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

Trustmark Corporation (NASDAQ:TRMK) announced net income of $17.6 million in the second quarter of 2008, which represented basic earnings per share of $0.31. Earnings during the quarter included a gain on sale of MasterCard stock that increased net income by $3.3 million, or $0.058 per share. Trustmark’s second quarter 2008 net income produced returns on average tangible equity and average assets of 11.70% and 0.77%, respectively. During the first six months of 2008, Trustmark’s net income totaled $43.7 million, which represented basic earnings per share of $0.76. Trustmark’s performance during the first half of 2008 resulted in returns on average tangible equity and average assets of 14.61% and 0.98%, respectively. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per common share. The dividend is payable September 15, 2008 to shareholders of record on September 1, 2008. Richard G. Hickson, Chairman and CEO, stated, "Trustmark produced positive financial results during the second quarter as reflected by growth in earning assets, reduced funding costs and a stable net interest margin. We achieved sequential quarter core revenue growth in our general banking, mortgage banking and insurance businesses while controlling noninterest expense, further reinforcing our ability to manage through a challenging environment. We continued to devote significant resources to managing credit risks resulting from the slowdown in residential real estate. While the duration of the economic slowdown is uncertain, we have fundamentally strong core earnings throughout our diversified financial businesses and are well positioned to face the challenges confronting the banking industry.” Credit Quality Conducted extensive reviews and updated appraisals of Florida construction portfolio Nonperforming assets increased $30.6 million, representing 1.67% of total loans and other real estate Net charge-offs totaled $26.3 million Provision for loan losses totaled $31.0 million During the second quarter, Trustmark conducted extensive reviews of the Corporation’s $321.9 million construction and land development portfolio in Florida. In addition to obtaining current financial information on borrowers and guarantors, updated property appraisals were obtained on a substantial portion of this portfolio. Through this review and appraisal process, $21.0 million in loans were charged-off based upon current property values in the marketplace. Of the $321.9 million in Florida construction and land development loans, approximately $96.6 million have been classified and reserved for at appropriate levels, including $42.4 million of impaired loans that have been written down to net realizable value. Trustmark believes that this portfolio is appropriately risk rated and adequately reserved based upon current conditions. Trustmark’s Mississippi, Tennessee and Texas loan portfolios continued to perform relatively well in the current economic environment. Trustmark’s nonperforming assets totaled $118.2 million at June 30, 2008, up $30.6 million relative to the prior quarter, to represent 1.67% of total loans and other real estate. Net charge-offs were $26.3 million in the second quarter of 2008 compared to $12.3 million in the prior quarter. The provision for loan losses in the second quarter totaled $31.0 million compared to $14.2 million in the prior quarter. Allocation of Trustmark’s $86.6 million allowance for loan losses represented 1.67% of commercial loans and 0.60% of consumer and home mortgage loans, resulting in an allowance to total loans of 1.26%. Capital Strength Internally generated tangible equity increased $54.0 million from prior year Total risk-based capital expanded to 11.46% at June 30, 2008 Tangible equity totaled $618.8 million at June 30, 2008, up $54.0 million from the prior year while total risk-based capital was 11.46%, exceeding "well-capitalized” standards. Continued preservation and growth of capital will afford Trustmark the ability to respond to opportunities in the marketplace. Based upon the existing capital base and continued ability to generate excess capital going forward, Trustmark is confident at this time in the sustainability of its cash dividend. In addition, Trustmark is not contemplating any capital raising transactions. Net Interest Margin Maintained at 3.91% Increased security yields and lower deposit and borrowing costs offset by decreased loan yields Average loans declined $96.7 million during the second quarter relative to the prior period substantially as a result of our strategy to reduce real estate construction and auto loan exposure. Average investment securities increased $408.2 million during the quarter as a positively sloped yield curve created an opportunity to enhance future net interest income. Trustmark’s funding mix improved as average deposits increased $167.5 million during the quarter while short-term borrowings expanded $151.4 million. Lower deposit and borrowing costs were effectively offset by lower yield on earning assets. As a result, a net interest margin of 3.91% was maintained during the second quarter. Mortgage Banking Mortgage production increased 8.7% from prior quarter Mortgage production totaled $413 million during the second quarter of 2008, an increase of 8.7% from the prior quarter. Growth in volume, coupled with improved spreads and fees, positively impacted net interest income. Noninterest income in Trustmark’s Mortgage Banking division included $2.7 million resulting from a successful mortgage servicing rights hedging strategy. Trustmark’s highly regarded mortgage banking reputation has enabled it to take advantage of competitive disruptions and expand market share. Because Trustmark is not a subprime lender, the home mortgage and home equity loan portfolios continued to perform well. Disciplined Expense Management and Investments for the Future Noninterest expense remained below $70 million target for fifth consecutive quarter Efficiency ratio of 56.6% Five new banking centers opened thus far in 2008 In the second quarter of 2008, noninterest expense totaled $69.6 million, marking the fifth consecutive quarter below the Corporation’s $70 million target. Success in this regard is due to ongoing human capital management