Trustmark (TRMK) Q3 2025: Deposit Base Expands $550M as Talent Investment Drives Organic Growth

October 29, 2025 | By EarningsIQ Research

Trustmark’s third quarter showcased disciplined deposit growth and a clear pivot toward organic expansion in key Southeastern markets. Leadership’s ongoing investment in production talent and relationship managers is translating to diversified loan growth and improved credit quality, even as deposit competition remains intense. With guidance reaffirmed and capital deployment flexibility increasing, the bank’s focus on full-relationship banking and selective opportunism in M&A will shape its trajectory into 2026.

Summary

• Organic Expansion Accelerates: New hires and market focus are strengthening Trustmark’s franchise in high-growth Southeastern cities.
• Deposit Growth Outpaces Loans: Core deposit campaigns and balanced commercial/personal mix support funding and margin stability.
• Capital Flexibility Increases: Management signals more proactive share repurchase and disciplined M&A as capital builds.

Performance Analysis

Trustmark delivered a quarter marked by broad-based loan growth and robust deposit inflows, with loans held for investment up $83 million sequentially and $448 million year-over-year, supported by momentum in commercial and municipal lending. Deposit growth outpaced loans, with balances rising $550 million quarter-over-quarter, led by a 5.9% increase in non-interest-bearing accounts. This deposit surge was driven by a mix of promotional campaigns and organic relationship growth, keeping the loan-to-deposit ratio in the desired mid-to-high-80s range.

Net interest income rose 2.4%, with net interest margin expanding two basis points to 3.83% despite a modest four-basis-point increase in deposit costs. Non-interest income remained stable, while non-interest expense rose 4.7% due to merit increases, incentive accruals, and non-routine items tied to strategic initiatives. Credit quality improved, as net charge-offs were contained and criticized loans declined by $49 million in the quarter, contributing to a lower provision for credit losses.

• Deposit Campaigns Drive Funding: Promotional money market programs and targeted relationship management fueled balanced deposit growth across commercial and personal lines.
• Expense Growth Linked to Talent Investment: Third-quarter hiring (29 new associates, 21 in production roles) increased costs but is expected to drive future revenue.
• Credit Quality Strengthens: Criticized loans trended down, supporting lower provision and affirming stable asset quality.

Capital ratios improved across the board, with CET1 up 18 basis points to 11.88%, enabling continued share repurchases and future capital deployment flexibility.

Executive Commentary

Strategic Positioning

1. Organic Growth in High-Opportunity Markets

Trustmark is intensifying its focus on organic expansion, targeting high-growth Southeastern markets such as Houston, Birmingham, Huntsville, and Atlanta. The addition of 29 new associates, including 21 in production roles across commercial real estate (CRE), equipment finance, and corporate banking, underlines a strategy to build deeper local relationships and capture share as M&A reshapes the competitive landscape.

2. Deposit Base as Competitive Moat

Core deposit growth and retention remain central to the business model, with promotional campaigns and proactive rate management sustaining funding. Leadership highlighted a surprisingly competitive deposit environment, but continued to execute cost-effective campaigns and leverage relationship managers to maintain a stable loan-to-deposit ratio and support margin stability.

3. Disciplined Capital Deployment and Shareholder Returns

With improving capital ratios, Trustmark is balancing share repurchases, organic loan growth, and selective M&A. The company repurchased $11 million in stock in Q3 and has $63 million in remaining authority, signaling a willingness to increase buybacks if loan demand moderates. Management continues to prioritize organic growth but remains opportunistic regarding potential acquisitions, especially those that would bolster core deposit funding.

4. Credit Quality and Underwriting Discipline

Asset quality trends are improving, with criticized loans declining by $123 million year-to-date, reflecting prudent underwriting and proactive portfolio management. The bank’s allowance for credit losses remains solid at 1.2% of loans held for investment, with lower provisions expected to persist barring macro deterioration.

