Trustmark (TRMK) Q2 2025 Earnings Call July 23, 2025 09:30 AM ET Company ParticipantsF. Joseph Rein - EVP, Assistant Secretary and Director - Corporate Strategy & Board GovernanceDuane Dewey - President & CEOCatherine Mealor - Managing DirectorRobert Harvey - Executive VP and Chief Credit & Operations OfficerThomas Owens - EVP & CFOTim Mitchell - Senior Equity Research AssociateChristopher Marinac - Director - ResearchGeorge Chambers - EVP & Chief Accounting OfficerFeddie Strickland - DirectorOperatorGood m ...

Financial Data and Key Metrics Changes - GAAP earnings were strong with core earnings continuing to increase, return on average assets was 1.51% and return on average equity was 15.12% for Q2 2025 compared to 1.45% and 14.97% respectively for Q1 2025 [5][6] - Net interest margin (NIM) increased to 4.07% in Q2 2025 from 4% in Q1 2025, with expectations for further upside [6][15] - Fee income as a percentage of operating revenue was 21% during the quarter, an improvement from prior periods, with noninterest income increasing by $1.3 million quarter over quarter [6][16] Business Line Data and Key Metrics Changes - Total loan growth was 6% on an annualized basis, with commercial loan growth at 2% [9][10] - Wealth management fees remained the largest component of fee income, with assets under management reaching $3 billion [7][16] - Noninterest expense declined by approximately $600,000 in the quarter, including merger-related expenses of almost $1 million [19][20] Market Data and Key Metrics Changes - The loan pipeline is reported to be the highest since the merger, reflecting a strong regional economy and engagement with clients [11][12] - Credit quality remains sound with net charge-offs being nominal and classified loans decreasing by 14% [12][22] - The average yield on loans was 6.5%, impacted by lower purchase accounting accretion [24] Company Strategy and Development Direction - The company is focused on enhancing liquidity, building capital, and accelerating commercial lending while considering share buybacks due to perceived undervaluation [27] - There is a strong emphasis on talent acquisition to support growth, particularly in the wealth management sector [48][55] - The company is open to future acquisitions that add value to the franchise, focusing on geographic proximity and complementary services [66][67] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing a strong loan pipeline and positive client sentiment despite market noise [52] - The company anticipates continued improvement in profitability and efficiency, with expectations for expenses to decline further [8][20] - Management acknowledged the competitive lending environment but remains confident in their ability to grow loans prudently [11][16] Other Important Information - The board authorized a share repurchase program of up to 500,000 shares and increased the quarterly dividend by $0.01 per share [13] - Regulatory capital ratios are now at or above pre-merger levels, providing options for growth [26] Q&A Session Summary Question: Are there still other credits in the Codorus Valley deal that you are looking to move off of or sell? - Management indicated that while there might be a couple of loans to consider for sale, they have been successful in working them out with minimal charge-offs [32] Question: Is there a capital level you would like to reach before considering another acquisition? - Management stated they are at pre-merger levels and feel comfortable moving forward without needing outside capital for future deals [35] Question: How would potential Fed rate cuts impact NIM? - Management noted that while rate cuts could negatively impact net interest income, they would continue to push on the loan side to offset some of that impact [42][43] Question: What initiatives are in place for growth in the wealth management business? - Management highlighted opportunities for growth through talent acquisition and expansion in key markets [48][49] Question: How has the sentiment of commercial clients changed recently? - Management reported that the pipeline is the largest since the merger, indicating positive sentiment among commercial clients [52] Question: What is the current line utilization rate on the commercial portfolio? - Management stated that line utilization rates have remained stable and modest [58] Question: Are you ready for another transaction a year after the Codorus Valley deal? - Management expressed that they are looking for opportunities that add value and are focused on best practices for future acquisitions [66][67]

SAN DIEGO, July 23, 2025 (GLOBE NEWSWIRE) -- Endeavor Bancorp (OTCQX: EDVR) (the "Company" or "Bancorp"), the holding company for Endeavor Bank (the "Bank"), today reported net income of $1.07 million, or $0.25 per diluted share, for the second quarter of 2025, compared to $1.36 million, or $0.32 per diluted share, for the first quarter of 2025, and $760,000, or $0.18 per diluted share, for the second quarter of 2024. All financial results are unaudited. "Our second quarter results reflect the strength of o ...