programs as well as a heightened awareness of expense management across the organization and is reflected in an efficiency ratio of 56.6%. Trustmark is committed to identifying additional reengineering and efficiency opportunities to enhance shareholder value. Trustmark continued to make investments to support revenue growth and profitability as well as reallocate resources to areas with additional growth potential. Thus far in 2008, Trustmark opened a total of five new banking centers in the Biloxi, Panama City, Houston and Memphis markets while closing two offices with limited growth opportunities. An additional banking center is scheduled to open later this year in Jackson. ADDITIONAL INFORMATION As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, July 23 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) 397-0300, passcode 6141473 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, July 30 in archived format at the same web address or by calling (888) 203-1112, passcode 6141473. 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 are not statements of historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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. 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. These risks could cause actual results to differ materially from current expectations of Management and include, but are not limited to, changes in the level of nonperforming assets and charge-offs, local, state and national economic and market conditions, material changes in market interest rates, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, changes in existing regulations or the adoption of new regulations, natural disasters, acts of war or terrorism, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of Trustmark’s borrowers, the 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 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     June 30, 2008   ($ in thousands except per share data) (unaudited)   Linked Quarter QUARTERLY AVERAGE BALANCES 6/30/2008 3/31/2008 $ Change % Change Securities AFS-taxable $ 769,790 $ 353,079 $ 416,711 n/m Securities AFS-nontaxable 35,869 36,241 (372 ) -1.0 % Securities HTM-taxable 186,047 189,604 (3,557 ) -1.9 % Securities HTM-nontaxable   76,940     81,559     (4,619 ) -5.7 % Total securities   1,068,646     660,483     408,163   61.8 % Loans (including loans held for sale) 7,080,495 7,177,233 (96,738 ) -1.3 % Fed funds sold and rev repos 30,567 22,921 7,646 33.4 % Other earning assets   41,481     36,958     4,523   12.2 % Total earning assets   8,221,189     7,897,595     323,594   4.1 % Allowance for loan losses (82,962 ) (80,998 ) (1,964 ) 2.4 % Cash and due from banks 253,545 259,392 (5,847 ) -2.3 % Other assets   782,986     775,722     7,264   0.9 % Total assets $ 9,174,758   $ 8,851,711   $ 323,047   3.6 %   Interest-bearing demand deposits $ 1,258,281 $ 1,233,892 $ 24,389 2.0 % Savings deposits 1,867,438 1,755,048 112,390 6.4 % Time deposits less than $100,000 1,568,802 1,577,753 (8,951 ) -0.6 % Time deposits of $100,000 or more   1,051,716     1,030,527     21,189   2.1 % Total interest-bearing deposits 5,746,237 5,597,220 149,017 2.7 % Fed funds purchased and repos 618,227 417,338 200,889 48.1 % Short-term borrowings 202,778 252,234 (49,456 ) -19.6 % Subordinated notes 49,720 49,712 8 0.0 % Junior subordinated debt securities   70,104     70,104     -   0.0 % Total interest-bearing liabilities 6,687,066 6,386,608 300,458 4.7 % Noninterest-bearing deposits 1,409,371 1,390,843 18,528 1.3 % Other liabilities 134,237 141,741 (7,504 ) -5.3 % Shareholders' equity   944,084     932,519     11,565   1.2 % Total liabilities and equity $ 9,174,758   $ 8,851,711   $ 323,047   3.6 %   n/m - percentage changes greater than +/- 100% are considered not meaningful       Year over Year QUARTERLY AVERAGE BALANCES 6/30/2008 6/30/2007 $ Change   % Change Securities AFS-taxable $ 769,790 $ 655,815 $ 113,975 17.4 % Securities AFS-nontaxable 35,869 52,627 (16,758 ) -31.8 % Securities HTM-taxable 186,047 196,424 (10,377 ) -5.3 % Securities HTM-nontaxable   76,940     86,491     (9,551 ) -11.0 % Total securities   1,068,646     991,357     77,289   7.8 % Loans (including loans held for sale) 7,080,495 6,784,126 296,369 4.4 % Fed funds sold and rev repos 30,567 33,811 (3,244 ) -9.6 % Other earning assets   41,481     35,033     6,448   18.4 % Total earning assets   8,221,189     7,844,327     376,862   4.8 % Allowance for loan losses (82,962 ) (72,400 ) (10,562 ) 14.6 % Cash and due from banks 253,545 285,424 (31,879 ) -11.2 % Other assets   782,986     748,306     34,680   4.6 % Total assets $ 9,174,758   $ 8,805,657   $ 369,101   4.2 %   Interest-bearing demand deposits $ 1,258,281 $ 1,224,450 $ 33,831 2.8 % Savings deposits 1,867,438 1,770,576 96,862 5.5 % Time deposits less than $100,000 1,568,802 1,613,569 (44,767 ) -2.8 % Time deposits of $100,000 or more   1,051,716     1,007,157     44,559   4.4 % Total interest-bearing deposits 5,746,237 5,615,752 130,485 2.3 % Fed funds purchased and repos 618,227 426,738 191,489 44.9 % Short-term borrowings 202,778 142,815 59,963 42.0 % Subordinated notes 49,720 49,688 32 0.1 % Junior subordinated debt securities   70,104     70,104     -   0.0 % Total interest-bearing liabilities 6,687,066 6,305,097 381,969 6.1 % Noninterest-bearing deposits 1,409,371 1,484,611 (75,240 ) -5.1 % Other liabilities 134,237 120,879 13,358 11.1 % Shareholders' equity   944,084     895,070     49,014   5.5 % Total liabilities and equity $ 9,174,758   $ 8,805,657   $ 369,101   4.2 %       Linked Quarter PERIOD END BALANCES 6/30/2008 3/31/2008 $ Change   % Change Cash and due from banks $ 296,628 $ 290,200 $ 6,428 2.2 % Fed funds sold and rev repos 23,901 16,022 7,879 49.2 % Securities available for sale 908,949 585,746 323,203 55.2 % Securities held to maturity 260,741 267,315 (6,574 ) -2.5 % Loans held for sale 184,858 198,245 (13,387 ) -6.8 % Loans 6,859,375 7,012,034 (152,659 ) -2.2 % Allowance for loan losses   (86,576 )   (81,818 )   (4,758 ) 5.8 % Net Loans 6,772,799 6,930,216 (157,417 ) -2.3 % Premises and equipment, net 154,026 151,469 2,557 1.7 % Mortgage servicing rights 76,209 59,047 17,162 29.1 % Goodwill 291,145 291,210 (65 ) 0.0 % Identifiable intangible assets 25,958 27,030 (1,072 ) -4.0 % Other assets   319,835     