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IB

INDEPENDENT BANK CORP (INDB)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered strong core results post-Enterprise integration: adjusted operating EPS was $1.55, up from $1.25 in Q2; reported GAAP EPS $0.69 reflects $23.9M merger costs and $34.5M day-two CECL provision on acquired loans . Net interest margin expanded 25 bps to 3.62% on repricing tailwinds and purchase accounting accretion .
  • Organic C&I loan growth ran 13% annualized; DDAs rose 1.2% linked-quarter, with total deposit costs at 1.58% highlighting franchise strength . Wealth AUA increased to $9.2B with Enterprise’s $1.5B contribution .
  • Asset quality remained contained: net charge-offs fell to $1.8M (4 bps annualized), allowance rose to 1.03% of loans largely from acquisition-related provision; NPLs increased to 0.47% including acquired NPAs .
  • Management guided Q4 to low single-digit loan/deposit growth, adjusted margin up 4–6 bps, core expenses down ~$2M, and one-time core upgrade costs of $3–$5M; tax rate ~23% . Narrative catalysts: successful integration, sustainable NIM trajectory, and capital deployment via buybacks ($23.4M repurchased) .

What Went Well and What Went Wrong

What Went Well

  • NIM inflected higher to 3.62% (+25 bps QoQ) on long-term asset repricing and purchase accounting accretion (8 bps loans; 5 bps securities) . “We believe prudent expense and capital management, continued NIM improvement… will unlock the inherent earnings power” (CEO) .
  • Enterprise integration executed smoothly with nearly 100% retention of client-facing personnel; originations by Enterprise bankers were 27% higher YoY in Q3, enabling cross-sell momentum .
  • Core franchise metrics: organic C&I balances +13% annualized; DDAs up 1.2%; total deposit cost 1.58%; wealth AUA to $9.2B . “Deposit retention at Enterprise has been better than expected” (CEO) .

What Went Wrong

  • Reported GAAP EPS fell to $0.69 on $23.9M merger expenses and $34.5M acquisition-related provision; NPLs increased to $86.6M (0.47% of loans) inclusive of acquired NPAs .
  • CRE/construction balances declined organically (−$137.7M and −$23.2M) amid runoff and transactional CRE de-risking; criticized/classified loans ticked to $460.2M (4.25% of commercial) .
  • Tangible book per share declined $2.17 QoQ to $46.63, partly from deal impacts and buybacks; CET1 ratio stepped down to 12.94% from 14.70% post-deal .

Financial Results

Core P&L and Returns

MetricQ1 2025Q2 2025Q3 2025
Total Revenue (NII + Noninterest) ($USD Thousands)$178,044 $181,804 $243,742
Net Interest Income ($USD Thousands)$145,505 $147,496 $203,344
Noninterest Income ($USD Thousands)$32,539 $34,308 $40,398
Diluted EPS (GAAP) ($)$1.04 $1.20 $0.69
Diluted EPS (Operating, Non-GAAP) ($)$1.06 $1.25 $1.55
Net Interest Margin (FTE, %)3.42% 3.37% 3.62%
ROAA (GAAP, %)0.93% 1.04% 0.55%

YoY reference (Q3 2024): Total revenue $175,252; GAAP EPS $1.01; NIM 3.29% .

Balance Sheet and Funding

MetricQ1 2025Q2 2025Q3 2025
Total Assets ($USD Thousands)$19,888,209 $20,048,934 $24,993,239
Total Loans ($USD Thousands)$14,491,969 $14,533,828 $18,452,443
Total Deposits ($USD Thousands)$15,676,017 $15,893,740 $20,295,869
Cost of Total Deposits (%)1.56% 1.54% 1.58%
DDAs (% of Deposits)28.1% 28.5% 27.8%
CET1 (%)14.52% 14.70% 12.94%
TCE / TA (%)10.78% 10.92% 9.77%

