TRMK - Earnings call transcript Q3 2021

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 Corporate Strategy at Trustmark. Please go ahead.

Joey Rein

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

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

Duane Dewey

you, With us. Accounting CFO; and for our Tom Good me Owens, morning, Harvey, Chambers, this Operations our Thank and our thanks Tom Credit Chief and Barry are joining Joey. Officer; Officer. morning Chief

Turning X, third the to quarter let's Slide highlights. review

regulatory to Together, we Trustmark making per moment reputation or net and net or quarter a diluted fair third I'd communities and items serve income Also our early million to matters, approximately share. consumers diluted by by included the per quarter believe diluted regarding lending $X.XX include XXXX, has These businesses. in a $XX.X we share. services net net million products per discuss to these per which income like income results or to which We strong reduced $X of $X.XX program, by approximately available settlement authorities $X.X by share. regulatory $X.X the the was Trustmark retirement approximately costs reduced recent voluntary allegations $X.XX $X.XX all of or reported reduced a income For by million this million share. settlement. resolve take

homeownership. well through accessibility, goals we allows and well as down of Memphis volunteer efforts training, negative barriers entered from breaking impact our all much serve. progress From communities anyone could products, look continued hours, material financial earnings strong in continue we communities us do reaching providing all. We any that on dream is the forward our settlement, prevent and any improved common market that not a from to contributed the build settlement in as are hopeful literacy positive avoid as We have to a recent while invest the capital of distractions perspective, better we meeting as anticipate to communities to to and financial The we impact that on focus more.

year-over-year. of totaled increased or million our held from noninterest a revenue. $XX.X X.X% represented Now securities and increased X.X% linked getting and X.X% from for quarter the $XXX.X to Deposits quarter million back investment quarter, increased or from the million $XXX.X review $XXX.X quarter excess loans as billion $X.X increased Investment from prior year. the Net the prior third $XX deployed. prior of prior $XXX.X million prior quarter. income September XX, from million third the X.X% PPP the and expense quarter. increase was At the interest million $X.X loans, total on interest liquidity excluding quarter, totaled or in Adjusted noninterest fees income, million and XX.X%

XX.XX%. capital a levels totaled for million quarter. total charge-offs quality as strong net in by a ratio continues $X.X negative loss capital a credit X capital the Tier $X.X improved exceeded recoveries equity maintained and third remain with losses Provisions for ratio expectations. solid We and reflects quarter credit of common credit Our million of to risk-based XX.XX% the

shares million or quarter, repurchased of During Trustmark common $X.X the approximately third XXX,XXX stock.

The year. will $XX.X XX, had expire repurchase December under that declared payable Board of its to program share remaining December As Directors authority record existing shareholders quarterly cash of of million XX in September on Trustmark December X. of per $X.XX dividend this of a XX

will on Harvey Barry provide Now some color credit quality. loan and growth

Barry Harvey

Thank you, Duane.

Looking billion of of an and Duane prior portfolios. reflects $XX which our growth We $XX.X to investments from experienced and both quarter million nonfarm, as Slide family held in million as increase, totaled for X/XX, X, onto the X mentioned, loans year-over-year. nonresidential mortgage $XXX X

down overall While we very the to due was this see continue and area. to significant production million nonscheduled CRE portfolio approximately payoffs, in $XX strong scheduled

Trustmark's CRE X/X and X, land Moving existing onto X/X construction development. approximately portfolio Slide is

Our as between or see, mix has book construction as The can estate portfolio, you is XX% construction development industries. loan types well real as nice a vertical. bank's owner-occupied

portfolio at Looking these the single industrial commercial governed Typically, secured, coveted segments category loans income to and borrowing well both exceeding are across numerous diversified well no formulaic XX%. Slide is the protect X, the by bases, balance bank's sheet. with statement

high-risk have exposure, one $XX.X X, and been Turning being the we to as you energy. today lending minimum exposure has industries pleased our with We've hotel credits and limited extremely manner to to in performed business, never over have Slide limited, The time. both in can Trustmark also in has underwritten been retail to million very see, restaurants how in see CRE credit. conservative historically. COVID-XX-impacted a bank our and well