280,653     39,182   14.0 % Total assets $ 9,315,049   $ 9,097,153   $ 217,896   2.4 %   Deposits: Noninterest-bearing $ 1,443,553 $ 1,475,976 $ (32,423 ) -2.2 % Interest-bearing   5,680,130     5,868,359     (188,229 ) -3.2 % Total deposits 7,123,683 7,344,335 (220,652 ) -3.0 % Fed funds purchased and repos 748,137 433,431 314,706 72.6 % Short-term borrowings 260,812 93,453 167,359 n/m Subordinated notes 49,725 49,717 8 0.0 % Junior subordinated debt securities 70,104 70,104 - 0.0 % Other liabilities   126,703     168,772     (42,069 ) -24.9 % Total liabilities   8,379,164     8,159,812     219,352   2.7 % Common stock 11,938 11,938 - 0.0 % Capital surplus 126,881 126,003 878 0.7 % Retained earnings 814,674 810,369 4,305 0.5 % Accum other comprehensive loss, net of tax -   (17,608 )   (10,969 )   (6,639 ) 60.5 % Total shareholders' equity   935,885     937,341     (1,456 ) -0.2 % Total liabilities and equity $ 9,315,049   $ 9,097,153   $ 217,896   2.4 %       Year over Year PERIOD END BALANCES 6/30/2008 6/30/2007 $ Change   % Change Cash and due from banks $ 296,628 $ 292,248 $ 4,380 1.5 % Fed funds sold and rev repos 23,901 20,081 3,820 19.0 % Securities available for sale 908,949 608,906 300,043 49.3 % Securities held to maturity 260,741 281,403 (20,662 ) -7.3 % Loans held for sale 184,858 132,588 52,270 39.4 % Loans 6,859,375 6,769,632 89,743 1.3 % Allowance for loan losses   (86,576 )   (70,948 )   (15,628 ) 22.0 % Net Loans 6,772,799 6,698,684 74,115 1.1 % Premises and equipment, net 154,026 144,263 9,763 6.8 % Mortgage servicing rights 76,209 76,955 (746 ) -1.0 % Goodwill 291,145 290,852 293 0.1 % Identifiable intangible assets 25,958 30,528 (4,570 ) -15.0 % Other assets   319,835     252,259     67,576   26.8 % Total assets $ 9,315,049   $ 8,828,767   $ 486,282   5.5 %   Deposits: Noninterest-bearing $ 1,443,553 $ 1,505,821 $ (62,268 ) -4.1 % Interest-bearing   5,680,130     5,563,364     116,766   2.1 % Total deposits 7,123,683 7,069,185 54,498 0.8 % Fed funds purchased and repos 748,137 503,442 244,695 48.6 % Short-term borrowings 260,812 138,529 122,283 88.3 % Subordinated notes 49,725 49,693 32 0.1 % Junior subordinated debt securities 70,104 70,104 - 0.0 % Other liabilities   126,703     111,654     15,049   13.5 % Total liabilities   8,379,164     7,942,607     436,557   5.5 % Common stock 11,938 11,931 7 0.1 % Capital surplus 126,881 122,185 4,696 3.8 % Retained earnings 814,674 770,925 43,749 5.7 % Accum other comprehensive loss, net of tax -   (17,608 )   (18,881 )   1,273   -6.7 % Total shareholders' equity   935,885     886,160     49,725   5.6 % Total liabilities and equity $ 9,315,049   $ 8,828,767   $ 486,282   5.5 %   Quarter Ended   Linked Quarter INCOME STATEMENTS 6/30/2008   3/31/2008 $ Change   % Change Interest and fees on loans-FTE $ 109,023 $ 119,641 $ (10,618 ) -8.9 % Interest on securities-taxable 11,079 5,857 5,222 89.2 % Interest on securities-tax exempt-FTE 1,943 2,086 (143 ) -6.9 % Interest on fed funds sold and rev repos 168 179 (11 ) -6.1 % Other interest income   475   572   (97 ) -17.0 % Total interest income-FTE   122,688   128,335   (5,647 ) -4.4 % Interest on deposits 36,881 43,363 (6,482 ) -14.9 % Interest on fed funds pch and repos 3,019 3,073 (54 ) -1.8 % Other interest expense   2,923   4,829   (1,906 ) -39.5 % Total interest expense   42,823   51,265   (8,442 ) -16.5 % Net interest income-FTE 79,865 77,070 2,795 3.6 % Provision for loan losses   31,012   14,243   16,769   n/m Net interest income after provision-FTE   48,853   62,827   (13,974 ) -22.2 % Service charges on deposit accounts 13,223 12,564 659 5.2 % Insurance commissions 8,394 8,256 138 1.7 % Wealth management 7,031 7,198 (167 ) -2.3 % General banking - other 6,053 5,788 265 4.6 % Mortgage banking, net 6,708 11,056 (4,348 ) -39.3 % Other, net   6,999   3,221   3,778   n/m Nonint inc-excl sec gains, net 48,408 48,083 325 0.7 % Security gains, net   58   433   (375 ) -86.6 % Total noninterest income   48,466   48,516   (50 ) -0.1 % Salaries and employee benefits 42,771 43,584 (813 ) -1.9 % Services and fees 9,526 9,430 96 1.0 % Net occupancy-premises 4,850 4,801 49 1.0 % Equipment expense 4,144 4,074 70 1.7 % Other expense   8,323   7,937   386   4.9 % Total noninterest expense   69,614   69,826   (212 ) -0.3 % Income before income taxes and tax eq adj 27,705 41,517 (13,812 ) -33.3 % Tax equivalent adjustment   2,247   2,321   (74 ) -3.2 % Income before income taxes 25,458 39,196 (13,738 ) -35.0 % Income taxes   7,906   13,017   (5,111 ) -39.3 % Net income $ 17,552 $ 26,179 $ (8,627 ) -33.0 %   Quarter Ended   Linked Quarter 6/30/2008   3/31/2008 $ Change   % Change Per Share Data Earnings per share - basic $ 0.31 $ 0.46 $ (0.15 ) -32.6 %   Earnings per share - diluted $ 0.31 $ 0.46 $ (0.15 ) -32.6 %   Dividends per share $ 0.23 $ 0.23 $ -   0.0 %   Weighted average shares outstanding Basic   57,296,449   57,283,240   Diluted   57,335,393   57,312,428   Period end shares outstanding   57,296,449   57,296,449   Quarter Ended   Year over Year INCOME STATEMENTS 6/30/2008 6/30/2007 $Change   % Change Interest and fees on loans-FTE $ 109,023 $ 124,224 $ (15,201 ) -12.2 % Interest on securities-taxable 11,079 9,018 2,061 22.9 % Interest on securities-tax exempt-FTE 1,943 2,536 (593 ) -23.4 % Interest on fed funds sold and rev repos 168 457 (289 ) -63.2 % Other interest income   475   541   (66 ) -12.2 % Total interest income-FTE   122,688   136,776   (14,088 ) -10.3 % Interest on deposits 36,881 ` 51,686 (14,805 ) -28.6 % Interest on fed funds pch and repos 3,019 5,014 (1,995 ) -39.8 % Other interest expense   2,923   3,937   (1,014 ) -25.8 % Total interest expense   42,823   60,637   (17,814 ) -29.4 % Net interest income-FTE 79,865 76,139 3,726 4.9 % Provision for loan losses   31,012   145   30,867   n/m Net interest income after provision-FTE   48,853   75,994   (27,141 ) -35.7 % Service charges on deposit accounts 13,223 13,729 (506 ) -3.7 % Insurance commissions 8,394 9,901 (1,507 ) -15.2 % Wealth management 7,031 6,400 631 9.9 % General banking - other 6,053 6,418 (365 ) -5.7 % Mortgage banking, net 6,708 1,799 4,909 n/m Other, net   6,999   2,194   4,805   n/m Nonint inc-excl sec gains, net 48,408 40,441 7,967 19.7 % Security gains, net   58   29   29   n/m Total noninterest income   48,466   40,470   