Trustmark Corporation Q3 FY2025 earnings call

• Trustmark's momentum continued in Q3 with diversified loan growth, stable credit quality, and cost-effective core deposit growth. • Implemented organic growth initiatives, adding customer relationship managers and production talent in key markets. • Loans held for investment had linked quarter growth of $83M and YoY growth of $448M. • Deposit base grew $550M linked quarter, with noninterest-bearing deposits up 5.9% linked quarter. • Net income, net interest income, and margin showed positive trends. • Credit quality remained solid with low net charge-offs and a solid allowance for credit losses. • Capital ratios increased, and $11M of stock was repurchased in Q3.

Loans held for investment increased $83 million (0.6% linked quarter) and $448 million (3.4% year-over-year), diversified by C&I, other loans, etc. Deposit base grew $550 million (3.4% linked quarter), with noninterest-bearing deposits up 5.9% linked quarter. Net income was $56.8 million, EPS $0.94 (up 2.2% QoQ, 11.9% YoY). Net interest income $165.2 million, margin 3.83% (up 2bps QoQ). Noninterest income $39.9 million (up 0.1% QoQ, 6.3% YoY). Noninterest expense up $5.8 million (4.7% QoQ) with nonroutine items. Credit quality solid: net charge-offs $4.4 million (13bps of average loans), provision $1.7 million, allowance 1.2% of loans. Capital ratios: CET1 11.88% (up 18bps), total risk-based 14.33% (up 18bps). Tangible book value per share $29.60 (up 3% QoQ, 10.1% YoY). Dividend declared $0.24 per share.

• Tightened net interest margin range for 2025 to 3.78%-3.82% from prior 3.77%-3.83%. • Affirmed loans held for investment to grow mid-single digits in 2025, and deposits to grow low single digits (excluding brokered). • Provision for credit losses expected to trend lower compared to 2024. • Noninterest income and expense expected to grow mid-single digits. • Disciplined capital deployment with preference for organic loan growth, potential M&A, and share repurchase opportunistically.

• Forward-looking statements may differ materially from actual results due to risks outlined in earnings release and SEC filings. • Challenges in managing deposit costs amidst competitive environment. • Potential impact of interest rate cuts on net interest margin and loan-to-deposit ratio. • Uncertainties related to competitive landscape affecting financial performance.

Q: Stephen Scouten asked about hiring in Q3 and plans moving forward.

A: Approximately 29 new associates hired in Q3, 21 production-related, in key markets like Houston, Birmingham, etc.

Q: Stephen Scouten asked about Q4 expenses.

A: Nonroutine items like recruiting fees and signing bonuses, but expecting mid-single-digit expense growth YoY.

Q: Michael Rose asked about M&A opportunities.

A: M&A deals in competitive markets create opportunities for hiring and customer acquisition.

Q: Feddie Strickland asked about Q4 expenses and margin.

A: Nonrecurring items should fall off, margin affected by asset sensitivity and Fed cuts.

Q: Feddie Strickland asked about classified loans.

A: Criticized loans trended down by $123M in first 3 quarters.

Q: Catherine Mealor asked about deposit costs and margin beta.

A: Deposit costs affected by Fed cuts, promotional campaigns, and competitive landscape.

Q: Catherine Mealor asked about loan yields.

A: CRE category more competitive, other categories similar.

Q: Gary Tenner asked about recruiting segments and deposit repricing.

A: Focus on key growth markets, deposit growth evenly balanced personal and commercial.

Q: Christopher Marinac asked about funding and M&A.

A: Aim to keep loan-to-deposit ratio in mid-high 80s, M&A considered opportunistically.