트러스트마크(TRMK) 2026년 3분기 실적 발표회: 사상 최고 EPS 및 NIM 가이던스 상향

핵심 요약

• 트러스트마크 코퍼레이션(Trustmark Corporation)은 2026년 3분기 순이익 5,810만 달러(희석 주당순이익(EPS) 기준 1.00달러)를 기록했다고 발표했습니다. 경영진은 분기 영업 EPS가 회사 137년 역사상 최고 기록이라고 설명했습니다.
• 전액 세금상등액 기준 순이자이익은 전분기 대비 1.2% 증가했으며, 순이자마진(NIM)은 3.84%를 유지했습니다. 경영진은 연간 NIM 가이던스를 3.83%~3.87%로 상향 조정했으며, 4분기 NIM은 약 4% 수준이 될 것으로 예상하고 있습니다.
• 투자목적 대출 잔액은 2분기 대비 4,390만 달러(0.3%) 감소했으나, 전년 동기 대비로는 3억 2,100만 달러(2.4%) 증가했습니다. 견조한 대출 실적에도 불구하고 증가한 상업용 대출 조기상환이 이를 상쇄했습니다.
• 계획된 중개예금 이탈을 제외하면, 예금은 전분기 대비 1억 8,430만 달러(1.2%), 전년 동기 대비 3.4% 성장했습니다. 중개예금은 1억 9,800만 달러 감소하여 총예금의 1.3%를 차지했습니다.
• 트러스트마크는 수익률 1.4%인 유가증권 6억 2,950만 달러를 매각하고 수익률 약 5%의 유가증권 6억 2,800만 달러를 매수했습니다. 경영진은 포트폴리오 재구성과 관련 세일앤리스백(매각 후 임차) 거래가 4분기 순이자이익을 약 570만 달러 증가시킬 것으로 예상하고 있습니다.
• 대손충당금 전입액 230만 달러, 순대손상각비 100만 달러(평균 대출의 3bp에 해당)를 기록하며 자산 건전성은 견조한 수준을 유지했습니다.

핵심 재무 데이터

사업 및 영업 성과

상업용 부동산(CRE) 대출 조기상환은 대출 성장의 주요 제약 요인으로 남았습니다. 예상치 못한 CRE 조기상환액은 요주의 이하 여신 5,200만 달러를 포함해 총 약 2억 1,400만 달러에 달했습니다. C&I 대출에서는 4개 여신에서 약 6,000만 달러의 예상치 못한 조기상환이 발생했으며, 공공금융 잔액은 약 4,300만 달러 감소했습니다.

경영진은 분기 말 승인된 대출 파이프라인이 10억 달러에 육박하며 C&I, CRE, 장비 금융 및 지방정부 대출 전반에 걸쳐 기회가 존재하여 이전보다 넓어졌다고 밝혔습니다. 신규 공공금융 한도대출 중 약 1억 1,500만 달러의 인출이 가능한 상태이며, 자금 집행은 2026년 4분기와 2027년에 걸쳐 이루어질 것으로 예상됩니다.

기업 및 개인 채널 전반의 예금 성장 덕분에 트러스트마크는 중개예금을 1억 9,800만 달러 줄일 수 있었습니다. 예금 구성비는 이자부 예금 약 80%, 무이자 예금 약 20% 수준을 유지했습니다.

모기지 은행 취급 실적은 전분기 대비 11.7% 감소했고 모기지 수익은 11.6% 하락했습니다. 또한 코어 시스템 전환 후 기존에 수수료 수익으로 기록되던 월 약 25만 달러 규모의 수수익이 순이자이익으로 들어가면서 자금관리 수수료 수익도 감소했습니다. 반면 자산관리(Wealth Management) 수익은 지속적인 성장세를 나타냈습니다.

트러스트마크는 34개 지점 건물에 대한 세일앤리스백을 완료하여 거래 관련 비용을 제외하고 6,150만 달러의 세전 이익을 거두었습니다. 회사는 또한 유가증권 포트폴리오 재편으로 6,150만 달러의 세전 손실을 인식하여 부동산 매각 이익을 사실상 상쇄했습니다.

