Cuộc họp báo cáo kết quả kinh doanh quý 3/2026 của Trustmark (TRMK): EPS kỷ lục và nâng dự báo NIM

Điểm tin chính

• Trustmark Corporation đã báo cáo thu nhập ròng quý 3 năm 2026 đạt 58,1 triệu USD, tương đương 1,00 USD trên mỗi cổ phiếu pha loãng. Ban lãnh đạo mô tả EPS hoạt động hàng quý là mức kỷ lục trong lịch sử 137 năm của công ty.
• Thu nhập lãi thuần quy đổi tính thuế đầy đủ tăng 1,2% so với quý trước, trong khi biên lãi thuần duy trì ở mức 3,84%. Ban lãnh đạo đã nâng dự báo NIM cả năm lên 3,83%–3,87% và kỳ vọng NIM quý 4 sẽ ở mức khoảng 4%.
• Dư nợ cho vay nắm giữ để đầu tư giảm 43,9 triệu USD, tương đương 0,3% so với quý 2 nhưng tăng 321 triệu USD, tương đương 2,4% so với cùng kỳ năm ngoái. Việc tất toán khoản vay thương mại ở mức cao đã bù trừ cho sản lượng phát hành mới tích cực.
• Nếu không tính khoản tiền gửi môi giới sụt giảm theo kế hoạch, tiền gửi tăng 184,3 triệu USD, tương đương 1,2% so với quý trước và tăng 3,4% so với cùng kỳ năm ngoái. Tiền gửi môi giới giảm 198 triệu USD và chiếm 1,3% tổng tiền gửi.
• Trustmark đã bán 629,5 triệu USD chứng khoán có lợi suất 1,4% và mua 628 triệu USD chứng khoán có lợi suất khoảng 5%. Ban lãnh đạo kỳ vọng đợt tái cơ cấu và giao dịch bán và thuê lại liên quan sẽ đóng góp khoảng 5,7 triệu USD vào thu nhập lãi thuần quý 4.
• Chất lượng tín dụng tiếp tục duy trì mức vững chắc, với chi phí dự phòng rủi ro tín dụng là 2,3 triệu USD và xóa nợ ròng là 1 triệu USD, tương đương 3 điểm cơ bản trên tổng dư nợ cho vay bình quân.

Dữ liệu tài chính cốt lõi

Kết quả kinh doanh và hoạt động

Việc tất toán khoản vay bất động sản thương mại tiếp tục là lực cản lớn đối với tăng trưởng dư nợ. Các khoản tất toán CRE ngoài dự kiến đạt tổng cộng khoảng 214 triệu USD, bao gồm 52 triệu USD tín dụng bị chú ý. Mảng C&I ghi nhận khoảng 60 triệu USD tất toán ngoài dự kiến trên 4 khoản vay, trong khi dư nợ tài chính công giảm khoảng 43 triệu USD.

Ban lãnh đạo cho biết danh mục khoản vay đã phê duyệt đạt gần 1 tỷ USD vào cuối quý và đa dạng hơn so với các kỳ trước, với các cơ hội thuộc mảng C&I, CRE, tài trợ thiết bị và cho vay đô thị. Một hạn mức tài chính công mới có sẵn khoảng 115 triệu USD để giải ngân, dự kiến giải ngân trong quý 4 năm 2026 và năm 2027.

Tăng trưởng tiền gửi ở cả kênh doanh nghiệp và cá nhân đã giúp Trustmark giảm 198 triệu USD tiền gửi môi giới. Cơ cấu tiền gửi duy trì ở mức khoảng 80% tiền gửi chịu lãi và 20% tiền gửi không chịu lãi.

Sản lượng cho vay thế chấp ngân hàng giảm 11,7% so với quý trước, và doanh thu thế chấp giảm 11,6%. Doanh thu phí quản lý ngân quỹ cũng giảm do khoảng 250.000 USD mỗi tháng trước đây được ghi nhận là thu nhập phí hiện chuyển sang thu nhập lãi thuần sau khi chuyển đổi hệ thống lõi. Doanh thu mảng Quản lý tài sản tiếp tục tăng trưởng.

Trustmark đã hoàn tất giao dịch bán và thuê lại 34 bất động sản chi nhánh, ghi nhận khoản lợi nhuận trước thuế 61,5 triệu USD sau chi phí giao dịch. Công ty cũng ghi nhận khoản lỗ trước thuế 61,5 triệu USD từ việc tái cơ cấu danh mục chứng khoán, qua đó bù trừ hoàn toàn khoản lợi nhuận từ bất động sản.

Trong 9 tháng đầu năm 2026, Trustmark đã mua lại 60,9 triệu USD cổ phiếu phổ thông, tương đương khoảng 1,4 triệu cổ phiếu. Tổng giá trị mua lại trong quý 3 là 20,1 triệu USD, tương đương khoảng 428.000 cổ phiếu. Hội đồng quản trị đã thông báo cổ tức hàng quý là 0,25 USD mỗi cổ phiếu, trả vào ngày 15 tháng 12 cho các cổ đông chốt danh sách ngày 1 tháng 12.