Asset Quality

MetricQ1 2025Q2 2025Q3 2025
NPLs / Loans (%)0.62% 0.39% 0.47%
NPAs ($USD Thousands)$89,493 $58,317 $88,697
Net Charge-offs ($USD Thousands)$40,892 $6,519 $1,836
Allowance / Loans (%)0.99% 1.00% 1.03%

Noninterest Income Breakdown (Q3 vs Q2)

Category ($USD Thousands)Q2 2025Q3 2025
Deposit Account Fees$7,141 $8,847
Interchange & ATM Fees$4,997 $5,989
Investment Mgmt & Advisory$11,380 $13,652
Mortgage Banking$1,072 $1,444
Loan Derivative Income$66 $1,224
Other Noninterest Income$5,964 $6,613
Total Noninterest Income$34,308 $40,398

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Loan GrowthQ4 2025Low single-digit (implied) Low single-digit % off Sept balances Maintained
Deposit GrowthQ4 2025Low single-digit (implied) Low single-digit % off Sept balances Maintained
Adjusted NIM (ex-loan accretion)Q4 2025Neutral to Fed cuts; margin resilient +4–6 bps expansion (adjusted) Raised (quantified)
Noninterest IncomeQ4 2025Modest growth (implied) Flat to low single-digit % increase Maintained
Core Noninterest ExpenseQ4 2025Enterprise cost saves ongoing Decrease by ~$2M (core, ex-M&A & one-time) Lowered
One-time Core Upgrade CostsQ4 2025~$5M over next couple quarters $3–$5M in Q4 Timed
Tax RateQ4 2025~23% range ~23% (plus finalizing 2024 impacts) Maintained
Enterprise Cost SavesThrough Q1 202630% of acquired expense base Reaffirmed 30% by Q1 2026 Maintained
Dividends/BuybacksOngoingBuyback program $150M authorized Repurchased $23.4M in Q3; ongoing reassessment Executed in Q3

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Enterprise integrationPending close; core conversion planned; disciplined culture Closed July 1, system conversion done; near 100% retention; originations +27% YoY; cost saves tracking Strong execution, synergy realization
NIM trajectory & rate cutsNIM resilient; neutral to Fed cuts NIM +25 bps to 3.62%; CFO reiterates neutral to Fed cuts; adjusted +4–6 bps guided Improving, sustainable
C&I vs CRE mixC&I growth (+$105M in Q2); CRE intentional reduction C&I +13% annualized; CRE/construction declines; focus on relationship CRE/C&I Mix shifting to C&I
Asset quality/officeQ1: elevated charge-offs; Q2: NPLs down; office discussed NCOs down; allowance up on acquisition; office resolutions progressing; one $27M renewed; $16M likely sale Stabilizing, contained losses
Capital & buybacksSub debt raised; TBV grew; buyback authorized CET1 ~12.94%; buybacks $23.4M; comfort at 12% CET1; evaluate pace Deploying excess capital
Technology/core upgradeMentioned; planned for 2026 May 2026 upgrade; $3–$5M Q4 costs Execution phase

Management Commentary

  • “We think third quarter results are an important stepping stone to improved growth and profitability… continued NIM improvement… and improved organic growth will unlock the inherent earnings power of Rockland Trust” — CEO .
  • “Reported margin improved meaningfully to 3.62%… 8 bps from purchase loan accretion, 5 bps from securities accretion… accretion will be lumpy, but sustainable as marks roll down” — CFO .
  • “NDFI exposure is basically nothing… growth in C&I is all Eastern Massachusetts middle market” — CEO (Q&A) .
  • “Comfortable at ~12% CET1… prefer to grow into capital via core funding; buybacks remain a tool” — CFO .
  • “Deposit retention at Enterprise better than expected… no branches closed, all employees retained” — CEO .

