Trustmark Corporation (TRMK)

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Trustmark Corporation (TRMK)

Q1 2009 Earnings Call

April 29, 2009; 11:00 am ET


Richard Hickson - Chairman & Chief Executive Officer

Buddy Wood - Chief Risk Officer

Barry Harvey - Senior Vice President, Chief Credit Administrator

Bob Hardison - Chief Commercial Credit Officer

Jerry Host - Chief Operating Officer

Louis Greer - Treasurer & Principal Financial Officer

Joey Rein - Director of Investor Relations


Kevin Fitzsimmons - Sandler O'Neil

Andy Stapp - B. Riley & Company

Brian Klock - KBW

Albert Savastano - Fox-Pitt Kelton



Good morning ladies and gentlemen and welcome to the Trustmark Corporation first quarter earnings conference call. At this time all participants are in a listen-only mode. (Operator Instructions)

It is now my pleasure to introduce Joey Rein, Director of Investor Relations at Trustmark. Please go ahead, sir.

Joey Rein

Good morning and thank you operator. I would like to remind everyone that a copy of our first quarter earnings release, along with supporting financial information is available on the Investor Relations section of our website at, by clicking on the news releases tab.

During the course of our call this morning, we 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 Richard Hickson, our Chairman and CEO.

Richard Hickson

Good morning. I’d like to thank you for joining us this morning. Our board meeting, falling on the last Tuesday this month has us I guess about last in reporting earnings. I’ll say, it’s been long month, because we’ve been very anxious to get these good earnings out to you.

We reported net income available to common shareholders of $23.4 million, a return on tangible common equity of around 14.5%, a return on assets of 1.10% and we declared our cash dividend, payable of $0.23 a share unchanged. Earnings during the quarter continue to reflect our core operating strength, expanded net interest income, growth and non-interest income, prudent expense management and enhanced capital strength. Bottom line, Trustmark has a very strong capital position, a solid balance sheet and financial flexibility.

Let met take you to page three in our stat sheet, which addresses credit quality. Non-accrual loans increased $20 million to $134 million or 1.94% of total loans. Taking a look at it by state; Florida was up $8.7 million, no large credits migrated to non-accrual.

There were a number of small credits. There were three over $1 million, one was a home and Watercolor, which was written down and subsequently sold and closed after quarter end. Another was a couple of residential lots. The other was a piece of land about $3.7 million; it was subsequently written down during the quarter to $1.5 million.

In Mississippi, the change in non-accrual was principally small home mortgage credit. No credit over $0.5 million. In Tennessee, there was no change, it was one loan residential related. In Texas, we were up $6 million; that is one real estate developer, old customer of the bank, had financial problems outside of our projects.

There are three different piece of real estate in that, all the three well located; one in office, one in office condominium and one is smaller piece of land due north and due west out in the Sugar Land area. Those have been reserve for. We are expecting to see them move into foreclosure and be liquidated within one or two quarters.

Other real estate increased $3 million, nothing significant. About 18 of that’s in Florida and I believe Florida has already actually went down a couple of million dollars. We sold about $3 million worth of real estate, all smaller houses and lots in Florida during the last quarter. Only other change in foreclosed was one $2.7 million land loan on the Gulf Coast in Biloxi and our Mississippi portfolios variable lands, we are not anticipating anything of significance there.

The total non-performing increased $24 million, up to 2.5% of total loans and other real estate. Net charge-offs were actually down linked quarter about $1.2 million to $11.4 million, a 0.66 of loan. Of the $11.4 million, $6.9 million was in Florida. Taking a look at it, principally it was the two credits that moved through to non-accrual that moved fairly quickly; nothing else of significance there, due smaller lot loan write-downs.

Our indirect auto portfolio charge-offs were $2.4 million. So, if you take Florida at seven and indirect auto was 2.4, anything else in our $7 billion loan portfolio was absolutely minimum. Our provision came in at $16.9 million, exceeding charge-offs by $5.5 million. In Florida, we did our best to identify issues during the quarter and we reserved $3.8 million more than our charge-offs. Our loan loss now is a little more than a $100 million at a $100.4 million.

When you look at our commercial and real estate commercial portfolios, we are at a 1.95% on that commercial portfolio, at 0.73% on the consumer portfolio and 1.51% of total loan. When I look at the consumer portfolio, as you know that’s significant with us. We began moving our auto portfolio down, probably in October of ’07 and it decreases about $20 million a month to $25 million. At quarter end it was about $550 million from our high of right at $900 million.

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