borrowers to borrowers facilities the well as of churches, impacted such other We COVID-impacted by in as of balances been X. living, million potentially conducted in an an that Moving more categories extent outstanding selected $X to COVID. have during with quarter or senior as industries Slide analysis healthcare

hotel impacted the portfolio, XX% credits. the industries, XX% restaurant XX% and of reviewed COVID-XX Within of the retail of the we book,

criticized upgraded category the pass category. $XX to downgraded the category As approximately outstandings criticized from a result of to no were were this million of and review, the credits

losses Slide prior unchanged for from our Looking remained at X, the quarter. relatively credit allowance

credit from calculation the decreases improving or were for allowance quantitative included for At industries resulting added COVID-impacted on XX, XXXX, credits. X.XX%. individually calculation both to investments as the $XXX loans reserves losses well reserve forecast. quality as held improvements Our credit for million changes specific totaled The increased September economic the analyzed due in as

you Slide post to see metrics. Turning quality solid can XX, continue we to asset

As And $X.X as for recoveries evaluated. real credit losses that totaled and the our million million mentioned, charge-offs, during year. Nonperforming were Other by million. increased of million September XX, individually quarter. the nonaccruals, quarter $X.X XXX% of exceeded and excluding loans prior allowance $X.X represented decrease a $XX for those assets the linked-quarter a year-over-year. decline $XX.X estate That's from million million $X.X Duane

million, September XXXX, fees Duane? deferred Looking decline. at portfolio Slide and of totaled XX, loan Program costs net to of XX, our PPP continues Paycheck Protection our $XX.X loans On $XXX,XXX.

Duane Dewey

base, Barry. look and sheet. you, I'd our liability Thank of deposit now net to noninterest the the balance margin discuss ask side Tom as Owens we interest to to like income

Tom Owens

Thanks, everyone. Duane, good morning, and

that, and had XX, million billion among Slide some transitory will likely increases increase at totaled be quarter large of fourth balance and growth million year-over-year. larger XX, during unusually we Looking that a to September deposits at headwind our depositors the prove deposit $XX.X to a increase create linked-quarter some Having said during quarter. a $XXX $X.X the

that activity, a of to growth to economy deposit net in continue the continues rates see normalization recover. as we So

mix Our to cost and from of we points in total noninterest-bearing interest-bearing basis favorable deposits deposits. a to balances declined X continue XX XX% of with deposit quarter the maintain basis points prior

resulting in accrual quarter. quarter. increase extra net FTE in of a security totaled primary reflecting was million. $X.X the Interest and sale million and $XX $XX.X in income the yield. interest of basis balances interest Core point which of the X.XX% quarter, loan was core interest which was in driven by fees interest a from the driven by PPP loans. $X.X a the net the income quarter, NIM the $XX.X driver X.XX% on decline PPP primarily by second as FTE offset the X decline million, largely representing fees interest-bearing recognition which securities loans NIM to margin of balances in third a in the linked-quarter interest deposit quarter linked-quarter, the points decline decrease in the totaled the an and points $XXX on linked-quarter, in net $XX.X was decline million in to fees million, day was revenue during accelerated million of Slide X basis increase and Turning in $XXX.X X.XX%, linked-quarter origination of of X-basis was increase Core the the in decline million in of linked-quarter, primarily costs XX, second million of third driven decrease X.XX% The of

on charges Turning quarter excess and rebound XX, Service decrease the totaled to noninterest quarter to to a $XX.X Slide third attributable revenue. quarter continued banking The depositors linked-quarter mortgage the linked-quarter for year-over-year. $XX.X deposit income third first low the balances. accounts down draw of decreases million, continue primarily million are lower $X.X from decrease during as to the and year-over-year million a

to demonstrate continuing of For noninterest income XX.X% well-diversified the represented Trustmark's stream. revenue, quarter, revenue a

in ask noninterest market declined XX%. a balance XX% sale while loan sheet production loans basis revenue on $X.X $XXX XX% to Mortgage the Slide totaled production Gain strong the at in in and the or remained I'll volume XX% and third represented quarter, declined the banking quarter, year-over-year. and year-over-year on X.X% quarter expense million, basis quarter million Looking strong And held of linked-quarter levels. in points third the decrease million. $XX.X but second cover Chambers a about historically Loans XXX management. capital in in XXX XX, linked-quarter from mortgage margin now secondary from million quarter. points linked-quarter Retail million $XX $XXX high XX% sold to represented the decrease production, third of at remained Tom third representing

