Trustmark Corporation

Good morning, ladies and gentlemen, and welcome to Trustmark Corporation's third quarter earnings conference call. At this time, all participants are in a listen-only mode. Following the presentation this morning, there will be a question-and-answer session. To ask a question, you may press star, then 1 on a touch-tone phone. To withdraw your question, please press star, then 2. As a reminder, this call is being recorded. It is now my pleasure to introduce Mr. Joey Rain, Director of Corporate Strategy at Trustmark. Please go ahead.

Good morning. I'd like to remind everyone that a copy of our third quarter earnings release, as well as the slide presentation that will be discussed on our call this morning, is available on the Investor Relations section of our website at Trustmark.com. During the course of our call, management may make forward-looking statements with the meaning of the Private Securities Litigation Reform Act of 1995. We would like to caution you that these forward-looking statements may differ materially from actual results due to a number of risks and uncertainties which are outlined in our earnings release and our other filings with the Securities and Exchange Commission. This time I'd like to introduce Dwayne Dewey, President and CEO of Trustmark.

Thank you, Joey. Good morning and thanks for joining us. With me this morning are Tom Owens, our CFO, Barry Harvey, our Chief Credit and Operations Officer, and Tom Chambers, our Chief Accounting Officer. Turning to slide three, let's review the third quarter highlights. For the third quarter 2021, Trustmark reported net income of $21.2 billion, or $0.34 per diluted share. These results include costs of the voluntary early retirement program, which we reduced net income by $4.3 million, or approximately $0.07 per diluted share. Also included this quarter was a settlement to resolve allegations by regulatory authorities regarding fair lending matters, which reduced net income by $5 million, or approximately $0.08 per share. Together, these items reduce net income by $9.3 million, or approximately 15 cents per diluted share. I'd like to take a moment to discuss our recent regulatory settlement. We believe Trustmark has a strong reputation in the communities we serve by making products and services available to all consumers and businesses. We have and continue to invest in our communities through improved products, better accessibility, as well as providing financial literacy training, volunteer hours, contributed capital, and much more. The recent settlement we entered allows us to avoid any distractions and focus on meeting the common goals of breaking down barriers that could prevent anyone from reaching that dream of home ownership. We look forward to continued progress in the Memphis market as well as all communities we serve From a financial perspective, we do not anticipate any material negative impact to earnings from the settlement while we are hopeful that our efforts to build strong communities is a positive impact on all. Now getting back to our review of the third quarter. Loans held for investment increased $22 million or 0.2% from the prior quarter and $327.2 million or 3.3% year-over-year. Deposits increased $290.8 million late quarter and $1.7 billion from the prior year. Investment securities increased $470.8 million from the prior quarter as excess liquidity was deployed. Net interest income excluding interest and fees on PPP loans increased 2.9 million or 2.9% from the prior quarter. At September 30th, non-interest income totaled 54.1 million and represented 35.5% of total revenue. Adjusted non-interest expense totaled 116.6 million in the third quarter a 0.3% increase from the prior quarter. Our credit quality continues to remain solid as recoveries exceeded charge-offs by $2.5 million in the third quarter. Provisions for credit losses net totaled a negative $3.5 million for the quarter and reflects improved credit loss expectations. We maintained strong capital levels with a common equity Tier 1 capital ratio of 11.68% and a total risk-based capital ratio of 14.01%. During the third quarter, Trustmark repurchased 9.7 million or approximately 319,000 shares of common stock. As of September 30th, Trustmark had $65.4 million in remaining authority under its existing repurchase program. That will expire December 31st of this year. The Board of Directors declared a quarterly cash dividend of 23 cents per share payable December 15th to shareholders of record on December 1st. Now, Barry Harvey will provide some color on loan growth and credit quality.