Good morning, ladies and gentlemen, and welcome to Trustmark Corporation's fourth quarter earnings conference call. (Operator Instructions) It is now my pleasure to introduce Joey Rein, Director of Investor Relations at Trustmark.

Good morning, and thank you, operator. I'd like to remind everyone that a copy of our fourth quarter earnings release as well as supporting financial information is available on the Investor Relations section of our website at trustmark.com. 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 were outlined in our earnings release and our other filings with the Securities and Exchange Commission. At this time, I'll turn the call over to Jerry Host, President and CEO of Trustmark.

Thank you, Joey, and good morning all, and thanks for joining us. Also with us this morning are Louis Greer, our Chief Financial Officer; Barry Harvey our Chief Credit Officer; Buddy Wood, our Chief Risk Officer; Tom Owens, our Bank Treasurer; and Breck Tyler, President of our Mortgage Services Company. Let me start with a quick review of our 2013 highlights. 2013 was a great year of accomplishments for Trustmark. We completed the largest acquisition in our history. We entered in a number of attractive markets in Alabama and strengthened our position in the Florida Panhandle. We also purchased two branch offices in the Oxford, Mississippi market. Since that acquisition in July, deposits have nearly tripled from $12 million to $34 million at yearend. We increased our market position to the number one rank in deposit market share in Mississippi during the year. We continue to see improvement in credit quality. We optimized our branch network by consolidating 14 branches and opening three new branches. We invested in technology to enhance future productivity and provide greater customer service. We continue to provide value to our shareholders. Anyway you look at it, 2013 was a successful year. Our net income totaled $117.1 million. Diluted EPS were $1.75 and we paid $0.92 a share in dividends during the year. Our return on average assets was 1.02% and our return on average tangible common equity was 13.09%. If you were to exclude non-routine merger cost and litigation expense, net income in 2013 totaled $125.3 million or $1.87 per diluted share. Now, let's take a closer look at the fourth quarter performance. Net income was $28 million or $0.42 a share. This represented a return on tangible common equity of 12.60% and return on average asset of 0.95%. Yesterday, our Board of Directors declared…

(Operator Instructions) Our first question comes from Catherine Mealor of KBW.

I might be mistaken, but I think a few quarters ago, you'll had mention a goal to get your expense base x OREO and CDI to about $92 million. So you're higher than that now. Can you talk a little bit about what maybe is driving this differential and do you think that that $92 is just unachievable now, just given maybe some changes in your operating structures? Or are there any imitative that you have in place to maybe get that expense base down to that previously targeted level?

We probably need to go back and take a look, our records indicate that we had kind of led to this $95 million this last call that we had, and that's where we think we'll be within that range. But let me have Louis, kind of comment a little more, if you would.

As Jerry mentioned, I think that when you look at our total expenses, were around a $104.9 million, backing out by the $5.5 million for ORE expenses as well as amortization, were down about $99.4 million, but when you look at the expenses, increases for the quarter, certainly salary and benefits went up. We had certainly a yearend incentive accrual adjustment for about $1.2 million, actually that is one-time expenses. In services and fees, we had two items, one was compliance related matters. We spend about $450,000 one-time as consultant's fee, work out some compliance-related matters, and in addition to that we had some controllable advertising expenses, we accelerated in the fourth quarter. And then when we look at other expenses, I think as discussed in the press release and in the Jerry's comment, we had about $1.1 million, a one-time expenses related to the mortgage company. And in the beginning of the fourth quarter, we settled a global settlement with Fannie Mae, which cleared up all with Fannie Mae, put back to expenses, but we accrued an additional $500,000 at the end of the year based on some analysis. We now have a reserve of a little under $2 million, I think its $1.8 million as well as some cleanup and some foreclosures, which we know is one-time. And then an addition in other expenses, there are some controllable expenses related to some community involvement of $300,000. So as I reconcile fact for the core from $99.4 million, we see that core run rate being about $96 million and we see that being fairly steady in quarters to come.

And maybe switching a little bit, just to the accretable yield, you gave some guidance for the yield on the acquired loans to be 6% to 6.25% this year. But you had a fairly large loan mark on BTFG. And as we're getting into an environment where credit is getting better across the country, do you think there is a likelihood that we will see higher accretable yields coming off of that portfolio? I know it's hard to predict, but just maybe you can talk about what you're seeing when you look into this credit?

