Trustmark: Trustmark Corporation Announces First Quarter 2025 Financial Results

In This Article: Trustmark Corporation Announces First Quarter 2025 Financial Results Strong Performance reflects Continued Loan Growth, Stable Credit Quality, Expanded Fee Income, and Lower Noninterest Expense JACKSON, Miss., April 22, 2025 --( BUSINESS WIRE )--Trustmark Corporation (NASDAQGS:TRMK) reported net income of $53.6 million in the first quarter of 2025, representing diluted earnings per share of $0.88. Trustmark's performance during the first quarter produced a return on average tangible equity of 13.13% and a return on average assets of 1.19%. The Board of Directors declared a quarterly cash dividend of $0.24 per share payable June 15, 2025, to shareholders of record on June 1, 2025. Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/20250422704139/en First Quarter Highlights Loans held for investment (HFI) increased 1.2% linked-quarter and represented 87.8% of total deposits at March 31, 2025 Credit quality remained stable, ACL coverage ratios expanded, net charge-offs represented 0.04% of average loans Deposits remained stable at $15.1 billion while cost of total deposits declined 15 basis points Noninterest income increased 4.0% linked-quarter, reflecting the strength of diversified business lines Noninterest expense decreased 0.3% linked-quarter, reflecting on-going expense management priorities Duane A. Dewey, President and CEO, stated, "We continued to build upon the strong momentum from 2024 and are pleased with our solid performance in the first quarter of 2025. Our results reflect continued loan growth, stable credit quality, and an attractive core deposit base. In addition, we experienced continued growth in noninterest income while noninterest expense decreased. These accomplishments are the results of our continued efforts to expand customer relationships and diligently manage expenses. We are particularly pleased to have received a Community Reinvestment Act (CRA) rating of Outstanding, the highest rating possible. Our associates have done a tremendous job of serving customers, building relationships, and demonstrating the value Trustmark can provide as a trusted financial partner." "We are operating in a dynamic and challenging economic environment that is ever-changing. With robust capital, liquidity, and profitability, Trustmark is well-positioned to help customers navigate this evolving landscape," said Dewey. Balance Sheet Management Loans HFI increased $151.5 million, or 1.2%, during the quarter and $183.5 million, or 1.4%, year-over-year Personal and commercial deposits totaled $12.9 billion at March 31, 2025, up $7.1 million, or 0.1%, from the prior quarter and $394.4 million, or 3.2%, year-over-year Maintained strong capital position with CET1 ratio of 11.63% and total risk-based capital ratio of 14.10% Trustmark Corporation Announces First Quarter 2025 Financial Results Loans HFI totaled $13.2 billion at March 31, 2025, reflecting an increase of $151.5 million, or 1.2%, linked-quarter and $183.5 million, or 1.4%, year-over-year. The linked-quarter growth reflected increases in commercial real estate (CRE), other commercial loans and leases, and 1-4 family mortgage loans offset in part by a decrease in commercial and industrial loans. Trustmark's loan portfolio remains well-diversified by loan type and geography. Deposits totaled $15.1 billion at March 31, 2025, down $27.5 million, or 0.2%, from the prior quarter, driven by the decline in public deposits of $61.8 million. Year-over-year, deposits declined $257.9 million, or 1.7%, driven by targeted declines in public funds and brokered deposits of $343.2 million and $309.5 million, respectively. Trustmark continues to maintain a strong liquidity position as loans HFI represented 87.8% of total deposits at the end of the first quarter. Noninterest-bearing deposits represented 20.4% of total deposits at March 31, 2025. Interest-bearing deposit costs totaled 2.30% for the first quarter, a decrease of 21 basis points linked-quarter. The total cost of interest-bearing liabilities was 2.43% in the first quarter of 2025, a decrease of 18 basis points from the prior quarter. During the first quarter, Trustmark repurchased $15.0 million, or approximately 423 thousand of its common shares. As previously announced, Trustmark's Board of Directors authorized a stock repurchase program effective January 1, 2025, under which $100.0 million of Trustmark's outstanding shares may be acquired through December 31, 2025. The repurchase program, which is subject to market conditions and management discretion, will continue to be implemented through open market repurchases or privately negotiated transactions. At March 31, 2025, Trustmark's tangible equity to tangible assets ratio was 9.39%, while the total risk-based capital ratio was 14.10%. Tangible book value per share was $27.78 at March 31, 2025, an increase of 4.1% from the