Earnings call transcript Q2 2023

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Operator

Good morning, ladies and gentlemen, and welcome to Trustmark Corporation's Second Quarter Earnings Conference Call. At this time, all participants are in listen-only mode.

Following the presentation this morning, there will be a question-and-answer session. [Operator Instructions] As a reminder this call is being recorded.

It is now my pleasure to introduce, Mr. Corporate Trustmark. of Director Rein, Strategy at Joey Go ahead.

Joey Rein

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

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

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

Duane Dewey

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

X.XX%. had million share quarter. and with level reported and return common income net of $XX resulted a XX.XX% growth, expanding return businesses. per $X.XX growth of continued income second on fee net solid quarter and Trustmark deposit interest We in of a in on of loan in our second the average diluted equity or a income tangible profitability This assets average

to billion. of highlights the in to million Loans level grew linked-quarter our Deposits billion. little or financial X. $XXX $XX.X held $XX.X X.X% million turning or quarter total look Let's increased Slide of during a linked-quarter $XXX detail investment a at a more by for to X.X%

million, X.X% second quarter represented an Noninterest income second Noninterest expense the X.X% and totaled quarter the quarter in the $XXX.X linked-quarter. second Net grew income X% XX.X% while linked-quarter increase prior compared quarter. the revenue. up of to interest of noninterest $XX.X totaled in was million, income in million Revenue increased X.X% linked-quarter. $XXX total

X.XX% Credit as loans. held X.X% quality totaled solid for investment Nonperforming remained of the represented Net loans represented of basis XXX% $X.X XX. the million nonaccrual as total four for and charge-offs of loans. during assets average quarter credit of loans losses represented and points June allowance of

to September continue capital equity as quarterly maintain Tier The Board of ratio of per common XX.XX%. total strong and XXth X risk-based of We shareholders a cash with levels to record $X.XX payable September dividend of on a share declared of X.XX% capital X.

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

Barry Harvey

Thank I’ll be you. glad to, Duane.

Turning to quarter. Slide $XXX X. Loans our line totaled came increase from held growth Duane of as during same June businesses. of $XX.X billion finance That's an of Loan mortgage QX mentioned for CRE, equipment investments as and XXth. million

and be on loan to the very solid We XXXX. credit continue a -- remainder a disciplined growth throughout processing from do from standpoint. We both continued of expect

continues Our well based loan geography. as be portfolio to upon type both product well-diversified as

development. in XX% existing land in Looking XX% Trustmark Slide CRE with is to the the portfolio category vertical and being XX% construction X.

portfolio high-quality modest and metrics The book. development levels overall XX% is is you see turnover, portfolio extremely million office low can of at portfolio construction. this portfolio is remains very credit comprised our loan low occupancy represents leverage. land construction which Trustmark's credits Our strong. of X% outstanding, strong on lease with only $XXX as tenants, The

XX%. single bank's category X. segments is exceeding with as commercial The numerous no to well can Turning slide diversified, across see, portfolio you industry loan

to X. Looking slide

second our and funding average weakening provisioning in credit within Our attributable our life provision for off-balance XX, held million. quarter. sheet losses an for The losses was growth, $XXX.X -- portfolio. for loan the companies our was loans for for balance for loans allowance losses for was the for for the On held quarter, the provision a macroeconomic investment exposure was $X.X investment June $XXX,XXX million credit mortgage for which the during forecast, credit loan was to increase

to slide Looking X. on

low credit losses nonaccruals, totaled our credit loans solid metrics. investment represents The post non-accruals to of allowance loans, excluding XXX% near both held average or continue second for remain the credit for million net X.XX% nonperforming allowance the quarter -- X.XX% loans analyzed. individually of and of quality losses We are that for levels. those assets represents charge-offs historically In $X.X

Duane?

