Trustmark Corporation (TRMK): what the price requires

At today's price, Trustmark Corporation (TRMK) is priced for 11.1% return on equity. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/TRMK

Headline

FieldValue
TickerTRMK
CompanyTrustmark Corporation
Sector / IndustryFinancial Services / Banks—Regional
Current price$46.22/sh
CompositionGeneral Banking 94% / Wealth Management 6%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basisfinancials
Return on equity needed11.1%
Return on equity now10.6%
ROE gap+0.5pp
Price-to-book1.27x

Solve inputs: computed at a 9.6% cost of equity with 4% terminal growth over a 5-year stage, on common book equity (FY2026); each 1pp of cost of equity moves the implied ROE ~1.3pp.

How unusual the bet is: elevated

ReferenceValue
vs own history+2.56σ
cohort percentile (of 119 peers)40
sustained it ~10 years at this level72%
implied end-window share0%

Valuation X-Ray

The price is supported by asset-based and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.04x3expensive
Earnings1.34x2expensive
Relative1.13x3expensive
Growth1.13x1expensive

Families that justify the price: Asset, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.2%); the inversion above states its own rate.

Per-Model Detail (n=9)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth——no—
Bank Fair Value (P/TBV)—$37.351.24xyesTBVPS $30.38 × 1.23x (ROE (TTM) 10.6% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption), credit 1.17% allowance/loans → ×0.93, NPL 0.71% → ×0.99)
Relative ValuationRelative$41.001.13xyesP/E 10x (static sector reference · 2026-04), scenarios: 8.3x / 10.0x / 11.7x (bear / base = reference held flat / bull), EV/EBITDA N/Ax
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$41.481.11xyesBV/sh $36.05, ROE (TTM) 10.6%, ke 9.3%
Two-Stage Excess ReturnAsset$44.381.04xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$40.771.13xyesRev $0.6B, growth 7% (input: historical growth; tapered), Terminal P/S: 3.5x / 4.2x / 4.9x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$45.241.02xyesEPS $3.77, growth 1% (input: historical EPS growth), PEG=23.86 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings——no—
Residual IncomeAsset——no—
Graham NumberAsset$55.300.84xyes√(22.5 × EPS $3.77 × BVPS $36.05) — Graham's conservative floor
EV/EBITDA RelativeRelative——no—
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$30.051.54xyesEPS $3.77 × (8.5 + 2×0.5%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative——no—
PEG Fair ValueRelative$18.852.45xyesEPS $3.77 × (PEG 1.5 × growth 0.5% (input: historical EPS growth)) → PE 0.8x
Earnings YieldEarnings$40.761.13xyesEPS $3.77 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Share count CAGR (buyback)-1.1%

Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).

Bullet Takeaways

Bull Case

Trustmark is a mature bank, and that changes what the numbers are supposed to do. Nobody should read a 148-year-old Mississippi lender for growth surprises; the test is whether it earns a durable return on its capital, funds itself cheaply, keeps credit clean, and hands the surplus back. On all four counts the recent record is strong. Return on equity runs at 10.6%, the net interest margin held at 3.81% in the March quarter as total deposit costs fell 9 basis points to 1.63%, net charge-offs were 0.04% of average loans, and nonperforming assets sat at 0.73%. Earnings per share of $0.95 beat the $0.89 consensus, and each of the last four quarters has landed between $0.92 and $0.96, the kind of monotony a bank investor pays for.

The capital return machinery is running at full deployment. About 61.8% of earnings went back to shareholders as dividends plus buybacks in the latest fiscal year: a dividend now at $1.00 per share annualized, up from $0.96 declared last year and consuming only 26.1% of net income, alongside $84.8 million of trailing buybacks that have the share count falling. The credit backdrop is helping rather than hurting, with the 10-K showing the provision for credit losses at "$12.9 million compared to a PCL of $41.1 million during 2024", and the filing states the underlying philosophy directly: "Trustmark places a significant emphasis on the maintenance of a strong capital position, which promotes investor confidence, provides access to funding sources under favorable terms". Beyond the lending book, the Wealth Management segment adds a fee stream the filing breaks out as its own reportable business, diversifying revenue away from pure spread income.

The franchise itself is the durable part. The loan book grew 4.8% year over year to $13.9 billion against $15.7 billion of deposits, and the 10-K shows the footprint compounding across "the Mississippi, Alabama, Florida, Tennessee and Texas market regions", a corridor with in-migration and business formation working in the bank's favor. A deposit base priced at 1.63% and still getting cheaper is the moat in its simplest form: it means Trustmark does not have to reach for yield or credit risk to earn its margin, and management's affirmed guidance of mid-single-digit growth with a stable margin asks the bank only to keep being itself.

