Trustmark(TRMK) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements This section presents Trustmark Corporation's unaudited condensed consolidated financial statements for Q1 2025, including balance sheets, income statements, cash flows, and notes - The financial statements adhere to U.S. GAAP for interim reporting, omitting some annual disclosures[30] - Trustmark completed the sale of Fisher Brown Bottrell Insurance, Inc. on May 31, 2024, with its historical results reported as discontinued operations[32] Consolidated Balance Sheets Total assets increased to $18.30 billion as of March 31, 2025, driven by loan growth, with shareholders' equity rising to $2.02 billion Consolidated Balance Sheet Highlights ($ in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $18,296,203 | $18,152,422 | | Net Loans Held for Investment (LHFI) | $13,074,459 | $12,929,672 | | Total Securities (AFS & HTM) | $3,052,515 | $3,027,919 | | Total Deposits | $15,080,704 | $15,108,175 | | Total Liabilities | $16,274,976 | $16,190,095 | | Total Shareholders' Equity | $2,021,227 | $1,962,327 | Consolidated Statements of Income (Loss) Net income for Q1 2025 increased to $53.6 million, driven by a 14.5% rise in net interest income and 8.2% growth in noninterest income Q1 2025 vs Q1 2024 Income Statement Highlights ($ in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Interest Income | $152,055 | $132,830 | | Provision for Credit Losses (PCL), LHFI | $8,125 | $7,708 | | Total Noninterest Income | $42,584 | $39,355 | | Total Noninterest Expense | $124,011 | $119,664 | | Net Income | $53,633 | $41,535 | | Diluted EPS | $0.88 | $0.68 | Consolidated Statements of Cash Flows Net cash from operating activities was $82.4 million in Q1 2025, a turnaround from a prior year outflow, while investing activities used $143.6 million Cash Flow Summary ($ in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $82,418 | $(58,543) | | Net cash from investing activities | $(143,635) | $(51,309) | | Net cash from financing activities | $81,328 | $(259,430) | | Net change in cash and cash equivalents | $20,111 | $(369,282) | Notes to Consolidated Financial Statements This section provides detailed disclosures for financial statements, covering discontinued operations, portfolio composition, credit losses, and regulatory capital Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) This section provides management's analysis of Trustmark's Q1 2025 financial condition and operating results, including capital, liquidity, and asset quality Executive Overview Q1 2025 results show continued loan growth, stable credit quality, and a solid capital position, with net income rising to $53.6 million - Q1 2025 financial results featured continued LHFI growth, stable credit quality, and a solid capital position[216] Q1 2025 Financial Highlights | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $53.6 million | $41.5 million | | Diluted EPS | $0.88 | $0.68 | | Return on Average Tangible Equity | 13.13% | 12.98% | | Return on Average Assets | 1.19% | 0.89% | - The Board declared a quarterly cash dividend of $0.24 per share, payable June 15, 2025[216] Results of Operations Total revenue increased 13.0% to $194.6 million in Q1 2025, driven by a 14.5% rise in net interest income and an 8.2% increase in noninterest income Net Interest Income and Margin (FTE) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Interest Income (FTE) | $154,739 thousand | $136,195 thousand | | Net Interest Margin (FTE) | 3.75% | 3.21% | - Noninterest income increased by $3.2 million (8.2%) year-over-year, primarily due to a $2.4 million gain on a bank property sale[227][259] - Noninterest expense rose by $4.3 million (3.6%) year-over-year, mainly from higher salaries and benefits and increased services and fees[228] Financial Condition Total assets reached $18.3 billion as of March 31, 2025, with LHFI growing by $151.5 million to $13.24 billion, while deposits slightly decreased - LHFI increased by $151.5 million (1.2%) from year-end 2024, driven by growth in real estate secured and other commercial loans[283] LHFI Composition ($ in thousands) | Loan Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Loans secured