Duane Dewey

Okay. Barry. Thank you,

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

Tom Owens

Thanks, good everyone. and morning, Duane,

let X, quarter ability on remain amid and with strong June billion we was million increase provides slide core base liquidity an deposit $XXX Deposits exceptionally the $XXX maintain year-over-year. pleased million saying for our environment Looking our deposit at $XX.X me at totaled linked costs, begin our deposits. competitive by a that XX deposits manage to increase that

CDs promotional attributable $XXX seasonality. brokered increase million somewhat most in public The in driven quarter and to deposits decline by segments, Linked million. in balances, million $XXX of declines of time time was increases offset fund was a CDs notably by deposits increase other $XXX normal with in primarily primarily

weighted XX average deposit about eight As average a remaining of promotional with our book time totaled weighted rate paid June X.XX%, and months. term of million $XXX a of

about XX. book weighted a deposit average of about X.XX% average totaled weighted as with months and $XXX of term remaining all-in of broker rate six an million Our base June

of the to Our points from interest-bearing by prior X.XX%. basis cost XX increased quarter deposits

to low XX. Trustmark and stable base. continues a Turning to slide granular deposit exposure maintain

collateralized accounts, about X,XXX X.X%. about of the had average average account accounts accounts, rate annualized an fund and about of second per personal balance or Average increased an we the quarter XXX,XXX by $XX,XXX. quarter, During of for an with excluding about deposit non-personal public

at of meaning uncollateralized billion June was $X.X XX, June borrowing XX%. that and stood secured XX% and quarter our of unchanged and XXX% As representing linked deposits. insured were of XX, our at coverage We are XX% maintain of which mix uninsured deposits uncollateralized deposits essentially were that capacity substantially at collateralized uninsured

cost XX a increase cycle represented quarter quarter of beta X.XX% linked second points total of of basis a and Our XX%. cumulative date to deposit

increase for deposit market which a target of in forecast represent XX%. of continued remaining of Fed through hold Our reflects The of year. range for year hiking forecast forward would top X.X% Fed on quarter, reaching for beta then interest X.XX% in the fourth a the remainder rate the about the cycle-to-date the this remainder of is implied and costs, the rate rates to funds with later morning the

quarter revenue FTE Turning representing X.XX%, $X.X to points. interest of X basis Slide interest net Net totaled resulted a linked linked XX. of in quarter our increased attention which million $XXX.X margin million, on income decrease a

quarter to included margin to deposit particularly liquidity accelerating pervaded deposit challenging linked environment the that compression in early and second of maintained of due quarter. interest-bearing betas, non-interest-bearing interest net in on-hand the macroeconomic and the Drivers from the excess a change mix part

with XX. sheet driven with interest for positioned asset rate rates substantial The balance loan Turning well by portfolio mix higher remains Slide to sensitivity, XX% variable coupon.

rate quarter, and end for second of at maintained hedge million the X.XX%. flow the into average X.X maturity million weighted years cash a portfolio up $XXX which interest weighted entering we quarter average the portfolio maturity fixed with to of a of were $XXX notional by the average rate starting received During weighted of swaps, forward

the downward potential while shock from we've rates. maintaining of adverse in hedging potential flow implementation upside cash a program, our interest interest higher asset substantially to rates reduced Through sensitivity

insurance quarter linked $XXX,XXX. the million, bankcard income a increase fees million, Non-interest $X.X of $XXX,XXX quarter The other of by increase $XXX,XXX service XX. on Slide million for and accounts in to $XX.X increase was linked Turning and second and commissions charges driven totaled deposit a $X.X year-over-year. quarter increases of

non-interest quarter, income of total our continuing stream. well-diversified to revenue, revenue the to For demonstrate XX.X% increased

Now quarter. quarter was $XXX,XXX on million $X driven banking more looking offset net increase by a decrease the of hedge which linked a mortgage at reduction million revenue in servicing totaled $X.X the sale Slide and increase than in ineffectiveness. gain in XX. second a $XXX,XXX in amortization a negative Mortgage asset, the That million $X.X

by and Year-over-year, the of a million production banking increase loan by totaled year-over-year. Mortgage decrease an of quarter, $X.X XX.X% XX.X% driven sale. gain mortgage on primarily reduced quarter linked $XXX declined in second million,

remained loans balance of represented second strong volume representing million XX% sold on and about loans quarter, sheet production while represented XX%. Retail XX% of in $XXX market secondary in production, held the or the

on by basis quarter linked Tom X.XX%. ask I'll management. points expense margin now Gain And capital Chambers X sale to to and increased cover non-interest

