Q3 2023 Trustmark Corporation Earnings Call
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Good morning, ladies and gentlemen, and welcome to Trustmark corporations third quarter earnings Conference call.
At this time all participants are in a listen only mode. Following the presentation. This morning, David 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 then two as a reminder, this call is being recorded it.
It is now my pleasure to introduce Mr. Joey Rein director of corporate strategy address Smart. Please go ahead.
Good morning, I'd like to remind everyone that a copy of our third 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 Dot com.
During the course of our call management May make forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
We'd like to caution you that these forward looking statements may differ materially from the actual results mutual a number of risks and uncertainties, which are outlined in our earnings release as well as our other filings with the Securities and Exchange Commission.
Finally, I'd like to introduce Duane Dewey President and CEO of Trustmark.
Thank you Jerry and good morning, everyone. Thank you for joining US today with me. This morning are Tom I once our Chief Financial Officer, Barry Harvey, Our Chief credit and operations Officer, and Tom Chambers, Our Chief Accounting Officer.
Trustmark had a solid third quarter with continued loan and deposit growth stable net interest income strong performance in our insurance business and solid credit quality.
As previously disclosed Trustmark recognized a litigation settlement expense of $6 5 million in the third quarter.
With discharge Trustmark reported a third quarter net income of $34 million, representing diluted earnings per share up 56 cents.
Including this litigation.
Excluding the litigation settlement expense Trustmark third quarter net income totaled $38 9 million or <unk> 64 cents per diluted share.
During the first nine months of 2023 Trust marks net income totaled $129 4 million, which represented diluted earnings of $2 11 per share an increase of 22, 7% from the same period in 2022.
We continue to focus on cost saving initiatives to improve efficiency as well as technology to enhance our ability to grow and serve customers.
We believe trustmark is well positioned to respond to changing economic conditions and create long term value for our shareholders.
Let's take a look at our financial highlights in a little more detail by turning to slide three.
Loans held for investment increased $196 3 million or one 6% linked quarter, and 1.2 million or 10, 6% year over year.
Deposits during the quarter grew 188 million or 1.3% linked quarter, and $676 7 million or four 7% year over year.
Net interest income totaled $141 9 million, resulting in a net interest margin of three.
3.29% down four basis points linked quarter.
Noninterest income decreased 2.5% linked quarter to $52 2 million, representing 27, 4% of total revenue in the third quarter.
Noninterest expense in the third quarter totaled $149 million, excluding the litigation settlement expense of $6 5 million noninterest expense was $134 4 million.
$2 2 million or one 7% linked quarter.
Net charge offs during the quarter totaled $3 6 million and represented 11 basis points of average loans the provision for credit losses for loans held for investment was $8 3 million in the third quarter.
Credit quality remained solid during the quarter as the allowance for credit losses represented 1.05% of total loans held for investment and 273, 6% of non accrual loans.
Individually evaluated loans at September 30.
We continue to maintain strong capital levels with common equity tier one of 989% and a total risk based capital ratio of 12, 1%.
The board declared a quarterly cash dividend of 23 per share payable on December 15th to shareholders of record as of December one.
At this time I'd like to ask Barry Harvey to provide some color on loan growth and credit quality.
I'll be glad to do wanted to thank you <unk> turning to slide four loans held for investments totaled $12 $8 million as of September 30th.
That's an increase as do I mentioned of $194 million for the quarter.
Loan growth during Q3 came from CRE equipment finance and our mortgage line of business.
We do expect continued solid loan growth throughout the remainder of 2023, resulting in mid single digit loan growth for the year.
Our loan portfolio as you can see.
It is well diversified both by product type as well as by geography.
Looking at slide five Trustmark CRE portfolio is 94% vertical with 68% of the exist in the existing category and 32% and construction land development, Arkansas.
Our construction land development portfolio is 80% construction Trustmark office portfolio. As you can see is very modest at 288 million outstanding which represents only 2% of our overall loan book the portfolio is comprised of credits with high quality tenants low lease turnover.
