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Trustmark says it put big dent in Florida loan woes, has Texas acquisitions on radar

JACKSON — Delivering his first quarterly earnings presentation as Trustmark CEO last Wednesday, Jerry Host said the regional banking company is on the verge of putting its single biggest headache behind it — the Florida loan portfolio — and is ready to pursue acquisitions, possibly in Texas.

On the eve of the four quarter earnings conference, Trustmark announced net income available to shareholders of $25.2 million in the fourth quarter of 2010, which represented basic earnings per common share of 39 cents.

Analysis’ consensus was for 38 cents a share in the final quarter. For the year, earnings per share climbed nearly a quarter above 2009’s yearend value.

The $9.3-billion Trustmark put its pre-tax earnings for the quarter at $46.7 million.

The board of the Jackson-based bank, meanwhile, declared a dividend of 23 cents per common share.

For the year ended Dec. 31, Trustmark’s net income available to common shareholders totaled $100.6 million, a sum that represented basic earnings per common share of $1.58, an increase of 25.4 percent compared to 2009.

For the year, Trustmark produced a return on average tangible common equity of 12.31 percent and a return on average assets of 1.08 percent.

On the credit side, Trustmark said nonperforming loans declined 10.3 percent while nonperforming assets fell 5.9 percent.

“Trends continued to improve in the fourth quarter,” said Host, citing a lower number of past due accounts, fewer net charge offs and more declines in non-performing loans, non-performing assets and criticized and classified loans.

He said net charge offs totaled $12.7 million. On the upside, charge offs for Florida declined $4.1 million, he said.

The total Florida portfolio is down $80 million year-over-year, according to Host, noting the progress made in the Panhandle during the real estate development boom of a few years ago. “We believe our exposure (in Florida) has been significantly reduced,” he said.

“In the future if these trends continue I expect we would make Florida part of the overall credit plan” rather than a portion carved away from the rest. “We’re beginning to feel much better” about Florida, Host added.

In an exchange with analysts, Host said whether the progress on credit quality continues will hinge on continued improvement in the national and regional economies.  Trustmark is prepared should a reversal occur, he said.

“We have experienced numerous years of write downs of properties; we feel we have set aside adequate reserves. … If we see another year of downticks we’ve got it covered.”

For the moment, Trustmark is faced with deciding what to do with $842.1 million in tangible equity, a figure that represents 9.11 percent of tangible assets.

Other than expanding internally, Host said Trustmark has three options: increase the shareholder dividend, do a stock buyback or acquire new banks.

Although Host “feels good” about an opportunity for a stock buyback, he emphasized: “I think our primary choice would be to look for acquisition opportunities to enhance the long term value of the company.”

He acknowledged that the price of mergers and acquisitions has gone up in recent quarters. “If that means we have to adjust some metrics on the front end to accomplish that we would certainly be willing to do that,” he said.


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