Tom Chambers

Tom. you, Thank

see salary mainly by increases. second XX, driven and you'll $X.X non-interest increase expense linked Slide million non-interest a expenses in between adjusted, during employee detail $X.X million an result quarter of to X.X% as of quarter, out broken benefits total. and of annual merit a commissions quarter of and a million mortgage the second Turning and our or was Adjusted other $XXX.X increase

professional increased the services million, increased during then and quarter. fees fees to and the In consulting due $X.X addition,

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

second our previously X.XX% to and mentioned, solid, in stock risk-based any unlikely during repurchase did under we capital of with engage way. Board of authorized program, although ratios $XX a a million stock shares the the our we remainder repurchase XXXX, have Trustmark ratio authority for quarter, a are a common repurchase common in of of total remained meaningful not capital XX.XX%. Tier ratio its Duane As one equity

organic Our to capital to priority for lending. be Back through deployment continues Duane. you,

Duane Dewey

Tom. you, Thank Okay.

Slide to Turning XX.

Let's outlook. our review

flow decline to interest year. We're grow look deposits single loans the subject course Let's for in sheet. the as rates. the changes expected of are portfolio of cash first high and reinvested, not runoff impact of by is which the to to digits, expecting digits balance at mid-single balances Security is market

including the charge-offs based grow dependent expected the and statement. total forecast. XXXX, to provision additional in growth be the interest on full year by driven is in unfunded net on macroeconomic high current loan growth on Moving requiring based economic and to credit to forward income nominal, market mid-X.XX's, for income margin digits rates. interest outlook. interest net single We're a reflecting Net implied to losses, commitments current upon the reserving the earning future expecting and The mid- are asset

digits expecting single management expected single increase card expected digits year fees with income level. From bank to insurance stabilize full is revenue and revenue, wealth mortgage banking a or charges We're service low the noninterest single increase to increase expected is prior and year, a to above low to perspective, high at digits.

system digits on added is impact expense the to FITXGROW expected discussed general XXXX is talent the our pressures and of lines of mid-single reflects year. subject the focused year. the for We increase especially, various -- remain business. commissions across wages as across initiatives, on new to intently inflationary throughout Noninterest in This

grown card loan our advancements of implementation Our platform, the the our finance, as of of has conversion with system. second in million technology $XXX plans quarter, Atlanta-based division to Implementation XX. as the credit our as equipment of June its continued well portfolio in underwriting

implemented fully network, be our we design process, to and will sales into We and these XXXX. build the During long-term XXXX continued will the early quarter, value retail believe performance, through across branch our for Trustmark's service which actions shareholders. enhance throughout

continue disciplined for will preference we deployment, loan with a growth approach M&A. to capital Finally, and a potential organic

We will base to corporate strong priorities and initiatives. capital continue -- maintain and with implement

like and that results financial of the our outlook quarter commentary, to overview With questions. second we'd open floor to

Operator

begin [Operator KBW. Catherine Our will session of We comes the Instructions] Go question from Mealor now ahead. question-and-answer first

Catherine Mealor

Good Thanks. morning.

Duane Dewey

Good morning, Katherine.

I your I to I'd like expected quarter. thoughts talk about deposit lowered looks XX% but full-cycle know, you bit start with just last XX% beta, the on your a updated margin, little beta. surprising It maybe from wanted

increasing it. are companies most think versus decreasing I it

else the what quarter. seeing kind stabilization, your read a Are through kind better Thanks. you So Is just to seeing in guidance? for anything deposit you're in your of there curious, activity markets? of

Tom Owens

Tom Good this morning, Owens. is Catherine,

Catherine Mealor

Good morning.

Tom Owens

the question. for Thanks

beta. The on So, we're discussed we've lower now X.X% looking a is in rate who whether at knows And previous Fed of calls, A cumulative goes you're quarter, One, thoughts. higher not. XX% that funds or for fourth couple this full-cycle Fed the a as than of and right. a beta.

that trajectory much be, deposit so Our what maybe beta of interest-bearing would cost. changed thinking which It's would and for more for of full-cycle mid-XXs about it. be hasn't in mid-XXs deposit the total cost really terms

easing at as year this today I that then and forwards implied know, of remaining quarter looking we're to quarter market not year. the second Fed now next market basically which rates, would beginning market have ease on as implied be the was hold forecast until And on second the half through in said and forward hiking first based quarter. the the pricing ago, you Our is interest a

in really terms that's in of interest market-implied terms And forwards it so out. is rate this where the in peak the the extended it's cycle moved goalpost of and

flatter So as is I describe what similar would destination. a it Catherine trajectory a towards

