TRMK - Earnings call transcript Q3 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, ladies and gentlemen, and welcome to Trustmark Corporation's Third Quarter Earnings Conference Call. [Operator Instructions].

As a reminder, this call is being recorded. It is now my pleasure to introduce Mr. Joey Rein, Director of Investor Relations at Trustmark.

Joseph Rein

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

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

Jerry of At President Host, this time, and Trustmark. I'd introduce to CEO like

Gerard Host

results and Officer; morning, us. to We're Owens, CFO; Barry pleased environment. increases thanks ability for Joey, a this and are Duane you, growth by Officer; minimal and to loan financial rate again report Operating noninterest Credit solid and challenging core on interest for successfully competitive good Dewey, proved its Louis joining morning continued as third remain strategic everyone, initiatives, Chief Tom Harvey, Greer, navigate focused and me our evidenced With the expenses. in Treasurer. Thank We Trustmark quarter Bank Chief

from X.X% a Noninterest up quarter, interest down basis and third prior quarter in was decrease a linked excluding from X% acquired held X quarter, totaled Let's period on the year. Revenue, excluding acquired increase linked quarter $XXX.X review and year. quarter, previous year-over-year. Loans but $XXX.X income the interest $XX.X shown loans, X.XX% investments totaled margin, for million year-over-year. and the last some the point from basis from quarter in third X. of X.X% the Slide increased fees million, the highlights or from net XX X.X% $XXX.X are the previous quarter, X.X% loans, million up on which The same points the million or X.X% and

ORE million, core amortization, year-over-year. noninterest charge-offs year of management, solid $XXX.X and intangible average and X.X% expense, totaled remained of Under X.XX% quality loans. increase net expense as Credit excluding represented from the X.X% prior an

time, to some provide this color Harvey I'd both credit Barry growth ask and Barry? At like quality. to loan to

Robert Harvey

glad Be Jerry. to,

some Looking on Slide the can during grew talk was Q&A of quarter. primarily We growth sure, I'm we the X, going category. The glad up growth and the you accounting in be loan million in that. kind $XXX our later see we've and mid-single-digit to previously. Street as show other on We're during track loan GAAP construction can, about the worth of occurred the changes that for where growth, the The of be migration to guided do still

it's is trending and $XXX book energy million, at modest Our downward.

see you We talking over speak of. can by criticized status. you're to little whether look at we levels, to loan X, quality classifieds, reserve at credit that no credit about dues, increase during The migrated cetera. It XX the Nonaccruals basis a one our metrics et the And low other was adequate really million points. to loss remains $X had or did remain nonaccrual Slide activities quarter. historical past

Jerry?

Gerard Host

Tom? sheet, base and Thanks, side deposit I'd the net Barry. the Tom our the discuss liability of Owens And turning balance margin. to to to like ask interest

Thomas Owens

Thanks, Jerry.

$XXX which $XXX average $XXX million growth prior by average year. was million million decline balances. in XX, billion decrease the a accounts, and by Linked-quarter Slide from $XXX public decline at from $XX of of $XXX $XXX increasing million the decline or $XXX X, accounts balance million than an Year-over-year, quarter personal and in a deposits at personal was totaled balance and million X.X% September increase the of offset Looking million driven commercial of commercial $XX.X with balances, X.X% fund driven fund prior or public increase million. primarily by in more

deposits of X we deposits cuts. XX% X to cost certain as interest-bearing the the response Our in deposits declined represented in rate quarter. basis prior Noninterest-bearing the deposits from Fed's of repriced proactively points average third quarter

basis Turning FTE prior X. which from X.XX%, totaled Net to margin in second resulted $XXX.X the a the interest a million Slide quarter. income in quarter, of interest net increase X point

up Excluding XX up prior the X from from the prior quarter acquired X.XX%, interest margin basis was year. basis net loans, point the points and

