Trustmark Corporation, a multi-bank holding company based in Jackson, Mississippi, has demonstrated remarkable resilience and strategic foresight in navigating the evolving financial landscape. With a rich history spanning over 130 years, Trustmark has evolved from a local banking institution to a diversified financial services provider, offering a comprehensive suite of products and solutions to its customers across the Southeast region of the United States.
Business Overview and History
Trustmark Corporation was incorporated in 1968 and is headquartered in Jackson, Mississippi. The company's principal subsidiary, Trustmark National Bank, was initially chartered by the State of Mississippi in 1889. Over the decades, Trustmark has grown to become a diversified financial services company, providing banking, wealth management, and other financial solutions through 163 full-service branches and 143 ATMs/ITMs across Alabama, Florida, Georgia, Mississippi, Tennessee, and Texas.
In its early years, Trustmark focused on building out its branch network and expanding its presence in Mississippi. The company later entered new state markets through a combination of organic growth and strategic acquisitions. A significant milestone in this expansion was the 2012 acquisition of BancTrust Financial Group, which extended Trustmark's footprint into Alabama.
During the financial crisis of 2008-2009, Trustmark faced challenges similar to many banks, experiencing an increase in problem assets and loan losses. However, the company successfully navigated this downturn and emerged with a strong capital position, demonstrating its resilience and effective risk management practices.
In recent years, Trustmark has concentrated on enhancing its product offerings and diversifying its revenue streams. The company acquired Fisher Brown Bottrell Insurance, Inc. in 2014 to strengthen its wealth management capabilities. However, as part of a strategic initiative to focus on its core banking and wealth management businesses, Trustmark sold this insurance subsidiary in 2024 to Marsh McLennan Agency LLC.
Throughout its history, Trustmark has maintained a strong commitment to serving the communities in which it operates. The company has consistently earned high ratings from the FDIC for its Community Reinvestment Act (CRA) performance, reflecting its dedication to meeting the credit needs of its local markets. This community banking approach, combined with conservative risk management, has contributed to Trustmark's steady financial performance over its more than 130-year history.
Financials
Trustmark's financial performance has been marked by a consistent trajectory of growth and diversification. As of December 31, 2024, the company reported total assets of $18.15 billion, a testament to its ability to navigate economic challenges and capitalize on opportunities. Trustmark's net income for the full year 2024 reached $223.00 million, with a strong return on average assets of 1.20% and a return on average tangible equity of 15.20%.
For the fiscal year 2024, Trustmark reported annual revenue of $960.33 million and annual net income of $45.21 million. In the most recent quarter (Q4 2024), the company achieved revenue of $199.39 million and net income of $56.31 million, representing a year-over-year revenue growth of 5%. The increase in net income in Q4 2024 compared to Q4 2023 was primarily due to an increase in revenue.
Lending and Deposit Dynamics
Trustmark's loan portfolio, classified as Loans Held for Investment (LHFI), totaled $13.09 billion as of December 31, 2024, reflecting a year-over-year increase of $139.40 million, or 1.10%. This growth was primarily driven by net increases in LHFI secured by real estate and other commercial loans and leases, partially offset by declines in commercial and industrial LHFI and state and other political subdivision LHFI.
The loan portfolio is diversified across several categories, with the largest concentrations in loans secured by nonfarm, nonresidential properties at 27.0% of total loans, loans secured by 1-4 family residential properties at 17.6%, and commercial and industrial loans at 14.0%.
On the deposit front, Trustmark reported total deposits of $15.11 billion as of December 31, 2024, a decrease of $461.60 million, or 3.00%, compared to the prior year. This decline was largely attributed to intentional reductions in public interest checking accounts and brokered deposits, as the company focused on managing its deposit costs. Excluding these managed declines, Trustmark's core deposits, including personal and non-personal accounts, increased by $265.20 million, or 2.10%, year-over-year.
The deposit base is diversified, with 20.3% in noninterest-bearing demand deposits and 79.7% in interest-bearing deposits, including interest-bearing demand, savings, and time deposits. The company also utilizes other funding sources, such as federal funds purchased, securities sold under repurchase agreements, and FHLB advances, to complement its deposit base and manage liquidity.
Margin and Earnings Dynamics
Trustmark's net interest margin (NIM) for the full year 2024 was 3.51%, an increase of 19 basis points compared to 2023. This improvement was primarily driven by increases in the yields on the LHFS and LHFI portfolios, reflecting the higher interest rate environment, as well as the restructuring of the securities portfolio during 2024. The company's net interest income for 2024 totaled $584.40 million, an increase of $31.50 million, or 5.70%, compared to the previous year.
Noninterest income for 2024 totaled a negative $23.40 million, a decrease of $171.90 million compared to 2023. This decline was primarily attributable to the $182.80 million loss recorded on the sale of available-for-sale securities during the second quarter of 2024, partially offset by increases in other, net and wealth management income.