Her strong occupancy levels and low leverage the credit metrics on this portfolio remain extremely strong.
Looking at slide six.
Commercial loan portfolio is well diversified as you can see across numerous industries with no single category seeing 13%.
Looking to slide seven our provision for credit losses for loans held for investment was $8 3 million during the quarter, which was attributable to reserving for one individually evaluated credit.
A weakening macroeconomic forecast funding of our funding provision for the loan growth that we achieved during the quarter and net adjustments to our qualitative factors.
The provision for credit losses for off balance sheet credit exposure was 104000 for the third quarter on September 30th the allowance for loan losses for loans held for investment were $134 million.
Looking to slide eight.
We continue to post solid credit quality metrics they.
The allowance for credit losses represents 1.15% of loans held for investment and 274% of non accruals. Excluding those loans that are individually analyzed in the third quarter net charge offs totaled $3 6 million or one 1% of average loans.
Both non accruals and nonperforming assets remain at reasonable levels.
<unk>.
Okay. Thank you Barry I'd like to ask Tom Owens now to focus on deposits and income statement.
Thanks, Dwayne and good morning, everyone turning to deposits on slide nine.
We had another good quarter with our deposit base continuing to show its strength I mean in an environment that remains exceptionally competitive.
As Dwayne said deposits totaled $15 1 billion at September 30th which was a linked quarter increase of 188 million or one 3%.
And a year over year increase of $677 million or four 7%.
The linked quarter increase was driven by strong fundamentals with growth in personal balances of $288 million non personal balances of $148 million and brokered balances of $125 million.
That growth was offset somewhat by a decline in public fund balances of $373 million due to seasonal and other factors.
Regarding mix time deposits continued to increase linked quarter with promotional Cds up $344 million and brokered Cds up $113 million.
As of September 30th our promotional time deposit book totaled 1.23 billion with a weighted average rate paid of $4 six 5% and a weighted average remaining term of about six months.
Our broker deposit book totaled 728 million with an all in weighted average rate paid of about 542% and weighted average remaining term of about five months as of September 30th.
Yeah.
Also regarding mix the rate of decline in noninterest bearing DDA slowed meaningfully during the third quarter down linked quarter by $141 million or four 1%.
Noninterest bearing DDA represented 22% of the deposit base as of September 30th.
Our cost of interest bearing deposits increased by 43 basis points from the prior quarter to 239%.
Turning to slide 10, Trustmark continues to maintain a stable granular and low exposure deposit base.
During the quarter, we had an average of about 464000 personal and non personal deposit accounts, excluding collateralize public funds accounts with an average balance per account of about $26000.
Average accounts for the quarter increased by about 3000 or an annualized rate of about 3%.
As of September 30, 65% of our deposits are insured and 12% were collateralized, meaning that our mix of deposits that are uninsured and uncollateralized was essentially unchanged linked quarter at 22%.
We maintained substantial secured borrowing capacity, which stood at $5 7 billion at September 30th representing 170% coverage of uninsured and uncollateralized deposits.
Our third quarter total deposit cost of $1 eight 4% represented a linked quarter increase of 36 basis points and accumulative beta cycle to date of 33%.
Forecast for the fourth quarter is for an increase in deposit cost is $2, one, 2%, which would represent a cycle to date beta of 39%.
<unk> forecast reflects market implied forward interest rates with the fed remains on hold for the remainder of the year with the top of the target range for the fed funds rate at five 5%.
Turning our attention to revenue on.
On slide 11, as Dwayne said net interest income FTE decreased $1 $4 million linked quarter totaling $141 9 million, which resulted in a net interest margin of 329% net.
Net interest margin decreased by four basis points linked quarter changes in asset rate and volume substantially offset changes in liability rate and volume.
Turning to slide 12.
Our interest rate risk profile remained essentially unchanged as of September 30th with substantial asset sensitivity.
Sensitivity driven by loan portfolio mix was 49% variable coupons.
