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DATE

Wednesday, April 29, 2026 at 9:30 a.m. ET

CALL PARTICIPANTS

  • President & Chief Executive Officer — Duane Arthur Dewey
  • Chief Financial Officer — Thomas C. Owens
  • Chief Credit and Operations Officer — Robert Barry Harvey

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TAKEAWAYS

  • Net Income -- $56.1 million, resulting in diluted EPS of $0.95 per share.
  • Return on Average Assets -- 1.2% for the period.
  • Return on Average Tangible Equity -- 12.58% for the quarter.
  • Loans Held for Investment -- Increased $203.7 million, or 1.5% sequentially, and $636.5 million, or 4.8% year over year.
  • Deposits -- Rose $212.7 million, or 1.4% sequentially, and $631.8 million, or 4.2% year over year, with sequential growth attributed to public deposits and annual growth driven by personal and commercial accounts.
  • Deposit Cost -- Averaged 1.63%, down 9 basis points sequentially.
  • Share Repurchase -- $19.8 million, or approximately 477,000 shares (0.8% of year-end 2025 shares outstanding), repurchased; $100 million authorization remains for the year.
  • Revenue -- Experienced a seasonal decrease of 0.6% sequentially and a 4.2% increase year over year.
  • Net Interest Income (Tax-Equivalent) -- $163.5 million generated a net interest margin of 3.81%, unchanged sequentially.
  • Noninterest Income -- $42.3 million, up 2.7% sequentially, representing 20.9% of total revenue.
  • Noninterest Expense -- $132.2 million, unchanged sequentially and up $8.1 million year over year; expense management remains a focus.
  • Net Charge-Offs -- $1.3 million, or 0.04% of average loans for the period.
  • Provision for Credit Losses -- $2.7 million for the quarter.
  • Allowance for Credit Losses -- Equal to 1.16% of loans held for investment at period end.
  • Common Equity Tier 1 (CET1) Ratio -- 11.7% as of quarter end.
  • Total Risk-Based Capital Ratio -- 14.37% as of March 31, 2026.
  • Dividend Declaration -- Quarterly dividend of $0.25 per share, payable June 15, 2026, to shareholders of record on June 1.
  • 2026 Guidance Affirmed -- Management expects single-digit loan growth and mid-single-digit deposit growth (excluding brokered), with net interest margin targeted in the 3.80%-3.85% range and both noninterest income and expense projected to increase mid-single digits.
  • Wealth Management Commentary -- Management noted that "market appreciation, which dramatically affects revenue" and highlighted stabilization after switching from an LPL to a Raymond James brokerage platform.
  • Hiring in Growth Markets -- Seven new production hires in the quarter, intended to support future growth, but not expected to impact 2026 results meaningfully.
  • Commercial Deposit Trends -- Commercial deposit balances grew over 4% on a year-over-year basis, reflecting "steady acceleration" from prior periods.

SUMMARY

Trustmark Corporation (TRMK 2.68%) reported solid profitability, featuring unchanged net interest margin and growth in both loans and deposits. Management reaffirmed full-year guidance on key performance metrics and capital strategy, outlining stable margin expectations supported by ongoing repricing dynamics in the loan and deposit portfolios. Executives emphasized consistent execution in noninterest income generation and disciplined expense control while reiterating their approach to capital allocation, including share repurchases and ongoing investment in market expansion. Forward commentary provided new insight into the timing of commercial real estate maturities and highlighted the stabilized transition within the wealth management platform, with ongoing growth initiatives in high-potential markets.

  • Management directly addressed the impact of "lumpy items" on year over year pre-provision net revenue, indicating that adjusted growth measures would reflect around "3% growth year-over-year" and that revenue growth, after full adjustment, approximates 5%.
  • Executives said strategic investments in "revenue producers, particularly in growth markets," are headwinds to near-term operating leverage, with benefits anticipated in future periods.
  • Discussion of the commercial real estate portfolio clarified that scheduled paydowns and maturities have been staggered across future quarters, reducing concentrated risk exposure in 2026.
  • Provision commentary noted the increase in nonaccrual loans was primarily due to a single CRE project, already classified as substandard, with specific reserves in place and a letter of intent for sale pending; management stated, "it was not something that was surprising to us just given their set of circumstances."
  • The company stated, regarding capital deployment, that share repurchase activity may total $70 million to $80 million for the year, with quarterly deployment likely at the high end only if loan growth remains robust.
  • Guidance for deposit cost indicated most CD repricing benefits have been realized, with 1.60% offered as a reasonable expectation for the next quarter, based on current trends.
  • Management confirmed continued openness to M&A for market expansion, but cited broader industry uncertainty, stating current focus remains on organic strategy, with all combinations under consideration as "wide open field."