2026년 첫 9개월 동안 트러스트마크는 약 140만 주에 해당하는 6,090만 달러의 보통주를 매입했습니다. 3분기 매입액은 총 2,010만 달러(약 42만 8,000주)였습니다. 이사회는 주당 0.25달러의 분기 배당금을 의결했으며, 12월 1일 주주명부에 등재된 주주를 대상으로 12월 15일에 지급될 예정입니다.

경영진 가이던스

• 경영진은 중개예금을 제외한 투자목적 대출 및 예금의 연간 성장이 한 자릿수 중반대를 기록할 것이라는 전망을 유지하고 있습니다.
• 유가증권 잔액은 안정적인 수준을 유지할 것으로 예상됩니다.
• 2026년 연간 순이자마진 가이던스는 3.83%~3.87%로 상향 조정되었으며, 경영진은 상단 수준의 실적과 4분기 NIM 약 4%를 예상하고 있습니다.
• 전액 세금상등액 기준 순이자이익은 2025년 대비 한 자릿수 중반 비율로 증가할 것으로 예상됩니다.
• 경영진은 난외 신용 익스포저를 포함한 대손충당금 전입액이 정상화되어 2026년 이전 분기 수준을 유지할 것으로 전망합니다.
• 연간 비이자수익은 어려운 모기지 업황과 자금관리 수익의 순이자이익 이전을 반영하여 한 자릿수 초반에서 중반 수준의 성장률을 기록할 것으로 전망이 수정되었습니다.
• 연간 비이자비용 가이던스는 한 자릿수 중반 성장을 유지하고 있습니다.
• 경영진은 FOMC 금리 인상 이전에 시작된 예금 캠페인을 반영해 33%의 베타와 함께 약 1.76%의 예금 비용을 전망했습니다.

리스크 및 주요 관전 포인트

상업용 대출 조기상환은 여전히 예측하기 어렵습니다. 경영진은 예상치 못한 조기상환이 매 분기 발생하고 있으며, 10억 달러에 달하는 승인 파이프라인의 집행 시기와 최종 성사 여부는 불확실하다고 밝혔습니다.

경쟁 심화는 CRE, C&I, 공공금융 전반의 가격 책정과 대출 성장에 계속 영향을 미치고 있습니다. 트러스트마크는 영업권을 확보하기 위해 가격이나 심사 기준을 완화하기보다는 선별적 대응을 유지할 것이라고 밝혔습니다.

판촉 캠페인의 만기가 오고 정기예금이 약 6개월의 시차를 두고 재조정됨에 따라 예금 비용이 상승할 수 있습니다. 경영진의 전망은 안정적인 예금 포트폴리오를 가정하지만, 예금 구성 변화(mix-shift) 리스크의 가능성도 인정했습니다.

금리 상승은 상업용 부동산 차주에게 차환 및 부채상환 리스크를 유발합니다. 트러스트마크는 실제 금리, 심사 금리, 또는 10년 만기 국채 금리에 200~250bp의 가산금리를 더한 금리 중 높은 금리를 사용해 스트레스 테스트를 수행하고 있으며, 거래 완충력이 부족한 경우 차주에게 추가 자본 입주를 요구할 수 있다고 밝혔습니다.

애널리스트 Q&A 주요 내용

경영진은 1년 동안의 금리 변동에 대한 총예금 베타 모델 수치가 약 40%라고 말했습니다. 이자부 예금 기준으로는 첫 금리 인상 시 약 55%의 베타를 확인했습니다.

트러스트마크는 대출 포트폴리오의 약 59%가 금리 변동 후 3개월 이내에 재조정되는 것으로 추정합니다. 현재 모델은 1년 동안 재무상태표 성장이 없다고 가정할 때 25bp 금리 변동마다 약 2bp의 NIM 확대를 나타냅니다.

경영진은 승인된 파이프라인이 과거 수준보다 견조하고 다변화되어 있어 4분기 대출 성장에 대해 자신감을 나타냈습니다. 다만, 승인된 약정이 모두 당해 분기 내에 완료되거나 자금이 집행되는 것은 아니라고 강조했습니다.