Well, I think that's the challenge. We'll have Barry Harvey comment. But obviously this is, as recoveries are difficult to project and we pointed that out. We've given guidance on what we project the size to be and the yield on that, but both recoveries and how we do relative to the mark are two things that are very difficult to hit. But let me ask Barry, if he can give just a little bit of flavor on what they are seeing, now that they've worked through a significant number of these credits.

I'll be glad to, Gerard. I guess a few things to bear in mind, one is, since we made the acquisition back in the first quarter, we've had our chance to go through on all of the problem loans, where all the mark resides. And reassess where we are, reassess the values of the collaterals, those are the collateral that depend and reassess the cash flows, get up to every financials. I think we've got a good benchmark established as of yearend, as to some certainty regarding each customer, problem customer, where they are, how we move forward and a good plan of action that we've gone through a couple of times and revised. We've also got a situation where our independent asset review function went in the latter part of the year and did a very thorough review. First time they've been able to go back and have the benefit of the lender discussions that you normally don't have during due diligence process. So that plus additional updated financials on all the revolvers has allowed us to make the risk rate changes that we think are appropriate up and down, and those have been made and are a big part of the provision usually being made in this quarter. So with that in mind I think we're ready to move forward, trying to work through the credit. I think one thing to bear in mind is when you're talking about a credit improving, but still are deteriorating and remaining on the books, when they improve with the risk rate change, you end up with situations where the improvement is spread out overtime, whether it'd be the length of the loan itself or over the pool in which they reside in. So good things that happened are spread overtime, negative events are recognized immediately in the form of a provision. So there is a timing gap between how things will resolve and when you recognize a positive event or a negative event that's not a terminal event.

The next question comes from Steven Alexopoulos of JPMorgan.

Hi everyone, this is [ph] Preeti on behalf of Steve. So a question on the loan yields outside of the acquired portfolio. It looks like there was quite a bit of pressures sequentially. Can you talk about what the blended yield is on new loans coming in? And then maybe some color on the types of projects and pricing that you're seeing C&D as well as the commercial real estate book?

I'll ask Barry Harvey to answer that.

The yield on what we see coming in that really is not a lot different today than it was, say, a year ago for our commercial real estate opportunities where we're seeing some new business coming in there. C&I is very competitive, especially on the higher quality deals. But it's not a lot different than what we saw in the previous 12 months. What has changed, of course, is the ability to retain and obtain floors of new credits. We're not able to get floors on new credits. We are working hard to retain some of the floors, as we're able to on the existing business. So from a pricing standpoint, it remains very competitive. I wouldn't say, it's a lot different than what we saw 12 months ago or six months ago, but with the exception maybe of public finance type of lending where it's a bid process, a lot of banks are making money now. So a lot of banks have some interests and some tax-free yields, therefore it's become more competitive in that regard, but I don't think the environment has, it's not gotten any better. I don't know that it has changed a lot in terms of the overall passing pressure that we've seen over the last six or 12 months.

And then just in terms of the types of property types that you're adding in the commercial real estate?

It's going to be a combination of our multifamily and that's going to be both, apartment complexes as well as student housing, on occasion. We've also got some good many opportunities with office space in some of our faster growing markets such as Houston, some in Mississippi, some in Alabama and that's going to be a combination of owner-occupied and non-owner occupied. And that's going to be the majority of the opportunities that we're seeing coming through on the commercial real estate in the form of construction request.

And then lastly, it looks like you slowed growths to residential mortgage in the quarter, I know industry-wide your originations are slowing, could you talk about your appetite for adding to this portfolio?

Now, you're referring to the internal portfolio.

Right, held for investment.

As we commented, I think two quarters ago, once we got above 3% yield levels, we began keeping production in the 10-15 year mortgages and rather than selling those out to the street, kept them on the books. Obviously, the overall volume of production has slowed as we noted. However, we continue to retain the new production internally as opposed to selling it. And we would expect that that will continue to increase over time, fairly steady rate, but at a slower pace than what we have been seeing.

The next question comes from Steve Moss with Evercore.

Most of my questions have been answered here. I want to touch based on mortgage production for the quarter, wondering what the mix was of purchase versus refi?

We'll have Breck Tyler to answer that.

Our fourth quarter mix was of 64% purchase and that's our third quarter was 61% purchase, second quarter was 46% and our first quarter was 34% of purchase. So purchase market obviously is very strong and hopefully we'll continue to increase.

And then it looks like gain on sale margins declined pretty substantially this quarter. Just kind of wondering what the dynamic is there?