INDUSTRY GLOSSARY

  • Nonaccrual Loan: A loan on which interest payments are no longer being collected, usually due to borrower payment delinquency.
  • CRE (Commercial Real Estate): Loans made for income-producing property such as offices, apartments, retail, and industrial buildings.
  • CD Repricing: The adjustment of interest rates paid on maturing certificates of deposit, impacting deposit cost.
  • SOFR: Secured Overnight Financing Rate, a benchmark interest rate for dollar-denominated derivatives and loans.
  • Net Interest Margin (NIM): The difference between interest income generated and interest paid out, relative to average earning assets.
  • HTM Securities: Securities held to maturity, not sold prior to their maturity date, impacting yield and balance sheet management.
  • PPNR (Pre-Provision Net Revenue): Net revenue before accounting for provision for credit losses, a key indicator of performance excluding credit costs.

Full Conference Call Transcript

Duane Arthur Dewey: Thank you, Joey, and good morning, everyone. Thank you for joining us this morning. With me are Thomas C. Owens, our Chief Financial Officer, and Robert Barry Harvey, our Chief Credit and Operations Officer. We continue to build upon strong momentum from our earnings in 2025 and are pleased with our strong performance in 2026. Our results reflect continued loan growth, stable credit quality, and an attractive core deposit base. In addition, we experienced continued growth in noninterest income, while noninterest expense remained unchanged, reflecting our continued focus on expense management. In our presentation this morning, I will provide a summary of our performance and discuss forward guidance before moving to your questions. Now turning to Slide three, financial highlights.

Our first quarter results reflect continued significant progress across the organization. Net income totaled $56.1 million, representing diluted EPS of $0.95 a share. This level of earnings resulted in a return on average assets of 1.2% and a return on average tangible equity of 12.58%. From a balance sheet perspective, loans held for investment increased $203.7 million, or 1.5% linked quarter, and $636.5 million, or 4.8% year over year. Our loan portfolio remains well diversified by loan type and geography. Our deposit base expanded $212.7 million, or 1.4% linked quarter, driven by seasonal increases in public deposits. Year over year deposits increased $631.8 million, or 4.2%, driven by growth in personal and commercial deposits.

The cost of our total deposits in the first quarter was 1.63%, a decrease of nine basis points from the prior quarter. Our strong cost-effective core deposit base is a continuing strength of Trustmark Corporation's. During the first quarter, we repurchased $19.8 million, or approximately 477 thousand shares of stock, which represent 0.8% of shares outstanding at year end 2025. As previously announced, we have authorization to repurchase up to $100 million of Trustmark Corporation common shares during 2026. This program continues to be subject to market conditions and management discretion. Revenue in the first quarter totaled [inaudible], a seasonal decrease of 0.6% from the prior quarter and an increase of 4.2% from the same quarter in the prior year.

Net interest income on a tax-equivalent basis in the first quarter totaled $163.5 million, which produced a net interest margin of 3.81%, unchanged from the prior quarter. Noninterest income in the first quarter totaled $42.3 million, up 2.7% from the prior quarter, and represents 20.9% of total revenue. Noninterest expense in the first quarter totaled $132.2 million, unchanged from the prior quarter and up $8.1 million year over year. Diligent expense management continues to be a focus for the organization. From a credit perspective, net charge-offs in the first quarter were $1.3 million, representing four basis points of average loans in the first quarter. The net provision for credit losses in the first quarter totaled $2.7 million.

At the end of the first quarter, the allowance for credit losses represented 1.16% of loans held for investment. Again, very solid credit performance. We have maintained our strong capital position as reflected by our CET1 ratio of 11.7% and our total risk-based capital ratio of 14.37% as of 03/31/2026. The board declared a regular quarterly dividend of $0.25 per share payable 06/15/2026 to shareholders of record on June 1. Now let us focus on our forward guidance, which is on Page 15 of the deck. In January, we provided full-year guidance for 2026 as well as 2025 benchmarks upon which the guidance is based. This morning, we are affirming the guidance previously provided.