Dự báo từ Ban lãnh đạo

• Ban lãnh đạo tiếp tục kỳ vọng tăng trưởng cả năm ở mức một chữ số tầm trung đối với dư nợ cho vay nắm giữ để đầu tư và tiền gửi, không bao gồm tiền gửi môi giới.
• Số dư chứng khoán dự kiến sẽ duy trì ổn định.
• Dự báo biên lãi thuần cả năm 2026 được nâng lên 3,83%–3,87%, với kỳ vọng của ban lãnh đạo là kết quả sẽ ở mức cận trên và NIM quý 4 khoảng 4%.
• Thu nhập lãi thuần quy đổi tính thuế đầy đủ dự kiến tăng ở mức phần trăm một chữ số tầm trung so với năm 2025.
• Ban lãnh đạo kỳ vọng chi phí dự phòng rủi ro tín dụng, bao gồm cả rủi ro tín dụng ngoại bảng, sẽ bình thường hóa và duy trì ổn định so với các quý trước của năm 2026.
• Doanh thu ngoài lãi cả năm hiện dự kiến tăng trưởng ở mức một chữ số từ thấp đến trung bình, phản ánh các điều kiện đầy thách thức của thị trường thế chấp và việc chuyển doanh thu quản lý ngân quỹ sang thu nhập lãi thuần.
• Dự báo chi phí ngoài lãi cả năm vẫn giữ nguyên ở mức tăng trưởng một chữ số tầm trung.
• Ban lãnh đạo dự báo chi phí tiền gửi khoảng 1,76%, với hệ số beta là 33%, phản ánh các chiến dịch huy động tiền gửi được triển khai trước đợt tăng lãi suất của FOMC.

Rủi ro và các điểm cần theo dõi

Việc tất toán khoản vay thương mại vẫn khó dự đoán. Ban lãnh đạo lưu ý rằng các khoản tất toán ngoài dự kiến xảy ra ở mỗi quý, trong khi thời điểm và tỷ lệ giải ngân thực tế của danh mục gần 1 tỷ USD đã phê duyệt vẫn chưa chắc chắn.

Cạnh tranh tiếp tục ảnh hưởng đến định giá và tăng trưởng dư nợ cho vay ở các mảng CRE, C&I và tài chính công. Trustmark cho biết họ sẽ tiếp tục duy trì sự chọn lọc thay vì nới lỏng các tiêu chuẩn định giá hoặc thẩm định để giành hợp đồng.

Chi phí tiền gửi có thể tăng khi các chương trình ưu đãi kết thúc và chứng chỉ tiền gửi được tái định giá với độ trễ ước tính 6 tháng. Dự báo của ban lãnh đạo giả định cơ cấu tiền gửi ổn định, mặc dù ngân hàng thừa nhận rủi ro thay đổi cơ cấu tiền gửi có thể xảy ra.

Lãi suất cao hơn tạo ra rủi ro tái cấp vốn và rủi ro nghĩa vụ trả nợ cho các bên vay bất động sản thương mại. Trustmark cho biết họ thực hiện kiểm tra sức chịu tải đối với các khoản tín dụng bằng cách sử dụng mức cao hơn giữa lãi suất thực tế, lãi suất thẩm định hoặc lãi suất Trái phiếu Kho bạc 10 năm cộng thêm biên độ 200–250 điểm cơ bản, và có thể yêu cầu bên vay bổ sung vốn chủ sở hữu khi vùng đệm giao dịch không đủ.

Điểm nhấn phiên hỏi đáp với nhà phân tích

Ban lãnh đạo cho biết hệ số beta tổng tiền gửi theo mô hình của ngân hàng là khoảng 40% trong cả năm biến động lãi suất. Trên cơ sở tiền gửi chịu lãi, ngân hàng xác nhận hệ số beta khoảng 55% cho đợt tăng lãi suất ban đầu.

Trustmark ước tính khoảng 59% danh mục cho vay của mình sẽ tái định giá trong vòng ba tháng kể từ khi có thay đổi lãi suất. Mô hình hiện tại của ngân hàng cho thấy NIM sẽ mở rộng khoảng 2 điểm cơ bản cho mỗi đợt thay đổi lãi suất 25 điểm cơ bản, với giả định bảng cân đối kế toán không tăng trưởng trong vòng một năm.

Các ban lãnh đạo bày tỏ sự tự tin vào tăng trưởng dư nợ cho vay trong quý 4 nhờ danh mục đã phê duyệt mạnh mẽ và đa dạng hơn so với các kỳ trước. Tuy nhiên, ban lãnh đạo nhấn mạnh rằng không phải mọi cam kết đã phê duyệt đều sẽ hoàn tất hoặc được giải ngân trong quý.

Ban lãnh đạo cũng cho biết lãi suất cao hơn có thể làm chậm tốc độ giảm dư nợ CRE bằng cách khuyến khích các dự án đã hoặc đang đi vào ổn định ở lại trên bảng cân đối kế toán của Trustmark lâu hơn. Vì các khoản vay này thường có lãi suất thả nổi, Trustmark có thể hưởng lợi từ lãi suất cơ sở cao hơn trong khi vẫn giữ lại các khoản tín dụng này.

Về đòn bẩy hoạt động, ban lãnh đạo cho biết có tiềm năng tăng trưởng từ biên lãi thuần, động lực nguồn vốn tiền gửi, doanh thu ngoài lãi và tăng trưởng tự thân. Trustmark đã tuyển dụng 18 hoặc 19 chuyên gia kinh doanh trong quý 3, bao gồm cả nhân sự thay thế và nâng cấp.

Toàn văn biên bản cuộc họp báo cáo kết quả kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

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.

Phần hỏi đáp

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.