781
Commercial and industrial loans			1,305,938				18,814				941,563				61,391				284,170
Consumer loans			895,046				3,206				848,835				31,400				11,605
Other loans			358,997				18,505				313,564				18,070				8,858
Loans		$	6,722,403			$	618,312			$	4,672,540			$	592,152			$	839,399
CONSTRUCTION AND LAND DEVELOPMENT LOANS BY REGION
Lots		$	127,043			$	76,849			$	31,885			$	5,524			$	12,785
Development			212,965				35,927				91,465				11,657				73,916
Unimproved land			301,759				114,232				106,522				34,049				46,956
1-4 family construction			191,351				29,246				89,644				11,936				60,525
Other construction			195,670				38,219				78,263				20,502				58,686
Construction and land development loans		$	1,028,788			$	294,473			$	397,779			$	83,668			$	252,868

FLORIDA CREDIT QUALITY			Total Loans			Criticized Loans (1)			Classified Loans (2)				Nonaccrual Loans			Impaired Loans (3)
Construction and land development loans:
	Lots		$	76,849		$	21,174		$	15,529			$	10,386		$	5,698
	Development			35,927			17,462			17,462				17,461			8,636
	Unimproved land			114,232			69,462			36,247				20,496			19,680
	1-4 family construction			29,246			12,626			12,626				9,630			9,630
	Other construction			38,219			24,952			13,959				9,328			6,482
	Construction and land development loans			294,473			145,676			95,823				67,301			50,126
Commercial, commercial real estate and consumer				323,839			31,011			19,265				7,791			1,019
	Total Florida loans		$	618,312		$	176,687		$	115,088			$	75,092		$	51,145
FLORIDA CREDIT QUALITY			Total Loans Less Impaired Loans			Loan Loss Reserves			Loan Loss Reserve % of Non-Impaired Loans
Construction and land development loans:
	Lots		$	71,151		$	3,542			4.98	%
	Development			27,291			2,537			9.30	%
	Unimproved land			94,552			5,043			5.33	%
	1-4 family construction			19,616			644			3.28	%
	Other construction			31,737			2,850			8.98	%
	Construction and land development loans			244,347			14,616			5.98	%
Commercial, commercial real estate and consumer				322,820			6,449			2.00	%
	Total Florida loans		$	567,167		$	21,065			3.71	%
(1)	Criticized loans include all classified loans as defined in (2) below as well as other loans that exhibit potential credit weaknesses that, if not resolved, may ultimately result in a more severe classification.
(2)	Classified loans include those loans identified by management as exhibiting well defined credit weaknesses that may jeopardize repayment in full of the debt.
(3)	All nonaccrual loans over $1 million are individually assessed for impairment in accordance with SFAS No. 114. Impaired loans have been determined to be collateral dependent and assessed using a fair value approach. Fair value estimates begin with appraised values, normally from recently received and reviewed appraisals. Appraised values are adjusted down for costs associated with asset disposal. When a loan is deemed to be impaired, the full difference between book value and the most likely estimate of the asset’s net realizable value is charged off.

Note 3 – Mortgage Banking
Trustmark utilizes derivative instruments to offset changes in the fair value of mortgage servicing rights (MSR) attributable to changes in interest rates. Changes in the fair value of the derivative instrument are recorded in mortgage banking income, net and are offset by the changes in the fair value of MSR, as shown in the accompanying table. MSR fair values represent the effect of present value decay and the effect of changes in interest rates. Ineffectiveness of hedging MSR fair value is measured by comparing total hedge cost to the fair value of the MSR asset attributable to market changes. The impact of this strategy resulted in a net positive ineffectiveness of $0.3 million and $2.0 million for the quarters ended December 31, 2008 and 2007, respectively, and a net positive ineffectiveness of $11.1 million and $1.2 million for the years ended December 31, 2008 and 2007, respectively. The accompanying table shows that the MSR value has declined $36.8 million for the quarter ended December 31, 2008. This change is due primarily to higher prepayment expectations in the servicing portfolio caused by a significant decline in mortgage rates. Offsetting the MSR change is a $37.2 million increase in the value of derivative instruments which is primarily caused by declining Treasury rates resulting in a $0.3 million net ineffectiveness for the quarter ended December 31, 2008.
The following table illustrates the components of mortgage banking income included in noninterest income in the accompanying income statements:
		Quarter Ended																				Year Ended
		12/31/2008				9/30/2008				6/30/2008				3/31/2008				12/31/2007				12/31/2008				12/31/2007
Mortgage servicing income, net		$	4,188			$	4,002			$	3,804			$	3,747			$	3,725			$	15,741			$	14,184
Change in fair value-MSR from market changes			(36,846	)			(903	)			13,104				(10,193	)			(8,143	)			(34,838	)			(9,466	)
Change in fair value of derivatives			37,160				1,680				(10,453	)			17,599				10,123				45,986				10,644
Change in fair value-MSR from runoff			(2,101	)			(2,152	)			(2,303	)			(2,430	)			(2,064	)			(8,986	)			(9,343	)
Gain on sales of loans			473				1,875				2,542				1,078				1,594				5,968				5,659
Other, net			1,519				(179	)			14				1,255				(268	)			2,609				346
Mortgage banking, net		$	4,393			$	4,323			$	6,708			$	11,056			$	4,967			$	26,480			$	12,024