Tom Chambers

be Thank I'll to. you, Tom. glad

detail of quarter, noninterest Adjusted other total. $XXX.X increase to $X.X Turning you the expenses adjusted, retirement in to the and the noninterest early Salaries prior $X.X employee and benefit from out increased in million declined see charges from quarter. related X.X% XX, expenses expense a the benefits and between broken $X.X Slide the totaled the excluding our linked-quarter, third million voluntary million quarter. Salary program. million prior

ratio Slide a with positioned capital XXXX. X a on noted total as September perspective of capital of XX, Tier XX, XX.XX% our and capital well equity ratio XX.XX% Trustmark from risk-based common remains of As

stock. shares million third repurchased the quarter, we During $X.X of approximately or XXX,XXX common

of of the Duane our Slide plan $XX.X common XXXX. our X.X will XX, million expires now shares. we at $XX.X which commentary For cover our first stock repurchase existing million we had XX. repurchased on XXXX, outlook million approximately remaining At or December XX, months September X under

Duane Dewey

Thank Tom. you,

perspective, remainder loans grow to accelerated we're balance from From in of outlook. mid-single year full expecting our the headwind sheet book. in held the review estate the with low continued investment for digits repayment XXXX real activity a for year commercial Let's the

balance excess during to Our expecting margin is the to security assets, liquidity. flatten of environment net to continue expected in from subject sheet conditions. changes We're to remainder interest XX% at targeted low out the market earning to pressure rate remain XX% the and balances of interest the Deposit are growth year. under

bank is moderating year gain Our core modestly of fees as lower income a earning mortgage interest the and continue linked-quarter charges margin. depressed compression banking asset management core the net on for by losses, growth total expense lower grow Wealth is full the remainder current stabilize net modest subject interest on during COVID of the expected the expected from Based crisis. outlook, the management. provision core service the is in continued to noninterest for from to unfunded expected wealth to mortgage, as with credit are single both line the impact by expect including a is digits economy sale digits the low the the income year. the levels remain and mid-single upon expected be rebound 'XX immaterial commissions and the to to for economic remainder remainder results margin. Mortgage production noninterest are of increase expected perspective, emerges the of insurance charge-offs and year, Adjusted outlook. we year on full card based commitments, expected to for to the current in third From Net to in quarter trending insurance XXXX. offsets for

opportunistic with identify We disciplined initiatives like to capital loan on market We'll for also repurchases. will a process share and approach optimization deployment preference growth, a potential continue and voluntary work program opportunities to continue retirement organic M&A further the to improvement opportunities.

that our for the and floor concludes So at this questions open with prepared that, we'll comments, time.

Operator

the [Operator Piper with And Instructions] question comes Sandler. from first Dick Graham

Graham Dick

if to on loan reasonable get of earlier I mentioned repayments might be to still seeing? you're occur? then I expecting XXXX. level also, quarter of strong you just it would what be wondering think And does, into were larger you what mid-single-digit last that kind you you that if guess growth anticipating? the production pushed I'm some expecting given you're said

Barry Harvey

I Barry. is is this would Graham, that say correct.

quarters what QX we of during out what We of analyzing -- of a and course have seen first the we've into slide the -- to quite we of a the of this the split also out seen, for year. And we've our have bit forecasting occur remainder then QX, we've QX X of some XXXX. within payoffs in occur, the occurred we're a while the in book. also it XXXX. expected But into CRE seen year, fully And meaningful know bit and of out then all later seen QX quite forecasting process the and really amount of forecasting of of case QX course, part

We expect QX, in extra slide and bit XXXX. Excuse maybe in same the a little into me, XXXX.

growth of XXXX We that with I it think mind, growth, focused quarter. do going mortgage still we've have finance achieved for going other Public loans, saw on within purposes in is and another we are into the you we have areas we growth achieved XXXX. whether have headwinds we outside CRE the be XXXX. area into as where So during similar where CRE this organization as growing, did very

the to same additional growing so the expect focus X, do those We C&I. we book, and excited that very for And other have from XXXX. entering that we've that market, be C&I about And perspective, resources a acquired are institutions possibility. new from recently to some we're we we grow then a part in into much believe a on of have both opportunity

grow. do XXXX the while end, we where XXXX what low-single we'd other we did as that think headwinds In know we've is And XXXX CRE, for going expect avenues for to on know to expect that we so I mid into we similar got be to digits do we have based today.