Catherine Mealor

That makes sense.

maybe deposit composition. you Okay. Thank just that. for on And the then

some in bit of of actually seen what less doing talk than move some how a CDs remix about what of non-interest-bearing between other? you're the half of bit looks as about shift the mix little non-interest-bearing Can little about I year not of a banks. your thinking the you we've and back the that just a you're talked we that to You promotional peer been think like, out CDs,

Tom Owens

is make are able interest-bearing to those some of what fees is from we point we're to one DDA charge higher on that a non-interest Well, so accounts, on the you've transition which accounts on value-added to accounts. seen bearing,

So I'm or going so the say in had we $XXX for in numbers quarter to second million migration. of round that example,

linked-quarter decline the bit in first. it was little the more a non-interest was second that quarter in bearing So in than

neighborhood or a for think maybe I less. even when when But you adjust we're little the in that same

out going about it's bottom We're we're to XX% our about not XX%. to So that there thinking – at changed. We're to project now. at going continuing has really

Catherine Mealor

Great.

last step out Okay. the then And and then margin questions. I'll the one one of on

I about say, while. put as a for a talked little and swaps we for Just longer XXX there we that big the higher but stay say on picture, you in think get let's to a bit just you

thinking start think scenario? about also And kind how how under think of like asset cut from so about of to we feels about the direction that I then separately in start of sensitive, to Fed taking to how trying picture off you like it that it? do margin environment your but big feels direction scenario. you're margin Just you're in the mean – an so the just the some feel table you that you're of see the It here where

Tom Owens

there a half Catherine. lift lot floating that. I because there's simple get when of loan book Yes, But you as hike you get as is a can, our from rate Fed the

short-term, longer, it between get a for cost deposit in becomes right? today. the happens in Fed ongoing though race of about repricing the you as hike helpful And time. fixed the it upward essentially, we if in onward, a over a is rate portfolio. loan So What your That's higher think then grind

stabilize So if run you the Xs you the you full but where low essentially into look do year at then rate at our takes guidance that as for NIM, a trajectory point.

beginning not because point. you but as call interest I would asset we I The this ease to your have range knows, So Fed we stabilized at is are for deposit thing right? the somewhat, are some thing other on of say question linear, to higher offset say are would And towards some of here right? there rate is other interest this Yes, the about the sensitive potentially betas end everyone the rates cycle. all likelihood probably

market-implied next deposit say accelerate betas the through the have to first seemingly deposit the year as continue accelerated. second hold, with will So And Fed quarter of on forward or suggests. betas

later much more opportunity an of on what thinking the those the that what be our you to then same the higher way Fed up. easing to onset of into significant But beta happens. happens my cycle Historically, deposits re-price you is, were have those the down tends quickly in Fed as to cycle easing begins way that anyway, get a cycle if

to so, re-price of opportunity the way Fed more that does those that costs to up longer winding the And for high a you deposit rapidly. compresses gives in begin higher and your once environment ongoing net cut same it interest beta the margin down from

a natural of easing can So cycle for although the sensitivity. or That can sensitive, some first that XXX basis be Fed helpful. offset gate asset of the say actually asset that we so out tailwind remain in that that points be a

Catherine Mealor

Great.

put to very is That context. it helpful Okay. into just

much. so Appreciate you Thank it. Okay.

Tom Owens

Thank Catherine. you,

Operator

ahead. D.A. Davidson. Go comes from Kevin question next Fitzsimmons of Our

Kevin Fitzsimmons

guys. morning. Hey Good

Tom Owens

Good Kevin. morning,

Kevin Fitzsimmons

back guess the drill Maybe seems in outlook that the happened margin color appreciate to stabilizing It then had looking want I in I the what guys further the a is, and I all -- what more out. like and to into -- more of you the little Tom, guided pressure quarter. year. half second

the guess cost margin we So the deposits. definitely than expected. the of you, it's I better held it and like seems on up And --

to kind happened the in it of easing than margin? expected better for over can you So point what shift was what pricing course Thanks. the the quarter came the an this the of the -- of mix competition, What pressure, if quarter?