by real estate | $6,674,082 | $6,404,906 | | Other loans secured by real estate | $3,030,862 | $3,128,897 | | Commercial and industrial loans | $1,765,893 | $1,840,722 | | Total LHFI | $13,241,469 | $13,089,942 | - Total deposits decreased slightly by $27.5 million (0.2%) to $15.081 billion compared to December 31, 2024[317] - The securities portfolio is 100% invested in U.S. Treasury, government agency, GSE-backed, and Aaa-rated securities[277] Allowance for Credit Losses and Asset Quality ACL on LHFI increased to $167.0 million (1.26% of LHFI) at March 31, 2025, while nonperforming assets rose to $95.0 million Allowance for Credit Losses (ACL) on LHFI ($ in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | ACL, LHFI | $167,010 | $160,270 | | ACL / LHFI | 1.26% | 1.22% | - The Provision for Credit Losses (PCL) on LHFI was $8.1 million for Q1 2025, up from $7.7 million in Q1 2024[253] Nonperforming Assets ($ in thousands) | Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Nonaccrual LHFI | $86,620 | $80,109 | | Other real estate | $8,348 | $5,917 | | Total nonperforming assets | $94,968 | $86,026 | Capital Resources and Liquidity Trustmark maintains a strong capital position with all ratios exceeding well-capitalized standards, and robust liquidity supported by diverse funding sources Regulatory Capital Ratios | Ratio | March 31, 2025 | Minimum Requirement | | :--- | :--- | :--- | | Common Equity Tier 1 | 11.63% | 7.00% | | Tier 1 Capital | 12.03% | 8.50% | | Total Capital | 14.10% | 10.50% | | Tier 1 Leverage | 10.11% | 4.00% | - A new $100.0 million stock repurchase program was authorized, with $15.0 million in shares repurchased during Q1 2025[166][335] - Liquidity sources include a strong deposit base, $1.717 billion in FHLB borrowing capacity, $1.157 billion in unencumbered securities, and $1.183 billion in Federal Reserve collateral capacity[342][343][344] Quantitative and Qualitative Disclosures About Market Risk Information on market risk is referenced within the 'Market/Interest Rate Risk Management' discussion of the Management's Discussion and Analysis - Required market risk information is provided in the Market/Interest Rate Risk Management discussion within the MD&A[377] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - The CEO and Principal Financial Officer concluded that Trustmark's disclosure controls and procedures were effective as of the reporting period end[378] - No material changes to internal control over financial reporting occurred during the last fiscal quarter[379] PART II. OTHER INFORMATION Legal Proceedings Trustmark is involved in ordinary course legal proceedings, with management believing no probable material losses or adverse financial effects - Trustmark accrues litigation liabilities when a loss is both probable and reasonably estimable[381] - Management currently believes no pending legal proceeding will result in a probable or estimable loss, nor a material adverse financial effect[381][382] Risk Factors No material changes to risk factors have been reported since Trustmark's 2024 Annual Report on Form 10-K - No material changes to risk factors were reported since the 2024 Annual Report[383] Unregistered Sales of Equity Securities and Use of Proceeds Trustmark's Board authorized a $100.0 million stock repurchase program, with 423,240 shares repurchased in Q1 2025 Common Stock Repurchases (Q1 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Jan 2025 | 243,717 | $34.90 | | Feb 2025 | 98,112 | $37.48 | | Mar 2025 | 81,411 | $34.79 | | Total | 423,240 | N/A | - As of March 31, 2025, approximately $85.0 million remained available under the current repurchase plan[385] Other Information No directors or executive officers adopted or terminated Rule 10b5-1 trading plans or similar arrangements during Q1 2025 - No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans or similar arrangements during Q1 2025[388] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and Inline XBRL Interactive Data files - Exhibits include CEO and Principal Financial Officer certifications under Sarbanes-Oxley Act Sections 302 and 906[393] - The filing incorporates Inline XBRL Interactive Data as required[393]