Trustmark(US:TRMK)2023-04-26 19:57Financial Data and Key Metrics Changes - For Q1 2023, Trustmark reported net income of $50.3 million or $0.82 per diluted share, with a return on average tangible common equity of 18.03% and a return on average assets of 1.1% [3][4] - Loans held for investment totaled $12.5 billion, an increase of $293 million linked quarter, while deposits totaled $14.8 billion, an increase of $346 million linked quarter [4][10] - Revenue in Q1 totaled $189 million, a decline of 1.5% linked quarter but an increase of 23.1% year-over-year [4] - Net interest income was $141.1 million, a decrease of $8.9 million or 6% linked quarter [4][14] - Noninterest income totaled $51.4 million, an increase of $6.2 million or 13.7% from the prior quarter [5][16] Business Line Data and Key Metrics Changes - The mortgage banking revenue increased by $4.2 million linked quarter to $7.6 million, while mortgage loan production decreased by 7.6% linked quarter and 33.7% year-over-year [17][18] - Noninterest expense was $128.3 million, a decline of $2.2 million or 1.6% compared to the prior quarter [5][19] - The allowance for credit losses for loans held for investment was $122.2 million, representing 0.98% of loans held for investment [8][19] Market Data and Key Metrics Changes - The commercial loan portfolio is well diversified across numerous industry segments, with no single category exceeding 13% [7] - Nonperforming assets represented 0.58% of total loans held for investment and loans held for sale [6] Company Strategy and Development Direction - The company expects loans held for investment to grow mid-to-high single digits for the year, with deposit balances expected to grow mid-single digits driven by promotional campaign activity [20][22] - Trustmark is focused on its "Fit to Grow" initiatives, expanding its team and investing in technology to enhance customer service and efficiency [22][23] - The company maintains a disciplined approach to capital deployment, prioritizing organic loan growth and potential M&A opportunities [22][23] Management's Comments on Operating Environment and Future Outlook - Management noted solid loan and deposit growth, strong performance in mortgage insurance and wealth management, and diligent expense management [3] - The outlook for net interest income is expected to grow mid-single digits, reflecting flat full-year net interest margin based on current market implied forward interest rates [21] - Management acknowledged some slowing in production opportunities, particularly in commercial real estate (CRE) and construction loans, while still seeing funding of existing deals [30][31] Other Important Information - The Board declared a quarterly cash dividend of $0.23 per share payable on June 15 to shareholders of record on June 1 [6] - The company has a $50 million authority for share repurchase but is unlikely to engage in significant repurchases [19] Q&A Session Summary Question: Margin outlook and deposit beta - The cumulative beta at the end of Q1 was 22%, expected to reach 43% by year-end, with total deposit beta being discussed [24][25] Question: Loan growth expectations - Management indicated a slowing in production opportunities, particularly in CRE, while still seeing funding of existing deals [29][30] Question: Credit quality and collateral adjustments - No need for additional collateral or adjustments in underwriting for projects taking extension options, as they are performing well [33][34] Question: Deposit dynamics post-bank failures - No unusual attrition or deposit dynamics observed despite recent bank pressures, indicating the quality of the deposit base [39]