TRMK - Earnings call transcript Q1 2024

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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.

F. Joseph 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 first will on at I'd the morning, Relations this the slide

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

Duane Dewey

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

to with We news multiple share great you on this fronts. have morning

in income First, revenue growth, solid noninterest continued Trustmark and first loan a quality, increased a had reflecting credit strong quarter, noninterest decrease expense. and

quarter, share for our Before I company. want delving another into the to important development

& We agency million. in to definitive Fisher transaction sell Marsh at agreement Insurance have $XXX to McLennan a Brown a signed our insurance Bottrell agency, valued cash

X. Slide to Turning

of the are have proud has past last we've that clients X is the for recent consistent known some MMA transaction best prove have extremely during of top we employees the and Through pleased insurance quarter growth country. multiples of brokerage in In we expected industry that the the time FBBI. The valuable in net purchase shareholders and for the years.The FBBI second compelling. chosen in revenue is XX-plus and months, bank-affiliated and to be bank's to profitability close the produced with XX-plus very XXXX, multiples are franchise. We for our partnering significantly, transaction, for income transaction while year. Trustmark. the years, over well-regarded insurance the the It this FBBI sale the the we've time is became in over bank's think increased brokerage especially X% agencies contributed over and organic the a largest of XX% the positive have of implications bank of capitalization. business price we the market years built of the our a what

our As we this Tom to part will strategy. transaction, intend more reposition of that on Owens balance give sheet details and

over generate assets tangible expected income franchise in businesses, Importantly, specifically combined total management to book also and EPS a increasing points. XXX significant accretion Trustmark while strong attractive business. After around a TCE and basis mortgage transactions the the sale, to XX% value full year wealth are share per has increase XX% fee

a pro be will range Owens Our forma. fee time healthy spend on of XX%. pro the income forma in will some the Tom

Thomas Owens

everyone. morning, Happy good to, Duane, and

X. Slide to turning So

the transactions the and XXX flows of reinvestment cash to portfolio of in with positive $X.X XXX to advantage corporate subject convexity Duane also time on depending of M&A be CETX We accretive growth, increase at an cash Based years. sale securities $XXX XX approximately portion including the securities market other mix we capacity. AFS restructuring, to $X.X with indicated, opportunity capital yield anticipate treasury conditions. securities our approximately securities a while resulting points of X%, and market anticipate with and impact of portfolio of flows of basis yield agency by capital, yielding securities repurchases, points that approximately million. organic which additional of points Including additional are while negative current approximately of agency of over consistent estimated We'll ladder is the of in The purposes X.X in in a provides to accretive loss combined book FBBI the TCE. conditions, improving deployment basis the for via billion earn-back X.X% the net a billion approximately taking of about support on the change, a and increasing portfolio. the restructuring intend remix deploy As are of of to the sale accretive share accretive flexibility to the or mix we stability obviously actions, reducing capital achieve of the the substantially basis accretion of general more loan securities a to MBS

approximately As value our points NIM other key Likewise, indicated, up share basis are the tangible approximately XX Duane approximately to improved XX% accretive combined points, full approximately ROAA with XX per down basis as to points. tangible basis transactions during ratio of accretive after-tax efficiency reconciliation, XX% and year walk-down the EPS. session. Q&A value book metrics take profitability It as to then book share and per we're on Slide questions which And turning Duane? proceeds well to X. and includes the XXX cash happy

Duane Dewey

Tom. Thanks, Great.

the million for and interest review linked Now first or from of in the quarter. $XXX.X an expense income Revenue margin XX.X% totaled decrease totaled quarter management for X.X% prior the priorities. $XX.X quarter $XXX.X held $XXX.X for quarter $X.X year-over-year. million totaled let's first an quarter X.X% Slide collecting of in XX.X% of of quarter. increased or totaled turn interest $XX.X financial the to quarter expense million, million, or million which total linked a million increase first quarter decrease first net investment X and linked Noninterest highlights X.X% revenue. million, strong $XXX.X increase of represented Loans of the the the Noninterest quarter, $XXX.X first in a Net $XXX.X ongoing quarter X.XX%. linked and resulted year-over-year. a in million of billion, $XXX.X million and income increase totaled X.X% for Deposits an

continues The losses points loans. for provision credit quarter during representing million with loans $X.X to credit held solid, Our quality net average million, the quarter. XX first investment in first of for $X.X the remain charge-offs totaling was basis for

