Trustmark Corporation Announces Second Quarter 2025 Financial Results

Profitability Metrics Continue to Expand; Strong Performance Reflects Loan and Deposit Growth, Stable Credit Quality, Robust Fee Income and Disciplined Expense Management

Trustmark Corporation (NASDAQ:TRMK) reported net income of $55.8 million in the second quarter of 2025, representing diluted earnings per share of $0.92. Trustmark's performance during the second quarter produced a return on average tangible equity of 13.13% and a return on average assets of 1.21%. The Board of Directors declared a quarterly cash dividend of $0.24 per share payable September 15, 2025, to shareholders of record on September 1, 2025.

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Second Quarter Highlights

• Loans held for investment (HFI) increased to $13.5 billion, reflecting diversified growth of 1.7% linked-quarter
• Credit quality remained stable, nonperforming assets declined linked-quarter, and net charge-offs represented 0.12% of average loans
• Deposits increased to $15.1 billion while cost of total deposits declined 3 basis points to 1.80%
• Total revenue expanded $4.0 million, or 2.1%, linked-quarter to $198.6 million
• Net interest income (FTE) increased $6.7 million, or 4.3%, linked-quarter, producing a net interest margin of 3.81%
• Noninterest expense increased $1.1 million, or 0.9%, linked-quarter to $125.1 million

Duane A. Dewey, President and CEO, stated, "Our momentum continues to build as reflected in our solid financial performance in the second quarter of 2025. Diversified loan growth and solid credit quality continued. We were also successful in building and expanding attractive, cost-effective core deposit relationships. Our mortgage banking and wealth management businesses also performed well. These accomplishments are the results of our focused efforts to expand customer relationships and diligently manage expenses. Our associates have done a tremendous job of serving customers, building relationships, and demonstrating the value Trustmark can provide as their financial partner. We are well-positioned to create long-term value for our shareholders."

Balance Sheet Management

• Loans HFI increased $223.3 million, or 1.7%, during the quarter and $309.4 million, or 2.4%, year-over-year
• Personal and commercial deposits totaled $13.0 billion at June 30, 2025, up $103.8 million, or 0.8%, from the prior quarter and $361.7 million, or 2.9%, year-over-year
• Maintained strong capital position with CET1 ratio of 11.70% and total risk-based capital ratio of 14.15%
• Repurchased $26.0 million, or approximately 764 thousand shares, of common stock during first six months of 2025

Loans HFI totaled $13.5 billion at June 30, 2025, reflecting an increase of $223.3 million, or 1.7%, linked-quarter and $309.4 million, or 2.4%, year-over-year. The linked-quarter growth was driven by 1-4 family mortgage loans, other loans and leases, commercial and industrial loans, other real estate secured loans, and construction, land development and other land loans. Trustmark's loan portfolio remains well-diversified by loan type and geography.

Deposits totaled $15.1 billion at June 30, 2025, up $35.2 million, or 0.2%, from the prior quarter as growth in noninterest-bearing deposits of $65.5 million was offset in part by a decline in interest-bearing deposits of $30.3 million. Year-over-year, deposits declined $347.0 million, or 2.2%, driven by targeted declines in public funds and brokered deposits of $408.2 million and $300.5 million, respectively. Trustmark continues to maintain a strong liquidity position as loans HFI represented 89.1% of total deposits at the end of the second quarter. Noninterest-bearing deposits represented 20.7% of total deposits at June 30, 2025. Interest-bearing deposit costs totaled 2.28% for the second quarter, a decrease of 2 basis points linked-quarter while the cost of total deposits was 1.80%, a decrease of 3 basis points from the prior quarter.

During the second quarter, Trustmark repurchased $11.0 million, or approximately 341 thousand of its common shares. During the first six months of 2025, Trustmark repurchased $26.0 million, or approximately 764 thousand common shares. As previously announced, Trustmark's Board of Directors authorized a stock repurchase program effective January 1, 2025, under which $100.0 million of Trustmark's outstanding shares may be acquired through December 31, 2025. The repurchase program, which is subject to market conditions and management discretion, will continue to be implemented through open market repurchases or privately negotiated transactions. At June 30, 2025, Trustmark's tangible equity to tangible assets ratio was 9.50%, while the total risk-based capital ratio was 14.15%. Tangible book value per share was $28.74 at June 30, 2025, an increase of 3.5% from the prior quarter and 13.9% from the prior year.