Q&A Highlights

  • C&I growth and pricing: disciplined spreads >200 bps; new C&I yields ~6%; healthy pipelines; growth all middle-market, Eastern MA .
  • Office credits: two key criticized notes—$27M extended with equity injection; ~$16M likely asset sale; class A office NPA $22M remains on deferral into 2026 .
  • Margin guidance vs Fed: adjusted NIM +4–6 bps regardless of one/two Fed cuts; neutralized by balance sheet positioning .
  • Securities portfolio/yields: acquired book low 4% yield post-mark; combined 2026 cash flows ~$700M; repricing to ~4% yields supports margin .
  • Capital deployment: CET1 ~12.94%, TCE 9.77%; buyback deployment calibrated to valuation and growth; $23.4M repurchased at $64.07 avg .

Estimates Context

MetricQ3 2025 ConsensusQ3 2025 Actual
Primary EPS Consensus Mean ($)1.535*1.55 (Operating EPS)
Revenue Consensus Mean ($USD)244,774,000*243,742,000 (Total Revenue)

Values marked with * retrieved from S&P Global. Note: S&P “Revenue” definitions for banks may differ (often proxied by net interest income or operating revenue). The company’s GAAP total revenue was $243.742M; on this basis, EPS was a slight beat and revenue was essentially in line/slight miss.*

Key Takeaways for Investors

  • NIM expansion appears durable, driven by long-duration asset repricing and marked securities/loan accretion; Q4 adjusted NIM guide adds 4–6 bps, supporting near-term EPS momentum .
  • Integration synergies are materializing: Enterprise originations up 27% YoY; 30% cost saves reaffirmed by Q1 2026; Q4 core expenses guided down ~$2M .
  • Balance sheet strength with low-cost deposits (1.58% cost) and DDA mix (~28%) underpins funding stability in a rate-cut environment . Short-term trading: positive reaction likely on NIM trajectory and EPS beat vs consensus.
  • Credit normalization remains contained; office exposures show progress toward resolution; NCOs and allowance trends are manageable post-acquisition provisioning . Medium term: monitoring criticized/classified trends as macro uncertainty persists .
  • Capital optionality: CET1 ~12.94% and ongoing buybacks ($23.4M in Q3) offer downside support; management prefers organic growth to “grow into” capital, but will reassess repurchase pace .
  • Wealth and fee income scaling (AUA $9.2B) enhances revenue diversity; incremental fee growth expected in Q4 .
  • Execution on 2026 core upgrade presents near-term one-time costs ($3–$5M in Q4) but should enhance scalability and efficiency longer term .

Appendix: KPIs and Operating Details

Deposit and Loan Mix

MetricQ2 2025Q3 2025
Average Deposits ($USD Billions)$15.6 $20.2
Cost of Deposits (%)1.54% 1.58%
C&I ($USD Thousands, period end)$3,426,938 $4,667,262
CRE ($USD Thousands, period end)$6,614,523 $8,106,490
Construction ($USD Thousands, period end)$798,808 $1,439,876
Consumer Real Estate ($USD Thousands, period end)$3,657,263 $4,201,240
Organic C&I Growth (Linked-Q, $USD Thousands)—$148,675
Organic CRE Decline (Linked-Q, $USD Thousands)—$(137,731)

Wealth

MetricQ2 2025Q3 2025
Assets Under Administration ($USD Thousands)$7,360,635 $9,220,205
Investment Mgmt & Advisory Revenue ($USD Thousands)$11,380 $13,652

Capital and Valuation

MetricQ2 2025Q3 2025
CET1 (%)14.70% 12.94%
TCE / TA (%)10.92% 9.77%
Tangible Book Value / Share ($)$48.80 $46.63
Buybacks Executed ($USD Millions)—$23.4

Note: All non-GAAP metrics include company-provided reconciliations in Exhibits/Appendices .

Sources

  • Q3 2025 Earnings Press Release (Exhibit 99.1 in 8-K Item 2.02) .
  • Q3 2025 Earnings Presentation (Exhibit 99.2) .
  • Q3 2025 Earnings Call Transcript (full) .
  • Q2 2025 Press Release .
  • Q1 2025 Press Release .
  • S&P Global consensus estimates (EPS and revenue) used where indicated with asterisk.*