Good morning, ladies and gentlemen, and welcome to Trustmark Corporation's first quarter earnings conference call. At this time, all participants are in a listen-only mode. Following the presentation this morning, there will be a question and answer session. To ask a question, you may press star, then one on a touchtone phone. To withdraw your question, please press star, than two. As a reminder, this call is being recorded. It is now my pleasure to introduce Mr. Joey Rain, Director of Corporate Strategy at Trustmark. Please go ahead.

Good morning. I'd like to remind everyone that our first quarter earnings release and the presentation that will be discussed on our call this morning are available on the investor relations section of our website at trustmark.com. During our 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 introduce Duane Dewey, President and CEO of Trustmark. Thank you, Joey, and good morning,

everyone. Thank you for joining us this morning. With me are Tom Owens, our Chief Financial Officer, and Barry Harvey, our Chief Credit and Operations Officer. We continue to build upon a strong momentum from our earnings in 2025 and are pleased with our strong performance in the first quarter of 2026 our results reflect continued loan growth stable credit quality and an attractive core deposit base in addition we experience continued growth and non-interest income while non-interest expense remained unchanged reflecting our continued focus on expense management in our presentation this morning I will provide a summary of our performance and discuss forward guidance before moving to your questions now turning to slide three financial highlights our first quarter results reflect continued significant progress across the organization net income total 56.1 million dollars representing diluted EPS of 95 cents a share this level of earnings resulted in a return on average assets of 1.2 percent and a return on average tangible equity of 12.58 percent from the balance sheet perspective loans held for investment increased 203.7 million dollars or 1.5 percent link quarter and 636.5 million dollars or 4.8 percent year over year our loan portfolio remains well diversified by loan type and geography Our deposit base expanded $212.7 million, or 1.4% length quarter, driven by seasonal increases in public deposits. Year-over-year deposits increased to $631.8 million, or 4.2%, driven by growth in personal and commercial deposits. The cost of our total deposits in the first quarter was 1.63%, a decrease of nine basis points from the prior quarter. Our strong cost-effective core deposit basis is a continuing strength of trust marks. During the first quarter, we repurchased 19.8 million or approximately 477,000 shares of stock, stock, which represent 0.8% of shares outstanding at year-end 2025. As previously announced, we have authorization to repurchase up to $100 million of Trustmark common shares during 2026. This program continues to be subject to market conditions and management discretion. Revenue in the first quarter totaled $203 million, a seasonal decrease of 0.6% from the prior quarter and an increase of 4.2% from the same quarter in the prior year. Net interest income, fully tax equivalent in the first quarter, totaled $163.5 million, which produced a net interest margin of 3.81%, which is unchanged from the prior quarter. Non-interest income in the first quarter totaled $42.3 million, up 2.7% from the prior quarter represents 20.9% of total revenue. Non-interest expense in the first quarter totaled 132.2 million dollars unchanged from the prior quarter and up 8.1 million year-over-year. Diligent expense management continues to be a focus for the organization. From a credit perspective, net charge offs in the first quarter or 1.3 million dollars representing four basis points of average loans in the first quarter the net provision for credit losses in the first quarter totaled 2.7 million at the end of the first quarter the allowance for credit losses represented 1.16 percent of loans held for investment again very solid credit performance we have maintained our strong capital position as reflected by our CET1 ratio of 11.7 percent and our total risk-based capital ratio of 14.37 percent at March 31, 2026. The board declared a regular quarterly dividend of 25 cents per share payable June 15th of 2026 to shareholders a record on June 1st. Now let's focus on our forward guidance, which is on page 15 of the deck. In January, we provided full-year guidance for 2026, as well as 2025 benchmarks upon which the guidance is based. This morning, we are affirming the guidance previously provided. We expect loans help for investment to increase single digits for the full year 2026 and deposits, excluding broker deposits to increase mid-single digits as well. Security balances are expected to remain stable as we continue to reinvest cash flows. We anticipate the net interest margin to be in the range of 380 to 385 for the full year, while we expect net interest income to increase mid-single digits. From a credit perspective, the total provision for credit losses, including off-balance sheet credit exposure is expected to normalize while non-interest income for the full year 2026 is expected to increase mid single digits as is non-interest expense we will continue our disciplined approach to capital deployment with a preference for or organic loan growth potential market expansion M&A or other general corporate purposes depending on market conditions at this time that will

We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Catherine Mueller with KBW. Please go ahead. Thanks. Good morning.

