Good morning, ladies and gentlemen, and welcome to Trustmark Corporation's Fourth Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded. It is now my pleasure to introduce Mr. Joey Rein, Director of Corporate Strategy at Trustmark.

Good morning. I'd like to remind everyone that a copy of our fourth quarter earnings release and the presentation that will be discussed 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'd 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 in 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 again 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. Trustmark's momentum continued to build throughout the year, resulting in record earnings in 2025. Our traditional Banking business drove continued loan and deposit growth, a strong net interest margin and solid credit quality. Our Mortgage Banking business achieved increased production and significant improvement in profitability, while revenue in our Wealth Management business reached an all-time high. 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 3, our financial highlights. Our fourth quarter results reflected continued significant progress across the organization. Net income totaled $57.9 million, representing diluted EPS of $0.97 a share, up 3.2% linked-quarter and 5.4% year-over-year. For the full year, Trustmark achieved a record net income of $224.1 million, representing diluted earnings per share of $3.70. Net income from adjusted continuing operations increased $37.8 million or 20.3% in 2025. This level of earnings resulted in a return on average assets of 1.21% and a return on average tangible equity of 12.97%. From the balance sheet perspective, loans held for investment increased $126 million or 0.9% linked-quarter and $584 million or 4.5% year-over-year. Our loan portfolio remains well diversified by loan type and geography. Our deposit base declined $131 million or 0.8% linked-quarter, driven in part by a decrease in public fund deposits of $219 million. Year-over-year, deposits increased $392 million or 2.6%, driven by growth in commercial and personal balances of $568 million. The cost of total deposits in the fourth quarter was 1.72%, a decrease of 12 basis points linked-quarter. Our…

[Operator Instructions] The first question comes from Stephen Scouten with Piper Sandler.

I guess, this morning, obviously, we've got another transaction that kind of impacts some of your larger markets, along with a lot of recent activity. And I know we talked about maybe 21 production hires back in the third quarter. Curious how many new hires maybe you had in fourth quarter, if any, and if these deals kind of accelerate any of your thoughts around talent acquisition in '26?

Stephen, in the fourth quarter -- I think in the third quarter, we announced 29 total new hires, 21 of them production oriented. In the fourth quarter, that number was in the range of 13 new production hires for the quarter. They're in all markets and several different disciplines throughout the company. So we continue to focus on organic expansion and bringing in new talent into the organization. As we talk and we'll go through the rest of the question-and-answer session here, we'll talk about loan growth and seeing some of the diversified loan growth that, through these new hires, we're starting to see C&I, our equipment finance team and so on, they all continue to now show improved performance and improved growth. So we're very pleased with that effort. As it relates to the M&A activity, that does create some opportunity. I mean with each transaction, both in our home core markets as well as in a market like Houston and so on, it does create some disruption, both clients and personnel. And so we continue to monitor that and stay in touch in the markets and continue to recruit actively. So we see it generally as a positive and look forward to that continuing throughout 2026.

Okay. Great. And maybe just -- my other question would be kind of around the guidance for 2026, around credit in particular, just this idea of normalizing, I guess, credit costs. Can you frame that up at all potentially or kind of give some color on what that means to you all just kind of within the context maybe of net charge-offs for '25 were around 13 basis points, if I'm looking at that correctly? So just kind of wondering how to frame up what you might expect within that normalizing from a charge-off and a reserve perspective.

Stephen, this is Barry. I guess, starting with the charge-off piece of it. I would think that 13 to 15 basis points of average loans is kind of where we would expect to see ourselves on an ongoing basis. We don't really see anything that unusual about 2025. We probably did have a few credit -- a few larger commercial credits than we do today that we got resolved during 2025, and that did result in a little bit of loss in some of those credits. And we really don't have, today, we don't have those credits that we're dealing with or ones of similar size. So I would think 13 to 15 basis points of average loans for net charge-offs would be a good range for us, what we might expect to see. And then as it relates to provisioning, to us, 14 to 18 basis points of average loans would seem like a range we might fall inside of. A lot of that is going to be predicated upon how much more improvement we see from a credit quality standpoint. We've had substantial improvement in credit quality during 2025. For example, criticized for the year down $181 million, classified were down $57 million for the year. So as we work through some of these credits, some of those upgrades and some of those are going to be paydowns as well as moving out of the bank. As we continue to experience that, then that obviously will help our provisioning. And that is obviously what helped our provisioning quite a bit this quarter as well as it did in Q3. And so as -- if that trend continues, which we don't know if they will or won't, but we do expect some improvement, but if that trend continues at that pace, then we might expect a little lower provisioning cost than we're anticipating right now. But right now, 14 to 18 basis points of average loans feels about right.

Fantastic. That's great color. Congrats on all the progress in 2025.

The next question comes from Gary Tenner with D.A. Davidson.

Great color on the provision question. I just wonder, on the other guidance areas, I mean, it looks like the guidance is -- really falls well within expectations kind of exiting '25, into 2026. Can you talk about just the lever points that you see as it impacts the guidance, whether it's growth, fees, expenses, kind of where you see the most sensitivity and leverage potentially as we work through the year?

