Good morning, ladies and gentlemen, and welcome to Trustmark Corporation’s fourth quarter earnings conference call. At this time, all participants are in a listen-only mode. Following the presentation, there will be a question-and-answer session. As a reminder, this call is being recorded. It is now my pleasure to introduce Joey Rein, Director of Investor Relations at Trustmark. Mr. Rein, Please go ahead, sir.

Thank you, and good morning. I would like to remind everyone that a copy of our fourth quarter earnings release and supporting financial information is available on the Investor Relations section of our web site at trustmark.com by clicking on the ‘News Releases’ tab. During the course of our call this morning, management may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We would like to caution you that these forward-looking statements may differ materially from actual results due to a number of risks and uncertainties, which are outlined in our earnings release and our other filings with the Securities and Exchange Commission. At this time, I would like to introduce our Chairman and CEO, Richard Hickson.

Good morning. Thank you for joining us. I know we have almost all of the analysts that cover us on board. I know you are busy this week and we appreciate you taking the time as well as our shareholders. I have with me this morning, Louis Greer, our Chief Financial Officer; Buddy Wood, our Chief Risk Officer, and the managers of our various credit areas. I characterize the quarter as a good quarter particularly in this environment. It’s our second quarter in a row with absolutely what I would call no noise in it to detract you from the core earnings of the company. We earned $24 million or $0.42 a share, return on tangible equity of approximately 15%, ROA 1.07%. Year-over-year, for the year, Trustmark earned $91 million, over 1% ROA and at a 15% return on tangible equity. It doesn’t feel like that thinking about last year, but looking at it holistically I would say in light of the environment we can't be immune to the economy. A very good year for our Company. The results in characterizing last quarter, I would call it relatively stable in the credit quality area particularly in light of the environment and we will be very granular and thorough in our comments and transparent. Increased capital strength both from earnings and as you know our acceptance of the Preferred stock with the TARP; very disciplined expense management. Our expenses have been have been flat for multiple quarters. Bottom line, profitable, well capitalized, strong and adequate liquidity, a very diversified business mix and financial flexibility to succeed in this challenging environment. I would like to take you to our stat sheets behind our news release to Page Three and I would like to talk about credit quality. You will note that we…

Thank you, sir. Ladies and gentlemen, our question-and-answer session will be conducted electronically. (Operator instructions) And for our first question we go to Kevin Fitzsimmons with Sandler O'Neill. Kevin Fitzsimmons – Sandler O'Neill: Good morning everyone.

Good morning, Kevin. Thank you for calling in. Kevin Fitzsimmons – Sandler O'Neill: I just had a couple of questions, Richard. First, I just wanted your clarify your margin guidance. You said – I think you said it was going to end the year 2009 somewhere around where you ended it year-end 2007, which I think first quarter 2007 margin was 3.93 or where you talking about a full year margin.

I believe it will be a little higher than that. What I don’t want to leave you with is an expectation that its’ going to stay at 4.20. We have remodeled our margin numerous times since the historic rate cut in mid-December. We were a little bit positive gapped. However, we’ve been able to take deposit rates down. And looking forward, I would say it will drop 10 basis points or so in the first or second quarter, but it could drop another 10 or 15 basis points in the third quarter. However, these things are manageable six months out, but we are not looking for anything precipitous in the margin compared to generally where it was throughout ’08. Buddy Wood, do you want to add anything to that?

I think the point that you made earlier regarding that our asset sensitivity was enhanced as we purchased these investment securities and we are able to fund them where we needed some funding on a short-term basis had created a very neutral position. We’ve run both the interest rate risk and our earnings value of equity in a variety of different shock scenarios and are able to achieve what Richard has described in all but the most extreme conditions. Kevin Fitzsimmons – Sandler O'Neill: So, would we – is the way to kind of think of it that the securities might be leveled to even increasing from her but that funding is going to change over time to be more in deposits, which is going to be a higher cost relative to the source you were able to use?

Our deposit and our lending changes almost mirror one another. We have enough variable priced assets and enough long-term liabilities that when we use the short-term borrow mix in that position, we end up with a near neutral adjustment. We have not had to go after any expensive funding, which would have been an impact to this margin conversation. Fortunately, we find that our competitors are now coming in to us after having been much wider and much more costly. So, it is – with a good degree of comfort that unless we have something and it may fall into what we might call political, and therefore unknown category will be the only stress level of the margin that is unknown to us. Otherwise we feel we can manage it on a very stable basis. Kevin Fitzsimmons – Sandler O'Neill: Okay. And additionally, you mentioned Texas earlier in the call, Richard. Obviously there is more concern about energy these days with what the price of oil has done. Can you talk about what you are seeing there and if you are seeing any early signs of stress and how you are dealing with that. Thanks.