All right, congrats on the quarter. I want to dig into it. Uh, you expanded net interest margin by quite a few basis points.What was the driver of that. You know, the core driver of of the seven basis point increase in net interest margin, which was really strong, was a couple of things. Number one, we've got a short duration securities portfolio.So, that's repricing more quickly than most. So, we're getting those cash flows quicker. The other thing is we've had success in driving down deposit costs.And so ...

Financial Data and Key Metrics Changes - The company reported a net income of $77.4 million for Q2 2025, an 11.4% increase compared to $69.5 million for Q1 2025 [6][14] - Diluted earnings per share increased by 12.2% to $1.10 for Q2 2025 from $0.98 in Q1 2025 [6] - Net interest margin increased from 2.25% in Q1 2025 to 3.27% in Q2 2025, attributed to a lower cost of funds [14][17] - Total deposits increased by $189 million or 3.8% annualized during Q2 2025 [12] Business Line Data and Key Metrics Changes - Total gross loans increased by $432 million or 8.9% annualized, driven by increases in commercial loans, commercial real estate loans, and residential loans [6][12] - Noninterest income for Q2 2025 increased by $4.2 million to $15.4 million compared to $11.2 million in Q1 2025 [15] - Noninterest expense increased by 4% to $89.1 million in Q2 2025 from $85.7 million in Q1 2025 [16] Market Data and Key Metrics Changes - The average loan-to-value ratio for commercial real estate loans remained at 49% as of June 30, 2025 [9] - Nonaccrual loans were 0.9% of total loans as of June 30, 2025, increasing by $19.6 million compared to Q1 2025 [11] Company Strategy and Development Direction - The company revised its 2025 loan growth guidance to 3% to 4% from a previous range of 1% to 4% due to strong Q2 loan growth [7] - The management emphasized a balanced growth in both commercial and industrial (C&I) loans and commercial real estate [29] Management Comments on Operating Environment and Future Outlook - Management expressed caution regarding the economic landscape, noting potential impacts from external factors such as terrorism and CPI adjustments [29] - The company is optimistic about maintaining a strong pipeline for the second half of the year [29] Other Important Information - The effective tax rate for Q2 2025 was 19.56%, with guidance updated to between 18.5% to 19% due to recent California tax legislation [17] - The company has an unused borrowing capacity from the Federal Home Loan Bank of $7 billion and the Federal Reserve Bank of $1.5 billion as of June 30, 2025 [13] Q&A Session Summary Question: Impact of California state tax change on income tax rate - The CFO confirmed a direct impact of $3.4 million due to writing off a portion of the deferred tax asset [20] Question: Allowance for Credit Losses (ACL) refill drivers - The CFO explained that the refill was primarily driven by economic factors in Moody's model rather than specific portfolio issues [21][23] Question: Loan growth guidance and pipeline outlook - Management indicated a strong pipeline for the second half of the year but maintained caution regarding potential loan demand drops [29][30] Question: Federal Home Loan Bank borrowing details - The CFO clarified that the recent borrowings were mainly two-week borrowings at a rate of approximately 4.6% [32] Question: Increase in classified loans - The CFO noted that the increase was due to one commercial relationship experiencing cash flow issues, but they are expected to catch up [37][39]