Well, Gary, I'll start. This is Tom Owens. As you said, our guidance is pretty consistent with the range of analyst estimates coming into '26. With respect to levers in terms of how it falls to the bottom line and EPS, obviously, loan growth is going to be a key driver. We've talked a little bit also about capital deployment during the year and I think those things are related. We've been pleased with our ability to continue to drive capital accretion at the same time that we've been supporting solid loan growth and deploying capital via share repurchase. So probably the biggest levers are probably going to be that relationship between loan growth and capital deployment.

Yes. I would add to the response there. So we're seeing improving conditions in the mortgage market. And we saw it in '25 starting to take shape. Things that impact that business, some of the MSR hedging and those sorts of things showed significant improvement. And so that reflects in our noninterest income category. As mentioned in the prior comments, in 2025, we had record net income in our Wealth Management businesses -- excuse me, at least record revenue in those businesses. And so I think we've invested there. We continue -- and when we talk about production talent, we're adding talent in those businesses as well across our footprint. So we see potential for some improvement, at least as we've guided mid-single digits, if not better, in some of the noninterest income categories. Expense management is going to be a continued focus for us. We'll see where that leads in the year, but at this point, we're good at mid-single digits. So really it's a continuing improving position across the whole both income statement, and as Tom noted, the balance sheet plays a critical role in that, obviously.

I appreciate the color there. And then just a follow-up, specific to Wealth Management. In the fourth quarter, the pickup in revenue there sequentially, what the driver was?

It's just general improvement in asset values. Asset values drive fee revenue. But it's a combination -- asset value improvement, I think, is a positive in that business, but also new account acquisition. We've invested -- like I said, we invested in the business. We have new talent, we have great leadership in that business, and a really focused effort across the organization on cross sales, on cross-pollination across our commercial businesses and the like. So it's all starting to really take hold and take shape and show improvement. I would also note, part of that business, we do have a brokerage team also that we converted from one brokerage platform to another in the third and fourth quarters. That new platform on the brokerage side is also generating new revenues and new opportunities for us. So we're optimistic on that front as well.

So to be clear, there's nothing unusual on that line in the fourth quarter, more just kind of increase on...

Nothing unusual.

And equity value. Okay.

That's accurate, yes.

The next question comes from Feddie Strickland with Hovde Group.

I wanted to start on the expense guidance. Curious to see what the cadence of expense growth throughout the year, is it relatively steady as you make these investments in new talent? Or is there any particular quarter that's higher?

He's asking about the timing of the timing of increases in noninterest expense.

Throughout the year?

Throughout the year. And was it chunky?

Yes. Well, what we -- what you see is -- this is Tom Chambers. What you see is, yes, the last half of the year, we end up having our annual merit increases across the company. So you're going to have a natural increase starting on July 1 of that quarter. And then really there's nothing else unusual, unless it's mortgage commissions and revenue-generating business.

Yes. I would just say, yes, the second half year, we do tend to -- merit increases go into effect July 1 each year, and so that hits in the second half of the year. Assuming performance is sufficient and so on, sometimes in the second half of the year we true up for year-end bonuses, production, commissions, those sorts of things. And so yes, I would say the second half of the year typically is a bit more -- a bit higher level of increase than in the first half of the year. And across our overall organization, we continue to look at and make technology investments and other things that are just the normal course of expense increase that impacts us every year. But I would say going into 2026, that's pretty much it.

Got it. That makes sense. And just wanted to ask conversations on M&A. I mean, would you say a deal is any more or less likely in '26? And just a quick refresher on preferred geographies, what you're looking for in terms of partners. Just curious in general on M&A.

Yes. I would say, first and foremost, I mean, the increase in discussion and consideration, there probably is a fairly significant increase across our markets and the markets we serve and where we have interest. That has not changed really as we've talked for some time between Houston up to Dallas, Arkansas, Louisiana, Tennessee. I mean we cover such a large geographic footprint that are very attractive markets, and we have interest in those markets. We've talked about size ranges of $1 billion up to $10 billion. But it's all opportunistic. We have to see the opportunity. We have to see a good cultural fit. And we continue to create relationships and build rapport, but we are not going to be focused on doing a deal. We're focused on our organic strategy at this point. And if an M&A opportunity presents itself in a good market, that provides talent, that provides market opportunity and so on, then we will take advantage of that. We do feel from an overall operating profitability, capital, et cetera, perspective, we're in the best position we've been in to do that in quite a while. But we're going to be cautious and selective in that process. And we have felt that the buyback has been a good route to utilize capital to this point, and we'll continue to consider that as we move forward as well.

The next question comes from Christopher Marinac with Janney.

Just to continue on the M&A question from Feddie. Do you think that there's a scenario where you don't do an M&A deal because there's too much happening around you? Stephen mentioned the Texas deal this morning. Obviously, you have a much bigger merger in your backyard that's happening this year with a competitor going away. Is there a scenario where you don't do anything on M&A, you simply focus organically just to take advantage of opportunities in people exclusively?