Sure. Obviously everyone in Texas is cautious of some slowdown in – that we’ve seen all year in the number of housing starts. We hear that there are some issues with the number of strip shopping centers that saw the stuff out on the branches. We don’t have any significant amount of that. We are not heavily exposed directly to the energy industry through a large portfolio there. As you know, well over half of our portfolio is just small business lending there. So, I think you would find better people to give you more accurate information that are more directly involved in that market, Kevin. Kevin Fitzsimmons – Sandler O'Neill: Well, I am not asking so much about the energy per se, just I am asking about your perceived exposure to energy. So it sounds like you are characterizing this more as indirect. If energy slows down, obviously that market slows down, but I mean housing and through small business and things like that.

Exactly. Our own review team was in there. Deterioration we are seeing, other than that Sim Crude credit is – small loans we haven’t seen it. We didn’t have a significant number of downgrades. And let me just say our Texas unit was thoroughly review by all constituencies who would want to look at it during the fourth quarter. We don’t ever comment on regulatory exams. Kevin Fitzsimmons – Sandler O'Neill: Okay. Just lastly, Richard, you mentioned right at the end there about being open to FDIC assistance deals. Can you just refresh us what’s your wish list in terms of market is. If you were to have deals brought to you what – where you would most like to expand?

Well, it’s been brought to us and we declined because we see no logic in a $300 million bank 200 miles outside of one of our markets. We see a number of institutions within our footprints in Florida that we think could have some issues. If they do, and they make sense for us where we have branches in that market we would be interested in it, but we are not interested in it to the extent of jumbo CDs, whatever. So we know to buy a failed bank if necessarily a good thing unless we can close most of the branches because it costs $400,000 or $500,000 a year to run a branch. We are not planning on taking on anybody’s assets. I don’t believe – there could be a unique small situation somewhere where there was no significant loan portfolio, but in general we aren’t going to step off in this environment and do anything. If they’re meaningful, $500 million to $2 billion-size company and our footprint gets in an assisted situation, we will give it strong consideration. Kevin Fitzsimmons – Sandler O'Neill: Okay, thank you very much.

For our next question we go to Brian Klock with KBW Investment. Brian Klock – KBW Investment: Good morning Richard.

Good morning, Brian. Thank you for joining us. Brian Klock – KBW Investment: Thank you. I know that a lot of my questions have been answered, so I will just have a few. I guess when you look to Page Six of your financial information, good granular detail on all the NPAs. I just – what I was wondering was just looking at Florida the last two quarters as far as provisions versus charge-offs, you have provisioned less than charge-offs. I guess my first question is do you think then that the reserve coverage you have got there is – and maybe you can remind us on the impaired loans, how much of those impaired loan balances have been charged off that is the first question. And the second question, when you look at Texas, we know that a good lion’s share of those NPLs is Sim Crude related, the extra provision – because you provisioned almost $3 million in the quarter in Texas – was that related to the ORE that you mentioned or are you seeing something that’s in commercial or something that you want to build a reserve for in Texas, maybe you can comment on those two things.

Yes, I am going to let Barry Harvey in our Risk Management Area address the first couple of questions. Brian Klock – KBW Investment: Okay.

Brian and then Bob Hardison address – if Barry does not have all the information. Bob spent a significant time in Texas and I think he can comment about that. Barry, on the impaired loans and write-offs and what you are seeing in expectation.

Exactly. What we are doing on the impaired loans – excuse me, just back up to the provision base, the provision is driven by loan growth or reduction in loan balances, net charge-offs, risk rate changes within our commercial portfolio as well as the changes in our reserving factors for our consumer portfolio and we use a 20 quarter historical rolling average for losses. When looking at the – Brian Klock – KBW Investment: On the consumer?

On the consumers. When looking at the provision for the fourth quarter it was $16.7 million and then net charge-offs was $12.7 million. When you are looking specifically at Florida, the net charge-offs, as you indicated, were $7.16 million and the provision was $6.5 million. What has to be taken into consideration is that approximately over $3 million of the charge-offs were actually provisioned in previous periods. So when taking that into consideration we actually provisioned approximately $2.5 million more than we actually charged off that had not previously been provisioned for. So oftentimes these credits manifest themselves over time and because of that the risk rate changes, the reserving occurs in previous quarters and actually results in the impairment and the write-off or the writedown of the value in later quarters. So for example, in the fourth quarter we are talking about – we actually provisioned more than $3 million more in Florida than we actually had in charge-offs. And – does that answer, does that kind of give you –

In other words, so with one $3 million payoff of a substandard loan to – yes.

