Good morning, ladies and gentlemen, and welcome to Trustmark Corporation’s Second Quarter Earnings Conference Call. As a reminder, this call is being recorded. It is now my pleasure to introduce Mr. Joey Rein, Director of Corporate Strategy at Trustmark. Please go ahead, sir.

Good morning. I’d like to remind everyone that a copy of our second quarter earnings release as well as the slide presentation that will be discussed on our call this morning is available on the Investor Relations section of our website at trustmark.com. During the call, management may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and 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 Duane Dewey, President and CEO of Trustmark Corporation.

Thank you, Joey and good morning everyone. Thank you for joining us this morning. With me are Tom Owens, our Chief Financial Officer; Barry Harvey, our Chief Credit and Operations Officer; and Tom Chambers, our Chief Accounting Officer. The second quarter was a very active and productive quarter for Trustmark. So we have a lot to share with you this morning on multiple fronts. During the quarter, we completed significant actions to increase earnings, enhance our profitability profile, reduce risk and strengthen capital flexibility. We had 4 significant non-routine items as outlined on Slide 3. First, we completed the previously announced sale of Fisher Brown Bottrell Insurance, capitalizing on attractive multiples of 5.9x revenue and 28x net income. We recognized an after-tax gain on sale of $171.2 million. Second, we sold $1.6 billion of AFS securities with an average yield of 1.36%, generating a loss of $182.8 million. We then purchased $1.4 billion of AFS securities with an average yield of 4.85%, which will significantly boost our net interest margin and enhance our profitability profile. Tom Owens will provide some additional color on this restructuring process that took place in late May and throughout much of June. Third, we proactively reduced the risk profile of our 1-4 family mortgage portfolio. During the quarter, we sold mortgage loans that were 3 payments or more delinquent and/or non-accrual at the time of selection, totaling $56.2 million. The mortgage loan sale resulted in an after-tax loss of $10.1 million, and this sale drove a $54.1 million reduction in non-performing loans. Finally, we exchanged our Visa Class B-1 shares for B-2 shares and Class C common stock. The exchange of Class C shares resulted in a $6 million after-tax gain during the quarter. With all the moving parts during the quarter, we developed Slide 4 to illustrate the strength of the quarter and provide additional details. The first column reflects reported earnings in the second quarter of $73.8 million or earnings of $1.20 per diluted share. The next column reflects that we recognized $171.2 million or $2.70 per diluted share on the sale of the agency. During the 2 months of the quarter, we owned the agency, we recognized $3.2 million in net income. Backing out the discontinued operations associated with the agency, the restructuring of the AFS securities portfolio, the mortgage loan sale, and the Visa share exchange, adjusted earnings from continuing operations in the second quarter was $40.5 million or $0.66 per diluted share. Our performance in the second quarter also compares favorably to net income from continuing operations in the prior quarter, which is shown on the right side of the chart. We’ve discussed the non-grouping transactions during the quarter. Now, let’s turn to Slide 5 for a recap of the strong fundamental accomplishments during the quarter. Loans held for investment increased $98 million linked-quarter, net of the mortgage sale, and $541 million year-over-year. Deposit growth exceeded loan growth, increasing $124 million linked-quarter, and $549 million from the prior year. A significant contributor to our performance in the quarter was the growth in net interest income, which increased $8 million or 6% linked-quarter to $144 million. The net interest margin expanded 17 basis points during the quarter to 3.38%. Revenue from continuing operations increased 4.1% linked-quarter, and non-interest income from continuing operations represented 21.3% of total revenue. Diligent expense management continues to be a focus of the organization, and non-interest expense declined 1.1% linked-quarter. Given the mortgage loan sale, key takeaways for us include non-accrual loans declining 55% and net charge-offs, excluding the mortgage loan sales, totaled $3 million, representing 9 basis points of average loans. The allowance for credit losses represents 1.18% of loans held for investment and 840% of non-accrual loans, excluding individually analyzed loans at June 30. Trustmark’s capital ratios expanded meaningfully during the quarter as tangible equity to tangible assets increased 105 basis points to 8.52%, while CET1 ratio expanded 80 basis points to 10.92%, and total risk-based capital expanded 87 basis points to 13.29%. The second quarter was fundamentally strong, and the actions taken during the quarter were designed to enhance our profitability profile going forward. Turning to Slide 6, we expect loans held for investment and deposits to grow at single digits for the full year 2024. Securities balances are expected to remain stable as we reinvest cash flows. We anticipate net interest income to increase low-single digits in 2024, reflecting continuing asset growth, stabilizing deposit costs and accretion from balance sheet repositioning, resulting in full year 2024 net interest margin of approximately 3.4% based on the market implied forward interest rates. We expect the net interest margin to be in the range of 3.55% to 3.60% in the second half of 2024. From a credit perspective, the provision for credit losses, including unfunded commitments, is dependent upon credit quality trends, current macroeconomic forecasts, and future loan growth. Net charge-offs from continuing operations are expected to remain below the industry average based on the current economic outlook. Non-interest income from continuing operations in the second half of 2024 is expected to increase low-single digits compared to the first half of 2024. Likewise, non-interest expense from continuing operations is also expected to increase low-single digits in the second half of the year when compared to the first half of 2024. We will continue our disciplined approach to capital deployment with a preference for organic loan growth, potential market expansion, M&A, or other general corporate purposes depending on market conditions. We also continue to assess the Board of Directors approved 2024 share repurchase program as the market and balance sheet dictate. At this time, Barry Harvey is going to provide some color on our loan portfolio and credit quality.