Tom Owens

So, several couple great that. to on question, you with -- Kevin, thoughts a share

Having more the all, the hike. with cost more of and the the right? point quarter, guidance so where decline a increase in, NIM of half stabilizing you NIM First That's deposit full one full linked-quarter in third to the in terms that… the the on guidance said year suggest Fed the quarter only basis math fourth does ongoing year takes in about maybe second for on

Kevin Fitzsimmons

Right.

Tom Owens

that the quarter the is course of terms posed of in pressures happened what a continues I fundamentals a would we that, or year environment I the second so Not all. mean, not competitive positive it at see something at couple case case be …in We competitive the like very to it you the way turn. of One the deposits. in all. for to characterize that, easing things. it through of everywhere a as is it say

digital overtime. a think experiment in is, we couple improving process leverage One continued this things some to more to of capabilities success targeted there with product, promotion. getting combinations -- continually have are promotion. price, continued We've in there's, We've digital though. through delivery of had and I

the the If the That's promotional January targeted. they back reduce the we through today are at us as book, given somewhat repricing go you in of this. practices more our year where versus coming into look were they to opportunity

taken that loans on we will as Barry, the it the the the get reduced has far other questions getting margin steps other I'm I'm we've return increase on is, morning. relates some then said the the on requirements of we're growth, that loans to sheet previous but to sure as making side And so the at have right? this balance loan all calls,

not loan between side. growth promotional and the the side deposit growth. our side. because So loan less back just we the And dial that calibration the on profile a dialed back that little the it's have competitive deposit relationship bit of growth gives to a and It's the deposit us opportunity bit on

Duane Dewey

the for still is loan you XXXX in Kevin, experienced I'd we if million first virtually but the that very Duane. coming out quarter XXXX just into $XXX where of moderated add half slightly, growth was So, significant recall particularly the in this second coming XX% first quarter.

seeing tightening flexibility we're We're it Tom now noted, hurdles us balance on a the bit it sort on side as other Then backing across and sheet. our noted, ROE off. that as thing, moderate little little just we're little a but we're and Therefore, bit the system. of a the of allows Tom seeing

Kevin Fitzsimmons

I guidance see And I'm that it. on loan Got the so -- now. seeing

be really for and intend you single-digit at that So to deposit So take… I loan right mid linked growth pace growth right?

Duane Dewey

goal. That's the

Kevin Fitzsimmons

change You'll probably dramatically. won't that all

now? with comfortable You're where it is

Duane Dewey

Yes, are. Yes. we

Kevin Fitzsimmons

And that Tom. Okay. get out pointed me you Barry since let involved

but but part on trying years are big they not about feel recognize the you're the judge of are over to real that when or concerned rate? So, are know for numbers what not looking problems getting maturities next you see and what stressing CECL the to like how you're line I office are a down increase about what -- for big credit? -- further out potential kind sitting subject to just sense portfolio, is how of but the in the going few estate do Thanks. your concerned your down commercial with model, today, you're you're meaning a when you're customers I you what

Barry Harvey

book as off -- Barry. the this XXXX, there. about process, I XXXX One, CRE then we're Hey, process, XX% for dramatically XX% maturing XX% guess, few is a the far and our things. drops XXXX, maturing for it's for Kevin, as it

in our book mini-perm So is be and predominantly CRE going construction to financing.

of to a then reprice, continue rate And across as there's we're all are to looking at various mini-perms those books, the see variable those looking mind when loans the bearing board. -- so that in construction we're

either rate and been look bumps. and established in, rates the they given they absorbing perform, they service were are to along But and have a continuing go they'll when permanent the to they're reserves market a from have to going to net third-party. see, higher interest or underwritten, the environment way all we're those to they with So, need were standpoint, the to valuations hurdle to possibly versus the how as where the sell

point feeling in So, we're evaluating secondary of we're seeing evaluations. source a repayment, lot our repayment. source book, going not those. of through these comfortable continuously this We're with very cracks And primary at