경영진은 또한 고금리로 인해 안정화되었거나 안정화되고 있는 프로젝트들이 트러스트마크 재무상태표에 더 오래 남게 됨으로써 CRE 조기상환이 둔화될 수 있다고 설명했습니다. 이러한 대출은 일반적으로 변동금리이므로 트러스트마크는 해당 여신을 유지하면서 기준금리 상승의 혜택을 누릴 수 있습니다.

영업레버리지와 관련하여 경영진은 순이자마진, 예금 조달 동향, 비이자수익 및 자체 성장에 따른 추가 개선 가능성이 있다고 말했습니다. 트러스트마크는 인력 교체 및 강화를 포함하여 3분기 동안 18명 또는 19명의 영업 전문 인력을 채용했습니다.

실적발표 콘퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good morning, ladies and gentlemen, and welcome to the Trustmark Corporation's Third Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded. It is now my pleasure to introduce Mr. Joey Rein, Director of Corporate Strategy at Trustmark. Please go ahead.

F. Joseph Rein

Good morning. Our third quarter earnings release and presentation for today's call are available in the Investor Relations section of trustmark.com. During this call, management may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from these statements because of risks and uncertainties outlined in our earnings release and our other filings with the Securities and Exchange Commission.

Now I'll turn the call over to Duane Dewey, President and CEO of Trustmark.

Duane Dewey

Thank you, Joey, and good morning, everyone. Thank you for joining us this morning. With me today are Tom Owens, our Chief Operating Officer; Joe Bond, our Chief Financial Officer; Barry Harvey, our Chief Credit and Operations Officer; and Tom Chambers, our Chief Accounting Officer. I'll review our performance and outlook and have Barry and Joe add some color before taking your questions.

Trustmark delivered a solid third quarter, highlighted by growing net interest income, strong credit quality and core deposit growth. Results demonstrate the strength of the core franchise, while strategic balance sheet actions taken during the quarter are designed to enhance future earnings capacity. Wealth Management also continued its positive momentum, and we maintained our focus on disciplined expense management and returning capital to shareholders.

Turning to Slide 3, financial highlights. Trustmark reported third quarter net income of $58.1 million or $1 per diluted share with a return on average tangible equity of 12.72% and a return on average assets of 1.21%. The quarterly operating EPS is a record for Trustmark in our 137-year history. The quarter included two strategic nonroutine transactions. We sold 34 branch properties and simultaneously entered into a triple net lease agreement for each generating a pretax gain of $61.5 million after transaction-related expenses.

We also repositioned our Investment Securities portfolio, reclassifying held-to-maturity securities for -- available for sale. We sold $629.5 million of securities yielding a weighted average of 1.4% and purchased $628 million of securities yielding a weighted average of approximately 5%. The resulting $61.5 million pretax loss was effectively offset by the sale-leaseback gain. In the quarter, loans held for investment declined $43.9 million or 0.3%, but increased $321 million or 2.4% year-over-year. Loan production trends remained solid during the quarter, although growth was offset by continued elevated commercial loan payoffs. Barry Harvey will provide more detail after my summary comments.

On the deposit side, excluding planned brokered deposit runoff, deposits grew $184.3 million or 1.2% linked quarter and 3.4% year-over-year. Total deposit costs were 1.67% for the quarter, reflecting the strength of our attractive low-cost deposit base. Revenue remained solid at $207.1 million, down 0.5% linked quarter and up 2.4% year-over-year. Fully tax equivalent net interest income rose $2 million or 1.2% linked quarter, while the net interest margin held steady at 3.84%. Fee income reflected quarterly variability.

Mortgage banking loan production volume was down 11.7% and linked quarter revenue was down 11.6%. Treasury management fee revenue was also down due to our core conversion shift to on-balance sheet deposits from fee income-oriented products. Finally, Wealth Management revenue showed continued solid growth.

Expense discipline remains a priority. Noninterest expense rose $753,000 or 0.6% linked quarter. Salaries and employee benefits increased $1.7 million or 2.3%, while other expense fell $1.7 million or 10.4%, primarily due to lower other real estate miscellaneous and loan expenses. Credit quality remained strong with third quarter net provision for credit losses of $2.3 million and net charge-offs were $1 million or 3 basis points of average loans. During the quarter, we continued our share repurchase program. In the first 9 months of 2026, we repurchased $60.9 million of common stock or approximately 1.4 million shares. This included $20.1 million or approximately 428,000 shares in the third quarter. The Board also declared a quarterly cash dividend of $0.25 per share payable December 15 to shareholders of record on December 1.

