INDB

This article first appeared on GuruFocus. - Net Income: $89.7 million in Q3 2026, a record for the bank. - Diluted EPS: $1.90, up 12% from the prior quarter, a record for the bank. - Return on Assets: 1.42% for the quarter. - Return on Average Tangible Common Equity: 15.4% for the quarter. - Net Interest Margin: 3.89%, up 4 basis points from the prior quarter; adjusted core margin flat at 3.76%. - Total Loan Growth: $158 million, or nearly 3.5% annualized. - C&I Loan Growth: Up $61 million, or 5% annualized, excluding $11.5 million dealer floor plan runoff. - Commercial Real Estate Growth: Up $31 million, including construction loans; $202 million in new relationship-based CRE loans funded. - Home Equity Growth: Approximately 12% annualized for the quarter. - Deposit Growth: Over $230 million in non-time deposits, or 5.4% annualized; average deposits up over $630 million. - Cost of Deposits: 142%, up 6 basis points from the prior quarter. - Net Charge-Offs: 2 basis points annualized for the quarter; averaged 6 basis points over the last five quarters. - Loan Loss Provision: $6.5 million, or 14 basis points of average loans. - Non-Performing Assets: $126.2 million, or 0.5% of total assets. - Criticized and Classified Loans: 3.9% of total commercial loans, relatively stable. - Fee Income: $41.2 million, down approximately 3% from the prior quarter. - Share Repurchases: $57.4 million in capital repurchased during the quarter. - CET1 Ratio: 12.7% as of September 30. - Tangible Capital Ratio: 9.4% as of September 30. - Tax Rate: 23.3%, relatively consistent. - Core Conversion Expenses: Approximately $2.2 million in the quarter; $5.5 million year-to-date. - Warning! GuruFocus has detected 5 Warning Signs with INDB. - Is INDB fairly valued? Test your thesis with our free DCF calculator. Release Date: October 16, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. - Independent Bank Corp (NASDAQ:INDB) reported record Q3 2026 net income of $89.7 million and diluted EPS of $1.90, a 12% increase over the prior quarter. - The company achieved a return on assets of 1.42% and a return on average tangible common equity of 15.4%, already meeting its profitability targets for Q4 2026. - Independent Bank Corp (NASDAQ:INDB) generated solid loan growth of $158 million (3.5% annualized) and deposit growth of over $230 million in non-time deposits (5.4% annualized), with a cost of deposits of 1.42%, which remains industry-leading. - The net interest margin remained stable at 3.89% (core margin flat at 3.76%) despite heightened deposit competition, and the company expects a path to a 4% margin by the end of 2027. - Asset quality remains strong with net charge-offs of just 2 basis points in Q3 and an average of 6 basis points over the last five quarters, and the company continues to aggressively return capital through buybacks ($57.4 million in Q3). - Non-performing assets increased to $126.2 million (0.5% of total assets), driven by a $22.4 million office loan that was placed on non-accrual, requiring a $6.5 million specific reserve. - The company holds approximately $17 million in specific reserves for commercial loans that are expected to be charged off over the next couple of quarters, which could impact future earnings. - Fee income decreased 3% from the prior quarter due to lower wealth management income and reduced demand for saleable mortgage banking and loan-level swap activity amid higher interest rates. - The core systems conversion has been delayed from October 2026 to February 2027, resulting in additional one-time expenses of $1.5 million to $2 million over the next couple of quarters. - Deposit cost competition remains high, with the spot cost of deposits at 1.44% in September and expected further pressure in Q4, which could compress the net interest margin if the Fed raises rates. Q: Can you provide more detail on the office credit that entered non-accrual this quarter, including geography, type, and expectations for the workout process?A: Mark Ruggiero, CFO, explained it is a local office loan with a single tenant planning to vacate, essentially becoming an empty office building. The bank is working with the sponsor on a potential multifamily conversion, though it's early stages. They reserved down to the average of values as an empty office and potential multifamily conversion, resulting in a $6.5 million specific reserve. CEO Jeffrey Tengel added the sponsor has a history of supporting projects and they proactively put it on non-performing status. Q: Regarding the $17 million in classified office loans coming due in the fourth quarter, how do you think about those as they come due?A: Mark Ruggiero, CFO, clarified it's one loan that went to non-accrual last quarter with a $6 million reserve already established. It's being marketed for sale with early interest seen, and they're hopeful for an early 2027 resolution. Q: Can you provide detail on how the NIM progressed through the quarter, where it ended, and the spot cost of deposits?A: Mark Ruggiero, CFO, noted gradual increase into September with spot NIM at 3.81%. The securities portfolio will print at a higher yield due to OCI unrealized losses. Spot cost of deposits for September was 1.44%, with more deposit cost pressure expected in Q4. He expects asset yields to improve nicely and deposit costs to go up a little, but believes they can increase the adjusted core margin by a few basis points. Q: What's the early read on how the margin could behave next year with potential rate hikes, and how are you thinking about defending NIM versus tolerating pressure to grow NII?A: Mark Ruggiero, CFO, said a 4% NIM is still realistic, particularly due to back-book repricing benefit with over $500 million of cash flow expected over the next four to five quarters, which alone can drive upwards of 7 basis points of expansion. Assuming they can equalize Fed action with loan yields and deposit costs, back-book repricing would still drive good margin expansion, with a path to 4% margin by end of 2027. Q: On the buyback, with OCI moving against you, what's the overall thinking, and could you get more active given how the stock has traded?A: Mark Ruggiero, CFO, reaffirmed the expectation of 100% of profits being returned via common dividend and buyback. He said they have the capacity and appetite to do a little more, but 100% of profits inclusive of dividend is the minimum level. Q: Can you give the actual dollar amount of the office loan that drove the jump in non-performers?A: Mark Ruggiero, CFO, confirmed it is a $22.4 million loan. Q: For the $22 million SNCC loan, is there still a thought it might come current in the fourth quarter?A: Mark Ruggiero, CFO, said it will likely be a Q1 2027 event based on the six-month performance period, but it is still on track to return to accrual. Q: For the $17 million in Life Sciences non-performers, is that your only non-performer in that sector, and any thought on when we might see movement?A: Mark Ruggiero, CFO, confirmed it's the only non-performer in the approximately $100 million Life Sciences portfolio, with a $6 million reserve. He hopes to resolve it by calendar year-end, though it could spill into Q1. Between the new non-performer and this loan, there's $12 million plus of reserves, and the loss has been taken for the most part, so it should not result in much more needed provision levels. Q: What are the total reserves for the office portfolio?A: Mark Ruggiero, CFO, said specific reserves are a little over $14 million, which does not include the $8 million already charged off on the SNCC. So there's essentially $22 million of actual charge-off and/or reserve, plus the standard 1% to 1.25% reserve on the general methodology. Q: What types of securities and yields are you purchasing these days, and what are loan origination yields and expected cash flows?A: Mark Ruggiero, CFO, said securities purchased in the quarter had a weighted average yield around 5%, upticking north of that in September, with today's purchases nearing 6%. They're staying plain vanilla with mortgage-backed, agency-backed securities, and low coupon, deep discounted securities. On loans, new commercial pricing is averaging around 6.5% in Q3 with potential to move higher. He expects $1.5 billion to $2 billion of loan repricing or cash flow annually, and over $500 million in securities cash flow in 2027 at about a 2.5% rate, providing 300-plus basis points of spread. Q: With the systems conversion pushed to Q1, how are you thinking about expenses for 2027?A: Mark Ruggiero, CFO, said they're not ready to give full year 2027 guidance but reiterated the goal to hold the line on expenses while investing in technology and AI. They'll look to invest by being disciplined in other areas of discretionary spend, with 2026 as the goal to move forward into 2027, acknowledging merit increases and inflationary impacts. Q: What drove the decision to move the core conversion to February, and what's the earnings impact?A: Jeffrey Tengel, CEO, said they didn't feel ready, citing stress on employees and risk of it not going well. It was prudent to delay until February to ensure minimal customer disruption. Mark Ruggiero, CFO, added the one-time expense is really outside third-party consulting, with no parallel core run rate expenses. The new system is expected to have pretty much the same run rate as today, with one-time costs hitting in Q4. Q: If we get one to two rate hikes mid-year, how should we think about margin?AFor the complete transcript of the earnings call, please refer to the full earnings call transcript.