Thank you, Duane. I’ll be glad to. Turning to Slide 7, loans held for investment totaled $13.2 billion as of June 30. That’s an increase, as Duane mentioned, of $97 million for the quarter. Loan growth during Q2 came from commercial real estate and the equipment finance line of business. We expect loan growth of low-single digits for 2024. As you can see, our loan portfolio remains diversified, both from a product standpoint as well as geography. Looking onto Slide 8, Trustmark’s CRE portfolio is 94% vertical with 69% in the existing category and 31% in construction land development. Our construction land development portfolio is 82% construction. Trustmark’s office portfolio, as you can see, is very modest at $279 million outstanding, which represents only 2% of our overall loan book. The portfolio was comprised of credits with high-quality tenants, low lease turnover, strong occupancy levels, and low leverage. Onto Slide 9, the bank’s commercial portfolio is well diversified, as you can see across numerous industries, with no single category exceeding 15%. Looking at Slide 10, our provision for credit losses for loans held for investment was $23.3 million during the second quarter. Excluding the mortgage loan sale, the provision for credit losses for loans held for investment was $14.7 million, which was driven by two parts: one, loan growth as well as risk rate migration. The provision for credit losses for off-balance sheet credit exposure was a negative $3.6 million, which resulted primarily from a decline in unfunded CRE commitments. At June 30, the allowance for credit losses for loans held for investment was $155 million. Looking onto Slide 11, we continue to post solid credit quality metrics. The allowance for credit losses represents 1.18% of loans held for investment and 840% of non-accruals, excluding those that are individually analyzed. In the second quarter, net charge-offs totaled $11.6 million. Excluding the previously referenced mortgage loan sale, net charge-offs totaled $3 million or 9 basis points of average loans. Both non-accruals and non-performing assets decreased significantly during the quarter as a result of the mortgage loan sale. Duane?

Okay. Thanks, Barry. Now Tom Owens will cover deposits, net interest margin, and non-interest income.