Turning to our full year outlook on Slide 15. Note, it is a full year outlook. We continue to expect mid-single-digit growth in both loans held for investment and deposits, excluding brokered deposits. Security balances are expected to remain stable. We have raised our full year 2026 net interest margin guidance to 3.83% to 3.87%. This is for the full year. You will recall Q1 NIM was 3.81%, while second and third quarters were 3.84% we do expect to be at the high end of our guide range with a Q4 NIM around 4%. We expect fully tax equivalent net interest income to be up mid-single digits compared to 2025. We expect the total provision for credit losses, including off-balance sheet credit exposure to normalize and remain consistent with prior 2026 quarters. This outlook is in line with our disciplined credit risk management and strong third quarter asset quality metrics.

With the challenging mortgage markets and the movement of treasury management revenue to NII, we now expect low to mid-single-digit growth in full year noninterest income, and we reaffirm our full year 2026 noninterest expense guidance of middle single-digit growth as we continue investing in the business while maintaining expense discipline. As previously communicated, we will maintain a disciplined approach to capital deployment, favoring organic loan growth, potential market expansion, M&A and other general corporate purposes as market conditions warrant.

And with that overall summary, I'll turn it over to Barry for a few comments on loans.

Robert Harvey

Thank you, Duane. And as you know, our balances were down $44 million for the quarter, and that puts us up year-to-date $195 million. We do continue to see CRE payoffs, both expected and unexpected. The unexpected payoffs for the quarter were about $214 million. Some good news on some payoffs is we did have $52 million worth of payoffs that were criticized credits, and we're glad to see those leave us. From the C&I perspective, we did experience about $60 million in unexpected payoffs coming from 4 credits. And then on the public finance side, we had a slight decline of about $43 million. The good news there is we -- while we did have one credit that paid-off that drove most of that decline, in the third quarter, we did also create a new facility for that same customer that has today about $115 million worth of availability to be drawn. We do expect that to fund up over Q4 and into '27.

And on the equipment finance side, we did have a little bit of a slower quarter than we've become accustomed to. We do fully expect that, that faster growth will reoccur in Q4 of this year. Just from the standpoint of the pipeline, the approved loan pipeline is very strong right now for us. We continue to have confidence in our ability to generate solid loan growth in Q4 and beyond. And the pipeline as it sits today of approved commitments is around $1 billion. Obviously, not all those will close, but we do feel very positive about the momentum that we do have.

At this time, I'd like to turn it over to Joe Bond, our CFO.

Joseph Bond

Thank you, Barry. Let me give a little more color on the deposits. Last quarter, on June 30, we had a surge on the last day of $200 million of noninterest-bearing deposits that left soon thereafter. With that, deposit growth across both commercial and consumer channels allowed us to reduce broker deposits by $198 million during the quarter, further strengthening our funding profile. Brokered deposits now represent just 1.3% of total deposits. Deposit costs were 1.67% for the quarter, 1 basis point above our guidance last quarter. For the quarter, we are forecasting deposit costs of approximately 1.76% with a 33% beta. The increase in this quarter primarily reflects deposit campaigns launched before the FOMC rate increase. We have not changed our promotional pricing since those campaigns were launched. We also have not changed pricing of our standard products, exception pricing remains limited.

Our deposit mix remains approximately 80% interest-bearing and 20% noninterest-bearing. We expect that mix to remain relatively stable in our forecast. Importantly, this deposit franchise has been built organically over decades through long-standing customer relationships and the work of our associates. We believe that provides us with a durable funding advantage in this competitive market.

Now turning over to net interest margin and revenue. Net interest margin was stable at 3.84%, as Duane has spoken to. On a linked-quarter basis, loan yields increased 4 basis points and securities were up 8 basis points, while the cost of interest-bearing liabilities rose 4 basis points. On a year-over-year basis, the cost of interest-bearing liabilities is down 27 basis points. Approximately 59% of the loan portfolio reprices within the first 3 months following a rate change, which provides relatively rapid asset pricing. Based on our current modeling, we expect approximately 2 basis points of NIM expansion for each 25 basis point change in rates, assuming no growth over a 1-year period.

