TRMK - Earnings call transcript Q4 2017

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Operator

Good morning, ladies and gentlemen, and welcome to Trustmark Corporation's Fourth Quarter Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. It is now my pleasure to introduce Mr. Joey Rein, Director of Investor Relations at Trustmark.

Joseph Rein

Good morning. this remind release, a slide of as we be to fourth of presentation our like on will earnings available quarter well discussing website would at everyone Relations copy that our that the trustmark.com. I Investor is section morning as the

to in a may to over forward-looking these and we'll our like Securities with materially number are of the Act time, risks Litigation and Trustmark. call differ During Securities our other make of Gerry of forward-looking uncertainties, which Host, the to Exchange meaning outlined due this the the and XXXX. call, our Commission. within course would President At earnings caution Reform and that release you of turn statements may of We filings CEO results actual management statements the from Private

Gerard Host

morning, Officer; for morning Officer; Thank thank $XX.X Credit Chief is you, Owens, net Trustmark income Greer, of reported us. $X.XX this Barry diluted our Louis fourth everyone, per Joey. Chief per asset Trustmark Financial the our to or Bank share and With our us Treasurer. Good you Tom Harvey, joining $XX.X in the for represents which valuation, increase Adjusting quarter-over-quarter of or $X.XX XX.X%. million charges million deferred one-time of diluted tax share a quarter. earned related earnings

strategic an presentation. one-time on of our our represented year update For with $X.XX. for totaled charges, per non-routine to earnings diluted priorities briefly which earnings of Page of which are X net per share or the provide again at million I'd diluted share Trustmark's adjusting and full $XXX $XXX are on we $X.XX after income you like million

and or efforts held increased exclude to X.X% evident profitable from as year-over-year. X.X% X.X% the We X.X% processes the the improve in compared loan controlled. inline of Credit manage assets revenue like totaled income The million to regarding million prior Revenue be amortization quarter quarter expense quarter $XXX.X growth, were noninterest up million with expenses decreased prior quality prior $XXX generations. quality. Trustmark. line expenses or totaled to add year. in prior advancements or continue loan $X.X and prior $XXX totaled credit fourth relatively remained and from for Barry to $XXX a to intangible which from spoke and both million ORE investments $XXX.X million prior Harvey million Loans from continues the up I X.X% but quarter. Nonperforming quarter. Barry? expense the I'd $XXX and briefly quarter million. Core color for ask in strength to growth the quarter, FTE net core some well to to make the

Barry Harvey

Be Gerry. glad to,

can growth you see on with Looking the the of loan driven and we slide-deck X long as had of during $XXX growth million. million QX $XXX Page year-to-date

public growth pleased loan We throughout was to balances The year-to-date we're one-third and finance, that decreased growth our particular reduction see the the book we areas in for able $XX those the in the XXXX. of it energy were portfolio. as say in very markets. we're saw and from was as exposure to to energy some the million, both whereas to QX, growth portfolio. that $XX pleased growth relates So with glad from was well The book decrease three year. achieve as two-thirds diversified decreased the year-to-date main within and year CRE About being we of C&I were million. Year-to-date

and classified able we continue historical to occurred about to year good the three increase that the million quarter about ones about As during well. think were during down given nonaccruals first one $XX that which pretty year-to-date. us low the it dues, led quality, nonaccruals to in relates normally Nonaccruals large We in that three and at were other various levels. million nonaccrual the we as of quarter past categories the felt credit $XX quarter, for you had that credits would quarter be this to criticized, then work second

Net for charge-offs, credits that $X.X up that the felt overall $X.X down so we year-to-date. increase quarter. $XX large progress million, positive as a was feel charged ended about year being the given And the in think which given three story well was we million flat a down came year-to-date the nonaccruals three we've we increase. ORE the I million two made positive like MPAs were positive. this

downs So outside the two $XXX,XXX. about were those year charge for of basically charge-offs net

pleased we’re with year. the the So overall for charge-offs

is to at yield down Their book million acquired QX the book, XX/XX. of as was $XXX $X.XX the million. Looking

million what always and which about quite Going forward in and million the yield recovery as talk being the $XX as to that's going in it forward we with The starting expect XXXX. we starting we in we being that as here at up of which a come range and QX X% there may far for to $XX about to controllable X% did of anticipate XXXX. can reduced that account Never the runoff QX. yield would QX

