Independent Bank Corp. Reports $81.8 Million in Second-Quarter 2026 Net Income as Deposits, Commercial Lending and Fee Businesses Strengthen
Independent Bank Corp. (Nasdaq Global Select Market: INDB), the parent company of Rockland Trust Company, reported net income of $81.8 million for the second quarter of 2026, reflecting continued progress across several of its strategic priorities.
The company reported diluted earnings of $1.70 per share for the quarter, compared with net income of $79.9 million, or $1.63 per diluted share, in the first quarter of 2026.
The second-quarter results benefited from stronger core deposit growth, an increase in commercial and industrial lending, continued expansion of fee-based businesses and disciplined capital management.
The company also reported that its second-quarter results included $2.1 million in one-time costs related to its upcoming core conversion.
The results followed a period of continued integration and investment after Independent Bank Corp.’s third-quarter 2025 acquisition of Enterprise Bancorp, Inc. and its subsidiary, Enterprise Bank.
The company incurred merger-related costs associated with the Enterprise acquisition during the first quarter of 2026 but recorded no merger-related expenses during the second quarter.
On an operating basis, first-quarter 2026 net income was $82.1 million, or $1.68 per diluted share, excluding merger-related expenses and their related tax effects.
Jeffrey Tengel, Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company, said the company made significant progress on several strategic priorities during the quarter.
“Our second quarter results reflect strong execution on many of our strategic priorities,” Tengel said.
He highlighted improvements in the company’s low-cost core deposit funding base, growth in commercial and industrial loan balances, continued expansion of fee income businesses and the company’s decision to return excess capital to shareholders.
“Our commitment to the communities we serve continues to pave the way for long-term growth and success for all our constituents,” Tengel added.
Stronger Quarterly Profitability
Independent Bank Corp. reported a return on average assets of 1.34% for the second quarter of 2026, compared with 1.31% in the first quarter.
Return on average common equity increased to 9.24%, compared with 9.02% in the prior quarter.
On an operating basis, the company generated a return on average assets of 1.35% and a return on average common equity of 9.27% during the first quarter of 2026.
There were no operating adjustments during the second quarter.
The company’s results reflect the impact of several factors, including changes in net interest income, deposit growth, fee-based revenue and operating expenses.
Although the net interest margin declined on a reported basis, the company said its adjusted margin improved after excluding purchase accounting accretion and other non-core items.
The company also continued to manage capital actively.
During the second quarter, Independent Bank Corp. repurchased approximately 964,000 shares for $75.0 million.
As of June 30, 2026, approximately $151 million remained available under the company’s previously announced $200 million share repurchase authorization adopted on April 30, 2026.
Deposits Increase as Core Funding Strengthens
Total deposits increased by $294.6 million, or 1.5%, during the second quarter to reach $20.4 billion at June 30, 2026.
The increase was driven primarily by growth in municipal and business accounts.
Average deposit balances remained relatively consistent at approximately $19.9 billion during the quarter.
Core deposits represented 84.1% of total deposits at the end of the second quarter, compared with 83.8% at the end of the first quarter.
Noninterest-bearing demand deposits accounted for 28.0% of total deposits at both June 30 and March 31, 2026.
The company’s total cost of deposits remained unchanged at 1.36% during the second quarter.
The stability of deposit costs and growth in core funding were important developments for the company as banks continue to manage funding costs in a changing interest rate environment.
A strong core deposit base can provide banks with a more stable and potentially lower-cost source of funding for lending and other balance sheet activities.
Loan Portfolio Shows Mixed Performance
Total loans stood at $18.4 billion at June 30, 2026, representing a decrease of $31.2 million, or 0.2%, compared with the prior quarter.
While overall loan balances declined modestly, several important areas of the portfolio recorded growth.
The commercial and industrial portfolio increased by $79.4 million, or 1.7%, during the quarter. On an annualized basis, the increase represented growth of 6.8%.
The growth occurred despite $36.8 million in runoff associated with the company’s strategic exit from the dealer finance business.
The increase in commercial and industrial lending demonstrates continued demand among business customers and reflects the company’s focus on relationship-based commercial banking.
Commercial real estate and construction loans declined by $176.4 million, or 1.8%.
The decrease was driven by elevated loan payoffs and scheduled amortization.
The consumer real estate portfolio performed more positively, increasing by $63.2 million, or 1.5%, during the quarter.
Residential mortgage balances rose by $28.1 million, or 1.0%, while home equity balances increased by $35.1 million, or 2.7%.
On an annualized basis, residential balances grew 4.0% and home equity balances grew 10.8%.
The results indicate continued demand in the company’s residential and home equity lending businesses.
Total Assets Rise on Deposit Growth
Total assets increased by $190.3 million, or 0.8%, to $25.0 billion at June 30, 2026.
The increase was primarily driven by higher cash balances resulting from strong deposit growth late in the quarter.
The company’s securities portfolio totaled $3.3 billion at the end of the second quarter, down $59.3 million, or 1.8%, from the prior quarter.
New purchases of $69.7 million in available-for-sale securities were offset by maturities, calls and principal paydowns across the available-for-sale and held-to-maturity portfolios.
Unrealized losses of $11.1 million in the available-for-sale portfolio also contributed to the decline.
Securities represented 13.3% of total assets at June 30, compared with 13.6% at March 31.
Borrowings Decline
Total period-end borrowings declined by $74.8 million, or 9.6%, during the second quarter.