Credit Quality

• Nonperforming assets declined 5.3% linked-quarter
• Net provision for credit losses was $4.7 million in the second quarter
• Net charge-offs (NCOs) totaled $4.1 million, including three individually analyzed credits totaling $2.7 million which were reserved for in prior periods; NCOs represented 0.12% of average loans in the second quarter
• Allowance for credit losses (ACL) represented 1.25% of loans HFI and 272.20% of nonaccrual loans, excluding individually analyzed loans at June 30, 2025

Nonaccrual loans totaled $81.0 million at June 30, 2025, down $5.6 million from the prior quarter. Other real estate totaled $9.0 million, reflecting an increase of $624 thousand from the prior quarter. Collectively, nonperforming assets totaled $90.0 million at June 30, 2025, down $5.0 million, or 5.3%, from the prior quarter and represented 0.66% of loans HFI and held for sale (HFS).

The provision for credit losses for loans HFI was $5.3 million in the second quarter and was primarily attributable to loan growth and changes in the macroeconomic forecast partially offset by net adjustments to the qualitative factors due to positive credit migration. The provision for credit losses for off-balance sheet credit exposures was a negative $670 thousand in the second quarter, primarily driven by positive credit migration partially offset by changes in the macroeconomic forecast. Collectively, the provision for credit losses totaled $4.7 million in the second quarter compared to $5.3 million in the prior quarter and $11.1 million (excluding the provision associated with the mortgage loan sale) in the second quarter of 2024.

Allocation of Trustmark's $168.2 million ACL on loans HFI represented 1.07% of commercial loans and 1.83% of consumer and home mortgage loans, resulting in an ACL to total loans HFI of 1.25% at June 30, 2025. Management believes the level of the ACL is commensurate with the credit losses currently expected in the loan portfolio.

Revenue Generation

• Net interest income (FTE) totaled $161.4 million in the second quarter, up $6.7 million, or 4.3%, linked-quarter
• Net interest margin totaled 3.81% in the second quarter, up 6 basis points from the prior quarter
• Noninterest income totaled $39.9 million, down $2.7 million, or 6.3%, from the prior quarter

Revenue in the second quarter totaled $198.6 million, an increase of 2.1% from the prior quarter. The linked-quarter increase reflects growth in net interest income offset in part by a reduction in noninterest income.

Net interest income (FTE) in the second quarter expanded to $161.4 million, resulting in a net interest margin of 3.81%, up 6 basis points from the prior quarter. The expansion of the net interest margin was primarily due to the increase in the yield of loans HFI and held for sale portfolio as well as the decrease in the cost of interest-bearing liabilities.

Noninterest income in the second quarter totaled $39.9 million, a decrease of $2.7 million, or 6.3%, from the prior quarter. Excluding a $2.4 million gain on sale of a bank facility in the first quarter and a $272 thousand net loss on sale of bank facilities in the second quarter, noninterest income was unchanged linked-quarter. Linked-quarter increases in bank card and other fees and wealth management were more than offset by declines in other income, net, mortgage banking, net, and service charges on deposit accounts.

Mortgage loan production in the second quarter totaled $426.3 million, up 33.7% from the prior quarter and up 12.3% year-over-year. Mortgage banking revenue totaled $8.6 million in the second quarter, a decrease of $169 thousand, or 1.9%, linked-quarter and an increase of $4.4 million year-over-year. The linked-quarter decrease was principally due to increased servicing asset amortization offset in part by increased gain on sale of mortgage loans. The year-over-year increase was principally attributable to increased mortgage servicing revenue, gain on sale of loans, and improved net hedge ineffectiveness.

Wealth management revenue in the second quarter totaled $9.6 million, an increase of $95 thousand, or 1.0%, from the prior quarter and a decline of $54 thousand, or 0.6%, year-over-year. The linked-quarter growth reflected increased investment services revenue offset in part by lower trust management revenue.