Bear Case

The variable with the most leverage over this stock is the rate path, and the current price does not leave much room for it to misbehave. The margin story rests on a specific asymmetry: deposit costs drifting down 9 basis points a quarter while loan yields hold. Guidance of a 3.80% to 3.85% net interest margin for 2026 assumes that asymmetry persists. Faster rate cuts compress asset yields quicker than a 1.63% deposit base can fall; a higher-for-longer turn reignites the deposit competition the 10-K already concedes, noting that "Trustmark expects to continue to face increasing competition from online and traditional financial institutions seeking to attract customers by providing access to similar services and products". Either branch of the rate tree squeezes the same margin the guidance depends on, and a spread lender with $15.7 billion of deposits cannot hedge its way out of its own business model.

The price already assumes improvement that has not arrived. At roughly 1.3x book, the market is paying for a sustained return on equity of about 11.2%; the bank has recently earned about 10.6%, and the assumed return runs well above its own longer record. If the required return never materializes, the price-to-book the stock supports compresses toward what a 10%-and-fading return justifies, and the 12x earnings multiple, already above the 10x sector median, follows it down. This is the quiet risk in a stock that looks cheap on absolute numbers: the premium is small, but so is the earning power backing it.

Credit is the third pressure point, mostly because it has been implausibly good. Charge-offs of 0.04% of average loans are near the theoretical floor, and 2025 earnings were flattered by provisions dropping to $12.9 million from $41.1 million the year before. Normalization alone, no recession required, reverses that tailwind. The 10-K adds a process wrinkle: during the third quarter of 2025, management determined there was risk related to "delayed identification and downgrading of commercial" credits in the loan portfolio, which is the filing's way of saying the early-warning system needed tightening. And the book is geographically concentrated, with the filing noting mortgage loans are "primarily included in the Mississippi market region" where the line of business is centrally run. A regional bank priced above its demonstrated return, with credit costs at cyclical lows and one state carrying disproportionate weight, is a stock where several small mean-reversions add up.

Valuation

A bank is worth the return it earns on its capital, so start there. At $46.22 (July 10, 2026), Trustmark trades at about 1.3x book value, which embeds a sustained return on equity of roughly 11.2%. The bank has recently been earning about 10.6%, so the price asks for modestly more than the demonstrated run rate, and the assumed return sits well above the bank's own longer history. The base rate is kinder than most: about 72% of banks earning at this level sustained it for a decade, and the multiple itself sits in the lower half of the peer group's price-to-book range. The bet is small but real: a fraction of a point of ROE, held indefinitely.

The valuation methods cluster unusually tightly. Asset-based reads put the price at 1.2x what they support, earnings power at 1.3x, peer multiples at 1.1x, and growth-based methods at 1.2x, so every family lands within 10% to 30% of the price rather than splitting into cheap and expensive camps. This is a value-supported name where the market pays a thin premium for quality, not a growth bet. On the earnings lens the stock trades at 12.1x against a 10x regional-bank median, a premium consistent with the clean credit book: the allowance covers 1.17% of loans against nonperforming loans of 0.71%, and tangible book stands at $30.38 per share.

For a deposit-funded balance sheet, the solvency frame is capital and payout rather than leverage ratios, and both read comfortably. The filing emphasizes "the maintenance of a strong capital position" as a stated priority, and the payout math shows the headroom in practice: about 61.8% of latest-fiscal-year earnings went back to shareholders through the $1.00 annualized dividend, a 26.1% payout ratio on dividends alone, plus $84.8 million of buybacks that are shrinking the share count. The decisive question is narrow: whether a 10.6% ROE bank with falling deposit costs and near-zero charge-offs can hold that arithmetic through a rate cycle. The price says yes by a small margin, and the tight clustering of the methods says the market is not paying much for the possibility of anything better.

Catalysts

The April print gave the year its template: net income of $56.1 million, earnings per share of $0.95 against an $0.89 estimate, and a net interest margin holding at 3.81% as total deposit costs fell 9 basis points to 1.63%. Loans held for investment grew 1.5% linked-quarter and 4.8% year over year to $13.9 billion, with deposits at $15.7 billion, though revenue of $202.9 million came in slightly below the $205.2 million consensus. The next quarterly report tests the same variables: whether deposit costs keep falling faster than asset yields, and whether loan growth holds its mid-single-digit pace through the summer.

Management affirmed full-year 2026 guidance across the board: mid-single-digit growth in loans and deposits excluding brokered balances, net interest margin of 3.80% to 3.85%, and net interest income, noninterest income, and noninterest expense each rising mid-single digits year over year. Credit metrics are the numbers to watch beneath the guidance, since net charge-offs at 0.04% of average loans and nonperforming assets at 0.73% sit near cyclical bests and any drift upward would pressure the provision line that helped 2025 earnings. The capital-return cadence continues in the background, with the dividend at $1.00 annualized and buybacks running at $84.8 million over the trailing year; with roughly 62% of earnings currently being returned, any acceleration or pause in repurchases is itself a signal of how management reads the credit cycle ahead.

Peer Cohorts (Per Segment, With Filing Citations)

General Banking (reported)

Wealth Management (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q1 2026 earnings, April 2026 · Q1 2026 earnings call, April 2026 · GuruFocus, April 2026

View the full interactive TRMK report on boothcheck