Trustmark(US:TRMK)2024-04-24 18:17Financial Data and Key Metrics Changes - Trustmark reported a net income increase, with net interest income totaling $136.2 million in Q1, resulting in a net interest margin of 3.21% [8][12] - Loans held for investment increased by $107.4 million or 0.8% linked quarter and $560.7 million or 4.5% year-over-year [8][9] - Deposits totaled $15.3 billion, reflecting a linked quarter decrease of $231.2 million but an increase of $554.9 million or 3.8% year-over-year [8][61] Business Line Data and Key Metrics Changes - Loan growth in Q1 was driven by commercial real estate and equipment finance, with expectations for mid-single-digit growth in 2024 [9][79] - Non-interest income for Q1 totaled $55.3 million, an increase of 11.1% linked quarter, representing 29.4% of total revenue [73][98] - Non-interest expense decreased by 3.4% linked quarter to $130.1 million, driven by lower professional fees and data processing costs [34][73] Market Data and Key Metrics Changes - The bank's commercial loan portfolio is well diversified, with no single category exceeding 14% [30] - The average cost of interest-bearing deposits increased by 7 basis points to 2.74% [76][97] - The provision for credit losses for loans held for investment was $7.7 million in Q1, maintaining solid credit quality metrics [29][60] Company Strategy and Development Direction - Trustmark signed a definitive agreement to sell its insurance agency for $345 million, which is expected to be accretive to capital and allow for balance sheet repositioning [4][71] - The company plans to focus on organic loan growth and may explore opportunities in new markets, leveraging experience gained from opening the Atlanta market [25][83] - Trustmark aims to maintain a strong capital base while prioritizing organic growth and potential M&A opportunities [80][84] Management's Comments on Operating Environment and Future Outlook - Management acknowledged significant headwinds in the marketplace but remains focused on organic growth and adding production talent [18][38] - The company expects non-interest income to grow in the mid-single digits, while non-interest expense is anticipated to increase in low-single digits for the full year [15][79] - Trustmark's capital ratios remain solid, with a common Tier 1 equity ratio of 10.12% and a total risk-based capital ratio of 12.42% [29][64] Other Important Information - The Board declared a quarterly cash dividend of $0.23 per share, payable on June 15 [29] - The company is restructuring its securities portfolio to improve cash flow stability and increase yield [72][57] Q&A Session Summary Question: What are the dynamics of the insurance sale transaction? - Management expressed excitement about the sale, highlighting its positive implications for shareholders and the bank [70][55] Question: How will the new capital be deployed? - The company plans to support organic loan growth and may explore new market opportunities, while remaining cautious about share repurchases [24][38] Question: What is the expected run rate for the insurance business post-sale? - Management confirmed that there is no ongoing fee arrangement but emphasized the positive ongoing relationship with the new partner [87] Question: What capital level would trigger share buybacks? - Management indicated that they would likely remain on the sidelines for share repurchases, focusing on organic growth and capital accretion [89][92]