We expect loans held for investment to increase single digits for the full year 2026 and deposits, excluding brokered deposits, to increase mid-single digits as well. Security balances are expected to remain stable as we continue to reinvest cash flows. We anticipate the net interest margin to be in the range of 3.80% to 3.85% for the full year, while we expect net interest income to increase mid-single digits. From a credit perspective, the total provision for credit losses, including off-balance sheet credit exposure, is expected to normalize, while noninterest income for the full year 2026 is expected to increase mid-single digits, as is noninterest expense.

We will continue our disciplined approach to capital deployment with a preference for organic loan growth, potential market expansion, M&A, or other general corporate purposes depending on market conditions. At this time, I will open the floor for questions.

Operator: We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. If you would like to withdraw your question, please press star then 2. The first question comes from Catherine Mealor with KBW. Please go ahead.

Catherine Mealor: Thanks. Good morning. It was nice to see the guidance was generally unchanged. And just thinking about the margin, we are taking rate cuts out of our estimates generally across the board. It feels like your NIM guide is still for that to remain pretty steady in this 3.80% to 3.85% range. Can you talk about some puts and takes within the margin without rate cuts, maybe where you are seeing new loan yields and where you are seeing new deposit costs coming in? Just help us model that going forward. Thank you.

Thomas C. Owens: Well, Catherine, this is Tom Owens. I will start.

Catherine Mealor: Hey, Tom. Good morning.

Thomas C. Owens: So yes, we, as you know, base our guidance on market-implied forwards, which now effectively have removed any further Fed rate cuts this year. And so I think the most simple way to think about it to start is you look at our guidance on deposit costs—we are anticipating a few basis points of decline here in the second quarter on a linked-quarter basis. We are also anticipating a similar magnitude of decline in loan yields. And then in the background, you have got securities yields which will continue to grind a little bit higher from the ongoing repricing of HTM securities.

And so I think when you net that all out, you are probably looking at one basis point or so of accretion on a linked-quarter basis each quarter this year. We were at 3.81% in the first quarter. And so that gets you to the middle of the range, 3.83% or so. As far as puts and takes, I mean, if you look at the industry data, loan growth continues to outpace deposit growth. And so it has really remained a competitive environment for deposits. When you look at what will be driving most of the linked-quarter decline in deposit costs, we do have a bit more benefit we will get there from CD repricing.

But then in the background, you have got sort of a countervailing migration for exception pricing on money market accounts, for example. So I think when you add all that up, we are talking fractions of a point probably in terms of which way we break on deposit cost, which way we break on loan yield, which way we break on net interest margin.

Catherine Mealor: Great. And then just a bigger picture question. You had really great improvement in profitability throughout 2025. It feels like looking at your guidance for maybe more steady in 2026, but just on a bigger balance sheet as growth is improving. Is that the way to think about it? Or are there levers that you see where we can actually get the ROA and ROE moving higher this year?

Thomas C. Owens: When you think about pre-provision net revenue, as we have guided in the past, mid-single-digit balance sheet growth with a stable to slightly expanding net interest margin should get a solid mid-single-digit PPNR growth. I know when you look at the headline in terms of what we have published—first quarter 2026 actual versus first quarter 2025 actual, for example—PPNR looks pretty flat. But there are always puts and takes in things like noninterest income. I will tell you that if you adjust for some lumpy items we had in the year-ago quarter and lumpy items this quarter, you end up closer to 3% growth year over year than down slightly.

And when you include that, it winds up at more like a 5% growth in revenue. I would say the same thing on the expense side. We are probably doing better on the expense side than what you see looking at the numbers. We have made strategic investments in revenue producers, particularly in growth markets. I think if you adjusted out for that, you would probably be more in the neighborhood of 5.5% in terms of expense growth year over year first quarter. So that gets you closer to neutral in terms of operating leverage.