On noninterest income, there are two items that are helpful in understanding the linked quarter comparison. Following the core conversion, approximately $250,000 per month or roughly $750,000 per quarter of economics previously reflected in fee income now flows through the net interest margin, a geography change on the income statement and the balance sheet because those products were no longer offered. In addition, the second quarter noninterest income included $1.2 million of partnership distributions that did not repeat this quarter.

Moving over to the sale leaseback and investment portfolio restructuring, I want to highlight the combined economic effect of two significant transactions this quarter. Together, these transactions allowed us to unlock capital embedded in our branch network and redeploy it through restructuring of our investment portfolio to further strengthen our balance sheet. The objective was to improve the timing of portfolio cash flows, strengthen our interest rate risk profile and enhance future earnings. For the fourth quarter of 2026, we currently expect the transaction to contribute approximately $5.7 million of incremental net interest income, which equates to approximately 12 basis points of margin after considering net occupancy and premises impact and taxes, approximately $3.2 million of income -- incremental net income or 5 basis points of diluted share. This was a flawless coordinated effort across our treasury, accounting, finance, facilities, properties and legal teams, and I want to recognize the associates across those groups who work to execute these transactions. Duane?

Duane Dewey

Thank you, Joe, and I will open the floor up for questions.

Operator

[Operator Instructions] And today's first question will come from Michael Rose with Raymond James.

질의응답

Michael Rose

I appreciate the color on the fourth quarter NIM. I think I misunderstood the slides last night, but good to hear, and I appreciate the color around the sensitivity to forward rates. Can you just give us some underlying assumptions around deposit betas and then maybe what we should expect just on a -- as we move in beyond the fourth quarter, will you get the big benefit just given the competitive pressures on both loans and deposits?

Joseph Bond

Sure. The beta that we're assuming assumes a full year of rate movement. So typically, that will work out into total deposits of around 40 basis points. Our CDs we do have a lag effect, which takes about 6-months for that to eventually follow through the rate increase and our interest-bearing transaction deposits, as I've spoken to in my comments, we have not changed standard pricing. They're lagging current rates and the balances are evolving as expected. So we're monitoring those very closely. But essentially, that's the betas that I'm expecting.

Duane Dewey

Barry, any comments on the loan yields or what's happening?

Robert Harvey

No, I think the loan yields remain competitive and in all categories, whether it's C&I or CRE, we're continuing to be disciplined and make sure that if we are -- if it is a thinner priced credit, it is for the right borrowers. And -- but it's more of the same Duane.

Michael Rose

Okay. That's helpful. And then just as it relates to loans, a little bit of a shrinkage this quarter. You kind of reiterated the guide. It implies a pretty big step-up in the fourth quarter. I guess maybe can you just kind of talk about pipelines and maybe what you see kind of driving that reversal in a somewhat material way in the fourth quarter?

Robert Harvey

Sure, Michael. This is Barry. As I mentioned, the pipeline of our approved commitments is just a little less than $1 billion as of 9/30. And the pull-through on that remains to be seen. But typically, for us, when we go through all the steps of getting something formally approved, the close rate is very strong there. And that's a stronger pipeline than we've seen historically. I do think we've got a lot of opportunities with live deals that we've approved that will come to fruition during the fourth quarter. We're vetting a tremendous number of deals, Michael. Every deal that -- before our relationship managers and portfolio managers spend a lot of time on it, we do vet deals. And it gives us from the credit perspective, an opportunity to understand where the opportunities are and we need to greenlight those deals and move them forward or it's something we may need some additional information on.

But I will say we've been extremely busy the last 3 -- probably the last 3 months vetting deals more so than normal, both on CRE but as well as C&I, both working capital and nonworking capital. It takes a little while for those deals to fully maturate and to get them approved and then to get them closed and booked. But we do feel like there's a lot of momentum going into fourth quarter that will come to fruition then. So we're encouraged across the board by the activities I mentioned, I mean, just on the public finance side. The payoff we've received with the new facility we've put in place, there's an additional $110 million worth of funding that we didn't have available previously. So there's quite a few things that we feel very encouraged about for Q4 and then going into '27, but specifically for Q4.