Independent Bank just reported Q3 2026 results with record quarterly earnings of US$89.7m and diluted EPS of US$1.90, and the stock jumped 3.6% on the day. Traders cheered the headline profit beat, yet the real story sits in the tug of war between that strong income line and rising non performing loans, now at US$125.7m. For you as an investor, the question is whether this move reflects genuine confidence in the bank's earnings power or a rush to chase momentum while early credit cracks are still being priced in. Impressed by Independent Bank's record profit but uneasy about those rising non performing loans? You can filter for banks and financials that pair solid earnings with stronger balance sheets using our list of solid balance sheet and fundamentals stocks (25 results). - Total Revenue (Q3 2026 vs Q3 2025): US$255.4m vs. US$205.2m (up about 24%) - Net Income (Excl. Extra Items, Q3 2026 vs Q3 2025): US$89.7m vs. US$34.3m (up about 162%) - Basic EPS (Q3 2026 vs Q3 2025): US$1.90 vs. US$0.69 (up about 177%) - Net Interest Margin (Q3 2026 vs Q3 2025): 3.89% vs. 3.62% (higher margin level) If you prefer clear charts instead of extensive earnings tables and credit metrics, explore Independent Bank's full visual breakdown, with a focus on its balance sheet strength, in the company report for Independent Bank. Supporters argue Independent Bank is already reshaping its engine toward relationship lending, fee income and scalable tech. "Rebalancing the loan book away from transactional commercial real estate toward relationship-based C&I and selected commercial real estate, including the 10% annualized C&I expansion in Q2 2026 alongside a reduction in investment CRE and construction, points to a mix shift that could support more stable net interest income and credit costs over time." Q3 data shows C&I still expanding, with roughly 5% annualized growth excluding dealer runoff, while CRE and construction rose only modestly. Core NIM held at 3.76% with reported margin at 3.89%. Expenses excluding conversion costs edged lower. The mix shift thesis is progressing but has not yet fully reduced CRE risk. On the flip side, critics worry the credit clean up and core project costs could erode that earnings story. "The earlier concern about Independent Bank's high commercial real estate concentration remains live because office exposure is still being worked through, with several criticized and classified office loans including a US$17.4 million life science office property that carries a full reserve and another office credit of about US$14 million being brokered for sale." Q3 confirmed that concern. Nonperforming assets reached US$126.2m, with nonaccruals concentrated in three office loans around US$22m each. Specific reserves are already sizable. Conversion risk also persists, with US$5.5m of year to date costs, more to come, and the FIS IBS timeline pushed to February 2027. One Narrative disagrees with today's price. → See where this Narrative says Independent Bank should trade. Independent Bank just showed how a single quarter can shift sentiment fast. The real opportunity could sit in stocks where fundamentals improve before valuations catch up. - Company 1 - 23% below our estimate - helps utilities upgrade grid hardware and diagnostics as electrification and modernization projects replace older equipment. - Company 2 - 48% below our estimate - wins large public infrastructure contracts while racing to automate project delivery as labor costs and shortages rise. - Company 3 - 32% below our estimate - tightens factory operations and expands aftermarket service as new power and nuclear projects demand higher reliability. Those are three of them. See every one of the 33 undervalued companies on it → This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include INDB. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Independent Bank (INDB) drew fresh attention on October 15 after it reported an earnings beat and third quarter net charge offs of $1.16 million, lower than the $1.84 million reported a year earlier. At a share price of $77.08, Independent Bank has seen a 1-day share price return of 1.37%, while the 30-day share price return is down 7.84%. The 1-year total shareholder return of 23.60% and 3-year total shareholder return of 79.68% highlight momentum that has built over a longer period and set the context for how investors react to the latest earnings beat and lower net charge offs. Capitalize on Independent Bank's latest earnings beat by comparing it with a hand picked group of banks and financials in our 33 high quality undervalued stocks. Independent Bank reported earnings that exceeded expectations, along with lower net charge-offs, while its share price has slipped over the past month. The business appears solid. The open question is whether the stock now offers fair value. Independent Bank's most followed valuation story points to a fair value of $93.43, above the recent close of $77.08. That puts fresh focus on how its business mix and capital return plans line up with that gap. Rebalancing the loan book away from transactional commercial real estate toward relationship-based C&I and selected commercial real estate, including the 10% annualized C&I expansion in Q2 2026 alongside a reduction in investment CRE and construction, points to a mix shift that could support more stable net interest income and credit costs over time. See why 5 investors see Independent Bank as 17% undervalued. Result: Fair Value of $93.43 (UNDERVALUED) Still, the bullish Independent Bank story depends on office related commercial real estate risk staying contained and on the core system conversion not driving higher than planned costs. Find out about the key risks to this Independent Bank narrative. Independent Bank looks cheap on some models, yet its P/E of 13.5x is higher than both the US Banks industry at 11.3x and its own fair ratio of 13.4x. That points to investors already paying a slight premium. The real question is whether that premium fits the risks around CRE, earnings growth and returns. See what the numbers say about this price in more detail in our See what the numbers say about this price — find out in our valuation breakdown. Mixed signals around Independent Bank's valuation and risk reward profile make this a moment to move beyond headlines and review the numbers directly. To weigh the balance between potential upside and the issues investors are watching, start by checking the 5 key rewards and 1 important warning sign. If you want a fuller watchlist, use the Simply Wall Street Screener to spot stocks that fit your goals before the next round of earnings headlines hits. - Target quality at a reasonable price by reviewing companies that show a mix of strong cash flows and attractive valuations in the 33 high quality undervalued stocks. - Prioritize resilience and sleep easier at night by scanning financially sound businesses in the list of solid balance sheet and fundamentals (25 results). - Hunt for future standouts early by checking a curated pool of under-the-radar opportunities in the 20 high quality undiscovered gems. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include INDB. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Image source: The Motley Fool. Friday, Oct. 16, 2026 - President and Chief Executive Officer - Jeffrey Tengel - Chief Financial Officer and Executive Vice President of Consumer Lending - Mark J. Ruggiero Operator: materially from these statements due to a number of factors, including those described in our earnings release and other SEC filings. We undertake no obligation to publicly update any such statements. In addition, some of our discussion today may include references to certain non-GAAP financial measures. Information about these non-GAAP measures, including reconciliation to GAAP measures, may be found in our earnings release and other SEC filings. These SEC filings can be accessed via the investor relations section of our website. Finally, please note that this event is being recorded. I would now like to turn the call over to Jeff Tengel, CEO. Please go ahead. Jeff Tengel: Thank you. Good morning, and thanks for joining us today. I am accompanied this morning by CFO and Head of Consumer Lending, Mark Ruggiero. We are pleased with our third quarter results. We generated solid loan and deposit growth, maintained the core net interest margin despite heightened deposit competition, continued to aggressively buy back stock, managed our expenses tightly, and had very modest net charge-off activity. Our deposit franchise continued to differentiate itself, producing over $230 million of non-time deposits, representing 5.4% annualized growth. While up six basis points from last quarter, our 142 cost of deposits remains industry-leading. These results were achieved in a very competitive environment, with growing expectations that the Federal Reserve will continue to move rates higher. On the lending front, we generated total loan growth of $158 million, or nearly 3.5% annualized. We experienced growth across a number of asset classes, including C&I, commercial real estate, home equity, and residential mortgage. Excluding the impact of the $11.5 million runoff from our dealer floor plan business, which has been fully exited, our C&I loans rose by $61 million, or a healthy 5% on an annualized basis. While C&I growth