Duane will noninterest on now provide income. And an update

Duane Dewey

Tom. you, Thank

decrease increase X. prior previous the more and the than sale million. offset year. Gain from from Turning Noninterest by in in $X.X million totaled up the of $X.X year-over-year. was $X.X of loan totaled quarter. loans XX.X% $XX.X on million net up and prior quarter quarter, third XX.X% to Mortgage This Slide the hedge from totaled from income $X.X a ineffectiveness million million, quarter million of prior increase production an the third of quarter $X.X $XXX.X quarter, the third for million the negative

totaled quarter. is, of the revenue income note third $XX.X represents unchanged revenue. total in third the the million, prior Of quarter, from in revenue and management Insurance both XX.X% $X.X wealth million noninterest totaled quarter,

cover will on on capital X now XX. Louis expenses management Slide Slide and

Louis Greer

Thank you, Duane.

relatively from intangible amortization, year. quarter, time As primarily about up the $XXX about linked for productions. which to linked quarter due mentioned core last and ORE earlier, benefits investments increased around technology noninterest totaled and Jerry well higher fees. as certain $XXX,XXX as exclude and increased expenses, due flat to Service quarter increased commissions a this as quarter, million the Salary of previous professional X.X% third fees and $XXX,XXX result

fourth expenses Mississippi linked Other Mississippi's linked recovery Act, organizations. to also for expect with expenses dollar-for-dollar individuals the credit periods. Promise tax line expenses charitable of expenses in Trustmark's Children's million. the in a business provides included in quarter which of prior primarily totaling to $XX.X contributions would participation in to million to includes Other item and third quarter, $X.X $X.X be state million a This eligible donations quarter quarter. to line $X litigation-related the in reflected related I state to core -- million declined

position. to turning Now solid XX. maintain Slide to Trustmark capital continues

worth quarter, common approximately repurchased $XX.X under program, of stock At $X.X shares remaining expires repurchase million about XXX,XXX Trustmark third its XXXX. million the or about existing stock. had the that in and During Trustmark on September authorization outstanding XX, of XX, common March

Jerry?

Gerard Host

Thank you. Louis. Thank you,

our of framework are that vision group any Our value provide any our At practical and by would, strategic priorities you and long-term guided continue a time, you. Thank meeting address us our I'll glad creating the customers as mission be have. for to this the and questions to shareholders. for and questions, needs might

Operator

Instructions]. [Operator

with Daniel comes question from Raymond first Mannix James. Our

Daniel Mannix

start to want with the just growth. loan So

bit more the little I'm the growth a production? teased or it more less construction by You Was it was out, trying so there payoffs? was -- driven on bucket. to figure there

Robert Harvey

true Barry. reporting is from was the is and see down where $XX about by did the $XXX million to about occurred. we this spending. Daniel, X-X construction, grow more builder driven production. the grew million $XXX It hard commercial nonowner-occupied about million GAAP into what's We bit And little growth migrated family a in in

services that's that on that we that nonowner-occupied to or one where came little care reclassify does did, recording were -- a the it and result and/or by both owner-occupied maintenance is was customers the to it the to a make that able to The staying of reclassification health where increasing out living bit call understand it providing some hard thing owner-occupied. recently, required from instructions facilities were senior did

based was that So that's all builder X-X as a came and growth it construction reclassification just lending, our commercial from production. occurred, upon family but well as increased

as That it growth industrial, Atlanta, geographically, in far apartments, Dallas was the as in Houston, commercial and South construction Springfield, living; came and Carolina. at senior

Daniel Mannix

Okay, How maybe of was great lower were production? pay-downs versus loans C&I line If a energy, little color. out I bit. that back much down

Robert Harvey

to several really out It We banks some in opposed was new larger of in smaller took positions, $XX There and C&I. credits facility. some in the asked refinancing to things. some was That our the the not result the of larger It all were of market. banks was decreased -- lower all of where Sure. some Tennessee million was pay-downs participate of originated as our it was productions.

also And business that just fast participate -- We result one a payoffs a few that not refinance the in to occurring. had of combinations. as growth upsized of some had we that pay-downs opted we then or was was because

that lack down was So on it Tennessee we -- not a of were off out when financing things those. all we opted refinancings then and the And were of was facility, need we combinations had that resulted out the additional for our where occurred some the all that paid it new nonetheless, paid market. fine. of we was or in we and But business then part

Daniel Mannix

it. Got

Okay.

more real Or continue you any Are Do tough thinking is potentially ability at looking that pretty So C&I on mid-single and seems it expect you're right C&I still do little good estate to next on side like here? number your change a you the the to growth side? you year? digits see still sledding.