Financial Data and Key Metrics Changes - The company reported a net income of $77.4 million for Q2 2025, an 11.4% increase compared to $69.5 million for Q1 2025 [6][14] - Diluted earnings per share increased 12.2% to $1.10 for Q2 2025 from $0.98 in Q1 2025 [6] - Net interest margin increased from 2.25% in Q1 2025 to 3.27% in Q2 2025, attributed to a lower cost of funds [14][16] - Total gross loans increased by $432 million or 8.9% annualized during Q2 2025 [6][12] Business Line Data and Key Metrics Changes - Commercial loans increased by $196 million, commercial real estate loans by $202 million, and residential loans by $69 million, while construction loans decreased by $32 million [6] - Noninterest income for Q2 2025 increased by $4.2 million to $15.4 million compared to $11.2 million in Q1 2025, driven by changes in unrealized losses on equity securities and higher foreign exchange income [15] - Noninterest expense increased by 4% to $89.1 million in Q2 2025 from $85.7 million in Q1 2025 [15] Market Data and Key Metrics Changes - Total deposits increased by $189 million or 3.8% annualized during Q2 2025, primarily due to increases in core deposits and time deposits [12] - As of June 30, 2025, total uninsured deposits were $8.7 billion, representing 43.3% of total deposits [12] Company Strategy and Development Direction - The company revised its 2025 loan growth guidance to 3% to 4% from a previous range of 1% to 4% due to strong loan growth in Q2 2025 [7] - The company continues to monitor its commercial real estate loans, with an average loan-to-value ratio of 49% as of June 30, 2025 [8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the loan pipeline for the second half of the year, citing balanced growth in both commercial and industrial sectors [27] - The company is cautious about potential economic factors that could impact loan demand, including inflation and geopolitical issues [27] Other Important Information - The effective tax rate for Q2 2025 was 19.56%, with guidance updated to between 18.5% to 19% due to recent California tax legislation [16] - The company has an unused borrowing capacity from the Federal Home Loan Bank of $7 billion and the Federal Reserve Bank of $1.5 billion as of June 30, 2025 [13] Q&A Session Summary Question: Impact of California state tax change on income tax rate - Management confirmed a direct impact of $3.4 million from writing off a portion of the deferred tax asset due to lower state apportionment [19] Question: Allowance for Credit Losses (ACL) refill drivers - The refill was primarily driven by economic factors in Moody's model, with an increase in unemployment and loan growth contributing to the adjustment [20][22] Question: Loan growth guidance and pipeline outlook - Management indicated a strong pipeline for the second half of the year but maintained caution regarding economic conditions that could affect loan demand [27][28] Question: Increase in classified loans - The increase was attributed to one commercial relationship facing cash flow issues, with expectations for the borrower to become current by the end of Q3 [34][35]

Financial Data and Key Metrics Changes - Net income for the second quarter totaled $9.3 million or $0.52 per share, including a $2.9 million after-tax employee retention tax credit refund [3][7] - Net interest income increased by $1.2 million, supported by solid loan growth and stable earning asset yields, with net interest margin (NIM) rising to 2.92% [3][4] - Adjusted net income, excluding the ERC refund, would have been $6.5 million or $0.36 per diluted share [8] Business Line Data and Key Metrics Changes - Loan held for investment grew by $92 million or 12% on an annualized basis, with strong results from the mortgage origination business, which originated $120 million in the second quarter [3][4] - Total second quarter loan originations reached $183 million at a blended yield of 6.76% [4] - Noninterest expenses increased by $2 million to $20.5 million, with $1.2 million related to the ERC refund [9][10] Market Data and Key Metrics Changes - Total deposits increased at a 6% annualized rate to $3.2 billion, with growth in non-interest bearing deposits and CDs offsetting a decline in money market accounts [12] - The loan-to-deposit ratio exceeded 100%, indicating a need for careful management of loan growth and deposit acquisition [36][40] Company Strategy and Development Direction - The company is focused on resolving nonperforming loans while continuing to grow its loan portfolio, indicating a dual-path strategy [28][31] - Management is optimistic about maintaining loan growth despite credit quality challenges, with a healthy pipeline of loans [31][40] - The company is enhancing credit quality control, particularly in bridge and gap financing, to mitigate risks [22][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of funding costs and potential increases in yields on earning assets, which could support margin improvements [5][9] - The company anticipates continued loan growth, albeit at a more moderate pace, and is actively managing its nonperforming assets [4][28] - Management acknowledged the competitive landscape for deposits and the need to balance loan growth with deposit acquisition strategies [40][42] Other Important Information - The tangible book value per share increased to $25.11, with all capital ratios remaining above regulatory well-capitalized levels [13] - The company expects noninterest expenses to normalize to an annualized run rate of about $18 million in future quarters [10][47] Q&A Session Summary Question: Discussion on capital and buyback program - Management views the stock as attractive at current trading prices and has sufficient liquidity to support both the buyback program and credit workouts [20][21] Question: Asset quality and loan downgrades - Management provided details on loans downgraded to substandard and special mention, emphasizing a conservative approach to credit quality control [22][25] Question: Sustainability of dual path strategy - Management believes it can continue to grow loans while addressing asset quality issues, with a healthy pipeline and ongoing focus on resolving nonperforming loans [28][31] Question: Loan and deposit growth outlook - Management is actively managing the loan-to-deposit ratio and expects to see organic deposit growth, with potential loan sales to alleviate pressure [40][42] Question: Deposit cost expectations - Management anticipates stabilization of deposit costs, with a focus on maintaining competitive rates to attract deposits [43][44] Question: Tax rate outlook - The tax rate for the quarter was around 28%, and management expects this to be a reasonable run rate going forward, with minor impacts from changes in California tax law [69][70]