Does that kind of give you the information you need there? Brian Klock – KBW Investment: Yes and I am not sure if you have – I think in the last quarter you said that the impaired loans in Florida are written down by 42%, I don’t know if that’s still – what you are seeing at the end of the year is that still the same sort of –?

I think that is broadly a good number, some would be less, some would be more.

That is correct. It varies, that is what we said depending what type of collateral is involved obviously land more so than a wonderful family finished home. So but that is generally what we are seeing.

We made a couple of impaired loans that moved in that we did not need to write down further from our pooled levels. For example, the $3 million Mississippi one required no additional write-down. There were a couple of others in Florida where we were already there and not every property that the guarantor can’t service is that depreciated. Sometimes we might be fortunate enough to have had a good project but they releverage themselves with other institutions and we can no longer look to them. Brian Klock – KBW Investment: Okay.

I will ask Bob Hardison to share about Florida, and what he did down there and what he sees and just generally and then – Brian Klock – KBW Investment: I think I am actually okay on Florida, I guess maybe we can talk about Texas.

Sure.

Okay. The provision was about consistent with the prior quarter in Texas. In the fourth quarter it was really more attributable to the loan that Richard mentioned previously that it went nonaccrual, and we have since foreclosed the loan. We feel real good about that. The appraisal we’ve recently received was consistent with the appraisal we made when the loan was originated. There were a couple of other loans in the quarter that were downgraded out of caution the borrower was showing some stress, but nothing really out of the ordinary. I think Texas still performed well. Our energy portfolio you alluded to a minute ago is only $80 million and there is a big balance between midstream and downstream companies, so we don’t really have a big – we only have one production loan in that portfolio and Richard said a lot of small loans and small business loans. So we have not – although Texas and Houston is showing the effects of the national economy as a whole albeit I think they came to the party late. They are showing some stress and some slowdown certainly not the magnitude of other markets, but we are working closely looking at Houston and I know – as Richard said or I said with new books went out there and we have not seen any significant deterioration in our portfolio nor do we expect any in the near term. Brian Klock – KBW Investment: Okay and I guess just may be, if you can refresh my memory, the loan in Texas that was provisioned for it looks like – that was taken into ORE was that a commercial real estate loan or the construction or the development, what was the type of property acquired?

It was a development loan that the borrower actually had problems unrelated to our project but was unable to keep our project (inaudible) due to problems in other areas and so we were really forced to take possession of that property. Brian Klock – KBW Investment: Okay great and I don’t know – Bob I have got you another, do you have the early stage delinquencies at the end of fourth quarter versus third quarter, 30-89 days past due bucket?

Just a minute, in Texas? Brian Klock – KBW Investment: No, overall.

Let me look at it, I am in front of that but I don’t want to read out 25 numbers to you. Yes, it is very hard to cover this.

Was there a specific portfolio or just in general terms? Brian Klock – KBW Investment: I guess I really was kind of looking at commercial real estate and C&I, the small business C&I and commercial real estate. And again just and even Richard maybe you can comment after that on are you seeing any deterioration starting to show up in that small business or CRE (inaudible) that is the question.

Okay, just in terms of the entire portfolio we are going to be about 2.41% 30 days or more past due and then within the commercial portfolio that is going to be approximately about 2.7% 30 days or more past due.

That includes Florida.

It does, it includes everything. So Richard, do you want to be more granular?

No. A year ago 12/31/07 our direct consumer portfolio that 750 originated branch was 1.59%, then it was 1.55% at the end of ’08. It dipped down a little bit and came back up. Our auto portfolio went from 1.55% to 2.5%, small business, which is around $800 million was consistent 3.36% a year ago and 3.28% the end of this year. Our mortgage loans 0.8% to 1.4%. So when we look – add it there has been some deterioration, but not anything significant and as you can see that entire consumer portfolio has about $16 million between the indirect auto, the direct-to-consumer which will be HELOCs, HELOANs, direct car loans and our mortgage portfolio, and it was up about $4 million for the quarter. And the losses outside of auto have shown nothing of any significance. And the past due home mortgages that we are working that are in our portfolio we are still counting on a couple of hands. We do service for the G&Ps [ph] and we are well into all of that and modifications and whatever – modifications of our own portfolio have not been called for at this time. Brian Klock – KBW Investment: Okay, great. Thanks for taking my questions.

Sure.

(Operator instructions) For our next question, we go to John Pancari with JPMorgan.