Hey, good morning, Catherine.

It was nice to see the guidance was generally unchanged. And just thinking about the margin, we're taking rate cuts out of our estimates generally across the board. It feels like your NIM guide is still for that to remain pretty steady in the 380 to 385 range. range can you just talk about some puts and takes within the margin you know without rate cuts maybe where you're seeing new loan yields and where you're seeing new uh deposit costs uh coming in

just help us model that going forward thank you well good morning Catherine this is Tom good morning so um yes uh we as you know base our guidance on market implied forwards which now effectively have removed any further Fed rate cuts this year and so you know I think the most simple way to think about it to start is you know you look at our guidance on deposit cost we're anticipating a few basis points of decline here in the second quarter on a linked quarter basis we're also anticipating a similar magnitude of decline in loan yields and then in the background you've got securities yields which will continue to grind a little bit higher from the ongoing repricing of HTM securities and so you know I think when you net that all out you're probably looking at a basis point or so of accretion on a linked quarter basis each quarter this year is what we're currently modeling we're at 381 in the first quarter and so that gets you to the middle of the range 383 or so as far as puts and takes I mean it's it's you know when you look at the industry data loan growth continues to outpace deposit growth and so it is it's really remained a competitive environment for deposits when you look at what will be driving most of the linked quarter decline in deposit cost we do have a bit more benefit will get there from CD repricing but then in the background you've got sort of a countervailing you know migration for exception pricing on money market accounts for example so you know I think when you add all that up we're talking fractions of a basis point probably in terms of you know which way we break on deposit cost which way we break on loan yield which way we break on net interest margin great and it's just a bigger

picture question you had really great improvement in profitability throughout 25. it feels like looking at your guidance for or maybe more steady in 26 but just on a bigger balance sheet as growth is improving and is that the way to think about it or are there are there levers you know that you see where we can actually get the roa and roe moving um moving higher this year

well you know when you think about pre-provision that this is tom continuing on here uh when you think about pre-provision net revenue uh as we've guided in the past you know mid single digit balance sheet growth with a stable to slightly expanding net interest margin should get a solid mid-single-digit PPNR growth. I know when you look at the headline in terms of what we've published, first quarter 26 actual versus first quarter 25 actual, for example, PPNR looks pretty flat. But, you know, there's always puts and takes, you know, and things like non-interest income. I'll tell you that if you adjust for some lumpy items we had in the year-ago quarter and lumpy items this quarter, you end up closer to 3% growth year over year than down slightly. And when you include that, you might end up at more like a 5% growth in revenue. I'd say the same thing on the expense side. We're probably doing better on the expense side than what you see looking at the numbers. We've made strategic investments in revenue producers, particularly in growth markets. I think if you adjust it out for that, you'd probably be more in the neighborhood of 5.5% in terms of expense growth year over year, first quarter. So that gets you closer to neutral in terms of operating leverage. Of course, we're trying to drive positive operating leverage, and that's part of those investments that we're making in revenue producers, particularly in our gross market. So I think that's the lever, ultimately, that can drive greater profitability.

Catherine, I'm sorry, just quickly. One other somewhat of a wild card in that mix is the mortgage business, you know, where we've had pretty negative net hedge ineffectiveness over an extended period of time here. As the market adjusts, as rates adjusts, et cetera, is that that is a wild card in the mix we can't forecast it necessarily it's difficult to pinpoint but you know if the mortgage business turns around and or the net negative hedge and effectiveness is different than it has been in the past that can make a fairly significant swing and non-interest income which then as you know affects your question so I just add that as a as a wild card in the

next a bit. Great. Yep. Thank you for that reminder. And congrats on your new role, Tom.

