Trustmark Q4 2023 Earnings Call Transcript

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January 24, 2024

There are 7 speakers on the call.

Operator

Good morning, ladies and gentlemen, and welcome to Trustmark Corporation's 4th Quarter Earnings Conference Call. Participants are in a listen only mode. Following the presentation this morning, there will be a question and answer session. As a reminder, this call is being recorded. It is now my pleasure to introduce Mr.

Operator

Joey Raine, Director of Corporate Strategy at Trustmark.

Speaker 1

Good morning.

Speaker 2

I'd like to remind everyone that a copy of our 4th quarter earnings release as well as the slide presentation that will be discussed on our call this morning are available on the Investor Relations section of our website at trustmark.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. And we'd like to caution you These forward looking statements may differ materially from the actual results due to a number of risks and uncertainties, which are outlined in our earnings release as well as our filings the Securities and Exchange Commission. At this time, I'd like to introduce Duane Dewey, President and CEO of Trustmark.

Speaker 3

Thank you, Joey, and good morning, everyone. Thank you for joining us 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. We at Trustmark are very pleased with our full year and 4th quarter performance in a tumultuous and challenging operating environment. Trustmark's performance reflected a very strong year in net income after tax, in fact, a record year in that regard.

Speaker 3

We chose solid loan production and credit quality as well as continued deposit growth. Trustmark reported a 4th quarter net income of 36 $100,000 representing diluted earnings per share of $0.59 For the full year 2023, Trustmark's Net income totaled $165,500,000 which represented diluted earnings per share of $2.70 Let's review our financial highlights in a little more detail by turning to Slide 3. Loans held for investment increased $140,300,000 or 1.1 percent linked quarter and 7 $46,500,000 or 6.1 percent year over year. During the 4th quarter, deposits grew 467,800,000 or 3.1% linked quarter and $1,100,000,000 or 7.8 percent year over year. Net interest income totaled $140,000,000 in the 4th quarter, which resulted in a net interest margin of 3.25%.

Speaker 3

For the year, net interest income totaled $566,300,000 up 11.7 percent from the prior year and resulted in a net interest margin of 3.32%, up 15 basis points from the prior year. Noninterest income in the 4th quarter totaled $49,800,000 an increase of 10.3% year over year. For the year ended 2023, noninterest income totaled $207,000,000 and represented 27.2 percent of total revenue. Revenue for the year totaled $759,800,000 an increase of 8 point percent from the prior year. Adjusted noninterest expense in the 4th quarter totaled $134,800,000 For the year, adjusted non interest expense totaled $527,900,000 an increase of 5.9% from the prior year.

Speaker 3

Our credit quality remains solid. Net charge offs during the 4th quarter totaled $2,200,000 representing 7 basis points of average loans. For 2023, net charge offs totaled $8,200,000 and represented 6 basis points of average loans. The provision for credit losses for loans held for investment was $7,600,000 in the 4th quarter and for the full year 2023 was $27,300,000 We continue to maintain strong capital levels with common equity Tier of 10.04 percent and a total risk based capital ratio of 12.29 percent. The Board declared a quarterly cash dividend of $0.23 per share payable on March 15 to shareholders of record as of March 1.

Speaker 3

At this time, I'd like to ask Barry Harvey to provide some color on our loan growth and credit quality.

Speaker 4

Thank you, Duane, and I'll be glad to. Turning to Slide 4, loans held for investments totaled $13,000,000,000 as of twelve 31, that's an increase as Duane mentioned of $140,000,000 for the quarter. Loan growth during Q4 came from commercial lending and the equipment finance our equipment finance line of business as well as our real estate secured loans. We expect loan growth of mid single digits during 2024. As you can see, our loan portfolio remains well diversified, both by product type as well as by geography.

Speaker 4

Looking on to Slide 5, Trustmark's CRE portfolio is 94% vertical with 70% being in the existing category and 30% in the construction land and development category. Our construction land development portfolio It's 79% construction. Trustmark's office portfolio, as you can see, is very at $298,000,000 outstanding, which represents only 2% of the overall loan book. The portfolio is comprised of credits with high quality tenants, low lease turnover, strong occupancy levels and low leverage. The credit metrics on this portfolio remain extremely strong.

