Trustmark Corporation

Ladies and gentlemen, and welcome to Trustmark Corporation's fourth quarter earnings conference call. At this time, all participants are in listener mode. Following the presentation this morning, there will be a question and answer session. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. 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 fourth quarter earnings release, as well as the slide presentation that we will discuss 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 within 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. At this time, I'd like to introduce Duane Dewey, President and CEO of Trustmark.

Thank you, Joey, and good morning, everyone. Thank you for joining us. With me this morning are Tom Owens, our Chief Financial Officer, Barry Harvey, our Chief Credit and Operations Officer, and Tom Chambers, our Chief Accounting Officer. Trustmark had a solid quarter as reflected by record loan growth, expansion of the net interest margin, solid performance in our insurance and wealth management businesses, and strong credit quality. As we previously disclosed, Trustmark agreed to a settlement that pending court approval will resolve all current and potential future claims relating to litigation involving the Stanford Financial Group that began in 2009. In the fourth quarter, Trustmark recognized litigation settlement expense of $100.75 million. With this charge, Trustmark reported a fourth quarter net loss of $34.1 million or $0.56 per diluted share. The settlement reduced fourth quarter net income by $75.6 million or $1.24 per diluted share. For the full year, Trustmark's net income totaled $71.9 million represented representing diluted earnings per share of $1.17. We believe the settlement is in the best interest of Trustmark and our shareholders as it eliminates risk, ongoing expense, and uncertainty. With this issue behind us, we're focused on the future and the opportunities ahead. Excluding the litigation settlement expense, Trustmark's net income in the fourth quarter totaled $41.5 million, or 68 cents for diluted share, and $147.5 million for the full year 2022, representing diluted earnings per share of $2.40. Now let's look at our financial highlights in a little more detail by turning to slide three. At December 31, loans held for investment totaled $12.2 billion, an increase of $618 million link quarter, and $2 billion, or 19.1% from the prior year. Deposits totaled $14.4 billion, an increase of $12.5 million from the prior quarter, and a decrease of $650 million, or 4.3% year over year. Revenue in the fourth quarter totaled $191.8 million, up 1.6% linked quarter. For the year, 2022 revenue totaled $700 million, an increase of $60 million or 9.3% from the prior year. Net interest income totaled $150 million in the fourth quarter, an increase of $11 million or 7.9% linked quarter. Non-interest income totaled $45.2 million and represented 23.6% of total revenue in the fourth quarter. Non-interest expense in the fourth quarter, excluding the litigation settlement, totaled $130.5 million, or a 3% increase linked quarter. For the year, non-interest expense, excluding the litigation settlement, totaled $502.5 million, a 2.7% increase from the prior year. Credit quality remained solid this quarter as net charge-offs represented six basis points of average loans, The allowance for credit losses for loans held for investment represented nearly 400% of total non-accrual loans, excluding individually evaluated loans. Non-accrual loans declined 2.9% in the fourth quarter, and total non-performing assets declined 4.1%. Including the impact of the settlement, we continue to maintain strong capital levels with a common tier one capital ratio of 9.74% and a total risk-based capital ratio of 11.91%. The board declared a quarterly cash dividend of 23 cents per share payable March 15th to shareholders of record on March 1st. At this time, I'd like to ask Barry to provide color on loan growth and credit quality.