During the third quarter, the weighted average maturity of the cash flow hedge portfolio shortened slightly to two nine years and the weighted average received fixed rate increased to three 6%.
We entered into 25 million notional of forward, starting swaps, which brought the portfolio notional at quarter end to $975 million.
Cash flow hedging program substantially reduces our adverse asset sensitivity to potential downward shock in interest rates.
Turning to slide 13, noninterest income for the third quarter totaled $52 2 million or $1 $3 million linked quarter decrease and a 382000 decrease year over year.
Linked quarter decrease was driven primarily by a decrease in bankcard and other fees of 700000, a decrease of <unk>.
In other net of $1 3 million, which was essentially normalization from an elevated level in the second quarter that was driven by nonrecurring income recognition.
Those linked quarter decreases were offset somewhat by increases in service charges on deposit accounts of 379000 and insurance commissions of 539000.
For the quarter noninterest income represented 27, 4% of total revenue continuing to demonstrate a well diversified revenue stream.
Now looking at slide 14 mortgage banking revenue totaled $6 5 million in the third quarter of $142000 decrease linked quarter driven by a 493000 increase in amortization of the mortgage servicing asset.
Which was substantially offset by a $152000 increase in servicing income and a 338000 reduction in negative net hedge ineffectiveness.
Year over year mortgage banking declined by 418000, driven primarily by reduced gain on sale.
Mortgage loan production totaled $390 million in the third quarter, a decrease of nine 6% linked quarter and a decrease of 23, 3% year over year.
Retail production mix remained strong in the third quarter, representing 76% of volume or about $295 million.
Loans sold in the secondary market represented 81% of production while loans held on balance sheet represented 19%.
Gain on sale margin decreased by three basis points linked quarter to $1 two 1%.
And now I'll ask Tom Chambers to cover noninterest expense and capital management.
Thank you Tom turning to slide 15, Youll see a detail of our total noninterest expense.
Noninterest expense was $134 million during the third quarter, the linked quarter increase of $2 $4 million or one 9%, mainly driven by an increase in salary and employee benefits of $726000. As a result of higher salary expense other expense increased by one point.
$4 million, resulting from an increase of FDIC assessment expense of $1 2 million in additional services and fees decreased $382000 due to lower professional and consulting fees during the quarter.
As noted on slide 16, Trustmark remains well positioned from a capital perspective.
As Dwayne previously mentioned our capital ratios remained solid.
Common equity tier one ratio of 989%.
Total risk based capital ratio of 12, 11%.
Trustmark did not repurchase any of its common shares during the second quarter during the third quarter, Although we have $50 million of authority for the remainder of 2023 under our board authorized stock repurchase program, we are unlikely to engage in stock repurchase in a meaningful way.
Our priority for capital deployment continues to be organic Linda.
Back to you doing well.
Well, Thank you Tom turning to slide 17, let's look at our outlook.
First.
Let's look at the balance sheet, we're expecting loans and deposits to continue to grow mid single digits for the year.
Security balances are expected to decline in high single digits for the year as cash flow run off of the portfolio is not reinvested, which of course is subject to the impact of changes in market interest rates.
Moving on to the income statement were expecting net interest income to grow high single digits full year, 'twenty, three which is driven by earning asset growth and reflects a full year net interest margin in the high 300 Twenty's.
Based on the current market implied forward interest rates, the total provision for credit losses, including unfunded commitments is dependent upon future loan growth the current macroeconomic forecast and the credit quality trends.
Net charge offs, requiring additional reserving are expected to be nominal based on the current economic outlook.
From a noninterest income perspective insurance revenue is expected to increase high single digits full year with wealth management are expected to increase low single digits.
We're expecting service charges and bank card fees to increase low single digits, which is offset somewhat by lower customer derivative fees.
Mortgage banking revenue is expected to decline low single digits for the year adjust.
Adjusted non interest expense is expected to increase mid single digits for the year. This reflects general inflationary pressures.
Added talent throughout our system as well, but it is also subject to the impact of commissions and the various lines of business.
We remain intently focused on our fit to grow initiatives as discussed throughout 2022 and 2023.
