Independent Bank Corp.

Second-quarter 2026 net income was $81.8 million and diluted EPS was $1.70. ROA was 1.34%, ROE was 9.24%, and ROTCE was 14.05%. Fee income was $42.4 million, up over 5% from the prior quarter. Net charge-offs were $911,000, or two basis points annualized; the provision was $6.3 million and the allowance for loan losses increased to 1.06% of loans. Total non-performing assets were $103.8 million, or 56 basis points of total assets. Core NIM rose 4 bps, with spot core margin at 3.76% in June and spot cost of deposits at 1.38%. The company repurchased $75 million of stock in the quarter, and CET1 ended at 12.8% with tangible capital at 9.7%. For full-year 2026, management reaffirmed 4Q26 targets of 1.4% ROA and 15% ROTCE, and a 3.9%-3.95% margin, likely toward the low end of the range. It now expects CRE and construction loans to be flat to down low single digits for the year, C&I to finish at the high end of mid-single-digit growth, consumer loans to rise low single digits, core expenses to be $553 million-$557 million, and one-time systems conversion costs to total $5 million-$6 million.

Jeff Tengel said the quarter showed good momentum after a slow start, with deposit growth, strong C&I growth, a better margin, and strong wealth management offset by smaller average balances and lower accretion income. He emphasized that the franchise is still winning core deposits in a competitive rate environment, that the CRE pipeline remains healthy even with heavier payoffs, and that the bank expects paydowns to normalize in the second half. His tone was constructive and strategic, highlighting disciplined underwriting, operating leverage, AI governance, and the October core conversion as supports for future growth.

Mark Ruggiero said earnings were driven by core profitability and buybacks, with core NIM expansion and repurchases offsetting a highly competitive loan environment. He detailed that the bank bought back $75 million of stock, ended with CET1 at 12.8% and tangible capital at 9.7%, and expects to use the buyback as the main tool for returning excess capital. On the margin, he noted reported loan yields were down 8 bps but core loan yields rose 3 bps, securities yields improved 5 bps, and the cost of deposits was flat at 1.36% despite a money market special; he expects some deposit cost pressure in the second half but still sees 4Q26 margin at 3.9%-3.95%. He also said core expenses excluding conversion costs should be $553 million-$557 million, with $5 million-$6 million of system conversion expenses for the year.

Analysts focused on slower CRE growth, asking why paydowns accelerated and whether the environment is more competitive. Management said two large CRE relationships accounted for $120 million of paydowns, described the market as more aggressive, but said the second-half pipeline and normalizing payoffs could support flat to modestly higher CRE balances. Questions also centered on credit and office exposure; management said most commercial NPA movement was benign, the largest office non-performing loan may return to performing status by year-end and has started making interest payments, and several criticized office loans are being worked through or sold. Analysts also pressed on deposits, margins, and capital returns, and management said deposit costs may tick up modestly, the margin guidance remains intact, and buybacks will remain the primary capital return lever.