TRMK - Earnings call transcript Q1 2018

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Operator

Good day, ladies and gentlemen, and welcome to Trustmark Corporation's First 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 first of presentation our like on will earnings available quarter well discussed website would at everyone Relations copy that our that the trustmark.com. I Investor are section morning as the

to in a may to over forward-looking these and I’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

our good Tom to which share prior you this Harvey, same Thank update everyone, first or and quarter, quarter-over-quarter XX.X% compared of Officer; compared morning period presentation. core financial you, diluted results you our a Bank on of Page earnings to when $X.XX net $XX.X per Louis of million the income joining XX.X% in us our Greer, is morning, Joey. CFO; on Barry Treasurer. increase to Trustmark the Owens, briefly like X year. us. Credit and With an I'd when provide represents the reported with for And are thank our which Chief for

balance capital sheet deployment optimization, and continue management. We make advancements expense regarding to

for to as X.X% totaled the Average year. million million the totaled year-over-year. quarter quarter our from while securities common process evident to prior net and from million up prior million or line which prior slight for and the previous expenses and of strength to decline $XXX X.X% controlled. $XXX.X quarter, in I interest spoke million. to be ORE color to million loan we to expense increased expenses a were Non-performing investments the Core compared the continue repurchasing million, $XX I'd clearly investment manage and X.X continues amortization a expense in the maturing During X.X% $XXX declined off income and stock. Harvey in or intangible Revenue Loans exclude held FTE the from quarter some improved $XXX or quality but relatively X.X well decreased add loan growth to Trustmark. assets remains core from the first portfolio, Credit quarter. X.X% quarter. ask Barry? briefly quarter credit prior the totaled like quality. to Barry non-interest run both

Barry Harvey

Gerry, thank you.

a you typically we million for in us during the We're as for is have XXXX year. loans of growth previously and as - quarter first still for for still back held loan as XXXX. million $XX XXXX, $XX were of declined end QX growth have very down Gerry, investment forecasting during we we indicated And digit good the evidenced quarter. quarter. the single the As slower

bit little slow QX. So in unexpected a so not be that's to

time therefore We will it cycle us months a to growing they and QX. XX bit loans be in through are little CRE beginning leading and will it about and chunky cycle be of time they into our from as was are to

little to finance the the have multi-family looking to down sold be changes other public the weather they've balances a it. and either you’re quarter, for decreased of see, because we actual or as well secured can not which what that's looking to market of outside that experience QX then did real anticipated other bit potential moved is you unexpected funding the by of the also unusual estate been as and on million permanent slow going projects for at side some $XX delays. We pay-offs and and When just of

be going nature. We $XX that’s about seasonal in million there small have decrease a to

was that was, the out little had that think our with what in in than funding forecasting and So, and was quicker mind, I projects unanticipated we had we're we some what CRE with process slower. did the anticipated quarter first comfortable move bit we a saw

at and quarter. energy the $XX book, Looking $XX quarter decreased during million the the the exposure during decreased outstandings million

to we're decrease the size. downs, payoffs pleased so energy based book of All see very pay on continue and the reduce to was their

are are credits through willing problem begin sector, on to that we and the look particular initiating move process. at opportunities to some to we the Although glad of in see

positively. $X.X to ORE. management, loss the Net points the credit Slide Looking We recoveries, do for quarter. the on $XXX,XXX X. million risk basis we very acquired took XX to The including recovered XX The net in loan were loans the reserve liquidating down which over for additional ORE of points, increased loss is all quarter. from no basis

loans to loan $XXX million outstandings acquired Slide continues time. over XX/XX over on totaled of decrease the acquired to X portfolio, Looking as of

book QX $XX the loan, to that, had acquired on see see unexpected very we $XXX,XXX the expect pleased but million yield expect during QX quarter, declined million acquired portfolio. down an which out we're The recoveries. we for that X.XX% QX. was the with in Our was on only there in provision QX loan during we to the that acquired saw payments we changes to scheduled on and amortization the payoffs. that $XX The more foresee million basis moderate so million can't going adjusted QX, acquired loan the to $XX loan $XX about but we included million what to some portfolio The $XX beginning in

Gerard Host

you Barry. thank Great,

like deposits to comment Tom and and Owens liability the Tom? interest Let’s to turn the net margin. to on ask I’d side

Tom Owens

Gerry. you, Thank

quarter Total increased Page $XXX to an balances. primarily $XXX or Turning the in or the due increased million X, to in year. fund prior X.X% increase X.X% total during deposits public million deposits