7,996   19.8 % Salaries and employee benefits 42,771 42,853 (82 ) -0.2 % Services and fees 9,526 9,041 485 5.4 % Net occupancy-premises 4,850 4,634 216 4.7 % Equipment expense 4,144 4,048 96 2.4 % Other expense   8,323   8,257   66   0.8 % Total noninterest expense   69,614   68,833   781   1.1 % Income before income taxes and tax eq adj 27,705 47,631 (19,926 ) -41.8 % Tax equivalent adjustment   2,247   2,307   (60 ) -2.6 % Income before income taxes 25,458 45,324 (19,866 ) -43.8 % Income taxes   7,906   15,496   (7,590 ) -49.0 % Net income $ 17,552 $ 29,828 $ (12,276 ) -41.2 %   Quarter Ended   Year over Year 6/30/2008   6/30/2007 $ Change   % Change Per Share Data Earnings per share - basic $ 0.31 $ 0.52 $ (0.21 ) -40.4 %   Earnings per share - diluted $ 0.31 $ 0.51 $ (0.20 ) -39.2 %   Dividends per share $ 0.23 $ 0.22 $ 0.01   4.5 %   Weighted average shares outstanding Basic   57,296,449   57,807,447   Diluted   57,335,393   58,025,401   Period end shares outstanding   57,296,449   57,264,283   Quarter Ended OTHER FINANCIAL DATA 6/30/2008   3/31/2008   6/30/2007 ROA 0.77 % 1.19 % 1.36 % ROE 7.48 % 11.29 % 13.37 % Return on average tangible equity 11.70 % 17.59 % 21.38 % Interest margin - Yield - FTE 6.00 % 6.54 % 6.99 % Interest margin - Cost - FTE 2.10 % 2.61 % 3.10 % Net interest margin - FTE 3.91 % 3.92 % 3.89 % Rate on interest-bearing liabilities 2.58 % 3.23 % 3.86 % Efficiency ratio 56.64 % 56.64 % 59.04 % EOP Employees - FTE 2,637 2,627 2,694   COMMON STOCK PERFORMANCE 6/30/2008 3/31/2008 6/30/2007 Market value-Close $ 17.65 $ 22.28 $ 25.86 Book value $ 16.33 $ 16.36 $ 15.47 Tangible book value $ 10.80 $ 10.81 $ 9.86 Market/Book value 108.08 % 136.19 % 167.16 % Market/Tangible book value 163.43 % 206.20 % 262.20 % NONPERFORMING ASSETS   Quarter Ended   Linked Quarter Nonaccrual loans 6/30/2008   3/31/2008 $ Change   % Change Florida $ 70,484 $ 49,654 $ 20,830 42.0 % Mississippi (1) 12,572 14,583 (2,011 ) -13.8 % Tennessee (2) 5,216 6,550 (1,334 ) -20.4 % Texas   7,039   7,207   (168 ) -2.3 % Total nonaccrual loans 95,311 77,994 17,317 22.2 % Other real estate Florida 10,398 1,067 9,331 n/m Mississippi (1) 5,258 1,741 3,517 n/m Tennessee (2) 6,778 6,634 144 2.2 % Texas   438   146   292   n/m Total other real estate   22,872   9,588   13,284   n/m Total nonperforming assets $ 118,183 $ 87,582 $ 30,601   34.9 %   (1) - Mississippi includes Central and Southern Mississippi Regions (2) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions   Quarter Ended   Linked Quarter LOANS PAST DUE OVER 90 DAYS 6/30/2008   3/31/2008 $ Change   % Change Loans $ 3,056 $ 4,986 $ (1,930 ) -38.7 % Loans HFS-Guaranteed GNMA serviced loans   15,809   15,868   (59 ) -0.4 % Total loans past due over 90 days $ 18,865 $ 20,854 $ (1,989 ) -9.5 % NONPERFORMING ASSETS   Quarter Ended   Year over Year Nonaccrual loans 6/30/2008   6/30/2007 $ Change   % Change Florida $ 70,484 $ 6,364 $ 64,120 n/m Mississippi (1) 12,572 13,553 (981 ) -7.2 % Tennessee (2) 5,216 3,831 1,385 36.2 % Texas   7,039   4,022   3,017   75.0 % Total nonaccrual loans 95,311 27,770 67,541 n/m Other real estate Florida 10,398 - 10,398 n/m Mississippi (1) 5,258 930 4,328 n/m Tennessee (2) 6,778 2,858 3,920 n/m Texas   438   192   246   n/m Total other real estate   22,872   3,980   18,892   n/m Total nonperforming assets $ 118,183 $ 31,750 $ 86,433   n/m   Quarter Ended   Year over Year LOANS PAST DUE OVER 90 DAYS 6/30/2008   6/30/2007 $ Change   % Change Loans $ 3,056 $ 6,433 $ (3,377 ) -52.5 % Loans HFS-Guaranteed GNMA serviced loans   15,809   11,273   4,536   40.2 % Total loans past due over 90 days $ 18,865 $ 17,706 $ 1,159   6.5 %   Quarter Ended   Linked Quarter ALLOWANCE FOR LOAN LOSSES 6/30/2008   3/31/2008 $ Change   % Change Beginning Balance $ 81,818 $ 79,851 $ 1,967 2.5 % Provision for loan losses 31,012 14,243 16,769 n/m Charge-offs (28,820 ) (15,176 ) (13,644 ) 89.9 % Recoveries   2,566     2,900     (334 ) -11.5 % Net charge-offs   (26,254 )   (12,276 )   (13,978 ) n/m Ending Balance $ 86,576   $ 81,818   $ 4,758   5.8 %   Quarter Ended   Year over Year ALLOWANCE FOR LOAN LOSSES 6/30/2008   6/30/2007 $ Change   % Change Beginning Balance $ 81,818 $ 72,049 $ 9,769 13.6 % Provision for loan losses 31,012 145 30,867 n/m Charge-offs (28,820 ) (4,187 ) (24,633 ) n/m Recoveries   2,566     2,941     (375 ) -12.8 % Net charge-offs   (26,254 )   (1,246 )   (25,008 ) n/m Ending Balance $ 86,576   $ 70,948   $ 15,628   22.0 %   Quarter Ended   Linked Quarter PROVISION FOR LOAN LOSSES 6/30/2008   3/31/2008 $ Change   % Change Florida $ 24,145 $ 9,557 $ 14,588 n/m Mississippi (1) 3,667 2,807 860 30.6 % Tennessee (2) 2,440 779 1,661 n/m Texas   760   1,100   (340 ) -30.9 % Total provision for loan losses $ 31,012 $ 14,243 $ 16,769   n/m   Quarter Ended   Year over Year PROVISION FOR LOAN LOSSES 6/30/2008   6/30/2007   $ Change   % Change Florida $ 24,145 $ 482 $ 23,663 n/m Mississippi (1) 3,667 360 3,307 n/m Tennessee (2) 2,440 (368 ) 2,808 n/m Texas   760   (329 )   1,089 n/m Total provision for loan losses $ 31,012 $ 145   $ 30,867 n/m   Quarter Ended   Linked Quarter NET CHARGE-OFFS 6/30/2008   3/31/2008 $ Change   % Change Florida $ 22,064 $ 9,688 $ 12,376 n/m Mississippi (1) 4,214 1,574 2,640 n/m Tennessee (2) 48 186 (138 ) -74.2 % Texas   (72 )   828   (900 ) n/m Total net charge-offs $ 26,254   $ 12,276 $ 13,978   n/m   Quarter Ended   Year over Year NET CHARGE-OFFS 6/30/2008   6/30/2007 $ Change   % Change Florida $ 22,064 $ (19 ) $ 22,083 n/m Mississippi (1) 4,214 1,193 3,021 n/m Tennessee (2) 48 48 - 0.0 % Texas   (72 )   24     (96 ) n/m Total net charge-offs $ 26,254   $ 1,246   $ 25,008   n/m     Quarter Ended CREDIT QUALITY RATIOS 6/30/2008   3/31/2008   6/30/2007 Net charge offs/average loans 1.49 % 0.69 % 0.07 % Provision for loan losses/average loans 1.76 % 0.80 % 0.01 % Nonperforming loans/total loans (incl LHFS) 1.35 % 1.08 % 0.40 % Nonperforming assets/total loans (incl LHFS) 1.68 % 1.21 % 0.46 % Nonperforming assets/total loans (incl LHFS) +ORE 1.67 % 1.21 % 0.46 % ALL/total loans (excl LHFS) 1.26 % 1.17 % 1.05 % ALL-commercial/total commercial loans 1.67 % 1.52 % 1.41 % ALL-consumer/total consumer and home mortgage loans 0.60 % 0.60 % 0.53 % ALL/nonperforming loans 90.84 % 104.90 % 255.48 %     Quarter Ended CAPITAL RATIOS 6/30/2008   