Trustmark(TRMK)2024-07-24 19:19Financial Data and Key Metrics Changes - The company reported earnings of $73.8 million or $1.20 per diluted share for the second quarter, with an after-tax gain of $171.2 million from the sale of Fisher Brown Bottrell Insurance [15][35] - Net interest income increased by $8 million or 6% linked-quarter to $144 million, with the net interest margin expanding by 17 basis points to 3.38% [37][56] - The CET1 ratio increased by 80 basis points to 10.92%, and total risk-based capital expanded by 87 basis points to 13.29% [16][60] Business Line Data and Key Metrics Changes - Loans held for investment increased by $98 million linked-quarter and $541 million year-over-year, with growth driven by commercial real estate and equipment finance [36][38] - Non-interest income from adjusted continuing operations totaled $38.2 million, reflecting a $1.1 million linked-quarter decrease [45] - Non-interest expense decreased by 1.1% linked-quarter to $118.3 million, primarily due to reduced salary and benefits [47] Market Data and Key Metrics Changes - Deposits totaled $15.5 billion at June 30, a linked-quarter increase of $124 million or 0.8%, and a year-over-year increase of $549 million or 3.7% [52] - The cost of interest-bearing deposits increased by 1 basis point to 2.75% [53] - The company anticipates net interest margin to be in the range of 3.55% to 3.60% in the second half of 2024 [44] Company Strategy and Development Direction - The company is focused on organic loan growth, potential market expansion, and M&A opportunities depending on market conditions [49] - A disciplined approach to capital deployment is maintained, with a preference for organic growth and evaluating share repurchase programs as market conditions dictate [60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of 2024, indicating a busy quarter and excitement for future growth [85] - The company expects loan growth in the low-single digits for 2024, with a focus on maintaining credit quality amid rising interest rates [30][51] Other Important Information - The company completed the sale of $1.6 billion of AFS securities, generating a loss of $182.8 million, and purchased $1.4 billion of AFS securities with a higher yield of 4.85% [15] - The allowance for credit losses represents 1.18% of loans held for investment, with net charge-offs totaling $3 million, representing 9 basis points of average loans [29][41] Q&A Session Summary Question: Guidance on expenses for the second half of the year - Management confirmed expectations for expenses to grow at a low-single digit pace, estimating a run rate around $122 million to $123 million per quarter [75][76] Question: Concerns about project delays and credit quality - Management indicated that while there are no concerning trends in NPAs or NPLs, they are focused on ensuring accurate grading of credits and supporting borrowers as needed [80][84] Question: Actions taken to rationalize deposit costs - Management discussed efforts to manage deposit costs, particularly regarding maturing promotional CDs, and noted that they have pivoted strategies to maintain deposit stability [82][83]