was not as robust as in the second quarter, we have a very healthy pipeline heading into the fourth quarter and had several loan closings slip into October. Commercial real estate, including construction loans, grew by $31 million during the quarter, primarily reflecting increased construction draw activity and a reduced level of payoffs. We funded $202 million in new relationship-based commercial real estate loans in the third quarter. Loan payoffs and pay downs were down 27% from the second quarter, and our CRE concentration now stands at 278. On September 30th, our approved commercial loan pipeline totaled $574 million, up from $510 million on June 30th. Our loan pipeline has benefited from strong origination activity, new hires across several business segments, and a pivot by the legacy Enterprise Bank relationship managers from defense to offense. Despite the competitive loan and deposit environment, the third quarter saw stability in our adjusted NIM. This reflects the favorable repricing of loan and bond cash flows, as well as pricing discipline across both our loan and deposit portfolios. Mark will elaborate on our NIM during his comments. As the environment continues to shift, we recognize the best use of our capital is to build deep, profitable customer relationships and not grow our balance sheet at thin, risk-adjusted spreads. This means we will continue to support our customers, be competitive for the right deals, and grow prudently. We also continue to maintain a proactive posture in returning excess capital to shareholders. Capital management will remain a key priority for the balance of the year. Regarding asset quality, while we continue to see movement in and out of our non-performing loans and criticized and classified loan buckets, the levels are consistent with our historical credit performance. Our net charge-offs were just 2 basis points for the third quarter and have averaged just 6 basis points over the last five quarters. Our loan loss provision represented 14 basis points of average loans in the third quarter and has averaged 12 basis points over the last five quarters, excluding the impact of the Enterprise acquisition. Over the last 20 years, our loan loss provision and net charge-offs have had an average of 21 basis points and 16 basis points of average loans, respectively. The economic landscape continues to be challenged by higher interest rates, inflationary concerns, the Iran war, tariffs, among other things. Importantly, however, we have not seen any degradation of credit from these pressures. We have seen a few instances where higher rates have resulted in business owners pausing planned spending and/or projects, particularly in the commercial real estate space. Excluding non-recurring core systems conversion costs, expenses were down compared to the second quarter. We remain vigilant regarding our expense levels. As we've stated in the past, given the investments we have made in people and technology over the past few years, we believe we have the scale to continue to grow without significant additions to our expense base. Of note, we have elected to move the timing of our planned systems upgrade from October to February to allow for additional preparation and ensure a smooth, well-managed implementation. The revised timeline provides additional flexibility to complete the necessary testing and readiness activities while minimizing potential disruption to our operations and customers. We believe this measured approach positions us for a successful implementation and does not change our overall objectives for the upgrade, which include enhanced operational efficiencies and additional product capability. I continue to tell the team, you only get one chance to do this well and minimize customer impact, so we are laser-focused on getting it done right. We've started to beta test some early AI applications. The first use cases will be internally oriented and will not have any customer impact. As I have mentioned in the past, this will allow us to develop muscle memory and gain confidence in our ability to execute before we take on bigger, more impactful applications. Beginning in November, we will consolidate our corporate headquarters into a single location at 1 Technology Place in Rockland, Mass, bringing nearly 400 employees together from five separate office buildings. In addition to the operational efficiencies, we expect this move to foster greater collaboration, strengthen teamwork, and further enhance our corporate culture. Our strategy remains straightforward: drive organic growth through new and existing relationships, maintain disciplined underwriting, generate positive operating leverage, and deploy our strong capital position to create long-term shareholder value. I want to thank all of the Rockland Trust employees for their tremendous efforts on a daily basis. Every measure of our success is a direct result of their commitment. On that note, I will turn it over to Mark. Mark Ruggiero: Thanks, Jeff. To summarize the quarter results, 2026 third quarter net income was $89.7 million, and diluted EPS was $1.90, representing a 12% increase over prior quarter EPS results. The quarter results reflect record earnings in EPS for the bank and showcase our continued growth and overall profitability. Return on assets for the quarter was 1.42%, and return on average tangible common equity was 15.4%. Both metrics already meeting profitability targets we set for the fourth quarter of this year. Our eyes are set on continuing to improve profitability from these levels. There are a lot of moving pieces, and as such, we will provide full year 2027 guidance with our fourth quarter results. A key driver of the third quarter earnings increase was the overall increase in net interest income. With a strong rebound in overall deposit balances, including an increase in average deposits of over $630 million, the overall average balance sheet grew nicely with higher cash, securities, and decent loan growth fueling a $15 million increase in interest income versus the prior quarter. Countering the growth in interest income, total cost of deposits increased 6 basis points for the quarter. The net interest margin for the quarter of 3.89% increased 4 basis points from the prior quarter as a result of increased purchase accounting benefit. The adjusted core margin, excluding purchase accounting and other non-core items, was flat at 3.76%. The average deposit increase that I just referenced was driven by growth across all segments, consumer, business, and municipal. However, due to typical seasonality, the quarter-end balances reflected solid growth in the business and consumer segments while municipal balances were down quarter-over-quarter. It's no secret that deposit rate competition is very high. Our approach remains steadfast. Be competitive, grow prudently, and reward strong customer relationships. On the loan side, as Jeff alluded to, we are seeing really good progress in a very competitive environment. As we discussed last quarter, the improved pipelines and anticipated closing activity led to a modest increase in total CRE and construction balances, while C&I grew at a 4% annualized rate. We did anticipate a slightly higher growth result in C&I. However, the activity remains very strong with approximately $40 million of anticipated Q3 fundings that got pushed into the first couple of weeks of October. On the consumer side, with long-term rates pushing up higher, home equity demand was very strong with approximately 12% annualized growth for the quarter, while residential mortgage activity remains challenged. Shifting gears a bit towards capital management, during the third quarter, we repurchased $57.4 million in capital, executing on our long-term goal of prudently returning excess capital to shareholders. As of September 30th, our CET1 ratio sits at 12.7%, and our tangible capital ratio is at 9.4%. We do recognize the higher interest rate environment has already put some pressure on other comprehensive income within the capital stack. However, our strong overall capital and liquidity levels, combined with a close monitoring of both our available-for-sale and held-to-maturity securities portfolios, will continue to afford us the flexibility to stay aggressive with our buyback activity. Rounding out the overall financial position update, on the borrowing side, we paid off a maturing $100 million FHLB borrowing, and we paid down $100 million of our $125 million holding company line of credit, with the remaining $25 million balance converting into a term debt structure. In addition, we executed on a new $125 million holding company three-year term loan with pricing at one month SOFR plus 170 basis points. I will switch gears now to asset quality, and we will highlight the following notable items for the third quarter. Total non-performing assets increased to $126.2 million or 0.5% of total assets. The increase is primarily driven by one office loan currently in workout status. This one loan has a newly established $6.5 million specific reserve. That reserve, along with some smaller moving pieces within the allowance model, drove a $6.5 million provision for loan loss for the quarter. Total criticized and classified loans remained relatively stable at 3.9% of total commercial loans. While net charge-offs for the quarter remained low