Financial Data and Key Metrics Changes - Net income for the second quarter totaled $9.3 million or $0.52 per share, including a $2.9 million after-tax employee retention tax credit refund [3][7] - Net interest income increased by $1.2 million, supported by solid loan growth and stable earning asset yields, with net interest margin (NIM) rising to 2.92% [3][4] - Adjusted for the employee retention credit refund, net income would have been $6.5 million or $0.36 per diluted share [8] Business Line Data and Key Metrics Changes - Loan held for investment grew by $92 million or 12% on an annualized basis, with strong results from the in-house mortgage origination business, which originated $120 million in mortgages [3][4] - Total second quarter loan originations reached $183 million at a blended yield of 6.76% [4] - Noninterest expenses increased by $2 million to $20.5 million, with $1.2 million related to the employee retention credit refund [9][10] Market Data and Key Metrics Changes - Total deposits increased at a 6% annualized rate to $3.2 billion, with growth in non-interest bearing deposits and CDs offsetting a decline in money market accounts [12] - The loan-to-deposit ratio exceeded 100%, indicating a need for careful management of loan growth relative to deposit growth [34][40] Company Strategy and Development Direction - The company is focused on resolving nonperforming loans while continuing to grow its loan portfolio, indicating a dual-path strategy [26][29] - Management expressed confidence in maintaining loan growth while addressing asset quality issues, with a healthy pipeline for future loan originations [29][30] Management's Comments on Operating Environment and Future Outlook - Management noted that absent rate cuts, funding costs are stabilizing, and there may be increases in yields on earning assets, supporting incremental margin increases [5][9] - The company expects to continue seeing loan growth, albeit at a more moderate pace than in the first half of the year [4][30] Other Important Information - The tangible book value per share increased to $25.11, with all capital ratios remaining above regulatory well-capitalized levels [13] - The company is actively managing its credit quality control processes, tightening oversight on certain loan categories [20][51] Q&A Session Summary Question: Discussion on capital and buyback program - Management views the stock as attractive at current trading prices and has sufficient liquidity to support the buyback program while managing nonperforming loans [18][19] Question: Asset quality and loan downgrades - The increase in special mention loans is due to enhanced credit quality control, with a focus on bridge and gate loans experiencing delays in stabilizing income [21][22] Question: Sustainability of dual path strategy - Management believes it can continue to grow loans while resolving nonperforming loans, maintaining a healthy pipeline for future growth [26][29] Question: Loan and deposit growth outlook - Management is focused on quality in loan origination and is implementing promotional programs to attract new deposits [38][60] Question: Deposit cost expectations - Management anticipates some stabilization in deposit costs, with a potential lag in response to Fed rate cuts [41][42] Question: Tax rate outlook - The tax rate for the quarter was around 28%, which is expected to be a reasonable run rate going forward, with minor benefits from changes in California tax law [63][64]

