Independent Bank reports Q2 2026 EPS of $1.70, repurchases $75M in shares

The company reported second quarter 2026 net income of $81.8 million, or $1.70 per diluted share, representing a 2.4% increase from the prior quarter's $79.9 million, or $1.63 per share. No merger-related costs were incurred during the second quarter, compared to $3.0 million in the first quarter related to the Enterprise Bancorp acquisition. The return on average assets was 1.34% and return on average common equity was 9.24% for the quarter.

Total deposits increased $294.6 million, or 1.5%, to $20.4 billion, driven primarily by inflows in municipal and business accounts. Core deposits comprised 84.1% of total deposits. Total loans decreased $31.2 million, or 0.2%, to $18.4 billion, with commercial and industrial loans growing $79.4 million (1.7%) while commercial real estate and construction decreased $176.4 million due to elevated payoffs and amortization. Consumer real estate portfolios increased $63.2 million (1.5%).

The reported net interest margin decreased 5 basis points to 3.85% from the prior quarter, primarily due to a 9 basis point decrease in purchase accounting accretion. However, excluding purchase accounting accretion and other non-core items, the adjusted margin increased 4 basis points to 3.76%, reflecting the benefit of asset repricing. The overall cost of funding remained flat at 1.52%, and the cost of deposits remained flat at 1.36%.

Nonperforming loans increased to $103.6 million (0.56% of total loans) from $96.6 million (0.52%) in the prior quarter. However, net charge-offs decreased significantly to $0.9 million (0.02% of average loans annualized) from $4.8 million (0.11%) in the prior quarter. The provision for credit losses increased to $6.3 million from $5.5 million. The allowance for credit losses increased to $195.9 million (1.06% of total loans) from $190.6 million (1.03%), providing 189% coverage of nonperforming loans.

The company reported Q2 2026 net income of $81.8 million and diluted EPS of $1.70, with return on average assets of 1.34%, return on average common equity of 9.24%, and net interest margin of 3.85%. These metrics reflect continued profitability and stable performance quarter-over-quarter.

Deposits increased $294.6 million, or 1.5%, . The growth was driven by increases in noninterest-bearing demand deposits ($77M), savings and interest checking ($193M), and money market accounts ($31M), partially offset by a slight decline in time deposits.

Total loans decreased $31.2 million, or 0.2%, . Commercial and industrial loans grew $80 million (1.7%) and consumer real estate increased $63 million (1.5%), offset by a $237 million (2.9%) decline in commercial real estate loans, reflecting planned runoff in that portfolio.

Management updated 2026 guidance for loan growth expectations across segments and revised noninterest expense guidance to $553-$557 million for core operating expenses, plus $5-$6 million in one-time costs for a core system upgrade. Net interest margin guidance remains unchanged with a Q4 2026 target range of 3.90%-3.95%.