prior quarter and 26.1% from the prior year. Credit Quality Net charge-offs totaled $1.4 million, representing 0.04% of average loans in the first quarter Net provision for credit losses was $5.3 million in the first quarter Allowance for credit losses (ACL) represented 1.26% of loans HFI, up 4 basis points linked-quarter, and 296.41% of nonaccrual loans, excluding individually analyzed loans at March 31, 2025 Nonaccrual loans totaled $86.6 million at March 31, 2025, up $6.5 million from the prior quarter and a decrease of $11.7 million year-over-year. Other real estate totaled $8.3 million, reflecting increases of $2.4 million and $728 thousand from the prior quarter and prior year, respectively. Collectively, nonperforming assets totaled $95.0 million, representing 0.71% of loans HFI and held for sale (HFS) at March 31, 2025. The provision for credit losses for loans HFI was $8.1 million in the first quarter and was primarily attributable to loan growth, changes in the macroeconomic forecast, and net adjustments to the qualitative factors. The provision for credit losses for off-balance sheet credit exposures was a negative $2.8 million in the first quarter, primarily driven by a reduction in unfunded CRE commitments and changes in the macroeconomic forecast. Collectively, the provision for credit losses totaled $5.3 million in the first quarter compared to $7.5 million in the prior quarter and $7.5 million in the first quarter of 2024. Allocation of Trustmark's $167.0 million ACL on loans HFI represented 1.11% of commercial loans and 1.76% of consumer and home mortgage loans, resulting in an ACL to total loans HFI of 1.26% at March 31, 2025, up 4 basis points from the prior quarter. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio. Revenue Generation Net interest income (FTE) totaled $154.7 million in the first quarter, down 2.3% linked-quarter Net interest margin totaled 3.75% in the first quarter, down 1 basis point from the prior quarter Noninterest income totaled $42.6 million, up 4.0% from the prior quarter, representing 21.9% of total revenue in the first quarter Revenue in the first quarter totaled $194.6 million, a decrease of 1.1% from the prior quarter and an increase of 13.0% from the same quarter in the prior year. The linked-quarter decrease primarily reflects lower net interest income offset in part by higher noninterest income while the year-over-year increase is attributed to higher net interest income and noninterest income. Net interest income (FTE) in the first quarter totaled $154.7 million, resulting in a net interest margin of 3.75%, down 1 basis point from the prior quarter. The net interest margin was relatively flat as the decrease in the cost of interest-bearing liabilities was offset by the decrease in yield for the loans HFI and held for sale portfolio. Noninterest income in the first quarter totaled $42.6 million, an increase of $1.6 million, or 4.0%, from the prior quarter and $3.2 million, or 8.2%, year-over-year. The linked-quarter increases in other income net, mortgage banking, net, and wealth management revenue were offset in part by seasonal declines in bank card and other fees and service charges on deposit accounts. The growth in noninterest income year-over-year reflects increases in other income, net, wealth management revenue, and bank card and other fees, which were offset in part by declines in service charges on deposit accounts and mortgage banking, net. Mortgage loan production in the first quarter totaled $318.8 million, down 14.4% from the prior quarter and up 16.4% year-over-year. Mortgage banking revenue totaled $8.8 million in the first quarter, an increase of $1.4 million, or 18.7%, linked-quarter and a decline of $144 thousand, or 1.6%, year-over-year. The linked-quarter increase was principally attributable to reduced servicing asset amortization and improvement in net hedge ineffectiveness. The year-over-year decrease was principally due to lower gain on sale of mortgage loans offset in part by improvement in net hedge ineffectiveness. Wealth management revenue in the first quarter totaled $9.5 million, an increase of $224 thousand, or 2.4%, from the prior quarter and $591 thousand, or 6.6%, year-over-year. The linked-quarter growth reflected higher trust management revenue while the year-over-year growth reflected increased trust management revenue and brokerage revenue. Other income, net totaled $6.0 million in the first quarter, up $1.7 million from the prior quarter and $2.9 million year-over-year. The linked-quarter increase includes a $2.4 million gain on the sale of a bank office facility. Service charges on deposit accounts totaled $10.6 million in the first quarter, reflecting a seasonal decrease of $592 thousand, or 5.3%, from the prior quarter and a decrease of $322 thousand, or 2.9%, year-over-year. Bank card and other fees totaled $7.7 million in the first quarter, down $1.1 million from the prior q