Trustmark Corporation (TRMK) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call showed solid financial performance, with a 5.5% revenue increase, strong credit metrics, and an enhanced capital position. The Q&A highlighted strategic growth in talent acquisition and potential M&A, with a positive outlook on loan and deposit growth. Shareholder returns were emphasized with increased dividends and share repurchases. Despite some ambiguity in M&A priorities, the overall sentiment was positive, supported by strong financial metrics and optimistic guidance, likely leading to a stock price increase in the short term.
Key Financial Performance
Net Income (Q4) $57.9 million, representing diluted EPS of $0.97 per share, up 5.4% year-over-year. The increase was driven by continued significant progress across the organization.
Net Income (Full Year) $224.1 million, representing diluted EPS of $3.70. Adjusted net income from continuing operations increased by $37.8 million or 20.3% year-over-year, attributed to strong performance across business segments.
Return on Average Assets (ROAA) 1.21% for the year, reflecting strong earnings performance.
Return on Average Tangible Equity (ROATE) 12.97% for the year, reflecting strong earnings performance.
Loans Held for Investment Increased $584 million or 4.5% year-over-year, driven by diversified loan growth across types and geographies.
Deposits Increased $392 million or 2.6% year-over-year, driven by growth in commercial and personal balances of $568 million, despite a decrease in public fund deposits.
Cost of Total Deposits (Q4) 1.72%, a decrease of 12 basis points linked-quarter, reflecting cost-effective core deposit management.
Revenue (Q4) $204 million, contributing to a record full-year revenue of $800 million.
Net Interest Income (Q4) $166 million, producing a net interest margin of 3.81%. Full-year net interest income was $647 million, up 8.4% year-over-year, driven by loan and deposit growth.
Noninterest Income (Q4) $41 million, up 3.3% linked-quarter. Full-year noninterest income was $164 million, representing 20.5% of total revenue.
Noninterest Expense $512 million for the year, an increase of 5.5% year-over-year, reflecting diligent expense management.
Net Charge-Offs (Q4) $7.6 million, including one individually analyzed loan of $5.9 million. Full-year net charge-offs were 13 basis points of average loans, reflecting solid credit performance.
Provision for Credit Losses (Q4) $1.2 million, influenced by positive credit migration, loan and unfunded commitment growth, and macroeconomic forecasts. Full-year provision was $12.9 million.
Allowance for Credit Losses 1.15% of loans held for investment at year-end, reflecting solid credit performance.
Capital Management Issued $170 million of 6% fixed-to-floating sub debt, repaid $125 million of existing sub debt, and repurchased $80 million of common stock during the year, enhancing regulatory capital position.
Tangible Book Value Per Share $30.28 at year-end, up 13.5% year-over-year, driven by share repurchase activity and quarterly dividends.
Dividend Increased by 4.2% to $0.25 per share, taking the full-year dividend to $1 per share, reflecting strong shareholder returns.
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Operating Highlights
Record Earnings: Trustmark achieved record net income of $224.1 million in 2025, with a diluted EPS of $3.70, reflecting a 20.3% increase in adjusted continuing operations income.
Loan and Deposit Growth: Loans held for investment increased by $584 million (4.5% year-over-year), while deposits grew by $392 million (2.6% year-over-year).
Cost Management: Noninterest expense increased by 5.5% year-over-year to $512 million, with a focus on diligent expense management.
Credit Performance: Net charge-offs were 0.22% of average loans in Q4, and the allowance for credit losses was 1.15% of loans held for investment at year-end.
Capital Management: Issued $170 million of sub debt, repaid $125 million of existing sub debt, and repurchased $80 million of common stock in 2025.
Forward Guidance for 2026: Trustmark expects mid-single-digit growth in loans and deposits, stable securities balances, and a net interest margin of 3.8%-3.85%. Noninterest income and expenses are also expected to grow mid-single digits.
Dividend Increase: The Board announced a 4.2% increase in the quarterly dividend to $0.25 per share, taking the full-year dividend to $1 per share.