at only two basis points annualized, we remind folks that we have approximately $17 million of established specific reserves in the commercial book that we do anticipate will be charged off over the next couple of quarters. Lastly, the uptick in delinquencies is driven primarily by both the new-to-non-performing loan as well as previously impaired workout loans reaching maturity dates. Moving now to non-interest items. Fee income of $41.2 million was down approximately 3% from the prior quarter. While deposit interchange and ATM fees all experienced increases, overall wealth management income decreased due primarily to elevated tax prep fees in the second quarter, while the higher interest rate environment softened demand in saleable mortgage banking and loan level swap activity. On the expense side, the quarterly results reflect prudent expense management across all major categories. I will highlight a few unique items in looking at quarter-over-quarter changes. First, within salaries and benefits, the third quarter results included a $1 million benefit relating to the fair valuation of life insurance split dollar benefits. The FDIC assessment expense decreased as a result of improved ratings driving a lower premium, and that does include an approximate $400,000 retroactive adjustment. Within other non-interest expense, the prior quarter expense included approximately $900,000 of expense associated with annual director equity grants, with minimal related expense in the third quarter. As an update on our core conversion project, we incurred approximately $2.2 million of expenses associated with the project in the quarter, bringing the year-to-date total to $5.5 million. With the shift, as Jeff mentioned now, to a 2027 Q1 conversion date, we anticipate an additional $1.5 million to $2 million of one-time expenses to be incurred over the next couple of quarters, with the majority of that to be incurred in the fourth quarter. Lastly, as expected, the tax rate stayed relatively consistent at 23.3%. With that, I will now finish up by providing fourth quarter 2026 guidance. Regarding loan growth, we estimate CRE and construction to increase at a low single-digit annualized percentage, while for C&I, we anticipate a mid-single digit annualized percentage increase. Regarding consumer real estate balances, we anticipate home equity to remain strong with high single-digit percentage annualized growth, while mortgage balances are anticipated to stay relatively flat to a low single-digit percentage increase. For deposits, we also anticipate some level of seasonality impacting period end balances, with point-in-time deposits likely staying relatively flat to a low single-digit annualized growth rate. As more and more variables come into play regarding net interest income, we think it is appropriate to also guide net interest income dollars in addition to the margin. Regarding net interest income, we anticipate a modest increase versus third quarter results. As a reminder, the third quarter benefited from the slightly elevated loan accretion and large seasonal increases in deposits that drove a big increase in average earning assets for the third quarter. Regarding the margin, if we assume no further Federal Reserve action, we would anticipate the reported margin to land slightly north of 3.9% for the fourth quarter. A reminder, that does include an estimated 10 basis point benefit from loan accretion. If the Fed increases again in the fourth quarter with no major changes on the longer end of the curve, we would anticipate a couple basis points reduction as a result. Our fee income is anticipated to grow in the low single-digit percentage range. On the expense side, we anticipate operating expenses, which excludes system conversion costs, to be up slightly over third quarter operating expenses. As I just mentioned, we anticipate approximately $1 million to $1.5 million of one-time expense related to the core conversion in the quarter. Lastly, we anticipate no material changes to the tax rate. That concludes my comments. With that, we will now open it up for questions. Operator: Thank you. We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimal sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Our first question is from the line of Feddie Strickland from Hovde Group. Your line is now open. Please go ahead. Feddie Strickland: Hey, good morning, Jeff and Mark. If we just start on the credit side, can you provide any more detail on the office credit that entered non-accrual this quarter? Geography, types, and just expectations for the workout process there. Mark Ruggiero: Sure. It's a local office loan. Basically, another single tenant that is looking to leave and is planning to vacate, so it'll essentially convert into a fairly empty office building. We're working with the sponsor. There is a potential plan to convert that facility to multifamily. That's early stages in terms of that process. So right now, we thought it was appropriate to look at an appraisal and evaluation as an empty office building as well as a potential increased value as a multifamily conversion, and we reserve down to the average of those balances, which is the $6.5 million reserve. Jeff Tengel: The other thing I would add is the sponsor has a history of supporting their projects. They've been supporting this one. We proactively put it on non-performing status, and they're looking for a partner to help them with the transition to a multifamily property. So it'll probably take a little while for it to work itself out, but we do feel like there's a little bit of optimism based on the sponsorship. Mark Ruggiero: That's a good point. It had been performing up until September 30th. Just given the loss exposure and the likely resolution, we thought it was appropriate to put it on discretionary non-accrual. Feddie Strickland: Got it. Thanks for the color. Just more broadly, I think you've got about $17 million or so in classified office coming due in the fourth quarter. Can you just give us a high level of kind of how you think about those as they come due? Mark Ruggiero: Yeah. The good news there, Freddie, I guess, is that is one loan. That is one that actually went to non-accrual last quarter. We also have a $6 million reserve on that loan already established. It is being marketed for sale. We have seen some early interest, so we are hopeful for an early 2027 resolution on that. But that is one loan with a $6 million reserve on it. Feddie Strickland: Got it. If I could just squeeze in one more on loan growth. Mark Ruggiero: Sure. Feddie Strickland: It seems like you have had some pretty solid momentum on the loan side, good pipeline building there. How should we think about the timeline for that getting deployed, and can you remind us on typical seasonality? Jeff Tengel: Yeah. The C&I loan growth, I think, is not very seasonal, in part because a lot of the growth has been new client acquisition, and so that has not been very seasonal. So my expectations on the C&I side is we are going to continue to see kind of that mid-single digit growth that we just talked about through the fourth quarter and into 2027. The commercial real estate portfolio is a little bit different. Obviously, we grew a little bit this quarter, in part because of the construction loan draws and the lack of paydowns. If you recall, we had outsized paydowns in the second quarter, which really muted our loan growth in that asset class. We did not see the same elevated level of payoffs in the third quarter. And while rising interest rates can make it a challenge for new projects, it also makes it more difficult to refinance into a lower rate. We think that the payoffs as we go forward, hopefully, will stay at a historical level, and we won't see the elevated payoffs we saw in the second quarter. I don't know, Mark, if you want to comment on the consumer portfolio. Mark Ruggiero: Yeah. Similar to the third quarter results, I would expect you'll see home equity demand continue to stay pretty strong. For the same reason Jeff just talked about some of the CRE dynamics, certainly the higher interest rates is challenging sellable mortgage volume. A lot of what we're seeing now is it's basically 80% purchase, 20% refi. Most of that purchase, if there's an adjustable rate demand, we will portfolio that. So you may see a little bit of portfolio growth, but I would expect mortgage banking income to stay challenged. Feddie Strickland: Got it. Thanks for the color. I'll step back. Mark Ruggiero: Thank you. Operator: Your next question is from the line of Justin Crowley from Piper Sandler. Your line is now open. Please go ahead. Justin Crowley: Hey, good morning, everyone. Mark Ruggiero: Hi, Justin. Justin Crowley: Wanted to start off on the NIM. Mark, do you have detail on just how the margin progressed through the quarter, where that ended the period, and then maybe just also the spot cost of deposits if you have it? Mark Ruggiero: Sure. We did see a gradual increase into September. I will caveat, the spot NIM for September was 381, but you will start to see a little bit of noise there because the securities portfolio will print at a meaningfully higher yield as you see a little bit more of that OCI unrealized loss in that number. We can certainly, going forward, think about maybe giving that yield also on a kind of an adjusted book