Gerard Host

core that little cost thank us our would you is comments. greatest franchise. of and Great, low interest a the If appreciate our deposits one Barry, believe on you deposit your net give Tom, margin. color please We strength

Tom Owens

to Happy Jerry.

to in on interest-bearing increased checking at year. funds XX% accounts. total seasonal was the excuse by up favorable This So turning of normal the $XXX driven to million maintain Page a during Total deposits deposits public X.X% XX% deposits quarter. a about me $XXX in primarily X, and or were or upswing deposits. million mix prior X.X% Continue deposits from

basis of interest-bearing cumulative our Fed cost five the hikes. points rose rate beta during cost a deposits three the quarter basis while of relative So of for rose to year the XX% points representing our deposits

prior of in and year. of points one flat quarter up quarter point quarter excluding the X.XX, interest core the up resulted X, $XXX our net from attention And income. Turning the prior margin interest now provide to relatively basis increase quarter prior at point acquired net one X.XX an from will Slide which totaled Louis was from four totaled and an interest net the basis noninterest FTE loans during income X.XX the margin million on update basis from a

Louis Greer

Thanks Tom.

As $XXX totaled you can quarter million see on about on for the table $XX X, in and XXXX. about noninterest Page income fourth million

increase that XXXX represents an X%. For annual of

and very income and XX% was diversified noninterest to the total you remind ineffectiveness insurance revenues quarter. linked-quarter the due due seasonal for was income the of hedge primarily For continues by for to increased an represent declines offset lower I’ll it principally and quarter to down slightly remains revenues. Trustmark's noninterest mortgage

to Page turn expenses earlier. Let's mentioned about as X and Jerry talk

about core previous gave with quarter little than Our in with estimates noninterest the noninterest fourth you. expenses prior less routine control was remain totaling $XXX million we and line our with and expenses very quarter our

progress pleased are we on we expense management. the with While to-date focused remain

We and our will delivery enhance customer investments continue realign to branches make experiences. channels and to

for in As to tax Note for of stat to I'd the reform quarter. that you sheet financial X our occurred fourth the like point taxes, impact of

attractive our remind to deploying expect can tagged prelease see of have are organic valuation amplest on X focused future XX, rate of most elimination we’d that growth And as effective I’ll XXXX, capital capital allowance. on we a XX% tax the to and in that you tax be beginning perspective you Slide mention to the deferred previously as addition Slide on methods from I capital support will capital. XX%. a In

So Jerry?

Gerard Host

stat And release results to you, and has time that quarter with you. I fourth Louis. to I trust financial any discussion this this along our at you brief Thank released we would that sheet helpful glad press address yesterday be afternoon of our that questions have. proven

Operator

Please ahead Mealor from with your question today [Operator KBW. our Instructions] go question. from And first comes Catherine

Catherine Mealor

I give sheet, it lowered wanted like balance outlook your little on Can securities a that us on more you bit color to this in start a portfolio? you little on looks and just for further all your bit quarter. reductions that portfolio the

Gerard Host

address Owens Sure, and he'll that Tom Kath. ask I’ll

Tom Owens

didn't Fed reduce hike attractive continuing the flattening became market portfolio capital prospects Reinvestment So the the the deployment. to the the We and quarter. form yield of somewhat for flows yes cash securities during environment, a the looked we and at curve. fourth of less

thing continued a a somewhat to sense interest we've continued we’ve tightening larger environment. growth Fed rate to with peer excess flows. to of made reinvestment robust yield and as carried for caused in disproportionate portfolio being But investment lot relative that us loan and liquidity has is that for prospects The large for other mind absorb cash long securities time during combined keep the the further flattening to low reconsider curve with

of and to will what to runoff the interest that's an decision as rates very our to be a with loan much the actively function the decision growth. economy tactical market whether allow the and not and or portfolio and monitored happens we continue So

Catherine Mealor

that earning appropriate there And so a asset goal or over you average is securities think percentage is as of next so? year the a to