Robert Harvey

there's and thinly at -- the girls opportunity for of but The not expect actively year. structure, terms available. next in And appetite to opportunities can everything loans themselves, in few out you as at guys And Daniel, see it's footprint. pursuing aggressive hustling we've that C&I, do this changing be We that priced presenting actively guided we've we pretty continue are anything loan to we point. that but we or our there for really growth pursuing guys industry to a there those our CRE But sledding. to refer business as tough point. it's be, of got year that's expect this our type we for within it, business. every nonetheless, lot in We to of a anything changing out brisk next and continue of are don't are about terms

Operator

Mealor Our with comes question from next Catherine KBW.

Catherine Mealor

to little The bps to we from for the I'm that guided is you quarter, last see remember bit. than some wanted but this had about talk with of the for the about margin cut. better I held assuming July expected remix. sheet X a I if compression X margin much balance quarter, in could

balance updated you're then about thinking just further how hold with you forward So maybe how in your moving think rate thoughts and remix should sheet margin on cuts.

Gerard Host

anticipating Tom your Catherine, was question...

Catherine Mealor

am I was. he sure

Gerard Host

Or the detail.

Thomas Owens

I is anticipate the anticipated Catherine, only but was ask who it. Not Tom. to did I question, going this

interest linked-quarter a margin. of net guidance basis actually had than yes, X the did came increase. of We We given with in quarter, basis X of points. So in compression X in terms point third to better we core guidance

Some it fundamental. is of

other that excess that base. turn driven public the earning Fed, is You see deposit in by fund of in decline the -- turn optimization reserves assets, our continued with in the which was basically

fund linked in been somewhat deposit balances been actually nonpersonal. has earlier which deposit heard about solid pay optimizing and You public comment We've running quarter and higher reasonably thereby down. somewhat balances, and growth were in cost, that me off higher year-over-year personal

that is So of probably or That's so. part it fundamental. basis points X

And very yield, lift -- margin in then the from point quarter in fees. we contribution got terms strong X LHFI of a about loan just to a basis

necessarily X favorable balance about past So the in the the mix, sheet points if that's basis from about you basis volatility of X the loan quarter-to-quarter, which basis X loan points. points basis fundamental, add add lift fees X we've talked fees, of fees and some is points not loan from

reported X you If would gave. guidance points to the X point points. the off comparable basis be basis That's linked-quarter we basis pretty X about X X of increase, take that that points to basis

Catherine Mealor

sense. makes That

Okay, that's helpful. really

perhaps are and outlook here? moving September of how what margin thinking have coming, the cuts sort -- forward, And from October was you we about that

Thomas Owens

Right.

forecast So XX% a XXX% would week we December chance of chance which using, the next which by market-implied on do we're cut cut our as a and that Fed had and basically a the third Fed forwards, what quarter then you a meeting. at know, is occur rate

So that in forecast. our is what's

you in linked core didn't full the cuts quarter. the you third you that the effect quarter, when for So quarter think NIM third in of quarter feel fourth the about two had

a linked-quarter happens week next a the -- when feel it going timing next effect And matters NIM, there's the in meeting. of or talking the you're matters obviously December they Fed it lot whether about cut, to You until lot a it will if the then full wait be fourth quarter.

take basis here I of linked-quarter points high compression which single-digit fourth would in XXXs. I us the would would quarter-over-quarter, into the core a say guidance low terms for basis be in quarter, on NIM thinking

