Echoing one of the most noteworthy trends of 2023, Trustmark Corp. in Jackson, Mississippi, announced it would sell its Fisher Brown Bottrell Insurance unit to the Marsh McLennan Agency for $345 million.
The cash will help the $18.4 billion-asset Trustmark restructure its securities portfolio, fuel organic growth and support potential merger-and-acquisition opportunities, Chief Financial Officer Thomas Owens said Wednesday on a conference call with analysts.
The deal price amounts to nearly six times Fisher Brown Bottrell's 2023 revenue and 28 times earnings, according to Duane Dewey, Trustmark's president and CEO. "The transaction multiples prove what we've known for some time, that we have a very valuable and well-regarded franchise," Dewey said on the conference call.
"The positive implications of a sale for our shareholders and for the bank became compelling," Dewey added.
Investors put their seal of approval on the news, bidding Trustmark shares up nearly 7% to $29.36 Wednesday.
In a separate transaction, Trustmark announced plans to sell $1.6 billion of available-for-sale securities yielding 1.7%. After taking a $160 million loss, Trustmark expects to utilize the proceeds of the securities sale to purchase $1.4 billion in securities with a yield closer to 5%.
But since the gain from selling the insurance unit is much larger than that loss, Trustmark's overall capital levels will improve. "We'll be taking the advantage of the opportunity to remix our securities portfolio to achieve a more consistent ladder of cash flows over time," Owens said.
Acquiring Fisher Brown Bottrell will give the Marsh McLennan Agency its first presence in Mississippi, Peter Krause, the firm's Southeast CEO, noted in an email to American Banker. It also adds what Krause termed "a strong base of production talent."
"We were impressed with the strong leadership of [Fisher Brown Bottrell] and the remarkable industry professionals who share a passion for not only their clients but also the communities in which they serve," Krause wrote. "From the initial meeting, there was a natural and organic fit between our teams."
The deal with Trustmark, expected to close in the second quarter, is the Marsh McLennan agency's third Southeast acquisition in recent months. It acquired two Louisiana-based agencies, Querbes and Nelson in Shreveport and Louisiana Companies in Baton Rouge, last month.
In all three instances, Marsh McLennan sought to partner with "high-quality agencies that fit the evolving needs of our clients," Krause wrote. In its 25 years of ownership, Trustmark grew Fisher Brown Bottrell from a single office in Jackson into a regional powerhouse with 2023 revenues nearing $60 million.
Trustmark reported first-quarter net income totaling $41.5 million Wednesday, down 17.5% year over year. Fee income provided nearly 30% of the company's $192 million in first-quarter revenue. While that total will be reduced going forward as insurance is removed from the mix, Trustmark still possesses strong and growing wealth management and mortgage banking franchises, Dewey said.
Fortified by capital from Fisher Brown Bottrell's sale, Trustmark is projecting mid-single-digit loan and deposit growth in 2024.
