Trustmark (TRMK) Q4 2025: Buyback Authorization Rises to $100M as Capital Flexibility Expands
Trustmark capped 2025 with record earnings and a material step up in capital return flexibility, authorizing up to $100 million in buybacks for 2026. The bank’s performance was anchored by broad-based loan and deposit growth, continued credit strength, and margin resilience, while management flagged a disciplined approach to M&A and organic expansion as market disruption presents new opportunities. Investors should watch for how Trustmark balances capital deployment between buybacks, organic talent acquisition, and opportunistic M&A as competition intensifies in key geographies.
Summary
- Capital Return Leverage: Buyback authorization increased, signaling confidence in capital flexibility and earnings power.
- Organic Growth Focus: Talent acquisition and market disruption are driving organic expansion across loan and deposit lines.
- Prudent Risk Posture: Management expects credit normalization but sees no material deterioration in asset quality.
Performance Analysis
Trustmark delivered record net income for 2025, with broad-based strength across core banking, mortgage, and wealth management businesses. Loan balances grew 4.5% year over year, while deposits climbed 2.6%, with commercial and personal deposit growth offsetting public fund outflows. Net interest income rose 8.4% on a full-year basis, supported by a net interest margin of 3.81% in Q4, which management clarified was impacted by accelerated recognition of capitalized costs from sub-debt refinancing. Adjusted, the margin held steady, reflecting disciplined deposit cost management and stable securities balances. Noninterest income represented 20.5% of total revenue, with mortgage and wealth management both contributing to sequential gains.
On the expense side, Trustmark maintained cost discipline despite merit increases and ongoing technology investments. Noninterest expense rose 5.5% for the year, with the cadence of increases weighted to the second half due to annual merit cycles and performance-based compensation. Credit metrics remained solid, with net charge-offs at 13 basis points of average loans for the year and allowance coverage at 1.15%. The provision for credit losses reflected positive migration and improved asset quality. Capital ratios improved, with CET1 at 11.72% and total risk-based capital at 14.41%.
- Deposit Cost Management: Core deposit costs declined 12 basis points quarter over quarter, underpinning margin resilience even as public fund balances fell.
- Noninterest Income Expansion: Wealth management and mortgage banking both delivered sequential revenue gains, driven by asset value appreciation and new account acquisition.
- Capital Deployment Optionality: $43 million in Q4 buybacks and a new $100 million authorization for 2026 provide levers for shareholder return and strategic flexibility.
Trustmark returned nearly 62% of net income to shareholders in 2025 through dividends and buybacks, reflecting a balanced capital management approach.
Executive Commentary
"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."
Dwayne Dooley, President and CEO
"When you look at our competitive stance on deposits and where we rank in terms of deposit cost, we've been pleased with our ability to grow balances cost effectively. You look at personal and commercial balances, they're up 4.4% year over year... We've been very pleased with our ability to do that to continue to fund solid loan growth."
Tom Owens, Chief Financial Officer
Strategic Positioning
1. Capital Return and Buyback Flexibility
Trustmark increased its buyback authorization to $100 million for 2026, following $80 million in repurchases during 2025. Management signaled a balanced approach, targeting $60 to $70 million in repurchases to maintain CET1 capital in the 11.5% to 12% range, while retaining capacity for future M&A or organic growth. The company’s willingness to return nearly 62% of net income to shareholders in 2025 underscores confidence in earnings durability and capital strength.
2. Organic Growth and Talent Acquisition
Organic expansion remains the primary growth vector, with 13 new production hires in Q4 and a focus on C&I (commercial and industrial) and equipment finance teams. Disruption from competitor M&A in Trustmark’s core geographies is viewed as an opportunity to attract both clients and talent. Management emphasized continued investment in new hires across commercial, mortgage, and wealth management lines, leveraging market dislocation to drive share gains.
3. Credit Quality and Provisioning Approach
Credit normalization is expected, but with no signs of material deterioration. Net charge-offs are guided to 13 to 15 basis points of average loans, with provisioning expected in the 14 to 18 basis point range. Improved credit migration and the resolution of larger commercial credits in 2025 reduce near-term risk, while criticized and classified loans declined materially year over year. The allowance remains robust, positioning Trustmark to absorb potential normalization without significant earnings drag.