Tom Owens

turning is So at look if our today about XX%. assets you securities

If of larger you legacy the securities that portfolio XX%, again function carrying look peer a is the us. is at as of about and median sort a function

the what's done portfolio the it’s ago years in that XX%. four we’ve these loan the happen other ratio deposit likely have portfolio. sheet balance is to a now may What of discussed interest we with to allow securities grow mid-XXs yield to rest and sense with combined deposit look loan of XX%. ratio shape continue the around of that’s the You the to example, us the in for of the things securities to about it Today for curve, make we runoff. I But had rates to terms

Just month cash to We securities from give about portfolio. you million these an $XX example. a flow

So annually that's about million. $XXX

would were assets to of to securities to assets median. that earnings lower about be us take and million runoff which you is do math we down to about the the XX% from year, to earning peer XX% for of if of the hypothetically if portfolio remainder would million XXX allow XXX So

it. management actively that’s Mathematically decision that yet, So about and think been monitored an sheet we're the it’s balance said way made I making. the decision has as to not

Catherine Mealor

outlook. you margin maybe even impact for outside then that outlook that kind margin And rate from one may have for it of your core the lower securities as how an - maybe margin there we and of follow the tax adjustment any up do FTE is on strategy you the impact the and look just expect margin, with then Thanks. you of kind

Gerard Host

Absolutely, so turns on net and of margin, off basis six out about reform again the rate, just our in be geography. compression the a effect sort point to tax tax lower core one effective reported that's math that of interest

deposit core interest net our You net to given we've full see potential projected guidance interest you last to interest betas than with for how XXX. that's the very and respect to path. basically essentially the on lower deposit from margin and guidance which versus our With look year Right, up That’s in that type be realized of path would about margin, couple XXXX, make XXX trends modest, rate is compression the statement. think compared core income to modeled, net to it margin what's XXXX, depending full-year at the of tax some core if betas upside lower you you that that come at continues come dynamic. what years

of in couple growth, some to loan of realized had margin upside dilution growth interest we've projecting years. modest terms LHFI similar projecting over betas. with from actual We're growth, core last to net we’re potential deposit So, very the what

the projection on in do assets net interest that get that, resulted XXXX both and a core you XXXX single earning XXXX all so which digit mid-to-high the to growth And and math looks basically and similar you in margin. to

in But did you Now which assets back obviously earning if cash to forward. math and the tactical flows, again a securities to and that's reinvestment and do puts continue call becomes ratchet assets. that it single-digit you to headwind will growth mid evaluated the into - made on I’ll math that growth be low going a decision on we that earning

comes not guiding other sheet is the past. economy the rates dynamics securities and the the depending balance We’re necessarily to possible of on it how of and continued portfolio but runoff interest

Operator

Ruiz question. from go Sandler next comes from question O'Neill. Our your ahead with Peter Please

Peter Ruiz

single in for and the there Peter current just maybe I growth Ruiz maybe maybe looks into any single-digit kind macro beyond loan higher this Brad accelerate and and like is opportunity on pipeline we XXXX, outlook could first of This today, maybe the mid to wanted is to see morning. effect if what touch if your a for digit.

Gerard Host

Peter, Barry that question. will answer Harvey

Barry Harvey

grow digits. achieving single think We've half I got digit books the that throughout then Peter amount there as how a is us that C&I, there. that runoffs do continuing that of is single book goal to get that our and well we cover help anticipate expectations for consumer both front we've XXXX, will goal CRE but today of on have is our some a already got as we And of areas. the finance, were get acquired from XXXX meaningful public in

a that So our be to is net half is runoff. expectation single-digit in of for the XXXX

Peter Ruiz

the the terms in What to amount acquired end to want for provision like acquired thinking what negative been to last of guys the net end. obviously several it's reserve. almost reserve. up about that to book but consistent year over de that pretty here by looks turning Maybe shrinking you maybe loan you do and the for where The minimis provision loan has quarters, that

Barry Harvey

no acquired consistent be that quarter-over-quarter QX the The is loan has out will there reserve. through occurred one that's coming reductions of reduction course other so

go So loans you the just would nonacquired be forward what anticipate a the for reserving on acquired would basis like portfolios. a you need on would for additional