Operator

The next question will come from Stephen Scouten with Piper Sandler.

Stephen Scouten

Maybe just drilling down a little bit more, Barry, on that pipeline. I think you gave a $1 billion figure of the current approved pipeline. I don't remember if you've given -- if you gave that number last quarter, but could you remind us how that compared maybe kind of quarter-over-quarter and just what you expect again from a payoff perspective?

Robert Harvey

Sure, Stephen. From a quarter-over-quarter, it's a little hard to say only because we've changed our -- some of our methodologies and we're evaluating the pipeline. So it's a little hard to compare previous periods. We do feel like that it is a stronger pipeline than we've had historically. And we've got a number of deals that are far along in the process and that we feel like the probability of closing is much higher. The second half of your question, remind me.

Stephen Scouten

Just kind of any expectations for payoffs relative to last quarter. And I know a lot of that was unexpected payoffs, but just kind of what you see as more scheduled? I suppose.

Robert Harvey

Yes. And on the scheduling side, it's in line with what we've had in the previous 3 quarters for Q4. I would say also that unexpected, while it does in and of itself indicate that we were not planning on it, obviously, unexpected happens every quarter. We just don't know which ones they are. They're not maturities that we would expect to see leave us based upon the feedback from the borrower. There are situations where the borrower circumstances have changed. So we do have some unexpected every quarter, but we can just speak to third quarter, it's about $214 million, and we'll have to wait and see what we experience in the fourth quarter.

Typically, there's a lot of things that end up pushing into the next year when you get to the fourth quarter. So we'll have to just wait and see how that plays out. But we are very encouraged by the activity we have going and the stage at which it is relative to being able to get the loan closed and booked -- and funded and booked all in Q4.

Duane Dewey

Stephen, I'll add real quick. This is Duane. Just to note, that pipeline is significantly broader than we've experienced. I think where for several quarters, periods, years even where we were predominantly CRE-focused, where now we're seeing much broader C&I opportunities and then further equipment finance and municipal. So we're seeing some things now. Barry mentioned in his prior comments that are very encouraging along the loan diversity perspective. So good news on that front.

Stephen Scouten

Okay. Great. And maybe just one more around loan growth. I mean with the mid-single-digit guide kind of year-to-date, I think like Michael said, it would be a pretty heavy lift here in the fourth quarter, but you sound confident. But kind of year-to-date, what do you think maybe has been slightly behind schedule with what you would have seen at the beginning of the year? Is that competitive factors, pricing, payoff levels, maybe a little bit of everything I assume. But if you could kind of speak to what's been maybe the biggest surprise relative to what you would have hoped could happen at the high end?

Robert Harvey

Stephen, I think it's a combination of all that you mentioned. I mean we are seeing a little bit more in the way of payoffs than we might would have expected. But having said that, it's a very competitive landscape. And whether it's -- whether you're talking about CRE or whether you're talking about C&I, working capital, nonworking capital, we haven't seen a lot of new public opportunities. We do have quite a few of those in front of us today. But I think it's a matter of just the need has arisen for the -- for some of the municipalities and other entities that fit inside that public finance category. So we are seeing some opportunities there.

But here, again, on the public side, everything pretty much -- there's a lot of it is bid. So it's -- you don't -- you haven't won it until you want it. And so it's one of those things where you just got to be very competitive from the beginning, and then we do have some situations where due to some long-term relationships, we are able to -- it's a negotiated deal as opposed to a bid deal. But we are seeing some opportunities there that we haven't seen in the prior quarters. So public finance has obviously been slower through the first 3 quarters than we would have anticipated. I think C&I and CRE is a function of competitiveness and the number of players pursuing the opportunities. And in some cases, where competitors are willing to go to win an opportunity. So we're going to have to remain disciplined and be selective for when we get very baked in on pricing. But I am encouraged by the level of our pipeline that are approved deals waiting to be closed, funded. And so we're encouraged by what we see at this point for Q4.

Stephen Scouten

Okay. And maybe just one last for me. On the deposit beta you referenced potentially, Joe, it was like 40%, I believe. Is that, I guess, total deposit beta that you're thinking about? It looks like maybe on the first hike through 4Q, you'd be at like 55% interest-bearing. So is that kind of the right way to think about it on an interest-bearing perspective?

