Trustmark Corporation

Good morning, ladies and gentlemen, and welcome to Trustmark Corporation's first 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 one on a touchtone 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.

Good morning. I'd like to remind everyone that a copy of our first 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 within the meaning of the Private Securities Litigation Reform Act of 1995, and 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 in our other filings with the Securities and Exchange Commission. At this time, I'd like to introduce Duane Dewey, President and CEO of Trustmark Corporation.

Thank you, Joey, and good morning, everyone. Thank you for joining us this morning. With me are Tom Owens, our Chief Financial Officer, Barry Harvey, our Chief Credit and Operations Officer, and Tom Chambers, our Chief Accounting Officer. We have great news to share with you this morning on multiple fronts. First, Trustmark had a strong first quarter reflecting continued loan growth, solid credit quality, increased non-interest income and revenue, and a decrease in non-interest expense. Before delving into the quarter, I want to share another important development for our company. We have signed a definitive agreement to sell our insurance agency, Fisher Brown Bottrell Insurance, to Marsh McLennan Agency in a cash transaction valued at $345 million. Turning to slide four, we are extremely proud of the insurance brokerage business that we have built over the past 20-plus years at Trustmark. FBBI is in the top five largest bank-affiliated agencies in the country. It has produced consistent organic revenue and profitability growth over the years, especially the last 10-plus years. The transaction multiples prove what we've known for some time, that we have a very valuable and well-regarded franchise. Through this transaction, we are pleased to be partnering with MMA and think we've chosen the best home for our employees and clients of FBBI. The transaction is expected to close during the second quarter of the year. In recent months, the multiples in the insurance brokerage industry have increased significantly. The positive implications of a sale for our shareholders and for the bank became compelling. FBBI contributed 7% of the bank's net income in 2023, while the purchase price is over 20% of the bank's market capitalization. As part of this transaction, we intend to reposition our balance sheet, and Tom Owens will give more details on that strategy. Importantly, the combined transactions are expected to generate around 16% full-year EPS accretion and 17% increase in tangible book value per share, while also increasing TCE to total assets over 100 basis points. After the sale, Trustmark has attractive fee income businesses, specifically a strong wealth management franchise and a significant mortgage business. Our pro forma fee income will be in the range of a healthy 20%. Tom and I will spend some time on the pro formas.