The following provides a narrative discussion and analysis of Trustmark Corporation's (Trustmark) financial condition and results of operations. This discussion should be read in conjunction with the consolidated financial statements and the supplemental financial data included elsewhere in this report.

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.

OVERVIEW

The Corporation
Trustmark Corporation, a Mississippi business corporation incorporated in 1968, is a bank holding company headquartered in Jackson, Mississippi. Through its subsidiaries, Trustmark operates as a financial services organization providing banking and financial solutions through approximately 150 offices and 2,600 associates in the states of Florida, Mississippi, Tennessee and Texas.

Trustmark seeks to be a premier financial services company in its marketplace. Trustmark provides a broad range of banking, wealth management, and insurance solutions, creating a diversified financial services company. Trustmark desires to become the customer's preferred choice for financial services in its markets. Trustmark's products and services are designed to strengthen customer relationships, enhance the organization's competitive advantage, and provide additional cross-selling opportunities. This broad range of financial services will strengthen the value of the Trustmark franchise as well as enhance and diversify its earnings stream.

Subsidiaries of Trustmark
Trustmark National Bank
Trustmark National Bank (TNB), initially chartered by the state of Mississippi in 1889, is headquartered in Jackson, Mississippi. TNB represents over 98% of the assets and revenues of Trustmark. Significant services offered by TNB include commercial banking, consumer banking, mortgage banking, wealth management and trust services, and risk management services. TNB also provides investment and insurances services through the following wholly-owned subsidiaries:

Trustmark Investment Advisors, Inc. (TIA) is a registered investment adviser. TIA provides customized investment management services for the clients of TNB and also serves as investment advisor to The Performance Funds, a proprietary family of mutual funds.

The Bottrell Insurance Agency, Inc. (Bottrell), which is based in Jackson, is among the largest agencies in Mississippi. Bottrell provides comprehensive insurance and risk management solutions to businesses and individuals.

TRMK Risk Management, Inc. (TRMI) engages in individual insurance product sales as a broker of life and long term care insurance.

Fisher-Brown, Incorporated (Fisher-Brown), a leading insurance agency in Northwest Florida, provides a comprehensive range of insurance products to businesses, families and individuals.

Somerville Bank & Trust Company
Somerville Bank & Trust Company (Somerville), headquartered in Somerville, Tennessee, provides banking services in the eastern Memphis MSA through five offices.

Capital Trusts
Trustmark Preferred Capital Trust I (Trustmark Trust) is a Delaware trust affiliate formed in 2006 to facilitate a private placement of $60.0 million in trust preferred securities. Republic Bancshares Capital Trust I (Republic Trust) is a Delaware trust affiliate acquired as the result of Trustmark's acquisition of Republic Bancshares of Texas, Inc. Republic Trust was formed to facilitate the issuance of $8.0 million in trust preferred securities. As defined in applicable accounting standards, both Trustmark Trust and Republic Trust are considered variable interest entities for which Trustmark is not the primary beneficiary. Accordingly, the accounts of both trusts are not included in Trustmark's consolidated financial statements.

CRITICAL ACCOUNTING POLICIES

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

Certain policies inherently have a greater reliance on the use of estimates, assumptions and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. There have been no significant changes in Trustmark's critical accounting estimates during the first three months of 2009.

FINANCIAL HIGHLIGHTS

Trustmark's net income available to common shareholders totaled $23.4 million in the first quarter of 2009, which represented basic earnings per common share of $0.41. Trustmark's first quarter 2009 net income produced a return on average tangible common equity of 14.46% and a return on average assets of 1.10%. Trustmark's Board of Directors declared a quarterly cash dividend of $0.23 per common share. The dividend is payable June 15, 2009, to shareholders of record on June 1, 2009.