I think that's a great point, and that's, again, there is a good amount of disruption and good companies all moving their organizations forward. But at the end of the day, it creates opportunities sometimes for those of us in the marketplace. And so that is absolutely a very accurate consideration for us. And as we have talked about our organic strategy, if you look at markets, like Synovus, Pinnacle, Cadence, Stellar, I mean, they're all in markets we serve, they all create some opportunity. And we're looking forward to considering what options we have for that organic strategy and we see it as significant. So I think that's a very good point. And I think it is a strong enough consideration that, yes, you may see us not do a deal.

Great. And then just to follow up on sort of the deposit success that you talked about in the prepared remarks. So are you doing anything to incent deposits differently than you had in past years?

So Chris, this is Tom Owens. And so I'm guessing with your question, you're talking about internal incentivization. And the answer there is yes. That has been an increasing area of focus for us, obviously, is deposit customer acquisition and balance acquisition. And so when you look at, for example, our CRM bonus templates and the drivers in the templates, we've increased our emphasis on deposit growth there. And I'll just say, I mean, we've been pleased with, when you look at our competitive stance on deposits and where we rank in terms of deposit costs, we've been pleased with our ability to grow balances cost-effectively. You look at personal and commercial balances are up 4.4% year-over-year. And I think on an average balance basis in the fourth quarter, over year-ago quarter, they're up 4% plus. So we've been very pleased with our ability to do that to continue to fund solid loan growth.

The next question comes from Catherine Mealor with KBW.

All right. One little nitty question on the margin. Tom, can you -- do you have any color you can give us on where deposit maybe ended the quarter or exiting the quarter just to kind of get a sense as to where we're going to start '26 just as we factor in the full impact of the recent rate cut?

Yes. It's a little difficult to hear you there, Catherine, but I think I got the question. This is Tom Owens. And so before I answer that specifically, Catherine, I also want to make a point, because when I looked at the pre-call notes from the various analysts, I'm not sure everyone picked up on it. But our net interest margin, that 2 basis point linked-quarter decline of -- from 3.83% in the third quarter to 3.81% in the fourth quarter was essentially a function of the accelerated recognition of capitalized costs from the 2020 sub debt issue, which, as you know, we refinanced during the quarter. So that was about $1.1 million that we took through the income statement, through net interest income specifically. And so adjusted for that, we would have been at 3.83%, which would have been our second consecutive quarter at that level. And so now this gets back to your question, because it's also the jumping-off point for our guidance for NIM in 2026. But the range we put out there of 3.80% to 3.85% is pretty tight relative to the ranges that you see from some other banks. But we're running right in the middle of that range right now at 3.83%. And then with respect to your question about deposit costs in our guidance, is for a decline from 1.72% to 1.61% here in the first quarter. And I think if you looked at month-to-date in January, we're running at about 1.63%. And so of course, we -- our CD book continues to reprice here during the quarter, and so that should drive us 1 basis point or 2 lower for the full quarter, all other things equal.

That's super helpful, and thank you for pointing out that other $1 million cost that you mentioned. And then my last question is just on the buyback. Is it fair -- I mean, I know growth is improving and you've got M&A out there, and your stock is inexpensive and you've got a lot of capital. I mean, is it fair to put your entire authorization in our expectations? For the year, do you think you have enough capital where you could really lean into the buyback today but still have enough capital for a future deal? Or is it -- or are you a little bit more price-sensitive on that? Just trying to kind of put a range on buyback opportunity.

Okay. Well, there's a lot there, but I'll start with giving you the range and the way to think about it. So you've heard us talk in the past about a continued accretion in our regulatory capital ratios and talk about 12%, for example, as a ceiling on CET1 in terms of where we would want to operate. We ended 2025 at 11.72% in our CET1, and without any deployment via share repurchase. Even with funding very solid, even robust loan growth in 2026, we -- our internal projections are that we would be -- we would end '26 slightly above 12%. So as Duane said, we've got the $100 million authorization. I mean a way to think about it is if we did no deployment via capital, assuming very solid loan growth, we would end the year '26 slightly above 12%. If we did every $0.01 of the authorization of $100 million, that would take us down to about 11.5%. So somewhere in between there, call it a range of $60 million to $70 million, is what would essentially keep our capital ratios where they are. And again at 11.72%, that's kind of mid-range between 11.5% and 12% in terms of CET1. So to your question of is it fair to put all $100 million in your model, I think that is -- I would probably guide you probably more to a range of $60 million to $70 million in all likelihood. And that range is based on trying to manage our capital levels where they are today, assuming the solid loan growth that we have in our projections.

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

Well, thank you for joining us today on the call. Again, 2025 was a record year for Trustmark. We're very pleased and proud and look forward to keeping that momentum into 2026. We look forward to joining back up with you for our first quarter call at the end of April. You all have a great rest of the week.

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