We'll miss NIM guidance from you going forward. Thank you, Catherine. Really, I greatly appreciate

that. Really excited about this next phase. The next question comes from Fetty Strickland

with Hovod Group. Please go ahead. Hey, good morning. Just wanted to stick with the non-interest income discussion, specifically on the wealth side. I know equity markets were a little bit more of a challenge through quarter end, but can you provide any sort of update on what you're seeing so far, just in terms of AUM and maybe an outlook for that line in the second quarter?

I'll kick in there, Fetty. Good morning. You know, it is dependent upon market appreciation and so on, which dramatically affects revenue in both the true wealth trust business as well as the brokerage side so that those are factors that are somewhat out of our control but then you also add in new business development and the like which is actually fairly solid we as we talk about our growth market initiatives that we've mentioned here in the last several calls is that includes the wealth management business which includes adding new production talent in high growth potential markets we're optimistic there we've seen improved production out of that side of the equation the second part I'd add is that we made a platform change last year in our brokerage business we went from an LPL platform to a Raymond James platform we in the latter half of 2025 spent a lot of time focused on that transition and are now fully stabilized there and have fairly solid expectations for improved performance out of our brokerage division and a good chunk of that is managed assets so that is a bit dependent on the market as well but still we are expecting continued progress and stabilization on that side of the equation so we're comfortable with the mid-single digits guide, but see some potential there.

Appreciate that. That's helpful. And just switching gears to capital, you know, I guess specifically in the share repurchase side, I think last quarter you talked about maybe looking at 67 million worth of repurchases this year. We've done, I think, about 20 million so far. Should we expect any sort of change in the cadence of repurchases throughout the next couple of quarters?

So, Fanny, this is Tom Owens. So, yeah, we were really pleased with our ability to deploy nearly $20 million via share repurchase in the first quarter while supporting over $200 million of loans held for investment growth while maintaining our capital ratios, essentially, very little change in our capital ratios on a linked quarter basis. I would say that, you know, we kind of leaned into it, so to speak, in the first quarter, given the opportunity, the downdraft in bank stock prices. We liked the price. We feel good about that. You know, I think it also demonstrates our ability to deploy that amount of capital via share repurchase and support robust loan growth. So I think if you think in terms of $20 million per quarter or $80 million for the year, that's probably the high end, assuming that we do continue to generate the same level of consistent loan growth. And on the low end, I would probably mark that up a little bit. I think we're probably thinking $70 to $80 million deployment for the full year.

Thanks so much. I'll step back. Thank you.

The next question is from Michael Rose with Raymond James. Please go ahead.

Hey, good morning, guys. Thanks for taking my questions. Just wanted to start on loan growth. Looks like you guys had a really good quarter of C&I loan growth, obviously some paydowns and some other places. If I annualize this quarter, it's about 6%. That'd be kind of the top end of the mid-single-digit range. So I guess what I'm trying to figure out is, you know, the effects of competition and or pay downs you know expected to maybe potentially slow the growth from here i'm just trying to understand maybe why you know in a seasonally slower you know first quarter you know why we wouldn't see that uh that guide raised and if we could just um you know get a sense from you guys for you know production and pay downs as we move forward thanks and michael this is barry um