basis. But for now, you will see a little bit of elevated yields in the securities book just because of that loss piece embedded in it. And we did a better job of shifting some of that excess cash into the securities portfolio. So just the mix of earning assets got better as the quarter progressed. That drove a bit of a lift in the margin over probably where July was, where we saw probably the biggest impact on the cost of deposits hitting the NIM. So if I think through to the fourth quarter, spot cost of deposits for September was 144, 1.44%, so I would expect to see a bit more deposit cost pressure heading into the fourth quarter. What you are not seeing in the third quarter margin results is the front end of the curve index-based loans getting the benefit on loan yields. So we will see a little bit of acceleration in loan yields out of the gate. We will still have the repricing benefit affecting both loans and securities. So I do expect the asset yields to improve nicely. I will expect deposit costs to go up a little bit. But I do think we will be able to increase the adjusted core margin by a few basis points here. Does that make sense? There is a lot of moving pieces there. Hopefully, I gave a little bit of color on each component. Justin Crowley: Yeah, no, that is super helpful. I appreciate that. I guess any early read on how you think that margin could behave as we get into next year with maybe a couple more hikes on the table, and maybe just more thematically, as I know you will get into formal outlook. Mark Ruggiero: Yes Justin Crowley: come January. You've got that constant debate between defending NIM or tolerating some pressure to grow NII. Just kind of curious how you're thinking about that moving forward. Mark Ruggiero: Yeah. I know in a number of conversations over the last quarter or two, we've been asked, is there a realistic expectation for a 4% NIM? I think the answer there is still yes, particularly because of that back book repricing benefit with rates continuing to inch up a bit higher. You're seeing really strong lift in the securities yields with over $500 million of cash flow expected over the next four to five quarters. That alone can drive upwards of 7 basis points of expansion in the margin. Assuming we can equalize any Fed action with loan yields and deposit costs, that back book repricing would still drive some pretty good margin expansion over the next four or five quarters. I do think there is a path to end of 2027, looking at a 4% margin. Justin Crowley: Okay. Got it. If I could just squeeze maybe one last one. Just on the buyback, you've got at least the optics of OCI moving against you. What's the overall thinking there, and could you look to get even more active, just given how the stock and really the whole group's traded over the past couple of months? Mark Ruggiero: It's a fair question. I would reaffirm certainly that expectation of 100% of profits being returned via common dividend and buyback is still the expectation. Right now, I don't know if we'll get much more aggressive than that. I've always talked about just balancing the funding of that and continuing to fund through bank profits is important. We certainly have the capacity, I think, and the appetite to do a little bit more. I'd say a minimum level of 100% of profits inclusive of the dividend. Justin Crowley: Perfect. Great. I will leave it there. I appreciate it. Mark Ruggiero: No problem. Operator: Your next question comes from the line of Laurie Hunsicker from Seaport Research Partners. Your line is now open. Please go ahead. Laurie Hunsicker: Yeah. Hi, good morning, Jeff and Mark. Thanks for taking my questions. Just wanted to circle back to credit here. I know the jump in non-performers, it looks like, as you said, was all office. But I just wanted to get the actual dollar amount. Was that a $22 million loan then, or do you have a better number? Mark Ruggiero: Yes. Sorry, we didn't make that clear. It is a $22 million loan, $22.4 million. Laurie Hunsicker: 22.4. Okay, great. If I'm just looking at the breakdown of the $62 million in office non-performers. So $22.4 million is the new non-performer. You still have that $22 million SNC or is there a better balance on that loan? Mark Ruggiero: Yep. That's paid down a little bit, Laurie. That's basically 22 even now, 21.9, 22, right around there. Laurie Hunsicker: Okay. Is there still a thought that one might come current in the fourth quarter? What's the latest? Mark Ruggiero: Yes. I think it will be January of 2027, if I understand sort of the six-month performance period. I think it is going to be a Q1 event. Yes, it is still- Laurie Hunsicker: Okay Mark Ruggiero: on track returning to accrual. Laurie Hunsicker: That is great. Okay. The $17 million that you have in life sciences non-performers, is that your only non-performer in life sciences? Jeff Tengel: Yes. Jeff Tengel: I think so. Mark Ruggiero: Yes. It is about a $100 million portfolio, and I am pretty certain that is the only non-performer. Just a reminder on that one, Laurie Hunsicker, we also have a $6 million reserve on that. That is the other $17 million with a large reserve. Laurie Hunsicker: Okay. Great. Any thought on when we might see movement on that one? Mark Ruggiero: Yeah, I am hoping if we could get that resolved by calendar year, that would be great. It could spill over into the first quarter. That is a little of my prepared comments. Just a reminder between the new non-performer and this loan, there is $12 million plus of reserves. There is another $1.6 million on another office property that is a much longer. I think it is a 2030 maturity date. But there is a little over $14 million in reserves, two of which we hope to resolve in the next couple of quarters. So you will see those charge-offs come through when they get resolved. But as I mentioned, the good news is the loss has been taken for the most part, so it should not result in much more needed provision levels. Jeff Tengel: Yeah. Laurie Hunsicker, because we have a lot of conversations going on now with a handful of the larger office loans, and we feel pretty good about the quality of the dialogue and moving forward resolving them. As Mark Ruggiero suggested, there is some loss content in some of those. But we are aggressively moving them off the balance sheet and, for the most part, have been working with cooperative sponsors in order to do that. Laurie Hunsicker: Okay. And then just sort of last question here on credit. So within that $62 million bucket of office non-performers, that leaves, I don't know, $5 million or $6 million. What is that? Mark Ruggiero: Bear with me here. There is the tw- Laurie Hunsicker: Oops, did I get disconnected? Operator: Ladies and gentlemen, we are currently experiencing technical difficulties. Please stand by as we resolve the issue. Mark Ruggiero: Yeah, until I left off, Laurie. Apologize for that. Do we have Laurie still in the queue? John, are you there? Operator: Our next question comes from the line of Steve Moss from Raymond James. Your line is now open. Please go ahead. Steve Moss: Hey, good morning, guys. Mark, just to answer your question on what you were trying to say to Laurie, it cut off before you started speaking, at least on my end. Mark Ruggiero: All right. I appreciate that. Laurie, you can obviously come back into the queue, but it's three loans that are on NPA. There's a $22.2 million, which is the new one. There's the $22 million, which is the SNC, and then there's the $17.7 million. So those make up 60 of the 62. There's one other small office loan on NPA, but it's primarily three loans. All right. Thank you, Steve. I appreciate that. Steve Moss: Absolutely. Maybe just a quick follow-up on office here. Just curious, what are the total reserves for the office portfolio here? Mark Ruggiero: Specific reserves, we have a little over $14 million, which as a reminder, does not include the $8 million we already charged off on the SNC. So there's essentially $22 million of actual charge-off and/or reserve. Then on top of that would be your standard, call it 1%-1.25% reserve on kind of the general methodology. Steve Moss: Okay, great. Appreciate that. Then maybe going back to the margin here, I guess two things. Curious as to what types of securities and yields you're purchasing these days, especially as we look at. Also just thoughts on the book going forward. Then the second thing, just where are loan origination yields these days, and how much should we expect in terms of cash flows from the loan portfolio over the next 12 months? Mark Ruggiero: Sure. So the first question on security yields purchasing. For the quarter, we were basically weighted average yield of around 5%. That started to uptick obviously north of that in September. So today, if we're purchasing a security, I'd say there's a good chance that's nearing 6%. We're staying pretty plain vanilla there, Steve. Mortgage backs, agency-backed mortgage securities. We still find good value in low coupon, deep discounted securities where it gives us some downside protection, likely less prepayment risk. So we're basically primarily buying that type of bond, and that's giving us the nice lift. If anything, it probably suggests it could move a bit higher over what's coming due, which as I mentioned, is a little over $500 million in 2027. That's at about a 2.5% rate. So