Catherine Mealor

right. All

that cost, from way then on came downside know from we coming guess, helpful. us give next downside deposit point, what can over side, lot couple much color of did public but we quarters? deposit any cost think But Okay. of a about of have deposit have month-over-month maybe -- And super to you upside to fund. about the your or, to to I That's and the think margin deposit is a declined, down cost I there how help it the

Thomas Owens

Sure.

that we we answer as cuts. during neighborhood in did $X.X have ways. we deposits that quarter's the One, billion So last quarter of of I the response so in or to proactively nonmaturity the can two discussed lower reprice on high-beta, Fed call, interest-bearing

what relative one cost December at to Fed those if is Another forecast cut I got I reflecting June one about think by when way in next in at And our said, year would is tell of we beta next to you assuming and so cuts, we've you or XX%. about look look deposit it one market-implied of December year. and then in interest-bearing as we're priced forwards beta,

about a funds target X.XX. those cuts to about would Fed So more of down us take X

the Fed interest-bearing of up. That's next assuming a conservative the at funds rate think, a, we're way by experienced look in down what way I the XX%. you deposits of relative the of X.X of beta on to if on we peak beta end reasonably X.XX year, So about to nonmaturity assumption

the the you closer interest-bearing experienced X.X, to target we funds rate Fed from look at X.XX if up up beta was way So that deposit XX%. to on

So have deposit in help terms should I assumption appropriately there, that and an our I think modeling you cost. of conservative think we

Catherine Mealor

the that just deposits? Yes, that's XX% high-beta, $X.X beta to great. billion be And is nonmaturity clear, on

Thomas Owens

No.

in... would XX%, the would in. be So Catherine, all It all be

Catherine Mealor

in. all Oh,

Thomas Owens

would beta much beta obviously higher $X.X All plenty cost. still down. in of those The high reprice interest-bearing deposit of to assumption. room We be applied have billion to our

Now that's they what anybody's from where where forwards goes whether reflect. to market-implied priced are again, we -- as it's guess the the Fed to here, priced, are

Operator

Our from next Milsaps question Sandler O'Neill. comes Brad with

Bradley Milsaps

all Tom, That helpful. the color. really was thanks for

what points quarter, of given get Just kind any the fees basis points that quarter? of X X X above beyond total you this is a loan basis of point points typically or fees of loan basis clarity, and in

Thomas Owens

and somewhat. Brad, that's Again, really loan channel the in in third normal fees loan that I quarter incremental. was a kind of fees just the it high volatility, actually mean breached of So end. of kind run we booked the range

in was beyond the it loan above So an unusually really is we be The booking. quarter of strong and normally way points basis what third X fees. would

Bradley Milsaps

you thoughts how curious and or for Really Barry, that. And guys? helpful. appreciate then That's Great. just CECL Louis any on that impact

Robert Harvey

Brad, is Barry. this

we're where we terms in implementation. is are of place think feel for a good being in like I we the ready

expecting I think looking will unfunded need we see requirements, reserving going going is change. our either disclosed that we'll to range. feel real But inside which from like, do. what be from there an think a some funded outlier reserving today, loan a standpoint, an standpoint, when I we're additional be a to we're not I think We're have peers mixed to not And material be to bag, that at side. on

the in paralleling our come all in going shape solution. and reserving. like feel change unfunded we're we I biggest real is We've of terms -- good for implement year, be to X/X CECL but to think us So our new been

Bradley Milsaps

doesn't numbers But what Okay. aren't expect you Barry, me be people comment, of like either based kind have to to it ready sounds provide seem guys sort on on yet. based said. of to way outlier your an other that, you it

Robert Harvey

correct. is That

Bradley Milsaps

guys you of have then picture. years. just job done bigger final controlling question, Louis, for Okay. a overhead number great And maybe a

I you making. Just Jerry kind you can that of curious, But and know on I how long think to lot continue? in sort Or this feel just is investments guys continue talk you of about need that that are a to kind you get technology want so know expense a take of that while like can investments? of? built-up growth of something to to those you care making you sense still maintain there's if