Net income available to common shareholders for the three months ended March 31, 2009, decreased $2.8 million, or 10.8% compared to the same time period in 2008. The decrease was primarily the result of preferred stock dividends and the accretion of preferred stock discount which reduced net income available to common shareholders by approximately $3.1 million. Excluding preferred stock dividends and the accretion of preferred stock discount, net income increased $306 thousand, or 1.2%, compared to the same time period in 2008. This increase resulted from an increase in net interest income of $13.8 million, which was offset by a decrease in noninterest income of $5.5 million, an increase in provision for loan losses of $2.6 million and an increase in noninterest expense of $4.6 million.

Selected Income Statement Data
($ in thousands, except per share data)

                                                                        Three Months Ended
                                                                March 31, 2009      March 31, 2008
Net interest income-fully taxable equivalent                   $         90,946     $        77,070
Taxable equivalent adjustment                                             2,397               2,321
Net interest income                                                      88,549              74,749
Provision for loan losses                                                16,866              14,243
Net interest income after provision for loan losses                      71,683              60,506
Noninterest income                                                       43,004              48,516
Noninterest expense                                                      74,407              69,826
Income before income taxes                                               40,280              39,196
Income taxes                                                             13,795              13,017
Net income                                                               26,485              26,179
Preferred stock dividends                                                 2,688                   -
Accretion of preferred stock discount                                       438                   -
Net income available to common shareholders                    $         23,359     $        26,179

Earnings per common share - basic                              $           0.41     $          0.46
Earnings per common share - diluted                                        0.41                0.46
Dividends per common share                                                 0.23                0.23

Return on assets                                                           1.10 %              1.19 %
Return on average tangible common equity                                  14.46 %             17.59 %

RESULTS OF OPERATIONS

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

Net interest income-FTE for the first three months of 2009 increased $13.9 million, or 18.0%, when compared with the same time period in 2008. Trustmark expanded its net interest margin while in a falling rate environment when compared to the previous year. This was accomplished through deposit pricing discipline afforded to Trustmark due to a strong liquidity position, the purchase of fixed rate securities throughout the year, and decreased funding costs. The combination of these factors resulted in a NIM of 4.18% during the first three months of 2009, a 26 basis point increase when compared with the first three months of 2008. For additional discussion, see Market/Interest Rate Risk Management included later in Management's Discussion and Analysis.

Average interest-earning assets for the first three months of 2009 were $8.833 billion, compared with $7.898 billion for the same time period in 2008, an increase of $935.3 million. The increase was primarily due to an increase in average total securities, which increased $1.134 billion compared to the first three months of 2008. The increase in average total securities was offset by a decrease in average total loans of $195.3 million when the first three months of 2009 are compared to the same time period in 2008. Due to a decrease in interest rates, the yield on loans decreased 133 basis points during the first three months of 2009 compared to the same time period during 2008. During the first three months of 2009, the overall yield on securities increased by 47 basis points when compared to the first three months of 2008 reflecting recent securities purchases. This improvement has helped to offset decreasing loan yields seen during the periods discussed above. The combination of these factors resulted in a decline in interest income-FTE of $12.1 million, or 9.5%, when the first three months of 2009 is compared to the same time period in 2008. The impact of these factors is also illustrated by the yield on total earning assets which decreased from 6.54% for the first three months of 2008 to 5.34% for the same time period in 2009, a decrease of 120 basis points.

Average interest-bearing liabilities for the first three months of 2009 totaled $6.995 billion compared with $6.387 billion for the same time period in 2008, an increase of $607.9 million, or 9.5%. However, the mix of these liabilities has changed when these two periods are compared. Management's strategy of disciplined deposit pricing resulted in a modest 1.8% decrease in interest-bearing deposits for the first three months of 2009 while the combination of federal funds purchased, securities sold under repurchase agreements and other borrowings increased by 90.0%. The impact of the change in liability mix, as well as lower interest rates, resulted in a 177 basis point decrease in the overall yield on liabilities when the first three months of 2009 is compared with the same time period in 2008. As a result of these factors, total interest expense for the first three months of 2009 decreased $26.0 million, or 50.7%, when compared with the same time period in 2008.

