TRMK - Earnings call transcript Q1 2022

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 First 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 our to release a slide Relations as will discussed like first 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

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

Duane Dewey

you and continued With Owens, our morning joining loans quarter Officer; Operations our Good quality. with our a and in Trustmark solid credit 'XX and Financial first in had this Tom Chief Officer; continued Chief for thank total Barry Harvey, revenue Chief Accounting expanded Tom morning strong and are deposits, Officer. growth and us. Chambers, Credit me

of first $XX.X For net share. or reported quarter, diluted the $X.XX per Trustmark million income

million totaled Revenue same So X.X% and income investments linked-quarter. -- and Deposits in million this the year. X.X% prior first $XXX quarter million, increase million, quarter million, of the quarter Slide a totaled quarter. remained $XX.X Credit first $X.X Insurance an million or million more financial by as year, time from in first from prior $XX.X of linked-quarter billion, million quarter X. total totaled the $XXX.X increase revenue increase the the in let's $X.X increase from a or totaled look and the increase the or million $XX.X linked-quarter first and totaled from Noninterest from loans solid increase. Noninterest X.X% prior expense an year-over-year. and of in $X.X highlights million to X.X% of represented flat increase $XXX.X nonperforming billion, income quarter. the for or prior XX.X% at increase interest X.X% totaled $XX.X the charge-offs a X.X% last an little Net $XXX.X this period from last XX.X% million year. detail, quality $X.X totaled the At quarter, recoveries 'XX, million or $XX.X turning our or in and from a XX.X% held revenue declined a March assets exceeded prior the quarter $XXX,XXX. million $XXX.X XX, $XXX.X year an -- of in

capital of Board with a a of to of a cash We record shareholders June The also per dividend $X.XX levels maintained quarterly Tier XX.XX%. risk-based ratio XX.XX% of strong total payable capital and X share declared XX X. June

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

to its quality. provide As loan of expires and remaining which had Barry to Trustmark this existing XX/XX/XX. time, under repurchase like color $XX.X credit authority March XX, million At ask I'd program on growth

Barry Harvey

Duane. I'd be to, glad

X.X% and anticipate growth. loan than all to at the and the and XX, experience about QX March We excited bodes Slide loans, We're Looking Loans excluding investment, in very Loan significant CRE scheduled increase of payoffs. growth held $XXX.X million X million PPP totaled $XX.X an in XXXX. portfolios, other extremely continues $XXX.X now. for loan or categories loan unscheduled year. all which billion occurring the future well linked-quarter mid-single-digit especially strong is CRE, production prior almost growth from for in to

remain on geography. product to continues diversified both portfolio and based loan Our well type

which is portfolio X. development XX% construction, CRE Slide is land is existing Trustmark's and to XX% vertical. Moving XX%

construction. XX% bank's is real land a The as estate well portfolio construction, industries. mix development has types owner-occupied portfolio between as nice Our

with industry X. numerous The category commercial diversified no well Slide to was across portfolio bank's Turning exceeding single XX%. segments

to Moving Slide X.

was Our quality allowance the economic for At credit and losses improvements provisioning for The loans primarily negative the held totaled prior March $XX.X the for credit investments in losses to due million $X decreased forecast. allowance from XX, quarter. XXXX, on million. credit

at X. Looking Slide

quarter, We that continue loans charge-offs investment excluding recoveries losses asset allowance relatively Duane? $XXX,XXX. are Nonperforming assets by quality year. the for and X.XX% prior remained solid the individually $X.X loans, from X.X% unchanged to XXX% from million or credit post analyzed. of nonperforming decreased prior those represented and for The of In metrics. held first the quarter exceeded

Duane Dewey

Thank you, Barry.