aspect comfortable with So, of it. that we're

loan of And in provision a three provisioning probably were provisioning the this provisioning then From loan where the forecast. factors. from, driven and about macroeconomic during have was the process, the by it -- our and That growth, slight standpoint, did a quarter, required primarily was driver. weakening the One came we was third we there. growth

lengthen quarters And to And given had a then out it in some Both XX well. a does we mortgage book. quarter, it it from there from quarters provisioning. as meaningful mortgage we a both we from quantitative provisioning did have and is qualitative require our some loan provisioning had XX standpoint standpoint -- from the does of $X.X when from billion, life book since a out lengthening our in

of Remember, of perspective, the expansion, have a every provision, that much slow driver $X.X key, wait been to million then So, the have unemployment how from pretty and pretty the an one good our forecasting average clearly a begins things one unemployment driver characteristics, from to of sudden life is and from standpoint. loss of an see. in was And that much books. we'll

Thus there, And the or relates have to sudden attribute forward. reversion unemployment fourth then the did so we've we mean. straight-line would four-quarter forecast. if in mean provisioning, weakening then the slight our We that do as the drives see a sudden unemployment a changes the quarter the provisioning drive in ever So, seen far, substantial national unemployment, it to going obviously attributes. from

comfortable one point, a the And guidance provided be before thought year started, it with provisioning. So, might feel probably XXXX. on the little we point than I at we higher mean this at we

slightly we be I but on know had in the being case. think don't than to what we line in it be don't this that based believe what higher less, XXXX or at point, see It we may today. we

Kevin Fitzsimmons

upfront of One Mississippi or announced me. last Barry. thanks, bond about bond where or peers already I loss, but one is down used Okay, Thanks. something higher using Is you're executed bank saw form down competitors a it your one that's took pay borrowings. know cost I by for flows to radar? to fellow they a an cash that one-third, portfolio but on that -- your cut [indiscernible] something transaction even loan growth the

Tom Owens

actively this Kevin, that of we aware something transactions one and We every are Owens. certainly balance So is That I And is sheet is those think we which this is different. have set from the contemplated. to contemplated something in but referring. Tom not an actively of is you're that types no. of different. that the not at type doing circumstances can of transaction, merit economic I time, see Every potentially have that standpoint

Kevin Fitzsimmons

it. Got Understood. Thank everyone. you,

Joey Rein

Thank you, Kevin.

Operator

comes Our of Joe question next Raymond Yanchunis ahead. Go James. from

Joe Yanchunis

Good morning

Barry Harvey

morning, Joe. Good

Joe Yanchunis

was on color I in margin, but you all the I appreciate more. one to slip the gave hoping

provided, of inflect Given that beta trough deposit kind do when conjunction commentary your outlook of some NIM the expect half you with in second to you and higher?

Tom Owens

of So, I the mirror right? as earlier the I in of I pressure the in not the say on my NIM said the side, is Tom Fed Owens. -- right? image get would expect what to we we're until all the Joe, hike higher today. likelihood think Again, this Let's comes deposit living now, through traject comments, So off

to hold think the the it nature the what's ease, say we forwards situation that's basis mid the market right? where the economy a a has market couple or the to we the Fed cycle, in into If six is and and nine next depends and you Let's Fed do also a on of hundred I correct implied apparent are that, of meaningful wind say up for get of on months. happen. Fed get points and year Fed overdone just easing softens, becomes going it let's onset, recession it the

would the the very reprice weeks, emergency were represents billion to book down cuts example of points we basis the $X.X you Fed, I from substantially $X.X of of Again, deposits basically over down to of of that that we couple of beta higher a at reprice pandemic, March I that that had beta course opportunity the the XXX deposits XXXX, billion, give say there immediately. of higher able point memory quickly.