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

loan to Harvey growth ask provide on Now Barry credit I'd and some like color quality. our to

Robert Harvey

to, I'll thank you. be glad Duane,

QX Slide real equipment estate Duane in million growth expect $XXX growth finance loan of mentioned, held business. Turning from and $XX.X increase, billion Loans We as XXXX. That's investments for came totaled line an commercial to mid-single digits our for of of quarter. Loan X. during XX. for March the as still the

loan see, portfolio both remains well as can you product as by well diversified, type geography. As our

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

well extremely exceeding with The The low bank's levels this commercial portfolio diversified, Our construction can which land portfolio of of office only turnover, category is industries our construction. is modest overall loan quick portfolio, X% as remain no credits numerous see, portfolio portfolio development $XXX lease The for can Trustmark's million occupancy portfolio. is tenants, as outstanding, high-quality across you to very represents low XX% XX. you see, strong.Turning single metrics XX%. at leverage. Slide and is with loan comprised strong

at Slide XX. Looking

for for which loans was changes first loan macroeconomic the million $XXX,XXX to Our was provision net for for held adjustments forecast a was negative to provision for $XXX sheet for investment credit in held off-balance attributable credit for the $X.X losses growth, for credit losses March was during At exposure loans The our qualitative million. factors. losses allowance and XX, quarter, for our the loan quarter. investment

Turning to Slide XX.

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

Duane Dewey

Thank you, Barry.

in outlook will focus statement on the Owens Tom deposits here. Now

Thomas Owens

Dwayne. Thanks,

to Deposits March Slide our as linked the or quarter, and with to that $XXX $XXX $XX.X year-over-year a turning deposit continues show at increase the So competitive. quarter X.X%. totaled to environment amidst of of million XX began strength or base on of exceptionally a X.X% deposits million another good which an decrease We year billion remain continued XX.

continue million quarter. fourth $XXX We declined by grown to the during quarter experience the the volatility fund quarter public balances during first having million during after in $XXX

the $X up So during some rationalize to during of $XX That depositors. essentially book personal the reflects first noise balances was noise And as declined brokered were unchanged, CDs CD of personal efforts certain our during attrition, by cost related while Non-personal first there, CD the quarter, promotional declined the really our matured to large million by $XX million balances during quarter. $XX million quarter. driven the counter by they which quarter. million seasonal

promotional price weighted remaining exception our time and XX, $X.X book paid March term and a of deposit average with about weighted X.XX% of billion months. a average of rate X As totaled

all-in X.XX% XX. Our X a rate paid at $XXX remained of about an as million broker months and remained term at remaining weighted average totaled deposit March average book about that weighted that at

quarter The DDA show million with primarily represented non-personal of end balances to XX% balances $XXX decline mix, the $X our driven continuing deposit X.X% quarter, declined was of linked as Regarding the bottoming. base. or of balances of to that signs noninterest-bearing by billion personal

increased by X basis the X.XX%, from quarter quarter which point from in the increase deposits Our to linked the points cost interest-bearing was quarter. basis XX of prior down fourth

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

XXX,XXX the accounts of public During about average deposit personal accounts, with an an average $XX,XXX. non-personal account collateralized per balance we of and about quarter, had excluding fund

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

increases forecast first the X of to quarter the beta of X.XX% cycle deposit to chart for Looking cumulative second beta increase X cycle the quarter bottom of cost linked basis and XX%. in of the XX%. And quarter points linked point the the deposit cost our is bringing quarter and a basis of continuing trend date flattening represented a our X.XX%, corner left-hand a total at of to in slide, increase

interest respect rate basis level asset fees the and X X quarter, to of unusual net our Net basis day margin would linked fees to which due decreased resulted quarter the about points quarter XX, quarter point by count. to dilution basis rather due X by in a liability and linked resulted have have linked-quarter X.XX%. revenue. points in the increase resulted loan in than basis points decline during Turning totaling in X attention income $X.X X to of somewhat decline had an margin a Net margin which FTE reported points dilution, due basis was loan A yield $XXX.X of in quarter, linked rate or and a With asset linked interest the of of in decrease. lift net the the to in loan offset X basis volume dilution we points which volume loan X drop rate X normalized point point basis interest decreased million, to basis Slide interest reduced a million as yield. would

