Trustmark Posts Record Year, Guides to Steady 2026

Trustmark ((TRMK)) has held its Q4 earnings call. Read on for the main highlights of the call.

Trustmark’s Earnings Call Signals Confidence Amid Manageable Headwinds

Trustmark’s latest earnings call painted a largely upbeat picture, underscoring record 2025 results, healthy profitability metrics, and a stronger balance sheet, even as management acknowledged some near-term noise around deposits, expenses, and a one-time margin item. Executives leaned into a narrative of durable earnings power, better credit quality, and focused capital deployment, framing 2026 as a year of steady, mid-single-digit growth and disciplined balance sheet management. The tone was confident but measured, with highlights clearly outweighing the few pressure points.

Record Net Income and EPS Underscore Earnings Momentum

Trustmark delivered record full-year 2025 net income of $224.1 million and diluted EPS of $3.70, confirming strong earnings momentum heading into 2026. Fourth-quarter net income came in at $57.9 million, with diluted EPS of $0.97, representing 3.2% growth from the prior quarter and 5.4% year over year. Management emphasized that these results reflect consistent execution rather than one-off benefits, positioning the bank near the top of its historical earnings range.

Strong Adjusted Earnings Growth and Returns on Capital

Underlying profitability strengthened meaningfully, with net income from adjusted continuing operations rising $37.8 million, or 20.3%, in 2025. That performance translated into a return on average assets of 1.21% and a return on average tangible equity of 12.97%, metrics that investors typically associate with a well-run regional bank. Management highlighted this improvement as evidence that the business model is scaling efficiently while still investing for future growth.

Revenue and Net Interest Income Hit New Highs

On the top line, Trustmark posted total revenue of $204 million in the fourth quarter and a record $800 million for the full year. Net interest income (NII) was a major driver, reaching $647 million for 2025, up 8.4% from the prior year, with Q4 NII at $166 million. The reported net interest margin (NIM) of 3.81% for the quarter, or 3.83% on an adjusted basis, highlighted that the bank is managing funding costs effectively while still benefiting from a constructive rate backdrop.

Balanced Loan and Deposit Growth Supports Core Franchise

Trustmark’s core banking engine showed solid traction, with loans held for investment growing $584 million, or 4.5% year over year, and deposits increasing $392 million, or 2.6%. Growth was driven by a $568 million rise in commercial and personal balances, reinforcing the bank’s positioning in its regional markets. Management framed this as disciplined, relationship-based growth rather than volume for its own sake, signaling an emphasis on credit quality and pricing.

Wealth and Mortgage Businesses Rebound Strongly

Noninterest businesses turned into a notable bright spot, as Wealth Management revenue reached an all-time high and Mortgage Banking posted stronger production and a marked jump in profitability. The improvement in mortgage results was helped by better hedging performance on mortgage servicing rights (MSRs) and a recovery in asset values. These segments are becoming more meaningful contributors, broadening the earnings base beyond spread income.

Capital Returns Remain a Priority for Shareholders

Capital management remained shareholder-friendly yet disciplined. The company repurchased $80 million of common stock in 2025, including $43 million in the fourth quarter alone, equivalent to roughly 3.5% of shares outstanding at year-end 2024. The board also lifted the quarterly dividend by 4.2% to $0.25, bringing the full-year payout to $1.00 per share. In total, Trustmark returned about 61.8% of 2025 net income to shareholders, signaling confidence in earnings durability and capital strength.

Credit Quality Strengthens with Low Loss Levels

Credit metrics remained a key support for the story. Full-year net charge-offs were approximately 13 basis points of average loans, a low level by industry standards, while fourth-quarter net charge-offs were $7.6 million, or 0.22% of average loans. The allowance for credit losses stood at 1.15% of loans held for investment at year-end. Criticized loans declined by $181 million and classified loans fell $57 million over the year, underscoring an improving risk profile and giving management confidence that the reserve is appropriately positioned.

Capital Ratios Bolstered by Subordinated Debt Refinance

Trustmark also used capital markets to reinforce its balance sheet. The bank issued $170 million of 6% fixed-to-floating subordinated debt in the fourth quarter, using the proceeds in part to repay $125 million of existing subordinated debt. As a result, the firm ended the year with a Common Equity Tier 1 (CET1) ratio of 11.72% and a total risk-based capital ratio of 14.41%. These levels give the company room to support growth, absorb potential stress, and continue selective capital returns.