you're talking probably a good 300-plus basis points of spread on that $500-plus million churn in the securities book. On the loan side, it is still less scientific on a number, but think of it as an on average 7 or 8-year duration. So you are seeing likely $1.5 billion to $2 billion of either repricing or cash flow happening on an annual basis. Similarly, you still have a lot of older fixed rate loans in the portfolio that are coming off around 5% yields. New pricing on the commercial side is averaging around 6.5%, at least in the third quarter. That is potential to move higher with rates continuing to move a bit higher in the fourth quarter. Home equity is pretty much in the same range as that is tied off of prime. I would say the resi was maybe a tick lower than that in the third quarter, though we will probably move to mid-sixes as well in the fourth quarter. Steve Moss: Okay. That is really helpful there. Then, in terms of just kind of expenses here, with the systems conversion getting pushed into the first quarter, I appreciate the color on the guidance for the fourth quarter. Just kind of curious how you are thinking about maybe an early thought process on total expenses for 2027. Mark Ruggiero: Yeah. Not ready to give full year 2027 guidance, but I would just reiterate Jeff's opening comments around we believe we have the ability to quote, unquote, "hold the line on expenses." That does not mean we will not invest in this company. There is certainly technology enhancements. There is AI development. There is a lot we want to get done. We think the core conversion is a big step in continuing to enhance our technology and get more efficient. But we will look to invest in those by really being disciplined in other areas of discretionary spend. So, without giving specific guidance, I think what you are seeing in 2026 would be the goal to kind of move forward into 2027. There will be merit increases, there will be inflationary impact, I am sure, on some of our larger contracts. But I think just in terms of overall spend, we are really trying to stay disciplined there. Steve Moss: Great. Appreciate all the color here and a nice quarter. Mark Ruggiero: Thanks, Steve. Operator: Your next call is from the line of Laurie Hunsicker from Seaport Research Partners. Your line is now open. Please go ahead. Laurie Hunsicker: Oh, yeah. Hi. Thanks. Yeah, good morning again. Just wanted to circle back one thing on expenses. Is there any one-time charges you're taking with the consolidation of the headquarters, or has that already been baked in? Mark Ruggiero: Yeah, that's a great question. We have not yet. There will be, and we'll give that as part of our 2027 guidance. So, it won't be real significant dollars, but there'll be a couple of facilities that have leases out into 2028 that we would look to be accelerating the remaining rent expense on that. Accounting rules are a little tighter there. You have to basically be out of that space. So I think from a timing standpoint, those will likely be 2027 numbers, Laurie. But I'll give that as part of the full year guide next quarter. Laurie Hunsicker: Great. Thanks. I'll leave it there. Mark Ruggiero: Okay. Operator: Your next question is from the line of Jared Shaw from Barclays. Your line is now open. Please go ahead. Jared Shaw: Hey, good morning. Mark Ruggiero: Hey, Jared. Jared Shaw: Hey. Could you just give us some context around what drove the decision to move the core conversion out to February? I guess, what changed since the September investment deck? When we think about the earnings impact, Mark, I think you pointed out an additional or incremental cost for fourth quarter. Is that just maintaining both systems in the fourth quarter, and we should just think about the delay just sort of pushing the efficiency benefits out past February? Or is that an incremental cost for running additional testing? Jeff Tengel: Yeah, I'll take the first part of that, Jared. It really was not a lot more than what I shared in my prepared remarks. We just didn't feel like we were ready. There's a lot of reasons for that. Not all of it was on us, I'll say that. As we were getting more clarity around kind of the lift that we thought we would need in order to get it done in October, the stress we were putting on our employees to try and get that done, and then the risk of it not going well. We just felt like it was prudent to delay it until February, make sure that, as I said, we have all of our ducks in a row and feel very confident that we'll get it done in the way that we would expect to get it done with minimal customer disruption. It's not a significant incremental cost to do to push it out. So that also gave us comfort that it was something that we probably should do and had really nothing more than that, just feeling like we weren't quite ready. As I also mentioned in my prepared remarks, you get one chance to get this right, and if you don't, then you'll have customer implications for a while. So I really felt like we needed to make sure that we get it right so that we don't have any negative customer effects. Mark Ruggiero: May I'll add the second part of that question, Jared. The one-time expense I would think of as really outside third-party consulting. We're not quote unquote running parallel, so there isn't core run rate expenses going through the P&L. But the good news, just as a reminder, is we expect the upgrade new system to be pretty much the same run rate as what we're paying today. So we've been able to negotiate a pretty good contract there. The one-time cost you're seeing are outside third-party consulting help, and that's what will hit in the fourth quarter as we just get through to the finish line. Jared Shaw: Okay. All right. Thanks. For my follow-up, shifting back over to margin. If we look at that sort of milepost of 4% at the end of 2027 based on no Fed moves, what happens if we get one to two hikes sort of mid-year? I think you said if we get a hike in fourth quarter, that could be a couple of basis points. How should we think about margin with a couple hikes next year? Mark Ruggiero: Yeah. I think the slope of the curve is still really important. I just want to preface my answer here with if we really just focus on the short end of the curve and what would likely happen with a Fed hike, the non-CD book, I would say is running around a 25%-30% beta inclusive of the DDA. So I would expect to see cost of deposits go up, call it four to five basis points on the non-CD book. On the loan side, we have about 25% of the loan book that's tied to the same short end of the curve. So I think you'd get pretty much equal and offsetting impact on loan yields versus cost of deposits. Where I think you get a little bit of that timing lag is whether you start to see CD costs go up as well. I do think we're going to get to a point where that's going to be a little bit more driven by kind of one to two-year money as we'll look to sort of lock up longer-term rates. If you see a level of increase in the cost of deposits related to the CDs, I think that's where you get a little bit of additional funding cost, a couple basis points over and above what we'll get on the loan side, if you follow me. That's just what's happening on the short end of the curve. Just a reminder, you still have that back book repricing benefit to help negate some of that. Jared Shaw: Yeah. Okay. On the CD side, where are you sort of putting your focus today? Are you extending duration? Is there uptake in the longer duration CDs today, or are people staying pretty short? Mark Ruggiero: Yeah. We are shifting the pricing of it to be much more in line with the slope of the curve today. I think through 2026, a lot of our strategy was to keep a lot of our promotional pricing short-term, and that attracted a lot of interest into the CD book. But I think as we are getting a bit more clarity over what feels like a revert back to a normal slope, we will look to entice longer CDs from a pricing standpoint and get back to kind of a normal shaped pricing curve, if that makes sense. Jared Shaw: Yeah. Okay. Thank you. Mark Ruggiero: Thank you. Operator: Your next question is from the line of Matthew Breese from Stephens Inc. Your line is now open. Please go ahead. Matthew Breese: Good morning, everybody. Mark Ruggiero: Matt. Matthew Breese: Hello. Just thinking about the commercial pipeline. It's grown for three straight quarters. It's now at $574 million, but obviously realized loan growth has been much more modest. Knowing that prepay and payoff activity is a big driver, if you were to kind of circle or look at the prepays and payoffs individually, how much of that would you chalk up to being really unusual and outsized? With that kind of production activity, the $575 million pipeline, what's kind of a normalized pace of growth? Jeff Tengel: Well, so keep in mind that the pipeline that we talk about are commitments. They're not outstanding. That would be one just point of clarification. In the real estate book where we've seen most of the payoffs and pay downs, other than just normal amortization, the outsized payoffs we've seen especially in the second quarter, were kind of one-off and we had a couple of larger relationships that in particular were loans that were paid off, and I think that drove a lot of the pressure on loan growth there. So if I'm