yeah you know as you can tell we we did have um nice growth especially in the cni side and it was It was very diversified in terms of the different growth industries that we saw as well as the fact that on the CRE side we were up 41 million. Really to the heart of your question, we did have a meaningful amount of maturities on our CRE book scheduled for the first quarter. A large majority of those did not occur and they migrated either later in the 26 or out to 27, 28. So we do still have headwinds that we're going to have to deal with over time, but that's the key for us is to the more spread out that we can see those payoffs coming, the better we're able to deal with them in terms of new production, new fundings, et cetera, throughout the year. So I think we're fully expecting without any type of catalyst that would bring about a large increase in payoffs that what we saw in the first quarter will continue throughout the year and you'll continue to see projects who need more time to fully stabilize to get the best price when they go to market to sell the project. Take that time. And then what you always see, Michael, is a lot of projects on the CRE side start off out of the gate with delays during the permitting, construction, the hit rock, whatever the case may be, and so there is a need for some additional time beyond just the scheduled maturity, at least the initial scheduled maturity, for them to fully stabilize. And we're seeing that today. So we're hopeful that the payouts which will eventually come from our CRE book will be a little bit spread out as they were during the first quarter and push on into other quarters, it be 2026 or into 2027 2028 Michael meanwhile as as you noted and Barry

noted CNI production pipelines are strong we continue to see opportunities across across the full portfolio CNI's been been good and then as we talked in the last couple quarters we continue to be focused on adding new production talent across the franchise it's a little bit slower in the first quarter in terms of new talent but uh we continue to to uh focus in that area in high growth markets and so we're as as very suggested with good solid pipelines good solid new production continued production on the cre space to offset some of these uh some of the headwind from paydowns is what we're focused on achieving

Okay, that's a great caller. Very helpful. Thanks for that. Maybe if I can just ask separately on credit, you did have a little bit of tick up in MPLs. I think it was related to one loan, just looking to get some color there. Looks like the reserve came down a little bit, so just was looking for any sort of updates and past dues or criticized classifieds that might have driven that allowance reduction. Thanks.

Yeah, our coverage moved up from $115 to $116 as far as the reserve is concerned. And the net provision, of course, as you know, is $2.74 million. And then on the funded side, we were $4.7. So as it relates specifically to the one credit, it's a CRE project. And it's the majority of the increase that we experienced in nonaccruals and of the change that we saw of the 12.3 million. The credit itself was substandard already and just moved into nonaccrual. The situation is one of those where the borrower just does not see a value from their perspective to continue to make payments based on the appraisal. There's a lot of equity in the project. We do have it impaired and reserved appropriately based upon that analysis of the valuation. So in that particular case, there is an LOI in place. They have an LOI in place, has not been converted to a PSA at this point. So there's always the chance that they're able to move the project out and we'll continue to work with the customer and to determine what the best options are for the bank and for them. But it was not something that was surprising to us, just given their set of circumstances, but it was very specific to their set of circumstances. Along the lines of CRE, Michael, while they didn't come to fruition during the first quarter, we are very encouraged by the fact that a lot of the potential pay downs that we anticipated may be happening in the first quarter on some substandard credits, we're encouraged that they will possibly come to fruition later in the year. So from that standpoint, we see more positive news from the standpoint of more either upgrades or payoffs coming out of the CRE book and we do deterioration.

Thanks for that, Barry. And then maybe if I can just slip in one more, just following up on Feddy's question on capital return. You know, I know last quarter you guys talked about, you know, kind of organic growth and buybacks as being kind of the preferred avenue for deployment. But any sort of updated or changed thoughts on M&A versus the prior 90 days?

No changes, Michael, really. I mean, we're still interested. It's part of our strategic plan. to consider M&A for expansion purposes in key markets. I would say start of the year, very active, lots of discussions up, down, and sideways. That said, I think with the war and related economic issues, et cetera, high gas prices, et cetera, It seems like a lot of the – there's been a lot of just tempering of those discussions pending the outcome or pending some stabilization of things. And so we continue to focus on the organic strategy and continue to build relations out there and would be very interested in that process. As I said, it's part of our strategic plan, but no real change in that thought process.

Thanks for taking my questions, guys.

The next question is from Gary Tenner with DA Davidson. Please go ahead.

Thanks. Hey, I had a follow-up on Catherine's NIMH question. Tom, your comments about expecting loan yields to continue to drift a little bit lower here, a little bit surprising to me. So I'm just curious what the driver of that is. Do you have some higher yielding loans maturing? And I'm also curious kind of what the new production yields look like in the first quarter.