Of course, we are trying to drive positive operating leverage, and that is part of those investments that we are making in revenue producers, particularly in our growth markets. So I think that is the lever ultimately that can drive greater profitability. Catherine, I am sorry, just quickly, one other somewhat of a wildcard in that mix is the mortgage business, where we have had pretty negative net hedge ineffectiveness over an extended period of time here. As the market adjusts, as rates adjust, etcetera, that is a wildcard in the mix. We cannot forecast it necessarily.

It is difficult to pinpoint, but if the mortgage business turns around and/or the net negative hedge ineffectiveness is different than it has been in the past, that can make a fairly significant swing in noninterest income, which then, as you know, affects your question. So I just add that as a wildcard in the mix a bit.

Catherine Mealor: Great. Yep. That is good. Thank you for that reminder. And congrats on your new role, Tom. We will miss NIM guidance from you going forward.

Thomas C. Owens: Thank you, Catherine. I greatly appreciate that. Really excited about this next phase.

Operator: The next question comes from Feddie Justin Strickland with Hovod Group. Please go ahead.

Feddie Justin Strickland: Just wanted to stick with the noninterest income discussion. Specifically on the wealth side. I know equity markets were a little bit more of a challenge through quarter end. But can you provide any sort of update on what you are seeing so far just in terms of AUM and maybe an outlook for that line in the second quarter?

Thomas C. Owens: I will kick in there, Feddie. It is dependent upon market appreciation, which dramatically affects revenue in both the trust wealth business as well as the brokerage side. Those are factors that are somewhat out of our control. But then you also add in new business development and the like, which is fairly solid. As we talk about our growth market initiatives that we have mentioned here in the last several calls, that includes the wealth management business, which includes adding new production talent in high-growth potential markets. We are optimistic there. We have seen improved production out of that side of the equation.

The second part I would add is that we made a platform change last year in our brokerage business. We went from an LPL platform to a Raymond James platform. We, in the latter half of 2025, spent a lot of time focused on that transition and are now fully stabilized there, and have fairly solid expectations for improved performance out of our brokerage division. And a good chunk of that is managed assets. So that is a bit dependent on the market as well, but still we are expecting continued progress and stabilization on that side of the equation. So we are comfortable with the mid-single-digits guide but see some potential there.

Feddie Justin Strickland: Appreciate that. Switching gears to capital, specifically on the share repurchase side. I think last quarter you talked about maybe looking at $60 million to $70 million worth of repurchases this year. You have done, I think, about $20 million so far. Should we expect any sort of change in the cadence of repurchases throughout the next couple of quarters?

Thomas C. Owens: So, Feddie, this is Tom Owens. Yes, we were really pleased with our ability to deploy nearly $20 million via share repurchase in the first quarter while supporting over $200 million of loans held for investment growth, while maintaining our capital ratios—essentially very little change in our capital ratios on a linked-quarter basis. I would say that we kind of leaned into it, so to speak, in the first quarter, given the opportunity—the downdraft in bank stock prices. We liked the price. We feel good about that. I think it also demonstrates our ability to deploy that amount of capital via share repurchase and support robust loan growth.

So I think if you think in terms of $20 million per quarter, or $80 million for the year, that is probably the high end, assuming that we continue to generate the same level of consistent loan growth. On the low end, I would probably mark that up a little bit. I think probably thinking $70 million to $80 million deployment for the full year.

Feddie Justin Strickland: All right, great. Thanks so much. I will step back. Thank you.

Operator: The next question is from Michael Rose with Raymond James. Please go ahead.

Michael Rose: Hey, good morning, guys. Thanks for taking my questions. Wanted to start on loan growth. Looks like you guys had a really good quarter of C&I loan growth—obviously some paydowns in some other places. If I annualize this quarter, it is about 6%. That would be the top end of the mid-single-digit range. So I guess what I am trying to figure out is the effects of competition and/or paydowns expected to maybe potentially slow the growth from here? I am just trying to understand maybe why in a seasonally slower first quarter, why we would not see that guide raised? And if we could just get a sense from you guys for production and paydowns as we move forward?

Thanks.

Robert Barry Harvey: Michael, this is Barry. Yes, as you can tell, we did have nice growth, especially in the C&I side, and it was very diversified in terms of the different growth industries that we saw, as well as the fact that on the CRE side, we were up $41 million. Really to the heart of your question, we did have a meaningful amount of maturities on our CRE book scheduled for the first quarter. A large majority of those did not occur, and they migrated either later in 2026 or out to 2027, 2028. So we do still have headwinds that we are going to have to deal with over time.

