Trustmark Corporation

Good morning, ladies and gentlemen, and welcome to the 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 your touchtone phone, and 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 Rein, Director of Corporate Strategy at Trustmark. Please go ahead.

Good morning. Our third quarter earnings release and presentation for today's call are available in the investor relations section of Trustmark.com. During this call, management may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from these statements because of risks and uncertainties outlined in our earnings release and our other filings with the Securities and Exchange Commission. Now I'll turn the call over to Duane Dewey, President and CEO of Trustmark.

Thank you, Joey, and good morning everyone. Thank you for joining us this morning. With me today are Tom Owens, our Chief Operating Officer, Joe Bond, our Chief Financial Officer, Barry Harvey, our Chief Credit and Operations Officer, and Tom Chambers, our Chief Accounting Officer. I'll review our performance and outlook and have Barry and Joe add some color before taking your questions. Pressmark delivered a solid third quarter highlighted by growing net interest income, strong credit quality, and core deposit growth. Results demonstrate the strength of the core franchise while strategic balance sheet actions taken during the quarter are designed to enhance future earnings capacity. Wealth Management also continued its positive momentum and we maintained our focus on disciplined expense management and returning capital to shareholders. Turning to slide three, financial highlights, Trustmark reported third quarter debt income of $58.1 million for $1 per diluted share with a return on average tangible equity of 12.72% and a return on average assets of 1.21%. The quarterly operating EPS is a record for Trustmark in our 137 year history. The quarter included two strategic non-routine transactions. We sold 34 branch properties and simultaneously entered into a triple net lease agreement for each, generating a pre-tax gain of $61.5 million after transaction related expenses. We also repositioned our investment securities portfolio, reclassifying held to maturity securities for available for sale. We sold $629.5 million of securities yielding a weighted average of 1.4% and purchased $628 million of securities yielding a weighted average of approximately 5%. The resulting $61.5 million pre-tax loss was effectively offset by the sale-leaseback gain. In the quarter, loans held for investment declined $43.9 million or 0.3% but increased $321 million or 2.4% year-over-year. Loan production trends remained solid during the quarter, although growth was offset by continued elevated commercial loan payoffs. Barry Harvey will provide more detail after my summary comments. On the deposit side, excluding planned broker deposit runoff, deposits grew $184.3 million, or 1.2% link quarter, and 3.4% year-over-year. Total deposit costs were 1.67% for the quarter, reflecting the strength of our attractive, low-cost deposit base. Revenue remained solid at $207.1 million, down 0.5% link quarter, and up 2.4% year-over-year. Fully tax equivalent net interest income rose $2 million, or 1.2% link quarter, while the net interest margin held steady at 3.84%. The income reflected quarterly variability. Mortgage banking loan production volume was down 11.7% and linked quarter revenue was down 11.6%. Treasury management fee revenue was also down due to our core conversion shift to on balance sheet deposits from fee income oriented products. Finally, wealth management revenue showed continued solid growth. Expense discipline remains a priority. Non-interest expense rose $753,000 or 0.6% linked quarter. Salaries and employee benefits increased $1.7 million or 2.3% while other expense fell $1.7 million or 10.4%. primarily due to lower other real estate miscellaneous and loan expenses. Credit quality remains strong with third quarter net provision for credit losses of $2.3 million and net charge offs were 1 million or three basis points of average loans. During the quarter, we continued our share repurchase program. In the first nine months of 2026, we repurchased 60.9 million of common stocks for approximately 1.4 million shares. This included 20.1 million or approximately 428,000 shares in the third quarter. The board also declared a quarterly cash dividend of 25 cents per share payable December 15th to shareholders of record on December 1st. Turning to our full year outlook on slide 15. Note, it is a full year outlook. We continue to expect mid single digit growth in both loans held for investment and deposits, excluding broker deposits. Security balances are expected to remain stable. We have raised our full year 2026 net interest margin margin guidance to 3.83 to 3.87%. This is for the full year. You will recall Q1 NIM was 3.81 while second and third quarters were 3.84. We do expect to be at the high end of our guide range with a Q4 NIM around 4%. We expect fully tax equivalent net interest income to be up mid single digits compared to 2025. We expect the total provision for credit losses, including off-balance sheet credit exposure, to normalize and remain consistent with prior 2026 quarters. This outlook is in line with our disciplined credit risk management and strong third quarter asset quality metrics. With the challenging mortgage markets and the movement of treasury management revenue to NII, we now expect low to mid single digit growth in full year non-interest income and we reaffirm our full year 2026 non-interest expense guidance of middle single digit growth as we continue investing in the business while maintaining expense discipline. As previously communicated, we will maintain a disciplined approach to capital deployment favoring organic loan growth, potential market expansion, M&A and other general corporate purposes as market conditions warrant. And with that overall summary, I'll turn it over to Barry for a few comments on loans.