Joseph Bond

Yes.

Stephen Scouten

Okay. And is that just kind of standard? Or is there any mix shift dynamic affecting that as well?

Joseph Bond

No, we don't have mix shift right now in our forecast, but there could be risk with that truly. But right now, in our forecast modeling, we don't have that mix.

Operator

The next question will come from Feddie Strickland with Hovde Group.

Feddie Strickland

Just wanted to continue on the loan discussion here, specifically on the payoff. I realize there's still a headwind today and you can kind of talk through a bit of what you expect near term. But if we continue to see rates go up a little bit, could we see those slow down given what you've seen historically? Or do you think we'll see the same level we've been seeing in the last couple of quarters?

Robert Harvey

Feddie, this is Barry. And I would agree with you. We're starting to see that a little bit already, where there's a little bit of a pause. And it's going to -- and there's additional time wanted to evaluate the direction things may ultimately go from an interest rate perspective. There's also the need for a lot of these projects, especially on the CRE side, the projects have always have in almost every real estate deal, there's some delays during construction that result in slower stabilization. The project is going according to plan from the standpoint of they're getting the rents they expect and the occupancy is coming as quickly as they anticipated, but it just started later. And therefore, there's oftentimes a need for another 6 months to 12 months. That's just normal business, and that's occurring.

And then you do have the situation where a little bit of higher rates and the potential for higher rates then you do have -- we do have projects that are staying with us. Of course, we're actively pursuing those opportunities. These are projects where it's been constructed, it's stabilized or stabilizing. It's well past a 1:1 debt service coverage on P&I basis and performing, just not fully baked from the standpoint of getting the maximum value out of the project when you're selling it into the marketplace. But we're very excited about those projects staying with us. They're well priced relative to the new deals we're looking at today. And for the most part, we're not necessarily talking about the need to reprice them for that extra 12 months, 18 months where they want to stay. So -- and they're all variable rates. So as these rates bump up and the pricing stays the same, we get the benefit of the index moving up.

So we're encouraged that a little bit higher rates or the belief that there's going to be higher rates will allow these projects to stay a little longer than we anticipated. That will help us some on the runoff and the need for production to cover the runoff.

Feddie Strickland

That's really helpful color. And just one more for me on -- just in the environment. Has the return of higher rates and some uncertainty increased or decreased the amount of conversations there? And what are you seeing from smaller banks?

Duane Dewey

I'd say, in general, about the same, not a lot of change. And I think as we have mentioned in our prior quarterly calls, I mean, we do believe scale is going to be critically important moving forward. And so we remain very interested. And there are conversations ongoing across all spectrums of sizes. So I really haven't seen much change. I do think the interest rate environment could impact things a little bit. But at the end of the day, I do believe the push to scale is really continuing.

Operator

The next question will come from Will Jones with KBW.

William Jones

I wanted to just ask, if I kind of put all the moving pieces together, a higher margin next quarter. You gave us the expense guide, which is roughly unchanged. Between those two dynamics, it feels like there's still a good opportunity for operating leverage into 2027. I guess just -- is that a fair comment to say, Duane? Is that kind of how you see things? And then within that, when we kind of set at this high level of profitability following the last insurance trade and bond trade. We now have the HTM restructure here. What do you feel like the ultimate upside is to profitability kind of putting all these moving pieces together?

Joseph Bond

On the operating leverage, the response is, yes. I do see there is upside opportunity really across all avenues in terms of what's driving the net interest margin, the dynamics of our deposit base and funding there, net interest -- noninterest revenue items as well. So I do see the opportunity for upside potential there, and I'll turn it over to Duane.

Duane Dewey

Yes. And I would just conclude with basically, what we've said all along, focused-intense organic growth. We've talked about hiring and things we're doing in our production staffs across our franchise. So we're focused on organic key market growth. Third quarter 2026, we hired 18, 19 new production professionals across the system. Some of those were replacements or upgrades, but continued focus on organic growth is going to drive it. And I do think selective M&A, and like I've said a second ago, I think scale and factors that impact scale are going to be critically important moving forward.

Operator

The next question will come from Christopher Marinac with Brean Capital.