Speaker 4

Looking on the Slide 6, The bank's commercial loan portfolio is well diversified, as you can see, across numerous industries with no single category exceeding 13%. On Slide 7, our provision for credit losses Our loans held for investment was $7,600,000 during the Q4, which was attributable to loan growth, net adjustments to the qualitative factors and changes in the macroeconomic forecast The provision for credit losses for off balance sheet credit exposure was a negative $888,000 During the quarter, at twelvethirty one, the allowance for loan losses for loans held for investment was $139,000,000 Looking to Slide 8, we continue to post solid credit quality metrics. The allowance for credit losses represents 1.08 percent of the loans held for investment and 294 percent of non accruals excluding those loans that are individually analyzed. In the 4th quarter, net charge offs totaled $2,200,000 or 0.07 percent of average loans. Both non accruals and nonperforming assets remain at reasonable levels.

Speaker 4

Duane?

Speaker 3

Thank you, Barry. I'd like to ask Tom Owens to now focus on deposits and the income statement.

Speaker 4

Thanks, Duane. Good morning, everyone. Turning to deposits on Slide 9. We finished up the year with another good quarter, which continued to show the strength of our deposit base amid an environment remains exceptionally competitive. Deposits totaled $15,600,000,000 at year end, a linked quarter increase of $468,000,000 or 3.1 percent and a year over year increase of $1,100,000,000 or 7.8 percent.

Speaker 4

Deposit growth, excluding brokered deposits, was also strong, up $616,000,000 or 4.3 percent linked quarter and $556,000,000 or 3.8 percent year over year. We had a pretty strong reversal of public which grew by $463,000,000 during the 4th quarter after having declined by $373,000,000 during the 3rd quarter. We also had good growth in personal balances linked quarter, which were up $276,000,000 offsetting decreases in non personal balances of $121,000,000 and brokered balances of $151,000,000 Regarding mix, time deposits declined by $22,000,000 linked quarter with non brokered CDs up $128,000,000 and brokered CDs down 149,000,000 As of year end, our promotional time deposit book declined by $44,000,000 linked quarter, totaling $1,200,000,000 with a weighted average rate paid of 4.75 percent, and the weighted average remaining term continued to shorten to about 3 months. Our broker deposit book declined by 100 $49,000,000 linked quarter totaling $579,000,000 with an all in weighted average rate paid of about 5.40 6%, 5.46 percent. And the weighted average remaining term also shortened to about 3 months as of December 31.

Speaker 4

Also regarding mix, noninterest bearing DDA balances declined $123,000,000 linked quarter or 3 point 7% and noninterest bearing DDA represented about 21% of the deposit base as of December 1st. Our cost of interest bearing deposits increased by 28 basis points from the prior quarter to 2.67%. That linked quarter increase was down from the prior quarter increase of 43 basis points during the 3rd quarter. Turning to Slide 10. Trustmark continues to maintain a stable, granular and low exposure deposit base.

Speaker 4

During the Q4, we had an average of about 465,000 personal and nonpersonal deposit accounts, excluding collateralized public fund accounts, with an average balance of about $27,000 As of December 31, 64% of our deposits were insured and 14% 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 $6,200,000,000 at December 31, representing 181 percent coverage of uninsured and un collateralized deposits. Our 4th quarter total deposit cost of 2.10% represented a linked quarter increase of 26 basis points and a cumulative beta cycle to date of 38%. Our forecast for the Q1 is for an increase in deposit cost to 2.19%, which would represent a cycle to date beta of 42%. Turning to revenue on Slide 11.

Speaker 4

Net interest income, FTE, decreased $1,900,000 linked quarter, totaling $140,000,000 which resulted in a net interest margin above 3.25 percent. Net interest margin decreased by 4 basis points linked quarter as the 10 basis points of accretion due to asset rate volume was more than offset by the 14 basis points of dilution due to liability, rate and operating.

Speaker 3

On Slide 12, our interest

Speaker 4

rate risk profile remains essentially unchanged as of December 31, substantial asset sensitivity driven by loan portfolio mix with 50% variable rate coupon. During the Q4, we entered into $75,000,000 notional of forward starting swaps, which brought the swap portfolio notional at quarter end to $1,050,000,000 with a weighted average maturity of 2.8 years and a weighted average received fixed rate of 3.18%. We also entered into $50,000,000 notional of forward starting floors, which brought the floor portfolio notional at quarter end to $75,000,000 with a weighted average maturity of 4 years and a weighted average SOFR rate of 3.58%. The cash flow hedging program substantially reduces our adverse asset sensitivity to potential downward shock in interest rates. Turning to Slide 13.