Louis Greer

stay core you, tell taking XXXX. Well, the quarter, year. and would expect that I tell ratio Brad, southward. that we mentioned efficiency I we'll expense given give into this you this technology reinvest can for But earlier, hopefully, that, to guidance don't for to but to improve guidance processes fourth we Certainly continue flat as next in to relatively related efficiencies not we start have change any I'll

there? So color Jerry, any

Gerard Host

are But can Well, to a we other in be of the remain we improve processes point operating-type to effort just, time, same the that customers costs. Brad, can technology I made our making at that as group and much and ways we we you relevant reduce think another that so our investments competitive. people in find there's by company

expenses that in improve So there pent-up total reduction to it's face driving and not and do and in operate that a ratio. ratio. business of we for people at revenues efficiency of is same time is -- We're investing how looking areas the And challenge revenues figuring any that that foresee can improve balance all we either increase -- out in efficiently. that efficiency can the technology Not expenditures? we're we we the how more the

transformation the so of digital. many of from moving other brick-and-mortar like banks in this We're middle to

do at You doesn't at it all can't want once. because it the once all customer

time, as the a investing balancing line in very what we've mentioned, keep here quarter going to we And reported to it's with at become Louis third So company, efficient. processes in and our the we're to fourth expenses our act. customers, of continue find the just work quarter in hard ways the in same more

Operator

Instructions]. [Operator

SunTrust. question comes with from next Jennifer Our Demba

Jennifer Demba

right environment more a activity. premium are A question have currency. And you seeing more now, interest level your the discussion What's you and now? with activity? challenging interest Right right discussion now on M&A guys still fundamentally

Gerard Host

is this Jerry. Jennifer,

been as how to And as we they the some levels level the have an really either balanced certain in finding really approach deals, or selective be and still pricing. capital. as to within it use when the to doing reaction do of adjacent we to use with for it's capital transactions, in And performance challenges that like high use The remains fits feel and to an have we disciplined that when market but improve have at the of operating interest some look we how existing that. that continue of have those done we yes, And time. really relates take discussions, overall. have is can Our far we as and one organization that discussions at deals footprint disciplined is the the we we

for far been place, -- seeing new reasons, find discussions They interest strong as uptick combination long. are of a been it's there's looking organizations additional all environment, challenges the haven't taking facing this I efficiencies relative though, as some I rate that a same any banks any tougher all think liquidity and needed to event. trying continue. we're to So new discussions year that for noticed

reasons looking the we changed deals that to continue opportunities. So to in be at do seen, haven't we've diligent and really

Operator

from Our is next with question Daniel a follow-up Raymond James. Mannix

Daniel Mannix

go from a if is book? guidance, have to going the fourth you what are conservative Or one quarter, NIM. And run could you assuming that? I the forward, me, around your Just the it you there low approach thoughts the book? still securities assumption that XXXs back with that for changed that In down or

Thomas Owens

question. Tom. a this Daniel, is That's great

this we going last our that holding into an and then profile quarter. given forward. that I flows market which that think yes, is that for our liquidity we conditions interest earning would tell way, rate about range in a of securities hit So call, securities modeling it you good to. to off there's of reinvesting be situation, rates the cash XX% we currently, 'XX, our portfolio fourth rates flat mix, about from kind on pretty basically quarter's We've assets to chance, the with the and securities year-end, assumption through point internally run risk get will if the and we continue continue here our wanted I that outlook talked are interest where

of, it's is than maintain the we assume better a to a assumption that the continuing a I'd of of a quarter probably better billion balances ended give you, to range for So where I point third $X.X off in at assumption think an say, guidance this period securities we billion run assumption extended time. $X.X good to

Operator

This conference now like concludes I to turn the Host remarks. over Jerry our back question-and-answer Mr. for closing to any would session.

Gerard Host

We all XXXX. Thank Trustmark you, us in late reporting and fourth look and I'd This our you quarter to in results interest forward call. thank for of third for quarter January on operator, to of like XXXX your ends joining our today.

Operator

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

may disconnect. now You

Trustmark (TRMK) 23 Oct 192019 Q3 Earnings call transcript