Thanks, Duane, and good morning, everyone. Turning to deposits on Slide 12. We had another good quarter, which continued to show the strength of our deposit base. Deposits totaled $15.5 billion at June 30, a linked-quarter increase of $124 million or 0.8%, and a year-over-year increase of $549 million or 3.7%. The linked-quarter increase was driven by growth of $114 million in non-interest-bearing DDA balances, which remained at 20% of our deposit base. Time deposits also increased by $90 million linked-quarter, driven by $77 million of growth in personal CDs and $13 million of growth in brokered CDs. As of June 30, our promotional and exception-priced time deposit book totaled $1.5 billion with a weighted average rate paid of 4.98% and a weighted average remaining term of about 5 months. Our brokered deposit book totaled $600 million at an all-in weighted average rate paid, which remained at about 5.43%, and the weighted average remaining term remains at about 3 months as of June 30. Our cost of interest-bearing deposits increased by 1 basis point from the prior quarter to 2.75%, down from the 7 basis point linked-quarter increase in the second quarter. Turning to Slide 13, Trustmark continues to maintain a stable, granular, and low-exposure deposit base. During the first quarter, we had an average of about 460,000 personal and non-personal deposit accounts, excluding collateralized public fund accounts, with an average balance per account of about $27,000. As of June 30, 64% of our deposits were insured and 14% were collateralized, meaning that our mix of deposits that are uninsured and uncollateralized was essentially unchanged linked-quarter at 22%. We continue to maintain substantial secured borrowing capacity, which stood at $6.1 billion at June 30, representing 179% coverage of uninsured and uncollateralized deposits. Our second quarter total deposit cost was unchanged linked-quarter at 2.18%, which continues to represent a cumulative beta cycle to date of 40%. The favorable variance to prior guidance was driven by pricing actions we’ve taken during the first quarter, which gave us a running start toward a lower deposit cost in the second quarter. Deposit costs have, however, continued to increase monthly, and as a frame of reference for the guide to 2.27% in the third quarter, which would bring the cycle to beta to 44%. Deposit cost is approximately 2.25% month to date in July. Turning our attention to revenue, on Slide 14, net interest income FTE increased $8.1 million linked-quarter, totaling $144.3 million, which resulted in a net interest margin of 3.38%. Net interest margin increased by 17 basis points linked-quarter, driven by 13 basis points of accretion from loan rate and volume and 5 basis points of accretion from the securities portfolio restructuring. With respect to the loan rate accretion, loan fees normalized during the second quarter from the unusual drop we experienced during the first quarter. Absent the linked-quarter volatility in loan fees, loan yields continue to trend higher by mid-single digit basis points each quarter. As Duane indicated, we anticipate net interest margin of 3.55% to 3.60% in the second half of 2024, with the increase driven by the securities portfolio restructuring, which was completed during June, resulting in an anticipated securities portfolio yield of approximately 3.5% going forward. We were pleased with the execution of the securities portfolio restructuring in what was a challenging interest rate environment, and we did achieve our objectives with the restructuring of extending effective duration from about 3.7 years to about 4.2 years. We adjusted the mix to achieve a more consistent ladder of cash flows over time, while also improving the stability of cash flows to changes in interest rates, picking up approximately 350 basis points of yield between securities purchased and securities sold. Turning to Slide 15, our interest rate risk profile remained essentially unchanged at June 30. We continue to have substantial asset sensitivity driven by loan portfolio mix with 51% variable rate coupon. During the second quarter, we entered into a $60 million notional of forward starting interest rate swaps, which brought the swap portfolio notional at quarter end to $1.165 billion, with a weighted average maturity of 3 years and a weighted average received fixed rate of 3.23%. We also entered into a $30 million notional of forward starting floors, which brought the floor portfolio notional at quarter end to $150 million with a weighted average maturity of 4.3 years and a weighted average SOFR rate of 3.68%. The cash flow hedging program substantially reduces our adverse asset sensitivity to potential downward shock in interest rates. Turning to Slide 16, non-interest income from adjusted continuing operations totaled $38.2 million in the second quarter, a $1.1 million linked-quarter decrease and approximately $400,000 year-over-year increase. The linked-quarter decrease was driven by a $3.4 million increase in negative net hedge ineffectiveness, which was driven by a higher assumed discount rate applied to mortgage servicing cash flows and asset valuation methodology. Excluding the increase in negative net hedging effectiveness, the linked-quarter increase in total non-interest income would have been $2.3 million or 5.8%, and the year-over-year increase would have been $3.6 million or 9.4%. And now I’ll ask Tom Chambers to cover non-interest expense and capital management.

Thank you, Tom. Turning to Slide 17, we’ll see a detail of our total non-interest expense. During the second quarter, non-interest expense continued to decline and totaled $118.3 million for a linked-quarter decrease of $1.3 million or 1.1%. This decline was mainly driven by a decrease in salary and benefits of $600,000, resulting in reduced compensation expense, and a seasonal decline in payroll taxes, offset by increased commission expense driven by increased revenue. Other expenses decreased by $900,000, resulting from lower operational losses during the quarter. Turning to Slide 18, Trustmark remains well positioned from a capital perspective. As Duane previously mentioned, our capital ratios remain solid with a common equity Tier 1 ratio of 10.92%, a linked-quarter increase of 80 basis points, and a total risk-based capital ratio of 13.29%, a linked-quarter increase of 87 basis points. Although we currently have a $50 million share repurchase program in place, our priority for capital deployment continues to be focused on organic lending. As Duane indicated, we will continue to evaluate the share repurchase program as the market and our capital levels dictate. Back to you, Duane.