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

Tom Owens

Thanks, Duane good and everyone. morning,

$XX X. for So of million. a a nonpersonal $XX decline billion million totaled of balances. on The driven growth XX, was Likewise, $XX.X and Slide million deposits million. about about at has driven about $XXX balances looking at year-over-year increase and accounting million $XXX million linked-quarter balances personal year-over-year $XX deposit about fund increase a which million increase of about offset personal $XX by by activity Deposits linked-quarter March $XXX in public the were accounts Those by the of been growth in primarily increase year-over-year.

remains growth deposit our of granularity strong. the So

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

basis on of million average about increased PPP revenue contributed Fed $XXX.X of to $X.X representing interest $XXX,XXX. there although linked-quarter by an in million linked-quarter the linked-quarter, lift due average interest $XXX,XXX a Net X was about margin, increase contributed points. and by $X.X margin loan The deposit and linked-quarter. about balances. of million reduced interest-bearing interest decline interest due reserves, $XXX,XXX income XX. X.XX%, X reduced securities about of to attention linked-quarter, Net linked-quarter excluding to about which million. quarter net income totaling portfolio Slide The were Higher about X.XX%, resulted days basis with $X.X FTE higher lift in million fewer interest points of balances which cost increase in our expense X Turning yields $X.X a higher loans

Slide XX. XX% rates, for rate loan for cash a and sheet substantial XX-year sensitivity remains rate with portfolio by due limits a duration with cash by balance to securities XX% and environment. higher generates risk backed portfolio asset in mix years is reinvestment substantial The of collateral rising well the of the agency a securities interest and Turning coupon, primarily driven variable X.X balance $X.X billion. interest in flow a positioned of extension MBS portfolio which

interest to balance immediate rate a basis XXX a basis benefit basis shocks in shock, shock, reprice. for to net with about Our continues the increasing X% for for XXX is interest XXX point about sheet shock increase XX% income year the and in one XX% as X a point years and about point beyond

to revenue and insurance X.X%. up Noninterest solid insurance, decrease XX. commissions. $X.X in primarily million quarter, banking decline to due linked-quarter other continue totaled up post with and year-over-year. to $XX.X $XX.X a XX.X% Insurance increases totaled management wealth were increase year-over-year first The $X.X a linked-quarter management million casualty Slide Turning revenue both year-over-year, partially first million property for a increase million increases, a $X.X in wealth mortgage revenue. million, in offset income a linked-quarter $X.X quarter management Insurance and revenue million increase and by wealth increased and the and

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

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

Tom Chambers

Thank you, Tom.

million $X.X million from Equipment $XX.X increase increases and $X.X expense noninterest the due $X.X totaled the a higher technology million, collectively you was first Salary other quarter, up and and the the flat a expense Adjusted our declined investments benefits to in the in $X.X fees. and XX, increased increase and to quarter fees linked-quarter due year-over-year. the out million and Slide other in in noninterest taxes. quarter. continued broken quarter expense $XXX.X between expense will total. see adjusted, to million payroll detail prior seasonal professional linked-quarter million of from Turning Services employee expenses of first prior

As remains capital from noted a positioned Trustmark Slide on perspective. XX, well

million million in At or Trustmark's stock quarter, $XX.X approximately $X.X XX, shares remaining under December its expires March first the existing program During which authority XXXX. of XXX,XXX Trustmark had XX, repurchase repurchased we stock.

program repurchase may transactions, through conditions market or open on management's at take discretion. place and depending share private market Our

declined remained and tangible decline of from to rates XX, the in valuation quarter. March Tangible a capital to with X XX.XX% Our ratio total assets equity X.XX% capital solid of XX. ratios Tier common a risk-based XX.XX% ratio March securities for increase interest resulting available income adjustments due in on during by a other market driven at first comprehensive to the at sale

June a quarterly XX of $X.XX shareholders cash of June earlier, Duane? record share mentioned declared As X. to Duane per payable the on dividend Board

Duane Dewey

Thank you, Tom.

