Trustmark Corporation (NASDAQ:TRMK) Q4 2022 Earnings Call Transcript

Tom Owens: So, this is Tom. So, the portfolio is throwing off about $25 million to $30 million per month. So, let’s call it 20 to 25. So, you’re between $360 million to $400 million or so. I would say a $300 million decline in the book value. Of course, you get some twinges in the carrying value because of changes in AOCI for the FS portfolio. But again, given the loan growth that we’ve had, our intention at this point is to run off the portfolios through year-end to generate liquidity to pay down wholesale borrowings. We had grown the securities portfolio substantially during €˜20 and ’21 with our abundant excess liquidity. And now, obviously, with the very robust loan growth we’ve had, we’ll continue to run that off for the time being.

Dave Bishop: Perfect. Thank you.

Operator: . The next question will be from Carl Doirin from Raymond James. Please go ahead.

Carl Doirin: Hi, good morning. Thank you for taking my questions. Most of them have already been asked, but I’ll ask a couple of follow-ups. Just in terms of either guidance or margin, do you have maybe an embedded assumption for the non-interest-bearing concentration, or how low that could get? I noticed it was down this quarter, probably almost a couple of hundred basis points.

Tom Owens: Yes, it was down – this is Tom Owens. It was down this quarter, and we’re projecting modest continued decline there. As I said, one of the big wild cards I think this year, and again, not just for Trustmark, but for the industry, is the extent to which we experienced that mix change from non-interest-bearing into time deposits. Historically, by the time you get up to a Fed Funds Rate of 5% historically in the industry, and here at Trustmark, you end up with your deposit mix being somewhere in the range of 40% time deposits. And so, we came into the year high single digits. I would think it will easily double that, if not more, over the course of the year. And it remains to be seen how much of that comes out of non-interest-bearing.

The other thing about it, Carl, is, as I said in my prepared comments, most of the decline in deposits in 2022 was a function of non-personal or business accounts. And we saw tremendous increase in just businesses holding liquidity. And so, it seems like a fair amount of that has run its course now in terms of reversal, and that was certainly part of what you saw in the fourth quarter. So, it remains to be seen how that plays out as well. It seems to be stabilizing a bit.

Carl Doirin: All right. Thank you for that. And second one, I think last quarter you noted that you typically expect large payoffs, both anticipated and unanticipated in 4Q. With the robust loan growth this quarter, could you talk about what the payoff and paydown activity was in 4Q, and how is it looking now?