So on trough in Turn we in XX. are to net Slide continuing interest a margin. to close

substantial loan with rate risk XX rate by remained variable mix unchanged driven XX% sensitivity interest as profile Our coupon. asset March portfolio essentially with of

notional and quarter, average received forward billion portfolio first fixed maturity entered a a $X.XXX the notional the quarter starting swaps, weighted million which swap rate X.XX%. years into with of average brought to of end weighted of X.X $XX During we at

XX years portfolio X interest also maturity SOFR in We $XXX million reduces starting shock at weighted X.XX%. average into with the quarter downward our entered brought million a flow any program floors, end average a which potential hedging sensitivity notional at to rate forward of weighted asset notional to substantially rates. floor cash The of adverse

linked million for $X of Slide sale XX. Tom I'll totaled And which million and the biggest to Noninterest driver in and increase margin, quarter $X.X capital was increase up on million, driven equal increased a $XX.X quarter to first hedge income ask a quarter market. expense net asset negative reduced in amortization and Turning mortgage million banking, The increase ineffectiveness. was year-over-year. approximately $X.X improvement parts the servicing cover Chambers now gain noninterest the by linked

Duane Dewey

Tom. Thank Great. you,

Let's on XX. to and now sheet look do want forward-looking I not commentary that reflect at Slide emphasize our outlook repositioning. is this any commentary balance does pre-transaction

changes nonreinvestment in are balance XXXX, digits. decline of expected second grow interest based to sheet. mid-single with loans subject the along digits grow flows, be let's are deposits course, rates. quarter at security which, digits balances updating single to while by We're of our market low single look to to So We'll guidance first, portfolio expecting Securities are cash our on high results. in expected

on sheet expecting 'XX, in year Now income to transaction. close of work costs, net forward and be stabilizing X.X% segment. asset impacted continued previously, noted as approximately interest growth a reflecting And interest based implied of in margin will earning full decline rates. post the interest single We're digits income significantly in low balance by on resulting market deposit NII the net

current expectations below the income half Again, reflects forecast we to completed. the and industry to dependent is is the outlook. credit sale to loan our mortgage noninsurance noninterest noninterest unfunded For of cost increase will is grow of containment quality digits, our Management year, reset noninterest credit, the including the economic expected management. is the mortgage and and are the our On to the upon charge-offs full and remain losses, is mid-single for income our in initiatives impact commitments division for is perspective, Wealth credit in latter the which based Net a total expense wealth XXXX average commissions current provision single trends. year. which subject digits on expense future macroeconomic From low growth, after expected expected

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

base capital time. We like will that, strong initiatives. open questions I'd a for corporate floor implement and priorities the maintain with to And to at continue to this

Operator

Instructions]. [Operator

comes from Our first KBW. question Will of Jones

William Jones

getting finish line the through was on still great that it So to insurance see the hit there. the congrats target

at as CETX bond you forma we the sale curious, nice pro Just of coming really the are about remain boat transaction, TCE going through think levels. a and have dynamics and the to

think I bond the sale. out lay you CETX following around somewhere guys XX.X% on

the you how Just excess curious, optimization. will buybacks And further for capital guess bond your through follow-up M&A, that which growth the stand to maybe got natural closing list tools even and sale? sheet where lens, the following would redeployment, you to I more characterize are then of is the then balance

If helpful. you prioritize could stack be bring would for just deployment, guys that sense us would where and super further rank you that

Thomas Owens

is this Tom Owens. I'll William, start.

from we lot repurchase there. share as a So you context, there's Historical know, have abstained activity.