3/31/2008   6/30/2007 EOP equity/ EOP assets 10.05 % 10.30 % 10.04 % Average equity/average assets 10.29 % 10.53 % 10.16 % EOP tangible equity/EOP tangible assets 6.88 % 7.05 % 6.64 % Tier 1 leverage ratio 7.87 % 8.12 % 7.60 % Tier 1 risk-based capital ratio 9.58 % 9.42 % 9.19 % Total risk-based capital ratio 11.46 % 11.21 % 10.91 %     Quarter Ended QUARTERLY AVERAGE BALANCES 6/30/2008   3/31/2008   12/31/2007   9/30/2007   6/30/2007 Securities AFS-taxable $ 769,790 $ 353,079 $ 435,438 $ 525,858 $ 655,815 Securities AFS-nontaxable 35,869 36,241 46,898 48,818 52,627 Securities HTM-taxable 186,047 189,604 192,878 194,356 196,424 Securities HTM-nontaxable   76,940     81,559     82,963     84,767     86,491   Total securities   1,068,646     660,483     758,177     853,799     991,357   Loans (including loans held for sale) 7,080,495 7,177,233 7,149,243 6,970,434 6,784,126 Fed funds sold and rev repos 30,567 22,921 25,960 30,201 33,811 Other earning assets   41,481     36,958     41,368     33,341     35,033   Total earning assets   8,221,189     7,897,595     7,974,748     7,887,775     7,844,327   Allowance for loan losses (82,962 ) (80,998 ) (73,659 ) (70,950 ) (72,400 ) Cash and due from banks 253,545 259,392 257,319 260,997 285,424 Other assets   782,986     775,722     765,939     759,626     748,306   Total assets $ 9,174,758   $ 8,851,711   $ 8,924,347   $ 8,837,448   $ 8,805,657     Interest-bearing demand deposits $ 1,258,281 $ 1,233,892 $ 1,160,823 $ 1,166,548 $ 1,224,450 Savings deposits 1,867,438 1,755,048 1,608,125 1,671,993 1,770,576 Time deposits less than $100,000 1,568,802 1,577,753 1,570,687 1,575,320 1,613,569 Time deposits of $100,000 or more   1,051,716     1,030,527     1,058,165     1,037,785     1,007,157   Total interest-bearing deposits 5,746,237 5,597,220 5,397,800 5,451,646 5,615,752 Fed funds purchased and repos 618,227 417,338 517,424 491,488 426,738 Short-term borrowings 202,778 252,234 413,676 314,264 142,815 Subordinated notes 49,720 49,712 49,703 49,696 49,688 Junior subordinated debt securities   70,104     70,104     70,104     70,104     70,104   Total interest-bearing liabilities 6,687,066 6,386,608 6,448,707 6,377,198 6,305,097 Noninterest-bearing deposits 1,409,371 1,390,843 1,419,364 1,423,745 1,484,611 Other liabilities 134,237 141,741 137,197 135,469 120,879 Shareholders' equity   944,084     932,519     919,079     901,036     895,070   Total liabilities and equity $ 9,174,758   $ 8,851,711   $ 8,924,347   $ 8,837,448   $ 8,805,657     Six Months Ended QUARTERLY AVERAGE BALANCES 6/30/2008   6/30/2007 Securities AFS-taxable $ 561,435 $ 668,778 Securities AFS-nontaxable 36,055 53,715 Securities HTM-taxable 187,826 197,350 Securities HTM-nontaxable   79,250     88,230   Total securities   864,566     1,008,073   Loans (including loans held for sale) 7,128,864 6,724,206 Fed funds sold and rev repos 26,744 53,832 Other earning assets   39,220     36,909   Total earning assets   8,059,394     7,823,020   Allowance for loan losses (81,980 ) (72,426 ) Cash and due from banks 256,469 315,532 Other assets   779,352     744,071   Total assets $ 9,013,235   $ 8,810,197     Interest-bearing demand deposits $ 1,246,087 $ 1,210,062 Savings deposits 1,811,243 1,777,829 Time deposits less than $100,000 1,573,277 1,615,233 Time deposits of $100,000 or more   1,041,122     1,014,514   Total interest-bearing deposits 5,671,729 5,617,638 Fed funds purchased and repos 517,783 389,475 Short-term borrowings 227,506 172,661 Subordinated notes 49,716 49,684 Junior subordinated debt securities   70,104     70,104   Total interest-bearing liabilities 6,536,838 6,299,562 Noninterest-bearing deposits 1,400,107 1,489,999 Other liabilities 137,988 124,054 Shareholders' equity   938,302     896,582   Total liabilities and equity $ 9,013,235   $ 8,810,197   PERIOD END BALANCES   6/30/2008   3/31/2008   12/31/2007     9/30/2007       6/30/2007   Cash and due from banks $ 296,628 $ 290,200 $ 292,983 $ 306,107 $ 292,248 Fed funds sold and rev repos 23,901 16,022 17,997 28,625 20,081 Securities available for sale 908,949 585,746 442,345 519,920 608,906 Securities held to maturity 260,741 267,315 275,096 278,385 281,403 Loans held for sale 184,858 198,245 147,508 133,693 132,588 Loans 6,859,375 7,012,034 7,040,792 6,917,541 6,769,632 Allowance for loan losses   (86,576 )   (81,818 )   (79,851 )   (72,368 )   (70,948 ) Net Loans 6,772,799 6,930,216 6,960,941 6,845,173 6,698,684 Premises and equipment, net 154,026 151,469 151,680 146,630 144,263 Mortgage servicing rights 76,209 59,047 67,192 73,253 76,955 Goodwill 291,145 291,210 291,177 291,177 290,852 Identifiable intangible assets 25,958 27,030 28,102 29,313 30,528 Other assets   319,835     280,653     291,781     258,711     252,259   Total assets $ 9,315,049   $ 9,097,153   $ 8,966,802   $ 8,910,987   $ 8,828,767     Deposits: Noninterest-bearing $ 1,443,553 $ 1,475,976 $ 1,477,171 $ 1,435,231 $ 1,505,821 Interest-bearing   5,680,130     5,868,359     5,392,101     5,467,221     5,563,364   Total deposits 7,123,683 7,344,335 6,869,272 6,902,452 7,069,185 Fed funds purchased and repos 748,137 433,431 460,763 525,142 503,442 Short-term borrowings 260,812 93,453 474,354 340,598 138,529 Subordinated notes 49,725 49,717 49,709 49,701 49,693 Junior subordinated debt securities 70,104 70,104 70,104 70,104 70,104 Other liabilities   126,703     168,772     122,964     115,453     111,654   Total liabilities   8,379,164     8,159,812     8,047,166     8,003,450     7,942,607   Common stock 11,938 11,938 11,933 11,933 11,931 Capital surplus 126,881 126,003 124,161 123,227 122,185 Retained earnings 814,674 810,369 797,993 787,356 770,925 Accum other comprehensive loss, net of tax   (17,608 )   (10,969 )   (14,451 )   (14,979 )   (18,881 ) Total shareholders' equity   935,885     937,341     919,636     907,537     886,160   Total liabilities and equity $ 9,315,049   $ 9,097,153   $ 8,966,802   $ 8,910,987   $ 8,828,767     Quarter Ended INCOME STATEMENTS 6/30/2008   3/31/2008   12/31/2007   9/30/2007   6/30/2007 Interest and fees on loans-FTE $ 109,023 $ 119,641 $ 133,088 $ 129,394 $ 124,224 Interest on securities-taxable 11,079 5,857 6,505 7,181 9,018 Interest on securities-tax exempt-FTE 1,943 2,086 2,352 2,422 2,536 Interest on fed funds sold and rev repos 168 