Graham Dick

Trustmark tech? think just guess if moving might Okay, program I the great. into through in hires if expenses, was towards are the maybe you reinvested And tick to Or I back be improved be That's really from XXXX? to expense able new lending helpful. expected savings retirement the rate wondering lower actually early run or

Duane Dewey

correct. start and, you can what answer opportunity improvement you add mean, do from Tom, -- reduction in we I exactly the headcount. is I'll but anything, the expect some for said

we new we're said, opportunities on focused and talent add expanding, improvement. side That opportunities minimizing on to being so are backs gaining adding markets. to noted. focused got and some on focused on And focus across growth as talent also C&I We've hire Barry on the all

of the we from do with that, And But voluntary modest impact, the a retirement from so positive that program. could on some expect benefit offset impact expenses that program.

Graham Dick

higher it's plan patient or loan was growth rates guys just I I Okay, going guess amount on rates, you or of environment? then for to last still wondering like longer-term here, of XX% excess to liquidity this color at one if better and waiting a range guess great. year. And the next of if growing securities you then you had for me how to might seems you it take just end any have XX% loans assuming being matter fair upper mid-single-digit the and just that deploy I a to are guys kind a of

Tom Owens

Graham, I this yes to is you and the way the say is the posed Owens, would Tom answer question.

think I prior we've the trends third be. the accounts we experienced to the of assess the and diligently balances that deposit little as looking something to exhibit with is to reasonable targeting the discussed grow the and durations ultimate grow so, growth came backloaded portfolio. So look We what think of and the did continue persistence to securities deposits portfolio those XX.X% we pandemic like of short we'll evaluate assume those XX% But during up duration were effective at surge we substantially going that, on continue deposit as calls, yes, those some more assets, of we effective to during in them continue the it's We normal quarter. that quarter. a about earning during or to

to XX% XX%. range target is the So

of than term, not liquidity we'll near say go term that, that longer for that. but to we'd think within the obviously, securities. that operate above rather form couldn't I loans the in we continue redeploy to That's

it's is to function dynamics. to so extent, And think of lesser of a the a I market to it. redeploy a be function those then, opportunity And mostly just what going

Operator

Jennifer [Operator SunTrust. from with comes Instructions] next The Demba question

Jennifer Demba

what seeing you I could the landscape wonder opportunity now. if right talk you're on about M&A

Duane Dewey

And Duane, this I'll opportunities seeing start. Jennifer, insurance it specialty different some type lenders, things. different market. the of sizes is of range things, very nonbank We're of M&A lots It's landscape different shapes. a and active a a wide lot agencies, across and includes

very M&A active. the marketplace So is opportunity

Jennifer Demba

now? us remind right you targeting of you're opportunities what really Can kind

Duane Dewey

in are markets earlier the in U.S., we really across southeastern markets hasn't either interested or very changed our since -- in year, commented southeast. the the It we still expansion new

We that also have something in. would of currently the wealth be well, is things, our some tended we we kind to interested we'd it are add management then businesses be we million And specialty offer, some by fee interest again, space types to billion and of organizations $X $XXX markets. at would the of to categorize additive lending I looking insurance as new in. have or what that,

And on above our so radar of all the screen. are

Operator

like back session. our would concludes turn remarks. the answer conference over This Dewey to for and now question closing any I Duane to

Duane Dewey

you. have joining the fourth this look you information We helpful Well, forward our morning. hope we for to Okay. end at was quarter. the Thank the us of to great rest you, thank reconnecting a and Everybody, of day.

Operator

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

disconnect. may now You

Trustmark (TRMK) 27 Oct 212021 Q3 Earnings call transcript