understanding your question correctly, we think that the C&I business is going to continue to grow. The real estate business, one of the unique aspects of that is to the extent we're growing, and we have seen a little bit more construction loan activity, including in the LIHTC space. Those homes don't fund up right away. It'll take 12 or 15 months before we start to see any funding on them. I think we're still, again, assuming normal levels of payoffs and amortization, we're expecting low single-digit growth in the commercial real estate portfolio going forward. Mark Ruggiero: Just one quick add to that. To give that a little perspective, Matt. On average, call it, because heading into the third quarter, there was a slightly higher than $500 million pipeline. That resulted in about $400 million in funding. I think that same ratio would probably apply, right? So a $550 million pipeline probably leads to a little over $400 million in actual fundings out of the gate. To Jeff's point, some of that being unused lines. I think that funding would be leveraging historical the last couple of quarters. We're seeing pay-downs and amortization probably in that $300 million range, call it. So that's the potential for a net growth of $100 million or so. I think the second quarter you saw payoffs in the $500 million range. So that kind of covers back to how much of this is unusual. Certainly $100 million to $150 million of unusual payoffs is enough to challenge net growth with the numbers I just gave you. If you don't see those unusual payoffs, it suggests that sort of low single-digit rate we've been talking. Matthew Breese: Got it. Okay. Last quarter, we talked a little bit about the disruption in Connecticut, that area as something potentially being something you consider for new growth. Any updates there, team hires or geography-wise areas you're interested in? Jeff Tengel: Yeah. We haven't hired anybody in Connecticut, or New Hampshire for that matter. I mean, new people in New Hampshire, in some of the markets where we're not. I'm thinking of principally like Manchester or Portsmouth in New Hampshire. But we're having active dialogue with a number of people in both of those markets. I was commenting just yesterday to our board about an event I was at a couple of weeks ago in Providence. It was a client event, and we don't have any branches in Providence. It was started as a kind of a LPO probably 10 or 15 years ago. The quality of the clientele that we have in that market is really incredible. I know we can do it because we've done it before, and it's just a matter of finding the right people and feeling like there's opportunity for us to win. So that's what we're exploring right now, both with people and just understanding what the landscape is like. Don't have anything to report today, but it is something that we're continuing to push at. Matthew Breese: Great. Just last one from me. In light of the shape of the curve, higher rates, when do you start contemplating applying higher cap rates for commercial real estate deals? Along those lines, should we start contemplating higher reserves or higher provisioning tied to that book on the back of higher cap rates? How quickly does that happen? Mark Ruggiero: From an allowance standpoint, there'll be a combination there. To be practical, there'll be a combination of actual data that will drive the starting point. I think as you know, Matt, there's obviously room for judgment and qualitative adjustments to appreciate maybe what might be shifting in the environment. So I think if we start to see, call it like a CRE index, a CRE valuation index start to move, that'll already start to inform potentially higher reserves. Then as a management team, if we feel that data supporting the math is not necessarily indicative of the risk, then we have the ability to tweak that through Q factors. So it's a fair point, something we're very cognizant of. We'll provide some transparency if we start to see reserve increases as a result. I think also to your question, it's the types of conversations we're having just in terms of looking at opportunities and thinking about the existing pipeline. I think the good news is the pipeline is strong. We think there's certainly room for near-term growth. I think we'd be naive to suggest that if it stays higher for longer or even creeps up a bit more north, that it wouldn't have an impact on demand as some of these projects may be much more challenged in penciling out from a debt service perspective. Matthew Breese: Great. I appreciate you taking all my questions. I will leave it there. Thank you. Mark Ruggiero: Thanks, Matt. Operator: There are no further questions at this time. I will now turn the call back over to Jeff Tengel for closing remarks. Jeff Tengel: Thanks everybody for joining us this morning, and we appreciate your interest in INDB, and have a great day. Operator: This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in Independent Bank, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Independent Bank wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $391,581!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,334,780!* Now, it's worth noting Stock Advisor's total average return is 936% — a market-crushing outperformance compared to 213% for the S&P 500. 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Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. - Management attributed third quarter success to a differentiated deposit franchise and disciplined loan pricing, which maintained core net interest margins despite intense competition. - C&I loan growth of 5% (excluding exited dealer floor plan runoff) was supported by new client acquisition and a strategic pivot by legacy Enterprise Bank managers from defense to offense. - The bank is prioritizing deep, profitable customer relationships over balance sheet growth at thin, risk-adjusted spreads in the current high-rate environment. - Operational efficiency initiatives include consolidating five separate office buildings into a single corporate headquarters to foster collaboration and reduce long-term facility costs. - Management elected to delay the core systems upgrade from October to February to ensure a smooth implementation and minimize customer disruption, emphasizing a 'get it right' approach. - Asset quality remains consistent with historical performance, with net charge-offs at just 2 basis points, though management is proactively monitoring specific office-related exposures. - The bank has begun beta testing internal AI applications to develop operational 'muscle memory' before deploying customer-facing technology solutions. - Management anticipates a path to a 4% net interest margin by the end of 2027, driven by the repricing of a $500 million securities portfolio and loan cash flows. - Fourth quarter guidance assumes a reported margin slightly north of 3.9%, including a 10 basis point benefit from loan accretion, assuming no further Federal Reserve action. - Loan growth for Q4 is projected at mid-single digits for C&I and low-single digits for CRE, with home equity demand expected to remain strong due to high long-term rates. - The bank intends to return at least 100% of profits to shareholders through a combination of common dividends and aggressive stock buybacks, supported by strong capital levels. - Operating expenses are expected to rise slightly in Q4, excluding approximately $1 million to $1.5 million in one-time system conversion costs. - A $22.4 million office loan was moved to non-accrual status following a tenant vacancy, resulting in a $6.5 million specific reserve and driving the quarterly provision. - Management identified approximately $17 million in established specific reserves within the commercial book that are anticipated to be charged off over the next few quarters. - The core systems conversion delay will result in an additional $1.5 million to $2 million of one-time expenses over the next two quarters, primarily impacting Q4. - Higher interest rates have caused some commercial real estate owners to pause planned projects, though no broad degradation of credit quality has been observed. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. - The $22.4 million loan involves a single-tenant building where the tenant is vacating; the sponsor is cooperative and exploring a conversion to multifamily housing. - Management proactively placed the loan on discretionary non-accrual despite it being current through September 30th to reflect potential loss exposure. - Margin expansion is expected from 'back book' repricing, as $500 million in securities yielding 2.5% will churn into new investments yielding near 6%. - Management believes this repricing benefit can offset potential deposit beta pressure if the Fed continues to hike rates. - The delay was a prudent decision based on readiness and the desire to avoid customer disruption, rather than significant incremental costs. - The new system's run-rate expense is expected to be comparable to the legacy system, with current extra costs limited to third-party consulting. - While no new hires have been made in Connecticut or New Hampshire yet, active dialogues are ongoing in markets like Manchester and Providence. - The strategy focuses on finding the right people to replicate the successful LPO-to-market-presence model used in Rhode Island.