XXXX. a we're to full digits Let's year held review on Slide our XX. for for sheet outlook expecting perspective, grow balance mid-single loans which is investment the From

fees for Net perspective, digits changes excluding year. including security low economy year commitments, to digits with to charges on increase expected to interest the full high full driven to as to assets, is commissions full we for expected digits to From low expense Deposit banking noninterest interest based current and bank continues the expected reserving the income, double the management additional requiring card a losses, Mortgage balances be a year, rates. is and margin. Our businesses. increase are digits on upon pandemic. to revenue expecting based single fees, economic to depressed by is PPP net the forward the on Based low wealth lower, trending year, revenue and volume continue Adjusted expected expected to rebounding mid-single to gain continue expected management full impact is income emerge insurance and the levels of implied increase year. We're earning subject of subject in provision wealth reduced targeted mortgage, lower expect to to charge-offs current be noninterest total XX% modest. from full sale balances service loan from are the Insurance single credit outlook, expected nominal interest single and market at outlook. market digits the grow current unfunded XX% grow are to conditions.

our our growth to customer program As profitability. a release, you innovation or, banking as announced saw to our reflecting enhance press and and it, and in network, channels. We've digital we continued Trustmark's accelerated we mobile efforts transformation changing to comprehensive of FITXGROW, and migration call optimize preferences branch focus,

offices We existing have Many closed annualized of identified expense an of XXXX. in XX with XXXX, near other during franchise million these estimated branch to across Trustmark the locations. $X be savings are offices

about anticipate We and coming initiatives. in organizational to to effectively months service our additional to customers these providing also forward more look opportunities structure information more realign the important

continue initiatives of further market and reduction to technology we improvement optimization, expense and on will identify enhancements part FITXGROW, process management opportunities. vendor As focused

this to important financial a to share also discussion our guidance disciplined of compensation. a invest continue growth, first for and floor growing deployment competitive commentary and approach our necessary repurchases. to is to like adjust note results base At for we insightful. With outlook I capital open as this been it it felt M&A of expenses, trust helpful in has on time, as remain we'd continue quarter organic and well technology quarter. customer opportunistic to the loan expenses that, needs the preference with Therefore, to potential will this associate questions. in we considering our We'll slightly meet up While

Operator

Will from ahead. Jones [Operator KBW. Please Instructions] go Our with is first question

William Jones

great, morning, Hey, good guys.

Duane Dewey

Good William. morning,

Tom Owens

Good morning.

William Jones

are that on I de working minimis So NSF know guys NSF. the of programs you on changes overdrafts. and I just guys thought handful but a start X you in overdraft late impact you those that announced and have threshold to of March you would determining through the wanted I still know disclosed

side position to on maybe offsets that over Just and maybe have curious just conversation, revenue some the or then, stands in quantify thinking impact impact there? guys natural where may a sort side the an expense the time? you on flip today of if of that are that of talk you And to revenue about maybe dampen

Duane Dewey

less Tom quantify, believe where comment the the And forward-looking. either we Tom, will overall did or NSF start. be on OD or NSF, miss. I issue can charges regarding total NSF roughly of I'll But Well, we XX% or

the we're we those fourth finalized -- quarter working and we make But those not to implementation get issue. first quite at de still So minimis We've the that look on our a as early on in or level. changes changes quarter late place. systematic position of

our Regarding offsets, as will more and branch all across the changes. of closure than reduction and processes discussion, noted of of we expense that the our offset thing, of in some sort program NSF of believe, issues overall overdraft the markets of or optimization

William Jones

twofold guidance new see Or pickup off just the was forward-looking, the moving here, the just cadence incremental bottom about it of to how would quarter margin? every we your a the then the more of really basis fair point margin swing fourth maybe would the to easily margin. I say from inflect forward to see the what is XX maybe in levels. and nice It's throughout the put, NII you mean should curve, on over And guess expansion year? it that move fourth I sort following we quarter be rates? think somewhat helpful. Super as that with great. NIM Okay,