Other income, net, totaled $2.3 million in the second quarter, down $3.7 million from the prior quarter. Excluding the aforementioned gain on sale of a bank facility in the first quarter and net loss on sale of bank facilities in the second quarter, other income, net, declined $952 thousand linked-quarter. Service charges on deposit accounts totaled $10.6 million in the second quarter, largely in-line with the prior quarter and a decrease of $339 thousand, or 3.1% year-over-year. Bank card and other fees totaled $8.8 million in the second quarter, up $1.1 million from the prior quarter principally due to increased customer derivative and interchange revenue. Year-over-year, bank card and other fees decreased $471 thousand.

Noninterest Expense

• Total noninterest expense increased $1.1 million, or 0.9%, linked-quarter
• Salaries and employee benefits expense declined $194 thousand, or 0.3%, linked-quarter
• Equipment expense declined $102 thousand, or 1.6%, linked-quarter

Noninterest expense in the second quarter totaled $125.1 million, an increase of $1.1 million, or 0.9%, from the prior quarter and $6.8 million, or 5.7%, year-over-year. Salaries and employee benefits expense totaled $68.3 million in the second quarter, a decline of $194 thousand, or 0.3%, linked-quarter and an increase of $3.5 million, or 5.3%, year-over-year. The linked-quarter decline reflected a seasonal decrease in payroll taxes and stock compensation expense, which were offset in part by increased commissions and compensation expense. Services and fees in the second quarter totaled $27.0 million, an increase of $751 thousand, or 2.9%, from the prior quarter and $2.3 million, or 9.1%, year-over-year. The linked-quarter increase is attributable principally to professional fees. Total other expense in the second quarter was $16.1 million, an increase of $526 thousand, or 3.4%, linked-quarter and $866 thousand, or 5.7%, year-over-year. The linked-quarter change is attributable to increased loan expense and other miscellaneous expense offset in part by lower other real estate expense and a decrease in FDIC assessment expense.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, July 23, 2025, at 8:30 a.m. Central Time to discuss the Corporation's financial results. Interested parties may listen to the conference call by dialing (877) 317-3051 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com. A replay of the conference call will also be available through Wednesday, August 6, 2025, in archived format at the same web address or by calling (877) 344-7529, passcode 1200603.

Trustmark is a financial services company providing banking and financial solutions through offices in Alabama, Florida, Georgia, Mississippi, Tennessee and Texas.

Forward-Looking Statements

Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as "may," "hope," "will," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "project," "potential," "seek," "continue," "could," "would," "future" or the negative of those terms or other words of similar meaning. You should read statements that contain these words carefully because they discuss our future expectations or state other "forward-looking" information. These forward-looking statements include, but are not limited to, statements relating to anticipated future operating and financial performance measures, including net interest margin, credit quality, business initiatives, growth opportunities and growth rates, among other things, and encompass any estimate, prediction, expectation, projection, opinion, anticipation, outlook or statement of belief included therein as well as the management assumptions underlying these forward-looking statements. You should be aware that the occurrence of the events described under the caption "Risk Factors" in Trustmark's filings with the Securities and Exchange Commission (SEC) could have an adverse effect on our business, results of operations or financial condition. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected.

Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, actions by the Board of Governors of the Federal Reserve System (FRB) that impact the level of market interest rates, local, state, national and international economic and market conditions, conditions in the housing and real estate markets in the regions in which Trustmark operates and the extent and duration of the current volatility in the credit and financial markets, changes in the level of nonperforming assets and charge-offs, an increase in unemployment levels, a slowdown in economic growth, changes in our ability to measure the fair value of assets in our portfolio, changes in the level and/or volatility of market interest rates, the impacts related to or resulting from bank failures and other economic and industry volatility, including potential increased regulatory requirements, the demand for the products and services we offer, potential unexpected adverse outcomes in pending litigation matters, our ability to attract and retain noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, cyber-attacks and other breaches which could affect our information system security, natural disasters, environmental disasters, pandemics or other health crises, acts of war or terrorism, potential market or regulatory effects of the current United States presidential administration's policies and other risks described in our filings with the SEC.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Except as required by law, we undertake no obligation to update or revise any of this information, whether as the result of new information, future events or developments or otherwise.