TRMK

Leadership and Strategic Updates

• Leadership changes: Longtime CFO Tom Owens was promoted to Chief Operating Officer, and Joe Bond joined the firm as the new CFO during Q2.
• Years of planning culminated in a successful conversion of the company's 45-year-old legacy core deposit and related systems to a modern, vendor-supported state-of-the-art platform, which was completed seamlessly with minimal customer disruption.

Balance Sheet and Credit Quality Highlights

• Solid loan production and deposit growth at attractive rates expanded the net interest margin; the company continued to execute its share repurchase program, with 475,000 shares repurchased in Q2 2026 and 952,000 shares repurchased in the first half of 2026. The Board declared a $0.25 per share quarterly dividend payable September 15, 2026.
• Credit quality improved meaningfully in Q2, driven by the sale of a $73.8 million portfolio of primarily delinquent/non-accrual mortgage loans, which reduced non-performing loans by $47.1 million and lowered the risk profile of the 1-4 family mortgage portfolio.
• Revolving credit utilization has trended upward, with C&I revolver utilization rising from 32% at year-end 2025 to 38% at the end of Q2 2026, indicating rising business activity.

Technology and Efficiency Planning

• The core conversion required adding 50-55 temporary retail associates to support customer service during the transition; only 10-15 of these positions are expected to be permanent, creating near-term efficiency gains as staffing levels normalize.
• Over the long term, the new core platform will allow the firm to reorient legacy internal maintenance roles to customer-facing and growth-focused positions, enable new product and pricing capabilities that were not available on the old legacy system, and improve operational efficiency.
• Management has presented a comprehensive AI roadmap to the board; the company plans to pursue AI-enabled efficiency gains now that the core conversion is complete, though specific financial impacts are not yet quantified.

Market Condition Highlights

• Economic activity across Trustmark's core Gulf South footprint, particularly Mississippi, is at historically high levels, driven by large-scale data center construction, manufacturing investment (including for battery production and auto manufacturing), and other broad commercial activity, which supports strong loan pipeline growth.

Management affirmed all previously provided full-year 2026 guidance, with the following key forward-looking statements:

• Loans held for investment are expected to grow mid-single digits for the full year
• Deposits, excluding broker deposits, are projected to increase mid-single digits for the full year
• Securities balances are expected to remain stable over the full year
• Net interest margin is expected to stay in the 3.80% to 3.85% range for the full year; net interest income is projected to grow mid-single digits compared to 2025
• The full-year provision for credit losses (including off-balance sheet exposure) is expected to normalize, with second half 2026 levels more consistent with Q1 2026 than Q2 2026
• Non-interest income and non-interest expense are both expected to grow mid-single digits for the full year, reflecting ongoing technology and business investment paired with continued expense discipline
• Share repurchase activity in the second half of 2026 is expected to remain consistent with the ~$20 million per quarter pace seen in the first half of the year
• Capital deployment will remain disciplined, with priority given to organic loan growth, potential market expansion, M&A, and other corporate purposes depending on market conditions

Trustmark does not break out separate product segment revenue contributions in this earnings call. Aggregate second quarter 2026 financial performance is as follows: reported net income totaled $63.5 million ($1.08 diluted EPS), including a $3.2 million gain from a delinquent mortgage loan portfolio sale and a $3.7 million net-of-tax gain from a Visa share exchange. Excluding these non-routine transactions, operating net income was $56.7 million ($0.97 diluted EPS). Total revenue grew $5.3 million (2.6% quarter-over-quarter) to $208.2 million. Fully tax-equivalent net interest income increased $5 million (3.1% quarter-over-quarter), resulting in a net interest margin of 3.84%, up 3 basis points from the prior quarter. Non-interest expense rose $1.5 million (1.2% quarter-over-quarter) to $133.7 million: salaries and employee benefits fell 1.7% quarter-over-quarter, while services/fees rose 6.5% due to core system conversion costs. Loans held for investment increased $35.1 million (0.3% quarter-over-quarter, 3.3% year-over-year); excluding the mortgage loan sale, growth was 0.8% quarter-over-quarter (3.9% year-over-year). New loan originations totaled $643 million in Q2, with $456 million in line draws. Deposits grew $358.7 million (2.3% quarter-over-quarter, 6.3% year-over-year), with the average cost of total deposits declining 4 basis points to 1.59%. Non-performing assets fell 47.3% to 0.39% of total loans held for investment; net charge-offs were $7.5 million, or $1.2 million (0.03% of average loans) excluding the mortgage sale.

• Unexpected commercial real estate (CRE) prepayments and payoffs can offset strong new loan production and lead to lower than projected net loan growth
• Rising deposit pricing competition and promotional deposit campaigns are expected to create near-term margin pressure in Q3 2026
• Forward-looking margin and income projections are dependent on expected interest rate increases that may not materialize, which would impact projected fourth quarter margin improvements
• M&A activity carries inherent execution and valuation risk, and management will only pursue disciplined transactions that add value to the firm

Q: Michael Rose (Raymond James) asked: Q2 loan production was strong, but large paydowns left net growth below the full-year pace even after adjusting for the mortgage loan sale. Management was asked how it expects to hit full-year mid-single digit net loan growth in the back half of 2026, and if this requires higher production, slower payoffs, or both. / A: Barry Harvey explained Q2 included $71 million in one-time payoffs of substandard credits that are not expected to recur quarterly. Adjusted for these non-recurring exits, Q2 net growth was closer to ~$180 million. Production pipelines remain very strong and steady quarter-over-quarter, with scheduled and unexpected CRE payoffs currently balancing each other out. Management expects back half net growth to be less volatile and still on track to hit the full-year mid-single digit target.

Q: Katherine Maylor (KBW) asked: Now that the multi-year core system conversion is complete, what efficiency gains and technology investment plans (including AI) are expected, and how does this change M&A strategy? / A: Management stated the core conversion was a massive company-wide effort that is now fully behind them. Temporary staffing added for conversion will trend down, with only ~10-15 of the 50-55 new retail roles becoming permanent, creating immediate efficiency gains. The new platform enables new products and better pricing tools, and the company is now pursuing AI-enabled efficiency gains with a formal plan presented to the board, though quantitative impacts are still early. M&A activity is now fully open for consideration after being deprioritized during conversion, and management is seeing increased market discussion across all deal sizes, remaining disciplined on opportunities that add long-term value.

Q: Fetty Strickland (Hovde Group) asked: After the large Q2 non-performing asset reduction from the mortgage loan sale, are forward charge-off expectations lower? Also, what is the outlook for deposit growth in the back half, given the strong Q2 run rate? / A: Barry Harvey confirmed that the large reduction in non-performing loans will lead to lower realized charge-offs going forward, which aligns with the expectation that second half provisioning will be more muted than Q2. Joe Bond added that the company is aligning deposit growth with loan growth and maintaining the full-year mid-single digit deposit growth guidance, with no plans to pursue faster than targeted growth, despite strong competition and higher deposit pricing.

Q: Steven Scaldin (Piper Sandler) asked: Can management confirm that new loan production yields are continuing to trend higher, supporting net interest margin even as deposit costs rise? What was Q2 hiring activity? / A: Barry Harvey shared that the average yield on Q2 new loan originations was 6.28%, which is 55 basis points higher than the average yield of the existing overall loan portfolio, supporting ongoing margin trends. Duane Dewey added that nearly all Q2 hiring was temporary retail staffing for the core conversion, with production-focused hiring for commercial and mortgage lending paused during the transition. Production hiring is now ramping back up in the second half of 2026.