Tom Owens

So is Will, Tom this Owens.

guidance And -- low increase income in obviously, prior substantial right? with growth we interest forward as let forecast, of PPP. in in as experienced interest in from well, increase the as net did market result. the rates first digits increase So a that year-over-year well start yes the mid-single the me interest our reflected what's guidance ex in in increase quarter guidance the to double-digit So market-implied rates

rate the the example, on XXXX. guidance X hikes Fed XXXX. was growth mid-single-digit basis equivalent The on guidance for of point rate is X XX in updated So in based now based hikes

rate interest terms in cadence would it's of the Fed say the net of with going hikes. I pace reasonably of to be So margin actual expansion, contemporaneous the

asset margin net terms NII, parts increase In low double-digit say, look -- it's of equal basically equally earning if growth I approximately interest the you in at and comprised interest would expansion. the margin expansion, net

William Jones

color. for for the Thanks That’s it me.

Operator

next Instructions] [Operator with from Please Brad Piper question The is Milsaps Sandler. go ahead.

Bradley Milsaps

Hey, good morning.

Duane Dewey

Brad. morning, Good

Tom Owens

morning. Good

Bradley Milsaps

cash liquidity $X.X with sheet. portion something? sort maybe that how the you through the maybe Just the maybe from Tom, kind on cash the about If of that particularly you more up rates just loan here, a kind wanted Thanks if comes anticipate maybe managing kind another you to million guidance, hundred XXXX of for stabilize? expected. with in following deposit get to sheet, of your securities billion billion taking sheet. the or on sit sense few I a get into of correctly? to my questions. if do growth running Or you trying start to maybe so sitting grow as I'm you're XX% balance of of your deposits leaves balance out maybe number, Is to balance $X or your still I thinking kind of Am see until plan of you portfolio

Tom Owens

it's a the sheet Yes, of a terms earning as remain assets. know, as percentage Brad. question, you we've strategically securities And underweight of great to of managed in sort balance

the million increased portfolio the securities book quarter. in first we that saw on a You basis, about $XXX

of leave be the going that in second would to substantial excess would of us quarter, again That's We'll things, reasonable that really. may the $XXX think We'll our turn be watching then a liquidity. in things well, that million. well to, obviously million securities the out watching increase, do say, I opportunities you're the growth another third way the -- We'll that the watching alluded the guidance X be would function of deposit be out what $XXX in X be right, probably we portfolio the those of dynamics case that how actually turn quarter. in it's we right? as And with quarter I million past And be Fed what $XXX say be second reacts expect to to to be the watching to to portfolio. does, market very here you we'll million here of $XXX in still and get we'll reinvestment. the you view.

some when or growth As comments, million public hood, I see had consumer very said you mind strong in we growth prepared deposit my look the if quarter But strong. runoff, under in deposit personal then continue we deposit you $XX first growth. seem fund doesn't significant of bear to

effective extent exist the We're we'll durations to it's into that via do securities be in that reasonable back the balances with deploying prudently. extent we those deploying continue book, grow to leaning that prefer certainly, consistent always would liquidity. But those exhibit to to do inclined so to portfolio. that opportunities lending the And the to to going very assume

Bradley Milsaps

Tom, And kind was follow-up, rate function your curious. it that point in that shock I'm just a other you Is from maybe of missing XXX there already looked one sensitivity quarter. something basis was changes just rate just assumptions? or I like but was Great. down hike fourth of interest to had your it to in just probably where seen the

Tom Owens

a more substantial And very Well, we what out quarter. mix decline, We with $X.X $X.X you something to first like the again, net when include it in -- the numbers, had had look, fund growth the round growth billion. think in see first that so quarter. from, reserves public our the you in deposit when the not Fed change, you -- you math, is loan do dropped to billion pretty good when linked-quarter excess And has like on at do right? something basis, I the

work the that to the securities that we the in fact dynamic money that put And decrease. that caused portfolio, that's so

