Trustmark(TRMK)2024-11-05 21:30Financial Performance - Trustmark reported net income of $51.3 million, or basic and diluted EPS of $0.84, for Q3 2024, compared to $34.0 million, or EPS of $0.56, in Q3 2023, reflecting a 50.9% increase in net income [264]. - For the nine months ended September 30, 2024, Trustmark's net income was $166.7 million, or EPS of $2.72, compared to $129.4 million, or EPS of $2.12, for the same period in 2023, representing a 28.9% increase in net income [265]. - Trustmark's return on average tangible equity for Q3 2024 was 12.86%, up from 11.32% in Q3 2023, indicating improved profitability [264]. - The return on average equity for the three months ended September 30, 2024, was 10.62%, an increase from 8.53% in the same period of 2023 [285]. - Net income from continuing operations for the three months ended September 30, 2024, was $51,330, compared to $30,553 for the same period in 2023, reflecting a 67.9% increase [295]. Revenue and Income Sources - Total revenue for Q3 2024 was $192.3 million, an increase of $16.7 million, or 9.5%, compared to Q3 2023, primarily due to increased net interest income [267]. - Net interest income for Q3 2024 totaled $154.7 million, an increase of $16.1 million, or 11.6%, compared to Q3 2023, driven by higher interest and fees from loans [270]. - Noninterest income for Q3 2024 was $37.6 million, an increase of $641 thousand, or 1.7%, compared to Q3 2023, while for the nine months ended September 30, 2024, it decreased by $176.2 million due to a loss on the sale of available for sale securities [271]. - Total interest income for the three months ended September 30, 2024, was $251,592, an increase of 10.1% compared to $228,522 for the same period in 2023 [285]. - Noninterest income (loss) for the three months ended September 30, 2024, was $(1,375), a decline from a positive $104 in the same quarter of 2023 [285]. Expenses and Cost Management - Noninterest expense for Q3 2024 decreased by $7.0 million, or 5.4%, totaling $123.3 million compared to Q3 2023 [272]. - Services and fees for the nine months ended September 30, 2024 totaled $74.9 million, a decrease of $5.4 million, or 6.8%, compared to the same period in 2023 [272]. - The total noninterest expense decreased by 5.4% to $123.270 million for the three months ended September 30, 2024, primarily due to a reduction in salaries and employee benefits [315]. Asset and Loan Management - Total assets increased to $18,480,372 as of September 30, 2024, compared to $18,390,839 a year earlier, reflecting a growth of 0.5% [286]. - Loans Held for Investment (LHFI) increased by $149.6 million, or 1.2%, totaling $13.100 billion compared to December 31, 2023 [277]. - Total loans (LHFI + LHFS) rose to $13,316,565, up 2.6% from $12,979,503 in the previous year [286]. - Nonperforming assets decreased by $29.1 million, or 27.3%, totaling $77.7 million compared to December 31, 2023 [276]. - The allowance for credit losses (ACL) on loans held for investment (LHFI) increased to $157.9 million at the end of September 2024, compared to $134.0 million at the end of September 2023, reflecting a year-over-year increase of 17.8% [364]. Capital and Dividends - The company declared a quarterly cash dividend of $0.23 per share, payable on December 15, 2024, to shareholders of record on December 1, 2024 [258]. - Trustmark's total shareholders' equity increased to $1,980,096, up from $1,570,351, representing a growth of 25.9% year-over-year [291]. - Trustmark's indicated dividend for 2024 is $0.92 per common share, the same as dividends per common share declared in 2023 [390]. Regulatory and Economic Environment - The Federal Reserve maintained the target federal funds rate at 5.25% to 5.50% from July 2023 through September 2024, impacting Trustmark's net interest margin [260]. - The FDIC finalized changes to its Statement of Policy on Bank Merger Transactions, which may complicate regulatory approval for bank mergers [280]. - Trustmark is evaluating the potential impact of a proposed FDIC rule that could classify more deposits as brokered deposits, potentially increasing deposit insurance assessment costs [282]. Liquidity and Funding - Trustmark's liquidity strategy includes the use of wholesale funding sources to address seasonal fluctuations in deposit and loan demand [394]. - Trustmark's total uninsured deposits were $5.402 billion, or 35.4% of total deposits, at September 30, 2024, compared to $5.601 billion, or 36.0%, at December 31, 2023 [378]. - Trustmark had $540.0 million held in an interest-bearing account at the FRBA as of September 30, 2024, down from $712.0 million at December 31, 2023 [398]. Interest Rate Risk Management - Trustmark uses financial simulation models to measure interest rate exposure and assess the impact on net interest income under various scenarios [426]. - Management's Asset/Liability Committee utilizes simulation models to provide extensive information on potential impacts of interest rate changes on net interest income [426]. - The significant increase in short-term market interest rates is expected to affect the balance sheet composition and rates [426].