Short-Term Deposit Volatility Tied to Public Funds

One of the few near-term headwinds was deposit volatility. Deposits declined $131 million, or 0.8%, quarter over quarter in Q4, driven largely by a $219 million decrease in public fund deposits. Management described this as short-term funding noise rather than a structural issue with the franchise, but it does underscore the inherent variability of certain institutional and public-sector balances in the current rate environment.

Expense Growth Reflects Investment and Compensation Dynamics

Operating costs ticked higher, with noninterest expense up $1.2 million, or 0.9%, sequentially in Q4, and totaling $512 million for the year, a 5.5% increase from 2024. The rise reflects ongoing investment in people, platforms, and growth initiatives, as well as normal merit and bonus cycles. While this puts some pressure on near-term efficiency ratios, management framed the spending as necessary to support future revenue and franchise value.

One Large Charge-Off Skews Quarterly Credit Costs

Fourth-quarter credit costs were affected by a single large problem credit. Net charge-offs included one individually analyzed loan totaling $5.9 million, which comprised the bulk of the $7.6 million in Q4 net charge-offs and pushed the quarterly NCO rate to 0.22% of average loans. With the full-year charge-off rate still at only about 13 basis points, management suggested this was a contained event rather than a sign of broader deterioration.

Net Interest Margin Slightly Dented by One-Time Item

Net interest margin showed only minor pressure, largely from a one-off accounting impact. Reported NIM dipped 2 basis points quarter over quarter to 3.81%, primarily due to $1.1 million of accelerated recognition tied to the subordinated debt refinancing. Adjusted for that item, NIM would have held steady at 3.83%, suggesting core margin trends are stable but can be noisy from occasional non-recurring items.

Buyback Authorization Tempered by Capital Objectives

Trustmark entered 2026 with a $100 million share repurchase authorization, but management signaled a more modest deployment plan of roughly $60–70 million to keep CET1 around current levels. This approach tempers upside from capital return in the near term but aligns with the bank’s conservative capital philosophy and desire to maintain flexibility for growth and potential strategic opportunities.

M&A Environment Presents Both Risks and Opportunities

Management acknowledged increased market disruption and competing M&A activity in core markets, which could open doors for selective acquisitions or talent hires but also introduce local competitive turbulence. The company is keeping an opportunistic stance on deals but stressed that organic growth remains the priority. This suggests investors should not count on transformative M&A but can expect Trustmark to be active if attractive, strategically aligned opportunities arise.

Forward-Looking Guidance Points to Steady, Sustainable Growth

For 2026, Trustmark guided to a steady, mid-single-digit growth profile across the business. Loans held for investment and core deposits (excluding brokered) are expected to grow at mid-single-digit rates, while the securities portfolio should remain roughly flat as cash flows are reinvested. Net interest margin is projected in a tight 3.80%–3.85% range, close to Q4’s 3.81% reported and 3.83% adjusted levels, supporting mid-single-digit growth in net interest income. Noninterest income and noninterest expense are likewise expected to rise mid-single digits, suggesting disciplined operating leverage. Provision for credit losses is expected to normalize to roughly 14–18 basis points of average loans, with net charge-offs around 13–15 basis points, consistent with a benign credit outlook. Deposit costs, which were 1.72% in Q4, are expected to ease slightly in Q1, and capital ratios are projected to drift modestly higher, with CET1 finishing 2026 just above 12% absent outsized buybacks. A $100 million repurchase authorization remains in place, though management expects actual repurchases in the $60–70 million range, while the higher quarterly dividend of $0.25 underscores an ongoing commitment to shareholder payouts.

In summary, Trustmark’s earnings call reinforced a story of record profitability, improving credit quality, and carefully managed capital, against a backdrop of modest deposit volatility and some investment-driven expense growth. The bank enters 2026 with clear guidance for mid-single-digit expansion across loans, deposits, and revenues, a stable margin outlook, and a conservative yet shareholder-friendly capital strategy. For investors, the message was one of sustainable growth rather than outsized surprises, with the balance of risks and opportunities tilting firmly in the company’s favor.