Yield/Rate Analysis
Table
($ in thousands)

                                                       Quarter Ended March 31,
                                          2009                                         2008

                          Average                       Yield/         Average                       Yield/
                          Balance       Interest         Rate          Balance       Interest         Rate
Assets
Interest-earning
assets:
Federal funds sold
and securities
purchased under
reverse repurchase
agreements              $    15,988     $      19           0.48 %   $    22,921     $     179           3.14 %
Securities - taxable      1,683,745        21,654           5.22 %       542,683         5,857           4.34 %
Securities -
nontaxable                  110,737         1,834           6.72 %       117,800         2,086           7.12 %
Loans (including
loans held for sale)      6,981,921        92,382           5.37 %     7,177,233       119,641           6.70 %
Other earning assets         40,485           313           3.14 %        36,958           572           6.22 %
Total
interest-earning
assets                    8,832,876       116,202           5.34 %     7,897,595       128,335           6.54 %
Cash and due from
banks                       239,508                                      259,392
Other assets                803,416                                      775,722
Allowance for loan
losses                      (97,986 )                                    (80,998 )
Total Assets            $ 9,777,814                                  $ 8,851,711

Liabilities and
Shareholders' Equity
Interest-bearing
liabilities:
Interest-bearing
deposits                $ 5,494,572        22,540           1.66 %   $ 5,597,220        43,363           3.12 %
Federal funds
purchased and
securities sold under
repurchase agreements       674,175           364           0.22 %       417,338         3,073           2.96 %
Other borrowings            825,785         2,352           1.16 %       372,050         4,829           5.22 %
Total
interest-bearing
liabilities               6,994,532        25,256           1.46 %     6,386,608        51,265           3.23 %
Noninterest-bearing
demand deposits           1,470,822                                    1,390,843
Other liabilities           120,062                                      141,741
Shareholders' equity      1,192,398                                      932,519
Total Liabilities and
Shareholders' Equity    $ 9,777,814                                  $ 8,851,711

Net Interest Margin                        90,946           4.18 %                      77,070           3.92 %

Less tax equivalent
adjustment                                  2,397                                        2,321

Net Interest Margin
per Income Statements                   $  88,549                                    $  74,749

Provision for Loan Losses
The provision for loan losses is determined by Management as the amount necessary to adjust the allowance for loan losses to a level, which, in Management's best estimate, is necessary to absorb probable losses within the existing loan portfolio. The provision for loan losses reflects loan quality trends, including the levels of and trends related to nonaccrual loans, past due loans, potential problem loans, criticized loans, net charge-offs or recoveries and growth in the loan portfolio among other factors. Accordingly, the amount of the provision reflects both the necessary increases in the allowance for loan losses related to newly identified criticized loans, as well as the actions taken related to other loans including, among other things, any necessary increases or decreases in required allowances for specific loans or loan pools.

Provision for Loan Losses
($ in thousands)                     Three Months Ended March 31,
                                       2009                 2008
Florida                           $       10,733       $        9,557
Mississippi (1)                            4,386                2,807
Tennessee (2)                              1,621                  779
Texas                                        126                1,100
Total provision for loan losses   $       16,866       $       14,243

(1) - Mississippi includes Central and Southern Mississippi Regions
(2) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions

As shown in the table above, the provision for loan losses for the first three months of 2009 totaled $16.9 million, or 0.98% of average loans, compared with $14.2 million during the same time period in 2008. During the first three months of 2009, the provision for loan losses exceeded net charge-offs by $5.5 million, including $3.8 million above net charge-offs in Florida. See the section captioned "Loans and Allowance for Loan Losses" elsewhere in this discussion for further analysis of the provision for loan losses.

Noninterest Income
Trustmark's noninterest income continues to play an important role in improving net income and total shareholder value. Total noninterest income before securities gains, net for the first three months of 2009 decreased $5.1 million, or 10.6%, compared to the same time period in 2008. Please see the discussion below for the selected items which supported this decrease. The comparative components of noninterest income for the three months ended March 31, 2009 and 2008, are shown in the accompanying table.