Note 4 – Earning Assets and Interest-Bearing Liabilities
The following table illustrates the yields on earning assets by category as well as the rates paid on interest-bearing liabilities on a tax equivalent basis:
		Quarter Ended															Year Ended
		12/31/2008			9/30/2008			6/30/2008			3/31/2008			12/31/2007			12/31/2008			12/31/2007
Securities – Taxable		4.87	%		4.79	%		4.66	%		4.34	%		4.11	%		4.73	%		4.13	%
Securities – Nontaxable		6.68	%		6.74	%		6.93	%		7.12	%		7.19	%		6.87	%		7.27	%
Securities – Total		5.01	%		4.99	%		4.90	%		4.84	%		4.63	%		4.95	%		4.60	%
Loans		5.86	%		6.07	%		6.19	%		6.70	%		7.21	%		6.21	%		7.31	%
FF Sold & Rev Repo		0.99	%		2.24	%		2.21	%		3.14	%		4.84	%		2.14	%		5.26	%
Other Earning Assets		2.98	%		4.34	%		4.61	%		6.22	%		4.80	%		4.42	%		5.70	%
Total Earning Assets		5.68	%		5.90	%		6.00	%		6.54	%		6.94	%		6.02	%		6.98	%
Interest-bearing Deposits		1.98	%		2.32	%		2.58	%		3.12	%		3.52	%		2.50	%		3.63	%
FF Pch & Repo		0.58	%		1.88	%		1.96	%		2.96	%		4.22	%		1.66	%		4.52	%
Borrowings		2.20	%		3.81	%		3.64	%		5.22	%		5.25	%		3.48	%		5.60	%
Total Interest-bearing Liabilities		1.83	%		2.34	%		2.58	%		3.23	%		3.72	%		2.48	%		3.81	%
Net interest margin		4.20	%		4.01	%		3.91	%		3.92	%		3.93	%		4.01	%		3.91	%
During the fourth quarter of 2008, declining funding costs more than offset lower yields on earning assets, resulting in a 19 basis point increase in the net interest margin to 4.20%. This expansion in the net interest margin is attributable to an increased level of fixed rate securities primarily funded by shorter, floating rate liabilities as well as to the abnormal spread between LIBOR and the overnight Federal Funds rate during the quarter that has since dissipated.
As discussed in Note 5 below, Trustmark corrected an accounting error in its consolidated financial statements resulting in a pre-tax benefit of $3.2 million and $2.6 million for the quarter and year ended December 31, 2007, respectively. This error correction has been excluded in the table above. Including this error correction, Trustmark’s loan yield for the quarter and year ended December 31, 2007 was 7.39% and 7.35%, respectively, while the net interest margin for the quarter and year ended December 31, 2007 was 4.09% and 3.94%, respectively.
All periods ended in 2007 have been restated to include the addition of other earning assets, made up primarily of Federal Home Loan Bank and Federal Reserve Bank stock.

Note 5 – Significant Nonrecurring Transactions

The information below represents significant items occurring during the periods presented. Management believes this information will help users compare Trustmark’s current results to those of prior periods.

MasterCard Class A Common

During the second quarter of 2008, MasterCard offered Class B shareholders the right to convert their stock into marketable Class A shares. Trustmark exercised its right to convert its shares and sold them through a liquidation program. The conversion and sale resulted in an after-tax gain of $3.3 million.

Visa Litigation Contingency

In the first quarter of 2008, Trustmark recognized a gain of $1.5 million resulting from the Visa initial public offering. This gain more than offsets an accrual of $1.0 million that Trustmark recorded for the Visa litigation contingency relating to the Visa USA Inc. antitrust lawsuit settlement with American Express and other pending Visa litigation (reflecting Trustmark’s share as a Visa member).

Correction of Accounting Error

Trustmark’s consolidated financial statements for the fourth quarter of 2007 included a pre-tax benefit of $3.2 million for the correction of an error relating to the amortization of deferred loan fees, which is included in interest income on loans. Of this amount, $2.6 million arose in prior periods, while $593 thousand was incurred over the first three quarters of 2007. Trustmark’s Management as well as the Audit and Finance Committee of the Board of Directors have reviewed this accounting error utilizing Securities and Exchange Commission Staff Accounting Bulletins (SAB) Nos. 99 and 108 and believe the impact of this error was not material to 2007 or prior period consolidated financial statements.