Trustmark(TRMK)2024-10-23 19:11Financial Data and Key Metrics Changes - Net income for the third quarter totaled $51.3 million, with diluted earnings per share of $0.84, reflecting a 26.7% growth in net income from adjusted continuing operations and a 282 basis point improvement in the efficiency ratio [3][4] - Net interest income increased by 9.5% linked-quarter to $158 million, driven by the restructuring of the investment securities portfolio [4][14] - Non-interest income from adjusted continuing operations totaled $37.6 million, a decrease of $0.7 million linked-quarter but an increase of $0.6 million year-over-year [5][16] - Non-interest expense increased by $4.9 million during the quarter, primarily due to salary merit increases, annual incentive accruals, and an increase in ORE expense [5][17] - Capital ratios improved, with the CET1 ratio at 11.3% and total risk-based capital ratio at 13.71% [6][18] Business Line Data and Key Metrics Changes - Loans held for investment were relatively flat, decreasing by $55 million linked-quarter but increasing by $290 million year-over-year [4][7] - The commercial loan portfolio remains diversified, with no single category exceeding 14% [9] - The provision for credit losses for loans held for investment was $7.9 million, driven by specific reserves for individually analyzed credits [9][10] Market Data and Key Metrics Changes - Deposits totaled $15.2 billion, with a linked-quarter decrease of $222 million or 1.4%, but a year-over-year increase of $139 million or 0.9% [10][11] - Non-interest-bearing DDA balances remained resilient, declining by $11 million linked-quarter and remaining above 20% of the deposit base [11][12] - The cost of interest-bearing deposits increased by 6 basis points from the prior quarter to 2.81% [11][13] Company Strategy and Development Direction - The company expects loan growth of low single digits for 2024 and stable deposits, excluding brokered deposits [19] - There is a focus on organic growth and potential market expansion through M&A opportunities [20][36] - The company is actively working on expanding business lines in markets where it has a presence, such as Houston and Atlanta [37][38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining the deposit base and net interest margin despite potential Fed rate cuts [24][25] - The company anticipates net interest income to increase in the mid-single digits in 2024, with a projected net interest margin of approximately 3.50% [19][20] - Credit quality metrics remain solid, with expectations for net charge-offs to remain below the industry average [20] Other Important Information - The Board declared a $0.23 dividend payable on December 15 to shareholders of record on December 1 [6] - Tangible book value per share increased by 6.5% from the prior quarter and 32.9% from the prior year, reaching $26.88 [6] Q&A Session Summary Question: Margin trends and deposit pricing actions - Management discussed the successful deposit pricing actions taken to mitigate the impact of Fed rate cuts and expressed confidence in maintaining the deposit base [23][24] Question: Loan yield impact and fee guidance - Management clarified that there were no unusual impacts on loan fees and provided guidance on adjusted continuing operations for non-interest income and expenses [27][28] Question: Loan balances and market expansion - Management reiterated guidance for low single-digit loan growth and discussed opportunities for market expansion through M&A and organic growth [35][36] Question: Increase in non-performing assets (NPAs) - Management provided details on the increase in NPAs, attributing it to two corporate credits that had turned troubled [42][45] Question: Interest rate moves and credit upgrades - Management indicated that while recent rate cuts are beneficial, it is still early to assess their full impact on credit upgrades [48][49]