Speaker 4

Noninterest income for the 4th quarter totaled $49,800,000 a $2,400,000 linked quarter decrease and for the full year totaled $206,900,000 a $1,800,000 decrease from the prior year. The linked quarter decrease was driven primarily by a normal seasonal decline of $2,100,000 in insurance commissions. The full year increase was driven by increases of $3,800,000 or 7.2 percent in insurance commissions and $1,300,000 or 3% increase in service charges on deposit accounts. Those increases were offset somewhat decreases of $2,700,000 in bank card and other fees, which was primarily a decline in customer derivative revenue and $2,100,000 decline in mortgage banking as both businesses faced significant headwinds from the interest rate environment. For the quarter, noninterest income represented 26.7 percent of total revenue, continuing to demonstrate a well diversified revenue strand.

Speaker 4

Turning to Mortgage Banking on Slide 14. Revenue totaled $5,500,000 in the 4th quarter, bringing full year revenue $200,000 which is a decline of $2,100,000 The full year decline was driven by increased negative net hedging effectiveness of $2,200,000 resulting from the difficult hedging environment, which prevailed during 2023. While full year increases in mortgage servicing income and change in fair value of servicing assets from runoff the decline in gain on sale of loans. Mortgage loan production totaled $1,500,000,000 in 2023, a decrease of 31.6% from the prior year. Retail production mix remained strong in the 4th quarter, representing 75% of volume or about $204,000,000 Loans sold in the secondary market represented 85 percent.

Speaker 4

Gain on sale margin remained under pressure in the 4th quarter, decreasing by 11 basis points going forward to 110 basis points. And now I'll ask Tom Chambers to cover noninterest expense and capital management.

Speaker 2

Thank you, Tom. Turning to Slide 15, we'll see a detail of our total non interest expense. During the 4th quarter, adjusted non interest expense totaled $134,700,000 a linked quarter increase of $700,000 or 0.5%, mainly driven by an increase in FDIC assessment expense of $1,100,000 which is included in other expense. All other non interest expense line items remained relatively unchanged on a linked quarter basis. As noted on Slide 16, Trustmark remains well positioned from a capital perspective.

Speaker 2

As Duane previously mentioned, our capital ratios remain solid with a common equity Tier 1 ratio of 10.04%, a linked quarter increase of 15 basis points and a total risk based capital ratio of 12.29%, a linked quarter increase of 18 basis points. Trustmark did not repurchase any of its common shares during 2023. As previously announced, Trustmark's Board of Directors authorized a stock repurchase program effective January 1, 2024 through December 31, 2024, under which $50,000,000 of Trustmark's outstanding shares may be acquired. Although we continue to have a share repurchase program in place, our priority for capital deployment continues to be through organic Back to you, Duane.

Speaker 3

Thank you, Tom. Let's take a look now at our commentary Outlook for commentary slide on Slide 17. First, let's look at the balance sheet. We're expecting loans grow mid single digits in 2024, while deposits are expected to grow low to mid single digits. Securities balances are expected to decline by high single digits based on non reinvestment of portfolio cash flows, which, of course, are subject to changes in market interest rates.

Speaker 3

Moving on to the income statement. We're expecting net interest income to decline Low single digits in 2024, reflecting continued earning asset growth and stabilizing deposit costs, resulting in full year net interest margin of approximately 3.2% based on market implied forward interest rates. For credit, the total provision for credit losses, including unfunded commitments, is dependent upon future loan growth, The current macroeconomic forecast and credit quality trends. Net charge offs requiring additional reserving are expected to be nominal based on the current economic outlook. From a non interest income perspective, non interest income is expected to grow mid single digits, which reflects some modest improvement in mortgage, continued growth in insurance and some improvement in the Wealth Management business.

Speaker 3

For the last couple of years, we've talked about our Fit to Grow initiatives across the company in which we've invested in both growth initiatives, mostly in additional production talent as well as in technology and other key areas of the company. To that end, in 2024, We will begin to see efficiencies from those efforts along with other heightened cost containment initiatives so that Adjusted non interest expense is expected to increase low single digits full year 2024. This is always subject to the impact of commissions in our commission based businesses. Finally, we'll continue a disciplined approach capital deployment with a preference for organic loan growth and potential M and A. We will continue to maintain a strong capital base to implement corporate priorities and initiatives.

Speaker 3

I'd like to now, at this time, open the floor up

Operator

The first question today comes from Graham Dyck from Piper Sandler. Please go ahead.

Speaker 5

Hey, good morning everyone.

Speaker 3

Good morning, Graham. Graham.

