Trustmark(US:TRMK)2022-01-26 16:52Financial Data and Key Metrics Changes - Trustmark reported net income of $26.2 million or $0.42 per diluted share for Q4 2021, with total net income for the year at $147.4 million, representing diluted earnings per share of $2.34 [9][10] - Loans held for investment totaled $10.2 billion, an increase of $72.9 million linked quarter and $423.3 million or 4.3% year-over-year [10][16] - Deposits reached $15.1 billion, up $164.3 million from the prior quarter and $1 billion or 7.4% year-over-year [10][23] - Investment securities totaled $3.6 billion, with a linked quarter increase of $128.9 million and a year-over-year increase of $1.1 billion or 41.6% [10] Business Line Data and Key Metrics Changes - Insurance revenue in 2021 totaled $48.5 million, reflecting a 7.4% increase from the prior year, while wealth management revenue totaled $35.2 million, up 11.5% year-over-year [12] - Mortgage loan production totaled $590.7 million in Q4, down 16.7% linked quarter, with total production for the year at $2.8 billion [12][30] - Non-interest income for Q4 totaled $50.8 million, representing 34.1% of total revenue, with a decrease attributed to lower mortgage banking revenue [11][28] Market Data and Key Metrics Changes - The allowance for credit losses on loans held for investments totaled $99.5 million, representing 0.97% of total loans held for investment [20][21] - Non-performing assets declined 10.1% from the prior year, with recoveries exceeding charge-offs by $3.7 million [13][21] Company Strategy and Development Direction - The company expects mid-single digit loan growth for 2022, with a focus on diversifying the loan portfolio [17][38] - Trustmark plans to maintain a disciplined approach to capital deployment, prioritizing organic loan growth, potential M&A, and opportunistic share repurchases [41] - The company is investing in technology enhancements and market optimization to improve efficiency and reduce expenses [41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the balance sheet's positioning for rising interest rates, anticipating net interest income growth driven by mid-single digit earning asset growth [9][38] - The outlook includes expectations for three Fed rate hikes in 2022, with a conservative approach to deposit betas [38][56] - Management noted that mortgage banking revenue is expected to trend lower due to reduced volume and lower gain on sale margins [39] Other Important Information - Trustmark maintained strong capital levels with a Tier 1 capital ratio of 11.29% and total risk-based capital of 13.55% [14][37] - The Board declared a quarterly cash dividend of $0.23 per share, payable on March 15 [14] Q&A Session Summary Question: Loan growth guidance - Management indicated that the mid-single-digit loan growth outlook includes retaining mortgage production on the balance sheet, with expectations for strong growth in most categories except for commercial real estate [46][53] Question: Asset sensitivity and deposit betas - Management discussed their conservative approach to deposit betas, estimating a 50% through-the-cycle beta based on historical analysis [54][56] Question: Overdraft fees and regulatory changes - Management stated they are closely monitoring overdraft issues and have been proactive in implementing programs to manage customer awareness [58][60] Question: Securities portfolio yield outlook - Management expressed optimism about the potential for higher yields on the securities portfolio due to reinvestment opportunities and slowing prepayment speeds [87]