Atlanta based equipment Finance Division continues to gain traction as its portfolio has grown to 191 million as of 930.
We have implemented numerous technology advancements, which will continue into 'twenty four 'twenty five all of which are designed to improve efficiencies.
Moving into Q4, we're intently focused on cost saving initiatives that will reduce the rate of expense growth in coming quarters in.
In addition work continues on the design of our sales through service process, which will be implemented across the retail branch network in 'twenty four.
We believe these actions will enhance trustmark performance and build long term value for our shareholders.
Finally, we will continue a disciplined approach to capital deployment with a preference for organic loan growth and potential M&A. We will continue to maintain a strong capital base and implement corporate priorities and initiatives.
With that at this time I'd like to open the floor up to questions.
Okay.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone, if you're using a speakerphone. Please pick up your handset before pressing the keys is that anytime. Your question has been addressed and you would like to withdraw. Your question. Please press Star then two at this time level.
Pause momentarily to assemble our roster.
Our first question comes from Graham <expletive> with Piper Sandler. Please go ahead.
Hey, good morning, guys.
Good morning, good morning.
So I just wanted to start quickly on the margin and specifically the loan yields. They saw some really nice expansion. This quarter just wanted to get a sense for the repricing dynamics in that portfolio. As we look forward and then also if you think that maybe a similar level of improvement would be possible in <unk> and maybe even as we look into <unk> 'twenty three.
And Graham this is Barry on the credit side I'll start there and then maybe others, who want to contribute but you know our weighted average yield for the book is 6.2% and for the quarter. What we put on the books was seven 9%. So we are still seeing a nice increase and the.
New bookings versus the makeup of the book itself and that's predominantly because a lot of our.
New opportunities are CRE related slower.
Slower production than we saw in 'twenty, one clearly much lower production we saw in 'twenty three excuse me in 'twenty, two but having said that we are we definitely are seeing some good fee income on those particular opportunities as well as spreads to one month.
So for so.
With it for that reason I think we continue to see a nice yield and our new production relative to the overall book.
Yeah.
Okay. That's helpful.
And then I guess just on the deposit side I know it was only a minor difference, but you guys did outperform your deposit cost guidance a little bit. This quarter can you just talk through what you're seeing on the funding cost side as you start to look ahead into 2024.
And when you if you have an idea of when you think that might.
Peak out in the lag will be fully into the deposit cost picture.
Hey, Graham this is Tom Owens.
Yes, we did come in just slightly favorable to our guidance for the third quarter.
And as a result, we.
Slightly lowered our guidance on deposit costs for the fourth quarter.
Internally, we are continuing to model.
As we've discussed.
On prior calls which is ultimately to a.
Our cumulative deposit beta mid 2024 in the mid Forty's.
So I think I think what you will see us.
Decline in linked quarter increase in deposit costs over the next several quarters right. So the pace of increase we will continue to decline.
And I would not expect that you will get to.
Flattish deposit cost until second half next year.
We've got the fed we're using market implied forwards.
The fed's on hold.
Through I believe July of next year.
Which is about the same time, we've got that cycle to date beta.
<unk> out and where we have deposit cost topping out.
Hey, Graham.
This is Duane let me just add real quickly to that.
To complement Tom and the Treasury team as well as our retail banking team here at Trustmark.
Think as the year has gone on we have.
Become more focused and targeted in some of our campaigning on the deposit side.
And really honed in on where we have opportunity where we have opportunity.
The price better et cetera. So I think we in addition to the market pressures that we're facing and I also think the organization has advanced in its.
Targeted marketing campaigns across the system.
Okay.
But just help.
We had it should cost.
Yes, definitely and then I guess, so you've taken out those two pieces together and then looking at the margin this quarter, which was held in pretty well.
Are you thinking that the asset repricing from here, Ken Ken maybe just to at least offset.
Deposit cost increases until we see that flatter I guess deposit cost trajectory in the back half of 2024.
I think so.