XX% with of non-interest favorable deposits mix bearing XX% in accounts. are We deposits continue and to of maintain checking a

delta X a the quarter representing rose from to XX% first bearing the interest hike. of points rate to-date basis and cycle feds of relative XX% cost Our deposits

totaled interest million resulted from first the decrease a X.XX% on income-FTE prior the of attention a points down X, quarter. of our in which the Page margin from $XXX Turning quarter basis two net X.X% prior interest to net in revenue quarter

the And loans was interest two provide update income. in acquired X.XX% point up non-interest and Excluding Louis margin on quarter the basis basis year. points an will one down prior prior the from now

Louis Greer

Thanks Tom.

the declines total areas. of continues represents businesses insurance a about non-interest income you income revenues quarter Trustmark's our fee our Slide see X mortgage can XX% strength quarter-over-quarter our The and other represent which revenues. $XX about for from increase income a in to of As million non-interest on in total offset of seasonal X.X%.

very As estimates. $XXX the you exclude quarter, well Gerry with down expenses, over can million mentioned, previous our again which in fourth slightly expenses line controlled totaled non-interest quarter as see ORE on remain routine in from and our little expenses the a intangible non-interest Page X previous a amortization with

continue we our to remain pleased expenses. we date While managing focused to with are on progress

investments to and experience. branch We continue will enhance make realign networks our to and channels customer our delivery, and

tax the our previous X% for Now with in quarter, our taxes XX.X, during guidance. effective line rate was as and

positioned well you Trustmark's If remains management XX, Page a perspective. from look at capital

share well We M&A. support repurchases growth, organic as have ample capital as to

to most of remain focused on continue attractive use net capital We performance. Gerry?

Gerard Host

you, it like discussion are helpful for the We the Louis. at that financial questions. open first to but results of quarter to time you, Thank this we’d up hope

So could do operator, if that? you

Operator

O'Neill. And Instructions] question [Operator comes with Sandler from first Milsaps Brad our question. ahead today your from go Please

Brad Milsaps

color this appreciate average and typically of It like type I the that the balance play out noticed picks sheet that the side through’XX? or term from on the was if down NIM maybe of deposits. benefited get wanted do that year. your of you for basis know traded you some sheet you about a back provided does growth public move out to the the to the wholesale of you lot of time was moves margin of kind does of you that more the borrowings does from interest as right come you funding it discussion. I balance how a funding quite Can you follow looks talk up curious – bit. helps in I a how, on also looks helps those – of in terms some loan because the that the continue really you year up, change hurts you as mix how the out that that kind or bearing along and or as long like look

Gerard Host

Yes, Tom?

Tom Owens

is during the really, function a quarter. the securities the what things the one decline balance two you of see yes, in decline So in borrowings there, is

couple than a the of did The bit during have public for other the we seasonal. inflow quarter is I'll and is in more of the relationship deposits We did call fund a quarter. experience public wins fund typical what info seasonal first

but November. is right persist, at those and low And point the a So this through to you in April public expect the about now decline about largely to say should peak is what pattern expect see balances. here fund time positive a is you from year this would of Trustmark point October,

terms that. portfolio that of off public into consideration, say should largely taking an deposit of Now the would so securities that I you flows increase balances. of in that will practice compensate expect offset dynamic non-reinvestment if to current continue though our for we borrowings that in cash to see of run fund

term those then borrowings of growth of And net at relationship be forward that two would loan between there short remained deposit would there the borrowings. differential the about their just would obviously impact growth going from and level. see the term you it's So a question current things and

Brad Milsaps

I quarter of that of something loan do this of number upon you do you this core and kind And NIM of build can impacted through mean question, piece maybe you the just you ’XX? kind any takes XXX is curious improvement, think bigger can off you build as puts picture this quarter's or kind move think all

Tom Owens

year-over-year is fees maintenance of comparable pretty quarter quarter first basis yield and both pretty is payments, linked a terms it on a clean loan and so in basis. So,

a to we've per with that the off Potentially realized continue is deposit that core off of, we interest you investment interest basis interest offset that call past you basis think point. to result those would lower also of would which basically quarter. net you So expect to portfolio as year margin to the by guidance modest to now dynamics dynamic that about core see portfolio X I X points are come than year-over-year net given a compression. if to but through some the respect to in X betas I'll should run our continue the margin and net have accretion if end core persist, about modeled mean is the pass. I margin very

Operator

Demba next with ahead from from comes your go Our question. question Please Trust. Jennifer Sun

Jennifer Demba

wise geographic geography, On your this and M&A what in at interest you're pipeline or seeing of and conversations? size point, terms

Gerard Host

Jennifer, I'll that answer this Gerry. is question.