So going credit forward This within provisioning. the of different upon are acquired to side you'll is and changes based credit function it’s nonacquired the just what quality - the in way nonacquired the its nonacquired to the you cetera, same see with loan than on the growth go upon et reserve changes see the upon to on to a going with that basis. be in based based be will no recoveries on you quality acquired - and drive going will changes book, going course like then

Gerard Host

the most… portfolio that’s the diminished that the flows for trust most that of most right reliance and is to add left bank of is tremendously of would - I Barry has and And and so bank cash trust reevaluation

Barry Harvey

to put perspective… Yes, just in

Gerard Host

inline. were losses those of Most

Barry Harvey

XXX That's $XXX to right. in acquisitions. moved million rely around acquired we moved to at is of center We're portfolio was a what when and for course we time down of

have the from the be what said of recent in book that majority Louis As remaining acquisition. we to going and is

Operator

from comes from SunTrust. question go Please next Our ahead question. Instructions] [Operator your with Jennifer Demba

Jennifer Demba

Question had on what year, Thanks. details then on just there. during you’ve announcement charge-offs acquisition since growth the is my second that Huntsville loan question big net last quarter? obviously the they've your a had you your completed means for And on wondering fourth

Gerard Host

Jennifer, I - Jerry Huntsville will it's will I acquisition. address the and

to the in to One us was play to some what had as be and time been the that was a reasons Huntsville found of around the out. and market truly that that. Number to one, we quite it you we a the bank is franchise the viewed bank alluded attractive had for beginning potential core so market great growth as

growth it So, and ramp perspective. so to has market that we commercial a although view really loan mortgage is good market only small lending overall not of portion perspective book, as a that resources it a a potential begun up some much our very from in have but relatively from

that there opportunity good of much really but those that potential this of for growth one see small our did one we of is at markets portion has us. is point So, a those

resources So accordingly. we're adjusting

the detail address charge-offs you relative Barry I'd ask to On that that the question.

Barry Harvey

the fourth had two as value during mentioned to in quarter. we we that commercial press credits we charged Jennifer release down the

fourth the One related final values. based we our during that of second nonaccrual values quarter was talked able got upon about that we the that as them working to the collateral that actually updated got moved credit quarter participants value to with during and were in we the of previously third the updated and healthcare down other write quarter to piece we

we then quite in one been actually had in credit had the we something reserved the quarter write-down release in press was was value quarter. and a mentioned took while. other the that that the the sub-standing that And a third the for so as for fourth And

it went And $X.X got the And leads it’s determination and the going participant be to with one down two million, is ahead one the - to had values During We on combined collateral million. made quarter wrote value the during other should we’ve nonaccrual. all the to those nonaccrual us of credit $X.X updated facility. on be in the quarter. who actually the that particular this it move we

So of you that's year-to-date of million charge-offs million. $X.X $X.X that can our see

outside is charge-offs that outside So, as earlier of the about I of bank. mentioned $XXX,XXX two net for those

Jennifer Demba

credit What second the industry was in?

Barry Harvey

of is credit a second distributor The parts.

Operator

with Please Daniel comes Our Mannix question. ahead from next question from Raymond your go James.

Daniel Mannix

just is been that’s So and a wanted weeks first the to few growth, loans start C&I flat utilization quarter. the sense trending loan give the line look Can in you pretty what a in of this year? how us

Barry Harvey

The time. has remained over very line utilization consistent for us

so line over significant utilization, lack consistent We stayed in that of have years a not the several utilization it standpoint. or seen increase any last from

just as side. other a of success had some as a that be business, matter C&I just really different good The as moving very which slowdown markets, lack been seeing over couple entities we the deals our that is lines a XXXX of goes, during activity seen in business for to pursuing opportunities. business. of and in last far competitive, the the it's couple all as fine. really years the very last see product and opportunities been But we of very going have lending of So far we've - from C&I just years structure competitive, several the we do competitive on it’s are is of we’ve The really active is what are in is in

and balance function themselves or being maybe of expansion Now expansion the that companies occurring from of is the liquidity the cash sheet. lack the a that by and

us et for cetera. you to allow side of some be know they'll changes depreciation nature more forward where equipment of to C&I begin that law that the land tax the we'll hopefully acceleration opportunities So things some some for bring on

the C&I that hopeful pick the So, in on will activity side up. we're volume XXXX of