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Risk or Challenges
Deposit Base Decline: The deposit base declined by $131 million or 0.8% linked-quarter, driven in part by a decrease in public fund deposits of $219 million. This could impact liquidity and funding stability.
Noninterest Expense Increase: Noninterest expense increased by $1.2 million or 0.9% linked-quarter and 5.5% year-over-year, which could pressure profitability if not managed effectively.
Credit Losses and Charge-offs: Net charge-offs in the fourth quarter were $7.6 million, including a $5.9 million individually analyzed loan. The provision for credit losses totaled $1.2 million in the quarter and $12.9 million for the year, indicating potential credit risk exposure.
Macroeconomic Forecast Impact: The provision for credit losses was influenced by the macroeconomic forecast, which could pose risks if economic conditions deteriorate.
Capital Management Risks: Issuance of $170 million in sub debt to repay $125 million of existing sub debt and for general corporate purposes could increase financial leverage and interest obligations.
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Guidance & Outlook
Loan Growth: Loans held for investment are expected to increase mid-single digits for the full year 2026.
Deposit Growth: Deposits, excluding brokered deposits, are expected to increase mid-single digits for the full year 2026.
Securities Balances: Securities balances are expected to remain stable as the company continues to reinvest cash flows.
Net Interest Margin: The net interest margin is anticipated to be in the range of 3.8% to 3.85% for the full year 2026.
Net Interest Income: Net interest income is expected to increase mid-single digits for the full year 2026.
Credit Loss Provisions: The total provision for credit losses, including off-balance sheet credit exposure, is expected to normalize in 2026.
Noninterest Income: Noninterest income for the full year 2026 is expected to increase mid-single digits.
Noninterest Expense: Noninterest expense for the full year 2026 is expected to increase mid-single digits.
Capital Deployment: The company will continue a disciplined approach to capital deployment, focusing on organic loan growth, potential market expansion, M&A, or other general corporate purposes depending on market conditions.
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Shareholder Return Plan
Quarterly Dividend Increase: The Board announced a 4.2% increase in Trustmark's regular quarterly dividend to $0.25 per share from $0.24 per share. This dividend is payable on March 15, 2026, to shareholders of record on March 1, 2026.
Annual Dividend: The full-year dividend for 2025 amounted to $1 per share.
Share Repurchase in Q4 2025: Trustmark repurchased $43 million or 1.1 million shares of its common stock during the fourth quarter of 2025.
Annual Share Repurchase: For the year 2025, Trustmark repurchased $80 million or 2.2 million shares, representing 3.5% of outstanding shares at year-end 2024.
Future Share Repurchase Authorization: Trustmark has authorization to repurchase up to $100 million of common shares during 2026, subject to market conditions and management discretion.
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Key Q&A
Q:How many new hires were made in the fourth quarter, and how does this relate to talent acquisition plans for 2026?
A:In the fourth quarter, 13 new production hires were made across various markets and disciplines. The company continues to focus on organic expansion and sees M&A activity as an opportunity to recruit talent, which aligns with their plans for 2026.
Q:What is the guidance for credit costs in 2026, and how does it compare to 2025?
A:The guidance for net charge-offs in 2026 is 13 to 15 basis points of average loans, similar to 2025. Provisioning is expected to be in the range of 14 to 18 basis points of average loans, depending on credit quality improvements. In 2025, criticized loans decreased by $181 million, and classified loans decreased by $57 million.
Q:What are the key levers impacting 2026 guidance, including growth, fees, and expenses?
A:Key levers include loan growth, capital deployment, improving conditions in the mortgage market, record revenue in Wealth Management, and mid-single-digit growth in noninterest income. Expense management will also be a focus, with expected mid-single-digit increases.
Q:What drove the sequential revenue increase in Wealth Management in the fourth quarter?
A:The increase was driven by general improvement in asset values, new account acquisition, investments in new talent, and a new brokerage platform generating additional revenues. There was nothing unusual in the fourth quarter results.
Q:What is the expected cadence of expense growth in 2026?
A:Expense growth is expected to be higher in the second half of the year due to annual merit increases effective July 1 and potential year-end bonuses and commissions. Technology investments and other normal expense increases will also contribute.