we not size markets looking size looking terms In also the we're range And $X in consolidation are deals of in we and that's million a ourselves at to although in geography, limited, the limiting interested opportunities point. in would to markets the we're at some for focal that southeast, them. have just that billion new footprint. the Primarily still of to element $XXX existing better opportunities growth remain within

at the PE where as I the can Many and still think think are particular pipeline, see they're think as of can the challenge. for look we are, present I which expectations far pricing high. out quarters. have the a I it opportunities several would, last As good present there I based opportunities relatively seen remains you numbers

remain to sure value are make term the but do, very that is we franchise. any acquisition we we to very we long a So want interested, comfortable

Jennifer Demba

of of couple And that rationalization in question the branch done years. last you some guys on have

branches So of idea what remaining you types the think consolidating and be you do what you next you're you your somewhere exiting do to give over more combining, market or could of us are scale? consolidating you altogether or have of you tend couple just where for to just is if years an here

Gerard Host

look in of composition but branches a channels very in the ranking transaction and branches, last specific in branch. channels regular and the some of that that branches, monthly. over have system at we on volumes markets To terms the not digital and impacts of be a have look a years just at are specifics ATMs deployed that around group and markets more of several would the meets various basis the the delivery that the other accepting We

at transaction closely base we market that whole we look a well. very how being So able as they retaining our can well that market and reconfigure to as volumes and existing and grow service customer

the reconfiguring you if game end process and approach markets it. continuous and a not will, is it it's that's So of we how

base, markets, could about expenses opportunity out base, that the maintaining continue consolidate but very I markets. for think work those deposit expect to the of you customer in growth going to we're we're growth providing concerned to and the

Operator

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

Daniel Mannix

wanted I so downs that CRE the seen tell you the quarter. in say Can start slowing so you your they're at downs to few in quarter with just here, the flow pay noted starting what still down to We've those see heard nonetheless. you've higher a pay loans levels, portfolios of trending? far level and how of that's but headwind us this peers elevated

Barry Harvey

of January understood of and touching which it's a surprising, a this sudden the a that time, effect and probably this all to of we we is to, from XXXX And we of little nonetheless I that, in January, of appetite during things Daniel, rationale. were seeing the year which all a time projects some the And in notified in mid-February a we happening QX quite that occurs that kind few during out status were combination market, We're a somewhat sudden to on then of had saw to customer bit, scheduled timeframe quo a bit construction. actually it as Barry. go was well. an a In of in little of and there's were it marketplace. was was moving they Really and the January where that December we out are time. that month but think the time from provide being permanent

there price, move the might quicker got also then Obviously look will having you'd stabilize some Normally, happen. that'd move companies those are the permanent sales pricing it guarantee do velocity are important. buyer financing away bank some do And stabilizing where there. stabilization the historically where at is the project there'll get permanent and occasionally permanent market. from being of standpoint, the far. the which projects so loans. in seller things than and it, they're who there's a hadn't of it's do the the see the and be reality to reached sold, maximize side on bridge from stabilization they credit the And there then a financing you’d They'll give out financing, being while Occasionally, that But see some occasions bridge to quite for quicker. it

the there's might price still So been they that all of sell it had seller types than of the factors almost could stabilized. to those gotten sooner otherwise and would potential have lead maximize would for it they

So had half little move ways seeing subside to quicker have April in little for frame. then it projects those are than unexpected time time of we a trend out We into February-March, reasons, types normally. and time from the seen industry second during the would of somewhat payoffs, of

of the too hoping throughout more that course that payoffs hoping little to rest and let we're many or will the forecasted least QX. payoffs we occur, year. unanticipated at not we've case got of be than in So, sporadic And see it a it but that the was were more is then

Daniel Mannix

an at impact the quarter Can Looking so the Reform on of you're whether terms talk Tax energy looks demand growth, has far? loan like loan pretty in it about seeing C&I had you and good what massed pricing there.