On the expense front, Trustmark's noninterest expense for 2024 was $485.70 million, a decrease of $10.00 million, or 2.00%, compared to the prior year. This reduction was driven by the absence of the $6.50 million litigation settlement expense recorded in 2023, as well as declines in services and fees and salaries and employee benefits, partially offset by an increase in other expense.
Provision for Credit Losses and Asset Quality
Trustmark's Provision for Credit Losses (PCL) on Loans Held for Investment (LHFI), excluding the $8.63 million PCL related to the sale of 1.00-4.00 family mortgage loans, totaled $37.30 million for 2024, compared to $27.40 million in 2023. This increase was primarily due to credit migrations, changes in the macroeconomic forecast, and an increase in specific reserves for individually analyzed credits.
The company's asset quality metrics remained strong, with nonaccrual LHFI totaling $80.11 million, or 0.61% of total LHFI, as of December 31, 2024, compared to $100.01 million, or 0.77%, a year earlier. The Allowance for Credit Losses (ACL) on LHFI represented 1.22% of total LHFI and 200.06% of nonaccrual LHFI at the end of 2024.
Liquidity
Trustmark's liquidity position remained robust throughout 2024, supporting the company's ability to meet its financial obligations and fund its operations. The company maintained a diverse mix of funding sources, including core deposits, wholesale funding, and access to various liquidity facilities. This strong liquidity position enabled Trustmark to navigate market volatility and support its lending activities while maintaining a conservative risk profile.
As of December 31, 2024, Trustmark reported cash of $567.25 million and $4.29 billion in available credit capacity with the Federal Home Loan Bank of Dallas. The company's debt-to-equity ratio stood at 0.22, reflecting a conservative approach to leverage.
Capital Strength and Shareholder Returns
Trustmark's capital position continued to strengthen in 2024, with the Common Equity Tier 1 (CET1) ratio reaching 11.54% and the total risk-based capital ratio expanding to 13.97% as of December 31, 2024. This solid capital base enabled the company to resume its share repurchase program, with $7.50 million, or approximately 203,000 shares, repurchased during the fourth quarter of 2024.
In addition, Trustmark's Board of Directors announced a 4.30% increase in the regular quarterly cash dividend to $0.24 per share from $0.23 per share, raising the indicated annual dividend rate to $0.96 per share. This action reflects the company's confidence in its financial performance and commitment to delivering value to its shareholders.
Business Segments
Trustmark operates through two main reportable segments: General Banking and Wealth Management.
The General Banking Segment offers a full range of commercial banking services to corporations and other business customers, including financing for commercial and industrial projects, income-producing commercial real estate, owner-occupied real estate, and construction and land development. This segment also provides deposit services, treasury management services, and mortgage banking services for both commercial and consumer customers.
The Wealth Management Segment provides specialized fiduciary services and expertise in wealth management, trust, investment, brokerage, qualified and non-qualified retirement plan services, and custodial services for corporate and individual customers. Services include the administration of personal trusts and estates, investment and individual retirement account management, and financial and estate planning.
Securities Portfolio
Trustmark's securities portfolio totaled $3.03 billion at December 31, 2024, primarily composed of U.S. Treasury securities, government agency obligations, and mortgage-backed securities. This composition reflects the company's focus on high-quality, liquid assets. The weighted-average life of the securities portfolio was 4.8 years at the end of 2024.
Industry Trends and Competition
The banking industry in the southeastern U.S. has experienced moderate economic growth and a gradual rise in interest rates. Competition remains intense among both traditional banks and fintech providers. Trustmark's diversified business model, strong capital position, and disciplined risk management have enabled the company to navigate this challenging operating environment and continue delivering solid financial performance for its shareholders.
Outlook and Guidance
For the full year 2025, Trustmark is guiding for low-single-digit growth in both loans held for investment and deposits, excluding brokered deposits. The company expects its net interest margin to be in the range of 3.75% to 3.85%, with net interest income projected to increase in the mid to high-single-digits.
On the credit front, the company anticipates the Provision for Credit Losses, including unfunded commitments, to remain stable relative to 2024. Noninterest income from adjusted continuing operations is expected to increase in the mid-single-digits, while noninterest expense from adjusted continuing operations is also projected to rise in the mid-single-digits, reflecting the company's continued investments in technology, risk infrastructure, and new production personnel.
Trustmark expects deposit costs to decline by about 14 basis points to 1.84% in Q1 2025. The company has a $100 million share repurchase program in place for 2025 but will prioritize organic lending.
Trustmark's strategic focus on organic growth, disciplined expense management, and prudent capital allocation positions the company well to navigate the evolving economic landscape and deliver enhanced value to its shareholders.