Trustmark Corp (TRMK) SEC Filing 10-Q Quarterly Report for the period ending Friday, March 31, 2023

Exhibit 99.1

Trustmark Corporation Announces First Quarter 2023 Financial Results

Loan and Deposit Growth Continues, Credit Quality Remains Strong,

Mortgage Banking, Insurance and Wealth Management Revenue Expands

JACKSON, Miss. – April 25, 2023 – Trustmark Corporation (NASDAQGS:TRMK) reported net income of $50.3 million in the first quarter of 2023, representing diluted earnings per share of $0.82. Trustmark’s performance during the first quarter produced a return on average tangible equity of 18.03% and a return on average assets of 1.10%. The Board of Directors declared a quarterly cash dividend of $0.23 per share payable June 15, 2023, to shareholders of record on June 1, 2023.

First Quarter Highlights

Duane A. Dewey, President and CEO, stated, “Our first quarter financial performance reflects solid loan and deposit growth, strong performance in our mortgage, insurance and wealth management businesses, and diligent expense management. Our overall strong performance was impacted by increasingly competitive deposit costs during the quarter, which compressed our net interest margin. Trustmark has a strong, diversified and proven business model that has stood the test of time. We remain well-positioned and committed to meeting our customers’ needs despite the challenging financial services environment. Our balance sheet is well-positioned for additional increases in interest rates and credit quality remains solid. We continue to focus on efficiency enhancements throughout the organization as well as investments in technology to better serve customers.”

Balance Sheet Management

Loans HFI totaled $12.5 billion at March 31, 2023, reflecting an increase of $293.2 million, or 2.4%, linked-quarter and $2.1 billion, or 20.2%, year-over-year. The linked-quarter growth was broad-based and reflected increases in all categories with the exception of state and political subdivisions and consumer loans. Trustmark’s loan portfolio remains well-diversified by loan type and geography.

Deposits totaled $14.8 billion at March 31, 2023, up $346.0 million, or 2.4%, from the prior quarter and down $329.6 million, or 2.2%, year-over-year. Trustmark continues to maintain a strong liquidity position as loans HFI represented 84.5% of total deposits at March 31, 2023. Migration into higher-yielding products continued to drive a change in deposit mix from noninterest-bearing deposits, which represented 25.7% of total deposits at March 31, 2023. Interest-bearing deposit costs totaled 1.53% for the first quarter, while the total cost of deposits was 1.13%. The total cost of interest-bearing liabilities was 1.98% for the first quarter of 2023.

During the first quarter, Trustmark did not repurchase any of its outstanding common shares. As previously announced, Trustmark’s Board of Directors authorized a stock repurchase program effective January 1, 2023, under which $50.0 million of Trustmark’s outstanding shares may be acquired through December 31, 2023. At March 31, 2023, Trustmark’s tangible equity to tangible assets ratio was 6.35%, while the total risk-based capital ratio was 11.95%. Tangible book value per share was $19.24 at March 31, 2023, an increase of 6.2% from the prior quarter.

Credit Quality

Nonaccrual loans totaled $72.4 million at March 31, 2023, up $6.4 million from the prior quarter and an increase of $8.0 million year-over-year. Other real estate totaled $1.7 million, reflecting a $302 thousand decrease from the prior quarter and a $1.5 million decline from the prior year.

The provision for credit losses for loans HFI was $3.2 million in the first quarter and was primarily attributable to loan growth. The provision for credit losses for off-balance sheet credit exposures was a negative $2.2 million primarily driven by decreases in unfunded commitments. Collectively, the provision for credit losses totaled $1.0 million in the first quarter compared to $12.1 million in the prior quarter and a negative $2.0 million in the first quarter of 2022.

Allocation of Trustmark’s $122.2 million ACL on loans HFI represented 0.80% of commercial loans and 1.54% of consumer and home mortgage loans, resulting in an ACL to total loans HFI of 0.98% at March 31, 2023. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.

Revenue Generation

Revenue in the first quarter totaled $189.0 million, a decline of 1.5% from the prior quarter and an increase of 23.1% from the same quarter in the prior year. The linked-quarter decline primarily reflects lower net interest income offset in part by higher mortgage banking, insurance and wealth management revenue while the year-over-year growth is attributed to higher net interest income offset in part by reduced mortgage banking revenue.