Trustmark (TRMK) Q2 2024 earnings summary

Executive summary

• Completed sale of Fisher Brown Bottrell Insurance, Inc. (FBBI), generating a $228.3 million pre-tax gain ($171.2 million after tax), reported as discontinued operations, and strengthening capital flexibility.

• Restructured investment securities portfolio, selling $1.6 billion in low-yield securities at a $182.8 million pre-tax loss and reinvesting in higher-yielding assets to boost net interest margin.

• Sold $56.2 million of delinquent/nonaccrual mortgage loans, reducing nonperforming loans by $54.1 million and incurring a $13.4 million loss, with $8.6 million credit-related.

• Exchanged Visa shares, resulting in a $6.0 million after-tax gain and $8.1 million total gain.

• Reported Q2 2024 net income of $73.8 million ($1.20 per diluted share); adjusted net income from continuing operations was $40.5 million ($0.66 per diluted share).

Financial highlights

• Loans held for investment increased $98 million linked-quarter and $541 million year-over-year to $13.2 billion; deposits grew $124 million linked-quarter and $549 million year-over-year to $15.5 billion.

• Net interest income (FTE) rose to $144.3 million, a 6% increase linked-quarter, with net interest margin at 3.38%, up 17 bps.

• Noninterest expense declined 1.1% linked-quarter to $118.3 million; tangible equity to tangible assets rose to 8.52%.

• Adjusted revenue from continuing operations was $179.3 million, up 4.1% linked-quarter; noninterest income from adjusted continuing operations was $38.2 million.

• Return on average tangible equity was 21.91%; return on average assets was 1.58%.

Outlook and guidance

• Expect low single-digit growth in loans and deposits for full year 2024.

• Net interest income and noninterest income from continuing operations projected to increase low single digits in the second half of 2024; net interest margin expected at 3.4% for 2024, with 3.55%-3.60% in the second half.

• Noninterest expense to increase low single digits in the second half due to merit increases.

• Net charge-offs expected to remain below industry average; capital deployment to focus on organic growth and potential M&A.

• Management expects improved operating performance in the second half of 2024 and beyond, following balance sheet restructuring and non-recurring events.