And I'll start, this is Barry, and then let Tom weigh in. Just from the standpoint of what we see every day, and it's more specific to the CRE side than it is the C&I side. But we are seeing, you know, those are all going to be for us. Those are all going to be 30-day sulfur plus a spread. And we do see a little lower spread today than we have at some points in the past as it relates to the CRE projects, regardless of which type you're talking about. It is, of course, Chris, very competitive in terms of that marketplace. So when you think about stuff rolling off for us that was 48 to 60 months ago, those spreads to that 30-day SOFR were better then than they are today of what's going on in funding in the near term. And then a lot of times, Chris, in order to, you know, when we do have payoffs scheduled on the CRE side like everyone does, we do pursue those opportunities to refinance existing debt that we think makes sense and fits our parameters. And when you do refinance existing debt to replace outstanding balances with outstanding balances, those are going to be priced a little less than your construction mini firm was that you made four or five years ago where you had construction risk, you had stabilization risk. replacing that with something that doesn't have construction risk doesn't have stabilization risk when it's fully funded and for that reason it's priced accordingly so you may be replacing something that was construction mini perm risk embedded in it your spread is a little bit higher on those deals than the ones you might replace it with if you're able to refinance a deal a fully funded deal away from somebody else it's fully stabilized if that makes sense

Again, Gary, I would add, it just, again, it depends on the mix of, you know, the lumpiness or not of maturities within a quarter and then the mix of the maturities, floating rate versus fixed rate. Of course, you still have a bit of a tailwind on the fixed rate loan side of those repricing higher. So it's very much mix-dependent, and as I said in my comments earlier, you know, we're getting down to, you know, dust settling here, so to speak, in terms of the aftermath of the last Fed rate cut. But, you know, you look at some, I'll call it normalization or steepening of the yield curve is certainly helpful where we're trading now in terms of where, you know, fixed rate loans coming on the books versus fixed rate loans paying off. So, you know, there's a lot at play there, but we're not talking about, you know, big, you know, very substantial linked quarter changes in loan yields or deposit costs. And as I said, a simple way to think about it is once we get past this quarter, relative stability here over the remainder of the year with a very gradual grind higher in terms of NIM.

Yeah, I appreciate that. That's great, great caller from both of you. And then just, you mentioned a couple of times, you know, kind of leaning into hiring in the growth markets. And, of course, this is not the first time you've mentioned it, but I'm just curious if you could kind of put some numbers around what you accomplished there in the first quarter and any kind of targets or expectations for the rest of the year.

I can put it in context of new bodies added. I don't know if we can break it down that specifically in terms of production at this point, But I think we messaged to the street in the third quarter. It was in the 21 new production talent across our franchise. Fourth quarter was more like 13-ish new hires. And in the first quarter of 2026, it was in the range of seven new hires. So the first quarter is a tough hire quarter because bonuses are paid and so on. so we will be refocusing our efforts in that the rest of the year but I don't believe we can can really break it down I mean they're all still getting their feet in the ground and and building their pipelines and so on like I was saying earlier we are seeing a very solid build a pipeline here into the year so are seeing some positive shoots from those efforts thank you yeah you

You net that all out, Gary, and, you know, it's not meaningfully impactful here for the full year in 2026 in terms of dropping to the bottom line. But, you know, the intent obviously is to be making the investment to bring the producers on board here in 2026 and then the return on that ramping up in future years.

Yeah, thanks again.

Again, if you have a question, you may press star, then 1. The next question comes from Christopher Maranek with Breen Capital Research. Please go ahead.

Hey, good morning. Thanks for hosting us. Tom, I wanted to follow up on kind of net new deposit accounts, particularly in the commercial channel. As we see success with CNI, should we see more deposit flows from that area over time?