But that is the key for us: the more spread out that we can see those payoffs coming, the better we are able to deal with them in terms of new production, new fundings, etcetera, throughout the year. So I think we are fully expecting—without any type of catalyst that would bring about a large increase in payoffs—that what we saw in the first quarter will continue throughout the year. And you will continue to see projects that need more time to fully stabilize to get the best price when they go to market to sell the project take that time.

And then what you always see, Michael, is a lot of projects on the CRE side start off out of the gate with delays during the permitting, construction—they hit rock, whatever the case may be—and so there is a need for some additional time beyond just scheduled maturity, at least the initial scheduled maturity, for them to fully stabilize. And we are seeing that today. So we are hopeful that the payoffs—which will eventually come from our C&I book and CRE book—will be a little bit spread out, as they were during the first quarter, and push on into other quarters, whether it be 2026 or into 2027, 2028.

Duane Arthur Dewey: Michael, meanwhile, as you noted and Barry noted, C&I production pipelines are strong. We continue to see opportunities across the full portfolio. C&I has been good. And then, as we have talked in the last couple of quarters, we continue to be focused on adding new production talent across the franchise. It is a little bit slower in the first quarter in terms of new talent, but we continue to focus in that area in high-growth markets. And so we are, as Barry suggested, with good solid pipelines, good solid new production, and continued production on the CRE space to offset some of the headwind from paydowns. That is what we are focused on achieving.

Michael Rose: Okay. That is great color. Very helpful. Thanks for that. Maybe if I can just ask separately on credit. You did have a little bit of a tick up in NPLs. I think it was related to one loan. Just looking to get some color there. Looks like the reserve came down a little bit. So just was looking for any sort of updates in kind of past dues or criticized/classifieds that might have driven that allowance reduction? Thanks.

Robert Barry Harvey: Yes. Our coverage moved up from 1.15% to 1.16% as far as the reserve is concerned. And the net provision, of course, as you know, is $2.74 million, and then on the funded side, we were $4.7 million. As it relates specifically to the one credit, it is a CRE project and it is the majority of the increase that we experienced in nonaccruals and of the change that we saw of the $12.3 million. The credit itself was substandard already; it just moved into nonaccrual. The situation is one of those where the borrower just does not see value, from their perspective, to continue to make payments based on the appraisal.

There is a lot of equity in the project. We do have it impaired and reserved appropriately based upon that analysis of the valuation. In that particular case, there is an LOI in place. They have an LOI in place; it has not been converted to a PSA at this point. So there is always a chance that they are able to move the project out, and we will continue to work with the customer to determine what the best options are for the bank and for them. But it was not something that was surprising to us just given their set of circumstances. It was very specific to their set of circumstances.

Along the lines of CRE, Michael, while they did not come to fruition during the first quarter, we are very encouraged by the fact that a lot of the potential paydowns that we anticipated might be happening in the first quarter on some substandard credits—we are encouraged that they will possibly come to fruition later in the year. So from that standpoint, we see more positive news in terms of more either upgrades or payoffs coming out of the CRE book than we do deterioration.

Michael Rose: Thanks for that, Barry. Then maybe if I can just slip in one more, just following up on Feddie’s question on capital return. I know last quarter you guys talked about kind of organic growth and buybacks just being the preferred avenue for deployment. But any sort of updated or changed thoughts on M&A versus the prior ninety days? Thanks.

Duane Arthur Dewey: No changes, Michael, really. We are still interested, as part of our strategic plan, to consider M&A for expansion purposes in key markets. I would say start of the year—very active. Lots of discussions up, down, and sideways. That said, I think with the war and related economic issues, etcetera, high gas prices, etcetera, it seems like there has been a lot of tempering of those discussions pending the outcome or pending some stabilization of things. And so we continue to focus on the organic strategy and continue to build relations out there, and would be very interested in that process. As I said, it is part of our strategic plan. But no real change in that thought process.

Michael Rose: All right. Thanks for taking my questions, guys.

Operator: The next question is from Gary Tenner with D.A. Davidson. Please go ahead.

