Independent Bank (INDB) - 2025 Q2 - Quarterly Results

Financial Highlights Independent Bank Corp. reported strong Q2 2025 results, with net income of $51.1 million and a new $150 million stock repurchase plan Q2 2025 Key Earnings Metrics (Millions) | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Net Income | $51.1 | $44.4 | | Diluted EPS | $1.20 | $1.04 | | Operating Net Income (Non-GAAP) | $53.5 | $45.3 | | Operating Diluted EPS (Non-GAAP) | $1.25 | $1.06 | Q2 2025 Key Performance Ratios (%) | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Return on Average Assets (ROA) | 1.04 | 0.93 | | Return on Average Common Equity (ROE) | 6.68 | 5.94 | | Net Interest Margin (NIM) | 3.37 | 3.42 | - A new stock repurchase plan was announced, authorizing up to $150 million in common stock repurchases, scheduled to expire on July 16, 2026[1] - The acquisition of Enterprise Bancorp was completed, with the core operating system conversion expected in October 2025, and merger-related costs were $2.2 million in Q2 2025[1][2] Balance Sheet Total assets grew to $20.0 billion in Q2 2025, driven by deposit and loan growth, while borrowings decreased and equity strengthened Balance Sheet Changes (Q2 2025 vs Q1 2025) | Account | Q2 2025 Balance | QoQ Change (Millions) | QoQ Change (Annualized) | | :--- | :--- | :--- | :--- | | Total Assets | $20.0 billion | +$160.7 | +3.2% | | Total Loans | $14.5 billion | +$41.9 | +1.2% | | Total Deposits | $15.9 billion | +$217.7 | +5.6% | | Total Borrowings | $759.4 million | -$100.4 | -11.7% (not annualized) | - Loan growth was driven by a $105.0 million (13.5% annualized) increase in the commercial and industrial portfolio and a $48.8 million (5.4% annualized) rise in consumer loans[6] - Deposit growth was led by increases in municipal and business categories, with core deposits remaining stable at 82.8% of total deposits[6] - The company paid off $100.0 million in Federal Home Loan Bank borrowings during the quarter[5] - Tangible book value per share grew by $0.99, or 2.1%, from the prior quarter to $48.80[3][7] Income Statement Analysis Q2 2025 income statement shows increased net interest income to $147.5 million and noninterest income to $34.3 million, despite a rise in noninterest expenses to $108.8 million Net Interest Income Net interest income rose to $147.5 million in Q2 2025, while the net interest margin slightly decreased by 5 basis points to 3.37%, with the core margin remaining stable Net Interest Income and Margin | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Net Interest Income (Millions) | $147.5 | $145.5 | | Net Interest Margin (%) | 3.37 | 3.42 | | Core Net Interest Margin (%) | 3.37 | 3.37 | - Total loan yields increased to 5.50% from 5.49% in Q1[8] - The overall cost of funding increased by 6 basis points to 1.73%, while the cost of deposits decreased by 2 basis points to 1.54%[6][8] Noninterest Income Noninterest income increased by $1.8 million to $34.3 million in Q2 2025, primarily due to a $1.7 million gain on life insurance proceeds, despite a drop in derivative income - Key drivers of the QoQ increase in noninterest income included: - Gain on life insurance: +$1.7 million - Mortgage banking income: +$331,000 (44.7%) - Interchange and ATM fees: +$375,000 (8.1%) - Offset by a decrease in Loan level derivative income: -$976,000 (93.7%)[8] - Assets under administration grew by $261.7 million (3.7%) during the quarter to $7.4 billion, driven by market gains[8] Noninterest Expense Noninterest expense rose by $2.9 million to $108.8 million in Q2 2025, driven by higher other expenses, merger costs, and salaries, partially offset by lower occupancy and FDIC costs - Significant changes in noninterest expense compared to Q1 2025: - Salaries and employee benefits: +$925,000 (1.5%) - Merger and acquisition expenses: +$1.0 million (to $2.2 million) - Other noninterest expense: +$2.1 million (9.0%) - Occupancy and equipment expenses: -$701,000 (5.1%) - FDIC assessment: -$615,000 (20.6%)[10] Asset Quality Asset quality improved significantly in Q2 2025, with nonperforming loans decreasing to $56.2 million and net charge-offs falling sharply to $6.5 million, leading to a lower provision for credit losses Asset Quality Metrics (Q2 2025 vs Q1 2025) | Metric | Q2 2025 (Millions) | Q1 2025 (Millions) | | :--- | :--- | :--- | | Nonperforming Loans | $56.2 | $89.5 | | Nonperforming Loans / Total Loans (%) | 0.39 | 0.62 | | Net Charge-offs | $6.5 | $40.9 | | Net Charge-offs to Avg. Loans (Ann.) (%) | 0.18 | 1.14 | | Provision for Credit Losses | $7.2 | $15.0 | | Allowance for Credit Losses / Total Loans (%) | 1.00 | 0.99 | - The decrease in nonperforming loans was primarily due to the resolution of two of the larger nonperforming balances from the prior quarter[10] Forward-Looking Statements