The single largest component of noninterest income continues to be service charges on deposit accounts, which remained flat at $12.6 million when the first three months of 2009 is compared to the same time period in 2008. Service charges on deposit accounts include service charges and NSF fees. Service charges increased by $162 thousand for the first three months of 2009 compared to the same time period in 2008. The increase in service charges for the first three months of 2009 is primarily attributable to decreases in earnings credits earned by commercial customers. The earnings credit rate is the value given to deposits maintained by commercial customers. Because interest rates have trended downward during the last two years, these deposit balances have become less valuable and are yielding a lower earnings credit rate relative to the first three months of 2008. As a result, customers must pay for their services through fees rather than with earnings credits applied to their deposit balances. NSF fees decreased by $157 thousand for the first three months of 2009 compared to the same time period in 2008. Compared to first three months of 2008, NSF revenues declined due to a reduced number of NSF opportunities which resulted from the current economic environment. Revenues from service charges were negatively impacted by the increased usage of accounts that do not charge a monthly fee and increased usage of electronic transactions.

Noninterest Income
($ in thousands)
                                                       Three Months Ended March 31,
                                             2009          2008         $ Change       % Change
Service charges on deposit accounts        $  12,568     $  12,564              4            0.0 %
Insurance commissions                          7,422         8,256           (834 )        -10.1 %
Wealth management                              5,555         7,198         (1,643 )        -22.8 %
General banking-other                          5,407         5,788           (381 )         -6.6 %
Mortgage banking, net                         10,907        11,056           (149 )         -1.3 %
Other, net                                     1,115         3,221         (2,106 )        -65.4 %
Total Noninterest Income before
securities gains, net                         42,974        48,083         (5,109 )        -10.6 %
Securities gains, net                             30           433           (403 )        -93.1 %
Total Noninterest Income                   $  43,004     $  48,516     $   (5,512 )        -11.4 %

Insurance commissions were $7.4 million during the first three months of 2009 compared with $8.3 million for the same time period in 2008. The decline in insurance commissions experienced during the first three months of 2009 is primarily attributable to contingency-related income for both Bottrell Insurance Agency, Inc. and Fisher-Brown, Inc.

Wealth management income totaled $5.6 million for the first three months of 2009 compared with $7.2 million for the first three months of 2008. Wealth management consists of income related to investment management, trust and brokerage services. The decline in wealth management income for the first three months of 2009 is largely attributed to a significant reduction in assets under management which resulted from declining stock market valuations. In addition, revenues from brokerage services have decreased due to the current economic environment. At March 31, 2009 and 2008, Trustmark held assets under management and administration of $6.6 billion and $7.4 billion, respectively, and brokerage assets of $1.1 billion and $1.2 billion, respectively.

General banking-other totaled $5.4 million for the first three months of 2009 compared with $5.8 million for the first three months of 2008. General banking-other income consists primarily of fees on various bank products and services as well as bankcard fees and safe deposit box fees. General banking fees and commissions decreased $363 thousand for the first three months of 2009 primarily as a result of a decline in fees earned on an interest rate driven product when compared with the same time period in 2008.

Net revenues from mortgage banking were $10.9 million for the first three months of 2009 compared with $11.1 million for the same time period in 2008. As shown in the accompanying table, net mortgage servicing income has increased $254 thousand, or 6.8% when the first three months of 2009 is compared with the same time period in 2008. This increase coincides with growth in the balance of the mortgage servicing portfolio as well as an increase in mortgage production. Loans serviced for others totaled $5.0 billion at March 31, 2009 compared with $4.6 billion at March 31, 2008. Trustmark's highly regarded mortgage banking reputation has enabled it to take advantage of competitive disruptions and expand market share.

The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements:

Mortgage Banking Income
($ in thousands)
                                                           Three Months Ended March 31,
                                                 2009          2008        $ Change       % Change
. . .