5. Margin Management Amid Rate Volatility

Trustmark’s asset-sensitive balance sheet positions it to benefit from repricing tailwinds on loans and securities, but also requires agile deposit rate management as the Fed cuts rates. Management expects some near-term margin choppiness, but projects net interest margin to remain in the 3.78% to 3.82% range, supported by proactive deposit repricing and a 40% deposit beta assumption through the next rate cycle.

Key Considerations

Trustmark’s Q3 results reflect a franchise in transition, balancing tactical investments in talent and technology with disciplined risk and capital management. The bank’s ability to execute on organic growth, navigate deposit competition, and deploy capital efficiently will be critical as industry M&A and rate cycles reshape the regional banking landscape.

Key Considerations:

• Talent-Led Revenue Expansion: The ramp-up in hiring, especially in production roles, is expected to drive future loan and deposit growth, but comes with near-term expense pressure.
• Deposit Competition Remains Elevated: Sustained promotional campaigns and rate sensitivity will require ongoing vigilance to defend funding at reasonable cost.
• Share Repurchase Flexibility: With CET1 nearing 12%, management has room to accelerate buybacks if loan growth moderates, enhancing EPS growth.
• M&A as a Strategic Option: While organic growth is preferred, management remains open to acquisitions that strengthen core funding and market share.

Risks

Competitive deposit pricing, especially in core Southeastern markets, could compress margins if industry loan growth continues to outpace deposit inflows. Rate volatility and aggressive promotional campaigns may pressure funding costs and customer retention. Expense growth tied to talent investment must be matched by revenue realization, or risk diluting operating leverage. Finally, any deterioration in credit quality or macroeconomic conditions could reverse the positive asset quality trends observed this quarter.

Forward Outlook

For Q4 2025, Trustmark guided to:

• Net interest margin in a tightened range of 3.78% to 3.82%
• Mid-single-digit loan growth and low-single-digit deposit growth for the full year

For full-year 2025, management affirmed guidance:

• Net interest income up high single digits
• Non-interest income and expense up mid-single digits
• Provision for credit losses trending lower versus 2024

Management cited continued investment in production talent, ongoing deposit competition, and proactive capital deployment as key themes for the coming quarters.

• Guidance reflects stable margin expectations despite choppy rate environment
• Organic growth initiatives and opportunistic share repurchases remain capital allocation priorities

Takeaways

Trustmark’s Q3 performance validates its strategy of disciplined organic expansion, but underscores the need to balance expense growth with tangible revenue gains as deposit competition intensifies.

• Organic Growth Execution: Talent investment is translating into diversified loan and deposit growth, but margin defense will require continued agility in a competitive landscape.
• Capital Flexibility: Rising capital ratios enable proactive share repurchase and optionality for M&A, positioning Trustmark for EPS growth and strategic expansion.
• Watch for Margin and Expense Trends: Investors should monitor deposit pricing dynamics, expense leverage, and credit quality as leading indicators of sustained outperformance.

Conclusion

Trustmark’s third quarter demonstrated the early benefits of its organic growth strategy, with disciplined deposit gathering, improved credit quality, and capital flexibility setting the stage for continued expansion. The bank’s ability to convert talent investment into profitable growth, while navigating deposit and rate pressures, will be the critical watchpoint heading into 2026.

Industry Read-Through

Regional banks across the Southeast face a fiercely competitive deposit environment, with promotional campaigns and relationship management driving funding strategies. Talent acquisition and retention are emerging as key differentiators, as banks seek to deepen customer relationships and capture share in growth markets. Margin management will remain volatile as the Fed cuts rates, and banks with flexible capital positions will be best positioned to balance organic growth, share repurchase, and opportunistic M&A. Asset quality improvements at Trustmark signal that disciplined underwriting and proactive portfolio management can offset macro headwinds, but vigilance is required as credit cycles evolve.

TRMK Financials Regional Banks Organic Growth Deposits Share Repurchase Credit Quality