Great. Thanks, Tom. A very, very busy quarter for us here. So we’ll now open the floor up for questions that you may have.

And the first question will come from Catherine Mealor with KBW. Please go ahead.

Thanks. Good morning.

Good morning, Catherine.

I wanted to start on some of the guidance that you provided, which is really helpful just to look at it on continuing operations and then kind of a growth rate to the back half of the year. So thank you for how you laid that out. I’ll begin with expenses. If you take the first half of the year and then grow that at a low-single digit pace, I’m getting kind of a run rate in the back half of the year around kind of $122 million, $123 million a quarter, which is a little bit higher than the first half. I just want to make sure that, that’s around what you’re thinking and where some of that growth is coming from.

Catherine, I’ll start. Tom, Chambers can continue on. But yes, I think in general, some of the things that occurred in the first quarter and second quarter will not continue into the second half of the year. So, we do think we will get a little bit of growth comparing the first half to second half, and it is in the very low-single digit range. Tom can elaborate a little more. But yes, I think you are about right with your numbers. Tom?

Yes. Duane, thank you. I believe the biggest driver of the increase in the second half of the year is we changed our merit increase structure. We used to have merit increases hit during March of the year, and we delayed that this year to hit in July. So, the first half of the year did not have merit increases in our salaries, and the second half of the year will. So, that will be the biggest.

But it still keeps it in that low – very low-single digit range.

Okay. Great. Everything else was – made perfect sense. I am actually not going to ask a margin question this quarter. So, Tom, I am going to – you are off the hook this quarter from me. My second question is on the CRE. It looks like you sold the NPAs that then built the reserve, and it looks like you put a lot of that in your CRE reserve. Just curious if that’s just from pure conservatism, or was there any negative migration in special mentioned or classified within your commercial real estate portfolio that drove that?

Hey Catherine, this is Barry.

Good morning Barry.

And I will try to speak to both of those. Good morning. The first thought process as it relates to the selling of the mortgage book that we did was, those are – that’s most all that’s 30-year paper. And it’s – once it gets into that category of non-accrual and there is a high roll rate from prepayments down and more, it’s kind of sticky and hard to remove. And we thought in today’s environment, while it’s still attractive, it would be a good time to go ahead and give ourselves some additional room as it relates to NPLs and NPAs. As it relates to the – your second part of your question regarding the risk rate migrations driving some of the provisioning, that is correct. I mean we like all banks on the CRE side are beginning to see some risk rate migration as it relates to predominantly special mention. And occasionally, there is some that’s going to be substandard. We don’t really see this as anything other than a cycle at this stage that we are flowing through. But of course, when you have the rate increases we've had, coming out of what was put on the books in the second half of really all of ‘23 and then most all of ‘22, if not all of ‘22, that population is going to be more challenged just because it was made in the lowest rate environment. And then now it’s functioning because all of ours are variable rate that I am referencing is functioning and it’s always been functioning in the higher rate environment. So, there is more stress on the category of lending not just for Trustmark, but for anybody who was booking those type of CRE loans during that window of time that are now beginning to reach CO, and in many cases beginning to stabilize. There is the need to continue to support those projects by the sponsor, by the guarantors, by the borrowers in order to give them a little bit more time to fully stabilize. It’s also a function of most construction projects for quite a while; very seldom do they finish on time. So, they need a little more time to fully stabilize, and sometimes that’s 6 months, sometimes that’s 12 months. So, it’s all those factors that are going into making sure we are staying on top of our credits, making sure we are grading them appropriately at all times. I wouldn’t call it conservatism. I would just say that we’re very focused on making sure that we are looking at as much of the book as often as we can to make sure the grades are right at all times, which would lead you to believe the ACL is accurate at all times as well.

Okay. That’s great. Do you have the balances of increase in criticized or classified?

We don’t report those in our earnings traditionally. That will be – of course, they will be in the call report.