Daniel Mannix

remarks you talked controlling in prepared you an XXXX? outlook updated back turn the expenses. about provide to Want expenses us for Can in

Gerard Host

forecast I around amortization. to $XXX XXXX going in try try sure million Daniel, core remain expenses And that's our ORE excluding on $XXX in is that think to basis quarterly and flat those to relatively so XXXX. we’re keep for a expenses

Operator

Our next question. Group. comes your Zabora question [Operator Instructions] ahead from Hovde with Brian from go Please

Brian Zabora

Question the any technology trimming branches piloting touch in supplements just just you you and about of around think think the and that? branches, kind mentioned you release or some about just - press on myTeller branch or thoughts network how could to in

Gerard Host

important As physical I relative as think we the industry to the forward locations are branch well. as takes of look whole a a

call a and team meets on have adjust We group not activity branches, review overall a that we information about optimization our to market branches branch our we can how a branch personnel, competition structure market. what's specific within around basis only that monthly structure, within happening to particular our but

So, we as things forward, couple we - we we look will are - do. to look of have

we We Memphis with an and new in customers both someone our locations Starbucks there to deposit Starbucks, we’ve begun have have standpoint balance that with the which have where this have assist to myTeller myTeller market ATMs to taking with in utilizing actually that partnered digital providing physical get it. used to the in situation deposit to sitting the remote channels from in technology unique to new the we Internet capture

operate support be a and trend ability to and holistically So of be will the channels. staffed overall we with branches very that look service people broad range at customers with have is the going that products fewer to it but delivery to

Brian Zabora

think for how the thoughts tax as about that that reduction, with any appetite the increase well? you first your or then it just deployment, around just does M&A capital And on

Gerard Host

of kind branch is we how industry that digital and the conversation different with two about our View the questions, that transforming as falls just maybe overall technology new of under itself. and realm optimization and channels finished

that businesses. of of savings go to So, that anticipate a to broad support will portion further the technology we a investments in tax range

on been insurance now has completely area upgraded. their and gone they - Our customers business right platform has operate really digital paperless and supporting that a

We've and system digital business ready systems both upgraded year to continue to upgrade in the fully go Internet that allow to our mortgage opportunities and We’re in other of live. to we a digital our the we channels. wealth go and have management retail platforms to July operating through to out upgrading area digital our customers platform our capture to plan for now there and this

investing that to our technologies and So, portion transform will and this meaningful a as be relevant we to base. into allow focused of customer stay money stay we us stay

the very, sizable like have those earnings as and far momentum on has we opportunities to look feel we challenge us that higher question around we very the transaction. a we capital levels As markets, or really in The allow regular basis. been the that add growth be finding will right a M&A, opportunity for solid to do think continue to

Operator

next question go your ahead Haire [Operator Instructions] Jefferies. Our comes from Casey from Please question. with

Elan Zanger

for on Casey. Zanger Elan is This

few me these from in - think acquisition. income release that related the one popped kind the was in out called I the to of has up an you press quarters Just on BOE last guys XQ

Just you if Thanks. this a sense is trying going get something guys to see forward?

Gerard Host

is come comment and add color. with happened That and ask very briefly as number you of project. debts to difficult A has with that imagine directors. associates I'll to very, would a little from both Louis

we from. when where want it it do come it did primarily not that So, something happen, give to it does guidance make on is but we

that. you if to color a Louis add little want So to

Louis Greer

some but good banks do sized. that as to we comment and do year it, that can't a sizable Yes, as of plans support $XXX investment most that I’ll of million have well where pretty insurance mentioned account predict benefit debt as we unusual so that investment of add benefits the and life book other just is $XXX tied we as related as have is invested to we’ve Jerry and time are about borrowing part then book related type. million long

Gerard Host

Trustmark (TRMK) 24 Jan 182017 Q4 Earnings call transcript