The decrease primarily reflected approximately $100 million in net paydowns of Federal Home Loan Bank borrowings.
The reduction was partially offset by a $25 million advance under a working capital line of credit.
The decrease in borrowings, combined with deposit growth, helped support the company’s overall funding position.
Net Interest Income and Margin Performance
Net interest income totaled $210.9 million for the second quarter, down $1.5 million, or 0.7%, compared with the first quarter.
The company’s reported net interest margin declined five basis points to 3.85%.
The decline was primarily due to a nine-basis-point reduction in purchase accounting accretion.
However, after excluding purchase accounting accretion and other non-core items, the adjusted net interest margin increased four basis points to 3.76%.
Total loan yields declined eight basis points to 5.69% from 5.77%.
The decrease was primarily associated with lower purchase accounting accretion, partially offset by the benefit of loan repricing.
On an adjusted basis, excluding purchase accounting accretion and other non-core items, loan yields increased three basis points during the quarter.
Securities yields increased five basis points to 3.13%.
The improvement reflected the impact of higher-yielding securities purchased during the first half of 2026.
The company’s overall cost of funding remained unchanged at 1.52%.
Fee-Based Businesses Continue to Grow
Noninterest income increased to $42.4 million during the second quarter, up $2.1 million, or 5.3%, from the previous quarter.
Several fee-based businesses contributed to the increase.
Interchange and ATM fee revenue increased by $668,000, or 13.3%, primarily due to seasonally higher transaction volumes.
Investment and advisory income increased by $796,000, or 5.6%.
The increase was driven by seasonal tax preparation fees and higher asset-based fee revenue, partially offset by lower insurance commissions.
Assets under administration increased by $298 million, or 3.2%, to $9.5 billion at June 30, 2026.
Loan-level derivative income also increased by $407,000, or 44.7%, during the quarter.
The growth of these businesses highlights the company’s efforts to diversify revenue beyond traditional lending and deposit activities.
Noninterest Expenses Decline
Noninterest expense totaled $140.3 million for the second quarter, down $2.6 million, or 1.9%, from the first quarter.
The company recorded no merger and acquisition expenses during the quarter, compared with $3.0 million in the first quarter related to the Enterprise acquisition.
Salaries and employee benefits declined by $1.6 million, or 2.0%, primarily due to lower incentive compensation and payroll taxes.
These reductions were partially offset by higher base salaries and retirement contributions.
Occupancy and equipment expenses declined by $1.1 million, or 6.6%.
Lower snow removal and utility costs contributed to the decrease, although higher general maintenance and repair expenses partially offset the savings.
Other noninterest expense increased by $3.5 million, or 12.3%.
The increase was primarily due to a $1.0 million increase in one-time costs related to the upcoming core conversion.
Additional increases included $878,000 in annual director equity compensation, $807,000 in legal fees and $326,000 in recruitment expenses.
Capital Management and Shareholder Returns
The company continued to return capital to shareholders during the second quarter.
The repurchase of approximately 964,000 shares for $75 million was completed at an average price of $77.79 per share.
Although stock repurchases reduced stockholders’ equity, strong quarterly earnings helped support book value growth.
Book value per share increased by $0.84, or 1.2%, to $73.76 at June 30.
Tangible book value per share increased by $0.48, or 1.0%, from the prior quarter to $48.34.
The company’s common equity-to-assets ratio was 14.06% at June 30, down 23 basis points from the previous quarter.
Tangible common equity to tangible assets was 9.69%, down 17 basis points from the prior quarter and 123 basis points from the year-ago period.
Asset Quality Remains a Key Focus
Asset quality metrics were mixed during the quarter.
Nonperforming loans increased to $103.6 million at June 30, compared with $96.6 million at March 31.
Nonperforming loans represented 0.56% of total loans, compared with 0.52% in the previous quarter.
Loan delinquencies increased two basis points to 0.43% of total loans.
At the same time, net charge-offs declined significantly to $900,000, compared with $4.8 million during the prior quarter.
Annualized net charge-offs represented 0.02% of average loans, compared with 0.11% in the first quarter.
The provision for credit losses increased to $6.3 million from $5.5 million.
Total criticized and classified commercial loans declined by $29.9 million, or 5.2%, to $545.6 million.
These loans represented 3.9% of total commercial loans.
The allowance for credit losses on total loans increased to $195.9 million at June 30, compared with $190.6 million at March 31.
The allowance represented 1.06% of total loans at the end of the second quarter, compared with 1.03% at the end of the first quarter.
Independent Bank Corp.’s second-quarter performance reflects continued progress across its core banking operations.
The company strengthened its deposit base, expanded commercial and industrial lending, grew its consumer real estate portfolio and increased assets under administration.
Fee-based businesses also continued to contribute to revenue growth.
At the same time, the company continued to manage expenses and reduce borrowings while returning capital to shareholders.
The upcoming core conversion represents an important investment in the company’s infrastructure and is expected to generate additional one-time costs during the transition.
As the company continues to integrate its Enterprise acquisition and invest in its technology platform, management will remain focused on maintaining strong customer relationships, improving operating efficiency and managing credit and funding risks.
The second-quarter results demonstrate the importance of a diversified banking model that combines commercial lending, consumer finance, wealth management and other fee-generating businesses.
With a strong core deposit base, substantial capital and continued investment in its operating platform, Independent Bank Corp. enters the second half of 2026 focused on sustainable growth and long-term value creation for shareholders, customers and the communities served by Rockland Trust.
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