Gary Tenner: Thanks. Good morning.

Duane Arthur Dewey: Hi, Gary.

Gary Tenner: Hey, I had a follow-up on Catherine’s NIM question. Tom, comments about loan yields continuing to drift a little bit lower here—a little bit surprising to me. So I am just curious what the driver of that is. Do you have some higher-yielding loans maturing? And I am also curious kind of what the new production yields looked like in the first quarter?

Robert Barry Harvey: I will start—this is Barry—and then let Tom weigh in. Just from the standpoint of what we see every day, and it is more specific to the CRE side than it is the C&I side, but we are seeing—those are all going to be for us—those are all going to be 30-day SOFR plus a spread. And we do see a little lower spread today than we have at some points in the past as it relates to those CRE projects, regardless of which type you are talking about. It is, of course, very competitive in terms of that marketplace.

So when you think about stuff rolling off for us that was 48 to 60 months ago, those spreads to that 30-day SOFR were better than they are today, given what is going on in funding in the near term. And then a lot of times, Gary, when we do have payoffs scheduled on the CRE side, like everyone does, we do pursue those opportunities to refinance existing debt that we think makes sense and fits our parameters. And when you do refinance existing debt—to replace outstanding balances with outstanding balances—those are going to be priced a little less than your construction mini-perm was that you made four or five years ago.

You had construction risk, you had stabilization risk; you are replacing that with something that does not have construction risk, does not have stabilization risk, when it is fully funded. And for that reason, it is priced accordingly. So you may be replacing something that had construction/mini-perm risk embedded in it—your spread is a little bit higher on those deals—than the ones you might replace it with when you are able to refinance a fully funded, fully stabilized deal away from somebody else, if that makes sense.

Thomas C. Owens: Yes. And Gary, I would add: again, it depends on the mix—on the lumpiness or not—of maturities within a quarter, and then the mix of the maturities, floating rate versus fixed rate. Of course, you still have a bit of a tailwind on the fixed-rate loan side of those repricing higher. So it is very much mix dependent. And as I said in my comments earlier, we are getting down to dust settling here, so to speak, in terms of the aftermath of the last Fed rate cut. You look at some normalization or steepening of the yield curve—it is certainly helpful.

Where we are trading now in terms of where fixed-rate loans are coming on the books versus fixed-rate loans paying off. So there is a lot at play there. But we are not talking about very substantial linked-quarter changes in loan yields or deposit costs. And as I said, a simple way to think about it is once we get past this quarter—relative stability here over the remainder of the year—with a very gradual grind higher in terms of NIM.

Gary Tenner: Yeah. Appreciate that. That is great color from both of you. Then just—you mentioned a couple of times kind of leaning into hiring in the growth markets and, of course, this is not the first time you mentioned it. But I am just curious if you could kind of put some numbers around what you accomplished there in the first quarter and any kind of targets or expectations for the rest of the year?

Duane Arthur Dewey: I can put it in context of new bodies added. I do not know if we can break it down that specifically in terms of production at this point, but I think we messaged to the Street in the third quarter it was 21 new production talent across our franchise. Fourth quarter was more like 13-ish new hires. And in the first quarter of 2026, it was in the range of seven new hires. The first quarter is a tough hiring quarter because bonuses are paid and so on. So we will be refocusing our efforts in that the rest of the year.

But I do not believe we can really break it down—they are all still getting their feet in the ground and building their pipelines and so on. Like I was saying earlier, we are seeing a very solid build of pipeline here into the year. So we are seeing some positive shoots from those efforts.

Robert Barry Harvey: Yes. You net that all out, Gary, and it is not meaningfully impactful for the full year in 2026 in terms of dropping to the bottom line. But the intent, obviously, is to be making the investment to bring the producers on board here in 2026, and then the return on that ramping up in future years.

Operator: The next question comes from Christopher Marinac with Breen Capital Research. Please go ahead.

Christopher William Marinac: Hey, good morning. Thanks for hosting us. Tom, I wanted to follow up on kind of net new deposit accounts, particularly in the commercial channel, as we see success with C&I. Should we see more deposit flows from that area over time?