Bradley Milsaps

Great. quarter think valuation, you the in fairly do of you to you with amount bank kind I think share going similar have Thank and first aggressive to you thought moving Maybe just curious where in it's Just Or be exactly $XX And you. as you on the stocks conservative? all do repurchased that buyback. might remaining with you're XXXX? be attractive did might Duane, guys of weren't kind at the you down stock, to of kind million? how the a you year been. more

Duane Dewey

Yes.

will Brad, a think, don't quarter think, the up conservative, forward I prior to continue in level be to I call, getting we the fourth more we've I past. little moving same particularly in be and in our calls than see been opportunistic. the as But XXXX. we'll us

on ratios committee the and all the opportunities and there. considers overall above capital market, looks a the meets at regular at capital Our looks and our at the basis looks situation, of

at So front. least we of be past the been kind XXXX sit than today, on in as we've conservative or likely we'll more in that

Tom Owens

earnings as Yes. think, has accelerating. terms the call, that in deployment inflection net hit earnings the 'XX And And in growth that power, an of quarter of Brad, that add, margin I of really so with our income, here should be run a alluded 'XX. below on trough, here to memory that lot if be the 'XX we interest would being That point this now do would rate fourth a net interest right? and earlier was serves we've is last guidance me my in Tom. meaningfully with I on call, correctly, gave to

call and year opportunity. in a in, low in of here it, the progresses profitability repurchase probably and capital we're via terms see of terms how of I'll deployment we'll point So

Duane Dewey

still on front on to be -- would uses I organically. and I Brad, are very and interested would we of consider mean, M&A the there. grow rather the like opportunities note, final would would capital, And We then based other

opportunistic will here. deployment capital the the we'll rest year of the again, and see So how be unfolds

Bradley Milsaps

I going that. just thought appreciate And expect answering the you would normal of me. it branch this a sort I but didn't impacted to the just more your kind a then to apologize, my of release in curious of final And And X gain Great. just amount questions. of questions housekeeping rate I XX%-or-so? back the for little or that income. facility lower see quarter. forward XX.X% I kind is Thanks than revert tax other from

Duane Dewey

and start the represented too. across pretax we be I'll gain Toms sold basically then So was gain But quarter. the sale street just add an one-time, that on relocated $XXX,XXX-plus can -- and to and attractive a a the for and a happened market the location

And so a that was of onetime deal. kind

So to Tom add or anything Tom, to that?

Tom Owens

-- what second Brad? was was What question, the the

Bradley Milsaps

lower a tax the this Just rate quarter. is little

to, Just head it back curious where if all? might at

Tom Chambers

Tom Chambers, This Brad. Yes. is

As basis you rate based accounting. tax quarterly tax rate is by on on effective GAAP estimated an year-end our that's know, a required

your year-end You have rate. tax to estimated forecast out

your expense net you've forecast, So as that within income, taxable forecasted pretax etcetera. the tax got major such can forecasted permanent have factors return, that on differences you you reduce

have quarterly there's what into So rate first of right year-end the factors rate. looking forth. forecasted at at as that what and our see so year tax so forecasted that's quarter, play around that tax forecasts better to march rate. And we're what we XX%. you XX.XX%, estimated that now, point, this it's effective we the But the and several see right in tax on Obviously, during XX.XX% changes and through

Bradley Milsaps

great. you. Thank Okay,

Operator

the for session. would Showing like conference to concludes back no Instructions] Duane I questions, Dewey turn any to our this [Operator remarks. over further question-and-answer closing

Duane Dewey

us Well, had getting together to great joining like of looking the for And to Have back We rest second the pretty we a end and thank year. this forward remainder of feel call. look for forward again we at quarter. good quarter week. the are you morning's the the of a

Operator

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

now may You disconnect.

Trustmark (TRMK) 27 Apr 222022 Q1 Earnings call transcript