Okay. That’s great. We can wait for that. So, it seems like the loss content perhaps is still arguably low on these projects, but you are more just migrating them to special mention, if there needs to be support from the guarantor just because of the project delay?

That’s correct. That’s a correct assessment, Catherine. We don’t see our – this quarter charge-offs were $3 million when you exclude the mortgage sale, which is obviously one-time, that’s versus $4 million last quarter. So, we – and we don’t really see a trend developing there that’s concerning. We don’t see a trend developing in our NPAs or NPLs of concern, but we do want to make sure the grading is correct on all of our credits. We would expect those to cycle, like especially if we have got any type of rate reductions in the second half of this year or next year, obviously, any of those would be some welcome relief in terms of trying to meet those debt service coverage ratio requirements.

Great. Thank you very much for the color Barry.

Our next question will come from Gary Tenner with D.A. Davidson. Please go ahead.

Thanks. Good morning.

Good morning Gary.

I wanted to ask about the guide on deposit costs for the third quarter. I guess I am a little surprised that it’s – the guidance is that much higher, just given the success on the non-interest bearing front in the second quarter and generally moderated – moderating deposit cost increases in the industry overall. So, you had alluded to some actions you took to set yourselves up better for lower rates. I am curious kind of what impact that’s having on the third quarter outlook.

Yes. Good morning Gary, this is Tom Owens, so good question. Coming into 2024, early in the first quarter, we began to take some actions to try and rationalize our deposit costs, particularly as it related to maturing promotional CDs as well as some rates on non-maturity products. And what we found – I don’t want to say that was experimental, right. But I think all banks at this point are focused on their deposit base and what the opportunities are to try and rationalize cost. And so we did try some of that in the first quarter. And what we found is we were driving more deposit mix change and more deposit disintermediation than we would have liked. And so we got into approximately mid-March, and we really sort of pivoted away from that. And so that’s what I mean by the actions we had taken in the first quarter, which set us up for a good running start, so to speak, towards beating on the guide that we had put out there for the second quarter. But at the same time, knowing that those deposit costs would continue to march higher going forward, and that’s what we have seen. So, I really encourage you and analysts and investors to think in terms of whether we are talking about loan yield or deposit cost, it’s – think in terms of mid-single digit increases on a normalized basis. We had a sort of a hiccup in terms of our loan yields in the first quarter on a linked-quarter basis, which was the result of sort of an unusual decrease in loan fees. That normalized for us here in the second quarter, right. And so you saw what is seemingly a disproportionately large increase on a linked-quarter basis in loan yield in the second quarter; that was normalization. And our guide in terms of deposit costs for the third quarter is also normalization. We are in relative equilibrium at this point on a month-over-month basis and on a linked-quarter basis in terms of the increase in loan yield versus the increase in deposit costs.

Thanks Tom for the answer. I guess if I were to boil it down to thinking that the third quarter outlook on deposit cost is almost – has basically been normalized and kind of skipped over the second quarter from a re-pricing perspective, is that kind of what it was…?

Absolutely, and that’s exactly right, Gary. And that’s why in my prepared comments, I gave you the reference point of month-to-date deposit costs here in July of 2.25%.

Okay. I appreciate that. And then if I could ask a follow-up just on capital, you have talked about kind of the priorities of organic growth, etcetera. But pushing an 11% CET1 ratio, I wonder if you could talk about capital really more from an M&A perspective, kind of where things are in terms of conversations? Has there been any sort of increase in conversations in your footprint and activity levels?

I will start. Others can add if they need to. As it relates to M&A, I mean first of all, yes, there is more – there is a little more activity out there, things we are hearing about and things that are being presented to us as opportunities, etcetera. So, we are seeing some increased activity there. In our minds, I think we wanted to get through this quarter with a lot of noise and activity, and all these different one-time deals kind of let the dust settle, and then really moving into 2025, more thinking about the M&A space in a little more focus and the like. But at the end of the day, I do believe there is a little more activity or at least a lot of different discussions and thought processes going on across our marketplace.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Duane Dewey for any closing remarks. Please go ahead sir.

Thank you again for joining us this morning. Very, very busy quarter for us, and we are very excited about the second half of 2024. And we look forward to our third quarter call in October. So, look forward to catching up then. Thank you.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.