179 317 397 457 Other interest income   475     572     501     482     541   Total interest income-FTE   122,688     128,335     142,763     139,876     136,776   Interest on deposits 36,881 43,363 47,911 50,423 51,686 Interest on fed funds pch and repos 3,019 3,073 5,499 5,898 5,014 Other interest expense   2,923     4,829     7,055     6,186     3,937   Total interest expense   42,823     51,265     60,465     62,507     60,637   Net interest income-FTE 79,865 77,070 82,298 77,369 76,139 Provision for loan losses   31,012     14,243     17,001     4,999     145   Net interest income after provision-FTE   48,853     62,827     65,297     72,370     75,994   Service charges on deposit accounts 13,223 12,564 13,908 13,849 13,729 Insurance commissions 8,394 8,256 7,630 8,983 9,901 Wealth management 7,031 7,198 6,969 6,507 6,400 General banking - other 6,053 5,788 6,177 6,111 6,418 Mortgage banking, net 6,708 11,056 4,967 2,503 1,799 Other, net   6,999     3,221     2,604     3,593     2,194   Nonint inc-excl sec gains, net 48,408 48,083 42,255 41,546 40,441 Security gains, net   58     433     2     23     29   Total noninterest income   48,466     48,516     42,257     41,569     40,470   Salaries and employee benefits 42,771 43,584 42,446 42,257 42,853 Services and fees 9,526 9,430 9,375 9,285 9,041 Net occupancy-premises 4,850 4,801 4,716 4,753 4,634 Equipment expense 4,144 4,074 4,165 3,922 4,048 Other expense   8,323     7,937     9,020     8,271     8,257   Total noninterest expense   69,614     69,826     69,722     68,488     68,833   Income before income taxes and tax eq adj 27,705 41,517 37,832 45,451 47,631 Tax equivalent adjustment   2,247     2,321     2,375     2,283     2,307   Income before income taxes 25,458 39,196 35,457 43,168 45,324 Income taxes   7,906     13,017     11,628     14,087     15,496   Net income $ 17,552   $ 26,179   $ 23,829   $ 29,081   $ 29,828     Quarter Ended Per Share Data 6/30/2008 3/31/2008 12/31/2007 9/30/2007 6/30/2007 Earnings per share - basic $ 0.31   $ 0.46   $ 0.42   $ 0.51   $ 0.52     Earnings per share - diluted $ 0.31   $ 0.46   $ 0.42   $ 0.51   $ 0.51     Dividends per share $ 0.23   $ 0.23   $ 0.23   $ 0.22   $ 0.22     Weighted average shares outstanding Basic   57,296,449     57,283,240     57,272,408     57,267,119     57,807,447     Diluted   57,335,393     57,312,428     57,341,472     57,526,573     58,025,401     Period end shares outstanding   57,296,449     57,296,449     57,272,408     57,272,408     57,264,283     Quarter Ended OTHER FINANCIAL DATA 6/30/2008 3/31/2008 12/31/2007 9/30/2007 6/30/2007 ROA 0.77 % 1.19 % 1.06 % 1.31 % 1.36 % ROE 7.48 % 11.29 % 10.29 % 12.80 % 13.37 % Return on average tangible equity 11.70 % 17.59 % 16.28 % 20.41 % 21.38 % Interest margin - Yield - FTE 6.00 % 6.54 % 6.94 % 7.04 % 6.99 % Interest margin - Cost - FTE 2.10 % 2.61 % 3.01 % 3.14 % 3.10 % Net interest margin - FTE 3.91 % 3.92 % 3.93 % 3.89 % 3.89 % Rate on interest-bearing liabilities 2.58 % 3.23 % 3.72 % 3.89 % 3.86 % Efficiency ratio 56.64 % 56.64 % 56.80 % 57.98 % 59.04 % EOP Employees - FTE 2,637 2,627 2,612 2,635 2,694   COMMON STOCK PERFORMANCE 6/30/2008 3/31/2008 12/31/2007 9/30/2007 6/30/2007 Market value-Close $ 17.65 $ 22.28 $ 25.36 $ 28.04 $ 25.86 Book value $ 16.33 $ 16.36 $ 16.06 $ 15.85 $ 15.47 Tangible book value $ 10.80 $ 10.81 $ 10.48 $ 10.25 $ 9.86 Market/Book value 108.08 % 136.19 % 157.91 % 176.91 % 167.16 % Market/Tangible book value 163.43 % 206.20 % 241.98 % 273.56 % 262.20 %   Six Months Ended INCOME STATEMENTS 6/30/2008   6/30/2007 Interest and fees on loans-FTE $ 228,664 $ 244,189 Interest on securities-taxable 16,936 18,098 Interest on securities-tax exempt-FTE 4,029 5,169 Interest on fed funds sold and rev repos 347 1,433 Other interest income   1,047     1,133   Total interest income-FTE   251,023     270,022   Interest on deposits 80,244 102,041 Interest on fed funds pch and repos 6,092 8,827 Other interest expense   7,752     8,520   Total interest expense   94,088     119,388   Net interest income-FTE 156,935 150,634 Provision for loan losses   45,255     1,784   Net interest income after provision-FTE   111,680     148,850   Service charges on deposit accounts 25,787 26,422 Insurance commissions 16,650 18,673 Wealth management 14,229 12,279 General banking - other 11,841 12,588 Mortgage banking, net 17,764 4,554 Other, net   10,220     4,018   Nonint inc-excl sec gains, net 96,491 78,534 Security gains, net   491     87   Total noninterest income   96,982     78,621   Salaries and employee benefits 86,355 86,019 Services and fees 18,956 18,599 Net occupancy-premises 9,651 9,048 Equipment expense 8,218 7,952 Other expense   16,260     16,621   Total noninterest expense   139,440     138,239   Income before income taxes and tax eq adj 69,222 89,232 Tax equivalent adjustment   4,568     4,860   Income before income taxes 64,654 84,372 Income taxes   20,923     28,687   Net income $ 43,731   $ 55,685       Six Months Ended Per Share Data 6/30/2008 6/30/2007 Earnings per share - basic $ 0.76   $ 0.96     Earnings per share - diluted $ 0.76   $ 0.95     Dividends per share $ 0.46   $ 0.44     Weighted average shares outstanding Basic   57,289,844     58,155,955     Diluted   57,322,388     58,415,070     Period end shares outstanding   57,296,449     57,264,283       Six Months Ended OTHER FINANCIAL DATA 6/30/2008 6/30/2007 ROA 0.98 % 1.27 % ROE 9.37 % 12.52 % Return on average tangible equity 14.61 % 20.08 % Interest margin - Yield - FTE 6.26 % 6.96 % Interest margin - Cost - FTE 2.36 % 3.08 % Net interest margin - FTE 3.92 % 3.88 % Rate on interest-bearing liabilities 2.89 % 3.82 % Efficiency ratio 56.64 % 60.44 % NONPERFORMING ASSETS   6/30/2008   3/31/2008   12/31/2007   9/30/2007   6/30/2007 Nonaccrual loans Florida $ 70,484 $ 49,654 $ 43,787 $ 19,536 $ 6,364 Mississippi (1) 12,572 14,583 13,723 16,641 13,553 Tennessee (2) 5,216 6,550 4,431 4,956 3,831 Texas   7,039   7,207   3,232   4,316   4,022 Total nonaccrual loans 95,311 77,994 65,173 45,449 27,770 Other real estate Florida 10,398 1,067 995 1,175 - Mississippi (1) 5,258 1,741 1,123 917 930 Tennessee (2) 6,778 6,634 6,084 3,726 2,858 Texas   438   146   146   52   192 Total other real estate   22,872   9,588   8,348   5,870   3,980 Total nonperforming assets $ 118,183 $ 87,582 $ 73,521 $ 51,319 $ 31,750   Quarter Ended LOANS PAST DUE OVER 90 DAYS 6/30/2008 3/31/2008 12/31/2007 9/30/2007 6/30/2007 Loans $ 3,056 $ 4,986 $ 4,853 $ 9,521 $ 6,433 Loans HFS-Guaranteed GNMA serviced loans   15,809   15,868   11,847   9,539   11,273 Total loans past due over 90 days $ 18,865 $ 20,854 $ 16,700 $ 19,060 $ 17,706   Quarter Ended ALLOWANCE FOR LOAN LOSSES 6/30/2008   3/31/2008   12/31/2007   9/30/2007   6/30/2007 Beginning Balance $ 81,818 $ 79,851 $ 72,368 $ 70,948 $ 72,049 Provision for loan losses 31,012 14,243 17,001 4,999 145 Charge-offs (28,820 ) (15,176 ) (11,904 ) (6,417 ) (4,187 ) Recoveries   2,566     2,900     2,386     2,838     2,941   Net charge-offs   (26,254 )   (12,276 )   (9,518 )   (3,579 )   (1,246 ) Ending Balance $ 86,576   $ 81,818   $ 79,851   $ 72,368   $ 70,948     Six Months Ended ALLOWANCE FOR LOAN LOSSES 6/30/2008   6/30/2007 Beginning Balance $ 79,851 $ 72,098 Provision for loan losses 45,255 1,784 Charge-offs (43,996 ) (8,469 ) Recoveries   5,466     5,535   Net charge-offs   (38,530 )   (2,934 ) Ending Balance $ 86,576   $ 70,948     Quarter Ended PROVISION FOR LOAN LOSSES 6/30/2008   3/31/2008   12/31/2007   9/30/2007   6/30/2007 Florida $ 24,145 $ 9,557 $ 12,523 $ 3,364 $ 482 Mississippi (1) 3,667 2,807 2,724 (798 ) 360 Tennessee (2) 2,440 779 1,056 1,153 (368 ) Texas   760   1,100   698   1,280     (329 ) Total provision for loan losses $ 31,012 $ 14,243 $ 17,001 $ 4,999   $ 145     Six Months Ended PROVISION FOR LOAN LOSSES 6/30/2008   6/30/2007 Florida $ 33,702 $ 576 Mississippi (1) 6,474 1,562 Tennessee (2) 3,219 (372 ) Texas   1,860   18   Total provision for loan losses $ 45,255 $ 1,784     Quarter Ended NET CHARGE-OFFS 6/30/2008   3/31/2008   12/31/2007   9/30/2007   6/30/2007 Florida $ 22,064 $ 9,688 $ 3,665 $ 799 $ (19 ) Mississippi (1) 4,214 1,574 3,999 2,312 1,193 Tennessee (2) 48 186 1,284 166 48 Texas   (72 )   828   570   302   24   Total net charge-offs $ 26,254   $ 12,276 $ 9,518 $ 3,579 $ 1,246     Six Months Ended NET CHARGE-OFFS 6/30/2008   6/30/2007 Florida $ 31,752 $ 81 Mississippi (1) 5,788 2,426 Tennessee (2) 234 50 Texas   756   377 Total net charge-offs $ 38,530 $ 2,934     Quarter Ended CREDIT QUALITY RATIOS 6/30/2008   3/31/2008   12/31/2007   9/30/2007   6/30/2007 Net charge offs/average loans 1.49 % 0.69 % 0.53 % 0.20 % 0.07 % Provision for loan losses/average loans 1.76 % 0.80 % 0.94 % 0.28 % 0.01 % Nonperforming loans/total loans (incl LHFS) 1.35 % 1.08 % 0.91 % 0.64 % 0.40 % Nonperforming assets/total loans (incl LHFS) 1.68 % 1.21 % 1.02 % 0.73 % 0.46 % Nonperforming assets/total loans (incl LHFS) +ORE 1.67 % 1.21 % 1.02 % 0.73 % 0.46 % ALL/total loans (excl LHFS) 1.26 % 1.17 % 1.13 % 1.05 % 1.05 % ALL-commercial/total commercial loans 1.67 % 1.52 % 1.48 % 1.36 % 1.41 % ALL-consumer/total consumer and home mortgage loans 0.60 % 0.60 % 0.59 % 0.58 % 0.53 % ALL/nonperforming loans 90.84 % 104.90 % 122.52 % 159.23 % 255.48 %     Six Months Ended CREDIT QUALITY RATIOS 6/30/2008   6/30/2007 Net charge offs/average loans 1.09 % 0.09 % Provision for loan losses/average loans 1.28 % 0.05 %     Quarter Ended CAPITAL RATIOS 6/30/2008   3/31/2008   12/31/2007   9/30/2007   6/30/2007 EOP equity/ EOP assets 10.05 % 10.30 % 10.26 % 10.18 % 10.04 % Average equity/average assets 10.29 % 10.53 % 10.30 % 10.20 % 10.16 % EOP tangible equity/EOP tangible assets 6.88 % 7.05 % 6.94 % 6.83 % 6.64 % Tier 1 leverage ratio 7.87 % 8.12 % 7.86 % 7.79 % 7.60 % Tier 1 risk-based capital ratio 9.58 % 9.42 % 9.17 % 9.20 % 9.19 % Total risk-based capital ratio 11.46 % 11.21 % 10.93 % 10.89 % 10.91 % TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS June 30, 2008 ($ in thousands except per share data) (unaudited) Note 1 - Financial Performance Non-GAAP Disclosures Management is presenting, in the accompanying table, adjustments to net income as reported in accordance with generally accepted accounting principles resulting from significant items occurring during the periods presented. Management believes this information will help users compare Trustmark’s current results to those of prior periods as presented in the table below.   Quarter Ended 6/30/2008   3/31/2008   12/31/2007   9/30/2007   6/30/2007   Net Income as reported-GAAP $ 17,552 $ 26,179 $ 23,829 $ 29,081 $ 29,828   Adjustments (net of taxes): Mastercard Class A Common (3,308 ) - - - - Visa Litigation Contingency - (936 ) 494 - - Correction of Accounting Error - - (1,989 ) - - Hurricane Katrina   -     -     -     -   -   (3,308 )   (936 )   (1,495 )   -   - Net Income adjusted for specific items (Non-GAAP) $ 14,244   $ 25,243   $ 22,334   $ 29,081 $ 29,828   Six Months Ended 6/30/2008   6/30/2007   Net Income as reported-GAAP $ 43,731 $ 55,685   Adjustments (net of taxes): Mastercard Class A Common (3,308 ) - Visa Litigation Contingency (936 ) - Correction of Accounting Error - - Hurricane Katrina   -     (665 )   (4,244 )   (665 ) Net Income adjusted for specific items (Non-GAAP) $ 39,487   $ 55,020   MasterCard Class A Common During the quarter, 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 sponsored by a market maker. 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 $800 thousand that Trustmark recorded in the fourth quarter of 2007 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 was included in interest income on loans. Trustmark’s Management as well as the Audit and Finance Committee of the Board of Directors 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 the 2007 or prior period consolidated financial statements. Hurricane Katrina In the third quarter of 2005, immediately following in the aftermath of Hurricane Katrina, Trustmark estimated possible pre-tax losses resulting from this storm of $11.7 million. Trustmark revised these estimates quarterly and any subsequent adjustments are reflected in the table above, net of taxes. At June 30, 2008, the allowance for loan losses included $405 thousand related to possible Hurricane Katrina losses. Note 2 – Loan Composition LOANS BY TYPE   6/30/2008   3/31/2008   12/31/2007   9/30/2007   6/30/2007 Loans secured by real estate: Construction, land development and other land loans $ 1,158,549 $ 1,212,052 $ 1,194,940 $ 1,155,737 $ 1,059,721 Secured by 1-4 family residential properties 1,633,021 1,660,148 1,694,757 