JACKSON — Fitch Ratings has affirmed the long-term issuer default ratings (IDRs) for Trustmark Corporation (TRMK) and its banking subsidiary, Trustmark National Bank at “A-.” The outlook is “stable.”
Fitch said it has affirmed TRMK’s ratings and outlook “based on its strong capital positions, solid core earnings strength, and good franchise, particularly in its home state of Mississippi. TRMK recently issued over $100 million in common stock, and subsequently paid off the preferred stock investment made by the U.S. Treasury last December as part of the Capital Purchase Program. Although the challenging operating environment in 2009 is reflected in TRMK’s financial results, which are below historical averages, they remain solidly profitable. TRMK has one of the highest ratios of pre-tax pre-provision earnings as a percentage of average assets amongst similarly sized rating peers. Finally, TRMK’s franchise is highlighted by its good market share in its home market of Jackson, Miss.
“Somewhat offsetting this, TRMK has reported continued asset quality deterioration. The company’s Florida exposure has been particularly stressed, comprising only 9 percent of total loans, but over 50 percent of nonaccrual loans as of Sept. 30, 2009. TRMK has written down its portfolio of Florida impaired real estate loans and foreclosed real estate properties considerably, suggesting a good deal of the losses have already been realized. Further, although performance in the commercial real estate (CRE) book has been good with nominal net charge-offs to date, TRMK is exposed to potentially higher levels of credit costs in the future given weak market fundamentals in the CRE market. CRE loans, excluding construction and land development loans, comprised 23 percent of loans at Sept. 30, 2009.
“The stable outlook presumes manageable credit deterioration, ongoing profitability and the continuation of solid capital levels over the near to intermediate term.”