Christopher Marinac

Barry, can you remind us on the stress testing process that you've been doing for a while on debt service coverage for real estate? And then how does it change given what's happened with rates the last couple of months, let alone what the look forward is?

Robert Harvey

Sure. Be glad to, Chris. We do -- our stress testing processes are -- there's bottoms up we do annually and the top down, we do twice a year, one on the on-cycle and one is the off-cycle. So we are constantly doing all those and especially on the top down, we are stressing interest rates throughout that process and evaluating what level of stress it's applying to the portfolio. And then we're obviously passing that information over to our treasury group where it's incorporated into our enterprise-wide stress testing.

On a credit-only basis, we have an annual review process to where we look at approximately 50% of our credits through the annual review process. We get another 30% coverage to get us between 75% and 80% of the total book, off of what we touch every -- through modification, a renewal and extension of one type or another. And so we get a lot of opportunities to touch those credits and reevaluate how they're doing in the interest rate environment. When we're underwriting, we do have an underwriting rate that we use that's different in apart from the actual rate or the treasury plus -- 10-year treasury plus a spread. On all of our covenant testing that we established, Chris, we use the higher of either the artificial underwriting rate that we've established that we monitor with our peers to make sure we're all kind of in line with how we're underwriting these credits, trying to give ourselves as much cushion as we can between the actual rate and the artificial rate that we establish for underwriting.

But when we establish covenants, we're usually going to look at the higher of the three, the actual rate for the test, the underwriting rate that was used at the time it was obviously underwritten and then some type of 10-year treasury plus the spread of 200 basis points to 250 basis points. Just so as rates do move and we do -- we're not -- we're looking at -- obviously, they're making the payments based on the actual rate, but we want to make sure we're quickly deducing how is the credit going to perform in the new environment if, in fact, it has to be refinanced at some point. We don't want to be caught surprised by the impact of the higher rates on the credit, even though it may be 1 year or 2 away from that at the time. And if it's not going to work or not going to work as well, we're having those conversations with the borrowers about rightsizing what interest reserve carry that we need to establish to make sure that as it has to live in a higher rate environment once it's refinanced, then the project works and works well. I hope that answers your question.

Christopher Marinac

No, it does. And then the increased pipeline that you have, those deals have been vetted on this basis, I presume. So...

Robert Harvey

They have, yes. Everything about what I just mentioned is what we do on a daily basis, and they're all vetted based upon what we believe the interest rate environment is today, where we think it's heading and determining how much cushion there is in deals in today's environment.

Obviously, with rates -- when rates are lower, there's more opportunity for cushion in the deals and the deals still work. But the way you address that is through additional equity on the front-end, and that's what we have to require. If we believe the deal is too tight, the only way to -- if we're going to move forward with the deal, the only way to protect ourselves is to require more equity on the front end, and we do that on a case-by-case basis.

Christopher Marinac

Got it. I appreciate it. With the larger pipeline, are you doing larger deals? Or is your deal size still the same as in the past?

Robert Harvey

Yes. Our deal sizes have not changed, Chris, on what we're doing day in and day out. If you say around the edges, do we do an additional $1 million or $2 million on a deal because there's reasons that are advantageous for Trustmark to do so. For example, in the CRE world, if we need to do a couple of million more to keep it a 2-bank deal, which is much more manageable and it's 100% voting rights, and we like the partner that we're doing business with, but they're full and they're a larger bank and they're full, then we'll probably -- we'll do that additional couple of million, $2 million or $3 million more to keep it a 2-bank deal so that we don't get cut back more than we want to be.

And then we don't have to introduce a smaller bank third party that we really don't want to deal with in case the project has bumps in the road, it's a little easier to build consensus with two banks, especially with the larger bank being typically more rational and less capital constrained. So for all those reasons, we do make adjustments around the edges of what we say we do, hard and fast, but we've not made any changes to our approach in order to generate more activity.

Operator

And this will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Duane Dewey for any closing remarks. Please go ahead.

Duane Dewey

Well, thank you again for joining us this morning. We appreciate everybody on the call, and we look forward to catching back up at the end of the fourth quarter. We believe the third quarter was a solid one and one that positions us well for the future, and we look to catch up again in January. Thank you.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.