Graham This is Tom Owens again, I think Youll continue to see some linked quarter compression in net interest margin for the next couple of quarters.
And then as you get into call it mid 'twenty four.
Second and third quarter.
Is where youre likely to see see that stabilize and even out.
Okay, Okay, Great and then lastly, if I could just get one more in yesterday, we saw another banking competitor or a peer of yours announced the sale of its insurance business and they're planning to use the capital to pay down some borrowings and restructure part of the bond portfolio.
How do you guys view this transaction would you ever consider anything like it because if I if I look at.
The multiple on that business it looks like you're all as insurance business would be implied about $300 million in value based on the revenue multiple that was yesterday.
Graham Duane this is Duane.
We're well aware obviously of of what's happening in the bank owned insurance.
Space I guess cross Theres been a couple of deals announced.
That and however, and we liked the business we've been in the business 25 years.
Been a steady stable consistent grower, especially over the last 10 to 12 years.
It's a very high return on tangible common equity business.
We have a great team great management structure, there et cetera. So we very much like we like the diversification also that insurance the insurance revenue brings.
Noted the 27 plus percent of.
Noninterest income, we like that that balance as well now all of that said, we're aware of what's going on around us, we know valuations and understand what it what impact that's having on others.
Our financial perspective, so we continue to monitor and evaluate but at this point in time, we really like the insurance business.
Okay, great. Thanks, guys.
Our next question comes from Kevin Fitzsimmons with D. A Davidson. Please go ahead.
Hey, good morning, guys.
Wondering Kevin Kevin.
Okay.
Shifting gears to credit.
Yeah.
We saw roughly a $20 million increase I believe in MPA is I know, we're kind of coming off a very low can link here.
And I saw you mentioned.
Yeah.
Reserving for this new newly evaluated nonaccrual loan it looks like.
Non accruals went up in the state of Alabama, Mississippi. So maybe just any color you can provide on.
How many loans.
What kind of business they're in.
And if theres any.
Concern that there'll be others come.
And Kevin This is Barry I guess starting with.
One aspect of that question, but really during the quarter. There was two credits that drove our increase in non.
Non accruals.
And and one of them was CRE and one of them was C&I both of them were substandard accruing all that sort of 630 and then we during the quarter. The third quarter, we decided to move them to non accrual and and and specifically.
<unk> them to determine if a reserve was required or not and don't see that there's anything systemic at this point I think it's just normal course of business when.
When you mentioned in Mississippi and Alabama.
One of the.
The C&I loan was that I've mentioned was originated out out of Alabama.
Customers not in Alabama, but it was originated out out of Alabama, and that's the way it's shown on our distribution and then within the within.
Within Mississippi the increase that you saw there was driven by our mortgage company. We had some we had we continue like everybody does I think to see some increase in non accruals coming out of our mortgage book, which is so so that's hopefully that gives you a little bit of color on that aspect of it.
We continue to monitor our portfolios I'm very very carefully we're looking at a lot of the credits on a quarterly basis, we're looking at them and specifically from a CRE perspective, we're looking we're taking the pro forma and then we're looking at today's interest rates in determining what the debt service coverage looks.
Like what the debt yield looks like and evaluating them.
Based upon today's interest rate environment, regardless of what the what the environment was at the time of underwriting. So we continuously continue to assess it and then as we need to adjust grades were doing so in a very timely manner well before we ended up with a bridge or a maturity.
That's helpful. Barry while we're on the subject of credit.
A number of your your large south East Bank peers, we're involved in.
Bankrupt syndicated credit can you remind us what kind of exposure you have just snakes and then.
Equipment Finance I know you guys are just kind of in the infancy stage, there of that business and it's ramping up but.
With the economy slowing and amid higher rates is there any concern about that book I know Duane when we've talked about this before you really emphasized how you you're really being <unk>.
Careful and methodical in building that business. So I would assume you feel okay credit was there.
Sure Kevin.
Start with the SNCC question, and we'll move to equipment finance for our shared national credits.