capital organic loan desire portfolio, transaction AFS We substantially to our continue time. with have with us over sale advantage to prioritized accrete What wanted opportunity the round taking regulatory we're half restructure this supporting which most the is restructuring of to to allows and growth regulatory take the FBBI the in half of capital we of that the capital. numbers of ratios, to terms and and portfolio do the other AFS supporting of of in to super accretion transaction accrete approximately the

organic this to would same, as So active growth accrete that we say I capital we'll us mode that result capital continue the I other But we it in. It have is opportunities. be to transaction. does provide flexibility helpful. become I supporting say to that would will loan respect is would our foreseeable would the the been accrete repurchases remain allowing priorities position anticipate of to to share additional continue not anticipate for with future, a and which and as to for we again, in

William Jones

guys does view And M&A way opportunities? change I mean that this the you

Thomas Owens

We focused get well, in to we move franchise. on are Well, still Tom marketplace. And feel of this production I'll adding the to equipment talent focusing pretty repositioning and get in respond business got significant real that behind are We're us the like headwinds quickly things. us referring the really, doing behind our was to new there we'd We're transaction well, organic to is the business. across finance that and and time, this very on side at support continue forward.

We Atlanta market have support. that office new a in to we'd like the

talent that space production M&A on for the really we to headwinds a on continue of issues, opportunity The being. opportunity pressure regulatory time plenty we've for we'll remain got the real to growth, the environment. and and other the in AOCI So system that add is across think focus

see us clarity of focusing some for to I'd time the start organically there the equation. being see really on side the So we other until

William Jones

maybe for on then just quarter. the one And quickly me

to in you maybe You below I up end dip the saw think expenses about of Could low guidance. re-talk guys quarter. the although the this guess low nice in there? pulls single-digit guidance? of to dynamics just to a really still a it little more of And where that rise maybe how growth maybe respect low stands then some guidance you just digits, is at the single

Duane Dewey

Duane. is it's Chambers the quarter, if I'll look some low really is then up comparative going the firstly, comparative, quick, start thoughts. good year-to-year This in and Tom single quarter, is But add real linked to you very digits.

forward. that's the that still that, and still we're And it's of pretty associate are so out pressures, across benefits feeling inflationary board really whether cost pressures guidance there, And and good I cetera, lot a significant. and or years we still with inflationary a a fees, costs couple data of initiatives started feel but still mentioned that mean moving professional have like there is take we his grow hold. third-party the of the and ago Fit other some comments, things of processing in to that started in costs the things Tom process, to fees et all

single-digit full keep we still at will on and the a very that comfortable the but feel growth, range the low year. lid see So still expense for

George Chambers

said. anything was That well that. to can't I add

Operator

Our D.A. next Davidson. Tenner of from question Gary comes

Gary Tenner

I bookkeeping the items of couple on had sale. a insurance

quarter, restructuring full a so third or the at you'd least would second the complete by you close at bond expected in have effectively XQ end the also be transaction? quarter the XX quarter, beginning the early of that the would anticipate of June With by that

Duane Dewey

what vary we close approvals. bit know, into expected date here, can then June as targeting. The as around be should a but of Xst get process the you we're is requires that regulatory some it But this

which to before we're happen gives X second the June opportunity things close, us for of then So for other targeting end the quarter.

Gary Tenner

And number thinking $XX quarter quarterly that business, insurance million will piece of what about Trustmark per for use that then the terms that models with any run a adjusting Is the assumption reasonable range? the we're $XX.X in to expense million rate consolidated. in to is of leaving be as qualms

Duane Dewey

very X months will noting that's year. the number. for of that be No, reasonable And out just a

Gary Tenner

And it then that. last question just to as relates

will think M&A -- note of referral I we would or assume insurance that, think partner business where there'll over actually to that there's from that bank. sort of how the be you the about potentially generate some an be that income time broker fee that? that Should means just

Duane Dewey

ongoing is continue and do a with to The through an and ongoing have our answer fee our will clients. to opportunity not of There's we agency we arrangement, relationship ongoing our XX very MMA considering process join production an for forces with. years build about partner, to on and process but there. that be team for no. And that we this went of transitioning team associates, very We're with impact for expect the experience MMA the painstaking a excited

fee very a arrangement. is we're direct but income So referral type positive, not it

Operator

[Operator Instructions].

question next Rose from comes Raymond Michael Our of James.