Yes, Chris. So I do not have those numbers in front of me, but yes, we would certainly anticipate accelerated growth in commercial deposit accounts and nearby accelerated growth in commercial production for balances. I think I have a report here that I could look at pretty quickly. I mean, we have seen, Chris, acceleration. If you think in terms of year-over-year growth in average balances, we have seen really good acceleration in commercial deposit balances. If we were having this exact conversation one year ago, it would have looked something like a 1% to 1.5% decline in year-over-year first quarter commercial balances. Over time, that has steadily migrated more positive. Three quarters ago, that was closer to break even. Two quarters ago, it was plus 2%. And now in the fourth quarter and into the first quarter here, we're on the high side of 4%. So we've had steady acceleration of growth in commercial average. Commercial deposit balance is outstanding on a year-over-year basis, and it's absolutely our focus to continue that trend going forward.

Great. Thank you for sharing that. And then just a quick question on expense operating leverage in general. Should we see further progress into next year? Just kind of curious how we translate this recent efforts into the future quarters.

Yeah, you know, our mindset coming into this year was particularly considering two things, considering the investments we're making in revenue producers and the investments we're making in technology our mindset coming in was if we could have a break-even year in terms of operating leverage that would be doing a pretty darn good job so both of those things coming in are clearly headwinds to us achieving positive operating leverage here in 2026 but again the idea on both of those whether it's investment in producers or investment in technology is to generate returns on those investments and drive operating uh positive operating leverage going

forward great thank you again thank you the next question is from steven scouton with piper sandler

please go ahead yeah thanks everyone um most of my questions have been asked and answered i just

maybe had one follow-up around um deposit costs the the quarter-quarter improvement that you're projecting in in the slide deck is that more indicative of incremental reductions you think from the CD repricings or was that more about kind of where you exited the quarter and the progression of deposit costs throughout the quarter so Stephen this is Tom good question as I said I believe earlier you know the majority of the benefits the tailwind to and immigration from the ongoing CD book repricing is now diminishing and so that 160 guide that you see for the second quarter that has that's basically where we are running it currently in fact I think month to date here in April we're probably running at about 159 we've had some favorable mix here in April we're probably running at 159 so the 160 reflects a couple of things as I also mentioned earlier you've got some ongoing repricing of exception money market accounts as we accommodate customers we're warranted by the nature of the relationship and the profitability of the relationship accommodating their requests for higher rates and then it's been our practice as As we get further into the second quarter and into the summer months, we generally engage in promotional deposit campaign activity, which would put some upward pressure on deposit cost that counter, which sort of counterbalances what's left there in terms of ongoing downward CD repricing. So, again, that's why, you know, from my perspective, I think the right way to think about it is, as we're coming into the second quarter, a bit lower loan yields, a bit lower deposit cost, and essentially relative stability from that point forward and a slow, gradual grind higher in net interest margin. And, again, you know, with the dust settling, we're talking a basis point or two. We're talking about, you know, fractions of a basis point in which way they round. You know, does deposit cost and loan yield both, you know, round in a favorable way or unfavorable way? So I think we're getting down to, you know, more relative stability in that regard. We came into the year with a very tight guidance range in terms of net interest margin, 380 to 385, and we're maintaining that range. We continue to feel good about being for the full year somewhere right in the middle of that range.

That's extremely helpful, Colton. Appreciate all the time, guys.

Okay.

Next, we have a follow-up question from Fetty Strickland with Havodi Group. Please go ahead.

Hey, just real quick, I had a quick follow-up on the M&A comment. I think you said up, down, sideways. Was that just a figure of speech, or should I take that to consider like an MOE-type transaction or even an upstream partner?

I'm not going to commit one way or the other there, Fetty. I mean, you know, it's – there are all – as you've seen in the marketplace, there are all sorts of combinations happening in, you know, from larger banks to smaller banks. And so it's pretty wide open field. That's not our focus. But, you know, it is the discussions out there are pretty significant across the board.

Thanks for taking my follow-up.

This concludes our question and answer session. I would like to turn the conference back over to Dwayne Dewey for any closing remarks.

Thank you again for joining us this morning. We look forward to catching back up at the end of the second quarter, and we'll talk then. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.