1,756,427 1,827,945 Secured by nonfarm, nonresidential properties 1,300,753 1,315,449 1,325,379 1,269,625 1,268,236 Other real estate secured 148,588 160,373 167,610 142,505 132,833 Commercial and industrial loans 1,313,620 1,286,578 1,283,014 1,241,772 1,163,346 Consumer loans 994,475 1,056,346 1,087,337 1,068,610 1,018,427 Other loans   310,369     321,088     287,755     282,865     299,124   Loans 6,859,375 7,012,034 7,040,792 6,917,541 6,769,632 Allowance for loan losses   (86,576 )   (81,818 )   (79,851 )   (72,368 )   (70,948 ) Net Loans $ 6,772,799   $ 6,930,216   $ 6,960,941   $ 6,845,173   $ 6,698,684     June 30, 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 $ 1,158,549 $ 321,864 $ 475,381 $ 108,384 $ 252,920 Secured by 1-4 family residential properties 1,633,021 93,946 1,326,666 175,723 36,686 Secured by nonfarm, nonresidential properties 1,300,753 178,869 725,791 188,347 207,746 Other real estate secured 148,588 12,648 105,114 12,303 18,523 Commercial and industrial loans 1,313,620 22,739 934,086 67,399 289,396 Consumer loans 994,475 2,905 945,704 32,862 13,004 Other loans   310,369   12,704   276,744   15,123   5,798 Loans $ 6,859,375 $ 645,675 $ 4,789,486 $ 600,141 $ 824,073   CONSTRUCTION AND LAND DEVELOPMENT LOANS BY REGION Lots $ 128,252 $ 84,936 $ 24,127 $ 5,277 $ 13,912 Development 233,464 41,098 96,158 14,842 81,366 Unimproved land 336,448 120,422 144,975 36,582 34,469 1-4 family construction 197,766 33,151 84,083 15,232 65,300 Other construction   262,619   42,257   126,038   36,451   57,873 Construction and land development loans $ 1,158,549 $ 321,864 $ 475,381 $ 108,384 $ 252,920 FLORIDA CREDIT QUALITY   Total Loans   Criticized Loans   Classified Loans   Nonaccrual Loans   Impaired Loans Construction and land development loans: Lots $ 84,936 $ 15,711 $ 11,071 $ 7,455 $ 1,628 Development 41,098 19,245 19,245 19,245 10,107 Unimproved land 120,422 65,058 37,417 21,660 18,178 1-4 family construction 33,151 10,757 10,757 6,340 6,016 Other construction   42,257   25,636   18,119   9,861   6,497 Construction and land development loans 321,864 136,407 96,609 64,561 42,426 Commercial, commercial real estate and consumer   323,811   34,695   16,660   5,923   289   Total Florida loans $ 645,675 $ 171,102 $ 113,269 $ 70,484 $ 42,715 FLORIDA CREDIT QUALITY   Total Loans Less Impaired Loans   Loan Loss Reserves   Loan Loss Reserve % of Non-Impaired Loans Construction and land development loans: Lots $ 83,308 $ 4,037 4.85 % Development 30,991 3,328 10.74 % Unimproved land 102,244 5,065 4.95 % 1-4 family construction 27,135 1,002 3.69 % Other construction   35,760   2,326 6.50 % Construction and land development loans 279,438 15,758 5.64 % Commercial, commercial real estate and consumer   323,522   6,587 2.04 %   Total Florida loans $ 602,960 $ 22,345 3.71 % All classified nonaccrual loans over $1 million are assessed for impairment in accordance with SFAS No. 114. Most of Trustmark’s nonaccrual assets are viewed as collateral dependent and assessed using a fair value of collateral 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 as well as for any further deterioration in values since the most recent appraisals. 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 $2.7 million and $7.4 million for the quarters ended June 30, 2008 and March 31, 2008, respectively, and net negative ineffectiveness of $1.1 million for the quarter ended June 30, 2007. The following table illustrates the components of mortgage banking income included in noninterest income in the accompanying income statements:   Quarter Ended 6/30/2008   3/31/2008   12/31/2007   9/30/2007   6/30/2007 Mortgage servicing income, net $ 3,804 $ 3,747 $ 3,725 $ 3,503 $ 3,478 Change in fair value-MSR from market changes 13,104 (10,193 ) (8,143 ) (5,268 ) 4,392 Change in fair value of derivatives (10,453 ) 17,599 10,123 5,298 (5,492 ) Change in fair value-MSR from runoff (2,303 ) (2,430 ) (2,064 ) (2,681 ) (2,494 ) Gain on sales of loans 2,542 1,078 1,594 1,224 1,496 Other, net   14     1,255     (268 )   427     419   Mortgage banking, net $ 6,708   $ 11,056   $ 4,967   $ 2,503   $ 1,799     Six Months Ended 6/30/2008   6/30/2007 Mortgage servicing income, net $ 7,551 $ 6,956 Change in fair value-MSR from market changes 2,911 3,945 Change in fair value of derivatives 7,146 (4,777 ) Change in fair value-MSR from runoff (4,733 ) (4,598 ) Gain on sales of loans 3,620 2,841 Other, net   1,269     187   Mortgage banking, net $ 17,764   $ 4,554   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 6/30/2008   3/31/2008   12/31/2007   9/30/2007   6/30/2007 Securities – Taxable 4.66 % 4.34 % 4.11 % 3.96 % 4.24 % Securities - Nontaxable 6.93 % 7.12 % 7.19 % 7.19 % 7.31 % Securities – Total 4.90 % 4.84 % 4.63 % 4.46 % 4.67 % Loans 6.19 % 6.70 % 7.21 % 7.36 % 7.34 % FF Sold & Rev Repo 2.21 % 3.14 % 4.84 % 5.22 % 5.42 % Other Earning Assets 4.61 % 6.22 % 4.80 % 5.74 % 6.19 % Total Earning Assets 6.00 % 6.54 % 6.94 % 7.04 % 6.99 %   Interest-bearing Deposits 2.58 % 3.12 % 3.52 % 3.67 % 3.69 % FF Pch & Repo 1.96 % 2.96 % 4.22 % 4.76 % 4.71 % Borrowings 3.64 % 5.22 % 5.25 % 5.65 % 6.01 % Total Interest-bearing Liabilities 2.58 % 3.23 % 3.72 % 3.89 % 3.86 %   Net interest margin 3.91 % 3.92 % 3.93 % 3.89 % 3.89 %   Six Months Ended 6/30/2008   6/30/2007 Securities – Taxable 4.55 % 4.21 % Securities - Nontaxable 7.03 % 7.34 % Securities – Total 4.88 % 4.65 % Loans 6.45 % 7.32 % FF Sold & Rev Repo 2.61 % 5.37 % Other Earning Assets 5.37 % 6.19 % Total Earning Assets 6.26 % 6.96 %   Interest-bearing Deposits 2.85 % 3.66 % FF Pch & Repo 2.37 % 4.57 % Borrowings 4.49 % 5.87 % Total Interest-bearing Liabilities 2.89 % 3.82 %   Net interest margin 3.92 % 3.88 % All periods prior to June 30, 2008 have been restated to include the addition of other earning assets, made up primarily of Federal Home Loan Bank and Federal Reserve Bank stock. As discussed in Note 1, Trustmark corrected an accounting error in its consolidated financial statements resulting in a pre-tax benefit of $3.2 million for the quarter ended December 31, 2007. This error correction has been excluded in the table above. Including this error correction, Trustmark’s loan yield for the quarter ended December 31, 2007 was 7.39%, while the net interest margin for the same time period was 4.09%.