Speaker 4

So I just wanted

Speaker 5

to start on NII and the NIM. I guess your guidance is implying the NIM decline kind of throughout 2024, which is a bit different than what most other of your peers are saying right now.

Speaker 1

Can you just walk through your thoughts on this?

Speaker 5

I know you guys have a fair amount of floating rate loans, but just interested to hear how your outlook might differ from Other banks out there who say that fixed asset repricing will be enough to overcome any pressures from lower Fed rates? Thanks.

Speaker 4

Yes. Graham, this is Tom Owens. And I'd start by saying that To a great extent, I'm in agreement with the commentary that you just cited. And I disagree Somewhat with your interpretation so far of continuing compression in net interest margin. We've come off here what back to back linked quarter declines of 4 basis points in net interest margin.

Speaker 4

Quarter before those 2 was 6 basis points. And so I think with the continued increase that we anticipate in deposit cost, guidance that we've given you for the Q1, it's reasonable to assume that you're going to see another linked quarter decline in terms of a similar order of magnitude to what the run rate has been, but we are I think on last quarter's call, when asked about the inflection point in terms of net interest margin and net interest income, I think The guidance we gave then was 2nd to 3rd quarter. And I think at this point, it might come in a quarter to the second quarter. So we Thanks, Dick. And obviously, as I said in my prepared comments, it remains a competitive environment for deposits.

Speaker 4

Who knows what the Fed is going to actually do? Our guidance is based on market implied forwards. But all that being said, We are modeling a similar linked quarter decline in the Q1 to what you've seen the last several quarters. And then we are getting to an inflection point in terms of some modest accretion to net interest income and net interest margin. And I do agree with the commentary that Repricing of the fixed rate assets on the balance sheet over time is enough to generally stabilize, if not accrete, then it just margin modestly.

Speaker 4

So that's a long winded answer. The short answer is we think the trough is probably in the Q1 here in terms of net interest margin, and then we do get some Stabilization there and some modest accretion.

Speaker 5

Okay. That's very helpful. So then I guess as you look out past 1Q, then you're thinking stabilization maybe a few basis points of accretion, but all in about 3 at the end of the day for the full year. What sort of rate I know you said you have the forward curve, I guess baked into the guidance right now. But what did that say, I guess, when you guys built this guidance obviously changes.

Speaker 4

Yes. I like the way you asked Question, Graham, because there's been some volatility in market implied forward. So yes, when we're putting our plan together and our forecast, it did have The 6 cuts in it, which it still largely does, although the probability of the March cut has come out quite a bit. So 6 cuts on the year, ending the year with the top of the target range at 4%. But I will say again, whether that comes to pass or not, The ongoing repricing of the fixed rate assets, let's say the Fed was just on hold.

Speaker 4

Let's say the market implied forwards are completely wrong And the Fed's just on hold for the remainder of the year. I still think that because of what we've talked about here, The dynamic of the fixed rate assets continuing to reprice that you get into the back half of the year and you start to see some lift to net interest margin and net interest income. So I really think that the wildcard is obviously what the Fed ends up doing and then what the competitive landscape looks like in terms of deposits. I mean, it stands to reason that that's really going to bring some of the pressure for deposit competition down as the competition for deposits The available yield declines. And so at that point, you need to be pretty reactive in terms of how you're repricing your deposit book.

Speaker 4

One of the reasons in my prepared commentary, I gave you the details on our broker time deposit book and our promotional time deposit book is Just to reiterate the point, at this point, the weighted average remaining term on those books, which together are something like $1,800,000,000 is about 3 months. So we think we're well positioned to react to whatever the Fed does. And I think that if the market Apply forwards turn out to be right. And clearly, there's a fair amount of skepticism in the industry as to whether the Fed begins to cut in March or not. But if they do turn out to be right, I really think that's going to take pressure on the cost of deposits and provide the opportunity to reprice down the promotional and for time deposit books.

Speaker 5

Okay. So the way I'm hearing it is, It sounds like Fed cuts would be better for the margin, I guess this year than the Fed staying on hold. Is that correct? Just want to make sure I understand that correctly.

Speaker 4

No, it's pretty so I'll say it in a different way. When I look at where analysts were in terms of expectations for 24, Right? When I look at the range of analyst estimates, when I look at the median analyst estimate in terms of net interest income and net interest margin for full year 'twenty four, That's essentially where we were, right, 90 days ago before the idea that, hey, the Fed is done here and they're going start to cut, maybe they're going to cut 6 times in 2024. We were already our internal modeling was already very similar to analyst estimates both on NII and net interest margin. And so the guidance that we're giving you today just essentially reiterates that.

