Independent Bank Q2 Earnings Call Highlights

Second-quarter profit beat was driven by deposits and lending: Independent Bank reported net income of $81.8 million, or $1.70 per share, supported by stronger deposit growth, C&I loan growth, margin expansion and share repurchases. Commercial lending trends were mixed: C&I loans rose 10% annualized excluding an exited floor-plan business, but CRE and construction loans fell by $176 million due to elevated payoffs. Management said a larger commercial pipeline could help return the bank to positive commercial loan growth. Capital returns and guidance stayed intact: The bank repurchased $75 million of stock and reiterated its focus on buybacks, while reaffirming fourth-quarter targets for a 1.4% ROA and a 15% return on tangible capital. It also kept its margin outlook at 3.90% to 3.95%, though likely near the low end.

Independent Bank NASDAQ: INDB reported second-quarter 2026 net income of $81.8 million, or $1.70 per diluted share, as executives said stronger deposit momentum, C&I lending growth, margin expansion and share repurchases supported profitability despite pressure from commercial real estate payoffs. Chief Executive Officer Jeff Tengel said business activity was slow early in the quarter but accelerated as the period progressed. He pointed to “solid deposit growth, strong C&I loan growth, continued improvement in the adjusted NIM, aggressive buyback activity, and excellent results in our wealth management business,” while noting that those gains were partly offset by a smaller average balance sheet and lower loan accretion income.

Tengel also provided a personal update at the start of the call, saying he had completed treatment for non-Hodgkin’s lymphoma and had learned he is “cancer-free and in remission.”

Deposit Growth and Margin Expansion Independent Bank’s deposit franchise produced more than $300 million of non-time deposit growth in the quarter, which Tengel said represented 7% annualized growth. The company held its cost of deposits stable at 1.36%, despite what management described as heightened competition and expectations that the Federal Reserve will keep rates elevated for longer. Chief Financial Officer Mark Ruggiero said period-end deposit balances grew at a 5.9% annualized rate, although average balances were down for much of the quarter. That created what he called a temporary drag on cash and average earning assets. He said balances rebounded late in the quarter, supported by new core deposit relationships. Ruggiero said the core net interest margin increased four basis points in the second quarter. Reported loan yields declined eight basis points, but core loan yields rose three basis points when excluding volatile purchase accounting accretion and other non-core items. Securities yields increased five basis points in the quarter, and Ruggiero said additional maturities and amortization in the second half should support further improvement. During the question-and-answer session, Ruggiero said the company had introduced a 4% short-term money market special halfway through the second quarter, contributing to some upward pressure in money market rates. He said the spot cost of deposits was 1.38% in June and that management expects some additional pressure in the second half, potentially toward 1.40%, while still maintaining its fourth-quarter margin guidance.

C&I Growth Offsets CRE Paydowns Loan growth was mixed during the quarter. Tengel said C&I and home equity lending were robust, while commercial real estate and construction loans declined by $176 million due to elevated payoffs. Excluding a $37 million decline tied to the dealer floor plan business that Independent Bank has largely exited, C&I loans ros...