Trustmark Corporation (TRMK)

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Trustmark Corporation (TRMK)

Q1 2013 Earnings Conference Call

April 24, 2013 11:00 ET


Joey Rein - Director, Investor Relations

Gerry Host - President and Chief Executive Officer

Louis Greer - Chief Financial Officer

Barry Harvey - Chief Credit Officer

Mitch Bleske - Treasurer

Art Stevens - President, Retail Banking Group


Preeti Dixit - JPMorgan

Catherine Mealor - KBW

Kevin Fitzsimmons - Sandler O'Neill

Michael Rose - Raymond James

Blair Brantley - BB&T

Peyton Green - Sterne Agee

Jennifer Demba - SunTrust Robinson Humphrey



Good morning, ladies and gentlemen, and welcome to Trustmark Corporation’s First Quarter Earnings Conference Call. At this time, all participants will be in listen-only mode. Following the presentation this morning, there will be a question-and-answer session. (Operator Instructions) As a reminder, this call is being recorded.

It’s now my pleasure to introduce Joey Rein, Director of Investor Relations at Trustmark.

Joey Rein - Director, Investor Relations

Good morning and thank you. I would like to remind everyone that a copy of our first quarter earnings release and supporting financial information is available on the Investor Relations section of our website at 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 want 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 will turn the call over to Trustmark President and CEO, Gerry Host.

Gerry Host - President and Chief Executive Officer

Thank you, Joey, and good morning, everyone. Thank you for joining us. With me this morning in addition to Joey and available to answer questions after my comments are Louis Greer, our Chief Financial Officer; Barry Harvey, our Chief Credit Officer; Mitch Bleske, our Treasurer; and Art Stevens, President of our Retail Banking Group.

Let me take a minute and cover some of the highlights of the first quarter. The completion of the BancTrust merger and our first quarter performance were great way to start the year. Our merger with Mobile-based BancTrust Financial Group was effective on February 15, and they are included in our financial results from this point forward. We are excited to serve our 66,000 new customers in Alabama and the Florida Panhandle. This is, I think, as we have stated before the largest transaction in our history. It’s added loans with fair value of $950 million and $1.7 billion in deposits. We have added 40 offices in Alabama and 9 in the Panhandle of Florida. It is meaningfully accretive to earrings per share and it is an opportunity to provide our full product set to these new markets. We are extremely pleased with the successful operational systems conversion that was completed during the weekend of March 23. This is a direct reflection on the efforts of our dedicated associates both with Trustmark and with BancTrust and I would like to thank them for all the hard work in completing this in a very successful way.

Our management team in Alabama has been in place. Our Florida region has seamlessly been integrated into the existing Florida Trustmark structure. In Central Alabama, we have a seasoned Regional President, and we have supplemented that with a proven Trustmark executive. In the Southern Alabama region, we have a management team in place that includes a very solid and seasoned regional market President, a strong commercial lending team. We have brought in from the Trustmark organization, a Head of the Credit area as well as an individual to manage the real estate lending group. In addition, we have added some expertise in the area of private banking from the Mobile market. Soon after we closed the transaction, we conducted a business calling list to thank the customers of BancTrust for their business and to identify other needs and to introduce Trustmark to the BancTrust customers. This joint effort between both the legacy Trustmark folks and the new Trustmark associates resulted in over 550 calls in one day and was very well received within the market.

Turning to highlights of the financials, our net income available to common shareholders in the first quarter totaled $24.9 million or $0.38 per share. Excluding non-routine merger expenses that reduced after-tax income by $5.8 million, our first quarter net income was $30.6 million, or $0.46 per share. BancTrust contributed approximately $2 million of net income, excluding merger cost during the 44 days during the quarter that they were part of Trustmark. We are pleased with these results today and are excited about the opportunities that are ahead. Also I want to note that our Board declared a quarterly cash dividend of $0.23 pre share payable on June 15th to holders of record on June the 1st.

Let’s review our first quarter accomplishments in more detail. First of all the balance sheet, total loans including held for investment and acquired loans in the first quarter increased approximately $800 million to total of $6.5 billion. This growth included acquired loans from BancTrust at March 31st. Loans held for investments totaled $5.5 billion down $118 million from the prior quarter. This decline is principally due to planned run off of about $125 million in our 1-4 family mortgage portfolio, our mortgage production during the quarter totaled $392 million, down roughly 21% from the prior quarter due to declining refi activity following this extensive low interest rate environment.

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