TRMK

Trustmark Corporation (TRMK)

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Trustmark Corporation (TRMK)

Q4 2008 Earnings Call Transcript

January 28, 2009 11:00 am ET

Executives

Joey Rein – Director, IR

Richard Hickson – Chairman, President and CEO

Buddy Wood – Chief Risk Officer

Barry Harvey – SVP, Chief Credit Administrator

Bob Hardison – Chief Commercial Credit Officer

Jerry Host – COO

Louis Greer – Treasurer and Principal Financial Officer

Analysts

Kevin Fitzsimmons – Sandler O'Neill

Brian Klock – KBW Investment

Pauline Sandville [ph] – JPMorgan

Andy Stapp – B. Riley & Company

Presentation

Operator

Good morning, ladies and gentlemen, and welcome to Trustmark Corporation’s fourth quarter earnings conference call. At this time, all participants are in a listen-only mode. Following the presentation, there will be a question-and-answer session. As a reminder, this call is being recorded. It is now my pleasure to introduce Joey Rein, Director of Investor Relations at Trustmark. Mr. Rein, Please go ahead, sir.

Joey Rein

Thank you, and good morning. I would like to remind everyone that a copy of our fourth quarter earnings release and supporting financial information is available on the Investor Relations section of our web site at trustmark.com by clicking on the ‘News Releases’ tab.

During the course of our call this morning, 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 would like to introduce our Chairman and CEO, Richard Hickson.

Richard Hickson

Good morning. Thank you for joining us. I know we have almost all of the analysts that cover us on board. I know you are busy this week and we appreciate you taking the time as well as our shareholders.

I have with me this morning, Louis Greer, our Chief Financial Officer; Buddy Wood, our Chief Risk Officer, and the managers of our various credit areas.

I characterize the quarter as a good quarter particularly in this environment. It’s our second quarter in a row with absolutely what I would call no noise in it to detract you from the core earnings of the company. We earned $24 million or $0.42 a share, return on tangible equity of approximately 15%, ROA 1.07%.

Year-over-year, for the year, Trustmark earned $91 million, over 1% ROA and at a 15% return on tangible equity. It doesn’t feel like that thinking about last year, but looking at it holistically I would say in light of the environment we can't be immune to the economy. A very good year for our Company. The results in characterizing last quarter, I would call it relatively stable in the credit quality area particularly in light of the environment and we will be very granular and thorough in our comments and transparent.

Increased capital strength both from earnings and as you know our acceptance of the Preferred stock with the TARP; very disciplined expense management. Our expenses have been have been flat for multiple quarters.

Bottom line, profitable, well capitalized, strong and adequate liquidity, a very diversified business mix and financial flexibility to succeed in this challenging environment.

I would like to take you to our stat sheets behind our news release to Page Three and I would like to talk about credit quality. You will note that we give you this information by market.

Nonaccrual loans increased $8.8 million in the quarter. There were really no large loans moving in the quarter. Florida increased $4 million. I can tie that back to about five loans between $1 million and $3 million. These were lot loans, a couple of pieces of commercial property, which are very good lots. A few houses and one storage unit company.

Mississippi increased $6 million. There was one $3 million loan on the Gulf Coast very near the casinos in Biloxi consisting of 12 condo units. It is very well secures. We are carrying these units on the books between $200,000 and $250,000 each. We have appraisals. We do not see any loss in this credit.

Tennessee was down $0.5 million and Texas down about $1 million. Looking at it holistically the rest of Mississippi was either (inaudible) or consumer credits or mortgages making up between $3 million and $4 million. Essentially all of our increases in nonaccrual loans as we are tying to be very consistent in following appraisals were impaired and written down to what we think it is (inaudible) valued.

Other real estate increased $6 million. Three of it was in Florida. We foreclosed on one property that was $1.8 million with a deed in lieu, and received a $400,000 cash payment, wrote it down further to $1.4 million, well covered by appraisal. It consists of around six lots, two of which are beach fronts, very near Sandestin. We are not expecting any additional loss.

In Texas, you see that other real estate went from $200,000 to $2.3 million. We foreclosed on a piece of land down in League City. It is a very nice piece of property. We have offer on it. Our original appraisal was approximately $3 million. We are carrying it on the books at $2 million. We are waiting for an updated appraisal so that we are sure we get proper value for the piece of land. We expect no loss from it.

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