- Interested in Independent Bank Corp.? Here are five stocks we like better. - Record profitability: Independent Bank reported third-quarter net income of $89.7 million, or $1.90 per diluted share, with EPS up 12% sequentially. Net interest margin rose to 3.89%, while adjusted core margin held steady at 3.76%. - Balance-sheet growth continued: Loans grew by $158 million and non-time deposits increased by more than $230 million, despite intense competition that lifted deposit costs. The commercial loan pipeline expanded to $574 million, supporting expectations for continued C&I and CRE growth. - Credit and investment developments: Credit performance remained generally strong, but a $22.4 million nonaccrual office loan drove nonperforming assets to 0.5% of total assets and required a $6.5 million specific reserve. The bank repurchased $57.4 million of stock, plans to return at least 100% of profits to shareholders, and expects $1.5 million–$2 million of additional one-time technology-conversion costs. - 3 Volatile Mid-Caps to Trade This Earnings Season Independent Bank (NASDAQ:INDB) reported third-quarter 2026 net income of $89.7 million, or $1.90 per diluted share, as loan and deposit growth, a stable core net interest margin and disciplined expenses supported record earnings per share. Chief Executive Officer Jeff Tengel said the bank generated $158 million of total loan growth during the quarter, nearly 3.5% on an annualized basis, while non-time deposits increased by more than $230 million, representing 5.4% annualized growth. The company's cost of deposits rose 6 basis points from the prior quarter to 1.42% amid intense competition for deposits. → Don't Get NVIDIA's Reflection AI Interest Wrong: Its Moat Could Deepen "Our deposit franchise continued to differentiate itself," Tengel said, adding that the bank maintained its core net interest margin despite the competitive rate environment. Chief Financial Officer Mark Ruggiero said third-quarter diluted EPS increased 12% from the prior quarter. Return on assets was 1.42%, while return on average tangible common equity was 15.4%, both reaching profitability targets the bank had set for the fourth quarter. → Tesla Wants to Make Its Own Chips—What Could Go Wrong? Net interest margin was 3.89%, up 4 basis points from the second quarter, aided by increased purchase accounting benefits. Adjusted core margin, which excludes purchase accounting and other non-core items, was unchanged at 3.76%. Average deposits increased by more than $630 million during the quarter, with growth across consumer, business and municipal segments. However, municipal balances declined on a quarter-end basis due to typical seasonal patterns. Ruggiero said the bank expects point-in-time deposits in the fourth quarter to be flat to low-single-digit annualized growth. → Birkenstock's Strong Growth Creates a Buying Opportunity For the fourth quarter, management expects a modest increase in net interest income from third-quarter levels. Assuming no additional Federal Reserve action, Ruggiero said reported margin could be slightly above 3.9%, including an estimated 10-basis-point benefit from loan accretion. A further Federal Reserve rate increase could reduce margin by a couple of basis points, he said. Looking further ahead, Ruggiero said cash flows from securities and loan repricing could support margin expansion. The bank expects more than $500 million of securities cash flow over the next four to five quarters, with maturing securities yielding about 2.5%, compared with recent new securities purchases that approached 6% yields. Commercial and industrial lending grew during the quarter despite the runoff of $11.5 million in dealer floor plan balances from a business that has been fully exited. Excluding that impact, C&I loans increased by $61 million, or 5% on an annualized basis. Management said roughly $40 million of expected third-quarter C&I fundings shifted into the first weeks of October. Commercial real estate, including construction lending, increased by $31 million, supported by construction draws and fewer payoffs. The bank funded $202 million in new relationship-based commercial real estate loans during the quarter, while loan payoffs and paydowns declined 27% from the second quarter. Its CRE concentration stood at 278 at Sept. 30. The approved commercial loan pipeline rose to $574 million at quarter-end from $510 million three months earlier. Tengel said the pipeline has benefited from origination activity, new hires and a greater focus on growth from legacy Enterprise Bank relationship managers. Management expects low-single-digit annualized growth in CRE and construction balances during the fourth quarter and mid-single-digit annualized growth in C&I. Home equity lending increased at approximately a 12% annualized pace in the third quarter and is expected to remain strong, while residential mortgage balances are expected to be flat to modestly higher. Net charge-offs were 2 basis points annualized in the third quarter. The provision for loan losses totaled $6.5 million, driven mainly by a newly established $6.5 million specific reserve for a $22.4 million local single-tenant office loan placed on nonaccrual status. Ruggiero said the office property's tenant is expected to leave, and the borrower is exploring a potential multifamily conversion. The bank evaluated the asset both as an empty office building and as a potential conversion project, reserving to the average of those values. Tengel said the sponsor has historically supported its projects and is seeking a partner for the transition. Total non-performing assets increased to $126.2 million, or 0.5% of total assets, primarily due to the office loan. Criticized and classified loans remained stable at 3.9% of total commercial loans. Management also noted that it has about $17 million of established specific reserves in the commercial loan portfolio that it expects to charge off over the next several quarters. The company said office nonperformers were concentrated in three primary loans totaling roughly $60 million, with specific reserves exceeding $14 million, excluding $8 million already charged off on one shared national credit loan. Independent Bank repurchased $57.4 million of capital during the quarter. Its common equity tier 1 ratio was 12.7% and tangible capital ratio was 9.4% at Sept. 30. Ruggiero reaffirmed the company's expectation to return at least 100% of profits through common dividends and share repurchases, though management did not commit to a higher level of buybacks. The company paid off a maturing $100 million Federal Home Loan Bank borrowing and reduced its holding company line of credit by $100 million. It also completed a new $125 million three-year holding company term loan priced at one-month SOFR plus 170 basis points. Fee income fell about 3% sequentially to $41.2 million, reflecting lower wealth management income following elevated second-quarter tax-preparation fees and softer mortgage banking and loan-level swap activity. The bank incurred $2.2 million of core conversion expenses in the third quarter, bringing year-to-date costs to $5.5 million. Management moved the planned systems upgrade from October to February 2027 to allow more time for testing and preparation. It expects an additional $1.5 million to $2 million in one-time expenses over the next two quarters, with most expected in the fourth quarter. Tengel also said the company has begun beta testing internally focused artificial intelligence applications and plans to consolidate nearly 400 employees from five offices into one Rockland, Massachusetts, headquarters beginning in November. Independent Bank Corp. is the bank holding company for Rockland Trust Company, a full-service community bank headquartered in Rockland, Massachusetts. Through Rockland Trust, the company provides banking and financial services to individuals, families, businesses, nonprofits and municipalities. Its products and services include checking and savings accounts, certificates of deposit, residential and commercial lending, home equity loans, mortgages, cash management, online and mobile banking, and other treasury management solutions. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Independent Bank Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.

Independent Bank Corp. (INDB) came out with quarterly earnings of $1.9 per share, beating the Zacks Consensus Estimate of $1.84 per share. This compares to earnings of $1.55 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +3.26%. A quarter ago, it was expected that this holding company for Rockland Trust would post earnings of $1.77 per share when it actually produced earnings of $1.7, delivering a surprise of -3.95%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Independent Bank Corp., which belongs to the Zacks Banks - Northeast industry, posted revenues of $261.95 million for the quarter ended September 2026, surpassing the Zacks Consensus Estimate by 1.27%. This compares to year-ago revenues of $243.74 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Independent Bank Corp. shares have added about 4.1% since the beginning of the year versus the S&P 500's gain of 12.8%. While Independent Bank Corp. has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Independent Bank Corp. was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.95 on $263.1 million in revenues for the coming quarter and $7.17 on $1.03 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Banks - Northeast is currently in the top 29% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Chain Bridge Bancorp, Inc. (CBNA), another stock in the same industry, has yet to report results for the quarter ended September 2026. This company is expected to post quarterly earnings of $1.71 per share in its upcoming report, which represents a year-over-year change of +137.5%. The consensus EPS estimate for the quarter has been revised 5% higher over the last 30 days to the current level. Chain Bridge Bancorp, Inc.'s revenues are expected to be $22.38 million, up 70.6% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Independent Bank Corp. (INDB) : Free Stock Analysis Report Chain Bridge Bancorp, Inc. (CBNA) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research