Gerard Host

when a very side, outside, can I I all pricing think it's not only a a you of to somewhat are the struggling to And an as standpoint. are been relates from scarce, banks think opportunities. competitive from but amount standpoint as meaningful demand the it structure scarce deals it's find imagine, obviously

acceptable remain have the disciplined, have trying an on kind side to opportunity maybe ourselves and ROE we attractive we're of attractive yet bullion but still CRE every and of on between the so, the the see we have sometimes get pricing for the to avail the pricing bank. less and able side And we're C&I

really very and first slow every We all at out But been opportunities. actively course of are year it's in for very, And looking they quarter, of half ones the second deal then been aggressively limited. we're it's fairly very pursuing of making see, we're point, this and the we competitive. flow, calls competitive. C&I very but of the last terms are there through seeing But opportunity are

Daniel Mannix

I in if good still core a job just year? could XXX to there. And more that million this the squeeze Nice for again control one quarter. expense in million Is on of the expenses XXX guidance

Louis Greer

and is XXX same to you between do continue in the we're couple this end and online but feel Louis, quarter projects guidance the I'll for Daniel, could guidance we upper for we us previous coming quarter. estimate, to that that have XXX, our of five give a the improvement tell the going to take second our process quarter,

Gerard Host

add This overhaul conversion should within when is the way utilize the to that is July in is go want major We it little Gerry X, done outside our live. and color. group will a resources I'll complete which causing complete a temporary That wealth us or we frame. project, we to within be beginning time management the nature system

be deposit the conversion base year. beginning is The That we two at a have will project a project, other year loan of a and again, the of system.

personnel projects. utilize as from outside complete time well to our to some to will to as hiring time people existing We resources opposed assist those

very portfolio. within is on common loan this choppiness the some the So

we'll upper work things a as back Louis use. are we where You'll the out, project in to choppiness of push way little quarter-to-quarter we resources but amount the down maybe and expenses, range where then of the our from see pointed bit there in outside the and

Operator

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

Brian Zabora

public how Wanting on of much deposit was those increase this funds those the side. the quarter related mix. and rest a to of a of pricing funds the to get on the inflow the Just of public versus sense question deposit

Tom Owens

the on given was is spoke pricing Again, that inflow a million. XXX public earlier fund to deposits. But quarter, in about first first I the and fourth in respect that know I quarter it seasonal. the the don't it specific phenomenon. quarter, then largely we've, past, in being late with about

seasonality say in years year this total the I'd larger been has past. than So that somewhat of

we've imagine, can betas I relative public you fund deposits, know calls As about betas. past the the on spoken

- data non-personal, non-personal personal been personal, the been that If that on and between it's double that date non-personal deposit, are I'll fund about deposits, these about public you double has look - at deposits to cycle just relationship data say the deposits and non-personal. of of public

relative So borrowings the aspects deposits. just public services to those fund to often order are a times of fees of and sense sort But other the relationships, profitability to magnitude are of price give accretive there you sensitivity relative of again, performed. deposits or

Brian Zabora

pricing down then see little forward, a of But if And going less follow in maybe public maybe up do a - areas, movement come do I just that guess quarterly funds. think - bit, seeing you funds of is any that of maybe movement to sense kinds the you other those the they kind how betas continue you're now, in the of higher? march

Tom Owens

believe we Yes, they do.

the you to rose our 'XX, Through a were XX%. is first quarter the quarter aggregate dissimilar of not think example, the to date that looked fourth if thinking I'd 'XX, our at XX%. deposit you whole. industry of for I through betas, cycle tell that as from

XX%. market consistent to We beta by In thinking there'll rise we're two more 'XX, date that the be projecting hikes with year would here. are cycle we fed are currently this to end, calendar projecting that

and forecast think in have accelerating will conservative we our anticipate and been betas we that that assumptions So have experiencing do continue. appropriately model, we

Brian Zabora

where slow running on whatever you maybe question Is - the just that, the XX% in versus of Is a about of you securities potentially the just end this get average type maybe just that more to it you'd yields to goal kind talked assets. decrease a the have where or of point plan your - a lastly, just there yield curve that brought a of to over is on you that this see year. And in longer may point yield? like increase

Louis Greer

an our it bring timed about our way And conditions, said What continuously on mean, yes, mean, yield would the hit curve, we asset thinking down Brian, and head. peer do monitor. right I'd to increases practice the earning median. we've which is shape continue it do we with XX% not percentage I more the you consistent that sort say to you as reinvestment. XX%, think be if that ratchet decision the we'd Well, this through adjusted and also, of tactical believe market have period. that the it about I at last of we conditions And, to look securities even call, what's back continuing over share year-end, And is if with rates be might interest look that's three capital have continued in if a on rates, that and on actually happened at we to liberation is we accretive used point year you before of for activity repurchase. a at that considering our

Operator

Catherine And from go from question. question your Please comes ahead KBW. our next with Mealor

Catherine Mealor

share buyback? Just how on you and mentioned can talk about get aggressive follow-up, your repurchase you for activity, outlook may that think the just you you a this