Q:What is the company's stance on M&A activity in 2026, and what are their preferred geographies and criteria for deals?
A:The company is focused on organic growth but remains open to M&A opportunities in markets like Houston, Dallas, Arkansas, Louisiana, and Tennessee. They are looking for deals in the $1 billion to $10 billion range with good cultural fit and market opportunities. However, they may prioritize organic strategies due to market disruptions.
Q:Is there a scenario where the company might avoid M&A deals in 2026?
A:Yes, the company may avoid M&A deals to focus on organic growth and capitalize on market disruptions caused by competitors' mergers. They see significant opportunities in their existing markets.
Q:Are there any changes in how the company incentivizes deposit growth?
A:Yes, the company has increased its emphasis on deposit growth in CRM bonus templates and has been successful in growing personal and commercial balances by over 4% year-over-year while maintaining competitive deposit costs.
Q:What is the guidance for net interest margin (NIM) in 2026, and how did it perform in the fourth quarter?
A:The guidance for NIM in 2026 is 3.80% to 3.85%. In the fourth quarter, the NIM was 3.81%, but adjusted for a $1.1 million accelerated cost recognition, it would have been 3.83%, consistent with the prior quarter.
Q:What is the expected range for share repurchases in 2026, and how does it relate to capital levels?
A:The company has a $100 million share repurchase authorization but is likely to repurchase $60 million to $70 million to maintain capital levels around 11.72% CET1, assuming solid loan growth.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer on whether they would prioritize M&A deals or organic growth in 2026, stating that it depends on market opportunities and disruptions. They also provided limited details on specific expense growth drivers beyond general categories like merit increases and technology investments.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Assistant Secretary
Commission President
Conference Instructions
Corporate copy
Executive VP
Instructions reminder
Mr Director
Private Securities
Secretary Director
Trustmark Executive
VP Assistant
copy release
meaning Private
release presentation
website statement
TRMK Transcript
Trustmark Corporation (TRMK) Q4 2025 Earnings Call Transcript
Positive1-28
The earnings call showed solid financial performance, with a 5.5% revenue increase, strong credit metrics, and an enhanced capital position. The Q&A highlighted strategic growth in talent acquisition and potential M&A, with a positive outlook on loan and deposit growth. Shareholder returns were emphasized with increased dividends and share repurchases. Despite some ambiguity in M&A priorities, the overall sentiment was positive, supported by strong financial metrics and optimistic guidance, likely leading to a stock price increase in the short term.
Trustmark Corporation (TRMK) Q3 2025 Earnings Call Transcript
Positive10-29
The earnings call reveals strong financial metrics, such as increased net interest margin and reduced criticized loans, alongside optimistic guidance on loan growth and deposit costs. The company plans to maintain its share repurchase program and sees M&A as a growth opportunity. However, increased expenses due to hiring and lack of specific guidance on share repurchases are minor concerns. Given the company's small-cap status, these factors suggest a positive stock price movement of 2% to 8% over the next two weeks.
Trustmark Corporation (TRMK) Q4 2023 Earnings Call Transcript
Unknown9-22
The earnings call presents a mixed sentiment. Strong financial performance is offset by concerns about margins and income pressures. Loan and deposit growth are positive, but interest rate sensitivity and non-interest income headwinds are concerning. The dividend announcement is positive, but lack of share repurchase in 2023 is a negative. The market cap suggests moderate volatility, leading to a neutral stock price prediction.
Trustmark Corporation (TRMK) Q2 2025 Earnings Conference Call Transcript
Positive7-23
The earnings call showed strong financial performance with an increase in net income and net interest income, a rise in tangible book value, and positive capital ratios. The guidance was optimistic, with growth driven by non-CRE categories and a focus on high-growth markets. The Q&A revealed confidence in profitability and NIM expansion, despite some uncertainty regarding Fed rate cuts. The shareholder return plan includes consistent share repurchases, adding to positive sentiment. Given the market cap, the stock is likely to have a positive reaction, falling in the 2% to 8% range.
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Frequently Asked Questions
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