Hello John. Pauline Sandville – JP Morgan: Hi, this is actually Pauline Sandville [ph] on behalf of John. I was just wondering if you could talk about your thoughts on continuing to add to the balance sheet leverage or whether 18% of assets is sort of the top of where you want to be or whether you are willing to continue to add to that?

I think that is a good place to be. That doesn’t mean it won’t go up or down $100 million but we are through leveraging plus we don’t like the rate situation at the moment. Pauline Sandville – JP Morgan: Okay. Can you remind us what your annual cash flows are from the bond portfolio and what the rolling off yields are about?

Well, we can surely do that. You will recall that we have deleveraged the Company down to about $400 million or $500 million in bonds totally from around $2 billion three years earlier. So we have bought $1.5 billion worth of bonds during the year. Buddy Wood is going to make a comment on that –

I would be glad to.

What the model says and what you really expect, yes.

The investment portfolio currently is at about $1.8 billion and a yield of around 5.27. We have got an average maturity of around two years on it. We structured it specifically to have cash flow balance in the first year recognizing that cash flow we wanted to move into lending, we still do. That number probably ranges from $500 million to $700 million in the first year. The yields that we will see come off during that time will be between 5 and 5.25. The rest of the average maturity is laid out on a declining principle basis going from two out to six years and is very tightly structured, mostly small discounts so that we would not be faced with premium write-offs with any accelerated payments which we now of course are experiencing. The tests that we ran when purchasing these securities over the last year included the four and half move in the third year although we felt that it would probably less likely than what we have all recognized is actually deferred now – is a combination of both rates and the political environment that we are in. But we see some stabilization in that and that keeps us from having just a sharp drop-off beyond the forecast that we have in cash flow. Pauline Sandville – JP Morgan: Thank you, that is very helpful. That is all the questions I have.

And for our next question we go to Andy Stapp with B. Riley & Company. Andy Stapp – B. Riley & Company: Good morning.

Good morning, Andy, thank you for joining. Andy Stapp – B. Riley & Company: In Tennessee I noticed that your provision up yet NPAs and net charge-offs were down, could you just provide some color on that?

Yes, I am going to let Jerry Host start, the COO, he has been up there a couple of times this quarter looking at the asset situation in Memphis, I am going to ask Jerry if he will comment on that.

Certainly. We recognized some issues with the Memphis real estate portfolio probably in the second and third quarter of last year. We addressed those issues very quickly. Our team on the ground in Memphis worked very aggressively to deal with those, and I think you are starting to see some of the positive results from those efforts that took place in the second, third, and fourth quarter of ’08. Andy Stapp – B. Riley & Company: And do you have a good run rate for compensation expense going forward?

You mean are we getting raises, the answer is likely not. Andy Stapp – B. Riley & Company: Okay. I mean is the fourth quarter a fairly good run rate or – a blend between the third and fourth quarter?

I don’t see any appreciable change in our compensation categories. We are doing a lot of re-engineering. We will continue to add some lending personnel in Texas. We are an extremely well regulated Company between the Fed, the OCC, and everyone else. So we have added about everything we think we would need in the compliance areas of DSA [ph]. We have added senior people into enterprise risk management in the last year, so I don’t see anything significant there. When we look at our expenses for next year, there are only one thing going up for sure that FDIC insurance for the errors of others, which we very – hate to see at this time and we hope that that does not go any higher than the present (inaudible), which had shown it going up to how much, Louis, for next year?

For us, about seven.

Go up about $7 million to about $10 million or $11 million for the year and that it depends on what it costs to carry and liquidate ORE, pay the taxes, the appraisals, whatever, which we pretty well built into our budget and maybe marginally more than this year, but we are generally going to hold our compensation account and other expenses in the Company other than the FDIC as flat as they can be held and that means cutting in some areas and growing in others. Andy Stapp – B. Riley & Company: Okay, thank you. That’s all I have.

And with that ladies and gentlemen we have no further questions on our roster. Therefore, Mr. Hickson, I will turn the conference back over to you for any closing remarks.

We want to thank you for joining us. This is two quarters in a row at this $24 millionish level. Earnings are at that level principally because of the level of provisioning. When we look at us, I think we have been extremely dependable in expense management, very predictable in fee income. We’ve talked extensively about the margin. No one knows whether the economy will perk up towards the end of this year. We are aggressively working on Florida and we are cautiously optimistic about our Mississippi portfolio. Thank you for joining us.

Ladies and gentlemen, this does conclude the Trustmark Corporation’s fourth quarter earnings conference call. We do appreciate your participation and you may disconnect at this time.