Gerard Host

opportunities within the the have relative Tom and one to of it. and about it. way acquire I help developed is there. buyback activity Catherine capital, The and govern of then add within oversee so think that that and includes approach dividend much market. color need the through what view relative the might growth to model company really Let we utilizing if so And our and the in to share we of start it kind we you that's me organic I think The might how component Tom, total team in then to think a buyback anything fluctuations his

you add let I’ll you Tom to if can. that So,

Tom Owens

were would threshold and share for also the do quarter as IRR. book first in we're repurchase. shares. model we of in you the valuation approach rigorous analytical discount of tangible have some as in earn are indicated downdraft financial to We So we a value advantage to looking take dilution. and at certain do prices We a general dividend imagine, And Gerry repurchase looking employ fortunate back

So, slow, in, is we which there 'XX. million for were think but that to-date we XXXX X.XX XXX have be rates where example pending and expires like. look whether the at I XX in you know kind tax around seems passage about the would We're environment million, ultimately March authorization for of about of and would reform uncertainty tax the

continue when you that a beyond As imagine felt discount on in and function financials. earnings has continue you're dust the to it has uncertainty future the to dividend opportunity the like, increase repurchase. that There itself prices the trying chase is And get would stream We I where to might error can something we side settled model of sort terms control look of valuation of presents generally, and expect have some to diligent been here. but in which prudent financials market and you be legislation. in caution retracement your what like a your not tax of obviously will

Catherine Mealor

in though it is So opportunistic be as outperform with active the you faster the activity, you'd tax to likely likely pullbacks would most started we - price, reform? capital financial more your a be if to more again building opposed you’re at even a pace did be see seems than as less for repurchase in really

Tom Owens

that build targets ratios will there capital capital is point. to build to point which I our but this at projecting our and make continue above an continues we're are that's think our fair, it do operating important and you

mindful we so that. of And are

to And less so equal little all a more that would a make aggressive. us aggressive tend else rather little than

around but on will be we we attractive fortunate achieved we've IRR that and the spreads growth and to returns. can been And with a reasonable our we've that as discipline long loan As been earn that maintain continues robust has that.

returns know repurchase you lending and with there. to so, is competing it speak available is so And right, share

dynamic all we're always well. So of mindful that as

Operator

question question. comes from Please next go your ahead Stephens. from Matt with Our Olney

Brandon Steverson

laid up upon book. XXXX, to growth. the for the all shrink at from that on guidance loan Or Brandon you loan is softer dependent question continue Steverson on would is wanted I if securities for than follow securities to you've growth This the earlier, is strategy Olney. out

Tom Owens

So might might I you in those two that would strategies the lead the to about bank are also deployment lending when make conditions that market general be imagine think independent, of softer, say reinvestment attractive the Fed bit flows on there environment of through would would cash is where of perhaps capital their securities the slow-down be to an more which a tightening. pace

might that things And related. so you two are find those

other. even they telling you us though a consequences lead one on attractive the more of So I'm little for a market might separate decisions, to that's are the

Brandon Steverson

me And saw of that then seeing going the have then improved margins rates see sale with gain you mortgage forward? last one what Is the from consistent in guys some on mortgage, your peers this talked quarter? business. on about mortgage is that you'll And for what outlook

Gerard Host

been gain because is within out first volume this we’ve sale. our the successful mortgage very me we despite there. seen the quarter, operations comment on until primarily and we've saw Gerry, comment, rates on overall We of Let portions have in building some let the that increase good retail me the been fact

hedge a by challenge a the rates as the to far of very we that far I do - it MSR. project have think is our function volumes. mortgage we is on and sale, as gain servicing I our clearly the there, and As MRS And mean much gain market driven as

trying to to quarter. income quarter we're impact from minimize on So statement the the

good will - to terms and business. are forward earnings. our clearly years that mortgage have But add. I markets. producers industry everyone has business in in that we watching will grow mentioned XX Tom, that than we you some if very the a over impact been what continue the whole. see in expanded we to last And the that retail we better contributed as else's to the I going it on would And of rate want looking However, a as to have anticipate fortunate rates like

Operator

any closing gentlemen conference and like I'd back remarks. conclude question-and-answer over Mr. for today's call to turn at this we'll to Ladies Host time, the session. Gerry

Gerard Host

And me Let very your understanding calling and you call our call planned questions. part hope the will be giving much you hope found helpful company on call being prior us then. we we that of be next and XX this positives. the this say call join I meeting, able in better July that this you'll the appreciate to official again you in to and to will notice and we be

So have thank day. again a you and great

Operator

gentlemen, for We do now Ladies you thank presentation. conference today's the and has concluded. attending

disconnect now may your You lines.

Trustmark (TRMK) 25 Apr 182018 Q1 Earnings call transcript