Michael Rose

you be relates managing is wait but buy more as is to a capital going guys I on to on book? before is where trading before happened bit back a all like earn-back level the Or would doing are buybacks to want capital actions would just it maybe the the maybe to you're given look be up until you what to you conservative at potentially look would question. little the just stock? tangible there it some the following buybacks, understand forma pro and that Just certain stock you

Thomas Owens

Michael, this Owens. is Tom

will think with be more in now business Clearly, I capital quarterly what think capital the current I would rate it's to sidelines. subject absent probably be stock so baseline price. market and of the mean in market volatility the I run on But on assumption accretion the based have we market it's to our always usual that our at conditions. subject conditions. happen might disposal, as

be I think going remainder sidelines capital support be we're on continue of to year and share accrete the growth. the for baseline organic on and loan would assumption repurchase to that the the

Some talked initiatives of the that Duane about.

Michael Rose

on little the would on and a meaning growth as And is follow-up, that do allow cautious look out fee up there a you this some before, side, bit anything there. maybe more capital invest new lenders, build to on will maybe some the organic hire just have money might side, just you maybe that you some more free to been

can growth of Just what capital the on organic sense looking a be deployed levers for into this side.

Duane Dewey

Houston, like would stated to note, very, and we in that gained be we're that attractive new Atlanta, understanding I comfortable process we those opportunity are we consideration experience the where that give knowledge Michael earlier, we've last then where mean some Memphis, exploring finance, does I market, have give get this Birmingham, can the around that think feel And opening gain markets, very exposure and Mobile, opportunity. for markets et thing really to a And can in some had cetera, as And we operate talent. in think serve, don't and currently regions the that We've always already I'd Atlanta opportunities across already a markets. some we production talent all by very there. growth, other add across there then attractive I business markets business does there's and We've and add organic in. the and we preference earlier, equipment we our this like us talent got us experience in starting I add franchise mentioned opportunity. where

we those opportunity really aggressively think focus gives organic and of this unique some more in areas. that us so do a expand And to

Michael Rose

little could working some around maybe through prove just And bit conservative. a for model of me. seem I like be the then was it last When accretion does EPS finally to the assumptions night,

takes projected it accretion, the EPS walk whether see Just the it, if or to capital about bond actually you've rates maybe do and more security I We've ability on on seen side. through the these having opportunity be talked higher. sale you potentially the more maybe where be a from way of may few with the deploy puts done to can seen to you impact know the that transactions book. other you

So just can headwinds takes be walk accretion puts you be? through the EPS could and What better what potential and guidance? to would maybe the that

Thomas Owens

restructuring respect restructuring, of these of -- interest terms amount This early is of with assumptions together in Tom amount put restructure portfolio. best Clearly, in We've the with different the being could are the rates end Owens. composition to of and restructuring particularly the bond somewhat that the would thoughts portfolio here volatility in in still we've how the had quarter-to-date our pro the forma quarter, market here. we up

think ex think, almost the the to When the me, to be I about opportunities transaction. there rates, interesting of variability on where Michael, to might deposit you Fed some and talk with might more the interest with impact and to the what respect it's takes the costs. respect about puts fundamentally head

I an opportunity there's think there. that

there in there's some time, that deposit DDA opportunity takes, risk and which some When balances outperform the particularly you flatten same with and noninterest-bearing I to guidance. respect the about of to At continue there We quarter linked increase there's relative to puts talk to trend cost. there. the think terms

consider the basically when takes, guidance done we left puts we and and board. is across what all the the So intact said

with thoughts you that come share to are I the can mind. those So

Operator

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

Duane Dewey

We to into an very perspective to I'd like again continue you was to excited from and to value. second us, joining second very we'll for and and us be it for you We're new back joining today's shareholder excited quarter. the the at arrangement informative. thank the to end for move all quarter of insurance hope call. for Thanks add

Operator

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

You may now disconnect.

Trustmark (TRMK) 24 Apr 242024 Q1 Earnings call transcript