As Jerry said, spreads did compressed and volumes were reduced. Our volume, as you saw on a linked-quarter was down 23%, but because of this portfolio loan of 10 to 15 year, our linked-quarter reduction of sold loans was 36% reduction. So that had an affect on for gain on sale. And then the third quarter, we kept our spread wide for an extended period of time. And in the fourth quarter, some of our trades that were set for December, we had to reset for January, holidays and pending regulations and so forth. But still the bottomline is spreads did compressed, volumes did dropped. That's why spreads are difficult to predict. They're going to be what they're going to be on the gain on sale. That's why we're just extremely focused and excited about the growth opportunities we have with Alabama and Florida, the BancTrust acquisition, that's where we're focused in growing production.

The next question comes from Blair Brantley with BB&T Capital Markets. Blair Brantley - BB&T Capital Markets: Couple of questions. One on the security balances, I understand they have moved this quarter to held to maturity. Can you just give some more detail on duration of those securities?

I'll ask Tom Owens, our Treasurer to comment on that specifically.

So the duration on the securities moved from AFS to HTM was about 5.25 years. And the composition is primarily, it's all agency stuff, it's primarily RMBS, but also it's some trust bonds and callable debentures. Blair Brantley - BB&T Capital Markets: And how does that duration compared to what you held in AFS?

The overall duration on the portfolio is about 4.25. So you can do the math there, so the 5.25 and HTM and 4.25 overall.

Blair, let me just add a little color to that. We've spent a lot of time and effort in analyzing, both the portfolio, which securities we've moved, liquidity-related issues. We do anticipate continued loan growth and the run-off just of cash flow in existing portfolio, we believe is going to be more than sufficient, coupled that with the strong deposits position we have and we are very comfortable that we can meet any upcoming potential loan growth needs from just regular cash flow run-off. Blair Brantley - BB&T Capital Markets: That was my next question, was in terms of relative size. Are you comfortable at this current level, given the percentage it holds relative to earning assets and kind of what you see trending there?

I think that we are comfortable maintaining, so now we can basically have one-third of the portfolio in HTM and two-thirds in AFS. And an Jerry said, those securities will cash flow and that we will be making decisions going forward in terms of the extent to which we maintain that relative percentage, but we are comfortable at those levels. Blair Brantley - BB&T Capital Markets: And then just to switch gears a bit. I know you mentioned the acquired loans going down about $200 million. Is that kind of a bottom level you see, these loans reaching and then kind of building from there? Or is that's the function of what you kind of have plan for a run-off through 2014?

As you know on those acquired loans we have to recalculate those every quarter. We would anticipate that the majority of those loans are going to be run-off overtime. To be replaced either, we maintain a relationship, they are reworked and renewed into another loan or new loan growth from the markets that we've entered relative to the acquisition. Blair Brantley - BB&T Capital Markets: How much came in terms of the loan growth for this quarter came from the acquired loans coming on into the held for investment category?

This is Barry. And we really haven't moved any loans of any significance from the acquired loan category into the new loan category or the new bank if you will. So we've been very, very careful about that from a regulatory standpoint, from a GAAP standpoint. So that's not something that is factored, that's not having any impact on our actual loan growth that we're representing for Alabama.

Our next question comes from Kevin Fitzsimmons with Sandler O'Neill.

This is Joe Adams for Kevin. So I was wondering if you could talk a little bit on expenses. I saw you guys give guidance around I think $95 million or $96 million. But I was wondering if you could talk about what's not in that run rate? The OREO expenses, I think these have been around 3 to 5 for the better part over the last two years kind of closer to 3. But I'm wondering what you guys expect from these going forward into 2014, if they're going to sort of run down at some point or kind of continue bumping around 3?

I would say, it's going to be more in line with where we are today. And the reason is it's because we are working the ORE out, but we will as a result of BancTrust, we will be migrating a reasonable amount of ORE of the problem loans and through the ORE categories. So while we do have better markets to sell into and we are seeing that everyday, we're very excited about that. And we are moving ORE, as Jerry indicated in his comments, and basically I would say, at a flat level, we do think that we'll have some increase in the ORE category and the balances as a result of the natural migration with BancTrust.

The next question comes from Michael Rose with Raymond James.

My questions have actually been asked and answered.

As there are no further questions, this concludes our question-and-answer session. I would like to turn the conference back over to Jerry Host for any closing remarks.

Thank you, operator, and I would like to thank all of you for joining us on the call this morning. You can see we've had a great 2013. We've got some real positive momentum relative to loan growth to begin the '14 season and look forward to being with you next quarter for that earnings call. Thank you all and have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.