So it just depends opportunity. circumstances. that answer this to that would occur. set ETF a intensely by other basically on -- margin examples competition world as paint could the virtually question But the impossible where of competitive bill your is right squeezing and on of Fed that interest thing as be deposit up frictionless treasury today's to X% The pick costs pressure comes environment that here of me to It's the sort engineered than the deposits, off. for a for is in same is that's for deposits that creating yield until bank the unless ability a to depositor net

the on competition deposit our here the will we're reprice and for onset interest to that fresh It I think for higher alleviate and opportunity net down gives some using that grind of of to us reduces the continue deposit margin. the and book. be net going to that costs industry, deposits with pressure cycle

Joe Yanchunis

and there. answer I of Understood. appreciate switching thoughts the over. Kind And thorough

that and some So provide some you commentary on the through impact more service in sales of process. potential of of that Can in financial including detail impacts some implementing? project of the laid out maybe you're release some your your you -- your initiatives and these

Duane Dewey

that for that organization, I excited that It sales be the a retail focused mean, It's is in and will bank an using training we're over basically that stab a service approach. months. at it. comprehensive wide positive. a source is I'll very particularly next several and currently take sales and the is quickly. underway external bank implemented customer-focused very program about It's

to FITXGROW really generate. real out projection short structure strong and already relationship uptick and the some But changes what retail and banker extremely think of a long making I'd customer in things like take is the that. have in on an the arrangements of stop Through we system we that designed might implemented financial run, process that in this advantage base. We

We have loyal base. a very customer

We believe on the have further core that system very and capitalize help will base et us cetera this we strength. solid deposit a throughout

Joe Yanchunis

Okay. it. here. follow then up I one I question could if with appreciate just last And

So with buyback for take share to a you will what appetite have and the build in capital levels repurchases? to for place continuing stronger it

Duane Dewey

of part that sorry, missed I'm I Could that? question. you repeat

Joe Yanchunis

Sorry.

the build in for have and levels it share take have appetite So what you to a you with place will buyback repurchases? for capital continuing stronger to

Tom Owens

is say this growth. we've we moment nicely Tom is as accreted during focus prior quarter. I would deployment the with And capital to the loan our respect supporting at capital on calls pretty of So said Owens.

We expect continue the be to that to case. for

we build. our So levels will think capital

about been could you We said a you scenario on have absolutely not actively in engaged sort buyback right? discussion NIM see of the as building

been same of can always I the substantially, You said meantime our see the preferred depressed. capital mean where the where in is a form that bank prices where deployment right at scenario accreting economy we organic that's time lending. demand loan stock have softens, we've declined become as

we're to we repurchase. the where arise accumulating don't opportunity in hesitate We certainly via But when as the demonstrated deploy that we've share earnings to the past retained have right? don't circumstances deploy

case. could year a a can But where how half on late to in the you depending could would that It's envision this frankly where to plays scenario you scenario. I be of a XXXX scenario here case. think XXXX mid become the out getting into me So the second imagine hard that envision certainly for

Joe Yanchunis

questions. All right. you my taking it. thank Well, for Appreciate

Duane Dewey

Thank you.

Operator

go Piper question from Please of Sandler. Graham ahead. comes Dick next The

Graham Dick

good Hey, guys. morning,

Duane Dewey

good Hey, Graham. morning,

Graham Dick

guidance, guess borrowers? because So, a loan the of with of answered. some that markets all versus maybe more just I mean, things my then But differences basis economic I your what is specifics it have on on you're is would the you're couple coming you color little you the last with slower asking follow-ups. is part include like, I side I in country is guess most difference XX starting generally that or give that the is the for asking you underwriting starting be into questions as guess I I part just get relationships you the reason like Are growth else? for updated a been helpful. of of can had for clients? a down or obviously yield, rate of from in guide loans, point And a mentioned to this time other something the the there growth to actual your it whole. the any wanted deposit criteria

Barry Harvey

start. this Graham, and Hey, Barry is I'll

of task But very depending viable I the think it on and the lending. the consumer speak opportunity at We're very, through on within deals seeing finance is CRE. As public of production of and bear of deals of looking our in, growth production -- actual relates at category, as the what I'll to other that, this CRE to is, from most side. can market production is, that point. coming to still flowing mindful far willing project we're get of actively books, coming on most type within type growth as most it enable just our C&I very to the that through it is strong the coming still depending we're And that opportunities

basis it standpoint to achieve But a to a a to XX available pricing from of to basis might us pricing dependent. is we to structure standpoint, from some position a seeing XX be projects use we whereas points origination standpoint fee and on category our specifically our So able dependent project are and point able CRE being improve from continue and we're routinely.