Speaker 4

I mean, we're slightly asset sensitive, right? And so there's no question when you look at about half the book is floating rate, Right. So there's no question that the Fed beginning to ease creates a headwind to net interest income. The question is how quickly you can react and re price down your deposit book starting with promotional and broker deposits, but we've been increasing rack rates that we pay on various products along the way as well. So we think we have the opportunity, however it turns out in terms of the ultimate path of monetary policy this year to be in the range we're giving you in terms of net interest margin and net interest income.

Speaker 5

Okay, got it. That's really helpful. And I guess just one quick question On credit, non accruals are up just a little bit again this quarter. Just wondering if you're comfortable with where the reserve is today relative to what you see on non performing side, like that said about 1.25 coverage for the ratio of reserve to non performers. So just wondering, Yes, if there's potential for maybe some reserve build in the future, if you feel good where it is right now.

Speaker 4

Hey, Graham, this is Barry. And I do feel good where the reserve is today. Maybe looking at it another way, I would say of the $100,000,000 of non accruals, we have $18,200,000 worth of reserve when you include those that are individually analyzed or 18.2%. So I do feel like that the reserve we have on the non accruals Our non performing assets is solid even though if you couch it from the standpoint of 1.2 times, That feels a little different, but if you think about it in terms of 18.2% reserve on the non accruals, Then that makes me feel good about where we are in that respect. The decent number of those are going to go larger credits of course are going to be individually analyzed And they're very precise in terms of what we know today in terms of the actual calculation.

Speaker 5

Got it. That's helpful. Thanks guys.

Speaker 4

Thank you. You're welcome.

Operator

The next question comes from Gary Kenner with D. A. Davidson. Please go ahead.

Speaker 1

Thanks. Good morning.

Speaker 3

Good morning, guys. Good morning, Gary.

Speaker 4

Hey, I wanted to ask a bit of

Speaker 1

a follow-up just on the deposit outlook. I'm curious in terms of the You kind of gave the guidance to the Q1. What are you assuming on the way down? Do you think it's a pretty similar beta? And what kind of lag do you think there is until you're able I mean, you talked about the promotional deposits and brokered.

Speaker 1

But beyond that, what type of lag do you think you see on the repricing side?

Speaker 4

So Gary, this is Tom Owens. Thanks for the question. So the way I would answer it, I gave you the simple answer first, which is about 20% beta, assuming let's start with the reference point, right? So let's assume that our guidance on 1st quarter deposit cost of about $2.19 comes to pass. And let's say that's the starting point and that the starting point is the Fed where they are currently at the top of the range is 5.5%, Right?

Speaker 4

And so then if you said, well, by year end, by the time we get to the 4th quarter, How much of the 150 basis points do you think what's the relationship between the decline in deposit cost and 150 basis points. And what does that beta turn out to be? In round numbers, I would say about 20%, right, which means 20% of 150% is about 30 basis points. So I think it would be reasonable to model from the 2.19% in the Q1, You take 30 basis points off of that and that's probably where you're going to wind up, which is about 189 or so, about, call it, 190. Keep if you want to keep it super round, go from 220 in the first quarter to 190 in the 4th quarter.

Speaker 4

And relative 150 basis points of Fed cuts, that's a beta of about 20%. And we're modeling that it's pretty linear or well, It's pretty constant is the word I'll use. In other words, the first 75% and then the next 50% and then the next 25%, we think it's pretty constant that we'll be able to get something like a 20% beta relative to those moves each quarter if those market applied forwards come to pass. So

Speaker 1

I appreciate the answer. I wonder if you could just kind of square this with me then. If you're looking at a 20% deposit repricing beta, but you're 50% variable rate loans and less than that if you factor in the hedges, of course, but still that's a Pretty decent repricing gap between the deposit beta and the variable rate loan book. So

Speaker 4

Yes, I mean, I'd have to do that all in my head, right, which is a little difficult on the fly, but the deposit base is a multiple, it's 2 point up to 3 times as much as the floating rate loan book. So Hard to do it in my head on the fly, but that's the mathematically that's the answer.

Speaker 1

Okay. I appreciate that.

Speaker 4

And then quick follow-up. If I can ask you a quick follow-up, just in

Speaker 1

terms of the mid single digit deposit growth or low to mid for the year, Does that assume any additional pay down in brokered over the course of time? Or do you think you just kind of renew those as they come up?

