TRUSTMARK CORP Q1 FY2025 earnings call

• Trustmark reported solid first quarter performance with loan growth, stable credit quality, expanded fee income, and lower non-interest expense.
• Adjusted presentation format to summarize performance, discuss guidance, and move to questions.
• Loans held for investment grew $151 million QoQ, diversified across segments.
• Deposit base stable with cost of total deposits decreasing 15 basis points.
• Net income $53.6 million, EPS $0.88, ROAA 1.19%, ROATCE 13.13%.
• Net interest income $155 million, margin 3.75%. Non-interest income up 4% QoQ.
• Non-interest expense declined $419,000 QoQ.
• Credit quality stable, net charge-offs $1.4 million, provision for credit losses $5.3 million, allowance for credit losses 1.2% of loans.
• Capital ratios increased, CET1 to 11.63%, risk-based to 14.1%. Repurchased $15 million of stock, remaining auth $85 million.
• Tangible book value per share up 4.1% QoQ and 26.1% YoY. Dividend declared $0.24 per share.

Loans held for investment increased $151 million or 1.2% quarter-over-quarter, diversified across CRE, other commercial loans/leases, and one to four family mortgage loans. Deposit base remained stable with cost of total deposits decreasing 15 basis points to 1.83%. Net income for the first quarter was $53.6 million, resulting in fully diluted EPS of $0.88 per share. Return on average assets was 1.19% and return on average tangible equity was 13.13%. Net interest income was $155 million with a net interest margin of 3.75%. Non-interest income totaled approximately $43 million, up 4% quarter-over-quarter. Non-interest expense declined $419,000 quarter-over-quarter. Net charge-offs were $1.4 million (4 basis points of average loans), net provision for credit losses was $5.3 million, and allowance for credit losses expanded to 1.2% of loans held for investment. Capital ratios increased, with CET1 at 11.63% and risk-based capital ratio at 14.1%. $15 million of common stock repurchased, remaining authorization $85 million. Tangible book value per share was $27.78 at March 31st, up 4.1% quarter-over-quarter and 26.1% year-over-year. Quarterly cash dividend of $0.24 per share declared.

• Affirming full year 2025 expectations. Loans held for investment to increase low single-digits, deposits excluding broker deposits to increase low single-digits.
• Securities balances expected to remain stable. Net interest margin anticipated to be in range of 3.75% to 3.85% for full year.
• Net interest income expected to increase mid to high single-digits in 2025. Provision for credit losses including unfunded commitments expected to remain stable.
• Non-interest income and non-interest expense from adjusted continuing operations expected to increase mid-single digits.
• Disciplined approach to capital deployment with preference for organic loan growth, potential market expansion, M&A, or other corporate purposes. Remaining share repurchase authority to be considered opportunistically.

• Impact of tariffs and other administrative policies on customer base, interest rates, and credit related issues.
• Volatility in interest rates affecting customer decisions on loan extensions and project plans.
• Increased competition in loan origination affecting pricing and structure of deals.

Q: Walk through loan growth trends this quarter, paydown story, and client behavior regarding tariffs and uncertainty.

A: Barry Harvey discussed CRE loan growth, paydowns expected in second half, customer communication about extension options, and market uncertainty. Duane Dewey added on solid pipelines pre-April 2nd, and some slowdown post-April 2nd but still affirming low single-digits growth.

Q: Sensitize net interest margin given higher rate cuts.

A: Tom Owens mentioned normalized linked-quarter basis would show 2 basis point increase, primary driver is repricing of fixed rate loans and HTM securities, with three Fed rate cuts forecasted.

Q: On credit, NPA ratio, reserve build.

A: Barry Harvey said provisioning was $8.1 million, driven by loan growth and qualitative portion, coverage increased to $126 million.

Q: Impact of expenses on low single-digits growth outlook.

A: Duane Dewey mentioned slower hiring, commission changes, and contractual expenses, with core system conversion in 2026 and mid-single digit expense growth.

Q: Buybacks pace, capital deployment.

A: Duane Dewey said pace dictated by market and management discretion, focused on strategic growth in key markets, and M&A activity post-April 2nd.

Q: Loan growth enabling selectivity, credit costs, deposits.

A: Barry Harvey talked about selective lending, competitive pricing, and Tom Owens discussed deposit flexibility, optimizing costs, and digital capabilities.