Financial Data and Key Metrics Changes - Earnings per share for the second quarter were reported at $0.35, with revenues increasing by 21% year-over-year and expenses rising by approximately 6% excluding charitable contributions [5][14] - Pre-provision net revenue (PPNR) increased by $44 million sequentially, marking a 60% growth since Q1 2024 [5][6] - Tax equivalent net interest income rose by 4% sequentially and 28% year-over-year, while noninterest income increased by 10% year-over-year [14][20] Business Line Data and Key Metrics Changes - Commercial loan growth achieved the full-year target of $3 billion by June 30, 2025, with strong backlogs in institutional and middle market segments [6][10] - Investment banking fees increased by 41% year-over-year, with the first half of 2025 being the second-best in the company's history [22] - Assets under management reached a record $64 billion, with commercial mortgage servicing balances also at record levels [9][24] Market Data and Key Metrics Changes - Average loans increased by $1.4 billion sequentially, with C&I loans growing by $1.7 billion and CRE loans by $500 million [16][18] - Average deposits declined by less than 1% from the previous quarter, but total deposits increased by 2% year-over-year [18][19] - Noninterest-bearing deposits accounted for 19% of total deposits, remaining stable compared to the first quarter [19] Company Strategy and Development Direction - The company is focused on maintaining low to mid-single-digit expense growth while investing significantly in frontline bankers and technology [11][29] - There is a commitment to increasing the number of frontline bankers and client advisers by approximately 10% this year [11][78] - The company is positioned to take advantage of market dislocations due to its strong capital position and ample liquidity [13][27] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding client sentiment, noting that many clients feel good about their business despite macro concerns [35][36] - The company anticipates a significant ramp-up in capital expenditures in the second half of the year, driven by favorable tax policies [40] - Credit metrics are stable to improving, with net charge-offs and criticized loans declining [25][48] Other Important Information - The company plans to revise its 2025 guidance upwards, expecting net interest income growth of 20% to 22% [27][28] - The CET1 ratio was reported at 11.7%, indicating a strong capital position relative to peers [27] - The company is actively managing its deposit costs, which are now below 2% [6][19] Q&A Session Summary Question: Client sentiment and eagerness to borrow - Management noted that clients are cautiously optimistic, with many feeling good about their business despite macroeconomic concerns [35][36] Question: NII and loan growth outlook - The company revised its NII growth guidance to 20% to 22%, driven by strong performance in the first half and healthy pipelines [44][45] Question: Deposit pricing strategy - Management indicated that they have room to manage deposit costs and are observing competitive pricing in the market [60][62] Question: Capital management and share repurchases - The company plans to resume modest share repurchases in Q3, with a more significant increase expected in Q4 [70][71] Question: Loan and deposit pricing competition - Management acknowledged increased competition in loan pricing but noted that their pricing has remained flat year-over-year [99][101]

Core Insights - Comerica reported Q2 2025 earnings with an EPS of $1.42, reflecting a nearly 14% sequential increase, and returned $193 million to shareholders through stock repurchases and dividends [1] - The company highlighted loan growth, normalization of deposits, disciplined expense control, and strong capital position, maintaining a net interest income growth guidance of 5% to 7% for the year despite short-term challenges [1][9] Loan Growth and Business Momentum - Comerica achieved approximately 3% loan growth and increased total commitments by $400 million, with notable activity in environmental services and commercial real estate [2] - Management indicated improving middle market loan pipelines and a positive sentiment among customers, suggesting a potential recovery in business confidence [3] Deposit Stability and Technology Investments - Non-interest-bearing deposits remained stable at 38% of total deposits for four consecutive quarters, showcasing resilience amid sector challenges [4] - The launch of two new real-time payment solutions aims to enhance customer relationships and improve funding mix quality [5] Expense Management and Capital Strength - Non-interest expenses decreased by $23 million quarter-over-quarter, leading to an improved efficiency ratio, while the CET1 ratio stood at 11.94%, above the internal target [6] - The strong capital position allowed for increased share repurchases of $100 million in Q2, although efficiency metrics remain a concern for management [8] Future Outlook - Management forecasts average loans to be flat to down 1% in 2025, with average deposits expected to decline by 2% to 3% [9] - Net interest income is projected to grow by 5% to 7% for the year, with a slight dip anticipated in Q3 before resuming growth in Q4 [9]