On July 23, 2024, Trustmark Corp (TRMK, Financial) released its 8-K filing announcing its second quarter financial results. Trustmark Corp, a bank holding company, operates as a financial services organization providing banking and other financial solutions in Alabama, Florida, Mississippi, Tennessee, and Texas. The company is managed along three operating segments: General Banking, Wealth Management, and Insurance.
Performance Overview
Trustmark Corp reported net income of $73.8 million for the second quarter of 2024, translating to diluted earnings per share (EPS) of $1.20. However, net income from adjusted continuing operations stood at $40.5 million, or $0.66 per diluted share, falling short of the analyst estimate of $0.72 per share. The company also reported revenue from adjusted continuing operations of $179.3 million, which was below the estimated $209.05 million.
Significant Non-Routine Transactions
During the second quarter, Trustmark completed several significant non-routine transactions:
- Sale of Fisher Brown Bottrell Insurance, Inc. (FBBI), generating a gain of $228.3 million ($171.2 million net of taxes).
- Restructured its investment securities portfolio, resulting in a loss of $182.8 million ($137.1 million net of taxes).
- Sold a portfolio of delinquent and nonaccrual mortgage loans, incurring a loss of $13.4 million ($10.1 million net of taxes).
- Exchanged Visa Class B-1 shares for Visa Class B-2 and Visa Class C common stock, resulting in a gain of $8.1 million ($6.0 million net of taxes).
Financial Achievements
Despite the challenges, Trustmark achieved several financial milestones:
- Loans held for investment (HFI) increased by $97.5 million, or 0.7%, from the prior quarter to $13.2 billion.
- Deposits expanded by $124.3 million, or 0.8%, to $15.5 billion.
- Net interest income (FTE) rose by $8.1 million, or 6.0%, to $144.3 million, resulting in a net interest margin of 3.38%, up 17 basis points from the prior quarter.
- Noninterest expense decreased by $1.3 million, or 1.1%, to $118.3 million.
- Tangible equity to tangible assets ratio increased by 105 basis points to 8.52%.
- Tangible book value per share increased by $3.20, or 14.5%, to $25.23.
Balance Sheet Management
Trustmark's balance sheet showed positive trends:
- Loans HFI totaled $13.2 billion, up 0.7% from the prior quarter and 4.3% year-over-year.
- Deposits totaled $15.5 billion, up 0.8% from the previous quarter and 3.7% year-over-year.
- Common Equity Tier 1 (CET1) ratio stood at 10.92%, and the total risk-based capital ratio was 13.29%.
Credit Quality
Trustmark's credit quality metrics improved:
- Nonaccrual loans declined by 55.0% to $44.3 million.
- Net charge-offs totaled $11.6 million, with $3.0 million excluding the mortgage loan sale.
- Allowance for credit losses (ACL) represented 1.18% of loans HFI and 840.20% of nonaccrual loans HFI.
Revenue Generation
Trustmark's revenue from adjusted continuing operations increased by $7.1 million, or 4.1%, to $179.3 million. Net interest income (FTE) totaled $144.3 million, resulting in a net interest margin of 3.38%. Noninterest income from adjusted continuing operations was $38.2 million, a decrease of $1.1 million, or 2.8%, from the prior quarter.
Noninterest Expense
Noninterest expense declined by $1.3 million, or 1.1%, to $118.3 million. Salaries and employee benefits expense decreased by $0.6 million, or 1.0%, linked-quarter.
"The second quarter of 2024 was an extremely productive quarter for Trustmark. We closed the previously announced sale of our insurance agency and completed significant balance sheet restructuring to position the company for improved operating performance into the second half of the year and beyond," said Duane A. Dewey, President and CEO.
For more detailed financial information, readers can access the full 8-K filing.
Explore the complete 8-K earnings release (here) from Trustmark Corp for further details.