Thomas C. Owens: Yes, Chris. I do not have those numbers in front of me. But yes, we would certainly anticipate accelerated growth in commercial deposit accounts and nearby accelerated growth in commercial production for balances. I think I have a report here that I could look at pretty quickly. I mean, we have seen, Chris, acceleration. If you think in terms of year-over-year growth in average balances, we have seen really good acceleration in commercial deposit balances. If we were having this exact conversation one year ago, it would have looked something like a 1% to 1.5% decline in year-over-year first quarter commercial balances. Over time, that has steadily migrated more positive. Three quarters ago, that was closer to breakeven.

Two quarters ago, it was plus 2%. And now in the fourth quarter and into the first quarter here, we are on the high side of 4%. So we have had steady acceleration of growth in average commercial deposit balances outstanding on a year-over-year basis, and it is absolutely our focus to continue that trend going forward.

Christopher William Marinac: Great. Thank you for sharing that. And just a quick question on expense, operating leverage in general. Should we see further progress into next year? Just kind of curious how we translate these recent efforts into the future quarters?

Thomas C. Owens: Yes. Our mindset coming into this year was—particularly considering two things: considering the investments we are making in revenue producers and the investments we are making in technology—our mindset coming in was if we have a breakeven year in terms of operating leverage, that would be doing a pretty darn good job. Both of those things coming in are clearly headwinds to us achieving positive operating leverage here in 2026. Again, the idea on both of those, whether it is investment in producers or investment in technology, is to generate returns on those investments and drive positive operating leverage going forward.

Operator: Next question is from Stephen Scouten with Piper Sandler. Please go ahead.

Stephen Scouten: Yes. Thanks, everyone. Most of my questions have been asked and answered. I just maybe had one follow-up around deposit costs. The quarter-over-quarter improvement that you are projecting in the slide deck, is that more indicative of incremental reductions you think from the CD repricings? Or was that more about kind of where you exited the quarter and the progression of deposit costs throughout the quarter?

Thomas C. Owens: So, Stephen, this is Tom. Good question. As I said, I believe earlier, the majority of the benefit—the tailwind to NIM accretion—from the ongoing CD book repricing is now diminishing. And so that 1.60% guide that you see for the second quarter—that is basically where we are running currently. In fact, I think month to date, here in April, we are probably running at about 1.59%. We have had some favorable mix. So 1.60% reflects a couple of things. As I also mentioned earlier, you have got some ongoing repricing of exception money market accounts as we accommodate customers—warranted by the nature of the relationship and the profitability of the relationship—accommodating their request for higher rates.

And then it has been our practice as we get further into the second quarter and into the summer months, we generally engage in promotional deposit campaign activity, which would put some upward pressure on deposit cost that counterbalances what is left there in terms of ongoing downward CD repricing. So again, that is why from my perspective I think the right way to think about it is, as we are coming into the second quarter, a bit lower loan yields, a bit lower deposit cost, and essentially relative stability from that point forward and a slow, gradual grind higher in net interest margin. And again, with the dust settling, we are talking one basis point or two.

We are talking about a fraction of a basis point of which way they round—do deposit cost and loan yield both round in a favorable way or unfavorable way. So I think we are getting down to more relative stability in that regard. We came into the year with a very tight guidance range in terms of net interest margin, 3.80% to 3.85%, and we are maintaining that range. We continue to feel good about being, for the full year, somewhere right in the middle of that range.

Analyst: Congrats.

Thomas C. Owens: Okay. Thank you.

Operator: Next, we have a follow-up question from Feddie Justin Strickland with Vavodi Group. Please go ahead.

Feddie Justin Strickland: Hey. Just real quick. I had a quick follow-up on the M&A comment. I think you said up, down, sideways. Was that just a figure of speech? Or should I take that to continue to consider like an MOE-type transaction or even an upstream partner?

Duane Arthur Dewey: Not going to commit one way or the other there, Feddie. As you have seen in the marketplace, there are all sorts of combinations happening—from larger banks to smaller banks—and so it is a pretty wide open field. That is not our focus. But the discussions out there are pretty significant across the board.

Feddie Justin Strickland: Great. Thanks for taking my follow-up.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Duane Arthur Dewey for any closing remarks.

Duane Arthur Dewey: Thank you again for joining us this morning. We look forward to catching back up at the end of the second quarter, and we will talk then. Thank you.

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