going on is of month higher to well. our the true little when sheet for been laser-focused to Then for asking balance opening spread spread an us side available definitely They are from as higher one to equation, be but deposits, a from see customer. ask better a we of consistent on up ask we not little requiring able have folks standpoint the how with the SOFR are from an to our approach ask we're we Same we customer, deposit have and continuing have deposits the just the we're deposits. when

most we those as condition is the sometimes it getting be of but are Now may the deposits. not, of time closing, a loan

bank as from being the we make be and deposits our But to our up responsive. lead We are very persistent being are deal, and borrowers not able to get we a them in get may and second following are the every even are people We sure two-bank very and bank single successful transaction. doing them very that. about

very what we've we've seen been with of pleased results effort. so from the And that

Duane Dewey

mention very quick as about equipment finance very that and December pleased we know Graham question. that about XXXX, an Barry division very did not Yeah. I based in announced we're with One in group. you on excited we're that is and would Atlanta that's category of real excited add

in noted a finance with we we to We And group. have and can growth the we're up team borrowers is to to expecting the there way large $XXX mid- a we're that doing as outstanding very ticket about release, high-quality that lessors in continued high-quality We're that think significantly. grow there. million equipment in that business measured very continue

and part as overall book of prevents -- the provides portfolio. that's some And the C&I or you to diversification know

would And be the high business the noted but top one ROEs note. in that that Barry some about maybe quality an added excited category head projects, that the in CRE midrange. not time. They're the end we again of very be and think would very where over can So are where we're as

Graham Dick

time? initially the to when to helpful. guys path loans division. to get did to -- And proportion would out following you that, just total a on of I in you equipment up level that the lay Did Okay. like That's that you guess or opened you

Duane Dewey

it. nowhere did. we Yes, We're near

ways that portfolio years. So, portfolio business, us in below for the several an overall XX% an grow, significantly to think probably from would overall perspective, that the think I you future I probably much range we -- for never see have over here, as the next

Barry Harvey

mind, amortizing, need Duane to bear they'll there to will a overcome will to amortization the level paper be going headwind have well. it will -- that be to that be will be so -- that that get as take while seven-year is five- typically fully is to in a to this Do referenced, because there

at runway nature. with have a got pace, about or concerns grow any credits things very in us So, concentrations high-quality nice of we've plenty of we of to before that front

Graham Dick

on And expenses guess Okay. front done trimming quickly. down That's have really years, this of the a on I I guys you over to, helpful. lot, initiative. can as I to make FITXGROW know you looking the you're just and hit and wanted last of part you other see guys or to you But think any you upon efficient? areas more I conversely invest? areas, then on improve And opportunities that at just from color wanted that get couple where

Duane Dewey

have the So, both in in core XXXX about system. across the technology, invested discussion, FITXGROW processing system loan system soup-to-nuts particularly XXXX as we the our last several in we [ph] talked -- we in and loan core years the over

efficiencies creates. those headwind, comfortable those any We as the a significant as the new of kind expect gets with reduce of and things as systems, we implementation marketplace system

And we be so can think, there. efficiency gained

some and have over the digital we across system, products efficiencies. also time services significantly digital account that and our in applications invested think digital We and acquisition, will generate

some of In projects, third-party the equation. of part are these services

XXXX time to over the especially We that into period. expect time decline here

in of skill I loan corporate some as finance, to some every cetera. talk well So, some and as our mentioning equipment system, very note we've finance, been production areas. the have expense into sets our CRE throughout We're like, of excited are the about company. about personnel et we side areas, equipment guidance that of as opportunity commercial production taking those advantage would

So, to revenue those those contribute lightening et cetera, across growth, things we -- into see and of some spends, third-party the maybe we system. think better XXXX of up some ultimately could all

Graham Dick

Okay. helpful. That’s very guys. Thank you,

Duane Dewey

you. Thank

Operator

over any to Dewey, to Instructions] question-and-answer remarks. for I like [Operator This turn closing would session. Duane our concludes the conference back

Duane Dewey

conference today joining continuing day. today's at to to questions Thank quarter, look end again, you for back and thank great you, appreciate look quarter forward call. have of a and third second the being Well, us discussions. and together We for the forward the

Operator

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

now may disconnect. You

Trustmark (TRMK) 26 Jul 232023 Q2 Earnings call transcript