4. Noninterest Income Diversification
Wealth management and mortgage banking are increasingly material contributors, with record revenue in wealth and improved production and profitability in mortgage. Asset value appreciation and new account acquisition, supported by cross-sell initiatives and a new brokerage platform, are fueling momentum. Management expects mid-single-digit growth in noninterest income for 2026, with upside potential if market conditions remain favorable.
5. Disciplined M&A Posture
Trustmark remains opportunistic but selective on M&A, focusing on core geographies with attractive market dynamics. Management stressed a continued preference for organic growth, with M&A only pursued if cultural fit, market opportunity, and talent acquisition align. The current environment of heightened competitor activity is seen as both a risk and an opportunity, but the bar for deals remains high.
Key Considerations
Trustmark’s record year was driven by a deliberate focus on core banking, capital discipline, and talent investment, while management’s tone on M&A remains cautious despite heightened market activity. The interplay between capital return, organic expansion, and opportunistic M&A will define the bank’s risk-reward profile in 2026.
Key Considerations:
- Deposit Mix Shift: Growth in commercial and personal deposits offset public fund outflows, supporting margin stability.
- Expense Cadence: Merit increases and incentive compensation will drive higher expense growth in the second half of 2026.
- Competitive Talent Market: Ongoing hiring in production and advisory roles is critical to sustaining organic growth, especially as regional M&A disrupts labor pools.
- Capital Allocation Discipline: Buyback pacing is tied to loan growth and regulatory capital targets, with management indicating flexibility to adjust based on market conditions.
Risks
Trustmark faces risks from potential credit normalization, competitive deposit pressures, and execution on talent acquisition amid ongoing regional bank consolidation. While capital ratios are strong, aggressive buybacks or an unexpected M&A transaction could pressure regulatory capital. The bank’s reliance on continued organic growth and stable asset quality may be tested if macroeconomic conditions deteriorate or if competitor disruptions prove less accretive than anticipated.
Forward Outlook
For Q1 2026, Trustmark guided to:
- Net interest margin in the 3.8% to 3.85% range
- Core deposit costs declining to approximately 1.61% to 1.63%
For full-year 2026, management maintained guidance:
- Mid-single-digit growth in loans held for investment and deposits (excluding brokered deposits)
- Stable securities balances
- Mid-single-digit growth in both net interest income and noninterest income
- Mid-single-digit increase in noninterest expense
- Credit costs normalizing to 14 to 18 basis points of average loans
Management highlighted several factors that will influence performance:
- Continued loan growth and disciplined capital deployment will be the main levers for EPS growth
- Expense increases will be weighted to the second half due to merit and incentive compensation cycles
Takeaways
Trustmark’s record 2025 performance sets a high bar for 2026, with the bank positioned to deploy capital flexibly while maintaining strong credit and operational discipline.
- Capital Return Optionality: The new $100 million buyback authorization, with a likely deployment of $60 to $70 million, signals management’s confidence in earnings and capital strength, while retaining ample flexibility for loan growth and M&A.
- Organic Growth Execution: Success in attracting new talent and clients amid regional disruption will be a key determinant of whether Trustmark can sustain above-peer growth without overextending on M&A.
- Forward Risk Management: Investors should monitor quarterly credit trends and expense run-rate, especially in the second half, as well as the pace and rationale for capital deployment.
Conclusion
Trustmark exits 2025 with record earnings, robust capital, and a clear bias toward organic growth and disciplined capital return. The bank’s ability to balance shareholder payouts with prudent risk management and talent acquisition will be the central narrative for 2026.
Industry Read-Through
Trustmark’s quarter highlights several industry themes: regional banks are increasingly leveraging buybacks as a capital management tool, while organic growth via talent acquisition is becoming a primary differentiator amid sector-wide M&A disruption. The focus on deposit cost management and credit normalization is likely to persist across peers, especially as funding costs remain volatile. Banks with diversified noninterest income streams and disciplined capital allocation will be best positioned to navigate ongoing market uncertainty and competitive shifts in core Sunbelt geographies.