Speaker 4

I think that will be flat to down slightly, as I said in my prepared comments. We had really good growth in personal deposits in the 4th quarter. We had solid growth when you think about it, ex the brokered, having growth of For the full year of 3.8% full year in an environment where bank deposits have been declining, we feel really good about that and especially having been able to raise those competitive cost. And so yes, I think flat to down is the answer on that. Certainly, we do not view broker deposits as a permanent feature of our balance sheet.

Speaker 4

It was more of the utilization of broker deposits in 2023 was more to manage the repricing of the deposit book with 500 basis points of Fed rate hikes. Certainly, we're going to try and be opportunistic over time to continue to have the broker deposit book of Thanks very much. Thanks very much.

Operator

The next question comes from Catherine Mealor with KBW. Please go ahead.

Speaker 6

Thanks. Good morning. Just one more follow-up on the margin. Do you have what percentage or the amount of loan fixed rate loans that you expect to reprice this year? And then similarly, you have an amount of deposits that are indexed that will outside of kind of the promotional maybe and broker Just that it will immediately reprice lower, just kind of thinking about the immediate repricing lower once rates start moving lower on the deposit side?

Speaker 6

Thanks.

Speaker 4

Catherine, this is Barry. I'll start with the first part and Tom will take the second part. But we do expect around 600,000,000 fixed rate loans to be repriced in the next 12 months. And then a little bit less than that, maybe 5 $2,000,000 of fixed rate loans to be repriced over the next 12 to 24 months.

Speaker 6

Okay. And what's the rate on average that's coming up And repricing too?

Speaker 4

Sure. The ones that are going to be repricing in the next 12 months, The average rate is 5.14 percent and then those who were priced 12 months to 24 months out, the average rate is 4.07.

Speaker 6

Okay, great. Thank you, Barry.

Speaker 4

So, Taffy, first of all, I Appreciate Barry taking some of the load here this morning. You all are wearing me out here out of the gate. But we do not have A large portion, we have some public fund balances. And I'm a little reluctant to throw out a number I don't have the numbers in front of me right now, but it's not a huge portion that re prices down immediately. I can think of some public fund balances that probably add up between somewhere between $500,000,000 $1,000,000,000 And then we also have some Corporate, what we call CTS, Corporate Treasury Services balances that reprice down that are indexed.

Speaker 4

And while we're on the call, I'm going to try and get my hands on that number so I can give you a little more color on that piece. But Those are really the 2 categories. I feel good about that range I just gave you on the public, And I'll see if I can get my hands on a more solid answer on the corporate deposits that are impacted.

Speaker 6

Okay. That's great. And then any thoughts on which these other companies do bond restructures, how you all think about that? I know you're talking about just the bond book Running off at a high single digit pace throughout the year, but any thoughts around doing something more immediate on the bond book?

Speaker 4

Catherine, we've gotten that question every quarter and understandably so. I mean, every time we've looked at it, The opportunity I always struggle a little bit with whether you're truly adding on a spread basis to fund securities in your portfolio that are not on a spread basis. And we have a pretty small of the portfolio in the securities portfolio that fits that profile. But we certainly have continued to look at it. And I'll tell you, I mean, the other thing is, obviously, in my prepared comments, I talked about the cash flow hedge portfolio and the steps that we've done there to rein in our asset sensitivity, we are very naturally asset sensitive.

Speaker 4

And As best we can tell from call report data, we feel like we're middle of the pack in terms of our asset sensitivity. But there is a decision to be made there as well, right? I mean, with the uncertainty that we're facing with respect to the path of the Fed and monetary policy. And so potential Restructuring in the securities portfolio is part of that calculus as well as what we do with the cash flow hedge portfolio. So I'd say we continue to look at it.

Speaker 6

Great. And any updated thoughts on the potential insurance sale? I know you get that question every quarter or 2, but just curious of any kind of changes in how you're thinking about that?

Speaker 3

No, I would say the same thing I've said in the prior quarters, Catherine. That's been a good business for Trustmark. I think This year was the 13th consecutive year of record revenue and profitability in that business. It's been a good business for us. That said, we're well aware of what is going on around us.

Speaker 3

We're well aware of valuations and the opportunities there. But at this point, where there's really no change from what we've got it in prior calls.

Speaker 6

Okay, great. Thank you.

Operator

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

Speaker 3

I just want to say thank you again for joining us this morning for our full year and Q4 earnings call. We look forward to getting back together with all of you again at the end of the Q1 and toward the end of April. You all have a great rest of the week. Thank you.

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Trustmark Q4 2023
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