Our percent of the total book is going to be for Outstandings is gonna be eight 6%.
And.
I think theres, a few things to comment beyond that as you know we don't have any concentrations from an industry standpoint based upon the regulatory definition of concentrations.
I'd also like to mention kind of how we are while we kind of monitor snakes within trustmark.
The credit quality or shared national credits given what they are is going to be near and oftentimes investment grade so high quality companies.
And as a general statement.
Obviously with high quality companies, you typically have less collateral.
As a general rule because of the quality of the earnings the strength of the earnings the size of the earnings predictability of the earnings all of those things lead you to a.
A credit process that that the credit criteria and structure reflects the strength of the borrower that that youre lending to <unk>.
Typically are careful with taking a modest hold as we approach shared national credits credit itself was extremely strong but they are.
We're always going to be buying into these credits we don't leave any.
Share national credits, so as we buy into them.
Take or leave so really the only way to protect yourself from our perspective is to be modest with the with the size of the.
Of the opportunities, we pursue and put on our books.
We've also established limits as it relates to shared national credits or a concentration limit. If you would we've had that in place for many many years, we display that through our enterprise.
Enterprise risk committee of the board, who looks at all it looks at everything credit from a board perspective, we shared that with them on a quarterly basis and so we do in fact, we are conscious of shared national credits maybe for a different reason than you are asking the question for we just won we know that its purchase business.
And has limited opportunity for for future ancillary business. So we're focused on making sure that we're doing as much direct business as we can and getting as much of a wallet share from our customers as possible. So we're focused on those credits to make sure that we're not doing those in lieu of the direct business that we want to be doing.
Good day, so shifting over to the equipment finance side I mean, we've got an extremely experienced talented team that.
They understand clearly that we're looking to be down the middle of the fairway on all of the deals we're looking at that.
The credit structure of the credit quality is first and foremost, but pricing is important to us, but it's always secondary to the to the ball, where we understand in a new line of business. We don't want to stumble. We don't want to have problems. So that is our focus and we will continue to be our focus for the for the foreseeable future and.
I do I can't overemphasize the experience level of knowledge of the people we have in that line of business, including the credit resources that we were able to obtain that had been in that line of business for many many years with some really large institutions. So from that standpoint, I'm very comfortable as we evaluate credits, which we will.
Later this morning for opportunities that we're looking at a good good solid credit risk.
Down the fairway in terms of of deal quality and making sure that that's our focus and priced a secondary but we do want to make sure we get a reasonable yield given the credit quality being presented.
One one just final note on the equipment finance, Kevin is it's mid to large ticket so it as well.
Not we're not focused on small ticket or small business type stuff, it's really mid to large and.
Most of the credit in that portfolio is.
Close to what Mary described from a snake perspective, very top topline credit quality. So yeah, we feel pretty good about where we are at this point in that business.
Okay great.
And I'm going to sneak one last one in here Duane.
I just want to point out not to be.
Just that your comment about like in your insurance business I recall.
Cadence CEO, saying that same thing on last quarter's call but.
Putting that aside like I say, there's no transaction there would you look at doing on its own securities.
Restructuring transaction just to accelerate some of that.
Redeployment or reinvestment on the securities portfolio.
Yes.
Start quickly and let Tom address the securities portfolio, but again I mean.
We've been in the business 25 years.
Comment much on on what cadence thought process is but you know.
Staying abreast staying aware of what's going on and looking at what's best for Trustmark shareholders moving forward. That's what we're focused on in and it's been a great business for us and.
We continue to monitor the situation, but at this point in time.
That's where we stand so I'll, let Tom address the securities. Kevin This is Tom Owens So.
I would probably echo <unk> comments in terms of being aware and monitoring what our competitors than what our peers are doing.
Certainly we're aware of the restructuring the investment portfolio restructuring activity.
Activity that's been going on.
So we're aware of it we look at it.
We are not.
At this point seriously contemplating doing that I guess is the way I would say.
Okay.
Great. Thanks, guys I appreciate it.