and Non-GAAP Measures The report contains forward-looking statements subject to economic and acquisition risks, and utilizes non-GAAP measures like operating net income and core margin for clearer financial insight - The press release contains forward-looking statements subject to risks including adverse economic conditions, competition, interest rate changes, and risks related to the Enterprise acquisition[13][14][16] - The report uses non-GAAP measures such as operating net income, operating EPS, core margin, and tangible book value per share to provide insight into the core banking business, excluding items like merger and acquisition expenses[17][18][19] Consolidated Financial Statements Consolidated financial statements detail Q2 2025 performance, showing total assets of $20.05 billion, net income of $51.1 million, and improved asset quality with reduced nonperforming assets Consolidated Balance Sheets Consolidated balance sheets show total assets at $20.05 billion and total stockholders' equity at $3.07 billion as of June 30, 2025, reflecting quarter-over-quarter growth Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Total Assets | $20,048,934 | $19,888,209 | $19,411,037 | | Net Loans | $14,389,055 | $14,347,877 | $14,250,083 | | Total Deposits | $15,893,740 | $15,676,017 | $15,409,587 | | Total Borrowings | $759,428 | $859,874 | $693,386 | | Total Stockholders' Equity | $3,074,856 | $3,033,392 | $2,919,249 | Consolidated Statements of Income Q2 2025 net income was $51.1 million from $147.5 million net interest income and $34.3 million noninterest income, while six-month net income was $95.5 million Consolidated Income Statement (Three Months Ended, in thousands) | Account | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income | $147,496 | $145,505 | $137,926 | | Provision for Credit Losses | $7,200 | $15,000 | $4,250 | | Total Noninterest Income | $34,308 | $32,539 | $32,330 | | Total Noninterest Expenses | $108,798 | $105,878 | $99,614 | | Net Income | $51,101 | $44,424 | $51,330 | Consolidated Income Statement (Six Months Ended, in thousands) | Account | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Net Interest Income | $293,001 | $275,365 | | Provision for Credit Losses | $22,200 | $9,250 | | Net Income | $95,525 | $99,100 | Asset Quality and Capital Ratios Asset quality tables show nonperforming assets decreased to $58.3 million, with strong capital ratios including a 14.70% Common Equity Tier 1 ratio and 10.92% Tangible Common Equity to Tangible Assets Nonperforming Assets (in thousands) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Total Nonperforming Loans | $56,217 | $89,493 | $57,451 | | Total Nonperforming Assets | $58,317 | $89,493 | $57,561 | | NPLs / Gross Loans (%) | 0.39 | 0.62 | 0.40 | Key Capital Ratios (%) | Ratio | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Common Equity Tier 1 (CET1) | 14.70 (Est.) | 14.52 | 14.40 | | Tangible Common Equity / Tangible Assets | 10.92 | 10.78 | 10.42 | | Tangible Book Value Per Share | $48.80 | $47.81 | $45.19 | Appendices: Non-GAAP Reconciliations Appendices provide detailed reconciliations of GAAP to non-GAAP financial measures, including tangible common equity, operating net income, and core net interest margin analysis Appendix A: Non-GAAP Reconciliation of Balance Sheet Metrics Appendix A reconciles GAAP to non-GAAP balance sheet metrics, showing Q2 2025 tangible common equity of $2.08 billion and tangible book value per share of $48.80 Tangible Book Value Per Share Reconciliation (Q2 2025, in thousands) | Metric | Amount | | :--- | :--- | | Stockholders' equity (GAAP) | $3,074,856 | | Less: Goodwill and other intangibles | $994,814 | | Tangible common equity (Non-GAAP) | $2,080,042 | | Common Shares Outstanding | 42,627,286 | | Tangible book value per share (Non-GAAP) | $48.80 | Appendix B: Non-GAAP Reconciliation of Earnings Metrics Appendix B reconciles GAAP net income to operating net income, showing Q2 2025 operating net income of $53.5 million after adjusting for $2.2 million in merger expenses Operating Net Income Reconciliation (Q2 2025, in thousands) | Description | Amount | | :--- | :--- | | Net income (GAAP) | $51,101 | | Add: Merger and acquisition expenses | $2,239 | | Total tax impact | $113 | | Operating net income (Non-GAAP) | $53,453 | Appendix C: Net Interest Margin Analysis & Non-GAAP Reconciliation of Core Margin Appendix C analyzes net interest margin, showing the Q2 2025 reported NIM and core margin both at 3.37%, unchanged from the prior quarter's core margin Core Margin Reconciliation (Q2 2025 vs Q1 2025) | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Reported Net Interest Margin (%) | 3.37 | 3.42 | | Impact of Non-core Adjustments (%) | 0.00 | -0.05 | | Core Margin (Non-GAAP) (%) | 3.37 | 3.37 |