As a reminder, if you have a question. Please press star then one to be joined into the queue.
Our next question comes from Bill Jones with <unk>. Please go ahead.
Hey, great. Good morning, guys. This is will.
How's it going.
Thank you.
Hey, So I just wanted to start on the margin I know you know and understand that we may take a step down here in the next quarter and I really appreciate the guidance.
A little bit of further compression until we moderate into the middle half of next year, but just taking that into account and then and I. Appreciate the fact that you still plan to grow earning assets do you feel like you can grow NII again in 2024 or does it really feel like more of a leveling out and NII in.
Maybe just trying to protect the margin.
So certainly well this is Tom so certainly earning asset growth will drive.
Driving the increase year over year in net interest income, but that but the headwind from compression in net interest margin, we're not going to be able to overcome no. I mean, I think when you look at the dynamic in the industry right. I mean, that's that's the challenge for the industry heading into 'twenty. Four is the compression that we've experienced in that were facing in terms of net interest.
Jen.
Just mathematically you can't get there you're going to be off year over year.
A meaningful way in terms of net interest income.
If I heard your question correctly, I hope I answered it and if not please please follow up.
No that was helpful.
It feels like it would be a challenge to maybe see that high single digit growth again in 2020 for not trying to.
2024 guidance out now or anything but.
I guess that that was really more of the precedent of a question of if we keep seeing more margin compression.
Understanding that you'll still be growing.
Earning asset base as well.
But no that was helpful, but I guess just to lead into it.
Assuming maybe the revenue environment stays somewhat more challenged next year do you have offsets maybe on the expense side.
With the understanding that you guys are fairly active with your fit to grow initiative.
How do you feel or what what is the outlook for where you feel expenses could go in the next year or so.
I don't know if I can give you a full year I can tell you directionally, we are very intensely focused on expenses.
As noted in the fit to grow initiatives, we've invested in technology, we've invested somewhat in talent and people like equipment finance in Atlanta office et cetera. So we've done some things that we think over time really enhance shareholder value.
Yes.
Theres been some other factors in there some of them.
The legal resolution that we completed here this quarter et cetera that we think there are there are definite opportunities for cost savings moving into 2024.
And you could one off things like we changed disaster recovery sites, that's a million dollar savings, we renegotiated some big vendor contracts that are additional savings and the like so so those things combined with some third party spends and then we have some employee initiatives that we're working.
On as we speak today that we also think.
We will help that combined with some of the efficiencies and technology that have been implemented we definitely moving into 2024.
Feel the call.
Cost saving side is a big opportunity for us and we are in position to take advantage of that and we will.
More likely than at our fourth quarter call give a real thorough guidance somewhere we think will be for the year 2024.
Okay.
That's helpful and Tom I just wanted to clarify did you did you mentioned earlier that you expect total deposit costs next quarter and in the 212 range.
39% total data I just wanted to clarify that.
Correct.
Okay great.
Yes.
Okay, thanks for pointing that out.
And lastly, I know you guys mentioned buybacks are.
Fairly unlikely in near term.
Although just just.
With where the stock trades at today in capital remaining.
In a healthy manner, just just curious what the thought process is on maybe not taken a more serious consideration to look at it. It just feels like it could be an opportunity for you guys right now.
Yeah, well as we've said consistently in the past I mean are our highest priority in terms of capital deployment is supporting lending growth.
And as.
We've demonstrated we've continued to have opportunities in that area and so I think that'll be the case I mean, I think we've given pretty strong guidance.
Last couple of earnings calls that.
In all likelihood we would not be engaging in repurchase activity for the remainder of 2003 and I think that's still the case.
Okay. That's fair enough. Thank you guys.
Thank you thanks Paul.
This concludes our question and answer session I would like to turn the conference back over to Duane Dewey for any closing remarks.
Thank you again for joining us for today's third quarter call. We look forward to catching up at the end of the fourth quarter in January and I. Appreciate your interest in Trustmark have a great week.
The conference has now concluded. Thank you for attending today's presentation you may all now disconnect.